Exhibit 99(a)
LUBY'S, INC.
CORPORATE GOVERNANCE GUIDELINES
Amended July 20, 2000
ROLE AND RESPONSIBILITIES OF BOARD
1. Ethical Business Environment
The Board believes that the long-term success of Luby's is dependent on
the maintenance of an ethical business environment that focuses on adherence to
both the letter and spirit of the law and regulations and the highest standards
of corporate citizenship.
2. Oversight
The Board acknowledges that Luby's has many different stakeholders.
However, the paramount duty of Luby's Board and management is to the
shareholders; the interests of other stakeholders are relevant as a derivative
of the duty to shareholders. The Board is the ultimate decision making body
except for those matters reserved by law to the shareholders. The management
team is charged by the Board with the management of Luby's affairs. The Board
monitors corporate performance against business plans on a regular basis to
evaluate whether the business is being properly managed.
3. Senior Management
The Board selects and regularly evaluates the CEO. The appointment and
regular evaluation of a Chief Operating Officer, if any, will be made by the
Board in conjunction with the CEO. The Board determines the CEO's compensation
and reviews and approves the salaries of senior management named in the Summary
Compensation Table of the Proxy Statement. The Board also reviews and approves
threshold, target, and stretch points for the annual Incentive Bonus Plan. It
periodically reviews succession planning and management development with the
CEO.
4. Strategy
The Board ensures that a strategic planning process is in place, is used,
and produces sound choices. It reviews and approves major corporate strategies
and monitors the implementation of current strategic initiatives to assess
whether they are on schedule, on budget, and producing effective results.
5. Material Transactions
The Board reviews and approves significant capital allocations and
expenditures and material transactions not in the ordinary course of business.
6. Internal Controls, Reporting, and Compliance
The Board satisfies itself as to the adequacy of internal controls, risk
management, financial reporting, and compliance with laws and regulations.
7. Corporate Governance
The Board nominates directors to serve on the Board and ensures that the
structure and practices of the Board provide for sound corporate governance.
COMPOSITION OF THE BOARD
8. Independent Director
An "Independent Director" is a person who is not a current and, generally,
not a former member of management and has no relationship or activity that
could affect or appear to affect his or her ability to exercise independent
judgment as a director. The Governance Committee reviews the circumstances in
each case and determines when a Board member or candidate is not independent.
The Board will seek to maintain a substantial majority of independent
directors. Various regulatory agencies have adopted differing concepts of
independence (e.g. SEC, NYSE, IRS). These external definitions are not part of
these Guidelines and should be consulted only for the specific purposes for
which they were intended.
9. Number of Directors
The Board believes that the number of directors should not be less than
nine or more than twelve. The Board may adjust the number upward to
accommodate an outstanding potential candidate or during periods of transition
when new directors may overlap with retiring directors.
10. Membership Criteria
The Governance Committee is responsible for recommending to the Board the
appropriate skills and characteristics for prospective Board candidates in the
context of the current Board makeup and the perceived needs of Luby's at that
point in time. This assessment should include issues of general business
experience, specialized knowledge, functional skills, other Board and time
commitments, personal characteristics, age, independence, and diversity.
11. Screening, Selection, and Invitation to Serve
Luby's Bylaws provide that director candidates standing for election by
the shareholders shall be nominated by the Board or by a shareholder as
provided in the Bylaws. Vacancies in the Board shall be filled by selection
of the current directors. The Governance Committee is responsible for
screening potential candidates with input from all Board members. The COB will
coordinate the extension of an invitation to Board membership.
12. Directors Who Change Principal Job Responsibility
Directors who have a significant change in their professional roles and
responsibilities, such as retirement or a change in employer, should submit a
letter to the Chairman of the Board explaining the circumstances. The Board,
through its Governance Committee, should review the circumstances and decide
whether it is in the best interest of Luby's that the director continue to
serve.
13. Retirement Age and Term Limits
A director shall not be eligible to stand for election or reelection to
the Board after reaching the age of 70 years. Except for incumbent directors
as of March 19, 1998, who were then 70 years of age or older, a director will
offer his or her resignation from the Board upon reaching the age of 70 years
effective at the next annual meeting of shareholders. The Board does not
believe that there should be term limits for directors. Rather, the Board
believes that the Governance Committee should consider each Director's
contribution to the Board every three years, prior to his of her nomination for
reelection.
14. Selection of CEO and COB
There is no policy as to whether the offices of the CEO and COB should be
separate and, if separate, whether the COB should be an independent director.
The Board remains free to make these choices in any way it deems best at the
time.
15. Lead Director
If the offices of the CEO and COB are not separate or if the COB is not
considered by the Board to be an independent director, the independent
directors will elect one of their number to serve as Lead Director. The Lead
Director will chair meetings of independent directors, will facilitate
communications between other members of the Board and the CEO and COB, and will
assume other duties which the independent directors as a whole may designate
from time to time. Directors are always free to communicate directly with the
CEO and COB.
16. Limitations on Tenure as Independent COB or Lead Director
An Independent COB or Lead Director serves at the pleasure of the Board. It is
the sense of the Board that a director's service as Independent COB or Lead
Director should generally not extend beyond the annual meeting of shareholders
after three consecutive years of service.
FUNCTIONING OF THE BOARD
17. Board Meetings
Article III of Luby's Bylaws spells out required procedures for calling and
conducting meetings of the Board in order to conduct corporate business. The
Board sets the number and schedule of Regular Board meetings for the entire
year at the annual meeting of the Board in January. Currently the Board has
five Regular Meetings each year. The COB , the CEO, or a majority of directors
may call Special Meetings of the Board as necessary.
18. 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.
19. Board Materials Distributed in Advance
Information and data that are important to the Board's understanding of
the business of the meeting and presentations on special subjects should, when
practical, be distributed at least one week in advance of the meeting to permit
directors to prepare for the meeting. This will conserve Board meeting time
and allow discussion to focus on questions and analysis of these materials.
Management will try to keep materials as brief as possible while still
providing the desired information. Lengthy reports or documents, when
practical, should be accompanied by executive summaries. Directors are
encouraged to comment on the adequacy and effectiveness of materials provided.
20. Attendance of Nondirectors at Board Meetings
The CEO may invite members of senior management who are not Board members
to regularly participate in portions of the Board meeting. Further, the Board
encourages the participation at Board meetings of managers who can provide
additional insight into items being discussed or who have substantial future
potential in the Company and who should be given exposure to the Board.
Portions of all Board meetings will be reserved for private deliberation among
Board members.
21. Meetings of Independent Directors
Independent directors will, at least twice a year, meet privately at the
request of the COB (or Lead Director) or upon the Board's own motion. These
meetings may include a discussion with the CEO.
FUNCTIONING OF COMMITTEES OF THE BOARD
22. Board Committees
The current standing committees of the Board are: Executive, Audit,
Compensation, and Governance. From time to time the Board may create a new or
disband an existing Committee depending on particular interests of the Board,
issues facing the Company, or legal requirements.
23. Committee Charters
Each Committee should, with leadership from its Chair, develop and
maintain a charter describing its duties and responsibilities. Charters
developed or amended will be reviewed by the Governance Committee and approved
by the full Board.
24. Assignment and Rotation of Committee Membership
The Governance Committee in consultation with the COB or Lead Director,
the CEO, and individual Board members, will assign Board members and chairs to
various Committees, subject to Board approval. Assignments should comply with
various applicable regulations (e.g. SEC, NYSE, IRS) and with the desires of
individual members insofar as possible. Consideration should be given to
rotating committee membership and chairs from time to time generally on a three
to five year schedule.
25. Scheduling of Committee Meetings and Committee Agendas
The Chair of each Committee, in consultation with its members, the COB,
and management, determines the frequency, length, and agenda of each meeting of
the Committee.
26. Committee Reports to the Board
The Chair of each Committee will report to the full Board as soon as
practical following a Committee meeting all significant matters discussed,
decisions reached, and recommendations made for Board approval. The Chair will
have an opportunity to comment on Committee activities at each Board meeting.
Minutes of all Committee meetings will be distributed to all Board members.
MISCELLANEOUS
27. Board Access to Management
Board members have complete access to Luby's management. Board members
should use judgment to insure that this contact is not distracting to business
operations or that it could be perceived as infringing on the responsibilities
of the CEO. Correspondence from a Board member to a member of management
should be copied to the CEO and COB.
28. Communications with the Public and Various Constituencies
The CEO is responsible for establishing effective communications with
Luby's various constituencies, i.e. press, shareholders, potential investors,
customers, communities, suppliers, creditors, and corporate partners.
Management speaks for Luby's, and Board members should communicate with these
constituencies only with the consent and generally at the request of
management.
29. Assessing Board Performance
Approximately annually, the COB will survey Board members on their
perceptions of the performance and effectiveness of the Board and solicit
suggestions for improving its performance. The objective is to increase the
effectiveness of the Board and not to evaluate individual Board members. The
results of this survey will be reported by the COB to the full Board.
30. Board Compensation
Luby's policy is to compensate nonmanagement directors competitively
relative to companies of comparable size. The Governance Committee will
annually recommend to the full Board for its consideration director
compensation for the next year.
31. Stock Ownership Guidelines for Directors
The Board believes that each Luby's director should accumulate a
meaningful investment in Luby's stock and has established guidelines for share
ownership. Currently, directors are expected to accumulate, over time, common
shares with a market value of at least $100,000. Luby's has established a tax
deferred Nonemployee Director Phantom Stock Plan. Beginning in 1999 and until
the ownership guidelines are met, the nonemployee director will receive at
least $10,000 of the annual retainer in phantom stock units to be redeemed for
a like number of common shares when he or she ceases for any reason to be a
director. Once ownership guidelines have been met, the director will not be
obligated to acquire additional phantom stock units or common shares.
32. Review of Guidelines
The Governance Committee is responsible for periodic review of these
Guidelines, as well as consideration of other corporate governance issues that
may, from time to time, merit consideration of the entire Board.
33. Intent
These Guidelines are intended to be a statement of general principles to
guide the Board in formulating corporate policy. The Guidelines are not rules
or bylaws. They may be amended from time to time by the Board. In addition,
the Board may on occasion depart from the Guidelines when circumstances
indicate that a departure is in the best interest of the Company and its
shareholders.
Exhibit 99(b)
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-8s) pertaining to the Luby's Cafeterias, Inc.
Management Incentive Stock Plan, (No. 33-36791), the Luby's Incentive Stock
Plan (No. 1.333-70315), and the Luby's Cafeterias Savings and Investment
Plan of Luby's Cafeterias, Inc. (No. 333-19283) of our report dated
October 9, 2000, with respect to the consolidated financial
statements of Luby's, Inc. included in the Annual Report (Form
10-K) for the year ended August 31, 2000.
ERNST & YOUNG LLP
San Antonio, Texas
November 27, 2000
