Options Reap $10.7 Million for Cheesecake CEO

Cheesecake Factory Inc. Chairman and Chief Executive David Overton exercised stock options worth $10.7 million in fiscal 2002 after exercising none in 2001, the company said Monday.

Overton, who co-founded the Calabasas-based chain of 61 restaurants, received $475,000 in salary plus about $90,000 in bonuses and other compensation for a 2002 total of $565,002, the company said in a regulatory filing. That’s up nearly $13,000, or 2%, from his 2001 compensation package.

Overton’s option exercise was his biggest since the company went public in 1992 and was done for estate planning purposes, a company spokesman said.

In a separate proxy filing with the Securities and Exchange Commission, a Las Vegas restaurant workers union called the company’s stock option plan excessive and asked shareholders to vote on a plan to list options as an expense on income statements.

The Culinary Workers Union Local 226, which for two years has been attempting to organize the company’s workers in Las Vegas, owns 30,000 Cheesecake shares through its pension fund, a spokesman said.

The union charges that the stock option program has transferred too much of company ownership from shareholders to management. From 1995 to 2002, more than 7.6 million stock options have been exercised by managers of the company, the union said.

“They have distributed a lot of options that are leading to a diluting of the existing shareholders’ ” stake, said Chris Bohner, senior research analyst for the union, part of the Hotel Employees and Restaurant Employees International.

Cheesecake Factory’s proxy said the options program provided “an important competitive advantage to the company with respect to recruitment ... and retention of critical personnel without excessive reduction in value to the stockholders.”

The company’s proxy showed that top management exercised 710,393 options in 2002, valued at $20.45 million.

Cheesecake shares rose 62 cents to $33.99 on Nasdaq.