<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 Section240.14a-11(c) or
Section240.14a-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)(1)
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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<PAGE>
[LOGO]
August 27, 1999
Dear Shareholders:
We are holding your 1999 Annual Meeting on Thursday, September 30, 1999, at
11:00 a.m., local time, at the Company's headquarters located at 150 West Church
Avenue, Maryville, Tennessee 37801. Matters on which action will be taken at the
meeting are explained in detail in the Notice and Proxy Statement following this
letter.
We sincerely hope that you will be able to attend the meeting in person, and
we look forward to seeing you. 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.
/s/ Samuel E. Beall, III
Samuel (Sandy) E. Beall, III
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
[LOGO]
<PAGE>
RUBY TUESDAY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 30, 1999
The Annual Meeting of Shareholders of Ruby Tuesday, Inc. will be held at the
Company's headquarters located at 150 West Church Avenue, Maryville, Tennessee
37801 on Thursday, September 30, 1999, at 11:00 a.m., local time, for the
following purposes:
1. To elect two Class I directors for a term of three years and one Class
III director for a term of two years to the Board of Directors.
2. To approve an amendment to the Company's 1996 Stock Incentive Plan to
increase the number of shares available for issuance thereunder by
3,000,000.
3. To reapprove the Company's Incentive Bonus Plan for the Chief Executive
Officer.
4. 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 11, 1999, are
entitled to vote at the meeting.
The mailing address of the Company's principal executive office is 150 West
Church Avenue, Maryville, Tennessee 37801.
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/ Daniel T. Cronk
Daniel T. Cronk
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
August 27, 1999
Maryville, Tennessee
<PAGE>
RUBY TUESDAY, INC.
150 WEST CHURCH AVENUE
MARYVILLE, TENNESSEE 37801
PROXY STATEMENT FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The following Proxy Statement and the accompanying proxy card, first mailed
to shareholders on or about August 27, 1999, are furnished in connection with
the solicitation by the Board of Directors of Ruby Tuesday, Inc., a Georgia
corporation (the "Company"), of proxies to be used in voting at the Annual
Meeting of Shareholders of the Company to be held on Thursday, September 30,
1999, at the Company's headquarters located at 150 West Church Avenue,
Maryville, Tennessee 37801 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 two nominees for Class I
directors and the one nominee for Class III director 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 3,000,000, (iii) in favor of the reapproval
of the Company's Incentive Bonus Plan for the Chief Executive Officer (the "CEO
Bonus Plan"), and (iv) 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 11, 1999 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, if any, are counted as shares present for
determination of a quorum. The number of shares of outstanding Common Stock on
August 11, 1999, was 32,041,843, each of which is entitled to one vote.
Election of each of the director nominees named in Proposal 1 requires the
approval of a plurality of the votes cast in the election. For purposes of
determining whether a director nominee has been elected, shares as to which
authority is withheld will have no effect on the outcome of the voting. The
approval of the amendment to the Stock Incentive Plan described in Proposal 2
and the reapproval of the CEO Bonus Plan described in Proposal 3 require the
affirmative vote of holders of a majority of the shares of Common Stock present
or represented and entitled to vote at the Annual Meeting. For purposes of
determining whether Proposals 2 and 3 have been approved by the shareholders,
abstentions will have the same effect as votes against Proposals 2 and 3, but
broker non-votes will have no effect on the voting on such Proposals.
<PAGE>
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. 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. Effective
April 7, 1999, the Board of Directors increased the number of members of the
Board of Directors from seven to nine and elected James A. Haslam, III and
Elizabeth L. Nichols to serve on the Board of Directors to fill the newly
created directorships in Class I and Class III, respectively. Under the Georgia
Business Corporation Code, directors elected by the Board of Directors to fill
newly created directorships serve until the next annual meeting of shareholders
regardless of whether or not the term of their Class expires at such meeting. In
addition to the expiration of Mr. Haslam's and Ms. Nichols' terms of office, the
terms of office of the Class I directors expire at the Annual Meeting.
Accordingly, the Board of Directors has nominated Dr. Benjamin F. Payton and
James A. Haslam, III to serve in Class I of the Board of Directors for a term of
three years. In addition, the Board of Directors has nominated Elizabeth L.
Nichols to serve in Class III of the Board of Directors for a term of two years.
The remaining incumbent Class II and Class III directors have one year and two
years, respectively, remaining on their terms of office. All nominees are
currently serving as directors of the Company. Arthur R. Outlaw resigned from
his position as Vice Chairman and a member of the Board of Directors effective
July 15, 1999. The Company does not plan to fill this vacancy and following the
Annual Meeting, the Board of Directors intends to decrease the number of members
on the Board of Directors to eight, with two members serving in Class I and
three members serving in each of Class II and Class III.
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
<TABLE>
<CAPTION>
CLASS I--TERM EXPIRING 2002
<S> <C> <C>
DR. BENJAMIN F. PAYTON
Director of the Company since 1993 Age: 66
Dr. Payton has been the President of Tuskegee University since 1981. Dr. Payton also is a
director of AmSouth Bancorporation, AmSouth Bank, N.A., The Liberty Corporation, Sonat, Inc.,
Praxair, Inc. and Morrison Management Specialists, Inc. (formerly Morrison Health Care, Inc.).
JAMES A. HASLAM, III
Director of the Company since 1999 Age: 45
Mr. Haslam has been Chief Executive Officer of Pilot Corporation, an operator of convenience
stores and travel centers in 36 states, since July 1995. Prior thereto, from 1976 to 1995, he was
Executive Vice President of Pilot Corporation. Mr. Haslam also is a director of First Tennessee
National Corporation.
CLASS III--TERM EXPIRING 2001
ELIZABETH L. NICHOLS
Director of the Company since 1999 Age: 45
Ms. Nichols has been President of JDN Realty Corp., a public real estate investment trust,
since March 1994. Prior thereto, Ms. Nichols was President of JDN Enterprises, Inc. from December
1990 through March 1994. Ms. Nichols also serves as a director of JDN Realty Corp. and Tri-Tel
Telecommunications, Inc.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
DIRECTORS CONTINUING IN OFFICE
CLASS II--TERM EXPIRING 2000
DR. DONALD RATAJCZAK
Director of the Company since 1981 Age: 56
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.
SAMUEL E. BEALL, III
Director of the Company since 1982 Age: 49
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.
CLAIRE L. ARNOLD
Director of the Company since 1994 Age: 52
Ms. Arnold has been Chair and Chief Executive Officer of Leapfrog Services, Inc., a
privately-held technical outsourcing company, since April 1998. Ms. Arnold served as President and
Chief Executive Officer of Nicotiana Enterprises, Inc., a family holding company, from November
1992 to April 1994. Prior thereto, Ms. Arnold was Chair 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., Morrison Management Specialists, Inc. (formerly Morrison Health Care, Inc.)
and International Multifoods, Inc.
CLASS III--TERM EXPIRING 2001
JOHN B. MCKINNON
Director of the Company since 1989 Age: 64
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 also is a director of Premark International, Inc. and Morrison Management Specialists,
Inc. (formerly Morrison Health Care, Inc.).
DOLPH W. VON ARX
Director of the Company since 1992 Age: 64
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. Since October
1998, Mr. von Arx has been serving as Chairman of the Board of Isolux America Corporation, a
privately-held company that manufactures fiberoptic cable and medical devices. Mr. von Arx also is
a director of Cree Research, Inc., International Multifoods, Inc., Mackenzie Investment Management,
Inc. and Northern Trust of Florida Corporation, a subsidiary of Northern Trust Corporation.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
TWO NOMINEES FOR CLASS I DIRECTORS AND THE ONE NOMINEE FOR
CLASS III DIRECTOR NAMED ABOVE.
3
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 11, 1999
(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
NAME OR GROUP OWNED(1) OF CLASS(2)
- --------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Westport Asset Management, Inc. (3)............................ 2,006,500(3) 6.3
Samuel E. Beall, III........................................... 867,988(4) 2.7
Claire L. Arnold............................................... 20,590 *
James A. Haslam, III........................................... 13,262(5) *
John B. McKinnon............................................... 36,612(6) *
Elizabeth L. Nichols........................................... 162 *
Dr. Benjamin F. Payton......................................... 18,032 *
Dr. Donald Ratajczak........................................... 28,520(7) *
Dolph W. von Arx............................................... 22,862(8) *
Robert D. McClenagan........................................... 307,376 1.0
J. Russell Mothershed.......................................... 182,794 *
Sherry L. Turner............................................... 81,982 *
Daniel T. Cronk................................................ 6,287(9) *
All directors and executive officers as a group (12 persons)... 1,586,467 4.8
</TABLE>
- ------------------------
(1) The amounts shown include (i) shares subject to currently exercisable
options and options exercisable within 60 days after August 11, 1999, held
by the named persons and group as follows: Mr. Beall, 628,602; Ms. Arnold,
11,497; Mr. McKinnon, 15,119; Dr. Payton, 11,497; Dr. Ratajczak, 15,119; Mr.
von Arx, 15,119; Mr. McClenagan, 263,068; Mr. Mothershed, 148,896; Ms.
Turner, 63,066; Mr. Cronk, 1,530; and all directors and executive officers
as a group, 1,173,513; and (ii) shares held in the Company's Salary Deferral
Plan as follows: Mr. Beall, 11,282; Mr. Mothershed, 181; and all directors
and executive officers as a group, 11,463.
The amounts shown do not include share equivalent units credited to the
accounts of the named persons and group under the Company's Deferred
Compensation Plan which, as of July 31, 1999, were as follows: Mr. Beall,
10,317; Mr. McClenagan, 12,720; Mr. Mothershed, 12,687; Ms. Turner, 8,247;
Mr. Cronk, 8,298; and all directors and executive officers as a group,
52,269. These units represent deferred compensation obligations of the
Company payable in shares of Common Stock upon termination of employment
either in a lump sum or in installments, as determined by the Company in its
capacity as plan administrator.
(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 11, 1999), without regard to any
disclaimers of beneficial ownership by the person indicated.
(3) The address of Westport Asset Management, Inc. is 253 Riverside Avenue,
Westport, CT 06880. The information presented is based on Schedule 13G, as
amended, filed by Westport Asset Management, Inc. reporting beneficial
ownership as of December 31, 1998.
4
<PAGE>
(4) Includes 121,800 shares held in the Beall Family Ltd. Partnership, a limited
partnership of which Mr. Beall is a General Partner.
(5) Includes 13,100 shares held by PTC Corporation of which Mr. Haslam is a 50%
owner. Mr. Haslam disclaims beneficial ownership of any shares in excess of
50% of the total of such shares.
(6) Includes 15,250 shares owned by Mr. McKinnon and his spouse as tenants in
common.
(7) Includes 6,750 shares held in an individual retirement account by Dr.
Ratajczak.
(8) 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.
(9) Includes 1,000 shares owned by Mr. Cronk and his spouse as tenants in
common.
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 1999 have been complied
with on a timely basis.
DIRECTORS' FEES AND ATTENDANCE
The Board of Directors met four times during fiscal year 1999. Each director
other than Dr. Benjamin F. Payton 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. Dr. Payton was unable to attend the Board of Directors
and Audit Committee meetings held on October 5 due to a death in the family.
Directors who are employees of the Company receive no directors' fees. All
non-employee directors currently receive $4,500 quarterly retainers, $4,500 per
regularly-scheduled Board meeting attended and $2,250 per special Board meeting
attended. Non-employee directors serving on the Audit Committee or the
Compensation and Stock Option Committee (other than the Chairmen of such
committees) do not receive any fee for attending committee meetings. 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. Mr. Outlaw,
who served as Vice Chairman of the Board until July 15, 1999 and is an employee
of the Company, received a fee of $250 per Board meeting attended during fiscal
year 1999, but he did not receive a retainer.
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.
5
<PAGE>
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 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 1999. The current members of the
Audit Committee are John B. McKinnon (Chairman), Claire L. Arnold, James A.
Haslam, III, Elizabeth L. Nichols, 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 1999. The current members of the Compensation
Committee are Dolph W. von Arx (Chairman), Claire L. Arnold, James A. Haslam,
III, John B. McKinnon, Elizabeth L. Nichols, Dr. Benjamin F. Payton and Dr.
Donald Ratajczak.
6
<PAGE>
EXECUTIVE COMPENSATION
This section of the Proxy Statement discloses compensation for services
rendered to the Company during each of the three fiscal years in the period
ended June 6, 1999, which compensation was 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 $100,000 in fiscal year 1999 (collectively, these persons are sometimes
referred to as the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION
--------------------------------------- ---------------------- ALL OTHER
OTHER ANNUAL AWARDS PAYOUTS COMPENSATION
COMPENSATION OPTIONS/ LTIP ---------------
NAME AND POSITION YEAR SALARY ($) BONUS ($) $(1) SARS (#) PAYOUTS ($) ($)(2)
- ----------------------------------- --------- ----------- ----------- ------------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Samuel (Sandy) E. Beall, III....... 1999 624,539 781,250 7,500(5) 171,434 -0- 3,288
Chairman of the Board and 1998 601,000 607,761 315,004 12,954 -0- 4,268
Chief Executive Officer 1997 587,496 332,914 27,249 236,312 -0- 8,418
Robert D. McClenagan............... 1999 331,255 414,375 189,185 109,346 -0- 5,669
President, Ruby Tuesday Concept 1998 318,758 398,448 4,500 7,770 -0- 5,907
1997 306,498 173,682 2,250 100,298 -0- 6,605
J. Russell Mothershed.............. 1999 241,820 242,000 18,215 90,007 -0- 5.410
Senior Vice President and Chief 1998 232,678 188,237 57,869 6,216 -0- 5,482
Financial Officer, Treasurer and 1997 222,532 100,881 1,800 37,618 -0- 3,653
Assistant Secretary
Sherry L. Turner (3)............... 1999 192,258 192,400 3,600 110,007(6) -0- -0-
Executive Vice President, Human 1998 138,750 142,548 24,812 6,216 -0- -0-
Resources and Performance 1997 N/A N/A N/A 60,000 N/A N/A
Management
Daniel T. Cronk (4)................ 1999 171,473 171,600 3,600 50,007 -0- -0-
Senior Vice President, 1998 137,007 72,686 5,352 46,264 -0- -0-
General Counsel and Secretary 1997 N/A N/A N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) Under the Company's Management Stock Option Program (the "MSOP"), eligible
employees of the Company may purchase shares of Common Stock up to
established annual limits if pre-established Corporate, Division, Region,
District or Unit goals, as the case may be, are achieved. For each share of
Common Stock purchased under the MSOP, the participant receives .15 of a
"bonus share" and a five-year option to purchase three times the number of
shares purchased plus the related bonus shares. The shares purchased and the
related bonus shares are subject to a two-year restriction on resale. The
value of the bonus shares received in connection with the purchase of shares
of Common Stock under the MSOP by the Named Executives is included in this
column. Additionally, the following amounts for taxable relocation
assistance provided by the Company are included for fiscal years 1999 and
1998, respectively: S. E. Beall, III, $0 and $307,504; R.D. McClenagan,
$183,185 and $0; J.R. Mothershed, $14,615 and $54,269; S.L. Turner, $0 and
$21,212; and D.T. Cronk, $0 and $1,752.
(2) The amounts in this column include the following: (a) Company contributions
to the Deferred Compensation Plan for fiscal years 1999, 1998 and 1997,
respectively: S.E. Beall, III, $0, $0 and $4,429; R.D. McClenagan, $3,655,
$3,295 and $4,128; and J.R. Mothershed, $3,748, $3,439 and $1,917; (b)
executive group life and accidental death and dismemberment insurance plan
premiums paid for fiscal years 1999, 1998 and 1997, respectively: S.E.
Beall, III, $837, $828 and $828; R.D. McClenagan, $837, $828 and $828; and
J.R. Mothershed, $816, $788 and $760; and (c) employee portion of split-
7
<PAGE>
dollar life insurance premiums paid by the Company for fiscal years 1999,
1998 and 1997, respectively: S.E. Beall, III, $2,451, $3,440 and $3,161;
R.D. McClenagan, $1,177, $1,784 and $1,649; and J.R. Mothershed, $846,
$1,255 and $976.
(3) Ms. Turner became an executive officer of the Company on September 1, 1997.
(4) Mr. Cronk became an executive officer of the Company on July 1, 1997.
(5) The indicated amount includes a merit pay adjustment of $23,499 paid in
fiscal 1997.
(6) Represents 60,000 options granted to Ms. Turner in contemplation of her
becoming an executive officer.
OPTION GRANTS IN FISCAL 1999
The following table presents information regarding options to purchase
shares of Common Stock granted by the Company during fiscal year 1999 to the
Named Executives. The Company has no outstanding SARs and granted no SARs during
fiscal year 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE(3) AT
ASSUMED ANNUAL
RATES OF STOCK PRICE APPRECIATION FOR
OPTION TERM
--------------------------------------
INDIVIDUAL GRANTS 5% 10%
-------------------------------------------------------- -------------------------- ----------
% OF TOTAL MARKET PRICE
OPTIONS/ SARS REQUIRED TO
GRANTED TO EXERCISE OR REALIZE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION DOLLAR DOLLAR GAINS DOLLAR
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SHARE) DATE GAINS ($) ($/SHARE) GAINS ($)
- ----------------------------- ------------- --------------- ----------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
S.E. Beall, III.............. 5,895 0.44% 14.6250 09/04/03 23,819 18.67 52,635
4,539 0.34% 19.0000 12/04/03 23,827 24.25 52,651
161,000 12.09% 17.0625 04/12/04 758,963 21.78 1,677,109
R.D. McClenagan.............. 4,716 0.35% 14.6250 09/04/03 19,056 18.67 42,108
3,630 0.27% 19.0000 12/04/03 19,055 24.25 42,107
101,000 7.59% 17.0625 04/12/04 476,119 21.78 1,052,100
J.R. Mothershed.............. 2,829 0.21% 14.6250 09/04/03 11,431 18.67 25,259
2,178 0.16% 19.0000 12/04/03 11,433 24.25 25,264
85,000 6.38% 17.0625 04/12/04 400,695 21.78 885,430
S.L. Turner.................. 20,000 1.50% 15.5000 06/30/03 85,647 19.78 189,258
2,829 0.21% 14.6250 09/04/03 11,431 18.67 25,259
2,178 0.16% 19.0000 12/04/03 11,433 24.25 25,264
85,000 6.38% 17.0625 04/12/04 400,695 21.78 885,430
D.T. Cronk................... 2,829 0.21% 14.6250 09/04/03 11,431 18.67 25,259
2,178 0.16% 19.0000 12/04/03 11,433 24.25 25,264
45,000 3.38% 17.0625 04/12/04 212,132 21.78 468,757
<CAPTION>
MARKET PRICE
REQUIRED TO
REALIZE
DOLLAR GAINS
NAME ($/SHARE)
- ----------------------------- -------------
<S> <C>
S.E. Beall, III.............. 23.55
30.60
27.48
R.D. McClenagan.............. 23.55
30.60
27.48
J.R. Mothershed.............. 23.55
30.60
27.48
S.L. Turner.................. 24.96
23.55
30.60
27.48
D.T. Cronk................... 23.55
30.60
27.48
</TABLE>
- ------------------------
(1) The indicated options have a term of five years and were granted pursuant to
the Company's Stock Incentive Plan. Those options with an exercise price of
$17.0625 on the date of grant generally become exercisable after 30 months.
All other options listed in the table above generally become exercisable
after two years. In the event of a change in control of the Company, the
vesting of options will be accelerated unless the committee administering
the plan elects to cash-out the options.
(2) Based on an aggregate of 1,331,439 options granted by the Company in fiscal
year 1999.
(3) The Potential Realizable Values are calculated as follows: [[Market Price at
Grant X (1 + Stock Price Appreciation Rate)] - Exercise Price] X Number of
Underlying Shares. Because these Potential Realizable Values are based on
annualized compound rates of increase over a five year term, the total
potential appreciation on annual appreciation rates of 5% and 10% is 27.6%
and 61.1%, respectively.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN
FISCAL 1999 AND FISCAL YEAR END VALUES
The following table presents information regarding exercises of options to
purchase shares of Common Stock during fiscal year 1999 by the Named Executives
and the value of unexercised options to purchase Common Stock held at June 6,
1999. There were no SARs outstanding during fiscal year 1999.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT
SHARES OPTIONS FY-END (#) FY-END($)(2)
ACQUIRED ON VALUE ------------------ ---------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------- -------------- ------------------ ---------------------
<S> <C> <C> <C> <C>
S.E. Beall, III......................... -0- -0- 395,902/410,704 4,040,810/2,794,040
R.D. McClenagan......................... 9,114 71,372 176,196/211,414 1,884,266/1,260,834
J.R. Mothershed......................... 16,172 164,416 113,862/129,041 1,146,332/570,962
S.L. Turner............................. -0- -0- -0-/176,223 -0-/926,726
D.T. Cronk.............................. -0- -0- -0-/96,271 -0-/473,942
</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 June 4, 1999) - (Per Share
Exercise Price)] X Number of Shares Subject to Unexercised Options. The per
share closing sale price on June 4, 1999, the last trading day of fiscal
year 1999, was $19.1875.
RETIREMENT PLAN
Following the distribution by the Company's predecessor, Morrison
Restaurants Inc. ("MRI"), of the stock of two subsidiaries in March of 1996 (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 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 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.
9
<PAGE>
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.
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 may be paid 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 an actuarially 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.
10
<PAGE>
EXECUTIVE SUPPLEMENTAL PENSION PLAN
ESTIMATED ANNUAL BENEFITS FOR REPRESENTATIVE YEARS OF SERVICE TO AGE 65
<TABLE>
<CAPTION>
ANNUAL AVERAGE 30 OR
BASE SALARY 10 15 20 25 MORE
- ----------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$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
650,000............................................. 162,500 243,750 325,000 357,500 390,000
675,000............................................. 168,750 253,125 337,500 371,250 405,000
700,000............................................. 175,000 262,500 350,000 385,000 420,000
725,000............................................. 181,250 271,875 362,500 398,750 435,000
750,000............................................. 187,500 281,250 375,000 412,500 450,000
775,000............................................. 193,750 290,625 387,500 426,250 465,000
800,000............................................. 200,000 300,000 400,000 440,000 480,000
825,000............................................. 206,250 309,375 412,500 453,750 495,000
850,000............................................. 212,500 318,750 425,000 467,500 510,000
875,000............................................. 218,750 328,125 437,500 481,250 525,000
900,000............................................. 225,000 337,500 450,000 495,000 540,000
925,000............................................. 231,250 346,875 462,500 508,750 555,000
950,000............................................. 237,500 356,250 475,000 522,500 570,000
975,000............................................. 243,750 365,625 487,500 536,250 585,000
1,000,000........................................... 250,000 375,000 500,000 550,000 600,000
</TABLE>
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, 27 years, $624,539; Mr. McClenagan, 27 years, $331,255; and Mr.
Mothershed, 26 years, $241,820.
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
11
<PAGE>
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 an actuarially reduced 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>
FINAL AVERAGE 30 OR
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, 27 years, $100,000; Mr. McClenagan, 27 years,
$100,000; and Mr. Mothershed, 26 years, $100,000.
12
<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 similar high-performance restaurant
companies;
- A very significant portion of executive compensation is tied to the
Company's success in meeting predetermined earnings per share growth and
other annual and long-term performance goals; 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 (Sandy) 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 of its officers,
including the Chief Executive Officer and the Named Executives, is to establish
salary ranges with market targets which are at the 75(th) percentile of the
competitive market in the casual dining industry for the Chief Executive Officer
and the 50(th) percentile for the other executives. Each salary range provides a
lower and upper limit on the value of jobs assigned to that range. 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 as well as
individual performance.
With respect to fiscal year 1999, the Compensation Committee utilized
published surveys of selected peer companies to obtain competition base salary
information. Executive officer salaries were reviewed and recommendations for
adjustments were made to the Board based on survey market targets.
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, 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 15 percent to
25 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
13
<PAGE>
fiscal year 1999 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 100 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. 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; Concept Presidents and President/Partners, a
minimum of three times base salary; Corporate Senior Vice Presidents and Senior
Vice President/Partners--Regional Operations, a minimum of two times base
salary; and Corporate and Concept Vice Presidents and Vice Presidents/Partners--
Regional Operations, a minimum of one times base salary. These objectives must
be attained within the five-year period commencing with the effective date of
the Distribution (March 9, 1996) or the date of hire, whichever is later, with
the minimum to be fully achieved at the end of such 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 30 months after
the date of the grant. In order for key employees to receive option grants under
this program after March 26, 2001, they must meet certain minimum Common Stock
ownership requirements. During fiscal year 1999, option grants ranging from 100
to 161,000 shares, for a total of 1,018,950 shares, were made under this
program.
MANAGEMENT STOCK OPTION PROGRAM
The Company has a MSOP 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. These options generally vest two years
after the date of the 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
14
<PAGE>
than through the exercise of stock options. The Company granted options to
purchase an aggregate of 312,489 shares to employees under this program during
fiscal year 1999.
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. No restricted stock or other stock rights were granted
by the Company during fiscal year 1999.
CHIEF EXECUTIVE OFFICER COMPENSATION
At the July 1, 1999, 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 $860,000 for fiscal year 2000. Mr. Beall's
base salary was set at the 75(th) percentile of the competitive salary range in
the casual dining industry.
The CEO Bonus Plan was approved by the shareholders at the 1994 Annual
Meeting, and is being submitted for reapproval at the Annual Meeting. Pursuant
to the CEO Bonus Plan, 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 1999, the Chief
Executive Officer's bonus opportunity was 25 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 1999, Mr. Beall earned an incentive bonus pursuant to the CEO
Bonus Plan of $781,250.
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.
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 the CEO Bonus Plan
at the 1994 Annual Meeting of Shareholders. In order to continue to preserve the
Company's ability to deduct annual incentive compensation paid to the Chief
Executive Officer, the CEO Bonus Plan is being submitted to the shareholders for
reapproval at the Annual Meeting. 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,
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 1999. The Board of Directors approved all decisions of
the Compensation Committee during fiscal year 1999. The members of the
Compensation Committee are named below.
<TABLE>
<S> <C>
Dolph W. von Arx (Chairman)
Claire L. Arnold Elizabeth L. Nichols(*)
James A. Haslam, III(*) Dr. Benjamin F. Payton
John B. McKinnon Dr. Donald Ratajczak
</TABLE>
- ------------------------
(*) Ms. Nichols and Mr. Haslam were appointed to the Compensation Committee
effective April 7, 1999 and, therefore, attended only one of the meetings of
the Compensation Committee held during fiscal year 1999.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal year 1999, the members of the Compensation Committee were
Dolph W. von Arx, (Chairman), Claire L. Arnold, John B. McKinnon, Dr. Benjamin
F. Payton and Dr. Donald Ratajczak and, effective April 7, 1999, James A.
Haslam, III and Elizabeth L. Nichols. During fiscal year 1999, Mr. Haslam served
as Chief Executive Officer and a director of Pilot Corporation, a privately-held
corporation. Pilot Corporation does not have a compensation committee of its
board of directors. Mr. Beall, Chairman of the Board and Chief Executive Officer
of the Company, and Mr. McKinnon, a director and member of the Compensation
Committee of the Company, also served on the Board of Directors of Pilot
Corporation during fiscal year 1999.
CERTAIN TRANSACTIONS
On August 20, 1998, the Company purchased an aggregate of 441,000 shares of
Common Stock from Arthur R. Outlaw, former Vice Chairman of the Board of
Directors, at $15.875 per share, the market price per share of Common Stock at
the time, on August 13, 1998, at which the agreement for the purchase was
concluded.
16
<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 EATING AND DRINKING PLACES INDICES AND NYSE STOCK MARKET
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RUBY TUESDAY, INC. NYSE EATING AND NYSE STOCK MARKET INDEX
<S> <C> <C> <C>
Drinking Places Index
3/11/96 $100.00 $100.00 $100.00
5/31/96 $119.72 $97.85 $104.87
5/30/97 $121.13 $103.27 $131.45
6/5/98 $176.00 $132.80 $174.91
6/4/99 $218.06 $161.49 $197.89
</TABLE>
<TABLE>
<CAPTION>
03/11/96 05/31/96 05/30/97 06/05/98 06/04/99
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ruby Tuesday, Inc.......................................... $ 100.00 $ 119.72 $ 121.13 $ 176.00 $ 218.06
NYSE Eating and Drinking Places Index...................... $ 100.00 $ 97.85 $ 103.27 $ 132.80 $ 161.49
NYSE Stock Market Index.................................... $ 100.00 $ 104.87 $ 131.45 $ 174.91 $ 197.89
</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.
17
<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 Stock
Incentive Plan to increase the number of shares authorized for issuance by
3,000,000 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 granted under the Stock
Incentive Plan. 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
6,000,000, of which approximately 1,177,201 shares were previously issued and
approximately 1,923,795 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(b) under the Securities Exchange Act of 1934, as amended, 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
18
<PAGE>
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 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 canceled, 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.
19
<PAGE>
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.
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
and other awards made under the Stock Incentive Plan during fiscal year 1999 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>
BONUS OPTIONS
NAME AND POSITION WITH THE COMPANY OR GROUP SHARES(#)(1) (#)(2)
- --------------------------------------------------------------------- ------------- ---------
<S> <C> <C>
S.E. Beall, III...................................................... 453 171,434
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
R.D. McClenagan...................................................... 363 109,346
PRESIDENT, RUBY TUESDAY DIVISION
J.R. Mothershed...................................................... 218 90,007
SENIOR VICE PRESIDENT, AND CHIEF FINANCIAL OFFICER, TREASURER AND
ASSISTANT SECRETARY
S.L. Turner.......................................................... 218 110,007
EXECUTIVE VICE PRESIDENT, HUMAN RESOURCES AND PERFORMANCE
MANAGEMENT
D.T. Cronk........................................................... 218 50,007
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
All executive officers of the Company as a group..................... 1,470 530,801
All other employees of the Company as a group........................ 326 22,518
</TABLE>
- ------------------------
(1) Bonus shares issued under the MSOP, a program maintained by the Company
under the Stock Incentive Plan, to the extent applicable to executive
officers. See footnote 1 to the Summary Compensation Table above for a
description of the MSOP. Any options granted under the MSOP are included in
the "Options" column.
(2) Includes options granted under the MSOP.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT TO THE
STOCK INCENTIVE PLAN.
20
<PAGE>
PROPOSAL 3
INCENTIVE BONUS PLAN
FOR THE CHIEF EXECUTIVE OFFICER
The CEO Bonus Plan of the Company was approved by the shareholders of the
Company at the 1994 Annual Meeting of Shareholders and we are submitting it for
reapproval at the Annual Meeting. Reapproval of the CEO Bonus Plan by the
shareholders every five years is required to meet the conditions necessary for
the Company to exclude performance-based compensation thereunder from the $1
million limit on the Company's deductions from federal income taxes under
Section 162(m) of the Internal Revenue Code. The CEO Bonus Plan will be
reapproved upon the affirmative vote of a majority of the votes cast by holders
of the shares of Common Stock voting by proxy or in person at the Annual
Meeting.
The Company has made two changes to the CEO Bonus Plan as originally
approved by the shareholders in contemplation of the CEO Bonus Plan's submission
to the shareholders for reapproval: (i) the requirement that the Company achieve
a 10 percent growth in pre-tax income for a fiscal year as a prerequisite to the
Chief Executive Officer earning a bonus for that year has been removed to bring
the CEO Bonus Plan in line with the Company's annual incentive program as it
applies to the Company's other executive officers; and (ii) the maximum bonus
amount that may be earned by the Chief Executive Officer in any given fiscal
year has been increased from $850,000 to $1,400,000 to reflect increases in the
Chief Executive Officer's base salary since the original approval of the CEO
Bonus Plan. The following is a description of the terms of the CEO Bonus Plan,
as amended.
PERFORMANCE GOALS AND DETERMINATION OF AWARDs. Pursuant to the CEO Bonus
Plan, 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 year 1999, the Chief Executive
Officer's bonus opportunity was 25 percent, 50 percent, 100 percent or 125
percent of his base salary if the Company achieves or exceeds 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 1999, Mr. Beall earned an incentive bonus pursuant to the CEO
Bonus Plan of $781,250. The maximum bonus that may be earned by the Chief
Executive Officer under the CEO Bonus Plan in any given fiscal year is
$1,400,000.
PAYMENT OF AWARDS. Before any award may be paid pursuant to the CEO Bonus
Plan, the Compensation Committee must certify that the performance goals have
been achieved and that any other requirements of the CEO Bonus Plan have been
satisfied.
PARTIAL ANNUAL BONUS AWARDS. In the event of the Chief Executive Officer's
death, termination of employment due to disability or termination of employment
due to a change of control, the Chief Executive Officer (or the legal
representative of the Chief Executive Officer, as the case may be) shall be
entitled to payment of an adjusted annual bonus award. The amount of the
adjusted annual bonus award shall be determined by multiplying the annual bonus
award that would have been payable to the Chief Executive Officer had he
remained an employee through the last day of the fiscal year of the Company by a
fraction the numerator of which shall be the number of days during the fiscal
year during which he was an employee and the denominator of which shall be 365.
ADMINISTRATION. The CEO Bonus Plan will be administered by the Compensation
Committee as long as the composition of the Compensation Committee consists
solely of two or more "outside directors" as that term is defined in Section
162(m) of the Internal Revenue Code. The Compensation Committee has the
authority to establish performance goals and targets under the CEO Bonus Plan
consistent with its terms.
21
<PAGE>
AMENDMENT AND TERMINATION. The Compensation Committee at any time may amend
or terminate the CEO Bonus Plan without shareholder approval; provided, however,
that the Compensation Committee may condition any amendment on the approval of
shareholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. The Compensation Committee
is specifically authorized to amend the CEO Bonus Plan as necessary or
appropriate to comply with Section 162(m) of the Internal Revenue Code and the
regulations issued thereunder.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE REAPPROVAL OF THE
CEO BONUS PLAN.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent auditors
for fiscal year 1999. 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 2000.
SHAREHOLDER PROPOSALS
Any shareholder of the Company wishing to submit a proposal for action at
the Company's 2000 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 28, 2000, and must otherwise comply with
rules of the Securities and Exchange Commission relating to shareholder
proposals.
The proxy or proxies designated by the Company will have discretionary
authority to vote on any matter properly presented by a shareholder for
consideration at the 2000 Annual Meeting of Shareholders but not submitted for
inclusion in the proxy materials for such meeting unless (i) with respect to any
nomination for director, written notice of the intent to make the nomination is
submitted to the Company at least 90 days in advance of the meeting and is
otherwise made in accordance with the nomination procedures contained in the
Articles of Incorporation of the Company, or (ii) with respect to any other
shareholder proposal, notice of the matter is received by the Company at its
principal executive office not later than July 13, 2000 and, in either case,
certain other conditions of the applicable rules of the Securities and Exchange
Commission are satisfied.
22
<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 1999 (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 JUNE 6, 1999. REQUESTS FOR
COPIES SHOULD BE DIRECTED TO DANIEL T. CRONK, SECRETARY, RUBY TUESDAY, INC., 150
WEST CHURCH AVENUE, MARYVILLE, TENNESSEE 37801.
By Order of the Board of Directors,
/s/ Daniel T. Cronk
Daniel T. Cronk
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
August 27, 1999
Maryville, Tennessee
23
<PAGE>
NOTE: The Chief Executive Officer's Incentive Bonus Plan is being filed as an
Appendix to the Company's 1999 Proxy Statement to the Shareholders pursuant to
Instruction 3 of Item 10 of Schedule 14A under the Securities Act of 1934, as
amended, and will not be distributed to the shareholders.
RUBY TUESDAY, INC.
CHIEF EXECUTIVE OFFICER'S
INCENTIVE BONUS PLAN
The purpose of the Ruby Tuesday, Inc. Chief Executive Officer's Incentive
Bonus Plan is to motivate and reward its chief executive officer for good
performance by making a proportion of his cash compensation dependent on growth
in earnings per share of Ruby Tuesday, Inc. (the "Company"). The Plan is
designed to ensure that the annual bonus paid hereunder to the eligible
participant, as an executive officer of the Company is deductible under Section
162(m) of the Internal Revenue Code of 1986, as amended, and the regulations and
interpretations promulgated thereunder.
SECTION 1 DEFINITIONS
1.1 DEFINITIONS. Whenever used herein, unless the context clearly indicates
otherwise, and the following capitalized words and phrases are used herein with
the meaning thereafter ascribed:
(a) "BASE SALARY MULTIPLIERS" means a series of multipliers determined by
the Committee for a fiscal year each of which corresponds to a separate
Earnings Per Share Target, as determined by the Committee in its
discretion no later than the ninetieth day of the fiscal year; provided
that such determination shall be made while the outcome remains
substantially uncertain.
(b) "BOARD OF DIRECTORS" means the board of directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means the committee administering the Plan and consisting
solely of at least two outside directors of the Company who qualify as
such under the requirements of Code Section 162(m). Members of the
committee shall be appointed by the Board of Directors.
(e) "COMPANY" means Ruby Tuesday, Inc., a Georgia corporation.
(f) "DISABILITY" means that condition described in Code Section 22(e)(3), as
amended from time to time. In the event of a dispute, the determination
of Disability shall be made by the Committee and shall be supported by
advice of a physician competent in the area to which such Disability
relates.
(g) "EARNINGS PER SHARE TARGETS" means those targets determined by the
Committee for a fiscal year for growth in earnings per share of the
Company each expressed as a percentage increase over earnings per share
determined as of the last day of the immediately preceding fiscal year
and as reported by the Company in its audited consolidated annual
financial statements, adjusted by the Committee in its discretion for
significant unusual items which are unusual as to their frequency or size
as determined under generally accepted accounting principles; provided
that no such adjustment shall be made later than the ninetieth day of the
fiscal year for which the target has been established and only if the
outcome remains substantially uncertain at the time of the adjustment.
(h) "EFFECTIVE DATE" means the date the restated Plan is re-approved by the
stockholders of the Company.
(i) "PARTICIPANT" means the individual who, pursuant to Plan Section 2, is
eligible to participate in the Plan.
(j) "PLAN" means the Ruby Tuesday, Inc. Chief Executive Officer's Incentive
Bonus Plan.
<PAGE>
SECTION 2 ELIGIBILITY
The sole individual entitled to any bonus payment hereunder shall be the
chief executive officer of the Company, Samuel E. Beall, III.
SECTION 3 ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the provisions
of the Plan, the Committee shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of performance goals and target
levels under the Plan consistent with the provisions of the Plan; to determine
whether established performance goals and target levels have been met; and to
make all other determinations necessary or advisable for the proper
administration of the Plan. The Committee's decisions shall be final and binding
on the Participant. The Plan shall be interpreted in view of the intention that
any grant of compensation pursuant to the Plan is intended to qualify as
performance-based compensation with the meaning of Code Section 162(m) and the
regulations and interpretations promulgated thereunder.
SECTION 4 ANNUAL BONUS AWARDS
4.1 CALCULATION OF ANNUAL BONUS AWARD. The Participant shall be eligible to
receive an annual bonus award for each fiscal year of the Company ending
after the Effective Date pursuant to the terms of the Plan, subject to the
amendment or termination of the Plan pursuant to Plan Section 5.4. The
payment of any annual bonus award shall be conditioned upon: (a) the
achievement of the minimum Earnings Per Share Target for the fiscal year;
and (b) except as provided in Section 4.3 below, the Participant's
continuance in employment with the Company through the last day of the
fiscal year. The amount of any bonus payment shall be the product of (i) the
Participant's base salary in effect for the fiscal year, MULTIPLIED BY (ii)
the applicable Base Salary Multiplier.
4.2 PAYMENT OF ANNUAL BONUS AWARD. Annual bonus awards shall be paid by the
Company in cash within thirty (30) days following the close of the fiscal
year for which the bonus was earned.
4.3 PARTIAL ANNUAL BONUS AWARDS. In the event of the Participant's death or a
termination of employment due to Disability, the Participant (or the legal
representative of the Participant, as the case may be) shall be entitled to
payment of an adjusted annual bonus award. The amount of the adjusted annual
bonus award shall be determined by multiplying the annual bonus award that
would have been payable to the Participant had he remained an employee
through the last day of the fiscal year of the Company by a fraction, the
numerator of which shall be the number of days during the fiscal year during
which he was an employee and the denominator of which shall be 365.
4.4 MAXIMUM ANNUAL BONUS AWARD. No annual bonus award otherwise earned pursuant
to the Plan shall be payable to the Participant if and to the extent the
amount of the annual bonus award exceeds $1,400,000.
4.5 NO OTHER BONUS AWARDS. The Participant shall be ineligible to participate in
any other annual bonus program maintained by the Company for the period
during which the Plan remains in force and effect.
4.6 CERTIFICATION OF ACHIEVEMENT OF PERFORMANCE GOALS. No annual bonus award
shall be paid unless and until the Committee certifies in writing that the
appropriate Earnings Per Share Target was achieved for the fiscal year of
the Company in question.
4.7 PARTICIPANT'S RIGHTS UNSECURED. The right of the Participant to receive
annual bonus payments under the Plan shall constitute an unsecured claim
against the general assets of the Company.
4.8 WITHHOLDING TAXES. The Company shall have the right to deduct from each
bonus payment any federal, state and local taxes required by such laws to be
withheld with respect to the payment.
2
<PAGE>
SECTION 5 GENERAL PROVISIONS
5.1 CHANGES IN CAPITALIZATION. Earnings Per Share Targets shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of common stock of the Company resulting from a subdivision or
combination of shares or the payment of a stock dividend in shares of common
stock of the Company to holders of outstanding shares of common stock of the
Company or any other increase or decrease in the number of shares of common
stock of the Company outstanding effected without receipt of consideration
by the Company. The existence of the Plan shall not affect in any way the
right or power of the Company to make or authorize any adjustment,
reclassification, reorganization or other change in its capital or business
structure, any merger or consolidation of the Company, any issue of debt or
equity securities having preferences or priorities as to the common stock of
the Company or the rights thereof, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of its business or assets,
or any other corporate act or proceeding.
5.2 RIGHT TO REMOVE CHIEF EXECUTIVE OFFICER. Nothing in the Plan shall confer
upon the Participant the right to continue as an employee of the Company or
shall impair the right of the Company to terminate the Participant's
employment at any time.
5.3 NON-ALIENATION OF BENEFITS. Other than as specifically provided with regard
to the death of the Participant, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge; and any attempt to do so shall be void. No
such benefit shall, prior to receipt by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or
torts of the Participant.
5.4 TERMINATION AND AMENDMENT OF THE PLAN. The Committee at any time may amend
or terminate the Plan without stockholder approval, including any amendment
necessary or appropriate to comply with Code Section 162(m) and the
regulations thereunder; provided, however, that the Committee may condition
any amendment on the approval of stockholders of the Company if such
approval is necessary or advisable with respect to tax, securities or other
applicable laws. No termination, modification or amendment of the Plan,
without the consent of the Participant, shall adversely affect the rights of
the Participant with respect to any annual bonus award previously earned,
except as contemplated by Section 5.5 below.
5.5 STOCKHOLDER APPROVAL. The restated Plan shall be submitted to the
stockholders of the Company for their approval prior to the date that
payment of any compensation becomes due to the Participant under the Plan,
as so restated. If such approval is not obtained, the Plan shall be deemed
null and void and no further compensation shall be payable to the
Participant under the Plan.
5.6 CHOICE OF LAW. The laws of the State of Georgia shall govern the Plan, to
the extent not preempted by federal law.
5.7 EFFECTIVE DATE. The Plan, as restated, shall become effective on the
Effective Date.
<TABLE>
<S> <C> <C>
RUBY TUESDAY, INC.
By: ----------------------------------
Title: ----------------------------------
</TABLE>
[CORPORATE SEAL]
ATTEST:
- ----------------------------------------
Secretary
3
<PAGE>
NOTE: The Second Amendment to the Ruby Tuesday, Inc. 1996 Stock Incentive Plan
is being filed as an Appendix to the Company's 1999 Proxy Statement to the
Shareholders pursuant to Instruction 3 of Item 10 of Schedule 14A under the
Securities Act of 1934, as amended, and will not be distributed to the
shareholders.
SECOND AMENDMENT TO THE
RUBY TUESDAY, INC. 1996 STOCK INCENTIVE PLAN
THIS SECOND AMENDMENT is made as of April 12, 1999, by Ruby Tuesday, Inc., a
corporation organized and existing under the laws of the State of Georgia
(hereinafter called the "Company").
W I T N E S S E T H:
WHEREAS, the Company maintains the Ruby Tuesday, Inc. 1996 Stock Incentive
Plan (the "Plan"); and
WHEREAS, the Company wishes to amend the Plan to reflect the following chain
of events: the approval by the Board of Directors of an increase in the number
of shares reserved for issuance under the Plan on July 1, 1997; the approval by
the Board of Directors of a two-for-one stock split as of April 17, 1998; and
the approval by the Board of Directors of an increase in the number of shares
reserved under the Plan on April 12, 1999;
NOW, THEREFORE, the Company does hereby amend the Plan, effective as of the
dates provided below, as follows:
1. By deleting, effective July 1, 1997, Plan Section 2.2 in its entirety and
substituting therefor the following:
"2.2 STOCK SUBJECT TO THE PLAN. Subject to adjustment in accordance with
Section 5.2, 1,500,000 shares of Stock (the "Maximum Plan Shares') are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At no time shall
the Company have outstanding Stock Incentives and shares of Stock issued in
respect of Stock Incentives in excess of the Maximum Plan Shares. The shares of
Stock attributable to the nonvested, unpaid, unexercised, unconverted or
otherwise unsettled portion of any Stock Incentive that is forfeited or
cancelled or expires or terminates for any reason without becoming vested, paid,
exercised, converted or otherwise settled in full shall again be available for
purposes of the Plan."
2. By deleting, effective April 17, 1998, the first sentence of Plan Section
2.2 and substituting therefor the following:
"Subject to adjustment in accordance with Section 5.2, 3,000,000 shares of
Stock (the "Maximum Plan Shares') are hereby reserved exclusively for
issuance pursuant to Stock Incentives."
3. By deleting, effective April 12, 1999, the first sentence of Plan Section
2.2 and substituting therefor the following:
"Subject to adjustment in accordance with Section 5.2, 6,000,000 shares of
Stock (the "Maximum Plan Shares') are hereby reserved exclusively for
issuance pursuant to Stock Incentives."
Notwithstanding the foregoing, the adoption of paragraph 3 of this Second
Amendment is subject to the approval of the stockholders of the Company and in
the event that the stockholders of the Company fail to approve such adoption
within twelve (12) months of April 12, 1999, the adoption of paragraph 3 of this
Second Amendment shall be null and void.
Except as specifically provided herein, the Plan shall remain in full force
and effect as prior to this Second Amendment.
IN WITNESS WHEREOF, the Company has caused this Second Amendment to be
executed on the day and year first above written.
RUBY TUESDAY, INC.
By: Samuel E. Beall, III
Title: Chairman and Chief Executive
Officer
Attest:
By: Daniel T. Cronk
Title: Secretary
[CORPORATE SEAL]
2
<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 27, 1999, 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 Company's
headquarters located at 150 West Church Avenue, Maryville, Tennessee 37801 at
11:00 a.m., local time, on September 30, 1999, and at any adjournment(s)
thereof:
<TABLE>
<S> <C> <C> <C>
1. TO ELECT TWO CLASS I DIRECTORS FOR A TERM OF THREE YEARS AND ONE CLASS III DIRECTOR FOR A TERM OF TWO YEARS.
CLASS I: DR. BENJAMIN F. PAYTON and JAMES A. HASLAM, III CLASS III: ELIZABETH L. NICHOLS
/ / 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 "FOR"
BOX ABOVE BUT LINE THROUGH THAT NOMINEE'S NAME IN THE LIST OF NOMINEES ABOVE THE
BOXES.
<TABLE>
<S> <C> <C> <C> <C>
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 3,000,000.
/ / FOR the Amendment / / AGAINST the Amendment / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT.
3. TO REAPPROVE THE COMPANY'S INCENTIVE BONUS PLAN FOR THE CHIEF EXECUTIVE OFFICER.
/ / FOR the reapproval of the Plan / / AGAINST the reapproval of the Plan / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE REAPPROVAL OF THE CEO BONUS PLAN.
4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before this meeting.
</TABLE>
(continued on reverse side)
<PAGE>
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, FOR THE APPROVAL OF THE
AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN AND FOR THE REAPPROVAL OF THE
INCENTIVE BONUS PLAN FOR THE CHIEF EXECUTIVE OFFICER.
PROXY NUMBER NUMBER OF SHARES Dated: ____________________, 1999.
___________________________________
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.
