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
1 Definitive Additional Materials
2 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 if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a6(i)(2) or
Item 22(a)(2) of Schedule 14A.
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 December 7, 2000
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 Thursday,
December 7, 2000, 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 and the form of Proxy are first being sent to
shareholders on approximately October 27, 2000.
Shareholder Proposals
Any shareholder proposal to be considered for presentation at the
2001 Annual Meeting of Shareholders must be received by the Company in
writing at its executive offices on or before November 27, 2000, to be
considered for inclusion in the Company's proxy materials. If a shareholder
desires to present a proposal for consideration at the 2001 Annual Meeting of
Shareholders which is not timely submitted for inclusion in the Company's
proxy materials and the shareholder fails to notify the Company by
February 10, 2001, of such proposal, the management proxies may use their
discretionary voting authority when the proposal is raised at the Annual
Meeting without any discussion of the matter in the Proxy Statement.
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,
October 24, 2000, will be entitled to notice of and to vote at the Meeting.
There were outstanding on the record date 6,780,674 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 tablesets forth information as of October 17, 2000,
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.
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership of Class
-------- ---------- ---------- --------
<S> <C> <C> <C>
Stock Southeastern Asset 1,279,900 <F1> 18.88%
(par value Management, Inc.
$.05 per 6410 Poplar Avenue, Suite 900
share) Memphis, TN 38119
Quaker Capital 807,351 <F2> 11.91%
Management Corporation
1300 Arrott Building
401 Wood Street
Pittsburgh, PA 15222
First Manhattan Co. 612,913 <F3> 9.04%
437 Madison Avenue
New York, NY 10022
Dimensional Fund Advisors,Inc. 580,500 <F4> 8.56%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1038
Franklin Advisory Services,Inc. 493,763 <F5> 7.28%
One Parker Plaza, 16th Floor
Fort Lee, NJ 07024
Carole Lewis Anderson 23,000 <F6> *
3616 Reservoir Road NW
Washington, DC 20007
Bruce B. Brundage 33,000 <F6> *
5290 DTC Parkway
Suite 160
Englewood, CO 80111
Charles R. Frederickson 162,654 <F6> 2.38%
400 West 48th Avenue
Denver, CO 80216
John C. Hoyt 54,196 <F7> *
500 SE Sixth Street
Bartlesville, OK 74003
Robert E. Kaltenbach 70,858 <F6> 1.03%
400 West 48th Avenue
Denver, CO 80216
Robert T. Marto 16,000 <F6> *
354 New Canaan
Wilton, CT 06897
Dennis B. Robertson 27,290 <F6> *
P. O. Box 2196
Edwards, CO 81632
Richard E. Sabourin 102,641 <F6> 1.49%
400 West 48th Avenue
Denver, CO 80216
Joseph F. Trungale 100,000 <F6> 1.45%
400 West 48th Avenue
Denver, CO 80216
Hunter Yager 14,871 <F6> *
314 West Fields
Manchester, VT 05255
Arthur Zankel 171,463 <F8> 2.52%
437 Madison Avenue
New York, NY 10022
All directors 775,973 10.80%
and executive officers
as a group (11 persons
including those
named above)
</TABLE>
_______________________
* Percent of class is less than 1%
<F1> Of the 1,279,900 shares beneficially owned, the shareholder has sole
voting power over 281,000 shares, shared voting power over 982,400
shares, no voting power over 16,500 shares, sole dispositive power over
297,500 shares, and shared dispositive power over 982,400 shares.
<F2> Of the 807,351 shares beneficially owned, the shareholder has sole
voting power over 356,351 shares, shared voting power over 451,000 shares,
sole dispositive power over 356,351 shares, and shared dispositive power over
451,000 shares.
<F3> Of the 612,913 shares beneficially owned, the shareholder has sole
voting power over 364,500 shares, shared voting power over 242,875 shares,
sole dispositive power over 364,500 shares, and shared dispositive power over
248,413 shares.
<F4> Of the 580,500 shares beneficially owned, the shareholder has sole
voting and dispositive power over all the shares.
<F5> Of the 493,763 shares beneficially owned, the shareholder has sole
voting and dispositive power over all of the shares.
<F6> Includes 22,000, 18,000, 50,000, 18,000, 70,833, 16,000, 18,000,
100,000, 100,000, and 12,000 shares which Ms. Anderson, Messrs. Brundage,
Frederickson, Hoyt, Kaltenbach, Marto, Robertson, Sabourin, Trungale, and
Yager, respectively, have the right to purchase under options that are
presently exercisable.
<F7> Includes 34,833 shares owned directly by Mr. Hoyt, 18,000 shares which
he has the right to purchase under options that are currently exercisable,
and 1,363 shares the receipt of which he has deferred under the Company's
Deferred Stock Plan for nonemployee directors. See Directors' Compensation.
<F8> Includes 152,100 shares owned directly by Mr. Zankel, 18,000 shares
which he has the right to purchase under options that are currently
exercisable, and 1,363 shares the receipt of which he has deferred under the
Company's Deferred Stock Plan for non-employee directors. See Directors'
Compensation.
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
<TABLE>
<CAPTION>
Served as
a director
Name and Age Position since
------------ -------- ----------
<S> <C> <C>
Carole Lewis Anderson, 56 Director of the Company April 1991
Bruce B. Brundage, 65 Director of the Company August 1988
Charles R. Frederickson, 62 Chairman of the Board June 1968
John C. Hoyt, 72 Director of the Company October 1982
Robert T. Marto, 55 Director of the Company August 1989
Dennis B. Robertson, 63 Director of the Company August 1988
Joseph F. Trungale, 59 Director, Chief Executive November 1999
Officer, and President of
the Company
Hunter Yager, 71 Director of the Company April 1996
Arthur Zankel, 68 Director of the Company October 1988
</TABLE>
Carole Lewis Anderson became a director in April 1991. Since June 1995,
she has been a principal of Suburban Capital Markets, Inc., a commercial real
estate mortgage company. Ms. Anderson is also a trustee of AARP Cash
Investment Funds, AARP Growth Trust, AARP Income Trust, AARP Managed
Investment Portfolios Trust, and AARP Tax-Free Income Trusts.
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.
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.
Robert T. Marto, a private investor, has been a director since August 1989.
He was the President and Chief Executive Officer of White River Corporation
from December 1993 to December 1997.
Dennis B. Robertson became a director of the Company in August 1988. In
January 2000 he retired from his position as President/CEO of DOCK'S Great
Fish, Inc., which operates seafood restaurants. From October 1991 to January
2000, Mr. Robertson held various positions with DOCK's Great Fish, Inc.,
including Chairman, Chief Executive Officer, and President.
Joseph F. Trungale was appointed Chief Executive Officer of the Company
in May 2000. He became a director in November 1999 simultaneously with his
appointment as President of the Company. Since joining the Company in July
1997, he has held various positions with the Company, including Regional
Operating Partner for Bakers Square and President/Bakers Square Division.
Hunter Yager became a director in April 1996. In 1985 he retired from
Grey Advertising, Inc., where he was an Executive Vice President. Since his
retirement, he has been an independent consultant in marketing and advertising.
Arthur Zankel became a director of the Company in October 1988. He is a
Managing Member of Zankel Capital Advisors, LLC, investment advisors to
High Rise Partnerships. Until December 31, 1999, he was a General
Partner of First Manhattan Co., a money management firm, a position he had held
for more than five years. Mr. Zankel is also a director of Citigroup and
White Mountains Insurance Group.
The Board of Directors, while not having a nominating committee, does
have standing Audit and Compensation Committees. The Audit Committee met
three times in fiscal 1999, and consisted of Ms. Anderson and Messrs.
Brundage, Hoyt, Marto, Dudley C. Mecum, Robertson, Yager, 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.
Mr. Mecum resigned his position as a director on May 30, 2000.
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, Dudley C. Mecum, Robertson, Yager, and Zankel.
That committee met two times during fiscal 1999. 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 1999, the Board of Directors met six 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
Chief Executive Officer and named executive officers for the three fiscal
years ended October 31, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Other
annual Securities
compen- underlying All other
Name and Principal Salary Bonus sation Options/ compensation
Position Year ($) ($) ($) SARs (#) ($)
-------- ---- ------ ----- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. 1999 300,000 125,086 3,721
Frederickson <F1> 1998 301,828 120,300 3,861
Chairman, Chief 1997 311,538 63,000 3,562
Executive Officer
and President
Robert E. 1999 296,626 105,000 3,680
Kaltenbach <F2> 1998 198,463 390,384 100,000 3,688
President/ 1997 181,267 150,000 3,522
Village Inn
Division
Richard E. 1999 250,000 104,239 3,544
Sabourin <F3> 1998 250,621 100,250 3,648
Executive Vice 1997 259,201 52,500 1,091
President/Chief
Financial
Officer
Joseph F. 1999 241,346 157,500 90,000 379
Trungale <F4> 1998 253,269 153,075 50,000 218
President/Baker 1997 40,385
Square Division
</TABLE>
<F1> Mr. Frederickson was appointed Chief Executive Officer and President in
May 1998. The amount shown under "All Other Compensation" represents $3,200
paid each year as the Company's matching contribution under its 401(k) plan and
$362, $661, and $521 paid by the Company for term life insurance premiums for
the years 1997, 1998, and 1999, respectively.
<F2> The amount shown under "All Other Compensation" represents $3,200 paid
each year as the Company's matching contribution under its 401(k) plan and
$322, $488, and $480 paid by the Company for term life insurance premiums for
the years 1997, 1998, and 1999, respectively.
<F3> The amount reflected in the column captioned "All Other Compensation"
represents $791, $3,200, and $3,200 paid as the Company's matching contribution
under its 401(k) plan and $300, $448, and $344 paid by the Company for term
life insurance premiums for the years 1997, 1998, and 1999, respectively.
<F4> Mr. Trungale was appointed to the position of Chief Executive Officer in
May 2000, and President in November 1999. He first joined the Company as a
Regional Operating Partner for the Chicago Bakers Square Restaurants in
July 1997. Under "All Other Compensation," the amount shown represents the
Company's payment for term life insurance premiums. The amount reflected in
the column captioned "Other Annual Compensation" represents the amount
he was reimbursed by the Company for his expenses in relocating to Denver.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table provides information on option/SAR exercises in
fiscal 1999 by the named executive officers and the value of such officers'
unexercised options/SARs at October 31, 1999.
<TABLE>
<CAPTION>
Value of
unexercise in-
Number of the-money
unexercised options/SARs at
options/SARs at fiscal year-end
fiscal year-end ($)
(#) ---
Shares ---
acquired on Value
exercise realized Exercisable/ Exercisable/
Name (#) ($) unexercisable unexercisable
---- --- --- ------------- -------------
<S> <C> <C> <C> <C>
Charles R. 0/0 0/0
Frederickson
Robert E. 41,666/58,334 43,748/87,502
Kaltenbach
Richard E. 75,000/25,000 403,125/134,375
Sabourin
Joseph F. 16,666/33,334 43,748/87,502
Trungale
</TABLE>
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
The members of the Compensation Committee for fiscal 1999 were Carole Lewis
Anderson, Bruce B. Brundage, Robert T. Marto, Dudley C. Mecum, Dennis B.
Robertson, Hunter Yager, and Arthur Zankel. Mr. Mecum resigned his position
as a director on May 30, 2000.
Employment Contracts and Termination of Employment and Change-of-Control
Arrangements
Mr. Sabourin executed an employment agreement of undefined term with the
Company in July 1996. Mr. Sabourin is to receive a base salary of $250,000
per year and is eligible to participate in the incentive bonus program,
if any, as approved annually by the Board of Directors. Pursuant to
the agreement, Mr. Sabourin was granted the option to purchase a total of
100,000 shares of the Company's Stock at an exercise price of $11.50 per
share, the fair market value of the Company's Stock on the date of grant.
The options vest in 25,000-share increments on September 1, 1997, 1998, 1999,
and 2000. The agreement provides Mr. Sabourin benefits consistent with
those provided to other Company officers.
Certain employees of the Company, including Messrs. Kaltenbach, Sabourin,
and Trungale, have entered into employment severance agreements with the
Company. Those agreements expire December 31, 2001, unless a Change-of-Control
occurs prior to that date, then the agreements expire two years after the
Change-of-Control. If a covered employee is terminated within one year
following a Change-of-Control, the employee is entitled to the following
payments. If the termination is because of death, disability, retirement,
the employee's voluntary action, or for cause (as defined in the agreement),
the Company must pay all earned, but unpaid, compensation to the date of
termination. If the termination is for other reasons, the Company must pay
all compensation earned and unpaid, as of the date of termination; a lump
sum cash payment equal to two times the employee's base salary at the
greater of the rate in effect on the date of the Change-of-Control or the
Notice of Termination; and the amount equal to the bonus compensation the
employee earned in the most recent fiscal year for which the employee
earned a bonus. Additionally, the Company must provide for eighteen (18)
months following termination, or until the employee obtains other comparable
benefits from another employer, medical, hospitalization, and dental
benefits comparable to those provided prior to the Change-of-Control. All
stock options granted the employee become immediately exercisable upon a
Change-of-Control. If the employee is terminated within the second year
after a Change-of-Control, the benefits the employee is to receive are the
same except the base salary component of the lump sum payment is based upon
one, not two, times base salary.
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 mergers,
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 Chief Executive
Officer and other executives named in the Summary Compensation Table were
determined for the 1999 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
shareholders. 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 longterm
management goals in keeping with the ultimate goal of enhancing shareholder
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 salary of Mr. Sabourin was established by the terms of his
employment agreement. See Employment Contract and Termination of Employment
and Change-of-Control Arrangements for a discussion of that agreement.
The base salaries, which were in the median range of the companies
included in the survey described below, of Messrs. Frederickson, Kaltenbach,
and Trungale were determined by the Compensation Committee in December 1998.
In making the determinations, the committee reviewed information contained
in the 1998 Chain Restaurant Compensation Association Survey, considered the
Company's performance, and evaluated the competitiveness of the entire
compensation packagefor each.
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. Public and private companies in various segments of the
restaurant industry were represented. Included among those companies were
ones on the Dow Jones Entertainment & Leisure - Restaurant Index.
Bonus Program
In December 1998, the Compensation Committee approved a bonus program for
certain officers of the Company, including Messrs. Frederickson and Sabourin,
which was predicated upon achievement of overall Company performance against
a set baseline of earnings before interest and taxes as computed in accordance
with generally accepted accounting principles. The measure of earnings before
interest and taxes and the baseline that was established (which was an increase
over the previous year) were selected by the Committee as being appropriate
because of their direct relationship to shareholder interest. Under the program
each participating executive officer could earn a bonus of up to 52% of the
executive's base salary. Bonuses were determined by application of a formula
that takes into account the extent to which the earnings' target was met or
exceeded. In fiscal 1999, results exceeded by 6.73% the earnings' target,
resulting in a bonus payment to the participating executive officers of
39.71% of that individual's base salary.
With respect to Mr. Kaltenbach, in December 1998, the Compensation Committee
approved a bonus program. The payout, a percentage of profit and income, was
predicated upon achieving store operating profits (restaurant results excluding
corporate overhead). The measures were selected because of their direct
relationship to Mr. Kaltenbach's areas of control and responsibility. In
fiscal 1999, the targets achieved resulted in a bonus payment to Mr. Kaltenbach
equal to approximately .45% of the Village Inn store operating profit.
Mr. Trungale's bonus program was predicated upon the store operating profits
(restaurant results excluding corporate overhead) for the Bakers Square
Restaurants. That measure was selected because of its focus on increasing
profits and because it was directly tied to his area of control and
responsibility. Mr. Trungale's performance resulted in a bonus payment equal
to approximately .7% of the gross store operating profit of the Company's
Bakers Square Restaurants.
1999 Stock Options
No stock options were granted to any of the named executive officers during
fiscal 1999. The decision not to grant additional options was made after the
Committee considered the amount and terms of the options currently held by
each of the named executives. It was the position of the Committee that the
options currently granted were comparable to those offered by similar
restaurant companies and were sufficient to create a direct link between the
long-term interest of the executives and the Company's shareholders.
On November 1, 1999, Mr. Trungale, in connection with his appointment as
the Company's President, was granted the option to purchase 50,000 shares of
the Company's Common Stock. The exercise price is $16.75 per share, the fair
market value of the Company's Common Stock on the date of grant. The options
vest 16,666 shares on November 1, 1999; and 16,667 shares on each of
November 1, 2000, and 2001. In making the grant, the Committee considered
the amount and terms of the options currently held by each of the named
executive officers and the increased level of responsibility being
undertaken by Mr. Trungale.
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
Hunter Yager
Arthur Zankel
Directors' Compensation
In fiscal 1999 the compensation of non-employee directors was changed.
From November 1, 1998, through May 31, 1999, the nonemployee directors were
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 was also granted options to purchase
2,000 shares of the Company's stock, pursuant to the terms of the now-
terminated 1983 Non-Qualified Stock Option Plan. The options were granted at
100% of the fair market value of the Company's Common Stock on the date of
grant.
Effective July 1, 1999, the non-employee directors' compensation was
changed to $2,000 per calendar quarter, plus each such director is to receive
common stock of the Company equal to $20,000 annually, and reimbursement for
actual expenses incurred. The stock grant is made quarterly. The quarterly
stock grant is $5,000 in value based upon the average closing price of the
Company's common stock during the last five trading days prior to the end of
the quarter rounded to a full share. Each nonemployee director can elect to
place the shares into the Company's Deferred Stock Plan for non-employee
directors.
PERFORMANCE GRAPH
The following performance graph reflects the percentage change in the
Company's cumulative total shareholder return on common stock as compared
with the cumulative total return of the Dow Jones U.S. Equity Index and
the Dow Jones Entertainment & Leisure - Restaurant Index.
<TABLE>
<CAPTION>
Oct. 28 Oct. 31 Oct. 31 Oct. 31 Nov. 1 Oct. 31
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
VICORP Restaurants, Inc. 16.750 11.000 14.500 15.500 14.125 16.875
Dow Jones RestaurantIndex 796.600 1051.540 1152.920 1140.860 1609.820 1848.400
Dow Jones U.S. Equity Index 561.220 709.270 877.420 1164.460 1412.960 1767.520
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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. During fiscal 1999 MPH operated seven
Village Inn Restaurants in Oklahoma. MPH paid an initial franchise fee of
$1,000 for six and $10,000 for one of the units and pays franchise service fees
equal to 2% of gross sales at each of the locations. Total franchise service
fees paid by MPH in fiscal 1999 were $174,676. 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 1999 was $51,991. As of
October 17, 2000, MPH's open account was current.
MPH is also the managing partner for a franchised Village Inn Restaurant
located in New Mexico. In fiscal 1999 the franchisee, 3155 Associates Limited
Partnership ("3155"), paid franchise service fees (2.7% of gross sales at that
location) in the amount of $38,557. 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 1999 was $7,341. As of October 17, 2000, 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.
Section 16(a) Beneficial Ownership Reporting Compliance
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 followed.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent accountants for the
year ended October 31, 1999. The Board of Directors selected Arthur Andersen
LLP as the Company's independent accountants for fiscal 2000. Representatives
of Arthur Anderson LLP are expected to 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, 1999, has previously been or is being mailed with this
Proxy Statement to each shareholder of record as of October 24, 2000.
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 OCTOBER
24, 2000. REQUESTS AND INQUIRIES SHOULD BE ADDRESSED TO:
Stanley Ereckson, Jr.,Secretary
VICORP Restaurants, Inc.
400 West 48th Avenue
Denver, Colorado 80216
Fax (303) 672-2668
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: October 27, 2000.
