<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
[ ] TRANSITION]REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 Commission file number 000-22150
----------------
LANDRY'S SEAFOOD RESTAURANTS, INC.
(Exact name of the registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0405386
(State of incorporation) (I.R.S. Employer Identification No.)
1400 POST OAK BLVD.,
SUITE 1010
HOUSTON, TX 77056 (713) 850-1010
(Address of principal executive (Registrant's telephone number)
offices)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON SHARES, PAR VALUE $.01 PER SHARE
(Title of Class)
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of the registrant's voting Common Stock held
by non-affiliates of the registrant was approximately $166,051,650 as of March
29, 1999, based on the NASDAQ National Market System closing price on that
date. For this purpose, all shares held by officers and directors of the
registrant are considered to be held by affiliates, but neither the registrant
nor such persons concede that they are affiliates of the registrants.
The number of shares outstanding of the registrant's common stock is
28,865,000 as of March 29, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The following information is set forth with respect to the directors and
executive officers of Landry's Seafood Restaurants, Inc. (the "Company").
Directors
<TABLE>
<CAPTION>
Director Term
Name Age Since Expires
- ---- --- -------- -------
<S> <C> <C> <C>
Tilman J. Fertitta(1)(3)(4)................................ 41 1993 1999
Steven L. Scheinthal(3).................................... 37 1993 1999
Paul S. West(3)............................................ 40 1994 1999
James E. Masucci(1)(2)..................................... 66 1993 1999
Joe Max Taylor(1)(2)(4).................................... 66 1993 1999
</TABLE>
- --------
(1) Member of Audit Committee
(2) Member of Compensation and Stock Option Committee
(3) Member of Executive Committee
(4) Member of Nominating Committee
Mr. Fertitta has served as President and Chief Executive Officer of the
Company since 1987. In 1988, he became the controlling stockholder and assumed
full responsibility for all of the Company's operations. Prior to serving as
President and Chief Executive Officer of the Company, Mr. Fertitta devoted his
full time to the control and operation of a hospitality and development
company. Mr. Fertitta serves on the boards of the Houston Livestock Show and
Rodeo, Space Center Houston, the Children's Museum of Houston, The Greater
Houston Convention and Visitor's Bureau, the Crohn's and Colitis Foundation,
the Better Business Bureau of Houston, and the Childress Foundation.
Mr. Scheinthal has served as Vice President of Administration, General
Counsel and Secretary to the Company since September 1992. He devotes a
substantial amount of time to lease and contract negotiations and is primarily
responsible for the Company's compliance with all federal, state and local
ordinances. Prior to joining the Company, he was a partner in the law firm of
Stumpf & Falgout in Houston, Texas. Mr. Scheinthal represented the Company for
approximately five years before joining the Company. He has been licensed to
practice law in the state of Texas since 1984.
Mr. West has served as Vice President of Finance and Chief Financial Officer
of the Company since June 1993. Prior to joining the Company, Mr. West was a
senior manager at Deloitte & Touche and a leader of their
Restaurant/Entertainment Advisors Group in Dallas, Texas. He was responsible
for numerous restaurant audits and performed the annual restaurant industry
operations survey and study on behalf of the National Restaurant Association
and many state restaurant associations. Mr. West had been engaged in public
accounting and auditing since 1981, and has been a certified public accountant
since 1983.
Mr. Masucci is self-employed as an advertising consultant. From 1956 until
June 1996 he was employed by Capital Cities/ABC ("ABC"). His last position with
ABC was as President and General Manager of KTRK-TV, an owned station of ABC in
Houston, Texas, a position he held from August 1990 to June 1996. Prior to
serving as President, Mr. Masucci served in various executive positions with
KTRK-TV and has served as Division Vice President and Vice President of the
Broadcast Division of ABC.
Mr. Taylor is a director and member of the Executive Committee of American
National Insurance Company, a publicly traded insurance company. He also serves
on the Board and Audit Committee of the
<PAGE>
Transitional Learning Center of Galveston and is President and a member of the
Executive Committee of Moody Gardens, Inc., which operates a public resort and
entertainment facility in Galveston, Texas. Mr. Taylor is also the chief law
enforcement administrator for Galveston County, Texas and serves on the
Galveston County Pre-Trial Board as well as the Board of Directors of
Harbourview Care Center.
There were eight meetings of the Board of Directors held during the 12
months ended December 31, 1998. All of the current Board members attended 75%
or more of the meetings of the Board and committees of the Board on which they
were members.
Executive Officers
In addition to Messrs. Fertitta, Scheinthal and West, for which information
is provided above, the following person is an executive officer of the Company:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Vice President of Restaurant
Richard E. Ervin...................... 43 Operations
</TABLE>
Mr. Ervin has served as Vice President of Restaurant Operations since 1991.
Prior to that time, he was the Vice-President of Internal Controls and Director
of Beverage Operations. He has 15 years of experience in high volume, multi-
unit food and beverage operations. His experience includes new restaurant
development and employee training programs.
Committees of the Board of Directors
The Company has an Executive Committee, an Audit Committee, a Compensation
Committee, and a Stock Option Committee. The Executive Committee has and may
exercise all of the authority of the Board of Directors with respect to the
management of the Company's business, except with respect to certain specified
matters that by law, the Certificate of Incorporation or By-laws must be
approved by the entire Board of Directors. The Executive Committee met twelve
times during 1998. All actions taken by the Executive Committee were ratified
unanimously by the Board of Directors. The Audit Committee is responsible for
(i) reviewing the scope of, and the fees for, the annual audit, (ii) reviewing
with the independent accountants the corporate accounting practices and
policies and recommending to whom reports should be submitted within the
Company, (iii) reviewing with the independent accountants their final report,
(iv) meeting with internal and independent accountants during the year for
consultation purposes, and (v) being available to the independent accountants
during the year for consultation purposes. The Audit Committee met on two
occasions in 1998. The Compensation Committee determines the compensation of
the officers of the Company and performs other similar functions. The
Compensation Committee met on two occasions in 1998. The Stock Option Committee
grants options under the Company's Stock Option Plans and also determines
whether additional options should be granted to deserving key employees. The
Stock Option Committee met on four occasions in 1998. The Company established a
nominating committee in 1999. The Committee selects appropriate candidates to
be recommended to the full Board of Directors and the Stockholders for election
as directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Common Stock to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common
Stock. The Company believes, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, that during the preceding fiscal year all of the
Company's directors, officers and holders of more than 10% of its Common Stock
complied with all Section 16(a) filing requirements, except that Mr. Taylor and
Mr. Masucci failed to timely file a Form 4 required to be filed during 1998.
Such reports have been filed with the SEC.
2
<PAGE>
Item 11. Executive Compensation
The following table sets forth in summary, compensation paid by the Company
and its subsidiaries for the year ended December 31, 1998 to executive officers
of the Company whose cash compensation exceeded $100,000:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------- ------------
Securities
Underlying
Salary Bonus Options/SARs
Name and Principal Position(1) Year ($) ($)(2) (#)
- ------------------------------ ---- ------- ------- ------------
<S> <C> <C> <C> <C>
Tilman J. Fertitta(4)......................... 1998 578,142 0 900,000
President and Chief Executive Officer 1997 525,000 325,000 750,000
1996 465,000 200,000 150,000
E.A. "Al" Jaksa, Jr.(3)....................... 1998 222,115 0 0
Former Executive Vice President and Chief 1997 200,000 125,000 75,000
Operating Officer 1996 225,000 125,000 100,000
Steven L. Scheinthal.......................... 1998 182,788 0 200,000
Vice President of Administration, Secretary 1997 165,000 125,000 75,000
and General Counsel 1996 129,000 100,000 100,000
Paul S. West(4)............................... 1998 177,692 0 200,000
Vice President of Finance and Chief Financial 1997 160,000 125,000 50,000
Officer 1996 120,000 10,000 50,000
Richard E. Ervin.............................. 1998 117,981 0 125,000
Vice President of Restaurant Operations 1997 105,000 75,000 325,000
1996 90,000 50,000 200,000
</TABLE>
- --------
(1) These executive officers receive personal benefits in addition to salary.
However, the Company has concluded that the aggregate amount of such
personal benefits do not exceed the lesser of $50,000 or 10% of annual
salary and bonus reported for each such executive.
(2) Bonuses were paid in the year after date indicated in table to reflect
accomplishments in the year indicated.
(3) Mr. Jaksa resigned his positions as Executive Vice President and Chief
Operating Officer in August, 1998. Compensation for 1998 includes severance
payments.
(4) The Compensation Committee has determined that no base salary raises shall
be awarded to Messrs. Fertitta and West in 1999. No bonuses were awarded to
any executive officers in 1998.
3
<PAGE>
The following table provides details regarding stock options granted in 1998
to executive officers named in the Summary Compensation Table. In addition, in
accordance with SEC rules, the hypothetical gains are shown that would exist
for the respective options based on assumed rates of annual compounded growth
in the stock price of 5% and 10% from the date the options were granted over
the full option term. The actual value, if any, an executive may realize will
depend on the spread between the market price and the exercise price on the
date the options are exercised.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------
Potential
Realizable Value at
Assumed Annual
No. of % of Total Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise Expira- for Option Term(3)
Options Employees Price tion -------------------
Name Granted in 1998 in 1998 ($/Sh) Date 5% ($) 10% ($)
---- --------------- ---------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tilman J. Fertitta(1)... 900,000 41% 6.00 12/17/08 3,396,031 8,606,207
Steven L.
Scheinthal(2).......... 200,000 9% 6.00 12/17/08 754,673 1,912,491
Paul S. West(2)......... 200,000 9% 6.00 12/17/08 754,673 1,912,491
Richard E. Ervin(2)..... 125,000 6% 6.00 12/17/08 471,671 1,195,307
</TABLE>
- --------
(1) Granted pursuant to the Company's 1993 Employee Stock Option Plan.
(2) Granted pursuant to the Company's 1995 Flexible Incentive Plan.
(3) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on the SEC's rules and are not intended to forecast future
price appreciation of the Common Stock of the Company. The gains reflect a
future value based upon growth at these prescribed rates. The Company is
not aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors. Actual gains, if
any, on the exercise of stock options are dependent on the future
performance of the Common Stock, overall market conditions, and the option
holders' continued employment through the vesting period. The amounts
reflected in this table may not necessarily be achieved. Amounts shown
under the "Potential Realizable Value" columns have been calculated by
multiplying the exercise price by the annual appreciation rate shown
(compounded for the term of the options), subtracting the exercise price
per share and multiplying the gain per share by the number of shares
covered by the options.
The following table shows the number of shares acquired upon exercise of
stock options in 1998, the value realized and the number of shares covered by
both exercisable and unexercisable stock options held by executive officers
named in the Summary Compensation Table at December 31, 1998. Also reported are
the value for the "in-the-money" options which represent the positive spread
between the exercise price of any such existing stock option and the price of
the Common Stock as of December 31, 1998.
Aggregated Options/SAR Exercised in Last Fiscal Year
and Fiscal Year End Option/SAR Values
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-The-Money Options at
Acquired Value Options at End of 1998 End of 1998(1)
on Realized ------------------------- -------------------------
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Tilman J. Fertitta...... -0- N/A 700,000 1,100,000 $-0- $1,350,000
Steven L. Scheinthal.... 96,250 1,332,525 167 315,833 $-0- $ 300,000
Paul S. West............ 91,250 1,247,460 4,000 310,000 $-0- $ 300,000
Richard E. Ervin........ 53,000 775,975 334 201,666 $-0- $ 187,500
</TABLE>
- --------
(1) The values were determined on the basis of the closing Common Stock price
of $7.50 on December 31, 1998, and equals the aggregate amount by which the
market value of the option shares exceeded the exercise price of
outstanding options.
4
<PAGE>
Compensation of Directors
Directors of the Company who are not executive officers receive Director's
fees of $18,000 per year, plus the expenses incurred by them on behalf of the
Company. Non-employee Directors also receive $1,000 for each Audit,
Compensation and Stock Option Committee meeting they attend. Each current non-
employee director has received stock options to acquire shares of Common Stock
under the Company's Non-Qualified Formula Stock Option Plan for Non-Employee
Directors (the "Non-Employee Director's Plan"). The Non-Employee Director's
Plan provides for the granting of nonqualified stock options to non-employee
directors of the Company. Pursuant to the Non-Employee Director's Plan, 80,000
shares of Common Stock are reserved for issuance to eligible non-employee
directors of the Company or its subsidiaries. The Non-Employee Director's Plan
is administered by the President of the Company and requires that the purchase
price under each option must not be less than 100% of the fair market value (as
defined in the Non-Employee Director's Plan) of the Common Stock at the time of
the grant of the option. Full payment for shares purchased upon exercise of an
option must be made at the time of exercise and no shares may be issued until
full payment is made. Options granted pursuant to the Non-Employee Director's
Plan generally vest in five installments beginning no earlier than the first
anniversary of the date of grant, and the options expire ten years from the
grant date. The Non-Employee Director's Plan provides that an option agreement
may include a provision for permitting an optionee the right to deliver
previously owned shares of Common Stock in partial or full payment for shares
to be purchased upon exercise of an option. In 1995, the Director's Plan was
amended to provide that each non-employee director who received a grant of an
option on the date such person was elected a director would receive an
additional option in the amount of 2,000 shares each time such person was re-
elected for an additional term as a director. Pursuant to the Non-Employee
Director's Plan, each current non-employee director initially received an
option to purchase 10,000 shares of Common Stock at $6 per share and received
an option to purchase 2,000 shares at $19.13 per share upon their re-election
in 1995, an option to purchase 2,000 shares at $24.63 per share upon their re-
election in 1996, an option to purchase 2,000 shares at $18.75 upon their re-
election in 1997, and an option to purchase 2,000 shares at $21.31 upon their
reelection in 1998. As set forth below, Mr. Taylor relinquished his option to
acquire 2,000 shares at $6.00 per share. In 1998 and 1999, in connection with
their functions as members of Committees of Non-Employee Independent Directors,
Messrs. Masucci and Taylor were each paid $41,000.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries. For information concerning
the relinquishment of certain options by Mr. Taylor, see "Security Ownership of
Certain Beneficial Owners and Management". The members of the Compensation
Committee had no other relationships with the Company requiring disclosure
pursuant to Item 404 of SEC Regulation S-K. No executive officer of the Company
served as a member of the compensation committee (or other board committee
performing similar functions or, in the absence of any such committee, the
entire Board of Directors) of another corporation, one of whose executive
officers served on the Compensation Committee. No executive officer of the
Company served as a director of another corporation, one of whose executive
officers served on the Compensation Committee. No executive officer of the
Company served as a member of the Compensation Committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire Board of Directors) of another corporation, one of whose
executive officers served as a director of the Company.
Compensation Committee Report on Executive Compensation
In August 1993, the Board of Directors established a Compensation Committee
to review and approve the compensation levels of members of management,
evaluate the performance of management, consider management succession and
consider any related matters for the Company. The Committee is charged with
reviewing with the Board of Directors in detail all aspects of compensation for
the executive officers of the Company.
The philosophy of the Company's compensation program is to employ, retain
and reward executives capable of leading the Company in achieving its business
objectives. These objectives include creating and
5
<PAGE>
preserving strong financial performance, increasing the assets of the Company,
positioning the Company's assets and business operations in geographic markets
and industry segments offering long-term growth opportunities, enhancing
stockholder value, and ensuring the survival of the Company. The accomplishment
of these objectives is measured against conditions prevalent in the industry
within which the Company operates. In recent years these conditions reflect a
highly competitive market environment and rapidly changing regional geographic
and overall industry market conditions.
The available forms of executive compensation include base salary, cash
bonus awards and stock options. Each component is intended to serve the
Compensation Committee's philosophy; however, performance of the Company is a
key consideration. The Company's compensation policy recognizes, however, that
stock price performance is only one measure of performance and, given industry
business conditions and the long term strategic direction and goals of the
Company, it may not necessarily be the best current measure of executive
performance. Therefore, the Company's compensation policy also gives
consideration to the Company's achievement of specified business objectives
when determining executive officer compensation. An additional objective of the
Compensation Committee has been to reward executive officers with equity
compensation in addition to salary in keeping with the Company's overall
compensation philosophy, which attempts to place equity in the hands of its key
employees in an effort to further instill stockholder considerations and values
in the actions of all the key employees and executive officers.
In furtherance of the Company's compensation philosophy and goal of
employing, retaining and rewarding its executives who have demonstrated a
desire and ability to lead the Company in the pursuit of its business
objectives, the Company entered into Personal Service and Employment Agreements
with the CEO and with Steven L. Scheinthal, Paul S. West and Richard E. Ervin
(Messrs. Scheinthal, West and Ervin are collectively referred to as the
"Additional Executives"). The employment agreements, which are discussed in
more detail below, became effective as of January 1, 1998 and established the
initial base salary payable to the CEO and each of the Additional Executives in
1998, established the minimum number of options available to the CEO and each
of the Additional Executives, and further provided for additional bonus awards
under any bonus programs established by the Company and/or, based upon merit
and Company performance, from the Compensation Committee. The employment
agreements also provided for certain additional executive benefits and
perquisites to be provided to each of the CEO and the Additional Executives.
The employment agreements established the initial salary payable in 1998 for
the CEO and each of the Additional Executives. Each executive officer's salary
shall thereafter be reviewed at least annually. In establishing the initial
salary payable to the CEO and the Additional Executives, the Compensation
Committee considered a number of factors. The factors included a review and
evaluation of the compensation and salary levels for similar level executives
for other comparable companies in the industry, the achievement of specified
business objectives during the prior fiscal years including progress made by
the Company in increasing the number of restaurants, improving revenues, income
and operating cash flows and progress made by the Company in product
development and improvements in customer satisfaction. Based upon such
considerations, the Compensation Committee determined the following 1998 fiscal
base salary levels to be fair and appropriate for the CEO and Additional
Executives taking into consideration the level of salary compensation paid to
the other key employees of the Company and the salaries payable to other
similarly situated executives at the Company's industry peers: Mr. Fertitta--
$585,000; Mr. Scheinthal--$185,000; Mr. West--$180,000; and, Mr. Ervin--
$120,000. Based on the 1998 performance of the Company, the Compensation
Committee determined not to grant any bonuses to Executive Officers in 1998. In
determining the options granted to the CEO and Additional Executives for fiscal
1998, the Compensation Committee considered the terms of the CEO's Employment
Agreement and granted to the CEO stock options to acquire up to 900,000 shares
of the Company's stock which is the minimum number of options required to be
granted under the terms of the CEO's Employment Agreement. The Compensation
Committee also granted to Messrs. Scheinthal and West options to acquire up to
200,000 shares apiece and Mr. Ervin options to acquire up to 125,000 shares of
the Company's stock which were also the minimum number of options required to
be granted in accordance with the terms of their employment agreements.
COMPENSATION COMMITTEE
James E. Masucci
Joe Max Taylor
6
<PAGE>
Employment Contracts and Change-in-Control Arrangements
The Company has entered into Personal Service and Employment Agreements with
the CEO and each of the Additional Executives which set forth the general terms
and conditions of each such executive's employment by the Company for the
period commencing January 1, 1998 through December 31, 2002, unless sooner
terminated. Each of the executives have the right to voluntarily terminate his
employment upon 90 day's prior notice.
Pursuant to the terms and provisions of the Personal Service and Employment
Agreement between the Company and Mr. Fertitta (the "CEO's Agreement"), Mr.
Fertitta has agreed to serve as President and Chief Executive Officer of the
Company to December 31, 2002, and is subject to automatic five-year extensions.
The CEO's Agreement provides that Mr. Fertitta will devote substantially all of
his time and attention to the business and affairs of the Company and will
receive, among other things, an annual base salary in an amount not less than
$585,000, annual cash bonuses in amounts determined by the Compensation
Committee, and a minimum number of stock options covering at least as many
shares for which options were granted to Mr. Fertitta during the three (3)
fiscal years preceding 1998, such options to be granted at a price equal to the
fair market value of the Company's Common Stock on the date of grant. In 1998,
the minimum number of options required to be granted under the CEO Agreement
were granted with an exercise price of $6.00 per share. The options shall vest
in equal annual installments over the three (3) year period following the date
of grant; provided, that if the stock price of the Company's stock increases by
more than forty percent (40%) from the exercise price, all options granted
under the CEO Agreement shall immediately vest.
The CEO's Agreement further provides that Mr. Fertitta shall be included in
all plans and programs of the Company made available to the Company's
executives and other salaried employees generally, including group life
insurance, accidental death and dismemberment insurance, hospitalization, long-
term disability, vacations and holidays. Mr. Fertitta will also be entitled to
life insurance and certain other benefits and perquisites in addition to those
made available to the Company's management generally, including use of Company
property, certain memberships, and matching charitable contributions. Mr.
Fertitta is also entitled to split-dollar life insurance. However, such split-
dollar life insurance was not obtained for Mr. Fertitta during 1998.
In the event Mr. Fertitta's employment is terminated as a result of his
death or disability (as defined in the CEO's Agreement), he, or his legal
representative, will be entitled to receive all compensation he would otherwise
have been entitled to receive throughout the remaining term of the then
effective employment period as well as the most favorable benefits provided by
the Company with regard to death or disability, all payable within 90 days of
such death or disability. In addition, upon Mr. Fertitta's death or disability,
unvested stock options shall immediately vest. In the event Mr. Fertitta's
employment is terminated (i) by him other than for Good Reason (as defined in
the CEO's Agreement) or (ii) by the Company for Cause (as defined in the CEO's
Agreement), Mr. Fertitta will receive all accrued compensation and other
amounts owed to him under his Employment Agreement as of the date of
termination as well as the most favorable benefits provided by the Company with
regard to death or disability. In the event Mr. Fertitta's employment is
terminated (i) by the Company other than for Cause, (ii) by Mr. Fertitta for
Good Reason (including a substantial or material alteration of the CEO's duties
and responsibilities under the CEO's Agreement; action by the Company which
negatively affects the CEO's rights under an employee benefit plan; relocation;
and material breach by the Company of the CEO's Agreement, subject to thirty
(30) days' notice to cure; and, any failure by the Company or its successors or
assigns to assume and perform the CEO's Agreement), or (iii) a Change in
Control (as defined in the CEO's Agreement), Mr. Fertitta will be entitled to
receive the following: (a) a lump sum payment of $3,000,000 in consideration of
his agreement not to compete with the Company, payable in full within five (5)
days of his termination, (b) an amount equal to two (2) years' base salary at
the rate then in effect immediately prior to termination, payable in full
within five (5) days of termination, (c) all unvested stock options shall
immediately vest, (d) the Company will pay all excise taxes, penalties and
interest arising from payments made under the CEO's Agreement which are imposed
pursuant to Section 4999 of the United States Internal Revenue Code or other
similar federal, state or local law, (e) a lump sum payment of $2,000,000 in
lieu of the Company's further maintenance of the split-dollar life insurance
policy for the remaining life of the policy, payable in full within five (5)
days of his termination, (f) for a period of two (2) years following his
7
<PAGE>
termination, the Company will provide all benefits he would have otherwise been
eligible to receive as if he were still employed by the Company, and (g) within
five (5) days of his termination, he will receive title to his Company
automobile, free and clear of all encumbrances. The CEO's Agreement further
provides that during the term of Mr. Fertitta's employment and for a period of
one (1) year following the termination of his employment, Mr. Fertitta will not
engage in any businesses involving the operation or management of seafood
restaurants within a 100-mile radius of any location in which the Company
operates a seafood restaurant.
The conditions of the Personal Service and Employment Agreements of the
Additional Executives (the "Additional Executive Agreements") are substantially
similar, differing only with respect to the specific amounts or value of
certain items of compensation to which each is entitled under the respective
Additional Executive Agreement. Under the Additional Executive Agreements, each
Additional Executive is obligated to devote his full time, attention and energy
to the Company. As compensation, the Additional Executive will receive, among
other things, the following respective annual base salaries: Mr. Scheinthal--
$185,000; Mr. West--$180,000; and Mr. Ervin--$120,000. Each Additional
Executive will be entitled to annual bonus awards under any bonus program
established by the Company and/or based on merit and Company performance from
the Stock Option Committee. Each Additional Executive will be included in all
plans and programs of the Company made available to the Company's executives
and other salaried employees generally, including group life, accidental death
and dismemberment, hospitalization, surgical, major medical, long-term
disability, and payment of or reimbursement of medical expenses not covered by
such plans up to $3,000 annually. Each Additional Executive shall also be
entitled to split-dollar life insurance and certain other benefits and
perquisites in addition to those made available to the Company's management
generally, including use of Company property, certain memberships, and matching
charitable contributions. During the term of employment, each of the Additional
Executives shall be granted stock options for the following minimum number of
shares: Mr. Scheinthal--200,000 shares; Mr. West--200,000 shares; and Mr.
Ervin--125,000 shares. Such options shall be granted at a price equal to the
fair market value at the time of grant. In 1998 the minimum number of options
under these Additional Executive Agreements were granted with an exercise price
of $6.00 per share. The options shall vest in equal annual installments over
three (3) years from the time of grant.
In the event an Additional Executives' employment is terminated as a result
of his death or disability (as defined in the Additional Executive Agreement),
he, or his legal representative, will receive his base salary which he would
have otherwise been entitled to receive throughout the remainder of the then
effective employment term, as well as the most favorable benefits provided by
the Company with regard to death or disability, all payable within ninety (90)
days of such death or disability. In addition, upon the Additional Executive's
death or disability, unvested stock options shall be vested. In the event an
Additional Executive's employment is terminated (i) by him other than for Good
Reason (as defined in the Additional Executive Agreement) or (ii) by the
Company for Cause (as defined in the Additional Executive Agreement), the
Additional Executive shall only be entitled to receive accrued compensation and
unpaid expenses through his termination date. In the event an Additional
Executive's employment is terminated by the Company other than for Cause, the
Additional Executive shall be entitled to receive, for a period of twelve (12)
months following such termination, his base salary at the rate then in effect
as of the date of termination and maintenance of all insurance benefits
provided under the terms of the Additional Executive Agreement. In the event
any Additional Executive's employment is terminated following a Change in
Control (as defined in the Additional Executive Agreement), the Additional
Executive Agreement provides that the Additional Executive will receive: (i) a
lump sum payment in consideration of his agreement not to compete in the
following respective amounts: Mr. Scheinthal-$1,500,000; Mr. West-$1,500,000
and Mr. Ervin-$750,000, (ii) those benefits as he would have otherwise been
entitled to receive had he been terminated by the Company other than for Cause,
(iii) all unvested stock options shall immediately vest, (iv) the Company will
pay all excise taxes, penalties and interest arising from payments made under
the Additional Executive Agreement which are imposed pursuant to Section 4999
of the United States Internal Revenue Code or similar federal, state or local
law, and (v) the Additional Executive will receive title to his company
automobile, free and clear of all encumbrances. The Additional Executive
Agreement provides that the Additional Executive shall not, during the term of
8
<PAGE>
employment and for one (1) year following his termination from the Company,
compete with the Company in the casual dining restaurant business anywhere in
the United States. The Additional Executive Agreement further provides that
during the term of employment and for a period of two (2) years following the
termination of employment from the Company, the Additional Executive shall not
seek to solicit, divert or hire the employees of the Company.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings in whole or in part, the following Performance Graph and the previous
Report of the Compensation Committee of Landry's Seafood Restaurants, Inc. on
Executive Compensation shall not be incorporated by reference into any such
filings.
Performance Graph
The following line graph compares the Company's cumulative total stockholder
return with the cumulative total stockholder return of the Dow Jones Global
Index and the Dow Jones Restaurant Index for the period from August 18, 1993
(the date of the Company's initial public offering) through December, 1998,
assuming in each case an initial investment of $100 on August 18, 1993.
Comparison of Five-Year Cumulative Total Return Among
Landry's Seafood Restaurants, Inc., Dow Jones Global Index, and Dow Jones
Restaurant Index
[Graph Appears Here]
<TABLE>
<CAPTION>
08/18/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Dow Jones Global Index.. 100 102 100 134 162 213 270
Dow Jones Restaurant.... 100 104 98 139 141 145 218
Landry's Seafood
Restaurants, Inc....... 100 200 236 284 356 400 125
</TABLE>
9
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of April 21, 1999, certain information
regarding the beneficial ownership of the Company's Common Stock by (a) each
person known to the Company to own beneficially more than five percent of the
outstanding shares of the Company's Common Stock, (b) each director of the
Company, (c) each executive officer named in the Summary Compensation Table
below, and (d) all executive officers and directors of the Company as a group.
Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares beneficially owned. The address of
each of Messrs. Fertitta, Scheinthal, West, Ervin, Masucci and Taylor is 1400
Post Oak Blvd., Suite 1010, Houston, Texas 77056.
<TABLE>
<CAPTION>
Shares
Beneficially
Owned
-----------------
Name of Beneficial Owner Number Percent
------------------------ --------- -------
<S> <C> <C>
Tilman J. Fertitta(1)(4)(5)............................ 4,550,000 15.3%
Steven L. Scheinthal(2)................................ 86,500 *
Paul S. West(2)........................................ 113,100 *
James E. Masucci(2).................................... 14,000 *
Joe Max Taylor(2)(3)................................... 6,000 *
Richard E. Ervin(2).................................... 48,667 *
Hospitality Entertainment, L.L.C.(4)................... 2,090,000 8.9%
All officers and directors as a group(5) (6 persons)... 4,818,267 16.1%
</TABLE>
- --------
* Less than 1%.
(1) Includes 800,000 shares subject to options which are exercisable prior to
June 21, 1999 and the 2,090,000 shares owned of record by Hospitality
Entertainment, L.L.C. ("Hospitality"). Mr. Fertitta has a 90% ownership
interest in Hospitality (his wife owns the remaining 10%) and thus controls
Hospitality. Mr. Fertitta is deemed to share voting and dispositive power
with Hospitality with respect to such 2,090,000 shares.
(2) Includes 66,000, 64,000, 14,000, 6,000 and 41,667 shares subject to
options, respectively for the persons named in the above table, which are
exercisable prior to June 21, 1999.
(3) In 1998, the Company paid $40,000 to Mr. Taylor and concurrently Mr. Taylor
relinquished an option to purchase 2,000 shares of the Company's Common
Stock at an exercise price of $6.00 per share previously issued to Mr.
Taylor.
(4) Hospitality is the record owner of 2,090,000 shares or 8.9% of the
Company's Common Stock. Mr. Fertitta has a 90% interest membership interest
in Hospitality (his wife owns the remaining 10%) and is deemed to share
voting and dispositive power with Hospitality with respect to such
2,090,000 shares.
(5) Includes 985,667 shares subject to options for all officers and directors
as a group which are, or will become, exercisable prior to June 21, 1999.
Item 13. Certain Relationships and Related Transactions
The policy of the Company is, to the extent practicable, to avoid
transactions (except those which are employment related) with officers,
directors, and affiliates. In any event, any such transactions will be entered
into on terms no less favorable to the Company than could be obtained from
third parties, and such transactions will be approved by a majority of the
disinterested directors of the Company.
Effective January 1, 1996, the Company entered into a Consulting Service
Agreement (the "Agreement") with Fertitta Hospitality, LLC ("Fertitta
Hospitality"), which is jointly owned by Mr. Fertitta and his wife. Pursuant to
the Agreement, the Company provides limited consulting services to Fertitta
Hospitality with respect to management and operational matters, administrative
and personnel matters. The Company receives a consulting fee of $2,500 per
month under the Agreement plus the reimbursement of all out-of-pocket expenses
and such additional compensation as may be agreed upon. The Agreement provides
for a one-year term which is automatically renewed unless either party
terminates the Agreement upon 30 days' written notice to the other
10
<PAGE>
party. The Consulting Services Agreement was entered into between related
parties and was not the result of arm's-length negotiations. Accordingly, the
terms of this transaction may have been more or less favorable to the Company
than might have been obtained from unaffiliated third parties. The Company
believes that the terms of the transaction were at least as favorable to the
Company as that which could have been obtained in arm's-length transactions
with an unaffiliated party.
The Company entered into an agreement with 610 Loop Venture, L.L.C. ("Loop
610 Venture"), a company wholly-owned by the CEO, whereby the Company would
sell to Loop 610 Venture a 4-acre undeveloped tract of land at a third-party
appraised value of approximately $5,360,000 (approximately $700,000 more than
the original purchase price paid by the Company), and Loop 610 Venture would
construct the condominium project on the land. It is proposed that the
condominium project would contain, among other things, a hotel unit owned by
Loop 610 Venture and a 4-story 83,000 square foot office facility. The
agreement contemplates that the Company would purchase the office facility for
a third-party appraised value of approximately $14,840,000. The agreement
further contemplates that at the completion of the project, a condominium
regime agreement would be entered into between the Company and Loop 610 Venture
who would continue to operate and manage the project. The Company and Loop 610
Venture have entered into discussions concerning a postponement of the proposed
construction and development of the condominium project including the 4-story,
83,000 square foot office facility.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized in the City of Houston, State of Texas, on the 29th
day of April, 1999.
LANDRY'S SEAFOOD RESTAURANTS, INC.
/s/ Tilman J. Fertitta
_____________________________________
Tilman J. Fertitta
Chairman of the Board/President and
Chief Executive Officer
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ Tilman J. Fertitta Chairman, President and April 29, 1999
- ----------------------------------- Chief Executive
Tilman J. Fertitta Officer, Principal
Executive Officer and
Director
/s/ Paul S. West Vice President, April 29, 1999
- ----------------------------------- Principal Financial
Paul S. West Officer, Principal
Accounting Officer and
Director
/s/ Steven L. Scheinthal Vice President, April 29, 1999
- ----------------------------------- Secretary, General
Steven L. Scheinthal Counsel and Director
/s/ James E. Masucci Director April 29, 1999
- -----------------------------------
James E. Masucci
/s/ Joe Max Taylor Director April 29, 1999
- -----------------------------------
Joe Max Taylor
</TABLE>
12
