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The Committee of Concerned Luby's Shareholders
P. O. Box 6983
Tyler, Texas 75711
800/657-2286
November __, 2000
Dear Fellow Shareholders of Luby's, Inc.:
As shareholders of Luby's, Inc. ("Luby's"), we have become
dissatisfied with the performance of Luby's in recent years and have
formed The Committee of Concerned Luby's Shareholders ("Committee") to
nominate four (4) persons for election as Directors of Luby's
("Nominees"). In the Committee's opinion, Luby's needs new blood at
the most senior level. The Committee believes that its Nominees will
help revitalize Luby's. We have nominated: (1) Elisse Jones Freeman;
(2) Herbert Leslie ("Les") Greenberg; (3) Thomas C. Palmer; and (4)
Davis W. Simpson. The Committee needs you to vote for its Director
nominees.
The Committee is seeking your support because it believes that
Luby's is a company in some trouble.
In 1997, the Board of Directors ("BOD") of Luby's, knowing that
Luby's faced fierce competition in the food service industry, hired
Mr. Barry J.C. Parker ("Parker"), a person with NO prior working
experience in the food service industry, as the President and Chief
Executive Officer of Luby's for a period of three (3) years. From
1989 to June 1996, Mr. Parker was employed as the Chairman of the
Board, Chief Operating Officer and President of County Seat Stores,
Inc., an apparel retailer which filed for bankruptcy protection in
October 1996.
"[F]or three years, Luby's has struggled with slumping profits,
... As the company scrambled to deal with its troubles, it drove away
numerous managers with decades of experience because of cuts in pay,
loss of autonomy and a corporate culture that has become increasingly
top-down." (HoustonChronicle.com, 10/28/00) (Please see Sections
entitled "Declining Sales, Net Profits and Market Stock Prices" and
"Management and Vendor Turnover" in the Proxy Statement.) In the
fourth quarter of fiscal year 2000, same-store sales declined 5.8%.
"We anticipate that our first quarter results will be disappointing."
(Luby's Press Release, 10/27/00) Dividends have recently been
discontinued. In October 2000, the market price of Luby's stock sunk
to $4-1/4, down from its all time high of $25-7/8 in 1993 and $21-1/8
on October 3, 1997. The market capitalization of Luby's has decreased
approximately $1/3 billion since October 3, 1997.
On July 19, 2000, the BOD extended Mr. Parker's employment
contract for one year commencing October 1, 2000. On September 23 25,
2000, he "tendered his resignation ... subject to finalizing a
separation agreement." In October 2000, the Vice President, Secretary
and General Counsel, the Senior Vice President - Human Resources and
the Senior Vice President - Chief Financial Officer resigned. "Over
the past 12 months, 15 percent of Luby's top Managers have resigned
..." (San Antonio Express-News, 10/27/00)
SHAREHOLDERS NEED THEIR OWN "WATCHDOGS" TO MIND THE STORE
AND TO MAKE SURE THAT THEIR CONCERNS ARE HEARD
The Committee believes that the success of any company is based
upon the performance of its top executive officers and that close
scrutiny of their performance is required by the BOD. The Committee
believes that the BOD should be accountable for its acts. Further,
the Committee believes that the input of independent Directors, those
who do not have to thank Management or the existing Directors for
their nomination or election, is essential for the improvement of
Luby's.
To this end, the Committee proposes the following:
[X] Vote FOR our Nominees: Elisse Jones Freeman; Herbert Leslie
("Les") Greenberg; Thomas C. Palmer, and Davis W. Simpson (Item 1).
(If three Director positions are subject to election, the nomination
of Mrs. Freeman shall be withdrawn.
[X] Vote FOR Shareholder Proposal (Item 2), a resolution by
Herbert Leslie Greenberg, a member of the Committee and a Nominee,
requesting that the BOD provide for the annual election of all
Directors and that the BOD be declassified.
[X] Vote FOR Shareholder Proposal (Item 3), a resolution by
Paulette D. Greenberg, wife of Herbert Leslie Greenberg, requesting
that the Cash Incentive Bonus Plan be amended so that bonuses only be
paid to the CEO in those years where the prior year's financial
performance has been exceeded.
[X] Vote FOR Shareholder Proposal (Item 4), a resolution, by a
person with no affiliation to the Committee, requesting that the
Corporate Governance Guidelines be amended to provide any Director
with the unfettered right to have items he/she submits for discussion
at BOD meetings placed upon the pre-meeting's printed agenda.
[X] Vote FOR Shareholder Proposal (Item 5), a resolution, by a
person with no affiliation to the Committee, requesting the removal of
all anti-takeover defenses.
Each of the Shareholder Proposals is advisory and will not be
implemented without approval of the BOD. While not binding on the
BOD, the Committee believes that the adoption of the proposals, or any
of them, would send a clear message to the BOD as to Shareholder
sentiment on the respective issues.
Shareholders are urged to attend the Annual Meeting in person.
If you are unable to attend in person and wish to have your shares
voted, please sign and date the enclosed BLUE proxy card and return it
by mail as promptly as possible.
IF YOU VOTE FOR US, PLEASE DO NOT USE THE WHITE PROXY CARD OF
LUBY'S AS IT WOULD REVOKE YOUR VOTE FOR US. IF YOU DATE AND SIGN THE
BLUE CARD TO VOTE FOR US, YOU WILL REVOKE ANY PROXY CARD YOU SIGNED ON
AN EARLIER DATE FOR LUBY'S.
Sincerely,
The Committee of Concerned Luby's Shareholders
By: HERBERT LESLIE("LES")GREENBERG
HERBERT LESLIE("LES")GREENBERG
PLEASE PROMPTLY SIGN, DATE AND RETURN
THE ENCLOSED BLUE PROXY CARD IN THE ENCLOSED ENVELOPE.
The Committee of Concerned Luby's Shareholders
P.O. Box 6983
Tyler, Texas 75711
(800) 657-2286
Fax Nos. (903) 581-4000 or (903) 534-0613
E-mail: [email protected]
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PROXY STATEMENT
OF
THE COMMITTEE OF CONCERNED LUBY'S SHAREHOLDERS
IN CONNECTION WITH A SHAREHOLDER SOLICITATION
REGARDING THE ELECTION OF INDEPENDENT DIRECTORS
AND SHAREHOLDER PROPOSALS AT THE
2001 ANNUAL MEETING OF SHAREHOLDERS
OF LUBY'S, INC.
November __, 2000
This Proxy Statement and the accompanying BLUE proxy card are
being furnished to shareholders of Luby's, Inc. ("Luby's") in
connection with the solicitation of proxies by The Committee of
Concerned Luby's Shareholders ("Committee") for use at the Annual
Meeting of Shareholders of Luby's or at any postponement or
rescheduling thereof ("Annual Meeting"). The Annual Meeting will be
held on Friday, January 12, 2001, at 9:00 A.M., at the Omni San
Antonio Hotel, 9821 Colonnade Boulevard, San Antonio, Texas. The Board
of Directors ("BOD") of Luby's has fixed the close of business on
November 27, 2000 as the record date for determining the shareholders
of Luby's entitled to notice of and to vote at the Annual Meeting.
Only holders of record of the shares of common stock ("Common Stock")
on the record date are entitled to vote at the Annual Meeting. There
are 22,420,375 shares of Common Stock outstanding as of the record
date. Each share of Common Stock is entitled to one vote on such
matters as may properly come before the Annual Meeting.
Copies of the Proxy Statement and BLUE proxy card are being
mailed or furnished on or about November 27, 2000.
You are urged to sign and date the enclosed BLUE proxy card
and return it in the enclosed envelope whether or not you plan to
attend the Annual Meeting. A shareholder may revoke any proxy
(whether such proxy was solicited by the Committee or by Luby's) at
any time prior to its use by submitting a duly executed proxy bearing
a later date or written revocation, and, in addition, any shareholder
who attends the
Annual Meeting in person may vote at the Annual Meeting thereby
canceling any proxy previously given.
The Proxy Statement and form of proxy will be delivered to
holders of at least the percentage of Common Stock of Luby's required
under applicable law to carry the proposals set forth hereinafter.
The Committee consists of: (1) L.L. Davis; (2) Herbert Leslie
("Les") Greenberg; (3) Tommy H. Griggs; (4) Thomas C. Palmer; and, (5)
Davis W. Simpson. They collectively hold approximately 1.85% of the
Common Stock of Luby's.
YOUR VOTE AT THIS YEAR'S ANNUAL MEETING IS ESPECIALLY IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED BLUE PROXY CARD IN THE
ENCLOSED ENVELOPE.
THE COMMITTEE OF CONCERNED LUBY'S SHAREHOLDERS
P. O. BOX 6983
Tyler, Texas 75711
(800) 657-2286
Fax Nos. (903) 581-4000 or (903) 534-0613
E-mail: [email protected]
ELECTION OF DIRECTOR(S) (ITEM 1)
Based upon their respective backgrounds, as described below, and
their willingness to challenge Management when they believe that it is
necessary to do so in order to represent Shareholders' interests, as
demonstrated, in part, by their participation in this solicitation,
the Committee believes that its nominees ("Nominees") will be the type
of independent, effective Directors that Luby's needs. Each of the
Committee's Nominees has consented to being named in the Proxy
Statement and to serve as a Director of Luby's if elected. There is
no agreement or understanding between such Nominees and any other
person pursuant to which the Nominee was selected as a Nominee of the
Committee. The Nominees are:
[X] ELISSE JONES FREEMAN ("Mrs. Freeman") is 57 years old and for at
least the past five years has been a Volunteer Professional. She has
been a Shareholder since 1980. Her father was Henry O. Jones, one of
the founders and formerly a Chief Operating Officer and Executive Vice
President of Luby's. She has dined at Luby's for almost her entire
life.
Mrs. Freeman earned a Bachelors of Arts degree from Southern
Methodist University in 1964. She holds a Secondary Teaching
Credential and taught from 1964 to 1968. She held a real estate
license in the early 1980s.
Mrs. Freeman has served as a national/international officer of
Alpha Delta Pi Sorority for 18 years. She now serves as the
International Vice President of Collegiate Membership for Alpha Delta
Pi Sorority. She has served as Vice President on the Grand Council
since 1997.
Mrs. Freeman is married and has three children.
[X] HERBERT LESLIE ("LES") GREENBERG ("Mr. Greenberg")is 57 years
old and for at least the past five years has been a semi-retired
business litigation attorney, arbitrator, mediator and investor. Mr.
Greenberg is a member of the Committee.
Mr. Greenberg and Paulette D. Greenberg (formerly Nebrat)("Mrs.
Greenberg") first became Shareholders in 1996. Mrs. Greenberg
commenced dining at Luby's more than fifty (50) years ago in Corpus
Christi, Texas. She graduated from the University of Texas in 1965.
Mr. and Mrs. Greenberg have dined at Luby's for about thirty (30)
years.
In the early 1970s, as Director of Compliance of a New York Stock
Exchange Member Firm, Mr. Greenberg and his staff audited and enforced
legal/regulatory compliance.
From 1973 until semi-retirement in 1994, Mr. Greenberg was
engaged in the private practice of law as a sole practitioner with
emphasis upon business litigation. He represented many individuals
and corporations before arbitration panels and in various state and
federal courts. He has served as an arbitrator on the panel of the
National Association of Securities Dealers since 1976. Also, he has
served on the panels of arbitrators of the American Arbitration
Association, Pacific Stock Exchange and New York Stock Exchange. He
has served the Los Angeles Superior/Municipal Courts as an arbitrator,
settlement officer (mediator) and Judge Pro Tem.
From 1976 to 1980, Mr. Greenberg served as an instructor of Real
Estate Law and Finance at West Los Angeles Community College. From
1976 to 1996, he was licensed as a Real Estate Broker.
During April and May 2000, Mr. and Mrs. Greenberg visited
many units of Luby's from Arizona to Tennessee and from Texas to
Missouri in order to determine the quality of the product/service.
[X] THOMAS C. PALMER ("Mr. Palmer") is 52 years old and for at least
the past five years has been an investment manager and President of
Ridglea Investment Services, Inc. of Tyler, Texas since 1979. Mr.
Palmer is a member of the Committee.
Mr. Palmer has regularly dined at Luby's in Tyler, Texas since
1980. He has also dined at many other Luby's Units from Texas to
Arizona.
Mr. Palmer has been involved in the investment management
profession since 1974. He achieved his Bachelors and Masters degrees
in Business Administration from Texas Christian University ("TCU")
where he taught a graduate level course on investments in 1974.
In addition to the common stock of Luby's, Mr. Palmer and his
clients own long-term investments in Brinker International, Tricon
Global Restaurants as well as several branded food companies.
Mr. Palmer has been married, since 1975, to Marjorie
T. Palmer (formerly Thomas)("Mrs. Palmer"), who is also a graduate of
TCU. They have three children.
[X] DAVIS W. SIMPSON ("Mr. Simpson") is 62 years old and for at least
the past five years has been retired. Mr. Simpson is a member of the
Committee.
Mr. Simpson received his Bachelors in Business Administration
degree from the University of Texas in 1963.
Mr. Simpson was employed by Luby's for 32 years, his last
positions being that of Director of Management Training (1973-1985)
and Vice President of Managerial Personnel (1985-1995). His duties in
the latter position involved recruiting, training and managing
placements at Units.
Mr. Simpson is married and has two children.
Luby's employs a staggered system of electing Directors whereby
only a minority of the Director positions are subject to election at
the Annual Meeting. According to the proxy statement of Luby's dated
December 1, 1999, there are three classes of Directors with four
members in each class with their respective terms expiring at the
Annual Meetings scheduled in 2001, 2002 and 2003. At the times when
the Nominees gave notice to Luby's of their respective candidacies and
when the Committee initially filed its Preliminary Proxy Statement,
the terms of four Directors were expected to expire at the Annual
Meeting. According to a preliminary proxy statement filed by Luby's
on November 3, 2000, the BOD has reduced the total number of Directors
to 9, effective as of January 12, 2001, and three Director positions
will be subject to election at the Annual Meeting. If this reduction
in size of the BOD ultimately becomes effective, the Committee's
nominees are Messrs. Greenberg, Palmer and Simpson, and Mrs. Freeman's
nomination will be withdrawn. If four Director positions are subject
to election, the Committee's nominee for the fourth position is Mrs.
Freeman.
Proxies sought hereby cannot be voted for a greater number of
persons than the nominees named.
REASON(S) FOR ELECTING INDEPENDENT DIRECTORS
The Committee believes, in part, that it is the duty of each
member of the BOD to monitor and consult with Management to cause
continuing betterment of net profits, quality of product/service,
reputation and employee relations at Luby's.
The following sets forth material concerns of the Committee as to
what it considers to be serious errors committed by the BOD, the
problems facing Luby's and specific suggested solutions.
A. Questions of Quality of Management Decisions
and Oversight of Management by the BOD
Unfortunately, Luby's is a somewhat troubled corporation after
embarking on a "long-term strategic plan." In the opinion of the
Committee, the strength of Luby's has been in its niche market of the
cafeteria segment of food service providers; and it is not and should
not be expected to be all things to all people.
Certain problems have become apparent. It is the hope of the
Committee that Luby's can return to the ranks of one of the premier
food service providers, but, in the opinion of the Committee, it
cannot occur without changes to the current BOD of Luby's.
(1) Declining Sales, Net Profits and Market Stock Prices
Prior to October 1997, Luby's was financially very healthy.
"'Nobody is building any new cafeterias except us,' Ralph 'Pete'
Erben, Luby's president and chief executive officer, told about 350
people attending the company's annual meeting .... Hard economic times
and the FIERCELY COMPETITIVE cafeteria market have hurt Luby's
COMPETITORS, but will NOT slow Luby's growth, he said." (Emphasis
added.) (San Antonio Express-News ["SAEN"], 3/7/92) "'Luby's is a very
healthy company,' said David B. Daviss, who was appointed acting chief
executive officer by the company's board last Friday. 'We make a lot
of money and we generate a lot of cash IN A VERY COMPETITIVE
INDUSTRY.'" (Emphasis added.) (SAEN, 5/15/97)
Since October 1997, the market capitalization of Luby's has
declined approximately $1/3 billion. In its Press Release dated
October 27, 2000, Luby's stated, "The company also announced that the
Board has suspended payment of quarterly dividends effective
immediately. .... '[O]ur negative sales trend has continued during the
first quarter and we have not seen any improvement in operating
margins from our fourth quarter,' Mr. Davis said. 'We anticipate that
our first quarter results will be disappointing.'"
"Luby's Inc. announced Friday it will close 15 under performing
locations. .... Fourth-quarter results were hurt by a 5.5 percent
decline in same-store sales." (SAEN, 8/19/00) For the nine months
ended May 31, 2000, the decline in same-store sales "was just over
three percent ..." (Luby's Report to Shareholders, 6/12/00) "Luby's
announced in August (1998) it would close 14 restaurants ..." (SAEN,
10/9/98)
For the years ended August 31, Luby's sales and net earnings per
share, including write-downs, were: 1997 --- $495 million and $1.22;
1998 --- $509 million and $.22; 1999 --- $501 million and $1.26; and,
2000 --- $493 million and $.41, respectively.
(2) Choice of CEO by BOD
In or about October 1997, the BOD hired Mr. Barry J.C. Parker
("Parker") as President and CEO of Luby's for a term of three (3)
years. Mr. Parker's background included absolutely NO employment
experience in the food service industry. Mr. Parker had been employed
as a member of the Executive Committee, Chairman of the Board,
President and CEO of County Seat Stores, Inc. ("County Seat") from
1989 to June 1996. In October 1996, County Seat filed a petition for
bankruptcy.
County Seat did an analysis of the events which lead to its
filing for bankruptcy protection. "During the period from 1992 to
1994, the Company expanded from 605 stores, ... and an EBITDA margin
of 9.3%, to 701 stores, ... and an EBITDA margin of 8.2%. However, by
1995 the Company's EBITDA margin declined to 5.6% primarily due, in
the Company's view, to the following: (i) the Company, in an attempt
to further its expansion strategy, opened stores without sufficient
regard to the profitability of each location; (ii) in response to
increased price competition ..., the Company unsuccessfully expanded
its offering of branded apparel ...; (iii) the Company failed to
competitively source merchandise ...; and (iv) apparel retailers
generally experienced weak sales. By 1996, ... the Company was unable
to meet scheduled interest payment obligations .... As a result of the
foregoing, in October 1996, the Company filed a petition ... for
reorganization relief ... with the United States Bankruptcy Court
...." (County Seat, SEC Form S-1/A, 6/1/98) In the Committee's
opinion, Mr. Parker should have been able to exercise some control
over Items (i)-(iii), inclusive, and, as to Item (iv), many other
apparel retailers survived that "weak sales" period.
"Parker had said in a late August interview that his three-year
contract, which will expire at the end of the month, had been extended
by the board of directors, ..." (SAEN, 9/26/00)
The Luby's Press Release dated September 25, 2000, states, "Barry
J.C. Parker has tendered his resignation ... subject to finalizing a
separation agreement." "Some former managers, who had said in
interviews that they were unhappy with Parker's strategy and personal
approach, greeted the news of Parker's resignation with glee." (SAEN,
9/25/00)
The Committee believes that, with Luby's facing fierce
competition and Mr. Parker having NO prior employment experience in
the very competitive food service industry and producing questionable
results at County Seat, it was a mistake of the BOD to hire Mr.
Parker. Further, after witnessing the financial/operational results
of the prior three (3) years, as set forth in subsections (1) and (3),
the Committee believes that the BOD's decision to extend Mr. Parker's
employment is questionable.
(3) "Made-From-Scratch" to Outsourced Food
"RECIPE For SUCCESS --- Take liberal quantities of: Luby's Fresh
Foods and Variety." (The Luby's Story --- Good food from good people
by Steve Barnhill, 1988) "Luby and Johnston ... built ... the Luby's
Cafeterias of the future. It was a huge success because - then as now
- Luby's Cafeterias provided greater value than the competition. From
the very start, Luby and Johnston made the commitment to good service
and good food MADE FROM HIGH-QUALITY FRESH INGREDIENTS, attractively
presented, and served generously at a reasonable price." (Emphasis
added.) (Luby's Cafeteria --- Good food from good people, 50th
Anniversary Recipe Collection, 1996)
"'Luby's built up its reputation by making food from scratch,'
said food services coordinator Janet Duckham." (SAEN, 5/10/95) "Close
your eyes and imagine a dining experience that includes dozens of your
favorite foods - all of which have been prepared from scratch. Mmmm.
... So is it just a dining fantasy? No, it's any day in the food
line at one of Luby's 224 cafeterias ...." (SAEN, 7/18/97)
Mr. David B. Daviss ("Mr. Daviss"), then CEO of Luby's stated,"I
think this is basically a cafeteria company, that isn't to say that we
might not find other ways to deliver fresh, scratch-cooked food to
customers." (SAEN, 9/18/97)
Mr. Parker questioned all of the past operating practices at
Luby's. "'Now, for the first time, we're questioning everything,' he
said. 'That's the reason I'm here.'" (SAEN, 1/9/98) "From the start,
Parker seemed to rub the company's tradition-bound managers the wrong
way." (HoustonChronicle.com ["HC"], 10/28/00)
Mr. Parker conceived and implemented a "long-term strategic
plan." "'This is the first time that the company has developed a
long-term strategic plan,' company spokeswoman Karen Sparks said. The
plan - 10 months in the making - has six key initiatives, including
four that the company is setting in motion this week, she said."
(SAEN, 6/25/98) "'This past year was a real transition for Luby's,'
Barry J.C. Parker ... said Friday at the company's annual meeting ....
Parker said he believes Luby's accomplished 'a great deal' by
implementing a new strategic plan." (SAEN, 1/9/99)
Under a "long-term strategic plan" conceived and implemented by
Mr. Parker, Luby's switched from its food preparation process of
"made-from-scratch" to the use of outsourced food. The public
detected a change in the quality of the food at Luby's. "If you think
homemade food is a thing of the past, you just may be right. But at
Luby's? We noticed some subtle changes at the popular San
Antonio-based cafeteria chain, WHICH BUILT ITS REPUTATION ON such
homemade (as in MADE FROM SCRATCH) specialties as .... You can still
find these items ... at the cafeteria chain, of course. ... IT'S JUST
THAT SOME OF THE OLD FAVORITES DON'T TASTE AS, WELL, HOMEMADE AS THEY
USED TO. .... But, if through the years, you've loved knowing that
Luby's has taken the road less traveled and stuck to its founders'
commitment to make food the old-fashioned way, you may be struggles
with this change. .... At the annual shareholders' meeting on Jan. 8,
1999, Parker spoke about achieving 'significant reductions in our food
costs with absolutely no give-up in quality.' Also mentioned was the
'outsourcing of some of our food preparation where we have the
opportunity to lower the final cost of a product, ....' I found some
interesting variations between sites. Some Luby's restaurants seem to
serve more from-scratch than others, .... Our next visit ... More
items had that authentic homemade flavor. (Incidentally, this was the
location that had the most booming business. Coincidence? I don't
think so.)" (Emphasis added.) (SAEN, 9/17/99)
"But the two moves that most enraged store managers and caused
many to leave were its decision to outsource -- buying premade
products instead of making them from scratch -- and restructuring
management compensation. .... Luby's outsourced to fight rising labor
costs. ... Overall, however, the company did not save as much on labor
as it spent on outsourced food." (HC, 10/28/00)
The Committee believes the decision making processes by which
Management caused a business whose reputation is based upon
"made-from-scratch" to change from "made-from-scratch" and the BOD
allowing it to occur are questionable.
(4) Reduced Compensation of Unit Management
"RECIPE For SUCCESS --- .... Add large portions of: Luby's
Organization and Entrepreneurship ...." (The Luby's Story --- Good
food from good people, 1988)
Luby's used to pride itself on the entrepreneurial spirit of its
Unit Managers. The "60/40" compensation plan, i.e., division of Unit
net profits whereby 60% went to Luby's and 40% to be divided by Unit
Management, was well known before the arrival of Mr. Parker.
In 1997, John B. Lahourcade, then Chairman of the Board and a
former CEO of Luby's stated, "A key ingredient of our profitability
and success is the experience of our managers. ... With our incentive
compensation system, our managers have always been our 'partners,' and
we will strive to provide them with the greatest opportunity for
success." (Letter to Our Shareholders, 6/12/97)
In 1998, the compensation plan was adjusted on three (3)
occasions with the result that the former "60/40" compensation plan no
longer exists and that Unit Manager compensation was substantially
reduced. Prior to the adjustment, Unit Management divided 40% of the
Unit's net profits, with a base salary of approximately $4,000 for the
Manager and approximately $3,000 for the Assistant Manager. Luby's
was to be reimbursed for any difference between base salary payments
and the compensation formula calculations from the Unit's future
performance. The new system based compensation upon several
variables, e.g. customer count, sales ratios, with Managers' base
salary, subject to a draw, of approximately $5,400 per month. As an
example of the impact of the change, the compensation of top managers
was reduced by 40% to 50%.
"But the two moves that most enraged store managers and caused
many to leave were its decision to outsource ... and restructuring
management compensation." (HC, 10/28/00) "Over the past 12 months, 15
percent of the company's top managers have resigned, Daviss said."
(SAEN, 10/27/00)
The Committee advocates a return to an effective incentive
compensation program at the Unit level.
(5) Questionable Market Testing of "Bundled Meals"
The Committee believes in the general concept of "change";
however, it should only be done after adequate testing and the
demonstration of positive financial results. The Committee believes
that Luby's, during the past three (3) years, has implemented
significant changes and significant financial performance declines
have followed. (See, sub-section (1), above.) The roll out of the
"new marketing strategy" associated with "bundled meals" was one of
those significant changes.
The Luby's News Release dated May 23, 2000 states, "Parker ...
today announced a new strategy designed to increase same-store sales.
The program focuses on new bundled meals .... Parker added, 'Based on
customer feedback, we are optimistic about the ability of this new
strategy to drive sales. ... Luby's WILL roll out the new program in
almost 60 restaurants initially, ...." (Emphasis added.) In The
Luby's Letter to Our Shareholders dated June 12, 2000, Mr. Parker
stated, "The new program WILL BE rolled out to approximately 70
restaurants by the end of June, ..." (Emphasis added.) The Luby's
News Release dated July 21, 2000 states, "Parker added, ... By the
end of July, we will have COMPLETED the roll out of our new bundled
meal offerings to ALL of our major markets.' ... The San Antonio
company operates 231 Luby's restaurants ..." (Emphasis added.) The
Luby's News Release dated August 18, 2000 states, "During July the
company AGGRESSIVELY rolled out the new marketing strategy to all
major markets, .... It is, however, early in the new campaign,
and the ultimate financial impact is still UNCERTAIN. According to
Parker, 'Most of our markets have had this offering for just a few
weeks. ...'" (Emphasis added.)
One can reasonably argue that Mr. Parker did, at the least, cause
insufficient testing of the "new marketing strategy" before
implementing an aggressive system-wide roll out of the new program.
The decision for the aggressive roll out to all major markets was made
approximately 21 days after a roll out to 60 Units was completed.
Also, the financial impact was best described as "uncertain" at the
time the ultimate roll out decision had been made.
The Committee believes that the BOD should implement measures to
ensure that there is adequate testing of proposed future changes and
that major changes are not implemented when the chance of success can
only be described as "uncertain."
(6) Management and Vendor Turnover
"Luby's, once a solid financial performer, has struggled in
recent years with ... internal turmoil." (SAEN, 10/27/00) "Some store
managers of the San Antonio-based cafeteria chain have left the
company in the past several years following changes imposed by senior
management." (SAEN, 9/21/00) "Over the past 12 months, 15 percent of
the company's top managers have resigned, Daviss said." (SAEN,
10/27/00) The past Annual Reports to Shareholders have identified
Area Vice Presidents of Luby's. Since the August 31, 1997, 6 of the
then 19 listed are no longer employed by Luby's.
"Managers chafed under increasing directives from corporate
headquarters that seemed to have no connection with store-level
reality. .... The company that kept managers for decades by giving
them freedom and paying them well had become one that sent rules down
from above and brooked no argument." (HC, 10/28/00)
"Anderson Advertising announced that it was giving up the Luby's
account that it had held for about 20 years. .... Also, on Tuesday,
Luby's announced that Bob Burke, senior vice president of marketing,
has resigned. His resignation 'is really coincidental,' Bishop said."
(SAEN, 5/24/00)
In or about March 2000, Luby's commenced the employment of a Vice
President, General Counsel and Secretary. In October 2000, she
tendered her resignation. Also, in October 2000, Ms. Laura Bishop,
Senior Vice President - Chief Financial Officer, and Ms. Sue Elliott,
Senior Vice President - Human Resources, resigned. "'They were not
asked to leave,' Daviss said of Bishop and Elliott." (SAEN, 10/27/00)
Earlier, in 2000, the Vice President - Equipment, and Vice President -
Construction and Design resigned.
The Committee advocates effective/impartial exit-interviews of
former management employees and/or inquiries of former long time
vendors to learn the cause(s) of the separations so that, if found
necessary, appropriate remedies may be implemented.
(7) Non-Responsive to Shareholder Inquiry
Luby's has paid legal fees to the law firm of Cauthorn Hale
Hornberger Fuller Sheehan & Becker ("Cauthorn Firm"), of which James
R. Hale, former Secretary of Luby's, is a member. The legal fees were
as follows: 1999 ($475,000), 1998 ($416,000), 1997 ($584,000), 1996
($563,000), 1995 ($439,000).
For five (5) years, Luby's paid legal fees to the Cauthorn firm
which averaged $41,284 per month.
On March 24, 2000, Mr. Greenberg wrote to Mr. Daviss, Chairman of
the Board, asking: (1) if and when Luby's last conducted an audit of
the aforesaid legal fees; and, (2) when Luby's last "shopped the
market" with respect the cost of legal services being provided. On
March 27, 2000, Mr. Daviss forwarded a non-responsive reply. On March
31, 2000, Mr. Greenberg forwarded the aforesaid correspondence to the
then General Counsel of Luby's. The General Counsel did not respond.
On June 1, 2000, Mr. Greenberg, again, wrote to the General Counsel
reminding her of the prior inquiries. Again, the General Counsel did
not respond.
The Nominees, if elected to the BOD, would advocate that Luby's
be responsive to Shareholder inquiries.
B. Certain Relationships And Related Transactions
A conflict of interest occurs when one is required to be loyal to
two masters at the same time where the interests of the masters oppose
one another. There are situations at Luby's where conflicts of
interest might occur.
(1) Legal Fees
It is the duty of the Corporate Secretary of Luby's to
render unbiased legal advice to the BOD. Potentially, that advice
could deal with the relationship between the BOD and Management. Over
a period of years, Management has paid the law firm of which the
Corporate Secretary is a member, on average, more than $40,000 per
month.
The Nominees, if elected to the BOD, would advocate that, in
order to avoid potential conflicts of interest, any person serving as
Corporate Secretary not, also, directly or indirectly receive
compensation from Management.
(2) Consulting Fees
Since at least 1996, Luby's has employed a Director (former
officer of Luby's) as a "consultant" and paid that Director $7,083 per
month. His original contract is to expire in 2001. Prior to January
1998, another Director and previous officer of Luby's received
"consulting fees" of $10,417 per month.
The Nominees, if elected to the BOD, would advocate that, in
order to avoid potential conflicts of interest, any person serving as
a Director not, also, receive compensation from Management.
C. Management Bonus Compensation
The Committee believes that Management should be fairly
compensated and awarded bonus compensation only when it produces
financial results which exceed the prior year's performance and meet
or exceed objective criteria specified by the BOD. See, Shareholder
Proposals, Restriction on Cash Bonus Plan Proposal, below.
Under the Cash Bonus Plans, Mr. Parker received $93,500 (1999)
and $132,000 (1998) while other participants in the Plans received
lesser amounts. At the same time, Mr. Parker and the BOD implemented a
series of compensation reductions for Unit Managers and the market
price of Luby's stock was declining.
D. Possible Corporate Cost Savings
(1) Architectural Design Fees
As of June 4, 2000, according to the Press Releases posted on the
Luby's Internet web-site, there had been thirteen (13) new openings
with an additional 96,968 square feet of facilities with 2,724 more
seats. The new Units, large and small, are very similar in design.
However, Luby's employed four (4) different architectural firms to
design the five (5) Community sized facilities and employed four (4)
different architectural firms to design the eight (8) full sized
Units. A total of five (5) different architectural firms were
involved.
The Nominees, if elected to the BOD, would advocate the
concentration of sources from which architectural design services are
purchased.
(2) CEO Base Salary Increases
On September 15, 1997, Luby's and Mr. Parker entered into an
Employment Agreement whereby he agreed to perform services and Luby's
agreed to pay him a "minimum base salary of $360,000 per year." The
Employment Agreement states,"Your base salary will be reviewed
annually and will be subject to increase from time to time at the
discretion of the Board of Directors ..." On January 8, 1999, Luby's
and Mr. Parker entered into an amendment to the Employment Agreement
which states, "Pursuant to the authorization by the BOD ... to
increase your minimum base salary to $390,000 per year." Pursuant to
the terms of the amendment, Mr. Parker did not incur any additional
obligation. On October 15, 1999, less than one year after his prior
Base Salary increase, Luby's and Mr. Parker enter into another
amendment to the Employment Agreement which states, "Pursuant to
authorization by the BOD ... to increase your minimum base salary to
$405,000 per year." Pursuant to the terms of the amendment, Mr.
Parker did not incur any additional obligation. Luby's explained the
salary increases as being "based upon his performance." (Luby's Proxy
Statement, 12/1/99)
The Nominees, if elected to the BOD, would advocate that Luby's
not enter employment agreements permitting discretionary Base Salary
increases and not grant such increases.
E. BOD Meeting Agendas
The procedures for permitting BOD members to place items for
discussion on the agendas of their meetings are set forth in the
Corporate Governance Guidelines of Luby's ("Guidelines"). The CEO and
the Chairman of the Board, in effect, had been given the authority to
control the issues upon which the Directors might deliberate. Item
No. 18 of the Guidelines stated, "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." (Emphasis added.) Luby's claims
to have partially amended the Guideline to eliminate the restriction
for making suggestions of topics during the actual BOD meetings.
However, pursuant to the amended Guideline, no member of the BOD has
been assured the unfettered right to place any item for discussion on
the pre-meeting published agenda. Only the CEO and COB "establish and
publish" the agenda. Whether or not an item, not appearing on the
pre-meeting agenda, was discussed at a BOD meeting had been "subject
to the authority of the COB." Thus, pursuant to the pre-amended
Guideline, no member of the BOD had been assured of an unfettered
right to have his/her ideas discussed at a BOD meeting. Even with the
amendment, no member of the BOD has been assured of an unfettered
right to have his/her ideas placed upon the pre-meeting published
agenda.
The Committee believes that the Guidelines should be amended to
assure each Director an unfettered right to cause subjects he/she
wishes discussed to be placed upon the published BOD pre-meeting
agenda and discussed. See, Shareholder Proposals, Corporate Guideline
Meeting Agenda Proposal, below.
F. Nominees' Specific Proposed Ideas
The following, not in order of significance, is a list of some
ideas which the Nominees would advocate in an attempt to improve
product/service, reputation, employee relations and profits at Luby's.
They would:
(1) encourage the free flow of information among employees,
former employees, Shareholders, customers and fellow Directors as to
concerns about Luby's, including, but not limited to a customer
cost-free hotline to obtain and utilize customer opinions and
suggestions and impartial exit interviews of former employees and
long-term vendors.
(2) solicit proposals (with specific reasoning) from Unit
Managers as to means to change Luby's for the better. (The Nominees
anticipate that suggestions will deal with issues related to
"made-from-scratch" and revival of a system of Unit Manager incentive
compensation.)
(3) at BOD meetings, advocate the implementation of promising
proposals obtained from Unit Managers and others.
(4) require Management to conduct adequate tests before
implementing strategic roll outs to ensure that profits are likely to
derive from changes, require Management to provide detailed
information as to the results of changes and, if the results are not
satisfactory, advocate a cessation of the respective changes.
(5) advocate that, through individual Director efforts and/or
through use of personnel of Luby's, a proactive approach be undertaken
to determine whether situations of potential material cost savings
exist within Luby's and, if such is determined to exist, advocate that
efforts be undertaken to capture the potential savings.
(6) encourage accountability of Management by advocating
compensation based upon production of positive financial results.
(7) advocate Director active participation and accountability.
The Committee believes that, through implementing such proposed
ideas, operating profits would increase and, hopefully, stock price
appreciation would follow. However, no assurance can be given by the
Committee that its Nominees, if elected, will be successful in
achieving those results.
ADDITIONAL INFORMATION
The Committee has prepared portions of this Proxy Statement based
upon publicly available information on Luby's and assumes no
responsibility for the accuracy or completeness of any such
information contained therein. Consent of the respective authors has
not been obtained to use their publication(s) as proxy solicitation
materials.
The Committee has also prepared this Proxy Statement without the
benefit of reviewing the definitive proxy statement of Luby's. As of
the date of this Proxy Statement, Luby's has not filed its definitive
proxy statement to be employed in conjunction with the Annual Meeting.
The information concerning the Nominees has been furnished by the
respective Nominees.
CONCLUSION
In the Committee's opinion, the above described history does NOT
suggest that Luby's is a well-managed company whose affairs are
overseen by a capable BOD. The Committee believes that the current
problems justify the step of electing independent Directors. Luby's
needs Directors who can be relied upon to exercise the sort of
effective oversight that is required to adequately protect the
interests of the Shareholders.
Shareholders need independent members on the BOD who, as
Shareholders' advocates, will ask and demand answers to the "tough
questions" and are willing to make independent inquiries.
Allow Mrs. Freeman and Messrs. Greenberg, Palmer, and Simpson to
be your advocates as independent members of the BOD. (Mrs. Freeman is
only to serve if four Director positions are subject to election at
the Annual Meeting.) Vote your proxy for these candidates.
SHAREHOLDER PROPOSALS
A. DECLASSIFIED BOARD PROPOSAL (ITEM 2)
The Committee seeks your support for the following Shareholder
Proposal, which has been submitted by Mr. Greenberg to Luby's for
inclusion in its proxy materials:
"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."
Adoption of the proposal would permit Shareholders, as owners of
Luby's, to express their sentiment with respect to the performance of
each Director on an annual basis.
BOD adoption of this proposal would repeal one of Luby's anti-
takeover measures a classified/staggered board. The Committee notes
that the existence of a classified/staggered board would make it more
difficult for a third party to acquire control of Luby's. The
existence of a classified/staggered board could have a material
adverse effect on the premium that potential acquirers might be
willing to pay in an acquisition or that investors might be willing to
pay in the future for the Common Stock. Also, there is no assurance
that elimination of the classified/staggered BOD would produce
greater management incentive or improve operating results.
Moreover, even if all Directors were to be elected annually,
Luby's has adopted pursuant to Delaware law an anti-takeover "rights
agreement" of the sort commonly known as a "poison pill." (See, Item
5, below.) Some opponents of declassification proposals argue that
adoption of this proposal could make the removal of management and
assumption of control by a principal shareholder easier even if such
removal would be generally detrimental to shareholders. They also
argue that annual change in BOD members could cause a sudden shift in
corporate policy and could contribute to the instability of Luby's
corporate governance. The Committee believes that the
Shareholders, on an annual basis, should be entitled to assess
those factors and vote upon the election of all Directors.
You are urged to vote IN FAVOR of the proposal.
B. RESTRICTION ON CASH INCENTIVE BONUS PLAN PROPOSAL (ITEM 3)
The Committee seeks your support for the following Shareholder
Proposal, which has been submitted by Mrs. Greenberg to Luby's for
inclusion in its proxy materials:
"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 (sic) 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."
You are urged to vote IN FAVOR of the proposal.
C. CORPORATE GUIDELINE MEETING AGENDA PROPOSAL (ITEM 4)
The Committee seeks your support for the following Shareholder
Proposal, which has been submitted by a person who is neither a member
of the Committee nor a Nominee to Luby's for inclusion in its proxy
materials:
"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."
You are urged to vote IN FAVOR of this proposal. (See, "BOD
Meeting Agendas," above.)
D. REMOVAL OF ANTI-TAKEOVER DEFENSES PROPOSAL (ITEM 5)
The Committee seeks your support for the following Shareholder
Proposal, which has been submitted by Anna M. Apanel, a person who is
neither a member of the Committee nor a Nominee and not affiliated or
associated with any of the participants or Nominees, to Luby's for
inclusion in its proxy materials:
"RESOLVED, the Shareholders of Luby's, Inc. request
that the Board of Directors take the necessary steps to
remove all anti-takeover provisions."
Anti-takeover defenses have the effect of making it more
difficult for a third party to acquire, or of discouraging a third
party from attempting to acquire control of a company.
This proposal appears to encompass the "declassified board"
proposal, above, of Mr. Greenberg.
If the proposal passes and is implemented, then the "rights
agreement" would not be in place. A "rights agreement" is designed
to strengthen the ability of the BOD to negotiate with hostile
bidders to ensure that the highest premium available be paid to
Shareholders. It may also serve to discourage coercive offers or
may enable the BOD to seek alternative offers for Shareholders.
However, such a plan could be used to block an offer which
Shareholders would find attractive or it might be used for an
undesirable purpose, such as making the removal of the BOD or
Management more difficult, even if such removal would be
beneficial to Shareholders generally, and limit Shareholder
participation in certain actions such as merger or tender offers
whether or not such transactions are favored by incumbent BOD.
The Committee believes that elimination of the anti-takeover
defenses would give Shareholders an improved opportunity to
determine for themselves how to respond to any offer, solicited
or unsolicited, that might be made. The Committee believes that
disclosure and substantive requirements of federal securities law
provide the Shareholders and Luby's adequate protection against
unfair or coercive offers.
You are urged to vote IN FAVOR of this proposal.
Each of the aforesaid Shareholder Proposals is advisory and will
not be implemented without the approval of the BOD. While not binding
on the BOD, the Committee believes that the adoption of the proposals,
or any of them, would send a clear message to the BOD as to
shareholder sentiment on the respective issues.
INFORMATION CONCERNING THE COMMITTEE
The Committee is composed of: L.L. Davis, a semi-retired
businessman, whose address is 4 Greyfriars Lane, San Antonio, Texas
78257 and who owns 100,000 shares of Luby's common stock; Mr.
Greenberg; Tommy H. Griggs, is a retired former 39-year employed of
Luby's where his last position was that of Director and Senior Vice
President - Management Personnel, whose address is 15 Westelm Circle,
San Antonio, Texas 78257 and who owns 300,000 shares of Luby's common
stock; Mr. Palmer; and Mr. Simpson. They may be deemed participants
in this solicitation, and they collectively hold approximately 1.85%
of the Common Stock of Luby's.
SHARES OWNED BY NOMINEES
The table below shows the amount of Common Stock beneficially
owned by the Nominees.
Name and Address Amount and Percent
Nature of
of Beneficial Class
Ownership
Elisse Jones Freeman (1) 53,562 0.240%
Herbert Leslie Greenberg (2) 5,800 0.025%
Thomas C. Palmer (3) 4,000 0.018%
Davis W. Simpson (4) 6,000 0.027%
(1) Business address: P. O. Box 1231, Lewisville, Texas 75067. (2)
Business address: P. O. Box 5445, Culver City, CA 90231. Mr.
Greenberg and Mrs. Greenberg own 1,000 shares as community property.
Mr. Greenberg owns 4,800 shares within his retirement plan. (3)
Business address: P.O. Box 6983, Tyler, Texas 75711.(4) Address: 1318
Twilight Ridge, San Antonio, TX 78230.
The following table shows the purchases and sales of Luby's
Common Stock by the retirement plan of Mr. Greenberg within the past
two years.
Number of Shares Purchase Date Sale Date
400 12/3/98
400 2/12/99
1,000 12/22/99
300 10/16/00
Except as described above, none of the Nominees has purchased or sold
securities of Luby's within the past two years.
VOTING PROCEDURES
The proxy statement and proxy card of Luby's include the
Shareholder Proposals, but NOT the names of Mrs. Freeman and Messrs.
Greenberg, Palmer and Simpson, our nominees for Director.
Even if you have already returned a proxy to Luby's by using the
proxy card of Luby's, you still can cast your vote for our Nominees,
or any of them, and for the Shareholder Proposals, or any of them, by
returning the enclosed BLUE proxy card. (See the discussion of
"Revocation Rights," below.)
The presence, in person or by proxy, of the holders of shares of
Common Stock entitled to cast a majority of the votes entitled to be
cast at the Annual Meeting is required to constitute a quorum for the
transaction of business at the Annual Meeting. Under applicable
Delaware law, abstentions and broker non-votes (i.e., shares held in
street name as to which the broker, bank or other nominee has no
discretionary power to vote on a particular matter, has received no
instructions from the persons entitled to vote such shares and has
appropriately advised the Company that it lacks voting authority) are
counted for purposes of determining the presence or absence of a
quorum for the transaction of business. A plurality of the votes
present, in person or by proxy, is necessary for the election of
directors. With regard to the election of directors, votes may be
cast in favor or withheld; votes that are withheld or broker non-votes
will be excluded entirely from the vote and will have no effect on the
outcome. Abstentions may not be specified in the election of
directors. A stockholder may, with respect to each other matter
specified in the notice of the meeting (i) vote "FOR," (ii) vote
"AGAINST" or (iii) "ABSTAIN" from voting. An affirmative vote of a
majority of the shares present in person or by proxy and entitled to
vote at the annual meeting is required for approval of the other
matters presented. Shares represented by proxies that are marked
"ABSTAIN" on such matters and proxies relating to broker non-votes
will be counted as shares present for purposes of determining the
presence of a quorum. Such shares, however, will not be treated as
shares voting and therefore will not affect the outcome of the vote on
matters. The Shareholder Proposals are advisory in nature and cannot
be implemented without approval of the BOD.
The accompanying BLUE proxy card will be voted at the Annual
Meeting in accordance with your instructions on the card. You may vote
FOR the election of Mrs. Freeman and Messrs. Greenberg, Palmer or
Simpson or all of them as Directors, or you may withhold authority to
vote for the election of any or all of them by marking the proper box
or boxes on the BLUE proxy card. It will not be possible to vote on
the election of any nominee of Luby's, who has been nominated by its
BOD to serve as a Director, by using the BLUE proxy card.
Unless otherwise directed on the enclosed BLUE proxy card, as
more fully described below, the Committee will vote FOR Mrs. Freeman,
FOR Mr. Greenberg, FOR Mr. Palmer and FOR Mr. Simpson to serve as the
Directors (Item 1) (with Mrs. Freeman only to serve if four Director
positions are subject to election at the Annual Meeting); will also
vote FOR the Declassified Board Proposal (Item 2), FOR Restriction on
Cash Incentive Bonus Plan Proposal (Item 3), FOR Corporate Guideline
Meeting Agenda Proposal(Item 4), and FOR Removal of Anti-Takeover
Defenses Proposal(Item 5) described herein. We will vote against any
and all proposals of Luby's to enhance the compensation of its senior
officers and/or Directors.
IF NO MARKING IS MADE, YOU WILL BE DEEMED TO HAVE GIVEN A
DIRECTION TO VOTE THE SHARES REPRESENTED BY THE BLUE PROXY CARD FOR
THE ELECTION OF MRS. FREEMAN AND MESSRS. GREENBERG, PALMER AND SIMPSON
AS DIRECTORS (ITEM 1) (with Mrs. Freeman only to serve if four
Director positions are subject to election at the Annual Meeting), AS
WELL AS FOR THE DECLASSIFIED BOARD PROPOSAL (ITEM 2), FOR RESTRICTION
ON CASH BONUS INCENTIVE PROPOSAL(ITEM 3), FOR CHANGE OF CORPORATE
GUIDELINES MEETING AGENDA PROPOSAL (ITEM 4) AND FOR REMOVAL OF
ANTI-TAKEOVER DEFENSES PROPOSAL (ITEM 5), PROVIDED THAT YOU HAVE
SIGNED AND DATED THE PROXY CARD.
REVOCATION RIGHTS
You may revoke a proxy vote any time before the tally by: (1)
executing a later proxy card; (2) appearing at the meeting to vote;
or, (3) delivering to the proxy holder or the Secretary of Luby's
written notice of revocation prior to the date of the Annual Meeting.
The Secretary of Luby's is Ms. Karen Hess, and the offices of Luby's
are located at 2211 Northeast Loop 410, San Antonio, Texas 78217-4673,
telephone (210) 654-9000. If you execute a later proxy card or
deliver to the proxy holder or the Secretary of Luby's written notice
of revocation prior to the date of the Annual Meeting, you would not
also need to vote at the Annual Meeting in order to revoke a
previously granted proxy.
The Committee will keep the content of all proxy cards it
receives confidential from everyone except those working directly with
it and its staff until the Annual Meeting, at which time the proxy
cards must be presented to the inspectors of election in order to be
counted.
SOLICITATION
The persons who may be considered participants in this
solicitation are: Mr. L.L. Davis; Mrs. Freeman; Mr. and Mrs.
Greenberg; Mr. Tommy H. Griggs; Mr. and Mrs. Palmer; and Mr. Simpson.
None of the persons who may be considered "participants" has any
arrangement or understanding with any person with respect to (1) any
future employment with Luby's or (2) any future transaction to which
Luby's or any of its affiliates may be a party. To the best of the
knowledge of the participants, none has been, within the past year, a
party to any contract, arrangement or understanding with any person
with respect to any securities of Luby's.
The participants intend to vote their shares of Common Stock in
accordance with the recommendations as to Director nominees of the
Committee as set forth herein.
Proxies will be sought by mail, courier service, advertising,
telecopier, Internet, telephone and/or personal interview. The
Committee may request that brokers, nominees, fiduciaries and other
custodians forward soliciting material to the beneficial owners of
shares and reimburse those intermediaries for their expenses. The
Committee and the aforesaid participants will bear the costs of this
solicitation. Although no precise estimate can be made at the present
time, those costs are expected to be approximately $25,000 and to date
the Committee has expended approximately $2,500. The Committee and
the aforesaid participants will seek reimbursement from Luby's for the
costs of the solicitation. Such issue will not be submitted to a vote
of the Shareholders.
SHAREHOLDER PROPOSALS FOR 2002 MEETING
Proposals that shareholders intend to present at the 2002 annual
meeting of stockholders (other than those submitted for inclusion in
proxy materials of Luby's pursuant to Rule 14a-8 of the Proxy Rules of
the Securities and Exchange Commission) must be received in writing by
Luby's no later than October 15, 2001 to be presented at the meeting.
Proposals from shareholders owning over $2,000 in stock for more than
one year that are submitted under Rule 14a-8 for inclusion in the
proxy materials of Luby's must be received in writing by Luby's no
later than August 2, 2001. Any such stockholder proposals must be
sent to the Secretary of Luby's at its executive offices at 2211
Northeast Loop 410, San Antonio, Texas 78217-4673.
PLEASE VOTE FOR MRS. FREEMAN AND MESSRS. GREENBERG, PALMER AND
SIMPSON, AND IN FAVOR OF ALL SHAREHOLDER PROPOSALS. (Mrs. Freeman is
only to serve if four Director positions are subject to election at
the Annual Meeting.)
Sincerely,
THE COMMITTEE OF CONCERNED LUBY'S SHAREHOLDERS
By: HERBERT LESLIE ("LES")GREENBERG
HERBERT LESLIE ("LES")GREENBERG
<PAGE>
=== PRELIMINARY COPY ===
(BLUE PROXY CARD)
PROXY
LUBY'S, INC.
2001 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY
THE COMMITTEE OF CONCERNED LUBY'S SHAREHOLDERS
FOR USE AT THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON JANUARY 12, 2001
AND AT ANY ADJOURNMENT THEREOF.
By signing this proxy, you revoke all prior proxies and appoint
Herbert Leslie ("Les") Greenberg, Paulette D. Greenberg and Thomas C.
Palmer, and each of them, as Proxies, each with full power of
substitution, to vote, as designated on the reverse side, at the
Annual Meeting of Shareholders of Luby's, Inc. to be held on January
12, 2001, and at any adjournment thereof, all shares of the Common
Stock of Luby's, Inc. registered in your name at the close of business
on November 27, 2000.
This proxy when properly executed will be voted as specified on the
reverse side, but, if no direction is given, this proxy will be voted
FOR Elisse Jones Freeman, Herbert Leslie ("Les") Greenberg, Thomas C.
Palmer and Davis W. Simpson (with Mrs. Freeman only to serve if four
Director positions are subject to election at the Annual Meeting), FOR
Item 2, FOR Item 3, FOR Item 4, and FOR Item 5. Shareholder Proposals
are advisory and will not be implemented without Board of Director
approval. Notwithstanding the foregoing, if this proxy is to be voted
for any nominee and such nominee is unwilling or unable to serve, this
proxy will be voted for a substitute in the discretion of the Proxies.
The Proxies are authorized to vote in their discretion upon such other
matters as may properly come before the Annual Meeting or any
adjournment, postponement or rescheduling thereof. The Committee is
not aware of any business other than as set forth in the Proxy
Statement that will be presented at the Annual Meeting.
(See reverse side for voting instructions.)
THE COMMITTEE OF CONCERNED LUBY'S SHAREHOLDERS
P. O. Box 6983
Tyler, Texas 75711
(800) 657-2286
Fax Nos. (903) 581-4000 or (903) 534-0613
E-mail: [email protected]
(BLUE PROXY CARD)
The Committee of Concerned Luby's Shareholders ("Committee")
recommends a vote FOR Elisse Jones Freeman, Herbert Leslie ("Les")
Greenberg, Thomas C. Palmer and Davis W. Simpson on Item 1, FOR Item
2, FOR Item 3, FOR Item 4 and FOR Item 5. (Mrs. Freeman only to serve
if four Director positions are subject to election at the Annual
Meeting.)
1. Election of Directors:
Elisse Jones Freeman
[ ] FOR [ ] AGAINST [ ] WITHHELD
Herbert Leslie ("Les") Greenberg
[ ] FOR [ ] AGAINST [ ] WITHHELD
Thomas C. Palmer
[ ] FOR [ ] AGAINST [ ] WITHHELD
Davis W. Simpson
[ ] FOR [ ] AGAINST [ ] WITHHELD
2. Shareholder proposal, by Herbert Leslie Greenberg, a member of
the Committee and a Nominee, to amend By-Laws to eliminate
staggered terms of office for and conduct annual elections of
all members of the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Shareholder proposal, by Paulette D. Greenberg, to withhold
executive officer cash bonuses unless financial status of
Luby's improves from year to year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Shareholder proposal to amend Corporate Guidelines so that
each Director has the right to place items for discussion on
agenda at meetings of the Board of Directors without
permission of Chairman of the Board.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Shareholder proposal to remove all anti-takeover defenses.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting.
The Committee is not aware of any business other than as set
forth in the Proxy Statement that will be presented at the
Annual Meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is
made, this proxy will be voted FOR Elisse Jones Freeman, Herbert
Leslie ("Les")Greenberg, Thomas C. Palmer and Davis W. Simpson (Item
1), and FOR Shareholder Proposals 2, 3, 4 and 5.
The undersigned revokes any prior proxies to vote the shares covered
by this Proxy.
DATED: ______, 200_
_____________________________ _______________________________
(PLEASE PRINT YOUR NAME) (PLEASE PRINT YOUR NAME)
_____________________________ _______________________________
Signatures (Signature, if held jointly)
_______________________________
Title
Jointly owned shares will be voted as directed if one owner signs
unless another owner instructs to the contrary, in which case the
shares will not be voted. Trustees, administrators, etc., should
include title and authority. Corporations and Partnerships should
provide the full name of the entity and title of authorized person
signing the proxy.
To vote in accordance with the recommendations of The Committee of
Concerned Luby's Shareholders, just sign and date this proxy. No
boxes need be checked.
