<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement |_| Confidential, for Use of
|X| Definitive proxy statement the Commission Only
|_| Definitive additional materials (as permitted by Rule
|_| Soliciting material pursuant 14a-6(e)(2))
to Rule 14a-11(c) or Rule 14a-12
WALL STREET DELI, INC.
(Name of registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(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.
One Independence Plaza
Suite 100
Birmingham, Alabama 35209
(205)870-0020
Fax: (205)868-0860
October 6, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders which will be held at 10:00 a.m. on Thursday, November 6, 1997, 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.
Yours very truly,
/s/ Louis C. Henderson, Jr.
Louis C. Henderson, Jr.
President and Chief Executive Officer
<PAGE> 3
WALL STREET DELI, INC.
ONE INDEPENDENCE PLAZA, SUITE 100
BIRMINGHAM, ALABAMA 35209
(205) 870-0020
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 6, 1997
The Annual Meeting of Shareholders of WALL STREET DELI, INC., a Delaware
corporation (the "Company"), will be held in the Board of Directors Meeting Room
of AmSouth Bank of Alabama, at the AmSouth-Sonat Building located at Fifth
Avenue North and Twentieth Street, Birmingham, Alabama, on Thursday, November 6,
1997, 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 proposal to approve the 1997 Incentive Award Plan.
3. The ratification of authorization for the Audit Committee to select
the Company's independent auditors.
4. 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,
1997, 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
/s/ Alan V. Kaufman
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.
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
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 6,
1997. A copy of the Annual Report of the Company for the fiscal year ended June
28, 1997, 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 6, 1997.
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 approval of
the 1997 Incentive Award Plan and 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, 1997, are
entitled to notice of, and to vote at, the Annual Meeting. As of September 23,
1997, there were 3,130,577 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 ratification of
auditors require the affirmative vote of a majority of the votes cast at the
meeting. The proposal to approve the 1997 Incentive Award Plan requires the
affirmative vote of the holders of a majority of the Company's voting shares
present at the meeting in person or by proxy. 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.
<PAGE> 5
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 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 15, 1997, 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 executive 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>
Amount and
Nature of Percentage
Name and Address of Beneficial of Common
Beneficial Owner Ownership(1) Stock
------------------- ------------ ----------
<S> <C> <C>
Alan V. Kaufman 336,212(2) 10.0%
Chairman and Nominee
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Robert G. Barrow 271,175(3) 8.0%
Vice Chairman, Chief Financial Officer and Nominee
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Louis C. Henderson, Jr. 53,222(4) 1.6%
President, Chief Executive Officer, Director and Nominee
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Jeffrey V. Kaufman 58,174(5) 1.7%
Executive Vice President, Chief Operating Officer,
Director and Nominee
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Steven G. Barrow 39,493(6) 1.2%
Vice President-Corporate Development and Secretary
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Name and Address of Beneficial of Common
Beneficial Owner Ownership(1) Stock
------------------- ------------ ----------
<S> <C> <C>
David A. Thomas 33,390(7) 1.0%
Senior Vice President-National Operations
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Kenneth L. Myres 15,000(8) *
Vice President and Director of Franchising
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Kevin D. Conaway 10,000(9) *
Treasurer and Chief Accounting Officer
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
William S. Atherton 105,150(10) 3.1%
Director and Nominee
1924 South Utica
Tulsa, Oklahoma 74104
Joe Lee Griffin 283,328(10)(11) 8.4%
Director and Nominee
2432 Shades Crest Road
Birmingham, Alabama 35216
Jake L. Netterville 44,250(10) 1.3%
Director and Nominee
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
All directors and executive officers 1,249,394(12) 37.1%
as a group (11 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 15,000 shares subject to options
held by Mr. Kaufman. Mr. Kaufman is the father of Jeffrey V. Kaufman.
(3) The amount reported includes 51,403 shares owned by Kaufman-Barrow
Properties, a general partnership, and 30,000 shares subject to options
held by Mr. Barrow. The reported amount also includes 5,375 shares owned
by one of Mr. Barrow's sons. Mr. Barrow is the father of Steven G. Barrow.
(4) The amount reported includes 45,500 shares subject to options.
3
<PAGE> 7
(5) The amount reported includes 1,045 and 8,750 shares owned by Mr.
Kaufman's spouse and minor children, respectively, as to which he
disclaims beneficial ownership. The amount reported also includes 44,000
shares subject to options.
(6) The amount reported includes 175 shares owned by Mr. Barrow's minor
children as to which he disclaims beneficial ownership. The amount
reported also includes 38,500 shares subject to options.
(7) The amount reported includes 630 shares owned by Mr. Thomas's minor
children as to which he disclaims beneficial ownership. The amount
reported also includes 23,000 shares subject to options.
(8) The amount reported includes 15,000 shares subject to options.
(9) The amount reported includes 10,000 shares subject to options.
(10) The reported amounts for Mr. Atherton, Mr. Griffin and Mr. Netterville
include 6,500 shares each subject to options.
(11) The amount reported includes 60,000 shares owned by JLG Investments, Inc.
of which Mr. Griffin is President, 200,478 shares owned by the Joe Lee
Griffin Family Limited Partnership of which Mr. Griffin is a general
partner and a limited partner, and an aggregate of 15,000 shares owned
by three trusts.
(12) The amount reported includes an aggregate 240,500 options held by
executive officers and directors included in the group.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Mr. Henderson, the Company's President and Chief Executive Officer, has
been conditionally granted options subject to the shareholders' approval of
Proposal Number 2 to be considered at this meeting. Mr. Henderson is also a
director and director nominee. The proposal, if adopted, will approve the
Company's 1997 Incentive Award Plan. Please see the more detailed information
under the captions "Conditional Grants" and "New Benefits under the Incentive
Plan" in the discussion of Proposal Number 2.
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.
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.
4
<PAGE> 8
<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; Chairman and 1966
Age: 60 President of the Company 1966 to August 1995(1)
Robert G. Barrow Vice Chairman of the Board and Chief Financial 1966
Age: 61 Officer since February 1997; President and Chief
Executive Officer from August 1995 to February
1997; Executive Vice President 1966 to 1996 and Chief
Financial Officer since 1966.
Louis C. Henderson, Jr. President and Chief Executive Officer of the 1977
Age: 60 Company since February 1997; President, The
Hackney Group, Inc. (management consulting
services), from 1989 until December 1996;
Senior Vice President, Operations, Protective
Life Corporation and Protective Life Insurance
Company, 1981 to 1989
Joe Lee Griffin President and Director, JLG Investments, Inc. 1978
Age: 67 (personal investments) since 1989; until 1989,
President and Director, NASCO Sales and
Service, Inc.; Director of Compass Bank of
Birmingham.(2)
Jake L. Netterville Managing Partner, Postlethwaite & Netterville, 1982
Age: 59 Certified Public Accountants
William S. Atherton Partner, Atherton & Murphy Investment 1991
Age: 64 Company (personal investments) since 1965;
Chairman and CEO, A&M Food Services, Inc.,
1981 to 1986(2); Director, Advantage Media,
Inc., 1991 to 1993
Jeffrey V. Kaufman Executive Vice President and Chief Operating 1995
Age: 36 Officer of the Company since August 1995;
Senior Vice President and National Operations
Manager 1993 to 1995; Regional Vice President,
Central Region 1987 to 1993(1)
</TABLE>
(1) Alan V. Kaufman is the father of 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 six meetings during the fiscal year ended June
28, 1997. All of the directors attended at least 75% of the meetings.
5
<PAGE> 9
The Audit Committee of the Board of Directors consists of Mr. Barrow, Mr.
Netterville and Mr. Atherton. 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 one time during
the 1997 fiscal year, and all members were present.
The Compensation Committee of the Board of Directors consists of Mr.
Atherton, Mr. Griffin and Mr. Netterville, none of whom are employed by the
Company. This committee held two meetings in fiscal 1997, 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.
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 28, 1997 for services by each of the persons serving
as chief executive officer at any time during the 1997 fiscal year, and the
other four highest paid executive officers of the Company who were serving as
such at the end of fiscal 1997 whose total salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards(3)
-------------------------------------- -----------
Other Annual All Other
Name and Principal Position Year(1) Salary Bonus Compensation(2) Options(4) Compensation(5)
- --------------------------- ------- ------ ----- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Louis C. Henderson, Jr. 1997 $ 75,000 $ -0- $ 2,915 25,000(7) $ -0-
President and
Chief Executive Officer(6)
Robert G. Barrow 1997 $208,000 $-0- $27,504 7,500 $56,987
President and Chief 1996 $204,000 $-0- $18,727 7,500 $56,987
Executive Officer until 1995 $184,000 $-0- $17,348 5,000 $56,987
February 1997; currently
Vice Chairman and Chief
Financial Officer(6)
Alan V. Kaufman 1997 $125,000 $-0- $12,811 -0- $53,979
Chairman of the Board 1996 $208,000 $-0- $15,767 -0- $57,979
1995 $204,000 $-0- $33,106 5,000 $57,979
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
Other Annual All Other
Name and Principal Position Year(1) Salary Bonus Compensation(2) Options(4) Compensation(5)
- --------------------------- ------- ------ ----- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey V. Kaufman 1997 $151,250 $-0- $12,764 17,500 $ 9,091
Executive Vice President 1996 $138,000 $-0- $11,183 10,000 $ 9,091
and Chief Operating Officer 1995 $130,000 $-0- $15,204 3,000 $ 2,304
David A. Thomas 1997 $138,750 $-0- $61,998 5,000 $ 3,356
Senior Vice President-
National Operations
Steven G. Barrow 1997 $ 99,167 $5,000 $32,958 15,000 $ 7,600
Vice President-Corporate
Development and Secretary
</TABLE>
(1) Information is provided for the full fiscal year during which a person
served in the named capacity for any portion of that year.
(2) 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 $4,905 to Jeffrey Kaufman; automobile allowances of
$1,812 to Louis Henderson, $19,033 to Robert Barrow, $6,000 to Jeffrey
Kaufman; and reimbursement or payment of moving expenses and moving
expense allowances of $54,257 to David Thomas and $27,635 to Steven
Barrow.
(3) The Company has no restricted stock award plans and no long term incentive
plans as those terms are defined by applicable SEC rules.
(4) 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.
(5) 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
Alan Kaufman, $17,987 for Robert Barrow, $9,091 for Jeffrey Kaufman,
$3,356 for David Thomas and $7,600 for Steven Barrow. With respect to Alan
Kaufman and Robert Barrow, these amounts also include $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. The amount shown also includes an
individual retirement account contribution of $4,000 to Robert Barrow.
(6) Effective February 1, 1997, Mr. Henderson assumed the position of
President and Chief Executive Officer formerly held by Mr. Barrow. Mr.
Barrow continues as Vice Chairman of the Board and Chief Financial
Officer.
(7) Does not include 15,000 stock options conditionally granted, subject to
shareholder approval at this meeting. See the discussion under Proposal
Number 2.
7
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1997
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>
Louis C. Henderson, Jr. 25,000(5) 19.3% $4.00 05-01-02 $27,750 $61,000
Robert G. Barrow 7,500 5.8% $5.25 08-13-01 $10,875 $24,075
Alan V. Kaufman -0- -0-% $-0- -0- $ -0- $ -0-
Jeffrey V. Kaufman 7,500 5.8% $5.25 08-13-01 $10,875 $24,075
10,000 7.7% $4.00 05-01-02 $11,100 $24,400
David A. Thomas 5,000 3.9% $5.25 08-13-01 $ 7,250 $16,050
Steven G. Barrow 5,000 3.9% $5.25 08-13-01 $ 7,250 $16,050
10,000 7.7% $4.00 05-01-02 $11,100 $24,400
</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 1997. Options are
immediately exercisable, and expire five years after the date of grant.
(2) Based on 129,200 options granted to all employees in the fiscal year ended
June 28, 1997. 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.
(5) Mr. Henderson was a non-employee director of the Company prior to February
1, 1997. The options shown in this table do not include options for 1,000
shares granted to him on August 1, 1996 in his capacity as a non-employee
director. Also not included are 15,000 options conditionally granted,
subject to shareholder approval at this meeting. See the discussion under
Proposal Number 2.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information on option exercises in fiscal
1997 by the named executive officers and the value of each such officer's
unexercised options at June 28, 1997.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
at Fiscal Year End at Fiscal Year End(1)
--------------------- -------------------------
Shares
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------ ------------ -------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Louis C. Henderson, Jr. -0- -0- 30,500 15,000 -0- -0-
Robert G. Barrow -0- -0- 41,250 -0- -0- -0-
Alan V. Kaufman -0- -0- 26,250 -0- -0- -0-
Jeffrey V. Kaufman -0- -0- 40,750 -0- -0- -0-
David A. Thomas -0- -0- 17,750 -0- -0- -0-
Steven G. Barrow -0- -0- 33,950 -0- -0- -0-
</TABLE>
(1) Based on $4.00 per share, the average of bid and ask prices reported by
NASDAQ on June 30, 1997.
COMPENSATION OF DIRECTORS
Three of the seven present directors are not salaried employees of the
Company. In addition, Mr. Henderson was not an employee of the Company until
February 1997. For their services in fiscal 1997 each non-employee director was
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 1997, 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
22,000 shares (as adjusted) had been granted and remained outstanding as of the
1997 fiscal year end and 53,000 shares remained available for grant under this
Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Alan Kaufman and Robert Barrow are general partners of CBK Associates,
which from 1981 until October 27, 1996 leased to the Company its catering
offices in Memphis, Tennessee. During the Company's 1997 fiscal year, rents paid
to CBK Associates were $12,000. Alan Kaufman, Robert Barrow, Jeffrey
9
<PAGE> 13
Kaufman, and Steven Barrow are general partners in Rex Associates, which leased
to the Company its administrative offices in Memphis, Tennessee. Pursuant to the
relocation of the Company's administrative offices from Memphis to Birmingham
and the subsequent consolidation with the Company's executive headquarters, the
lease agreement terminated effective September 30, 1997. During the Company's
1997 fiscal year, rents paid to Rex Associates were $69,672. Management believes
these transactions to have been on terms no less favorable than could have been
obtained from unaffiliated third parties.
Effective October 27, 1996, the Company sold the operating assets of its
Memphis division to Executive Chef Catering, L.L.C., of which Robert Barrow and
Judy Gupton, former manager of the Memphis division, are the owners. Total sale
price for the assets was $1,017,000, consisting of $810,305 in cash and
short-term notes, 25,000 shares of Company stock valued at $5.55 per share, and
$68,739 payable in two years, with interest at the prime rate and paid
quarterly. Prior to the close of fiscal 1997, one note in the amount of $47,990
was paid with 11,250 shares of Company stock valued at $4.125 per share, with
the balance paid in cash. The book value of the assets sold was approximately
$867,000. The assets included in the sale were ten Memphis stores, three
operating under the Wall Street Deli trade name and seven operating as R.C.
Cooper's stores, and the Memphis catering operation conducted under the trade
name Executive Chef Catering. In fiscal 1996, average annual sales approximated
$178,000 for each of the ten Memphis stores while the catering operation had
annual sales of approximately $2,900,000. Operating income for fiscal 1996 was
approximately $268,000. The Board of Directors' decision to sell the Memphis
division was based on the small size of the existing stores, the lack of
compatibility of the catering operation with the Company's transition to a
single source vendor system for food and restaurant supplies, and the
installation of the store-level management information system. The catering
business previously operated as part of the Company's commissary in Memphis. In
fiscal 1996, the Company closed all of its regional commissaries and made the
transition to a single source vendor system. Management believes this
transaction to have been on terms no less favorable than could have been
obtained from unaffiliated third parties.
INDEBTEDNESS OF MANAGEMENT
The Company made a short-term loan in the amount of $85,000 at no interest
to Steven G. Barrow to facilitate the sale of his residence and move to
Birmingham in connection with the consolidation and relocation of the Memphis
office. The loan was made on May 31, 1997, and $69,656 was repaid on July 29,
1997. An additional $8,824 was offset against the principal balance by the
Company's reimbursement of expenses incidental to the sale of Mr. Barrow's
Memphis residence. Mr. Barrow's outstanding indebtedness to the Company was
$6,520 at fiscal 1997 year end, and as of the date of this proxy statement the
debt had been completely repaid.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The present members of the Compensation Committee of the Board of
Directors are Messrs. William S. Atherton, Joe Lee Griffin, and Jake L.
Netterville, who are all of the non-employee members of the Board. Mr. Henderson
was a member of the Compensation Committee until February 1, 1997, when he
resigned from the Committee upon his employment by the Company as its President
and Chief Executive Officer. Both Mr. Alan Kaufman and Mr. Robert Barrow have
formerly served as chief executive officer of the Company, during the time that
Mr. Henderson was a member of the Compensation Committee, and Mr. Kaufman and
Mr. Barrow have participated in deliberations concerning executive officer
compensation. Mr. Kaufman, Mr. Barrow and Mr. Henderson continue to make
recommendations to and are consulted by the Committee.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In June 1993, the Board of Directors created a Compensation Committee,
composed of the 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 1997, the Company's formula for
annual performance bonuses for the three most senior officers (Mr. Henderson,
President and Chief Executive Officer effective February 1, 1997, Mr. Robert
Barrow, President and Chief Executive Officer until February 1, 1997, currently
Vice Chairman and Chief Financial Officer, and Mr. Jeffrey Kaufman, Executive
Vice President and Chief Operating 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 computed as if any bonuses earned had been
paid. Upon attainment of the target amount, these three executives would be
eligible for bonuses of up to 20% of their base salaries. The target was not met
and no bonuses were paid in 1997.
For other senior employees, including the other named executive officers,
1997 annual performance bonuses were conditioned upon attainment of either (1) a
specified net pre-tax profit (as a percentage of sales) on a regional basis,
which was payable quarterly, or (2) management's evaluation of the achievement
of individual goals.
11
<PAGE> 15
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 133,200 options in fiscal 1997, of which 37,500 were granted to the other
named executive officers.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
From August 1996 to February 1997, Mr. Barrow, currently Vice Chairman and
Chief Financial Officer, was President and Chief Executive Officer. Mr. Barrow's
base salary for the fiscal year ended June 28, 1997 was $208,000. Effective
February 1, 1997, Mr. Henderson was employed at a base salary of $180,000. 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 1997, 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.
The Committee awarded options for 40,000 shares to Mr. Henderson and 7,500
shares to Mr. Robert Barrow during the year. 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
Joe Lee Griffin
Jake L. Netterville
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<PAGE> 16
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.
RESEARCH Total Return - Data Summary
WSDI
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------------
6/92 6/93 6/94 6/95 6/96 6/97
<S> <C> <C> <C> <C> <C> <C> <C>
WALL STR DELI INC WSDI 100 173 188 135 92 62
NASDAQ STOCK MARKET (U.S.) INAS 100 126 127 169 218 265
S&P RESTAURANTS IRET 100 109 126 165 194 203
</TABLE>
Assumes $100 invested in Wall Street Deli, Inc., NASDAQ Stock Market - U.S., and
S&P Restaurants indexes on June 30, 1992.
Total return calculations assume annual dividend reinvestment. The Company 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 28, 1997, 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 28,
1997, 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.
13
<PAGE> 17
PROPOSAL NUMBER 2:
APPROVAL OF THE 1997 INCENTIVE AWARD PLAN
The Board of Directors has adopted the Company's 1997 Incentive Award Plan
(the "Incentive Plan"), subject to the approval of the shareholders at this
annual meeting.
The Company has since 1977 maintained one or more employee stock option
plans, which management believes have served as a valuable incentive for
employees of the Company. The present plan, which is the 1989 Incentive Stock
Option Plan (the "1989 Plan"), provides only for incentive stock options and
stock appreciation rights. This Incentive Plan, which would replace the 1989
Plan, would authorize non-qualified stock options and restricted stock awards,
as well as incentive stock options and stock appreciation rights. The Board and
management believe this will provide additional flexibility with respect to
long-term and incentive compensation for key employees, and will thereby enhance
shareholder value.
SUMMARY OF PLAN PROVISIONS
Purpose; Types of Awards and Individual Limits. The purpose of the
Incentive Plan is to provide long-term incentives and rewards to those employees
largely responsible for the success and growth of the Company, to assist the
Company in attracting and retaining such employees and to associate their
interests with those of the Company's stockholders. The Incentive Plan will be
administered by the Compensation Committee of the Board of Directors. Awards
under the Incentive Plan may include incentive stock options, non-qualified
stock options, stock appreciation rights, restricted stock or performance shares
or any combination of the foregoing. The form, amount and timing of awards, and
other terms and conditions need not be uniform and may be made selectively among
participants. Any participant may be granted multiple awards, but no one
participant may be granted, in the aggregate, awards which would result in his
or her receiving more than 10% of the maximum number of shares available under
the Incentive Plan.
Shares Issuable Under the Incentive Plan. The Incentive Plan will make
available a total of 350,000 shares, which may be either authorized but unissued
shares or treasury shares. In the event of a lapse, expiration, termination or
cancellation of any award or the reacquisition of shares pursuant to the rights
reserved upon issuance, the shares subject to or reserved therefor may again be
used for new awards, so long as the number of shares issued under the Incentive
Plan does not exceed 350,000.
In addition, the Incentive Plan provides for an annual maximum number of
shares that will be first available for award in any one year. Awards for shares
that may be delivered or purchased under the Incentive Plan during any fiscal
year can not exceed an aggregate of 75,000 shares, in addition to any shares
previously available. In the event awards for fewer than 75,000 shares are made
in any year, the remainder will be available for award in subsequent years,
together with any shares that become available pursuant to the lapse,
expiration, termination or cancellation of any award or the reacquisition of
shares pursuant to the rights reserved upon issuance.
Persons Eligible. Active full time and part time key employees of the
Company and its subsidiaries are eligible to participate in the Incentive Plan.
Non-employee directors are not eligible. While the concept of a "key employee"
eligible to participate is necessarily flexible, during the 1997 fiscal year, 38
employees
14
<PAGE> 18
(including a total of 7 executive officers) were granted options under the
Company's 1989 Plan. The Compensation Committee has sole authority and
discretion to designate eligible participants and determine the types of awards
to be granted and their terms and conditions, including the vesting schedule and
exercise price.
Incentive Stock Options and Non-qualified Stock Options. The option price
for incentive stock options and non-qualified stock options may not be less than
the fair market value of the common stock on the date of grant. For incentive
stock options granted to persons owning 10% or more of the Company's outstanding
stock, the option price may not be less than 110% of fair market value on the
date of grant, and no person may be granted incentive stock options if under all
plans of the Company such person holds options first exercisable during such
calendar year for shares having an aggregate fair market value, as of the date
of grant, of more than $100,000.
Stock Appreciation Rights and Restricted Stock. Stock appreciation rights
("SAR's") may be granted either singly or in tandem with options, on such terms
and conditions as the Compensation Committee may determine, except that the
exercise period for an SAR in tandem with an option may not exceed the exercise
period for the underlying option. Restricted stock grants may also be granted on
terms established by the Compensation Committee as long as such grants are
conditioned on continued employment with the Company.
Non-transferability. No awards under the Incentive Plan or any rights or
interest therein are assignable or otherwise transferable except by will or the
laws of descent and distribution. Participants under the Incentive Plan have no
rights as shareholders unless and until certificates for shares are issued to
the participant.
Amendment and Termination. Unless approved by the shareholders, the
Incentive Plan may not be amended to increase the maximum number of shares under
the Incentive Plan or the maximum number of shares that may be awarded to any
individual, to extend the maximum period during which awards may be granted
under the Incentive Plan, or to make any other changes in the Incentive Plan
that would require shareholder approval under SEC Rule 16b-3. No awards may be
made under the Incentive Plan after April 30, 2007, but the Incentive Plan will
continue in effect for existing awards so long as such awards are outstanding.
The Committee may terminate the Incentive Plan at any time in whole or in part,
but such termination shall not adversely affect any rights or obligations with
respect to any awards theretofore made.
FEDERAL INCOME TAX TREATMENT.
Incentive Stock Options. An employee should not realize taxable income at
the time of the grant of an incentive stock option and the Company will not be
entitled to a tax deduction with respect to such grant. No taxable income should
be realized by an employee and the Company will not be entitled to a federal
income tax deduction in respect of the exercise of an incentive stock option.
However, exercise of an incentive stock option will give rise to an item of tax
preference to the employee equal to the excess, on the date of exercise of the
option, of the fair market value of the shares acquired through such exercise
over the option price of such shares, and such item of tax preference may be
subject to the alternative minimum tax. The Company would not be entitled to a
tax deduction in respect of any such item of tax preference.
15
<PAGE> 19
If the shares acquired through the exercise of an incentive stock option
are sold more than two years after the date of the grant of the option and more
than one year after the date of the transfer of such shares to the employee, and
the option price of such shares had been paid in cash, the full difference
between the amount realized on the sale and the option price will constitute
long or short term capital gain or loss (depending on whether the shares were
considered held by the employee for federal income tax purposes for more than
one year or more than eighteen months prior to such disposition) to the employee
and no deduction will be allowed to the Company. However, if and to the extent
that shares previously acquired by the employee had been delivered in payment of
the option price of the option, upon sale of an equivalent number of shares
received on exercise of the option, more than two years after the date of grant
of the option and one year after the date of transfer of such shares to the
optionee, the full difference between the amount realized on the sale and the
adjusted tax basis of the previously acquired shares delivered in payment of the
option price should constitute capital gain or loss. Upon sale of any shares
acquired on exercise of the incentive stock option in excess of the number of
previously acquired shares delivered by the employee in payment of the option
price, more than two years after the date of transfer of such shares to the
employee, the amount realized on the sale of such shares should constitute
capital gain. The Company will not be entitled to a tax deduction in respect of
any such sales.
If the shares acquired through the exercise of an incentive stock option
are sold or otherwise disposed of at a gain within two years after the date of
grant of the option or within one year after the transfer of such shares to the
employee (a "disqualifying disposition"), the employee should realize income
subject to tax at ordinary income rates equal to the difference between the
option price of the shares and the lesser of (a) the amount realized on such
disposition and (b) the fair market value of the shares on the date of exercise,
with any appreciation after the date of exercise generally constituting long or
short term capital gain (depending on whether the shares were considered held by
the employee for federal income tax purposes for more than one year or more than
eighteen months prior to such disposition). The Company should be able to claim
a tax deduction in the amount of ordinary income (but not capital gain) realized
by the employee. However, in the case of a disqualifying disposition by an
employee who was an officer or director on the date of exercise of the option,
the employee will generally realize income subject to tax at ordinary income
rates and the Company will be entitled to a tax deduction in an amount equal to
the difference between the option price of the shares and the lesser or (a) the
amount realized on such disposition, and (b) the fair market value of the shares
on the first day when the employee could have sold the shares at a profit
without liability under the SEC short-swing profit rules, which would generally
have been six months after the date of grant, with any appreciation thereafter
generally constituting long or short term capital gain to the employee and
without any tax deduction to the Company in respect of such gain. If shares,
previously acquired by an officer or other employee through the exercise of an
incentive stock option, are delivered by the employee in payment of the option
price of an incentive stock option prior to satisfaction of the statutory
holding periods applicable to such shares, such delivery will constitute a
disqualifying disposition of such previously acquired shares that may give rise
to ordinary income to the employee and a tax deduction to the Company in
accordance with the rules described above, and no capital gain would be realized
by the employee at the time of such disposition.
Non-qualified Stock Options. An employee who is granted an option which
does not qualify as an incentive stock option should not be subject to federal
income tax upon the grant of the option, and the Company should not be entitled
to a tax deduction by reason of such grant. Upon exercise of the option, the
excess of the fair market value of the shares on the exercise date over the
option price will be considered
16
<PAGE> 20
compensation taxable as ordinary income to the employee and subject to
withholding unless the shares so received are subject to a substantial risk of
forfeiture, in which event (unless the employee elected to be taxed on exercise)
compensation should generally be realized subject to federal income tax and
withholding only at the time the shares are no longer subject to a substantial
risk of forfeiture, with the amount of compensation realized being the excess of
the fair market value of the shares at that time over the option price. Shares
received by an officer or director of the Company upon exercise of an option
would be considered subject to a "substantial risk of forfeiture" for this
purpose so long as the sale of such shares could subject the individual to suit
under the short-swing profits recapture provision of federal securities
legislation, generally a period of six months after the option was granted. The
Company may claim a tax deduction at the time and in the amount that such
taxable compensation is realized by the employee.
Restricted Stock Awards. Unless an election is made as described below, an
employee who receives an award of restricted stock under the Incentive Plan will
not realize taxable income at the time of the award, nor will the Company be
entitled to a tax deduction at that time. When the awards become vested (i.e.,
when restrictions lapse through passage of time or otherwise) or the election
described below is made, participants will realize income and the Company may
claim a deduction at such time in an amount equal to the fair market value of
the shares less any amount paid by the participant. Dividends paid to the
employee with respect to restricted stock prior to their vesting constitute
compensation and, as such, are taxable to the participant and deductible by the
Company.
Pursuant to provisions of Section 83(b) of the Internal Revenue Code as
amended, the recipient of restricted stock under the Incentive Plan may elect to
be taxed at the time of the award. If the participant so elects, the full value
of the shares (without regard to restrictions) at the time of the grant, less
any amount paid by the participant, will be taxed to the participant as ordinary
income and will be deductible by the Company. Dividends paid with respect to the
shares during the period of restriction will be taxable as dividends to the
participant and not deductible by the Company. If, after making an election
pursuant to Section 83(b), any shares are subsequently forfeited, or if the
market value at vesting is lower than the amount on which the participant was
taxed, the participant cannot then claim a deduction.
Stock Appreciation Rights. The grant of stock appreciation rights should
not result in taxable income to the recipient or a tax deduction for the
Company. The exercise of stock appreciation rights should result in compensation
taxable as ordinary income to the employee subject to withholding, and in a tax
deduction for the Company, in the amount of the cash paid and the fair market
value of any shares issued or transferred, unless any such shares are subject to
a substantial risk of forfeiture, in which event, (unless the employee elected
to be taxed on exercise) compensation should generally be realized subject to
federal income tax and withholding and a tax deduction should be available to
the Company only at a time the shares are no longer subject to a substantial
risk of forfeiture, with the amount based on the fair market value of the shares
at that time. Shares received by an officer or director of the Company would be
considered subject to a "substantial risk of forfeiture" for this purpose so
long as the sale of such shares could subject the individual to suit under the
short-swing profits recapture provision of federal securities legislation.
CONDITIONAL GRANTS
Non-Qualified Stock Options. Subject to shareholder approval at this
annual meeting, the Compensation Committee voted on April 30, 1997 to
conditionally grant non-qualified stock options to purchase an
17
<PAGE> 21
aggregate of 15,000 shares to Mr. Henderson. These options will become
exercisable on November 6, 1997, will expire on April 29, 2002, and are
exercisable at $4.00 per share. In the event that the shareholders of the
Company do not approve the Incentive Plan by April 30, 1998, both the Incentive
Plan and these and any other conditional awards will be rendered immediately
void and of no effect.
NEW BENEFITS UNDER THE INCENTIVE PLAN.
While it is expected that all current executive officers, including the
named executive officers, will be eligible for awards under the Incentive Plan,
and likely will be granted awards in the future, the number, terms and values of
such awards are not presently determinable.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes this Incentive Plan will increase the
involvement of its employees in the Company's well-being and will provide
employees with added incentive to promote the Company's success. The Board
therefore recommends a vote FOR Proposal number 2.
PROPOSAL NUMBER 3:
RATIFICATION OF AUTHORIZATION FOR THE
AUDIT COMMITTEE TO SELECT 1997 INDEPENDENT AUDITORS
The Board of Directors has authorized the Audit Committee to select the
Company's independent auditors for the fiscal year ending June 27, 1998, 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 28, 1997, 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 1998 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 3.
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 1998 must be received at the Company's principal executive
office shown on the first page of this Proxy Statement
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<PAGE> 22
not later than May 18, 1998, in order to be included in the proxy material for
the 1998 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 LOUIS C. HENDERSON, JR., PRESIDENT AND CHIEF
EXECUTIVE OFFICER, WALL STREET DELI, INC., ONE INDEPENDENCE PLAZA, SUITE 100,
BIRMINGHAM, ALABAMA 35209.
By Order of the Board of Directors
Louis C. Henderson, Jr.
President and Chief Executive Officer
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<PAGE> 23
Appendix A
to Proxy Statement for 1997 Annual Shareholders Meeting
WALL STREET DELI, INC.
1997 INCENTIVE AWARD PLAN
As adopted by the Board of Directors on April 30, 1997
subject to shareholder approval
1. PURPOSE.
The purposes of the 1997 Incentive Award Plan (the "Plan") are to
provide long-term incentives and rewards to those employees largely responsible
for the success and growth of Wall Street Deli, Inc. and its subsidiaries and
divisions (the "Company"), to assist the Company in attracting and retaining
executives with experience and ability on a basis competitive with industry
practices, and to associate the interests of such key employees with those of
the Company's shareholders.
2. ADMINISTRATION OF THE PLAN.
(a) Committee. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). The Board
of Directors shall appoint at least two of its members to the Committee. Except
as may otherwise be provided in Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), no person shall be appointed as a member of
the Committee who is not "disinterested" as defined in Rule 16b-3 of the 1934
Act.
(b) Committee Actions. Each member of the Committee shall serve at the
pleasure of the Board of Directors, which may fill any vacancy, however caused,
in the Committee. The Committee shall select one of its members as a chairman
and shall hold meetings at the times and in the places as it may deem advisable.
All actions the Committee takes shall be made by majority decision. Any action
evidenced by a written instrument signed by all of the members of the Committee
shall be as fully effective as if the Committee had taken the action by majority
vote at a meeting duly called and held.
(c) Committee Powers. The Committee shall have all the powers vested in
it by the terms of the Plan, such powers to include exclusive authority (within
the limitations described herein) to (i) select the employees to be granted
awards under the Plan ("Participants"), (ii) determine the type, size and terms
of awards to be made to each Participant, including whether or not such awards
shall be issued for any consideration and, if issued for consideration, the
amount and type of consideration, (iii) determine the consideration to be paid
upon exercise of an ISO or NSO, as defined herein, (iv) determine the time when
awards will be granted and (v) establish objectives and conditions for awards,
including any holding period for awards or securities awarded, the effects of
termination of employment or disability on awards, vesting requirements and the
form of payment of awards. The Committee may, in its sole discretion, delegate
such of its powers as it deems appropriate, except that the Committee may not
delegate its authority with regard to any matter or action affecting an officer
or other person subject to Section 16 of the 1934 Act.
(d) The Committee shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines
and instruments for the administration of the Plan and for
<PAGE> 24
the conduct of its business as the Committee deems necessary or advisable. The
Committee's interpretations of the Plan, and all actions taken and
determinations made by the Committee pursuant to the powers vested in it
hereunder, shall be conclusive and binding on all parties concerned, including
the Company, its shareholders and any employee of the Company.
3. ELIGIBILITY.
(a) Active full-time and part-time key employees of the Company, its
subsidiaries and divisions, whether or not directors of the Company, shall be
eligible to participate in the Plan; directors of the Company who are not
employees are not eligible. The Committee, or its delegate, shall designate
Participants from among such eligible key employees.
(b) Subject to the limits set forth in this Plan, the Committee at any
time may grant additional awards to Participants to whom the Committee had
previously granted awards, so that a Participant may hold more than one award at
the same time.
4. AWARDS.
(a) Types. The Committee may authorize awards under the Plan of any one
or a combination of: nonqualified stock options ("NSO"), incentive stock options
("ISO"), stock appreciation rights ("SAR"), and restricted stock. The Committee
may make any other type of award which it shall determine is consistent with the
objectives and limitations of the Plan. All Incentive Stock Options ("ISOs")
awarded hereunder are intended to comply with Internal Revenue Code of 1986, as
amended ("Code"), Sections 422 and 424 and all provisions of the Plan and all
ISOs granted shall be construed to effectuate that intent. Each award shall be
subject to the terms and conditions set forth herein and as determined by the
Committee. Committee determinations as to eligibility, form, amount and timing
of awards, and other terms and conditions need not be uniform and may be made
selectively among Participants who receive or are eligible for awards hereunder,
whether or not such individuals are similarly situated.
(b) Guidelines. The Committee may adopt from time to time policies for
its implementation of the Plan. Such policies may include, but need not be
limited to, the type, size and term of awards to be made to Participants who are
eligible key employees and the conditions for payment of such awards. All awards
shall be evidenced by a written agreement between the Participant and the
Company in the form and containing the terms and conditions authorized by the
Committee.
(c) Maximum Awards. A Participant may be granted multiple awards under
the Plan but no one Participant may be granted, in the aggregate, awards that
would result in his or her receiving more than 10% of the maximum number of
shares of Common Stock, $.05 par value, of the Company ("Common Stock")
available for award under the Plan.
5. TERMS OF STOCK OPTIONS.
The Committee may grant options qualifying as ISOs under the Code and
NSOs (collectively "Stock Options"), and such Stock Options shall be subject to
the following terms and conditions and such other terms and conditions as the
Committee may prescribe:
2
<PAGE> 25
(a) Option Price. The option price per share with respect to each Stock
Option shall be determined by the Committee, but shall not be less than 100% of
the fair market value of the Common Stock on the date the Stock Option is
granted, as determined by the Committee. Unless otherwise determined by the
Committee, fair market value shall be deemed to be the mean between the highest
and lowest sales prices of the Common Stock on the Consolidated Transaction
Reporting System on the date the Stock Option is granted.
(b) Period of Option. The period of each Stock Option shall be fixed by
the Committee.
(c) Payment. The option price shall be payable at the time the Stock
Option is exercised in cash or, at the discretion of the Committee, in whole or
in part in the form of shares of Common Stock already owned by the grantee
(based on the fair market value of the Common Stock on the date the option is
exercised as determined by the Committee). No shares shall be issued until full
payment therefor has been made. A grantee of a Stock Option shall have none of
the rights of a stockholder until the shares are issued.
(d) Exercise of Option. The shares covered by a Stock Option may be
purchased in such installments and on such exercise dates as the Committee may
determine. Any shares not purchased on the applicable exercise date may be
purchased thereafter at any time prior to the final expiration of the Stock
Option. In no event (including those specified in paragraphs (e), (f) and (g) of
this section below) shall any Stock Option be exercisable after its specified
expiration period.
(e) Termination of Employment. Upon the termination of a Participant's
employment (for any reason other than retirement, death or termination for
deliberate, willful, or gross misconduct), Stock Option privileges for such
Participant shall be limited to the shares that were immediately exercisable at
the date of such termination. The Committee, however, in its discretion may
provide that any Stock Options outstanding but not yet exercisable upon the
termination of a Participant's employment may become exercisable in accordance
with a schedule to be determined by the Committee. Such Stock Option privileges
shall expire unless exercised within such period of time after the date of such
termination of employment as may be established by the Committee. If a
Participant's employment is terminated for deliberate, willful or gross
misconduct, as determined by the Company, all rights under the Stock Option
shall expire upon receipt of the notice of such termination.
(f) Retirement. Upon retirement of the Participant, Stock Option
privileges for such Participant shall apply to those shares immediately
exercisable at the date of retirement. The Committee, however, in its
discretion, may provide that any Stock Options outstanding but not yet
exercisable upon the retirement of the Participant may become exercisable in
accordance with a schedule to be determined by the Committee. Stock Option
privileges shall expire unless exercised within such period of time as may be
established by the Committee.
(g) Death. Upon the death of a Participant, Stock Option privileges for
such Participant shall apply to those shares that were immediately exercisable
at the time of death. The Committee, however, in its discretion, may provide
that any Stock Options outstanding but not yet exercisable upon the death of a
Participant may become exercisable in accordance with a schedule to be
determined by the Committee. Such privileges shall expire unless exercised by
legal representatives within a period of time as determined by the Committee but
in no event later than the date of the expiration of the Stock Option.
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(h) Limits on Incentive Stock Options. Except as may otherwise be
permitted by the Code, the Committee shall not grant, in the aggregate under all
plans of the Company, a Participant ISOs that are first exercisable during any
one calendar year to the extent that the aggregate fair market value of the
Common Stock with respect to which such ISOs are granted, at the time the ISOs
are granted, exceeds $100,000.
6. TERMS OF STOCK APPRECIATION RIGHTS
The Committee may, in its discretion, grant a stock appreciation right
to receive the appreciation in the fair market value of shares of Common Stock
("SAR") either singly or in combination with an underlying Stock Option granted
hereunder. Such SARs shall be subject to the following terms and conditions and
such other terms and conditions as the Committee may prescribe:
(a) Time and Period of Grant. If an SAR is granted with respect to an
underlying Stock Option, it may be granted at the time of the Stock Option grant
or at any time thereafter but prior to the expiration of the Stock Option grant.
If an SAR is granted with respect to an underlying Stock Option, at the time the
SAR is granted the Committee may limit the exercise period for such SAR, before
and after which period no SAR shall attach to the underlying Stock Option. In no
event shall the exercise period for an SAR granted with respect to an underlying
Stock Option exceed the exercise period for such Stock Option. If an SAR is
granted without an underlying Stock Option, the period of exercise of the SAR
shall be set by the Committee.
(b) Value of SAR. If an SAR is granted with respect to an underlying
Stock Option, the Participant will be entitled to surrender the Stock Option
which is then exercisable and receive in exchange therefor an amount equal to
the excess of the fair market value of the Common Stock on the date the election
to surrender is received by the Company over the Stock Option price multiplied
by the number of shares covered by the Stock Option which are surrendered. If an
SAR is granted without an underlying Stock Option, the Participant will receive
upon exercise of the SAR an amount equal to the excess of the fair market value
of the Common Stock on the date the election to surrender such SAR is received
by the Company over the fair market value of the Common Stock on the date of
grant multiplied by the number of shares covered by the grant of the SAR.
(c) Payment of SAR. Payment of an SAR shall be in the form of shares of
Common Stock, cash, or a combination thereof. The form of payment upon exercise
of an SAR shall be determined by the Committee either at the time of grant of
the SAR or at the time of exercise of the SAR.
7. TERMS OF RESTRICTED STOCK.
The Committee may issue shares of Common Stock to a Participant which
shares shall be subject to the following terms and conditions and such other
terms and conditions as the Committee may prescribe for the award of restricted
stock ("RS"):
(a) Requirement of Employment. A Participant awarded an RS must remain
in the employment of the Company during a period designated by the Committee
("Restriction Period"). If the Participant leaves the employment of the Company
prior to the end of the Restriction Period, the RS shall terminate and the
shares of Common Stock shall be returned immediately to the Company; provided
that the Committee may, at the time of the grant, provide for the employment
restriction to lapse with respect to a portion of the RS at different times
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<PAGE> 27
during the Restriction Period. The Committee may, in its discretion, also
provide for such complete or partial exceptions to the employment restriction as
it deems equitable.
(b) Restrictions on Transfer and Legend of Stock Certificates. During
the Restriction Period, the Participant may not sell, assign, transfer, pledge,
or otherwise dispose of the shares of Common Stock. Each certificate for shares
of Common Stock issued hereunder shall contained a legend giving appropriate
notice of the restrictions in the grant.
(c) Custody of Certificates. The Committee may require, under such
terms and conditions as it deems appropriate or desirable, that the certificates
for shares of Common Stock delivered under the Plan may be held in custody by a
bank or other institution, or that the Company may itself hold such shares in
custody until the Restriction Period expires or until restrictions thereon
otherwise lapse, and may require, as a condition of any award of RS that the
Participant shall have delivered a stock power endorsed in blank relating to the
RS.
(d) Lapse of Restrictions. All restrictions imposed under the RS shall
lapse upon the expiration of the Restriction Period if the conditions as to
employment set forth above have been met. The Participant shall then be entitled
to have the legend removed from the certificates.
(e) Dividends. The Committee shall, in its discretion, at the time of
the award of RS, provide that any dividends declared on the Common Stock during
the Restriction Period shall either be (i) paid to the Participant, or (ii)
accumulated for the benefit of the Participant and paid to the Participant only
after the expiration of the Restriction Period.
8. SHARES OF STOCK SUBJECT TO THE PLAN.
(a) Aggregate Shares. The shares that may be delivered or purchased
under the Plan shall not exceed an aggregate of 350,000 shares of Common Stock.
Shares to be delivered or purchased under the Plan may be either shares of
authorized but unissued Common Stock or treasury shares.
(b) Annual Maximum. No more than 75,000 shares of Common Stock shall,
in any fiscal year, be first available for award in any such year, so that
awards for shares that may be delivered or purchased under the Plan shall not
during any fiscal year exceed an aggregate of 75,000 shares of Common Stock in
addition to the shares theretofore available. It is the intent of this provision
that in the event awards for fewer than 75,000 shares are made in any year, the
remainder shall thereafter be available for award, together any shares any
shares that become available pursuant to section 8 (c) hereafter.
(c) Reacquired Shares. In the event of a lapse, expiration, termination
or cancellation of any award granted under the Plan without the issuance of
shares or payment of cash, or if shares are issued as RS hereunder and are
reacquired by the Company pursuant to rights reserved upon the issuance thereof,
the shares subject to or reserved for such award may again be used for new
awards hereunder; provided that in no event may the number of shares issued
hereunder exceed the total number of shares reserved for issuance.
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9. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding shares of Common Stock by
reason of any split, stock dividend, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, such
equitable adjustments shall be made in the Plan and the awards thereunder as the
Committee determines are necessary and appropriate, including, if necessary, an
adjustment in the maximum number or kind of shares subject to the Plan or which
may be or have been awarded to any Participant. Such adjustment shall be
conclusive and binding for all purposes of the Plan.
10. MISCELLANEOUS PROVISIONS.
(a) Rights as Shareholder. A Participant under the Plan shall have no
rights as a holder of Common Stock with respect to awards of Stock Options or
SARs hereunder, unless and until certificates for shares of Common Stock are
issued to the Participant.
(b) Assignment or Transfer. No awards under the Plan or any rights or
interests therein shall be assignable or transferable by a Participant except by
will or the laws of descent and distribution. During the lifetime of a
Participant, awards hereunder are exercisable only by, and payable only to, the
Participant or if the Participant is disabled, by the participant's duly
appointed guardian or legal representative.
(c) Requirements for Transfer. No shares of Common Stock shall be
issued or transferred under the Plan until all legal requirements applicable to
the issuance or transfer of such shares have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any issuance of shares of Common Stock made to any Participant upon such
Participant's written undertaking to comply with such restrictions on his
subsequent disposition of such shares as the Committee or the Company shall deem
necessary or advisable as a result of any applicable law, regulation or official
interpretation thereof, and certificates representing such shares may be
legended to reflect any such restrictions.
(d) Withholding Taxes. The Company shall have the right to deduct from
all awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such awards and, with respect to
awards paid in stock or upon exercise of stock options, to require the payment
(through withholding from the participant's salary or otherwise) of any such
taxes. Alternatively, the Company may issue or transfer the number of shares of
Common Stock under an award net of the number of shares sufficient to satisfy
the withholding tax requirements. For withholding tax purposes, the shares of
Common Stock shall be valued on the date the withholding obligation is incurred.
The obligation of the Company to make delivery of awards in cash or Common Stock
shall be subject to currency or other restrictions imposed by any government.
(e) No Rights to Awards. No employee or other person shall have any
claim or right to be granted an award under the Plan.
(f) Compliance with Section 16(b). Transactions under this Plan and
each award to a person subject to Section 16 of the 1934 Act are intended to
comply with Rule 16b-3 (or its successors) under the 1934 Act, and the Committee
shall impose such minimum holding periods, requirements on the timing of
elections and other restrictions on any award as it may deem needed for such
compliance. To the extent any provision of this Plan, agreements entered into
pursuant thereto or any action by the Committee fails to comply with Rule 16b-3
(or its
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<PAGE> 29
successors) under the 1934 Act, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
(g) Costs and Expenses. The cost and expenses of administering the Plan
shall be borne by the Company and not charged to any award nor to any
Participant receiving an award.
(h) The Right of the Company to Terminate Employment. No provision in
the Plan or any award shall confer upon any employee any right to continue in
the employment of the Company or any subsidiary or division of the Company or to
continue performing services for or to interfere in any way with the right of
the Company or any subsidiary or division of the Company to terminate his
employment or of the right of shareholders of the Company to remove such
employee or person as a director at any time for any reason.
(i) Approval of Shareholders, etc. The Company shall submit the Plan to
its shareholders for approval within 12 months of the adoption of the Plan by
the Board of Directors; provided further that unless shareholder approval is
obtained within said twelve-month period, both the Plan and all outstanding
awards shall be rendered immediately void and of no effect.
11. AMENDMENTS AND TERMINATION.
The Committee may at any time terminate or from time to time amend the
Plan in whole or in part, but no such action shall adversely affect any rights
or obligations with respect to any awards theretofore made under the Plan.
Unless the holders of at least a majority of the outstanding shares of
Common Stock of the Company shall have first approved thereof, no amendment of
the Plan shall be effective that would increase the maximum number of shares
which may be delivered under the Plan or to any one individual or extend the
maximum period during which awards may be granted under the Plan or make such
other changes in the Plan which would require shareholder approval pursuant to
Rule 16b-3 under the 1934 Act.
With the consent of the Participant affected, the Committee may amend
outstanding agreements evidencing awards under the Plan in a manner not
inconsistent with the terms of the Plan.
12. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall become effective on the date it is approved by the
Board of Directors of the Company. No awards shall be made under the Plan after
April 30, 2007. The Plan will continue in effect for existing awards so long as
any such award is outstanding.
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APPENDIX B
WALL STREET DELI, INC.
Proxy for Annual Meeting of Shareholders, November 6, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan V. Kaufman and Louis C. Henderson,
Jr., 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 share holders of
the Company to be held on November 6, 1997, 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, Louis C. Henderson, Jr. Jeffrey V.
Kaufman, William S. Atherton, Joe Lee Griffin, 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. Approval of the 1997 Incentive Award Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of authorization for the Audit Committee to select the
Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. 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, 2 and 3.
<PAGE> 31
Dated , 19 Phone No.
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Signature of Stockholder
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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.
