Note 19.21. Earnings Per Share
A reconciliation of the numerators and denominators of basic earnings per share and earnings per share assuming dilution is shown in the table below:
Fiscal Year Ended | ||||||||||||||
| August 26, 2020 | August 28, 2019 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||
| Numerator: | ||||||||||||||
| Loss from continuing operations | $ | (29,421) | $ | (15,219) | ||||||||||
| Net Loss | $ | (29,450) | $ | (15,226) | ||||||||||
| Denominator: | ||||||||||||||
| Denominator for basic earnings per share—weighted-average shares | 30,294 | 29,786 | ||||||||||||
| Effect of potentially dilutive securities: | ||||||||||||||
| Employee and non-employee stock options | 0 | 0 | ||||||||||||
| Denominator for earnings per share assuming dilution | 30,294 | 29,786 | ||||||||||||
| Loss from continuing operations: | ||||||||||||||
| Basic | $ | (0.97) | $ | (0.51) | ||||||||||
Assuming dilution (a) | $ | (0.97) | $ | (0.51) | ||||||||||
| Net loss per share: | ||||||||||||||
| Basic | $ | (0.97) | $ | (0.51) | ||||||||||
Assuming dilution (a) | $ | (0.97) | $ | (0.51) | ||||||||||
Fiscal Year Ended | ||||||||
| August 28, 2019 | August 29, 2018 | |||||||
| (In thousands, except per share data) | ||||||||
| Numerator: | ||||||||
| Loss from continuing operations | $ | (15,219 | ) | $ | (32,954 | ) | ||
| Net Loss | $ | (15,226 | ) | $ | (33,568 | ) | ||
| Denominator: | ||||||||
| Denominator for basic earnings per share—weighted-average shares | 29,786 | 29,901 | ||||||
| Effect of potentially dilutive securities: | ||||||||
| Employee and non-employee stock options | — | — | ||||||
| Denominator for earnings per share assuming dilution | 29,786 | 29,901 | ||||||
| Loss from continuing operations: | ||||||||
| Basic | $ | (0.51 | ) | $ | (1.10 | ) | ||
Assuming dilution (a) | $ | (0.51 | ) | $ | (1.10 | ) | ||
| Net loss per share: | ||||||||
| Basic | $ | (0.51 | ) | $ | (1.12 | ) | ||
Assuming dilution (a) | $ | (0.51 | ) | $ | (1.12 | ) | ||
(a) Potentially dilutive shares, not included in the computation of net income per share because to do so would have been anti-dilutive, totaled 76,572 shares in fiscal 2020 and 63,000 shares in fiscal 2019 and no shares in fiscal 2018.2019. Additionally, stock options with exercise prices exceeding market close prices that were excluded from the computation of net income per share amounted to 860,501 shares in fiscal 2020and 1,387,000 shares in fiscal 2019and 1,653,000 shares in fiscal 2018.2019.
Note 20.22. Shareholder Rights Plan
On February 15, 2018, the Board of Directors adopted a rights plan with a 10% triggering threshold and declared a dividend distribution of one right initially representing the right to purchase one half of a share of Luby’s common stock, upon specified terms and conditions. The rights plan was effective immediately.
The Board adopted the rights plan in view of the concentrated ownership of Luby’s common stock as a means to ensure that all of Luby’s stockholders are treated equally. The rights plan is designed to limit the ability of any person or group to gain control of Luby’s without paying all of Luby’s stockholders a premium for that control. The rights plan was not adopted in response to any specific takeover bid or other plan or proposal to acquire control of Luby’s.
If a person or group acquires 10% or more of the outstanding shares of Luby’s common stock (including in the form of synthetic ownership through derivative positions), each right will entitle its holder (other than such person or members of such group) to purchase, for $12.00, a number of shares of Luby’s common stock having a then-current market value of twice such price. The rights plan exempts any person or group owning 10% or more (35.5% or more in the case of Harris J. Pappas, Christopher J. Pappas and their respective affiliates and associates) of Luby’s common stock immediately prior to the adoption of the rights plan. However, the rights will be exercisable if any such person or group acquires any additional shares of Luby’s common stock (including through derivative positions) other than as a result of equity grants made by Luby’s to its directors, officers or employees in their capacities as such.
Prior to the acquisition by a person or group of beneficial ownership of 10% or more of the outstanding shares of Luby’s common stock, the rights are redeemable for 1 cent per right at the option of Luby’s Board of Directors.
The dividend distribution was made on February 28, 2018 to stockholders of record on that date. Unless and until a triggering event occurs and the rights become exercisable, the rights will trade with shares of Luby’s common stock.
Luby’s financial condition, operations, and earnings per share was not affected by the adoption of the rights plan.
On February 11, 2019, the Board of Directors approved the first amendment to the shareholder rights plan extending the term of the plan to February 15, 2020. On February 14, 2020, the Board of Directors approved the second amendment to the shareholder rights plan extending the term of the plan to February 15, 2021. See Note 2. Subsequent Events.
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Note 21.23. Quarterly Financial Information
The following tables summarize quarterly unaudited financial information for fiscal 20192020 and 2018.2019.
Quarter Ended | |||||||||||||||||||||||
| August 26, 2020 | June 3, 2020 | March 11, 2020 | December 18, 2019 | ||||||||||||||||||||
| (84 days) | (84 days) | (84 days) | (112 days) | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Restaurant sales | $ | 25,729 | $ | 13,832 | $ | 60,392 | $ | 83,558 | |||||||||||||||
| Franchise revenue | 576 | 193 | 1,158 | 1,707 | |||||||||||||||||||
| Culinary contract services | 5,012 | 4,963 | 6,998 | 9,774 | |||||||||||||||||||
| Vending revenue | 0 | 6 | 14 | 110 | |||||||||||||||||||
| Total sales | $ | 31,317 | $ | 18,994 | $ | 68,562 | $ | 95,149 | |||||||||||||||
| Income (loss) from continuing operations | 7,674 | (24,972) | (3,796) | (8,327) | |||||||||||||||||||
| Loss from discontinued operations | (5) | (7) | (6) | (11) | |||||||||||||||||||
| Net income (loss) | $ | 7,669 | $ | (24,979) | $ | (3,802) | $ | (8,338) | |||||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | 0.25 | $ | (0.82) | $ | (0.13) | $ | (0.28) | |||||||||||||||
| Assuming dilution | $ | 0.25 | $ | (0.82) | $ | (0.13) | $ | (0.28) | |||||||||||||||
Costs and Expenses (as a percentage of restaurant sales) | |||||||||||||||||||||||
| Cost of food | 27.7 | % | 29.2 | % | 28.8 | % | 28.7 | % | |||||||||||||||
| Payroll and related costs | 32.8 | % | 39.7 | % | 39.4 | % | 38.5 | % | |||||||||||||||
| Other operating expenses | 23.2 | % | 41.7 | % | 16.7 | % | 17.7 | % | |||||||||||||||
| Occupancy costs | 10.3 | % | 26.7 | % | 6.3 | % | 6.0 | % | |||||||||||||||
Results for the quarter ended August 26, 2020 includes:
(1) $4.3 million net gain in Provision for asset impairments and store closings is due to the termination of 17 leases for locations where we permanently ceased operations and negotiated buyouts of the leases.
(2) $8.7 million net gain on disposition of property and equipment, primarily due to the gain on the sale of 5 properties previously held for sale and 1 property previously held for use, partially offset by routine asset retirements.
| Quarter Ended | |||||||||||||||||||||||
| August 28, 2019 | June 5, 2019 | March 13, 2019 | December 19, 2018 | ||||||||||||||||||||
| (84 days) | (84 days) | (84 days) | (112 days) | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Restaurant sales | $ | 62,434 | $ | 65,611 | $ | 65,370 | $ | 91,098 | |||||||||||||||
| Franchise revenue | 1,563 | 1,482 | 1,421 | 2,224 | |||||||||||||||||||
| Culinary contract services | 7,278 | 7,571 | 7,543 | 9,496 | |||||||||||||||||||
| Vending revenue | 88 | 102 | 90 | 99 | |||||||||||||||||||
| Total sales | $ | 71,363 | $ | 74,766 | 74,424 | $ | 102,917 | ||||||||||||||||
| Income (loss) from continuing operations | (9,081) | (5,295) | 6,640 | (7,483) | |||||||||||||||||||
| Income (loss) from discontinued operations | 12 | (6) | (8) | (5) | |||||||||||||||||||
| Net income (loss) | $ | (9,069) | $ | (5,301) | $ | 6,632 | $ | (7,488) | |||||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | (0.30) | $ | (0.18) | $ | 0.22 | $ | (0.25) | |||||||||||||||
| Assuming dilution | $ | (0.30) | $ | (0.18) | $ | 0.22 | $ | (0.25) | |||||||||||||||
Costs and Expenses (as a percentage of restaurant sales) | |||||||||||||||||||||||
| Cost of food | 28.5 | % | 28.2 | % | 27.8 | % | 27.5 | % | |||||||||||||||
| Payroll and related costs | 38.8 | % | 38.1 | % | 37.8 | % | 37.9 | % | |||||||||||||||
| Other operating expenses | 18.4 | % | 17.5 | % | 17.5 | % | 18.1 | % | |||||||||||||||
| Occupancy costs | 6.5 | % | 6.1 | % | 6.4 | % | 6.4 | % | |||||||||||||||
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Quarter Ended | |||||||||||||||
| August 28, 2019 | June 6, 2019 | March 14, 2019 | December 20, 2018 | ||||||||||||
| (84 days) | (84 days) | (84 days) | (112 days) | ||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| Restaurant sales | $ | 62,434 | $ | 65,611 | $ | 65,370 | $ | 91,098 | |||||||
| Franchise revenue | 1,563 | 1,482 | 1,421 | 2,224 | |||||||||||
| Culinary contract services | 7,278 | 7,571 | 7,543 | 9,496 | |||||||||||
| Vending revenue | 88 | 102 | 90 | 99 | |||||||||||
| Total sales | $ | 71,363 | $ | 74,766 | $ | 74,424 | $ | 102,917 | |||||||
| Loss from continuing operations | (9,081 | ) | (5,295 | ) | 6,640 | (7,483 | ) | ||||||||
| Loss from discontinued operations | 12 | (6 | ) | (8 | ) | (5 | ) | ||||||||
| Net loss | $ | (9,069 | ) | $ | (5,301 | ) | $ | 6,632 | $ | (7,488 | ) | ||||
| Net loss per share: | |||||||||||||||
| Basic | $ | (0.30 | ) | $ | (0.18 | ) | $ | 0.22 | $ | (0.25 | ) | ||||
| Assuming dilution | $ | (0.30 | ) | $ | (0.18 | ) | $ | 0.22 | $ | (0.25 | ) | ||||
Costs and Expenses (as a percentage of restaurant sales) | |||||||||||||||
| Cost of food | 28.5 | % | 28.2 | % | 27.8 | % | 27.5 | % | |||||||
| Payroll and related costs | 38.8 | % | 38.1 | % | 37.8 | % | 37.9 | % | |||||||
| Other operating expenses | 18.4 | % | 17.5 | % | 17.5 | % | 18.1 | % | |||||||
| Occupancy costs | 6.5 | % | 6.1 | % | 6.4 | % | 6.4 | % | |||||||
| Quarter Ended | |||||||||||||||
| August 29, 2018 | June 6, 2018 | March 14, 2018 | December 20, 2017 | ||||||||||||
| (91 days) | (84 days) | (84 days) | (112 days) | ||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| Restaurant sales | $ | 75,782 | $ | 77,803 | $ | 74,351 | $ | 104,582 | |||||||
| Franchise revenue | 1,633 | 1,444 | 1,401 | 1,887 | |||||||||||
| Culinary contract services | 6,369 | 6,639 | 5,889 | 6,885 | |||||||||||
| Vending revenue | 119 | 118 | 151 | 143 | |||||||||||
| Total sales | $ | 83,903 | $ | 86,004 | 81,792 | $ | 113,497 | ||||||||
| Loss from continuing operations | (1,858 | ) | (14,133 | ) | (11,461 | ) | (5,502 | ) | |||||||
| Loss from discontinued operations | (6 | ) | (463 | ) | (110 | ) | (35 | ) | |||||||
| Net loss | $ | (1,864 | ) | $ | (14,596 | ) | $ | (11,571 | ) | $ | (5,537 | ) | |||
| Net loss per share: | |||||||||||||||
| Basic | $ | (0.06 | ) | $ | (0.48 | ) | $ | (0.39 | ) | $ | (0.19 | ) | |||
| Assuming dilution | $ | (0.06 | ) | $ | (0.48 | ) | $ | (0.39 | ) | $ | (0.19 | ) | |||
Costs and Expenses (as a percentage of restaurant sales) | |||||||||||||||
| Cost of food | 27.8 | % | 28.6 | % | 28.5 | % | 28.5 | % | |||||||
| Payroll and related costs | 37.5 | % | 37.8 | % | 38.3 | % | 36.5 | % | |||||||
| Other operating expenses | 17.7 | % | 19.3 | % | 19.3 | % | 18.6 | % | |||||||
| Occupancy costs | 6.4 | % | 5.9 | % | 6.3 | % | 6.0 | % | |||||||
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
We have had no disagreements with our accountants on any accounting or financial disclosures.
Item 9A. Controls and Procedures
Evaluation of Disclosure Control and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of August 28, 2019.26, 2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of August 28, 2019,26, 2020, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect material misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework-2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, we concluded that our internal control over financial reporting was effective as of August 28, 2019.
26, 2020.
Changes in Internal Control over Financial Reporting
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
DIRECTORS
 | GERALD W. BODZY, 69, is President of Bodzy Investment Partnership, Ltd. Mr. Bodzy has been a director of the Company since 2016 and is Chairman of the Board, Chair of the Nominating and Corporate Governance Committee, a member of the Compensation Committee, a member of the Finance and Audit Committee and Co-Chair of the Special Committee. He is also a director of the Boys & Girls Club of Greater Houston, a national trustee of National Jewish Health, Denver, Colorado, where he has been a member of the investment committee since 2000, and a member of Phi Beta Kappa. From 2004 to 2020, Mr. Bodzy was President and owner of Showcase Custom Vinyl Windows and Doors. From 1990 to 2000, Mr. Bodzy was a Managing Director of Stephens, Inc. where he headed the investment banking firm’s Houston office. From 1979 to 1990, he was employed by Smith Barney, Inc. in New York (as Managing Director from 1986). From 1976 to 1990, he worked in the real estate group at General Crude Oil Company in Houston. Mr. Bodzy is a former director of Oshman’s Sporting Goods, Benchmark Electronics, and Republic Bankshares of Texas. He earned a B.A. Degree in Economics from the University of Texas in 1973 and a J.D. Degree from the University of Texas School of Law in 1976. Qualifications, Experience, Key Attributes and Skills: Mr. Bodzy has over 40 years of experience in investment banking, investments, and business management, including 11 years at Smith Barney and 10 years at Stephens, Inc., in both firms culminating in service as Managing Director, representing clients in equity and debt offerings and mergers and acquisitions. Most recently, he has served 16 years at Showcase Custom Vinyl Windows and Doors as President and owner. Mr. Bodzy also has significant board experience from his service on boards of banks, retail, and manufacturing companies, where he has also served on audit, compensation, and nominating committees. | ||||
 | TWILA DAY, 58, is currently the Vice President and Chief Information Officer for Huntsman Corporation as of November 2018. As CIO, she is accountable for the global technology investments and operations, leading strategic planning, and ensuring compliance with the company covenants and regulatory controls including SOX, cyber security, and Global Data Protection Regulation (GDPR). Prior to Huntsman, from August 2013 until October 2018, Ms. Day was Managing Director, National Practice Lead for Technology Services, and a member of the Executive Technology Advisor Group for Alvarez and Marsal. While at Alvarez and Marsal, she advised companies in the national restaurant, energy, pharmaceutical, construction, and engineering/manufacturing sectors providing them with objective and independent advice on technology strategies, process improvement, IT initiatives, post-merger integration and security risk management. In 1992, Ms. Day began working for Sysco Corporation as a programmer/analyst and advanced through various Information Technology positions where she ultimately became Chief Information Officer in January 2006 and held that role through June 2013. While at Sysco, she focused on driving strategic change initiatives that intersected business transformation with information technology solutions. Ms. Day also served as a member of Sysco's enterprise risk management executive committee as the risk owner for data protection, cyber security, and information technology availability. Ms. Day graduated from Our Lady of Lake University in 1989 with a Bachelor of Arts degree in Business Management. Ms. Day serves as a member of the Finance and Audit Committee, the Compensation Committee and the Special Committee. Qualifications, Experience, Key Attributes, and Skills: Ms. Day has more than 30 years of experience connecting Information Technology with the business. With her broad technology expertise, she has served as a trusted advisor to executives translating technology into "plain English" and helping them ensure their technology investments create value and competitive advantage. | ||||
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 | JILL GRIFFIN, 65, has advised corporations, both domestically and abroad, on customer loyalty and leadership strategies as Principal of Austin-based, Jill Griffin Executive Learning since 1988. She is Forbes.com "Careers" columnist, a Fox News contributor and is a frequent guest on radio programs including Wharton Women @ Work. The author of six books, her latest is Follow These Leaders, a compilation of "Best Business and Life advice" from people from all walks of life. Ms. Griffin has been an Independent Director since 2003 and currently serves as Vice-Chair of the Board. She also serves as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. She began her career at RJR Tobacco company where she ultimately served as Senior Brand Manager of Winston, the corporations largest brand. Ms. Griffin is a magna cum laude graduate, Distinguished alumna recipient, and commencement speaker and past Trustee, of the University of South Carolina Moore School of Business from which she holds Bachelor of Science and MBA degrees. She has served on the Marketing faculty at the University of Texas where her books have been adopted as text books for MBA classes. Ms. Griffin is a member of the Advisory Board of the Austin Chapter of National Association of Corporate Board Directors, Advisory Board member of Broadway Bank, and past Chairwoman of Visit Austin.org. Qualifications, Experience, Key Attributes, and Skills: Ms. Griffin has more than 35 years’ experience, has published six books, and is widely regarded as an expert on the topics of brand management, brand loyalty, and customer experience. Furthermore, she brings leadership and management experience from her distinguished career at RJR/Nabisco, culminating in Senior Brand Manager for the corporation’s largest brand, and her Austin-based, Jill Griffin Executive Learning, which she founded and operates. | ||||
 | FRANK MARKANTONIS, 72, is an attorney with over forty years of legal experience representing clients in the restaurant industry, with a concentration in real estate development, litigation defense, insurance procurement and coverage, immigration, and employment law. From 1992 until his retirement in 2020, he served as General Counsel of Pappas Restaurants, Inc., a Houston based restaurant group. He is a graduate of the University of Texas at Austin (1970) and the University of Houston Law Center (1973). Mr. Markantonis is admitted to practice in the following jurisdictions and before the following courts: The United States Supreme Court, District of Columbia Court of Appeals, United States Court of Appeals for the Fifth Circuit, The United States District Court for the Southern District of Texas, and the State of Texas. Mr. Markantonis is a member of the State Bar of Texas, District of Columbia Bar, and is a Fellow in the Houston Bar Foundation. He has been a director of the Company since January 2002. Qualifications, Experience, Key Attributes, and Skills: Mr. Markantonis brings extensive state and federal legal experience from his more than 45 years as a practicing attorney representing clients in the restaurant industry. He has represented his clients in all areas of legal practice affecting the operations of restaurants and hospitality clients, including real estate development, litigation defense, insurance procurement and coverage, immigration and employment law, and business transactions. | ||||
 | JOE C. McKINNEY, 74, had been Vice-Chairman of Broadway National Bank, a locally owned and operated San Antonio-based bank, since October 2002 until his retirement in March 2020. He formerly served as Chairman of the board of directors and Chief Executive Officer of JPMorgan Chase Bank-San Antonio from November 1987 until his retirement in March 2002. Mr. McKinney graduated from Harvard University in 1969 with a Bachelor of Arts in Economics, and he graduated from the Wharton School of the University of Pennsylvania in 1973 with a Master of Business Administration in Finance. Mr. McKinney has been an independent director of the Company since January 2003 and is Chair of the Finance and Audit Committee, a member of the Nominating and Corporate Governance Committee, a member of the Compensation Committee, and a member of the Special Committee. He is a former director of Broadway National Bank; Broadway Bancshares, Inc.; New York Liquidating LLC (NYRT); USAA Real Estate Company; US Industrial REIT I, II, and III; US Global Investors Funds; and Prodigy Communications Corporation. Qualifications, Experience, Key Attributes, and Skills: Mr. McKinney has over 45 years of experience in banking, finance, and management from his distinguished career in banking, culminating in a tenure of over 14 years as Chairman of the Board and Chief Executive Officer of JPMorgan Chase Bank-San Antonio and 17.5 years as Vice-Chairman of Broadway National Bank. He further brings significant board experience from his service on over six boards of banks, investment funds, and corporations. | ||||
76
 | GASPER MIR, III, 74, since his retirement as a principal owner of the professional services firm MFR Group, Inc. (formerly known as MFR P.C.) ("MFR"), which he founded in 1988, Mr. Mir has served as an independent business consultant. From 2008 and until his retirement, he served as MFR's Chief Administrative Officer, and prior to that his work included financial audit and accounting services for clients in the retail industry. From January 2003 through January 2008, Mr. Mir took a leave of absence from MFR and served as Executive General Manager of Strategic Partnerships for the Houston Independent School District. From 1969 until 1987, he worked at KPMG LLP, an international accounting and professional services firm, serving as a partner of the firm from 1978 until 1987. Mr. Mir has been a director of the Company since January 2002 and is a member of the Nominating and Corporate Governance Committee, the Finance and Audit Committee, and the Special Committee. Mr. Mir is also a director of the Galveston-Houston Archdiocese Council of the Society of St. Vincent de Paul and the Houston A+ Challenge. Qualifications, Experience, Key Attributes, and Skills: Mr. Mir has more than 46 years of experience in accounting, finance, and audit from his distinguished tenure at the accounting firms KPMG LLP and MFR. He is an active member of NACD and regularly participates in their professional development conferences. Additionally, Mr. Mir has experience in public relations, government, education, health care and community outreach from his board service on several community-based organizations. | ||||
 | JOHN MORLOCK, 65, was previously Chief Executive Officer of Hale and Hearty for eighteen months where he helped with the successful selling of the company in June of 2019. Prior to that, he served as the Chief Operating Officer of Sbarro, working with company stores as they were converting to a franchise system. From 2002 to 2015 he served as Chief Operating Officer of Potbelly Sandwich Works as they grew from 16 to 450 stores and was instrumental in its initial public offering in 2013. In 1993, Mr. Morlock became a co-owner of Boston Chicken where he served as Senior Vice President of Operations before going on to be its largest franchisee. Following the start of his career in 1977, Mr. Morlock has also held various positions with Steak and Ale restaurants, Grady's Goodtimes, the first and largest Blockbuster franchise, and Blockbuster corporate. Mr. Morlock has been an independent director of the Company since July 2019, Chair of the Compensation Committee, and a member of the Special Committee. Qualifications, Experience, Key Attributes, and Skills: Mr. Morlock has over 40 years of restaurant and retail management experience and has been involved with companies both on the franchise and franchisee side. Further, he has been directly involved in both start-up and turnaround situations in the public and private sector, and he been a Chief Operating Officer of a public company as well as the served of 4 privately held board of directors. | ||||
 | CHRISTOPHER J. PAPPAS, 73, has been President and Chief Executive Officer and a director of the Company since March 2001. He also has been Chief Executive Officer of Pappas Restaurants, Inc. since 1980. Mr. Pappas graduated from the University of Texas with a Bachelor of Science in Mechanical Engineering. Mr. Pappas is also an advisory director of Amegy Bank N.A.; the University of Houston Conrad Hilton School of Hotel and Restaurant Management Dean’s Advisory Board; the Greater Houston Partnership Board; and a director emeritus of the National Restaurant Association. Qualifications, Experience, Key Attributes, and Skills: Mr. Pappas has more than 42 years of experience in the restaurant industry. With his brother, Harris Pappas, he has founded and operated more than 90 restaurants during his successful career, including Pappadeaux Seafood Kitchen, Pappasitos Cantina, and Pappas Bros. Steakhouse. Additionally, Mr. Pappas has broad executive management and operational experience from his 36-year tenure as Chief Executive Officer of Pappas Restaurants, Inc. He also has extensive board and banking experience from his tenure as a board member in previous years and currently as an advisory board member Amegy Bank. Mr. Pappas is widely regarded as a restaurant industry expert. | ||||
77
 | RANDOLPH C. READ, 68, has served as an independent Director of our Company since August 2019 and currently serves as Co-Chairman of the Board’s Special Committee and a member of the Finance & Audit Committee and Nominating & Corporate Governance Committee. Mr. Read has been President and Chief Executive Officer of Nevada Strategic Credit Investments, LLC since 2009. Mr. Read has served since November 2018 as an independent Manager/Director and Chairman of the Board of New York REIT Liquidating, LLC, a successor to New York REIT, Inc., a publicly traded real estate investment trust, where Mr. Read served as an independent Director from December 2014 to November 2018, including as Chairman of its Board of Directors from June 2015 to November 2018. Mr. Read has served since June 2018 as an independent Director of SandRidge Energy, Inc., a publicly traded energy company and serves on various committees thereto including as Chairman of their Audit Committee and Chairman of their Finance and Special Committee. Mr. Read has served since August 2020 as an independent director and Chairman of the Board of Enzon Pharmaceuticals, Inc., a publicly traded acquisition vehicle, as well as Chairman of its Finance and Audit Committee. Mr. Read served as an independent Director of Business Development Corporation of America from December 2014 to June 2018. Mr. Read also served as an independent Director of Business Development Corporation of America II from December 2014 until its liquidation and dissolution in December 2015. Mr. Read served as the Chairman of the Board of Directors of Healthcare Trust, Inc., a real estate investment trust, from February 2015 to October 2016. Mr. Read has previously served as president and other senior positions of a variety of other companies and has previously served on a number of public and private company boards and advisory boards, including the Flying Food Group. In certain of these positions, various food service operations were involved, including at Wynn Resorts, the Dunes Casino and Resort, Greenspun Gaming, and Regent Air. Mr. Read is admitted as a Certified Public Accountant and has an M.B.A. in Finance from the Wharton Graduate School of the University of Pennsylvania and a B.S. from Tulane University. Qualifications, Experience, Key Attributes, and Skills: It is believed that Mr. Read’s significant business experience as a director and an executive officer of entities in a variety of industries, as well as capital markets, governance, and operations, in addition to his financial expertise and leadership qualities and roles, make him well qualified to serve as a member of the Board of Directors of Luby’s, Inc. | ||||
EXECUTIVE OFFICERS
Certain information is incorporatedset forth below concerning the executive officers of the Company, each of whom has been elected to serve until his successor is duly elected and qualified:
Name | Served as Officer Since | Positions with Luby's, Inc. | Age | |||||||||||||||||
| Christopher J. Pappas | 2001 | President and CEO (since March 2001) | 73 | |||||||||||||||||
| Benjamin T. Coutee | 2007 | Chief Operating Officer (since October 2018); Senior Vice President of Operations (2011 to 2018); Division Vice President, Culinary Services (2007 to 2011) | 54 | |||||||||||||||||
| Steven Goodweather | 2009 | Chief Financial Officer and Treasurer (since April 2020); Vice President of Financial Planning & Analysis (October 2009 to April 2020); Director, Financial Planning & Analysis (October 2006 to October 2009) | 51 | |||||||||||||||||
| Philip J. Rider | 2019 | Chief Accounting Officer and Controller (since April 2020): Vice President - Accounting and SEC Reporting (October 2019 to April 2020) | 62 | |||||||||||||||||
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CORPORATE GOVERNANCE
Governance Highlights
The Company remains committed to maintaining sound corporate governance practices, including:
•a separate independent chairman and CEO;
•a large majority of independent directors;
•regular executive session meetings of non-management directors; and
•an ongoing Board refreshment initiative.
Committees of the Board
The Board currently maintains the following standing committees: Finance and Audit, Nominating and Corporate Governance and Compensation. In November 2019, the Board eliminated the Personnel and Administrative Policy and Executive Committees as standing committees of the Board and renamed the Executive Compensation Committee as the Compensation Committee (the "Standing Committee Restructuring"). The Board currently maintains a Board Special Committee comprised of independent directors with the purpose of establishing a strategic review process with the objective of maximizing shareholder value. All committees meet as necessary to fulfill their responsibilities. The Board has directed each committee to consider matters within its areas of responsibility and to make recommendations to the full Board for action on these matters.
Finance and Audit Committee
The Finance and Audit Committee is a standing audit committee established to oversee the Company’s accounting and financial reporting processes and the audit of the Company’s financial statements. Its primary functions are to monitor and evaluate corporate financial plans and performance and to assist the Board in this Item 10monitoring: (1) the integrity of the financial statements of the Company; (2) the review of the Company's filings; (3) the Company’s compliance with legal and regulatory requirements; (4) the qualifications and independence of the Company’s independent registered public accounting firm; (5) the performance of the Company’s internal audit function and its independent registered public accounting firm; (6) the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures; and (7) the review of the Company's financial status and plans. Management is responsible for preparing the financial statements, and the independent registered public accounting firm is responsible for auditing those financial statements. The Finance and Audit Committee is also directly responsible for the appointment, compensation, retention, and oversight of the work of the Company’s independent registered public accounting firm and the preparation of the Finance and Audit Committee Report below. A copy of the current Finance and Audit Committee Charter adopted by referencethe Board is available in print to any shareholder upon request and can be found on the Company’s website at www.lubysinc.com. All members of the Finance and Audit Committee are independent directors as described under “Director Independence” on page 92. The Finance and Audit Committee met ten times during the last fiscal year.
The Board determined that portionJoe McKinney, Gasper Mir, III, Gerald W. Bodzy, and Randolph C. Read are “audit committee financial experts” as defined in rules of the SEC adopted pursuant to the Sarbanes-Oxley Act of 2002 and each is “independent” as independence for audit committee members is defined in the corporate governance standards of the NYSE.
At least quarterly, members of the Finance and Audit Committee have the opportunity to meet privately with representatives of the Company’s independent registered public accounting firm and with the Company’s internal auditor.
As of August 26, 2020, the members of the Finance and Audit Committee were: Joe C. McKinney (Chair); Gerald W. Bodzy; Gasper Mir, III, Randolph C. Read, and Twila Day.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is a standing committee of the Board whose primary functions are: (1) to maintain oversight of the development, structure, performance, and evaluation of the Board; (2) to seek and recommend candidates to fill vacancies on the Board; (3) to review Board and committee performance; (4) to recommend appropriate Board action on renewal terms of service for incumbent members as their terms near completion; (5) to oversee the evaluation of management performance; and (6) to develop and periodically review the Company’s Corporate Governance Guidelines and recommend such changes as may be determined appropriate to the Board so as to reflect the responsibilities of the Board and the manner in which the enterprise should be governed in compliance with best practices. A copy of the current Nominating and Corporate Governance Committee Charter is available in print to any shareholder upon request and can be found on the Company’s website at www.lubysinc.com. All members of the Nominating and Corporate Governance Committee
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are independent directors as described below. The Nominating and Corporate Governance Committee met one time during the last fiscal year.
As of August 26, 2020, the members of the Nominating and Corporate Governance Committee were: Gerald W. Bodzy (Chair); Jill Griffin; Joe C. McKinney; Gasper Mir, III; and Randolph C. Read.
Compensation Committee
The Compensation Committee (formerly known as the Executive Compensation Committee) is a standing committee of the Board, consisting of independent directors, whose primary functions are: (1) to discharge the Board’s responsibilities relating to compensation of our definitive proxy statementNamed Executive Officers; (2) to administer the Company's equity-based compensation plans; and (3) to communicate to shareholders the Company’s executive compensation policies and the reasoning behind such policies. The Compensation Committee may delegate its responsibilities to a subcommittee consisting of one or more of its members. The Compensation Committee Charter is available in print to any shareholder upon request and can be found on the Company’s website at www.lubysinc.com. All members of the Compensation Committee are independent directors as described under “Director Independence” on page 92. The Compensation Committee met five times during the last fiscal year.
For information concerning policies and procedures relating to the consideration and determination of executive compensation, including the role of the Compensation Committee, see “Executive Compensation” beginning on page 81.
As of August 26, 2020, the members of the Compensation Committee were: John Morlock (Chair); Gerald W. Bodzy; Twila Day; Jill Griffin; and Joe McKinney.
Special Committee
In September 2019, the Company's Board of Directors formed a new Board Special Committee comprised of independent directors with the purpose of establishing a strategic review process to identify, examine, and consider a range of strategic alternatives available to the Company with the objective of maximizing shareholder value. The Board Special Committee consists of the following members: Gerald Bodzy, Twila Day, Joe McKinney, Gasper Mir, John Morlock, and Randolph Read. The Board Special Committee is co-chaired by Messrs. Bodzy and Read.
Code of Conduct and Ethics for the 2020 annual meeting of shareholders appearing therein under the captions “Election ofAll Directors,” “Corporate Governance,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Executive Officers,” and “Certain Relationships and Related Transactions.”Employees
Copies of the Policy Guide on Standards of Conduct and Ethics are available in print to shareholders upon request and can be found on the Company’s website at www.lubysinc.com.
Code of Ethics for the Chief Executive Officer and Senior Financial Officers
The Board has adopted Supplemental Standards of Conduct and Ethics that apply to the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller, and all senior financial officers (“Senior Officers’ Code”). The Senior Officers’ Code is designed to deter wrongdoing and to promote, among other things:
•honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
•full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the SEC and in other public communications made by the Company;
•compliance with all securities laws and other laws, rules and regulations applicable to the Company and the operation of its business;
•the prompt internal reporting to an appropriate person or persons identified in the Senior Officers’ Code of violations of the Senior Officers’ Code; and
•accountability for adherence to the Senior Officers’ Code.
Waivers of the Senior Officers’ Code for the Chief Executive Officer, Chief Financial Officer, Vice Presidentand Controller are permitted only by a vote of Accounting, andthe Board or a designated Board committee that will ascertain whether a waiver is appropriate under all senior financial officers. This Policy Guide and the Supplemental Standards were filed as exhibitscircumstances. The Company intends to disclose any waivers of the Senior Officers’ Code granted to the Annual ReportChief
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Executive Officer, Chief Financial Officer, or Controller on Form 10-K for the fiscal year ended August 26, 2003Company’s website at www.lubysinc.com and in print to any shareholder upon request.
Copies of the Senior Officers’ Code are available in print to shareholders upon request and can be found on ourthe Company’s website at www.lubys.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendments to or waivers from the code of ethics or supplementary code of ethics by posting such information on our website at www.lubys.com.www.lubysinc.com.
Item 11. Executive Compensation
The Company’s executive compensation program is designed to enable the Company to execute its business objectives by attracting, retaining, and motivating the highest quality of management talent. The Compensation Committee administers the Company’s stock option, ownership, and any other equity-based compensation plans with respect to our Named Executive Officers.
In prior years, the Compensation Committee granted performance-based compensation awards, which included non-equity incentive compensation in this Item 11 by reference that portionthe form of a cash payment based on the Company's overall performance, short-term equity incentive awards in the form of stock options and restricted stock, and long-term equity incentive awards in the form of a long-term incentive opportunity settled in Common Stock at the end of a three-year performance period based on the Company’s relative total shareholder return. The Compensation Committee maintains full discretion with regard to annual incentive compensation and may decide to award or withhold an incentive compensation award for an individual based upon overall Company or individual performance during the year. Due to the Company's fiscal 2019 and fiscal 2020 performance, the Compensation Committee did not grant performance-based compensation awards, including short-term or long-term equity incentive compensation, related to fiscal 2019 and fiscal 2020.
The Company’s executive compensation program does not include any pension benefits. None of our definitive proxy statementNamed Executive Officers participate in any retirement or defined benefit plan maintained by the Company other than the Company's 401(k) retirement plan. The Company has no compensation agreements or benefits which provide for tax gross-ups. Further, executive officers do not receive perquisites or other personal benefits which exceed $10,000 in the aggregate for any executive officer in any fiscal year.
The Company is a party to an employment agreement with Mr. Pappas that provides for severance benefits in the event Mr. Pappas’ employment is terminated by the Company without "cause" (as defined in the employment agreement), or by Mr. Pappas for "good reason" (as defined in the employment agreement). Under such circumstances, the Company will pay Mr. Pappas his then-current base salary, as well as any benefits in effect at the time of termination, until the expiration of the initial or renewal term, as applicable, of the employment agreement.
Messrs. Coutee, Goodweather, Rider, and other specified senior level employees are party to severance agreements, under which each recipient will be eligible to receive a separation payment, based on a percentage of such recipient’s current annual base salary, if such recipient is terminated without Cause, resigns for Good Reason, or is not hired by a successor or buyer of the Company’s assets. The separation payment amount for the Company's named executive officers is calculated as follows: Benjamin T. Coutee—100% of Base Salary; Steven Goodweather—100% of Base Salary; and Philip Rider—83.3% of Base Salary.
The Compensation Committee reviews the Company’s executive compensation program, including advising the Board on and approving the compensation to be paid to the Company’s executive officers. The Company annually provides shareholders with an advisory vote to approve the Company’s executive compensation as required under Section 14A of the Exchange Act. At the Company’s 2020 annual meeting of shareholders, appearing thereinthe compensation of our Named Executive Officers was approved with an affirmative vote of approximately 86 percent of the votes cast on the proposal. The Compensation Committee evaluated the results of the 2020 advisory vote at its February 5, 2020 meeting. The Compensation Committee has spoken about the Company’s executive compensation program with shareholders representing a significant portion of the outstanding shares of the Company and also considered many other factors, including the Company’s performance for the prior fiscal year and each executive’s contribution to the Company’s performance. The Compensation Committee did not make any changes to the Company’s executive compensation program and policies during fiscal 2020 as a result of the 2020 advisory vote on the compensation of our Named Executive Officers.
Bonus Opportunity Agreement
On August 12, 2020, the Board of Directors approved, upon the recommendation of the Compensation Committee, a bonus opportunity agreement, pursuant to which certain executive officers, including Messrs. Coutee, Goodweather, and Rider, and other specified senior level employees will receive separation payments upon the occurrence of certain events and will be eligible to receive both a cash bonus and a restricted stock award bonus (collectively, the “retention awards”). The retention
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awards are designed to retain certain key employees in their roles with the Company and to carry out the Plan of Liquidation. The restricted stock award bonus portion of the retention awards, granted pursuant to the Luby’s Incentive Stock Plan, was issued upon entering into the bonus opportunity agreement and is subject to vesting and a one-third of the total being earned upon the occurrence of the contemplated sales of each of: (1) the Company's Fuddruckers brand, (2) the Company's Culinary Contract Services brand; and (3) at least 30 of the Company's Luby’s cafeterias.
Neither the Company nor the Compensation Committee has a program, plan, or practice to time equity grants to the Company’s executive officers in coordination with the release of material nonpublic information.
Role of Executive Officers
Our Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer had roles in determining executive compensation policies and programs. They based their recommendation on a variety of factors such as their appraisal of the officer’s performance and contribution to the Company and on market data. All compensation decisions made with respect to the Company’s Named Executive Officers are made by the Compensation Committee.
Stock Ownership Guidelines
The Board has suspended guidelines for ownership of Common Stock by executive officers as the Company has implemented the Plan of Liquidation.
Chief Executive Officer Employment Agreement
The Company entered into a new employment agreement with Christopher J. Pappas, the Company’s President and Chief Executive Officer on December 11, 2017. The employment agreement, as amended, has an initial term that ended on August 28, 2020, and, unless earlier terminated, continues for annual renewals unless terminated by either party upon 60 days advance notice of the expiration of the initial or renewal term. The employment agreement initially provided for a base annual salary of $500,000, plus potential bonus compensation in an amount that the independent directors of the Board or an authorized committee, shall determine, in its sole discretion. At his direction, on August 1, 2018, the Board and Christopher J. Pappas agreed to reduce his fixed annual base salary to $1. Under the terms of the employment agreement, if Mr. Pappas’ employment is terminated by the Company without "cause" (as defined in the employment agreement), or by Mr. Pappas for "good reason" (as defined in the employment agreement), the Company will be obligated to pay Mr. Pappas his base salary, as well as any benefits in effect at the time of termination, until the expiration of the initial or renewal term, as applicable, of the employment agreement.
Compensation and the Company’s Risk Management
The Company believes that our compensation policies and practices for our employees are appropriately structured and do not encourage decision-making that could expose the Company to unreasonable risks of material adverse consequences. Furthermore, the Company employs a number of safeguards with respect to the compensation policies and practices designed to mitigate against excessive risk-taking by our employees. These safeguards include: benchmarking compensation to market levels; granting equity awards emphasizing long-term shareholder value creation; tying a portion of long-term incentive grants to the achievement of pre-established objectives; issuing equity awards that vest over multi-year time horizons; and maintaining stock ownership guidelines for our officers.
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COMPENSATION TABLES AND INFORMATION
Fiscal 2020 Summary Compensation Table
The table below contains information concerning annual and long-term compensation of our Named Executive Officers (each a "Named Executive Officer") for the fiscal year ended August 26, 2020.
Awards granted in the fiscal year ended August 26, 2020 are pursuant to the bonus opportunity agreement designed to retain certain key employees in their roles with the Company and to carry out the Plan of Liquidation.
| Name and Principal Position | Year | Salary | Bonus | Stock awards (1) | Option awards (2) | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compen- sation Earnings | All Other Compensation (3) | Total | ||||||||||||||||||||
| Christopher J. Pappas President and Chief Executive Officer | 2020 | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | ||||||||||||
| 2019 | 9,615 | — | — | — | — | — | — | 9,615 | |||||||||||||||||||||
Benjamin T. Coutee Chief Operating Officer (4) | 2020 | 263,952 | — | 32,850 | — | — | — | — | 296,802 | ||||||||||||||||||||
| 2019 | 283,000 | — | — | — | — | — | — | 283,000 | |||||||||||||||||||||
K. Scott Gray Former Senior Vice President and Chief Financial Officer (5) | 2020 | 283,314 | — | — | — | — | — | — | 283,314 | ||||||||||||||||||||
| 2019 | 342,000 | — | — | — | — | — | — | 342,000 | |||||||||||||||||||||
Steven B. Goodweather Chief Financial Officer and Treasurer (6) | 2020 | 178,798 | — | 26,280 | — | — | — | — | 205,078 | ||||||||||||||||||||
| 2019 | 175,000 | — | — | — | — | — | — | 175,000 | |||||||||||||||||||||
Philip J. Rider Chief Accounting Officer and Controller (7) | 2020 | 160,048 | — | 36,333 | — | — | — | — | 196,381 | ||||||||||||||||||||
| 2019 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
(1)There were no "Stock Awards" granted to Named Executive Officers in the fiscal year ended August 28, 2019. The amounts shown in the "Stock Awards" column reflect the full aggregate grant date fair value of stock-based awards granted during fiscal year end August 26, 2020, computed in accordance with FASB ASC Topic 718, determined without regard to forfeitures, as required by SEC rules, and do not reflect the actual value that may be recognized by each Named Executive Officer. For assumptions made in the valuation of the awards in this column, see Note 18, Share-Based Compensation, to our audited financial statements included in Item 8. of this Annual Report on Form 10-K. For a description of the retention awards, which are subject to vesting requirements, shown in the "Stock Awards" column, relate to the Bonus Opportunity Agreement, see "Bonus Opportunity Agreement" beginning on page 81 for more information.
(2)There were no "Option Awards" granted in the fiscal years ended August 26, 2020 and August 28, 2019.
(3)Perquisites and other personal benefits that did not exceed $10,000 in the aggregate for any Named Executive Officer have been excluded.
(4)Mr. Coutee's annual base salary was increased to $300,000, effective July 2, 2020.
(5)Mr. Gray's employment with the Company was terminated on April 3, 2020. On April 24, 2020, Mr. Gray and the Company entered into a Final Separation Agreement and Release pursuant to which Mr. Gray is entitled to receive, in addition to other payments, severance pay in an amount equal to $105,231 payable in equal bi-weekly installments over a period of 26 weeks following April 4, 2020.
(6)Mr. Goodweather was appointed Chief Financial Officer and Treasurer of the Company, effective April 4, 2020, and his annual base salary was increased to $215,000.
(7)Mr. Rider was appointed Chief Accounting Officer and Controller of the Company, effective April 4, 2020, and his annual base salary was increased to $205,000.
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The following table provides information regarding outstanding equity awards at fiscal year-end for each of our Named Executive Officers granted under the captions “Compensation Discussion and Analysis—Executive Compensation,” “—Executive Compensation Committee Report,” “—Compensation Tables and Information,” “—Director Compensation,” and “Corporate Governance—Executive Compensation Committee—Compensation Committee Interlocks.”Luby's Incentive Stock Plan, as amended.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||||||||||||||||||||
| Christopher J. Pappas President and Chief Executive Officer | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||
| Benjamin T. Coutee Chief Operating Officer | 8,000 | N/A | N/A | 5.34 | 4/20/2021 | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||
| 4,664 | N/A | N/A | 4.42 | 11/15/2021 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 81,967 | N/A | N/A | 4.49 | 1/23/2025 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 26,042 | N/A | N/A | 4.89 | 11/11/2025 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 21,174 | N/A | N/A | 4.26 | 11/30/2026 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 35,857 | 11,952 (1) | N/A | 2.82 | 11/30/2027 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| N/A | N/A | N/A | N/A | N/A | 17,730 (2) | 19,503 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| N/A | N/A | N/A | N/A | N/A | 30,000 (4) | 33,000 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| K. Scott Gray Former Senior Vice President and Chief Financial Officer | 10,531 | N/A | N/A | 5.39 | 11/18/2020 | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||
| 6,929 | N/A | N/A | 4.42 | 11/15/2021 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 17,150 | N/A | N/A | 5.95 | 11/15/2022 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 95,628 | N/A | N/A | 4.49 | 1/23/2025 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 45,573 | N/A | N/A | 4.89 | 11/11/2025 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 49,406 | N/A | N/A | 4.26 | 11/30/2026 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 83,666 | N/A | N/A | 2.82 | 11/30/2027 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| Steven B. Goodweather Chief Financial Officer and Treasurer | 11,816 | N/A | N/A | 4.49 | 1/23/2025 | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||
| 7,426 | N/A | N/A | 4.89 | 11/11/2025 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 8,187 | N/A | N/A | 4.26 | 11/30/2026 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| 10,399 | 3,466 (1) | N/A | 2.82 | 11/30/2027 | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| N/A | N/A | N/A | N/A | N/A | 5,142 (2) | 5,656 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| N/A | N/A | N/A | N/A | N/A | 24,000 (3) | 26,400 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
| Philip J. Rider Chief Accounting Officer and Controller | N/A | N/A | N/A | N/A | N/A | 5,236 (4) | 5,760 | N/A | N/A | |||||||||||||||||||||||||||||||||||||||||||||||
| N/A | N/A | N/A | N/A | N/A | 24,000 (3) | 26,400 | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||
(1)This option vests 50% on the first anniversary of the grant date, November 30, 2017, 25% on each of the next two anniversaries.
(2)This award of restricted stock units vests on the third anniversary date of the grant date, December 8, 2017.
(3)This award of restricted stock units was made under the bonus opportunity agreement and one-third of the restricted shares is earned upon the closing of a sale of each of the following assets of the Company or its subsidiaries: the Culinary Contract Services business line, the Fuddruckers business line, and 30 or more of the Company's Luby's Cafeterias.
(4)The award of restricted stock vests on the third anniversary date of the grant date, October 3, 2019.
(5)Market value based on closing price of $1.10 per share of Common Stock on August 26, 2020.
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Additional Narrative Disclosure
Equity Awards
Grants of stock options may be exercised in the event of the termination of the grantee's employment with the Company as a result of such grantee's death or disability within the time period ending on the earlier of: (a) the date 12 months following such termination of the grantee’s employment or (b) the last day of the term of such stock option. Grants of restricted stock units will immediately vest and become unrestricted in the event of the death or disability of the grantee or a change of control of the Company. The terms of the bonus opportunity agreements provide that in the event of death or disability of the grantee after a triggering event or a change of control of the Company the grants of restricted stock will immediately vest and become unrestricted.
Retirement Plans
We maintain a qualified 401(k) savings plan which allows participants to defer cash compensation up to the maximum amount allowed under Internal Revenue Service guidelines. The Company has in the past matched up to 25% of participants’ contributions made to the plan up to 6% of their salary, subject to Internal Revenue Service guidelines. We suspended the Company match effective March 19, 2020 in response to the effect of the COVID-19 Pandemic on our operations.
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2020 DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) (3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($) | Non-qualified Deferred Compensation Earnings | All Other Compensation ($)(5) | Total ($) | |||||||||||||||||||||||||||||||||||||
| Gerald W. Bodzy | $ | — | $ | 160,264 | $ | — | $ | — | $ | — | $ | — | $ | 160,264 | ||||||||||||||||||||||||||||||
| Twila Day | 3,750 | 102,668 | — | — | — | — | 106,418 | |||||||||||||||||||||||||||||||||||||
| Jill Griffin | 52,000 | 32,234 | — | — | — | — | 84,234 | |||||||||||||||||||||||||||||||||||||
| Frank Markantonis | — | 78,743 | — | — | — | — | 78,743 | |||||||||||||||||||||||||||||||||||||
| Joe C. McKinney | — | 132,755 | — | — | — | — | 132,755 | |||||||||||||||||||||||||||||||||||||
| Gasper Mir, III | — | 118,756 | — | — | — | — | 118,756 | |||||||||||||||||||||||||||||||||||||
| John Morlock | 84,167 | 32,234 | — | — | — | — | 116,401 | |||||||||||||||||||||||||||||||||||||
| Randolph C. Read | — | 161,863 | — | — | — | — | 161,863 | |||||||||||||||||||||||||||||||||||||
(1)Amounts shown reflect the aggregate grant date fair value of the restricted stock granted to directors in fiscal 2020, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Share-Based Payment ("FASB ASC Topic 718"). The grant date fair value for each share is based on the average of the high and low stock price of our Common Stock on the date of grant.
(2)The grant date fair value of each equity award granted to each director, was as follows:
| Name | 1st Quarterly Grant October 1, 2019 | 2nd Quarterly Grant January 2, 2020 | Special Grant and Catch-up Special Committee Grant February 5, 2020 | 3rd Quarterly Grant April 13, 2020 | 4th Quarterly Grant July 1, 2020 | |||||||||||||||||||||||||||||||||
| Gerald W. Bodzy | $ | 21,250 | $ | 21,250 | $ | 46,266 | $ | 32,211 | $ | 39,287 | ||||||||||||||||||||||||||||
| Twila Day | 12,500 | 16,251 | 29,329 | 20,816 | 23,772 | |||||||||||||||||||||||||||||||||
| Jill Griffin | 3,751 | 3,750 | 17,231 | 3,749 | 3,753 | |||||||||||||||||||||||||||||||||
| Frank Markantonis | 18,750 | 14,250 | 17,231 | 14,248 | 14,264 | |||||||||||||||||||||||||||||||||
| Joe C. McKinney | 19,749 | 22,249 | 31,749 | 27,729 | 31,279 | |||||||||||||||||||||||||||||||||
| Gasper Mir, III | 16,251 | 18,750 | 31,749 | 24,230 | 27,776 | |||||||||||||||||||||||||||||||||
| John Morlock | 3,751 | 3,750 | 17,231 | 3,749 | 3,753 | |||||||||||||||||||||||||||||||||
| Randolph C. Read | 18,750 | 18,750 | 52,071 | 31,904 | 40,388 | |||||||||||||||||||||||||||||||||
(3)As of August 26, 2020, each non-employee director held the following outstanding shares of restricted stock: Mr. Bodzy, 200,069 shares; Ms. Day, 100,806 shares; Ms. Griffin, 43,416 shares; Mr. Markantonis, 141,789 shares; Mr. McKinney, 164,332 shares; Mr. Mir, 160,830 shares, Mr. Morlock 18,998 shares and Mr. Read 113,692 shares.
(4)As of August 26, 2020, none of our non-employee directors held outstanding stock options.
(5)Perquisites and other personal benefits that did not exceed $10,000 in the aggregate for any non-employee director have been excluded.
Each nonemployee director other than the Chairman of the Board is paid an annual retainer fee of $50,000 and a single fee of $15,000 for all other standing committees in which each such nonemployee director is a member. Nonemployee directors do not receive meeting fees. The Chairman of the Board is paid an annual retainer fee of $85,000. Further, the Chair of the Finance and Audit Committee is paid an additional annual retainer fee of $14,000, and the Chair of each other standing committee of the Board is paid an additional annual retainer fee of $10,000. Each nonemployee director that serves on the Special Committee is paid a monthly retainer of $2,500 except that co-chairs of the Special Committee are each paid a monthly retainer of $6,000. On February 5, 2020, directors serving on the Special Committee were granted a one-time amount to
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compensate them for their service on the Special Committee from its formation until that date for which they had not been previously compensated.
Pursuant to the Company’s Second Amended and Restated Nonemployee Director Stock Plan (the “Plan”), each nonemployee director is required to receive a portion of the annual retainer fee in restricted stock in an amount as determined by the Board (the “Mandatory Retainer Award”). The Board has set the Mandatory Retainer Award at the dollar value equivalent of $15,000. In addition, each nonemployee director, prior to the end of any calendar year, may elect to receive an additional portion (up to 100%) of their annual retainer fee in the dollar value equivalent of restricted stock (the “Elective Retainer Award”). On the first day of each January, April, July, and October during the term of the Plan, the director receives the Mandatory Retainer Award and any Elective Retainer Award so elected in restricted stock, the amount of shares being equal to the dollar value equivalent of the elected portion of the director’s annual retainer fees. Directors receiving an Elective Retainer Award will also receive an additional number of whole shares of restricted stock equal to 20% of the number of whole shares of restricted stock issued in payment of the Elective Retainer Award for the quarterly period beginning on that date.
Further, under the Plan, nonemployee directors may be periodically granted shares of restricted stock or nonqualified options to purchase shares of Common Stock at an option price equal to 100% of the fair market value on the date of grant. Each option terminates on the earlier of the tenth anniversary of the grant date or one year after the optionee ceases to be a director. An option may not be exercised prior to the first anniversary of the grant date, subject to certain exceptions specified in the Plan. No nonemployee director may receive options to purchase more than 7,500 shares in any 12-month period.
The Company’s Corporate Governance Guidelines establish guidelines for share ownership. Currently, all directors are expected to accumulate shares of Common Stock with a market value of at least $100,000 prior to the five-year anniversary of their appointment to the Board. As of November 24, 2020, each of our non-employee directors satisfied our non-employee director share ownership guideline or is within the five-year transition period.
On October 1, 2020, shares of Common Stock available for issuance under the Plan were exhausted and the remaining portion of each director’s retainer and other fees were be paid in cash. Accordingly, the Mandatory Retainer Award and Elective Retainer Award under the Plan were suspended and each director’s retainer and other fees will be paid in cash until such time as there are shares of Common Stock available under the Plan for issuance to directors, if ever.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
The following table sets forth information concerning the beneficial ownership of Common Stock, as of November 24, 2020 for (a) each director currently serving on the Board, (b) each of the officers and former officer named in the Summary Compensation Table not listed as a director, and (c) all directors and executive officers as a group. In general, “beneficial ownership” includes those shares a director or executive officer has the power to vote or transfer and those shares that the director or executive officer has the right to acquire within 60 days after November 24, 2020.
Name (1) | Shares Beneficially Owned | Percent of Common Stock | ||||||||||||
Gerald W. Bodzy(2) | 225,854 | * | ||||||||||||
Benjamin T. Coutee(3) | 301,081 | * | ||||||||||||
Twila Day(4) | 100,170 | * | ||||||||||||
Steven B. Goodweather (5) | 89,304 | * | ||||||||||||
K. Scott Gray(6) | 422,296 | 1.38 | % | |||||||||||
Jill Griffin(7) | 121,320 | * | ||||||||||||
Frank Markantonis(8) | 298,567 | * | ||||||||||||
Joe C. McKinney(9) | 304,845 | * | ||||||||||||
Gasper Mir, III(10) | 266,235 | * | ||||||||||||
John Morlock(11) | 12,818 | * | ||||||||||||
Christopher J. Pappas(12) | 5,667,153 | 18.47 | % | |||||||||||
Randolph C. Read(13) | 116,091 | * | ||||||||||||
Philip J. Rider (14) | 24,000 | * | ||||||||||||
All directors and executive officers of the Company, as a group (13 persons)(15) | 7,949,734 | 25.91 | % | |||||||||||
(1)Except as indicated in these notes and subject to applicable community property laws, each person named in the table owns directly the number of shares indicated and has the sole power to vote and to dispose of such shares. Shares of phantom stock held by a nonemployee director convert into an equivalent number of shares of Common Stock when the nonemployee director ceases to be a director of the Company due to resignation, retirement, death, disability, removal, or any other circumstance. The shares of Common Stock payable upon conversion of the phantom stock are included in this Item 12 by reference that portion of our definitive proxy statementtable because it is possible for the 2020 annual meetingholder to acquire the shares of shareholders appearing thereinCommon Stock within 60 days if his or her directorship were to be terminated. Under the Company’s Nonemployee Director Stock Plan, restricted stock awards may become unrestricted when a nonemployee director ceases to be a director of the Company. Unless otherwise specified, the mailing address of each person named in the table is 13111 Northwest Freeway, Suite 600, Houston, Texas 77040.
(2)The shares shown for Mr. Bodzy include 34,778 shares held for his benefit in a custodial account and 191,076 shares of restricted stock.
(3)The shares shown for Mr. Coutee include 63,695 shares held for his benefit in a custodial account, 30,000 shares of restricted stock and 207,386 shares that he has a right to acquire within 60 days under Luby's Incentive Stock Plan.
(4)The 100,170 shares shown for Ms. Day are shares of restricted stock.
(5)The shares shown for Mr. Goodweather include 18,868 shares held for his benefit in a custodial account, 24,000 shares of restricted stock and 46,436 shares that he has a right to acquire within 60 days under Luby's Incentive Stock Plan.
(6)The shares shown for Mr. Gray, a former executive, include 123,944 shares held for his benefit in a custodial account and 298,352 shares which he has the right to acquire within 60 days under Luby’s Incentive Stock Plan.
(7)The shares shown for Ms. Griffin include 92,988 shares held for her benefit in a custodial account and 28,332 shares of restricted stock.
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(8)The shares shown for Mr. Markantonis include 175,187 shares held for his benefit in a custodial account, 3,879 shares of phantom stock held under the captions “OwnershipNonemployee Director Phantom Stock Plan, and 119,501 shares of Equity Securitiesrestricted stock.
(9)The shares shown for Mr. McKinney include 150,166 shares held in certificate form and 154,679 shares of restricted stock.
(10)The shares shown for Mr. Mir include 117,193 shares held for his benefit in a custodial account, 2,453 shares of phantom stock held under the Nonemployee Director Phantom Stock Plan, and 146,589 shares of restricted stock.
(11)The 12,818 shares shown for Mr. Morlock are shares of restricted stock.
(12)The shares shown for Christopher J. Pappas include 4,595,773 shares held for his benefit in a custodial account and 1,071,380 shares owned by Pappas Restaurants, Inc. Each of Christopher J. Pappas and Harris J. Pappas owns a 50% interest in Pappas Restaurants, Inc. and therefore Christopher J. Pappas owns a corresponding beneficial interest in the Company”1,071,380 shares owned by Pappas Restaurants, Inc.
(13)The 116,091 shares shown for Mr. Read are shares of restricted stock.
(14)The 24,000 shares shown for Mr. Rider are shares of restricted stock.
(15)The shares shown for all directors and “Principal Shareholders.”executive officers as a group include 5,222,426 shares held in custodial accounts, 150,166 shares held in certificate form, 552,174 shares which they have the right to acquire within 60 days under the Company’s various benefit plans, 947,256 shares of restricted stock, 6,332 shares of phantom stock held by nonemployee directors under the Nonemployee Director Phantom Stock Plan, and 1,071,380 shares owned by Pappas Restaurants, Inc., of which Christopher J. Pappas owns a 50% interest, as described above.
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PRINCIPAL SHAREHOLDERS
The following table sets forth information as to the beneficial ownership of Common Stock by each person or group known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock as of November 24, 2020 and, unless otherwise indicated, is based on disclosures made by the beneficial owners in Securities Exchange Commission ("SEC") filings under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”):
Name and Address of Beneficial Owner (1) | Shares Beneficially Owned | Percent of Common Stock | ||||||||||||
Christopher J. Pappas(2) | 5,667,153 | 18.47% | ||||||||||||
13939 Northwest Freeway Houston, Texas 77040 | ||||||||||||||
Harris J. Pappas(3) | 5,506,470 | 17.95% | ||||||||||||
13939 Northwest Freeway Houston, Texas 77040 | ||||||||||||||
Bandera Partners LLC(4) | 2,859,926 | 9.32% | ||||||||||||
50 Broad Street, Suite 1820 New York, New York 10004 | ||||||||||||||
Hodges Capital Management, Inc.(6) | 2,544,770 | 8.29% | ||||||||||||
2905 Maple Ave. Dallas, Texas 75201 | ||||||||||||||
Dimensional Fund Advisors LP(6) | 1,736,067 | 5.66% | ||||||||||||
Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746 | ||||||||||||||
(1)Except as indicated in these notes and subject to applicable community property laws, each person named in the table owns directly the number of shares indicated and has the sole power to vote and to dispose of such shares.
(2)The shares shown for Christopher J. Pappas include 4,595,673 shares held for his benefit in a custodial account and 1,071,380 shares owned by Pappas Restaurants, Inc., as each of Christopher J. Pappas and Harris J. Pappas owns a 50% interest in Pappas Restaurants, Inc. and therefore owns a corresponding beneficial interest in the 1,071,380 shares owned by Pappas Restaurants, Inc.
(3)The shares shown for Harris J. Pappas include 4,434,640 shares held for his benefit in a custodial account and 1,071,380 shares owned by Pappas Restaurants, Inc. Each of Christopher J. Pappas and Harris J. Pappas owns a 50% interest in Pappas Restaurants, Inc. and therefore owns a corresponding beneficial interest in the 1,071,380 shares owned by Pappas Restaurants, Inc.
(4)Information based solely on Report for the Calendar Year or Quarter Ended September 30, 2020 on Form 13F-HR dated November 12, 2020 and filed on November 12, 2020 with the SEC by Bandera Partners LLC. Bandera Partners LLC has sole voting authority with respect to 2,859,926 shares.
(5)Information based solely on Report for the Calendar Year or Quarter Ended September 30, 2020 on Form 13F-HR dated October 15, 2020 and filed on October 15, 2020 with the SEC by Hodges Capital Management, Inc. Hodges Capital Management, Inc. has sole voting authority with respect to 2,419,570 shares and has no voting authority with respect to 125,200 shares.
(6)Information based solely on Report for the Calendar Year or Quarter Ended September 30, 2020 on Form 13F-HR dated November 12, 2020 and filed on November 12, 2020 with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP has sole voting authority with respect to 1,690,947 shares and has no voting authority with respect to 45,120 shares.
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Item 13. Certain Relationships and Related Transactions, and Director Independence
Related Person Transactions
On July 23, 2002, the Company entered into an Indemnification Agreement with each member of the Board under which the Company obligated itself to indemnify each director to the fullest extent permitted by applicable law so that he or she will continue to serve the Company free from undue concern regarding liabilities. The Company has also entered into an Indemnification Agreement with each person becoming a member of the Board since July 23, 2002. The Board has determined that uncertainties relating to liability insurance and indemnification have made it advisable to provide directors with assurance that liability protection will be available in this Item 13the future.
The Company obtains certain goods and/or services from entities owned or controlled by reference that portionChristopher J. Pappas, President and Chief Executive Officer of our definitive proxy statement for the Company, and Harris J. Pappas, a former member of the Board (the “Pappas Entities”), pursuant to the terms of an Amended and Restated Master Sales Agreement, dated August 2, 2017 (the “Master Sales Agreement”). Under the terms of the Master Sales Agreement, the Pappas Entities may provide specialized (customized) equipment fabrication and basic equipment maintenance, including stainless steel stoves, shelving, rolling carts, and chef tables. During fiscal 2020, annual meeting of shareholders appearing thereinthe Pappas Entities provided goods and services to the Company under the captions, “CorporateMaster Sales Agreement in the amount of approximately $7,600.
The Company anticipates that payments to the Pappas Entities under the Master Sales Agreement during fiscal 2021, if any, will be primarily for goods purchased pursuant to the terms of the Master Sales Agreement. In the opinion of the Finance and Audit Committee, the fees paid by the Company for such goods and/or services are primarily at or below what the Company would pay for comparable goods and/or services (if available) from a party unaffiliated with the Company.
In the third quarter of fiscal 2004, Messrs. Pappas became partners in a limited partnership which purchased a retail strip center in Houston, Texas. Messrs. Pappas collectively own a 50% limited partner interest and a 50% general partner interest in the limited partnership. A third-party company manages the center. One of the Company’s Luby's Cafeteria restaurants has rented approximately 7% of the space in that center since July 1969. No changes were made to the Company’s lease terms as a result of the transfer of ownership of the center to the new partnership. On November 22, 2006, due to the approaching expiration of the previous lease, the Company executed a new lease agreement with respect to this property. The new lease agreement was approved by the Finance and Audit Committee and provided for a primary term of approximately 12 years with two subsequent five-year options. The new lease was effective upon the Company’s relocation and occupancy into the new space in July 2008. On July 1, 2020, the Company executed an amendment to the lease which terminates the lease early on December 31, 2020. Through the end of calendar year 2020, the Company pays $22.00 per square foot plus maintenance, taxes, and insurance, which resulted in lease payments of $284,985 during fiscal 2020, and $62,609 from August 26, 2020 to November 24, 2020.
In the third quarter of fiscal 2014, an entity owned or controlled by Messrs. Pappas purchased from the Company’s landlord, the land underlying one of the Company’s Fuddruckers restaurants in Houston, Texas, which was contiguous to other land owned by the same entity. One of the Company’s restaurants has rented that property since July 1996, and the property was previously one of several properties included on the Master Lease, dated November 24, 1998, between Spirit Master Funding, LLC and Luby’s Fuddruckers Restaurants, LLC, as amended (the "Master Lease"). On March 12, 2014, the Company executed a new ground lease agreement (the "Ground Lease") severing this property from the Master Lease. The terms of the Ground Lease are substantially similar to the Master Lease and provide for a primary term of approximately six years with two subsequent five-year options. Pursuant to the Ground Lease, the Company paid $28.53 per square foot plus maintenance, taxes, and insurance from March 12, 2014 until May 31, 2020. Thereafter, the Ground Lease provides for increases in rent at set intervals. The Company made lease payments of $126,483 during fiscal 2020, and $42,385 from August 26, 2020 to November 24, 2020.
Policies and Procedures Regarding Related Person Transactions
The Board has adopted a written Related Person Transaction Approval Policy, which requires the Finance and Audit Committee to review each related person transaction (as defined below) and determine whether it will approve or ratify that transaction.
For purposes of the policy, a “related person transaction” is any transaction, arrangement, or relationship where the Company is a participant, the Related Person (defined below) had, has, or will have a direct or indirect material interest and the aggregate amount involved is expected to exceed $120,000 in any calendar year. “Related Person” includes: (a) any person who is or was (at any time during the last fiscal year) an executive officer, director or nominee for election as a director; (b) any person or group who is a beneficial owner of more than 5% of the Company’s voting securities; (c) any immediate family
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member of a person described in provisions (a) or (b) of this sentence; or (d) any entity in which any of the foregoing persons is employed, is a partner or has a greater than 5% beneficial ownership interest.
In determining whether a related person transaction will be approved or ratified, the Finance and Audit Committee may consider factors such as: (a) the extent of the Related Person’s interest in the transaction; (b) the availability of other sources of comparable products or services; (c) whether the terms are competitive with terms generally available in similar transactions with persons that are not Related Persons; (d) the benefit to the Company; and (e) the aggregate value of the transaction.
DIRECTOR INDEPENDENCE
The Board, with recommendation by the Nominating and Corporate Governance Guidelines—Committee, has evaluated the independence of the members of the Board under the Luby’s Director Independence”Independence Test. In conducting this evaluation, the Board considered transactions and “Certain Relationshipsrelationships between each director or his or her immediate family and Related Transactions.”the Company to determine whether any such transactions or relationships were material and, therefore, inconsistent with a determination that each such director is independent. Based upon that evaluation, the Board determined that the following directors are independent:
Gerald W. Bodzy
Jill Griffin
Joe C. McKinney
Gasper Mir, III
John Morlock
Randolph C. Read
The Board also has determined that each member of the Finance and Audit Committee, the Nominating and Corporate Governance Committee, and the Compensation Committee meets the independence requirements applicable to such committees required by the NYSE and the SEC. The Luby’s Director Independence Test is available in print to any shareholder upon request and can be found on the Company’s website at www.lubysinc.com.
Item 14. Principal Accountant Fees and Services
Firm
The table below shows aggregate fees for professional services rendered for the Company by Grant Thornton LLP for fiscal 2020 and 2019:
| 2020 | 2019 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Audit Fees | $ | 505 | $ | 483 | ||||||||||||||||
| Audit-Related Fees | 0 | 0 | ||||||||||||||||||
| Tax Fees | 0 | 0 | ||||||||||||||||||
| All Other Fees | 0 | 0 | ||||||||||||||||||
| Total | $ | 505 | $ | 483 | ||||||||||||||||
Audit Fees for fiscal 2020 and 2019 consisted of fees associated with the audit of the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K and reviews of the Company’s interim financial statements included in the Company’s Quarterly Reports on Form 10-Q.
Audit-Related Fees. The Company did not incur any Audit-Related Fees for fiscal 2020 or 2019.
Tax Fees. The Company did not incur any Tax Fees from Grant Thornton LLP for fiscal 2020 or 2019.
All Other Fees. The Company did not incur any other fees for fiscal 2020 or 2019.
Preapproval Policies and Procedures
All auditing services provided by Grant Thornton LLP must be preapproved by the Finance and Audit Committee. Generally, this approval occurs each year at the August meeting of the Finance and Audit Committee for the subsequent fiscal year and as necessary during the rest of the fiscal year for unforeseen requests. The non-audit services specified in Section 10A(g) of the Exchange Act may not be, and are not, provided by Grant Thornton LLP. Grant Thornton LLP provides a report to the Chair of the Finance and Audit Committee prior to each regularly scheduled Finance and Audit Committee
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meeting detailing all fees, by project, incurred by Grant Thornton LLP year-to-date and an estimate for the fiscal year. The Chair of the Finance and Audit Committee reviews such fees at each Finance and Audit Committee meeting. The Finance and Audit Committee periodically reviews these fees with the full Board. During fiscal 2020 and 2019, no preapproval requirements were waived for services included in the Audit-Related Fees, Tax Fees, and All Other Fees captions of the fee table above pursuant to the limited waiver provisions in applicable rules of the SEC.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
1. | Financial Statements | ||||
| The following financial statements are filed as part of this Report: | |||||
| Consolidated balance sheets at August | |||||
| Consolidated statements of operations for each of the two years in the period ended August | |||||
| Consolidated statements of shareholders’ equity for each of the two years in the period ended August | |||||
| Consolidated statements of cash flows for each of the two years in the period ended August | |||||
| Notes to consolidated financial statements | |||||
| Report of Independent Registered Public Accounting Firm Grant Thornton LLP | |||||
2. | Financial Statement Schedules | ||||
All schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the financial statements and notes thereto.
3. | Exhibits | ||||
The following exhibits are filed as a part of this Report:
| 2 | |||||
| 3(a) | |||||
| 3(b) | |||||
| 3(c) | |||||
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| 4 | |||||
| 4(a) | |||||
| 4(b) | |||||
| 4(c) | |||||
| 10(a) | |||||
| 10(b) | |||||
| 10(c) | |||||
| 10(d) | |||||
| 10(e) | |||||
| 10(f) | |||||
| 10(g) | |||||
| 10(h) | |||||
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| 10(i) | |||||
| 10(j) | |||||
| 10(k) | |||||
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| 14(b) | |||||
| 21 | |||||
| 23.1 | |||||
| 31.1 | |||||
| 31.2 | |||||
| 32.1 | |||||
| 32.2 | |||||
| 99(a) | |||||
| 101.INS | XBRL Instance Document | ||||
| 101.SCH | XBRL Schema Document | ||||
| 101.CAL | XBRL Calculation Linkbase Document | ||||
| 101.DEF | XBRL Definition Linkbase Document | ||||
| 101.LAB | XBRL Label Linkbase Document | ||||
| 101.PRE | XBRL Presentation Linkbase Document | ||||
__________________________
| Denotes management contract or compensatory plan or arrangement. | |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| December 9, 2020 | LUBY’S, INC. | |||||||
| Date | (Registrant) | |||||||
| By: | ||||||||
| /s/ CHRISTOPHER J. PAPPAS | ||||||||
| Christopher J. Pappas | ||||||||
| President and Chief Executive Officer | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature and Title | Date | ||||
| /S/ GERALD W. BODZY | |||||
| Gerald W. Bodzy, Director and Chairman of the Board | |||||
| /S/ CHRISTOPHER J. PAPPAS | |||||
Christopher J. Pappas, Director, President and Chief Executive Officer (Principal Executive Officer) | |||||
| /S/ | |||||
Officer and Treasurer (Principal Financial Officer) | |||||
| /S/ PHILIP J. RIDER | December 9, 2020 | ||||
| Philip J. Rider, Chief Accounting Officer and Controller (Principal Accounting Officer) | |||||
| /S/ TWILA DAY | |||||
| Twila Day, Director | |||||
| /S/ JILL GRIFFIN | |||||
| Jill Griffin, Vice Chair and Director | |||||
| /S/ FRANK MARKANTONIS | |||||
| Frank Markantonis, Director | |||||
| /S/ JOE C. MCKINNEY | |||||
| Joe C. McKinney, Director | |||||
| /S/ GASPER MIR, III | |||||
| Gasper Mir, III, Director | |||||
| /S/ JOHN B. MORLOCK | |||||
| John B. Morlock, Director | |||||
| /S/ RANDOLPH C. READ | |||||
| Randolph C. Read, Director | |||||
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