<PAGE> 1
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 the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Section 240.14a-11(c) or Section
240.14a-12
CHART HOUSE ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] 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:(1)
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
- --------------------------------------------------------------------------------
<PAGE> 2
[CHARTHOUSE LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1999
To the Stockholders of
Chart House Enterprises, Inc.:
The Annual Meeting of Stockholders (the "Annual Meeting") of Chart House
Enterprises, Inc., a Delaware corporation (the "Company"), will be held at One
North Franklin Street, 3rd Floor, Chicago, Illinois 60606, on Tuesday, May 18,
1999 at 11:00 a.m. local time for the following purposes:
1. To elect seven directors; and
2. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 22, 1999 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournment thereof. A list of such
stockholders will be available for examination by any stockholder, for any
purpose germane to the Annual Meeting, during ordinary business hours at the
offices of the Company at 640 North LaSalle Street, Suite 295, Chicago,
Illinois, during the ten days prior to the Annual Meeting.
In order to constitute a quorum for the conduct of business at the Annual
Meeting, holders of a majority of all outstanding shares of the Company's Common
Stock must be present in person or be represented by proxy. We hope that you
will take this opportunity to take an active part in the affairs of the Company
by voting on the business to come before the Annual Meeting, either by executing
and returning the enclosed proxy in the postage paid, return envelope provided
or by casting your vote in person at the Annual Meeting.
By Order of the Board of Directors
/s/ Susan Obuchowski
Susan Obuchowski
Secretary
March 29, 1999
Chicago, Illinois
<PAGE> 3
CHART HOUSE ENTERPRISES, INC.
640 North LaSalle Street
Chicago, IL 60610
------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999
------------------------------------
GENERAL INFORMATION ON THE MEETING
This proxy statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Chart House Enterprises,
Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting
(including any adjournments or postponements thereof) to be held at One Franklin
Street, 3rd Floor, Chicago, Illinois, 60606, on Tuesday, May 18, 1999, at 11:00
a.m., local time.
The entire cost of soliciting Proxies will be borne by the Company,
including expenses in connection with preparing and mailing proxy solicitation
materials. In addition to use of the mails, Proxies may be solicited by certain
officers, directors and regular employees of the Company, without extra
compensation, by telephone, facsimile transmission or personal interview. The
Company will reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in sending proxies and proxy material
to the beneficial owners of the Company's common stock, par value $.01 per share
(the "Common Stock"). This Proxy Statement, the accompanying form of Proxy and
the other enclosed documents are first being mailed to stockholders of the
Company on or about March 29, 1999.
RECORD DATE AND VOTING
Only stockholders of record at the close of business on March 22, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting and
any adjournment thereof. As of the close of business on the Record Date,
11,762,561 shares of the Company's Common Stock were issued and outstanding.
Each stockholder is entitled to one vote for each share of Common Stock held on
all matters to come before the meeting. A list of stockholders will be available
for examination by stockholders at the Annual Meeting.
The presence, either in person or by proxy, of persons entitled to vote a
majority of the outstanding shares of the Company's Common Stock is necessary to
constitute a quorum for the transaction of business at the Annual Meeting. A
stockholder giving a proxy may revoke it at any time before it is voted by
filing with the Secretary of the Company written notice of revocation or by
appearing at the meeting and voting in person. A prior proxy is automatically
revoked by a stockholder giving a valid proxy bearing a later date. Shares
represented by all valid proxies will be voted in accordance with the
instructions contained in the proxies. In the absence of instructions, shares
represented by valid proxies will be voted as recommended by the directors.
<PAGE> 4
All outstanding shares of the Company's Common Stock vote together as a
single class. Assuming a quorum is present, the election of seven directors will
be determined by a plurality of the votes cast. In the case of shares that are
present at the Annual Meeting for quorum purposes, not voting those shares for a
particular nominee for director (including withholding authority on the proxy)
will not operate to prevent the election of that nominee if he otherwise
receives the requisite affirmative votes. For the purposes of determining the
outcome of any matter, "broker non-votes" (i.e., shares held by brokers or
nominees that are represented at the meeting by properly signed and returned
proxies but with respect to which the broker or nominee is not empowered to vote
on a particular matter) will be treated as not present and not entitled to vote
with respect to that matter (although such shares may be entitled to vote on
other matters), and will be deemed to be present and entitled to vote for quorum
purposes.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 22, 1999 (unless otherwise
indicated in a footnote), information concerning the beneficial ownership of
voting securities of the Company by the persons who are known by the Company to
own beneficially more than 5% of the outstanding shares of the Company's voting
stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- -------------- ------------------- ----------------------- ----------------
<S> <C> <C> <C>
Common Stock Samstock, L.L.C. 1,891,522(2) 28.9%
Samstock/ZFT, L.L.C. 705,808(2)
Chart House Investors, L.L.C. 428,591(2)
F. Philip Handy, as Trustee 103,539(2)
of Blaine Trust
Robert Saltsman 4,137(2)
Thomas and Donna Gaffney, as 20,708(2)
tenants by the entirety
Richard Melman, Trustee of 43,478(2)
the Richard Melman
Revocable Trust U/T/A
1/16/82
MelChart, LLC 202,217(2)
(see footnote 2 below for
addresses)
Common Stock Metropolitan Life Insurance 1,159,475(3) 9.9%
Co.
One Madison Avenue
New York, NY 10010-3690
Common Stock Pioneer Investment 770,000(4) 6.5%
Management, Inc.
a/k/a Pioneering Management
Corp.
60 State Street
Boston, MA 02109
Common Stock Dimensional Fund Advisors 605,400(5) 5.1%
Inc.
1299 Ocean Avenue, 11(th)
Floor
Santa Monica, CA 90401
Common Stock The TCW Group, Inc. 603,600(6) 5.1%
865 South Figueroa Street
Los Angeles, CA 90017
AND
Robert Day
200 Park Avenue, Suite 2200
New York, NY 10166
</TABLE>
- -------------------------
(1) The amounts of Common Stock beneficially owned is reported on the basis of
regulations of the Securities and Exchange Commission (the "SEC") governing
the determination of beneficial ownership of securities.
(2) Based upon information received from the stockholders and pursuant to the
Stockholder's Agreement dated October 1, 1997 among the referenced entities.
According to such Stockholder's Agreement each entity/Stockholder appointed
3
<PAGE> 6
Samstock, L.L.C., its true and lawful attorney and proxy during the period
of such Stockholder's Agreement, to appear for, represent, and vote the
shares held by each Stockholder, as defined in the Stockholder's Agreement,
subject to the voting restrictions contained in such Stockholder's
Agreement. The addresses for these entities are as follows: Samstock,
L.L.C., Samstock/ZFT, L.L.C. and Chart House Investors, L.L.C., c/o Equity
Group Investments, L.L.C, Two North Riverside Plaza, Suite 600, Chicago, IL
60606; F. Philip Handy, as Trustee of Blaine Trust, Robert Saltsman and
Thomas Gaffney and Donna Gaffney, as tenants by the entirety, 222 West
Comstock, Winter Park, FL 32789; Richard Melman, Trustee of the Richard
Melman Revocable Trust U/T/A 1/16/82 and Melchart, L.L.C., 5419 N. Sheridan
Road, Chicago, IL 60640.
(3) Pursuant to a Schedule 13G filed with the SEC for calendar 1998,
Metropolitan Life Insurance Company has sole voting and dispositive power of
the shares reported herein.
(4) Pursuant to a Schedule 13G filed with the SEC for calendar 1998, Pioneer
Investment Management, Inc. is an Investment Advisor under Section 203 of
the Investment Advisors Act of 1940 ("Investment Act").
(5) Pursuant to a Schedule 13G filed with the SEC for calendar 1998, Dimensional
Fund Advisors Inc. is an Investment Advisor registered under Section 203 of
the Investment Act and furnishes advice to four investment companies
registered under the Investment Act and serves as investment manager to
certain other investment vehicles, including co-mingled group trusts. In its
role as investment advisor and manager, Dimensional possesses both voting
and investment power. All shares reported herein are owned by the investment
companies or vehicles and Dimensional disclaims beneficial ownership of such
shares.
(6) Pursuant to a Schedule 13G filed with the SEC for calendar 1998, The TCW
Group, Inc. and Robert Day (an individual who may be deemed to control The
TCW Group, Inc. and other entities) which hold shares of Common Stock, are a
parent holding company or control person in accordance with Rule
13(d)-1(b)(1)(ii)(G). Various persons other than those described herein have
the right to receive or the power to direct receipt of dividends from, or
the proceeds from the sale of, the shares of Common Stock reported herein.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
There are currently seven directors on the Company's Board. Each of the
current directors has consented to be a nominee and has agreed to serve if
elected. The proxy holders will vote the proxies received by them for all seven
nominees if so instructed on a proxy card, or if no instruction is given, or in
the unlikely event that any nominee becomes unable to serve as a director, for
other persons designated by the Board of Directors. Set forth opposite the name
of each director is his or her age, principal occupation for the past five
years, the name and principal business of any corporation or other organization
in which such employment is carried on and other business directorships held by
the director
4
<PAGE> 7
as of March 22, 1999. The Company is not presently aware of any circumstance
which would prevent any nominee from fulfilling his or her duties as a director
of the Company.
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE PRINCIPAL OCCUPATION BECAME DIRECTOR
- ---- --- -------------------- ---------------
<S> <C> <C> <C>
Samuel Zell.................... 57 Samuel Zell has been Chairman of 1997
the Board of the Company since May
1998. Mr. Zell has been Chairman of
Equity Group Investments, L.L.C., a
private investment firm, since 1999
and had been Chairman of the Board
of Equity Group Investments, Inc.,
a private investment firm, for more
than five years before 1999. Mr.
Zell serves as Chairman of the
board of directors of Anixter
International Inc., American
Classic Voyages Co., Capital Trust,
Inc., Jacor Communications, Inc.
and Manufactured Home
Communities,Inc. Mr. Zell also
serves as Chairman of the boards of
trustees of Equity Residential
Properties Trust and Equity Office
Properties Trust. Mr. Zell is a
director of Fred Meyer, Inc. and
Davel Communications, Inc. He is a
non-executive director of RAMCO
Energy-plc.
Thomas J. Walters.............. 40 Thomas J. Walters has been 1998
President and Chief Executive
Officer of the Company since
November 1998 and had been Chief
Operating Officer from February 23,
1998 until November 1998. From
March 1995 until February 1998, Mr.
Walters had been President of
Morton's of Chicago ("Morton's")
restaurants nationwide. He also
held the positions at Morton's of
Vice President of Operations and
Regional Manager from March 1993 to
March 1995. Prior to Mr. Walters
association with Morton's, he was
Director of Food and Beverage with
the Ritz Carlton Hotel Corporation
for six years. He also has held
positions as Director of Food and
Beverage for the La Costa Resort &
Spa and Director of Catering and
Banquet for the Hyatt Hotels
Corporation.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE PRINCIPAL OCCUPATION BECAME DIRECTOR
- ---- --- -------------------- ---------------
<S> <C> <C> <C>
Barbara R. Allen............... 46 Barbara R. Allen has been President 1998
of Corporate Supplier Solutions
Division of Corporate Express, an
office products supplier to
businesses in the U.S. and
internationally, since September
1998. Prior to joining Corporate
Express, she spent 23 years at The
Quaker Oats Company. She served as
Executive Vice President of
International Foods of Quaker from
1995 through September 1998 and
held other positions within Quaker
including Vice President of
Corporate Planning (1992 -- 1995);
President of the Frozen Foods
Division (1990 -- 1992); Vice
President of Marketing
(1987 -- 1990); and Director of
Marketing (1985 -- 1987). Ms. Allen
serves on the board of directors of
Maytag Corporation.
Linda Walker Bynoe............. 46 Linda Walker Bynoe has been 1998
President, Chief Executive Officer
and a principal of Telemat, Ltd., a
private investment and financial
services firm, since June 1989. She
was employed by the investment
banking firm of Morgan Stanley &
Company starting in July 1978, and
held the position of Vice President
from December 1984 to May 1989.
From June 1975 to September 1976,
Ms. Bynoe was an associate with
Arthur Andersen & Co. Ms. Bynoe
serves on the boards of directors
of American Odyssey Funds, Inc. and
Walden Residential Properties, Inc.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE PRINCIPAL OCCUPATION BECAME DIRECTOR
- ---- --- -------------------- ---------------
<S> <C> <C> <C>
William M. Diefenderfer III.... 52 William M. Diefenderfer III has 1991
been a partner in the law firm of
Diefenderfer, Hoover, Boyle & Wood
for more than five years. He was
Deputy Director of the Office of
Management and Budget from February
1989 to May 1991. He served in the
Ford White House, as Chief Counsel
on two U.S. Senate Committees and
Counsel to a committee in the House
of Representatives. Mr.
Diefenderfer serves on the board of
directors of the Student Loan
Marketing Association, a wholly
owned subsidiary of SLM, Inc., a
New York Stock Exchange company.
F. Philip Handy................ 54 F. Philip Handy is a private 1997
investor. He had been the Acting
Chief Executive Officer of the
Company from December 1997 until
November 1998. He had been a
managing director of EGI Corporate
Investments, a division of Equity
Group Investments, Inc., from March
1997 until December 1998. Mr. Handy
had been Chairman and President of
Winter Park Capital Company, a
private investment firm he founded
in 1980, until March 1997. He
serves on the boards of directors
of Anixter International Inc.,
Banca Quadrum, Davel
Communications, Inc., Jacor
Communications, Inc. and Transmedia
Network Inc.
Stephen Ottmann................ 44 Stephen Ottmann has been President 1998
and Chief Operating Officer of
Lettuce Entertain You Enterprises,
Inc. ("Lettuce Entertain You")
since February 1998. From January
1996 to February 1998, Mr. Ottmann
was Executive Vice President and
Chief Operating Officer of Lettuce
Entertain You. He also held the
positions of Partner and Divisional
Vice President at Lettuce Entertain
You from March 1984 to January
1996.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
ABOVE.
7
<PAGE> 10
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings and took various actions by
unanimous written consent during 1998. Each director attended at least 75% of
the total number of meetings of the Board of Directors and of Board committees
of which he or she was eligible to attend, except for William E. Mayer who did
not stand for election at the 1998 Annual Meeting and attended one out of three
meetings he was eligible to attend.
The Board of Directors has established four standing committees: the Audit
Committee, the Compensation Committee, the Performance Compensation Committee
and the Nominating Committee.
Audit Committee. The Audit Committee, which held three meetings in 1998,
has the primary responsibility for ensuring the integrity of the financial
information reported by the Company. The Audit Committee's functions include:
(i) to make recommendations concerning the selection of independent auditors;
(ii) to review the scope of the annual audit to be performed by the independent
auditors; (iii) to review the results of those audits; and (iv) to meet
periodically with management and the Company's independent public accountants to
review financial, accounting and internal control matters. The Audit Committee
consists of Mmes. Allen and Bynoe and Mr. Diefenderfer.
Compensation Committee. The Compensation Committee, which held three
meetings in 1998, reviews and makes recommendations to the Board on the
compensation and benefits payable to the officers and key employees of the
Company and is responsible for administering the Company's stock option and
incentive compensation plans. The Compensation Committee consists of Messrs.
Diefenderfer and Handy and Ms. Bynoe.
Performance Compensation Committee. The Performance Compensation Committee,
which held two meetings in 1998, sets Company policy and authorizes actions to
be taken with respect to any performance compensation matters as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
including but not limited to granting stock options and administering the
Company's stock option plans with respect to executive officers, and is
comprised solely of "outside" directors independent of management within the
meaning of Section 162(m) of the Code. The Performance Compensation Committee
consists of Ms. Bynoe and Mr. Diefenderfer.
Nominating Committee. The Nominating Committee, which held one meeting in
1998, is responsible for (i) recommending nominees for election as directors and
for appointment as directors to fill vacancies; (ii) considering any nominations
for election as director submitted by stockholders; and (iii) making
recommendations concerning the organization and size of the Company's Board of
Directors and committees of the Board. The Nominating Committee consists of
Messrs. Ottmann and Zell and Ms. Allen. Stockholders who want to submit
recommendations of nominees for election as directors should submit the
recommendations to the Company at its executive offices stating in detail the
qualifications of the proposed candidates.
COMPENSATION OF DIRECTORS
The Company pays an annual fee to its non-employee directors of $15,000.
Such fees are paid in stock pursuant to the 1996 Non Employee Director Stock
Compensation Plan. In addition, each continuing non-employee director is granted
annually on the date of the Company's Annual Meeting options to purchase 2,500
shares of the Company's Common Stock. Such stock options become exercisable over
a two-year period.
8
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth compensation for services in all capacities
to the Company for the fiscal years ended December 28, 1998, December 29, 1997
and December 30, 1996, of those persons who were, during the fiscal year ended
December 28, 1998 (i) the chief executive officer, or acting in that capacity
and (ii) the other most highly compensated executive officer of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL OCCUPATION YEAR SALARY($) BONUS($) GRANTED(#) COMPENSATION($)
- ----------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
F. Philip Handy............ 1998 0 0 0 0
Acting Chief 1997 0 0 102,500 0
Executive Officer(1) 1996 0 0 0 0
Thomas J. Walters.......... 1998 211,154 155,000(2) 285,000 0
President and Chief 1997 0 0 0 0
Executive Officer 1996 0 0 0 0
Cynthia T. Quigley......... 1998 103,173 61,250(4) 75,000 41,784(5)
Vice President -- Finance 1997 0 0 0 0
and Chief Financial 1996 0 0 0 0
Officer(3)
</TABLE>
- -------------------------
(1) Mr. Handy assumed the duties and responsibilities of chief executive officer
on December 11, 1997 and relinquished them on November 2, 1998, upon the
promotion of Mr. Walters to Chief Executive Officer.
(2) Includes a $75,000 signing bonus.
(3) Ms. Quigley resigned her positions with the Company as of March 26, 1999.
(4) Includes a $15,000 signing bonus.
(5) Includes $41,784 of expenses for relocating Ms. Quigley to Chicago, IL.
9
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#) 1998 ($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
F. Philip Handy...... 0 0% -- -- -- --
Thomas J. Walters.... 160,000 24.3% 7.00 3/4/08 704,362 1,784,992
100,000 15.2% 7.00 3/4/08 440,226 1,115,620
25,000 3.8% 4.25 11/2/08 66,820 169,335
Cynthia T. Quigley... 75,000 11.4% 8.25 6/1/08 389,129 986,128
</TABLE>
- -------------------------
(1) Potential realizable value amounts are based on an assumption that the
Company's stock price will appreciate at the annual compounded rates shown
over the ten-year option terms. There can be no assurances that the stock
price will appreciate at these rates or experience any appreciation at all.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES VALUE OPTIONS AT AT DECEMBER 28,
ACQUIRED ON REALIZED DECEMBER 28, 1998 (#) 1998($)(1)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
F. Philip Handy........ 0 0 101,250/1,250 0/0
Thomas J. Walters...... 0 0 0/285,000 0/43,750
Cynthia T. Quigley..... 0 0 0/75,000 0/0
</TABLE>
- -------------------------
(1) Value is based on the closing price on the New York Stock Exchange of the
Company's Common Stock on that date ($6.00). There is no negative value
attributed to options which have exercise prices higher than the closing
market price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Diefenderfer and Handy and Ms. Bynoe were members of the
Compensation Committee during 1998. Mr. Handy, a director of the Company, serves
as a member of the compensation committee of Jacor Communications, Inc., and Mr.
Zell, a director of the Company, is an executive officer and director of Jacor
Communications, Inc.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, or the Exchange Act that might
incorporate future filings, including this Proxy Statement, in whole or in part,
the report presented below and the Performance Graph following shall not be
incorporated by reference into any such filings.
10
<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Performance Compensation Committee of the Board of Directors is
responsible for reviewing and determining the compensation of the executive
officers of the Company, administering the Company's executive compensation
plans, including incentive compensation, the stock option plan as it relates to
the executive officers, and making recommendations to the Board of Directors
regarding the adoption of new executive compensation plans.
The Compensation Committee is responsible for reviewing and determining the
compensation of all other officers and the general administration of the stock
option plan and other employee benefit plans.
COMPENSATION PHILOSOPHY
The Performance Compensation Committee's primary objective in developing
and administering the Company's executive compensation system is to attract and
motivate a quality management team to increase stockholder value. The Company's
compensation system emphasizes incentives tied to the attainment of financial
performance goals.
The executive compensation system consists of three major components: base
salary, annual incentive and long-term incentive compensation.
BASE SALARY. Base salaries for executives are established at a level
commensurate with the executive's position in the Company and relative to peers
in other companies. Annual base salary increases generally are made based on
performance evaluations and in recognition of added duties and responsibilities
taken on by the executive.
ANNUAL INCENTIVE COMPENSATION. The Company has traditionally, but not
exclusively, relied on incentive bonus compensation as a major component of
executive compensation. Under the Corporate Management Compensation Plan, annual
bonuses are earned based primarily on the Company's financial performance as
measured against budget targets, and secondarily on the performance of the
individual management employee as measured against performance criteria
established by the employee and his or her supervisor.
The maximum annual bonus available under the Corporate Management
Compensation Plan ranged from 10% to 60% of base salary during 1998, depending
on the individual's position in the Company.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided to
Company executives in the form of stock option grants under the Company's 1996
Stock Option Plan. The Performance Compensation Committee believes that equity
incentives are an effective way of motivating management to increase value to
the stockholder and that stock options are the most appropriate type of equity
incentive given the characteristics of the Company and its management team.
1998 EXECUTIVE OFFICER COMPENSATION
During 1998, the Company hired a new Chief Financial Officer, the only
executive officer other than the Chief Executive Officer. Her base salary and
bonus range were determined by the Performance Compensation Committee based on
recommendations made by the Acting Chief Executive Officer and the President and
Chief Operating Officer and information regarding industry peer group
compensation.
11
<PAGE> 14
Bonus compensation paid to such executive officer during 1998 consisted of
a $15,000 signing bonus and a bonus for 1998 of $46,250, the minimum amount
guaranteed to Ms. Quigley when she joined the Company.
1998 CHIEF EXECUTIVE OFFICER COMPENSATION
During most of 1998, Mr. Handy continued as acting Chief Executive Officer
of the Company. In November 1998, Mr. Walters, who became President and Chief
Operating Officer of the Company in February 1998, was promoted to President and
Chief Executive Officer. Mr. Walters' base salary and bonus range were
determined by the Performance Compensation Committee based on recommendations of
Mr. Handy and information regarding industry peer group compensation.
Mr. Walters received a $75,000 signing bonus at the time he joined the
Company in February. The Performance Compensation Committee increased his annual
target bonus to 60% from 50% of his base salary with his promotion to Chief
Executive Officer. Mr. Walters received a bonus for 1998 of $80,000, relating to
his individual performance in 1998, under the Corporate Management Compensation
Plan.
Mr. Handy did not receive any compensation from the Company during fiscal
1998 for his duties as Acting Chief Executive Officer.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Code generally provides that certain compensation in
excess of $1 million per year paid to a company's chief executive officer and
any of its four other highest paid executive officers is not deductible by a
company unless the compensation qualifies for an exception. This deduction limit
generally applies only to compensation that could otherwise be deducted by a
company in a taxable year. For 1998, the Performance Compensation Committee does
not expect that Section 162(m) will limit the Company's deductibility of
compensation paid to any of its executive officers.
Section 162(m) provides an exception to the deductibility limit for
performance-based compensation if certain procedural requirements, including
stockholder approval of the material terms of the performance goal, are
satisfied. In some cases, it may be necessary in order to attract, retain and
incentivize certain individuals to grant options or other performance-based
compensation without satisfying the procedural requirements under Section
162(m). The Compensation Committee believes that grants of options at or above
then-current market price under the 1996 Stock Option Plan qualify for full
deductibility under Section 162(m).
Respectfully submitted,
Linda Walker Bynoe
William M. Diefenderfer III
12
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998, the Company retained the services of Rosenberg & Liebentritt,
P.C., a law firm which performs legal services exclusively for entities in which
Mr. Zell has an interest. During 1998, the Company also retained EGI Risk
Services, Inc., which reviews, obtains and/or renews insurance policies, and EGI
Corporate Investments, which provides assistance to the Company in strategic
planning, financings and transactions. Both of these companies are affiliated
with Mr. Zell. The Company believes that such services have been on terms no
less favorable to the Company than could have been obtained with other
independent parties. During 1998, the Company paid these entities approximately
$1.0 million.
During 1998, the Company also retained Lettuce Entertain You Enterprises,
Inc. ("LEYEI") as a consultant to evaluate the Company's business operations and
restaurant concepts and develop new concepts and menu offerings. The Company
paid LEYEI a total of $1,103,000 in fees and expenses during the year ended
December 28, 1998. Mr. Ottmann, a director of the Company, is President, Chief
Operating Officer and a minority shareholder of LEYEI.
13
<PAGE> 16
PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
Company's Common Stock with the performance of the New York Stock Exchange
Market Index and a restaurant industry peer group index (Standard Industrial
Classification (SIC) Code 5812-Eating Places) for the five fiscal year period
ended December 28, 1998. The graph assumes that the value of an investment in
the Company's Common Stock and each index was $ 100 on December 31, 1993.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE
COMPANY, THE NEW YORK STOCK EXCHANGE MARKET INDEX*
AND A PEER GROUP
[GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CHT 100.00 78.13 50.00 41.67 54.17 50.00
- ----------------------------------------------------------------------------------------------
New York Stock Exchange
Market Index* 100.00 98.06 127.15 153.16 201.50 239.77
- ----------------------------------------------------------------------------------------------
Peer Group (SIC CODE 5812) 100.00 87.58 119.93 125.73 132.33 178.78
- ----------------------------------------------------------------------------------------------
</TABLE>
* This index was identified as the Dow Jones Equity Market in the Company's
Proxy Statement for the 1998 Annual Meeting.
14
<PAGE> 17
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 22, 1999, information
concerning the number of shares of the Company's Common Stock, and options to
purchase Common Stock that are currently exercisable, or exercisable within 60
days of the date of this table, beneficially owned by each of the directors, the
executive officers named in the Summary Compensation Table and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
SHARES UPON
SHARES OF EXERCISE OF PERCENT OF
NAME OF BENEFICIAL HOLDER COMMON STOCK(1) OPTIONS TOTAL(1) CLASS
- ------------------------- --------------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Barbara R. Allen..................... 1,739 1,250 2,989 *
Linda Walker Bynoe................... 3,739 1,250 4,989 *
William M. Diefenderfer III.......... 70,344(2) 3,750 74,094 *
F. Philip Handy...................... 3,400,000(3) 102,500 3,502,500 29.5%
Stephen Ottmann...................... 6,087(4) 1,250 7,337 *
Thomas J. Walters.................... -- 65,000 65,000 *
Samuel Zell.......................... 3,400,719(3) 2,500 3,403,219 28.9%
Cynthia T. Quigley................... 10 -- 10 *
All directors and executive officers
as a group (8 persons) including
the above-named persons............ 3,478,290 177,500 3,655,790 30.6%
</TABLE>
- -------------------------
* Less than one percent.
(1) The amounts of Common Stock beneficially owned are reported on the basis of
regulations of the SEC governing the determination of beneficial ownership
of securities.
(2) Includes 31,469 shares owned directly by Mr. Diefenderfer, 3,255 shares
owned by Mr. Diefenderfer in an individual retirement account, 720 shares
owned in a supplemental executive retirement plan, 2,100 shares owned by an
independent trustee for the benefit of Mr. Diefenderfer's two sons, 3,300
shares owned by Mr. Diefenderfer as a custodian for his two sons, and 29,500
shares owned by his wife. Mr. Diefenderfer disclaims beneficial ownership of
the 29,500 shares owned by his wife.
(3) Includes 1,860,000 shares owned by Samstock, L.L.C., 705,808 shares owned by
Samstock/ZFT, L.L.C., 428,591 shares owned by Chart House Investors, L.L.C.,
103,539 shares owned by F. Philip Handy, as Trustee of the Blaine Trust,
4,137 shares owned by Robert Saltsman, 20,708 shares owned by Thomas Gaffney
and Donna Gaffney, as tenants by the entirety, 43,478 shares owned by
Richard Melman as Trustee of the Richard Melman Revocable Trust U/T/A and
202,217 owned by MelChart, LLC. According to the Stockholder's Agreement
among these noted entities, each entity/Stockholder appointed Samstock,
L.L.C. its true and lawful attorney and proxy during the period of said
Stockholder's Agreement, to appear for, represent, and vote the shares held
by each Stockholder, as defined in the Stockholder's Agreement, subject to
the voting restrictions contained in said Agreement. The Stockholder's
Agreement also reflects an option for Mr. Handy to acquire 163,581 of the
shares owned by Chart House Investors, L.L.C. Mr. Handy
15
<PAGE> 18
and Mr. Zell have disclaimed beneficial ownership of 3,038,541 and 605,416
shares, respectively.
(4) Includes 4,348 shares owned indirectly by Mr. Ottmann as trustee under a
revocable trust, which owns a 2.15% non-managing member interest in
MelChart, LLC, which owns 202,217 shares subject to the Stockholder's
Agreement referenced in footnote (2) above.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities ("Reporting Persons") to
file reports of ownership and changes in ownership with the SEC. Reporting
Persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by it and
written representations from certain Reporting Persons, the Company believes
that during 1998 its Reporting Persons complied with all requirements applicable
to them.
AUDITORS
Arthur Andersen LLP served as the Company's auditors for the year ended
December 28, 1998. The Audit Committee intends to make a future recommendation
to the Board concerning the selection of the Company's auditors for the current
fiscal year which began December 29, 1998. There have been no disagreements
between the Company and its auditors relating to accounting procedures,
financial statement disclosures, or related items. Representatives of Arthur
Andersen LLP are expected to be available at the Annual Meeting and will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Any stockholder intending to submit to the Company a proposal for inclusion
in the Company's Proxy Statement and proxy for the 2000 Annual Meeting must
submit such proposal so that it is received by the Company no later than
November 30, 1999. Stockholder proposals should be submitted to the Secretary of
the Company. No stockholder proposals were received for inclusion in this proxy
statement.
Pursuant to the Company's Bylaws, no nomination for election of directors
will be considered properly brought before the next annual meeting by a
stockholder unless notice is received by the Company not fewer than ninety (90)
days prior to the meeting. Unless fewer than forty-five (45) days' notice or
prior public disclosure of the date of the Annual Meeting is given or made to
Stockholders, no business proposal will be considered properly made at the next
annual meeting by a stockholder, unless notice is received by the Company not
less than thirty-five (35) days prior to the meeting. All notices received must
contain certain information required by the Bylaws and SEC rules and
regulations.
16
<PAGE> 19
MISCELLANEOUS
The Company knows of no matters other than the foregoing to be brought
before the Annual Meeting, but if any other matter properly comes before the
meeting or any adjournment thereof, it is the intention of the persons named in
the accompanying form of Proxy to vote the proxies in accordance with their best
judgment.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report for the year ended December 28, 1998 is being
mailed to stockholders together with this Proxy Statement.
THE COMPANY WILL SEND TO STOCKHOLDERS UPON WRITTEN REQUEST, WITHOUT CHARGE,
A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AND
ANY DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR COPIES OF DOCUMENTS SHOULD BE
DIRECTED TO THE SECRETARY, CHART HOUSE ENTERPRISES, INC., 640 NORTH LA SALLE
STREET, SUITE 295, CHICAGO, IL 60610.
STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
By Order of the Board of Directors
[Susan Obuchowski signature]
Susan Obuchowski
Secretary
March 29, 1999
Chicago, Illinois
17
<PAGE> 20
<TABLE>
<CAPTION>
<S><C>
PLEASE MARK
YOUR VOTES
THIS WAY [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
WITHHELD
FOR FOR ALL I PLAN TO ATTEND MEETING [ ]
Proposal 1 - ELECTION OF SEVEN DIRECTORS
Nominees: Barbara R. Allen, Linda Walker Bynoe,
William M. Diefenderfer III, F. Philip Handy, Stephen
Ottmann, Thomas J. Walters and Samuel Zell. [ ] [ ]
WITHHELD FOR (Write name of nominee(s) in COMMENTS/ADDRESS CHANGE
space provided below). Please mark this box if you have
any written comments/address
change on the reverse side. [ ]
________________________________________
</TABLE>
And on any other matter which may properly come before the meeting or any
adjournment or postponement thereof in the discretion of the Proxy holder.
SIGNATURE(S) DATE
------------------------ --------------------------
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, guardian or
officer, please give full title under signature.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
/\ FOLD AND DETACH HERE /\
<PAGE> 21
CHART HOUSE ENTERPRISES, INC.
640 N. LASALLE STREET, CHICAGO, ILLINOIS 60610
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Chart House Enterprises,
Inc., a Delaware corporation (the "Company"), hereby appoints F.
PHILIP HANDY and THOMAS J. WALTERS, or either of them, with full
power of substitution in each of them, to attend the Annual Meeting
of Stockholders of the Company to be held on Tuesday, May 18, 1999,
at 11:00 a.m., Chicago time, and any adjournment or postponement
thereof, to cast on behalf of the undersigned all votes that the
undersigned is entitled to cast at such meeting and otherwise to
represent the undersigned at the meeting with all powers possessed
by the undersigned if personally present at the meeting. The
undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Stockholders and of the accompanying Proxy Statement and
revokes any proxy heretofore given with respect to such meeting.
The votes entitled to be cast by the undersigned will be
cast as instructed on the reverse side. If this proxy is executed
but no instruction is given, the votes entitled to be cast by the
undersigned will be cast "for" each of the nominees for director as
described in the Proxy Statement and in the discretion of the proxy
holder on any other matter that may properly come before the
meeting or any adjournment or postponement thereof.
=
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENTS/ADDRESS BOX ON REVERSE SIDE
(Continued
and to be signed on other side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
/\ FOLD AND DETACH HERE /\
