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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
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NATHAN'S FAMOUS, INC.
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(Name of Registrant as Specified in its Charter)
NATHAN'S FAMOUS, INC.
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NATHAN'S FAMOUS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 9, 2004
To our Stockholders:
The Annual Meeting of Stockholders of NATHAN'S FAMOUS, INC. will be held on
Thursday, September 9, 2004 at the Conference Room on the Lower Level at 1400
Old Country Road, Westbury, New York at 10:00 a.m. At the meeting, you will be
asked to vote on:
- The election of eight directors to the Board of Directors;
- Any other matters that properly come before the meeting.
If you are a stockholder of record at the close of business on July 16,
2004, you are entitled to vote at the meeting or at any adjournment or
postponement of the meeting. This notice and proxy statement are first being
mailed to stockholders on or about July 26, 2004.
Please sign, date and return the enclosed proxy as soon as possible so your
shares may be voted as you direct.
By Order of the Board of Directors,
RONALD G. DEVOS
Secretary
Dated: Westbury, New York
July 26, 2004
NATHAN'S FAMOUS, INC.
1400 OLD COUNTRY ROAD
WESTBURY, NEW YORK 11590
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, SEPTEMBER 9, 2004
Our annual meeting of stockholders will be held on Thursday, September 9,
2004 at the Conference Room on the Lower Level at 1400 Old Country Road,
Westbury, New York at 10:00 a.m. Our Board of Directors is soliciting your proxy
to vote your shares of common stock at the annual meeting. This proxy statement,
which was prepared by our management for the Board, contains information about
the matters to be considered at the meeting or any adjournments or postponements
of the meeting and is first being sent to stockholders on or about July 26,
2004.
ABOUT THE MEETING
What is being considered at the meeting?
You will be voting for the election of eight directors for a term of 1 year
or until their successors are elected and qualified.
In addition, our management will report on our performance during fiscal
2004 and respond to your questions.
Who is entitled to vote at the meeting?
You may vote if you owned stock as of the close of business on July 16,
2004. Each share of stock is entitled to one vote.
How do I vote?
You can vote in two ways:
1. By attending the meeting; or
2. By completing, signing and returning the enclosed proxy card.
Can I change my mind after I vote?
Yes, you may change your mind at any time before the polls close at the
meeting. You can do this by (1) signing another proxy with a later date and
returning it to us prior to the meeting, or (2) voting again at the meeting.
What if I return my proxy card but do not include voting instructions?
Proxies that are signed and returned but do not include voting instructions
will be voted FOR the election of the nominee directors.
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts with brokers and/or our transfer
agent. Please vote all of these shares. We recommend that you contact your
broker and/or our transfer agent to consolidate as many accounts as possible
under the same name and address. Our transfer agent is American Stock Transfer &
Trust Company, 718-921-8000.
Will my shares be voted if I do not provide my proxy?
Yes, if they are held in a brokerage account. Your shares may be voted
under certain circumstances if they are held in the name of the brokerage firm.
Brokerage firms generally have the authority to vote customers unvoted shares,
which are called "broker non-votes," on certain routine matters. Shares
represented by broker non-votes will be counted as voted by the brokerage firm
in the election of directors. When a brokerage firm votes its customer's unvoted
shares, these shares are also counted for purposes of establishing a quorum.
If you hold your shares directly in your own name, they will not be voted
if you do not provide a proxy.
How many votes must be present to hold the meeting?
Your shares are counted as present at the meeting if you attend the meeting
and vote in person or if you properly return a proxy by mail. In order for us to
conduct our meeting, a majority of our outstanding shares as of July 16, 2004
must be present at the meeting, in person or by proxy. This is referred to as a
quorum. On July 16, 2004, we had 5,213,904 shares issued and outstanding,
excluding treasury shares.
What vote is required to elect directors?
Directors are elected by a plurality of the votes cast. Abstentions will
have no effect on the voting outcome with respect to the election of directors.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Our Certificate of Incorporation presently provides for a Board of
Directors consisting of not less than three nor more than twenty-seven
directors. Our Board of Directors now consists of eight directors, as set forth
below.
PRINCIPAL DIRECTOR
NAME AGE OCCUPATION SINCE
---- --- ---------- --------
Wayne Norbitz.................. 56 President, Chief Operating Officer and Director 1989
Robert J. Eide(1)(2)........... 51 Chairman and Chief Executive Officer -- Aegis 1987
Capital Corp.
Brian S. Genson(1)(2).......... 55 President -- Pole Position Investments 1999
Barry Leistner(1)(2)........... 53 President and Chief Executive Officer -- Koenig 1989
Iron Works, Inc.
Howard M. Lorber............... 55 President and Chief Operating Officer -- New 1987
Valley Corp.
Donald L. Perlyn............... 61 President -- Miami Subs Corporation 1999
A. F. Petrocelli............... 60 President and Chairman of the Board United 1993
Capital Corp.
Charles Raich(1)............... 61 Managing Partner Raich, Ende, Malter & Co., LLP 2004
---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Unless you indicate otherwise, shares represented by executed proxies will
be voted FOR the election as directors of the persons listed above. If any of
them is unavailable, the shares will be voted for a substitute nominee
designated by the Board of Directors. We have no reason to believe that any of
the nominees will be unavailable or, if elected, will decline to serve.
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DIRECTOR BIOGRAPHIES
The following is a brief account of our directors' business experience:
ROBERT J. EIDE has been a director of Vector Group Ltd., a company engaged
through its subsidiaries in the manufacture and sale of cigarettes in the United
States and Russia, and VGR Holding, Inc., since November 1993. Mr. Eide has been
the Chairman and Chief Executive Officer of Aegis Capital Corp., a registered
broker-dealer, since 1984. Mr. Eide also serves as a director of Ladenberg
Thalman Financial Services, Inc., an investment banking and brokerage firm.
BRIAN S. GENSON has been President of Pole Position Investments, a company
engaged in the motor sport business, since 1990. Mr. Genson also serves as a
managing director of F1 Action located in Stanstead, England and is engaged in
investing in the motor sport industry. Mr. Genson was also responsible for
introducing Ben and Jerry's Ice Cream Company to the Japanese market. Mr. Genson
previously served as a director of Nathan's from 1987 to 1989.
BARRY LEISTNER has been President and Chief Executive Officer of Koenig
Iron Works, Inc., a company engaged in the fabrication and erection of
structural steel, since 1979. Mr. Leistner is also engaged in general
construction and real estate development in New York.
HOWARD M. LORBER has been Chairman of the Board since 1990, Chief Executive
Officer since 1993 and a director since 1987. Mr. Lorber has been President and
Chief Operating Officer of New Valley Corporation, a company engaged, through
its subsidiaries, in the real estate business in the United States, since
November 1994 and has served as a director of New Valley Corporation since 1991.
Mr. Lorber has been President, Chief Operating Officer and a director of Vector
Group Ltd., a holding company and an affiliate of New Valley Corporation, since
January 2001. Mr. Lorber has been Chairman of the Board of Ladenberg Thalman
Financial Services, Inc., an investment banking and brokerage firm, since May
2001. He has been the Chairman of Hallman & Lorber Associates, Inc., an employee
benefit and pension consulting firm, and various affiliates, since 1975. Mr.
Lorber has been a stockholder and registered representative of Aegis Capital
Corp., a broker-dealer and member firm of the NASD, since 1984. Mr. Lorber also
serves as a director of United Capital Corp., a manufacturing and real estate
company, since May 1991and Prime Hospitality Corporation, an owner and operator
of hotel properties, since May 1994. He is also a trustee of Long Island
University.
WAYNE NORBITZ has been an employee since 1975 and has been President since
October 1989. He previously held the positions of Director of Operations, Vice
President of Operations, Senior Vice President of Operations and Executive Vice
President. Prior to joining us, Mr. Norbitz held the position of Director of
Operations of Wetson's Corporation.
DONALD L. PERLYN has been an Executive Vice President since September 2000.
Prior to our merger with Miami Subs Corporation, Mr. Perlyn was a member of
Miami Subs' board of directors. In July 1998, Mr. Perlyn was appointed President
and Chief Operating Officer of Miami Subs and continues to serve in that
capacity. Prior to July 1998, Mr. Perlyn had been Miami Subs' Executive Vice
President of Franchise Development since March 1992. From September 1990 to
February 1992, Mr. Perlyn served as Miami Subs' Senior Vice President of
Franchising and Development. Between August 1990 and December 1991, he was
Senior Vice President of Franchising and Development for QSR, Inc., one of Miami
Subs' predecessors and an affiliate. Mr. Perlyn also serves as a director of
IMSI, Inc., a software company, affiliated with DCDC, the former owner of Arthur
Treacher's, Inc.
A. F. PETROCELLI has been the Chairman of the Board, President and Chief
Executive Officer of United Capital Corp., a company engaged in the ownership
and management of real estate and the manufacture and sale of engineered
products, for more than the last five years. Mr. Petrocelli is also a director
of Prime Hospitality Corp., an owner and operator of hotel properties, since
1992 and Chairman, Chief Executive Officer and President since 1998. He is a
director of Philips International Realty Corp., a real estate investment trust,
since 1997 and a director of the Boyar Value Fund, Inc., a public mutual fund,
since 1997.
CHARLES RAICH has been the Managing Partner for more than the past five
years of Raich, Ende, Malter & Co. LLP, an independent public accounting firm,
which he founded in 1972. His early career includes
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positions at both Lybrand, Ross Brothers and Montgomery and Gruntal & Co. Mr.
Raich is a graduate of Hofstra University and is a certified public accountant.
DIRECTOR INDEPENDENCE
The Board of Directors has determined that each of Messrs. Eide, Genson,
Leistner, Petrocelli and Raich are independent under Nasdaq Rule 4200.
DIRECTORS' COMPENSATION
Directors who are not our employees receive an annual fee of $7,500 and a
fee of $750 for each Board of Directors or committee meeting attended. In
addition, members of committees of the Board of Directors also receive an annual
fee of $1,000 for each committee on which they serve.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
There were four meetings of the Board of Directors during the fiscal year
ended March 28, 2004. Each director attended or participated in all of the
meetings of the Board of Directors and the committees thereof on which he
served.
For the fiscal year ended March 28, 2004, there were four meetings of the
Audit Committee and one meeting of the Compensation Committee. Our Audit
Committee is involved in discussions with our independent auditors with respect
to the scope and results of our year-end audit, our quarterly results of
operations, our internal accounting controls and the professional services
furnished by the independent auditors. See "Audit Committee Report." A copy of
our Audit Committee Charter is attached as Annex A to this proxy statement and
is available on our website at www.nathansfamous.com.
The Compensation Committee recommends to the Board of Directors executive
compensation and the granting of stock options to key employees. See
"Compensation Committee Report on Executive Compensation." A copy of our
Compensation Committee Charter is attached as Annex B to this proxy statement
and is available on our website at www.nathansfamous.com.
To date, our company has not been required to have a standing nominating
committee. Consequently, we had no such committee during fiscal 2004 and,
accordingly, we have no nominating committee charter. Our entire Board of
Directors, including all of our independent directors, participate in the
consideration of director nominees and all of them approved the nominees for
inclusion in this proxy statement.
STOCKHOLDER NOMINEES FOR DIRECTOR
Any stockholder who wants to nominate a candidate for election to the Board
must deliver timely notice to our Secretary at our principal executive offices.
Pursuant to our by-laws, in order to be timely, the notice must be delivered
- in the case of an annual meeting, not less than 60 nor more than 90 days
prior to the anniversary date of the immediately preceding annual meeting
of stockholders, although if we did not hold an annual meeting or the
annual meeting is called for a date that is more than 30 days before or
more than 60 days after the anniversary date of the prior year's annual
meeting, the notice must be received not earlier than the close of
business on the 90th day prior to such annual meeting and not later than
the close of business on the later of the 60th day prior to such annual
meeting or the 10th day following the day on which public announcement of
the date of such meeting is first made by us; and
- in the case of a special meeting of stockholders called for the purpose
of electing directors, the notice must be received not earlier than the
close of business on the 90th day prior to such special meeting and not
later than the close of business on the later of the 60th day prior to
such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the board of directors to be elected at such
meeting.
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The stockholder's notice to the Secretary must set forth (1) as to each
person whom the stockholder proposes to nominate for election as a director (a)
his name, age, business address and residence address, (b) his principal
occupation and employment, (c) the number of shares of common stock of Nathan's
which are owned beneficially or of record by him and (d) any other information
relating to the nominee that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Exchange Act,
and the rules and regulations promulgated thereunder; and (2) as to the
stockholder giving the notice (a) his name and record address, (b) the number of
shares of common stock of the corporation which are owned beneficially or of
record by him, (c) a description of all arrangements or understandings between
the stockholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
the stockholder, (d) a representation by him that he is a holder of record of
stock of Nathan's entitled to vote at such meeting and that he intends to appear
in person or by proxy at the meeting to nominate the person or persons named in
his notice and (e) any other information relating to the stockholder that would
be required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. The notice delivered by a stockholder must be
accompanied by a written consent of each proposed nominee to being named as a
nominee and to serve as a director if elected. The stockholder must be a
stockholder of record on the date on which he gives the notice described above
and on the record date for the determination of stockholders entitled to vote at
the meeting.
POLICY FOR SHAREHOLDER COMMUNICATIONS
Mail can be addressed to Directors in care of the Office of the Secretary,
Nathan's Famous, Inc., 1400 Old Country Road, Suite 400, Westbury, NY 11590. At
the direction of the Board of Directors, all mail received will be opened and
screened for security purposes. The mail will then be logged in. All mail, other
than trivial or obscene items, will be forwarded. Mail addressed to a particular
Director will be forwarded or delivered to that Director. Mail addressed to
"Outside Directors" or "Non-Management Directors" will be forwarded or delivered
to each of the non-employee directors. Mail addressed to the "Board of
Directors" will be forwarded or delivered to the Chairman of the Board.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
Our Board of Directors encourages Director attendance at our Annual
Meetings of Stockholders. All of our Directors attended last year's Annual
Meeting.
5
SECURITY OWNERSHIP
The following table sets forth as of July 9, 2004, certain information with
regard to ownership of our common stock by (i) each beneficial owner of 5% or
more of our common stock, based solely on filings made with the Securities and
Exchange Commission; (ii) each director and executive officer named in the
"Summary Compensation Table" below; and (iii) all of our executive officers and
directors as a group:
COMMON STOCK PERCENT
NAME AND ADDRESS(1) BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
Steel Partners II L.P. ..................................... 1,059,637 20.2%
Quest Equities Corp. ....................................... 360,000 6.9%
Dimensional Fund Advisors Inc. ............................. 332,400 6.4%
Lloyd I. Miller, III........................................ 293,896 5.6%
Howard M. Lorber(2)......................................... 973,079 16.6%
Wayne Norbitz(3)............................................ 208,000 3.9%
Robert J. Eide(4)........................................... 159,220 3.0%
Barry Leistner(5)........................................... 84,167 1.6%
A. F. Petrocelli(5)......................................... 132,667 2.5%
Donald L. Perlyn(6)......................................... 204,225 3.8%
Brian S. Genson(7).......................................... 27,301 *
Charles Raich(8)............................................ 5,510 *
Ronald G. DeVos(9).......................................... 85,833 1.6%
Donald P. Schedler(10)...................................... 28,667 *
Directors and officers as a group (13 persons)(11).......... 1,853,667 28.0%
---------------
* Less than 1%
(1) The addresses of the individuals and entities in this table are: Steel
Partners II, L.P. 590 Madison Avenue, 32nd Floor, New York, New York
10022; Quest Equities Corp., 8 Old Canal Crossing, Farmington,
Connecticut 06032; Lloyd I. Miller III, 4550 Gordon Drive, Naples,
Florida 34102; Dimensional Fund Advisors Inc., 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401; Robert J. Eide and Howard M.
Lorber, 70 East Sunrise Highway, Valley Stream, New York 11581; Barry
Leistner, 223 West 19th Street, New York, New York 10011; Brian S.
Genson, 100 Crystal Court, Hewlett, New York 11557; Donald L. Perlyn,
6300 N.W. 31st Avenue, Fort Lauderdale, Florida 33309; A. F.
Petrocelli, 9 Park Place, Suite 401, Great Neck, New York 11021;
Charles Raich, 90 Merrick Avenue, East Meadow, New York 11554; and
Wayne Norbitz, Ronald G. DeVos and Donald P. Schedler, 1400 Old
Country Road, Suite 400, Westbury, New York 11590.
(2) Includes options exercisable within 60 days to purchase an aggregate
of 481,667 shares and warrants exercisable within 60 days to purchase
150,000 shares. Also includes 75,000 shares owned by the Howard M.
Lorber Irrevocable Trust, as to which Mr. Lorber disclaims beneficial
ownership.
(3) Includes options exercisable within 60 days to purchase 165,000
shares.
(4) Includes options exercisable within 60 days to purchase 84,167 shares
and 75,000 shares owned by the Howard M. Lorber Irrevocable Trust, for
which Mr. Eide is trustee.
(5) Includes options exercisable within 60 days to purchase 84,167 shares.
(6) Includes options exercisable within 60 days to purchase 204,225
shares.
(7) Includes options exercisable within 60 days to purchase 24,167 shares.
(8) Shares owned by Raich, Ende, Malter & Co., LLP, of which Mr. Raich is
managing partner.
(9) Includes options exercisable within 60 days to purchase 85,833 shares.
(10) Includes options exercisable within 60 days to purchase 26,667 shares.
(11) Includes 443,609 shares beneficially owned by Messrs. Eide, Genson,
Lorber, Perlyn, Petrocelli, Raich, Leistner, Norbitz, DeVos, Schedler,
Gatoff, Paley and Watts after elimination of shares as to which
beneficial ownership is shared by more than one member of this group
(see notes 2 and 4, above), 1,260,058 shares subject to stock options
exercisable within 60 days and 150,000 shares subject to warrants
exercisable within 60 days by Mr. Lorber.
6
MANAGEMENT
OFFICERS OF THE COMPANY
Our executive officers are:
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Howard M. Lorber............... 55 Chairman of the Board and Chief Executive Officer
Wayne Norbitz.................. 56 President and Chief Operating Officer
Donald L. Perlyn............... 61 Executive Vice President
Carl Paley..................... 67 Senior Vice President -- Franchise and Real Estate
Development
Ronald G. DeVos................ 49 Vice President -- Finance, Chief Financial Officer and
Secretary
Donald P. Schedler............. 51 Vice President -- Development, Architecture and Construction
Eric Gatoff.................... 35 Vice President -- Corporate Counsel
Randy Watts.................... 48 Vice President -- Franchise Operations
CARL PALEY has been Senior Vice President-Franchise and Real Estate
Development since April 1993. Mr. Paley initially joined us as Director of
Franchise Development in May 1989 and was promoted to Vice
President -- Franchise Development in September 1989 before being promoted to
Senior Vice President. From November 1985 to May 1989 he provided consulting
services to franchise companies through Carl Paley Enterprises. Mr. Paley served
as Vice President of Franchising of The Haagen-Dazs Shoppe Co., Inc. from June
1978 to November 1985. Prior to November 1985, Mr. Paley was a Vice President of
Carvel Corporation and was responsible for marketing, public relations,
advertising, promotions and training.
RONALD G. DEVOS joined us as Vice President -- Finance and Chief Financial
Officer in January 1995 and became Secretary in April 1995. Prior to January
1995, he was Controller of a large Wendy's franchisee, from June 1993 to
December 1994. Mr. DeVos was Vice President -- Controller of Paragon Steakhouse
Restaurants, Inc., a wholly owned subsidiary of Kyotaru Company Ltd., from May
1989 to October 1992, and Controller of Paragon Restaurant Group, Inc. and its
predecessors, from October 1984 to May 1989. Mr. DeVos holds an M.B.A. from St.
John's University and a B.A. from Queens College.
DONALD P. SCHEDLER has been Vice President-Development, Architecture and
Construction since January 2000. Mr. Schedler initially joined us in March 1989
as Director of Architecture and Construction and was made Vice
President -- Architecture and Construction in February 1991 before being
promoted to his current position. Prior to March 1989, he was a Director of
Construction for The Riese Organization, restauranteurs, from January 1988 to
February 1989 and an Associate and Project Architect with Frank Guillot
Architects, Ltd. from June 1985 to January 1988. Mr. Schedler is a registered
architect in the states of Vermont and New York, and holds a B.A. degree in
economics from Susquehanna University and a M.A. degree in architecture from
Syracuse University.
ERIC GATOFF joined us as Vice President and Corporate Counsel in October
2003. Prior to October 2003, Mr. Gatoff was a partner at Grubman Indursky &
Schindler, P.C. , a law firm specializing in intellectual property,
entertainment and media law. Mr. Gatoff is a member of the New York State Bar
Association and holds a B.B.A. in Finance from George Washington University and
a J.D. from Fordham University School of Law.
RANDY K. WATTS was appointed Vice President of Franchise Operations in
June, 2004. Mr. Watts initially joined us as a District Manager in May of 1993,
was promoted to Director of Franchise Operations in September of 1997, and was
made Senior Director of Franchise Operations in January of 2000 before being
promoted to his current position. Prior to 1993, Mr. Watts was Regional Food
Service Manager for McCrory Stores, where he worked from 1975-1993.
For the biographies of Messrs. Lorber, Norbitz and Perlyn, please see
"Proposal 1 -- Election of Directors -- Director Biographies."
7
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by us to our Chief
Executive Officer and each of the four other highest paid executive officers for
the three fiscal years ended March 28, 2004, March 30, 2003 and March 31, 2002:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------
------------------------------------- RESTRICTED SECURITIES
NAME AND FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARD($) OPTIONS(#) COMPENSATION(2)
------------------ ------ -------- -------- --------------- ---------- ---------- ---------------
Howard M. Lorber............... 2004 $ 1 $250,000 $ -- -- -- $ 540
Chairman of the Board and 2003 1 250,000 -- -- -- 492
Chief Executive Officer 2002 1 250,000 -- -- 100,000 725
Wayne Norbitz.................. 2004 $275,000 $100,000 $ -- -- -- $14,041
President and Chief 2003 275,000 65,000 -- -- -- 13,184
Operating Officer 2002 275,000 40,000 -- -- 30,000 13,423
Donald L. Perlyn............... 2004 $200,000 $ 60,000 $ -- -- -- $ 4,790
Executive Vice President 2003 200,000 50,000 -- -- -- 4,897
2002 200,000 13,333 -- -- 17,500 5,855
Ronald G. DeVos................ 2004 $155,000 $ 30,000 $ -- -- -- $ 1,601
Vice President -- Finance and 2003 155,000 25,000 -- -- -- 1,355
Chief Financial Officer 2002 155,000 16,667 -- -- 12,500 2,310
Donald P. Schedler............. 2004 $140,000 $ 25,000 $ -- -- -- $ 1,545
Vice President -- Architecture 2003 140,000 15,000 -- -- -- 1,480
and Development 2002 140,000 10,000 -- -- 10,000 1,912
---------------
(1) Except where otherwise indicated, no other annual compensation is shown
because the amounts of perquisites and other non-cash benefits provided by
us do not exceed the lesser of $50,000 or 10% of the total annual base
salary and bonus disclosed in this table for the respective officer.
(2) The amounts disclosed in this column include our contributions on behalf of
the named executive officer to the Nathans' 401(k) retirement plan and
premiums for life and/or disability insurance, respectively, for fiscal
2004, for Mr. Lorber in the sums of $0 and $540, for Mr. Norbitz in the sums
of $1,643 and $12,398, for Mr. Perlyn in the sums of $0 and $4,790, for Mr.
DeVos in the sums of $1,061 and $540, and for Mr. Schedler in the sums of
$1,005 and $540.
EMPLOYMENT CONTRACTS
We entered into a new employment agreement with Howard M. Lorber, our
Chairman and Chief Executive Officer, effective as of January 1, 2000. The
agreement expires December 31, 2004. Pursuant to the agreement, Mr. Lorber
receives a base salary of $1 and an annual bonus equal to 5 percent of our
consolidated pre-tax earnings for each fiscal year, with a minimum bonus of
$250,000. The agreement further provides for a three-year consulting period
after the termination of employment during which Mr. Lorber will receive
consulting payments in an annual amount equal to two-thirds of the average of
the annual bonuses awarded to him during the three fiscal years preceding the
fiscal year of termination of his employment. The employment agreement also
provides for life insurance and for the continuation of certain benefits
following death or disability. In connection with the agreement, we issued to
Mr. Lorber 25,000 shares of common stock.
In the event that Mr. Lorber's officer's employment is terminated without
cause, he is entitled to receive his salary and bonus for the remainder of the
contract term. The employment agreement further provides that in the event there
is a change in the control, as defined in the agreement, Mr. Lorber has the
option, exercisable within one year after such event, to terminate his
employment agreement. Upon such termination, he has the right to receive a lump
sum cash payment equal to the greater of (A) his salary and annual bonuses for
the remainder of the employment term (including a prorated bonus for any partial
fiscal year), which bonus shall be equal to the average of the annual bonuses
awarded to him during the three fiscal years preceding the fiscal year of
termination; or (B) 2.99 times his salary and annual bonus for the fiscal year
8
immediately preceding the fiscal year of termination, as well as a lump sum cash
payment equal to the difference between the exercise price of any exercisable
options having an exercise price of less than the then current market price of
our common stock and such then current market price. In addition, we will
provide Mr. Lorber with a tax gross-up payment to cover any excise tax due.
In December 1992, we entered into an employment agreement with Wayne
Norbitz, for a term expiring on December 31, 1996, providing for an annual base
salary of $288,750, as amended to date, and various benefits, including
participation in our executive bonus program. The agreement also provides, among
other things, that, if Mr. Norbitz is terminated without cause, we will pay Mr.
Norbitz an amount equal to his then annual salary and benefits for a six-month
period following delivery of the termination notice plus a severance benefit of
one year's annual compensation. The agreement, as amended, provides that Mr.
Norbitz shall have the right, exercisable for a six-month period, to terminate
the agreement and receive an amount equal to three times his compensation during
the most recent fiscal year, less $100, in the event of a change in control of
the company. The employment agreement was extended through December 31, 1997, on
the original terms and automatically renews for successive one year periods
unless 180 days prior written notice is delivered to Mr. Norbitz. No such
non-extension notice has been delivered to date.
On September 30, 1999, Miami Subs entered into an employment agreement with
Donald L. Perlyn, pursuant to the merger agreement, for a term expiring on
September 30, 2003, under which he currently receives annual base compensation
of $210,000, and certain other benefits, including participation in our
executive bonus program. We guaranteed the obligations of Miami Subs under the
agreement. The term of the agreement automatically extends for successive one
year periods unless 180 days prior written notice is delivered by one party to
the other. In the event that notice of non-extension is delivered, Mr. Perlyn is
entitled to be paid an amount equal to his base salary as then in effect. The
agreement also provides, among other things, that if Mr. Perlyn is terminated
without cause, we will pay Mr. Perlyn an amount equal to three times his base
salary as in effect at the time of his termination. The agreement provides that
Mr. Perlyn shall have the right, exercisable for a thirty-day period, to
terminate the agreement and receive an amount equal to three times his base
salary, together with a pro rata portion of his bonus, for the most recent
fiscal year, in the event of a change in control of Miami Subs. No non-extension
notice has been delivered to date.
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted to the officers named in the Summary
Compensation Table during the fiscal year ended March 28, 2004.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised
during the year ended March 28, 2004 by the executive officers named in the
Summary Compensation Table and the value of unexercised options held by them as
of June 28, 2004:
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED AT FISCAL YEAR END AT FISCAL YEAR END(1)
ON --------------------------- ---------------------------
NAME EXERCISE VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------------- ----------- ------------- ----------- -------------
Howard M. Lorber..... -- -- 631,667 33,333 $1,526,633 $91,667
Wayne Norbitz........ -- -- 165,000 10,000 405,245 27,500
Donald L. Perlyn..... -- -- 204,225 5,833 564,025 16,042
Ronald G. DeVos...... -- -- 85,833 4,167 199,533 11,458
Donald P. Schedler... -- -- 26,667 3,333 64,208 9,167
---------------
(1) Based upon the closing price of our common stock of $5.95 on March 26, 2004
(the last trading day in fiscal 2004).
9
STOCK OPTION AND OTHER PLANS
1992 Stock Option Plan.
In December 1992, in order to attract and retain persons necessary for our
success, we adopted the 1992 Stock Option Plan, as amended, covering up to
525,000 shares of common stock, under which our officers, directors and key
employees were eligible to receive incentive and/or non-qualified stock options.
The 1992 Plan, which expired on December 2, 2002, provides that it will be
administered by the Board of Directors or a committee designated by the Board of
Directors which consists of "non-employee directors" as defined in the
Securities Exchange Act of 1934. The Compensation Committee currently
administers the 1992 Plan. The selection of participants, allotments of shares,
determination of price and other conditions relating to options are determined
by the Board of Directors, or a committee thereof, in the Board's sole
discretion. Incentive stock options granted under the 1992 Plan are exercisable
for a period of up to ten years from the date of grant at an exercise price
which is not less than the fair market value of the common stock on the date of
the grant, except that the term of an incentive stock option granted under the
1992 Plan to a stockholder owning more than 10% of the outstanding common stock
may not exceed five years and its exercise price may not be less than 110% of
the fair market value of the common stock on the date of grant. At March 28,
2004, options for 338,000 shares, having an average exercise price of $3.9574
and exercisable for a ten-year period from their respective grant dates, had
been granted and were outstanding under the 1992 Plan.
Through July 9, 2004, 2,000 options granted under the 1992 Plan have been
exercised, 176,166 options have been canceled, all of which have been reissued,
and 185,000 options have lapsed since the inception of the Plan.
Outside Director Plan.
We adopted the Nathan's Outside Director Stock Option Plan as of June 1,
1994 which covers up to 200,000 shares of common stock. The primary purposes of
the Outside Director Plan are to attract and retain well-qualified persons for
service as directors of Nathan's and to provide our outside directors with the
opportunity to increase their proprietary interest in Nathan's, and thereby to
increase their personal interest in our success and further align their
interests with the interests of our stockholders through the grant of options to
purchase shares of common stock. Through July 9, 2004, options to purchase up to
200,000 shares of common stock have been issued, options to purchase 150,000
shares are outstanding, options to purchase 50,000 shares have been canceled and
no options have lapsed under the Outside Director Plan. Since the Outside
Director Plan is a formula plan which provided for grants only through June
1996, no additional shares may be granted under the Outside Director Plan.
Under the Outside Director Plan, each Non-Employee director then serving
received:
- on September 8, 1994, the date on which the Outside Director Plan was
approved by stockholders, options to purchase 25,000 shares of common
stock at a price of $6.25 per share, which was the average of the mean
between the last reported "bid" and "asked" prices of shares of common
stock on the five trading days preceding June 1, 1994;
- on June 1, 1995, options to purchase 12,500 shares of common stock at a
price of $4.50 per share, which was the average of the mean between the
last reported "bid" and "asked" prices of shares of common stock on the
five trading days preceding June 1, 1995; and
- on June 1, 1996, options to purchase 12,500 shares of common stock at a
price of $3.40 per share, which was the average of the mean between the
last reported "bid" and "asked" prices of the common stock on the five
trading days immediately preceding June 1, 1996.
Options awarded to each Non-Employee director vest over a period of two
years, subject to forfeiture under conditions specified in the option
agreements, and are exercisable by the non-employee director upon vesting.
Accordingly, all of the options currently outstanding under the Outside Director
Plan are now fully vested.
10
The Board of Directors has the responsibility and authority to administer
and interpret the provisions of the Outside Director Plan. The Board shall
appropriately adjust the number of shares for which awards may be granted under
the Outside Director Plan in the event of reorganization, recapitalization,
stock split, reverse stock split, stock dividend, exchange or combination of
shares, merger, consolidation, rights offering, or any change in capitalization.
The Board of Directors may at any time amend, rescind or terminate the Outside
Director Plan, as it shall deem advisable; provided, however that:
- no change may be made in awards previously granted under the Outside
Director Plan which would impair participants' rights without their
consent; and
- no amendment to the Outside Director Plan shall be made without approval
of Nathan's stockholders if the effect of the amendment would be to:
- increase the number of shares reserved for issuance under the Outside
Director Plan;
- change the requirements for eligibility under the Outside Director Plan;
or
- materially modify the method of determining the number of options awarded
under the Outside Director Plan.
1998 Stock Option Plan
In April 1998, our Board of Directors adopted the Nathan's Famous, Inc.
1998 Stock Option Plan, under which any of our directors, officers, employees or
consultants, or those of a subsidiary or an affiliate, may be granted options to
purchase an aggregate 500,000 shares of common stock. The 1998 Plan is to be
administered by the Board of Directors of Nathan's; provided, however, that the
Board may, in the exercise of its discretion, designate from among its members a
compensation committee or a stock option committee consisting of no fewer than
two "non-employee directors", as defined in the Securities Exchange Act of 1934.
The Compensation Committee currently administers the 1998 Plan. Subject to the
terms of the 1998 Plan, the Compensation Committee may determine and designate
those directors, officers, employees and consultants who are to be granted stock
options under the 1998 Plan and the number of shares to be subject to options
and the term of the options to be granted, which term may not exceed ten years.
The Board of Directors or the committee shall also, subject to the express
provisions of the 1998 Plan, have authority to interpret the 1998 Plan and to
prescribe, amend and rescind the rules and regulations relating to the 1998
Plan. Only non-qualified stock options may be granted under the terms of the
1998 Plan. The exercise price for the options granted under the 1998 Plan will
be not less than the fair market value on the date of grant. The option price,
as well as the number of shares subject to the option, shall be appropriately
adjusted by the committee in the event of stock splits, stock dividends,
recapitalizations, and other specified events involving a change in Nathan's
capital.
On July 9, 2004, there were options outstanding to purchase an aggregate
500,000 shares of common stock with a weighted average exercise price of
$3.3597, each of which has a term of ten years from its grant date are issued
and outstanding. No options have lapsed since the inception of the 1998 Plan.
2001 Stock Option Plan
In September 2001, our stockholders approved the 2001 Stock Option Plan
under which our employees, officers, directors and consultants, and those of our
subsidiaries and affiliates, may be granted options to purchase an aggregate of
350,000 shares of our common stock. The 2001 Plan may be administered by the
Board of Directors or a compensation committee, consisting of two or more
members of the Board of Directors who are non-employee directors, as defined
under the Securities Exchange Act of 1934. Our Compensation Committee
administers the 2001 Plan. Subject to the terms of the 2001 Plan, the Board of
Directors or the Committee may determine and designate those employees and
consultants who are to be granted stock options under the 2001 Plan, the number
of shares to be subject to such options and the term of the options to be
granted, which term may not exceed ten years. The Board of Directors or the
Committee also, subject to the express provisions of the 2001 Plan, has the
authority to interpret the 2001 Plan and to prescribe, amend and rescind the
rules and regulations relating to the 2001 Plan. Only non-qualified stock
options may be granted
11
under the terms of the 2001 Plan. The exercise price for the options granted
under the 2001 Plan will not be less than 85% nor greater than 110% of the fair
market value of our common stock at the date of grant. The option price, as well
as the number of shares subject to options granted or to be granted, shall be
appropriately adjusted by the Committee in the event of stock splits, stock
dividends, recapitalizations and certain other events involving a change in our
capital. Through July 9, 2004, 346,500 options were granted under the 2001 Plan
which have an average exercise price of $3.7576 per share and 3,500 options
remain available for grant.
2002 Stock Incentive Plan
In September 2002, our stockholders approved the 2002 Stock Incentive Plan
under which our employees, officers, directors and consultants, and those of our
subsidiaries and affiliates, may be granted awards of non-qualified stock
options or shares of restricted stock. The maximum number of shares of common
stock which may be issued under the 2002 Plan is 300,000 shares, including up to
100,000 shares of restricted stock. The 2002 Plan may be administered by the
Board of Directors or a compensation committee, consisting of two or more
members of the Board of Directors who are non-employee directors, as defined
under the Securities Exchange Act of 1934. Our Compensation Committee
administers the 2002 Plan. Subject to the terms of the 2002 Plan, the Board of
Directors or the Committee may determine and designate those employees and
consultants who are to be granted awards under the 2002 Plan, the number of
shares to be subject to awards and, within the limits of the 2002 Plan, to set
the terms of the awards. The Board of Directors or the Committee also, subject
to the express provisions of the 2002 Plan, has the authority to interpret the
2002 Plan and to prescribe, amend and rescind the rules and regulations relating
to the 2002 Plan.
Only non-qualified stock options may be granted under the terms of the 2002
Plan. The exercise price for the options granted under the 2002 Plan will not be
less than the fair market value of our common stock at the date of grant. The
term of any option may not exceed ten years. Through July 9, 2004, 50,000
options were granted under the 2002 Plan having an exercise price of $5.62 per
share and 250,000 options remain available for grant.
Restricted stock is common stock that is not freely transferable to the
participant until specified restrictions lapse or specified conditions are met.
The 2003 Plan authorizes the issuance of up to a total of 100,000 shares of
restricted stock. Restricted stock that is forfeited will not count against the
limit on the maximum number of restricted shares. Restricted stock will be
subject to such restrictions as the Committee may impose; provided, that the
term of the restriction cannot be less than one year unless otherwise determined
by the Committee. Unless otherwise provided by the Committee, upon termination
of a participant's employment during the applicable restriction period for any
reason other than death or disability, all shares of restricted stock still
subject to restriction will be forfeited. Upon death or disability of a
participant, awards will provide that the restrictions still in effect will
immediately lapse and the person entitled to receive such shares under law will
take them free and clear of any restriction.
In the event of stock splits, stock dividends, recapitalizations and
certain other events involving a change in our capital, the Committee shall, to
the extent it deems appropriate, adjust the number of shares of stock issuable
under the 2002 Plan, including those issued or to be issued under previously
granted awards.
Upon a change of control, as defined in the 2002 Plan, at the option of the
Committee, all awards become vested immediately and all restrictions will lapse.
12
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
REMAINING AVAILABLE
NUMBER OF SECURITIES FOR FUTURE ISSUANCE
TO BE ISSUED UPON WEIGHTED-AVERAGE UNDER EQUITY
EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OPTIONS OUTSTANDING OPTIONS (EXCLUDING SECURITIES
AND WARRANTS AND WARRANTS REFLECTED IN
PLAN CATEGORY (A) (B) COLUMN (A))(C)
------------- -------------------- ------------------- ---------------------
Equity compensation plans approved by
security holders....................... 1,342,436 $4.3402 253,500
--------- ------- -------
Equity compensation plans not approved by
security holders....................... 650,000 $3.3344 -0-
--------- ------- -------
Total.................................. 1,992,436 $4.0120 253,500
========= ======= =======
401(k) Savings Plan
We sponsor a retirement plan intended to be qualified under Section 401(k)
of the Internal Revenue Code of 1986. All non-union employees over age 21 who
have been employed by us for at least one year are eligible to participate in
the plan. Employees may contribute to the plan on a tax deferred basis up to 15%
of their total annual salary, but in no event more than the maximum permitted by
the Internal Revenue Code ($16,000 in calendar 2004, including $3,000 catch-up
contributions for employees 50 and over). Company contributions are
discretionary. For the plan year ended December 31, 2003, we elected to make
matching contributions at the rate of $.25 per dollar contributed by each
employee vesting at the cumulative rate of 20% per year of service starting one
year after commencement of service and, accordingly, after six years of an
employee's service with us, matching contributions are fully vested. As of March
28, 2004, approximately 67 employees had elected to participate in the plan. For
the fiscal year ended March 28, 2004, we contributed approximately $21,000 to
the 401(k) plan, of which $1,643 was a matching contribution for Mr. Norbitz,
$1,061 was a matching contribution for Mr. DeVos and $1,005 was a matching
contribution for Mr. Schedler.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During fiscal 2004, our Compensation Committee consisted of Messrs. Eide,
Leistner and Genson. None of the Compensation Committee members are employees of
the Company or any of its subsidiaries.
Filings made by companies with the Securities and Exchange Commission
sometimes "incorporate information by reference." This means the company is
referring you to information that has been previously filed with the SEC and
that this information should be considered as part of the filing you are
reading. The Compensation Committee Report, Stock Performance Graph and Audit
Committee Report in this proxy statement are not incorporated by reference into
any other filings with the SEC.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
POLICY
Nathan's cash compensation package for its executive officers consists of
two components: (1) base salary; and (2) annual performance-based bonuses.
Nathan's also provides stock option grants to its executive officers as a means
to promote ownership in the company.
Nathan's Compensation Committee is composed of directors who are not
employees of Nathan's. The Compensation Committee is responsible for the
approval and administration of the base salary level and annual bonus
compensation programs, as well as the grant of stock options to executive
officers and other key employees. In determining executive compensation levels,
the Compensation Committee considers salary and bonus levels which will attract
and retain qualified executives when considered with the other components of
13
Nathan's compensation structure and rewarding executive officers for continuous
improvement in their respective areas which contribute to continual increases in
shareholder value.
Nathan's philosophy for granting stock options is based on the principles
of encouraging executive officers to remain with Nathan's and to encourage
ownership in Nathan's. This provides executive officers with a long-term
interest in Nathan's overall performance and gives them an incentive to manage
with a view toward maximizing long-term shareholder value.
Nathan's used the services of GK Partners, a compensation consulting firm,
in establishing the compensation of Howard M. Lorber, the Chairman of the Board.
BASE SALARY
The base compensation of each of Messrs. Lorber, Norbitz and Perlyn is
established by contract. Messrs. Lorber and Norbitz annually assess the
performance of all other executive officers and Nathan's financial results.
Based on such assessment, Mr. Norbitz or Mr. Lorber may recommend salary
increases. Any recommendations regarding officer compensation are subject to the
terms of any existing employment agreements. Any salary increases are reviewed
and subject to approval by the Compensation Committee.
In determining executive officer salaries, the Compensation Committee
reviews recommendations from Messrs. Lorber and Norbitz, including management's
performance evaluations and Nathan's financial condition.
For more information regarding the compensation and employment arrangements
of Messrs. Lorber and Norbitz and other executive officers, see
"Management -- Employment Contracts".
ANNUAL BONUSES
Executive officers and other key employees are eligible to earn annual
bonuses.
Management establishes performance goals for Nathan's growth and
profitability. Based on these goals, management makes recommendations to the
Compensation Committee as to the level of attainment of financial performance
objectives necessary for bonus awards to be made to the executive officers.
Management also evaluates whether each executive officer has met his specific
objectives. These objectives are both quantitative in nature, such as sales and
revenue goals and cost containment; and qualitative in nature, such as the
development and retention of key personnel, assessment and development of
quality products and services, and management effectiveness. The amount of the
bonus paid to the executive for the prior fiscal year is also taken into
consideration. If all of the company and individual goals are completely met,
management generally recommends that the executive officer receive a bonus in an
amount equal to or in excess of his prior year's bonus. To the extent either the
company or the individual's goals are only partially met, management generally
recommends that a lesser bonus be paid.
At the end of each year, the Compensation Committee reviews the extent to
which the company has actually attained its performance goals. The Compensation
Committee also reviews recommendations by management regarding the extent to
which each executive officer has met his individual objectives, regardless of
whether such objectives are quantitative. The Committee makes its determination
regarding executive officer bonuses based on the recommendations of management,
the earnings of the company and taking into consideration the amount of the
executive's bonus for the prior year. Specific relative weights are not assigned
to each factor.
STOCK OPTION GRANTS
Options to purchase common stock may be granted annually to executive
officers and key employees under Nathan's various stock option plans. Grants are
made at an option price of 100% of the market value on the date of grant.
Nathan's philosophy in granting stock options is to increase executive officer
ownership in Nathan's. Executive officers are incentivized to manage with a view
toward maximizing long-term shareholder value. In determining the total number
of options to be granted annually to all recipients, including executive
14
officers, the Compensation Committee considers the number of options already
held by the executive officer which are in or near-the-money and the performance
of Nathan's during the immediately preceding year. During fiscal 2004, the
Compensation Committee determined not to grant options to executive officers
other than the grant of options to Eric Gatoff in order to induce him to enter
into Nathan's employ.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Under the employment agreement between Nathan's and Howard M. Lorber,
Chairman of the Board and Chief Executive Officer, Mr. Lorber receives a base
salary of $1 and an incentive bonus equal to five percent (5%) of the company's
consolidated pre-tax earnings, but no less than $250,000. In light of this
employment agreement, the Compensation Committee was not required to make any
decision regarding Mr. Lorber's cash compensation.
The Compensation Committee:
ROBERT J. EIDE, CHAIRMAN
BARRY LEISTNER
BRIAN S. GENSON
AUDIT COMMITTEE REPORT
As required by its written charter, which sets forth its responsibilities
and duties, a copy of which is attached to this proxy as Annex A, the Audit
Committee reviewed and discussed the audited financial statements with Nathan's
management and discussed with Grant Thornton LLP, Nathan's independent certified
public accountants, the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended.
The Audit Committee has received from Grant Thornton the written
disclosures and the letter required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees, and the Audit Committee has
discussed with Grant Thornton that firm's independence. Based upon these
discussions with management and the independent certified public accountants,
the Audit Committee recommended to Nathan's that the audited consolidated
financial statements for Nathan's be included in Nathan's Annual Report on Form
10-K for the fiscal year ended March 28, 2004 for filing with the Securities and
Exchange Commission.
The Audit Committee has also reviewed and discussed the fees paid to Grant
Thornton during the last fiscal year for audit and non-audit services, which are
set forth below under "Audit Fees," and has determined that the provision of the
non-audit services are compatible with the firm's independence.
The Audit Committee:
ROBERT J. EIDE, CHAIRMAN
BARRY LEISTNER
BRIAN S. GENSON
CHARLES RAICH
INDEPENDENCE OF AUDIT COMMITTEE
We have an Audit Committee established in accordance with Section 3(a)(58)
of Exchange Act. In fiscal 2004 our Audit Committee consisted of Robert J. Eide
(Chairman), Barry Leistner and Brian S. Genson. Mr. Raich became a member of our
Audit Committee in June 2004. Each of the persons who served on the Audit
Committee during fiscal 2004 and who currently serves on the Audit Committee is
independent, as defined by Rule 4200(a)(15) of the NASD listing standards.
15
AUDIT COMMITTEE FINANCIAL EXPERT
The Board has determined that Charles Raich, a member of the Audit
Committee since June 2004, qualifies as an "audit committee financial expert,"
as defined by Securities and Exchange Commission rules, based on his education,
experience and background.
AUDIT AND RELATED FEES
GENERAL
We were billed by Grant Thornton LLP the aggregate amount of approximately
$149,000 in respect of fiscal 2004 and $146,000 in respect to fiscal 2003 for
fees for professional services rendered for the audit of our annual financial
statements and review of our financial statements included in our Forms 10-Q.
AUDIT-RELATED FEES
We were billed by Grant Thornton LLP the aggregate amount of approximately
$19,000 in respect of fiscal 2004 and $20,000 in respect to fiscal 2003 for fees
for assurance and related services related to the performance of the audit. In
fiscal 2004, audit-related fees were incurred for the stand-alone audit of
certain of our subsidiaries in connection with the preparation of franchise
offering circulars and research regarding certain critical accounting policies.
In fiscal 2003, audit-related fees were incurred for the stand-alone audit of
certain of our subsidiaries in connection with the preparation of franchise
offering circulars and in connection with the review by Grant Thornton of our
responses to certain SEC comments.
TAX FEES
Grant Thornton LLP did not render any tax compliance, tax advice nor tax
planning services for fiscal 2004 and 2003. Consequently, aggregate fees billed
for tax compliance, tax advice and tax planning services rendered by Grant
Thornton LLP for fiscal 2004 and 2003 were $0.
ALL OTHER FEES
Grant Thornton LLP did not render any other services, other than as set
forth above, for fiscal 2004 and 2003. Consequently, aggregate fees billed for
all other services rendered by Grant Thornton LLP for fiscal 2004 and 2003 were
$0.
PRE-APPROVAL POLICIES
Our audit committee has not adopted any policies pursuant to which it has
pre-approved the provision by Grant Thornton LLP of any audit or non-audit
services.
Our audit committee approved all of the services provided by Grant Thornton
LLP and described in the preceding paragraphs.
16
STOCK PERFORMANCE CHART
The following graph illustrates a comparison of cumulative stockholder
return among Nathan's, Standard and Poors' 500 companies and Standard and Poors'
restaurant companies for the period since March 1998 to our fiscal year end on
March 28, 2004:
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG NATHAN'S FAMOUS, INC., THE S&P 500 INDEX
AND THE S&P RESTAURANTS INDEX
(COMPARISON OF 5 YEAR)
NATHAN'S FAMOUS, INC. S & P 500 S & P RESTAURANTS
--------------------- --------- -----------------
3/99 100.00 100.00 100.00
3/00 108.17 117.94 77.47
3/01 96.14 92.38 64.11
3/02 98.59 92.60 75.00
3/03 97.79 69.67 51.24
3/04 163.43 94.14 88.06
---------------
* $100 invested on 3/28/99 in stock or on 3/31/99 in index-including
reinvestment of dividends.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers,
directors and persons who own more than ten percent of a registered class of our
equity securities to file report of ownership and changes in ownership on Forms
3, 4 and 5 with the SEC and the NASD. These officers, directors and greater than
ten percent beneficial owners are required by SEC regulation to furnish us with
copies of all Forms 3, 4 and 5 they file with the SEC and NASD.
Based solely on our review of the copies of the forms we have received, we
believe that all our executive officers, directors and greater than ten percent
of beneficial owners complied on a timely basis with all filing requirements
applicable to them with respect to transactions during fiscal year 2004.
17
CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS
The Board of Directors has adopted a Code of Conduct applicable to our
principal executive officer and senior financial officers. Pursuant to the Code
of Conduct, our principal officer and senior financial officers agree to abide
by principles governing their professional and ethical conduct. A copy of the
Code of Conduct can be viewed on our website at www.nathansfamous.com.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Grant Thornton LLP acted as the Company's independent certified public
accountants for the fiscal year ended March 28, 2004. A representative of Grant
Thornton LLP is expected to be present at the annual meeting with the
opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate questions.
FINANCIAL STATEMENTS
A copy of our Annual Report of Stockholders for the fiscal year ended March
28, 2004 has been provided to all stockholders as of July 16, 2004. Stockholders
are referred to the report for financial and other information about us, but
such report is not incorporated in this proxy statement and is not a part of the
proxy soliciting material.
MISCELLANEOUS INFORMATION
MATTER TO BE CONSIDERED AT THE MEETING
The Board of Directors does not intend to present to the meeting any
matters not referred to in the form of proxy. If any proposal not set forth in
this Proxy Statement should be presented for action at the meeting, and is a
matter which should come before the meeting, it is intended that the shares
represented by proxies will be voted with respect to such matters in accordance
with the judgment of the persons voting them.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying form, which we estimate
to be $25,000, will be paid by us. In addition to solicitations by mail,
arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxy material to their principals, and we may reimburse
them for their expenses in so doing. To the extent necessary in order to assure
sufficient representation, our officers and regular employees may request the
return of proxies personally, by telephone or telegram. The extent to which this
will be necessary depends entirely upon how promptly proxies are received, and
stockholders are urged to send in their proxies without delay.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2005 Annual
Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at our
principal office not later than March 28, 2005 to be included in the proxy
statement for that meeting.
In addition, our by-laws require that we be given advance notice of
stockholder nominations for election to the Board of Directors and of other
matters which stockholders wish to present for action at an annual meeting of
stockholders. The required notice must be delivered to the Secretary of the
company at our principal offices not less than 60 days and not more than 90 days
prior to the first anniversary date for the previous year's annual meeting of
stockholders. These requirements are separate from and in addition to the SEC
requirements that a stockholder must meet in order to have a stockholder
proposal included in our proxy statement.
18
Pursuant to our by-laws, if notice of any stockholder proposal is received
before June 11, 2005 or after July 11, 2005, then the notice will be considered
untimely and we are not required to present such proposal at the 2005 Annual
Meeting. If the Board of Directors chooses to present a proposal submitted after
July 14, 2005 at the 2005 Annual Meeting, then the persons named in proxies
solicited by the Board of Directors for the 2005 Annual Meeting may exercise
discretionary voting power with respect to such proposal.
WE WILL PROVIDE WITHOUT CHARGE TO ANY STOCKHOLDER AS OF THE RECORD DATE,
COPIES OF THE OUR ANNUAL REPORT ON FORM 10-K, UPON WRITTEN REQUEST DELIVERED TO
RONALD G. DEVOS, SECRETARY, AT THE COMPANY'S OFFICES AT 1400 OLD COUNTRY ROAD,
SUITE 400, WESTBURY, NEW YORK 11590.
By Order of the Board of Directors,
RONALD G. DEVOS
Secretary
Dated: July 26, 2004
Westbury, New York
19
EXHIBIT A
NATHAN'S FAMOUS, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee is appointed by the Board to assist the Board in
monitoring (1) the accounting and financial reporting processes of the Company,
(2) the integrity of the financial statements of the Company, (3) the
independent auditor's qualifications and independence, (4) the performance of
the Company's internal audit function and independent auditors, and (5) the
compliance by the Company with legal and regulatory requirements.
The Audit Committee shall prepare the report required by the rules of the
Securities and Exchange Commission ("the Commission") to be included in the
Company's annual proxy statement and any other Committee reports required by
applicable securities laws or stock exchange listing requirements or rules.
COMMITTEE MEMBERSHIP
The Audit Committee shall consist of no fewer than three members. The
members of the Audit Committee shall meet the independence and experience
requirements of Nasdaq, Section 10A(m)(3) of the Securities Exchange Act of 1934
(the "Exchange Act") and the rules and regulations of the Commission.
The members of the Audit Committee shall be appointed by the Board. Audit
Committee members may be replaced by the Board.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Audit Committee shall have the sole authority to appoint or replace the
independent auditor (subject, if applicable, to shareholder ratification). The
Audit Committee shall be directly responsible for the compensation and oversight
of the work of the independent auditor (including resolution of disagreements
between management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work. The
independent auditor shall report directly to the Audit Committee.
The Audit Committee shall pre-approve all audit and non-audit services and
shall approve all engagement fees and terms. The Audit Committee shall consult
with management but shall not delegate these responsibilities.
The Audit Committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including the authority to
grant preapprovals of audit and permitted non-audit services, provided that
decisions of such subcommittee to grant preapprovals shall be presented to the
full Audit Committee at its next scheduled meeting.
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors. The Company shall provide for appropriate funding, as determined by
the Audit Committee, for payment of compensation to the independent auditor for
the purpose of rendering or issuing an audit report and to any advisors employed
by the Audit Committee.
The Audit Committee shall meet as often as it determines, but not less
frequently than quarterly. The Audit Committee may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee. The Audit Committee shall meet with management,
any internal auditors and the independent auditor in separate executive
sessions.
A-1
The Audit Committee, to the extent it deems necessary or appropriate,
shall:
Financial Statement and Disclosure Matters
1. Review and discuss with management and the independent auditor the
annual audited financial statements, including disclosures made in management's
discussion and analysis, and recommend to the Board whether the audited
financial statements should be included in the Company's Form 10-K.
2. Review and discuss with management and the independent auditor the
Company's quarterly financial statements prior to the filing of its Form 10-Q,
including disclosures made in management's discussion and analysis and the
results of the independent auditor's review of the quarterly financial
statements.
3. Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with the preparation
of the Company's financial statements, including (a) any significant changes in
the Company's selection or application of accounting principles, (b) any major
issues as to the adequacy of the Company's internal controls, (c) the
development, selection and disclosure of critical accounting estimates, and (d)
analyses of the effect of alternative assumptions, estimates or GAAP methods on
the Company's financial statements.
4. Discuss with management and the Company's independent auditor:
(a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's ability to
record, process, summarize and report financial data and any material
weaknesses in internal controls reported by management; and
(b) Any significant changes in the Company's internal controls; and
(c) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal
controls.
Review disclosures made to the Audit Committee by the Company's CEO and CFO
in connection with their certification of the foregoing for the Form 10-K and
Form 10-Q.
5. Discuss with management the Company's earnings press releases.
6. Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives as well as off-balance sheet structures,
if any, on the Company's financial statements.
7. Discuss with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures, including
the Company's risk assessment and risk management policies.
8. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit. In particular, discuss:
(a) The adoption of, or changes to, the Company's significant auditing
and accounting principles and practices as suggested by the independent
auditor, any internal auditors or management.
(b) The management letter provided by the independent auditor and the
Company's response to that letter.
(c) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
requested information, and any significant disagreements with management.
A-2
9. Discuss with the independent auditors the matters required to be
discussed by Section 10A(k) of the Securities Exchange Act of 1934, as amended,
as follows:
(a) All critical accounting policies and practices to be used;
(b) All alternative treatments of financial information, if any,
within generally accepted accounting principles that have been discussed
with management of the Company, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred by the
independent auditors;
(c) Other material written communications between the independent
auditors and the management of the Company, such as any management letter
or schedule of unadjusted differences.
10. Review and discuss the adequacy and effectiveness of the Company's
disclosure controls and procedures and management reports thereon.
Oversight of the Company's Relationship with the Independent Auditor
11. Review and evaluate the lead partner of the independent auditor team.
12. Obtain and review a report from the independent auditor at least
annually regarding (a) the independent auditor's internal quality-control
procedures, (b) any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any inquiry or
investigation by governmental or professional authorities within the preceding
five years respecting one or more independent audits carried out by the firm,
(c) any steps taken to deal with any such issues, (d) all relationships between
the independent auditor and the Company and (e) confirmation that their audit
has been performed in accordance with the requirements of Section 10A of the
Securities Exchange Act of 1934. Evaluate the qualifications, performance and
independence of the independent auditor, including considering whether the
auditor's quality controls are adequate and the provision of permitted non-audit
services is compatible with maintaining the auditor's independence, and taking
into account the opinions of management and any internal auditor. The Audit
Committee shall present its conclusions with respect to any internal auditor to
the Board.
13. Ensure the rotation of the lead (or coordinating) audit partner having
primary responsibility for the audit and the audit partner responsible for
reviewing the audit as required by law.
14. Confirm that the lead audit partner, and the lead audit partner
responsible for reviewing the audit, for the Company's independent auditors has
not performed audit services for the Company for in excess of the five previous
fiscal years.
15. Meet with the independent auditor prior to the audit to discuss the
planning, scope and staffing of the audit.
Compliance Oversight Responsibilities
16. Obtain from the independent auditor assurance that Section 10A(b)
(Required Response to Audit Committees -- Illegal Acts) of the Exchange Act has
not been implicated.
17. Obtain reports from management, any senior internal auditing executive
and the independent auditor that the Company and any subsidiary/foreign
affiliated entities are in conformity with applicable legal requirements and the
Company's code of ethics.
18. Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies and any employee complaints or
published reports which raise material issues regarding the Company's financial
statements or accounting policies.
19. Discuss with management, the independent auditors, the internal
auditors and the Company's General Counsel as appropriate, any legal, regulatory
or compliance matters that may have a material impact on the financial
statements or compliance policies, including significant changes in accounting
standards or rules as promulgated by the Financial Accounting Standards Board,
the Securities and Exchange Commission or other regulatory authorities with
relevant jurisdiction.
A-3
Complaints
20. Establish procedures for:
(a) The receipt, retention, and treatment of complaints received by
the Company regarding accounting, internal accounting controls, or auditing
matters.
(b) The confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing matters.
General -- The Audit Committee shall:
21. Make regular reports to the Board of Directors.
22. Establish the policy for the Company's hiring of employees or former
employees of the independent auditors who were engaged on the Company's account.
23. Review any management decision to seek a second opinion from
independent auditors other than the Company's regular independent auditors with
respect to any significant accounting issue.
24. Review and reassess the adequacy of this Committee and its Charter at
least annually and recommend to the Board any changes the Committee deems
appropriate.
25. Perform any other activities consistent with this Charter, the
Company's By-Laws and governing law as the Committee or the Board deems
necessary or appropriate.
26. Make available this Charter on the Company's website at
www.nathansfamous.com as required by the rules and regulations of the Securities
and Exchange Commission and The Nasdaq Stock Market.
Limitation of Audit Committee's Role
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements and disclosures
are complete and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations. These are the
responsibilities of management and the independent auditor.
A-4
EXHIBIT B
NATHAN'S FAMOUS, INC.
COMPENSATION COMMITTEE CHARTER
PURPOSE
The Compensation Committee is appointed by the Board to discharge the
Board's responsibilities relating to compensation of the Company's executive
officers. The Committee has overall responsibility for approving and evaluating
the executive officer compensation plans, policies and programs of the Company.
The Compensation Committee shall review and approve an annual report on
executive compensation for inclusion in the Company's proxy statement.
COMMITTEE MEMBERSHIP
The Compensation Committee shall consist of no fewer than three members.
Each member of the Compensation Committee shall (i) qualify as independent under
the requirements of the SEC and the Nasdaq Stock Market or such other market or
exchange on which the Company's securities are listed or quoted; (ii) be a
"non-employee director" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934, as amended; and (iii) be an "outside director" under the
regulations promulgated under Section 162(m) of the Internal Revenue Code of
1986, as amended.
The members of the Compensation Committee shall be appointed by the Board.
Compensation Committee members may be replaced by the Board.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
1. The Compensation Committee shall have the sole authority to retain and
terminate any compensation consultant to be used to assist in the evaluation of
Chief Executive Officer, senior executive or director compensation and shall
have sole authority to approve the consultant's fees and other retention terms.
The Compensation Committee shall also have authority to obtain advice and
assistance from internal or external legal, accounting or other advisors.
2. The Compensation Committee shall annually review and approve corporate
goals and objectives relevant to Chief Executive Officer compensation, evaluate
the Chief Executive Officer's performance in light of those goals and objectives
and, subject to the terms of any employment contract, recommend to the Board the
Chief Executive Officer's compensation levels based on this evaluation.
3. The Compensation Committee shall regularly review and approve corporate
goals and objectives relevant to compensation of executive officers other than
the Chief Executive Officer.
4. The Compensation Committee shall annually review and determine the
annual and long-term incentive component of Chief Executive Officer and other
executive officer compensation, including under incentive-compensation plans and
equity-based plans and any special or supplemental benefits. In making such
determinations, the Compensation Committee will consider the Company's
performance and relative shareholder return, the value of similar incentive
awards to Chief Executive Officers and other executive officers at comparable
companies, the awards given to the Chief Executive Officer and other executive
officers in past years and will take into account the terms of any employment
agreements.
5. The Compensation Committee shall periodically review and approve, for
the Chief Executive Officer and the other executive officers of the Company, the
terms of any employment agreements, severance arrangements, and change in
control agreements/provisions, whether or not in writing.
6. The Compensation Committee shall administer the Company's stock option
and other equity-based plans.
7. The Compensation Committee may form and delegate authority to
subcommittees when appropriate.
8. The Compensation Committee shall make regular reports to the Board.
B-1
9. The Compensation Committee shall periodically review the compensation
of Directors, and make recommendations to the Board as to any changes it deems
appropriate.
10. This Charter will be filed with the SEC as part of the Company's proxy
statement and will also be available on the Company's website.
11. The Compensation Committee shall review and reassess the adequacy of
this Charter annually and recommend any proposed changes to the Board for
approval.
COMPENSATION PRINCIPLES
The Committee will make compensation decisions based on the following
principles:
- Compensation arrangements will incentivize and encourage retention of
those employees who enhance the Company's performance;
- Compensation arrangements will promote ownership of the Company's stock
and equity to align the interests of management and stockholders; and
- Compensation arrangements will maintain an appropriate balance between
base salary and long-term and annual incentive compensation.
B-2
ANNUAL MEETING OF STOCKHOLDERS OF
NATHAN'S FAMOUS, INC.
SEPTEMBER 9, 2004
PLEASE DATE, SIGN AND MAIL
YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
Please detach along perforated line and mail in the envelope provided.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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1. Election of the following nominees, as set forth in the proxy statement:
NOMINEES:
[ ] FOR ALL NOMINEES O Robert J. Eide
O Brian S. Genson
[ ] WITHHOLD AUTHORITY O Barry Leistner
FOR ALL NOMINEES O Howard M. Lorber
O Wayne Norbitz
[ ] FOR ALL EXCEPT O Donald Perlyn
(See instructions below) O A.F. Petrocelli
O Charles Raich
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: O
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
[ ]
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2. Upon such other business as may properly come before the meeting
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY PROXIES, AND EACH OF THEM, AS
SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING. SHAREHOLDERS MAY WITHHOLD THE VOTE FOR ONE OR MORE
NOMINEE(S) BY WRITING THE NOMINEE(S) NAME(S) IN THE BLANK SPACE PROVIDED UNDER
ITEM 1. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE PROPOSALS
SET FORTH TO THE LEFT HEREOF.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
Signature of Stockholder Date:
--------------------------------------- ---------
Signature of Stockholder Date:
--------------------------------------- ---------
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by
authorized person.
NATHAN'S FAMOUS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Wayne Norbitz and Howard M. Lorber, or
either of them, attorneys and Proxies with full power of substitution in each of
them, in the name and stead of the undersigned to vote as Proxy all the stock of
the undersigned in NATHAN'S FAMOUS, INC., a Delaware corporation, at the Annual
Meeting of Stockholders scheduled to be held September 9, 2004 and any
adjournments thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)