Exhibit 99
Luby's Cafeterias, Inc.
Corporate Governance Guidelines
Adopted March 19, 1998
ROLE AND RESPONSIBILITIES OF BOARD
1. Ethical Business Environment
The Board believes that the long-term success of Luby's is dependent on
the maintenance of an ethical business environment that focuses on
adherence to both the letter and spirit of the law and regulations and
the highest standards of corporate citizenship.
2. Oversight
The Board acknowledges that Luby's has many different stakeholders.
However, the paramount duty of Luby's Board and management is to the
shareholders; the interests of other stakeholders are relevant as a
derivative of the duty to shareholders. The Board is the ultimate
decision making body except for those matters reserved by law to the
shareholders. The management team approved by the Board is charged by
the Board with the day-to-day management of Luby's affairs. The Board
monitors corporate performance against business plans on a regular
basis to evaluate whether the business is being properly managed.
3. Senior Management
The Board selects and regularly evaluates the CEO. The appointment and
regular evaluation of a Chief Operating Officer, if any, will be made
by the Board in conjunction with the CEO. The Board determines the
CEO's compensation and reviews and approves the compensation of senior
management. It periodically reviews succession planning and
management development with the CEO.
4. Strategy
The Board ensures that a strategic planning process is in place, is
used, and produces sound choices. It reviews and approves major
corporate strategies and monitors the implementation of current
strategic initiatives to assess whether they are on schedule, on
budget, and producing effective results.
5. Material Transactions
The Board reviews and approves material transactions not in the
ordinary course of business including significant capital allocations
and expenditures.
6. Internal Controls, Reporting, and Compliance
The Board satisfies itself as to the adequacy of internal controls,
risk management, financial reporting, and compliance with laws and
regulations.
7. Corporate Governance
The Board nominates directors to serve on the Board and ensures that
the structure and practices of the Board provide for sound corporate
governance.
COMPOSITION OF THE BOARD
8. Independent Director
An "Independent Director" is a person who is not a current and,
generally, not a former member of management and has no relationship
or activity that could affect or appear to affect his or her ability
to exercise independent judgment as a director. The Governance
Committee reviews the circumstances in each case and determines when a
Board member or candidate is not independent. The Board will seek to
maintain a substantial majority of independent directors. Various
regulatory agencies have adopted differing concepts of independence
(e.g. SEC, NYSE, IRS). These external definitions are not part of
these Guidelines and should be consulted only for the specific
purposes for which they were intended.
9. Number of Directors
Luby's Bylaws provide for the Board to fix the number of directors at
not less than nine or more than fifteen. The Board currently has nine
members. The Board may adjust this upward to accommodate an
outstanding potential candidate or during periods of transition when
new directors may overlap with retiring directors.
10. Membership Criteria
The Governance Committee is responsible for recommending to the Board
the appropriate skills and characteristics for prospective Board
candidates in the context of the current Board makeup and the perceived
needs of Luby's at that point in time. This assessment should include
issues of general business experience, specialized knowledge,
functional skills, other Board and time commitments, personal
characteristics, age, independence, and diversity.
11. Screening, Selection, and Invitation to Serve
Luby's Bylaws provide that director candidates standing for election by
the shareholders shall be nominated by the Board or by a shareholder as
provided in the Bylaws. Vacancies in the Board shall be filled by
selection of the current directors. The Governance Committee is
responsible for screening potential candidates with input from all
Board members. The COB will coordinate the extension of an invitation
to Board membership.
12. Directors Who Change Principal Job Responsibility
Directors should as a matter of course tender their resignation from
the Board upon retirement, a change of employer, or other significant
change in their professional roles and responsibilities. The Board,
through its Governance Committee, should then consider whether it is in
the best interest of Luby's to accept this resignation or to ask the
director to continue to serve.
13. Retirement Age and Term Limits
A director shall not be eligible to stand for election or reelection to
the Board after reaching the age of 70 years. Except for incumbent
directors as of March 19, 1998, a director will offer his or her
resignation from the Board upon reaching the age of 70 years effective
at the next annual meeting of shareholders. The Board does not believe
that there should be term limits for directors. Rather, the Board
believes that the Governance Committee should consider each Director's
contribution to the Board every three years, prior to his of her
nomination for reelection.
14. Selection of CEO and COB
There is no policy as to whether the offices of the CEO and COB should
be separate and, if separate, whether the COB should be an independent
director. The Board remains free to make these choices in any way it
deems best at the time.
15. Lead Director
If the offices of the CEO and COB are not separate or if the COB is not
considered by the Board to be an independent director, the independent
directors will elect one of their number to serve as Lead Director.
The Lead Director will chair meetings of independent directors, will
facilitate communications between other members of the Board and the
CEO and COB, and will assume other duties which the independent
directors as a whole may designate from time to time. Directors are
always free to communicate directly with the CEO and COB.
16. Limitations on Tenure as Independent COB or Lead Director
An Independent COB or Lead Director serves at the pleasure of the
Board. It is the sense of the Board that a director's service as
Independent COB or Lead Director should generally not extend beyond the
annual meeting of shareholders after three consecutive years of
service.
FUNCTIONING OF THE BOARD
17. Board Meetings
Article III of Luby's Bylaws spells out required procedures for calling
and conducting meetings of the Board in order to conduct corporate
business. The Board sets the number and schedule of Regular Board
meetings for the entire year at the annual meeting of the Board in
January. Currently the Board has five Regular Meetings each year. The
President, Secretary or a majority of directors may call Special
Meetings of the Board as necessary.
18. Board Agendas
The CEO in conjunction with the COB or Lead Director will establish and
publish an agenda for each meeting of the Board. Board members may
suggest items for inclusion on the agenda and, subject to the authority
of the COB and the will of the majority, may raise for discussion at
any Board meeting subjects not on the agenda.
19. Board Materials Distributed in Advance
Information and data that are important to the Board's understanding of
the business of the meeting and presentations on special subjects
should, when practical, be distributed at least one week in advance of
the meeting to permit directors to prepare for the meeting. This will
conserve Board meeting time and allow discussion to focus on questions
and analysis of these materials. Management will try to keep materials
as brief as possible while still providing the desired information.
Lengthy reports or documents, when practical, should be accompanied by
executive summaries. Directors are encouraged to comment on the
adequacy and effectiveness of materials provided.
20. Attendance of Nondirectors at Board Meetings
The CEO may invite members of senior management who are not Board
members to regularly participate in portions of the Board meeting.
Further, the Board encourages the participation at Board meetings of
managers who can provide additional insight into items being discussed
or who have future potential in the Company and who should be given
exposure to the Board. Portions of all Board meetings will be reserved
for private deliberation among Board members.
21. Meetings of Independent Directors
Independent directors will, from time to time, meet privately at the
request of the COB (or Lead Director) or upon the Board's own motion.
These meetings may include a discussion with the CEO.
FUNCTIONING OF COMMITTEES OF THE BOARD
22. Board Committees
The current standing committees of the Board are: Executive, Audit,
Compensation, and Governance. From time to time the Board may create a
new or disband an existing Committee depending on particular interests
of the Board, issues facing the Company, or legal requirements.
23. Committee Charters
Each Committee should, with leadership from its Chair, develop and
maintain a charter describing its duties and responsibilities.
Charters developed or amended will be reviewed by the Governance
Committee and approved by the full Board.
24. Assignment and Rotation of Committee Membership
The Governance Committee in consultation with the COB or Lead Director,
the CEO, and individual Board members, will assign Board members and
chairs to various Committees, subject to Board approval. Assignments
should comply with various applicable regulations (e.g. SEC, NYSE, IRS)
and with the desires of individual members insofar as possible.
Consideration should be given to rotating committee membership and
chairs from time to time generally on a three to five year schedule.
25. Scheduling of Committee Meetings and Committee Agendas
The Chair of each Committee, in consultation with its members, the COB,
and management, determines the frequency, length, and agenda of each
meeting of the Committee.
26. Committee Reports to the Board
The Chair of each Committee will report to the full Board as soon as
practical following a Committee meeting all matters discussed,
decisions reached, and recommendations made for Board approval. The
Chair will have an opportunity to comment on Committee activities at
each Board meeting. Minutes of all Committee meetings will be
distributed to all Board members.
MISCELLANEOUS
27. Board Access to Management
Board members have complete access to Luby's management. Board members
should use judgment to insure that this contact is not distracting to
business operations or that it could be perceived as infringing on the
responsibilities of the CEO. Correspondence from a Board member to a
member of management should be copied to the CEO and COB.
28. Communications with the Public and Various Constituencies
The CEO is responsible for establishing effective communications with
Luby's various constituencies, i.e. press, shareholders, potential
investors, customers, communities, suppliers, creditors, and corporate
partners. Management speaks for Luby's, and Board members should
communicate with these constituencies only with the consent and
generally at the request of management.
29. Assessing Board Performance
Approximately annually, the COB will survey Board members on their
perceptions of the performance and effectiveness of the Board and
solicit suggestions for improving its performance. The objective is to
increase the effectiveness of the Board and not to target individual
Board members. The results of this survey will be reported by the COB
to the full Board.
30. Board Compensation
Luby's policy is to compensate nonmanagement directors competitively
relative to companies of comparable size. The Governance Committee
will annually recommend to the full Board for its consideration
director compensation for the next year.
31. Stock Ownership Guidelines for Directors
The Board believes that each Luby's director should accumulate a
meaningful investment in Luby's stock and has established guidelines
for share ownership. Currently, directors are expected to accumulate,
over time, common shares with a market value of at least $100,000.
Luby's has established a tax deferred Nonemployee Director Phantom
Stock Plan. Beginning in 1999 and until the ownership guidelines are
met, the nonemployee director will receive at least $10,000 of the
annual retainer in phantom stock units to be redeemed for a like number
of common shares when he or she ceases for any reason to be a director.
Once ownership guidelines have been met, the director will not be
obligated to acquire additional phantom stock units or common shares.
32. Review of Guidelines
The Governance Committee is responsible for periodic review of these
Guidelines, as well as consideration of other corporate governance
issues that may, from time to time, merit consideration of the entire
Board.
33. Intent
These Guidelines are intended to be a statement of general principles
to guide the Board in formulating corporate policy. The Guidelines are
not rules or bylaws. They may be amended from time to time by the
Board. In addition, the Board may on occasion depart from the
Guidelines when circumstances indicate that a departure is in the best
interest of the Company and its shareholders.