UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
ELMER'S RESTAURANTS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
<PAGE>
ELMER'S RESTAURANTS, INC.
11802 S.E. STARK STREET
P.O. BOX 16938
PORTLAND, OR 97292-0938
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUGUST 9, 2000
To the Shareholders of Elmer's Restaurants, Inc.:
Notice is hereby given that the annual meeting of the shareholders of
Elmer's Restaurants, Inc., an Oregon corporation (the "Company"), will be held
at Elmer's Restaurant, 9848 N Whitaker Road, Portland, Oregon 97217, on August
9, 2000, at 2:00p.m., Pacific Daylight Time, for the following purposes:
1. Electing a Board of Directors to serve for the ensuing staggered terms
and until their successors are elected;
2. To approve and ratify the appointment of PricewaterhouseCoopers, LLP,
as the Company's independent public accountants for the year ending
March 31, 2000.
3. Transacting any other business that properly comes before the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors has fixed the close
of business on June 1, 2000 as the record date (the "Record Date") for the
determination of shareholders of record that will be entitled to notice of and
to vote at the annual meeting. Accompanying this Notice is a Proxy. WHETHER OR
NOT YOU EXPECT TO BE AT THE ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT PROMPTLY in the postage-prepaid envelope enclosed for that
purpose. If you plan to attend the Annual Meeting and wish to vote your shares
personally, you may revoke your proxy at any time before the Proxy is voted. In
other words, you may attend the meeting in person even though you have sent in
your proxy, since retention of the proxy is not necessary for admission to or
identification at the meeting.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors
/s/ Juanita Nelson
----------------------------------
Juanita Nelson
Secretary
Portland, Oregon
June 23, 2000
PLEASE NOTE THAT ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. TO ENSURE YOUR REPRESENTATION AT THE MEETING, HOWEVER, PLEASE VOTE,
DATE, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
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ELMER'S RESTAURANTS, INC.
11802 SE STARK STREET
PORTLAND, OREGON 97216
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
AUGUST 9, 2000
The Board of Directors of Elmer's Restaurants, Inc., an Oregon
corporation (the "Company") is soliciting a proxy in the form accompanying this
proxy statement for use at the annual meeting of shareholders to be held on
August 9, 2000 at Elmer's Restaurant, 9848 N Whitaker Road, Portland, Oregon
97217 at 2:00p.m., Pacific Daylight Time and at any adjournments thereof. This
Proxy Statement will be first sent to shareholders on or about June 30, 2000.
The Company will bear the cost of preparing and mailing the proxy, proxy
statement, and any other material furnished to the shareholders by the Company
in connection with the annual meeting. Proxies will be solicited by use of the
mails, and officers and employees of the Company may, without additional
compensation, also solicit proxies by telephone or personal contact. Copies of
solicitation materials will be furnished to fiduciaries, custodians, and
brokerage houses for forwarding to beneficial owners of the stock held in their
names.
Any shares of stock of the Company held in the name of fiduciaries,
custodians, or brokerage houses for the benefit of their clients may only be
voted by the fiduciary, custodian, or brokerage house itself -- the beneficial
owner may not vote the shares directly and must instruct the person or entity in
whose name the shares are held how to vote the shares held for the beneficial
owner. Therefore, if any shares of stock of the Company are held in "street
name" by a brokerage house, only the brokerage house, at the instructions of its
client, may vote the shares.
ANY PERSON GIVING A PROXY IN THE FORM ACCOMPANYING THIS PROXY STATEMENT HAS THE
POWER TO REVOKE IT AT ANY TIME BEFORE ITS EXERCISE. A PROXY MAY BE REVOKED BY
WRITTEN NOTICE (OF AN INSTRUMENT OF REVOCATION) TO THE SECRETARY OF THE COMPANY
AT ANY TIME PRIOR TO THE ANNUAL MEETING OR BY EXECUTING A LATER DATED PROXY OR
BY ATTENDING THE ANNUAL MEETING AND AFFIRMATIVELY ELECTING TO VOTE IN PERSON
WHILE ATTENDING THE MEETING. HOWEVER, A SHAREHOLDER WHO ATTENDS THE MEETING NEED
NOT REVOKE THE PROXY AND VOTE IN PERSON UNLESS THE SHAREHOLDER WISHES TO DO SO.
ALL VALID, UNREVOKED PROXIES WILL BE VOTED AT THE ANNUAL MEETING IN ACCORDANCE
WITH THE INSTRUCTIONS GIVEN. UNLESS CONTRARY INSTRUCTIONS ARE INDICATED ON THE
PROXY, ALL SHARES REPRESENTED BY VALID PROXIES RECEIVED PURSUANT TO THIS
SOLICITATION (AND NOT REVOKED BEFORE THEY ARE VOTED) WILL BE VOTED FOR THE
ELECTION OF THE BOARD'S NOMINEES FOR DIRECTORS AND THE RATIFICATION AND APPROVAL
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS, LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS. AS TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE
ANNUAL MEETING AND BE SUBMITTED TO A VOTE OF THE SHAREHOLDERS, PROXIES RECEIVED
BY THE BOARD WILL BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE HOLDERS
THEREOF.
SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the Company's
2001 Annual Meeting of Shareholders must be received by the President of the
Company for possible inclusion in the
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Company's Proxy Statement, and notice of meeting relating to that meeting by
January 22, 2001. Shareholder proposals must be made in compliance with
applicable legal requirements promulgated by the Securities and Exchange
Commission and be furnished to the President by certified mail, return receipt
requested.
Upon written request to Juanita Nelson, Secretary of the Company,
directed to the Company's offices at P.O. Box 16938, Portland, Oregon
97292-0938, any person whose Proxy is solicited by this Proxy Statement will be
provided, without charge, a copy of the Company's Annual Report on Form 10-K,
including financial statements and schedules. These materials can also be
obtained from the Securities and Exchange Commission's EDGAR website at
http://www.sec.gov/ cgi-bin/srch-edgar?elmers+adj+restaurants.
VOTING
The Company's Common Stock is the only outstanding voting security of
the Company. Shareholders of record on June 1, 2000 (the "Record Date") will be
entitled to notice of and to vote at the annual meeting or any adjournments
thereof. On the Record Date, there were 1,665,548 shares of Common Stock
outstanding, representing the only voting securities of the Company and voting
as a single class. Each share of Common Stock is entitled to one vote. The
Common Stock does not have cumulative voting rights.
VOTES CAST BY PROXY OR IN PERSON AT THE ANNUAL MEETING WILL BE COUNTED BY THE
PERSON APPOINTED BY THE COMPANY TO ACT AS INSPECTOR OF ELECTION FOR THE ANNUAL
MEETING. THE INSPECTOR OF ELECTION WILL TREAT SHARES REPRESENTED BY PROXIES THAT
REFLECT ABSTENTIONS OR INCLUDE "BROKER NON-VOTES" AS SHARES THAT ARE PRESENT AND
ENTITLED TO VOTE FOR PURPOSES OF DETERMINING THE PRESENCE OF A QUORUM.
ABSTENTIONS OR "BROKER NON-VOTES" DO NOT CONSTITUTE A VOTE "FOR" OR "AGAINST"
ANY MATTER AND THUS WILL BE DISREGARDED IN THE CALCULATION OF "VOTES CAST." ANY
UNMARKED PROXIES, INCLUDING THOSE SUBMITTED BY BROKERS OR NOMINEES, WILL BE
VOTED IN FAVOR OF THE NOMINEES OF THE BOARD AND THE PROPOSALS HEREIN, AS
INDICATED IN THE ACCOMPANYING PROXY CARD. THE APPROVAL OF THE BOARD'S NOMINEES
FOR ELECTION AND THE OTHER PROPOSALS STATED HEREIN WILL BE DECIDED BY THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information with respect to the number
of shares of Common Stock beneficially owned by (i) each director of the
Company, (ii) the Named Executive Officers, (iii) all directors and executive
officers of the Company as a group, and (iv) each shareholder known by the
Company to be a beneficial owner of more than 5% of the Company's voting
securities as of June 1, 2000. The Company believes that except as otherwise
noted, each person or entity named has sole investment and voting power with
respect to the shares of Common Stock indicated as beneficially owned by such
person or entity.
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<TABLE><CAPTION>
NAME OF BENEFICIAL OWNER
------------------------ SHARES PERCENTAGE OF
EXECUTIVE OFFICERS AND DIRECTORS BENEFICIALLY OWNED(1)(2) CLASS(2)
-------------------------------- ------------------------ --------
<S> <C> <C>
William W. Service (3) 205,273 11.3%
Bruce Davis (3) 206,273 11.3%
Corydon H. Jensen (3) 75,461 4.1%
Thomas C. Connor 52,583 2.9%
Richard Williams 2,000 *
Paul Welch 2,000 *
Donald Woolley 52,583 2.9%
Jerry Scott (4) 13,478 *
Juanita Nelson (4) 2,000 *
All executive officers and directors 611,651 33.6%
as a group (9 persons)
CERTAIN SHAREHOLDERS
Richard Buckley 108,211 5.9%
Gary Weeks 109,211 6.0%
William W. Service, Bruce N. Davis and 587,694 32.3%
Cordy Jensen, Voting Trustees (5)
Franklin Holdings Limited (6) 202,333 11.1%
-------------
*Representing less than 1%.
</TABLE>
(1) For purposes of calculating beneficial ownership percentages, 1,665,548
shares of Common Stock were deemed outstanding and 154,500 options were
deemed vested and exercisable at strike prices between $4.75 and $6.25
per share.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired within 60 days from the date set forth above through the
exercise of any option, warrant, or right. Shares of Common Stock
subject to options, warrants, or rights which are currently exercisable
or exercisable within 60 days are deemed outstanding for computing the
percentage of the person holding such options, warrants, or rights but
are not deemed outstanding for computing the percentage of any other
person.
(3) The beneficial ownership shown represent shares and options owned
directly. See Note (5) for information as to beneficial ownership of
shares of Common Stock held by a Voting Trust as to which Messrs.
Service, Jensen and Davis are Voting Trustees.
(4) Jerry Scott and Juanita Nelson occupy the positions of Vice President,
Operations and Controller respectively but have been omitted from the
disclosure regarding Named Executive Officers because their individual
annual compensation did not exceed $100,000 for the fiscal year ended
March 31, 2000.
(5) William Service, Bruce Davis and Cordy Jensen are co-trustees of a
Voting Trust which holds these shares and share voting power as to
these shares. William Service disclaims beneficial
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ownership of all but 139,873 shares held in the Voting Trust. Bruce
Davis disclaims beneficial ownership of all but 139,873 shares held in
the Voting Trust. Cordy Jensen disclaims beneficial ownership of all
but 73,461 shares held in the Voting Trust.
(6) Franklin Holdings Limited is owned beneficially 25% by Thomas Connor
and beneficially 25% by Donald Woolley. Mr. Connor and Mr. Woolley's
beneficial ownership listed under Executive Officers and Directors are
inclusive of the shares owned by Franklin Holdings Limited.
As previously reported in prior filings with the Securities and
Exchange Commission, CBW, Inc. ("CBW") acquired 705,000 shares of Common Stock
in the Company (representing 53.8% of the outstanding Common Stock) from Anita
Goldberg and Rudolph Mazurosky on August 25, 1998. The consideration paid by CBW
for the shares was $4,504,950. CBW's financing for its acquisition of the shares
was drawn from two sources: (1) $600,000 from the purchase by Thomas Connor and
Donald Woolley of shares representing 25% of the issued and outstanding common
stock of CBW and (2) $3,904,950 from a loan to CBW, Inc. by Eagle's View
Management Company, Inc. ("EVM"). EVM is affiliated with Donald Woolley and
members of his family. The loan from EVM was for a total of $4,000,000. In
connection with the acquisition of the shares, the Company's Board of Directors
named certain shareholders of CBW, Inc. viz., Thomas Connor, Bruce Davis,
Corydon Jensen, William Service, and Donald Woolley as directors and appointed
William Service as Chief Executive Officer, Bruce Davis as President, and Jerry
Scott as Vice President. The officers appointed occupied analogous positions
with CBW, Inc. at that time.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) ("Section 16(a)") of the Securities Exchange Act of 1934,
as amended, requires the Company's executive officers, directors, and persons
who own more than ten percent of the Company's Common Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). SEC regulations require that persons filing these reports furnish
copies to the Company. Based solely on a review of the copies of the reports
received by the Company and on written representations of certain reporting
persons, the Company believes that all Section 16(a) filing requirements
applicable to its executive officers and directors have been complied with. To
the knowledge of the Company, appropriate reports of such transactions are in
the process of being filed with the Securities and Exchange Commission.
PROPOSAL I
----------
ELECTION OF DIRECTORS
The Board currently consists of seven members. The Board of Directors
of the Company has the ability to amend the Bylaws of the Company without
submitting such amendments to a shareholder vote. The Board of Directors
recently adopted certain Bylaw amendments. The Company's Bylaws, as amended,
provide for the classification of the Board into three classes, as nearly equal
in number as possible, with staggered terms of office and provides that upon the
expiration of the term of office for a class of directors, nominees for such
class shall be elected for a term of three years or until their successors are
duly elected and qualified. After a transitional arrangement, Directors will
serve for three years, with one class being elected each year. In the opinion of
the Board of Directors, the Board classification amendment was desirable to
ensure stability and continuity in the management of the Company's business and
affairs. Although there have been no material problems in the past with respect
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to stability or continuity of the Board of Directors, the Board believes that
the longer time required to elect a majority of a classified Board will help to
prevent the occurrence of such problems in the future. The provisions for
classification of Directors will apply in all years. Changes in the composition
of the whole Board would take up to three years and a change of a majority of
the Directors would require two successive annual meetings.
At this meeting, two nominees for director are to be re-elected as
Class I directors. The Class I nominees are William W. Service and Paul Welch.
As a result of the transitional arrangements required to give effect to the
Board classification, the Class I directors elected at this annual meeting shall
be elected to a three year term of office, and successors thereafter elected in
each class shall be elected to three year terms. If no contrary indication is
made, Proxies in the accompanying form are to be voted for such nominees or, in
the event any such nominee is not a candidate or is unable to serve as a
director at the time of the election (which is not currently expected), for any
nominee who shall be designated by the Board to fill such vacancy. Service and
Welch are currently directors of the Company. The Board of Directors has no
reason to believe that any of the nominees will be unavailable or unable to
serve if elected.
INFORMATION REGARDING DIRECTORS
The information set forth below as to each nominee for director has
been furnished to the Company by the respective nominees for director:
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A ONE-YEAR TERM EXPIRING AT THE
2000 ANNUAL MEETING OF SHAREHOLDERS
NAME AGE PRESENT POSITION WITH THE COMPANY
---- --- ---------------------------------
William W. Service, Jr. 39 Director and Chief Executive Officer
Paul Welch 72 Director
Bill Service, 39, is the Chief Executive Officer of several companies
engaged in the restaurant business: Jaspers Food Management, Inc.
(1993-present), CBW, Inc. (1995-1999) (which acquired the majority shareholding
interest in the Company in 1998 and subsequently merged with the Company in
February 1999), and Oregon Food Management, Inc. (1996-present). He has served
as a director of the Company since 1998.
Paul Welch, 72, owns and operates two Elmer's Restaurant franchises in
Vancouver, Washington, one since 1978 and one since 1994. He has served as a
director of the Company since 1983.
BOARD MEETINGS AND COMMITTEES
The Company's Board held eleven regularly scheduled meetings and no
special telephonic meetings during the year ended March 31, 2000. No nominee for
director who served as a director during the past year attended fewer than 80%
of the aggregate of the total number of meetings of the Board and the total
number of meetings of committees of the Board on which he served. The Company's
Board of Directors has an Audit Committee and established a Compensation
Committee. The Company does not have a Nominating Committee or any other
committee.
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COMPENSATION COMMITTEE
The Compensation Committee consists of Messrs. Williams, Connor and
Welch. The Compensation Committee determines and makes recommendations for
salaries, incentives and other forms of compensation for the Company's senior
executive officers, directors, and employees of the Company and administers the
1999 Stock Option Plan. The Compensation Committee held two meetings during the
year ended March 31, 2000.
AUDIT COMMITTEE
The Audit Committee consists of Messrs. Welch, Williams and Woolley.
The Audit Committee reviews the Company's accounting practices, internal
accounting controls, and financial results, makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and oversees the adequacy of the Company's internal
accounting controls. The Audit Committee held one meeting during the year ended
March 31, 2000.
COMPENSATION OF DIRECTORS
On the 18th day of February 1999, each director who is not an employee
of the Company (each an "Outside Director") was granted an option, subject to
shareholder approval, to purchase 10,000 shares of Common Stock exercisable at
$4.75 per share. In addition, each person who is initially elected to the Board
and who is an Outside Director at the time of such election or anniversary
thereafter will be granted an annual option to purchase 2,000 additional shares
of Common Stock on the anniversary date of the initial election. These options
are subject to five-year straight line vesting schedules and are defined as
non-qualified options with a fifteen-year term. Outside Directors are paid
quarterly fees in the annual cash sum of $5,000.
VOTE REQUIRED; ELECTION OF DIRECTORS
If a quorum is present and voting at the Annual Meeting, the seven
nominees receiving the affirmative vote of a majority will be elected to the
Board. Votes withheld from any nominee, abstentions and broker non-votes will be
counted for purposes of determining the presence or absence of a quorum.
Abstentions and broker nonvotes will have no effect on the results of the vote.
The Proxies will be voted with respect to the election of the nominees in
accordance with the instructions specified in the Proxy form. If no instructions
are given, Proxies will be voted for the election of the nominees. If any
nominee is not available as a candidate for director, the Proxies may be voted
for another candidate or other candidates nominated by the Board of Directors,
in accordance with the authority conferred in the Proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES LISTED ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE ON THE ACCOMPANYING PROXY.
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PROPOSAL II
-----------
RATIFICATION AND APPROVAL OF APPOINTMENT OF
PRICEWATERHOUSECOOPERS, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ended March 31, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL. The
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the annual meeting will be required for adoption of the proposal
by the shareholders.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The executive officers and key employees of the Company and their ages
as of June 1, 2000 are as follows:
NAME AGE POSITION
---- --- --------
William W. Service 39 Chief Executive Officer and
Chief Financial Officer
Bruce Davis 39 President
Jerry Scott 46 Vice President, Operations
Juanita Nelson 64 Secretary and Controller
EXECUTIVE OFFICERS
Bill Service, 39, is the Chief Executive Officer of several companies
engaged in the restaurant business: Jaspers Food Management, Inc.
(1993-present), CBW Inc. (1995-1999) (which acquired the majority shareholding
interest in the Company in 1998 and subsequently merged with the Company in
February 1999), and Oregon Food Management, Inc. (1996-present). He has served
as Chief Executive Officer of the Company since 1998.
Bruce Davis, 39, is the President of several companies engaged in the
restaurant business: Jaspers Food Management, Inc. (1993- present), CBW Inc.
(1995-1999) (which acquired the majority shareholding interest in the Company in
1998 and subsequently merged with the Company in February 1999), and Oregon Food
Management, Inc.(1996-present). He has served as President of the Company since
1998.
KEY EMPLOYEES
Jerry Scott, 46, has served as Vice President in charge of operations
since August 1998. Prior to that, and since November 1995, Mr. Scott served as
Vice President of Operations for Jaspers Food Management, Inc. He served from
November 1994 to November 1995 as Regional Director of Operations of Macheezmo
Mouse Restaurants, Inc. and from June 1993 to September 1994 as Director of
Operations of Mission Investment Company.
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Juanita Nelson, 64, has served as Controller of the Company since 1985
and as Secretary since February 1998. For more than five years prior to joining
the Company, Mrs. Nelson was the Office Manager of the Red Lion Inns and
Thunderbird Motor Inns corporate office.
COMPENSATION INFORMATION
The table below sets forth information concerning the annual and
long-term compensation for services rendered in all capacities to the Company
during the fiscal years ended March 31, 2000 and 1999 of the Chief Executive
Officer of the Company, the other four most highly compensated executive
officers of the Company who were serving as executive officers at March 31, 2000
and one additional individual, Ms. Anita Goldberg, who would have been named but
for the fact that she was not serving as an executive officer at the end of the
fiscal year ended March 31, 1999 (the "Named Executive Officers"). None of the
Named Executive Officers served for any of 1997 and 1998 (other than Ms.
Goldberg), or all of 1999. Salary amounts for 1999 do not reflect salary for a
full year. Certain executive officers who would otherwise have been named are
excluded because each officer's total annual salary and bonus did not exceed
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE><CAPTION>
NAME AND
PRINCIPAL FISCAL LONG TERM COMPENSATION
POSITION YEAR SALARY BONUS SECURITIES UNDERLYING OPTIONS
-------- ---- ------ ----- -----------------------------
<S> <C> <C> <C> <C>
William W. Service 2000 $0 $0 50,000 (1)
Chief Executive Officer 1999 $0 -- 15,000 (2)
Bruce Davis 2000 $0 $0 50,000 (1)
President 1999 $0 -- 15,000 (2)
Anita Goldberg (3)
Former President 1999 $120,000 $66,531 --
</TABLE>
(1) Dollar values of non-qualified stock option awards are based on the
fair market value at the time of grant, viz. 50,000 non-qualified options at a
strike price of $6.25 per share. The Company's non-qualified option awards vest
over a five-year period (with the first 20% of the award vesting annually on the
anniversary of the date of grant), except that the options granted to the named
executives as listed in the table will be fully vested on March 31, 2000.
(2) Dollar values of non-qualified stock option awards are based on the
fair market value at the time of grant, viz. 15,000 non-qualified options at a
strike price of $4.75 per share. The Company's non-qualified option awards vest
over a five-year period (with the first 20% of the award vesting annually on the
anniversary of the date of grant), except that the options granted to the named
executives as listed in the table will be fully vested on August 25, 1999.
(3) Ms. Goldberg resigned from the Board and Company effective December
29, 1998. Ms. Goldberg's annualized salary for fiscal year ended March 31, 1999
was $120,000. Pursuant to an employment agreement, Ms. Anita Goldberg, then
President of the Company, was paid $120,000 in fiscal 1998. In March 1998, the
Board of Directors authorized incentive compensation payable to Ms. Goldberg
equal to ten percent of annual earnings above $200,000 (before tax and incentive
payment).
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OPTION GRANTS TABLE FOR FISCAL YEAR ENDED MARCH 31, 2000
The following table sets forth information regarding stock options
granted during fiscal 2000 to the Named Executive Officers. The Company does not
have any outstanding stock appreciation rights.
<TABLE><CAPTION>
Number of Percent of Exercise Market Expiration Potential Realizable
Securities Total Price Per Price at Date (1) Value at Assumed
Underlying Options Share ($/SH) Date of Annual Rates of Stock
Options Granted to Grant Price Appreciation for
Granted (#) Employees in Option Term (2)
Fiscal Year
-------------------- --------------- -------------- ------------- ------------- ------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
5% 10%
-- ---
William W. Service 50,000 33.3% $6.25 $6.00 4/21/14 $77,000 $226,000
Bruce Davis 50,000 33.3% $6.25 $6.00 4/21/14 $77,000 $226,000
</TABLE>
(1) The options granted to the Named Executives as listed in the table were
fully vested on March 31, 2000.
(2) Gains are reported net of the option exercise price, but before taxes
associated with exercise. These values also do not take into account
amounts required to be paid as income taxes under the Internal Revenue
Code and any applicable state laws or option provisions providing for
termination of an option following termination of employment,
non-transferability or vesting. These amounts represent certain assumed
rates of appreciation shown (compounded annually) from the date of
grant until the end of the option term and are calculated based on the
requirements promulgated by the Securities and Exchange Commission.
Actual gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock and overall stock market
conditions. The amounts reflected in this table will not necessarily be
achieved and do not reflect the Company's estimate of future stock
price growth of the shares of the Company's Common Stock.
DIRECTOR COMPENSATION
The Company compensates its directors who are not employees by granting
them options to purchase shares of the Company's Common Stock. In fiscal 2000,
the non-employee directors were each granted non-qualified options to purchase
2,000 shares of Common Stock exercisable at $5.88 per share and during the term
of office, are eligible for additional annual grants of 2,000 non-qualified
options. All non-qualified options have a fifteen-year term and are subject to a
five-year vesting schedule with 20% of the total grant vesting annually.
Non-employee Directors also receive in cash the annual sum of $5,000 paid in
quarterly increments.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000 the Company's Board of Directors, with the advice
and recommendations of the Compensation Committee, determined compensation
matters. No executive officer of the Company served as a member of the
Compensation Committee or Board of Directors of another entity which had an
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executive officer who served on the Company's Board of Directors or Compensation
Committee during the fiscal year ended March 31, 2000. During fiscal year 2000,
the Compensation Committee was comprised of Thomas C. Connor, Richard Williams
and Paul Welch. No interlocking relationship exists between any member of the
Compensation Committee and any member of any other company's board of directors
or compensation committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee reviews and makes recommendations
to the Company's Board of Directors regarding the Company's executive
compensation program. In that connection, the Compensation Committee reviews and
approves each of the elements of the executive compensation program of the
company and periodically assesses the effectiveness and competitiveness of the
program in total. In addition, the Committee administers the Stock Option Plan
and Employee Stock Purchase Plan. Set forth below is the Report of the
Compensation Committee regarding compensation paid by the Company to its
executive officers during fiscal 2000.
The Company's compensation program for executive officers is primarily
comprised of combinations of elements of base salary, bonus, and/or short and
long-term incentives in the form of stock option grants. Executives also
participate in various other benefit plans, including medical and 401(k) plans,
versions of that are generally available to all employees of the Company.
COMPENSATION PHILOSOPHY
The goals of the Company's executive compensation program are to reward
the achievement of the Company's strategic goals and the creation and
maximization of shareholder value. The Company anticipates positioning base
salaries at competitive levels, except in the case of its Named Executive
Officers who, at this time, have been awarded options to purchase shares of
common stock in lieu of annual salary. Stock option grants are intended to
result in no reward if the stock price does not appreciate, but may provide
substantial reward to executives as shareholders benefit from stock price
appreciation. However, the annual cash bonus (or grant of stock options)
compensation program will be positioned to reward above competitive levels for
exceptional performance. The Company also believes in providing rewards for the
creation of shareholder value through the use of stock options. The Company and
the Committee believe this philosophy will motivate the executives and, thereby,
reinforce the accomplishments of the Company's strategic and financial goals. In
the future, the Company's philosophy will be to pay base salaries to executives
at levels that enable the Company to attract, motivate and retain highly
qualified executives. In addition, the Company intends to give bonuses as a
reward for performance based upon individual performance and overall Company
financial results. The Company has not established an annual incentive plan at
this time.
BASE SALARY AND BONUSES. Except as previously stated, each Company
executive receives a base salary, which when aggregated with a bonus or options
grant, is intended to be competitive with similarly situated executives in other
companies at a comparable stage of development, considering the experience,
achievements and contributions of the employees and the Company's industry. The
Company targets base pay at the level required to attract and retain highly
qualified executives. In determining salaries, individual experience and
performance and specific needs particular to the Company are taken into account.
Salary increases will be designed to reflect competitive practices in the
industry, financial performance of the Company and individual performance of the
executive. The annualized sum of $120,000 was paid to Ms. Anita Goldberg, the
former President of the Company, in fiscal year 1999.
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LONG-TERM INCENTIVES. The objectives of the Company's long-term
incentive program are to offer opportunities for stock ownership that are
competitive with those at peer companies and to encourage and create ownership
and retention of the Company's stock by key employees. Grant levels under the
Company's employee stock option plans are made in consideration of awards to
officers within peer companies and an assessment of the executive's tenure,
responsibilities and current stock and option holdings.
In addition to base salary, executives are eligible to receive an
annual bonus. The Compensation Committee intends to consider and adopt a formal
Executive Incentive Bonus Plan which would provide for year end cash bonuses to
executives based on the Company's and the executive's performance for that year.
It is anticipated that the amount of bonus and the performance criteria will
vary with the position and role of the executive within the Company, although
bonuses will be significantly tied to the Company's financial performance.
STOCK, OPTIONS AND OTHER AWARDS. The Company believes that it is
important for executives to have an equity stake in the Company and, toward this
end (and disclosed elsewhere herein), has made option grants to key executives
and other employees in February 2000. Option grants have taken into account the
level of awards granted to executives at companies in the Company's industry,
the levels of cash compensation earned by such executives, and the individual
executive's specific role at the Company. The Compensation Committee, comprised
of Outside Directors (who are not employees of the Company), administers the
1999 Stock Option Plan. Awards to Outside Directors or employee Directors are
made by the Board.
CHIEF EXECUTIVE OFFICER COMPENSATION. William W. Service does not have
an employment agreement with the Company and received no salary or other form of
cash compensation from the Company in consideration for his services as Chief
Executive Officer in fiscal year 2000. In April 1999, Mr. Service was awarded a
non-qualified option to purchase 50,000 shares of Common Stock at an exercise
price of $6.25 which became fully vested on March 31, 2000. The Compensation
Committee believes that Mr. Service's compensation is below the compensation
paid to Chief Executive Officers of comparable, publicly-held companies.
SECTION 162(M) COMPLIANCE
The Company does not presently anticipate any of the Named Executive
Officers to exceed the million-dollar non-performance based compensation
threshold of Section 162(m) of the Internal Revenue Code. The Company and the
Committee will continue to monitor the compensation levels of the Named
Executive Officers and determine the appropriate response to Section 162(m) when
and if necessary. It is the Company's intent to bring the stock option program
into compliance with Section 162(m), if necessary, to ensure that stock option
grants are excluded from compensation calculation for the purposes of Section
162(m).
The foregoing report has been furnished by the Compensation Committee.
Thomas C. Connor
Richard Williams
Paul Welch June 1, 2000
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STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the NASDAQ Composite Index and the Company's peer
group index. The Company's peer group consists of the NASDAQ Retail Trade
Stocks. The stock performance graph assumes $100 was invested on April 1, 1995
and measures the return thereon at various points based on the closing price of
the Common Stock on the dates indicated.
[PERFORMANCE GRAPH]
MEASUREMENT ELMER'S
PERIOD RESTAURANTS INC. PEER NASDAQ
GROUP COMPOSITE
3/31/95 100.0 100.0 100.0
3/31/96 115.4 125.3 135.8
3/31/97 146.2 126.3 150.9
3/31/98 284.6 187.1 228.9
3/31/99 369.2 190.0 309.2
3/31/00 379.4 150.8 574.0
CERTAIN TRANSACTIONS
Paul Welch, a director of the Company, operates two Elmer's restaurants
in Vancouver, Washington, one since 1978 and the other since 1994. Under a
franchise agreement with the Company, Mr. Welch pays the Company a franchise
royalty fee of two percent of gross sales of each of the restaurants. During
fiscal 2000, $68,000 was paid to the Company under this franchise agreement.
Effective February 18, 1999, the Board of Directors unanimously voted
to engage Jaspers Food Management, Inc. ("JFMI") to provide some of the
Company's administrative and accounting service needs for the operations of the
Company's Ashley's and Richard's restaurants. Two different agreements were
executed for each restaurant brand. William Service and Bruce Davis each own 36%
of the outstanding common stock of JFMI and each serve on JFMI's three person
Board of Directors. JFMI's third director is Cordy Jensen who owns 3.75% of the
outstanding common stock of JFMI. Messrs. Service and Davis each receive the
annual compensation in the sum of $30,000 from JFMI.
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As of March 31, 2000, the Company had outstanding indebtedness for
borrowed money of $1.25 million under a term loan facility with Eagle's View
Management Company, Inc. (which is affiliated with Donald Woolley and members of
his family), assumed at the time of the merger with CBW, Inc. The Eagle's View
Management loan has a maturity of approximately 5 years, an interest rate of
12%, requires monthly payments of interest only, and is collateralized by a
second position on substantially all the assets owned by the Company and does
not impose financial covenants upon the Company.
INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ended March 31, 2000.
Representatives of PricewaterhouseCoopers LLP will be present at the annual
meeting, will have the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
DISCRETIONARY AUTHORITY
-----------------------
Although the Notice of Annual Meeting of Shareholders provides for
transaction of any business that properly comes before the meeting, the Board of
Directors has no knowledge of any matters to be presented at the meeting other
than those referred to herein. The enclosed proxy, however, gives discretionary
authority if any other matters are presented.
COSTS OF SOLICITATION
---------------------
The entire cost of solicitation of proxies by the Board of Directors
will be borne by the Company. In addition, to the use of the mails, proxies may
be solicited by personal interview, facsimile, telephone and telegram by
directors, officers and employees of the Company. The Company expects to
reimburse brokers or other persons for their reasonable out-of-pocket expenses
in forwarding proxy material to beneficial owners.
YOU ARE URGED TO SIGN AND RETURN YOUR PROXY PROMPTLY TO MAKE CERTAIN
YOUR SHARES WILL BE VOTED AT THE 2000 ANNUAL MEETING. FOR YOUR CONVENIENCE, A
RETURN ENVELOPE IS ENCLOSED.
By Order of the Board of Directors
/s/ Juanita Nelson
----------------------------------
Juanita Nelson
Secretary
June 23, 2000
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PROXY
ELMER'S RESTAURANTS, INC.
ANNUAL MEETING, AUGUST 9, 2000
PLEASE SIGN AND RETURN THIS PROXY
The undersigned hereby appoints William W. Service, Paul Welch, Corydon
H. Jensen, Thomas C. Connor, Bruce Davis, Richard Williams, Donald Woolley, and
each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares which the undersigned may be entitled to vote at the
annual meeting of shareholders of Elmer's Restaurants, Inc. (the "Company") on
August 9, 2000 and any adjournments thereof, with all powers that the
undersigned would possess if personally present, with respect to all matters set
forth on this proxy card. The undersigned hereby acknowledges receipt of the
Company's proxy statement, and hereby revokes any proxy or proxies previously
given. This proxy when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. Unless direction is given, this proxy
will be voted:
- "FOR" election of each of the nominated directors.
- "FOR" the approval and ratification of PricewaterhouseCoopers
as the Company's independent Public accountants.
- And in accordance with the discretion of the proxy as to
other matters.
1. Election of Directors
[ ] FOR all nominees except as [ ] WITHHOLD AUTHORITY to vote for
marked to the contrary below all nominees listed below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A LINE
THROUGH THE NOMINEE'S NAME BELOW.)
William W. Service;
Paul Welch
The proposition set forth above is a proposition of the Company and is not
related to any or conditioned upon approval of any other proposition.
2. A proposal to approve and ratify the appointment of PricewaterhouseCoopers,
LLP, as the Company's independent public accountants for the year ending March
31, 2000.
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY
The proposition set forth above is a proposition of the Company and is not
related to any or conditioned upon approval of any other proposition
3. Transaction of any business that properly comes before the meeting or any
adjournments thereof. A majority of the proxies or substitutes at the meeting
may exercise all the powers granted hereby.
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY
The proposition set forth above is a proposition of the Company and is not
related to any or conditioned upon approval of any other proposition.
<PAGE>
PROXY
Shares:
-----------------------------
Date: , 2000
-------------------------
------------------------------------
Signature or Signatures
I PLAN TO ATTEND MEETING [ ] mark box.
COMMENTS/ADDRESS CHANGE
Please mark this box if you have written comments/address change on the reverse
side. [ ]
Please date and sign as name is imprinted hereon, including designation
as executor, trustee, etc., if applicable. A corporation must sign its name by
the president or other authorized officer. When shares are held by joint
tenants, both should sign. The Annual Meeting of Shareholders of Elmer's
Restaurants, Inc. will be held on Wednesday, August 9, 2000, at 2:00 p.m.,
Pacific Daylight Time, at Elmer's Restaurant, 9848 N. Whitaker Road, Portland,
Oregon 97217.
Please Note: Any shares of stock of the Company held in the name of
fiduciaries, custodians or brokerage houses for the benefit of their clients may
only be voted by the fiduciary, custodian or brokerage house itself--the
beneficial owner may not directly vote or appoint a proxy to vote the shares and
must instruct the person or entity in whose name the shares are held how to vote
the shares held for the beneficial owner. Therefore, if any shares of stock of
the Company are held in "street name" by a brokerage house, only the brokerage
house, at the instructions of its client, may vote or appoint a proxy to vote
the shares.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE
