<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-12
</TABLE>
<TABLE>
<S> <C> <C>
STAR BUFFET, INC.
- --------------------------------------------------------------------------
(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.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
STAR BUFFET, INC.
420 LAWNDALE DRIVE
SALT LAKE CITY, UTAH 84115
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 26, 2000
------------------------
To the Stockholders of Star Buffet, Inc.:
The Annual Meeting of Stockholders of Star Buffet, Inc. will be held at the
HomeTown Buffet, 1312 N. Scottsdale Drive, Scottsdale, Arizona, on Monday,
June 26, 2000, at 9:00 a.m. for the following purposes:
1. To elect the following five (5) nominees to serve as directors until the
next annual meeting of stockholders or until their successors are elected
and have qualified:
<TABLE>
<S> <C>
Robert E. Wheaton Phillip "Buddy" Johnson
Jack M. Lloyd Craig B. Wheaton
Thomas G. Schadt
</TABLE>
2. To reduce the number of authorized shares of common stock from
18,500,000 to 8,000,000 shares.
3. To approve KPMG LLP as independent auditors for the Company for the
current fiscal year.
4. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Only stockholders of record at the close of business on May 15, 2000 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
Robert E. Wheaton
Chairman of the Board
Salt Lake City, Utah
June 1, 2000
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, TO ASSURE THAT YOUR SHARES
WILL BE VOTED AT THE MEETING, YOU ARE REQUESTED TO SIGN THE ATTACHED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON ON EACH
MATTER.
- --------------------------------------------------------------------------------
<PAGE>
STAR BUFFET, INC.
420 LAWNDALE DRIVE
SALT LAKE CITY, UT 84115
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 26, 2000
------------------------
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Star Buffet, Inc., a Delaware
corporation ("Star" or the "Company"), for use at the Annual Meeting of
Stockholders to be held at the HomeTown Buffet, 1312 N. Scottsdale Drive,
Scottsdale, Arizona, on Monday, June 26, 2000, at 9:00 a.m. (the "Meeting").
This Proxy Statement and accompanying proxy card (the "Proxy Card") are
first being mailed to stockholders on or about June 1, 2000.
SOLICITATION OF PROXIES
At the Meeting, the stockholders of Star will be asked (1) to vote upon the
election of five (5) nominees to serve as directors until the next annual
meeting of stockholders or until their successors are elected and have
qualified, (2) to vote upon the proposal to reduce the number of authorized
shares of common stock from 18,500,000 shares to 8,000,000 shares, (3) to
approve KPMG LLP as independent auditors for the Company for the current fiscal
year and (4) to act upon such other matters as may properly come before the
Meeting or any postponements or adjournments thereof. Star's Board of Directors
is asking for your proxy for use at the Meeting. A stockholder giving a proxy
may revoke it at any time before it is exercised. Any proxy that is not revoked
will be voted at the Meeting in accordance with the stockholder's instructions
indicated on the enclosed Proxy Card. If no instructions are marked on a
properly executed returned Proxy Card, the shares represented thereby will be
voted FOR the election of the director nominees. Although management does not
know of any other matter to be acted upon at the Meeting, shares represented by
valid proxies will be voted by the persons named on the Proxy Card in accordance
with their best judgment with respect to any other matters that may properly
come before the Meeting.
The cost of solicitation of proxies will be paid by Star. In addition,
following the mailing of the Proxy Statement, directors, officers and regular
employees of Star may solicit proxies by mail, telephone, telegraph or personal
interview. Such persons will receive no additional compensation for such
services. Brokerage houses and other nominees, fiduciaries and custodians
nominally holding shares of Star Common Stock of record will be requested to
forward proxy soliciting material to the beneficial owners of such shares and
will be reimbursed by Star for their charges and expenses in connection
therewith.
RECORD DATE AND VOTING
Holders of Star Common Stock of record at the close of business on May 15,
2000 (the "Record Date") are entitled to notice of, and to vote at, the Meeting.
As of the Record Date, there were 2,950,000 shares of Star Common Stock
outstanding and entitled to vote at the Meeting. No shares of the Company's
preferred stock, $.001 par value, were outstanding. A majority of shares
entitled to vote represented in person or by proxy will constitute a quorum at
the Meeting. Each stockholder is entitled to one vote for
1
<PAGE>
each share of Common Stock held as of the Record Date. Abstentions and broker
non-votes are each included in the determination of the number of shares present
and voting for the purpose of determining whether a quorum is present.
Abstentions will be treated as shares present and entitled to vote for purposes
of any matter requiring the affirmative vote of a majority or other proportion
of the shares present and entitled to vote. With respect to shares relating to
any proxy as to which a broker non-vote is indicated on a proposal, those shares
will not be considered present and entitled to vote with respect to any such
proposal. Abstentions or broker non-votes or other failures to vote will have no
effect in the election of directors, who will be elected by a plurality of the
affirmative votes cast. With respect to any matter brought before the Annual
Meeting requiring the affirmative vote of a majority or other proportion of the
outstanding shares, an abstention or broker non-vote will have the same effect
as a vote against the matter being voted upon.
PROPOSAL 1
ELECTION OF DIRECTORS
Currently, there are five (5) members of the Board of Directors. Directors
are elected at each annual stockholders' meeting to hold office until the next
annual meeting or until their successors are elected and have qualified. Unless
otherwise instructed, the persons named in the accompanying Proxy Card will vote
the proxies received by them for the five (5) nominees named below. All of the
nominees presently are directors of the Company.
If any nominee becomes unavailable for any reason before the election, the
persons named in the accompanying Proxy Card will have discretionary authority
to vote for the election of such substitute nominee or nominees, if any, as
shall be designated by the Board of Directors. The Board of Directors has no
reason to believe that any of the nominees will be unavailable to serve.
DIRECTORS
The names and certain information concerning the five (5) nominees for
election as directors are set forth below. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
The director nominees of Star are as follows:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ---- -------- ----------------------------------
<S> <C> <C>
Robert E. Wheaton................. 48 Chief Executive Officer, President
and Chairman
Phillip "Buddy" Johnson........... 47 President, BuddyFreddys Division
Jack M. Lloyd..................... 49 Director
Thomas G. Schadt.................. 58 Director
Craig B. Wheaton.................. 42 Director
</TABLE>
ROBERT E. WHEATON has served as the Chief Executive Officer and President
and as a director of the Company since its formation in July 1997. Mr. Wheaton
has been Chairman of the Board since September 1998. Mr. Wheaton served as
Executive Vice President of CKE from January 1996 through January 1999. From
April 1995 to January 1996, he served as Vice President and Chief Financial
Officer of Denny's Inc., a subsidiary of Flagstar Corporation. From 1991 to
1995, Mr. Wheaton served as President and Chief Executive Officer, and from 1989
to 1991 as Vice President and Chief Financial Officer of The Bekins Company.
PHILLIP "BUDDY" JOHNSON has served as a Director of the Company since
February 1999 and as President of the BuddyFreddys Division since it was
acquired in April 1998. From 1980 until 1998, he was the founding Chairman and
CEO of BuddyFreddys Enterprises. From 1991 to 1996, Mr. Johnson served as
2
<PAGE>
Republican floor leader in the Florida House of Representatives. Mr. Johnson
also served on the executive committee of The Foundation for Florida's Future, a
non-profit corporation established in 1995 by Jeb Bush.
JACK M. LLOYD has served as a director of the Company since the completion
of the Company's initial public offering in September 1997. Mr. Lloyd has served
as Chairman of the Board of DenAmerica Corp. since July 9, 1996 and as
President, Chief Executive Officer and a director of DenAmerica Corp. since
March 29, 1996. Mr. Lloyd served as Chairman of the Board and Chief Executive
Officer of Denwest Restaurant Corp. ("DRC") from 1987 until the March 1996
merger of DRC and DenAmerica and as President of DRC from 1987 until
November 1994. Mr. Lloyd engaged in commercial and residential real estate
development and property management as President of First Federated Investment
Corporation during the early and mid-1980's. Mr. Lloyd also currently serves as
a director of Action Performance Companies, Inc. DenAmerica Corp. changed its
name to Phoenix Restaurant Group on June 29, 1999.
THOMAS G. SCHADT has served as a director of the Company since the
completion of the Company's initial public offering in September 1997.
Mr. Schadt has been the Chief Executive Officer of a privately-held beverage
distribution company, Bear Creek, L.L.C., since 1995. From 1976 to 1994, he held
several positions with PepsiCo, Inc., most recently, Vice President of Food
Service.
CRAIG B. WHEATON has served as a director of the Company since
February 1999. Mr. Wheaton is a partner in the law firm Kilpatrick Stockton LLP.
His main areas of practice include employee benefits, executive compensation and
general corporate law. Mr. Wheaton received his B.A. degree, with honors, from
the University of Virginia and his J.D. degree from Wake Forest University.
Mr. Wheaton was a member of the Tax Council of the North Carolina Bar
Association Section on Taxation ('93-'98) and chair of its Employee Benefits
Committee ('95-'97). He is a member and former president of the Triangle
Benefits Forum. He is a member of the Southern Employee Benefits Conference, the
Employee Benefits Committee of the American Bar Association's Section of
Taxation, the National Pension Assistance Project's National Lawyers Network,
and the National Association of Stock Plan Professionals. Mr. Wheaton is the
brother of Robert E. Wheaton, the Company's Chairman, President and Chief
Executive Officer.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The Board does not have a nominating committee or
other committee performing similar functions. Instead, the Board of Directors,
as a whole, identifies and screens candidates for membership on the Company's
Board of Directors. The Audit Committee, whose current members are
Messrs. Schadt, Lloyd and Craig Wheaton, monitors Star's basic accounting
policies and their related system of internal control, reviews Star's audit and
management reports and makes recommendations regarding the appointment of
independent auditors. The Compensation Committee, whose current members are
Messrs. Schadt and Lloyd, considers the hiring and election of corporate
officers, salary and incentive compensation policies for officers and directors,
and the granting of stock options to employees.
During fiscal 2000, the Board of Directors held four meetings, the Audit
Committee held two meetings and the Compensation Committee held one meeting.
During fiscal 2000, no director attended fewer than 75% of the aggregate
meetings of the Board of Directors and the committee or committees on which he
served.
COMPENSATION OF DIRECTORS
For their services as directors in fiscal 2000, each non-employee director
received $2,000 per meeting of the Board of Directors and $500 per committee
meeting. In addition, all directors are entitled to participate in Star's 1997
Stock Incentive Plan.
3
<PAGE>
PROPOSAL 2
REDUCTION OF THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM
18,500,000 SHARES TO 8,000,000 SHARES
REDUCTION OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved, subject to stockholder approval, a
proposal to reduce the number of authorized shares of common stock from
18,500,000 to 8,000,000 shares.
PROPOSED RESOLUTION
The Company's Certificate of Incorporation currently authorizes 18,500,000
shares of the Company's common stock, par value $.001 per share. On
February 24, 2000, the Board of Directors approved and adopted, subject to
approval by the shareholders, an amendment of the Company's Certificate of
Incorporation to reduce the number of authorized shares of common stock to
8,000,000 shares. By reducing the number of authorized but unissued shares in
this fashion, the Company will be able to realize a reduction of approximately
$20,000 in annual franchise taxes payable to the State of Delaware. As of
May 15, 2000, the Company had less than 3,000,000 common shares outstanding and
the Board believes that reducing the number of authorized common shares to
8,000,000 still leaves the Company sufficient flexibility for future corporate
needs.
REQUIRED VOTE
The affirmative vote of a majority of the Common Stock outstanding and
entitled to vote at the Meeting is required to approve Proposal 2. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF PROPOSAL 2.
PROPOSAL 3
SELECTION OF AUDITORS
The Board of Directors has appointed KPMG LLP as independent auditors of the
Company for the fiscal year ending January 29, 2001, it being intended that such
appointment would be presented for ratification by the shareholders. KPMG LLP
has audited the financial statements of the Company for the fiscal year ended
January 31, 2000. KPMG will have representation at the meeting and be available
to respond to appropriate questions. The representatives of KPMG LLP also will
have an opportunity to make a formal statement, if they so desire.
In the event the shareholders do not ratify the appointment of KPMG LLP, the
Board of Directors will consider the selection of other independent auditors.
REQUIRED VOTE
The affirmative vote of a majority of the Common Stock outstanding and
entitled to vote at the Meeting is required to approve Proposal 3. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF PROPOSAL 3.
OTHER MATTERS
Management does not know of any matter to be acted upon at the Meeting other
than the matters described above, but if any other matter properly comes before
the Meeting, the persons named on the enclosed Proxy Card will vote thereon in
accordance with their best judgment.
4
<PAGE>
OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth certain information regarding beneficial
ownership of Star's Common Stock as of the Record Date, by (i) each person who
is known by Star to beneficially own more than five percent of the outstanding
Star Common Stock, (ii) each director of Star, (iii) each Named Executive
Officer of Star identified in the Summary Compensation Table and (iv) all
current directors and executive officers of Star as a group. Except as otherwise
indicated, beneficial ownership includes both voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS(%)(1)
- ------------------------------------ ------------------- -----------
<S> <C> <C>
Robert E. Wheaton......................................... 1,255,637(2) 39.0%
Jack M. Lloyd............................................. 30,000(3) 1.0%
Thomas G. Schadt.......................................... 30,200(3) 1.0%
Phillip "Buddy" Johnson................................... 7,700(4) *
Craig B. Wheaton.......................................... 35,500(5) 1.2%
Robert Fleming, Inc. .....................................
320 Park Avenue--11(th) Flr.
New York, NY 10022 429,565(6) 14.6%
Dresdner RCM Global Investors LLC ........................
Four Embarcadero Center
San Francisco, CA 94111 293,500(7) 10.0%
Stephen T. Watson ........................................
237 Park Avenue, Suite 801
New York, NY 10017 259,600(8) 8.8%
All executive officers and directorsas a group
(5 persons)............................................. 1,359,037(9) 41.1%
</TABLE>
- ------------------------
* Less than one percent.
(1) Calculated based on 2,950,000 shares of Star Common Stock outstanding
May 15, 2000.
(2) Includes 269,237 shares subject to presently exercisable options or options
that become exercisable within 60 days of May 15, 2000.
(3) Includes 30,000 shares subject to presently exercisable options or options
that become exercisable within 60 days of May 15, 2000.
(4) Includes 7,500 shares subject to presently exercisable options or options
that become exercisable within 60 days of May 15, 2000.
(5) Includes 22,500 shares subject to presently exercisable options or options
that become exercisable within 60 days of May 15, 2000.
(6) Robert Fleming, Inc. has shared power to vote 429,565 of such shares and has
shared power to dispose of all such shares. Robert Fleming, Inc. claims
beneficial ownership with respect to all such shares. The information
relating to the beneficial ownership of Robert Fleming, Inc. has been
derived from the Schedule 13G dated February 7, 2000 filed by Robert
Fleming, Inc. with the Securities and Exchange Commission. The number of
shares beneficially owned by Robert Fleming, Inc. is stated as of
December 31, 1999.
(7) Dresdner RCM Global Investors LLC ("Dresdner RCM") has sole power to vote
293,500 of such shares and sole power to dispose of 250,000 shares and
shared power to dispose of 43,500 of such
5
<PAGE>
shares. Dresdner RCM claims beneficial ownership with respect to all such
293,500 shares. Dresdner RCM is a wholly owned subsidiary of Dresdner RCM US
Holdings LLC ("DRCM Holdings"). DRCM Holdings, a Delaware Limited Liability
Company, is a wholly owned subsidiary of Dresdner Bank AG ("Dresdner").
Dresdner is an international banking organization headquartered in
Frankfurt, Germany. Dresdner RCM, DRCM Holdings and Dresdner are now filing
a joint statement on Schedule 13G under the Act in connection with the
common stock of Star Buffet, Inc. Previously, Dresdner RCM and DRCM Holdings
filed separately from Dresdner. Effective with this filing, all three
entities are now filing jointly. The information relating to the beneficial
ownership of Dresdner RCM has been derived from the Schedule 13G dated
February 15, 2000 filed by Dresdner RCM with the Securities and Exchange
Commission. The number of shares beneficially owned by Dresdner RCM is
stated as of December 31, 1999.
(8) Stephen T. Watson has sole power to vote 259,6000 of such shares and has
sole power to dispose of all such shares. Stephen T. Watson claims
beneficial ownership with respect to all such shares. The information
relating to the beneficial ownership of Stephen T. Watson has been derived
from the Schedule 13G dated March 8, 2000 filed by Stephen T. Watson with
the Securities and Exchange Commission. The number of shares beneficially
owned by Stephen T. Watson is stated as of December 31, 1999.
(9) Includes 359,237 shares subject to presently exercisable options or options
that become exercisable within 60 days of May 15, 2000.
6
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR THE FISCAL YEAR
ENDED JANUARY 31, 2000.
The Compensation Committee (the "Committee"), comprised of two non-employee
directors, is responsible for administering the executive compensation policies,
administering the various management incentive programs (including option
plans), and making recommendations to the Board of Directors with respect to
these policies and programs. In addition, the Committee makes annual
recommendations to the Board of Directors concerning the compensation paid to
the Chief Executive Officer and to each of the other executive officers of Star
(each, an "Executive Officer"). As discussed below, the Company began its
independent corporate existence on July 28, 1997 through the reorganization of
direct or indirect wholly-owned subsidiaries of CKE. The Committee was not
formed until after the first meeting of the Board following the formation of the
Company. Since there was no Committee at the time of the first Board meeting, it
was necessary for the non-employee directors of the Board to decide all
compensation issues at that meeting. In addition, certain compensation
arrangements were established by the Compensation Committee of the Board of
Directors of CKE while the Company was a wholly-owned subsidiary of CKE.
The following is a summary of the policies which the Board of Directors
analyzed in determining the compensation for the Executive Officers of the
Company. The Committee intends to follow the same general policies in
determining the compensation for the Executive Officers of the Company in fiscal
2001, but may, in its discretion, alter such policies to take into consideration
the applicable circumstances at the time.
COMPENSATION POLICIES TOWARDS EXECUTIVE OFFICERS. The Committee believes
that the most effective executive compensation program is one that provides
incentives to achieve both current and long-term strategic management goals,
with the ultimate objective of enhancing stockholder value. In this regard, the
Committee believes executive compensation should be comprised of cash as well as
equity-based programs. Base salaries are generally set at market levels in order
to attract and retain qualified executives. With respect to equity-based
compensation, the Committee believes that an integral part of Star's
compensation program is the ownership and retention of Star's Common Stock by
its Executive Officers. By providing Executive Officers with a meaningful stake
in Star, the value of which is dependent on Star's long-term success, a
commonality of interests between Star's Executive Officers and its stockholders
is fostered.
RELATIONSHIP OF PERFORMANCE TO COMPENSATION. Compensation that may be
earned by the Executive Officers in any fiscal year consists primarily of base
salary, cash bonus and stock options. The significant factors that were
considered in establishing the components of each Executive Officer's
compensation package for the fiscal year ended January 31, 2000 are summarized
below. The Committee, in its discretion, may apply different factors,
particularly different measures of financial performance, in setting executive
compensation for future fiscal years, but all compensation decisions will be
designed to further the general compensation policies indicated above.
BASE SALARY. The base salary for each Executive Officer is set on the basis
of personal performance, the salary levels in effect for comparable positions
with Star's principal competitors (including, but not limited to, Star's
self-determined peer group set forth in the "Stock Performance Graph"), and
Star's financial performance relative to such competitors. Factors relating to
individual performance that are assessed in setting base compensation are based
on the particular duties and areas of responsibility of the individual Executive
Officer. Factors relating to Star's financial performance that may be related to
increasing or decreasing base salary include revenues and earnings. The
establishment of base compensation involves a subjective assessment and weighing
of the foregoing criteria and is not based on any specific formula.
CASH BONUS. Annual bonuses are earned by each Executive Officer on the
basis of Star's achievement of pre-tax income targets established at the start
of the fiscal year and on the basis of the particular Executive Officer's duties
and areas of responsibility. Bonus amounts are established based on various
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<PAGE>
levels of performance against such targets. Following the completion of the
fiscal year, the Committee assesses Star and individual performance against the
established targets and provides for annual bonuses based on the targeted
performance of levels actually achieved.
STOCK OPTIONS. Stock option grants motivate Executive Officers to manage
the business to improve long-term Star performance, and align the interests of
Executive Officers with stockholder value. Customarily, option grants are made
with exercise prices equal to the fair market value of the shares on the grant
date and will be of no value unless the market price of Star's outstanding
shares appreciates, thereby aligning a substantial part of the Executive
Officer's compensation package with the return realized by the stockholders.
Options generally vest in equal installments over a period of time, contingent
upon the Executive Officer's continued employment with Star. Accordingly, an
option will provide a return to the Executive Officer only if the Executive
Officer remains employed by Star and the market price of the underlying shares
appreciates over the option term. The size of an option grant is designed to
create a meaningful opportunity for stock ownership and is based upon the
individual's current position with Star, internal comparability with option
grants made to other Star executives and the individual's potential for future
responsibility and promotion over the option term. The Committee has established
an award program which takes into account the level of responsibility in the
organization, and total compensation compared to comparable companies, in making
option grants to the Executive Officers in an attempt to target a fixed number
of unvested option shares based upon the individual's position with Star and the
Executive Officer's existing holdings of unvested options. As such, the award of
stock options requires subjective judgment as to the amount of the option.
However, the Committee does not adhere strictly to these guidelines and will
occasionally vary the size of the option grant, if any, made to each Executive
Officer as circumstances warrant.
CHIEF EXECUTIVE OFFICER COMPENSATION. Robert E. Wheaton became Star's Chief
Executive Officer upon the Company's formation in July 1997. Prior to the
Company's initial public offering in September 1997, Mr. Wheaton's annual base
compensation was established at $250,000 for the fiscal year ended January 31,
2000, based on the philosophy described above.
CORPORATE DEDUCTION FOR COMPENSATION. Section 162(m) of the Code generally
limits to $1.0 million the corporate deduction for compensation paid to certain
executive officers, unless certain requirements are met. Star's 1997 Stock
Incentive Plan is structured so that any compensation deemed paid to an
executive officer upon exercise of an option, with an exercise price equal to
the fair market value of the underlying shares on the grant date, will qualify
as performance-based compensation that will not be limited by Section 162(m).
The Committee intends to monitor regulations issued pursuant to Section 162(m)
and to take such actions with respect to the executive compensation program as
are reasonably necessary to preserve the corporate tax deduction for executive
compensation paid.
Thomas G. Schadt
Jack M Lloyd
THE REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT
BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY
REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933
OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT STAR
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE
BE DEEMED FILED UNDER SUCH ACTS.
8
<PAGE>
STOCKHOLDER PERFORMANCE GRAPH
COMPARISON OF 28 MONTH CUMULATIVE TOTAL RETURN*
AMONG STAR BUFFET, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX,
THE DOW JONES RESTAURANTS INDEX AND A PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ STOCK DOW JONES
<S> <C> <C> <C> <C>
STAR BUFFET, INC. PEER GROUP MARKET (U.S.) RESTAURANTS
Sep-97 $100.00 $100.00 $100.00 $100.00
Jan-98 $82.35 $81.30 $96.93 $98.33
Jan-99 $39.50 $77.29 $151.71 $153.16
Jan-00 $24.37 $77.60 $236.50 $135.07
</TABLE>
* $100 INVESTED ON 9/25/97 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING DECEMBER 31.
The Peer Group includes the following stocks: Garden Fresh Restaurants
(LTUS), Roadhouse Grill (GRLL), Sizzler International (SZ), Fresh Foods Inc.
(FOOD), Shell's Seafood (SHLL) and Fresh Choice (SALD). All are listed on NASDAQ
except for Sizzler International, which is on the New York Stock Exchange. The
Peer Group stocks are all small capitalization stocks in the family dining
segment which is more relative of the business in which Star Buffet operates.
- ------------------------
THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY
ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, EXCEPT TO THE EXTENT THAT STAR SPECIFICALLY INCORPORATES THIS INFORMATION
BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
9
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Company was incorporated on July 28, 1997, through the reorganization of
direct or indirect wholly-owned subsidiaries of CKE. Prior to the Company's
incorporation, the Company's Executive Officers have been employed by CKE or its
subsidiaries, and all or substantially all of their compensation paid prior to
July 28, 1997 was paid by CKE or its subsidiaries primarily for services
rendered to CKE or its subsidiaries. In connection with the organization of the
Company, the Company and CKE established an allocated annual base salary of
$187,000 for Robert E. Wheaton, Chairman of the Board, Chief Executive Officer
and President of the Company. The following table sets forth the compensation
awarded to, earned by or paid to the Company's executive officer for each of the
three fiscal years ended January 26, 1998, January 25, 1999 and January 31,
2000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
SUMMARY COMPENSATION -------------------------
------------------------------------ RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS
NAME AND TITLE YEAR ($) ($) ($)(4) ($) ($)(5)
- -------------- -------- -------- -------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Wheaton ....... 2000(1) $254,824 -- 12,000 90,000
Chairman of the Board, 1999(2) 221,155 -- 4,658 --
President and Chief 1998(3) 61,298 -- -- 239,237
Executive Officer
</TABLE>
- ------------------------
(1) Mr. Wheaton's annual salary was $250,000. The fifty-third week in fiscal
2000 adds the additional $4,824.
(2) Mr. Wheaton's annual salary was $250,000 in fiscal 1999. In August 1998,
Mr. Wheaton's employment agreement with CKE was modified to provide that
Star pays 100% of his base salary.
(3) Excludes the following amounts earned by Mr. Wheaton from CKE during fiscal
1998: (i) salary in the amount of $160,721, (ii) bonus in the amount of
$80,354, (iii) other annual compensation in the amount of $8,820 and
(iv) 16,500 options to purchase CKE's common stock. In September 1997,
Mr. Wheaton's employment agreement with CKE was modified to provide that CKE
pays 25% of his base salary and Star pays the remaining 75%.
(4) "Other Annual Compensation" represents auto related payments to
Mr. Wheaton.
(5) Represents options to purchase shares of Star's common stock for fiscal 1998
and fiscal 2000.
STOCK OPTIONS
The following table sets forth certain information with respect to the stock
options granted during the fiscal year ended January 31, 2000 to the Named
Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
- ------------------------------------------------------------------------------------ VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OF OPTION TERM
OPTIONS FISCAL BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) YEAR(1) ($/SHARE)(2) DATE(3) 5%($) 10%($)
- ---- ----------- -------------- ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Wheaton....... 90,000 37.1% $5.00 Nov. 1, 2009 71,898 381,035
</TABLE>
- ------------------------
(1) Based on the number of shares being subject to options granted to all
employees aggregating 242,775 for the fiscal year ended January 31, 2000.
10
<PAGE>
(2) The fair market value of Star's Common Stock was $3.56 on the date of grant.
(3) All the options vest 33 1/3% upon the date of grant, 33 1/3% on the first
anniversary of the date of grant and 33 1/3% on the second anniversary of
the date of grant.
OPTION EXERCISES AND HOLDINGS
No options were exercised by any of the Named Executive Officers during the
fiscal year ended January 31, 2000. The following table sets forth the fiscal
year end options values for all options held by the Company's Named Executive
Officer.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Robert E. Wheaton................ 269,237 60,000 -- --
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 31, 2000, no executive officer of the
Company served as a member of the compensation committee or as a director of any
other entity, one of whose executive officers serves on the Compensation
Committee or is a director of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Star's
executive officers and directors, and persons who own more than 10% of a
registered class of star's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than 10% stockholders are required by
SEC regulations to furnish Star with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, Star believes that, during fiscal 2000, all filing
requirements applicable to its executive officers, directors and greater than
10% stockholders were satisfied.
CERTAIN TRANSACTIONS
The Company and CKE are parties to a three-year Service Agreement, pursuant
to which CKE provides the Company with certain multi-unit infrastructure
support, including accounting and administration, purchasing services, financial
services and real estate services, in exchange for which CKE receives an annual
management fee in the amount of $350,000, which may be increased up to 10% per
year by CKE based upon increases in CKE's cost of providing such services.
Commencing February 24, 1998, the annual management fee was increased to
$375,000. The Service Agreement with CKE was terminated on February 22, 1999.
STOCKHOLDERS' PROPOSALS FOR 2001 ANNUAL MEETING
Pursuant to the rules of the Securities and Exchange Commission, proposals
by eligible stockholders (as defined below) which are intended to be presented
at Star's Annual Meeting of Stockholders in 2001 must be received by Star by
January 29, 2001 in order to be considered for inclusion in Star's proxy
materials. The Board of Directors of Star will determine whether any such
proposal will be included in its
11
<PAGE>
2001 proxy solicitation materials. An eligible stockholder is one who is the
record or beneficial owner of at least 1% or $1,000 in market value of
securities entitled to be voted at the 2001 Annual Meeting and has held such
securities for at least one year, and who shall continue to own such securities
through the date on which the meeting is held.
Stockholders are urged to sign and return their proxies without delay.
For the Board of Directors
ROBERT E. WHEATON,
Chairman of the Board
June 1, 2000
The Annual Report to Stockholders of the Company for the fiscal year ended
January 31, 2000 is the Company's Annual Report on Form 10-K which was filed
with the Securities and Exchange Commission on May 3, 2000 and which is being
mailed concurrently with this Proxy Statement to all stockholders of record as
of May 15, 2000. The Annual Report is not to be regarded as proxy soliciting
material or as a communication by means of which any solicitation is to be made.
12
<PAGE>
_______________________________________________________________________________
PROXY
STAR BUFFET, INC.
420 LAWNDALE DRIVE
SALT LAKE CITY, UT 84115
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF STAR BUFFET, INC.
The undersigned hereby appoints Robert E. Wheaton as Proxy, with the
power to appoint his substitute, and hereby authorizes him to represent and
to vote as designated below, all the shares of Common Stock of Star Buffet,
Inc. held of record by the undersigned on May 15, 2000, at the Annual Meeting
of Stockholders to be held on June 26, 2000, and any postponements or
adjournments thereof.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
_______________________________________________________________________________
^ FOLD AND DETACH HERE ^
<PAGE>
_______________________________________________________________________________
Please mark your votes as indicated in this example / X /
FOR all of the nominees listed WITHHOLD AUTHORITY to
below (except as marked to vote for all nominees
the contrary below) listed below
1. ELECTION OF DIRECTORS: / / / /
INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.
Robert E. Wheaton
Phillip "Buddy" Johnson
Jack M. Lloyd
Thomas G. Schadt
Craig B. Wheaton
2. To reduce the number of authorized shares of common stock from 18,500,000 to
8,000,000 shares.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve KPMG LLP as independent auditors for the current fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or any and all postponements
or adjournments thereof.
YES NO
DO YOU PLAN TO ATTEND THE MEETING? / / / /
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder IF NO DIRECTION IS GIVEN, THE PROXIES
WILL VOTE FOR THE NOMINEES LISTED ABOVE, AND IN THEIR DISCRETION ON MATTERS
DESCRIBED IN ITEM 2 AND ITEM 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature_______________________________________
Signature if held jointly ______________________
Dated:___________________, 2000
Please sign exactly as the name appears below. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give your full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in the partnership name by
an authorized person.
_______________________________________________________________________________
^ FOLD AND DETACH HERE ^
