CHOCK FULL O'NUTS CORPORATION
370 Lexington Avenue
New York, N.Y. 10017
------------
Notice of Annual Meeting of Stockholders
------------
Friday, December 12, 1997 at 10:00 A.M.
The Chase Building
11th Floor - Room A
270 Park Avenue
New York, New York 10017
------------
PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY PROMPTLY
------------
To the Stockholders of
CHOCK FULL O'NUTS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Chock Full O'Nuts Corporation (the "Company") will be held at The
Chase Building,11th Floor - Room A, 270 Park Avenue, New York, New York 10017
on Friday, December 12, 1997 at 10:00 A.M., Eastern Standard Time, for
the following purposes:
1. To elect four directors for three year terms.
2. To ratify the appointment of independent auditors for 1998.
3. To transact such other business as may properly be brought before
the meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on October 22,
1997 are entitled to notice of and to vote at the meeting or any
adjournment thereof.
By Order of the Board of Directors
MARTIN J. CULLEN
Secretary
Dated: New York, N.Y.
October 30, 1997
- ----------------------------------------------------------------
IMPORTANT: Whether or not you expect to attend the meeting, please
complete, date and sign the proxy and return it promptly in the
enclosed envelope.
CHOCK FULL O'NUTS CORPORATION
PROXY STATEMENT
This Statement is furnished to the stockholders of Chock Full O'Nuts
Corporation (the "Company") in connection with the solicitation by the
Board of Directors of proxies to be used at the 1997 Annual Meeting of
Stockholders of the Company to be held at The Chase Building, 11th Floor -
Room A, 270 Park Avenue, New York, New York 10017 on Friday, December 12,
1997 at 10:00 A.M., Eastern Standard Time, and at any adjournments
thereof.
The approximate date on which this Statement and the accompanying
proxy will be mailed to stockholders is October 30, 1997. The
Company's Annual Report, including financial statements, has been
mailed to stockholders along with this Statement.
All shares represented by each properly executed, unrevoked proxy
received in time for the meeting will be voted as specified. In the
absence of any specification, proxies will be voted for the election
of the four persons listed herein as nominees as directors and for the
ratification of the appointment of Ernst & Young as the Company's
independent auditors for 1998. Any proxy may be revoked at
any time prior to its exercise, by written notification to the
Secretary of the Company.
The Board of Directors has fixed the close of business on October
22, 1997 as the record date (the "Record Date") for the determination
of the stockholders entitled to notice of and to vote at this meeting.
The principal office of the Company is located at 370 Lexington
Avenue, New York, New York 10017.
At the Record Date, the Company had outstanding approximately
10,736,000 shares of Common Stock, par value $.25 per share. Each
share outstanding entitles the holder thereof to one vote.
The only persons known to the Company to be the beneficial owner of
five percent or more of the Company's Common Stock, as of the Record
Date, are listed under "Security Ownership of Certain Beneficial
Owners and Management" below.
ELECTION OF DIRECTORS
At this meeting four directors are to be elected to serve for
three-year terms, each to hold office until his successor is duly
elected and qualified. It is not contemplated that any nominee will be
unable to serve as a director, but if such contingency should occur
prior to the meeting, the persons named as proxies in the enclosed
proxy or their substitutes (the "Proxies") will have the right to vote
for substitute nominees. The Proxies were selected by the Board of
Directors of the Company and are directors and officers of the
Company. Certain information with respect to each nominee, as well as
directors continuing in office, is stated below.
ELECTION OF DIRECTORS
MARK A. ALEXANDER, M.D.-Dr. Alexander was elected to the Board of
Directors in October 1993. He is Vice President of Metropolitan Life
Insurance Company (a position he had held for more than five years).
His responsibilities include managing the decentralized personal life
insurance medical underwriting activities for Metropolitan. He is 47
years old.
JERRY COLUMBUS-Mr. Columbus is a strategic planning consultant in the
consumer products area and President of Columbus Consulting
Company (a company which provides strategic planning and other management
consulting services to mid-sized manufacturers, distributors and retailers),
positions he has held for over one year. Prior to that time, for 16 years he
was employed by Grant Thornton LLP (the seventh largest U.S. Accounting and
Management Consulting Firm). The last 7 of those years he was a management
consulting partner providing services to manufacturing and distribution
companies. He is 45 years old.
HOWARD M. LEITNER-Mr. Leitner joined the Company in August 1980 as
Chief Financial and Accounting Officer and later that year was elected
a director. He was President of the Company from August 1986 until
February 1995 and currently is a Senior Vice President. He has been a
Certified Public Accountant for more than 25 years and for two years
prior to joining the Company he was an Audit Manager for Ernst &
Whinney (now known as Ernst & Young), the successor to S. D.
Leidesdorf & Co., with whom Mr. Leitner had been employed as an
accountant for the 15 preceding years. He is 56 years old.
HENRY SALZHAUER-Mr. Salzhauer was elected to the Board of Directors
in July 1992. He is a Vice President of Benjamin Partners, Inc. ("BPI"),
an investment firm. Prior to December 1993, he was a Vice President of
Benjamin Electrical Engineering Works, Inc. ("BEEW"), an electrical
contracting company (a position he had held for more than five years).
He is 62 years old. In November 1993, BEEW sold its electrical
contracting assets, including its name, to Fischbach & Moore, Inc.
another electrical contractor, and changed its name to BPI.
During the past year the Company increased the number of directors from
nine to ten by adding one Director whose term expires at the 1997 annual
meeting. In September 1997, Mr. Jerry Columbus was appointed to the board
position which expires at the 1997 annual meeting.
DIRECTORS CONTINUING IN OFFICE:
NORMAN E. ALEXANDER-Mr. Alexander was elected to the Board of
Directors in 1982. In February 1994, he was elected non-executive
Chairman of the Board of Directors. He is Chairman and Chief Executive
Officer of Sequa Corporation, a company providing a broad range of
products and services to customers in commercial and government
markets (a position he has held for more than five years). He is 83
years old. He is also a director of Richton International Corporation.
(Term to expire at the 1998 Annual Meeting).
MARTIN J. CULLEN-Mr. Cullen was elected to the Board of Directors in
1981. He has been Vice President of the Company for over 20 years and
in 1981 was also elected Treasurer of the Company. He is 65 years old
and has been with the Company for over forty years. His
responsibilities are principally in the area of purchasing and he is
currently Secretary of the Company. (Term to expire at the 1999 Annual
Meeting).
MARVIN I. HAAS-Mr. Haas was elected to the Board of Directors in
December 1990. In August 1993, Mr. Haas was elected Chief Executive
Officer and in February 1995, he was elected President. He was Vice
Chairman of the Board and Chief Operating Officer from October 1991
until February 1995. He was a consultant to the Company from September
1989 to May 1990. Mr. Haas was President and Chief Operating Officer
of Swissrose International (a dairy products importer) for a period of
more than five years through April 1987 and subsequently was a
self-employed consultant until joining the Company. He is 55 years
old. (Term to expire at the 1999 Annual Meeting).
STUART Z. KRINSLY-Mr. Krinsly was elected to the Board of Directors in
September 1992. He is Senior Executive Vice President and General
Counsel of Sequa Corporation, a company providing a broad range of
products and services to customers in commercial and government
markets (a position he has held for more than five years). He also is
a director of Sequa Corporation. He is 80 years old. (Term to expire
at the 1998 Annual Meeting).
R. SCOTT SCHAFLER-Mr. Schafler was elected to the Board of Directors
in March 1993 and is President of Cortec Group, Inc. (a position he
has held for more than five years), a New York based buyout group
specializing in the acquisition and operation of middle market
manufacturing companies with proprietary technology or leading
distribution channels. He is Chairman of the Board of a Cortec Group
affiliate, National Controls Corporation, a leading manufacturer of
electronic controls for food service companies. He is also President
of Cortec Capital Corporation, General Partner of Cortec Group Fund I,
LP and the managing partner of entities which manage Cortec Group Fund
II, LP (the Funds). Both Funds specialize in the acquisition and
operation of middle market manufacturing companies. He is 47 years
old. (Term to expire at the 1999 Annual Meeting).
DAVID S. WEIL-Mr. Weil was elected to the Board of Directors in April
1990. He is President and Chief Executive Officer of Ampacet
Corporation, a company which is a plastics raw material producer,
specializing in the manufacture of color and additive masterbatches
used by plastic processors, (a position he has held for more than five
years). He is 72 years old. (Term expire at the 1998 Annual Meeting).
Norman E. Alexander is the father of Mark A. Alexander. There is no
other family relationship between any officer or director of the
Company.
There were five meetings of the Company's Board of Directors held
during the Company's last fiscal year. The Board of Directors has a
Compensation Committee which is comprised of Henry Salzhauer, R. Scott
Schafler and David S. Weil. The Compensation Committee which met
three times in fiscal year 1997 performs the function of evaluating the work
performance of the Company's executive and administrative employees
and determining compensation for such persons. The report of the
compensation committee appears on pages 5 and 6 of this proxy
statement. The Board of Directors has a Nominating Committee
comprised of Norman E. Alexander, Stuart Z. Krinsly and Henry
Salzhauer which evaluates potential members of the Board of Directors.
The Nominating Committee seeks potential nominees for Board
membership in many ways and will consider suggestions submitted by
stockholders if mailed to the Secretary of the Company. The Board of
Directors has an Audit Committee comprised of Mark A. Alexander,
R. Scott Schafler and David S. Weil. This Committee
met twice relative to the Company's 1997 fiscal year. The Audit
Committee approved the selection of Ernst & Young as the Company's
independent auditors and met with the auditors to review the planned
scope and the results of the audit. The Board of Directors has an
Executive Committee comprised of Norman E. Alexander, Marvin I. Haas,
Stuart Z. Krinsly and David S. Weil. The Executive Committee may
exercixe the power and authority of the Board of Directors when the
entire Board is unable to convene. All directors, attended at
least 75% of the aggregate of the total number of meetings of the Board
of Directors and of all committees of the Board on which that director
served.
EXECUTIVE COMPENSATION AND TRANSACTIONS WITH DIRECTORS, OFFICERS AND
PRINCIPAL HOLDERS
The following information is furnished with respect to each of the
five highest compensated executive officers of the Company who were
executive officers of the Company at any time during the fiscal year
ended July 31, 1997:
COMPENSATION TABLE
Annual Compensation
(In Thousands)
-------------------------
Name and Fiscal Other Annual
Principal Position Year Salary Bonus Compensation
- ------------------------- ------ ------ ----- ------------
(a)
Marvin I. Haas 1997 $269 $205 $20
President and 1996 269
Chief Executive Officer 1995 273 104
Howard M. Leitner 1997 221 84 20
Senior Vice President and 1996 222
Chief Financial Officer 1995 225 92
Thomas Donnell 1997 163 65 5
President and Chief Executive 1996 167 52
Officer of Cain's Coffee 1995 169 83
Company
Martin J. Cullen 1997 183 45 20
Vice President, Secretary 1996 186
and Treasurer 1995 193 74
Anthony Fazzari 1997 170 50 11
Senior Vice President Retail 1996 175 28
Sales and Marketing 1995 186 73
- ------
(a) Perquisites include use of corporate automobiles (ranging between
$1,000 and $10,000) and life insurance (ranging between $3,000 and
$10,000).
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
There were no options/SARs granted during fiscal 1997` to the named
executives.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR
END OPTION/SAR VALUES
The following table summarizes options and SARs exercised during fiscal
1997 and presents the value of unexercised options and SARs held by the
named executives at fiscal year end:
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal at Fiscal
Shares Year-End Year-End
Acquired Value Exercisable(E) Exercisable(E)
Name on Exercise Realized Unexercisable(U) Unexercisable(U)
Marvin I. Haas 0 0 83,333 E 78,333 E
166,667 U 156,667 U
Howard M. Leitner 0 0 5,333 E
10,667 U
Thomas Donnell 0 0 3,333 E
6,667 U
Martin J. Cullen 0 0 3,333 E
6,667 U
Anthony Fazzari 0 0 3,333 E
6,667 U
Restricted stock share holdings at July 31, 1997, for Mr. Leitner and
Mr. Cullen amounted to 35,778 shares ($371,000) and 3,577 shares ($37,100),
respectively. These shares are to vest ratably through 2001. The unvested
portion of the shares are subject to forfeiture in the event the Company
terminates employment for Cause or the employee terminates employment for a
reason other than death, disability, retirement at or after normal retirement
date or Good Reason and to accelerated vesting in the event of termination of
employment by the Company for any reason other than Cause or termination of
employment by the employee for Good Reason, death, disability or retirement.
The Company established a Benefits Protection Trust with Shawmut
Bank, N.A., ultimately succeeded to by State Street Bank and Trust Company
(the Trust Fund) and contributed $700,000 thereto in 1988. The Trust Fund is
to be used for litigation expenses incurred by Company employees, including all
executive officers of the Company, in the event that after a Change-in-Control
(as defined) the new management of the Company refuses to pay benefits under
any employment contract or any employee benefit plan maintained by the Company.
At the present time, the Company has no intention of making additional
contributions to the Trust Fund.
As compensation for their services, each independent director (i.e.
a director who is not also an officer or employee of the Company) is
paid $16,000 annually in cash. Eash independent director who is a member of
the Audit Committee or the Compensation Committee is paid $1,000 for
attendance at a meeting of the Committee on which he serves. The
Company does not pay director fees to directors who are employees of
the Company.
Annual pension payments as of July 31, 1997 under the Company's
defined benefit plan which would be payable for Messrs. Haas, Leitner,
Donnell, Cullen and Fazzari (assuming normal retirement date) amount
to approximately $27,000, $45,000, $14,000, $109,000 and $36,000.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee's responsibilities include establishing
the Company's policies governing compensation of officers and other
key executives of the Company. The Committee's principal objective in
setting such policies is to develop a program designed to attract and
retain officers and other key executives critical to the success of
the Company and to reward and motivate those executives for
performance which enhances the profitability of the Company and
creates value for its shareholders.
To achieve these objectives, the Compensation Committee has developed
a competitive, market-driven base salary program coupled with an
annual incentive cash bonus plan geared toward performance. Base
salaries, prior to bonus awards, for officers and key executives have
been fixed at levels believed to be within a competitive range for
comparable positions in comparable companies. The President and Chief
Executive Officer can receive a bonus of from 25% to 90% of base pay
dependent upon the achievement of certain targeted levels of earnings
per share and a return on net assets at an agreed upon percent. The
President and Chief Executive Officer of Cain's Coffee Company can
receive a bonus of from 25% to 45% of base pay dependent upon a return
on net assets at an agreed upon percentage of such company. The
Senior Vice President and Chief Financial Officer can receive a bonus
from 12.5% to 45% of base pay dependent upon the achievement of certain
targeted levels of earnings per share and a return on net assets at an
agreed upon percent. The Vice President, Secretary/Treasurer can receive a
bonus from 8% to 30% of base pay dependent upon the achievement of certain
targated levles of earnings per share and a return on net assets at an
agreed upon percent. The Senior Vice President of Retail Sales and
Marketing can receive a bonus of from 18% to 45% of base pay dependent
upon sales volume, a return on net assets and operating profit at an
agreed upon percent and levels. In addition, certain other officers and key
executives can receive a bonus up to 45% of base pay based on specified levels
of sales volume, margins, purchasing efficiencies, manufacturing plant
expenditures, operating results, a return on net assets at an agreed
upon percent and the achievement of certain targeted levels of
earnings per share. Tying a significant portion of overall executive
compensation to the achievement of performance objectives and thus
making such bonus "at risk" is believed to align the financial
interests of the participating executives with those of the Company
and its shareholders. The bonus is only paid if the executive is
employed as at the last day of the fiscal year. In addition,
non-qualified stock options are also granted, from time to time, based
upon long-term corporate objectives and individual circumstances. In
determining long-term incentive grants, the Compensation Committee has
set shareholder value creation as a priority. During fiscal 1997, no
non-qualified stock options were granted to the named executives. The
incentive cash bonus program for fiscal 1997 was reviewed for the
Compensation Committee by a senior external compensation consulting
specialist and found to utilize accepted incentive compensation
techniques, including quantifiable operating objectives that must be
met to receive an incentive award and structures that tie awards
directly to performance through sliding scale payout schedules that
include performance thresholds and payout caps.
The base salary levels for the President and Chief Executive Officer
and all other officers and key executives are reviewed and approved by
the Compensation Committee based upon competitive salary data
developed for the Committee in consultation with the senior external
compensation consulting specialist. This data includes salaries paid
to executives at comparable corporations and is affected by overall
salary movement in the workplace, generally, and the food industry in
which the Company operates. Salary changes are recommended to the
Compensation Committee based upon a comparison between each
executive's base pay and those of other companies of similar size in
the food industry, the length of service of each executive and how
well each executive has performed in relation to predetermined goals
and other operational issues which may have arisen during the
preceding year.
Compensation for the President and Chief Executive Officer for fiscal
1997 was determined in accordance with the preceding factors. Mr. Haas'
compensation also reflected his inclusion in the incentive bonus program
which can provide a substantial part of his overall potential compensation
dependent upon the performance of the Company.
COMPENSATION COMMITTEE
HENRY SALZHAUER
R. SCOTT SCHAFLER
DAVID S. WEIL
COMPANY PERFORMANCE
The following graph shows a five year comparison of cumulative total
returns for the Company, the S&P 500 composite index and a Peer
Group whose members currently constitute the S&P Midcap 400 Index for
Foods and Beverages ("Midcap 400 Index"). The Midcap 400 Index
includes the following companies: Dean Foods Co., Dole Food Inc.,
Dreyers Grand Ice Cream Inc., Flowers Inds Inc., lbp Inc.,
International Multifoods Corp., Lance Inc., McCormick & Co. Inc.,
Michael Foods Inc., Savannah Foods & Inds Inc., JM Smucker Co., Tyson
Foods Inc. and Universal Foods Corp.
CHART
PENSION PLAN
The Chock Full O'Nuts Corporation Pension Plan is a noncontributory
defined benefit plan covering all non-union employees of the Company.
Employees become eligible for membership in the Plan on the
anniversary dates coinciding with or next following the date of
attainment of age 201/2 and completion of six months of service.
Participants become fully vested after 5 years of service. Prior
thereto there are no benefits payable under the Plan.
The Plan provides normal retirement benefits, reduced early retirement
benefits and increased post-retirement benefits which are available at
the employee's option. Benefits are payable in the form of a straight
life annuity or a 50% joint and survivor annuity. At Normal Retirement
(age 65) or Postponed Retirement, a participant receives an
annual pension payable in equal monthly installments equal to 2% of
his final 5 year average compensation times credited service to a
maximum of 50% of the final 5 year average compensation. Credited
service includes years of service rendered after reaching age 22. The
years of credited service under the Plan at July 31, 1997 of Messrs.
Haas, Leitner, Donnell, Cullen, and Fazzari are 7, 17, 3, 25 and 9,
respectively.
Marvin I. Haas and Howard M. Leitner are the Trustees of the Plan.
The table below shows the estimated annual pension benefits at
normal retirement age to an employee upon retirement under the Plan.
Final
Average
Earnings 15 Years 20 Years 25 Years 30 Years 35 Years
- ---------- -------- -------- -------- -------- --------
$300,000
and higher $48,000 $ 64,000 $ 80,000 $ 80,000 $ 80,000
$250,000 48,000 64,000 80,000 80,000 80,000
$200,000 48,000 64,000 80,000 80,000 80,000
$150,000 45,000 60,000 75,000 75,000 75,000
$100,000 30,000 40,000 50,000 50,000 50,000
___________
Certain participants may have accured annual pension benefits in excess of
those represented above prior to 1989 when certain tax law limitations become
effective.
401(k) CASH OR DEFERRED COMPENSATION PLAN
The Company maintains a tax-qualified 401(k) cash or deferred
compensation plan that covers certain employees who have completed one
year of service and attained age 20. Participants are permitted,
within the limitations imposed by the Internal Revenue Code, to make
pre-tax contributions to the plan pursuant to salary reduction
agreements. The contributions of the participants are held in
separate accounts which are always fully vested.
DEFERRED COMPENSATION PLAN
The Chock Full O'Nuts Deferred Compensation Plan for certain key
executives (the "Deferred Compensation Plan") became effective August
1, 1987. The purpose of the Deferred Compensation Plan is to
supplement the pension benefits available to certain officers and key
employees of the Company under the Chock Full O'Nuts Corporation
Pension Plan and to further the growth in the earnings of the Company
by offering long-term incentives to such officers and key employees
who will be largely responsible for such growth. While the arrangement
is considered unfunded for tax purposes, the Company and Wachovia Bank
& Trust Company have entered into a grantor trust agreement
establishing a trust fund to aid the Company in accumulating the
amounts necessary to satisfy its liability for deferred compensation
benefits. The assets of the trust will at all times be subject to the
claims of the Company's creditors. The Company will make contributions
annually in an amount which will fully fund each covered executive's
benefit as of his expected retirement, and will make payments of
deferred compensation benefits to the extent the trust does not.
Pursuant to the provisions of the Deferred Compensation Plan, the
Compensation Committee of the Board shall determine those employees
who shall be entitled to participate in the Deferred Compensation Plan
and the amount of the supplemental benefits to be paid to any such
participant. Upon such determination, such employee and the Company
shall enter into a deferred compensation agreement which specifies the
amount and rights of such participant to receive supplemental pension benefits.
As of the date hereof there are no deferred compensation agreements
outstanding under the Deferred Compensation Plan.
EMPLOYEE STOCK OWNERSHIP PLAN
In November 1988, the Company's Board of Directors approved the
Chock Full O'Nuts Corporation Employee Stock Ownership Plan ("ESOP")
which is a noncontributory plan established to acquire shares of the
Company's common stock for the benefit of all eligible employees. In February
1990, January 1991, April 1991, May 1995, September 1995 and August 1997, the
Company loaned the ESOP $1,140,000, $325,000, $675,000, $500,000, $500,000 and
$1,000,000, respectively, to be repaid in equal annual installments over eight
years from the date of the loan with interest primarily at 9% and 10%. Each
full-time employee of the Company who is not represented by a labor union is
eligible to participate in the ESOP on the date which is one year after the
date of his employment by the Company. All such participating employees are
vested in those shares allocated to their specific accounts after a period of
five years. Shares are allocated to participant's accounts annually based upon
the annual compensation (up to $150,000) earned by each participant. As the
Company makes annual contributions to the ESOP, these contributions
are used to repay the loans to the Company, together with accrued
interest. Deferred compensation equal to the loans has been recorded
as a reduction of stockholders' equity representing the Company's
prepayment of future compensation expense. As the loans are repaid,
common stock is allocated to ESOP participants and deferred
compensation is reduced by the amount of the principal payment on the
loans. Marvin I. Haas and Howard M. Leitner are the administrators of
the ESOP.
As of the date of this proxy statement a total of 4,285 shares,
4,153 shares, 1,376 shares, 5,781 shares and 5,212 shares of common
stock were allocated to each of the accounts of Messrs. Haas, Leitner,
Donnell, Cullen and Fazzari, respectively.
UNFUNDED DIRECTORS RETIREMENT PLAN
The Board of Directors has adopted an Unfunded Directors Retirement
Plan (the "Directors Plan") for directors who are not and never have
been employees of the Company (the "Outside Directors"). Each Outside
Director who retires from the Board with at least five full years of
service as a director of the Company shall, at the latter of age 65 or
on the date on which such director retires from the Board (the
"Payment Date") receive for a period of 10 years from the Payment Date
an annual cash benefit payment (the "Retired Director's Fee") equal to
the regular annual director's fee in effect upon such director's
retirement; provided, however, that if such director is terminated as
a director following a change in control (as defined in the Company's
Severance Benefit Payment Plan) the balance of such director's then
current term shall be credited toward his five-year service
requirement and in addition, the surviving spouse of any director who
dies (in office or after retirement) after meeting the foregoing age
and service requirements shall receive or continue to receive such
director's benefits for the balance of the 10 year period during which
the deceased director was entitled thereto, and payment of such
Retired Director's Fee shall terminate upon the death of any such
director and such director's surviving spouse. Benefits are currently
being paid to the surviving spouses of two deceased directors. As of the
date hereof, three Outside Directors meet the age and service
requirements for the receipt of benefits in the event of their
retirement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of October 7, 1997, the shares of
the Company's Common Stock owned beneficially by the present directors
and nominees of the Company individually and by all present directors,
nominees and executive officers of the Company as a group:
Name of Common Stock Percent
Beneficial Owner Beneficially Owned of Class
- ------------------------------ --------------------- ------------
Marvin I. Haas 663,257(1)(7) 6.1% (1)(7)
Howard M. Leitner 442,624(1)(7) 4.1% (1)(7)
Mark A. Alexander 3,020(3) *
Norman E. Alexander 46,179(4) *
Martin J. Cullen 20,112(7) *
Stuart Z. Krinsly 1,280(5) *
Henry Salzhauer 127,175(6) 1.2%
R. Scott Schafler 3,182 *
David S. Weil 6,796 *
All Directors and executive officers as
a group (17 persons), including the
above named persons 1,734,496(1)(2)(7) 16.0% (1)(2)(7)
- ------
* Less than 1% of class.
(1) Includes 389,100 shares owned by the Chock Full O'Nuts Corporation
Pension Trust of which Marvin I. Haas and Howard M. Leitner are the
Trustees. See "Pension Plan".
(2) Includes 787,025 shares owned by the Chock full o'Nuts Corporation
Employee Stock Ownership Plan of which Marvin I. Haas and Howard M.
Leitner are the administrators. See "Employee Stock Ownership Plan".
(3) Includes 1,920 shares which would be received upon conversion of
$15,000 of the Company's 8% Convertible Subordinated Debentures.
(4) Includes 44,884 shares owned by Galleon Syndication Corporation of
which Norman E. Alexander owns 100% of the issued and outstanding
capital stock.
(5) Represents shares which would be received upon the conversion of
$10,000 of the Company's 8% Convertible Subordinated Debentures.
(6) Includes 6,075 shares which would be received upon the conversion of
$50,000 of the Company's 7% Convertible Senior Subordinated
Debentures.
(7) Includes for Messrs. Haas, Leitner and Cullen, respectively, 83,333,
5,333 and 3,333 shares granted under stock option agreements which are
currently exerciseable.
The following tables sets forth, as of October 7, 1997, the shares
of the Company's Common Stock owned beneficially by persons known to
the Company to own more than five percent of the outstanding shares of
the Common Stock of the Company:
Common
Stock Percent
Beneficially of
Name and Address Owned Class
- ------------------------ --------------------- -----------------
Chock Full O'Nuts Corporation
Employee Stock Ownership Plan
Chock Full O'Nuts Corporation
370 Lexington Avenue
New York, New York 10017 787,025(1) 7.3%(1)
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580 1,694,016(2) 14.9%(2)
Dimensional Fund Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401 792,991(3) 7.4%(3)
The TCW Group, Inc.
865 South Figueroa Street
Los Angeles, California 90017 892,788(4) 8.3%(4)
- ------
(1) See "Employee Stock Ownership Plan".
(2) Includes 371,203 shares which would be received upon conversion of
$3,055,000 of the Company's 7% Convertible Senior Subordinated Debentures
and 257,490 shares which would be recieved upon conversion of $2,011,000 of
the Company's 8% Convertible Subordinated Debentures. This information has
been reported on Amendment No. 26 to Schedule 13D on September 25, 1997.
(3) This information has been confirmed to the Company by Dimensional
Fund Advisors, Inc. on October 8, 1997.
(4) The information has been confirmed to the Company by The TCW
Group, Inc. on October 8, 1997.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Directors propose that the stockholders ratify the appointment
of Ernst & Young as the Company's independent auditors for 1998. Ernst
& Young has been the Company's independent auditors for the last
eighteen years. The report of Ernst & Young with respect to the
Company's financial statements appears in the Company's annual report
for the fiscal year ended July 31, 1997. A representative of Ernst &
Young will be at the annual meeting and will have an opportunity to
make a statement if he desires to do so and will be available to
respond to appropriate questions. In the event the stockholders fail
to ratify the appointment, the Directors will consider it a directive
to consider other auditors for a subsequent year.
Approval of the foregoing proposal requires the affirmative vote of
a majority of the votes cast.
The Board of Directors recommends a vote FOR this proposal.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1998
Annual Meeting must be received by the Company for inclusion in the
Company's proxy statement relating to that meeting not later than July
27, 1998. Such proposals should be addressed to Martin J. Cullen,
Secretary, Chock Full O'Nuts Corporation, 370 Lexington Avenue, New
York, New York 10017.
OTHER MATTERS
The management knows of no other business which will be presented
for consideration at the Annual Meeting other than that stated in the
notice of meeting, except that the minutes of the Annual Meeting of
Stockholders held December 19, 1996, will be presented for approval as
to form but such action is not to constitute approval or disapproval
of any of the matters referred to in such minutes. If, however, any
other matters shall properly come before the Annual Meeting, it is
intended that the persons named in the enclosed proxy, or their
substitutes, will vote the proxies in accordance with their best
judgment in such matters.
The cost of this proxy solicitation and any additional material relating
to the meeting which may be furnished to the stockholders will be borne
by the Company. In addition, solicitation by telephone, telegraph or other
means may be made personally, without additional compensation, by officers,
directors and regular employees of the Company. The Company also will request
brokers, dealers, banks and voting trustees and their nominees holding
shares of record but not beneficially to forward proxy soliciting
material to beneficial owners of such shares, and the Company, upon
request, will reimburse them for their expenses in so doing. The
Company has also retained The Altman Group to aid in solicitation of
proxies at an anticipated aggregate cost of $10,000, plus reasonable
out-of-pocket expenses.
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K, without exhibits, will be provided without
charge to any stockholder submitting a written request. Such request
should be addressed to Martin J. Cullen, Secretary, Chock Full O'Nuts
Corporation, 370 Lexington Avenue, New York, New York 10017.
By Order of the Board of Directors
MARTIN J. CULLEN
Secretary
Dated: New York, New York
October 30, 1997
CHOCK FULL O'NUTS CORPORATION
This proxy solicited by the Board of Directors for the Annual Meeting
on December 12, 1997
The undersigned hereby appoints Marvin I. Haas and Howard M.
Leitner, and each of them, with full power of substitution, the
attorneys and proxies of the undersigned to attend the Annual Meeting
of Stockholders of Chock Full O'Nuts Corporation to be held December
12, 1997 at 10:00 A.M., Eastern Standard Time and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, to
vote all shares of stock of the Company held or owned by the
undersigned as indicated on the proposals as more fully set forth in
the Proxy Statement, and in their discretion upon such other matters
as may come before the meeting.
1. Election of Directors: for a three-year term Mark A. Alexander,
Jerry Columbus, Howard M. Leitner and Henry Salzhauer
FOR all nominees WITHHOLD authority to vote for all nominees.
FOR all nominees, EXCEPT nominee(s) written below.
- -------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees.
2. Proposal to ratify the appointment of independent auditors for
1998.
FOR AGAINST ABSTAIN
The Board of Directors recommends a vote FOR Proposal 2.
(continued and to be signed on reverse side)
The shares represented by this proxy will be voted as directed or if
no direction is indicated, will be voted FOR the election of each of
the nominees and FOR Proposal 2.
The undersigned hereby acknowledges receipt of the Notice of and Proxy
Statement for the aforesaid Annual Meeting.
Date and sign exactly as name appears hereon. Each joint Tenant must
sign. When signing as Attorney, Executor, Trustee, etc., give full
title. If signer is corporation, sign in full corporate name by
authorized officer.
.. (Date of Above)
.. (Signature of Stockholder)
.. (Signature of Stockholder)
