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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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Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Cooker Restaurant Corporation
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COOKER RESTAURANT CORPORATION
5500 VILLAGE BOULEVARD
WEST PALM BEACH, FLORIDA 33407
1998 ANNUAL MEETING OF SHAREHOLDERS
March 30, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of Cooker Restaurant Corporation which will be held at 9:00 a.m., Eastern
Daylight Time, on May 4, 1998 at our headquarters, 5500 Village Boulevard, West
Palm Beach, Florida. The matters on the meeting agenda are described in the
Notice of 1998 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 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 4, 1998
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, May 4, 1998 at 9:00 a.m., Eastern Daylight Time, for
the following purposes:
1. To elect three 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 March 19, 1998 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
March 30, 1998
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COOKER RESTAURANT CORPORATION
----------------------------
1998 ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 1998
----------------------------
PROXY STATEMENT
DATED MARCH 30, 1998
----------------------------
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 1998 Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on May 4, 1998 and
any adjournment thereof. This Proxy Statement and the accompanying proxy card
are first being mailed to shareholders on or about April 7, 1998.
Voting Rights. Shareholders of record at the close of business on March 19,
1998 are entitled to notice of and to vote at the Annual Meeting. As of that
date, there were approximately 10,023,000 Common Shares of the Company, without
par value ("Common Shares"), issued and outstanding. Each shareholder of record
on March 19, 1998 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 David L.
Hobson, Robin V. Holderman and G. Arthur Seelbinder 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
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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.
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, three 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 2001 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:
DAVID L. HOBSON, age 61, 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 46, has been a director of the Company since 1986.
Mr. Holderman has been an Executive Vice President of Corporate Development of
Karrington Health, Inc., an assisted living facilities operating and development
company, since November of 1996. 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 54, 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. Mr.
Seelbinder was a general partner in a single-asset real estate limited
partnership (the "Partnership") that owned and managed an office building in
central Ohio. As part of the foreclosure process, a state court appointed a
receiver to take over the property owned by the Partnership in December, 1994.
The Partnership filed a Chapter 11 petition in the United States Bankruptcy
Court for the Southern District of Ohio, Eastern Division, in December, 1995.
The Bankruptcy Court dismissed the case in December, 1996.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 1999 ANNUAL MEETING:
HENRY R. HILLENMEYER, age 54, 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 company. 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.
MARGARET T. MONACO, age 50, has served as a director of the Company since
1994. She has been President of Probus Advisors, a management/financial
consulting firm, since July 1993. From October 1987 to June 1993, she
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was Vice President and Treasurer of The Limited, Inc. She is a director of
Barnes & Noble, Inc. and Crown America Realty Trust. She has an MBA degree from
Columbia Graduate School of Business Administration.
PHILLIP L. PRITCHARD, age 48, has been a director of the Company since 1994
and has served as the President and Chief Operating Officer of the Company since
December 1994. Prior to joining the Company, Mr. Pritchard spent 22 years with
General Mills Restaurants, Inc., ("GMRI"). Most recently, Mr. Pritchard served
as Executive Vice President, Operations for GMRI's Red Lobster restaurants from
1986 through 1992 and Executive Vice President, Operations for GMRI's China
Coast restaurants from 1992 to 1993. He has an MBA degree from Rollins College
Graduate School of Business Administration.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2000 ANNUAL MEETING:
GLENN W. COCKBURN, age 42, 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 59, 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., Pipeliner Systems,
Inc., Cheryl & Co., Inc., SBC Advertising, Christy & Associates, Select Comfort
and Audio Environments, 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.
HARVEY M. PALASH, age 64, 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.
BOARD OF DIRECTORS MEETINGS
The Board of Directors held nine meetings in fiscal 1997 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, Margaret T. Monaco
(Chair) and Harvey M. Palash as of the end of fiscal 1997) 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 1997.
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
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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, 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, and provides instructions to the trustee of
the Company's employee stock ownership plan (the "ESOP") with respect to the
voting of unallocated Common Shares thereunder. The Compensation Committee held
five meetings in fiscal 1997.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth, as of February 28, 1998, 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) 964,949 (c)(d) 9.4%
Glenn W. Cockburn 350,497 (c)(d) 3.5%
Henry R. Hillenmeyer 14,500 (c)(e)(f) (m)
David L. Hobson 58,874 (c)(e) (m)
Robin V. Holderman 34,818 (c) (m)
David T. Kollat 130,244 (c)(e) 1.3%
Margaret T. Monaco 14,500 (c) (m)
Harvey M. Palash 180,000 1.8%
Phillip L. Pritchard 384,428 (c)(d) 3.8%
David C. Sevig 53,555 (c)(g) (m)
All directors and executive officers
as a group (11 persons) 2,195,339 (c)(d)(e) 20.4%
Dimensional Fund Advisors Inc. 687,962 (h) 6.9%
Kennedy Capital Management, Inc. 630,600 (i) 6.3%
Public Employees Retirement System of Ohio 600,000 (j) 6.0%
The TCW Group, Inc. 534,200 (k) 5.3%
Wellington Management Company, LLP 567,000 (l) 5.7%
- - ----------------------
(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) G. Arthur Seelbinder's 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 February 28, 1998; for Mr. Seelbinder, 220,873 Common
Shares; for Mr. Cockburn, 140,141 Common Shares; for Mr. Hillenmeyer, 7,500
Common Shares; for Mr. Hobson, 19,442 Common Shares; for Mr. Holderman,
32,736 Common Shares; for Mr. Kollat, 56,612 Common Shares; for Ms. Monaco,
7,500 Common Shares; for Mr. Pritchard, 198,000 Common Shares; for Mr.
Sevig, 30,750 Common Shares; and for all directors and executive officers
as a group, 719,908 Common Shares.
(d) Includes Common Shares beneficially owned through the ESOP; for Mr.
Seelbinder, 5,953 Common Shares; for Mr. Cockburn, 5,355 Common Shares; for
Mr. Pritchard, 524 Common Shares; and for all directors and executive
officers as a group, 14,723 Common Shares.
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(e) The ESOP holds approximately 239,000 Common Shares, constituting
approximately 2.4% percent of the outstanding Common Shares as of February
28, 1998. Margaret A. Epperson, Secretary and Treasurer of the Company, is
the trustee of the ESOP. Under certain circumstances, Ms. Epperson has
investment power over Common Shares held by the ESOP and may, to such
extent, be deemed the beneficial owner of such shares. Messrs. Kollat,
Hobson, and Hillenmeyer, as members of the Compensation Committee, have
shared voting and, in certain circumstances, investment power over
unallocated Common Shares held by the ESOP and may, to such extent, be
deemed the beneficial owners of such shares. Messrs. Kollat, Hobson,
Hillenmeyer and Holderman disclaim beneficial ownership of all Common
Shares held by the ESOP.
(f) Includes 3,000 Common Shares owned of record by his spouse and children, as
to which beneficial ownership is disclaimed.
(g) Includes 5,019 Common Shares owned of record by his spouse, as to which
beneficial ownership is disclaimed.
(h) 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 448,862 Common Shares and sole investment power
with regard to 687,962 Common Shares as of December 31, 1997, 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 1997 is the source of information
concerning Dimensional reported in this Proxy Statement.
(i) Kennedy Capital Management, Inc.'s ("KCM's") address is 10829 Olive
Boulevard, St. Louis, Missouri 63141. KCM has sole voting power with regard
to 564,600 Common Shares and sole investment power with regard to 630,600
Common Shares. A Schedule 13G filed by KCM with the Securities and Exchange
Commission dated February 10, 1998 is the source of information concerning
KCM reported in this Proxy Statement.
(j) Public Employees Retirement System of Ohio's ("PERSO's") address is 277
East Town Street, Columbus, Ohio 43215-4642. A Schedule 13G filed by PERSO
with the Securities and Exchange Commission dated February 13, 1998 is the
source of information concerning PERSO reported in this Proxy Statement.
(k) The TCW Group, Inc.'s ("TCW") address is 865 South Figueroa Street, Los
Angeles, California 90017. TCW is deemed to beneficially own 534,200 Common
Shares as of December 31, 1997. 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, 1998 is the source of information
concerning TCW reported in this Proxy Statement.
(l) Wellington Management Company, LLP's ("WMC's") address is 75 State Street,
Boston, Massachusetts 02109. WMC has shared voting power with regard to
387,000 Common Shares and shared investment power with regard to 567,000
Common Shares. A Schedule 13G filed by WMC with the Securities and Exchange
Commission dated January 13, 1998 is the source of information concerning
WMC reported in this Proxy Statement.
(m) Less than one percent.
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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
Annual Compensation Underlying
Name and ------------------------------ Options All Other
Principal Position Year Salary Bonus (Shares) Compensation
- - ------------------ ---- ------ ----- -------- ------------
G. Arthur Seelbinder 1997 $231,357 $142,380 160,000 $ ---
Chairman of the Board- 1996 215,000 437,259 75,000 2,190 (a)
Chief Executive Officer 1995 175,000 314,606 --- 3,660 (a)
Phillip L. Pritchard 1997 191,357 81,648 42,000 ---
President-Chief 1996 180,000 256,860 150,000 2,190 (a)
Operating Officer 1995 150,000 105,000 --- 3,660
Glenn W. Cockburn 1997 155,734 40,500 26,000 ---
Senior Vice-President 1996 143,750 141,574 25,000 2,190 (a)
Operations 1995 125,000 95,250 --- 43,992 (a)(b)
David C. Sevig 1997 131,684 33,750 23,000 ---
Vice President-Chief 1996 115,000 92,019 20,000 2,190 (a)
Financial Officer 1995(c) 48,461 5,250 30,000 1,352
- - ----------------------
(a) The amount listed is an allocation to the account of the Named Executive in
the ESOP, which is an employee stock ownership plan under the Code. The
allocations for 1997 have not been made. Any amounts shown for 1995 and
1996 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 $11.25 at the end of
1995 and $11.75 at the end of 1996. The Company may, in its sole
discretion, make contributions to the ESOP in the form of cash or Common
Shares. These contributions and forfeiture of invested accounts are
allocated to the individual account of every employee of the Company who is
age 21 and employed on December 31 of each year in proportion to such
employee's relative compensation for the year. The accounts become 20
percent vested after three years of employment increasing to 100 percent
vested after seven years of employment. Upon termination of employment, the
vested amount of his account is delivered to the terminated employee.
(b) This includes a one-time moving allowance in connection with the relocation
of the Company's headquarters from Columbus, Ohio to West Palm Beach,
Florida.
(c) Hired June 5, 1995.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options to the Named Executives during the last fiscal year.
Individual Grants (a) Grant Date Value
------------------------------------------------------------- ----------------
Number of Percent of
Securities Total Options
Underlying granted Exercise of
Options Granted to Employees Base Price Expiration Grant Date
Name (shares) in Fiscal Year ($/share) Date Present Value $
---- ------- -------------- --------- ---------- ---------------
G. Arthur Seelbinder 60,000(a) 17.2% $10.875 01/21/07 $298,800(d)
16,667(b) 4.8% $ 11.50 10/19/99 $ 88,168(e)
16,665(b) 4.8% $ 11.50 10/17/00 $ 88,158(e)
66,668(c) 19.1% $ 11.50 11/15/04 $352,674(e)
Glenn W. Cockburn 26,000(a) 7.5% $10.875 01/21/07 $129,480(d)
Phillip L. Pritchard 42,000(a) 12.1% $10.875 01/21/07 $209,160(d)
David C. Sevig 23,000(a) 6.6% $10.875 01/21/07 $114,540(d)
- - ----------------------
(a) These options were granted on January 20, 1997 and the exercise price is
the market value of the Common Shares on that date. Each option vests in
four equal installments on each of the first four anniversaries of the date
of 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 March 4, 1997 and the exercise price is the
market value of the Common Shares on that date. 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) These options were granted on March 4, 1997 and the exercise price is the
market value of the Common Shares on that date. These options vest in four
equal installments on each of the first four anniversaries of the date of
grant and lapse 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."
(d) The per share weighted-average fair value of stock options during 1997 was
$4.98 on the date of grant using the Black Scholes option-pricing model
with the following weighted average assumptions: expected dividend yield of
.60 percent, risk-free interest rate of 6.50%, an expected life of 7 years,
and volatility of 33%.
(e) The per share weighted average fair value of these stock options during
1997 was $5.29 on the date of grant using the Black Scholes option-pricing
model with the following weighted average assumptions: expected dividend
yield of .60%, risk-free interest rate of 6.59%, an expected life of 7
years, and volatility of 33%.
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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 Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Value Options at Fiscal Year-End Options at Fiscal Year-End
Name on Exercise Realized (Exercisable/Unexerciseable) (Exercisable/Unexerciseable)
---- ----------- -------- ---------------------------- ----------------------------
G. Arthur Seelbinder 100,000 $575,913 187,123 / 227,932 $384,716 / $200,463
Glenn W. Cockburn 0 0 127,390 / 67,354 $499,565 / $ 73,463
Phillip L. Pritchard 0 0 150,000 / 192,000 $351,563 / $117,188
David C. Sevig 0 0 20,000 / 53,000 $ 16,875 / $ 16,875
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 (1993), through and including the end of the Company's last completed
fiscal year (1997). 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.
Common Share Performance
- - --------------------------------------------------------------------------------
Years Common Shares Russell 2000 VLRI
- - --------------------------------------------------------------------------------
Begin 100.00 100.00 100.00
- - --------------------------------------------------------------------------------
1993 58.01 118.91 96.21
- - --------------------------------------------------------------------------------
1994 27.15 116.55 75.90
- - --------------------------------------------------------------------------------
1995 51.24 149.70 100.07
- - --------------------------------------------------------------------------------
1996 53.20 174.30 85.97
- - --------------------------------------------------------------------------------
1997 44.02 213.00 76.75
- - --------------------------------------------------------------------------------
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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 1997
through 2001, 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,
ESOP) 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 72 percent for the first half of 1997 and was 0 percent
for the second half of 1997. The cumulative average percentage payout under the
incentive bonus plan through the end of fiscal year 1997 is 91.0 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 March 4, 1997, the
Company granted stock options for 100,000 Common Shares to G. Arthur Seelbinder,
Chief Executive Officer and Chairman of the Board.
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In 1997, 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."
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 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, Phillip
L. Pritchard, Glenn W. Cockburn, David C. Sevig, and Margaret A. Epperson.
10
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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 1997 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
1997, 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 options on 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 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"). The loan (the "Loan") from the Bank
bears interest at the Bank's prime rate or LIBOR plus 2%, is 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 was scheduled to
expire in the first quarter of 1998. The term of the loan has been extended
until August 28, 1998. At March 24, 1998, the amount of the Loan outstanding,
including capitalized and accrued interest, was approximately $5,330,000 and the
undiscounted fair market value of the pledged shares was approximately
$5,344,000. The guaranty secures the Loan until it is repaid or refinanced
without a guaranty. The Company would fund any obligation it incurs under the
terms of its guaranty from additional borrowings under its Credit Agreement. The
Company does not believe that it will be required to make any material payment
under the guaranty in 1998; however, there can be no assurance that the Loan
will be repaid or refinanced on terms that will not result in continuing the
guaranty or in a material payment. 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 one-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. Mr. Seelbinder has also agreed to make payments
on the Loan in amounts sufficient to ensure that the Loan balance on January 31,
1999 does not exceed 90 percent of the Loan balance on January 31, 1998.
On March 4, 1997, Mr. Seelbinder exercised options to purchase 100,000
Common Shares, sold the shares in a block transaction through a broker at $11.50
per share, the then current trading price on the New York Stock Exchange,
11
15
and the Company purchased 100,000 Common Shares in a block transaction through
the same broker at the same time. The transaction was approved by the Board of
Directors in advance. The gain on the transaction is taxable to Mr. Seelbinder
and deductible by the Company. $438,000 of the proceeds of this transaction
after payment of the option exercise price and withholding taxes were used to
reduce the principal of the Loan.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP ("KPMG") served as the Company's independent
accountants for the fiscal year 1997 which ended December 28, 1997. On August
12, 1996, the Company engaged KPMG as its independent accountants to audit its
financial statements for the fiscal year 1996 which ended December 29, 1996.
Price Waterhouse LLP ("Price Waterhouse") served as the Company's independent
accountants for the fiscal year 1995 (ended December 31, 1995) and 1994 (ended
January 1, 1995) and audited the financial statements of the Company for the
three fiscal years ended December 31, 1995. The Audit Committee of the Company
approved the engagement of KPMG and the consequent non-reengagement of Price
Waterhouse on August 12, 1996. Price Waterhouse's report on the financial
statements of the Company for each of the fiscal years 1994 and 1995 did not
contain an adverse opinion nor a disclaimer of opinion nor was such report
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with its audits for the Company's fiscal years 1995 and 1994 and
the period of the fiscal year 1996 ending on the date of the engagement of KPMG,
the Company had no disagreements with Price Waterhouse 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
Price Waterhouse 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.
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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 1999 must be received by the Company before December 9, 1998, 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 1999 Annual Meeting, this notice must be delivered to
the Secretary of the Corporation before December 9, 1998.
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COOKER RESTAURANT CORPORATION THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints G. Arthur Seelbinder, Phillip L. Pritchard
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
March 19, 1998, at the Annual Meeting of Shareholders to be held on May 4, 1998,
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: David L. Hobson, Robin V. Holderman and G. Arthur Seelbinder
[ ] 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.
THIS PROXY, 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 TO ELECT ALL NOMINEES LISTED ABOVE.
(Continued, and to be dated and signed, on the reverse side.)
(Continued from the other side.)
The undersigned hereby acknowledges receipt with this Proxy of a copy of
the Notice of Annual Meeting and Proxy Statement dated March 30, 1998 and a copy
of the Company's 1997 Annual Report to Shareholders.
Date: , 1998
-------------------------------------
Signature
-------------------------------------
Signature (if held jointly)
IMPORTANT: Please sign exactly as
name or names appear to the left.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
Corporations should sign in their
full corporate name by their
president or other authorized
officer. If a partnership, please
sign in partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.