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:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
Ryan's Family Steak Houses, 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)(4) 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):
________________________________________________________________________________
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________________________________________________________________________________
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[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
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4) Date Filed:
________________________________________________________________________________
RYAN'S FAMILY STEAK HOUSES, INC.
405 LANCASTER AVENUE (29650)
POST OFFICE BOX 100 (29652)
GREER, SOUTH CAROLINA
March 28, 2002
To Our Shareholders:
We cordially invite you to attend the Annual Meeting of Shareholders of
Ryan's Family Steak Houses, Inc. on Wednesday, May 1, 2002. The meeting will
begin at 11:00 a.m. at the Greenville/Spartanburg Airport Marriott in
Greenville, South Carolina.
The official Notice of Annual Meeting, Proxy Statement and Proxy Card
are enclosed with this letter. The Notice of the Annual Meeting and Proxy
Statement describe the formal business to be transacted at the Annual Meeting.
THE VOTE OF EVERY SHAREHOLDER IS IMPORTANT. TO ENSURE PROPER
REPRESENTATION OF YOUR SHARES AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY
PLAN TO ATTEND THE ANNUAL MEETING. This will not prevent you from voting in
person but will ensure that your vote will be counted if you are unable to
attend.
Sincerely,
/s/ Janet J. Gleitz
Janet J. Gleitz
Secretary
RYAN'S FAMILY STEAK HOUSES, INC.
405 LANCASTER AVENUE (29650)
POST OFFICE BOX 100 (29652)
GREER, SOUTH CAROLINA
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 1, 2002
----------------------------------------
To Our Shareholders:
Ryan's Family Steak Houses, Inc. will hold its Annual Meeting of
Shareholders at the Greenville/Spartanburg Airport Marriott, Greenville, South
Carolina, on Wednesday, May 1, 2002, at 11:00 a.m. for the following purposes:
(1) To elect seven (7) directors to hold office until the next annual
meeting of shareholders or until their successors have been duly
elected and qualified;
(2) To vote on a proposal to approve the Ryan's Family Steak Houses,
Inc. 2002 Stock Option Plan;
(3) To consider and vote on a proposal to ratify the appointment of
KPMG LLP as independent auditors for Ryan's for the current
fiscal year; and
(4) To transact any other business properly presented at the meeting
or any adjournment.
If you were a shareholder of record at the close of business on March
6, 2002, you may vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ Janet J. Gleitz
Janet J. Gleitz
Secretary
March 28, 2002
Greer, South Carolina
A PROXY CARD IS ENCLOSED. TO ENSURE THAT YOUR SHARES WILL BE VOTED AT
THE ANNUAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED, POSTAGE-PAID, ADDRESSED ENVELOPE.
NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU RETURN
YOUR SIGNED PROXY CARD, YOU RETAIN YOUR RIGHT TO VOTE IF YOU ATTEND THE MEETING.
RYAN'S FAMILY STEAK HOUSES, INC.
405 LANCASTER AVENUE (29650)
POST OFFICE BOX 100 (29652)
GREER, SOUTH CAROLINA
(864) 879-1000
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors of Ryan's Family Steak Houses, Inc. is
furnishing this Proxy Statement in connection with the solicitation of proxies
to be voted at the Annual Meeting of Shareholders to be held at 11:00 a.m. on
Wednesday, May 1, 2002, at the Greenville/Spartanburg Airport Marriott,
Greenville, South Carolina. The approximate mailing date of this Proxy Statement
is March 28, 2002.
Shareholders of record at the close of business on March 6, 2002, are
entitled to notice of and to vote at the Annual Meeting. On that date,
29,533,000 shares of Ryan's Common Stock, $1.00 par value per share, were
outstanding. Holders of Common Stock are entitled to one vote for each share
held of record on March 6, 2002, on all matters properly presented at the Annual
Meeting or any adjournment.
If you give a proxy, you may revoke it at any time before it is
exercised by:
o submitting a written notice of revocation (dated later than the
proxy card) to the Secretary at or before the Annual Meeting;
o submitting another proxy that is properly signed and later dated;
or
o voting in person at the meeting (although attendance at the
Annual Meeting will not in and of itself revoke a proxy).
Unless you decide to vote your shares in person, you may revoke your
prior proxy by delivering a notice to the Secretary of Ryan's at the Annual
Meeting or prior to the Annual Meeting to one of the above addresses, Attention:
Janet J. Gleitz.
Unless you revoke your proxy by following the above instructions, your
proxy will be voted as you specify. If you do not specify how to vote your
shares, all shares represented by a proxy that is received by the Company's
transfer agent will be voted FOR the proposal to elect as directors of Ryan's
the nominees named in this Proxy Statement, FOR the proposal to approve the
Ryan's Family Steak Houses, Inc. 2002 Stock Option Plan (the "2002 Stock Option
Plan"), FOR the proposal to ratify the appointment of KPMG LLP as independent
auditors for Ryan's for the current fiscal year, and in the best judgment of the
proxy holders on any other matter that may properly come before the Annual
Meeting and any and all adjournments and on matters incident to the conduct of
the meeting.
An automated system administered by Ryan's transfer agent tabulates the
votes. The Company's bylaws require the presence, either in person or by proxy,
of the holders of a majority of the outstanding shares of Common Stock at March
6, 2002, to constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes are each included in determining the number of shares present and able
to vote. Each is tabulated separately. In connection with the election of
directors, the proposal to approve the 2002 Stock Option Plan, and the proposal
to ratify the appointment of KPMG LLP as independent auditors, abstentions and
broker non-votes are not counted.
Directors will be elected by a plurality of votes cast at the Annual
Meeting. Shareholders do not have a right to cumulate their votes for directors.
Approval of the 2002 Stock Option Plan and ratification of the appointment of
KPMG LLP as independent auditors will require the affirmative vote of holders of
a majority of the shares voting on the issue at the Annual Meeting.
1
ELECTION OF DIRECTORS
(ITEM #1 ON THE PROXY)
The following seven persons are nominees for election at the Annual
Meeting as directors to serve until the next annual meeting or until their
successors are duly elected and qualified: Charles D. Way, G. Edwin McCranie,
Barry L. Edwards, James M. Shoemaker, Jr., Harold K. Roberts, Jr., James D.
Cockman, and Brian S. MacKenzie. Unless you indicate otherwise, the persons
named in the enclosed proxy card intend to nominate and vote for these nominees.
Management believes that all of the nominees will be available and able
to serve as directors, but if any nominee is not available or able to serve, the
Common Stock represented by the proxies will be voted for the substitute that
the Board of Directors designates.
The following table lists for each nominee for director the name, age,
principal occupation, years of service as a director, and Common Stock
beneficially owned as of March 6, 2002.
PERCENT OF
OUTSTANDING
AGGREGATE REPRESENTED BY
NUMBER OF SHARES AGGREGATE NUMBER
BENEFICIALLY OF SHARES
DIRECTOR OWNED AS OF BENEFICIALLY
NAME AGE PRINCIPAL OCCUPATION SINCE MARCH 6, 2002 (5) OWNED (6)
- ---- --- -------------------- -------- ----------------- ---------
Charles D. Way (1)(2).... 49 Chairman of the Board, President 1981 362,470(7) 1.2%
and Chief Executive Officer of
Ryan's
G. Edwin McCranie (2).... 53 Executive Vice President of 1991 189,547 0.6%
Ryan's
Barry L. Edwards (3)(4).. 54 Executive Vice President and 1982 70,731 0.2%
Chief Financial Officer,
SOURCECORP, INC.
James M. Shoemaker, Jr. 69 Member, Wyche, Burgess, 1982 68,235(8) 0.2%
(2)(4)................... Freeman & Parham, P.A.
Harold K. Roberts, Jr. (1) 51 President and Chief Executive 1988 45,000 0.2%
(3)(4)................... Officer, Statewide Title, Inc.
James D. Cockman (1)(2).. 69 Investor 1993 47,000 0.2%
Brian S. MacKenzie (2)(3) 50 Chief Operating Officer, Samling 1993 46,000(9) 0.2%
Strategic Corporation SDN
BHD
Chief Executive Officer, Paper
Space, Inc.
<FN>
- ----------------------
(1) Member of the Nominating Committee. The Nominating Committee met once
during fiscal 2001 to recommend members of the Board. Ryan's Nominating
Committee will consider nominees to the Board recommended by shareholders
of Ryan's for the 2003 Annual Meeting of Shareholders. See "Proposals of
Shareholders".
(2) Member of the Long-Range Planning Committee. The committee met once during
fiscal 2001 to provide long-term direction for Ryan's.
(3) Member of the Compensation Committee. The committee met twice during fiscal
2001 to review and submit to the Board recommendations respecting the
salary, bonus and option grants under Ryan's 1998 Stock Option Plan to the
Company's executive officers and key employees.
(4) Member of the Audit Committee. The Audit Committee met with representatives
of Ryan's independent auditors once during fiscal 2001 to review the scope
and results of their audit.
(5) Includes 260,000 shares for Mr. Way, 173,000 shares for Mr. McCranie,
2
50,000 shares for Mr. Edwards, 50,000 shares for Mr. Shoemaker, 40,000
shares for Mr. Roberts, 40,000 shares for Mr. Cockman and 40,000 shares for
Mr. MacKenzie that may be acquired within 60 days of March 6, 2002, through
the exercise of stock options.
(6) Under Rule 13d-3 of the Securities Exchange Act of 1934, as amended, the
percentages of total outstanding shares were computed assuming that shares
that can be acquired within 60 days of March 6, 2002, upon the exercise of
options by a given person are outstanding, but shares others may similarly
acquire are not outstanding.
(7) Mr. Way's wife owns 10,380 of these shares. Mr. Way may be deemed to share
voting and investment power regarding these shares.
(8) Mr. Shoemaker's wife owns 2,000 of these shares. Mr. Shoemaker may be
deemed to share voting and investment power regarding these shares.
(9) A trust for the benefit of Mr. MacKenzie's minor child holds 500 of these
shares.
</FN>
The Board met five times during fiscal 2001. All directors attended
personally or by telephone all meetings of the Board and committees on which
they served.
BUSINESS EXPERIENCE OF NOMINEES FOR DIRECTOR
Charles D. Way became the Chairman of the Board of Ryan's in October
1992. Mr. Way became President and Chief Executive Officer of Ryan's in October
1989. From June 1988 to October 1989, he served as President. From May 1986 to
June 1988, he served as Executive Vice President, Treasurer and Secretary. From
January 1981 through April 1986, he served as Vice President-Finance, Treasurer
and Secretary. Mr. Way joined Ryan's in June 1979 as Controller. Mr. Way is also
a director of World Acceptance Corporation.
G. Edwin McCranie was promoted to Executive Vice President of Ryan's in
January 1995. From November 1991 to December 1994, he served as Executive Vice
President-Purchasing. From January 1989 to October 1991, he served as Vice
President-Purchasing. Mr. McCranie joined Ryan's in 1986 and served as Director
of Purchasing through 1988.
Barry L. Edwards has served as Executive Vice President and Chief
Financial Officer of SOURCECORP, INC., a provider of document and information
outsourcing services, since August 2000. He served as Executive Vice President
and Chief Financial Officer of AMRESCO, Inc., an asset management company, from
November 1994 to March 2000. He served as Vice President and Treasurer of The
Liberty Corporation, engaged primarily in the life insurance business, from 1979
to November 1994.
James M. Shoemaker, Jr. has been an attorney with Wyche, Burgess,
Freeman & Parham, P.A., the law firm that is general counsel to Ryan's, since
1965. Mr. Shoemaker also is a director of Palmetto Bancshares, Inc., One Price
Clothing Stores, Inc., and Span-America Medical Systems, Inc.
Harold K. Roberts, Jr. has served as President and Chief Executive
Officer of Statewide Title, Inc., a real estate title insurance agency, since
1989. Mr. Roberts was a partner in the firm of Roberts and Morgan, certified
public accountants, from October 1989 until December 1996.
James D. Cockman is a private investor. From 1989 until 1992, he served
as Chairman of the Sara Lee Food Service Division of Sara Lee Corp., which
engages in the business of processing and distributing food products. In
addition, Mr. Cockman was Chief Executive Officer of several Sara Lee operating
companies for 17 years prior to 1989.
Brian S. MacKenzie has served as Chief Operating Officer of Samling
Strategic Corporation SDN BHD, a forest products manufacturing company, since
October 1999 and as Chief Executive Officer of Paper Space, Inc., a distribution
company, since June 2000. He served as Chief Operating Officer of New Hope
Communications, Inc., a publishing company, from December 1998 to October 1999.
He served as President and Chief Executive Officer of Builder Marts of America,
3
Inc. ("Builder Marts") from October 1993 to August 1998. From May 1991 to
October 1993, he served as Builder Marts' President and Chief Operating Officer
after serving as President of its Building Materials Retail Division from July
1990 to May 1991. Builder Marts is a wholesale distributor of building materials
and supplies.
COMPENSATION OF DIRECTORS
During 2001, Ryan's paid to directors who were not officers of the
company an annual retainer of $20,000, plus $1,000 for each Board meeting
attended, $500 for each committee meeting attended in person, and $250 for each
committee meeting attended by teleconference. Under this arrangement, directors
were paid as follows during fiscal 2001: Mr. Cockman, $25,500; Mr. Edwards,
$25,750; Mr. MacKenzie, $26,000; Mr. Roberts, $26,250; and Mr. Shoemaker,
$25,500. Directors who are also officers received no payments for attending
Board or committee meetings.
In addition, Ryan's grants options for 5,000 shares of Common Stock in
January of each year to each director who is not an officer of the Company.
Accordingly, on January 31, 2001 and January 31, 2002, Ryan's granted options
for 5,000 shares of Common Stock to each of Messrs. Edwards, Shoemaker, Roberts,
Cockman and MacKenzie. The options granted on January 31, 2001 had an exercise
price of $9.25 per share (the per share market value on the date of grant), were
immediately exercisable and expire on January 31, 2011. The options granted on
January 31, 2002, had an exercise price of $21.63 per share (the per share
market value on the date of grant), were immediately exercisable and expire on
January 31, 2012.
VOTE REQUIRED TO ELECT DIRECTORS
Directors will be elected by a plurality of votes cast at the Annual
Meeting. Shareholders do not have a right to cumulate their votes for directors.
Abstentions and broker non-votes are not counted in determining the votes cast
for directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION
OF EACH NOMINEE LISTED IN THIS PROXY STATEMENT.
CERTAIN BENEFICIAL OWNERS OF COMMON STOCK
To the extent known to Ryan's, the only persons or groups that
beneficially owned 5% or more of the outstanding shares of the Common Stock of
Ryan's as of March 6, 2002 are shown in the following table:
NAME AND ADDRESS AMOUNT OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------- -------------------- ----------
Private Capital Management, Inc.(1) 4,160,502(1) 14.1%
8889 Pelican Bay Boulevard, Suite 500
Naples, FL 34108
2,403,300(2) 8.1%
Dimensional Fund Advisors Inc.(2)
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
- ----------------------
<FN>
(1) Private Capital Management, Inc. ("PCMI") reported on February 10, 2002
that it has shared voting and dispositive power as to 4,160,502 shares of
Common Stock. Bruce S. Sherman, Chief Executive Officer of PCMI, and Gregg
J. Powers, President of PCMI, each has shared voting and dispositive power
as to these shares of Ryan's Common Stock owned by PCMI's clients and
managed by PCMI, but disclaims beneficial ownership of these shares.
(2) Dimensional Fund Advisors Inc. ("Dimensional") reported on January 30,
2002 that it serves as investment adviser or manager to certain investment
companies, trusts and accounts (the "Funds") and as such has sole voting
and sole dispositive power for all of the shares of Common Stock shown in
the table. All shares of Common Stock shown in the table above are owned
by the Funds, no one of which to the knowledge of Dimensional owns more
than 5% of Ryan's Common Stock. Dimensional disclaims beneficial ownership
of all these shares.
</FN>
4
EXECUTIVE OFFICERS
The following table provides the name, age, position with Ryan's, years
of service as an officer of Ryan's and Common Stock beneficially owned as of
March 6, 2002, by each executive officer of Ryan's and all executive officers
and directors as a group. The executive officers are appointed by and serve at
the pleasure of the Board of Directors. Unless otherwise indicated in the
footnotes to the table, each executive officer has sole voting and investment
power with respect to the shares indicated.
AGGREGATE NUMBER PERCENT OF OUTSTANDING
OF SHARES REPRESENTED BY
COMPANY BENEFICIALLY AGGREGATE NUMBER OF
COMPANY OFFICES OFFICER OWNED AS OF SHARES BENEFICIALLY
NAME AGE CURRENTLY HELD SINCE MARCH 6, 2002(1) OWNED(2)
- ---- --- --------------- ------- ---------------- --------
Charles D. Way...... 49 Chairman of the Board, 1981 362,470(3) 1.2%
President and Chief
Executive Officer
G. Edwin McCranie... 53 Executive Vice 1989 189,547 0.6%
President and Director
Fred T. Grant, Jr... 46 Senior Vice President - 1990 108,865 0.4%
Finance, Treasurer and
Assistant Secretary
Alan E. Shaw........ 43 Senior Vice President 1990 115,000 0.4%
Operations
Janet J. Gleitz..... 59 Secretary 1988 33,100(4) 0.1%
Morgan A. Graham.... 65 Vice President - 1991 129,585 0.4%
Construction
James R. Hart....... 54 Vice President - 1988 116,601 0.4%
Human Resources
Ilene T. Turbow..... 51 Vice President - 1995 50,162 0.2%
Marketing
All executive
officers and
directors as a group
(13 persons)........ 1,382,296 4.5%
- ---------------
<FN>
(1) Includes 260,000 shares for Mr. Way, 173,000 shares for Mr. McCranie,
101,200 shares for Mr. Grant, 106,000 shares for Mr. Shaw, 29,500
shares for Ms. Gleitz, 125,000 shares for Mr. Graham, 107,924 shares
for Mr. Hart, 45,490 shares for Ms. Turbow, and 1,168,114 shares for
all executive officers and directors as a group that may be acquired
within 60 days of March 6, 2002 through the exercise of stock options.
(2) Under Rule 13d-3 of the Exchange Act, percentages of total outstanding
shares are computed assuming that shares that can be acquired within 60
days of March 6, 2002 upon the exercise of options by a given person or
group are outstanding, but shares others may similarly acquire are not
outstanding.
(3) Mr. Way's wife owns 10,380 of these shares. Mr. Way may be deemed to
share voting and investment power regarding these shares.
(4) The pension plan of Acro International Inc., a company owned by Ms.
Gleitz's husband, holds 2,500 of these shares.
</FN>
In 1996, Ryan's implemented a policy to encourage executive officers to
own more of the Company's Common Stock, which would more closely align the
personal financial interests of executive officers with shareholders' interests.
The policy provides that, over 13 years, the value of an executive officer's
Common Stock ownership should increase so that by the end of 2008 the value of
an individual's stock holdings of Ryan's Common Stock equals 100% of his or her
base salary. If an executive officer does not meet the target ownership value in
a year, up to one-half of any bonus payable to that officer for that year will
be paid in Ryan's Common Stock.
BACKGROUND OF EXECUTIVE OFFICERS
Below is a summary of the backgrounds of Ryan's executive officers who
are not also directors of Ryan's.
Fred T. Grant, Jr., a certified public accountant, joined Ryan's in
January 1990 as Director of Finance. He served in that position until April
1990, when he became Vice President-Finance. Mr. Grant served as Vice President-
Finance, Treasurer and Assistant Secretary from January 1994 to November 2000,
when he was named Senior Vice President-Finance, Treasurer and Assistant
Treasurer.
Alan E. Shaw joined Ryan's in 1979 and served as a store manager until
being promoted to Supervisor in 1982, in which position he served until 1984.
From 1984 through 1989, he served as Assistant Director of Operations and
Regional Director of Operations prior to his promotion to Regional Vice
President-Operations in January 1990. Mr. Shaw served as Vice
President-Operations from November 1991 to November 2000, when he became Senior
Vice President-Operations.
Janet J. Gleitz joined Ryan's in 1981 and served as Corporate Relations
Administrator until June 1988, when she became Secretary.
Morgan A. Graham has been Vice President-Construction since November
1991. After joining Ryan's in July 1987 as a Construction Superintendent, he
served in several construction-related positions, including Project Manager,
Architectural Coordinator, Procurement Manager and Director of Construction,
until assuming his present position.
James R. Hart joined Ryan's in 1979 and served as a store manager until
September 1983. From that time, he served as Director of Human Resources until
April 1988, when he became Vice President-Human Resources.
Ilene T. Turbow joined Ryan's in April 1993 as Director of Marketing.
She served in that position until August 1995, when she became Vice
President-Marketing. Prior to joining Ryan's, Ms. Turbow was General Manager
with Kaminsky's from 1992 to 1993, where she was responsible for store
operations of a prototype restaurant concept. From 1985 to 1992, she was Vice
President with Dawson Foodservice, Inc., a foodservice marketing firm.
6
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows for the fiscal years 2001, 2000 and 1999 the
cash compensation paid by Ryan's and its subsidiaries, as well as certain other
compensation paid or accrued for those years, to the chief executive officer and
the four other executive officers with the highest total salaries and bonuses in
2001 (collectively the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------- ----------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) OPTIONS (#) ($)(3)
- ------------------------- ----------- ------------- ----------- ------------------ ---------------- ----------------
Charles D. Way........ 2001 374,818 426,000 4,206 40,000 61,302(4)
Chairman of the Board, 2000 364,914 73,000 2,017 40,000 69,536
President and Chief 1999 349,338 308,000 795 40,000 38,252
Executive Officer
G. Edwin McCranie..... 2001 220,626 219,674 4,638 25,000 38,345(5)
Executive Vice President 2000 205,972 48,307 2,289 25,000 39,469
1999 193,693 154,133 856 25,000 31,034
Fred T. Grant, Jr..... 2001 194,741 193,830 1,129 20,000 32,196(6)
Senior Vice President - 2000 182,991 42,914 714 20,000 34,271
Finance, Treasurer and 1999 171,895 136,654 429 20,000 28,912
Assistant Secretary
Alan E. Shaw.......... 2001 219,626 194,600 2,396 22,500 58,330(7)
Senior Vice President - 2000 204,972 74,950 1,196 22,500 44,953
Operations 1999 192,857 153,000 368 22,500 33,116
James R. Hart......... 2001 155,857 132,912 1,255 15,000 40,513(8)
Vice President - 2000 147,010 29,547 876 15,000 42,951
Human Resources 1999 136,972 93,297 603 15,000 36,895
- ----------------------
<FN>
(1) All bonus amounts, except for those earned by Mr. Shaw, were earned during
the indicated fiscal year and paid during the subsequent year. Mr. Shaw's
bonuses are paid quarterly.
(2) Amounts in this column were paid for the reimbursement of taxes.
(3) The components of "All Other Compensation" described below may include the
following: (a) premiums Ryan's pays under its split-dollar life insurance
coverage on the life of a participating executive officer for a period of
ten years. Under the insurance plan, Ryan's must be repaid the aggregate
amount of the premiums, without interest, at the earlier of the executive's
death or termination of his employment; (b) Company matches made under the
deferred compensation plan, a nonqualified plan that commenced in 1999 and
provides benefits payable to officers and certain key executives or their
designated beneficiaries at specified future dates or upon the termination
of employment or death. Participants in the plan have the opportunity to
(y) defer up to $150,000 of their compensation in excess of the Social
Security wage base and (z) receive a matching contribution comparable to
Ryan's 401(k) Plan without the restrictions and limitations in the Internal
Revenue Code of 1986, as amended. Participant deferrals and Ryan's match
are deposited each month in participant-owned insurance contracts that give
each participant the opportunity to indicate a preference among various
investment options. The return on these underlying investments determines
the amount of earnings credit. Participants' contributions vest immediately
7
and Ryan's matching contributions vest after six years of employment,
including prior service; and (c) the costs of equivalent term insurance
related to a life insurance plan for officers and other key executives
that provides for a death benefit equal to $6,002,000 for Mr. Way,
$5,177,000 for Mr. McCranie, $1,477,000 for Mr. Grant, $5,556,000 for Mr.
Shaw and $912,000 for Mr. Hart.
(4) "All Other Compensation" for Mr. Way includes Ryan's contributions of
$4,319 to the 401(k) Plan to match a portion of the 2001 pre-tax elective
deferral contributions (included under Salary and Bonus) Mr. Way made to
the Plan; estimated imputed premium amounts (based on prior claims history,
past administrative charges and estimated medical inflation rates) of
$5,324 for health insurance providing a level of coverage not otherwise
available under Ryan's standard health plan; premium payments of $150 for
an additional $100,000 in life insurance above the coverage available to
salaried employees generally; a premium payment of $2,428 for disability
insurance; Ryan's estimate of the imputed benefit of $22,067 of
split-dollar life insurance coverage (including the value of the term
insurance portion) purchased by Ryan's on Mr. Way's life in the policy
amount of $1,859,000; Company contributions to Ryan's deferred compensation
plan, amounting to $22,786; and $4,228 for the cost of equivalent term
insurance related to the insurance plan described in Footnote 3(c) above.
(5) "All Other Compensation" for Mr. McCranie includes Ryan's contributions of
$2,000 to the 401(k) Plan to match a portion of the 2001 pre-tax elective
deferral contributions (included under Salary and Bonus) Mr. McCranie made
to the Plan; estimated imputed premium amounts (based on prior claims
history, past administrative charges and estimated medical inflation rates)
of $5,324 for health insurance providing a level of coverage not otherwise
available under Ryan's standard health plan; premium payments of $150 for
an additional $100,000 in life insurance above the coverage available to
salaried employees generally; Ryan's estimate of the imputed benefit of
$21,324 of split-dollar life insurance coverage (including the value of the
term insurance portion) purchased by Ryan's on Mr. McCranie's life in the
policy amount of $1,695,000; Company contributions to Ryan's deferred
compensation plan, amounting to $4,259; and $5,288 for the cost of
equivalent term insurance related to the insurance plan described in
Footnote 3(c) above.
(6) "All Other Compensation" for Mr. Grant includes Ryan's contributions of
$1,916 to the 401(k) Plan to match a portion of the 2001 pre-tax elective
deferral contributions (included under Salary and Bonus) Mr. Grant made to
the Plan; estimated imputed premium amounts (based on prior claims history,
past administrative charges and estimated medical inflation rates) of
$5,324 for health insurance providing a level of coverage not otherwise
available under Ryan's standard health plan; premium payments of $150 for
an additional $100,000 in life insurance above the coverage available to
salaried employees generally; Ryan's estimate of the imputed benefit of
$20,118 of split-dollar life insurance coverage (including the value of the
term insurance portion) purchased by Ryan's on Mr. Grant's life in the
policy amount of $1,675,000; Company contributions to Ryan's deferred
compensation plan, amounting to $3,799; and $889 for the cost of equivalent
term insurance related to the insurance plan described in Footnote 3(c)
above.
(7) "All Other Compensation" for Mr. Shaw includes Ryan's contributions of
$1,240 to the 401(k) Plan to match a portion of the 2001 pre-tax elective
deferral contributions (included under Salary and Bonus) Mr. Shaw made to
the Plan; estimated imputed premium amounts (based on prior claims history,
past administrative charges and estimated medical inflation rates) of
$5,324 for health insurance providing a level of coverage not otherwise
available under Ryan's standard health plan; premium payments of $150 for
an additional $100,000 in life insurance above the coverage available to
salaried employees generally; Ryan's estimate of the imputed benefit of
$28,085 of split-dollar life insurance coverage (including the value of the
term insurance portion) purchased by Ryan's on Mr. Shaw's life in the
policy amount of $1,782,000; Company contributions to Ryan's deferred
compensation plan, amounting to $20,827; and $2,704 for the cost of
equivalent term insurance related to the insurance plan described in
Footnote 3(c) above.
(8) "All Other Compensation" for Mr. Hart includes Ryan's contributions of
$1,200 to the 401(k) Plan to match a portion of the 2001 pre-tax elective
deferral contributions (included under Salary and Bonus) Mr. Hart made to
the Plan; estimated imputed premium amounts (based on prior claims history,
past administrative charges and estimated medical inflation rates) of
$5,324 for health insurance providing a level of coverage not otherwise
available under Ryan's standard health plan; premium payments of $150 for
an additional $100,000 in life insurance above the coverage available to
salaried employees generally; Ryan's estimate of the imputed benefit of
$23,339 of split-dollar life insurance coverage (including the value of the
term insurance portion) purchased by Ryan's on Mr. Hart's life in the
policy amount of $1,623,000; Company contributions to Ryan's deferred
compensation plan, amounting to $9,573; and $927 for the cost of equivalent
term insurance related to the insurance plan described in Footnote 3(c)
above.
</FN>
8
SUMMARY OF OPTION GRANTS, OPTION EXERCISES AND HOLDINGS
The following table illustrates the value of the stock options granted
to the Named Executive Officers during fiscal 2001:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------
MARKET PRICE
NUMBER OF REQUIRED TO
SECURITIES PERCENT OF TOTAL REALIZE GRANT
UNDERLYING OPTIONS GRANTED EXERCISE GRANT DATE DATE PRESENT
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#)(1) 2001 FISCAL YEAR ($/SH) DATE VALUE ($)(2) ($/SH)(3)
- -------------------- ---------------- ------------------ ----------- ---------- ------------ ---------------
Charles D. Way.... 40,000 4.7% 17.79 10/19/2011 291,600 25.08
G. Edwin McCranie. 25,000 3.0% 17.79 10/19/2011 182,250 25.08
Fred T. Grant, Jr. 20,000 2.4% 17.79 10/19/2011 145,800 25.08
Alan E. Shaw...... 22,500 2.7% 17.79 10/19/2011 164,025 25.08
James R. Hart..... 15,000 1.8% 17.79 10/19/2011 109,350 25.08
- -----------------
<FN>
(1) These options are all currently exercisable.
(2) In accordance with Securities and Exchange Commission ("SEC") rules, the
dollar amounts under this column were calculated using the Black-Scholes
based option valuation model. Use of this model should not be construed as
an endorsement of its accuracy at valuing options. All stock option models
require a prediction about the future movement of stock price. The
valuation assumes an expected volatility of 0.29, a 0% dividend yield, a
7-year holding term prior to exercise, and a risk-free rate of return of
4.53%, reflecting the yield on a zero coupon U.S. Treasury security for the
holding term prior to exercise of the option. No adjustment was made for
non-transferability or risk of forfeiture. The actual value of the options,
if any, will depend on the extent, if any, to which the market value of the
Common Stock exceeds the exercise price of the option on the date of
exercise.
(3) In order to obtain the Grant Date Present Value shown, the market price of
the Common Stock would need to be $25.08 in present value terms.
</FN>
The following table shows option exercises, the unexercised options
held as of the end of fiscal 2001 and the value of unexercised options for each
Named Executive Officer.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT 2001 OPTIONS AT 2001
FISCAL YEAR END (#) FISCAL YEAR END ($)(2)
SHARES ----------------------- ---------------------------
ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXECISE (#) ($) (1) UNEXERCISABLE UNEXERCISABLE
- --------------------- -------------- --------------- ----------------------- ---------------------------
Charles D. Way..... 120,000 1,177,800 260,000/0 2,807,100/0
G. Edwin McCranie.. 20,000 137,525 173,000/0 1,900,105/0
Fred T. Grant, Jr.. 41,000 419,955 101,200/0 1,009,992/0
Alan E. Shaw (3) .. 39,000 331,110 124,700/0 1,252,802/0
James R. Hart...... 20,900 122,172 107,924/0 1,199,005/0
- ----------------------
<FN>
(1) The value realized of exercised options is the product of (a) the excess
of the per share fair market value of the Common Stock on the date of
exercise over the per share option exercise price, and (b) the number of
shares acquired upon exercise.
(2) The value of unexercised in-the-money options for each officer was
calculated as follows: (a) the product of the market price of the Common
Stock as of January 2, 2002, and the number of shares covered by the
in-the-money options held by such officer, minus (b) the product of the
exercise price with respect to such options and the number of shares
covered by such options.
</FN>
9
(3) Mr. Shaw exercised options covering 18,700 shares on February 14, 2002. To
comply with SEC rules, this exercise will be reported in the proxy
statement for the 2003 annual meeting.
DEFERRED COMPENSATION - SALARY CONTINUATION AGREEMENT
The Company is party to a Deferred Compensation - Salary Continuation
Agreement with Mr. Charles Way. The agreement provides for cash payments of
$60,000 per year for each of the 20 years following Mr. Way's retirement, death
or total disability, with retirement age set at 55. These benefits began vesting
10% per annum in 1987 and are now fully vested. The total deferred compensation
liability as of December 31, 2001 relating to this agreement was $343,728. An
aggregate of $25,461 of deferred compensation was accrued under this agreement
for the benefit of Mr. Way during fiscal 2001. Ryan's is the owner and
beneficiary of a life insurance policy on the life of Mr. Way. The Company
expects that the cost of benefits under this arrangement will be paid through a
combination of general corporate funds and the cash surrender value of the
insurance policy.
EXECUTIVE EMPLOYMENT AGREEMENTS
In February 2001, each of Messrs. Way, McCranie, Grant and Hart (each
an "Executive") entered into an Employment, Noncompetition and Severance
Agreement with Ryan's Family Steak Houses TLC, Inc. ("Ryan's TLC"), a
wholly-owned subsidiary of Ryan's. Each agreement specified a base annual salary
for the officer, subject to annual review by Ryan's Board of Directors. In
addition to annual salary, each agreement provides for participation in Ryan's
TLC's Executive Bonus Plan, discretionary stock option grants and other
executive-level benefits.
Each agreement contains an "evergreen" term provision so that, until an
Executive is 60 years old, the term of the agreement runs for the next two-year
period. Either Ryan's TLC or the Executive may cause the term to become fixed to
a two-year term from the date of notice. At age 60, the term converts to a
five-year period, with the agreement expiring at age 65.
The agreement also contains noncompetition provisions. Each Executive
is prohibited from hiring current and certain former Ryan's employees and from
working for a competing restaurant business for a period of two years following
termination of employment at Ryan's.
Each Executive is also eligible for severance payments resulting from
certain termination circumstances. Severance payments, when applicable, will be
based on the sum of Executive's most recent annual salary and the average of the
most recent three years of bonus payments (this sum is referred to as "Annual
Compensation"). If an Executive is terminated by Ryan's for reasons other than
"cause" (or for "cause" after a change of control, as defined in the agreement),
the severance payment will be equal to one times Annual Compensation or, for
termination without cause after a change of control, two times Annual
Compensation. "Cause" includes material criminal fraud, material dereliction of
duties, intentional material damage to Ryan's TLC's property or business,
commission of a material felony or repeated failure to carry out the Board's or
the CEO's reasonable directions. Following a change of control, an "involuntary
termination" by the Executive results in a severance payment equal to two times
Annual Compensation, while a voluntary termination by the Executive after a
change of control results in a severance payment equal to one times Annual
Compensation. "Involuntary termination" is defined as a termination by the
Executive following a change of control due to a change in the Executive's
position, authority, status or duties, change in the agreement's terms
(including the rolling two-year termination date), reduction in compensation or
benefits, forced relocation outside the Greenville, South Carolina metropolitan
area or significant increase in travel requirements. In addition, termination by
the Executive due to a material breach of the agreement by Ryan's TLC (after
notice and a cure period) results in a severance payment equal to two times
Annual Compensation. All other termination circumstances do not result in any
severance payment.
10
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Ryan's directors, executive
officers, and greater-than-10% stockholders to file reports with the SEC and
NASDAQ on changes in their beneficial ownership of Ryan's Common Stock and to
provide the Company with copies of the reports. Based on review of these reports
and of certifications furnished to the Company, the Company believes that all of
these reporting persons complied with their filing requirements for 2001.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors
periodically submits to the Board recommendations respecting the salary, bonus
and other compensation to be provided to Ryan's executive officers and grants
options for shares of Ryan's Common Stock to the Company's executive officers
and employees. The Committee is composed entirely of independent, nonemployee
directors who have not served as officers of Ryan's and have no interlocking
relationships, as defined by the Securities and Exchange Commission. The
Committee provides the following report.
EXECUTIVE OFFICER COMPENSATION
The Committee attempts to act on the shareholders' behalf in
establishing executive compensation programs, for our shareholders ultimately
bear the cost of these programs. Ryan's adopts and administers its executive
compensation policies and specific executive compensation programs in accordance
with that objective. The Committee annually reviews Ryan's corporate performance
and that of its executive officers to determine appropriate compensation. The
Committee seeks to achieve a balance between our need to attract and retain
qualified and motivated executives, on the one hand, and maximizing our
operating performance, on the other.
The Committee's executive compensation philosophy is to set
compensation levels in its discretion that provide for compensation
opportunities that reflect company and individual performances. Ryan's current
executive compensation structure consists of base salary, incentive cash bonuses
and stock options.
Over the years, the Committee has attempted to set executive officer
cash compensation amounts at levels somewhat lower than levels that the
Committee believes prevail within the restaurant industry, and has complemented
these cash amounts with significant stock option grants.
The Committee adjusted the salaries for all executive officers except
Mr. Way in 2001 based upon the recommendations of Mr. Way. Mr. Way considered
factors that were generally subjective, such as his perception of individual
performance and the level of individual responsibility. Mr. Way recommended
increases in the base salaries of executive officers ranging from 4% to 7%. The
Committee determined that these increases were appropriate to compensate
executive officers for the increased level of responsibility associated with the
increase in Ryan's size.
The Committee generally grants stock options on an annual basis at an
exercise price equal to the stock market price at the time of grant. The grants
provide Ryan's executive officers and key employees with an equity ownership
opportunity in Ryan's and with incentives to maximize shareholder value. The
Committee can grant stock options at its discretion and is not required to award
grants within any given 12-month period. In October 2001, the Committee made an
option grant to each executive officer shown in the table titled "Option Grants
in Last Fiscal Year." In determining the size of any stock option grant, the
Committee considered the following qualitative factors: the Committee's
perception of Ryan's overall performance; the individual's performance; the
potential effect that the individual's future performance may have on Ryan's;
and the number of options previously granted to the individual. The Committee
gave each of these factors approximately equal weight.
11
During 2001, Alan Shaw, Vice President-Operations, was paid quarterly
bonuses based on four factors: same-store sales comparisons; net earnings per
share compared to the immediately preceding year; customer service as reported
through a "hidden shopper" program; and various other subjective considerations,
including management turnover, team work and creativity. The first two factors
were given a combined weight of approximately 80%. The Committee considered each
of these factors and awarded bonuses to Mr. Shaw as noted in the Summary
Compensation Table.
During 2001 the Committee continued an Executive Bonus Plan to provide
additional incentives to its other executive officers. The bonus plan covers
seven of Ryan's eight executive officers. Alan Shaw participates in the plan
described above. Pursuant to the plan, each year the Committee establishes a
percentage of each participating executive's annual base salary, ranging from
20% - 40%, as a target bonus amount. The executive is eligible to receive this
bonus amount, or a portion or multiple thereof, if the executive meets or
exceeds objectives set by the Committee.
In the case of all executive officers other than Charles Way and Alan
Shaw, the receipt of the target bonus was based upon the achievement of Company
objectives related to increases in same-store sales (50% weight), increases in
net earnings per share (20% weight), and subjective departmental and personal
objectives (30% weight). Ryan's performance during 2001 was significantly above
targeted levels for same-store sales and for net earnings per share. In
reviewing net earnings per share, the Committee also considered the impact of
the 52-week reporting period for 2001 compared to the 53-week reporting period
for 2000. Based on management's estimate, the 53rd week of 2000 added
approximately $.05 to 2000's net earnings per share. When combined with
performance of departmental and personal objectives, bonus payouts were
generally 184% greater than targeted levels.
In the case of Mr. Way, the receipt of his entire target bonus was
based upon the achievement of Company objectives related to increases in
same-store sales (70% weight) and increases in net earnings per share (30%
weight). Ryan's performance during 2001 was significantly above targeted levels
for same-store sales and for net earnings per share. In reviewing net earnings
per share, the Committee also considered the impact of the 52-week reporting
period for 2001 compared to the 53-week reporting period for 2000 discussed
above. Accordingly, Mr. Way's bonus payout was 184% greater than the targeted
level. In early 2002, the Committee considered each of these objectives and
awarded bonuses as noted in the Summary Compensation Table in accordance with
the Bonus Plan.
The Omnibus Budget Reconciliation Act of 1993 denies publicly traded
companies the ability to deduct for federal income tax purposes certain
compensation paid (including income on exercised stock option grants) to top
executive officers in excess of $1 million per person. The Committee intends to
administer Ryan's executive compensation programs in such a way that anticipated
compensation to executive officers will be fully deductible under the Internal
Revenue Code, including submitting plans for shareholder approval where
necessary and determining compensation on an objective basis where necessary.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Way joined Ryan's in 1979, has served as its President and Chief
Executive Officer since 1989, and became Chairman of the Board in 1992. In
setting Mr. Way's compensation, the Committee tends to set a relatively low base
salary for an individual with Mr. Way's responsibilities and emphasize stock
option grants as a component of his overall compensation package. The Committee
believes that this approach to Mr. Way's compensation has resulted in an
appropriate alignment of his long-term rewards from Ryan's with the interests of
shareholders.
During 2001, the Committee adjusted Mr. Way's base salary upward by
approximately 3%. In making this adjustment, the Committee considered subjective
factors including the perception of the Committee as to Mr. Way's overall
performance and objective factors such as the increase in Ryan's earnings per
share, operating margins, and return on equity. Each of these factors was given
approximately equal weight. In addition, Mr. Way received a bonus of $426,000
pursuant to the bonus plan described above because Ryan's same-store sales and
net earnings per share for 2001 significantly exceeded target levels.
12
In addition, in October 2001, the Committee granted Mr. Way options
with respect to 40,000 shares of Common Stock. In determining the size of this
grant, the Committee considered the following qualitative factors: the
Committee's perception of Ryan's overall performance; Mr. Way's performance; the
potential effect of his future performance on Ryan's; and the number of options
previously granted to him. Each of these factors was given approximately equal
weight. At fiscal 2001 year-end, the value of Mr. Way's outstanding exercisable
in-the-money stock options was $2,807,100 as compared to $479,471 at the end of
2000, an increase of 485.5%. The Committee believes that the stock options
provide Mr. Way with appropriate incentives to promote long-term shareholder
value.
COMPENSATION COMMITTEE
Brian S. MacKenzie, Chairman
Barry L. Edwards
Harold K. Roberts, Jr.
THE FOLLOWING REPORT DOES NOT CONSTITUTE SOLICITING MATERIAL AND IS NOT
CONSIDERED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER FILING BY RYAN'S
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, UNLESS THE COMPANY EXPRESSLY STATES OTHERWISE.
REPORT OF THE AUDIT COMMITTEE
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which was attached as Appendix A to the proxy statement
relating to the 2001 annual meeting. The Audit Committee is comprised of three
non-employee directors, all of whom are independent as defined in Rule
4200(a)(14) of the National Association of Securities Dealers' listing
standards.
In carrying out its responsibilities, the Audit Committee has:
o Reviewed and discussed the audited financial statements for the
year ended January 2, 2002, with Ryan's management and will meet
with the independent auditors at the April 2002 Audit Committee
meeting;
o Received from the independent auditors the matters required to be
discussed by the Statement on Auditing Standard No. 61,
Communication with Audit Committees and reviewed such matters and
will discuss these matters with the independent auditors at the
April 2002 Audit Committee meeting;
o Received from the independent auditors written disclosures
regarding auditor independence and the letter required by
Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and discussed with the
auditors their independence from Ryan's and its management;
o Reviewed the selection, application and disclosure of critical
accounting policies.
In addition, the chair of the Audit Committee reviewed quarterly
financial statements for 2001 and discussed these statements with the
independent auditors.
Based on the review and discussions described above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in Ryan's Annual Report on Form 10-K for the year ended
January 2, 2002, for filing with the Securities and Exchange Commission.
All members of the Audit Committee concur in this report.
Barry L. Edwards, Chairman
Harold K. Roberts, Jr.
James M. Shoemaker, Jr.
13
PERFORMANCE GRAPH
Below is a line graph comparing the cumulative, total shareholder
return on the Common Stock of Ryan's for the last five fiscal years with the
cumulative total returns of the NASDAQ Market Index and a peer group consisting
of all publicly traded companies whose SIC code is 5812, the code for eating
restaurants, over the same period (assuming a $100 initial investment and
dividend reinvestment). If you are a shareholder of record on March 6, 2002, the
Company will promptly furnish to you without charge the identity of the
companies included in the peer group. You may send requests to Ryan's, Post
Office Box 100, Greer, South Carolina 29652; Attention: Shareholder Relations.
Note: The stock price performance shown on the graph below does not
necessarily indicate future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURNS
AMONG RYAN'S FAMILY STEAK HOUSES, INC.,
NASDAQ MARKET INDEX AND SIC RESTAURANT INDEX FOR THE
FIVE-YEAR PERIOD ENDED JANUARY 2, 2002 (YEAR-END 2001)
[GRAPH OMITTED]
12/31/1996 12/31/1997 12/30/1998 12/29/1999 1/03/2001 1/02/2002
------------ --------------- ------------- ------------- ------------- ------------
RYAN'S FAMILY STEAK $100.00 124.55 181.82 122.73 139.10 302.55
HOUSES, INC.
SIC RESTAURANT INDEX $100.00 105.25 142.20 135.26 128.80 131.17
NASDAQ MARKET INDEX $100.00 122.32 172.52 304.29 191.25 152.46
PROPOSAL TO APPROVE THE 2002 STOCK OPTION PLAN
(ITEM #2 ON THE PROXY)
The Board of Directors and the Compensation Committee recommend that
the shareholders of the Company approve adoption of the Ryan's Family Steak
Houses, Inc. 2002 Stock Option Plan (the "Plan"). Under the Plan, the Board or
Compensation Committee would have the discretion to grant options for up to an
aggregate maximum of 2,500,000 shares of the Company's Common Stock. This
maximum number of shares may be appropriately adjusted to reflect any change in
capitalization of the Company resulting from a stock dividend, recapitalization,
merger, reorganization, consolidation, stock split or similar event affecting
the characteristics of the shares of Common Stock of the Company. The Board and
Compensation Committee recommend approval of the Plan because it will provide
the Company's key personnel who participate in the Plan with an incentive to
maximize shareholder value by better aligning their compensation with the
interests of the Company's shareholders. Proceeds received by the Company from
the sale of shares pursuant to options granted under the Plan will be used for
general corporate purposes as determined by the Board.
The purpose of the Plan is to promote the growth and profitability of
the Company and its subsidiaries ("Subsidiaries") by increasing the personal
participation of key personnel in the continued growth and financial success of
the Company and the Subsidiaries by enabling the Company and the Subsidiaries to
attract and retain key personnel of outstanding competence and by providing such
key personnel with an equity opportunity in the Company.
The Compensation Committee or a committee of the Board of Directors
(the "Committee") that includes those members of the Compensation Committee who
are "outside directors" as defined for purposes of Section 162(m) ("Section
162(m)") of the Internal Revenue Code of 1986, as amended (the "Code") and
"non-employee directors" as defined for purposes of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, shall administer the Plan. The Committee
shall have complete authority to: (i) interpret all terms and provisions of the
Plan consistent with law; (ii) select from the group of those individuals
eligible to participate in the Plan the key personnel to whom options will be
granted; (iii) within the limits established in the Plan, determine the number
of shares to be subject to and the term of each option granted to each of such
personnel; (iv) prescribe the form of instrument(s) evidencing options granted
under the Plan; (v) determine the time or times at which options shall be
granted; (vi) make special grants of options when determined to be appropriate;
(vii) provide, if appropriate, for the exercise of options in installments
and/or subject to specified conditions; (viii) determine the method of exercise
of options granted under the Plan; (ix) determine any other terms and conditions
to which options shall be subject, so long as such terms and conditions are not
inconsistent with the Plan; (x) adopt, amend and rescind general and special
rules and regulations for the Plan's administration; and (xi) make all other
determinations necessary or advisable for the administration of the Plan.
Participation in the Plan is determined by the Committee and is limited
to those key personnel, who may or may not be officers or members of the Board
of Directors, of the Company or the Subsidiaries who have the greatest impact on
the Company's long-term performance. In determining the key personnel to whom
options shall be granted and the number of shares to be granted, the Committee
shall take into account, in each case, the level and responsibility of the
person's position, performance, compensation, assessed potential and other
factors the Committee shall deem relevant to accomplish the purpose of the Plan.
Directors of the Company or any Subsidiary who are not also employees of the
Company are eligible to participate in the Plan only under the conditions
described in the next paragraph. The Company believes that approximately 1,500
employees of the Company and its Subsidiaries are currently eligible to
participate in the Plan.
The Plan contains certain provisions for directors of the Company who,
on the date of grant, are neither officers nor employees of the Company or any
Subsidiary (each an "Eligible Director"). On October 31 of each calendar year
(or, if October 31 is not a business day, the immediately preceding business
day) (the "Grant Date"), each Eligible Director shall automatically receive from
the Company an option to acquire 5,000 shares of Common Stock at an exercise
price equal to the closing price of the Common Stock on the Grant Date. Each
such option shall be exercisable immediately and at any time thereafter until
and including the business day immediately preceding the tenth anniversary of
the Grant Date. Notice of each such option granted on a Grant Date shall be
given to each Eligible Director within a reasonable time after the Grant Date.
15
The stock to be offered under the Plan, upon exercise of options, may
be authorized but unissued common shares, shares previously issued and
thereafter acquired by the Company (if permitted by applicable law), or any
combination thereof. An aggregate of 2,500,000 shares are reserved for the grant
under the Plan of options. The maximum number of shares of the Company's Common
Stock that may be covered by options granted under the Plan in any fiscal year
of the Company to any single participant is 100,000. Provided that the
adjustment does not cause compensation payable under the Plan to lose its
deductibility under Section 162(m), the maximum number of shares subject to the
Plan shall be appropriately adjusted to reflect any change in the capitalization
of the Company resulting from a stock dividend, stock split, or other adjustment
contemplated by the Plan and occurring after the adoption of the Plan.
The Committee shall establish the term of each option, but the term
shall not exceed ten years (or five years for owners of more than 10% of the
total combined voting power of all classes of stock of the Company or of a
Subsidiary) from the date of grant. The Committee shall also determine the
schedule for exercising each option. If an option expires or terminates for any
reason without having been fully exercised, the unpurchased shares subject to
the option shall again be available for the purposes of the Plan.
The Committee may, in its sole discretion and subject to the provisions
of the Plan, grant to eligible participants options to purchase shares of the
Company's common stock. Options granted under this Plan may, at the discretion
of the Committee, be: (i) options which are intended to qualify as incentive
stock options ("ISOs") under Section 422 of the Code; (ii) Options which are not
intended to qualify under Section 422 of the Code ("NQOs"); or (iii) both of the
foregoing if granted separately, not in tandem. Options may be allotted to
participants in such amounts, subject to the limitations specified in the Plan,
as the Committee, in its sole discretion, may from time to time determine. In
the case of options intended to be ISOs, the aggregate fair market value
(determined at the time of the options' respective grants) of the shares with
respect to which such options are exercisable for the first time by a
participant during any calendar year (under all plans taken into account
pursuant to Section 422(d) of the Code (or any successor provision)) shall not
exceed $100,000.
Generally, a participant is not taxed upon either the grant or exercise
of an ISO. However, for purposes of determining an individual's alternative
minimum tax, the difference between the exercise price of an ISO and the market
price at the date of exercise gives rise to an adjustment of alternative minimum
tax income in the year of exercise. To qualify as an ISO, the stock acquired by
a participant must be held for at least two years after the option is granted
and one year after it is exercised. The Company does not receive a tax deduction
for the value of the option at date of grant or date of exercise of the option
or at any other time unless the participant disposes of the stock before the
holding periods expire.
In the event of a disposition of an ISO prior to the end of the one-
and two-year holding periods, the participant recognizes ordinary income in the
taxable year of the disposition equal to the difference between the option price
and the market value at date of exercise, and the Company receives a tax
deduction in an equal amount. If the participant holds the stock for the period
of time required for ISO qualification, then he will be taxed only on the gain
realized upon the disposition of the stock. His gain will be equal to the
difference between the sales price of the stock and its option price. There is
no requirement that ISOs must be exercised in the order granted. For all options
intended to be ISOs to receive ISO treatment, the fair market value of stock
subject to ISOs that become exercisable by an individual for the first time in
any future year cannot exceed $100,000, determined in accordance with fair
market value at the date of grant. If an ISO is exercised after the death of the
employee by the estate of the decedent, or by a person who acquired the right to
exercise such option by bequest or inheritance or by reason of the death of the
decedent, neither of the holding period requirements described above in this
paragraph apply.
If options granted under the Plan do not qualify as ISOs, they will be
treated as "non-qualified stock options" or "NQOs." Ordinarily NQOs do not
result in tax liability for Federal income tax purposes to the participant upon
grant. Generally, upon exercise of an NQO, the participant recognizes ordinary
income for Federal income tax purposes equal to the difference between the fair
16
market value of the stock on the day of exercise and the exercise price. The
Company receives a tax deduction for the amount the participant reports as
ordinary income by reason of the exercise if the amount of ordinary income the
participant should recognize is included in the participant's income reported on
a timely Form W-2 or 1099. Upon a subsequent sale or disposition of the stock
received from exercise of an option, the holder is generally taxable on any
excess of the selling price over its fair market value at the date of exercise.
Subject to the provisions of the Plan, an option granted under the Plan
may be exercisable at such time or times after the date of grant, on such
schedule, and upon such conditions as may be determined by the Committee at the
time of grant (except for grants of options to Eligible Directors, which are
exercisable at the times described above).
Any option granted under the Plan (other than an option granted to a
person who was an executive officer of the Company (as designated by the Board
of Directors) at the time of the grant of the option (a "Grant-Date Officer"))
shall terminate in full (whether or not previously exercisable) prior to the
expiration of its term on the date the optionee ceases to be a director of the
Company or an employee of the Company or any Subsidiary of the Company, except
as follows:
(a) if the optionee dies or becomes permanently and totally disabled,
vested ISOs may be exercised up to one year after the date of
death or termination of employment due to disability, and vested
NQOs may be exercised up to two years after the date of death or
termination of employment due to disability;
(b) if the optionee resigns with the consent of the Company or has his
or her directorship with the Company or employment with the
Company or any Subsidiary terminated by the Company or any
Subsidiary for any reason other than because of an "Immediate
Termination Event" (as defined below), the optionee may exercise
options vested as of the termination date for up to 3 months after
the optionee ceases to be a director or employee;
(c) if the optionee retires with the consent of the Company after the
optionee has reached his or her 55th birthday and has at least 10
years of service with the Company or any Subsidiary, the optionee
may exercise options vested as of the date of retirement for the
remainder of their term; or
(d) if the optionee retires with the consent of the Company in any
circumstance not covered by the preceding clause (c), the optionee
may exercise options vested as of the date of retirement for up to
2 years after such date.
In the case of an option granted to a Grant-Date Officer, the
termination of such participant's employment for a reason other than an
Immediate Termination Event (as defined below) shall not affect the term of the
option, and the option shall be exercisable by the option holder or his or her
personal representative for its remaining term notwithstanding such termination
of employment.
An "Immediate Termination Event" means termination of employment or
directorship by reason of: (i) failure to pass a drug test administered by the
Company or any Subsidiary; (ii) obvious intoxication on the job or possession of
any alcoholic substance on the premises of the Company or any Subsidiary; (iii)
misuse of Company or Subsidiary assets (which shall include but not be limited
to cash, inventory and/or equipment); (iv) gross misconduct in connection with
the performance of job duties for the Company or any Subsidiary; or (v)
conviction of a felony or entry of a guilty or nolo contendere plea to a felony
offense by the individual. If an optionee has his or her directorship with the
Company or employment with the Company or a Subsidiary terminated because of an
Immediate Termination Event, all options held by such participant shall
terminate in full (whether or not previously exercisable) on the date that the
participant ceases to be an employee or a director.
Under Section 422 of the Code, an ISO will lose its qualification as an
ISO and be treated as an NQO if not exercised within three months of termination
of the participant's employment with the Company (the three-month period is
extended to one year in cases of disability and does not apply in cases of
death). The expiration dates described above would, in certain instances, permit
an optionee to exercise an option granted as an ISO to be exercised beyond the
statutory deadline for exercise of an ISO. Thus options originally classified as
ISOs exercised by optionees, or their representatives, who seek to take full
advantage of the expiration dates described above could lose their ISO status
and be taxed as NQOs.
17
In no event may an Option be exercised after the expiration of its
fixed term.
Options granted pursuant to the Plan are not transferable except by
will, by the laws of descent and distribution or pursuant to a domestic
relations order. Options granted pursuant to the Plan that are intended to
qualify as ISOs are not transferable except by will or the laws of descent and
distribution and during a participant's lifetime are exercisable only by him or
her.
The price per share at which each option granted under the Plan may be
exercised shall be the price as determined by the Committee at the time of grant
based on criteria adopted by the Committee at the time of grant in good faith;
provided, however, that in no event shall the exercise price per share of an
option be less than 100% of the fair market value of the Common Stock on the
date such option is granted (or 110% for owners of more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary).
Fair market value is the closing price per share of the Common Stock as quoted
on the NASDAQ National Market. The closing price of the Common Stock, as quoted
on the NASDAQ National Market, on March 21, 2002 was $24.35 per share. Other
than adjustments for stock splits, stock dividends and similar events, the price
per share at which an option may be exercised may not be changed after the date
of grant.
A participant may exercise an option by completing each of the
following steps:
(a) indicating in writing the decision to exercise the option and
delivering such notice to the Company;
(b) tendering to the Company payment in full in cash, or in shares of
the Company's Common Stock, of the exercise price for the shares
for which the option is exercised;
(c) tendering to the Company payment in full in cash, or in shares of
the Company's Common Stock, of the amount of all federal and
state withholding or other employment taxes applicable to taxable
income, if any, of the holder resulting from such exercise; and
(d) complying with such other reasonable requirements as the
Committee may establish.
The Plan provides that it may be suspended, terminated or amended by
the Committee, except that shareholder approval would be required in the event
an amendment were to:
(a) materially increase the benefits accruing to participants;
(b) increase the number of securities issuable under the Plan (other
than an increase pursuant to the antidilution provisions of the
Plan);
(c) change the class of individuals eligible to receive options; or
(d) otherwise materially modify the requirements for eligibility.
The Plan provides that it shall terminate on the close of business on
April 30, 2012, and no option shall be granted under the Plan after that date,
but the termination shall not affect any option previously granted under the
Plan.
All of the Company's executive officers and other key personnel are
currently eligible to participate in the Plan.
Each of the directors and executive officers of the Company (including
those named in this Proxy Statement), as a potential participant in the Plan,
could be deemed to have an interest in approval of the Plan.
Because shares of the Company's Common Stock will be issued upon
exercise of options granted pursuant to the Plan, the proportional ownership of
the Company by existing shareholders will be reduced.
The Committee has not yet made any grants under the Plan and is unable
to predict the exact number of options that will be granted under the Plan to
officers or directors. The Committee expects, however, that in 2002 it will
grant options under the Plan to officers and directors at levels similar to
those granted during 2001. The options granted to directors during 2001 are
discussed on page 4; options granted to Named Executive Officers during 2001 are
shown on the table on page 9. During 2001 the Company granted options with
18
respect to an aggregate of 152,000 shares of Common Stock to executive officers
as a group, options with respect to 25,000 shares of Common Stock to directors
who are not executive officers as a group, and options with respect to an
aggregate of 623,000 shares of Common Stock to employees (including all current
officers who are not executive officers) as a group.
The Plan is being submitted to the shareholders of the Company for
approval in order to qualify the Plan under the incentive stock option rules of
the Code, in order to permit options issued under the plan to qualify for
exemption from Section 162(m) of the Code and because of the requirements of
NASDAQ. Section 162(m) generally denies a corporate income tax deduction for
annual compensation in excess of $1,000,000 paid to the chief executive officer
and the four most highly compensated officers of a public company (who, in each
proxy statement, will be the Named Executive Officers for such year). Certain
types of performance-based compensation, including certain types of stock
options, can be excluded from this deduction limit.
For the Plan to be approved, the number of votes cast in favor of the
Plan must exceed the number of votes cast against the Plan. Broker non-votes and
abstentions have no effect on the vote pertaining to the Plan. If the Plan is
not approved by the requisite shareholder vote described above, it will not
become effective. By approving the Plan, shareholders will be approving, among
other things, the class of employees and the class of directors eligible to
participate in the Plan and the limits on various compensation awards contained
in the Plan. Shareholders have no dissenters' rights or rights of appraisal with
respect to the vote to approve the Plan.
THE BOARD OF DIRECTOR UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE RYAN'S FAMILY STEAK HOUSES, INC. 2002 STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM #3 ON THE PROXY)
The Board has appointed KPMG LLP, independent certified public
accountants, as auditors for Ryan's for the current fiscal year and to examine
and report to shareholders on the financial statements as of and for the year
ending January 1, 2003, and has requested that shareholders ratify the
appointment. Representatives of KPMG LLP will be present at the Annual Meeting.
They will have the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions that the shareholders may
have. KPMG LLP has acted for Ryan's in this capacity since 1981, and neither the
firm nor any of its members has any relation with Ryan's except in the firm's
capacity as auditors and tax advisors.
AUDIT FEES
The aggregate fees billed for professional services rendered for the
audit of Ryan's annual financial statements for the most recent fiscal year and
the reviews of the financial statements included in Ryan's Forms 10-Q for that
fiscal year were $72,400.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed for professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X rendered by KPMG LLP for the
most recent fiscal year.
ALL OTHER FEES
The aggregate fees billed for all professional services rendered by
KPMG LLP for the most recent fiscal year other than those described in the prior
two paragraphs were approximately $20,400 for an audit of an employee benefit
plan and for various tax and accounting services.
The Audit Committee has considered whether the provision of these
services is compatible with maintaining KPMG LLP's independence.
19
VOTE REQUIRED
Ratification of the appointment of KPMG LLP as independent auditors
will require that, of the shares present at the Annual Meeting in person or by
proxy and voting on the matter, there be more positive votes than negative
votes. Abstentions and broker non-votes will not be counted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF KPMG LLP AS INDEPENDENT AUDITORS.
SOLICITATION OF PROXIES
Ryan's will pay for soliciting proxies. Officers and other regular
employees of Ryan's may solicit proxies by telephone, e-mail, telegram or
personal interview for no additional compensation. Ryan's has engaged W. F.
Doring & Company to solicit proxies and distribute materials to brokerage
houses, banks, custodians, nominees and fiduciaries for a fee of approximately
$10,000. Ryan's will reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses for forwarding
solicitation materials to shareholders.
PROPOSALS OF SHAREHOLDERS
Any shareholder who wishes to present a proposal at the 2003 Annual
Meeting of Shareholders and have his or her proposal included in the proxy
statement and proxy card relating to that meeting must deliver such proposal to
Ryan's no later than November 28, 2002. The proposal must comply with the rules
of the SEC relating to shareholder proposals. Shareholders desiring to make a
recommendation to the Nominating Committee of the Board of Directors should
submit the name(s) and business background(s) of the proposed nominee(s) for the
Board by no later than November 28, 2002. With respect to a shareholder proposal
for the 2003 Annual Meeting of Shareholders that is not intended to be included
in the proxy materials relating to the meeting, the proposal must be received by
Ryan's at least forty-five (45) days prior to the shareholders meeting at which
the proposal is to be presented. After that date, the proposal will not be
considered timely. Shareholders may send their proposals to Ryan's, Attention:
Janet J. Gleitz, Post Office Box 100, Greer, South Carolina 29652.
FINANCIAL INFORMATION
THE COMPANY'S 2001 ANNUAL REPORT IS ENCLOSED. THE COMPANY WILL PROVIDE
WITHOUT CHARGE TO ANY SHAREHOLDER OF RECORD AS OF MARCH 6, 2002, WHO REQUESTS IN
WRITING, A COPY OF THE 2001 ANNUAL REPORT OR THE 2001 ANNUAL REPORT ON FORM 10-K
(WITHOUT EXHIBITS), INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES, IF ANY, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
SHAREHOLDERS MAY DIRECT REQUESTS TO RYAN'S FAMILY STEAK HOUSES, INC., 405
LANCASTER AVENUE, GREER, SOUTH CAROLINA 29650, OR POST OFFICE BOX 100, GREER,
SOUTH CAROLINA 29652, ATTENTION: JANET J. GLEITZ, SECRETARY. REQUESTS CAN ALSO
BE MADE THROUGH THE COMPANY'S WEBSITE AT WWW.RYANSINC.COM.
20
OTHER BUSINESS
As of the date of this Proxy Statement, management was not aware that
any business not described above would be presented for consideration at the
Annual Meeting. If any other business properly comes before the meeting, the
shares represented by proxies will be voted according to the best judgment of
the person voting them.
By Order of the Board of Directors,
/s/ Janet J. Gleitz
Janet J. Gleitz
Secretary
Greer, South Carolina
March 28, 2002
21
APPENDIX A
|X| PLEASE MARK VOTE AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE BELOW-LISTED
PROPOSALS.
- ------------------------------------------------------------------------
1) Elect as directors the seven nominees listed below to serve until
the Annual Meeting of Shareholders in the year 2003 or until their
successors are elected and qualified:
NOMINEES: (01) Charles D. Way, (02) G. Edwin McCranie, (03) Barry
L. Edwards, (04) James M. Shoemaker, Jr., (05) Harold K.
Roberts, Jr., (06) James D. Cockman, (07) Brian S. MacKenzie
FOR WITHHELD
ALL |_| |_| FROM ALL
NOMINEES NOMINEES
|_| _____________________________________________
For all nominees except as noted above
- ------------------------------------------------------------------------
RYAN'S FAMILY STEAK HOUSES, INC.
- ------------------------------------------------------------------------
2) To approve the Ryan's Family Steak Houses, Inc. 2002 Stock Option
Plan.
|_|For |_| Against |_| Abstain
3) Ratify the appointment of KPMG LLP as independent auditors for
Ryan's for the current fiscal year:
|_| For |_| Against |_| Abstain
THIS PROXY CARD WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSALS.
Mark the box at right if you plan to attend the Annual Meeting. |_|
Mark box at right if an address change or comment has |_|
been noted on the reverse side of this card.
In its discretion, the proxy is authorized to vote upon such other business as
properly may come before the Annual Meeting and any and all adjournments
thereof and on matters incident to the conduct of the meeting.
If any other business is presented at the Annual Meeting, this proxy card will
be voted by the person(s) appointed proxy in his or their best judgment. At
the present time, the Board of Directors knows of no other business to be
presented at the Annual Meeting.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Signature___________________________________ Date: ____________________
Signature___________________________________ Date: ____________________
RYAN'S FAMILY STEAK HOUSES, INC.
405 Lancaster Avenue (29650)
Post Office Box 100 (29652)
Greer, South Carolina
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 2002 ANNUAL MEETING OF
SHAREHOLDERS
The undersigned shareholder of Ryan's Family Steak Houses, Inc. (the "Company"),
hereby revoking all previous proxies, hereby appoints Charles D. Way and G.
Edwin McCranie and either of them, the attorney or attorneys or proxy or
proxies, with full power of substitution, to act for and in the name of the
undersigned to vote all shares of Common Stock of the Company that the
undersigned shall be entitled to vote, at the 2002 Annual Meeting of
Shareholders of the Company, to be held at the Greenville/Spartanburg Airport
Marriott, Greenville, South Carolina, on Wednesday, May 1, 2002, at 11:00 a.m.
local time, and at any and all adjournments thereof, as set forth on the reverse
side.
Receipt of the Notice of the Meeting, the accompanying Proxy Statement and the
Annual Report to Shareholders is hereby acknowledged.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
Please mark, date and sign exactly as your name appears on this proxy card. When
shares are held jointly, both holders should sign. When signing as attorney,
executor, administrator, trustee, guardian or custodian, please give your full
title. If the holder is a corporation or a partnership, the full corporate or
partnership name should be signed by a duly authorized officer.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
If so, print new address below:
- ----------------------------------- ---------------------------------
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
APPENDIX B
RYAN'S FAMILY STEAK HOUSES, INC.
2002 STOCK OPTION PLAN
Effective as of May 1, 2002
RYAN'S FAMILY STEAK HOUSES, INC.
2002 STOCK OPTION PLAN
1. PURPOSE
-------
The purpose of the Ryan's Family Steak Houses, Inc. Stock Option Plan
(the "Plan") is to promote the growth and profitability of Ryan's Family Steak
Houses, Inc. (the "Company") and its subsidiaries from time to time (the
"Subsidiaries") by increasing the personal participation of key personnel in the
continued growth and financial success of the Company and the Subsidiaries by
enabling the Company and the Subsidiaries to attract and retain key personnel of
outstanding competence and by providing such key personnel with an equity
opportunity in the Company. This purpose will be achieved through the grant of
stock options ("Options") to purchase shares of the common stock of the Company.
2. ADMINISTRATION
--------------
The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Compensation Committee"); provided, however,
that, if the Compensation Committee includes members who are not "outside
directors" (within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor provision ("Section 162(m)")) or
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 ("Rule 16b-3")) the Plan shall be administered
by a special committee of the Board of Directors that includes those members of
the Company's Compensation Committee (not less than two) who are "outside
directors" and "non-employee directors." The administering committee shall be
referred to herein as the "Committee." The Committee shall have complete
authority to: (i) interpret all terms and provisions of the Plan consistent with
law; (ii) select from the group of those individuals eligible to participate in
the Plan the key personnel to whom Options shall be granted; (iii) within the
limits established herein, determine the number of shares to be subject to and
the term of each Option granted to each of such personnel; (iv) prescribe the
form of instrument(s) evidencing Options granted under this Plan; (v) determine
the time or times at which Options shall be granted; (vi) make special grants of
Options when determined to be appropriate; (vii) provide, if appropriate, for
the exercise of Options in installments and/or subject to specified conditions;
(viii) determine the method of exercise of Options granted under the Plan; (ix)
determine any other terms and conditions to which Options shall be subject, so
long as such terms and conditions are not inconsistent with this Plan; (x)
adopt, amend and rescind general and special rules and regulations for the
Plan's administration; and (xi) make all other determinations necessary or
advisable for the administration of this Plan.
Any action which the Committee is authorized to take may be taken
without a meeting if all the members of the Committee sign a written document
authorizing such action to be taken, unless different provision is made by the
Bylaws of the Company or by resolution of the Committee.
The Committee may designate selected Board members or certain employees
of the Company to assist the Committee in the administration of the Plan and may
grant authority to such persons to execute documents including Options on behalf
of the Committee; subject in each such case to the requirements of Rule 16b-3
and Section 162(m).
No member of the Board or Committee or employee of the Company
assisting the Board or Committee pursuant to the preceding paragraph shall be
liable for any action taken or determination made in good faith.
2
3. ELIGIBILITY AND FACTORS TO BE CONSIDERED IN GRANTING OPTIONS
------------------------------------------------------------
Participation in this Plan shall be determined by the Committee and
(other than grants pursuant to Section 5 hereof) shall be limited to those key
personnel, who may or may not be officers or members of the Board of Directors,
of the Company and the Subsidiaries who have the greatest impact on the
Company's long-term performance. In making any determination as to the key
personnel to whom Options shall be granted and as to the number of shares to be
subject thereto, the Committee shall take into account, in each case, the level
and responsibility of the position, performance, compensation, assessed
potential and such other factors as the Committee shall deem relevant to the
accomplishment of the purposes of the Plan.
Directors of the Company or any Subsidiary who are not also employees
of the Company or any Subsidiary are not eligible to participate in this Plan,
except pursuant to Section 5 of the Plan. Options may be granted under this Plan
only for a reason connected with employment or directorship.
4. STOCK SUBJECT TO PLAN
---------------------
The stock to be offered under this Plan, upon exercise of Options, may
be authorized but unissued common shares, shares previously issued and
thereafter acquired by the Company (if permitted by applicable law), or any
combination thereof. An aggregate of 2,500,000 shares are reserved for the grant
of Options under this Plan, any or all of which, at the Committee's discretion,
may be intended to qualify as incentive stock options under Section 422 of the
Code. The maximum number of shares of the Company's common stock that may be
covered by Options granted under the Plan in any fiscal year of the Company to
any single participant is 100,000. Provided that the adjustment does not cause
compensation payable under this Plan to lose its deductibility under Section
162(m), the maximum number of shares subject to the Plan shall be appropriately
adjusted to reflect any change in the capitalization of the Company resulting
from a stock dividend, stock split, or other adjustment contemplated by Section
15 of this Plan and occurring after the adoption of this Plan.
If an Option granted hereunder shall expire or terminate for any reason
without having been fully exercised, the unpurchased shares subject thereto
shall again be available for the purposes of this Plan.
The Committee will maintain records showing the cumulative total of all
shares subject to Options outstanding under this Plan.
5. OPTIONS FOR DIRECTORS WHO ARE NEITHER OFFICERS NOR EMPLOYEES
------------------------------------------------------------
The grant of Options under this Section 5 shall be limited to those
directors of the Company who, on the date of grant, are neither officers nor
employees of the Company or any Subsidiary (each an "Eligible Director").
On October 31 of each calendar year (or, if October 31 is not a
business day, the immediately preceding business day) (the "Grant Date"), each
Eligible Director shall automatically receive from the Company an option to
acquire 5,000 shares of common stock at an exercise price equal to the closing
price of the Common stock on the Grant Date. Each such Option shall be
exercisable immediately and at any time and from time to time thereafter
(subject to Section 11 hereof) until and including the date which is the
business day immediately preceding the tenth anniversary of the Grant Date.
Notice of each such Option granted on a Grant Date shall be given to each
Eligible Director within a reasonable time after the Grant Date. The number of
shares subject to Options granted under this Section 5 shall not be subject to
adjustment pursuant to Section 15., provided, however, that the Committee, in
its sole discretion, may increase or decrease such number of shares from time to
time.
This Section 5 may not be amended more frequently than once every six
months, other than to comport with changes in the Internal Revenue Code or the
rules and regulations thereunder.
3
6. ALLOTMENT OF SHARES
-------------------
The Committee may, in its sole discretion and subject to the provisions
of the Plan, grant to eligible participants, on or after the effective date
hereof, Options to purchase shares of the Company's common stock. Options
granted under this Plan may, at the discretion of the Committee, be: (i) Options
which are intended to qualify as incentive stock options under Section 422 of
the Code (or any successor provision); (ii) Options which are not intended to so
qualify under Section 422 of the Code (or any successor provision); or (iii)
both of the foregoing if granted separately and not in tandem. Each Option
granted under this Plan must be clearly identified as to its status as an
incentive stock option or not.
Options may be allotted to participants in such amounts, subject to the
limitations specified in this Plan, as the Committee, in its sole discretion,
may from time to time determine.
In the case of Options intended to be incentive stock options, the
aggregate fair market value (determined at the time of the Options' respective
grants) of the shares with respect to which such Options are exercisable for the
first time by a participant hereunder during any calendar year (under all plans
taken into account pursuant to Section 422(d) of the Code (or any successor
provision)) shall not exceed $100,000.
Options not intended to qualify as incentive stock options under
Section 422 of the Code (or any successor provision) may be granted to any Plan
participant without regard to the Section 422 limitations.
7. OPTION PRICE
------------
The price per share at which each Option granted under the Plan may be
exercised shall be such price as shall be determined by the Committee at the
time of grant based on such criteria as may be adopted by the Committee in good
faith; provided, however, in no case shall the exercise price per share be less
than one hundred percent (100%) of the fair market value of the common stock at
the time such Option is granted (or 110% for owners of more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary). Other than adjustments pursuant to Section 15 of this Plan, the
price per share at which an Option granted under this Plan may be exercised
shall not be changed after the date of grant.
If the Company's shares of common stock are:
(1) actively traded on any national securities exchange or
NASDAQ system that reports their sales prices, fair market value shall
be the closing price per share on the date the Committee grants the
Option;
(2) otherwise traded over the counter, fair market value
shall be the average of the final bid and asked prices for the shares
of the Company's common stock as reported for the date the Committee
grants the Option; or
(3) not traded, the Committee shall consider any factor or
factors which it believes affects fair market value, and shall
determine fair market value without regard to any restriction other
than a restriction which by its terms will never lapse.
8. TERM OF OPTION
--------------
The term of each Option granted under the Plan shall be established by
the Committee, but shall not exceed ten (10) years (or five (5) years for owners
of more than 10% of the total combined voting power of all classes of stock of
the Company or of a Subsidiary) from the date of the grant.
4
9. TIME OF GRANTING OPTIONS
------------------------
The date of grant of an Option under the Plan shall, for all purposes,
be the date on which the Committee makes the determination of granting such
Option. Notice of the determination shall be given to each individual to whom an
Option is so granted, within a reasonable time after the date of such grant.
10. NON-TRANSFERABILITY
-------------------
An Option granted to a participant under this Plan shall not be
transferable by him or her except by will or the laws of descent and
distribution or, to the extent not inconsistent with the applicable provisions
of the Code, pursuant to a domestic relations order. In the case of an Option
intended to be an incentive stock option, such Option shall not be transferable
by a participant other than by will or the laws of descent and distribution and
during the optionee's lifetime shall be exercisable only by him or her.
11. EXERCISE OF OPTIONS
-------------------
Subject to the provisions of this Plan, an Option may be exercisable at
such time or times after the date of grant thereof, on such schedule, and upon
such conditions as may be determined by the Committee at the time of grant, and
an Option granted under Section 5 hereof shall be exercisable in accordance with
the provisions of Section 5 hereof. The Committee may, in its discretion,
temporarily suspend the exercise of Options from time to time for a period not
to exceed thirty (30) days.
Exercisability of Incentive Stock Options. Any Option granted under
this Plan which is intended to qualify as an incentive stock option under
Section 422 of the Code (or any successor provision) (other than an Option
granted to a person who was an executive officer of the Company (as designated
by the Board of Directors) at the time of the grant of the Option (a "Grant-Date
Officer")) shall terminate in full (whether or not previously exercisable) prior
to the expiration of its term on the date the optionee ceases to be a director
of the Company or an employee of the Company or any Subsidiary of the Company,
unless the optionee shall (a) die while a director of the Company or an employee
of the Company or such Subsidiary, in which case the participant's personal
representative or representatives may exercise all or part of the previously
unexercised portion of the Option at any time within one year after the
participant's death (but no later than the fixed term of the Option) for the
number of shares for which the Option could have been exercised at the time the
participant died, (b) become permanently or totally disabled within the meaning
of Section 22(e)(3) of the Code (or any successor provision) while a director of
the Company or an employee of the Company or a Subsidiary, in which case the
participant or his or her personal representative may exercise the previously
unexercised portion of the Option at any time within one year after termination
of his or her employment or directorship (but no later than the fixed term of
the Option) for the number of shares for which the Option could have been
exercised at the time the participant terminated his or her employment because
of becoming permanently or totally disabled, (c) resign with the consent of the
Company or have his or her directorship with the Company or employment with the
Company or any Subsidiary terminated by the Company or any Subsidiary for any
reason other than because of an "Immediate Termination Event" (as defined
below), in which case the participant may exercise the previously unexercised
portion of the Option at any time within three months after the participant's
resignation or termination (but no later than the fixed term of the Option) for
the number of shares for which the Option could have been exercised immediately
prior to such resignation or termination, (d) retire with the consent of the
Company after the optionee has reached his or her 55th birthday and has at least
10 years of service with the Company or any Subsidiary, in which case the
participant may exercise the previously unexercised portion of such Option at
any time prior to the expiration of its fixed term for the number of shares for
which the Option could have been exercised immediately prior to such retirement,
or (e) retire with the consent of the Company in any circumstance not covered by
5
the preceding clause (d), in which case the participant may exercise the
previously unexercised portion of such Option at any time within two years after
the participant's retirement (but no later than the fixed term of the Option)
for the number of shares for which the Option could have been exercised
immediately prior to such retirement.
Exercisability of Stock Options other than Incentive Stock Options. Any
Option granted under this Plan which is not intended to qualify as an incentive
stock option under Section 422 of the Code (or any successor provision) (other
than an Option granted to a Grant-Date Officer) shall terminate in full (whether
or not previously exercisable) prior to the expiration of its term on the date
the optionee ceases to be a director of the Company or an employee of the
Company or any Subsidiary of the Company, unless the optionee shall (a) die
while a director of the Company or an employee of the Company or such
Subsidiary, in which case the participant's personal representative or
representatives may exercise all or part of the previously unexercised portion
of the Option at any time within two years after the participant's death (but no
later than the fixed term of the Option) for the number of shares for which the
Option could have been exercised at the time the participant died, (b) become
permanently or totally disabled within the meaning of Section 22(e)(3) of the
Code (or any successor provision) while a director of the Company or an employee
of the Company or a Subsidiary, in which case the participant or his or her
personal representative may exercise the previously unexercised portion of the
Option at any time within two years after termination of his or her employment
or directorship (but no later than the fixed term of the Option) for the number
of shares for which the Option could have been exercised at the time the
participant terminated his or her employment because of becoming permanently or
totally disabled, (c) resign with the consent of the Company or have his or her
directorship with the Company or employment with the Company or any Subsidiary
terminated by the Company or any Subsidiary for any reason other than because of
an "Immediate Termination Event" (as defined below), in which case the
participant may exercise the previously unexercised portion of the Option at any
time within three months after the participant's resignation or termination (but
no later than the fixed term of the Option) for the number of shares for which
the Option could have been exercised immediately prior to such resignation or
termination, (d) retire with the consent of the Company after the optionee has
reached his or her 55th birthday and has at least 10 years of service with the
Company or any Subsidiary, in which case the participant may exercise the
previously unexercised portion of such Option at any time prior to the
expiration of its fixed term for the number of shares for which the Option could
have been exercised immediately prior to such retirement, or (e) retire with the
consent of the Company in any circumstance not covered by the preceding clause
(d), in which case the participant may exercise the previously unexercised
portion of such Option at any time within two years after the participant's
retirement (but no later than the fixed term of the Option) for the number of
shares for which the Option could have been exercised immediately prior to such
retirement.
Options to Grant-Date Officers. In the case of an Option granted to a
Grant-Date Officer, the termination of such participant's employment for a
reason other than an Immediate Termination Event (as defined below) shall not
affect the term of the Option and the Option shall be exercisable by the option
holder or his or her personal representative for its remaining term
notwithstanding such termination of employment.
Immediate Termination Event. An "Immediate Termination Event" means
termination of employment or directorship by reason of: (i) failure to pass a
drug test administered by the Company or any Subsidiary; (ii) obvious
intoxication on the job or possession of any alcoholic substance on the premises
of the Company or any Subsidiary; (iii) misuse of Company or Subsidiary assets
(which shall include but not be limited to cash, inventory and/or equipment);
(iv) gross misconduct in connection with the performance of job duties for the
Company or any Subsidiary; or (v) conviction of a felony or entry of a guilty or
nolo contendere plea to a felony offense by the individual. Notwithstanding
anything to the contrary herein, if a participant to whom an Option shall have
6
been granted shall have his or her directorship with the Company or employment
with the Company or a Subsidiary terminated because of an Immediate Termination
Event, all options held by such participant shall terminate in full (whether or
not previously exercisable) prior to their term on the date that the participant
ceased to be an employee of the Company or a Subsidiary or a director of the
Company.
No Exercise After Fixed Term of Option. In no event may an Option be
exercised after the expiration of its fixed term.
12. METHOD OF EXERCISE
------------------
Each Option granted under this Plan shall be deemed exercised when the
holder: (a) shall indicate the decision to do so in writing delivered to the
Company; (b) shall tender to the Company payment in full in cash, or in shares
of the Company's common stock, of the exercise price for the shares for which
the Option is exercised; (c) shall tender to the Company payment in full in
cash, or in shares of the Company's common stock, of the amount of all federal
and state withholding or other employment taxes applicable to the taxable
income, if any, of the holder resulting from such exercise; and (d) shall comply
with such other reasonable requirements as the Committee may establish.
No person, estate or other entity shall have any of the rights of a
shareholder with reference to shares subject to an Option until a certificate or
certificates for the shares has been delivered.
An Option granted under this Plan may be exercised for any lesser
number of shares than the full amount for which it could be exercised. Such a
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan for the remaining shares subject
to the Option. An optionee must exercise Options in 100 share increments, unless
the optionee is exercising Options upon or after termination of the optionee's
employment with the Company or a Subsidiary.
13. CANCELLATION AND REPLACEMENT OF OPTIONS
---------------------------------------
The Committee may, at any time or from time to time, permit the
voluntary surrender by the holder of any outstanding Option under this Plan
where such surrender is conditioned upon the granting to such holder of new
Option(s) for such number of shares as the Committee shall determine, or may
require such a voluntary surrender as a condition precedent to the grant of new
Option(s) to such holder.
The Committee shall determine the terms and conditions of new Options,
including the prices at and periods during which they may be exercised, in
accordance with the provisions of this Plan, all or any of which may differ from
the terms and conditions of the Options surrendered. Any such new Option(s)
shall be subject to all the relevant provisions of this Plan. In no event,
however, shall a cancellation and regrant be used to effect a "repricing" that
would result in a decrease in the per-share exercise price of an Option granted
under this Plan.
The shares subject to any Option(s) so surrendered shall no longer be
charged against the limitation provided in Section 4 of this Plan and may again
become shares subject to the Plan.
Except as may be otherwise required under Section 162(m) with respect
to "covered employees" (as defined in Section 162(m)), the granting of new
Option(s) in connection with the surrender of outstanding Option(s) under this
Plan shall be considered for the purposes of the Plan as the grant of new
Option(s) and not an alteration, amendment or modification of the Plan or of the
Option(s) being surrendered.
14. TERMINATION OF OPTIONS
----------------------
An Option granted under this Plan shall be considered terminated in
whole or in part to the extent that, in accordance with the provisions of this
Plan, it can no longer be exercised for any shares originally subject to the
Option. The shares subject to any Option, or portion thereof, which terminates
shall no longer be charged against the limitation provided in Section 4 of this
Plan and may again become shares subject to the Plan.
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15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
------------------------------------------
In the event of a stock dividend, recapitalization, merger,
reorganization, consolidation, stock split, stock consolidation or any other
change in the characteristics of the shares of common stock, the shares
available for purposes of this Plan or subject to Options outstanding hereunder
shall be correspondingly increased, diminished or changed, so that by exercise
of any outstanding Option the participant shall receive, without change in
aggregate purchase price, securities, as so increased, diminished or changed,
(and other property, if applicable) comparable to the securities (and property,
if applicable) he or she would have received if he or she had exercised his or
her Option prior to such event and had continued to hold the common stock so
purchased until affected by such event; provided with respect to incentive stock
options that, in the case of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the excess of the
aggregate fair market value of the shares subject to any Option immediately
after such event over the aggregate exercise price of such shares is not more
than the excess of the aggregate fair market value of all shares subject to the
Option immediately before such event over the aggregate exercise price of such
shares. The Committee, in its discretion, may elect not to make adjustments
pursuant to this Section 15. to the extent necessary to ensure that compensation
payable under this Plan does not lose its deductibility on account of Section
162(m).
Adjustments under this Section shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
16. COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION AND OTHER
REQUIREMENTS
- -------------------------------------------------------------------------
No certificate(s) for shares shall be executed and delivered upon
exercise of an Option until the Company shall have taken such action, if any, as
is then required to comply with the provisions of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the South Carolina
Uniform Securities Act, as amended, any other applicable state blue sky law(s)
and the requirements of any exchange or NASDAQ system on which the common stock
of the Company may, at the time, be listed.
In the case of the exercise of an Option by a person or estate
acquiring the right to exercise the Option by bequest or inheritance, the
Committee may require reasonable evidence as to the ownership of the Option and
may require such consent and releases of taxing authorities as it may deem
advisable.
17. NO RIGHT TO EMPLOYMENT
----------------------
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, shall confer upon any
participant under this Plan any right to continue in the employ or as a director
of the Company or any Subsidiary, or shall in any way affect the right and power
of the Company or any Subsidiary to terminate the employment or directorship of
any participant in this Plan at any time with or without assigning a reason
therefore, to the same extent as the Company or Subsidiary might have done if
this Plan had not been adopted.
18. AMENDMENT AND TERMINATION
-------------------------
The Committee may at any time suspend, amend or terminate this Plan.
The Committee may make such modifications of the terms and conditions of a
holder's Option as it shall deem advisable. No Option may be granted during any
suspension of the Plan or after such termination. Notwithstanding the foregoing
provisions of this Section, no amendment, suspension or termination shall,
8
without the consent of the holder of an Option, alter or impair any rights or
obligations under any Option theretofore granted under the Plan.
In addition to Committee approval of an amendment, if the amendment
would: (i) materially increase the benefits accruing to participants; (ii)
increase the number of securities issuable under this Plan (other than an
increase merely reflecting a change in capitalization such as a stock dividend
or stock split); (iii) change the class of employees eligible to receive
Options; or (iv) otherwise materially modify the requirements for eligibility,
then such amendment shall be approved by a majority of the shares of the
Company's capital stock present and voting either in person or by proxy, and
entitled to vote, at a meeting duly held of the stockholders of the Company.
19. USE OF PROCEEDS
---------------
The proceeds received by the Company from the sale of shares pursuant
to Options granted under the Plan shall be used for general corporate purposes
as determined by the Board.
20. INDEMNIFICATION OF COMMITTEE
----------------------------
In addition to such other rights of indemnification as they may have as
members of the Board, the members of the Committee shall, to the fullest extent
permitted by law, be indemnified by the Company against the reasonable expenses,
including attorney's fees, actually and necessarily incurred in connection with
the defense of any action, suit, investigation or other proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such Board
member (or Committee member, as applicable) is liable for gross negligence or
misconduct in the performance of his or her duties; provided that within 60 days
after institution of any such action, suit or proceeding the Board member (or
Committee member, as applicable) shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
21. EFFECTIVE DATE OF THE PLAN
--------------------------
This Plan shall be effective as of May 1, 2002, subject, however, to
approval by the requisite shareholder vote at the annual meeting of shareholders
of the Company held or to be held on or about May 1, 2002.
22. SECTION 162(m)
--------------
This Plan and its operation are intended to satisfy the requirements of
Section 162(m) with respect to permitting the deductibility of compensation for
those participants who are "covered employees" for purposes of Section 162(m).
In the event that any provision of this Plan or an Option granted under this
Plan does not so satisfy Section 162(m), that provision shall be deemed amended
to the extent necessary to satisfy Section 162(m).
9
23. DURATION OF THE PLAN
--------------------
Unless previously terminated by the Committee, this Plan shall
terminate at the close of business on April 30, 2012, and no Option shall be
granted under it thereafter, but such termination shall not affect any option
theretofore granted under the Plan.
10