SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Uno Restaurant Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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UNO RESTAURANT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
UNO RESTAURANT CORPORATION TO BE HELD ON
FEBRUARY 23, 1999
The Annual Meeting of Stockholders of UNO RESTAURANT CORPORATION will be
held on Tuesday, February 23, 1999 at 10:00 a.m., at "Pizzeria Uno...Chicago Bar
& Grill" located at One Newton Place, 287 Washington Street, Newton,
Massachusetts, for the following purposes:
1. To elect two Class II directors to hold office until the 2002 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualified.
2. To consider and act upon any matters incidental to the foregoing purposes
and any other matters which may properly come before the Meeting or any
adjourned session thereof.
The Board of Directors has fixed January 22, 1999 as the record date for
determining the stockholders entitled to notice of, and to vote at, the Meeting.
You are cordially invited to attend the Meeting.
By Order of the Board Of Directors
Allan Afrow,
Secretary
Boston, Massachusetts
January 29, 1999
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING FORM OF PROXY,
SO THAT, IF YOU ARE UNABLE TO ATTEND THE MEETING, YOUR SHARES MAY NEVERTHELESS
BE VOTED. HOWEVER, THE PROXY IS REVOCABLE AS DESCRIBED IN THE PROXY STATEMENT.
UNO RESTAURANT CORPORATION
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON FEBRUARY 23, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Uno Restaurant Corporation, a Delaware
corporation with its principal executive offices at 100 Charles Park Road, West
Roxbury, Massachusetts 02132 (referred to hereinafter as the "Company"), for use
at the Annual Meeting of Stockholders to be held on February 23, 1999, and at
any adjournment or adjournments thereof (the "Meeting"). The enclosed proxy
relating to the Meeting is solicited on behalf of the Board of Directors of the
Company and the cost of such solicitation will be borne by the Company. It is
expected that this proxy statement and the accompanying proxy will be mailed to
stockholders on or about January 29, 1999. Certain of the officers and regular
employees of the Company may solicit proxies by correspondence, telephone or in
person, without extra compensation. The Company may also pay to banks, brokers,
nominees and certain other fiduciaries their reasonable expenses incurred in
forwarding proxy material to the beneficial owners of securities held by them.
Only stockholders of record at the close of business on January 22, 1999
will be entitled to receive notice of, and to vote at, the Meeting. As of that
date, there were outstanding and entitled to vote 10,337,810 shares of Common
Stock, $.01 par value, of the Company (the "Common Stock"). Each such
stockholder is entitled to one vote for each share of Common Stock so held and
may vote such shares either in person or by proxy.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy or, in the absence of such direction, for the election of the nominees
as directors. If any other matters shall properly come before the Meeting, the
enclosed proxy will be voted by the proxies in accordance with their best
judgment. The proxy may be revoked at any time prior to exercise by filing with
the Secretary of the Company a written revocation, by executing a proxy with a
later date, or by attending and voting at the Meeting.
1
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting, two Class II directors are to be elected to serve until the
2002 Annual Meeting of Stockholders and until their respective successors have
been duly elected and qualified.
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall be divided into three classes. At each Annual
Meeting of Stockholders following the initial classification, the directors
elected to succeed those whose terms expire shall be identified as being the
same class as the directors they succeed and shall be elected to hold office for
a term to expire at the third Annual Meeting of Stockholders after their
election, and until their respective successors are duly elected and qualified,
unless an adjustment in the term to which an individual director shall be
elected is made because of a change in the number of directors.
The Restated Certificate of Incorporation sets the initial number of
directors at seven and authorizes the Board of Directors and the stockholders to
change the number from time to time. The terms of Craig S. Miller and Robert M.
Brown expire at the Meeting. Mr. Miller is being renominated for election as a
Class II director, and Paul W. MacPhail is being nominated for election as a
Class II director, each to hold office until the 2002 Annual Meeting of
Stockholders and until their successors have been duly elected and qualified.
Mr. Brown, who will not stand for reelection, will continue to serve the Company
as Senior Vice-President--Administration. In addition, S. James Coppersmith has
resigned as a Class I director and his position on the Board of Directors will
remain vacant at this time. The Company would like to express its gratitude to
Mr. Coppersmith and Mr. Brown for their valuable years of service as directors.
It is the intention of the persons named as proxies to vote for the election
of Mr. Miller and Mr. MacPhail as Class II directors. In the unanticipated event
that the nominees should be unable to serve, the persons named as proxies will
vote the proxy for such substitutes, if any, as the present Board of Directors
may designate or to reduce the number of directors. The nominees have not been
nominated pursuant to any arrangement or understanding with any person.
The following table sets forth certain information with respect to the
nominees and each of the directors whose term extends beyond the Meeting,
including the year in which the nominees' terms would expire, if elected. When
used below, positions held with the Company include positions held with the
Company's predecessors and subsidiaries.
2
YEAR TERM
EXPIRES,
IF
DIRECTOR ELECTED,
NAME AGE PRINCIPAL OCCUPATION SINCE AND CLASS
- ------------------------------------------ --- ------------------------------------------ ----------- ----------
Craig S. Miller*.......................... 49 President, Chief Executive Officer and 1985 2002 Class
Director of the Company II
Paul W. MacPhail*......................... 35 Executive Vice President and Chief 2002 Class
Operating Officer II
Robert M. Brown**......................... 51 Senior Vice President-Administration and 1987 1999 Class
Director of the Company II
Aaron D. Spencer.......................... 67 Chairman and Director of the Company 1979 2000 Class
III
Stephen J. Sweeney........................ 69 Former Chairman of the Board of Boston 1991 2000 Class
Edison Company III
James F. Carlin, Jr....................... 58 Chairman and Chief Executive Officer of 1996 2000 Class
Carlin Consolidated, Inc. III
John T. Gerlach........................... 66 Director of the Graduate Business Program, 1987 2001 Class
Sacred Heart University I
- ------------------------
* Nominees for Class II directors.
** Term expires at the Annual Meeting. Mr. Brown will continue to serve the
Company as Senior Vice President--Administration.
Mr. Miller has been President since 1986 and Chief Executive Officer since
September 30, 1996. From 1986 to 1998, he served as Chief Operating Officer.
From 1984 to 1986, he served as a Vice President and then Executive Vice
President of the Company. Prior to joining the Company, he spent 11 years with
the General Mills Inc. restaurant subsidiary, including four years in various
executive capacities with Casa Gallardo Mexican restaurants and 6 years with the
Red Lobster restaurant chain. Mr. Miller has a total of 31 years of experience
in the restaurant industry.
Mr. MacPhail was appointed Executive Vice President and Chief Operating
Officer on December 1, 1998. Mr. MacPhail served as Senior Vice
President--Operations from January 1997 to November 1998. From October 1994 to
January 1997, he served as Divisional Vice President--Operations and from
November 1992 to October 1994, he served as a Regional Director of Operations.
From 1990 to 1992, Mr. MacPhail served with the Company as a General Manager and
Senior Operations Manager. Prior to joining the Company, Mr. MacPhail served for
8 years as a General Manager with Ground Round, Inc. Mr. MacPhail has a total of
15 years of experience in the restaurant industry.
Mr. Brown has been Senior Vice President--Administration since June 1997. He
was Senior Vice President--Finance from 1988 until 1997 and served as Chief
Financial Officer and Treasurer from 1987 to 1997. From 1987 to 1988, he served
as Vice President--Finance of the Company. From 1984 to 1987, he served as vice
president, treasurer and chief financial officer of the waste management
subsidiary of Genstar Corporation and was employed by SCA Services, Inc. from
1980 to 1984, most recently as assistant controller. He is a certified public
accountant and has worked in accounting and finance since 1969.
3
Mr. Spencer, the founder of the Company, has been Chairman of the Company
since 1986 and previously served as the Company's Chief Executive Officer until
September 30, 1996 and as the Company's President until 1986. Mr. Spencer has 33
years of experience in the restaurant industry and was the founder and owner of
the predecessor of the Company which operated a chain of 24 Kentucky Fried
Chicken franchised restaurants at the time the restaurants were sold.
Mr. Sweeney was chairman of the board of Boston Edison Company from 1986 to
1992. He was chief executive officer of Boston Edison Company from 1984 to 1990
and president of Boston Edison Company from 1983 to 1987. Mr. Sweeney is a
director of the Boston Edison Company, Liberty Mutual Insurance Company, Liberty
Mutual Fire Insurance Company, Liberty Financial Services, the Boston Stock
Exchange Incorporated and Microscript, Inc.
Mr. Carlin has been the chairman and chief executive officer of Carlin
Consolidated, Inc., a management and investment company since 1966. He has been
the chairman of the Massachusetts Board of Higher Education since 1995. He was
also the receiver for the City of Chelsea, Massachusetts from 1991 to 1992. Mr.
Carlin is a director of Health Plan Services, Inc., a trustee of the
Massachusetts Health and Education Tax Exempt Trust, and a trustee or director
of 33 funds managed by John Hancock Mutual Life Insurance Company. He is also a
director of Alpha Analytical, Inc., Carlin Insurance Agency, Inc. and the
Arbella Mutual Insurance Company.
Mr. Gerlach has been the director of the Graduate Business Program of Sacred
Heart University since July 1992. He was the director of the Center for Policy
Issues of Sacred Heart University from January 1990 to July 1992. From 1988 to
1990, he was an adjunct professor of finance in the Graduate School of Business
at Drexel University. From 1986 to 1988, he was associate director of Bear,
Stearns & Co. From 1985 to 1986, he was a consultant for The Horn & Hardart Co.,
and from 1982 to 1985, he was the president and chief operating officer of The
Horn & Hardart Co. Prior to that time, he was a vice president of General Mills
Inc. He is presently a director of Marketing Sources Corporation and Security
American Financial Enterprises, Inc.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held five meetings during the fiscal
year ended September 27, 1998. Each current director attended at least 75% of
the aggregate number of all meetings of the Board of Directors and committees of
which he was a member during such fiscal year.
The Board of Directors has an Audit Committee, currently comprised of
Messrs. Carlin, Gerlach and Sweeney, which met twice during fiscal year 1998.
The functions performed by this Committee include recommending to the Board of
Directors the engagement of the independent auditors, reviewing the scope of
internal controls and the results of internal audit activities, and reviewing
the implementation by management of recommendations made by the independent
auditors.
The Board of Directors also has a Compensation Committee, currently
comprised of Messrs. Carlin, Gerlach and Sweeney. The Compensation Committee met
once during fiscal year 1998. The functions of the Compensation Committee
include making recommendations to the Board of Directors concerning salaries,
incentive plans, benefits and overall compensation.
The Board of Directors also has an Executive Committee, currently comprised
of Messrs. Gerlach, Miller and Spencer. The Executive Committee is responsible
for reviewing and recommending to the Board of Directors for approval major
business decisions, including capital and operating budgets,
4
strategic plans, financing proposals, executive officer changes and composition
of the Board of Directors. The Executive Committee met five times during fiscal
year 1998.
The Board of Directors does not have a nominating committee. Changes in
directors are considered by the whole Board of Directors, based on
recommendations of the Executive Committee.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information as of November 27, 1998
concerning the beneficial ownership of Common Stock by each director, each
nominee for director, each named executive officer in the Summary Compensation
Table under "Executive Compensation," below, all executive officers and
directors as a group, and each person known by the Company to be the beneficial
owner of 5% or more of the Company's Common Stock. This information is based
upon information received from or on behalf of the named individuals.
SHARES OF COMMON
STOCK
BENEFICIALLY PERCENT
NAME OWNED (1) OF CLASS
- -------------------------------------------------------------------------------------- ---------------- -----------
Robert M. Brown (2)(3)(4)(5).......................................................... 82,704 *
James F. Carlin, Jr.(2)(6)............................................................ 24,906 *
Alan M. Fox (2)(4)(5)................................................................. 107,658 1.0
John T. Gerlach (2)................................................................... 24,963 *
Damon M. Liever (2)(4)(5)(7).......................................................... 58,660 *
Paul W. MacPhail (2)(4)(5)............................................................ 38,599 *
Craig S. Miller (2)(4)(5)(7)(8)....................................................... 360,819 3.4
Aaron D. Spencer (2)(4)(9)(10)........................................................ 2,511,477 24.1
Stephen J. Sweeney (2)................................................................ 25,222 *
Uno Associates (10)................................................................... 3,692,707 35.8
Executive Officers and Directors as a Group (11 Persons)(11).......................... 7,026,776 64.7
- ------------------------
* Represents less than 1%.
(1) Unless otherwise noted, the beneficial owners listed have sole voting and
investment power over the shares listed.
(2) Includes the following shares subject to currently exercisable options: Mr.
Brown--74,442; Mr. Carlin--12,406; Mr. Fox--81,863; Mr. Gerlach--16,879; Mr.
Liever--51,175; Mr. MacPhail-- 37,864; Mr. Miller--277,250; Mr.
Spencer--78,000; Mr. Sweeney--19,347.
(3) Includes 1,625 shares held by Mr. Brown's spouse.
(4) Includes the following shares held in participant accounts under the
employee stock ownership provision of the Company's Employee Stock Ownership
Plan (the "ESOP"): Mr. Brown--967; Mr. Fox--675; Mr. Liever--221; Mr.
MacPhail--200; Mr. Miller--1,628; Mr. Spencer--915. The voting power of
these shares is held by the trustees of the ESOP.
5
(5) Includes the following shares held in participant accounts under the 401(k)
savings provision of the ESOP: Mr. Brown--670; Mr. Fox--619; Mr.
Liever--639; Mr. MacPhail--535; and Mr. Miller--624.
(6) Includes 2,500 shares held in a profit sharing plan and 10,000 shares held
in a family trust.
(7) Includes the following shares held in deferred compensation accounts: Mr.
Miller--10,000; Mr. Liever--2,000.
(8) Includes 9,375 shares held by a trust created by Mr. Miller, and 200 shares
held by Mr. Miller's spouse.
(9) Includes 174,562 shares held by a charitable foundation of which Mr. Spencer
is a trustee.
(10) Uno Associates is a partnership owned 80% by Mr. Spencer and 10% each by
his two adult children, Lisa S. Cohen and Mark Spencer. Mr. Spencer is
deemed to be the beneficial owner of all of the shares held by Uno
Associates, and as a result is deemed to be the beneficial owner of an
aggregate of 6,204,184 shares, including exercisable stock options (59.6% of
the outstanding shares). The mailing address of Uno Associates and Mr.
Spencer is 100 Charles Park Road, West Roxbury, Massachusetts 02132.
(11) Includes all shares beneficially owned by the executive officers and
directors named and as described above, 2,625 shares beneficially owned by
one executive officer not specifically named above, 94,325 shares subject to
currently exercisable options held by two executive officers not
specifically named above, an aggregate of 1,612 shares held in participant
accounts under the 401(k) savings and employee stock ownership provisions of
the ESOP for two executive officers not specifically named above, and 500
shares held in deferred compensation accounts for one executive officer not
specifically named above.
6
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation of each
of the Chief Executive Officer and the four most highly-compensated executive
officers of the Company whose annual salary and bonus, if any, exceeded $100,000
for services in all capacities to the Company during the last three fiscal
years.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- AWARDS ALL OTHER
NAME AND SALARY BONUS OPTIONS COMPENSATION
PRINCIPAL POSITION FISCAL YEAR ($) ($) (#)(1) ($)(2)
------------------------- ----------- ---------- ---------- ------------- -------------
Aaron D. Spencer.............................. 9/27/98 $ 262,500 $ 113,926 37,500 $ 0
Chairman and Director 9/28/97 250,000 87,501 0 449
9/29/96 250,000 68,900 0 533
Craig S. Miller............................... 9/27/98 $ 262,500 $ 146,474 250,000 $ 1,560
President, Chief Executive Officer, and 9/28/97 250,000 117,704 0 1,758
Director 9/29/96 250,000 68,900 20,000 1,508
Robert M. Brown............................... 9/27/98 $ 157,500 $ 59,537 142,189 $ 1,628
Senior Vice President--Administration and 9/28/97 146,250 45,737 0 1,896
Director 9/29/96 145,000 28,548 6,750 1,736
Damon M. Liever............................... 9/27/98 $ 150,000 $ 59,400 100,000 $ 1,616
Senior Vice President--Marketing 9/28/97 145,000 45,512 0 1,804
9/29/96 145,000 30,180 6,750 1,644
Alan M. Fox................................... 9/27/98 $ 160,000 $ 61,920 137,696 $ 1,616
Senior Vice President--Purchasing, 9/28/97 145,000 49,863 0 1,612
President--Uno Foods Inc. 9/29/96 145,000 28,004 6,750 1,434
- ------------------------
(1) Consisting of options granted under the Uno Restaurant Corporation 1987
Employee Stock Option Plan, the Uno Restaurant Corporation 1997 Employee
Stock Option Plan and the 1997 Key Officer Stock Option Plan.
(2) Consisting solely of benefits under the Company's 401(k) savings provision
and the employee stock ownership provision of the Company's Employee Stock
Ownership Plan (the "ESOP"). The ESOP is designed to invest Company
contributions in shares of Common Stock. Such shares are entitled to receive
dividends if and when declared. The Company's contributions to a
participant's account are subject to a vesting schedule providing, in
general, for no vesting before three years of service and 20% vesting for
each additional year of service (100% vesting after seven years of service,
although there is an accelerated six year vesting schedule under certain
circumstances). As of October 1, 1998, the number and value of shares
allocated to the accounts of the executive officers listed in the table
above were as follows: Mr. Spencer--915 shares ($5,376), Mr. Miller--2,252
shares ($13,232), Mr. Brown--1,637 shares ($9,618), Mr. Liever--860 shares
($5,053) and Mr. Fox--1,295 shares ($7,606) (based upon the closing sale
price of the Common Stock on the New York Stock Exchange on September 25,
1998).
7
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN- THE-MONEY OPTIONS
OPTIONS AT AT
9/27/98 9/27/98
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) (#) ($)
- ------------------------------ ------------------- ------------- --------------------- ----------------------
Aaron D. Spencer.............. -- -- 78,000/52,000 --
Craig S. Miller............... -- -- 277,250/216,500 --
Robert M. Brown............... -- -- 74,442/120,889 $ 2,226/$0
Damon M. Liever............... -- -- 51,175/85,950 --
Alan M. Fox................... 12,696 $ 29,929 81,863/116,396 --
- ------------------------
(1) Based upon the closing sale price of the Common Stock on September 25, 1998
on the New York Stock Exchange, minus the option exercise price.
CHANGE IN CONTROL PROTECTION AGREEMENTS. The Compensation Committee
determined and the Board of Directors of the Company affirmed that it is in the
best interests of the Company's stockholders, employees and customers to assure
continuity of management of the Company's administration and operations in the
event of a change in control of the Company. Therefore, the Company has entered
into Change in Control Protection Agreements with each of its officers that
provide, in general, for specified severance payments in the event that an
officer of the Company is terminated, other than for cause, within two years of
a change in control.
A Change in Control will be deemed to have occurred, among other reasons,
if: the beneficial ownership interest of Aaron D. Spencer, Chairman of the
Company, is reduced to less than 15% of the outstanding shares of Common Stock;
another "person" becomes the beneficial owner of 35% or more of the Common
Stock; a majority of the Board of Directors is replaced within a period of two
years; or a sale of all, or substantially all, of the Company's assets occurs.
The Change in Control Protection Agreements provide for severance payments
that are, in general, the equivalent of salary and benefits for periods ranging
from between 12 and 24 months. Pursuant to the Change in Control Protection
Agreements, of the executive officers included in the Summary Compensation
Table, Mr. Spencer and Mr. Miller would be entitled to severance payments equal
to 24 months of salary and benefits, and Mr. Brown, Mr. Liever and Mr. Fox would
be entitled to severance payments equal to 18 months of salary and benefits.
See also, "Compensation of Directors--Indemnification Agreements."
COMPENSATION OF DIRECTORS
Messrs. Carlin, Gerlach and Sweeney, members of the Board of Directors who
are not employees of the Company, received an annual fee of $10,000 for the
fiscal year ended September 27, 1998. In addition, these non-employee directors
received the following fees for each meeting attended during the fiscal year:
$1,000 for each Board of Directors meeting, $500 for each committee meeting and
$500 for the committee chairman for each committee meeting. They were also
reimbursed for expenses incurred in attending such meetings.
8
Members of the Board of Directors who are not employees of the Company
participate in a retirement plan for non-employee directors that provides for
the payment annually, upon retirement, of the annual fee then paid to active
non-employee directors. This annual retirement payment will continue for the
same number of years as the director served as a non-employee director.
INDEMNIFICATION AGREEMENTS. The Company has entered into indemnification
agreements with each of its directors and anticipates that it will enter into
similar agreements with any future directors. The Company has also entered into
similar agreements with certain of the Company's officers who are not also
directors. Generally, the indemnification agreements attempt to provide the
maximum protection permitted by Delaware law with respect to indemnification of
directors and officers.
The indemnification agreements provide that the Company will pay certain
amounts incurred by a director or officer in connection with any civil or
criminal action or proceeding and specifically including actions by or in the
name of the Company (derivative suits) where the individual's involvement is by
reason of the fact that he is or was a director or officer. Such amounts
include, to the maximum extent permitted by law, attorney's fees, judgments,
civil or criminal fines, settlement amounts, and other expenses customarily
incurred in connection with legal proceedings. Under the indemnification
agreements, a director or officer will not receive indemnification if he is
found not to have acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company.
THE 1993 AND 1997 NON-QUALIFIED STOCK OPTION PLANS FOR NON-EMPLOYEE
DIRECTORS. The Company has a 1993 Non-Qualified Stock Option Plan for
Non-Employee Directors (the "1993 Directors Plan") and a 1997 Non-Qualified
Stock Option Plan for Non-Employee Directors (the "1997 Directors Plan"). The
1993 Directors Plan and the 1997 Directors Plan are referred to collectively as
the "Directors Plans."
Options may be granted under the Directors Plans only to directors of the
Company who are not also employees of the Company. Currently, the non-employee
directors of the Company are Messrs. Carlin, Gerlach and Sweeney.
Pursuant to the 1997 Directors Plan, each year, immediately following the
Company's Annual Meeting of Stockholders, each then non-employee director is
granted an option to acquire 1,156 shares of Common Stock. During the fiscal
year ended September 27, 1998, under the 1997 Directors Plan, the Company
granted options to purchase 1,156 shares of Common Stock at an exercise price of
$6.50 per share to each of Messrs. Carlin, Gerlach and Sweeney. After the
Meeting this year, the Company will grant options to purchase 1,156 shares of
Common Stock to each of Messrs. Carlin, Gerlach and Sweeney under the 1997
Directors Plan.
Pursuant to the 1993 Directors Plan, each non-employee director was granted
an option to acquire 6,250 shares of Common Stock as of the date of adoption of
the 1993 Directors Plan. Subsequent to the date of adoption, an option to
acquire 6,250 shares of Common Stock will be granted to each non-employee
director immediately following the Company's Annual Meeting of stockholders at
which such non-employee director is first elected by the stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is comprised of James
F. Carlin, Jr., John T. Gerlach and Stephen J. Sweeney. No member of the
Compensation Committee is a former or current officer or employee of the
Company. In addition, although Mr. Spencer and Mr. Miller are not members of the
Compensation Committee, they serve as administrators of and are eligible to
participate in the
9
Company's Management Bonus Plan. Bonuses under the Management Bonus Plan awarded
to Mr. Spencer and Mr. Miller are reviewed and approved by the Compensation
Committee. See "Compensation Committee Report."
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is comprised solely of
non-employee directors. The Compensation Committee is responsible for developing
and making recommendations to the Company with respect to executive officer
compensation policies addressing such matters as salaries, incentive plans,
benefits and overall compensation. The Compensation Committee determines the
compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company.
The objectives of the Compensation Committee in determining the type and
amount of executive officer compensation are to provide a level of base
compensation which allows the Company to attract and retain superior talent. The
Compensation Committee endeavors to align the executive officer's interests with
the success of the Company through the payment of a bonus based upon Company
performance and participation in stock option and other stock ownership plans
which provide the executive officer with the opportunity to build a substantial
ownership interest in the Company.
The compensation of an executive officer of the Company includes cash
compensation, consisting of a base salary plus performance bonus, long-term
incentive compensation in the form of stock options and participation in a
401(k) savings and employee stock ownership plan, and participation in various
benefit plans generally available to employees of the Company.
CASH COMPENSATION. Cash compensation consists of a base salary plus an
annual performance bonus under the Management Bonus Plan (the "Bonus Plan"). In
determining base salary, the Compensation Committee reviewed national and
regional compensation information for executives in the restaurant industry
reported in various sources, including the 1997 Chain Restaurant Compensation
Association Survey prepared by Towers, Perrin, Forster & Crosby, Inc. (the
"Towers Perrin Survey"), a multiple regression analysis of compensation
information for the executive positions of 68 companies, representing 112 dining
concepts. The Compensation Committee also considered the individual experience
and performance of each executive officer. The Compensation Committee sets base
salaries at a level which is competitive with similarly situated corporations.
The key management level employees, including executive officers, are
eligible to participate in the Bonus Plan. The Bonus Plan is administered by
Messrs. Spencer and Miller, although bonuses granted to Messrs. Spencer and
Miller are reviewed and approved by the Compensation Committee. The purpose of
the Bonus Plan is to align more closely the interests of the participating
employees with the financial success of the Company and to reward individual
performance contributing to such success. Under the Bonus Plan, each eligible
employee is assigned a percentage bonus factor ranging from 10% to 35%, except
in the case of Mr. Miller who was assigned a bonus factor of 45% in lieu of an
increase in his base salary when he became Chief Executive Officer. Individual
employee and Company goals are established each year. At the end of each year,
each participating employee is rated against the employee's individual and
Company goals on a scale of 0 to 1.5. That rating is multiplied by the
employee's percentage bonus factor which in turn is multiplied by the employee's
salary to determine the employee's potential bonus. However, bonuses are paid to
employees only if the Company's earnings performance during the year exceeds a
certain threshold as specified by the Compensation Committee. During the fiscal
year ended
10
September 27, 1998, the Company paid an aggregate of $1,033,260 in bonuses under
the Bonus Plan, including a total of $613,337 to all executive officers as a
group. Of those executive officers named in the table above, Messrs. Spencer,
Miller, Brown, Liever and Fox received bonuses of $113,926, $146,474, $59,537,
$59,400 and $61,920, respectively.
The Compensation Committee determined and the Board of Directors of the
Company affirmed that it is in the best interests of the Company's stockholders,
employees and customers to assure continuity of management of the Company's
administration and operations in the event of a change in control of the
Company. Therefore, the Company has entered into Change in Control Protection
Agreements with each of its officers that provide, in general, for specified
severance payments in the event that an officer of the Company is terminated,
other than for cause, within two years of a change in control. See also,
"Executive Compensation--Change in Control Protection Agreements."
LONG-TERM INCENTIVE COMPENSATION. The executive officers, as well as all
salaried employees, of the Company are also eligible to participate in the Uno
Restaurant Corporation 1997 Employee Stock Option Plan (the "Employee Stock
Option Plan") and the ESOP. The executive officers of the Company are also
eligible to participate in the Uno Restaurant Corporation 1997 Key Officer Plan.
The purpose of the Employee Stock Option Plan is to provide increased
incentives to salaried employees, to encourage new employees to become
affiliated with the Company and to associate more closely the interests of such
persons with those of the Company. The Employee Stock Option Plan is
administered by the Compensation Committee. The Compensation Committee has the
authority to determine the individuals to whom stock options are awarded, the
terms upon which option grants shall be made and the number of shares subject to
each option, all subject to the terms and the conditions of the Employee Stock
Option Plan. Of the executive officers listed in the table above, for the fiscal
year ended September 27, 1998, the Compensation Committee granted options to
purchase 37,500 shares, 17,189 shares, and 12,696 shares to Mr. Spencer, Mr.
Brown, and Mr. Fox, respectively.
The purpose of the Key Officer Plan is to provide substantial equity
incentives only to key officers of the Company. In adopting the Key Officer
Plan, the Board of Directors and the Compensation Committee approved a one-time
only grant of options to key officers of the Company. The options will only
become exercisable to the extent financial performance goals are achieved by the
Company. The Compensation Committee believes these stock options will be a
substantial factor in motivating the Company's key officers to achieve the
Company's financial goals and to provide incentives to remain with the Company
over the long term. Of those executive officers named in the table above,
Messrs. Miller, Brown, Liever and Fox received options to purchase 250,000,
125,000, 100,000 and 125,000 shares, respectively. Mr. Spencer did not receive
any options.
The executive officers also participate in the ESOP, which is funded by
Company contributions pursuant to the employee stock ownership provision of the
ESOP, as well as by voluntary contributions by employees and matching
contributions by the Company pursuant to the 401(k) savings provision of the
ESOP. The Company's matching contributions under the 401(k) savings provision
are based upon 30% of the first 2% of compensation, and 25% of the next 4% of
compensation contributed by employees. Employees may contribute up to 15% of
compensation per year, subject to a maximum dollar limit. All Company
contributions to the ESOP are intended to be held in the ESOP in the form of
Common Stock. Employee contributions to the ESOP are invested at the direction
of employees from among seven investment funds made available by the ESOP. Each
year the Company's Board of Directors determines the amount, if any, that the
Company will contribute pursuant to the employee stock ownership provision
11
and the 401(k) savings provision of the ESOP for that plan year. As a result of
the Company's financial performance for the fiscal year ended September 27,
1998, the Company contributed $214,000 pursuant to the 401(k) savings provision
of the ESOP during the fiscal year ended September 27, 1998. Contributions
pursuant to the employee stock ownership provision of the ESOP, plus any
forfeitures arising from the termination of employees whose accounts were not
fully vested, will be allocated among those participants who (i) completed a
year of service that year and are employed on the last day of the year or (ii)
retired, died or became disabled that year. Allocations are made pro rata on the
basis of annual compensation, excluding compensation in excess of $150,000 and
compensation received before joining the ESOP.
The ESOP is designed to invest in shares of the Company's Common Stock.
Benefits will normally be distributed in a lump sum consisting of shares of
Common Stock, plus cash representing any fractional shares. Participants receive
their benefits when they retire, become disabled, die or terminate service. If
participants terminate employment for reasons other than death, disability or
retirement, they are entitled to receive only the vested portion of their
accrued benefit.
The assets of the ESOP were most recently allocated to the accounts of all
employees, including executive officers, as of September 30, 1998. At that time,
$7,005, $10,911, $6,487, $1,493 and $4,533 had been allocated to the accounts of
Mr. Spencer, Mr. Miller, Mr. Brown, Mr. Liever and Mr. Fox, respectively.
The stock ownership afforded under the Employee Stock Option Plan, the Key
Officer Plan and the ESOP allows executive officers to acquire a significant,
long-term stock ownership position in the Company which serves to align the
executives' interests with stockholders' interests.
OTHER COMPENSATION. The Company provides certain other benefits, such as
health insurance, to the executive officers that are generally available to
Company employees. In addition, officers of the Company (including the named
executive officers) are eligible to participate in a deferred compensation plan,
to receive supplemental health insurance coverage and an automobile allowance.
For the fiscal year ended September 27, 1998, the amount of additional benefits
to each of the named executive officers of the Company did not exceed 10% of the
total of annual salary and bonus for each named executive officer.
CHIEF EXECUTIVE OFFICER COMPENSATION. The base salary for Mr. Miller, Chief
Executive Officer, for the fiscal year ended September 27, 1998 was $262,500.
Mr. Miller's salary was determined based upon a review of compensation data from
several surveys, data from selected peer companies and a review of Mr. Miller's
past and expected future contributions to the Company. In lieu of increasing Mr.
Miller's salary upon his becoming Chief Executive Officer, the Compensation
Committee increased his bonus factor under the Bonus Plan as described above. As
a result, Mr. Miller received a bonus of $146,474 under the Bonus Plan for the
fiscal year ended September 27, 1998. Based on the Towers Perrin Survey referred
to above, Mr. Miller's total cash compensation is in the middle range of
executives of those restaurant companies which were the subject of the survey.
Compensation Committee
John T. Gerlach
James F. Carlin, Jr.
Stephen J. Sweeney
12
PERFORMANCE GRAPH
The following graph compares the yearly change in the Company's cumulative
total shareholder return with the cumulative total return on the Standard &
Poor's 500 Stock Index and the Standard & Poor's Restaurant Index for fiscal
years ended October 2, 1994, October 1, 1995, September 29, 1996, September 28,
1997 and September 27, 1998 based upon the market price of the Common Stock.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG UNO RESTAURANT CORPORATION, THE S&P 500 INDEX
AND THE S&P RESTAURANTS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
UNO RESTAURANT S & P
CORPORATION S & P 500 RESTAURANTS
9/93 $100.00 $100.00 $100.00
9/94 $144.59 $103.69 $99.56
9/95 $116.55 $134.53 $142.78
9/96 $91.22 $161.89 $170.28
9/97 $96.28 $227.37 $173.36
9/98 $90.37 $247.93 $216.63
* $100 INVESTED ON 9/30/93 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
The Performance Graph assumes the investment of $100 on October 4, 1993 in
the Company's Common Stock, the Standard & Poor's 500 Stock Index and the
Standard & Poor's Restaurant Index, and the reinvestment of any and all
dividends.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LEASES. The Company's executive offices are located in two adjacent
buildings in West Roxbury, Massachusetts. The first, a three-story building
owned by Aaron D. Spencer, Chairman of the Company, is leased to the Company
pursuant to a five-year lease, commencing on March 30, 1987, with options to
13
renew for two additional five-year terms. Rent during the initial term of the
lease was $30,000 per year. Currently, the second of two five-year options has
been exercised at a rate of $43,200 per year. The Company is responsible for all
taxes, utilities, insurance, maintenance and repairs. The adjacent facility, a
two-story building owned by Mr. Spencer's children, is also leased to the
Company pursuant to a 15 year lease commencing on February 1, 1990, with options
to renew for three additional five-year periods. Rent during the initial
five-year period of the lease was $106,800 per year, increasing to $128,160 per
year for the next five years, and to $153,792 per year for the final five years
of the initial term of the lease. The Company is responsible for all taxes,
utilities, insurance, maintenance and repairs. Rent during any option term will
be 120% of the rent for the prior term of the lease. Management believes that
the terms of the leases for the two offices are as favorable as otherwise
available in the real estate market. With the two buildings, the executive
offices currently consist of approximately 25,000 square feet and house the
Company's executive, administrative and clerical offices.
One of the Company-owned restaurants in Boston, Massachusetts is located on
the first floor of a six-story office building owned by Mr. Spencer. Mr. Spencer
leased the entire building to the Company pursuant to a five-year lease, which
ended on March 29, 1997, at a rent of $162,000 per year. The Company and Mr.
Spencer have reached an agreement in principal to extend the lease, and are
currently finalizing the documentation. The Company continues to pay $162,000 of
rent per year on a tenancy at will basis in the interim. The Company is
responsible for all taxes, utilities, insurance, maintenance and repairs. The
lease provided that if Mr. Spencer or the Company terminated the lease, a new
lease between the Company and Mr. Spencer relating only to the restaurant space
of the building would become effective immediately. The Company currently
sublets all but the restaurant space at rents which aggregate more than the
$162,000 annual rent that it is obligated to pay Mr. Spencer. Management
believes that the terms of its occupancy are as favorable as those otherwise
available in the real estate market.
OTHER MATTERS. A corporation, wholly-owned by Craig S. Miller ("Mr.
Miller"), President, and Chief Executive Officer of the Company, and his
brother, owns two franchised Pizzeria Uno restaurants in San Diego, California
and two franchised units in Los Angeles, California, all of which operate under
the Company's standard unit franchise agreements. The restaurants are being
operated by Mr. Miller's brother and Mr. Miller is not involved in the daily
operations of the restaurants. The Board of Directors has determined that the
franchise agreements are as favorable as otherwise available from nonaffiliated
franchisees.
On January 23, 1996, the Company loaned Mr. Miller the principal sum of
$150,000 pursuant to a promissory note (the "Note"). The Note bears interest at
the rate of 7.3% per year payable in arrears on a quarterly basis commencing
March 31, 1996. On September 27, 1998, a principal payment of $75,000 was made
and the maturity date for the balance of $75,000 has been extended to October 3,
1999. The Note is secured by all of Mr. Miller's real and personal property.
James F. Carlin, Jr., a Director of the Company, and his adult children
control Carlin Insurance Agency, Inc. Carlin Insurance Agency, Inc. provides
insurance brokerage services to the Company. It places property and casualty
insurance for the Company with various insurance carriers. During the fiscal
year ended September 27, 1998, Carlin Insurance Agency, Inc. earned $180,711 in
commissions and fees from insurance premiums paid by the Company.
14
OTHER MATTERS
VOTING PROCEDURES
The votes of stockholders present in person or represented by proxy at the
Meeting will be tabulated by an inspector of elections appointed by the Company.
The two nominees for director of the Company who receive the greatest number of
votes cast by stockholders present in person or represented by proxy at the
Meeting and entitled to vote thereon will be elected directors of the Company.
Abstentions will have no effect on the outcome of the vote for the election
of Directors. Shares of Common Stock held of record by brokers who do not return
a signed and dated proxy will not be considered present at the Meeting, will not
be counted towards a quorum and will not be voted in the election of directors.
Shares of Common Stock held of record by brokers who return a signed and dated
proxy, but who fail to vote on the proposal to elect Directors will count
towards the quorum but will count neither for nor against the proposal.
INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as the independent
auditors to audit the Company's consolidated financial statements for the fiscal
year ending October 3, 1999. Such firm and its predecessor have served
continuously in that capacity since 1979.
A representative of Ernst & Young LLP will be at the Meeting and will be
given an opportunity to make a statement, if so desired. The representative will
be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of the Company's Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and
the New York Stock Exchange. Executive officers, directors and greater than 10%
stockholders are required to furnish the Company with copies of all Forms 3, 4
and 5 they file.
Based solely on the Company's review of the copies of such Forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for specified fiscal years, the Company
believes that all of its executive officers, directors and greater than 10%
stockholders complied with all Section 16(a) filing requirements applicable to
them during the Company's fiscal year ended September 27, 1998, except as
follows:
The executive officers and directors listed in the table below filed a Form
5, on December 24, 1998, reporting, as indicated in the table, one or more of
(i) the allocation of shares of Common Stock as of September 25, 1998 under the
Company's Employee Stock Ownership Plan (the "ESOP") to such participant's
account, (ii) the grant of stock options under the 1997 Employee Stock Option
Plan, (iii) the grant of stock options under the 1997 Non-Qualified Stock Option
Plan for Non-Employee Directors, and (iv) the grant of stock options under the
1997 Key Officer Stock Option Plan.
15
NON-EMPLOYEE
EMPLOYEE KEY OFFICER DIRECTOR
STOCK OPTION STOCK STOCK OPTION
NAME ESOP ALLOCATION GRANT OPTION GRANT GRANT
- ---------------------------------------------------------- --------------- ------------- ------------ -------------
Robert M. Brown........................................... 20 17,189 125,000
James F. Carlin........................................... 1,156
Alan M. Fox............................................... 20 12,696 125,000
Paul W. MacPhail.......................................... 14 100,000
Thomas W. Gathers......................................... 18 100,000
John T. Gerlach........................................... 1,156
Robert M. Vincent......................................... 13 100,000
Damon Liever.............................................. 20 100,000
Craig S. Miller........................................... 21 250,000
Aaron D. Spencer.......................................... 37,500
Stephen J. Sweeney........................................ 1,156
OTHER PROPOSED ACTION
The Board of Directors knows of no matters which may come before the Meeting
other than the election of directors. However, if any other matters should
properly be presented to the Meeting, the persons named as proxies shall have
discretionary authority to vote the shares represented by the accompanying proxy
in accordance with their own judgment.
STOCKHOLDER PROPOSALS
Proposals which stockholders intend to present at the Company's 1999 Annual
Meeting of Stockholders and wish to have included in the Company's proxy
materials pursuant to Rule 14a-8 promulgated under the Securities Exchange Act
of 1934, as amended, must be received by the Company no later than October 1,
1999. If a proponent fails to notify the Company by December 15, 1999 of a
non-Rule 14a-8 stockholder proposal which it intends to submit at the Company's
1999 Annual Meeting of Stockholders, the proxy solicited by the Board of
Directors with respect to such meeting may grant discretionary authority to the
proxies named therein to vote with respect to such matter.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of the Proxy Statement entitled "Compensation Committee Report" and
"Performance Graph" shall not be deemed to be so incorporated, unless
specifically otherwise provided in any such filing.
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
SEPTEMBER 27, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ARE
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED TO
INVESTOR RELATIONS, UNO RESTAURANT CORPORATION AT 100 CHARLES PARK ROAD, WEST
ROXBURY, MASSACHUSETTS 02132.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
16
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PROXY UNO RESTAURANT CORPORATION PROXY
The undersigned hereby appoints Aaron D. Spencer and Craig S. Miller, and
each of them, acting singly, with full power of substitution, attorneys and
proxies to represent the undersigned at the 1999 Annual Meeting of Stockholders
of Uno Restaurant Corporation to be held on Tuesday, February 23, 1999, and at
any adjournment or adjournments thereof, with all power which the undersigned
would possess if personally present, and to vote all shares of stock which the
undersigned may be entitled to vote at said meeting upon the matters set forth
in the Notice of and Proxy Statement for the Meeting in accordance with the
following instructions and with discretionary authority upon such other matters
as may come before the Meeting. All previous proxies are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS INDICATED, IT WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES AS DIRECTORS.
Continued and to be signed, on reverse side
(Please fill in the reverse side and mail in the enclosed envelope)
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FOLD AND DETACH HERE
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The Board of Directors recommends a vote for the election of the nominees as directors. Please mark
your choice / X /
as indicated
in the example
1. Election of Directors: Nominees: Craig S. Miller and Paul W. MacPhail
FOR ALL NOMINEES WITHHOLD
(except as marked to AUTHORITY FOR except vote withheld from the following nominee(s):
the contrary) to vote for all
nominees ------------------------------------------------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
/X/ /X/ THAT NOMINEE'S NAME IN THE SPACE PROVIDED ABOVE.)
MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT
/X/
(Signatures should be the same as the name printed
hereon. Executor, Administrators, trustees,
guardians, attorneys, and officers of corporations
should add their titles when signing.)
Signature:
-----------------------------------------
Signature:
-----------------------------------------
Date:
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Date:
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FOLD AND DETACH HERE