SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as permitted by Rule 14a-
6(e)(2)]
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LUBY'S, INC.
_____________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
_______________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________
5) Total fee paid:
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[ ] 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: ________________________________________
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PRELIMINARY COPY
Luby's, Inc.
2211 Northeast Loop 410
San Antonio, Texas 78217-4673
210/654-9000
Mailing Address:
P.O. Box 33069
San Antonio, Texas 78265-3069
December _, 2000
Dear Shareholders:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders of
Luby's, Inc. to be held on Friday, January 12, 2001, at 9:00 a.m., at the Omni
San Antonio Hotel, 9821 Colonnade Boulevard, San Antonio, Texas. We hope that
you will be able to attend the meeting.
At this year's shareholders meeting you are being asked to elect three
directors, consider nonbinding shareholder proposals and approve the
appointment of Ernst & Young LLP as independent auditors. Your Board of
Directors unanimously recommends a vote FOR the director nominees named in the
attached Proxy Statement and AGAINST the nonbinding shareholder proposals.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER OR NOT YOU EXPECT TO BE
PRESENT AT THE MEETING YOU CAN BE SURE YOUR SHARES ARE REPRESENTED AT THE
MEETING BY PROMPTLY SUBMITTING YOUR PROXY [BY PHONE, BY INTERNET, OR] BY
MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
If you have any questions or comments, please contact us or our proxy
solicitors, MacKenzie Partners, Inc. at (800) 322-2885.
Thank you for your continued support and interest in Luby's.
Sincerely,
DAVID B. DAVISS
______________________________
David B. Daviss
Chairman of the Board and
Acting Chief Executive Officer
LUBY'S, INC.
2211 Northeast Loop 410
P. O. Box 33069
San Antonio, Texas 78265-3069
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 12, 2001
To the Shareholders of
LUBY'S, INC.
The 2001 Annual Meeting of Shareholders of Luby's, Inc. will be held at
the Omni San Antonio Hotel, 9821 Colonnade Boulevard, San Antonio, Texas, on
Friday, January 12, 2001, at 9:00 a.m., local time, for the following purposes:
(1) To elect three directors to serve until the 2004 Annual Meeting of
Shareholders;
(2) To approve the appointment of independent auditors for the 2001
fiscal year; and
(3) To act upon such other matters, including shareholder proposals, as
may properly come before the meeting or any adjournment thereof.
Only Shareholders of record at the close of business on November __, 2000,
will be entitled to vote at the meeting or any adjournments.
A complete list of shareholders entitled to vote at the meeting will be
available for inspection at the Company's corporate office at 2211 Northeast
Loop 410, San Antonio, Texas, during normal business hours for ten days prior
to the meeting. The list also will be available at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WE URGE
YOU TO PROMPTLY SIGN, DATE, AND RETURN THE ENCLOSED WHITE PROXY IN THE ENCLOSED
ENVELOPE [OR TO USE THE TELEPHONE OR INTERNET VOTING PROCEDURES DESCRIBED IN
THE ATTACHED PROXY STATEMENT].
YOUR BOARD OF DIRECTORS ALSO URGES YOU NOT TO SIGN ANY PROXY SENT TO YOU
BY THE COMMITTEE OF CONCERNED LUBY'S SHAREHOLDERS (THE "CCLS"). [EVEN IF YOU
HAVE PREVIOUSLY SIGNED A PROXY SENT TO YOU BY CCLS, YOU CAN REVOKE THAT EARLIER
PROXY BY SIGNING, DATING, AND MAILING THE ENCLOSED WHITE PROXY IN THE ENVELOPE
PROVIDED [OR BY USING THE TELEPHONE OR INTERNET VOTING PROCEDURE].
DREW R. FULLER, JR.
____________________
Drew R. Fuller, Jr.
Secretary
December _, 2000
LUBY'S, INC.
2211 Northeast Loop 410
P. O. Box 33069
San Antonio, Texas 78265-3069
PROXY STATEMENT
This proxy statement and the accompanying white proxy are being furnished
in connection with the solicitation by the Board of Directors of Luby's, Inc.,
a Delaware corporation (the "Company"), of proxies to be voted at the 2001
Annual Meeting of Shareholders on January 12, 2001, or at any adjournment
thereof. This proxy statement and the accompanying proxy are first being
mailed to shareholders on or about December _, 2000. At the meeting, the Board
of Directors will propose that you (i) elect Ronald K. Calgaard, Roger R.
Hemminghaus and Jimmy W. Woliver to the Board of Directors to serve until the
2004 annual meeting of shareholders, (ii) vote against the nonbinding
shareholder proposals described in this proxy statement under the heading
"Shareholder Proposals," and (iii) approve the appointment of Ernst & Young LLP
as independent auditors for the Company for fiscal 2001.
THE COMPANY
The Company was restructured into a holding company on February 1, 1997, at
which time all of the operating assets were transferred to Luby's Restaurants
Limited Partnership, a Texas limited partnership composed of two wholly owned
indirect corporate subsidiaries of the Company. All restaurant operations are
conducted by the partnership. Unless the context indicates otherwise, the word
"Company" as used herein includes the partnership and the consolidated
corporate subsidiaries of Luby's, Inc.
VOTING AND PROXIES
Only holders of record of common stock of the Company at the close of
business on November __, 2000, will be entitled to vote at the meeting. There
were 22,420,375 shares of common stock outstanding on the record date,
exclusive of 4,982,692 treasury shares. Each share of common stock outstanding
is entitled to one vote. A majority of the shares outstanding will constitute a
quorum at the meeting.
You may ensure that your shares are voted at the meeting in accordance
with your Board's recommendations by [submitting your instructions by phone, by
Internet or by] completing, signing, dating, and returning the enclosed white
proxy in the envelope provided. Submitting your instructions by any of these
methods will not effect your right to attend the meeting and vote in person.
If the WHITE proxy is signed and returned without any direction given, shares
will be voted in accordance with the recommendations of the Board of Directors
as described in this proxy statement. Any shareholder giving a proxy may
revoke it at any time before the proxy is voted by giving written notice of
revocation to the Secretary of the Company, by submitting a later-dated proxy,
or by attending the meeting and voting in person.
The election of nominees for director requires a plurality of the votes
cast. Approval of the appointment of auditors requires the affirmative vote of
a majority of the shares present at the meeting in person and by proxy.
Adoption of each of the shareholder proposals described herein requires the
affirmative vote of a majority of the shares present at the meeting in person
and by proxy. Abstentions and broker nonvotes will be included in determining
the presence of a quorum at the meeting. Broker nonvotes will not be included
in determining the number of votes cast on any matter.
The Board of Directors is soliciting votes FOR the Board's nominees,
Ronald K. Calgaard, Roger R. Hemminghaus, and Jimmy W. Woliver for election to
the Board of Directors and AGAINST the Shareholder Proposals. The Board has
provided [telephonic and Internet voting procedures and] a WHITE proxy is
enclosed for your use. The Board of Directors urges you to [use the telephone
or Internet voting procedures or] complete, sign, date, and return the WHITE
proxy.
If you have any questions, or need any assistance in voting your shares,
please call 1-800-322-2885 and our proxy solicitors will be happy to help
you.
THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY AN
INSURGENT GROUP OF SHAREHOLDERS CALLING THEMSELVES "The Committee Of Concerned
Luby's Shareholders." IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE THAT PROXY
BY [SUBMITTING YOUR INSTRUCTIONS USING THE TELEPHONE OR INTERNET VOTING
PROCEDURES OR BY] DELIVERING A LATER DATED WHITE PROXY IN THE ENCLOSED ENVELOPE.
Remember, it will not help your Board to return the Committee's proxy
with a vote to "abstain." Do not return any card sent to you by the
Committee. The only way to support your Board of Directors' nominees is to
vote "FOR" those nominees using [the telephone or Internet procedures included
in this package or] a WHITE proxy.
If your shares are held in the name of a bank, broker, or other nominee,
only your bank, broker, or other nominee can vote your shares and only upon your
specific instructions. Please contact the person responsible for your account
and instruct him or her to vote the WHITE proxy as soon as possible.
ELECTION OF DIRECTORS (Item 1)
The shareholders elect approximately one-third of the members of the Board
of Directors annually. The Board is divided into three classes, as nearly
equal in number as possible, with the members of each class serving three-year
terms. The Board is currently comprised of 11 members. The Board has reduced
the total number of directors to 9, effective as of January 12, 2001, with
three directors in each of the classes whose terms will expire in 2002, 2003,
and 2004.
The terms of Ronald K. Calgaard, Lauro F. Cavazos, Roger R. Hemminghaus,
John B. Lahourcade, and George H. Wenglein will expire at the 2001 Annual
Meeting. Messrs. Cavazos, Lahourcade and Wenglein have decided not to stand
for reelection. Mr. Hemminghaus was elected in 1999 for a three-year term. In
November 2000 he resigned and was reelected by the Board to serve until January
2001 in order to equalize the number of directors in each class.
The persons who have been nominated by the Board of Directors for election
as directors to serve until the 2004 Annual Meeting of Shareholders and until
their successors are duly elected and qualified are Ronald K. Calgaard,
Roger R. Hemminghaus, and Jimmy W. Woliver. The Board of Directors recommends
a vote FOR such nominees.
Each of the Board's nominees have indicated a willingness to serve as
directors, but should any of them decline or be unable to serve, white
proxies may be voted for another person nominated as a substitute by the
Board of Directors.
Pursuant to the Company's bylaws, the Company has been notified by various
shareholders that the shareholders providing such notices intend to nominate Les
Greenberg, Thomas Palmer, Elisse Freeman, and Davis Simpson, respectively, for
election as directors at the 2001 Annual Meeting. A small group of
shareholders, including the shareholders who gave notice of their intention to
make nominations, calling themselves "the Committee of Concerned Luby's
Shareholders" has filed preliminary proxy materials indicating that they will
solicit your vote for Messrs. Greenberg, Palmer, and Simpson and for approval of
the shareholder proposals described in this Proxy Statement.
Nominees for Election to Terms Expiring in 2004
RONALD K. CALGAARD is Chief Operating Officer of Austin Calvert & Flavin
Inc., investment advisors (since January 2000). He was President of
Trinity University from 1979 to 1999. He is 63 and has been a director
of the Company since 1998. He is a member of the Audit Committee. He
is a director of Plymouth Commercial Mortgage Company, Valero Energy
Corporation, and The Trust Company, N.A.
ROGER R. HEMMINGHAUS is Chairman Emeritus of Ultramar Diamond Shamrock
Corporation (since January 2000). He was Chairman of the Board and a
director of Ultramar Diamond Shamrock Corporation prior to 2000, where
he also served as Chief Executive Officer until 1999 and as President
until 1996. He is 64 and has been a director of the Company since
1989. He is Chairman of the Compensation Committee and a member of the
Executive Committee and the Corporate Governance Committee. He is
Chairman of the Federal Reserve Bank, Eleventh District, and a director
of billserv.com, Tandy Brand Accessories Corp., CTS Corporation, Excel
Energy, Inc., and Southwest Research Institute.
JIMMY W. WOLIVER is a retired former officer of the Company. He was
Senior Vice President-Operations from 1995 to 1997 and Vice President-
Operations from 1987 to 1995. He was Area Vice President from
1983 to 1987 and served in various positions in restaurant management
for the Company from 1964 to 1983. He is 63.
Incumbent Directors Whose Terms Expire in 2002
JUDITH B. CRAVEN is a Physician Administrator. She was President of
United Way of the Texas Gulf Coast (1992-1998). She is 55 and has been
a director of the Company since 1998. She is a member of the
Compensation Committee. She is a director of A.H. Belo Corporation,
Compaq Computer Corp., Sysco Corporation, and Valic Corp.
DAVID B. DAVISS is Chairman of the Board of the Company (since 1997). He
is Acting Chief Executive Officer of the Company (since September 2000)
and served in the same capacity from May to October 1997. He is 64
and has been a director of the Company since 1984. He is Chairman of
the Executive Committee and a member of the Corporate Governance
Committee. He is an advisory director of Austin Trust Company and a
director of Bartlett Cocke, Inc.
ARTHUR R. EMERSON is Chairman/CEO of Groves Rojas Emerson, an advertising
and public relations firm (since June 2000). Prior thereto he was Vice
President and General Manager of the Texas Stations of the Telemundo
television network. He is 56 and has been a director of the Company
since 1998. He is a member of the Audit Committee. He is a director
of USAA Federal Savings Bank.
Incumbent Directors Whose Terms Expire in 2003
ROBERT T. HERRES is Chairman of USAA (insurance and financial services)
since 1993. He was formerly Chief Executive Officer of USAA (1992
to 2000). He is 68 and has been a director of the Company since
January 1999. He is a member of the Compensation Committee. He is a
retired General (USAF) and was formerly Vice Chairman of the Joint
Chiefs of Staff. He is a director of Logistics Management, Inc.
WALTER J. SALMON is Emeritus Professor, Harvard Graduate School of
Business Administration (since 1996). Prior thereto he was Stanley
Roth, Sr. Professor of Retailing, Harvard Graduate School of Business
Administration. He is 70 and has been a director of the Company since
1979. He is a member of the Audit Committee and the Corporate
Governance Committee. He is a director of Circuit City Stores, Inc.;
Cole National Corporation; The Neiman Marcus Group; Harrah's
Entertainment, Inc.; Petsmart, Inc.; The Quaker Oats Company; and Tufts
Associated Health Plans, Inc. Under the Company's Corporate Governance
Guidelines, Dr. Salmon was required to tender his resignation as a
director upon reaching age 70. His resignation was tendered, but the
Board declined to accept it and requested that he serve the remainder
of his elected term.
JOANNE WINIK is President, General Manager, and a director of KLRN-TV, San
Antonio's Pubic Broadcasting Service affiliate. She is 60 and has been
a director of the Company since 1993. She is Chairman of the Corporate
Governance Committee. She is a director of PBS (Public Broadcasting
System).
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
According to information furnished by the persons concerned, each
director, each nominee for director, the five most highly compensated executive
officers, and all directors and executive officers of the Company as a group,
owned beneficially the indicated number and percentage of outstanding shares of
common stock of the Company as of November ___, 2000:
Shares Beneficially Owned Percent of
Name (1) Shares Beneficially Owned Class
_____________________ _________________________ ____________
Laura M. Bishop (2) 48,042 0.21%
Ronald K. Calgaard(3) 4,142 0.02%
Lauro F. Cavazos (4) 16,117 0.07%
Judith B. Craven (5) 3,571 0.02%
Alan M. Davis (6) 37,040 0.16%
David B. Daviss (7) 7,692 0.03%
Arthur R. Emerson (8) 4,308 0.02%
Raymond C. Gabrysch (9) 50,605 0.23%
Clyde C. Hays III (10) 54,248 0.24%
Roger R. Hemminghaus (11) 11,100 0.05%
Robert T. Herres (12) 3,759 0.02%
John B. Lahourcade (13) 189,405 0.84%
Barry J.C. Parker (14) 207,500 0.92%
Walter J. Salmon (15) 10,335 0.05%
George H. Wenglein (16) 737,000 3.29%
Joanne Winik (17) 10,995 0.05%
Jimmy W. Woliver (18) 20,416 0.09%
All directors and executive
officers of the Company,
as a group (19) 1,347,817 5.93%
(1) Except as indicated in these notes, each person in the table owns
directly the number of shares indicated and has the sole power to vote
and to dispose of such shares. Shares of phantom stock held by
nonemployee directors cannot be voted or disposed of until the phantom
stock is converted into common stock when the holder ceases to be
a director.
(2) The shares shown for Ms. Bishop include 7,460 shares held in custodial
accounts and 40,582 shares which she has the right to acquire within
60 days under the Company's stock option plans.
(3) The shares shown for Dr. Calgaard include 4,142 shares of phantom stock
held under the Nonemployee Director Phantom Stock Plan.
(4) The shares shown for Dr. Cavazos include 12,000 shares which he has the
right to acquire within 60 days under the Nonemployee Director Stock
Option Plan and 2,567 shares which he has the right to acquire within
60 days under the Nonemployee Director Phantom Stock Plan.
(5) The shares shown for Dr. Craven are held for her benefit in a custodial
account. The shares shown include 2,071 shares of phantom stock held
under the Nonemployee Director Phantom Stock Plan.
(6) The shares shown for Mr. Davis include 5,790 shares held in custodial
accounts and 31,250 shares which he has the right to acquire within
60 days under the Company's stock option plans.
(7) The shares shown for Mr. Daviss are held for his benefit in custodial
accounts and include 989 shares held by a 401(k) custodian. The shares
shown include 1,166 shares which he has the right to acquire within 60
days under the Nonemployee Director Stock Option Plan.
(8) The shares shown for Mr. Emerson include 2,237 shares held jointly with
his wife in a custodial account. The shares shown include 2,071 shares
of phantom stock held under the Nonemployee Director Phantom Stock
Plan.
(9) The shares shown for Mr. Gabrysch include 7,335 shares held in custodial
accounts and 35,950 shares which he has the right to acquire within
60 days under the Company's stock option plans.
(10) The shares shown for Mr. Hays include 16,118 shares held in custodial
accounts and 36,850 shares which she has the right to acquire within
60 days under the Company's stock option plans.
(11) The shares shown for Mr. Hemminghaus are held for his benefit in a
custodial account. The shares shown include 1,666 shares which he has
the right to acquire within 60 days under the Nonemployee Director
Stock Option Plan and 5,134 shares of phantom stock held under the
Nonemployee Director Phantom Stock Plan.
(12) The shares shown for Gen. Herres include 1,973 shares of phantom stock
held under the Nonemployee Director Phantom Stock Plan.
(13) The shares shown for Mr. Lahourcade include 1,125 shares held jointly
with his wife.
(14) The shares shown for Mr. Parker include 22,500 shares held in custodial
accounts and 165,000 shares which he has the right to acquire within
60 days under the Company's stock option plans.
(15) The shares shown for Dr. Salmon are held for his benefit in an
individual retirement account. The shares shown include 3,333 shares
which he has the right to acquire within 60 days under the Nonemployee
Director Stock Option Plan and 2,567 shares of phantom stock held
under the Nonemployee Director Phantom Stock Plan.
(16) The shares shown for Mr. Wenglein include 7,000 shares which he has
the right to acquire within 60 days under the Nonemployee Director
Stock Option Plan.
(17) The shares shown for Ms. Winik are held for her benefit in a custodial
account. The shares shown include 3,333 shares which she has the
right to acquire within 60 days under the Nonemployee Director Stock
Option Plan and 5,103 shares of phantom stock held under the
Nonemployee Director Phantom Stock Plan.
(18) The shares shown for Mr. Woliver are held for his benefit in a
custodial account.
(19) The shares shown for all directors and executive officers as a group
include 133,048 shares which they have the right to acquire within 60
days under the Company's benefit plans and 25,628 shares of phantom
stock held under the Nonemployee Director Phantom Stock Plan.
INFORMATION CONCERNING DIRECTORS AND COMMITTEES
Meetings and Compensation of Directors
During the fiscal year ended August 31, 2000, the Board of Directors held
seven meetings. Each nonofficer director is paid an annual retainer of $20,000
plus a meeting fee of $1,500 per day for each meeting of the Board of
Directors which he or she attends and a meeting fee of $1,000 per day for each
meeting of any Board committee which he or she attends (except that the meeting
fee for the chair of the committee is $1,200 per day). The Company has
standing Audit, Compensation, and Corporate Governance committees.
Nonemployee Director Stock Options
Under the Company's Nonemployee Director Stock Option Plan as amended and
restated (the "Option Plan"), nonemployee directors are periodically granted
nonqualified options to purchase shares of the Company's common stock at an
option price equal to 100% of fair market value on the date of grant. Each
option terminates upon the expiration of ten years from the date of grant or
one year after the optionee ceases to be a director, whichever first occurs.
An option may not be exercised prior to the expiration of one year from the
date of grant, subject to certain exceptions specified in the Option Plan.
Pursuant to the provisions of the Option Plan, options were granted on
January 14, 2000, to Ronald K. Calgaard, Lauro F. Cavazos, Judith B. Craven,
Arthur R. Emerson, Roger R. Hemminghaus, Walter J. Salmon, George H. Wenglein,
and Joanne Winik for 2,000 shares each, and to Robert T. Herres for 4,000
shares, at an option price of $10.8125 per share.
Nonemployee Director Phantom Stock Plan
Under the Company's Nonemployee Director Phantom Stock Plan (the "Phantom
Stock Plan"), nonemployee directors may elect to defer all or a portion of their
director retainer fees into a phantom share account which is credited with
dollar amounts in the form of phantom shares priced at current market value of
the Company's common stock. The phantom share accounts are also credited with
dollar amounts equal to dividends paid on the common stock. When a participant
ceases to be a director, the number of phantom shares in his or her account is
converted into an equal number of shares of the Company's common stock.
Audit Committee
The Audit Committee of the Board of Directors, which currently consists of
Lauro F. Cavazos (Chairman), Ronald K. Calgaard, Arthur R. Emerson, and
Walter J. Salmon, met three times during the 2000 fiscal year. All members of
the Audit Committee are independent as that term is defined in Section 303.01 of
the listing standards of the New York Stock Exchange. The primary functions of
the Audit Committee are to provide guidance and assistance to the Board of
Directors in fulfilling its responsibility to the shareholders, potential
shareholders, and the investment community relating to corporate accounting,
reporting practices, the quality and integrity of the Company's financial
reports, and the maintenance of an effective control environment that supports
appropriate business practices. The Board of Directors has adopted a written
charter for the Audit Committee. A copy of the Audit Committee Charter, as
amended May 18, 2000, is attached to this proxy statement as Appendix A.
Audit Committee Report
The primary responsibility of the Audit Committee (the "Committee") is to
oversee the financial reporting process on behalf of the Board of Directors (the
"Board") and report the results of its activities to the Board. Management is
responsible for preparing the financial statements, and the outside auditor is
responsible for auditing those financial statements.
In fulfilling its oversight responsibilities, the Committee reviewed the
audited financial statements in the Annual Report with management and the
outside auditors, including their judgement about the quality and
appropriateness of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements. In
addition, the Committee discussed any matter required to be communicated under
generally accepted auditing standards. The Committee also discussed with the
outside auditors the auditors' independence from management and the Company
including the matters in the formal written statement required by the
Independence Standards Board.
The Committee discussed with the Company's internal auditors and outside
auditors the overall scope and plans for their respective audits. The
Committee met separately with the internal auditors and the outside auditors,
with and without management present, to discuss the results of their
examinations, including the integrity, adequacy, and effectiveness of the
accounting and financial reporting processes and controls.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board, and the Board has approved, that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended August 31, 2000, for filing with the Securities and Exchange
Commission. Based upon the recommendation of the Committee, the Board has
appointed Ernst & Young LLP as the Company's outside auditors for the 2001
fiscal year.
Members of the Committee:
Lauro F. Cavazos, Chairman
Ronald K. Calgaard
Arthur R. Emerson
Walter J. Salmon
Compensation Committee
The Compensation Committee of the Board of Directors currently consists of
Roger R. Hemminghaus (Chairman), Judith B. Craven, and Robert T. Herres. The
Compensation Committee met four times during the 2000 fiscal year. The
functions of the Compensation Committee are to review and make recommendations
concerning compensation and incentives for officers and management employees,
to review and make recommendations concerning employee benefits and employee
benefit plans, to ensure annual evaluation of the performance of senior
officers, to review succession and development plans, and to review compliance
with laws and regulations relating to employees.
Compensation Committee Interlocks and Insider Participation
The only persons who served as members of the Compensation Committee of
the Board of Directors during the 2000 fiscal year were Ronald K. Calgaard,
Judith B. Craven, Roger R. Hemminghaus, and Robert T. Herres, none of whom is
an officer or employee, or a former officer or employee, of the Company.
Corporate Governance Committee
The Corporate Governance Committee of the Board of Directors currently
consists of Joanne Winik (Chairman), Lauro F. Cavazos, David B. Daviss,
Roger R. Hemminghaus, and Walter J. Salmon. The Corporate Governance Committee
met two times during the 2000 fiscal year. The functions of the Corporate
Governance Committee are to define and review the responsibilities of the Board
of Directors relating to corporate governance; to review and recommend changes
in the Corporate Governance Guidelines; to monitor compliance with the
guidelines; to review corporate citizenship issues; to make recommendations
concerning the size of the Board and its committee structure; to consult with
the Board regarding committee assignments; to identify skills and
characteristics needed by Board candidates; to recommend Board candidates; to
decide issues relating to independence and conflicts of interest; to consider
periodically the appropriateness of continued Board service; and to make
recommendations concerning director compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry J.C. Parker resigned as a director and as President and Chief
Executive Officer of the Company effective September 23, 2000. David B. Daviss,
Chairman of the Board, has assumed the duties of Chief Executive Officer.
Mr. Daviss received a salary of $120,000 for the fiscal year ended August 31,
2000. His salary as Acting Chief Executive Officer has been fixed at $30,000
per month.
John B. Lahourcade, a director of the Company, is employed by the Company
as a consultant at a salary of $7,083 per month under a contract which expires
in 2001.
James R. Hale was Secretary of the Company from 1980 until his resignation
on March 17, 2000. He is a member of the law firm of Cauthorn Hale Hornberger
Fuller Sheehan Becker & Beiter Incorporated. The firm performs legal services
for the Company on a regular basis. For services rendered during the fiscal
year ended August 31, 2000, the Company paid such firm approximately $340,000.
Drew R. Fuller, Jr., who was elected Secretary of the Company on October 11,
2000, is also a member of such law firm.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and any persons holding more than ten
percent of the Company's common stock to report their initial ownership of the
Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission and the New York Stock Exchange, and to
provide copies of such reports to the Company. Based upon the Company's review
of copies of such reports received by the Company and written representations
of its directors and executive officers, the Company believes that during the
year ended August 31, 2000, all Section 16(a) filing requirements were
satisfied.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Company, no person owned beneficially as of
October 31, 2000, more than five percent of the outstanding common stock of the
Company.
EXECUTIVE COMPENSATION
The table below contains information concerning annual and long-term
compensation of the chief executive officer and the four most highly
compensated executive officers (the "Named Officers") for services in all
capacities to the Company for the fiscal years ended August 31, 2000, 1999, and
1998:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
_____________________________________________________ ____________________________ ________
Securities All
Other Under- Other
Name and Annual Restricted lying Compen-
Principal Fiscal Compen- Stock Options/ LTIP sation
Position Year Salary Bonus(1) sation(2) Awards SARs(3) Payouts (4)
_____________________________________________________ ____________________________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barry J.C. Parker* 2000 $402,500 $ 0 $0 $0 70,000 $ 0 $ 2,034
President and 1999 375,000 93,500 0 0 106,000 0 3,696
Chief Executive 1998 330,000 132,000 0 0 170,000 0 0
Officer
Laura M. Bishop* 2000 185,833 0 0 0 25,000 0 2,034
Senior Vice 1999 175,000 28,000 0 0 41,785 0 3,691
President and 1998 165,000 34,000 0 0 20,000 0 4,016
Chief Financial
Officer
Alan M. Davis 2000 184,167 0 0 0 25,000 0 2,034
Senior Vice 1999 177,500 27,000 0 0 42,370 0 0
President- 1998 43,750 8,750 0 0 25,000 0 25,000
Real Estate Development
Raymond C. Gabrysch 2000 184,167 0 0 0 25,000 0 2,034
Senior Vice 1999 175,000 26,000 0 0 41,965 0 3,696
President- 1998 165,000 34,000 0 0 20,000 0 4,015
Operations
Clyde C. Hays III 2000 204,500 0 0 0 25,000 0 2,034
Senior Vice 1999 201,000 26,000 0 0 44,800 0 3,696
President- 1998 200,000 40,000 0 0 20,000 0 4,015
Operations
<FN>
* These individuals are no longer employed by the Company.
(1) Reflects incentive-based cash bonuses awarded under the Company's Incentive Bonus Plan.
Awards are stated as compensation in the year with respect to which the award was earned,
even if actually paid in the following year.
(2) Perquisites and other personal benefits received by the executive officers are not
included because the aggregate amount of such compensation does not exceed the lesser of
$50,000 or 10% of the total amount of annual salary and bonus for any Named Officer.
(3) The Company has not issued any stock appreciation rights to the Named Officers.
(4) Amounts are contributions under the Profit Sharing Plan and employment signing bonuses.
</TABLE>
The following table reports the grant of stock options and stock
appreciation rights ("SARs") to the Named Officers during fiscal 2000.
Options were granted under the Company's Incentive Stock Plans.
The Company has not granted SARs to any of the Named Officers.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Potential Realized
Value at
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term (3)
________________________________________________________________________ ____________________
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted (1) Fiscal Year (2) ($/sh) Date 5%($) 10%($)
________________________________________________________________________ ____________________
<S> <C> <C> <C> <C> <C> <C>
Barry J.C. Parker 70,000 11.65% $12.0625 10/14/2005 $287,017 $651,096
Laura M. Bishop 25,000 4.16% 12.0625 10/14/2005 102,506 232,534
Alan M. Davis 25,000 4.16% 12.0625 10/14/2005 102,506 232,534
Raymond C. Gabrysch 25,000 4.16% 12.0625 10/14/2005 102,506 232,534
Clyde C. Hays III 25,000 4.16% 12.0625 10/14/2005 102,506 232,534
<FN>
(1) Options were granted at fair market value of the common stock on the date of grant.
Options may not be exercised during the first 12 months following the date of grant.
(2) Based upon a total of 601,000 options granted to employees in fiscal 2000.
(3) The dollar amounts in these columns are the result of calculations at the 5% and 10%
rates set by the Securities and Exchange Commission and should not be considered as a
forecast of future stock prices.
</TABLE>
The table below reports exercises of stock options and SARs by the Named
Officers during fiscal 2000 and the value of their unexercised stock options
and SARs as of August 31, 2000. The stock options were granted under the
Company's Incentive Stock Plans. The Company has not granted SARs to any of
the Named Officers.
Aggregated Options/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARS Options/SARs
Acquired at FY-End at FY-End(1)
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
_____________________________________________________________________________
Barry J.C. Parker --- $ --- 92,500/253,500 $0/$0
Laura M. Bishop --- --- 23,082/73,203 0/0
Alan M. Davis --- --- 18,750/73,620 0/0
Raymond C. Gabrysch --- --- 19,400/70,715 0/0
Clyde C. Hays III --- --- 20,600/73,550 0/0
(1) The value of unexercised options is based on a price of $5.50 per
common share at August 31, 2000.
DEFERRED COMPENSATION
The Company's Nonemployee Director Deferred Compensation Plan permits
Nonemployee directors to defer all or a portion of their directors' fees in
accordance with applicable regulations under the Internal Revenue Code.
Deferred amounts bear interest at the average interest rate of U.S. Treasury
ten-year obligations. The Company's obligation to pay deferred amounts is
unfunded and is payable from general assets of the Company.
Nonemployee directors are permitted to defer all or a portion of their
director retainer fees pursuant to the Company's Nonemployee Director Phantom
Stock Plan. See the discussion under the caption "Nonemployee Director Phantom
Stock Plan."
The Company has a Supplemental Executive Retirement Plan which is designed
to provide benefits for selected officers at normal retirement age with 25
years of service equal to 50% of their final average compensation offset by
Social Security, profit sharing benefits, and deferred compensation. Some of
the officers designated to participate in the plan have retired and are
receiving benefits under the plan. Accrued benefits of all actively employed
participants become fully vested upon termination of the plan or a change in
control (as defined in the plan). The plan is unfunded, and the Company is
obligated to make benefit payments solely on a current disbursement basis.
The Company has a Deferred Compensation Plan for all of its highly
compensated employees, effective as of June 1, 1999, which permits deferral of
a portion of annual compensation. See the discussion under the caption
"Deferred Compensation Plan."
The following table illustrates the approximate annual pension that the
Named Officers in the Summary Compensation Table would receive under the
Supplemental Executive Retirement Plan if the plan remained in effect and the
Named Officers retired at age 65 and elected an individual life annuity.
Pension Plan Table
Final Average Years of Service
Earnings 15 20 25
______________________________________________________________________________
$150,000 $ 45,000 $ 60,000 75,000
300,000 90,000 120,000 150,000
450,000 135,000 180,000 225,000
600,000 180,000 240,000 300,000
Amounts shown as "final average earnings" in this table represent the
average of the last five years of compensation, which is substantially the same
as the total of salary, bonus, and LTIP payouts as shown in the Summary
Compensation Table for the Named Officers. As of November 30, 2000, the
credited years of service under the Supplemental Executive Retirement Plan for
Barry J.C. Parker, Laura M. Bishop, Alan M. Davis, Raymond C. Gabrysch, and
Clyde C. Hays III, are 5, 8, 2, 26, and 27, respectively. The annual benefit
amounts shown above are subject to an offset by benefits payable under the
profit sharing plan and Social Security. Net benefits under the plan are
prorated by credited years of service less than 25; after 25 years of service,
the net benefits are unchanged.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
presents the following report on executive compensation. The report describes
the Company's executive compensation programs and the bases on which the
Committee made compensation decisions for fiscal 2000 with respect to the
Company's executive officers, including those named in the compensation tables.
Compensation Objectives
The Committee conducts an annual review of the Company's executive
compensation program. The objectives of the executive compensation program
include the following:
To offer fair and competitive base salaries consistent with the Company's
position in the foodservice industry;
To reward executives for corporate and individual performance through an
annual incentive bonus program;
To encourage future performance through the use of long-term incentives
such as stock options and performance units; and
To encourage executives to acquire and retain ownership of the Company's
common stock.
The Company's executive compensation program is designed to enable the
Company to attract, retain, and motivate the highest quality of management
talent. To achieve that objective, the Committee has developed a compensation
program which combines annual base salaries with annual and long-term
incentives tied to corporate performance and to increases in shareholder value.
Annual Base Salaries
The Committee annually establishes the base salaries to be paid to the
Company's executive officers during the coming year, subject to approval by the
Board of Directors. In setting base salaries, the Committee takes into account
several factors, including the executive's experience, responsibilities,
management abilities, and job performance, as well as performance of the
Company as a whole and competitive compensation data.
Annual Incentive Bonuses
The Company's Annual Incentive Bonus Plan for executive officers and other
key personnel links annual cash incentive payments to the attainment of
predetermined earnings per share goals and strategic objectives established by
the Committee and approved by the Board of Directors. Eligible executives are
assigned threshold, target, and maximum bonus levels as a percentage of base
salary, based upon the executive's responsibility level, achievement of
earnings per share targets, and the degree of achievement of specific strategic
objectives.
On October 15, 1999, the Committee recommended, and the Board of Directors
adopted, an Executive Bonus Plan for fiscal 2000, in which the Named Officers
are eligible to participate. The plan provides for the payment of cash bonuses
determined by achievement of goals based upon earnings per share and comparable
store sales and upon achievement of strategic objectives. Bonuses paid under
such plan for fiscal 2000 to the Named Officers are included in the Summary
Compensation Table.
Based upon the recommendation of the Committee, the Board of Directors on
October 26, 2000, adopted an Executive Bonus Plan for fiscal 2001, in which the
Named Officers are eligible to participate. Such plan is similar to the plan
for fiscal 2000 described above.
Stock Options
The Committee normally grants incentive stock options annually to eligible
executive officers and other key employees. The options, which are granted at
100% of market price on the date of grant, are usually for six-year terms. The
number of option shares granted each year is normally determined by a formula
based upon the executive's responsibility level and base salary. The number of
option shares granted will vary based upon position level, with the more senior
officers receiving larger grants. The number of option shares held by an
executive is not considered in determining stock option awards.
Stock Purchase Loans
During January and February 1999, pursuant to Luby's Incentive Stock Plan,
the Company guaranteed loans by an institutional lender to several officers,
including the Company's president and five senior vice presidents for the
purpose of purchasing shares of the Company's common stock. The Named Officers
obtaining such loans, the number of shares purchased by each, and the amount of
each loan are: Laura M. Bishop - 5,595 shares for $85,000; Alan M. Davis -
5,790 shares for $87,500; Raymond C. Gabrysch - 5,655 shares for $85,000;
Clyde C. Hays III - 6,600 shares for $100,000; and Barry J.C. Parker - 12,000
shares for $180,000.
Change in Control Agreements
Based upon recommendations of the Committee, the Company has entered into
Change in Control Agreements with all of the Senior Vice Presidents. The
agreements provide for benefits to become effective if a change in control of
the Company (as defined therein) occurs and if, within 24 months thereafter,
there is involuntary termination of employment unrelated to gross negligence,
malfeasance or incompetence, or there is voluntary termination of employment
for good reason (as defined therein). Benefits payable under such
circumstances include (i) lump sum severance payments equal to two times annual
base pay; (ii) lump sum severance payments equal to two times for the average
of the short-term incentive bonuses for the prior fiscal year and the target
for the year of termination; (iii) continuation of health and welfare benefits
for 24 months; (iv) immediate vesting of all stock options; and (v) other
benefits described in the agreements, copies of which are on file with the
Securities and Exchange Commission.
Deferred Compensation Plan
Based upon the recommendation of the Committee, the Board of Directors
adopted a Deferred Compensation Plan for all highly compensated employees,
including the President and all Senior Vice Presidents. The plan, which became
effective June 1, 1999, permits highly compensated employees to defer a portion
of their annual compensation into unfunded accounts with the Company. The
deferrals mirror the results of a phantom investment portfolio theoretically
(but not actually) invested in funds selected by each participant, including a
Luby's, Inc. stock fund. A participant's account balance will be paid in cash
upon death, termination of employment, change in control of the Company,
disability, or retirement.
Compensation of Chief Executive Officer
Barry J.C. Parker was elected President and Chief Executive Officer on
October 1, 1997, at which time he entered into a three-year employment contract
with the Company providing for a base salary of $360,000 per year. Based upon
his performance, the Committee recommended and the Board of Directors approved
an increase in Mr. Parker's base salary to $390,000 per year, effective as of
March 1, 1999, and to $405,000 per year, effective as of November 1, 1999. On
July 19, 2000, the Board approved a renewal of Mr. Parker's employment contract
for one year commencing October 1, 2000. The contract, as amended, provides
that Mr. Parker will be entitled to receive all of his compensation and
benefits for a period of one year if his employment is terminated during the
term by the Company without cause (as therein defined) or if he terminates his
employment during the term for good reason (as therein defined). Mr. Parker
resigned as President and Chief Executive Officer on September 23, 2000.
The Company is currently negotiating the terms of a separation agreement
with Mr. Parker.
Members of the Committee:
Roger R. Hemminghaus, Chairman
Judith B. Craven
Robert T. Herres
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's common stock for the five fiscal years ended August 31, 2000,
with the cumulative total return on the S&P SmallCap 600 Index and an industry
peer group index. The peer group index is comprised of Bob Evans Farms, Inc.;
Buffets, Inc.; Furr's Restaurant Group, Inc.; Piccadilly Cafeterias, Inc.;
Ryan's Family Steakhouses, Inc.; Shoney's, Inc.; Sizzler International, Inc.;
and Vicorp Restaurants, Inc. These companies are multiunit family restaurant
operators in the mid-price range with similar stock market capitalization.
The cumulative total shareholder return computations set forth in the
performance graph assume the investment of $100 on August 31, 1995, and the
reinvestment of all dividends. The returns of each company in the peer group
index have been weighted according to the respective company's stock market
capitalization.
The performance graph has been omitted in the EDGAR filing. A table of
the graph's data points is shown below.
Five-Year Cumulative Return
Years Ended August 31,
__________________________________
1995 1996 1997 1998 1999 2000
Luby's, Inc. $100 123 106 86 79 35
Peer Group $100 90 93 90 90 81
S&P SmallCap 600 $100 113 152 129 160 206
APPOINTMENT OF AUDITORS (Item 2)
The Board of Directors of the Company has appointed the firm of Ernst &
Young LLP to audit the accounts of the Company for the 2001 fiscal year.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting of Shareholders with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Approval of the appointment of auditors is not a matter which is required
to be submitted to a vote of shareholders, but the Board of Directors considers
it appropriate for the shareholders to express or withhold their approval of
the appointment. If shareholder approval should be withheld, the Board would
consider an alternative appointment for the succeeding fiscal year. The
affirmative vote of a majority of the shares present at the meeting in person
and by proxy is required for approval. The Board recommends that the
shareholders vote FOR approval of the appointment of Ernst & Young LLP.
SHAREHOLDER PROPOSALS
Proponents of four shareholder proposals have stated that they intend to
present the following proposals at the Annual Meeting. Some of the following
proposals contain assertions that, in the judgment of the Board, are incorrect.
Rather than refuting all of these inaccuracies, however, your Board has
recommended a vote against these proposals for broader policy reasons set forth
following each proposal. Share holdings of various proposal proponents are
reported below as represented to the Company by each proponent.
Shareholder Proposal (Item 3)
Ms. Paulette D. Greenberg, with an address of 10732 Farragut Drive, Culver
City, California 90231, owner of 500 shares, has proposed the adoption of the
following resolution and has furnished the following statement in support of
her proposal:
RESOLVED, the Shareholders of Luby's, Inc. request that the Board of
Directors take the necessary steps to cause conditions to be added to the terms
of Cash Investment Bonus Plans so that no bonus payment will be paid to the
Chief Executive Officer from those plans for a fiscal year if either: (1) the
Earnings Per Share; or, (2) the Total Sales; or, (3) the year-end market price
of common stock of Luby's, Inc. do/does not exceed those respective amounts of
the prior fiscal year.
Management should be fairly compensated and awarded bonus compensation
only when it produces results which equal or exceed the prior year's
performance.
Under prior Cash Bonus Incentive Plans, the Chief Executive Officer
received cash bonuses of $132,000 (1998) and $93,500 (1999).
For years 1997, 1998 and 1999: (1) Earnings Per Share were $1.22, $0.22
$1.27, respectively; (2) Total Sales (thousands) were $495,446, $508,871,
$501,496, respectively; and, (3) fiscal year-end market prices were $19-11/16,
$15-1/4, and $13-3/8, respectively. Under the proposed added conditions to the
plans, no bonus would have been paid to the Chief Executive Officer under the
Cash Bonus Incentive Plans.
The proposed additional terms of the Cash Bonus Incentive Plans put the
interests of the Chief Executive Officer more in line with those of the
Shareholders.
You are urged to vote IN FAVOR of this proposal.
Board of Directors Statement Opposing the Proposal
Your Board of Directors agrees that the Company's performance should be a
component of the compensation of officers, including the chief executive
officer, but the proposal described above is contrary to sound compensation
practices and the Board of Directors recommends a vote against the proposal.
The Board has historically placed principal responsibility for
recommending for approval by the Board compensation and incentives for the
chief executive officer with the Compensation Committee, which is comprised
solely of independent directors in accordance with good corporate governance.
As discussed in the report of the Compensation Committee on pages ___ to
___, the Directors consider a number of factors in establishing executive
incentives and compensation. The Board of Directors believes that executive
compensation levels should not be based on unalterable conditions, but rather
on the competitive dynamics of the marketplace. The Board believes that this
committee of independent directors is best qualified to measure performance of
the officers of the Company, to decide appropriateness and timing of officer
compensation, and to consider market conditions and other factors, including
comparison with other companies in the restaurant industry, that should affect
executive compensation. Adoption of the proposal would unduly restrict the
Compensation Committee's ability to consider certain appropriate components of
executive compensation. The Compensation Committee and the Board need to
retain the discretion to set and adjust the compensation of the chief
executive officer in the future based upon all relevant factors, without the
restraint of the predetermined conditions called for in this proposal.
The Company is currently actively searching for a new chief executive
officer. A competitive compensation package is essential to recruit, develop,
and retain senior executives who have the requisite skills and capabilities.
The conditions imposed on the compensation of the chief executive officer under
the proposal could unduly inhibit the Company's flexibility in providing
compensation arrangements needed to attract, reward and retain a new chief
executive officer in a competitive environment. It would not be in the
shareholders' best interest to constrain the Company's ability to recruit,
incentivize and retain executive talent when other companies competing for
executive talent do not adhere to such constraints.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 3.
Shareholder Proposal (Item 4)
Mr. Mark R. Johnson, with an address of 4630 Stillbrooke Street, Houston,
Texas 77035, owner of 1,200 shares, has proposed the adoption of the following
resolution and has furnished the following statement in support of his
proposal:
RESOLVED, the Shareholders of Luby's, Inc. request that the Board of
Directors take the necessary steps to allow each member of the Board of
Directors an unfettered right to establish items for inclusion on the agenda
for each meeting of the Board of Directors.
The Luby's, Inc. Corporate Governance Guidelines Amended January 14, 2000
state, in part, "Board Agenda. The CEO in conjunction with the COB...will
establish and publish an agenda for each meeting of the Board. Board members
may suggest items for inclusion on the agenda and, subject to the authority of
the COB and the will of the majority, may raise for discussion at any Board
meeting subjects not on the agenda."
Each member of the Board of Directors owes a fiduciary duty to the
Shareholders. The Guideline hinders members (other than the COB) from
fulfilling those duties. The Guideline effectively enables the CEO and the COB
to control Luby's, Inc. by their ability to restrict all topics of discussion
by the Board of Directors.
If only a few members (other than the COB) wish to discuss the CEO's
Performance or non-performance, the Guideline prevents the topic from being
discussed.
If a member is not able to suggest a topic worthy of being on the agenda,
then the person should not have been elected/appointed to the Board. However,
once a person has been elected/appointed to the Board, his/her concerns should
be addressed at a meeting of the Board whether or not the COB and/or a majority
of the Board agree to place the topic on the agenda.
Further, even if the COB and a majority of the Board agree at a meeting to
discuss a topic not previously on the agenda, the discussion may be ineffective
as the members' ability to prepare to discuss the topic will have been very
limited or non-existent. The Guideline is undemocratic and causes
inefficiency.
The Guideline stifles all dissent and hinders execution of the fiduciary
duties owed to Shareholders. The provision should be abolished.
You are urged to vote IN FAVOR of this proposal.
Board of Directors Statement Opposing the Proposal.
The Board of Directors recommends a vote against this proposal. Adoption
of this proposal is unnecessary in the opinion of the Board because it has been
substantially implemented. The proposal refers to the provision of the
Company's Corporate Governance Guidelines relating to board agendas as in
effect January 14, 2000. On July 20, 2000, the Board of Directors of the
Company amended the Guidelines to clarify what has always been the
policy of the Board - any director may raise any subject or issue for
discussion at any Board meeting. As amended, the Guidelines now provide as
follows:
Board Agendas. The CEO in conjunction with the COB or Lead Director will
establish and publish an agenda for each meeting of the Board. Board members
may suggest items for inclusion on the agenda and may raise for discussion at
any Board meeting subjects not on the agenda.
Contrary to the proponent's assertion, the requirement of an agenda does
not hinder directors from fulfilling their fiduciary duties to shareholders or
restrict their ability to raise or discuss any topic. The Board believes that
a board meeting agenda should be established and published in advance in order
to give all directors an opportunity to properly consider and prepare for
topics and issues before each meeting of the Board. The provision gives each
director the right to suggest items for inclusion on any board agenda and it
does not inhibit the right of directors to raise for discussion at any Board
meeting any subject even if it is not on the agenda.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 4.
Shareholder Proposal (Item 5)
Mr. Herbert Leslie ("Les") Greenberg, with an address of Post Office Box
5445, Culver City, California 90231-05445, owner of 5,300 shares, has proposed
the adoption of the following resolution and has furnished the following
statement in support of his proposal:
RESOLVED, the Shareholders of Luby's, Inc. request that the Board of
Directors take the necessary steps to declassify the elections of Directors by
providing that at future Board elections new Directors be elected annually and
not by classes as is now provided. The declassification shall be phased in so
that it does not affect the unexpired terms of Directors previously elected.
The election of the Board of Directors is a primary avenue for
Shareholders to influence corporate affairs and exert accountability on
Management. The great majority of New York Stock Exchange listed corporations
elect their Directors each year. The California Public Employees' Retirement
Systems, the largest public retirement system in the US and long a leader in
the corporate governance movement, has concluded that good corporate governance
leads to long-term performance. It, generally, votes in favor of annual
election of all directors and against staggered terms.
If we, Shareholders, feel that any Director or all of the Directors are
not working satisfactorily to represent our best interests, we should be able
to express our dissatisfaction in a reasonably prompt and effective manner.
Now, we only vote upon 1/3 of the 12 Directors each year. Directors, who
properly monitor/counsel Management, resulting in continuing improvement to the
net profits, product, reputation and employee relations, have nothing to fear
from annual voting as to their performance.
Any opposition would be based upon the paternalistic assumption that the
Shareholders are not capable of making quality decisions in their own best
interests. Previously heard oppositions and responses are as follows:
(1) At some unspecified time in the distant past, former Shareholders
voted for staggered elections; however, now, the trend is toward
corporate democracy and accountability.
(2) There may be other means to attempt to assure accountability; however,
none provides a Shareholder with a better means to directly express
his/her/its opinion.
(3) Director continuity of direction and/or knowledge might to impaired;
however, Shareholders are capable of judging for themselves the value
of that "direction" and "knowledge" and whether it should continue.
(4) A "corporate raider" might be more encouraged to make a buy-out offer
for the company; however, even if that were to occur, the Board of
Directors would still be there to express its opinion
on the merits of any buy-out offer and Shareholders could then vote on
any proposal.
(5) It might be more difficult to find candidates for Directors; however,
other companies with annual elections of all Directors are able to do
so and Shareholders may not want Directors who are not fully committed
Shareholder democracy.
(6) Since the proposal does not order Directors to change the
company's system of voting, they can ignore the proposal if it passes;
however, such an argument is the moral equivalent of "Let them eat
cake." The oppositions are without merit.
You are urged to vote IN FAVOR of this proposal.
Board of Directors Statement Opposing the Proposal.
Your Board of Directors believes that the proposal is not in the best
interest of the Company or its shareholders and recommends a vote against the
proposal.
In 1991, the Company's shareholders approved the current classification
system for the Board of Directors dividing the Board into three equal or nearly
equal classes, each to serve for terms of three years, with one class being
elected each year. The Board of Directors believes that directors elected for
staggered terms are as accountable to shareholders as they would be if elected
annually because the same legal and fiduciary duties and standards of
performance apply regardless of the term of service. Similar classified board
provisions exist at [approximately half of the Fortune 500 companies][at over
half of the companies that make up the Standard & Poor's 500].
The Board of Directors firmly believes that classification of the Board is
in the best interests of the Company and its shareholders because
classification gives greater continuity of experience and stability in the
management of the business and affairs of the Company. It assures that at
least one-third of the directors will be in their third year of service
providing in-depth knowledge of the Company. This experience and knowledge
contribute to more effective long-range strategic planning and are particularly
important given the challenges the Company faces in the current environment of
the restaurant industry.
A classified board is also desirable to offer some protection to
shareholders from hostile, abusive or coercive takeover tactics that can be
highly disruptive to the Company's business, and adversely affect the Company's
relationships with its employees, customers and others on which the Company's
performance depends, all to the detriment of the shareholders as a whole. The
Board of Directors believes that the threat of removal facing the Board in such
a situation could severely curtail the Board's ability to negotiate effectively
and, in an appropriate case, make it more difficult to achieve full value for
the shareholders in any transaction involving the Company. A classified board
encourages any potential acquiror to negotiate at arm's length with seasoned
and knowledgeable board members who are in a position to negotiate a
transaction that is fair to all of the Company's shareholders.
Adoption of this advisory proposal will not by itself eliminate the
classified Board. To eliminate the classified board under Delaware law and the
Company's Certificate of Incorporation would require repeal of the classified
board provision in the Company's Certificate of Incorporation, which would
require approval of the Board of Directors and the favorable vote, at a future
shareholders' meeting, of the holders of at least 80% of the then outstanding
shares of voting stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 5.
Shareholder Proposal (Item 6)
Ms. Anna M. Apanel, with an address of 4630 Stillbrooke, Houston, Texas
77035, owner of 1,200 shares, has proposed the adoption of the following
resolution and has furnished the following statement in support of her
proposal:
RESOLVED, the Shareholders of Luby's, Inc. request that the Board of
Directors take the necessary steps to remove all anti-takeover provisions.
California Public Employees' Retirement Systems, the largest public
retirement system in the US and long a leader in the corporate governance
movement, has concluded that good corporate governance leads to long-term
performance. Its Proxy Voting Guidelines state, "Votes will be cast in favor
of shareholder proposals asking for the removal of all anti-takeover
provisions."
The real possibility of losing one's position as a Corporate Officer
and/or Director should promote accountability to Shareholders. The Board of
Directors has caused Luby's to implement barriers to take-over attempts by
outsiders, e.g. staggered terms for Directors, shareholder rights plan, golden
and tin parachutes. These provisions do not provide for shareholder value, but
cause Management and the Directors to be entrenched regardless of their
performance.
Contracts for a term of years, which protect Management until dates
certain, can be allowed to expire without being renewed.
Adequate shareholder protection would remain in place without the use of
Management and Board of Director entrenchment provisions. At the time of any
take-over offer, Management and the Board of Directors would have the ability
to express their opinion(s) to Shareholders as to the merits of an offer.
Shareholders would still have the right to vote on any such offer or to sell
their shares.
You are urged to vote IN FAVOR of this proposal.
Board of Directors Statement Opposing the Proposal
The Board of Directors recommends a vote against this proposal. The Board
believes that deleting the Company's existing anti-takeover provisions would
remove valuable protections for shareholders and eliminate valuable tools
designed to protect your interest. Removal at this time could potentially
deprive you of substantial economic benefits in the future.
In adopting the Company's anti-takeover measures, the Board's goal was to
protect the interest of the Company and all shareholders. These measures are
designed to prevent an acquiror from gaining control of the Company without
offering all shareholders what the Board believes to be full value of their
investment. The anti-takeover measures in place are to counter a wide range of
abusive and coercive takeover tactics that do not treat all shareholders fairly
and equally, and pressure shareholders into disposing of their common stock at
less than fair value. The Company's protective measures do not preclude a
corporate takeover but are designed to encourage bidders to negotiate with the
Board. This permits your Board to ensure that the acquisition is fair to and
in the best interest of all shareholders.
The Board's commitment has always been, and always will be, to serve the
best interest of the Company including by creation of shareholder value.
Moreover, the Board's legal responsibilities and duties require it to act in
the best interest of the Company, including protecting shareholders' interest.
The Board believes that the current anti-takeover provisions enable it to carry
out these obligations if faced with a takeover bid.
Removing the Company's protective measures at this time, as the proponent
seeks, would expose the shareholders to the abusive tactics of bidders, remove
any incentive for a bidder to approach the Board and possibly deprive the
Company of the time to evaluate an offer and to maximize value for all
shareholders either through negotiations or development of alternatives.
Adoption of this advisory proposal will not remove the Company's
protective provisions. Eliminating these provisions will take action by the
Board of Directors. Furthermore, certain of the provisions are included in the
Company's Certificate of Incorporation and cannot be removed by the Board.
Their removal would require an amendment to the Certificate of Incorporation
adopted by the favorable vote at a further shareholders' meeting, of the
holders of at least 80% of the then outstanding shares of voting stock of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 6.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals of shareholders for inclusion in the Company's proxy statement
and form of proxy for the Company's 2002 Annual Meeting of Shareholders
submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 must
be received in writing by the Company at its corporate office no later than
August 2, 2001. Notice of a shareholder proposal submitted outside the
processes of Rule 14a-8 with respect to the Company's 2002 Annual Meeting of
Shareholders will be considered untimely if received by the Company after
October ___, 2001.
DIRECTOR NOMINATIONS FOR 2002 ANNUAL MEETING
The Company's Bylaws provide that candidates for election as directors at
an annual meeting of shareholders shall be nominated by the Board of Directors
or by any shareholder of record entitled to vote at the meeting, provided the
shareholder gives timely notice thereof. To be timely, such notice shall be
delivered in writing to the Secretary of the Company at the principal executive
offices of the Company not later than 90 days prior to the date of the meeting
of shareholders at which directors are to be elected and shall include (i) the
name and address of the shareholder who intends to make the nomination,
(ii) the name, age, and business address of each nominee, and (iii) such other
information with respect to each nominee as would be required to be disclosed
in a proxy solicitation relating to an election of directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Company
currently estimates that it will spend a total of approximately $____ for its
solicitation of proxies. This estimates excludes salaries and wages of regular
employees and officers and normal expenses of an uncontested proxy solicitation
for the election of directors. As of ____________, 2000, the Company had
incurred proxy solicitation expenses of approximately $ ___________. The
transfer agent and registrar for the Company's common stock, American Stock
Transfer & Trust Company, as a part of its regular services and for no
additional compensation other than reimbursement for out-of-pocket expenses,
has been engaged to assist in the proxy solicitation. The Company has also
retained the proxy solicitation firm of MacKenzie Partners, Inc. at estimated
fees of $_________, plus reasonable out-of-pocket expenses to participate in
the solicitation of proxies and revocations. The Company has also agreed to
indemnify MacKenzie Partners, Inc. against certain liabilities and expenses.
The Company estimates that approximately ________ employees of MacKenzie
Partners, Inc. will be involved in the solicitation of proxies and revocations
on behalf of the Company. Proxies may be solicited through
the mail and through telephonic or telegraphic communications to, or by
meetings with, shareholders or their representatives by directors, officers,
and other employees of the Company who will receive no additional compensation
therefor.
The Company requests persons such as brokers, nominees, and fiduciaries
holding stock in their names for others, or holding stock for others who have
the right to give voting instructions, to forward proxy material to their
principals and to request authority for the execution of the proxy, and the
Company reimburses such persons for their reasonable expenses.
INFORMATION CONCERNING DIRECTORS OF THE COMPANY WHO MAY SOLICIT PROXIES
Under applicable SEC rules, the following individuals, all of whom are
directors of the Company, may be deemed to be participants in the solicitation
of proxies on behalf of the Company: David B. Daviss (Chairman of the Board of
Directors and acting Chief Executive Officer of the Company, 2211 Northeast
Loop 410, San Antonio, TX 78217), Judith B. Craven (Physician Administrator),
Arthur R. Emerson (Chairman and Chief Executive Officer of Groves Rojas
Emerson, an advertising and public relations firm, 314 E. Commerce, Suite
800, San Antonio, TX 78205), Roger R. Hemminghaus (Chairman Emeritus of
Ultramar Diamond Shamrock Corporation, 15750 IH 10 West, Suite 200, San
Antonio, TX 78249), Robert T. Herres (Chairman of USAA, insurance and financial
services, 9800 Fredericksburg Road, San Antonio, TX 78288), Walter J. Salmon
(Emeritus Professor, Harvard Graduate School of Business, Soldiers Field Road
Cumnock 300, Boston, MA 02163), Joanne Winik (President, General Manager and a
director of KLRN-TV, San Antonio,Texas, 501 Broadway, San Antonio, TX 78215),
Ronald K. Calgaard (Chief Operating Officer of Austin Calvert & Flavin, Inc.,
investment advisors, 112 East Pecan Street, Suite 2800, San Antonio, TX 78205),
Lauro F. Cavazos (Professor of Family Medicine and Community Health, Tufts
University School of Medicine, 173 Annursnac Hill Road, Concord, MA 01742),
John B. Lahourcade (Investor), and George H. Wenglein (retired Chairman of the
Board of Directors and a founder of the Company).
The number of shares of common stock of the Company owned by each
participant are set forth in the table under "Management Shareholders." Except
as otherwise disclosed in this proxy statement, the shares set forth in that
table opposite such participant's name are owned of record and beneficially by
such participant. Within the past two years, none of the participants has
purchased or sold any shares of common stock of the Company except that the
following directors have purchased shares as follows: Dr. Craven - 1,000 shares
on October 29, 1999; Mr. Emerson - 100 shares on April 14, 2000, and 900 shares
on May 30, 2000; Mr. Hemminghaus - 200 shares on January 19, 2000; and
Gen. Herres - 1,786 shares on January 20, 2000.
Except as described in this proxy statement, none of the participants nor
any of their respective affiliates or associates (together, the "participant
affiliates") (i) directly or indirectly beneficially owns any securities of the
Company or (ii) has had any relationship with the Company in any capacity other
than as a shareholder, employee, officer or director. Furthermore, except as
described in this proxy statement, no participant or participant affiliate is
or was either a party to any transaction or series of transactions since the
beginning of fiscal 1999 or has knowledge of any currently proposed transaction
or series of transactions (i) to which the Company was or is to be a party,
(ii) in which the amount involved exceeds $60,000 and (iii) in which any
participant or participant affiliate had or will have a direct or indirect
material interest. Except as described in this proxy statement, no participant
or participant affiliate has entered into any agreement or understanding with
any person respecting any (i) future employment by the Company or its
affiliates or (ii) any transaction to which the Company or any of its
affiliates will or may be a party. Except as described in this proxy
statement, there are no contracts, arrangements or understandings by any
participant or participant affiliate within the past year with any person with
respect to any securities of the Company.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Company.
Luby's, Inc.
DREW R. FULLER, JR.
____________________
Drew R. Fuller, Jr.
Secretary
Dated: December _, 2000
APPENDIX A
LUBY'S, INC.
AUDIT COMMITTEE CHARTER
Amended May 18, 2000
Organization
There shall be a committee of the board of directors (Board) to be known
as the audit committee (Committee) composed of no less than three or more than
five directors, all of whom are independent of management and are free of any
relationship that, in the opinion of the Board, would interfere with the
exercise of their independence from management and the Company. In addition,
all Committee members shall be financially literate, and at least one member
shall have accounting or related financial management expertise. Members of
the Committee and the chairman will be selected by Board vote immediately
following the annual shareholders' meeting. The Board can make additions to
the Committee during the year or replace members who resign or who, in the
opinion of the Board, are no longer considered independent. The Committee
shall meet at least two times each year, and special meetings will be called by
the chairman, as circumstances require.
Statement of Policy
The Committee shall provide guidance and assistance to the Board in
fulfilling its responsibility to the shareholders, potential shareholders, and
the investment community relating to corporate accounting, reporting practices,
the quality and integrity of the Company's financial reports, and the
maintenance of an effective control environment that supports appropriate
business practices. In so doing, it is the responsibility of the Committee to
maintain free and open communications between the Committee, the outside
auditor, the internal auditors, and management of the Company. In discharging
its oversight role, the Committee is empowered to investigate any matter
brought to its attention with full access to all books, records, facilities,
and personnel of the Company and the power to retain outside counsel, or other
experts for this purpose.
Responsibility
The primary responsibility of the Committee is to oversee the financial
reporting process on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing the financial
statements, and the outside auditor is responsible for auditing those financial
statements. In carrying out the responsibilities specified in this Charter,
the Committee will, of necessity, rely upon management, the Company's internal
auditors and the outside auditor to furnish comprehensive and accurate
financial information and to ensure that the financial statements are in
accordance with generally accepted accounting principles.
Processes and Activities
The following shall be the primary recurring processes and activities of
the Committee in carrying out its oversight responsibilities. These processes
are set forth as a guide, and additional processes may be supplemented as
deemed appropriate.
The Committee shall review and reassess this charter, which governs the
operations of the Audit Committee, at least annually and submit the
charter to the Board for approval. The charter shall be published at
least every three years in accordance with SEC regulations.
The Committee shall have a clear understanding with management and the
outside auditor that the outside auditor for the Company is ultimately
accountable to the Board and the Committee. The Committee shall review
the independence and performance of the outside auditor and annually
recommend to the Board the appointment of the outside auditor or approve
the discharge of the outside auditor where circumstances warrant. The
Committee shall approve any partner responsible for the engagement that
is assigned to the Company's account.
The Committee is responsible for ensuring that the outside auditor
submits on a periodic basis to the Committee a formal written statement
delineating all relationships between the outside auditor and the
Company. The Committee is responsible for actively engaging in a
dialogue with the outside auditor with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the outside auditor and for recommending that the Board
take appropriate action in response to the outside auditor's report to
satisfy itself of the outside auditor's independence.
The Committee shall discuss with the internal auditors and the outside
auditor the overall scope and plans for their respective audits,
including the adequacy of staffing and compensation. The Committee shall
discuss with management, the internal auditors, and the outside auditor
the integrity, adequacy, and effectiveness of the accounting and
financial reporting processes and controls, including the Company's
system to monitor and manage business risk, and legal and ethical
compliance programs. In addition, the Committee shall meet separately
with the internal auditors and the outside auditor, with and without
management present, to discuss the results of their examinations.
The Committee shall ensure that the outside auditor performs timely
reviews of the interim financial statements. Also, the Committee shall
discuss with management and the outside auditor the Company's quarterly
financial results prior to release of earnings and any matters required
to be communicated under generally accepted auditing standards prior to
the filing of the Company's quarterly report on Form 10-Q. The chairman
of the Committee may represent the entire Committee for the purposes of
this discussion.
The Committee shall review with management and the outside auditor the
financial statements to be included in the Company's Annual Report on
Form 10-K, including their judgment about the quality and appropriateness
of accounting principles, the reasonableness of significant judgments,
and the clarity of the disclosures in the financial statements. Also,
the Committee shall discuss the results of the annual audit and any other
matters required to be communicated to the Committee under generally
accepted auditing standards.
At least annually, the Committee shall meet with the Company's legal
counsel to discuss legal matters that could have a significant impact on
the financial statements.
The Committee shall meet regularly with the Director of Internal Audit
and management to review the internal audit function including its
independence, charter, budget, staffing, audit plans, findings, and
management's response and follow-up.
At least annually, the Committee shall meet with the Director of
Operations Quality Assurance and management to review food safety
procedures and processes.
Periodically, the Committee shall review Luby's Policy Guide on Standards
of Conduct and management's procedures for monitoring compliance and
recommend significant changes to the Board.
The Committee shall report its activities to the full Board on a regular
basis so that the Board is kept currently informed. In addition, the
Committee shall ensure that minutes are taken at all meetings and
distributed to all members of the Board.
PRELIMINARY COPY
PROXY
Luby's, INC.
c/o American Stock Transfer & Trust Company
59 Maiden Lane, New York, New York 10007
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Walter J. Salmon, Robert T. Herres, and David
B. Daviss, and each of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of Common Stock of Luby's, Inc. held on record
by the undersigned on November __, 2000, at the Annual Meeting of Shareholders
to be held on January 12, 2001, or any adjournment thereof.
[x] Please mark your votes as in this example.
1. Election of Directors
[ ] FOR [ ] WITHHELD
For, except vote withheld from the following nominee(s):
_______________________________________________________
Nominees: Ronald K. Calgaard, Roger R. Hemminghaus, Jimmy W. Woliver
2. Proposal to approve the appointment of Ernst & Young LLP as the
independent public accountants of the corporation.
[ ] FOR [ ] WITHHELD [ ] ABSTAIN
3. Shareholder proposal to limit CEO compensation.
[ ] FOR [ ] WITHHELD [ ] ABSTAIN
4. Shareholder proposal regarding board meeting agendas.
[ ] FOR [ ] WITHHELD [ ] ABSTAIN
5. Shareholder proposal to declassify board of directors.
[ ] FOR [ ] WITHHELD [ ] ABSTAIN
6. Shareholder proposal to remove antitakeover provisions.
[ ] FOR [ ] WITHHELD [ ] ABSTAIN
7. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made,
this proxy will be voted for proposals 1 and 2, and against
proposals 3, 4, 5, and 6.
PLEASE MARK, SIGN, DATE, AND RETURN THE
PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
SIGNATURE __________________________________ DATE __________________
SIGNATURE __________________________________ DATE __________________
IF HELD JOINTLY
Note: Please sign exactly as name appears. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
