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 Section 240.14a-11(c) or Section 240.14a-12
VICORP Restaurants, Inc.
---------------------------
(Name of Registrant as Specified In Its Charter)
Stanley Ereckson, Jr.
-----------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
_____________________________________________________________
VICORP RESTAURANTS, INC.
400 West 48th Avenue
Denver, Colorado 80216
____________________
PROXY STATEMENT
___________________
Annual Meeting of Shareholders
To Be Held April 5, 1996
General Information on The Meeting
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of VICORP
Restaurants, Inc. (the "Company") whose principal offices are
located at 400 West 48th Avenue, Denver, Colorado 80216,
telephone number (303) 296-2121, to be used at the Annual Meeting
of Shareholders of the Company (the "Meeting") to be held on
Friday, April 5, 1996 at 11:00 A.M. Denver time, at the Company's
offices at 400 West 48th Avenue, Denver, Colorado 80216 and at
any adjournment thereof.
This Proxy Statement, the form of Proxy and the 1995 Annual
Report to Shareholders are first being sent to shareholders on
approximately February 26, 1996.
Shareholder Proposals
Any shareholder proposal to be considered for presentation at
the 1997 Annual Meeting of Shareholders must be received by the
Company at its executive offices on or before October 29, 1996 to
be considered for inclusion in the Company's proxy materials
under the rules of the Securities and Exchange Commission.
Revocability of Proxy
Any shareholder giving a proxy has the power to revoke it at
any time prior to the voting of the shares represented by the
proxy, by either (1) filing with the Secretary of the Company at
400 West 48th Avenue, Denver, Colorado 80216, an instrument
revoking the proxy or a duly executed proxy bearing a later date,
or (2) attending the meeting and, after notifying the Secretary
of the Company, voting the shares covered by the proxy in person.
Officers and other employees of the Company, for no
additional compensation, may solicit proxies by telephone or
personal interview as well as by mail. The cost of soliciting
proxies will be borne entirely by the Company.
Only shareholders of record at the close of business on the
record date, February 16, 1996, will be entitled to notice of and
to vote at the Meeting. There were outstanding on the record
date 9,049,026 shares of the Company's $.05 par value Common Stock ("Stock").
Each share of Stock is entitled to one vote on each matter to
come before the Meeting. In the election of Directors,
cumulative voting is not allowed. Shares represented by all
valid proxies will be voted in accordance with the instructions
contained in the proxies. In the absence of instructions, shares
represented by valid proxies will be voted in accordance with the
best judgment of the persons named in the solicited proxy.
Shares of the Company representing one-third of the votes
entitled to be cast by all outstanding shares of Stock will
constitute a quorum for the transaction of business at the
Meeting. The affirmative vote of the holders of shares of Stock
representing a majority of the votes represented at the Meeting
will be sufficient for approval of the matters to come before the
Meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum.
Broker non-votes are not counted for purposes of determining
whether a proposal has been approved. Since the affirmative vote
of the holders of shares of Stock representing a majority of the
votes represented at the meeting is required for approval of the
matters to come before the meeting, abstentions will have the
effect of a negative vote.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stock
The following table sets forth information as of February 16,
1996 with respect to the beneficial ownership of VICORP's Stock
by all persons known by the Company to be the beneficial owners
of 5% or more of the outstanding shares, each director of the
Company, each of the executive officers named in the Summary
Compensation Table (see Compensation of Directors and Executive
Officers) and all directors and executive officers of the Company
as a group.
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership of Class
-------- ---------- ---------- --------
Stock First Manhattan Co. 1,143,612 <F1> 12.58%
(par value $.05 437 Madison Avenue
per share) New York, NY 10022
Southeastern Asset 587,500 <F2> 6.49%
Management, Inc.
6075 Poplar Avenue, Suite 900
Memphis, TN 38119
The TCW Group, Inc. 488,800 <F3> 5.40%
865 South Figueroa Street
Los Angeles, CA 90017
Dimensional Fund Advisors, Inc. 469,300 <F4> 5.19%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Carole Lewis Anderson 14,000 <F5> *
3616 Reservoir Road NW
Washington, DC 20007
Bruce B. Brundage 25,000 <F5> *
5290 DTC Parkway
Suite 160
Englewood, CO 80111
James R. Burke 7,000 <F5> *
400 West 48th Avenue
Denver, CO 80216
James F. Caruso 100 *
173 Marion Street
Denver, CO 80218
Charles R. Frederickson 232,654 <F5> 2.52%
400 West 48th Avenue
Denver, CO 80216
Nicholas S. Galanos -0- *
400 West 48th Avenue
Denver, CO 80216
John C. Hoyt 55,868 <F5> *
500 South East Sixth Street
Bartlesville, OK 74003
J. Michael Jenkins 20,000 *
400 West 48th Avenue
Denver, CO 80216
Robert E. Kaltenbach 12,925 <F5> *
400 West 48th Avenue
Denver, CO 80216
Dennis L. Kuper 3,000 *
740 Olive Street
Denver, CO 80220
Robert T. Marto 18,000 <F5> *
White Plains Office Park
777 Westchester Avenue
White Plains, NY 10604
Dudley C. Mecum 17,500 <F5> *
540 Madison Avenue
New York, NY 10022
Dennis B. Robertson 22,000 <F5> *
1987 West 11th Street
Chicago, IL 60643
Arthur Zankel 163,700 <F6> 1.80%
437 Madison Avenue
New York, NY 10022
All directors 593,437 <F5><F6> 6.34%
and executive officers
as a group (14 persons
including those
named above)
* Percent of class is less than 1%
[FN]
<F1> Of the 1,143,612 shares beneficially owned, the shareholder has sole
voting power over 271,500 shares, shared voting power over 837,463
shares, sole dispositive power over 271,500 shares and shared
dispositive power over 872,112 shares. Arthur Zankel, a director of
the Company, is a Co-Managing Partner of First Manhattan Co.
<F2> Of the 587,500 shares beneficially owned, the shareholder
has sole voting power over 281,000 shares, shared voting power
over 290,000 shares, sole dispositive power over 297,500 shares
and shared dispositive power over 290,000 shares.
<F3> Of the 488,800 shares beneficially owned, the shareholder
has sole voting power and sole dispositive power over each share.
<F4> Of the 469,300 shares beneficially owned, the shareholder
has sole voting power over 340,100 shares, no shared voting or
dispositive power and sole dispositive power over each of the shares.
<F5> Includes 14,000, 20,000, 7,000, 152,000, 18,000, 12,000, 18,000,
16,000, and 20,000 shares which Ms. Anderson, Messrs. Brundage, Burke,
Frederickson, Hoyt, Kaltenbach, Marto, Mecum, and Robertson,
respectively, have the right to purchase under options that are
presently exercisable.
<F6> Includes 142,100 shares owned directly by Mr. Zankel, 20,000 shares
which he has the right to purchase under options that are presently
exercisable and 1,600 shares held by or in trust for a family member.
VICORP is unaware of any arrangement which would at a subsequent date
result in a change in the control of the Company.
ELECTION OF DIRECTORS
Directors are to be elected to hold office until the next
Annual Meeting of Shareholders and until their successors shall
be elected and shall qualify. Each of the persons nominated is
currently a member of the Board of Directors.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
Served as
a Director
Name and Age Position Since
- ------------ -------- ----------
Carole Lewis Anderson, 51 Director of the Company April 1991
Bruce B. Brundage, 60 Director of the Company August 1988
Charles R. Frederickson, 58 Chairman of the Board and June 1968
Co-Chief Executive Officer of
the Company
John C. Hoyt, 68 Director of the Company October 1982
J. Michael Jenkins, 49 Director, Co-Chief Executive August 1994
Officer and President of the
Company
Robert T. Marto, 50 Director of the Company August 1989
Dudley C. Mecum, 61 Director of the Company December 1989
Dennis B. Robertson, 58 Director of the Company August 1988
Arthur Zankel, 63 Director of the Company October 1988
Carole Lewis Anderson, became a director in April 1991.
Since June of 1995, she has been a principal of Suburban Capital
Markets, Inc., a commercial real estate mortage company. Prior
to that time, she was the President of MASDUN Capital Advisors, a
private investment banking company which engages in corporate and
real estate finance. Ms. Anderson is also a director of AARP
Cash Investment Funds and AARP Income Trust.
Bruce B. Brundage became a director of the Company in August
1988. Since 1973, Mr. Brundage has been the President of
Brundage & Company, a Denver based company specializing in the
private placement of long-term financing and the negotiation,
appraisal and arrangement of mergers and acquisitions. Mr.
Brundage is also a director of Black Hills Corporation.
Charles R. Frederickson, a director of the Company since
1968, was appointed to the position of Chairman of the Board in
November 1986 and Co-Chief Executive Officer in August 1994.
John C. Hoyt, a director since October 1982, has for more
than the past five years been an officer, director and
controlling shareholder of Midwest Pancake Houses, Inc. which is
a Village Inn franchisee. See Certain Transactions.
J. Michael Jenkins became a director of the Company and its
Co-Chief Executive Officer and President in August 1994.
Immediately prior to his joining the Company, he was the Chairman
of the Board and Chief Executive Officer of El Chico Restaurants,
Inc., positions which he held since February 1992. From May 1989
to February 1992 Mr. Jenkins served as President and Chief
Executive Officer of Metromedia Steakhouses, Inc.
Robert T. Marto, a director since August 1989, is currently
President and Chief Executive Officer of White River Corporation.
He served as Executive Vice President and Chief Financial Officer
of Fund American Enterprises Holdings, Inc., and as President of
its wholly owned subsidiary Fund American Enterprises, Inc. from
1990 to December 1993. Mr. Marto is a director of Infovest
Corp., White River Corporation and Zurich Reinsurance Center
Holdings, Inc.
Dudley C. Mecum became a director in December 1989. Since
August 1989, he has been a partner with G.L. Ohrstrom & Company,
which acquires and manages companies for investors. Mr. Mecum is
also a director of The Travelers Group, Lyondell Petrochemical
Co., Dyncorp, Fingerhut Companies, Inc., Roper Industries, Inc.,
and Harrow Industries, Inc.
Dennis B. Robertson became a director of the Company in
August 1988. Mr. Robertson is currently the Chairman and Chief
Executive Officer of DOCK'S Great Fish, Inc., which operates
seafood restaurants. Prior to his appointment as Chairman, he
was the President, a position he held since 1985.
Arthur Zankel became a director of the Company in October
1988. He is currently the Co-Managing Partner of First Manhattan
Co., a position which he has held since 1979. First Manhattan
Co. is a money management and institutional research firm. Mr.
Zankel is also a director of The Travelers Group and Fund American
Enterprises, Inc.
The Board of Directors, while not having a nominating
committee, does have standing Audit and Compensation Committees.
The Audit Committee met five times in fiscal 1995, and consisted
of Ms. Anderson and Messrs. Brundage, Hoyt, Marto, Mecum,
Robertson, and Zankel. The functions of the Committee are to
recommend to the Board of Directors the appointment of the
Company's independent auditors, review the fee arrangements and
scope of the annual audit, and consider the comments of the
independent and internal auditors with respect to internal
controls.
The Compensation Committee, which also acts as the Regular
Stock Option Committee for the Company's 1982 Stock Option Plan,
was composed of Ms. Anderson and Messrs. Brundage, Marto, Mecum,
Robertson and Zankel. That committee met three times during the
last fiscal year. The Committee recommends to the Board of
Directors officers' salaries, administers executive compensation
plans, grants options and approves bonuses for the Company's
executive employees.
During fiscal 1995, the Board of Directors met five times.
Each of the Directors attended at least 75% of the meetings of
the Board of Directors and the committees of which that person
was a member.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary of Cash and Certain Other Compensation
The following table discloses compensation received by the
Company's Co-Chief Executive Officers and named executive
officers for the three fiscal years ended October 31, 1995.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-------------------------
Other
Annual
Compen- All Other
Name and Principal Salary Bonus sation Compensation
Position Year ($) ($) ($) ($)
- ----------------------- ---- ------- ------ ------- ------------
<S> <C> <C> <C> <C> <C>
Charles R. Frederickson 1995 300,000 3,398 <F1>
Chairman and Co-Chief 1994 297,115 4,717 <F8>
Executive Officer 1993 274,423 4,577 <F9>
James R. Burke <F2> 1995 130,160 6,355 29,000 2,558
Executive Vice 1994
President/Operations 1993
Bakers Square
Nicholas S. Galanos <F3> 1995 148,462 177
Executive Vice 1994
President/Development 1993
President/Angel's Diner
J. Michael Jenkins <F4> 1995 350,000 46,910 610
Co-Chief Executive 1994 55,192 1,000,000
Officer and President 1993
James F. Caruso 1995 74,462 223,095 <F5>
President/Bakers 1994 221,385 44,000 4,717 <F8>
Square Division 1993 195,385 84,000
Robert E. Kaltenbach 1995 172,981 13,860 3,238 <F6>
President/Village Inn 1994 143,192 26,950 3,545 <F8>
Division 1993
Dennis L. Kuper 1995 132,257 146,198 <F7>
Executive Vice 1994 136,538 20,550 3,537 <F8>
President/Finance 1993 132,654 16,156 2,982 <F9>
<FN>
<F1> The amount shown represents $3,000 paid as the Company's
matching contribution under its 401(k) plan and $398 paid by the
Company for term life insurance premiums.
<F2> Mr. Burke first became an executive officer of the Company
during 1995. The amount reflected in the column captioned "Other
Annual Compensation" represents the amount he was reimbursed by
the Company for his expenses in relocating to Denver. Under "All
Other Compensation", the amount shown represents $2,388 paid as
the Company's matching contribution under its 401(k) plan and
$170 paid by the Company for term life insurance premiums.
<F3> Mr. Galanos first became an executive officer of the Company
during 1995. The $177 payment reflected under "All Other
Compensation" represents the Company's payment for term life
insurance premiums.
<F4> Mr. Jenkins first became an executive officer of the Company
during 1994. See discussion of his employment contract under
Employment Contracts and Termination of Employment and Change-of-
Control Arrangements. The amount reflected in the column
captioned "Other Annual Compensation" represents a reimbursement
of moving expenses in conjunction with his relocation to Denver.
Under "All Other Compensation", the amount shown represents the
Company's payment for term life insurance premiums.
<F5> Mr. Caruso resigned on February 17, 1995, and the amount
shown consists of $220,000 paid to Mr. Caruso under an Employment
Severance and Mutual Release Agreement executed at the time of
his resignation from the Company; $3,000 as the Company's
matching contribution for Mr. Caruso to its 401(k) plan; and $95
is the amount paid by the Company in insurance premiums for term
life insurance for the benefit of Mr. Caruso.
<F6> The amount shown represents $3,000 paid as the Company's
matching contribution under its 401(k) plan and $238 paid by the
Company for term life insurance premiums. Mr. Kaltenbach first
became an executive officer of the Company during 1994.
<F7> Mr. Kuper resigned on October 9, 1995, and the amount shown
consists of $140,000 paid to Mr. Kuper under an Employment
Severance and Mutual Release Agreement executed at the time of
his resignation from the Company; $3,000 as the Company's
matching contribution for Mr. Kuper to its 401(k) plan; $198 as
the amount paid by the Company in insurance premiums for term
life insurance for the benefit of Mr. Kuper; and $3,000 paid to
Mr. Kuper under the Company's 1989 Outstanding Stock Purchase
Plan. Under that plan, eligible employees could elect annually
to use up to the lesser of (i) 25% of that individual's total
compensation for that year; or (ii) 50% of that person's
incentive compensation to purchase VICORP's common stock in
public transactions. If after two years from the purchase date,
the employee was still employed with VICORP and continued to own
the stock, VICORP would pay the employee a cash bonus equal to
25% of the amount used to purchase it.
<F8> The amounts shown represent $4,717 paid on behalf of each of
Messrs. Frederickson, and Caruso; $3,545 on behalf of Mr.
Kaltenbach; and $3,537 on behalf of Mr. Kuper as the Company's
matching contribution for the stated individuals to its 401(k) Plan.
<F9> Represents the Company's matching contribution for the stated
individuals to its 401(k) Plan during fiscal 1993.
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
The following table provides information on option/SAR
exercises in fiscal 1995 by the named executive officers and the
value of such officers' unexercised options/SARs at October 31,
1995.
Number of Value of
Unexercised Unexercised
Options/SARs In-the-money
at Fiscal Options/SARs at
Year End Fiscal Year End
(#) ($)
------------- ---------------
Shares
Acquired Value
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ----------------------- ----------- -------- ------------- ---------------
Charles R. Frederickson 152,000/0 $542,345/0
J. Michael Jenkins 0/300,000 0/0
James R. Burke 7,000/0 0/0
James F. Caruso 0/0 0/0
Nicholas S. Galanos 0/0 0/0
Robert E. Kaltenbach 12,000/0 6,000/0
Dennis L. Kuper 30,000 118,750 0/0 0/0
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
The members of the Compensation Committee for fiscal 1995 were
Carole Lewis Anderson, Bruce B. Brundage, Robert T. Marto, Dudley
C. Mecum, Dennis B. Robertson and Arthur Zankel.
Employment Contracts and Termination of Employment and Change-of-
Control Arrangements
In August 1994, Mr. Jenkins entered into a five-year
employment agreement. Under that agreement, Mr. Jenkins received
a $1 million cash payment upon the execution of the contract and
is to receive a base salary of $350,000 per year for the first
three years and $450,000 per year for the final two years of the
agreement's term. During the term of the employment agreement,
he is entitled to earn annual bonuses, not to exceed a cumulative
total of $4 million through fiscal year 1999. For the Company's
1995, 1996 and 1997 fiscal years, his annual bonuses, if any,
will be 20% of the amount by which the Company's earnings before
interest, taxes and the bonus itself exceed $25 million, and for
fiscal years 1998 and 1999, 20% of the amount by which such
earnings exceed $32 million. In no event, however, shall the
cumulative bonus paid exceed $4 million over the term of the
contract or, except in the last year of the agreement, $1.5
million in any one year.
Simultaneously with the execution of the employment
agreement, and as a part of it, Mr. Jenkins was granted the
option to purchase a total of 300,000 shares of the Company's
common stock at prices ranging from $15.00 to $30.17 per share.
The options vest on October 1, 1999 and are exercisable until
October 1, 2004. In the event Mr. Jenkins dies, becomes
permanently disabled, resigns on Just Grounds or is terminated
other than for Just Cause the vesting accelerates in 50,000 share
increments on September 1, 1994 and on October 1, 1995 and each
year thereafter through October 1, 1999.
In the event the Board of Directors terminates Mr. Jenkins
without Just Cause or if he terminates his employment with Just
Grounds, the agreement provides that he is to receive the
greatest of (i) two times his then current base salary, (ii) $2
million, less the amount of any bonus previously paid or (iii)
any amount accrued but unpaid from bonuses in prior years in
excess of $1.5 million but in no event to exceed $4 million.
If there is a change in control (any person becomes the
beneficial owner of 50% or more of the combined voting power of
the Company's outstanding securities; a majority of the members
of the Board of Directors changes in any period of 12 months,
unless the nomination and election of each new director was
approved by a vote of at least a majority of the directors then
still in office and who were directors at the beginning of the
period or any person acquires gross assets of the Company that
have an aggregate fair market value of 50% or more of the fair
market value of all the Company's gross assets immediately prior
to such acquisition) and Mr. Jenkins is terminated within 180
days thereafter, he shall receive the greater of two times his
then current salary or $4 million, less the amount of any bonus
previously paid to him.
In addition to the above, the employment agreement provides
Mr. Jenkins life, health, hospitalization, disability, vacation
and other benefits consistent with those provided to other
Company officers.
Mr. Galanos executed an employment agreement of undefined
term with the Company in February 1995. Under that agreement,
Mr. Galanos is to receive a base salary of $200,000 per year and
is eligible to earn an annual bonus equal to 10% of the
divisional operating income of the Company's Angel's restaurant
division. Divisional operating income is defined as the amount
of store operating profit minus divisional overhead expenses. In
no event shall the bonus exceed, on a cumulative basis, $2.5
million over the Company's 1995 through 1999 fiscal years.
Should the Company involuntarily terminate Mr. Galanos
without just cause, the agreement provides he will be entitled to
severance equal to one year's base salary, plus benefits for up
to the earlier of 12 months or until he secures another position
which includes benefits.
Finally, the agreement provides Mr. Galanos benefits
consistent with those provided to other Company officers.
Messrs. Caruso and Kuper each executed an Employment
Severance and Mutual Release Agreement with the Company at the
time each left the Company's employ. In those agreements, the
parties executed a mutual release of claims and VICORP paid to
Mr. Caruso $220,000 and to Mr. Kuper $140,000.
Certain employees of the Company, including Messrs. Burke and
Kaltenbach, have entered into employment severance agreements with
the Company. The term of those agreements expires December 31 of
each year; however, they are extended automatically on January 1
of each year, unless ninety days notice of non-renewal is given
by either party. The severance agreement provides that, in the
event a covered employee is terminated within one year following
a change of control in the Company, the terminated employee will
be entitled to the following described payments as applicable.
If the employee's termination is by reason of death, disability,
retirement or is a voluntary action on the part of the employee,
the Company is required to pay the employee all earned, but
unpaid, compensation to the date of termination. If the employee
is terminated for cause, as defined in the agreement, the Company
is required to pay the employee his base salary through the date
of termination. If the employee's termination is for reasons
other than those specified above, the employee is entitled to all
compensation earned and unpaid as of the date of termination; a
lump sum cash payment equal to one and one-half times the
employee's annual base salary; one year's life, health,
hospitalization, dental and disability benefits consistent with
those provided by the Company prior to termination; and the right
to immediately exercise any granted stock options. Under the
severance agreements, a change of control is defined as a change
in beneficial ownership of 50% or more of the combined voting
power of the Company; the first purchase of stock in a non-
Company sponsored tender or exchange offer; or upon shareholder
approval of certain merger consolidations, sales or disposition
of substantially all of the Company's assets, a plan of
liquidation; or a change in at least two-thirds of the members of
the Board absent approval of the then existing Board members.
In April 1989, Mr. Frederickson entered into an employment
severance agreement with the Company. The terms of that
agreement are substantially the same as described above for other
Company employees except (i) if termination is for reasons other
than cause, disability, retirement or by the voluntary action of
the employee, the lump sum cash payment shall be equal to two and
three-quarters times his annual base salary plus the amount equal
to the bonus compensation to which he was entitled during the
most recent fiscal year in which he earned a bonus; and (ii) if
he becomes employed within one year after termination, he shall
repay to the Company any cash compensation actually received by
him as a result of such employment during the one-year period up
to a specified amount.
Report of the Compensation Committee
This report discusses the manner in which base salaries,
incentive compensation and stock option grants for the Company's
Co-Chief Executive Officers and other executives named in the
Summary Compensation Table were determined for the 1995 fiscal
year.
The Company's compensation policies for the stated
individuals are administered by the Compensation Committee of the
Board of Directors, all members of which are outside directors.
The compensation policies are intended to enhance the financial
performance of the Company by aligning the financial interest of
the Company's executives with those of its stockholders. The
Committee believes that the most effective executive compensation
program is one which serves to attract and retain talented
individuals who are incented to achieve both current and long-
term management goals toward the end of enhancing stockholder
value.
The primary components of executive compensation are base
salary, cash bonus and longer-term incentives in the form of
stock option grants.
Base Salaries:
The base salaries, which were in the median range of the
companies included in the survey described below, of Mr.
Frederickson and each of the Named Executives with the exception
of Mr. Jenkins for the 1995 fiscal year were determined by the
Compensation Committee in December 1994. In making its
determinations, the Committee reviewed the information contained
in the 1994 Chain Restaurant Compensation Association Survey and
evaluated the competitiveness of the entire compensation package.
The independently conducted Chain Restaurant Compensation
Association Survey was deemed to be an appropriate indicator of
the competitiveness of the Company's salaries when compared with
other restaurant companies because of the number and nature of
companies participating. In excess of sixty companies
participated representing both publicly and privately owned
business in various segments of the restaurant industry.
Included with that representation were the restaurant companies
on the Dow Jones Entertainment & Leisure--Restaurant Index.
Mr. Jenkins's compensation is governed by the terms of his
employment agreement with the Company, which was approved by the
Board of Directors when it was executed in 1994. There have been
no modifications to that agreement. See Executive Contracts and
Termination of Employment and Change in Control Arrangements for a
detailed discussion of Mr. Jenkins's employment agreement.
Bonus Program:
In December 1994, the Compensation Committee approved a
bonus program which was predicated upon achievement of overall
Company performance against a set baseline of the Company's
earnings before interest and taxes as computed in accordance with
generally accepted accounting principals. The measure of
earnings before interest and taxes and the baseline that was
established (which was a substantial earnings increase over the
previous year) were selected by the Committee as being
appropriate because of their direct relationship to shareholder
interest. The Company failed to meet the earnings target and
accordingly no bonus was paid to any executive for fiscal 1995.
1995 Stock Options:
No stock option grants were made nor existing options
repriced in 1995 to the named executive officers.
Deductibility of Compensation:
The Compensation Committee has considered the potential
impact of Section 162(m) (the "Section") of the Internal Revenue
Code adopted under the federal Revenue Reconciliation Act of
1993. The Section disallows a tax deduction for any publicly-
held company for individual compensation exceeding $1 million in
any tax year for any of the named executive officers, unless the
compensation is performance-based. The Company intends to
structure its compensation plans to achieve maximum deductibility
under the Section with minimal sacrifices in flexibility and
Company objectives. The Compensation Committee will consider the
deductibility of compensation payments in connection with future
compensation arrangements with the named executive officers, but
deductibility will not be the sole factor used by the
Compensation Committee in determining appropriate levels or types
of compensation. If, in the judgment of the Compensation
Committee, the benefits of a compensation package that does not
satisfy the requirements of the Section outweigh the costs to the
Company of a failure to comply with the Section, the Compensation
Committee may adopt compensation arrangements in the future under
which payments are not deductible under the Section.
Compensation Committee Members:
This report is submitted by the members of the Compensation Committee
of the Board of Directors:
Dennis B. Robertson, Chairman
Carole Lewis Anderson
Bruce B. Brundage
Robert T. Marto
Dudley C. Mecum
Arthur Zankel
Directors' Compensation:
Non-employee directors are compensated for their services at
the rate of $2,000 per fiscal quarter, plus $1,000 per day for
services rendered, and reimbursement of actual expenses incurred.
Each non-employee director is also granted options to purchase
shares of the Company's Stock pursuant to the terms of its 1983
Non-Qualified Stock Option Plan ("1983 Plan"). The 1983 Plan,
which is mandatory in its operation, provides that each non-
employee director when first elected to the Board is granted an
option to purchase 10,000 shares of the Company's Stock, which
vest 4,000, 4,000, and 2,000 shares over the ensuing three years.
Upon a director's election for the fourth consecutive term and
each year thereafter, the director is granted an additional 2,000
shares. All options granted under the 1983 Plan are at 100% of
the fair market value of the Company's Common Stock on the date
of grant.
PERFORMANCE GRAPH
The following performance graph reflects percentage change in
the Company's cumulative total shareholder return on common stock
as compared with the cumulative total return of the Dow Jones
Equity Market Index and the Dow Jones Entertainment & Leisure -
Restaurant Index.
1990 1991 1992 1993 1994 1995
----------------------------------------------
VICORP Restaurants, Inc. 100.00 150.89 158.93 148.21 119.64 78.57
Dow Jones Restaurant Index 100.00 135.25 171.70 221.87 209.31 276.61
Dow Jones Equity Market Index 100.00 132.37 148.27 172.52 178.99 226.65
CERTAIN TRANSACTIONS
John C. Hoyt, a director of the Company, and members of his
family are the principal shareholders of Midwest Pancake Houses,
Inc. ("MPH"). MPH has been a franchisee of the Company since
1970 and currently operates six Village Inn restaurants in
Oklahoma. MPH paid an initial franchise fee of $1,000 each for
the operating units and pays franchise service fees equal to 1.5%
of gross sales at each of those locations. Total franchise
service fees paid by MPH in fiscal 1995 were $115,064. MPH
additionally was indebted to the Company on its open account.
The largest aggregate amount outstanding on that open account at
any time during fiscal 1995 was $107,067. As of February 1,
1996, MPH's open account was current.
MPH is also the managing partner for a franchised Village Inn
Restaurant located in New Mexico. In fiscal 1995 the franchisee,
3155 Associates Limited Partnership ("3155"), paid franchise
service fees (4% of gross sales at that location) in the amount
of $58,339. It was also indebted to the Company on its open
account. The largest aggregate amount outstanding on that open
account at any time during fiscal 1995 was $9,922. As of
February 1, 1996, 3155's open account was current.
Ratification of Certain Transactions
The transactions described in the foregoing discussion have
been approved or ratified by the unanimous vote of those
directors having no interest in those transactions. The Company
believes that the terms of those transactions are no less
favorable to the Company than those that could have been obtained
from independent third parties.
Compliance with Section 16(a) of the Exchange Act
Based solely on a review of the written representation of the
Company's directors and executive officers and copies of the
reports they have filed with the Securities and Exchange
Commission, the Company believes that all Section 16(a) filing
requirements applicable to its executive officers, directors and
greater than ten percent (10%) beneficial owners were complied
with, with the exception of the following: James R. Burke's
filing of a Form 3 dated January 10, 1996 was not filed within
ten days of his promotion to an executive officer of the Company
which occurred on May 31, 1995. At the time of his promotion and
continuing to present, Mr. Burke owns no stock of the Company
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent
accountants for the year ended October 31, 1995. The Board of
Directors has selected Arthur Andersen LLP to serve as the
Company's independent accountants for fiscal 1996.
Representatives of Arthur Andersen LLP will be present at the
Meeting, will be given an opportunity to make a statement if they
desire to do so and are expected to be available to respond to
appropriate questions from shareholders.
OTHER MATTERS
The Company knows of no other matters to be brought before
the Meeting; if other matters properly come before the Meeting,
it is the intention of the persons named in the solicited proxy
to vote such proxy in accordance with their judgment.
ANNUAL REPORTS AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the
fiscal year ended October 31, 1995 is being mailed with this
Proxy Statement to each shareholder of record as of February 16,
1996.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION TO ANY PERSON REQUESTING A
COPY IN WRITING AND STATING THAT HE/SHE WAS THE BENEFICIAL OWNER
OF SHARES OF STOCK OF THE COMPANY ON FEBRUARY 16, 1996. REQUESTS
AND INQUIRIES SHOULD BE ADDRESSED TO:
Stanley Ereckson, Jr., Secretary
VICORP Restaurants, Inc.
400 West 48th Avenue
Denver, Colorado 80216
Neither the Company's Annual Report to Shareholders nor the
Form 10-K is to be regarded as proxy soliciting material or as a
communication by means of which a solicitation is to be made.
By Order of the Board of Directors
Stanley Ereckson, Jr.
Secretary
Dated: February 26, 1996.
(Front)
VICORP RESTAURANTS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Charles R. Frederickson, J. Michael
Jenkins, or either of them, with full power of substitution, proxies to vote
at the Annual Meeting of Shareholders of VICORP Restaurants, Inc. (the
"Company") to be held on April 5, 1996 at 11:00 a.m., Denver, Colorado, and
at any adjournment or adjournments thereof, hereby revoking any proxies
heretofore given, to vote all shares of common stock of the Company held or
owned by the undersigned as directed below, and in their discretion upon
such other matters as may come before the meeting.
(To be Signed on Reverse Side)
(Back)
X Please mark your
votes as in this
example.
FOR WITHHELD
1. Election of Directors
Nominees: Carole Lewis Anderson, Bruce B. Brundage, Charles R.
Frederickson, John C. Hoyt, J. Michael Jenkins, Robert T.
Marto, Dudley C. Mecum, Dennis B. Robertson, Arthur Zankel
For, except vote withheld from the following nominee(s).
__________________________
FOR AGAINST WITHHELD
2. Approval of Independent Accountants
SIGNATURE(S) ____________________________
DATE ____________________________
NOTE: Please sign name exactly as it appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
