<PAGE> 1
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
MONRO MUFFLER BRAKE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE> 2
MONRO MUFFLER BRAKE, INC.
200 HOLLEDER PARKWAY
ROCHESTER, NEW YORK 14615
---------------
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
AUGUST 5, 1996
---------------
To the Shareholders of
MONRO MUFFLER BRAKE, INC.
The Annual Meeting of Shareholders of Monro Muffler Brake, Inc. (the
"Company") will be held at The Hutchison House, 930 East Avenue, Rochester, New
York 14607, on Monday, August 5, 1996, commencing at 10 a.m., for the following
purposes:
1. electing five directors to Class 1 of the Board of Directors to serve a
two-year term, and until their successors are duly elected and qualified
at the 1998 annual meeting of shareholders;
2. ratifying the re-appointment of Price Waterhouse LLP as the independent
auditors of the Company for the fiscal year ending March 31, 1997; and
3. considering such other business as may properly be brought before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on Friday, June 21,
1996, will be entitled to vote at the meeting.
Robert W. August
Secretary
Rochester, New York
July 5, 1996
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED, SELF-
ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
1
<PAGE> 3
PROXY STATEMENT
MONRO MUFFLER BRAKE, INC.
200 HOLLEDER PARKWAY
ROCHESTER, NEW YORK 14615
---------------
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 5, 1996
---------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Monro
Muffler Brake, Inc., a New York corporation (the "Company" or "Monro"), for use
at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at The
Hutchison House, 930 East Avenue, Rochester, New York 14607, on Monday, August
5, 1996, commencing at 10 a.m., or at any adjournment or postponement thereof.
A shareholder who executes a proxy may revoke it at any time before it is
voted. Attendance at the meeting shall not have the effect of revoking a proxy
unless the shareholder so attending shall, in writing, so notify the secretary
of the meeting at any time prior to the voting of the proxy. A proxy which is
properly signed and not revoked will be voted for the nominees for election as
directors listed herein, and for the ratification of the re-appointment of
independent auditors as proposed herein, unless contrary instructions are given,
and such proxy may be voted by the persons named in the proxy in their
discretion upon such other business as may be properly brought before the
meeting.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies by telephone or otherwise. The Company will reimburse brokers or
other persons holding shares in their names or in the names of their nominees
for their charges and expenses in forwarding proxies and proxy material to the
beneficial owners of such shares. It is anticipated that the mailing of this
Proxy Statement will commence on or about July 5, 1996.
VOTING SECURITIES
Only shareholders of record at the close of business on Friday, June 21,
1996 will be entitled to vote. At such date, the Company had outstanding
7,058,453 shares of common stock, par value $.01 per share ("Common Stock").
Each share of Common Stock is entitled to one vote on each matter as may
properly be brought before the meeting.
On January 26, 1996, the Board of Directors of the Company declared a five
percent stock dividend, payable August 5, 1996, to holders of record as of June
21, 1996. Shares of Common Stock listed in this Proxy Statement as outstanding
or beneficially owned by any person do not include any shares to be issued in
connection with such dividend.
The voting rights of holders of Common Stock are subject to the voting
rights of the holders of 91,727 shares outstanding of the Company's Class C
Convertible Preferred Stock, par value $1.50 per share ("Class C Preferred
Stock"). The vote of the holders of at least 60% of the shares of Class C
Preferred Stock at the time outstanding, voting as a separate class, or,
alternatively, the written consent of the holders of all outstanding shares of
Class C Preferred Stock, is needed to effect or validate any action approved by
a vote of the holders of shares of Common Stock. Therefore, such preferred
shareholders have an effective veto over all matters put to a vote of common
shareholders, and such veto power could be used, among other things, to block
the election of directors, the ratification of the appointment of auditors or
any other transaction that the holders of Common Stock might otherwise approve
at the Annual Meeting. It is expected that the holders of Class C Preferred
Stock will approve, by unanimous written consent, all matters currently proposed
to be put to a vote of common shareholders at the Annual Meeting.
2
<PAGE> 4
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee. Director nominees must receive a plurality of the
votes cast at the meeting to be elected. Votes that are withheld from any
nominee are counted as present for purposes of determining the existence of a
quorum but are not deemed cast at the meeting and, thus, have no effect on the
determination of a plurality. Abstentions may be specified on proposals other
than the election of directors, which proposals require a majority of the votes
cast at the meeting for approval. Abstentions will be counted as present for
purposes of determining the existence of a quorum but are not deemed cast at the
meeting and, thus, have no effect on the determination of a majority. With
respect to shares of Common Stock held in street name, where no vote is
indicated on a matter because the nominee or broker lacks authority to vote such
shares without specific instructions from the beneficial owner and the nominee
or broker has received no such instructions (a "broker non-vote"), such shares
are not counted as present for the purpose of determining the existence of a
quorum and are not counted as votes cast with respect to any such matter.
3
<PAGE> 5
PRINCIPAL SHAREHOLDERS
As of June 1, 1996 (unless otherwise indicated), the following are the only
persons or entities known to the Company to be the beneficial owners of more
than five percent of the Common Stock:
<TABLE>
<CAPTION>
TOTAL NUMBER
OF SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
- - ---------------------------- ------------ ---------
<S> <C> <C>
Peter J. Solomon 1,147,987(1) 15.8
350 Park Avenue
New York, New York 10022
Nicholas Company, Inc. 1,097,474(2) 15.7
700 North Water Street
Milwaukee, Wisconsin 53202
The Kaufmann Fund, Inc. 550,000(3) 7.9
17 Battery Place
Suite 2624
New York, New York 10004
Donald Glickman 516,708(4)(5) 7.4
575 Park Avenue
New York, New York 10021
FMR Corp. 410,075(6) 5.9
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- - ---------------
(1) Includes 48,000 shares of Class C Preferred Stock (including 28,000 shares
held in trust for the benefit of Mr. Solomon's children for which Mr.
Solomon is trustee) presently convertible into 287,356 shares of Common
Stock. Also includes 759,179 shares of Common Stock held in trusts for the
benefit of Mr. Solomon's children for which Mr. Solomon is the trustee. Mr.
Solomon disclaims beneficial ownership of all such shares held in trust.
(2) Beneficial ownership reported as of October 31, 1995, according to a
statement on Schedule 13G, dated November 7, 1995, of Nicholas Company,
Inc., a registered investment adviser. Consists of 720,324 shares owned by
Nicholas Company, Inc., and 377,150 owned by Nicholas Fund, Inc.
(3) Beneficial ownership reported as of December 31, 1995, according to a
statement on Schedule 13G, dated February 8, 1996, of The Kaufmann Fund,
Inc., a registered investment company.
(4) Excludes shares of Common Stock owned by Mr. Glickman's children. Mr.
Glickman disclaims beneficial ownership of such shares. Also see note (5)
below.
(5) As represented to the Company by the respective parties, Massachusetts
Mutual Life Insurance Company and MassMutual Corporate Investors each own
38,929 shares of Common Stock and may be regarded as a group under the
federal securities laws. Donald Glickman, a director and principal
shareholder of Monro, is a trustee of, and holds trustee's qualifying shares
in, MassMutual Corporate Investors, a Massachusetts business trust. Mr.
Glickman and the other trustees of MassMutual Corporate Investors share
voting and investment power over the stock portfolio of MassMutual Corporate
Investors. However, Mr. Glickman does not participate in decisions with
respect to shares of Common Stock held in such portfolio. Mr. Glickman
disclaims beneficial ownership of shares of Common Stock held by
Massachusetts Mutual Life Insurance Company or MassMutual Corporate
Investors. These shares have been excluded from the total number of shares
beneficially owned by Mr. Glickman as shown on page 4.
(6) Beneficial ownership reported as of December 31, 1995, according to a
statement on Schedule 13G, dated February 14, 1996, of FMR Corp., a parent
holding company of Fidelity Management & Research Company, a registered
investment adviser.
4
<PAGE> 6
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into two classes,
currently consisting of five directors each, having terms which expire at the
Annual Meeting (Class 1) and at the 1997 annual meeting of shareholders (Class
2). The five Class 1 directors are proposed for election at the Annual Meeting.
CURRENT NOMINEES
It is proposed to elect at the Annual Meeting five persons to Class 1 of
the Board of Directors to serve (subject to the Company's by-laws) until the
election and qualification of their successors at the 1998 annual meeting of
shareholders. If any such person should be unwilling or unable to serve as a
director of the Company (which is not anticipated), the persons named in the
proxy will vote the proxy for substitute nominees selected by them unless the
number of directors has been reduced to the number of nominees willing and able
to serve.
The following table sets forth certain information for each of the five
nominees for election to the Board of Directors, including information
concerning beneficial ownership of Common Stock as of June 1, 1996:
<TABLE>
<CAPTION>
DIRECTOR COMMON STOCK PERCENT
NAME SINCE AGE BENEFICIALLY OWNED OF CLASS
- - ----------------------------------------- -------------- --- ------------------ --------
<S> <C> <C> <C> <C>
Burton S. August......................... May 1969 81 78,303(1)(4) 1.1
Robert W. August......................... July 1982 44 324,647(1)(2) 4.6
Donald Glickman.......................... July 1984 63 516,708(3)(4) 7.4
Lionel B. Spiro.......................... August 1992 57 8,835(4) *
W. Gary Wood............................. February 1993 45 7,352(4) *
</TABLE>
- - ---------------
* Less than 1% of the shares deemed outstanding.
(1) Includes 30,490 shares of Common Stock held in The Charles J. and Burton S.
August Family Foundation, a charitable trust for which Mr. August is a
trustee. Mr. August disclaims beneficial ownership of such shares held in
trust.
(2) Includes 44,899 shares of Common Stock issuable upon the exercise of
outstanding options. Such options were exercised by Mr. August in June 1996.
(3) See notes (4) and (5) under "Principal Shareholders."
(4) Includes 5,250 shares of Common Stock attributable to options granted
pursuant to the Non-Employee Directors' Stock Option Plan.
BIOGRAPHICAL INFORMATION
Burton S. August was a Vice President of the Company until May 1980, when
he retired. Mr. August has been a director of Home Properties of New York since
August 4, 1994.
Robert W. August has been Senior Vice President -- Marketing since May 1992
and Secretary since July 1984. Mr. August was Vice President -- Marketing from
July 1989 to May 1992, Executive Vice President from 1984 to July 1989, and has
worked for Monro in various other capacities since 1968.
Donald Glickman is a private investor and has been a partner of J.F. Lehman
& Company, an investment banking firm, since January 1993. He was an executive
employee of Peter J. Solomon Company Limited, an investment banking firm, from
July 1989 to June 1992. From July 1988 to July 1989, he was a managing director
of Shearson Lehman Hutton, Inc. Prior to July 1988, Mr. Glickman was a Senior
Vice President of the First National Bank of Chicago. Mr. Glickman is a director
of Sperry Marine, Inc., and a trustee of MassMutual Corporate Investors and
MassMutual Participation Investors. He is Chairman of General Aluminum
Corporation (formerly CalTex Industries, Inc.), a company that filed a petition
under Chapter 11 of the federal bankruptcy laws on December 21, 1992. Such
company reorganized on April 29, 1994, and is no longer operating under Chapter
11.
5
<PAGE> 7
Lionel B. Spiro is the Chairman and President of Charrette Corporation of
Woburn, Massachusetts, a distributor of design supplies and imaging services,
which he cofounded in 1964.
W. Gary Wood was a principal with Deloitte & Touche, an accounting, tax and
consulting firm, from 1984 through 1993 in the management consulting practice,
working from Deloitte & Touche's Michigan office. Mr. Wood currently is an
independent business owner with operations in computer services and in specialty
manufacturing.
CONTINUING DIRECTORS
The following table sets forth certain information, including information
concerning beneficial ownership of Common Stock as of June 1, 1996, for each of
the continuing members of Class 2 of the Board of Directors:
<TABLE>
<CAPTION>
COMMON
STOCK
DIRECTOR BENEFICIALLY PERCENT
NAME SINCE AGE OWNED OF CLASS
- - ----------------------------------------- -------------- --- ------------------ --------
<S> <C> <C> <C> <C>
Charles J. August........................ February 1959 77 215,266(1)(5) 3.1
Frederick M. Danziger.................... July 1984 56 16,677(5) *
Lawrence C. Day.......................... July 1993 46 28,403(2) *
Jack M. Gallagher........................ October 1987 59 207,161(3) 3.0
Peter J. Solomon......................... July 1984 57 1,147,987(4)(5) 15.8
</TABLE>
- - ---------------
* Less than 1% of the shares deemed outstanding.
(1) Includes 30,490 shares of Common Stock held in The Charles J. and Burton S.
August Family Foundation, a charitable trust for which Mr. August is a
trustee. Mr. August disclaims beneficial ownership of such shares held in
trust.
(2) Includes 26,460 shares of Common Stock issuable upon the exercise of
outstanding options; excludes 118,540 shares of Common Stock attributable to
options not exercisable within the next 60 days.
(3) Includes 38,013 shares of Common Stock issuable upon the exercise of
outstanding options.
(4) See note (1) under "Principal Shareholders."
(5) Includes 5,250 shares of Common Stock attributable to options granted
pursuant to the Non-Employee Directors' Stock Option Plan.
BIOGRAPHICAL INFORMATION
Charles J. August founded the predecessor to the Company in 1957 and served
as the Company's Chairman, President and Chief Executive Officer until October
1987, when he retired.
Frederick M. Danziger is of counsel in the law firm of Latham & Watkins,
and was a partner of the law firm of Mudge Rose Guthrie Alexander & Ferdon from
1989 until 1996. Mr. Danziger is a general partner of Ryan Instruments, L.P.,
and a director of IBAH, Inc., Culbro Corporation and First Financial Caribbean
Corporation.
Lawrence C. Day has been President and Chief Executive Officer since April
1, 1995. Mr. Day was Executive Vice President and Chief Operating Officer from
July 1993 through March 31, 1995, and has been a member of the Company's Board
of Directors since July 1993. Prior to joining the Company, Mr. Day was Vice
President of the Auto Express Division of Montgomery Ward & Co., Incorporated
from December 1991 to June 1993, Field Director of Auto Express Division of
Montgomery Ward & Co., Incorporated from December 1989 to December 1991 and Vice
President of Automotive Industries, Inc. from February 1989 to December 1989.
From September 1976 to January 1989, Mr. Day held various management positions
for the Firestone Tire & Rubber Company.
Jack M. Gallagher has been Director -- Special Projects since April 1,
1995, and was President and Chief Executive Officer from October 1987 through
March 31, 1995. Prior to joining the Company,
6
<PAGE> 8
Mr. Gallagher was President of Auto Works, a 240-store chain of discount auto
parts stores headquartered in Pontiac, Michigan, from May 1985 to October 1987.
Mr. Gallagher has held various other positions in the auto parts and service
industries, including 20 years with Firestone Tire & Rubber Company, where he
was Chief Executive of the Fidesta Company, a 200-store nationwide chain of tire
and service centers.
Peter J. Solomon has been Chairman of the Board of Directors and Treasurer
of Peter J. Solomon Company Limited, an investment banking firm, since May 1989.
From 1985 to May 1989, he was a Vice Chairman and member of the board of
directors of Shearson Lehman Hutton, Inc. Mr. Solomon is a director of
Centennial Cellular Corp., Century Communications Corp., Charrette Corporation,
Culbro Corporation, Office Depot, Inc. and Phillips-Van Heusen Corporation.
OTHER INFORMATION CONCERNING DIRECTORS
Burton S. August and Charles J. August are brothers. Burton S. August is
the father of Robert W. August and John W. August.
Jack Gallagher, formerly President and Chief Executive Officer of the
Company, resigned from that position effective March 31, 1995. Mr. Gallagher
continues to serve as a director of the Company. Mr. Gallagher entered into a
three-year employment agreement, effective April 1, 1995, with the Company (the
"Agreement") pursuant to which he serves as Director -- Special Projects of the
Company. In such capacity, Mr. Gallagher is responsible for, among other things,
finding, investigating and negotiating with acquisition candidates, and advising
and consulting with respect to investor and shareholder relations. As
compensation for such services, Mr. Gallagher is paid a salary of $80,000 per
year. Through August 31, 1995, Mr. Gallagher was also responsible for
supervising the completion of the Company's new corporate headquarters and
distribution center and was paid a salary of $200,000 per year. Upon Mr.
Gallagher's death or the termination of his employment by the Company, the
Company shall pay him an amount equal to the product of $5,000 times the number
of months remaining in the term of the Agreement. Mr. Gallagher also receives
other benefits, including vacation, paid holidays, medical coverage and
additional benefits customarily provided to the Company's senior executives.
During the term of the Agreement, Mr. Gallagher has agreed not to compete in any
manner with the business of the Company.
As of June 1, 1996, all executive officers and directors of the Company as
a group (15 persons) owned beneficially 2,794,278 shares of Common Stock,
including 48,000 shares of Class C Preferred Stock presently convertible into
287,356 shares of Common Stock, 177,157 shares of Common Stock issuable upon the
exercise of outstanding options and 1,057,201 shares of Common Stock
beneficially owned by the family members of, or other parties (including a
charitable foundation) affiliated with certain officers and directors, which
constituted approximately 37.6% of the shares deemed outstanding on that date.
The officers and directors have sole voting power and sole investment power with
respect to all such shares, except for the 1,057,201 shares beneficially owned
by the family members of, or other parties affiliated with, such officers and
directors (beneficial ownership of which has been disclaimed by such officers
and directors). Exclusive of shares as to which beneficial ownership has been
disclaimed, officers and directors of the Company as a group owned beneficially
approximately 23.4% of Common Stock deemed outstanding on June 1, 1996. As of
June 1, 1996, Named Officers (as hereinafter defined) not identified in the
foregoing tables, John W. August, Senior Vice President -- Business Development,
owned beneficially 223,379 shares of Common Stock (including 29,933 shares of
Common Stock issuable upon the exercise of outstanding options and 22,050 shares
held in trust for the benefit of Mr. August's niece for which Mr. August is
trustee) constituting approximately 3.2% of the shares deemed outstanding on
such date, and Catherine D'Amico, Senior Vice President -- Finance, owned
beneficially 1,050 shares of Common Stock constituting less than 1% of the
shares deemed outstanding on such date. G. Michael Cox, Senior Vice
President -- Store Operations, held no shares of Common Stock on such date.
7
<PAGE> 9
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four meetings during fiscal 1996(1).
Non-employee directors of the Company receive directors' fees at the rate of
$2,000 per year plus $750 per meeting attended. All directors are reimbursed for
actual expenses incurred in connection with attendance at meetings of the Board
of Directors or committees thereof. In addition, each non-employee director
receives an annual grant of an option to purchase 2,625 shares of Common Stock.
The Board of Directors has created four standing committees: a five-member
Executive Committee, a three-member Audit Committee, a four-member Compensation
and Benefits Committee (the "Compensation Committee") and a four-member Stock
Option Committee.
The Executive Committee has and may exercise, between meetings of the Board
of Directors, all the power and authority of the full Board of Directors,
subject to certain exceptions. During fiscal 1996, the Executive Committee did
not meet. Its members are Robert W. August, Lawrence C. Day, Jack M. Gallagher,
Donald Glickman and Peter J. Solomon.
The Audit Committee has the power and authority to select and engage
independent auditors for the Company, subject to the approval of shareholders,
and reviews with the auditors and with the Company's management all matters
relating to the annual audit of the Company. The Audit Committee held two
meetings in fiscal 1996. Its members are Frederick M. Danziger, Donald Glickman
and W. Gary Wood.
The Compensation Committee has the power and authority to review and
approve the remuneration arrangements for executive officers and employees of
the Company and to select participants, approve awards under, interpret and
administer the employee benefit plans of the Company (other than stock option
plans). The Compensation Committee held two meetings in fiscal 1996. Its members
are Lawrence C. Day, Donald Glickman, Peter J. Solomon and Lionel B. Spiro.
The Stock Option Committee has the power and authority to select
participants and approve awards under, and to interpret and administer or
otherwise act with respect to, the Company's stock option plans. During fiscal
1996, the Stock Option Committee met twice. Its members are Charles J. August,
Donald Glickman, Jack M. Gallagher and Peter J. Solomon.
- - ---------------
(1) References in this Proxy Statement to fiscal years are to the Company's
fiscal years ending or ended March 31 of each year (e.g., references to "fiscal
1996" are to the Company's fiscal year ended March 31, 1996).
8
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth, for the Company's last three fiscal years,
the annual and long-term compensation of those persons who were, at March 31,
1996, (i) the Chief Executive Officer and (ii) the other four most highly
compensated executive officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
---------------------------- COMPENSATION
FISCAL AWARDS
NAME AND YEAR ---------- ALL OTHER
PRINCIPAL ENDED SALARY BONUS OPTIONS(5) COMPENSATION(1)
POSITION MARCH 31, ($) ($) (#) ($)
- - ------------------------------------ --------- ------- ------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
Lawrence C. Day 1996 221,330 0 100,900
President and 1995 157,500 92,925 0 50,192
Chief Executive Officer(2) 1994 101,731 44,000 44,100 0
John W. August 1996 129,165 0 0
Senior Vice President -- 1995 113,333 41,853 0 4,249
Business Development 1994 100,000 27,500 0 3,215
Robert W. August 1996 140,995 0 0
Senior Vice President -- 1995 136,500 50,334 0 4,561
Marketing, and Secretary 1994 130,000 35,750 0 4,186
G. Michael Cox 1996 125,200 0 10,000 21,328
Senior Vice President -- 1995 26,515 11,523 21,000 42,339
Store Operations(3)
Catherine D'Amico 1996 108,150 0 6,000
Senior Vice President -- 1995 105,000 38,719 0 3,667
Finance, and Chief Financial
Officer(4) 1994 61,026 16,042 8,269 0
</TABLE>
- - ---------------
(1) For most officers, All Other Compensation represents the Company's
contributions to the Monro Muffler Brake, Inc. Profit Sharing Plan for the
accounts of the Named Officers. Information relating to fiscal 1996 profit
sharing contributions is not yet available.
For Mr. Day, All Other Compensation also includes reimbursement for
relocation expenses in fiscal 1995. For Mr. Cox, All Other Compensation for
both fiscal 1995 and 1996 represents only reimbursement for relocation
expenses.
(2) Mr. Day joined the Company in fiscal 1994. Until March 31, 1995, Mr. Day was
Executive Vice President and Chief Operating Officer of the Company.
(3) Mr. Cox joined the Company in fiscal 1995.
(4) Ms. D'Amico joined the Company in fiscal 1994.
(5) The number of options shown has been adjusted to reflect the impact of the
five percent stock dividend paid in August 1995 and in August 1994.
9
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, for the Company's fiscal year ended March
31, 1996, information concerning the granting of options to the Named Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE ASSUMING RATES
% OF TOTAL OF STOCK PRICE
OPTIONS EXERCISE APPRECIATION OF
OPTIONS(2) GRANTED IN PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR(3) ($/SH) DATE 5%(1) 10%(1)
- - ------------------------- ---------- -------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lawrence C. Day.......... 60,900 38.4 17.27 3/31/05 $661,436 $1,676,207
20,000 12.6 14.75 8/6/05 185,524 470,154
20,000 12.6 13.00 1/25/06 163,513 414,373
John W. August........... 0 -- -- -- -- --
Robert W. August......... 0 -- -- -- -- --
G. Michael Cox........... 5,000 3.2 14.75 8/6/05 46,381 117,539
5,000 3.2 13.00 1/25/06 40,878 103,593
Catherine D'Amico........ 5,000 3.2 14.75 8/6/05 46,381 117,539
1,000 .6 13.00 1/25/06 8,176 20,719
</TABLE>
- - ---------------
(1) These values are calculated by comparing the exercise price of such options
to the market value of the shares of Common Stock subject to such options,
assuming that the market price of such shares increases by 5% and 10%,
respectively, during each year of the options' terms. Actual gains, if any,
on the stock option exercises are dependent on the future performance of the
Common Stock and overall stock conditions, as well as the option holder's
continued employment through the vesting period. The value stated may not
necessarily be achieved.
(2) Options granted in fiscal 1996 under the Company's 1989 Employees' Incentive
Stock Option Plan. Subject to certain conditions, 60% of such options become
exercisable three years after the date of grant, 20% become exercisable four
years after the date of grant and 20% become exercisable five years after
the date of grant.
(3) Based on a total of 158,400 options granted to 37 employees of the Company
in fiscal 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for the Company's fiscal year ended March
31, 1996, information concerning the exercise of options by the Named Officers
and the value of unexercised options of the Named Officers:
<TABLE>
<CAPTION>
TOTAL VALUE OF
TOTAL NUMBER OF UNEXERCISED, IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS HELD AT OPTIONS HELD AT
SHARES MARCH 31, 1996 MARCH 31, 1996
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence C. Day.... 0 0 0 145,000 0 245,524
John W. August..... 0 0 29,933 0 428,940 0
Robert W. August... 0 0 44,899 0 643,403 0
G. Michael Cox..... 0 0 0 31,000 0 21,250
Catherine D'Amico.. 0 0 0 14,269 0 30,915
</TABLE>
- - ---------------
10
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
setting the Chief Executive Officer's compensation and making annual
recommendations for the compensation of the other executive officers to the full
Board of Directors after considering recommendations made by the Chief Executive
Officer.
Executive compensation is a mix of salary, annual bonus awarded under the
executive bonus plan, company contributions to the profit sharing plan and
pension plan, long-term compensation in the form of stock options and other
benefits generally available to all employees. The Company relies to a large
degree on bonus, stock options and stock ownership to attract and retain
executives of outstanding ability and to motivate them to work to their fullest
potential. Under the executive bonus plan, the Compensation Committee seeks to
enhance the profitability of the Company by aligning closely the financial
interest of the Company's executives with those of its shareholders through the
payment of bonuses based on attainment of profit targets. In setting base
salaries, the Company refers to the National Executive Compensation Survey
published by The Management Association of Illinois.
The Chief Executive Officer's fiscal 1996 compensation consisted of a
salary of $225,000 which was set at the beginning of the year and other benefits
extended to all full-time employees. Mr. Day did not receive a bonus for fiscal
1996 because the Company did not attain the minimum required percentage of
targeted profit performance. The Chief Executive Officer does not participate in
the Compensation Committee's determination of his compensation.
The salaries of other executive officers are set at amounts the Company
believes to be equal to those paid to comparable executives at other automotive
service companies of comparable size. Executive officers who joined the Company
in fiscal 1996 were awarded salaries commensurate with their prior positions and
experience. Bonuses are paid based on attainment of profit targets. Executive
officers did not receive bonuses for fiscal 1996 because the Company did not
attain the minimum required percentage of targeted profit performance.
All employees, including executive officers, may receive stock options from
time to time under the Company's stock option plans. Stock option grants are
recommended by the Stock Option Committee of the Board of Directors, a committee
composed of non-management directors. Under the stock option plans, 123,621
shares are currently available for grants to employees. During fiscal 1996, the
Stock Option Committee granted options, including 100,900 to Lawrence C. Day,
President and Chief Executive Officer; 10,000 to G. Michael Cox, Senior Vice
President -- Operations; 6,000 to Catherine D'Amico, Senior Vice
President -- Finance, and Chief Financial Officer; 1,500 to William E. Thackrah,
Vice President -- Western Operations and 5,000 to Thomas J. Budreau, Vice
President -- Eastern Operations, in recognition of such officers' new or
expanded management responsibilities. Options exercisable for an aggregate of
18,375 shares were also granted to seven non-employee directors of the Company
under the terms of the Non-Employee Directors Stock Option Plan approved by
shareholders in August 1995.
The executive officers participate in the Company's qualified,
non-contributory profit sharing and pension plans on the same basis as all other
employees. The Company offers health care, life insurance, disability insurance
and other benefits to the executive officers on substantially the same terms as
available to all employees of the Company. The amount of perquisites received by
any executive officer in fiscal 1996 did not exceed $50,000 or ten percent of
his or her cash compensation.
Recent amendments to the federal income tax laws impose limitations on the
deductibility of compensation in excess of $1 million paid to executive officers
in certain circumstances. The Compensation Committee intends that all
compensation paid to executive officers in fiscal 1996 will be deductible by the
Company under such tax laws.
The members of the Compensation Committee are Lawrence C. Day, Donald
Glickman, Peter J. Solomon and Lionel B. Spiro.
11
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Lawrence C. Day, the President and Chief Executive Officer of the Company,
served on the Compensation Committee during the Company's last fiscal year.
In June 1991, the Company entered into a management agreement effective
July 1, 1991, with Peter J. Solomon Company Limited ("PJSC") pursuant to which
PJSC provides to the Company strategic and financial advice relating to
financing, capital structure, mergers and acquisitions and offensive/defensive
positioning for a fee of $160,000 per year (plus reimbursement of out-of-pocket
expenses). Pursuant to such agreement, the Company has agreed to indemnify PJSC
against certain liabilities. Peter J. Solomon, a director and principal
shareholder of the Company, is Chairman, Treasurer and sole shareholder of PJSC.
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
shareholder return on the Company's Common Stock, on an indexed basis, against
the cumulative total returns of the S&P 400 Index and the S&P Retail
Stores-Specialty Index for the fifty-six month period from July 29, 1991 (the
date of the Company's initial public offering of Common Stock) to March 31, 1996
(July 29, 1991 = 100):
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG MONRO MUFFLER BRAKE, INC., THE S&P INDUSTRIALS INDEX
AND THE S&P RETAIL STORES (SPECIALTY) INDEX
<TABLE>
<CAPTION>
S&P RETAIL
MEASUREMENT PERIOD MONRO MUFFLER S&P IN- STORES (SPE-
(FISCAL YEAR COVERED) BRAKE, INC. DUSTRIALS CIALTY)
<S> <C> <C> <C>
7/91 100 100 100
3/92 77 106 117
3/93 72 117 148
3/94 100 121 138
3/95 118 140 141
3/96 107 184 150
</TABLE>
* $100 INVESTED ON 07/30/91 IN STOCK OR
ON 07/31/91 IN INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MARCH 31.
12
<PAGE> 14
PENSION PLAN
The Company sponsors a qualified, noncontributory retirement plan (the
"Pension Plan"). Each employee who has attained age 21 becomes a participant on
the April 1 or October 1 following the date the employee completes one year of
service. The basic benefit under the Pension Plan is a straight life annuity.
Benefit payments generally begin upon retirement at age 65 or age 60 with 20
years of service. Subject to certain limits required by law, benefits are
payable monthly in an amount equal to (i) 45% of a participant's average monthly
earnings for the highest ten consecutive years prior to retirement, less (ii)
45% of the monthly primary Social Security benefit payable to a participant at
retirement. The amount of the benefit is reduced for short service participants
and also is reduced if a participant terminates his or her employment prior to
retirement.
Remuneration covered by the Pension Plan includes any kind of compensation
that is subject to tax for Social Security benefits without regard to the dollar
limitation on such compensation subject to FICA taxes. The Pension Plan only
recognizes such earnings up to $100,000 for plan years beginning after March 31,
1986.
Benefits under the Pension Plan are 100% vested in each participant upon
completion of five years of service, attainment of age 65 or the termination of
the Pension Plan. Lump sum distributions are available at termination or
retirement only for accrued benefits of $3,500 or less.
The following table shows the estimated annual benefits payable upon
retirement at age 65 under the formula described above to participants under the
Pension Plan, excluding the offset for Social Security benefits:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
NUMBER OF YEARS OF SERVICE
AVERAGE -------------------------------------------------------
COMPENSATION 5 10 15 20 25
- - ------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$100,000 $22,500 $45,000 $45,000 $45,000 $45,000
</TABLE>
The following are estimated years of credited service at age 65 (rounded to
the nearest year) under the Pension Plan for each of the Named Officers:
Lawrence C. Day -- 21 years; Robert W. August -- 43 years; John W. August -- 47
years; G. Michael Cox -- 22 years; and Catherine D'Amico -- 28 years.
CERTAIN TRANSACTIONS
PAYMENTS ON SENIOR NOTES
As of June 1, 1996, the Company had outstanding $5,500,000 in principal
amount of its 10.65% Senior Notes due April 1, 1999 (the "Senior Notes"), held
by Massachusetts Mutual Life Insurance Company, which together with an affiliate
owns approximately 1.1% of the outstanding Common Stock (see note (5) under
"Principal Shareholders"). In fiscal 1996, the Company paid in the aggregate
$829,812 in interest on the Senior Notes. The third of six equal annual
installments of principal in the amount of $1,833,333 was paid on April l, 1996.
AFFILIATE LEASES
The Company leases 41 stores from Charles J. August, Burton S. August and
others or partnerships or trusts in which such persons or members of their
families, including Robert W. August and John W. August, have interests. In
fiscal 1996, the Company paid or accrued $1,688,000 as rent for these stores. As
of June 1, 1996, most of these properties were subject to mortgages or notes
under which such persons or entities were obligated.
The Company has not entered into any affiliate leases, other than renewals
or modifications of existing leases, since May 1989, and as a matter of policy,
will not do so.
(See also "Compensation Committee Interlocks and Insider Participation").
13
<PAGE> 15
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more that ten percent of the Company's Common
Stock, to file with the Securities and Exchange Commission (the "SEC") initial
reports of ownership and reports of changes in ownership of Common Stock.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during fiscal 1996, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with; except that William E. Thackrah, Vice
President -- Western Operations, reported late several purchases totalling 76
shares on a year end Form 5; and John W. August, Senior Vice
President -- Business Development, reported a sale of 12,000 shares on a Form 4
that was filed late.
APPROVAL OF AUDITORS
Subject to ratification by shareholders at the Annual Meeting, the Board of
Directors, upon recommendation of the Audit Committee, has re-appointed Price
Waterhouse LLP as independent auditors to audit the books and accounts of the
Company for fiscal 1997. A representative of Price Waterhouse LLP will be
present at the Annual Meeting to respond to questions and will have an
opportunity to make a statement if he or she desires to do so.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented at the annual meeting to be held
in 1997 must be received by the Company for inclusion in the Company's next
proxy statement and form of proxy by March 7, 1997.
ADDITIONAL INFORMATION
The Company will furnish to any shareholder, upon written request, a copy
of the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1996, as filed with the SEC, without charge, except that copies of any exhibit
to such report will be furnished upon payment by such shareholder of the
Company's reasonable expenses in furnishing such exhibit. Written requests may
be directed to the Company, 200 Holleder Parkway, Rochester, New York 14615,
Attention: Secretary.
By order of the Board of
Directors
Robert W. August
Secretary
Rochester, New York
July 5, 1996
14
<PAGE> 16
MONRO MUFFLER BRAKE, INC.
P SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MONRO MUFFLER
R BRAKE, INC.
O The undersigned shareholder(s) of MONRO MUFFLER BRAKE, INC. (the
X "Company") hereby appoint(s) LAWRENCE C. DAY and CATHERINE D'AMICO,
Y or either of them, proxies of the undersigned, each with power of
substitution at the Annual Meeting of Shareholders of the Company
to be held at The Hutchison House, 930 East Avenue, Rochester, New
York 14607 on Monday, August 5, 1996, commencing at 10 a.m., and at
any adjournment or postponement thereof, to vote all shares of
Common Stock of the Company held or owned by the undersigned.
<TABLE>
<S> <C>
Election of Class 1 Directors, Nominees: (change of address)
Burton S. August, Robert W. August, Donald Glickman, Lionel ________________________________
B. Spiro and W. Gary Wood. ________________________________
________________________________
________________________________
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C>
X PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Ratification of the re-appointment / / / / / /
Class 1 of Price Waterhouse LLP as the
Directors independent auditors of the
(see reverse) Company.
For, except vote withheld from the following nominee(s): THE PROXIES ARE INSTRUCTED TO VOTE AS DIRECTED
_______________________________________________________ HEREON, AND IN THEIR DISCRETION ON ALL MATTERS. IF
NO DIRECTION IS SPECIFIED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE
FOR PROPOSALS 1 AND 2.
Change
of / / PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
Address WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
Attend / / EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
Meeting PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT
OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED
PERSON.
SIGNATURE(S) _____________________________________________________________ DATE _________
SIGNATURE(S) _____________________________________________________________ DATE _________
</TABLE>
