SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RYAN'S FAMILY STEAK HOUSES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
RYAN'S FAMILY STEAK HOUSES, INC.
405 Lancaster Avenue (29650)
Post Office Box 100 (29652)
Greer, South Carolina
March 30, 1999
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of
Ryan's Family Steak Houses, Inc. to be held on Wednesday, May 5, 1999, at 11:00
a.m. at the Greenville/Spartanburg Airport Marriott in Greenville, South
Carolina.
The official Notice of Annual Meeting, Proxy Statement and Proxy Card are
enclosed with this letter. The Notice of the Annual Meeting and Proxy Statement
describe the formal business to be transacted at the Annual Meeting.
THE VOTE OF EVERY SHAREHOLDER IS IMPORTANT. TO ENSURE PROPER REPRESENTATION
OF YOUR SHARES AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY PLAN TO
ATTEND THE ANNUAL MEETING. This will not prevent you from voting in person but
will ensure that your vote will be counted if you are unable to attend. Under
the laws of some states, failure to vote your shares (either in person or by
proxy) over a period of years can cause ownership of your shares to be
forfeited (escheated) to the state.
Sincerely,
/S/Janet J. Gleitz
Janet J. Gleitz
Secretary
<PAGE>
RYAN'S FAMILY STEAK HOUSES, INC.
405 Lancaster Avenue (29650)
Post Office Box 100 (29652)
Greer, South Carolina
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 1999
----------------------------------------
TO OUR SHAREHOLDERS:
Ryan's Family Steak Houses, Inc. (the "Company") will hold its Annual
Meeting of Shareholders at the Greenville/Spartanburg Airport Marriott,
Greenville, South Carolina, on Wednesday, May 5, 1999 at 11:00 a.m. for the
following purposes:
(1) To elect seven (7) directors to hold office until the next annual
meeting of shareholders or until their successors have been duly elected
and qualified; and
(2) To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
If you were a shareholder of record at the close of business on March 3,
1999, you may vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/Janet J. Gleitz
JANET J. GLEITZ
Secretary
March 30, 1999
Greer, South Carolina
A PROXY CARD IS ENCLOSED. TO ENSURE THAT YOUR SHARES WILL BE VOTED AT THE
ANNUAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED, POSTAGE-PAID, ADDRESSED
ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF
YOU RETURN YOUR SIGNED PROXY CARD, YOU RETAIN YOUR RIGHT TO VOTE IF YOU ATTEND
THE MEETING.
<PAGE>
RYAN'S FAMILY STEAK HOUSES, INC.
405 Lancaster Avenue (29650)
Post Office Box 100 (29652)
Greer, South Carolina
(864) 879-1000
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors (the "Board") of Ryan's Family Steak Houses, Inc.
(the "Company") is furnishing this Proxy Statement in connection with the
solicitation of proxies to be voted at the Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held at 11:00 a.m. on Wednesday, May
5, 1999, at the Greenville/Spartanburg Airport Marriott, Greenville, South
Carolina. The approximate mailing date of this Proxy Statement is March 30,
1999.
Shareholders of record at the close of business on March 3, 1999, are
entitled to notice of and to vote at the Annual Meeting. As of such date, a
total of 39,320,326 shares of common stock, $1 par value, of the Company
("Common Stock") were outstanding. Holders of Common Stock are entitled to one
vote for each share held of record on March 3, 1999, upon all matters presented
at the Annual Meeting.
A shareholder giving a proxy may revoke it at any time before it is
exercised by:
o submitting a written notice of revocation (dated later than the Proxy
Card) to the Secretary at or before the Annual Meeting;
o submitting another proxy that is properly signed and later dated; or
o voting in person at the meeting (although attendance at the Annual
Meeting will not in and of itself revoke a proxy).
Any instrument revoking a proxy should be delivered to the Secretary of
the Company at the Annual Meeting or delivered prior to the Annual Meeting to
Ryan's Family Steak Houses, Inc., 405 Lancaster Avenue, Greer, South Carolina
29650, or P.O. Box 100, Greer, South Carolina 29652, Attention: Janet J.
Gleitz.
Unless you revoke your proxy by following the above instructions, your
proxy will be voted as you specify. Unless you specify otherwise, all shares
represented by a proxy that is received by the Company's transfer agent will be
voted FOR the proposal to elect as directors of the Company the nominees named
in this Proxy Statement and in the best judgment of the proxy holders on any
other matter that may properly come before the Annual Meeting and any and all
adjournments thereof and on matters incident to the conduct of the meeting. An
automated system administered by the Company's transfer agent tabulates the
votes. Abstentions and broker non-votes are each included in determining the
number of shares present and able to vote. Each is tabulated separately. In
connection with the election of directors, abstentions and broker non-votes are
not counted in determining the votes cast for directors.
The Company's bylaws require the presence, either in person or by proxy,
of the holders of a majority of the outstanding shares of Common Stock at March
3, 1999, to constitute a quorum at the Annual Meeting. Directors will be
elected by a plurality of votes cast at the Annual Meeting. Shareholders do not
have a right to cumulate their votes for directors.
ELECTION OF DIRECTORS
(Item #1 on the Proxy)
The following seven persons are nominees for election at the Annual
Meeting as directors to serve until the next annual meeting of the Company or
until their successors are duly elected and qualified: Charles D. Way, G. Edwin
McCranie, Barry L. Edwards, James M. Shoemaker, Jr., Harold K. Roberts, Jr.,
James D. Cockman, and Brian S. MacKenzie. Unless you withhold authority to vote
for the Board's nominees in the election of directors, the persons named in the
enclosed proxy intend to nominate and vote for such nominees.
Management believes that all of the nominees will be available and able to
serve as directors, but if any nominee is not available or able to serve, the
Common Stock represented by the proxies will be voted for such substitute as
the Board of Directors may designate.
1
<PAGE>
The following table sets forth the name, age, principal occupation, years
of service as a director, and Common Stock beneficially owned as of March 3,
1999, of or by each nominee for director.
<TABLE>
<CAPTION>
Percent of
Outstanding Shares
Aggregate Number Represented by
of Shares Aggregate Number
Beneficially of Shares
Principal Owned as of Beneficially
Name Age Occupation Director Since March 3, 1999 (5) Owned (6)
- ---------------------------- ----- ---------------------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Charles D. Way 46 Chairman of the Board, President 1981 362,470(7) .9%
(1,2) and Chief Executive Officer of
the Company
G. Edwin McCranie 50 Executive Vice President of the 1991 154,379 .4%
(2) Company
Barry L. Edwards 51 Executive Vice President, 1982 65,731 .2%
(2,4) Treasurer and Chief Financial
Officer, AMRESCO, Inc.
James M. Shoemaker, Jr. 66 Member, Wyche, Burgess, 1982 70,735(8) .2%
(3,4) Freeman & Parham, P.A.
Harold K. Roberts, Jr. 48 President and Chief Executive 1988 47,326 .1%
(1,3,4) Officer, Statewide Title, Inc.
James D. Cockman 66 Investor 1993 32,000 .1%
(1,2)
Brian S. MacKenzie 47 Chief Operating Officer, 1993 32,000(9) .1%
(2,3) New Hope Communications, Inc.
</TABLE>
- ---------
(1) Member of the Nominating Committee. The Nominating Committee met once
during fiscal 1998 to recommend members of the Board. The Company's
Nominating Committee will consider nominees to the Board recommended by
shareholders of the Company for the 1999 Annual Meeting of Shareholders.
See "Proposals of Shareholders".
(2) Member of the Long Range Planning Committee. The Committee met once during
fiscal 1998 to provide long-term direction for the Company.
(3) Member of the Compensation and Stock Option Committee. The Committee met
twice during fiscal 1998 to review and submit to the Board recommendations
respecting the salary, bonus and option grants under the Company's 1998
Stock Option Plan to the Company's executive officers and key employees.
(4) Member of the Audit Committee. The Audit Committee met with representatives
of the Company's independent auditors once during fiscal 1998 to review
the scope and results of such firm's audit.
(5) Includes 260,000 shares for Mr. Way, 138,000 shares for Mr. McCranie,
50,000 shares for Mr. Edwards, 50,000 shares for Mr. Shoemaker, 45,000
shares for Mr. Roberts, 30,000 shares for Mr. Cockman and 30,000 shares
for Mr. MacKenzie that may be acquired within 60 days of March 3, 1999,
through the exercise of stock options.
(6) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company has computed percentages of
total outstanding shares assuming that shares that can be acquired within
60 days of March 3, 1999, upon the exercise of options by a given person
are outstanding, but no other such shares similarly subject to acquisition
by other persons are outstanding.
(7) The figure shown includes 10,380 shares owned by Mr. Way's wife. Mr. Way
may be deemed to share voting and investment power with respect to such
shares.
(8) The figure shown includes 2,000 shares owned by Mr. Shoemaker's wife. Mr.
Shoemaker may be deemed to share voting and investment power with respect
to such shares.
(9) The figure shown includes 500 shares held in trust for the benefit of Mr.
MacKenzie's minor child.
The Board met four times during fiscal 1998. All directors attended
personally or by telephone all meetings of the Board and committees on which
they served.
Business Experience of Nominees for Director
Charles D. Way became the Chairman of the Board of the Company in October
1992. Mr. Way assumed the position of President and Chief Executive Officer of
the Company in October 1989. From June 1988 to October 1989, he served as
President. From May 1986 to June 1988, he served as Executive Vice President,
Treasurer and Secretary. From January 1981 through April 1986, he served as
Vice President-Finance, Treasurer and Secretary. Mr. Way joined the Company in
June 1979 as Controller. Mr. Way is also a director of World Acceptance
Corporation.
2
<PAGE>
G. Edwin McCranie was promoted to Executive Vice President of the Company
in January 1995. From November 1991 to December 1994, he served as Executive
Vice President-Purchasing. From January 1989 to October 1991, he served as Vice
President-Purchasing. Mr. McCranie joined the Company in 1986 and served as
Director of Purchasing until 1989.
Barry L. Edwards has served as Executive Vice President, Treasurer and
Chief Financial Officer of AMRESCO, Inc., an asset management company, since
November 1994. He served as Vice President and Treasurer of The Liberty
Corporation, engaged primarily in the life insurance business, from 1979 to
November 1994.
James M. Shoemaker, Jr. has been an attorney with Wyche, Burgess, Freeman
& Parham, P.A., the law firm that is general counsel to the Company, since
1965. Mr. Shoemaker also is a director of Palmetto Bancshares, Inc., One Price
Clothing Stores, Inc., and Span-America Medical Systems, Inc.
Harold K. Roberts, Jr. has served as President and Chief Executive Officer
of Statewide Title, Inc., a real estate title insurance agency, since 1989. Mr.
Roberts was a partner in the firm of Roberts and Morgan, certified public
accountants, from October 1989 until December 1996.
James D. Cockman is a private investor. From 1989 until 1992, he served as
Chairman of the Sara Lee Food Service Division of Sara Lee Corp., which engages
in the business of processing and distributing food products. In addition, Mr.
Cockman was Chief Executive Officer of several Sara Lee operating companies for
17 years prior to 1989. Mr. Cockman also serves as a director of California
Culinary Academy, Inc. and as a director and a shareholder of Phillips & Goot,
Inc. d/b/a BRAINS ON FIRE ("PGI"), a brand development and growth strategy
firm.
Brian S. MacKenzie has served as Chief Operating Officer of New Hope
Communications, Inc., a publishing company, since December 1998. He served as
President and Chief Executive Officer of Builder Marts of America, Inc. ("BMA")
from October 1993 to August 1998. From May 1991 to October 1993, he served as
BMA's President and Chief Operating Officer after serving as President of its
Building Materials Retail Division from July 1990 to May 1991. BMA is a
wholesale distributor of building materials and supplies.
Compensation of Directors
During 1998, the Company paid to directors who were not officers of the
Company an annual retainer of $12,000, plus $2,000 per meeting of the Board,
and $500 for each committee meeting attended. Pursuant to this arrangement,
directors were paid as follows during fiscal 1998: Mr. Cockman, $21,000; Mr.
Edwards, $21,250; Mr. MacKenzie, $21,500; Mr. Roberts, $21,500; and Mr.
Shoemaker, $21,500. Directors who are also officers received no payments for
attending Board or committee meetings.
In addition, the Company grants to directors who are not officers of the
Company options for 5,000 shares each of Common Stock in January of each year.
Pursuant to such arrangement, on each of January 30, 1998 and January 29, 1999,
the Company granted options for 5,000 shares of Common Stock to each of Messrs.
Edwards, Shoemaker, Roberts, Cockman and MacKenzie. The options granted on
January 30, 1998 had an exercise price of $8.31 per share (the per share market
value on the date of grant), were immediately exercisable and expire on January
30, 2008. The options granted on January 29, 1999, had an exercise price of
$13.81 per share (the per share market value on the date of grant), were
immediately exercisable and expire on January 29, 2009.
Vote Required to Elect Directors
Directors will be elected by a plurality of votes cast at the Annual
Meeting. Shareholders do not have a right to cumulate their votes for
directors. Abstentions and broker non-votes are not counted in determining the
votes cast for directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE ELECTION OF EACH NOMINEE LISTED HEREIN
3
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS, INSIDER PARTICIPATION
AND RELATED PARTY TRANSACTIONS
During fiscal 1998, Messrs. Edwards, MacKenzie and Shoemaker, each a
non-employee director, served on the Compensation and Stock Option Committee of
the Board. Mr. Shoemaker is a member of the law firm of Wyche, Burgess, Freeman
& Parham, P.A. ("WBFP"), which serves as general counsel to the Company. In
1998, the Company paid approximately $20,000 to WBFP for its services.
The Company uses the firm of PGI, a South Carolina corporation with its
principal office in Greenville, South Carolina, for certain creative and
production services related to the Company's advertising and merchandising
programs. The Company began to use PGI in 1997, paying approximately $240,000
during 1998 for their services. The Company estimates that PGI billings during
1999 will be approximately $200,000. Mr. Cockman is a director and a
shareholder of PGI and owns approximately 33% of its common stock.
CERTAIN BENEFICIAL OWNERS OF COMMON STOCK
To the extent known to the Company, the only persons or groups that in any
case beneficially owned 5% or more of the outstanding shares of the Common
Stock of the Company as of March 3, 1999 are shown in the following table:
<TABLE>
<CAPTION>
Name and Address Amount of Percent of
of Beneficial Owner Beneficial Ownership Class
- -------------------------------------------- ---------------------- -----------
<S> <C> <C>
Trimark Financial Corporation (1) 4,737,300(1) 12.05%
One First Canadian Place
Suite 5600
Toronto, Ontario
Canada M5X 1E5
Mellon Bank Corporation (2) 2,069,933(2) 5.26%
One Mellon Bank Center
Pittsburgh, PA 15258
</TABLE>
- ---------
(1) The information with respect to the beneficial ownership of Trimark
Financial Corporation ("TFC") is based on information provided by it on
February 1, 1999. TFC reported that certain Trimark mutual funds (the
"Funds") are record owners of a portion of the 4,737,300 shares of Common
Stock shown in the table. Trimark Investment Management Inc. ("TIMI") is
the manager of the assets of the Funds and trustee of the Funds and, as
such, has sole voting power and sole dispositive power with respect to
such shares of Common Stock. TFC owns 100% of the voting equity securities
of TIMI, and consequently may be deemed to be the beneficial owner of such
shares of Common Stock.
(2) The information with respect to the beneficial ownership of Mellon Bank
Corporation ("Mellon") is based on information provided by it on February
24, 1999. All of the shares shown are beneficially owned by Mellon or
direct or indirect subsidiaries of Mellon in their various fiduciary
capacities. Of the total amount of shares shown as beneficially owned by
Mellon, it or its subsidiaries has sole voting power as to 1,786,930
shares, shared voting power as to 34,485 shares, sole dispositive power as
to 2,029,078 shares and shared dispositive power as to 40,855 shares of
the Company's Common Stock.
4
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the name, age, position with the Company,
years of service as an officer of the Company and Common Stock beneficially
owned as of March 3, 1999, by each executive officer of the Company and all
executive officers and directors as a group. The Company's executive officers
are appointed by and serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
Aggregate Percent of
Number Outstanding Shares
of Shares Represented by
Company Beneficially Aggregate Number of
Company Offices Officer Owned as of Shares Beneficially
Name Age Currently Held Since March 3, 1999 (1) Owned (2)
- ------------------------ ----- --------------------------------------- --------- ------------------- --------------------
<S> <C> <C> <C> <C> <C>
Charles D. Way 46 Chairman of the Board, 1981 362,470(3) .9%
President and Chief Executive Officer
G. Edwin McCranie 50 Executive Vice President and Director 1989 154,379 .4%
Janet J. Gleitz 56 Secretary 1988 23,600(4) .1%
Morgan A. Graham 62 Vice President-Construction 1991 95,585 .2%
Fred T. Grant, Jr. 43 Vice President-Finance, 1990 88,865 .2%
Treasurer and Assistant Secretary
James R. Hart 51 Vice President-Human Resources 1988 89,101 .2%
John C. Jamison 40 Vice President-Real Estate 1988 108,500 .3%
Alan E. Shaw 40 Vice President-Operations 1990 102,167 .3%
Ilene T. Turbow 48 Vice President-Marketing 1995 34,412 .1%
All executive officers 1,306,871 3.2%
and directors as a
group (14 persons)
</TABLE>
- ---------
(1) Includes 260,000 shares for Mr. Way, 138,000 shares for Mr. McCranie,
21,500 shares for Ms. Gleitz, 93,000 shares for Mr. Graham, 85,700 shares
for Mr. Grant, 86,574 shares for Mr. Hart, 105,000 shares for Mr. Jamison,
100,000 shares for Mr. Shaw, 32,640 shares for Ms. Turbow, and 1,127,414
shares for all executive officers and directors as a group that may be
acquired within 60 days of March 3, 1999, through the exercise of stock
options.
(2) Pursuant to Rule 13d-3 under the Exchange Act, the Company has computed
percentages of total outstanding shares assuming that shares that can be
acquired within 60 days of March 3, 1999, upon the exercise of options by
a given person or group are outstanding, but no other such shares
similarly subject to acquisition by other persons are outstanding.
(3) The figure shown includes 10,380 shares owned by Mr. Way's wife. Mr. Way
may be deemed to share voting and investment power with respect to such
shares.
(4) The figure shown includes 1,000 shares held by the pension plan of Acro
International Inc., a company owned by Ms. Gleitz's husband.
In 1996, the Company implemented a policy to encourage executive officers
to own more of the Company's Common Stock, which would more closely align the
personal financial interests of executive officers with shareholders'
interests. The policy provides that over 13 years, the value of an executive
officer's Common Stock ownership should increase so that by the end of 2008 the
value of such stock holdings equals 100% of the individual's base salary. If an
executive officer does not meet a year's target ownership value, up to one-half
of any bonus payable to such officer for that year may be paid in the Company's
Common Stock.
Background of Executive Officers
Below is a summary of the backgrounds of the Company's executive officers
who are not also directors of the Company.
Janet J. Gleitz joined the Company in 1981 and served as Corporate
Relations Administrator until June 1988, when she became Secretary.
Morgan A. Graham has been Vice President-Construction since November 1991.
After joining the Company in July 1987 as a Construction Superintendent, he
served in several construction-related positions, including Project Manager,
Architectural Coordinator, Procurement Manager and Director of Construction,
until assuming his present position.
5
<PAGE>
Fred T. Grant, Jr., a certified public accountant, joined the Company in
January 1990 as Director of Finance. He served in that position until April
1990, when he became Vice President-Finance. In January 1994, Mr. Grant was
named Vice President-Finance, Treasurer and Assistant Secretary.
James R. Hart joined the Company in 1979 and served as a store manager
until September 1983. From that time, he served as Director of Human Resources
until April 1988, when he became Vice President-Human Resources.
John C. Jamison joined the Company in 1980 and served as a manager trainee
and store manager until February 1983. Since that time, he served as Assistant
Director of Development and Director of Development until January 1988, when he
became Vice President-Development. In May 1991, he was named Vice
President-Real Estate.
Alan E. Shaw joined the Company in 1979 and served as a store manager
until being promoted to Supervisor in 1982, in which position he served until
1984. From 1984 through 1989, he served as Assistant Director of Operations and
Regional Director of Operations prior to his promotion to Regional Vice
President-Operations in January 1990. In November 1991, Mr. Shaw became Vice
President-Operations.
Ilene T. Turbow joined the Company in April 1993 as Director of Marketing.
She served in that position until August 1995, when she became Vice
President-Marketing. Prior to joining the Company, Ms. Turbow was General
Manager with Kaminsky's from 1992 to 1993, where she was responsible for store
operations of a prototype restaurant concept. From 1985 to 1992, she was Vice
President with Dawson Foodservice, Inc., a foodservice marketing firm.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table shows for the fiscal years 1998, 1997 and 1996 the
cash compensation paid by the Company and its subsidiaries, as well as certain
other compensation paid or accrued for those years, to the chief executive
officer and the four other executive officers with the highest total salaries
and bonuses in 1998 (collectively the "Named Executive Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------
Awards
Annual Compensation -------------
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($) (1)
- ------------------------------------ -------- ------------ ----------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
Charles D. Way, 1998 310,009 285,480 80,000 33,107
Chairman of the Board, President 1997 265,071 159,000 0 35,664
and Chief Executive Officer 1996 240,414 144,000 30,000 38,453
G. Edwin McCranie, 1998 170,789 137,183 50,000 30,057
Executive Vice President 1997 147,019 86,214 6,000 33,572
1996 123,935 49,446 12,000 36,978
Fred T. Grant, Jr., 1998 158,837 127,764 40,000 27,256
Vice President-Finance, Treasurer 1997 139,395 81,830 6,000 29,389
and Assistant Secretary 1996 123,114 49,446 10,000 31,947
John C. Jamison, 1998 132,562 91,260 30,000 23,157
Vice President-Real Estate 1997 122,589 61,373 0 24,927
1996 116,092 46,632 10,000 27,177
Alan E. Shaw, 1998 177,630 137,000 45,000 28,932
Vice President-Operations 1997 143,770 69,000 6,000 30,894
1996 121,997 52,100 10,000 33,334
</TABLE>
- ---------
(1) "All Other Compensation" for 1998 includes the following: (i)
contributions of $1,877 to the Company's 401(k) Plan (the "Plan") on
behalf of each of Messrs. Way, McCranie, Grant, Jamison and Shaw to match
a portion of the 1998 pre-tax elective deferral contributions (included
under Salary and Bonus) made by each to such Plan; (ii) premium payments of
$4,659 on behalf of each of Messrs. Way, McCranie, Grant, Jamison and Shaw
for a policy of health insurance providing a level of coverage not otherwise
available under the Company's standard health plan; (iii) premium payments
of $204 on behalf of each of Messrs. Way, McCranie, Grant, Jamison and Shaw
and for an additional $100,000 in life
6
<PAGE>
insurance above the coverage available to salaried employees generally; (iv)
a premium payment of $2,428 for disability insurance coverage for Mr. Way;
and (v) the Company's estimate of the imputed benefit to Messrs. Way,
McCranie, Grant, Jamison and Shaw of $23,939, $23,317, $20,516, 16,417 and
$22,192, respectively, of split-dollar life insurance coverage (including
the value of the term insurance portion) purchased by the Company on each
officer's life in the policy amounts of $1,005,000, $1,101,000, $840,000,
675,000 and $910,000, respectively. Under the Company's insurance plan, the
Company pays premiums on such a policy on the life of a participating
executive officer for a period of ten years. The Company owns the policy for
the first five years of the policy. After the fifth year, the Company
transfers ownership of the policy to the participating executive. These
transfers occurred in March 1999. The Company must be repaid the aggregate
amount of the premiums, without interest, at the earlier of the executive's
death or termination of his employment.
Summary of Option Grants, Option Exercises and Holdings
The following table illustrates the value of the stock options granted to
the Named Executive Officers during fiscal 1998:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
- -----------------------------------------------------------------------------------
% of Total Market Price
Number of Options Required to
Securities Granted to Realize Grant
Underlying Employees in Exercise Grant Date Date Present
Options 1998 Fiscal Price Expiration Present Value
Name Granted (#) Year ($/Sh) Date Value ($) (1) ($/Sh)
- -------------------- --------------- -------------- ---------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Charles D. Way 40,000(2) 2.7% 7.44 01/22/2008 134,000 10.79(4)
40,000(3) 2.7% 11.19 10/27/2008 193,600 16.03(5)
G. Edwin McCranie 25,000(2) 1.7% 7.44 01/22/2008 83,750 10.79(4)
25,000(3) 1.7% 11.19 10/27/2008 121,000 16.03(5)
Fred T. Grant, Jr. 20,000(2) 1.3% 7.44 01/22/2008 67,000 10.79(4)
20,000(3) 1.3% 11.19 10/27/2008 96,800 16.03(5)
John C. Jamison 15,000(2) 1.0% 7.44 01/22/2008 50,250 10.79(4)
15,000(3) 1.0% 11.19 10/27/2008 72,600 16.03(5)
Alan E. Shaw 22,500(2) 1.5% 7.44 01/22/2008 75,375 10.79(4)
22,500(3) 1.5% 11.19 10/27/2008 108,900 16.03(5)
</TABLE>
- ---------
(1) In accordance with Securities and Exchange Commission ("SEC") rules, the
Company calculated the dollar amounts under this column using the
Black-Scholes based option valuation model. The Company's use of this
model should not be construed as an endorsement of its accuracy at valuing
options. All stock option models require a prediction about the future
movement of stock price. The valuation assumes an expected volatility of
0.31, a 0% dividend yield, a 7-year holding term prior to exercise, a
risk-free rate of return of 5.58% for the options expiring January 22,
2008 and a risk-free rate of return of 4.63% for the options expiring
October 27, 2008, reflecting the yield on a zero coupon U.S. Treasury
security for the holding term prior to exercise of the option. The Company
made no adjustment for non-transferability or risk of forfeiture. The
actual value of the options, if any, will depend on the extent to which
the market value of the Common Stock exceeds the exercise price of the
option on the date of exercise.
(2) These options became exercisable in full on January 22, 1998. In addition,
the stock option plan and/or stock option agreements set forth certain
earlier expiration dates.
(3) Except for options representing 8,900 shares, these options became
exercisable in full on October 27, 1998. The options representing 8,900
shares became exercisable in full on January 2, 1999. In addition, the
stock option plan and/or stock option agreements set forth certain earlier
expiration dates.
(4) In order to obtain the Grant Date Present Value shown, the market price of
the Common Stock would need to be $10.79 in present value terms.
(5) In order to obtain the Grant Date Present Value shown, the market price of
the Common Stock would need to be $16.03 in present value terms.
7
<PAGE>
The following table shows option exercises, the unexercised options held
as of the end of fiscal 1997 and the value of such options for each Named
Executive Officer.
Aggregated Option Exercises In Last Fiscal Year And Fiscal
Year-End Option Values
<TABLE>
<CAPTION>
Value of
Unexercised
Number of Securities In-The-Money
Underlying Options
Unexercised Options at 1998 Fiscal
at 1998 Fiscal Year-End
Year-End(#) ($)(2)
---------------------- -----------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($)(1) Unexercisable Unexercisable
- ------------------------ -------------- ----------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Charles D. Way (3) 0 -- 281,100/8,900 1,282,791/11,659
G. Edwin McCranie (4) 0 -- 139,100/8,900 690,421/11,659
Fred T. Grant, Jr. (5) 29,000 164,363 77,100/8,900 307,836/11,659
John C. Jamison 12,500 95,375 96,100/8,900 457,316/11,659
Alan E. Shaw 9,000 38,813 91,100/8,900 373,531/11,659
</TABLE>
- ---------
(1) The value realized of exercised options is the product of (a) the excess of
the per share fair market value of the Common Stock on the date of
exercise over the per share option exercise price, multiplied by (b) the
number of shares acquired upon exercise.
(2) The Company calculated the value of unexercised in-the-money options for
each officer as follows: (a) market price of the Common Stock as of
December 30, 1998, times (b) the number of shares covered by such
in-the-money options held by such officer minus the product of the
exercise price with respect to such options and the number of shares
covered by such options.
(3) Mr. Way exercised options covering 30,000 shares on January 28, 1999. In
accordance with SEC rules, this exercise will be reported in tabular
format in the Company's proxy statement for the 2000 annual meeting.
(4) Mr. McCranie exercised options covering 10,000 shares on December 31, 1998.
In accordance with SEC rules, this exercise will be reported in tabular
format in the Company's proxy statement for the 2000 annual meeting.
(5) Mr. Grant exercised options covering 300 shares on February 1, 1999. In
accordance with SEC rules, this exercise will be reported in tabular
format in the Company's proxy statement for the 2000 annual meeting.
Deferred Compensation -- Salary Continuation Agreement
The Company is party to a Deferred Compensation -- Salary Continuation
Agreement with Mr. Charles Way. The agreement provides for cash payments of
$60,000 per year for each of the 20 years following Mr. Way's retirement, death
or total disability, with retirement age set at 55. These benefits began
vesting 10% per annum in 1987 and are now fully vested. The total deferred
compensation liability as of December 30, 1998 relating to this agreement was
$247,532. An aggregate of $65,572 of deferred compensation was accrued under
this agreement for the benefit of Mr. Way during fiscal 1998. The Company is
the owner and beneficiary of a life insurance policy on the life of Mr. Way.
The Company expects that the cost of benefits under this arrangement will be
recovered through a combination of general corporate funds and the cash
surrender value of the insurance policy.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and greater-than-10% stockholders to file reports with the
SEC and the NASDAQ on changes in their beneficial ownership of the Company's
Common Stock and to provide the Company with copies of the reports. Based on
the Company's review of these reports and of certifications furnished to it,
the Company believes that all of these reporting persons complied with their
filing requirements for 1998.
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation and Stock Option Committee (the "Committee") of the Board
of Directors periodically submits to the Board recommendations respecting the
salary, bonus and other compensation to be provided to the Company's executive
officers and grants options for shares of the Company's Common Stock to the
Company's executive officers and employees. The Committee provides the
following report.
Executive Officer Compensation
The Committee attempts to act on the shareholders' behalf in establishing
executive compensation programs, for the Company's shareholders ultimately bear
the cost of these programs. The Company adopts and administers its executive
compensation policies and specific executive compensation programs in
accordance with that objective. The Committee annually reviews the Company's
corporate performance and that of its executive officers to determine
appropriate compensation. The Committee seeks to achieve a balance between the
Company's need to attract and retain qualified and motivated executives, on the
one hand, and maximizing the Company's operating performance, on the other.
The Committee's executive compensation philosophy is to set compensation
levels in its discretion that provide for compensation opportunities that
reflect Company and individual performances. The Company's current executive
compensation structure consists of base salary, incentive cash bonuses and
stock options.
Over the years, the Committee has attempted to set executive officer cash
compensation amounts at levels somewhat lower than levels that the Committee
believes prevail within the restaurant industry, and has complemented these
cash amounts with significant stock option grants.
The Committee adjusted the salaries for all executive officers except Mr.
Way in 1998 based upon the recommendations of Mr. Way. Mr. Way considered
factors that were generally subjective, such as his perception of individual
performance and the level of individual responsibility. Mr. Way recommended
increases in the base salaries of executive officers ranging from 8% to 16%.
The Committee determined that these increases were appropriate to compensate
executive officers for the increased level of responsibility associated with
the increase in the Company's size.
The Committee generally grants stock options on an annual basis at an
exercise price equal to the stock market price at the time of grant. The grants
provide the Company's executive officers and key employees with an equity
ownership opportunity in the Company and with incentives to maximize
shareholder value. The Committee can grant stock options at its discretion and
is not required to award grants within any given 12-month period. During 1998,
the Committee made two option grants to each executive officer shown in the
table titled "Option Grants in Last Fiscal Year." The January 1998 grant was
made in lieu of the grant that normally would have been made in late-1997. The
October 1998 grant represents the normal year-end grant for 1998. In
determining the size of any stock option grant, the Committee considers the
following qualitative factors: the Committee's perception of the Company's
overall performance; the individual's performance; the potential effect that
the individual's future performance may have on the Company; and the number of
options previously granted to the individual. The Committee gave each of these
factors approximately equal weight.
During 1998, Alan Shaw, Vice President-Operations, was paid quarterly
bonuses based on four factors: same-store sales comparisons; net earnings per
share compared to the immediately preceding year; customer service as reported
through a "hidden shopper" program; and various other subjective
considerations, including management turnover, team work and creativity. The
first two factors were given a combined weight of approximately 80%. The
Committee considered each of these factors and awarded bonuses to Mr. Shaw as
noted in the Summary Compensation Table.
During 1998, the Committee continued an Executive Bonus Plan to provide
additional incentives to its other executive officers. The bonus plan covers
eight of the Company's nine executive officers. Alan Shaw participates in the
plan described above. Pursuant to the plan, each year the Committee establishes
a percentage of each participating executive's annual base salary, ranging from
20%-40%, as a target bonus amount. The executive is eligible to receive this
bonus amount, or a portion or multiple thereof, if the executive meets or
exceeds objectives set by the Committee.
In the case of all executive officers other than Charles Way and Alan
Shaw, the receipt of the target bonus was based upon the achievement of Company
objectives related to increase in same-store sales, increase in net earnings
per share, and subjective departmental and personal objectives. The Committee
weighted each of these factors approximately equally in setting the target
bonus. The Company's performance during 1998 was substantially above targeted
levels in both of the Company-wide measures, which when combined with
performance of departmental and personal objectives, resulted in bonus payouts
that were substantially above targeted levels.
9
<PAGE>
In the case of Mr. Way, the receipt of his entire target bonus was based
upon the achievement of Company objectives related to increase in same-store
sales and increase in net earnings per share. The Committee weighted each of
these factors approximately equally in setting the target bonus. The Company's
performance during 1998 was substantially above targeted levels in both
measures, resulting in a bonus payout that was substantially above the targeted
level. In early 1999, the Committee considered each of these objectives and
awarded bonuses as noted in the Summary Compensation Table in accordance with
the Bonus Plan.
The Omnibus Budget Reconciliation Act of 1993 denies publicly traded
companies the ability to deduct for federal income tax purposes certain
compensation paid (including income on exercised stock option grants) to top
executive officers in excess of $1 million per person. The Committee intends to
administer the Company's executive compensation programs in such a way that
anticipated compensation to executive officers will be fully deductible under
the Internal Revenue Code, including submitting plans for shareholder approval
where necessary and determining compensation on an objective basis where
necessary.
Chief Executive Officer Compensation
Mr. Way joined the Company in 1979, has served as its President and Chief
Executive Officer since 1989, and became Chairman of the Board in 1992. In
setting Mr. Way's compensation, the Committee tends to set a relatively low
base salary for an individual with Mr. Way's responsibilities and emphasize
stock option grants as a component of his overall compensation package. The
Committee believes that this approach to Mr. Way's compensation has resulted in
an appropriate alignment of his long-term rewards from the Company with the
interests of shareholders.
During 1998, the Committee adjusted Mr. Way's base salary upward by
approximately 15%. In making this adjustment, the Committee considered
subjective factors including the perception of the committee as to Mr. Way's
overall performance and objective factors such as the increase in the Company's
earnings per share, operating margins, and return on equity. Each of these
factors was given approximately equal weight. In addition, Mr. Way received a
bonus of $285,480 pursuant to the bonus plan described above because of the
Company's attainment of its same-store sales and net earnings per share
objectives.
In addition, during January and October 1998, the Committee granted Mr.
Way options with respect to an aggregate of 80,000 shares of Common Stock. No
options were granted to Mr. Way during 1997. In determining the size of this
grant, the Committee considered the following qualitative factors: the
Committee's perception of the Company's overall performance; Mr. Way's
performance; the potential effect of his future performance on the Company; and
the number of options previously granted to him. Each of these factors was
given approximately equal weight. At fiscal 1998 year-end, the value of Mr.
Way's outstanding exercisable in-the-money stock options was $1,282,791 as
compared to $265,275 at the end of 1997, an increase of 383.6%. The Stock
Option Committee believes that the stock options provide Mr. Way with
appropriate incentives to promote long-term shareholder value.
Compensation and Stock Option Committee
Brian S. MacKenzie, Chairman
James M. Shoemaker, Jr.
Harold K. Roberts, Jr.
10
<PAGE>
PERFORMANCE GRAPH
A line graph comparing the cumulative, total shareholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total returns of the NASDAQ Market Index and a peer group consisting of all
publicly traded companies whose SIC code is 5812, the code for eating places,
over the same period (assuming a $100 initial investment and dividend
reinvestment) is presented below. The Company will promptly furnish without
charge to any shareholder of record on March 3, 1999, the identity of the
companies included in the peer group. Requests should be directed to the
Company, Post Office Box 100, Greer, South Carolina 29652; Attention:
Shareholder Relations.
Note: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURNS
AMONG RYAN'S FAMILY STEAK HOUSES, INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX FOR EATING PLACES FOR THE
FIVE-YEAR PERIOD ENDED DECEMBER 30,1998 (YEAR-END 1998)
(GRAPH APPEARS HERE)
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
-------------------------------------------------------------------------
COMPANY/INDEX/MARKET 12/29/1993 12/28/94 1/03/1996 12/31/1996 12/31/1997 12/30/1998
- -------------------- ---------- -------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ryans Family 100.00 80.71 84.29 78.57 97.86 142.86
Eating Places 100.00 87.58 119.93 125.73 132.33 178.78
NASDAQ Market Index 100.00 104.99 136.18 169.23 207.00 291.96
</TABLE>
AUDITORS
The Board has appointed KPMG Peat Marwick LLP, independent certified
public accountants, as auditors for the Company for the current fiscal year and
to examine and report to shareholders upon the financial statements as of and
for the year ending December 29, 1999. Representatives of KPMG Peat Marwick LLP
will be present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions that the shareholders may have. KPMG Peat Marwick LLP has
acted for the Company in this capacity since 1981, and neither the firm nor any
of its members has any relation with the Company except in the firm's capacity
as auditors and tax advisors.
SOLICITATION OF PROXIES
The Company will pay for soliciting proxies. Officers and other regular
employees of the Company may solicit proxies by telephone, telegram or personal
interview for no additional compensation. The Company has engaged W. F. Doring
& Company to solicit proxies and distribute materials to brokerage houses,
banks, custodians, nominees and fiduciaries for
11
<PAGE>
a fee of approximately $10,000. The Company will make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation material to beneficial owners of the stock held of record by such
persons, and the Company will reimburse such persons for reasonable
out-of-pocket expenses incurred by them in so doing.
PROPOSALS OF SHAREHOLDERS
Any shareholder who wishes to present a proposal at the 2000 Annual
Meeting of Shareholders of the Company and have such proposal included in the
proxy statement and proxy card relating to that meeting must deliver such
proposal to the Company no later than December 2, 1999. The proposal must
comply with the rules of the SEC relating to shareholder proposals.
Shareholders desiring to make a recommendation to the Nominating Committee of
the Board of Directors should submit the name(s) and business background(s) of
the proposed nominee(s) for the Board by no later than December 2, 1999. With
respect to a shareholder proposal for the 2000 Annual Meeting of Shareholders
that is not intended to be included in the proxy materials relating to the
meeting, the proposal must be received by the Company forty-five (45) days
prior to the shareholders meeting at which the proposal is to be presented.
After that date, the proposal will not be considered timely. Shareholders may
send their proposals to the Company, Attention: Janet J. Gleitz, Post Office
Box 100, Greer, South Carolina 29652.
FINANCIAL INFORMATION
The Company's 1998 Annual Report is enclosed. The Company will provide
without charge to any shareholder of record as of March 3, 1999, who requests
in writing, a copy of the Company's 1998 Annual Report or the 1998 Annual
Report on Form 10-K (without exhibits), including financial statements and
financial statement schedules, if any, filed with the Securities and Exchange
Commission. Any such request should be directed to Ryan's Family Steak Houses,
Inc., 405 Lancaster Avenue, Greer, South Carolina 29650, or Post Office Box
100, Greer, South Carolina 29652, Attention: Janet J. Gleitz, Secretary.
OTHER BUSINESS
As of the date of this Proxy Statement, management was not aware that any
business not described above would be presented for consideration at the Annual
Meeting. If any other business properly comes before the meeting, the shares
represented by proxies will be voted according to the best judgment of the
person voting them.
By Order of the Board of Directors,
/S/Janet J. Gleitz
Janet J. Gleitz
Secretary
Greer, South Carolina
March 30, 1999
12
