UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
FORM 10-K/A
Amendment No. 1
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 30, 2008
or,
o TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
| |
Benihana
Inc.
|
|
| |
(Exact name of registrant as
specified in its charter)
|
|
| |
Delaware
|
|
65-0538630
|
|
| |
(State or other jurisdiction
of
|
|
(I.R.S.
Employer
|
|
| |
incorporation or
organization)
|
|
Identification
No.)
|
|
| |
8685 Northwest 53rd Terrace,
Miami, Florida
|
|
33166
|
|
| |
(Address of principal executive
offices)
|
|
(Zip Code)
|
|
|
Registrant’s telephone number,
including area code:
|
|
(305)
593-0770
|
|
|
Securities registered pursuant to
Section 12(b) of the Act:
|
|
None
|
|
Securities registered pursuant to
Section 12(g) of the Act:
|
| |
Title of Each
Class
|
|
Name of Exchange on Which
Registered
|
|
| |
Common Stock, par value $.10 per
share
|
|
NASDAQ Global
Market
|
|
| |
Class A Common Stock, par value
$.10 per share
|
|
NASDAQ Global
Market
|
|
| |
Preferred Share Purchase
Right
|
|
Not
Applicable
|
|
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or 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.
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. o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of
the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller
reporting company o
| |
(do not check
if smaller reporting company) |
|
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the
Act).
As of June 30, 2008, 6,118,164 shares of Common Stock
and 9,161,236 shares of
Class A Common Stock were outstanding. As of October 12, 2007, the aggregate market value of
common equity held by non-affiliates was $237,101,000 based on the closing price of the Common
Stock and Class A Common Stock on such date.
None.
EXPLANATORY
NOTE
Benihana
Inc. (the “Company”) hereby amends its Annual Report on Form 10-K for the fiscal
year ended March 30, 2008, which was filed on June 13, 2008, to include Items
10, 11, 12, 13, 14 and 15.
PART III
Item 10. Directors
and Executive Officers of the Company
Below is a list of the names and ages of
the directors and executive officers of the
Company as of June 30, 2008, indicating their position with the
Company and their principal
occupation during the past five years and prior thereto where
applicable.
Director
since 2005
Class I Director
Age
70
In 2004,
Mr. Castell formed ReelRon LLC, a marketing consulting firm serving clients such
as Huizenga Holdings, Inc., Centryx Corp., Southern Audio Video and Breakaway
Films. From 1995 through 2004, Mr. Castell served as Senior Vice President of
Marketing and Communications of Huizenga Holdings, Inc. From 1989 through 1995,
Mr. Castell served as Senior Vice President Programming and Communications of
Blockbuster Entertainment Corp.
JOSEPH J.
WEST, PH.D.
Director
since 2005
Class I Director
Age
63
Since
1999, Mr. West has been serving as Dean, School of Hospitality and the Tourism
Management, Florida International University. Between 1991 and 1999, he served
as Department Chairman of Hospitality Administration, College of Business,
Florida State University, and from 1993 through 1996, he served as Director,
Hospitality Education Program, Department of Business and Professional
Regulation, State of Florida and has held teaching positions at Florida State
University and the University of South Carolina. Additionally, Mr. West
possesses restaurant operating experience as an executive and operator having
served as Vice President of Operations, Spring Garden Grill and Bar and General
Manager at the following restaurant units: Franklin's Off Friendly, Colony
House/Wine Cellar Restaurants and Colony Caterers. Mr. West is also a retired
U.S. Naval Officer.
TAKA
YOSHIMOTO
Director
since 1990
Class I Director, Executive Vice
President - Operations
Age
62
Mr.
Yoshimoto has served as Executive Vice President of the Company and its
predecessor since September 1989 and as the Director of Operations from May 1986
until September 1989. Mr. Yoshimoto joined the Company in July 1979 and has held
various positions in operations. During that time, Mr. Yoshimoto has made
significant contributions to the Company’s restaurant operations. Mr. Yoshimoto
holds a Masters Degree of Business Administration and a Masters Degree of
Economics and Finance from Louisiana State University, a Bachelor of Arts of
Liberal Arts from International Christian University, Tokyo and has completed
his doctoral study at Tulane University. Mr. Yoshimoto is also a director of
Benihana Ono Restaurant BV Holdings in Europe. He was born and raised in
Japan.
JOHN E. ABDO
Director since 1990
Class II Director
Age 65
Mr. Abdo
has been principally employed since June 1984 as the Vice Chairman of the Board
of Directors and Chairman of the Executive Committee of each of BankAtlantic
Bancorp, Inc., and BankAtlantic, FSB. He has served as Vice Chairman of
Woodbridge Holdings, Inc. since August 1984 and as the Vice Chairman of the
Board of Directors of Bluegreen Corporation since March 2002. Additionally, he
has served as the Vice Chairman of the Board of BFC Financial Corporation since
June 1987. Mr. Abdo is the President and Chief Executive Officer of Abdo
Companies, Inc., a real estate development, construction and real estate
brokerage firm for more than thirty five years. Mr. Abdo is a member of
the Board of Directors of PACA (Performing Arts Center Authority) and is the
President of the Broward Performing Arts Foundation, a $100,000,000 state of the
art, twin concert hall venue located in Fort Lauderdale, FL.
NORMAN BECKER
Director since 1997
Class II Director
Age 70
Mr. Becker has been self-employed in the
practice of public accounting since April 1985. Prior thereto, Mr.
Becker was a partner with Touche Ross & Co., the predecessor of Deloitte
& Touche LLP, for a period in excess of 10 years. Mr.
Becker is also a director of Bluegreen Corporation and an officer of Proguard Acquisition
Corp.
ROBERT B. STURGES
Director since 2003
Class II Director
Age 61
During
October 2006, Mr. Sturges was appointed Chief Executive Officer of Nevada Gold
& Casinos Inc. (AMEX: UWN), a company engaged in the development, ownership,
and operation of commercial gaming facilities and lodging and entertainment
facilities in the United States. Mr. Sturges served as Nevada Gold &
Casinos’ General Counsel and Chief Development Officer between June
2006 and October 2006. Since 2001, Mr. Sturges has been a partner at
Continental Hospitality Holdings, a hospitality company, which provides
development, technical and operational services to the hotel and resort
industry. From 1994 to 2001, Mr. Sturges was President of the Gaming
Division and a Director of Carnival Resorts and Casinos Inc. which developed,
owned and managed resorts, hotels and casinos. Mr. Sturges is also a
partner in the Miami Heat Basketball Organization.
LEWIS JAFFE
Director since 2004
Class III Director
Age 51
Mr. Jaffe is Chief Executive Officer of
Lynch Ambulance. Mr. Jaffe served as
President, Chief Executive Officer and a director of Oxford Media,
Inc. from February 2006
through October 2007 and President and Chief Operating Officer of
Verso Technologies from November 2004 through August 2005. From August 2002 to
November 2004, Mr. Jaffe was a self-employed public speaker and consultant. From
April 2002 until August 2002, Mr. Jaffe served as the interim President of
Glowpoint, Inc., a publicly-traded video products and services company. From
July 2000 to July 2003, Mr. Jaffe served as an independent consultant to
Glowpoint, Inc. From June 2000 to March 2002, Mr. Jaffe served as President and
Chief Operating Officer of PictureTel Corporation, a publicly-traded
videoconferencing company. From September 1998 to June 2000, Mr. Jaffe served as
a managing director in the Boston office of Arthur Andersen LLP in its global
finance practice. From January 1997 to March 1998, Mr. Jaffe served as President
of C Systems, LLC, a designer and manufacturer of mobile military shelters,
housing, communication and radar and missile launch systems. Mr. Jaffe served as
a member of the board of directors for Glowpoint, Inc. from September 2001
to July 2003, the board of directors of Media 100 Inc. from June 2003
through November 2004 and the Turnaround Management Association of New England
from September 1999 through November 2004. He currently is on the Board of ACT
Teleconferencing, Inc., a public company, as well as two private companies:
Travizon Inc. and Pixion, Inc.
JOEL A. SCHWARTZ
Director since 1982
Class III Director, Chairman of the Board of Directors and
Chief Executive
Officer
Age 67
Mr. Schwartz has been a
director of the Company and its predecessor since
1982 and has served as Chief Executive Officer
of the Company since May 1998. Additionally, Mr. Schwartz served as
President of the Company from 1982 until April 2007.
RICHARD C.
STOCKINGER
Director since 2007
Class III Director
Age 50
Mr. Stockinger is a restaurant
consultant. Mr. Stockinger
served as the President of Patina Restaurant Group (formerly Restaurant
Associates – Patina Group) from October 2003 through April 2008 and served as Restaurant Associates’ Vice
President and Chief Financial Officer from 1985 through October
2003. During his tenure with Restaurant Associates and the Patina
Restaurant Group, Mr. Stockinger played a critical role in the development and
implementation of its sales, acquisitions and turnaround
strategies. Some of the restaurant deals include California Pizza
Kitchen, El Torito and Au
bon Pain. Mr.
Stockinger also serves on the Board of Directors of the National Kidney
Foundation of Greater New York.
JUAN C. GARCIA
President and Chief Operating
Officer
Age 44
Mr.
Garcia was appointed President and
Chief Operating Officer during April 2007. Prior thereto, Mr. Garcia
served as Senior Vice President – Chief Operating Administrative Officer from
June 2005 until April 2007. Prior thereto, Mr. Garcia had served as Vice
President-Controller since January 1999. He served as Controller of the Company
and its predecessor since July 1994. Prior to July 1994, Mr. Garcia served in
various accounting and finance roles with the Company. Mr. Garcia has served as
the Assistant Secretary of the Company since July 1996. Mr. Garcia is also a
certified public accountant licensed in the State of Florida.
JOSE I. ORTEGA
Vice President – Finance, Chief
Financial Officer and Treasurer
Age 36
Mr.
Ortega was appointed Vice President – Finance, Chief Financial Officer and
Treasurer in September 2006. Prior thereto, Mr. Ortega had served as
Controller of the Company since July 2005. Prior to joining the
Company, Mr. Ortega was employed at Burger King Corporation, as Director,
Consolidation and Reporting from November 2002 to July 2005, and prior thereto
as Manager, Consolidation and Reporting, from September 2001 to November
2002. From June 1996 through September 2001, Mr. Ortega was the
Controller of Viragen, Inc., a biotechnology company. Mr. Ortega is
also a certified public accountant licensed in the State of
Florida.
AUDIT
COMMITTEE
For the fiscal year ended March 30, 2008, the Audit Committee consisted of
Norman Becker (the Chairman), Lewis Jaffe, Robert B. Sturges and Richard Stockinger, all of whom have been determined by
the Board of Directors to be independent (as independence is defined in Rule
4200(a)(15) under the current National Association of Securities Dealers, Inc.
listing standards). The Board of Directors has determined that Norman Becker
qualifies as an "audit committee financial expert" as defined by Item
407(d)(5)(ii) of Regulation S-K promulgated by the
Securities and Exchange Commission.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Rules
promulgated by the Securities and Exchange Commission govern the reporting of
securities transactions by directors, officers and holders of 5% or more of the
Company’s Common Stock or Class A Common Stock. Based solely upon its review of
copies of reports filed with the SEC and received by the Company, the Company
believes that its directors and officers have filed all required reports on a
timely basis except the following: Kevin Y. Aoki, a former director and former
Vice President - Marketing of the Company, failed to timely file one Form 4
reporting an option exercise and sale of shares; Mr. Schwartz failed to timely
file one Form 4 reporting an option exercise and sale of shares; Mr. Garcia
failed to timely file one Form 4 reporting a purchase of shares; and Mr. Becker
failed to timely file two Form 4s reporting a sale of shares and an option
exercise.
CODE OF ETHICS
The
Company has adopted a written code of business conduct and ethics that applies
to its directors and officers, including the Chief Executive Officer and Chief
Financial Officer. The code of business conduct and ethics is
available on the Company’s website, which is located at www.benihana.com. The
Company intends to make all required disclosures concerning any amendments to,
or waivers from, the Company’s code of business conduct and ethics on its
website.
Item 11. Executive
Compensation
Compensation Discussion and
Analysis
The Compensation and Stock Option
Committee of the Board of Directors (the Compensation Committee) evaluates
executive officer performance in light of the Company's strategic objectives and
establishes compensation levels based on such evaluation, including for the
Chief Executive Officer, Joel A. Schwartz; the President and Chief Operating
Officer, Juan C. Garcia; the Executive Vice President - Operations, Taka
Yoshimoto; and the Chef Financial Officer and Vice President – Finance, Jose I.
Ortega (together, with Messrs. Schwartz, Garcia and Yoshimoto, the Named
Executive Officers). The Compensation Committee also administers the
Company’s 2007 Equity Incentive Plan (the Equity Plan) and approves
performance targets and payments to executive officers under the Company’s
Executive Incentive Compensation Plan (the Cash Incentive
Plan).
Objectives of Compensation
Program
The objectives of the Company’s
compensation program are to attract and retain exceptional
personnel. To accomplish these objectives, the Company seeks to offer
competitive compensation packages comprised of base salary, “at risk” incentive
compensation based on achieving short-term and long-term individual and Company
performance targets and equity awards designed to align executive officer
interests with those of the Company’s stockholders.
What the Company’s Compensation Program is Designed to
Reward
The Company’s compensation program is
designed to reward executive officers for advancing critical elements of the
Company’s growth strategy: selectively pursuing restaurant growth, developing
and maintaining strong restaurant unit economics (by sustaining sales growth and
implementing cost controls at the individual unit level), continuing to build
brand awareness and customer loyalty and providing strong management support to
restaurant units. Executive officer contributions to these goals are measured at
the individual and Company levels.
The Company’s compensation program is
designed to reward the accomplishment of short-term and long-term
objectives. For this reason, the Compensation Committee generally
provides that a portion of each executive officer’s compensation is “at risk,”
contingent upon accomplishment of performance targets or increases in value as
the Company grows, and that another portion has present value, that is, provides
immediate reward and motivation to confront short-term
challenges. The elements which are deemed to have present value are
annual base salary and grants of restricted stock (although, in part, the
potential increase in value of restricted stock also represents “at risk”
compensation); the elements of compensation which are deemed “at risk” are cash
incentive award payments and grants of stock options. The
Compensation Committee has determined that the compensation of executive
officers whose positions enable them to directly affect the Company’s overall
performance and growth should include a significant portion of “at risk”
compensation. The percentage of compensation "at risk" for the Named
Executive Officers is between 35% and 51%.
In order to maintain and improve the
program and ensure that it effectively rewards executive officers, the
Compensation Committee, from time to time, may engage an outside compensation
consultant. During the fiscal year ended March 30, 2008, the Compensation Committee
engaged a compensation consultant, Mercer (US) Inc., in order to assess
compensation levels of the Named Executive Officers for the fiscal year
2009. In that report, Mercer noted that the Company’s current
compensation levels are at or below market for companies similar to the
Company. The Compensation Committee also receives recommendations
from, and consults with, the Chief Executive Officer, who is most familiar with
the Company’s day-to-day operations and the executive officers’ contributions
thereto.
The four elements of the Company’s
compensation program are base salary, cash incentive awards under the Cash
Incentive Plan, equity grants under the Equity Plan and post-termination benefits.
In aggregate, these
elements balance short-term and long-term rewards, vested and unvested
compensation and cash and equity-based payments. Annual base salary
is the primary element of compensation for executive officers because its
predetermined nature allows them to confront short-term challenges without
concerns about financial
stability. Annual base
salary also serves as a reliable measure for attracting and retaining
exceptional executives.
Cash incentive awards under the Cash
Incentive Plan are designed to reward key employees, including the Named
Executive Officers, for achieving individually-based and Company level
(e.g., return on equity) performance
objectives. By providing reward for accomplishment of individualized
objectives, one portion of the Company’s cash incentive awards focuses employees
on excelling in the performance of their specific
responsibilities. By providing reward for Company-wide performance,
the other portion aligns employees’ interests with those of
stockholders. Equity grants, because of the vesting schedules unique
to them, especially restricted stock grants which always retain some value, are
ideally suited for ensuring long-term retention of executive officers, thereby
supporting the Company’s compensation program objective to retain exceptional
personnel. Equity ownership also aligns the interests of executive
officers with those of their fellow stockholders since its value is dependent on
the value of the Company’s stock. Post-termination benefits provide
varying levels of security to executive officers and are a critical inducement
for exceptional personnel to come to, and to continue working at, the
Company. These benefits, in particular, enhance the overall value of
a compensation package further contributing to executive
retention.
How the Company Chose Amounts and Formulas for Each
Element
Base
Salary
Base salaries of each Named Executive
Officer are defined in their respective employment agreements and are subject to
future increases as determined from time to time by the Compensation Committee
or, in some cases, consistent with increases in the cost of
living. Factors which may be considered in determining base salaries
include the Company’s accomplishments in the prior
year, the Company’s
objectives for the upcoming
year, salary changes in prior years and the executive’s experience,
responsibilities, ability and performance during the prior
year.
Effective April 2, 2007, in connection with his promotion
to President and Chief Operating Officer, the Compensation Committee approved an
increase in Mr. Garcia’s base salary from $205,000 to $250,000. The
primary factor that impacted the Compensation Committee’s decision was Mr.
Garcia’s promotion and his resultant greater responsibilities. In
addition, the Compensation Committee also considered Mr. Garcia’s many years of experience with the Company in
various roles, including Controller and Chief Operating Administrative Officer,
which give him a unique understanding of the Company’s
operations. Furthermore, pursuant to the terms of Messrs. Schwartz’s
and Yoshimoto’s employment agreements, effective April 2, 2007, the base salaries of Messrs. Schwartz
and Yoshimoto were increased by approximately 3% in order to track increases in cost of
living.
Cash
Incentive Plan
For the fiscal year 2008, the maximum
cash incentive award opportunity for each Named Executive Officer under the Cash
Incentive Plan (i.e., the maximum amount payable if maximum
performance targets are achieved) was set at 50% of annual base salary for Mr.
Schwartz, 45% for Mr. Garcia, 40% for Mr. Yoshimoto and 30% for Mr.
Ortega. The Compensation Committee believes that directly relating
the amount of potential cash incentive pay to the amount of annual base salary
provides Named Executive Officers with appropriate motivation by ensuring that a
material portion of total compensation is “at risk” if various objectives are
not achieved. Furthermore, the proportion of total cash compensation
“at risk” increases with positions that provide a greater ability to directly
affect the Company’s overall performance and growth.
With respect to each Named Executive
Officer, 25% of the maximum cash incentive award is based on fulfillment of
individual goals and objectives, including the factors described immediately
below:
|
·
|
Mr.
Schwartz: overall
Company leadership,
restaurant concept
development
|
|
·
|
Mr.
Garcia: management
team stability and quality, business plan completion, investor
relations
|
|
·
|
Mr.
Yoshimoto: expense
control, quality control, remodeling project continuation (each, with
respect to the
Benihana teppanyaki
restaurants)
|
|
·
|
Mr.
Ortega: Audit
Committee functioning, Sarbanes-Oxley Act compliance, budget plan
development
|
For Messrs. Schwartz, Garcia and Ortega,
the remaining 75% of the cash incentive award is based on the Company’s
achievement of targeted return on equity thresholds. For Mr.
Yoshimoto, the remaining 75% is based on the attainment of targeted restaurant operating profit results with respect to the Company’s
Benihana teppanyaki restaurants. In each case,
the Compensation Committee determines the target level prior to the start of the
fiscal year. The Compensation Committee considers return on equity to
be an optimal measure of Company-wide performance because it is a commonly used
measurement of effective capital allocation, which is of specific interest to a
restaurant company deploying capital to expand its market
share. The
targeted restaurant operating profit results of the Company's Benihana teppanyaki restaurants are considered to be an
optimal measure of performance with respect to Mr. Yoshimoto because they
isolate the operations and performance of the units for which Mr. Yoshimoto is
responsible and indicate the efficiency of his management.
For the fiscal year 2008, the targeted
return on equity was 8.1%; the Benihana teppanyaki restaurants’ targeted restaurant operating profit
results were $40.6
million. If the targeted results of either measure were exceeded by
the percentages indicated in the left-hand column below, the Named Executive Officer
would receive the indicated percentage of the
Company performance component of the maximum cash incentive
award.
| |
If targeted result
is
exceeded
by…
|
…then the percentage of
maximum cash incentive
award related to Company
performance paid will
be…
|
|
| |
less than
5%
|
50%
|
|
| |
5% but less than
10%
|
60%
|
|
| |
10% but less than
15%
|
75%
|
|
| |
15% or more
|
100%
|
|
The Compensation Committee determined
that, based on historical performance of the Company, the thresholds are, at the
minimum level, realistically attainable so as to be motivating, while, at the
maximum level, sufficiently aggressive to encourage optimal growth and
innovation. No later than thirty days after the Company’s filing of
its Annual Report on Form 10-K for any fiscal year, the Compensation Committee must review
applicable performance targets and approve the amounts to be paid under the Cash
Incentive Plan with respect to the applicable fiscal year.
On June 6, 2008, the Compensation Committee determined
that Mr. Schwartz, Mr.
Garcia and Mr. Ortega had
fully accomplished
their individualized
performance targets, however, the Company’s return on equity
target was not
met and thus approved cash incentive award
payments of $45,053, $28,125 and $13,875 to Messrs. Schwartz, Garcia
and Ortega,
respectively. With respect to Mr. Yoshimoto, the
Company’s Benihana
teppanyaki restaurants did not achieve their targeted results, however, Mr. Yoshimoto accomplished
certain of his individual performance targets and thus the Compensation Committee approved a cash incentive award
payment of
$16,676. The Compensation Committee does not have discretion to alter
such payments under the Cash Incentive Plan if performance goals are not
achieved, but it may approve discretionary bonus payments pursuant to the
Company’s employment agreement with each Named Executive
Officer.
In addition to the cash incentive award
opportunity under the Cash Incentive Plan, Mr. Garcia is entitled to receive a
performance-based bonus of up to 25% of his base salary, at the discretion of
and as determined by the Compensation Committee and Chief Executive
Officer, at the end of each fiscal year of service based upon Mr. Garcia’s
performance. The following criteria, among others, are considered: the
Company’s actual results of operations compared with the Company’s business plan
as adopted by the Company’s Board of Directors, restaurant development and
management retention. This additional cash incentive bonus opportunity was
included in Mr. Garcia's employment agreement in order to tie more of his
compensation, as President and Chief Operating Officer, to individual and
Company performance. No such bonus was paid with respect to the fiscal year
2008.
Equity
Plan
At the Company’s 2007 annual
stockholders meeting, the stockholders approved adoption of the Equity Plan. While the Company has, at
times, previously granted equity incentives in the form of stock options, the
Board of Directors recommended approval of the Equity Plan because it permits
alternative forms of equity grants, including grants of restricted stock and
equity grants which can be made subject to performance-based vesting, affording
the Compensation Committee more flexibility in establishing appropriate
compensation packages for employees. In addition, the Equity Plan
allows the Company to adapt to the continuing, highly competitive market for
executive talent and the market trend of offering alternative awards, so as to
remain competitive within the restaurant industry and continue to be able to
attract and retain employees.
The Compensation Committee determines
the value of equity awards based upon the amount of total compensation
(excluding post-termination benefits) considered necessary by the Compensation
Committee to retain such an executive officer for such position, the performance
of the Company and Named Executive Officer during the previous year, the impact
of awards on the Company’s net income and the dilutive effect of awards on the
Company’s outstanding shares. Furthermore, the Compensation Committee
allocates equity awards representing a greater proportion of total compensation
to those executive officers whose positions provide a greater ability to
directly affect the Company’s overall performance and
growth.
The Compensation Committee uses
fair value to determine equity grant value, as
discussed below under the heading “Tax and Accounting Considerations,”
and to establish the value of
total equity grants to be awarded to each officer. Consequently, the
amount of underlying stock will vary depending upon the stock price of the
Company’s Class A Common Stock on the grant date, which is the date on which the
Compensation Committee approves the award. The share price of
restricted stock and exercise price of stock options are not repriced by the
Compensation Committee, nor does the Compensation Committee have a policy
permitting such repricing. The Compensation Committee typically meets
to grant the awards as close as possible to the end of the Company’s fiscal
year, when the Committee can evaluate overall Company
performance. Establishing a fixed total value gives the Company
greater ability to ensure accrual of consistent compensation costs
year-to-year. The share price or exercise price of an equity award is
equal to the fair market value of the Company’s Class A Common Stock, which is
the average of the high and low price of stock on such day. The
stock’s fair market value, rather than its closing market price, is used because
the Company believes such price is the more accurate representation of the value
of the Company’s stock on any given day.
For the fiscal year 2008, the Company
issued stock options and restricted stock that were subject to time based vesting
conditions which require that the officer be employed on
the vesting date to realize any value from the award. The typical
vesting schedule for such awards provides that one-third of the shares covered
by the award vests upon each of the first, second and third anniversaries of the
grant date. Such vesting periods are considered to be of long enough
duration to give significant financial incentive to the officer to remain with
the Company while being of short enough duration to allow realization of
financial incentives.
Equity awards for the Named Executive
Officers consist of two-thirds (in value) stock options and one-third (in value)
restricted stock. The Compensation Committee considered such
allocation optimal to balance the Company’s interest in motivating its officers
to increase the Company’s value, which is supported by the award of stock
options (which have no value unless and until the stock price begins to exceed
the exercise price) and its interest in rewarding officers for previous
performance through the award of restricted stock (which represents immediate
value upon vesting, yet still retains quality as a performance incentive since
its value changes with the price of the Company’s stock).
On March 17, 2008, the Compensation
Committee approved equity awards for the fiscal year 2008, with a fair market
value equal to 100%, 85%, 40% and 40% of annual base salary for each of Messrs.
Schwartz, Garcia, Yoshimoto and Ortega, respectively.
Post-Termination and Other Benefits
Overall
Philosophy
The Company’s employment agreements with
certain Named Executive Officers provide for payments in the event of certain
terminations of employment, as discussed below under the heading “Post-Termination
Benefits and Change in Control.” In general, the
Compensation Committee considers post-termination benefits to be an important
element of total compensation because they allow the Company to better recruit
and retain executive officers by offering competitive compensation
packages. In addition, certain longstanding officers are
eligible for severance and change in control benefits since these benefits have
been terms of their employment agreements since 1997, and the Compensation
Committee believes that the elimination of these benefits would be a material
reduction in their total compensation.
Trigger
Events
The Company provides certain benefits to
all of the Named Executive Officers following a termination of employment as a
result of death or disability. The Compensation Committee believes
that these benefits enhance the officers’ performance by eliminating
distractions relating to job security and family welfare and thereby fostering
the officers’ ability to focus upon execution of daily job
responsibilities.
Pursuant to the terms of their
employment agreements, Messrs. Schwartz and Yoshimoto are eligible for severance
payments in connection with a termination of their employment by the Company
without cause, the termination of their employment by them with good reason, or
with respect to the Mr. Schwartz, the failure of the Company to renew or extend
his employment agreement. In addition to alleviating concerns about
job security and family welfare, the Company considers these substitute
retirement benefits, which are maintained in lieu of any
other retirement plan dedicated to executive officers.
In addition to the foregoing, Messrs.
Schwartz’s and Yoshimoto’s contracts include benefits which are payable to the
executive if he is terminated in connection with a change in control of the
Company. The Company believes that providing these benefits in
connection with a change in control is an effective way of separating the
officers’ personal financial interests in maintaining their employment from the
stockholders’ interests in increasing the value of the Company through potential
corporate transactions. In addition, these benefits are structured as
a “double trigger;” that is, the mere fact of the occurrence of the change in
control will not trigger
the payment. The
change in control must occur and the officer’s employment must terminate for the
benefit to become payable. The Compensation Committee continues to
believe that this structure is appropriate to balance the Company’s interest in
ensuring that its executive officers’ interests’ are aligned with those of its
stockholders, while limiting the Company’s exposure for such payments to those
circumstances where the benefit is necessary for the protection of the
executive.
Benefits
Formula
Payments in connection with a death or
disability are generally based on a multiple of monthly salary so that the value
of such benefit increases in proportion to salary increases, providing a certain
amount of support upon the occurrence of such events; however, in the event of
the death of Mr. Schwartz, the Company would pay a fixed amount approximately
equal to his compensation at the time such benefit was originally agreed
to. Payments in connection with a termination without cause, with
good reason or in the event of a change in control are a multiple of annual base
salary but are reduced to reflect the remaining time in the officer’s employment
term. The Compensation Committee believes that this appropriately
reflects the Company’s interest in providing security while reflecting the
officer’s expectation under the employment agreement. Payment in
connection with a failure to renew is a fixed multiple of annual base salary in
order to establish a fixed amount of security and retirement benefits in such
event where the amount of time remaining under the term may not provide an
appropriate benefit.
Tax and Accounting
Considerations
Section 162(m) of the Internal Revenue
Code generally limits the deductibility of compensation (other than qualified
performance-based compensation) in excess of $1 million paid in a taxable year
to a company’s chief executive officer and the four other most highly
compensated executive officers. The Compensation Committee considers
the impact of this deductibility limitation on its compensation
program, however,
in certain cases, the
Compensation Committee may determine that the Company’s interest in providing
necessary compensation may outweigh interest in tax
deductibility.
Current accounting rules, including
Statement on Financial Accounting Standards No. 123R (FAS 123R), “Share-Based
Payment,” require the Company to record, as an expense, the estimated fair market value of
stock option and restricted
stock grants, which reduces
the Company’s reported profits. The Compensation Committee considers
such impact of this expense when determining the types and values of equity
awards to be granted to employees, including Named Executive
Officers.
The Company uses the Black-Scholes model
to determine the value of equity grants, which ensures that the amount of
compensation accrued annually by the Company in connection with its stock option
grants may be more simply compared year to year since the Black-Scholes model is
the same methodology used by the Company to determine its compensation expense
under FAS 123R.
Compensation and Stock Option Committee
Report
The Company’s Compensation Committee has
reviewed and discussed with management the Compensation Discussion and Analysis
included in the Annual Report on Form 10-K (the
“Form 10-K”) and the Company’s Proxy Statement with
respect to the Company’s fiscal year ended March 30, 2008, filed pursuant to
Section 13 of the Securities Exchange Act of 1934. Based on the
reviews and discussions referred to above, the Company’s Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and
Analysis referred to above be included in the Form 10-K and the Proxy
Statement.
Compensation and Stock Option
Committee
John E. Abdo
(Chairman)
Norman Becker
Executive
Compensation
SUMMARY COMPENSATION
TABLE
The following table sets forth
compensation for the
Company’s Chief Executive Officer, the Company’s Chief Financial Officer and the Company’s other most highly compensated executive
officers (the
Company’s Named Executive Officers) during the fiscal year ended March 30,
2008.
|
Name and
Principal Position
|
|
Fiscal
Year
|
|
|
Salary
($)
|
|
|
Stock
Awards
($) (1)
|
|
|
Option
Awards
($) (1)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
All
Other
Compensation
($) (2)
|
|
|
Total
($)
|
|
|
Joel A. Schwartz,
Chairman
and Chief Executive
Officer
|
|
2008
2007
|
|
|
$
|
360,420
355,377
|
|
|
$
|
1,500
—
|
|
|
$
|
3,500
—
|
|
|
$
|
45,053
45,793
|
|
|
$
|
7,910
7,148
|
|
|
$
|
418,383
408,318
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juan C. Garcia, President
and
Chief Operating
Officer
|
|
2008
2007
|
|
|
|
234,615
177,500
|
|
|
|
900
—
|
|
|
|
2,100
—
|
|
|
|
28,125
24,062
|
|
|
|
4,100
4,580
|
|
|
|
269,840
206,142
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taka Yoshimoto, Director
and
Executive Vice President
—
Operations
|
|
2008
2007
|
|
|
|
211,088
201,019
|
|
|
|
400
—
|
|
|
|
800
—
|
|
|
|
16,676
14,819
|
|
|
|
4,286
4,188
|
|
|
|
233,250
220,026
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jose I.
Ortega,
Vice President — Finance and
Chief Financial
Officer
|
|
2008
2007
|
|
|
|
185,000
158,950
|
|
|
|
300
—
|
|
|
|
700
—
|
|
|
|
13,875
20,945
|
|
|
|
4,289
4,481
|
|
|
|
204,164
184,376
|
|
_____________________________
|
(1)
|
Represents the amount of
compensation cost recognized by the Company in the fiscal year ended March 30, 2008 related to stock and option
awards granted in the
fiscal year 2008, as described in Statement of
Financial Accounting Standards No. 123R (SFAS 123R). For a
discussion of valuation assumptions, see Note 1 to the Company’s 2008 Consolidated
Financial Statements included in the Annual Report on Form 10-K for
the fiscal year 2008.
|
| |
|
|
(2)
|
Other Compensation included
Company-paid Group Term Life Insurance and automobile
allowance.
|
GRANTS OF PLAN-BASED AWARDS
TABLE
The following table sets forth certain
additional information regarding the range of possible grants of plan-based awards to
the Company’s Named Executive Officers for the fiscal
year ended March 30,
2008. Actual grants awarded with respect to
the fiscal year 2008 are disclosed as “Non-Equity Plan Compensation in the
Summary Compensation Table” above.
Under the Company’s Cash Incentive Plan, each Named Executive
Officer may receive a cash award, which may be all or a portion of his maximum
overall bonus opportunity, which for the fiscal year 2008 was set at 50% of
annual base salary for Mr. Schwartz, 45% for Mr. Garcia, 40% for Mr. Yoshimoto
and 30% for Mr. Ortega. Eligibility for 75% of the award is based on
exceeding certain targeted Company-wide results, while eligibility for the
remaining 25% is based on achieving other personal performance and management
goals specific to the individual’s role in the Company. Because the personnel
component is based on subjective criteria of individual achievement objectives,
the Company has assumed that, at the threshold level, a Named Executive Officer
has not achieved any objectives and, at a maximum level, a Named Executive
Officer has achieved all of his objectives. With respect to the
Company component, the threshold and maximum levels are based on the minimum and maximum awards
50% and 100%, respectively,
under the plan. The plan provides for a range of payments between the threshold
amount and the maximum amount, which is determined by the achievement of various
levels of Company performance and a Named Executive Officer’s achievement of
personal objectives. Accordingly, there is no target under the Company’s plan
and the Company has omitted the column providing such
information.
Under the Company’s Equity Plan, the
Compensation Committee determines the value of equity awards based upon, among
other things, the amount of total compensation (excluding post-termination
benefits) considered necessary to retain such an executive officer for such
position and the performance of the Company and Named Executive Officer during
the previous year. Furthermore, the Compensation Committee
establishes the value of total equity grants to be awarded to each officer;
therefore, the amount of underlying stock will vary depending upon the stock
price of the Company’s Class A Common Stock on the grant date.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
All
Other |
|
|
|
|
|
|
|
| |
|
Estimated
Future Pay-Outs |
|
|
|
All
Other |
|
|
Option |
|
|
|
|
|
|
|
| |
|
Under
Non-Equity Incentive |
|
|
|
Stock |
|
|
Awards:
|
|
|
Exercise |
|
|
Grant
Date |
|
| |
|
Plan Awards |
|
|
|
Awards:
|
|
|
Number
of |
|
|
or Base |
|
|
Fair
Value |
|
| |
|
|
|
|
|
Number |
|
|
Securities |
|
|
Price
of |
|
|
of
Stock |
|
| |
|
|
|
|
|
|
of
Stock |
|
|
Underlying |
|
|
Option |
|
|
and
Option |
|
|
Name
|
|
Threshold |
Maximum |
|
Grant |
|
or
Units |
|
|
Options |
|
|
Awards |
|
|
Awards |
|
| |
|
($) |
|
($) |
|
Date |
|
(#)
(1) |
|
|
(#)
(2) |
|
|
($/Share) |
|
|
($/Share) |
|
|
Joel A.
Schwartz
|
|
$ |
|
67,579 |
|
|
$ |
180,210 |
|
3/17/08
|
|
|
11,600 |
|
|
|
69,600 |
|
|
$ |
10.35 |
|
|
$ |
390,804 |
|
|
Juan C.
Garcia
|
|
|
|
42,188 |
|
|
|
112,500 |
|
3/17/08
|
|
|
6,800 |
|
|
|
41,100 |
|
|
|
10.35 |
|
|
|
230,259 |
|
|
Taka
Yoshimoto
|
|
|
|
31,663 |
|
|
|
84,435 |
|
3/17/08
|
|
|
2,700 |
|
|
|
16,300 |
|
|
|
10.35 |
|
|
|
91,352 |
|
|
Jose I.
Ortega
|
|
|
|
20,813 |
|
|
|
55,500 |
|
3/17/08
|
|
|
2,400 |
|
|
|
14,300 |
|
|
|
10.35 |
|
|
|
80,467 |
|
________________________________
|
(1)
|
Each such award
consists of restricted shares of Class A
Common Stock subject to a risk of forfeiture which lapses as to
approximately one-third of the shares covered by the
award on each of the
first three anniversaries of the grant date.
|
|
(2)
|
Each such award consists of an
option to purchase Class A Common Stock that has a term of seven years and is exercisable as to
approximately one-third of the shares covered by the award
on each of the first
three anniversaries of the grant
date.
|
NARRATIVE ADDENDUM TO THE SUMMARY
COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
Employment
Agreements
The Company originally entered into an
employment agreement with Mr. Schwartz on April 1, 2001 and, pursuant to an
amendment dated May 27, 2004, such agreement was extended until March 31, 2009.
The employment agreement provided for an initial annual base salary of $300,000,
subject to annual adjustment based on cost of living increases. On
March 17, 2008, the Company entered into an amended and restated employment
agreement with Mr. Schwartz, providing that he continue to serve as Chief
Executive Officer until March 31, 2011 for an initial base salary of $400,000,
subject to annual adjustments based on cost of living
increases.
The Company entered into an employment
agreement with Mr. Yoshimoto on April 1, 2006, to continue to serve as Executive
Vice President — Operations through March 31, 2009, providing for an initial
base salary of $187,209 and subject to annual adjustment based on cost of living
increases.
The Company entered into an employment
agreement with Mr. Ortega on August 28, 2006, in connection with Mr. Ortega’s
promotion to serve as Vice President — Finance and Chief Financial Officer
through August 31, 2009, providing for an initial annual base salary of
$185,000.
The Company entered into an amended and
restated employment agreement with Mr. Garcia on June 18, 2007, effective as of
April 2, 2007, the date upon which Mr. Garcia was
promoted to serve as President and Chief Operating Officer. The
employment agreement provides for Mr. Garcia to serve in both positions
through March 31, 2010, with an initial annual base salary of
$250,000, subject to annual adjustment based on cost of living increases.
Mr. Garcia is
also entitled to receive a performance-based bonus of up to 25% of his base
salary, as determined by the Compensation Committee and Chief Executive Officer,
as discussed above under the heading "Cash Incentive
Plan."
The terms of the employment agreement
with each of the Named Executive Officers provide for bonuses and equity awards
determined by the Company’s Board of Directors under the Company’s Cash Incentive Plan or Equity Plan,
respectively (as each such plan is discussed under the “Grants of Plan-Based Awards
Table” in this Form
10-K/A). Additionally, pursuant to the terms of the employment
agreement with each of the Named Executive Officers, each such officer will be
eligible to participate in the health, insurance and other benefit plans
generally available to the Company’s executive officers and will be entitled to
receive an automobile expense allowance between $200 and $300 per
month. Last, the Named Executive Officers are
eligible for severance payments upon certain events of termination of their
employment, as discussed under the heading “Post-Termination Benefits and Change
in Control” section in this Form 10-K/A.
Equity
Plan
The
long-term incentive compensation plan pursuant to which the Company presently
grants equity awards is the Company’s 2007 Equity Incentive
Plan. Pursuant to the Equity Plan, employees, including the Named
Executive Officers, may be granted stock options, stock awards, stock
appreciation rights and stock equivalent units (the Awards). The
exercise price of all stock options to purchase Class A Common Stock, including
Incentive Stock Options, as defined by Section 422 of the Internal Revenue Code
of 1986, is the stock’s fair market value, which is the average of the high and
low price of the Class A Common Stock on the grant date. In the
fiscal year 2008, the Company granted only restricted stock awards and stock
options. All employees of the Company and its subsidiaries and
non-employee directors are eligible to receive Awards under the Equity
Plan. The Equity Plan provides that the Compensation Committee may
determine which employees are granted Awards and the number of shares subject to
each Award. The non-employee directors are eligible for automatic
grants of stock options, as further discussed below under the heading “Director
Compensation.”
Prior to
the adoption of the Equity Plan, the Company granted stock options to its
employees and directors under its 2003 Directors’ Stock Option Plan, 2000
Employees Class A Common Stock Option Plan and other prior plans (the Prior
Plans). Following adoption of the Equity Plan, the Company ceased to
issue stock options under the Prior Plans, however all options previously issued
under the Prior Plans which remain outstanding continue to be governed by the
terms of such Prior Plans.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR
END TABLE
The following table sets forth
information regarding each unexercised option held by each of the Company’s Named Executive Officers as of
March 30, 2008.
|
|
|
|
|
|
Options
Awards
|
|
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
Shares or
Units
|
|
|
Market Value
of
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
of Stock
That
|
|
|
Shares or Units
of
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
|
Stock That
Have
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
Expiration
|
|
Vested
|
|
|
Not Vested
|
|
|
Name
|
|
|
(#)
|
|
|
|
(#) (1)
|
|
|
($/Share)
|
|
Date
|
|
|
(#) (2)
|
|
|
($)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joel A.
Schwartz
|
|
|
57,500 |
|
|
|
— |
|
|
$ |
6.5942
|
|
5/7/09
|
|
|
11,600 |
|
|
$ |
131,312 |
|
|
|
|
|
28,750 |
|
|
|
— |
|
|
|
6.6209
|
|
5/7/09
|
|
|
|
|
|
|
|
|
|
|
|
|
40,250 |
|
|
|
— |
|
|
|
8.9855
|
|
9/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
20,125 |
|
|
|
— |
|
|
|
9.0122
|
|
9/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
57,500 |
|
|
|
—
|
|
|
|
7.8261
|
|
5/12/10
|
|
|
|
|
|
|
|
|
|
|
|
|
28,750 |
|
|
|
—
|
|
|
|
7.8528
|
|
5/12/10
|
|
|
|
|
|
|
|
|
|
|
|
|
51,750 |
|
|
|
— |
|
|
|
4.9623
|
|
4/24/11
|
|
|
|
|
|
|
|
|
|
|
|
|
25,875 |
|
|
|
— |
|
|
|
4.9890
|
|
4/24/11
|
|
|
|
|
|
|
|
|
|
|
|
|
57,500 |
|
|
|
— |
|
|
|
11.1884
|
|
6/7/12
|
|
|
|
|
|
|
|
|
|
|
|
|
28,750 |
|
|
|
— |
|
|
|
11.2151
|
|
6/7/12
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
69,600 |
|
|
|
10.3500
|
|
3/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juan
C. Garcia
|
|
|
34,500 |
|
|
|
— |
|
|
|
7.8261
|
|
5/12/10
|
|
|
6,800 |
|
|
|
76,976 |
|
|
|
|
|
17,250 |
|
|
|
— |
|
|
|
7.8528
|
|
5/12/10
|
|
|
|
|
|
|
|
|
|
|
|
|
28,750 |
|
|
|
— |
|
|
|
4.9623
|
|
4/24/11
|
|
|
|
|
|
|
|
|
|
|
|
|
14,375 |
|
|
|
— |
|
|
|
4.9890
|
|
4/24/11
|
|
|
|
|
|
|
|
|
|
|
|
|
34,500 |
|
|
|
— |
|
|
|
11.1884
|
|
6/7/12
|
|
|
|
|
|
|
|
|
|
|
|
|
17,250 |
|
|
|
— |
|
|
|
11.2151
|
|
6/7/12
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
41,100 |
|
|
|
10.3500
|
|
3/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taka
Yoshimoto
|
|
|
23,000 |
|
|
|
— |
|
|
|
8.9855
|
|
9/1/09
|
|
|
2,700 |
|
|
|
30,564 |
|
|
|
|
|
11,500 |
|
|
|
— |
|
|
|
9.0122
|
|
9/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
46,000 |
|
|
|
— |
|
|
|
7.8261
|
|
5/12/10
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000 |
|
|
|
— |
|
|
|
7.8528
|
|
5/12/10
|
|
|
|
|
|
|
|
|
|
|
|
|
46,000 |
|
|
|
— |
|
|
|
11.1884
|
|
6/7/12
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000 |
|
|
|
— |
|
|
|
11.2151
|
|
6/7/12
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
16,300 |
|
|
|
10.3500
|
|
3/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jose I.
Ortega
|
|
|
— |
|
|
|
14,300 |
|
|
|
10.3500
|
|
3/17/15
|
|
|
2,400 |
|
|
|
27,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Each such option was granted on
March 17, 2008 and is exercisable as to approximately one-third
of the shares covered
by the award on each
of the first three anniversaries of such date.
|
|
(2)
|
Each such stock award was granted
on March 17, 2008 and is subject to a risk of forfeiture which lapses as
to approximately one-third of the shares covered by the award on each of
the first three anniversaries of such date.
|
|
(3)
|
The market value of shares of
stock that have not vested was $11.32, which was the closing price per share of the Company’s Class A
Common Stock on March 30,
2008.
|
OPTION EXERCISES AND STOCK VESTED
TABLES
The following table shows the number of
shares acquired upon exercise of stock options by each of the Company’s Named Executive Officers during the
fiscal year ended March 30,
2008. There were no stock awards granted
under the Equity Plan which vested in the fiscal year 2008.
| |
|
|
|
|
Option
Awards
|
|
|
|
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
|
Value Realized
on Exercise
($) (1)
|
|
|
|
|
|
|
|
|
|
|
Joel A.
Schwartz
|
|
112,125
|
|
|
|
$ |
1,457,000 |
|
|
Juan C.
Garcia
|
|
-
|
|
|
|
|
- |
|
|
Taka
Yoshimoto
|
|
-
|
|
|
|
|
- |
|
|
Jose I.
Ortega
|
|
-
|
|
|
|
|
- |
|
|
(1)
|
The “value realized on exercise”
is the difference between the market price of the underlying security at
exercise and the exercise price of the
option.
|
NONQUALIFIED DEFERRED
COMPENSATION
The following table shows the executive
contributions, earnings and account balances for the Named Executive Officers
who participated
in the Company’s Deferred Compensation
Plan. The Deferred Compensation Plan allows key employees, including the Named Executive Officers,
to defer up to 20% of their annual base salary and up to 100% of their annual
bonuses until resignation
from service at the Company or age 55, whichever is later, or if earlier, their
disability (as defined in the Deferred Compensation Plan) or death. Deferred amounts may be invested among
several investment programs at the participant’s option. Participants’ obligation to
pay federal or state income
tax on contributions to the
plan is deferred until withdrawal of such amounts. The Company does not match any of the amounts deferred by
participants in the Deferred Compensation Plan.
Employees who participate in the
Deferred Compensation Plan may invest deferred monies in a range of investment
vehicles, including Money
Markets, Bonds and Mutual Funds. Over the last three years, these investments
have yielded less than 5%
per
annum.
The Company does not make contributions,
including matching contributions, to the Deferred Compensation
Plan.
|
Name
|
|
Executive
Contributions
in Last
FY
|
|
|
Aggregate
Earnings
in Last FY
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate Balance at Last Fiscal
Year End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joel A.
Schwartz
|
|
$ |
26,000 |
|
|
$ |
(8,857) |
|
$ |
- |
|
|
$ |
318,896 |
|
|
Juan C.
Garcia
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
Taka
Yoshimoto
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
Jose I.
Ortega
|
|
|
- |
|
|
|
- |
|
|
-
|
|
|
|
-
|
|
|
(1)
|
The amounts set forth in this
column have also been reported as “Salary” in the Summary Compensation
Table above.
|
POST-TERMINATION BENEFITS AND CHANGE IN
CONTROL
Compensation upon Termination of
Employment
The Company’s amended and restated
employment agreement with Mr. Schwartz provides that, in the event of
termination of his employment without cause, for good reason, due to disability,
as a result of his resignation after a change in control of the Company or as a
result of a failure to renew or extend Mr. Schwartz’s employment agreement, he
shall receive a payment equal to five times his annual base salary in effect at
the time of such termination. In addition, if Mr. Schwartz’s
employment is terminated without cause, for good reason or as a result of his
resignation after a change in control of the Company, he shall receive an
additional payment equal to his annual base salary in effect at the time of such
termination multiplied by the number of years remaining under his employment
agreement. Each such payment is to be paid in sixty equal monthly
installments, subject to certain delays in payment which might be required under
applicable law.
In the event of the death of Mr.
Schwartz, the employment agreement provides that the Company shall pay his
beneficiary or other designated person $350,000 less the amount of any insurance
on Mr. Schwartz’s life which the Company has purchased. In addition,
in the event of Mr. Schwartz’s resignation after a change in control
of the Company, he has the right at any time within twelve months following the
date of such change in control to cause the Company to repurchase any options
granted him in connection with his services as an employee, officer, director at
a purchase price equal to the difference between the closing price of the
appropriate stock on the stock exchange on which the Company’s stock is listed,
on the date immediately prior to the exercise of such rights, and the exercise
price of such option. In the event of the termination of Mr.
Schwartz’s employment for any reason (other than termination by the Company with
cause), for a period of three years immediately following such termination the
Company shall provide Mr. Schwartz and his family members with continued group
medical and dental insurance coverage or payments in lieu
thereof.
Mr. Schwartz’s right to receive any
payment in connection with termination of his employment is conditioned upon his
execution of a general release with respect to the Company. For a
period commencing upon the termination of Mr. Schwartz’s employment and ending
the later of one year following such termination or the date on which the
Company’s obligations to make payments to him terminate, Mr. Schwartz is
prohibited from engaging in any business activity within the United States (or
any other area in which the Company conducts substantial business operations)
which competes with the Company’s business or solicit, directly or indirectly,
any of the Company’s employees, customers or accounts.
The Company’s employment agreement with
Mr. Yoshimoto provides that if he is terminated without cause
or Mr. Yoshimoto resigns
after a change in control of the Company, he shall receive an additional payment
equal to his annual base salary multiplied by the number of years remaining
under his employment agreement. In the event Mr. Yoshimoto’s
employment is terminated, unless such termination is a result of the Company’s
breach of the employment agreement, Mr. Yoshimoto is prohibited from engaging,
directly or indirectly in any business activity within the United States which
competes with the Company’s business, provided that he may own any class of
securities of any corporation which is regularly traded on any stock exchange or
over-the-counter market.
In the event of the death or disability
of any of Messrs. Ortega, Garcia and Yoshimoto, the Company’s employment
agreements with each Named Executive Officer provides that the Company shall pay
such person, his designee or his beneficiary his monthly base salary in effect
at the time of such event for a period of three months after such
event.
Set forth in the table below are
reasonable estimates of the potential amounts payable to a Named Executive
Officer assuming his employment was terminated without cause, in connection with
a change in control of the Company or as a result of disability or death, in
each case, based on a termination date of March 30, 2008.
|
Name
|
|
Termination
Without Cause
($)
|
|
|
Change in
Control
($)
|
|
|
Disability
($)
|
|
|
Death
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joel A. Schwartz (1)
|
|
$ |
2,884,300 |
|
|
$ |
2,884,300 |
|
|
$ |
1,802,100 |
|
|
$ |
350,000 |
|
|
Juan C.
Garcia
|
|
|
- |
|
|
|
- |
|
|
|
62,500 |
|
|
|
62,500 |
|
|
Taka
Yoshimoto
|
|
|
211,100 |
|
|
|
211,100 |
|
|
|
52,800 |
|
|
|
52,800 |
|
|
Jose I.
Ortega
|
|
|
- |
|
|
|
- |
|
|
|
46,300 |
|
|
|
46,300 |
|
