<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
MORRISON RESTAURANTS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF MORRISON RESTAURANTS APPEARS HERE]
August 25, 1995
Dear Stockholders:
We are holding your 1995 Annual Meeting on Wednesday, September 27, 1995, at
10:30 a.m., local time, at the Company's executive offices, 4721 Morrison
Drive, Mobile, Alabama 36609. I sincerely hope that you will be able to attend
the meeting, and I look forward to seeing you. Matters on which action will be
taken at the meeting are explained in detail in the Notice and Proxy Statement
following this letter.
We hope that you will be able to attend the meeting in person. Whether or not
you expect to be present, please complete, date, sign and mail the enclosed
proxy in the envelope provided. If you attend the meeting, you may withdraw
your proxy and vote your own shares.
Sincerely,
MORRISON RESTAURANTS INC.
/s/ Samuel E. Beall, III
Samuel E. Beall, III
Chairman of the Board and
Chief Executive Officer
M O R R I S O N R E S T A U R A N T S I N C.
P.O. Box 160266 . 4721 Morrison Drive . Mobile, Alabama 36625-0001
. (334) 344-3000 . Telefax (334) 344-3066
<PAGE>
MORRISON RESTAURANTS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
SEPTEMBER 27, 1995
The Annual Meeting of Stockholders of Morrison Restaurants Inc. will be held
at the Company's executive offices, 4721 Morrison Drive, Mobile, Alabama 36609
on Wednesday, September 27, 1995, at 10:30 a.m., local time, for the following
purposes:
1. To elect two Class II directors to the Board of Directors for a term of
three years.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on August 4, 1995, are
entitled to vote at the meeting.
The mailing address of the Company's principal executive office is Post
Office Box 160266, Mobile, Alabama 36625.
We hope you will be able to attend the meeting in person. Whether or not you
expect to be present, please complete, date, sign, and mail the enclosed proxy
in the envelope provided. If you attend the meeting, you may withdraw your
proxy and vote your own shares.
By Order of the Board of Directors
/s/ Pfilip G. Hunt
Pfilip G. Hunt
Senior Vice President,
General Counsel
and Secretary
August 25, 1995
Mobile, Alabama
<PAGE>
MORRISON RESTAURANTS INC.
4721 MORRISON DRIVE
POST OFFICE BOX 160266
MOBILE, ALABAMA 36625
PROXY STATEMENT FOR 1995 ANNUAL MEETING OF STOCKHOLDERS
The following statement and the accompanying proxy card, first mailed to
stockholders on or about August 25, 1995, are furnished in connection with the
solicitation by the Board of Directors of Morrison Restaurants Inc. (the
"Company") of proxies to be used in voting at the Annual Meeting of
Stockholders of the Company to be held on September 27, 1995, at the Company's
executive offices, 4721 Morrison Drive, Mobile, Alabama 36609 and at any
adjournment(s) thereof (the "Meeting").
Any stockholder returning a proxy has the power to revoke it prior to the
Meeting by giving the Secretary of the Company written notice of revocation, by
returning a later dated proxy or by expressing a desire to vote in person at
the Meeting. All shares of the Company's common stock, $.01 par value ("Common
Stock"), represented by valid proxies received pursuant to this solicitation
and not revoked before they are exercised will be voted in the manner specified
therein. If no specification is made, the proxy will be voted in favor of the
election of the two nominees for directors named in this Proxy Statement and in
accordance with the best judgment of the proxy holders on any other matter that
may properly come before the Meeting.
The entire cost of soliciting these proxies will be borne by the Company. In
following up to the original solicitation of the proxies by mail, the Company
will request brokers and others to send proxy forms and other proxy material to
the beneficial owners of the Common Stock and will reimburse them for the
expenses in so doing. If necessary, the Company also may use some of its
employees to solicit proxies from the stockholders personally or by telephone.
The number of shares of outstanding stock entitled to vote at the Meeting is
34,532,900 shares of Common Stock, each of which is entitled to one vote.
August 4, 1995 has been fixed as the record date for determination of
stockholders entitled to notice of and to vote at the Meeting and, accordingly,
only holders of Common Stock of record at the close of business on that date
will be entitled to notice of and to vote at the Meeting.
ELECTION OF DIRECTORS
Election of each of the Director Nominees named below requires the approval
of a plurality of the votes cast in the election. If authority to vote for one
or more Director Nominees is withheld on a proxy card, no vote will be cast
with respect to the shares indicated on that card and the outcome of the
election will not be affected. "Broker non-votes" do not occur in connection
with elections of directors. Shares as to which authority to vote is withheld
are counted in determining whether a quorum exists.
The Company's Certificate of Incorporation provides for three classes of
directors with staggered, three-year terms of office and provides that upon the
expiration of the term of office for a class of directors, the nominees for
that class will be elected for a term of three years to serve until the
election and qualification of their successors or until their earlier
resignation, death or removal from office. At the Meeting, the two nominees are
for the Class II directors. The Class I and Class III directors have one year
and two years, respectively, remaining on their terms of office. The Company's
Certificate of Incorporation and its Bylaws provide that the Board of Directors
shall consist of not less than nine nor more than 12 directors and authorize
the exact number to be fixed from time to time by the Board of Directors. The
Board of Directors has fixed at nine the exact number of members of the Board
of Directors and has nominated John B. McKinnon and Dolph W. von Arx to serve
in Class II of the Board of Directors for a term of three years.
1
<PAGE>
Both nominees are currently serving as directors of the Company. Wallace R.
Bunn, who is currently serving as a Class II director, attained age 70 during
his current term of office and, in accordance with the Company's Bylaws, will
not stand for re-election at the Meeting. The Nominating Committee has
considered a number of well qualified individuals for nomination to the
position being vacated by Mr. Bunn's retirement, but has not concluded its
search for a candidate possessing the business background and experience
desired by the Nominating Committee. Therefore, the Board of Directors has
determined to maintain a vacancy in Class II to be filled by the Board of
Directors at such time as the Nominating Committee recommends a candidate to
fill the vacancy created by Mr. Bunn's retirement.
It is intended that persons named in the accompanying form of proxy will vote
for the two nominees listed below unless authority to so vote is withheld.
Although the Board of Directors does not expect that any of the nominees
identified herein will be unavailable for election, in the event a vacancy in
the slate of nominees occurs, the shares represented by proxies in the
accompanying form may be voted for the election of a substitute nominee
selected by the persons named in the proxy.
DIRECTOR AND DIRECTOR NOMINEE INFORMATION
NOMINEES FOR DIRECTORS
CLASS II -- TERM EXPIRING 1998
JOHN B. MCKINNON
Director of the Company since 1989 Age: 60
Prior to his retirement in May 1995, Mr. McKinnon was Dean, Babcock Graduate
School of Management, Wake Forest University. Prior thereto, he was President,
Sara Lee Food Service from July 1988 through June 1989, and President, Sara Lee
Corporation from July 1986 through June 1988. Mr. McKinnon also is a director
of Premark International and Integon Corporation.
DOLPH W. VON ARX
Director of the Company since 1992 Age: 60
Prior to his retirement in 1991, Mr. von Arx was Chairman of the Board,
President and Chief Executive Officer of Planters LifeSavers Company, an
affiliate of RJR Nabisco, Inc. Mr. von Arx also is a director of Cree Research,
Inc.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM EXPIRING 1997
SAMUEL E. BEALL, III
Director of the Company since 1982 Age: 45
Mr. Beall has been Chairman of the Board and Chief Executive Officer of the
Company since May 1995. Mr. Beall served as President and Chief Executive
Officer of the Company from June 1992 to May 1995 and President and Chief
Operating Officer of the Company from September 1986 to June 1992. Mr. Beall
also is a director of First American Corporation.
DR. DONALD RATAJCZAK
Director of the Company since 1981 Age: 52
Dr. Ratajczak is Professor and Director, Economic Forecasting Center, Georgia
State University. Dr. Ratajczak also is a director of Morgan Keegan Inc. and
CIM High Yield Securities Fund.
2
<PAGE>
CLAIRE L. ARNOLD
Director of the Company since 1994 Age: 48
Ms. Arnold is currently a private investor. Ms. Arnold served as President
and Chief Executive Officer of Nicotiana Enterprises, Inc., a family holding
company holding stock in NCC L.P., from August 1979 to February 1995 and was
Chief Executive Officer of NCC L.P., a major distributor of grocery, tobacco,
candy, health and beauty, and allied products to retail stores, from November
1992 to April 1994. Prior thereto, Ms. Arnold was Chairman and Chief Executive
Officer of NCC L.P. from August 1979 to November 1992. Ms. Arnold also is a
director of Schweitzer-Mauduit International, Inc.
CLASS I -- TERM EXPIRING 1996
E. EUGENE BISHOP
Director of the Company since 1963 Age: 65
Mr. Bishop was Chairman of the Board of the Company from June 1992 until his
retirement in May 1995. From June 1986 to June 1992, he was Chairman of the
Board and Chief Executive Officer of the Company. Mr. Bishop also is a director
of Delchamps, Inc.
ARTHUR R. OUTLAW
Director of the Company since 1959 Age: 68
Mr. Outlaw has been Vice Chairman of the Board of the Company since December
1984. From October 1985 to October 1989, he was Mayor, City of Mobile, Alabama.
DR. BENJAMIN F. PAYTON
Director of the Company since 1993 Age: 62
Dr. Payton has been the President of Tuskegee University since 1981. Dr.
Payton also is a director of AmSouth Bancorporation, The ITT Corporation, The
Liberty Corporation, Sonat, Inc. and Praxair, Inc.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 4, 1995
(except as otherwise noted) regarding the amount of Common Stock beneficially
owned by all persons known to the Company who beneficially own more than five
percent of the outstanding Common Stock, each director and director nominee of
the Company, each named executive (as defined below), and all directors and
executive officers of the Company as a group. An asterisk indicates beneficial
ownership of less than one percent of the outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OR GROUP BENEFICIALLY OWNED(1) OF CLASS(2)
------------- -------------------- ----------
<S> <C> <C>
Shawmut National Corporation(3)........ 1,763,564(3) 5.0
C. L. Arnold........................... 6,302 *
S. E. Beall, III....................... 791,521(4) 2.2
E. E. Bishop........................... 1,394,948(5) 3.9
W. R. Bunn............................. 22,323 *
J. B. McKinnon......................... 9,323(6) *
A. R. Outlaw(7)........................ 4,145,065(8) 12.0
B. F. Payton........................... 6,414 *
D. Ratajczak........................... 14,986(9) *
D. W. von Arx.......................... 8,573(10) *
G. A. Davenport........................ 14,959(11) *
A. R. Johnson.......................... 10,155 *
R. D. McClenagan....................... 110,333 *
R. L. Tatum............................ 46,347 *
All directors and executive officers as
a group (16 persons).................. 6,698,985(12) 18.3
</TABLE>
(Footnotes on the following page)
3
<PAGE>
- --------
(1) Includes (i) shares subject to options exercisable within 60 days after
August 4, 1995 held by the named persons and group as follows: Ms. Arnold,
786; Mr. Beall, 697,500; Mr. Bishop, 1,061,250; Mr. Bunn, 4,407; Mr.
McKinnon, 4,407; Dr. Payton, 786; Dr. Ratajczak, 4,407; Mr. von Arx, 4,407;
Mr. Davenport, 8,740; Mr. McClenagan, 105,796; Mr. Tatum, 34,728; and all
directors and executive officers as a group, 2,007,299; and (ii) shares
held in the Company's Salary Deferral Plan as follows: Mr. Beall, 7,054;
Mr. Davenport, 643; and all directors and executive officers as a group,
7,808.
(2) "Percent of Class" has been calculated by taking into account all shares as
to which the indicated person has sole or shared voting or investment power
(including shares subject to options exercisable within 60 days after
August 4, 1995), without regard to any disclaimers of beneficial ownership
by the person indicated.
(3) The holder's address is 777 Main Street, Hartford, Connecticut 06115. The
information presented is based on the holder's amendment to Schedule 13G
dated January 20, 1995 which reports beneficial ownership with respect to
the indicated shares as follows: (i) sole voting power, 1,691,889 shares;
(ii) shared voting power, 11,500 shares; (iii) sole dispositive power,
1,529,364 shares; (iv) shared dispositive power, 234,200 shares; and (v)
aggregate amount beneficially owned, 1,763,564 shares.
(4) Includes 54,000 shares held by the Beall Family Ltd. Partnership, a limited
partnership of which Mr. Beall is a General Partner.
(5) Includes 6,160 shares owned by Mr. Bishop's spouse.
(6) Includes 2,250 shares owned by Mr. McKinnon and his spouse as tenants in
common.
(7) Mr. Outlaw's address is 4721 Morrison Drive, Mobile, Alabama 36609.
(8) Includes (i) 2,963,104 shares held by Mr. Outlaw as executor or trustee of
various estates and trusts for the benefit of relatives, and (ii) 49,711
shares owned by Mr. Outlaw's spouse.
(9) Includes 6,750 shares held in a KEOGH account for the benefit of Dr.
Ratajczak.
(10) Includes 2,250 shares held by the von Arx Family Foundation, a charitable
organization. Mr. von Arx may be deemed to share voting and dispositive
power with respect to such shares by virtue of his position as a member of
the Board of Directors of the foundation.
(11) Includes (i) 325 shares held in an Individual Retirement Account for the
benefit of Mr. Davenport and (ii) 88 shares held in an Individual
Retirement Account for the benefit of Mr. Davenport's spouse.
(12) Includes 17,275 shares held by an executive officer's spouse. The
executive officer disclaims beneficial ownership of these shares.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and greater than 10% shareholders ("Reporting
Persons") to file certain reports ("Section 16 Reports") with respect to
beneficial ownership of the Company's equity securities. Based solely on its
review of the Section 16 Reports furnished to the Company by its Reporting
Persons and, where applicable, any written representation by any of them that
no Form 5 was required, all Section 16(a) filing requirements applicable to the
Reporting Persons during and with respect to Fiscal 1995 have been complied
with on a timely basis except that, (i) due to an administrative oversight,
shares held by the following executive officers and directors in the Company's
Dividend Reinvestment Plan were not reported on Forms 5 with respect to Fiscal
1994: Samuel E. Beall, III, 3 shares (held by Mr. Beall's minor sons); J.
Russell Mothershed, 25 shares; Ronald Vilord, 33 shares; Ronnie L. Tatum, 68
shares; and Donald Ratajczak, 22 shares, and (ii) Mr. Davenport did not timely
report, during Fiscal 1994, the acquisition by him of 325 shares through his
Individual Retirement Account and the acquisition by his wife of 88 shares
through her Individual Retirement Account.
4
<PAGE>
DIRECTORS' FEES AND ATTENDANCE
The Board of Directors held six meetings during Fiscal 1995. Directors who
are employees of the Company, other than Mr. Outlaw, receive no directors'
fees. All non-management directors currently receive a $20,000 annual retainer
(the "Retainer") and $1,000 per Board meeting attended. Mr. Outlaw, who serves
as Vice Chairman of the Board and is an employee of the Company, receives fees
of $250 per Board meeting attended. Mr. Outlaw, however, does not receive a
Retainer. Each of the directors attended at least 75 percent of the meetings of
the directors and committees of which such director was a member.
Non-management directors serving on the Audit Committee, the Executive
Committee, the Compensation and Stock Option Committee or the Nominating
Committee (other than the Chairmen of such committees) receive a fee of $500
for each committee meeting attended in conjunction with a meeting of the Board
of Directors or $1,000 for each committee meeting attended that is not held in
conjunction with a meeting of the Board of Directors. Mr. Outlaw receives the
same fees as non-management directors for attending meetings of the committees
on which he serves. Committee Chairmen receive a fee of $2,000 for each
committee meeting attended. Non-management directors serving on any committee
are compensated at a rate of $200 an hour for services performed on special
assignments. In addition, in recognition of the extensive time expended to
attend a special meeting with the Company's independent compensation consultant
for the purpose of reviewing the Company's executive compensation program, each
of Messrs. Bunn and von Arx, the Chairman and Vice Chairman, respectively, of
the Compensation and Stock Option Committee, received a special fee of $3,600
during Fiscal 1995.
The Company maintains the Morrison Restaurants Inc. Stock Incentive and
Deferred Compensation Plan for Directors (the "Directors' Plan"). The
Directors' Plan permits non-management directors to defer all or a portion (in
25 percent increments) of their retainer (other than any portion of the
retainer allocated to Stock Awards, as described below) and/or any additional
meeting and committee fees to a deferred compensation account. Deferred
compensation accounts are credited as of the last day of each fiscal quarter
with an assumed rate of income equal to 90-day U.S. Treasury bills, based on
the weighted average balance of that account during that fiscal quarter.
Amounts credited to a director's deferred compensation account will be
distributed not sooner than the earlier of the first January 15 or July 15
following (i) the date of the director's seventieth birthday, or (ii) the date
the director ceases to be a member of the Board.
Effective September 28, 1994, the Directors' Plan was amended to encourage
further Company stock ownership by non-management directors. The Directors'
Plan provides that each non-management director who has not attained the
"Target Ownership Level," as defined below, will be deemed to have elected to
direct that 60 percent of his or her retainer payable for each fiscal quarter
be allocated to the purchase of Common Stock on his or her behalf. Each non-
management director who has attained the Target Ownership Level may elect to
direct, in 10 percent increments and subject to such other conditions
prescribed by the Directors' Plan, that up to 60 percent of his or her retainer
for each fiscal quarter be allocated to the purchase of Common Stock on his or
her behalf (collectively, the "Stock Awards"). A deemed election will continue
in effect until that director, after attaining the Target Ownership Level,
modifies or revokes the election in the manner allowed for discretionary
elections.
A director will be treated as having attained the "Target Ownership Level"
for a fiscal quarter if he or she owns, on the first day of that fiscal
quarter, at least a number of shares of Common Stock with a fair market value,
as determined by the closing price on the last trading date prior to such date
("Fair Market Value"), equal to 10 multiplied by that director's annual
retainer.
Each director who has elected, or who has been deemed to have elected, to
purchase Stock Awards for a fiscal quarter, shall be issued the number of
shares of Common Stock equal to the amount of the retainer elected to be so
allocated, multiplied by 1.15 and divided by the Fair Market Value of a share
of Common Stock. Common Stock so purchased may not be transferred within three
years of the date of purchase, except in the event of death, disability,
retirement on or after age 70 or unless this restriction is waived.
5
<PAGE>
The Directors' Plan provides that each non-management director who receives
Stock Awards, whether through a deemed election or a discretionary election,
shall be awarded an option to purchase shares of Common Stock (the "Options")
equal to three times the number of shares issued pursuant to the discretionary
election or deemed election, as the case may be.
Options issued under the Directors' Plan will be granted on the first day of
each fiscal quarter for which an election for a Stock Award is in effect; will
become fully exercisable six months following the date of grant; and will be
exercisable at the Fair Market Value of the Common Stock. Each Option shall
expire generally upon the fifth anniversary of the date on which it was
granted.
Under the amended Directors' Plan, a one-time restricted stock award of 5,000
shares of Common Stock was made to each of the Company's non-management
directors who was first elected as a director on or after September 29, 1993.
One-third of the Common Stock subject to any restricted stock award vests on
each of the first three anniversary dates of the date the director was first
elected to the Board of Directors if the individual is a non-management
director on the applicable anniversary date. However, shares subject to the
restricted stock award shall become 100 percent vested on any earlier to occur
of the following additional vesting dates: the date the individual ceases to be
a non-management director on account of death, disability, attainment of age 70
or upon a Change in Control (as defined in the Directors' Plan).
COMMITTEES OF THE BOARD
The Board of Directors is responsible for the overall affairs of the Company.
To assist the Board of Directors in carrying out this responsibility, the Board
has delegated certain authority to several committees. Information concerning
these committees follows.
Executive Committee. The Executive Committee makes recommendations to the
Board of Directors and has and may exercise all of the powers of the Board of
Directors to the extent permitted by applicable law. The Executive Committee
met three times during Fiscal 1995. The current members of the Executive
Committee are John B. McKinnon (Chairman), Samuel E. Beall, III, Wallace R.
Bunn and Donald Ratajczak.
Audit Committee. The Audit Committee is comprised solely of non-management
directors. The Audit Committee maintains communications with the Company's
auditors as to the nature of the auditors' services, fees and such other
matters as the auditors believe may require the attention of the Board. The
Audit Committee reviews the Company's internal control procedures and makes
recommendations to the Board with respect thereto. The Audit Committee met two
times during Fiscal 1995. The current members of the Audit Committee are John
B. McKinnon (Chairman), Donald Ratajczak, Wallace R. Bunn, Benjamin F. Payton,
Dolph W. von Arx, Claire L. Arnold and E. Eugene Bishop.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee is comprised solely of non-management directors. The Compensation and
Stock Option Committee makes recommendations to the Board of Directors with
respect to compensation of officers and with respect to the granting of stock
options. The Compensation and Stock Option Committee met two times during
Fiscal 1995. The current members of the Compensation and Stock Option Committee
are Wallace R. Bunn (Chairman), Donald Ratajczak, John B. McKinnon, Benjamin F.
Payton, Dolph W. von Arx, Claire L. Arnold and E. Eugene Bishop.
Nominating Committee. The Nominating Committee recommends individuals to the
Board of Directors for consideration as nominees for directors of the Company.
The Nominating Committee met one time during Fiscal 1995. The current members
of the Nominating Committee are Donald Ratajczak (Chairman), Wallace R. Bunn,
E. Eugene Bishop, Samuel E. Beall, III, Arthur R. Outlaw, Benjamin F. Payton,
John B. McKinnon, Dolph W. von Arx and Claire L. Arnold. Alternatively, notice
of nominations to be made by any stockholder at a meeting must be submitted in
the manner and within the time periods prescribed in the Company's Certificate
of Incorporation. Any such notice should be directed to the Secretary of the
Company at the following address: Morrison Restaurants Inc., Post Office Box
160266, Mobile, Alabama 36625.
6
<PAGE>
EXECUTIVE COMPENSATION
This section of the proxy statement discloses Fiscal 1995 compensation
awarded, paid to, or earned by the Company's Chief Executive Officer and each
of the four other executive officers of the Company who were most highly
compensated in Fiscal 1995 (together, these five persons are sometimes referred
to as the "named executives").
TABLE I--SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM ALL OTHER
COMPENSATION COMPENSATION COMPENSATION
--------------- ------------------ ------------
AWARDS PAYOUTS
-------- ---------
LTIP
SALARY BONUS OPTIONS/ PAYOUTS
NAME AND POSITION YEAR ($) ($) SARS (#) ($) ($)(1)
----------------- ---- ------- ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
S. E. Beall, III............... 1995 564,900 588,626 -0- 393,750(2) 49,572
Chairman of the Board 1994 525,000 630,000 -0- 360,000(2) 27,609
and Chief Executive Officer 1993 400,000 214,240 30,000 -0- 8,939
G. A. Davenport................ 1995 181,432 229,040 11,292 -0- 19,807
President, Health 1994 143,000 182,800 26,220 -0- 11,725
Care Division (3) 1993 N/A N/A N/A N/A N/A
R. D. McClenagan............... 1995 248,184 124,242 -0- -0- 34,430
President, Ruby 1994 236,400 295,500 46,950 -0- 21,470
Tuesday Division 1993 200,000 85,900 12,300 -0- 6,836
R. L. Tatum.................... 1995 200,400 104,454 2,007 -0- 54,900
President, Family 1994 170,100 217,125 38,394 -0- 27,675
Dining Division 1993 120,000 180,000 4,700 -0- 7,151
A. R. Johnson.................. 1995 213,165 91,231 2,190 -0- -0-
President, Specialty 1994 200,045 178,800 32,712 -0- -0-
Division (4) 1993 N/A N/A N/A N/A N/A
</TABLE>
- --------
(1) The amounts in this column include the following: (a) Company contributions
to the Deferred Compensation Plan for 1995, 1994 and 1993, respectively: S.
E. Beall, III, $0, $1,567 and $3,821; G. A. Davenport, $4,947, $3,189 and
N/A; R. D. McClenagan, $3,616, $3,699 and $3,613; and R. L. Tatum, $3,696,
$3,696 and $4,621; (b) executive group life and accidental death and
dismemberment insurance plan premiums paid for 1995, 1994 and 1993,
respectively: S. E. Beall, III, $822, $5,729 and $5,118; G. A. Davenport,
$660, $3,161 and N/A; R. D. McClenagan, $814, $5,271 and $3,223; and R. L.
Tatum, $704, $2,937 and $2,530; and (c) split-dollar life insurance
premiums paid by the Company for 1995 and 1994, respectively: S. E. Beall,
III, $48,750 and $20,313; G. A. Davenport, $14,200 and $5,375; R. D.
McClenagan, $30,000 and $12,500; and R. L. Tatum, $50,500 and $21,042.
(2) Represents the value of 15,000 shares of Common Stock earned by Mr. Beall
in each of Fiscal 1995 and 1994 pursuant to the performance stock rights
awarded to him by the Company in July 1993 and approved by the stockholders
at the 1993 Annual Meeting of Stockholders. Under this award, payouts of
15,000 shares each are made to Mr. Beall over a five-year period ending in
1998 if the Company's Common Stock reaches a pre-established per share
price for a period of 22 consecutive trading days during the period ending
May 31 of each year in the five-year period. Such pre-established per share
prices were $23.00 in 1994, and $26.45 in 1995, and are $30.42 in 1996,
$34.98 in 1997 and $40.23 in 1998. Shares not earned in any given year may
be earned in a subsequent year if the stated price level for the subsequent
year is obtained. The value of such shares has been calculated based on the
market price of the Common Stock on the date of issuance of the shares.
(3) Mr. Davenport was elected as an executive officer of the Company effective
November 1, 1993.
(4) Mr. Johnson was elected as an executive officer of the Company effective
June 6, 1993.
7
<PAGE>
TABLE II--OPTIONS GRANTS IN FISCAL 1995
This table presents information regarding Fiscal 1995 grants of options to
purchase Common Stock. The Company has no outstanding SARs and granted no SARs
during Fiscal 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE(3)
AT ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION TERM
-----------------------------------
INDIVIDUAL GRANTS 5% ($) 10% ($)
------------------------------------- ------------------ ----------------
% OF MARKET MARKET
TOTAL PRICE PRICE
OPTIONS REQUIRED REQUIRED
GRANTED TO TO
TO EXERCISE REALIZE REALIZE
OPTIONS EMPLOYEES OR BASE DOLLAR DOLLAR DOLLAR
GRANTED IN FISCAL PRICE EXPIRATION DOLLAR GAINS GAINS GAINS
NAME (#)(1) YEAR(2) ($/SH) DATE GAINS ($) ($/SH) ($) ($/SH)
---- ------- --------- -------- ---------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S. E. Beall, III........ -0- N/A N/A N/A -0- N/A -0- N/A
G. A. Davenport......... 9,360 2.82% 22.75 30-Jun-99 58,831 29.04 130,002 36.64
1,932 0.58% 26.75 04-Mar-00 14,279 34.14 31,552 43.08
R. D. McClenagan........ -0- N/A N/A N/A -0- N/A -0- N/A
R. L. Tatum............. 2,007 0.61% 25.75 03-Sep-99 14,278 32.86 31,551 41.47
A. R. Johnson........... 2,190 0.66% 23.63 04-Jun-99 14,294 30.15 31,587 38.05
</TABLE>
- --------
(1) The indicated options have a term of five years and were granted pursuant
to the Company's Stock Incentive Plan (formerly, the 1989 Non-Qualified
Stock Option Plan). Those options with an exercise price of $22.75 per
share become exercisable after three years. The vesting of these options
may be accelerated up to one year if predetermined goals for Fiscal 1994
and Fiscal 1995 are achieved. All other options listed in the table above
become exercisable after two years. In the event of a change in control of
the Company, the Committee administering the plan may accelerate vesting,
otherwise adjust the options or cash out the options. Option holders also
have certain rights with respect to these options pursuant to their Change
of Control Agreements. See "Contracts with Executives."
(2) Based on an aggregate of 331,405 options granted in Fiscal 1995.
(3) The Potential Realizable Values are calculated as follows: [[Market Price
at Grant x (1 + Stock Price Appreciation Rate)] -- Exercise Price] x Number
of Underlying Shares. Because these Potential Realizable Values are based
on annualized compound rates of increase over a five-year term, the total
potential appreciation on annual appreciation rates of 5% and 10% is 27.6%
and 61.1%, respectively.
8
<PAGE>
TABLE III--AGGREGATED OPTION EXERCISES IN
FISCAL 1995 AND FISCAL YEAR END VALUES
This table presents information regarding options exercised for shares of the
Company's Common Stock during Fiscal 1995 and the value of unexercised options
held at June 3, 1995. There were no SARs outstanding during Fiscal 1995.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS
FY-END (#) AT FY-END ($)(2)
SHARES VALUE -------------- -----------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ------------ --------- -------------- -----------------
<S> <C> <C> <C> <C>
S. E. Beall, III........ 200,000 4,053,000 686,250/45,000 6,507,912/356,252
G. A. Davenport......... -0- N/A 5,906/54,861 64,115/216,377
R. D. McClenagan........ -0- N/A 95,558/83,684 1,169,148/457,484
R. L. Tatum............. -0- N/A 30,595/81,608 362,325/475,765
A. R. Johnson........... -0- N/A -0-/42,402 -0-/122,376
</TABLE>
- --------
(1) Value Realized is calculated as follows: [(Per Share Closing Price on date
of exercise) - (Per Share Exercise Price)] x Number of Shares for which the
Option was exercised.
(2) Value of Unexercised, In-the-Money Options at June 3, 1995 is calculated as
follows: [(Per Share Closing Sale Price on June 2, 1995) - (Per Share
Exercise Price)] x Number of Shares Subject to Unexercised Options. The per
share closing sale price on June 2, 1995, the last trading day of Fiscal
1995, was $22.25.
RETIREMENT PLAN
The Morrison Restaurants Inc. Retirement Plan (the "Retirement Plan") was
frozen as of December 31, 1987, so that no additional benefits have accrued,
and no new participants have been permitted since that date. The Retirement
Plan is a tax-qualified, funded, defined benefit plan, which covers employees
of the Company who had attained age 21 and had completed at least one year of
full-time service by July 1, 1987. A participant's accrued annual benefit is
determined generally by adding A and B below, as applicable:
(A) 1/4 percent of pay up to that year's Social Security Wage Base, plus
1 1/4 percent of pay over the Social Security Wage Base for each credited
year of service (as defined in the Retirement Plan) commencing on or
after January 1, 1986; and
(B) 1/4 percent of average pay for the highest consecutive five years from
1976 through 1985 up to $14,400, plus 1 1/4 percent of such pay in
excess of $14,400, multiplied by the number of credited years of
service up to January 1, 1986.
Normal retirement for purposes of the Retirement Plan is age 65, although a
participant with at least five years of service may retire with a reduced
benefit as early as age 55. Generally, benefits are paid in the form of a
single life annuity if the participant is unmarried or a joint and survivor
annuity if the participant is married, unless an alternative form of benefit
payment is selected by the participant from among a range of options made
available under the Retirement Plan. A participant's accrued benefit becomes
vested upon completion of five years of service after age 18.
Benefits payable under the Retirement Plan reduce the amount of benefit
payable to a participant in the Supplemental Plan or the Management Plan,
described below.
EXECUTIVE SUPPLEMENTAL PENSION PLAN
The Morrison Restaurants Inc. Executive Supplemental Pension Plan (the
"Supplemental Plan") is a nonqualified, unfunded, defined benefit retirement
plan for selected employees. As a condition of entry, future participants must
complete five years of consecutive service in one or more qualifying job
positions and must have achieved a minimum salary threshold, as described in
the Supplemental Plan. A participant's accrued
9
<PAGE>
benefit in the Supplemental Plan equals 2.5 percent of the participant's
highest five-year average base salary multiplied by the participant's years and
fractional years of continuous service (as defined in the Supplemental Plan)
not in excess of 20 years; plus 1 percent of the participant's highest five-
year average base salary multiplied by the participant's years and fractional
years of continuous service in excess of 20 years, but not in excess of 30
years of such service. Base salary includes commissions but excludes bonuses
and other forms of remuneration other than salary. Benefits are paid to a
participant in the same manner as benefits paid to the participant under the
Retirement Plan and become vested if the participant has completed ten years of
service. Normal retirement for purposes of the Supplemental Plan is age 65,
although a participant with at least five years of service may retire with a
reduced benefit as early as age 55. Effective March 29, 1995, the Company
revised the early retirement provisions to allow participants to receive
reduced benefits as early as age 55 and unreduced benefits as early as age 55
depending upon age and service criteria specified in the Supplemental Plan. A
participant's receipt of unreduced early retirement benefits is conditioned
upon not competing with the Company for a period of two years following
retirement.
Estimated annual benefits payable upon retirement to persons in specified
remuneration and years of continuous service classifications are shown in the
following table. All amounts shown are for a single life annuity and assume
that active participation in the Supplemental Plan continues until age 65. In
accordance with the Supplemental Plan, the amounts shown are subject to
reduction for Social Security benefits and benefits received under the
Retirement Plan.
SUPPLEMENTAL PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO AGE 65
<TABLE>
<CAPTION>
30 OR
ANNUAL AVERAGE BASE SALARY 10 15 20 25 MORE
-------------------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
$175,000....................... $43,750 $65,625 $87,500 $96,250 $105,000
200,000....................... 50,000 75,000 100,000 110,000 120,000
225,000....................... 56,250 84,375 112,500 123,750 135,000
250,000....................... 62,500 93,750 125,000 137,500 150,000
275,000....................... 68,750 103,125 137,500 151,250 165,000
300,000....................... 75,000 112,500 150,000 165,000 180,000
325,000....................... 81,250 121,875 162,500 178,750 195,000
350,000....................... 87,500 131,250 175,000 192,500 210,000
375,000....................... 93,750 140,625 187,500 206,250 225,000
400,000....................... 100,000 150,000 200,000 220,000 240,000
425,000....................... 106,250 159,375 212,500 233,750 255,000
450,000....................... 112,500 168,750 225,000 247,500 270,000
475,000....................... 118,750 178,125 237,500 261,250 285,000
500,000....................... 125,000 187,500 250,000 275,000 300,000
525,000....................... 131,250 196,875 262,500 288,750 315,000
550,000....................... 137,500 206,250 275,000 302,500 330,000
575,000....................... 143,750 215,625 287,500 316,250 345,000
</TABLE>
Years of continuous service, to the nearest year, and current remuneration
covered by the Supplemental Plan (base salary) for the eligible named
executives are: Mr. Beall, 23 years, $564,900; Mr. Davenport, 21 years,
$181,432; Mr. McClenagan, 23 years, $248,184; and Mr. Tatum, over 30 years,
$200,400.
MANAGEMENT RETIREMENT PLAN
The Morrison Restaurants Inc. Management Retirement Plan (the "Management
Plan") is a nonqualified, unfunded, defined benefit retirement plan for
employees with 15 or more years of credited service (as defined in the
Management Plan) and whose average compensation over a three-year period equals
or exceeds $40,000, which amount may be adjusted by the Company from time to
time. A participant's
10
<PAGE>
accrued benefit in the Management Plan equals 1.5 percent of the participant's
average compensation determined over the five-year period immediately preceding
termination of employment multiplied by the participant's years of credited
service not in excess of 20 years; plus 2 percent of the participant's average
compensation determined over the five-year period immediately preceding
termination of employment multiplied by the participant's years of credited
service in excess of 20 years, but not in excess of 30 years. For purposes of
determining a participant's accrued benefit, a year's compensation includes
commissions and bonuses, but generally no form of remuneration is counted in
excess of $100,000, which amount may be adjusted by the Company from time to
time.
Normal retirement for purposes of the Management Plan is age 65, although a
participant may retire with a benefit as early as age 55. Generally, benefits
are paid in the form of a single life annuity if the participant is unmarried
or a joint and survivor annuity if the participant is married. If the
participant is also entitled to benefits under the Retirement Plan, benefits
payable under the Management Plan must be in the same form as those payable
under the Retirement Plan. A participant's accrued benefit under the Management
Plan is forfeited if the participant terminates employment before he is
eligible for early retirement under the Management Plan. Effective March 29,
1995, the Company amended the Management Plan to allow payment of a
participant's accrued benefit, commencing as early as age 55, even if the
participant terminated employment prior to attainment of age 55.
Estimated annual benefits payable upon retirement to persons in specified
remuneration and years of credited service classifications are shown in the
following table. All amounts shown are for a single life annuity and assume
that active participation continues in the Management Plan until age 65. In
accordance with the Management Plan, the amounts shown are subject to reduction
for Social Security benefits, benefits received under the Retirement Plan and
benefits received under the Supplemental Plan. A participant is ineligible for
benefits under the Management Plan while receiving any long-term disability
benefits.
MANAGEMENT PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO AGE 65
<TABLE>
<CAPTION>
30 OR
FINAL AVERAGE SALARY 15 20 25 MORE
-------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
$ 40,000.................................. $ 9,000 $12,000 $16,000 $20,000
60,000.................................. 13,500 18,000 24,000 30,000
80,000.................................. 18,000 24,000 32,000 40,000
100,000.................................. 22,500 30,000 40,000 50,000
</TABLE>
Years of credited service and salary covered by the Management Plan for the
eligible named executives are: Mr. Beall, 23 years, $100,000; Mr. Davenport, 21
years, $100,000; Mr. McClenagan, 23 years, $100,000; and Mr. Tatum, over 30
years, $100,000.
CONTRACTS WITH EXECUTIVES
The Company entered into a Change of Control Agreement (the "Agreement") with
each of the executives in positions with the Company specified by the
Compensation Committee (currently 21 executives), including the persons named
in the Summary Compensation Table. The Agreement is designed to diminish the
distraction of executives by virtue of the personal uncertainties and risks
created by a threatened or pending Change of Control (as defined in the
Agreement) and to encourage their full attention and dedication to the Company
currently and in the event of any pending or threatened Change of Control.
Under the Agreement, a "Change of Control" is defined as either (i) certain
changes in the composition of more than 20 percent of the Board of Directors,
or (ii) with certain exceptions, any "Business Combination" (as defined in the
Agreement) that has not been approved by the holders of 80 percent or more
11
<PAGE>
of the Company's outstanding voting stock. Events that do not constitute a
Change in Control include (a) any Business Combination approved by at least 80
percent of the Continuing Directors (as defined in the Agreement), (b) any
Business Combination transaction that satisfies certain price and procedural
requirements specified in the Company's Certificate of Incorporation, and (c)
any acquisition by the Company, any of its subsidiaries, or any employee
benefit plan of the Company or any of its subsidiaries.
Under the Agreement, the "Effective Date" means the first date on which a
Change of Control occurs. Prior to the Effective Date, each covered executive
remains an at-will employee, except as may be provided in any other agreement,
and any termination of his employment will terminate his rights under the
Agreement. If and when the Effective Date occurs, the Company has agreed to
continue the employment of the executive, and the executive has agreed to
remain in the employ of the Company, for a three-year period (the "Employment
Period") commencing on the Effective Date. During the Employment Period, the
executive (a) shall receive an annual base salary no less than that received
prior to the Effective Date and an annual bonus no less than the average of the
last three annual bonuses received prior to the Effective Date, and (b)
generally shall be entitled to continuation of retirement, savings and welfare
benefit plan participation and practices, expense reimbursements and other
fringe benefits on a basis at least comparable to that obtaining prior to the
Effective Date.
If during the Employment Period the Company terminates the executive's
employment other than for cause, death or disability, or if the executive
terminates his employment for "good reason" (as defined in the Agreement), or
if the executive terminates his employment for any reason during the 30-day
period immediately following the first anniversary of the Effective Date, the
executive becomes entitled to receive (i) any unpaid portion of his accrued
annual base salary plus a pro rata portion of his highest annual bonus paid or
payable for the three fiscal years immediately preceding his date of
termination, (ii) an amount equal to either three, two or one times the sum of
his annual base salary and his highest annual bonus, depending upon the
particular multiplier stipulated in his Agreement, (iii) any other accrued
obligations, (iv) rights with respect to any outstanding stock options granted
to him prior to his date of termination or a cash amount equal to the
difference between the option price and the then value of Company stock for
which any such option was granted, and (v) certain employee benefits consisting
of retirement, savings and various health and welfare insurance benefits. The
multiplier referred to in clause (ii) of the preceding sentence is three for
each of the persons named in the Summary Compensation Table. If this package of
compensation and benefits constitutes "excess parachute payments" as defined
under the Internal Revenue Code, the Company will pay an additional amount
sufficient to reimburse the executive for all taxes payable by the executive
with respect to the parachute payments. The Company estimates that the
obligations to the named executives as of the date of this Proxy Statement if
the employment termination provisions of the Agreement were to take effect
immediately upon a Change of Control would be approximately as follows: Mr.
Beall, $7,936,000; Mr. Davenport, $3,075,000; Mr. McClenagan, $3,774,000; Mr.
Tatum, $2,994,000; and Mr. Johnson, $2,749,000. Other executives may be made
subject to an Agreement by the Board of Directors.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of the Company, which is
composed solely of non-employee directors of the Company, has furnished the
following report on executive compensation.
OVERALL COMPENSATION PHILOSOPHY
During the past fiscal year, the Company has reaffirmed its long-standing
emphasis on the performance-based elements of executive compensation. These
programs closely align performance measures with current business strategy and
are designed to motivate executive behavior. In general, the Company controls
base salaries and compensates outstanding performance through more highly
leveraged annual and longer-term incentive programs. As a result, the following
principles apply to executive compensation:
. Base salaries are competitive with the Company's peer group of public
companies in the food service industry, but represent a smaller
proportion of total executive compensation opportunities than in the
past;
12
<PAGE>
. A very significant portion of executive compensation is tied to the
Company's success in meeting predetermined annual and long-term
performance goals, including the Company's profitability and
appreciation in the Company's stock price; and
. Executives are required to own specified amounts of stock in the
Company, resulting in direct linkage between executive and stockholder
interests.
The overall objectives of this strategy are to attract and retain the best
possible executive talent and to motivate the Company's executives to achieve
the goals inherent in the Company's business strategy.
The key components of the Company's executive compensation packages are base
salary, annual incentive opportunities, and equity devices. The Compensation
Committee's policies with respect to each of these elements, including the
basis for the compensation awarded to Mr. S. E. Beall, III, the Company's Chief
Executive Officer, are discussed below.
BASE SALARIES
The Company's general approach for base compensation is to establish salary
ranges with midpoints which are at the 50th percentile of the competitive
market in the food service industry. Each salary range provides a lower and
upper limit on the value of jobs assigned to that range. However, for its top
41 executives, including the Chief Executive Officer and the other executives
named in the Summary Compensation Table, the Company has capped base salaries
at the midpoint of the salary range effective beginning with Fiscal 1994. This
reflects the previously mentioned objective of controlling base salary costs
and emphasizing incentive compensation. Future adjustments to base salaries and
salary ranges will reflect average movement in the competitive market.
With respect to Fiscal 1995, the Compensation Committee utilized the services
of an independent consulting firm to obtain competitive base salary information
in the food service industry from published surveys of selected peer companies.
Executive officer salaries were reviewed and recommendations for adjustments
were made to the Board based on survey midpoints.
ANNUAL INCENTIVE COMPENSATION
The Company's annual incentive plan directly links annual incentive payments
to the accomplishment of predetermined and Board-approved financial and
operating goals. Corporate and individual performance objectives are
established at the beginning of each fiscal year.
Each executive's potential incentive was tied to growth in earnings per share
or growth in pretax net income effective beginning with Fiscal 1994, as well as
certain qualitative measures. Depending upon an executive's organizational
level and responsibilities, as well as competitive market practices, annual
incentive compensation targets range from 30 percent to 50 percent of base
salary if 100 percent of predetermined corporate goals are achieved and
maximums range from 60 percent to 125 percent of base salary effective
beginning with Fiscal 1994. Performance with respect to the measures named in
the annual incentive plan for Fiscal 1995 resulted in average annual incentive
compensation of 65 percent of base salaries for the four executives (other than
Mr. Beall) named in the Summary Compensation Table. Such awards represented
approximately 52 percent of the total incentive awards that could have been
earned by the four executive officers. Occasionally the Company may establish a
special incentive award for an individual officer or other employee aimed at
achieving a specified performance goal. The Company has a separate bonus plan
for the Chief Executive Officer, described in more detail below, which is
similar in structure to the incentive plan for the other executives.
EXECUTIVE STOCK OWNERSHIP
Believing that equity ownership plays a key role in aligning the interests of
Company personnel with Company stockholders, the Company encourages all
employees to make a personal investment in Company
13
<PAGE>
stock. The Company's goal is that 10 percent of Common Stock will be owned by
employees by the year 2000 and that 80 percent of employees with more than two
years of experience with the Company will own Common Stock.
In addition, ownership requirements have been developed for the Company's top
management group. The following requirements apply to various organization
levels: Chief Executive Officer-a minimum of four times base salary; Division
Presidents-a minimum of three times base salary; Corporate and Division Senior
Vice Presidents and Vice Presidents-a minimum of two times base salary; and
Division Management-a minimum of one times base salary. These objectives will
be phased in over a period of five years that commenced with Fiscal 1994 with
the minimum to be fully achieved at the end of that period, and may be
accomplished through the exercise of stock options, other stock incentives or
open market purchases. Members of the management group must achieve target
ownership levels to be eligible to receive future awards under stock-based
plans.
LONG-TERM INCENTIVE COMPENSATION
Awards under the Company's stock-based compensation plans directly link
potential participant rewards to increases in stockholder value. The Company
maintains stock incentive plans for executive officers and other employees.
These plans provide for grants of a variety of stock incentives, including
stock options, restricted stock, stock appreciation rights, stock purchase
rights and performance shares or units. The programs described below have been
established under one or more of these plans.
Executive Stock Option Program
The Company has an Executive Stock Option Program which provides for option
grants of 3,000 to 54,000 shares to its top 40 executives, other than the Chief
Executive Officer. The options are issued at fair market value, have a five-
year term and generally vest three years after the date of the grant, with a
performance-based vesting acceleration if annual incentive plan maximums are
achieved. Following the initial grant, in order for executives to receive
option grants under this program, they must meet certain minimum Common Stock
ownership requirements. During Fiscal 1995, option grants ranging from 3,000 to
24,000 shares, for a total of 117,472 shares, were made under this program.
Management Stock Option Program
The Company has a Management Stock Option Program for all employees at the
General Manager level and higher except the Chief Executive Officer. Effective
June 1, 1995, eligibility was expanded to include Assistant General Managers,
exempt employees and full-time non-exempt employees with at least two years of
service. Based on organization level, eligible employees may purchase shares of
Company stock up to established annual limits. For each share purchased, 1.15
shares will be issued and the participant will receive a five-year option to
purchase three times the number of shares of Company stock obtained at a per
share exercise price equal to the fair market value of a share on the date of
grant. The right to purchase Common Stock under this program is conditioned on
the achievement of Corporate, Division, Region, District or Unit goals, as the
case may be. There is a two-year restriction on the sale of shares acquired
through this program other than through the exercise of stock options. During
Fiscal 1995, the Company granted options to purchase an aggregate of 213,933
shares to employees under this program.
Restricted Stock
The Company may occasionally grant restricted stock or performance stock
rights to insure retention of key executives or as part of the compensation
provided to a new executive hired from outside the Company. At the 1993 Annual
Meeting of Shareholders, an award of performance stock rights made to Mr. Beall
and described below was approved by the stockholders.
CHIEF EXECUTIVE OFFICER COMPENSATION
At the January 30, 1994, Compensation Committee meeting, Mr. Beall's base
salary was reviewed. Based on his performance and competitive market data, the
Compensation Committee recommended, and the Board
14
<PAGE>
of Directors subsequently approved, an annual base salary of $564,900 for
Fiscal 1995. Mr. Beall's base salary was capped at the midpoint of the
competitive salary range as is the case with other executive officers of the
Company.
The Company has an Incentive Bonus Plan for the Chief Executive Officer (the
"CEO Bonus Plan"), which was approved by the stockholders at the 1994 Annual
Meeting. Pursuant to the CEO Bonus Plan, if the Company achieves a
predetermined minimum percentage growth in pre-tax income for a fiscal year,
the Chief Executive Officer may earn a cash bonus determined as a percentage of
his base salary if predetermined levels of growth in earnings per share are
achieved by the Company. For Fiscal 1995, the Chief Executive Officer's bonus
opportunity was 12.5 percent, 50 percent, 100 percent or 125 percent of his
salary if the Company achieved or exceeded the "threshold," "target," "maximum"
and "maximum plus" earnings per share growth level, respectively, with a
proportional increase in the bonus for every one-tenth of a percent increase in
earnings per share growth between such performance levels. For Fiscal 1995, Mr.
Beall earned an incentive bonus of $588,626 pursuant to the CEO Bonus Plan,
which was 104 percent of his base salary.
At the 1993 Annual Meeting, the stockholders of the Company approved an award
made by the Compensation Committee during Fiscal 1994 of performance stock
rights providing for the issuance of up to 75,000 shares of Common Stock to Mr.
Beall. If the Company's stock reaches pre-established price levels, Mr. Beall
will receive shares of Common Stock over a five-year period according to the
following schedule:
<TABLE>
<CAPTION>
AVERAGE
PERIOD ENDING MAY 31, PRICE LEVEL SHARES ISSUED OR ISSUABLE
--------------------- ----------- -------------------------
<S> <C> <C>
1994.................. $23.00 15,000
1995.................. $26.45 30,000, minus shares previously issued
1996.................. $30.42 45,000, minus shares previously issued
1997.................. $34.98 60,000, minus shares previously issued
1998.................. $40.23 75,000, minus shares previously issued
</TABLE>
Stock will be issued to Mr. Beall according to the table above if the Common
Stock averages the stated price level for a period of 22 consecutive trading
days. The price is defined as the average of the high and low sale prices of a
share of Common Stock on each day during the period. Shares not issued in a
given year may be earned in a subsequent year if the stated price level for the
subsequent year is attained. Mr. Beall earned 15,000 shares during Fiscal 1995
pursuant to the terms of the performance-based stock incentive program.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
limits the amount of individual compensation for certain executives that may be
deducted by the employer for federal tax purposes in any one fiscal year to $1
million unless such compensation is "performance-based." The determination of
whether compensation is performance-based depends upon a number of factors,
including shareholder approval of the plan under which the compensation is
paid, the exercise price at which options or similar awards are granted, the
disclosure to and approval by the stockholders of applicable performance
standards, the composition of the Compensation Committee, and certification by
the Compensation Committee that performance standards were satisfied. In order
to preserve the Company's ability to deduct certain performance-based
compensation under Section 162(m) of the Code, the Compensation Committee
recommended that the Company seek stockholder approval for certain incentive
compensation programs for the Chief Executive Officer. Pursuant to the
Compensation Committee recommendation, the Company submitted to the
stockholders for approval, and the stockholders approved (i) a grant of
performance-based stock rights to the Chief Executive Officer at the 1993
Annual Meeting of Stockholders, and (ii) an Incentive Bonus Plan for the Chief
Executive Officer at the 1994 Annual Meeting of Stockholders. While it is
possible for the Company to compensate or make awards under incentive plans and
otherwise that do not qualify as performance-based compensation deductible
under Section 162(m), the Compensation Committee, in structuring compensation
programs for its top executive officers, intends to give strong consideration
to the deductibility of awards.
15
<PAGE>
BOARD OF DIRECTORS AND COMPENSATION COMMITTEE
The Board of Directors of the Company has a standing Compensation Committee
whose purpose is to review and make recommendations concerning the base
salaries of all officers of the Company and to authorize all other forms of
compensation. Members of the Compensation Committee also administer the
Company's stock-based incentive plans. The Compensation Committee met two times
during the fiscal year. The Board of Directors approved all decisions of the
Compensation Committee during Fiscal 1995. The members of the Compensation
Committee are named below.
Wallace R. Bunn, Chairman Benjamin F. Payton
Claire L. Arnold Donald Ratajczak
E. Eugene Bishop* Dolph W. von Arx
John B. McKinnon
- --------
* Mr. Bishop was appointed to the Compensation Committee effective June 28,
1995 and did not take part in any deliberations with respect to executive
compensation for Fiscal 1995.
CERTAIN TRANSACTIONS
In May 1994, the Company entered into a salary continuation agreement with J.
B. Byrum, then President of the Company's Hospitality Division, pursuant to
which the Company agreed that in the event Mr. Byrum's status as a management
employee were terminated by the Company within 12 months of the date of the
agreement, the Company would continue to pay Mr. Byrum for a period of 12
months a salary equal to the then current base salary and a pro rata portion of
the bonus earned by Mr. Byrum prior to the date of termination of his status as
a management employee. In addition, the Company agreed to employ Mr. Byrum
following the termination of his status as a management employee until Mr.
Byrum reached the age of 55 with an annual salary equal to the annual
retirement payment amount that Mr. Byrum would be entitled to on retirement at
age 55 based on the Supplemental Plan formula and determined by his base salary
in effect at the time of termination of his status as a management employee.
Mr. Byrum's status as a management employee of the Company and President of the
Company's Hospitality Division terminated in August 1995 and he became entitled
to the benefits of the agreement effective upon such termination. The agreement
provided also that if Mr. Byrum remained in the employ of the Company he would
be entitled to a commission on the sale by the Company of certain assets based
upon the net pre-tax sales price of such assets adjusted for related expenses
and certain other charges. Mr. Byrum earned a commission of $400,000 under this
provision upon the sale by the Company in August 1994 of certain education,
business and industry contracts and assets (the "B&I Assets") to Gardner
Merchant Food Services, Inc., a wholly owned subsidiary of Gardner Merchant
Ltd. Pursuant to the agreement, Mr. Byrum agreed not to compete with certain
aspects of the Company's business for a period of three years following the
date of the agreement.
In June 1994, the Company sold its 35.9% interest in Morrison-Crothall
Support Services, Inc., to Mr. Byrum for a $400,000 promissory note payable in
$50,000 quarterly installments in fiscal years 1996 and 1997. Pursuant to the
terms of the sale agreement, the commission earned by Mr. Byrum in connection
with the sale of the B&I Assets was paid by means of a setoff by the Company
against the amount due under the promissory note.
16
<PAGE>
PERFORMANCE GRAPH
The following chart and table compare the five-year cumulative total return
of the Company's Common Stock with the cumulative total return of the NYSE
Stock Market Index and the NYSE Eating and Drinking Places Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG MORRISON RESTAURANTS INC.,
NYSE STOCK MARKET AND NYSE EATING & DRINKING PLACES INDICES
[FIVE-YEAR PERFORMANCE GRAPH - APPEARS HERE]
<TABLE>
<CAPTION>
LAST TRADING DAY OF MAY
-----------------------------------------------
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Morrison Restaurants Inc....... $100.00 $ 95.60 $162.77 $191.63 $220.52 $213.80
NYSE Stock Market Index........ $100.00 $111.57 $123.55 $138.96 $144.93 $170.01
NYSE Eating & Drinking Places
Index.......................... $100.00 $101.61 $120.31 $135.00 $163.80 $184.77
</TABLE>
- --------
* Assumes $100.00 invested in the Common Stock of Morrison Restaurants Inc.
and comparison groups on May 31, 1990 and reinvestment of dividends.
17
<PAGE>
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent auditors
for Fiscal 1995. Representatives of Ernst & Young LLP will be present at the
Meeting to respond to appropriate questions and will have an opportunity to
make a statement if they so desire.
The appointment of auditors is a matter for determination by the Board of
Directors for which no stockholder approval or ratification is necessary. The
Board of Directors has selected, upon the recommendation of the Audit
Committee, the firm of Ernst & Young LLP to audit the books of the Company for
Fiscal 1996.
STOCKHOLDER PROPOSALS
Any stockholder of the Company wishing to submit a proposal for action at the
Company's 1996 Annual Meeting of Stockholders and desiring the proposal to be
considered for inclusion in the Company's proxy materials must provide a
written copy of the proposal to the management of the Company at its principal
executive office not later than April 27, 1996, and must otherwise comply with
rules of the Securities and Exchange Commission relating to stockholder
proposals.
GENERAL
Management does not know of any other business to come before the Meeting.
If, however, other matters do properly come before the Meeting, it is the
intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their best judgment.
A list of stockholders entitled to be present and vote at the Meeting will be
available at the offices of the Company, 4721 Morrison Drive, Mobile, Alabama
36609, for inspection by stockholders during regular business hours from
September 18, 1995, to the date of the Meeting.
The Annual Report of the Company for Fiscal 1995 (which is not part of the
proxy soliciting material) is being mailed with this proxy statement to all
stockholders of record as of the record date for the Meeting.
THE COMPANY WILL, UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER, FURNISH
WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED JUNE 3, 1995. REQUESTS
FOR COPIES SHOULD BE DIRECTED TO PFILIP G. HUNT, SECRETARY, MORRISON
RESTAURANTS INC., POST OFFICE BOX 160266, MOBILE, ALABAMA 36625.
By Order of the Board of Directors,
/s/ Pfilip G. Hunt
Pfilip G. Hunt
Senior Vice President,
General Counsel
and Secretary
August 25, 1995
Mobile, Alabama
18
<PAGE>
APPENDIX A
MORRISON RESTAURANTS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated August 25, 1995, and does hereby
appoint S. E. Beall, III and A. R. Outlaw, and either of them, with full power
of substitution, as proxy or proxies of the undersigned to represent the
undersigned and to vote all shares of Morrison Restaurants Inc. Common Stock
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders of Morrison Restaurants Inc., to be held at
Morrison Restaurants Inc.'s executive offices, 4721 Morrison Drive, Mobile,
Alabama 36609 at 10:30 a.m., local time, on September 27, 1995, and at any
adjournment(s) thereof:
1.To elect two Class II Directors for a term of three years.
John B. McKinnon and Dolph W. von Arx
<TABLE>
<C> <S> <C> <C>
[_] FOR all nominees above [_] WITHHOLD AUTHORITY
(except as marked to the contrary above) to vote for ALL nominees listed above
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, MARK THE FIRST
BOX ABOVE AND LINE THROUGH THAT NOMINEE'S NAME AS IT APPEARS ABOVE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL DIRECTOR NOMINEES LISTED ABOVE.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before this meeting.
(CONTINUED ON OTHER SIDE)
(CONTINUED FROM REVERSE SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, IT
WILL BE VOTED FOR ALL DIRECTOR NOMINEES LISTED ABOVE.
PROXY NUMBER NUMBER OF SHARES
------------ ----------------
Dated , 1995.
----------------------------
----------------------------------------
Signature
----------------------------------------
Signature, if held jointly
Please sign exactly as your name(s)
appear hereon. If shares are held
jointly, each stockholder named should
sign. When signing as attorney,
executor, administrator, trustee or
guardian, give your full title as such.
If the signatory is a corporation, sign
the full corporate name by a duly
authorized officer.
PLEASE COMPLETE, DATE, SIGN AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
