SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
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[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BUCA, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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[LOGO OF BUCA DI BEPPO]
BUCA, INC.
1300 Nicollet Mall, Suite 5003
Minneapolis, Minnesota 55403
(612) 288-2382
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 12, 2001
VOTING METHOD
The accompanying Proxy Statement describes important issues affecting BUCA,
Inc. If you are a shareholder of record, you have the right to vote your
shares by telephone or by mail. You may also revoke your proxy any time before
the Annual Meeting. Please help us save time and postage costs by voting by
telephone. Voting by telephone is available 24 hours a day and your vote will
be confirmed and posted immediately. To vote:
1. BY TELEPHONE
a. On a touch-tone telephone, call toll-free 1-800-240-6326 24 hours a
day, seven days a week.
b. Enter the 3-digit company number and 7-digit control number, which
are located in the upper right hand corner of the proxy card.
c. Follow the simple recorded instructions.
2. BY MAIL (Do not mail the proxy card if you are voting by telephone.)
a. Mark your selections on the proxy card.
b. Date and sign your name exactly as it appears on your proxy card.
c. Mail the proxy card in the enclosed postage-paid envelope.
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted.
Your vote is important. Thank you for voting.
[LOGO OF BUCA DI BEPPO]
BUCA, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME..................... 10:00 a.m., Central Daylight Time, on Tuesday,
June 12, 2001.
PLACE.................... Hyatt Hotel
1300 Nicollet Mall
Minneapolis, Minnesota 55403
ITEMS OF BUSINESS........ (1) To elect two directors for three-year terms.
(2) To amend our 1996 Stock Incentive Plan.
(3) To approve the appointment of Deloitte &
Touche LLP auditors.
(4) To act upon any other business that may
properly come before the meeting.
RECORD DATE.............. You may vote if you are a shareholder of record
at the close of business on April 25, 2001.
ANNUAL REPORT............ Our 2000 Annual Report has been included in this
package.
PROXY VOTING............. It is important that your shares be represented
and voted at the Annual Meeting. Please vote in
one of these two ways:
(1) USE THE TOLL-FREE TELEPHONE NUMBER shown on
the proxy card,
OR
(2) MARK, SIGN, DATE AND PROMPTLY RETURN the
enclosed proxy card in the postage-paid
envelope.
You may revoke any proxy at any time prior to its
exercise at the Annual Meeting.
/s/ Greg A. Gadel
Greg A. Gadel
SECRETARY
Approximate Date of Mailing of
Proxy Material: May 2, 2001
TABLE OF CONTENTS
Page
----
GENERAL INFORMATION ABOUT THE MEETING AND VOTING.......................... 1
What is the purpose of the Annual Meeting?.............................. 1
Who may vote?........................................................... 1
Who may attend the Annual Meeting?...................................... 1
What constitutes a quorum?.............................................. 1
How may I vote?......................................................... 1
May I vote confidentially?.............................................. 2
May I change my vote?................................................... 2
How does the board recommend I vote?.................................... 2
How many votes are required to approve each item?....................... 2
What if other matters are presented for determination at the Annual
Meeting?............................................................... 2
Who pays the expenses incurred in connection with the solicitation of
proxies?............................................................... 3
How do I get additional copies of the Annual Report?.................... 3
ITEM ONE--ELECTION OF DIRECTORS........................................... 4
Director Nominees....................................................... 4
General Information About the Board of Directors........................ 4
Director Compensation................................................... 5
Board Committees........................................................ 5
Board Meetings During Fiscal 2000....................................... 5
Compensation Committee Interlocks and Insider Participation............. 6
Certain Transactions.................................................... 6
Stock Ownership of Directors, Officers and Principal Shareholders....... 7
Executive Compensation.................................................. 9
Summary Compensation Table............................................ 9
Fiscal 2000 Stock Option Grants Table................................. 9
Aggregated Option Exercises in Fiscal 2000 and Fiscal Year-End Option
Value Table.......................................................... 10
Report of the Compensation Committee on Executive Compensation.......... 11
Report of the Audit Committee........................................... 13
Independent Auditors' Fees.............................................. 13
Financial Information Systems Design and Implementation Fees............ 13
All Other Fees.......................................................... 13
Auditor Independence.................................................... 13
ITEM TWO--APPROVAL OF AMENDMENTS TO OUR 1996 STOCK INCENTIVE PLAN......... 14
Introduction............................................................ 14
General Description of Our 1996 Stock Incentive Plan.................... 14
Plan Administration..................................................... 14
Eligibility............................................................. 14
Types of Awards Under the Plan.......................................... 15
Acceleration of Awards, Lapse of Restrictions, Forfeiture............... 16
Adjustments, Modifications, Termination................................. 16
Federal Tax Considerations.............................................. 16
Registration with the SEC............................................... 17
ITEM THREE--APPOINTMENT OF INDEPENDENT AUDITORS........................... 18
ADDITIONAL INFORMATION.................................................... 18
Comparison of Total Shareholder Return.................................. 18
Section 16(a) Beneficial Ownership Reporting Compliance................. 19
Shareholder Proposals................................................... 19
BUCA, INC.
1300 Nicollet Mall, Suite 5003
Minneapolis, Minnesota 55403
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
June 12, 2001
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The board of directors of BUCA, Inc. (the "company," "we" or "us") is
soliciting the enclosed proxy for the Annual Meeting of Shareholders to be
held at the Hyatt Hotel, 1300 Nicollet Mall, Minneapolis, Minnesota, on
Tuesday, June 12, 2001, at 10:00 a.m., Central Daylight Time, and for any
adjournment of the meeting.
GENERAL INFORMATION ABOUT THE MEETING AND VOTING
What is the purpose of the Annual Meeting?
At our Annual Meeting, shareholders will act upon the matters described in
the accompanying notice of meeting, including the election of two directors,
approval of amendments to the 1996 Stock Incentive Plan and appointment of our
independent auditors. In addition, our management will report on the
performance of the company during fiscal 2000 and respond to questions from
shareholders.
Who may vote?
Only shareholders of record of our common stock at the close of business on
the record date, April 25, 2001, are entitled to receive notice of the Annual
Meeting and to vote the shares of common stock that they held on the record
date, at the meeting, or any postponement or adjournment of the meeting. As of
the record date for the Annual Meeting, each share of common stock had one
vote on each matter to be voted upon.
Who may attend the Annual Meeting?
All shareholders as of the record date, or their duly appointed proxies,
may attend the meeting. Seating, however, is limited. Admission to the meeting
is on a first-come, first-served basis and seating begins at approximately
9:30 a.m. Cameras and recording devices are not permitted at the meeting.
Please note that if you hold shares in "street name" (that is, through a
bank, broker or other nominee), you will need to bring personal identification
and a copy of a statement reflecting your stock ownership as of the record
date and check in at the registration desk at the meeting.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of common stock outstanding on the record date will constitute a
quorum, permitting the meeting to conduct its business. As of the record date,
16,160,502 shares of our common stock were outstanding. Proxies received but
marked as abstentions will be included in the calculation of the number of
shares considered to be present at the meeting for purposes of determining
whether there is a quorum.
How may I vote?
You may vote by completing and properly signing the enclosed proxy card and
returning it to the company in the envelope provided. If you are a registered
shareholder (whose shares are owned in your name and not in "street name") and
attend the meeting, you may deliver your completed proxy card in person. In
addition,
1
registered shareholders may vote by telephone by following the instructions on
the inside of the front cover of these materials. "Street name" shareholders
who wish to vote at the meeting will need to obtain a proxy form from the
institution that holds their shares.
May I vote confidentially?
Yes. Our policy is to treat all shareholder meeting proxies, ballots and
voting tabulations of a shareholder confidentially, if the shareholder has
requested confidentiality on the proxy card or ballot.
If you so request, your proxy will not be available for examination nor
will your vote be disclosed prior to the tabulation of the final vote at the
Annual Meeting except (1) to meet applicable legal requirements, (2) to allow
the independent election inspectors to count and certify the results of the
vote or (3) where there is a proxy solicitation in opposition to the board of
directors, based upon an opposition proxy statement filed with the Securities
and Exchange Commission. The independent election inspectors may at any time
inform us whether or not a shareholder has voted.
May I change my vote?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with our Secretary either a
notice of revocation or a duly executed proxy bearing a later date. The powers
of the proxy holders will be suspended if you attend the meeting in person and
so request, although attendance at the meeting will not by itself revoke a
previously granted proxy.
How does the board recommend I vote?
Unless you give instructions on your proxy card, the persons named as proxy
holders on the proxy card will vote in accordance with the recommendations of
the board of directors. The board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the board of
directors recommends a vote:
FOR election of the director nominees (see page 4),
FOR approval of amendments to our 1996 Stock Incentive Plan (see page 14),
and
FOR approval of the appointment of Deloitte & Touche LLP as our independent
auditors (see page 18).
For any other matter that properly comes before the meeting, the proxy
holders will vote as recommended by the board of directors or, if no
recommendation is given, in their own discretion.
How many votes are required to approve each item?
The affirmative vote of the holders of a majority of the outstanding shares
of our common stock entitled to vote and present in person or by proxy at the
Annual Meeting will be required for approval of each proposal presented in
this proxy statement. A properly executed proxy marked "ABSTAIN" with respect
to any matter will be counted for purposes of determining whether there is a
quorum and will be considered present in person or by proxy and entitled to
vote. Accordingly, an abstention will have the effect of a negative vote. A
shareholder (including a broker) who does not give authority to a proxy to
vote, or who withholds authority to vote, on a proposal will not be considered
present and entitled to vote on the proposal.
What if other matters are presented for determination at the Annual Meeting?
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the meeting other than those referred
to in this Proxy Statement. If any other matters properly come before the
meeting calling for a vote of shareholders, proxies in the enclosed form
returned to us will be voted in accordance with the recommendation of the
board of directors, or, in the absence of such a recommendation, in accordance
with the judgment of the proxy holders.
2
Who pays the expenses incurred in connection with the solicitation of proxies?
We will pay expenses in connection with the solicitation of proxies.
Proxies are being solicited principally by mail and by telephone. In addition,
our directors, officers and regular employees may solicit proxies personally,
by telephone, fax or special letter.
How do I get additional copies of the Annual Report?
Our Annual Report for the fiscal year ended December 31, 2000, including
financial statements, has been included in this package. For additional
copies, please contact Greg A. Gadel, our Chief Financial Officer, at (612)
288-2382 or mail your request to Mr. Gadel at our address listed above.
3
ITEM ONE--ELECTION OF DIRECTORS
Director Nominees
Proxies solicited by the board of directors will, unless otherwise
directed, be voted for the election of two nominees to serve as Class II
directors for three-year terms expiring in 2004 or until their successors are
elected. The two nominees are Peter J. Mihajlov and Paul Zepf. Both of the
nominees are currently directors.
The board of directors has no reason to believe that either of the nominees
is not available or will not serve if elected. If for any reason either
nominee becomes unavailable for election, the board of directors may designate
substitute nominees, in which event the shares represented by proxies returned
to us will be voted for such substitute nominees, unless an instruction to the
contrary is indicated on the proxy.
General Information About the Board of Directors
Our board of directors consists of seven members. Our Articles of
Incorporation, as amended, provide that the board of directors be divided into
three classes of as nearly equal size as possible. Our board is divided into
three classes with staggered three-year terms. Mr. Mihajlov and Mr. Zepf are
Class II directors whose terms expire at the annual shareholders' meeting in
2001. Mr. Micatrotto, Mr. Roberts and Mr. Whaley are Class III directors whose
terms expire at the annual shareholders' meeting in 2002. Mr. Hays and Mr.
Yarnell are Class I directors whose terms expire at the annual shareholders'
meeting in 2003.
At each annual meeting of shareholders, the successors to directors whose
terms then expire will be elected to serve for a full term of three years.
This classification of the board may delay or prevent changes in our control
or in our management. Pursuant to the terms of Mr. Micatrotto's employment
agreement, the board is required to use its best efforts to cause Mr.
Micatrotto to continue to be elected to the board as long as he is our Chief
Executive Officer.
Following is information regarding the nominees and directors, including
information furnished by them as to their principal occupations. All of the
present directors were elected to the board of directors by our shareholders.
See page 7 for a table showing the number of shares of our common stock
beneficially owned by each director as of April 25, 2001.
Joseph P. Micatrotto, 49, joined BUCA in 1996 as our President and Chief
Executive Officer, and as a director and in July 1999 became Chairman of the
Board. Mr. Micatrotto's 27 year career in restaurant management includes being
CEO of Panda Management Company, Inc., where he led the company's expansion,
and president and CEO of Chi-Chi's Mexican Restaurant, Inc., where he was
instrumental in its national growth. Mr. Micatrotto is active on various
boards and industry groups. He currently serves on the board of directors of
the National Restaurant Association and the American Beverage Institute.
Philip A. Roberts, 61, co-founded BUCA in 1993. He has been a director
since 1993 and served as Chairman of our board of directors until July 1999.
Mr. Roberts is also a principal of Parasole Restaurant Holdings, Inc., which
he co-founded in 1986. Mr. Roberts has been involved in the restaurant
industry since 1977, when he co-founded with Mr. Mihajlov the first of several
privately-held restaurant companies, which later merged to form Parasole.
Peter J. Mihajlov, 61, co-founded BUCA in 1993 and has served as a director
since 1993. Mr. Mihajlov is also a principal of Parasole, which he co-founded
in 1986. Mr. Mihajlov has been in the restaurant industry since 1977, when he
and Mr. Roberts co-founded the first of several privately-held restaurant
companies, which later merged to form Parasole. Prior to that, Mr. Mihajlov
served in a variety of marketing and business management positions within The
Pillsbury Company over the course of 17 years.
Don W. Hays, 58, co-founded BUCA in 1993 and has served as a director since
1993. Mr. Hays is also a principal of Parasole, which he co-founded in 1986.
Prior to that, Mr. Hays founded Hospitality Management
4
Group, Inc. in 1977, which later merged to form Parasole. Mr. Hays has been
involved in the restaurant industry since 1964, when he joined Dayton's
Restaurant Division, of which he later became Director of Operations.
John P. Whaley, 48, has served as a director of BUCA since 1996. He is a
partner of Norwest Equity Partners and Norwest Venture Partners, and has been
a partner or officer of these and affiliated private equity investment funds
since 1977. Mr. Whaley is also a director of several privately held companies.
David Yarnell, 45, has served as a director of BUCA since 1996. He has been
a General Partner of Brand Equity Ventures since April 1997. He was a Vice
President of Consumer Venture Partners from June 1993 to December 1999. Mr.
Yarnell also serves on the board of directors of Alloy Online, a publicly held
company.
Paul Zepf, 36, has served as a director of BUCA since 1998. He is currently
a Managing Director of Lazard Freres & Co. LLC. Previously, he was a Managing
Director of Centre Partners Management L.L.C., and a managing director of
Corporate Advisors, L.P. Mr. Zepf is also a director of Nationwide Credit,
Inc.
Director Compensation
Our directors are reimbursed for certain reasonable expenses incurred in
attending board meetings. Directors who are also our employees receive no
remuneration for services as members of the board of directors or any board
committee. Directors who are not employed by us have received certain grants
of stock options.
Board Committees
Executive Committee
The executive committee of the board, comprised of Messrs. Micatrotto,
Roberts and Yarnell, provides advice and counsel to the Chief Executive
Officer regarding the day to day operations of the company. While the
executive committee may recommend policies and actions for the board's
consideration, it does not have the authority to take any action on behalf of
the board.
Compensation Committee
The compensation committee of the board, comprised of Messrs. Roberts,
Hays, Whaley and Zepf, is responsible for reviewing and establishing the
compensation structure for our officers, including salaries, participation in
incentive compensation and benefit plans, stock option plans and other forms
of compensation, and is responsible for administering our 1996 Stock Incentive
Plan, 2000 Stock Incentive Plan, the Stock Option Plan for Non-employee
Directors and our Employee Stock Purchase Plan.
Audit Committee
The audit committee of the board, comprised of Messrs. Mihajlov, Whaley and
Hays, is responsible for recommending to the board our independent auditors,
analyzing the reports and recommendations of the auditors and reviewing
internal audit procedures and controls.
All members of the audit committee are "independent" as that term is
defined in the applicable listing standards of The Nasdaq Stock Market. The
responsibilities of the audit committee are set forth in the Audit Committee
Charter, adopted by the company's board of directors on April 25, 2000, and
amended and restated on March 30, 2001. A copy of the company's Audit
Committee Charter is included as Exhibit A to this Proxy Statement.
Board Meetings During Fiscal 2000
The board of directors met seven times during fiscal 2000. The Securities
and Exchange Commission rules require disclosure of those directors who
attended fewer than 75% of the aggregate total of meetings of the
5
board and board committees on which the director served during the last fiscal
year. No director attended fewer than 75% of the aggregate total of these
meetings.
Compensation Committee Interlocks and Insider Participation
The compensation committee is responsible for establishing and
administering the company's policies involving the compensation of executive
officers. During fiscal 2000, the members of the compensation committee were
Philip A. Roberts, and Don W. Hays, John P. Whaley and Paul Zepf. During the
period prior to April 1998, Messrs. Roberts and Hays served as officers of the
company and several of its subsidiaries.
During fiscal 2000, we paid Roberts Consulting LLC, an entity controlled by
Mr. Roberts, a total of $110,500 for consulting services provided to the
company. We also paid Steven Roberts, son of Mr. Roberts, a total of $322,000
for his architectural services.
Certain Transactions
Vendor Relationship with Parasole Good Earth Bakery. We have a vendor
relationship with Parasole Good Earth Bakery, owned by Parasole, through which
the bakery provides various baked goods to our restaurants in the
Minneapolis/St. Paul market. The relationship can be terminated at any time at
our discretion. The amount paid by us to the bakery in fiscal 2000 was
$92,000. We believe the terms of the supply arrangement are at least as
favorable as we could obtain from unrelated parties.
Agreement with Roberts Consulting LLC. In January 2000, we entered into an
agreement with Roberts Consulting LLC. Roberts Consulting is controlled by our
director, Philip Roberts. Under the agreement we pay Roberts Consulting $6,500
for each new restaurant opening in exchange for consulting services and
assistance with new restaurant openings. During fiscal 2000, we paid Roberts
Consulting a total of $110,500 for its consulting services.
Agreement with Steven Roberts. Steven Roberts, son of our director, Philip
Roberts, from time to time performs architectural services for us under a
letter agreement. The amount paid by us to Mr. Roberts for these services in
fiscal 2000 was $322,000. We believe the terms of the letter agreement are at
least as favorable as we could obtain from unrelated parties.
Agreement with Joseph P. Micatrotto. On February 6, 2001, the company's
board of directors approved a $150,000 unsecured loan to Joseph P. Micatrotto,
a director of the company and the company's Chairman, President and Chief
Executive Officer. The note bears interest at the rate of 8% per annum. The
loan was made on March 15, 2001 and $150,000 is outstanding as of April 25,
2001.
Payments to John Mihajlov. John Mihajlov, son of our director, Peter
Mihajlov, is a Regional Vice President of the company. During fiscal 2000, we
paid him a salary of $80,000 and a bonus of $51,000.
Payments to Joseph Micatrotto, Jr. Joseph Micatrotto, Jr., son of our
Chairman, President and Chief Executive Officer, Joseph P. Micatrotto, is a
Paisano Partner. During fiscal 2000, we paid him a salary of $41,000 and a
bonus of $23,000.
6
Stock Ownership of Directors, Officers and Principal Shareholders
The following table sets forth information regarding the beneficial
ownership of our common stock as of April 25, 2001 by:
. each shareholder known by us to beneficially own more than five percent
of our common stock,
. each of our directors and director nominees,
. the executive officers named in the Summary Compensation Table on page
9, and
. all of our directors and executive officers as a group.
Except as otherwise noted below, each of the shareholders identified in the
table has sole voting and investment power with respect to the shares of
common stock beneficially owned by the person.
Shares
Beneficially
Owned(/1/)
-----------------
Name of Beneficial Owner Number Percent
- ------------------------ --------- -------
Norwest Equity Partners V, L.P.(/2/).......................... 1,423,897 8.8
Arbor Capital Management, LLC(/3/)............................ 917,500 5.7
Lord, Abbett & Co.(/4/)....................................... 936,598 5.8
T. Rowe Price Associates, Inc.(/5/)........................... 1,416,800 8.8
Capital Guardian Trust Company(/6/)........................... 1,149,900 7.1
Philip A. Roberts(/7/)........................................ 293,048 1.8
Don W. Hays(/8/).............................................. 311,228 1.9
Peter J. Mihajlov(/9/)........................................ 324,194 2.0
John P. Whaley(/10/).......................................... 1,423,897 8.8
David Yarnell(/11/)........................................... -- --
Paul Zepf(/12/)............................................... 1,300 *
Joseph P. Micatrotto(/13/).................................... 138,331 *
Greg A. Gadel(/14/)........................................... 15,695 *
Leonard A. Ghilani(/15/)...................................... 8,001 *
All directors and executive officers as a group
(9 persons).................................................. 2,515,694 15.4
- ----------------
* Less than 1%.
(/1/)Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that generally attribute beneficial
ownership of securities to persons who possess sole or shared voting
power and/or investment power with respect to those securities and
includes shares of common stock issuable pursuant to the exercise of
stock options that are immediately exercisable or exercisable within
60 days. Unless otherwise indicated, the persons or entities identified
in this table have sole voting and investment power with respect to all
shares shown as beneficially owned by them. Percentage ownership
calculations are based on 16,160,502 shares of common stock outstanding.
(/2/)Includes options for the purchase of 10,665 shares of common stock
exercisable within 60 days granted to John P. Whaley. The address for
Norwest Equity Partners V, L.P. is 3600 IDS Center, 80 South 8th Street,
Minneapolis, Minnesota 55402.
(/3/)Based on a Schedule 13G filed with the Securities and Exchange Commission
on February 12, 2001. Arbor Capital Management, LLC has sole voting power
with respect to 791,400 shares of common stock. The address for Arbor is
One Financial Plaza, 120 South Sixth Street, Suite 1000, Minneapolis,
Minnesota 55402.
(/4/)Based on a Schedule 13G filed with the Securities and Exchange Commission
on January 19, 2001. The address for Lord, Abbett is 90 Hudson Street,
Jersey City, New Jersey 07302.
7
(/5/)Based on a Schedule 13G filed with the Securities and Exchange Commission
on February 6, 2001. T. Rowe Price Associates, Inc. has sole voting power
with respect to 521,400 shares of common stock. The address for T. Rowe
Price Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202.
(/6/)Based on a Schedule 13G filed with the Securities and Exchange Commission
on February 12, 2001. Capital Guardian Trust Company is deemed to be the
beneficial owner of 1,149,900 shares as a result of its serving as the
investment manager of various institutional accounts. Capital Group
International, Inc. is the parent holding company of Capital Guardian
Trust Company. Capital Group International, Inc. does not have investment
power or voting power over the securities reported; however, Capital
Group International, Inc. may be deemed to "beneficially own" the
securities reported by virtue of Rule 13d-3 under the Securities Exchange
Act of 1934, as amended. Capital Guardian Trust Company has sole voting
power with respect to 991,900 shares of common stock. The address for
Capital Guardian Trust Company is 11100 Santa Monica Blvd., Los Angeles,
California 90025.
(/7/)Includes (1) 69,333 shares owned by the Roberts Family Limited
Partnership II; (2) 120,666 shares owned by Mr. Roberts' wife; (3)
options for the purchase of 21,333 shares of common stock exercisable
within 60 days granted to Mr. Roberts; and (4) options for the purchase
of 515 shares of common stock exercisable within 60 days granted to Mr.
Robert's wife. The address for Mr. Roberts is 1300 Nicollet Mall, Suite
5003, Minneapolis, Minnesota 55403.
(/8/)Includes (1) 108,333 shares owned by the Hays Family Limited Partnership;
(2) 52,633 shares owned by the Linda Hays Revocable Trust; and (3)
options for the purchase of 8,000 shares of common stock exercisable
within 60 days granted to Mr. Hays. The address for Mr. Hays is 3001
Hennepin Avenue South, Suite 301A, Minneapolis, Minnesota 55408.
(/9/)Includes (1) 126,666 shares owned by the Mihajlov Family Limited
Partnership; (2) 71,666 shares owned by Mr. Mihajlov's wife; (3) 18,560
shares held by Peter J. Mihajlov Trust; and (4) options for the purchase
of 8,000 shares of common stock exercisable within 60 days granted to Mr.
Mihajlov. The address for Mr. Mihajlov is 3001 Hennepin Avenue South,
Suite 301A, Minneapolis, Minnesota 55408.
(/10/)Consists of options for the purchase of 10,665 shares of common stock
exercisable within 60 days granted to Mr. Whaley and 1,413,232 shares of
common stock beneficially owned by Norwest Equity Partners V, L.P. Mr.
Whaley is a managing administrative partner of Itasca Partners V, LLP,
the general partner of Norwest Equity Partners V, L.P. All voting and
investment power with respect to the shares is held by the managing
partners and managing administrative partner of Itasca Partners V, LLP.
Mr. Whaley disclaims beneficial ownership of the 1,413,232 shares of
common stock owned by Norwest Equity Partners V, L.P. except to his
pecuniary interest therein. The address for Mr. Whaley is 3600 IDS
Center, 80 South 8th Street, Minneapolis, Minnesota 55402.
(/11/)The address for Mr. Yarnell is One Stamford Plaza, 263 Tresser Blvd.,
16th Floor, Stamford, Connecticut 06901.
(/12/)The address for Mr. Zepf is 30 Rockefeller Plaza, 50th Floor, New York,
New York 10020.
(/13/)Consists of options for the purchase of 138,331 shares of common stock
exercisable within 60 days granted to Mr. Micatrotto. The address for
Mr. Micatrotto is 1300 Nicollet, Suite 5003, Minneapolis, Minnesota
55403.
(/14/)Includes options for the purchase of 14,005 shares of common stock
exercisable within 60 days granted to Mr. Gadel. The address for Mr.
Gadel is 1300 Nicollet, Suite 5003, Minneapolis, Minnesota 55403.
(/15/)Consists of options to purchase 8,001 shares of common stock exercisable
within 60 days granted to Mr. Ghilani. The address for Mr. Ghilani is
1300 Nicollet, Suite 5003, Minneapolis, Minnesota 55403.
8
Executive Compensation
Summary Compensation Table. The following table contains information
concerning compensation for fiscal 2000 and fiscal 1999 earned by our
Chairman, President and Chief Executive Officer, our Chief Financial Officer
and our Chief Operations Officer.
Summary Compensation Table
Long-Term
Annual Compensation
Compensation Awards
--------------- ------------
Securities
Name and Salary Bonus Underlying
Principal Position Year ($) ($) Options (#)
------------------ ---- ------- ------- ------------
Joseph P. Micatrotto........................ 2000 322,796 -- 190,000
Chairman, President and Chief Executive
Officer 1999 309,615 100,000 126,666
Greg A. Gadel............................... 2000 153,483 -- 42,000
Chief Financial Officer 1999 143,544 70,000 20,000
Leonard A. Ghilani.......................... 2000 147,428 -- 26,000
Chief Operations Officer 1999 137,461 75,800 20,000
Stock Option Grants Table. The following table sets forth certain
information concerning all stock options granted during fiscal 2000 to the
named executive officers. We did not grant any stock appreciation rights or
restricted stock awards during fiscal 2000.
Fiscal 2000 Stock Option Grants Table
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation For
Option Term Option Term(/2/)
------------------------- -----------------------
Number of Percent of
Shares Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted 2000 ($/Share)(/1/) Date 5% ($) 10% ($)
---- ------------ ------------- -------------- ---------- ----------- -----------
Joseph P. Micatrotto.... 190,000(/3/) 34.8% $12.59 2010 1,504,639 3,813,188
Greg A. Gadel........... 42,000(/4/) 7.7% 12.51 2010 330,346 837,161
Leonard A. Ghilani...... 26,000(/5/) 4.8% 12.75 2010 208,441 528,230
- ----------------
(/1/)The exercise price may be paid in cash, in shares of common stock valued
at fair market value on the exercise date, or in a combination of cash
and shares.
(/2/)The hypothetical potential appreciation shown in these columns reflects
the required calculations at annual assumed appreciation rates of 5% and
10%, as set by the Securities and Exchange Commission, and therefore is
not intended to represent either historical appreciation or anticipated
future appreciation of the common stock.
(/3/)Options for the purchase of 50,000 shares vested on December 31, 2000.
Options for the purchase of 140,000 shares will vest on the following
dates: 40,000 shares on December 31, 2001; 40,000 shares on December 31,
2002; 40,000 shares on December 31, 2003; and 20,000 shares on December
31, 2004.
(/4/)Options for the purchase of 10,000 shares vested on December 31, 2000.
Options for the purchase of 20,000 shares will vest in four equal annual
installments beginning on December 31, 2001. Options for the purchase of
12,000 shares vested or will vest in five equal annual installments
beginning on October 29, 2000.
(/5/)Options for the purchase of 20,000 shares vested or will vest in five
equal installments beginning on December 31, 2000. Options for the
purchase of 6,000 shares will vest in three equal annual installments
beginning on December 20, 2001.
9
Fiscal Year-End Option Value Table. The following table sets forth certain
information concerning options exercised by named executive officers in fiscal
2000 and unexercised stock options held by the named executive officers as of
fiscal 2000 year-end.
Aggregated Option Exercises in Fiscal 2000 and
Fiscal Year-End Option Value Table
Number of Shares Value of
Underlying Unexercised In-the-Money
Number of Options at Options at
Shares December 31, 2000 December 31, 2000(/1/)
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Joseph P. Micatrotto.... 76,520 $759,995 211,664 300,001 $1,516,063 $1,057,155
Greg A. Gadel........... 29,331 147,220 18,000 91,335 78,415 476,486
Leonard A. Ghilani...... 5,333 17,786 9,333 54,000 61,351 218,540
- ----------------
(/1/)Based on a closing sale price of our common stock of $14.688 per share at
December 29, 2000, the last trading day of our 2000 fiscal year.
Employment Agreements. We entered into an employment agreement with Joseph
P. Micatrotto on July 22, 1996, which was subsequently amended and restated in
February 1999 and further amended in September 2000. Under the terms of the
agreement, Mr. Micatrotto is currently serving as our Chairman, President and
Chief Executive Officer for a term expiring on December 31, 2004. The
agreement provides that Mr. Micatrotto's annual salary will be $375,000 for
the current year, $400,000 for the year ended December 31, 2002, $425,000 for
the year ended December 31, 2003, and $450,000 for the year ended December 31,
2004. Mr. Micatrotto is eligible to receive a yearly bonus based upon certain
performance criteria established by the board. In connection with the
amendment of Mr. Micatrotto's employment agreement in February 1999,
Mr. Micatrotto received options to purchase 126,666 shares of our common stock
at an exercise price of $11.25 per share, 6,666 of which vested or vest on
each of December 31, 1999, 2000 and 2001 and 53,334 of which vest on each of
December 31, 2002 and 2003. We also have agreed to reimburse Mr. Micatrotto's
reasonable and necessary business expenses. Mr. Micatrotto is entitled to the
following termination benefits:
. If Mr. Micatrotto is terminated by us for cause or if Mr.
Micatrotto terminates his employment, he will receive no
additional compensation or termination benefits.
. If Mr. Micatrotto is terminated because of death or physical or
mental disability, he or his estate will be entitled to a
termination payment of two years' base salary then in effect,
payable in 24 equal monthly installments.
. If Mr. Micatrotto terminates his employment upon 30 days' prior
written notice following a change in control of the company,
because his duties are substantially reduced or negatively altered
without his prior written consent, or if Mr. Micatrotto's
employment is terminated by us without cause following a change in
control or within 180 days prior to a change in control and the
termination is related to the change in control, he will be
entitled to a termination payment of 18 months' base salary then
in effect, payable in 18 monthly installments. If Mr. Micatrotto
terminates employment as a result of a change in control, but his
duties have not been substantially reduced or negatively altered,
he will be entitled to a termination payment of 12 months' base
salary then in effect, payable in 12 monthly installments.
. If Mr. Micatrotto is terminated by us without cause and not
associated with a change in control, he will be entitled to a
termination payment of 18 months' base salary then in effect,
payable in 18 monthly installments.
The agreement also contains fringe benefits, confidentiality and non-
competition provisions.
10
On April 1, 1997, we entered into a letter agreement with Greg A. Gadel
under which Mr. Gadel will be entitled one year's base compensation in effect
at the time of termination if his employment is terminated as a result of a
change in control of BUCA or if he terminates his employment following a
change in control if his duties are substantially reduced or negatively
altered.
Report of the Compensation Committee on Executive Compensation
Philip A. Roberts, Don W. Hays, John P. Whaley and Paul Zepf are members of
the Compensation Committee (the "Committee") of the Board of Directors. For
fiscal year ended 2000, all decisions concerning executive compensation were
made by the Committee. The Committee is responsible for setting and
administering the policies governing annual compensation of the executive
officers of the company. The Committee reviews and approves the President and
Chief Executive Officer's recommendations regarding the performance and
compensation levels for executive officers, other than himself.
Overview
The goals of the company's executive officer compensation policies are to
attract, retain and reward executive officers who contribute to the company's
success, to align executive officer compensation with the company's
performance and to motivate executive officers to achieve the company's
business objectives. The company uses salary, bonus compensation and option
grants to attain these goals. The Committee reviews compensation surveys and
other data to enable the Committee to compare the company's compensation
package with that of similarly-sized restaurant companies.
Salary
Base salaries of executive officers are reviewed annually, and if deemed
appropriate, adjustments are made based on individual executive officer
performance, scope of responsibilities and levels paid by similarly-sized
restaurant companies. In determining the salaries of the executive officers,
the Committee considered information provided by the company's President and
Chief Executive Officer and salary data from industry surveys, and may from
time to time consider salary surveys and similar data prepared by an executive
recruitment consulting firm.
The President and Chief Executive Officer is responsible for evaluating the
performance of all other executive officers and recommends salary adjustments
which are reviewed and approved by the Committee. In addition to considering
the performance of individual executive officers and information concerning
competitive salaries, significant weight is placed on the financial
performance of the company in considering salary adjustments.
Bonus Compensation
Cash bonuses for each executive officer are determined annually by the
Committee. At the beginning of each year, the Committee chooses five of the
following six performance targets upon which to base bonus compensation for
that year: (i) number of new restaurant openings, (ii) number of operating
weeks, (iii) restaurant operating profit, (iv) total sales, (v) general and
administrative expenses and (vi) comparable restaurant sales. These are the
same targets used in determining the President and Chief Executive Officer's
cash bonus. For fiscal 2000, the Committee excluded the general and
administrative expenses target from the bonus calculation. Performance against
the established goals is determined annually by the Committee and based on
such determination, the Committee approves payment of appropriate bonuses.
Stock Options
The company strongly believes that equity ownership by executive officers
provides incentives to build shareholder value and align the interests of
executive officers with the shareholders. The size of an initial option
11
grant to an executive officer has generally been determined with reference to
similarly-sized restaurant companies, the responsibilities and future
contributions of the executive officer, as well as recruitment and retention
considerations. In fiscal 2000, the President and Chief Executive Officer
recommended to the Committee and the Board of Directors, and the Committee and
the Board of Directors approved, stock option grants under the 1996 Stock
Incentive Plan to the executive officers.
Compensation of Chief Executive Officer
The company and Mr. Micatrotto, our President and Chief Executive Officer,
entered into an employment agreement upon Mr. Micatrotto's hire in 1996. Prior
to the company's initial public offering in April 1999, Mr. Micatrotto's
employment agreement was amended and restated. Mr. Micatrotto's employment
agreement was further amended in September 2000. See "Executive Compensation--
Employment Agreements" for a general discussion of the agreement. As amended,
the agreement set Mr. Micatrotto's base compensation for 2000 at $335,000. In
addition, the bonus policy for Mr. Micatrotto is based upon meeting certain
company performance targets specified in the agreement. As with the other
executive officers, the Committee selected all but general and administrative
expenses as the performance targets to be used to determine Mr. Micatrotto's
2000 cash bonus. The performance targets for fiscal 2000 were not met and
therefore, no bonus was paid to Mr. Micatrotto. The Committee also approved
the grant of options to Mr. Micatrotto covering an aggregate of 190,000 shares
of common stock under the 1996 Stock Incentive Plan.
In addition, the company's board of directors also approved a $150,000
unsecured loan to Mr. Micatrotto. The promissory note bears interest at the
rate of 8% per annum. See "Certain Transactions" for a general discussion of
the promissory note.
Deductibility of Executive Compensation
Internal Revenue Code Section 162(m) limits the deductibility of
compensation over $1 million paid by a company to an executive officer. The
Committee currently does not have a policy with respect to Section 162(m)
because it is unlikely that such limit will apply to compensation paid by the
company to any of the company's executive officers for at least the current
year.
COMPENSATION COMMITTEE
Philip A. Roberts
Don W. Hays
John P. Whaley
Paul Zepf
12
Report of the Audit Committee
The role of the company's Audit Committee, which is composed of three
independent non-employee directors, is one of oversight of the company's
management and the company's outside auditors in regard to the company's
financial reporting and the company's controls respecting accounting and
financial reporting. In performing its oversight function, the Audit Committee
relied upon advice and information received in its discussions with the
company's management and independent auditors.
The Audit Committee has (i) reviewed and discussed the company's audited
financial statements for the year ended and December 31, 2000 with the
company's management; (ii) discussed with the company's independent auditors
the matters required to be discussed by Statement on Auditing Standards No. 61
regarding communication with audit committees (Codification of Statements on
Auditing Standards, AU sec. 380); and (iii) received the written disclosures
and the letter from the company's independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and has discussed with the company's independent
accountants the independent accountants' independence.
Based on the review and discussions with management and the company's
independent auditors referred to above, the Audit Committee recommended to the
board of directors that the audited financial statements be included in the
company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Peter J. Mihajlov
John P. Whaley
Don W. Hays
Independent Auditors' Fees
The aggregate fees billed for the audit of the company's annual
consolidated financial statements for fiscal 2000 and for the review of the
company's interim consolidated financial statements for each quarter in fiscal
2000 were $63,650.
Financial Information Systems Design and Implementation Fees
Deloitte & Touche LLP did not bill any amounts to the company for financial
information systems design and implementation during fiscal 2000.
All Other Fees
The company also paid its principal accountant $241,000 for all other
services for fiscal 2000. These fees related primarily to preparation and
review of the company's tax returns, consulting related to tax planning and
audits related to equity offerings made by the company.
Auditor Independence
The Audit Committee has considered whether, and has determined that, the
provision of services described under "All Other Fees" was compatible with
maintaining the independence of Deloitte & Touche LLP as the company's
principal accountants.
13
ITEM TWO--APPROVAL OF AMENDMENTS TO OUR 1996 STOCK INCENTIVE PLAN
Introduction
On October 1, 1996, our shareholders approved the 1996 Stock Incentive Plan
of BUCA, Inc. and Affiliated Companies. The purpose of the plan is to motivate
our key personnel to produce a superior return for our shareholders by
facilitating their ownership of our common stock and by rewarding them for
achieving a high level of corporate financial performance. The plan is also
intended to facilitate recruiting and retaining key personnel of outstanding
ability by providing an attractive capital accumulation opportunity. As of
April 25, 2001, options to purchase 1,548,929 shares of common stock had been
issued under the plan, 154,845 shares had been issued under the plan and
96,226 shares were available for future grants.
In addition to the 1996 Stock Incentive Plan, our board of directors
adopted a 2000 Stock Incentive Plan on April 25, 2000. The plan will remain in
effect until all stock subject to it has been distributed, until all awards
have expired or lapsed, or until April 25, 2010. We have reserved 300,000
shares of our common stock for awards under the plan. All of our employees,
other than our officers and directors, are eligible to receive awards under
the plan.
General Description of Our 1996 Stock Incentive Plan
In fiscal 2000, our board of directors and shareholders approved amendments
to the 1996 Stock Incentive Plan to increase the total number of shares
reserved for issuance to 1,800,000 and to allow shares issued under the plan,
but reacquired by the company, to be available for future awards under the
plan. To enable us to continue to make awards under the plan, our board of
directors has approved another amendment to the plan to increase the number of
shares reserved for issuance by 500,000, increasing the total number of shares
reserved under the plan to 2,300,000, subject to shareholder approval. We are
asking shareholders to approve the amendment to the plan at the Annual
Meeting.
There are currently 1,800,000 shares of our common stock available for
awards under the plan. This number of shares under the plan is subject to
adjustment for future stock splits, stock dividends, and similar changes in
the capitalization of our company. The plan will remain in effect until all
stock subject to it has been distributed, until all awards have expired or
lapsed, or until October 1, 2006. In addition, our board of directors may
terminate the plan at any time, subject to the conditions stated in the plan.
The plan is not subject to the Employee Retirement Income Security Act of
1974 and is not a "qualified plan" under Section 401(a) of the Internal
Revenue Code of 1986.
Plan Administration
The 1996 Stock Incentive Plan is administered by a committee of members of
our board of directors. The committee has the authority, subject to the terms
of the plan, to adopt, revise, and waive rules relating to the plan. The
committee is also responsible for determining when and to whom awards will be
granted, the form of each award, the amount of each award, and any other terms
of an award, consistent with the plan.
Members of the committee are designated by our board of directors and serve
on the committee for an indefinite term, at the discretion of the board. The
Compensation Committee of our board of directors currently serves as the
committee that administers the plan. The committee may delegate its
responsibilities under the plan to members of our management, or to others,
with respect to the grants of awards to employees who are not deemed to be
executive officers of our company under relevant federal securities laws.
Eligibility
All employees of BUCA, Inc. and its "affiliates," as defined in the plan,
are eligible to receive awards under the plan. As of December 31, 2000, we had
4,000 employees. Awards other than incentive stock options may be granted by
the committee to individuals or entities that are not our employees, but who
provide services to our company or its affiliates as consultants or
independent contractors. The selection of those to whom awards under the plan
are made is within the sole discretion of the committee.
14
Types of Awards Under the Plan
The types of awards that may be granted under the plan include incentive
and non-statutory stock options, restricted stock, stock appreciation rights,
performance shares, and other stock-based awards. The following is a brief
description of the material characteristics of each type of award.
Incentive and Non-Statutory Stock Options. Both incentive stock options and
non-statutory stock options may be granted under the plan. The exercise price
of an option is determined by the committee and set forth in an option
agreement. The exercise price for non-qualified stock options may be less
than, equal to or greater than the fair market value of our common stock on
the date the option is granted. Stock options may be granted and exercised at
such times as the committee may determine, which is reflected in the exercise
schedule set forth in an option agreement. Unless federal tax laws are
modified:
. no incentive stock option may be granted more than 10 years after
October 1, 1996, which was the effective date of the plan;
. an incentive stock option may not be exercised more than 10 years after
the date it was granted; and
. the aggregate fair market value of shares of our common stock underlying
incentive stock options held by any participant under the plan, and
under any other plan of our company or of our affiliates, that first
become exercisable in any calendar year may not exceed $100,000.
Additional restrictions apply to incentive stock options granted to persons
who beneficially own 10% or more of the outstanding shares of our common
stock.
The purchase price for common stock purchased upon the exercise of stock
options may be payable in cash, in our common stock having a fair market value
on the date the option is exercised equal to the option price of the stock
being purchased, or a combination of cash and stock, as provided in the option
agreement. In addition, the committee may permit recipients of stock options
to simultaneously exercise options and sell the common stock purchased upon
exercise and to use the sale proceeds to pay the purchase price.
Restricted Stock and Other Stock-Based Awards. The committee is authorized
to grant, either alone or in combination with other types of awards,
restricted stock and other stock-based awards. Restricted stock may contain
such restrictions, including provisions requiring forfeiture and imposing
restrictions on stock transfer, as the committee may determine and set forth
in the option agreement.
The committee may provide that, unless forfeited, a recipient of an award
of restricted stock will have all rights of a company shareholder, including
voting and dividend rights.
Stock Appreciation Rights and Performance Awards. The recipient of a stock
appreciation right receives all or a portion of the amount by which the fair
market value of a specified number of shares, as of the date the right is
exercised, exceeds a price specified by the committee at the time the right is
granted, as set forth in the recipient's agreement. The price specified by the
committee must be at least 100% of the fair market value of our common stock
on the date the right is granted.
Performance awards entitle the recipient to payment in amounts determined
by the committee, and set forth in the recipient's agreement, based upon the
achievement of specified performance targets during a specified term.
Payments for stock appreciation rights and performance awards may be paid
in cash, shares of our common stock, or a combination of cash and shares, as
determined by the committee.
15
Acceleration of Awards, Lapse of Restrictions, Forfeiture
The committee may provide in the applicable agreement for the lapse of
restrictions on restricted stock or other awards, accelerated vesting of stock
options, stock appreciation rights, and other awards, or acceleration of the
term with respect to which the achievement of performance targets for
performance awards is determined in the following circumstances:
. a change in control of the company;
. other fundamental changes in the corporate structure of the company;
. death, disability, or qualified retirement; or
. such other events as the committee may determine.
Adjustments, Modifications, Termination
The plan gives the committee discretion to adjust the kind and number of
shares available for awards or subject to outstanding awards, the exercise
price of outstanding stock options, and performance targets for, and payments
under, outstanding performance awards upon mergers, recapitalizations, stock
dividends, stock splits, or similar changes affecting us. Adjustments in
performance targets and payments on performance shares are also permitted upon
the occurrence of such other events as may be specified by the committee.
The plan also gives our board of directors the right to terminate, suspend,
or modify the plan. Amendments to the plan are subject to shareholder
approval, however, if needed to comply with Rule 16b-3 under the Securities
Exchange Act or federal tax laws relating to incentive stock options.
Under the plan, the committee may generally cancel outstanding stock
options and stock appreciation rights in exchange for cash payments to the
recipients upon dissolutions, liquidations, mergers, statutory share
exchanges, or similar events involving us.
Federal Tax Considerations
Incentive Stock Options. Option recipients do not realize taxable income,
and we are not entitled to any related deduction, when we grant recipients an
incentive stock option. The Internal Revenue Code requires that recipients
satisfy the following employment and holding period requirements to obtain the
tax benefits given to incentive stock options:
. unless they die or become disabled, they must remain employed by us or a
subsidiary during the entire period starting on the date the option was
granted and ending three months before the date the option was
exercised.
. unless they die, they must hold the shares they receive upon exercise of
the option for the longer of (1) two years from the date the option was
granted, or (2) one year from the date the option was exercised.
If the recipient satisfies the statutory employment and holding period
conditions, then they will not realize taxable income upon the exercise of the
option, and we will not be entitled to any related deduction. Upon disposition
of the shares after expiration of the statutory holding periods, any gain or
loss they realize will be a capital gain or loss, and we will not be entitled
to any related deduction.
Except in connection with the recipient's death, if a recipient exercises
an incentive stock option and then disposes of the shares before the
expiration of the statutory holding periods (a "disqualifying disposition"),
he or she will realize ordinary income in the year of disposition equal to the
lesser of (1) the total gain realized on disposition, or (2) the difference
between the exercise price and the fair market value of the shares on the date
of exercise. We will be entitled to a deduction at the same time and in the
same amount as the recipient realizes ordinary income. Any gain they realize
on the disposition in excess of the amount treated as ordinary income, or any
loss they realize on the disposition, will be capital gain or loss.
16
If recipients pay the exercise price with shares of stock that the
recipient originally acquired upon the exercise of an incentive stock option
and the statutory holding periods for those shares have not been met, they
will be treated as having made a disqualifying disposition of those shares.
The tax consequences of such a disqualifying disposition will be as described
above.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes, an incentive stock option will be treated as
if it were a non-statutory stock option, the tax consequences of which are
discussed below.
Non-Statutory Stock Options. Option recipients do not realize taxable
income, and we are not entitled to any related deduction, when we grant
recipients a non-statutory stock option. When they exercise a non-statutory
stock option, they will realize ordinary income, and we will be entitled to a
related deduction, equal to the excess of the fair market value of the shares
on the date of exercise over the option price. Upon disposition of the shares,
any additional gain or loss they realize will be taxed as a capital gain or
loss.
Restricted Stock. Unless recipients file an election to be taxed under
Section 83(b) of the Internal Revenue Code, the following federal tax
consequences will apply:
. they will not realize income upon the grant of the restricted stock;
. they will realize ordinary income, and we will be entitled to a related
deduction, when the restrictions on their stock have been removed or
have expired; and
. the amount of their ordinary income and our deduction will be the fair
market value of the stock on the date the restrictions are removed or
expire.
If recipients elect to be taxed under Section 83(b), then the tax
consequences to them and us will be determined as of the date of the grant of
the restricted stock, rather than as of the date of the removal or expiration
of the restrictions.
When they dispose of restricted stock, the difference between the amount
they receive upon disposition and the fair market value of the shares on the
date they realized ordinary income will be taxed as a capital gain or loss.
Stock Appreciation Rights and Performance Awards. Recipients will not
realize income upon the award of a stock appreciation right or performance
shares. They will realize ordinary income, and we will be entitled to a
related deduction, when cash or shares of common stock are delivered to them
upon exercise of a stock appreciation right or in payment of a performance
shares award. The amount of ordinary income and deduction will be the amount
of cash, plus the fair market value of the shares on the date they receive
them. Upon a subsequent disposition of any shares received, any additional
gain or loss they realize will be taxed as capital gain or loss.
Registration with the SEC
Following approval of the increase in the number of shares available under
the plan, we intend to amend our registration statement covering the plan to
include the additional shares.
OUR BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE TO APPROVE THE
AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN OF BUCA, INC. AND AFFILIATED
COMPANIES.
17
ITEM THREE--APPOINTMENT OF INDEPENDENT AUDITORS
Proxies solicited by the board of directors will, unless otherwise
directed, be voted to approve the appointment by the board of directors of
Deloitte & Touche LLP as our independent auditors for the fiscal year ending
December 30, 2001. We have employed Deloitte & Touche LLP in this capacity
since 1997.
A representative from Deloitte & Touche LLP will be at the Annual Meeting
and will have the opportunity to make a statement if such representative so
desires and will be available to respond to questions during the meeting.
OUR BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE TO APPROVE THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
ADDITIONAL INFORMATION
Comparison of Total Shareholder Return
The graph below compares the cumulative total shareholder return(/1/),
assuming the reinvestment of all dividends on our common stock for the period
beginning April 20, 1999(/2/), and ending on December 31, 2000.
[Performance Graph Appears Here]
April 20, December 26, December 31,
1999 1999 2000
--------- ------------ ------------
Standard & Poor's 500 Stock Index $100 $113.10 90.15
Standard & Poor's Small Cap
Restaurant Index $100 $ 85.57 110.83
BUCA, Inc. $100 $ 73.96 122.40
(/1/)Assumes that $100 was invested on April 20, 1999, in our common stock at
the initial public offering price of $12 and at the closing sales price
for each index, and that all dividends were reinvested. We have not
declared dividends on our common stock. You should not consider
shareholder returns over the indicated period to be indicative of future
shareholder returns.
(/2/)The effective date of our initial public offering was April 20, 1999. For
purposes of this presentation, we have assumed that our initial public
offering price of $12 would have been the closing sales price on
April 19, 1999, the day prior to commencement of trading.
18
Section 16(a) Beneficial Ownership Reporting Compliance
The SEC rules require disclosure of those directors, officers and
beneficial owners of more than 10% of the our common stock who fail to file on
a timely basis reports required by Section 16(a) of the Securities Exchange
Act of 1934 during the most recent fiscal year. Based solely on review of
reports furnished to us and written representations that no other reports were
required during the fiscal year ended December 31, 2000, all Section 16(a)
filing requirements were met.
Shareholder Proposals
Shareholder proposals for consideration at our 2001 Annual Meeting must
follow the procedures set forth in Rule 14a-8 under the Securities Exchange
Act of 1934 and our By-laws. To be timely under Rule 14a-8, they must be
received by our Secretary by December 3, 2000, in order to be included in the
Proxy Statement. Under our By-laws, if a shareholder plans to propose an item
of business to be considered at any annual meeting of shareholders, that
shareholder is required to give notice of the proposal to our Secretary at
least 90 days prior to the anniversary of the most recent annual meeting and
to comply with certain other requirements. The proposals also must comply with
all applicable statutes and regulations.
19
Exhibit A
BUCA, Inc.
Audit Committee Charter
I. Purpose
The primary function of the Audit Committee is to assist the Board of
Directors of BUCA, Inc. in fulfilling its oversight responsibilities
related to corporate accounting, financial reporting practices, quality and
integrity of financial reports as well as legal compliance and business
ethics. The Audit Committee's primary duties and responsibilities are to:
. Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board of Directors.
. Serve as an independent and objective party to monitor the corporation's
financial reporting process and internal control system.
. Review and appraise the audit efforts of the corporation's independent
accountants.
II. Membership
The Audit Committee shall be comprised of three or more directors as
determined by the Board of Directors, each of whom shall be independent
directors as defined in Rule 4200 of the National Association of Securities
Dealers, Inc. The members will be free from any financial, family or other
material personal relationships that, in the opinion of the Board of
Directors or Audit Committee members, would interfere with the exercise of
his or her independence from management and the corporation. All members of
the Audit Committee will have a working familiarity with basic finance and
accounting practices, and at least one member of the Audit Committee must
have accounting or related financial management experience.
The members of the Audit Committee shall be elected by the Board of
Directors at the annual organizational meeting of the Board of Directors.
Unless the Board of Directors elects a Chair, the members of the Audit
Committee may designate a Chair by majority vote of the committee.
III. Meetings
A majority shall constitute a quorum of the Audit Committee. A majority of
the members in attendance shall decide any questions brought before any
meeting of the Committee.
As part of its job to foster open communication, the Audit Committee has
access to management and the independent accountants to discuss any matters
that the Committee or any one of these groups feels need to be discussed
privately. In addition, the Audit Committee or at least the Chair should
meet with management quarterly to review the corporation's quarterly
financial results prior to release. The Audit Committee is entitled to rely
on information provided by the corporation's management and the independent
accountants with respect to, among things, the nature of services provided
by the independent accountants and the fees paid for such services.
IV. Responsibilities and Duties
The Audit Committee will fulfill their duties and responsibilities as
follows:
A. General
. Adopt a formal written charter that is adopted by the full Board of
Directors that specifies scope of responsibility, membership, etc.
The charter will be reviewed as necessary, but at least annually.
A-1
. Maintain minutes or other records of meetings and activities.
. Report Committee actions to the Board of Directors with
recommendations the Committee may deem appropriate.
B. Independent Accountants
. Recommend to the Board of Directors the selection of independent
accountants for the annual financial audit, considering independence
and effectiveness. Review and approve the discharge of the
independent accountants.
. Consult with independent accountants without management's presence
about internal controls, disagreements between the independent
accountants and management, and the completeness/accuracy of
financial statements.
. Review, prior to the annual audit, the scope and general extent of
the independent accountants' audit examinations including their
engagement letter.
. Be apprised on audit work performed by other accounting firms that
the independent accountants rely on.
. On an annual basis, review and discuss with the accountants all
significant relationships that accountants have with the corporation
to determine the accountants' independence. This should include a
review of management consulting services.
. Consider results of the independent accountants' last peer review,
litigation status and disciplinary actions, if any.
. Review the terms of proposed engagements of the independent
accountants relating to services to the corporation (other than
those services rendered in respect of the audit or review of the
corporation's annual or quarterly financial statements) prior to
such engagements.
. Consider whether the provision of the services by the independent
accountants (other than those services rendered in respect of the
audit or review of the corporation's annual or quarterly financial
statements) is compatible with maintaining the independent
accountants' independence.
C. Financial Statements/Internal Controls
. Review annual financial statements with management and the
independent accountants to determine that the independent
accountants are satisfied with the disclosure and content of the
financial statements, and approve such financial statements prior to
release of the annual earnings.
. Review the SEC Form 10-K prior to its filing.
. Consider independent accountants' judgments regarding the quality
and appropriateness of financial statements.
. Make inquiries of management and independent accountants' concerning
the adequacy of the corporation's system of internal controls.
. Inquire of management and the independent accountants about
significant risks or exposures, including legal matters, that exist
and assess the steps management has taken to minimize such risks and
exposures.
The above list represents examples of actions the Audit Committee may take
in fulfilling their responsibilities. The list shall not be construed as
mandatory functions of the committee. The Audit Committee has the power to
conduct or authorize investigations into any matters within the committee's
scope of responsibilities. The duties and responsibilities of a member of
the Audit Committee are in addition to those duties set out for a member of
the Board of Directors.
* * * * * *
A-2
Adopted by BUCA Audit Committee on March 30, 2001.
/s/ Peter J. Mihajlov
-------------------------------
Peter J. Mihajlov
/s/ John Whaley
-------------------------------
John Whaley
/s/ David Yarnell
-------------------------------
David Yarnell
A-3
[LOGO OF BUCA DI BEPPO]
BUCA, INC.
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, June 12, 2001
10:00 a.m., Central Daylight Savings Time
Hyatt Hotel
1300 Nicollet Mall
Minneapolis, Minnesota
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Buca, Inc.
1300 Nicollet Mall, Minneapolis, Minnesota 55403 Proxy
- --------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at the Annual Meeting
of Shareholders to be held on June 12, 2001 and at any adjournment thereof.
By signing this proxy, you revoke all prior proxies and appoint Joseph P.
Micatrotto and Greg A. Gadel, and each of them, as Proxies, each with full power
of substitution, to vote, as designated on the reverse side and below, at the
Annual Meeting of Shareholders to be held on June 12, 2001, and at any
adjournment thereof, all shares of Common Stock of BUCA, Inc. registered in your
name at the close of business on April 25, 2001.
This proxy when properly executed will be voted as specified on the reverse
side, but, if no direction is given, this proxy will be voted FOR Items 1, 2 and
3. Notwithstanding the foregoing, if this proxy is to be voted for any nominee
named on the reverse side and such nominee is unwilling or unable to serve, this
proxy will be voted for a substitute in the discretion of the Proxies. The
Proxies are authorized to vote in their discretion upon such other matters as
may properly come before the Annual Meeting or any adjournment thereof.
See reverse for voting instructions.
-------------------
COMPANY #
CONTROL #
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There are two ways to vote your Proxy
Your telephone vote authorizes the Named Proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE --TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12 p.m. (ET) on June 11, 2001.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
* Follow the simple instructions the voice provides you.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to BUCA, Inc. c/o Shareowner ServicesSM, P.O. Box
64873, St. Paul, MN 55164-0873.
Please detach here
\/ \/
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The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
1. Election of 01 Peter J. Mihajlov [_] Vote FOR [_] Vote WITHHELD
Directors: 02 Paul Zepf all nominees from all nominees
(except as
marked)
(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. Approval of amendments to our 1996 Stock Incentive Plan as specified in our
proxy statement.
[_] For [_] Against [_] Abstain
3. Ratification of the appointment of Deloitte & Touche LLP as independent
auditors for the 2001 fiscal year.
[_] For [_] Against [_] Abstain
Address Change? Mark Box [_] Indicate changes below:
Dated:_________________________, 2001
_____________________________________
_____________________________________
Signature(s) in Box
Please sign exactly as your name(s)
appear on proxy. Jointly owned
shares will be voted as directed if
one owner signs unless another owner
instructs to the contrary, in which
case the shares will not be voted.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the proxy.