<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.
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(Name of Registrant as Specified In Its Charter)
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(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]
September 1, 2000
Dear Shareholders:
We are holding your 2000 Annual Meeting on Thursday, October 5, 2000, 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 (Sandy) E. Beall, III
Samuel (Sandy) E. Beall, III
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
RUBY TUESDAY, INC.
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150 WEST CHURCH AVENUE - MARYVILLE, TENNESSEE 37801 - (865) 379-5700 -
TELEFAX (865) 379-6811
<PAGE>
RUBY TUESDAY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
OCTOBER 5, 2000
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, October 5, 2000, at 11:00 a.m., local time, for the following
purposes:
1. To elect three Class II directors for a term of three years to the Board
of Directors.
2. To approve an amendment to the Company's 1996 Stock Incentive Plan to
(i) increase the number of shares with respect to which equity
incentives may be granted during any fiscal year to any employee to
750,000 to accommodate both of the two-for-one stock splits of the
common stock effected on each of May 11, 1998 and May 19, 2000, and
(ii) to provide for automatic adjustments in the number of shares with
respect to which equity incentives may be granted during any fiscal year
in the event of future stock splits or other similar changes in the
Company's capital structure.
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on August 16, 2000, 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
September 1, 2000
Maryville, Tennessee
<PAGE>
RUBY TUESDAY, INC.
150 WEST CHURCH AVENUE
MARYVILLE, TENNESSEE 37801
PROXY STATEMENT FOR 2000 ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The following Proxy Statement and the accompanying proxy card, first mailed
to shareholders on or about September 1, 2000, 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, October 5, 2000,
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 three nominees for Class II
directors named in this Proxy Statement, (ii) in favor of the proposed amendment
to the Company's 1996 Stock Incentive Plan (the "Stock Incentive Plan") to
(a) increase the number of shares with respect to which equity incentives may be
granted during any fiscal year to any employee to 750,000 to accommodate both of
the two-for-one stock splits of the Common Stock effected on each of May 11,
1998 and May 19, 2000, and (b) to provide for automatic adjustments in the
number of shares with respect to which equity incentives may be granted during
any fiscal year in the event of future stock splits or other similar changes in
the Company's capital structure, and (iii) in accordance with the best judgment
of the proxy holders on any other matter that may properly come before the
Annual Meeting.
The entire cost of soliciting these proxies will be borne by the Company. In
following up the original solicitation of the proxies by mail, the Company will
request brokers and others to send proxy forms and other proxy material to the
beneficial owners of the Common Stock and will reimburse them for expenses
incurred in so doing. If necessary, the Company also may use some of its
employees to solicit proxies from the shareholders personally or by telephone.
August 16, 2000 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 16, 2000, was 61,964,986, each of which is entitled to one vote. ALL
SHARE AND SHARE-RELATED INFORMATION IN THIS PROXY STATEMENT GIVES EFFECT TO A
TWO-FOR-ONE STOCK SPLIT EFFECTED AS A STOCK DIVIDEND PAID ON MAY 19, 2000 TO
SHAREHOLDERS OF RECORD ON APRIL 28, 2000.
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 amendments to the Stock Incentive Plan described in Proposal 2
requires 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 Proposal 2 has been approved by the
shareholders, abstentions will have the same effect as votes against
Proposal 2, but broker non-votes will have no effect on the voting on such
Proposal.
<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. At the Annual Meeting, the three nominees are for the
Class II directors. The Class I and Class III directors have two years and one
year, respectively, remaining on their terms of office. The Company's Articles
of Incorporation and its Bylaws provide that the Board of Directors shall
consist of not less than three nor more than 12 directors and authorize the
exact number to be fixed from time to time by resolution of a majority of the
Board of Directors or by the affirmative vote of the holders of at least 80% of
all outstanding shares entitled to be voted in the election of directors voting
together as a single class. The Board of Directors has fixed at eight the exact
number of members of the Board of Directors and has nominated Dr. Donald
Ratajczak, Samuel E. Beall, III and Claire L. Arnold to serve in Class II of the
Board of Directors for a term of three years. All nominees are currently serving
as directors of the Company.
It is intended that persons named in the accompanying form of proxy will
vote for the three nominees listed below unless authority to so vote is
withheld. Although the Board of Directors does not expect that any of the
nominees identified herein will be unavailable for election, in the event a
vacancy in the slate of nominees occurs, the shares represented by proxies in
the accompanying form may be voted for the election of a substitute nominee
selected by the persons named in the proxy.
DIRECTOR AND DIRECTOR NOMINEE INFORMATION
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
CLASS II--TERM EXPIRING 2003
<S> <C> <C>
DR. DONALD RATAJCZAK
Director of the Company since 1981 Age: 57
Dr. Ratajczak has served as President and Chairman of Auric Metals Corporation, a company which
provides investment and advisory services for startup technology companies, since May 2000. Previously,
Dr. Ratajczak served as Professor and Director, Economic Forecasting Center, Georgia State University
from July 1973 until his retirement in June 2000. Dr. Ratajczak also is a director of Morgan
Keegan Inc., CIM High Yield Securities Fund and TBC Corporation.
SAMUEL E. BEALL, III
Director of the Company since 1982 Age: 50
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: 53
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.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
DIRECTORS CONTINUING IN OFFICE
CLASS I--TERM EXPIRING 2002
DR. BENJAMIN F. PAYTON
Director of the Company since 1993 Age: 67
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, Praxair, Inc. and Morrison
Management Specialists, Inc. (formerly Morrison Health Care, Inc.).
JAMES A. HASLAM, III
Director of the Company since 1999 Age: 46
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
JOHN B. MCKINNON
Director of the Company since 1989 Age: 65
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 Morrison Management Specialists, Inc. (formerly Morrison Health Care, Inc.).
DOLPH W. VON ARX
Director of the Company since 1992 Age: 65
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.
ELIZABETH L. NICHOLS
Director of the Company since 1999 Age: 46
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 Tritel, Inc.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
THE THREE NOMINEES FOR CLASS II DIRECTORS NAMED ABOVE.
3
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of August 16, 2000
(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)............... 4,907,000(3) 7.9
Samuel E. Beall, III.............................. 1,079,145(4) 1.7
Claire L. Arnold.................................. 44,639 *
James A. Haslam, III.............................. 31,875(5) *
John B. McKinnon.................................. 90,575(6) *
Elizabeth L. Nichols.............................. 5,675 *
Dr. Benjamin F. Payton............................ 44,395 *
Dr. Donald Ratajczak.............................. 62,391(7) *
Dolph W. von Arx.................................. 45,807(8) *
Robert D. McClenagan.............................. 389,722 *
J. Russell Mothershed............................. 371,817 *
Sherry L. Turner.................................. 182,985 *
Daniel T. Cronk................................... 72,029(9) *
All directors and executive officers as a group
(13 persons).................................... 2,421,363 3.8
</TABLE>
------------------------
(1) The amounts shown include (i) shares subject to currently exercisable
options and options exercisable within 60 days after August 16, 2000, held
by the named persons and group as follows: Mr. Beall, 600,322; Ms. Arnold,
24,536; Mr. McKinnon, 29,416; Mr. Haslam, 4,038; Ms. Nichols, 4,038;
Dr. Payton, 24,536; Dr. Ratajczak, 29,416; Mr. von Arx, 29,416;
Mr. McClenagan, 296,228; Mr. Mothershed, 296,750; Ms. Turner, 138,090;
Mr. Cronk, 58,186; and all directors and executive officers as a group,
1,534,972; and (ii) shares held in the Company's Salary Deferral Plan as
follows: Mr. Beall, 22,615; Mr. Mothershed, 360; and all directors and
executive officers as a group, 22,975.
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, 2000, were as follows: Mr. Beall,
20,671; Mr. McClenagan, 27,087; Mr. Mothershed, 27,567; Ms. Turner, 20,337;
Mr. Cronk, 19,776; and all directors and executive officers as a group,
115,438. 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 16, 2000), 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, 1999. The amount shown does
4
<PAGE>
not include 4,600 shares owned by employees of Westport Asset
Management, Inc. and Westport Advisors LLC.
(4) Includes 209,424 shares held in the Beall Family Ltd. Partnership, a limited
partnership of which Mr. Beall is a General Partner.
(5) Includes 26,200 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 42,500 shares owned by Mr. McKinnon and his spouse as tenants in
common.
(7) Includes 13,500 shares held in an individual retirement account by
Dr. Ratajczak.
(8) Includes 4,500 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 3,200 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 2000 have been complied
with on a timely basis.
DIRECTORS' FEES AND ATTENDANCE
The Board of Directors met five times during fiscal year 2000. Each director
attended at least 75% of these meetings and of the meetings of any committee of
which he or she was a member which were held during the fiscal year.
Directors who are employees of the Company 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 for each 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 for each committee meeting attended which is not held in
conjunction with a meeting of the Board of Directors.
The Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for
Directors (the "Directors' Plan") permits non-employee directors to defer all or
a portion (in 25 percent increments) of their retainer (other than any portion
of the retainer allocated to Stock Awards, as described below) and/or any
additional meeting and committee fees to a deferred compensation account.
Deferred compensation accounts are credited as of the last day of each fiscal
quarter with an assumed rate of income equal to 90-day U.S. Treasury Bills,
based on the weighted average balance of that account during that fiscal
quarter. Amounts credited to a director's deferred compensation account will be
distributed not sooner than the earlier of the first January 15 or July 15
following (a) the date of the director's seventieth birthday, or (b) the date
the director ceases to be a member of the Board of Directors.
The Directors' Plan provides that each non-employee director who has not
attained the Target Ownership Level, as defined below, will be deemed to have
elected to direct that 60 percent of his or her retainer payable for each fiscal
quarter be allocated to the purchase of Common Stock on his or her behalf. Each
non-employee director who has attained the Target Ownership Level may elect to
direct, in
5
<PAGE>
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 four times during fiscal year 2000. 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
three times during fiscal year 2000. 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 4, 2000, 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 $100,000 in fiscal year 2000 (collectively, these persons are sometimes
referred to as the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION
------------------------------------- ---------------------- ------------
OTHER ANNUAL AWARDS PAYOUTS
COMPENSATION OPTIONS/ LTIP
NAME AND POSITION YEAR SALARY ($) BONUS ($) $(1) SARS (#) PAYOUTS ($) ($)(2)
----------------- -------- ---------- --------- ------------ -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Samuel (Sandy) E. Beall, 2000 846,442 1,075,000 -0- 478,000 -0- 3,217
III.......................... 1999 624,539 781,250 7,500 171,434 -0- 3,288
Chairman of the Board and 1998 601,000 607,761 315,004 12,954 -0- 4,268
Chief Executive Officer
Robert D. McClenagan......... 2000 344,544 431,000 74,177 216,634 -0- 7,064
President 1999 331,255 414,375 189,185 109,346 -0- 5,669
1998 318,758 398,448 4,500 7,770 -0- 5,907
J. Russell Mothershed........ 2000 251,513 251,700 3,600 178,778 -0- 6,452
Senior Vice President, Chief 1999 241,820 242,000 18,215 90,007 -0- 5,410
Financial Officer, Treasurer 1998 232,678 188,237 57,869 6,216 -0- 5,482
and Assistant Secretary
Sherry L. Turner............. 2000 202,502 202,700 3,600 179,387 -0- -0-
Executive Vice President, 1999 192,258 192,400 3,600 110,007 -0- -0-
Human Resources and 1998 138,750 142,548 24,812 6,216 -0- -0-
Performance Management
Daniel T. Cronk.............. 2000 193,961 194,400 3,600 99,387 -0- -0-
Senior Vice President, 1999 171,473 171,600 3,600 50,007 -0- -0-
General Counsel and Secretary 1998 137,007 72,686 5,352 46,264 -0- -0-
</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 2000, 1999
and 1998, respectively: S. E. Beall, III, $0, $0 and $307,504; R. D.
McClenagan, $68,177, $183,185 and $0; J. R. Mothershed, $0, $14,615 and
$54,269; S. L. Turner, $0, $0 and $21,212; and D. T. Cronk, $0, $0 and
$1,752.
(2) The amounts in this column include the following: (a) Company contributions
to the Deferred Compensation Plan for fiscal years 2000, 1999 and 1998,
respectively: S. E. Beall, III, $0, $0 and $0; R. D. McClenagan, $4,898,
$3,655 and $3,295; and J. R. Mothershed, $4,655, $3,748 and $3,439;
(b) executive group life and accidental death and dismemberment insurance
plan premiums paid for fiscal years 2000, 1999 and 1998, respectively:
S. E. Beall, III, $864, $837 and $828; R. D. McClenagan, $864, $837 and
$828; and J. R. Mothershed, $861, $816 and $788; and (c) employee portion of
split-dollar life insurance premiums paid by the Company for fiscal years
2000, 1999 and 1998, respectively: S. E. Beall, III, $2,353, $2,451 and
$3,440; R. D. McClenagan, $1,302, $1,177 and $1,784; and J. R. Mothershed,
$936, $846 and $1,255.
7
<PAGE>
OPTION GRANTS IN FISCAL 2000
The following table presents information regarding options to purchase
shares of Common Stock granted by the Company during fiscal year 2000 to the
Named Executives. The Company has no outstanding SARs and granted no SARs during
fiscal year 2000.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
% OF TOTAL
OPTIONS/
SARS
GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SHARE) DATE
---- ------------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
S. E. Beall, III....... 322,000 12.40% 9.2813 04/11/05
156,000(4) 6.01% 9.4688 12/18/08
R. D. McClenagan....... 7,560 .29% 9.1250 09/03/04
7,074 .27% 9.7500 12/03/04
202,000 7.78% 9.2813 04/11/05
J. R. Mothershed....... 4,536 .17% 9.1250 09/03/04
4,242 .16% 9.7500 12/03/04
170,000 6.54% 9.2813 04/11/05
S. L. Turner........... 4,536 .17% 9.1250 09/03/04
4,851 .19% 8.5313 03/03/05
170,000 6.54% 9.2813 04/11/05
D. T. Cronk............ 4,536 .17% 9.1250 09/03/04
4,851 .19% 8.5313 03/03/05
90,000 3.46% 9.2813 04/11/05
<CAPTION>
POTENTIAL REALIZABLE VALUE(3) AT ASSUMED ANNUAL
RATES OF STOCK PRICE APPRECIATION FOR OPTION TERM
----------------------------------------------------
5% 10%
------------------------ -------------------------
MARKET PRICE MARKET PRICE
REQUIRED TO REQUIRED TO
REALIZE REALIZE
DOLLAR DOLLAR GAINS DOLLAR DOLLAR GAINS
NAME GAINS ($) ($/SHARE) GAINS ($) ($/SHARE)
---- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
S. E. Beall, III....... 825,689 11.85 1,824,557 14.95
408,105 12.08 901,804 15.25
R. D. McClenagan....... 19,059 11.65 42,116 14.70
19,056 12.44 42,108 15.70
517,979 11.85 1,144,598 14.95
J. R. Mothershed....... 11,436 11.65 25,270 14.70
11,427 12.44 25,250 15.70
435,923 11.85 963,275 14.95
S. L. Turner........... 11,436 11.65 25,270 14.70
11,434 10.89 25,266 13.74
435,923 11.85 963,275 14.95
D. T. Cronk............ 11,436 11.65 25,270 14.70
11,434 10.89 25,266 13.74
230,783 11.85 509,969 14.95
</TABLE>
------------------------
(1) Except as otherwise stated, 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 $9.2813 on the date of grant generally
become exercisable after 30 months. All other options listed in the table
above generally become exercisable after two years. In the event of a change
in control of the Company, the vesting of options will be accelerated unless
the Committee administering the plan elects to cash-out the options.
(2) Based on an aggregate of 2,597,552 options granted by the Company in fiscal
year 2000.
(3) The Potential Realizable Values are calculated as follows: [[Market Price at
Grant X (1 + Stock Price Appreciation Rate)]--Exercise Price] X Number of
Underlying Shares. Because these Potential Realizable Values are based on
annualized compound rates of increase over a five year term, the total
potential appreciation on annual appreciation rates of 5% and 10% is 27.6%
and 61.1%, respectively.
(4) These options vest as set forth in Mr. Beall's Employment Agreement, which
is described herein.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN
FISCAL 2000 AND FISCAL YEAR END VALUES
The following table presents information regarding exercises of options to
purchase shares of Common Stock during fiscal year 2000 by the Named Executives
and the value of unexercised options to purchase Common Stock held at June 4,
2000. There were no SARs outstanding during fiscal year 2000.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS FY-END (#) FY-END ($)(2)
------------------ -------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- ------------------ -------------------
<S> <C> <C> <C> <C>
S.E. Beall, III.............. -0- -0- 1,270,344/820,868 7,854,417/1,387,822
R.D. McClenagan.............. 209,840 1,112,043 346,688/435,326 2,200,633/778,524
J.R. Mothershed.............. 1,700 4,805 304,092/358,792 1,850,617/640,958
S.L. Turner.................. -0- -0- 132,432/399,401 803,882/764,941
D.T. Cronk................... -0- -0- 92,528/199,401 466,203/362,441
</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 2, 2000) - (Per Share
Exercise Price)] X Number of Shares Subject to Unexercised Options. The per
share closing sale price on June 2, 2000, the last trading day of fiscal
year 2000, was $10.6875.
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.
Supplemental early retirement provisions allow designated participants to
receive unreduced benefits 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, 28 years, $846,442; Mr. McClenagan, 28 years, $344,544; and
Mr. Mothershed, 27 years, $251,513.
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, 28 years, $100,000; Mr. McClenagan, 28 years,
$100,000; and Mr. Mothershed, 27 years, $100,000.
EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Samuel (Sandy) E.
Beall, III, pursuant to which Mr. Beall has agreed to serve as Chief Executive
Officer of the Company until June 18, 2006. The employment agreement may
continue for any subsequent renewal periods agreed to by the Company and
Mr. Beall.
The employment agreement provides that Mr. Beall will be compensated at a
base salary rate equal to $860,000 a year, adjusted annually by an amount equal
to the greater of (a) 4% of the base salary then in effect, or (b) an amount
determined by the Board of Directors of the Company, or appropriate committee
thereof, based upon peer group competitive market data (as so adjusted from time
to time, the "Base Salary"). In addition, under the employment agreement,
Mr. Beall is entitled to an annual bonus opportunity pursuant to the terms of
the CEO Bonus Plan, based upon performance criteria approved by the Board of
Directors of the Company, or appropriate committee thereof, with a target bonus
equal to 50% of Base Salary and a maximum bonus equal to 125% of Base Salary.
12
<PAGE>
In addition, under the employment agreement, Mr. Beall will also be entitled
to participate in such long-term incentive compensation programs as may be
developed from time to time for the senior management of the Company, including
annual grants of stock options under the Company's Executive Stock Option
Program according to the same criteria pursuant to which grants are awarded to
other senior executives of the Company.
Pursuant to the employment agreement, the Company agreed to provide
Mr. Beall with life insurance coverage providing a death benefit of not less
than four times Base Salary, payable to such beneficiary or beneficiaries as
Mr. Beall may designate. This obligation may be satisfied in whole or in part by
the Executive's participation in the Ruby Tuesday, Inc. Executive Life Insurance
Plan.
Pursuant to the employment agreement, the Company granted Mr. Beall a
non-qualified stock option award to acquire 156,000 shares of Common Stock at an
exercise price of $9.4688 per share (the fair market value of a share of Common
Stock determined as of the close of business on the day before the Company and
Mr. Beall executed the employment agreement) (the "1999 Option"). The 1999
Option will vest on July 1, 2006 and will expire on December 18, 2008; provided,
however, the 1999 Option will expire earlier under the same circumstances as
apply to the other options granted to Mr. Beall, as described in the immediately
succeeding paragraph. In addition, the Company agreed to grant Mr. Beall a
second non-qualified stock option award of Common Stock on the date of the Board
of Directors meeting that immediately follows the 2000 Annual Meeting of
Shareholders (the "2000 Option"). The 2000 Option will have a per share exercise
price equal to the fair market value of a share of Common Stock determined as of
the close of business on the day before the date of grant. The 2000 Option will
vest on July 1, 2006 and will expire on December 18, 2008; provided, however,
the 2000 Option will expire earlier under the same circumstances as apply to the
1999 Option. Notwithstanding the foregoing, the 2000 Option will not be granted
if Mr. Beall is no longer employed by the Company as of the grant date unless
his employment shall have terminated as a result of death, disability,
involuntary termination other than for Cause (as defined below) or Qualified
Termination (as defined below) following a Change of Control (as defined below).
The grant of the 2000 Option is also conditioned upon the approval at the Annual
Meeting of the proposed amendment to the Stock Incentive Plan, being submitted
to the shareholders as Proposal 2. The number of shares subject to the 2000
Option is intended to be the number of shares necessary to create a present
value, as of September 1999, of $1,500,000, when the 2000 Option is aggregated
with the 1999 Option, using the Black-Sholes model to calculate present value.
In the event the proposed amendment to the Stock Incentive Plan being submitted
to the shareholders as Proposal 2 is not approved by the shareholders, the
obligations of the Company will be extended from year to year until sufficient
options have been granted to create such present value.
In the employment agreement, the Company and Mr. Beall agreed that, subject
to the approval by the Company's Compensation Committee, options previously
granted to Mr. Beall to acquire Common Stock will be amended to provide, or will
provide if granted in the future, that (a) such options which have not then
vested shall vest in full upon Mr. Beall's death or disability, the involuntary
termination of Mr. Beall's employment by the Company without Cause, Mr. Beall's
retirement upon satisfying applicable early retirement criteria or upon a Change
in Control and (b) the maximum term within which then-vested options may be
exercised shall expire no later than 90 days following a voluntary resignation
by Mr. Beall (unless the resignation qualifies as a Qualified Termination) prior
to Mr. Beall satisfying applicable early retirement criteria; no later than
90 days following an involuntary termination of Mr. Beall's employment by the
Company without Cause with respect to the portion of any option which vests as a
result of such involuntary termination of employment; or, no later than one year
following any other involuntary termination of Mr. Beall's employment, prior to
a Change of Control, without Cause with respect to the portion of any option
which has then previously vested, and no later than 15 days following an
involuntary termination of Mr. Beall's employment by the Company for Cause, or
in each case the expiration of the stated term of such option, whichever first
occurs.
13
<PAGE>
Pursuant to the employment agreement, in the event the Company terminates
Mr. Beall's employment other than for Cause, the employment agreement will
terminate and Mr. Beall will become entitled to receive: (a) immediate payment
of any obligations accrued but unpaid as of the date of termination;
(b) payment of Base Salary then in effect for 24 months (the "Severance
Period"); (c) payment of annual bonuses (or pro rata portion thereof), if any,
payable for each of those fiscal years that overlap, in whole or in part, with
the Severance Period, with such amounts paid when and as such annual bonuses
would normally be determined; (d) payment of earned but unused vacation through
the end of the calendar month in which the termination occurs; and (e) the
provision of health, life and disability coverages to Mr. Beall and eligible
dependents for the Severance Period at active employee rates (or cash equal to
the cost of any such coverage to the extent such continued coverage cannot be
provided pursuant to any underlying insurance policy then in effect or where
such continued coverage would have adverse tax effects to Mr. Beall or other
plan participants). The Company and Mr. Beall agreed that the failure of the
Board of Directors of the Company to elect, or the action of the Board of
Directors to remove, Mr. Beall as Chairman of the Board will, in the absence of
Cause, permit Mr. Beall to terminate the employment agreement within 60 days of
such event and such termination will be deemed to constitute an involuntary
termination other than for Cause by the Company.
The employment agreement provides that in the event of a Qualified
Termination of Mr. Beall's employment following a Change of Control, the
employment agreement will terminate and Mr. Beall will become entitled to
receive: (a) immediate payment of any obligations accrued but unpaid as of the
date of termination; (b) immediate payment of a lump sum amount equal to the
product of three, multiplied by the sum of (i) Base Salary then in effect, plus
(ii) the greater of (A) the target annual bonus for the fiscal year in which the
Qualified Termination occurs, or (B) the average of the last three annual
bonuses earned by Mr. Beall; (c) immediate payment of a pro rata portion of the
target annual bonus for the fiscal year in which the Qualified Termination
occurs; and (d) the provision of health, life and disability coverages to
Mr. Beall and eligible dependents for a period of 36 months at active employee
rates (or cash equal to the cost of any such coverage to the extent such
continued coverage cannot be provided pursuant to any underlying insurance
policy then in effect or where such continued coverage would have adverse tax
effects to Mr. Beall or other plan participants). Payment of obligations under
any other employee benefit plans will be determined in accordance with the
provisions of those plans; provided, however, that Mr. Beall's accrued benefit
under the ESPP will be determined by increasing Mr. Beall's actual years of
continuous service by an additional three full years.
The employment agreement also provides that if the aggregate amount provided
for in the employment agreement and any other payments and benefits which
Mr. Beall has the right to receive from the Company and its affiliates would
subject Mr. Beall to an excise tax under Section 4999 of the Internal Revenue
Code, or any interest or penalties are incurred or paid by Mr. Beall with
respect to such excise tax (any such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then Mr. Beall shall be entitled to an additional payment from the Company as is
necessary (after taking into account all federal, state and local taxes
(regardless of type, whether income, excise or otherwise imposed upon Mr. Beall
as a result of the receipt of the payment contemplated by the employment
agreement)) to place Mr. Beall in the same after-tax position Mr. Beall would
have been in had no Excise Tax been imposed or incurred or paid by Mr. Beall.
The Company agreed to pay to Mr. Beall in cash in a lump sum any amount due
pursuant to this provision not later than five business days prior to the date
that Mr. Beall must file his federal income tax return which reflects the
payment that subjects Mr. Beall to the Excise Tax.
Pursuant to the employment agreement, Mr. Beall agreed (a) to hold the
Company's confidential information and trade secrets in strictest confidence,
and (b) not to use, duplicate, reproduce, distribute, disclose or otherwise
disseminate the Company's confidential information and trade secrets or any
physical embodiments thereof and may in no event take any action causing or fail
to take any action necessary in order to prevent any of the Company's
confidential information and trade secrets from losing its character
14
<PAGE>
or ceasing to qualify as confidential information or a trade secret. These
covenants will survive the termination of the employment agreement for a period
of two years following termination of the employment agreement with respect to
confidential information, and with respect to trade secrets for so long as the
information qualifies as a trade secret under applicable law.
In addition, Mr. Beall agreed that during his employment by the Company and
for a period of two years thereafter (a) he will not (except on behalf of or
with the prior written consent of the Company), within the United States, either
directly or indirectly, on his own behalf or in the service or on behalf of
others, as a principal, partner, officer, director, manager, supervisor,
administrator, consultant, executive employee or in any other capacity which
involves duties and responsibilities similar to those undertaken for the
Company, engage in any business which is the same as or essentially the same as
the business of the Company and (b) he will not, on his own behalf or in the
service or on behalf of others, solicit or recruit any employee of the Company
with whom he worked or had dealings in the course of his employment with the
Company. Mr. Beall also agreed that at any time during or after his employment
with the Company, he will not make any disparaging remarks to the public
regarding the Company or otherwise attempt to cast the Company in an unfavorable
light.
Under the employment agreement, "Cause" means, with respect to termination
of Mr. Beall's employment by the Company: (a) conviction of a felony;
(b) conduct constituting a willful refusal to perform any material duty assigned
by the Board of Directors of the Company; (c) conduct that amounts to fraud
against the Company or its affiliates; (d) a breach of the terms of the
employment agreement that is materially injurious to the Company or its
affiliates; or (e) conduct that amounts to willful gross neglect or willful
gross misconduct resulting in material economic harm to the Company or its
affiliates.
"Change of Control" means any of the following events: (a) the acquisition
by any individual, entity or "group" (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under such Act) of voting securities of the Company where such acquisition
causes any such Person to own 25% or more of the combined voting power of the
then outstanding voting securities then entitled to vote generally in the
election of directors (the "Outstanding Voting Securities"); provided, however,
that for purposes of this definition, the following shall not constitute a
Change of Control: (i) any acquisition directly from the Company, unless such a
Person subsequently acquires additional shares of Outstanding Voting Securities
other than from the Company; or (ii) any acquisition by an employee benefit plan
(or related trust) sponsored or maintained by the Company or any affiliate;
(b) within any 12-month period (beginning on or after the effective date of the
employment agreement), the persons who were directors of the Company immediately
before the beginning of such 12-month period (the "Incumbent Directors") shall
cease to constitute at least a majority of the Board of Directors of the
Company; provided that any director who was not a director as of the effective
date of the employment agreement shall be deemed to be an Incumbent Director if
that director was elected to the Board of Directors by, or on the recommendation
of or with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors; and provided further that no director whose
initial assumption of office is in connection with an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act of 1934) relating to the election
of directors shall be deemed to be an Incumbent Director; (c) the approval by
the shareholders of the Company of a reorganization, merger or consolidation,
with respect to which persons who were the shareholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power entitled
to vote in the election of directors of the reorganized, merged or consolidated
company's then outstanding voting securities; (d) the sale, transfer or
assignment of all or substantially all of the assets of the Company and its
affiliates to any third party; or (e) the liquidation or dissolution of the
Company.
"Qualified Termination" means, during the term of the employment agreement,
any one of the following events: (a) an involuntary termination of Mr. Beall's
employment by the Company other than for
15
<PAGE>
Cause; (b) a resignation by Mr. Beall for any reason within 12 months following
a Change of Control; or (c) a resignation by Mr. Beall following a Change of
Control for any one of the following reasons: (i) a reduction in his then
current Base Salary or a reduction in his target bonus opportunity, expressed as
a percentage of Base Salary; (ii) a failure to elect or reelect him to the
positions of Chief Executive Officer and Chairman of the Board of Directors;
(iii) a material diminution in his duties or responsibilities; or (iv) a change
in supervisory authority such that he no longer reports directly to the Board of
Directors of the Company.
The Company estimates the value of the compensation and benefits payable
under the change in control provisions of Mr. Beall's employment agreement, as
of the date of this Proxy, if such provisions were triggered by a change in
control would be approximately $7,881,000.
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 75th percentile of the
competitive market in the casual dining industry for the Chief Executive Officer
and the 50th 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 2000, 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.
16
<PAGE>
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 fiscal year 2000 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, open
market purchases effected by the employee on his own behalf or by his spouse or
on behalf of his children under age 21 or through participation in the Company's
deferred compensation retirement plans. 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.
17
<PAGE>
During fiscal year 2000, option grants ranging from 400 to 322,000 shares, for a
total of 1,892,300 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 than through the exercise
of stock options. The Company granted options to purchase an aggregate of
549,252 shares to employees under this program during fiscal year 2000.
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 2000.
CHIEF EXECUTIVE OFFICER COMPENSATION
Pursuant to the terms of Mr. Beall's employment agreement, Mr. Beall's base
salary for fiscal year 2000 was $860,000. At the July 10, 2000, Compensation
Committee meeting, Mr. Beall's base salary was reviewed. Based on the terms of
his employment agreement and competitive market data, the Compensation Committee
recommended, and the Board of Directors subsequently approved, an increase in
annual base salary to $894,400 for fiscal year 2001.
The CEO Bonus Plan was approved by the shareholders at the 1994 Annual
Meeting of Shareholders, and was reapproved at the 1999 Annual Meeting of
Shareholders. 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 2000, 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 2000, Mr. Beall earned an incentive bonus
pursuant to the CEO Bonus Plan of $1,075,000.
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.
However, pursuant to the terms of Mr. Beall's employment agreement, Mr. Beall
has foregone participation in the Management Stock Option Program for fiscal
year 2000.
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
18
<PAGE>
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 was reapproved at the 1999 Annual Meeting
of Shareholders. While it is possible for the Company to compensate or make
awards under incentive plans and otherwise that do not qualify as
performance-based compensation deductible under Section 162(m), the Compensation
Committee, in structuring compensation programs for its top executive officers,
intends to give strong consideration to the deductibility of awards.
BOARD OF DIRECTORS AND COMPENSATION COMMITTEE
The Board of Directors of the Company has a standing Compensation Committee
whose purpose is to review and make recommendations concerning the base salaries
of all officers of the Company and to authorize all other forms of compensation,
including stock options. Members of the Compensation Committee also administer
the Company's stock-based incentive plans. The Compensation Committee met three
times during fiscal year 2000. The Board of Directors approved all decisions of
the Compensation Committee during fiscal year 2000. 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>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During fiscal year 2000, the members of the Compensation Committee were
Dolph W. von Arx, (Chairman), Claire L. Arnold, John B. McKinnon, Dr. Benjamin
F. Payton, Dr. Donald Ratajczak, James A. Haslam, III and Elizabeth L. Nichols.
During fiscal year 2000, 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 2000.
CERTAIN TRANSACTIONS
A. Richard Johnson has served as Senior Vice President--Brand
Development/Growth of the Company since April 10, 2000. Mr. Johnson also served
as President of Hopewell Corporation until May 15, 2000, of which his wife, Mary
Johnson, is the sole shareholder. Between April 10, 2000 and May 15, 2000,
Hopewell & Co., a division of Hopewell Corporation, provided certain planning
and business development, corporate communications and crisis management
services to the Company. The total cost to the Company for all such services
provided for that time period was $70,427.21.
The Company entered into a ground lease on June 30, 1999 with Furrow-Holrob
Development I, LLC, a Tennessee limited liability company ("FHD"). The lease
covers the Company's restaurant located in the Mercedes Place Shopping Center in
Knoxville, Tennessee. The lease has a fifteen year term with two
19
<PAGE>
five-year renewal options. The minimum rent under the lease begins at $50,000
annually for the first five years and gradually increases every fifth
anniversary by a rate of less than $10,000 annually. In July 2000, Susan Bagwell
Haslam, James A. Haslam, III's wife, and William E. Haslam, Mr. Haslam's
brother, each acquired 25% of FHD.
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 NYSE STOCK MARKET INDEX
AND
<S> <C> <C> <C>
Drinking Places Index
3/1996 $100.00 $100.00 $100.00
5/1996 $119.72 $97.85 $104.87
5/1997 $121.13 $103.27 $131.45
6/1998 $176.00 $132.80 $174.91
6/1999 $218.06 $161.49 $197.89
6/2000 $244.00 $136.70 $208.50
</TABLE>
<TABLE>
<CAPTION>
03/11/96 05/31/96 05/30/97 06/05/98 06/04/99 06/02/00
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ruby Tuesday, Inc............................ $100.00 $119.72 $121.13 $176.00 $218.06 $244.00
NYSE Eating and Drinking Places Index........ $100.00 $ 97.85 $103.27 $132.80 $161.49 $208.49
NYSE Stock Market Index...................... $100.00 $104.87 $131.45 $174.91 $197.89 $136.68
</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
spin-off in which the Company became an independent company, and
reinvestment of dividends.
20
<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 (i) increase the number of shares with respect to which equity
incentives may be granted during any fiscal year to any employee to 750,000 to
accommodate both of the two-for-one stock splits of the Common Stock effected on
each of May 11, 1998 and May 19, 2000, and (ii) to provide for automatic
adjustments in the number of shares with respect to which equity incentives may
be granted in any fiscal year in the event of future stock splits or other
similar changes in the Company's capital structure. A proportionate adjustment
in the number of shares reserved under the Plan to reflect the past stock splits
referenced above would result in an increase to 1,000,000 shares reserved,
however, the Board has determined that an increase to 750,000 shares is
sufficient at this time. 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. Following the May 19, 2000 stock split the shares of
Common Stock reserved for issuance pursuant to awards made or that may be made
under the Stock Incentive Plan is 12,000,000, of which approximately 2,657,810
shares were previously issued and approximately 4,937,782 shares 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 employee will not exceed 750,000. The
Stock Incentive Plan provides for further adjustments to the number of shares
reserved for issuance, and to the per employee limit, 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 employee 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
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<PAGE>
Incentives may be adjusted by the Committee to reflect certain corporate events
such as corporate reorganizations.
Stock awards will generally vest over a period of no less than three years.
Stock Incentives may be made exercisable or settled at such prices and will
terminate under such terms as will be established by the Committee. Options
generally may not be made exercisable at a price less than the fair market value
of the Common Stock as determined in accordance with the Stock Incentive Plan.
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. Material amendments require shareholder
approval. 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.
22
<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 2000 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....................................... -0- 478,000
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
R.D. McClenagan....................................... 636 216,634
PRESIDENT
J.R. Mothershed....................................... 381 178,778
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
TREASURER AND ASSISTANT SECRETARY
S.L. Turner........................................... 408 179,387
EXECUTIVE VICE PRESIDENT, HUMAN RESOURCES AND
PERFORMANCE MANAGEMENT
D.T. Cronk............................................ 408 99,387
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
All executive officers of the Company as a group...... 1,833 1,322,186
All other employees of the Company as a group......... 591 53,590
</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 PROPOSED AMENDMENT TO THE STOCK INCENTIVE PLAN.
23
<PAGE>
INDEPENDENT AUDITORS
The firm of KPMG LLP served as the Company's independent auditors for fiscal
year 2000. Representatives of KPMG 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 KPMG LLP to audit the books of the
Company for fiscal year 2001.
The Company engaged KPMG LLP to serve as its independent auditors effective
as of December 6, 1999. Prior to that date, Ernst & Young LLP has served as the
Company's independent auditors. The decision to change auditors was recommended
by the Audit Committee and approved by the Board of Directors.
During the Company's two fiscal years and the subsequent interim periods
prior to December 6, 1999, there were no disagreements with Ernst & Young LLP on
any matter of accounting principles or practices, financial statements
disclosure, or auditing scope or procedures, which disagreements, if not
resolved to Ernst & Young LLP's satisfaction, would have caused it to make
reference to the subject matter of the disagreement in connection with its
report.
Ernst & Young LLP's reports on the Company's consolidated financial
statements for the past two fiscal years did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.
SHAREHOLDER PROPOSALS
Any shareholder of the Company wishing to submit a proposal for action at
the Company's 2001 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 May 4, 2001, 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 2001 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 18, 2001 and, in either case,
certain other conditions of the applicable rules of the Securities and Exchange
Commission are satisfied.
24
<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 2000 (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 4, 2000. 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
September 1, 2000
Maryville, Tennessee
25
<PAGE>
NOTE: THIS FIRST AMENDMENT TO THE RESTATED (SEPTEMBER 30, 1999) RUBY TUESDAY,
INC. 1996 STOCK INCENTIVE PLAN IS BEING FILED AS AN APPENDIX TO THE COMPANY'S
2000 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.
FIRST AMENDMENT TO THE
RESTATED (SEPTEMBER 30, 1999)
RUBY TUESDAY, INC. 1996 STOCK INCENTIVE PLAN
THIS FIRST AMENDMENT is made as of July 10, 2000, 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"), restated as of September 30, 1999.
WHEREAS, as a result of the two-for-one stock split effected by the Company
as of May 19, 2000, the total number of shares reserved for issuance pursuant to
the Plan is now 12,000,000.
WHEREAS, the Company wishes to amend the Plan primarily to increase the per
employee limit on the number of shares of stock that may be subject to options
or stock appreciation rights granted to a single employee during any fiscal year
of the Company.
WHEREAS, the Board of Directors of the Company has duly approved and
authorized this amendment to the Plan.
NOW, THEREFORE, the Company does hereby amend the Plan, effective upon
approval of the Company's shareholders at the Company's fiscal year 2000 Annual
Meeting of Shareholders, by deleting the last sentence of Section 2.4 in its
entirety and by substituting therefor the following:
"To the extent required under Code Section 162(m) and the regulations issued
thereunder for compensation to be treated as qualified performance-based
compensation, the maximum number of shares of Stock with respect to which
Options and Stock Appreciation Rights may be granted during any fiscal year
of the Company to any Participant who is an employee (a "Covered Employee")
may not exceed 750,000, subject to adjustment in accordance with
Section 5.2. In applying this limitation, if an Option or Stock Appreciation
Right, or any portion thereof, granted to an employee is cancelled or
repriced for any reason, then the shares of Stock attributable to such
cancellation or repricing either shall continue to be counted as an
outstanding grant or shall be counted as a new grant, as the case may be,
against the Covered Employee's individual limit for the applicable fiscal
year."
The adoption of the First Amendment is conditioned upon, and subject to, the
approval of the First Amendment by the stockholders of the Company
Except as specifically provided herein, the Plan shall remain in full force
and effect as prior to this First Amendment.
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed on the day and year first above written.
<TABLE>
<S> <C> <C>
RUBY TUESDAY, INC.
By: /s/ SAMUEL E. BEALL, III
-----------------------------------------
Samuel E. Beall, III
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
Attest:
<TABLE>
<S> <C>
By: /s/ DANIEL T. CRONK
-------------------------------------------
Daniel T. Cronk
SECRETARY
[CORPORATE SEAL]
</TABLE>
<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 September 1, 2000, 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 October 5, 2000, and at any adjournment(s) thereof.
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 (I) FOR ALL DIRECTOR NOMINEES LISTED ABOVE AND (II) FOR THE
PROPOSED AMENDMENT TO THE COMPANY'S 1996 STOCK INCENTIVE PLAN.
(continued on other side)
RUBY TUESDAY, INC.
P.O. BOX 11113
NEW YORK, N.Y. 10203-0113
1. TO ELECT THREE CLASS II DIRECTORS FOR A TERM OF THREE YEARS.
/ / FOR all nominees above / / WITHHOLD AUTHORITY
(except as marked to the to vote for ALL nominees
contrary above) listed above
<PAGE>
/ / *EXCEPTIONS
Nominees: DR. DONALD RATAJCZAK, SAMUEL E. BEALL, III and CLAIRE L. ARNOLD
(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, MARK THE
"EXCEPTIONS" BOX ABOVE AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST
OF NOMINEES BELOW THE BOXES.)
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.
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
(i) INCREASE THE NUMBER OF SHARES WITH RESPECT TO WHICH EQUITY INCENTIVES MAY
BE GRANTED DURING ANY FISCAL YEAR TO AN EMPLOYEE TO 750,000 AND (ii) TO
PROVIDE FOR AUTOMATIC ADJUSTMENTS IN THE NUMBER OF SHARES WITH RESPECT TO
WHICH EQUITY INCENTIVES MAY BE GRANTED IN THE EVENT OF FUTURE STOCK SPLITS OR
OTHER SIMILAR CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
/ / FOR the / / AGAINST the / / ABSTAIN
Amendment Amendment
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before this meeting.
Change of Address and or Comments Mark Here / /
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. 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.
Dated: ______________, 2000.
-------------------------------------
Signature
-------------------------------------
Signature, if held jointly
Votes must be indicated
(x) in Black or Blue ink.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
