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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:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
MORRISON FRESH COOKING, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[MORRISON'S FRESH COOKING LOGO appears here]
August 20, 1997
Dear Shareholders:
We are holding your 1997 Annual Meeting on Wednesday, September 24, 1997 at
10:00 a.m., local time, at the Morrison's Cafeteria, 3200 Springdale Plaza,
Mobile, Alabama 36606. We sincerely hope that you will be able to attend the
meeting, and we look forward to seeing you. Matters on which action will be
taken at the meeting are explained in detail in the Notice and Proxy Statement
following this letter.
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 own shares.
Sincerely,
MORRISON FRESH COOKING, INC.
/s/DOLPH W. VON ARX
Dolph W. von Arx
Chairman of the Board
/s/RONNIE L. TATUM
Ronnie L. Tatum
Chief Executive Officer
MORRISON FRESH COOKING, INC.
------------------------------------------------------------
The Hartsfield Colonnade . 4893 Riverdale Road, Suite 260 . Atlanta, Georgia
30337 . (770) 991-0351 . Telefax (770) 991-9125
<PAGE>
MORRISON FRESH COOKING, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 24, 1997
The Annual Meeting of Shareholders of Morrison Fresh Cooking, Inc. will be
held at the Morrison's Cafeteria, 3200 Springdale Plaza, Mobile, Alabama 36606
on Wednesday, September 24, 1997, at 10:00 a.m., local time, for the following
purposes:
1. To elect two Class II directors to the Board of Directors for a term of
three years.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on August 8, 1997 are
entitled to vote at the meeting.
The mailing address of the Company's principal executive office is The
Hartsfield Colonnade, 4893 Riverdale Road, Suite 260, Atlanta, Georgia 30337.
We hope 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 own shares.
By Order of the Board of Directors
/s/MITCHELL S. BLOCK
Mitchell S. Block
Vice President, General Counsel
and Secretary
August 20, 1997
Atlanta, Georgia
<PAGE>
MORRISON FRESH COOKING, INC.
THE HARTSFIELD COLONNADE
4893 RIVERDALE ROAD
SUITE 260
ATLANTA, GEORGIA 30337
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
Morrison Fresh Cooking, Inc., a Georgia corporation (the "Company") became
an independent publicly-owned company in March 1996 as a result of the
distribution (the "Distribution") by Morrison Restaurants Inc., a Delaware
corporation ("MRI"), to its shareholders of all the issued and outstanding
shares of common stock of the Company. In the Distribution, MRI also
distributed to its shareholders all of the issued and outstanding shares of
common stock of Morrison Health Care, Inc. ("MHCI"), which held the health
care food and nutrition services assets and business of MRI. Simultaneously
with the Distribution, MRI reincorporated as a Georgia corporation (the
"Reincorporation"), effected a one-for-two reverse stock split and changed its
name to Ruby Tuesday, Inc. ("RTI"). As a result of the Distribution and the
Reincorporation, MRI's shareholders received one share of Company common stock
for every four shares of MRI common stock held, one share of MHCI common stock
for every three shares of MRI held, and one share of common stock of RTI,
successor to MRI's casual dining business, for every two shares of MRI held.
Certain of the executive compensation information presented in this Proxy
Statement for fiscal years prior to the Distribution relates to compensation
paid or awarded by MRI.
GENERAL INFORMATION
The following Proxy Statement and the accompanying proxy card, first mailed
to shareholders on or about August 20, 1997, are furnished in connection with
the solicitation by the Board of Directors of the Company of proxies to be
used in voting at the Annual Meeting of Shareholders of the Company to be held
on Wednesday, September 24, 1997, at the Morrison's Cafeteria, 3200 Springdale
Plaza, Mobile, Alabama 36606 and at any adjournment(s) thereof (the "Annual
Meeting").
Any shareholder returning a proxy has the power to revoke it prior to the
Annual Meeting by giving the Secretary of the Company written notice of
revocation, by returning a later dated proxy or by expressing a desire to vote
in person at the Annual Meeting. All shares of the Company's common stock,
$.01 par value per share ("Common Stock"), represented by valid proxies
received pursuant to this solicitation and not revoked before they are
exercised will be voted in the manner specified therein. If no specification
is made, the proxy will be voted (i) in favor of the election of the two
nominees for directors named in this Proxy Statement, and (ii) in accordance
with the best judgment of the proxy holders on any other matter that may
properly come before the Annual Meeting.
The entire cost of soliciting these proxies will be borne by the Company. In
following up the original solicitation of the proxies by mail, the Company
will request brokers and others to send proxy forms and other proxy material
to the beneficial owners of the Common Stock and will reimburse them for
expenses incurred in so doing. If necessary, the Company also may use some of
its employees to solicit proxies from the shareholders personally or by
telephone.
August 8, 1997 has been fixed as the record date for determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting and,
accordingly, only holders of Common Stock of record at the close of business
on that date will be entitled to notice of, and to vote at, the Annual
Meeting. The presence in person or by proxy of shareholders holding of record
a majority of shares of Common Stock outstanding and entitled to vote at the
Annual Meeting will constitute a quorum for the transaction of business at the
Annual Meeting. Shares
1
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represented by a valid proxy or which the authority to vote for one or more
Director Nominees is withheld will be counted as present in determining
whether a quorum exists. The number of shares of outstanding Common Stock on
August 8, 1997 was 9,248,715, each of which is entitled to one vote.
ELECTION OF DIRECTORS
Election of each of the Director Nominees named below requires the approval
of a plurality of the votes cast in the election. For purposes of determining
whether a Director Nominee has been elected by the shareholders, shares as to
which authority is withheld with respect to such Director Nominee will have no
effect on the outcome of the voting. Broker non-votes do not occur in the
election of directors.
The Company's Articles of Incorporation provide for three classes of
directors with staggered, three-year terms of office and provide that upon the
expiration of the term of office for a class of directors, the nominees for
that class will be elected for a term of three years to serve until the
election and qualification of their successors or until their earlier
resignation, death or removal from office. At the Annual Meeting, the two
nominees are for the Class II directors. The Class I and Class III directors
have two years and one year, respectively, remaining on their terms of office.
The Company's Articles of Incorporation and its Bylaws provide that the Board
of Directors shall consist of not less than three nor more than 12 directors
and authorize the exact number to be fixed from time to time by resolution of
a majority of the Board of Directors or by the affirmative vote of the holders
of at least 80% of all outstanding shares entitled to be voted in the election
of directors voting together as a single class. The Board of Directors has
fixed the exact number of members of the Board of Directors at seven and has
nominated J. Veronica Biggins and Ronnie L. Tatum to serve in Class II of the
Board of Directors for a term of three years. Both nominees are currently
serving as directors of the Company. There is currently one vacancy in Class I
of the Board of Directors. The Board of Directors has no immediate plans to
fill such vacancy, which vacancy may be filled without shareholder approval by
a majority vote of the remaining Directors.
It is intended that persons named in the accompanying form of proxy will
vote for the two nominees listed below unless authority to so vote is
withheld. Although the Board of Directors does not expect that any of the
nominees identified herein will be unavailable for election, in the event a
vacancy in the slate of nominees occurs, the shares represented by proxies in
the accompanying form may be voted for the election of a substitute nominee
selected by the persons named in the proxy.
DIRECTOR AND DIRECTOR NOMINEE INFORMATION
NOMINEES FOR DIRECTORS
CLASS II -- TERM EXPIRING 2000
J. VERONICA BIGGINS
Director of the Company since 1996 Age: 50
Ms. Biggins has been Executive Search Consultant in the Atlanta, Georgia
office of Heidrick & Struggles since February 1995 and is a Partner in such
office. Prior thereto, Ms. Biggins served as Assistant to the President of the
United States and Director of Presidential Personnel from February 1994 to
February 1995 and in various capacities with NationsBank Corporation from 1974
to February 1994, most recently as Executive Vice President-Director of
Corporate Community Affairs. Ms. Biggins is also a director of National Data
Corporation, Avnet, Inc. and Cameron Ashley Building Products, Inc.
RONNIE L. TATUM
Director of the Company since 1996 Age: 57
Mr. Tatum has been Chief Executive Officer of the Company since March 1996.
Mr. Tatum was President of the Family Dining Division of MRI's Morrison Group
from March 1994 until the Distribution in March 1996. Mr. Tatum served as
Senior Vice President of MRI's Family Dining Group from 1990 to March 1993.
2
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DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM EXPIRING 1998
DR. DONALD RATAJCZAK
Director of the Company since 1996 Age: 54
Dr. Ratajczak is Professor and Director, Economic Forecasting Center,
Georgia State University. Dr. Ratajczak was a director of MRI from 1981 until
the Distribution in March 1996. Dr. Ratajczak also is a director of Morgan
Keegan Inc., CIM High Yield Securities Fund and Ruby Tuesday, Inc.
DOLPH W. VON ARX
Director of the Company since 1996 Age: 62
Mr. von Arx was Chairman of the Board, President and Chief Executive Officer
of Planters LifeSavers Company, an affiliate of RJR Nabisco, Inc. until his
retirement in 1991. Mr. von Arx was a director of MRI from 1992 until the
Distribution in March 1996. Mr. von Arx is also a director of Cree Research,
Inc., BMC Fund, Inc., International MultiFoods, Inc., Mackenzie Investment
Management, Inc. and Ruby Tuesday, Inc.
CLASS I -- TERM EXPIRING 1999
E. EUGENE BISHOP
Director of the Company since 1996 Age: 67
Mr. Bishop was Chairman of the Board of MRI from June 1992 until his
retirement in May 1995. From June 1986 to June 1993, he was Chairman of the
Board and Chief Executive Officer of MRI. Mr. Bishop was a director of MRI
from 1963 until the Distribution in March 1996. Mr. Bishop also is a director
of Delchamps, Inc. and Morrison Health Care, Inc.
ARTHUR R. OUTLAW
Director of the Company since 1996 Age: 70
Mr. Outlaw was Vice Chairman of the Board of MRI from December 1984 until
the Distribution in March 1996. From October 1985 to October 1989, he was
Mayor, City of Mobile, Alabama. Mr. Outlaw is currently a director of Ruby
Tuesday, Inc. and director emeritus of AmSouth Bank, N.A.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 8, 1997
(except as otherwise noted) regarding the amount of Common Stock beneficially
owned by all persons known to the Company who beneficially own more than five
percent of the outstanding Common Stock, each director and director nominee of
the Company, each Named Executive (as defined below), and all directors and
executive officers of the Company as a group. An asterisk indicates beneficial
ownership of less than one percent of the outstanding Common Stock.
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OR GROUP OWNED(1) CLASS(2)
------------- ---------------- ----------
Westport Asset Management, Inc. (3)................ 1,130,013(3) 12.2
The TCW Group Inc./Robert Day(4)................... 702,975(4) 7.6
Arthur R. Outlaw(5)................................ 912,788(5) 9.9
J. Veronica Biggins................................ 9,755 *
E. Eugene Bishop................................... 274,233(6) 2.9
Dr. Donald Ratajczak............................... 20,211 *
Ronnie L. Tatum.................................... 40,876 *
Dolph W. von Arx................................... 60,657(7) *
Craig D. Nelson.................................... 10,368 *
Mitchell S. Block.................................. 4,222 *
William M. Byrd.................................... 16 *
Christopher P. Elliott............................. 925(8) *
Scears Lee, III.................................... 2,621 *
All directors and executive officers as a group
(9 persons)........................................ 1,333,126 14.1
- - --------
(1) Includes (i) shares subject to options exercisable within 60 days after
August 8, 1997 held by the named persons and group as follows: J.V.
Biggins, 4,488; E.E. Bishop, 176,711; D. Ratajczak, 6,155; R.L. Tatum,
27,097; D.W. von Arx, 18,680; C.D. Nelson, 4,667; S. Lee, 1,862; all
directors and executive officers as a group, 237,798; and (ii) shares held
in the Company's Salary Deferral Plan as follows: R.L. Tatum, 1,434; C.D.
Nelson, 1,223; S. Lee, 759; M.S. Block, 661.
(2) "Percent of Class" has been calculated by taking into account all shares
as to which the indicated person has sole or shared voting or investment
power (including shares subject to currently exercisable options and
options exercisable within 60 days after August 8, 1997), without regard
to any disclaimers of beneficial ownership by the person indicated.
(3) Westport Asset Management, Inc's address is 253 Riverside Avenue,
Westport, Connecticut 06880. The information presented is based on the
beneficial owner's Schedule 13G which reports beneficial ownership as of
December 31, 1996.
(4) The TCW Group, Inc.'s address is 865 South Fiqueroa Street, Los Angeles,
California 90017 and Robert Day's address is 200 Park Avenue, Suite 2200,
New York, New York 10166. The information presented is based on the
indicated persons' joint Schedule 13G which reports beneficial ownership
as of December 31, 1996. Robert Day is an individual who may be deemed to
control The TCW Group, Inc.
(5) Mr. Outlaw's address is 4721 Morrison Drive, Mobile, Alabama 36609. The
number of shares indicated includes 12,427 shares owned by Mr. Outlaw's
spouse.
(6) Includes 1,540 shares owned by Mr. Bishop's spouse.
(7) Includes 563 shares held in a family trust.
(8) Owned in an Individual Retirement Account.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and greater than 10% shareholders ("Reporting
Persons") to file certain reports ("Section 16 Reports") with
4
<PAGE>
respect to beneficial ownership of the Company's equity securities. Based
solely on its review of the Section 16 Reports furnished to the Company by its
Reporting Persons and, where applicable, any written representation by any of
them that no Form 5 was required, all Section 16(a) filing requirements
applicable to the Reporting Persons during and with respect to fiscal year
1997 have been complied with on a timely basis.
DIRECTORS' FEES AND ATTENDANCE
The Board of Directors of the Company met five times during fiscal year
1997. Each director attended at least 75% of these meetings and the meetings
of any committee of which he or she was a member which was held during the
fiscal year.
Directors who are employees of the Company receive no directors' fees. All
non-employee directors currently receive a $10,000 annual retainer and $1,000
per Board meeting attended. Non-employee directors serving on the Audit
Committee, the Nominating Committee or the Compensation and Stock Option
Committee (other than the Chairmen of such committees) receive a fee of $1,000
for each committee meeting attended. Committee Chairmen receive a fee of
$2,000 for each committee meeting attended. Non-employee directors serving on
any committee are compensated at a rate of $200 an hour for services performed
on special assignments.
Mr. von Arx, Chairman of the Company's Board of Directors, provides
strategic planning, investor relations and management consulting services to
the Company on a regular basis. Mr. von Arx is generally compensated at a rate
of $2,000 per day for such services. For fiscal year 1997, Mr. von Arx was
paid an aggregate of $27,000 for such services. Mr. von Arx is also eligible
to participate in a program under the Company's 1996 Stock Incentive Plan that
permits him to elect to direct that up to 60 percent of his non-retainer
compensation for each fiscal quarter be allocated to the purchase of Company
Common Stock on his behalf. Under this program, Mr. von Arx is awarded bonus
shares and stock options based on formulas and subject to terms and conditions
substantially similar to awards that would be made under the Company's
Directors' Plan, as described below, to a participant who elects to allocate a
portion of his or her retainer for the purchase of Company Common Stock. In
fiscal year 1997, Mr. von Arx purchased 3,177 shares, was awarded 476 bonus
shares and was granted options to purchase 10,959 shares under the program.
The Morrison Fresh Cooking, Inc. 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 income equal to 90-day
U.S. Treasury Bills, based on the weighted average balance of that account
during that fiscal quarter. Amounts credited to a director's deferred
compensation account will be distributed not sooner than the earlier of the
first January 15 or July 15 following (a) the date of the director's
seventieth birthday, or (b) the date the director ceases to be a member of the
Board of Directors.
The Directors' Plan provides that each non-employee director who has not
attained the Target Ownership Level, as defined below, will be deemed to have
elected to direct that 60 percent of his or her retainer payable for each
fiscal quarter be allocated to the purchase of Common Stock on his or her
behalf. Each non-employee director who has attained the Target Ownership Level
may elect to direct, in 10 percent increments and subject to such other
conditions prescribed by the Directors' Plan, that up to 60 percent of his or
her retainer for each fiscal quarter be allocated to the purchase of Common
Stock on his or her behalf (collectively, the "Stock Awards"). A deemed
election will continue in effect until that director, after attaining the
Target Ownership Level, modifies or revokes the election in the manner allowed
for discretionary elections.
A director will be treated as having attained the "Target Ownership Level"
for a fiscal quarter 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,
as determined by the closing price on the last trading day prior to such date
("Fair Market Value"), equal to 10 multiplied by that director's annual
retainer.
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Each director who has elected, or who has been deemed to have elected, to
purchase Stock Awards for a fiscal quarter, will be issued the number of
shares of Common Stock equal to the amount of the retainer elected to be 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.
The Directors' Plan provides that each non-employee director who receives
Stock Awards, whether through a deemed election or a discretionary election,
will be awarded an option to purchase shares of Common Stock (the "Options")
equal to three times the number of shares issued pursuant to the discretionary
election or deemed election, as the case may be.
Options issued under the Directors' Plan will be granted on the first day of
each fiscal quarter for which an election for a Stock Award is in effect; will
become fully exercisable six months following the date of grant; and will be
exercisable at the Fair Market Value of the Common Stock as of the date of the
option grant. Each Option shall expire generally upon the fifth anniversary of
the date on which it was granted. In fiscal year 1997, directors purchased
4,440 shares and the Company awarded to directors 656 bonus shares as well as
options for the purchase of 15,288 shares under the program.
Under the Directors' Plan, each non-employee director shall receive a one-
time restricted stock award of 5,000 shares of Common Stock as of the date the
individual is first elected to the Board of Directors, provided such
individual did not serve as a director of MRI, the predecessor corporation to
the Company. Each restricted stock award shall be evidenced by a Stock
Incentive Agreement. One-third of the Common Stock subject to any restricted
stock award will vest on each of the first three anniversary dates of the date
the director was first elected to the Board of Directors if the individual is
a non-employee director on the applicable anniversary date. However, shares
subject to the restricted stock award shall become 100 percent vested on any
earlier to occur of the following additional vesting dates: the date the
individual ceases to be a non-employee director on account of death,
disability, attainment of age 70 or upon a Change in Control (as defined in
the Directors' Plan).
COMMITTEES OF THE BOARD
The Board of Directors is responsible for the overall affairs of the
Company. To assist the Board of Directors in carrying out this responsibility,
the Board has delegated certain authority to three committees. Information
concerning these committees follows.
Audit Committee. The Audit Committee is comprised solely of non-employee
directors. The Audit Committee maintains communications with the Company's
independent auditors as to the nature of the auditors' services, fees and such
other matters as the auditors believe may require the attention of the Board.
The Audit Committee reviews the Company's internal control procedures and
makes recommendations to the Board with respect thereto. The Audit Committee
met two times during fiscal year 1997. The current members of the Audit
Committee are E. Eugene Bishop (Chairman), J. Veronica Biggins, Dr. Donald
Ratajczak and Arthur R. Outlaw.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee (the "Compensation Committee") is comprised solely of non-employee
directors. The Compensation Committee makes recommendations to the Board of
Directors with respect to compensation of officers and with respect to the
granting of stock options. The Compensation Committee met three times during
fiscal year 1997. The current members of the Compensation Committee are Dr.
Donald Ratajczak (Chairman), J. Veronica Biggins, Arthur R. Outlaw and E.
Eugene Bishop.
Nominating Committee. The Nominating Committee recommends individuals to the
Board of Directors for consideration as nominees for directors of the Company.
The Nominating Committee will consider any recommendations made by an
individual shareholder if submitted in writing and addressed to the Chairman
of the Committee or the Secretary of the Company within the time period
prescribed in the Company's Articles of
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Incorporation. Alternatively, notice of nominations to be made by a
shareholder at a meeting must be submitted to the Secretary of the Company in
the manner and within the time period prescribed in the Articles of
Incorporation. Any such recommendation or notice of nomination should be
mailed to the Company's headquarters at 4893 Riverdale Road, Suite 260,
Atlanta, Georgia 30337. The Nominating Committee met one time during fiscal
year 1997. Current members of the Nominating Committee are Dolph W. von Arx
(Chairman), J. Veronica Biggins, E. Eugene Bishop, Arthur R. Outlaw, Dr.
Donald Ratajczak and Ronnie L. Tatum.
EXECUTIVE COMPENSATION
This section of the proxy statement discloses compensation awarded, paid to,
or earned by the Company's Chief Executive Officer, each of the three other
executive officers of the Company who were most highly compensated in fiscal
year 1997 and two former executive officers who would have been included in
the group of the four most highly-compensated executive officers in fiscal
year 1997 had they been executive officers at the end of fiscal year 1997, for
services rendered to MRI prior to the Distribution and the Company thereafter
during each of the three fiscal years in the period ended May 31, 1997
(together, these persons are sometimes referred to as the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION
-------------------------------------- ---------------- ------------
AWARDS PAYOUTS
-------- -------
OPTIONS/ LTIP
OTHER ANNUAL SARS(2) PAYOUTS
NAME AND POSITION YEAR SALARY ($) BONUS ($) COMPENSATION(1) (#) ($) ($)(3)
----------------- ---- ---------- --------- --------------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
R.L. Tatum.............. 1997 230,021(4) -0- -0- -0- -0- 7,389
Chief Executive Officer 1996 208,416 -0- 10,050 73,663 -0- 7,141
1995 200,400 104,454 -0- 2,007 -0- 7,008
C.D. Nelson............. 1997 132,068(4) -0- -0- -0- -0- 6,501
Senior Vice President, 1996 101,228 -0- 3,600 76,011 -0- 21,169
Finance and Assistant
Secretary 1995 94,000 40,961 -0- 801 -0- 3,092
M.S. Block.............. 1997 118,625(4) -0- -0- -0- -0- 1,931
Vice President, General 1996 89,599 -0- 3,600 30,683 -0- 231
Counsel and Secretary 1995 68,738 9,669 -0- -0- -0- -0-
W.M. Byrd............... 1997 137,500 -0- -0- -0- -0- -0-
Senior Vice President, 1996(5) 81,731 72,500 -0- -0- -0- -0-
Operations 1995 N/A N/A N/A N/A N/A N/A
C.P. Elliott(6)......... 1997 153,892(4) -0- -0- -0- -0- 28,933
President and 1996 145,600 -0- -0- 232,257 -0- -0-
Chief Operating Officer 1995(5) 48,462 39,000 -0- 2,500 -0- -0-
S. Lee, III(6).......... 1997 95,102(4) -0- -0- -0- -0- 20,365
Vice President, Human 1996 97,984 -0- 3,150 24,548 -0- 2,765
Resources 1995 94,325 17,248 -0- 870 -0- 2,927
</TABLE>
- - --------
(1) The amounts in this column include: (a) the following values of bonus
shares issued in connection with the purchase of Common Stock under the
Management Stock Option Program for fiscal year 1996: R.L. Tatum, $7,500;
C.D. Nelson, $3,600; S. Lee, $3,150; and M.S. Block, $3,600; and (b)
special pay for fiscal year 1996: R.L. Tatum, $2,550.
(2) For fiscal years 1996 and 1995, the number of options shown includes
options to purchase shares of Common Stock of the Company issued upon
conversion of options granted by MRI prior to the Distribution. MRI
options were converted in the Distribution into options to purchase shares
of common stock of each of the Company, MHCI and RTI with the number of
shares subject to each such option allocated based on the conversion
ratios used in connection with the Distribution and the related reverse
stock split. See "Introduction." The exercise price per share of the MRI
options has
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been allocated among the options to purchase common stock of the Company,
MHCI and RTI into which the MRI options were converted based upon a formula
that took into account the relative trading prices of the common stock of
the three companies for the first ten trading days following the
Distribution. Such per share exercise price was allocated as follows:
10.22% to the Company option; 32.62% to the MHCI option; and 53.16% to the
RTI option. Except for the number of shares and exercise price thereof, the
replacement options have the same terms and conditions as the original MRI
options.
(3) The amounts in this column include the following: (a) Company
contributions to the Deferred Compensation Plan for fiscal years 1997,
1996 and 1995, respectively: R.L. Tatum, $3,800, $3,800 and $3,696; C.D.
Nelson, $4,174, $3,172 and $3,092; S. Lee, $2,182, $2,765 and $2,927; and
M.S. Block $1,931, $231 and N/A; (b) executive group life and accidental
death and dismemberment insurance plan premiums paid for fiscal years
1997, 1996 and 1995, respectively: R.L. Tatum, $781, $661 and $704; and
C.D. Nelson $1,273, $257 and N/A; (c) employee portion of split-dollar
life insurance premiums paid by the Company for fiscal years 1997, 1996
and 1995, respectively: R.L. Tatum, $2,808, $2,680 and $2,608; and C.D.
Nelson $1,054, N/A and N/A; (d) tax gross-up on moving expense
reimbursement for fiscal year 1996: C.D. Nelson, $17,740; and (e)
severance payments (see "Severance Agreements" below) made during fiscal
year 1997: C.P. Elliott $28,933 and S. Lee $18,183.
(4) Amounts for fiscal year 1997 include a retroactive pay increase covering
13 weeks of fiscal year 1996 as follows: R.L. Tatum, $4,321; C.D. Nelson,
$6,168; M.S. Block, $3,725; C.P. Elliott, $7,000; S. Lee, $2,787.
(5) Mr. Byrd joined the Company in October 1995; therefore, the amounts shown
for fiscal 1996 represent compensation earned for 8 months of employment.
Mr. Elliott joined the Company in January 1995; therefore, the amounts
shown for fiscal 1995 represent compensation earned for 5 months.
(6) The indicated person resigned his position with the Company effective
April 4, 1997. See "Severance Agreements" below.
OPTION GRANTS IN FISCAL 1997
The Company granted no stock options to Named Executives during fiscal year
1997. The Company has no outstanding SARs and granted no SARs during fiscal
year 1997.
AGGREGATED OPTION EXERCISES IN
FISCAL 1997 AND FISCAL YEAR END VALUES
The following table presents information regarding exercises of options to
purchase shares of Common Stock of the Company during fiscal 1997 by the Named
Executives and the value of unexercised options to purchase Company Common
Stock held at May 31, 1997. There were no Company SARs outstanding during
fiscal 1997.
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT FY-END
FY-END (#) ($)(2)
SHARES VALUE ------------- --------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- --------------------
R. L. Tatum............. -0- -0- 24,451/77,268 9,258/-0-
C. D. Nelson............ -0- -0- 3,548/77,130 913/-0-
M.S. Block.............. -0- -0- -0-/30,683 -0-/-0-
W.M. Byrd............... -0- -0- -0-/26,875 -0-/-0-
C.P. Elliott(3)......... -0- -0- -0-/2,500 -0-/-0-
S. Lee, III (3)......... -0- -0- 1,862/200 -0-/-0-
- - --------
(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 30, 1997) -- Per Share
Exercise Price)] x Number of Shares Subject to Unexercised Options. The
per share closing sale price on May 30, 1997, the last trading day of
fiscal year 1997, was $5.00.
(3) C.P. Elliott and S. Lee, III resigned on April 4, 1997, forfeiting 232,257
and 24,348 unexercisable options, respectively.
8
<PAGE>
RETIREMENT PLAN
Following the Distribution and in conjunction therewith, the Company 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
of the Company 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 A and B below, as applicable:
(A) 1/4 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
(B) 1/4 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, 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 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 of the Company participate in the Company's
Executive Supplemental Pension Plan ("ESPP") adopted March 7, 1996. The ESPP
is a nonqualified, unfunded, defined benefit retirement plan for selected
employees. Company employees who 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 RTI, the successor to MRI, from liability for benefits accrued prior
to the Distribution under the MRI Executive Supplemental Pension Plan.
(However, both RTI and MHCI have 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 salary. Benefits are paid to a participant in
the same manner as benefits are paid to the participant under the Retirement
Plan and become vested if the participant has completed ten years of service.
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 provisions allow designated participants to
receive unreduced benefits as early as age 55 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.
9
<PAGE>
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.
EXECUTIVE SUPPLEMENTAL PENSION PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO AGE 65
<TABLE>
<CAPTION>
ANNUAL AVERAGE BASE SALARY 10 15 20 25 30 OR MORE
- - -------------------------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
$ 75,000............................ $18,750 $28,125 $37,500 $41,250 $45,000
100,000............................ 25,000 37,500 50,000 55,000 60,000
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
</TABLE>
Years of continuing service, to the nearest year, and the five-year average
base salary covered by the ESPP for the eligible Named Executives are: Mr.
Tatum, over 30 years, $185,787 and Mr. Nelson, 21 years, $97,630.
MANAGEMENT RETIREMENT PLAN
Effective as of March 7, 1996, the Company adopted the Morrison Fresh
Cooking, Inc. 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 the Company from time to time. Company employees who
participated in the 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 RTI, successor to MRI, from liability for benefits accrued prior to
the Distribution under the Retirement Plan. (However, both RTI and MHCI have
agreed to be secondarily liable for certain benefits accrued under the MRP to
the extent of the amounts these employees had earned under the 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 (a) the participant's Retirement Plan
benefits, (b) the participant's Social Security benefits, and (c) 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, bonuses and certain types of deferred income, but generally no
form of remuneration is counted in excess of $100,000, which amount may be
adjusted by the Company from time to time.
Normal retirement for purposes of the MRP is age 65, although a participant
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. 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.
10
<PAGE>
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.
MANAGEMENT RETIREMENT PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO AGE 65
FINAL AVERAGE SALARY 15 20 25 30 OR MORE
- - -------------------- ------- ------- ------- ----------
$ 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
Years of credited service and five-year average base salary covered by the
MRP for the eligible Named Executives are: Mr. Tatum, over 30 years, $100,000;
Mr. Nelson, 21 years, $97,630; and Mr. Lee, 18 years, $89,718.
CONTRACTS WITH EXECUTIVES
The Company has entered into a Change of Control Agreement (the "Change of
Control Agreement") with each of the Named Executives who are currently
employed by the Company. 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 the Company 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 (a) certain changes in the composition of more than 20 percent of the
Board of Directors, or (b) 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 the Company's outstanding voting stock.
Events that do not constitute a Change of Control include (a) any Business
Combination approved by at least 80 percent of the Continuing Directors (as
defined in the Change of Control Agreement), (b) any Business Combination
transaction that satisfies certain price and procedural requirements specified
in the Company's Articles of Incorporation, and (c) any acquisition by the
Company, any of its subsidiaries, or any employee benefit plan of the Company
or any of its 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 Agreement. If and when the
Effective Date occurs, the Company has 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 (a) 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 (b) 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 the Company terminates 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
11
<PAGE>
immediately following the first anniversary of the Effective Date, the
executive becomes entitled to receive (a) 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, (b) 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, (c) any
other accrued obligations, (d) rights with respect to 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 (e) certain employee benefits
consisting of retirement, savings and various health and welfare insurance
benefits. The multiplier referred to in clause (b) of the preceding sentence
is three for Mr. Tatum, Mr. Nelson, Mr. Byrd and Mr. Block. 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. The Company estimates 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 would be
approximately as follows: Mr. Tatum $2,828,322; Mr. Nelson $1,725,008; Mr.
Block, $1,193,596; and Mr. Byrd $1,536,778. Other executives may be made
subject to a Change of Control Agreement by the Board of Directors.
SEVERANCE AGREEMENTS
In connection with Mr. Elliott's resignation effective April 4, 1997, he
entered into a severance agreement with the Company pursuant to which: (a) the
Company agreed to pay Mr. Elliott an amount of $14,466.67 per month for six
months following his termination of employment and for an additional period of
up to three months in the event that he had not obtained other employment
provided that Mr. Elliott had exercised all due diligence as determined by the
Company to obtain such employment; (b) the Company waived any restrictions on
the sale of the 37,419 shares of Common Stock acquired by Mr. Elliott under
the Company's Managment Stock Option Program and agreed to pay him an amount
equal to the difference between $7.75 per share (the amount paid by Mr.
Elliott upon purchase of such shares) and the closing price per share of
Common Stock on the date of any sale that occurs prior to December 31, 1997;
(c) each stock option held by Mr. Elliott, other than any stock option issued
to him during the fourth quarter of fiscal 1996 under the Company's Executive
Stock Option Program and the Managment Stock Option Program which would
otherwise expire upon termination of employment continued to remain
outstanding for a period equal to the lesser of two years from the date of
termination of employment or the expiration of the original option period and
may be exercised by him when such option becomes exercisable within such
period in accordance with its terms; (d) the Company agreed to pay Mr. Elliott
any bonus earned by him during fiscal 1997 on a pro rata basis through the
date of termination of employment; and (e) the Company agreed to reimburse Mr.
Elliott for that portion of his COBRA cost equal to the amount the Company
contributes for the same type of employee coverage for a period equal to the
lesser of six months or the duration of COBRA contribution period. The
severance agreement also provides that Mr. Elliott will receive benefits under
the other Company plans in accordance with their terms and contains
confidentiality and waiver and release provisions customary for such
agreements.
In connection with Mr. Lee's resignation effective April 4, 1997, he entered
into a severance agreement with the Company pursuant to which: (a) the Company
agreed to pay Mr. Lee an amount of $9,091.67 per month for 12 months following
his termination of employment and for an additional period of up to three
months in the event that he had not obtained other employment; (b) the Company
waived any restrictions on the sale of the 3,116 shares of Common Stock
acquired by Mr. Lee under the Company's Managment Stock Option Program and
agreed to pay him an amount equal to the difference between $7.75 per share
(the amount paid by Mr. Lee upon the purchase of such shares) and the closing
price per share of Common Stock on the date of any sale that occurs prior to
December 31, 1997; (c) each stock option held by Mr. Lee, other than any stock
option issued to him during the fourth quarter of fiscal 1996 under the
Company's Executive Stock Option Program and the Management Stock Option
Program which would otherwise expire upon termination of employment continued
to remain outstanding for a period equal to the lesser of three years from the
date of termination of employment
12
<PAGE>
or the expiration of the original option period and may be exercised by him
when such option becomes exercisable within such period in accordance with its
terms; (d) the Company agreed to pay Mr. Lee any bonus earned by him during
fiscal 1997 on a pro rata basis through the date of termination of employment;
and (e) the Company agreed to reimburse Mr. Lee for that portion of his COBRA
cost equal to the amount the Company contributes for the same type of employee
coverage for a period equal to the lesser of 12 months or the duration of
COBRA contribution period. The severance agreement also provides that Mr. Lee
will receive benefits under other Company plans in accordance with their terms
and contains confidentiality and waiver and release provisions customary for
such agreements.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company, which
is composed solely of non-employee directors of the Company, has furnished the
following report on executive compensation.
OVERALL COMPENSATION PHILOSOPHY
The Company's executive compensation policies and programs emphasize
performance-based elements of executive compensation. The Company's executive
compensation programs closely align performance measures with current business
strategy and are designed to motivate executive behavior. In general, the
Company controls base salaries and compensates 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 ten percent below the Company's peer group of public
companies in the family dining industry; and
. A very significant portion of executive compensation is tied to the
Company's success in meeting predetermined annual performance goals,
including the Company's profitability.
The overall objectives of this strategy are to attract and retain the best
possible executive talent and to motivate the Company's executives to achieve
the goals inherent in the Company's business strategy.
The key components of the Company's executive compensation packages are base
salary, annual incentive opportunities, and equity devices. The Compensation
Committee's policies with respect to each of these elements, including the
basis for the compensation awarded to Mr. Ronnie L. Tatum, the Company's Chief
Executive Officer, are discussed below.
BASE SALARIES
The Company's general approach for base compensation is to establish salary
ranges with midpoints which are 10 percent below the 50th percentile of the
competitive market in the family dining industry. The Company's general
approach is for total compensation to be at the 75th percentile of the
competitive market in the family dining industry. Each salary range provides a
lower and upper limit on the value of jobs assigned to that range. This
reflects the previously mentioned objective of controlling base salary costs
and emphasizing incentive compensation. Future adjustments to base salaries
and salary ranges are intended to reflect average movement in the competitive
market.
ANNUAL INCENTIVE COMPENSATION
The Company's 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.
13
<PAGE>
Each executive's potential incentive is tied to the objective of growth in
pre-tax income. Depending upon an executive's organizational level and
responsibilities, as well as competitive market practices, annual incentive
compensation ranges from 10 percent to 15 percent of base salary if minimum
corporate targets are achieved, from 25 percent to 55 percent of base salary
if 100 percent of predetermined targeted corporate goals are achieved, and
from 90 percent to 165 percent of base salary if maximum corporate goals are
achieved. Occasionally the Company may establish a special incentive award for
an individual officer or other employee aimed at achieving a specified
performance goal.
EXECUTIVE STOCK OWNERSHIP
Believing that equity ownership plays a key role in aligning the interests
of Company personnel with Company shareholders, the Company encourages all
employees to make a personal investment in Company stock. In addition,
ownership requirements have been developed for the Company's top management
group. The following requirements apply to various organization levels: Chief
Executive Officer--a minimum of four times base salary; Senior Vice Presidents
and Vice Presidents--a minimum of two times base salary; and supervisory and
store management--a minimum of one times base salary. These objectives will be
phased in over a period of five years that commenced with fiscal year 1997
with the minimum to be fully achieved at the end of that period, and may be
accomplished through the exercise of stock options, other stock incentives or
open market purchases. Members of the management group must achieve target
ownership levels to be eligible to receive future awards under stock-based
plans.
LONG-TERM INCENTIVE COMPENSATION
Awards under the Company's stock-based compensation plans directly link
potential participant rewards to increases in shareholder value. The Company
maintains 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
The Company has an Executive Stock Option Program which provides for option
grants of 200 to 120,000 shares for key employees. The options are issued at
fair market value, have a five-year term and generally vest three years after
the date of the grant. In order for executives to receive option grants under
this program, they must meet certain minimum Common Stock ownership
requirements. During fiscal year 1997, one option grant for 4,000 shares was
made under this program.
Management Stock Option Program
The Company has a Management Stock Option Program for all employees at the
General Manager level and higher. Based on organization level, eligible
employees may purchase shares of Company stock up to established annual
limits. For each share purchased, 1.15 shares will be issued and the
participant will receive a five-year option to purchase three times the number
of shares of Company stock obtained at a per share exercise price equal to the
fair market value of a share on the date of grant. The right to purchase
Common Stock under this program is conditioned on the achievement of Company,
region or location goals, as the case may be. There is a two-year restriction
on the sale of shares acquired through this program other than through the
exercise of stock options. The Company granted options to purchase an
aggregate of 10,374 shares to employees under this program during fiscal year
1997.
CHIEF EXECUTIVE OFFICER COMPENSATION
The base salary for Mr. Tatum, the Company's Chief Executive Officer, for
fiscal year 1997 was determined by the Compensation Committee in accordance
with compensation practices and policies in effect. The
14
<PAGE>
Compensation Committee reviewed Mr. Tatum's annual base salary and
recommended, and the Board of Directors subsequently approved, an annual base
salary of $257,000 for fiscal year 1998. Mr. Tatum's annual base salary was
determined taking into account his performance and comprehensive market data.
Mr. Tatum is eligible to participate in the Company's annual incentive plan
under which he may earn a cash bonus determined as a percentage of his salary
if predetermined levels of pre-tax income growth are achieved by the Company.
For fiscal year 1998, the Chief Executive Officer's bonus opportunity is 15
percent, 55 percent, and 165 percent of his salary if the Company achieves or
exceeds "minimum," "target," and "maximum" pre-tax income growth levels,
respectively.
Mr. Tatum is eligible to participate in the Executive Stock Option Program
described above. In addition, the Compensation Committee has approved Mr.
Tatum's participation in the Management Stock Option Program (described above)
under which he may purchase Common Stock having a value of up to $50,000
annually, conditioned upon the Company's achievement of pre-established
financial goals.
DEDUCTIBILITY OF 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 shareholder 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 shareholders 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 the Company 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.
BOARD OF DIRECTORS AND COMPENSATION COMMITTEE
The Board of Directors of the Company has a standing Compensation Committee
whose purpose is to review and make recommendations concerning the base
salaries of all officers of the Company and to authorize all other forms of
compensation including stock options. Members of the Compensation Committee
also administer the Company's stock-based incentive plans. The Compensation
Committee met three times during the fiscal year. The Board of Directors
approved all decisions of the Compensation Committee during fiscal year 1997.
The members of the Compensation Committee are as follows:
Dr. Donald Ratajczak (Chairman)
J. Veronica Biggins
E. Eugene Bishop
Arthur R. Outlaw
RELATED PARTY TRANSACTIONS
Mr. Byrd received an interest free loan from the Company in the amount of
$65,000 on August 7, 1996 in conjunction with Mr. Byrd's relocation of his
home from Norfolk, Virginia to Atlanta, Georgia. Mr. Byrd repaid such loan in
full on November 26, 1996.
15
<PAGE>
PERFORMANCE GRAPH
The following chart and table compare the sixteen-month cumulative total
return of the Company's Common Stock with the cumulative total return of the
Index of NYSE Stock Market Index and the NYSE Eating and Drinking Places
Index.
COMPARISON OF RETURNS*
FOR MORRISON FRESH COOKING, INC.,
EATING AND DRINKING PLACES INDICES
[PERFORMANCE GRAPH - TO BE INSERTED HERE]
03/11/96 05/31/96 08/30/96 11/29/96 02/28/97 05/30/97
-------- -------- -------- -------- -------- --------
Morrison Fresh Cooking,
Inc..................... $100.0 85.2 64.6 55.3 57.8 62.0
NYSE Stock Market Index.. $100.0 104.9 103.0 117.6 123.2 131.4
NYSE Eating and Drinking
Places Index............ $100.0 97.8 93.8 95.6 89.8 103.3
- - --------
* Assumes $100 invested in the Common Stock of the Company and in the
indicated indices on March 11, 1996, the first business day following the
Distribution, and reinvestment of dividends.
16
<PAGE>
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent auditors
for fiscal year 1997. Representatives of Ernst & Young LLP will be present at
the Annual Meeting to respond to appropriate questions and will have an
opportunity to make a statement if they so desire.
The appointment of auditors is a matter for determination by the Board of
Directors for which no shareholder approval or ratification is necessary. The
Board of Directors has selected the firm of Ernst & Young LLP to audit the
books of the Company for fiscal year 1998.
SHAREHOLDER PROPOSALS
Any shareholder of the Company wishing to submit a proposal for action at
the Company's 1998 Annual Meeting of Shareholders and desiring the proposal to
be considered for inclusion in the Company's proxy materials must provide a
written copy of the proposal to the management of the Company at its principal
executive office not later than April 22, 1998, and must otherwise comply with
rules of the Securities and Exchange Commission relating to shareholder
proposals.
GENERAL
Management does not know of any other business to come before the Annual
Meeting. If, however, other matters do properly come before the Annual
Meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment.
A list of shareholders entitled to be present and vote at the Annual Meeting
will be available for inspection by the shareholders at the time and place of
the Annual Meeting.
The Annual Report of the Company for fiscal year 1997 (which is not part of
the proxy soliciting material) is being mailed with this proxy statement to
all shareholders of record as of the record date for the Annual Meeting.
THE COMPANY WILL, UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, FURNISH
WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED MAY 31, 1997. REQUESTS
FOR COPIES SHOULD BE DIRECTED TO CRAIG D. NELSON, SENIOR VICE PRESIDENT--
FINANCE, MORRISON FRESH COOKING, INC., THE HARTSFIELD COLONNADE, 4893
RIVERDALE ROAD, SUITE 260, ATLANTA, GEORGIA 30337.
By Order of the Board of Directors,
/s/MITCHELL S. BLOCK
Mitchell S. Block
Vice President, General Counsel
and Secretary
August 20, 1997
Atlanta, Georgia
17
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<TABLE>
<CAPTION>
MORRISON FRESH COOKING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<S> <C>
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement, each dated
August 20, 1997, and does hereby appoint Ronnie L. Tatum, and Craig D. Nelson, 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 Fresh Cooking, Inc. Common
Stock which the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders of Morrison Fresh
Cooking, Inc., to be held at the Morrison's Cafeteria, 3200 Springdale Plaza, Mobile, Alabama 36606 at 10:00 a.m., local time, on
September 24, 1997, and at any adjournment(s) thereof:
1. To elect two Class II Directors for a term of three years.
J. Veronica Biggins and Ronnie L. Tatum
[_] FOR all nominees above [_] WITHHOLD AUTHORITY
(except as marked to the contrary above) to vote for ALL nominees listed above
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, MARK THE FIRST BOX ABOVE AND LINE THROUGH THAT NOMINEE'S NAME AS IT
APPEARS ABOVE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL DIRECTOR NOMINEES LISTED ABOVE.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly come before this meeting.
(CONTINUED ON OTHER SIDE)
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 FOR ALL DIRECTOR NOMINEES LISTED ABOVE.
PROXY NUMBER NUMBER OF SHARES Dated: ____________________________, 1997.
------------ ----------------
-----------------------------------------
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.
</TABLE>
