Long-Term Incentive Plan
Attachment to Plan Document Dated as of September 1, 1999
This sets forth the CBRL Group, Inc. Long Term Incentive Plan as of September 1,
1999.
The Long-Term Incentive Plan has 3 components:
o Annual Stock Option Grant
o Targeted Performance Cash Award
o Special Non-Qualified Stock Option Grant
The annual stock option grant provides 70% of the Long Term Incentive (LTI)
compensation, while the Targeted Performance Cash Award and the Special
Non-Qualified Stock Option Grant comprise 30% of the program compensation. The
Cash Award can decrease, but it has no upside potential. The Special
Non-Qualified Stock Option Grant provides the upside performance reward
potential.
Plan
Duration: The duration of the program is 5 years beginning with FY
2000 (July 31, 1999) and concluding at the end of FY 2004
(July 31, 2004).
Eligible
Employees: Eligible employees are all corporate officers at CBRL Group,
Inc., and all officers at the level of Vice President and
above at Cracker Barrel Old Country Store, Inc. and at
Logan's Roadhouse, Inc.
Percentage
Award: An eligible officer will receive an award percentage that
is determined by his or her officer level within the company
(the "Percentage Award" or "LTI%"). The LTI target award
will be the officer's base salary multiplied by that
percentage. Part of the LTI target award compensation (70%)
will be granted as Annual Stock Options and part (30%) will
be a lump sum Targeted Performance Cash Award opportunity.
Each eligible officer will also be eligible for an
additional Special Non-Qualified Stock Option Grant. The
size of the Cash Award will determine the amount of the
additional Special Non-Qualified Option Grant.
A. ANNUAL STOCK OPTION GRANT
Annual Stock
Option Grant: The company historically has granted stock options to
eligible employees annually. We anticipate continuing this
practice going forward. An annual stock option grant will be
awarded based on the provisions of the CBRL Group, Inc.
Amended and Restated Stock Option Plan. The annual stock
option grant makes up 70% of the LTI target award
compensation.
Calculation
Of Grant: The individual stock option grant will be determined based
on each participant's base salary and officer level. The
company will follow an appropriate widely-used compensation
methodology and calculation (such as Black-Scholes, for
example) to arrive at the Stock Option Price Adjustment
Factor. For purpose of our examples, assume that this
factor is 40%. The Exercise Price of the annual stock
options will be the regular session closing priceof the
stock on the most recent trading day preceding the date of
grant.
Vesting
Period: These options typically vest over 3 years and, generally,
remain in effect until exercised or 10 years from the grant
date, whichever date is earlier, all subject to the specific
terms and conditions of each grant.
Annual Grant
Formula: Number of Options granted =(Annual Salary) x (LTI %) x (70%)
---------------------------------
(stock Exercise Price) x (40%)
B. TARGETED PERFORMANCE CASH AWARD
Cash
Award: Eligible employees receive a one time Targeted Performance
Cash Award amount based on their LTI target award. The LTI
target award amount is a percentage of salary based on the
employee's job and officer level in the organization (the
"LTI %") at the date the award is granted. The Targeted
Performance Cash Award is 30% of the LTI target award. The
Targeted Performance Cash Award is "front-loaded" for the
next 5 years, thus, the total amount represents compensation
for 5 years of service. Officers who join the plan after the
original award date will have their award pro-rated to
reflect the time remaining in the award period. The purpose
of these adjustments is to ensure that all participants are
on a level economic playing field. These Targeted
Performance Cash Award grants will "cliff vest" at the end
of FY 2004 (July 31, 2004) but could vest sooner if certain
specified performance goals are achieved. The Targeted
Performance Cash Award amount granted cannot increase. It
can decrease if the company stock price is below certain
pre-established levels at the close of business on the
vesting date.
Adjustments: After the beginning of the LTI program, for those hired in
or promoted to a position qualifying for LTI, the company
will adjust the award period to reflect the expected time in
position during the remaining LTI period. The adjustment
factor (the years remaining in the LTI plan) is multiplied
by the Targeted Annual Dollar Value of Cash Award. The net
result of this calculation is the Adjusted Targeted
Performance Cash Award. The specified Cash Award is the
maximum amount you can realize at the time the award vests,
and if the stock price drops below what it was at the time
of the award, the specified Cash Award will be adjusted
lower to reflect that drop.
Basic Grant
Formula: (Annual Salary) x (LTI %) x (30%) = Targeted Annual Dollar
Value of Cash Award
5-Year
Cash Award: (Annual Salary) x (LTI%) x (30%) x (5 yrs) = Targeted
Performance Cash Award
The pro-ration factor was 1 for the initial grant. Those who
entered the program after the initial grant date will have a
pro-ration factor based on the time remaining in the
program. For example, if 40 months are left in the program
the pro-ration factor will be 40/60.
Adjusted
Cash Award: (Annual Salary) x (LTI%) x (30%) x (5 yrs) x
(remaining mos / 60 mos) = Adjusted Targeted Performance
Cash Award
Vesting
Period: The 5-year or adjusted Cash Award will "cliff vest" at the
end of FY 2004 (July 31, 2004). The vesting period could be
accelerated to the end of FY 2002 or FY 2003 if certain
specified cumulative performance goals are achieved. The
amount of the award will be reduced pro-rata if the stock
price on the vesting date is below the award price (for
initial awards, $13.0625 - the closing price on October 27,
1999 - the day prior to the date of implementation of the
LTI plan).
Actual
Payment: If the cumulative goals are achieved such that the Targeted
Performance Cash Award vests early (in either 3 or 4 years)
the full value (the originally stated amount) of the Cash
Award grant will be paid. If vesting is in 5 years, the
full amount will only be paid if the stock price is
$13.0625 (or the specified price for plan awards made
subsequent to the initial award under the plan) or higher.
If the stock price is then lower than $13.0625 (or the
specified price for plan awards made subsequent to the
initial award under the plan), the cash payment will be
prorated based on the differential. For example, for an
initial award, if the stock price on the last day of FY 2004
is $30.00, the full Cash Award amount will be paid. However,
if the stock price is $12.00 on that date, the Cash Award
will be paid at 92% (12.00/13.0625) of the grant amount.
Performance
Criteria for
Accelerated
Vesting: CBRL participants have a goal based on Total Shareholder
Return in relation to the Stock Performance Graph of Peer
Composite performance over the period, as provided by the
Nasdaq Stock Market. On a cumulative basis, measured from
the last day of fiscal year 1999 (July 30, 1999), CBRL must
exceed the annual Total Return Index performance of the
Nasdaq - listed eating and drinking places composite peer
group (SIC Code 58xx) (the "Goal Index") as reported by the
Nasdaq Stock Market as of the end of each measurement fiscal
year as follows: at the end of the 3rd LTI plan year, CBRL
must exceed the Goal Index by 20% or more, at the end of the
4th LTI plan year, CBRL must exceed the Goal Index by 10%
or more.
Cracker Barrel Old Country Store and Logan's Roadhouse
participants have goals based on their cumulative Operating
Income growth. On a cumulative basis, Cracker Barrel Old
Country Store must meet or exceed its annual financial plan
Operating Income goal. On a cumulative basis, Logan's
Roadhouse must meet or exceed its annual financial plan
Operating Income goal. The cumulative basis in both these
cases will reflect the cumulative effects of annual
full-year variances, favorable and unfavorable, from the
applicable financial plan, beginning with fiscal year 2000.
Operating performance will be evaluated at the end of the
third year (fiscal 2002) for each covered company. If the
cumulative third-year goal (exceeding the stated target by
20%) has not been achieved in the third year, operating
performance will be reviewed again at the end of the fourth
year (fiscal 2003). If the cumulative fourth-year goal
(exceeding target by 10%) is not achieved in the fourth
year, the cash award will not vest early. In that case, the
award will vest at the end of the fifth year (fiscal 2004)
of the program.
The specific performance goal program was established at the
July 1999 meeting of the Board of Directors.
In all cases, there are no performance criteria as
conditions for the vesting of the award at the end of FY
2004. If not vested earlier, all LTI awards to participants
who are otherwise qualified at that time, will then
automatically vest.
C. SPECIAL NON-QUALIFIED STOCK OPTION GRANT
Non-Qualified
Stock Option
Grant: Since the cash award amount does not increase over time, the
Special Non-Qualified Stock Options provide a vehicle to
reward long-term performance that actually increases Total
Shareholder Value. The number of options granted is
determined by dividing each employee's specified Targeted
Performance Cash Award by the stock Exercise Price. The
Exercise Price of these special stock options will be the
regular session closing price of CBRL stock on the most
recent trading day preceding the date of grant. The vesting
schedule is identical to the Cash Award vesting schedule.
These options must be exercised within 6 months of the date
they vest.
5-Year Grant
Formula: (Annual Salary) x (LTI %) x (30%) x (5 years) = Number of
---------------------------------------------
stock Exercise Price Options
Adjusted Grant
Formula: (Annual Salary) x (LTI %) x (30%) x (5 years)
x (remaining mos/60) = Number
---------------------------------------------
stock Exercise Price of Options
Vesting
Period: Like the cash award, this option award will "cliff vest" at
the end of FY 2004 (July 31, 2004). The vesting period could
be accelerated to the end of FY 2002 or FY 2003 if certain
specified performance goals are achieved.
Performance
Criteria for
Accelerated
Vesting: CBRL participants have a goal based on Total Shareholder
Return in relation to the Stock Performance Graph of Peer
Composite performance over the period, as provided by the
Nasdaq Stock Market. On a cumulative basis, measured from
the last day of fiscal year 1999 (July 30, 1999), CBRL must
exceed the annual Total Return Index performance of the
Nasdaq - listed eating and drinking places composite peer
group (SIC Code 58xx) (the "Goal Index") as reported by the
Nasdaq Stock Market as of the end of each measurement fiscal
year as follows: at the end of the 3rd LTI plan year, CBRL
must exceed the Goal Index by 20% or more, at the end of the
4th LTI plan year, CBRL must exceed the Goal Index by 10%
or more.
Cracker Barrel Old Country Store and Logan's Roadhouse
participants have goals based on their cumulative Operating
Income growth. On a cumulative basis, Cracker Barrel Old
Country Store must meet or exceed its annual financial plan
Operating Income goal. On a cumulative basis, Logan's
Roadhouse must meet or exceed its annual financial plan
Operating Income goal. The cumulative basis in both these
cases will reflect the cumulative effects of annual
full-year variances, favorable and unfavorable, from the
applicable financial plan, beginning with fiscal year 2000.
Operating performance will be evaluated at the end of the
third year (fiscal 2002) for each covered company. If the
cumulative third-year goal (exceeding the stated target by
20%) has not been achieved in the third year, operating
performance will be reviewed again at the end of the fourth
year (fiscal 2003). If the cumulative fourth-year goal
(exceeding target by 10%) is not achieved in the fourth
year, the cash award will not vest early. In that case, the
award will vest at the end of the fifth year (fiscal 2004)
of the program.
The specific performance goal program was established at the
July 1999 meeting of the Board of Directors.
In all cases, there are no performance criteria as
conditions for the vesting of the award at the end of FY
2004. If not vested earlier, all LTI awards to participants
who are otherwise qualified at that time, will then
automatically vest.
D. EXHIBITS
Examples of Long-
Term Incentive
Calculations: Exhibit A
Chart of Officers'
Long-Term Incentive
Percentages: Exhibit B
Examples of Long-Term Incentive Calculations
Annual Stock Option Grant Example:
Annual Grant
Formula: (Annual Salary) x (LTI %) x (70%) = Number of
-----------------------------------
(stock price) x (40%*) Options granted
Example #1: VP #1 was eligible for the initial grant and received a
cash award based on 60% of an annual salary of $150,000. The
closing price of the stock the day before the grant was
$20.50.
Option grant=($150,000) x (.60) x (.70)= 7,683 stock options
--------------------------------------
($20.50) x (.40*)
* Black-Scholes factor, for this example 40%.
Cash Award Example:
Grant
Formula: (Annual Salary)x(LTI%)x(30%)x(5 years)x(Pro-ration factor,
if any)= Adjusted Targeted Performance Cash Award
Example #1: VP #1 was eligible for the initial grant and received a cash
award based on 60% of an annual salary of $150,000.
Cash Award = ($150,000)x(.60)x(.30)x(5)x(1) = $135,000
Example #2 VP #2 became eligible for the long-term incentive plan in
the 20th month (40 months left in the program period). The
base salary and award percentage is the same as VP #1.
Cash Award = ($150,000)x(.60)x(.30)x(5)x(40/60) = $90,000
EXHIBIT A
Special Non-Qualified Stock Option Example:
Grant
Formula: (Annual Salary) x (LTI %) x (30%) x (5 years)
x (Pro-ration factor, if any) = Number
---------------------------------------------
stock Exercise Price of Options
Example #1: VP #1 was eligible for the initial grant and received a
cash award based on 60% of an annual salary of $150,000. The
closing stock price (and therefore the stock Exercise Price)
on the day prior to the grant date was $13.0625
Option grant = ($150,000)x(.60)x(.30)x(5)x(1) = 10,335
------------------------------ stock options
$13.0625
Example #2 VP #2 became eligible for the long-term incentive plan in
the 20th month (40 months left in the program period). The
base salary and award percentage is the same as VP #1. The
closing stock price (and therefore the stock Exercise Price)
on the day prior to the grant date was $20.25
Option grant = ($150,000)x(.60)x(.30)x(5)x(40/60) = 4,444
---------------------------------- stock
$20.25 options
A-2
Chart of Officers' Long-Term Incentive Percentages
The chart below shows the officer tiers that are eligible for long-term
incentives and the appropriate long-term incentive award target as a percentage
of salary.
Long Term Incentive as Percent of Salary
Targeted
Performance
Cash Award
Annual and Related
Officer Tiers Stock Options Options Total
- ------------- ------------- ----------- -----
Chairman 175% 75% 250%
President & COO 105% 45% 150%
SVP & General Counsel 84% 36% 120%
Operational VP's 42% 18% 60%
Other VP's 31.5% 13.5% 45%
Notes to Chart
1. The size of the long term incentive opportunity is based on competitive
data.
2. Participants would receive 70% of their opportunity from annual stock
options and 30% from the Targeted Performance Cash Award. In connection
with the Targeted Performance Cash Award, a participant is also granted a
one-time Special Non-Qualified Stock Option Grant to provide an opportunity
for a greater award due to improved company financial performance.
3. The value of the annual options in this plan is determined using an
appropriate, widely-used compensation methodology (such as Black-Scholes,
for example).
4. This chart is effective on and after September 1, 1999.
EXHIBIT B
Chart of Officers' Long-Term Incentive Percentages
The chart below shows the officer tiers that are eligible for long-term
incentives and the appropriate long-term incentive award target as a percentage
of salary.
Long Term Incentive as Percent of Salary
Targeted
Performance
Cash Award
Annual and Related
Officer Tiers Stock Options Options Total
- ------------- ------------- ----------- -----
Chairman; CEO 175% 75% 250%
President & COO 105% 45% 150%
CAO; SVP &
General Counsel 84% 36% 120%
Divisional (and similar)
Vice Presidents 52.5% 22.5% 75%
Operational VP's 42% 18% 60%
Other VP's 31.5% 13.5% 45%
Notes to Chart
5. The size of the long term incentive opportunity is based on competitive
data.
6. Participants would receive 70% of their opportunity from annual stock
options and 30% from the Targeted Performance Cash Award. In connection
with the Targeted Performance Cash Award, a participant is also granted a
one-time Special Non-Qualified Stock Option Grant to provide an opportunity
for a greater award due to improved company financial performance.
7. The value of the annual options in this plan is determined using an
appropriate, widely-used compensation methodology (such as Black-Scholes,
for example).
8. This chart is effective on and after August 4, 2001.
EXHIBIT B