<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
RARE HOSPITALITY INTERNATIONAL, 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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[RARE HOSPITALITY LOGO]
8215 ROSWELL ROAD
BUILDING 200
ATLANTA, GEORGIA 30350
April 25, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
RARE Hospitality International, Inc., which will be held at the Ritz-Carlton
Buckhead, 3434 Peachtree Road, Atlanta, Georgia, on Tuesday, May 20, 1997, at
3:00 p.m. local time.
I hope you are planning to attend the meeting so that you can become
acquainted with the members of our Board of Directors and our management team.
The items of business that will be considered and voted upon this year are
explained in the accompanying Proxy Statement. Even if you are planning to
attend and to vote your shares in person, please complete the enclosed proxy
card and return it to us.
If you have any questions about the Proxy Statement or the 1996 Annual
Report to Shareholders, please contact Ms. Anne D. Huemme at (770) 399-9595.
We look forward to seeing you on May 20, 1997.
Sincerely,
/s/ GEORGE W. McKERROW, JR.
GEORGE W. McKERROW, JR.
Chairman of the Board of Directors
<PAGE> 3
RARE HOSPITALITY INTERNATIONAL, INC.
8215 ROSWELL ROAD
BUILDING 200
ATLANTA, GEORGIA 30350
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1997
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of RARE Hospitality International, Inc. (the "Company"), will be held
at the Ritz-Carlton Buckhead, 3434 Peachtree Road, Atlanta, Georgia, on Tuesday,
May 20, 1997, at 3:00 p.m. local time, for the following purposes:
1. To elect three directors in Class II to serve until the 2000 Annual
Meeting of Shareholders.
2. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors to serve for the fiscal year ending December 28, 1997.
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only those shareholders of record at the close of business on April 14,
1997, are entitled to notice of and to vote at the Meeting and any adjournments
thereof. The transfer books will not be closed. A complete list of shareholders
entitled to vote at the Meeting will be available at the Meeting.
By Order of the Board of Directors,
/s/ ANNE D. HUEMME
ANNE D. HUEMME
Secretary
Atlanta, Georgia
April 25, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
VOTE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
BUSINESS REPLY ENVELOPE. IF YOU DO ATTEND THE MEETING YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE> 4
RARE HOSPITALITY INTERNATIONAL, INC.
8215 ROSWELL ROAD
BUILDING 200
ATLANTA, GEORGIA 30350
April 25, 1997
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 1997
INTRODUCTION
This Proxy Statement is furnished to shareholders of RARE Hospitality
International, Inc., a Georgia corporation (herein, unless the context otherwise
requires, the "Company"), in connection with the solicitation of proxies by the
Company's Board of Directors from holders of the outstanding shares of common
stock of the Company ("Common Stock") for use at the Annual Meeting of
Shareholders to be held at the Ritz-Carlton Buckhead, 3434 Peachtree Road,
Atlanta, Georgia, on Tuesday, May 20, 1997, at 3:00 p.m. local time, and at any
adjournments thereof (the "Meeting").
The Meeting will be held for the following purposes: (i) to elect three
directors in Class II to serve until the 2000 Annual Meeting of Shareholders;
(ii) to ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 28, 1997; and (iii) to
transact such other business as may properly come before the Meeting.
The Company's mailing address and the location of its principal executive
offices is 8215 Roswell Road, Building 200, Atlanta, Georgia 30350. This Proxy
Statement and the accompanying Proxy are first being mailed to shareholders of
the Company on or about April 25, 1997.
SHAREHOLDERS ENTITLED TO VOTE
Only shareholders of record of the Company at the close of business on
April 14, 1997 (the "Record Date"), will be entitled to notice of, and to vote
at, the Meeting. On the Record Date, there were 11,662,525 shares of Common
Stock issued and outstanding held by approximately 426 shareholders of record.
Notwithstanding the Record Date specified above, the Company's stock transfer
books will not be closed and shares may be transferred subsequent to the Record
Date. However, all votes must be cast in the names of shareholders of record on
the Record Date.
QUORUM AND VOTING REQUIREMENTS
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast on a matter at the Meeting will constitute a quorum to
conduct business at the Meeting. Pursuant to the Bylaws of the Company, holders
of Common Stock will be entitled to one vote for each share held.
The election of directors will require the affirmative vote of a majority
of the shares represented at the Meeting and entitled to vote, provided a quorum
is present. With respect to the election of directors, shareholders may: (1)
vote "for" all of the director nominees; (2) "withhold" authority to vote for
all of the nominees; or (3) withhold authority to vote for any individual
nominee or nominees but vote for all other nominees. In the election of
directors, votes to withhold authority and broker nonvotes (which occur when
shares held by brokers or nominees for beneficial owners are voted on some
matters but not on others), both of which are considered present at the Meeting
and counted for purposes of establishing a quorum, will have the same effect as
a vote "against" the nominee.
The ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors will require that votes cast in favor of the proposal exceed the votes
cast against the proposal, provided a quorum is present. With respect to the
approval of the auditors, shareholders may: (1) vote "for" approval; (2) vote
<PAGE> 5
"against" approval; or (3) "abstain" from voting on the proposal. Abstentions
and broker nonvotes will have no effect on the approval of the auditors.
PROXIES
If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE
VOTED (I) FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR OF THE COMPANY, (II) FOR
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 28, 1997, AND (III) IN
THE SOLE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING.
A shareholder who has given a Proxy may revoke it at any time prior to its
exercise at the Meeting by (i) giving written notice of revocation to the
Secretary of the Company, (ii) properly submitting to the Company a duly
executed Proxy bearing a later date, or (iii) appearing at the Meeting and
voting in person. All written notices of revocation of Proxies should be
addressed as follows: RARE Hospitality International, Inc., 8215 Roswell Road,
Building 200, Atlanta, Georgia 30350, Attention: Ms. Anne D. Huemme, Secretary.
2
<PAGE> 6
PROPOSAL I
ELECTION OF DIRECTORS
The Company's Board of Directors has nominated Messrs. George W. McKerrow,
Jr., Richard E. Rivera and Edward P. Grace, III for election as Class II
directors to hold office until the 2000 Annual Meeting of Shareholders of the
Company and until their successors shall have been elected and qualified.
It is believed that all of the nominees will be available and able to serve
as directors. It is anticipated that management shareholders of the Company will
grant authority to vote for the election of all the nominees.
The Company's Board of Directors is divided into three classes, with three
directors in each of Classes I, II and III. Messrs. McKerrow, Sr., Chapman and
Metz are directors in Class I and their terms expire at the 1999 Annual Meeting
of Shareholders. Messrs. McKerrow, Jr., Rivera and Grace are directors in Class
II and their terms expire at the 1997 Annual Meeting of Shareholders. Messrs.
San Martin and Pawly are directors in Class III and their terms expire at the
1998 Annual Meeting of Shareholders. There is currently a vacant director's
position in Class III.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE THREE NOMINEES FOR
ELECTION AS DIRECTORS. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES
REPRESENTED AND ENTITLED TO VOTE AT THE MEETING AT WHICH A QUORUM IS PRESENT IS
REQUIRED FOR THE ELECTION OF THE NOMINEES.
3
<PAGE> 7
CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following table sets forth the names of the nominees and of the
directors continuing in office, their ages, the year in which each was first
elected a director, their position(s) with the Company, their principal
occupations and employers for at least the last five years, and any other
directorships held by them in certain other companies. For information
concerning membership on committees of the Board of Directors, see "Meetings of
the Board of Directors and Committees" below. For information concerning
directors' ownership of Common Stock, see "Beneficial Owners of More Than Five
Percent of the Company's Common Stock; Shares Held by Directors and Executive
Officers" below.
NOMINEES TO THE BOARD OF DIRECTORS
CLASS II
TERM EXPIRING ANNUAL MEETING 2000
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS
DURING AT LEAST THE PAST FIVE YEARS,
NAME AND YEAR FIRST ELECTED A DIRECTOR AGE AND OTHER DIRECTORSHIPS
- -------------------------------------- --- -------------------------------------------------
<S> <C> <C>
George W. McKerrow, Jr................ 46 Mr. McKerrow, Jr. is the Chairman of the Board of Directors
1982 of the Company, a position he has held since February
1994. Mr. McKerrow previously served as President and a
director of the Company from its organization in 1982
until February 1994. Before opening the first LongHorn
Steakhouse restaurant in 1981, Mr. McKerrow, Jr. was the
Southeastern Regional Manager of Victoria Station
Restaurants. Mr. McKerrow, Jr. is the son of George W.
McKerrow, Sr., a director of the Company.
Richard E. Rivera..................... 50 Mr. Rivera became the Company's President and Chief
1994 Executive Officer in February 1994. From March 1988
until he joined the Company in February 1994, Mr. Rivera
served as President and Chief Executive Officer of TGI
Friday's, Inc., an operator and franchisor of
restaurants. Mr. Rivera also serves as a member of the
Casa Ole, Inc. Board of Directors and is a member of
both the audit and compensation committees of that
Board.
Edward P. Grace, III.................. 46 Mr. Grace became a director in September 1996 pursuant to
1996 the acquisition of Bugaboo Creek Steak House, Inc. by
the Company. Mr. Grace serves as President of Phelps
Grace International, Inc., a developer and operator of
restaurants. From 1989 until September 1996, Mr. Grace
served as Chairman of the Board, President and Chief
Executive Officer of Bugaboo Creek Steak House, Inc., an
operator of restaurants.
</TABLE>
4
<PAGE> 8
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS III
TERM EXPIRING ANNUAL MEETING 1998
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS
DURING AT LEAST THE PAST FIVE YEARS,
NAME AND YEAR FIRST ELECTED A DIRECTOR AGE AND OTHER DIRECTORSHIPS
- -------------------------------------- --- -------------------------------------------------
<S> <C> <C>
Ronald W. San Martin.................. 49 Mr. San Martin serves as President of 490 East Paces Ferry,
1985 Inc., a developer and operator of restaurants, and has
held the position of Chief Financial Officer, since June
1995, and Secretary, since January 1996, of We're Cookin
Inc., a restaurant operating company. Mr. San Martin was
the Chief Financial Officer and the Secretary of the
Company from May 1985 until June 1995. Prior to joining
the Company, Mr. San Martin was a tax manager at Evans,
Snyder & Co., Certified Public Accountants.
John G. Pawly......................... 68 Mr. Pawly has retired as a senior Consultant for Attwood
1993 Corporation, a manufacturer of boating accessories and
general hardware, a position he held since its merger in
January 1994 with Pawly Industries Corporation, a
privately held manufacturer of boating accessories. Mr.
Pawly served as President and principal shareholder of
Pawly Industries Corporation and Chairman and Chief
Executive Officer of L.S. Brown Co., a division of Pawly
Industries Corporation, for more than five years prior
to January 1994.
</TABLE>
CLASS I
TERM EXPIRING ANNUAL MEETING 1999
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS
DURING AT LEAST THE PAST FIVE
NAME AND YEAR FIRST ELECTED A DIRECTOR AGE YEARS, AND OTHER DIRECTORSHIPS
- -------------------------------------- --- --------------------------------------------------------
<S> <C> <C>
George W. McKerrow, Sr. .............. 71 Mr. McKerrow, Sr. was Chairman of the Board of Directors of
1982 the Company from its organization in 1982 until February
1994 and continues as a director and employee of the
Company. Before joining the Company, Mr. McKerrow, Sr.
was the Vice President and General Manager of the
Dairypak Division of Champion International Corporation.
Mr. McKerrow's son, George W. McKerrow, Jr. is the
Chairman of the Board of Directors of the Company.
Don L. Chapman........................ 57 Mr. Chapman is President and Chief Executive Officer of Tug
1982 Manufacturing Corporation, a manufacturer of aircraft
towing equipment, a position he has held for more than
five years. Mr. Chapman is also a director of The Omni
Insurance Group, Inc., and ValuJet Airlines, Inc. and
serves on the compensation committee of both of these
boards.
John C. Metz.......................... 57 Mr. Metz has served as Chairman and Chief Executive Officer
1995 of Metz Enterprises, Inc., a contract food management
and retail restaurant operations company, since 1987.
</TABLE>
5
<PAGE> 9
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Board of Directors. The property, affairs and business of the Company are
under the general management of its Board of Directors as provided by the laws
of Georgia and the Bylaws of the Company. The Company has standing Audit,
Compensation and Stock Option Committees of the Board of Directors and does not
have a Nominating Committee.
Audit Committee. The members of the Audit Committee are Don L. Chapman and
John G. Pawly. The Audit Committee recommends the independent accountants for
approval by the Board of Directors to audit the financial statements of the
Company, which includes an inspection of the books and accounts of the Company,
and reviews with such accountants the scope of their audit and their report
thereon, including any questions and recommendations that may arise relating to
such audit and report or the Company's internal accounting procedures. The Audit
Committee held one meeting during the 1996 fiscal year.
Compensation Committee. The members of the Compensation Committee are Don
L. Chapman, John C. Metz and John G. Pawly. The function of the Compensation
Committee is to review and approve the compensation of executive officers
including salary, bonus and other annual compensation awards. The Compensation
Committee reports to the Board of Directors. The Compensation Committee held two
meetings during the 1996 fiscal year.
Stock Option Committee. The members of the Stock Option Committee are Don
L. Chapman, John C. Metz and John G. Pawly. The Stock Option Committee
establishes targets and then recommends incentive awards under the incentive
compensation plans of the Company for executive officers and other key personnel
of the Company. The Stock Option Committee held one meeting during the 1996
fiscal year.
During the 1996 fiscal year, the Company's Board of Directors met ten
times. Each director, during the period he was a director, attended at least 75%
of the aggregate number of meetings of the Board of Directors and each of the
Committees of the Board of Directors of which he was a member.
EXECUTIVE OFFICERS OF THE COMPANY
Except for Messrs. McKerrow, Jr., and Rivera discussed above, the following
table sets forth the names of the executive officers of the Company, their ages,
their position(s) with the Company, their principal occupations and employers
for at least the last five years, and any other directorships held by them in
certain other companies. For information concerning ownership of Common Stock,
see "Beneficial Owners of More Than Five Percent of the Company's Common Stock;
Shares Held by Directors and Executive Officers" below.
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS
NAME AGE DURING AT LEAST THE PAST FIVE YEARS
- ---- --- --------------------------------------------------------
<S> <C> <C>
Anne D. Huemme....................... 35 Ms. Huemme became the Company's Chief Financial Officer
and Secretary in June 1995. For more than five years
prior to joining the Company, Ms. Huemme held various
positions at Pizza Hut, Inc., including Division
Director of Asset Development and regional Finance
Director.
Robert Ferngren...................... 42 Mr. Ferngren became the Company's Executive Vice
President for the LongHorn Steakhouse concept in
February 1997. Prior to joining the Company, he had
served as President and Chief Executive Officer of Fresh
Choice, Inc., a publicly-held operator of restaurants
with 51 restaurants and approximately $80 million in
revenues. Before joining Fresh Choice, Inc., Mr.
Ferngren was President and Chief Executive Officer of
America's Clubhouse Grill, Inc., a company he founded in
1993 after having held various positions from 1981 with
S&A Restaurant Corporation/ Bennigans, including
Director of Operations and President.
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS
NAME AGE DURING AT LEAST THE PAST FIVE YEARS
- ---- --- --------------------------------------------------------
<S> <C> <C>
Eugene I. Lee........................ 36 Mr. Lee became the Company's Executive Vice President
for the Bugaboo Creek Steak House concept in January
1997. For more than five years prior to joining the
Company, he occupied various positions with Uno
Restaurant Corporation, an operator of restaurants,
including Senior Vice President -- Operations.
OTHER KEY EMPLOYEES
Lane G. Schmiesing................... 40 Mr. Schmiesing became the Vice President of Marketing
for the LongHorn Steakhouse concept in May 1994. From
May 1992 to May 1994, Mr. Schmiesing was a principal
with Foodservice Marketing Solutions, a marketing
consultant to the food service industry. For more than
five years prior to May 1992, Mr. Schmiesing held
various positions with Bonanza Restaurants including
Senior Vice President of Marketing.
Kirk M. Hermansen.................... 32 Mr. Hermansen became the Company's Vice President of
Development in May 1994. For more than five years prior
to joining the Company, Mr. Hermansen held various
positions with TGI Friday's, Inc. including Real Estate
Analyst and Director of Real Estate.
Nancy J. Winship..................... 38 Ms. Winship became the Company's Vice President of Human
Resources in January 1997. Prior to that, she held
various positions at the Company including Director of
Human Resources starting in 1995, Director of Recruiting
and Training starting in 1994, and Management Recruiter
starting in 1992. Before joining the Company, Ms.
Winship served in management recruiting at Cracker
Barrel Old Country Store, Inc.
</TABLE>
7
<PAGE> 11
BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT OF THE COMPANY'S COMMON STOCK;
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS
Based solely on information made available to the Company, the following
table sets forth certain information with respect to the beneficial ownership of
the Company's Common Stock as of April 14, 1997, by (i) each person who is known
by the Company to beneficially own more than 5% of the outstanding shares of
Common Stock of the Company, (ii) each director and nominee for director of the
Company, (iii) the Named Executive Officers of the Company (as defined under
"Executive Compensation" below), and (iv) all of the Company's executive
officers and directors as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NAME(1) SHARES PERCENT
- ------- --------- -------
<S> <C> <C>
George W. McKerrow, Jr...................................... 505,000(2) 4.33%
Richard E. Rivera........................................... 275,000(3) 2.36%
Ronald W. San Martin........................................ 225,000(4) 1.93%
George W. McKerrow, Sr...................................... 516,100(5) 4.42%
Edward P. Grace, III........................................ 1,479,924(6) 12.69%
Don L. Chapman.............................................. 18,000(7)(8) *
John G. Pawly............................................... 19,000(7) *
John C. Metz................................................ 3,000(9) *
William A. Burnett(9)....................................... 36,480(11) *
Anne D. Huemme.............................................. 11,700(12) *
Lane G. Schmiesing.......................................... 20,560(13) *
All executive officers and directors as a group (eleven
persons)............................................... 3,089,524(14) 26.5%
</TABLE>
- ---------------
* Less than one percent.
(1) The named shareholders have sole voting and investment power with respect
to all shares shown as being beneficially owned by them, except as
otherwise indicated. Shares of Common Stock underlying options to purchase
Common Stock are deemed to be outstanding for the purpose of computing the
outstanding Common Stock owned by the particular person and by the group,
but are not deemed outstanding for any other purpose.
(2) Includes 150,000 shares of Common Stock pledged to secure a loan to Mr.
McKerrow, Jr. over which he has sole voting and shared investment power;
5,265 shares of Common Stock held by Mr. McKerrow, Jr. as custodian for one
of his daughters; and 1,000 shares of Common Stock held by Mr. McKerrow,
Jr.'s wife, as to which shares Mr. McKerrow, Jr. disclaims beneficial
ownership.
(3) Consists solely of options to purchase shares of Common Stock which are
currently exercisable.
(4) Includes 50,000 shares of Common Stock pledged to secure a loan to Mr. San
Martin over which Mr. San Martin has sole voting and shared investment
power.
(5) Includes 600 shares of Common Stock owned by Mr. McKerrow, Sr., as
custodian for his grandchildren and 515,500 shares held by the George W.
McKerrow, Sr. Revocable Trust. Mr. McKerrow is the sole trustee of such
trust with sole voting and dispositive power over all 515,500 shares held
by the trust.
(6) Includes 246,251 shares held as Trustee of a retained annuity trust, 60,542
held by the Grace Family Limited Partnership, and 1,158,366 shares held as
a General Partner of Grace Associates general partnership. The address for
Mr. Grace is RARE Hospitality International, Inc., 8215 Roswell Road,
Building 200, Atlanta, Georgia 30350.
(7) Includes 11,000 shares with respect to Mr. Chapman and 14,000 shares with
respect to Mr. Pawly that are subject to currently exercisable options.
(8) Includes 7,000 shares owned jointly with his wife.
(9) Includes 2,500 shares that are subject to currently exercisable options.
(10) Mr. Burnett resigned as the Company's Vice President of Operations
effective September 1996.
(11) Includes options to purchase 36,280 shares of Common Stock which are
currently exercisable and 200 shares of Common Stock held by Mr. Burnett's
wife in an individual retirement account.
(12) Includes 11,700 shares that are subject to currently exercisable options.
(13) Includes 19,560 shares that are subject to currently exercisable options.
(14) Includes 369,960 shares of Common Stock that are subject to currently
exercisable options.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation paid or accrued by the Company, for services rendered in all
capacities during the fiscal years ended December 31, 1994, December 31, 1995,
and December 29, 1996, for (i) the President and Chief Executive Officer of the
Company; and (ii) each of the five other most highly compensated executive
officers of the Company (determined as of the end of the last fiscal year) whose
total annual salary and bonus exceeded $100,000 (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
George W. McKerrow, Jr. ................. 1996 $120,000 -- -- $ 3,761(1)
Chairman of the Board of 1995 192,028 -- -- 4,620(1)
Directors and a Director 1994 235,000 -- -- 4,620(1)
Richard E. Rivera........................ 1996 262,019 $275,000 -- 9,600(3)
President and Chief Executive 1995 250,000 275,000 -- 9,600(3)
Officer and a Director 1994(2) 229,396 200,000 500,000 29,221(4)
William A. Burnett*...................... 1996 138,942 27,000 12,038(5)(6)
Former Vice President of 1995 135,000 47,000 11,400 12,662(7)(6)
Operations 1994(8) 100,618 -- 60,000 12,572(4)
Anne D. Huemme........................... 1996 105,730 25,000 -- 6,588(3)
Chief Financial Officer 1995 48,475 -- -- 4,800(3)
1994 -- -- -- --
Lane G. Schmiesing....................... 1996 93,146 18,000 -- 9,600(3)
Vice President Marketing............... 1995 89,180 15,000 -- 9,600(3)
1994 -- -- -- --
</TABLE>
- ---------------
(1) Consists of discretionary and matching contributions to the Company's 401(k)
Plan. The matching contributions are based on pre-tax elective contributions
(included under salary and bonus) made to such plan.
(2) Mr. Rivera was employed by the Company effective February 1, 1994. See
"Executive Compensation -- Employment Contracts."
(3) Consists of automobile allowance.
(4) Consists of moving expenses reimbursed to Mr. Rivera and Mr. Burnett in
connection with moving their families and personal property to Atlanta,
Georgia when they joined the Company.
(5) Includes $2,438 in discretionary and matching contributions to the Company's
401(k) Plan. The matching contributions are based on pre-tax elective
contributions (included under salary and bonus) made to such plan.
(6) Includes a $9,600 automobile allowance.
(7) Includes $3,062 in discretionary and matching contributions to the Company's
401(k) Plan. The matching contributions are based on pre-tax elective
contributions (included under salary and bonus) made to such plan.
(8) Mr. Burnett was employed by the Company effective March 14, 1994.
* Mr. Burnett resigned as an officer of the Company effective September 1996.
9
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not make any stock option grants to any Named Executive
Officers in 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(1) AT FISCAL YEAR-END(2)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
George W. McKerrow, Jr.................... -- -- -- --
Richard E. Rivera......................... 275,000(3) 200,000(4) $2,818,750 $1,000,000
William A. Burnett........................ 36,280(5) -- 267,850 --
Anne D. Huemme............................ 11,700(6) 46,800(7) 49,625 198,500
Lane G. Schmiesing........................ 19,560(8) 39,240(9) 152,200 285,300
</TABLE>
- ---------------
(1) No stock options were exercised by any of the Named Executive Officers in
1996.
(2) The value of in-the-money options was calculated using the market value of
the Common Stock on December 29, 1996 ($19, the closing sale price on the
Nasdaq National Market).
(3) The exercise price of these options is $8.75.
(4) The number of securities underlying the options granted and the exercise
prices for these options is as follows:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS EXERCISE OR
GRANTED BASE PRICE
---------- -----------
<C> <C>
100,000 $12.00
100,000 $16.00
</TABLE>
(5) The exercise price of 30,000 of these options is $11.50, the exercise price
of 4,000 of these options is $9.00 and the exercise price of the remaining
2,280 options is $17.75.
(6) The exercise price of 10,000 of these options is $14.25 and the exercise
price of the remaining 1,700 options is $17.75.
(7) The number of securities underlying the options granted and the exercise
price for these options is as follows:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS EXERCISE OR
GRANTED BASE PRICE
---------- -----------
<C> <C>
40,000 $14.25
6,800 $17.75
</TABLE>
(8) The exercise price of 17,000 of these options is $10.75, the exercise price
of 1,000 of these options is $9.00 and the exercise price of the remaining
1,560 options is $17.75.
(9) The number of securities underlying the options granted and the exercise
price for these options is as follows:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS EXERCISE OR
GRANTED BASE PRICE
---------- -----------
<C> <C>
30,000 $10.75
3,000 $ 9.00
6,240 $17.75
</TABLE>
10
<PAGE> 14
Compensation of Directors. Directors of the Company who are not also
employees receive an annual retainer of $4,000, director fees of $1,000 per
meeting attended and $500 per committee meeting attended, plus reimbursement of
travel and other expenses incurred in connection with the performance of their
duties. Directors who are also employees of the Company are not paid any
compensation for their services as directors. In addition, non-employee
Directors are also eligible to receive formula plan stock options under the
Company's 1996 Stock Plan for Outside Directors ("Directors Plan"). In 1996,
Messrs. Chapman, Metz, Pawly and San Martin each received options to purchase
5,000 shares of Common Stock at an exercise price of $21.25 under the Directors
Plan.
Employment Contracts. Effective January 1, 1992, the Company entered into
an employment agreement with Mr. McKerrow, Jr. which provided for annual salary
of $220,000. Effective January 1, 1993, the annual salary of Mr. McKerrow, Jr.
was changed to $235,000 and, on August 1, 1995, Mr. McKerrow's annual salary was
changed to $120,000. This agreement also provides for the employment of Mr.
McKerrow, Jr. for an indefinite period in the position he currently occupies,
which employment may be terminated by either party at will. In addition, Mr.
McKerrow, Jr. agrees that for a period of one year following the termination of
his employment with the Company, without the consent of the Company he will not
engage, in a general management capacity, in the operation of a steak restaurant
within the Company's then current market areas.
Effective February 1, 1994, the Company entered into an employment
agreement with Mr. Richard E. Rivera, the Company's President and Chief
Executive Officer (the "Employment Agreement"). Under the Employment Agreement,
which expires on January 31, 1999, Mr. Rivera receives an annual salary of
$250,000 and an annual bonus based upon growth in the Company's earnings per
share in each calendar year beginning with 1994.
In the event Mr. Rivera is terminated without cause or his employment is
terminated due to his death or disability, he will be entitled to receive the
compensation owed but unpaid for performance rendered under the Employment
Agreement as of the date of termination and any additional compensation he may
be entitled to receive under the terms of any employee benefit plan. In
addition, (i) in the event Mr. Rivera is terminated without cause, the Company
will be obligated to pay him his base compensation as of the date of termination
of such employment from the date of such termination for the lesser of (a) two
years or (b) the remaining term of the Employment Agreement; (ii) in the event
Mr. Rivera is terminated due to his death the Company will pay to the personal
representative of Mr. Rivera a lump sum amount equal to one-half of his annual
salary as in effect on the date of his death; and (iii) in the event Mr. Rivera
is terminated due to incapacity the Company will pay to Mr. Rivera, for up to 90
days, an amount equal to the difference between the amount of Mr. Rivera's then
level of base compensation and 150% of the amount paid to Mr. Rivera under any
short-term disability insurance policy obtained by Mr. Rivera under the
Company's group coverage until the Company's long-term disability insurance
begins to pay. In the event Mr. Rivera elects to terminate the Employment
Agreement (as might be the case if he resigned), or is terminated for cause, he
will only receive any unpaid portion of his compensation owed under the
Employment Agreement and any additional compensation he may be entitled to
receive under the terms of any employee benefit plan.
The Employment Agreement also contains certain provisions relating to
unauthorized disclosure of confidential information, recognition of the
proprietary rights and non-competition provisions which provide that without the
consent of the Company Mr. Rivera will not compete with the Company during his
employment nor for a period of 12 months following his termination.
The Employment Agreement provided for the granting of two groups of stock
options to Mr. Rivera. First, effective February 1, 1994, Mr. Rivera was granted
incentive stock options under the Incentive Plan to purchase a total of 14,583
shares of the Company's Common Stock. Second, the Employment Agreement provided,
on a one-time basis only, for the grant of an option to purchase 485,417 shares
of Common Stock (the "Option"). The Option was granted pursuant to a stock
option agreement by and between the Company and Mr. Rivera, dated as of January
6, 1994, in consideration of Mr. Rivera's entering into the Employment
Agreement, accepting employment with the Company, and performing services on
behalf of the Company.
11
<PAGE> 15
Mr. Burnett resigned as an officer of the Company effective September 1996
to become a joint venture partner of the Company in Georgia. Pursuant to his
severance package, Mr. Burnett continued to receive his salary and benefits as
an employee by the Company through March 31, 1997.
SHAREHOLDER RETURN ANALYSIS
The following line-graph presentation compares cumulative shareholder
returns of the Company, with the Nasdaq Stock Market (U.S. Companies) and a Peer
Index for the period beginning on March 31, 1992 (assuming the investment of
$100 in the Company's Common Stock, the Nasdaq Stock Market (U.S. Companies),
and the Peer Index at the initial public offering price on March 31, 1992, and
reinvestment of all dividends).
YEAR-END TOTAL RETURNS
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
RARE HOSPITALITY INTERNATIONAL, INC. 145.313 51.562 53.125 110.937 118.750
NASDAQ STOCK MARKET 112.790 128.689 125.826 178.926 220.514
PEER INDEX 118.969 122.077 88.189 101.184 97.853
</TABLE>
Total return calculations for the Nasdaq Stock Market (U.S. Companies) and
the Peer Index were prepared by the Center for Research in Security Prices, The
University of Chicago. The Peer Index is composed of 50 companies, including the
Company, offering a wide variety of restaurant services and franchising found in
the Standard Industrial Classification ("SIC") Code groups 5810 and 5812.
Information with regard to SIC classifications in general can be found in the
Standard Industrial Classification Manual published by the Executive Office of
the President, Office of Management and Budget. Specific information regarding
the companies comprising the Peer Index will be provided to any shareholder upon
request to the Secretary of the Company.
COMPENSATION AND STOCK OPTION COMMITTEES REPORT ON EXECUTIVE COMPENSATION.
The compensation of the Company's executive officers, including those with
employment agreements, are reviewed annually for adjustment by the Compensation
Committee. Executive officers other than Mr. Rivera
12
<PAGE> 16
are eligible for annual cash bonuses in the sole discretion of the Compensation
Committee based upon both the growth in the Company's earnings per share and the
Compensation Committee's evaluation of the individual's performance and
contribution to such growth. Mr. Rivera's employment agreement provides for an
annual bonus based upon the growth in the Company's earnings per share. In
addition to salary and bonus, the Company's executive officers are eligible to
receive options to purchase shares of the Company's common stock under the
Company's Amended and Restated 1992 Incentive Plan. The Stock Option Committee
(whose members are eligible to receive stock options only under the Directors
Plan) is responsible for determining the key employees to whom options will be
granted.
In January 1996, the Compensation Committee reviewed the compensation of
the Company's executive officers and determined that the level of such
compensation would be increased from the compensation for 1995 in light of level
of responsibility of the executive officers, prior experience and achievements,
and the importance of each officer's contribution to the Company. The
compensation of Mr. Rivera was reviewed by the Committee in connection with his
employment, his services to the Company and the benefits to the Company from his
efforts. After such review, the Committee approved a five percent increase in
Mr. Rivera's 1996 base compensation as compared to his base compensation for
1995. The Compensation Committee's determinations of the level of compensation
of the Named Executive Officers described in "Executive Compensation" above was
also based upon a review of compensation levels at comparable companies in the
Peer Index and the prior level of the executive's pay.
The Stock Option Committee determines from time to time the key employees
of the Company who are entitled to receive options under the Incentive Plan and
from time to time grants to such key employees options under the Incentive Plan
to provide greater incentive to such employees to increase the long term value
of the Company and its stock. The Stock Option Committee granted no options to
executive officers in 1996.
The Compensation Committee approved the Company's employment agreement with
Mr. Richard E. Rivera, described above under "Executive Compensation" and Mr.
Rivera was compensated in 1996 in accordance with the provisions of that
Agreement, including the payment of a $275,000 bonus with respect to such year.
Mr. George W. McKerrow, Jr. was paid at an annual rate of $120,000 for 1996.
These levels of salary and bonus were approved by the Compensation Committee
after considering compensation information from the companies in the Peer Index
and, with respect to Mr. Rivera's bonus, after consideration of the growth of
the Company.
Section 162(m) of the Internal Revenue Code (the "Code") adopted as part of
the Revenue Reconciliation Act of 1993, generally limits to $1 million the
deduction that can be claimed by any publicly-held corporation for compensation
paid to any "covered employee" in any taxable year beginning after December 31,
1993. The term "covered employee" for this purpose is defined generally as the
Chief Executive Officer and the four other highest paid employees of the
Company. Performance-based compensation is outside the scope of the $1,000,000
million limitation and, hence, generally can be deducted by a publicly-held
corporation without regard to amount, provided that, among other requirements,
such compensation is approved by the shareholders. Because of the current levels
of compensation of the Company's highest paid employees, the Compensation
Committee has not yet developed a formal policy on this matter. Generally
speaking, the Compensation Committee's executive compensation policies are
performance-based, as described above.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
<S> <C>
Don Chapman Don Chapman
John C. Metz John C. Metz
John G. Pawly John G. Pawly
</TABLE>
CERTAIN TRANSACTIONS
Longhorn of Tennessee. Longhorn Steaks of Tennessee, Inc., which was
acquired by the Company in April 1992, operated two LongHorn Steakhouses in
Nashville, Tennessee pursuant to a franchise agreement
13
<PAGE> 17
with the Company. In connection with the acquisition, the Company assumed a
lease on one restaurant site and agreed to indemnify the former shareholders of
Longhorn of Tennessee, including Messrs. McKerrow, Sr., McKerrow, Jr. and San
Martin, from any losses resulting from the Company's failure to perform its
obligations under this lease. Future minimum lease payments under this lease
aggregated $219,374 at December 29, 1996.
Other Transactions. The Company leases the land and buildings in which it
operates its Tucker, Georgia restaurant from a partnership that is owned 15% by
Mr. McKerrow, Sr., 15% by Mr. McKerrow, Jr., 10% by Mr. San Martin and 60% by
three unrelated individuals. This lease was entered into for a term of five
years beginning on July 1, 1986, renewable for two additional five year periods,
and provides for monthly rent equal to the greater of $3,700 ($4,200 and $4,700,
respectively, in the two subsequent five-year periods) or 5% of the restaurant's
adjusted gross revenues. The lease was renewed for an additional five-year
period beginning on July 1, 1991. Under the terms of the lease, the Company pays
all taxes, utilities, and maintenance of the leased premises. This lease is on
substantially the same terms as other leases the Company has entered into with
unrelated parties with respect to other Company-owned restaurants. The Company
paid the partnership rent of $119,990 in 1996.
RDM Design, a company owned by Robert D. McKerrow, AIA, the brother of
George W. McKerrow, Jr. and the son of George W. McKerrow, Sr., provides
architectural design services to the Company. RDM Design received fees for such
services (including payments for subcontracted services) in the amount of
$114,000 in 1996.
PROPOSAL II
RATIFICATION OF SELECTION OF AUDITORS
The Company's Board of Directors has selected KPMG Peat Marwick LLP to
conduct the annual audit of the financial statements of the Company for the
fiscal year ending December 28, 1997. The ratification by the shareholders of
the selection of KPMG Peat Marwick LLP as independent auditors is not required
by law or by the Bylaws of the Company. The Board of Directors, consistent with
the practice of most publicly held corporations, is nevertheless, submitting
this selection to the shareholders. If this selection is not ratified at the
Meeting, the Board of Directors intends to reconsider its selection of
independent auditors for the fiscal year ending December 28, 1997.
Representatives of KPMG Peat Marwick LLP will be present at the Meeting
with an opportunity to make statements, if they so desire, and to respond to
appropriate questions with respect to that firm's audit of the Company's
financial statements for the fiscal year ended December 29, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 28, 1997. RATIFICATION OF KPMG PEAT MARWICK LLP REQUIRES THAT THE VOTES
CAST IN FAVOR OF RATIFICATION EXCEED THE VOTES CAST AGAINST RATIFICATION AT THE
MEETING AT WHICH A QUORUM IS PRESENT.
SHAREHOLDER PROPOSALS
ANY PROPOSAL WHICH A COMPANY SHAREHOLDER INTENDS TO BE PRESENTED AT THE
NEXT ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN 1998 MUST BE RECEIVED BY THE
COMPANY ON OR BEFORE DECEMBER 26, 1997. Only proper proposals which are timely
received will be included in the Proxy Statement and Proxy.
OTHER MATTERS
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
directors, officers or other employees of the Company, personally,
14
<PAGE> 18
or by telephone. The Company does not expect to pay any compensation for the
solicitation of proxies, but may reimburse brokers, custodians or other persons
holding stock in their names or in the names of nominees for their expenses in
sending proxy materials to principals and obtaining their instructions.
SECTION 16(A) REPORTING
Based solely on a review of the copies of reports furnished to the Company,
or written representations that no annual forms (Form 5) were required, the
Company believes that, during the 1996 fiscal year, all filing requirements of
its officers, directors and 10% shareholders for reporting to the Securities and
Exchange Commission their ownership and changes in ownership of Common Stock (as
required pursuant to Section 16(a) of the Securities Exchange Act of 1934) were
complied with, except for the following: (i) Mr. John C. Metz filed one Form 4
late which form covered one transaction; (ii) Mr. George W. McKerrow, Jr. filed
one Form 5 late which form covered two exempt gifts; and (iii) Mr. Don L.
Chapman, Mr. John C. Metz, Mr. John G. Pawly and Mr. Ronald W. San Martin filed
Forms 5 one day late which forms covered shares received in the Outside
Directors Plan adopted in 1996, and in Mr. Metz case which form covered one
additional Form 4 transaction. Mr. Grace is filing an amended Form 5 to include
a right to purchase shares triggered by the retirement of an officer prior to
the acquisition of Bugaboo Creek Steak House, Inc. by the Company.
MISCELLANEOUS
Management does not know of any matters to be brought before the Meeting
other than as described in this Proxy Statement. Should any other matters
properly come before the Meeting, the persons designated as proxies will vote in
their sole discretion on such matters.
15
<PAGE> 19
APPENDIX A
PROXY RARE HOSPITALITY INTERNATIONAL, INC.
ATLANTA, GEORGIA
ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of RARE Hospitality International, Inc. (the
"Company"), Atlanta, Georgia, hereby constitutes and appoints Richard E. Rivera
and Anne D. Huemme, or either one of them, each with full power of substitution,
to vote the number of shares of Company common stock which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
to be held at the Ritz-Carlton Buckhead, 3434 Peachtree Road, Atlanta, Georgia,
on Tuesday, May 20, 1997, at 3:00 p.m. local time, or at any adjournments
thereof (the "Meeting"), upon the proposals described in the Notice of Annual
Meeting of Shareholders and Proxy Statement, both dated April 25, 1997, the
receipt of which is acknowledged, in the manner specified below. The proxies, in
their discretion, are further authorized to vote for the election of a person to
the Board of Directors if any nominee named herein becomes unable to serve or
for good cause will not serve, are further authorized to vote on matters which
the Board of Directors does not know a reasonable time before making the proxy
solicitation will be presented at the Meeting, and are further authorized to
vote on other matters which may properly come before the Meeting and any
adjournments thereof. The Board of Directors recommends a vote FOR Proposals 1
and 2.
1. ELECTION OF DIRECTORS: To elect George W. McKerrow, Jr., Richard E. Rivera
and Edward P. Grace, III to serve as Class II directors until the 2000 Annual
Meeting of Shareholders of the Company and until their successors are elected
and qualified:
FOR [ ] WITHHOLD AUTHORITY [ ]
To withhold authority for any individual nominee(s), write the name of the
nominee(s) in the space provided:
- --------------------------------------------------------------------------------
2. RATIFICATION OF AUDITORS: To ratify the selection of KPMG Peat Marwick to
serve as the independent auditors of the Company for the fiscal year ending
December 28, 1997:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2, AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Please sign exactly as your name appears on your stock certificate and date.
Where shares are held jointly, each shareholder should sign. When signing as
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
---------------------------------------
Signature of Shareholder
---------------------------------------
Signature of Other Shareholder
Dated ___________________________, 1997
Month Day
THIS PROXY IS SOLICITED ON BEHALF OF RARE HOSPITALITY INTERNATIONAL, INC.'S
BOARD OF DIRECTORS AND MAY BE REVOKED BY THE SHAREHOLDER PRIOR TO ITS EXERCISE.
