NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
July 14, 1998
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 14, 1998, 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;
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
26, 1998, 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 31, 1998, 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 4, 1998,
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 3, 1998
NPC INTERNATIONAL, INC.
720 W. 20TH STREET
PITTSBURG, KANSAS 66762
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 14, 1998
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 14, 1998. 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 26, 1998, 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 26, 1998, the record date for the
determination of Stockholders entitled to vote at the Annual
Meeting, there were 24,758,822 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 14,862,366 SHARES
CONSTITUTING APPROXIMATELY 60% 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 AND RATIFICATION 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 16, 1998.
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 2001 and until their
successors are elected and qualified are O. Gene Bicknell and
Michael Braude. 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 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 O. Gene Bicknell and Michael Braude.
Nominees for Directors to Serve a Three-Year Term to Expire in
2001:
O. GENE BICKNELL, Age 65, 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.
MICHAEL BRAUDE, Age 62, President and Chief Executive Officer
of the Kansas City Board of Trade.
Mr. Braude has been President and Chief Executive Officer of
the Kansas City Board of Trade since 1984. He also serves as
a director of Country Club Bank and Midwest Grain Products,
Inc. He is on the board of the National Futures Association
and is a past chairman of the National Grain Trade Council.
He is a trustee of the University of Kansas City and a
trustee of Midwest Research Institute, Kansas City. He is a
member of the Board of Trustees of Baker University and is
Vice President and Director of the Kansas Foundation for
Excellence in Education.
Continuing Directors - Not Standing for Election This Year
Directors with Terms Expiring in 1999:
JAMES K. SCHWARTZ, Age 36, 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 54, Vice President and Chief
Financial Officer of Semitool, Inc.
Mr. Freeman has been Vice President and Chief Financial
Officer of Semitool, Inc., a semiconductor equipment
manufacturer, since March 1998. Previously, Mr. Freemen was
self-employed as a management consultant after retiring from
Zurn Industries, Inc. in 1995. Mr. Freeman's former
consulting clients included, among others, 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
Senior Vice President and Chief Financial Officer from May
1986 through May 1991 and divisional management positions
from January 1973 through April 1986.
Directors with Terms Expiring in 2000:
FRAN D. JABARA, Age 73, 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 59, Partner in Diverse Direction,
Inc. (DDI).
Mr. Cressler was first elected a director of the Company in
April 1985. He has been for more than the past ten years a
partner in DDI, which previously operated Pizza Hut
restaurants and continues to operate other businesses,
including Nutri/System and New Horizons franchises.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met five times during the fiscal year
ended March 31, 1998. The Company's standing Stock Option and
Compensation Committee 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. Mary Polfer, whose term as Director
expires at the Annual Meeting on July 14, 1998. 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.
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDER
AND OF DIRECTORS AND MANAGEMENT
The following table sets forth, as of May 20, 1998, 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
Name, and Title Nature of
Of Beneficial Beneficial Percent
Owner Ownership(1) of Class
O. Gene Bicknell(2)
Chairman, Chief
Executive Officer
and Director 14,237,366 60.2%
James K. Schwartz
President and Chief 137,500 *
Operating Officer,
Director
Troy D. Cook 55,000 *
Vice President,
Finance and Chief
Financial Officer
Marty D. Couk
Senior Vice President-
Pizza Hut Operations 55,806 *
Robert B. Page
President, Romacorp, Inc. 75,000 *
Robert E. Cressler
Director ---- *
Fran D. Jabara
Director 3,998 *
William A. Freeman
Director 400 *
All executive
officers and directors 15,215,070 61.5%
as a group
(1) Includes options for 972,500 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 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 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
November 1997 and December 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 31, 1998, March 25, 1997, and March 26, 1996, the
compensation awarded to, earned by, or paid to (i) the Chief
Executive Officer (the "CEO") of the Company as of March 31, 1998,
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 31, 1998, whose annual
compensation exceeded $100,000 for the fiscal year ended March 31,
1998, 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
Compen-
sation All
Award Other
Name and Annual Securities Compen-
Principal Fiscal Compensation Underlying sation
Position Year(1) Salary Bonus Options (2)
O. Gene Bicknell 1998 $350,000 $95,000 ---- $57,108
Chairman of the 1997 350,000 100,000 ---- 12,778
Board and Chief 1996 300,000 120,000 ---- 11,990
Executive Officer(3)
James K. Schwartz(4)1998 225,000 95,000 ---- 9,760
President and 1997 200,000 85,000 50,000 10,240
Chief Operating 1996 185,000 77,000 25,000 13,080
Officer
Troy D. Cook 1998 150,000 38,750 ---- 9,760
Vice President 1997 130,000 40,000 30,000 5,567
Finance 1996 120,000 28,500 20,000 9,048
Chief Financial
Officer
Marty D. Couk 1998 126,000 12,228 ---- 4,416
Senior Vice 1997 126,000 20,604 ---- 4,812
President- 1996 119,347 62,622 20,000 4,719
Pizza Hut
Operations
Robert B. Page 1998 160,000 23,207 ---- 9,760
President, 1997 140,000 51,250 30,000 4,812
Romacorp, Inc. 1996 126,000 62,500 20,000 4,842
(1)For the fiscal year ended on the last Tuesday in March for the
year noted.
(2)Fiscal 1998 figures consist of the Company's calendar 1997
profit sharing plan contributions, the cost of group term life
insurance and accidental death benefits, car allowance, stock
option gains 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, $5,092 profit sharing, $1,260 group insurance, $4,602
car allowance, $46,154 split-dollar insurance; Mr. Schwartz,
$5,092 profit sharing, $66 group insurance, $4,602 car
allowance; Mr. Cook, $5,092 profit sharing, $66 group
insurance, $4,602 car allowance; Mr. Couk, $4,314 profit
sharing, $102 group insurance; Mr. Page, $5,092 profit sharing,
$66 group insurance; $4,602 car allowance.
(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 1998, $46,154; 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 1998 fiscal year was $225,000. 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.
TRANSACTIONS WITH MANAGEMENT
During the fiscal year ended March 31, 1998, the Company
loaned James K. Schwartz, President and Chief Executive Officer
$100,000. The principal sum of $100,000 is due on or before
January 7, 1999, together with interest thereon, due and
payable quarterly based on the Company's average swing-line
borrowing rate, adjusted monthly, through the date upon which
the principal sum is repaid in full. At March 31, 1998, the
principal amount of $100,000 plus accrued interest was due the
Company.
STOCK OPTIONS
The following two tables set forth information for the last
completed fiscal year relating to (i) grants to and exercises by
the Named Executive Officers of stock options pursuant to the
Company's 1994 Non-Qualified Stock Option Plan (the "1994 Plan")
and the Amended and Restated 1984 Non-Qualified Stock Option Plan
(the "1984 Plan" or collectively the Company's "Stock Option
Plans"), and (ii) holdings at March 31, 1998, by the Named
Executive Officers of unexercised options granted pursuant to the
Stock Option Plans. The Company currently does not award stock
appreciation rights under its executive compensation program.
Option Grants in the Fiscal Year Ended March 31, 1998
Potential
Realizable
% of Value at
Total Assumed Annual
Options Rates of
Number Granted Stock Price
of to Exercise Appreciation
Options Employees or Base Expi- for Option
Granted in Fiscal Price ration Term(2)
Name (1) Year ($/Sh) Date 5% 10%
O. Gene Bicknell ---- ---- ---- ---- ---- ----
James K. Schwartz ---- ---- ---- ---- ---- ----
Troy D. Cook ---- ---- ---- ---- ---- ----
Marty D. Couk ---- ---- ---- ---- ---- ----
Robert B. Page ---- ---- ---- ---- ---- ----
(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 1998 and Option Value at
March 31, 1998
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired March 31, 1998 March 31, 1998
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable(1)
O. Gene Bicknell $---- $---- 650,000/---- $3,083,750/----
James K. Schwartz ---- ---- 137,500/62,500 1,037,813/370,313
Troy D. Cook ---- ---- 55,000/45,000 391,875/273,125
Marty D. Couk 7,500 68,645 55,000/22,500 408,750/160,625
Robert B. Page 17,500 67,188 75,000/45,000 516,250/273,125
(1) The closing price of the Common Stock on the NASDAQ National
Market on March 31, 1998 was $13 1/4 per share. Value is
calculated by determining the difference between the option
exercise price and $13 1/4 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 1998, the
Board of Directors, with Mr. Bicknell abstaining with respect to
his 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 1998, 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 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 Performance
Graph included herein; 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. The 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 have been 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 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 1998
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.
Mar-93 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98
NPC
International,
Inc. 100.00 87.30 70.90 139.00 161.20 204.60
Peer Group 100.00 110.30 122.10 161.90 186.00 276.90
Nasdaq Stock
Market(1) 100.00 102.80 83.60 102.70 83.10 91.30
(1) Represents SIC Codes 5800-5899.
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 31,
1998. 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 fiscal 1999 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 1999
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 5,
1999. 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 1998 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 31, 1998 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 B Board of Directors
David G. Short
Secretary
Pittsburg, Kansas
June 3, 1998
