<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
WALL STREET DELI, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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:
<PAGE> 2
Wall Street Deli, Inc.
400 Century Park South, Suite 116
Birmingham, Alabama 35226
(205)822-3960
Fax: (205)822-5241
October 4, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders which will be held at 10:00 a.m. on Thursday, November 7, 1996, in
the Board of Directors Meeting Room on the mezzanine floor of AmSouth Bank of
Alabama, at the AmSouth-Sonat Building located at Fifth Avenue North and
Twentieth Street, Birmingham, Alabama.
Information about the meeting and the various matters on which the
shareholders will act is included in the Notice of Meeting and Proxy Statement
which follow. Also included is a Proxy Card and postage paid return envelope.
It is important that your shares be represented at the meeting.
Whether you plan to attend or not, we hope that you will complete and return
your Proxy in the enclosed envelope as promptly as possible.
We look forward to seeing you at the shareholders meeting.
Sincerely,
Robert G. Barrow
President and Chief Executive Officer
<PAGE> 3
WALL STREET DELI, INC.
400 Century Park South, Suite 116
Birmingham, Alabama 35226
(205) 822-3960
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 7, 1996
The Annual Meeting of Shareholders of WALL STREET DELI, INC., a
Delaware corporation (the "Company"), will be held at the Board of Directors
Meeting Room of AmSouth Bank of Alabama, in the AmSouth-Sonat Building, located
at Fifth Avenue North and Twentieth Street, Birmingham, Alabama, on Thursday,
November 7, 1996, at 10:00 a.m. Central Standard Time.
At the Annual Meeting shareholders will consider and act upon the
following matters:
1. The election of seven directors, each director to hold office
until his successor is elected and qualified.
2. The ratification of authorization for the Audit Committee to
select the Company's independent auditors.
3. The transaction of such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on September 23,
1996, as the record date for the determination of shareholders entitled to vote
at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
ALAN V. KAUFMAN
Chairman of the Board
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, WE URGE YOU TO MARK, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED IN ORDER
THAT AS MANY SHARES AS POSSIBLE MAY BE REPRESENTED AT THE MEETING AND TO ASSURE
A QUORUM. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
SHOULD YOU LATER DETERMINE TO ATTEND THE MEETING.
<PAGE> 4
WALL STREET DELI, INC.
400 Century Park South, Suite 116
Birmingham, Alabama 3526
PROXY STATEMENT
The following information is furnished in connection with the
SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS of Wall Street Deli, Inc.
(the "Company"), to be voted at the Annual Meeting of shareholders to be held
on November 7, 1996. A copy of the Annual Report of the Company for the fiscal
year ended June 29, 1996, and a form of proxy for use at the meeting are
enclosed with this Proxy Statement. It is anticipated that this Proxy
Statement and the enclosed proxy will be first mailed to shareholders on or
about October 4, 1996.
GENERAL INFORMATION
PROXY
Shareholders are requested to execute and return the enclosed proxy in
the accompanying envelope. The proxy may be revoked at any time before it is
voted by written notice to the Secretary of the Company. Proxies which are
returned properly executed, and not revoked, will be voted in accordance with
the shareholders' directions specified thereon. Where no direction is
specified, proxies will be voted FOR each of the nominees for directors and FOR
the ratification of auditors. On any other matters that may properly come
before the meeting, proxies will be voted by the persons named in the proxy in
accordance with their best judgment.
RECORD DATE AND VOTING SECURITIES
Shareholders of record at the close of business on September 23, 1996,
are entitled to notice of, and to vote at, the Annual Meeting. As of September
23, 1996, there were 3,411,743 shares of the Company's common stock issued and
outstanding, and entitled to vote. The holders of common stock, the only
class of voting stock of the Company outstanding, are entitled to one vote per
share, exercisable in person or by proxy, for the election of directors and all
other matters.
A majority of the outstanding shares entitled to vote is necessary to
provide a quorum at this meeting. The election of directors and all other
matters to be submitted to a vote require the affirmative vote of a majority of
the votes cast at the meeting. Proxies marked as abstentions or as broker no
votes will be treated as shares present for purposes of determining whether a
quorum is present. Broker no votes (that is, shares held in street name for
which proxies have been designated as not voted) will not be counted as votes
cast. An abstention or a proxy instructing that a vote be withheld is
considered a negative vote.
EXPENSES OF SOLICITATION
The cost of soliciting proxies is paid by the Company. Solicitation is
being made principally by mail; in addition certain officers and directors of
the Company and persons acting under their instructions may also solicit
proxies on behalf of management by telephone or in person. Banks, brokerage
firms and other custodians, nominees and fiduciaries will be reimbursed by the
Company for reasonable expenses incurred in
<PAGE> 5
sending proxy material to beneficial owners of the Company's stock. The cost
of such additional solicitation, if any, and such expenses is not expected to
be material.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of September 10, 1996, certain
information with respect to the Company's common stock owned beneficially by
each director, each nominee for election as a director, each executive officer,
by all officers and directors as a group, and by each person known by the
Company to be a beneficial owner of more than five percent of the issued and
outstanding common stock of the Company.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership(1) of Common Stock
------------------- ----------------------- ---------------
<S> <C> <C>
Alan V. Kaufman 353,112(2) 9.9%
Chairman and Nominee
400 Century Park South, Suite 116
Birmingham, Alabama 35226
Robert G. Barrow 322,975(3) 9.1%
President and Chief Executive Officer,
Director and Nominee
5683 South Rex Road
Memphis, Tennessee 38119
Jeffrey V. Kaufman 107,674(4) 3.0%
Executive Vice President, Chief Operating Officer,
Director and Nominee
400 Century Park South, Suite 116
Birmingham, Alabama 35226
Arnold McGruder 17,500(5) *
Treasurer and Chief Accounting Officer
5683 South Rex Road
Memphis, Tennessee 38119
William S. Atherton 85,650(6) 2.4%
Director and Nominee
1924 S. Utica
Tulsa, Oklahoma 74104
Joe Lee Griffin 201,328(6)(7) 5.7%
Director and Nominee
3940 Montclair Road, Suite 500
Birmingham, Alabama 35213
Louis C. Henderson, Jr. 10,222(6) *
Director and Nominee
2 Office Park Circle, Suite One
Birmingham, Alabama 35223
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C> <C>
Jake L. Netterville 40,750(6) 1.2%
Director and Nominee
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
All directors and executive officers 1,139,211(8) 32.1%
as a group (8 persons)
</TABLE>
* Less than 1%
(1) Beneficial ownership reflects sole voting and investment power unless
otherwise noted.
(2) The amount reported includes 51,403 shares owned by Kaufman-Barrow
Properties, a general partnership, and 26,250 shares subject to
options held by Mr. Kaufman. The reported amount does not include
107,674 shares and options for shares beneficially owned by Mr.
Kaufman's son, Jeffrey V. Kaufman (who is listed and included in the
group below), or an aggregate 26,307 shares beneficially owned by two
other adult children, as to all of which Mr. Kaufman disclaims any
beneficial interest.
(3) The amount reported includes 51,403 shares owned by Kaufman-Barrow
Properties, a general partnership, and 41,250 shares subject to
options held by Mr. Barrow. The reported amount also includes 5,375
shares owned by one of Mr. Barrow's sons, but does not include 23,738
shares and options for shares owned by two other adult children, as to
which Mr. Barrow disclaims any beneficial interest.
(4) The amount reported includes 7,250 shares owned by Mr. Kaufman's
minor children as to which he disclaims beneficial ownership. The
amount reported also includes 30,750 shares subject to options.
(5) The amount reported relates to 17,500 shares that may be acquired upon
exercise of options.
(6) The reported amounts for Mr. Atherton, Mr. Griffin, Mr. Henderson and
Mr. Netterville include 7,000 shares each that may be acquired upon
exercise of options.
(7) The amount reported includes 60,000 shares owned by JLG Investments,
Inc. of which Mr. Griffin is President and 132,978 shares owned by the
Joe Lee Griffin Family Limited Partnership of which Mr. Griffin is a
general partner and a limited partner.
(8) The amount reported includes an aggregate 143,750 options held by
officers and directors included in the group.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors will be elected to hold office
until their successors are elected and qualified. The persons named as proxies
in the accompanying proxy, or their substitutes, will vote for the election of
the nominees listed hereafter, except to the extent authority to vote for any or
all of the nominees is withheld. The election of each director requires the
affirmative vote of a majority of the votes cast at the meeting. No nominee for
election as a director is proposed to be elected pursuant to any arrangement or
understanding between the nominee and any other person or persons. All
nominations for membership on the Board of Directors originated with the Board
of Directors. It is believed that all such nominees are available for
election. If any are unable or unwilling to serve, the persons named as proxies
in the accompanying proxy, or their substitutes, will have full discretion and
authority to vote or refrain from voting for any other nominees in accordance
with their judgment.
3
<PAGE> 7
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND NOMINEES
The Company's bylaws provide for a minimum of three, and a maximum of
seven directors. The Board of Directors has presently fixed the number of
directors at seven and since 1995 the Company has had seven directors. The
following is a brief summary of each nominee's business experience during at
least the past five years, unless otherwise indicated, and other directorships
held.
<TABLE>
<CAPTION>
Principal Occupation and Director
Name and Age Other Directorships Held Since
- - ------------ ------------------------ --------
<S> <C> <C>
Alan V. Kaufman Chairman of the Board since 1966; 1966
Age: 59 Chairman and President of the Company 1966
to August 1996(1)
Robert G. Barrow President and Chief Executive Officer of 1966
Age: 60 the Company since August 1996; Executive
Vice President and Chief Financial Officer
1966 to 1996
William S. Atherton Partner, Atherton & Murphy 1991
Age: 63 Investment Company (personal
investments) since 1965; Chairman
and CEO, A&M Food Services, Inc.,
1981 to 1986(2); Director, Advantage
Media, Inc., 1991 to 1993
Joe Lee Griffin President and Director, JLG Investments, 1978
Age: 66 Inc. (personal investments) since 1989;
until 1989, President
and Director, NASCO Sales and
Service, Inc.
Louis C. Henderson, Jr. President, The Hackney Group, Inc. 1977
Age: 59 (management consulting services), since
1989; Senior Vice President, Operations,
Protective Life Corporation and Protective
Life Insurance Company, 1981 to 1989
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C> <C>
Jeffrey V. Kaufman Executive Vice President and Chief 1995
Age: 35 Operating Officer of the Company since
August 1996; Senior Vice President and
National Operations Manager 1993 to 1996;
Regional Vice President, Central Region
1987 to 1993(1)
Jake L. Netterville Managing Partner, Postlethwaite 1982
Age: 58 & Netterville, Certified Public
Accountants
</TABLE>
(1) Mr. Alan V. Kaufman is the father of Mr. Jeffrey V. Kaufman, who has
been an employee of the Company since 1985 and an executive officer
since 1993.
(2) A company with a class of securities registered under the Securities
Exchange Act of 1934.
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
The Board of Directors held three formal meetings during the fiscal year
ended June 29, 1996. All of the directors attended all of the meetings, except
for Mr. Atherton who was unable to achieve a 75% attendance rate for the fiscal
1996 formal Board Meetings.
The Audit Committee of the Board of Directors consists of Mr.
Netterville, Mr. Henderson and Mr. Barrow. The Audit Committee is charged with
recommending to the Board of Directors the independent accountants to be
selected as the Company's auditors; reviewing the audit plan, financial
statements and audit results; reviewing with internal accounting officers and
independent auditors the accounting practices and policies, and overall
accounting and financial controls; and conducting an appropriate review of all
related party transactions and potential conflict of interest situations. The
committee met two times during the 1996 fiscal year, and all members were
present at all meetings.
The Compensation Committee of the Board of Directors consists of Mr.
Atherton, Mr. Griffin, Mr. Henderson and Mr. Netterville, none of whom are
employed by the Company. This committee held one formal meeting in fiscal 1996,
at which all members were in attendance. The Compensation Committee acts as the
Stock Option Plan Committee as set forth in the Company's 1989 Incentive Stock
Option Plan, and in addition administers the Company's employee compensation and
benefit plans, makes annual recommendations to the Board of Directors concerning
compensation to executive officers, considers and makes recommendations with
respect to executive compensation policies, and considers and acts upon such
other related matters as the Board may direct or request.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following tables and charts set forth information with respect to
benefits made available, and compensation paid or accrued, by the Company
during the fiscal year ended June 29, 1996 for services by each of the chief
executive officer and the other four highest paid executive officers of the
Company who were serving as such at the end of fiscal 1996 whose total salary
and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards (2)
------------------------------------ ------------
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation(1) Options(3) Compensation (4)
- - --------------------------- ---- ------ ----- --------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Alan V. Kaufman 1996 $208,000 $-0- $15,767 -0- $57,979
Chairman of the Board (5) 1995 204,000 -0- 33,106 5,000 57,979
1994 200,000 -0- 28,655 10,000 57,979
Robert G. Barrow 1996 $204,000 $-0- $18,727 7,500 $56,987
President and 1995 184,000 -0- 17,348 5,000 56,987
Chief Executive Officer (5) 1994 180,000 -0- 35,739 10,000 56,987
Jeffrey V. Kaufman 1996 $138,000 $-0- $11,183 10,000 $ 9,091
Executive Vice President 1995 130,000 -0- 15,204 3,000 2,304
and 1994 130,000 -0- 11,435 -0- 2,304
Chief Operating Officer
</TABLE>
(1) The amounts shown in this column for the last fiscal year include the
following perquisites or personal benefits which exceeded 25% of the
total of such benefits reported for each such officer: medical expense
reimbursements of $7,000 to Mr. Alan Kaufman, $4,648 to Mr. Barrow and
$6,383 to Mr. Jeffrey Kaufman, and company automobile allowances and
use of company automobiles of $7,200 to Mr. Alan Kaufman, $14,079 to
Mr. Barrow and $4,800 to Mr. Jeffrey Kaufman.
(2) The Company has no restricted stock award plans and no long term
incentive plans as those terms are defined by applicable SEC rules.
(3) The Company's Incentive Stock Option Plan provides for grants of stock
appreciation rights (SAR's) in tandem with options, but no SAR's have
been granted during the past three fiscal years.
(4) The amounts shown in this column for the last fiscal year include
Company contributions to a defined contribution variable life
insurance plan for management and administrative employees, in the
amounts of $18,979 for Mr. Alan Kaufman, $17,987 for Mr. Barrow and,
$9,091 for Mr. Jeffrey Kaufman. With respect to Mr. Alan Kaufman and
Mr. Barrow, these amounts also include $4,000 each in individual
retirement account contributions, and $35,000 each in dollar value of
premiums paid by the Company for their benefit for split- dollar life
insurance with respect to term life insurance and to premium amounts
unrelated to term life insurance coverage. On termination of the
insurance policy the beneficiaries are obligated by contract to refund
to the Company all premiums paid.
(5) Effective August 21, 1995 Mr. Barrow assumed the position of President
and Chief Executive Officer formerly held by Mr. Alan Kaufman. Mr.
Alan Kaufman continues as Chairman of the Board of the Company.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal
1996 to the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term(4)
- - --------------------------------------------------------------------------------------- ---------------------------
Percent of Total
Options Granted Exercise
Options to Employees or Base Expiration
Name Granted(1) in Fiscal Year(2) Price(3) Date 5% 10%
- - ------------------- ---------- ------------------ -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Alan V. Kaufman -0- -0-% N/A N/A N/A N/A
Robert G. Barrow 7,500 10.9% $5.25 1-30-01 $10,879 $24,039
Jeffrey V. Kaufman 10,000 14.5% $5.25 1-30-01 $14,505 $32,052
</TABLE>
(1) SAR's in tandem with options may be granted under the Company's
Incentive Stock Option Plan, but no SAR's were granted during fiscal
1996. Options are immediately exercisable, and expire five years
after the date of grant.
(2) Based on 69,100 options granted to all employees in the fiscal year
ended June 29, 1996. This amount does not include options for 4,000
shares granted to non-employee directors.
(3) Options are exercisable at fair market value (the average of the high
and low prices for the Company's common stock) on the date of grant.
In the case of persons owning more than 10% of the Company's
outstanding stock, the exercise price is 110% of fair market value on
the date of grant.
(4) The dollar amounts set forth under these columns are the result of
calculations at the 5% and 10% rates specified by SEC rules; they are
not intended to forecast future appreciation of the Company's stock
price.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information on option exercises in fiscal
1996 by the named executive officers and the value of each such officer's
unexercised options at June 29, 1996.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal Year End at Fiscal Year End(1)
----------------------------- -----------------------------
Shares Acquired
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- - ------------------ --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan V. Kaufman - 0 - - 0 - 26,250 - 0 - - 0 - - 0 -
Robert G. Barrow - 0 - - 0 - 33,750 - 0 - $2,344 - 0 -
Jeffrey V. Kaufman 2,250 $5,693 23,250 - 0 - $3,125 - 0 -
</TABLE>
(1) Based on $5.5625 per share, the average of bid and ask prices reported by
NASDAQ on July 1, 1996.
7
<PAGE> 11
COMPENSATION OF DIRECTORS
Four of the seven present directors are not salaried employees of the
Company. For their services in fiscal 1996 those directors were paid a fee of
$650 for each meeting of the Board of Directors and each committee meeting (if
not held in conjunction with a Board meeting) attended.
The non-employee directors also received grants of options for 1,000
shares each in fiscal 1996, pursuant to the Company's Stock Option Plan for
Non-Employee Directors (the "Directors Plan"). The Directors Plan provides for
the granting of stock options under a non-discretionary formula by which each
non-employee director serving as such on August 1 of each year receives an
option to purchase 1,000 shares of the Company's common stock. The options are
immediately exercisable, at an exercise price equal to the fair market value of
the common stock on the date of grant, and expire five years from the date of
grant. The Directors Plan reserves 75,000 shares of the Company's common stock
for issuance upon exercise of the non-qualified stock options to purchase. The
Plan will terminate in 2001. Directors are eligible to participate if they are
not employed by the Company or its subsidiaries. Options for an aggregate of
24,000 shares (as adjusted) had been granted as of the 1996 fiscal year end and
51,000 shares remained available for grant under this Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was established
in June of 1993. The members of the Committee are Messrs. William S. Atherton,
Joe Lee Griffin, Louis C. Henderson, Jr., and Jake L. Netterville, who are all
of the non-employee members of the Board. Prior to June, 1993, the Board did
not have a committee performing the functions of a compensation committee,
except the Stock Option Committee (also composed of the same four non-employee
directors), and until that time the entire Board, including Mr. Alan Kaufman
and Mr. Barrow, participated in deliberations concerning executive officer
compensation. Mr. Kaufman and Mr. Barrow continue to make recommendations to
and are consulted by the Committee. Other than Mr. Kaufman and Mr. Barrow, no
other officer, employee or former officer of the Company or any subsidiary
participated in such deliberations during the 1996 fiscal year.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Mr. Alan Kaufman and Mr. Barrow are general partners of WESCO
Associates, which leased to the Company its executive offices at Birmingham,
Alabama, until February 1996, and of CBK Associates, which leases to the
Company its catering offices in Memphis, Tennessee. The leases were entered
into in April 1979 and February 1981, respectively, for terms of 10 years, and
subsequently extended for five year terms ending in 1994 and 1996,
respectively, and both provide for annual escalation of rents based on the
consumer price index. In February 1996 the WESCO Associates lease was
terminated. The space leased from CBK Associates was increased by approximately
40% in 1990, and in April 1996, this lease was extended four additional years
to June, 2000. During the Company's 1994, 1995 and 1996 fiscal years, rents
paid to WESCO Associates were $32,400, $33,204, and $24,036 respectively, and
rents paid to CBK Associates were, $77,124, $79,056 and $74,712 respectively.
Mr. Alan Kaufman, Mr. Robert Barrow, Mr. Jeffrey Kaufman and Mr. Steve
Barrow (Mr. Robert Barrow's son and an employee of the Company since 1988) are
general partners in Rex Associates, which leases to the Company its
administrative offices in Memphis, Tennessee. The administrative office lease
was
8
<PAGE> 12
entered into as of May 1994 for a term of 10 years, and provides for an annual
escalation of rents based on the consumer price index. During the Company's
fiscal years 1995 and 1996, rent paid to Rex Associates totalled $25,875 and
$62,690, respectively.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In June 1993, the Board of Directors created a Compensation Committee,
composed of the four non-employee members of the Board, to consider and act on
matters concerning compensation to executive officers. In addition, this
Committee serves as the Stock Option Plan Committee as set forth in the
Company's 1989 Incentive Stock Option Plan.
COMPENSATION POLICIES
Though the Committee has not to date adopted a formal policy
addressing executive compensation, the structure of the Company's executive
compensation is reflective of the principle that the compensation of its named
executive officers should be competitive with compensation of senior executives
at comparable companies, and that a meaningful portion of the compensation
received should be closely tied to the performance of the Company and, in
certain instances, to the achievement of individual goals. Through this link
between pay and performance, it is the intent of the Company to provide direct
incentives for the Company's financial success and the creation of incremental
stockholder value.
In keeping with these general objectives, the key components of
compensation for the named executive officers have for a number of years
consisted of annual compensation provided by base salary and annual performance
bonuses, and long-term compensation provided by stock options.
Members of the Committee believe they have a general awareness of pay
practices among companies of roughly comparable size, complexity, and/or
industry focus, but the Committee has not commissioned any studies or reviewed
any specific information concerning compensation practices of other companies.
As this is necessarily an imprecise basis for comparison, the Committee is
unable to measure with any specificity the compensation paid by the Company
against that paid by other companies. Solely on the basis of the Committee's
general knowledge and experience, it is believed that the Company's
compensation levels are generally commensurate with those of similar companies.
Other than the Annual Performance Bonus criteria outlined below, compensation
of the named executive officers is a subjective determination and has not been
determined by reference to any specific criteria or factors related to
corporate performance.
Annual Performance Bonuses. In fiscal 1996, the Company's formula for
annual performance bonuses for the two most senior officers (Mr. Alan Kaufman,
the Chairman of the Board, and Mr. Barrow, the President and Chief Executive
Officer) was based upon the achievement of a specified goal for annual net
after-tax earnings. For the purpose of this bonus program, net after-tax
earnings are to be computed as if any bonuses earned had been paid. Upon
attainment of the target amount, these two executives would be eligible for
bonuses of up to 30% of their base salaries. As discussed in more detail
later, no bonuses were paid in 1996.
For other senior employees, including the other named executive
officers, 1996 annual performance bonuses were conditioned upon attainment of
(1) positive "same store" sales, (2) a specified gross profit margin (as a
percentage of sales), and (3) for certain employees, a specified net division
profit (as a percentage of sales). No specific relative weight was assigned to
any of the three criteria; if all three Company performance criteria were met,
employees of this rank were eligible for bonuses of up to 25% of their base
9
<PAGE> 13
salaries, based upon management's subjective evaluation of each individual's
overall performance. Management's evaluation of individual performance may,
but need not, include specific factors or the achievement of individual goals.
While the sales thresholds were met in fiscal 1996, the other Company
performance criteria were not met, and no bonuses were paid to the other named
executive officers.
Stock Options. Stock Options are granted by the Committee to
executive officers, as well as other employees, based upon the Committee's
subjective evaluation of employees' general overall performance and upon their
relative rank within the Company. No specific performance criteria are
considered, and there is no fixed formula for differentiating among different
levels of responsibility within the Company or for otherwise determining the
number of options granted to an individual or to all employees in the
aggregate. The Committee's approach to long-term incentives provided by stock
options has been a flexible one, in which the effort is to attract and retain
able key employees by giving them an opportunity for stock ownership. The
Committee awarded a total of 69,100 options in fiscal 1996, of which 7,500 were
granted to Mr. Barrow, and 10,000 were granted to Mr. Jeffrey Kaufman.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In the fiscal year ended June 29, 1996, Mr. Barrow's base salary was
$208,000. In determining the chief executive officer's base salary, the
Committee has not considered any specific factors or criteria, and has relied
only on the general principles outlined in the "Compensation Policies"
discussion above. Under the guidelines as outlined in "Annual Performance
Bonuses" above, no bonus was awarded in fiscal 1996, based upon the fact that
the target goal for annual net after-tax earnings, as that is computed for this
bonus program, was not met.
In light of the Company's record revenues during fiscal 1995, the
Committee awarded options for 7,500 shares to Mr. Barrow and 10,000 shares to
Mr. Jeffrey Kaufman in January 1996. The Committee believes this approach is
consistent with the Company's ongoing effort to achieve a responsible balance
between short-term and long-term performance for the Company and its
shareholders, and between compensation incentives that encourage those results.
All members of the Compensation Committee concur in this report to the
shareholders.
William S. Atherton Louis C. Henderson, Jr.
Joe Lee Griffin Jake L. Netterville
10
<PAGE> 14
PERFORMANCE GRAPH
The graph below sets forth Company's cumulative total stockholder
return over the last five years compared to the NASDAQ Stock Market - U.S. and
the Standard & Poor's Restaurants indexes. Stock price performance over the
past five years is not necessarily indicative of future results.
[GRAPH]
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------------------------
6/91 6/92 6/93 6/94 6/95 6/96
<S> <C> <C> <C> <C> <C> <C> <C>
WALL STR DELI INC WSDI 100 108 188 204 146 100
NASDAQ STOCK MARKET-US INAS 100 120 151 153 204 261
S & P RESTAURANTS IRET 100 137 148 171 226 265
</TABLE>
Assumes $100 invested in Wall Street Deli, Inc., NASDAQ Stock Market - U.S.,
and S&P Restaurants indexes on June 30, 1991.
Total return calculations assume annual dividend reinvestment. Wall Street
Deli, Inc. has never paid a cash dividend.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The information set forth in the following paragraph is based solely
upon a review of Forms 3 and 4 and amendments thereto furnished to the Company
pursuant to Rule 16a-3(e) during the fiscal year ended June 29, 1996, and Form
5 and amendments thereto furnished to the Company with respect to that fiscal
year, if any, and written representations received by the Company.
Of those persons who, at any time during the fiscal year ended June
29, 1996, were directors, executive officers, or beneficial owners of more than
10 percent of the Company's outstanding stock, none of such persons failed to
file, on a timely basis, as disclosed in the above forms, reports required by
Section 16(a) of the Securities Exchange Act of 1934 during the most recent
fiscal year or prior fiscal years.
11
<PAGE> 15
PROPOSAL NUMBER 2:
RATIFICATION OF AUTHORIZATION FOR THE
AUDIT COMMITTEE TO SELECT 1996 INDEPENDENT AUDITORS
The Board of Directors has authorized the Audit Committee to select
the Company's independent auditors for the fiscal year ending June 28, 1997,
subject to approval by the shareholders at the Annual Meeting. BDO Seidman,
LLP, Certified Public Accountants, served as the Company's independent auditors
for the fiscal year ending June 29, 1996, and has performed this function for
the Company since 1971. Representatives of BDO Seidman, LLP will be present at
the Annual Meeting with the opportunity to make a statement if they so desire
and will be available to respond to questions of shareholders.
The Board of Directors of the Company recommends ratification of
authorization for the Audit Committee to select the Company's independent
auditors for the 1997 fiscal year. The affirmative vote of a majority of the
votes cast at the meeting is necessary to approve this proposal.
The Board of Directors recommends a vote FOR Proposal number 2.
OTHER MATTERS
The Board of Directors knows of no other business to be transacted,
but if any other matters do come before the meeting, the persons named as
proxies in the accompanying proxy, or their substitutes, will vote or act with
respect to them in accordance with their best judgment.
SHAREHOLDERS' PROPOSALS
Any proposal which a shareholder expects to present at the next annual
meeting to be held in 1997 must be received at the Company's principal
executive office shown on the first page of this Proxy Statement not later than
May 19, 1997, in order to be included in the proxy material for the 1997
meeting. All proposals must be sent to the Company by Certified Mail, Return
Receipt Requested, and must comply with the Rule 14a-8 of Regulation 14A of the
proxy rules of the Securities and Exchange Commission.
THE ANNUAL REPORT OF THE COMPANY WHICH ACCOMPANIES THIS PROXY
STATEMENT CONTAINS CERTAIN OF THE INFORMATION CONTAINED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. A
COPY OF THE 10-K WILL BE FURNISHED TO SHAREHOLDERS UPON REQUEST WITHOUT CHARGE.
REQUESTS FOR FORM 10-K REPORTS SHOULD BE SENT TO ROBERT G. BARROW, PRESIDENT,
WALL STREET DELI, INC., 5683 SOUTH REX ROAD, MEMPHIS, TENNESSEE 38119.
By Order of the Board of Directors
Robert G. Barrow
President and Chief Executive Officer
12
<PAGE> 16
APPENDIX A
PROXY
WALL STREET DELI, INC.
Proxy for Annual Meeting of Shareholders, November 7, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan V. Kaufman and Robert G. Barrow
and either of them, proxies for the undersigned, with full power of
substitution, to represent the undersigned and to vote, as designated below,
all of the shares of the common stock of Wall Street Deli, Inc. (the Company)
which the undersigned is entitled to vote at the annual meeting of shareholders
of the Company to be held on November 7, 1996, and at any adjournment thereof.
1. The election as directors of all nominees listed below (except as marked to
the contrary below):
Alan V. Kaufman, Robert G. Barrow, Jeffrey V. Kaufman, William S.
Atherton, Joe Lee Griffin, Louis C. Henderson, Jr. and Jake L. Netterville
[ ] FOR all nominees listed above [ ] VOTE WITHHELD
(except as marked to the to vote for all
contrary) nominees listed above
(INSTRUCTION: TO WITHHOLD YOUR AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE BELOW:)
- - --------------------------------------------------------------------------------
2. Ratification of authorization for the Audit Committee to select the
Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and will be voted
as directed herein. If no direction is given, this proxy will be voted FOR
proposals 1 and 2.
Dated , 19 Phone No.
----------------------------- -- -----------------
<PAGE> 17
----------------------------------------
Signature of Stockholder
----------------------------------------
Signature of Stockholder
Where stock is registered jointly in the names of two or more persons, ALL
should sign. Signature(s) should correspond exactly with the name(s) as shown
above. Please mark, sign, date, and return the proxy card promptly in the
enclosed envelope. No postage need be affixed if mailed in the United States.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
