<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 Section 240.14a-11(c) or Section 240.14a-12
RUBY TUESDAY, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(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>
[RTI LOGO]
August 25, 1997
Dear Shareholders:
We are holding your 1997 Annual Meeting on Monday, September 29, 1997, at
10:30 a.m., local time, at The Westin Hotel - Atlanta Airport, 4736 Best Road,
College Park, Georgia 30337. We sincerely hope that you will be able to attend
the meeting, and we 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,
RUBY TUESDAY, INC.
[Signature Appears Here]
Samuel E. Beall, III
Chairman of the Board and
Chief Executive Officer
RUBY TUESDAY, INC.
------------------------------------------------------
P.O. Box 160266 . 4721 Morrison Drive . Mobile, Alabama 36625-0001 . (334)
344-3000 . Telefax (334) 344-3066
<PAGE>
RUBY TUESDAY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 29, 1997
The Annual Meeting of Shareholders of Ruby Tuesday, Inc. will be held at The
Westin Hotel - Atlanta Airport, 4736 Best Road, College Park, Georgia 30337 on
Monday, September 29, 1997, at 10:30 a.m., local time, for the following
purposes:
1. To elect three Class II directors to the Board of Directors for a
term of three years.
2. To approve an amendment to the Company's 1996 Stock Incentive Plan to
increase the number of shares available for issuance thereunder by
250,000.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on August 4, 1997, are
entitled to vote at the meeting.
The mailing address of the Company's principal executive office is 4721
Morrison Drive, Mobile, Alabama 36609.
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,
[Signaure Appears Here]
Pfilip G. Hunt
Senior Vice President, General
Counsel and Secretary
August 25, 1997
Mobile, Alabama
<PAGE>
RUBY TUESDAY, INC.
4721 MORRISON DRIVE
MOBILE, ALABAMA 36609
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
Ruby Tuesday, Inc. (the "Company") is the result of a corporate
reorganization of Morrison Restaurants Inc., a Delaware corporation ("MRI"),
that was effective March 9, 1996. In that reorganization, MRI distributed to
its shareholders all of the issued and outstanding shares of Morrison Fresh
Cooking, Inc., a Georgia corporation ("MFCI"), which held the family dining
assets and business of MRI, and of Morrison Health Care, Inc., a Georgia
corporation ("MHCI"), which held the health care food and nutrition services
assets and business of MRI. Simultaneously with the distribution (the
"Distribution"), MRI reincorporated as a Georgia corporation (the
"Reincorporation") and changed its name to Ruby Tuesday, Inc., and in
conjunction therewith, effected a one-for-two reverse stock split. As a result
of the Distribution and Reincorporation, MRI's shareholders received one share
of Company common stock for every two shares of MRI common stock held, one
share of MHCI common stock for every three shares of MRI common stock held,
and one share of MFCI common stock for every four shares of MRI common stock
held. Certain of the executive compensation information presented in this
Proxy Statement for fiscal years prior to the Distribution relates to
compensation paid or awarded by MRI.
GENERAL INFORMATION
The following Proxy Statement and the accompanying proxy card, first mailed
to shareholders on or about August 25, 1997, are furnished in connection with
the solicitation by the Board of Directors of the Company of proxies to be
used in voting at the Annual Meeting of Shareholders of the Company to be held
on Monday, September 29, 1997, at The Westin Hotel - Atlanta Airport, 4736
Best Road, College Park, Georgia 30337 and at any adjournment(s) thereof (the
"Annual Meeting").
Any shareholder returning a proxy has the power to revoke it prior to the
Annual 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 Annual Meeting. All shares of the Company's common stock,
$.01 par value per share ("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 (i) in favor of the election of the three
nominees for directors named in this Proxy Statement, (ii) in favor of the
proposed amendment to the Company's 1996 Stock Incentive Plan (the "Stock
Incentive Plan") to increase the number of shares available for issuance
thereunder by 250,000 shares, and (iii) in accordance with the best judgment
of the proxy holders on any other matter that may properly come before the
Annual Meeting.
The entire cost of soliciting these proxies will be borne by the Company. In
following up 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
expenses incurred in so doing. If necessary, the Company also may use some of
its employees to solicit proxies from the shareholders personally or by
telephone.
August 4, 1997 has been fixed as the record date for determination of
shareholders entitled to notice of, and to vote at, the Annual 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 Annual
Meeting. The presence in person or by proxy of shareholders holding of record
a majority of Common Stock outstanding and entitled to vote at the Annual
Meeting will constitute a quorum for the transaction of business at the Annual
Meeting. Shares represented by a valid proxy on which the authority to vote
for one or more Director Nominees is withheld, abstentions and broker non-
votes, if any, are counted as shares present for determination of a quorum.
The number of shares of outstanding Common Stock on August 4, 1997, was
17,098,350, each of which is entitled to one vote.
1
<PAGE>
Election of each of the Director Nominees named in Proposal 1 requires the
approval of a plurality of the votes cast in the election. Approval of the
amendment to the Stock Incentive Plan described in Proposal 2 requires the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Company present or represented and entitled to vote at the Annual Meeting.
For purposes of determining whether a Director Nominee has been elected or
whether Proposal 2 has been approved by the shareholders, (i) shares as to
which authority is withheld with respect to such Director Nominee will have no
effect on the outcome of the voting, and broker non-votes do not occur in the
election of directors, and (ii) abstentions will have the same effect as votes
against Proposal 2, but broker non-votes will have no effect on the voting on
such proposal.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide for three classes of
directors with staggered, three-year terms of office and provide 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 Annual Meeting, the three
nominees are for the Class II directors. The Class I and Class III directors
have two years and one year, respectively, remaining on their terms of office.
The Company's Articles of Incorporation and its Bylaws provide that the Board
of Directors shall consist of not less than three nor more than 12 directors
and authorize the exact number to be fixed from time to time by resolution of
a majority of the Board of Directors or by the affirmative vote of the holders
of at least 80% of all outstanding shares entitled to be voted in the election
of directors voting together as a single class. The Board of Directors has
fixed at seven the exact number of members of the Board of Directors and has
nominated Dr. Donald Ratajczak, Samuel E. Beall, III, and Claire L. Arnold to
serve in Class II of the Board of Directors for a term of three years. All
nominees are currently serving as directors of the Company.
It is intended that persons named in the accompanying form of proxy will
vote for the three 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 2000
DR. DONALD RATAJCZAK
Director of the Company since 1981
Age: 54
Dr. Ratajczak is Professor and Director, Economic Forecasting Center,
Georgia State University. Dr. Ratajczak also is a director of Morgan Keegan
Inc., CIM High Yield Securities Fund and Morrison Fresh Cooking, Inc.
SAMUEL E. BEALL, III
Director of the Company since 1982
Age: 47
Mr. Beall has served as 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 Pilot Corporation.
2
<PAGE>
CLAIRE L. ARNOLD
Director of the Company since 1994
Age: 50
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. and Morrison Health Care,
Inc.
DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM EXPIRING 1998
JOHN B. MCKINNON
Director of the Company since 1989
Age: 62
Prior to his retirement in May 1995, Mr. McKinnon was Dean of Babcock
Graduate School of Management at 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
is also a director and interim President and Chief Executive Officer of
Integon Corporation, a director of Premark International and MedCath, Inc. and
serves as Chairman of the Board of Directors of Morrison Health Care, Inc.
DOLPH W. VON ARX
Director of the Company since 1992
Age: 62
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., International Multi Foods and Mackenzie Investment Management,
Inc., and serves as Chairman of the Board of Directors of Morrison Fresh
Cooking, Inc.
CLASS I -- TERM EXPIRING 1999
ARTHUR R. OUTLAW
Director of the Company since 1959
Age: 70
Mr. Outlaw has been Vice Chairman of the Board of the Company since 1984.
From October 1985 to October 1989, he was Mayor, City of Mobile, Alabama. Mr.
Outlaw also serves as Vice Chairman of the Board of Morrison Fresh Cooking,
Inc.
DR. BENJAMIN F. PAYTON
Director of the Company since 1993
Age: 64
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., Praxair, Inc. and Morrison Health Care, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTIONOF THE THREE
NOMINEES FOR CLASS II DIRECTORS NAMED ABOVE.
3
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 4, 1997
(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
BENEFICIALLY PERCENT OF
OWNED(1) CLASS(2)
NAME OR GROUP ---------------- ----------
<S> <C> <C>
Arthur R. Outlaw (3)............................... 1,825,579(4) 10.7
Samuel E. Beall, III............................... 465,308(5) 2.7
Claire L. Arnold................................... 7,260 *
John B. McKinnon................................... 13,771(6) *
Dr. Benjamin F. Payton............................. 5,981 *
Dr. Donald Ratajczak............................... 11,725(7) *
Dolph W. von Arx................................... 8,396(8) *
Pfilip G. Hunt..................................... 70,921(9) *
Mark S. Ingram..................................... 46,540 *
Robert D. McClenagan............................... 83,210 *
J. Russell Mothershed.............................. 30,888 *
All directors and executive officers as a group (12
persons).......................................... 2,593,011 14.7
</TABLE>
- - --------
(1) Includes (i) shares subject to currently exercisable options and options
exercisable within 60 days after August 4, 1997, held by the named persons
and group as follows: Mr. Beall, 365,625; Ms. Arnold, 3,437; Mr. McKinnon,
5,248; Dr. Payton, 3,437; Dr. Ratajczak, 5,248; Mr. von Arx, 5,248; Mr.
Hunt, 53,047; Mr. Ingram, 37,294; Mr. McClenagan, 74,479; Mr. Mothershed,
23,586; and all directors and executive officers as a group, 593,274; and
(ii) shares held in the Company's Salary Deferral Plan as follows: Mr.
Beall, 5,690; Mr. Mothershed, 91; Mr. Ingram, 199; and all directors and
executive officers as a group, 5,980.
(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 currently exercisable options and
options exercisable within 60 days after August 4, 1997), without regard
to any disclaimers of beneficial ownership by the person indicated.
(3) Mr. Outlaw's address is 4721 Morrison Drive, Mobile, Alabama 36609.
(4) Includes (i) 1,284,600 shares held by Mr. Outlaw as executor or trustee of
various estates and trusts for the benefit of relatives, and (ii) 24,855
shares owned by Mr. Outlaw's spouse.
(5) Includes 58,400 shares held in the Beall Family Ltd. Partnership, a
limited partnership of which Mr. Beall is a General Partner.
(6) Includes 6,125 shares owned by Mr. McKinnon and his spouse as tenants in
common.
(7) Includes 3,375 shares held in a KEOGH account for the benefit of Dr.
Ratajczak.
(8) Includes 1,125 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.
(9) Includes 8,888 shares held by Mr. Hunt's spouse. Mr. Hunt disclaims
beneficial ownership of such shares.
4
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 year 1997 have been
complied with on a timely basis.
DIRECTORS' FEES AND ATTENDANCE
The Board of Directors of the Company met seven times during fiscal year
1997. Each director attended at least 75% of these meetings and of the
meetings of any committee of which he or she was a member which were held
during the fiscal year.
Directors who are employees of the Company, other than Mr. Outlaw, receive
no directors' fees. All non-employee directors currently receive a $16,000
annual 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 a
fee of $250 per Board meeting attended, but he does not receive a retainer.
Non-employee directors serving on the Audit Committee or the Compensation and
Stock Option Committee (other than the Chairmen of such committees) receive a
fee of $1,000 for each committee meeting attended which is not held in
conjunction with a meeting of the Board of Directors. Mr. Outlaw receives the
same fees as non-employee directors for attending meetings of the committees
on which he serves. Committee Chairmen receive a fee of $2,000 for each
committee meeting attended which is not held in conjunction with a meeting of
the Board of Directors and $1,000 for each committee meeting attended which is
held in conjunction with a Board meeting.
The Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for
Directors (the "Directors' Plan") permits non-employee 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 (a) the date of the director's seventieth birthday, or (b) the date
the director ceases to be a member of the Board of Directors.
The Directors' Plan provides that each non-employee 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-employee 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 day 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, will 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, as of
5
<PAGE>
the issue date. 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 by the
committee administering the Directors' Plan.
The Directors' Plan provides that each non-employee director who receives
Stock Awards, whether through a deemed election or a discretionary election,
will 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 as of the date of the
Option grant. Each Option shall expire generally upon the fifth anniversary of
the date on which it was granted.
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 delegated certain authority to two committees. Information
concerning these committees follows.
Audit Committee. The Audit Committee is comprised solely of non-management
directors. The Audit Committee maintains communications with the Company's
independent 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
of the Company's Board met one time during fiscal year 1997. The current
members of the Audit Committee are John B. McKinnon (Chairman), Claire L.
Arnold, Dr. Benjamin F. Payton, Dr. Donald Ratajczak and Dolph W. von Arx.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee (the "Compensation Committee") is comprised solely of non-management
directors. The Compensation 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 Committee of the Company's Board
met two times during fiscal year 1997. The current members of the Compensation
Committee are Dolph W. von Arx (Chairman), Claire L. Arnold, John B. McKinnon,
Dr. Benjamin F. Payton and Dr. Donald Ratajczak.
6
<PAGE>
EXECUTIVE COMPENSATION
This section of the proxy statement discloses compensation awarded to, 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 and
whose salary and bonus exceeded $100,000 in fiscal year 1997 for services
rendered to the Company during each of the three fiscal years in the period
ended May 31, 1997 (together, these persons are sometimes referred to as the
"Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
ANNUAL COMPENSATION LONG TERM COMPENSATION COMPENSATION
---------------------------------- ----------------------- ------------
OTHER ANNUAL AWARDS PAYOUTS
COMPENSATION OPTIONS/SARS LTIP
NAME AND POSITION YEAR SALARY($) BONUS($) $(1) (#)(2) PAYOUTS($) ($)(3)
----------------- ---- --------- -------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
S.E. Beall, III......... 1997 587,496 332,914 27,249(7) 118,156 -0- 8,418
Chairman of the 1996 587,496 -0- -0- 170,453 -0- 7,382
Board and Chief 1995 564,900 588,626 -0- -0- 393,750(4) 3,564
Executive Officer
R.D. McClenagan......... 1997 306,498 173,682 2,250 50,149 -0- 6,605
President, Ruby Tuesday 1996 226,112 78,826(5) 4,500 61,806 -0- 6,381
Division 1995 248,184 124,242 -0- -0- -0- 5,870
J.R. Mothershed......... 1997 222,532 100,881 1,800 18,809 -0- 3,653
Senior Vice President 1996 187,100 45,712(5) 4,049 49,014 -0- 2,211
and Chief Financial 1995 162,708 135,633 1,500 5,037 -0- 6,143
Officer, Treasurer and
Assistant Secretary
M.S. Ingram (6)......... 1997 158,160 123,376 1,800 24,713 -0- 4,224
Senior Vice President, 1996 N/A N/A N/A N/A N/A N/A
Human Resources 1995 N/A N/A N/A N/A N/A N/A
P.G. Hunt............... 1997 187,996 85,224 -0- 16,409 -0- 7,337
Senior Vice President, 1996 166,401 40,312(5) 3,600 44,466 -0- 6,303
General Counsel and 1995 169,630 133,376 900 783 -0- 7,611
Secretary
</TABLE>
- - --------
(1) Represents the value of bonus shares issued in connection with the
purchase of (a) shares of Common Stock under the Company's Management
Stock Option Program following the Distribution, and (b) shares of common
stock of MRI under the MRI Stock Option Program prior to the Distribution.
See "Introduction."
(2) For fiscal years 1996 and 1995, the number of options shown includes
options to purchase shares of Common Stock of the Company issued upon
conversion of options granted by MRI prior to the Distribution. MRI
options were converted in the Distribution into options to purchase shares
of common stock of each of the Company, MHCI and MFCI with the number of
shares subject to each such option allocated based on the conversion
ratios used in connection with the Distribution and the related reverse
stock split. See "Introduction." The exercise price per share of the MRI
options has been allocated among the options to purchase common stock of
the Company, MHCI and MFCI into which the MRI options were converted based
upon a formula that took into account the relative trading prices of the
common stock of the three companies for the first ten trading days
following the Distribution. Such per share exercise price was allocated as
follows: 53.17% to the Company option, 36.62% to the MHCI option and
10.21% to the MFCI option. Except for the number of shares and exercise
price thereof, the replacement options have the same terms and conditions
as the original MRI options.
7
<PAGE>
(3) The amounts in this column include the following: (a) Company
contributions to the Deferred Compensation Plan for fiscal years 1997,
1996 and 1995, respectively: S.E. Beall, III, $4,429, $3,696 and $0; R.D.
McClenagan, $4,128, $4,069 and $3,616; J.R. Mothershed, $1,917, $692 and
$4,726; M.S. Ingram $3,046, N/A and N/A; and P.G. Hunt, $3,800, $3,046 and
$4,438; and (b) executive group life and accidental death and
dismemberment insurance plan premiums paid for fiscal years 1997, 1996 and
1995, respectively: S.E. Beall, III, $828, $800 and $822; R.D. McClenagan,
$828, $796 and $814; J.R. Mothershed, $760, $660 and $621; M.S. Ingram,
$612, N/A and N/A; and P.G. Hunt, $686, $615 and $628; and (c) employee
portion of split-dollar life insurance premiums paid by the Company for
fiscal years 1997, 1996 and 1995, respectively: S.E. Beall, III, $3,161,
$2,886 and $2,742; R.D. McClenagan, $1,649, $1,516 and $1,440; J.R.
Mothershed, $976, $859 and $796; M.S. Ingram, $566, N/A and N/A; and P.G.
Hunt, $2,851, $2,642 and $2,545.
(4) Represents the value of 15,000 shares of Common Stock of MRI earned by Mr.
Beall in fiscal year 1995 pursuant to the performance stock rights awarded
to him by MRI in July 1993 and approved by the stockholders of MRI at the
1993 Annual Meeting of Stockholders. Under this award, payouts of 15,000
shares each were or could have been earned by Mr. Beall over a five-year
period ending in 1998 if the Common Stock of MRI reached 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 price was $26.45 in 1995. The value of such shares
has been calculated based on the market price of the Common Stock of MRI
on the date of issuance of the shares. Mr. Beall agreed to the
cancellation of all performance stock rights remaining outstanding as of
March 9, 1996, the effective date of the Distribution.
(5) The indicated fiscal year 1996 bonus was paid in shares of Company Common
Stock, which may not be transferred for a period of two years, valued for
this purpose at $22.00 per share, the closing price of the Common Stock on
June 27, 1996, the day on which the Compensation Committee made the
decision to pay such bonuses in shares of Common Stock. These shares are
subject to forfeiture if the executive's employment is terminated prior to
June 27, 1998, except due to death, retirement or disability.
(6) Mr. Ingram was elected as an executive officer of the Company effective
September 30, 1996.
(7) The indicated amount includes a merit pay adjustment of $23,499 paid in
fiscal 1997, as well as $3,750 for the value of bonus shares received as
described in footnote (1).
8
<PAGE>
OPTION GRANTS IN FISCAL 1997
The following table presents information regarding options to purchase
shares of the Company Common Stock granted by the Company during fiscal year
1997 to the Named Executives. The Company has no outstanding SARs and granted
no SARs during fiscal year 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE(3) AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR OPTION TERM
-------------------------------------------
INDIVIDUAL GRANTS 5% 10%
---------------------------------------------- -------------------- ----------------------
% OF TOTAL
OPTIONS/SARS MARKET PRICE MARKET PRICE
GRANTED TO EXERCISE REQUIRED TO REQUIRED TO
OPTIONS/SARS EMPLOYEES IN OR BASE DOLLAR REALIZE REALIZE
GRANTED FISCAL PRICE EXPIRATION GAINS DOLLAR GAINS DOLLAR DOLLAR GAINS
NAME (#)(1) YEAR(2) ($/SHARE) DATE ($) ($/SHARE) GAINS ($) ($/SHARE)
---- ------------ ------------ --------- ---------- ------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S.E. Beall, III......... 4,998 0.76% 17.2500 2-28-02 23,820 22.02 52,635 27.78
113,158 17.12% 17.6250 4-4-02 551,019 22.49 1,217,607 28.39
R.D. McClenagan......... 3,000 0.45% 17.2500 2-28-02 14,298 22.02 31,594 27.78
47,149 7.13% 17.6250 4-4-02 229,590 22.49 507,334 28.39
J.R. Mothershed......... 2,400 0.36% 17.2500 2-28-02 11,438 22.02 25,275 27.78
16,409 2.48% 17.6250 4-4-02 79,903 22.49 176,565 28.39
M.S. Ingram............. 5,904 0.89% 18.1250 1-14-02 29,565 23.13 65,331 29.19
2,400 0.36% 17.2500 2-28-02 11,438 22.02 25,275 27.78
16,409 2.48% 17.6250 4-04-02 79,903 22.49 176,565 28.39
P.G. Hunt............... 16,409 2.48% 17.6250 4-04-02 79,903 22.49 176,565 28.39
</TABLE>
- - --------
(1) The indicated options have a term of five years and were granted pursuant
to the Stock Incentive Plan (formerly, the 1989 Non-Qualified Stock Option
Plan of MRI). Those options with an exercise price of $17.625 on the date
of grant generally become exercisable after 30 months while those options
with an exercise price of $18.125 become exercisable after three years.
All other options listed in the table above generally become exercisable
after two years. In the event of a change in control of the Company, the
Committee administering the plan may accelerate vesting, otherwise adjust
the options or terminate the options. Option holders also have certain
rights with respect to these options pursuant to their Change of Control
Agreements. See "Contracts with Executives."
(2) Based on an aggregate of 660,873 options granted by the Company in fiscal
year 1997.
(3) The Potential Realizable Values are calculated as follows: [[Market Price
at Grant x (1 + Stock Price Appreciation Rate)] -- Exercise Price] x
Number of Underlying Shares. Because these Potential Realizable Values are
based on annualized compound rates of increase over a five year term, the
total potential appreciation on annual appreciation rates of 5% and 10% is
27.6% and 61.1%, respectively.
9
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR END VALUES
The following table presents information regarding exercises of options to
purchase shares of Company Common Stock during fiscal year 1997 by the Named
Executives and the value of unexercised options to purchase Company Common
Stock held at May 31, 1997. There were no SARs outstanding during fiscal year
1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT
FY-END (#) FY-END ($)(2)
SHARES VALUE --------------- -------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------- -------------------
<S> <C> <C> <C> <C>
S.E. Beall, III....... -0- N/A 354,375/299,859 2,790,003/1,068,449
R.D. McClenagan....... 11,448 126,757 69,866/116,568 456,573/419,514
J.R. Mothershed....... 2,889 33,088 22,551/68,625 98,609/223,702
M.S. Ingram........... -0- N/A 32,000/68,519 206,845/240,012
P.G. Hunt............. 5,644 65,305 44,636/69,286 313,243/235,185
</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 fiscal year end is calculated
as follows: [(Per Share Closing Sale Price on May 30, 1997) (Per Share
Exercise Price)] x Number of Shares Subject to Unexercised Options. The
per share closing sale price on May 30, 1997, the last trading day of
fiscal year 1997, was $21.50.
RETIREMENT PLAN
Following the Distribution and in conjunction therewith, the Company
continued as a sponsor of the Morrison Restaurants Inc. Retirement Plan (the
"Retirement Plan"). Under the Retirement Plan, participants are entitled to
receive benefits based upon salary and length of service. 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 with MRI 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
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 percent of such pay in excess
of $14,400, multiplied by the number of credited years of service with
the Company 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 benefits
payable to a participant in the Executive Supplemental Pension Plan or the
Management Retirement Plan, described below.
10
<PAGE>
EXECUTIVE SUPPLEMENTAL PENSION PLAN
Eligible Named Executives of the Company participate in the Company's
Executive Supplemental Pension Plan ("ESPP"). The ESPP is a nonqualified,
unfunded, defined benefit retirement plan for selected employees. As a
condition of entry to the ESPP, future participants must complete five years
of continuous service in one or more qualifying job positions and must have
achieved a minimum salary threshold, as described in the ESPP.
A participant's accrued benefit in the ESPP 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 ESPP) not in excess of 20 years; plus one 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; less the retirement benefit payable at the
age of 65 in the form of a single life annuity payable to the participant
under the Retirement Plan; and less the participant's Social Security
benefits. 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 are 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 ESPP is age 65, although a participant
with at least five years of service may retire with a reduced benefit as early
as age 55. Early retirement provisions allow designated participants to
receive unreduced benefits as early as age 55 depending upon age and service
criteria specified in the ESPP. 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 ESPP continues until age 65. In accordance
with the ESPP, the amounts shown are subject to reduction for Social Security
benefits and benefits received under the Retirement Plan.
EXECUTIVE SUPPLEMENTAL PENSION 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>
$125,000........................ $ 31,250 $ 46,875 $ 62,500 $ 68,750 $ 75,000
150,000......................... 37,500 56,250 75,000 82,500 90,000
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
600,000......................... 150,000 225,000 300,000 330,000 360,000
625,000......................... 156,250 234,375 312,500 343,750 375,000
</TABLE>
11
<PAGE>
Years of continuing service, to the nearest year, and current remuneration
covered by the ESPP (base salary) for the eligible Named Executives are: Mr.
Beall, 25 years, $587,496; Mr. McClenagan, 25 years, $306,498; Mr. Mothershed,
24 years, $222,532; Mr. Ingram, 18 years, $158,160; and Mr. Hunt, 29 years,
$187,996.
MANAGEMENT RETIREMENT PLAN
The Company's Management Retirement Plan ("MRP") provides a select group of
management or highly compensated employees the security of receiving a defined
level of retirement benefits. The MRP is a nonqualified, unfunded, defined
benefit retirement plan for employees with 15 or more years of credited
service (as defined in the MRP) and whose average annual compensation over a
consecutive three calendar-year period equals or exceeds $40,000, which amount
may be adjusted by the Company from time to time.
A participant's single-life annuity accrued benefit in the MRP 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; minus the sum of (a) the participant's Retirement Plan
benefits, (b) the participant's Social Security benefits, and (c) the
participant's ESPP Benefit (as defined in the MRP). 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 MRP 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 MRP
must be in the same form as those payable under the Retirement Plan. The MRP
allows 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 MRP until age 65. In accordance
with the MRP, the amounts shown are subject to reduction for Social Security
benefits, benefits received under the Retirement Plan and benefits payable
under the ESPP. A participant is ineligible for benefits under the MRP while
receiving any long-term disability benefits.
MANAGEMENT RETIREMENT 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 MRP for the eligible
Named Executives are: Mr. Beall, 25 years, $100,000; Mr. McClenagan, 25 years,
$100,000; Mr. Mothershed, 24 years, $100,000; Mr. Ingram, 18 years, $100,000;
and Mr. Hunt, 29 years, $100,000.
12
<PAGE>
CONTRACTS WITH EXECUTIVES
The Company entered into a Change of Control Agreement (the "Change of
Control Agreement") with each of the executives in positions with the Company
specified by the Compensation Committee (currently 11 executives), including
the Named Executives. The Change of Control 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
Change of Control 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 Change of Control Agreement, a "Change of Control" is defined as
either (a) certain changes in the composition of more than 20 percent of the
Board of Directors, or (b) with certain exceptions, any "Business Combination"
(as defined in the Change of Control Agreement) that has not been approved by
the holders of 80 percent or more of the Company's outstanding voting stock.
Events that do not constitute a Change of Control include (a) any Business
Combination approved by at least 80 percent of the Continuing Directors (as
defined in the Change of Control Agreement), (b) any Business Combination
transaction that satisfies certain price and procedural requirements specified
in the Company's Articles 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.
Prior to the first date on which a Change of Control occurs (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 Change of Control 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 obtained 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 Change of
Control 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 (a) 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, (b) 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 Change of Control
Agreement, (c) any other accrued obligations, (d) 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 (e) certain
employee benefits consisting of retirement, savings and various health and
welfare insurance benefits. The multiplier referred to in clause (a) 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 a Change of Control had occurred and the
employment termination provisions of the Change of Control Agreement were to
take effect immediately would be approximately as follows: Mr. Beall,
$8,428,000; Mr. McClenagan, $3,967,000; Mr. Mothershed, $2,825,000; Mr.
Ingram, $2,142,000; and Mr. Hunt, $1,618,000. At its September 30, 1996,
meeting, the Board of Directors of the Company voted not to renew any existing
Change of Control Agreements and not to enter into any new Change of Control
Agreements.
13
<PAGE>
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 casual dining industry, but represent a smaller
proportion of total executive compensation opportunities than in the
past;
. 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 shareholder
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. Samuel E. Beall, III, the Company's
Chairman of the Board and 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 casual dining industry. Each salary range provides a lower and
upper limit on the value of jobs assigned to that range. However, for its top
22 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 year 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 year 1997, the Compensation Committee utilized the
services of an independent consulting firm to obtain competitive base salary
information in the casual dining 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.
14
<PAGE>
Each executive's potential incentive was tied to growth in earnings per
share or growth in pretax net income effective beginning with fiscal year
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 opportunities range from 7.5 percent
to 12.5 percent of base salary if the "threshold" goals are achieved, 30
percent to 50 percent of base salary if the "target" goals are achieved, 45
percent to 100 percent of base salary if the "maximum" goals are achieved and
60 percent to 125 percent of base salary if the "maximum plus" goals are
achieved. Performance for fiscal year 1997 measured against the objectives
contained in the incentive plan resulted in the incentive compensation for the
Named Executives shown in the Summary Compensation Table. Such awards
represented approximately 48.6 percent of the total incentive awards that
could have been earned by the Named Executives. 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 shareholders, the Company encourages all
employees to make a personal investment in Company 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 service 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, Corporate Vice Presidents and Vice Presidents-Operations-a
minimum of two times base salary; and Division Management (including other
Vice President positions)-a minimum of one times base salary. These objectives
must be attained within the five-year period that commenced with the date of
the Distribution 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 shareholder 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 to its key employees at the General Manager level and above, depending
upon the key employee's position within the Company. The options are issued at
fair market value and have a five-year term and generally vest three years
after the date of the grant. In order for key employees to receive option
grants under this program after March 9, 2001, they must meet certain minimum
Common Stock ownership requirements. During fiscal year 1997, option grants
ranging from 200 to 113,158 shares, for a total of 562,338 shares, were made
under this program.
15
<PAGE>
Management Stock Option Program
The Company has a Management Stock Option Program for 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. The
Company granted options to purchase an aggregate of 98,535 shares to employees
under this program during fiscal year 1997.
Restricted Stock
The Company may occasionally grant restricted stock or other stock rights to
ensure retention of key executives or as a part of the compensation provided
to a new executive hired from outside the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
At the July 1, 1997, 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 of Directors subsequently
approved, an annual base salary of $601,000 for fiscal year 1998. 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 shareholders 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 salary if predetermined levels of growth in earnings per share are
achieved by the Company. For fiscal year 1997, 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 year 1997, Mr. Beall earned an incentive bonus pursuant to the CEO
Bonus Plan of $332,914.
At the 1993 Annual Meeting, the shareholders of MRI approved an award made
by the Compensation Committee during fiscal year 1994 of performance stock
rights for the issuance of up to 75,000 shares of Common Stock to Mr. Beall.
Under this award, payouts of 15,000 shares each were or could have been earned
by Mr. Beall over a five-year period ending in 1998 if the MRI Common Stock
reached 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. Mr. Beall earned such awards for fiscal years 1995 and 1994. Mr.
Beall agreed to the cancellation of all performance stock rights remaining
outstanding as of March 9, 1996, the date of the Distribution. In lieu of
renegotiating the performance stock rights award, the Compensation Committee
approved an option grant in favor of Mr. Beall under the Executive Stock
Option Program (described above). The option provides Mr. Beall with the right
to purchase up to 170,453 shares of common stock over a five-year period. In
addition, the Compensation Committee has approved Mr. Beall's participation in
the Management Stock Option Program (described above) under which he may
purchase Common Stock having a value of up to $50,000 annually, conditioned
upon the Company's achievement of pre-established financial goals.
16
<PAGE>
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 shareholders 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 shareholder approval
for certain incentive compensation programs for the Chief Executive Officer.
Pursuant to the Compensation Committee recommendation, the Company submitted
to the shareholders for approval, and the shareholders approved (a) a grant of
performance-based stock rights to the Chief Executive Officer at the 1993
Annual Meeting of Shareholders, and (b) an Incentive Bonus Plan for the Chief
Executive Officer at the 1994 Annual Meeting of Shareholders. 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.
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, including stock options. Members of the Compensation Committee
also administer the Company's stock-based incentive plans. The Compensation
Committee met two times during fiscal year 1997. The Board of Directors
approved all decisions of the Compensation Committee during fiscal year 1997.
The members of the Compensation Committee are named below.
Dolph W. von Arx, Chairman Dr. Benjamin F. Payton
Claire L. Arnold Dr. Donald Ratajczak
John B. McKinnon
17
<PAGE>
PERFORMANCE GRAPH
The following chart and table compare the 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 CUMULATIVE TOTAL RETURN*
AMONG RUBY TUESDAY, INC.
NYSE STOCK MARKET AND NYSE EATING AND DRINKING PLACES INDICES
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
03/11/96 05/31/96 05/30/97
-------- -------- --------
<S> <C> <C> <C>
Ruby Tuesday, Inc.................................... $100.00 $119.72 $121.13
NYSE Stock Market Index.............................. $100.00 $104.87 $131.45
NYSE Eating and Drinking Places Index................ $100.00 $ 97.90 $103.27
</TABLE>
- - --------
* Assumes $100 invested in the Common Stock of the Company and in the
indicated indices on March 11, 1996, the first business day following the
Distribution, and reinvestment of dividends.
18
<PAGE>
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN
The Board of Directors of the Company has approved, and recommends the
shareholders of the Company approve, the amendment to the Company's 1996 Stock
Incentive Plan (the "Stock Incentive Plan") to increase the number of shares
authorized for issuance under the Stock Incentive Plan by 250,000 shares.
Shareholder approval is being sought to preserve the Company's ability to
deduct, for Federal income tax purposes, compensation expense attributable to
stock options and other stock awards. Under Section 162(m) of the Internal
Revenue Code, shareholder approval of performance-based compensation plans
(including material amendments thereto) is necessary to qualify for the
performance-based compensation exception to the limitation on a company's
ability to deduct compensation paid to certain specified individuals in excess
of $1 million. Approval of the proposed amendment to the Stock Incentive Plan
requires the affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock of the Company represented and entitled to
vote at the Annual Meeting.
The following is a description of the Stock Incentive Plan, if amended as
proposed hereby.
Reserved Shares. The shares of Common Stock reserved for issuance pursuant
to awards made or that may be made under the Stock Incentive Plan will be
1,500,000, of which approximately 218,287 shares were previously issued and
approximately 1,017,206 are subject to stock options which are outstanding.
The maximum number of shares of Common Stock with respect to which options or
stock appreciation rights may be granted during any fiscal year to any
eligible recipient who is a "covered employee," within the meaning of Section
162(m) of the Internal Revenue Code, will not exceed 250,000. The Stock
Incentive Plan provides for further adjustments to the number of shares
reserved for issuance in the event of certain recapitalizations.
Disinterested Administration. Awards under the Stock Incentive Plan are
determined by the Compensation Committee (the "Committee"), the members of
which are selected by the Board of Directors and are solely non-management
members. Only persons who satisfy the criteria of "non-employee directors" set
forth in Rule 16b-3(c) under the Exchange Act and the criteria of "outside
directors" set forth in regulations under Section 162(m) of the Internal
Revenue Code may be members of the Committee. The Committee shall have at
least two members.
Awards. The Stock Incentive Plan permits the Committee to make awards of
shares of Common Stock, awards of derivative securities related to the value
of the Common Stock and certain cash awards to directors, officers and
employees of the Company or its affiliates ("Eligible Persons"). These
discretionary awards may be made on an individual basis, or pursuant to a
program approved by the Committee for the benefit of a group of Eligible
Persons. The Stock Incentive Plan permits the Committee to make awards of a
variety of Stock Incentives (as defined below), including, but not limited to,
stock awards, options to purchase shares of Common Stock, stock appreciation
rights, so-called "cashout" or "limited stock appreciation rights" (which the
Committee may make exercisable in the event of a Change in Control of the
Company (as defined therein) or other event), phantom shares, performance
incentive rights, dividend equivalent rights and similar rights (together,
"Stock Incentives"). Outstanding Stock Incentives may be adjusted by the
Committee to reflect certain corporate events such as corporate
reorganizations.
The Company anticipates that most stock awards will be restricted for some
period of time, although the Committee does have the discretion to make such
awards freely transferable at the time of grant. Stock Incentives may be made
exercisable or settled at such prices and will terminate under such terms as
will be established by the Committee. For example, options may be made
exercisable at a price equal to, less than or more than the fair market value
of the Common Stock on the date that the option is awarded, or based upon an
average fair market value of the Common Stock at the time the option is
awarded or at the time the option is exercised. The
19
<PAGE>
Committee may permit an option exercise price to be paid in cash or by the
delivery of previously-owned shares of Common Stock, or to be satisfied
through a cashless exercise executed through a broker or by having a number of
shares of Common Stock otherwise issuable at the time of exercise withheld.
The Stock Incentive Plan permits the grant of both incentive and nonqualified
stock options.
Stock appreciation rights may be granted separately or in connection with
another Stock Incentive, and the Committee may provide that they are
exercisable at the discretion of the holder or that they will be paid at a
time or times certain or upon the occurrence or non-occurrence of certain
events. Stock appreciation rights may be settled in shares of Common Stock or
in cash, according to terms established by the Committee with respect to any
particular award. The Committee may make cash awards designed to cover tax
obligations of employees that result from the receipt or exercise of a Stock
Incentive.
The terms of particular Stock Incentives may provide that they terminate or
expire upon the occurrence of one or more events, including, but not limited
to, the holder's termination of employment or other status with respect to the
Company, passage of a specified period of time, the holder's death or
disability, or the occurrence of a Change in Control of the Company. Stock
Incentives may include exercise, conversion or settlement rights to a holder's
estate or legal representative in the event of the holder's death or
disability. At the Committee's discretion, Stock Incentives that are held by
an employee who suffers a termination of employment may be cancelled,
accelerated, paid or continued. The Board of Directors at any time may
terminate the Stock Incentive Plan or amend it in any respect without
shareholder approval. Amendments that may be adopted without shareholder
approval include amendments that increase the cost of the Stock Incentive Plan
to the Company or alter the allocation of benefits thereunder among executive
officers, directors and other employees. No such termination or amendment
without the consent of the holder of a Stock Incentive shall adversely affect
the rights of the holder under such Stock Incentive. The Board also may
condition any such amendment upon shareholder approval if shareholder approval
is deemed necessary or appropriate in consideration of tax, securities or
other laws.
Tax Consequences. A participant will not recognize income upon the grant of
an option or at any time prior to the exercise of the option or a portion
thereof. At the time the participant exercises a nonqualified option or
portion thereof, he or she will recognize compensation taxable as ordinary
income in an amount equal to the excess of the fair market value of the Common
Stock on the date the option is exercised over the price paid for the Common
Stock, and the Company will then be entitled to a corresponding deduction.
A participant who exercises an incentive stock option will not be taxed at
the time he or she exercises his or her option or a portion thereof. Instead,
he or she will be taxed at the time he or she sells the Common Stock purchased
pursuant to the option. The participant will be taxed on the difference
between the price he or she paid for the stock and the amount for which he or
she sells the stock. If the participant does not sell the stock prior to two
years from the date of grant of the option and one year from the date the
stock is transferred to him or her, the gain will be capital gain and the
Company will not be entitled to a corresponding deduction. If the participant
sells the stock at a gain prior to that time, the difference between the
amount the participant paid for the stock and the lesser of the fair market
value on the date of exercise or the amount for which the stock is sold will
be taxed as ordinary income and the Company will be entitled to a
corresponding deduction. If the stock is sold for an amount in excess of the
fair market value on the date of exercise, the excess amount is taxed as
capital gain. If the participant sells the stock for less than the amount he
or she paid for the stock prior to the one or two year periods indicated, no
amount will be taxed as ordinary income and the loss will be taxed as a
capital loss. Exercise of an incentive option may subject a participant to, or
increase a participant's liability for, the alternative minimum tax.
A participant generally will not recognize income upon the grant of a stock
appreciation right, dividend equivalent right, performance unit award or
phantom share (the "Equity Incentives"). At the time a participant receives
payment under any Equity Incentive, he or she generally will recognize
compensation taxable as ordinary income in an amount equal to the cash or the
fair market value of the Common Stock received, and the Company then will be
entitled to a corresponding deduction.
20
<PAGE>
A participant will not be taxed upon the grant of a stock award if such
award is not transferable by the participant or is subject to a "substantial
risk of forfeiture," as defined in the Internal Revenue Code. However, when
the shares of Common Stock that are subject to the stock award are
transferable by the participant and are no longer subject to a substantial
risk of forfeiture, the participant will recognize compensation taxable as
ordinary income in an amount equal to the fair market value of the stock
subject to the stock award, less any amount paid for such stock, and the
Company then will be entitled to a corresponding deduction. However, if a
participant so elects at the time of receipt of a stock award, he or she may
include the fair market value of the stock subject to the stock award, less
any amount paid for such stock, in income at that time and the Company also
will be entitled to a corresponding deduction at that time.
The Stock Incentive Plan is not qualified under Section 401(a) of the
Internal Revenue Code.
The following table sets forth information regarding stock options granted
under the Stock Incentive Plan during fiscal year 1997 to each of the Named
Executives, all persons who serve as executive officers of the Company as a
group, and all persons who are employees of the Company as a group.
<TABLE>
<CAPTION>
OPTIONS TO
PURCHASE COMPANY
NAME AND POSITION WITH THE COMPANY OR GROUP COMMON STOCK (#)
- - ------------------------------------------- ----------------
<S> <C>
S.E. Beall, III............................................... 118,156
Chairman of the Board and Chief Executive Officer
R.D. McClenagan............................................... 50,149
President, Ruby Tuesday Division
J.R. Mothershed............................................... 18,809
Senior Vice President, and Chief Financial Officer, Treasurer
and Assistant Secretary
M.S. Ingram................................................... 24,713
Senior Vice President, Human Resources
P.G. Hunt..................................................... 16,409
Senior Vice President, General Counsel and Secretary
All executive officers of the Company as a group.............. 228,236
All other employees of the Company as a group................. 5,399
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT TO
THE 1996 STOCK INCENTIVE PLAN.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent auditors
for fiscal year 1997. Representatives of Ernst & Young LLP will be present at
the Annual 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 shareholder approval or ratification is necessary. The
Board of Directors has selected the firm of Ernst & Young LLP to audit the
books of the Company for fiscal year 1998.
SHAREHOLDER PROPOSALS
Any shareholder of the Company wishing to submit a proposal for action at
the Company's 1998 Annual Meeting of Shareholders 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, 1998, and must otherwise comply with
rules of the Securities and Exchange Commission relating to shareholder
proposals.
21
<PAGE>
GENERAL
Management does not know of any other business to come before the Annual
Meeting. If, however, other matters do properly come before the Annual
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 shareholders entitled to be present and vote at the Annual Meeting
will be available for inspection by shareholders at the time and place of the
Annual Meeting.
The Annual Report of the Company for fiscal year 1997 (which is not part of
the proxy soliciting material) is being mailed with this proxy statement to
all shareholders of record as of the record date for the Annual Meeting.
THE COMPANY WILL, UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, FURNISH
WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED MAY 31, 1997. REQUESTS
FOR COPIES SHOULD BE DIRECTED TO PFILIP G. HUNT, SECRETARY, RUBY TUESDAY,
INC., 4721 MORRISON DRIVE, MOBILE, ALABAMA 36609.
By Order of the Board of Directors,
[Signature Appears Here]
Pfilip G. Hunt
Senior Vice President, General
Counsel and Secretary
August 25, 1997
Mobile, Alabama
22
<PAGE>
RUBY TUESDAY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated August 25, 1997, and does hereby
appoint Samuel E. Beall, III and J. Russell Mothershed, 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 Ruby Tuesday, Inc. Common
Stock which the undersigned would be entitled to vote if personally present at
the Annual Meeting of Shareholders of Ruby Tuesday, Inc., to be held at The
Westin Hotel - Atlanta Airport, 4736 Best Road, College Park, Georgia 30337 at
10:30 a.m., local time, on September 29, 1997, and at any adjournment(s)
thereof:
1.To elect three Class II Directors for a term of three years.
Dr. Donald Ratajczak, Samuel E. Beall, III, and Claire L. Arnold
[_] FOR all nominees above [_] WITHHOLD AUTHORITY
(except as marked to the to vote for ALL nominees listed above
contrary above)
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. To approve an amendment to the Company's 1996 Stock Incentive Plan to
increase the number of shares available for issuance thereunder by 250,000.
[_] FOR the amendment [_] AGAINST the amendment [_] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before this meeting.
(CONTINUED ON OTHER SIDE)
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, IT
WILL BE VOTED FOR ALL DIRECTOR NOMINEES LISTED ABOVE AND FOR THE APPROVAL OF
THE AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN.
PROXY NUMBER NUMBER OF SHARES
------------ ----------------
Dated ______________________, 1997.
-----------------------------------
Signature
-----------------------------------
Signature, if held jointly
Please sign exactly as your
name(s) appear hereon. If shares
are held jointly, each shareholder
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.
