CALABASAS HILLS Calif. The Cheesecake Factory Inc.’s chairman and chief executive, David Overton, and other current and former executives and board members have agreed to repay a total of $940,000 to the company to settle a shareholder lawsuit that alleged they benefited from the backdating of stock option grants.
In a filing Thursday with securities regulators, Cheesecake Factory said the Feb. 11 settlement also provides for a slate of corporate governance reforms, including new systems for approving option grants, the adoption of new standards for director independence, the naming of a new independent board member, additional insider-trading controls, new director education methods and provisions for recovering performance-based cash bonuses that were based on restated financial results.
In addition to Overton, restitution would come from former CFO Gerald Deitchle, now president and CEO of BJ's Restaurants Inc., and current directors Thomas Gregory, Wayne White and Jerome Kransdorf, the company said.
The settlement and lawsuit stemmed from an Aug. 3, 2006, disclosure by Cheesecake Factory that the Securities and Exchange Commission had begun a probe into the company's option-granting practices -- the first such investigation of a restaurant company amid a flurry of SEC inquiries into suspected backdating by more than 80 public companies.
Among scores of restaurant companies that subsequently began internal probes into their option-granting practices were the parent of the Chuck E. Cheese's chain; Krispy Kreme Doughnuts Inc.; Starbucks Corp.; Wendy's International Inc.; Ruby Tuesday Inc.; and P.F. Chang's China Bistro Inc.