NATHAN’S
FAMOUS, INC.
1400 Old
Country Road, Suite 400
Westbury,
New York 11590
March 6,
2009
VIA EDGAR
United
States Securities and
Exchange
Commission
Washington,
DC 20549
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RE:
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Nathan’s
Famous, Inc.
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Form 10-K
for fiscal year ended March 30, 2008
Filed
June 12, 2008
File No.
000-03189
Ladies
and Gentlemen:
The
following are the responses to the comments of the staff of the Securities and
Exchange Commission (the “Commission”) in its
letter of January 26, 2009, in connection with the above-referenced filing
by Nathan’s Famous, Inc. (“Nathan’s,” the “Company,” “we,” “us” or “our”), which
letter was received by the Company on February 24, 2009. To
facilitate your review, we have included the staff’s numbered
comments along with the related responses.
Definitive Proxy Statement
on Schedule 14A (incorporated by reference into Part III of
Form 10-K)
Annual Bonuses, page
15
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1.
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We note your disclosure
regarding your executive bonus program. We note that in
determining the amount of annual bonuses awarded to named executive
offers, your compensation committee considers the “achievement of
individual targets,” “Nathan’s achievement of performance goals,” and the
achievement of “strategic planning objectives,” but we do not see
sufficient discussion regarding these criteria. In future
filings, please disclose the individual target goals for each executive
officer, Nathan’s performance goals, and Nathan’s strategic planning
objectives. What formulas, if any, do you use for determining
the amount of each executive’s bonus? Be specific, and use
quantitative data to the extent possible. Please refer to
Item 402(b)(2)(v) of Regulation S-K. To the extent
you believe that disclosure of the targets is not required because it
would result in competitive harm such that the targets could be excluded
under Instruction 4 to Item 402(b) of Regulation S-K,
please provide a detailed explanation for such
conclusion. Please also note that to the extent
you have an appropriate basis for omitting the specific
targets, you must discuss how difficult it would be for the named
executive officers or how likely it will be for you to achieve the
undisclosed target levels or other
factors.
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Please be
advised that the Company’s Compensation Committee intends to re-evaluate its
current executive compensation program and may determine to revise the structure
of such program. In the event that, following any amendment to the
Company’s executive compensation program for the Company’s current fiscal year
ending March 29, 2009 and future years, such program provides for compensation
based on an individual’s target goals, Company performance goals or achievement of
strategic planning objectives, we will include disclosure of such goals and
objectives in our future filings. Please refer to our response to
question 2, below, for a description of the Company’s long-term objectives
currently considered in evaluating executive compensation.
Equity-Based Compensation,
page 16
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2.
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We also note your disclosure
regarded equity-based compensation. You state that grants of
equity awarded are designed to reward your executives for assisting the
Company in achieving its “long-term objectives” and to “link an increase
in stockholder value to compensation,” but we do not see sufficient
disclosure regarding these criteria. For example, what are your
long-term objectives? How do you determine whether executives
have helped you achieve those objectives and are entitled to grants of
equity compensation? How does your equity-based compensation
program effectively link an increase in stockholder value to
compensation? Be specific, using quantitative date and formulas
to the extent possible. Please refer to Item 402(b)(2)(v)
of Regulation S-K.
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In
response to the staff’s comment, please be advised that the Company’s long-term
objectives currently consist of the following: increasing each of revenues,
profits from continuing operations, free cash flow, net income, earnings per
share and cash balances and controlling general and administrative expenses. In
addition, the Company also evaluates certain other metrics for each of its
revenue centers (i.e.,
Company-owned restaurants, franchising, branded product program and licensing)
as follows: sales at Company-owned restaurants, cash contribution from
company-owned restaurants, number of franchise store openings, amount of
franchise fees and royalties, sales and the number of pounds sold through food
service, amount of license royalties and the ability to control
general and administrative costs. However, the Company has not established fixed
quantitative goals for any of the foregoing objectives or metrics.
The
importance of the specific objective or metric to an executive’s compensation
depends on the specific responsibilities of an executive’s
position. For example, it would be inappropriate to evaluate the
performance of our chief financial officer in connection with the Company’s goal
of increasing revenue. In addition, the specific objectives
considered for a particular executive officer may be afforded greater or lesser
weight in any fiscal year, depending on a variety of factors such as the
Company’s overall results, its performance relative to its competitors and the
economy in general. As a result, an executive’s success or failure as
it relates to any one of the foregoing objectives or metrics may drive whether
or not that executive gets a bonus and the amount of the bonus. In
addition, an extraordinary event, such as the sale or purchase of a brand or
line of business, may impact compensation either positively or negatively. If,
following its evaluation of the foregoing metrics, management and the
Compensation Committee determine that an executive has helped the Company
achieve one or more of the Company’s long-term objectives and/or the appropriate
profit center metric, we will consider an award of equity-based compensation as
a reward for the executive’s contribution in meeting or exceeding the relevant
objective. In addition, since the Company’s stock option awards vest over a
three or four-year period, any stock option award is also intended to provide an
incentive for the executive to remain in our employ during the vesting period of
the award. We will include disclosure of the foregoing in the Company’s future
filings.
Further,
the Company believes that the way to increase stockholder value is to increase
the trading price for its common stock. The Company’s equity incentive program
primarily consists of the grant of stock options; the Company only has the
ability to grant another 2500 shares of restricted stock. The Company’s stock
incentive plans only permit the grant of options with an exercise price equal to
the market price on the grant date. Through the use of stock options, a
significant portion of potential compensation is tied directly to stock price
appreciation, thereby aligning the interests of our executives with those of our
stockholders. The Company believes that the foregoing is an effective link
between an increase in stockholder value and its executives’
compensation.
* * * *
*
The
Company hereby acknowledges that:
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the
Company is responsible for the adequacy and accuracy of the disclosure in
the filing;
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staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
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the
Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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Thank you
for your comments. We trust that these responses are sufficient for
your purposes. However, if you have any further questions or
comments, please feel free to contact me.
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Sincerely,
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/s/
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Ronald
DeVos
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Ronald
DeVos
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Chief
Financial Officer
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