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
/ / Confidential, For Use of the Commission Only (as permitted by
Rule No 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec. 240.14a-12
Garden Fresh Restaurant Corp.
- -------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Garden Fresh Restaurant Corp.
- -------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/ / 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1).
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / 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:
<PAGE>
Garden Fresh Restaurant Corp.
February 3, 2000
Dear Stockholder:
This year's Annual Meeting of Stockholders will be held on March 7, 2000 at
9:00 a.m. local time, at the Radisson Suite Hotel located at 11520 W. Bernardo
Court, San Diego, California 92127, (858) 451-6600. You are cordially invited
to attend.
The Notice of Annual Meeting of Stockholders and a Proxy Statement, which
describe the formal business to be conducted at the meeting, follow this
letter.
After reading the Proxy Statement, please promptly mark, sign, and return
the enclosed Proxy in the postage-prepaid envelope to ensure that your shares
will be represented. Your shares cannot be voted unless you date, sign, and
return the enclosed Proxy or attend the Annual Meeting in person. Regardless
of the number of shares you own, your careful consideration of, and voting
upon, the matters before our stockholders are important.
A copy of the Company's 1999 Annual Report is also enclosed.
The Board of Directors and Management look forward to seeing you at the
Annual Meeting.
Very truly yours,
/s/ M. P. Mack
Michael P. Mack
Chairman of the Board
Chief Executive Officer and President
<PAGE>
GARDEN FRESH RESTAURANT CORP.
17180 Bernardo Center Drive
San Diego, CA 92128
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 7, 2000
Dear Stockholder:
You are invited to attend the Annual Meeting of the Stockholders of Garden
Fresh Restaurant Corp., a Delaware corporation (the "Company"), which will be
held on March 7, 2000 at 9:00 a.m., local time, at the Radisson Suite Hotel
located at 11520 W. Bernardo Court, San Diego, California 92127, (858) 451-6600
for the following purposes:
1. To elect one (1) Class A Director to hold office for a three-year term and
until his successor is duly elected and qualified. Management's nominee
is Michael P. Mack.
2. To ratify the appointment of KPMG LLP as the Company's independent
accountants for the fiscal year ending September 30, 2000.
3. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on January 7, 2000 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof. For ten days prior to the meeting, a complete list of the
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose relating to the meeting during ordinary
business hours at the principal office of the Company.
By order of the Board of Directors,
/s/ D. W. Qualls
DAVID W. QUALLS
Chief Financial Officer
Executive Vice President-Finance and Real Estate
Secretary
San Diego, California
February 3, 2000
IMPORTANT: Please fill in, date, sign and promptly mail the enclosed proxy
card in the accompanying postage-prepaid envelope to ensure that your shares
are represented at the meeting. If you attend the meeting, you may choose to
vote in person even if you have previously sent in your proxy card.
<PAGE>
TABLE OF CONTENTS
Page
GENERAL INFORMATION...........................................................1
Annual Report............................................................1
Voting Securities........................................................1
Solicitation of Proxies..................................................1
Voting of Proxies........................................................1
Stock Ownership of Certain Beneficial Owners and Management..............1
ELECTION OF DIRECTORS.........................................................3
COMMITTEES OF THE BOARD OF DIRECTORS..........................................5
EXECUTIVE COMPENSATION AND OTHER MATTERS......................................5
Summary Compensation Table...............................................5
Option Grants in Last Fiscal Year........................................6
Aggregate Option Exercises and Fiscal Year-Ended Values..................6
Compensation of Directors................................................7
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions................................................7
Certain Relationships and Related Transactions...........................7
Employment Contracts and Termination of Employment and Change in Control
Arrangements..........................................................7
Section 16(a) Beneficial Ownership Reporting Compliance..................8
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION................8
Deductibility of Executive Compensation..................................9
COMPARISON OF STOCKHOLDER RETURN.............................................10
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS.......................11
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING.................11
TRANSACTION OF OTHER BUSINES.................................................11
<PAGE> 1
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
Garden Fresh Restaurant Corp.
17180 Bernardo Center Drive
San Diego, CA 92128
(858) 675-1600
The accompanying proxy is solicited by the Board of Directors of Garden
Fresh Restaurant Corp., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held March 7, 2000 or any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting. The date of this Proxy Statement is February 3, 2000, the approximate
date on which this Proxy Statement and the accompanying form of proxy were
first sent or given to stockholders.
GENERAL INFORMATION
ANNUAL REPORT. An annual report for the fiscal year ended September 30,
1999 is enclosed with this Proxy Statement.
VOTING SECURITIES. Only stockholders of record as of the close of business
January 7, 2000, will be entitled to vote at the meeting and any adjournment
thereof. As of that date, there were 5,639,281 shares of Common Stock of the
Company ("Common Stock"), par value $.01 per share, issued and outstanding.
Stockholders may vote in person or by proxy. Each holder of shares of Common
Stock is entitled to one (1) vote for each share of stock held on the proposals
presented in this Proxy Statement. The Company's by-laws provide that a
majority of all of the shares of the stock entitled to vote, whether present in
person or represented by proxy, shall constitute a quorum for the transaction
of business at the meeting. Abstentions and shares held by brokers that are
present but not voted, because the brokers are prohibited from exercising
discretionary authority (i.e., "broker non-votes"), will be counted as present
for purposes of determining whether a quorum is present.
SOLICITATION OF PROXIES. The cost of soliciting proxies will be borne by
the Company. In addition to soliciting stockholders by mail through its
regular employees, the Company will request banks and brokers, and other
custodians, nominees and fiduciaries, to solicit their customers who have stock
of the Company registered in the names of such persons and will reimburse them
for their reasonable, out-of-pocket costs. The Company may use the services of
its officers, directors, and others to solicit proxies, personally or by
telephone, without additional compensation. The Company may determine to use a
proxy solicitor, and if it does, it would pay a fee, which it reasonably
expects would not exceed $2,500.
VOTING OF PROXIES. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a
stockholder specifies by means of the proxy a choice with respect to any matter
to be acted upon, the shares will be voted in accordance with the specification
so made. If no choice is indicated on the proxy, the shares will be voted in
favor of the proposal. A stockholder giving a proxy has the power to revoke
his or her proxy, at any time prior to the time it is voted, by delivery to the
Secretary of the Company of a written instrument revoking the proxy or a
duly-executed proxy with a later date, or by attending the meeting and voting
in person.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following
table sets forth certain information, as of September 30, 1999, with respect to
the beneficial ownership of the Company's Common Stock by (i) all persons known
by the Company to be the beneficial owners of more than 5% of the outstanding
Common Stock of the Company; (ii) each director and director-nominee of the
Company; (iii) each executive officer of the Company named in the Summary
Compensation Table; and (iv) all executive officers and directors of the
Company as a group.
<PAGE> 2
Shares Beneficially
Owned (1)
----------------------
Name and Address of Beneficial Owner (2) Number Percent(3)
---------------------------------------- --------- ----------
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202................................. 508,000 9.0%
Entities and individuals affiliated with
The D3 Family Fund, L.P. (4)
19605 NE 8th Street
Camas, WA 98607...................................... 345,375 6.1%
Entities affiliated with
St. Paul Venture Capital, Inc (5)
10400 Viking Drive, Suite 550
Eden Prairie, MN 55344............................... 546,104 9.7%
RS Investment Management Co. L.L.C.
388 Market Street, Suite 200
San Francisco, CA 94111............................ 338,100 6.0%
Fleming Asset Management USA
320 Park Avenue, 11th Floor
New York, NY 10022................................. 304,390 5.4%
Michael P. Mack (6)..................................... 281,962 5.0%
David W. Qualls (7)..................................... 41,830 0.7%
R. Gregory Keller (8)................................... 88,560 1.6%
Kenneth J. Keane (9).................................... 6,008 *
Edgar F. Berner (10).................................... 25,940 *
Robert A. Gunst (10).................................... 26,640 *
Michael M. Minchin, Jr. (11)............................ 79,640 1.4%
John M. Robbins, Jr. (10)............................... 25,140 *
All directors and executive officers as a
group (8 persons) (12)................................ 575,720 10.2%
* Less than one percent.
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to community
property laws, where applicable.
(2) Except as otherwise indicated, the address of each beneficial owner is c/o
the Company, 17180 Bernardo Center Drive, San Diego, California 92128.
<PAGE> 3
(3) Calculated on the basis of 5,629,405 shares of Common Stock outstanding,
except that shares of Common Stock underlying options exercisable within
60 days of September 30, 1999 are deemed to be outstanding for purposes of
calculating the beneficial ownership of securities of the holders of such
options.
(4) Includes shares held by the following: The Nierenberg Family 1993 Trust
(39,975); Haredale Limited (10,100; James Henry Hildebrandt (3,900); The
David and Patricia Nierenberg 1993 Irrevocable Trust (3,200); Toxford
Corporation (1,700); and Toxford Corporation (1,700); and Florence Cies
(1,300).
(5) St. Paul Venture Capital, Inc. is an affiliate of St. Paul Fire and Marine
Insurance Company which is the record owner of 396,104 shares and St.
Paul Venture Capital IV, LLC which is the record owner of 150,000 shares.
(6) Includes 158,000 shares issuable upon exercise of stock options and 375
shares held by his wife, Ruth Mack.
(7) Includes 41,170 shares issuable upon exercise of stock options.
(8) Includes 88,560 shares issuable upon exercise of stock options.
(9) Includes 6,008 shares issuable upon exercise of stock options.
(10) Includes 21,640 shares issuable upon exercise of stock options.
(11) Includes 71,640 shares issuable upon exercise of stock options.
(12) Includes 430,298 shares issuable upon exercise of stock options.
ELECTION OF DIRECTORS
The Company has a classified Board of Directors consisting of one Class A
director (Michael P. Mack), two Class B directors (Edgar F. Berner and John M.
Robbins, Jr.), and two Class C directors (Michael M. Minchin, Jr. and Robert A.
Gunst) who will serve until the Annual Meetings of Stockholders to be held in
2000, 2002 and 2001, respectively, and until their respective successors are
duly elected and qualified. At each Annual Meeting of Stockholders, directors
are elected for a full term of three years to succeed those directors whose
terms expire at such annual meeting.
Management's nominee for election at the Annual Meeting of Stockholders to
fill the Class A position on the Board of Directors is Michael P. Mack. If
elected, the nominee will serve as director until the Company's Annual Meeting
of Stockholders in 2003, and until this successor is elected and qualified. If
the nominee decline to serve or become unavailable for any reason, or if a
vacancy occurs before the election (although management knows of no reason to
anticipate that this will occur), the proxies may be voted for such substitute
nominees as management may designate.
If a quorum is present and voting, the one nominee for Class A director
receiving the highest number of votes will be elected as Class A director.
Abstentions and broker non-votes will have no effect on the outcome of the
vote.
The table below sets forth the current directors, including the Class B
nominees to be elected at this meeting and certain information, as of September
30, 1999, with respect to age and background:
POSITIONS WITH DIRECTOR
NAME AGE THE COMPANY SINCE
- ---- --- -------------- ---------
CLASS A DIRECTOR WHOSE TERM EXPIRES
AT THE 2000 ANNUAL MEETING OF
STOCKHOLDERS:
Michael P. Mack 48 Chairman of the Board of
Directors, Chief Executive
Officer and President 1984
CLASS B DIRECTORS WHOSE TERMS EXPIRE
AT THE 2002 ANNUAL MEETING OF
STOCKHOLDERS:
Edgar F. Berner 68 Director 1996
John M. Robbins, Jr. 52 Director 1996
<PAGE> 4
CLASS C DIRECTORS WHOSE TERMS EXPIRE
AT THE 2001 ANNUAL MEETING OF
STOCKHOLDERS:
Michael M. Minchin, Jr. 73 Director 1993
Robert A. Gunst 51 Director 1996
Michael M. Minchin, Jr. joined the Company's Board of Directors in November
1993 and assumed the role of Chairman of the Board from February 1994 to
December 1997. From May 1992 to November 1993, Mr. Minchin served as an
independent consultant to Sizzler International, Inc. (NYSE) a restaurant
company, and several other publicly held restaurant chains. Prior to that, Mr.
Minchin served as the Executive Vice President of Sizzler International from
May 1980 to May 1992. Mr. Minchin received a Bachelor of Arts Degree from
Stanford University and an Master's Degree in Business Administration from
Harvard University. Currently, Mr. Minchin serves as Managing Director of the
John Douglas French Alzheimer's Foundation as well as an independent consultant
to several publicly held restaurant chains.
Michael P. Mack co-founded the Company in 1983 and was the President and
Chief Operating Officer from the Company's inception until April 1991 and the
Chief Executive Officer from September 1990 to April 1991. Mr. Mack assumed
the role of Chairman of the Board of Directors in December 1997. Mr. Mack has
been a director of the Company since 1984. Since February 1994, Mr. Mack has
been the Company's President and Chief Executive Officer. From April 1991 to
February 1994, Mr. Mack served as the President of MPM Management, Inc., a
consulting firm. Prior to joining the Company, from 1977 to 1983, Mr. Mack
worked for Bain & Company, a management consulting firm, where he specialized
in the development and implementation of business strategies. Mr. Mack
received a Bachelor of Arts Degree from Brown University and a Master's Degree
in Business Administration from Harvard University.
Edgar F. Berner joined the Company's Board of Directors in 1996. Mr.
Berner is a private investor and is the former Chairman (from 1991 to 1996) and
CEO (from 1991 to 1998) of Sweet Factory, Inc., a national candy specialty
chain. From 1969 to 1980, Mr. Berner was founder and President of Fashion
Conspiracy, a 280 store junior apparel chain. He previously served on the
Board of The Clothestime, Inc. and Edison Brothers Stores, Inc. In addition to
serving on the Board of the Company, Mr. Berner is a Director of Hot Topic
(Nasdaq), a teen specialty retail chain, and a Director of Barbeques Galore
(Nasdaq) the nation's largest barbeque chain store.
John M. Robbins, Jr. joined the Company's Board of Directors in 1996. Mr.
Robbins currently serves as Chairman of the Board of Directors and CEO of
American Residential Investment Trust, Inc. (NYSE) ("ARIT") and Home Asset
Management Corp. Prior to joining ARIT, Mr. Robbins was Chairman of the Board
of American Residential Mortgage Corporation ("AMRES Mortgage") from 1990 until
1994 and President of AMRES Mortgage from the time he co-founded it in 1983
until 1994. He currently serves as Chairman of Societas, the International
Institute of Real Estate Finance and a Director of Accredited Home Lenders, the
Old Globe Theatre, the University of San Diego and the Century Club of San
Diego.
Robert A. Gunst joined the Company's Board of Directors in 1996. Mr. Gunst
has more than 25 years of experience in food and retailing. Mr. Gunst
currently serves as Vice Chairman of the Board of Directors for Tradius
Corporation as well as Chairman of the Board of Directors and Chief Executive
Officer for Supreme Corq, Inc. Mr. Gunst had previously served as President
and Chief Executive Officer of The Good Guys, Inc. (Nasdaq) from 1993 to 1999.
In 1990, he became President and Chief Operating Officer of The Good Guys, Inc.
while remaining a member of its Board of which he had joined in 1986. Mr.
Gunst holds a Master's Degree in Business Administration from the University of
Chicago's Graduate School of Business and a Bachelor of Arts Degree from
Dartmouth College.
During the fiscal year ended September 30, 1999, the Board held five
meetings. Messrs. Berner, Gunst, Mack, Minchin and Robbins attended all the
Board meetings.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
MICHAEL P. MACK AS CLASS A DIRECTOR TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS IN 2003.
<PAGE> 5
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has two standing committees: an Audit Committee and
a Compensation Committee.
The Audit Committee's function is to review, with the Company's independent
accountants and management, the results of the examination of the Company's
financial statements by the independent accountants and the independent
accountants' opinion. The Audit Committee also approves all professional
services performed by the independent accountants, recommends the retention of
the independent accountants to the Board, subject to ratification by the
stockholders and periodically reviews the Company's accounting policies and
internal accounting and financial controls. For fiscal 1999, the members of
the Audit Committee were Messrs. Berner and Gunst. The Audit Committee held
three meetings; February 18, 1999, August 18, 1999 and November 11, 1999.
The Compensation Committee's function is to review and recommend executive
compensation, including officer salary levels, incentive compensation programs
and stock option grants. During fiscal 1999, the members of the Compensation
Committee were Messrs. Gunst, Minchin and Robbins. The Compensation Committee
held one meeting during the fiscal year ended September 30, 1999. For
additional information concerning the Compensation Committee, see "REPORT OF
THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION."
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth information for the fiscal years ended
September 30, 1999, 1998 and 1997 concerning the compensation of the Chief
Executive Officer of the Company and the other executive officers of the
Company whose salary and bonus for the year ended September 30, 1999, exceeded
$100,000.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
------------
Shares Other
Name and Principal Underlying Annual
Position Year Salary Bonus Options Compensation
- -------------------------------------------------------------------------------
Michael P. Mack (1) 1999 $301,875 $150,638 40,000 (7) $ 20,000 (5)
Chief Executive Officer, 1998 $298,620 $115,000 36,000 $ 15,833
President 1997 $256,823 $ 93,000 - -
David W. Qualls (2) 1999 $205,275 $ 81,947 20,000 (7) $ 20,000 (5)
Chief Financial Officer, 1998 $204,359 $ 78,200 24,000 $ 15,833
Executive Vice President 1997 $176,151 $ 57,000 - -
Finance and Real Estate,
Secretary
R. Gregory Keller (3) 1999 $181,125 $ 72,306 15,000 (7) $ 20,000 (5)
Vice President of 1998 $179,016 $ 69,000 20,000 $ 15,833
Operations 1997 $153,836 $ 50,000 - -
Kenneth J. Keane (4) 1999 $111,783 $ 44,256 7,500 (7) $ 10,950 (5)
Vice President of 1998 $ 88,643 $ 17,431 10,000 $ 2,375
Human Resources 1997 $ 86,314 $ 12,803 2,000 -
===============================================================================
(1) Mr. Mack was granted an increase in annual salary to $325,000 for fiscal
year 2000.
(2) Mr. Qualls was granted an increase in annual salary to $230,000 for
fiscal year 2000.
(3) Mr. Keller was granted an increase in annual salary to $192,500 for
fiscal year 2000.
(4) Mr. Keane was granted an increase in annual salary to $130,000 for fiscal
year 2000.
(5) Consists of deferred compensation match.
<PAGE> 6
(6) Consists of grants actually earned in fiscal year and subsequently granted
in the following fiscal year.
(7) Options were granted at an exercise price of $15.75.
The following table provides the specified information concerning grants
of options to purchase the Company's Common Stock made during the year ended
September 30, 1999 to the persons named in the Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
================================================================================================
Potential Realized
Values At Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual grants in Fiscal 1999 (3) Term (1)
- ------------------------------------------------------------------------------------------------
% of Total
Options
Granted to
Number of Employees Exercize
Securities In Fiscal Or Base Expiration
Name Underlying (2) Year Price (2) Date 5% 10%
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael P. Mack 36,000 23.4 $ 14.31 2/18/09 $ 324,000 $ 821,160
David W. Qualls 24,000 15.6 $ 14.31 2/18/09 $ 216,000 $ 547,440
R. Gregory Keller 20,000 13.0 $ 14.31 2/18/09 $ 180,000 $ 456,200
Kenneth J. Keane 10,000 6.5 $ 12.75 10/12/08 $ 80,200 $ 203,200
<FN>
================================================================================================
(1) 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 Securities and Exchange Commission rules.
Actual gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock, overall market conditions and the
optionholders' continued employment through the vesting period. The
amounts reflected in this table may not necessarily be achieved. One
share of stock purchased in 1999 at $14.31 would yield profits of $9.00
per share at 5% appreciation over ten years, or $22.81 per share at 10%
appreciation over the same period. One share of stock purchased in 1999
at $12.75 would yield profits of $8.02 per share at 5% appreciation over
ten years, or $20.32 per share at 10% appreciation over the same period.
(2) All options were granted at market value on the date of grant. All
options vest equally at 1/36 per month over 36 months.
(3) Grants were based on performance for fiscal year 1998.
The following table provides information concerning exercises of options
to purchase the Company's Common Stock during the fiscal year ended September
30, 1999, and unexercised options held as of September 30, 1999 by the persons
named in the Summary Compensation Table:
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END VALUES
===========================================================================================================
Number of Securities Value of Unexercized In-The
Underlying Unexercized MoneyOptions at 9/30/99 (2)(3)
Options at 9/30/99
-------------------------------------------------------------
Shares
Acquired Value
Name On Exercise Realized (1) Exercisable Unexercisable Exercisable (2) Unexercisable
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael P. Mack - $ - 156,000 28,000 $1,051,270 $ 28,070
David W. Qualls 55,000 $526,732 39,824 18,676 $ 229,049 $ 18,792
R. Gregory Keller 46,000 $447,635 87,420 15,580 $ 608,206 $ 15,782
Kenneth J. Keane 9,433 $ 61,376 667 12,667 $ 792 $ 36,295
<FN>
===========================================================================================================
(1) Amounts shown represent the value realized upon the exercise of stock
options during the year ended September 30, 1999, which equals the
difference between the aggregate exercise price of the options and the
closing market price of the underlying Common Stock on the date preceding
the exercise date.
(2) Values are net of exercise price.
<PAGE> 7
(3) The value of "in-the-money" stock options represents the difference
between the exercise price of such option and the fair market value of
$15.3125 per share of Common Stock as of September 30, 1999, the closing
price of the Common Stock reported on the Nasdaq National Market on such
date.
</TABLE>
COMPENSATION OF DIRECTORS
The outside directors of the Company each receive $10,000 per year as a
cash compensation for attendance at Board of Directors and committee meetings.
Additionally, the directors of the Company are reimbursed for expenses incurred
in connection with attendance at Board of Directors or committee meetings.
Each outside director remaining in office is granted an option to purchase
6,640 shares of Common Stock on the day following each annual meeting of
stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the year ended September 30, 1999, executive compensation was
administered by the Compensation Committee comprised of three non-employee
directors of the Company, Robert A. Gunst, Michael M. Minchin and John M.
Robbins Jr. Mr. Mack, the Company's President and Chief Executive Officer,
participated in the deliberations of the Compensation Committee regarding
executive compensation that occurred during fiscal 1999, but did not take part
in deliberations regarding his own compensation. Mr. Mack's participation in
the deliberations of the Compensation Committee included providing information
on the performance of people who work at the Company and advisory
recommendations regarding the appropriate levels of compensation for the
Company's officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into employment agreements with certain of its
officers. See "Severance and Change of Control Arrangements."
The Company's officers and directors are indemnified pursuant to certain
provisions of Delaware General Corporation Law, the Company's charter documents
and indemnification agreements with the Company. The indemnification
agreements contain provisions that are in some respects broader than the
specific indemnification provisions contained in the Delaware General
Corporation Law.
The Company's policy has been and continues to be that all transactions
between the Company and its officers, directors and other affiliates must (i)
be approved by a majority of the members of the Company's Board of Directors
and by a majority of the disinterested members of the Company's Board of
Directors and (ii) be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties. In addition, this policy requires
that any loans by the Company to its officers, directors or other affiliates be
for bona fide business purposes only.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In July 1997, the Company entered into employment agreements with Michael
Mack, Chief Executive Officer and President, David Qualls, Executive Vice
President and Chief Financial Officer-Finance and Real Estate, Gregory Keller,
Vice President of Operations, and in November 1998 the Company entered into an
employment agreement with Kenneth Keane, which provides them, upon termination
without cause, with a severance equal to one half of their then current annual
salary and certain other benefits. Additionally, in the event of a termination
without cause following a change of control, their employment agreements
provide for a severance equal to two years of base salary plus two years of
bonus. Under the respective employment agreements, the minimum base annual
salary for Mr. Mack is $250,000, for Mr. Qualls is $ 170,000, for Mr. Keller
is $ 150,000 and for Mr. Keane is $120,000.
In the event of a change in control, as defined under the Company's 1998
Option Plan, any unexercisable or unvested portion of the outstanding options
will become immediately exercisable and vested in full prior to the change in
control. The Company's other stock option plans also contain provisions that
could lead to the vesting and exercisability of all outstanding options prior
to a change in control of the Company.
<PAGE> 8
SECTION 6(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by such persons.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's executive
officers, directors and more than 10% stockholders were timely complied with
during the fiscal year ended September 30, 1999.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors during the 1999 fiscal
year was comprised of the non-employee directors of the Company, Messrs.
Gunst, Minchin and Robbins. The Compensation Committee is responsible for
setting and administering the policies governing compensation of the executive
officers of the Company, including cash compensation, stock ownership programs
and other benefits. The goals of the Company's compensation policy are to
attract and retain executive officers who contribute to the overall success of
the Company by offering compensation which is competitive in the restaurant
industry, for companies of the Company's size, and to motivate executives to
achieve the Company's business objectives and reward them for their
achievements. The Company uses salary, incentive compensation and stock
options to meet these goals.
For fiscal 1999, salaries were set for each executive officer within the
range of salaries for similar positions in other comparably sized companies in
the Company's industry. The salaries were based in part on surveys conducted
by the Company's Human Resources Department and by utilizing information
provided by an outside compensation consultant. In preparing the performance
graph set forth in the section entitled "COMPARISON OF STOCKHOLDER RETURN" the
Company has selected the Dow Jones Industry Group for Restaurants as its
published industry index. The companies included in the Company's salary
surveys are included in the comparison index. Salaries were set within the
applicable range based on the officer's experience, tenure and prior
performance. Performance was evaluated by the Chief Executive Officer for all
executive officers other than himself and recommendations for salary increases
were made to the Compensation Committee. The Chief Executive Officer's total
compensation for fiscal 1999 approximates the mean of the compensation for
chief executive officers in similar sized companies in the restaurant industry.
The Compensation Committee evaluated the Chief Executive Officer's performance,
increasing his salary for fiscal 2000 based primarily on the Chief Executive
Officer's increased responsibilities as a result of the Company's increased
size and the Company's performance in 1999.
The Compensation Committee granted incentive compensation to each of the
executive officers based upon the performance of the Company relative to the
profit performance criteria set forth in the fiscal year 1999 bonus program
which was implemented at the beginning of the year. The amounts are reflected
in the "SUMMARY COMPENSATION TABLE".
The Company believes that employee equity ownership provides significant
additional motivation to executive officers to maximize value for the Company's
stockholders. Because stock options are granted at the prevailing market
price, they will only have value if the Company's stock price increases over
the exercise price. Therefore, the Committee believes that stock options will
serve to align the interest of executive officers closely with other
stockholders because of the direct benefit executive officers receive through
improved stock performance.
The Compensation Committee did recommend to the Board of Directors, and the
Board of Directors did approve stock option grants, based on the Company's
performance in fiscal year 1999, to the executive officers, including the Chief
Executive Officer, under the Company's Option Plan. The grants were issued and
vest pursuant to the standard form of option agreement used in connection with
the Option Plan. The grants are reflected in the "SUMMARY COMPENSATION TABLE".
<PAGE> 9
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Effective January 1, 1994, Section 162(m) of the Internal Revenue Code was
amended to impose a $1,000,000 per executive per year limit on the amount of
compensation which may be deducted by a publicly-held corporation for
compensation paid to the corporation's chief executive officer and its four
other most highly- compensated officers. Exemptions from this deductibility
limit are provided for certain types of "performance- based compensation,"
including compensation related to stock option plans meeting certain criteria.
The Compensation Committee does not believe that other components of the
Company's compensation will be likely in the aggregate to exceed $1,000,000 for
any executive officer in any year in the foreseeable future, and therefore
concluded that no further action with respect to qualifying its executive
compensation for deductibility of such compensation is necessary at this time.
The policy of the Committee is to qualify executive compensation for
deductibility under the applicable tax laws as practicable. In the future, the
Committee will continue to evaluate the advisability of qualifying the
deductibility of such compensation in the future.
COMPENSATION COMMITTEE
Robert A. Gunst
Michael M. Minchin Jr.
John M. Robbins Jr.
<PAGE> 10
COMPARISON OF STOCKHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of the Nasdaq National Market and the Dow Jones Industry Group for
Restaurants for the period commencing on May 16, 1995 (1) and ending on
September 30, 1999(2).
Comparison of Cumulative Total Return From May 15, 1995 through
September 30, 1999 (2).
Garden Fresh Restaurant Corp., Index for Nasdaq National Market and
Dow Jones Industry Group for Restaurants
The graph referenced plots three lines; GARDEN FRESH, NASDAQ NATIONAL
MARKET, and DOW JONES INDUSTRY GROUP FOR RESTAURANTS.
Data points are at 5/16/95 (public offering), 9/30/95, 9/30/96, 9/30/97,
9/30/98, and 9/30/99.
The data line for GARDEN FRESH shows a decline from the public offering
to fiscal year end 9/30/95, an increase from there to 8/30/97, an
unchanged line to fiscal year end 9/30/98, then a slight increase to
fiscal year end 9/30/99.
15-May 30-Sept 30-Sept 30-Sept 30-Sept 30-Sept
1995 1995 1996 1997 1998 1999
Garden Fresh $100.00 $ 86.11 $108.33 $163.89 $163.89 $170.11
Nasdaq National Market 100.00 120.91 142.16 195.32 196.26 318.19
Dow Jones Industry 100.00 102.09 122.49 122.55 144.94 193.11
Group for Restaurants
(1) The effective date of the Company's initial public offering was May 16,
1995. For purposes of this presentation, the closing price on the first
day of trading was $9.00.
(2) Assumes that $100.00 was invested on May 16, 1995, in the Company's Common
Stock at a price of $9.00 and at the closing sales price for each index on
that date and that all dividends were reinvested. No dividends have been
declared on the Company's Common Stock. Stockholder returns over the
indicated period should not be considered indicative of future stockholder
returns.
<PAGE> 11
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected KPMG LLP to serve as
independent accountants to audit the financial statements of the Company for
the fiscal year ending September 30, 2000. A representative of KPMG LLP is
expected to be present at the Annual Meeting, will be given the opportunity to
make a statement if the representative desires to do so, and is expected to be
available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast at the Annual Meeting
of Stockholders, at which a quorum representing a majority of all outstanding
shares of Common Stock of the Company is present and voting, either in person
or by proxy, is required for approval of this proposal. Abstentions and broker
non-votes will each be counted as present for purposes of determining the
presence of a quorum, but will not be counted as having been voted on the
proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2000.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be included in the Company's proxy
statement for the next Annual Meeting of Stockholders of the Company must be
received by the Company at its offices at 17180 Bernardo Center Drive, San
Diego, CA, 92128, not later than October 6, 2000, and satisfy the conditions
established by the Securities and Exchange Commission for stockholder proposals
to be included in the Company's proxy statement for that meeting.
Pursuant to Rule 14a-4(c) of the Securities Exchange Act of 1934, as
amended, if a stockholder who intends to present a proposal at the next Annual
Meeting of Stockholders does not notify the Company of such proposal on or
prior to December 20, 2000, then management proxies would be allowed to use
their discretionary voting authority to vote on the proposal when the proposal
is raised at the annual meeting, even though there is no discussion of the
proposal in the proxy statement prepared for the next annual meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the meeting
is as set forth above. If any other matter or matters are properly brought
before the meeting or any adjournment thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the proxy on such
matters in accordance with their best judgement.
By Order of the Board of Directors
/s/ D. W. Qualls
DAVID W. QUALLS
Chief Financial Officer,
Executive Vice President Finance and Real Estate,
and Secretary
Dated: February 3, 2000
<PAGE>
PROXY
GARDEN FRESH RESTAURANT CORP.
17180 BERNARDO CENTER DRIVE
SAN DIEGO, CA 92128
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints, David W. Qualls and Michael P. Mack as
proxies, each with full power of substitution, and hereby authorizes them or
either of them to represent and to vote as designated below all the shares of
Common Stock of Garden Fresh Restaurant Corp., held of record by the
undersigned on January 7, 2000 at the Annual Meeting of Stockholders to be
held March 7, 2000 or at any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF ELECTING THE NOMINEE LISTED AS DIRECTOR AND "FOR" ITEM 2
ON THE REVERSE SIDE. ANY PROXY WHICH IS RETURNED CONTAINING A DIRECTION TO
VOTE WITH RESPECT TO A MATTER AS TO WHICH THE STOCKHOLDER IS NOT ENTITLED TO
VOTE WILL BE DISREGARDED WITH RESPECT TO THAT PARTICULAR MATTER.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
/ X / Please mark votes as in this example.
1. Election of one Class A Director
Nominee: Michael P. Mack FOR / / WITHHELD / /
2. Ratification of appointment of independent accountants.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED ENVELOPE.
Please sign exactly as your name appears on your stock certificate. If shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If shares are held of record by a corporation, please sign in full corporate
name by president or other authorized officer. Partnerships should sign in
partnership name by an authorized signatory.
Signature: _____________ Date: ___ Signature: _____________ Date: ___
