______________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
July 15, 1997
______________________________
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, July 15, 1997,
at 10:00 a.m., Central Time, to consider and take action with respect to
the following:
1. To elect two directors to serve a three-year term
and until their successors are elected and qualified; and
2. 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 May 27, 1997,
will be entitled to notice and to vote at the meeting or any adjournment or
postponement thereof . The annual report to Stockholders for the year
ended March 25, 1997, 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 July 3, 1997, 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 or she 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
June 6, 1997
NPC INTERNATIONAL, INC.
720 W. 20TH STREET
PITTSBURG, KANSAS 66762
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 15, 1997
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 Time on Tuesday, July 15, 1997. The mailing address of
the principal executive office 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 appropriate expenses in forwarding such material. All
costs of solicitation of proxies will be borne by the Company.
Only stockholders of record of the Common Stock, $.01 par value per
share (the "Common Stock"), as of the close of business on May 27, 1997,
are entitled to vote on the issues presented for a vote at the meeting or
any adjournment or postponement thereof. At the close of business on May
27, 1997, the record date for the determination of Stockholders entitled to
vote at the Annual Meeting, there were 24,646,272 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 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 or her cumulative votes among the
nominees by marking the proxy card according to instructions on the card.
If a Stockholder does not allocate his or her votes, then such
Stockholder's cumulative votes will be allocated equally among the nominees
for whom authority to vote is granted. 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 the approval of any other matter properly
brought before this meeting.
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 election of the
Directors named as nominees in this Proxy Statement. 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. 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, THE CHIEF
EXECUTIVE OFFICER AND THE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE
COMPANY, BENEFICIALLY HELD 14,757,327 SHARES CONSTITUTING APPROXIMATELY
62.5% OF THE COMMON STOCK. MR. BICKNELL HAS INFORMED THE COMPANY THAT HE
INTENDS TO VOTE ALL SUCH SHARES FOR THE ELECTION OF DIRECTORS NAMED AS
NOMINEES IN THIS PROXY STATEMENT. IF HE VOTES SUCH SHARES ACCORDINGLY,
THEN SUCH ELECTION WILL BE APPROVED REGARDLESS OF HOW ANY OTHER HOLDER OF
SHARES VOTES WITH RESPECT TO THE PROPOSAL.
This Proxy Statement and the form of proxy are first being mailed to
Stockholders on or around June 6, 1997.
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 expiring
in 2000 and until their successors are elected and qualified are Fran D.
Jabara and Robert E. Cressler, both current members of the Board. Each of
the nominees has indicated a willingness and ability to continue 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 a plurality of the votes cast by
the stockholders 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.
The Board of Directors recommends that you vote FOR the election of
Fran D. Jabara and Robert E. Cressler.
Nominees for Directors to Serve a Three-Year Term to Expire in 2000:
FRAN D. JABARA, Age 72, 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 58, 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.
Continuing Directors - Not Standing for Election This Year
Directors with Terms Expiring in 1998:
O. GENE BICKNELL, Age 64, 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 52, Management Consultant, Ms. Polfer served as
Vice President of Administration, for the Public Service Company of
Oklahoma, a subsidiary of Central and South West Corporation, from
December, 1990, first as Vice President Finance and, from November
1993, as Vice President of Administration, through July, 1996. Prior
to that, Ms. Polfer was Director of Corporate Projects with Farmland
Industries, Inc.
Directors with Terms Expiring in 1999:
JAMES K. SCHWARTZ, Age 35, 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 Accounting and
Administration, 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.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met five times during the fiscal year ended
March 25, 1997. The Company's standing Stock Option and Compensation
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.
STOCK OPTION AND COMPENSATION COMMITTEE. The Stock Option and
Compensation Committee is comprised of Messrs. Jabara and Cressler and Ms.
Polfer. 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.
DIRECTOR COMPENSATION
Non-employee Directors are paid a fee of $750 for each Board meeting
attended and $1,000 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.
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Stock Option and Compensation Committee is currently comprised of
three non-employee Directors, Messrs. Jabara and Cressler and Ms. Polfer.
Mr. Jabara chairs the Committee. Messrs. Jabara, Cressler , and Freeman,
and Ms. Polfer have never been employed by the Company. Mr. Freeman
performs consulting services for two entities owned by Mr. Bicknell but no
services, other than as a Director are provided to, or paid for by the
Company. The Company currently leases a property from Mr. Bicknell. See
the section titled "Transactions with Management" for additional
information on this lease. Management believes the lease rate is 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 May 20, 1997, 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.
Amount and Nature of
Name, and Title Beneficial Ownership (1) Percent of Class
Of Beneficial Owner
O. Gene Bicknell (2)
Chairman, Chief Executive
Officer and Director 15,407,327 62.5%
James K. Schwartz
President and Chief Operating 106,250 *
Officer, Director
Troy D. Cook 30,000 *
Vice President, Finance and
Chief Financial Officer
Marty D. Couk
Senior Vice President
Pizza Hut Operations 45,806 *
Robert B. Page
President, Romacorp, Inc. 67,500 *
Robert E. Cressler, Director ---- *
Fran D. Jabara, Director 3,998 *
Mary M. Polfer, Director ---- *
William A. Freeman, Director 400 *
All executive officers and
directors as a group 15,661,281 63.6%
(1) Includes options for 906,250 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. The address for Mr.
Bicknell is 720 W. 20th Street, Pittsburg, Kansas, 66762.
* Less than 1% ownership.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 Mr. Bicknell
was late reporting a February 1997 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 25, 1997, March 26, 1996, and March 28, 1995, the compensation
awarded to, earned by, or paid to (i) the Chief Executive Officer (the
"CEO") of the Company as of March 25, 1997, 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 25, 1997,
whose annual compensation exceeded $100,000 for the fiscal year ended March
25, 1997, 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.
Summary Compensation Table
Long Term
Compensation
Award
Name and Securities All Other
Principal Fiscal Annual CompensationUnderlyingCompensation
Position Year (1) Salary Bonus Options (2)
O. Gene Bicknell
Chairman of the 1997 $350,000 $100,000 ---- $12,778
Board and Chief 1996 300,000 120,000 ---- 11,990
Executive Officer (3) 1995 300,000 75,000 ---- 11,975
James K. Schwartz (4) 1997 200,000 85,000 50,000 10,240
President and 1996 185,000 77,000 25,000 13,080
Chief Operating Officer 1995 130,750 18,250 100,000 4,049
Troy D. Cook 1997 130,000 40,000 30,000 5,567
Vice President Finance 1996 120,000 28,500 20,000 9,048
Chief Financial Officer 1995 15,230 ---- 50,000 ----
Marty D. Couk 1997 126,000 20,604 ---- 4,812
Senior Vice President- 1996 119,347 62,622 20,000 4,719
Pizza Hut Operations 1995 103,000 33,049 50,000 5,105
Robert B. Page 1997 140,000 51,250 30,000 4,812
President, 1996 126,000 62,500 20,000 4,842
Romacorp, Inc. 1995 115,384 16,500 50,000 3,680
(1) For the fiscal year ended on the last Tuesday in March for the
year noted.
(2) Fiscal 1997 figures consist of the Company's calendar 1996 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, $4,746 profit sharing, $702 group insurance, $7,330 split-
dollar insurance; Mr. Schwartz, $4,746 profit sharing, $54 group
insurance, $5,440 taxes; Mr. Cook, $54 group insurance, $5,513 taxes;
Mr. Couk, $4,746 profit sharing, $66 group insurance; Mr. Page,
$4,746 profit sharing, $66 group insurance; Mr. Short, $4,076 profit
sharing, $450 group insurance.
(3) The Company pays 100% of the premiums on split-dollar policies
insuring the life of Mr. Bicknell. The policies state that 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 1997, $7,330; fiscal 1996, $6,512;
fiscal 1995, $6,707
(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 $200,000.
If there is a change in control in the Company and his employment with
the Company is terminated, Mr. Schwartz will continue to receive from
the Company or a successor entity, as the case may be, his base salary
as of the date of the contract for a period of one year.
STOCK OPTIONS
The following two tables set forth information for the last completed
fiscal year relating to (i) grants to and exercises by the Named Executive
Officers of stock options pursuant to the Company's 1994 Non-Qualified
Stock Option Plan (the "1994 Plan") and the Amended and Restated 1984 Non-
Qualified Stock Option Plan (the "1984 Plan" or collectively the Company's
"Stock Option Plans"), and (ii) holdings at March 25, 1997, by the Named
Executive Officers of unexercised options granted pursuant to the Stock
Option Plans. The Company currently does not award stock appreciation
rights under its executive compensation program.
Option Grants in the Fiscal Year Ended March 25, 1997
Potential Realizable
Value at Assumed
% of Total Annual Rates
Options of Stock Price
Number of Granted to Exercise Appreciation
Options Employees or Base Expi- for Option
Granted in Fiscal Price ration Term (2)
Name (1) Year ($/Sh) Date 5% 10%
O. Gene Bicknell ---- ---- ---- ---- ---- ----
James K. Schwartz 50,000 21.85% $8.25 12/31/06 $88,896 $191,441
Troy D. Cook 30,000 13.11 8.25 12/31/06 53,338 114,865
Marty D. Couk ---- ---- ---- ---- ---- ----
Robert B. Page 30,000 13.11 8.25 12/31/06 53,338 114,865
(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 1997 and Option Value at March 25,
1997
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired March 25, 1997 March 25, 1997
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
(1) (2)
O. Gene Bicknell -0- -0- 650,000 / -0- $1,377,500 / -0-
James K. Schwartz -0- -0- 106,250 /93,750 553,438 / 329,688
Troy D. Cook -0- -0- 30,000 /70,000 146,875 / 255,625
Marty D. Couk -0- -0- 45,000 /40,000 216,458 / 184,375
Robert B. Page -0- -0- 67,500 /70,000 272,813 / 255,625
(1) No options were exercised.
(2) The closing price of the Common Stock on the NASDAQ National Market on
March 25, 1997 was $10 5/8 per share. Value is calculated by determing the
difference between the option exercise price and $10 5/8 multiplied by the
number of shares of Commons Stock underlying the options.
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation for the Company's Chief Executive Officer and its
other executives is administered by the Stock Option and Compensation
Committee. Following review and approval by the Stock Option and
Compensation Committee, all issues pertaining to executive compensation are
submitted to the full Board of Directors for approval and ratification. In
fiscal 1997, the Board of Directors, with Messrs. Bicknell and Schwartz
abstaining with respect to their own compensation, approved all
recommendations of the Stock Option and Compensation 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 1997, the Committee reviewed surveys published by Technomic
Information Services to obtain competitive compensation levels for
companies similar in size and nature (i.e., those with multiple restaurants
"concepts," of which the Company had two in Pizza Hut 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
Stock Option and Compensation Committee and then proposed to the full Board
of Directors for ratification and approval, with tentative installments
paid quarterly. 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.
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
Stock Option and Compensation 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 1997 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 Stock Option and Compensation 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 Stock Option and Compensation Committee in determining
current performance and the related compensation for the Company's
executive officers for the 1997 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 Stock Option and Compensation 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 the discussion or vote when deliberations regarding his
salary 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
Fran D. Jabara
Robert E. Cressler
Mary M. Polfer
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 fiscal year ended March 25, 1997, the Company leased one
property from Mr. Bicknell. The Company paid a total of $11,038 to Mr.
Bicknell as rent for this property in the fiscal year ended March 25,
1997. The Company continues to rent this 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. Management believes this lease is at least
as favorable as could be obtained from unrelated parties.
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 25, 1997. 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 1998 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 1998 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 February 3, 1998. Such proposals must also comply
with the other requirements of the proxy solicitation rules of the
Securities and Exchange Commission. Stockholder proposals should be
addressed to the attention of the Secretary of the Company.
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 1997 Annual Report to Stockholders accompanies
this proxy. Additional copies of the Company's Annual Report to
Stockholders and copies of the Company's Annual Report on Form 10-K for the
year ended March 25, 1997 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
June 6, 1997
