<PAGE> 1
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 the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Morrison Management Specialists, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
<PAGE> 2
PROXY STATEMENT
AND NOTICE OF
2000
ANNUAL
SHAREOWNERS
MEETING
(MORRISON MANAGEMENT SPECIALISTS LOGO)
<PAGE> 3
LETTER TO THE SHAREOWNERS
(MORRISON MANAGEMENT SPECIALISTS LOGO)
August 22, 2000
To Our Shareowners:
It is our pleasure to invite you to attend our Annual Meeting of Shareowners,
which will be held this year on Wednesday, September 27, 2000, at the Georgia
International Convention Center, 1902 Sullivan Road, College Park, Georgia. The
meeting will start at 1:00 p.m., local time.
On the ballot at this year's meeting is the proposal for the election of two
Class II directors. Also on the ballot is the proposal to increase the number of
shares reserved for issuance under our 1996 Stock Incentive Plan by 500,000
shares. We also look forward to answering any questions you may have at the
meeting.
We hope that you will be able to attend the meeting in person. Whether or not
you expect to be present, please complete, date, sign and mail the enclosed
proxy in the envelope provided. If you attend the meeting, you may withdraw your
proxy and vote your shares.
Thank you for your support.
Sincerely,
/s/ Glenn A. Davenport
Glenn A. Davenport
Chairman and Chief Executive Officer
<PAGE> 4
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
<TABLE>
<S> <C>
TIME: 1:00 p.m. on Wednesday, September 27, 2000
PLACE: Georgia International Convention Center
1902 Sullivan Road
College Park, Georgia 30337-0508
ITEMS OF BUSINESS: (1) To elect two Class II directors.
(2) To increase the number of shares reserved for
issuance under the 1996 Stock Incentive Plan by 500,000
shares.
(3) To transact any other business properly coming
before the meeting.
WHO MAY VOTE: You can vote if you were a shareowner of record on
August 11, 2000.
ANNUAL REPORT: A copy of the Annual Report is enclosed.
DATE OF MAILING: This notice and the Proxy Statement are first being
mailed to shareowners on or about August 22, 2000.
MAILING ADDRESS: The mailing address of the Company is 1955 Lake Park
Drive, S.E., Suite 400, Smyrna, Georgia 30080-8855.
By Order of the Board of Directors,
/s/ John E. Fountain
John E. Fountain
Vice President, General Counsel and Secretary
</TABLE>
<PAGE> 5
ABOUT THE MEETING
WHAT AM I VOTING ON?
You will be voting on the following:
- To elect two Class II directors; and
- To increase the number of shares reserved for issuance under the 1996 Stock
Incentive Plan by 500,000 shares.
WHO IS ENTITLED TO VOTE?
You may vote if you owned stock as of the close of business on August 11, 2000.
Each share of stock is entitled to one vote. As of August 11, 2000, we had
12,834,806 shares of common stock ("Common Stock") outstanding. All share
information in this proxy statement gives effect to the ten percent stock
dividend paid on May 19, 2000.
HOW CAN I VOTE MY SHARES?
You may vote your shares:
- By proxy; or
- In person at the meeting.
HOW DO I VOTE BY PROXY?
You may vote by proxy by completing, signing and returning to us the enclosed
proxy card. Please follow the directions on your proxy card carefully. If you
send the completed proxy card on time, your "proxy" (the persons named on the
proxy card) will vote your shares as you have directed.
HOW CAN I VOTE AT THE MEETING?
You may vote your shares at the meeting if you attend in person. If you attend
the meeting, we will give you a ballot to vote your shares if you wish to vote
in person. Even if you plan to be present at the meeting, we encourage you to
vote your shares by proxy because it will make it easier for us to count the
votes.
CAN I CHANGE MY MIND AFTER I SEND IN THE PROXY?
You may change your mind and revoke your proxy at any time before the voting
takes place at the meeting. You may do this by:
- Signing another proxy with a later date and returning it to us prior to the
meeting;
- Giving the Secretary of the Company written notice of revocation prior to the
meeting; or
- Voting in person at the meeting.
WHAT IF I RETURN MY PROXY CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?
Proxies that are signed and returned but do not contain instructions will be
voted:
- FOR the election of the nominees named in this Proxy Statement;
- FOR the increase in the number of shares reserved for issuance under the 1996
Stock Incentive Plan by 500,000 shares; and
- In accordance with the best judgment of the proxy holder on any other matter
properly brought before the meeting.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts with brokers and/or our transfer agent.
Please vote all of these shares. We recommend that you contact your broker
and/or our transfer agent to consolidate as many accounts as possible under the
same name and address. Our transfer agent is SunTrust Bank, Atlanta, which may
be reached by mail at Mail Code 258, P.O. Box 4625, Atlanta, Georgia 30302, or
by phone at (800) 568-3476.
IF I HOLD MY SHARES IN "STREET NAME" IN A BROKERAGE ACCOUNT, HOW DO I VOTE MY
SHARES?
Your broker will send you a form requesting instructions from you as to how to
vote your shares. You should follow the directions provided on the form to
properly instruct your broker how
1
<PAGE> 6
ABOUT THE MEETING
you would like your shares to be voted. Your brokerage firm has the authority
under the New York Stock Exchange rules to vote your shares in its discretion on
certain "routine" matters, including the election of directors, if you have not
provided proper instructions on how your shares should be voted. If you have
instructed your broker how to vote your shares and wish to change your
instructions, you must follow the procedure outlined in the form provided by
your broker.
HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
In order for us to conduct our meeting, a majority of our outstanding shares as
of August 11, 2000 must be present or represented by proxy at the meeting. This
is referred to as a quorum. Shares voted by brokerage firms under their
discretionary voting authority as described above will be counted for purposes
of establishing a quorum. As of August 11, 2000, we had 12,834,806 shares
outstanding.
HOW MANY VOTES DOES EACH SHARE REPRESENT?
Each share outstanding on August 11, 2000 is entitled to one vote.
HOW MANY VOTES ARE NEEDED TO ELECT DIRECTORS?
The two nominees in Class II who receive the most votes at the meeting will be
elected as directors. This is called an election by a plurality of the votes
cast. Because directors are elected by a plurality of votes cast, withholding
authority to vote for a particular nominee on the proxy card will have no effect
on determining whether that nominee has been elected.
HOW MANY VOTES ARE NEEDED TO APPROVE THE AMENDMENT TO THE STOCK INCENTIVE
PLAN?
Approval of the amendment to the Stock Incentive Plan will require the
affirmative vote of a majority of the shares entitled to vote on the matter.
Because approval requires the affirmative vote of a majority of the shares
entitled to vote, abstentions will have the same effect as votes against the
amendment. Broker non-votes will have no effect on the voting.
2
<PAGE> 7
ELECTION OF DIRECTORS AND NOMINEE BIOGRAPHIES
PROPOSAL 1--ELECTION OF DIRECTORS
WHO ARE THE NOMINEES THIS YEAR?
Claire L. Arnold and Glenn A. Davenport are each nominated for election as Class
II directors. Each nominee for Class II, if elected, will hold office until the
2003 annual meeting of shareowners and until his or her successor is elected and
qualified.
WHAT ARE THE BACKGROUNDS OF THIS YEAR'S NOMINEES?
CLASS II--TERM EXPIRING 2003
The Class II directors standing for election this year are:
CLAIRE L. ARNOLD, 53, Director since 1996
- Chairman and Chief Executive Officer of Leapfrog Services, Inc., a
privately-held technical outsourcing company, 1998-present
- President and Chief Executive Officer of Nicotiana Enterprises, Inc.,
1979-1995
- Chief Executive Officer of NCC L.P., 1992-1994
- Chairman, Chief Executive Officer and President of NCC L.P., 1979-1992
- Director of Morrison Restaurants Inc., 1994-1996
- Member of the Board of:
- Schweitzer-Mauduit International, Inc.
- Ruby Tuesday, Inc.
- International Multifoods, Inc.
GLENN A. DAVENPORT, 46, Director since 1996
- Chairman of the Board, President and Chief Executive Officer of the Company,
July 1999-present
- President, Chief Executive Officer and Director of the Company, 1996-July
1999
- President of the Health Care Division of Morrison Restaurants Inc.'s Morrison
Group, 1993-1996
- Senior Vice President of Morrison Restaurants Inc.'s Hospitality Group,
1990-1993
- Member of the Board of foodbuy.com
WE RECOMMEND
THAT YOU VOTE
FOR THE ELECTION
OF THESE DIRECTORS
3
<PAGE> 8
STANDING DIRECTOR BIOGRAPHIES
WHAT IS THE BACKGROUND OF THE DIRECTORS NOT STANDING FOR ELECTION THIS YEAR?
CLASS III--TERM EXPIRING 2001
The incumbent directors with terms expiring in 2001 are:
JOHN B. MCKINNON, 65, Director since 1996
- Investor and Business Advisor since 1995
- Chairman of the Board of the Company, 1996-July 1999
- Director of Morrison Restaurants Inc., 1989-1996
- Dean of Babcock Graduate School of Management at Wake Forest University,
1989-1995
- President of Sara Lee Food Service, 1988-1989
- President of Sara Lee Corporation, 1986-1988
- Member of the Board of:
- Premark International, Inc.
- Ruby Tuesday, Inc.
DR. BENJAMIN F. PAYTON, 67, Director since 1996
- President of Tuskegee University, 1981-present
- Member of the Board of:
- AmSouth Bancorporation
- AmSouth Bank, N.A.
- The Liberty Corporation
- Praxair, Inc.
- Ruby Tuesday, Inc.
MICHAEL F. CORBETT, 48, Director since 1998
- President of Michael F. Corbett & Associates, LTD. since 1996
- Chairman and Executive Director of The Outsourcing Research Council since
1997
- Chairman of The Corbett Group since 1998
- Member of the Advisory Board of Human Capital Services, Inc. since 1998
- Member of the Editorial Board of InfoServices since 1998
- Member of the Editorial Board of The Outsource Report since 1997
- Co-founder and Director of The Outsourcing Institute, 1993-1996
- Assistant Director of The Graduate Center for Public Policy & Administration,
Marist College, 1992-1995
- Member of the Board of:
- Janus Associates, Inc.
- Providyn LLP
CLASS I--TERM EXPIRING 2002
The incumbent directors with terms expiring in 2002 are:
E. EUGENE BISHOP, 70, Director since 1996
- Retired since 1995
- Chairman of the Board of Morrison Restaurants Inc., 1986-1995
- Chief Executive Officer of Morrison Restaurants Inc., 1980-1992
- Director of Morrison Restaurants Inc., 1963-1996
4
<PAGE> 9
STANDING DIRECTOR BIOGRAPHIES
A. ROBERT OUTLAW, JR., 46, Director since 1996
- Chairman of the Board and Chief Executive Officer of Marshall Biscuit
Company, 1985-present
- Founder of Marshall Biscuit Company, 1985
- Cafeteria management and finance for Morrison Restaurants Inc., 1978-1985
FRED L. BROWN, 59, Director since 1996
- Immediate past Chairman of the American Hospital Association
- Vice Chairman of St. Louis-based BJC Health System since January 1999
- Founding President and Chief Executive Officer of BJC Health System, 1993-
December 1998
- Member of President Clinton's Council on Year 2000 (Y2K) Conversion since
January 1999
- Visiting professor, George Washington University, Washington, D.C.
- Member of the Board of:
- Citation Computers, Inc.
- Commerce Bancshares, Inc.
- American Hospital Association
- Curon Medical, Inc.
- Xcare.net
5
<PAGE> 10
BOARD OF DIRECTORS INFORMATION
WHAT IS THE COMPOSITION OF THE BOARD OF DIRECTORS?
Our Board of Directors currently has eight members. The directors are divided
into three classes, with each class serving for a staggered, three-year period.
The shareowners elect approximately one-third of the members of the Board of
Directors each year.
WHAT IF A NOMINEE IS UNWILLING OR UNABLE TO SERVE?
That is not expected to occur. If it does, proxies will be voted for a
substitute nominee selected by the persons named in the proxy.
HOW ARE DIRECTORS COMPENSATED?
Each director who is not an employee of the Company receives $20,000 annually.
In addition, effective June 1, 2000 each director may receive a stock option
grant of up to 3,000 options under the Directors' Plan based upon the Company
reaching established strategic objectives. Directors who are also employees of
the Company are not separately compensated for their services as directors.
WHAT BENEFIT PLANS ARE AVAILABLE TO DIRECTORS?
Our Stock Incentive and Deferred Compensation Plan for Directors (the
"Directors' Plan") permits non-employee directors to defer all or a portion (in
25 percent increments) of their retainer (other than any portion of the retainer
allocated to Stock Awards, as described below) and/or any additional meeting and
committee fees to a deferred compensation account. Deferred compensation
accounts are credited as of the last day of each fiscal quarter with an assumed
rate of interest equal to 90-day U.S. Treasury Bills, based on the weighted
average balance of that account during that fiscal quarter. A director who
defers compensation will not receive it until:
- the date of the director's 70th birthday; or
- the date the director ceases to be a member of the Board of Directors.
Under our Directors' Plan, non-employee directors who do not attain the "Target
Ownership Level," as defined below, are deemed to have elected to direct that 60
percent of their retainer be allocated to the purchase of Common Stock on their
behalf. Non-employee directors who have attained the Target Ownership Level may
elect that up to 100 percent of their retainer be allocated to the purchase of
Common Stock on their behalf (collectively, the "Stock Awards"). A director will
be treated as having attained the Target Ownership Level if he or she owns, on
the first day of that fiscal quarter, at least a number of shares of Common
Stock with a fair market value equal to 10 multiplied by that director's annual
retainer.
Each director who has a discretionary or deemed election in effect for a fiscal
quarter to purchase Stock Awards will be issued the number of shares of Common
Stock equal to the amount of the retainer so allocated, multiplied by 1.15 and
divided by the fair market value of a share of Common Stock as of the issue
date. Common Stock so purchased may not be transferred within three years of the
date of purchase, except in the event of death, disability, retirement on or
after age 70 or unless the committee administering the Directors' Plan waives
this restriction.
Our Directors' Plan provides that each non-employee director who receives a
Stock Award for a fiscal quarter will be awarded an option as of the first day
of that fiscal quarter to purchase shares of Common Stock equal to three times
the number of shares issued pursuant to the discretionary election or deemed
election, as the case may be.
Under our Directors' Plan, each non-employee director receives a one-time option
award of 5,000 shares of Common Stock as of the date he or she is first elected
to the Board of Directors. Each non-employee director who is re-elected to the
Board of Directors receives an option award of 2,000 shares of Common Stock as
of the date he or she is re-elected.
Options issued under our Directors' Plan:
- Will become fully exercisable six months following the date of grant;
6
<PAGE> 11
BOARD OF DIRECTORS INFORMATION
- Will be exercisable at the fair market value of our Common Stock as of the
date of the option grant; and
- Will generally expire upon the fifth anniversary of the date on which it was
granted.
HOW OFTEN DID THE BOARD MEET IN FISCAL YEAR 2000?
The Board of Directors met eight times during fiscal year 2000. Each director
other than Mr. Corbett attended more than 75% of the meetings of the board and
of committees of which they were members. Mr. Corbett missed the February 7,
February 23 and April 12 special meetings of the Board of Directors due to prior
business commitments.
7
<PAGE> 12
BOARD OF DIRECTORS INFORMATION
WHAT ARE THE COMMITTEES OF THE BOARD?
Our Board of Directors has the following committees:
<TABLE>
<CAPTION>
NUMBER OF
NAME OF COMMITTEE & FUNCTIONS OF THE MEETINGS IN FISCAL
MEMBERS COMMITTEE YEAR 2000
<S> <C> <C>
AUDIT COMMITTEE:
E. Eugene Bishop, - Maintains communications with the Company's 3
Chairman independent auditors as to the nature of the
Claire L. Arnold auditors' services, fees and other significant
Fred L. Brown matters.
Michael F. Corbett - Reviews the Company's internal control
John B. McKinnon procedures.
A. Robert Outlaw, Jr. - Makes recommendations to the Board with respect
Dr. Benjamin F. Payton to the Company's internal control procedures.
COMPENSATION AND
STOCK OPTION
COMMITTEE:
Claire L. Arnold, - Reviews and recommends compensation of officers. 5
Chairman - Reviews and recommends the granting of stock
E. Eugene Bishop options.
Fred L. Brown
Michael F. Corbett
John B. McKinnon
A. Robert Outlaw, Jr.
Dr. Benjamin F. Payton
NOMINATING
COMMITTEE:
Fred L. Brown, Chairman - Reviews the structure of the Board to assure 0
Claire L. Arnold proper skills and experience are represented on the
E. Eugene Bishop Board.
Michael F. Corbett - Proposes nominees for Board membership to the
John B. McKinnon full Board based upon recommendations of the
A. Robert Outlaw, Jr. Chairman, and other Board members, in
Dr. Benjamin F. Payton consultation with the Chief Executive Officer.
- Reviews potential conflicts of prospective Board
members.
- Periodically reviews and recommends to the full
Board the size of the Board.
- Recommends membership of the committees to the
Board.
</TABLE>
8
<PAGE> 13
BOARD OF DIRECTORS INFORMATION
HOW ARE COMMITTEE MEMBERS COMPENSATED?
A non-employee director serving on a Committee (other than the Chairman of such
Committees) receives an annual retainer of $2,500 for each committee membership.
Non-employee Committee members also receive $200 an hour for services performed
on special assignments. Each Committee Chairman receives an annual retainer of
$3,500.
WILL THE NOMINATING COMMITTEE CONSIDER NOMINEES RECOMMENDED BY SHAREOWNERS?
The Nominating Committee does not solicit director nominations but will consider
recommendations from shareowners that are submitted to our Secretary in writing,
indicating the nominee's qualifications and other relevant biographical
information and providing confirmation of the nominee's consent to serve as a
director.
9
<PAGE> 14
EXECUTIVE COMPENSATION
The following tables set forth the compensation earned in fiscal years 2000,
1999 and 1998 by our Chairman of the Board, President and Chief Executive
Officer and the four other most highly compensated executive officers in fiscal
year 2000 ("Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------------- -----------------------
OTHER ANNUAL RESTRICTED AWARDS ALL OTHER
FISCAL SALARY BONUS COMPENSATION STOCK OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) AWARDS($)(2) SARS(3) ($)(4)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
G.A. Davenport.................. 2000 393,000 225,000 8,325 240,560 58,888 7,193
Chairman 1999 339,846 172,000 11,127 303,135 97,239 4,049
and Chief Executive Officer 1998 287,908 145,000 8,145 173,391 69,706 6,121
G.L. Gaddy...................... 2000 185,985 56,452 7,654 109,631 39,213 0
Executive Vice President, 1999 173,077 70,000 12,021 125,990 39,735 0
Sales and Marketing 1998 135,577 85,673 76,440(5) 75,675 29,532 0
K.W. Engwall.................... 2000 199,238 80,000 7,509 91,526 20,938 9,001
Chief Financial Officer 1999 188,461 76,400 0 137,523 46,436 4,731
and Assistant Secretary 1998 158,000 63,200 20,000(5) 75,578 30,382 3,653
J.D. Underhill.................. 2000 196,923 80,000 7,200 91,526 48,433 4,340
President, Morrison Healthcare 1999 178,077 72,000 6,518 129,602 44,009 3,184
Food Services 1998 154,182 62,000 0 91,790 32,897 2,000
R.C. Roberson................... 2000 156,175 46,800 6,538 50,421 23,217 8,069
Division Vice President, 1999 141,538 37,900 3,432 80,999 26,668 6,132
Morrison Healthcare Food 1998 119,857 35,500 4,384 47,933 20,264 5,473
Services
</TABLE>
(1) Does not include "bonus shares" and bonuses paid in restricted stock (see
footnote (2) below).
(2) Under our Management Stock Option Program, any bonus payable to the Named
Executives under our annual incentive bonus program in excess of the target
level of performance is paid in restricted stock valued at the fair market
value of our Common Stock on the first day of the subsequent fiscal year.
For each share paid in lieu of bonus, the executive receives an additional
.15 of a share of restricted stock. Additionally, the executive receives an
option to purchase three times the aggregate number of shares of restricted
stock received. Stock options granted in connection with bonus paid in
restricted stock are included in the "Awards Options/SARs" column. The
executive will forfeit the restricted stock and the related options if his
employment is terminated within 18 months following the date of the award
unless the termination was due to death, retirement or disability. For
fiscal year 2000, the Company allowed Named Executives to subject
previously owned, freely tradable shares to restrictions and forfeitability
provisions in lieu of receiving newly issued restricted shares in payment
of bonus in excess of target level of performance. However, for purposes of
the table, these restricted shares have been treated the same as newly
issued restricted shares. Holders of restricted stock are paid the same
dividends as holders of non-restricted stock. The amounts in this column
include the value of the restricted stock, including the bonus shares,
received as described above. Under our Management Stock Option Program,
eligible employees may purchase shares of Common Stock up to established
annual limits if pre-established corporate, region, or account goals, as
the case may be, are achieved. For each share purchased under the
Management Stock Option Program, the participant receives .15 of a "bonus
share" and an option to purchase three times the number of shares purchased
and the related bonus shares. Stock options granted in connection with
purchases of stock are included in the Awards Options/SARs column. The
shares purchased and the related bonus shares are subject to a two-year or
three-year restriction on resale. The amounts in this column include the
value of the bonus shares, if any, received in connection with the purchase
of shares of Common Stock under the Management Stock Option Program.
(3) Includes stock options granted under the Management Stock Option Program in
connection with shares purchased or restricted stock issued to the Named
Executives as described in footnote (2) above.
10
<PAGE> 15
EXECUTIVE COMPENSATION
(4) "All other compensation" consists of:
- Company contributions to the Deferred Compensation Plan;
- Executive group life and accidental death and dismemberment insurance
premiums paid for by the Company;
- Split-dollar life insurance premiums paid for by the Company; and
- Company contributions to our 401(k) plan.
The following table shows the amount of each category of "all other
compensation" received by each of the named individuals in fiscal year 2000:
ALL OTHER COMPENSATION
<TABLE>
<CAPTION>
DEFERRED EXECUTIVE GROUP LIFE SPLIT-DOLLAR LIFE 401(K) MATCHING
NAME COMPENSATION PLAN INSURANCE PREMIUMS INSURANCE PREMIUMS CONTRIBUTION
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
G.A. Davenport $3,469 $158 $1,378 $2,188
---------------------------------------------------------------------------------------------------
G.L. Gaddy 0 0 0 0
---------------------------------------------------------------------------------------------------
K.W. Engwall 6,756 196 997 1,052
---------------------------------------------------------------------------------------------------
J.D. Underhill 462 366 435 3,077
---------------------------------------------------------------------------------------------------
R.C. Roberson 6,303 280 1,112 374
</TABLE>
(5) Represents relocation-related expenses.
11
<PAGE> 16
EXECUTIVE COMPENSATION
OPTION GRANTS IN FISCAL YEAR 2000
<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATE
NUMBER OPTIONS/ OF STOCK PRICE APPRECIATION FOR OPTION TERM(2)
OF SARS ---------------------------------------------------
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
(#)(1) YEAR(%) ($/SH) DATE 5%($) 10%($)
------------------------------------------------------------------------------------------------------------------------------
MARKET PRICE MARKET PRICE
REQUIRED TO REQUIRED TO
REALIZE REALIZE
DOLLAR DOLLAR DOLLAR DOLLAR
GAINS GAINS GAINS GAINS
($) ($/SHARE) ($) ($/SHARE)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
G.A. Davenport 36,221 5.4351 18.7500 01/06/05 187,635 23.9303 414,624 30.1971
21,095 3.1654 27.0000 06/01/10 358,196 43.9802 907,740 70.0310
1,572 0.2359 27.0000 06/01/05 11,726 34.4596 25,912 43.4838
------------------------------------------------------------------------------------------------------------------------------
G.L. Gaddy 17,200 2.5809 18.7500 01/06/05 89,101 23.9303 196,889 30.1971
7,013 1.0523 27.0000 06/01/10 119,082 43.9802 301,777 70.0310
1,800 0.2701 27.0000 06/01/05 13,427 34.4596 29,671 43.4838
------------------------------------------------------------------------------------------------------------------------------
K.W. Engwall 12,880 1.9327 18.7500 01/06/05 66,722 23.9303 147,438 30.1971
7,500 1.1254 27.0000 06/01/10 127,351 43.9802 322,733 70.0310
5,109 0.7666 27.0000 06/01/05 38,111 34.4596 84,216 43.4838
558 0.0837 27.0000 06/01/05 4,162 34.4596 9,198 43.4838
------------------------------------------------------------------------------------------------------------------------------
J.D. Underhill 27,500 4.1265 22.7273 06/30/09 393,060 37.0204 996,090 58.9488
12,880 1.9327 18.7500 01/06/05 66,722 23.9303 147,438 30.1971
7,500 1.1254 27.0000 06/01/10 127,351 43.9802 322,733 70.0310
5,109 0.7666 27.0000 06/01/05 38,111 34.4596 84,216 43.4838
558 0.0837 27.0000 06/01/05 4,162 34.4596 9,198 43.4838
------------------------------------------------------------------------------------------------------------------------------
R.C. Roberson 6,815 1.0226 18.7500 01/06/05 35,304 23.9303 78,012 30.1971
4,922 0.7386 27.0000 06/01/10 83,576 43.9802 211,799 70.0310
2,985 0.4479 27.0000 06/01/05 22,267 34.4596 49,204 43.4838
11,000 1.6506 17.8409 06/04/09 123,421 29.0609 312,772 46.2747
480 0.0720 27.0000 06/01/05 3,581 34.4596 7,912 43.4838
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The options were granted under the Stock Incentive Plan. They expire in
five or ten years and become exercisable in two or three years after the
date of the grant. In the event of certain changes of control of the
Company, the options will vest fully unless the Compensation and Stock
Option Committee elects to cash-out the options.
(2) The potential realizable values are:
- Calculated using the following formula: [Market Price at Grant Date X
(1 + Stock Price Appreciation Rate)-Exercise Price X Number of
Underlying Shares];
- Based on 5% or 10% annualized compound rates of increase over the option
term.
12
<PAGE> 17
EXECUTIVE COMPENSATION
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2000
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS THE-MONEY OPTIONS AT
AT FISCAL YEAR END(#) FISCAL YEAR END($)(2)
SHARES ACQUIRED VALUE -----------------------------------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
G .A. Davenport 65,305 389,021 339,774/219,861 4,370,205/2,237,969
G .L. Gaddy 12,522 0 0/148,395 0/1,551,903
K .W. Engwall 68,618 703,487 35,585/97,380 522,283/992,827
J .D. Underhill 11,277 0 92,558/124,977 1,202,100/1,122,233
R .C. Roberson 31,290 352,279 0/71,641 0/725,063
</TABLE>
(1) Value realized is calculated as follows: [(Per Share Closing Price on date
of exercise)-(Per Share Exercise Price)] X Number of Shares for which the
option was exercised.
(2) Value of Unexercised, In-the-Money Options at Fiscal Year End is calculated
as follows: [(Per Share Closing Sale Price on May 31, 2000)-(Per Share
Exercise Price)] X Number of Shares Subject to Unexercised Options. The per
share closing sale price on May 31, 2000, the last trading day of fiscal
year 2000, was $27.1875.
WHAT BENEFIT PLANS ARE AVAILABLE FOR THE COMPANY'S EXECUTIVE OFFICERS?
Our executive officers are entitled to participate in all benefit plans which
are generally available to our employees. In addition, our executive officers
are entitled to participate in the following benefit plans, subject to the
individual terms of each plan, as described below:
RETIREMENT PLAN
Following the distribution of our stock and the stock of Morrison Fresh Cooking,
Inc. (which was subsequently acquired by Piccadilly Cafeterias, Inc. through a
merger in May 1998) by our predecessor, Morrison Restaurants Inc. ("MRI"), to
its shareowners on March 9, 1996 (the "Distribution"), we became a co-sponsor of
the Morrison Restaurants Inc. Retirement Plan (the "Retirement Plan"). Under the
Retirement Plan, participants are entitled to receive benefits based upon salary
and length of service. The Retirement Plan was frozen as of December 31, 1987,
so that no additional benefits have accrued, and no new participants have been
permitted since that date. The Retirement Plan is a tax-qualified, funded,
defined benefit plan, which covers employees who had attained age 21 and had
completed at least one year of full-time service with MRI by July 1, 1987. A
participant's accrued annual benefit is determined generally by adding the
following, as applicable:
- percent of pay up to that year's Social Security Wage Base, plus 1 1/4
percent of pay over the Social Security Wage Base for each credited year of
service (as defined in the Retirement Plan) commencing on or after January 1,
1986; and
- percent of average pay for the highest consecutive five years from 1976
through 1985 up to $14,400, plus 1 1/4 percent of such pay in excess of
$14,400, both multiplied by the number of credited years of service with MRI
up to January 1, 1986.
Normal retirement for purposes of the Retirement Plan is age 65, although a
participant with at least five years of service may retire with a reduced
benefit as early as age 55. Generally, benefits are paid in the form of a single
life annuity if the participant is unmarried or a joint and survivor annuity if
the participant is married, unless an alternative form of benefit payment is
selected by the participant from among a range of options made available under
the Retirement Plan. A
13
<PAGE> 18
EXECUTIVE COMPENSATION
participant's accrued benefit becomes vested upon completion of five years of
service after age 18.
Benefits payable under the Retirement Plan reduce the amount of benefits payable
to a participant in the Executive Supplemental Pension Plan or the Management
Retirement Plan, described below.
EXECUTIVE SUPPLEMENTAL PENSION PLAN
Eligible Named Executives participate in our Executive Supplemental Pension Plan
("ESPP") adopted in March, 1996. The ESPP is a nonqualified, unfunded, defined
benefit retirement plan for selected employees. Our employees who previously
participated in the MRI Executive Supplemental Pension Plan prior to the
Distribution are eligible to participate and receive full credit for benefit
accrual purposes for their service with MRI prior to the Distribution, provided
such employees have released Ruby Tuesday, Inc., the successor to MRI, from
liability for benefits accrued prior to the Distribution under the MRI Executive
Supplemental Pension Plan. (However, both Ruby Tuesday, Inc. and Morrison Fresh
Cooking, Inc. agreed to be secondarily liable for certain benefits accrued under
the ESPP to the extent of the amounts these employees had earned under the MRI
Executive Supplemental Pension Plan as of the Distribution.) As a condition of
entry to the ESPP, future participants must complete five years of consecutive
service in one or more qualifying job positions and must have achieved a minimum
salary threshold, as described in the ESPP.
A participant's accrued benefit in the ESPP equals 2.5 percent of the
participant's highest five-year average base salary multiplied by the
participant's years and fractional years of continuous service (as defined in
the ESPP) not in excess of 20 years; plus 1 percent of the participant's highest
five-year average base salary multiplied by the participant's years and
fractional years of continuous service in excess of 20 years, but not in excess
of 30 years of such service; less the retirement benefit payable at the age of
65 in the form of a single life annuity payable to the participant under the
Retirement Plan; and less the participant's primary Social Security benefits.
Base salary includes commissions but excludes bonuses and other forms of
remuneration other than base salary. Benefits are paid to a participant in the
same manner as benefits may be paid under the Retirement Plan and become vested
if the participant has completed ten years of service. If the participant is
also entitled to benefits under the Retirement Plan, benefits payable under the
ESPP must be in the same form as those payable under the Retirement Plan. Normal
retirement for purposes of the ESPP is age 65, although a participant with at
least five years of service may retire with a reduced benefit as early as age
55. Early retirement and change of control provisions allow designated
participants to receive unreduced benefits as early as age 55 depending upon
criteria specified in the ESPP. Change of control provisions also allow eligible
participants to receive credit for up to three years of vesting service
depending upon criteria specified in the ESPP. A participant's receipt of
unreduced early retirement benefits is conditioned upon not competing with the
Company for a period of two years following retirement.
Estimated annual benefits payable upon retirement to persons in specified
remuneration and years of continuous service classifications are shown in the
following table. All amounts shown are for a single life annuity and assume that
active participation in the ESPP continues until age 65. In accordance with the
ESPP, the amounts shown are subject to reduction for Social Security benefits
and benefits received under the Retirement Plan.
14
<PAGE> 19
EXECUTIVE COMPENSATION
EXECUTIVE SUPPLEMENTAL PENSION PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO
AGE 65(1)
<TABLE>
<CAPTION>
ANNUAL AVERAGE BASE
SALARY 10 15 20 25 30 OR MORE
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
$125,000 $ 31,250 $ 46,875 $ 62,500 $ 68,750 $ 75,000
------------------------------------------------------------------------------------
150,000 37,500 56,250 75,000 82,500 90,000
------------------------------------------------------------------------------------
175,000 43,750 65,625 87,500 96,250 105,000
------------------------------------------------------------------------------------
200,000 50,000 75,000 100,000 110,000 120,000
------------------------------------------------------------------------------------
225,000 56,250 84,375 112,500 123,750 135,000
------------------------------------------------------------------------------------
250,000 62,500 93,750 125,000 137,500 150,000
------------------------------------------------------------------------------------
275,000 68,750 103,125 137,500 151,250 165,000
------------------------------------------------------------------------------------
300,000 75,000 112,500 150,000 165,000 180,000
------------------------------------------------------------------------------------
325,000 81,250 121,875 162,500 178,750 195,000
------------------------------------------------------------------------------------
350,000 87,500 131,250 175,000 192,500 210,000
------------------------------------------------------------------------------------
375,000 93,750 140,625 187,500 206,250 225,000
------------------------------------------------------------------------------------
400,000 100,000 150,000 200,000 220,000 240,000
</TABLE>
(1) Accrued benefit in the ESPP equals:
- 2.5 percent of the participant's highest five-year average base salary
multiplied by the participant's years and fractional years of continuous
service not in excess of 20 years; plus
- 1 percent of the participant's highest five-year average base salary
multiplied by the participant's years and fractional years of continuous
service in excess of 20 years, but not in excess of 30 years; minus
- Single life annuity payments payable to the participant at age 65 under
the Retirement Plan; minus
- The participant's primary Social Security benefits.
Years of continuing service, to the nearest year, and current remuneration
covered by the ESPP (base salary) for the eligible Named Executives are:
- Mr. Davenport, 26 years, $393,000;
- Mr. Engwall, 17 years, $199,238;
- Mr. Underhill, 7 years, $196,923; and
- Mr. Roberson, 38 years, $156,175.
MANAGEMENT RETIREMENT PLAN
Effective as of March 7, 1996, we adopted our Management Retirement Plan ("MRP")
to provide for a select group of management or highly compensated employees the
security of receiving a defined level of retirement benefits. The MRP is a
nonqualified, unfunded, defined benefit retirement plan for employees with 15 or
more years of credited service (as defined in the MRP) and whose average annual
compensation over a consecutive three calendar-year period equals or exceeds
$40,000, which amount may be adjusted by us from time to time. Our employees who
participated in the MRI Management Retirement Plan prior to the Distribution are
eligible to participate and receive full credit for benefit accrual purposes for
their service with MRI prior to the Distribution, provided such employees have
released Ruby Tuesday, Inc., successor to MRI, from liability for benefits
accrued prior to the Distribution under the MRI Management Retirement Plan.
(However, Ruby Tuesday, Inc. and Morrison Fresh Cooking, Inc. both agreed to be
secondarily liable for certain benefits accrued under the MRP to the extent of
the amounts these employees had earned under the MRI
15
<PAGE> 20
EXECUTIVE COMPENSATION
Management Retirement Plan as of the Distribution.)
A participant's single-life annuity accrued benefit in the MRP equals 1.5
percent of the participant's average compensation determined over the five-year
period immediately preceding termination of employment multiplied by the
participant's years of credited service not in excess of 20 years; plus 2
percent of the participant's average compensation determined over the five-year
period immediately preceding termination of employment multiplied by the
participant's years of credited service in excess of 20 years, but not in excess
of 30 years; minus the sum of:
- The participant's Retirement Plan benefits; plus
- The participant's Social Security benefits; plus.
- The participant's ESPP Benefit (as defined in the MRP).
For purposes of determining a participant's accrued benefit, a year's
compensation includes commissions and bonuses, but generally no form of
remuneration is counted in excess of $100,000, which amount may be adjusted by
us from time to time.
Normal retirement for purposes of the MRP is age 65, although a participant may
retire with a benefit as early as age 55. Change of control provisions also
allow eligible employees to receive service credit for up to three years for
purposes of determining eligibility for participation in the MRP. Generally,
benefits are paid in the form of a single life annuity if the participant is
unmarried or a joint and survivor annuity if the participant is married. If the
participant is also entitled to benefits under the Retirement Plan, benefits
payable under the MRP must be in the same form as those payable under the
Retirement Plan. The MRP allows payment of a participant's accrued benefit,
commencing as early as age 55, even if the participant terminated employment
prior to attainment of age 55.
Estimated annual benefits payable upon retirement to persons in specified
remuneration and years of credited service classifications are shown in the
following table. All amounts shown are for a single life annuity and assume that
active participation continues in the MRP until age 65. In accordance with the
MRP, the amounts shown are subject to reduction for Social Security benefits,
benefits received under the Retirement Plan and benefits payable under the ESPP.
A participant is ineligible for benefits under the MRP while receiving any
long-term disability benefits.
16
<PAGE> 21
EXECUTIVE COMPENSATION
MANAGEMENT RETIREMENT PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE
TO AGE 65(1)
<TABLE>
<CAPTION>
30 OR
FINAL AVERAGE SALARY 15 20 25 MORE
<S> <C> <C> <C> <C>
$ 40,000 $ 9,000 $12,000 $16,000 $ 20,000
60,000 13,500 18,000 24,000 30,000
80,000 18,000 24,000 32,000 40,000
100,000 22,500 30,000 40,000 50,000
</TABLE>
(1) Single life annuity benefits equal:
- 1.5 percent of the participant's average compensation determined over
the five-year period immediately preceding termination of employment
multiplied by the participant's years of credited service not in excess
of 20 years; plus
- 2 percent of the participant's average compensation determined over the
five-year period immediately preceding termination of employment
multiplied by the participant's years of credited service in excess of
20 years, but not in excess of 30 years; minus
- The participant's Retirement Plan benefits; minus
- The participant's Social Security benefits; minus
- The participant's ESPP Benefits.
Years of credited service and salary covered by the MRP for the eligible Named
Executives are:
- Mr. Davenport, 26 years, $100,000;
- Mr. Engwall, 17 years, $100,000; and
- Mr. Roberson, 38 years, $100,000.
CONTRACTS WITH EXECUTIVES
We have entered into a Change of Control Agreement (the "Change of Control
Agreement") with each of the Named Executives. The Change of Control Agreement
is designed to diminish the distraction of executives by virtue of the personal
uncertainties and risks created by a threatened or pending Change of Control (as
defined in the Change of Control Agreement and set forth below) and to encourage
their full attention and dedication to us currently and in the event of any
pending or threatened Change of Control.
Under the Change of Control Agreement, a "Change of Control" is defined as
either:
- Certain changes in the composition of more than 20 percent of the Board of
Directors; or
- With certain exceptions, any "Business Combination" (as defined in the Change
of Control Agreement) that has not been approved by the holders of 80 percent
or more of our outstanding voting stock.
Events that do not constitute a Change of Control include:
- Any Business Combination approved by at least 80 percent of the Continuing
Directors (as defined in the Change of Control Agreement);
- Any Business Combination transaction that satisfies certain price and
procedural requirements specified in our Articles of Incorporation; and
- Any acquisition by us, any of our subsidiaries, or any employee benefit plan
of ours or any of our subsidiaries.
Prior to the first date on which a Change of Control occurs (the "Effective
Date"), each covered executive remains an at-will employee, except as may be
provided in any other agreement, and any termination of his employment will
terminate his rights under the Change of Control
17
<PAGE> 22
EXECUTIVE COMPENSATION
Agreement. If and when the Effective Date occurs, we have agreed to continue the
employment of the executive, and the executive has agreed to remain in the
employ of the Company, for a three-year period (the "Employment Period")
commencing on the Effective Date. During the Employment Period, the executive:
- Shall receive an annual base salary no less than that received prior to the
Effective Date and an annual bonus no less than the average of the last three
annual bonuses received prior to the Effective Date; and
- Generally shall be entitled to continuation of retirement, savings and
welfare benefit plan participation and practices, expense reimbursements and
other fringe benefits on a basis at least comparable to that obtaining prior
to the Effective Date.
If during the Employment Period we terminate the executive's employment other
than for cause, death or disability, or if the executive terminates his
employment for "good reason" (as defined in the Change of Control Agreement), or
if the executive terminates his employment for any reason during the 30-day
period immediately following the first anniversary of the Effective Date, the
executive becomes entitled to receive:
- Any unpaid portion of his accrued annual base salary plus a pro rata portion
of his highest annual bonus paid or payable for the three fiscal years
immediately preceding his date of termination;
- An amount equal to either three, two or one times the sum of his annual base
salary and his highest annual bonus, depending upon the particular multiplier
stipulated in his Change of Control Agreement;
- Any other accrued obligations;
- Accelerated vesting of any outstanding stock options granted to him prior to
his date of termination or a cash amount equal to the difference between the
option price and the then value of Company stock for which any such option
was granted; and
- Certain employee benefits consisting of retirement, savings and various
health and welfare insurance benefits.
If this package of compensation and benefits constitutes "excess parachute
payments" as defined under the Internal Revenue Code, the Company will pay an
additional amount sufficient to reimburse the executive for all taxes payable by
the executive with respect to the parachute payments. We estimate that the
obligations to the Named Executives as of the date of this Proxy Statement if a
Change of Control had occurred and the employment termination provisions of the
Change of Control Agreement were to take effect immediately (excluding
obligations relating to stock options and employee benefits) would be as shown
in the following table. Other executives may be made subject to a Change of
Control Agreement by the Board of Directors.
COMPENSATION IN THE EVENT OF A CHANGE OF CONTROL(1)
<TABLE>
<CAPTION>
<S> <C>
G.A. Davenport $1,958,000
-----------------------------------------------
G.L. Gaddy 809,000
-----------------------------------------------
K.W. Engwall 876,000
-----------------------------------------------
J.D. Underhill 867,000
-----------------------------------------------
R.C. Roberson 623,000
</TABLE>
(1) Assumes a change of control had occurred and the termination provisions of
the Change of Control Agreement were to take effect immediately.
18
<PAGE> 23
AMENDMENT TO STOCK INCENTIVE PLAN
PROPOSAL 2--APPROVAL OF AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN
Our Board of Directors has approved, and recommends that our shareowners
approve, the amendment to the Stock Incentive Plan to increase the number of
shares authorized for issuance by 500,000 shares. We are seeking shareowner
approval to preserve our ability to deduct, for Federal income tax purposes,
compensation expense attributable to stock options and other stock awards
granted under the Stock Incentive Plan. Under Section 162(m) of the Internal
Revenue Code, shareowner approval of performance-based compensation plans
(including material amendments thereto) is necessary to qualify for the
performance-based compensation exception to the limitation on a company's
ability to deduct compensation paid to certain specified individuals in excess
of $1 million. Approval of the proposed amendment to the Stock Incentive Plan
requires the affirmative vote of the holders of at least a majority of the
outstanding shares of our Common Stock represented and entitled to vote at the
annual meeting.
The following is a description of the Stock Incentive Plan, if amended as
proposed hereby.
RESERVED SHARES. The shares of Common Stock reserved for issuance pursuant to
awards made or that may be made under the Stock Incentive Plan will be
2,425,000, of which approximately 369,000 shares were previously issued and
approximately 1,435,000 are subject to stock options which are outstanding. The
maximum number of shares of Common Stock with respect to which options or stock
appreciation rights may be granted during any fiscal year to any eligible
recipient who is a "covered employee," within the meaning of Section 162(m) of
the Internal Revenue Code, will not exceed 300,000. The Stock Incentive Plan
provides for further adjustments to the number of shares reserved for issuance
in the event of certain recapitalizations.
DISINTERESTED ADMINISTRATION. Awards under the Stock Incentive Plan are
determined by the Compensation Committee (the "Committee"). The members of the
Committee are selected by the Board of Directors and are solely non-management
members. Only persons who satisfy the criteria of "non-employee directors" set
forth in Rule 16b-3(b) under the Securities Exchange Act of 1934, as amended,
and the criteria of "outside directors" set forth in regulations under Section
162(m) of the Internal Revenue Code may be members of the Committee. The
Committee shall have at least two members.
AWARDS. The Stock Incentive Plan permits the Committee to make awards of shares
of Common Stock, awards of derivative securities related to the value of the
Common Stock and certain cash awards to our directors, officers and employees
("Eligible Persons"). These discretionary awards may be made on an individual
basis, or pursuant to a program approved by the Committee for the benefit of a
group of Eligible Persons. The Stock Incentive Plan permits the Committee to
make awards of a variety of stock incentives including, but not limited to,
stock awards, options to purchase shares of Common Stock, stock appreciation
rights, so-called "cashout" or "limited stock appreciation rights" (which the
Committee may make exercisable in the event of a Change in Control (as defined
therein) or other event), phantom shares, performance incentive rights, dividend
equivalent rights and similar rights (together, "Stock Incentives"). Outstanding
Stock Incentives may be adjusted by the Committee to reflect certain corporate
events such as corporate reorganizations.
We anticipate that most stock awards will be restricted for some period of time,
although the Committee does have the discretion to make such awards freely
transferable at the time of grant. Stock Incentives may be made exercisable or
settled at such prices and will terminate under such terms as will be
established by the Committee. The Committee may permit an option exercise price
to be paid in cash or by the delivery of previously owned shares of Common
Stock, or to be satisfied through a cashless exercise executed through a broker
or by having a number of shares of Common Stock otherwise issuable at the time
of exercise withheld. The Stock Incentive Plan permits the grant of both
incentive and nonqualified stock options.
19
<PAGE> 24
AMENDMENT TO STOCK INCENTIVE PLAN
Stock appreciation rights may be granted separately or in connection with
another Stock Incentive, and the Committee may provide that they are exercisable
at the discretion of the holder or that they will be paid at a time or times
certain or upon the occurrence or non-occurrence of certain events. Stock
appreciation rights may be settled in shares of Common Stock or in cash,
according to terms established by the Committee with respect to any particular
award. The Committee may make cash awards designed to cover tax obligations of
employees that result from the receipt or exercise of a Stock Incentive.
The terms of particular Stock Incentives may provide that they terminate or
expire upon the occurrence of one or more events, including, but not limited to,
the holder's termination of employment or other status with the Company, passage
of a specified period of time, the holder's death or disability, or the
occurrence of a Change in Control. Stock Incentives may include exercise,
conversion or settlement rights to a holder's estate or legal representative in
the event of the holder's death or disability. At the Committee's discretion,
Stock Incentives that are held by an employee who suffers a termination of
employment may be canceled, accelerated, paid or continued. The Board of
Directors at any time may terminate the Stock Incentive Plan or amend it in any
respect without shareowner approval, including amendments that increase the cost
of the Stock Incentive Plan to the Company or alter the allocation of benefits
thereunder among executive officers, directors and other employees. However, no
such termination or amendment without the consent of the holder of a Stock
Incentive shall adversely affect the rights of the holder under such Stock
Incentive. The Board also may condition any such amendment upon shareowner
approval if shareowner approval is deemed necessary or appropriate in
consideration of tax, securities or other laws.
TAX CONSEQUENCES. A participant will not recognize income upon the grant of an
option or at any time prior to the exercise of the option or a portion thereof.
At the time the participant exercises a nonqualified option or portion thereof,
he or she will recognize compensation taxable as ordinary income in an amount
equal to the excess of the fair market value of the Common Stock on the date the
option is exercised over the price paid for the Common Stock, and the Company
will then be entitled to a corresponding deduction.
A participant who exercises an incentive stock option will not be taxed at the
time he or she exercises his or her option or a portion thereof. Instead, he or
she will be taxed at the time he or she sells the Common Stock purchased
pursuant to the option. The participant will be taxed on the difference between
the price he or she paid for the stock and the amount for which he or she sells
the stock. If the participant does not sell the stock prior to two years from
the date of grant of the option and one year from the date the stock is
transferred to him or her, the gain will be capital gain and we will not be
entitled to a corresponding deduction. If the participant sells the stock at a
gain prior to that time, the difference between the amount the participant paid
for the stock and the lesser of the fair market value on the date of exercise or
the amount for which the stock is sold will be taxed as ordinary income and we
will be entitled to a corresponding deduction. If the stock is sold for an
amount in excess of the fair market value on the date of exercise, the excess
amount is taxed as capital gain. If the participant sells the stock for less
than the amount he or she paid for the stock prior to the one or two year
periods indicated, no amount will be taxed as ordinary income and the loss will
be taxed as a capital loss. Exercise of an incentive option may subject a
participant to, or increase a participant's liability for, the alternative
minimum tax.
A participant generally will not recognize income upon the grant of a stock
appreciation right, dividend equivalent right, performance unit award or phantom
share (the "Equity Incentives"). At the time a participant receives payment
under any Equity Incentive, he or she generally will recognize compensation
taxable as ordinary income in an amount equal to the cash or the fair market
value of the Common Stock received, and the Company then will be entitled to a
corresponding deduction.
A participant will not be taxed upon the grant of a stock award if such award is
not transferable by the participant or is subject to a "substantial risk
20
<PAGE> 25
AMENDMENT TO STOCK INCENTIVE PLAN
of forfeiture," as defined in the Internal Revenue Code. However, when the
shares of Common Stock that are subject to the stock award are transferable by
the participant and are no longer subject to a substantial risk of forfeiture,
the participant will recognize compensation taxable as ordinary income in an
amount equal to the fair market value of the stock subject to the stock award,
less any amount paid for such stock, and we then will be entitled to a
corresponding deduction. However, if a participant elects at the time of receipt
of a stock award, he or she may include the fair market value of the stock
subject to the stock award, less any amount paid for such stock, in income at
that time and we also will be entitled to a corresponding deduction at that
time. The Stock Incentive Plan is not qualified under Section 401(a) of the
Internal Revenue Code.
The following table sets forth information regarding stock options granted and
other awards made under the Stock Incentive Plan during fiscal year 2000 to each
of the Named Executives, all of our executive officers as a group, and all of
our employees as a group.
<TABLE>
<CAPTION>
BONUS OPTIONS
NAME AND POSITION SHARES(#)(1) (#)(2)
----------------- ------------ -------
<S> <C> <C>
G.A. Davenport.............................................. 12,598 37,793
Chairman of the Board, President and Chief Executive
Officer
G.L. Gaddy.................................................. 6,333 19,000
Executive Vice President, Sales and Marketing
K.W. Engwall................................................ 6,182 18,547
Chief Financial Officer, Senior Vice President, Finance
and Assistant Secretary
J.D. Underhill.............................................. 6,182 18,547
President, Morrison Healthcare Food Services
R.C. Roberson............................................... 3,427 10,280
Division Vice President, Morrison Healthcare Food Services
All executive officers as a group........................... 40,280 120,842
All other employees as a group.............................. 18,570 55,710
</TABLE>
(1) Shares issued under the MSOP, a program maintained under the Stock
Incentive Plan, to the extent applicable to executive officers. See
footnote 2 to the Summary Compensation Table above for a description of the
MSOP. Any options granted under the MSOP are included in the "Options"
column.
(2) Includes options granted under the MSOP.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE
FOR THE AMENDMENT
TO THE STOCK INCENTIVE
PLAN
21
<PAGE> 26
COMPENSATION COMMITTEE REPORT
Filings made by companies with the Securities and Exchange Commission sometimes
"incorporate information by reference." This means a company is referring you to
information that has been previously filed with the SEC and that this
information should be considered as part of the filing you are reading. The
Compensation Committee Report and Performance Graph in this Proxy Statement are
not incorporated by reference into any other filings with the Securities and
Exchange Commission.
The Compensation Committee of the Board of Directors, which is composed solely
of non-employee directors, has furnished the following report on executive
compensation:
WHAT ARE THE COMPONENTS OF EXECUTIVE COMPENSATION?
Our compensation program for executives consists of three key elements:
- Annual base salary;
- Annual incentive opportunities; and
- Equity devices.
WHAT IS THE PHILOSOPHY OF EXECUTIVE COMPENSATION?
Our executive compensation policies and programs emphasize performance-based
elements of executive compensation. Our executive compensation programs closely
align performance measures with current business strategy and are designed to
motivate executive behavior. In general, we control base salaries and compensate
outstanding performance through more highly leveraged annual and longer-term
incentive programs. As a result, the following principles apply to executive
compensation:
- Base salaries are competitive with our peer group of public companies in the
contract food services industry;
- A very significant portion of executive compensation is tied to our success
in meeting predetermined annual and long-term performance goals, including
our profitability and appreciation in our stock price; and
- Executives are required to own specified amounts of our stock, resulting in
direct linkage between executive and shareowner interests.
The overall objectives of this strategy are to attract and retain the best
possible executive talent and to motivate our executives to achieve the goals
inherent in our business strategy.
WHAT IS THE COMPANY'S APPROACH TO BASE COMPENSATION?
Our general approach for base compensation is to establish salary ranges with
midpoints which are at the 50th percentile of the competitive market in the
contract food services industry. Each salary range provides a lower and upper
limit on the value of jobs assigned to that range. However, for its executive
officers, including the Chairman of the Board, President and Chief Executive
Officer and the other executives named in the Summary Compensation Table, we
have capped base salaries at the midpoint of the salary range. This reflects the
previously mentioned objective of controlling base salary costs and emphasizing
incentive compensation. Future adjustments to base salaries and salary ranges
will reflect average movement in the competitive market.
WHAT IS THE COMPANY'S APPROACH TO INCENTIVE COMPENSATION?
Our annual incentive plan directly links annual incentive payments to the
accomplishment of predetermined and board approved financial and operating
goals. Corporate and individual performance objectives are established at the
beginning of each fiscal year.
Each executive's potential incentive is tied to growth in net income as well as
certain qualitative measures. Depending upon an executive's organizational level
and responsibilities, as well as competitive market practices, annual incentive
compensation targets range from 15 percent to 50 percent of base salary if 100
percent of predetermined corporate goals are achieved and maximums range from 75
percent to 125 percent of base salary. For executives at the Division Vice
President level and above, annual incentive compensation in excess of the target
level of performance is paid in restricted stock valued at
22
<PAGE> 27
COMPENSATION COMMITTEE REPORT
the fair market value of our Common Stock on the first day of the subsequent
fiscal year. For each share paid as annual incentive compensation, the executive
receives an additional .15 of a restricted share. The shares of restricted stock
are forfeitable for a period of 18 months upon termination of employment for any
reason other than death, retirement or disability. In addition, the executives
receive options to purchase three times the aggregate number of shares of
restricted stock received in lieu of annual incentive awards and related bonus
shares at an exercise price equal to the fair market value of our Common Stock
on the effective date of the grant.
Performance with respect to the measures named in the annual incentive plan for
fiscal year 2000 resulted in average annual incentive compensation (including
the value of restricted stock in lieu of bonus) of 76 percent of base salaries
for the Named Executives. Such awards represented approximately 69 percent of
the total incentive awards that could have been earned by the Named Executives.
Occasionally we may establish a special incentive award for an individual
officer or other employee aimed at achieving a specified performance goal.
DOES THE COMPANY ENCOURAGE STOCK OWNERSHIP BY ITS EMPLOYEES?
Believing that equity ownership plays a key role in aligning interests of our
personnel with our shareowners, we encourage all employees to make a personal
investment in our stock. In addition, we require management who are at the vice
president level and above to obtain stock ownership levels of one times, two
times, or three times their salary, depending on their executive level. Upon
attaining this level of management, each vice president must obtain 60% of their
stock ownership level within three years and must obtain 100% of their stock
ownership level within five years. Stock ownership may be accomplished through
the exercise of stock options, other stock incentives, open market purchases,
and, at a specified date, stock held in the Salary Deferral Plan and stock
equivalent units credited under the Deferred Compensation Plan. Members of the
management group must achieve target ownership levels to be eligible to receive
future awards under stock-based plans. In addition, as discussed above, any
incentive award under the annual incentive plan in excess of the target is paid
in restricted stock.
WHAT IS THE COMPANY'S APPROACH TO LONG-TERM INCENTIVE COMPENSATION?
Awards under our stock-based compensation plans directly link potential
participant rewards to increases in shareowner value. We maintain stock
incentive plans for executive officers and other employees. These plans provide
for grants of a variety of stock incentives, including stock options, restricted
stock, stock appreciation rights, stock purchase rights and performance shares
or units. The programs described below have been established under one or more
of these plans.
EXECUTIVE STOCK OPTION PROGRAM
We have an Executive Stock Option Program which provides for option grants to
key employees. The options are issued at fair market value, have a term of
three, five or ten years and generally vest one, two or three years after the
effective date of the grant. During fiscal year 2000, option grants ranging from
275 to 27,500 shares, for a total of 169,730 shares, were made under this
program.
MANAGEMENT STOCK OPTION PROGRAM
We also have a Management Stock Option Program for key employees. Based on
organization level, eligible employees may purchase shares of our stock up to
established annual limits. For each share purchased, 1.15 shares will be issued
and the participant will receive an option to purchase three times the number of
shares of our stock obtained at a per share exercise price equal to the fair
market value of a share on the effective date of the grant. There generally is a
two-year restriction on the sale of shares acquired through this program other
than through the exercise of stock options. We granted options to purchase an
aggregate of 80,877 shares to key employees under this program during fiscal
year 2000.
In addition, as discussed earlier in this report, for executives at the Division
Vice President level and above, any annual incentive in excess of the target
level of performance is paid in restricted stock and
23
<PAGE> 28
COMPENSATION COMMITTEE REPORT
the executives receive options to purchase three times the number of shares of
restricted stock received in lieu of annual incentive awards. For fiscal year
2000, the Company allowed Named Executives to subject previously owned, freely
tradable shares to restrictions and forfeitability provisions in lieu of
receiving newly issued restricted shares in payment of bonus in excess of target
level of performance. We granted options to purchase 95,675 shares to executives
under this part of the Management Stock Option Program during fiscal year 2000.
We may occasionally grant restricted stock or other stock rights to ensure
retention of key executives or as a part of the compensation provided to a new
executive hired from outside the Company.
HOW IS THE CHIEF EXECUTIVE OFFICER COMPENSATED?
The base salary for Mr. Davenport, our Chief Executive Officer, for fiscal year
2000 was determined by the Compensation Committee in accordance with
compensation practices and policies in effect. Mr. Davenport's annual base
salary was determined in the same manner described previously for other
executives.
Mr. Davenport is eligible to participate in our annual incentive plan under
which he may earn a bonus determined as a percentage of his salary if
predetermined levels of net income growth, new account sales and account
retention are achieved by us. For fiscal year 2000, the Chief Executive
Officer's bonus opportunity was 25 percent, 50 percent, 100 percent and 125
percent of his salary if we achieved or exceeded "threshold," "target,"
"maximum" and "maximum plus" growth levels, respectively, with a proportional
increase in the bonus between such performance levels.
As is the case with all other executives at the Division Vice President level
and above, any annual bonus earned by Mr. Davenport in excess of the target
level of performance is paid in restricted stock and Mr. Davenport receives an
option to purchase three times the number of shares of restricted stock
received.
Mr. Davenport is eligible to participate in the Executive Stock Option Program
described above. The Compensation Committee approved a grant of options to
purchase 58,888 shares of Common Stock to Mr. Davenport during fiscal year 2000.
WHAT ABOUT DEDUCTIBILITY LIMITATIONS ON EXECUTIVE COMPENSATION?
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
limits the amount of individual compensation for certain executives that may be
deducted by the employer for federal tax purposes in any one fiscal year to $1
million unless such compensation is "performance-based." The determination of
whether compensation is performance-based depends upon a number of factors,
including shareowner approval of the plan under which the compensation is paid,
the exercise price at which options or similar awards are granted, the
disclosure to and approval by the shareowners of applicable performance
standards, the composition of the Compensation Committee, and certification by
the Compensation Committee that performance standards were satisfied. While it
is possible for us to compensate or make awards under incentive plans and
otherwise that do not qualify as performance-based compensation deductible under
Section 162(m), the Compensation Committee, in structuring compensation programs
for its top executive officers, intends to give strong consideration to the
deductibility of awards.
WHO PREPARED THIS REPORT?
This report has been furnished by the members of the Compensation Committee:
- Claire L. Arnold, Chairman
- E. Eugene Bishop
- Fred L. Brown
- Michael F. Corbett
- John B. McKinnon
- A. Robert Outlaw, Jr.
- Dr. Benjamin F. Payton
24
<PAGE> 29
STOCK PERFORMANCE GRAPH
This graph and table compare the cumulative total return of our Common Stock
with the cumulative total return of the NYSE Stock Market Index, the NYSE Eating
and Drinking Places Index and the Russell 2000 Index. The graph assumes $100
invested at the per share closing price of our Common Stock, adjusted for the
May 2000 stock dividend, and of each of the indicated indices on March 11, 1996,
and reinvestment of dividends.
COMPARATIVE TOTAL RETURNS*
MORRISON MANAGEMENT SPECIALISTS, INC.
(Performance results through 05/31/2000)
<TABLE>
<CAPTION>
MHI NYSE PEER GROUP R2000
--- ---- ---------- -----
<S> <C> <C> <C> <C>
3/11/96 100.00 100.00 100.00 100.00
1996 79.753 104.873 97.65 112.64
1997 95.862 131.448 103.272 120.487
1998 105.701 171.731 129.941 146.082
1999 121.804 194.248 155.905 142.158
2000 187.224 202.98 134.63 156.25
</TABLE>
25
<PAGE> 30
STOCK OWNERSHIP
This table shows how much of our Common Stock is owned by directors, named
executive officers and owners of more than 5% of our outstanding Common Stock as
of August 11, 2000. An asterisk indicates beneficial ownership of less than one
percent of the outstanding shares.
BENEFICIAL OWNERSHIP TABLE
<TABLE>
<CAPTION>
SHARES RIGHT TO
NAME OF BENEFICIAL OWNER OWNED(1) ACQUIRE(2) PERCENT OF CLASS
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
GeoCapital, LLC(3) 1,260,480 0 9.8%
--------------------------------------------------------------------------------------------------------
Arthur R. Outlaw(4) 692,962 0 5.4%
--------------------------------------------------------------------------------------------------------
E.E. Bishop(5) 237,245 10,654 1.8%
--------------------------------------------------------------------------------------------------------
A.R. Outlaw, Jr. 229,130 2,200 1.8%
--------------------------------------------------------------------------------------------------------
G.A. Davenport(6) 49,308 249,274 *
--------------------------------------------------------------------------------------------------------
R.C. Roberson 18,658 0 *
--------------------------------------------------------------------------------------------------------
J.D. Underhill 18,174 30,153 *
--------------------------------------------------------------------------------------------------------
K.W. Engwall 12,586 35,585 *
--------------------------------------------------------------------------------------------------------
J.B. McKinnon 11,693 13,176 *
--------------------------------------------------------------------------------------------------------
F.L. Brown 9,433 12,188 *
--------------------------------------------------------------------------------------------------------
C.L. Arnold 6,983 11,360 *
--------------------------------------------------------------------------------------------------------
B.F. Payton 6,396 8,887 *
--------------------------------------------------------------------------------------------------------
G.L. Gaddy 1,781 0 *
--------------------------------------------------------------------------------------------------------
M.F. Corbett 1,191 8,691 *
--------------------------------------------------------------------------------------------------------
Directors and executive officers as a group (15
people) 624,623 397,292 5.0%
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) These amounts include shares for which the named person has sole or shared
voting and investment power.
(2) These amounts reflect shares that could be purchased by the exercise of
stock options which are currently exercisable or which are exercisable
within 60 days of August 11, 2000.
(3) The address of GeoCapital, LLC is 45th Floor, 767 Fifth Avenue, New York,
NY 10153-4590. The information presented is based on Schedule 13G, as
amended, filed by GeoCapital, LLC reporting beneficial ownership as of
December 31, 1999.
(4) The address of Mr. Outlaw is P.O. Box 9579, Mobile, Alabama 36691-0579. The
number listed under "Shares Owned" does not include 18,227 shares owned by
Mr. Outlaw's spouse, for which Mr. Outlaw disclaims beneficial ownership.
(5) Includes 2,258 shares owned by Mr. Bishop's spouse.
(6) Includes 1,100 shares owned by Mr. Davenport's spouse.
26
<PAGE> 31
GENERAL
COMPENSATION COMMITTEE INTERLOCKS
None of the members of the Compensation Committee were officers or employees of
the Company or had any relationship with us requiring disclosure under SEC
regulations.
COMPLIANCE WITH SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING
REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who own more than ten percent of a registered
class of our equity securities to file with the SEC and the New York Stock
Exchange reports of ownership and changes in ownership of our Common Stock.
Directors, executive officers and greater than ten percent shareholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. Based solely on review of the copies of these reports furnished to us
or written representations that no other reports were required, we believe that
during fiscal year 2000, all of our directors, executive officers and greater
than ten percent beneficial owners complied with these requirements.
INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Ernst & Young LLP was our independent auditor during fiscal year 2000 and will
be our independent auditor for fiscal year 2001. A representative of that firm
will be present at the annual meeting, will be given an opportunity to make a
statement and will be available to respond to appropriate questions.
AVAILABILITY OF FORM 10-K AND ANNUAL REPORT TO SHAREHOLDERS
SEC rules require us to provide an Annual Report to shareowners who receive this
Proxy Statement. We will also provide copies of the Annual Report to brokers,
dealers, banks, voting trustees and their nominees for the benefit of their
beneficial owners of record. Additional copies of the Annual Report on Form 10-K
for the fiscal year ended May 31, 2000 (not including documents incorporated by
reference), are available without charge to shareholders upon written request to
Investor Relations Department, Morrison Management Specialists, Inc., 1955 Lake
Park Drive, S.E., Suite 400, Smyrna, Georgia 30080-8855.
SHAREOWNER LIST
A list of shareowners entitled to be present and vote at the annual meeting will
be available for inspection by the shareowners at the time and place of the
annual meeting.
SHAREOWNER PROPOSALS
To be considered for inclusion in next year's proxy statement, shareowner
proposals must be submitted in writing no later than April 24, 2001. Any
shareowner proposal to be considered at next year's meeting, but not included in
the proxy statement, must be submitted in writing no later than 90 days in
advance of the meeting if the proposal relates to the nomination of a director,
and no later than July 6, 2001 with respect to any other proposal, or the
persons appointed as proxies may exercise their discretionary voting authority
with respect to the proposal. Although Management is not aware of any other
business being presented at the annual meeting, persons appointed as proxies may
exercise their discretionary voting authority with respect to any matters which
properly arise. All written proposals should be submitted to the Corporate
Secretary, Morrison Management Specialists, Inc., 1955 Lake Park Drive, S.E.,
Suite 400, Smyrna, Georgia 30080-8855.
SOLICITATION BY BOARD; EXPENSES OF SOLICITATION
Our Board of Directors has sent you this Proxy Statement. We will bear the
entire cost of soliciting these proxies. We will also reimburse brokers,
nominees and fiduciaries to send proxies and proxy materials to our shareowners
so they can vote their shares. If necessary, our employees may solicit proxies
from shareowners or authorized representatives personally or by telephone.
27
<PAGE> 32
MORRISON MANAGEMENT SPECIALISTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement, each dated August 22, 2000, and does hereby
appoint Glenn A. Davenport, and K. Wyatt Engwall, and either of them, with full
power of substitution, as proxy or proxies of the undersigned to represent the
undersigned and to vote all shares of Morrison Management Specialists, Inc.
Common Stock which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders of Morrison Management
Specialists, Inc., to be held at the Georgia International Convention Center,
1902 Sullivan Road, College Park, Georgia 30337-0508 at 1:00 p.m., local time,
on September 27, 2000, and at any adjournment(s) thereof:
1. TO ELECT TWO CLASS II DIRECTORS FOR A TERM OF THREE YEARS.
Claire L. Arnold and Glenn A. Davenport
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary above) to vote for ALL nominees listed above
</TABLE>
INSTRUCTION: To withhold authority for any individual nominee, mark the "FOR"
box above and line through that nominee's name in the list of nominees above the
boxes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL DIRECTOR NOMINEES LISTED ABOVE.
2. TO AMEND THE 1996 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE THEREUNDER BY 500,000 SHARES.
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] FOR the [ ] AGAINST the [ ] ABSTAIN
Amendment Amendment
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before this meeting.
NUMBER OF SHARES PROXY NUMBER
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, IT
WILL BE VOTED (I) FOR ALL DIRECTOR NOMINEES LISTED ABOVE AND (II) FOR THE
PROPOSED AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN.
Dated:
-----------------------, 2000.
------------------------------
Signature
------------------------------
Signature, if held jointly
Please sign exactly as your
name(s) appear hereon. If
shares are held jointly, each
shareholder named should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, give your
full title as such. If the
signatory is a corporation,
sign the full corporate name
by a duly authorized officer.
PLEASE COMPLETE, DATE, SIGN
AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 33
NOTE: The 1996 Stock Incentive Plan is being filed as an Appendix to the
Company's 2000 Proxy Statement pursuant to Instruction 3 of Item 10 of
Schedule 14A under the Securities Act of 1934, as amended, and will not
be distributed to shareholders.
MORRISON HEALTH CARE, INC.
1996 STOCK INCENTIVE PLAN
<PAGE> 34
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 DEFINITIONS............................................................................................1
1.1 Definitions..............................................................................................1
SECTION 2 THE STOCK INCENTIVE PLAN...............................................................................4
2.1 Purpose of the Plan......................................................................................4
2.2 Stock Subject to the Plan................................................................................4
2.3 Administration of the Plan...............................................................................4
2.4 Eligibility and Limits...................................................................................5
SECTION 3 TERMS OF STOCK INCENTIVES..............................................................................5
3.1 Terms and Conditions of All Stock Incentives.............................................................5
3.2 Terms and Conditions of Options..........................................................................7
(a) Option Price.............................................................................................7
(b) Option Term..............................................................................................7
(c) Payment..................................................................................................7
(d) Conditions to the Exercise of an Option..................................................................8
(e) Termination of Incentive Stock Option....................................................................8
(f) Special Provisions for Certain Substitute Options........................................................8
3.3 Terms and Conditions of Stock Appreciation Rights........................................................8
(a) Settlement...............................................................................................9
(b) Conditions to Exercise...................................................................................9
3.4 Terms and Conditions of Stock Awards.....................................................................9
3.5 Terms and Conditions of Dividend Equivalent Rights.......................................................9
(a) Payment..................................................................................................9
(b) Conditions to Payment....................................................................................9
3.6 Terms and Conditions of Performance Unit Awards.........................................................10
(a) Payment.................................................................................................10
(b) Conditions to Payment...................................................................................10
3.7 Terms and Conditions of Phantom Shares..................................................................10
(a) Payment.................................................................................................10
(b) Conditions to Payment...................................................................................10
3.8 Treatment of Awards Upon Termination of Service.........................................................11
SECTION 4 RESTRICTIONS ON STOCK.................................................................................11
4.1 Escrow of Shares........................................................................................11
4.2 Forfeiture of Shares....................................................................................11
4.3 Restrictions on Transfer................................................................................11
SECTION 5 GENERAL PROVISIONS....................................................................................12
5.1 Withholding.............................................................................................12
5.2 Changes in Capitalization; Merger; Liquidation..........................................................12
5.3 Cash Awards.............................................................................................13
5.4 Compliance with Code....................................................................................13
</TABLE>
-i-
<PAGE> 35
<TABLE>
<S> <C>
5.5 Right to Terminate Service..............................................................................13
5.6 Restrictions on Delivery and Sale of Shares; Legends....................................................13
5.7 Non-alienation of Benefits..............................................................................14
5.8 Termination and Amendment of the Plan...................................................................14
5.9 Stockholder Approval....................................................................................14
5.10 Choice of Law...........................................................................................14
5.11 Effective Date of Plan..................................................................................14
</TABLE>
-ii-
<PAGE> 36
MORRISON HEALTH CARE, INC.
1996 STOCK INCENTIVE PLAN
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall be
deemed to include the feminine, and the singular to include the plural, unless
the context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:
(a) "Board of Directors" means the board of directors of the
Company.
(b) "Cause" has the same meaning as provided in the employment
agreement between the Participant and the Company or, if applicable, any
affiliate of the Company on the date of Termination of Service, or if no such
definition or employment agreement exists, "Cause" means conduct amounting to
(1) fraud or dishonesty against the Company or its affiliates, (2) Participant's
willful misconduct, repeated refusal to follow the reasonable directions of the
board of directors of the Company or its affiliates, or knowing violation of law
in the course of performance of the duties of Participant's service with the
Company or its affiliates, (3) repeated absences from work without a reasonable
excuse, (4) repeated intoxication with alcohol or drugs while on the Company or
affiliates' premises during regular business hours, (5) a conviction or plea of
guilty or nolo contendere to a felony or a crime involving dishonesty, or (6) a
breach or violation of the terms of any agreement to which Participant and the
Company or its affiliates are party.
(c) "Change in Control" means any event that pursuant to the
Company's Certificate of Incorporation, as amended from time to time, requires
the affirmative vote of the holders of not less than eighty percent (80%) of the
Voting Stock (as defined therein); provided, however, that no event shall
constitute a Change in Control if approved by the Board of Directors a majority
of whom are present directors and new directors. For purposes of the preceding
sentence, the term "present directors" means individuals who as of the date this
Plan is adopted were members of the Board of Directors and the term "new
directors" means any director whose election by the Board of Directors in the
event of vacancy or whose nomination for election was approved by a vote of at
least three-fourths of the directors then still in office who are present
directors and new directors; provided that any director elected to the Board of
Directors solely to avoid or settle a threatened or actual proxy contest shall
in no event be deemed to be a new director.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the committee appointed by the Board of
Directors to administer the Plan pursuant to Plan Section 2.3.
(f) "Company" means Morrison Health Care, Inc., a Georgia
corporation.
<PAGE> 37
(g) "Disability" has the same meaning as provided in the long-term
disability plan or policy maintained or, if applicable, most recently
maintained, by the Company or, if applicable, any affiliate of the Company for
the Participant. If no long-term disability plan or policy was ever maintained
on behalf of the Participant or, if the determination of Disability relates to
an Incentive Stock Option, Disability shall mean that condition described in
Code Section 22(e)(3), as amended from time to time. In the event of a dispute,
the determination of Disability shall be made by the Board of Directors and
shall be supported by advice of a physician competent in the area to which such
Disability relates.
(h) "Disposition" means any conveyance, sale, transfer,
assignment, pledge or hypothecation, whether outright or as security, inter
vivos or testamentary, with or without consideration, voluntary or involuntary.
(i) "Dividend Equivalent Rights" means certain rights to receive
cash payments as described in Plan Section 3.5.
(j) "Fair Market Value" with regard to a date means the closing
price at which Stock shall have been sold on the last trading date prior to that
date as reported by a national securities exchange selected by the Committee on
which the shares of Stock are then actively traded and published in The Wall
Street Journal; provided that, for purposes of granting awards other than
Incentive Stock Options, Fair Market Value of the shares of Stock may be
determined by the Committee by reference to the average market value determined
over a period certain or as of specified dates, to a tender offer price for the
shares of Stock (if settlement of an award is triggered by such an event) or to
any other reasonable measure of fair market value.
(k) "Incentive Stock Option" means an incentive stock option, as
defined in Code Section 422, described in Plan Section 3.2.
(l) "Non-Qualified Stock Option" means a stock option, other than
an option qualifying as an Incentive Stock Option, described in Plan Section
3.2.
(m) "Option" means a Non-Qualified Stock Option or an Incentive
Stock Option.
(n) "Over 10% Owner" means an individual who at the time an
Incentive Stock Option is granted owns Stock possessing more than 10% of the
total combined voting power of the Company or one of its Parents or
Subsidiaries, determined by applying the attribution rules of Code Section
424(d).
(o) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, with respect to
Incentive Stock Options, at the time of granting of the Option, each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
-2-
<PAGE> 38
(p) "Participant" means an individual who receives a Stock
Incentive hereunder.
(q) "Performance Unit Award" refers to a performance unit award
described in Plan Section 3.6.
(r) "Phantom Shares" refers to the rights described in Plan
Section 3.7.
(s) "Plan" means the Morrison Health Care, Inc. 1996 Stock
Incentive Plan. If the Company's Certificate of Incorporation is amended to
change the name of the Company, the Plan shall thereafter be formally titled
using the new name of the Company followed by the phrase "1996 Stock Incentive
Plan."
(t) "Stock" means the Company's common stock, $.01 par value.
(u) "Stock Appreciation Right" means a stock appreciation right
described in Plan Section 3.3.
(v) "Stock Award" means a stock award described in Plan Section
3.4.
(w) "Stock Incentive Agreement" means an agreement between the
Company and a Participant or other documentation evidencing an award of a Stock
Incentive.
(x) "Stock Incentive Program" means a written program established
by the Committee pursuant to which Stock Incentives, other than Options or Stock
Appreciation Rights, are awarded under the Plan under uniform terms, conditions
and restrictions set forth in such written program and distributed among
eligible officers, employees and directors.
(y) "Stock Incentives" means, collectively, Dividend Equivalent
Rights, Incentive Stock Options, Non-Qualified Stock Options, Performance Unit
Awards, Phantom Shares, Stock Appreciation Rights and Stock Awards.
(z) "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, with respect to
Incentive Stock Options, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
(aa) "Termination of Service" means the termination of either the
employee-employer or director relationship, as the case may be, between a
Participant and the Company and its affiliates, regardless of the fact that
severance or similar payments are made to the Participant, for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, Disability or retirement. The Committee shall, in its absolute
discretion, determine the effect of all matters and questions relating to
Termination of Service, including, but not by way of limitation, the question of
whether a leave of absence constitutes a Termination of Service, or whether a
Termination of Service is for Cause.
-3-
<PAGE> 39
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the Plan. The Plan is intended to (a) provide
incentive to officers, employees and directors of the Company and its affiliates
to stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
officers, employees and directors by providing them with a means to acquire a
proprietary interest in the Company by acquiring shares of Stock or to receive
compensation which is based upon appreciation in the value of Stock; and (c)
provide a means of obtaining and rewarding key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance
with Section 5.2, 500,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At no time shall
the Company have outstanding Stock Incentives and shares of Stock issued in
respect of Stock Incentives in excess of the Maximum Plan Shares; for this
purpose, the outstanding Stock Incentives and shares of Stock issued in respect
of Stock Incentives shall be computed in accordance with Rule 16b-3(a)(1) as
promulgated under the Securities Exchange Act of 1934, as amended from time to
time. To the extent permitted by Rule 16b-3(a)(1) as promulgated under the
Securities Exchange Act of 1934, the shares of Stock attributable to the
nonvested, unpaid, unexercised, unconverted or otherwise unsettled portion of
any Stock Incentive that is forfeited or cancelled or expires or terminates for
any reason without becoming vested, paid, exercised, converted or otherwise
settled in full shall again be available for purposes of the Plan.
2.3 Administration of the Plan. The Plan shall be administered by
the Committee. The Committee shall have full authority in its discretion to
determine the officers, employees and directors of the Company or its affiliates
to whom Stock Incentives shall be granted and the terms and provisions of Stock
Incentives, subject to the Plan. Subject to the provisions of the Plan, the
Committee shall have full and conclusive authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the respective Stock Incentive Agreements
or Stock Incentive Programs and to make all other determinations necessary or
advisable for the proper administration of the Plan. The Committee's
determinations under the Plan need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan (whether or not such persons are similarly situated). The Committee's
decisions shall be final and binding on all Participants.
As to any matter involving a Participant who is not a
"reporting person" for purposes of Section 16 of the Securities Exchange Act of
1934, Committee may delegate to any member of the Board of Directors or officer
of the Company the administrative authority to (a) interpret the provisions of
the Participant's Stock Incentive Agreement and (b) determine the treatment of
Stock Incentives upon a Termination of Service, as contemplated by Plan Section
3.8.
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Prior to the date the Stock of the Company is distributed to
the stockholders of Morrison Restaurants Inc., the Committee shall consist of
the then current members of the Board of Directors; thereafter, the Committee
shall consist of at least two members of the Board of Directors each of whom,
during those periods that the Company is subject to the provisions of Section 16
of the Securities Exchange Act of 1934, shall qualify as a "disinterested
person," as defined in Rule 16b-3 as promulgated under the Securities Exchange
Act of 1934 and as an "outside director," within the meaning of Code Section
162(m) and the regulations promulgated thereunder. The Board of Directors may
from time to time remove members from or add members to the Committee. Vacancies
on the Committee shall be filled by the Board of Directors.
2.4 Eligibility and Limits. Stock Incentives may be granted only
to officers, employees and directors of the Company or an affiliate (including,
but not limited to, Morrison Restaurants Inc. and Morrison Fresh Cooking, Inc.;
provided, however, that directors who serve on the Committee shall not be
eligible to receive awards that are subject to Section 16 of the Securities
Exchange Act of 1934 while they are members of the Committee and that an
Incentive Stock Option may only be granted to an employee of the Company or any
Parent or Subsidiary. In the case of Incentive Stock Options, the aggregate Fair
Market Value (determined as at the date an Incentive Stock Option is granted) of
stock with respect to which stock options intended to meet the requirements of
Code Section 422 become exercisable for the first time by an individual during
any calendar year under all plans of the Company and its Parents and
Subsidiaries shall not exceed $100,000; provided further, that if the limitation
is exceeded, the Incentive Stock Option(s) which cause the limitation to be
exceeded shall be treated as Non-Qualified Stock Option(s). To the extent
required under Code Section 162(m) and regulations thereunder for compensation
to be treated as qualified performance-based compensation, the maximum number of
shares Stock with respect to which Options or Stock Appreciation Rights may be
granted during any single fiscal year of the Company to any Participant who is a
"covered employee," within the meaning of Code Section 162(m) and the
regulations promulgated thereunder (a "Covered Employee"), shall not exceed
100,000.
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All Stock Incentives.
(a) The number of shares of Stock as to which a Stock
Incentive shall be granted shall be determined by the Committee in its sole
discretion, subject to the provisions of Section 2.2 as to the total number of
shares available for grants under the Plan. If a Stock Incentive Agreement so
provides, a Participant may be granted a new Option to purchase a number of
shares of Stock equal to the number of previously owned shares of Stock tendered
in payment of the Exercise Price (as defined below) for each share of Stock
purchased pursuant to the terms of the Stock Incentive Agreement.
(b) Each Stock Incentive shall be evidenced either by a
Stock Incentive Agreement in such form and containing such terms, conditions and
restrictions as the Committee may determine is appropriate or be made subject to
the terms of a Stock Incentive Program, containing such terms, conditions and
restrictions as the Committee may determine is
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appropriate. Each Stock Incentive Agreement or Stock Incentive Program shall be
subject to the terms of the Plan and any provision in a Stock Incentive
Agreement or Stock Incentive Program that is inconsistent with the Plan shall be
null and void.
(c) The date a Stock Incentive is granted shall be the
date on which the Committee has approved the terms and conditions of the Stock
Incentive Agreement or Stock Incentive Program and has determined the recipient
of the Stock Incentive and the number of shares covered by the Stock Incentive
and has taken all such other action necessary to complete the grant of the Stock
Incentive.
(d) The Committee may provide in any Stock Incentive
Agreement or pursuant to any Stock Incentive Program (or subsequent to the award
of a Stock Incentive but prior to its expiration or cancellation, as the case
may be) that, in the event of a Change in Control, the Stock Incentive shall or
may be cashed out on the basis of any price not greater than the highest price
paid for a share of Stock in any transaction reported by any national securities
exchange selected by the Committee on which the shares of Stock are then
actively traded during a specified period immediately preceding or including the
date of the Change in Control or offered for a share of Stock in any tender
offer occurring during a specified period immediately preceding or including the
date the tender offer commences; provided that, in no case shall any such
specified period exceed one (1) year (the "Change in Control Price"). For
purposes of this Subsection, the cash-out of a Stock Incentive shall be
determined as follows:
(i) Options shall be cashed out on the basis of
the excess, if any, of the Change in Control Price (but not more than the Fair
Market Value of the Stock on the date of the cash-out in the case of Incentive
Stock Options) over the Exercise Price with or without regard to whether the
Option may otherwise be exercisable only in part;
(ii) Stock Awards and Phantom Shares shall be
cashed out in an amount equal to the Change in Control Price with or without
regard to any conditions or restrictions otherwise applicable to any such Stock
Incentive; and
(iii) Stock Appreciation Rights, Dividend
Equivalent Rights and Performance Unit Awards shall be cashed out with or
without regard to any conditions or restrictions otherwise applicable to any
such Stock Incentive and the amount of the cash out shall be determined by
reference to the number of shares of Stock that would be required to pay the
Participant in kind for the value of the Stock Incentive as of the date of the
Change in Control multiplied by the Change in Control Price.
(iv) Any Stock Incentive may be granted in
connection with all or any portion of a previously or contemporaneously granted
Stock Incentive. Exercise or vesting of a Stock Incentive granted in connection
with another Stock Incentive may result in a pro rata surrender or cancellation
of any related Stock Incentive, as specified in the applicable Stock Incentive
Agreement or Stock Incentive Program.
(v) Stock Incentives shall not be transferable
or assignable except by will or by the laws of descent and distribution and
shall be exercisable, during the Participant's
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lifetime, only by the Participant; in the event of the Disability of the
Participant, by the legal representative of the Participant; or in the event of
the death of the participant, by the personal representative of the
Participant's estate or if no personal representative has been appointed, by the
successor in interest determined under the Participant's will.
3.2 Terms and Conditions of Options. Each Option granted under the
Plan shall be evidenced by a Stock Incentive Agreement. At the time any Option
is granted, the Committee shall determine whether the Option is to be an
Incentive Stock Option or a Non-Qualified Stock Option, and the Option shall be
clearly identified as to its status as an Incentive Stock Option or a
Non-Qualified Stock Option. At the time any Incentive Stock Option is exercised,
the Company shall be entitled to place a legend on the certificates representing
the shares of Stock purchased pursuant to the Option to clearly identify them as
shares of Stock purchased upon exercise of an Incentive Stock Option. An
Incentive Stock Option may only be granted within ten (10) years from the
earlier of the date the Plan, as amended and restated, is adopted or approved by
the Company's stockholders.
(a) Option Price. Subject to adjustment in accordance
with Section 5.2 and the other provisions of this Section 3.2, the exercise
price (the "Exercise Price") per share of Stock purchasable under any Option
shall be as set forth in the applicable Stock Incentive Agreement. With respect
to each grant of an Incentive Stock Option to a Participant who is not an Over
10% Owner or to each grant of any Option to a Participant who is then a Covered
Employee, the Exercise Price per share shall not be less than the Fair Market
Value on the date the Option is granted. With respect to each grant of an
Incentive Stock Option to a Participant who is an Over 10% Owner, the Exercise
Price shall not be less than 110% of the Fair Market Value on the date the
Option is granted.
(b) Option Term. The term of an Option shall be as
specified in the applicable Stock Incentive Agreement; provided, however that
any Incentive Stock Option granted to a Participant who is not an Over 10% Owner
shall not be exercisable after the expiration of ten (10) years after the date
the Option is granted and any Incentive Stock Option granted to an Over 10%
Owner shall not be exercisable after the expiration of five (5) years after the
date the Option is granted.
(c) Payment. Payment for all shares of Stock purchased
pursuant to exercise of an Option shall be made in any form or manner authorized
by the Committee in the Stock Incentive Agreement or by amendment thereto,
including, but not limited to, cash or, if the Stock Incentive Agreement
provides, (i) by delivery to the Company of a number of shares of Stock which
have been owned by the holder for at least six (6) months prior to the date of
exercise having an aggregate Fair Market Value of not less than the product of
the Exercise Price multiplied by the number of shares the Participant intends to
purchase upon exercise of the Option on the date of delivery; (ii) in a cashless
exercise through a broker; or (iii) by having a number of shares of Stock
withheld, the Fair Market Value of which as of the date of exercise is
sufficient to satisfy the Exercise Price. In its discretion, the Committee also
may authorize (at the time an Option is granted or thereafter) Company financing
to assist the Participant as to payment of the Exercise Price on such terms as
may be offered by the Committee in its discretion. Payment shall be made at the
time that the Option or any part thereof is exercised,
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and no shares shall be issued or delivered upon exercise of an option until full
payment has been made by the Participant. The holder of an Option, as such,
shall have none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option
granted under the Plan shall be exercisable by whom, at such time or times, or
upon the occurrence of such event or events, and in such amounts, as the
Committee shall specify in the Stock Incentive Agreement; provided, however,
that subsequent to the grant of an Option, the Committee, at any time before
complete termination of such Option, may accelerate the time or times at which
such Option may be exercised in whole or in part, including, without limitation,
upon a Change in Control and may permit the Participant or any other designated
person to exercise the Option, or any portion thereof, for all or part of the
remaining Option term notwithstanding any provision of the Stock Incentive
Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect
to an Incentive Stock Option, in the event of the Termination of Service of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Service;
provided, however, that in the case of a holder whose Termination of Service is
due to death or Disability, one (1) year shall be substituted for such three (3)
month period. For purposes of this Subsection (e), Termination of Service of the
Participant shall not be deemed to have occurred if the Participant is employed
by another corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the Incentive Stock Option of the Participant in
a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options.
Notwithstanding anything to the contrary in this Section 3.2, any Option issued
in substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such other
terms and conditions as the Committee may prescribe to cause such substitute
Option to contain as nearly as possible the same terms and conditions (including
the applicable vesting and termination provisions) as those contained in the
previously issued option being replaced thereby.
3.3 Terms and Conditions of Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan shall be evidenced by a Stock
Incentive Agreement. A Stock Appreciation Right may be granted in connection
with all or any portion of a previously or contemporaneously granted Stock
Incentive or not in connection with a Stock Incentive. A Stock Appreciation
Right shall entitle the Participant to receive the excess of (a) the Fair Market
Value of a specified or determinable number of shares of the Stock at the time
of payment or exercise over (b) a specified price (i) which, in the case of a
Stock Appreciation Right granted in connection with an Option, shall be not less
than the Exercise Price for that number of shares and (ii) which, in the case of
a Stock Appreciation Right that is granted to a Participant who is then a
Covered Employee, shall not be less than the Fair Market Value of the Stock at
the time of the award. A Stock Appreciation Right granted in connection with a
Stock Incentive may only be
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exercised to the extent that the related Stock Incentive has not been exercised,
paid or otherwise settled. The exercise of a Stock Appreciation Right granted in
connection with a Stock Incentive shall result in a pro rata surrender or
cancellation of any related Stock Incentive to the extent the Stock Appreciation
Right has been exercised.
(a) Settlement. Upon settlement of a Stock Appreciation
Right, the Company shall pay to the Participant the appreciation in cash or
shares of Stock (valued at the aggregate Fair Market Value on the date of
payment or exercise) as provided in the Stock Incentive Agreement or, in the
absence of such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right
granted under the Plan shall be exercisable or payable at such time or times, or
upon the occurrence of such event or events, and in such amounts, as the
Committee shall specify in the Stock Incentive Agreement; provided, however,
that subsequent to the grant of a Stock Appreciation Right, the Committee, at
any time before complete termination of such Stock Appreciation Right, may
accelerate the time or times at which such Stock Appreciation Right may be
exercised or paid in whole or in part.
3.4 Terms and Conditions of Stock Awards. The number of shares of
Stock subject to a Stock Award and restrictions or conditions on such shares, if
any, shall be as the Committee determines, and the certificate for such shares
shall bear evidence of any restrictions or conditions. Subsequent to the date of
the grant of the Stock Award, the Committee shall have the power to permit, in
its discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
The Committee may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment.
3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
Equivalent Right shall entitle the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends paid on a
specified number of shares of Stock to Company stockholders of record during the
period such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent
Right may be made by the Company in cash or shares of Stock (valued at Fair
Market Value on the date of payment) as provided in the Stock Incentive
Agreement or, in the absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right
granted under the Plan shall be payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement or Stock Incentive Program; provided,
however, that subsequent to the grant of a Dividend Equivalent
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Right, the Committee, at any time before complete termination of such Dividend
Equivalent Right, may accelerate the time or times at which such Dividend
Equivalent Right may be paid in whole or in part.
3.6 Terms and Conditions of Performance Unit Awards. A Performance
Unit Award shall entitle the Participant to receive, at a future date, payment
of an amount equal to all or a portion of the value of a number of units (stated
in terms of a designated dollar amount per unit) granted by the Committee, all
as the Committee shall specify in the Stock Incentive Agreement or Stock
Incentive Program. At the time of the grant, the Committee must determine the
base value of each unit, the number of units subject to a Performance Unit
Award, the performance factors applicable to the determination of the ultimate
payment value of the Performance Unit Award and the period over which Company
performance shall be measured. The Committee may provide for an alternate base
value for each unit under certain specified conditions.
(a) Payment. Payment in respect of Performance Unit
Awards may be made by the Company in cash or shares of Stock (valued at Fair
Market Value on the date of payment) as provided in the Stock Incentive
Agreement or Stock Incentive Program or, in the absence of such provision, as
the Committee may determine.
(b) Conditions to Payment. Each Performance Unit Award
granted under the Plan shall be payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Incentive Agreement or Stock Incentive Program; provided,
however, that subsequent to the grant of a Performance Unit Award, the
Committee, at any time before complete termination of such Performance Unit
Award, may accelerate the time or times at which such Performance Unit Award may
be paid in whole or in part.
3.7 Terms and Conditions of Phantom Shares. Phantom Shares shall
entitle the Participant to receive, at a future date, payment of an amount equal
to all or a portion of the Fair Market Value of a number of shares of Stock at
the end of a certain period, all as the Committee shall specify in the Stock
Incentive Agreement or Stock Incentive Program. At the time of the grant, the
Committee shall determine the factors which will govern the portion of the
rights so payable, including, at the discretion of the Committee, any
performance criteria that must be satisfied as a condition to payment.
(a) Payment. Payment in respect of Phantom Shares may be
made by the Company in cash or shares of Stock (valued at Fair Market Value on
the date of payment) as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine.
(b) Conditions to Payment. Each Phantom Share granted
under the Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify in the
Stock Incentive Agreement or Stock Incentive Program; provided, however, that
subsequent to the grant of a Phantom Share, the Committee, at any time before
complete termination of such Phantom Share, may accelerate the time or times at
which such Phantom Share may be paid in whole or in part.
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3.8 Treatment of Awards Upon Termination of Service. Except as
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who suffers a Termination of Service may be cancelled, accelerated,
paid or continued, as provided in the Stock Incentive Agreement or Stock
Incentive Program or, in the absence of such provision, as the Committee may
determine. The portion of any award exercisable in the event of continuation or
the amount of any payment due under a continued award may be adjusted by the
Committee to reflect the Participant's period of service from the date of grant
through the date of the Participant's Termination of Service or such other
factors as the Committee determines are relevant to its decision to continue the
award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of
Stock issued under the Plan shall be issued in the Participant's name, but, if
the Stock Incentive Agreement or Stock Incentive Program so provides, the shares
of Stock shall be held by a custodian designated by the Committee (the
"Custodian"). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian shall appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant's name, place and stead to transfer,
assign and convey to the Company any shares of Stock held by the Custodian for
such Participant, if the Participant forfeits the shares under the terms of the
applicable Stock Incentive Agreement or Stock Incentive Program. During the
period that the Custodian holds the shares subject to this Section, the
Participant shall be entitled to all rights, except as provided in the
applicable Stock Incentive Agreement or Stock Incentive Program, applicable to
shares of Stock not so held. Any dividends declared on shares of Stock held by
the Custodian shall, as the Committee may provide in the applicable Stock
Incentive Agreement or Stock Incentive Program, be paid directly to the
Participant or, in the alternative, be retained by the Custodian until the
expiration of the term specified in the applicable Stock Incentive Agreement or
Stock Incentive Program and shall then be delivered, together with any proceeds,
with the shares of Stock to the Participant or to the Company, as applicable.
4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set
forth in any Stock Incentive Agreement or Stock Incentive Program, in the event
that the Participant violates a noncompetition agreement as set forth in the
Stock Incentive Agreement or Stock Incentive Program, all Stock Incentives and
shares of Stock issued to the holder pursuant to the Plan shall be forfeited;
provided, however, that the Company shall return to the holder the lesser of any
consideration paid by the Participant in exchange for Stock issued to the
Participant pursuant to the Plan or the then Fair Market Value of the Stock
forfeited hereunder.
4.3 Restrictions on Transfer. The Participant shall not have the
right to make or permit to exist any Disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the applicable Stock
Incentive Agreement or Stock Incentive Program. Any Disposition of the shares of
Stock issued under the Plan by the Participant not made in accordance with the
Plan or the applicable Stock Incentive Agreement or Stock Incentive Program
shall be void. The Company shall not recognize, or have the duty to recognize,
any Disposition not made in accordance with the Plan and the applicable Stock
Incentive Agreement
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or Stock Incentive Program, and the shares so transferred shall continue to be
bound by the Plan and the applicable Stock Incentive Agreement or Stock
Incentive Program.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash
distributions under the Plan any taxes required to be withheld by federal, state
or local government. Whenever the Company proposes or is required to issue or
transfer shares of Stock under the Plan or upon the vesting of any Stock Award,
the Company shall have the right to require the recipient to remit to the
Company an amount sufficient to satisfy any federal, state and local withholding
tax requirements prior to the delivery of any certificate or certificates for
such shares or the vesting of such Stock Award. A Participant may pay the
withholding tax in cash, or, if the applicable Stock Incentive Agreement or
Stock Incentive Program provides, a Participant may elect to have the number of
shares of Stock he is to receive reduced by, or with respect to a Stock Award,
tender back to the Company, the smallest number of whole shares of Stock which,
when multiplied by the Fair Market Value of the shares of Stock determined as of
the Tax Date (defined below), is sufficient to satisfy federal, state and local,
if any, withholding taxes arising from exercise or payment of a Stock Incentive
(a "Withholding Election"). A Participant may make a Withholding Election only
if both of the following conditions are met:
(a) The Withholding Election must be made on or prior to
the date on which the amount of tax required to be withheld is determined (the
"Tax Date") by executing and delivering to the Company a properly completed
notice of Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable;
however, the Committee may in its sole discretion disapprove and give no effect
to the Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
(a) The number of shares of Stock reserved for the grant
of Options, Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares,
Stock Appreciation Rights and Stock Awards; the number of shares of Stock
reserved for issuance upon the exercise or payment, as applicable, of each
outstanding Option, Dividend Equivalent Right, Performance Unit Award, Phantom
Share and Stock Appreciation Right and upon vesting or grant, as applicable, of
each Stock Award; the Exercise Price of each outstanding Option and the
specified number of shares of Stock to which each outstanding Dividend
Equivalent Right, Phantom Share and Stock Appreciation Right pertains shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock resulting from a subdivision or combination of shares or the
payment of an ordinary stock dividend in shares of Stock to holders of
outstanding shares of Stock or any other increase or decrease in the number of
shares of Stock outstanding effected without receipt of consideration by the
Company.
(b) In the event of any merger, consolidation, extraordinary
dividend (including a spin-off), reorganization or other change in the corporate
structure of the Company or its Stock or tender offer for shares of Stock, the
Committee, in its sole discretion, may make
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such adjustments with respect to awards and take such other action as it deems
necessary or appropriate to reflect or in anticipation of such merger,
consolidation, extraordinary dividend, reorganization, other change in corporate
structure or tender offer, including, without limitation, the substitution of
new awards, the termination or adjustment of outstanding awards, the
acceleration of awards or the removal of restrictions on outstanding awards. Any
adjustment pursuant to this Section 5.2 may provide, in the Committee's
discretion, for the elimination without payment therefor of any fractional
shares that might otherwise become subject to any Stock Incentive.
(c) The existence of the Plan and the Stock Incentives
granted pursuant to the Plan shall not affect in any way the right or power of
the Company to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure, any merger
or consolidation of the Company, any issue of debt or equity securities having
preferences or priorities as to the Stock or the rights thereof, the dissolution
or liquidation of the Company, any sale or transfer of all or any part of its
business or assets, or any other corporate act or proceeding.
5.3 Cash Awards. The Committee may, at any time and in its
discretion, grant to any holder of a Stock Incentive the right to receive, at
such times and in such amounts as determined by the Committee in its discretion,
a cash amount which is intended to reimburse such person for all or a portion of
the federal, state and local income taxes imposed upon such person as a
consequence of the receipt of the Stock Incentive or the exercise of rights
thereunder.
5.4 Compliance with Code. All Incentive Stock Options to be
granted hereunder are intended to comply with Code Section 422, and all
provisions of the Plan and all Incentive Stock Options granted hereunder shall
be construed in such manner as to effectuate that intent.
5.5 Right to Terminate Service. Nothing in the Plan or in any
Stock Incentive Agreement or Stock Incentive Program shall confer upon any
Participant the right to continue as an employee, officer or director of the
Company or any of its affiliates or affect the right of the Company or any of
its affiliates to terminate the Participant's service at any time.
5.6 Restrictions on Delivery and Sale of Shares; Legends. Each
Stock Incentive is subject to the condition that if at any time the Committee,
in its discretion, shall determine that the listing, registration or
qualification of the shares covered by such Stock Incentive upon any securities
exchange or under any state or federal law is necessary or desirable as a
condition of or in connection with the granting of such Stock Incentive or the
purchase or delivery of shares thereunder, the delivery of any or all shares
pursuant to such Stock Incentive may be withheld unless and until such listing,
registration or qualification shall have been effected. If a registration
statement is not in effect under the Securities Act of 1933 or any applicable
state securities laws with respect to the shares of Stock purchasable or
otherwise deliverable under Stock Incentives then outstanding, the Committee may
require, as a condition of exercise of any Option or as a condition to any other
delivery of Stock pursuant to a Stock Incentive, that the Participant or other
recipient of a Stock Incentive represent, in writing, that the shares received
pursuant to the Stock Incentive are being acquired for investment and not with a
view to distribution and agree that the shares will not be disposed of except
pursuant to an effective
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registration statement, unless the Company shall have received an opinion of
counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities laws. The Company may
include on certificates representing shares delivered pursuant to a Stock
Incentive such legends referring to the foregoing representations or
restrictions or any other applicable restrictions on resale as the Company, in
its discretion, shall deem appropriate.
5.7 Non-alienation of Benefits. Other than as specifically
provided with regard to the death of a Participant, no benefit under the Plan
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge; and any attempt to do so shall be
void. No such benefit shall, prior to receipt by the Participant, be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the Participant.
5.8 Termination and Amendment of the Plan. The Board of Directors
at any time may amend or terminate the Plan without stockholder approval;
provided, however, that the Board of Directors may condition any amendment on
the approval of stockholders of the Company if such approval is necessary or
advisable with respect to tax, securities or other applicable laws. No such
termination or amendment without the consent of the holder of a Stock Incentive
shall adversely affect the rights of the Participant under such Stock Incentive.
5.9 Stockholder Approval. The Plan shall be submitted to the
stockholders of both Morrison Restaurants Inc. and Morrison Health Care, Inc.
for their approval within twelve (12) months before or after its adoption by the
Board of Directors. If such approval is not obtained, any Stock Incentive
granted under the Plan shall be void.
5.10 Choice of Law. The laws of the State of Georgia shall govern
the Plan, to the extent not preempted by federal law.
5.11 Effective Date of Plan. The Plan shall become effective upon
the date the Plan is approved by the Board of Directors.
MORRISON HEALTH CARE, INC.
By: J. Russell Mothershed
Title: Vice President
Attest:
Pfilip G. Hunt
Secretary
[CORPORATE SEAL]
-14-
<PAGE> 50
FIRST AMENDMENT TO THE
MORRISON HEALTH CARE, INC. 1996 STOCK INCENTIVE PLAN
THIS FIRST AMENDMENT is made as of this 26th day of June, 1996, by
Morrison Health Care, Inc., a corporation duly organized and existing under the
laws of the State of Georgia (hereinafter called the "Company").
WITNESSETH:
WHEREAS, the Company maintains the Morrison Health Care, Inc. 1996
Stock Incentive Plan under an indenture which was adopted as of February 23,
1996 (the "Plan"); and
WHEREAS, the Company desires to amend the Plan to reflect increases in
the number of shares authorized for issuance thereunder and to increase the
limit on the number of shares that may be the subject of awards granted to
certain executives during any single fiscal year of the Company; and
WHEREAS, the Board of Directors of the Company has duly approved and
authorized these amendments to the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan as follows:
1. By deleting, effective March 26, 1996, the first sentence of Section
2.2 in its entirety and by substituting therefor the following:
"Subject to adjustment in accordance with Section 5.2, 750,000 shares
of Stock (the `Maximum Plan Shares') are hereby reserved exclusively
for issuance pursuant to Stock Incentives."
2. By deleting, effective June 26, 1996, the first sentence of Section 2.2
in its entirety and by substituting therefor the following:
"Subject to adjustment in accordance with Section 5.2, 850,000 shares
of Stock (the `Maximum Plan Shares') are hereby reserved exclusively
for issuance pursuant to Stock Incentives."
3. By deleting, effective March 26, 1996, the number "100,000" where it
appears in the last sentence of Section 2.4 and by substituting therefor the
number "300,000".
<PAGE> 51
4. Except as specifically amended hereby, the Plan shall remain in full
force and effect as prior to the adoption of this First Amendment.
5. Notwithstanding the foregoing, the adoption of this First Amendment is
subject to the approval of the stockholders of the Company and in the event that
the stockholders of the Company fail to approve such adoption within twelve
months of March 26, 1996, the adoption of this First Amendment shall be null and
void.
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed on the day and year first above written.
MORRISON HEALTH CARE, INC.
By: Glenn A. Davenport
Title: President and CEO
ATTEST:
By: John E. Fountain
Title: Secretary
(CORPORATE SEAL)
2
<PAGE> 52
SECOND AMENDMENT TO THE
MORRISON HEALTH CARE, INC. 1996 STOCK INCENTIVE PLAN
THIS SECOND AMENDMENT is made as of this 26th day of June, 1997, by
Morrison Health Care, Inc., a corporation duly organized and existing under the
laws of the State of Georgia (hereinafter called the "Company").
WITNESSETH:
WHEREAS, the Company maintains the Morrison Health Care, Inc. 1996
Stock Incentive Plan under an indenture which was adopted as of February 23,
1996 (the "Plan");
WHEREAS, the Company desires to amend the Plan to reflect an increase
in the number of shares authorized for issuance thereunder; and
WHEREAS, the Board of Directors of the Company has duly approved and
authorized this amendment to the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan, effective as of
the date first set forth above, as follows:
1. By deleting the first sentence of Section 2.2 in its entirety and by
substituting therefor the following:
"Subject to adjustment in accordance with Section 5.2, 1,750,000 shares
of Stock (the `Maximum Plan Shares') are hereby reserved exclusively
for issuance pursuant to Stock Incentives."
2. Except as specifically amended hereby, the Plan shall remain in full
force and effect as prior to the adoption of this Second Amendment.
3. Notwithstanding the foregoing, the adoption of this Second Amendment is
subject to the approval of the stockholders of the Company and in the event that
the stockholders of the Company fail to approve such adoption within twelve
months from the date first set forth above, the adoption of this Second
Amendment shall be null and void.
<PAGE> 53
IN WITNESS WHEREOF, the Company has caused this Second Amendment to be
executed on the day and year first above written.
MORRISON HEALTH CARE, INC.
By: Glenn A. Davenport
Title: President and Chief Executive Officer
ATTEST:
By: John E. Fountain
Title: Secretary
(CORPORATE SEAL)
<PAGE> 54
THIRD AMENDMENT TO THE
MORRISON MANAGEMENT SPECIALISTS, INC.
1996 STOCK INCENTIVE PLAN
THIS THIRD AMENDMENT is made as of this 29th day of June, 2000, by
Morrison Management Specialists, Inc., a corporation organized and existing
under the laws of the State of Georgia (the "Company").
WITNESSETH:
WHEREAS, the Company maintains the Morrison Management Specialists,
Inc. 1996 Stock Incentive Plan under an indenture which was adopted as of
February 23, 1996 (the "Plan");
WHEREAS, the Company desires to amend the Plan to reflect the ten
percent (10%) stock dividend paid on May 19, 2000; and
WHEREAS, the Company also desires to amend the Plan to reflect a
500,000 share increase in the number of shares authorized for issuance
thereunder, as approved by the Board of Directors of the Company on June 29,
2000; and
WHEREAS, the Board of Directors of the Company has duly approved and
authorized this amendment to the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan, effective as of
the dates set forth below, as follows:
1. By deleting, effective May 19, 2000, the first sentence of Section 2.2
its entirety and by substituting therefor the following:
"Subject to adjustment in accordance with Section 5.2, 1,925,000 shares
of Stock (the `Maximum Plan Shares') are hereby reserved exclusively
for issuance pursuant to Stock Incentives."
2. By deleting, effective June 29, 2000, the first sentence of Section 2.2
its entirety and by substituting therefor the following:
"Subject to adjustment in accordance with Section 5.2, 2,425,000 shares
of Stock (the `Maximum Plan Shares') are hereby reserved exclusively
for issuance pursuant to Stock Incentives."
3. Except as specifically amended hereby, the Plan shall remain in full
force and effect as prior to the adoption of this Third Amendment.
1
<PAGE> 55
4. Notwithstanding the foregoing, the adoption of this Third Amendment is
subject to the approval of the stockholders of the Company and in the event that
the stockholders of the Company fail to approve such adoption within twelve
months from the date first set forth above, the adoption of this Third Amendment
shall be null and void.
IN WITNESS WHEREOF, the Company has caused this Third Amendment to be
executed on the day and year first above written.
MORRISON MANAGEMENT SPECIALISTS, INC.
By:
-----------------------------
Title:
---------------------------
ATTEST:
By:
------------------------------
Title:
---------------------------
(CORPORATE SEAL)
