<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 2)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[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 Rule 14a-12
</TABLE>
Luby's Inc.
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
Luby's, Inc.
2211 Northeast Loop 410
San Antonio, Texas 78217-4673
210/654-9000
[LUBY'S, INC. LOGO]
Mailing Address:
P.O. Box 33069
San Antonio, Texas 78265-3069
December 8, 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,
/s/ DAVID B. DAVISS
David B. Daviss
Chairman of the Board and
Acting Chief Executive Officer
<PAGE> 3
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 the following nonbinding shareholder proposals:
(a) To request that the Board of Directors take the necessary steps to
cause conditions to be added to the Company's cash bonus plans to
provide that no bonus will be paid to the Chief Executive Officer
unless certain financial or share price conditions are met.
(b) To request that the Board of Directors take the necessary steps to
permit each member of the Board of Directors to have the unfettered
right to establish items for inclusion on the agenda of each meeting
of the Board of Directors.
(c) To request that the Board of Directors take the necessary steps to
declassify the elections of directors.
(d) To request that the Board of Directors take the necessary steps to
remove all antitakeover provisions.
Only Shareholders of record at the close of business on November 27, 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"). 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. 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 OR BY ATTENDING
THE MEETING AND VOTING IN PERSON.
Drew R. Fuller, Jr.
Secretary
December 8, 2000
<PAGE> 4
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 WHITE proxy are first being mailed to
shareholders on or about December 8, 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 27, 2000, will be entitled to vote at the meeting. There
were 22,420,375 shares of common stock outstanding on the record date. 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 calling
1-800-PROXIES or by Internet by visiting the website www.voteproxy.com 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
affect 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.
When you vote by telephone or Internet, simply follow the instructions
provided. You will need to provide your control number from your proxy card to
vote by either of these methods. If your shares are held in the name of a bank
or broker, follow the voting instructions you receive on your proxy card.
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.
<PAGE> 5
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, FOR approval of the appointment of Ernst & Young LLP as its
auditors and AGAINST the Shareholder Proposals. The Board has provided
telephonic and Internet voting procedures and a WHITE proxy for your use. The
Board of Directors urges you to use the telephone or Internet voting procedures
or to 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
ANY INSURGENT GROUP OF SHAREHOLDERS, INCLUDING THE ONE 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 OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
Remember, it will not help your Board to return the Committee's proxy or
any other insurgent'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 by using 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,
respectively.
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 are not eligible under the
Company's Corporate Governance Guidelines to stand for reelection because of
their ages. 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
these nominees.
Each of the Board's nominees has 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 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 Mr.
Greenberg, Mr. Palmer, and Mrs. Freeman and for approval of the shareholder
proposals described in this Proxy Statement.
2
<PAGE> 6
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 (since ). She
was President of United Way of the Texas Gulf Coast from 1992 to 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 to that 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 from 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 to that he was the 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.
3
<PAGE> 7
JOANNE WINIK is President, General Manager, and a director of KLRN-TV, San
Antonio's Pubic Broadcasting Service affiliate (since 1978). 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 27, 2000:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME(1) OWNED OF CLASS
------- ------------ --------
<S> <C> <C>
Laura M. Bishop(2).......................................... 41,552 0.19%
Ronald K. Calgaard(3)....................................... 6,142 0.03%
Lauro F. Cavazos(4)......................................... 16,117 0.07%
Judith B. Craven(5)......................................... 5,571 0.02%
Alan M. Davis(6)............................................ 42,830 0.19%
David B. Daviss(7).......................................... 14,692 0.07%
Arthur R. Emerson(8)........................................ 7,308 0.03%
Raymond C. Gabrysch(9)...................................... 50,605 0.23%
Clyde C. Hays III(10)....................................... 60,848 0.27%
Roger R. Hemminghaus(11).................................... 18,100 0.08%
Robert T. Herres(12)........................................ 7,759 0.03%
John B. Lahourcade(13)...................................... 189,405 0.84%
Barry J.C. Parker(14)....................................... 135,000 0.60%
Walter J. Salmon(15)........................................ 12,335 0.06%
George H. Wenglein(16)...................................... 737,000 3.29%
Joanne Winik(17)............................................ 12,995 0.06%
Jimmy W. Woliver(18)........................................ 20,416 0.09%
All directors and executive officers of the Company, as a
group(19)................................................. 1,397,938 6.15%
</TABLE>
---------------
(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 34,092 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 2,000 shares which he has the
right to acquire within 60 days under the Nonemployee Director Stock Option
Plan and 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 2,000 shares which she has the right to
acquire within 60 days under the Nonemployee Director Stock Option Plan and
2,071 shares of phantom stock held under the Nonemployee Director Phantom
Stock Plan.
4
<PAGE> 8
(6) The shares shown for Mr. Davis include 5,790 shares held in custodial
accounts and 37,040 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 8,666 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 3,237 shares held jointly with his
wife in a custodial account. The shares shown include 2,000 shares which he
has the right to acquire within 60 days under the Nonemployee Director
Stock Option Plan and 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 43,450 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 8,666 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 4,000 shares which he has the
right to acquire within 60 days under the Nonemployee Director Stock Option
Plan and 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 92,500 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 5,333 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 5,333 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 315,281 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.
5
<PAGE> 9
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 judgment 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.
6
<PAGE> 10
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
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.
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 to the
Board of Directors concerning compensation and incentives for the Chief
Executive Officer and certain officers, to review and approve the compensation
program for non-senior level officers, 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.
7
<PAGE> 11
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
- 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 this 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 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 and the achievement of earnings per share
targets.
On October 15, 1999, the Committee recommended, and the Board of Directors
adopted, an Executive Bonus Plan for fiscal 2000, in which the chief executive
officer and the four most highly compensated executive officers (the "Named
Officers") were eligible to participate. The plan provided 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. No
bonuses were paid under such plan for fiscal 2000 to the Named Officers.
Based upon the recommendation of the Committee, the Board of Directors on
October 26, 2000, adopted an Incentive Bonus Plan for fiscal 2001, in which the
Named Officers and certain other officers of the Company are eligible to
participate. Such plan provides for the payment of cash bonuses determined
solely by achievement of goals based upon earnings per share.
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
8
<PAGE> 12
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. Each of these loans is for a five year
term and bears interest at the rate of % per year. The shares purchased with
the loan proceeds are non-transferrable until the relevant loan has been repaid.
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. In October 1999, based on Mr. Parker's efforts to implement the
Company's strategic plan, the Company approved a 3% increase in his compensation
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 25, 2000.
9
<PAGE> 13
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
10
<PAGE> 14
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 25, 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 and former President, Chief
Executive Officer and Chairman of the Board of Directors of the Company, is
employed by the Company as a consultant to provide services to management of the
Company upon request at a salary of $7,083 per month under a contract which
expires in January 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.
The Company has guaranteed loans to certain officers of the Company as
described in "Compensation Committee Report -- Stock Purchase Loans."
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.
11
<PAGE> 15
EXECUTIVE COMPENSATION
The table below contains information concerning annual and long-term
compensation of each of the Named Officers for services in all capacities to the
Company for the fiscal years ended August 31, 2000, 1999, and 1998. The Company
has not yet hired a Chief Executive Officer or Chief Financial Officer. A
committee of the Board of Directors has been formed and is actively conducting
searches to fill these positions. The Board plans to hire a Chief Executive
Officer first and then to select a Chief Financial Officer with assistance from
the Chief Executive Officer. David B. Daviss is currently acting as Chief
Executive Officer, and Paula Gold-Williams is currently fulfilling the duties
normally performed by the Chief Financial Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
OTHER RESTRICTED UNDERLYING
NAME AND FISCAL ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS SARS(3) PAYOUTS COMPENSATION(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 Chief 1999 375,000 93,500 0 0 106,000 0 3,696
Executive Officer 1998 330,000 132,000 0 0 170,000 0 0
Laura M. Bishop*........... 2000 185,833 0 0 0 25,000 0 2,034
Senior Vice President 1999 175,000 28,000 0 0 41,785 0 3,696
and Chief Financial 1998 165,000 34,000 0 0 20,000 0 4,015
Officer
Alan M. Davis.............. 2000 184,167 0 0 0 25,000 0 2,034
Senior Vice President - 1999 177,500 27,000 0 0 42,370 0 0
Development 1998 43,750 8,750 0 0 25,000 0 25,000
Raymond C. Gabrysch........ 2000 184,167 0 0 0 25,000 0 2,034
Senior Vice President - 1999 175,000 26,000 0 0 41,965 0 3,696
Operations 1998 165,000 34,000 0 0 20,000 0 4,015
Clyde C. Hays III.......... 2000 204,500 0 0 0 25,000 0 2,034
Senior Vice President - 1999 201,000 26,000 0 0 44,800 0 3,696
Operations 1998 200,000 40,000 0 0 20,000 0 4,015
</TABLE>
---------------
* 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 $50,000 or 10% of the total amount of annual salary and
bonus for any Named Officer.
(3) The Company has not issued any stock appreciation rights to the Named
Officers.
(4) Amounts are contributions under the Profit Sharing Plan and employment
signing bonuses.
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<PAGE> 16
The following table reports the grant of stock options and stock
appreciation rights ("SARs") to the Named Officers during fiscal 2000. Options
were granted under the Company's Incentive Stock Plans. The Company has not
granted SARs to any of the Named Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS/SARS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES IN EXERCISE FOR OPTION TERM(3)
OPTIONS/SARS FISCAL OF BASE ---------------------
NAME GRANTED(1) YEAR(2) PRICE ($/SH) EXPIRATION 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
</TABLE>
---------------
(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.
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
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END AT FY-END(1)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- -------------- -------------
<S> <C> <C> <C> <C>
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
</TABLE>
---------------
(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
13
<PAGE> 17
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
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------
FINAL AVERAGE EARNINGS 15 20 25
---------------------- -------- -------- --------
<S> <C> <C> <C>
$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
</TABLE>
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.
14
<PAGE> 18
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.
FIVE-YEAR CUMULATIVE RETURN
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
1995 1996 1997 1998 1999 2000
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
15
<PAGE> 19
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. If the shareholder, or a
representative who is qualified under state law, is present and submits his or
her proposal for a vote, then the proposal will be voted upon at the Annual
Meeting. In accordance with Federal securities regulations, we have included the
shareholder proposals plus any supporting statement exactly as submitted by the
proponents. To make sure readers can easily distinguish between material
provided by the proponents and material provided by the Company, we have put a
box around the material provided by the proponents. We are not responsible for
the material provided by the proponents. 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.
16
<PAGE> 20
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.
17
<PAGE> 21
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
18
<PAGE> 22
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.
19
<PAGE> 23
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.
20
<PAGE> 24
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 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. Removal of the classified board provision could however make it easier
for shareholders to cause a change in the management of the Company.
A classified board is also desirable to offer some protection to
shareholders from 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. However, elimination of the classified board
provision could make it more likely that a given transaction, such as an
acquisition of control or tender offer, would be made and that it could be
effected even if your Board opposed it. 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.
Although they are being proposed by different shareholders, the shareholder
proposal described above (Item 5) is substantially subsumed by the shareholder
proposal to remove all anti-takeover provisions (Item 6) discussed below since a
classified board may have an anti-takeover effect. If the shareholder proposal
described in Item 6 were adopted it would have the same effect on the Company's
classified board provision as adoption of the shareholder proposal described in
Item 5 above; however, adoption of the shareholder proposal described in Item 5
would not affect any other anti-takeover provision but adoption of the
shareholder proposal described in Item 6 does seek removal of all anti-takeover
provisions and thus, is much broader than the shareholder proposal described in
Item 5. Your Board of Directors has recommended that you vote against both
proposals.
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.
21
<PAGE> 25
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.
The Company currently has in effect the following anti-takeover provisions,
each of which has been in effect for many years and each of which was submitted
to, and approved by, the vote of the shareholders of the Company (with the
exception of the "rights plan" and the change in control contracts): a listing
agreement with the New York Stock Exchange which requires the approval of a
majority of the holders of the Company's common stock to approve the issuance of
stock in certain situations; a "rights plan" pursuant to which each holder of
the Company's common stock could receive the right to purchase one-half share of
stock if a person or group acquires 15% or more of the Company's common stock; a
classified board, divided into three classes, each class to be elected every
three years for a three-year term; a "fair price provision" which, in certain
instances, requires the approval of the holders of 80% of the voting power of
the Company's capital stock as a condition to approve certain business
combinations with a holder of more than 10% of such stock; lack of a provision
authorizing cumulative voting; lack of a provision authorizing shareholder
action by written consent in lieu of a meeting; the provisions of Section 203 of
the Delaware General Corporate Law, which is applicable to the Company, and
which requires the affirmative vote of the Board of Directors of the Company
and, in certain cases, two-thirds of the outstanding voting stock of the
Company, to approve certain business combinations; and contracts to which the
Company is a party which provide for the payment of benefits to certain officers
of the Company if there is a change in control of the Company (as defined in
such contracts) and the officer is terminated without cause or quits for good
cause within two years of such change in control.
22
<PAGE> 26
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
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. In the view of your Board, such tactics include partial and two-tier
tender offers as well as certain tender offers or proposals and transactions
conditioned upon the acquiror gaining, or approved after the acquiror has
gained, control of the Board of Directors. The Company's protective measures do
not preclude a corporate takeover but are designed to encourage bidders to
negotiate with the Board. The Board believes that this permits the Board to
determine whether it believes the acquisition is fair to, and in the best
interest of, all shareholders and advise shareholders of its views prior to any
change of control. Removal of these provisions may make it easier for
shareholders to cause a change in the management of the Company and may make it
more likely that an acquisition of control or a tender offer would be made even
if such transaction were opposed by the Board or management.
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 takeover 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 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 6.
23
<PAGE> 27
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 or nominees for director 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
24
<PAGE> 28
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 retired Chairman of the Board of Directors of the
Company), George H. Wenglein (retired Chairman of the Board of Directors and a
founder of the Company) and Jimmy W. Woliver (retired).
The number of shares of common stock of the Company owned by each
participant are set forth in the table under "Ownership of Equity Securities of
the Company." 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, 900 shares on May 30, 2000 and 1,000 shares on November 15, 2000; Mr.
Hemminghaus -- 200 shares on January 19, 2000; and Gen. Herres -- 1,786 shares
on January 20, 2000, and Mr. Woliver has sold shares as follows -- 500 shares on
May 3, 1999, 500 shares on May 4, 1999, and 2,000 shares on May 12, 1999.
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.
Secretary
Dated: December 8, 2000
25
<PAGE> 29
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 has 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.
A-1
<PAGE> 30
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.
A-2
<PAGE> 31
PLEASE DATE, SIGN, AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE.
ANNUAL MEETING OF SHAREHOLDERS
LUBY'S, INC.
JANUARY 12, 2001
- Please Detach and Mail in the Envelope Provided if Voting By Mail -
--------------------------------------------------------------------------------
A [ ] PLEASE MARK YOUR - - |
VOTES AS IN THIS | |
EXAMPLE. - - -
1. ELECTION OF DIRECTORS NOMINEES: Ronald K. Calgaard
Roger R. Hemminghaus
FOR [ ] WITHHELD [ ] Jimmy W. Wollver
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
------------------------------------------------------------------------------
2. Proposal to approve the appointment of
Ernst & Young LLP as the independent
public accountants of the corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Shareholder proposal to limit CEO
compensation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Shareholder proposal regarding board
meeting agendas.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Shareholder proposal to declassify
board of directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Shareholder proposal to remove
antitakeover provisions.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before
the meeting.
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 corporate, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
--------------------------------------------------------------------------------
<PAGE> 32
--------------------------------------------------------------------------------
PROXY
LUBY'S, INC.
c/o AMERICAN STOCK TRANSFER & TRUST COMPANY
59 MAIDEN LANE, NEW YORK, NEW YORK 10038
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 on the reverse side of this card, all the shares of Common Stock of
Luby's, Inc. held on record by the undersigned on November 27, 2000, at the
Annual Meeting of Shareholders to be held on January 12, 2001, or any
adjournment thereof.
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.
(SEE REVERSE SIDE)
--------------------------------------------------------------------------------
<PAGE> 33
ANNUAL MEETING OF SHAREHOLDERS OF
LUBY'S, INC.
JANUARY 12, 2001
-----------------------------
PROXY VOTING INSTRUCTIONS
-----------------------------
TO VOTE BY MAIL
---------------
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS
POSSIBLE.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
--------------------------------------------
PLEASE CALL TOLL-FREE 1-800-PROXIES AND FOLLOW THE INSTRUCTIONS. HAVE YOUR
CONTROL NUMBER AND THE PROXY CARD AVAILABLE WHEN YOU CALL.
TO VOTE BY INTERNET
-------------------
PLEASE ACCESS THE WEB PAGE AT "WWW.VOTEPROXY.COM" AND FOLLOW THE ON-SCREEN
INSTRUCTIONS. HAVE YOUR CONTROL NUMBER AVAILABLE WHEN YOU ACCESS THE WEB PAGE.
------------------------------
YOUR CONTROL NUMBER IS | |
------------------------------
Please Detach and Mail in the Envelope provided If Voting By Mail
A [X] PLEASE MARK YOUR [ |
VOTES AS IN THIS |___
EXAMPLE
FOR WITHHELD
1. ELECTION [ ] [ ] NOMINEES: Ronald K. Calgaard
OF Roger R. Hemminghaus
DIRECTORS Jimmy W. Wollver
FOR, EXCEPT VOTE WITHHELD
FROM THE FOLLOWING NOMINEE(S):
______________________________
FOR AGAINST ABSTAIN
2. Proposal to approve the appointment of Ernst [ ] [ ] [ ]
& Young LLP as the independent public
accountants.
3. Shareholder proposal to limit CEO [ ] [ ] [ ]
compensation.
4. Shareholder proposal regarding board meeting [ ] [ ] [ ]
agendas.
5. Shareholder proposal to declassify board of [ ] [ ] [ ]
directors.
6. Shareholder proposal to remove antitakeover [ ] [ ] [ ]
provisions.
7. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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.
