SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K/A
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AMENDMENT TO
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 27, 1997
COMMISSION FILE NUMBER 0-19253
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AU BON PAIN CO., INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2723701
-------- ----------
(State or other jurisdiction (I.R.S. employer
of incorporation or identification No.)
organization)
19 FID KENNEDY AVENUE,BOSTON, MASSACHUSETTS 02210
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(617) 423-2100
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(Registrant's telephone number, including area code)
AMENDMENT NO. 1
---------------
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report for the fiscal year
ended December 27, 1997 on Form 10-K as set forth in the pages attached hereto:
1. Part III: Item 10 - Directors and Executive Officers of the Registrant.
2. Part III: Item 11 - Executive Compensation.
3. Part III: Item 12 - Security Ownership of Certain Beneficial Owners
and Management.
4. Part III: Item 13 - Certain Relationships and Related Transactions.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Background Information Regarding Directors and Executive Officers
The following table and biographical descriptions sets forth information
regarding the principal occupation, other affiliations, committee memberships
and age, for each Director in office and the executive officers of the Company
who are not Directors, based on information furnished to the Company by each
director and officer. The following information is as of April 17, 1998 unless
otherwise noted.
<TABLE>
<CAPTION>
Term as a
Name Age Position with Company Director Ends
---- --- --------------------- -------------
<S> <C> <C> <C>
George E. Kane (3)......... 93 Director 1998
Henry J. Nasella (1)(2).... 51 Director 1998
Francis W. Hatch (1)(2)(3). 72 Director 1999
Louis I. Kane.............. 67 Co-Chairman, Director 2000
James R. McManus (1)(2).... 64 Director 2000
Ronald M. Shaich........... 44 Co-Chairman, Director, Chief 1999
Executive Officer
</TABLE>
- ------------
(1) Member of the Compensation and Stock Option Committee.
(2) Member of the Committee on Nominations.
(3) Member of the Audit Committee.
GEORGE E. KANE, Director since November 1988. Mr. Kane was a Director of
the Company from March 1981 to December 1985 and a Director Emeritus from
December 1985 to November 1988. Mr. Kane retired in 1970 as President of Garden
City Trust Company (now University Trust Company). Mr. Kane is an Honorary
Director of USTrust. Mr. Kane is the father of Louis I. Kane.
HENRY J. NASELLA, Director since June 1995. Mr. Nasella has been the
President, Chief Executive Officer and Chairman of Star Markets Company, Inc.
from September 1994. From January 1994 to September 1994, he was a principal of
Phillips-Smith Specialty Venture Capital. From 1988 to July 1993, Mr. Nasella
served as the President and Chief Operating Officer of Staples, Inc. Mr. Nasella
served as President and Chief Executive Officer of Staples USA (Domestic) from
1992 to July 1993. Mr. Nasella currently is a member of the Board of Visitors of
Northeastern University School of Business and a member of the Board of Trustees
of Northeastern University Corporation.
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<PAGE>
FRANCIS W. HATCH, Director since February 1983. Mr. Hatch is a trustee
of certain private trusts, and also serves as a director of various
corporations.
LOUIS I. KANE, Director since 1981, co-founder of the Company and
Co-Chairman of the Board since January 1988. From January 1988 to May 1994, Mr.
Kane served as Co-Chief Executive Officer of the Company. From March 1981 to
January 1988, Mr. Kane served as Chairman and Chief Executive Officer of the
Company. Beginning in August 1978, Mr. Kane was Chief Executive Officer of Au
Bon Pain Corporation, an operator of French bakeries and a predecessor of the
Company.
JAMES R. MCMANUS, Director since October 1987. Since 1971, Mr. McManus
has been Chairman, Chief Executive Officer and founder of Marketing Corporation
of America, Westport, Connecticut, a marketing consulting and marketing services
firm which advises companies in the consumer products and services industry. Mr.
McManus is also a director of First Brands Corporation. On February 1, 1994, Mr.
McManus resigned as President and Chief Executive Officer of Business Express,
Inc., a regional airline operating in the northeastern United States. On January
22, 1996, a petition for Chapter XI Bankruptcy Protection was filed against
Business Express, Inc. in federal Bankruptcy Court in Manchester, New Hampshire
by Saab Aircraft of America and two of its operating subsidiaries.
RONALD M. SHAICH, Director since 1981, co-founder of the Company,
Co-Chairman of the Board since January 1988 and Chief Executive Officer since
May 1994. From January 1988 to May 25, 1994, Mr. Shaich served as Co-Chief
Executive Officer of the Company.
Executive Officers Who Are Not Directors
MAXWELL T. ABBOTT, 51, Senior Vice President Technical Services since
June 1995. Prior to that time and for the five years preceding December 27,
1997, Mr. Abbott was Senior Vice President - Research and Development of Long
John Silver's, Inc.
MARK A. BORLAND, 45, Executive Vice President since January 1993 and
President, Manufacturing Services Division since January 1995. Prior to January
1995 and from May 1992, Mr. Borland served as Executive Vice President of Au Bon
Pain Retail Operations and Manufacturing Operations. Prior to May 1992, Mr.
Borland served as Vice President Manufacturing Operations of the Company.
ANTHONY J. CARROLL, 46, Senior Vice President and Chief Financial
Officer since November 1988. Mr. Carroll has also served as Treasurer of the
Company since 1992.
MARIEL CLARK, 41, Senior Vice President Corporate Human Resources since
July 1994. Prior to that and since January 1993, Ms. Clark served as Vice
President Human Resources. From November 1990 to June 1992, Ms. Clark served as
a principal of Bridges.
THOMAS R. HOWLEY, 47, Vice President, General Counsel and Assistant
Secretary since January 1993. Prior to that time and for the five years
preceding December 28, 1996, Mr. Howley was an attorney with the law firm of
Rackemann, Sawyer & Brewster.
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<PAGE>
RICHARD C. POSTLE, 49, Executive Vice President and President, Saint
Louis Bread Company, Inc. since August 1995. From August 1994 through August
1995, Mr. Postle was President and Chief Operating Officer of Checker Drive-In
Restaurants, Inc. From January 1992 through August 1994, Mr. Postle was Senior
Vice President, Operations of KFC-USA. From 1988 through December 1991, Mr.
Postle was Chief Operating Executive of Brice Foods Inc.
ROBERT TAFT, 45, Executive Vice President since February 1997 and
President, Au Bon Pain Retail Stores Business Unit since October 1996. From June
1996 to October 1996, Mr. Taft was Executive Vice President of Golden Corral and
from November 1993 to May 1996 he was President and Chief Executive Officer of
Papa Gino's. Mr. Taft was previously President of Skippers, Inc.
SAMUEL H. YONG, 48, Executive Vice President and President,
International and Trade Channels Business Unit since January 1994. From April
1989 to December 1993, Mr. Yong served as Managing Director for Burger King Asia
Pacific Private, Ltd.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than 10% of the
Company's outstanding shares of Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC") and
Nasdaq. Officers, Directors and greater than 10% stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
In accordance with the provisions of Item 405 of Regulation S-K, to the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required during the fiscal year ended December 27, 1997, all Section 16(a)
filing requirements applicable to its executive officers, Directors and greater
than 10% beneficial owners were satisfied, with the exception of a Form 4 that
was not timely filed on behalf of James R. McManus.
Item 11. Executive Compensation.
COMPENSATION TABLES
The following tables set forth information concerning the compensation
paid or accrued by the Company during the fiscal years ended December 30, 1995,
December 28, 1996 and December 27, 1997, to or for the Company's Chief Executive
Officer and its four other most highly compensated executive officers whose
salary and bonus combined exceeded $100,000 for fiscal year 1997 (hereinafter
referred to as the "named executive officers").
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------ ------------- All Other
Name and Salary Bonus Other Annual Options/SARs Compensation
Principal Position Year ($) ($) Comp. ($) (#) ($)
------------------ ---- ------ ----- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Schaich 1997 250,000 - 1,428 400,000(a)
Co-Chairman and Chief 1996 249,519 - 1,428 -
Executive Officer 1995 241,346 - 1,428 100,000(b)
Louis I. Kane 1997 250,000 - 17,640 400,000(a)
Co-Chairman 1996 249,519 - 17,640 -
1995 241,346 - 9,828 100,000(b)
Richard C. Postle 1997 295,192 75,000 8,846 10,000
President, Saint Louis 1996 250,000 75,000 7,436 35,000(c)
Bread Business Unit 1995 77,885 - 1,538 46,822 35,000(f)
Robert C. Taft (e) 1997 250,000 88,850 5,924 10,000
President, Au Bon 1996 42,308 21,150 1,826 50,000(d)
Pain Retail Stores
Business Unit
Samuel H. Yong 1997 175,377 51,465 5,975 45,000
President, International 1996 170,000 57,375 6,600 13,763
and Trade Channels 1995 161,634 67,575 6,600 16,259
Business Unit
</TABLE>
(a) Consists of a ten-year option, vesting equally over a five year period
beginning June 12, 1997 and is subject to continued employment.
(b) Consists of an option for 100,000 shares granted in fiscal 1996 in order to
reflect compensation earned for performance in fiscal 1995.
(c) Includes of an option for 5,000 shares granted in fiscal 1997 in order to
reflect compensation earned for performance in fiscal 1996.
(d) Represents a one time hire grant.
(e) Mr. Taft began his employment with the Company in October 1996.
(f) Represents one time relocation payment.
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------
Percent of Potential Realizable
Number of Total Annual Rates of Stock
Securities Options / Valued at Assumed Price
Underlying SARs Appreciation
Options / Granted to Prices for Option Term
SARs Employees Exercise or ($)*
Granted in Fiscal Base Price Expiration -----------------------
Name (#) Year ($ / Sh) Date 5% 10%
---- --- ---- -------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Shaich 400,000 32.6% $7.50 6/12/07 $1,886,684 $4,781,227
Louis I. Kane 400,000 32.6% $7.50 6/12/07 $1,886,684 $4,781,227
Richard C. Postle 10,000 0.8% $8.63 12/2/07 $54,274 $137,540
Robert C. Taft 10,000 0.8% $8.63 12/2/07 $54,274 $137,540
Samuel H. Yong 45,000 3.7% $7.88 8/21/07 $223,006 $565,141
</TABLE>
* The dollar amounts in this table are the result of calculations at stock
appreciation rates specified by the Securities and Exchange Commission and are
not intended to forecast actual future appreciation rates of the Company's stock
price.
FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised
Options / SARs at FY-End (#)
----------------------------
Name Exercisable / Unexercisable
- ---- ---------------------------
Ronald M. Shaich................................. 277,330/400,000
Louis I. Kane.................................... 277,330/400,000
Richard C. Postle................................ 11,706/80,116
Robert C. Taft................................... -- / 60,000
Samuel H. Yong................................... 58,115/39,003
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<PAGE>
The Board of Directors and Its Committees
The Company's Board of Directors held five meetings, including one
action by written consent, during fiscal year 1997. The Board of Directors has
established an Audit Committee, a Compensation and Stock Option Committee and a
Committee on Nominations.
The Audit Committee, which held two meetings in fiscal year 1997, meets
with the Company's auditors and principal financial personnel to review the
results of the annual audit. The Audit Committee also reviews the scope of, and
establishes fees for, audit and non-audit services performed by the independent
accountants, reviews the independence of the independent accountants and the
adequacy and effectiveness of the Company's internal accounting controls. The
Audit Committee consists of two members, currently Messrs. George E. Kane and
Francis W. Hatch, and is reconstituted annually.
The Compensation and Stock Option Committee ("Compensation Committee"),
which held three meetings in fiscal year 1997, establishes the compensation,
including stock options and other incentive arrangements, of the Company's
Co-Chairmen and Chief Executive Officer. It also administers the Company's 1992
Equity Incentive Plan and 1992 Employee Stock Purchase Plan. The Compensation
Committee consists of three members, currently Messrs. Francis W. Hatch, James
R. McManus and Henry J. Nasella, and is reconstituted annually.
The Committee on Nominations was established in November 1995 and held
no meetings in 1997. The Committee on Nominations consists of three members,
currently Messrs. Francis W. Hatch, James R. McManus and Henry J. Nasella, and
is reconstituted annually. The Committee on Nominations selects nominees for
election as Directors and will consider written recommendations from any
stockholder of record with respect to nominees for Directors of the Company.
All Directors attended at least 75% of the meetings of the Board and of
the committees of which they are members in fiscal 1997.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee has interlocking or
other relationships with other boards or with the Company that would call into
question his independence as a Committee member.
Compensation of Directors
Directors who are not employees of the Company receive a quarterly fee
ranging from $3,000 to $3,500 for serving on the Board, plus reimbursement of
out-of-pocket expenses for attendance at each Board or committee meeting.
Under a formula-based stock option plan for independent directors (the
"Directors' Plan"), as amended by the stockholders at the 1995 Annual Meeting of
Stockholders, each current Director who is not an employee or principal
stockholder of the Company ("Independent Director") first elected after the
effective date of the Directors' Plan will receive, upon his or her election to
the board, a one-time grant of an option to purchase 5,000 shares of Class A
Common stock. All Independent Directors who serve as such at the end of each of
the Company's fiscal years will receive an option to purchase 5,000 shares of
Class A Common Stock. All such options will have an exercise price per share
equal to the fair
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<PAGE>
market value of a share of Class A Common Stock as of the close of the market
the trading day immediately preceding the grant date, will be fully vested when
granted, and will be exercisable for a period of 10 years.
Report of the Compensation Committee
This report is made by the Compensation and Stock Option Committee (the
"Compensation Committee") of the Board of Directors, the committee which is
responsible for establishing the compensation, including base salary and
incentive compensation, for the Company's Co-Chairman of the Board, Louis I.
Kane and its Co-Chairman and Chief Executive Officer, Ronald M. Shaich.
Philosophy
The Compensation Committee seeks to set the compensation of the
Company's Chief Executive Officer and Co-Chairmen at levels which are
competitive with companies of similar size in the Company's industry. Messrs.
Kane and Shaich share the overall responsibilities of Chairman of the Board of
Directors. Mr. Shaich also has the overall responsibilities of Chief Executive
and Chief Operating Officer. In addition to his responsibilities as Co-Chairman,
Mr. Kane is actively involved in a number of areas of the Company, including
real estate development, finance and international franchise development. The
Compensation Committee examined compensation structures for the chief executive
and chief operating officers of companies in the restaurant industry using
generally available source material from business periodicals and other sources,
and sought to structure the Chief Executive Officer's and Co-Chairmen's
compensation at a competitive level appropriate to the comparable companies'
group. The companies examined for purposes of evaluating and setting
compensation of the Chief Executive Officer and Co-Chairmen are not necessarily
included in the "Standard & Poor's 400 - MidCap Restaurant Index" used in the
Stock Performance Graph set forth under "Stock Performance" below.
Compensation Structure
As can be seen from the Summary Compensation Table included under
"Compensation Tables" below, the compensation of the Chief Executive Officer and
Co-Chairmen consists of two principal parts, salary and bonus, each of which is
reviewed annually by the Committee. The compensation of the Chief Executive
Officer and Co-Chairmen is structured to be competitive within the Company's
industry and is based upon the general performance of the Company.
Components of Compensation
Salary. The salary shown in the Summary Compensation Table represents
the fixed portion of compensation for the Chief Executive Officer and
Co-Chairmen for the year. Changes in salary depend upon overall Company
performance as well as levels of base salary paid by companies of similar size
in the Company's industry.
Bonus. The cash bonus is the principal incentive-based compensation paid
annually to the Chief Executive Officer and Co-Chairmen. The Chief Executive
Officer and Co-Chairmen will receive a bonus in a predetermined amount if the
Company achieves its net income objective for the fiscal year. A higher bonus is
paid if the Company exceeds the net income objective by a predetermined
percentage. In determining the bonus amount, the Compensation Committee seeks to
create an overall compensation package for the Chief Executive Officer and
Co-Chairmen which is at the mid-point for comparable companies in
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<PAGE>
the restaurant industry. For 1997, the Company did not achieve the net income
objective and, therefore, no cash bonuses were paid to the Chief Executive
Officer and Co-Chairmen.
The Chief Executive Officer and Co-Chairmen may elect to take their
respective bonuses in the form of 10-year, fully vested stock options for that
number of shares of the Company's Class A Common Stock that could be purchased
with an amount equal to two times the cash value of his bonus. The exercise
price of the option equals the fair market value of the Company's Class A Common
Stock on the date of grant.
Stock Options. Neither Mr. Kane nor Mr. Shaich participates in either
the Performance-Based Option Program under the Company's 1992 Equity Incentive
Plan or the 1992 Employee Stock Purchase Plan. In order to provide what the
Compensation Committee believes to be appropriate and continuing long-term
incentives to its Chief Executive Officer and Co-Chairmen, and in order to align
more fully the interests of the stockholders and the Chief Executive Officer and
Co-Chairmen, the Compensation Committee on June 12, 1997 granted, to each of
Messrs. Kane and Shaich a 10-year option, vesting equally over a five-year
period (subject to continued employment), to purchase 400,000 shares of the
Company's Class A Common Stock at an exercise price equal to the fair market
value of a share of the Class A Common Stock calculated immediately preceding
the date of grant. These grants were made in order to retain the services of
Messrs. Kane and Shaich over the next five years, at a minimum. As these options
have exercise prices equal to the market value of the Company's Class A Common
Stock on the grant date, they provide incentive for the creation of stockholder
value over the long term since their full benefit cannot be realized unless
there occurs over time an appreciation in the price of the Company's Class A
Common Stock. The Compensation Committee considers the number of shares to be an
appropriate incentive for the Chief Executive officer and Co-Chairmen to
continue to focus on building stockholder value. The Compensation Committee has
not determined whether any ongoing program of long-term incentive compensation
should or will be adopted with respect to its Chief Executive Officer and
Co-Chairmen.
Deductibility of Executive Compensation
The Compensation Committee has reviewed the potential consequences for
the Company of Section 162(m) of the Code which imposes a limit on tax
deductions for annual compensation in excess of one million dollars paid to any
of the five most highly compensated executive officers. Based on such review,
the Compensation Committee believes that the limitation will have no effect on
the Company in 1998.
Respectfully submitted,
James R. McManus
Chairman
Francis W. Hatch
Henry J. Nasella
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<PAGE>
Report of the Chief Executive Officer
This report is made by the Company's Chief Executive Officer, who is
responsible for establishing the compensation, including salary, bonus and
incentive compensation, for all of the Company's executive officers other than
the Chief Executive Officer and Co-Chairmen of the Board.
Philosophy
In compensating its executive officers, the Chief Executive Officer
seeks to structure a salary, bonus and incentive compensation package that will
help attract and retain talented individuals and align the interests of the
executive officers with the interests of the Company's stockholders.
Components of Compensation
There are two components to the compensation of the Company's executive
officers: annual cash compensation (consisting of salary and bonus incentives)
and long-term incentives.
Cash Compensation. The Company participates annually in an
industry-specific survey of executive officers, which serves as the basis for
determining total target cash compensation packages, which are crafted
individually for each executive officer. The individual's compensation consists
of a base salary and contingent compensation based on actual performance against
agreed-to expectations of performance. The individual compensation packages are
structured so that, if the executive officer attains the expected level of
achievement of each performance goal, the cash compensation of the executive
officer will be approximately at the 75th percentile of the compensation of
individuals occupying similar positions in the industry, using generally
available surveys of executive compensation within the retail industry for
companies with comparable revenues.
At the beginning of each fiscal year, the Chief Executive Officer and
each executive officer establish a series of individual performance goals which
are specific to the executive's responsibilities. These goals seek to measure
performance of each executive officer's job responsibilities: for executive
officers whose responsibilities are operational in nature, attainment of
operating group goals and objectives is stressed, and for corporate staff
officers, overall Company performance measured by earnings-per share growth is
utilized. Currently, the maximum potential cash bonus for the Company's
executive officers, as a percentage of base salary, ranges from 20% to 60%.
Thus, the Company's cash compensation practices seek to motivate
executives by requiring excellent performance measured against both internal
goals and competitive performance.
Long-Term Incentive Compensation. The second element of executive
compensation, long-term incentive compensation, currently takes the form of
stock options granted under the Company's 1992 Equity Incentive Plan. Currently,
stock options are granted under the Performance-Based Option program, which
consists of a series of guidelines which provide for the periodic granting of
specific amounts of stock options, denominated in dollars rather than in numbers
of shares, depending upon the executive's position within the Company. Existing
holdings of stock or stock options are not a factor in determining the dollar
value of an individual executive officer's award.
As is the case with short-term incentive compensation, at the beginning
of each fiscal year, the Chief Executive Officer and each executive officer
establish a series of individual
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<PAGE>
performance goals specifically related to the executive's responsibilities and
designed to measure execution of these responsibilities. In addition, a
Company-wide performance goal measured in earnings-per-share growth is
established. Further consideration is given to each executive officer's
accountability and/or level of responsibility for managing one or more aspects
of the Company's overall business. These factors are weighted for each executive
officer, with greater emphasis and value being placed on those factors which
could have a greater impact on the Company's long-term profitability. An
individual executive officer's performance against each of these criteria is
then graded at one of five levels: significantly less than expected, less than
expected, as expected, exceeds expectation, and significantly exceeds
expectation. Awards of options are then made based upon a dollar value, which
increases as the executive officer achieves higher grades for overall
performance.
As often as seems appropriate, but at least annually, the Chief
Executive Officer reviews the Company's executive compensation program to judge
its consistency with the Company's compensation philosophy, whether it supports
the Company's strategic and financial objectives, and whether it is competitive
within the Company's industry.
Deductibility of Executive Compensation
The Chief Executive Officer has reviewed the potential consequences for
the Company of Section 162(m) of the Code which imposes a limit on tax
deductions for annual compensation in excess of one million dollars paid to any
of the five most highly compensated executive officers. Based on such review,
the Chief Executive Officer believes that the limitation will have no effect on
the Company in 1998.
Respectfully submitted,
Ronald M. Shaich
Chief Executive Officer
Severance Arrangements
Pursuant to certain employment agreements, the Company has agreed to
provide each of Messrs. Postle and Taft with severance benefits equal to one
year's base salary plus car allowance and insurance benefits if employment is
terminated other than for cause.
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<PAGE>
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on December 31, 1992)
The following graph and chart compare the cumulative annual stockholder
return on the Company's Common Stock over the period commencing December 31,
1992 through December 31, 1997 to that of the total return index for the NASDAQ
Stock Market (U.S. Companies) and the Standard & Poor's 400 - MidCap Restaurant
Index, assuming the investment of $100 on December 31, 1992. In calculating
total annual stockholder return, reinvestment of dividends is assumed. The stock
performance graph and chart below are not necessarily indicative of future price
performance.
[INSERT GRAPH HERE]
S&P
Measurement Period Au Bon 400-MidCap NASDAQ
(Fiscal Year Covered) Pain Restaurants Composite
12/31/92 $100.00 $100.00 $100.00
12/31/93 $ 85.85 $125.23 $114.79
12/31/94 $ 60.38 $ 86.54 $111.99
12/29/95 $ 31.13 $ 85.49 $164.60
12/31/96 $ 24.53 $ 82.00 $202.46
12/31/97 $ 28.54 $ 89.89 $247.29
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<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
OWNERSHIP OF AU BON PAIN COMMON STOCK
The following table sets forth certain information as of March 31, 1998,
with respect to the Company's Class A and Class B Common Stock owned by (1) each
director of the Company, (2) the executive officers named in the Summary
Compensation Table, (3) all directors and executive officers of the Company as a
group, and (4) each person who is known by the Company to beneficially own more
than five percent of the Company's capital stock. Unless otherwise indicated in
the footnotes to the table, all stock is owned of record and beneficially by the
persons listed in the table.+
<TABLE>
<CAPTION>
Class A Common Class B Common
Name and, with respect to owner --------------------- --------------------- Combined Voting
of more than 5%, address Number Percent (1) Number Percent (2) Percentage (3)
- ------------------------------ ------ ----------- ------ ----------- --------------
<S> <C> <C> <C> <C> <C>
Ronald M. Shaich+...................... 304,865(4) 2.89% 1,097,710 68.36% 23.4%
Co-Chairman, Director and
Chief Executive Officer
c/o Au Bon Pain Co., Inc.
19 Fid Kennedy Avenue
Boston, MA 02210
Louis I. Kane.......................... 278,580(5) 2.65% 130,436 8.12% 2.7%
Co-Chairman and Director
c/o Au Bon Pain Co., Inc.
19 Fid Kennedy Avenue
Boston, MA 02210
Francis W. Hatch....................... 49,880(6)(7) * 42,013 2.61% 1.2%
Director
George E. Kane......................... 23,942(6)(8) * 20,000 1.24% *
Director
James R. McManus....................... 38,542(6)(9) * -- -- *
Director
Henry J. Nasella....................... 20,080(10) * -- -- *
Director
Samuel H. Yong......................... 64,408(11) * -- -- *
President, International & Trade Channels
Richard C. Postle...................... 12,670(12) * -- -- *
President, Saint Louis Bread
Robert Taft............................ 2,247(13) * -- -- *
Executive Vice President and
President, Au Bon Pain Retail Stores
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Class A Common Class B Common
Name and, with respect to owner --------------------- --------------------- Combined Voting
of more than 5%, address Number Percent (1) Number Percent (2) Percentage (3)
- ------------------------------ ------ ----------- ------ ----------- --------------
<S> <C> <C> <C> <C> <C>
All Directors and officers as
a group (13 persons)+................ 895,828(14) 8.74% 1,310,070 81.58% 30.4%
Morgan Stanley Group Inc. (15)(16)..... 1,331,215 12.98% -- -- 8.8%
1251 Avenue of the Americas
New York, NY 10020
PG Investors, Inc. (15)(17)............ 1,326,468 12.93% -- -- 8.8%
1251 Avenue of the Americas
New York, NY 10020
Princes Gate Investors, L.P. (15)(18).. 993,896 9.69% -- -- 6.6%
1251 Avenue of the Americas
New York, NY 10020
Brown Capital Management............... 1,210,550 11.81% -- -- 8.0%
809 Cathedral Street
Baltimore, MD 21201
Acorn Investment Trust,
Series Designated Acorn Fund (19).... 634,000 6.18% -- -- 4.2%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Wanger Asset Management, L.P. (20)..... 634,000 6.18% -- -- 4.2%
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Fund Asset Management, L.P. (21)....... 1,166,800 11.37% -- -- 7.7%
c/o Merrill Lynch & Co., Inc.
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
Dimensional Fund Advisors Inc.......... 509,550 4.96% -- -- 3.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 (22)
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+ Does not include options to purchase 23,542 shares of Class A Common Stock
exercisable within 60 days of March 31, 1998 and 140,000 shares of Class
B Common Stock held by Mr. Joseph Shaich, a director of the Company on
March 31, 1998. Mr. Shaich died on April 16, 1998. Ronald Shaich and
Joseph Shaich entered into an agreement pursuant to which Ronald Shaich
agreed to purchase all such shares of stock within 60 days of Joseph
Shaich's death. If Ronald Shaich acquires such shares, his combined voting
percentage will be 26.3% and the combined voting percentage of officers
and directors as a group will be 33.1%.
* Less than one percent.
(1) Percentage ownership of Class A Common Stock is based on 10,254,301 shares
issued and outstanding plus shares subject to options exercisable within
sixty days of March 31, 1998 held by the stockholder or group.
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(2) Percentage ownership of Class B Common Stock is based on 1,605,741 shares
issued and outstanding plus shares subject to options exercisable within
sixty days of March 31, 1998 held by the stockholder or group.
(3) This column represents voting power rather than percentage of equity
interest as each share of Class A Common Stock is entitled to one vote
while each share of Class B Common Stock is entitled to three votes.
(4) Includes options exercisable within 60 days for 277,330 shares.
(5) Consists of (a) 1,200 shares owned by Mr. Kane's spouse and as to which Mr.
Kane disclaims beneficial ownership; and (b) options exercisable within 60
days for 277,330 shares.
(6) Includes options for 23,542 shares exercisable within sixty days of March
31, 1998 pursuant to the Directors' Plan for independent directors.
(7) Includes 22,338 shares owned by Mr. Hatch's spouse and as to which Mr.
Hatch disclaims beneficial ownership.
(8) Also includes 400 shares owned by Mr. Kane.
(9) Also includes 15,000 shares owned by Mr. McManus.
(10) Consists of 1,000 shares jointly owned by Mr. Nasella and his spouse and
options for 19,080 shares exercisable within sixty days of March 31, 1998
pursuant to the Directors' Plan for independent directors.
(11) Consists of (a) options for 64,388 shares exercisable within sixty days of
March 31, 1998, and (b) 20 shares in custodial accounts for Mr. Yong's
minor children and as to which Mr. Yong disclaims any beneficial ownership.
(12) Includes 964 shares owned by Mr. Postle and options for 11,706 shares
exercisable within sixty days of March 31, 1998.
(13) Consists of 2,247 shares of which 895 shares are held in custodial accounts
for Mr. Taft's children and as to which Mr. Taft disclaims any beneficial
ownership.
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(14) Includes options for 801,050 shares exercisable within sixty days of March
31, 1998.
(15) Information included is based solely upon a Schedule 13D filed with the
Commission, jointly on behalf of Morgan Stanley Group Inc. ("MS Group"), PG
Investors, Inc. ("PGI") and Princes Gate Investors, L.P. ("Princes Gate
L.P."). PGI Investors, Inc. is a wholly-owned subsidiary of Morgan Stanley
Group Inc., and is the general partner of Princes Gate L.P. On December 22,
1993, the Company issued to several purchasers, including Princes Gate
L.P., $30,000,000 in aggregate principal amount of 4.75% Convertible
Subordinated Notes due 2001 (the "Notes"). The Notes are convertible into
fully paid and non-assessable shares of Class A Common Stock at a
conversion price (subject to adjustment) equal to $25.50 principal amount
for each share of Class A Common Stock, or currently 1,176,468 shares of
Class A Common Stock in the aggregate.
(16) Includes (a) 4,247 shares of Class A Common Stock owned by its wholly-owned
subsidiary, Morgan Stanley & Co. Incorporated ("MS & Co.") in its capacity
as a market-maker in the Company's Class A Common Stock, (b) 500 shares of
Class A Common Stock over which MS & Co. exercises discretionary authority
on behalf of customers, and (c) since PGI exercises investment management,
voting and/or disposition control over all of the Notes and the underlying
shares of Class A Common Stock obtainable upon conversion of the Notes,
1,176,468 shares of Class A Common Stock obtainable upon conversion of the
Notes. In connection with a financing transaction consummated in July 1996,
also includes a Class A Common Stock purchase warrant issued for 150,000
shares, exercisable at $5.62 per share through July 24, 2001.
(17) Since PGI exercises investment management, voting and disposition control
over the Notes and the underlying shares of Class A Common Stock obtainable
upon conversion of the Notes, includes 1,176,468 shares of Class A Common
Stock obtainable upon conversion of the Notes. In connection with a
financing transaction consummated in July 1996, also includes a Class A
Common Stock purchase warrant issued for 150,000 shares, exercisable at
$5.62 per share through July 24, 2001.
(18) Includes 881,504 shares of Class A Common Stock obtainable upon conversion
of the Notes currently held by Princes Gate L.P. In connection with a
financing transaction consummated in July 1996, also includes a Class A
Common Stock purchase warrant issued for 112,392 shares, exercisable at
$5.62 per share through July 24, 2001.
(19) Power over voting and disposition of these securities is shared with Wanger
Asset Management, L.P., which is the investment adviser of Acorn Investment
Trust, Series Designated Acorn Fund.
(20) Includes 634,000 shares beneficially owned by Acorn Investment Trust,
Series Designated Acorn Fund (the "Trust"), with respect to which the Trust
has delegated to Wanger Asset Management, L.P. ("WAM") shared voting power
and shared dispositive power. WAM serves as investment adviser to the
Trust.
(21) Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group, Inc. ("ML
Group"), and Princeton Services, Inc. ("PSI"), are parent holding companies
pursuant to the Securities Exchange Act of 1934. PSI is the general partner
of Fund Asset Management, L.P. (d/b/a) Fund Asset Management ("FAM"), and
Merrill Lynch Asset Management L.P. (d/b/a) Merrill Lynch Asset Management
("MLAM"). The following entities, (a) ML&Co., (b) ML Group, a wholly-owned
direct subsidiary of ML&Co., and (c) PSI, a wholly-owned direct subsidiary
of ML Group, may all be deemed to be the beneficial owner of certain of
these shares by virtue of PSI being the general partner of FAM and MLAM.
FAM is an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940 and may be deemed to be the beneficial owner of
certain of these shares by virtue of its acting as investment adviser to
one or more investment companies and to one or more private accounts. One
registered investment
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company advised by FAM, Merrill Lynch Special Value Fund, Inc., is the
beneficial owner of these shares, and is a reporting person. MLAM is an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940 and may be deemed to be the beneficial owner of these shares by
virtue of its acting as investment adviser to one or more investment
companies registered under Section 8 of the Investment Company Act and to
one or more private accounts. ML&Co., ML Group and PSI disclaim beneficial
ownership of these shares
(22) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 509,500 shares, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
Item 13. Certain Relationships and Related Transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no Certain Relationships or Related Transactions during the
fiscal year ended December 27, 1997 to report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
AU BON PAIN CO., INC.
By: /s/ Louis I. Kane
---------------------------------------
Louis I. Kane, Co-Chairman of the Board
Date: April 27, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this amendment has been duly signed by the following persons on behalf
of the registrant and in the capacities and on the date indicated:
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<S> <C>
/s/ Louis I. Kane /s/ Ronald M. Schaich
- --------------------------------------- -------------------------------------------
Louis I. Kane, Co-Chairman of the Board Ronald M. Schaich, Co-Chairman of the Board
and Director and Chief Executive Officer
/s/ Anthony J. Carroll /s/ Francis W. Hatch
- --------------------------------------- -------------------------------------------
Anthony J. Carroll, Chief Francis W. Hatch, Director
Financial Officer
/s/ George E. Kane /s/ Henry J. Nasella
- --------------------------------------- -------------------------------------------
George E. Kane, Director Henry J. Nasella, Director
/s/ James R. McManus
- ---------------------------------------
James R. McManus, Director
</TABLE>
All dated: April 27, 1998
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