<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
Name of Registrant as Specified in Its Charter:
Chart House Enterprises, Inc.
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 RESTAURANTS LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 2000
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 Monday, May 15,
2000 at 10:00 a.m. local time for the following purposes:
(1) To elect seven directors;
(2) To approve an amendment to the option to purchase 100,000 shares
previously granted to F. Philip Handy;
(3) To approve the 2000 Nonemployee Director Equity Compensation Plan; and
(4) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 17, 2000,
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
April 6, 2000
Chicago, Illinois
<PAGE> 3
CHART HOUSE ENTERPRISES, INC.
640 North LaSalle Street
Chicago, IL 60610
------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 2000
------------------------------------
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 Monday, May 15, 2000, at 10:00
a.m., local time.
The Company has retained the service of Corporate Investor Communications,
Inc. to assist in obtaining proxies from stockholders for the Annual Meeting.
The estimated cost of such services is $5,000 plus reasonable out-of-pocket
expenses. 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 April 6, 2000.
RECORD DATE AND VOTING
Only stockholders of record at the close of business on March 17, 2000 (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,
11,775,191 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 Annual 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 Annual 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
<PAGE> 4
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.
For each of the Proposals, 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 (Proposal 1) 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. The approval of the amendment to Mr. Handy's option (Proposal 2) and the
approval of the 2000 Nonemployee Director Equity Compensation Plan (Proposal 3)
will both require the affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote at the Annual Meeting. Abstentions do
not constitute a vote "for" or "against" any matter and thus will be disregarded
in the calculation of "votes cast". 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 Annual 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 17, 2000 (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. 2,458,572(2) 32.2%
705,808(2)
Samstock/ZFT, L.L.C.
198,203(2)
Samstock/Alpha, L.L.C.
197,879(2)
F. Philip Handy, as Trustee
of Blaine Trust
23,245(2)
F. Philip Handy
202,217(2)
MelChart, LLC
(see footnote 2 below for
addresses)
Common Stock Metropolitan Life Insurance 1,117,875(3) 9.5%
Co.
One Madison Avenue
New York, NY 10010-3690
Common Stock Dimensional Fund Advisors, 735,300(4) 6.2%
Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
- -------------------------
(1) The amounts of Common Stock beneficially owned is reported on the basis of
regulations of the SEC governing the determination of beneficial ownership
of securities.
2
<PAGE> 5
(2) Based upon information received from the stockholders and pursuant to a
Stockholder's Agreement dated October 1, 1997, as amended, among the
referenced entities. According to such Stockholder's Agreement each
entity/Stockholder appointed 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 Samstock/ Alpha, L.L.C.,
c/o Equity Group Investments, L.L.C, Two North Riverside Plaza, Suite 600,
Chicago, IL 60606; F. Philip Handy, both individually and as Trustee of
Blaine Trust, 222 West Comstock, Winter Park, FL 32789; and MelChart,
L.L.C., 5419 N. Sheridan Road, Chicago, IL 60640.
(3) Pursuant to a Schedule 13G filed with the SEC for calendar 1999,
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 1999, 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.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
There are currently seven directors on the Company's Board. Each of the
current directors, except for F. Philip Handy who is not standing for
reelection, has consented to be a nominee and has agreed to serve if elected.
Robert A. McCormack has consented to be a nominee to fill the vacancy created by
Mr. Handy. 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 nominee 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 or nominee
3
<PAGE> 6
as of March 17, 2000. 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.......................... 58 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. ("Equity
Group"), 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., Danielson Holding
Corporation, Davel
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. He is a
non-executive director of RAMCO
Energy-plc.
Thomas J. Walters.................... 41 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
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>
4
<PAGE> 7
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE PRINCIPAL OCCUPATION BECAME DIRECTOR
- ---- --- -------------------- ---------------
<S> <C> <C> <C>
Barbara R. Allen..................... 47 Barbara R. Allen has been 1998
President and Chief Operating
Officer of Paladin Resources,
LLC, a management company
developing internet services,
since January 2000. Ms. Allen had
been President of Corporate
Supplier Solutions Division of
Corporate Express, an office
products supplier to businesses
in the U.S. and internationally,
from September 1998 until January
2000. Prior to joining Corporate
Express, Ms. Allen spent 23 years
at The Quaker Oats Company
("Quaker"). 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................... 47 Linda Walker Bynoe has been a 1998
principal of Telemat Ltd., a
private investment and financial
services firm, since June 1989.
She currently serves as President
and Chief Executive Officer of
Telemat Ltd. 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 board of directors
of American Odyssey Funds, Inc.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE PRINCIPAL OCCUPATION BECAME DIRECTOR
- ---- --- -------------------- ---------------
<S> <C> <C> <C>
William M. Diefenderfer III.......... 54 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 in the
Bush White House 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. He serves on the
board of directors of Sallie Mae,
Inc.
Robert McCormack..................... 56 Robert A. McCormack has been a --
Managing Director of Equity Group
since August 1999. Mr. McCormack
had been employed by Citicorp
Inc. from 1973 until 1999, last
serving as Corporate Executive
Vice President with
responsibility as co-head of
Global Corporate Banking for
Citicorp's business of providing
products and services worldwide
to global corporate customers.
Stephan Ottmann...................... 45 Stephen Ottmann has been 1998
President and Chief Executive
Officer of Lettuce Entertain You
Enterprises, Inc. ("Lettuce
Entertain You"), an owner and
operator of restaurants, since
January 2000. From February 1998
to January 2000, Mr. Ottmann had
been President and Chief
Operating Officer of Lettuce
Entertain You. 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.
6
<PAGE> 9
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings and took various actions by
unanimous written consent during 1999. 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.
The Board of Directors has established five standing committees: the
Executive Committee, the Audit Committee, the Compensation Committee, the
Performance Compensation Committee and the Nominating Committee.
Executive Committee. The Executive Committee, which held one meeting in
1999, exercises the full powers of the Board of Directors to the extent
permitted by law in the intervals between Board meetings. The Executive
Committee consists of Messrs. Handy, Walters and Zell.
Audit Committee. The Audit Committee, which held four meetings in 1999, 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 1999, 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 three meetings in 1999, 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. The Performance
Compensation Committee is comprised solely of "outside" directors independent of
management within the meaning of Section 162(m) of the Code and consists of
Mmes. Bynoe and Allen and Mr. Diefenderfer.
Nominating Committee. The Nominating Committee, which did not hold any
meetings in 1999, 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. Handy, 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.
7
<PAGE> 10
COMPENSATION OF DIRECTORS
During 1999, the Company paid 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, on the date of the Company's
Annual Meeting, each continuing non-employee director is granted options to
purchase 2,500 shares of the Company's Common Stock. Such stock options become
exercisable over a two-year period. At this Annual Meeting, stockholders are
being asked to approve the 2000 Nonemployee Director Equity Compensation Plan
which will replace the current compensation structure. See Proposal 3 below for
a description of the proposed 2000 Nonemployee Director Compensation Plan.
PROPOSAL NO. 2 -- APPROVAL OF AN AMENDMENT TO THE OPTION TO
PURCHASE 100,000 SHARES PREVIOUSLY GRANTED TO F. PHILIP HANDY
On May 19, 1997, and subject to approval by the stockholders of the
Company, the Board of Directors granted to F. Philip Handy a non-qualified
option (the "Handy Option") to purchase 100,000 shares of Common Stock at $6.75
per share to reward Mr. Handy for his service to the Company. On May 6, 1998,
the stockholders of the Company approved the Handy Option.
Under its current terms, the Handy Option expires on the earlier of the
tenth anniversary of the date of grant or three months after the date on which
Mr. Handy no longer is a member of the Board of Directors. Mr. Handy has elected
not to stand for reelection to the Board of Directors at this Annual Meeting. In
consideration of Mr. Handy's service to the Company as a member of the Board of
Directors, the Executive Committee, the Compensation Committee and, in the past,
as Acting Chief Executive Officer, the Board of Directors has voted to extend
the time frame in which Mr. Handy can exercise the Handy Option from three
months to fifteen months after his service as a director ceases. No other terms
of the Handy Option are proposed to be amended.
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the Annual Meeting and entitled to vote is
required for the approval of the amendment to the Handy Option. Abstentions with
respect to this proposal will be treated as shares that are present or
represented at the Annual Meeting and entitled to vote, but will not be counted
as a vote in favor of such proposal. Accordingly, an abstention from voting will
have the same effect as a vote against such proposal. Broker non-votes with
respect to this proposal will not be considered as present or represented at the
Annual Meeting and entitled to vote with respect to this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL
APPROVING AMENDMENT OF THE HANDY OPTION.
PROPOSAL NO. 3 -- APPROVAL OF THE 2000 NONEMPLOYEE DIRECTOR EQUITY COMPENSATION
PLAN
The Board of Directors, by a Unanimous Written Consent dated March 15,
2000, adopted the Chart House Enterprises, Inc. 2000 Nonemployee Director Equity
Compensation Plan (the "Director Plan"), subject to the approval of the
Company's stockholders.
8
<PAGE> 11
The Board has authorized the issuance of up to 400,000 shares of Common
Stock under the Director Plan.
Set forth below is a summary of certain important features of the Director
Plan, which summary is qualified in its entirety by reference to the full text
of the Director Plan which is attached as Exhibit A to this Proxy Statement. All
capitalized terms which are not defined herein are defined in the Director Plan.
Purpose of the Plan. The Director Plan will be the only source of
compensation by the Company for all Nonemployee Directors. It will align the
Nonemployee Directors' personal interests with those of the stockholders of the
Company since all of their compensation will be in equity securities of the
Company.
Shares Reserved for Issuance under the Director Plan. A total of 400,000
shares of Common Stock are reserved and available for issuance under the
Director Plan. Such shares may be authorized, but unissued shares, treasury
shares or shares acquired in the market or a combination thereof.
Eligibility. Each Nonemployee Director of the Company shall be eligible to
elect to receive his or her Compensation in either Stock Units or a Stock
Option.
Compensation. Compensation is the annual remuneration in value equal to
$35,000 earned by a Nonemployee Director, including but not limited to annual
retainer fees for service on the Board or a Board Committee, fees for attending
a meeting of the Board or a Board Committee, and any other fees paid to
Nonemployee Directors as determined by the Board, excluding any reimbursement of
expenses incurred in connection with meeting attendance.
Stock Units. Each Nonemployee Director who elects to receive his or her
Compensation for a given year in Stock Units must file an irrevocable written
election prior to the Annual Meeting of Stockholders for such year. As of the
date of the Annual Meeting, the Company will credit a Participant's Account with
a number of whole Stock Units equal to the Participant's Compensation divided by
the Fair Market Value of the Company Stock. A Participant shall become vested in
the Stock Units ratably in 25% increments, as of the end of each three months
quarterly period. A Participant's Stock Unit Account shall be distributed to the
Participant as of the last day of the month in which the earliest of the
following occurs: (i) the Participant leaves the Board of Directors; (ii) a
Change of Control occurs or (iii) the Director Plan is terminated. When
distributed, a Participant's Stock Units shall be converted to and paid in whole
shares of Company Stock.
Stock Options. Each Nonemployee Director who elects to receive his or her
Compensation for a given year in Stock Options must file an irrevocable written
election prior to the Annual Meeting of Stockholders for such year. As of the
date of the Annual Meeting, the Company will grant a Participant an Option to
purchase a number of shares of Common Stock, such that the Option granted shall
have a value equal to the Participant's Compensation, as determined in good
faith by the Company. The Company shall employ the Black-Scholes Option Pricing
Formula in good faith to determine the value of the Option. The Option will have
a term of ten years and will have an exercise price equal to the Fair Market
Value on the date of grant. The option shall vest 100% at the end of five years
subject to acceleration as follows: the Option will vest in one-third increments
if the Fair Market Value of the Common Stock is 20% higher than the Option
9
<PAGE> 12
exercise price for 60 consecutive trading days with the 20% threshold
compounding for each subsequent one-third vesting increment.
Federal Income Tax Consequences. Nonemployee Director Compensation awarded
in the form of Stock Units is not subject to federal income taxation at the time
of award. A Nonemployee Director's Stock Units will be subject to federal income
taxation at ordinary income tax rates when distributed in the form of Company
Stock, in an amount then equal to the Fair Market Value of the Company Stock
distributed.
Nonemployee Director Compensation granted in the form of a Stock Option is
not subject to federal income taxation at the time of grant. A Nonemployee
Director will be taxed at ordinary income tax rates at the time of exercise of
the Stock Option on the difference, if any, between the exercise price of the
Stock Option and the Fair Market Value of the Common Stock at the time of
exercise.
Upon the sale of any Company Stock acquired under the Plan, a Nonemployee
Director will be subject to capital gains tax on the difference, if any, between
the sale price of the Company Stock and the Fair Market Value of the Company
Stock as of the date it was either distributed from his or her Account or
acquired through exercise of the Stock Option.
Benefits to be Received. If the Director Plan had been in effect during the
Company's fiscal year ended December 27, 1999, the six (6) Nonemployee Directors
as a group would have received Compensation having a value of $210,000 for such
year under the Director Plan, in the form of Stock Units representing 38,184
shares of Common Stock if they had all elected to receive Stock Units or Stock
Options to purchase 64,812 shares of Common Stock if they all had elected to
receive Stock Options under the Director Plan.
Vote Required. The affirmative vote of the holders of a majority of the
shares of Common Stock present or represented at the Annual Meeting is required
for approval of the Director Plan. Abstentions with respect to this proposal
will be treated as shares that are present or represented at the Annual Meeting
and entitled to vote, but will not be counted as a vote in favor of such
proposal. Accordingly, an abstention from voting will have the same effect as a
vote against such proposal. Broker non-votes with respect to this proposal will
not be considered as present or represented at the Annual Meeting and entitled
to vote with respect to this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE PROPOSAL TO APPROVE THE DIRECTOR PLAN.
10
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth compensation for services in all capacities
to the Company for the fiscal years ended and December 27, 1999, December 28,
1998 and December 29, 1997, of those persons who were, during the fiscal year
ended December 27, 1999 (i) the chief executive officer, or acting in that
capacity and (ii) the other most highly compensated executive officer of the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
-------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL OCCUPATION YEAR SALARY($) BONUS($) GRANTED(#) COMPENSATION($)(2)
- ----------------------------- ---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Thomas J. Walters............ 1999 304,077 140,000 75,000 1,250
President and Chief 1998 211,154 155,000(1) 285,000 0
Executive Officer 1997 0 0 0 0
William Sullivan............. 1999 143,269 45,000 75,000 1,250
Executive Vice President, 1998 83,116 30,625 25,000 0
Chief Financial Officer 1997 0 0 0 0
and Treasurer
</TABLE>
- -------------------------
(1) Includes a $75,000 signing bonus.
(2) Includes employer matching contributions to the Company's 401(k) plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#) IN 1999 ($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Walters.... 50,000(2) 17.39% 4.50 12/9/09 141,501 358,592
25,000(3) 8.7% 4.625 1/13/09 72,716 184,276
William Sullivan..... 50,000(2) 17.39% 4.50 12/9/09 141,501 358,592
25,000(3) 8.7% 5.6875 6/7/09 89,421 226,610
</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.
(2) Options vest 100% after five years subject to acceleration, ratably, in
one-third increments, as of the end of each five-trading days during which
the Common Stock
11
<PAGE> 14
has closed 20% above the grant price. The 20% threshold is compounded for
each subsequent vesting increment.
(3) Options vest 25% each on the first four anniversaries of the day of grant
subject to acceleration, ratably, in one-third increments, as of the end of
each five-trading days during which the Common Stock has closed 20% above
the grant price. The 20% threshold is compounded for each subsequent vesting
increment.
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 27,
ACQUIRED ON REALIZED DECEMBER 27, 1999 (#) 1999($)(1)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas J. Walters...... 0 0 71,250/288,750 4,688/48,438
William Sullivan....... 0 0 5,000/95,000 0/25,000
</TABLE>
- -------------------------
(1) Value is based on the closing price on the New York Stock Exchange of the
Company's Common Stock on that date ($5.00). 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 1999. No Compensation Committee interlocking
relationships existed in 1999.
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.
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
12
<PAGE> 15
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 1999, 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.
1999 EXECUTIVE OFFICER COMPENSATION
During 1999, the Company promoted its Vice President -- Finance, William
Sullivan, to Executive Vice President, Chief Financial Officer and Treasurer,
the only executive officer other than the chief executive officer. His base
salary and bonus range were determined by the Performance Compensation Committee
based on recommendations made by the chief executive officer and information
regarding industry peer group compensation.
Bonus compensation paid to such executive officer during 1999 consisted of
a $45,000 bonus, related to his individual performance, under the Corporate
Management Compensation Plan.
Mr. Sullivan was granted an option to purchase 25,000 shares of Common
Stock at the time of his promotion to Executive Vice President, Chief Financial
Officer and Treasurer. In December 1999, Mr. Sullivan was granted an option to
purchase 50,000 shares of Common Stock to align the number of options Mr.
Sullivan has been granted to his position in the Company.
1999 CHIEF EXECUTIVE OFFICER COMPENSATION
For 1999, 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.
13
<PAGE> 16
Mr. Walters received a bonus for 1999 of $140,000, relating to his
individual performance in 1999, under the Corporate Management Compensation
Plan.
Mr. Walters was granted an option to purchase 25,000 shares of Common Stock
in January 1999 and an option to purchase 50,000 shares of Common Stock in
December 1999 to recognize the progress the Company has made since he became
President and 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 1999, 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
William M. Diefenderfer III
F. Philip Handy
14
<PAGE> 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, 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 1999, 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, financing 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 1999, the Company paid these entities approximately
$1,286,600.
During 1999, the Company also retained Lettuce Entertain You as a
consultant to evaluate the Company's business operations and restaurant concepts
and develop new concepts and menu offerings. The Company paid Lettuce Entertain
You a total of approximately $351,900 in fees and expenses during the year ended
December 27, 1999. Mr. Ottmann, a director of the Company, is President, Chief
Executive Officer and a minority shareholder of Lettuce Entertain You.
15
<PAGE> 18
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 27, 1999. The graph assumes that the value of an investment in
the Company's Common Stock and each index was $100 on December 30, 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE
COMPANY, THE NEW YORK STOCK EXCHANGE MARKET INDEX
AND A PEER GROUP
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CHT 100.00 64.00 53.33 69.33 64.00 46.67
New York Stock Exchange Market
Index 100.00 129.66 156.20 205.49 244.52 267.75
Peer Group (SIC CODE 5812) 100.00 136.94 143.56 151.10 204.13 194.18
</TABLE>
16
<PAGE> 19
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 17, 2000, 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
nominees for 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.................. 4,265 2,500 6,765 *
Linda Walker Bynoe................ 6,265 2,500 8,765 *
William M. Diefenderfer........... 80,470(2) 5,000 85,470 *
F. Philip Handy................... 3,218,874(3) 102,500 3,321,374 28.0%
Robert A. McCormack............... 0 0 0 *
Stephen Ottmann................... 11,083(4) 2,500 13,583 *
Thomas J. Walters................. -- 159,166 159,166 *
Samuel Zell....................... 3,732,148(5) 2,500 3,734,648 31.8%
William Sullivan.................. 2,101 26,666 28,767 *
All directors and executive
officers as a group (8 persons)
including the above-named
persons......................... 3,831,984 303,332 4,135,316 34.2%
</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 37,895 shares owned directly by Mr. Diefenderfer, 4,055 shares
owned by Mr. Diefenderfer in an individual retirement account, 720 shares
owned in a supplemental executive retirement plan, 4,000 shares owned as
Custodian for a son, 2,100 shares owned by an independent trustee for the
benefit of Mr. Diefenderfer's two sons, and 31,700 shares owned by his wife.
Mr. Diefenderfer disclaims beneficial ownership of the 31,700 shares owned
by his wife.
(3) Includes 1,891,522 of the shares owned by Samstock, L.L.C., 705,808 shares
owned by Samstock/ZFT, L.L.C., 198,203 shares owned by Samstock/Alpha,
L.L.C., 197,879 shares owned by F. Philip Handy, as Trustee of the Blaine
Trust, and 202,217 owned by MelChart, LLC. that are subject to a
Stockholders' Agreement. Mr. Handy disclaims beneficial ownership of
2,834,169 of these shares. 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 Samstock/Alpha, L.L.C. Also includes 20,000 shares owned by the Handy
Family Partnership, a family limited partnership, which Mr. Handy is deemed
to beneficially own through its
17
<PAGE> 20
corporate general partner. Mr. Handy disclaims 19,800 of the 20,000 shares
that are attributable to the limited partners of the Handy Family
Partnership.
(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 (3) above.
(5) Includes 1,891,522 of the shares owned by Samstock, L.L.C., 705,808 shares
owned by Samstock/ZFT, L.L.C., 198,203 shares owned by Samstock/Alpha,
L.L.C., 197,879 shares owned by F. Philip Handy, as Trustee of the Blaine
Trust, and 202,217 owned by MelChart, LLC. that are subject to a
Stockholders Agreement. 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 Samstock/Alpha, L.L.C. Also includes an additional 535,800 shares owned
by Samstock, L.L.C. that are not governed by the Stockholders' Agreement.
Mr. Zell disclaims beneficial ownership of 400,096 of these shares.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
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 Securities and Exchange
Commission (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 1999 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 27, 1999. 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 28, 1999. 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.
18
<PAGE> 21
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 2001 Annual Meeting must
submit such proposal so that it is received by the Company no later than
December 4, 2000. 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.
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 27, 1999 was mailed
to stockholders commencing on March 27, 2000.
THE COMPANY WILL SEND TO STOCKHOLDERS UPON WRITTEN REQUEST, WITHOUT CHARGE,
A COPY OF THE COMPANY'S 1999 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
/s/ Susan Obuchowski
Susan Obuchowski
Secretary
April 6, 2000
Chicago, Illinois
19
<PAGE> 22
CHART HOUSE ENTERPRISES, INC.
2000 NONEMPLOYEE DIRECTOR
EQUITY COMPENSATION PLAN
<PAGE> 23
EXHIBIT A
CHART HOUSE ENTERPRISES, INC.
2000 NONEMPLOYEE DIRECTOR
EQUITY COMPENSATION PLAN
1. PURPOSE. Chart House Enterprises, Inc., a Delaware corporation (the
"Company"), has adopted this 2000 Nonemployee Director Equity Compensation Plan
(the "Plan"), as set forth in this document. The purposes of this Plan are to:
(a) Advance the interests of the Company and its stockholders by
improving the Company's ability to attract and retain highly qualified
persons to serve as Nonemployee Directors of the Company;
(b) Align Nonemployee Directors' personal interests more closely with
those of stockholders of the Company;
(c) Promote ownership by Nonemployee Directors of a greater
proprietary interest in the Company.
(d) The Plan provides Nonemployee Directors the opportunity to elect
to receive Compensation in either:
(i) Stock Units, where one Stock Unit is equal in value to one
share of Chart House Enterprises, Inc. common stock; or
(ii) An option to purchase shares of Chart House Enterprises, Inc.
common stock.
2. DEFINITIONS. Where the following terms are used in this Plan they shall
have the meaning specified below, unless the context clearly indicates
otherwise.
(a) "Account" means the record maintained by the Company of a
Participant's interest under the Plan credited in Stock Units.
(b) "Board" means the Board of Directors of the Company.
(c) "Change of Control" shall be deemed to have occurred if (i) the
percentage of the voting stock of the Company owned by one or more persons
("person" as that term is defined for purposes of Sections 13(d) and 14(d)
of the Exchange Act) or entities becomes more than fifty percent (50%) of
the outstanding shares of Company Stock (determined on the basis of all
outstanding stock of the Company and not just with regard to a percentage
increase of such persons or entities over their prior interest), whether
such increase occurs by way of a merger, consolidation, redemption, direct
transfer, or sale of stock or otherwise, (ii) as a result of or in
connection with any tender or exchange offer, any contested election of
directors or any combination thereof, the persons who were directors of the
Company immediately before such tender or exchange offer, contested
election or combination thereof cease to constitute a majority of the
Board, (iii) the stockholders of the Company approve a plan of complete
liquidation of the Company, or (iv) the stockholders of the Company approve
an agreement for the sale or disposition of all or substantially all of the
assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because fifty percent (50% or more of the combined voting
power of the
A-1
<PAGE> 24
Company's then outstanding securities is acquired by (A) a trustee or other
fiduciary holding securities under one or more employee benefit plans
maintained by the Company or any of its Subsidiaries or (B) any company
which, immediately prior to such acquisition, is owned directly or
indirectly by the stockholders of the Company in the same proportion as
their ownership of stock in the Company immediately prior to such
acquisition.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code include regulations thereunder and
successor provisions and regulations thereto.
(e) "Company" means Chart House Enterprises, Inc. or any successor
thereto.
(f) "Company Stock" means the common stock of the Company, par value
$0.01 per share, and any equity security of the Company issued or
authorized to be issued in the future, but excluding any warrants, options
or other rights to purchase common stock.
(g) "Compensation" means annual remuneration in value equal to
thirty-five thousand dollars ($35,000.00) earned by a Nonemployee Director,
including but not limited to annual retainer fees for service on the Board
or a Board Committee, fees for attending a meeting of the board or a Board
Committee, and any other fees paid to Nonemployee Directors as determined
by the Board, but excluding any reimbursement of expenses incurred in
connection with meeting attendance. Amounts payable by the Company to a
Nonemployee Director in excess of $35,000 annually shall be payable in cash
and shall not be considered part of "Compensation" under this Plan.
(h) "Director" means a member of the Board.
(i) "Employee" means an employee of the Company receiving "wages" from
the Company, as that term is defined in Section 3121(a) of the Code.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. References to any provision of the Exchange Act include rules
thereunder and successor provisions and rules thereto.
(k) "Fair Market Value" of Company Stock means as of any given date,
(i) the closing sale price of a share of Company Stock on the principal
exchange on which shares of Company Stock are then trading, if any, on such
date, or if shares were not traded on such date, then on the closest
preceding date on which a trade occurred, or (ii) if Company Stock is not
traded on an exchange, the mean between the closing representative bid and
asked prices for the Company Stock on such date as reported by NASDAQ or,
if NASDAQ is not then in existence, by its successor quotation system; or
(iii) if Company Stock is not publicly traded, the Fair Market Value of a
share of Company Stock as established by the Committee acting in good faith
and considering all relevant and available information and data.
(l) "Nonemployee Director" means any member of the Board who is not an
Employee of the Company or a Subsidiary.
(m) "Option" or "Stock Option" means the right, granted to a Director
under Section 7, to purchase a specified number of shares of Company Stock
at the
A-2
<PAGE> 25
specified exercise price for a specified period of time under the Plan. All
Options granted under the Plan will be nonqualified stock options.
(n) "Participants" means each Nonemployee Director who participates in
the Plan in accordance with the terms of the Plan.
(o) "Plan" means the 2000 Nonemployee Director Equity Compensation
Plan.
(p) "Rule 16b-3" means that certain Rule 16b-3 under the Exchange Act,
as such Rule may be amended from time to time.
(q) "Stock Unit" means a unit of measurement equal in value to one
share of Company Stock of the Company as defined in this Section 2.
(r) "Subsidiary" means any corporation, as defined in Section 424(f)
of the Code in an unbroken chain of corporations beginning with the Company
if each of the corporations other than the last corporation in the unbroken
chain then owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain.
(s) "Termination of Board Service" means the time when a Director
ceases to be a member of the Board for any reason, including, but not by
way of limitation, a termination by resignation, expiration of term,
removal (with or without cause), retirement or death.
3. SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as provided in
Section 8, the total number of shares of Company Stock reserved and available
for issuance under the Plan is four hundred thousand (400,000). Such shares may
be authorized but unissued shares, treasury shares, or shares acquired in the
market for the account of the Participant, or a combination thereof.
4. ADMINISTRATION OF THE PLAN. The Plan will be administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee shall have the full power, discretion, and authority to interpret and
administer the Plan consistent with the Plan provisions; provided, however, in
no event shall the Committee have the power to determine the persons eligible to
participate in the Plan or the number, price, or timing of Options to be granted
under the Plan, all such determinations being automatic pursuant to Plan
provisions. Any action taken by the Committee with respect to the administration
of the Plan which would result in any Nonemployee Director ceasing to be a
"disinterested person" for purposes of any other plan maintained by the Company
within the meaning of Rule 16b-3 of the Exchange Act or which would result in a
Nonemployee Director ceasing to be an "outside director" within the meaning of
Section 162(m) of the Code shall be null and void.
5. ELIGIBILITY. Each Nonemployee Director of the Company shall be eligible
to elect to receive their Compensation in either Stock Units under Section 6 or
in a Stock Option under Section 7. No person other than those specified in this
Section 5 will be eligible to participate in the Plan.
6. RECEIPT OF STOCK UNITS. Subject to the terms of the Plan, each
Nonemployee Director of the Company may, in lieu of receipt of a Stock Option
under
A-3
<PAGE> 26
Section 7, elect to receive his or her Compensation in the form of Stock Units
in accordance with this Section 6.
(a) Election to Receive Stock Units. Each Nonemployee Director who
elects to receive Compensation for a given year in the form of Stock Units
must file an irrevocable written election with the Secretary of the Company
prior to the annual stockholder meetings for such year. A Nonemployee
Director may execute an election with the Company to receive his or her
Compensation as Stock Units by completing a Stock Unit Payment Form or any
substantially similar document to be delivered to and subject to acceptance
by the Secretary of the Company. The election to receive Stock Units shall
be irrevocable and shall remain in effect for the year, but a new election
shall be required each subsequent year.
(b) Stock Unit Account Credits. As of the date of the annual
stockholders meeting, for each Participant who has elected to receive his
or her Compensation in the form of Stock Units, the Company will credit to
the Participant's Account a number of whole Stock Units equal to the
Participant's Compensation divided by the Fair Market Value of the Company
Stock (rounded to the nearest whole Stock Unit). One Stock Unit shall at
all times have a value equal to the Fair Market Value of one share of
Company Stock.
(c) Stock Units Nontransferable. Stock Units credited to a
Participant's Account may not be sold, transferred, encumbered or
hypothecated in any manner at any time.
(d) Vesting in Stock Units. A Participant shall become vested in the
Stock Units allocated to his or her Account, ratably, in 25% increments, as
of the end of each three month quarterly period immediately following the
payment of Compensation hereunder allocated in the form of Stock Units.
(e) Stock Unit Account Distributions. A Participant's Stock Unit
Account shall be distributed to the Participant as of the last day of the
month in which the earliest of the following occurs: (i) the Participant
incurs a Termination of Board Service, (ii) a Change in Control occurs or
(iii) the Plan is terminated. Account distributions will be made no later
than thirty (30) days after the specified distribution date. Account
distributions shall be made in whole shares of the Company Stock equal to
the number of whole Stock Units to be distributed with fractional Stock
Units to be paid in cash. If a Participant dies before distribution has
been made under the Plan, distribution of his or her Account shall be made
to the beneficiary or beneficiaries designated in such form prescribed by
the Company. If no beneficiary designation has been made, payment shall be
made to the Participant's estate.
7. GRANT OF STOCK OPTIONS. Subject to the terms of the Plan, each
Nonemployee Director of the Company may, in lieu of receipt of Stock Units under
Section 6, elect to receive his or her Compensation in the form of a Stock
Option in accordance with this Section 7.
(a) Election to Receive Option Grant. Each Director who elects to
receive Compensation for a given year in the form of a Stock Option must
file an irrevocable written election with the Secretary of the Company
prior to the date of the annual stockholders meeting for such year. A
Director may execute an election with the Company to receive his or her
Compensation in a Stock Option by completing a Stock Option Payment Form or
any substantially similar document to be delivered to and be subject to
acceptance by the Secretary of the Company. The election to
A-4
<PAGE> 27
receive a Stock Option shall be irrevocable and shall remain in effect for
the year, but a new election shall be required each subsequent year.
(b) Option Grant. As of the date of the annual stockholders meeting
for a given year (the "Grant Date"), for each Participant who has elected
to receive his or her Compensation in the form of a Stock Option, the
Company shall grant the Participant an Option to purchase a number of
shares of Company Stock, such that the Option granted shall have a value
equal to the Participant's Compensation, as determined in good faith by the
Company. The Company shall employ the Black-Scholes Option Pricing Formula
in good faith to determine of the value of the Option for this purpose.
(c) Option Term. Stock Options granted hereunder shall have a term of
ten years from the Grant Date, at which time the Stock Option shall expire.
(d) Exercise Price. Stock Options granted hereunder shall have an
exercise price equal to the Fair Market Value of the Company Stock as of
the Grant Date.
(e) Option Vesting. Stock Options granted will become vested and
exercisable as follows:
(i) Except as provided in clause (ii), a Participant's Option shall
become one hundred percent (100%) fully vested on the fifth anniversary
of the Grant Date of the Stock Option, which may thereafter be
exercisable in accordance with the Plan provisions.
(ii) Notwithstanding clause (i), a Participant's Option shall
become vested, ratably, in one-third (1/3) increments, as of the end of
each 60-trading-day period during which the Fair Market Value of the
Company Stock subject to that Option has exceeded the Option's exercise
price by twenty percent (20%) for the entire 60-trading-day period. The
twenty percent (20%) threshold shall be compounded for each subsequent
vesting increment.
(f) Termination of Service. In the event of the Termination of Board
Service of a Director, all nonvested Options shall be immediately
forfeited, and all vested and outstanding Options shall remain exercisable
until the expiration of the ten-year term applicable for each Option.
(g) Payment of Exercise Price. At the time of exercise, the Optionee
shall make full cash payment to the Secretary of the Company for the shares
with respect to which the Option, or portion thereof, is exercised.
However, at the discretion of the Committee the terms of the Options may
(i) allow a delay in payment up to thirty (30) days from the date the
Option, or portion thereof, is exercised; (ii) allow payment, in whole or
in part, through the delivery of shares of Company Stock owned by the
Optionee, duly endorsed for transfer to the Company with a Fair Market
Value on the date of delivery equal to the aggregate exercise price of the
Option or exercised portion thereof; (iii) allow payment, in whole or in
part, through the surrender of shares of Company Stock then issuable upon
exercise price of the Option or Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of a
full recourse promissory note bearing interest (at no less than such rate
as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee or the Board
may also
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<PAGE> 28
prescribe the form of such note and the security to be given for such note.
The Option may not be exercised, however, by delivery of a promissory note
or by a loan from the Company when or where such loan or other extension of
credit is prohibited by law. The Committee may, in its discretion, adopt
regulations relating to payment of the Option exercise price with
previously acquired shares.
8. ADJUSTMENT PROVISIONS.
(a) Corporate Transactions and Events. In the event any
recapitalization, reorganization, merger, consolidation, spin-off,
combination, repurchase, exchange of shares or other securities of the
Company, stock split or reverse split, stock dividend, other extraordinary
dividend having a value in excess of 150% of the aggregate quarterly
dividends paid during the 12-month period preceding the record date
therefor, liquidation, dissolution, or other similar corporate transaction
or event affects the Company Stock such that an adjustment of a
Participant's Stock Units or Stock Options is appropriate in order to
prevent dilution or enlargement of the Participant's rights under the Plan,
then an adjustment shall be made, in a manner that is proportionate to the
change to the Company Stock and otherwise equitable in the number and kind
of shares of Company Stock remaining available for issuance under the Plan.
The foregoing notwithstanding, no adjustment may be made hereunder except
as will be necessary to maintain the proportionate interest of the
Participant under the Plan.
(b) Change in Control. Upon the occurrence of a Change in Control,
unless specifically prohibited by the terms of applicable law or
regulation, any and all Stock Units and Stock Options granted hereunder
shall become immediately fully vested and exercisable.
(c) Insufficient Number of Shares. If at any date an insufficient
number of shares of Company Stock are available under the Plan for the
receipt of Compensation in the form of Stock Units or Stock Options at that
date, Compensation shall be paid in the form of Stock Units or Stock
Options proportionately among Nonemployee Directors who are eligible to
participate and who have elected to receive Stock Units or Stock Options,
as applicable, to the extent shares are then available under Section 3, and
the remainder of each Nonemployee Director's Compensation shall be paid in
cash.
(d) Changes to the Plan. The Board of Directors may amend, alter,
suspend, discontinue or terminate the Plan without the consent of
stockholders or Participants, except that any amendment or alteration will
be subject to the approval of the Company's stockholders at or before the
next annual meeting of stockholders for which the record date is after the
date of such Board action if such stockholder approval is required by
federal or state law or regulation or the rules of any stock exchange or
automated quotation system or any regulatory body having jurisdiction
thereto, and the Board may otherwise determine to submit other such
amendments or alterations to stockholders for approval; provided, however,
that without the consent of an affected Participant, no such action may
materially impair the rights of such Participant with respect to any
previous Option; and provided, however, that the Plan may not be amended
more than once every six months other than to bring it into compliance with
changes in the Code, the Exchange Act, or other relevant laws, regulations,
or requirements.
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<PAGE> 29
9. GENERAL PROVISIONS.
(a) Agreements. Stock Options and Stock Units awarded under the Plan
will be evidenced by agreements or other documents executed by the Company
and the Participant incorporating the terms and conditions set forth in the
Plan, together with such other terms and conditions not inconsistent with
the Plan as the Board of Directors may from time to time approve.
(b) Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver shares of Company Stock in distribution of
any Nonemployee Director's Account, or upon the exercise of any Stock
Option, in a transaction subject to the registration requirements of the
Securities Act of 1933, as amended, or any other state securities law, any
requirement under any listing agreement between the Company and any stock
exchange or automated quotation system, or any other law, regulation or
contractual obligation of the Company, until the Company is satisfied that
such laws, regulations and other obligations of the Company have been
complied with in full. Certificates representing shares of Company Stock
issued under the Plan will be subject to such stop-transfer orders and
other restrictions as may be applicable under such laws, regulations and
other obligations of the Company, including any requirement that a legend
or legends be placed thereon.
(c) Compliance with Rule 16b-3. It is the intent of the Company that
this Plan and all transactions under this Plan comply in all respects with
applicable provisions of Rule 16b-3 under the Exchange Act. Accordingly, if
any provision of this Plan, any agreement hereunder, or any transaction
pursuant to an Option under the Plan does not comply with the requirements
of Rule 16b-3 as then applicable to a Participant, or would preclude a
Nonemployee Director of the Company from being deemed a "disinterested
person" within the meaning of Rule 16b-3, such provisions will be construed
or deemed amended to the extent necessary to conform to the applicable
requirements with respect to such Participant and ensure the Nonemployee
Director's status as a "disinterested person" is unaffected. In addition,
the Board of Directors will have no authority to make any amendment,
alteration, suspension, discontinuation, or termination of the Plan under
Section 8 and the Board of Directors will have no authority to make any
adjustment under Section 8, amend any agreement hereunder, or take any
other action if and to the extent such authority would cause a transaction
under the Plan by a Participant not to be exempt, or would preclude a
Nonemployee Director from being deemed a "disinterested person," under Rule
16b-3.
(d) No Right to Continue as a Director. Nothing contained in the Plan
or any agreement hereunder will confer upon any Participant any right to
continue to serve as a Nonemployee Director of the Company.
(e) No Stockholder Rights Conferred. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant (or any person or
entity claiming rights by or through a Participant) any rights of a
stockholder of the Company unless and until shares of Company Stock are in
fact issued to such Participant (or person).
(f) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board of Directors nor its submission to the stockholders of the
Company for approval shall be
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<PAGE> 30
construed as creating any limitations on the power of the Board to adopt
such other compensatory arrangements for Nonemployee Directors as it may
deem desirable.
(g) Governing Law. To the extent not preempted by Federal law the Plan
and any agreement pursuant to the Plan shall be construed in accordance
with and governed by the internal laws of the State of Delaware.
(h) Severability. In the event any provision of the Plan or any action
taken pursuant to the Plan shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included, and the illegal or invalid action
shall be deemed null and void.
10. EFFECTIVE DATE. The Plan, as amended and restated herein, shall be
effective if, and at such time as, the stockholders of the Company have approved
it by the affirmative votes of the holders of a majority of the voting
securities of the Company present, or represented, and entitled to vote on the
subject matter at a duly held meeting of stockholders.
(a) Stockholder Approval. Stockholder approval of the Plan must be
obtained not later than the final adjournment of the first annual meeting
of stockholders of the Company held after the date of the Board of
Directors has adopted the Plan.
(b) Delayed Effectiveness of Elections in Order to Comply with Rule
16b-3. Other provisions of this Plan notwithstanding, if any payment of
Compensation in the form of Company Stock would occur less than six months
after the Participant filed the irrevocable election which would result in
such payment, and at a time when the Company's employee benefits plans are
being operated in conformity with Rule 16b-3 under the Exchange Act as in
effect on and after May 1, 1991, such Compensation shall be paid in cash.
11. PLAN TERMINATION. Unless earlier terminated by action of the Board of
Directors, the Plan will remain in effect until such time as (i) no shares of
Stock remain available for issuance under the Plan, (ii) all Stock Unit Accounts
have been distributed under the Plan, and (iii) the Company and Participants
have no further rights or obligations under the Plan. However, in no event may
an Option be granted under the Plan on or after the tenth anniversary of the
effective date of the Plan, but Options granted prior to such tenth anniversary
may extend beyond that date.
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<PAGE> 31
* * *
I hereby certify that the foregoing Plan was duly adopted by unanimous
written consent by the Board of Directors of Chart House Enterprises, Inc. and
approved by the stockholders of Chart House Enterprises, Inc. at a meeting held
on , 2000.
Executed on this day of , 2000
- ---------------------------------------------
Secretary
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<PAGE> 32
SKU No. 0300-PR-00
<PAGE> 33
[CHT'S LOGO]
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
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 SAMUEL ZELL 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 Monday,
May 15, 2000, at 10:00 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 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, "for" the
amendment to the option previously granted to F. Philip Handy, "for" the 2000
Nonemployee Director Equity Compensation Plan 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.
SEE REVERSE SEE REVERSE
SIDE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 34
<TABLE>
<CAPTION>
DETACH HERE
- -----------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
<S> <C>
1. ELECTION OF SEVEN DIRECTORS 2. Approval of an amendment to the option to
NOMINEES: Barbara R. Allen, Linda Walker Bynoe, purchase 100,000 shares of common stock
William M. Diefenderfer III, Robert A. Mc Cormack, previously granted to F. Philip Handy.
Stephen Ottmann, Thomas J. Walters and Samuel Zell.
FOR AGAINST ABSTAIN
FOR ALL WITHHELD FROM
NOMINEES ALL NOMINEES
3. Approval of the 2000 Nonemployee Director
Equity Compensation Plan.
FOR AGAINST ABSTAIN
---------------------------------
For all nominees except as noted above
Mark here if you plan to attend the meeting.
Mark here for address change and note at left.
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.
Signature: _____________________________________ Signature: ____________________________________ Date: ____________
</TABLE>
