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Star Buffet Inc – ‘DEF 14A’ for 6/30/98

As of:  Tuesday, 5/26/98   ·   For:  6/30/98   ·   Accession #:  892569-98-1641   ·   File #:  333-32249

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/26/98  Star Buffet Inc                   DEF 14A     6/30/98    1:45K                                    Bowne - Biv/FA

Definitive Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Statement                            17     73K 


Document Table of Contents

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11st Page   -   Filing Submission
5John F. North, Jr
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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: [Enlarge/Download Table] [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission [X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12 STAR BUFFET, INC. -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] Fee not required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------
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STAR BUFFET, INC. 440 LAWNDALE DRIVE SALT LAKE CITY, UTAH 84115 --------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS JUNE 30, 1998 To the Stockholders of Star Buffet, Inc.: The Annual Meeting of Stockholders of Star Buffet, Inc. will be held at the Biltmore Four Seasons Resort, 1260 Channel Drive, Santa Barbara, California, on Tuesday, June 30, 1998, at 9:30 a.m. for the following purposes: 1. To elect the following eight (8) nominees to serve as directors until the next annual meeting of stockholders or until their successors are elected and have qualified: William P. Foley II Jack M. Lloyd Robert E. Wheaton Thomas G. Schadt C. Thomas Thompson Norman N. Habermann Stuart W. Clifton John F. North, Jr. 2. To transact such other business as may properly come before the meeting or any adjournments or postponements thereof. Only stockholders of record at the close of business on May 8, 1998, will be entitled to notice of and to vote at the meeting or any adjournment thereof. By Order of the Board of Directors, William P. Foley, II Chairman of the Board Salt Lake City, Utah May 28, 1998 -------------------------------------------------------------------------------- WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, YOU ARE REQUESTED TO SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON ON EACH MATTER. --------------------------------------------------------------------------------
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STAR BUFFET, INC. 440 LAWNDALE DRIVE SALT LAKE CITY, UT 84115 --------------- PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS JUNE 30, 1998 --------------- This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of Star Buffet, Inc., a Delaware corporation ("Star" or the "Company"), for use at the Annual Meeting of Stockholders to be held at the Biltmore Four Seasons Resort, 1260 Channel Drive, Santa Barbara, California, on Tuesday, June 30, 1998, at 9:30 a.m. (the "Meeting"). This Proxy Statement and accompanying proxy card (the "Proxy Card") are first being mailed to stockholders on or about May 28, 1998. SOLICITATION OF PROXIES At the Meeting, the stockholders of Star will be asked (1) to vote upon the election of eight (8) nominees to serve as directors until the next annual meeting of stockholders or until their successors are elected and have qualified and (2) to act upon such other matters as may properly come before the Meeting or any postponements or adjournments thereof. Star's Board of Directors is asking for your proxy for use at the Meeting. A stockholder giving a proxy may revoke it at any time before it is exercised. Any proxy that is not revoked will be voted at the Meeting in accordance with the stockholder's instructions indicated on the enclosed Proxy Card. If no instructions are marked on a properly executed returned Proxy Card, the shares represented thereby will be voted FOR the election of the director nominees. Although management does not know of any other matter to be acted upon at the Meeting, shares represented by valid proxies will be voted by the persons named on the Proxy Card in accordance with their best judgment with respect to any other matters that may properly come before the Meeting. The cost of solicitation of proxies will be paid by Star. In addition, following the mailing of the Proxy Statement, directors, officers and regular employees of Star may solicit proxies by mail, telephone, telegraph or personal interview. Such persons will receive no additional compensation for such services. Brokerage houses and other nominees, fiduciaries and custodians nominally holding shares of Star Common Stock of record will be requested to forward proxy soliciting material to the beneficial owners of such shares and will be reimbursed by Star for their charges and expenses in connection therewith. RECORD DATE AND VOTING Holders of Star Common Stock of record at the close of business on May 8, 1998 (the "Record Date") are entitled to notice of, and to vote at, the Meeting. As of the Record Date, there were 5,450,000 shares of Star Common Stock outstanding and entitled to vote at the Meeting. No shares of the Company's preferred stock, $.001 par value, were outstanding. A majority of shares entitled to vote represented in person or by proxy will constitute a quorum at the Meeting. Each stockholder is entitled to one vote for each share of Common Stock held as of the Record Date. Abstentions and broker non-votes are each included in the determination of the number of shares present and voting for the purpose of determining whether a quorum is present. Abstentions will be treated as shares present and entitled to vote for purposes of any matter requiring 2
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the affirmative vote of a majority or other proportion of the shares present and entitled to vote. With respect to shares relating to any proxy as to which a broker non-vote is indicated on a proposal, those shares will not be considered present and entitled to vote with respect to any such proposal. Abstentions or broker non-votes or other failures to vote will have no effect in the election of directors, who will be elected by a plurality of the affirmative votes cast. With respect to any matter brought before the Annual Meeting requiring the affirmative vote of a majority or other proportion of the outstanding shares, an abstention or broker non-vote will have the same effect as a vote against the matter being voted upon. PROPOSAL 1 ELECTION OF DIRECTORS Currently, there are eight (8) members of the Board of Directors. Directors are elected at each annual stockholders' meeting to hold office until the next annual meeting or until their successors are elected and have qualified. Unless otherwise instructed, the persons named in the accompanying Proxy Card will vote the proxies received by them for the eight (8) nominees named below. All of the nominees presently are directors of the Company. If any nominee becomes unavailable for any reason before the election, the persons named in the accompanying Proxy Card will have discretionary authority to vote for the election of such substitute nominee or nominees, if any, as shall be designated by the Board of Directors. The Board of Directors has no reason to believe that any of the nominees will be unavailable to serve. DIRECTORS The names and certain information concerning the eight (8) nominees for election as directors are set forth below. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW. The director nominees of Star are as follows: [Download Table] NAME AGE PRINCIPAL OCCUPATION ---- --- -------------------- William P. Foley II 53 Chairman of the Board Robert E. Wheaton 45 Chief Executive Officer, President and Director C. Thomas Thompson 48 Director Stuart W. Clifton 53 Director Jack M. Lloyd 48 Director Thomas G. Schadt 56 Director Norman N. Habermann 65 Director John F. North, Jr. 49 Director William P. Foley II has served as the Chairman of the Board of the Company since its formation in July 1997. Mr. Foley has been the Chief Executive Officer of CKE Restaurants, Inc. ("CKE") since October 1994, the Chairman of the Board of Directors of CKE since March 1994, and has served as a director of CKE since December 1993. Since 1981, Mr. Foley has been Chairman of the Board, President (until January 1995) and Chief Executive Officer of Fidelity National Financial, Inc., a specialty finance company performing specialty finance functions and providing loans in the small ticket leasing industry, and is also engaged in the business of issuing title insurance and providing title related services. Mr. Foley is also the Chairman of the Board of Checkers Drive-In Restaurants, Inc., Rally's Hamburgers, Inc., and a member of the Boards of 3
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Directors of DataWorks Corporation, Micro General Corporation, GB Foods Corporation and Fresh Foods, Inc. Robert E. Wheaton has served as the Chief Executive Officer and President and as a director of the Company since its formation in July 1997. Mr. Wheaton also served as the interim Chief Executive Officer and as a director of Stacey's Buffet, Inc. from October 31, 1997 to February 13, 1998. Mr. Wheaton also has served as an Executive Vice President of CKE since January 1996. From April 1995 to January 1996, he served as Vice President and Chief Financial Officer of Denny's Inc., a subsidiary of Flagstar Corporation. From 1991 to 1995, Mr. Wheaton served as President and Chief Executive Officer and, from 1989 to 1991, as Vice President and Chief Financial Officer of The Bekins Company. C. Thomas Thompson has served as a director of the Company since its formation in July 1997. Mr. Thompson has served as the President and Chief Operating Officer of CKE since October 1994. Mr. Thompson has been a franchisee of CKE since 1984, and currently operates 15 Carl's Jr. Restaurants in the San Francisco Bay Area. Mr. Thompson also currently serves as Vice Chairman of the Board of Checkers Drive-In Restaurants, Inc. and a member of the Board of Directors of Rally's Hamburgers, Inc. Mr. Thompson has more than 20 years of experience in the restaurant industry. He previously held positions with Jack-in-the-Box and Pacific Fresh Restaurants, a full-service restaurant chain in the Bay Area. Stuart W. Clifton has served as a director of the Company since the completion of the Company's initial public offering in September 1997. Since 1987, Mr. Clifton has been the Chief Executive Officer and President and a member of the Board of Directors of DataWorks Corporation, a supplier of information systems to manufacturing companies. Thomas G. Schadt has served as a director of the Company since the completion of the Company's initial public offering in September 1997. Mr. Schadt has been the Chief Executive Officer of a privately-held beverage distribution company, Bear Creek, L.L.C., since 1995. From 1976 to 1994, he held several positions with Pepsico, Inc., including, most recently, Vice President of Food Service. Norman N. Habermann has served as a director of the Company since the completion of the Company's initial public offering in September 1997. Since February 1994, Mr. Habermann has been the President of Scobrett Associates, Inc., which is involved in venture capital and consulting activities. From December 1986 to January 1994, Mr. Habermann was President and Chief Executive Officer of the Restaurant Enterprises Group, Inc. and its predecessors. From November 1994 until its acquisition by CKE in July 1996, Mr. Habermann was a director of Summit Family Restaurants Inc. Jack M. Lloyd has served as a director of the Company since the completion of the Company's initial public offering in September 1997. Mr. Lloyd has served as Chairman of the Board of DenAmerica Corp. since July 9, 1996 and as President, Chief Executive Officer and a director of DenAmerica Corp. since March 29, 1996. Mr. Lloyd served as Chairman of the Board and Chief Executive Officer of Denwest Restaurant Corp. ("DRC") from 1987 until the March 1996 merger of DRC and DenAmerica and served as President of DRC from 1987 until November 1994. Mr. Lloyd engaged in commercial and residential real estate development and property management as President of First Federated Investment Corporation during the early and mid-1980's. Mr. Lloyd also currently serves as a director of Action Performance Companies, Inc. John F. North, Jr. has served as a director of the Company since the completion of the Company's initial public offering in September 1997. Mr. North is the co-founder of JJ North's Grand Buffet and, since 1978, has served as the President and Co-Chairman of the Board of Directors of North's Restaurants, Inc. 4
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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS The Executive Committee of the Board of Directors, comprised of Messrs. Foley, Thompson and Wheaton, is empowered by the Board of Directors to take all actions that may otherwise be taken by the Board of Directors, to the extent permitted by law. In addition to the Executive Committee, the Board of Directors has two standing committees: the Audit Committee and the Compensation Committee. The Board does not have a nominating committee or other committee performing similar functions. Instead, the Board of Directors, as a whole, identifies and screens candidates for membership on the Company's Board of Directors. The Audit Committee, whose current members are Messrs. Clifton, Lloyd and Habermann (Chairman), monitors Star's basic accounting policies and their related system of internal control, reviews Star's audit and management reports and makes recommendations regarding the appointment of independent auditors. The Compensation Committee, whose current members are Messrs. Foley (Chairman), Habermann and Schadt, considers the hiring and election of corporate officers, salary and incentive compensation policies for officers and directors, and the granting of stock options to employees. During fiscal 1998, the Board of Directors held one meeting and the Executive Committee held two meetings. The Compensation Committee and the Audit Committee did not meet during fiscal 1998. During fiscal 1998, no director attended fewer than 75% of the aggregate meetings of the Board of Directors and the committee or committees on which he served. COMPENSATION OF DIRECTORS For their services as directors in fiscal 1998, each non-employee director received $2,000 per meeting of the Board of Directors and $500 per committee meeting. In addition, all directors are entitled to participate in Star's 1997 Stock Incentive Plan. OTHER MATTERS Management does not know of any matter to be acted upon at the Meeting other than the matters described above, but if any other matter properly comes before the Meeting, the persons named on the enclosed Proxy Card will vote thereon in accordance with their best judgment. 5
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OWNERSHIP OF THE COMPANY'S SECURITIES The following table sets forth certain information regarding beneficial ownership of Star's Common Stock as of the Record Date, by (i) each person who is known by Star to beneficially own more than five percent of the outstanding Star Common Stock, (ii) each director of Star, (iii) each Named Executive Officer of Star identified in the Summary Compensation Table and (iv) all current directors and executive officers of Star as a group. Except as otherwise indicated, beneficial ownership includes both voting and investment power. [Download Table] AMOUNT AND NATURE OF BENEFICIAL PERCENT OF NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS (%)(1) ------------------------------------ ------------------ ------------ CKE Restaurants, Inc. 1200 North Harbor Boulevard Anaheim, CA 92801................................. 2,000,000 36.6% Robert E. Wheaton.................................. 117,746 (2) * William P. Foley II................................ 72,848 (3) * C. Thomas Thompson................................. 31,899 (4) * John F. North, Jr.................................. 60,583 (5) * Theodore Abajian................................... 7,000 (6) * Stuart W. Clifton.................................. 7,500 (7) * Norman N. Habermann................................ 7,500 (7) * Jack M. Lloyd...................................... 7,500 (7) * Thomas G. Schadt................................... 7,500 (7) * All executive officers and directors as a group (9 persons)........................... 320,076 (8) 5.6% ---------- * Less than one percent. (1) Calculated based on 5,450,000 shares of Star Common Stock outstanding May 8, 1998. (2) Includes 79,746 shares subject to presently exercisable options or options that become exerciseable within 60 days of May 8, 1998. (3) Includes 47,848 shares subject to presently exercisable options or options that become exerciseable within 60 days of May 8, 1998. (4) Includes 31,899 shares subject to presently exercisable options or options that become exerciseable within 60 days of May 8, 1998. 6
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(5) Includes 60,583 shares subject to presently exercisable options or options that become exerciseable within 60 days of May 8, 1998. (6) Includes 5,000 shares subject to presently exercisable options or options that become exerciseable within 60 days of May 8, 1998. (7) Includes 7,500 shares subject to presently exercisable options or options that become exerciseable within 60 days of May 8, 1998. (8) Includes 233,993 shares subject to presently exercisable options or options that become exerciseable within 60 days of May 8, 1998. 7
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EXECUTIVE COMPENSATION COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR THE FISCAL YEAR ENDED JANUARY 26, 1998. The Compensation Committee (the "Committee"), comprised of three non-employee directors, is responsible for administering the executive compensation policies, administering the various management incentive programs (including option plans), and making recommendations to the Board of Directors with respect to these policies and programs. In addition, the Committee makes annual recommendations to the Board of Directors concerning the compensation paid to the Chief Executive Officer and to each of the other executive officers of Star (each, an "Executive Officer"). As discussed below, the Company began its independent corporate existence on July 28, 1997 through the reorganization of direct or indirect wholly-owned subsidiaries of CKE. The Committee was not formed until after the first meeting of the Board following the formation of the Company. Since there was no Committee at the time of the first Board meeting, it was necessary for the non-employee directors of the Board to decide all compensation issues at that meeting. In addition, certain compensation arrangements were established by the Compensation Committee of the Board of Directors of CKE while the Company was a wholly-owned subsidiary of CKE. The following is a summary of the policies which the Board of Directors analyzed in determining the compensation for the Executive Officers of the Company. The Committee intends to follow the same general policies in determining the compensation for the Executive Officers of the Company in fiscal 1999, but may, in its discretion, alter such policies to take into consideration the applicable circumstances at the time. Compensation Policies Towards Executive Officers. The Committee believes that the most effective executive compensation program is one that provides incentives to achieve both current and long-term strategic management goals, with the ultimate objective of enhancing stockholder value. In this regard, the Committee believes executive compensation should be comprised of cash as well as equity-based programs. Base salaries are generally set at market levels in order to attract and retain qualified executives. With respect to equity-based compensation, the Committee believes that an integral part of Star's compensation program is the ownership and retention of Star's Common Stock by its Executive Officers. By providing Executive Officers with a meaningful stake in Star, the value of which is dependent on Star's long-term success, a commonality of interests between Star's Executive Officers and its stockholders is fostered. Relationship of Performance to Compensation. Compensation that may be earned by the Executive Officers in any fiscal year consists primarily of base salary, cash bonus and stock options. The significant factors that were considered in establishing the components of each Executive Officer's compensation package for the fiscal year ended January 26, 1998 are summarized below. The Committee, in its discretion, may apply different factors, particularly different measures of financial performance, in setting executive compensation for future fiscal years, but all compensation decisions will be designed to further the general compensation policies indicated above. Base Salary. The base salary for each Executive Officer is set on the basis of personal performance, the salary levels in effect for comparable positions with Star's principal competitors (including, but not limited to, Star's self-determined peer group set forth in the "Stock Performance Graph"), and Star's financial performance relative to such competitors. Factors relating to individual performance that are assessed in setting base compensation are based on the particular duties and areas of responsibility of the individual Executive Officer. Factors relating to Star's financial performance that may be related to increasing or decreasing base salary include revenues and earnings. The establishment of base compensation involves a subjective assessment and weighing of the foregoing criteria and is not based on any specific formula. Cash Bonus. Annual bonuses are earned by each Executive Officer on the basis of Star's achievement of pre-tax income targets established at the start of the fiscal year and on the basis of the particular Executive Officer's duties and areas of responsibility. Bonus amounts are established based on various levels of performance against such targets. Following the completion of the fiscal year, the Committee 8
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assesses Star and individual performance against the established targets and provides for annual bonuses based on the targeted performance of levels actually achieved. Stock Options. Stock option grants motivate Executive Officers to manage the business to improve long-term Star performance, and align the interests of Executive Officers with stockholder value. Customarily, option grants are made with exercise prices equal to the fair market value of the shares on the grant date and will be of no value unless the market price of Star's outstanding shares appreciates, thereby aligning a substantial part of the Executive Officer's compensation package with the return realized by the stockholders. Options generally vest in equal installments over a period of time, contingent upon the Executive Officer's continued employment with Star. Accordingly, an option will provide a return to the Executive Officer only if the Executive Officer remains employed by Star and the market price of the underlying shares appreciates over the option term. The size of an option grant is designed to create a meaningful opportunity for stock ownership and is based upon the individual's current position with Star, internal comparability with option grants made to other Star executives and the individual's potential for future responsibility and promotion over the option term. The Committee has established an award program which takes into account the level of responsibility in the organization, and total compensation compared to comparable companies, in making option grants to the Executive Officers in an attempt to target a fixed number of unvested option shares based upon the individual's position with Star and the Executive Officer's existing holdings of unvested options. As such, the award of stock options requires subjective judgment as to the amount of the option. However, the Committee does not adhere strictly to these guidelines and will occasionally vary the size of the option grant, if any, made to each Executive Officer as circumstances warrant. Chief Executive Officer Compensation. Robert E. Wheaton became Star's Chief Executive Officer upon the Company's formation in July 1997. Prior to the Company's initial public offering in September 1997, Mr. Wheaton's annual base compensation was established at $187,000 for the fiscal year ended January 26, 1998, based on the philosophy described above. Corporate Deduction for Compensation. Section 162(m) of the Code generally limits to $1.0 million the corporate deduction for compensation paid to certain executive officers, unless certain requirements are met. Star's 1997 Stock Incentive Plan is structured so that any compensation deemed paid to an executive officer upon exercise of an option, with an exercise price equal to the fair market value of the underlying shares on the grant date, will qualify as performance-based compensation that will not be limited by Section 162(m). The Committee intends to monitor regulations issued pursuant to Section 162(m) and to take such actions with respect to the executive compensation program as are reasonably necessary to preserve the corporate tax deduction for executive compensation paid. William P. Foley (Chairman) Norman N. Habermann Thomas G. Schadt The report of the Compensation Committee of the Board of Directors shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that Star specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. 9
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STOCKHOLDER PERFORMANCE GRAPH [PERFORMANCE GRAPH] [Download Table] 9/97 10/97 11/97 12/97 1/98 ------ ------ ------ ----- ------ STAR BUFFET INC STRZ 100.00 119.27 108.85 95.83 102.08 NASDAQ STOCK MARKET (U.S.) INAS 100.00 94.82 95.30 93.80 96.78 DOW JONES RESTAURANTS IRES 100.00 93.68 100.92 99.51 97.74 ---------- The Stock Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that Star specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. 10
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SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The Company was incorporated on July 28, 1997, through the reorganization of direct or indirect wholly-owned subsidiaries of CKE. Prior to the Company's incorporation, the Company's Executive Officers have been employed by CKE or its subsidiaries, and all or substantially all of their compensation paid prior to July 28, 1997 was paid by CKE or its subsidiaries primarily for services rendered to CKE or its subsidiaries. In connection with the organization of the Company, the Company and CKE established an allocated annual base salary of $187,000 for Robert E. Wheaton, the Chief Executive Officer and President of the Company, and an allocated annual base salary of $95,000 for Theodore Abajian, the Chief Financial Officer of the Company. The following table sets forth the compensation awarded to, earned by or paid to the Company's executive officers for each of the two fiscal years ended January 27, 1997 and January 26, 1998: SUMMARY COMPENSATION TABLE [Enlarge/Download Table] LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION ----------------------------- ---------------------------------------- RESTRICTED SECURITIES OTHER ANNUAL STOCK UNDERLYING FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS NAME AND TITLE YEAR ($) ($) ($)(5) ($) (#)(6) ------------------------------ ------- ------------ ---------- -------------- ------------- ---------- Robert E. Wheaton............. 1998(1) 61,298 -- -- 239,237 President and Chief 1997(2) 200,000 70,000 9,344 30,000 Executive Officer Ted Abajian (7)............... 1998(3) 23,293 -- 3,925 15,000 Vice President and 1997(4) 78,092 3,000 1,846 1,500 Chief Financial Officer ---------- (1) Excludes the following amounts earned by Mr. Wheaton from CKE during fiscal 1998: (i) salary in the amount of $160,721, (ii) bonus in the amount of $80,354, (iii) other annual compensation in the amount of $8,820 and (iv) 16,500 options to purchase CKE's common stock. In September 1997, Mr. Wheaton's employment agreement with CKE was modified to provide that CKE pays 25% of his base salary and Star pays the remaining 75%. (2) Represents compensation paid by CKE or its subsidiaries to Mr. Wheaton in his capacity as Executive Vice President of CKE. (3) Excludes the following amounts earned by Mr. Abajian from CKE or its subsidiaries during fiscal 1998: (i) salary in the amount of $63,689, (ii) bonus in the amount of $14,707, and (iii) other annual compensation in the amount of $3,806. (4) Represents compensation paid by CKE or its subsidiaries to Mr. Abajian. (5) "Other Annual Compensation" represents primarily auto related payments to Messrs. Wheaton and Abajian. (6) Represents options to purchase shares of CKE's common stock for fiscal 1997, and represents options 11
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to purchase shares of Star's common stock for fiscal 1998. (7) On April 27, 1998, Theodore Abajian resigned as the Chief Financial Officer of the Company. STOCK OPTIONS The following table sets forth certain information with respect to the stock options granted during the fiscal year ended January 26, 1998 to the Named Executive Officers. OPTION GRANTS IN LAST FISCAL YEAR [Enlarge/Download Table] INDIVIDUAL GRANTS POTENTIAL REALIZABLE --------------------------------------------------------------------------------------------- VALUE AT ASSUMED PERCENTAGE OF ANNUAL RATES OF NUMBER OF TOTAL OPTIONS STOCK PRICE SECURITIES GRANTED TO APPRECIATION FOR UNDERLYING EMPLOYEES IN EXERCISE OF OPTION TERM OPTIONS FISCAL BASE PRICE EXPIRATION -------------------------- NAME GRANTED (#) YEAR(1) ($/SHARE)(2) DATE(3) 5%($) 10%($) ----------------------- ------------ -------------- ------------- -------------- ----------- --------- Robert E. Wheaton 239,237 39.3% $12.00 Sept. 24, 2008 1,808,632 4,564,642 Theodore Abajian 15,000 2.5% $12.00 Sept. 24, 2008 113,400 286,200 ---------- (1) Based on the number of shares being subject to options granted to all employees aggregating 608,308 for the fiscal year ended January 26, 1998. (2) The fair market value of Star's Common Stock on the date of grant. (3) All the options vest 33 1/3% upon the date of grant, 33 1/3% on the first anniversary of the date of grant and 33 1/3% on the second anniversary of the date of grant. 12
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OPTION EXERCISES AND HOLDINGS The following table sets forth certain information with respect to stock options exercised during the fiscal year ended January 26, 1998 and year-end stock option values. AGGREGATE OPTION EXERCISES IN FISCAL 1998 AND FISCAL 1998 YEAR-END OPTION VALUES [Enlarge/Download Table] NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END (#) ($) SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE ---- ----------------- ------------------- ------------------- -------------------- Robert E. Wheaton -- -- 79,746/159,491 -- -- Theodore Abajian -- -- 5,000/10,000 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. During the fiscal year ended January 26, 1998, no executive officer of the Company, except for Mr. Foley, who is Chairman of the Board of the Company and serves as a member of the Compensation Committee thereof, served as a member of the compensation committee or as a director of any other entity, one of whose executive officers serves on the Compensation Committee or is a director of the Company. Mr. Foley is the Chairman of the Board and Chief Executive Officer of CKE. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. Section 16(a) of the Securities Exchange Act of 1934 requires Star's executive officers and directors, and persons who own more than 10% of a registered class of star's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("SEC"). Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish Star with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Forms 5 were required for those persons, Star believes that, during fiscal 1998, all filing requirements applicable to its executive officers, directors and greater than 10% stockholders were satisfied. 13
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CERTAIN TRANSACTIONS The Company and CKE are parties to a three-year Service Agreement, pursuant to which CKE provides the Company with certain multi-unit infrastructure support, including accounting and administration, purchasing services, financial services and real estate services, in exchange for which CKE receives an annual management fee in the amount of $350,000, which may be increased up to 10% per year by CKE based upon increases in CKE's cost of providing such services. Commencing February 24, 1998, the annual management fee was increased to $375,000. Prior to the Company's initial public offering, the Company declared a cash dividend payable to CKE in an aggregate amount equal to approximately $7.9 million. The Company paid the dividend in September 1997 with a portion of the net proceeds from the Company's initial public offering. The Company was incorporated as a Delaware corporation on July 28, 1997. Prior to the completion of the Company's initial public offering, CKE contributed to the Company all of the issued and outstanding shares of capital stock of Summit Family Restaurants Inc. ("Summit") in exchange for 2,600,000 shares of Common Stock of the Company (the "Summit Exchange"). Summit is the parent corporation of HTB Restaurants, Inc. ("HTB"), which operates 16 HomeTown Buffet restaurants as a franchisee of HomeTown Buffet, Inc. (the "HomeTown Franchisor"). Summit was acquired by CKE in July 1996, at which time it was the owner, operator and franchisor of 101 JB's Restaurants and the owner and operator of six Galaxy Diner restaurants. Prior to the Summit Exchange, Summit transferred substantially all of its net assets, including its JB's Restaurant system and Galaxy Diner restaurants, but excluding the shares of capital stock of HTB owned by Summit, to JB's Restaurants, Inc., a newly formed subsidiary of CKE ("JB's"), in exchange for a promissory note (the "JB's Note") with a principal amount equal to CKE's book value of those net assets as of the date of transfer, determined in accordance with generally accepted accounting principles ("GAAP"). JB's continued to operate the JB's Restaurants and related franchise systems and the Galaxy Diner restaurants and assume all of Summit's liabilities, other than liabilities incurred which specifically relate to the restaurant operations of HTB. Immediately following completion of such transfer, and prior to the Summit Exchange, Summit assigned the JB's Note and its rights to payment thereunder to CKE as a dividend. In addition, prior to the Summit Exchange, Taco Bueno Restaurants, Inc., an indirect wholly-owned subsidiary of CKE formerly known as Casa Bonita Incorporated ("Taco Bueno"), transferred substantially all of the net assets relating to its two Casa Bonita restaurants to Summit in exchange for a promissory note (the "Casa Bonita Note") with a principal amount equal to CKE's book value of those net assets (which was estimated at $495,000 as of August 11, 1997) as of the date of transfer, determined in accordance with GAAP. Summit continued to operate the Casa Bonita restaurants and assume substantially all of Taco Bueno's liabilities relating to those restaurant operations. Prior to the completion of the Company's initial public offering, all of the parties to the foregoing transactions were direct or indirect wholly-owned subsidiaries of CKE. On February 24, 1998, pursuant to the terms of an Asset Purchase Agreement dated February 10, 1998 (the "Purchase Agreement"), the Company, through its wholly-owned subsidiary Summit, acquired substantially all of the assets of twelve JB's Restaurants for $4,265,000 in cash from JB's. In connection with the Purchase Agreement, Summit and JB's entered into franchise agreements for each of the purchased restaurants pursuant to which JB's granted to Summit the right to use the intangible property rights of JB's. Summit paid to JB's cash in the amount of $485,000 to satisfy all royalty payments due under all of the franchise agreements through the first anniversary of the closing of the transaction. CKE has also agreed to indemnify and hold the Company harmless from any income tax liability attributable to periods ending on or before the consummation of the Company's initial public offering. For periods ending after the consummation of the initial public offering, the Company will pay its income tax liability directly to the appropriate taxing authorities. CKE generally controls any audits and administrative and judicial proceedings with respect to periods ending on or before the consummation of the initial public offering, although CKE cannot compromise or settle any issue that increases the Company's liability without 14
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the Company's prior written consent. The Company generally will control all other audits and administrative and judicial proceedings. INDEPENDENT AUDITORS Selection of an independent auditor is made by the Board of Directors upon consultation with the Audit Committee. Star's independent auditor for the fiscal year ended January 26, 1998, was KPMG Peat Marwick LLP. The Board of Directors will vote upon the selection of an auditor for the current fiscal year at a future Board meeting. Representatives of KPMG Peat Marwick LLP are expected to attend the Meeting and be available to respond to appropriate questions. The representatives of KPMG Peat Marwick LLP also will have an opportunity to make a formal statement, if they so desire. STOCKHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING Pursuant to the rules of the Securities and Exchange Commission, proposals by eligible stockholders (as defined below) which are intended to be presented at Star's Annual Meeting of Stockholders in 1999 must be received by Star by January 26, 1999 in order to be considered for inclusion in Star's proxy materials. The Board of Directors of Star will determine whether any such proposal will be included in its 1999 proxy solicitation materials. An eligible stockholder is one who is the record or beneficial owner of at least 1% or $1,000 in market value of securities entitled to be voted at the 1999 Annual Meeting and has held such securities for at least one year, and who shall continue to own such securities through the date on which the meeting is held. Stockholders are urged to sign and return their proxies without delay. For the Board of Directors WILLIAM P. FOLEY II, Chairman of the Board May 28, 1998 The Annual Report to Stockholders of the Company for the fiscal year ended January 26, 1998 is the Company's Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on April 27, 1998 and which is being mailed concurrently with this Proxy Statement to all stockholders of record as of May 8, 1998. The Annual Report is not to be regarded as proxy soliciting material or as a communication by means of which any solicitation is to be made. 15
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PROXY STAR BUFFET, INC. 440 LAWNDALE DRIVE SALT LAKE CITY, UT 84115 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF STAR BUFFET, INC. The undersigned hereby appoints William P. Foley II and Robert R. Wheaton, and each of them, as Proxies, each with the power to appoint his substitute, and hereby authorizes each of them to represent and to vote as designated below, all the shares of Common Stock of Star Buffet, Inc. held of record by the undersigned on May 8, 1998, at the Annual Meeting of Stockholders to be held on June 30, 1998, and any postponements or adjournments thereof. PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE. -------------------------------------------------------------------------------- FOLD AND DETACH HERE Please mark /X/ your votes as indicated in this example. [Download Table] 1. ELECTION OF DIRECTORS: FOR all of the nominees WITHHOLD AUTHORITY to vote for listed below (except all nominees listed below / / as marked to the contrary below) / / INSTRUCTION: To withhold authority to vote for any individual nominee strike a line through the nominee's name in the list below. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before such meeting or any and all postponements or adjournments thereof. DO YOU PLAN TO ATTEND THE MEETING? YES / / NO / / This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder IF NO DIRECTION IS GIVEN, THE PROXIES WILL VOTE FOR THE NOMINEES LISTED ABOVE, AND IN THEIR DISCRETION ON MATTERS DESCRIBED IN ITEM 2. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. Signature_____________________ Signature if held jointly________________________ Dated:_____________________, 1998 Please sign exactly as the name appears below. When shares are held by joint tenants, both should sign. When signing as an attorney, executor, administrator, trustee or guardian, please give your full title as such. If a corporation, please sign in full corporate name by the President or other authorized officer. If a partnership, please sign in the partnership name by an authorized person. -------------------------------------------------------------------------------- FOLD AND DETACH HERE

Dates Referenced Herein   and   Documents Incorporated by Reference

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This ‘DEF 14A’ Filing    Date First  Last      Other Filings
1/26/9916
For Period End:6/30/98217
5/28/98216
Filed on:5/26/98
5/8/98217
4/27/98131610-K
2/24/98158-K,  8-K/A
2/13/985SC 13G
2/10/9815
1/26/9891610-K
10/31/9758-K
8/11/9715
7/28/97915S-1
1/27/9712
7/9/965
3/29/965
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