<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
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 Rule 14a-11(c) or Rule 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 7, 2000
---------------
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 7, 2000, commencing at 10 a.m., for the following
purposes:
1. to elect 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 2002 annual meeting of
shareholders;
2. to ratify the re-appointment of PricewaterhouseCoopers LLP as
the independent auditors of the Company for the fiscal year
ending March 31, 2001; and
3. to consider 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 Monday, June
19, 2000, will be entitled to vote at the meeting.
By Order of the Board of Directors
/s/ Robert W. August
--------------------
Robert W. August
Secretary
Rochester, New York
July 3, 2000
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 7, 2000
---------------
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
7, 2000, 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 6, 2000.
VOTING SECURITIES
Only shareholders of record at the close of business on Thursday, June
1, 2000 will be entitled to vote. At such date, the Company had outstanding
8,201,801 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.
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.
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
2
<PAGE> 4
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.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into two classes
having terms which expire at the Annual Meeting (Class 1) and at the 2001 annual
meeting of shareholders (Class 2). The five Class 1 directors are proposed for
re-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 2002 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 summarizes biographical information for the Class 1
directors, each of whom is nominated for re-election:
Burton S. August, 85, was elected to the Board of Directors in May
1969. He 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, 48, was elected to the Board of Directors in July
1982. He has been Senior Vice President - Store Support since October 1996 and
Secretary since July 1984. Mr. August was Senior Vice President - Marketing from
May 1992 through October 1996, Vice President - Marketing from July 1989 to May
1992, Executive Vice President from 1984 through July 1989, and has worked for
Monro in various other capacities since 1968. Mr. August is a director of ACM
Medical Laboratory, Inc.
Donald Glickman, 67, was elected to the Board of Directors in July
1984. He is a private investor and has been a partner of J.F. Lehman & Company,
an investment banking firm, since January 1992. 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 Lehman
Brothers (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 Burke Industries, Inc., MacNeal Schwendler Corporation, General
Aluminum Corporation and SDI, Inc., and a trustee of MassMutual Corporate
Investors and MassMutual Participation Investors. He is Chairman of Elgar
Electronics.
Lionel B. Spiro, 61, was elected to the Board of Directors in August
1992. He was the Chairman and President of Charrette Corporation of Woburn,
Massachusetts, a distributor of design supplies and imaging services, until July
1997, when he retired. Mr. Spiro co-founded Charrette Corporation in 1964.
W. Gary Wood, 49, was elected to the Board of Directors in February
1993. Mr. Wood currently is an independent business owner with operations in
computer services and specialty manufacturing. He was a principal with Deloitte
& Touche (in Michigan), an accounting, tax and consulting firm, from 1984
through 1993 in the management consulting practice, and has extensive experience
in retail strategy and operations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
DIRECTOR.
3
<PAGE> 5
The following summarizes biographical information for each of the
continuing Class 2 directors:
Charles J. August, 81, was elected to the Board of Directors in
February 1959. He 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, 60, was elected to the Board of Directors in
July 1984. He is President of Griffin Land & Nurseries, Inc. Mr. Danziger was
previously of counsel in the law firm of Latham & Watkins from 1995 to 1997, and
was a partner of the law firm of Mudge Rose Guthrie Alexander & Ferdon from 1974
to 1995. Mr. Danziger is a general partner of Ryan Instruments, L.P.
Jack M. Gallagher, 63, was elected to the Board of Directors in October
1987. He has been Director of Special Projects since January 1, 1999 and from
April 1995 to February 1998. Mr. Gallagher was interim President and Chief
Executive Officer from February 1998 through December 1998 and President and
Chief Executive Officer from October 1987 through March 1995. Prior to joining
the Company, 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 Co.,
where he was Chief Executive of the Fidesta Company, a 200-store nationwide
chain of tire and service centers.
Robert G. Gross, 42, was elected to the Board of Directors in February
1999. He has been President and Chief Executive Officer since January 1, 1999.
Prior to joining the Company, Mr. Gross was Chairman and Chief Executive Officer
of Tops Appliance City, Inc., a consumer electronics and appliance store chain
based in Edison, New Jersey, from 1995 to 1998. Mr. Gross also held various
management positions with Eye Care Centers of America, Inc., a San Antonio,
Texas based optometry company owned by Sears, Roebuck & Co., including President
and Chief Operating Officer from 1992 through 1994; Executive Vice President and
Chief Operating Officer from 1991 through 1992 and Senior Vice President from
1990 through 1991.
Peter J. Solomon, Chairman of the Board, 61, was elected to the Board
of Directors in July 1984. He has been Chairman of the Board of Directors of
Peter J. Solomon Company Limited, an investment banking firm, since May 1989.
From 1985 to May 1989, he was a Vice Chairman and a member of the board of
directors of Shearson Lehman Hutton, Inc. Mr. Solomon is a director of General
Cigar Holdings, Inc., Office Depot, Inc., Phillips-Van Heusen Corporation and
Baker, Fentress & Company.
EXECUTIVE OFFICERS
The name and business experience of each of the executive officers of
the Company, as of June 1, 2000, is set forth below to the extent not provided
above:
Catherine D'Amico, 44, has been Senior Vice President - Finance, Chief
Financial Officer and Treasurer since August 1993. Ms. D'Amico, a certified
public accountant, was previously a Senior Audit Manager with Price Waterhouse
LLP in Rochester, New York and was affiliated with such firm from 1978 to 1993.
Thomas J. Budreau, 43, has been Divisional Vice President - Eastern
Operations since December 1998. From October 1995 to November 1998, Mr. Budreau
was Vice President - Eastern Operations. Prior to joining the Company, Mr.
Budreau was the National Auto Express Service Manager for Montgomery Ward &
Co., Incorporated ("Montgomery Ward") from March 1994 to October 1995. From
November 1990 to March 1994, Mr. Budreau was a Regional Auto Express Manager
and from March 1988 to November 1990, a District Manager for Montgomery Ward.
From 1975 to March 1988, Mr. Budreau held various other management positions
with Montgomery Ward.
Christopher R. Hoornbeck, 49, has been Divisional Vice President -
Western Operations since December 1998. From October 1996 to November 1998,
Mr. Hoornbeck was a Zone Manager and has worked for Monro in various other
capacities since 1973.
4
<PAGE> 6
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of Common Stock and
Common Stock equivalents beneficially owned as of June 1, 2000 by (i) each
person or entity known to the Company to be the beneficial owners of more than
five percent of the Common Stock, (ii) each Class 1 director, each of whom is
nominated for re-election, (iii) each continuing Class 2 director, (iv) the
executive officers named in the Summary Compensation Table and (v) all directors
and executive officers as a group. Unless otherwise indicated, each of the named
individuals and each member of the group has sole voting power and sole
investment power with respect to the shares shown.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
BENEFICIALLY OPTION SHARES CLASS
5% SHAREHOLDERS, DIRECTORS AND OWNED EXERCISABLE INCLUDING
EXECUTIVE OFFICERS EXCLUDING OPTIONS WITHIN 60 DAYS OPTIONS
------------------ ----------------- -------------- -------
<S> <C> <C> <C>
Peter J. Solomon
767 Fifth Avenue
New York, NY 10153 1,440,676 (1) 18,234 (9) 16.8
FMR Corp.
82 Devonshire Street
Boston, MA 02109 744,000 (2) 9.1
Paradigm Capital Management, Inc.
9 Elk Street
Albany, NY 12207 685,763 (3) 8.4
Donald Glickman
450 Park Avenue
New York, NY 10022 589,049 (4) 18,234 (9) 7.4
Wellington Management Company, LLP
75 State Street
Boston, MA 02109 545,100 (5) 6.6
Dimensional Fund Advisors
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 468,874 (6) 5.7
Robert W. August 351,871 (7) 5,250 4.4
Jack M. Gallagher 112,671 (8) 136,407 3.0
Charles J. August 219,949 (7) 18,234 (9) 2.9
Robert G. Gross 109,000 62,652 2.1
Burton S. August 85,349 (7) 18,234 (9) 1.3
Christopher R. Hoornbeck 26,006 9,082 *
Frederick M. Danziger 13,226 18,234 (9) *
Catherine D'Amico 1,514 23,687 *
W. Gary Wood 4,432 18,234 (9) *
Lionel B. Spiro 4,149 18,234 (9) *
Thomas J. Budreau 0 6,542 *
All directors and executive officers
as a group (13 persons) 2,849,688 371,258 35.7 (10)
---------------
</TABLE>
* Less than 1% of the shares deemed outstanding.
(1) Includes 65,000 shares of Class C Preferred Stock (including 45,000
shares held in trust for the benefit of Mr. Solomon's children for
which Mr. Solomon is trustee) presently convertible into 450,466 shares
of Common Stock. Also includes 878,845 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. Peter J. Solomon is a principal shareholder and a
Class 2 director.
5
<PAGE> 7
(2) Beneficial ownership reported as of December 31, 1999, according to a
statement on Schedule 13G, dated February 14, 2000, of FMR Corp., a
parent holding company of Fidelity Management & Research Company, a
registered investment adviser.
(3) Beneficial ownership reported as of December 31, 1999, according to a
statement on Schedule 13G, dated February 7, 2000, of Paradigm Capital
Management, Inc., a registered investment adviser.
(4) Excludes shares of Common Stock owned by Mr. Glickman's children. Mr.
Glickman disclaims beneficial ownership of such shares. Donald Glickman
is a principal shareholder and a Class 1 director.
(5) Beneficial ownership reported as of December 31, 1999, according to a
statement on Schedule 13G, dated February 9, 2000, of Wellington
Management Company, LLP, a registered investment adviser.
(6) Beneficial ownership reported as of December 31, 1999, according to a
statement on Schedule 13G, dated February 11, 2000, of Dimensional Fund
Advisors Inc., a registered investment adviser.
(7) Includes 54,102 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.
(8) Includes 42,750 shares held in trust for the benefit of Mr. Gallagher's
children for which Mr. Gallagher is trustee. Mr. Gallagher disclaims
beneficial ownership of such shares held in trust.
(9) Options granted pursuant to the Non-Employee Directors' Stock Option
Plan.
(10) Exclusive of shares as to which beneficial ownership has been
disclaimed, officers and directors of the Company as a group owned
beneficially approximately 21.4% of Common Stock deemed outstanding on
June 1, 2000.
OTHER INFORMATION CONCERNING DIRECTORS
Burton S. August and Charles J. August are brothers. Burton S. August
is the father of Robert W. August.
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into an employment agreement (the "Agreement") in
November 1998 with Robert G. Gross, its President and Chief Executive Officer.
The Agreement, which provides for a base salary of $420,000, plus a bonus,
subject to the discretion of the Compensation Committee, has a five-year term
ending December 1, 2003. The Agreement includes a covenant against competition
with the Company for two years after termination. The Agreement provides the
executive with a minimum of one year's salary and certain additional rights in
the event of a termination without cause (as defined therein), or a termination
in the event of change in control (as defined therein).
Jack M. Gallagher entered into an employment agreement with the Company
through February 2003, pursuant to which he serves as Director of 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 $24,000 per year. During the term of the Agreement and for two
years after termination, Mr. Gallagher has agreed not to compete in any manner
with the business of the Company.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held six meetings during fiscal 2000(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 3,039 shares of Common Stock.
The Board of Directors has created four standing committees: a
four-member Governance Committee, a four-member Audit Committee, a four-member
Compensation and Benefits Committee (the "Compensation Committee") and a
four-member Stock Option Committee.
The Governance 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 2000, the
-------------------
(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
2000" are to the Company's fiscal year ended March 31, 2000).
6
<PAGE> 8
Governance Committee held no meetings. Its members are Robert W. August, Donald
Glickman, Robert G. Gross 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 2000. It consists of four members: Frederick M. Danziger,
Lionel B. Spiro and W. Gary Wood, each of whom is an independent director, and
Donald Glickman who is not independent. Donald Glickman receives payments from
Peter J. Solomon Company Limited, a firm with which the Company has a management
agreement. (See "Compensation Committee Interlocks and Insider Participation".)
The Audit Committee has adopted a written charter.
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 2000. Its members
are Donald Glickman, Robert G. Gross, 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
2000, the Stock Option Committee met one time. Its members are Charles J.
August, Jack M. Gallagher, Donald Glickman and Peter J. Solomon.
7
<PAGE> 9
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, 2000, (i) the Chief Executive Officer and (ii) the other four most highly
compensated executive officers of the Company (the "Named Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- ------
NAME AND FISCAL YEAR ALL OTHER
PRINCIPAL ENDED SALARY BONUS OPTIONS COMPENSATION (1)
POSITION MARCH 31, ($) ($) (#) ($)
-------- --------- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Robert G. Gross 2000 420,000 0 0 158,985
President and 1999 112,500 150,000 425,000
Chief Executive Officer (2)
Robert W. August 2000 150,400 0 0
Senior Vice President - 1999 150,400 0 10,500 538
Store Support, and Secretary 1998 146,900 0 0 2,642
Catherine D'Amico 2000 130,000 0 20,000
Senior Vice President - 1999 130,000 0 10,500 551
Finance, and Chief Financial Officer 1998 113,865 25,000 0 2,464
Thomas J. Budreau 2000 110,404 0 0 53,760
Divisional Vice President - 1999 97,068 0 5,000 8,980
Eastern Operations 1998 90,400 0 0 1,815
Christopher R. Hoornbeck 2000 110,404 0 0 38,754
Divisional Vice President - 1999 97,068 0 6,050 842
Western Operations 1998 90,400 0 0 7,092
------------
</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 2000
profit sharing contributions is not yet available.
For Mr. Gross, All Other Compensation for fiscal 2000 includes $104,595
forgiveness of principal due on the loan described in "Compensation
Committee Interlocks and Insider Participation"; and reimbursement of
$54,390 for relocation expenses.
For Messrs. Budreau and Hoornbeck, All Other Compensation for fiscal
2000 represents reimbursement for relocation expenses.
For Mr. Budreau, All Other Compensation for fiscal 1999 includes $8,638
for relocation expenses.
For Mr. Hoornbeck, All Other Compensation for fiscal 1999 and 1998
includes $500 and $5,599 for sales contests, respectively.
(2) Mr. Gross joined the Company in December 1998.
8
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, for the Company's fiscal year ended
March 31, 2000, information concerning the granting of options to the Named
Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS EXERCISE VALUE ASSUMING RATES
OPTIONS GRANTED IN PRICE EXPIRATION OF STOCK PRICE
NAME (#) (2) FISCAL YEAR (3) ($/SH) DATE APPRECIATION OF
---- ------- --------------- ------ ---- ---------------
5% (1) $ 10% (1) $
-------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Gross 0 - - - - -
Robert W. August 0 - - - - -
Catherine D'Amico 20,000 66.67 8.50 12/22/09 106,912 270,936
Thomas J. Budreau 0 - - - - -
Christopher R. Hoornbeck 0 - - - - -
-----------------
</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' term.
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 2000 under the Company's 1989 Employees'
Incentive Stock Option Plan. Subject to certain conditions, 25% of such
options become exercisable each year beginning one year after the date
of grant.
(3) Based on a total of 30,000 options granted to 18 employees of the
Company in fiscal 2000.
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, 2000, information concerning the exercise of options by the Named
Officers and the value of unexercised options of the Named Officers:
<TABLE>
<CAPTION>
NUMBER OF TOTAL VALUE OF
SHARES TOTAL NUMBER UNEXERCISED, IN-THE-MONEY OPTIONS
ACQUIRED ON OF UNEXERCISED OPTIONS HELD AT
EXERCISE VALUE HELD AT MARCH 31, 2000
REALIZED MARCH 31, 2000
NAME (#) ($) (#) ($)
---- --- --- --- ---
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Gross 0 0 62,652 362,348 31,483 182,080
Robert W. August 0 0 2,625 7,875 0 0
Catherine D'Amico 0 0 21,062 31,468 0 0
Thomas J. Budreau 0 0 5,881 6,010 0 0
Christopher R. Hoornbeck 0 0 8,820 4,768 0 0
---------------
</TABLE>
9
<PAGE> 11
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 2000 compensation consisted of a
salary of $420,000 in accordance with his employment agreement (see also
"Employment Agreements and Change-in-Control Arrangements"), and other benefits
extended to all full-time employees. Mr. Gross did not receive a bonus for
fiscal 2000 because the Company did not attain the minimum required percentage
of targeted profit performance set by the Compensation Committee. In fiscal
1999, in connection with his joining the Company, Mr. Gross received a $150,000
signing bonus. 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 comparable to those paid to executives holding similar positions
at other automotive service companies of comparable size. Bonuses are paid based
on attainment of profit targets. Executive officers did not receive profit-based
bonuses for fiscal 2000, 1999 and 1998 because the Company did not attain the
minimum required percentage of targeted profit performance. However, Robert G.
Gross received a signing bonus upon joining the Company in fiscal 1999 and
Catherine D'Amico was awarded a bonus in fiscal 1998 in connection with her
performance in the negotiation of the acquisition of the Speedy Muffler stores
in the United States (the "Speedy Stores") from Speedy Muffler King, Inc.
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 primarily of non-management directors. Under the stock option
plans, 616,258 shares are currently available for grants to employees. During
fiscal 2000, the Stock Option Committee granted options, including 20,000 to
Catherine D'Amico, Senior Vice President - Finance, and Chief Financial Officer
in recognition of her new and expanded management responsibilities. Options
exercisable for an aggregate of 21,273 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 and amended
in fiscal 1998 and 2000.
The executive officers participate in the Company's qualified, profit
sharing/401(k) 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 2000 did not exceed $50,000 or ten percent of his or
her cash compensation.
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 2000 will be deductible by the Company under such
tax laws.
10
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In December 1998, the Company loaned $523,000 to Robert G. Gross, its
President and Chief Executive Officer, to purchase 75,000 shares of the
Company's common stock at the then fair market value. This loan, which bears an
interest rate of 5.50% per annum, matures on December 1, 2003, and requires five
equal annual installments of principal beginning on the first anniversary of the
loan. If the Executive is employed with the Company when a principal payment is
due, that installment will be forgiven by the Company. All interest is due on
the fifth anniversary of the loan, and shall also be forgiven if the Executive
is employed with the Company at that time. The loan is secured by the common
stock.
The members of the Compensation Committee are Donald Glickman, Robert
G. Gross, Peter J. Solomon and Lionel B. Spiro.
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. In addition, PJSC, from time to time, provides
additional investment banking services to the Company for customary fees. The
firm provided financial advisory services to the Company in connection with the
acquisition of and financing for the Speedy Stores for fees of approximately $1
million in fiscal 1999. No additional fees were paid in fiscal 1998 or 2000.
Peter J. Solomon, Chairman of the Board and principal shareholder of the
Company, is Chairman of PJSC. Of the fees paid by the Company to PJSC,
approximately half were paid to Donald Glickman by PJSC for consulting services.
11
<PAGE> 13
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 sixty month period from March 31, 1995 to March
31, 2000 (March 31, 1995 = 100):
Monro Muffler Brake Inc (MNRO)
CUMULATIVE TOTAL RETURN
---------------------------------------
3/95 3/96 3/97 3/98 3/99 3/00
MONRO MUFFLER BRAKE, INC. 100 91 99 104 47 55
S & P INDUSTRIALS 100 130 155 227 278 340
S & P RETAIL (SPECIALTY) 100 107 113 127 112 73
12
<PAGE> 14
PENSION PLAN
The Company sponsors a noncontributory retirement plan which is intended to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Pension Plan"). As of September 30, 1999, participants ceased to accrue
benefits under the Pension Plan and no employees will become plan participants
after this date. Compensation and services after this date are not taken into
consideration in determining benefits under the Pension Plan. Prior to September
30, 1999, each employee who attained age 21 became a participant on the April 1
or October 1 following the date the employee completed one year of service.
Benefit payments generally begin upon retirement at age 65 or age 60 with 20
years of service.
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 to
participants under the Pension Plan upon retirement at age 65. The table does
not show the reduction for Social Security benefits (see formula below).
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Average Compensation Number of Years of Service
-------------------- ------------------------------------------------------------------------------------
5 10 15 20 25
- -- -- -- --
<S> <C> <C> <C> <C> <C>
$100,000 $22,500 $45,000 $45,000 $45,000 $45,000
80,000 18,000 36,000 36,000 36,000 36,000
</TABLE>
For the purpose of determining amounts payable under the Pension Plan
for each of the named executives, compensation includes the average of ten years
(i) base salary (including the amount of any reductions in the executive's
otherwise payable compensation attributable to any "cafeteria plan") plus (ii)
cash bonuses. For the last three years, the base salaries and bonuses of each
named executive are shown in the Summary Compensation Table. Compensation does
not include stock options ("Long Term Compensation" column) or the Company's
contributions to the Profit Sharing Plan ("All Other Compensation" column) shown
in the Summary Compensation Table. Compensation is limited to $100,000 for
determining amounts payable under the Pension Plan.
The following are the years of credited service as of March 31, 2000
(rounded to the nearest year) under the Pension Plan for each of the named
executives: Robert G. Gross - 0 years; Robert W. August - 26 years; Catherine
D'Amico - 7 years; Thomas J. Budreau - 5 years; and Christopher R. Hoornbeck -
27 years.
The basic benefit under the Pension Plan is a straight life annuity.
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 September 30, 1999, less (ii) 45% of the
monthly primary Social Security benefit payable to the participant at
retirement. The amount of the benefit is also reduced for short service
participants and participants terminating employment prior to retirement.
PROFIT SHARING PLAN
The Company sponsors a profit sharing plan with a 401(k) feature (the
"Profit Sharing Plan"). The Profit Sharing Plan is intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended.
Each employee who has attained age 21 becomes a participant as of the
first day of the month following completion of three months of service.
Participants may elect to reduce their compensation by up to the lesser of 15%
of their annual compensation or the statutorily prescribed annual limit ($10,500
in 2000) and to have the amount of the reduction contributed to their account in
the Profit Sharing Plan. One of the investment options available to participants
is the Company's stock.
13
<PAGE> 15
The Company may make discretionary matching contributions to the
matching accounts of those employees who are contributing to the Profit Sharing
Plan. The Board approves matching contributions quarterly. A discretionary
Company profit sharing contribution may also be made on an annual basis.
CERTAIN TRANSACTIONS
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, have interests. In fiscal 2000, the
Company paid or accrued $1,713,000 as rent for these stores. As of June 1, 2000,
most of these properties were subject to mortgages or notes under which such
persons or entities were obligated. Charles J. August, Burton S. August and
Robert W. August are directors of the Company.
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").
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 and executive officers, and
persons who beneficially own more than 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 2000, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with.
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
PricewaterhouseCoopers LLP as independent auditors to audit the books and
accounts of the Company for fiscal 2001. A representative of
PricewaterhouseCoopers 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.
THE BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the
annual meeting to be held in 2001 must be received by the Company by March 2,
2001 in order that they may be considered for inclusion in the proxy statement
and form of proxy relating to that meeting.
14
<PAGE> 16
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, 2000, 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
/s/ Robert W. August
--------------------
Robert W. August
Secretary
Rochester, New York
July 3, 2000
15
<PAGE> 17
________________________________________________________________________________
MONRO MUFFLER BRAKE, INC.
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Shareholders, August 7, 2000
The undersigned hereby appoints Robert G. Gross and Catherine D'Amico, as
proxies, each with the power to appoint his substitute and hereby authorizes
such person acting individually, to represent and to vote, as specified on the
reverse side hereof, all of the shares of common stock of Monro Muffler Brake,
Inc. which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders to be held at The Hutchison House, 930 East Avenue, Rochester,
New York, 14607, commencing at 10:00 a.m. on August 7, 2000 and at any
postponement or adjournment thereof; and in the discretion of the proxies, their
substitutes or delegates, to vote such shares and to represent the undersigned
in respect of other matters properly brought before the meeting.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS SPECIFIED BY THE
SIGNING SHAREHOLDER ON THE REVERSE SIDE HEREOF. UNLESS THE AUTHORITY TO VOTE FOR
ELECTION OF ANY NOMINEE FOR DIRECTOR IS WITHHELD IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE REVERSE SIDE HEREOF, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
(To Be Signed on Reverse Side.)
________________________________________________________________________________
<PAGE> 18
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
MONRO MUFFLER BRAKE, INC.
August 7, 2000
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Please Detach and Mail in the Envelope Provided
___________________________________________________________________________________________________________________________________
_ |
_____ | |
| | PLEASE MARK YOUR |_ _ _
A | X | VOTES AS IN THIS
|_____| EXAMPLE.
WITHHOLD
FOR authority for
all nominees all nominees FOR AGAINST ABSTAIN
1. To elect _____ _____ NOMINEES: Burton S. August 2. Ratification of the _____ _____ _____
five Class 1 | | | | Robert W. August re-appointment of | | | | | |
directors to | | | | Donald Glickman PricewaterhouseCoopers | | | | | |
the Board of |_____| |_____| Lionel B. Spiro LLP as the independent |_____| |_____| |_____|
Directors to serve a two-year term, and until W. Gary Wood auditors of the Company
their successors are duly elected and qualified for the fiscal year
at the 2002 annual meeting of shareholders. ending March 31, 2001.
(INSTRUCTIONS: To withhold authority to vote for any 3. Considering such other business as may properly be
individual nominee, write the person's name below.) brought before the meeting or any adjournment or
postponement thereof.
____________________________________________________
_____
Mark here for | |
change of address | |
and note at left. |_____|
_____ _____
I will not | | I will | |
attend | | attend | |
meeting |_____| meeting |_____|
SIGNATURE ______________________________________ DATE _______________ ______________________________________ DATE _______________
SIGNATURE, IF SHARES HELD JOINTLY
INSTRUCTION: Please sign exactly as your name appears hereon. When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, 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.
___________________________________________________________________________________________________________________________________
</TABLE>
