SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 ss. 240.14a-11(c) or ss. 240.14a-12
THE MARCUS CORPORATION
(Name of Registrant as Specified in its Charter)
----------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
THE MARCUS CORPORATION
[LOGO]
250 East Wisconsin Avenue, Suite 1700
Milwaukee, Wisconsin 53202-4220
--------------------------------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
To Be Held Monday, October 4, 1999
-------------------------------------
To the Shareholders of
THE MARCUS CORPORATION
NOTICE IS HEREBY GIVEN THAT the 1999 Annual Meeting of Shareholders of
THE MARCUS CORPORATION ("Company") will be held on Monday, October 4, 1999, at
10:00 A.M., local time, at Westown Cinemas, 2440 East Moreland Boulevard,
Waukesha, Wisconsin, for the following purposes:
1. To elect eight directors for the ensuing year.
2. To approve an amendment to the Company's 1995 Equity Incentive
Plan.
3. To consider and act upon any other business which may be
properly brought before the meeting or any adjournment
thereof.
Only holders of record of the Common Stock and Class B Common Stock as
of the close of business on August 13, 1999 will be entitled to notice of, and
to vote at, the meeting and any adjournment thereof. Shareholders may vote in
person or by proxy. The holders of Common Stock will be entitled to one vote per
share and the holders of Class B Common Stock will be entitled to ten votes per
share on each matter submitted for shareholder consideration.
Shareholders are cordially invited to attend the meeting in person. A
map has been provided on the following page to assist you in locating Westown
Cinemas. Even if you expect to attend the meeting in person, to help ensure your
vote is represented at the meeting, please complete, sign, date and return in
the enclosed postage paid return envelope the accompanying proxy which is being
solicited by the Board of Directors. You may revoke your proxy at any time
before it is actually voted by notice in writing to the undersigned or by voting
in person at the meeting.
Accompanying this Notice of 1999 Annual Meeting of Shareholders is a
form of proxy and Proxy Statement.
On Behalf of the Board of Directors
Thomas F. Kissinger
General Counsel and Secretary
Milwaukee, Wisconsin
August 30, 1999
- --------------------------------------------------------------------------------
Attend the annual meeting...and stay for a movie!
Shareholders attending The Marcus Corporation's 1999 annual meeting on
Monday, October 4, 1999, at 10:00 a.m. at the Westown Cinemas in Waukesha,
Wisconsin, are invited to stay for a movie after the meeting. This special
opportunity for shareholders to experience a first-run motion picture on the
largest theatre screen in the Midwest! Directions to the Westown Cinemas are on
the back of this page.
- --------------------------------------------------------------------------------
The Marcus Corporation Westown Cinemas
1999 Annual Meeting 2440 East Moreland Boulevard
October 4, 1999 Waukesha, Wisconsin
(414) 785-9917
[Map]
Directions:
From the east on I-94 take Exit 297 (Highway 18-Y) and follow the Highway 18
West/ Waukesha signs. Continue to Highway 18 West (East Moreland Blvd.). Turn
right onto Highway 18 West (East Moreland Blvd.). Continue on East Moreland
Blvd. to South Kossow Road making a right turn on South Kossow Road. Take the
first road on the right to the theatre parking lot.
From the west on I-94 take Exit Exit 297 (Bluemound Road/Waukesha) and follow
the Highway 18 West signs to Highway 18 West (East Moreland Blvd.). Turn right
on Highway 18 West (East Moreland Blvd.) and proceed to South Kossow Road making
a right turn on South Kossow Road. Take the first road on the right to the
theatre parking lot.
There is ample free parking for shareholders in the Westown Cinemas' parking
lots immediately in front of the theatre's main entrance and on the northeast
side of the building.
THE MARCUS CORPORATION
[LOGO]
--------------------------------------
PROXY STATEMENT
--------------------------------------
For
1999 Annual Meeting of Shareholders
To be Held October 4, 1999
This Proxy Statement and accompanying form of proxy are being furnished
to the shareholders of THE MARCUS CORPORATION ("Company") beginning on or about
August 30, 1999, in connection with the solicitation of proxies by the Board of
Directors of the Company ("Board") for use at the Company's 1999 Annual Meeting
of Shareholders to be held on Monday, October 4, 1999, at 10:00 A.M., local
time, at Westown Cinemas, 2440 East Moreland Boulevard, Waukesha, Wisconsin, and
at any adjournment thereof (collectively, "Meeting"), for the purposes set forth
in the attached Notice of 1999 Annual Meeting of Shareholders and as described
herein.
Execution of a proxy given in response to this solicitation will not
affect a shareholder's right to attend the Meeting and to vote in person.
Presence at the Meeting of a shareholder who has signed a proxy does not in
itself revoke a proxy. Any shareholder giving a proxy may revoke it at any time
before it is exercised by giving notice thereof to the Company's Secretary in
writing, by notifying the appropriate personnel at the Meeting in writing or by
voting in person at the Meeting. Unless so revoked, the shares represented by
proxies received by the Board will be voted at the Meeting in accordance with
the instructions thereon. If no instructions are specified on the proxy, the
votes represented thereby will be voted (i) FOR the Board's eight director
nominees set forth below, (ii) FOR the approval of an amendment to the Company's
1995 Equity Incentive Plan and (iii) on such other shareholder matters which may
properly come before the Meeting in accordance with the best judgment of the
persons named as proxies.
Only holders of record of shares of Common Stock ("Common Shares") and
Class B Common Stock ("Class B Shares") as of the close of business on August
13, 1999 ("Record Date"), are entitled to vote at the Meeting. As of the Record
Date, the Company had outstanding and entitled to vote 17,401,015 Common Shares
and 12,502,026 Class B Shares. The record holder of each outstanding Common
Share on the Record Date is entitled to one vote per share and the record holder
of each outstanding Class B Share on the Record Date is entitled to ten votes
per share on each matter submitted for shareholder consideration at the Meeting.
The holders of Common Shares and the holders of Class B Shares will vote
together as a single class on all matters subject to shareholder consideration
at the Meeting. The total number of votes represented by outstanding Common
Shares and Class B Shares as of the Record Date was 142,421,275, consisting of
17,401,015 votes represented by outstanding Common Shares and 125,020,260 votes
represented by outstanding Class B Shares.
ELECTION OF DIRECTORS
At the Meeting, the Company's shareholders will elect eight directors
of the Company, constituting the entire Board, to hold office until the
Company's 2000 annual meeting of shareholders and until their successors are
duly qualified and elected. If, prior to the Meeting, any of the Board's
nominees should for any reason become unable to serve as a director, the votes
represented by proxies granting authority to vote for all of the nominees named
below, or which do not contain any instructions, will be voted for another
replacement nominee selected by the Board. Under Wisconsin law, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election, assuming a quorum is present. For this purpose, "plurality" means that
the individuals receiving the largest number of votes are elected as directors,
up to the maximum number of directors to be chosen at the election. Therefore,
any shares which are not voted on this matter at the Meeting, whether by
abstention, broker nonvote or otherwise, will have no effect on the election of
directors at the Meeting.
All of the nominees are shareholder-elected directors of the Company
and have served continuously as directors since the indicated date of their
election, except for Bronson J. Haase, who was appointed as a director of the
Company by the Board effective December 17, 1998. The names of the nominees,
together with certain information about each of them as of the Record Date, are
set forth below.
Director
Name Current Principal Occupation Age Since
---- ---------------------------- --- -----
[Photo] Stephen H. Marcus Chairman of the Board, President and Chief 64 1969
Executive Officer of the Company(1)(2)(3)
[Photo] Diane Marcus Gershowitz Real estate management and investments(1)(3) 60 1985
[Photo] Daniel F. McKeithan, Jr. President and Chief Executive Officer of 63 1985
Tamarack Petroleum (operator of oil and gas
wells) and President and Chief Executive Officer
of Active Investor Management, Inc. (operator of
oil and gas wells)(4)
[Photo] Allan H. Selig Commissioner of Major League Baseball and 64 1995
President and Chief Executive Officer of Selig
Executive Leasing Co., Inc. (automobile leasing
agency)(5)
[Photo] Timothy E. Hoeksema Chairman of the Board, President and Chief 52 1995
Executive Officer of Midwest Express Holdings,
Inc. (commercial airline carrier)
[Photo] Bruce J. Olson Group Vice President of the Company(2)(6) 49 1996
2
[Photo] Philip L. Milstein President and Chief Executive Officer of 49 1996
Emigrant Savings Bank (savings bank) and
President and Executive Vice President of
Milford Management Corp. (real estate
development and management)
[Photo] Bronson J. Haase President and Chief Executive Officer of 55 1998
Wisconsin Gas Company (gas utility), Vice
President of WICOR, Inc. (utility holding
company) and former President and Chief
Executive Officer of Ameritech Wisconsin(7)
- -----------------
(1) Diane Marcus Gershowitz and Stephen H. Marcus are brother and sister.
(2) Since the Company operates as a holding company through subsidiary
corporations, Stephen H. Marcus and Bruce J. Olson are also officers of
certain of the Company's principal operating subsidiaries.
(3) As a result of their beneficial ownership of Common Shares and Class B
Shares, Stephen H. Marcus and/or Diane Marcus Gershowitz may be deemed
to control, or share in the control of, the Company. See "Stock
Ownership of Management and Others."
(4) Daniel F. McKeithan, Jr. is a director of Firstar Corporation,
Wisconsin Gas Company and WICOR, Inc. and is a trustee of The
Northwestern Mutual Life Insurance Company ("NML"). NML is also one of
the Company's principal lenders.
(5) Allan H. Selig is a director of Oil-Dri Corporation of America.
(6) Bruce J. Olson is a director of Schultz Sav-O-Stores, Inc.
(7) Bronson J. Haase is a director of Firstar Mutual Funds.
The Board has an Audit Committee whose principal function is to
recommend annually a firm of independent certified public accountants to serve
as the Company's auditor, to meet with and review reports of the Company's
auditor and to recommend to the Board such actions within the scope of its
authority as it deems appropriate. The Audit Committee consists entirely of
independent directors. During fiscal 1999, the Audit Committee consisted of
Daniel F. McKeithan, Jr. (Chairman), Philip L. Milstein and Allan H. Selig. The
Audit Committee met one time in fiscal 1999.
The Board has a Compensation and Nominating Committee whose principal
function is to recommend for approval to the Board the compensation, bonuses and
benefits of officers and other key employees of the Company and its subsidiaries
and to administer the Company's 1995 Equity Incentive Plan. See "Executive
Compensation -- Stock Options." The Compensation and Nominating Committee will
consider nominees for director recommended by shareholders, but has no
established procedures which shareholders must follow to make a recommendation.
The Company's By-laws require that shareholders give advance notice and furnish
certain information to the Company in order to nominate a person as a director.
The Compensation and Nominating Committee consists of entirely independent
directors. During fiscal 1999, the Compensation and Nominating Committee
consisted of Timothy E. Hoeksema (Chairman), Daniel F. McKeithan, Jr. and
3
Allan H. Selig. The Compensation and Nominating Committee met two times in
fiscal 1999. See "Executive Compensation -- Report on Executive Compensation."
During the Company's 1999 fiscal year, four meetings of the
Board were held. No director attended fewer than 75% of the meetings of the
Board and committees thereof on which he or she served held during fiscal 1999.
STOCK OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth information as of the Record
Date as to the Common Shares and Class B Shares beneficially owned by (i) each
director of the Company; (ii) each executive officer named in the Summary
Compensation Table set forth below under "Executive Compensation -- Summary
Compensation;" (iii) all directors and named executive officers of the Company
as a group; and (iv) all other persons or entities known by the Company to be
the beneficial owner of more than 5% of either class of the Company's
outstanding capital stock. A row for Class B Share ownership is not included for
individuals or entities who do not beneficially own any Class B Shares.
Total Share
Sole Voting Shared Voting and Ownership and Percentage of
Name of Individual or and Investment Investment Percentage of Aggregate Voting
Group/Class of Stock Power(1) Power(1) Class(1) Power(1)
- -------------------- -------- -------- -------- --------
Directors and Named Executive Officers
Stephen H. Marcus(2)
Common Shares 79,549(3) 150,546 230,095(3)
(1.3%) 30.4%
Class B Shares 2,681,558 1,632,092 4,313,650
(34.5%)
Diane Marcus Gershowitz(2)
Common Shares 82,145(4) 150 82,295(4)
* 20.7%
Class B Shares 1,979,280 963,658 2,942,938
(23.5%)
Daniel F. McKeithan, Jr.
Common Shares 8,125(4) -0- 8,125(4)
* *
Allan H. Selig
Common Shares 6,100(4) -0- 6,100(4)
* *
Timothy E. Hoeksema
Common Shares 5,875(4) -0- 5,875(4)
*
Philip L. Milstein
Common Shares 44,115(4)(5) -0- 44,115(4)(5)
* *
Class B Shares 39,601 62,055 101,656
*
Bronson J. Haase
Common Shares 1,500(4) -0- 1,500(4)
* *
Bruce J. Olson
Common Shares 104,979(3)(6) 32,760 137,739(3)(6)
* *
H. Fred Delmenhorst
Common Shares 39,657(3)(6) 3,019 42,676(3)(6)
* *
Thomas F. Kissinger
Common Shares 23,059(3)(6) -0- 23,059(3)(6)
4
* *
Douglas A. Neis
Common Shares 29,758(3)(6) 6,417 36,175(3)(6)
* *
All continuing directors and named
executive officers as a group (11
persons)(7)
Common Shares(8) 424,862(3) 192,892 617,754(3)
(3.6%) 47.6%
Class B Shares 4,700,439 2,014,326 6,714,765
(53.7%)
Other Five Percent Shareholders
Ben Marcus(2)
Common Shares 1,049 305,088 306,137
(1.8%) 32.4%
Class B Shares -0- 4,582,954 4,582,954
(36.7%)
Neuberger & Berman, LLC(9)
Common Shares(10) 842,302 636,421 1,478,723
(8.5%) 1.0%
Private Capital Management, Inc.(11)
Common Shares(12) 26,950 3,187,348 3,214,298
(18.5%) 2.3%
Vanguard Explorer Fund, Inc.(13)
Common Shares(14) 984,100 -0- 984,100
(5.7%) *
- -----------------------------------
* Less than 1%.
(1) There are included in some cases shares over which a person has or
shares voting power and/or investment power, as to which beneficial
ownership may be disclaimed. The number of Class B Shares (included in
the beneficial ownership figures detailed above) set forth after each
of the following individuals has also been included in the beneficial
ownership of at least one other director: Stephen H. Marcus (643,479)
and Diane Marcus Gershowitz (643,479). The outstanding Class B Shares
are convertible on a share-for-share basis into Common Shares at any
time at the discretion of each holder. As a result, a holder of Class B
Shares is deemed to beneficially own an equal number of Common Shares.
However, in order to avoid overstatement of the aggregate beneficial
ownership of both classes of the Company's outstanding capital stock,
the Common Shares listed in the table do not include Common Shares
which may be acquired upon the conversion of outstanding Class B
Shares. Similarly, the percentage of outstanding Common Shares
beneficially owned is determined with respect to the total number of
outstanding Common Shares, excluding Common Shares which may be issued
upon conversion of outstanding Class B Shares.
(2) The address of Stephen H. Marcus, Diane Marcus Gershowitz and Ben
Marcus is c/o 250 East Wisconsin Avenue, Suite 1700, Milwaukee,
Wisconsin 53202-4220.
(3) Includes 3,054, 2,778, 1,771, 749 and 1,220 Common Shares held for the
respective accounts of Stephen H. Marcus, Bruce J. Olson, H. Fred
Delmenhorst, Thomas F. Kissinger and Douglas A. Neis and all continuing
directors and named executive officers as a group in the Company's
Pension Plus Plan as of May 27, 1999, the latest practicable date for
which such data is available. See "Executive Compensation -- Summary
Compensation Information."
(4) Includes 5,875 Common Shares subject to acquisition by each of Diane
Marcus Gershowitz, Daniel F. McKeithan, Jr., Allan H. Selig and Timothy
E. Hoeksema, 3,250 Common Shares subject to acquisition by Philip L.
Milstein and 1,500 Common Shares subject to acquisition by Bronson J.
Haase pursuant to
5
the exercise of vested stock options held on the Record Date pursuant
to the 1994 Nonemployee Director Stock Option Plan. See "Director
Compensation."
(5) Total does not include 5,625 Common Shares in the AB Elbaum Trust in
which Mr. Milstein is co-trustee and 8,100 Common Shares held by Mr.
Milstein's children, as to which Mr. Milstein disclaims beneficial
ownership.
(6) Includes 67,125, 29,288, 21,975 and 28,538 Common Shares subject to
acquisition by Bruce J. Olson, H. Fred Delmenhorst, Thomas F. Kissinger
and Douglas A. Neis, respectively, pursuant to the exercise of vested
stock options held on the Record Date pursuant to the 1987 Stock Option
Plan and 1995 Equity Incentive Plan. See "Executive Compensation --
Stock Options."
(7) In determining the aggregate beneficial ownership of Common Shares and
Class B Shares for all continuing directors and named executive
officers as a group, shares which are beneficially owned by more than
one director or officer have been counted only once to avoid
overstatement.
(8) Includes 175,176 Common Shares subject to acquisition pursuant to the
exercise of vested stock options held by named executive officers and
continuing nonemployee directors of the Company on the Record Date
pursuant to the 1987 Stock Option Plan, 1995 Equity Incentive Plan and
the 1994 Nonemployee Director Stock Option Plan. See "Executive
Compensation -- Stock Options."
(9) The address of Neuberger & Berman, LLC ("N&B") is 605 Third Avenue, New
York, New York 10158-3698.
(10) Other than share ownership percentage information, the information set
forth is as of February 16, 1999, as reported by N&B in its Schedule
13G filed with the SEC and the Company. According to such Schedule 13G,
principals of N&B own 103,525 shares and N&B disclaims beneficial
ownership of these shares which were purchased with the personal funds
of the N&B principals.
(11) The address of Private Capital Management, Inc. ("PCM") is 3003 Tamiami
Trail North, Naples, Florida 33940.
(12) Other than share ownership percentage information, the information set
forth is as of February 16, 1999, as reported by PCM in its Schedule
13G filed with the SEC and the Company.
(13) The address of Vanguard Explorer Fund, Inc. ("Vanguard") is P.O. Box
2600, Valley Forge, Pennsylvania 19482-2600.
(14) Other than share ownership percentage information, the information set
forth is as of February 10, 1999, as reported by Vanguard in its
Schedule 13G/A filed with the SEC and the Company.
EXECUTIVE COMPENSATION
Report on Executive Compensation
The Company strives to provide fair and competitive compensation which
rewards corporate and individual performance and helps attract, retain and
motivate highly qualified individuals who contribute to the Company's long-term
growth and success. One of the Company's guiding philosophies is to encourage
its executives and other employees to take appropriate market responsive
risk-taking actions which facilitate the growth and success of the Company. The
Company's compensation policies attempt to encourage the continuation of this
entrepreneurial spirit.
The Compensation and Nominating Committee of the Board ("Committee") is
responsible for evaluating and determining the compensation of the Company's
executive officers, including the Company's Chief Executive Officer, Stephen H.
Marcus, in accordance with the foregoing philosophies and policies. The
Committee is composed entirely of independent, nonemployee directors. Executive
officer compensation consists of base salary, annual bonus payments, stock
option grants and other benefits under the Company's several employee benefit
plans.
6
Each executive officer's base salary has been established based on the
level of responsibilities delegated to the executive and the relationship of
such responsibilities to those of other Company executive officers. In
evaluating and adjusting base salaries of executives (other than Mr. Marcus)
from year-to-year, the Committee acts on the recommendations of Mr. Marcus, who
in making his recommendations takes into account (i) the financial performance
of the Company as a whole and on a divisional basis, when appropriate, for the
fiscal year then ended, compared to its respective historical and anticipated
performance; (ii) general economic conditions (including inflationary factors)
and the impact such conditions had on the industry segments in which the Company
operates; (iii) each executive officer's past, and anticipated future,
contributions to the Company's performance; (iv) each executive officer's
existing base salary compared to the range of the base salaries of similarly
situated executives at both the national and local level; (v) any new
responsibilities delegated, or to be delegated, to such officer; and (vi) the
extent of participation of the executive in any significant corporate
achievements over the prior fiscal year. In evaluating and adjusting Mr. Marcus'
base salary, the Committee subjectively considers the same factors cited above,
as well as the comparative salaries and total compensation packages of other
chief executive officers, with particular reference to local market
circumstances. In determining the adjustment to Mr. Marcus' base salary for
fiscal 2000, the Committee specifically took into account the Company's revenue
and earnings performance for fiscal 1999, the Company's long-term record of
financial success and the comparative cash compensation of other similarly
situated executives.
Bonus awards attributable to each fiscal year are granted by the
Committee to the named executive officers, including Mr. Marcus, subsequent to
the fiscal year-end. Fiscal 1999 bonus awards for the named executive officers
who have no direct operational responsibilities were based on the
recommendations of Mr. Marcus, who made his recommendations based on the
Company's overall financial performance for the year then ended and such
officer's individual contributions and achievements over fiscal 1999,
particularly as such contributions and achievements related to advancing the
Company's entrepreneurial philosophy. Specific corporate performance factors
considered in making fiscal 1999 bonus determinations for such executives were
the contribution that each executive made to his specific functional area and
overall Company performance and the Company's 8.4% increase in revenues compared
to fiscal 1998, the Company's earnings performance for fiscal 1999 and the
comparative cash compensation of other similarly situated executives. The fiscal
1999 bonus award for Bruce J. Olson, who has direct managerial responsibilities
for two operating divisions of the Company, was determined based on the
financial and operating performance of those divisions, together with the
overall financial performance of the Company in fiscal 1999. Mr. Marcus received
a fiscal 1999 bonus payment based on a pre-established formula which provides
for his receipt of a performance bonus equal to three-fourths of one percent of
the Company's pre-tax earnings for the fiscal year.
Stock options are granted each year by the Committee to selected
executive officers as part of such officers' compensation package. Options
granted by the Committee have a per share exercise price equal to 100% of the
fair market value of the Common Shares on the date of grant. Therefore, since
the economic value of each option is directly dependent upon future increases in
the value of the Common Shares, the Committee believes option grants help to
better align the interests of option recipients with the economic interests of
the Company's shareholders. The Committee believes stock option grants provide a
long-term incentive for option recipients to improve the Company's financial
performance and, in turn, its stock price. The Committee has the flexibility to
grant other types of equity-based incentive awards (including stock appreciation
rights, restricted stock and performance shares) in addition to stock options in
accordance with the 1995 Equity Incentive Plan. Mr. Marcus is not eligible to
receive option grants or other awards under the 1995 Equity Incentive Plan.
Since Mr. Marcus and his family own approximately 39.5% of the outstanding
Common Shares and Class B Shares, his economic interests are already
substantially directly linked to the price performance of the Company's Common
Shares. Therefore, at the time the 1995 Equity Incentive Plan was adopted, it
was determined unnecessary to provide Mr. Marcus with the opportunity to receive
stock option grants.
7
Consistent with the Company's philosophy of encouraging entrepreneurism
throughout the organization, the Committee grants options annually to a broad
number of key employees. Option grants in fiscal 1999 to key employees other
than the named executive officers constituted 89.1% of all non-Board option
grants. The size of option grants to the named executive officers is based on
(i) each officer's length of service and relative responsibilities and
contributions to the Company's performance over the past year; (ii) the
officer's anticipated future contributions to the success of the Company; (iii)
historical levels of option grants to, and the level of existing stock ownership
of, such officer and other executive officers; and (iv) the relative levels of
option grants then being made to all employees and other executive officers.
The Committee also attempts to provide other competitive compensatory
benefits to the Company's executive officers, including participation in the
Company's Pension Plus Plan, nonqualified retirement income plan, employee stock
purchase plan, nonqualified deferred compensation plan, health insurance, life
and disability insurance and other benefits.
The Company's cash compensation program for its managers is designed to
reward an entrepreneurial orientation on the part of such managers. In addition
to the need for such reinforcement, the Company also recognizes that long-term
service and loyalty are of strategic value to the continued continuity of
management which is necessary for the growth of the Company. For this reason,
the Company has introduced an incentive stock option program for unit and
multi-unit managers based on level of responsibility and length of service.
As a result of current executive compensation levels, the Committee
does not intend currently to take any action to conform its compensation plans
to comply with the regulations proposed under Internal Revenue Code Section
162(m) relating to the $1 million cap on executive compensation deductibility
imposed by the Omnibus Revenue Reconciliation Act of 1993.
By the Compensation and Nominating Committee:
Timothy E. Hoeksema, Chairman
Daniel F. McKeithan, Jr.
Bronson J. Haase
Summary Compensation Information
The following table sets forth certain information concerning
compensation paid by the Company for the last three fiscal years to the
Company's Chief Executive Officer and the other executive officers of the
Company who earned over $100,000 in salary and bonuses in fiscal 1999. The
persons named in the table below are hereinafter sometimes referred to as the
"named executive officers."
8
Summary Compensation Table
Annual Compensation
--------------------------
Stock Option
Name and Principal Fiscal Grants(3)(4) All Other
Positions Year Salary(1) Bonus Other(2) (shares) Compensation(5)
------------- ------ ----------- ------- -------- ---------- ---------------
Stephen H. Marcus 1999 $418,077 $284,737 $ -- N/A $6,030(6)
Chairman of the Board, 1998 $398,077 $362,684 $ -- N/A $7,024(6)
President and Chief 1997 $378,461 $398,868 $ -- N/A $6,912(6)
Executive Officer
Bruce J. Olson 1999 $248,558 $112,214 $ -- 7,500 $4,347
Group Vice President
1998 $233,558 $147,600 $ -- 7,500 $5,156
1997 $218,462 $256,046 $ -- 7,500 $5,091
H. Fred Delmenhorst 1999 $141,327 $ 15,000 $ -- 3,750 $6,310
Vice President-Human
Resources
1998 $134,039 $ 20,000 $ -- 3,750 $6,556
1997 $124,231 $ 18,500 $ -- 3,750 $4,289
Thomas F. Kissinger 1999 $148,558 $ 28,000 $ -- 3,750 $2,617
General Counsel and
Secretary
1998 $134,039 $ 35,000 $ -- 3,750 $2,444
1997 $123,231 $ 30,000 $ -- 3,750 $1,820
Douglas A. Neis 1999 $114,135 $ 15,000 $ -- 3,750 $2,204
Chief Financial Officer
and Treasurer
1998 $105,423 $ 20,000 $ -- 3,000 $2,513
1997 $ 99,308 $ 17,500 $ -- 3,000 $2,034
- -----------------
(1) Includes amounts deferred by the Company at the election of the named
executive officer under Section 401(k) of the Internal Revenue Code and
the Company's Deferred Compensation Plan. The Company's Deferred
Compensation Plan is a defined contribution program whereby an eligible
employee may voluntarily make an irrevocable election to defer receipt
of up to 100% of the employee's annual compensation on a pre-tax basis.
The irrevocable election must be made prior to the start of any
calendar year to which it applies and must specify both a benefit
payment commencement date beyond the end of the last such calendar year
and the form of payment (i.e., lump sum, periodic installments or
monthly annuity). During the period of deferral, the Company quarterly
applies to the deferred amount an earnings credit equal to the average
prime interest rate of a designated Milwaukee bank. The benefits
payable under the Deferred Compensation Plan (i.e., the employee's
deferred amounts plus his earnings credits) will be paid out of the
Company's general corporate assets as benefit payments become due after
the employee's specified commencement date.
(2) The value of all perquisites and other personal benefits provided to
each named executive officer by or on behalf of the Company is
significantly less than the required Securities and Exchange Commission
reporting thresholds of the lesser of $50,000 or 10% of the annual
salary and bonus reported for each respective named executive officer.
(3) Fiscal 1997, 1998 and 1999 options were granted at 100% of fair market
value on the date of grant under the Company's 1995 Equity Incentive
Plan. See footnote (1) to the table set forth under "Stock Options --
Option Grants in 1999 Fiscal Year" below for additional information.
(4) Options granted during fiscal 1998 and 1997 have been adjusted to
reflect the Company's three-for-two stock split effected on December 5,
1997, in the form of a 50% dividend on both of its Common Shares and
Class B Shares.
(5) Includes the Company's contributions on behalf of each named executive
officer to its defined contribution Pension Plus Plan and the dollar
value of imputed life insurance premiums paid by, or on
9
behalf of, the Company during the fiscal year with respect to term life
insurance for the benefit of the named executive officer. The Pension
Plus Plan is a profit sharing plan with Internal Revenue Code Section
401(k) features and covers all eligible employees of the Company and
its subsidiaries, including the named executive officers, and uses a
participating employee's aggregate direct compensation as the basis for
determining the employee and employer contributions that are allocated
to the employee's account under the Pension Plus Plan. A participating
employee may elect to make pre-tax deposits of up to 14% of the
employee's annual compensation. The Pension Plus Plan also provides for
three types of employer contributions: (i) a basic contribution equal
to 1% of a participating employee's annual compensation; (ii) a
matching contribution equal to one-fourth of the employee's pre-tax
deposits not exceeding 6% of such annual compensation; and (iii) a
discretionary profit performance contribution determined by the Board
each year. For purposes of the profit performance contribution, the
Company and its subsidiaries have been divided into eight profit
sharing groups, and the profit performance contribution for the
participating employees employed by a particular profit sharing group
is dependent upon the Company's overall operations meeting
profitability targets, the Company having achieved a positive return on
shareholders' equity and that profit sharing group's operating
performance having been profitable. A participating employee's share of
the annual profit performance contribution, if any, for the employee's
profit sharing group is determined by multiplying the contribution
amount by the ratio of the participating employee's annual compensation
to the aggregate annual compensation of all participating employees in
that profit sharing group. The employee's pre-tax savings deposits and
the employer basic contributions allocated to a participating
employee's account are fully vested upon deposit, and the employer
matching and profit performance contribution are subject to a graduated
vesting schedule resulting in full vesting after seven years of
service. The participating employee has the right to direct the
investment of the pre-tax savings deposits and employer matching
contributions allocated to the employee's account in one or more of
several available investment funds. The allocated employer basic
contributions are generally expected to be invested in Common Shares
but, at the direction of the Pension Plus Plan's administrative
committee, may be invested in a different manner. The allocated
employer profit performance contributions are invested in the manner
selected by the Pension Plus Plan's administrative committee, which may
also include investment in Common Shares. The vested portion of a
participating employee's account balance becomes distributable in a
lump sum payment only after the employee's termination of employment,
although the employee has the right while employed to borrow a portion
of such vested portion or make a withdrawal of pre-tax savings deposits
for certain hardship reasons which are prescribed by applicable federal
law. The Company also provides all named executive officers with
long-term disability protection.
(6) In each of fiscal 1999, 1998 and 1997, the Company paid approximately
$368,000 of premiums on three split-dollar insurance policies on the
life of Mr. Marcus. The foregoing data is excluded from the table above
because, upon surrender of these policies to the Company or the death
of Mr. Marcus, these premium payments will be reimbursed in full to the
Company. Based on an assumed retirement age of 65, the present value of
the excess cash surrender value of all of such policies over the
premium payments is estimated to be approximately $156,000.
Stock Options
The Company has a 1987 Stock Option Plan ("1987 Plan") pursuant to
which options to acquire Common Shares could have been granted by the Committee
prior to June 1997 to officers and other key employees of the Company and its
subsidiaries, including executive officers. However, Ben Marcus, Stephen H.
Marcus, Diane Marcus Gershowitz and any other person who owned, directly or
indirectly, 5% or more of the Company's voting power were not eligible to
receive options under the 1987 Plan. No new options may be granted under the
1987 Plan, although outstanding options previously granted under the 1987 Plan
are still outstanding and may be exercised pursuant to their terms.
10
The Company also has a 1995 Equity Incentive Plan ("1995 Plan")
pursuant to which options to acquire Common Shares may be granted by the
Committee until June 2005 to officers and other key employees of the Company and
its subsidiaries, including executive officers. However, Ben Marcus, Stephen H.
Marcus, Diane Marcus Gershowitz and any other person who owns, directly or
indirectly, 5% or more of the Company's voting power cannot receive options
under the 1995 Plan.
The following table sets forth information concerning the grant of
stock options under the 1995 Plan during fiscal 1999 to the named executive
officers.
Option Grants in 1999 Fiscal Year
Percentage of
Common Shares Total Options Potential Realizable Value at Assumed
Underlying Granted to All Exercise Annual Rates of Stock Price
Options Employees in Price(2) Expiration Appreciation for Option Term(3)
Name Granted(1) 1999 Fiscal Year (per share) Date 5% 10%
---- ---------- ---------------- ----------- ------ -- ---
Stephen H. Marcus N/A N/A N/A N/A N/A N/A
Bruce J. Olson 7,500 3.8% $16.9375 6/25/08 $79,889 $202,455
H. Fred Delmenhorst 3,750 1.9% $16.9375 6/25/08 $39,945 $101,228
Thomas F. Kissinger 3,750 1.9% $16.9375 6/25/08 $39,945 $101,228
Douglas A. Neis 3,750 1.9% $16.9375 6/25/08 $39,945 $101,228
- ------------------
(1) Options granted under the 1995 Plan may be designed to qualify as
either "incentive stock options" within the meaning of Section 422A of
the Internal Revenue Code or as "nonstatutory stock options." The
options reflected in the table are incentive stock options under the
Internal Revenue Code and were granted on June 25, 1998. The exercise
price of each option granted was equal to 100% of the fair market value
of the Common Shares on the date of grant. The foregoing options
granted vest and are exercisable with respect to 40% of the subject
shares after two years from the grant date, 60% after three years, 80%
after four years and 100% after five years, but may not be exercised
after the ten-year option period. Not reflected in this table are
25,000 Common Shares subject to incentive stock options which were
granted to the named executive officers after the Company's fiscal 1999
year end (Olson-10,000, Delmenhorst-5,000, Kissinger-5,000 and
Neis-5,000) at an exercise price of $12.3125 per share.
(2) The exercise price of options may be paid in cash, by delivering
previously issued Common Shares or any combination thereof.
(3) The potential realizable values set forth under the columns represent
the difference between the stated option exercise price and the market
value of the Common Shares based on certain assumed rates of stock
price appreciation and assuming that the options are exercised on their
stated expiration date; the potential realizable values set forth do
not take into account applicable tax and expense payments which date
may be associated with such option exercises. Actual realizable value,
if any, will be dependent on the future stock price of the Common
Shares on the actual date of exercise, which may be earlier than the
stated expiration date. The 5% and 10% assumed rates of stock price
appreciation over the ten-year exercise period of the options used in
the table above are mandated by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of the future price of the Common Shares on any date. There
can be no assurances that the stock price appreciation rates for the
Common Shares assumed for purposes of this table will actually be
achieved.
The following table sets forth certain information with respect to the
named executive officers concerning their unexercised stock options held as of
the end of the Company's fiscal 1999. No options were exercised by any of the
named executive officers during the Company's fiscal 1999.
11
Fiscal 1999 Year-End Value Table
Number of Common Shares Value of Unexercised
Underlying Unexercised Options at In-the-Money Options at End of
End of Fiscal 1999(1) Fiscal 1999(4)
Name Exercisable(2)(3)/Unexercisable(2)(3) Exercisable/Unexercisable
---- ------------------------------------- -------------------------
Stephen H. Marcus N/A N/A
Bruce J. Olson 60,375 / 24,000 $152,325/ $0
H. Fred Delmenhorst 26,138 / 11,550 $ 71,193/ $0
Thomas F. Kissinger 18,825 / 11,550 $ 27,371/ $0
Douglas A. Neis 25,838 / 10,350 $ 71,193/ $0
- ----------------
(1) See vesting schedule of stock options set forth in footnote (1) under
the "Option Grants in 1999 Fiscal Year" table above.
(2) Not reflected herein are 15,750 Common Shares subject to stock options
which have vested and become exercisable after the Company's 1999
fiscal year end (Olson-6,750, Delmenhorst-3,150, Kissinger-3,150 and
Neis-2,700). Also not reflected in this table are 25,000 Common Shares
subject to stock options which were granted to the named executive
officers after the Company's fiscal 1999 year end (Olson-10,000,
Delmenhorst-5,000, Kissinger-5,000 and Neis-5,000) at an exercise price
of $12.3125 per share.
(3) Reflects adjustments for the Company's three-for-two stock split
effected on December 5, 1997, in the form of a 50% dividend on both of
its Common Shares and Class B Shares.
(4) The dollar values were calculated by determining the difference between
the fair market value of the underlying Common Shares and the various
applicable exercise prices of the named executive officers' outstanding
options at the end of fiscal 1999. The closing sale price of the Common
Shares on the New York Stock Exchange on May 27, 1999, was $12.75 per
share.
Pension Plan
The Company has a nonqualified defined benefit pension plan
("Supplemental Plan") for the eligible employees of the Company and its
subsidiaries with annual compensation in excess of a specified level (e.g.,
$80,000 in 1999), including named executive officers of the Company. The
Supplemental Plan is a defined benefit retirement income program which provides
benefits based upon the employee's average total compensation for the five
highest compensation years within the employee's last ten compensation years.
The amounts accrued for named executive officers under the Supplemental Plan
cannot be readily ascertained and are, therefore, not included in the "Summary
Compensation Table" above. In calculating employee compensation for purposes of
determining its contribution to the Supplemental Plan, the Company uses a
participating employee's total direct compensation in determining its annual
benefits (which, for the named executive officers, would be comprised of the
salary and bonus amounts listed in the "Summary Compensation Table" above),
calculated on a straight life annuity basis assuming benefits commence at age
65. In addition to a reduction equal to 50% of Social Security benefits, the
Supplemental Plan also reduces its benefits by the benefits attributable to
employer contributions which the participating employee received under other
Company-sponsored plans, such as the Pension Plus Plan and the Company's former
qualified pension plans. An employee participating in the Supplemental Plan will
be entitled to receive annual benefits substantially in accordance with the
table set forth below, except that the amounts shown in the table do not reflect
the applicable reductions for Social Security benefits and benefits funded by
employer contributions which are payable under other Company-sponsored plans.
For an employee entitled to the highest level of Social Security benefits who
retires at age 65 during calendar year 1999, the reduction in annual
Supplemental Plan benefits would be approximately $9,720.
12
Estimated Annual Pension Plan Benefits
for Representative Years of Service
------------------------------------------------------------------------
Final Five-Year
Average Compensation 15 20 25 30 35
-------------------- -- -- -- -- --
$ 80,000 $ 20,000 $ 26,667 $ 33,333 $ 40,000 $ 40,000
120,000 30,000 40,000 50,000 60,000 60,000
180,000 45,000 60,000 75,000 90,000 90,000
240,000 60,000 80,000 100,000 120,000 120,000
400,000 100,000 133,000 167,000 200,000 200,000
600,000 150,000 200,000 250,000 300,000 300,000
800,000 200,000 267,000 333,000 400,000 400,000
A participating employee is entitled to benefits under the Supplemental
Plan upon normal retirement on or after age 65, early retirement after age 60
with at least five years of service, disability retirement after at least five
years of service and other termination of employment after at least five years
of service. A graduated vesting schedule, which provides for 50% vesting after
five years of service and an additional 10% for each year of service thereafter,
applies in the case of termination of employment before completing 10 years of
service or qualifying for normal, early or disability retirement. Benefits
payable under the Supplemental Plan will be paid out of the Company's general
corporate assets as benefit payments become due after retirement or other
termination. At the end of fiscal 1999, Stephen H. Marcus, Bruce J. Olson, H.
Fred Delmenhorst, Thomas F. Kissinger and Douglas A. Neis had 38, 25, 14, 6 and
13 years, respectively, of credited years of service under the Supplemental
Plan.
Director and Director Emeritus Compensation
Under the Company's standard director compensation policy, each
nonemployee director receives an annual retainer fee of $10,000, together with
$1,750 for each meeting of the Board and $350 for each committee meeting thereof
(or $500 per committee meeting if that person serves as the committee's
chairperson), which he or she attends. In addition, under the Company's 1994
Nonemployee Director Stock Option Plan ("Director Plan"), each nonemployee
director automatically is granted stock options to purchase 1,000 Common Shares
upon his or her initial appointment or election to the Board and also receives
an automatic annual grant of an option for 500 Common Shares at the end of each
fiscal year of the Company. Exercise prices of options granted under the
Director Plan are equal to 100% of the fair market value of the Common Shares on
the date of grant. Under the Director Plan, on May 27, 1999, each nonemployee
director received his or her annual automatic option grant to purchase 500
shares of Common Stock at an exercise price of $12.75 per share. The options
have a term of ten years and were fully vested and exercisable immediately after
grant.
Ben Marcus, the founder of the Company in 1935, retired from his
position as the Company's Chairman of the Board in December 1991. In December
1995, Ben Marcus retired from the Board and was appointed a director emeritus.
Mr. Marcus also continues to serve the Company as a nonofficer employee. The
Committee has adopted a compensation policy applicable to Ben Marcus that
attempts to recompense him for his many years of service and dedication to the
founding, development and growth of the Company. To recognize his contributions
to the founding and success of the Company, Mr. Marcus is entitled to receive
for the remainder of his life (and thereafter his wife will be entitled to
receive for the remainder of her life) a consulting fee partially linked to a
percentage of the Company's pre-tax and pre-corporate bonus earnings. Mr. Marcus
is also entitled to receive continued salary payments as an employee of the
Company. In fiscal 1999, Ben Marcus earned total cash compensation of $397,621
from the Company.
13
STOCK PERFORMANCE INFORMATION
Set forth below is a line graph comparing the annual percentage change
during the Company's last five fiscal years in the Company's cumulative total
shareholder return (stock price appreciation on a dividend reinvested basis) on
the Common Shares, compared to the cumulative total return of a composite peer
group index selected in good faith by the Company, companies included within the
Russell 2000 Index and companies included within the S & P 500 Composite Index.
The Company has selected the Russell 2000 Index as a new index because the
Company believes the Russell 2000 Index includes companies with market
capitalizations that are more similar to the market capitalization of the
Company as opposed to the companies included within the S & P 500 Composite
Index, which have larger market capitalizations than the Company. The composite
peer group index is comprised of the Standard & Poor's Hotel/Motel Index
(weighted 62%), Standard & Poor's Restaurants Index (weighted 7%) and a
Company-selected theatre index (weighted 31%) which includes Carmike Cinemas,
Inc., Cineplex Odeon Corp./Loews Cineplex Entertainment Corp. and AMC
Entertainment, Inc. The indices within the composite industry peer group index
have been weighted to approximate the relative revenue contributions of each of
the Company's respective business segments (counting the limited-service lodging
and hotel/resort segments as one segment) to the Company's total revenues in
fiscal 1999. The shareholder returns of the companies included in the theatre
index have been weighted based on each such company's relative market
capitalization as of the beginning of the presented periods.
Comparison of Five-Year Total Returns
(on a dividend reinvested basis)
[GRAPHIC OMITTED]
=====================================================================================================================
5/31/94 5/31/95 5/31/96 5/31/97 5/31/98 5/31/99
=====================================================================================================================
The Marcus Corporation $100 $107 $148 $141 $155 $112
- ---------------------------------------------------------------------------------------------------------------------
Composite Peer Group Index $100 $108 $147 $146 $169 $133
- ---------------------------------------------------------------------------------------------------------------------
Russell 2000 Index $100 $108 $145 $153 $183 $176
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Composite Index $100 $120 $154 $200 $261 $316
=====================================================================================================================
14
CERTAIN TRANSACTIONS
During the 1999 fiscal year, the Company paid approximately $145,000 of
interest to certain entities owned by Ben Marcus, Stephen H. Marcus, Diane
Marcus Gershowitz and certain trusts for the benefit of members of their
families on nine debts of the Company owed to such entities. These debts are due
on demand and bear interest at the prime rate (7.75% at May 27, 1999). The
largest aggregate amount outstanding on the above debts during the Company's
1999 fiscal year was $1,882,000. As of the end of the 1999 fiscal year, the
amount outstanding on the nine debts was $1,827,000. Payment of both principal
and interest on these debts is current.
In May 1998, Marcus Hotels, Inc. ("Marcus Hotels"), an operating
subsidiary of the Company, entered into two agreements with Virtuem, Inc.
("Virtuem"), an entity controlled by Stephen H. Marcus and Diane Marcus
Gershowitz, to develop and manage a luxury hotel project in Chicago, Illinois.
Because the project has not yet been started, the fees to be paid by Virtuem to
Marcus Hotels are not yet ascertainable. The agreement for the development of
the hotel will require Virtuem to pay to Marcus Hotels a fee equal to 1.5% of
the budget for the development of the hotel, a portion of which will be paid in
monthly installments and the remainder of which will be paid upon completion of
the project. The agreement for the management of the hotel will require Virtuem
to pay to Marcus Hotels a fee equal to 3% of the gross revenues for the hotel.
In conjunction with this agreement, Marcus Hotels has advanced funds for the
benefit of Virtuem for costs associated with the development of the project. The
advances are secured by a mortgage on Virtuem's leasehold interest, bear
interest at the prime rate plus 1.0% (8.75% at May 27, 1999) and are due the
earlier of (i) the date Virtuem has funds available out of Net Cash Flow (as
defined in the management agreement), (ii) the date permanent financing is
closed, or (iii) in the event the management agreement is terminated, one year
after the date of such termination. As of the end of the 1999 fiscal year, the
amount due from Virtuem on these advances was $1,497,000.
As has been the case in prior years, during the 1999 fiscal year, the
Company leased automobiles from Selig Executive Leasing Co., Inc. Aggregate
lease payments were $467,000 in fiscal 1999. Allan H. Selig, a director of the
Company, is the President, Chief Executive Officer and sole shareholder of Selig
Executive Leasing Co., Inc.
The Company believes that all of the above transactions were
consummated on terms at least as favorable as could have been obtained from
non-affiliated third parties.
APPROVAL OF THE AMENDMENT TO THE 1995 EQUITY INCENTIVE PLAN
General
Out of the original 1,125,000 Common Shares authorized for issuance of
awards under the Company's 1995 Equity Incentive Plan (the "1995 Plan"), only
228,000 Common Shares remain available for additional grants of stock options
and other equity awards. As a result, the Board amended the 1995 Plan on August
12, 1999, subject to approval by the shareholders at the Meeting, to increase
Common Share availability by 2,000,000 Common Shares (the "Amendment"). In
addition, certain provisions of the 1995 Plan have been updated to reflect
current Securities and Exchange Commission regulations.
The purpose of the 1995 Plan is to promote the best interests of the
Company and its shareholders by providing key employees of the Company and its
subsidiaries with an opportunity to acquire or increase their proprietary
interest in the Company. It is intended that the 1995 Plan will promote
continuity of management and increased incentive and personal interest in the
welfare of the Company by those key employees who are primarily responsible for
shaping or carrying out the long-range plans of the Company and securing the
Company's continued growth and financial success.
15
The following summary discussion of the 1995 Plan, as amended, is
qualified in its entirety by reference to the full text of the 1995 Plan, as
amended, which is available without charge upon written request mailed to the
Secretary of the Company at the Company's address set forth on the face of this
Proxy Statement.
Administration
The 1995 Plan is required to be administered by the Compensation and
Nominating Committee ("Committee"), provided the Committee continues to consist
of not less than two directors who are "non-employee directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 ("Exchange
Act"). Among other functions, the Committee has the authority to establish rules
for the administration of the 1995 Plan; to select the key employees of the
Company to whom awards will be granted; to determine the types of awards to be
granted to key employees and the number of shares covered by such awards; to set
the terms and conditions of such awards; and to cancel, suspend and amend awards
granted to key employees to the extent authorized under the 1995 Plan. The
Committee may also determine whether the payment of any proceeds of any award
shall or may be deferred by a key employee participating in the 1995 Plan.
Except as otherwise provided in the 1995 Plan, determinations and
interpretations with respect thereto and any award agreements thereunder will be
in the sole discretion of the Committee, whose determination and interpretations
will be binding on all parties. Any key employee of the Company, including any
executive officer or employee-director of the Company who is not a member of the
Committee, is eligible to receive awards under the 1995 Plan; provided, however,
that Ben Marcus, Stephen H. Marcus, Diane Marcus Gershowitz and any other person
who beneficially owns, directly or indirectly, stock possessing more than 5% of
the total combined voting power of all classes of stock of the Company shall not
be eligible to receive awards under the 1995 Plan.
Awards Under the 1995 Plan; Available Shares
The 1995 Plan authorizes the granting to key employees of: (a) stock
options, which may be either incentive stock options ("ISOs") meeting the
requirements of Section 422 of the Internal Revenue Code (the "Code") or
nonqualified stock options; (b) stock appreciation rights ("SARs"); (c)
restricted stock; and (d) performance shares. The 1995 Plan, as amended,
provides that up to a total of 3,125,000 Common Shares (subject to adjustment as
described below) will be available for the granting of awards thereunder. Any
shares delivered pursuant to an award may be either authorized and unissued
Common Shares or treasury shares held by the Company.
Terms of Awards
Options. The exercise price per Common Share subject to an option
granted under the 1995 Plan will be determined by the Committee, provided that
the exercise price may not be less than 100% of the fair market value of a
Common Share on the date of grant. The term of an option granted under the 1995
Plan will be as determined by the Committee, provided that the term of an Option
may not exceed ten years. Options granted under the 1995 Plan will become
exercisable in such manner and within such period or periods and in such
installments or otherwise as determined by the Committee. Options will be
exercised by payment in full of the exercise price, either in cash or in whole
or in part by tendering Common Shares or other consideration having a fair
market value on the date of exercise equal to the option exercise price. All
ISOs granted under the 1995 Plan will also be required to comply with all other
terms of Section 422 of the Code.
SARs. An SAR granted under the 1995 Plan will confer on the holder a
right to receive, upon exercise thereof, the excess of (a) the fair market value
of one Common Share on the date of exercise over (b) the grant price of the SAR
as specified by the Committee. The grant price of an SAR under the 1995 Plan
will not be less than the fair market value of a Common Share on the date of
grant. The grant price, term, methods of exercise, methods of settlement
(including whether the holder of an SAR will be paid in cash, Common Shares or
other consideration) and any other terms and conditions of any SAR granted under
the 1995 Plan will be determined by the Committee.
16
Restricted Stock. Restricted Common Shares granted to key employees
under the 1995 Plan will be subject to such restrictions as the Committee may
impose, including any limitation on the right to vote such shares or receive
dividends thereon. The restrictions imposed on the shares may lapse separately
or in combination at such time or times, or in such installments or otherwise,
as the Committee may deem appropriate. The number of Common Shares which may be
granted to key employees as restricted stock shall not exceed 112,500 shares
(subject to adjustment as described below). Except as otherwise determined by
the Committee, upon termination of a key employee's employment for any reason
during the applicable restriction period, all shares of restricted stock still
subject to restriction will be subject to forfeiture by the key employee. Under
the 1995 Plan, the Committee will have the authority at its discretion to waive
in whole or in part any or all remaining restrictions with respect to shares of
restricted stock granted to a key employee.
Performance Shares. The 1995 Plan also provides for the granting of
performance shares to key employees. The Committee will determine the applicable
performance period, the performance goal or goals to be achieved during any
performance period, the proportion of payments, if any, to be made for
performance between the minimum and full performance levels, the restrictions
applicable to shares of restricted stock received upon payment of performance
shares if payment is made in such manner, and any other terms, conditions and
rights relating to the grant of performance shares. Performance goals
established by the Committee under the 1995 Plan may be based on one or more
measures such as return on shareholders' equity, earnings or such other standard
or standards deemed relevant by the Committee, measured internally or relative
to other organizations and before or after extraordinary items. Payment on
performance shares held by key employees will be made in Common Shares (which,
at the discretion of the Committee, may be shares of restricted stock) equal to
the number of performance shares payable. The Committee may provide that, during
a performance period, key employees will be paid cash amounts, with respect to
each performance share held by such key employees, equal to the cash dividend
paid on a Common Share. Participating key employees shall have no voting rights
with respect to performance shares held by them.
The Committee may at any time adjust performance goals (up or down) in
minimum or full performance levels (and any intermediate levels in proportion of
payments related thereto), adjust the manner in which performance goals are
measured, or shorten any performance period or waive in whole or part any or all
remaining restrictions with respect to shares of restricted stock issued in
payment of performance shares, if the Committee determines that economic,
competitive or other conditions, changes in generally accepted accounting
principles, changes in the Company's accounting policies, acquisitions or
dispositions by the Company, or the occurrence of other unusual events so
warrant.
Adjustments
If any dividend or other distribution, recapitalization stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of Common Shares subject to the 1995 Plan or other
securities of the Company, or other similar corporate transaction or event
affects the Common Shares so that an adjustment is appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the 1995 Plan, then the Committee will generally have
the authority to, in such manner as it deems equitable, adjust (a) the number
and type of Common Shares subject to the 1995 Plan and which thereafter may be
made the subject of awards; (b) the number and type of Common Shares subject to
outstanding awards; and (c) the grant, purchase or exercise price with respect
to any award, or may make provision for a cash payment to the holder of an
outstanding award.
Limits on Transferability
No award granted under the 1995 Plan may be assigned, sold, transferred
or encumbered by any participant, otherwise than by will, by designation of a
beneficiary, or by the laws of descent and distribution, except that a
participant may, to the extent allowed by the Committee and in a manner
specified by the
17
Committee or the award agreement, designate in writing a beneficiary to exercise
an award after the participant's death or transfer any award. Each award will be
exercisable during the participant's lifetime only by such participant or, if
permissible under applicable law, by the participant's guardian or legal
representative.
Amendment and Termination
The Board may amend, suspend or terminate the 1995 Plan at any time,
except that shareholder approval of any amendment to the 1995 Plan must first be
obtained if otherwise required by: (a) the Code or any rules thereunder; or (b)
the listing requirements of the New York Stock Exchange or any other principal
securities exchange or market on which the Common Shares are then traded.
Termination of the 1995 Plan shall not affect the rights of key employees with
respect to awards previously granted to them, and all unexpired awards shall
continue in force after termination except as they may lapse or be terminated by
their own terms and conditions. No award may be granted under the 1995 Plan
after the tenth anniversary of its effective date. The term of awards granted on
or prior to such tenth anniversary date, unless otherwise expressly provided,
may extend beyond such date.
Withholding
Not later than the date as of which an amount first becomes includible
in the gross income of a key employee for federal income tax purposes with
respect to any award under the 1995 Plan, the key employee will be required to
pay to the Company, or make arrangements satisfactory to the Company regarding
the payment of, any federal, state, local or foreign taxes of any kind required
by law to be withheld with respect to such amount. Unless otherwise determined
by the Committee, withholding obligations arising with respect to awards under
the 1995 Plan may be settled with Common Shares except that the key employee may
not settle such obligations with Common Shares that are part of, or are received
upon exercise of, the award that gives rise to the withholding requirement. The
obligations of the Company under the 1995 Plan are conditional on such payment
or arrangements, and the Company and any affiliate will, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the key employee. The Committee may establish such procedures as it deems
appropriate for the settling of withholding obligations with Common Shares.
Certain Federal Income Tax Consequences
Stock Options. The grant of a stock option under the 1995 Plan will
create no income tax consequences to the key employee or the Company. A key
employee who is granted a nonqualified stock option will generally recognize
ordinary income at the time of exercise in an amount equal to the excess of the
fair market value of the Common Shares at such time over the exercise price. The
Company will be entitled to a deduction in the same amount and at the same time
as ordinary income is recognized by the key employee. A subsequent disposition
of the Common Shares will give rise to capital gain or loss to the extent the
amount realized from the sale differs from the tax basis (i.e., the fair market
value of the Common Shares on the date of exercise). This capital gain or loss
will be a long-term or short-term capital gain or loss depending on the length
of time the Common Shares had been held.
In general, if a key employee holds the Common Shares acquired pursuant
to the exercise of an ISO for at least two years from the date of grant and one
year from the date of exercise, the key employee will recognize no income or
gain as a result of the exercise (except that the alternative minimum tax may
apply). Any gain or loss realized by the key employee on the disposition of the
Common Shares will be treated as a long-term capital gain or loss. No deduction
will be allowed to the Company. If either of these holding period requirements
is not met, the key employee will recognize ordinary income at the time of the
disposition equal to the lesser of (a) the gain realized on the disposition or
(b) the excess of the fair market value of the Common Shares on the date of
exercise over the exercise price. The Company will be entitled to a deduction in
the same amount and at the same time as ordinary income is recognized by the key
employee. Any additional gain
18
realized by the key employee over the fair market value at the time of exercise
will be treated as a capital gain. This capital gain will be a long-term or
short-term capital gain depending on the length of time the Common Shares had
been held.
Stock Appreciation Rights. The grant of an SAR will create no income
tax consequences for the key employee or the Company. Upon exercise of an SAR,
the key employee will recognize ordinary income equal to the amount of any cash
and the fair market value of any Common Shares or other property received,
except that if the key employee receives an option, shares of restricted stock
or performance shares upon exercise of an SAR, recognition of income may be
deferred in accordance with the rules applicable to such other awards. The
Company will be entitled to a deduction in the same amount and at the same time
as income is recognized by the key employee.
Restricted Stock. A key employee will not recognize income upon the
award of restricted stock under the 1995 Plan unless the election described
below is made. However, an individual who has not made such an election will
recognize ordinary income at the end of the applicable restriction period in an
amount equal to the fair market value of the restricted stock at such time. The
Company will be entitled to a corresponding deduction in the same amount and at
the same time as the key employee recognizes income. Any otherwise taxable
disposition of the restricted stock after the end of the applicable restriction
period will result in capital gain or loss (long-term or short-term depending on
the length of time the restricted stock is held after the end of the applicable
restriction period). Dividends paid in cash and received by a key employee prior
to the end of the applicable restriction period will constitute ordinary income
to the key employee in the year paid. The Company will be entitled to a
corresponding deduction for such dividends. Any dividends paid in stock will be
treated as an award of additional restricted stock subject to the tax treatment
described herein.
A key employee may, within 30 days after the date of the award of
restricted stock, elect to recognize ordinary income as of the date of the award
in an amount equal to the fair market value of such restricted stock on the date
of the award. The Company will be entitled to a corresponding deduction in the
same amount and at the same time as the key employee recognizes income. If the
election is made, any cash dividends received with respect to the restricted
stock will be treated as dividend income to the key employee in the year of
payment and will not be deductible by the Company. Any otherwise taxable
disposition of the restricted stock (other than by forfeiture) will result in
capital gain or loss (long-term or short-term depending on the holding period).
If the key employee who has made an election subsequently forfeits the
restricted stock, the key employee will not be entitled to deduct any loss. In
addition, the Company would then be required to include as ordinary income the
amount of the deduction it originally claimed with respect to such shares.
Performance Shares. The grant of performance shares will create no
income tax consequences for the key employee or the Company. Upon the receipt of
cash, Common Shares or other property at the end of the applicable performance
period, the key employee will recognize ordinary income equal to the amount of
any cash and the fair market value of any shares or other property received,
except that if the key employee receives an option, shares of restricted stock
or SARs in payment of performance shares, recognition of income may be deferred
in accordance with the rules applicable to such other awards. In addition, the
key employee will recognize ordinary income upon the receipt of cash payments
that are based on the amount of dividends paid by the Company with respect to
Common Shares. The Company will be entitled to a deduction in the same amount
and at the same time as income is recognized by the key employee.
Awards Under the Plan
During fiscal 1999, the Committee approved grants of stock options and
performance shares to executive officers and others that are not subject to
shareholder approval of the 1995 Plan, as amended. See "Option Grants in 1999
Fiscal Year." The Committee has not approved any grants of awards that require
shareholder approval of the 1995 Plan, as amended.
19
The Company cannot currently determine the number of shares or the
types of shares that may be granted to eligible participants under the 1995
Plan, as amended, in the future. Such determinations will be made from time to
time by the Committee.
On August 13, 1999, the last reported sales price per Common Share on
the New York Stock Exchange was $12.00.
Vote Required
The affirmative vote of the holders of a majority of the votes
represented by Common Shares and Class B Shares represented and voted together
as a single class at the Meeting is required to approve the Amendment. Any votes
represented by Common Shares and/or Class B Shares not voted at the Meeting,
whether due to broker nonvotes or otherwise (except abstentions), will have no
impact regarding the proposal to approve the Amendment. Common Shares and Class
B Shares as to which holders abstain from voting will be treated as votes
against approval of the Amendment.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT. COMMON
SHARES OR CLASS B SHARES REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED "FOR" THE AMENDMENT.
OTHER MATTERS
Ernst & Young LLP acted as the independent auditors of the Company in
fiscal 1999 and it is anticipated that such firm will be similarly appointed to
act in fiscal 2000. Representatives from Ernst & Young LLP are expected to be
present at the Meeting and will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate shareholder questions.
The Company has filed an Annual Report on Form 10-K with the Securities
and Exchange Commission for its 1999 fiscal year which ended on May 27, 1999.
The Company will provide a copy of such Form 10-K (excluding exhibits) without
charge to each person who is a record or beneficial owner of Common Shares or
Class B Shares on the Record Date and who submits a written request therefor.
Exhibits to the Form 10-K will be furnished upon payment of the fee described in
the list of exhibits accompanying the copy of Form 10-K. Requests for copies of
the Form 10-K and any exhibits thereto should be addressed to Thomas F.
Kissinger, General Counsel and Secretary, The Marcus Corporation, 250 East
Wisconsin Avenue, Suite 1700, Milwaukee, Wisconsin 53202-4220.
The Board does not intend to present at the Meeting any matters for
shareholder action other than the matters described in the Notice of Annual
Meeting. The Board knows of no other matters to be brought before the Meeting
which will require the vote of shareholders. If any other business or matters
should properly come before the Meeting, the proxies named in the accompanying
proxy will vote on such business or matters in accordance with their best
judgment.
A shareholder wishing to include a proposal in the Company's proxy
statement for its 2000 annual meeting of shareholders pursuant to Rule 14a-8
under the Exchange Act must forward the proposal to the Company by April 29,
2000. In addition, a shareholder who otherwise intends to present business at
the 2000 annual meeting of shareholders (including, nominating persons for
election as directors) must comply with the requirements set forth in the
Company's By-laws. Among other things, to bring business before an annual
meeting, a shareholder must give written notice thereof, complying with the
By-laws, to the Secretary of the Company not later than 45 days prior to the
date in the current year corresponding to the date on which the Company first
mailed its proxy materials for the prior year's annual meeting. Accordingly, if
the Company does not receive notice of a shareholder proposal submitted
otherwise than pursuant to Rule 14a-8 prior to July 13, 2000, then the notice
will be considered untimely and the Company will not be required to present such
20
proposal at the 2000 annual meeting of shareholders. If the Board of Directors
chooses to present such proposal at the 2000 annual meeting of shareholders,
then the persons named in proxies solicited by the Board of Directors for the
1999 annual meeting of shareholders may exercise discretionary voting power with
respect to such proposal.
The cost of soliciting proxies will be paid by the Company. The Company
expects to solicit proxies primarily by mail. Proxies may also be solicited
personally and by telephone by certain officers and regular employees of the
Company. The Company will reimburse brokers and other holders of record for
their expenses in communicating with the persons for whom they hold Common
Shares or Class B Shares. It is not anticipated that anyone will be specially
engaged to solicit proxies or that special compensation will be paid for that
purpose, but the Company reserves the right to do so should it conclude that
such efforts are needed.
On Behalf of the Board of Directors
Thomas F. Kissinger
General Counsel and Secretary
Milwaukee, Wisconsin
August 30, 1999
21
[White]
THE MARCUS CORPORATION
PROXY FOR HOLDERS OF COMMON STOCK
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 4, 1999
The undersigned hereby constitutes and appoints STEPHEN H. MARCUS and THOMAS F.
KISSINGER, and each of them, with the power of substitution, as proxies of the
undersigned, to vote any and all shares of Common Stock of THE MARCUS
CORPORATION which the undersigned is entitled to vote at the 1999 Annual Meeting
of Shareholders to be held at 10:00 A.M., local time, October 4, 1999, at
Westown Cinemas, Waukesha, Wisconsin, and at any adjournment thereof, upon such
business as may properly come before the meeting, including the following items
as more completely described in the Proxy Statement for the meeting.
The undersigned acknowledges receipt of the Notice of the Annual Meeting, the
Proxy Statement and the 1999 Annual Report to Shareholders and hereby revokes
any other proxy heretofore executed by the undersigned for such meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, the proxy will be voted
FOR all nominees for director and on such other matters as may properly come
before the meeting or any adjournment thereof in accordance with the best
judgment of the proxies named herein.
* DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED *
THE MARCUS CORPORATION 1999 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1. - Diane Marcus Gershowitz 2. - Timothy E. Hoeksema
3. - Stephen H. Marcus 4. - Daniel F. McKeithan, Jr.
5. - Bruce J. Olson 6. - Allan H. Selig
7. - Philip L. Milstein 8. - Bronson J. Haase
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed to the left to vote for all
(except as nominees listed to
specified below). the left.
(Instructions: To withhold authority to vote for any indicated nominee, write
the number(s) of the nominee(s) in the box provided to the right.)
-----------------------------------------------
*
-----------------------------------------------
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1995 EQUITY INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Upon such other business as may properly come before the annual meeting or
any adjournment thereof in accordance with the best judgment of such proxies.
Check appropriate box Date ______________ NO. OF SHARES
Indicate changes below:
Address Change? [ ] Name Change? [ ]
--------------------------------
--------------------------------
Signature(s) in Box
Please sign exactly as your name
appears on your stock
certificate. Joint owners should
each sign personally. A
corporation should sign in full
corporate name by a duly
authorized officer. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full title
as such.
[Blue]
THE MARCUS CORPORATION
PROXY FOR HOLDERS OF CLASS B COMMON STOCK
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 4, 1999
The undersigned hereby constitutes and appoints STEPHEN H. MARCUS and THOMAS F.
KISSINGER, and each of them, with the power of substitution, as proxies of the
undersigned, to vote any and all shares of Class B Common Stock of THE MARCUS
CORPORATION which the undersigned is entitled to vote at the 1999 Annual Meeting
of Shareholders to be held at 10:00 A.M., local time, October 4, 1999, at
Westown Cinemas, Waukesha, Wisconsin, and at any adjournment thereof, upon such
business as may properly come before the meeting, including the following items
as more completely described in the Proxy Statement for the meeting.
The undersigned acknowledges receipt of the Notice of the Annual Meeting, the
Proxy Statement and the 1999 Annual Report to Shareholders and hereby revokes
any other proxy heretofore executed by the undersigned for such meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, the proxy will be voted
FOR all nominees for director and on such other matters as may properly come
before the meeting or any adjournment thereof in accordance with the best
judgment of the proxies named herein.
* DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED *
THE MARCUS CORPORATION 1999 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1. - Diane Marcus Gershowitz 2. - Timothy E. Hoeksema
3. - Stephen H. Marcus 4. - Daniel F. McKeithan, Jr.
5. - Bruce J. Olson 6. - Allan H. Selig
7. - Philip L. Milstein 8. - Bronson J. Haase
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed to the left to vote for all
(except as nominees listed to
specified below). the left.
(Instructions: To withhold authority to vote for any indicated nominee, write
the number(s) of the nominee(s) in the box provided to the right.)
-----------------------------------------------
*
-----------------------------------------------
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1995 EQUITY INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Upon such other business as may properly come before the annual meeting or
any adjournment thereof in accordance with the best judgment of such proxies.
Check appropriate box Date ______________ NO. OF SHARES
Indicate changes below:
Address Change? [ ] Name Change? [ ]
--------------------------------
--------------------------------
Signature(s) in Box
Please sign exactly as your name
appears on your stock
certificate. Joint owners should
each sign personally. A
corporation should sign in full
corporate name by a duly
authorized officer. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full title
as such.