[DESCRIPTION]COOKER RESTAURANT CORPORATION DEF 14A
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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Check the appropriate box:
| | Preliminary Proxy Statement | |Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Cooker Restaurant Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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COOKER RESTAURANT CORPORATION
5500 Village Boulevard
West Palm Beach, Florida 33407
1999 ANNUAL MEETING OF SHAREHOLDERS
June 18, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders of
Cooker Restaurant Corporation which will be held at 9:00 a.m., Eastern
Daylight Time, on July 19, 1999 at our headquarters, 5500 Village Boulevard,
West Palm Beach, Florida. The matters on the meeting agenda are described in
the Notice of 1999 Annual Meeting of Shareholders and Proxy Statement which
accompany this letter.
We hope you will be able to attend the meeting, but, whatever your plans, we
ask that you please complete, execute and date the enclosed proxy card and
return it in the envelope provided so that your shares will be represented at
the meeting.
Very truly yours,
/s/ G. Arthur Seelbinder
------------------------
G. Arthur Seelbinder
Chairman of the Board and
Chief Executive Officer
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COOKER RESTAURANT CORPORATION
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 19, 1999
To the Shareholders of
COOKER RESTAURANT CORPORATION:
The Annual Meeting of Shareholders of Cooker Restaurant Corporation (the
"Company") will be held at our headquarters, 5500 Village Boulevard, West Palm
Beach, Florida, on Monday, July 19, 1999 at 9:00 a.m., Eastern Daylight Time,
for the following purposes:
1. To elect two directors, each to serve for a term of three years or until
their successors are duly elected and qualified.
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on May 21, 1999 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting and any adjournment thereof. A list of shareholders
will be available for examination by any shareholder at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please sign, date and
return the enclosed proxy card in the envelope provided.
By Order of the Board of Directors,
/s/ G. Arthur Seelbinder
-----------------------------------
G. Arthur Seelbinder
Chairman of the Board and
Chief Executive Officer
West Palm Beach, Florida
June 18, 1999
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COOKER RESTAURANT CORPORATION
1999 ANNUAL MEETING OF SHAREHOLDERS
July 19, 1999
PROXY STATEMENT
Dated June 18, 1999
GENERAL INFORMATION
Solicitation. This Proxy Statement is furnished to the shareholders of Cooker
Restaurant Corporation, an Ohio corporation (the "Company"), in connection
with the solicitation by the Board of Directors of the Company (the "Board of
Directors") of proxies to be voted at the 1999 Annual Meeting of Shareholders
of the Company (the "Annual Meeting") to be held on July 19, 1999 and any
adjournment thereof. This Proxy Statement and the accompanying proxy card are
first being mailed to shareholders on or about June 18, 1999.
Voting Rights. Shareholders of record at the close of business on May 21, 1999
are entitled to notice of and to vote at the Annual Meeting. As of that date,
there were approximately 5,985,000 Common Shares of the Company, without par
value ("Common Shares"), issued and outstanding. Each shareholder of record on
May 21, 1999 is entitled to one vote per Common Share held of record on all
matters which may be brought before the Annual Meeting.
Authorization. All shares represented by properly executed proxies received by
the Company pursuant to this solicitation will be voted in accordance with the
shareholders' directions specified on the proxy card. If no directions have
been specified by marking the appropriate square on the accompanying proxy
card, the shares represented by such proxy will be voted in accordance with
the recommendation of the Board of Directors, which is FOR the election of
Henry R. Hillenmeyer and William L. Jackson as directors of the Company. The
proxy will also be voted at the discretion of the persons acting under the
proxy to transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
Revocation. Any shareholder returning the accompanying proxy has the power to
revoke it at any time before its exercise by giving written notice of revocation
to the Company (addressed to the attention of the Secretary), by giving oral
notice of revocation to the Company at the Annual Meeting, by duly executing
and delivering to the Company a proxy card bearing a later date, or by voting
in person at the Annual Meeting.
Tabulation. Under Section 1701.51 of the Ohio Revised Code ("ORC") and the
Code of Regulations of the Company, a quorum must be present at the Annual
Meeting in order for any valid action, including the election of directors and
voting on the other matters presented to the meeting, other than adjournment, to
be taken thereat. The Code of Regulations of the Company provides that a quorum
consists of the holders of a majority of the voting shares present in person or
by proxy. Shares represented by signed proxies that are returned to the Company
will be counted toward the quorum in all matters even though they are marked as
"Abstain," "Against" or "Withhold Authority" on one or more or all matters or
they are not marked at all (see "Authorization"). Broker/dealers, who hold their
customers' shares in street name, may, under the applicable rules of the
exchange and other self-regulatory organizations of which the broker/dealers are
members, sign and submit proxies for such shares and may vote such shares on
routine matters, which, under such rules, typically include the election of
directors, but broker/dealers may not vote such shares on other matters, which
typically include amendments to the articles of incorporation of the Company
and the approval of stock compensation plans, without specific instructions
from the customer who owns such shares. Proxies signed and submitted by
broker/dealers which have not been voted on certain matters as described in the
previous sentence are referred to as broker non-votes. Such proxies count
toward the establishment of a quorum.
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Under Section 1701.55 of the ORC, directors are elected by a plurality of the
votes for the respective nominees. Therefore, proxies that are marked "Withhold
Authority" and broker non-votes, if any, will not affect the election of
directors.
ELECTION OF DIRECTORS
Nominees for Election as Directors
At the Annual Meeting, two nominees will be elected as directors. See "General
Information - Tabulation." Directors elected at the Annual Meeting will hold
office for a three-year term expiring at the Annual Meeting of Shareholders in
2002 or until their successors are elected and qualified. The Company has no
reason to believe that any of the nominees will not stand for election or
serve as a director. If any person nominated fails to stand for election, the
proxies will be voted for the election of such other person as shall be
designated by the persons named in the proxy.
The Board of Directors has nominated the following persons to serve as
directors of the Company:
HENRY R. HILLENMEYER, age 55, has been a director of the Company since 1994.
Since March 1995, Mr. Hillenmeyer has served as the Chairman and Chief
Executive Officer of Skill Search Corporation, a resume database and internet
recruitment company. He has also served, since August 1997, as Chairman and
Chief Executive Officer of Preston's Food Service, LLC, operator of
Preston's New American Bistro, a casual dining restaurant in Dallas, Texas.
He also was Chairman and President of Southern Hospitality Corporation, a
Wendy's franchise operator based in Nashville, Tennessee, from May 1988 to
October 1994.
WILLIAM LEHR JACKSON, age 57, has been a director of the Company since
September 1998. He is a co-founder and Principal In Charge of Williams
Jackson Ewing, a specialty retail development company. He has been with
Williams Jackson Ewing since 1978. In 1971, he became the Regional Leasing
Director for the Rouse Company. Mr. Jackson received his Bachelor of Arts
in Economics from the University of Virginia. He also was a Captain in the
United States Marine Corps, earning a Distinguished Flying Cross and the
Navy Commendation Medal for time served in Vietnam.
Directors Whose Terms Continue Until the 2000 Annual Meeting:
GLENN W. COCKBURN, age 43, is one of the founders of the Company. He has
been a director of the Company since 1989. In 1991, he was elected Senior
Vice President - Operations of the Company. He was Vice President - Food
Services of the Company from 1988 to 1991 and was Vice President of Food
Operations of Cooker Corporation (a predecessor of the Company) from 1986
to 1988 when it was merged into the Company. He is a graduate of the
Culinary Institute of America in Hyde Park, New York.
DAVID T. KOLLAT, age 60, has been a director of the Company since 1988
and is Chairman of 22 Inc., a company specializing in research and
consulting for retailers and consumer goods manufacturers. He is a
director of Consolidated Stores, Inc., The Limited, Inc., Wolverine
Worldwide, Inc., Cheryl & Co., Inc., SBC Advertising, Christy &
Associates, Select Comfort, Children's Hospital Foundation, AEI Music
Network and Starpower, Inc. He earned his Doctor of Business Administration
degree at Indiana University, and was a Professor of Marketing in the
College of Administrative Sciences of The Ohio State University from 1965
to 1972.
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HARVEY M. PALASH, age 65, has been a director of the Company since January
1997. He has been a director of the National Hot Rod Association since 1979
and has served as Vice Chairman since 1986. He also served as a director of
Southern Hospitality Corporation, a Wendy's franchise operator based in
Nashville, Tennessee, from 1988 to 1994. He has been a consultant for
Hubbard Broadcasting since January 1990. He was a consultant for the
Nashville Network from 1990 to 1992. In 1985, he founded Diamond P Video,
Inc. and served as Chief Executive Officer until he sold the company in
January 1990. In 1980, he founded Diamond P Sports, Inc. and served as Chief
Executive Officer until he sold the company in January 1990. He has a J.D.
degree from the Loyola Law School. He received his license to practice law
in California in 1966.
Directors Whose Terms Continue Until the 2001 Annual Meeting:
DAVID L. HOBSON, age 62, has been a director of the Company since 1986. Mr.
Hobson became a member of the United States House of Representatives in
January 1991. Before being elected to the House of Representatives, he served
as a member of the Ohio Senate for more than five years and was its president
Pro Tem.
ROBIN V. HOLDERMAN, age 47, has been a director of the Company since 1986.
Mr. Holderman has been the Vice President and General Manager for Opus North
Corporation, a commercial real estate development company, since July 1998.
Mr. Holderman was an Executive Vice President of Corporate Development of
Karrington Health, Inc., an assisted living facilities operating and
development company, from November of 1996 to July 1998. He served as
President of Ruscilli Development Co., Ltd., a real estate development
company, from May 1995 to November 1996. He served as Manager of Industrial
Development of Duke Realty Investments, Inc., a real estate development
company, from April 1994 to May 1995, and prior thereto was the founder and
President of Conquest Corporation, a commercial and industrial real estate
development company located in Columbus, Ohio. From 1990 through 1992, he
was the Director of Development for the Columbus office of the
Miller-Valentine Group, a Dayton, Ohio-based commercial real estate
developer and design/build contractor.
G. ARTHUR SEELBINDER, age 56, is one of the founders of the Company. He has
been Chairman of the Board, Chief Executive Officer and a director of the
Company since 1986 and served as President from September 1989 until December
1994. He was Chairman of the Board of Cooker Corporation from 1984 until
1988 when it was merged into the Company. Mr. Seelbinder is also a director
and the President of Financial Land Corporation, a real estate holding
company.
Board of Directors Meetings
The Board of Directors held nine meetings in fiscal 1998 and each of the
directors attended at least 75 percent of the aggregate number of meetings
of the Board of Directors and committees (if any) on which he served.
Committees
The Company has a standing Audit Committee and a standing Compensation
Committee. The Company does not have a committee whose functions
include nominating directors.
The Audit Committee (comprised of Robin V. Holderman, W. Lehr Jackson
and Harvey M. Palash (Chair) as of the end of fiscal 1998) recommends the
firm to be employed by the Company as its independent auditors; reviews, in
consultation with the independent auditors, their report of audit, or
proposed report of audit, and the management letter, if any; consults with
the independent auditors (periodically and, as appropriate, out of the
presence of management) with regard to the adequacy of the internal
accounting controls; and approves transactions between the Company and its
officers. The Audit Committee held two meetings in fiscal 1998.
The Compensation Committee (comprised of Henry R. Hillenmeyer, David L.
Hobson, and David T. Kollat (Chairman)) establishes the compensation of all
officers and management employees of the Company, adopts compensation plans
for them, approves employment agreements with such persons, administers and
interprets the 1988 and 1992 Employee Stock Option Plans and the 1996
Officers' Stock Option Plan, and takes any action that is permitted to be
taken by a committee of the Board of Directors under the terms of such
plans, including the granting of options. The Compensation Committee held
five meetings in fiscal 1998.
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SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth, as of March 31, 1999, certain information
with respect to the beneficial ownership of Common Shares by (i) each
person known to the Company to be the beneficial owner of more than
five percent of the outstanding Common Shares, (ii) each director or nominee
for director of the Company, (iii) each of the Named Executives (as defined
in "Compensation of Management" below) and (iv) the Company's directors
and executive officers as a group.
Number of Shares
Shareholder Beneficially Owned (a) Percent of Class
G. Arthur Seelbinder (b) 508,940 (c) 7.8%
Glenn W. Cockburn (b) 315,394 (c) 5.0%
Henry R. Hillenmeyer (b) 15,666 (c)(d) (i)
David L. Hobson (b) 58,874 (e) (i)
Robin V. Holderman (b) 39,918 (c) (i)
David T. Kollat (b) 135,344 (c) 2.2%
W. Lehr Jackson (b) - 0.0%
Harvey M. Palash (b) 100,650 (c) 1.3%
Phillip L. Pritchard (b) 432,950 (c) 6.8%
Mark W. Mikosz (b) - 0.0%
Margaret A. Epperson (b) 6,724 (c) (i)
All directors and executive
officers as a group (11
persons) 1,599,809 (c) 23.0%
Dimensional Fund Advisors Inc. 686,162 (e) 11.1%
Heartland Advisors 569,900 (h) 9.2%
The TCW Group, Inc. 65,503 (g) 1.0%
Wellington Management
Company, LLP 757,000 (f) 12.3%
(a) Unless otherwise indicated, the beneficial owner has sole voting and
investment power over these shares subject to the spousal rights, if any,
of the spouses of those beneficial owners who have spouses.
(b) Address is c/o the Company, 5500 Village Boulevard, West Palm Beach,
Florida 33407.
(c) Includes Common Shares subject to stock options outstanding and
exercisable within 60 days of March 31. 1999; for Mr. Seelbinder, 179,420
Common Shares; for Mr. Cockburn, 161,244 Common Shares; for Mr.
Hillenmeyer, 12,600 Common Shares; for Mr. Hobson, 19,442 Common Shares;
for Mr. Holderman, 37,836 Common Shares; for Mr. Kollat, 61,712 Common
Shares; for Mr. Pritchard, 236,522 Common Shares; for Mrs. Epperson, 4,105
Common Shares; and for all directors and executive officers as a group,
698,228 Common Shares.
(d) Includes 1,314 Common Shares owned of record by his spouse and children,
as to which beneficial ownership is disclaimed.
(e) Dimensional Fund Advisors Inc.'s address is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401. Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment advisor, is deemed to have sole
voting power with regard to 686,162 Common Shares and sole investment power
with regard to 686,162 Common Shares as of February 12, 1999, all of which
shares are held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in a series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee benefit
plans, all of which Dimensional Fund Advisors Inc. serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares. A
Schedule 13G filed by Dimensional with the Securities and Exchange Commission
for calendar year 1998 is the source of information concerning Dimensional
reported in this Proxy Statement.
(f) Wellington Management Company, LLP's ("WMC") address is 75 State Street,
Boston, Massachusetts 02109. WMC has shared voting power with regard to
457,000 Common Shares and shared investment power with regard to 757,000
Common Shares. A Schedule 13G filed by WMC with the Securities and Exchange
Commission dated December 31, 1998 is the source of information concerning WMC
reported in this Proxy Statement.
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(g) The TCW Group, Inc.'s ("TCW") address is 865 South Figueroa Street, Los
Angeles, California 90017. TCW is deemed to beneficially own 64,503 Common
Shares as of February 12, 1999. Mr. Robert Day may be deemed to control TCW.
Mr. Day's address is 200 Park Avenue, Suite 2200, New York, New York 10166.
Neither TCW nor Mr. Day directly own Common Shares. The Common Shares which
they are deemed to beneficially owned are directly owned by subsidiaries of
TCW. Both TCW and Mr. Day disclaim beneficial ownership of all such shares. A
Schedule 13G filed by TCW with the Securities and Exchange Commission dated
February 12, 1999 is the source of information concerning TCW reported in this
Proxy Statement.
(h) Heartland Advisors, Inc.'s ("Heartland") address is 790 North Milwaukee
Street, Milwaukee, Wisconsin 53202. Heartland has sole voting power with regard
to 51,900 Common Shares and sole investment power with regard to 569,900 Common
Shares. A Schedule 13G filed by Heartland with the Securities and Exchange
Commission dated January 13, 1999 is the source of information concerning
Heartland reported in this Proxy Statement.
(i) Less than one percent.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Cooker Restaurant
Corporation's executive officers, directors, and persons who own more than 10%
of the Company's stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. These reports are also filed with
the New York Stock Exchange.
SEC Regulations require Cooker Restaurant Corporation to identify anyone who
filed a required report late during the most recent fiscal year. Based on
review of reports furnished to the Company and written representations, the
Company believes during fiscal year ended January 3, 1999, all section 16(a)
filing requirements were met except:
Margaret A. Epperson, an officer of the Company, failed to file a Form 4
on time as to the exercise of 4,854 options of the Company's common
stock in April 1998. The exercise was reported in May 1998.
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COMPENSATION OF MANAGEMENT
Summary Compensation Table
The following table sets forth certain information concerning the annual and
long term compensation for the last three fiscal years of the Chief Executive
Officer of the Company and the other executive officers whose total annual
salary and bonus exceeded $100,000 during the last fiscal year (the "Named
Executives").
Long Term
Compensation
Awards
Securities
Underlying
Name and Annual Compensation Options
Principal Position Year Salary Bonus (Shares) Compensation All Other
- --------------------------------------------------------------------------------
G. Arthur Seelbinder 1998 $228,158 49,438 75,000 $ ---
Chairman of the Board 1997 231,357 142,380 160,000 ---
Chief Executive Officer 1996 215,000 437,259 75,000 2,190 (a)
Phillip L. Pritchard 1998 185,619 30,713 33,000 ---
President-Chief 1997 191,357 81,648 42,000 ---
Operating Officer 1996 180,000 256,860 150,000 2,190 (a)
Glenn W. Cockburn 1998 140,240 15,000 21,000 ---
Senior Vice-President 1997 155,734 40,500 26,000 ---
Operations 1996 143,750 141,574 25,000 2,190 (a)
David C. Sevig 1998(b) 58,016 9,916 --- ---
Vice President-Chief 1997 131,684 33,750 23,000 ---
Financial Officer 1996 115,000 92,019 20,000 2,190 (a)
Mark W. Mikosz 1998(c) 75,000 5,000 22,000 36,810 (d)
Vice President-Chief 1997 --- --- --- ---
Financial Officer 1996 --- --- --- ---
(a) The amount listed is an allocation to the account of the Named Executive in
the ESOP, which was an employee stock ownership plan under the Code. Any amounts
shown for 1996 and 1997 represent Common Shares allocated to the account of the
Named Executive as of the end of each such year. Such allocations were made
during the next year. Common Shares were valued at $11.75 at the end of 1996 and
$9.75 at the end of 1997. The Company, in its sole discretion, could make
contributions to the ESOP in the form of cash or Common Shares. These
contributions and forfeiture of invested accounts were allocated to the
individual account of every employee of the Company who is age 21 and employed
on December 31 of each year in proportion to such employee's relative
compensation for the year. The accounts became 20 percent vested after three
years of employment increasing to 100 percent vested after seven years of
employment. Upon termination of employment, the vested amount of his account
was delivered to the terminated employee. The ESOP was terminated by the
Company effective June 30, 1998, with any vested shares and/or cash
distributed to the participants.
(b) Resigned effective March 28, 1998
(c) Hired June 1, 1998.
(d) Amount reflects payments made in association with Mr. Mikosz's move to
Florida as per his employment agreement with the Company.
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Option Grants in Last Fiscal Year
The following table sets forth certain information concerning grants of stock
options to the Named Executives during the last fiscal year.
Individual Grants (a) Grant Date Value
---------------------------------------------------------
Percent of
Total
Number of Options
Securities granted Exercise
Underlying Granted to of Grant
Options Employees Base Date
Granted in Price Expiration Present
Name (shares) Fiscal Year ($/share) Date Value
- ------------------------------------------------------------------------------
G. Arthur Seelbinder 47,857(a) 18.4% $5.50 01/27/08 $229,714(c)
27,156(b) 15.4% $5.50 04/16/08 $130,349(c)
Glenn W. Cockburn 20,621(a) 8.0% $5.50 01/27/08 $ 98,981(c)
Phillip L. Pritchard 33,311(a) 12.9% $5.50 01/27/08 $159,893(c)
Mark W. Mikosz 21,854(d) 9.2% $5.50 07/15/08 $104,899(c)
- ----------------------
(a) These options were granted on January 26, 1998. The exercise price is the
market value of the Common Shares on December 14, 1998, as all options
granted in 1996, 1997, and 1998, were repriced on December 14, 1998. Each
option vests in four equal installments on each of the first four
anniversaries of the date of original grant and lapses 90 days after death or
disability or 30 days after termination of employment. All unvested options
vest upon a change in control, see "Change in Control Arrangements."
(b) These options were granted on April 15, 1998. The exercise price is the
market value of the Common Shares on December 14, 1998, as all options
granted in 1996, 1997, and 1998, were repriced on December 14, 1998. These
options vested one year after the date of grant and lapse 90 days after death
or disability or 30 days after termination of employment. All options vest
upon a change in control, see "Change in Control Arrangements."
(c) The per share weighted-average fair value of stock options during 1998
was $4.80 on the date of grant using the Black Scholes option-pricing model
with the following weighted average assumptions: expected dividend yield of
1.05 percent, risk-free interest rate of 4.54%, an expected life of 7
years, and volatility of 35%.
(d) These options were granted on July 14, 1998. The exercise price is the
market value of the Common Shares on December 14, 1998, as all options
granted in 1996, 1997, and 1998, were repriced on December 14, 1998.
These options vest in four equal installments on each of the first four
anniversaries of the date of original grant and lapse 90 days after death
or disability or 30 days after termination of employment. All options vest
upon a change in control, see "Change in Control Arrangements."
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Aggregate Option Exercises and Fiscal Year-End Stock Option Values
The following table sets forth certain information concerning the exercise
of stock options by the Named Executives during the last fiscal year and
the number and value of unexercised stock options held by each of them at
the end thereof.
Number of Value of
Underlying In-the-money
Options at Options at
Fiscal Fiscal
Shares Year End Year End
Acquired Value (Exercisable/ (Exercisable/
Name on Exercise Realized Unexercisable) Unexercisable)
- ----------------------------------------------------------------------------
G. Arthur Seelbinder 100,000 $556,250 125,808 / 168,689 $384,716 / $84,480
Glenn W. Cockburn 0 0 148,388 / 40,114 $ 84,850 / $20,057
Phillip L. Pritchard 0 0 199,927 / 96,454 $ 24,964 / $48,227
Mark W. Mikosz 0 0 0 / 21,854 $ 0 / $10,927
Common Share Performance
The following graph shows the yearly percentage change in the cumulative total
return to holders of Common Shares, assuming dividend reinvestment, and the
cumulative total return, assuming dividend reinvestment, of the Russell 2000
Index and the Value Line Restaurant Industry Index since the market close on
the last trading day before the beginning of the Company's fifth preceding
fiscal year (1994), through and including the end of the Company's last
completed fiscal year (1998). The Russell 2000 Index is a capitalization
weighted index of domestic equities traded on The New York and American Stock
Exchanges and the Nasdaq National Market which excludes the 1,000 largest
capitalization equities of the 3,000 such equities. Common shares are traded
on The New York Stock Exchange and fit within the Russell 2000 Index
definition. The Value Line Restaurant Industry Index is published in the
Value Line Industry Review. The graph is based upon an assumed investment
of $100.00 in each of Common Shares, the Russell 2000 Index and the Value
Line Restaurant Industry Index on the last trading day before the beginning
of the Company's fifth preceding fiscal year.
Data Points Used in Preparation of Graph in Original Proxy Statement
Index 1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------
Cooker Restaurant Corporation $100 46.80 88.33 91.70 75.89 47.99
Russell 2000 Index $100 98.02 125.89 146.59 179.13 174.23
Restaurant Industry Index $100 78.89 104.02 89.39 79.80 90.10
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Compensation Committee Report on Executive Compensation
The primary purpose of the Company's executive compensation system as set
forth in the Company's Long Range Strategic Plan for the Fiscal Years 1998
through 2002, is to promote, support and reward exceptional growth and
premium profitability and thereby to maximize the value of the Company to
its shareholders.
The Company's executive compensation system consists of three components:
salary and fringe benefits, cash bonus payments and stock options. All of
the Named Executives, including the Chief Executive Officer, are compensated
under this system which is administered by the Compensation Committee.
Salary and fringe benefits (e.g., group health and life insurance) are
intended to be no higher than the median of the base salaries and benefits
paid by comparable restaurant companies. The Committee's objective is to
minimize this component and increases in it so as to minimize fixed costs
and break-even levels. Base salaries are reviewed and adjusted by the
Committee based upon management's recommendations annually. The Committee's
review includes a review of salaries paid by comparable restaurant companies
to comparable officers, including the chief executive officer, as shown in
their proxy statements and by a trade association survey. These companies
consist of publicly-traded full-service restaurants in the casual dining
segment of the restaurant industry.
Cash bonus payments are a function of the Company's incentive bonus plan, which
is administered by the Compensation Committee. The bonuses payable under the
incentive bonus plan are determined by the multiplication of three factors: the
individual executive's base salary during the period of determination, which is
usually one-half of a fiscal year, the bonus percentage amount set for each
executive by the Compensation Committee at the same time that his base salary
is set, and the par percentage of the Company as a whole for the period of
determination. The par percentage of the Company is based on an earnings per
share (diluted) target as determined by the Compensation Committee at the
beginning of each fiscal half-year period. The earnings per share (diluted)
target approved by the Committee becomes 100 percent of par. At the beginning
of each half-year, the Compensation Committee establishes increments by which
the par percentage is increased or decreased if the actual earnings per share
(diluted) achieved for the half-year exceeds or falls short of the budgeted
amount. At the end of each half-year, the Compensation Committee reviews the
Company's financial performance for that half-year and determines the par
percentage, which determination may include such adjustments as the Committee
deems advisable. The determination of cash bonus is a mechanical exercise after
the determination of the par percentage. Thus, if an executive's annual base
salary is $80,000, his bonus percentage is 35 percent of base salary and the
Company's earnings per share (diluted) for the half-year exceeded budget by a
sufficient amount so that the Compensation Committee set the percentage payout
at 125 percent of par, the executive's bonus for the fiscal half-year would be
1/2 x $80,000 x 35 percent x 125 percent or $17,500. The sum of salary and
cash bonus payments at par should raise the executive's total compensation to
the third quartile of total compensation paid by comparable restaurant
companies to comparable officers. The incentive bonus plan has been operated
by the Committee since the Company's initial public offering in 1989. During
that time, par percentages have varied from a low of zero percent to a high
of 154 percent. The percentage payout was 25 percent for the first half of
1998 and was 0 percent for the second half of 1998 (Note: Mark W. Mikosz,
Chief Financial Officer, received 100% of his eligible bonus for the second
half of 1998 per the terms of his employment agreement with the Company).
The cumulative average percentage payout under the incentive bonus plan
through the end of fiscal year 1998 is 82.8 percent.
The final element of the Company's executive compensation system is the grant
of stock options. The Compensation Committee grants options to the executives
periodically under the Company's Employee Stock Option Plans which are
administered by the Compensation Committee. Options generally have a ten year
term, become exercisable as to 25 percent of the grant on each of the first
four anniversaries of the date of grant (subject to change in control
provisions discussed below under "Change in Control Arrangements"), lapse
after termination of employment and have an exercise price equal to the
market price of Common Shares on the date of grant. Assuming a constant price
to earnings ratio, stock options, like cash bonus payments, reward
profitability. Additionally, since profitable earnings growth should raise
the price to earnings ratio above the Company's competitors, stock options
should reward growth and the commensurate increase in the Company's value to
its shareholders. On April 15, 1998, the Company granted stock options for
27,156 Common Shares to G. Arthur Seelbinder, Chief Executive Officer and
Chairman of the Board. In 1998, Mr. Seelbinder exercised options for 100,000
Common Shares as part of a transaction which reduced the balance of a loan
guaranteed by the Company. See "Option Grants in Last Fiscal Year" and
"Certain Transactions."
13
The addition of stock options to the compensation system should raise the
Company's compensation levels provided to its executives to a superior
level in the marketplace which should allow the Company to attract and retain
superior talent. At the same time, the Company and its shareholders are
protected by the large variable amount of compensation which is paid only if
superior results are achieved and by the nature of the incentives to maximize
income and growth built into the system.
Under Section 162(m) of the Code, compensation paid by the Company to a
Named Executive which is in excess of $1,000,000 in a year will be
nondeductible by the Company for purposes of determining its federal taxable
income unless such compensation is paid under a performance-based plan which
is approved by the shareholders of the Company. Under the Internal Revenue
Service Regulations promulgated under Section 162(m), the Company's 1988
and 1992 employee stock option plans (as amended in 1996) and the 1996
Officers' Stock Option Plan should be deemed to be performance-based
compensation plans and amounts realized by the Named Executives under such
plans should continue to be deductible by the Company. Because of the
favorable treatment of the Company's employee stock option plans and the
remoteness of the possibility that base compensation and cash bonus levels
will exceed $1,000,000 during fiscal 1996 and the years thereafter, the
Committee did not consider the impact of Section 162(m) on its decisions
concerning compensation.
Compensation Committee: David T. Kollat (Chairman), Henry R. Hillenmeyer
and David L. Hobson.
Change in Control Arrangements
The Compensation Committee has authorized the Company to enter into
contingent employment agreements with the present and future Chairmen of
the Board, Presidents, Vice Presidents, Secretaries or Treasurers of the
Company. These employment agreements will be effective only after a change
in control of the Company has occurred. A change in control includes
(a) the acquisition of 20 percent or more of the Company's Common Shares
without the prior approval of the Board of Directors, (b) a majority of
the directors elected at any meeting of shareholders being persons who are
not nominated by the Company's then current Board of Directors, or (c) any
merger, consolidation or transfer of substantially all of the Company's
assets without approval by the Board of Directors. Furthermore, these
agreements become effective only if the Company had a 10 percent return on
assets and 15 percent earnings per share growth during the year preceding
the year during which a change in control occurred. If a change in control
occurs and the Company has met the profitability and growth targets set
forth in the agreements, the employees who were party to the agreements
will be employed by the Company for at least five years after the change
in control with authority, responsibility and compensation not less than
they had before the change in control. The agreements provide that, while
the employees are employed by the Company after a change in control, they
will not compete with the Company and will protect the Company's
confidential information and intellectual property. If an employee's
employment is terminated by the Company without cause (defined for this
purpose to include willful failure to perform material employment
obligations, acts of deliberate dishonesty involving the business of the
Company or conviction of a felony involving the business of the Company,
as determined by the Board of Directors after notice, opportunity to cure
and a hearing), or if the employee resigns because he has determined in
good faith that his authority, responsibility or compensation has been
diminished, the Company must pay a severance payment equal to the maximum
amount payable under Section 280G of the Code, which is generally three
times the employee's average compensation over the previous five years.
Under the agreements, the Company must bear all costs and legal fees
associated with the agreement's enforcement by the employee and indemnify
the employee against all claims by third parties or the Company unless
the employee has been determined to be liable to the Company in a
derivative action and a court refuses to grant him indemnification.
The agreements may be canceled by the Board of Directors at any time
before a change in control has occurred. To date, the Company has entered
into contingent employment agreements with G. Arthur Seelbinder,
Glenn W. Cockburn, Mark W. Mikosz, and Margaret A. Epperson.
14
The Company's stock option plans each contain a provision providing that
each option granted under the plan will become immediately exercisable
as to 100 percent of the Common Shares subject to such option upon any
change in control of the Company. A change in control is defined under
the plans to include (a) the acquisition of 20 percent or more of the
Company's Common Shares without the prior approval of the Board of
Directors, (b) a majority of the directors elected in any annual meeting
of shareholders being persons who are not nominated by the Company's then
current Board of Directors, or (c) any merger, consolidation or transfer
of substantially all of the Company's assets without approval by the
Board of Directors.
Compensation of Non-Management Directors
In 1998 each director of the Company who was not an employee of the
Company received $2,200 per quarter, $500 per board meeting attended, and
$500 per committee meeting attended as compensation for his services as a
director. In 1998, the chairman of the strategic planning committee
received a retainer of $18,500 for his services as chairman of that
committee. David L. Hobson, who is a member of the United States House of
Representatives, is precluded from receiving any compensation from the
Company for his services as a director by the rules of the House and has
waived the payment of all such compensation.
Each director of the Company who is not an employee is eligible to receive
options under the 1992 Director Plan. Only non-incentive options may be
granted under the Directors Plan. The Directors Plan provides that a total
of 24,000 shares will be granted at the time of the annual meeting of
shareholders to the non-employee directors who attended 75 percent of the
meetings of the Board of Directors held since the previous annual meeting.
The options will be allocated among the eligible directors equally and will
be exercisable at a price of 100 percent of the value of the Common Shares
on the date of grant. Each option will become exercisable as to 25 percent
of the shares which are subject to the option on completion of each full
year of directorship after the grant and will terminate after 10 years and
one day, 90 days after termination of directorship due to death or
disability or 30 days after any other termination of directorship. Payment
for Common Shares purchased upon exercise of an option must be made in
full in cash at the time of exercise.
Certain Transactions
In 1994, the Board of Directors approved a guaranty by the Company of a
loan of $5,000,000 to G. Arthur Seelbinder (the "Loan"), the Chairman of
the Board. In January 1997, the Board approved a refinancing of the loan
with The Chase Manhattan Bank of New York (the "Bank"). As refinanced and
extended, the Loan from the Bank bears interest at the Bank's prime rate
or LIBOR plus 2%, and was secured by 570,000 Common Shares and is
guaranteed by the Company in the principal amount up to $6,250,000,
including capitalized interest. Pursuant to the loan agreement between
Mr. Seelbinder and the Bank, any reduction of the principal amount
outstanding under the Loan shall not entitle Mr. Seelbinder to the
advancement of additional funds under the Loan. The guaranty provides
that the Bank will sell the pledged shares and apply the proceeds
thereof to the Loan prior to calling on the Company for its guaranty.
The term of the Loan has been extended until January 31, 2000.
Pursuant to the Company's tender offer to repurchase Common Shares
completed in 1998 (the "Offer"), Mr. Seelbinder tendered 737,562 shares,
approximately 99% of the outstanding Common shares that he owned, including
all 570,000 shares which secured the Loan. Approximately 414,555 shares
were taken up in the Offer for a total price of approximately $4,352,827.
Pursuant to Mr. Seelbinder's letter to the Company dated September 17,
1998, the net after tax proceeds of the sale of 167,652 shares or
approximately $1,408,276 were applied by Mr. Seelbinder to the repayment
of certain personal indebtedness and tax liabilities, the remaining net
after tax proceeds (approximately $2,073,985) were applied to the Loan and
the remaining 323,007 Common shares were returned to the Bank.
As of April 12, 1999, the amount of the Loan outstanding, including
capitalized and accrued interest, was $3,497,635 and the undiscounted fair
market value of the pledged shares was $1,726,069, based upon a market price
of $5.625 per common share. The guaranty secures the loan until it is paid
or refinanced without a guaranty. The Company would fund any obligation it
incurs under the terms of its guaranty from additional borrowing under its
Revolver. Mr. Seelbinder agreed to pay to the Company a guaranty fee each
year that the guaranty remains outstanding beginning on March 9, 1994, the
date the Company first issued its guaranty of the Loan. The amount of the
guaranty fee is 1/4 percent of the outstanding principal amount of the
guaranteed loan on the date that the guaranty fee becomes due. Mr.
Seelbinder has agreed to use at least on-half of any incentive bonus paid
to him by the Company to pay principal and interest on the Loan beginning
with any incentive bonus paid for fiscal year 1998.
Because the value of the shares pledged to secure the Loan subsequent to
the Offer was less than the amount required under the terms of the Loan,
the Bank required the Company to make a cash deposit in such amount to
satisfy the collateral shortfall as a result of the decreased price of the
Company's common stock. The Bank, the Company and Mr. Seelbinder reached a
preliminary agreement concerning such deposit under which Mr. Seelbinder
paid $150,000 to the Bank, the Bank extended their maturity of the Loan to
January 31, 2000, the Company made an initial cash deposit of
approximately $1,600,000 in the Bank which will be revalued monthly, and
Mr. Seelbinder will reimburse the Company for the amount by which the
interest on the deposit is less than the interest the Company pays for
funds under its Term Loan and Revolver. This use of the Company's funds
will not materially affect its working capital or its ability to implement
its capital expenditure plan or make improvements and betterments on its
property. Subsequent to the initial cash deposit, the Company has made
additional deposits totaling approximately $154,000 based upon changes in
the price of Company's Common Stock. Mr. Seelbinder has also informed the
Company that he intends to discuss with the Bank or other financing sources
the refinancing of the balance of the Loan. There can be no assurance that
such refinancing will occur or that, if the Loan is refinanced, the
guaranty will not remain outstanding or that the deposit will be returned
to the Company.
15
INDEPENDENT ACCOUNTANTS
KPMG LLP ("KPMG") served as the Company's independent accountants for the
fiscal year 1998 which ended January 3, 1999. In connection with its
audits for the three years ended January 3, 1999, the Company had no
disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of KPMG
would have caused them to make reference thereto in their report on the
financial statements for such years.
A representative of KPMG has been invited and is expected to be present at
the Annual Meeting. The representative will have an opportunity to make a
statement if he so desires and is expected to be available to respond to
appropriate questions of shareholders.
OTHER BUSINESS
The Board of Directors does not intend to present, and has no knowledge
that others will present, any other business at the meeting. If, however,
any other matters are properly brought before the meeting, it is intended
that the persons named in the enclosed proxy will vote the shares
represented thereby in accordance with their best judgment.
COST OF SOLICITATION OF PROXIES
The cost of this solicitation will be paid by the Company. The Company has
retained Corporate Investor Communications, Inc. ("CIC") to distribute
proxy materials and solicit proxies in connection with the Annual Meeting.
The Company will pay CIC $4,000 plus $3 per shareholder contacted plus
reasonable out-of-pocket expenses for such activities. The Company will
reimburse CIC for all printing costs, postage and freight charges incurred
in connection with the delivery of the Company's proxy materials. In
addition to the solicitation of proxies by mail, CIC may solicit proxies
personally or by telephone. The company may request persons holding shares
in their names for others to forward soliciting materials to their
principals to obtain authorization for the execution of proxies, and the
Company will reimburse such persons for their expenses in so doing.
16
SHAREHOLDER PROPOSALS
A shareholder proposal intended for inclusion in the proxy statement and
form of proxy for the Annual Meeting of Shareholders of the Company to be
held in 2000 must be received by the Company before December 9, 1999, at
its offices at 5500 Village Boulevard, West Palm Beach, Florida 33407,
Attention: Secretary.
A shareholder who wishes to nominate a candidate for election to the
Board of Directors must follow the procedures outlined in Section 2.04 of
the Company's Code of Regulations. A copy of the Code of Regulations is
available upon request from the Secretary of the Company, 5500 Village
Boulevard, West Palm Beach, Florida 33407. One of the procedural
requirements in the Code of Regulations is timely written notice of the
nomination, in a form complying with the Code of Regulations. In order
to nominate a candidate for the Board of Directors election at the 2000
Annual Meeting, this notice must be delivered to the Secretary of the
Corporation before December 9, 1999.
17
Cooker Restaurant Corporation
Proxy solicited on behalf of the Board of Directors
The undersigned hereby appoints G. Arthur Seelbinder, and Margaret A.
Epperson, and each of them, severally, with full power of substitution,
as proxies for the undersigned and hereby authorizes them to represent
and to vote, as designated below, all of the Common Shares, without par
value, of Cooker Restaurant Corporation held of record by the
undersigned on May 21, 1999, at the Annual Meeting of Shareholders to
be held on July 19, 1999, or any adjournment thereof, with all the
power the undersigned would possess if present in person.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ALL NOMINEES.
To elect as directors the nominees named below for a term of three years
and until their successors are duly elected and qualified.
NOMINEES: Henry R. Hillenmeyer, William Lehr Jackson
| | FOR all nominees listed above (except as marked to the contrary).
| | WITHHOLD AUTHORITY to vote for all nominees listed above.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name listed above.)
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting of Shareholders
or any adjournment thereof.
(Continued, and to be dated and signed, on the reverse side.)
(Continued from the other side.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and when
properly executed will be voted in the manner directed herein by the
undersigned shareholder. If no direction is made, this proxy will be
voted FOR all nominees for Director.
Signed: __________________________
Signed: __________________________
Please sign exactly as your name
appears hereon. If the holder is a
corporation or partnership, please
sign its name and add your own
name and title. When signing as
an attorney, executor,
administrator, trustee or
guardian, please also give your
full title. If shares are held
jointly EACH holder must sign.
Dated: ___________________________
| | I plan to attend the July 19,
1999 Annual Meeting in West Palm
Beach, FL. Please indicate the
number of persons attending in
the space provided._______________
IMPORTANT: Please mark, sign and
date this proxy and return it
promptly in the enclosed envelope.
No postage is required if mailed
in the United States.