-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CaxLu0KlBbZuPP5O6bSB9ro3HAZeZ2DEZ8Rzsyv5s5aeKJeUlKu8Xzp3zVzGYm8o r8TDeNXlDxU8oD0btNCDEg== 0000935226-04-000026.txt : 20040803 0000935226-04-000026.hdr.sgml : 20040803 20040803153043 ACCESSION NUMBER: 0000935226-04-000026 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040908 FILED AS OF DATE: 20040803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENIHANA INC CENTRAL INDEX KEY: 0000935226 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 650538630 STATE OF INCORPORATION: DE FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-26396 FILM NUMBER: 04948345 BUSINESS ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 BUSINESS PHONE: 3055930770 MAIL ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 PRE 14A 1 proxy2004.txt SCHEDULE 14A (Rule 14a - 101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No.) Filed by registrant [ X ] Filed by a party other than the registrant [ ] Check the appropriate box: [ X ] Preliminary proxy statement [ ] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to 240.14a-12 Benihana Inc. - ------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) - ------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than registrant) Payment of filing fee (Check the appropriate box): [ X ] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(I) (1) 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 0-11:1 - ------------------------------------------------------------------------------- 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: - ------------------------------------------------------------------------------- 1 Set forth the amount on which the filing fee is calculated and state how it was determined. BENIHANA INC. NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS Time 10:00 a.m. on Wednesday, September 8, 2004 Place Doral Golf Resort and Spa 4400 N.W. 87th Avenue Miami, Florida 33178 Purpose 1. (For the holders of our Common Stock) To elect two members of our Board of Directors for a three-year term. 2. (For holders of our Class A Stock) To elect one member of our Board of Directors for a three-year term. 3. (For all stockholders) To ratify the appointment of Deloitte & Touche LLP as our independent accountants. Record Date You can vote if you were a stockholder of record at the close of business on August 11, 2004. Annual Report A copy of our Annual Report to Stockholders for the fiscal year ended March 28, 2004 is enclosed. You are cordially invited to attend the Annual Meeting. Whether or not you plan to be present, kindly complete, date and sign the enclosed forms of proxy with respect to all shares of Common Stock and Class A Stock which you may own and mail them promptly in the enclosed return envelope to assure that your shares of Common Stock and Class A Stock are represented. This may save the expense of further proxy solicitation. If you own shares of both the Common Stock and Class A Stock, you will receive two proxies, each of which must be dated, signed and returned as described above. If you do attend the Annual Meeting, you may revoke your prior proxy and vote your shares in person if you wish. If you have any questions or need assistance in voting your shares, please call Georgeson Shareholder Communications Inc. toll-free at (866) 432-2791. Dated: August 13, 2004 By Order of the Board of Directors Darwin C. Dornbush Secretary BENIHANA INC. 8685 Northwest 53rd Terrace Miami, Florida 33166 PROXY STATEMENT CONTENTS -------- Page ---- ANNUAL MEETING INFORMATION 1 Who is entitled to vote? 1 What am I voting on? 1 How does the Board of Directors recommend I vote on the proposals? 1 How do I vote? 1 What is a quorum? 2 What vote is required to approve each item? 2 Who will count the vote? 2 What are the deadlines for shareholder proposals for next year's Annual Meeting? 2 Who pays the expenses of this Proxy Statement? 2 May brokers vote without instruction? 3 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 3 Common Stock 4 Class A Stock 5 Beneficial Ownership Reporting Compliance 7 ELECTION OF DIRECTORS 7 Corporate Governance 10 Committees; Meetings of the Board of Directors 11 Audit Committee Report 13 Compensation and Stock Option Committee Interlocks and Insider Participation 14 Report on Executive Compensation by the Compensation and Stock Option Committee 14 Directors' Compensation 15 EXECUTIVE COMPENSATION 15 Summary Compensation Table 16 Stock Options 17 Options Granted in Fiscal 2004 17 Aggregate Option Exercise in Fiscal 2004 and Fiscal Year End Option Values 18 Deferred Compensation Plans 18 Incentive Plans 18 PERFORMANCE GRAPH 19 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 20 OTHER MATTERS 20 RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT ACCOUNTANTS 21 ANNUAL REPORT 22 FORM 10-K 22 EXHIBIT A - CHARTER OF THE AUDIT COMMITTEE ANNUAL MEETING INFORMATION Your proxies are solicited by the Board of Directors of Benihana Inc. for use at the Annual Meeting of Stockholders to be held at Doral Hotel & Country Club, 4400 N.W. 87th Avenue, Miami, Florida, 33178 at 10:00 a.m. on Wednesday, September 8, 2004 and at any adjournment or adjournments thereof for the purposes set forth in the attached Notice of Meeting. The Corporation intends to mail this Proxy Statement and the forms of proxy to stockholders on or about August 13, 2004. Who is entitled to vote? Stockholders owning our Common Stock or Class A Stock on August 11, 2004 are entitled to vote at the Annual Meeting, or any postponement or adjournment of the meeting. Each holder of Common Stock has one vote per share, and each holder of Class A Stock has 1/10 of a vote per share, on all matters to be voted on, other than on the election of directors, on which the two classes vote separately. On August 11, 2004, there were __________ shares of Common Stock and __________ shares of our Class A Stock outstanding. What am I voting on? You will be asked to elect nominees to serve on the Board of Directors and to ratify the appointment of our independent accountants for the 2005 fiscal year. The Board of Directors is not aware of any other matters to be presented for action at the meeting. If any other matter requiring a vote of the shareholders should arise, the proxies will vote in accordance with their best judgment. How does the Board of Directors recommend I vote on the proposals? The Board recommends a vote FOR each of the nominees, and FOR the appointment of Deloitte & Touche LLP as our independent certified public accountants for the 2005 fiscal year. How do I vote? Sign and date each proxy card you receive and return it in the prepaid envelope. If you sign your proxy, but do not mark your choices, your proxies will vote for the persons nominated by the Board for election as directors and in favor of ratifying the appointment of Deloitte & Touche LLP as independent certified public accountants for the 2005 fiscal year. You can revoke your proxy at any time before it is exercised. To do so, you must give written notice of revocation to the Assistant Secretary, Benihana Inc. 8685 Northwest 53rd Terrace, Miami, Florida 33166, submit another properly signed proxy with a more recent date, or vote in person at the meeting. What is a quorum? A "quorum" is the presence at the meeting, in person or by proxy, of the holders of the majority of the outstanding shares. There must be a quorum for the meeting to be held. Abstentions are counted for purposes of determining the presence or absence of a quorum and have the effect of a negative vote on all matters other than election of directors. Shares held by brokers in street name and for which the beneficial owners have withheld the discretion to vote from brokers are called "broker non-votes." They are counted to determine if a quorum is present, but are not considered a vote cast under Delaware law. Broker non-votes will not affect the outcome of a vote on a particular matter. What vote is required to approve each item? The director nominees will be elected by a plurality of the votes cast at the meeting by the class of stock voting for such director nominee. All other matters to be considered at the meeting require the affirmative vote of a majority of the votes present at the meeting, in person or by proxy to be approved. Who will count the vote? Votes cast by proxy or in person at the Annual Meeting will be tabulated by the inspector of election appointed for the Annual Meeting. The inspector of election will determine whether or not a quorum is presented at the Annual Meeting. What are the deadlines for shareholder proposals for next year's Annual Meeting? Shareholders may submit proposals on matters appropriate for shareholder action at future annual meetings by following the rules of the Securities and Exchange Commission. Proposals intended for inclusion in next year's proxy statement and proxy card must be received by not later than March 15, 2005. In addition, our By-Laws provide that no proposal may be properly raised at next year's Annual Meeting if we do not receive notice of the proposal at least 60 days before next year's meeting or, if later, less than 10 days before the date we publicly announce the date of the meeting or mail out the Proxy Statement for the meeting. All proposals and notifications should be addressed to the Assistant Secretary, Benihana Inc., 8685 Northwest 53rd Terrace, Miami, Florida 33166. Who pays the expenses of this Proxy Statement? We are paying all costs of soliciting proxies for the Annual Meeting, including the costs of preparing, printing and mailing this Notice of Meeting and Proxy Statement. Certain of our officers and regular employees may solicit the return of proxies by telephone, mail or personal interview without additional consideration. In addition, we have engaged Georgeson Shareholder Communications Inc. ("Georgeson") to assist us in the distribution and solicitation of proxies. We have agreed to pay Georgeson a fee of up to $62,000, plus expenses for their services. Brokerage houses will be requested to forward these soliciting materials to beneficial owners and we will reimburse them for their expenses. May brokers vote without instruction? Brokers holding shares for beneficial owners must vote those shares according to the specific instructions they receive from the beneficial owners. If specific instructions are not received, brokers may vote those shares in their discretion, depending on the type of proposal involved. We believe that, in accordance with New York Stock Exchange rules applicable to such voting by brokers, brokers will have discretionary authority to vote with respect to any shares as to which no instructions are received from beneficial owners with respect to the election of directors and the ratification of the appointment of Deloitte & Touche LLP as our independent accountants. Shares as to which brokers have not exercised such discretionary authority or received instructions from beneficial owners are considered "broker non-votes." SECURITY OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND MANAGEMENT The following is information relating to the beneficial ownership of our Common Stock and Class A Stock by all persons we know who own beneficially more than 5% of our Common Stock or Class A Common Stock outstanding on August_________, 2004 and by all of our executive officers and directors. Except as otherwise noted, the named person owns directly and exercises sole voting power and investment discretion over the shares listed as beneficially owned. COMMON STOCK
Name (and address if applicable) of Position with Amount and Nature of Percent Beneficial Owners, Officers and Directors the Corporation Beneficial Ownership(1)(6) of Class - ----------------------------------------- --------------- -------------------------- -------- Benihana of Tokyo, Inc. (2) Stockholder 1,535,668 43.6% 232 East 63rd Street New York, New York 10021 BFC Financial Corporation(3) Stockholder 526,315 15.0% 1750 East Sunrise Boulevard Ft. Lauderdale, Florida 33304 Springhouse Capital, LP (4) Stockholder 270,900 7.7% 520 Madison Avenue, 35th Floor New York, New York FMR Corp. (4) Stockholder 373,300 10.6% 82 Devonshire Street Boston, MA 02109 Joel A. Schwartz President and 38,333 1.1% Chief Executive Officer/Director Taka Yoshimoto Executive Vice 8,000 * President-Restaurant Operations/Director John E. Abdo Director 20,000 * Norman Becker Director 2,500 * Michael R. Burris Senior Vice President - 24,087 * Finance and Treasurer Kevin Y. Aoki Vice President- 50 * Marketing/Director Darwin C. Dornbush Secretary/Director 10,500 * All (11) directors and 1,639,138 46.3% Officers as a group CLASS A STOCK Name (and address if applicable) of Position with Amount and Nature of Percent Beneficial Owners, Officers and Directors the Corporation Beneficial Ownership(7) of Class - ----------------------------------------- --------------- ----------------------- -------- Springhouse Capital, LP (4) Stockholder 815,114 13.2% 520 Madison Avenue, 35th Floor New York, New York 10022 Royce & Associates, LLC (4) Stockholder 730,455 11.9% 1414 Avenue of the Americas New York, New York 10019 FMR Corp. (4) Stockholder 562,225 9.1% 82 Devonshire Street Boston, MA 02109 Dalton, Grierner, Hartman, Stockholder 516,944 8.4% Maher & Co. (4) 565 5th Avenue New York, NY 10017 David M. Knott(4) Stockholder 385,872 6.3% 485 Underhill Boulevard, Ste. 205 Syosset, New York 11791 Joel A. Schwartz President and Chief 408,249 6.2% Executive Officer/Director Taka Yoshimoto Executive Vice 225,450 3.5% President-Restaurant Operations/Director Kevin Y. Aoki Vice President- 98,678 1.6% Marketing/Director Michael R. Burris (8) Senior Vice President- 239,150 3.7% Finance and Treasurer Juan C. Garcia Vice President-Controller 120,750 1.9% John E. Abdo Director 65,667 1.1% Norman Becker Director 69,367 1.1% Darwin C. Dornbush Secretary/Director 53,892 * Max Pine Director 33,917 * Robert B. Sturges Director 11,667 * Yoshihiro Sano Director 11,667 * All (11) directors and Officers as a group 1,455,208 19.5% * less than 1%
Notes - ----- (1) Beneficial ownership in this table includes the following shares of Common Stock which may be purchased by exercise of presently exercisable options: Mr. Abdo - 7,500 shares; Mr. Becker - 2,500 shares; Mr. Dornbush - 10,500 shares; all officers and directors as a group - 20,500 shares. (2) The capital stock of Benihana of Tokyo (the "Benihana of Tokyo Stock") is held in a voting trust. Kevin Y. Aoki, Vice President-Marketing and a Director of the Corporation, Darwin C. Dornbush, the Secretary and a Director of the Corporation, Grace Aoki, Kevin Y. Aoki's sister, and Kyle Aoki, Kevin Y. Aoki's brother, are the trustees of this voting trust. In addition, beneficial interest in the Benihana of Tokyo Stock is held by a trust of which Kevin Y. Aoki, Kyle Aoki and Grace Aoki are the trustees. By reason of such positions, such individuals may be deemed to share beneficial ownership of the Benihana of Tokyo Stock and the shares of our stock owned by Benihana of Tokyo. Darwin C. Dornbush has indicated his intent to resign as trustee subject to the performance of an accounting. (3) Represents Common Stock that BFC Financial Corporation would own if its Convertible Preferred Stock were converted. See "Certain Relationships and Related Transactions". Based solely upon reports on Schedule 13D filed by or on behalf of such person. (4) Based solely upon reports on Schedule 13G filed by or on behalf of such persons. (5) Includes 10 shares owned by Mr. Schwartz's son, as to which shares Mr. Schwartz disclaims beneficial interest. (6) Shares of our Common Stock are convertible at any time into shares of our Class A Stock at the option of the holder. Therefore, each beneficial owner of our Common Stock may be deemed the beneficial owner of the same number of shares of our Class A Stock. (7) Beneficial ownership on this table includes the following shares of Class A Stock which may be purchased by exercise of options which are presently exercisable or which will become exercisable within 60 days: Mr. Schwartz - 402,500 shares; Mr. Yoshimoto 195,500 shares; Mr. Aoki - 97,750 shares; Mr. Burris - 235,750 shares; Mr. Garcia - 120,750 shares; Mr. Abdo - 63,792 shares; Mr. Becker - 68,792 shares; Mr. Dornbush - 52,742 shares; Mr. Pine - 33,917 shares; Mr. Sturges - 11,667 shares; Mr. Sano - 11,667 shares; all officers and directors as a group - 1,294,827 shares. (8) Includes 1,150 shares owned by Mr. Burris' wife, as to which shares Mr. Burris disclaims beneficial ownership. BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Rules promulgated by the Securities and Exchange Commission govern the reporting of securities transactions by directors, executive officers and holders of 10% or more of our Common Stock or Class A Stock. Based solely upon its review of copies of reports filed with the SEC and received by us, we believe that our directors and executive officers have filed all required reports on a timely basis. ELECTION OF DIRECTORS Our Certificate of Incorporation provides that the Board of Directors be divided into three classes with the three-year term of office of one class expiring each year. The current directors have been elected or appointed to the classes set forth opposite their names below. The terms of office of Joel A. Schwartz, Kevin Y. Aoki and Yoshihiro Sano, Class III Directors, will expire at the Meeting. As a consequence, a majority of our Board is now composed of independent directors. Messrs Schwartz, Aoki and Sano are proposed to be re-elected as Class III Directors, and will each hold office for a three-year term, in each case until their respective successors shall have been duly elected and qualified. Our Certificate of Incorporation also provides that when the Board of Directors is divided into at least two classes, as is presently the case, the holders of the Class A Stock vote separately as a class to elect 25% (or the next higher whole number) of each class of the Board; provided, however, that the number of directors so elected by the holders of the Class A Stock may not exceed 25% (or the next whole higher number) of the entire Board. Holders of the Class A Stock do not vote for the election of directors at any meeting of stockholders if the terms of office of directors so elected by such holders do not expire at such meeting. Holders of the Common Stock vote separately as a class for the remainder of each class of the Board. The Board of Directors currently consists of nine members, of which three members (more than 25% of the Board, rounded to the nearest whole director) are directors who have been elected by holders of the Class A Stock. Messrs. Max Pine, a Class I Director, John E. Abdo, a Class II Director and Yoshihiro Sano, a Class III Director currently serve as Class A Directors. Prior to the date of this Proxy Statement, Joel Schwartz was a Common Stock Director. The Board of Directors has nominated Messr. Schwartz to serve as a Class A Director and Messrs. Sano and Aoki to serve as Common Stock Directors. At the Meeting, only the holders of the Class A Stock, voting separately as a class, will vote on the election of Messr. Schwartz as a Class A Director, and only the holders of the Common Stock, voting separately as a class, will vote on the election of Messrs. Sano and Aoki as Directors. The Board of Directors has selected persons named as proxies in the enclosed form of proxy. It is intended that the shares represented by the proxies, unless authorization is withheld, shall be voted for the election as Directors of the nominees set forth in the following table, who have been designated by the Board of Directors and who are presently Directors of the Corporation. Although it is not contemplated that such nominees will be unable to serve, should such a situation arise prior to the balloting at the Meeting, the persons named in the proxy will vote the shares represented by the proxy for such substitute nominee(s) as they deem advisable. The following are the nominees for director: JOEL A. SCHWARTZ Director since 1982 Class III Director (Term to expire in 2004), President and Chief Executive Officer Age 63 Mr. Schwartz has been President and a Director of the Corporation and its predecessor since 1982 and has served as Chief Executive Officer since 1998. KEVIN Y. AOKI Director since 1998 Class III Director (Term to expire in 2004), Vice President-Marketing Age 36 Mr. Aoki has served as Vice President-Marketing and a Director of the Corporation since November 1998. For two years prior thereto, he served as General Manager of Benihana of Tokyo, the originator of the Benihana concept and a principal shareholder of the Corporation (see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT"). From 1993 through 1996, Mr. Aoki served as Unit Manager for the Corporation's Chicago and Dallas restaurants and as Manager of Sales for the Corporation's New York region. Mr. Aoki is the son of Rocky H. Aoki, the founder of Benihana. YOSHIHIRO SANO Director Since June, 2003 Class III Director (Term to expire in 2004) Age 56 Yoshihiro Sano is the founder of Pacific Alliance Group, an investment banking firm specializing in cross-border transactions. Mr. Sano is the publisher of the US Japan Food Industry Report, and the author of two books on cross-border transactions. Mr. Sano is a consultant to the foodservice industry in both Japan and the United States. The following is information about our remaining Class I and Class II Directors, each of whom will continue in office, and our other executive officers: TAKA YOSHIMOTO Director since 1990 Class I Director (Term to expire in 2005), Executive Vice President-Operations Age 58 Mr. Yoshimoto has served as Executive Vice President of the Corporation and its predecessor since 1989 and as the Director of Operations from 1985 until 1989. JOHN E. ABDO Director since 1990 Class II Director (Term to expire in 2006) Age 61 John E. Abdo has been principally employed as the Vice Chairman of BankAtlantic Bancorp, Inc. since April 1987 and Chairman of the Executive Committee of BankAtlantic since October 1985. He has been a director of BFC Financial Corporation since 1988 and Vice Chairman of the Board of BFC Financial Corporation since 1993. He has been a director and Vice Chairman of the Board of BankAtlantic Bancorp, Inc. since 1994, director of BankAtlantic Bancorp, Inc. since 1984 and President of Levitt Corporation (f/k/a BankAtlantic Development Corporation), a wholly owned subsidiary of BankAtlantic Bancorp, Inc., since 1985. He is President and Chief Executive Officer of Abdo Companies, Inc., a real estate development, construction and real estate brokerage firm, for more than five years. NORMAN BECKER Director since 1997 Class II Director (Term to expire in 2006) Age 66 Mr. Becker is currently, and has been for more than ten years, self-employed in the practice of public accounting. Prior thereto, Mr. Becker was a partner with Touche Ross & Co., the predecessor of Deloitte & Touche LLP for a period in excess of 10 years. In addition, Mr. Becker is an officer and director of Ram Ventures Holding Corp. and New Systems Inc. Mr. Becker is also a director of Bluegreen Corporation. DARWIN C. DORNBUSH Director Since 1995 Class I Director (Term to expire in 2005), Secretary Age 74 Mr. Dornbush is currently and has been for more than the past five years a partner in the law firm of Dornbush Schaeffer Strongin & Weinstein, LLP. (formerly known as Dornbush Mensch Mandelstam & Schaeffer, LLP). He has served as the Secretary of the Corporation and its predecessor since 1983, and has been a Director since 1995. He has served as Secretary and a Director of our principal stockholder, Benihana of Tokyo, since 1980. Mr. Dornbush is also a director of Cantel Medical Corp. ROBERT B. STURGES Director Since June, 2003 Class II Director (Term to expire in 2006) Age 57 Robert B. Sturges has been a partner since 2002 with Continental Hospitality Holdings, a hospitality company which provides development, technical and operational services to the hotel and resort industry. Mr. Sturges is a partner of the Miami Heat Basketball Organization. Previously, Mr. Sturges was Chief Operating Officer and a Director of Carnival Resort and Casino Inc. which developed, owned and managed resorts, hotels and casinos. MAX PINE Director since 2001 Class I Director (Term to expire in 2005) Age 70 In April 2001, after seven years with Patricof & Co. and BNY Capital Markets, Mr. Pine launched Aries Associates, to concentrate exclusively on advising restaurant industry CEOs, and doing due diligence projects for financial investors. Prior to 1994, he was employed by Restaurant Associates Corp., a NYC-based diversified full-service restaurant company, for 25 years, and served as Chief Executive Officer from 1988 to 1994. MICHAEL R. BURRIS Senior Vice President-Finance and Treasurer Age 54 Mr. Burris has served as Senior Vice President-Finance and Chief Financial Officer of the Corporation since 1999. He was appointed Vice President - -Finance and Treasurer effective 1995. Prior to his appointment with the Corporation, Mr. Burris was a partner with Deloitte & Touche LLP. JUAN C. GARCIA Vice President-Controller Age 40 Mr. Garcia was appointed as Vice President-Controller effective in 1999. He served as Controller of the Corporation and its predecessor since 1994. Previously, Mr. Garcia served as Assistant Controller. No director or executive officer of the Corporation has any family relationship to any other director or executive officer. CORPORATE GOVERNANCE The Corporation seeks to follow best practices in corporate governance in a manner that is in the best interests of its business and stockholders. The Corporation's current corporate governance principles, including the Code of Business Conduct and Ethics are available under Investor Relations on its website at www.benihana.com. The Corporation is in compliance with the corporate governance requirements imposed by the Sarbanes-Oxley Act, the Securities and Exchange Commission and the Marketplace Rules of the National Association of Securities Dealers, Inc. ("NASD"). The Corporation will continue to modify its policies and practices to meet ongoing developments in this area. Aspects of the Corporation's corporate governance principles are discussed throughout this Proxy Statement. COMMITTEES; MEETINGS OF THE BOARD OF DIRECTORS The Board of Directors of the Corporation held six meetings during the fiscal year ended March 28, 2004 and no director attended fewer than 75% of the aggregate of such meetings and the number of meetings of each Committee of which he is a member. The Board of Directors has determined that each of the following directors is "independent" within the meaning of Rule 10A-3 of the Securities Exchange Act and within the current NASD definition of "independent director" and the NASD definition that will become applicable to the Corporation on the date of the Annual Meeting: John E. Abdo, Norman Becker, Robert B. Sturges, Yoshihiro Sano and Max Pine. None of the independent directors receives compensation from the Corporation other than directors' fees and non-discretionary grants under the Corporation's stock option plans for service on the Board or its Committees. The Board of Directors has approved a policy for stockholder communications whereby stockholders may contact the Board of Directors or any Committee or individual director through a link under Investor Relations on the Corporation's website at www.benihana.com. The link will direct the stockholder to an outside company or an employee of the Corporation who will be responsible for processing the correspondence. The outside company or Corporation employee will forward appropriate stockholder communications to the Corporation's Audit Committee which will then distribute the correspondence to the appropriate directors. The Corporation is working to have this mechanism in place in fiscal 2005. Stockholders are also welcome to communicate directly with the Board of Directors at its Annual Meeting of Stockholders. As a matter of policy, members of the Board of Directors are required to make every reasonable effort to attend the Annual Meeting of Stockholders. All members of the Board of Directors attended the Corporation's 2003 Annual Meeting of Stockholders held on August 21, 2003. The Board of Directors has four standing committees: the Audit Committee, the Compensation and Stock Option Committee, the Nominating Committee and the Corporate Governance Committee. All of the members of the Audit Committee, the Compensation and Stock Option Committee, the Nominating Committee and Corporate Governance Committee are independent directors. Each of the Nominating Committee, the Compensation and Stock Option Committee and the Audit Committee has the authority to retain independent advisors and consultants, with all fees and expenses to be paid by the Corporation. The Board-approved charters of each of the Board committees are available on the Corporation's website under Investor Relations at www.benihana.com. Audit Committee. For the fiscal year ended March 28, 2004, the Audit Committee - --------------- consisted of Norman Becker (the Chairman), John E. Abdo, Max Pine and Robert B. Sturges, all of whom have been determined by the Board of Directors to be independent (as independence is defined under the NASD listing standards). In May 2004, the Board of Directors adopted the revised Audit Committee Charter, a copy of which is attached hereto as Exhibit A. The Board has determined that Norman Becker qualifies as an "audit committee financial expert" as defined by Item 401(h)(2) of Regulation S-K promulgated by the Securities and Exchange Commission. The Audit Committee's primary responsibilities are to: (i) oversee the Corporation's financial reporting principles and policies and internal control systems, including review of the Corporation's quarterly and annual financial statements, (ii) review and monitor the performance and independence of the Corporation's independent auditors and the performance of the internal auditing department, (iii) provide an open avenue of communication among the independent auditors, financial and senior management, the internal auditing department and the Board of Directors and (iv) appoint (subject to shareholder ratification), evaluate, compensate and where appropriate, terminate and replace the Corporation's independent auditors. The audit committee held four meetings during the fiscal year ended March 28, 2004. Compensation and Stock Option Committee. The Corporation has a Compensation and - --------------------------------------- Stock Option Committee composed of John E. Abdo (the Chairman), Robert B. Sturges and Yoshihiro Sano. The Compensation and Stock Option Committee Charter provides that the Committee is responsible for (i) discharging the Board of Director's responsibilities relating to compensation of the Corporation's executives, (ii) the administration of the Corporation's equity-based compensation plans and (iii) producing an annual report on executive compensation for inclusion in the Corporation's proxy statement in accordance with applicable rules and regulations. During the fiscal year ended March 28, 2004, the Compensation and Stock Option Committee met from time to time to make recommendations concerning salary and bonus for the Corporation's executive officers for the 2004 year and to make recommendations as to the grant of stock options to such executive officers. Nominating Committee. The Nominating Committee is composed of John E. Abdo, - -------------------- Norman Becker and Max Pine. The Committee's responsibilities include (i) identifying individuals qualified to become members of the Board of Directors, consistent with criteria approved by the Board of Directors and recommending that the Board of Directors select the director nominees for the next annual meeting of shareholders and (ii) overseeing evaluation of the Board of Directors. The Nominating Committee was formed in May 2004 and accordingly no meetings were held during fiscal 2004. The Nominating Committee has established a process for identifying and evaluating nominees for director. Although the Nominating Committee will consider nominees recommended by stockholders, the Nominating Committee believes that the process it utilizes to identify and evaluate nominees for director is designed to produce nominees that possess the educational, professional, business and personal attributes that are best suited to further the Corporation's purposes. The Board of Directors does not believe that it is necessary for the Corporation to have a policy regarding the consideration of candidates recommended by stockholders as any interested person may make such recommendations and all recommended candidates will be considered using the criteria set forth in the Corporation's guidelines. The Nominating Committee will consider, among other factors, the following to evaluate Committee recommended nominees: the Board of Directors current composition, including expertise, diversity, balance of management and non-management directors, independence and other qualifications required or recommended by applicable laws, rules and regulations (including NASD requirements) and Corporation policies or procedures and the general qualifications of potential nominees, including, but not limited to personal integrity; loyalty to the Corporation and concern for its success and welfare; experience at strategy/policy setting level; high-level leadership experience in business or administrative activity; breadth of knowledge about issues affecting the Corporation; an ability to work effectively with others; sufficient time to devote to the Corporation; freedom from conflicts of interest. Corporate Governance Committee. The Corporate Governance Committee is composed - ------------------------------ of Darwin C. Dornbush, Max Pine and Yoshihiro Sano. The Committee's responsibilities include (i) preparing, reviewing and recommending to the Board of Directors the corporate governance guidelines applicable to the Corporation and (ii) advising the Board of Directors on matters of organizational and governance structure of the Corporation. The Corporate Governance Committee was formed during May 2004 and accordingly no meetings were held during fiscal 2004. AUDIT COMMITTEE REPORT For fiscal year ended March 28, 2004, the Audit Committee consisted of Norman Becker (the Chairman), John E. Abdo, Max Pine and Robert Sturges, all of whom have been determined by the Board to be independent (as independence is defined under the NASD listing standards). The Audit Committee operates under a written charter adopted by the Board of Directors, a copy of which is attached hereto as Exhibit A. The Audit Committee recommends to the Board of Directors, subject to shareholder ratification, the selection of our independent auditors. Management is responsible for our internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and for issuing a report on those consolidated financial statements. The Committee's responsibility is to monitor and oversee these processes. In this context, the Committee has met and held discussions with management and Deloitte & Touche LLP, the independent accounting firm for the Corporation. Management represented that the consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Committee reviewed and discussed the audited consolidated financial statements with management and Deloitte & Touche LLP. The Committee discussed with Deloitte & Touche LLP matters required to be discussed by Statement of Auditing Standards No. 61 ("Communication with Audit Committees"). Deloitte & Touche LLP also provided the Committee with the written disclosures required by Independence Standards Board Independence Standard No. 1 ("Independence Discussions with Audit Committees"), and the Committee discussed with Deloitte & Touche LLP that firm's independence. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, which recommendation has been adopted by the Board of Directors, that the audited financial statements be included or incorporated by reference in the 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 Norman Becker, Chairman John E. Abdo Max Pine Robert B. Sturges COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None of the members of the Compensation Committee served as an officer or employee of the Corporation or had any relationship with the Corporation requiring disclosure under the heading "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS," except for Darwin C. Dornbush, who serves as our Secretary. REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION AND STOCK OPTION COMMITTEE Compensation Policy. The Compensation and Stock Option Committee is ------------------- responsible for setting and administering the policies which govern annual executive salaries, raises and bonuses. The Committee is responsible for administering our Employee Stock Option Plans. The Compensation and Stock Option Committee consists of John E. Abdo, Robert B. Sturges and Yoshihiro Sano, each of whom is a non-employee member of the Board of Directors. The policy of the Compensation and Stock Option Committee is to recommend compensation for the Chief Executive Officer and other executive officers, reflecting the contribution of such executives to our growth in sales and earnings, and the implementation of our strategic plans for growth. In addition, in order to assure our ability to attract and retain managerial talent, an attempt is made to keep compensation competitive with compensation offered by other restaurant companies of comparable quality, size and performance. Long-term incentive compensation policy consists of the award of stock options under our stock option plans, which serve to identify and reward executive performance with increases in value for stockholders and bonuses under our Administrative Incentive Compensation Plan. Performance and Chief Executive Officer Compensation. Executive ---------------------------------------------------- compensation for the fiscal year ended March 28, 2004 consisted of base salary and bonus. The Compensation and Stock Option Committee met from time to time during such fiscal year. All salary compensation paid to the Chief Executive Officer and to our other executive officers during the fiscal year ended March 28, 2004 was in accordance with the terms of written employment agreements with such officers. In addition, certain of the executive officers received awards during the fiscal year ended March 28, 2004 under our Administrative Incentive Compensation Plan. Under this plan, the aggregate amount available for awards to all executive officers is determined by a formula based on the amount by which return on stockholder's equity exceeds preset targets; allocation of this amount among the Chief Executive Officer and the other executive officers is made by the Compensation and Stock Option Committee (in the case of the Chief Executive Officer) and by the Chief Executive Officer (in the cases of the other executive officers) based upon the level of management responsibility of the various executive officers and the relative contributions of each to the long-term success and increase in profitability. Each of these factors was equally considered. Under the terms of this plan the Compensation and Stock Option Committee reserves the discretion to award bonuses notwithstanding the failure of the Corporation to achieve the preset target. Compensation and Stock Option Committee John E. Abdo, Chairman Robert B. Sturges Yoshihiro Sano Directors' Compensation Non-employee directors receive directors' fees of $12,000 a year plus $1,000 for each meeting attended and also for each committee meeting attended. All directors are reimbursed for expenses incurred on behalf of the Corporation. In addition, each director who is not an employee participates in the existing 2003 Directors' Stock Option Plan. Under this plan options to purchase 10,000 shares of Class A Stock are automatically granted annually to such non-employee director on the date of our Annual Meeting of Stockholders. Previous to the 2003 Directors' Stock Option Plan, the Corporation had a Directors' Stock Option Plan, (Directors' Plan) and a Directors' Class A Stock Option Plan (Directors' Class A Plan). Under the Directors' Plan 2,500 shares of Common Stock were granted in each year from 1994 thru 1997, and options to purchase 10,000 shares of Class A Stock were granted in 1998 thru 20021 under the Directors' Class A Plan. Each option granted under the Director's Plan from 1994 through 1997 has an exercise price equal to the fair market value of the Common Stock on the date of grant; each option granted in 1998 and thereafter has an exercise price equal to the fair market value of the Class A Stock on the date of grant. Each option granted under the Directors' Plan and the Directors' Class A Plan is for a term of 10 years and becomes exercisable as to one-third of the number of shares covered thereby on the date of grant, one-third on each of the first two anniversaries of the date of grant. Options granted under the 2003 Directors' Plan are exercisable ratably as to one-third of the shares on the date which is six months after the date of grant, one-third of the shares on the first anniversary of the grant of such option and as to the balance of such shares on the second anniversary of grant of such option. The 2003 Directors' Stock Option Plan authorizes the grant of options to purchase 300,000 shares of Class A Common Stock. The Directors' Plan authorizes the grant of options to purchase an aggregate of 35,000 shares of Common Stock and the Directors' Class A Plan authorizes the grant of options to purchase 200,000 shares2 of Class A Stock. As of March 28, 2004, options to purchase an aggregate of 35,000 shares2 Common Stock, have been granted under the Directors' Plan and options to purchase an aggregate of 220,625 and 300,000 shares of Class A Stock have been granted under the Directors' Class A Plan and the 2003 Directors' Stock Option Plan, respectively. - ------------------------------------------------ 1 Optons granted prior to August, 2002 received a 15% stock dividend payable in options to purchase. 2 Adjusted to reflect the 15% stock divident effective August 12, 2002. EXECUTIVE COMPENSATION The following table sets forth, for the fiscal years ended March 28, 2004, March 30, 2003 and March 31, 2002, compensation paid to the Chief Executive Officer and to the other executive officers who received more than $100,000 in salary and bonus during fiscal year 2004, including salary, bonuses, stock options and certain other compensation: SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation(1) ------------------- ------------------------- Name and Principal Position Year Salary Bonus(2) Options - --------------------------- ---- ------ -------- ------- $ $ # Joel A. Schwartz, President 2004 339,195 57,334 - and Chief Executive 2003 323,077 78,000 57,500 Officer (3) 2002 317,308 114,000 51,750 Taka Yoshimoto, Executive 2004 186,135 39,334 - Vice President (4) 2003 180,624 49,000 46,000 2002 174,519 61,000 40,250 Michael R. Burris, Senior 2004 156,765 36,000 - Vice President-Finance 2003 153,740 45,333 40,250 and Treasurer (5) 2002 151,471 58,667 34,500 Kevin Y. Aoki, Vice 2004 137,554 28,666 - President-Marketing (6) 2003 131,923 34,000 34,500 2002 129,567 42,000 23,000 Juan C. Garcia, Vice 2004 116,503 28,666 - President-Controller (7) 2003 111,058 36,667 34,500 2002 111,058 34,333 28,750
(1) Consists of Employee Stock Option grants for Class A Stock described in this Proxy Statement. We do not award stock appreciation rights or restricted stock awards. All option amounts are adjusted to reflect the 15% Stock Dividend effective August 12, 2002. (2) Consists of payouts under our Administrative Incentive Compensation Plan. For each of these individuals, each year's payout equals one third of his award, if any, under this plan for each of the three preceding fiscal years. (3) Joel A. Schwartz, President and Chief Executive Officer, is employed on a full-time basis at an annual salary of $300,000, pursuant to the terms of an employment agreement entered into effective April 1, 2001 and amended on May 27, 2004. The agreement expires March 31, 2009. The agreement provides for annual salary increases based on cost-of-living adjustments and bonuses and additional salary increases as may be determined by the Board from time to time. The agreement provides that Mr. Schwartz may resign following a change of control and receive a severance payments which could be equal to his salary over the unexpired term of the agreement and five additional years. The agreement also provides for additional severance payments which could equal five year's salary if Mr. Schwartz' employment terminates for failure to renew his agreement. Mr. Schwartz is prohibited from competing with the Corporation for a period of one year after any termination of his employment. (4) Pursuant to the terms of an Employment Agreement entered into as of April 1, 2001. Mr. Yoshimoto, Executive Vice President-Restaurant Operations, is employed at an annual salary of $165,000. The agreement expires March 31, 2006. The agreement provides for annual salary increases based on cost of living adjustments, and bonuses and additional salary increases as may be determined by the Board from time to time, and that Mr. Yoshimoto may resign following a change of control and receive a severance payment equal to his salary over the unexpired term of the agreement. Mr. Yoshimoto is prohibited from competing with the Corporation for a period of one year following certain terminations of employment. (5) Pursuant to the terms of an Employment Agreement entered into as of September 1, 2003, Mr. Burris, Senior Vice President - Finance and Treasurer and Chief Financial Officer, is employed at an annual salary of $157,500. The agreement expires August 31, 2006. Mr. Burris is prohibited from competing with the Corporation for a period of one year following certain terminations of employment. (6) Pursuant to the terms of an Employment Agreement entered into as of September 1, 2003. Mr. Aoki, Vice President of Marketing, is employed at an annual salary of $132,500. The agreement expires August 31, 2006. Mr. Aoki is prohibited from competing with the Corporation for a period of one year following certain terminations of employment. (7) Pursuant to the terms of an Employment Agreement entered into as of September 1, 2003. Mr. Garcia, Vice President and Controller, is employed at an annual salary of $115,000. The agreement expires August 31, 2006. Mr. Garcia is prohibited from competing with the Corporation for a period of one year following certain terminations of employment. STOCK OPTIONS We maintain employee stock option plans adopted in 1996, 1997 and 2000 and various directors stock option plan. The employee plans make available for stock option grants a total of 500,000 shares of Common Stock and 2,742,515 shares(1) of Class A Stock. Of these amounts, we have granted options to purchase 10,000 shares of Common Stock and 1,701,007 shares(1) of Class A Stock; options to purchase 490,000 shares of Common Stock and 1,041,508 shares of Class A Stock are available for future grants. In addition, as of March 28, 2004, options to purchase 17,500 shares of Common Stock and 2,625 shares (1) of Class A Stock were outstanding under employee stock option plans which have expired. The purpose of the employee plans and the directors' plan is to enable us to attract, retain and motivate key employees and directors by providing them an equity participation. The employee plans provide for incentive stock options (ISO's) under Section 422A of the Internal Revenue Code of 1986, as amended, and for options which are not ISO's. Options granted under the employee plans may not have terms exceeding ten years, and, in the case of the options which are ISO's, may not provide for an option exercise price of less than 100% of the fair market value of our Common Stock or Class A Stock on the day of the grant (110% of such fair market value in the case of optionees holding 10% or more of the combined voting rights of our securities). - ------------------------------------------------- (1) Adjusted to reflect the 15% Stock Dividend effective August 12, 2002. OPTIONS GRANTED IN FISCAL 2004 No options were granted in fiscal 2004 with respect to the individuals set forth in the Summary Compensation Table. AGGREGATE OPTION EXERCISE IN FISCAL 2004 AND FISCAL YEAR END OPTION VALUES The following information is furnished for the fiscal year ended March 28, 2004 for stock option exercises during such fiscal year and the value realized upon exercise by the individuals set forth in the Summary Compensation Table during the fiscal year ended March 28, 2004 and the value of outstanding options held by such executive officers as of March 28, 2004.
Number of Unexercised Value of Unexercised in the Options at 03/28/04 Money Options at 03/28/04 ---------------------------------------------------------------- Shares Acquired Value Non- Non- Name on Exercise Realized Exercisable Exercisable Exercisable Exercisable - ----------------------------------------------------------------------------------------------------------------------------------- Common Stock: # $ # # $ $ Joel A. Schwartz 7,500 78,449 -0- -0- -0- -0- Michael R. Burris 20,000 144,574 -0- -0- -0- -0- Class A Stock: Joel A. Schwartz 1,125 11,749 402,500 -0- 2,363,088 -0- Taka Yoshimoto -0- -0- 195,500 -0- 962,720 -0- Michael R. Burris 3,750 22,174 235,750 -0- 1,458,443 -0- Kevin Y. Aoki -0- -0- 97,750 -0- 439,773 -0- Juan C. Garcia -0- -0- 120,750 -0- 551,893 -0-
DEFERRED COMPENSATION PLANS We have a deferred compensation plan under which certain key employees may elect to defer up to 20% of their salary and up to 100% of their bonus until retirement or termination of employment. Employees may select from various investment options for their account. Investment earnings are credited to their accounts. INCENTIVE PLANS Restaurant Incentive Plan. We maintain an incentive bonus program under which certain of our administrative and restaurant employees, based on their performance, may be eligible for cash awards. Under the restaurant incentive program, the awards are divided among restaurant management personnel and chefs who have been determined to have contributed significantly to our operating goals. In addition, incentive bonuses of small numbers of shares of Class A Stock are also given to selected restaurant employees. Administrative Incentive Compensation Plan. Under the Administrative Incentive Compensation Plan, awards are allocated to headquarters employees, including executive officers, if we exceed annual targeted returns on equity as determined by the Compensation and Stock Option Committee. The purpose of the plan is to align the interests of management and our stockholders by providing incentives, which are directly related to identified operating objectives, to our officers and administrative employees upon whose judgment, initiative and efforts we largely depend for the successful conduct of our business. Awards are made by the Compensation and Stock Option Committee of the Board of Directors and the senior management out of a bonus pool which is a predetermined percentage of the amount by which our Net Income After Taxes exceeds the amount required for the annual targeted return on equity for such year. Pursuant to the Plan, the Compensation and Stock Option Committee retains the discretion to award bonuses notwithstanding the failure of the Corporation to achieve preset target for a fiscal year; in fiscal 2004, 2003 and 2002 the Corporation exercised such discretion in awarding bonuses. For awards in excess of $1,000, one-third of the amount awarded is paid immediately to the employee and the remaining two-thirds is payable ratably over the succeeding two years. Amounts allocated under the plan may be taken in cash or deferred in a non-qualified deferred compensation plan. Participants also have the option of electing to take awards in our Class A Stock valued at a price equal to 85% of its average closing price for the period immediately preceding the making of the award. The amount of award for any individual is capped at 50% of the employee's eligible salary, which is defined as the amount of ordinary salary less 40% of the FICA salary base. For the purposes of this plan, the return on equity is computed by dividing after tax income (computed before allocations to the Incentive Compensation Plan) by the amount of stockholders' equity as of the beginning of the year. The target rate of return on equity, which is approved annually by the Compensation and Stock Option Committee was 15% for the fiscal year ended March 28, 2004, which rate represented a Net Income After Tax of $12,845,000. During fiscal year 2003, amounts were paid with respect to performance awards granted in 2003 and 2002. For the fiscal year ended March 28, 2004, $125,000 was accrued under the plan for payment of bonuses to employees, including executive officers. PERFORMANCE GRAPH Comparison of five-year cumulative total return among Benihana Inc., the NASDAQ stock market-US index and the SIC Code Index. FISCAL YEAR ENDING
COMPANY 1999 2000 2001 2002 2003 2004 ---- ---- ---- ---- ---- ---- Benihana Inc. 100.00 111.54 92.31 155.58 90.89 148.10 SIC Code Index 100.00 78.77 70.17 88.33 62.29 99.72 NASDAQ Market Index - U.S. 100.00 100.00 192.23 79.28 78.07 56.61 87.25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Benihana of Tokyo owns shares representing approximately 43.6% of the votes represented by our Common Stock, which class elects 75% of the directors and, therefore, Benihana of Tokyo is able as a practical matter to control the Corporation through the election of a majority of its directors. A trust of which Kevin Y. Aoki, Vice President-Marketing and a Director of the Corporation, Grace Aoki, Kevin Y. Aoki's sister, Kyle Aoki, Kevin Y. Aoki's brother and Darwin C. Dornbush, the Secretary and Director of the Corporation, are the trustees, is the owner of the Benihana of Tokyo Stock. Darwin C. Dornbush has given his intent to resign as trustee subject to the performance of an accounting. Benihana of Tokyo owns a Benihana restaurant in Honolulu, Hawaii (the "Honolulu Restaurant") and all rights to the Benihana name and trade names, service marks and proprietary systems outside the territory served by the Corporation which consists of the United States (except for rights related to the State of Hawaii) and Central and South America and the islands of the Caribbean Sea. We also granted to Benihana of Tokyo a perpetual license to operate the Honolulu Restaurant and an exclusive license to own and operate Benihana restaurants in Hawaii. This license is royalty free with respect to any Hawaiian restaurant beneficially owned by Rocky H. Aoki. We have a right of first refusal to purchase any Hawaiian restaurant or any joint venture or sublicensing thereof proposed to be made by Benihana of Tokyo with an unaffiliated third party; and, in the event any Hawaiian restaurant is sold, sublicensed or transferred to a third party not affiliated with Rocky H. Aoki, we will be entitled to receive royalties from such restaurant equal to 6% of gross revenues. Darwin C. Dornbush, our Secretary and a Director, is a partner in Dornbush Schaeffer Strongin & Weinstein, LLP, formerly known as Dornbush Mensch Mandelstam & Schaeffer, LLP, a law firm. In the fiscal year ended March 28, 2004, we paid approximately $657,000 in legal fees and expenses to Dornbush Schaeffer Strongin & Weinstein, LLP. Mr. Rocky H. Aoki, the founder of Benihana and the father of Kevin Y. Aoki, resigned as Chairman and Chief Executive Officer in 1998. Under the terms of a Consulting Agreement, Mr. Aoki continues to provide consulting services to the Corporation. He is paid $600,000 a year for these services subject to cost of living adjustments. This agreement will expire in 2006. John E. Abdo, our director, is a director and Vice Chairman of the Board of BFC Financial Corporation. On July 1, 2004, the Corporation completed the funding of the first tranche of its previously announced sale of $20,000,000 aggregate principal amount of Convertible Preferred Stock to BFC Financial Corporation in a private placement (the "BFC Transaction"). The Corporation issued $10,000,000 in principal amount of the Convertible Preferred Stock at the closing and will issue the balance of the Convertible Preferred Stock from time to time during the two year period commencing on the first anniversary of the closing. Subsequent closings are subject to customary closing conditions. OTHER MATTERS On July 2, 2004, Benihana of Tokyo, Inc. ("BOT"), which owns Common Stock of the Corporation representing approximately 43.6% of the voting power entitled to vote at the Annual Meeting on the election of the Common Stock Directors, commenced a lawsuit in the Court of Chancery of the State of Delaware against the Corporation, members of the Corporation's Board of Directors and BFC Financial Corporation. The action, which purports to be brought both individually and derivatively on behalf of the Corporation, seeks temporary and permanent injunctive relief, and unspecified monetary damages and recovery of costs and expenses, in connection with the recent closing of the BFC Transaction described in "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS". In connection with this action, BOT stated in a motion made to the Court of Chancery of the State of Delaware, that BOT will propose candidates to replace Messrs. Schwartz and Sano as directors and will seek to retain Kevin Aoki as a director. BOT has nominated Kevin Aoki and Lewis Jaffe for the election at the Annual Meeting to serve as Common Stock Directors. RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT ACCOUNTANTS The firm of Deloitte & Touche LLP, or its predecessor Touche Ross & Co., has audited the financial statements of the Corporation and its predecessor since its formation in 1982 and the Board of Directors desires to continue the services of that firm for the current fiscal year ending March 27, 2005, The following table presents fees for professional audit services rendered by Deloitte & Touche LLP for the audit of the Corporation's annual financial statements included in the Corporation's Annual Report on Form 10-K and review of financial statements included in the Corporation's quarterly reports on Form 10-Q for fiscal 2003 and 2004, and fees billed for other services rendered by Deloitte & Touche LLP. 2003 2004 ---- ---- Audit Fees (1) $124,962 $162,650 Audit Related Fees (2)(3) $ 8,450 $ 6,300 Tax Fees (3)(4) $ 18,321 $121,599 All Other Fees $ -0- $ -0- (1) The fees consisted of the audit of the Corporation's Consolidated Financial Statements included in the Corporation's Annual Report on Form 10-K and reviews of its interim financial statements included in the Corporation's quarterly reports on Form 10-Q. (2) The audit related fees consisted of services incurred for a registration statement and audit fees of our Employee Benefit Plan. (3) The Audit Committee has determined that the provisions of all non-audit services performed for the Corporation by Deloitte & Touche LLP is compatible with maintaining that firm's independence. (4) Tax fees consisted primarily of tax advisory services. The Audit Committee's policy is to pre-approve all audit services and all non-audit services that the Corporation's independent auditor is permitted to perform for the Corporation under applicable federal securities regulations. While it is the general policy of the Audit Committee to make such determinations at full Audit Committee Meetings, the Audit Committee may delegate its pre-approval authority to one or more members of the Audit Committee, provided that all such decisions are presented to the full Audit Committee at its next regularly scheduled meeting. The affirmative vote of a majority of the votes present, in person or by proxy at the Meeting is required to ratify such appointment. This vote is not required by our Certificate of Incorporation or By-Laws. However, the Board of Directors will appoint other independent public accountants if the appointment of Deloitte & Touche LLP is not approved by a majority of the votes of the shares represented and voting thereon at the Meeting. A representative of Deloitte & Touche LLP is expected to be present at the Meeting and will have the opportunity to make a statement if he or she wishes and will be available to respond to appropriate questions. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP ANNUAL REPORT Our 2004 Annual Report is enclosed with this Proxy Statement. FORM 10-K WE WILL PROVIDE WITHOUT CHARGE TO EACH STOCKHOLDER, UPON WRITTEN REQUEST DIRECTED TO JUAN C. GARCIA, ASSISTANT SECRETARY, AT 8685 NORTHWEST 53RD TERRACE, MIAMI, FLORIDA 33166, A COPY OF OUR ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO) FOR THE FISCAL YEAR ENDED MARCH 28, 2004. Date: August 2004 ---------------- Order of the Board of Directors /s/ Darwin C. Dornbush - ---------------------------------- By: Darwin C. Dornbush, Secretary Exhibit A BENIHANA INC. CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS (Revised as of May 20, 2004) 1. PURPOSE The primary functions of the Audit Committee is to represent the Board of Directors (the Board) in fulfilling its oversight responsibilities by: 1. Reviewing the financial reports and other financial and related information released by the Corporation to the public, or in certain circumstances governmental bodies; 2. Reviewing the Corporation's system of internal controls regarding finance, accounting, business conduct and ethics and legal compliance that management and the Board have established; 3. Reviewing the Corporation's accounting and financial reporting processes; 4. Reviewing and appraising with management the performance of the Corporation's independent auditors, including the audit of the Corporation's financial statements; 5. Monitoring the independence of the Corporation's independent auditors; 6. Providing an open avenue of communication between the independent auditors, management and the Board of Directors; and 7. Receiving and investigating notices of financial improprieties. The Audit Committee's role is one of oversight. The Corporation's management is responsible for the preparation of the Corporation's financial statements, for maintaining appropriate systems for accounting and internal controls, and for monitoring compliance with the Corporation's policies and rules regarding business conduct. The Corporation's independent auditors are responsible for planning and conducting proper audits and reviews of the Corporation's financial statements. Ensuring that the Corporation's financial statements comply with generally accepted accounting principles is the joint responsibility of the Corporation's management and the independent auditors. The Audit Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it has direct access to the independent auditors as well as anyone in the organization. The Audit Committee has the ability to retain, at the Corporation's expense, special legal, accounting or other consultants or experts it deems necessary in the performance of its duties. The Corporation shall provide funding for the ordinary administrative expenses of the Audit Committee. 2. COMPOSITION The Audit Committee members shall meet the requirements of NASDAQ and the Sarbanes-Oxley Act of 2002 (the S-O Act). The Audit Committee shall be comprised of three or more directors, as determined by the Board, each of whom shall be independent directors and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Audit Committee. An Audit Committee member may not be an affiliated person of the Corporation or any of its subsidiaries. All members of the Committee shall have a working familiarity with basic finance and accounting practices and be able to read and understand fundamental financial statements, including the Corporation's financial statements. At least one member of the Audit Committee shall, in the judgment of the Board, have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background that results in the individual's financial sophistication (as required by applicable listing standards), including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. The members of the Audit Committee shall be elected or reappointed by the Board annually for a one year term. A Chairperson shall be appointed by the Board. 3. MEETINGS The Audit Committee will meet at least four times annually and be available to meet more frequently as circumstances dictate. The Audit Committee Chairperson shall meet with the independent auditors and senior management periodically to review the Corporation's financial statements, 10-Q reports and other relevant interim reports before release and/or filing. Incidental to any of these regularly scheduled meetings, the Audit Committee shall meet, if necessary, with management and the independent auditors in separate executive sessions to discuss any matters that the Audit Committee and each of these groups believe should be discussed privately. 4. COMPENSATION The members of the Audit Committee shall be compensated for participation at Audit Committee meetings as provided by the Board, and shall be reimbursed for expenses incurred in connection with their service on the Audit Committee. No additional fees (other than for service as a director), including consulting and advisory fees, may be paid to members of the Audit Committee which are proscribed by the S-O Act. 5. RESPONSIBILITIES AND DUTIES To fulfill its responsibilities and duties the Audit Committee shall: Documents/Reports Review 1. Review and update this Charter periodically, as conditions dictate. Submit the charter to the Board for approval and have the document published at least every three years in accordance with Securities and Exchange Commission (the "SEC") regulations. 2. Review and approve the Corporation's Business Conduct policies. 3. Review the Corporation's annual financial statements and other reports, including the Management's Discussion and Analysis contained in these reports, and financial and related information prior to its release to the public, or in certain circumstances release to governmental bodies, including any certification, report, opinion or review rendered by the independent auditors. 4. Review with financial management and the independent auditors each quarterly earnings release and 10-Q Quarterly Report, including the Management's Discussion and Analysis contained in such reports, prior to its filing. The Chairperson of the Audit Committee may represent the entire Audit Committee for purposes of this review. 5. Review with independent auditors the recommendations included in their management letter, if any, and their informal observations regarding the adequacy of overall financial and accounting procedures of the Corporation. On the basis of this review, make recommendations to senior management for any changes that seem appropriate. 6. Prepare the minutes of each meeting and distribute them to all members of the Board. The Committee may also provide periodic summary reports to the Board. The permanent file of the minutes of Audit Committee meetings will be maintained by the Secretary of the Corporation. Independent Auditors 7. The Audit Committee shall be directly responsible for the appointment, compensation, retention and oversight of the Corporation's outside auditor. This will include the sole authority to hire and fire the outside auditor. The Audit Committee shall review the fees, expenses and performance of the independent auditors. 8. The Audit Committee shall be responsible for pre-approval of all audit services and non-audit services in accordance with Section 202 of the S-O Act. 9. The Audit Committee shall review and approve the scope of the annual audit to be performed by the Corporation's independent auditors. 10. On an annual basis, the Audit Committee shall review and discuss with the independent auditors their independence from management and the corporation and the matters included in the auditors' written disclosures required by the Independence Standards Board Standard No. 1 (ISB 1), including all relationships or services between the independent auditors and the Corporation, and any other relationships that may adversely affect the objectivity of the independent auditors, and to the extent any relationships are identified, recommend action, if appropriate, to the full Board in view of such reviews and discussions. 11. Annually consult with the independent auditors out of the presence of management about internal controls and the fullness and accuracy of the Corporation's financial statements. 12. Assure regular rotation of the lead audit partner, as required by Section 203 of the S-O Act. Financial Reporting Process 13. In consultation with the independent auditors, review the integrity of the Corporation's financial reporting process, both internal and external. 14. Discuss with the independent auditors the matters required to be communicated under Statement on Auditing Standards No. 61, Communication with Audit Committees (SAS 61), including, but not limited to, the independent auditors' judgment as to the quality of the Corporation's accounting principles, setting forth significant financial reporting issues, judgments and disclosures in financial statements. 15. Review and consider major changes to the Corporation's accounting principles and practices as proposed by management or the independent auditors. 16. The Chairperson of the Audit Committee may represent the entire Committee for purposes of the consultation and review prescribed under this section (Financial Reporting Process). Process Improvement 17. Request that management report to the Audit Committee and the independent auditors regarding any principal/critical risks, emerging or developing issues and significant judgments made or to be made in management's preparation of the financial statements. 18. Following completion of the annual audit, review separately with management and the independent auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information. 19. Review any significant disagreement among management and the independent auditors in connection with the preparation of the financial statements. In cases where any such disagreement cannot be resolved to the mutual satisfaction of management and the outside auditors, the Audit Committee shall have responsibility for making the final determination of the Corporation's position. 20. Review with the independent auditors and management the extent to which changes or improvements in financial or accounting practices, as approved by the Audit Committee, have been implemented. Outside Advisors 21. The Audit Committee shall have the authority to retain outside advisors, including counsel, without the approval of the full Board, and to approve the compensation of such advisors. Ethical and Legal Compliance 22. Review the Corporation's operations and determine whether management has established and maintains effective programs and processes to ensure compliance with its Business Conduct policies. 23. Review management's programs and processes for risk management and protection of the Corporation's assets and business. 24. Review management's monitoring of the Corporation's compliance with the above programs to ensure that management has the proper review system in place to ensure that the Corporation's financial statements, reports and other financial information disseminated to governmental organizations and the public satisfy legal requirements. 25. Review, with the Corporation's counsel, legal compliance matters, including corporate securities trading policies. 26. Review, with the Corporation's counsel, any legal matter that could have a significant impact on the Corporation's financial statements. 27. Review with the Corporation's Chief Executive Officer and Chief Financial Officer how they are meeting their obligations under the certification requirements of Section 302 and 906 of the S-O Act. 28. Review with the Chief Executive Officer and the Chief Financial Officer the Corporation's internal controls and procedures for financial reporting and its disclosure controls and procedures. 29. The chairperson of the Committee may represent the entire Audit Committee for purposes of the review referred to in paragraphs 22 through 26 of this section (Ethical and Legal Compliance). 30. Perform any other activities consistent with this Charter, the Corporation's By-Laws and government law, as the Audit Committee or the Board deems necessary or appropriate. 31. Review and approve all related party transactions of the type contemplated to be disclosed under Item 404 of the SEC's Regulation S-K, other than stock option grants or exercises. Critical Accounting Policies and Significant Accounting Judgments and Estimates 32. Request and review report from independent auditors on critical accounting policies and alternative treatments of financial information that have been discussed with management. Members of the Audit Committee should understand the Corporation's critical accounting policies, internal controls, off-balance sheet financing and related party transactions. 33. Review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Corporation's selection or application of accounting principles. 34. Discuss with senior management, with respect to each critical accounting estimate included in the Corporation's management, disclosure and analysis (MD&A) associated with its financials, the development and selection of the accounting estimate, and the MD&A disclosure about the estimate. Open Communications; Reports to the Board 35. The Audit Committee shall provide an open avenue of communications between and among the independent auditors, the internal auditors, management and the Board. The Audit Committee shall meet in separate executive sessions periodically with the Corporation's independent auditors, internal auditors, Chief Financial Officer and Chief Executive Officer to discuss any matters that the Audit Committee or any of those persons believes should be discussed. The Audit Committee shall report the results of its deliberations and activities to the Board. Complaint Procedures 36. The Audit Committee shall establish procedures for the submission of complaints and concerns received by or on behalf of the Corporation regarding accounting, auditing and other financial matters. These procedures must address: (1) the receipt, retention, and treatment of complaints received by the company about accounting, internal accounting controls and auditing matters; and (2) the confidential, anonymous submission of employees concerns about questionable auditing or accounting matters. Other Audit Committee Responsibilities 37. Annually prepare a report to shareholders as required by the SEC. The report should be included in the Corporation's annual proxy statement. 38. Perform any other activities consistent with this Charter, the Corporation's By-Laws and governing law, as the Audit Committee or the Board deems necessary or appropriate. BENIHANA INC. Class A Stock Proxy - For the Annual Meeting of Stockholders - September 8, 2004. This Proxy is solicited on behalf of the Board of Directors. The undersigned stockholder of BENIHANA INC., revoking any previous proxy for such stock, hereby appoints Joel A. Schwartz and Darwin C. Dornbush, or any one of them, the attorneys and proxies of the undersigned, with full power of substitution, and hereby authorizes them to vote all shares of Class A Stock of BENIHANA INC. which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on September 8, 2004 at 10:00 a.m. at Doral Golf Resort and Spa, 4400 N.W. 87th Avenue, Miami, Florida 33178, and any adjournment thereof on all matters coming before said meeting. In the event no contrary instructions are indicated by the undersigned stockholder, the proxies designated hereby are authorized to vote the shares as to which the proxy is in accordance with the recommendation of the Board of Directors set forth on this card. The Board of Directors Recommends a Vote FOR the election of he nominee of the Board of Directors, and FOR the ratification of the appointment of Deloitte & Touche LLP as our independent accountants. For each proposal, mark one box |_| in blue or black ink. Election of Directors FOR THE NOMINEE WITHHOLD AUTHORITY Joel A. Schwartz Class III Director |_| |_| Ratification of Deloitte & Touche LLP as Independent Accountants. FOR AGAINST ABSTAIN |_| |_| |_| Please sign here exactly as your name(s) appear(s) on this Proxy. - ----------------------------------------------- (Signature) - ----------------------------------------------- (Signature) Dated: -------------------- If signing for an estate, trust or corporation, title or capacity should be stated. If shares are held jointly, each holder should sign. If a partnership, sign in partnership name by authorized person BENIHANA INC. Common Stock Proxy - For the Annual Meeting of Stockholders - September 8, 2004. This Proxy is solicited on behalf of the Board of Directors. The undersigned stockholder of BENIHANA INC., revoking any previous proxy for such stock, hereby appoints Joel A. Schwartz and Darwin C. Dornbush, or any one of them, the attorneys and proxies of the undersigned, with full power of substitution, and hereby authorizes them to vote all shares of Common Stock of BENIHANA INC. which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on September 8, 2004 at 10:00 a.m. at Doral Golf Resort and Spa, 4400 N.W. 87th Avenue, Miami, Florida 33178, and any adjournments thereof on all matters coming before said meeting. In the event no contrary instructions are indicated by the undersigned stockholder, the proxies designated hereby are authorized to vote the shares as to which the proxy is in accordance with the recommendation of the Board of Directors set forth on this card. The Board of Directors Recommends a Vote FOR the election of the nominee of the Board of Directors and FOR the ratification of the appointment of Deloitte & Touche LLP as our independent accountants. For each proposal, mark one box |_| in blue or black ink. Election of Directors. FOR THE NOMINEE WITHHOLD AUTHORITY Yoshihiro Sano Class III Director |_| |_| Kevin Y. Aoki Class III Director |_| |_| Ratification of Deloitte & Touche LLP as Independent Accountants. FOR AGAINST ABSTAIN |_| |_| |_| Please sign here exactly as your name(s) appear(s) on this Proxy. - ----------------------------------------------- (Signature) - ----------------------------------------------- (Signature) Dated: -------------------- If signing for an estate, trust or corporation, title or capacity should be stated. If shares are held jointly, each holder should sign. If a partnership, sign in partnership name by authorized person. -----END PRIVACY-ENHANCED MESSAGE-----