The Committee of Concerned Luby's Shareholders, P.O. 6983, Tyler,
Texas 75711, 800/657-2286
E-mail: [email protected]
LUBY'S NEEDS WATCHDOGS ON ITS BOARD OF DIRECTORS
The Director-nominees of The Committee of Concerned Luby's
Shareholders, Mrs. Freeman and Messrs. Greenberg, Palmer and
Simpson, have demonstrated their willingness to independently and
aggressively represent the interests of Shareholders by bringing
a grass-roots proxy contest. Shareholders need them on the BOD
as watchdogs to advocate effective decision making --- to make
sure that Luby's has a proper business plan and that the plan is
properly executed.
WHERE WAS THE BOD?
During the past 3 fiscal years:
sales and earnings declined.
the stock price plummeted 75% with $1/3 billion loss of
market capitalization.
the cumulative total Shareholder return on Luby's stock
was -67% while that of its Peer Group was -13% and
that of the S&P SmallCap 600 was +36%.
the dividend was eliminated.
In the Committee's opinion, the BOD has demonstrated lack of
commitment to Luby's and its Shareholders and lack of concern
with Shareholder value, as it allowed Luby's to:
in the very competitive food service industry,
enthusiastically select Parker as CEO, a person with no
prior food service industry experience who had led his
retail clothing company for many years, shortly after
which it filed for bankruptcy.
switch to outsourced food when the 50+ year reputation
of Luby's was based upon food "made-from-scratch."
lower the compensation of it best Unit Managers 40% to
50% with concomitant departures of many Unit Managers
and Assistant Unit Managers.
permit Parker to exercise a "my-way-or-the-highway"
management style.
implement a price reduction program --- "bundled meals"
--- without adequate testing of the marketing strategy
and with negative financial results.
after witnessing poor performance, extend Parker's 3-
year employment contract on
July 19, 2000, but not inform Shareholders until
September 25, 2000 when Parker resigned "subject to
finalizing a separation agreement."
engage in non-effective advertising programs.
oppose Shareholder Proposals to reduce BOD entrenchment
and stop payment of executive cash bonuses without
financial performance.
Luby's candidates, Directors Hemminghaus (who, after being
on the BOD for 13 years, owns 5,766 shares of Luby's stock) and
Calgaard (who owns 0 shares of Luby's stock) are, respectively,
the Chairman and a member of the 3 person Compensation Committee.
In 1999, in spite of poor performance, the Compensation Committee
recommended and caused Luby's to:
raise Parker's base pay from $360,000 to $390,000 and
then from $390,000 to $405,000 "based upon his
performance."
award Parker a $93,500 cash incentive bonus "based upon
his performance."
enter into a "Change in Control Agreement" with Parker
and other executives.
set Parker's compensation package with the extension of
his employment agreement.
SMOKE AND MIRRORS?
The Committee has been prodding Luby's. Luby's recently
claimed that it is making some "exciting" changes. Smoke and
mirrors? In Annual Reports, the BOD told Shareholders, "Luby's
is making a concerted, system-wide commitment to change ...."
(1998) and "We've changed ... how we do many things" (1999).
Now, we know the results of those changes.
THE COMMITTEE'S INDEPENDENT NOMINEES
If elected, the Committee's nominees would:
be truly independent and only beholding to the
Shareholders.
strive to make much better efforts than were previously
made by the BOD in the selection of a new CEO.
attempt to re-set the philosophy and direction at
Luby's to assure better communication between Unit
Managers and Senior Management with goals of raising
efficiency and corporate morale.
make efforts to stop the ineffective "bundled meals"
program.
encourage efforts to assure a return to more of a
"made-from-scratch " approach to restore the reputation
of Luby's.
advocate the reduction of corporate debt.
engage Luby's Internal Audit Department and other means
to locate possibilities of cost savings and encourage
cost savings programs.
INSTITUTIONAL SHAREHOLDERS
Institutional Shareholders are required to uphold their
fiduciary duties when voting their Luby's shares. Voting for a
team which has a demonstrated history of lack of commitment to
Luby's and its Shareholders and lack of concern with Shareholder
value may be inconsistent with that obligation.
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The Committee has filed its Preliminary Proxy Statement with the
Securities and Exchange Commission and anticipates that it will be
filing its Definitive Proxy Statement and BLUE Proxy Card in the near
future. You are urged to read the Definitive Proxy Statement when it
becomes available because it will contain important information.
After it is filed with the SEC, you will be able to obtain a copy,
free of charge, at the SEC's web-site (http://www.sec.gov).
Certain persons may be deemed to be "participants" in the solicitation
of proxies on behalf of the Committee. Their names and respective
beneficial share interests are as follows: L.L. Davis (100,000);
Elisse Jones Freeman (53,562); Herbert Leslie ("Les") and Paulette
Nebrat Greenberg (5,800); Tommy H. Griggs, formerly Director and
Senior Vice President - Management Personnel of Luby's (300,000);
Thomas C. and Marjorie T. Palmer (4,000); and, Davis W. Simpson,
formerly Director of Management Training and Vice President of
Managerial Personnel of Luby's (6,000).
