______________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 27, 1996
______________________________
TO OUR STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of NPC
International, Inc. (the "Company") will be held at the Memorial Auditorium, 503
North Pine, Pittsburg, Kansas, on Tuesday, August 27, 1996, at 10:00 a.m.,
Central Daylight Savings Time, for the following purposes:
1. For the Stockholders to elect two directors to serve a
three-year term and until their successors are elected and
qualified; and
2. For the Stockholders to transact such other business as
may properly come before the meeting or any adjournment of the
meeting.
Only stockholders of record at the close of business on July 8, 1996, will
be entitled to notice and to vote at the meeting or adjournment or postponement
thereof . The annual report for the year ended March 26, 1996, is enclosed
herewith. A complete list of stockholders entitled to notice of and to vote at
the meeting will be available and open to the examination of any stockholder for
any purpose germane to the meeting during ordinary business hours on and after
August 16, 1996, at the office of the Company, 720 W. 20th Street, Pittsburg,
Kansas 66762.
All stockholders are cordially invited to attend the meeting. For the
convenience of those stockholders who do not expect to attend the meeting in
person and desire to have their stock voted, a form of proxy and an envelope,
for which no postage is required, are enclosed. Any stockholder who later finds
he can be present at the meeting, or for any other reason desires to do so, may
revoke this proxy if done so in writing to the Secretary of the Company at any
time before it is voted.
Please complete, sign, date and mail promptly the proxy card in the return
envelope furnished for that purpose, even if you currently plan to attend the
meeting.
By Order of the Board of Directors,
David G. Short
Secretary
Pittsburg, Kansas
July 19, 1996
NPC INTERNATIONAL, INC.
720 W. 20TH STREET
PITTSBURG, KANSAS 66762
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 27, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of NPC International, Inc.
(the "Company"), to be voted at its Annual Meeting of Stockholders to be held at
the Memorial Auditorium, 503 North Pine, Pittsburg, Kansas at 10:00 a.m. Central
Daylight Savings Time on Tuesday, August 27, 1996. The mailing address of the
principal executive offices of the Company is 720 West 20th Street, Pittsburg,
Kansas 66762. The individuals named as proxies are O. Gene Bicknell and James K.
Schwartz. Proxies may be solicited by use of the mails, by personal interview,
or by telephone and may be solicited by officers and directors, and by other
employees of the Company. Brokers, nominees, fiduciaries, and other custodians
will be requested to forward soliciting material to the beneficial owners of
shares and will be reimbursed for their expenses in forwarding such material.
All costs of solicitation of proxies will be borne by the Company.
Stockholders of record of the Common Stock, $.01 par value per share (the
"Common Stock"), as of the close of business on July 8, 1996, are entitled to
vote on all issues presented for a vote at the meeting or any adjournment or
postponement thereof. At the close of business on July 8, 1996, the record date
for the determination of stockholders entitled to vote at the Annual Meeting,
there were 24,673,346 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote on all matters presented for stockholder action at
the meeting. All shares of Common Stock have cumulative voting rights in the
election of directors, and there are no conditions precedent to the exercise of
those rights. Cumulative voting means a Common Stockholder is entitled to cast a
total number of votes equal to the number of his shares multiplied by the number
of directors to be elected at the meeting, and can cast them all for one nominee
or can divide them among as many nominees as he or she chooses. A holder of
Common Stock may divide his cumulative votes among the nominees by marking the
proxy card according to instructions on the card. If a Stockholder does not
allocate his votes, then such stockholder's cumulative votes will be allocated
equally among the nominees for whom authority to vote is granted.
All shares of Common Stock represented by proxies received will be voted in
accordance with instructions contained therein. In the absence of voting
instructions, the shares will be voted FOR the proposals listed herein. A holder
of Common Stock giving a proxy has the power to revoke it any time before it is
voted by notifying the Secretary of the Company in writing, by submitting a
substitute proxy having a later date or by voting in person at the meeting.
Votes submitted as abstentions on any proposal will be counted as present for
purposes of establishing a quorum, but unvoted for purposes of determining the
approval of any matter submitted to the stockholders for a vote. An affirmative
vote of the majority of the outstanding shares of Common Stock present at the
meeting in person or by proxy is required for approval of proposals. Broker
"non-votes" will count as present for quorum purposes but will not count for or
against any proposal. A broker non-vote occurs when a nominee holding shares
for a beneficial holder does not have discretionary voting power and does not
receive voting instructions from the beneficial owner.
AS OF THE ANNUAL MEETING RECORD DATE, MR. O. GENE BICKNELL, AS THE CHIEF
EXECUTIVE OFFICER AND THE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE COMPANY,
BENEFICIALLY HELD 14,914,594 SHARES CONSTITUTING APPROXIMATELY 60.4% OF THE
COMMON STOCK. MR. BICKNELL HAS INFORMED THE COMPANY THAT HE INTENDS TO VOTE ALL
SUCH SHARES IN FAVOR OF PROPOSAL ONE. IF HE VOTES SUCH SHARES ACCORDINGLY, THEN
SUCH PROPOSAL WILL BE APPROVED REGARDLESS OF HOW ANY OTHER HOLDER OF SHARES
VOTES WITH RESPECT TO THE PROPOSAL.
This Proxy Statement and forms of proxy are first being mailed to stockholders
on or around July 19, 1996.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE AND RETURN THE FORM
OF PROXY SENT TO THEM WITH THIS PROXY STATEMENT.
PROPOSAL NUMBER ONE
ELECTION OF TWO DIRECTORS
The Board of Directors of the Company is comprised of six directors divided
into three classes. At each annual meeting of stockholders, members of one of
the classes, on a rotating basis, are elected for three year terms. The two
persons designated by the Board of Directors as nominees for election at this
meeting to serve a three year term and until their successors are elected and
qualified are, James K. Schwartz, President of the Company, and William A.
Freeman, a proposed new member of the Board. Each of the nominees has indicated
a willingness and ability to serve as a director. If a nominee becomes unable or
unwilling to serve, the accompanying proxy may be voted for the election of such
other person as shall be designated by the Board of Directors. Shares of Common
Stock represented by all proxies received by the Board of Directors and not
marked to withhold authority to vote for any individual director or for all
directors will be voted (unless one or both nominees are unable or unwilling to
serve) for the election of the nominees named above. Each director requires an
affirmative vote of the majority of the outstanding shares of the Common Stock
present at the meeting in person or by proxy to be elected to the Board of
Directors. Mr. Bicknell has informed the Company that he intends to vote his
shares of Common Stock FOR the election of the nominees named above. If his
shares are voted in this manner, the vote required for election of the nominees
listed above will be achieved, regardless of how other shares of Common Stock
are voted. The names of the directors and nominees, their ages, the years in
which their terms of office will expire, their principal occupations during at
least the past five years other directorships held and certain other
biographical information are set forth below.
Nominees for Directors to Serve a Three-Year Term to Expire in 1998:
JAMES K. SCHWARTZ, Age 34, President and Chief Operating Officer.
Mr. Schwartz was promoted to President and Chief Operating Officer from
Executive Vice President and Chief Operating Officer In January, 1995. He
also held the positions of Vice President Finance, Treasurer and Chief
Financial Officer within the organization, in the past five years.
WILLIAM A. FREEMAN, Age 53, Management Consultant.
Mr. Freeman has been self employed as a management consultant since
retiring from Zurn Industries, Inc. in 1995. Mr. Freeman's consulting
clients include, among others, certain entities privately held by Mr.
Bicknell. Mr. Freeman was President of Zurn Industries, Inc., a
manufacturing and construction company from May 1991 through September
1995. During his tenure at Zurn Industries, Inc., Mr. Freeman also held
the positions of Chief Financial Officer and Sr. Vice President from May
1986 through May 1991 and divisional management positions from January 1973
through April 1986.
Continuing Directors - Not Standing for Election This Year
Directors with Terms Expiring in 1998:
O. GENE BICKNELL, Age 63, Chairman of the Board of the Company.
Mr. Bicknell has been Chairman of the Board of Directors of the Company and
its predecessors since 1962. Mr. Bicknell re-assumed the position of Chief
Executive Officer, a position he held from 1962 to 1992, on January 31,
1995.
MARY M. POLFER, Age 51, Vice President of Administration, Public Service
Company of Oklahoma.
Ms Polfer has been with Public Service Company of Oklahoma, a subsidiary of
Central and South West Corporation, since December, 1990, first as Vice
President Finance and, since November 1993, as Vice President of
Administration. Prior to that, Ms. Polfer was Director of Corporate
Projects with Farmland Industries, Inc.
Directors with Terms Expiring in 1997:
FRAN D. JABARA, Age 71, President of Jabara Ventures Group.
Mr. Jabara was elected a director of the Company in May 1984. He is
currently President of Jabara Ventures Group, a venture capital firm. From
September 1949 to August 1989 he was a distinguished professor of business
at Wichita State University, Wichita, Kansas. He is also a director of
Commerce Bank, Wichita, Kansas and Midwest Grain Products, Inc.
ROBERT E. CRESSLER, Age 57, Partner in FRAC Enterprises.
Mr. Cressler was first elected a director of the Company in April 1985. He
has been for more than the past five years a partner in FRAC Enterprises,
which previously operated Pizza Hut restaurants and continues to operate
other businesses, including Nutri/Systems franchises.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met seven times during the fiscal year ended March
26, 1996. The Company's standing Compensation and Stock Option Committee met
once and the Company's standing Audit Committee met twice during the last fiscal
year. The Company does not have a Nominating Committee. The normal duties of
such a committee are carried out by the entire Board of Directors. During the
last fiscal year, none of the Company's Directors attended fewer than 75% of the
meetings of the Board of Directors or any committee of which he or she was a
member.
AUDIT COMMITTEE. The Audit Committee is comprised of Messrs. Jabara, and
Cressler and Ms. Polfer. The Audit Committee recommends to the Board of
Directors the independent auditors that will conduct the annual audit of the
Company, and also reviews the Company's accounting practices and control systems
and reviews the qualifications and performance of the proposed independent
auditors.
COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation and Stock Option
Committee is comprised of Messrs. Bicknell, Jabara and Cressler. The Committee
reviews and recommends to the Board of Directors the levels, amounts, and types
of compensation to be paid to executive officers and directors of the Company.
The Committee also determines the number of options to be granted to the
Company's executive management and receives and reviews executive management's
recommendations regarding options to be granted to all other Company employees.
All recommendations of the Committee are submitted to the Board of Directors for
approval.
DIRECTOR COMPENSATION
Non-employee Directors are paid a fee of $750 for each Board meeting
attended and $750 per month as additional Director's compensation. Directors who
are also employees of the Company do not receive any additional compensation
solely for serving as directors of the Company.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee is currently comprised of Mr.
O. Gene Bicknell, the Chairman of the Board of Directors and the Chief Executive
Officer, and two non-employee Directors, Messrs. Jabara and Cressler. Mr.
Bicknell chairs the Committee. Messrs. Jabara and Cressler have never been
employed by the Company. During the year the Board of Directors, authorized the
purchase of two parcels of property owned by Mr. Bicknell or his affiliates.
One property was acquired from Mr. Bicknell for $500,000 based on an independent
certified appraisal. The second property acquired from Mr. Bicknell was
purchased for $300,000 and was valued by Company personnel using recognized
valuation techniques such as comparable property sales data and the income
method. The Board of Directors upon review of the proposal, appraisal, and
valuations, and with Mr. Bicknell abstaining from any participation in the
votes, approved the purchase of these sites for the aggregate value of $800,000.
The Company currently leases two properties from Mr. Bicknell and one restaurant
from Mr. Gordon W. Elliott, past president of the Company and Director whose
term expires in 1996. See the section titled "Transactions with Management" for
additional information on the leases. Management believes these leases are at
least as favorable as could be obtained from unrelated parties.
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDER
AND OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of June 30, 1996, certain information as
to the number of shares of common stock beneficially owned by each person who is
known by the Company to own beneficially more than 5% of its outstanding shares,
by all directors and nominees, by the Named Executive Officers (as defined under
the caption "Executive Compensation") and by the directors and executive
officers as a group. The address for each of the individuals listed below shall
be the address of the Company, 720 W. 20th Street, Pittsburg, Kansas, 66762.
Amount and Nature of
<TABLE>
Name, and Title Beneficial Ownership (1) Percent of Class
Of Beneficial Owner
<S> <C> <C>
O. Gene Bicknell (2)
Chairman, Chief Executive
Officer and Director 15,505,844 63.2%
James K. Schwartz
President and Chief Operating 83,750 *
Officer, Director nominee (3)
Troy D. Cook 12,500 *
Vice President Finance and
Chief Financial Officer
Marty D. Couk
Senior Vice President 26,431 *
Pizza Hut Operations
Robert B. Page
President, Romacorp, Inc. 47,500 *
David G. Short
Vice President Legal 3,750 *
and General Counsel
Gordon W. Elliott,
Director (4) 703,216 2.9%
Robert E. Cressler, Director ---- *
Fran D. Jabara, Director 3,998 *
Mary M. Polfer, Director ---- *
William A. Freeman, 400 *
Director Nominee (3)
All executive officers and
directors as a group 16,387,389 66.8%
</TABLE>
(1) Includes options for 764,375 shares of Common Stock which could be
exercised within 60 days. Does not include options held which are not
exercisable within 60 days.
(2) Includes 45,000 shares of Common Stock owned by Pitt Plastics, Inc., a
corporation controlled by Mr. Bicknell, and 9,600 shares of Common Stock
owned by Mr. Bicknell's spouse.
(3) Messrs. Schwartz and Freeman have been nominated to serve three year
terms subject to election at the meeting on August 27, 1996 to which this
Proxy Statement relates.
(4) Mr. Elliott's term expires in 1996 and he is not standing for re-
election.
* Less than 1% ownership.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers, and
persons owning more that ten percent of a registered class of the Company's
securities to file with the United States Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of equity
securities of the Company. Officers, directors, and greater-than-ten-percent
stockholders are required by the Securities and Exchange Commission's
regulations to furnish the Company with copies of all Section 16(a) forms that
they file.
To the Company's knowledge, based solely on its review of copies of reports
furnished to the Company and written representations that no other reports were
required, the Company is required to report that all officers, except for Mr.
Bicknell, and Mr. Baird were late in filing the appropriate forms related to the
issuance of stock options in the fourth quarter due to a delay between the award
of the option and notification of the option issuance to the officers. Mr.
Bicknell was late reporting a February, 1996 sale of stock. All forms have been
subsequently filed and all requirements are believed to be satisfied.
EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years ended
March 26, 1996, March 28, 1995, and March 29, 1994, the compensation awarded to,
earned by, or paid to (i) the Chief Executive Officer (the "CEO") of the Company
as of March 26, 1996, and (ii) each of the four most highly compensated
executive officers (other than the CEO) who served as executive officers of the
Company or its subsidiaries as of March 26, 1996, whose annual compensation
exceeded $100,000 for the fiscal year ended March 26, 1996, and (iii) up to two
additional individuals for whom disclosure would have been provided but for the
fact that the individual was not serving as an executive officer at the end of
the fiscal year ((i), (ii) and (iii) collectively, the "Named Executive
Officers"). The Company does not currently award stock appreciation rights,
restricted stock and other long term incentives (other than stock options) under
its executive compensation program.
<TABLE>
Summary Compensation Table
Long Term
Annual Compensation Compensation All Other
Fiscal Option Award Compensation
Year (1) Salary Bonus (#) (2)
<S> <C> <C> <C> <C> <C>
O. Gene Bicknell 1996 $300,000 $120,000 ------ $11,990
Chairman of the 1995 300,000 75,000 ------ 11,975
Board and Chief 1994 300,000 60,000 ------ 15,517
Executive Officer (3)
James K. Swartz (4) 1996 185,000 77,000 25,000 13,080
President and Chief 1995 130,750 18,250 100,000 4,049
Operating Officer 1994 80,000 ------ 10,000 2,456
Troy D. Cook 1996 120,000 28,500 20,000 9,048
Vice President 1995 15,230 ------ 50,000 ------
Finance, Chief
Financial Office
Marty D. Couk 1996 119,347 62,622 20,000 4,719
Senior Vice 1995 103,000 33,049 50,000 5,105
President-Pizza 1994 89,231 39,432 ----- 3,681
Hut Operations
Robert B. Page 1996 126,000 62,500 20,000 4,842
President 1995 115,384 16,500 50,000 3,680
Romacorp, Inc. 1994 99,231 39,946 ------ 4,794
David G. Short 1996 120,000 ------ 5,000 3,972
Vice President 1995 115,177 5,000 5,000 3,917
Legal and General 1994 81,577 ------ 5,000 148
Counsel (5)
Paul R. Baird 1996 120,000 48,437 ------ 102
President 1995 ------- ------ 25,000` -----
Skipper's
</TABLE>
(1) For the fiscal year ended on the last Tuesday in March for the year
noted.
(2) Fiscal 1996 figures consist of the Company's calendar 1995 profit
sharing plan contributions, the cost of group term life insurance and
accidental death benefits and, in the case of Mr. Bicknell, the economic
benefit derived from split-dollar life insurance policies paid for by
Company (see footnote 3), in the following amounts: Mr. Bicknell, $4,776
profit sharing, $702 group insurance, $6,512 split-dollar insurance; Mr.
Schwartz, $4,776 profit sharing, $54 group insurance, $8,250 relocation;
Mr. Cook, $8,994 relocation, $54 group insurance; Mr. Couk, $4,617 profit
sharing, $102 group insurance; Mr. Page, $4,776 profit sharing, $66 group
insurance; Mr. Short, $3,522 profit sharing, $450 group insurance; Mr.
Baird $102 group insurance.
(3) The Company pays 100% of the premiums on split-dollar policies
insuring the life of Mr. Bicknell. The policies state the Company is
entitled to be reimbursed all premiums it paid, without interest, from the
proceeds with the residual to be paid to a named beneficiary. The Company
receives a statement from the insurance company specifying the economic
benefit derived by Mr. Bicknell under this arrangement, based upon the
Company's rights under the policy. The benefit derived for each year is as
follows: fiscal 1996, $6,512; fiscal 1995, $6,707; and fiscal 1994,
$10,625.
(4) Mr. Schwartz has a five year employment contract with the Company
dated January 27, 1995. If Mr. Schwartz is terminated by the Company for
any reason (other than for cause) the Company is required to pay Mr.
Schwartz any accrued bonus and an amount equal to his then current base
salary for one year and continuation for six months of any benefit plan
available to him immediately prior to the termination of the contract. His
base salary for the 1997 fiscal year is $200,000. If there is a change in
control in the Company and his employment with the Company is terminated,
Mr. Schwartz will continue to receive from the Company or a successor
entity, as the case may be, his base salary as of the date of the contract
for a period of one year.
(5) Mr. Short joined the Company on June 8, 1993 and became an
executive officer on July 23, 1993.
STOCK OPTIONS
The following two tables set forth information for the last completed
fiscal year relating to (i) grants to and exercises by the Named Executive
Officers of stock options pursuant to the Company's 1994 Non-Qualified Stock
Option Plan (the "1994 Plan") and the Amended and Restated 1984 Non-Qualified
Stock Option Plan (the "1984 Plan" or collectively the Company's "Stock Option
Plans"), and (ii) holdings at March 26, 1996, by the Named Executive Officers of
unexercised options granted pursuant to the Stock Option Plans. The Company
currently does not award stock appreciation rights under its executive
compensation program.
Option Grants in the Fiscal Year Ended March 26, 1996
<TABLE>
Potential Realizable
Value at Assumed
% of Total Annual Rates
Options of Stock Price
Granted to Exercise Appreciation
Options Employees or Base Expi- for Option
Granted in Fiscal Price ration Term (2)
Name (1) Year ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
O. Gene Bicknell ---- ---- ---- ---- --- ----
James K. Schwartz 25,000 11.33% $6.875 1/17/06$108,090 $273,924
Troy D. Cook 20,000 9.06 6.875 1/17/06 86,472 219,139
Marty D. Couk 20,000 9.06 6.875 1/17/06 86,472 219,139
Robert B. Page 20,000 9.06 6.875 1/17/06 86,472 218,139
David G. Short 5,000 2.27 6.875 1/17/96 21,618 54,785
Paul Baird ---- ---- ---- --- ---- ----
</TABLE>
(1) Options are generally exercisable beginning 12 months after the grant
date, with 25% of the shares covered thereby becoming exercisable at that
time and with an additional 25% of the option shares becoming exercisable
on each successive anniversary date, with full vesting occurring on the
fourth anniversary date. All options were granted at the market price or
higher on the date of grant and expire ten years from such date, subject to
earlier termination in certain events related to termination of employment.
The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain conditions.
(2) The values presented in these two columns are based on assumed stock
price appreciation rates. The potential realizable dollar value of a grant
is the product of (a) the difference between: (i) the product of the per
share market price at the time of the grant and the sum of 1 plus the
adjusted stock price appreciation rate (the assumed rate of appreciation
compounded annually over the term of the option); and (ii) the per share
exercise price of the option; and (b) the number of securities underlying
the grant at the fiscal year end. THESE ASSUMED APPRECIATION RATES ARE NOT
DERIVED FROM THE HISTORIC OR PROJECTED PRICES OF THE COMPANY'S STOCK OR
RESULTS OF OPERATIONS OR FINANCIAL CONDITION AND THEY SHOULD NOT BE VIEWED
AS A PREDICTION OF POSSIBLE PRICES FOR THE COMPANY'S STOCK IN THE FUTURE.
Aggregated Option Exercises in Fiscal 1996 and Option Value at March 26, 1996
<TABLE>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired March 26, 1996 March 26, 1996
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
O. Gene Bicknell -0- -0- 591,250 / 58,750 $474,375 / 146,875
James K. Schwartz -0- -0- 83,750 / 66,250 306,250 / 214,375
Troy D. Cook -0- -0- 12,500 / 57,500 43,750 / 173,750
Marty D. Couk -0- -0- 25,625 / 59,375 83,333 / 179,375
Robert B. Page -0- -0- 47,500 / 60,000 101,250 / 181,250
David G. Short -0- -0- 3,750 / 11,250 11,875 / 31,250
Paul Baird -0- -0- 6,250 / 15,750 21,875 / 65,625
</TABLE>
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation for the Company's Chief Executive Officer and its other
executives is administered by the Compensation and Stock Option Committee.
Following review and approval by the Compensation and Stock Option Committee,
all issues pertaining to executive compensation are submitted to the full Board
of Directors for approval and ratification. In fiscal 1996, the Board of
Directors, with Mr. Bicknell abstaining with respect to his own compensation,
approved all recommendations of the Compensation and Stock Option Committee.
Executive compensation is comprised of three primary components: a base
salary, a non-guaranteed performance bonus and stock option grants. The first
two are based generally upon short-term performance, with the latter offered as
a long-term incentive to the executive. The Company does not offer any deferred
compensation plan to its employees.
In fiscal 1996, the Committee reviewed surveys published by the National
Restaurant Association to obtain competitive compensation levels for companies
similar in size and nature (i.e., those with multiple restaurants "concepts," of
which the Company had three in Pizza Hut, Skipper's and Tony Roma's
restaurants). The Committee seeks to establish base rates believed to be
competitive so that the Company is able to attract and retain qualified and
experienced executives. Base salaries are reviewed annually taking into account
competitive salaries in the industry and the relative performance of the
individual and Company during the previous fiscal year. Compensation surveys
reviewed by the Committee include many of the peer companies reflected in the
following Performance Graph; both the surveys and the graph are based upon the
same standard industrial code as that of the Company.
Annual bonuses, if granted, are based primarily upon the individual
executive's contribution to the Company. Bonuses are determined by the
Compensation and Stock Option Committee and then proposed to the full Board of
Directors for ratification and approval, with tentative installments paid
quarterly. The Committee does not believe that the $23.5 million impairment and
loss provision related to the disposition of the Company's Skipper's subsidiary
and the closure of six Tony Roma's units is indicative of the performance of
management. Specifically, the sale of Skipper's was the culmination of a
strategic initiative to improve operations to an acceptable rate of return or
execute alternative plans to favorably impact stockholder value. The closed
Tony Roma's locations existed at the time of the acquisition and were low volume
stores in less than optimal locations, that did not meet the Company's return
expectations. Because the relative performance and contribution of an executive
may not perfectly coincide with earnings reported in the respective fiscal year,
bonuses may not correlate directly with a particular division's or company-wide
earnings results.
Executives participate in the NPC International, Inc. Profit Sharing Plan
(the "Profit Sharing Plan") along with store management and certain corporate
staff, to the extent they meet the requirements for the Profit Sharing Plan. To
qualify for the Profit Sharing Plan, an employee generally must have two years
of service, be 21 years of age or older and be employed on the last day of the
plan year. The Board of Directors determines the overall contribution to the
Profit Sharing Plan for each division, and executives who participate in the
Profit Sharing Plan receive a pro-rata share of that contribution. A
participant's share of the annual Profit Sharing Plan contribution generally is
computed to be the proportion of his/her salary (as adjusted to meet ERISA
requirements) relative to the combined salaries of all participants in the
Profit Sharing Plan. Five executives named in the Summary Compensation Table
participated in the Profit Sharing Plan. Because of Skipper's performance in
calendar 1995, the Board elected to make no corresponding contribution on behalf
of that concept's employees.
The Company utilizes long-term awards in the form of stock options to
strengthen the link between executive pay and overall stockholder return. Stock
options have been periodically issued pursuant to the Stock Option Plans and are
an integral part of executive officer compensation. The Compensation and Stock
Option Committee believes such options will align the interests of the Company's
executives with those of its stockholders. The Company continued the use of
stock options in fiscal 1996 to focus the executives on long-term decisions
which it believes will enhance the value of the Company's stock, thereby
building stockholder value. The Committee believes that Company performance is
reflected over time in the price of the Company's stock and that improving the
stock price benefits the stockholders collectively in addition to the individual
executive.
The Compensation and Stock Option Committee does not impose strict formulas
or compare results to specific pre-set performance targets in determining
overall compensation for executive officers. Factors considered by the
Compensation and Stock Option Committee in determining current performance and
the related compensation for the Company's executive officers for the 1996
fiscal year include (i) the achievement of minimum performance standards
(generally prior year operating performance, adjusted for those factors in the
current or prior year which are outside the control of the individual being
considered), (ii) current year earnings performance in relation to performance
of the Company's competitors, (iii) overall stockholder return (in the form of
stock price appreciation), (iv) the organizational level at which the executive
functions, (v) the individual executive's success in performing the requisite
duties and responsibilities of his or her office, and (vi) compensation levels
for executives at companies which are similar in size and complexity to the
Company.
While some or all of these factors are considered in judging the
performance of each executive, certain of the factors may have more or less
relevance in determining a specific individual's performance and resulting pay.
Particular factors may be considered more relevant to, and weigh more heavily in
determination of compensation for, the executive who exercises operating control
over a division or subsidiary than for an executive who performs a general
function.
Chief Executive Officer Compensation
The Compensation and Stock Option Committee utilizes the same factors in
determining the compensation of its Chief Executive Officer as it does for all
executives of the Company. Although there are specific discussions regarding
overall company performance and the Chief Executive Officer's contribution in
achieving those results, there is no unique criterion applied to the Chief
Executive Officer that is not also applied to other key executives of the
Company, as outlined above. Mr. Bicknell does not participate in Committee
deliberations regarding his own compensation, nor does he participate in the
discussion or vote when such matters are before the Board of Directors, of which
he is a member.
In determining Mr. Bicknell's bonus in the current and prior year, the
Committee considered the amount of time he spent on activities which were
unrelated to the Company over the course of each fiscal year.
Compensation Committee Members
O. Gene Bicknell
Fran D. Jabara
Robert E. Cressler
COMPARATIVE PERFORMANCE GRAPH
Below is a graph comparing the total return on an indexed basis of a $100
investment in (i) the Company's Common Stock, (ii) a peer group of the Company
and (iii) the overall broad equity market in which the Company participated.
Management considers the Company's peer group to be all publicly-held companies
with a primary Standard Industrial Code between 5800 and 5899 (Eating and
Drinking Establishments) in existence during the reporting period. The broad
equity market index consists of all NASDAQ companies. All indices are based upon
total return, weighted for market capitalization and with dividends reinvested;
they are published by and available through the University of Chicago's Center
for Research in Security Prices. The historical stock price performance shown on
this graph is not indicative of future price performance.
TRANSACTIONS WITH MANAGEMENT
During the year the Board of Directors, authorized the purchase of two
parcels of property owned by Mr. Bicknell or his affiliates. One property was
acquired from Mr. Bicknell for $500,000 based on appraisal by an independent
certified appraiser. The second property acquired from Mr. Bicknell was
purchased for $300,000 and was valued by Company personnel using recognized
valuation techniques such as comparable property sales data and the income
method. The Board of Directors upon review of the proposal, appraisal, avd
valuations, and with Mr. Bicknell abstaining from any participation in the vote,
approved the purchase of these sites for the aggregate value of $800,000.
During the fiscal year ended March 26, 1996, the Company leased a total of
two properties from Mr. Bicknell and one property from Mr. Elliott, a past
president of the Company and Director whose term expires in 1996. The Company
paid a total of $37,716 to Mr. Bicknell and $31,089 to Mr. Elliott as rent for
these properties in the fiscal year ended March 26, 1996. The Company continues
to rent one property from Mr. Bicknell, subject to normal lease terms set to
expire no later than May 1998, at a monthly rent of $800 per month. In
addition, one restaurant is leased from Mr. Elliott at a monthly rate of $1,891
with a lease term expiring January 1999. Management believes these leases are
at least as favorable as could be obtained from unrelated parties.
- -Add Attachment
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee recommended and the Board of Directors
approved the selection of Ernst & Young LLP as independent public accountants of
the Company for the fiscal year ended March 26, 1996. Ernst and Young LLP
examined the financial statements of the Company for the most recent completed
fiscal year. A representative of Ernst & Young LLP will be present at the
Annual Meeting with the opportunity to make a statement if he desires to do so
and will be available to respond to appropriate questions. The Audit Committee
has not made a recommendation with respect to Ernst & Young LLP for the fiscal
1997 year because meetings regarding such services have not yet occurred. There
have been no changes in, or disagreements with, the Company's independent
accountants on accounting or financial disclosure matters.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders of the Company intended to be presented at the
Annual Meeting of Stockholders to be held in 1997 must be received at the
principal executive offices of the Company by the Board of Directors for
inclusion in the proxy statement and form of proxy relating to that meeting no
later than March 20, 1997.
MISCELLANEOUS
No business other than that described herein is expected by the Board of
Directors to come before this meeting, but should any other matters requiring
the vote of stockholders arise, the proxy holders will vote thereon according to
their best judgment.
AVAILABLE INFORMATION
A copy of the Company's 1996 Annual Report to Stockholders accompanies this
proxy. The financial statements which are included in such Annual Report to
Stockholders are incorporated herein by reference. Additional copies of the
Company's Annual Report to Stockholders and copies of the Company's Annual
Report to Stockholders on Form 10-K for the year ended March 26, 1996 are
available without charge upon request. Requests should be addressed to the
Chief Financial Officer, NPC International, Inc., 720 W. 20th Street, Pittsburg,
KS 66762.
By Order of the Board of Directors
David G. Short
Secretary
Pittsburg, Kansas
July 19, 1996
<TABLE>
3/26/91 3/31/92 3/30/93 3/29/94 3/28/95 3/26/96
<S> <C> <C> <C> <C> <C> <C>
NPC International, 100.0 68.9 53.4 46.6 37.9 74.2
Inc.
Nasdaq Stock 100.00 128.4 146.8 161.6 179.3 239.0
Market (U.S.
Companies)
Nasdaq Stock 100.0 143.7 161.6 166.1 135.1 165.9
(SIC 5800-5899
U.S. Companies)
</TABLE>
