SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</Table>
Piccadilly 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.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] 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:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
PICCADILLY CAFETERIAS, INC.
3232 SHERWOOD FOREST BOULEVARD
BATON ROUGE, LOUISIANA 70816
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 4, 2002
---------------------
To the Shareholders of Piccadilly Cafeterias, Inc.:
The 2002 Annual Meeting of the Shareholders of Piccadilly Cafeterias, Inc.
(the "Company") will be held at the corporate headquarters of the Company, 3232
Sherwood Forest Boulevard, Baton Rouge, Louisiana, on Monday, November 4, 2002,
at 10:00 a.m., for the following purposes:
1. To elect two persons to serve as directors on the Board of Directors for
a three-year term and until their successors are elected and have
qualified;
2. To approve the Piccadilly Cafeterias, Inc. Directors Stock Plan;
3. To act upon such other matters as may properly come before the meeting
or any reconvened meeting following any adjournment thereof.
Only holders of record as of the close of business on September 6, 2002 are
entitled to notice of and to vote at the meeting.
The Annual Meeting may be adjourned from time to time without notice other
than announcement at the Annual Meeting, and any business for which notice of
the Annual Meeting is hereby given may be transacted at a reconvened meeting
following such adjournment.
By Order of the Board of Directors,
/s/ W. SCOTT BOZZELL
W. Scott Bozzell
Secretary
Baton Rouge, Louisiana
September 25, 2002
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON, PLEASE VOTE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED REPLY
ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON.
PICCADILLY CAFETERIAS, INC.
3232 SHERWOOD FOREST BOULEVARD
BATON ROUGE, LOUISIANA 70816
---------------------
PROXY STATEMENT
---------------------
This proxy statement is furnished in connection with a solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
Piccadilly Cafeterias, Inc. (the "Company") for use at its Annual Meeting of
Shareholders to be held on November 4, 2002, and at any adjournments thereof
(the "Meeting") and is first being mailed to the Company's shareholders on or
about October 1, 2002.
VOTING PROCEDURE
Only shareholders of record at the close of business on September 6, 2002
(the "Record Date") will be entitled to vote at the Meeting. On the Record Date,
there were 10,865,589 shares of common stock (the "Common Stock") outstanding.
The holders of a majority of the shares of Common Stock issued and
outstanding, present in person or represented by proxy, will constitute a quorum
at the Meeting. The persons appointed by the Company to act as inspectors of
election will treat shares of Common Stock represented by a properly executed,
returned and unrevoked proxy as present at the Meeting for purposes of
determining a quorum. Shares of Common Stock present at the Meeting that abstain
from voting or that are the subject of broker non-votes will be counted as
present for purposes of determining a quorum.
Directors will be elected by a plurality vote, and the proposal to approve
the Director's Stock Plan (the "Plan") and all other matters coming before the
Meeting will be decided by the vote of a majority of the votes cast. Each share
of Common Stock will entitle the holder to cast one vote with respect to each
matter properly presented at the meeting and votes cast will be counted by the
inspectors of election. Abstentions and broker non-votes will have no effect
upon the vote on the election of directors or on the proposal to approve the
Plan.
Proxies in the enclosed form are solicited by the Board to provide an
opportunity to every shareholder to vote on all matters scheduled to come before
the Meeting, whether or not he or she attends in person. If proxies in the
enclosed form are properly executed and returned, the shares represented thereby
will be voted as specified. Unless authority to vote for the election of
directors or approval of the Plan is withheld, the proxy holders named on the
enclosed proxy will vote all shares represented thereby in favor of the election
of each of the two nominees listed below and in favor of approval of the Plan.
Management expects no matters to be presented for action at the Meeting other
than the election of directors and the approval of the Plan. If, however, any
other matters properly come before the Meeting, the persons named as proxies in
the enclosed form of proxy will vote in accordance with their judgment on the
matters presented.
PROXY SOLICITATION; REVOCATION OF PROXY
The Company will pay all expenses of soliciting proxies for the Meeting. In
addition to solicitations by mail, arrangements have been made for brokers and
nominees to send proxy materials to their principals, and the Company will
reimburse them for their reasonable expenses in doing so. The Company has
retained EquiServe Trust Company, N.A. to assist with the solicitation of
proxies from brokers and nominees. It is estimated that the fees for such firm's
services will be approximately $7,500 including out-of-pocket expenses. Certain
employees of the Company, who will receive no additional compensation for their
services, may also solicit proxies by telephone, telegram, telex, telecopy or
personal interview.
The enclosed proxy may be revoked at any time prior to its exercise by
filing with the Secretary of the Company a written revocation or a duly executed
proxy bearing a later date. The proxy will also be deemed revoked with respect
to any matter on which the shareholder votes in person at the Meeting.
Attendance at the Meeting will not in and of itself constitute a revocation of a
proxy.
SHAREHOLDER PROPOSALS AND BOARD NOMINATIONS
In order to be considered for inclusion in the proxy materials related to
the 2003 annual meeting of shareholders, the Company must receive shareholder
proposals no later than June 3, 2003. If such proposal is in compliance with all
of the requirements of Rule 14a-8 under the Securities Exchange Act of 1934 (the
"Exchange Act"), it will be included in the proxy statement and set forth on the
form of proxy issued for such annual meeting of shareholders.
The Company's Bylaws also require that any shareholder who desires to
nominate a director or present a proposal before the 2003 annual meeting must
notify the Secretary of the Company no earlier than April 23, 2003 and no later
than June 3, 2003.
Nominations for the election of directors may be made by the Board of
Directors or the Nominating Committee. Shareholders may make a recommendation
for a nominee by sending a letter to the Nominating Committee, or may make a
nomination by complying with the notice procedures set forth in the Company's
Bylaws.
ELECTION OF DIRECTORS
At the Meeting, two directors are to be elected to a three-year term, each
to hold office until his successor is elected and qualified. The Board consists
of three classes, each having a three-year term of office, with one class being
elected each year. The persons named in the enclosed form of proxy intend to
vote such proxy, unless otherwise directed, for the election of Robert P. Guyton
and Christel C. Slaughter as members of the class to serve until the 2005 Annual
Meeting of Shareholders. If, contrary to present expectations, any of the
nominees to be elected at the Meeting should be unable to serve for any reason,
the Board may reduce the size of the Board or votes may be cast pursuant to the
accompanying form of proxy for a substitute nominee designated by the Board.
INFORMATION ABOUT NOMINEES AND DIRECTORS
The following table provides certain information as of August 19, 2002,
unless otherwise indicated, with respect to each nominee and each other director
whose term will continue after the Meeting. Unless otherwise indicated, each
person has been engaged in the principal occupation shown for the past five
years.
Nominees for Director
Nominees for a three-year term expiring at the 2005 annual meeting:
Robert P. Guyton, age 65, has been a director since 1996. Mr. Guyton is a
financial consultant, having previously been a Vice President and financial
consultant for Raymond James & Associates, Inc. from 1993 to 1996. From 1981 to
1991, Mr. Guyton was President and Chief Executive Officer of BankSouth
Corporation. Mr. Guyton is a director of ChemFirst Corporation.
Christel C. Slaughter, age 47, has been a director since 1996. Ms.
Slaughter is the co-owner of, and a management consultant with, SSA Consultants,
Inc. Since 1979, Ms. Slaughter has been an active lecturer and consultant for
both governmental and private entities.
Members of Board of Directors Continuing in Office
Directors whose terms expire at the 2003 annual meeting:
Ronald A. LaBorde, age 46, is the Chief Executive Officer and has held that
position since June 1995. Mr. LaBorde joined the Company in July 1982 and has
been a director since May 1992. From July 1995 until March 2001, Mr. LaBorde
also held the position of President. From November 2000 until August 2002, Mr.
LaBorde also served as Chairman of the Board.
James F. White, Jr., age 62, has been a director since 2000. Mr. White has
served as of counsel to the law firm of Shumaker, Loop & Kendrick, Toledo, Ohio
since January 1, 1996. He previously served in various executive positions and
as a director of Checkers Drive-In Restaurants, Inc. from January 1993 through
2
December 1995, including serving as Chief Executive Officer from August 1, 1994
through August 31, 1995. Mr. White is also President and Chief Executive Officer
of whOlesome group, llc, an operator of Panera Bread Bakery Cafes in northwest
Ohio and southeast Michigan, and serves on the boards of numerous privately-held
companies.
Joseph H. Campbell, Jr., age 50, has served as the Chairman of the Board
since August 2002 and has been a director since 2000. Mr. Campbell has been
President and Chief Executive Officer of Associated Grocers, Inc. since February
1, 1995. Associated Grocers, Inc. is a private, member-owned corporation that
serves independent retail grocers in four states by providing grocery products
and retail and technological services.
Directors whose terms expire at the 2004 annual meeting:
Dale E. Redman, age 54, has been a director since 1995. Mr. Redman is the
managing director of Windward Capital. From 1988 to 1998, he was the Executive
Vice President and Chief Financial Officer of United Companies Financial
Corporation and served as a director until November 2000. On March 1, 1999,
United Companies Financial Corporation, a Baton Rouge financial institution,
filed for protection under Chapter 11 of the Bankruptcy Code.
C. Ray Smith, age 67, has been a director since 1992. Mr. Smith is the
Tipton R. Snavely Professor of Business Administration at the Darden Graduate
School of Business Administration, University of Virginia and the Executive
Director of the Darden School Foundation.
James A. Perkins, age 58, has been a director since 2001. Mr. Perkins is a
private investor and a consultant. He recently completed a career that spanned
over 25 years with Federal Express Corporation, most recently as Senior Vice
President and Chief Personnel Officer from June 1979 to December 1999. Mr.
Perkins is a director of Provant, Inc.
OTHER INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board held 21 meetings during the fiscal year ended July 2, 2002. No
director during the last full fiscal year attended fewer than 75% of the
aggregate of (a) the total number of meetings of the Board (held during the
period for which he or she has been a director) and (b) the total number of
meetings held by all committees of the Board on which he or she served (during
the periods served), except Christel C. Slaughter.
For the period ended June 30, 2002, each director who is not an officer of
the Company received, in addition to reimbursement of reasonable and necessary
costs and expenses incurred, a retainer of $15,000 per year, a fee of $1,000 for
each regular and special meeting of the Board that he or she attended, and $500
for each meeting of a committee of the Board, other than the Company's Executive
Committee, that such director attended. For each meeting of the Board and each
meeting of a committee of the Board, that each director participated by
telephone, the director received 50% of the meeting fee. The retainer was paid
50% in cash and 50% in the Company's Common Stock. The Company's Executive
Committee received a monthly cash fee of $1,000. Effective July 1, 2002, each
director who is not an officer of the Company receives, in addition to
reimbursement of reasonable and necessary costs and expenses incurred, a
retainer of $20,000 per year, a fee of $1,500 for each regular and special
meeting of the Board that he or she attends, and $1,000 for each meeting of a
committee of the Board, that such director attends. For each meeting of the
Board and each meeting of a committee of the Board, that such director
participates by telephone, the director receives $500. The retainer, subject to
approval by the shareholders of the Piccadilly Cafeterias, Inc. Directors Stock
Plan, is paid 50% in cash and 50% in the Company's Common Stock.
The Board presently has five standing committees, as described below:
Executive Committee. The Executive Committee is authorized, to the extent
permitted by law, to exercise substantially all powers of the Board between
meetings of the Board. The Executive Committee held 22 meetings during the
fiscal year ended July 2, 2002. Joseph H. Campbell, Jr. (Chairman), Dale E.
Redman, Christel C. Slaughter and James F. White, Jr. are members of the
Executive Committee.
3
Audit Committee. The Audit Committee reviews with the Company's independent
auditors the plan, scope and results of the annual audit and the procedures for
and results of internal audit controls. The Audit Committee reviews the audit
services performed by the Company's independent auditors and the possible effect
on the independence of the auditors of the performance of nonaudit services. The
Audit Committee held six meetings during the fiscal year ended July 2, 2002. C.
Ray Smith (Chairman), Joseph H. Campbell, Jr., James F. White, Jr. and Christel
C. Slaughter are members of the Audit Committee. The Audit Committee's specific
responsibilities are included in its written charter attached as Exhibit A to
this Proxy Statement. Each member of the Audit Committee meets the definition of
an independent director as defined by the New York Stock Exchange rules.
Compensation Committee. The Compensation Committee, which has authority to
consider and make recommendations to the Board regarding compensation of
officers of the Company, held six meetings during the fiscal year ended July 2,
2002. This committee also administers the Company's 1993 Amended and Restated
Incentive Compensation Plan (the "Incentive Compensation Plan"). Robert P.
Guyton (Chairman), James A. Perkins, and Dale E. Redman are members of the
Compensation Committee.
Nominating Committee. The Nominating Committee, which makes director
recommendations to the Board on an as needed basis, did not meet during the
fiscal year ended July 2, 2002. James A. Perkins (Chairman), Christel C.
Slaughter, Ronald A. LaBorde, and C. Ray Smith are members of the Nominating
Committee.
Corporate Governance. The Corporate Governance Committee, which reviews the
Board's governance practices and makes recommendations to the Board of any
revisions to existing practices, was formed on May 6, 2002. The Corporate
Governance Committee held two meetings during the fiscal year ended July 2,
2002. James F. White, Jr. (Chairman), Robert P. Guyton and Dale E. Redman are
members of the Corporate Governance Committee.
4
COMMON STOCK OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock by (i) each director and director
nominee of the Company, (ii) each executive officer for whom compensation
information is disclosed under the heading "Executive Compensation and Other
Benefits", (iii) all of the Company's directors and executive officers as a
group, and (iv) each person known to the Company to be a beneficial owner of
more than 5% of the outstanding common stock, all as determined in accordance
with Rule 13d-3 of the Exchange Act based on information furnished by such
persons. Unless otherwise indicated, all information is presented as of
September 6, 2002 and all shares shown are held with sole voting and investment
power.
<Table>
<Caption>
SHARES BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED PERCENT OF CLASS
- ------------------------------------ ------------------- ----------------
Ronald A. LaBorde........................................... 443,663(1) 4.0%
Dale E. Redman.............................................. 13,826 *
Robert P. Guyton............................................ 13,899 *
Christel C. Slaughter....................................... 12,826 *
C. Ray Smith................................................ 13,223(2) *
James A. Perkins............................................ 6,747 *
James F. White, Jr. ........................................ 8,542(3) *
Joseph H. Campbell, Jr. .................................... 8,542 *
Azam Malik.................................................. 50,000(4) *
Mark L. Mestayer............................................ 54,000(5) *
Julia H. R. Hamilton........................................ 1,103,592(6) 10.2%
2736 Windrush Way
Baton Rouge, Louisiana 70879
O. Q. Quick................................................. 829,159(7) 7.6%
#83 Sugar Creek Place
Waco, Texas 76712
Dimensional Fund Advisors, Inc.(8).......................... 762,700 7.0%
All directors and executive officers as a group (10
persons).................................................. 625,268(9) 5.5%
</Table>
- ---------------
* Less than 1%
(1) Includes 78,373 shares held by Mr. LaBorde as trustee or co-trustee
(together with Mr. O. Q. Quick) under several trusts. Also includes 325,000
shares that Mr. LaBorde has the right to acquire upon the exercise of
presently exercisable options.
(2) Includes 300 shares held of record by Mr. Smith's spouse.
(3) All shares are held of record by Mr. White's spouse.
(4) Represents shares that Mr. Malik has the right to acquire upon the exercise
of presently exercisable options.
(5) Represents shares that Mr. Mestayer has the right to acquire upon the
exercise of presently exercisable options.
(6) Includes 26,000 shares held by Ms. Hamilton as trustee of a charitable
trust. Ms. Hamilton is the daughter of the Company's founder, T.H.
Hamilton. Ms. Hamilton served on the Company's Board from 1977 to 1997, and
continues to serve as an advisory director of the Company.
(7) Includes 739,659 shares held by Mr. Quick as trustee or co-trustee under
several trusts, 30,000 shares held by Mr. Quick's spouse as trustee under
several trusts, and 59,500 shares held beneficially and of record jointly
with his spouse or individually by Mr. Quick or his spouse. Mr. Quick began
his career with the Company in 1946 and served in various capacities for
the Company including Chairman of the Board and Chief Executive Officer
until 1995, and as a director until 1996.
5
(8) Based upon information included in Schedule 13G dated December 31, 2001
filed with the Securities Exchange Commission by Dimensional Fund Advisors,
Inc., an investment advisor to four investment companies, and an investment
manager to certain other comingled group trusts and separate accounts. These
investment companies, trusts and accounts are the "Funds." All securities
reported here are owned by the Funds. The address of the Funds is 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401.
(9) Includes 429,000 shares that such persons have the right to acquire upon the
exercise of presently exercisable options.
6
EXECUTIVE COMPENSATION AND OTHER BENEFITS
The following table sets forth certain information regarding the
compensation of the Company's Chief Executive Officer and each of the Company's
other most highly compensated executive officers. For the purpose of this and
the following tables and discussion concerning executive compensation, such
executive officers shall be referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS COMPENSATION(1)
--------------------------- ---- -------- -------- ------------ ---------------
Ronald A. LaBorde.................... 2002 $312,988 $ 86,388 -- $ 800
Chief Executive Officer 2001 312,988 -- 75,000 800
2000 312,988 -- -- 800
Azam Malik(2)........................ 2002 200,000 41,400 -- 800
President and Chief Operating
Officer 2001 79,077 -- 100,000 200
Mark L. Mestayer..................... 2002 155,012 41,932 -- 800
Executive Vice President, Treasurer 2001 155,012 -- 14,000 800
and Chief Financial Officer 2000 149,282 -- 12,000 800
</Table>
- ---------------
(1) Represents amounts paid by the Company for insurance premiums for a group
policy which afforded term life insurance and long-term disability insurance
for all officers and for a group accidental death policy which afforded
coverage for all executive officers.
(2) Mr. Malik joined the Company in March 2001.
---------------------
No options were granted during the fiscal year ended July 2, 2002 to the
Named Executive Officers.
The following table sets forth information with respect to the Named
Executive Officers concerning option and SAR exercises during the fiscal year
ended July 2, 2002 and unexercised options and SARs held as of July 2, 2002.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES AS OF JULY 2, 2002
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON OPTIONS AT JULY 2, 2002 AT JULY 2, 2002
EXERCISE VALUE ------------------------------ ------------------------------
NAME (#) REALIZED ($) EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
---- ----------- ------------ -------------- ------------- -------------- -------------
Ronald A. LaBorde...... 0 0 325,000 0 $23,250 $ 0
Azam Malik............. 0 0 50,000 50,000 68,500 68,500
Mark L. Mestayer....... 0 0 54,000 0 4,340 0
</Table>
- ---------------
(1) All options were awarded at the fair market value of the underlying shares
on the date of grant.
---------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION OBJECTIVES
The Committee conducts an annual review of the Company's executive
compensation program. The objectives of the program include the following:
- To attract, retain and motivate qualified executives;
- To offer competitive base salaries consistent with the Company's position
in the foodservice industry;
7
- To reward corporate and individual performance through an annual
incentive bonus program;
- To align the interests of executives with the long-term interests of
shareholders through stock-option award opportunities that result in
ownership of Common Stock
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.
Generally, salaries are targeted at the median level of the market.
ANNUAL INCENTIVE BONUSES
Previously, the Company's Annual Incentive Bonus Plan for executive
officers linked annual cash incentive bonus payments solely to the attainment of
predetermined earnings goals approved by the Board of Directors. Executives were
assigned target bonus levels as a percentage of base salary. After achieving
minimum threshold levels of performance, bonus payments to executives were
dependent upon the degree of achievement of earnings goals.
Based on the performance of the Company, the Committee approved incentive
bonus awards for the year ended July 2, 2002 totalling $268,710 for twelve
members of executive management including the chief executive officer.
For the fiscal year ending July 1, 2003, based on the recommendations of
the Committee, the Board of Directors approved a revision to the Annual
Incentive Bonus Plan. For the fiscal year ending July 1, 2003, executives are
now assigned target bonus levels based on the attainment of predetermined
earnings goals, approved by the Board of Directors, and individual performance
goals established for each executive. Seventy percent of target bonuses are
based on achievement of earnings goals and thirty percent are based on
achievement of individual performance goals. The portion of an executive's
target bonus based on earnings goals depends on the degree that earnings exceed
minimum threshold levels.
For the fiscal year ending July 1, 2003, the chief executive officer's
incentive bonus compensation is determined on the same basis as other
executives. The chief executive officer's individual performance goals were
approved by the Board of Directors.
LONG-TERM INCENTIVES
The Incentive Compensation Plan, which was approved by the shareholders in
1993, allows the Committee to employ a variety of forms of stock-based
incentives to accomplish its objectives. To date, the Committee has issued
non-qualified stock options exclusively.
In the fiscal year ended July 2, 2002, the Committee issued 101,700
non-qualified stock options to five executives.
Legislation enacted in 1993 imposes a $1 million annual limit on the tax
deductibility of compensation paid to certain executive officers. The Company's
Incentive Compensation Plan has been structured such that stock-based incentives
granted under that plan can be excluded from the $1 million limit. The annual
cash compensation currently paid by the Company to executive officers is
substantially below $1 million and, accordingly, will continue to be deductible
by the Company.
Submitted by the Compensation
Committee
Robert P. Guyton (Chairman)
Dale E. Redman
James A. Perkins
8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee have been officers or
employees of the Company or any of its subsidiaries. No executive officer of the
Company served in the last fiscal year as a director or member of the
compensation committee of another entity, one of whose executive officers served
as a director or on the Compensation Committee of the Company.
PENSION PLAN
The Company maintains a defined benefit pension plan for employees. As of
December 31, 2001, accrual of additional employee benefits was frozen. The Named
Executive Officers have the following credited years of service under the plan:
Mr. LaBorde -- 20; Mr. Mestayer -- 13. Participation in the pension plan is not
available to persons who became employed after December 31, 1997, so Mr. Malik
is not a participant. Benefits are not subject to deductions for Social Security
benefits or other offset amounts. The estimated annual benefits payable on
retirement to each of the Named Executive Officers are $31,845 for Mr. LaBorde
and $19,194 for Mr. Mestayer.
EMPLOYMENT, MANAGEMENT CONTINUITY AND RETIREMENT AGREEMENTS
Each of the Named Executive Officers has entered into a management
continuity agreement with the Company that provides benefits to the officer if
the officer's employment is terminated other than because of disability, death,
cause (as defined in the agreement) or by the officer for good reason (as
defined in the agreement) within 36 months following a change of control (as
defined in the agreement) of the Company. The benefits for Mr. Mestayer include
a cash payment equal to one and one-half times his base salary and bonus and the
vesting of all outstanding stock options, stock appreciation rights or other
incentive awards. Mr. Malik and Mr. LaBorde have identical agreements, except
the multiplier for Mr. Malik is two and the multiplier for Mr. LaBorde is two
and one half.
AUDIT COMMITTEE REPORT
The Audit Committee performs the functions described in its charter, which
is attached to this Proxy Statement as Exhibit A. These functions include:
- recommending to the Board the appointment of the independent auditors;
- approving the scope of audits and quarterly reviews and the procedures to
be utilized by the independent auditors; and
- reviewing with the independent auditors and financial management, the
adequacy and effectiveness of the accounting and financial controls of
the Company.
The Audit Committee reviews the Company's financial reporting process on behalf
of our Board of Directors. Management has the primary responsibility for the
financial statements and the financial reporting process, including our system
of internal controls.
In this context, the Audit Committee has met and held discussions with
management and the Company's independent auditors. Management represented to the
Audit Committee that the Company's audited financial statements were prepared in
accordance with generally accepted accounting principles. The Audit Committee
has reviewed and discussed the audited financial statements with management and
the independent auditors. The Audit Committee discussed with the independent
auditors matters required to be discussed by Statement on Auditing Standards No.
61 (Communication With Audit Committees).
In addition, the Audit Committee has discussed with the independent
auditors the auditor's independence from the Company and management, including
matters in the written disclosures provided by the independent auditors to the
Audit Committee as required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees).
9
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Audit Committee has met with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board, and the Board has approved, that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended July 2, 2002, for filing with the Securities and Exchange
Commission. Ernst & Young LLP acted as independent accountants for the Company
for the fiscal year ended July 2, 2002. The Committee has not yet selected the
independent accountants for the fiscal year ending July 1, 2003, although Ernst
& Young LLP is expected to perform its normal quarterly review for the quarter
ended October 1, 2002. The Audit Committee has requested proposals from
independent accounting firms to perform audit and tax services for each of the
three fiscal years ending June 28, 2005. Representatives of Ernst & Young LLP
are expected to be present at the Annual Meeting, with the opportunity to make
any statement they desire at that time, and will be available to respond to
appropriate questions.
Aggregate fees and costs billed to the Company by Ernst and Young LLP, the
Company's principal accountant, for the fiscal year ended July 2, 2002, were as
follows for the referenced services:
Audit Fees: $135,000 for professional services rendered for the audit of
the Company's financial statements for the fiscal year ended July 2, 2002 and
for reviewing the financial statements included in the Company's Form 10-Qs
filed with the Securities and Exchange Commission for the fiscal year ended July
2, 2002.
All Other Fees: $258,099 for all services rendered other than audit and
financial information systems design and implementation services. This includes
audit-related fees of $43,685. Other fees, which were not audit related,
consisted primarily of fees related to tax return preparation and tax consulting
fees.
Financial Information Systems Design and Implementation Fees: Ernst &
Young LLP did not provide any professional services described in Paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X (financial information systems design
and implementation).
The Audit Committee has considered the compatibility of the provision of
services covered by the two preceding paragraphs with the maintenance of Ernst &
Young's independence from the Company.
Submitted by the Audit Committee
C. Ray Smith (Chairman)
Joseph H. Campbell, Jr.
Christel C. Slaughter
James F. White, Jr.
10
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total shareholder return
("shareholder return") on the Company's Common Stock against the shareholder
return of the S&P 500 Stock Index and a Peer Group Composite Index (structured
by the Company as set forth below) for the five-year period commencing June 30,
1997 and ended July 2, 2002.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
PICCADILLY CAFETERIAS, INC., S&P 500 INDEX & PEER GROUP COMPOSITE INDEX**
PERFORMANCE GRAPH
<Table>
<Caption>
- --------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
- --------------------------------------------------------------------------------
Piccadilly
Cafeterias, Inc. 100.00 125.75 84.88 29.29 16.19 31.96
Peer Group 100.00 103.45 101.72 71.98 89.67 116.11
S&P 500 100.00 130.16 159.78 171.36 145.95 119.71
</Table>
- ---------------
* Assumes $100 invested on June 30, 1997 in the Company's Common Stock, the
S&P 500 Stock Index and a Peer Group Composite Index constructed by the
Company as set forth below. Also assumes reinvestment of dividends.
** Fiscal year ended July 2, 2002.
In constructing the Peer Group Composite Index ("Peer Index") for use in
the performance graph above, the Company used the shareholder returns of various
publicly held companies (including reinvestment of dividends) that compete with
the Company in the family dining segment (the group of companies included in the
Peer Index competing with the Company are hereinafter referred to as the "Peer
Group"). Included in the Peer Group are mid-priced family restaurant companies
with large multi-unit operations. For the fiscal year ended July 2, 2002, the
Peer Group consists of Fresh Choice, Inc., Luby's Cafeterias, Inc., Ryan's
Family Steak Houses, Inc., Star Buffet, Inc., and Worldwide Restaurant Concepts,
Inc., formerly Sizzler International, Inc. Shoney's, Inc. was formerly included
in the Peer Group for the fiscal year ended June 30, 2001, but was not included
in this year's Peer Group because they are no longer a publicly-traded company.
11
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
Common Stock, to file certain beneficial ownership reports with the Securities
and Exchange Commission. Julia H.R. Hamilton, filed a late Form 5 for the year
ended July 2, 2002.
PROPOSAL TO APPROVE THE PICCADILLY CAFETERIAS, INC.
DIRECTORS STOCK PLAN
GENERAL
The Piccadilly Cafeterias, Inc. Directors Stock Plan (the "Plan"), which
has been approved by the Board, subject to the approval by the shareholders at
the Meeting. The Plan provides for the payment of a portion of a director's
annual retainer in shares of the Company's Common Stock. The Board believes that
the Plan will align the interests of directors with those of the Company's
shareholders, and encourage the highest level of performance by providing those
directors with a proprietary interest in the financial success and growth of the
Company. The primary features of the Plan are summarized below. This summary is
qualified in its entirety, however, by reference to the Plan, which is attached
to this Proxy Statement as Exhibit B.
TERMS OF THE PLAN
The Company pays an annual retainer and meeting fees to the members of the
Board who are not also officers of the Company (the "Non-Employee Directors").
Currently, the Board has seven Non-Employee Directors. Under the Plan, the
annual retainer is paid in cash and Common Stock on a quarterly basis. The cash
component of the retainer is paid in two installments on the first Monday of the
second month following the end of the Company's first and third fiscal quarters.
The stock component of the retainer is paid in two installments on the first
Monday of the second month following the end of the Company's second and fourth
fiscal quarters. Each stock installment will consist of that number of whole
shares of the Company's Common Stock having a fair market value equal to 25% of
the annual retainer as of the date of payment.
Subject to certain adjustment provisions described below, the maximum
number of shares of Common Stock that may be issued under the Plan is 250,000
shares. In the event of any recapitalization, reclassification, stock dividend,
stock split, combination of shares or other change in the Company's Common
Stock, the limitations on the number of shares of Common Stock that may be
issued under the Plan will be adjusted in proportion to the change in
outstanding shares of Common Stock. In addition, in the event of any such change
in the Common Stock, the Compensation Committee of the Board (the "Committee")
shall make any other adjustment that it determines to be equitable in order to
provide Non-Employee Directors with the same relative rights before and after
such adjustment.
The Committee administers the Plan and has authority to interpret the Plan,
to prescribe, amend and rescind rules relating to the Plan and to make any other
determinations necessary for the administration of the Plan. The Board may amend
or discontinue the Plan at any time. However, the shareholders must approve any
amendment that would:
- materially increase the benefits accruing to Non-Employee Directors under
the Plan;
- increase the number of shares of Common Stock that may be issued under
the Plan; or
- materially expand the classes of persons eligible to receive benefits
under the Plan.
12
NEW PLAN BENEFITS
If the shareholders approve the Plan at the Meeting, shares of Common Stock
will be issued under the Plan, during the Company's current fiscal year, to the
persons named and in the amounts set forth below.
<Table>
<Caption>
DOLLAR VALUE OF
SHARES TO BE ISSUED
NAME IN FISCAL YEAR 2003
- ---- -------------------
Joseph H. Campbell, Jr...................................... $10,000
Robert P. Guyton(1)......................................... $10,000
James A. Perkins............................................ $10,000
Dale E. Redman.............................................. $10,000
Christel C. Slaughter(1).................................... $10,000
C. Ray Smith................................................ $10,000
James F. White, Jr.......................................... $10,000
All non-employee directors as a group....................... $70,000
</Table>
- ---------------
(1) The referenced issuance of shares of Common Stock is contingent upon the
director's re-election at the Meeting.
The dollar value of the shares of Common Stock to be issued during the
Company's current fiscal year, referenced in the table above, is based on the
current retainer amount for Non-Employee Directors, which may be increased at
the discretion of the Board. For future years that the Plan is in effect and to
the extent that shares of Common Stock remain available for issuance thereunder,
Non-Employee Directors will continue to receive shares of Common Stock as part
of their annual retainer.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about shares of the Company's
Common Stock that may be issued upon the exercise of options, warrants and
rights under all of the Company's existing equity compensation plans as of
September 25, 2002.
<Table>
<Caption>
C. NUMBER OF SECURITIES
A. NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED B. WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER PLAN
UPON EXERCISE OF EXERCISE PRICE OF (EXCLUDING SECURITIES
PLAN CATEGORY OUTSTANDING OPTIONS OUTSTANDING OPTIONS REFLECTED IN COLUMN (A))
- ------------- ----------------------- ------------------- --------------------------
Incentive compensation plans
approved by
shareholders.............. 1,040,650 $7.15 409,350
Incentive compensation plans
not approved by
shareholders.............. 0 0 0
--------- ----- -------
TOTAL....................... 1,040,650 $7.15 409,350
========= ===== =======
</Table>
VOTE REQUIRED
Approval of the Plan requires the affirmative vote of the holders of a
majority of votes cast at the Meeting. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE PLAN.
By Order of the Board of Directors
/s/ W. SCOTT BOZZELL
W. Scott Bozzell
Secretary
Baton Rouge, Louisiana
September 25, 2002
13
EXHIBIT A
PICCADILLY CAFETERIAS, INC. AUDIT COMMITTEE CHARTER
ORGANIZATION
The Audit Committee of the Board of Directors shall be comprised of three
or more directors selected by the Board of Directors, each of whom shall meet
the standards of independence and any other qualifications required from time to
time by the New York Stock Exchange (or, if the Company's common stock is listed
or traded on some other exchange or trading system, the standards of
independence and any other qualifications required by the other exchange or
system).
STATEMENT OF POLICY
Purpose. The Audit Committee shall provide assistance to the Board of
Directors in fulfilling its responsibility to oversee management's conduct of
the Company's financial reporting process by monitoring (a) the financial
information that will be provided to the shareholders, (b) the systems of
internal and financial controls that management and the Board of Directors have
established, (c) the audit process and (d) the independence and performance of
the independent auditors. In so doing, the Audit Committee shall strive to
maintain free and open communication between the directors, the independent
auditors and the financial management of the Company.
Allocation of Responsibilities. The management of the Company is
principally responsible for developing the Company's accounting practices,
preparing the Company's financial statements and developing and maintaining
systems of internal and financial controls. The independent auditors are
responsible for auditing the Company's annual financial statements in accordance
with generally accepted auditing standards to obtain reasonable assurance that
they are free from material misstatement and for reviewing the Company's interim
financial statements in accordance with SAS 71. The Audit Committee, as the
delegate of the Board of Directors, is responsible for overseeing this process;
provided, however, the Audit Committee recognizes that the financial management
and the internal and outside auditors have more knowledge and information about
the Company than do members of the Audit Committee and, consequently, in
carrying out its oversight responsibilities, the Audit Committee is not
providing any expert or special assurances as to the Company's financial
statements or internal controls or any professional certification as to the
independent auditor's work.
Accountability. The independent auditors are accountable to the Audit
Committee and the Board of Directors. The Board of Directors, with the advise of
the Audit Committee, has the authority and responsibility to select, evaluate
and, if necessary or appropriate, replace the independent accountants.
MEETINGS
The Audit Committee shall meet as necessary. To foster open communications,
the Audit Committee may invite other directors, representatives of management,
or the independent auditors to attend any of its meetings, but reserves the
right in its discretion to meet in executive session. The Audit Committee shall
have the power to conduct or authorize investigations into any matters within
the Committee's scope of responsibilities and to employ independent legal
counsel, accountants or others to advise it. The Audit Committee shall maintain
written minutes of all its meetings and provide a copy of all such minutes to
any member of the Board of Directors.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee shall:
- Review and reassess the adequacy of this Charter as conditions dictate
(at least annually).
- Recommend to the Board of Directors the independent auditors to be
selected or proposed to the stockholders considering independence and
effectiveness, and approve the independent auditor's compensation.
A-1
- Review the performance of the independent auditors and approve any
proposed discharge of the independent auditors when circumstances
warrant.
- On an annual basis, obtain from the independent auditors the written
disclosures regarding the independent auditors' independence and
delineating all their relationships and professional services as required
by Independence Standards Board Standard No. 1, Independence Discussions
with Audit Committees. In addition, discuss with the independent auditors
the nature and scope of any disclosed relationships or professional
services that may affect the independent auditors' independence and take,
or recommend that the Board of Directors take, appropriate action to
ensure the continuing independence of the auditors.
- Instruct the independent auditors that they are ultimately accountable to
the Board of Directors and the Audit Committee.
- Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit and timely quarterly
reviews for the current year and the procedures to be utilized.
- Review with the independent auditors and financial management, the
adequacy and effectiveness of the accounting and financial controls of
the Company, and elicit any recommendations for the improvement of such
internal controls or particular areas where new or more detailed controls
or procedures are desirable.
- Review periodically the effectiveness and adequacy of the Company's
corporate compliance procedures and consider and recommend to the Board
of Directors any proposed changes that the Audit Committee deems
appropriate or advisable.
- Instruct the independent auditors that the audit committee and
appropriate members of management will be informed of fraud and illegal
acts, unless they are clearly inconsequential, of which the independent
auditors become aware. In addition, instruct the independent auditors
that the audit committee and appropriate members of management will be
informed of significant audit adjustments and of reportable conditions
noted during the audit.
- Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements.
- Inquire of management and the independent auditors about significant
risks or exposures and assess the steps management has taken to minimize
such risks to the Company.
- Discuss with the independent auditors any uncorrected misstatements
aggregated by them during the current engagement that were determined by
management to be immaterial, both individually and in the aggregate, to
the financial statements taken as a whole.
- Review with financial management and the independent auditors prior to
the filing of the Form 10-Q with the SEC the results of the independent
accountants' review of the Company's interim financial statements in
accordance with generally accepted auditing standards for conducting such
reviews (currently Statement of Auditing Standards No. 71). The chair of
the Audit Committee may represent the entire Committee for purposes of
this review.
- Review the Company's annual financial statements and related footnotes
contained in the annual report to shareholders with management and the
independent auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial statements.
Inquire whether the independent auditors reasonably believe that the
annual financial statements are free of material misstatement. Review
with management and the independent auditors the results of the
independent auditors' audit and their analysis of significant financial
reporting issues and practices, including changes in, or adoptions of,
accounting principles and disclosure practices or their application, and
discuss any other matters required to be communicated to the Committee by
the auditors under generally accepted auditing standards (currently,
Statement of Auditing Standards No. 61). Discuss with management and the
independent auditors (i) any significant and unusual transactions and, if
A-2
any, identify the method used to account for such transactions; (ii) any
significant accounting policies in controversial or emerging areas for
which there is a lack of authoritative guidance or consensus; (iii) the
process used by management in formulating particularly sensitive
accounting estimates; (iv) the basis for the independent auditor's
conclusions regarding the reasonableness of particularly sensitive
accounting estimates; (v) any adjustments arising from the audit that
could, in the independent auditor's judgment, either individually or in
the aggregate, have a significant affect on the Company's financial
reporting process; (vi) the independent auditor's responsibility for
other information and documents containing audited financial statements
(i.e., the "management's discussion and analysis of financial condition
and results of operations" in the Form 10-K) and any procedures performed
with respect to such information and the results thereof; (vii) the
independent auditor's judgments about the quality and acceptability of
the Company's accounting principles as applied in its financial reporting
including, but not limited to, such matters as the consistency of the
Company's accounting policies and their application and the clarity and
completeness of the Company's financial statements and related
disclosures; (viii) any disagreements with management about matters that,
individually or in the aggregate, could be significant to the Company's
financial statements or the independent auditor's report including, but
not limited to, disagreements over (a) application of accounting
principles to the Company's specific transactions and events, (b) the
basis for management's judgments about accounting estimates, (c) the
scope of the external audit, (d) disclosures to be included in the
Company's financial statements and (e) the wording of the external
auditor's report; and (ix) any serious difficulties encountered by the
independent auditor in dealing with management related to the performance
of the external audit such as (a) unreasonable delays by management in
permitting the commencement of the external audit or providing requested
information, (b) an unreasonable timetable, (c) availability of
management personnel and (d) failure by the Company to complete schedules
on a timely basis. Recommend to the Board of Directors, based on the
Audit Committee's discussions with management and the independent
auditors, that the audited financial statements be included in the
Company's annual report on Form 10-K to be filed with the Securities and
Exchange Commission and recommend such inclusion if the Committee shall
determine so to do.
- Review with management and the independent auditors the interim and
annual earnings announcements prior to their release to the public. The
chair of the Audit Committee may represent the entire Committee for
purposes of this review.
- Prepare the audit committee report required by applicable law and the
rules and regulations of the Securities and Exchange Commission to be
included in the Company's annual proxy statement and review the
disclosure in the Company's proxy statement for its annual meeting of
shareholders regarding the independence of Audit Committee members. In
addition, include a copy of this Charter in the Company's proxy statement
every three years.
- Prepare and submit the annual written confirmation regarding the
constitution of the Audit Committee and the annual review of this Charter
required by the New York Stock Exchange (or, if the Company's common
stock is listed or traded on some other exchange or trading system, any
annual certification as may be required by the other exchange or system).
- Review and make recommendations to the Board of Directors concerning the
Company's policies with regard to transactions with affiliates
(employees, directors and other parties closely related to the Company)
and conflicts of interest.
- Review and approve CEO and selected officers' expense accounts and
verification of perquisites policies.
A-3
LIMITATIONS ON SCOPE
Members shall serve on the Audit Committee from time to time, subject to
the understanding on their part and the part of management and employees of the
Company and the independent auditors that:
- While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and the
independent auditors. Nor is it the duty of the Audit Committee to
conduct investigations, to resolve disagreements, if any, between
management and the independent auditors or to assure compliance with laws
and regulations.
- The Audit Committee will not be required to take all of the actions or to
exercise all of the powers enumerated above, and the Audit Committee's
failure to take any one or more such actions or to exercise any one or
more such powers in connection with the good faith exercise of its
oversight function will in no way be construed as a breach of its duties
or responsibilities to the Company, its Board of Directors or its
shareholders.
- The Audit Committee expects the Company's management and employees and
the independent auditors to cooperate with the Audit Committee and to
provide the Audit Committee with prompt and accurate information and
documents so that the Audit Committee can discharge its oversight
functions properly.
- To the extent permitted by applicable law, rules and regulations the
Audit Committee shall be entitled to rely on the information and opinions
of the persons and entities noted above in carrying out its
responsibilities.
- The members, in agreeing to serve on the Audit Committee, do so in
reliance on, among other things, the indemnification and advancement of
expenses provisions of the Company's Certificate of Incorporation and
other applicable indemnification provisions in any agreement between the
Company and any member of the Audit Committee.
Adopted by the Audit Committee on August 5, 2002
Approved by the Board of Directors on August 5, 2002
A-4
EXHIBIT B
PICCADILLY CAFETERIAS, INC.
DIRECTORS STOCK PLAN
1. PURPOSE. The purpose of the Directors Stock Plan (the "Plan") of
Piccadilly Cafeterias, Inc. (the "Company") is to provide for the payment of a
portion of the annual retainer paid to members of the Board of Directors of the
Company (the "Directors") in shares of the Company's common stock (the "Common
Stock"). The purpose of the Plan is to align the interests of Directors with
those of the Company's shareholders, and to encourage the highest level of
performance by providing that a significant portion of Director compensation
will consist of shares of Common Stock. This compensation arrangement will
provide Directors with a proprietary interest in the financial success and
growth of the Company.
2. ADMINISTRATION OF THE PLAN.
2.1. The Plan shall be administered by the Compensation Committee of
the Board of Directors (the "Committee"), which shall have the power to
interpret the Plan and, subject to its provisions, to prescribe, amend and
rescind Plan rules and to make all other determinations necessary for the
Plan's administration.
2.2. All action taken by the Committee in the administration and
interpretation of the Plan shall be final and binding upon all parties. No
member of the Committee will be liable for any action or determination made
in good faith by the Committee with respect to the Plan.
3. ELIGIBLE PERSONS. Only Directors who are not also officers of the
Company (the "Non-Employee Directors") are eligible to participate in the Plan.
4. ANNUAL RETAINER. Each Non-Employee Director receives an annual retainer
for his or her service on the Board of Directors. The annual retainer shall be
paid on a quarterly basis and shall be paid partly in cash and partly in Common
Stock. The cash component of the retainer shall be paid in two installments on
the first Monday of the second month following the end of each of the Company's
first and third fiscal quarters. The stock component of the retainer shall be
paid in two installments on the first Monday of the second month following the
end of each of the Company's second and fourth fiscal quarters. Each installment
of the stock component of the retainer shall consist of that number of whole
shares of Common Stock equal in Fair Market Value to 25% of the annual retainer
calculated as of the date of payment. No fractional shares of Common Stock shall
be issued; instead, any fractional share shall be rounded up to the next whole
share of Common Stock.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
5.1. The Company may issue up to 250,000 shares of Common Stock under
the Plan, subject to the adjustment provisions of Section 6.
5.2. Common Stock issued under the Plan may be authorized and unissued
shares or issued shares held as treasury shares.
6. ADJUSTMENT PROVISIONS. In the event of any recapitalization,
reclassification, stock dividend, stock split, combination of shares or other
change in the Common Stock, all limitations on numbers of shares of Common Stock
provided in this Plan shall be equitably adjusted in proportion to the change in
outstanding shares of Common Stock. In addition, in the event of any such change
in the Common Stock, the Committee shall make any other adjustment that it
determines to be equitable in order to provide Non-Employee Directors with the
same relative rights before and after such adjustment.
7. GENERAL PROVISIONS.
7.1. Nothing in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Non-Employee Director any right to continue as a
Director or affect the right of the Company to terminate the services of
any Non-Employee Director.
B-1
7.2. No shares of Common Stock will be issued or transferred pursuant
to the Plan unless and until all then-applicable requirements imposed by
federal and state securities and other laws, rules and regulations and by
any regulatory agencies having jurisdiction, and by any stock exchanges
upon which the Common Stock may be listed, have been fully met. As a
condition precedent to the issuance of shares under the Plan, the Company
may require the Non-Employee Director to take any reasonable action to meet
such requirements.
7.3. Anything in the Plan to the contrary notwithstanding: (a) the
Company may, if it shall determine it necessary or desirable for any
reason, at the time of issuance of any shares of Common Stock under the
Plan, require the Non-Employee Director, as a condition to the receipt
thereof, to deliver to the Company a written representation of present
intention to acquire the shares of Common Stock issued pursuant thereto for
his or her own account for investment and not for distribution; and (b) if
at any time the Company further determines, in its sole discretion, that
the listing, registration or qualification (or any updating of any such
document) of the shares of Common Stock issuable pursuant thereto is
necessary on any securities exchange or under any federal or state
securities or blue sky law, or that the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of,
or in connection with the issuance of shares of Common Stock pursuant
thereto, or the removal of any restrictions imposed on such shares, such
shares of Common Stock shall not be issued or such restrictions shall not
be removed, as the case may be, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Company.
8. AMENDMENT, DISCONTINUANCE OR TERMINATION OF THE PLAN.
8.1. The Board may amend or discontinue the Plan at any time;
provided, however, that no such amendment may without the approval of the
shareholders, (i) increase, subject to adjustments permitted herein, the
maximum number of shares of Common Stock that may be issued through the
Plan, (ii) materially increase the benefits accruing to Non-Employee
Director under the Plan, or (iii) materially expand the classes of persons
eligible to participate in the Plan.
8.2. The Plan shall automatically terminate at such time as no shares
of Common Stock remain available for issuance through the Plan.
9. DEFINITION OF FAIR MARKET VALUE. Whenever "Fair Market Value" of Common
Stock shall be determined for purposes of this Plan, it shall be determined as
follows: (a) if the Common Stock is listed on an established stock exchange or
any automated quotation system that provides sale quotations, the closing sale
price for a share of the Common Stock on such exchange or quotation system on
the applicable date, or if no sale of the Common Stock shall have been made on
that day, on the next preceding day on which there was a sale of the Common
Stock; (b) if the Common Stock is not listed on any exchange or quotation
system, but bid and asked prices are quoted and published, the mean between the
quoted bid and asked prices on the applicable date, and if bid and asked prices
are not available on such day, on the next preceding day on which such prices
were available; and (c) if the Common Stock is not regularly quoted, the fair
market value of a share of Common Stock on the applicable date as established by
the Committee in good faith.
B-2
DETACH HERE ZPICC2
PROXY
PICCADILLY CAFETERIAS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the 2002 Annual
Meeting of Shareholders and Proxy Statement and does hereby appoint Joseph H.
Campbell, Jr. and W. Scott Bozzell, or either of them, with full power of
substitution, as proxy or proxies of the undersigned to represent and to vote
all shares of Piccadilly Cafeterias, Inc. Common Stock, which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of Piccadilly Cafeterias, Inc., to be held at the corporate
headquarters of the Company, 3232 Sherwood Forest Boulevard, Baton Rouge,
Louisiana at 10:00 a.m. on November 4, 2002 and at any adjournment(s) thereof.
This Proxy, when properly executed, duly returned and not revoked, will be voted
in accordance with the directions given by the undersigned shareholder. IF NO
DIRECTION IS MADE, IT WILL BE VOTED IN FAVOR OF THE NOMINEES LISTED IN
PROPOSAL 1 AND IN FAVOR OF PROPOSAL 2.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) hereon, and when signing as
attorney, executor, administrator, trustee or guardian, give your full title as
such. If the signatory is a corporation, sign the full corporate name by a duly
authorized officer.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------ -------------------------------
- ------------------------------ -------------------------------
- ------------------------------ -------------------------------
PICCADILLY CAFETERIAS, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
PICCADILLY CAFETERIAS, INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the management and
operation of your Company that require your immediate attention and
approval. These are discussed in detail in the enclosed proxy
materials.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares
will be voted. Then sign the card, detach it and return your proxy vote
in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders,
November 4, 2002.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Piccadilly Cafeterias, Inc.
DETACH HERE ZPICC1
<Table>
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
- ---------------------------------------
PICCADILLY CAFETERIAS, INC.
- --------------------------------------- FOR AGAINST ABSTAIN
2. Proposal to approve the Piccadilly Cafeterias,
1. Election of Directors. Inc. Directors Stock Plan. [ ] [ ] [ ]
(01) Robert P. Guyton
(02) Christel C. Slaughter
FOR WITHHELD 3. In their discretion, the Proxies are authorized to vote upon such other business
ALL [ ] [ ] FROM ALL as may properly come before the meeting or any adjournment(s). This Proxy may be
NOMINEES NOMINEES revoked at any time prior to the voting thereof.
[ ]
--------------------------------------
For all nominees except as noted above
Mark box at right if an address change or comment has been
noted on the reverse side of this card. [ ]
Please be sure to sign and date this Proxy.
Signature: Date: Signature: Date:
--------------------------------- -------------- -------------------------------- -------------------
</Table>