<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
J. Alexander's Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
<PAGE> 2
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
Date Filed:
<PAGE> 3
J. ALEXANDER'S CORPORATION
3401 WEST END AVENUE
SUITE 260
P.O. BOX 24300
NASHVILLE, TENNESSEE 37202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of J. Alexander's Corporation:
The Annual Meeting of Shareholders of J. Alexander's Corporation (the
"Company") will be held at the J. Alexander's Restaurant at 1721 Galleria
Boulevard, Franklin, Tennessee, at 9:00 a.m., Nashville time, on May 6, 1999 for
the following purposes:
(1) To elect five directors to hold office for a term of one year
and until their successors have been elected and qualified;
and
(2) To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on April 5, 1999
are entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
Your attention is directed to the Proxy Statement accompanying this
notice for a more complete statement regarding the matters to be acted upon at
the meeting.
We hope very much that you will be able to be with us. If you do not
plan to attend the meeting in person, you are requested to complete, sign and
date the enclosed proxy and return it promptly in the enclosed addressed
envelope, which requires no postage if mailed in the United States.
By Order of the Board of Directors
R. GREGORY LEWIS
Secretary
April 6, 1999
<PAGE> 4
J. ALEXANDER'S CORPORATION
3401 WEST END AVENUE
SUITE 260
P.O. BOX 24300
NASHVILLE, TENNESSEE 37202
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 6, 1999
The enclosed proxy is solicited by and on behalf of the Board of Directors
of J. Alexander's Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held on Thursday, May 6, 1999, at 9:00 a.m., Nashville time,
at the J. Alexander's Restaurant at 1721 Galleria Boulevard, Franklin,
Tennessee, and at any adjournments or postponements thereof, for the purposes
set forth in the foregoing Notice of Annual Meeting of Shareholders. Copies of
the proxy, this Proxy Statement and the attached Notice are being mailed to
shareholders on or about April 7, 1999.
Proxies may be solicited by mail, telephone or telegraph. All costs of this
solicitation will be borne by the Company. The Company does not anticipate
paying any compensation to any party other than its regular employees for the
solicitation of proxies, but may reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to beneficial owners.
Shares represented by such proxies will be voted in accordance with the
choices specified thereon. If no choice is specified, the shares will be voted
FOR the election of the director nominees named herein. The Board of Directors
does not know of any other matters which will be presented for action at the
meeting, but the persons named in the proxy intend to vote or act with respect
to any other proposal which may be properly presented for action according to
their best judgment in light of the conditions then prevailing.
A proxy may be revoked by a shareholder at any time before its exercise by
attending the meeting and electing to vote in person, by filing with the
Secretary of the Company a written revocation or by duly executing a proxy
bearing a later date.
Each share of the Company's Common Stock, $.05 par value (the "Common
Stock"), issued and outstanding on April 5, 1999 (the "Record Date"), will be
entitled to one vote on all matters to come before the meeting. As of the Record
Date, there were outstanding 6,531,601 shares of Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 23, 1999, certain information
with respect to those persons known to the Company to be the beneficial owners
(as defined by certain rules of the Securities and Exchange Commission (the
"Commission")) of more than five percent (5%) of the Common Stock, its only
voting security, and with respect to the beneficial ownership of the Common
Stock by all directors and nominees, each of the executive officers
<PAGE> 5
named in the Summary Compensation Table, and all executive officers and
directors of the Company as a group. Except as otherwise specified, the shares
indicated are presently outstanding.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK(1)
- ------------------------------------ ------------------ ---------------
<S> <C> <C>
E. Townes Duncan**............................................... 1,597,166 (2) 24.5%
30 Burton Hills Blvd
Suite 100
Nashville, TN 37215
Solidus, LLC..................................................... 1,560,666 (3) 23.9
30 Burton Hills Blvd
Suite 100
Nashville, TN 37215
Sackett & Company................................................ 416,967 (4)
P. O. Box 276 6.3
Corte Madera, CA 94976-0276
Dimensional Fund Advisors, Inc................................... 350,600 (5)
1299 Ocean Avenue, 11th Floor 5.4
Santa Monica, CA 90401
The J. Alexander's Corporation................................... 334,273 (6)
Employee Stock Ownership Trust 5.1
3401 West End Avenue
Nashville, TN 37203
Lonnie J. Stout II****........................................... 212,523 (7) 3.2
John L.M. Tobias**............................................... 48,992 (8) *
R. Gregory Lewis***.............................................. 42,741 (9) *
Earl Beasley, Jr.**.............................................. 38,218 (10) *
Garland G. Fritts**.............................................. 25,000 (11) *
Ronald E. Farmer***.............................................. 9,446 (12) *
J. Michael Moore***.............................................. 3,752 (13) *
All directors and executive officers as a group.................. 1,979,673 (14) 29.3
</TABLE>
- ---------------
* Less than one percent.
** Director.
*** Named Officer.
**** Director and Named Officer.
2
<PAGE> 6
(1) Pursuant to the rules of the Commission, shares of Common Stock which
certain persons presently have the right to acquire pursuant to the
conversion provisions of the Company's 8 1/4% Convertible Subordinated
Debentures Due 2003 ("Conversion Shares") are deemed outstanding for
the purpose of computing such person's percentage ownership, but are
not deemed outstanding for the purpose of computing the percentage
ownership of the other persons shown in the table. Likewise, shares
subject to options held by directors and executive officers of the
Company which are exercisable within 60 days of March 23, 1999, are
deemed outstanding for the purpose of computing such director's or
executive officer's percentage ownership and the percentage ownership
of all directors and executive officers as a group. The beneficial
ownership of each officer and director as reported in this table does
not include shares that may be acquired upon exercise of certain rights
that may be distributed in the Company's pending rights offering, as
described in the Company's Registration Statement on Form S-3 filed
with the Commission on March 23, 1999. Unless otherwise indicated, each
individual has sole voting and dispositive power with respect to all
shares shown.
(2) Includes 9,000 shares issuable upon exercise of certain options held by
Mr. Duncan, 1,180 shares that Mr. Duncan holds as custodian for his
children, 700 shares owned by Mr. Duncan's wife, 2,070 shares that are
held in trusts of which Mr. Duncan's wife is trustee, and 1,560,666
shares that are owned by Solidus, LLC, a limited liability company in
which Mr. Duncan is the principal manager and a member.
(3) Solidus, LLC ("Solidus") shares voting and dispositive power with
respect to 1,560,666 shares with Mr. Duncan, a principal manager and
member whose beneficial ownership in such shares is shown above.
Information is based solely on the Schedule 13D filed with the
Commission by Solidus.
(4) Includes 73,467 Conversion Shares. Sackett & Company ("Sackett") is a
registered investment advisor. Information is based solely on the
Schedule 13G filed with the Commission by Sackett.
(5) Dimensional Fund Advisors, Inc. ("DFA") is a registered investment
advisor. Information is based solely on the Schedule 13G filed with the
Commission by DFA.
(6) Includes 144,732 shares that have been allocated to the J. Alexander's
Employee Stock Ownership Plan (the "ESOP") participants. Pursuant to
the terms of the ESOP that govern the J. Alexander's Corporation
Employee Stock Ownership Trust (the "Trust"), each ESOP participant
instructs SunTrust Bank, Nashville, N.A., as trustee of the Trust (the
"Trustee"), how to vote the shares allocated to his or her account. The
ESOP provides that the Trustee shall abstain from voting allocated
shares for which no written instructions are received. Shares of the
Company's Common Stock held by the ESOP but not yet allocated to the
accounts of the participants will be voted based on the percentage of
stock allocated to the participants' accounts which is voted for and
against each proposal, including in the tabulation of such percentages
only those shares as to which written voting instructions were
received. The Trustee has shared dispositive power with respect to the
shares, subject to certain provisions of the ESOP.
3
<PAGE> 7
(7) Includes 179,741 shares issuable upon exercise of certain options held
by Mr. Stout and 7,025 ESOP shares allocated to Mr. Stout and held by
the Trust, as to which Mr. Stout has sole voting power and shared
dispositive power.
(8) Includes 1,126 Conversion Shares, 3,000 shares owned by Mr. Tobias'
wife, and 20,000 shares issuable upon exercise of certain options held
by Mr. Tobias.
(9) Includes 7,500 shares issuable upon exercise of certain options held by
Mr. Lewis and includes 5,499 ESOP shares allocated to Mr. Lewis and
held by the Trust, as to which Mr. Lewis has sole voting power and
shared dispositive power.
(10) Includes 56 Conversion Shares, 1,332 shares that Mr. Beasley holds as
custodian for his children, and 7,000 shares issuable upon exercise of
certain options held by Mr. Beasley.
(11) Includes 7,000 shares issuable upon exercise of certain options held by
Mr. Fritts.
(12) Includes 2,084 ESOP shares allocated to Mr. Farmer and held by the
Trust, as to which Mr. Farmer has sole voting power and shared
dispositive power.
(13) Includes 3,377 ESOP shares allocated to Mr. Moore and held by the
Trust, as to which Mr. Moore has sole voting power and shared
dispositive power.
(14) Includes 1,182 Conversion Shares, 230,241 shares issuable upon exercise
of certain options held by the directors and executive officers, and
19,804 ESOP shares allocated to the executive officers and held by the
Trust, as to which such officers have sole voting power and shared
dispositive power.
Pursuant to a Stock Purchase and Standstill Agreement between Solidus and
the Company dated March 22, 1999, Solidus purchased 1,086,266 shares of Common
Stock for $3.75 per share, for an aggregate purchase price of $4,073,497.50. In
addition, Solidus agreed that (i) for a period of seven years, Solidus and its
affiliates would not acquire or hold more than 33% of the Company's Common
Stock; (ii) for a period of seven years, Solidus and its affiliates would not
solicit proxies for a vote of the shareholders of the Company; (iii) for a
period of seven years, Solidus and its affiliates would not sell the Company's
Common Stock, except to the Company, a person, entity or group approved by the
Company or to an affiliate of Solidus; (iv) the above restrictions on Solidus'
ownership and ability to solicit proxies would terminate in the event of certain
tender offers or exchange offers, a notice filing with the Department of Justice
relating to the acquisition by a third party of more than 15% of the outstanding
Common Stock or with the Securities and Exchange Commission relating to the
acquisition by a third party of more than 10% of the outstanding Common Stock,
the Company's proposing or approving a merger or other business combination, or
a change to a majority of the Company's Board of Directors over a two-year
period; and (v) Solidus would not exercise rights attributable to the 1,086,266
shares of Common Stock purchased on March 22, 1999, during the Company's rights
offering, pursuant to which holders of each share will be granted the
nontransferable right to purchase 0.2 share of the Company's Common Stock at
$3.75 per share for each share owned on the rights record date.
4
<PAGE> 8
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Five directors are to be elected at the annual meeting for a term of one
year and until their successors shall be elected and qualified. Election of
directors requires a plurality of the votes cast in such election. It is
intended that shares represented by the enclosed proxy will be voted FOR the
election of the nominees named in the table set forth below unless a contrary
choice is indicated. All of such nominees are presently directors of the
Company. Management believes that all of the nominees will be available and able
to serve as directors, but if for any reason any should not be available or able
to serve, it is intended that such shares will be voted for such substitute
nominees as may be proposed by the Board of Directors of the Company. The
following schedule includes certain information with respect to each of the
nominees.
<TABLE>
<CAPTION>
NAME BACKGROUND INFORMATION
- ---- ----------------------
<S> <C>
Earl Beasley, Jr.................... Mr. Beasley, 65, has been a director of the Company since March 1991. Since
1981, Mr. Beasley has been President of Homer B. Brown Co., an investment
firm. Mr. Beasley was President and a director of the Company from 1971 to
1980.
E. Townes Duncan.................... Mr. Duncan, 45, has been a director of the Company since May 1989. Mr.
Duncan has been President and a director of Solidus, LLC, a private
investment firm, since January 1997. From 1993 to May 1997, Mr. Duncan
was the Chairman of the Board and Chief Executive Officer of Comptronix
Corporation, a manufacturer of printed circuit board assemblies
("Comptronix"). From 1985 to 1993, Mr. Duncan was a Vice President and
principal of Massey Burch Investment Group, Inc. From 1994 to March 1999,
Mr. Duncan was a director of Sirrom Capital Corporation, a specialty finance
company. Mr. Duncan is also a director of Bright Horizons Family Solutions,
Inc. (formerly CorporateFamily Solutions), a childcare services company.
Garland G. Fritts................... Mr. Fritts, 69, has been a director of the Company since December 1985.
Since 1993, Mr. Fritts has been a consultant for Fry Consultants, Inc., a
management consulting firm. Mr. Fritts was a consultant for McManis
Associates, Inc., a management consulting firm, from 1989 to 1993.
Lonnie J. Stout II.................. Mr. Stout, 52, has been a director and President and Chief Executive Officer
of the Company since May 1986. Since July 1990, Mr. Stout has also served
as Chairman of the Company. From 1982 to May 1984, Mr. Stout was a
director of the Company, and served as Executive Vice President and Chief
Financial Officer of the Company from October 1981 to May 1984.
John L.M. Tobias.................... Mr. Tobias, 78, has been a director of the Company since February 1983. He
has served as President of J.M.T. Associates, Inc., an investment firm, since
1979 and as that corporation's Board Chairman since January 1987.
</TABLE>
5
<PAGE> 9
The Board of Directors of the Company held nine meetings in 1998. The
Board of Directors has an Audit Committee and a Compensation/Stock Option
Committee (the "Compensation Committee"), the members of each of which are
Messrs. Beasley, Duncan, Fritts and Tobias. The Audit Committee, which held two
meetings during 1998, generally meets with the Company's independent auditors to
review the Company's consolidated financial statements. It is the function of
this committee to ensure that the Company's financial statements accurately
reflect the Company's financial position and results of operations. The
Compensation Committee is responsible for the periodic review of management's
compensation and administration of the Company's stock option plans. The
Compensation Committee held two meetings during 1998. The Company's Board of
Directors has no standing nominating committee.
Each of the incumbent directors of the Company attended at least 75% of the
aggregate of (i) the total number of meetings held during 1998 by the Board of
Directors and (ii) the total number of meetings held during 1998 by all
committees of the Board of which he was a member.
CERTAIN PROCEEDINGS
Mr. Duncan served as Chairman of the Board and Chief Executive Officer, and
Mr. Stout served as a director, of Comptronix. Comptronix filed for
reorganization under Chapter 11 of the Bankruptcy Code in August 1996. In
November 1996, Comptronix sold substantially all of its assets pursuant to an
agreement approved by the Bankruptcy Court. Comptronix distributed all of its
remaining assets, including the proceeds from the November 1996 sale, to its
creditors pursuant to a plan of liquidation consummated in May 1997.
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or other
compensation during fiscal years 1998, 1997 and 1996 for the Company's Chief
Executive Officer and each of the other executive officers of the Company who
were serving as executive officers at January 3, 1999 whose cash compensation
exceeded $100,000 (collectively, the "Named Officers").
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) ($)(1)
- --------------------------------- --------- ------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Lonnie J. Stout II............... 1998 272,500 34,688 50,000 5,388(2)
Chairman, President, Chief 1997 258,750 -- 80,000 5,623
Executive Officer, and 1996 250,000 -- -- 1,634
Director
R. Gregory Lewis................. 1998 130,000 16,750 46,800 5,636(3)
Vice-President, Chief 1997 121,500 -- 19,500 6,231
Financial Officer, and 1996 117,000 -- -- 2,425
Secretary
Ronald E. Farmer................. 1998 103,500 13,375 34,200 3,078(4)
Vice-President, 1997 96,500 -- -- 3,348
Development 1996 87,000 -- -- 1,241
J. Michael Moore................. 1998 95,650 12,250 15,800 3,531(5)
Vice-President, Human 1997 86,000 -- -- 3,555
Resources and
Administration
</TABLE>
- ---------------------
(1) THE ESOP SHARES INCLUDED IN THIS COLUMN FOR 1998 ARE VALUED AT $4 PER
SHARE, THE CLOSING PRICE OF THE COMPANY'S COMMON STOCK ON DECEMBER 31,
1998. THE NUMBER OF ESOP SHARES INCLUDED IN THIS COLUMN FOR 1998 IS AN
APPROXIMATION OF THE NUMBER OF SHARES TO BE ALLOCATED TO THE PARTICIPANTS.
(2) INCLUDES THE $1,440 PREMIUM COST OF TERM LIFE INSURANCE MAINTAINED FOR THE
BENEFIT OF MR. STOUT, $600 CONTRIBUTED BY THE COMPANY TO THE COMPANY'S
401(K) PLAN ON BEHALF OF MR. STOUT, AND 837 ESOP SHARES ALLOCATED TO MR.
STOUT.
(3) INCLUDES THE $1,248 PREMIUM COST OF TERM LIFE INSURANCE MAINTAINED FOR THE
BENEFIT OF MR. LEWIS, $1,040 CONTRIBUTED BY THE COMPANY TO THE COMPANY'S
401(K) PLAN ON BEHALF OF MR. LEWIS AND 837 ESOP SHARES ALLOCATED TO MR.
LEWIS.
(4) INCLUDES THE $994 PREMIUM COST OF TERM LIFE INSURANCE MAINTAINED FOR
THE BENEFIT OF MR. FARMER AND 521 ESOP SHARES ALLOCATED TO MR. FARMER.
7
<PAGE> 11
(5) Includes the $893 premium cost of term life insurance maintained for the
benefit of Mr. Moore, $838 contributed by the Company to the Company's
401(k) plan on behalf of Mr. Moore and 450 ESOP shares allocated to Mr.
Moore.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information as to options granted to the Named
Officers during fiscal 1998. No stock appreciation rights ("SARs") have ever
been awarded by the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL GRANT DATE
SECURITIES OPTIONS VALUE
UNDERLYING GRANTED TO ------------
OPTIONS/SARS EMPLOYEES IN EXERCISE OR GRANT DATE
GRANTED FISCAL BASE EXPIRATION PRESENT
NAME (#)(1) YEAR (%) PRICE ($/SH) DATE VALUE ($)(2)
- ------------------- ---------------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Lonnie J. Stout II 50,000 14.1% 2.75 9/30/2008 79,000
R. Gregory Lewis 10,000 2.75 9/30/2008 15,800
36,800(3) 2.75 9/30/2008 58,144
-------- --------
46,800 13.2% 73,944
Ronald E. Farmer 9,000 2.75 9/30/2008 14,220
25,200(3) 2.75 9/30/2008 39,816
-------- --------
34,200 9.6% 54,036
J. Michael Moore 5,000 2.75 9/30/2008 7,900
10,800(3) 2.75 9/30/2008 17,064
-------- -------
15,800 4.4% 24,964
</TABLE>
- ---------------------
(1) One-third of the shares covered by the options granted to the Named
Officers vest on the first anniversary of the date of grant and each
year thereafter.
(2) Based on the Black-Scholes Option Valuation Method. The assumptions
underlying this valuation are as follows: (i) a $2.75 exercise price
and market price on the date of grant; (ii) a ten year expected option
term; (iii) risk-free rate based on the current Treasury bill rate
(4.60 % ten year rate); (iv) volatility of .3799, based on monthly
closing prices since August 1990; and (v) no annual dividend yield. The
grant date value has not been discounted for the vesting schedule of
the options.
(3) Represents new options issued in option exchange, described below in
"Report on Exchange of Options".
8
<PAGE> 12
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information as to options exercised by the
Named Officers during fiscal 1998. None of the Named Officers has held or
exercised separate SARs. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of January 3,
1999. Also reported are the values for the "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED VALUE FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
ON REALIZED ------------------------------ --------------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ------------- ----------- ------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Lonnie J. Stout II -- -- 179,741 140,259 182,850 59,400
R. Gregory Lewis -- -- 7,500 46,800 19,185 55,598
Ronald E. Farmer -- -- -- 34,200 -- 40,630
J. Michael Moore -- -- -- 15,800 -- 18,770
</TABLE>
- ------------------
(1) Amounts reflect the value of outstanding options based on the average
of the high and low price of the Company's Common Stock on December 31,
1998.
REPORT ON EXCHANGE OF OPTIONS
On September 30, 1998, the Board of Directors approved an exchange of some
option grants to employees under the Company's 1994 Employee Stock Incentive
Plan and 1985 Stock Option Plan. All employees other than Lonnie J. Stout II,
President and Chief Executive Officer (who asked not to be considered for the
exchange offer) were eligible to surrender their outstanding grants in exchange
for new grants with a new 3-year vesting period, new exercise prices and, for
management employees, reduced number of shares issuable upon exercise. No
directors were eligible to participate. The new options were granted at an
exercise price of $2.75 per share, the closing sale price of the Common Stock on
September 30, 1998 as reported on the New York Stock Exchange. For management
employees, including the executive officers listed below, the number of shares
of Common Stock that may be purchased when the new options are exercised is 80%
of the shares issuable under the surrendered options. The new options will vest
in one-third increments on the first, second and third anniversaries of the date
of grant.
The following table sets forth certain information concerning the exchange,
which has been the only adjustment to option exercise prices in the past ten
years.
9
<PAGE> 13
TEN YEAR OPTION EXCHANGE
<TABLE>
<CAPTION>
NUMBER OF (NEW LENGTH OF
SECURITIES EXERCISE ORIGINAL
UNDERLYING PRICE) NUMBER OF EXERCISE OPTION TERMS
NEW MARKET PRICE SECURITIES PRICE AT REMAINING
OPTIONS OF STOCK AT UNDERLYING TIME OF AT DATE OF
ISSUED TIME OF OLD OPTIONS EXCHANGE EXCHANGE
NAME DATE (#)(1) EXCHANGE ($) EXCHANGED (#) ($) (YEARS)
- --------------------------- -------- ------------- -------------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. Gregory Lewis........... 9/30/98 36,800 2.75 9,000 7.38 5.9
Vice President, 9,000 9.75 6.8
Chief Financial 7,500 8.75 8.4
Officer, and Secretary 12,000 5.69 9.1
8,500 10.50 4.8
Ronald E. Farmer........... 9/30/98 25,200 2.75 7,500 8.75 8.4
Vice President, 12,000 5.69 9.1
Development 5,000 10.38 5.1
3,000 7.25 6.1
4,000 9.75 6.8
J. Michael Moore........... 9/30/98 10,800 2.75 3,500 8.75 8.4
Vice President, 10,000 5.69 9.1
Human Resources and
Administration
</TABLE>
- --------------
(1) Represents 80% of the number of shares of Common Stock issuable upon
exercise of surrendered options
The Board believes that permitting the exchange for new options with
the exercise price at the current market price of the Common Stock was in the
best interests of the Company and its shareholders. In the view of the Board,
the decline in the market price of the Common Stock substantially impaired the
effectiveness of the surrendered options as incentives to employees'
performance. It was also determined by the Board that exchanging the new options
would renew the incentive for employees of the Company to acquire an equity
interest in the Company, which the Board believes better aligns the long-term
interests of management with those of the shareholders. Further, the Board
believes that the commencement of the new vesting period would provide further
incentive to employees to remain with the Company. On March 22, 1999, the
closing sale price of the Common Stock on the New York Stock Exchange was
$3.6875.
Respectfully submitted,
Earl Beasley, Jr.
E. Townes Duncan
Garland G. Fritts
John L. M. Tobias
10
<PAGE> 14
SALARY CONTINUATION PLAN
Since 1978, the Company has provided a salary continuation plan for
eligible employees (the "Salary Plan") which will continue to operate in 1999.
The Salary Plan generally provides for a retirement benefit of 50% of the
employee's salary on the date of entry into the plan with adjustments based on
certain subsequent salary increases. The retirement benefit is payable over 15
years commencing at age 65. The Salary Plan also provides that in the event an
employee dies while in the employ of the Company after entering the Salary Plan
but before retirement, his or her beneficiaries, for a period of one year, will
receive 100% of such employee's salary at the applicable time under the Salary
Plan. Thereafter, for a period of 10 years, or until such time as the employee
would have attained age 65, whichever period is longer, the beneficiaries will
receive 50% of such salary yearly. All officers and certain other key employees
of the Company with three full years of service are eligible to participate in
the Salary Plan, which is generally funded by life insurance purchased by the
Company and payable to the Company on the death of the employee. An amount which
approximates the cash value of the life insurance policy, or in some cases in
which the Company currently self funds the retirement benefit, the cash value of
the policy which would have been required to fund the retirement benefit, for
each employee vests for the benefit of such employee at the rate of 10% per year
for each year of service, including the first three years of service required
for eligibility under the Salary Plan, and is payable to such employee upon
termination of service with the Company for any reason other than death or
retirement at age 65. Directors of the Company who are not also executive
officers or employees do not participate in the Salary Plan.
The estimated annual benefits payable upon retirement at age 65 for each of
Messrs. Stout and Lewis are $107,500 and $58,500, respectively. Messrs. Farmer
and Moore are each expected to receive estimated annual benefits of
approximately $46,500 payable upon retirement at age 65. These amounts may be
adjusted periodically pursuant to the terms of the Salary Plan.
TERMINATION BENEFITS
Pursuant to severance benefits agreements with the Company, in the event
that Mr. Stout or Mr. Lewis is terminated or resigns after a change in
responsibilities, then such employee will receive an amount equal to 18 months'
compensation. Based on current levels of compensation, such amount would be
$416,250 for Mr. Stout and $201,000 for Mr. Lewis.
COMPENSATION OF DIRECTORS
The directors receive a monthly director's fee of $500 plus an additional
fee of $300 for each Board or Board Committee meeting attended.
Pursuant to the 1990 Stock Option Plan for Outside Directors ("1990 Plan"),
each director who is not also an officer or employee of the Company and who was
serving in such capacity on October 24, 1989 was granted an option to purchase
10,000 shares of Common Stock and an additional 1,000 shares for each previous
full year of service as a director. Each eligible director elected thereafter
has been and will be granted an option to purchase 10,000 shares upon election,
and all directors have been and will be granted an option to purchase 1,000
shares for
11
<PAGE> 15
each full year of service as a director after 1989 or their later
election, as applicable. The per share exercise price of the options granted
under the 1990 Plan is the fair market value of the Common Stock on the date the
option is granted.
COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executive officers are made by
the Compensation Committee of the Company's Board of Directors. Each member of
the Compensation Committee is a non-employee director. It is the responsibility
of the Compensation Committee to determine whether in its judgment the executive
compensation policies are reasonable and appropriate, meet their stated
objectives and effectively serve the best interests of the Company and its
shareholders.
Compensation Philosophy and Policies for Executive Officers
The Compensation Committee believes that the primary objectives of the
Company's executive compensation policies should be:
- to attract and retain talented executives by providing compensation
that is, overall, competitive with the compensation provided to
executives at companies of comparable size and position in the
restaurant industry, while maintaining compensation within levels that
are consistent with the Company's overall financial objectives and
operating performance;
- to provide the appropriate incentives for executive officers to work
towards the achievement of the Company's annual sales, operating and
development targets; and
- to align the interests of its executive officers more closely with
those of its shareholders and the long-term interests of the Company by
providing long-term incentive compensation in the form of stock
options.
The Compensation Committee believes that the Company's executive
compensation policies should be reviewed each year following the time when the
financial results of the prior year become final. The policies are reviewed in
light of their consistency with the Company's financial performance, the success
achieved in meeting its sales and operating performance targets, achieving its
overall strategic business plan objectives and its position within the
restaurant industry, as well as the compensation policies of similar companies.
The compensation of individual executive officers is reviewed annually by the
Compensation Committee in light of the executive compensation policies
established for that year.
The Compensation Committee sets the base compensation of its executive
officers at a level that it believes appropriate considering the overall
strategic direction of the Company, its position within the relative segments of
the food service industry in which it operates and the overall responsibilities
of each executive officer. The Compensation Committee believes that in addition
to corporate performance, it is appropriate to consider in setting and reviewing
executive compensation the personal contributions the particular individual may
make to the success of the corporate enterprise. Such qualitative factors as
leadership skills, planning initiatives, development and morale
12
<PAGE> 16
building skills, and other such related factors have been deemed to be important
qualitative factors to take into account when considering levels of
compensation.
Compensation of Executive Officers
The Compensation Committee believes that the compensation for each of the
Named Officers should consist of a base salary, the potential for an annual
bonus and long-term stock-based incentive compensation and has applied the
policies described herein to fiscal 1998 compensation for executive officers as
described below.
Base Compensation. Base salaries for the Named Officers are at fixed levels
generally between the 25th and 75th percentiles of salaries paid to senior
managers with comparable qualifications, experience and responsibility at other
corporations engaged in the same or similar businesses as the Company. The
Compensation Committee subjectively determined, on the basis of discussions with
the Chief Executive Officer and its experience in business generally and with
the Company specifically, what it viewed to be appropriate levels of base
compensation after taking into consideration each executive's contributions. As
a result of this review, increases averaging approximately 5.1% in the base
salaries for the Named Officers for fiscal 1998 were made, with specific
increases varying from 3.7% to 7.0%, reflecting the Compensation Committee's
subjective judgment as to individual contributions to the success of meeting the
Company's overall financial objectives and financial performance. The
Compensation Committee did not assign any relative weight to the quantitative
and qualitative factors which it applied subjectively in reaching its base
compensation decisions.
Annual Incentive Compensation. The principal factors in awarding an annual
bonus to the Company's executive officers are their ability to increase same
store sales, improve corporate operating profits or maintain them at the
appropriate levels for the sales achieved, and meet the Company's overall
strategic business plan objectives. The Compensation Committee also may consider
other factors when awarding annual bonuses, such as the executive's contribution
to concept development, improvement in financial performance and the impact the
executive officers have on programs that enhance shareholder value.
The Compensation Committee generally believes that an annual bonus award in
the range of 15% to 50% of the executive officer's annual base compensation is
appropriate in light of the relatively low to moderate base salary levels. In
establishing the levels of incentive compensation for 1998, the Compensation
Committee did not award any executive officers a bonus in the targeted range
because the Company was not profitable for the entire year. However, the Company
believed that an award of incentive compensation was appropriate given the
significant improvement in the Company's operating performance. During fiscal
1998, bonuses averaging 12.5% of the executive officers' annual base
compensation were awarded to the executive officers, with specific bonuses
ranging from $12,250 to $34,688, reflecting the Compensation Committee's
subjective judgment as to individual contributions to the Company's performance
compared to its overall strategic business plan objectives and the factors
affecting the Company described above.
Long-Term Incentive Compensation. During the Company's fiscal year the
Compensation Committee considers the desirability of granting its senior
executives long-term incentive compensation in the form of awards under the
Company's incentive stock option plan. The Compensation Committee believes that
its past grants of stock options
13
<PAGE> 17
have successfully focused the Company's management team on building
profitability and enhancing shareholder value.
The Company currently has no set policy as to when stock options should be
awarded, although historically the Company has awarded stock options, if any, at
the time of the Company's annual compensation review. The Compensation Committee
believes that the Company should make it a part of its regular executive
compensation policies to consider granting annual awards of stock options to
executive officers to provide long-term incentives as part of each executive's
annual compensation package. The Compensation Committee also believes that this
grant should be made on terms established at the time of the annual review, and
that the exercise price of stock options should be the fair market value of the
Company's Common Stock on the date of grant. Generally, the Compensation
Committee's policy is that stock options should vest gradually over a period of
three or more years.
The Compensation Committee believes that long-term stock-based incentive
compensation should be structured so as to closely align the interests of the
executives with those of the Company's shareholders. The Compensation Committee
determines the award of stock option grants to the executive officers and takes
into account the recommendations of the Chief Executive Officer prior to
approving annual awards of long-term stock-based incentive compensation to the
other executive officers.
Compensation of Chief Executive Officer
The Compensation Committee believes that the Chief Executive Officer's
compensation is consistent with its general policies concerning executive
compensation and is appropriate in light of the Company's financial objectives
and performance. Awards of long-term incentive compensation to the Chief
Executive Officer are considered concurrently with awards to other executive
officers and follow the same general policies as such other long-term incentive
awards.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), enacted in 1993,
generally prohibits public companies from deducting the Chief Executive
Officer's and four other most highly compensated executive officers'
compensation, to the extent such compensation exceeds $1 million for any
individual officer. Performance-based compensation is not subject to the
deduction limit if certain requirements are met. Since the compensation of each
of the Company's executive officers is significantly less than $1 million, the
Company has not addressed the steps that it would take to structure the
performance-based portion of the compensation of its executive officers in a
manner that would comply with the statute.
Respectfully submitted,
Earl Beasley, Jr.
E. Townes Duncan
Garland G. Fritts
John L.M. Tobias
14
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the five-year cumulative returns of $100
invested on January 2, 1994 in (a) the Company, (b) the Media General Restaurant
Group Industry Index ("MG Restaurant Index"), (c) the Standard & Poor's 500
Index ("S&P 500 Index"), and (d) the New York Stock Exchange Market Index ("NYSE
Index") assuming the reinvestment of all dividends.
[GRAPH]
<TABLE>
<CAPTION>
End of Fiscal Year 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
J. Alexander's Corporation 100 54.55 86.36 77.27 43.75 36.36
MG Restaurant Index 100 87.80 123.49 124.92 128.51 174.99
S&P 500 Index 100 101.32 139.40 171.41 228.59 293.92
NYSE Index 100 98.06 127.15 153.16 201.50 239.77
</TABLE>
15
<PAGE> 19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a Stock Purchase and Standstill Agreement between Solidus and
the Company dated March 22, 1999, Solidus purchased 1,086,266 shares of Common
Stock for $3.75 per share, for an aggregate purchase price of $4,073,497.50. In
addition, Solidus agreed that (i) for a period of seven years, Solidus and its
affiliates would not acquire or hold more than 33% of the Company's Common
Stock; (ii) for a period of seven years, Solidus and its affiliates would not
solicit proxies for a vote of the shareholders of the Company; (iii) for a
period of seven years, Solidus and its affiliates would not sell the Company's
Common Stock, except to the Company, a person, entity or group approved by the
Company or to an affiliate of Solidus; (iv) the above restrictions on Solidus'
ownership and ability to solicit proxies would terminate in the event of certain
tender offers or exchange offers, a notice filing with the Department of Justice
relating to the acquisition by a third party of more than 15% of the outstanding
Common Stock or with the Securities and Exchange Commission relating to the
acquisition by a third party of more than 10% of the outstanding Common Stock,
the Company's proposing or approving a merger or other business combination, or
a change to a majority of the Company's Board of Directors over a two-year
period; and (v) Solidus would not exercise rights attributable to the 1,086,266
shares of Common Stock purchased on March 22, 1999, during the Company's rights
offering, pursuant to which holders of each share will be granted the
nontransferable right to purchase 0.2 share of the Company's Common Stock at
$3.75 per share for each share owned on the rights record date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission and the New York Stock Exchange. Executive
officers, directors and greater than 10% shareholders are required by regulation
of the Commission to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on a review of the Forms 3, 4 and 5 and amendments thereto and
certain written representations furnished to the Company, the Company believes
that during the fiscal year ended January 3, 1999, its executive officers,
directors and greater than 10% beneficial owners complied with all applicable
filing requirements, except that Mr. Beasley failed to timely report a surrender
of $1,000 of convertible debentures, which were called by the Company for
redemption on June 1, 1998, and Mr. Duncan failed to timely report purchases of
1,000 shares, 300 shares and 200 shares, occurring in October, November and
December, 1998, respectively, by Solidus, LLC, a company of which he is a
principal manager and member. Each of the delinquent transactions of Messrs.
Beasley and Duncan have since been reported to the Commission.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP, which has been the Company's independent auditors since
its organization, has been selected as independent auditors of the Company for
the 1999 fiscal year. The Company has been informed that representatives of
Ernst & Young LLP plan to attend the Annual Meeting. Such representatives will
have the opportunity to make a statement if they desire to do so and will be
available to respond to shareholders' questions.
16
<PAGE> 20
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE
PRESENTED AT THE 2000 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 2000 Annual Meeting
of Shareholders by any shareholder of the Company must be received by the
Secretary of the Company not later than December 8, 1999, in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 2000 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the Company to include any shareholder
proposal that does not meet all the Commission's requirements for inclusion in
effect at the time.
For other shareholder proposals to be timely (but not considered for
inclusion in the Company's Proxy Statement), a shareholder's notice must be
received by the Secretary of the Company not less than 75 days nor more than 90
days prior to April 7, 2000. For proposals that are not timely filed, the
Company retains discretion to vote proxies it receives. For proposals that are
timely filed, the Company retains discretion to vote proxies it receives
provided (1) it includes in the Proxy Statement advice on the nature of the
proposal and how the Company intends to exercise its voting discretion and (2)
the proponent does not issue a proxy statement.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the back side of the
proxy card. A broker non-vote occurs when a broker holding shares registered in
street name is permitted to vote, in the broker's discretion, on routine matters
without receiving instructions from the client, but is not permitted to vote
without instructions on non-routine matters, and the broker returns a proxy card
with no vote (the "non-vote") on the non-routine matter. Under the rules and
regulations of the primary trading markets applicable to most brokers, the
election of directors is a routine matter on which a broker has the discretion
to vote if instructions are not received from the client in a timely manner.
Abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum. Directors will be elected by a plurality
of the votes cast in the election by the holders of the Common Stock represented
and entitled to vote at the Annual Meeting. Abstentions and broker non-votes
will not be considered in the vote.
MISCELLANEOUS
A copy of the Company's Annual Report is being mailed to shareholders
concurrently with the mailing of this Proxy Statement. It is important that
proxies be returned promptly to avoid unnecessary expense. Therefore,
shareholders who do not expect to attend in person are urged, regardless of the
number of shares of stock owned, to date, sign and return the enclosed proxy
promptly.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JANUARY 3,
1999, MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER TO WHOM THIS PROXY
STATEMENT IS SENT, UPON WRITTEN REQUEST TO R. GREGORY LEWIS, SECRETARY, J.
ALEXANDER'S CORPORATION, P.O. BOX 24300, NASHVILLE, TENNESSEE 37202.
Date: April 6, 1999
17
<PAGE> 21
Appendix A
PROXY
J. ALEXANDER'S CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON THURSDAY, MAY 6, 1999.
The undersigned hereby appoints Lonnie J. Stout II and R. Gregory Lewis, and
each of them, as proxies, with full power of substitution, to vote all shares of
the undersigned as shown below on this proxy at the Annual Meeting of
Shareholders of J. Alexander's Corporation to be held at the J. Alexander's
Restaurant at 1721 Galleria Boulevard, Franklin, Tennessee on Thursday, May 6,
1999, at 9:00 a.m., local time, and any adjournments thereof.
(1) Election of Directors:
[ ] FOR all of the following nominees (except as indicated to the contrary
below):
E. Beasley, T. Duncan, G. Fritts, L. Stout and J. Tobias.
[ ] AGAINST the following nominees (please print name or names):
- --------------------------------------------------------------------------------
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please print
name or names):
- --------------------------------------------------------------------------------
[ ] AGAINST all nominees [ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all
nominees
(2) In their discretion on any other matter which may properly come before said
meeting or any adjournment thereof.
IMPORTANT: Please date and sign this proxy on the reverse side.
Your shares will be voted in accordance with your instructions. If no choice
is specified, shares will be voted FOR the nominees in the election of
directors.
PLEASE SIGN HERE AND RETURN PROMPTLY
-------------------------------
-------------------------------
Date: , 1999
--------------------
Please sign exactly as your
name appears at left. If
registered in the names of two
or more persons, each should
sign. Executors,
administrators, trustees,
guardians, attorneys, and
corporate officers should show
their full titles.
- --------------------------------------------------------------------------------
If you have changed your address, please PRINT your new address on this line.
<PAGE> 22
Appendix B
J. ALEXANDER'S CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN PARTICIPANT VOTING INSTRUCTION FORM
This Voting Instruction Form is tendered to direct SunTrust Bank, Nashville,
N.A. (the "Trustee"), as Trustee of the J. Alexander's Corporation Employee
Stock Ownership Plan ("ESOP"), as to the manner in which all allocated shares in
the ESOP account of the undersigned (the "Voting Shares") shall be voted at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at the J.
Alexander's Restaurant at 1721 Galleria Boulevard, Franklin, Tennessee on
Thursday, May 6, 1999, at 9:00 a.m., local time, and any adjournments thereof.
The undersigned hereby directs the Trustee to vote all Voting Shares of the
undersigned as shown below on this Voting Instruction Form at the Annual
Meeting.
(1) Election of Directors:
[ ] FOR all of the following nominees (except as indicated to the contrary
below):
E. Beasley, T. Duncan, G. Fritts, L. Stout and J. Tobias.
[ ] AGAINST the following nominees (please print name or names):
- --------------------------------------------------------------------------------
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please print
name or names):
- --------------------------------------------------------------------------------
[ ] AGAINST all nominees [ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all
nominees
(2) In the Trustee's discretion, the Trustee is entitled to act on any other
matter which may properly come before said meeting or any adjournment
thereof.
(Continued and to be signed on reverse side)
(Continued from other side)
IMPORTANT: PLEASE DATE AND SIGN THIS VOTING INSTRUCTION FORM and return it
to the Trustee of the J. Alexander's Corporation Employee Stock Ownership Plan,
SunTrust Bank, Nashville, N.A., P.O. Box 305110, Nashville, Tennessee
37230-5110.
A stamped and addressed envelope is enclosed for your convenience. YOUR
VOTING INSTRUCTION FORM MUST BE RECEIVED BY THE TRUSTEE BY MAY 3, 1999.
Your shares will be voted by the Trustee in accordance with your
instructions. If no choice is specified, your shares will be voted FOR the
nominees in the election of directors.
PLEASE SIGN, DATE AND RETURN PROMPTLY
-------------------------------
-------------------------------
Date: , 1999
--------------------
Please sign exactly as your
name appears at left. If
registered in the names of two
or more persons, each should
sign. Executors,
administrators, trustees,
guardians, attorneys, and
corporate officers should show
their full titles.
- --------------------------------------------------------------------------------
If your address has changed, please PRINT your new address on this line.
