<PAGE> 1
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>
Volunteer Capital Corporation
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
(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
VOLUNTEER CAPITAL CORPORATION
3401 WEST END AVENUE
SUITE 260
P.O. BOX 24300
NASHVILLE, TENNESSEE 37202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Volunteer Capital Corporation:
The Annual Meeting of Shareholders of Volunteer Capital Corporation (the
"Company") will be held at the Nashville City Club, Third National Bank
Building, 201 Fourth Avenue North, Nashville, Tennessee, at 10:00 a.m.,
Nashville time, on Tuesday, May 9, 1995 for the following purposes:
(1) To elect six directors, to hold office for a term of one year and
until their successors have been elected and qualified;
(2) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on March 24, 1995 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding the matters to be acted upon at the
meeting.
We hope very much that you will be able to be with us. If you do not plan
to attend the meeting in person, you are requested to complete, sign and date
the enclosed proxy and return it promptly in the enclosed addressed envelope,
which requires no postage if mailed in the United States.
By Order of the Board of Directors
R. GREGORY LEWIS
Secretary
April 4, 1995
<PAGE> 3
VOLUNTEER CAPITAL CORPORATION
3401 WEST END AVENUE
SUITE 260
P.O. BOX 24300
NASHVILLE, TENNESSEE 37202
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 9, 1995
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Volunteer Capital Corporation (the "Company") for use at the Annual Meeting
of Shareholders to be held on Tuesday, May 9, 1995, at 10:00 a.m., Nashville
time, at the Nashville City Club, Third National Bank Building, 201 Fourth
Avenue North, Nashville, Tennessee, and at all adjournments or postponements
thereof, for the purposes set forth in the foregoing Notice of Annual Meeting of
Shareholders. Copies of the proxy, this Proxy Statement and the attached Notice
are being mailed to shareholders on or about April 4, 1995.
Proxies may be solicited by mail, telephone or telegraph. All costs of this
solicitation will be borne by the Company. The Company does not anticipate
paying any compensation to any party other than its regular employees for the
solicitation of proxies, but may reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to beneficial owners.
Shares represented by such proxies will be voted in accordance with the
choices specified thereon. If no choice is specified, the shares will be voted
FOR the election of the director nominees named herein. The Board of Directors
does not know of any other matters which will be presented for action at the
meeting, but the persons named in the proxy intend to vote or act with respect
to any other proposal which may be properly presented for action according to
their best judgment in light of the conditions then prevailing.
A proxy may be revoked by a shareholder at any time before its exercise by
attending the meeting and electing to vote in person, by filing with the
Secretary of the Company a written revocation or by duly executing a proxy
bearing a later date.
Each share of the Company's Common Stock, $.05 par value (the "Common
Stock"), issued and outstanding on the record date, March 24, 1995, will be
entitled to one vote on all matters to come before the meeting. Cumulative
voting is not permitted. As of the record date, there were outstanding 5,246,481
shares of Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to those
persons known to the Company to be the beneficial owners (as defined by certain
rules of the Securities and Exchange Commission (the "Commission")) of more than
five percent (5%) of the Company's Common Stock, its only voting security, and
with respect to the beneficial ownership of the Company's Common Stock by all
directors and nominees, each of the executive officers named in the Summary
Compensation Table and all executive officers and directors of the Company as a
group. The information set forth in the following table is based on ownership
<PAGE> 4
information filed with the Company as of March 24, 1995. Except as otherwise
specified the shares indicated are presently outstanding.
<TABLE>
<CAPTION>
AMOUNT OF COMMON PERCENTAGE OF
STOCK BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED COMMON STOCK(1)
- ---------------------------------------------------------- ------------------ ---------------
<S> <C> <C>
RCM Capital Management.................................... 524,800(2) 10.0%
Four Embarcadero Center
Suite 2900
San Francisco, CA 94111
The Volunteer Capital Corporation......................... 453,919(3) 8.7
Employee Stock Ownership Trust
3401 West End Avenue
Nashville, TN 37203
Sackett & Company......................................... 282,185(4) 5.4
555 California Street
Suite 4490
San Francisco, CA 94104
Lonnie J. Stout II****.................................... 113,678(5) 2.1
Toby S. Wilt**............................................ 61,000(6) 1.2
R. Gregory Lewis***....................................... 41,182(7) *
John L.M. Tobias**........................................ 37,992(8) *
Earl Beasley, Jr.**....................................... 34,744(9) *
Richard D. May***......................................... 32,201(10) *
Dennis J. Cleary***....................................... 26,053(11) *
Garland G. Fritts**....................................... 19,000(12) *
E. Townes Duncan**........................................ 18,700(13) *
All directors and executive officers as a group........... 389,346(14) 7.1
</TABLE>
- ---------------
* Indicates ownership of less than one percent of the Company's outstanding
Common Stock.
** Director of the Company.
*** Named Officer.
**** Director and Named Officer.
(1) Pursuant to the rules of the Commission, shares of the Company's Common
Stock which certain persons presently have the right to acquire pursuant to
the conversion provisions of the Company's 8 1/4% Convertible Subordinated
Debentures Due 2003 ("Conversion Shares") are deemed outstanding for the
purpose of computing such person's percentage ownership, but are not deemed
outstanding for the purpose of computing the percentage ownership of the
other persons shown in the table. Likewise, the shares subject to options
held by directors and executive officers of the Company which are
exercisable within 60 days of March 10, 1995, are all deemed outstanding
for the purpose of computing such director's or executive officer's
percentage ownership and the percentage ownership of all executive officers
and directors as a group. Unless otherwise indicated, each individual has
sole voting and dispositive power with respect to all shares shown.
2
<PAGE> 5
(2) RCM Capital Management ("RCM") is a registered investment advisor. RCM has
sole voting power with respect to 422,100 shares and sole power to dispose
of all of the shares. Information is based on documents submitted to the
Company by RCM.
(3) Includes 133,981 shares that have been allocated to the Volunteer Capital
Employee Stock Ownership Plan (the "ESOP") participants. Pursuant to the
terms of the ESOP that govern the Volunteer Capital Corporation Employee
Stock Ownership Trust (the "Trust"), each ESOP participant instructs Third
National Bank in Nashville, Tennessee, as trustee of the Trust (the
"Trustee"), how to vote the shares allocated to his account. The ESOP
provides that the Trustee shall abstain from voting the allocated shares
for which no written instructions are received. Shares of the Company's
Common Stock held by the ESOP but not yet allocated to the accounts of the
participants will be voted based on the percentage of stock allocated to
the participants' accounts which is voted for and against each proposal,
including in the tabulation of such percentages only those shares as to
which written voting instructions were received. The Trustee has shared
dispositive power with respect to the shares, subject to certain provisions
of the ESOP.
(4) Includes 58,000 Conversion Shares. Sackett & Company ("Sackett") is a
registered investment advisor. Information is based on documents submitted
to the Company by Sackett.
(5) Includes 100,354 shares issuable upon exercise of certain options held by
Mr. Stout and 4,588 ESOP shares allocated to Mr. Stout and held by the
Trust, as to which Mr. Stout has sole voting power and shared dispositive
power.
(6) Includes 11,000 shares issuable upon exercise of certain options held by
Mr. Wilt.
(7) Includes 29,333 shares issuable upon exercise of certain options held by
Mr. Lewis and 3,128 ESOP shares allocated to Mr. Lewis and held by the
Trust, as to which Mr. Lewis has sole voting power and shared dispositive
power.
(8) Includes 1,126 Conversion Shares, 1,000 shares owned by Mr. Tobias' wife
and 16,000 shares issuable upon exercise of certain options held by Mr.
Tobias.
(9) Includes 3,000 shares issuable upon exercise of certain options held by Mr.
Beasley, 1,332 shares which Mr. Beasley holds as custodian for his children
and 112 Conversion Shares.
(10) Includes 22,833 shares issuable upon exercise of certain options held by
Mr. May and 3,365 ESOP shares allocated to Mr. May and held by the Trust,
as to which Mr. May has sole voting power and shared dispositive power.
(11) Includes 21,333 shares issuable upon exercise of certain options held by
Mr. Cleary and 3,108 ESOP shares allocated to Mr. Cleary and held by the
Trust, as to which Mr. Cleary has sole voting power and shared dispositive
power.
(12) Includes 3,000 shares issuable upon exercise of certain options held by Mr.
Fritts.
(13) Includes 15,000 shares issuable upon exercise of certain options held by
Mr. Duncan, 300 shares which Mr. Duncan holds as custodian for his
children, and 2,400 shares for which Mr. Duncan has sole voting and
investment power, which are owned by a partnership in which Mr. Duncan and
a trust for the benefit of Mr. Duncan's children are partners. Mr. Duncan's
wife owns an additional 700 shares, beneficial ownership of which is
disclaimed by Mr. Duncan and which are not included.
(14) Includes 226,853 shares issuable upon exercise of certain options held by
the directors and executive officers, 1,238 Conversion Shares and 14,685
ESOP shares allocated to the executive officers and held by the Trust.
3
<PAGE> 6
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Six directors are to be elected at the annual meeting for a term of one
year and until their successors shall be elected and qualified. Election of
directors requires a plurality of the votes cast in such election. It is
intended that shares represented by the enclosed proxy will be voted FOR the
election of the nominees named in the table set forth below unless a contrary
choice is indicated. All of such nominees are presently directors of the
Company. Management believes that all of the nominees will be available and able
to serve as directors, but if for any reason any should not be available or able
to serve, it is intended that such shares will be voted for such substitute
nominees as may be proposed by the Board of Directors of the Company. The
following schedule includes certain information with respect to each of the
nominees.
<TABLE>
<CAPTION>
NAME BACKGROUND INFORMATION
- ---------------------- ----------------------------------------------------------------
<S> <C>
Earl Beasley, Jr...... Mr. Beasley, 61, has been a director of the Company since March
1991. Since 1981, Mr. Beasley has been President of Homer B.
Brown Co. As the result of the recent sale of its assets, Homer
B. Brown Co. is now engaged in investments. Mr. Beasley was
President and a director of the Company from 1971 to 1980.
E. Townes Duncan...... Mr. Duncan, 41, has been a director of the Company since May
1989. Since November 1993, Mr. Duncan has been the Chairman of
the Board and Chief Executive Officer of Comptronix Corporation,
a manufacturer of printed circuit board assemblies. From May
1985 to November 1993, Mr. Duncan was a Vice President and
principal of Massey Burch Investment Group, Inc. From September
1983 to May 1985, he was a partner with the law firm of Bass,
Berry & Sims. Mr. Duncan is also a director of PMT Services, a
payment services company, and Sirrom Capital Corporation, a
small business investment company.
Garland G. Fritts..... Mr. Fritts, 65, has been a director of the Company since
December 1985. Since 1993, Mr. Fritts has been a consultant for
Fry Consultants, Inc., a management consulting firm. Mr. Fritts
was a consultant for McManis Associates, Inc., a management
consulting firm from 1989 to 1993. From 1980 to 1988, Mr. Fritts
was a Vice President of Cresap, McCormack and Paget, a general
consulting services firm. Mr. Fritts also serves as a director
and member of the Compensation Committee of Swanstrom
Industries, Inc.
Lonnie J. Stout II.... Mr. Stout, 48, has been a director and President and Chief
Executive Officer of the Company since May 1986. Since July
1990, Mr. Stout has also served as Chairman of the Company. From
August 1984 to May 1986, Mr. Stout served as President and a
director of DineLite Corporation, a food service company. From
1982 to May 1984, Mr. Stout was a director of the Company and
served as Executive Vice President and Chief Financial Officer
of the Company from October 1981 to May 1984. Mr. Stout is also
a director and a member of the Compensation Committee of
Comptronix Corporation.
John L.M. Tobias...... Mr. Tobias, 74, has been a director of the Company since
February 1983. He has served as President of J.M.T. Associates,
Inc., a Columbia, South Carolina-based investment firm, since
1979 and as that corporation's Board Chairman since January
1987.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME BACKGROUND INFORMATION
- ---------------------- ----------------------------------------------------------------
<S> <C>
Toby S. Wilt.......... Mr. Wilt, 50, has been a director of the Company since July
1993. He has served as President and Chief Executive Officer of
TSW Investment Company, a private investment firm, since 1987
and as Chairman of the Board of The Christie Cookie Company, a
gourmet cookie company, since 1989. Mr. Wilt is also a director
of First American Corporation, a bank holding company, and Titan
Holdings, Inc., an insurance company.
</TABLE>
The Board of Directors of the Company held four meetings in 1994. The Board
of Directors has an Audit Committee and a Compensation/Stock Option Committee
(the "Compensation Committee"), the members of each of which are Messrs.
Beasley, Duncan, Fritts, Tobias and Wilt. The Audit Committee, which held two
meetings during 1994, generally meets with the Company's independent auditors to
review the Company's consolidated financial statements. It is the function of
this committee to ensure that the Company's financial statements accurately
reflect the Company's financial position and results of operations. The
Compensation Committee is responsible for the periodic review of management's
compensation and administration of the Company's stock option plans. The
Compensation Committee held two meetings during 1994. The Company's Board of
Directors has no standing nominating committee.
Each of the incumbent directors of the Company attended at least 75% of the
aggregate of (i) the total number of meetings held during 1994 by the Board of
Directors while he was a director and (ii) the total number of meetings held
during 1994 by all committees of the Board of which he was a member.
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or other
compensation during fiscal years 1994, 1993 and 1992 for the Company's Chief
Executive Officer and the persons who, at the end of fiscal 1994, were the other
three most highly compensated executive officers of the Company (collectively,
the "Named Officers"). The Company had no other executive officers during fiscal
1994 whose compensation was greater than $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)(2)
- ------------------------------------- ---- --------- -------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Lonnie J. Stout II,.................. 1994 $ 230,000 $58,750 40,000 $ 8,508(3)
Chief Executive Officer 1993 220,000 90,000 25,000 20,663
1992 210,000 75,250 0 13,997
Dennis J. Cleary,.................... 1994 126,500 33,000 9,000 7,730(4)
Vice President, 1993 116,750 46,700 8,500 12,990
J. Alexander's Division 1992 81,750 25,000 0 7,008
Richard D. May,...................... 1994 110,443 27,000 9,000 7,861(5)
Vice President, 1993 101,963 42,354 8,500 14,710
Wendy's Division 1992 95,704 34,345 0 8,378
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)(2)
- ------------------------------------- ---- --------- -------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
R. Gregory Lewis,.................... 1994 105,958 24,000 9,000 7,620(6)
Chief Financial Officer 1993 97,708 40,766 8,500 12,986
1992 90,750 32,725 0 7,828
</TABLE>
- ---------------
(1) Each amount in this column for 1994 includes the $630 premium cost of term
life insurance maintained for the benefit of such Named Officer.
(2) The ESOP shares included in this column for 1994 are valued at $6.00 per
share, the closing price of the Company's Common Stock on December 30,
1994. The number of ESOP shares included in this column for 1994 is an
approximation of the number of shares to be allocated to the participants.
(3) Includes $1,380 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. Stout and 1,083 ESOP shares allocated to Mr. Stout as of
December 31, 1994.
(4) Includes $602 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. Cleary and 1,083 ESOP shares allocated to Mr. Cleary as of
December 31, 1994.
(5) Includes $733 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. May and 1,083 ESOP shares allocated to Mr. May as of December
31, 1994.
(6) Includes $636 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. Lewis and 1,059 ESOP shares allocated to Mr. Lewis as of
December 31, 1994.
OPTION/SAR GRANTS TABLE
The following table provides information as to options granted to the Named
Officers during fiscal 1994. None of the Named Officers were granted separate
SARs. The value assumed for the options is based on the Black-Scholes valuation
method, which is based on several assumptions including the future performance
of the Company and future interest rates. The actual value of the stock options
will depend on the value of the underlying Common Stock on the date of exercise,
which value may be different than set forth below.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS EXERCISE GRANT
UNDERLYING GRANTED TO OR BASE DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE VALUE($)(2)
- --------------------------------- -------------------- ----------------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Lonnie J. Stout.................. 40,000 34.5% $7.375 8/10/04 $ 141,810
Dennis J. Cleary................. 9,000 7.8 7.375 8/10/04 31,907
Richard D. May................... 9,000 7.8 7.375 8/10/04 31,907
R. Gregory Lewis................. 9,000 7.8 7.375 8/10/04 31,907
</TABLE>
- ---------------
(1) One-third of the shares covered by the options granted to the Named Officers
vest on the first anniversary of the date of grant and each year
thereafter.
(2) Based on the Black-Scholes Option Valuation Method. The assumptions
underlying this valuation are as follows: (i) a $7.375 exercise price and
market price on the date of grant; (ii) a ten year expected option
6
<PAGE> 9
term; (iii) risk-free rates based on the current Treasury bill rates (7.82%
ten year rate); (iv) volatility of .3908 based on monthly closing prices
from August 1989 through December 1994; and (v) no annual dividend yield.
The grant date value has not been discounted for the vesting schedule of
the options.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table provides information as to options exercised by the
Named Officers during fiscal 1994. None of the Named Officers has held or
exercised separate SARs. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of January 1,
1995. Also reported are the values for the "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Company's Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lonnie J. Stout II.......... 100,000 $ 600,063 100,354 56,667 $ 351,130 $ 0
Dennis J. Cleary............ 0 0 21,333 14,667 87,875 0
Richard D. May.............. 0 0 25,333 14,667 74,375 0
R. Gregory Lewis............ 0 0 29,333 14,667 95,000 0
</TABLE>
- ---------------
(1) Amounts reflect gains on outstanding options based on the average of the
high and low price of the Company's Common Stock on December 30, 1994.
SALARY CONTINUATION PLAN
Since 1978, the Company has provided a salary continuation plan for
eligible employees (the "Salary Plan") which will continue to operate in 1995.
The Salary Plan generally provides for a retirement benefit of 50% of the
employee's salary on the date of entry into the plan with adjustments based on
certain subsequent salary increases. The retirement benefit is payable over 15
years commencing at age 65. The Salary Plan also provides that in the event an
employee dies while in the employ of the Company after entering the Salary Plan
but before retirement, his beneficiaries, for a period of one year, will receive
100% of such employee's salary at the applicable time under the Salary Plan.
Thereafter, for a period of 10 years, or until such time as the employee would
have attained age 65, whichever period is longer, the beneficiaries will receive
one-half of such salary yearly. All officers of the Company with three full
years of service are eligible to participate in the Salary Plan, which is funded
by life insurance purchased by the Company and payable to the Company on the
life of the employee. An amount which approximates the cash value of the life
insurance policy for each employee vests for the benefit of such employee at the
rate of 10% per year for each year of service, including the first three years
of service required for eligibility under the Salary Plan, and is payable to
such employee upon termination of service with the Company for any reason other
than death or retirement at age 65. Directors of the Company who are not also
executive officers or employees do not participate in the Salary Plan.
7
<PAGE> 10
The estimated annual benefits payable upon retirement at age 65 for each of
the Named Officers are $107,500, $62,500, $57,500 and $46,750, respectively.
TERMINATION BENEFITS; CHANGE IN CONTROL
Three of the Company's current executive officers may receive termination
benefits in the event of a change in control of the Company. In the event that
any of these executive officers is terminated or resigns after a change in
responsibilities in connection with a change in control of the Company, then
such employee will receive an amount equal to 18 months' compensation. Based on
current levels of compensation, such amount would be $352,500 for Mr. Stout,
$172,500 for Mr. May and $165,000 for Mr. Lewis. The Company is not currently
aware of any potential change in control that would give rise to such payments.
COMPENSATION OF DIRECTORS
The directors receive an annual director's fee of $6,000 plus an additional
fee of $300 for each Board or Board Committee meeting attended.
Pursuant to the 1990 Stock Option Plan for Outside Directors ("1990 Plan"),
each director who is not also an employee of the Company and who was serving in
such capacity on October 24, 1989 was granted an option to purchase 10,000
shares of Common Stock and an additional 1,000 shares for each previous full
year of service as a director. Each eligible director elected thereafter has
been and will be granted an option to purchase 10,000 shares upon election, and
all directors have been and will be granted an option to purchase 1,000 shares
for each full year of service as a director after 1989 or their later election,
as applicable. The per share exercise price of the options granted under the
1990 Plan is the fair market value of the Common Stock on the date the option is
granted.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Stout, Chairman of the Board, Chief Executive Officer and President of
the Company, is a director and member of the Compensation Committee of
Comptronix Corporation. Mr. Duncan, a director and chairman of the Compensation
Committee of the Company, is the Chairman of the Board and Chief Executive
Officer of Comptronix Corporation.
COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executive officers are made by
the Compensation Committee of the Company's Board of Directors. Each member of
the Compensation Committee is a non-employee director. It is the responsibility
of the Compensation Committee to determine whether in its judgment the executive
compensation policies are reasonable and appropriate, meet their stated
objectives and effectively serve the best interests of the Company and its
shareholders.
Compensation Philosophy and Policies for Executive Officers
The Compensation Committee believes that the primary objectives of the
Company's executive compensation policies should be:
- to attract and retain talented executives by providing compensation that
is, overall, competitive with the compensation provided to executives at
companies of comparable size and position in the
8
<PAGE> 11
restaurant industry, while maintaining compensation within levels that are
consistent with the Company's overall financial objectives and operating
performance;
- to provide the appropriate incentives for executive officers to work
towards the achievement of the Company's annual sales, operating and
development targets; and
- to more closely align the interests of its executive officers with those
of its shareholders and the long-term interests of the Company by
providing long-term incentive compensation in the form of stock options.
The Compensation Committee believes that the Company's executive
compensation policies should be reviewed each year following the time when the
financial results of the prior year become final. The policies are reviewed in
light of their consistency with the Company's financial performance, the success
achieved in meeting its sales and operating performance targets, achieving its
overall strategic business plan objectives and its position within the
restaurant industry, as well as the compensation policies of similar companies.
The compensation of individual executive officers is reviewed annually by the
Compensation Committee in light of the executive compensation policies
established for that year.
To review the comparability of the Company's executive compensation
policies, the Compensation Committee retained the Hay Group, an independent
consulting firm, to assist the Compensation Committee in reviewing compensation
packages of executive officers of comparable companies. The consulting firm
analyzed the components of the Company's compensation for its executive officers
and concluded that the Company's total compensation for its executive officers
is approximately market, or the fiftieth percentile, of comparable companies
while compensation for the Company's Chief Executive Officer is paid between the
fiftieth and seventy-fifth percentiles.
The Compensation Committee sets the base compensation of its executive
officers at a level that it believes appropriate considering the overall
strategic direction of the Company, its position within the relative segments of
the food service industry in which it operates and the overall responsibilities
of each executive officer. The Compensation Committee believes that in addition
to corporate performance and specific business unit performance, it is
appropriate to consider in setting and reviewing executive compensation the
personal contributions the particular individual may make to the success of the
corporate enterprise. Such qualitative factors as leadership skills, planning
initiatives, development and morale building skills, and other such related
factors have been deemed to be important qualitative factors to take into
account when considering levels of compensation.
In evaluating the performance and setting the incentive compensation of the
senior executives, the Compensation Committee has taken particular note of
management's success in developing the Company's business. In addition, the
Compensation Committee has taken into account management's performance in
increasing market share and operating profits in its Wendy's division. In
reviewing management's performance and compensation, the Compensation Committee
has also taken into account management's consistent commitment to the long-term
success of the Company through the development of a new restaurant concept in
the casual dining segment of the restaurant industry, evidenced by the fact that
the J. Alexander's division (formed in 1991) generated approximately $1.3
million in operating profit in 1994 as compared to $1.1 million in 1993 and a
loss of approximately $400,000 in 1992.
In making the annual incentive compensation awards for 1994 described
below, the Compensation Committee considered that restaurant operating profit
increased in both Wendy's and J. Alexander's operating divisions and the Company
was successful in developing its fourth and fifth J. Alexander's restaurants.
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<PAGE> 12
Nevertheless, because the Company did not achieve all of the objectives set
forth in its business plan, the amount of incentive compensation awards was
lower than the incentive awards for 1993.
Compensation of Executive Officers
The Compensation Committee believes that the compensation for each of the
Named Officers should consist of a base salary, the potential for an annual
bonus and long-term stock-based incentive compensation and has applied the
policies described herein to fiscal 1994 compensation for executive officers as
described below.
Base Compensation. Base salaries for the Named Officers are at fixed
levels generally between the 25th and 75th percentiles of salaries paid to
senior managers with comparable qualifications, experience and responsibility at
other corporations engaged in the same or similar businesses as the Company. The
Compensation Committee subjectively determined on the basis of discussions with
the Chief Executive Officer and its experience in business generally and with
the Company specifically what it viewed to be appropriate levels of base
compensation after taking into consideration the contributions of each
executive. As a result of this review, increases averaging approximately 6.2% in
the base salaries for the executive officers for fiscal 1994 were made, with
specific increases varying from 4.4% to 8.6%, reflecting the Compensation
Committee's subjective judgment as to individual contributions to the success of
meeting the Company's overall financial objectives and financial performance.
The Compensation Committee did not assign any relative weight to the
quantitative and qualitative factors which it applied subjectively in reaching
its base compensation decisions.
Annual Incentive Compensation. The principal factors in awarding an annual
bonus to the Company's executive officers are their ability to increase same
store sales and improve corporate operating profits or maintain them at the
appropriate levels for the sales achieved, and meet the Company's overall
strategic business plan objectives. The Compensation Committee also may consider
other factors when awarding annual bonuses such as the contribution to new
concept development, improvement in financial performance and the impact the
executive officers have on programs that enhance shareholder value.
The Compensation Committee generally believes that an annual bonus award in
the range of 20% to 50% of the executive officer's annual base compensation is
appropriate in light of the relatively low to moderate base salary levels.
During fiscal 1994, bonuses averaging 25% of the executive officers' annual base
compensation were awarded to the executive officers, with specific bonuses
ranging from $24,000 to $58,750, reflecting the Compensation Committee's
subjective judgment as to individual contributions to the Company's performance
compared to its overall strategic business plan objectives and the factors
affecting the Company generally described above.
Long-Term Incentive Compensation. During the Company's fiscal year the
Compensation Committee considers the desirability of granting its senior
executives long-term incentive compensation in the form of awards under the
Company's incentive stock option plan. The Compensation Committee believes that
its past grants of stock options have successfully focused the Company's
management team on building profitability and enhancing shareholder value.
The Company currently has no set policy as to when stock options should be
awarded, although historically the Company has awarded stock options, if any, at
the time of the Company's annual compensation review. The Compensation Committee
believes that the Company should make it a part of its regular executive
compensation policies to consider granting annual awards of stock options to
executive officers to provide long-term incentives as part of the compensation
package that is reviewed annually for each
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<PAGE> 13
executive officer. This grant should be made on terms established at the time of
the annual review. The exercise price of each stock option should be the fair
market value of the Company's Common Stock on the date of grant. Generally,
stock options should vest gradually over a period of three or more years. The
Compensation Committee's policy is that the material terms of stock options
should not be amended after grant.
The Compensation Committee believes that long-term stock-based incentive
compensation should be structured so as to closely align the interests of the
executives with the interests of the Company's shareholders and, in particular,
to provide only limited value (if any) in the event that the Company's stock
price fails to increase over time. The Compensation Committee determines the
award of stock option grants to the executive officers and takes into account
the recommendations of the Chief Executive Officer prior to approving annual
awards of long-term stock-based incentive compensation to the other executive
officers. During fiscal 1994, the Compensation Committee granted options to
purchase an aggregate of 67,000 shares of Common Stock to the executive officers
at an exercise price of $7.375 per share. These stock options were granted in
part to reward the executive officers for their long-term strategic management
of the Company, and to motivate the executives to improve shareholder value by
increasing this component of their compensation package. Specific grants to the
executive officers ranged from 9,000 to 40,000 shares. The Compensation
Committee believes that the varying levels of grants were appropriate due to
different levels of responsibility associated with the executive officers. These
grants of different amounts did not reflect a judgment as to different levels of
performance and were determined in accordance with the Compensation Committee's
subjective judgment.
Compensation of Chief Executive Officer
The Compensation Committee believes that compensation of the Chief
Executive Officer is consistent with its general policies concerning executive
compensation and is appropriate in light of the Company's financial objectives
and performance. Awards of long-term incentive compensation to the Chief
Executive Officer are considered concurrently with awards to other executive
officers and follow the same general policies as such other long-term incentive
awards.
In reviewing and approving Mr. Stout's fiscal 1994 compensation package,
the Compensation Committee also took into account the Company's operating
performance during 1994. Mr. Stout's compensation package for fiscal 1994 was
directly tied to the same performance criteria as the other executive officers.
Mr. Stout received an increase of 4.4% in base compensation which the
Compensation Committee determined on a subjective basis to be appropriate,
considering the contributions of Mr. Stout and the performance of the Company.
Mr. Stout participated on approximately the same basis as other executive
officers in the bonus awards and received a bonus of $58,750. He also was
granted an option to purchase 40,000 shares, the largest grant made. The
Compensation Committee subjectively determined that the level of the award was
appropriate in light of Mr. Stout's performance and the Compensation Committee's
desire to increase the proportion of the long-term equity-based compensation
component of the Chief Executive Officer's compensation package.
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<PAGE> 14
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Code, enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the company's Chief Executive
Officer and four other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. Since the compensation of each of the Company's
executive officers is significantly less than $1 million, the Company has not
addressed the steps that it would take to structure the performance-based
portion of the compensation of its executive officers in a manner that would
comply with the statute.
Respectfully submitted,
Earl Beasley, Jr.
E. Townes Duncan
Garland G. Fritts
John L.M. Tobias
Toby S. Wilt
PERFORMANCE GRAPH
The following graph compares the five-year cumulative returns of $100
invested on December 31, 1989 in (a) the Company, (b) the New York Stock
Exchange Market Index ("NYSE Index"), (c) the Media General Restaurant Group
Industry Index ("MG Restaurant Index"), and (d) the Standard & Poor's 500 Index
("S&P 500 Index"), assuming the reinvestment of all dividends.
[GRAPH]
<TABLE>
<CAPTION>
Volunteer
Measurement Period Capital Cor- MG Restau- S&P 500 In
(Fiscal Year Covered) poration NYSE Index rant Index dex
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990 76.92 95.92 86.41 96.88
1991 161.54 124.12 110.69 126.42
1992 415.38 129.96 136.04 136.08
1993 676.92 147.56 148.65 149.80
1994 369.23 144.69 133.83 151.78
</TABLE>
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<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases five Wendy's restaurant properties from a corporation
principally owned by Mr. Tobias and his wife pursuant to 15-year leases dated as
of December 30, 1988. The leases provide for an aggregate minimum annual rental
of approximately $265,000, which is subject to adjustment based on the lessor's
financing costs (subject to certain limitations), plus contingent rentals of 6%
of the sales of each restaurant in excess of the minimum rental. The leases are
renewable at the Company's option for two additional five year periods. The
Company has the option to purchase these properties at a price based on the
lessor's original cost.
The Company believes that the above-described transaction has been on terms
no less favorable to the Company than would have been obtainable from unrelated
parties.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission and the New York Stock Exchange. Executive
officers, directors and greater than 10% shareholders are required by regulation
of the Commission to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on a review of the Forms 3, 4 and 5 and amendments thereto and
certain written representations furnished to the Company, the Company believes
that during the fiscal year ended January 1, 1995, its executive officers,
directors and greater than 10% beneficial owners complied with all applicable
filing requirements, except that Mr. Tobias inadvertently failed to timely
report one transaction required to be reported on Form 4. Mr. Tobias
subsequently reported the transaction on a timely filed Form 5.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP, which has been the Company's independent auditors since
its organization, has been selected as independent auditors of the Company for
the 1995 fiscal year. The Company has been informed that representatives of
Ernst & Young LLP plan to attend the Annual Meeting. Such representatives will
have the opportunity to make a statement if they desire to do so and will be
available to respond to questions by the shareholders.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE
PRESENTED AT THE 1996 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1996 Annual Meeting
of Shareholders by any shareholder of the Company must be received by the
Secretary of the Company not later than December 6, 1995, in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1996 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the Company to include any shareholder
proposal that does not meet all the requirements for such inclusion established
by the Commission at the time in effect.
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<PAGE> 16
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the back side of the
proxy card. A broker non-vote occurs when a broker holding shares registered in
street name is permitted to vote, in the broker's discretion, on routine matters
without receiving instructions from the client, but is not permitted to vote
without instructions on non-routine matters, and the broker returns a proxy card
with no vote (the "non-vote") on the non-routine matter. Under the rules and
regulations of the primary trading markets applicable to most brokers, the
election of directors is a routine matter on which a broker has the discretion
to vote if instructions are not received from the client in a timely manner.
Under Tennessee law and the Company's Charter and Bylaws, broker non-votes rules
will have no impact on the election of directors. Abstentions will be counted as
present for purposes of determining a quorum but will not be counted for or
against the election of directors.
MISCELLANEOUS
A copy of the Company's Annual Report is being mailed to shareholders
concurrently with the mailing of this Proxy Statement.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, shareholders who do not expect to attend in person are
urged, regardless of the number of shares of stock owned, to date, sign and
return the enclosed proxy promptly.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
JANUARY 1, 1995, MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER TO WHOM
THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO R. GREGORY LEWIS,
SECRETARY, VOLUNTEER CAPITAL CORPORATION, P.O. BOX 24300, NASHVILLE, TENNESSEE
37202.
Date: April 4, 1995.
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<PAGE> 17
APPENDIX A
PROXY
VOLUNTEER CAPITAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON TUESDAY, MAY 9, 1995.
The undersigned hereby appoints Lonnie J. Stout II and R. Gregory Lewis, and
each of them, as proxies, with full power of substitution, to vote all shares of
the undersigned as shown below on this proxy at the Annual Meeting of
Shareholders of Volunteer Capital Corporation to be held at the Nashville City
Club, Third National Bank Building, 201 Fourth Avenue North, Nashville,
Tennessee, on Tuesday, May 9, 1995, at 10:00 a.m., local time, and any
adjournments thereof.
(1) Election of Directors:
/ / FOR all of the following nominees (except as indicated to the contrary
below):
E. Beasley, T. Duncan, G. Fritts, L. Stout, J. Tobias and T. Wilt.
/ / AGAINST the following nominees (please print name or names)
- --------------------------------------------------------------------------------
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please print
name or names)
- --------------------------------------------------------------------------------
/ / AGAINST all nominees / / WITHHOLD AUTHORITY (ABSTAIN) to vote for all
nominees
(2) In their discretion on any other matter which may properly come before said
meeting or any adjournment thereof.
IMPORTANT: Please date and sign this proxy on the reverse side.
Your shares will be voted in accordance with your instructions. If no choice
is specified, shares will be voted FOR the nominees in the election of
directors.
PLEASE SIGN HERE AND RETURN PROMPTLY
-------------------------------
-------------------------------
Date:
- -------------------------------------------------------------------------------,
1995
Please sign exactly as your
name appears at left. If
registered in the names of two
or more persons, each should
sign. Executors,
administrators, trustees,
guardians, attorneys, and
corporate officers should show
their full titles.
- --------------------------------------------------------------------------------
If you have changed your address, please PRINT your new address on this line.
