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Non-Tech : RAINFOREST CAFE -- Ignore unavailable to you. Want to Upgrade?

To: Dylan who wrote (4256)	5/27/1998 2:41:00 AM
From: Dennis Vail	Read Replies (2) \| Respond to of 4704

From the 5/12/98 Pioneer Press Grand Casino exec gets special treatment Lyle Berman has his hand in the cookie jar again. And he's doing it with help from the board of directors of a publicly traded company. Investors may recall last year that Berman's board at Grand Casinos gave him a chance to buy cheap stock options as shareholders watched their holdings get brutalized after a key misstep. Berman, then chief executive, made a major investment in what became a bankrupt Las Vegas casino. In effect, the board rewarded Berman for that mess while shareholders lost value and waited for a turnaround. Some shareholders complained bitterly at the company's annual meeting, arguing that repricing options when stock prices fall simply makes stock options a ruse. Rather than being an incentive for good work, it seemed that Grand Casinos was using them to reward mistakes. The criticism didn't change anything at Grand. In fact, it didn't even stop Rainforest Cafe's board, which includes some of the same directors as Grand's board, from giving Berman the same type of favored treatment. The restaurant company will report to the Securities and Exchange Commission this week that it's changed Rainforest's stock option plan, said Mark Robinow, the company's chief financial officer. Berman, who holds options on 450,000 shares, and other Rainforest executives will be able to buy their options for $16 a share, instead of the original $21.42. If they choose that price, they'll have to reduce their options by 15 percent. Regardless, that's a good deal for Berman because his old options, priced at over $21, are worthless given today's stock price of around $16. Rainforest shares fell from $25 to $10.75 in January after the company said it was having trouble attracting repeat business. Stores opened at least a year suffered an 11 percent decline in sales. Since the announcement, Rainforest's stock has recovered somewhat, but hasn't budged much above $16. But the fact that the company still hasn't rewarded shareholders didn't stop Rainforest's board from enriching Berman. Rather than making him increase the value of Rainforest stock before he profited, the board simply lowered the bar and gave him an attractive stock price. Joel Waller, who's on Rainforest's and Grand Casinos' compensation committees, says he's taken criticism for giving Berman more attractive stock options. But he maintains it was the right thing to do. He notes that not only is Berman being induced to do good work, but the company is making stock options available to rank-and-file employees, too. ''It's been a wonderful motivator,'' he said. Waller, who is chief executive of another Berman business, Wilsons The Leather Experts, says he also provides stock options to employees at Wilsons. ''Even receptionists start every day wondering what the stock price is,'' he said. But critics of Berman's stock options note that while they're available to nonexecutive employees, it's Berman and other executives who get the largest share. So what's the thinking? After all, it seems that Berman is being rewarded for a falling stock price rather than a rising price. But Waller says Rainforest sees it differently -- the company must provide incentives to keep Berman because he's so important. ''Lyle is extremely involved,'' he says. And when pushed about motivating Berman -- who holds almost 1.7 million shares, or 6.7 percent of the company -- when the price is down, Waller responds: ''He's extremely motivated. He has a lot of stock in this company. He has a vested interest in it.'' So why the lower stock option price?