Exhibit 99(a)
Luby's Cafeterias, Inc.
Corporate Governance Guidelines
As Amended January 7, 1999
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. When the current number is less than
fifteen, the Board may adjust the number 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, who were then 70 years of age or older, 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 COB , the CEO, 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
substantial 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, at least twice a year, 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,
ompensation, 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 evaluate 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.