<PAGE>
[LOGO]
6820 LBJ FREEWAY
DALLAS, TEXAS 75240
(972) 980-9917
September 18, 1998
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Brinker International, Inc. (the "Company") to be held at 10:00 a.m., on
Thursday, October 29, 1998, at the Cinemark 17 Theater, located at 11819 Webb
Chapel Road, Dallas, Texas. The meeting is being held for the following
purposes:
(A) to elect twelve (12) directors of the Company to serve until the next
annual meeting of shareholders or until their respective successors shall
be elected and qualified;
(B) to approve the Company's Stock Option and Incentive Plan; and
(C) to transact such other business as may properly come before the meeting
or any adjournment thereof.
Our agenda for the meeting will also include a strategic overview of the
Company.
It is important that your shares be represented at the meeting, whether or
not you attend personally. I urge you to sign, date and return the enclosed
proxy, or vote via telephone as set forth in the proxy, at your earliest
convenience.
Very truly yours,
NORMAN E. BRINKER
CHAIRMAN OF THE BOARD
<PAGE>
BRINKER INTERNATIONAL, INC.
6820 LBJ FREEWAY
DALLAS, TEXAS 75240
(972) 980-9917
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 29, 1998
To our Shareholders:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Brinker
International, Inc., a Delaware corporation (the "Company"), will be held at the
Cinemark 17 Theater, located at 11819 Webb Chapel Road, Dallas, Texas, on
Thursday, October 29, 1998, at 10:00 a.m., local time, for the following
purposes:
(A) to elect twelve (12) directors of the Company to serve until the next
annual meeting of shareholders or until their respective successors shall
be elected and qualified;
(B) to approve the Company's Stock Option and Incentive Plan; and
(C) to transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on September 1, 1998,
are entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
It is desirable that as large a proportion as possible of the shareholders'
interests be represented at the meeting. Whether or not you plan to be present
at the meeting, you are requested to sign and return the enclosed proxy in the
envelope provided (or follow the instructions set forth in the enclosed proxy to
vote your proxy by telephone) so that your stock will be represented. The giving
of such proxy will not affect your right to vote in person, should you later
decide to attend the meeting. Please date and sign the enclosed proxy and return
it promptly in the enclosed envelope (or follow the instructions set forth on
the enclosed proxy to vote your proxy by telephone).
By Order of the Board of Directors,
ROGER F. THOMSON
SECRETARY
Dallas, Texas
September 18, 1998
<PAGE>
BRINKER INTERNATIONAL, INC.
6820 LBJ FREEWAY
DALLAS, TEXAS 75240
(972) 980-9917
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 29, 1998
------------------------
This Proxy Statement is first being mailed on or about September 18, 1998,
to shareholders of Brinker International, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the annual meeting of shareholders to be
held on October 29, 1998. Proxies in the form enclosed will be voted at the
meeting if properly executed, returned to the Company prior to the meeting, and
not revoked, or if voted by telephone in accordance with the instructions set
forth in the enclosed proxy, and not revoked. The proxy may be revoked at any
time before it is voted by giving written notice or a subsequently dated proxy
(either by mail or by telephone), to the Secretary of the Company, or voting in
person.
OUTSTANDING CAPITAL STOCK
The record date for shareholders entitled to vote at the annual meeting is
September 1, 1998 (the "Record Date"). At the close of business on the Record
Date, the Company had issued and outstanding and entitled to vote at the meeting
65,859,510 shares of Common Stock, $0.10 par value ("Common Stock").
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the shareholder otherwise specifies in the
proxy, will be voted (i) for the election as directors of the Company of the
twelve (12) persons named under the caption "Directors and Executive
Officers--Directors" and (ii) for the approval of the Company's Stock Option and
Incentive Plan.
Where shareholders have appropriately specified how their proxies are to be
voted, they will be voted accordingly. If any other matter or business is
brought before the meeting, the proxy holders may vote the proxies at their
discretion. The directors do not know of any such other matter or business.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock as of the Record Date is necessary to
constitute a quorum at the annual meeting. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of votes cast on
proposals presented to shareholders. Broker non-votes are not counted for
purposes of determining whether a proposal has been approved. In deciding all
questions, a holder of Common Stock is entitled to one vote, in person or by
proxy, for each share held in his or her name on the Record Date.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as to the number of
shares of Common Stock of the Company beneficially owned by the principal
shareholders of the Company.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------
NUMBER OF
NAME AND ADDRESS SHARES PERCENT
- --------------------------------------------------------------------- -------------- ---------
<S> <C> <C>
Capital Research and Management Company ............................. 6,300,000(1) 9.57%
333 South Hope Street
Los Angeles, California 90071
Capital Guardian Trust Company, Capital International Limited, and
Capital International S.A. ........................................ 5,427,460(2) 8.24%
333 South Hope Street
Los Angeles, California 90071
FMR Corp. ........................................................... 5,107,400(3) 7.76%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ------------------------
(1) Based on information contained in Schedule 13G dated as of December 31,
1997.
(2) Based on information contained in Schedule 13G dated as of December 31,
1997. The listed companies are affiliated entities.
(3) Based on information contained in Schedule 13G dated as of December 31,
1997.
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<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND ELECTION OF DIRECTORS
Twelve (12) directors are to be elected at the meeting. Each nominee will be
elected to hold office until the next annual meeting of the shareholders or
until his or her successor is elected and qualified. To be elected a director,
each nominee must receive a plurality of all of the votes cast at the meeting
for the election of directors. Should any nominee become unable or unwilling to
accept nomination or election, the proxy holders may vote the proxies for the
election, in his or her stead, of any other person the Board of Directors may
recommend. All nominees have expressed their intention to serve the entire term
for which election is sought. The following table sets forth certain information
concerning security ownership of management and nominees for election as
directors of the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER ATTRIBUTABLE
OF COMMON STOCK TO
BENEFICIALLY OWNED OPTIONS EXERCISABLE
AS OF SEPTEMBER 1, WITHIN 60 DAYS OF PERCENT
NAME 1998(1)(2) SEPTEMBER 1, 1998 OF CLASS
- -------------------------------- --------------------------- --------------------- -----------
<S> <C> <C> <C>
Norman E. Brinker............... 1,984,009(3) 1,183,750 2.96%
Douglas H. Brooks............... 414,294 327,470 *
Gerard V. Centioli.............. 64,462(4) 60,000 *
Ronald A. McDougall............. 965,022 940,000 1.45%
Russell G. Owens................ 136,469 115,447 *
Roger F. Thomson................ 176,000 172,500 *
Donald J. Carty................. 10,000 -0- *
Dan W. Cook, III................ -0- -0- *
Marvin J. Girouard.............. -0- -0- *
J.M. Haggar, Jr................. 77,687 23,917 *
Frederick S. Humphries.......... 18,413 17,333 *
Ronald Kirk..................... -0- -0- *
Jeffrey A. Marcus............... -0- -0- *
James E. Oesterreicher.......... 20,500 20,000 *
Roger T. Staubach............... 31,500 21,000 *
All executive officers and 4,225,094 3,143,970 6.12%
directors as a group (20
persons)......................
</TABLE>
- ------------------------
* Less than one percent (1%)
(1) Beneficial ownership has been determined in accordance with the rules of the
Securities and Exchange Commission. Except as noted, and except for any
community property interests owned by spouses, the listed individuals have
sole investment power and sole voting power as to all shares of stock of
which they are identified as being the beneficial owners.
(2) Includes shares of Common Stock which may be acquired by exercise of options
vested, or vesting within 60 days of September 1, 1998, under the Company's
1983 Incentive Stock Option Plan, 1984 Non-Qualified Stock Option Plan, 1992
Incentive Stock Option Plan and 1991 Stock Option Plan for Non-Employee
Directors and Consultants, as applicable.
(3) Includes 20,250 shares of Common Stock held of record by a family trust of
which Mr. Brinker is trustee.
(4) Includes 2,000 shares of Common Stock held of record by a family trust of
which Mr. Centioli is trustee.
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The Company has established a guideline that all senior officers of the
Company own stock in the Company, believing that it is important to further
encourage and support an ownership mentality among the senior officers that will
continue to align their personal financial interests with the long-term
interests of the Company's shareholders. Pursuant to the guideline, the minimum
amount of Company Common Stock that a senior officer will be required to own
will be determined by such officer's position within the Company as well as
annual compensation. The Company has established a program with a third-party
lender pursuant to which the senior officers will be able to obtain financing
for purposes of attaining the stock ownership levels referred to above. Any
loans obtained by such senior officers to finance such stock acquisitions are
facilitated by the Company pursuant to an agreement in which the senior officer
pledges the underlying stock and future incentive payments which may be
receivable from the Company as security for the loan.
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
A brief description of each person nominated to become a director of the
Company is provided below. All nominees are currently serving as directors of
the Company. Each of the current directors was elected at the last annual
meeting of the Company's shareholders held on November 6, 1997, except Donald J.
Carty, who was appointed to the Board of Directors in June 1998, and Marvin J.
Girouard, who was appointed to the Board of Directors in September 1998.
NORMAN E. BRINKER, 67, served as Chairman of the Board of Directors and
Chief Executive Officer of the Company from September 1983 to June 1995, with
the exception of a brief period during which Mr. Brinker was incapacitated due
to an injury. Mr. Brinker continues to serve as Chairman of the Board of
Directors. Mr. Brinker is a member of the Executive and Nominating Committees of
the Company. He was the founder of S&A Restaurant Corp., having served as its
President from February 1966 through May 1977 and as its Chairman of the Board
of Directors and Chief Executive Officer from May 1977 through July 1983. From
June 1982 through July 1983, Mr. Brinker served as Chairman of the Board of
Directors and Chief Executive Officer of Burger King Corporation, while
simultaneously occupying the position of President of The Pillsbury Company
Restaurant Group. Mr. Brinker currently serves as a member of the Board of
Directors of Haggar Clothing Company.
RONALD A. MCDOUGALL, 56, was elected President and Chief Executive Officer
of the Company in June 1995 having formerly held the office of President and
Chief Operating Officer since 1986. Mr. McDougall joined the Company in 1983 and
served as Executive Vice President--Marketing and Strategic Development until
his promotion to President. Prior to joining the Company, Mr. McDougall held
senior management positions at Proctor and Gamble, Sara Lee, The Pillsbury
Company and S&A Restaurant Corp. Mr. McDougall has served as a member of the
Board of Directors of the Company since September 1983 and is a member of the
Executive and Nominating Committees of the Company. Mr. McDougall serves on the
Board of Directors of Excel Communications, Inc.
GERARD V. CENTIOLI, 44, was elected Senior Vice President--Emerging Concepts
President and Chief Executive Officer in April 1997. Mr. Centioli joined the
Company as Senior Vice President--Maggiano's/ Corner Bakery Concepts President
and Chief Executive Officer in August 1995 and was named Senior Vice
President--Italian Concepts President and Chief Executive Officer in January
1996. Mr. Centioli previously served as Senior Partner of Lettuce Entertain You
Enterprises, Inc. (restaurants) and President and Chief Executive Officer of the
Maggiano's Little Italy and The Corner Bakery Divisions. Prior to joining
Lettuce Entertain You Enterprises, Inc. in 1984, Mr. Centioli served as Vice
President--Division President of Collins Foods International, Inc. Mr. Centioli
has served as a member of the Board of Directors of the Company since November
1995.
DONALD J. CARTY, 51, was named Chairman, President and Chief Executive
Officer of AMR Corp. and American Airlines, Inc. in May 1998, after serving as
President from March 1995 until May 1998. From
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1989 to 1995, he served American and AMR as Executive Vice President--Finance
and Planning. He joined American in 1978 and held numerous finance and planning
positions, with the exception of a two-year hiatus as President and Chief
Executive Officer of CP Air in Canada. He is a graduate of Queen's University in
Kingston, Ontario and of the Harvard Graduate School of Business Administration.
He serves on the Board of Directors of Dell Computer Corporation, the
Canada--U.S. Foundation for Educational Exchange, the Greater Dallas Chamber of
Commerce and the Dallas Citizens Council. He was elected to the Board of
Directors in June 1998.
DAN W. COOK, III, 63, is a limited partner with The Goldman Sachs Group,
L.P. (investment banking). Mr. Cook started with The Goldman Sachs Group, L.P.
in 1961 and was a partner when he retired in 1992. Mr. Cook is a member of the
Executive and Compensation Committees of the Company and has served as a member
of the Board of Directors since October 1997. Mr. Cook also serves on the Board
of Directors for Centex Corporation. Mr. Cook is a member of the Board of
Trustees of Southern Methodist University as well as Vice-Chair of the Edwin L.
Cox School of Business Executive Board.
MARVIN J. GIROUARD, 59, is the President and Chief Executive Officer of Pier
1 Imports, Inc., having been elected to the position of President in August 1988
and Chief Executive Officer in June 1998. Mr. Girouard also served as Chief
Operating Officer from 1988 to 1998. Mr. Girouard joined Pier 1 Imports in 1975
and has served on its Board of Directors since 1988. He serves as a Director for
Tandy Brands Accessories, Inc. and is a member of the Executive Committee for
the United States Committee for UNICEF--The United Nations Children's Emergency
Fund. Mr. Girouard has served as a member of the Board of Directors of the
Company since September 1998.
J. M. HAGGAR, JR., 73, is currently the owner of J.M. Haggar, Jr.
Investments, a business he has operated since retiring as Chairman of the Board
of Directors of Haggar Clothing Company in February 1995. Mr. Haggar previously
held the positions of President and Chief Executive Officer of Haggar Clothing
Company until 1991. Mr. Haggar is a member of the Compensation and Audit
Committees of the Company and has served as a member of the Company's Board of
Directors since April 1985.
FREDERICK S. HUMPHRIES, 62, is the President of Florida A&M University in
Tallahassee, Florida, having held this position since 1985. Prior to joining
Florida A&M University, Dr. Humphries was President of Tennessee State
University in Nashville for over 10 years. Dr. Humphries serves as a member of
the USDA Task Force of 1890 Land-Grant Institutions in addition to being
involved in various civic and community activities. Dr. Humphries has served on
the Board of Directors of the Company since May 1994 and is a member of the
Audit Committee of the Company. He is also a member of the Board of Directors of
Wal-Mart, Inc.
RONALD KIRK, 44, is currently Mayor of the City of Dallas and a partner in
the law firm of Gardere & Wynne. He was elected Mayor in 1995, and previously
served as Secretary of State of the State of Texas from 1994 to 1995. Mr. Kirk
was engaged in the private practice of law from 1989 to 1994, served as an
Assistant City Attorney for Dallas from 1983 to 1989 and as a legislative aide
to U.S. Senator Lloyd Bentsen from 1983 to 1989. Mayor Kirk is an honors
graduate of Austin College and earned his law degree from The University of
Texas. Mayor Kirk has served on the Board of Directors since January 1997 and is
a member of the Nominating Committee of the Company.
JEFFREY A. MARCUS, 51, is President and Chief Executive Officer of
Chancellor Media Corporation (radio broadcasting), a position he has held since
May 1998. Previously, Mr. Marcus was Chairman, President and Chief Executive
Officer of Marcus Cable Company, a company he formed in 1990 after spending more
than 20 years in the cable television industry. Mr. Marcus is active in several
civic and charitable organizations. Mr. Marcus has served on the Board of
Directors since January 1997 and is a member of the Executive Committee of the
Company.
JAMES E. OESTERREICHER, 57, is the Chairman of the Board and Chief Executive
Officer of J.C. Penney Company, Inc., having been elected to the position of
Chairman of the Board in January 1997 and to the
5
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position of Chief Executive Officer in January 1995. Mr. Oesterreicher served as
Vice Chairman of the Board from 1995 to 1997, as President of JCPenney Stores
and Catalog from 1992 to 1995 and as Director of JCPenney Stores from 1988 to
1992. Mr. Oesterreicher has been with the J.C. Penney Company since 1964 where
he started as a management trainee. He serves as a Director for various
entities, including Texas Utilities Company, Presbyterian Healthcare Systems,
National Retail Federation, Circle Ten Council--Boy Scouts of America, National
4-H Council, National Organization on Disability and March of Dimes Birth
Defects Foundation. He also serves as a member of the Policy Committee of the
Business Roundtable. Mr. Oesterreicher has served as a member of the Board of
Directors of the Company since May 1994 and is a member of the Compensation and
Nominating Committees of the Company.
ROGER T. STAUBACH, 56, has been Chairman of the Board and Chief Executive
Officer of The Staubach Company, a national real estate company specializing in
tenant representation, since 1982. He has served as a member of the Board of
Directors of the Company since May 1993 and is a member of the Executive
Committee of the Company. Mr. Staubach is a 1965 graduate of the U.S. Naval
Academy and served four years in the Navy as an officer. In 1968 he joined the
Dallas Cowboys professional football team as quarterback and was elected to the
National Football League Hall of Fame in 1985. He currently serves on the Board
of Directors of American AAdvantage Funds and International Home Foods, Inc.,
and is active in numerous civic, charity and professional organizations.
EXECUTIVE OFFICERS
The following persons are executive officers of the Company who are not
nominated to serve on the Company's Board of Directors:
DOUGLAS H. BROOKS, 46, joined the Company as an Assistant Manager in
February 1978 and was promoted to General Manager in April 1978. In March 1979
Mr. Brooks was promoted to Area Supervisor and in May 1982 to Regional Director.
He was again promoted in March 1987 to Senior Vice President-Central Region
Operations and to the position of Concept Head and Senior Vice
President--Chili's Operations in June 1992. Mr. Brooks became Senior Vice
President--Chili's Grill & Bar Concept President in June 1994 and was promoted
to his current position of Executive Vice President and Chief Operating Officer
in May 1998.
LESLIE CHRISTON, 44, was elected Senior Vice President--On The Border
President in April 1997, having previously served as Vice President of
Operations/On The Border since joining the Company in July 1996. Prior to this
time, Ms. Christon held the position of Senior Vice President of Operations of
Red Lobster Restaurants from November 1994 to June 1996 and she was with El
Chico Restaurants, Inc. from June 1981 to November 1994. Ms. Christon serves on
the Board of Directors of the Women's Foodservice Forum and is the past
president of the Roundtable for Women in Foodservice, Inc.
KENNETH D. DENNIS, 45, joined the Company as a Manager in November 1976 and
was promoted to General Manager in June 1978. In February 1979, he became
Director of Internal Systems and in September 1983 became Director of Marketing.
Mr. Dennis was promoted to Vice President of Marketing in August 1986 and to
Senior Vice President of Marketing in August 1993. In February 1997, Mr. Dennis
became Senior Vice President--Chief Operating Officer of Cozymel's and was
elected to Senior Vice President--Cozymel's President in September 1997. Mr.
Dennis serves on the Board of Directors of the Marketing Executives Group and is
the past Co-Chairman.
TODD E. DIENER, 41, joined the Company as a Chili's Manager Trainee in
November 1981. In May 1983, Mr. Diener was promoted to General Manager and in
April 1985 to Area Director. He was promoted to Regional Director in 1987,
Regional Vice President in 1989, Senior Vice President/Chief Operating Officer
in July 1996 and in May 1998, Mr. Diener was promoted to Senior Vice
President--Chili's Grill & Bar Concept President.
6
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CAROL E. KIRKMAN, 41, was appointed Executive Vice President of Human
Resources in June 1997 after serving as Senior Vice President of Human Resources
since April 1996. Ms. Kirkman joined the Company as Corporate Counsel in 1990
and was promoted to Vice President/Assistant General Counsel in 1994. Ms.
Kirkman was an attorney in private practice in Dallas, Texas, from 1982 until
1987 and worked as a commercial and retail real estate broker in southern
California from 1987 until 1990.
JOHN C. MILLER, 43, joined the Company as Vice President-Special Concepts in
September 1987. In October 1988, he was elected as Vice President--Joint
Venture/Franchise and served in this capacity until August 1993 when he was
promoted to Senior Vice President--New Concept Development. Mr. Miller was named
Senior Vice President--Mexican Concepts in September 1994 and was subsequently
elected Senior Vice President--Mexican Concepts President in October 1995. In
April 1997, Mr. Miller was elected Senior Vice President--Romano's Macaroni
Grill President. Prior to joining the Company, Mr. Miller worked in various
capacities with the Taco Bueno Division of Unigate Restaurants.
RUSSELL G. OWENS, 39, joined the Company in 1983 as Controller. He was
elected Vice President of Planning in 1986 and Vice President of Operations
Analysis in 1991. Mr. Owens was promoted to Senior Vice President of Operations
Analysis in 1993 and was named Senior Vice President of Strategic
Development--Italian Concepts in 1996. Mr. Owens was elected Executive Vice
President and Chief Strategic Officer in June 1997 and became Chief Financial
and Strategic Officer in September 1997. Prior to joining the Company, Mr. Owens
worked for the public accounting firm, Deloitte & Touche.
ROGER F. THOMSON, 49, joined the Company as Senior Vice President, General
Counsel and Secretary in April 1993 and was promoted to Executive Vice
President, General Counsel and Secretary in March 1994. In June 1996, Mr.
Thomson was promoted to the position of Executive Vice President, Chief
Administrative Officer, General Counsel and Secretary and was a Director of the
Company from 1993 until 1995. From 1988 until April 1993, Mr. Thomson served as
Senior Vice President, General Counsel and Secretary for Burger King
Corporation. Prior to 1988, Mr. Thomson spent ten years at S & A Restaurant
Corp. where he was Executive Vice President, General Counsel and Secretary.
CLASSES OF DIRECTORS
For purposes of determining whether non-employee directors will be nominated
for reelection to the Board of Directors, the non-employee directors have been
divided into four classes. Each non-employee director will continue to be
subject to reelection by the shareholders of the Company each year. However,
after a non-employee director has served on the Board of Directors for four
years, such director shall be deemed to have been advised by the Nominating
Committee that he or she will not stand for reelection at the subsequent annual
meeting of shareholders and shall be considered a "Retiring Director."
Notwithstanding this policy, the Nominating Committee may determine that it is
appropriate to renominate any or all of the Retiring Directors after first
considering the appropriateness of nominating new candidates for election to the
Board of Directors. The four classes of non-employee directors are as follows:
Messrs. Girouard, Humphries and Oesterreicher comprise Class 1 and will be
considered Retiring Directors as of the annual meeting of shareholders following
the end of the 2002 fiscal year. There are no members of Class 2. Messrs.
Haggar, Kirk and Marcus comprise Class 3 and will be considered Retiring
Directors as of the annual meeting of shareholders following the end of the 2000
fiscal year. Messrs. Carty, Cook and Staubach comprise Class 4 and will be
considered Retiring Directors as of the annual meeting of shareholders following
the end of the 2001 fiscal year.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established an Executive
Committee, Audit Committee, Compensation Committee, and Nominating Committee.
The Executive Committee (currently comprised of Messrs. Brinker, McDougall,
Cook, Marcus, and Staubach) met four (4) times during the fiscal year. The
Executive Committee reviews material matters during the intervals between Board
meetings, provides
7
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advice and counsel to Company management during such intervals, and has the
authority to act for the Board on most matters during the intervals between
Board meetings. In addition, the Executive Committee is also charged with
assuring that the Company has a satisfactory succession management plan for all
key management positions.
All of the members of the Audit and Compensation Committees are directors
independent of management who are not and never have been officers or employees
of the Company. The Audit Committee is currently comprised of Messrs. Haggar and
Humphries and met four (4) times during the fiscal year. Included among the
functions performed by the Audit Committee are: the review with independent
auditors of the scope of the audit and the results of the annual audit by the
independent auditors, consideration and recommendation to the Board of the
selection of the independent auditors for the next year, the review with
management and the independent auditors of the annual financial statements of
the Company, and the review of the scope and adequacy of internal audit
activities.
The Compensation Committee is currently comprised of Messrs. Cook, Haggar
and Oesterreicher and it met four (4) times during the fiscal year. Functions
performed by the Compensation Committee include: reviewing the performance of
the Chief Executive Officer, approving key executive promotions, ensuring the
reasonableness and appropriateness of senior management compensation
arrangements and levels, the adoption, amendment and administration of
stock-based incentive plans (subject to shareholder approval where required),
management of the various stock option plans of the Company, approval of the
total number of available shares to be used each year in stock-based plans, and
approval of the adoption and amendment of significant compensation plans. The
specific nature of the Committee's responsibilities as they relate to executive
officers is set forth below under "Report of the Compensation Committee."
The purposes of the Nominating Committee are to recommend to the Board of
Directors potential non-employee members to be added as new or replacement
members to the Board of Directors, to review the compensation paid to
non-management Board members, and to recommend corporate governance guidelines
to the full Board of Directors. The Nominating Committee will consider a
shareholder-recommended nomination for director to be voted upon at the 1999
annual meeting of shareholders provided that the recommendation must be in
writing, set forth the name and address of the nominee, contain the consent of
the nominee to serve, and be submitted on or before May 21, 1999. The Nominating
Committee is composed of Messrs. Brinker, McDougall, Kirk and Oesterreicher and
it met two (2) times during the fiscal year.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive $1,000 for each
meeting of the Board of Directors attended and $1,000 for each meeting of any
committee of the Board of Directors attended. The Company also reimburses
directors for costs incurred by them in attending meetings of the Board.
Directors who are not employees of the Company receive grants of stock
options under the Company's 1991 Stock Option Plan for Non-Employee Directors
and Consultants. A new director who is not an employee of the Company will
receive as compensation (a) 20,000 stock options at the beginning of such
director's term, and (b) an annual payment of $36,000, at least 25% of which
must be taken in the form of stock options. If a director is appointed to the
Board of Directors at any time other than at an annual meeting of shareholders,
the director will receive a prorated portion of the annual cash compensation for
the period from the date of election or appointment to the Board of Directors
until the meeting of the Board of Directors held contemporaneous with the next
annual meeting of shareholders. If a director elects to receive cash, the first
payment will be made at the Board of Directors' meeting held contemporaneous
with the next annual meeting of shareholders. The stock options will be granted
as of the 60th day following such meeting (or if the 60th day is not a business
day, on the first business day thereafter) at the fair market value on the date
of grant. One-third ( 1/3) of the options will vest on each of the second, third
and fourth anniversaries of the date of grant. If a director is a Retiring
Director who is being nominated for
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an additional term on the Board of Directors, each such renominated director
will receive an additional grant of 10,000 stock options at the beginning of
such director's new term.
For purposes of applying this compensation program to the current
non-employee directors of the Company, the previous compensation program was
blended with this compensation program in order to determine annual compensation
payable to non-employee directors until such directors become Retiring Directors
and leave the Board or are approved by the Nominating Committee to serve for an
additional four years. Dr. Humphries previously has received a grant of 15,000
stock options and has received an annual cash retainer of $16,000; Mr.
Oesterreicher previously has received a grant of 15,000 stock options and has
received an annual cash retainer of $6,000. As Messrs. Humphries and
Oesterreicher are currently Retiring Directors, if they are re-elected to the
Board of Directors, they will be compensated according to the new compensation
plan. If Mr. Girouard is elected to the Board of Directors, he will be
compensated according to the new compensation plan. Messrs. Carty, Cook, Haggar,
Kirk, Marcus, and Staubach are being compensated according to the new
compensation plan.
During the year ended June 24, 1998, the Board of Directors held six (6)
meetings; each incumbent director attended at least 75% of the aggregate total
of meetings of the Board of Directors and Committees on which he or she served.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the annual compensation
for the Company's five highest compensated executive officers, including the
Chief Executive Officer, whose salary and bonus exceeded $100,000 in fiscal
1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
AWARDS PAYOUTS
----------- -----------
ANNUAL COMPENSATION SECURITIES LONG-TERM
------------------------ UNDERLYING INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS PAYOUTS COMPENSATION(1)
- ------------------------------------- --------- ---------- ------------ ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. McDougall.................. 1998 $ 861,442 $ 1,033,731 200,000 $ 76,633 $ 30,397
President and Chief Executive Officer 1997 $ 825,000 $ 396,000 200,000 $ 67,289 $ 29,194
1996 $ 744,808 $ -0- 375,000 $ 69,860 $ 18,396
Douglas H. Brooks.................... 1998 $ 387,308 $ 255,623 60,000 $ 45,980 $ 16,595
Executive Vice President and Chief 1997 $ 333,654 $ 120,462 50,000 $ 33,645 $ 20,818
Operating Officer 1996 $ 311,058 $ -0- 90,000 $ 31,049 $ 12,830
Roger F. Thomson..................... 1998 $ 334,692 $ 267,754 50,000 $ 57,475 $ 16,501
Executive Vice President, Chief 1997 $ 317,231 $ 104,940 50,000 $ 40,374 $ 16,680
Administrative Officer, General 1996 $ 256,827 $ -0- 90,000 $ 31,049 $ 6,641
Counsel and Secretary
Gerard V. Centioli................... 1998 $ 289,841 $ 231,783 50,000 $ 30,653 $ 58,686
Senior Vice President-- Emerging 1997 $ 276,768 $ 100,000 50,000 $ -0- $ 19,791
Concepts President and Chief 1996 $ 127,739 $ -0- 90,000 $ -0- $ 5,315
Executive Officer
Russell G. Owens..................... 1998 $ 286,577 $ 229,262 50,000 $ 37,473 $ 13,319
Executive Vice President and Chief 1997 $ 187,231 $ 41,931 20,000 $ 26,916 $ 12,589
Financial and Strategic Officer 1996 $ 168,846 $ -0- 90,000 $ 23,287 $ 7,437
</TABLE>
- ------------------------
(1) All other compensation represents Company match on deferred compensation.
9
<PAGE>
OPTION GRANTS DURING 1998 FISCAL YEAR
The following table contains certain information concerning the grant of
stock options pursuant to the Company's 1992 Incentive Stock Option Plan to the
executive officers named in the above compensation table during the Company's
last fiscal year:
<TABLE>
<CAPTION>
REALIZABLE VALUE OF
% OF TOTAL ASSUMED ANNUAL RATES OF
OPTIONS STOCK PRICE APPRECIATION
GRANTED TO FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR BASE PRICE DATE 5% 10%
- ----------------------------------- --------- ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. McDougall................ 200,000 12.04% $ 14.00 10/31/07 $ 1,760,905 $ 4,462,479
Douglas H. Brooks.................. 60,000 3.61% $ 14.00 10/31/07 $ 528,271 $ 1,338,744
Roger F. Thomson................... 50,000 3.01% $ 14.00 10/31/07 $ 440,226 $ 1,115,620
Gerard V. Centioli................. 50,000 3.01% $ 14.00 10/31/07 $ 440,226 $ 1,115,620
Russell G. Owens................... 50,000 3.01% $ 14.00 10/31/07 $ 440,226 $ 1,115,620
</TABLE>
- ------------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Company's stock price.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUE TABLE
The following table shows stock option exercises by the named officers
during the last fiscal year, including the aggregate value of gains on the date
of exercise. In addition, this table includes the number of shares covered by
both exercisable and non-exercisable stock options at fiscal year-end. Also
reported are the values for "in-the-money" options which represent the position
spread between the exercise price of any such existing options and the $19.75
fiscal year-end price of the Company's Common Stock.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. McDougall............. -0- -0- 877,500 712,500 $ 2,815,553 $ 5,046,875
Douglas H. Brooks............... 98,603 $ 1,739,315 369,425 185,000 $ 3,131,433 $ 1,297,500
Roger F. Thomson................ -0- -0- 157,500 175,000 $ 261,930 $ 1,240,000
Gerard V. Centioli.............. -0- -0- 30,000 190,000 $ 183,750 $ 1,307,500
Russell G. Owens................ -0- -0- 100,447 145,000 $ 610,099 $ 981,250
</TABLE>
10
<PAGE>
LONG-TERM PERFORMANCE SHARE PLAN AND AWARDS
Executives of the Company participate in the Long-Term Performance Share
Plan. See "Report of the Compensation Committee--Long-Term Incentives" for more
information regarding this plan. The following table represents awards granted
in the last fiscal year under the Long-Term Performance Share Plan.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK BASED PLANS
---------------------------
NUMBER OF UNITS (DOLLARS)
NAME AWARDED THRESHOLD TARGET MAXIMUM
- --------------------------------------------------------------- --------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C>
Ronald A. McDougall............................................ 1,000 * $ 100,000 *
Douglas H. Brooks.............................................. 600 * $ 60,000 *
Roger F. Thomson............................................... 750 * $ 75,000 *
Gerard V. Centioli............................................. 400 * $ 40,000 *
Russell G. Owens............................................... 575 * $ 57,500 *
</TABLE>
- ------------------------
* Future payouts under the Long-Term Performance Share Plan have no minimum
threshold and have no maximum limit as set forth in more detail in "Report
of the Compensation Committee--Long Term Incentives."
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION PHILOSOPHY
The executive compensation program is designed as a tool to reinforce the
Company's strategic principles--to be a premier and progressive growth company
with a balanced approach towards people, quality and profitability and to
enhance long-term shareholder value. To this end, the following principles have
guided the development of the executive compensation program:
- Provide competitive levels of compensation to attract and retain the best
qualified executive talent. The Committee strongly believes that the
caliber of the Company's management group makes a significant difference
in the Company's sustained success over the long term.
- Embrace a pay-for-performance philosophy by placing significant amounts of
compensation "at risk"--that is, compensation payouts to executives must
vary according to the overall performance of the Company.
- Directly link executives' interests with those of shareholders by
providing opportunities for long-term incentive compensation based on
changes in shareholder value.
The executive compensation program is intended to appropriately balance the
Company's short-term operating goals with its long-term strategy through a
careful mix of base salary, annual cash incentives and long-term performance
compensation including cash incentives and incentive stock options.
BASE SALARIES
Executives' base salaries and total compensation are targeted to be
competitive between the 75th and 90th percentiles of the market for positions of
similar responsibility and scope to reflect the exceptionally high level of
executive talent required to execute the growth plans of the Company.
Positioning executives' base salaries at these levels is needed for attracting,
retaining and motivating executives with the essential qualifications for
managing the Company's growth. The Company defines the relevant labor market for
such executive talent through the use of third-party executive salary surveys
that reflect both the chain restaurant industry as well as a broader
cross-section of companies from many industries. Individual base salary levels
are determined by considering market data for each officer's position, level of
responsibility,
11
<PAGE>
performance, and experience. The overall amount of base salary increases awarded
to executives reflects the financial performance of the Company, individual
performance and potential, and/or changes in an officer's duties and
responsibilities.
ANNUAL INCENTIVES
The Company's Profit Sharing Plan is a non-qualified annual incentive
arrangement in which all corporate employees, including executives, participate.
The program is designed to reflect employees' contribution to the growth of the
Company's common stock value by increasing the earnings of the Company. The plan
reinforces a strong teamwork ethic by making the basis for payouts to
non-restaurant concept executives the same as for all other non-restaurant
concept corporate employees and by making the basis for payouts to executives of
one of the Company's restaurant concepts the same as for all other members of
such restaurant concept's corporate team.
At the beginning of a fiscal year, each executive is assigned an Individual
Participation Percentage ("IPP") which is tied to the base salary for such
executive and targets overall total cash compensation for executives between the
75th and 90th percentiles of the market. The IPPs reflect the Committee's desire
that a significant percentage of executives' total compensation be derived from
variable pay programs.
401(k) SAVINGS PLAN AND SAVINGS PLAN II
On January 1, 1993, the Company implemented the 401(k) Savings Plan ("Plan
I") and Savings Plan II ("Plan II"). These Plans are designed to provide the
Company's salaried employees with a tax-deferred long-term savings vehicle. The
Company provides a matching contribution equal to 25% of a participant's
contribution, up to a maximum of 5% of such participant's compensation.
Plan I is a qualified 401(k) plan. Participants in Plan I elect the
percentage of pay they wish to contribute as well as the investment alternatives
in which their contributions are to be invested. The Company's matching
contribution for all Plan I participants is made in Company common stock. All
participants in Plan I are considered non-highly compensated employees as
defined by the Internal Revenue Service. Participants' contributions vest
immediately while Company contributions vest 25% annually, beginning in the
participant's second year of eligibility since Plan I inception.
Plan II is a non-qualified deferred compensation plan. Plan II participants
elect the percentage of pay they wish to defer into their Plan II account. They
also elect the percentage of their deferral account to be allocated among
various investment options. The Company's matching contribution for all
non-officer Plan II participants is made in Company common stock, with corporate
officers receiving a Company match in cash. Participants in Plan II are
considered a select group of management and highly compensated employees
according to the Department of Labor. A participant's contributions vest
immediately while Company contributions vest 25% annually, beginning in the
participant's second year of eligibility since Plan II inception.
LONG-TERM INCENTIVES
All salaried employees above a specified grade level of the Company,
including executives, are eligible for annual grants of tax-qualified and
non-qualified stock options. By tying a significant portion of executives' total
opportunity for financial gain to increases in shareholder wealth as reflected
by the market price of the Company's common stock, executives' interests are
closely aligned with shareholders' long-term interests. In addition, because the
Company does not maintain any qualified retirement programs for executives, the
stock option plan is intended to provide executives with opportunities to
accumulate wealth for later retirement.
Stock options are rights to purchase shares of the Company's Common Stock at
the fair market value on the date of grant. Grantees do not receive a benefit
from stock options unless and until the market price
12
<PAGE>
of the Company's common stock increases. Fifty percent (50%) of a stock option
grant becomes exercisable two years after the grant date; the remaining 50% of a
grant becomes exercisable three years after the grant date.
The number of stock options granted to an executive is determined by the
Compensation Committee and is based on grant guidelines set by the Compensation
Committee that reflect market data and the officer's position within the
Company.
Executives also participate in the Long-Term Executive Profit Sharing Plan,
a non-qualified long-term performance cash plan. This plan provides an
additional mechanism for focusing executives on the sustained improvement in
operating results over the long term. This is a performance-related plan using
overlapping three-year cycles paid annually. Performance units (valued at $100
each) are granted to individuals and paid in cash based upon the Company's
attainment of predetermined performance objectives. Long-term operating results
are measured by evaluating both pre-tax net income (weighted 70%) and changes in
shareholders' equity (weighted 30%) over three-year cycles. The Long-Term
Executive Profit Sharing Plan will continue in effect through the cycle which
includes fiscal years 1997, 1998, and 1999. The Long-Term Executive Profit
Sharing Plan has been replaced by the Long-Term Performance Share Plan
commencing with the cycle which includes fiscal years 1998, 1999, and 2000. The
Long-Term Performance Share Plan is based on the Company's total shareholder
return in comparison to the S&P 500 Index and the S&P Restaurant Industry Index.
For executives to receive the target payout, the Company must perform at the
75th percentile of each index over the three-year cycle and must average at
least 90% of its planned annual profit before taxes over the same three-year
cycle.
PAY/PERFORMANCE NEXUS
The Company's executive compensation program has resulted in a direct
relationship between the compensation paid to executive officers and the
Company's performance. See "Five-Year Total Shareholder Return Comparison"
below.
CEO COMPENSATION
The Compensation Committee made decisions regarding Mr. McDougall's
compensation package according to the guidelines discussed in the preceding
sections. Mr. McDougall was awarded a salary increase in the amount of 6.3%,
effective June 25, 1998, to recognize his vast experience in the restaurant
industry, the Company's performance under his leadership and his significant
contributions to the Company's continued success. Mr. McDougall was granted
1,000 units under the Long-Term Executive Profit Sharing Plan for the cycle
which includes fiscal years 1998, 1999, and 2000. Mr. McDougall was also granted
200,000 stock options under the Company's stock option plan. Approximately 51.6%
of Mr. McDougall's compensation for 1998 was incentive pay pursuant to the
Company's Profit Sharing Plan. Like all Company executives, Mr. McDougall's
compensation is significantly affected by the Company's performance. In the 1998
fiscal year, Mr. McDougall's total compensation increased 52% from its level in
the 1997 fiscal year.
FEDERAL INCOME TAX CONSIDERATIONS
The Compensation Committee has considered the impact of Section 162(m) of
the Internal Revenue Code adopted under the Omnibus Budget Reconciliation Act of
1993. This section disallows a tax deduction for any publicly-held corporation
for individual compensation to certain executives of such corporation exceeding
$1,000,000 in any taxable year, unless compensation is performance-based. It is
the intent of the Company and the Compensation Committee to qualify to the
maximum extent possible its executives' compensation for deductibility under
applicable tax laws. The Compensation Committee believes that the Company's
compensation programs provide the necessary incentives and flexibility to
13
<PAGE>
promote the Company's performance-based compensation philosophy while being
consistent with Company objectives.
The Compensation Committee's administration of the executive compensation
program is in accordance with the principles outlined at the beginning of this
report. The Company's financial performance supports the compensation practices
employed during the past year.
Respectfully submitted,
COMPENSATION COMMITTEE
DAN W. COOK, III
J.M. HAGGAR, JR.
JAMES E. OESTERREICHER
FIVE-YEAR TOTAL SHAREHOLDER RETURN COMPARISON
The following is a line graph presentation comparing cumulative, five-year
total shareholder returns on an indexed basis with the S&P 500 Index and the S&P
Restaurant Industry Index. A list of the indexed returns follows the graph.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BRINKER
INTERNATIONAL S&P 500 S&P RESTAURANTS
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 $91.97 $101.41 $115.71
1995 $75.55 $127.84 $152.17
1996 $65.69 $161.08 $179.06
1997 $62.41 $216.98 $187.26
1998 $86.50 $282.42 $253.72
</TABLE>
The graph assumes a $100 initial investment and the reinvestment of
dividends. The Common Stock prices shown are neither indicative nor
determinative of future performance.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Brinker International.................................. 100.00 91.97 75.55 65.69 62.41 86.50
S&P 500................................................ 100.00 101.41 127.84 161.08 216.98 282.42
S&P Restaurants........................................ 100.00 115.71 152.17 179.06 187.26 253.72
</TABLE>
14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
Common Stock are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates have been established for these reports
and the Company is required to disclose in this proxy statement, any failure to
file by these dates. Through an inadvertent omission, there was one late filing
during the fiscal year by each of Messrs. Haggar, Humphries, Oesterreicher, and
Staubach relating to a stock option grant during the 1996 fiscal year. Except as
set forth herein, the Company believes that all filing requirements were
satisfied. In making these disclosures and filing of the reports, the Company
has relied solely on written representations from certain reporting persons.
CERTAIN TRANSACTIONS
The policy of the Company is, to the extent practicable, to avoid
transactions (except those which are employment related) with officers,
directors, and affiliates. In any event, any such transactions will be entered
into on terms no less favorable to the Company than could be obtained from third
parties, and such transactions will be approved by a majority of the
disinterested directors of the Company. Except for the transactions described
below, there were no transactions required to be reported in the last fiscal
year.
On June 28, 1995, Mr. Norman Brinker contractually agreed to remain as
Chairman of the Board (subject to annual reelection by the shareholders) through
the 2001 fiscal year. Under this agreement, Mr. Brinker's compensation will not
materially differ from his compensation on June 28, 1995. However, Mr. Brinker's
total base compensation and profit sharing distributions in the 1998 through
2001 fiscal years will not exceed $1,000,000 per year. Upon Mr. Brinker's death,
retirement or termination for cause, no further payment shall be made pursuant
to this agreement.
Upon the expiration of the agreement described above, Mr. Brinker will
remain a consultant to the Company through the 2021 fiscal year. Mr. Brinker
will be compensated commensurate with his continuing contributions to the
Company; however, during this time, he will no longer participate in any of the
Company's profit sharing plans or benefit programs. Upon Mr. Brinker's death,
retirement or termination for cause, no further payment shall be made pursuant
to the consulting agreement.
The Company also entered into an agreement with Mr. Brinker whereby Mr.
Brinker conveyed to the Company his likeness, biography, photo, voice and name
to be used by the Company in all media, promotions, advertising, training, and
other materials as the Company deems appropriate. He will receive as
compensation $400,000 per year until the earlier of July 1, 2021 or his death.
The Company owns an office building and leases an adjacent office complex
containing three buildings in order to allow for the expansion of its corporate
headquarters. A company controlled by Roger T. Staubach, a director of the
Company, is a subtenant in this office complex and paid approximately $514,000
in rent to the Company during the 1998 fiscal year pursuant to a lease entered
into with an unrelated party prior to the acquisition of the office complex by
the Company. In addition, a company controlled by Mr. Staubach provided real
estate brokerage services in connection with the purchase of land by the Company
during the 1998 fiscal year and was paid $12,500 for such services by the
property seller.
Dan W. Cook, III, a director of the Company, is a limited partner of The
Goldman Sachs Group, L.P., an investment banking firm that served as a financial
advisor to the Company during the 1998 fiscal year.
APPROVAL OF STOCK OPTION AND INCENTIVE PLAN
In September 1998, the Board of Directors, relying upon the recommendation
of the Compensation Committee of the Board of Directors, adopted the Stock
Option and Incentive Plan (the "Plan") subject to the approval of shareholders
at the annual meeting, covering the issuance of up to 6,000,000 shares of
15
<PAGE>
Common Stock of the Company. In addition, the Plan would include shares of
Common Stock of the Company that are represented by awards granted under prior
stock option plans of the Company which are forfeited, expire or are cancelled
without the delivery of the underlying shares of Common Stock. The purpose of
the Plan is to strengthen the Company's ability to attract and retain key
employees and to provide an incentive to employees and other persons who will be
responsible for the Company's future growth and continued success. The Plan
provides more flexibility than the Company's 1992 Incentive Stock Option Plan
(the "1992 Plan") in that it allows the issuance of stock options, stock
appreciation rights, and restricted stock to eligible participants. At the
annual meeting, the shareholders of the Company are being asked to approve the
adoption of the Plan. A copy of the Plan is attached hereto as Appendix A. The
following description is subject in all respects to the terms of the Plan.
SUMMARY OF THE PLAN
STOCK OPTIONS
The Plan is designed to permit the granting of options to all employees of
the Company and its subsidiaries (of which there were approximately 53,000
employees as of June 24, 1998), although the Company has historically granted
options only to certain of its salaried employees. The administration of the
Plan will be provided by the Compensation Committee which has the authority to
determine the terms on which options are granted under the Plan. The
Compensation Committee determines the number of options to be granted to
eligible participants, determines the purchase price (not less than the fair
market value of the Company's Common Stock on the date of option grant) and
option period at the time the option is granted, and administers and interprets
the Plan.
The exercise price of options is payable in cash or the holder of an option
may request approval from the Compensation Committee to exercise an option or a
portion thereof by tendering shares of Common Stock at the fair market value per
share on the date of exercise in lieu of cash payment of the exercise price.
Both incentive stock options ("ISOs") and non-qualified stock options may be
granted under the Plan. The Plan requires that the exercise price of an option
will not be less than 100% of the fair market value of the Common Stock on the
date of the grant of the option. No ISO may be granted under the Plan to anyone
who owns more than 10% of the outstanding Common Stock unless the exercise price
is at least 110% of the fair market value of the Common Stock on the date of
grant and the option is not exercisable more than five years after it is
granted. There is no limit on the fair market value of ISOs that may be granted
to an employee in any calendar year, but no employee may be granted ISOs that
first become exercisable during a calendar year for the purchase of stock with
an aggregate fair market value (determined as of the date of grant of each
option) in excess of $100,000 and no employee may be granted more than 500,000
options and SARs (hereinafter defined) in a fiscal year. An option (or an
installment thereof) counts against the annual limitation only in the year it
first becomes exercisable.
TAX STATUS OF STOCK OPTIONS
Pursuant to the Plan, the Compensation Committee shall determine whether an
option will be an "ISO" or a "non-qualified option."
INCENTIVE STOCK OPTIONS. All stock options that qualify under the rules of
Section 422 of the Internal Revenue Code, will be entitled to ISO treatment. To
receive ISO treatment, an optionee is not permitted to dispose of the acquired
stock (i) within two years after the option is granted or (ii) within one year
after exercise. In addition, the individual must have been an employee of the
Company for the entire time from the date of granting of the option until three
months (one year if the employee is disabled) before the date of the exercise.
The requirement that the individual be an employee and the two-year and one-year
holding periods are waived in the case of death of the employee. If all such
requirements are met, no tax will be imposed upon exercise of the option, and
any gain upon sale of the stock will be entitled to capital gain
16
<PAGE>
treatment. The employee's gain on exercise (the excess of fair market value at
the time of exercise over the exercise price) of an ISO is a tax preference item
and, accordingly, is included in the computation of alternative minimum taxable
income.
If an employee does not meet the two-year and one-year holding requirement,
but does meet all other requirements, tax will be imposed at the time of sale of
the stock, but the employee's gain on exercise will be treated as ordinary
income rather than a capital gain and the Company will receive a corresponding
deduction at the time of sale. Any remaining gain on sale will be a short-term
or a long-term capital gain, depending on the holding period of the stock.
An optionee's stock option agreement may permit payment for stock upon the
exercise of an ISO to be made with other shares of Common Stock. In such a case,
in general, if an employee uses stock acquired pursuant to the exercise of an
ISO to acquire other stock in connection with the exercise of an ISO, it may
result in ordinary income if the stock so used has not met the minimum statutory
holding period necessary for favorable tax treatment as an ISO.
NON-QUALIFIED STOCK OPTIONS. In general, no taxable income will be
recognized by the optionee, and no deduction will be allowed to the Company,
upon the grant of an option. Upon exercise of a non-qualified option an optionee
will recognize ordinary income (and the Company will be entitled to a
corresponding tax deduction if applicable withholding requirements are
satisfied) in an amount equal to the amount by which the fair market value of
the shares on the exercise date exceeds the option price. Any additional gain or
loss after exercise realized by an optionee on subsequent disposition of such
shares generally is a capital gain or loss and does not result in a tax
deduction to the Company.
INTERNAL REVENUE CODE SECTION 162(M). Under Section 162(m) of the Internal
Revenue Code, a limitation was placed on tax deductions of any publicly-held
corporation for individual compensation to certain executives of such
corporation exceeding $1,000,000 in any taxable year, unless compensation is
performance-based. It is intended that the Plan meet the performance-based
compensation exception to the limitation on deductions. The Plan meets the first
requirement of this exception because no options will be awarded at an exercise
price less than the fair market value of the stock on the date of grant. In
addition, the administration of the plan by the Compensation Committee satisfies
a second requirement for exemption from the $1,000,000 cap. A third requirement
is satisfied due to the limitation on the number of shares that may be granted
to any single employee during any fiscal year of the Company. The last
requirement for exemption from the $1,000,000 cap is the approval of the Plan by
the shareholders of the Company.
STOCK APPRECIATION RIGHTS AND STOCK AWARDS
The Plan also permits the issuance of stock appreciation rights ("SARs") and
restricted stock ("Stock Awards") (SARs and Stock Awards are collectively
referred to as "Awards"). All employees of the Company and its subsidiaries are
eligible to receive Awards under the Plan, although it is anticipated that only
certain salaried employees will receive Awards. When an Award is made, the
Compensation Committee will specify (a) the amount and form of the Award, (b)
the objective performance goals, if any, that must be met in order for amounts
to be payable pursuant to the Award, (c) the period, if any, during which the
performance goals must be met, and (d) the period, if any, during which the
participant must remain employed by the Company or a subsidiary as a condition
of the Award ("Vesting Period"). The Compensation Committee may specify
additional terms as it deems appropriate.
The Compensation Committee may establish objective performance goals for
Awards. The objective performance goals may relate to the performance of an
employee's department or restaurant concept or the performance of the Company
and its subsidiaries as a whole, or any combination of the two. The Compensation
Committee may use any objectively determinable performance goals to measure
performance. The Compensation Committee will establish the objective performance
goals for Awards in writing before the beginning of the fiscal year, unless
otherwise permitted under Section 162(m) of the Internal
17
<PAGE>
Revenue Code. At the end of each performance period for which an Award relates,
the Compensation Committee will determine whether and to what extent the
performance goals have been met. Awards will not be paid to the extent that the
performance goals are not met. If any performance goal, business criteria or
target for an Award is affected by special factors, the Compensation Committee
may make special adjustments in the performance goal, business criteria or
target.
Awards may also be subject to vesting requirements under which the
participant must remain a full-time active employee of the Company or a
subsidiary throughout a "Vesting Period" in order for the Award to be payable.
Full or partial acceleration of vesting will occur in the event of death or
disability. The Compensation Committee may accelerate vesting, in whole or in
part, under such circumstances as the Compensation Committee deems appropriate,
but subject to the requirements of Section 162(m) of the Internal Revenue Code.
No employee may be granted more than 500,000 stock options and SARs in a fiscal
year and the maximum payment that can be made to an employee relating to Stock
Awards in a fiscal year is $1,000,000.
TAX STATUS OF SARS AND STOCK AWARDS
Under the Internal Revenue Code, except as described below, if Awards are
made in the form of restricted stock, no income will be realized by the employee
upon the award of restricted stock. When restricted stock vests, the employee
will recognize ordinary compensation income equal to the then fair market value
of the shares. An employee may elect to make a "Section 83(b) election" under
the Internal Revenue Code, in which case the employee will recognize income on
the fair market value of the restricted stock at the time the shares are
granted. A Section 83(b) election must be made within 30 days after the
restricted stock is granted. The Company generally will be entitled to a federal
income tax deduction at the time the employee recognizes income on the
restricted stock.
If Awards are made in the form of SARs, no income will be realized by the
employee upon the award of SARs. When the SARs vest, the employee will recognize
ordinary compensation income equal to the cash value of the SARs. The Company
generally will be entitled to a federal income tax deduction at the time the
employee recognizes income on the SARs.
Grants of Awards are generally intended to meet the requirements of Section
162(m) of the Internal Revenue Code and, as such, to be exempt from the
$1,000,000 deduction limit under most circumstances. The Plan is being submitted
to the Company's stockholders for approval in order to comply with such
requirements.
AMENDMENTS
The Plan may be amended, altered or discontinued by the Compensation
Committee without the approval of the shareholders, except that the Compensation
Committee does not have the power or authority to adversely affect the rights of
any participant or beneficiary of any stock options or Awards granted under the
Plan prior to the date such amendment is adopted by the Compensation Committee
in the absence of written consent to the change by the affected participant or
beneficiary. The Compensation Committee, however, may make appropriate
adjustments in the number of shares covered by the Plan, the number of
outstanding options, option prices, and any restrictions on outstanding Awards
to reflect any stock dividend, stock split, share combination, merger,
consolidation, reorganization, liquidation, change in control, or the like, of
or by the Company.
REQUIRED VOTE
The favorable vote of the holders of a majority of the shares of Common
Stock present and entitled to vote at the annual meeting in person or by proxy
is required to approve the adoption of the Plan.
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The Board of Directors believes that approval of the Plan is in the best
interest of the Company and that the Plan will strengthen the Company's ability
to attract and retain key employees and furnish additional incentives to such
persons by encouraging them to become owners of Common Stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL
TO APPROVE THE ADOPTION OF THE PLAN.
SHAREHOLDERS' PROPOSALS
Any proposals that shareholders of the Company desire to have presented at
the 1999 annual meeting of shareholders must be received by the Company at its
principal executive offices no later than May 21, 1999.
INDEPENDENT AUDITORS
Representatives of KPMG Peat Marwick LLP, independent certified public
accountants and auditors of the Company's financial statements, are expected to
be present at the meeting with the opportunity to make a statement if they so
desire and to be available to respond to appropriate questions.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy and the material used in the solicitation thereof will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by directors, officers, and employees
of the Company. Arrangements may also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of stock held of record by such persons, and the
Company may reimburse them for reasonable out-of-pocket expenses incurred by
them in connection therewith.
The Annual Report to Shareholders of the Company, including financial
statements for the fiscal year ended June 24, 1998, accompanying this Proxy
Statement is not deemed to be a part of the Proxy Statement.
By Order of the Board of Directors,
ROGER F. THOMSON
SECRETARY
Dallas, Texas
September 18, 1998
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APPENDIX A
BRINKER INTERNATIONAL, INC.
STOCK OPTION AND INCENTIVE PLAN
SECTION 1
GENERAL
1.1 PURPOSE. The Brinker International, Inc. Stock Option and Incentive
Plan (the "Plan") has been established by Brinker International, Inc. (the
"Company") (i) to attract and retain persons eligible to participate in the
Plan; (ii) motivate Participants, by means of appropriate incentives, to achieve
long-range goals; (iii) provide incentive compensation opportunities that are
competitive with those of other similar companies; and (iv) further align
Participants' interests with those of the Company's other shareholders through
compensation that is based on the Company's common stock; and thereby promote
the long-term financial interest of the Company and the Related Companies,
including the growth in value of the Company's equity and enhancement of
long-term shareholder return.
1.2 PARTICIPATION. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Employees, those persons who will be granted one or more Awards under
the Plan, and thereby become "Participants" in the Plan. In the discretion of
the Committee, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or replacement of awards outstanding
under the Plan, or any other plan or arrangement of the Company or a Related
Company (including a plan or arrangement of a business or entity, all or a
portion of which is acquired by the Company or a Related Company).
1.3 OPERATION, ADMINISTRATION AND DEFINITIONS. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 7 of the Plan).
SECTION 2
OPTIONS AND SARS
2.1 DEFINITIONS.
(a) The grant of an "Option" entitles the Participant to purchase shares
of Stock at an Exercise Price established by the Committee. Options
granted under this Section 2 may be either Incentive Stock Options or
Non-Qualified Stock Options, as determined in the discretion of the
Committee. An "Incentive Stock Option" is an Option that is intended
to satisfy the requirements applicable to an "incentive stock option"
described in section 422(b) of the Code. A "Non-Qualified Option" is
an Option that is not intended to be an "incentive stock option" as
that term is described in section 422(b) of the Code.
(b) A stock appreciation right (an "SAR") entitles the Participant to
receive, in cash or Stock (as determined in accordance with
subsection 2.5), value equal to all or a portion of the excess of:
(a) the Fair Market Value of a specified number of shares of Stock at
the time of exercise; over (b) an Exercise Price established by the
Committee.
2.2 EXERCISE PRICE. The "Exercise Price" of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted, except that the Exercise Price shall not be less than 100% of
the Fair Market Value of a share of Stock as of the Pricing Date. For purposes
of the preceding sentence, the
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"Pricing Date" shall be the date on which the Option or SAR is granted, except
that the Committee may provide that: (i) the Pricing Date is the date on which
the recipient is hired or promoted (or similar event), if the grant of the
Option or SAR occurs not more than 90 days after the date of such hiring,
promotion or other event; and (ii) if an Option or SAR is granted in tandem
with, or in substitution for, an outstanding Award, the Pricing Date is the date
of grant of such outstanding Award.
2.3 EXERCISE. An Option and an SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
Committee.
2.4 PAYMENT OF OPTION EXERCISE PRICE. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the following:
(a) Subject to the following provisions of this subsection 2.4, the full
Exercise Price for shares of Stock purchased upon the exercise of any
Option shall be paid at the time of such exercise (except that, in
the case of an exercise arrangement approved by the Committee and
described in subsection 2.4(c), payment may be made as soon as
practicable after the exercise).
(b) The Exercise Price shall be payable in cash or by tendering shares of
Stock (by either actual delivery of shares or by attestation, with
such shares valued at the Fair Market Value as of the day of
exercise), or in any combination thereof, as determined by the
Committee.
(c) The Committee may permit a Participant to elect to pay the Exercise
Price upon the exercise of an Option by authorizing a third party to
sell shares of Stock (or a sufficient portion of the shares) acquired
upon exercise of the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire Exercise Price and any
tax withholding resulting from such exercise.
2.5 SETTLEMENT OF AWARD. Distribution following exercise of an Option or
SAR, and shares of Stock distributed pursuant to such exercise, shall be subject
to such conditions, restrictions and contingencies as the Committee may
establish. Settlement of SARs may be made in shares of Stock (valued at their
Fair Market Value at the time of exercise), in cash, or in a combination
thereof, as determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.
SECTION 3
OTHER STOCK AWARDS
3.1 DEFINITION. A Stock Award is a grant of shares of Stock or of a right
to receive shares of Stock (or their cash equivalent or a combination of both)
in the future.
3.2 RESTRICTIONS ON STOCK AWARDS. Each Stock Award shall be subject to
such conditions, restrictions and contingencies as the Committee shall
determine. These may include continuous service and/or the achievement of
performance measures. The Committee may designate a single goal criterion or
multiple goal criteria for performance measurement purposes, with the
measurement based on absolute Company or business unit performance and/or on
performance as compared with that of other publicly traded companies. If the
right to become vested in a Stock Award granted under this Section 3 is
conditioned on the completion of a specified period of service with the Company
and the Related Companies, without achievement of performance measures or other
objectives being required as a condition of vesting, then the required period of
service for vesting shall be not less than three years (subject to acceleration
of vesting, to the extent permitted by the Committee, in the event of the
Participant's death, disability, change in control or involuntary termination).
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SECTION 4
OPERATION AND ADMINISTRATION
4.1 EFFECTIVE DATE. Subject to the approval of the shareholders of the
Company at the Company's 1998 annual meeting of its shareholders, the Plan shall
be effective as of September 3, 1998 (the "Effective Date"). The Plan shall be
unlimited in duration and, in the event of Plan termination, shall remain in
effect as long as any Awards under it are outstanding.
4.2 SHARES SUBJECT TO PLAN.
(a) (i) Subject to the following provisions of this subsection 4.2, the
maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be
equal to the sum of: (I) 6 million shares of Stock and (II) any
shares of Stock that are represented by awards granted under
any prior plan of the Company in which employees are eligible
to participate (the "Prior Plans"), which are forfeited, expire
or are canceled without delivery of shares of Stock or which
result in the forfeiture of shares of Stock back to the
Company. The 6 million shares of Stock described above in
subsection 4.2(a)(i)(I) may be issued over a period of not less
than three years from the Effective Date.
(ii) Any shares of Stock granted under the Plan that are forfeited
because of the failure to meet an Award contingency or
condition shall again be available for delivery pursuant to new
Awards granted under the Plan. To the extent any shares of
Stock covered by an Award are not delivered to a Participant or
beneficiary because the Award is forfeited or canceled, or the
shares of Stock are not delivered because the Award is settled
in cash, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan.
(iii) If the Exercise Price of any stock option granted under the
Plan or any Prior Plan is satisfied by tendering shares of
Stock to the Company (by either actual delivery or by
attestation), only the number of shares of Stock issued net of
the shares of Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Stock
available for delivery under the Plan.
(iv) Shares of Stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or
obligations to grant future awards) under the plans or
arrangements of another entity shall not reduce the maximum
number of shares of Stock available for delivery under the
Plan, to the extent that such settlement, assumption or
substitution is a result of the Company or a Related Company
acquiring another entity (or an interest in another entity).
(b) Subject to subsection 4.2(c), the following additional maximums are
imposed under the Plan:
(i) The maximum number of shares of Stock that may be issued by
Options intended to be Incentive Stock Options shall be 6
million shares.
(ii) The maximum number of shares of Stock that may be issued in
conjunction with Awards granted pursuant to Section 3 (relating
to Stock Awards) shall be 3 million shares.
(iii) The maximum number of shares that may be covered by Awards
granted to any one individual pursuant to Section 2 (relating
to Options and SARs) shall be 500,000 shares during any fiscal
year.
(iv) The maximum payment that can be made for awards granted to any
one individual pursuant to Section 3 (relating to Stock Awards)
shall be $1,000,000 for any single or combined performance
goals established for any fiscal year. If an Award granted
under
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Section 3 is, at the time of grant, denominated in shares, the
value of the shares of Stock for determining this maximum
individual payment amount will be the Fair Market Value of a
share of Stock on the first day of the applicable performance
period.
(c) Subject to the provisions of Section 6 hereof, in the event of a
corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares), the Committee
may adjust Awards to preserve the benefits or potential benefits of
the Awards. Action by the Committee may include adjustment of: (i)
the number and kind of shares which may be delivered under the Plan;
(ii) the number and kind of shares subject to outstanding Awards; and
(iii) the Exercise Price of outstanding Options and SARs as well as
any other adjustments that the Committee determines to be equitable.
4.3 LIMIT ON DISTRIBUTION. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall
have no liability to deliver any shares of Stock under the Plan or
make any other distribution of benefits under the Plan unless such
delivery or distribution would comply with all applicable laws
(including, without limitation, the requirements of the Securities
Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the issuance
may be effected on a noncertificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock
exchange.
4.4 TAX WITHHOLDING. Whenever the Company proposes or is required to
distribute Stock under the Plan, the Company may require the recipient to remit
to the Company an amount sufficient to satisfy any federal, state and local tax
withholding requirements prior to the delivery of any certificate for such
shares or, in the discretion of the Committee, the Company may withhold from the
shares to be delivered shares sufficient to satisfy all or a portion of such tax
withholding requirements. Whenever under the Plan payments are to be made in
cash, such payments may be net of an amount sufficient to satisfy any federal,
state and local tax withholding requirements.
4.5 PAYMENT SHARES. Subject to the overall limitation on the number of
shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Related Company, including the plans and arrangements of the
Company or a Related Company assumed through the acquisition of another entity
(or an interest in another entity).
4.6 DIVIDENDS AND DIVIDEND EQUIVALENTS. An Award may provide the
Participant with the right to receive dividends or dividend equivalent payments
with respect to Stock which may be either paid currently or credited to an
account for the Participant, and may be settled in cash or Stock as determined
by the Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.
4.7 PAYMENTS. Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards, or a combination thereof as
the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Committee shall determine. The Committee may permit or require the deferral
of any Award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred Stock
equivalents.
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4.8 TRANSFERABILITY. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
4.9 FORM AND TIME OF ELECTIONS. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
4.10 AGREEMENT WITH COMPANY. At the time of an Award to a Participant
under the Plan, the Committee may require a Participant to enter into an
agreement with the Company (the "Agreement") in a form specified by the
Committee, agreeing to the terms and conditions of the Plan and to such
additional terms and conditions, not inconsistent with the Plan, as the
Committee may, in its sole discretion, prescribe.
4.11 LIMITATION OF IMPLIED RIGHTS.
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property
of the Company or any Related Company whatsoever, including, without
limitation, any specific funds, assets, or other property which the
Company or any Related Company, in its sole discretion, may set aside
in anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the stock or amounts, if any,
payable under the Plan, unsecured by any assets of the Company or any
Related Company. Nothing contained in the Plan shall constitute a
guarantee that the assets of such companies shall be sufficient to
pay any benefits to any person.
(b) The Plan does not constitute a contract of employment, and selection
as a Participant will not give any employee the right to be retained
in the employ of the Company or any Related Company, nor any right or
claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan. Except as otherwise
provided in the Plan, no Award under the Plan shall confer upon the
holder thereof any right as a shareholder of the Company prior to the
date on which the individual fulfills all conditions for receipt of
such rights.
4.12 EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
4.13 ACTION BY COMPANY OR RELATED COMPANY. Any action required or
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee of the board) who are duly authorized to act for
the board, or (except to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of the company.
4.14 GENDER AND NUMBER. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
SECTION 5
COMMITTEE
5.1 ADMINISTRATION. The authority to control and manage the operation and
administration of the Plan shall be vested in the Compensation Committee (the
"Committee") in accordance with this Section 5. The Committee shall be selected
by the Board and shall consist of two or more members of the Board.
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5.2 POWERS OF COMMITTEE. The authority to manage and control the operation
and administration of the Plan shall be vested in the Committee, subject to the
following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Employees
those persons who shall receive Awards, to determine the time or
times of receipt, to determine the types of Awards and the number of
shares covered by the Awards, to establish the terms, conditions,
performance criteria, restrictions, and other provisions of such
Awards, and (subject to the restrictions imposed by Section 6) to
cancel or suspend Awards. In making such Award determinations, the
Committee may take into account the nature of services rendered by
the individual, the individual's present and potential contribution
to the Company's success and such other factors as the Committee
deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to determine the extent to which Awards
under the Plan will be structured to conform to the requirements
applicable to performance-based compensation as described in Code
section 162(m), and to take such action, establish such procedures,
and impose such restrictions at the time such Awards are granted as
the Committee determines to be necessary or appropriate to conform to
such requirements.
(c) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to establish terms and conditions of awards
as the Committee determines to be necessary or appropriate to conform
to applicable requirements or practices of jurisdictions outside of
the United States.
(d) The Committee will have the authority and discretion to interpret the
Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, and to make all other
determinations that may be necessary or advisable for the
administration of the Plan.
(e) Any interpretation of the Plan by the Committee and any decision made
by it under the Plan is final and binding.
(f) Except as otherwise expressly provided in the Plan, where the
Committee is authorized to make a determination with respect to any
Award, such determination shall be made at the time the Award is
made, except that the Committee may reserve the authority to have
such determination made by the Committee in the future (but only if
such reservation is made at the time the Award is granted and is
expressly stated in the Agreement reflecting the Award).
(g) In controlling and managing the operation and administration of the
Plan, the Committee shall act by a majority of its then members, by
meeting or by writing filed without a meeting. The Committee shall
maintain and keep adequate records concerning the Plan and concerning
its proceedings and acts in such form and detail as the Committee may
decide.
5.3 DELEGATION BY COMMITTEE. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange and subject to the prior
approval of the Board, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.
5.4 INFORMATION TO BE FURNISHED TO COMMITTEE. The Company and Related
Companies shall furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the Company and Related
Companies as to an employee's or Participant's employment, termination of
employment, leave of absence, reemployment and compensation shall be conclusive
on all
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persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.
SECTION 6
ACCELERATION OF EXERCISABILITY
AND VESTING UNDER CERTAIN CIRCUMSTANCES
Notwithstanding any provision in this Plan to the contrary, with regard to
any Award of Options, SARs and Stock Awards to any Participant, unless the
particular grant agreement provides otherwise, all Awards will become
immediately exercisable and vested in full upon the occurrence, before the
expiration or termination of such Option, SARs and Stock Awards or forfeiture of
such Awards, of any of the events listed below:
(a) a sale, transfer or other conveyance of all or substantially all of
the assets of the Company on a consolidated basis; or
(b) the acquisition of beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) by any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than the Company, directly or indirectly, of securities
representing 50% or more of the total number of votes that may be
cast for the election of directors of the Company; or
(c) the commencement (within the meaning of Rule 14d-2 promulgated under
the Exchange Act) of a "tender offer" for stock of the Company
subject to Section 14(d)(2) of the Exchange Act; or
(d) the failure at any annual or special meeting of the Company's
stockholders following an "election contest" subject to Rule 14a-11
promulgated under the Exchange Act, of any of the persons nominated
by the Company in the proxy material mailed to stockholders by the
management of the Company to win election to seats on the Board,
excluding only those who die, retire voluntarily, are disabled or are
otherwise disqualified in the interim between their nomination and
the date of the meeting.
SECTION 7
AMENDMENT AND TERMINATION
The Committee may, at any time, amend or terminate the Plan, provided that,
subject to subsection 4.2 (relating to certain adjustments to shares) and
Section 6 hereof (relating to immediate vesting upon certain events), no
amendment or termination may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Committee.
SECTION 8
DEFINED TERMS
For purposes of the Plan, the terms listed below shall be defined as
follows:
(a) AWARD. The term "Award" shall mean any award or benefit granted to
any Participant under the Plan, including, without limitation, the
grant of Options, SARs, and Stock Awards.
(b) BOARD. The term "Board" shall mean the Board of Directors of the
Company.
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(c) CODE. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include
reference to any successor provision of the Code.
(d) The term "Eligible Employee" shall mean any employee of the Company
or a Related Company.
(e) FAIR MARKET VALUE. For purposes of determining the "Fair Market
Value" of a share of Stock, the following rules shall apply:
(i) If the Stock is at the time listed or admitted to trading on any
stock exchange, then the "Fair Market Value" shall be the last
reported sale price of the Stock on the date in question on the
principal exchange on which the Stock is then listed or admitted
to trading. If no reported sale of Stock takes place on the date
in question on the principal exchange, then the reported closing
asked price of the Stock on such date on the principal exchange
shall be determinative of "Fair Market Value."
(ii) If the Stock is not at the time listed or admitted to trading
on a stock exchange, the "Fair Market Value" shall be the mean
between the lowest reported bid price and highest reported
asked price of the Stock on the date in question in the
over-the-counter market, as such prices are reported in a
publication of general circulation selected by the Committee
and regularly reporting the market price of Stock in such
market.
(iii) If the Stock is not listed or admitted to trading on any stock
exchange or traded in the over-the-counter market, the "Fair
Market Value" shall be as determined in good faith by the
Committee.
(f) EXCHANGE ACT. The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(g) RELATED COMPANY. The term "Related Company" means any company during
any period in which it is a "parent company" (as that term is defined
in Code section 424(e)) with respect to the Company, or a "subsidiary
corporation" (as that term is defined in Code section 424(f)) with
respect to the Company.
(h) STOCK. The term "Stock" shall mean shares of common stock of the
Company.
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BRINKER INTERNATIONAL, INC.
PROXY
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Brinker International, Inc. (the "Company") to be
held at the Cinemark 17 Theater, 11819 Webb Chapel Road, Dallas, Texas, on
Thursday, October 29, 1998 at 10:00 a.m., local time, and the Proxy Statement
in connection therewith, and (b) appoints Norman E. Brinker and Ronald A.
McDougall, and each of them, his proxies with full power of substitution and
revocation, for and in the name, place and stead of the undersigned, to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned or with respect to which the
undersigned is entitled to vote and act at said meeting or at any adjournment
thereof, and the undersigned directs that his proxy be voted as shown on the
reverse side hereof or as directed via telephone.
If more than one of the proxies listed on the reverse side shall be
present in person or by substitute at the meeting or any adjournment thereof,
all of said proxies so present and voting, either in person or by substitute,
shall exercise all of the powers hereby given or given via telephone.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE OR BY TELEPHONE. IF
NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED AS FOLLOWS: FOR ALL
NOMINEES FOR DIRECTOR NAMED; AND FOR THE PROPOSAL TO APPROVE THE COMPANY'S
STOCK OPTION AND INCENTIVE PLAN. THE PROXIES ARE AUTHORIZED IN THEIR
DISCRETION TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms
all that said proxies, their substitutes, or any of them, may lawfully do by
virtue hereof.
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Call TOLL FREE 1-800-840-1208 on a touch tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
OR
2. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
PLEASE VOTE
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Please mark
your votes as /X/
indicated in
the example
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS NOMINEES: 01 Norman E. Brinker 05 Dan W. Cook, III 09 Ronald Kirk
02 Ronald A. McDougall 06 Marvin J. Girouard 10 Jeffrey A. Marcus
FOR all nominees WITHHOLD 03 Donald J. Carty 07 J.M. Haggar, Jr. 11 James E. Oesterreicher
listed to the right AUTHORITY 04 Gerard V. Centioll 08 Dr. Frederick S. 12 Roger T. Staubach
(except as marked to vote for all nominees Humphries
to the contrary) listed to the right
/ / / / INSTRUCTION: To withhold authority to vote for any individual nominee, write that
nominee's name in the space below.
2. PROPOSAL TO APPROVE THE COMPANY'S
STOCK OPTION AND INCENTIVE PLAN. ---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
FOR AGAINST ABSTAIN *** IF YOU WISH TO VOTE BY TELEPHONE,
/ / / / / / PLEASE READ THE INSTRUCTIONS BELOW***
---------------------------------------------------------------------------------
SIGNATURE SIGNATURE DATE
------------------------------ ------------------------------ ------------
</TABLE>
PLEASE DATE THIS PROXY AND SIGN YOUR NAME EXACTLY AS IT APPEARS HEREON. WHERE
THERE IS MORE THAN ONE OWNER, EACH SHOULD SIGN. WHEN SIGNING AS AN
ATTORNEY, ADMINISTRATOR, EXECUTOR, GUARDIAN, OR TRUSTEE, PLEASE ADD YOUR
TITLE AS SUCH. IF EXECUTED BY A CORPORATION, THE PROXY SHOULD BE SIGNED BY A
DULY AUTHORIZED OFFICER. PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY NEVERTHELESS VOTE IN
PERSON IF YOU DO ATTEND.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
- VOTE BY TELEPHONE -
QUICK *** EASY *** IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
- - After dialing the toll-free number listed below, you will be asked to enter
a Control Number which is located in the box in the lower right hand corner
of this card.
- --------------------------------------------------------------------------------
OPTION #1: To vote as the Board of Directors recommends on ALL proposals:
Press 1
- --------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- --------------------------------------------------------------------------------
OPTION #2: If you choose to vote on each proposal separately, press 0. You
will hear these instructions:
- --------------------------------------------------------------------------------
Proposal 1: To VOTE FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to
the instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- --------------------------------------------------------------------------------
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF YOU VOTE BY PHONE.
- --------------------------------------------------------------------------------
CALL ** TOLL FREE ** ON A TOUCH TONE TELEPHONE
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
