Eric S. Langan
RCI HOSPITALITY HOLDINGSAbout Eric S. Langan
Eric S. Langan, age 57, is Chairman, President, and CEO of RCI Hospitality Holdings (RICK). He has served as a director since 1998 and as CEO/President and Chairman since 1999, after building the XTC Cabaret brand and merging it into RCI in 1998; he has served on the board of the National Association of Club Executives (ACE) since 1999 . Pay-versus-performance disclosures show RICK’s net income and free cash flow over 2021–2024 and TSR vs. peer index; the company-selected measure is free cash flow, highlighting cash generation as a key value driver .
| Performance Metric | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|
| Net Income ($) | $30,150,000 | $46,060,000 | $29,100,000 | $3,018,000 |
| Free Cash Flow ($) | $36,084,000 | $58,911,000 | $53,176,000 | $48,421,000 |
| RICK TSR (Indexed to $100) | 336.19 | 319.02 | 296.39 | 217.81 |
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| RCI Hospitality Holdings, Inc. | Chairman; President & CEO; Director | Director since 1998; CEO/President & Chairman since 1999 | Led expansion following merger of XTC Cabaret into RCI in 1998; introduced professional marketing, management, finance, and technology systems to club operations . |
| XTC Cabaret | Founder/Developer | 1989–1998 | Built the XTC nightclub brand, merged into RCI, expanding company scope . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| National Association of Club Executives (ACE) | Board Member | Since 1999 | Industry advocacy and best-practice sharing within adult entertainment sector . |
Fixed Compensation
| Component ($) | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary | $1,700,000 | $1,700,000 | $1,700,000 |
| Bonus | — | — | — |
| Option Awards (Grant-Date Fair Value) | $1,568,500 | — | — |
| All Other Compensation | $151,353 | $167,388 | $129,649 |
| Total | $3,419,853 | $1,867,388 | $1,829,649 |
Perquisites – FY 2024 detail:
| Perquisite | FY 2024 Amount ($) |
|---|---|
| SIMPLE IRA Match | $19,385 |
| Automobile Expenses | $27,408 |
| Personal Use of Aircraft | $71,523 |
| Tax Reimbursement (auto fringe) | $11,333 |
| Total “All Other Comp” | $129,649 |
- Corporate aircraft policy (amended Aug 28, 2023): max annual personal use of 100 flight hours for the CEO .
Performance Compensation
There are no regular annual cash incentive plans or long-term performance plans with financial/TSR metrics; NEO pay is principally salary plus periodic equity, with discretionary bonuses possible. The company states compensation is not directly aligned with TSR/net income/FCF in the years presented, and there were no plan-based grants in FY 2023 or FY 2024 .
Stock options (granted Feb 9, 2022):
| Grant Date | Shares | Exercise Price | Expiration | Vesting |
|---|---|---|---|---|
| Feb 9, 2022 | 50,000 | $100.00 | Feb 9, 2027 | 20% vested upon 2022 plan approval (Aug 23, 2022); 20% vests on each Feb 9 in 2023–2026; eligible for earlier vesting on certain events incl. change in control . |
Outstanding options status:
| As-Of Date | Exercisable (#) | Unexercisable (#) | Source |
|---|---|---|---|
| Sep 30, 2023 | 20,000 | 30,000 | |
| Sep 30, 2024 | 30,000 | 20,000 | |
| June 23, 2025 (beneficial ownership footnote) | 40,000 | — |
- No option exercises or stock vesting occurred in FY 2024 .
Equity Ownership & Alignment
| Metric | As of July 3, 2024 | As of June 23, 2025 |
|---|---|---|
| Beneficial Ownership (Shares) | 734,870 (includes 30,000 options exercisable) | 745,000 (includes 40,000 options exercisable) |
| Percent of Class | 8.04% | 8.46% |
| Notes | Includes 1,870 shares in an investment club over which Langan has shared voting/investment power . | No convertibles/warrants outstanding; no pledges disclosed in filings cited . |
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Pledging/hedging: Insider trading policy prohibits short sales and restricts options trading by insiders; filings reviewed did not disclose pledging of Langan’s shares .
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Personal alignment: Langan personally guarantees all of the company’s commercial bank indebtedness without compensation, creating strong alignment but also concentration risk .
Employment Terms
| Provision | Terms |
|---|---|
| Latest Agreement | Two-year employment agreement effective Sept 1, 2024; term ends Aug 31, 2026 . |
| Base Salary | $1,700,000 under the new agreement . |
| Bonus Eligibility/Benefits | Eligible for bonus; expense reimbursement; health/benefit plans; company auto; access to company aircraft per policy; two weeks paid vacation . |
| Severance | If terminated without cause or if he resigns due to reduction/failure to pay compensation or material change in responsibilities, entitled to a lump-sum payment equal to the full remaining amount under the term of the agreement . |
| Non-Compete/Confidentiality | Bound to confidentiality and a period of non-compete post-termination (duration not specified in filing) . |
| Equity Acceleration | 2022 options provide for earlier vesting on certain events including change in control . |
Board Governance (Director service, committees, dual-role implications)
- Service history: Director since 1998; CEO/President and Chairman since 1999 .
- Dual role: CEO also serves as Chairman; the board has four independent directors and no designated Lead Independent Director, which can concentrate authority; board asserts structure is appropriate for current size .
- Committees: Langan is not a committee member; Audit (Barabash—financial expert, Martin, Priaulx), Compensation (Barabash, Lirot, Martin, Priaulx), Nominating (Barabash, Lirot, Martin, Priaulx). Compensation Committee held one meeting in FY 2024; Audit held eight .
- Attendance: Board held 11 meetings in FY 2024; no director attended fewer than 75% of meetings; broad use of unanimous written consents .
- Director compensation: Independent directors received $50,000 in cash (Audit Chair +$10,000) in FY 2024; Langan received no director fees .
Risk Indicators & Red Flags (governance, legal, related-party)
- 2020 SEC settlement: Cease-and-desist order for undisclosed perquisites and related-party transactions (2014–2019); civil penalties: Company $400,000; Langan $200,000; former CFO $35,000; deficiencies cited in proxy/reporting, books and records, and disclosure controls .
- 2025 New York indictment: Company, Langan, CFO and certain subsidiaries/employees indicted on conspiracy, bribery, criminal tax fraud, and filing false instrument charges tied to alleged sales tax reductions; company and individuals deny allegations and intend to defend; clubs remain open .
- Internal control weaknesses: Auditor reported material weaknesses in ICFR for FY 2023 and FY 2024 (IT general controls; controls over accounting for business combinations and impairment assessments), with adverse opinions on ICFR .
- Related-party transactions: Payments to a brother’s furniture firms (Nottingham Creations/Sherwood Forest) ~$350,000 (FY 2024), $195,000 (FY 2023), $207,000 (FY 2022); plumbing/HVAC services via son‑in‑law’s 50%-owned firm (TW Mechanical) billed ~$3,160 direct to RCI (FY 2024), $9,430 (FY 2023), $133,000 (FY 2022); family employment disclosures; personal guarantee of all bank debt by Langan .
- Director/compensation governance: No Lead Independent Director while CEO is Chair; Compensation Committee reported one meeting in FY 2024 .
Say-on-Pay & Shareholder Feedback
| Meeting | Result |
|---|---|
| Aug 28, 2023 Annual Meeting | ~96% approval on say-on-pay . |
| Aug 28, 2024 Annual Meeting | ~92% approval on say-on-pay . |
Additional Signals on Alignment & Capital Allocation
- Share repurchases: In 3Q24, repurchased 202,630 shares for $9.2M (avg $45.27); by Aug 5, 2024, total 335,874 shares bought YTD; management emphasized “Back to Basics” focus on FCF/share and buybacks; stock count reduced below 9 million by early Aug 2024 .
- FCF focus: Non-GAAP FCF used as company-selected metric in pay-versus-performance disclosure .
Investment Implications
- Pay-for-performance alignment: CEO compensation is largely fixed (salary) with limited variable or performance-linked pay; no regular bonus or PSU/RSU plan, and options were last granted in 2022 at a $100 strike with five-year life. The company itself discloses CAP (compensation actually paid) is not tightly aligned with TSR/net income/FCF for the covered years—investors may see limited direct incentive linkage to near-term financial targets .
- Retention and severance economics: A two-year contract with lump-sum payout of remaining term if terminated without cause or for specified “good reason” reduces voluntary departure risk but raises potential termination cost risk; options vest through February 2026 with potential acceleration on a change in control .
- Ownership alignment and potential overhang: Langan beneficially owns 8.46% (745,000 shares as of June 23, 2025) including 40,000 currently exercisable options; no pledging disclosure was identified in the reviewed filings. Personal guarantees of all bank debt strongly align incentives but elevate key-person and governance risk considerations .
- Governance and legal risk: CEO/Chair dual role without a lead independent director, material weaknesses in ICFR (FY 2023–2024), multiple related-party transactions, and the 2025 New York indictment together represent meaningful governance and headline risk. Monitoring legal developments and control remediation progress is critical to underwriting multiple and event risk .
- Shareholder sentiment: Say-on-pay support remains high (92%–96%), suggesting current pay structure and governance have not triggered broad investor opposition to date, but legal and control issues could pressure sentiment if unresolved .
Note on undisclosed items: No explicit clawback policy, stock ownership guidelines, or pledging prohibitions for executives/directors were identified in the cited proxy/10-K materials; no annual cash bonus targets or performance metrics are disclosed for the CEO in the covered years .