EXHIBIT 99
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as to the
number of shares of Common Stock of the Company beneficially
owned by the principal shareholders of the Company.
Beneficial Ownership
Number of
Name and Address Shares Percent
FMR Corp. 7,314,600(1) 11.11%
82 Devonshire Street
Boston, Massachusetts 02109
Capital Research and Management 5,700,000(1) 8.66%
Company
333 South Hope Street
Los Angeles, California 90071
Morgan Stanley Dean Witter & Co. 3,910,369(1) 5.94%
1585 Broadway
New York, New York 10036
(1) Based on information contained in Schedule 13G dated as
of December 31, 1998.
SECURITY OWNERSHIP OF MANAGEMENT
AND ELECTION OF DIRECTORS
Twelve directors are to be elected at the meeting. Each
nominee will be elected to hold office until the next annual
meeting of shareholders or until his or her successor is elected
and qualified. To be elected a director, each nominee must
receive a plurality of all of the votes cast at the meeting for
the election of directors. Should any nominee become unable or
unwilling to accept nomination or election, the proxy holders may
vote the proxies for the election, in his or her stead, of any
other person the Board of Directors may recommend. All nominees
have expressed their intention to serve the entire term for which
election is sought. The following table sets forth certain
information concerning security ownership of management and
nominees for election as directors of the Company:
Number of Shares Number Attributable to
of Common Stock Options Exercisable Percent
Beneficially Owned Within 60 Days of of
Name as of September 7, 1999(1)(2) September 7, 1999 Class
Norman E. Brinker 1,799,934 (3) 1,011,875 2.69%
Ronald A. McDougall 912,522 887,500 1.37%
Douglas H. Brooks 431,324 344,500 *
John C. Miller 131,630 130,625 *
Russell G. Owens 150,469 135,708 *
Roger F. Thomson 196,000 192,500 *
Donald J. Carty 10,000 -0- *
Dan W. Cook, III -0- -0- *
Marvin J. Girouard -0- -0- *
J.M. Haggar, Jr. 72,435 (4) 8,715 *
Frederick S. Humphries 26,080 25,000 *
Ronald Kirk 7,430 7,430 *
Jeffrey A. Marcus 17,048 7,048 *
James E. Oesterreicher 19,500 19,000 *
Roger T. Staubach 34,500 24,000 *
All executive officers
and directors as a
group (21 persons) 4,383,330 (3)(4) 3,079,453 6.36%
* Less than one percent
(1) Beneficial ownership has been determined in accordance
with the rules of the Securities and Exchange Commission.
Except as noted, and except for any community property
interests owned by spouses, the listed individuals have sole
investment power and sole voting power as to all shares of
stock of which they are identified as being the beneficial
owners.
(2) Includes shares of Common Stock which may be acquired
by exercise of options vested, or vesting within 60 days of
September 7, 1999, under the Company's 1983 Incentive Stock
Option Plan, 1992 Incentive Stock Option Plan and 1991 Stock
Option Plan for Non-Employee Directors and Consultants, as
applicable.
(3) Includes 10,250 shares of Common Stock held of record by a
family trust of which Mr. Brinker is trustee.
(4) Includes 25,000 shares of Common Stock held of record
by Joe Haggar Interest, L.P., a limited partnership
controlled by Mr. Haggar.
The Company has established a guideline that all senior
officers of the Company own stock in the Company, believing
that it is important to further encourage and support an
ownership mentality among the senior officers that will
continue to align their personal financial interests with
the long-term interests of the Company's shareholders.
Pursuant to the guideline, the minimum amount of Company
Common Stock that a senior officer will be required to own
will be determined by such officer's position within the
Company as well as annual compensation. The Company has
established a program with a third-party lender pursuant to
which the senior officers will be able to obtain financing
for purposes of attaining the stock ownership levels
referred to above. Any loans obtained by such senior
officers to finance such stock acquisitions are facilitated
by the Company pursuant to an agreement in which the senior
officer pledges the underlying stock and future incentive
payments which may be receivable from the Company as
security for the loan.
DIRECTORS AND EXECUTIVE OFFICERS
Directors
A brief description of each person nominated to become
a director of the Company is provided below. Except for
Douglas H. Brooks, all nominees are currently serving as
directors of the Company. Each of the current directors was
elected at the last annual meeting of the Company's
shareholders held on October 29, 1998.
Norman E. Brinker, 68, has served as Chairman of the
Board of Directors since 1983. He was also Chief Executive
Officer of the Company from September 1983 to June 1995,
with the exception of a brief period during which
Mr. Brinker was incapacitated due to an injury. Mr. Brinker
is a member of the Executive and Nominating Committees of
the Company. He was the founder of S&A Restaurant Corp. in
1966, and served as its Chairman of the Board of Directors
and Chief Executive Officer from 1977 through 1983. From
1982 through 1983, Mr. Brinker served as Chairman of the
Board of Directors and Chief Executive Officer of Burger
King Corporation, while simultaneously occupying the
position of President of The Pillsbury Company Restaurant
Group. Mr. Brinker currently serves as a member of the Board
of Directors of Haggar Clothing Company and Petsmart, Inc.
Ronald A. McDougall, 57, was elected Vice Chairman and
Chief Executive Officer in January 1999, having formerly
held the office of President and Chief Executive Officer of
the Company since June 1995 and President and Chief
Operating Officer from 1986 to 1995. Mr. McDougall joined
the Company in 1983 and served as Executive Vice President -
Marketing and Strategic Development until his promotion to
President. Prior to joining the Company, Mr. McDougall held
senior management positions at Proctor and Gamble, Sara Lee,
The Pillsbury Company and S&A Restaurant Corp.
Mr. McDougall has served as a member of the Board of
Directors of the Company since 1983 and is a member of the
Executive and Nominating Committees of the Company. Mr.
McDougall also serves on the Board of Trustees of the Cooper
Institute for Aerobics Research.
Douglas H. Brooks, 47, became President and Chief
Operating Officer of the Company in January 1999.
Previously, Mr. Brooks served as Chili's Grill & Bar
("Chili's") President from June 1994 to May 1998 and
Executive Vice President and Chief Operating Officer from
May 1998 until January 1999. Mr. Brooks joined the Company
as an Assistant Manager in 1978 and was promoted to General
Manager later that year. He was named Area Supervisor in
1979, Regional Director in 1982, Senior Vice President -
Central Region Operations in 1987, and Senior Vice President
- - Chili's Operations in 1992. He held this position until
becoming President of Chili's in 1994. Mr. Brooks serves on
the Board of Directors of Limbs for Life.
Donald J. Carty, 53, was named Chairman, President and
Chief Executive Officer of AMR Corp. and American Airlines,
Inc. in May 1998, after serving as President from March 1995
until May 1998. From 1989 to 1995, he served American
Airlines, Inc. and AMR Corp. as Executive Vice President -
Finance and Planning. He joined American in 1978 and held
numerous finance and planning positions, with the exception
of a two-year hiatus as President and Chief Executive
Officer of CP Air in Canada. He serves on the Board of
Directors of Dell Computer Corporation and Sabre Holdings
Corporation. He also serves on the boards of the Canada-
U.S. Foundation for Educational Exchange and the Dallas
Chamber and is a member of the Dallas Citizens Council. Mr.
Carty has served on the Board of Directors since June 1998
and is a member of the Executive Committee of the Company.
Dan W. Cook, III, 64, is a Senior Director of Goldman
Sachs, an investment banking firm. Mr. Cook joined Goldman
Sachs Group in 1961 and was a partner when he retired in
1992. Mr. Cook is a member of the Executive and
Compensation Committees of the Company and has served as a
member of the Board of Directors since October 1997. Mr.
Cook also serves on the Board of Directors for Centex
Corporation. Mr. Cook is a member of the Board of Trustees
of Southern Methodist University as well as Vice-Chair of
the Edwin L. Cox School of Business Executive Board.
Marvin J. Girouard, 60, is the Chairman, President and
Chief Executive Officer of Pier 1 Imports, Inc., having been
elected to the position of Chairman in February 1999,
President in August 1988 and Chief Executive Officer in June
1998. Mr. Girouard previously served as Chief Operating
Officer from 1988 to 1998. Mr. Girouard joined Pier 1
Imports in 1975 and has served on its Board of Directors
since 1988. He serves as a Director for Tandy Brands
Accessories, Inc. and is a member of the Executive Committee
for the United States Committee for UNICEF - The United
Nations Children's Emergency Fund. Mr. Girouard has served
as a member of the Board of Directors since September 1998
and is a member of the Audit and Compensation Committees of
the Company.
J. M. Haggar, Jr., 74, is currently the owner of J.M.
Haggar, Jr. Investments, a land management and personal
investments business he has operated since retiring as
Chairman of the Board of Directors of Haggar Clothing
Company in February 1995. Mr. Haggar previously held the
positions of President and Chief Executive Officer of Haggar
Clothing Company until 1991. Mr. Haggar is a member of the
Compensation and Audit Committees of the Company and has
served as a member of the Company's Board of Directors since
1985.
Frederick S. Humphries, 63, is the President of Florida
A&M University in Tallahassee, Florida, having held this
position since 1985. Prior to joining Florida A&M
University, Dr. Humphries was President of Tennessee State
University in Nashville for over 10 years. Dr. Humphries
serves as a member of the USDA Task Force of 1890 Land-Grant
Institutions in addition to being involved in various civic
and community activities. Dr. Humphries has served on the
Board of Directors of the Company since May 1994 and is a
member of the Audit Committee of the Company. He is also a
member of the Board of Directors of Wal-Mart, Inc.
Ronald Kirk, 45, is currently Mayor of the City of
Dallas and a partner in the law firm of Gardere & Wynne. He
was elected Mayor in 1995, and previously served as
Secretary of State of the State of Texas from 1994 to 1995.
Mr. Kirk was engaged in the private practice of law from
1989 to 1994, served as an Assistant City Attorney for
Dallas from 1983 to 1989 and as a legislative aide to U.S.
Senator Lloyd Bentsen from 1983 to 1989. Mayor Kirk is an
honors graduate of Austin College and earned his law degree
from The University of Texas. Mayor Kirk has served on the
Board of Directors since January 1997 and is a member of the
Nominating Committee of the Company.
Jeffrey A. Marcus, 52, is a Partner of Marcus &
Partners, a private equity investment firm he co-founded in
March 1999. He previously served as President and Chief
Executive Officer of Chancellor Media Corporation (radio
broadcasting), from May 1998 until March 1999. Previously,
Mr. Marcus was Chairman, President and Chief Executive
Officer of Marcus Cable Company, a company he formed in 1990
after spending more than 20 years in the cable television
industry. Mr. Marcus is active in several civic and
charitable organizations. Mr. Marcus has served on the
Board of Directors since January 1997 and is a member of the
Executive Committee of the Company.
James E. Oesterreicher, 58, is the Chairman of the
Board and Chief Executive Officer of J.C. Penney Company,
Inc., having been elected to the position of Chairman of the
Board in January 1997 and to the position of Vice Chairman
and Chief Executive Officer in January 1995. Mr.
Oesterreicher served as President of JCPenney Stores and
Catalog from 1992 to 1995 and as Director of JCPenney Stores
from 1988 to 1992. Mr. Oesterreicher has been with the J.C.
Penney Company since 1964 where he started as a management
trainee. He serves as a Director for various entities,
including Texas Utilities Company (TXU Corp), Southwest
Health Systems, National Retail Federation, Circle Ten
Council - Boy Scouts of America, National Organization on
Disability, March of Dimes Birth Defects Foundation, and the
Conference Board. Mr. Oesterreicher has served as a member
of the Board of Directors of the Company since May 1994 and
is a member of the Compensation and Nominating Committees of
the Company.
Roger T. Staubach, 57, has been Chairman of the Board
and Chief Executive Officer of The Staubach Company, a
national real estate company specializing in tenant
representation, since 1982. Mr. Staubach is a 1965 graduate
of the U.S. Naval Academy and served four years in the Navy
as an officer. In 1968, he joined the Dallas Cowboys
professional football team as quarterback and was elected to
the National Football League Hall of Fame in 1985. He
currently serves on the Board of Directors of American
AAdvantage Funds and International Home Foods, Inc., and is
active in numerous civic, charity and professional
organizations. He has served as a member of the Board of
Directors of the Company since 1993 and is a member of the
Nominating Committee of the Company.
Executive Officers
The following persons are executive officers of the
Company who are not nominated to serve on the Company's
Board of Directors:
Leslie Christon, 45, was elected On The Border Mexican
Grill & Cantina ("On The Border") President in April 1997,
having previously served as Vice President of Operations of
On The Border since joining the Company in July 1996. Prior
to this time, Ms. Christon held the position of Senior Vice
President of Operations of Red Lobster Restaurants from
November 1994 to June 1996, and she was with El Chico
Restaurants, Inc. from June 1981 to November 1994. Ms.
Christon serves on the Board of Directors of the Women's
Foodservice Forum and is a past president of the Roundtable
for Women in Foodservice, Inc.
Kenneth D. Dennis, 46, has been Cozymel's Coastal
Mexican Grill ("Cozymel's") President since September 1997,
having previously served as Senior Vice President and Chief
Operating Officer of Cozymel's since February 1997. Mr.
Dennis joined the Company as a Manager in 1976 and was named
General Manager in 1978, Director of Internal Systems in
1979, and Director of Marketing in 1983. Mr. Dennis was
promoted to Vice President of Marketing in 1986 and to
Senior Vice President of Marketing in 1993, a position he
held until February 1997. Mr. Dennis serves on the Board of
Directors of the Marketing Executives Group and is a past Co-
Chairman.
Todd E. Diener, 42, was elected Chili's Grill & Bar
President in May 1998, having previously served as Chili's
Senior Vice President and Chief Operating Officer since July
1996. Mr. Diener joined the Company as a Chili's Manager
Trainee in 1981 and was promoted to General Manager in 1983,
Area Director in 1985, and Regional Director in 1987. Mr.
Diener became Regional Vice President in 1989, a position he
held until July 1996.
Carol E. Kirkman, 42, was appointed Executive Vice
President of Human Resources in June 1997 after serving as
Senior Vice President of Human Resources since April 1996.
Ms. Kirkman joined the Company as Corporate Counsel in 1990
and was promoted to Vice President/Assistant General Counsel
in 1994. Ms. Kirkman was an attorney in private practice in
Dallas, Texas, from 1982 until 1987 and worked as a
commercial and retail real estate broker in southern
California from 1987 until 1990.
John C. Miller, 44, has served as Romano's Macaroni
Grill President since April 1997. Mr. Miller joined the
Company as Vice President-Special Concepts in 1987. In
1988, he was elected Vice President - Joint
Venture/Franchise and served in this capacity until 1993
when he was promoted to Senior Vice President - New Concept
Development. Mr. Miller was named Senior Vice President -
Mexican Concepts in September 1994 and was subsequently
elected Senior Vice President and Mexican Concepts President
in October 1995, a position he held until April 1997. Prior
to joining the Company, Mr. Miller worked in various
capacities with the Taco Bueno Division of Unigate
Restaurants.
Russell G. Owens, 40, has served as Executive Vice
President and Chief Financial and Strategic Officer since
September 1997. Mr. Owens joined the Company in 1983 as
Controller. He was elected Vice President of Planning in
1986 and Vice President of Operations Analysis in 1991. Mr.
Owens was promoted to Senior Vice President of Operations
Analysis in 1993 and was named Senior Vice President of
Strategic Development - Italian Concepts in 1996, a position
he held until being elected Chief Strategic Officer in June
1997. Prior to joining the Company, Mr. Owens worked for the
public accounting firm, Deloitte & Touche.
Roger F. Thomson, 50, has served as Executive Vice
President, Chief Administrative Officer, General Counsel and
Secretary since June 1996. Mr. Thomson joined the Company
as Senior Vice President, General Counsel and Secretary in
1993 and was promoted to Executive Vice President, General
Counsel and Secretary in March 1994. Mr. Thomson served as a
Director of the Company from 1993 until 1995. From 1988
until 1993, Mr. Thomson served as Senior Vice President,
General Counsel and Secretary for Burger King Corporation.
Prior to 1988, Mr. Thomson spent ten years at S & A
Restaurant Corp. where he was Executive Vice President,
General Counsel and Secretary.
Mark F. Tormey, 46, has served as Maggiano's Little
Italy President since November 1997, having joined the
Company as Senior Vice President and Chief Operating Officer
of Maggiano's Little Italy in August 1995. Prior to joining
the Company, Mr. Tormey worked for Lettuce Entertain You
Enterprises, Inc. since 1979. In 1991, Mr. Tormey opened the
first Maggiano's Little Italy restaurant and worked with the
Maggiano's Little Italy group at Lettuce Entertain You
Enterprises, Inc. until its acquisition by the Company in
August 1995.
David Wolfgram, 41, has served as Corner Bakery Cafe
("Corner Bakery") President since November 1997, having
joined the Company as Senior Vice President and Chief
Operating Officer of Corner Bakery in August 1995. Mr.
Wolfgram joined Lettuce Entertain You Enterprises, Inc. in
1980 and served as Vice President and Managing Partner with
Lettuce Entertain You Enterprises, Inc. from 1989 until
Corner Bakery was acquired by the Company in August 1995.
Classes of Directors
For purposes of determining whether non-employee
directors will be nominated for reelection to the Board of
Directors, the non-employee directors have been divided into
four classes. Each non-employee director will continue to
be subject to reelection by the shareholders of the Company
each year. However, after a non-employee director has served
on the Board of Directors for four years, such director
shall be deemed to have been advised by the Nominating
Committee that he or she will not stand for reelection at
the subsequent annual meeting of shareholders and shall be
considered a "Retiring Director." Notwithstanding this
policy, the Nominating Committee may determine that it is
appropriate to renominate any or all of the Retiring
Directors after first considering the appropriateness of
nominating new candidates for election to the Board of
Directors. The four classes of non-employee directors are
as follows: Messrs. Girouard, Humphries and Oesterreicher
comprise Class 1 and will be considered Retiring Directors
as of the annual meeting of shareholders following the end
of the 2002 fiscal year. There are no members of Class 2.
Messrs. Haggar, Kirk and Marcus comprise Class 3 and will be
considered Retiring Directors as of the annual meeting of
shareholders following the end of the 2000 fiscal year.
Messrs. Carty, Cook and Staubach comprise Class 4 and will
be considered Retiring Directors as of the annual meeting of
shareholders following the end of the 2001 fiscal year.
Committees of the Board of Directors
The Board of Directors of the Company has established
an Executive Committee, Audit Committee, Compensation
Committee, and Nominating Committee. The Executive Committee
(currently comprised of Messrs. Brinker, McDougall, Carty,
Cook, and Marcus) met two times during the fiscal year. The
Executive Committee reviews material matters during the
intervals between Board meetings, provides advice and
counsel to Company management during such intervals, and has
the authority to act for the Board on most matters during
the intervals between Board meetings. In addition, the
Executive Committee is also charged with assuring that the
Company has a satisfactory succession management plan for
all key management positions.
All of the members of the Audit and Compensation
Committees are directors independent of management who are
not and never have been officers or employees of the
Company. The Audit Committee is currently comprised of
Messrs. Girouard, Haggar, and Humphries, and it met three
times during the fiscal year. Included among the functions
performed by the Audit Committee are: the review with
independent auditors of the scope of the audit and the
results of the annual audit by the independent auditors,
consideration and recommendation to the Board of the
selection of the independent auditors for the next fiscal
year, the review with management and the independent
auditors of the annual financial statements of the Company,
and the review of the scope and adequacy of internal audit
activities.
The Compensation Committee is currently comprised of
Messrs. Cook, Girouard, Haggar and Oesterreicher, and it met
three times during the fiscal year. Functions performed by
the Compensation Committee include: reviewing the
performance of the Chief Executive Officer, approving key
executive promotions, ensuring the reasonableness and
appropriateness of senior management compensation
arrangements and levels, the adoption, amendment and
administration of stock-based incentive plans (subject to
shareholder approval where required), management of the
various stock option plans of the Company, approval of the
total number of available shares to be used each year in
stock-based plans, and approval of the adoption and
amendment of significant compensation plans. The specific
nature of the Committee's responsibilities as they relate to
executive officers is set forth below under "Report of the
Compensation Committee."
The purposes of the Nominating Committee are to
recommend to the Board of Directors potential members to be
added as new or replacement members to the Board of
Directors, to review the compensation paid to non-management
Board members, and to recommend corporate governance
guidelines to the full Board of Directors. The Nominating
Committee will consider a shareholder-recommended nomination
for director to be voted upon at the 2000 annual meeting of
shareholders provided that the recommendation must be in
writing, set forth the name and address of the nominee,
contain the consent of the nominee to serve, and be
submitted on or before May 27, 2000. The Nominating
Committee is composed of Messrs. Brinker, McDougall, Kirk,
Oesterreicher, and Staubach and it met two times during the
fiscal year.
During the fiscal year ended June 30, 1999, the Board
of Directors held four meetings; each incumbent director
attended at least 75% of the aggregate total of meetings of
the Board of Directors and Committees on which he or she
served.
Directors' Compensation
Directors who are not employees of the Company receive
$1,000 for each meeting of the Board of Directors attended
and $1,000 for each meeting of any committee of the Board of
Directors attended. The Company also reimburses directors
for costs incurred by them in attending meetings of the
Board.
Directors who are not employees of the Company receive
grants of stock options under the Company's 1991 Stock
Option Plan for Non-Employee Directors and Consultants. A
new director who is not an employee of the Company will
receive as compensation (a) 20,000 stock options at the
beginning of such director's term, and (b) an annual payment
of $36,000, at least 25% of which must be taken in the form
of stock options. If a director is appointed to the Board
of Directors at any time other than at an annual meeting of
shareholders, the director will receive a prorated portion
of the annual cash compensation for the period from the date
of election or appointment to the Board of Directors until
the meeting of the Board of Directors held contemporaneous
with the next annual meeting of shareholders. If a director
elects to receive cash, the first payment will be made at
the Board of Directors' meeting held contemporaneous with
the next annual meeting of shareholders. The stock options
will be granted as of the 60th day following such meeting
(or if the 60th day is not a business day, on the first
business day thereafter) at the fair market value on the
date of grant. One-third (1/3) of the options will vest on
each of the second, third and fourth anniversaries of the
date of grant. If a director is a Retiring Director who is
being nominated for an additional term on the Board of
Directors, each such renominated director will receive an
additional grant of 10,000 stock options at the beginning of
such director's new term. If the 1999 Stock Option and
Incentive Plan for Non-Employee Directors and Consultants is
approved by the shareholders of the Company, an individual
director will be given the option of substituting awards of
restricted stock or stock options for cash in making his or
her annual election regarding compensation.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the
annual compensation for the Company's five highest
compensated executive officers, including the Chief
Executive Officer, whose salary and bonus exceeded $100,000
in fiscal 1999.
Summary Compensation Table
Long-Term Compensation
Awards Payouts
Securities Long-Term
Name and Annual Compensation Underlying Incentive All Other
Principal Position Year Salary Bonus Options Payouts Compensation (1)
Ronald A. McDougall
Vice Chairman and 1999 $ 929,154 $1,080,142 200,000 $106,100 $ 20,652
Chief Executive 1998 $ 861,442 $1,033,731 200,000 $ 76,633 $ 30,397
Officer 1997 $ 825,000 $ 396,000 200,000 $ 67,289 $ 29,194
Douglas H. Brooks
President and 1999 $ 541,154 $ 555,515 125,000 $ 69,505 $ 17,491
Chief Operating 1998 $ 387,308 $ 255,623 60,000 $ 45,980 $ 16,595
Officer 1997 $ 333,654 $ 120,462 50,000 $ 33,645 $ 20,818
Russell G. Owens
Executive Vice 1999 $ 350,000 $ 271,251 75,000 $ 62,898 $ 14,220
President and Chief 1998 $ 286,577 $ 229,262 50,000 $ 37,473 $ 13,319
Financial and 1997 $ 187,231 $ 41,931 20,000 $ 26,916 $ 12,589
Strategic Officer
Roger F. Thomson
Executive Vice 1999 $ 349,885 $ 271,161 50,000 $ 79,575 $ 13,909
President, Chief 1998 $ 334,692 $ 267,754 50,000 $ 57,475 $ 16,501
Administrative Officer,1997 $ 317,231 $ 104,940 50,000 $ 40,374 $ 16,680
General Counsel and
Secretary
John C. Miller
Romano's Macaroni 1999 $ 329,792 $ 204,472 60,000 $ 63,660 $ 13,623
Grill President 1998 $ 305,631 $ 131,421 50,000 $ 38,317 $ 15,865
1997 $ 277,461 $ 37,592 50,000 $ 26,916 $ 15,871
(1)All other compensation represents Company match on deferred
compensation and various fringe benefits including car
allowance and reimbursement of tax preparation, financial
planning, and health club expenses.
Option Grants During 1999 Fiscal Year
The following table contains certain information
concerning the grant of stock options pursuant to the
Company's Stock Option and Incentive Plan to the executive
officers named in the above compensation table during the
Company's last fiscal year:
% of Total Realizable Value of
Options Assumed Annual Rates of
Granted to Stock Price Appreciation
Options Employees in Exercise or Expiration for Option Term (1)
Name Granted Fiscal Year Base Price Date 5% 10%
Ronald A. McDougall 200,000 10.4% $26.75 01/21/09 $3,364,586 $8,526,522
Douglas H. Brooks 125,000 6.5% $26.75 01/21/09 $2,102,866 $5,329,076
Russell G. Owens 75,000 3.9% $26.75 01/21/09 $1,261,720 $3,197,446
Roger F. Thomson 50,000 2.6% $26.75 01/21/09 $ 841,147 $2,131,631
John C. Miller 60,000 3.1% $26.75 01/21/09 $1,009,376 $2,557,957
(1) The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the Securities and
Exchange Commission and, therefore, are not intended to
forecast possible future appreciation, if any, of the
Company's stock price.
Stock Option Exercises and Fiscal Year End Value Table
The following table shows stock option exercises by the
named officers during the last fiscal year, including the
aggregate value of gains on the date of exercise. In
addition, this table includes the number of shares covered
by both exercisable and non-exercisable stock options at
fiscal year end. Also reported are the values for "in-the-
money" options which represent the position spread between
the exercise price of any such existing options and the
$27.50 fiscal year end price of the Company's Common Stock.
Shares Value of Unexercised
Acquired Number of Unexercised In-the-Money Options at
On Value Options at Fiscal Year End Fiscal Year End
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Ronald A. McDougall 252,500 $3,424,153 787,500 750,000 $7,943,593 $8,112,500
Douglas H. Brooks 94,925 $1,823,756 314,500 270,000 $4,323,112 $2,183,125
Russell G. Owens 14,739 $ 326,553 110,708 195,000 $1,402,600 $1,765,000
Roger F. Thomson 30,000 $ 412,500 167,500 185,000 $1,548,610 $1,991,875
John C. Miller -0- -0- 105,625 195,000 $1,282,971 $1,999,375
Long-Term Performance Share Plan and Awards
Executives of the Company participate in the Long-Term
Performance Share Plan. See "Report of the Compensation
Committee - Long-Term Incentives" for more information
regarding this plan. The following table represents awards
granted in the last fiscal year under the Long-Term
Performance Share Plan:
Number of Estimated Future Payouts
Name Units Awarded Under Non-Stock Based Plans
(Dollars)
Threshold Target Maximum
Ronald A. McDougall 2,000 * $200,000 *
Douglas H. Brooks 1,500 * $150,000 *
Russell G. Owens 1,000 * $100,000 *
Roger F. Thomson 1,000 * $100,000 *
John C. Miller 1,000 * $100,000 *
* Future payouts under the Long-Term Performance Share
Plan have no minimum threshold and have no maximum
limit as set forth in more detail in "Report of the
Compensation Committee - Long Term Incentives."
REPORT OF THE COMPENSATION COMMITTEE
Compensation Philosophy
The executive compensation program is designed as a
tool to reinforce the Company's strategic principles - to be
a premiere and progressive growth company with a balanced
approach towards people, quality and profitability and to
enhance long-term shareholder value. To this end, the
following principles have guided the development of the
executive compensation program:
Provide competitive levels of compensation to attract
and retain the best qualified executive talent. The
Committee strongly believes that the caliber of the
Company's management group makes a significant
difference in the Company's sustained success over the
long term.
Embrace a pay-for-performance philosophy by placing
significant amounts of compensation "at risk" - that
is, compensation payouts to executives must vary
according to the overall performance of the Company.
Directly link executives' interests with those of
shareholders by providing opportunities for long-term
incentive compensation based on changes in shareholder
value.
The executive compensation program is intended to
appropriately balance the Company's short-term operating
goals with its long-term strategy through a careful mix of
base salary, annual cash incentives and long-term
performance compensation including cash incentives and
incentive stock options.
Base Salaries
Executives' base salaries and total compensation are
targeted to be competitive between the 75th and 90th
percentiles of the market for positions of similar
responsibility and scope to reflect the exceptionally high
level of executive talent required to execute the growth
plans of the Company. Positioning executives' base salaries
at these levels is needed for attracting, retaining and
motivating executives with the essential qualifications for
managing the Company's growth. The Company defines the
relevant labor market for such executive talent through the
use of third-party executive salary surveys that reflect
both the chain restaurant industry as well as a broader
cross-section of companies from many industries. Individual
base salary levels are determined by considering market data
for each officer's position, level of responsibility,
performance, and experience. The overall amount of base
salary increases awarded to executives reflects the
financial performance of the Company, individual performance
and potential, and/or changes in an officer's duties and
responsibilities.
Annual Incentives
The Company's Profit Sharing Plan is a non-qualified
annual incentive arrangement in which all corporate
employees, including executives, participate. The program
is designed to reflect employees' contribution to the growth
of the Company's Common Stock value by increasing the
earnings of the Company. The plan reinforces a strong
teamwork ethic by making the basis for payouts to non-
restaurant concept executives the same as for all other non-
restaurant concept corporate employees and by making the
basis for payouts to executives of one of the Company's
restaurant concepts the same as for all other members of
such restaurant concept's corporate team.
At the beginning of a fiscal year, each executive is
assigned an Individual Participation Percentage ("IPP") of
the base salary for such executive that targets overall
total cash compensation for executives between the 75th and
90th percentiles of the market. The IPPs reflect the
Committee's desire that a significant percentage of
executives' total compensation be derived from variable pay
programs.
401(k) Savings Plan and Savings Plan II
On January 1, 1993, the Company implemented the 401(k)
Savings Plan ("Plan I") and Savings Plan II ("Plan II").
These Plans are designed to provide the Company's employees
with a tax-deferred long-term savings vehicle. The Company
provides a matching contribution equal to twenty-five
percent of a salaried participant's contribution, up to a
maximum of five percent of such participant's base
compensation.
Plan I is a qualified 401(k) plan. Participants in
Plan I elect the percentage of pay they wish to contribute
as well as the investment alternatives in which their
contributions are to be invested. The Company's matching
contribution for all Plan I participants is made in Company
Common Stock. All participants in Plan I are considered non-
highly compensated employees as defined by the Internal
Revenue Service. Participants' contributions vest
immediately while Company contributions vest twenty-five
percent annually, beginning in the participant's second year
of eligibility since Plan I inception.
Plan II is a non-qualified deferred compensation plan.
Plan II participants elect the percentage of pay they wish
to defer into their Plan II account. They also elect the
percentage of their deferral account to be allocated among
various investment options. The Company's matching
contribution for all non-officer Plan II participants is
made in Company Common Stock, with corporate officers
receiving a Company match in cash. Participants in Plan II
are considered a select group of management and highly
compensated employees according to the Department of Labor.
A participant's contributions vest immediately while Company
contributions vest twenty-five percent annually, beginning
in the participant's second year of eligibility since
Plan II inception.
Long-Term Incentives
All salaried employees above a specified grade level of
the Company, including executives, are eligible for annual
grants of tax-qualified and non-qualified stock options. By
tying a significant portion of executives' total opportunity
for financial gain to increases in shareholder wealth as
reflected by the market price of the Company's Common Stock,
executives' interests are closely aligned with shareholders'
long-term interests. In addition, because the Company does
not maintain any qualified retirement programs for
executives, the stock option plan is intended to provide
executives with opportunities to accumulate wealth for later
retirement.
Stock options are rights to purchase shares of the
Company's Common Stock at the fair market value as of the
date of grant. Grantees do not receive a benefit from stock
options unless and until the market price of the Company's
common stock increases. Fifty percent of a stock option
grant becomes exercisable two years after the grant date;
the remaining fifty percent of a grant becomes exercisable
three years after the grant date.
The number of stock options granted to an executive is
determined by the Compensation Committee and is based on
grant guidelines set by the Compensation Committee that
reflect market data and the officer's position within the
Company.
During the 2000 fiscal year, annual grants of stock
options to officers of the Company will be reduced.
Pursuant to the Executive Long-Term Incentive Plan described
in more detail below, the value of each officer's long-term
compensation package will be reallocated among stock
options, restricted stock and cash. Such restricted stock
will vest fifty percent in two years and fifty percent in
three years provided that certain performance objectives
relating to the Company's revenues and earnings are
attained.
Executives also participate in the Long-Term
Performance Share Plan. The Long-Term Performance Share Plan
is based on the Company's total shareholder return in
comparison to the S&P 500 Index and the S&P Restaurant
Industry Index. For executives to receive the target
payout, the Company must perform at the 75th percentile of
each index over a three-year cycle and must average at least
ninety percent of its planned annual profit before taxes
over the same three-year cycle. If approved by the
shareholders of the Company, the Long-Term Performance Share
Plan will be replaced by the Executive Long-Term Incentive
Plan. The Executive Long-Term Incentive Plan is based upon
the Company's earnings per share over a three year period in
comparison to a target established by the Compensation
Committee of the Board of Directors. For a restaurant
concept president, the criteria will be the three-year
profit before taxes for such restaurant concept as compared
to the target established by the Compensation Committee of
the Board of Directors. Any payouts made under the
Executive Long-Term Incentive Plan shall be made one-half in
cash and one-half in restricted stock, which restricted
stock will vest one-third per year over the next three
years. In order to transition from the current Long-Term
Performance Share Plan, payouts for the cycle including
fiscal years 1998, 1999, and 2000, will be paid out based
upon the performance during the 1998 and 1999 fiscal years
(on a prorata basis) in the form of restricted stock that
will vest two-thirds in one year and one-third in two years.
Payments under the Long-Term Performance Share Plan for the
1999, 2000, and 2001 three-year cycle will be paid out based
upon the performance during the 1999 fiscal year (on a
prorata basis) in the form of restricted stock that will
vest two-thirds in one year and one-third in two years. The
Executive Long-Term Incentive Plan will be phased in over a
three-year period beginning in the 2000 fiscal year. Payouts
under the Executive Long-Term Incentive Plan will commence
following the 2000 fiscal year. The first payout will be
based on the performance (either earnings per share for
corporate officers or profit before taxes for concept
presidents) for the 2000 fiscal year and the target payout
will be one-third of the approved target payout. The second
payout will occur following the completion of the 2001
fiscal year and will be based on the performance over the
two-year period of fiscal years 2000 and 2001. The target
payout will be two-thirds of the approved target payout.
Full target payouts will become effective after the
completion of the 2002 fiscal year when the performance
results for the full 2000, 2001, and 2002 three-year cycle
are known. These target payouts will be paid based upon
performance against the three-year target earnings per share
or profit before taxes amounts established by the
Compensation Committee of the Board of Directors.
Pay/Performance Nexus
The Company's executive compensation program has
resulted in a direct relationship between the compensation
paid to executive officers and the Company's performance.
See "Five-Year Total Shareholder Return Comparison" below.
CEO Compensation
The Compensation Committee made decisions regarding Mr.
McDougall's compensation package according to the guidelines
discussed in the preceding sections. Mr. McDougall was
awarded a salary increase in the amount of 5.4%, effective
July 1, 1999, to recognize his vast experience in the
restaurant industry, the Company's performance under his
leadership and his significant contributions to the
Company's continued success. Mr. McDougall was granted
2,000 units under the Long-Term Performance Share Plan for
the cycle which includes fiscal years 1999, 2000, and 2001.
Mr. McDougall was also granted 200,000 stock options under
the Company's Stock Option and Incentive Plan. Approximately
fifty-four percent of Mr. McDougall's cash compensation for
fiscal 1999 was incentive pay pursuant to the Company's
Profit Sharing Plan. Like all Company executives,
Mr. McDougall's compensation is significantly affected by
the Company's performance. In the 1999 fiscal year,
Mr. McDougall's total cash compensation increased six
percent from its level in the 1998 fiscal year.
Federal Income Tax Considerations
The Compensation Committee has considered the impact of
Section 162(m) of the Internal Revenue Code adopted under
the Omnibus Budget Reconciliation Act of 1993. This section
disallows a tax deduction for any publicly-held corporation
for individual compensation to certain executives of such
corporation exceeding $1,000,000 in any taxable year, unless
compensation is performance-based. It is the intent of the
Company and the Compensation Committee to qualify to the
maximum extent possible its executives' compensation for
deductibility under applicable tax laws. The Compensation
Committee believes that the Company's compensation programs
provide the necessary incentives and flexibility to promote
the Company's performance-based compensation philosophy
while being consistent with Company objectives.
The Compensation Committee's administration of the
executive compensation program is in accordance with the
principles outlined at the beginning of this report. The
Company's financial performance supports the compensation
practices employed during the past year.
Respectfully submitted,
COMPENSATION COMMITTEE
DAN W. COOK, III
MARVIN J. GIROUARD
J.M. HAGGAR, JR.
JAMES E. OESTERREICHER
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors
and executive officers, and persons who own more than ten percent of the
Company's Common Stock are required to report their initial ownership of
the Company's Common Stock and any subsequent changes in that ownership
to the Securities and Exchange Commission. Specific due dates have been
established for these reports and the Company is required to disclose in
this proxy statement, any failure to file by these dates. The Company
believes that all filing requirements were satisfied. In making these
disclosures and filing the reports, the Company has relied solely on
written representations from certain reporting persons.
CERTAIN TRANSACTIONS
The policy of the Company is, to the extent practicable, to avoid
transactions (except those which are employment related) with officers,
directors, and affiliates. In any event, any such transactions will be
entered into on terms no less favorable to the Company than could be
obtained from third parties, and such transactions will be approved by
a majority of the disinterested directors of the Company. Except for
the transactions described below, there were no transactions required to
be reported in the last fiscal year.
On June 28, 1995, Mr. Norman Brinker contractually agreed to remain as
Chairman of the Board (subject to annual reelection by the shareholders)
through the 2001 fiscal year. Under this agreement, Mr. Brinker's
compensation will not materially differ from his compensation on
June 28, 1995. However, Mr. Brinker's total base compensation and profit
sharing distributions in the 1998 through 2001 fiscal years will not
exceed $1,000,000 per year. Upon Mr. Brinker's death, retirement or
termination for cause, no further payment shall be made pursuant to this
agreement.
Upon the expiration of the agreement described above, Mr. Brinker will
remain a consultant to the Company through the 2021 fiscal year.
Mr. Brinker will be compensated commensurate with his continuing
contributions to the Company; however, during this time, he will no
longer participate in any of the Company's profit sharing or bonus
plans. Upon Mr. Brinker's death, retirement or termination for cause,
no further payment shall be made pursuant to the consulting agreement.
The Company also entered into an agreement with Mr. Brinker whereby
Mr. Brinker conveyed to the Company his likeness, biography, photo,
voice and name to be used by the Company in all media, promotions,
advertising, training, and other materials as the Company deems appropriate.
He will receive as compensation $400,000 per year until the earlier of
July 1, 2021 or his death.
The Company owns an office building and leases an adjacent office
complex containing three buildings in order to allow for the expansion
of its corporate headquarters. A company controlled by Roger T. Staubach,
a director of the Company, was previously a subtenant in this office
complex and paid approximately $511,500 in rent to the Company during
the 1999 fiscal year pursuant to a lease entered into with an unrelated
party prior to the acquisition of the office complex by the Company.
This sublease terminated in April 1999. A company controlled by Mr. Staubach
provided real estate brokerage services in connection with the purchase of
land by the Company during the 1999 fiscal year and was paid $36,750 for
such services by the property seller. In addition, a company controlled
by Mr. Staubach provided real estate brokerage services during the 1999
fiscal year in connection with the renewal of a sublease by a third party
tenant in the office complex leased by the Company and was paid $47,320
for such services by the Company.