<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, SunTrust Bank Building, 201
Fourth Avenue North, Nashville, Tennessee, at 9:30 a.m., Nashville time, on
Tuesday, May 14, 1996 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; and
(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 25, 1996 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 2, 1996
<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 14, 1996
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 14, 1996, at 9:30 a.m., Nashville
time, at the Nashville City Club, SunTrust Bank Building, 201 Fourth Avenue
North, Nashville, Tennessee, and at any 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 2, 1996.
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 25, 1996, 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 5,276,972
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 Common Stock, its only voting security, and with
respect to the beneficial ownership of the 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
<PAGE> 4
as a group. The information set forth in the following table is based on
ownership information filed with the Company as of March 25, 1996. 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.................................... 518,100(2) 9.8%
Four Embarcadero Center
Suite 3000
San Francisco, CA 94111
The Volunteer Capital Corporation......................... 449,868(3) 8.5
Employee Stock Ownership Trust
3401 West End Avenue
Nashville, TN 37203
Sackett & Company......................................... 308,855(4) 5.9
555 California Street
Suite 4490
San Francisco, CA 94104
Morgan Stanley Group, Inc................................. 275,700(5) 5.2
1585 Broadway
New York, New York 10036
Lonnie J. Stout II****.................................... 124,333(6) 2.3
Toby S. Wilt**............................................ 62,000(7) 1.2
R. Gregory Lewis***....................................... 49,025(8) *
John L.M. Tobias**........................................ 38,992(9) *
Earl Beasley, Jr.**....................................... 35,474(10) *
Richard D. May***......................................... 36,853(11) *
Dennis J. Cleary***....................................... 31,944(12) *
Garland G. Fritts**....................................... 20,000(13) *
E. Townes Duncan**........................................ 19,700(14) *
All directors and executive officers as a group (10
persons)................................................ 426,426(15) 7.7
</TABLE>
- ---------------
* Less than one percent.
** Director of the Company.
*** Named Officer.
**** Director and Named Officer.
(1) Pursuant to the rules of the Commission, shares of 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, shares subject to options held
by directors and executive officers of the Company which are exercisable
within 60 days of March 25, 1996, are deemed outstanding for the purpose of
computing such director's or executive officer's percentage ownership and
the percentage ownership of all directors and executive officers 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 408,200 shares and sole dispositive power
with respect to 518,100 shares. Information is based on documents submitted
to the Company by RCM.
(3) Includes 175,635 shares that have been allocated to Volunteer Capital
Employee Stock Ownership Plan (the "ESOP") participants. Pursuant to the
terms of the ESOP that governs the Volunteer Capital Corporation Employee
Stock Ownership Trust (the "Trust"), each ESOP participant instructs
SunTrust Bank, Nashville, N.A. (formerly known as Third National Bank in
Nashville, Tennessee), as trustee of the Trust (the "Trustee"), how to vote
the shares allocated to his or her account. The ESOP provides that the
Trustee shall abstain from voting 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 57,183 Conversion Shares. Sackett & Company ("Sackett") is a
registered investment advisor. Sackett has sole voting and dispositive
power with respect to 308,855 shares. Information is based on documents
submitted to the Company by Sackett.
(5) Shares held in accounts managed by Morgan Stanley & Co. Incorporated
("Morgan Stanley"), a wholly owned subsidiary of Morgan Stanley Group, Inc.
Morgan Stanley has shared voting and dispositive power with respect to
275,700 shares. Information is based on documents submitted to the Company
by Morgan Stanley.
(6) Includes 110,382 shares issuable upon exercise of certain options held by
Mr. Stout and 5,215 ESOP shares allocated to Mr. Stout and held by the
Trust, as to which Mr. Stout has sole voting power and shared dispositive
power.
(7) Includes 12,000 shares issuable upon exercise of certain options held by
Mr. Wilt.
(8) Includes 35,166 shares issuable upon exercise of certain options held by
Mr. Lewis and 3,758 ESOP shares allocated to Mr. Lewis and held by the
Trust, as to which Mr. Lewis has sole voting power and shared dispositive
power.
(9) Includes 1,126 Conversion Shares, 1,000 shares owned by Mr. Tobias' wife
and 17,000 shares issuable upon exercise of certain options held by Mr.
Tobias.
(10) Includes 4,000 shares issuable upon exercise of certain options held by Mr.
Beasley, 1,332 shares that Mr. Beasley holds as custodian for his children
and 112 Conversion Shares.
(11) Includes 28,666 shares issuable upon exercise of certain options held by
Mr. May and 3,992 ESOP shares allocated to Mr. May and held by the Trust,
as to which Mr. May has sole voting power and shared dispositive power.
(12) Includes 25,666 shares issuable upon exercise of certain options held by
Mr. Cleary and 3,735 ESOP shares allocated to Mr. Cleary and held by the
Trust, as to which Mr. Cleary has sole voting power and shared dispositive
power.
(13) Includes 4,000 shares issuable upon exercise of certain options held by Mr.
Fritts.
(14) Includes 16,000 shares issuable upon exercise of certain options held by
Mr. Duncan, 300 shares that Mr. Duncan holds as custodian for his children
and 2,400 shares that are owned by a partnership in which Mr. Duncan and a
trust for the benefit of Mr. Duncan's children are partners. Mr. Duncan has
sole voting and dispositive power over the shares held by the partnership.
Does not include 700 shares owned by Mr. Duncan's wife. Mr. Duncan
disclaims beneficial ownership of such shares.
(15) Includes 258,046 shares issuable upon exercise of certain options held by
the directors and executive officers, 1,238 Conversion Shares and 17,480
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, 62, has been a director of the Company since March
1991. Since 1981, Mr. Beasley has been President of Homer B.
Brown Co., an investment firm. Mr. Beasley was President and a
director of the Company from 1971 to 1980.
E. Townes Duncan...... Mr. Duncan, 42, 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., and 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 Sirrom
Capital Corporation, a small business investment company.
Garland G. Fritts..... Mr. Fritts, 66, 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, and from 1980 to 1988, Mr.
Fritts was a Vice President of Cresap, McCormack and Paget, a
general consulting services firm.
Lonnie J. Stout II.... Mr. Stout, 49, 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, 75, 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, 51, 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
privately-held 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 1995. 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 1995, 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 1995. 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 1995 by the Board of
Directors and (ii) the total number of meetings held during 1995 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 1995, 1994 and 1993 for the Company's Chief
Executive Officer and the persons who, at the end of fiscal 1995, 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
1995 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,.............. 1995 $ 242,500 $75,000 50,000 $ 7,850(3)
Chief Executive Officer 1994 230,000 58,750 40,000 7,706
1993 220,000 90,000 25,000 20,663
Dennis J. Cleary,................ 1995 133,000 48,300 12,000 8,949(4)
Vice President, 1994 126,500 33,000 9,000 6,928
J. Alexander's Division 1993 116,750 46,700 8,500 12,990
Richard D. May,.................. 1995 117,000 17,850 5,000 8,714(5)
Vice President, 1994 110,443 27,000 9,000 7,059
Wendy's Division 1993 101,963 42,354 8,500 14,710
</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,................ 1995 $ 113,500 $29,250 9,000 $ 8,531(6)
Chief Financial Officer 1994 105,958 24,000 9,000 6,838
1993 97,708 40,766 8,500 12,986
</TABLE>
- ---------------
(1) Each amount in this column for 1995 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 1995 are valued at $9.50 per
share, the closing price of the Company's Common Stock on December 29,
1995. The number of ESOP shares included in this column for 1995 is an
approximation of the number of shares to be allocated to the participants.
(3) Includes 760 ESOP shares allocated to Mr. Stout as of December 31, 1995.
(4) Includes $1,099 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. Cleary and 760 ESOP shares allocated to Mr. Cleary as of
December 31, 1995.
(5) Includes $864 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. May and 760 ESOP shares allocated to Mr. May as of December
31, 1995.
(6) Includes $681 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. Lewis and 760 ESOP shares allocated to Mr. Lewis as of
December 31, 1995.
OPTION/SAR GRANTS TABLE
The following table provides information as to options granted to the Named
Officers during fiscal 1995. None of the Named Officers were granted separate
SARs. The value assumed for the options is determined using the Black-Scholes
valuation method, which is based on several assumptions including the future
performance of the Company and future interest rates. The actual value of the
stock options will depend on the value of the underlying Common Stock on the
date of exercise, which value may be different than set forth below.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS EXERCISE GRANT
UNDERLYING GRANTED TO OR BASE DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE VALUE($)(2)
- --------------------------------- -------------------- ----------------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Lonnie J. Stout.................. 50,000 35.3% $ 9.75 8/2/05 $ 305,500
Dennis J. Cleary................. 12,000 8.5 9.75 8/2/05 73,320
Richard D. May................... 5,000 3.5 9.75 8/2/05 30,550
R. Gregory Lewis................. 9,000 6.4 9.75 8/2/05 54,990
</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, except for the options granted to Mr. Stout which vest in
varying amounts during the years 1999 through 2004.
6
<PAGE> 9
(2) Based on the Black-Scholes Option Valuation Method. The assumptions
underlying this valuation are as follows: (i) a $9.75 exercise price and
market price on the date of grant; (ii) a ten year expected option term;
(iii) risk-free rates based on the current Treasury bill rates (6.43% ten
year rate); (iv) volatility of .3849 based on monthly closing prices from
August 1990 through July 1995; and (v) no annual dividend yield. The grant
date value has not been discounted for the vesting schedule of the options.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table provides information as to options exercised by the
Named Officers during fiscal 1995. None of the Named Officers has held or
exercised separate SARs. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of January 1,
1996. Also reported are the values for the "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Company's Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lonnie J. Stout II.......... -- -- 110,382 96,639 $ 630,159 $67,038
Dennis J. Cleary............ 1,500 $13,406 25,666 20,834 137,000 10,500
Richard D. May.............. 2,500 13,906 28,666 13,834 127,750 10,500
R. Gregory Lewis............ -- -- 35,166 17,834 179,750 10,500
</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 29, 1995.
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 1996.
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 or her 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 50% 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
death 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 annual benefits currently payable upon retirement at age 65 for Messrs.
Stout, May, Lewis and Cleary are $107,500, $57,500, $58,500 and $62,500,
respectively. These amounts may be adjusted periodically pursuant to the terms
of the plan.
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 $375,000 for Mr. Stout,
$178,500 for Mr. May and $175,500 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 officer or 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 align the interests of its executive officers more closely 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, in 1994 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 over the
long-term while experiencing a decline in same-store sales and operating profit
in 1995 as a result of intense competitive pressures. 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. This commitment is evidenced by the fact
that the J. Alexander's division (formed in 1991) generated approximately $2.8
million in operating profit in 1995 as compared to $1.3 million in 1994 and $1.1
million in 1993.
9
<PAGE> 12
In making the annual incentive compensation awards for 1995 described
below, the Compensation Committee considered that restaurant operating profit
increased in the J. Alexander's operating division and the Company was
successful in developing its four new J. Alexander's restaurants. The
Compensation Committee also considered the decline in same-store sales and
operating profit in the Wendy's division as well as the efforts of management to
improve operations in a difficult competitive environment.
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 establish fiscal 1995 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 each executive's contributions. As
a result of this review, increases averaging approximately 6.0% in the base
salaries for the executive officers for fiscal 1995 were made, with specific
increases varying from 3.5% to 7.8%, 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, 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 executive's 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 15% 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 1995, bonuses averaging 28.1% of the executive officers' annual
base compensation were awarded to the executive officers, with specific bonuses
ranging from $17,850 to $75,000, 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
10
<PAGE> 13
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 in order to
include long-term incentives as part of each executive's annual compensation
package. The Compensation Committee also believes that this grant should be made
on terms established at the time of the annual review, and that the exercise
price of stock options should be the fair market value of the Company's Common
Stock on the date of grant. Generally, the Compensation Committee's policy is
that stock options should vest gradually over a period of three or more years,
and 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 those 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 1995, the Compensation Committee granted options to purchase an
aggregate of 76,000 shares of Common Stock to the executive officers at an
exercise price of $9.75 per share. These stock options were granted in part to
reward the executive officers for their long-term strategic management of the
Company, as well as to motivate the executives to improve shareholder value by
increasing incentive stock options as a portion of their total compensation
package. Specific grants to the executive officers ranged from 5,000 to 50,000
shares. The Compensation Committee believes that the varying levels of grants
were appropriate given the executive officers' different levels of
responsibility. Varying grant levels 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 the Chief Executive Officer's
compensation 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 1995 compensation package,
the Compensation Committee also took into account the Company's operating
performance during 1994 and 1995. Mr. Stout's compensation package for fiscal
1995 was directly tied to the same performance criteria as the other executive
officers. Mr. Stout received an increase of 6.4% 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 $75,000. He also was
granted an option to purchase 50,000 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.
11
<PAGE> 14
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code, enacted in 1993, generally prohibits public companies
from deducting the Chief Executive Officer's and four other most highly
compensated executive officers' compensation, to the extent such compensation
exceeds $1 million for any individual officer. Performance-based compensation is
not 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, 1990 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.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
[GRAPH]
<TABLE>
<CAPTION>
VOLUNTEER
MEASUREMENT PERIOD NYSE MARKET CAPITAL COR- MG RESTAU- S&P 500 IN-
(FISCAL YEAR COVERED) INDEX PORATION RANT INDEX DEX
<S> <C> <C> <C> <C>
1990 100 100 100 100
1991 129.41 210.00 128.10 130.48
1992 135.50 540.00 157.44 140.46
1993 153.85 880.00 172.03 154.62
1994 150.86 480.00 154.88 156.66
1995 195.61 760.00 211.66 215.54
</TABLE>
12
<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 leases one additional Wendy's restaurant
from affiliates of Mr. Tobias. This agreement calls for annual lease payments of
approximately $17,000 through June 1997.
The Company believes that the above-described transactions have 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 December 31, 1995, its executive officers,
directors and greater than 10% beneficial owners complied with all applicable
filing requirements.
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 1996 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 1997 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1997 Annual Meeting
of Shareholders by any shareholder of the Company must be received by the
Secretary of the Company not later than December 10, 1996, in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1997 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 of the Commission's requirements for inclusion
in effect at the time.
13
<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-vote 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
DECEMBER 31, 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 2, 1996.
14
<PAGE> 17
Appendix A
VOLUNTEER CAPITAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN PARTICIPANT VOTING INSTRUCTION FORM
This Voting Instruction Form is tendered to direct SunTrust Bank, Nashville
N.A. (the "Trustee"), as Trustee of the Volunteer Capital Corporation Employee
Stock Ownership Plan (the "ESOP"), as to the manner in which all allocated
shares in the ESOP account of the undersigned (the "Voting Shares") shall be
voted at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on
May 14, 1996 at the Nashville City Club, SunTrust Bank Building, 201 Fourth
Avenue North, Nashville, Tennessee, at 9:30 a.m., local time.
The undersigned hereby directs the Trustee to vote all Voting Shares of the
undersigned as shown below on this Voting Instruction Form at the Annual
Meeting.
(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 the Trustee's discretion, the Trustee is entitled to act on any other
matter which may properly come before said meeting or any adjournment
thereof.
(Continued and to be signed on reverse side)
(Continued from other side)
IMPORTANT: Please date and sign this Voting Instruction Form and return it
to the Trustee of the Volunteer Capital Corporation Employee Stock Ownership
Plan, SunTrust Bank, Nashville N.A., P.O. Box 305110, Nashville, Tennessee
37230-9979, Attention: Robert Mayer.
A stamped and addressed envelope is enclosed for your convenience. YOUR
VOTING INSTRUCTION FORM MUST BE RECEIVED BY THE TRUSTEE BY MAY 9, 1996.
Your shares will be voted by the Trustee in accordance with your
instructions. If no choice is specified, your shares will be voted FOR the
nominees in the election of directors.
PLEASE SIGN, DATE AND RETURN PROMPTLY
-------------------------------
-------------------------------
Date: , 1996
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 your address has changed, please PRINT your new address on this line.
<PAGE> 18
Appendix B
PROXY
VOLUNTEER CAPITAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON TUESDAY, MAY 14, 1996.
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 on the reverse side of this proxy at the Annual Meeting
of Shareholders of Volunteer Capital Corporation to be held at the Nashville
City Club, SunTrust Bank Building, 201 Fourth Avenue North, Nashville,
Tennessee, on Tuesday, May 14, 1996, at 9:30 a.m., local time, and any
adjournments thereof.
IMPORTANT: Please date and sign this proxy on the reverse side.
FOLD AND DETACH HERE
(1) Election of Directors:
/ / FOR all nominees listed below (except as indicated to the contrary):
E. Beasley, T. Duncan, G. Fritts, L. Stout, J. Tobias and T. Wilt.
/ / WITHHOLD AUTHORITY to vote for all nominees listed above
INSTRUCTIONS: To withhold authority to vote for any of the individual nominee(s)
write the name(s) on the line provided below.
- --------------------------------------------------------------------------------
(2) In their discretion on any other matter which may properly come before said
meeting or any adjournment thereof.
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: , 1996
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.
FOLD AND DETACH HERE
