SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
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Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as permitted by Rule 14a-
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LUBY'S, CAFETERIAS, INC.
_____________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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[ ] 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: ________________________________________
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December 1, 19981999
Dear Shareholders:
You are cordially invited to attend the 19992000 Annual Meeting of Shareholders of
Luby's, Cafeterias, Inc. to be held on Friday, January 8, 1999,14, 2000, at 10:9:00 a.m., at the Omni
San Antonio Airport Hilton, 611 Northwest Loop 410,Hotel, 9821 Colonnade Boulevard, San Antonio, Texas. We hope that
you will be able to attend the meeting. Matters on which action will be taken
at the meeting are explained in detail in the notice and proxy statement
following this letter.
We hope as many of you as possible will attend the meeting in person. Whether
or not you expect to be present and regardless of the number of shares you own,
please mark, sign, and mail the enclosed proxy in the envelope provided.
Sincerely,
BARRY J.C. PARKER
____________________________________________
Barry J.C. Parker
President and
Chief Executive Officer
DAVID B. DAVISS
____________________________________________
David B. Daviss
Chairman of the Board
LUBY'S, CAFETERIAS, INC.
2211 Northeast Loop 410
P. O. Box 33069
San Antonio, Texas 78265-3069
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 8, 199914, 2000
To the Shareholders of
LUBY'S, CAFETERIAS, INC.
NOTICE IS HEREBY GIVEN that the 19992000 Annual Meeting of Shareholders of
Luby's, Cafeterias, Inc., a Delaware corporation, will be held at the Omni San Antonio
Airport Hilton, 611 Northwest Loop 410,Hotel, 9821 Colonnade Boulevard, San Antonio, Texas, on Friday, January 8, 1999,14,
2000, at 10:9:00 a.m., local time, for the following purposes:
(1) To elect one director to serve until the 2001 Annual Meeting of
Shareholders and four directors to serve until the 20022003 Annual Meeting of
Shareholders;
(2) To adopt an amendment to the Certificate of Incorporation to change
the corporate name to "Luby's, Inc.;"
(3) To approve the Luby's Incentiveamendment and restatement of the Nonemployee Director
Stock Option Plan;
(4)(3) To approve the appointment of auditors for the 19992000 fiscal year;
and
(5)(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with the Bylaws of the Company and a resolution of the Board
of Directors, the record date for the meeting has been fixed at November 10,
1998.16,
1999. Only shareholders of record at the close of business on that date will
be entitled to vote at the meeting or any adjournment thereof.
A complete list of shareholders entitled to vote at the meeting will be on
file at the Company's corporate office at 2211 Northeast Loop 410, San Antonio,
Texas, for a period of ten days prior to the meeting. During such time, the
list will be open to the examination of any shareholder during ordinary
business hours for any purpose germane to the meeting.
Shareholders who do not expect to attend the meeting in person are urged
to sign the enclosed proxy and return it promptly. A return envelope is
enclosed for that purpose.
LUBY'S, CAFETERIAS, INC.
James R. Hale
Secretary
Dated: December 1, 1998
1999
LUBY'S, CAFETERIAS, INC.
2211 Northeast Loop 410
P. O. Box 33069
San Antonio, Texas 78265-3069
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Luby's,
Cafeterias, Inc., a Delaware corporation (the "Company"), to be voted at the 19992000 Annual
Meeting of Shareholders on January 8, 1999,14, 2000, or at any adjournment thereof.
This proxy statement and the accompanying proxy are being mailed to
shareholders on or about December 1, 1998.1999.
THE COMPANY
The Company was restructured into a holding company on February 1, 1997,
at which time all of the operating assets were transferred to Luby's
Restaurants Limited Partnership, a Texas limited partnership composed of two
wholly owned indirect corporate subsidiaries of the Company. All cafeteriarestaurant
operations are conducted by the partnership. Unless the context indicates
otherwise, the word "Company" as used herein includes the partnership and the
consolidated corporate subsidiaries of Luby's, Inc. On January 11, 1999,
Luby's Cafeterias, Inc. changed its name to Luby's, Inc.
VOTING AND PROXIES
Only holders of record of common stock of the Company as of the close of
business on November 10, 1998,16, 1999, will be entitled to vote at the meeting. There
were 22,964,47522,420,375 shares of common stock outstanding on the record date,
exclusive of 4,438,5924,982,692 treasury shares. Each share of common stock outstanding
is entitled to one vote. A majority of the shares outstanding will constitute a
quorum at the meeting.
All shares represented by proxies will be voted in accordance with the
shareholders' directions. If the proxy card is signed and returned without any
direction given, shares will be voted in accordance with the recommendations of
the Board of Directors as described in this proxy statement. Any shareholder
giving a proxy may revoke it at any time before the proxy is voted by giving
written notice of revocation to the Secretary of the Company, by submitting a
later-dated proxy, or by attending the meeting and voting in person.
The election of nominees for director requires a plurality of the votes
cast. Approval of the amendment to the certificate of incorporation to change
the corporate name requires the affirmative vote of a majorityand restatement of the outstanding shares entitled to vote at the meeting. Approval of the Luby's
IncentiveNonemployee Director
Stock Option Plan requires the affirmative vote of a majority of the shares
present at the meeting in person and by proxy. Approval of the appointment of
auditors requires the affirmative vote of a majority of the shares present at
the meeting in person and by proxy. Abstentions and broker nonvotes will be
included in determining the presence of a quorum at the meeting. Broker
nonvotes and abstentions will not be included in determining the number of
votes cast on any matter.
The Company's Bylaws provide that candidates to stand for election as
directors at an annual meeting of shareholders shall be nominated by the Board
of Directors. Candidates may also be nominated by any shareholder of record
entitled to vote at the meeting, provided the shareholder gives timely notice
thereof. To be timely, such notice shall be delivered in writing to the
Secretary of the Company at the principal executive offices of the Company not
later than 90 days prior to the date of the meeting of shareholders at which
directors are to be elected and shall include (i) the name and address of the
shareholder who intends to make the nomination, (ii) the name, age, and
business address of each nominee, and (iii) such other information with respect
to each nominee as would be required to be disclosed in a proxy solicitation
relating to an election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934.
SENIOR MANAGEMENT CHANGES
On May 9, 1997, David B. Daviss was elected as Acting Chief Executive
Officer. On October 1, 1997, he resigned as Acting Chief Executive Officer and
was elected Chairman of the Board. On October 1, 1997, Barry J.C. Parker was
elected President and Chief Executive Officer. On April 30, 1998, William E.
Robson resigned as Executive Vice President-Operations.
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors divided into
three classes, as nearly equal in number as possible, with the members of each
class to serve three-year terms. In accordance with the Bylaws, the Board has
fixed the number of directors at eleven.twelve. The directors whose terms expire at
the 1999 Annual Meeting of Shareholders are Ronald K. Calgaard, Judith B.
Craven, David B. Daviss, Arthur R. Emerson, and Roger R. Hemminghaus.
Dr. Calgaard haspersons who have been nominated
by the Board of Directors for reelectionelection to serve until the 2001 Annual
Meeting of Shareholders and until his successor is duly elected and qualified.
Dr. Craven, Mr. Daviss, Mr. Emerson, and Mr. Hemminghaus have been nominated
for reelection to serve until the 20022003 Annual Meeting
of Shareholders and until their successors are duly elected and qualified.qualified are
Robert T. Herres, Barry J.C. Parker, Walter J. Salmon, and Joanne Winik. The
Board of Directors recommends a vote FOR such nominees.
The proxies named in the accompanying proxy, who have been designated by
the Board of Directors, intend to vote for the above mentioned nominees for
election as directors, unless otherwise specified. Such nominees have
indicated a willingness to serve as directors, but should any of them decline
or be unable to serve, the persons named as proxies may vote for another person
in the place of such nominee according to their best judgment in the interest
of the Company.
The following information is furnished with respect to each of the
nominees and for each of the other sixeight directors whose terms will continue
after the meeting. Such information includes all positions with the Company
and principal occupations during the last five years.
Nominee for Election to Term Expiring in 2001
RONALD K. CALGAARD is President of Trinity University (since 1979). He is
61 and has been a director of the Company since July 1998. He is a
member of the Compensation Committee. He is a director of Plymouth
Commercial Mortgage Company and Valero Energy Corporation and is
Chairman of The Trust Company, N.A.
Nominees for Election to Terms Expiring in 2002
JUDITH B. CRAVEN2003
ROBERT T. HERRES is a Physician Administrator. She was PresidentChairman and Chief Executive Officer of United Way of the Texas Gulf Coast (1992-1998). SheUSAA
(insurance and financial services) since 1993. He is 5367 and has
been a director of the Company since July 1998. She is a member of
the Compensation Committee. She is a
director of A.H. Belo
Corporation, Sysco Corporation, and the Houston Branch of the Federal
Reserve Bank of Dallas.
DAVID B. DAVISS is Chairman of the Board of the Company (since October
1997). He was Acting Chief Executive Officer from May to October
1997. He is 62 and has been a director of the Company since 1984. He
is Chairman of the Executive Committee and a member of the Corporate
Governance Committee. He served as Chairman of the Audit Committee
prior to May 1997. He is an advisory director of Austin Trust
Company.
ARTHUR R. EMERSON is Vice President and General Manager of the Texas
Stations of the Telemundo television network. He is 54 and has been a
director of the Company since July 1998.USAA. He is a memberretired General (USAF) and was formerly
Vice Chairman the Joint Chiefs of the Audit
Committee. He is a director of the San Antonio Branch of the Federal
Reserve Bank of Dallas and USAA Federal Savings Bank and is a trustee
of City Public Service (San Antonio).
ROGER R. HEMMINGHAUS is Chairman of the Board, Chief Executive Officer, and
a director of Ultramar Diamond Shamrock Corporation, where he also
served as President until December 1996. He is 62 and has been a
director of the Company since 1989. He is Chairman of the
Compensation Committee and a member of the Executive Committee and the
Corporate Governance Committee. He is Chairman of the Federal Reserve
Bank, Eleventh District, and a director of New Century Energies, Inc.
Incumbent Directors Whose Terms Expire in 2000Staff.
BARRY J.C. PARKER is President and Chief Executive Officer of the Company
(since October 1997). From 1989 to 1996 he was Chairman of the Board,
President, and Chief Executive Officer of County Seat Stores, Inc., a
casual apparel chain. He was a principal of Hoak Capital Corporation
from January to October 1997. He is 5152 and has been a director and
officer of the Company and a member of the Executive Committee since
October 1997. He is a trustee of Prentiss Properties Trust.
WALTER J. SALMON is Emeritus Professor, Harvard Graduate School of
Business Administration (since 1996). Prior thereto he was Stanley
Roth, Sr. Professor of Retailing, Harvard Graduate School of Business
Administration. He is 6869 and has been a director of the Company
Since1979.since 1979. He is a member of the Compensation Committee, the Audit Committee and the Corporate
Governance Committee. He is a director of Circuit City Stores, Inc.;
Cole National Corporation; The Neiman Marcus Group; Hannaford Bros.
Co.; Harrah's Entertainment, Inc.; Petsmart, Inc.; The Quaker Oats
Company; and Tufts Associated Health Plans, Inc. When Dr. Salmon
reaches age 70 on November 16, 2000, he will be required under the
Company's Corporate Governance Guidelines to tender his resignation
as a director, effective at the 2001 Annual Meeting of Shareholders.
JOANNE WINIK is President, General Manager, and a director of KLRN-TV,
San Antonio's Pubic Broadcasting Service affiliate. She is 5859 and
has been a director of the Company since 1993. She is Chairman of
the Corporate Governance Committee and was formerly a member of the Audit
Committee. She is a director of Southern Educational Communications
Association.
OtherPBS (Public
Broadcasting System).
Incumbent Directors Whose Terms Expire in 2001
RONALD K. CALGAARD is an investor. He was President of Trinity University
from 1979 to 1999. He is 62 and has been a director of the Company
since 1998. He is a member of the Compensation Committee. He is a
director of Plymouth Commercial Mortgage Company and Valero Energy
Corporation and is Chairman of The Trust Company, N.A.
LAURO F. CAVAZOS is Professor of Family Medicine and Community Health,
Tufts University School of Medicine (since 1996); and education and
management consultant (since 1991). He was Acting Chair, Department
of Family Medicine and Community Health, Tufts University School of
Medicine (since 1997);(1997-1999) and education and management
consultant (since 1991). He was Acting Chair, Community Health, Tufts
University School of Medicine (1994-1997) and Adjunct Professor,
Community Health, Tufts University School of Medicine (1992-1994). He is 7172 and has been a
director of the Company since 1993. He is Chairman of the Audit
Committee and a member of the Corporate Governance Committee. He is
a director of the Nellie Mae Foundation.
JOHN B. LAHOURCADE is an investor. He served as Chairman of the Board of
the Company from 1988 to 1996 and from March to October 1997. He
served as Acting Chief Executive Officer from March to May 1997.
He is a member of the Executive Committee. He has been employed by
the Company as a consultant since January 1996. He is 7475 and has
been a director of the Company since 1970.
GEORGE H. WENGLEIN is an investorretired Chairman of the Board and one of the
founders of the Company. He was employed by the Company as a
consultant prior to January 1998. He is 8182 and has been a director
of the Company since 1959. He is a member of the Executive
CommitteeCommittee.
Incumbent Directors Whose Terms Expire in 2002
JUDITH B. CRAVEN is a Physician Administrator. She was President of
United Way of the Texas Gulf Coast (1992-1998). She is 54 and was formerlyhas
been a director of the Company since 1998. She is a member of the
Compensation Committee. She is a director of A.H. Belo Corporation,
Compaq Computer Corp., Sysco Corporation, VALIC, and the Houston
Branch of the Federal Reserve Bank of Dallas.
DAVID B. DAVISS is Chairman of the Board of the Company (since 1997). He
was Acting Chief Executive Officer from May to October 1997. He is
63 and has been a director of the Company since 1984. He is
Chairman of the Executive Committee and a member of the Corporate
Governance Committee. He is an advisory director of Austin Trust
Company and a director of Bartlett Cocke, Inc.
ARTHUR R. EMERSON is Vice President and General Manager of the Texas
Stations of the Telemundo television network. He is 55 and has been
a director of the Company since 1998. He is a member of the Audit
Committee. He is a director of USAA Federal Savings Bank.
ROGER R. HEMMINGHAUS is Chairman of the Board and a director of Ultramar
Diamond Shamrock Corporation, where he also served as Chief Executive
Officer until 1999 and as President until 1996. He is 63 and has
been a director of the Company since 1989. He is Chairman of the
Compensation Committee and a member of the Executive Committee and
the Corporate Governance Committee. He is Chairman of the Federal
Reserve Bank, Eleventh District, and a director of New Century
Energies, Inc., and billserv.com.
INFORMATION CONCERNING DIRECTORS AND COMMITTEES
Meetings and Compensation of Directors
During the fiscal year ended August 31, 1998,1999, the Board of Directors held
six meetings. Each nonofficer director is paid an annual retainer of $20,000
plus a meeting fee of $1,500 for each meeting of the Board of Directors which
he or she attends and a meeting fee of $1,000 for each meeting of any Board
committee which he or she attends (except that the meeting fee for the chair of
the committee is $1,200 per meeting). The Chairman of the Board, in his
discretion, may reduce meeting fees by 50% when the meeting involved is brief
or telephonic.
Nonemployee Director Stock Options
The Company has aUnder the Company's Nonemployee Director Stock Option Plan (the "Option
Plan") under which, nonemployee directors are periodically granted nonqualified options to
purchase shares of the Company's common stock at an option price equal to 100%
of fair market value on the date of grant. Each option terminates upon the
expiration of ten years from the date of grant or one year after the optionee
ceases to be a director, whichever first occurs. An option may not be
exercised prior to the expiration of five years from the date of grant, subject
to certain exceptions specified in the Option Plan.
Pursuant to the provisions of the Option Plan, options were granted on
January 9, 1998,8, 1999, to Lauro F. CavazosRonald K. Calgaard, Judith B. Craven, Arthur R. Emerson,
and George H. WengleinRoger R. Hemminghaus for 5,000 shares each at an option price of $17.00$15.4375
per share,share.
The Option Plan is proposed to be amended and on July 24, 1998, to Ronald K.
Calgaard, Judith B. Craven, and Arthur R. Emerson for 1,666 shares each at an
option price of $17.125 per share.restated as discussed
elsewhere in this proxy statement.
Nonemployee Director Phantom Stock Plan
The Company has aUnder the Company's Nonemployee Director Phantom Stock Plan (the "Phantom
Stock Plan") which became effective on April 1, 1998. Under the Phantom Stock
Plan,, nonemployee directors may elect to defer all or a portion of
their director retainer fees into a phantom share account which is credited
with dollar amounts in the form of phantom shares priced at current market
value of the Company's common stock. The phantom share accounts are also
credited with dollar amounts equal to dividends paid on the common stock. When
a participant ceases to be a director, the number of phantom shares in his or
her account is converted into an equal number of shares of the Company's common
stock.
Audit Committee
The Audit Committee of the Board of Directors, which currently consists of
Lauro F. Cavazos (Chairman), Arthur R. Emerson, and Walter J. Salmon, met twothree
times during the 19981999 fiscal year. The functions of the Audit Committee are to
review the qualifications and independence of the independent auditors; to
recommend the appointment of the independent auditors; to approve the
assignment of new audit partners; to review the scope of the annual audit and
the annual audit process; to review the annual audited financial statements; to
review the annualinterim reporting process; to review internal audit, accounting,
data processing, financial functions, and personnel; to review accounting and
data processing controls and procedures; to review legal matters that may have
a significant effect on the financial statements; to review the internal audit
function; to provide regular opportunities for the director of internal audit
and the independent auditors to meet privately with the Audit Committee; to
review the Company's policies on standards of conduct; and to report the
activities of the Audit Committee to the Board of Directors on a regular basis.
Compensation Committee
The Compensation Committee of the Board of Directors currently consists of
Roger R. Hemminghaus (Chairman), Ronald K. Calgaard, and Judith B. Craven, and
Walter J. Salmon.Craven. The
Compensation Committee met fourthree times during the 19981999 fiscal year. The
functions of the Compensation Committee are to review the
compensation of officers and other management personnel and to make
recommendations to the Board of Directors concerning such compensation.compensation and benefits
of officers and employees. The Compensation Committee also administers those
employee benefit plans of the Company which provide for administration by a
Board committee.
Compensation Committee Interlocks and Insider Participation
Prior to January 1998, George H. WengleinThe only persons who served as a membermembers of the Compensation Committee. HeCommittee of
the Board of Directors during the 1999 fiscal year were Ronald K. Calgaard,
Judith B. Craven, Roger R. Hemminghaus, and Walter J. Salmon, none of whom is
an officer or employee, or a former officer or employee, of the Company and was
previously employed by the Company as a consultant at a salary of $10,417 per
month under a contract which expired in January 1998.Company.
Corporate Governance Committee
The Corporate Governance Committee of the Board of Directors currently
consists of Joanne Winik (Chairman), Lauro F. Cavazos, David B. Daviss,
Roger R. Hemminghaus, and Walter J. Salmon. The Corporate Governance Committee
met fourtwo times during the 19981999 fiscal year. The functions of the Corporate
Governance Committee are to define and to periodically review the
responsibilities of directors; to maintain a current statement of, and to
monitor compliance with, Corporate Governance Guidelines; to make
recommendations regarding the size of the Board and its committee structure; to
assign committee members and chairs, subject to Board approval; to review
committee charters and changes therein; to assist in identifying and screening
Board candidates; to decide issues regarding conflicts of interest and
independence of directors; to consider appropriateness of continued Board
service when significant changes occur in a director's professional role and
responsibilities; to survey annually the performance of directors and the
effectiveness of the Board; to solicit suggestions for improving Board
performance; and to review and make recommendations to the Board
regarding
matters of corporate governance and to nominate persons for election
as directors.director compensation.
The Corporate Governance Committee will consider nominees for election as
directors recommended by shareholders. A shareholder desiring to submit such a
recommendation should deliver to the Secretary of the Company at the principal
offices of the Company not later than 90 days prior to the date of the meeting
of shareholders at which directors are to be elected a notice which includes
(i) the name and address of the shareholder making the recommendation, (ii) the
name, age, and business address of the proposed nominee, and (iii) such other
information regarding the proposed nominee as would be required in a proxy
solicitation relating to an election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry J.C. Parker is employed as President and Chief Executive Officer of
the Company under a three-year employment contract effective October 1, 1997.
Mr. Parker's employment contract provides, among other things, for (i) a
minimum base salary of $360,000 per year, (ii) a guaranteed bonus for the
fiscal year ending August 31, 1998, of at least $132,000, (iii) the initial
grant of options to purchase 100,000 shares of the Company's common stock at an
option price of $20.75 per share, and (iv) a loan from the Company not to
exceed $200,000 to be applied to the purchase of 20,000 shares of the Company's
common stock (with forgiveness of principal over five years, contingent upon
continued employment).The. The contract also provides that Mr. Parker will be
entitled to receive his compensation and benefits until September 30, 2000, if
prior to that date, the Company terminates his employment without "cause" (as
defined) or if he resigns "for good reason" (as defined). Mr. Parker was
Chairman of the Board, President, and Chief Executive Officer of County Seat
Stores, Inc. from 1989 until his resignation in July 1996. County Seat
Stores, Inc. filed a petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in October 1996. The Board of Directors of the Company does
not believe that such filing reflects adversely upon Mr. Parker's integrity or
upon his abilities as a director and executive officer of the Company.
John B. Lahourcade, a director of the Company, is employed by the Company
as a consultant at a salary of $7,083 per month under a contract which expires
in 2001.
James R. Hale, Secretary of the Company, is a member of the law firm of
Cauthorn Hale Hornberger Fuller Sheehan & Becker Incorporated. The firm
performs legal services for the Company on a regular basis. For services
rendered during the fiscal year ended August 31, 1998,1999, the Company paid such
firm approximately $416,000.$475,000. In the opinion of the Company, such fees are
comparable to those charged by other law firms for similar services.
William E. Robson resigned as a director and as Executive Vice President-
Operations of the Company effective as of April 30, 1998. In connection with
his resignation, the Company agreed to pay him $3,000 per month for 100 months
(until age 65) in satisfaction of his deferred compensation benefits and his
supplemental executive retirement plan (SERP) benefits. As a severance
benefit, the Company agreed to pay Mr. Robson $5,000 per month for 100 months,
subject to the Company's right to reduce or terminate such payments in the
event of certain contingencies relating to death, survivorship, employment
status, and competitive activities. The Company also paid Mr. Robson his
regular monthly salary through July 1, 1998, transferred to him a Company
automobile, and agreed to provide him with outplacement services at a cost to
the Company of $3,500. A copy of the agreement is on file with the Securities
and Exchange Commission as an exhibit to the Company's quarterly report on Form
10-Q for the fiscal quarter ended May 31, 1998.
SECTION 16(a) OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and any persons holding more than ten
percent of the Company's common stock to report their initial ownership of the
Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission and the New York Stock Exchange, and to
provide copies of such reports to the Company. Based upon the Company's review
of copies of such reports received by the Company and written representations
of its directors and executive officers, the Company believes that during the
year ended August 31, 1998,1999, all Section 16(a) filing requirements were
satisfied.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Company, no person owned beneficially as of
October 31, 1998,1999, more than five percent of the outstanding common stock of the
Company, except as follows:
Shares of Common Stock
Names and Address of Beneficially Owned as of Percent of
Beneficial Owner October 31, 1998 Class
_____________________ ________________________ ___________
NBD Bank, N.A. (1)
611 Woodward Avenue
MS 8115
Detroit, MI 48226 1,308,940 5.70%
(1) The shares held by NBD Bank, N.A. ("NBD") are held in advisory and
discretionary accounts of investors. NBD has sole power to dispose
of 1,307,640 shares in such accounts and has shared dispositive power
with respect to 1,300 shares. NBD has sole power to vote 1,308,940
shares held in such accounts and has no shared voting power. As of
October 31, 1998, none of such accounts contained more than five
percent of the outstanding common stock of the Company.
The foregoing is based upon information furnished by NBD.
MANAGEMENT SHAREHOLDERS
According to information furnished by the persons concerned, each
director, each nominee for director, and all directors and executive officers
of the Company as a group, owned beneficially the indicated number and
percentage of outstanding shares of common stock of the Company as of
November 10, 1998:16, 1999:
Name of Individual or Shares Beneficially Owned Percent
IdentifyIdentity of Group as of November 10, 1998 (1) Of16, 1999(1) of Class
_____________________ ___________________________ ________
Ronald K. Calgaard (2) -0- ---
Lauro F. Cavazos (2) 1,550 0.01%(3) 6,550 0.03%
Judith B. Craven (3) 500 ---(4) 1,500 0.01%
David B. Daviss (4) 5,135 0.02%(5) 7,477 0.03%
Arthur R. Emerson (5)(6) 1,237 0.01%
Roger R. Hemminghaus (6) 4,100 0.02%(7) 5,766 0.03%
Robert T. Herres -0- ---
John B. Lahourcade (7) 196,405 0.85%(8) 192,405 0.86%
Barry J.C. Parker (8) 59,500 0.26%(9) 128,377 0.57%
Walter J. Salmon (9) 4,435 0.02%(10) 7,768 0.03%
George H. Wenglein 730,000 3.17%3.26%
Joanne Winik (10) 2,230 0.01%(11) 5,698 0.03%
All directors and executive
officers of the Company,
as a group (11) 1,066,773 4.63%(12) 1,265,988 5.59%
(1) 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, except as indicated in the following notes.
(2) The shares shown for Dr. Calgaard do not include 1,383 shares of
phantom stock held under the Nonemployee Director Phantom Stock Plan.
(3) The shares shown for Dr. Cavazos are held jointly with his wife.
Such shares do not include 4331,148 shares of phantom stock held under
the Nonemployee DirectorsDirector Phantom Stock Plan. (3)The shares shown
include 5,000 shares which he has the right to acquire within 60 days
under the Nonemployee Director Stock Option Plan.
(4) The shares shown for Dr. Craven are held for her benefit in a
custodial account. (4)Such shares do not include 691 shares of phantom
stock held under the Nonemployee Director Phantom Stock Plan.
(5) The shares shown for Mr. Daviss are held for his benefit in custodial
accounts and include 98774 shares held by a 401(k) custodian. (5)The
shares shown include 1,666 shares which he has the right to acquire
within 60 days under the Nonemployee Director Stock Option Plan.
(6) The shares shown for Mr. Emerson include 1,0001,237 shares held jointly
with his wife in a custodial account and 237account. Such shares do not include 691
shares of phantom stock held for his
benefit in an Individual Retirement Account.
(6)under the Nonemployee Director Phantom
Stock Plan.
(7) The shares shown for Mr. Hemminghaus are held for his benefit in a
custodial account. Such shares do not include 8672,297 shares of
phantom stock held under the Nonemployee DirectorsDirector Phantom Stock Plan.
(7)The shares shown include 1,666 shares which he has the right to
acquire within 60 days under the Nonemployee Director Stock Option
Plan.
(8) The shares shown for Mr. Lahourcade include 1,125 shares held jointly
with his wife.
(8)(9) The shares shown for Mr. Parker include 37,50092,500 shares which he has
the right to acquire within 60 days under the Company's benefit
plans.
(9)(10) The shares shown for Dr. Salmon are held for his benefit in an
Individual Retirement Account. Such shares do not include 4331,148
shares of phantom stock held under the Nonemployee DirectorsDirector Phantom
Stock Plan. (10)The shares shown include 3,333 shares which he has the
right to acquire within 60 days under the Nonemployee Director Stock
Option Plan.
(11) The shares shown for Ms. Winik are held for her benefit in a
custodial account. Such shares do not include 2,6503,484 shares of
phantom stock held under the Nonemployee DirectorsDirector Phantom Stock Plan.
(11)The shares shown include 3,333 shares which she has the right to
acquire within 60 days under the Nonemployee Director Stock Option
Plan.
(12) The shares shown for all directors and executive officers as a group
include 80,699221,830 shares which they have the right to acquire within 60
days under the Company's benefit plans.
EXECUTIVE COMPENSATION
The table below contains information concerning annual and long-term
compensation of the chief executive officersofficer and the fivesix most highly compensated
executive officers (the "Named Officers") for services in all capacities to the
Company for the fiscal years ended August 31, 1999, 1998, 1997, and 1996:1997:
Summary Compensation Table
Annual Compensation Long-Term Compensation
Awards Payouts
_____________________________________________________ ____________________________ ________
Securities All
Other Under- Other
Name and Annual Restricted lying LTIP Compen-
Principal Fiscal Compen- Stock Options/ Payouts sation
Position Year Salary Bonus(1) sation(2) Awards SARs(3) (4) (5)
_____________________________________________________ ____________________________ ________
Barry J.C. Parker 1998 $330,000 $132,0001999 $375,000 $ 93,500 $0 $0 170,000106,000 $ 0 $ 03,696
President and 1998 330,000 132,000 0 0 170,000 0 0
Chief Executive 1997 --- --- 0 0 0 0 0
Chief Executive 1996 --- ---Officer
Laura M. Bishop 1999 175,000 28,000 0 0 41,785 0 0 0
Officer
David B. Daviss 1998 135,000 --- 0 0 0 0
Acting Chief 1997 125,000 --- 0 0 0 0 0
Executive Officer 1996 32,400 --- 0 0 5,000 0 0
and director
Laura M. Bishop3,696
Senior Vice 1998 165,000 34,000 0 0 20,000 0 4,015
Senior VicePresident and 1997 146,667 --- 0 0 850 0 2,862
President and 1996 108,750 --- 0 0 8,650 0 6,129
Chief Financial
Officer
Robert P. Burke 1999 175,000 27,000 0 0 41,980 0 3,696
Senior Vice 1998 165,000 34,000 0 0 20,000 0 4,015
Senior VicePresident- 1997 153,333 --- 0 0 1,000 0 2,973
Marketing
Alan M. Davis 1999 177,500 27,000 0 0 42,370 0 0
Senior Vice 1998 43,750 8,750 0 0 25,000 0 25,000
President- 1996 105,0001997 --- --- 0 0 13,000 0 0 Marketing0
Real Estate
Development
Sue Elliott 1999 177,500 28,000 0 0 42,205 0 0
Senior Vice 1998 52,088 10,208 0 0 25,000 0 25,000
President- 1997 --- --- 0 0 0 0 0
Human Resources
Raymond C. Gabrysch 1999 175,000 26,000 0 0 41,965 0 3,696
Senior Vice 1998 165,000 34,000 0 0 20,000 0 4,015
Senior VicePresident- 1997 156,667 --- 0 0 1,000 0 2,973
President- 1996 148,750 3,761 0 0 1,200 0 14,062
Operations
Clyde C. Hays III 1999 201,000 26,000 0 0 44,800 0 3,696
Senior Vice 1998 200,000 40,000 0 0 20,000 0 4,015
Senior VicePresident- 1997 190,000 --- 0 0 1,500 19,316 2,973
President- 1996 174,167 --- 0 0 1,600 22,993 14,062
Operations
William E. Robson 1998 256,667 --- 0 0 0 0 518,753
Executive Vice 1997 275,000 --- 0 0 2,300 28,359 9,279
President- 1996 263,333 --- 0 0 2,500 58,527 19,795
Operations
(1) Reflects incentive-based cash bonuses awarded under the Company's Incentive Bonus Plan
and Area Vice President Bonus Plan.
Awards are stated as compensation in the year with respect to which the award was earned,
even if actually paid in the following year.
(2) Perquisites and other personal benefits received by the executive officers are not
included because the aggregate amount of such compensation does not exceed the lesser of
$50,000 or 10% of the total amount of annual salary and bonus for any Named Officer.
(3) The Company has not issued any stock appreciation rights to the Named Officers.
(4) The long-term incentive plan (LTIP) amounts paid out in fiscal 1997 and 1996 under the Company's
Performance Unit Plan relate to the three-year performance cyclescycle ended August 31, 1996 and 1995, respectively.1996.
(5) Amounts for Mr. Robson include payments paid and accrued in connection with his
resignation on April 30, 1998, of $514,738 in 1998 and contributions under the Profit
Sharing Plan of $4,015, $2,973, and $14,062 in 1998, 1997, and 1996, respectively.
Remaining amounts for Mr. Robson for 1997 and 1996 are for amounts under a deferred
compensation agreement. Amounts for Ms. Bishop and Messrs. Burke, Gabrysch, Hays, and HaysParker are contributions
under the Profit Sharing Plan. Amounts for Mr. Davis and Ms. Elliott are employment
signing bonuses.
The following table reports the grant of stock options and stock
appreciation rights ("SARs") to the Named Officers during fiscal 1998.1999. Options
were granted under the Company's Management Incentive Stock Plan.Plans. The Company has not
granted SARs to any of the Named Officers.
Option/SAR Grants in Last Fiscal Year
Potential Realized
Value at
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term (3)
________________________________________________________________________ ____________________
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted (1) Fiscal Year (2) ($/sh) Date 5%($) 10%($)
________________________________________________________________________ ____________________
Barry J.C. Parker 100,000 21.57% $20.750 09-30-2003 $705,327 $1,600,029
70,000 15.10% 19.125 12-08-2003 455,063 1,032,30853,300 3.52% $14.3750 10-14-2004 $260,577 $591,160
16,700 1.10% 15.4375 01-07-2005 87,679 198,913
36,000 2.38% 14.7500 02-03-2005 180,591 409,699
Laura M. Bihsop 20,000 4.31% 19.125 12-08-2003 130,018 294,945Bishop 19,040 1.26% 14.3750 10-14-2004 93,084 211,176
5,960 0.39% 15.4375 01-07-2005 31,291 70,989
16,785 1.11% 15.1875 01-20-2005 86,698 196,688
Robert P. Burke 20,000 4.31% 19.125 12-08-2003 130,018 294,94519,040 1.26% 14.3750 10-14-2004 93,084 211,176
5,960 0.39% 15.4375 01-07-2005 31,291 70,989
16,980 1.12% 15.0625 01-27-2005 86,983 197,335
Alan M. Davis 19,040 1.26% 14.3750 10-14-2004 93,084 211,176
5,960 0.39% 15.4375 01-07-2005 31,291 70,989
17,370 1.15% 15.1875 01-20-2005 89,720 203,543
Sue Elliott 19,040 1.26% 14.3750 10-14-2004 93,084 211,176
5,960 0.39% 15.4375 01-07-2005 31,291 70,989
17,205 1.14% 15.1875 01-19-2005 88,867 201,610
Raymond C. Gabrysch 20,000 4.31% 19.125 12-08-2003 130,018 294,94519,040 1.26% 14.3750 10-14-2004 93,084 211,176
5,960 0.39% 15.4375 01-07-2005 31,291 70,989
16,965 1.12% 14.9375 02-01-2005 86,185 195,525
Clyde C. Hays III 20,000 4.31% 19.125 12-08-2003 130,018 294,945
William E. Robson 30,000 6.47% 19.125 12-08-2003 195,027 442,418
19,040 1.26% 14.3750 10-14-2004 93,084 211,176
5,960 0.39% 15.4375 01-07-2005 31,291 70,989
19,800 1.31% 15.3750 01-14-2005 103,534 234,882
_______________________________________
(1) Options were granted at fair market value of the common stock on the date of grant.
Options may not be exercised during the first 12 months following the date of grant.
(2) Based upon a total of 463,5001,512,732 options granted to employees in fiscal 1998.1999.
(3) The dollar amounts in these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and
should not be considered as a forecast of future stock prices.
The table below reports exercises of stock options and SARs by the Named
Officers during fiscal 19981999 and the value of their unexercised stock options
and SARs as of August 31, 1998.1999. The stock options were granted under the
Company's Management Incentive Stock Plan.Plans. The Company has not granted SARs to any of
the Named Officers.
Aggregated Options/Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARS Options/SARs
Acquired at FY-End at FY-End(1)
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
______________________________________________________________________________
Barry J.C. Parker --- $ --- 0/170,00037,500/238,500 $0/$0
David B. Daviss --- --- 0/6,666 0/0
Laura M. Bishop --- --- 3,741/25,75910,499/60,786 0/0
Robert P. Burke --- --- 5,500/28,50013,000/62,980 0/0
Alan M. Davis --- --- 6,250/61,120 0/0
Sue Elliott --- --- 6,250/60,955 0/0
Raymond C. Gabrysch 1,200 5,625 4,850/20,500--- --- 9,100/56,965 0/0
Clyde C. Hays III 1,200 5,925 6,100/20,750--- --- 10,600/59,800 0/0
William E. Robson 2,700 11,138 10,650/31,150 0/0_________________________
(1) The value of unexercised options is based on a price of $15.25$13.375 per common
share at August 31, 1998.1999.
DEFERRED COMPENSATION
The Company's Nonemployee Director Deferred Compensation Plan permits
nonemployee directors to defer all or a portion of their directors' fees in
accordance with applicable regulations under the Internal Revenue Code.
Deferred amounts bear interest at the average interest rate of U.S. Treasury
ten-year obligations. The Company's obligation to pay deferred amounts is
unfunded and is payable from general assets of the Company.
Nonemployee directors are permitted to defer all or a portion of their
director retainer fees pursuant to the Company's Nonemployee Director Phantom
Stock Plan. See the discussion under the caption "Nonemployee Director Phantom
Stock Plan."
The Company has deferred compensation agreements with several officers and
former officers of the Company. Under the agreements, the Company is obligated
to provide annual benefits for each such officer or his beneficiaries during a
period of ten years after his death, disability, or retirement. The agreements
are unfunded, but the Company has purchased life insurance as a means of
partially offsetting the cost of such benefits. No estimated annual benefits
are payable upon retirement at normal retirement age for any of the Named
Officers.
The Company has a Supplemental Executive Retirement Plan which is designed
to provide benefits for selected officers at normal retirement age with 25
years of service equal to 50% of their final average compensation offset by
Social Security, profit sharing benefits, and deferred compensation. Three of
the officers designated to participate in the plan have retired and are
receiving benefits under the plan. Accrued benefits of all actively employed
participants become fully vested upon termination of the plan or a change in
control (as defined in the plan). The plan is unfunded, and the Company is
obligated to make benefit payments solely on a current disbursement basis.
The Company has a Deferred Compensation Plan for all of its highly
compensated employees, effective as of June 1, 1999, which permits deferral of
a portion of annual compensation. See the discussion under the caption
"Deferred Compensation Plan."
The following table illustrates the approximate annual pension that the
Named Officers in the Summary Compensation Table would receive under the
Supplemental Executive Retirement Plan if the plan remained in effect and the
Named Officers retired at age 65 and elected an individual life annuity.
Pension Plan Table
Final Average Years of Service
Final Average ______________________________________________
Earnings 15 20 25
__________________ ____________ ______________ _____________ ________ ________ ________
$150,000 $ 45,000 $ 60,000 $ 75,000
300,000 90,000 120,000 150,000
450,000 135,000 180,000 225,000
600,000 180,000 240,000 300,000
Amounts shown as "finalAfinal average earnings"earnings@ in this table represent the
average of the last five years of compensation, which is substantially the same
as the total of salary, bonus, and LTIP payouts as shown in the Summary
Compensation Table for the Named Officers. As of November 30, 1998,1999, the
credited years of service under the Supplemental Executive Retirement Plan for
Barry J.C.J. C. Parker, Laura M. Bishop, Robert P. Burke, Alan M. Davis,
Sue Elliott, Raymond C. Gabrysch, and Clyde C. Hays III are 2, 6, 3, 24,4, 7, 4, 1, 1, 25,
and 25,26, respectively. The annual benefit amounts shown above are subject to an
offset by benefits payable under deferred
compensation agreements, if applicable, the profit sharing plan and Social Security.
Net benefits under the plan are prorated by credited years of credited service less than
25; after 25 years of service, the net benefits are unchanged.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
presents the following report on executive compensation. The report describes
the Company's executive compensation programs and the bases on which the
Committee made compensation decisions for fiscal 19981999 with respect to the
Company's executive officers, including those named in the compensation tables.
Compensation Objectives
The Committee conducts an annual review of the Company's executive
compensation program. The objectives of the executive compensation program
include the following:
To offer fair and competitive base salaries consistent with the Company's
position in the foodservice industry;
To reward executives for corporate and individual performance through an
annual incentive bonus program;
To encourage future performance through the use of long-term incentives
such as stock options and performance units; and
To encourage executives to acquire and retain ownership of the Company's
common stock.
The Company's executive compensation program is designed to enable the
Company to attract, retain, and motivate the highest quality of management
talent. To achieve that objective, the Committee has developed a compensation
program which combines annual base salaries with annual and long-term
incentives tied to corporate performance and to increases in shareholder value.
Annual Base Salaries
The Committee annually establishes the base salaries to be paid to the
Company's executive officers during the coming year, subject to approval by the
Board of Directors. In setting base salaries, the Committee takes into account
several factors, including the executive's experience, responsibilities,
management abilities, and job performance, as well as performance of the
Company as a whole and competitive compensation data.
Annual Incentive Bonuses
The Company's annual incentive bonus plan for executive officers and other
key personnel directly links annual cash incentive payments to the attainment of
predetermined earnings per share goals and strategic objectives established by
the Committee and approved by the Board of Directors. Eligible executives are
assigned threshold, target, and maximum bonus levels as a percentage of base
salary, based upon the executive's responsibility level, and increase inachievement of
earnings per share overtargets, and the prior year. Based upon the recommendationdegree of the Committee, the
annual incentive bonus plan was suspended for fiscal 1998 and replaced with a
discretionary cash bonus plan for fiscal 1998 based upon nonfinancial
objectives but subject to attainmentachievement of a threshold earnings goal by the
Company for fiscal 1998. Incentive bonuses earned by the Named Officers for
fiscal 1998 under the discretionary plan are included in the Summary
Compensation Table.specific strategic
objectives.
On October 22, 1998, based upon the recommendation of the Committee, the
Board of Directors adopted an Executive Bonus Plan for Fiscalfiscal 1999 for officers
and key personnel providing for the payment of cash bonuses from a bonus pool
to be established if a minimumbased upon achievement of earnings per share target is achievedtargets and
strategic objectives. Bonuses paid under such plan for fiscal 1999 to the
fiscal year.Named Officers are included in the Summary Compensation Table.
On October 15, 1999, the Committee recommended, and the Board of Directors
adopted, an Executive Bonus Plan for Fiscal 2000, in which all of the Named
Officers are eligible to participate. Bonuses may range from 10% to 60%under the plan will be
determined by achievement of annual base compensation.
Individual bonuses aregoals based upon an evaluationearnings per share and comparable
store sales and upon achievement of individual performance in
relation to predeterminedstrategic objectives.
Stock Options
The Committee normally grants incentive stock options annually to eligible
executive officers and other key employees. The options, which are granted at
100% of market price on the date of grant, are usually for six-year terms. The
number of option shares granted each year is normally determined by a formula
based upon the executive's responsibility level and base salary and the market
price of the common stock.salary. The number of
option shares granted will vary based upon position level, with the more senior
officers receiving larger grants. The number of option shares held by an
executive is not considered in determining stock option awards.
Stock Purchase Loans
During January and February 1999, pursuant to Luby's Incentive Stock Plan,
the Company guaranteed loans by an institutional lender to several officers,
including the Company's president and five senior vice presidents for the
purpose of purchasing shares of the Company's common stock. The Named Officers
obtaining such loans, the number of shares purchased by each, and the amount of
each loan are: Laura M. Bishop - 5,595 shares for $85,000; Alan M. Davis -
5,790 shares for $87,500; Sue Elliott - 5,735 shares for $87,500; Raymond C.
Gabrysch - 5,655 shares for $85,000; Clyde C. Hays III - 6,600 shares for
$100,000; and Barry J.C. Parker - 12,000 shares for $180,000.
Performance Units
Prior to fiscal 1998 the Committee normally granted annually to eligible
executive officers and other key employees performance units based upon
attainment by the Company of predetermined earnings and equity goals
established by the Committee over a performance cycle of three consecutive
fiscal years. The number of performance units granted was normally determined
by a formula based upon the participant's responsibility level and base salary
and the market price of the common stock. Performance units are payable at the
end of each performance cycle in cash or shares of stock, or both, if the
performance goals for the cycle are attained. No payments were made for the
three-year performance cycles ended August 31, 1997, 1998, and 1998.1999.
The Committee did not grant any performance units during fiscal 1998 and
1999, based upon the Committee's determination that other types of incentive
awards were more appropriate during the development and implementation of the
Company's new strategic plan.
Stock Ownership Guidelines
In 1996 theThe Board of Directors has adopted guidelines for ownership of Companythe
Company's common stock by executives and nonemployee directors. The guidelines
provide that each person in the following categories is expected to attain the
indicated level of stock ownership within five years:
(a) Chief Executive Officer - shares having a value equal to four times
annual base salary;
(b) President and Senior Vice President - shares having a value equal to
two times annual base salary; and
(c) Vice President - shares having a value equal to annual base salary.
The guidelines were amended in 1998 to provide that each nonemployee
director is expected to attain, over time, ownership of common stock in an
amount(d) Nonemployee Director - shares having a value equal to five times his
or her annual director retainer fees. Phantom stock is considered
common stock for purposes of the guidelines. Until a nonemployee
director attains the minimum level of stock ownership, he or she is
obligated to defer at least 50% of annual retainer fees in the form
of phantom stock.
Change in Control Agreements
In January 1999, based upon recommendations of the Committee, the Company
entered into a Change in Control Agreement with each of Barry J.C. Parker (CEO)
and the six senior vice presidents (SVP's). The agreements provide for
benefits to become effective if a change in control of the Company (as defined
therein) occurs and if, within 24 months thereafter, there is involuntary
termination of employment unrelated to gross negligence, malfeasance or
incompetence, or there is voluntary termination of employment for good reason
(as defined therein). Benefits payable under such circumstances include
(i) lump sum severance payments equal to three times annual base pay for the
CEO and two times annual base pay for SVP's; (ii) lump sum severance payments
equal to three times for the CEO and two times for SVP's the average of the
short-term incentive bonuses for the prior fiscal year and the target for the
year of termination; (iii) continuation of health and welfare benefits for 36
months for the CEO and 24 months for SVP's; (iv) immediate vesting of all stock
options; and (v) other benefits described in the agreements, copies of which
are on file with the Securities and Exchange Commission.
Deferred Compensation Plan
Based upon the recommendation of the Committee, the Board of Directors
adopted a Deferred Compensation Plan for all highly compensated employees,
including the president and all senior vice presidents. The plan, which became
effective June 1, 1999, permits highly compensated employees to defer a portion
of their annual compensation into unfunded accounts with the Company. The
deferrals mirror the results of a phantom investment portfolio theoretically
(but not actually) invested in funds selected by each participant, including a
Luby's, Inc. stock fund. A participant's account balance will be paid in cash
upon death, termination of employment, change in control of the Company,
disability, or retirement.
Compensation of Chief Executive Officer
Mr. DavissBarry J.C. Parker was paidelected President and Chief Executive Officer on
October 1, 1997, at which time he entered into a three-year employment contract
with the Company providing for a base salary of $25,000$360,000 per month for services as
Acting Chief Executive Officer from May 1, 1997, to October 1, 1997. His
salary as Chairman ofyear. Based upon
his performance, the Committee recommended and the Board of Directors approved,
an increase in Mr. Parker's base salary to $390,000 per year, effective Octoberas of
March 1, 1997, is $120,0001999, and to $405,000 per year.
On Octoberyear, effective as of November 1, 1997,1999.
For the fiscal year ended August 31, 1998, Mr. Parker was elected as President and Chief
Executive Officer. Thepaid a bonus of
$132,000 in accordance with his employment contract. Based upon his
performance, the Committee recommended a three-year employment contract
for Mr. Parker, which was approved byand the Board approved payment of Directors. The contract
fixes his base annual salary at $360,000 per year and provides for a guaranteedcash
bonus for fiscal 1998 of at least $132,000. In accordance with the contract,
the Company reimbursed$93,500 to Mr. Parker for relocation expenses infiscal 1999. During fiscal 1999, the
amount of
$90,000.
Pursuant toCommittee granted Mr. Parker's employment contract, he was grantedParker stock options as follows: on October 1, 1997,15, 1998, a
stock option for 100,00053,300 shares of common stock at an option price of $20.75$14.375 per share and was granted a loan by the Company in the amount of
$199,999. The loan proceeds were applied to Mr. Parker's purchase of 20,000
shares of common stock, which are pledged to secure the loan. The principal of
the loan is to be forgiven over five years, conditioned upon his continued
employment by the Company.
On December 9, 1997, Mr. Parker was grantedshare; on
January 8, 1999, a stock option for 70,00016,700 shares of common stock at an option price of
$19.125$15.4375 per share, which numbershare; and on February 4, 1999, a stock option for 36,000 shares
at an option price of shares was determined in accordance with the formula discussed above.$14.75 per share.
Salary Continuation Agreements
Mr. Parker's employment contract, referred to above, provides that he will
be entitled to receive all of his compensation and benefits under the contract
until September 30, 2000, if his employment is terminated by the Company
without cause (as therein defined) or if he terminates his employment for good
reason (as therein defined).
On May 14, 1998, the Company entered into a contract with Sue Elliott,
Senior Vice President-Human Resources, which provides that if her employment is
terminated by the Company without good cause (as therein defined) prior to
May 14, 2000, the Company will continue to pay her monthly salary until the
later of May 14, 2000, or 12 months after termination, but not after she
accepts other employment.
On June 1, 1998, the Company entered into a contract with Alan M. Davis,
Senior Vice President-Real Estate Development, which provides that if his
employment is terminated by the Company without good cause (as therein defined)
prior to June 1, 2000, the Company will continue to pay his monthly salary
until the later of June 1, 2000, or 12 months after termination, but not after
he accepts other employment.
Members of the Committee:
Roger R. Hemminghaus, Chairman
Ronald K. Calgaard
Judith B. Craven
Walter J. Salmon
PERFORMANCE GRAPH
This year the Company has changed the composition of the peer group used
to compare the cumulative total shareholder return on the Company's common
stock from that used in prior proxy statements. Information on two of the
companies in the prior year's peer group is no longer available. Morrison
Restaurants, Inc. was acquired by Piccadilly Cafeterias, Inc. and Perkins
Family Restaurants, L.P. is no longer a public company. As a result, the
Company chose to expand the 1998 peer group to include several other companies
in the family dining segment of the restaurant industry.
The following graph compares the cumulative total shareholder return on
the Company's common stock for the five fiscal years ended August 31, 1998,1999,
with the cumulative total return on the S&P SmallCap 600 Index and an industry
peer group index. The 1997 Peer Group is comprised of Buffets, Inc.;
Piccadilly Cafeterias, Inc.; Ryan's Family Steakhouses, Inc.; Shoney's, Inc.;
and Sizzler International, Inc. The 1998 Peer Grouppeer group index is comprised of Bob Evans Farms, Inc.;Buffets, Inc.; Furr's/Bishop's, Inc.; Piccadilly Cafeterias, Inc.; Ryan's
Family Steakhouses, Inc.; Shoney's, Inc.; Sizzler International, Inc.; and
Vicorp Restaurants, Inc. These companies are multiunit family restaurant
operators in the mid-price range with similar stock market capitalization.
The cumulative total shareholder return computations set forth in the
performance graph assume the investment of $100 on August 31, 1993,1994, and the
reinvestment of all dividends. The returns of each company in the 1997 Peer
Group and 1998 Peer Grouppeer group
index have been weighted according to the respective company's stock market
capitalization.
The performance graph has been omitted in the EDGAR filing. A table of
the graph's data points is shown below.
Five-Year Cumulative Return
Years Ended August 31,
__________________________________
1993 1994 1995 1996 1997 1998 1999
______________________________________________
Luby's, Cafeterias, Inc. $100 94 82 100 87 107 93 75 70
1998
Peer Group $100 76 65 54 55 52
1997 Peer Group $100 78 66 61 56 5285 71 71 69 69
S&P SmallCap 600 $100 104 127 144 193 134
CHANGE OF CORPORATE NAME
On October 16, 1998,122 139 186 158 196
NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company's Nonemployee Director Stock Option Plan was approved by the
shareholders on January 13, 1995, and was amended by the Board of Directors declared it advisable and
proposed that Article First ofon
January 14, 1997. The plan, as so amended, is referred to herein as the
Certificate of Incorporation be amended to
change the corporate name to "Luby's, Inc."Original Plan."
The name "Luby's" is well established in the Company's principal markets
as an indicator of quality food and service. As new concepts of food service
are developed, the word "cafeteria" is becoming too limited to identify the
Company's methods of food service. Accordingly, the Board of Directors
believes that the abbreviated corporate name, "Luby's, Inc.," will better serve
to identify the Company as it expands and diversifies its operations in the
coming century.
Adoption of the amendment requires the affirmative vote of a majority of
the outstanding shares entitled to vote thereon. The Board of Directors
recommends a vote "FOR" the amendment.
LUBY'S INCENTIVE STOCK PLAN
On October 16, 1998,15, 1999, the Board of Directors adopted an amendment and
restatement of the Luby's Incentive
StockOriginal Plan, (the "New Plan"), to be effective on January 1, 1999 (the "Effective
Date"), subject to approval byof the shareholders at
the 1999 Annual Meeting.2000 annual meeting. The New Plan is similaramended and restated plan (referred to andherein as
the "Amended Plan") is intended to replace,restate the Management
Incentive StockOriginal Plan, adopted in 1989 (the "1989 Plan"). No furthereffective as of
January 1, 2000.
Original Plan. The Original Plan became effective on January 13, 1995.
It provides for automatic grants will
be madeto directors who are not employees of the
Company or its subsidiaries or affiliated entities of options to purchase
common stock of the Company. The maximum number of shares of common stock
issuable under the 1989Original Plan after December 31, 1998, ifis 100,000, subject to the adjustment
provisions of the plan.
Options have been issued under the Original Plan to each of the following
persons to purchase shares of common stock of the Company at option prices
equal to 100% of market value on the date of grant for the number of option
shares indicated:
Optionee Number of Shares
_____________________ ________________
Ronald K. Calgaard 6,666
Lauro F. Cavazos 10,000
Judith B. Craven 6,666
David B. Daviss 6,666
Arthur R. Emerson 6,666
Roger R. Hemminghaus 11,666
Walter J. Salmon 8,333
George H. Wenglein 5,000
Joanne Winik 8,333
None of these options have been exercised and all are outstanding.
Exercise prices for such options range from $15.4375 to $22.75 per share. The
closing price of the Company's common stock on the New York Stock Exchange on
November 16, 1999, was $12.00 per share.
Principal Changes. The principal changes in the Original Plan is
approvedto be
effected by the shareholders atAmended Plan are:
(a) increasing the 1999 Annual Meeting.total number of shares issuable from 100,000 to
200,000;
(b) making the grant of options discretionary with the Board of Directors
in lieu of automatic grants;
(c) making options exercisable one year after date of grant instead of
five years; and
(d) providing that no optionee may be granted options for more than 5,000
shares in any year.
Summary. The following summary description of the NewAmended Plan is qualified in its
entirety by reference to the complete text of the Amended Plan attached as
Appendix A to this Proxy Statement. The term "Company"ACompany@ as used in this summary
refers only to Luby's, Cafeterias, Inc.
Purpose. The Newpurpose of the Amended Plan is designed to benefitpromote the shareholdersinterests of
the Company and its shareholders by strengthening the Company's ability to
attract and retain the services of experienced and knowledgeable directors. To
accomplish these objectives, the Amended Plan authorizes the awards of options
to purchase shares of the Company's common stock to Nonemployee Directors,
thereby encouraging and rewarding high levelsthem to acquire an increased proprietary interest in the
Company.
Administration. The Amended Plan will be administered by the Board of
performance by individualsDirectors.
Types of Options. Options granted under the Amended Plan will be options
which do not meet the requirements of Section 422 of the Internal Revenue Code,
known as "nonqualified stock options."
Participants. Options under the Amended Plan will be issued only to
directors of the Company who are key to the success of the Company. The New Plan authorizes incentive
awards ("Awards") in the form of stock options, restricted stock, and
performance shares.
Eligibility. The persons eligible to receive Awards under the New Plan
are allnot employees of the Company and all employeesor a subsidiary
of the Company or any corporation or other business entity in which the Company, owns, directly or
indirectly, owns 50% or more than
50% of the capital and profit interests.
Stock Available.or profits interest ("Nonemployee
Directors").
Shares. Subject to the adjustment provisions for adjustments,of the Amended Plan, the
number of shares of common stock of the Company ("Common Stock") which may be issued upon the exercise of options may not
exceed 200,000 shares.
Grants. The Board of Directors shall select the Nonemployee Directors who
are to be granted options under the NewAmended Plan is equaland shall determine the terms,
conditions, and limitations applicable to the sum of: (a) 2,000,000 shares; (b) any shares
of Common Stock available for future awardseach option. No Nonemployee Director
may receive options under the 1989Amended Plan as of the
Effective Date; and (c) any shares of Common Stock represented by awards
granted under the 1989 Plan which are forfeited, expire, or are canceled
without delivery of Common Stock after the Effective Date, or which result in
the forfeiture of Common Stock back to the Company. In no event will the
number of shares of Common Stock which may be issued under the New Plan exceed
2,500,000. Shares covered by an Award which are not issued become available
for further Awards. No participant may receive, under the New Plan, stock
options for more than 100,0005,000 shares in any
one year, except that a newly hired
employee may be granted options for not more than 200,00012-month period.
Adjustments. In the event of changes in outstanding shares of the
Company's common stock described in the first
yearAmended Plan, appropriate adjustments
in the shares as to which options are granted shall be made so that the
proportionate interest of employment.
Stock Options. A stockeach optionee shall be maintained.
Option Price. The option is a right to purchase a specified numberprice shall be 100% of shares of Common Stock during a specified time not exceeding ten years at a
fixed price equal to fair market value on the
date of grant. Stock options may
be either incentive stock options ("ISOs") which comply with Section 422 of the
Internal Revenue Code of 1986 (as amended from time to time) or nonstatutory
stock options ("nonqualified options") which do not comply with Section 422.
Restricted Stock. Restricted Stock is Common Stock which is subject to
restrictions on transfer and/or ownership for a required period of continued
employment. Stock Awards may be granted without payment of consideration by
the participant.
Performance Shares. A Performance Share is Common Stock or a unit valuedgrant, determined with reference to Commonthe closing price of the Company's
common stock on the New York Stock that is subject to restrictions on transfer
and/or ownership. Performance SharesExchange.
Payment. Payment for shares purchased upon the exercise of an option may
be paidmade in Common Stockcash, in shares of the Company's common stock, or cashin a combination
of the two, at the time of purchase.
Option Terms. Each option granted under the Amended Plan shall terminate
ten years from the date of grant or both. Each Performance Share shallone year from the date on which the
optionee ceases to be subjecta director of the Company, whichever first occurs. An
option may not be exercised prior to the attainmentexpiration of performance
targets establishedone year from the date
of grant, with certain exceptions. Each option becomes exercisable immediately
in the event of (i) death of the optionee, (ii) resignation or removal of the
optionee as a director because of long-term disability, (iii) resignation of
the optionee as a director after having served at least two full terms, and
(iv) expiration of the optionee's term without being reelected after having
served at least two full terms.
Transferability. An option shall not be assignable or transferable other
than by will or the laws of descent and distribution. During an optionee's
lifetime, an option can be exercised only by the Committee.
Award Agreements. Each Award will be evidencedoptionee or his or her
guardian or legal representative.
Term, Amendment, and Termination. To the extent permitted by an Award agreement
containing provisions consistent withlaw, the New Plan and such other terms and
conditions as the Committee deems necessary or appropriate.
Limited Stock Purchase Loans. As a means of encouraging stock ownership
by officers, during the period from the Effective Date to March 25, 1999, the
Company may, with the approval of the Committee, make or guarantee loans to
Participants who are officers of the rank of Vice President and above for the
purpose of purchasing Common Stock. It is anticipated that the principal
amount of such loans, in the aggregate, will not exceed $2,500,000.
Administration. The New Plan is to be administered by the Compensation
Committee of the Board of Directors or other committee designated by the Board.
Amendments, etc. The
Board of Directors may amend, modify, suspend, or terminate the New Plan forAmended Plan. However,
shareholder approval is required of any purpose permitted by law. Unless changes in
legal requirements permit otherwise,amendment which (i) increases the
Board may not amend the New Plan (i)
to increase themaximum number of shares of Common Stock that may be issued (exceptissuable under the plan other than pursuant to the
adjustment provisions),provisions, (ii) changes the class of persons eligible to decreasereceive
options, or (iii) must be approved by shareholders under rules of the
option price, (iii)Securities and Exchange Commission. Subject to materially modify eligibility requirements, (iv) to withdraw administration
fromearlier termination, the
Committee, or (v) to extendAmended Plan will remain in effect until the period during which Awards may be
granted.
Adjustments. In the event of a change in the outstanding Common Stock by
reason of a stock split, stock dividend, combination or reclassification of
shares, recapitalization, merger, or other event, the Committee shall make
proportionate or other equitable adjustments in themaximum number of shares of Common
Stock (i) reservedissuable
under the New Plan, (ii) for which Awards may be granted to
an individual participant, (iii) covered by outstanding Awards denominated in
stock or units of stock and shall make appropriate adjustments in (x) stock
prices related to outstanding Awards and (y) price determinations related to
outstanding Awards.
Change of Control. In the event of a "change of control" of the Company
(as defined in the New Plan) or in the event of a "Restructuring Event" (as
defined in the New Plan), the Committee may recommend that the Board of
Directors take action to (i) accelerate the vesting of outstanding Awards, (ii)
offer to purchase outstanding Awards, or (iii) modify the terms of outstanding
Awards.
Unfunded Plan. Insofar as the New Plan provides for Awards in cash and
Common Stock, it shall be an unfunded plan without any obligation on the part
of the Company to segregate assets relating to the New Plan.
Termination. The New Plan is to terminate on December 31, 2008, unless
sooner terminated by the Board of Directors, after which no Awards may be made
under the New Plan.have been issued.
Tax consequences.Consequences. The tax consequences of the issuance and exercise of
Awardsoptions granted under the Amended Plan are set forth in Appendix B to this
Proxy Statement.
Stock Price. The closing price of the Common Stock on the New York Stock
Exchange on November 10, 1998, was $15.00 per share.proxy statement.
Shareholder Vote. The affirmative vote of a majority of the shares
present at the meeting in person and by proxy is required for approval of the
NewAmended Plan. The Board of Directors recommends that the shareholders vote FOR
approval of the NewAmended Plan. The affirmative vote of a majority of the shares
present at the meeting in person and by proxy is required for approval.
APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed the firm of Ernst &
Young LLP to audit the accounts of the Company for the 19992000 fiscal year.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting of Shareholders with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Approval of the appointment of auditors is not a matter which is required
to be submitted to a vote of shareholders, but the Board of Directors considers
it appropriate for the shareholders to express or withhold their approval of
the appointment. If shareholder approval should be withheld, the Board would
consider an alternative appointment for the succeeding fiscal year. The Board
recommends that the shareholders vote FOR approval of the appointment of
Ernst & Young LLP. The affirmative vote of a majority of the shares present at
the meeting in person and by proxy is required for approval.
SHAREHOLDER PROPOSALS FOR 20002001 ANNUAL MEETING
Proposals of shareholders for inclusion in the Company's proxy statement
and form of proxy for the Company's 20002001 Annual Meeting of Shareholders
submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 must
be received in writing by the Company at its corporate office no later than
August 2, 1999.2000. Notice of a shareholder proposal submitted outside the process
of Rule 14a-8 with respect to the Company's 20002001 Annual Meeting of Shareholders
will be considered untimely if received by the Company after October 16, 1999.2000.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. ToThe transfer
agent and registrar for the Company's common stock, American Stock Transfer &
Trust Company, as a part of its regular services and for no additional
compensation other than reimbursement for out-of-pocket expenses, has been
engaged to assist in the proxy solicitation, the Company has engaged W.F. Doring and Co. for a fee
of $3,000 plus reimbursement of out-of-pocket expenses.solicitation. Proxies may be solicited through
the mail and through telephonic or telegraphic communications to, or by
meetings with, shareholders or their representatives by directors, officers,
and other employees of the Company who will receive no additional compensation
therefor.
The Company requests persons such as brokers, nominees, and fiduciaries
holding stock in their names for others, or holding stock for others who have
the right to give voting instructions, to forward proxy material to their
principals and to request authority for the execution of the proxy, and the
Company reimburses such persons for their reasonable expenses.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Company.
LUBY'S CAFETERIAS, INC.
James R. Hale
Secretary
Dated: December 1, 1998
1999
APPENDIX A
LUBY'S, INCENTIVEINC.
AMENDED AND RESTATED
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Objectives. The Luby's IncentiveIntroduction. This Amended and Restated Nonemployee Director Stock
Option Plan (the "Plan") is designed
to benefitof Luby's, Inc. (the "Company"), upon approval of the
Plan by the shareholders of the Company at their 2000 annual meeting, shall
amend and restate the Nonemployee Director Stock Option Plan approved by encouraging and
rewarding high levels of performance by individuals who are key to the
successshareholders of the Company on January 13, 1995, and amended by increasing the proprietary interestBoard of
Directors on January 14, 1997 (the "Original Plan").
2. Effectiveness. Upon approval of the Plan by the shareholders of the
Company at their 2000 annual meeting, the Plan shall become effective as of
January 1, 2000. If the Plan is not approved by the shareholders at such
individualsmeeting, it shall not become effective, and the Original Plan shall continue in
force and effect.
3. Purpose. The Purpose of the Plan is to promote the interests of the
Company and its shareholders by strengthening the Company's growthability to attract
and success.retain the services of experienced and knowledgeable Nonemployee Directors.
To accomplish these objectives, the Plan authorizes incentive Awards through grantsawards of stock options restricted stock, and performance(the
"Options") to purchase shares to those
individuals whose judgment, initiative, and efforts are responsible
for the success of the Company's common stock par value $.32 per
share ("Common Stock") to Nonemployee Directors, thereby encouraging such
directors to acquire an increased proprietary interest in the Company.
2. Definitions.
"Award" means any award described in Section 5 of the Plan.
"Award Agreement" means an agreement entered into between the Company and a
Participant, setting forth the terms and conditions applicable to the Award
granted to the Participant.
"Board" means4. Administration. The Plan shall be administered by the Board of
Directors of the Company.
"Code" meansCompany (the "Board"). The decision of the Board on any
questions concerning the interpretation or administration of the Plan shall, as
between the Company and the Option holders, be final and conclusive. The Board
may consult with counsel, who may be counsel to the Company, and shall not
incur any liability for any action taken in good faith in reliance upon the
advice of counsel.
5. Types of Options. Options granted under the Plan do not meet the
requirements of Section 422 of the Internal Revenue Code of 1986,and are commonly
referred to as amended from time to time.
"Committee" means the Compensation Committee of the Board or other committee
designated by the Board to administer the Plan. The Committee"nonqualified stock options."
6. Participants. Participants shall be constituted to comply with Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 or any successor rule.
"Common Stock" means the common stockdirectors of the Company (par value $.32 per share)
and shall include both treasury shares and authorized but unissued shares.
"Company" means Luby's Cafeterias, Inc.
"Fair Market Value" means the closing price of the Common Stock as reported by
the composite tape of New York Stock Exchange issues (or such other reporting
system as shall be selected by the Committee) on the relevant date, or if no
sale of Common Stock is reported for such date, the next following day for
which there is a reported sale.
"Participant" means an individual who
has been granted an Award pursuant to the
Plan.
"1989 Plan" means the Management Incentive Stock Planare not employees of the Company which was
adopted in 1989.
3. Eligibility. All employees of anyor a subsidiary of the following entities are
eligible to receive Awards under the Plan: (i) the Company (ii) any
corporation or other entity that has elected to be taxed as a corporation for
federal income tax purposes (collectively "Entities"), other than the Company,
in an unbroken chain of Entities beginning with the Company if each of the
Entities other than the last Entity in the unbroken chain owns stock or
interests possessing more than fifty percent (50%) of the total combined voting
power of all classes of stock or interests in one of the other Entities in such
chain, (iii) partnerships and any other
business entitiesentity in which the Company, directly or indirectly, owns 50% or more than fifty percent (50%)
of the capital andor profit interests. With regard to the issuance of incentive stock options, all
employees of any of the entities described in (i) and (ii) are eligible to
receive Awards under the Plan.
4. Common Stock Available for Awards.interest ("Nonemployee Directors").
7. Shares. Subject to the adjustment provisions of Section 10, the
number of shares of Common Stock thatof the Company which may be issued for Awardsupon
exercise of Options granted pursuant to the Plan shall not exceed 200,000
shares. If, however, any Option granted under the Plan is equalshall expire,
terminate, or be canceled without having been exercised in full, the
unpurchased shares shall continue to be available for purposes of the Plan.
More than one Option may be granted to the sum of: (a) 2,000,000
shares; (b) any sharessame participant.
8. Grant of Common Stock available for future awards underOptions. The Board shall select the 1989 Plan as of the Effective Date; and (c) any shares of Common Stock
represented by awardsNonemployee Directors
who are to be granted under the 1989 Plan which are forfeited, expire,
or are canceled without delivery of Common Stock after the Effective Date, or
which result in the forfeiture of Common Stock back to the Company. In no
event will the number of shares of Common Stock which may be issuedOptions under the Plan exceed 2,500,000.and, subject to the provisions of
the Plan, shall determine the terms, conditions, and limitations applicable to
each Option. No ParticipantNonemployee Director may receive, under the Plan, stock
optionsOptions for
more than 100,0005,000 shares in any one year, except that12-month period.
9. Listing and Registration. The Company, in its discretion, may
postpone the issuance and delivery of shares, upon exercise of an Option, until
completion of such stock optionsexchange listing, or registration, or other
qualification of such shares under any federal or state law, rule, or
regulation, as the Company may be grantedconsider appropriate. The Company may require
any person exercising an Option to a newly hired employee for not more than 200,000 sharesmake such representations and to furnish
such information as the Company may consider appropriate in connection with the
first year of employment. Shares of Common stock related to Awards which
(i) are forfeited, (ii) expire unexercised, (iii) are settled in such manner
that all or someissuance of the shares covered by an Award are not issued to a
Participant, (iv) are exchanged for Awards that do not involve Common Stock, or
(v) are tendered by a Participant upon exercise of a stock option in payment of
all or a portion ofcompliance with applicable law.
10. Adjustment Provisions. In the option price shall be added back toevent the pool and shall
immediately become available for Awards.
5. Awards. The Committee shall select the persons who are to receive
Awards and shall determine the type or types of Award(s) to be made to each
Participant and shall set forth in the related Award Agreement the terms,
conditions, performance requirements, and limitations applicable to each Award
Awards may be granted singly, in combination, or in tandem. Awards may include
but are not limited to the following:
(a) Nonqualified Stock Options. A nonqualified stock option is a
right to purchase a specified number of shares of Common Stock at a fixed
option price equal to the Fair Market Value of the Common Stock on the date the
Award is granted, during a specified time, not to exceed ten years, as the
Committee may determine. The option price shall be payable:
(i) in U.S. dollars by personal check, bank draft, or by money order
payable to the order of the Company or by money transfer or
direct account debit; or
(ii) if the Committee so determines, through the delivery ofoutstanding shares of Common
Stock of the Company withare increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company or
another corporation, through reorganization, merger, consolidation,
liquidation, recapitalization, reclassification, stock split-up, combination of
shares, or dividend payable in stock of the class which is subject to the Plan,
appropriate adjustment in the number and kind of shares as to which Options may
be granted and as to which Options or portions thereof then unexercised shall
be exercisable, and in the option price thereof, shall be made to the end that
the proportionate number of shares or other securities as to which Options may
be granted and the Option holder's proportionate interest under outstanding
Options shall be maintained as before the occurrence of such event.
11. Option Price. The option price shall be 100% of the Fair Market Value
of the shares at the time of the granting of the Option. Such Fair Market
Value shall be determined by the Board and shall be the closing price of the
Common Stock on the New York Stock Exchange on the day on which the Option is
granted or, if no sale of the Common Stock shall have been made on the Exchange
on that day, then on the next preceding day on which a sale was made.
12. Payment for Shares. Payment for shares purchased upon exercise of an
Option shall be made in full at the time of exercise of the Option. No loan
shall be made or guaranteed by the Company for the purpose of financing the
purchase of any optioned shares. Payment of the option price shall be made in
cash, or by delivering Common Stock of the Company having a Fair Market Value
(determined as provided in Section 11) at least equal to
all or a portion of the option price, for the total number of
options being exercised; or
(iii) by a
combination of the methods describedCommon Stock and cash. Payment in subsections (i) and
(ii) next above.
(b) Incentive Stock Options. An incentive stock option ("ISO") is an
Award which, in addition to being subject to applicable terms, conditions, and
limitations established by the Committee, complies with Section 422 of the
Code. Among other limitations, Section 422 of the Code currently provides
(i) that the aggregate Fair Market Value (determined at the time the option is
granted)shares of Common Stock for which ISOs are exercisable for the first time by
a Participant during any calendar year shall not exceed $100,000, (ii) that
ISOs shall
be priced at not less than 100%made by delivering to the Company certificates, duly endorsed for transfer,
representing shares of theCommon Stock having an aggregate Fair Market Value on
the date of exercise equal to that portion of the grant,option price which is to be
paid in Common Stock. Whenever payment of the option price would require
delivery of a fractional share, the optionee shall deliver the next lower whole
number of shares of Common Stock and (iii) that ISOsa cash payment shall be made by the
optionee for the balance of the option price.
13. Terms and Exercise of Options.
(a) Term. An Option shall terminate upon the expiration of ten years
from the date the Option is granted or one year from the date the
optionee ceases to be a director of the Company, whichever first
occurs (the "Expiration Date"). In no event shall an Option be
exercised after the Expiration Date.
(b) Exercise. To the extent that an Option is exercisable, it may be
exercised by the optionee or the legal representative of the
optionee or the legal representative of the optionee's estate.
Except as provided in subsection (c) below, an Option may not be
exercised prior to the expiration of one year from the date the
Option is granted. Once an Option becomes exercisable, it may
thereafter be exercised, wholly or in part, at any time prior to
its Expiration Date.
(c) Acceleration. Upon the occurrence of any of the following events
prior to the Expiration Date of an Option, the Option shall
become immediately and fully exercisable:
(i) death of the optionee;
(ii) resignation or removal of the optionee as a director of
the Company by reason of a physical or mental impairment
which prevents the optionee from performing the duties of
his or her directorship for a period of not
more than ten years. The Committee may provide that the option price under an
ISO can be paid by onesix months or
moremore;
(iii) resignation of the methods described in subsection (a) next
above.
(c) Restricted Stock. Restricted Stock is Common Stockoptionee as a director of the Company
that is subjectafter having served at least two full terms as a director;
or
(iv) expiration of the optionee's term of office as a director
of the Company, without being reelected to restrictions on transfer and/the Board,
after having served at least two full terms as a director.
14. Transferability. No Option shall be assignable or suchtransferable other
restrictions on
incidents of ownership as the Committee may determine, for a required period of
continued employment of not less than three years as set by the Committee at
the time of Award. Restricted Stock Awards shall require no payments of
consideration by the Participant, either on the date of grantwill or the datelaws of descent and distribution. During an optionee's
lifetime, only the restriction(s) are removed, unless specifically required byoptionee or his or her guardian or legal representative may
exercise an option.
15. Provision for Taxes. It shall be a condition to the termsCompany's
obligation to issue or reissue shares of Common Stock upon exercise of an
Option that the Award Agreement. Theoptionee pay, or make provision satisfactory to the Company for
payment of, any federal or state income or other taxes which the Company is
obligated to withhold or collect with respect to the issuance or reissuance of
such shares.
16. Term of Plan. Subject to the provisions of Section 18, the Plan
shall continue in effect until the maximum number of shares of RestrictedCommon Stock
which may be
issuedissuable under the Plan is 200,000.
(d) Performance Shares. A Performance Share is Common Stockhas been issued.
17. Restrictions on Exercise. Any provision of the Company, or a unit valued by referencePlan to Common Stock, that is subject to
restrictions on transfer and/or such other restrictions on incidents of
ownership as the Committee may determine. The elimination of restrictions on a
Performance Share and the number of shares ultimately earned by a Participant
shall be contingent upon achievement of one or more performance targets
specified by the Committee. Performance Shares may be paid in Common Stock,
cash, or a combination thereof. The Committee shall establish minimum
performance targets with respect to each Performance Share. Performance targets
may be based on financial criteria consisting of (i) revenue growth, (ii)
diluted earnings per share, (iii) net operating profit after taxes, (iv) cash
flow, (v) economic value added, or (vi) a combination of such criteria. No
Participant may receive, under the Plan, a Performance Share Award for any
award cycle in excess of 25,000 performance units or 25,000 shares of Common
Stock.
6. Certain Changes. Except as may be permitted under the provisions of
Section 10 or Section 11,contrary
notwithstanding, no stock option issuedOption granted pursuant to the Plan may be
(i) canceled by the Company or (ii) amended so as to reduce the option price,
unless such cancellation or amendment is approved by the shareholders of the
Company.
7. Award Agreements. Each Award under this Plan shall be evidenced by an
Award Agreement consistent with the provisions of the Plan setting forth the
terms and conditions applicableexercisable at
any time, in whole or in part, (i) prior to the Award. Award Agreements shall include:
(a) Nonassignability. A provision that no Award shall be assignable or
transferable except by will or by the laws of descent and distribution and that
during the lifetime of a Participant, the Award shall be exercised only by such
Participant.
(b) Termination of Employment. Provisions governing the disposition of
an Award in the event of the retirement, disability, death, or other
termination of a Participant's employment or relationship to the Company or any
affiliate of the Company.
(c) Rights as a Shareholder. A provision that a Participant shall have
no rights as a shareholder with respect to any shares covered by an Award until
the date the Participant or his nominee becomes the holder of record. Except as
provided in Section 10 hereof, no adjustment shall be made for dividends or
other rights for which the record date is prior to such date, unless the Award
Agreement specifically requires such adjustment.
(d) Withholding. A provision requiring the withholding of all taxes
required by law from all amounts paid in cash. In the case of payments of
Awards in shares of Common Stock the Participant may be required to pay the
amount of any taxes required to be withheld prior to receipt of such shares. A
Participant must in all instances pay the required withholding taxes in cash.
The withholding of shares to pay taxes shall not be permitted.
(e) Other Provisions. Such other terms and conditions, including the
criteria for determining vesting of Awards and the amount or value of Awards,
as the Committee determines to be necessary or appropriate. Without limiting
the generality of the foregoing, any stock option granted under the Plan may
provide, if the Committee so determines, that upon the occurrence of a "change
of control" (as defined in Section 11) the option shall immediately become
exercisable and shall remain exercisable for a period of one year after
termination of the optionee's employment but not later than the expiration date
of the option.
8. Administration. The Plan shall be administered by the Committee,
which shall have full and exclusive power to interpret the Plan, to grant
waivers of Award restrictions, and to adopt such rules, regulations, and
guidelines for carrying out the Plan as it may deem necessary or proper, all of
which powers shall be executed in the best interests of the Company and in
keeping with the objectives of the Plan. All questions of interpretation and
administration with respectsubject
to the PlanOption being authorized for listing on the New York Stock Exchange or
(ii) if issuance and Award Agreements shall be
determined by the Committee, and its determination shall be final and
conclusive. The Committee may delegate to the Chief Executive Officer of the
Company its administrative functions and authority to grant Awards under the
Plan pursuant to such conditions and limitations as the Committee may
establish, except that only the Committee may select, and grant Awards to,
Participants who are subject to Section 16 of the Securities Exchange Act of
1934.
9. Amendment, Modification, Suspension, or Discontinuance of the Plan.
The Board may amend, modify, suspend, or terminate the Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other
purpose permitted by law. Subject to changes in law or other legal
requirements that would permit otherwise, the Plan may not be amended without
the consent of the holders of a majoritydelivery of the shares of Common Stock then
outstanding (i)subject to the
Option would be in violation of any applicable laws or governmental
regulations.
18. Amendment and Termination. Subject to the limitation that the
provisions of the Plan shall not be amended more than once every six months
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder, the Board may at any
time amend, suspend or discontinue the Plan or alter or amend any or all
Options under the Plan to the extent permitted by law. However, no such action
by the Board may, without approval of the shareholders of the Company, alter
the provisions of the Plan so as to:
(a) increase the aggregatemaximum number of shares of Common Stock that may
be issued upon exercise of Options granted under the Plan (except for adjustmentsexcept
pursuant to Section 1010;
(b) change the class of the Plan), (ii)individuals eligible to decrease the option price, (iii) to materially modify the
requirements as to eligibility for participation in the Plan, (iv) to withdraw
administration of the Plan from the Committee, or (v) to extend the period
during which Awards may be granted.
10. Adjustments. In the event of any change in the outstanding Common
Stock of the Company by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger, or similar event, the
Committee may adjust proportionally (a) the number of shares of Common Stock
(i) reservedreceive Options
under the Plan, (ii) for which Awards may be granted to an
individual Participant, and (iii) covered by outstanding Awards denominated in
stockPlan; or
units of stock; (b) the stock prices related to outstanding Awards;
and (c) the appropriate Fair Market Value and other price determinations for
such Awards. In the event ofeffect any other change affecting the Common Stock or
any distribution (other than normal cash dividends) to holders of Common Stock,
such adjustments as may be deemed equitable by the Committee, including
adjustments to avoid fractional shares, may be made to give proper effect to
such event. In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Committee
shall be authorized to issue or assume stock options, whether or not in a
transaction to which Section 424(a) of the Code applies, by means of
substitution of new stock options for previously issued stock options or an
assumption of previously issued stock options. The issuance of new stock
options for previously issued stock options or the assumption of previously
issued stock options in connection with a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation
shall not reduce the number of shares of Common Stock available for Awards
under the Plan.
11. Change of Control. (a) In the event of a change of control of the
Company, or if the Board reaches agreement to merge or consolidate with another
corporation and the Company is not the surviving corporation or if all, or
substantially all, of the assets of the Company are sold, or if the Company
shall make a distribution to shareholders that is nontaxable under the Code, or
if the Company shall dissolve or liquidate (a "Restructuring Event"), then the
Committee may, in its discretion, recommend that the Board take any of the
following actions as a result of, or in anticipation of, any such Restructuring
Event to assure fair and equitable treatment of Participants:
(i) accelerate time periods for purposes of vesting in, or realizing
gain from, any outstanding Award made pursuant to the Plan;
(ii) offer to purchase any outstanding Award made pursuantamendment to the Plan from the holder for its equivalent cash value, as determined by the
Committee, aswhich approval of the
date of the Restructuring Event; and
(iii) make adjustments or modifications to outstanding Awards as the
Committee deems appropriate to maintain and protect the rights and
interests of Participants following such Restructuring Event.
(b) Any such actionCompany's shareholders is required by the Board shall be conclusive and binding on the
Company and all Participants. Notwithstanding the foregoing, the Committee
shall retain full authority to take, in its discretion, any of the foregoing
actions with respect to Awards held by Participants who are directors, and the
Board shall have no authority to act in any such matter.
(c) For purposes of this Section, "change of control" shall mean (i) the
acquisition by any person of voting shares of the Company, not acquired
directly from the Company, if, as a result of the acquisition, such person, or
any "group" as defined in Section 13(d)(3) ofRule 16b-3 under the
Securities Exchange Act of 1934 of which such person is a part, owns at least 20% of the outstanding
voting shares of the Company; or (ii) a change in the composition of the Board
such that within any period of two consecutive years, persons who (a) at the
beginning of such period constitute the Board or (b) become directors after the
beginning of such period and whose election or nomination for election by the
shareholders of the Company was approved by a vote of at least two-thirds of
the persons who were either directors at the beginning of such period or whose
subsequent election or nomination was previously approved in accordance with
this clause (b), cease to constitute at least a majority of the Board; or
(iii) a merger, consolidation, reorganization, or similar restructuring
involving the Company is consummated and, as a result, the shareholders of the
Company immediately prior to such event own less than 50% of the voting shares
of the surviving entity outstanding immediately after such event.
12.1934.
19. Unfunded Plan. Insofar as it provides for Awards of cash and Common
Stock, theThe Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Participants who are entitled to cash, Common
Stock, or rights thereto underNeither the Plan, any such accountsCompany nor
the Board shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock, or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Company or the Board or the Committee be deemedin connection with Options
issued pursuant to be a trustee of
any cash, Common Stock, or rights thereto to be granted under the Plan. Any liability of the Company or any of its affiliates to any ParticipantNonemployee
Director with respect to a grant of cash, Common Stock, or rights thereto under the Planan Option shall be based solely upon any contractual
obligations that may be created by the Plan and any Award Agreement; noOption agreement. No such obligation of the Company or any of
its affiliates
shall be deemed to be secured by any pledge or otherany encumbrance on any property
of the Company.
Neither the Company nor the Board nor the
Committee shall be required to give any security or bond for the performance of
any obligation that may be created by the Plan.
13. Right of Discharge Reserved. Nothing in the Plan or in any Award
shall confer upon any employee or other individual the right to continue in the
employment or service of the Company or any affiliate of the Company or affect
any right the Company or any affiliate of the Company may have to terminate the
employment or service of any such employee or other individual at any time for
any reason.
14. Nature of Payments. All Awards made pursuant to the Plan are in
consideration of services performed for the Company or an affiliate of the
Company. Any gain realized pursuant to such Awards constitutes a special
incentive payment to the Participant and shall not be taken into account as
compensation for purposes of any of the employee benefit plans of the Company
or any affiliate of the Company.
15. Limited Stock Purchase Loans. During the period from the Effective
Date to March 25, 1999, the Company may, with the approval of the Committee,
make or guarantee loans to Participants who are officers of the rank of Vice
President and above, for the purpose of purchasing Common Stock. Each such
loan shall be for a maximum of five years, shall not exceed an amount equal to
50% of the Participant's annual base salary, and shall be subject to such
conditions as the Committee may prescribe with respect to recourse, interest,
security, and payment.
16. Notice. Any notice to the Company required by any of the provisions
of the Plan shall be addressed to the chief human resources officer or to the
Chief Executive Officer of the Company in writing and shall become effective
when it is received by the office of either of them.
17.20. Governing Law. TheThis Plan shall be governed by, construed, and
enforced in accordance with the internal laws of the State of Texas without regard toDelaware, and,
where applicable, the conflicts of law provisions in any jurisdiction.
18. Effective and Termination Dates. The Plan shall become effective on
January 1, 1999, subject to approvallaws of the shareholders of the Company at the
1999 annual meeting of shareholders. The Plan shall terminate on December 31,
2008, unless sooner terminated by the Board, after which no Awards may be made
under the Plan, but any such termination shall not affect Awards then
outstanding or the authority of the Committee to continue to administer the
Plan.
United States.
APPENDIX B
CERTAIN FEDERAL INCOME TAX ASPECTS
The following is only a general summary of the federal income tax effects
to the Participantparticipants and the Company of nonqualified stock options restricted stock, and
performance units to be granted
under the NewAmended Plan. There are a number of special tax rules which may be
applicable under certain circumstances. This discussion is based on the
provisions of the Internal Revenue Code of 1986 as amended (the "Code"), and
regulations and rulings in effect on the date of this Proxy Statement, all of
which are subject to change at any time. This summary does not address state,
local, or non-U.S. taxation of Awardsoptions under the NewAmended Plan, which may differ
significantly from federal income tax rules and regulations.
Stock Options. Options granted under the Plan may be either "incentive
stock options," as defined in Section 422 of the Code, or "nonqualified
options," which are options that do not meet the requirements of Section 422.
To the extent that the aggregate fair market value of stock with respect to
which incentive stock options are exercisable for the first time by any
individual during any calendar year exceeds $100,000, such options shall be
treated as nonqualified options.
Incentive Stock Options. For federal income tax purposes, the grant or
exercise of an incentive stock option will not generally cause recognition of
income by the optionee; however, the amount by which the fair market value of a
share of common stock at the time of exercise of an incentive stock option
exceeds the option price will be treated as an "item of adjustment" for
purposes of the alternative minimum tax. In the event of a sale of the shares
received upon exercise of an incentive stock option more than two years from
the date of grant and more than one year from the date of exercise, any amount
received in excess of the exercise price should qualify as long-term capital
gain. However, if shares acquired pursuant to the exercise of an incentive
stock option are sold by the optionee before the completion of such holding
periods (and if the sale is a transaction with respect to which a loss, if
sustained, would be recognized to the optionee), so much of the gain as does
not exceed the difference between the option price and the lesser of the fair
market value of the shares at the date of exercise or the fair market value at
the date of disposition will be taxable as ordinary income for the taxable year
in which the sale occurs. Any additional gain realized on the sale should
qualify as a capital gain.
In some cases, the exercise of an incentive stock option after termination
of employment will not qualify for favorable tax treatment and will be treated
for tax purposes as the exercise of a nonqualified stock option. If employment
is terminated by reason of disability, the incentive stock option must be
exercised within one year thereafter in order to qualify for favorable tax
treatment. If employment is terminated for any other reason (except death),
the incentive stock option must be exercised within three months thereafter in
order to qualify for favorable tax treatment.
Nonqualified Stock Options.
For federal income tax purposes, the grant of a nonqualified stock option
should not result in recognition of income by the optionee. Upon exercise of a
nonqualified stock option by an employee who is not an officer or director, the
excess of the fair market value of the shares on the exercise date over the
option price will be considered as compensation taxable as ordinary income.
If, however, at the time of exercise of the option, the optionee is a director
of the Company or an "officer" as defined in Rule 16a-1 of the Securities and
Exchange Commission, and if the sale of the stock at a profit within six months
could subject such person to suit under Section 16(b) of the Securities
Exchange Act of 1934 (the "Exchange Act"), the fair market value of the stock
is determined, and the tax applicable thereto is incurred, at the end of such
six-month period or at such earlier time as may be determined (i) by such
person's election made within 30 days of the date of exercise to be taxed
sooner, or (ii) by the occurrence of an event which causes Section 16(b) of the
Exchange Act to become inapplicable to such person. In the event of a gain or
loss realized upon the sale of the shares received upon exercise of a
nonqualified stock option, the optionee will recognize long-term or short-term
capital gain or loss, depending on the optionee's holding period for the
shares.
The amount of compensation income realized as a result of the exercise of
nonqualified stock options is subject to income tax withholding by the Company.
An optionee may be required to pay to the Company the amount of taxes required
to be withheld even though no cash compensation has been received at the time
of exercise.
Performance Awards. The grant of performance awards under the Plan will
not result in recognition of income to the holder of an award. Upon payment of
a performance award, the amount paid (whether paid in cash or stock, or both)
is taxable for federal income tax purposes as ordinary income to the holder of
the award. The Company is generally entitled to a tax deduction for the amount
of such payment and is required to withhold income taxes on such amount. If
any part of the payment is made in stock to a director of the Company or an
"officer" of the Company as defined in Rule 16a-1 of the Securities and
Exchange Commission and if the sale of the stock at a profit within six months
could subject such person to suit under Section 16(b) of the Exchange Act,
the fair market value of the stock is determined, and the tax applicable
thereto is incurred and the deduction allowed, at the end of such six-month
period or at such earlier time as may be determined (i) by such person's
election made within 30 days of the date of payment to be taxed sooner or
(ii) by the occurrence of an event which causes Section 16(b) of the Exchange
Act to become inapplicable to such person.
Upon the sale of shares of common stock received in payment or in partial
payment of a performance award, the participant realizes long-term or short-
term capital gain or loss, and the Company receives no further tax deduction.
Restricted Stock. In general, the grant of restricted stock is not
taxable. Instead, at the time restricted stock vests, an employee will
recognize ordinary income equal to (1) the excess of the fair market value of
such restricted stock on the date the shares vest over (2) the price, if any,
paid for the restricted stock. Dividends paid on the shares before they vest
will be taxed as additional compensation to the employee. An employee may,
however, elect to recognize income as of the date of grant of the restricted
stock in an amount equal to (1) the excess of the fair market value of the
restricted stock on the date of grant over (2) the price, if any, paid for the
restricted stock. Such employee will not recognize a loss for tax purposes in
the event of a subsequent forfeiture of the shares.
Tax Consequences to the Company. With regard to nonqualified stock options, the Company will generally be
entitled to a deduction for federalFederal income tax purposes at the same time and in
the same amount as the ordinary income will be recognized by the optionee,
provided that the amount of the compensation is reasonable and any Federal
income tax reporting and withholding requirements are satisfied. With regard to incentive stock options, if the
holding period requirements outlined above that pertain to an incentive stock
option are satisfied, no deduction will be available to the Company either upon
the grant or exercise of an incentive stock option.
Under certain circumstances, the Company's deduction may also be limited
by the provisions of Section 162(m) of the Code. Section 162(m) generally
limits the Company's deduction for certain types of compensation paid to each
of its Chief Executive Officer and its four highest compensated officers (other
than the Chief Executive Officer) to no more than $1 million per year.
Under the so-called "golden parachute"Agolden parachute@ provisions of the Code, certain
awards vested or paid in connection with a change of control may also be
nondeductible by the Company and may be subject to an additional twenty percent
(20%) federal excise tax. Nondeductible "parachute payments"Aparachute payments@ will in general
reduce the $1 million limit on deductible compensation described above.
PROXY
LUBY'S, CAFETERIAS, INC.
c/o American Stock Transfer & Trust Company
40 Wall Street, New York, New York 10005
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints John B. Lahourcade, George H. Wenglein, and
David B. Daviss, and each of them, as Proxies, each with the power to appoint
his substitute, and hereby authorizes each of them to represent and to vote, as
designated below,on the reverse side of this card, all the shares of Common Stock of
Luby's, Cafeterias, Inc. held on record by the undersigned on November 10, 1998,16, 1999, at the
Annual Meeting of Shareholders to be held on January 8, 1999,14, 2000, or any
adjournment thereof.
[X](SEE REVERSE SIDE)
Please mark your votes as in this example.
FOR WITHHELD
1. ELECTION ____ ____ Nominees: Robert T. Herres
OF Barry J.C. Parker
DIRECTORS [ ] FOR [ ] WITHHELD
Nominees: Ronald K. Calgaard
Judith B. Craven
David B. Daviss
Arthur R. Emerson
Roger R. HemminghausWalter J. Salmon
Joanne Winik
For, except vote withheld from the following nominee(s):
_______________________________________________________________________________________________________________
2. Proposal to amend the Certificate of Incorporation to change the corporate
name to "Luby's, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the Luby's Incentiveamendment and restatement of the Nonemployee
Director Stock Plan.
[ ]Option Plan
FOR [ ] AGAINST [ ] ABSTAIN
4.____ ____ ____
3. Proposal to approve the appointment of Ernst & Young LLP as the
independent public accountants of the corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5.____ ____ ____
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for proposals 1, 2, 3, and 4.3.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
SIGNATURE ___________________________________________________________________________ DATE _______________________________________
SIGNATURE ___________________________________________________________________________ DATE _______________________________________
IF HELD JOINTLY
Note: Please sign exactly as name appears. 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.