<PAGE>
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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MORTON'S RESTAURANT GROUP, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MORTON'S RESTAURANT GROUP, 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)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
-----------------------------------------------------------------------
(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:
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(4) Date filed:
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<PAGE>
MORTON'S RESTAURANT GROUP, INC.
3333 NEW HYDE PARK ROAD
NEW HYDE PARK, NEW YORK 11042
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of Morton's
Restaurant Group, Inc. to be held on May 12, 1999, at The Garden City Hotel, 45
Seventh Street, Garden City, New York 11530, at 9:00 a.m.
The Notice of Meeting and Proxy Statement on the following pages cover the
formal business of the meeting, which includes proposals to (i) elect three
directors, (ii) ratify the re-appointment of KPMG LLP, certified public
accountants, as the Company's independent auditors for the fiscal year ending
January 2, 2000, and (iii) adoption of an employee stock purchase plan.
We hope that you will be able to attend the Annual Meeting in person. In any
event, in order that we may be assured of a quorum, we request that you
complete, sign, date and return the enclosed proxy as soon as possible. Your
vote is important regardless of the number of shares you own.
Sincerely,
ALLEN J. BERNSTEIN
CHAIRMAN OF THE BOARD,
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
March 24, 1999
<PAGE>
MORTON'S RESTAURANT GROUP, INC.
3333 NEW HYDE PARK ROAD
NEW HYDE PARK, NEW YORK 11042
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1999
------------------------
To the Stockholders of
MORTON'S RESTAURANT GROUP, INC.
The Annual Meeting of Stockholders of Morton's Restaurant Group, Inc. (the
"Company") will be held at The Garden City Hotel, 45 Seventh Street, Garden
City, New York 11530, on Wednesday, May 12, 1999, at 9:00 a.m., for the
following purposes:
1. to elect three directors to Class 1 of the Board of Directors to serve
three-year terms and until their successors are duly elected and qualified;
2. to ratify the re-appointment of KPMG LLP as the independent auditors of
the Company for the fiscal year ending January 2, 2000;
3. to adopt an employee stock purchase plan, and
4. to consider and transact such other business as may properly be brought
before the meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 25, 1999 will
be entitled to vote at the meeting.
Agnes Longarzo
SECRETARY
March 24, 1999
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED, SELF-ADDRESSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
MORTON'S RESTAURANT GROUP, INC.
3333 NEW HYDE PARK ROAD
NEW HYDE PARK, NEW YORK 11042
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1999
------------------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Morton's
Restaurant Group, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held at The Garden City Hotel, 45 Seventh
Street, Garden City, New York 11530, on Wednesday, May 12, 1999, at 9:00 a.m.,
or at any adjournment or adjournments thereof (the "Annual Meeting").
A proxy that is properly submitted to the Company may be properly revoked at
any time before it is voted. Proxies may be revoked by (i) delivering to the
Secretary of the Company at or before the Annual Meeting a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same shares of Common Stock and delivering it to the
Secretary of the Company at or before the Annual Meeting, or (iii) attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not in and of itself constitute revocation of a proxy). A proxy which is
properly signed, submitted and not revoked will be voted for the nominees for
director named in proposal 1 and in favor of proposals 2 and 3 unless contrary
instructions are given, and such proxy may be voted by the persons named in the
proxy in their discretion upon such other business as may be properly brought
before the meeting.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies by telephone or otherwise. The Company has retained Corporate
Investor Communications, Inc. to assist it in soliciting proxies at an
anticipated cost of approximately $3,000. The Company will reimburse brokers or
other persons holding stock in their names or in the names of their nominees for
their charges and expenses in forwarding proxies and proxy material to the
beneficial owners of such stock. It is anticipated that the mailing of this
Proxy Statement will commence on or about April 1, 1999.
VOTING SECURITIES
The Company had outstanding 6,318,275 shares of common stock, par value $.01
per share ("Common Stock"), at the close of business on March 25, 1999, which
are the only securities of the Company entitled to be voted at the meeting. Each
share of Common Stock is entitled to one vote on each matter as may properly be
brought before the meeting. Only stockholders of record at the close of business
on March 25, 1999 will be entitled to vote.
VOTING PROCEDURES
The votes of stockholders present in person or represented by proxy at the
Annual Meeting will be tabulated by an inspector of elections appointed by the
Company. With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. The three nominees for directors of the
Company who
<PAGE>
receive the greatest number of votes cast by stockholders present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon will be
elected directors of the Company.
Abstentions may be specified on all proposals except the election of
directors and will be counted as present for purposes of determining the
existence of a quorum. Since Proposals 2 and 3 must be approved by the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Company present, or represented and entitled to vote, at the Annual Meeting,
abstentions on these proposals will also have the effect of a negative vote.
Under the rules of the New York Stock Exchange (NYSE), brokers who hold
shares in street name have the authority to vote on certain routine items even
when they have not received instructions from beneficial owners. Brokers that do
not receive instructions are entitled to vote on the non-contested election of
directors, amendments to the Certificate of Incorporation and ratification of
auditors. Under applicable Delaware law, a broker non-vote will have no effect
on the outcome of the Proposals.
Shares of Common Stock held by stockholders who do not return a signed and
dated proxy will not be considered present at the Annual Meeting, will not be
counted towards a quorum and will not be voted on any matter.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Certificate of Incorporation of the Company provides for the
classification of the Board of Directors into three classes, with the classes
being as nearly equal in number as possible. The current term of office of the
Class 1 directors will expire at the 1999 annual meeting; the current term of
office of the Class 2 directors will expire at the 2000 annual meeting; and the
current term of office of the Class 3 directors will expire at the 2001 Annual
Meeting (in each case, when their respective successors are duly elected and
qualified). The class of directors to be elected at each annual meeting will be
elected for a three-year term and the directors in the other classes will
continue in office.
The Certificate of Incorporation permits the Board of Directors to create
new directorships and to elect new directors therefor to serve for the full term
of the class of directors in which the new directorship was created. The by-laws
of the Company provide that a vacancy on the Board of Directors occurring from
an increase in the number of directors or otherwise may be filled by the vote of
a majority of directors then in office, though less than a quorum, or by a sole
remaining director.
The Company's by-laws provide that the Board of Directors shall consist of
not less than three nor more than nine directors. The Board of Directors has
fixed the number of directors at eight. The terms of Lee M. Cohn, Dianne H.
Russell and Alan A. Teran expire at the Annual Meeting. Mr. Cohn, Ms. Russell
and Mr. Teran have been renominated by the Board of Directors for election at
the Annual Meeting as Class 1 directors to serve (subject to the Company's
by-laws) until the election and qualification of their successors at the 2002
annual meeting of stockholders. If any such person should be unwilling or unable
to serve as a director of the Company (which is not anticipated), the persons
named in the proxy will vote the proxy for substitute nominees selected by them
unless the number of directors to be elected has been reduced to the number of
nominees willing and able to serve.
2
<PAGE>
The following table sets forth information with respect to the nominees and
each of the directors whose term extends beyond the Annual Meeting, including
the year in which the nominees' terms would expire, if elected.
<TABLE>
<CAPTION>
YEAR TERM EXPIRES,
IF ELECTED, AND
NAME AGE DIRECTOR SINCE CLASS
- - ----------------------------------------------- --- ------------------ -------------------
<S> <C> <C> <C>
Lee M. Cohn.................................... 51 August 1997 1999 Class 1
Dianne H. Russell.............................. 55 May 1993 1999 Class 1
Alan A. Teran.................................. 53 May 1993 1999 Class 1
Dr. John J. Connolly........................... 59 October 1994 2000 Class 2
David B. Pittaway.............................. 47 December 1988 2000 Class 2
Allen J. Bernstein............................. 53 December 1988 2001 Class 3
Thomas J. Baldwin.............................. 43 November 1998 2001 Class 3
John K. Castle................................. 58 December 1988 2001 Class 3
</TABLE>
Lee M. Cohn has been a Director of the Company since August 1997. Mr. Cohn
co-founded and has been the chief executive officer of Big 4 Restaurants, Inc.
since 1973. Mr. Cohn has served on the boards of Valley Big Brothers and the
Phoenix Ballet Company and is an active member of The Phoenix Thunderbirds, The
Fiesta Bowl Committee and the Young Presidents Organization (YPO). Mr. Cohn has
been a director of Luther's Acquisition Corp. since January 1999.
Dianne H. Russell has been a Director of the Company since May 1993. Ms.
Russell is a Senior Vice President and Manager of the Merchant Banking
Operations of Imperial Bank in Boston. Formerly, Ms. Russell was President of
Hyde Boston Capital, a financial consulting company, since January 1992, and
before that, a Senior Vice President and Department Executive at BankBoston,
N.A., a national bank, where she was employed from 1975 to 1991. Ms. Russell is
the Chairman of the Financial Advisory Board of the Commonwealth of
Massachusetts.
Alan A. Teran has been a Director of the Company since May 1993. Mr. Teran
was the President of Cork "N Cleaver Restaurants from 1975 to 1981. Since 1981,
Mr. Teran has been a principal in private restaurant businesses. Mr. Teran has
served as a Director of Good Times, Inc., a restaurant company, since April
1994, is a Director of Charlie Browns Acquisition Corp. and previously served on
the Board of Boulder Valley Bank and Trust from 1990 to 1997.
Dr. John J. Connolly has been a Director since October 1994. He is the
President and Chief Executive Officer of Castle Connolly Medical LTD since 1992.
He previously served as President and CEO of New York Medical College for over
ten years. He is a Fellow of the New York Academy of Medicine and a member of
the New York Academy of Science. He serves on the President's Advisory Council
of the United Hospital Fund, as a Director of Funding First and as a Director of
the New York Business Group on Health. He also has served as Chairman of the
Board of Trustees of St. Francis Hospital in Poughkeepsie and as a member of the
Board of Trustees of St. Agnes Hospital in White Plains. He is a member of the
Commission on Biomedical Research at the New York Academy of Medicine and is a
Director, founder and past Chairman of the American Lyme Disease Foundation. Dr.
Connolly serves as a Trustee and Past-Chairman of the Board of the Culinary
Institute of America, Director of the Westchester "2000", Director of the
Westchester County Association and Director of Mental Health Association of
Westchester County. Dr. Connolly also presently serves as a Director of Dearborn
Risk Management, Charlie Brown's, Inc. and as Chairman and a Director of
AlphaGene, Inc.
David B. Pittaway has been a Director of the Company since December 1988. He
was a Vice President from December 1988 through May 1993 and Assistant Secretary
from May 1988 through September 1993. Mr. Pittaway has been Vice President and
Secretary of Castle Harlan, Inc., a private merchant bank in New York City since
February 1987 and Managing Director since February 1992. Mr. Pittaway has been
Vice President and Secretary of Branford Castle, Inc., an investment company,
since October 1986 and Vice President, Chief Financial Officer and a Director of
Branford Chain, Inc., a marine wholesale company,
3
<PAGE>
since June 1987. Prior thereto, Mr. Pittaway was Vice President of Strategic
Planning and Assistant to the President of Donaldson Lufkin & Jenrette, Inc., an
investment bank, from 1985. Mr. Pittaway is a Managing Director of Statia
Terminals Group, N.V., and a Director of Commemorative Brands, Inc., and Charlie
Browns Acquisition Corp., and has been a Director of Luther's Acquisition Corp.
since November 1998.
Allen J. Bernstein has been Chairman of the Board of the Company since
October 1994 and Chief Executive Officer and a Director of the Company since
December 1988. He has been President of the Company since September 1997 and was
previously President of the Company from December 1988 through October 1994. Mr.
Bernstein has worked in many various aspects of the restaurant industry since
1970. Mr. Bernstein is also a director of Dave and Busters, Inc., Charlie Browns
Acquisition Corp., and Luther's Acquisition Corp.
Thomas J. Baldwin was elected a Director of the Company in October 1998 and
Executive Vice President in January 1997. He previously served as Senior Vice
President, Finance of the Company since June 1992, and Vice President, Finance
since December 1988. In addition, Mr. Baldwin has been Chief Financial Officer,
Assistant Secretary and Treasurer of the Company since December 1988. His
previous experience includes seven years at General Foods Corp., now a
subsidiary of Philip Morris Companies, Inc., where he worked in various
financial management and accounting positions and two years at Citicorp where he
served as Vice President responsible for strategic planning and financial
analysis at a major corporate banking division. Mr. Baldwin is a licensed
certified public accountant in the State of New York.
John K. Castle has been a Director of the Company since December 1988. Mr.
Castle is Chairman and Chief Executive Officer of Branford Castle, Inc., an
investment company formed in 1986. Since 1987, Mr. Castle has been Chairman of
Castle Harlan, Inc., a private merchant bank in New York City. Immediately prior
to forming Castle Harlan, Inc., Mr. Castle was President and Chief Executive
Officer and a Director of Donaldson Lufkin & Jenrette, Inc., one of the nation's
leading investment banking firms. Mr. Castle is a Director of Sealed Air
Corporation, Commemorative Brands, Inc., Universal Compression, Inc., a Managing
Director of Statia Terminals Group, N.V. and is a member of the Corporation of
the Massachusetts Institute of Technology. Mr. Castle is also a trustee of the
New York Presbyterian Hospital, Inc., the Whitehead Institute of Biomedical
Research and New York Medical College (for 11 years he was Chairman of the
Board). Formerly, Mr. Castle was a Director of The Equitable Life Assurance
Society of the United States.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held five meetings during the fiscal
year ended January 3, 1999 ("fiscal 1998"). Each current director attended at
least 75% of the aggregate number of all meetings of the Board of Directors and
committees of which he or she was a member during such year.
The Board of Directors has created three standing committees: a three-member
Executive Committee, a three-member Audit Committee and a three-member
Compensation and Stock Option Committee.
The Executive Committee has, and may exercise between meetings of the Board
of Directors, all the power and authority of the Board of Directors in the
management of the business affairs of the Company, subject to certain
limitations. The Executive Committee held four meetings in fiscal 1998. Its
members are Allen J. Bernstein, John K. Castle and David B. Pittaway.
The Audit Committee recommends to the Board of Directors the engagement of
the independent auditors, and has the authority to review with the auditors and
with the Company's management all matters relating to the annual audit of the
Company. The Audit Committee held two meetings in fiscal 1998. Its members are
David B. Pittaway, Dianne H. Russell and Alan A. Teran.
4
<PAGE>
The Compensation and Stock Option Committee has the authority to review and
approve the remuneration arrangements for executive officers and employees of
the Company, review the benefit plans for employees and select participants,
approve awards under, interpret and administer the employee benefit plans of the
Company. The Compensation Committee held six meetings in fiscal 1998. Its
members are John K. Castle, Lee M. Cohn and John J. Connolly.
The Board of Directors does not have a nominating committee. Changes in
directors are considered by the whole Board of Directors.
The Company's Certificate of Incorporation provides that nominations for the
election of directors may be made by any stockholder in writing, delivered or
mailed to the Secretary of the Company, Morton's Restaurant Group, Inc., 3333
New Hyde Park Road, New Hyde Park, New York 11042, not less than 45 days nor
more than 60 days prior to the meeting, except that if less than 55 days notice
or prior public disclosure of the meeting is given or made to stockholders, such
written notice shall be received not later than the close of business on the
tenth day following the day on which notice of the meeting was mailed or such
public disclosure was made, whichever first occurs. Each notice shall set forth
all information regarding each nominee proposed in such notice that would be
required to be included in a proxy statement soliciting proxies for the proposed
nominee (including such person's written consent to serve as a director if so
elected) and certain information about the stockholder proposing to nominate
that person. If the Chairman of the meeting determines that a nomination was not
made in accordance with the nomination procedure, such nomination will be
disregarded.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 12, 1999,
with respect to the beneficial ownership of the Company's Common Stock of each
director, each nominee for director, each named executive officer in the summary
compensation table under "Executive Compensation" below, all executive officers
and directors as a group, and each person known by the Company to be the
beneficial owner of 5% or more of the Company's Common Stock. This information
is based upon information received from or on behalf of the named individuals or
entities.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED PERCENT OF
NAME (1) CLASS (2)
- - ------------------------------------------------------------ -------------------- -----------
<S> <C> <C>
Thomas J. Baldwin (3)....................................... 54,680 *
Allen J. Bernstein (4)...................................... 408,705 6.31%
John K. Castle.............................................. 5,178 *
Lee M. Cohn................................................. 500 *
Dr. John J. Connolly........................................ 400 *
Klaus W. Fritsch (5)........................................ 21,250 *
Agnes Longarzo (6).......................................... 19,250 *
David B. Pittaway........................................... 3,132 *
Dianne H. Russell........................................... 500 *
Allan C. Schreiber (5)...................................... 13,750 *
Alan A. Teran............................................... 200 *
FMR Corp. (7)............................................... 810,600 12.78%
Chartwell Investment Partners (7)........................... 591,104 9.32%
Goldman, Sachs & Co. (7).................................... 548,100 8.64%
Baron Capital Group, Inc. (7)............................... 515,400 8.13%
Massachusetts Financial Services Company (7)................ 543,060 8.56%
Capital Research and Management Company (7)................. 450,000 7.09%
Lazard Freres & Co. LLC (7)................................. 380,200 5.99%
Executive Officers and Directors as a Group (12 Persons)
(8)....................................................... 532,065 8.14%
</TABLE>
- - ------------------------
* Represents less than 1%.
(1) Unless otherwise noted, the beneficial owners listed have sole voting and
investment power over the shares listed.
(2) Percent of Class based upon 6,343,275 outstanding shares of Common Stock
plus, for those persons who hold options for Common Stock, the number of
shares of Common Stock beneficially owned by such person as of March 12,
1999.
(3) Includes beneficial ownership of 12,500 shares of Common Stock issuable upon
exercise of outstanding incentive stock options issued under the Morton's
Restaurant Group, Inc. Stock Option Plan ("Stock Option Plan"). Excludes
shares of Common Stock issuable upon exercise of incentive stock options
issued under the Stock Option Plan which are not exercisable by May 12,
1999.
(4) Includes beneficial ownership of 137,500 shares of Common Stock issuable
upon exercise of outstanding incentive and non-qualified stock options
issued under the Stock Option Plan. Excludes shares of Common Stock issuable
upon exercise of incentive stock options and non-qualified stock options
issued under the Stock Option Plan which are not exercisable by May 12,
1999.
6
<PAGE>
(5) Includes beneficial ownership of shares of Common Stock issuable upon
exercise of outstanding incentive stock options issued under the Stock
Option Plan as follows: Klaus W. Fritsch (21,250), and Allan C. Schreiber
(13,750). Excludes shares of Common Stock issuable upon exercise of
incentive stock options issued under the Stock Option Plan which are not
exercisable by May 12, 1999.
(6) Includes beneficial ownership of 9,250 shares of Common Stock issuable upon
exercise of outstanding incentive and non-qualified stock options issued
under the Stock Option Plan. Excludes shares of Common Stock issuable upon
exercise of incentive stock options and non-qualified stock options issued
under the Stock Option Plan which are not exercisable by May 12, 1999.
(7) Shares of Common Stock beneficially owned by FMR Corp., Chartwell Investment
Partners ("Chartwell"), Goldman, Sachs & Co. ("GS&C"), Baron Capital Group,
Inc. ("BCG"), Massachusetts Financial Services Company ("MFS"), Capital
Research and Management Co. ("CRM"), and Lazard Freres & Co. LLC ("Lazard")
and are listed according to reports on Schedule 13G as of December 31, 1998
filed as of February 15, 1999, February 17, 1999, February 15, 1999,
February 14, 1998 (and supplemental correspondence from BCG), February 12,
1999, February 12, 1999, and February 17, 1999, respectively. Based upon
information set forth in such report on Schedule 13G filed by FMR Corp.,
Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of 810,600 shares or 12.78%
of the Common Stock as a result of acting as an investment advisor to
several investment companies. Mr. Edward C. Johnson 3rd, FMR Corp., through
its control of Fidelity, and the aforementioned investment companies each
has sole dispositive power over these 810,600 shares. The ownership of two
investment companies, Fidelity Advisor Strategic Opportunities Fund and
Fidelity Low-Priced Stock Fund, amounted to 424,800 shares or 6.70% and
350,000 shares or 5.52%, respectively, of the Common Stock. The power to
vote such shares resides with the aforementioned investment companies'
Boards of Trustees. Based upon information set forth in such report on
Schedule 13G filed by Chartwell, Chartwell is the beneficial owner of
591,104 shares or 9.32% of the Common Stock and has sole voting and
dispositive power over these shares as a result of acting as an investment
advisor. Based upon information set forth in such report on Schedule 13G
filed by GS&C, GS&C has shared voting and dispositive power over 548,100
shares or 8.64% of the Common Stock. The Goldman Sachs Group, L.P. is also a
beneficial owner of these shares and Goldman Sachs Trust, on behalf of
Goldman Sachs Small Cap Value Fund, is a beneficial owner of 406,400 or
6.41%, of these shares. Based upon information provided by BCG, BCG is the
beneficial owner of 515,400 shares or 8.13% of the Common Stock. Baron Small
Cap Fund, an investment company advised by BCG has shared voting and
dispositive power over 350,000 or 5.52% of these shares. Mr. Ronald Baron
through his control of BCG has shared voting and dispositive power over
these 515,400 shares. Based upon information set forth in such report on
Schedule 13G filed by MFS, MFS has sole dispositive power over 543,060
shares or 8.56% and sole voting power over 542,660 shares or 8.56% of the
Common Stock. MFS Series Trust II--MFS Emerging Growth Fund is also a
beneficial owner of 440,000 or 6.94% of these shares. Based upon information
set forth in such report on Schedule 13G filed by CRM, CRM has sole
dispositive power over 450,000 shares or 7.09% of the Common Stock as a
result of acting as investment advisor to SmallCap World Fund, Inc. which
has sole voting power over 415,000 or 6.54% of these shares. Based upon
information set forth in such report on Schedule 13G filed by Lazard, Lazard
has sole voting power over 376,700 shares or 5.94% and sole dispositive
power over 380,200 shares or 5.99% of the Common Stock.
(8) Includes beneficial ownership of 194,250 shares of Common Stock issuable in
the aggregate upon exercise of outstanding incentive and non-qualified stock
options issued under the Stock Option Plan to officers of the Company.
Excludes shares of Common Stock issuable upon exercise of incentive and
non-qualified stock options issued under the Stock Option Plan which are not
exercisable by May 12, 1999.
7
<PAGE>
The address of each of the directors, nominees for director and executive
officers named in the table above is c/o Morton's Restaurant Group, Inc., 3333
New Hyde Park Road, New Hyde Park, NY 11042. The addresses for the other 5%
beneficial owners of the Company's Common Stock are as follows: FMR Corp., 82
Devonshire Street, Boston, MA 02109; Chartwell Investment Partners, 1235
Westlakes Drive, Suite 330, Berwyn, PA 19312; Goldman, Sachs & Co., 85 Broad
Street, New York, NY 10004; Baron Capital Group, Inc., 767 Fifth Avenue, 24(th)
Floor, New York, NY 10153; Massachusetts Financial Services Company, 500
Boylston Street, Boston, MA 02116; Capital Research & Management Co., 333 South
Hope Street, Los Angeles, CA 90071; and Lazard Freres & Co. LLC, 30 Rockefeller
Plaza, New York, NY 10020.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the Company's last three fiscal years
(ended January 3, 1999, December 28, 1997, and December 29, 1996), the
compensation of those persons who were, at January 3, 1999, (i) the chief
executive officer, and (ii) the other four most highly compensated executive
officers of the Company (together the "Named Officers"):
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION (1) SECURITIES
--------------------------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- - --------------------------------------------------- --------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Allen J. Bernstein................................. 1998 $ 472,508 $ 270,000 130,000 $ 43,959(2)(3)
Chairman of the Board, President 1997 $ 408,762 $ 236,000 50,000 $ 43,936(4)(5)
and Chief Executive Officer 1996 $ 392,538 $ 150,000 50,000 $ 43,561(6)(7)
Thomas J. Baldwin.................................. 1998 $ 239,596 $ 125,000 56,000 $ 3,678(2)(3)
Executive Vice President, Chief Financial 1997 $ 204,808 $ 115,000 20,000 $ 3,645(4)(5)
Officer, Assistant Secretary and Treasurer 1996 $ 186,923 $ 65,000 15,000 $ 3,270(6)(7)
Allan C. Schreiber................................. 1998 $ 147,926 $ 85,000 13,000 $ 3,678(2)(3)
Senior Vice President, Development 1997 $ 141,549 $ 42,000 5,000 $ 3,424(4)(5)
1996 $ 135,000 -- 25,000 $ 270(6)
Klaus W. Fritsch................................... 1998 $ 129,846 $ 75,000 12,700 $ 3,398(3)
Vice Chairman and Co-Founder, 1997 $ 124,816 $ 60,000 5,000 $ 3,375(5)
Morton's of Chicago, Inc. 1996 $ 119,012 $ 50,000 10,000 $ 2,704(7)
Agnes Longarzo..................................... 1998 $ 109,919 $ 65,000 18,200 $ 3,678(2)(3)
Vice President, Administration 1997 $ 103,740 $ 58,000 7,000 $ 3,188(4)(5)
and Secretary 1996 $ 99,692 $ 30,000 5,000 $ 2,927(6)(7)
</TABLE>
- - ------------------------
(1) Includes cash bonuses paid in the referenced fiscal year with respect to
services rendered in the prior fiscal year. Excludes cash bonuses paid in
the following fiscal year with respect to services rendered in the
referenced fiscal year. Cash bonuses paid in 1999 with respect to services
rendered in 1998, which bonuses are excluded from 1998 bonuses, are as
follows: Allen J. Bernstein ($350,000), Thomas J. Baldwin ($160,000), Allan
C. Schreiber ($90,000), Klaus W. Fritsch ($150,000) and Agnes Longarzo
($70,000).
(2) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($280), Allan C. Schreiber ($280) and
Agnes Longarzo ($280).
(3) Includes employer contributions made by the Company pursuant to the Morton's
Group Profit Sharing and Cash Accumulation Plan and Trust (the "Morton's
Plan"), which is a retirement plan
8
<PAGE>
intended to be qualified under Sections 401(a) and 401(k) of the Internal
Revenue Code of 1986, as amended, for the benefit of: Allen J. Bernstein
($3,398), Thomas J. Baldwin ($3,398), Allan C. Schreiber ($3,398), Klaus W.
Fritsch ($3,398) and Agnes Longarzo ($3,398).
(4) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($270), Allan C. Schreiber ($270) and
Agnes Longarzo ($270).
(5) Includes employer contributions made by the Company pursuant to the Morton's
Plan for the benefit of: Allen J. Bernstein ($3,375), Thomas J. Baldwin
($3,375), Allan C. Schreiber ($3,154), Klaus W. Fritsch ($3,375) and Agnes
Longarzo ($2,918).
(6) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($270), Allan C. Schreiber ($270) and
Agnes Longarzo ($270).
(7) Includes employer contributions made by the Company pursuant to the Morton's
Plan for the benefit of: Allen J. Bernstein ($3,000), Thomas J. Baldwin
($3,000), Klaus W. Fritsch ($2,704) and Agnes Longarzo ($2,657).
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth, for fiscal 1998, information concerning
grants of stock options to the Named Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------------- VALUE AT ASSUMED RATES
NUMBER OF OF STOCK PRICE
SHARES % OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED EXERCISE TERM
OPTIONS GRANTED TO EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME (#) (1) FISCAL YEAR (2) ($/SHARE) DATE 5% ($) 10% ($)
- - ------------------------- --------------- ------------------- ------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Allen J. Bernstein....... 65,000 17.1% $ 19.438 1/22/08 $ 794,576 $ 2,013,540
Allen J. Bernstein....... 65,000 17.1% $ 13.125 10/15/08 $ 536,530 $ 1,359,625
Thomas J. Baldwin........ 26,000 6.8% $ 19.438 1/22/08 $ 317,830 $ 805,416
Thomas J. Baldwin........ 30,000 7.9% $ 13.125 10/15/08 $ 247,629 $ 627,519
Allan C. Schreiber....... 6,500 1.7% $ 19.438 1/22/08 $ 79,458 $ 201,354
Allan C. Schreiber....... 6,500 1.7% $ 13.125 10/15/08 $ 53,653 $ 135,963
Klaus W. Fritsch......... 5,700 1.5% $ 19.438 1/22/08 $ 69,678 $ 176,572
Klaus W. Fritsch......... 7,000 1.8% $ 13.125 10/15/08 $ 57,780 $ 146,421
Agnes Longarzo........... 9,100 2.4% $ 19.438 1/22/08 $ 111,241 $ 281,896
Agnes Longarzo........... 9,100 2.4% $ 13.125 10/15/08 $ 75,114 $ 190,348
</TABLE>
- - ------------------------
(1) Represents options granted under the Stock Option Plan and nonqualified
stock options. Such options vest and become exercisable with respect to 25%
of the shares subject thereto two years after the date of grant and,
thereafter, options with respect to 25% of the shares subject thereto will
vest and become exercisable on each of the third, fourth and fifth
anniversary of the date of grant, provided that the grantee remains in the
employ of the Company. Vested options may not be exercised beyond three
months after the grantee ceases to be employed by the Company.
(2) Based on a total of 379,900 options granted to 76 employees of the Company.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, for fiscal 1998, information concerning the
exercise of options by the Named Officers and the value of unexercised options
of the Named Officers:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FY-END(#) AT FY-END ($)(1)
EXERCISE REALIZED -------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------------------------ ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Allen J. Bernstein........................ -- -- 181,205 230,000 $ 2,356,748 $ 895,000
Thomas J. Baldwin......................... 40,680 $ 486,278 -- 91,000 -- $ 343,969
Allan C. Schreiber........................ -- -- 6,250 36,750 $ 42,969 $ 181,375
Klaus W. Fritsch.......................... -- -- 16,250 26,450 $ 139,688 $ 118,606
Agnes Longarzo............................ 7,000 $ 115,985 10,000 30,200 $ 136,369 $ 110,488
</TABLE>
- - ------------------------
(1) Based upon the closing sale price of $18.875 per share of the Company's
Common Stock on January 3, 1999 on the New York Stock Exchange minus the
respective option exercise price.
The Company has not awarded stock appreciation rights to any employee and
has no long term incentive plans, as that term is defined in the regulations of
the Securities and Exchange Commission (the "SEC"). The Company has a stock
option plan and bonus plans. During fiscal 1998, the Company did not adjust or
amend the exercise price of stock options awarded to the Named Officers, whether
through amendment, cancellation or replacement grants, or other means. Also, the
Company presently has no defined benefit or actuarial plans covering any
employees of the Company.
COMPENSATION OF DIRECTORS
Each non-officer director of the Company is entitled to receive directors'
fees at the rate of $15,000 per year. All directors are reimbursed for actual
expenses incurred in connection with attendance at meetings of the Board of
Directors or committees of the Board.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL CONTRACTS
Pursuant to a Second Amended and Restated Employment Agreement dated as of
February 28, 1995, as amended on October 1, 1998, between the Company and Allen
J. Bernstein, Mr. Bernstein serves as Chairman of the Board, President and Chief
Executive Officer of the Company. His current annual base salary of $625,000 is
subject to minimum adjustments based upon increases in the Consumer Price Index
for Urban Wage Earners and Clerical Workers. In addition, Mr. Bernstein is
eligible to receive an annual bonus of up to 120% of his base salary based upon
the Company attaining a profitability target, which in the discretion of the
Board of Directors may be based on net income, operating income, net cash flow
(adjusted for nonrecurring items) or any other basis it considers appropriate.
Mr. Bernstein's employment agreement is terminable by the Company upon 60 months
written notice or at any time for cause (as defined in such employment
agreement) and by Mr. Bernstein in the event of non-payment of amounts due under
the agreement or if he is assigned duties inconsistent with his capacity as
Chief Executive Officer of the Company. In the event of such a termination by
Mr. Bernstein or in the event of a termination by the Company for any reason
other than Cause, death or disability, Mr. Bernstein is entitled to receive
either (i) severance pay for a 60 month period following such termination or the
delivery of the Company's notice of termination (the "Measuring Date"), in an
amount equal to his base salary, a pro-rated bonus for the year in which the
Measuring Date occurs plus continuance of certain fringe benefits or (ii) at Mr.
Bernstein's election (the "Election"), a lump-sum payment equal to 60 multiplied
by $67,800. Upon Mr. Bernstein's acquisition of alternative employment, the
Company's monthly obligation to Mr. Bernstein will be reduced to $50,600 (if Mr.
Bernstein has not made the Election). If, however, Mr. Bernstein had made the
Election and acquires alternative employment, he shall repay to the Company
10
<PAGE>
an amount equal to the product of $17,366 and a number equaling the difference
between 60 and the number of months between the Measuring Date and the date Mr.
Bernstein commences such new employment.
Effective December 15, 1994, the Company entered into change of control
agreements with Allen J. Bernstein and Thomas J. Baldwin (the "Change of Control
Agreements"). The Change of Control Agreements have a three-year term, subject
to automatic renewal for additional three-year periods on each third anniversary
of the Agreements unless the Company gives the executive at least 60 days' prior
notice that the Agreement will not be so extended. Pursuant to these Agreements,
the Company agrees to continue the executive in its employ for a three-year
period (the "Continuation Period") following a "Change of Control" (as such term
is defined in the applicable Change of Control Agreement). If, during the
Continuation Period, the executive's employment is terminated by the Company
other than for "Cause" or if the executive terminates his employment with the
Company for "Good Reason" (as such terms are defined in the applicable Change of
Control Agreement), the Company is required to make a cash lump sum payment to
the executive equal to 2.99 times his base amount, as computed under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), less
any severance payments payable to such executive pursuant to employment
agreements, where applicable; subject to reduction to the extent the total
amount received by the executive under the Change of Control Agreements and any
other agreement by reason of a Change of Control would constitute a "parachute
payment" under Section 280G(b)(2) of the Internal Revenue Code. In addition, for
a period of at least three years after such termination the Company is required
to continue to provide the executive with welfare benefits similar to those
received by him when employed by the Company. In general, an individual's base
amount as used above is the average annual compensation included in the gross
income of such individual for the most recent five taxable years ending before a
Change of Control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Board of Directors
consists of John K. Castle, Lee M. Cohn and Dr. John J. Connolly. No member of
the Compensation and Stock Option Committee is a former or current officer or
employee of the Company or any of its subsidiaries. In addition, except as set
forth below, there are no relationships among the Company's executive officers,
members of the Compensation and Stock Option Committee or entities whose
executives serve on the Board of Directors or the Compensation and Stock Option
Committee that require disclosure under applicable Securities and Exchange
Commission regulations. During fiscal 1998, in exchange for consulting services
provided by the Company to Luther's Acquisition Corp. ("LAC") and Castle Harlan
Partners III, L.P. ("CHPIII") in connection with CHPIII's formation of LAC and
LAC's acquisition of Luther's Bar-B-Q, Inc., a chain of restaurants located in
Texas, Louisiana and Colorado, the Company received a $90,000 consulting fee
from LAC and, for a nominal amount, received common and preferred stock
representing approximately 1.5% of LAC. Mr. Allen J. Bernstein, Mr. Lee M. Cohn,
and Mr. David B. Pittaway are Directors of the Company and also are members of
the Board of Directors of LAC. Mr. Allen J. Bernstein, Chairman, President and
Chief Executive Officer of the Company, and Mr. Thomas J. Baldwin, Executive
Vice President of the Company, received individual consulting fees from LAC and
purchased shares of common and preferred stock of LAC. CHPIII is indirectly
controlled by Mr. John K. Castle, a Director of the Company.
COMPENSATION COMMITTEE REPORT
OVERVIEW AND PHILOSOPHY. The Compensation and Stock Option Committee (the
"Committee") is composed entirely of non-management directors. It has been
delegated the authority to review and approve the remuneration arrangements for
the Chief Executive Officer and each of the other executive officers of the
Company. In addition, the Committee reviews the benefit plans for employees of
the Company and administers the Stock Option Plan and approves grants to be made
in connection therewith.
11
<PAGE>
The Company's executive compensation is based upon three primary components:
base salary, annual bonuses and grants of stock options. Such compensation also
includes participation in various benefit plans generally available to employees
of the Company. The objectives of the Committee in determining the type and
amount of such executive officer compensation are to attract and retain superior
talent and to align the interests of management with the best interests of
stockholders.
To motivate management to enhance profitability and stockholder returns, the
Chief Executive Officer and other officers are paid an annual bonus based upon
the Company attaining certain performance-related targets as described below,
and participation in the Stock Option Plan provides the executive officers with
the opportunity to build substantial ownership interest in the Company.
Changes to Section 162(m) of the Internal Revenue Code may, effective for
tax years beginning on or after January 1, 1994, limit the Company's deductions
for any remuneration in excess of $1 million that is paid to certain executive
officers. The Committee intends that the deduction for any compensation paid to
any executive officer for the 1998 fiscal year will not be limited by Section
162(m) of the Code.
CASH COMPENSATION. Cash compensation typically consists of a base salary
plus an annual performance bonus. The base salary for the Chief Executive
Officer is fixed under such officers' employment agreement which is described
above under the caption "Employment Contracts and Change of Control Contracts."
The base salary for the other executive officers and annual performance bonuses
are also determined by the Committee, in each case based upon prevailing
economic and business conditions and opportunities, performance by comparable
organizations, performance of individual executives, stockholder value and such
other criteria as the Committee deems relevant. No particular weightings are
assigned by the Committee to any such factors. The Company paid bonuses to the
Named Officers as described above in the Summary Compensation Table under the
caption "Executive Compensation".
STOCK OPTIONS. The executive officers, as well as other employees of the
Company, are eligible to participate in the Stock Option Plan and may also
receive non-qualified stock options. The purpose of issuing stock options is to
motivate and retain employees who are responsible for the attainment of the
primary long-term performance goals of the Company. Stock options are
administered by the Committee. The Committee believes that awards of stock
options provide the necessary long-term incentive to focus managers on building
profitability and stockholder value. The Committee has the authority to
determine the individuals to whom stock options are awarded, the terms upon
which option grants shall be made and the number of shares subject to each
option, all subject to the terms and conditions consistent with the Stock Option
Plan. The Committee granted non-qualified options and options under the Stock
Option Plan to five executive officers as described above under the caption
"Options Granted in Last Fiscal Year." The Committee believes that such awards
provide the necessary long-term incentive to focus managers on building
profitability and stockholder value.
In determining base salaries and annual bonuses, the Committee considered
the individual experience and performance of each executive officer as well as
the competitive marketplace to hire and retain qualified executives at the
appropriate level relative to the position, responsibilities and performance of
such executives. The Committee sets base salaries at levels which the Committee
believes are competitive with those of comparable executives at similarly
situated corporations.
OTHER COMPENSATION. The Company provides certain other benefits, such as
health insurance, to the executive officers that are generally available to
Company employees.
In addition, during fiscal 1994 the Company entered into Change of Control
Agreements with certain of its executive officers as described above under the
caption "Employment Contracts and Change of Control Contracts."
In addition, certain executive officers are eligible to participate in the
Morton's Plan, which is described above in note 3 to the Summary Compensation
Table. Within certain limits prescribed by the
12
<PAGE>
Morton's Plan and applicable law, the Company may authorize discretionary
employer contributions subject to certain limits, pro rata based upon
compensation to eligible employees to a retirement account. The Company made
profit sharing contributions to all of the Named Officers, as described in the
Summary Compensation Table.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The base salary of the Chief
Executive Officer is fixed under his employment agreement. The employment
agreement was amended and restated as of February 28, 1995, and as amended on
October 1, 1998, is terminable by the Company upon 60 months' written notice.
The bonus paid thereunder is determined by the Committee based upon certain
performance-related targets being obtained. At the beginning of each fiscal year
the Committee establishes the profitability target which, in its discretion, may
be based on net income, operating income, net cash flow (adjusted for
nonrecurring items) or any other basis it considers appropriate. No particular
weightings are assigned by the Committee to any such factors. The Chief
Executive Officer is eligible to receive an annual bonus of up to 120% of his
base salary based upon the Company attaining such target. The payment of an
annual bonus and granting of options to the Chief Executive Officer are designed
to motivate the Chief Executive Officer to enhance profitability and stockholder
returns.
The Company also entered into a Change of Control Agreement with the Chief
Executive Officer as described above under the caption "Employment Contracts and
Change of Control Contracts" in fiscal 1994.
John K. Castle
Lee M. Cohn
John J. Connolly
Members of the Compensation
and Stock Option Committee
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
stockholder return, calculated on a dividend reinvested basis, for the Company's
Common Stock, against the cumulative total returns of the NASDAQ Composite Stock
Index and the Nation's Restaurant News Stock Index for the period from December
31, 1993 through January 3, 1999. The graph assumes $100 was invested in the
Company's Common Stock, the NASDAQ Composite Stock Index and the Nation's
Restaurant News Stock Index on December 31, 1993. Note that historic stock price
performance is not necessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
MORTON'S RESTAURANT GROUP, INC. COMMON STOCK,
NASDAQ COMPOSITE AND NATION'S RESTAURANT NEWS STOCK INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NATION'S RESTAURANT NEWS STOCK
MORTON'S RESTAURANT GROUP, INC. COMMON STOCK NASDAQ COMPOSITE STOCK INDEX INDEX
<S> <C> <C> <C>
Dec-93 100.00 100.00 100.00
Dec-94 97.96 97.75 98.62
Dec-95 91.84 138.26 139.73
Dec-96 130.61 170.02 142.07
Dec-97 161.22 208.58 148.55
Dec-98 154.08 293.21 199.45
</TABLE>
14
<PAGE>
CERTAIN TRANSACTIONS
On October 21, 1996, BankBoston, NA ("BBNA") (formerly known as The First
National Bank of Boston), which was previously the sole provider of the
Company's $45.0 million credit facility, as amended, syndicated a portion of the
credit facility to Imperial Bank. Ms. Dianne Russell is a senior officer of
Imperial Bank as well as a Director of Morton's Restaurant Group, Inc. During
fiscal 1998, BBNA also syndicated a portion of the credit facility to First
Union Corporation.
See also "Executive Compensation--Compensation Committee Interlocks and
Insider Participation."
APPOINTMENT OF AUDITORS
(PROPOSAL 2)
Subject to ratification by stockholders at the Annual Meeting, the Board of
Directors of the Company, upon recommendation of the Audit Committee, has
re-appointed KPMG LLP as independent auditors to audit the books and accounts of
the Company for the fiscal year ending January 2, 2000.
A representative of KPMG LLP is expected to be present at the meeting to
respond to appropriate questions and will have an opportunity to make a
statement if he or she desires to do so.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present, or represented and entitled to vote, at the Annual
Meeting, is required to approve Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE THEIR SHARES FOR
RATIFICATION OF THE RE-APPOINTMENT OF AUDITORS.
ADOPTION OF THE MORTON'S RESTAURANT GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 3)
INTRODUCTION
On March 5, 1999, the Company adopted, subject to approval of its
stockholders, the Morton's Restaurant Group, Inc. Employee Stock Purchase Plan,
as amended (the "Plan") and directed that the Plan be submitted to a vote of the
stockholders at such a meeting. If approved by holders of the Class A Common
Stock, the Plan, as amended, will become effective as of October 1, 1999.
The full text of the Plan is set forth as Exhibit A to this Proxy Statement.
The following is a summary of the principal features of the Plan and does not
purport to be complete. Stockholders are urged to read the Plan in its entirety.
The summary is subject to and qualified in its entirety by reference to the
Plan.
PURPOSE
The purpose of the Plan is to provide eligible employees of the Company and
its subsidiaries (each a "Participant") with an opportunity to purchase shares
of Common Stock through payroll deductions. The Plan is intended to qualify as
an "employee stock purchase plan" under Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code") but is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
ADMINISTRATION
The Compensation and Stock Option Committee of the Company (the "Committee")
administers the Plan; PROVIDED, HOWEVER, the Committee may delegate the day to
day responsibilities with respect to the
15
<PAGE>
administration of the Plan to the Company or any officer of the Company. The
members of the Committee are appointed by the Board of Directors. The members of
the Committee may be removed for any reason or for no reason at any time. The
Plan has no expiration date. The Plan may be amended or terminated at any time
by the Committee, PROVIDED, HOWEVER, that no such amendment or termination shall
be made which would impair the rights of any Participant under the Plan without
his or her consent.
ELIGIBLE EMPLOYEES
Employees of the Company or its subsidiaries, including, to the extent
permitted by the Committee, senior officers of the Company, who are customarily
employed for at least 20 hours per week are eligible to participate in the Plan
as of the first calendar quarter following the employees' first anniversary of
employment with the Company.
PURCHASE OF SHARES
Prior to each calendar quarter of the Plan (an "Offering Period"), a
Participant may authorize payroll deductions to be taken from his or her base
salary to be used to purchase shares of Common Stock under the Plan. The rate of
payroll deductions shall be between 1% and 15% of the Participant's base salary,
or such lesser percentage as determined by the Committee. Options are granted to
Participants on the first day of each Offering Period to purchase up to a number
of shares of Common Stock equal to the total amount of payroll deductions
accumulated during the Offering Period divided by the lesser (i) 85% of the fair
market value of a share of Common Stock on the first business day of an Offering
Period or (ii) 85% of the fair market value of a share of Common Stock on the
last business day of an Offering Period. Thus, the option price per share is
equal to 85% of the fair market value of a share of Common Stock on either the
first business day of an Offering Period or the last business day of an Offering
Period. The fair market value of a share of Common Stock is the closing trading
price of a share of Common Stock on the New York Stock Exchange.
The option to purchase shares of Common Stock under the Plan is
automatically exercised on the last day of the Offering Period. The maximum
number of whole and fractional shares of Common Stock subject to the option will
be purchased for the Participant at the applicable option price with the payroll
deductions accumulated during the Offering Period. In any calendar year, no
Participant may purchase shares of Common Stock which have a fair market value
that exceeds $25,000 when the option to purchase such shares of Common Stock is
granted to the Participant.
The maximum number of shares of Common Stock which shall be available for
sale under the Plan is 600,000, subject to adjustment by the Company upon a
change in capitalization of the Company. The shares of Common Stock to be sold
to Participants under the Plan may, at the election of the Company, be either
treasury shares, authorized but unissued shares or publicly traded shares.
In the event that the shares of Common Stock to be sold to Participants
under the Plan are publicly traded shares, the Company shall contribute 15% of
the option price, determined by the fair market value of a share of Common
Stock.
Participants may increase or decrease their rate of payroll deductions at
any time to be effective for the next Offering Period so long as the
authorization for the payroll deduction change is made at least 15 days before
the beginning of the next Offering Period. A Participant may not increase or
decrease the rate of payroll deductions during an Offering Period to be
effective for that Offering Period.
No interest accrues on the payroll deductions held in a Participant's
account under the Plan. Cash dividends for the shares of Common Stock held in a
Participant's account are, at the discretion of the Committee, either
distributed directly to Participants or automatically invested in shares of
Common Stock at the fair market value of the shares of Common Stock on the date
that the cash dividends are invested in such shares (with no contribution by the
Company for any discount toward the purchase of such shares of
16
<PAGE>
Common Stock). Shares of Common Stock purchased with cash dividends are held in
a Participant's account under the Plan.
A Participant shall have the right to vote shares of Common Stock held in
the Participant's account under the Plan. However, a Participant has no interest
or voting right in shares of Common Stock covered by an option until such option
has been exercised under the provisions of the Plan.
WITHDRAWAL FROM PLAN; ASSIGNMENT OF INTEREST
Participants may withdraw all, but not less than all, payroll deductions
accumulated during the Offering Period at any time prior to the last day of the
Offering Period by giving notice to the Committee. If a Participant withdraws
from the Plan, the accumulated payroll deductions will be paid to the
Participant as promptly as administratively possible and no further payroll
deductions will be made for the Participant for such Offering Period. A
Participant's withdrawal from the Plan during one Offering Period does not
affect such Participant's eligibility to participate in subsequent Offering
Periods. However, in such a case, the Participant must authorize the resumption
of payroll deductions and the rate of such payroll deductions. A Participant's
termination of employment for any reason or failure to remain in the continuous
employ of the Company or one of its subsidiaries for at least 20 hours per week
during the Offering Period shall constitute a withdrawal from the Plan.
Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of an option or to receive shares of Common
Stock under the Plan may be assigned, transferred, pledged or otherwise disposed
of in any way (other than by will, the laws of descent and distribution or as
provided to a beneficiary in accordance with the provisions of the Plan) by the
Participant.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the principal federal income tax
consequences to the Company and Participants of participation in the Plan. The
summary is based upon an analysis of the Code, as currently in effect. Any
change under the Code could have a retroactive effect and could affect the
consequences described in the summary. The summary does not purport to cover all
federal income tax consequences that may apply to the Company or a Participant
and does not contain any discussion of foreign, state or local tax laws.
Participants are urged to consult their own tax advisors regarding the tax
consequences to them resulting from participation in the Plan. The Plan is not
qualified under Section 401(a) of the Code, but is intended to comply with the
provisions of Section 423 of the Code as an "employee stock purchase plan."
TAX CONSEQUENCES TO THE COMPANY
The Company will be entitled to a tax deduction equal to the amount of
payroll deductions authorized by a Participant under the Plan to the same extent
as other compensation paid to the Participant.
With respect to the Company's 15% contribution, if a Participant satisfies
the applicable holding period, the Company will not be entitled to any tax
deduction for any income recognized by the Participant. If a disqualifying
disposition (as explained below) occurs, the Company will be entitled to a tax
deduction equal to the amount that the Participant includes as ordinary income
in the year in which the disqualifying disposition occurs.
TAX CONSEQUENCES TO THE PARTICIPANT
The payroll deductions authorized by a Participant under the Plan continue
to be taxable income to the Participant in the year such amounts are earned.
Such income is subject to taxation to the same extent (Federal, state and local)
as other compensation income received by the Participant. However, a Participant
will not recognize income either upon enrollment in the Plan or upon any
purchase of shares of
17
<PAGE>
Common Stock under the Plan. All tax consequences are deferred until a
Participant sells the shares of Common Stock acquired under the Plan, disposes
of such shares by gift or dies.
The tax treatment with respect to a disposition of shares of Common Stock
purchased pursuant to an option under the Plan depends on whether such shares of
Common Stock are disposed of within the holding period provided under Section
423 of the Code. Under Section 423 of the Code, the required holding period is
the later of (i) two (2) years after the date of the option grant and (ii) one
(1) year after the option exercise date. The required holding period is also
satisfied if the Participant dies while holding shares of Common Stock acquired
under the Plan. If a disposition does not satisfy the required holding period
under Section 423 of the Code, such disposition is called a "disqualifying
disposition." If a disqualifying disposition occurs, the Participant must
recognize as ordinary income, in the year of such disqualifying disposition, the
difference between the fair market value of the shares of Common Stock on the
date that the option is exercised and the option's exercise price.
Since the Plan provides that the option price per share of Common Stock
generally shall be the lesser of (i) 85% of the fair market value of a share of
Common Stock on the first business day of an Offering Period or (ii) 85% of the
fair market value of a share of Common Stock on the last business day of an
Offering Period, a Participant who satisfies the required holding period under
Section 423 of the Code must include as ordinary income at the time of sale or
other taxable disposition of the shares of Common Stock purchased pursuant to an
option, or upon the Participant's death while still holding the shares of Common
Stock purchased pursuant to an option exercised under the Plan, the lesser of:
(i) the amount, if any, by which the fair market value of the shares of
Common Stock when the option was exercised exceeds the option price; or
(ii) the amount, if any, by which the fair market value of the shares of
Common Stock at the time of such disposition or death exceeds the
option price paid.
The basis of the shares of Common Stock purchased pursuant to an option will
be increased by the amount of ordinary income recognized. If a Participant
satisfies the applicable holding period with respect to the shares of Common
Stock purchased pursuant to an option, such shares of Common Stock would be
eligible for capital gains treatment under the Code.
VOTE REQUIRED.
The affirmative vote of a majority of the shares of Class A Common Stock
present and voting thereon is required for adoption of this proposal.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to adopt the Plan. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE THEIR SHARES FOR APPROVAL OF THE PLAN.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders to be presented at the annual meeting to be held
in 2000 must be received by November 24, 1999 in order for such proposals to be
considered for inclusion in the Proxy Statement and form of proxy relating to
such meeting. Stockholders who do not present proposals for inclusion in the
Proxy Statement but who still intend to submit a proposal at the 2000 annual
meeting, and stockholders who intend to submit nominations for directors at the
meeting, are required to notify the Secretary of the Company of their proposal
or nominations, and provide certain other information, in accordance with and
during the time period set forth in the Company's Certificate of Incorporation
and By-laws. See "Election of Directors--Meetings of the Board of Directors and
Committees" for a brief summary of the procedure and time period for submitting
nominations for directors. Additional information and a copy of the Certificate
of Incorporation and By-laws may be obtained from the Secretary of the Company,
Morton's Restaurant Group, Inc., 3333 New Hyde Park Road, New Hyde Park, New
York 11042.
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REPORTING UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the SEC. Executive officers, directors and greater than
10% stockholders are required to furnish the Company with copies of all Forms 3,
4 and 5 they file. Based solely on the Company's review of the copies of such
Forms it has received and written representations from certain reporting persons
that they were not required to file Forms 5 for specified fiscal years, except
as noted below, the Company believes that all of its executive officers,
directors and greater than 10% stockholders complied with all Section 16(a)
filing requirements applicable to them during the Company's fiscal year ended
January 3, 1999. In fiscal 1998, a report was not timely filed when Alan A.
Teran purchased stock of Morton's Restaurant Group, Inc. The failure to file
such form was inadvertent and there were no transactions required to be reported
on such form on the date it was required to be filed.
OTHER BUSINESS
The management of the Company is not aware of any other matters to be
brought before the Annual Meeting. However, if any other matters are properly
brought before the Annual Meeting, the persons named in the enclosed form of
proxy will have discretionary authority to vote all proxies with respect to such
matters in accordance with their best judgment.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of the Proxy Statement entitled "Compensation Committee Report" and
"Performance Graph" shall not be deemed to be so incorporated unless
specifically otherwise provided in any such filing.
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 3, 1999, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES, AS FILED WITH
THE SEC ARE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
ADDRESSED TO THOMAS J. BALDWIN, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, MORTON'S RESTAURANT GROUP, INC., 3333 NEW HYDE PARK ROAD, NEW HYDE
PARK, NEW YORK 11042.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
By order of the Board of Directors
Agnes Longarzo
SECRETARY
March 24, 1999
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EXHIBIT A
MORTON'S RESTAURANT GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Morton's Restaurant Group,
Inc. Employee Stock Purchase Plan (the "Plan") of Morton's Restaurant Group,
Inc. (the "Company").
1. PURPOSE. The purpose of the Plan is to provide employees of the Company
and its subsidiaries with an opportunity to purchase shares of Common Stock of
the Company through payroll deductions. It is the intention of the Company to
have the Plan qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of
the Plan shall, accordingly, be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. DEFINITIONS.
(a) "Account" shall mean the account established for each Participant under
the plan.
(b) "Base Salary" shall mean the total compensation received by an Employee
as reflected on his or her IRS Form W-2 Wage and Tax Statement,
including, but not limited to, an Employee's salary or wages, tips and
overtime for each pay period during any Offering Period as determined
from the payroll records of the Company; PROVIDED, HOWEVER, that the
Committee may, in its discretion, limit the amount of a Participant's
Base Salary that may be considered under the Plan.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Broker" shall mean the brokerage firm selected and designated by the
Company or the Committee.
(e) "Closing Date" shall mean the last business day of each Offering Period.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Committee" shall mean the Compensation and Stock Option Committee of
the Company.
(h) "Common Stock" shall mean the Class A common stock of the Company par
value $.01 per share.
(i) "Company" shall mean Morton's Restaurant Group, Inc., a Delaware
corporation.
(j) "Employee" shall mean any person who is customarily employed for at
least twenty (20) hours per week by the Company or a Subsidiary,
including, to the extent permitted by the Committee, senior officers of
the Company.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" shall mean on any day, with respect to Common Stock
of the Company which is (a) listed on a United States securities
exchange, the last sales price of such stock on such day on the largest
United States securities exchange on which such stock shall have traded
on such day, or if such day is not a day on which a United States
securities exchange is open for trading, on the immediately preceding day
on which such securities exchange was open, (b) not listed on a United
States securities exchange but is included in The NASDAQ Stock Market
System (including The NASDAQ National Market), the last sales price on
such system of such stock on such day, or if such day is not a trading
day, on the immediately preceding trading day, or (c) neither listed on a
United States securities exchange nor included in The NASDAQ Stock Market
System, the fair market value of such stock as determined from time to
time by the Board in good faith in its sole discretion.
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(m) "Offering Date" shall mean the first business day of each Offering
Period.
(n) "Offering Period" shall mean each three (3) month period when Options
for shares of Common Stock are offered by the Company.
(o) "Option" shall mean the right of a Participant to purchase shares of
Common Stock of the Company under the Plan.
(p) "Participant" shall mean an Employee of the Company or Subsidiary who is
enrolled in the Plan in accordance with Section 3 hereof.
(q) "Plan" shall mean the Morton's Restaurant Group, Inc. Employee Stock
Purchase Plan.
(r) "Subsidiary" shall mean a corporation, domestic or foreign, of which not
less than fifty percent (50%) of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
(a) As soon as administratively possible, any Employee who shall be employed
by the Company or one of its Subsidiaries shall be eligible to
participate in the Plan as of the date of the first Offering Period
following the first anniversary of the Employee's commencement of
employment with the Company or a Subsidiary.
(b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an Option under the Plan (i) if, immediately after the
grant, such Employee would own shares of Common Stock or hold outstanding
options to purchase shares of Common Stock possessing five percent (5%)
or more of the total combined voting power or value of all classes of
shares of the Company or of any Subsidiary of the Company, or (ii) which
causes him or her to purchase shares of Common Stock under all employee
stock purchase plans of the Company and its Subsidiaries which have a
Fair Market Value which exceeds Twenty-Five Thousand Dollars ($25,000)
(determined at the time such Option is granted) for each calendar year in
which such Option is outstanding at any time.
4. OFFERING DATES. The Plan shall be implemented by one offering during
each three (3) month period (calendar quarter) of the Plan, commencing on
October 1, 1999, and continuing thereafter until terminated in accordance with
Section 21 hereof. The Offering Periods for each calendar quarter are as
follows:
January 1--March 31
April 1--June 30
July 1--September 30
October 1--December 31
The Committee shall have the power to change the duration of Offering
Periods with respect to future offerings without shareholder approval if such
change is announced at least fifteen (15) days prior to the scheduled beginning
of the first Offering Period to be affected.
5. PARTICIPATION. An eligible Employee may become a Participant in the Plan
by authorizing payroll deductions in such form or manner as the Committee may
prescribe prior to the applicable Offering Date. Once authorized, such
authorization for payroll deductions shall commence on the first Offering Date
after authorization is effected and shall remain effective for all subsequent
Offering Periods until the Participant withdraws from the Plan as provided in
Section 11 hereof or, subject to Section 6 hereof, authorizes a change in the
amount of his or her payroll deductions.
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6. PAYROLL DEDUCTIONS.
(a) At the time a Participant authorizes payroll deductions, he or she shall
elect to have payroll deductions made on each payday during subsequent
Offering Periods at a rate between one percent (1%) and fifteen percent
(15%) of Base Salary (such percentage representing a whole number
percentage); PROVIDED, HOWEVER, that the Committee may, in its discretion
and from time to time, limit payroll deductions to a lesser percentage of
Base Salary.
(b) All payroll deductions made by a Participant shall be credited to his or
her Account under the Plan. A Participant may not make any additional
payments into such Account.
(c) A Participant may increase or decrease his or her rate of payroll
deductions (within the limitations set forth in Section 6(a) hereof) to
be effective for the next Offering Period by authorizing a new rate of
payroll deductions at least fifteen (15) days before the beginning of
such Offering Period. A Participant may not increase or decrease the rate
of payroll deductions during an Offering Period to be effective for that
Offering Period.
(d) A Participant must continue payroll deductions for the duration of the
Offering Period in order to exercise an Option in accordance with Section
8 hereof. In the event that a Participant does not continue payroll
deductions for the entire Offering Period, such Participant shall be
treated as withdrawing from such Offering Period in accordance with
Section 11(a) hereof.
7. GRANT OF OPTION.
(a) On each Offering Date, each eligible Employee participating in the Plan
shall be granted an Option to purchase (at the per share Option price) up
to a number of shares of the Company's Common Stock determined by
dividing the Employee's to be accumulated payroll deductions (not to
exceed an amount equal to fifteen percent (15%) of his or her Base
Salary, or such lesser percentage of Base Salary as determined by the
Committee, during the applicable Offering Period) by the Option price, as
determined in accordance with Section 7(b).
(b) The Option price per share of such shares of Common Stock shall be the
lesser of (i) eighty-five percent (85%) of the Fair Market Value of a
share of Common Stock of the Company on the Offering Date or (ii)
eighty-five percent (85%) of the Fair Market Value of a share of Common
Stock of the Company on the Closing Date.
8. EXERCISE OF OPTION. Unless a Participant withdraws from the Plan as
provided in Section 11 hereof, his or her Option for the purchase of shares of
Common Stock will be exercised automatically on the Closing Date, and the
maximum number of whole and fractional shares of Common Stock subject to the
Option will be purchased for him or her at the applicable Option price with the
accumulated payroll deductions in his or her Account. During his or her
lifetime, a Participant's Option to purchase shares of Common Stock hereunder is
exercisable only by him or her.
9. BROKER AND PARTICIPANT'S ACCOUNT WITH BROKER. The Broker is authorized
to open and maintain an Account for each Participant. The Company reserves the
right to change the designation of the Broker at any time without prior notice
to Participants and the Broker has reserved the right to terminate its services
as Broker under the Plan at any time. The Broker shall deliver to each
Participant as promptly as practicable, by mail or otherwise, all notices of
meetings, proxy statements and other materials distributed by the Company to its
stockholders. The whole and fractional shares in each Participant's Account
shall be voted in accordance with the Participant's signed proxy instructions
duly delivered to the Broker by mail or otherwise, in accordance with the rules
applicable to stock listed on the New York Stock Exchange.
10. DELIVERY OF CERTIFICATES. A Participant may request, in accordance with
Section 22 hereof, that the Company arrange for the delivery of a certificate
representing the number of whole shares of Common Stock of the Company purchased
upon exercise of the Participant's Option as promptly as practicable after each
Closing Date. A Participant may not require delivery for a fractional share, but
may instruct the
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Broker to sell the fractional share. In connection with the delivery of
certificates to a Participant, the Committee may, in its sole discretion, impose
a reasonable charge.
11. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A Participant may withdraw all but not less than all the payroll
deductions credited to his or her Account under the Plan at any time
prior to the Closing Date by giving notice to the Committee in such form
or manner as the Committee may prescribe. All of the Participant's
payroll deductions credited to his or her Account will be paid to him or
her as soon as administratively possible after receipt of his or her
notice of withdrawal and his or her Option for the current Offering
Period will be automatically terminated, and no further payroll
deductions for the purchase of shares of Common Stock will be made during
such Offering Period.
(b) Upon termination of the Participant's employment prior to the Closing
Date for any reason, including retirement or death, the payroll
deductions credited to his or her Account will be returned to him or her
or, in the case of his or her death, to the person or persons entitled
thereto under Section 16 hereof, as soon as administratively possible,
and his or her Option will be automatically terminated.
(c) In the event an Employee fails to remain in the continuous employ of the
Company or one of its Subsidiaries for at least twenty (20) hours per
week during the Offering Period in which the employee is a Participant,
he or she will be deemed to have elected to withdraw from the Plan and
the payroll deductions credited to his or her Account will be returned to
him or her as soon as administratively possible and his or her Option
will be terminated.
(d) A Participant's withdrawal from an Offering Period will not have any
effect upon his or her eligibility to participate in a succeeding
offering or in any similar plan which may hereafter be adopted by the
Company. However, in such a case, the Participant must authorize the
resumption of payroll deductions and the rate of such payroll deductions.
12. NO INTEREST. No interest shall accrue on the payroll deductions held in
the Account of a Participant in the Plan.
13. STOCK.
(a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 600,000, subject to adjustment
upon changes in capitalization of the Company as provided in Section 20
hereof. The shares of Common Stock to be sold to Participants under the
Plan may, at the election of the Company, be either treasury shares,
authorized but unissued shares or publicly traded shares. If at the
termination of any Offering Period the total number of shares of Common
Stock which would otherwise be subject to Options granted pursuant to
Section 7(a) hereof exceeds the number of shares of Common Stock then
available under the Plan (after deduction of all shares of Common Stock
for which Options have been exercised or are then outstanding), the
Company shall promptly notify the Participants, and shall, in its sole
discretion (i) make a pro rata allocation of the shares of Common Stock
remaining available for Option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable, (ii) terminate the
Offering Period without issuance of any shares of Common Stock or (iii)
obtain stockholder approval for an increase in the number of shares of
Common Stock authorized under the Plan such that all Options could be
exercised in full. The Company may delay determining which of (i), (ii)
or (iii) above it shall decide to effect, and may accordingly delay
issuances of any shares of Common Stock under the Plan for such time as
is necessary to attempt to obtain stockholder approval for any increase
in shares of Common Stock authorized under the Plan. The Company shall
promptly notify Participants of its determination to effect (i), (ii) or
(iii) above upon making such decision. A Participant may withdraw all but
not less than all the payroll deductions credited to his or her Account
under the Plan at any time prior to such
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notification from the Company. In the event the Company determines to
effect (i) or (ii) above, it shall promptly upon such determination
return to each Participant all payroll deductions not applied towards the
purchase of shares of Common Stock.
(b) The Participant will have no interest or voting right in shares of
Common Stock covered by his or her Option until such Option has been
exercised.
(c) Shares of Common Stock to be delivered to a Participant under the Plan
shall be registered in the name of the Participant.
14. DIVIDENDS. Cash dividends for shares of Common Stock in Participants'
Accounts under the Plan shall, as permitted by the Committee in its discretion,
either be distributed to Participants directly or automatically invested in
shares of Common Stock at the full Fair Market Value on the date of such
investment as soon as administratively possible after such dividends are paid by
the Company. In the event cash dividends are automatically invested in shares of
Common Stock, such shares of Common Stock will be held in Accounts under the
Plan.
15. ADMINISTRATION. The Plan shall be administered by the Committee;
PROVIDED, HOWEVER, that the day to day responsibilities with respect to the
administration of the Plan may be delegated to the Company or any officer of the
Company, as determined by the Committee. The administration, interpretation or
application of the Plan by the Committee, or such other person or persons who
have been delegated the responsibility to administer the Plan, shall be final,
conclusive and binding upon all Participants.
16. DESIGNATION OF BENEFICIARY. The beneficiary or beneficiaries of the
Participant to receive any shares of Common Stock and cash, if any, from the
Participant's Account under the Plan in the event of such Participant's death
prior to delivery to him or her of such shares of Common Stock and cash shall be
determined under the Company's Group Life Insurance Plan. In the absence of a
valid designation under the Company's Group Life Insurance Plan or if no validly
designated beneficiary survives the Participant or if each surviving validly
designated beneficiary is legally impaired or prohibited from receiving shares
of Common Stock and cash, if any, from the Participant's Account under the Plan,
then the Participant's beneficiary shall be the Participant's estate.
17. TRANSFERABILITY. Neither payroll deductions credited to a Participant's
Account nor any rights with regard to the exercise of an Option or to receive
shares of Common Stock under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 16 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 11 hereof.
18. NO SEGREGATION OF FUNDS. The Company shall not be obligated to
segregate payroll deductions received or held by the Company under the Plan.
Such payroll deductions shall be used to purchase shares of Common Stock under
the Plan in accordance with Section 8 hereof.
19. REPORTS. Individual Accounts will be maintained for each Participant in
the Plan. Statements of Account will be given to Participants within a
reasonable period of time following each Closing Date.
20. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the stockholders of the Company, the number of shares of Common Stock
covered by each Option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but have not yet been placed under Option (collectively, the
"Reserves"), as well as the price per share of Common Stock covered by each
Option under the Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend (but only
on the Common Stock) or any other increase or decrease in the number of shares
of Common Stock effected without receipt of consideration by the Company;
PROVIDED, HOWEVER, that conversion of any convertible securities of
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the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into or exercisable for shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding Option under the Plan, in the event
that the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.
21. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Committee may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any
Participant under any Option theretofore granted without his or her
consent.
(b) SHAREHOLDER APPROVAL OF AMENDMENTS. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Rule 16b-3 promulgated under the Exchange Act or with Section
423 of the Code (or any successor statute or rule or other applicable
law, rule or regulation), such stockholder approval to be obtained in
such a manner and to such a degree as is required by the applicable law,
rule or regulation.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination of
the Plan shall not affect Options already granted hereunder and such
Options shall remain in full force and effect as if this Plan had not
been amended or terminated.
22. NOTICES. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof. All notices or
other communications to a Participant by the Company shall be deemed to have
been duly given when sent by the Company by regular mail to the address of the
Participant on the human resources records of the Company.
23. CONDITIONS UPON ISSUANCE OF SHARES OF COMMON STOCK. Shares of Common
Stock shall not be issued with respect to an Option unless the exercise of such
Option and the issuance and delivery of such shares of Common Stock pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or automated quotation system upon which the
shares of Common Stock may then be listed or quoted, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the shares of Common Stock are being purchased only for investment
and without any present intention to sell or distribute such shares of Common
Stock if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of law.
24. NO CONTRACT OF EMPLOYMENT. The Plan is not and shall not be deemed to
constitute a contract of employment between the Company and any Employee or
other individual, nor shall anything herein contained be deemed to give any
Employee or other individual any right to be retained in the Company's employ or
to in any way limit or restrict the Company's right or power to discharge any
Employee or other
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individual at any time and to treat him without any regard to the effect which
such treatment might have upon him as a Participant of the Plan.
25. GOVERNING LAW. The Plan shall be construed in accordance with and
governed by the laws of the state of New York.
26. EFFECTIVE DATE AND APPROVAL OF PLAN BY STOCKHOLDERS. The Plan shall
become effective on October 1, 1999, SUBJECT HOWEVER, to receipt of approval of
the Plan by stockholders of the Company in accordance with section 423(b)(2) of
the Code.
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DETACH HERE
PROXY
MORTON'S RESTAURANT GROUP, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MORTON'S RESTAURANT GROUP, INC.
The undersigned, revoking previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated March 24,
1999 in connection with the Annual Meeting to be held at 9:00 a.m. on May 12,
1999 at The Garden City Hotel, 45 Seventh Street, Garden City, New York
11530, and hereby appoints Thomas J. Baldwin and David B. Pittaway, and each
of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of Common
Stock of MORTON'S RESTAURANT GROUP, INC. registered in the name provided
herein which the undersigned is entitled to vote at the 1999 Annual Meeting
of Stockholders, and at any adjournment or adjournments thereof, with all the
powers the undersigned would have if personally present. Without limiting the
general authorization hereby given, said proxies are, and each of them is,
instructed to vote or act as follows on the proposals set forth in said Proxy
Statement and on such other matters as may property come before the meeting.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, JUST SIGN ON THE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES.
/SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE /SEE REVERSE
SIDE/ SIDE/
<PAGE>
/X/ Please mark
votes as in
this example.
This Proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR the election of
Directors and FOR Proposals 2 and 3.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
1. Election of Directors.
Nominees: Lee M. Cohn, Dianne H. Russell and Alan A. Teran
FOR ALL NOMINEES / / WITHHELD FROM ALL NOMINEES / /
/ / FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. Selected of KPMG LLP as the Company's Independent Auditors.
FOR / / AGAINST / / ABSTAIN / /
3. Ratification of an Employee Stock Purchase Plan.
FOR / / AGAINST / / ABSTAIN / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON, JOINT OWNERS SHOULD
EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
Signature: Date:
-------------------------------------- -------------
Signature: Date:
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