PROPOSAL ONE: ELECTION
OF DIRECTORS
|
Introduction
During fiscal year 2016, our Board
focused on continuing to guide management through the Companys brand
transformation. In particular, the Board played an important role in evaluating
and advising on the disposition of the Lime Fresh Mexican Grill concept, helping
to advance the Companys Garden Bar enhancements and restaurant remodel program,
and identifying and filling needed executive-level skill sets. In addition, the
Board and its committees continued to improve processes, proactively addressing
potential risks, and aligning compensation practices with our shareholders
preferences as well as the market.
The Audit Committee actively monitored
the Companys financial reporting and risk management. It remains engaged with
the Companys cyber security efforts and other key business risks. The committee
also regularly received deep dive reports on various areas that have a
substantial impact on the Companys finances and maintained open lines of
communication with management and the Companys independent auditor, KPMG.
The Executive Compensation Committee
(the Compensation Committee) made significant efforts to respond to our
shareholders feedback regarding executive compensation and to further align the
Companys compensation practices with market-practice. As discussed in the
Compensation Discussion and Analysis section of this Proxy Statement, the
committee implemented many of the specific items our shareholders requested be
included in the fiscal year 2016 executive compensation packages. After
reviewing several responses to a request for proposals, the committee also
engaged a new independent compensation consultant to bring a fresh perspective
to the Companys compensation practices. Finally, the committee addressed
certain areas in which the Companys practices were out of step with
market-practice: for instance, freezing the Companys Executive Supplemental
Pension Plan and establishing executive severance plans.
The Governance Committee continued to
enhance its role within the Board during fiscal year 2016. It actively engaged
with management to assist with executive succession planning. It has also been
heavily involved in updating and improving the Companys policies and practices
and continues to seek out opportunities to enhance director education.
Election Process
The Companys Articles of Incorporation
provide for three classes of directors with staggered, three-year terms of
office. The Articles of Incorporation require that, upon the expiration of the
term of office for a class of directors, the nominees for that class will be
elected for a term of three years to serve until the election and qualification
of their successors or until their earlier resignation, death, or removal from
office. The Companys Articles of Incorporation and its Bylaws provide that the
Board shall consist of not less than three nor more than 12 directors and
authorize the exact number to be fixed from time to time by resolution of a
majority of the Board or by the
2016 Proxy
Statement
|
|
7
|
Table of Contents
affirmative vote of the holders of at
least 80% of all outstanding shares entitled to vote in the election of
directors, voting together as a single class. The size of the Board is currently
fixed at eight directors. The terms of office of the Class III directors expire
at the Annual Meeting. The Board has nominated Bernard Lanigan, Jr. and James J.
Buettgen to serve in Class III of the Board for a term of three years. The Class
I directors and the Class II directors have one year and two years,
respectively, remaining on their terms of office.
It is intended that persons named in
the accompanying form of proxy will vote for the two nominees listed below
unless instructed to vote against a particular nominee. Although the Board does
not expect that any of the nominees identified herein will be unavailable for
election, in the event a vacancy in the slate of nominees occurs, the shares
represented by proxies in the accompanying form may be voted for the election of
a substitute nominee selected by the persons named in the proxy.
Director Nominations
The Governance Committee is responsible
for identifying individuals qualified to become Board members and recommending
director nominees to the Board. In addition, the Companys Articles of
Incorporation provide that any shareholder entitled to vote generally in the
election of directors may nominate one or more persons for election as directors
so long as written notice of such shareholders intent to make such nomination
has been given (i) no later than 90 days in advance of the Annual Meeting, or
(ii) with respect to any election to be held at a special meeting of
shareholders for the election of directors, no later than the close of business
on the seventh day following the date on which notice of such meeting is first
given to shareholders.
Each notice of intent to nominate one
or more persons for the election of directors must set forth, in addition to
such information as may be required by the Bylaws, (i) the name and address of
the shareholder making the nomination and the person or persons being nominated;
(ii) a representation that the shareholder is a holder of record of shares of
Common Stock entitled to vote at the Annual Meeting and that the shareholder
intends to appear either in person or by proxy at the Annual Meeting to nominate
the person or persons described in the notice; (iii) a description of any
arrangements or understandings between the shareholder, each nominee and any
person or persons pursuant to which the shareholder intends to make the
nomination; (iv) such other information regarding each nominee as would be
required by the proxy rules of the SEC if the nominee were to be nominated by
the Board; and (v) the consent of each nominee to serve as a director of the
Company.
The Governance Committee has adopted a
formal policy and procedure with regard to the consideration of any director
candidates recommended by shareholders. Consistent with these procedures, the
Governance Committee will consider director candidates recommended by the
Companys shareholders. Recommendations may be sent to the Governance Committee,
c/o Secretary, Ruby Tuesday, Inc., 150 West Church Avenue, Maryville, Tennessee
37801.
8
|
|
2016 Proxy Statement
|
Table of Contents
The Governance Committee identifies
potential nominees for director through a variety of business contacts including
current directors, community leaders, and shareholders. To the extent necessary,
the Governance Committee may retain professional search firms and other advisors
to identify potential candidates.
Qualifications
for All Directors
In considering potential candidates for
election to the Board, the Governance Committee observes the following
guidelines, among other considerations: (i) the composition of the Board must
include a majority of independent directors; (ii) the committee shall not
discriminate against potential nominees on the basis of sex, race, religion or
national origin; (iii) each director nominee should be an individual of the
highest character and integrity and have an inquiring mind, vision, and the
ability to work well with others; (iv) each director nominee should be free of
any conflict of interest that would violate any applicable law or regulation or
interfere with the proper performance of the responsibilities of a director; (v)
each director nominee should possess substantial and significant experience that
would be of particular importance to the Company in the performance of the
duties of a director; (vi) each director nominee should have sufficient time
available to devote to the affairs of the Company in order to carry out the
responsibilities of a director, including, without limitation, consistent
attendance at Board of Directors and committee meetings and advance review of
Board and committee materials; and (vii) each director nominee should have the
capacity and desire to represent the balanced, best interests of the
shareholders as a whole and not primarily a special interest group or
constituency.
If the Governance Committee determines
that an additional director is needed and a potential candidate may be qualified
to serve on the Board, at least one member of the Governance Committee, as well
as the Chairman of the Board and Chief Executive Officer will interview such
candidate. The Governance Committee then determines whether to recommend to the
Board that a candidate be nominated for approval by the shareholders. The
Governance Committee evaluates potential candidates recommended by shareholders
in the same manner.
With respect to nominating existing
directors, the Governance Committee reviews relevant information available to
it, including the most recent individual director evaluations for such
candidates, the number of meetings attended, his or her level of participation,
biographical information, professional qualifications, and overall contributions
to the Company.
During fiscal year 2016, the Board
amended the Companys Corporate Governance Guidelines to provide that an
individual may stand for election to the Board so long as the director has not
reached the age of 72 at the time of election. Prior to this amendment, the
guidelines prohibited a nominee to stand for election if the nominee would reach
the age of 70 during the term to be elected.
2016 Proxy
Statement
|
|
9
|
Table of Contents
Qualifications, Attributes,
Experience, and Skills of the Board as a Whole
The Board has identified the following
qualifications, attributes, experiences, and skills that are important to be
represented on the Board as a whole, in
consideration of the Companys current and future goals:
●
|
Management, leadership and strategy;
|
●
|
Financial expertise;
|
●
|
Marketing and consumer experience; and
|
●
|
Risk assessment and capital
management.
|
In addition, while the Board does not
have a specific diversity policy, it will consider and value diversity of race,
ethnicity, gender, age, cultural background, and professional experiences in
evaluating potential candidates for Board membership.
10
|
|
2016 Proxy Statement
|
Table of Contents
DIRECTOR AND
DIRECTOR NOMINEE
INFORMATION
|
Information about the directors and
director nominees is below including the specific qualifications,
attributes,
experiences and skills described
above.
Director
Nominees: Class III Term Expiring 2019
JAMES J.
BUETTGEN (Chairman, President and Chief Executive
Officer)
|
|
Age:
56
Director Since:
2012
Mr. Buettgen joined the Company
in December 2012 as President and Chief Executive Officer and became
Chairman of the Board in 2013. Prior to joining the Company, Mr. Buettgen
served as Senior Vice President, Chief Marketing
Officer of Darden Restaurants,
Inc. (Darden) from June 2011 to November 2012 and as Senior Vice
President, New Business Development of Darden from May 2007 to June 2011.
Additionally, Mr. Buettgen served as President of Dardens former Smokey
Bones Barbeque & Grill concept from November 2004 to May 2007. Prior
to his tenure at Darden, among other positions, Mr. Buettgen served as
Senior Vice President of Marketing and Brand Development for Brinker
International, Inc.; Senior Vice President of Marketing and Sales for
Disneyland Resorts, a division of the Walt Disney Company; Senior Vice
President of Marketing for Hollywood Entertainment Group; and held various
marketing positions with General Mills,
Inc.
Skills and
Qualifications:
|
●
|
Management, leadership and
strategy
Leadership experience as
Chairman, President and Chief Executive Officer of the Company and
previous leadership of casual dining concept.
|
●
|
Marketing and consumer
experience
Extensive experience in
marketing, strategic planning and consumer research for major restaurant
and entertainment companies.
|
●
|
Risk assessment and capital
management
Experience as Chairman,
President, and Chief Executive Officer in overseeing business risk and
designing and implementing strategies to increase shareholder
value.
|
Age:
68
Director Since:
2001
Committees:
Audit (Chair)
Public Directorships:
Rayonier, Inc.; Consol
Energy,
Inc.
Former Directorships Held
Within Last Five
Years:
Texas Industries, Inc.
Mr. Lanigan founded and has
served as Chairman and Chief Executive Officer of Southeast Asset
Advisors, Inc., a registered investment advisor and wealth management
company, since 1991. Also, Mr. Lanigan founded and has served as Chairman
of Lanigan & Associates, P.C., Certified Public Accountants and
Consultants, since 1974. Mr. Lanigan previously served on the board of
directors of Texas Industries, Inc. (NYSE), and currently serves on the
board of
directors of Rayonier, Inc. (NYSE:
RYN) and Consol Energy, Inc. (NYSE: CNX) and Lykes Brothers, Inc., a
private corporation, as well as non-public
companies and endowments and private
foundations.
2016 Proxy Statement
|
|
11
|
Table of Contents
Skills and
Qualifications:
|
●
|
Management, leadership and
strategy
More than 40 years of
leadership experience through founding, establishment, and management of
companies that provide investment and advisor services, accounting,
tax,
financial and strategy consulting
services. Served on numerous boards and currently serves on two other
public
company boards.
|
●
|
Financial expertise
Certified public accountant for 40 years and has
over 35 years of experience in tax, accounting, investment advising,
valuations, and mergers and acquisitions as both advisor and
principal.
|
●
|
Marketing and consumer
experience
Thorough understanding of
the casual dining industry and our customer base, as well as investing in
industry companies for many years.
|
●
|
Risk assessment and capital
management
Extensive knowledge of and
experience in accounting, tax, financial markets, lending, financing
instruments, capital allocation and investing.
|
Directors Continuing in Office: Class I Term
Expiring 2017
STEPHEN I.
SADOVE (Lead Independent Director)
|
|
Age:
65
Director Since:
2002
Committees:
Executive
Compensation (Chair)
Public
Directorships:
Aramark,
Colgate-
Palmolive Co.
Former Directorships Held Within Last
Five Years:
Saks Inc., J.C. Penney
Company, Inc.
Mr. Sadove currently serves as a
principal of Stephen Sadove & Associates; the founding partner of JW Levin
Partners, a private equity and advisory firm; Chair of the Board of Trustees of
Hamilton College; and on the Board of the National Retail Federation, of which
he was the prior Chairman. Mr. Sadove previously served as Chief Executive
Officer of Saks Incorporated from 2006-2013, acting as Chairman of the Saks
Incorporated Board from May 2007-2013. Before becoming Chief Executive Officer,
Mr. Sadove served Saks Incorporated as Vice Chairman from January 2002 to March
2004 and served as Vice Chairman
and Chief
Operating Officer from March 2004 to January 2006. Prior to his position with
Saks Incorporated, Mr. Sadove served as Senior Vice President of Bristol-Myers
Squibb Company (Bristol-Myers) and President of Bristol-Myers Worldwide Beauty
Care and Nutritionals from 1996 to January 2002. Mr. Sadove holds a bachelors
degree from Hamilton College and an MBA with Distinction from Harvard Business
School.
Skills and
Qualifications:
|
●
|
Management, leadership and
strategy
Leadership roles with
several well-known consumer products and retail companies for over 25
years.
|
●
|
Financial expertise
Executed financial plan of publicly traded
company and has overseen and managed operating budgets for various
companies throughout his career.
|
●
|
Marketing and consumer
experience
Extensive understanding of
consumer products and consumer behavior. Also possesses over 25 years of
marketing experience.
|
●
|
Risk assessment and capital
management
Provides the Board with
additional insight into issues involving capital allocation, shareholder
value and business risk.
|
12
|
|
2016 Proxy Statement
|
Table of Contents
Age:
61
Director
Since:
2014
Committees:
Audit,
Governance
Mr. Addicks formerly served as
Senior Vice President, Chief Marketing Officer for General Mills Inc.,
where he was responsible for global brand-building strategy, including
advertising, promotions, public relations, design, packaging, online,
licensing and multicultural initiatives. He also oversaw the companys
well-
known Box Tops for Education program
and the Pillsbury Bake-Off Contest. Mr. Addicks joined General Mills in
1988 and held marketing positions in various divisions. He led highly
successful new product development efforts and received numerous industry
awards for his innovation and marketing expertise. Before joining General
Mills, he led marketing communication programs for Anderson, Clayton &
Company, a diversified foods company based in Houston. During the same
period, he started and managed three entrepreneurial businesses in
Houston. He holds a bachelors degree from the University of Texas and an
MBA from Harvard University. In addition, he has been invited as a guest
lecturer at some of the nations leading business programs, including
Harvard, Tuck and the University of Chicago.
Skills and
Qualifications:
|
●
|
Management, leadership and
strategy
Experience as a member of
senior management team at an international packaged goods producer.
|
●
|
Marketing and consumer
experience
Extensive marketing
experience as chief marketing officer for General Mills. Serves currently
as a Professor of Marketing Innovation at the Opus School of Business at
the University
of St. Thomas, Minnesota.
|
Age:
67
Director Since:
2014
Committees:
Executive
Compensation, Governance
Former Directorships Held Within Last
Five Years:
Saks Inc.
Mr. Hess, who is currently the
Chief Executive Officer of Southwood Partners, a private investment
company, has extensive experience in the retail industry. He was President
and Chief Executive Officer of Parisian, Inc. as well as a member of the
board of directors of Proffitts Inc. and the Lead Director at Saks Inc.
As President and Chief Executive Officer of Parisian, a department store
chain with stores primarily in the southeast, Mr.
Hess was instrumental in establishing and executing an expansion
strategy leading to significant growth for the company. In addition to his
executive leadership and strategic vision, Mr. Hess also oversaw the
merchandising and marketing function for the company. Mr. Hess is also
engaged in local and national educational and philanthropic organizations.
Mr. Hess holds a bachelors degree from Dartmouth College.
2016 Proxy Statement
|
|
13
|
Table of Contents
Skills and
Qualifications:
|
●
|
Management, leadership and
strategy
Held several positions of
increasing responsibility with a specialty department store chain over 30
years, including President and Chief Executive Officer.
|
●
|
Marketing and consumer
experience
Oversaw the marketing
function and has created and overseen numerous successful marketing
campaigns for a specialty department store
chain.
|
Directors Continuing in Office: Class II Term
Expiring 2018
Age:
64
Director Since:
2012
Committees:
Audit,
Executive Compensation
Former Directorships Held Within Last Five
Years:
P.F. Changs China Bistro, Inc.
Mr. Cardwell is the President of
Cardwell Hospitality Advisory. He previously served as the President of
P.F. Changs China Bistro (P.F. Changs) from March 2011 until the
company was taken private in mid-2012. Prior to this he was the President
and Chief Executive Officer of Boston Market from June 2009 to October
2010. He was the President of Cardwell Hospitality
Advisory from June 1999 to June 2009, serving on several public and
private boards during that time. He was on the board of P.F. Changs
(NASDAQ: PFCB) from 1999 to 2009, and then again from 2010 to 2012. He
served on the board of Famous Daves of America (NASDAQ: DAVE) from 2003
to 2009, and was interim President and CEO from December 2007 until April
2008. He previously served as President and Chief Executive Officer of
Eatzis Market and Bakery from 1996 to 1999. Prior to joining Eatzis, Mr.
Cardwell was Executive Vice President and Chief Administrative Officer and
a member of the board of directors of Brinker International (NYSE: EAT).
Mr. Cardwell also serves on the board of directors of a private family
dining company and a private restaurant group based in Saudi
Arabia.
Skills and
Qualifications:
|
●
|
Management, leadership and
strategy
38 years of executive
leadership experience in the restaurant industry with 44 restaurant
brands, with significant experience as president, CEO or board member for
several leading companies.
|
●
|
Financial expertise
Extensive financial experience including service
on the audit committees of public and private companies; MBA
Finance.
|
●
|
Marketing and consumer
experience
Possesses extensive
experience in restaurant marketing, competitive positioning and new
concept development.
|
●
|
Risk assessment and capital
management
Experience leading
publicly-traded and privately-held restaurant companies; broad corporate
governance experience from service on the board and board committees of
other
public and private
companies.
|
14
|
|
2016 Proxy
Statement
|
Table of Contents
Age:
53
Director Since:
2006
Committees:
Executive Compensation,
Governance (Chair)
Mr. Clayton has served as President
and Chief Executive Officer of Clayton Homes, Inc. (a Berkshire Hathaway
Company) since 1999. Prior to serving as President and Chief Executive
Officer, Mr. Clayton served as Chief Operating Officer of Clayton Homes,
Inc. from 1997 to 1999 and as Vice President of Clayton Homes, Inc. and
President of Vanderbilt Mortgage and Finance, Inc. from 1995 until
1997.
Skills and
Qualifications:
●
|
Management, leadership and strategy
Chief executive officer experience through his leadership roles
with Clayton Homes, Inc., which was a publicly-traded company prior to
Berkshire Hathaways acquisition of the
company in 1999.
|
●
|
Financial expertise
Possesses in-depth knowledge and experience in the areas of finance,
lending and credit markets.
|
●
|
Marketing and consumer experience
Extensive sales and marketing experience in the housing industry
including the retail sales of manufactured and modular
homes.
|
●
|
Risk assessment and capital management
Provides the Board with additional insight into issues involving
capital allocation, shareholder value and business
risk.
|
Age:
60
Director
Since:
2012
Committees:
Audit, Governance
Former Directorships Held Within Last
Five Years:
Einstein Noah Restaurant
Group
Mr. ONeill is the Chairman and the
former President/Chief Executive Officer of the a2 Milk Company-USA, a
division of the a2 Milk Company worldwide, headquartered in Sydney,
Australia. Prior to this, Mr. ONeill served as President and Chief
Executive Officer of The Einstein Noah Restaurant Group (Einstein Noah)
from December 2008 through March 2014. In May 2005, Mr. ONeill joined
Priszm Income Fund in Toronto, Canada and served as its President and
Chief Operating Officer until being named Chief Executive Officer in
January 2008. Priszm Income Fund owned and operated 465 quick service and
quick casual restaurants (KFC, Taco Bell, and Pizza Hut) across seven
Canadian provinces. From 1999 until 2005, Mr. ONeill served as President
of Pepsi-Cola Canada. From March 1999 to January 2003 and from February
2003 through March 2005 he was Vice President of Sales for Quaker Foods
USA.
Skills and Qualifications:
●
|
Management, leadership and strategy
Chief executive
officer experience through his leadership roles with Einstein Noah, Priszm
Income Fund, Quaker Foods and Pepsi-Cola Canada.
|
2016 Proxy
Statement
|
|
15
|
Table of Contents
●
|
Financial expertise
Responsible for all aspects of
profit and loss management including quarterly reporting and
responsibilities related to a publicly-traded bagel/bakery chain
restaurant company focused in the fast-casual segment.
|
●
|
Marketing and consumer experience
Possesses
extensive experience in marketing, strategic planning and consumer
research.
|
●
|
Risk assessment and capital management
Extensive
experience in overseeing business risk and designing and implementing
strategies to increase shareholder
value.
|
Shareholder Approval
To elect each of the director nominees
named in the Proposal, the number of votes cast in favor of election must constitute a majority of votes cast,
not including abstentions or broker non-votes.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE
FOR
THE ELECTION OF THE TWO NOMINEES FOR CLASS
III DIRECTORS NAMED ABOVE.
|
Directors
Independence
As required by NYSE corporate
governance standards, at all times a majority of the members of the Companys
Board are independent within the meaning of NYSE rules. To assist it in making
the annual affirmative determination of each directors independence, the Board
has adopted Categorical Standards of Director Independence (Categorical
Standards) which are posted on our website at http://rubytuesday.com/investors/corporate governance. A director will be considered independent only if he or
she meets the requirements of the Categorical Standards and the criteria for
independence set forth from time to time by the NYSE corporate governance
standards.
The Board has affirmatively determined
that all of the Companys directors, with the exception of Mr. Buettgen, are
independent under the Categorical Standards and the NYSE corporate governance
standards. Mr. Buettgen is disqualified from being independent because he is
also an executive officer of the Company. Each member of the Boards Audit,
Executive Compensation, and Governance Committees is independent as required
by the respective charters of each Committee and the NYSE corporate governance
standards.
The Boards Role
in Risk Oversight
The Board is responsible for oversight
of the various risks facing the Company. Risks are considered in virtually every
business decision and as part of our culture and business strategy. The Board
recognizes that appropriate risk-taking is essential for the Company to remain
competitive and achieve its long-term goals.
The Board has implemented the following
risk oversight framework:
16
|
|
2016 Proxy Statement
|
Table of Contents
○
|
know the major risks inherent
in the Companys business and strategy;
|
○
|
evaluate risk management
processes;
|
○
|
encourage open and regular
communication about risks between management and the Board;
and
|
○
|
cultivate a
culture of integrity and risk awareness.
|
While the Board oversees risk, Company
management is responsible for managing risk. We have strong internal processes
to identify, manage, and mitigate risk and communicate appropriately with the
Board. These processes include quarterly risk assessment updates to the
directors, regular management disclosure committee meetings, our Code of
Business Conduct and Ethics, thorough quality assurance standards and systems,
and a comprehensive internal and external audit process. Management communicates
routinely with the Board, Board Committees, and individual directors on the
significant risks identified and how they are being managed, and directors are
free to communicate directly with Internal Audit and senior
management.
The Board implements its risk oversight
function both as a whole and through committees. Board committees meet regularly
and report back to the full Board. The particular role each Committee plays in
carrying out the risk oversight function is as follows:
○
|
The Audit Committee oversees
the manner in which management assesses, monitors, and manages risks
related to the Companys financial statements, the financial reporting
process, accounting, legal, and tax matters, and information technology.
The Audit Committee oversees the internal audit function and compliance
with the Companys ethics programs, including the Code of Business Conduct
and Ethics, and the Companys Whistleblower Policy. The Audit Committee
receives and evaluates a quarterly analysis from senior management on
potential risks to the enterprise, including information technology risks;
an assessment of the potential severity of such risks; and actions
identified to manage or mitigate such risk. The Audit Committee members
meet separately with the Companys Chief Financial Officer; Vice
President, Internal Audit; representatives of the Companys independent
accounting firm; and any others the committee deems
appropriate.
|
○
|
The Compensation Committee
reviews the compensation arrangements for the Companys executive
officers, including the Chief Executive Officer; evaluates the risks and
rewards associated with the Companys compensation philosophy and
programs; and reviews the Boards compensation. The Compensation Committee
receives advice from independent compensation consultants.
|
○
|
The Governance Committee oversees
and evaluates Company policies pertaining to ethics and governance risks
and monitors evolving legislation and trends in these areas. It also
oversees the annual effectiveness evaluations of the Board and its
committees and evaluates Board and committee composition. In addition, the
committee assists management with executive succession
planning.
|
2016 Proxy
Statement
|
|
17
|
Table of Contents
Board Leadership
Structure
Our current Board leadership structure
is comprised of a Chairman and seven independent directors. Mr. Buettgen, our
Chief Executive Officer, serves as Chairman. Mr. Sadove serves as the Boards
Lead Independent Director (Lead Director).
As Chairman, Mr. Buettgen presides over
Board meetings, presides over annual meetings of shareholders, consults and
advises the Board and its committees on the business and affairs of the Company,
and performs other responsibilities as may be assigned by the Board from time to
time. As Chief Executive Officer, Mr. Buettgen is in charge of both overseeing
the Companys day-to-day operations and establishing and leading the execution
of the Companys long-term strategic objectives, subject to the overall
direction and supervision of the Board and its committees.
The Lead Director presides at all
meetings of the Board at which the Chairman is not present. The Lead Director
may call, and lead, non-management director and independent director sessions;
serves as a liaison and facilitates communication between the Chairman and the
independent directors; and advises the Chairman on the Boards informational
needs, Board meeting agendas, and the schedule of Board meetings.
The Board believes at this point and
time that this leadership structure the combined Chairman and Chief Executive
Officer positions balanced by active and strong non-employee directors with
substantial and diverse industry and business experience with focused committees
led by independent directors best positions the Company to continue its brand
transformation and ultimately deliver shareholder value.
Committees of the
Board of Directors
The Board is responsible for the
overall affairs of the Company. To assist the Board in carrying out this
responsibility, the Board has delegated certain
authority to three standing committees as follows:
Bernard Lanigan, Jr., Chair
Mark W. Addicks
F. Lane
Cardwell, Jr.
Jeffrey J. ONeill
The Audit Committee maintains
communications with the Companys independent registered public accounting
firm as to the nature of the Auditors services, fees and such other
matters as the Auditors believe may require the Boards attention. The
Audit Committee reviews and makes recommendations to the Board regarding
the Companys system of internal control over financial reporting and
procedures. The Audit Committee also reviews the Companys practices with
respect to the security of its information technology systems. The
responsibilities of the Audit Committee are more fully described in its
charter, a copy of which is posted on our website at
http://rubytuesday.com/investors/corporate governance. The Audit Committee
met once telephonically and four times at regularly scheduled meetings
during fiscal year 2016. The Board has
18
|
|
2016 Proxy Statement
|
Table of Contents
determined that each member of the
Audit Committee is independent as defined under the NYSE corporate governance
requirements and the SEC rules. All of the members of the Audit Committee have
significant experience in financial matters and are financially literate as
defined in Section 303A of the NYSE Listed Company Manual as such qualifications
are interpreted by the Board in its business judgment. In addition, the Board
has determined that at least one member of the Audit Committee, Mr. Lanigan, is
an audit committee financial expert as defined in Item 407(d)(5) of Regulation
S-K.
Executive Compensation Committee
|
|
Stephen I. Sadove, Chair
F. Lane Cardwell, Jr.
Kevin T.
Clayton
Donald E. Hess
The Compensation Committee is
responsible for setting the Companys philosophy regarding executive
compensation. The responsibilities of the Compensation Committee are more
fully described in its charter, a copy of which is posted on our website
at http://rubytuesday.com/investors/corporate governance. The processes
utilized by the Compensation Committee in fulfilling its responsibilities
are more fully discussed in the Compensation Discussion and Analysis
section of this Proxy Statement.
Following a request for proposals from
independent compensation consultants, in fiscal year 2016, the Compensation
Committee retained Meridian Compensation Partners, LLC (Meridian) as its new
independent compensation consultant. Prior to retaining Meridian, the
Compensation Committee retained Pearl Meyer & Partners, LLC (Pearl Meyer)
as its independent compensation consultant.
1
The Compensation Committee
requested that Meridian provide information related to the Companys
compensation practices and the compensation practices of its Peer Group, as
defined in the Compensation Discussion and Analysis section of this Proxy
Statement. The scope of Meridians engagement and any fees paid for its services
are approved by the Compensation Committee. Management works with Meridian to
provide necessary information about the Company in order to complete the
compensation surveys requested by the Compensation Committee. Meridian does not
provide any other services to the Company. Further discussion of Meridians role
in the Companys compensation programs is contained within the Compensation
Discussion and Analysis section of this Proxy Statement. The Compensation
Committee evaluated its engagement with Meridian and has determined, based on
its own assessment, that Meridian is independent as described in Section
303A.05(c)(iv) of the NYSE Listed Company Manual.
The Compensation Committee met four
times at regularly scheduled meetings during fiscal year 2016. Members of the
Compensation Committee also held numerous conference calls during the fiscal
year in connection with the review and selection of a new independent
compensation consultant. The Board has determined that each
member
____________________
1
|
Because the Compensation
Committee utilized the services of two different independent compensation
consultants during fiscal year 2016, this Proxy Statement refers to the
particular consultant by name where the specific consultant is relevant
and refers to the Compensation Consultant to indicate more generic
services and/or whichever consultant was retained at the time a particular
service was delivered.
|
2016 Proxy
Statement
|
|
19
|
Table of Contents
of the Compensation Committee is
independent under the NYSE corporate governance requirements. Each member of the
Compensation Committee qualifies as a non-employee director as defined under
Rule 16b-3 under the Securities Exchange Act of 1934 and as an outside
director as defined in Section 162(m) of the Internal Revenue Code.
Kevin T. Clayton, Chair
Mark W. Addicks
Donald E.
Hess
Jeffrey J. ONeill
The Governance Committee (i)
identifies individuals qualified to become Board members and recommends
director nominees to the Board; (ii) recommends committee membership for
each director on the Board; (iii) oversees governance policies and
practices and recommends to the Board changes to the Corporate Governance
Guidelines, Code of Business Conduct and Ethics, and other governance
policies; and (iv) leads the Board in its performance review of the Board,
each committee of the Board, individual directors, and management. The
responsibilities of the Governance Committee are more fully described in
its charter, a copy of which is posted on our website at http://rubytuesday.com/investors/corporate
governance. The Governance Committee met four times during fiscal year
2016. The Board has determined that each member of the Governance
Committee is independent as independence for nominating committee members
is defined under the NYSE corporate governance
requirements.
Policy with Regard to
Directors Attendance at the Annual Meeting of Shareholders
The Board has adopted a policy
requiring that, absent unusual circumstances, members of the Board are expected
to attend each annual meeting of the shareholders of the Company. All members of
the fiscal year 2016 Board attended the Annual Meeting of Shareholders in 2015.
Policy by Which a
Presiding Director is Chosen to Chair Executive Sessions of Non-Management
Directors
Currently, the Lead Director serves as
the chair of the executive sessions of the non-management directors. The
non-management directors met without management present in executive session at
each of its four in-person and five telephonic meetings in fiscal year
2016.
Procedure for
Shareholder Communication with Directors
All interested parties may send
communications to the Board, to individual directors, or to the non-management
directors as a group by mail c/o Secretary, Ruby Tuesday, Inc., 150 West Church
Avenue, Maryville, Tennessee 37801. All interested parties may also send
communications to the Board as a group by electronic mail in care of the
Secretary at boardofdirectors@rubytuesday.com. Communications addressed to the
non-management members of the Board are reviewed by the Secretary and directed
to the appropriate director or directors for their consideration. The Secretary
may not filter out any direct communications from being presented to the
non-
20
|
|
2016 Proxy Statement
|
Table of Contents
management members of the Board
without instruction from directors. The Secretary maintains a record of all
communications received that were addressed to one or more directors, including
those determined to be inappropriate communications. Such record includes the
names of the addressee (if other than the Board as a group), the disposition by
the Secretary, and in the case of communications determined to be inappropriate,
a brief description of the nature of the communication. The Secretary will
provide a copy of the record upon the request of any member of the Board.
Anti-Hedging and
Anti-Pledging Policies
The Company prohibits directors and
executive officers from purchasing any financial instrument that is designed to
hedge or offset any decrease in the market value of the Companys stock,
including prepaid variable forward contracts, equity swaps, collars, and
exchange funds.
During fiscal year 2016, the Board
adopted a policy prohibiting directors and employees, including executive
officers, from pledging Company securities in any circumstance, including by
purchasing Company securities on margin or holding Company securities in a
margin account.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), requires the Companys
executive officers, directors, and shareholders of greater than ten percent of
outstanding shares (Reporting Persons) file certain reports with respect to
beneficial ownership of the Companys equity securities (Section 16 Reports).
Based solely on the Companys review of the Section 16 Reports, including any
amendments to them, and, where applicable, any written representation from any
Reporting Persons that they were not required to file a Form 5, all Section
16(a) filing requirements applicable to the Reporting Persons during and with
respect to fiscal year 2016 have been complied with on a timely
basis.
Directors Fees and
Attendance
During fiscal year 2016, the Board
met nine times, including five telephonic meetings and four regularly scheduled
meetings. Each director attended at least 83% of the aggregate total meetings of
the Board and committees of which he was a member that were held during the
fiscal year.
The Compensation Committee evaluates
director compensation and seeks to maintain it at the 50th percentile of its
peers. Directors do not receive meeting attendance fees because the Board views
meeting attendance as an essential director responsibility. Rather, directors
receive quarterly retainer fees for membership on the Board and committee
membership and/or chairmanship. Currently, non-employee directors receive
quarterly retainer fees as shown in the below table. Directors who are employees
of the Company receive no directors fees.
2016 Proxy Statement
|
|
21
|
Table of Contents
|
Quarterly
|
|
|
|
|
|
Quarterly
|
|
Audit
|
Quarterly
|
Quarterly
|
Quarterly
|
Quarterly
|
Quarterly
|
Lead
|
|
Committee
|
Audit
|
Compensation
|
Compensation
|
Governance
|
Governance
|
Director
|
Quarterly
|
Members
|
Committee
|
Committee
|
Committee
|
Committee
|
Committee
|
Retainer
|
Retainer
($)
|
($)
|
Chair
($)
|
Members
($)
|
Chair
($)
|
Members
($)
|
Chair
($)
|
($)
|
18,750
|
2,500
|
5,000
|
1,875
|
5,000
|
1,250
|
3,000
|
6,250
|
Non-employee directors who undertake
special projects for the Company or attend special meetings are entitled to fees
ranging from $2,500 to $5,000 per day of service, except that they will not be
entitled to fees for special meetings that occur on the same day as a meeting of
the Board.
Non-employee directors may
participate in the Ruby Tuesday, Inc. Stock Incentive Plan (the SIP), which
excludes awards to directors from certain vesting and holding requirements
applicable to awards to Company employees. Non-employee director participation
in the SIP is designed to provide incentives aligned with the interests of
shareholders, to encourage share ownership by eligible directors, and to provide
a means of recruiting and retaining qualified director candidates.
Non-employee directors may also
participate in the Ruby Tuesday, Inc. Deferred Compensation Plan for Directors
(the DCPD). The DCPD permits non-employee directors to defer all or a portion
(in 25% increments) of their retainers, and any additional meeting and committee
fees, to a deferred compensation account. A directors deferred compensation
account is credited as of the last day of each fiscal quarter with an assumed
rate of income equal to 90-day U.S. Treasury Bills, based on the weighted
average balance of that account during the respective fiscal quarter. Unless a
director otherwise timely elects, amounts credited to a directors deferred
compensation account generally will be distributed starting on the earlier of
(a) the first day of the calendar month after the directors 70th birthday or
(b) the first January 15 or July 15 following when the director ceases to be a
member of the Board.
The Companys practice under the SIP
is that each non-employee director will be granted a restricted stock award, an
award of stock options, or a blend of both as of the date of each annual meeting
of the shareholders of the Company if the director is elected, re-elected, or
otherwise continues to serve on the Board following such annual meeting of the
shareholders of the Company.
Any shares subject to restricted
stock awards granted pursuant to this annual equity grant will be granted on the
date of the annual meeting of shareholders and will be valued at fair market
value, defined by the SIP to be the closing price of our Common Stock on the
last trading day prior to the grant date as reported by the NYSE. Per the terms
of the awards, the shares granted shall vest on the earlier of the day
immediately preceding the first anniversary of the grant date for that award or
the next regularly scheduled annual meeting of shareholders, provided the
director remains a director on such vesting date. The shares may vest earlier in
the event of death,
22
|
|
2016 Proxy Statement
|
Table of Contents
disability, the director attaining
age 70, certain involuntary departures, or a change in control. Otherwise, any unvested shares shall be forfeited
if a director ceases to be a director.
Under the SIP, any options granted
pursuant to this annual equity grant are valued using a commonly accepted option
valuation technique and have an exercise price equal to the closing price of our
Common Stock as of the trading day before the date of the annual meeting of
shareholders.
In fiscal year 2016, the
Compensation Committee issued annual equity awards to non-employee directors
valued at $90,000. The awards are designed to vest on the day before the first
anniversary of the grant unless the next regularly scheduled annual meeting
takes place before that date, in which case the awards vest on the day before
the annual meeting. The SIP expressly limits director awards such that the
maximum number of shares of stock that may be granted to any non-employee
director during any fiscal year may not exceed the number of shares having a
fair market value, as determined on the date of the grant, in excess of
$300,000.
Director Share
Ownership Policy
The Companys Corporate Governance
Guidelines require the Companys directors to maintain minimum stock ownership
with a fair market value of at least $225,000 within five years of appointment
to the Board. The Corporate Governance Guidelines provide that, upon attaining
the threshold share ownership level, a director will not fall out of compliance
simply because of a change in the market price of the stock.
2016 DIRECTOR
COMPENSATION
|
|
Fees Earned
or
|
Stock
Awards
|
|
Name
|
Paid in Cash
($)
|
($)
(1)
|
Total
($)
|
Mark W.
Addicks
|
90,000
|
90,003
|
180,003
|
F. Lane Cardwell,
Jr.
|
92,500
|
90,003
|
182,503
|
Kevin T.
Clayton
|
94,500
|
90,003
|
184,503
|
Donald E.
Hess
|
87,500
|
90,003
|
177,503
|
Bernard Lanigan,
Jr.
|
95,000
|
90,003
|
185,003
|
Jeffrey J.
ONeill
|
90,000
|
90,003
|
180,003
|
Stephen I.
Sadove
|
120,000
|
90,003
|
210,003
|
____________________
(1)
|
Represents the grant date fair
value of the equity awards as determined in accordance with U.S. generally
accepted accounting principles ("GAAP"). The Company calculates the grant
date fair value of restricted shares as the closing price of Common Stock on the date prior to the grant date.
The restricted shares awarded in fiscal year 2016 have a grant date fair
value of $6.32 per share. Additionally, the assumptions used in
calculating the grant date fair value of these awards are disclosed in
Note 10 of the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 2016.
|
2016 Proxy Statement
|
|
23
|
Table of Contents
Outstanding stock award data as of
May 31, 2016 is as follows:
|
Number of
Unvested
|
Name
|
Stock
Awards
|
Mark W.
Addicks
|
14,241
|
F. Lane Cardwell,
Jr.
|
14,241
|
Kevin T.
Clayton
|
14,241
|
Donald E.
Hess
|
14,241
|
Bernard Lanigan,
Jr.
|
14,241
|
Jeffrey J.
ONeill
|
14,241
|
Stephen I.
Sadove
|
14,241
|
The Company is committed to the
highest standards of integrity and corporate governance. We believe that our
corporate governance policies and practices meet or exceed the requirements of
the Sarbanes-Oxley Act of 2002, the rules of the SEC, and the NYSE listing
standards regarding corporate governance and other applicable corporate
governance requirements. In particular:
○
|
the Board has appointed an
active, experienced Lead Director;
|
○
|
the Board has adopted Categorical
Standards of Director Independence;
|
|
the Board has determined that
all of the non-management directors are independent, and that all Board
committees are composed of directors who are independent, as independence
of directors is defined under the NYSE corporate governance requirements
and under the Companys Categorical Standards;
the Board has determined that
all of the members of the Audit Committee are independent as independence
for audit committee members is defined under the NYSE corporate governance
requirements and under the Companys Categorical
Standards;
each member of the Compensation
Committee qualifies as a non-employee director (as defined under Rule
16b-3 under the Securities Exchange Act of 1934) and as an outside
director (as defined in Section 162(m) of the Internal Revenue Code), and
the Board has determined that all members of the Compensation Committee
are independent under the NYSE corporate governance requirements and under
the Companys Categorical Standards; further, the Compensation Committee
utilizes the services of a consultant whom the Committee has expressly
determined to be independent as independence for compensation committee
advisors is defined under the NYSE corporate governance
requirements;
|
○
|
the Board has established a
Governance Committee comprised of independent directors, which adopted its
own charter;
|
○
|
the Board has adopted Corporate
Governance Guidelines;
|
○
|
the Board has adopted a Code of
Business Conduct and Ethics applicable to all of the Companys employees,
including our executive officers;
|
○
|
the Board prohibits hedging and
pledging of Company equity by the Companys officers and directors; and
|
24
|
|
2016 Proxy Statement
|
Table of Contents
○
|
the Board has represented that it
will not, without prior shareholder approval, issue any series of
preferred stock for any defensive or anti-takeover purpose, for the
purpose of implementing any shareholder rights plan or with features
specifically intended to make any attempted acquisition of the Company
more difficult or costly.
|
The Companys Audit Committee
Charter, Executive Compensation Committee Charter, Governance Committee Charter,
Code of Business Conduct and Ethics, Corporate Governance Guidelines,
Categorical Standards for Director Independence, and Whistleblower Policy can be
found on our website at http://rubytuesday.com/investors/corporategovernance.
These materials are also available in print, without charge, upon request
directed to the Secretary, Ruby Tuesday, Inc., 150 West Church Avenue,
Maryville, Tennessee 37801.
2016 Proxy Statement
|
|
25
|
Table of Contents
COMPENSATION
DISCUSSION AND ANALYSIS
|
The following discussion provides
information concerning the compensation of the Companys Chief Executive
Officer, the next three most highly compensated executive officers, and the
Companys former Chief Financial Officer (collectively, these persons are
hereinafter referred to as the Named Executives).
2
For fiscal
year 2016, the Named Executives were:
Name
|
Title
|
James J.
Buettgen (J.J. Buettgen)
|
President and
Chief Executive Officer (President, CEO)
|
Brett A.
Patterson (B.A. Patterson)
|
Ruby Tuesday
Concept President (PRT, OPS)
|
Rhonda J.
Parish (R.J. Parish)
|
Chief Legal
Officer and Secretary (CLO)
|
David W.
Skena (D.W. Skena)
|
Chief
Marketing Officer (CMO)
|
Jill M.
Golder (J.M. Golder)
(1)
|
Former Executive Vice President, Chief Financial
Officer,
Treasurer, and Assistant Secretary (Former EVP,
CFO)
|
____________________
(1)
|
Ms.
Golder departed the Company on April 11, 2016. She served as the Companys
Chief Financial Officer from the beginning of fiscal year 2016 until her
departure.
|
Executive Summary
Ruby Tuesday is committed to
creating and sustaining a winning culture, building long-term shareholder value,
and maintaining an executive compensation policy that links pay to performance
while aligning incentive compensation with shareholder interests.
Our fiscal year 2016 financial
results, on an adjusted basis, were slightly lower than the prior year as we
were unable to improve our performance amid a backdrop of softness in casual
dining and increased promotional activity by our peers.
While our business and the entire
restaurant industry remains challenged, we acted upon opportunities throughout
fiscal year 2016 to strengthen Ruby Tuesdays brand leadership and believe these
efforts will be instrumental in enabling us to build momentum in fiscal year
2017. Specifically, we added seasoned leaders from outside the Company who bring
significant experience in the areas of marketing, development, and human
resources and complement our existing executive team.
____________________
2
|
Following Ms. Golders departure near the end of fiscal year 2016,
the Company immediately initiated a search for a new Chief Financial
Officer. After the start of fiscal year 2017, the Company, recognizing
that the search would take some additional time, appointed Sue Briley to
serve as Interim Chief Financial Officer for the Company. Ms. Briley did
not fulfill the principal financial officer function during fiscal year
2016,
|
26
|
|
2016 Proxy Statement
|
Table of Contents
We recently announced the launch of
our Fresh Start Initiative which will streamline our organization and which we
believe will ultimately create long-term value for
shareholders. The Fresh Start Initiative was developed to appeal to our
target demographic as we believe the biggest opportunity to drive more
significant topline growth and profitability over time is to re-engage with more
women and young families. The key components of the Fresh Start Initiative will
be rolled out in phases across multiple markets throughout the coming quarters
and include a comprehensive review and rigorous unit-level analysis of our
corporate-owned restaurant portfolio, a fresh new menu, a fresh new Garden Bar,
and efforts to improve our service and overall guest experience.
We believe these steps will make
Ruby Tuesday a stronger and healthier in fiscal year 2017 and position the Company to drive sustainable growth
going forward.
Executive Transitions
Since the start of fiscal year 2016,
we had the following transitions among our executive leadership team:
○
|
Brett Patterson was
promoted to Ruby Tuesday Concept President in July 2015, replacing Todd
Burrowes.
|
○
|
David Skena, our Chief
Marketing Officer, joined the Company in July 2015.
|
○
|
Mike Ellis, our Chief
Development Officer, joined the Company in February 2016.
|
○
|
Thomas Williams, our
Chief People Officer, joined the Company in April 2016.
|
○
|
Jill Golder, the
Companys Executive Vice President, Chief Financial Officer, Treasurer,
and Assistant Secretary, departed the Company in April 2016. On June 2,
2016, after the end of fiscal year 2016, Sue Briley was appointed to serve
as Interim Chief Financial Officer.
|
These changes to the leadership team
bring valuable skills and expertise in a wide range of areas, from communicating
with our guests to delivering a first-rate guest experience, creating a
rewarding and fulfilling place to work for our team members, and managing and
maximizing our real estate portfolio. The Board and executive team remain
committed to evaluating any needed transition prudently but expeditiously in
order to acquire the talent and experience necessary for compelling results for
shareholders.
Executive Compensation
During the past several years of
executive management transitions, the Compensation Committee has continued to
target executive compensation close to the 50th percentile of the Companys Peer
Group, as defined in this Compensation Discussion and Analysis section of this
Proxy Statement (with compensation for individual positions varying at the
discretion of the Compensation Committee), and incent management to achieve
goals directly related to bottom-line results as follows:
○
|
Base salaries for certain Named
Executives were increased during fiscal year 2016, but base salaries
generally remain near the 50th percentile of the Companys peers.
|
2016 Proxy Statement
|
|
27
|
Table of Contents
○
|
The short-term incentive levels
in fiscal year 2016 were similar to those in recent years and the plan
design focused on Adjusted EBITDA and Restaurant-Level Margin with
additional incentives to achieve positive Guest Count
Growth.
|
○
|
Total long-term incentive
compensation awards to our executives in fiscal year 2016 were generally
in line with historical levels. The long-term incentive plan design was
significantly altered to explicitly tie payouts under certain awards to
the Companys performance relative to a Total Shareholder Return compared
to a group of peer companies and relative to average Same Restaurant
Sales, both as measured over a three-year
period.
|
Fiscal Year 2016 Performance and Pay
Results
The Companys short-term financial
targets were established against Adjusted EBITDA, Restaurant-Level Margin, and
Guest Count Growth.
3
The Companys results on these metrics fell short of the
incentive compensation targets set for fiscal year 2016 under the Companys
short-term incentive program. In accordance with the Companys goal of tying
executive compensation to Company performance, the Named Executives received no
short-term incentive compensation for fiscal year 2016.
Consideration of Say-On-Pay
Shareholders Vote and Shareholder Feedback
More than 95% of the votes cast on an
advisory basis at our Annual Meeting of shareholders in 2015 were in favor of
the "say-on-pay" vote on executive compensation. The Compensation Committee is
confident that this positive vote is the direct result of the committees
careful assessment of feedback received from shareholders over the last few
years and its determination of the best way to incorporate many of the
shareholder-requested changes in the Companys long-term incentive compensation
practices. In connection with the 2014 and 2015 say-on-pay votes, the
Compensation Committee engaged in thorough discussions with our shareholders. In
particular, during fiscal year 2015, we engaged 6 of our 10 largest shareholders
representing approximately 33% of our outstanding shares about their
preferences with respect to compensation practices. Our discussions with
shareholders have reinforced the Boards belief in the value of linking
executive compensation to Company performance. Nearly all of the shareholders we
engaged expressed preferences for three changes to our long- and short-term
incentive compensation practices: (1) the use of different performance metrics
for our long- and short-term incentive compensation; (2) the use of a multi-year
performance period for long-term incentive compensation; and (3) the use of
metrics relative to total shareholder return.
The fiscal year 2016 short-term
incentive compensation plan targeted Adjusted EBITDA and Restaurant-Level
Margin because the Compensation Committee continued to
view those as critical metrics for the Companys near-
____________________
3
|
The specific definitions of Adjusted EBITDA,
Restaurant-Level Margin, and Guest Count Growth used by the Company
for its incentive compensation goals are provided in the Annual Cash
Incentive Compensation portion of the Compensation Discussion and
Analysis section of this Proxy Statement.
|
28
|
|
2016 Proxy Statement
|
Table of Contents
term performance. The Compensation
Committee has long viewed EBITDA as a strong indicator of the fundamental
financial health of the Company, and the adjustments, as described herein,
eliminated the effects of certain charges. Thus, a focus on Adjusted EBITDA
incented management to drive improvements in the Companys core operations and
gave management sufficient flexibility to make mid- and long-term investments in
the Company. The Compensation Committee also continued to use the short-term
incentive compensation program to focus the executive team on improving
Restaurant-Level Margin. The Compensation Committee believed that improving
those margins would both enhance the Companys bottom-line results and help it
to make the long-term investments needed to drive top-line growth in the future.
In addition to Adjusted EBITDA and Restaurant-Level Margin, the Compensation
Committee incented management to attain positive Guest Count Growth in fiscal
2016 by providing an additional incentive using that metric. The committee used
Guest Count Growth because it believed that positive guest counts are essential
indicators of success in the Companys brand transformation.
The Compensation Committee revised the
long-term incentive compensation structure for fiscal year 2016 to implement
many of the suggestions from our shareholders. These changes reflect the
committees thoughtful consideration of shareholder feedback and the committees
assessment of what is prudent and challenging, yet realistically attainable, for
the Company.
One-third of the long-term incentive
package consists of service-based restricted stock units (RSU). The RSUs vest
ratably over a three-year period and provide a stable equity grant for the
Companys executives. This aids in recruiting and retention and also ensures
executives are interested in preserving the longer-term value of
equity.
One-third of the package consists of
performance-based RSUs. This award cliff vests after fiscal year 2018 and payout
is determined based on the Companys Total Shareholder Return
4
relative to a
group of restaurant peers as measured by a 20-day average stock price at the
beginning of fiscal year 2016 compared to the 20-day average stock price at the
end of fiscal year 2018.
One-third of the package consists of a
performance-based cash award. This component also cliff vests after fiscal year
2018 and payout is determined based on Company performance from the beginning of
fiscal year 2016 to the end of fiscal year 2018 based on the Companys
three-year average Same Restaurant Sales performance.
In conjunction with the
re-introduction of expressly performance-based awards, the Board also adopted a
revised
clawback policy to help ensure that
performance attainment is measured accurately.
____________________
4
|
The specific definitions of Total Shareholder Return and
Same Restaurant Sales used by the Company for its incentive compensation
goals are provided in the Long-Term Incentive Compensation portion of
the Compensation Discussion and Analysis section of this Proxy
Statement.
|
2016 Proxy
Statement
|
|
29
|
Table of Contents
The Compensation Committee believes the
fiscal year 2016 incentive compensation structure is prudent, effective, and
addresses each of the three primary changes that our shareholders have
requested. In particular, the Compensation Committee believed this package was
appropriate because:
●
|
Both the short- and long-term incentive
packages were strongly performance-based and used different metrics that
were specifically chosen for their respective performance
periods.
|
○
|
The short-term incentive relied
on metrics the Compensation Committee believed would motivate
management to take the needed steps to deliver near-term
shareholder value.
|
○
|
The long-term incentives were
based on relative Total Shareholder Return and Same Restaurant Sales
metrics over multiple years, which the Compensation Committee believed are
the ultimate determinants of the brand transformations
success.
|
●
|
One-third of the long-term
incentive is service-based, helping to recruit and retain
talent.
|
●
|
The inclusion of a
performance-based cash award helps the Compensation Committee continue to
be a
good steward of the share capacity
shareholders have reserved for the incentive
programs.
|
Responsibility
for Setting Executive Compensation Philosophy
Compensation
Committee
The Compensation Committee is
responsible for setting the Companys philosophy regarding executive
compensation and for approving the Companys executive compensation programs
including eligibility, award opportunity levels, plan designs, performance
and/or service requirements, and the associated payouts under these programs. In
doing so, the Compensation Committee considers multiple factors, including
shareholder feedback, past say-on-pay vote results, expected financial results,
and the ability to accurately foresee those results at the time executive
compensation is determined, as well as the incentives the Compensation Committee
and Board deem appropriate for the Company.
Chief Executive
Officer
The Chief Executive Officer makes
recommendations to the Compensation Committee for specific pay levels for each
executive officer, other than himself, and for the key features and design
elements of the Companys executive compensation program. These recommendations
are based in part on the Chief Executive Officers evaluation of each executive
officers performance, the Companys performance, shareholder input, relevant
competitive market data, and other information and advice provided by the
committees independent compensation consultant and senior management. Mr.
Buettgen made such recommendations during the Compensation Committees annual
review in July 2015.
30
|
|
2016 Proxy Statement
|
Table of Contents
Senior
Management
Various members of senior management
participate in and support the executive compensation process. For example, the
Companys Chief Legal Officer and Secretary works directly with the Compensation
Committee Chair and the independent compensation consultant to coordinate
meeting agendas and materials and to provide historical compensation data
relevant to the topics being discussed as well as provides relevant legal
context and advice and assists with the preparation of required SEC disclosures.
The Companys Chief Financial Officer and Vice President, Principal Accounting
Officer and Controller provide relevant analysis and information regarding the
Companys historical and pro-forma performance against goals established by the
Compensation Committee under various incentive compensation programs. Upon his
appointment during fiscal year 2016, the Companys Chief People Officer began
assisting the Compensation Committee as well. No member of senior management is
in a position to recommend his or her own compensation or the compensation of
other members of senior management.
Independent
Consultant
As noted above, the Compensation
Committee retained Pearl Meyer for compensation advice in establishing the
fiscal year 2016 compensation packages. In March 2016, following a request for
proposals from independent compensation consultants, the Compensation Committee
retained the services of Meridian; accordingly, it no longer receives advice
from Pearl Meyer. Meridian advised the Compensation Committee with respect to
the executive compensation for fiscal year 2017 and certain items in fiscal year
2016 as identified in this Proxy Statement. The Compensation
Consultant
provides relevant data and information regarding market practices and
trends and, when appropriate, makes recommendations to the Compensation
Committee regarding the Companys compensation philosophy, strategy, plan
designs, policies, and related disclosures. The Compensation Consultant reports
directly to the Compensation Committee, and the Compensation Committee is not
beholden to the Compensation Consultants recommendations. The Compensation
Committee regularly meets in executive session with the Compensation Consultant
without any members of senior management present. Further, the Compensation
Committee has, based on its assessment, determined that both Pearl Meyer and
Meridian are (or were at the relevant time) independent as independence is
defined for compensation committee advisors under the NYSE corporate governance
requirements.
Overall
Compensation Philosophy
The overall objectives of the Companys
compensation program are to attract and retain the best possible executive
talent and to motivate the Companys executives to achieve the goals of the
Companys business strategy through a pay for performance compensation
structure. Specifically, the Companys compensation structure seeks to reward
executive performance that maximizes financial return to shareholders, prudently
invests capital, and achieves certain targets for the Companys sales and
profits. In any given year, the strategies the
2016 Proxy
Statement
|
|
31
|
Table of Contents
Compensation Committee uses to achieve
the objectives of attracting, retaining, and properly motivating executive
talent can vary.
As part of its overall deliberation
process for determining all executive compensation, the Compensation Committee
compares total compensation, as well as each component of compensation, against
the practices of similarly situated companies. The Compensation Consultant
assists the Compensation Committee in identifying those companies against which
it should measure the competitiveness of its compensation packages (the Peer
Group) and compiles and presents data from the Peer Group. Based on advice from
the Compensation Consultant, the Peer Group utilized by the Compensation
Committee to set fiscal year 2016 compensation levels consisted of the following
15 publicly-traded restaurant and retail companies:
●
Ann Inc.
●
Bob Evans Farms, Inc.
●
Brinker International, Inc.
●
Buffalo Wild Wings Inc.
●
CBRL Group, Inc.
|
●
The Cheesecake Factory
Inc.
●
Chipotle Mexican Grill,
Inc.
●
Dennys Corp.
●
DineEquity, Inc.
●
Fiesta Restaurant Group
|
●
Jos A Bank Clothiers
Inc.
5
●
Panera Bread
Company
●
Pier 1 Imports
Inc.
●
Red Robin Gourmet
Burgers
●
Texas Roadhouse, Inc.
|
The companies in the Peer Group were
selected based on similar business models, the same or similar industries, and
comparable annual revenues and market capitalization, and the talent pool from
which the Company could seek to recruit executives.
6
When reviewing and assessing executive
compensation levels relative to the Peer Group, the Compensation Committee seeks
to position each executives compensation at the 50
th
percentile within the Peer
Group for both aggregate compensation and each specific component of
compensation.
7
____________________
5
|
In June 2014, Jos. A. Bank Clothiers, Inc. merged with The
Mens Wearhouse, Inc. While the merger was complete prior to our
Compensation Committee making fiscal year 2016 compensation decisions, the
Committee relied upon a market study created by Pearl Meyer prior to the
merger. Thus, Jos. A. Bank was part of the Companys peer group for
benchmarking fiscal year 2016 compensation.
|
6
|
For purposes of benchmarking fiscal year 2017 compensation,
the Compensation Committee revised the Peer Group to eliminate Ann Inc.;
Chipotle Mexican Grill, Inc.; Jos A Bank Clothiers, Inc.; and Pier 1
Imports Inc. and to add BJs Restaurants, Inc.; Ignite Restaurant Group,
Inc.; Noodles & Company; and Bravo Brio Restaurant Group,
Inc.
|
7
|
The components of executive compensation include: base
salary; target short-term incentive; target total cash (base salary plus
target short-term incentive compensation); target long-term cash and
equity incentive compensation; and target total direct compensation (total
cash compensation plus target long-term incentive compensation). Desired
positioning (i) serves as a general guideline for managing overall pay
decisions relative to market benchmarks, with individual executive pay
decisions also based on a variety of other considerations, such as
performance, long-term potential, and tenure; and (ii) yields target pay
at the 50th percentile and actual pay that will be either below or above
the 50th percentile based on the Companys financial and stock price
performance.
|
32
|
|
2016 Proxy Statement
|
Table of Contents
These guidelines apply to the target
compensation levels for achieving target performance goals and reflect the
Companys desired emphasis on superior pay for superior performance. However, if
the Company does not achieve its target performance goals, then actual
compensation levels will be below target.
In addition to the desired positioning
of compensation relative to the Peer Group, the Compensation Committee considers
a variety of other relevant factors including the executives experience,
tenure, roles and responsibilities, and the importance of the role relative to
the Companys short-term and long-term success. In considering these factors,
the Compensation Committee relies on its overall judgment and does not use a
specific formula or weighting of the various factors.
In terms of the mix of compensation
elements, the Company seeks to achieve an appropriate balance between fixed and
variable compensation and between short-term and long-term incentives, with a
goal of having such total compensation being appropriately competitive with
respect to our Peer Group. The Named Executives target pay mixes for fiscal
year 2016 varied:
FISCAL YEAR 2016 APPROXIMATE PAY
MIX
|
Name
|
Fixed (Base Salary)
(% of Total
Compensation)
|
Variable (Target STI and LTI)
(% of
Total Compensation)
|
J.J. Buettgen
|
26
|
74
|
B.A. Patterson
|
36
|
64
|
R.J. Parish
|
47
|
53
|
D.W. Skena
|
47
|
53
|
J.M. Golder
|
34
|
66
|
These target pay mixes are aligned with
the Companys performance-based pay philosophy. They are similar to the target
pay mix of the Peer Group and, as discussed below in the section entitled,
Analysis of Risk Associated with Executive Compensation Plans, are not
believed to encourage excessive risk taking.
In addition to the key components, the
Company sponsors an executive retirement plan and a deferred
compensation plan and provides certain other benefits to
executives of the Company.
2016 Proxy
Statement
|
|
33
|
Table of Contents
Key Components
of Compensation
As noted above, the key components of
the Companys fiscal year 2016 executive compensation packages are base salary,
annual cash incentives, and long-term cash and equity incentives. These
components, along with other elements such as retirement benefits, are discussed
more fully below, but can be summarized as follows:
|
|
Element
|
Description
|
|
|
Base Salary
|
Designed to provide
appropriate predictability for executives and give a fixed, liquid
component to the compensation package.
|
Determined by the
Compensation Committee with the assistance of an independent consultant
and the CEO. CEO pay determined without CEO input.
|
|
Annual
Cash Incentive
Compensation
|
Designed to
incent the accomplishment of predetermined, Board-approved financial and
operating goals chosen to highlight critical strategic objectives for the
Company on an annual basis.
|
Performance
goals and payouts are determined by the Compensation Committee with the
assistance of an independent consultant.
|
Fiscal year 2016 performance goals
were:
|
○
Adjusted EBITDA;
○
Restaurant-Level Margin;
and
○
Guest Count
Growth.
|
Long Term
Incentive
Compensation
|
Designed to reward positive long-term
decisions and retain executive talent with service-based equity awards
with long-term payout timelines. Includes:
|
○
Service-based RSUs that vest
over three years;
○
Performance RSUs based on
relative Total Shareholder Return over a three-year period;
and
○
Performance cash based on
average Same Restaurant Sales over a three-year period.
|
|
|
Benefits
|
Provides
medical, dental, and vision insurance coverage, as well as enhanced life
insurance, accident and disability protection. The Company also provides
relocation assistance for certain newly-hired executives.
|
|
Retirement
Benefits
|
Provides
eligible executives a nonqualified, unfunded defined benefit plan that
generally requires 5 years of continuous service in a qualifying
position.
(1)
Also provides a
deferred compensation plan in lieu of its 401(k) plan, which is not
available to employees above a certain salary threshold.
|
|
Perquisite
Allowance
|
The Company
maintains one airplane for business travel that is available to executives
for personal use with the CEOs or CFOs permission provided that the
executive pay the Company for the incremental cost.
|
|
Termination and Change of
Control Benefits
|
Provided to
certain officers pursuant to plans adopted in fiscal year 2016 and to the
CEO pursuant to an employment
agreement.
|
(1)
|
As discussed below, the Company froze its Executive
Supplemental Pension Plan, limiting new entrants, on January 1,
2016.
|
Base Salary
A portion of each executives
compensation is comprised of base salary because the Compensation Committee
believes it is appropriate to provide predictability and a fixed, liquid
component in the compensation package. Individual base salaries are based on a
number of considerations, including time in the position and individual
performance.
34
|
|
2016 Proxy Statement
|
Table of Contents
Base salaries for executives are set by
the Compensation Committee at its meeting typically held in July. Any
modifications made at that meeting are implemented retroactively to the first
day of the then-current fiscal year. Adjustments to base salaries and salary
ranges reflect the Compensation Committees assessment of average movement in
the competitive market as well as individual performance. The Compensation
Committee is free to set executive base salaries at a level deemed appropriate
for the individual executive and his or her position.
Overall, base salaries for senior
executives have not increased significantly for several years. In fiscal year
2016, the Compensation Committee adjusted the salaries for certain Named
Executives to reflect its assessment of market rates and individual
contributions to the Company. In particular, Mr. Buettgens salary was raised to
$850,000 and Ms. Golders was raised to $400,000. While Mr. Pattersons salary
increased over the prior year to $375,000, this represented a decrease compared
to the salary of his predecessor. During fiscal year 2016, the Compensation
Committee raised Mr. Skenas salary to $325,000.
Annual Cash Incentive
Compensation
The Companys annual incentive plan
(i.e., its short-term incentive or bonus plan) directly links annual cash
incentive payments to the accomplishment of predetermined and Board-approved
financial and operating goals. It provides cash compensation to the Named
Executives to the extent that these goals are met.
Annual cash incentive plans are
established by the Compensation Committee for all executives of the Company,
including the Chief Executive Officer and the Named Executives, whose incentives
were determined pursuant to the Ruby Tuesday, Inc. 2015 Executive Incentive
Compensation Plan (the 2015 Executive Incentive Plan), which was approved by
shareholders at the 2015 Annual Meeting. In determining these plans, the
Compensation Committee considers each executives respective organizational
level and responsibilities, as well as competitive market practices.
Corporate performance goals are
established by the Compensation Committee near the beginning of each fiscal
year. These goals are closely aligned with our overall business strategy of
maximizing financial returns to shareholders, prudently investing capital, and
increasing the Companys sales; and the goals are designed to emphasize those
areas in which the Compensation Committee wishes to incent executive
performance. In setting the performance goals, the Compensation Committee
attempts to provide targets that are ambitious but achievable. The Compensation
Committee retains the discretion to adjust performance metrics based on a number
of factors, including infrequent and/or nonrecurring events affecting the
Company or its financial statements or changes in law or accounting. In making
such adjustments, however, the Compensation Committee considers whether the
changes would cause any portion of an award to be nondeductible under Section
162(m) of the Internal Revenue Code, as described more fully in the
Deductibility of Executive Compensation
section of this Proxy Statement. Under the
2015 Executive Incentive Plan, the Compensation Committee retains the discretion
to reduce any award by as much as 25% for any reason.
2016 Proxy
Statement
|
|
35
|
Table of Contents
For fiscal year 2016, the performance
metrics for executives and certain eligible employees of the Companys
Restaurant Support Center were: (i) Adjusted EBITDA achievement and (ii)
Restaurant-Level Margin, with (iii) the potential to increase the payout if the
Company achieved positive Guest Count Growth for the fiscal year.
8
The Compensation Committee chose to use
Adjusted EBITDA for the reasons outlined in the Consideration of Say-On-Pay
Shareholders Vote and Shareholder Feedback above.
Bonus Goal Details
Measure and payout by percent of target
(1)
|
|
Entry
|
Target
|
Maximum
|
|
(20%)
|
(80%)
|
(160%)
|
2016 Adjusted
EBITDA (in $1,000)
|
|
$70,591
|
$82,000
|
$93,409
|
Measure and payout by percent of
target
(1)
|
|
Entry
|
Target
|
Maximum
|
|
(5%)
|
(20%)
|
(40%)
|
2016 Restaurant-Level
Margin
|
|
17.4%
|
17.8%
|
18.2%
|
Guest Count Growth
|
|
Zero or Negative
|
Positive (20%
of
Target)
|
(1)
|
The Incentive payouts increase based upon straight line interpolation
between award levels.
|
The Compensation Committee determined
the targets for the performance metrics were realistically attainable but
difficult to meet based on the Companys recent performance and the economic
environment in general. For Named Executives, annual incentive compensation
awards were based on the following, depending on the structure of the individual
executives incentive award:
____________________
8
|
The performance goals for fiscal
year 2016 defined Adjusted EBITDA to mean earnings before interest,
taxes, depreciation and amortization ($20.3 million), as adjusted to
disregard the impact of (i) charges from accounting rules adopted or which
become effective after the end of the Companys fiscal year 2015 (none);
(ii) charges related to the high-level strategic direction of the Company
as recorded in accordance with U.S. generally accepted accounting
principles, as follows: new executive (vice president or higher)
transition costs, including recruiting and relocation fees; vice president
or higher terminations or retirements; costs associated with outsourcing
formerly-Support Service positions; divestiture guarantees; termination,
including settlement and curtailment charges, of any of the Companys
three defined benefit pension plans; losses from the extinguishment of
debt; and any Change in Control; and (iii) events beyond the control of
the Company, as follows: terrorist attacks, including those resulting from
credit and debit card data breaches; natural disasters; industry-wide food
borne illness outbreak or pandemic; and hostile shareholder activism
(none). For fiscal year 2016 performance purposes, the Company calculated
Restaurant-Level Margin, which under the 2015 Executive Incentive Plan
is Gross Profit measured at the restaurant level, as restaurant sales and
operating revenue less cost of goods sold, payroll and related costs, and
other restaurant operating costs, divided by restaurant sales and
operating revenue, all from continuing operations. For fiscal year 2016
performance purposes, the Company defined Guest Count Growth as the
year-over-year comparison of guest counts at Ruby Tuesday concept
restaurants open at least 18 months as of the first day of fiscal year
2016.
|
36
|
|
2016 Proxy Statement
|
Table of Contents
|
Percentage of
Base Salary
|
|
(without
Guest Count Growth kicker)
|
Name
|
Entry
|
Target
|
Maximum
|
(%)
|
(%)
|
(%)
|
J.J. Buettgen, President,
CEO
|
25
|
100
|
200
|
B.A. Patterson, PRT
|
20
|
80
|
160
|
R.J. Parish, CLO
|
12.5
|
50
|
100
|
D.W. Skena, CMO
|
12.5
|
50
|
100
|
J.M. Golder, Former EVP,
CFO
|
20
|
80
|
160
|
For fiscal year 2016, Adjusted EBITDA,
as calculated under the formula set by the Compensation Committee, was $48.5
million. Restaurant-Level Margin for fiscal year 2016 was 16.8%. Guest Count
Growth for the fiscal year was negative. Therefore, performance for fiscal year
2016 measured against the performance goals resulted in no payout to the Named
Executives.
Long-Term Incentive
Compensation
All long-term incentive awards have
been granted under the Companys shareholder-approved 1996 Stock Incentive Plan
(the 1996 SIP) or the SIP. Both plans permit grants of equity awards and cash
incentives to officers and employees. Equity awards are the Companys primary
long-term incentive for executives and are intended both as a reward for
positive long-term decisions and as a retention tool for the Company.
Historically, the Board has calibrated the mix of stock options, performance-
and service-based restricted stock and performance-based cash incentives to best
incent executive management to achieve the goals the Board deems most prudent.
In fiscal year 2016, in conjunction with the use of explicitly performance-based
equity incentives, the Compensation Committee began using RSUs. The long-term
incentive compensation granted to the Named Executives, consisted of a blend of
service- and performance-based RSUs and performance-based cash
awards.
The SIP provides for, among other
things:
○
|
specified performance
criteria;
|
○
|
prohibitions against re-pricing or
buyouts of options and so-called reload option grants;
|
○
|
prohibitions against payment of
dividends or dividend equivalent rights until the other equity rights to
which they relate vest;
|
○
|
a six-month holding requirement after
the vesting of restricted shares, subject to certain exceptions and a
carve out to permit use of some shares to satisfy tax withholding
obligations;
|
○
|
a minimum 30-month vesting period for
restricted stock not subject to a performance condition;
|
○
|
a minimum one-year vesting period for
performance-based restricted stock;
|
○
|
elimination of the ability to grant cash
awards for the purpose of offsetting an award recipients tax
consequences; and
|
2016 Proxy
Statement
|
|
37
|
Table of Contents
○
|
limitations on share
recycling.
|
For long-term incentive awards to
Named Executives in fiscal year 2016, approximately 33% of each Named
Executives grant value was provided in the form of service-based RSUs, 33% was
in the form of performance-based RSUs, and 33% was in the form of
performance-based cash awards. This mix was selected to effectively balance the
primary objectives of the long-term incentive program: shareholder alignment,
performance linkage, and recruiting/retention. The Compensation Committee
reviews the grant mix each year, and reserves the right to alter the grant mix
based on the relevant facts and circumstances leading up to each years grant.
Such facts and circumstances include the varying weight of the objectives
identified above as well as variables such as prevailing economic conditions,
the overall pay-for-performance relationship, the number of shares available for
grant under the shareholder-approved equity plan, the resulting aggregate grant
rate for the Company, and the Companys ability to set reasonable multi-year
performance goals.
In setting the annual long-term
incentive grant values, the Compensation Committee considers each executives
total compensation opportunity relative to the market information provided by
the Compensation Consultant, as well as factors such as the Companys
performance, the individuals performance, total equity grants to all
participants, the impact on share availability under the shareholder-approved
equity plan, and the accounting cost.
There was some year-over-year variation
in individual equity award values, but the total value of long-term incentive
equity awards granted to executives in fiscal year 2016 was similar to that
awarded in fiscal year 2015. The long-term incentive award values for the Named
Executives in fiscal year 2016, two-thirds of which were performance-based, were
as follows:
|
|
|
|
Performance-
|
|
Target Grant
|
Service-Based
|
Performance-Based
|
Based Cash
|
Name
|
Value ($)
|
RSU Value ($)
|
RSU Value ($)
|
Award ($)
|
J.J. Buettgen, President,
CEO
|
1,600,000
|
533,333
|
533,333
|
533,333
|
B.A. Patterson, PRT
|
375,000
|
125,000
|
125,000
|
125,000
|
R.J. Parish, CLO
|
200,000
|
66,667
|
66,667
|
66,667
|
D.W. Skena, CMO
|
200,000
|
66,667
|
66,667
|
66,667
|
J.M. Golder, EVP, CFO
|
450,000
|
150,000
|
150,000
|
150,000
|
Service-Based RSUs
.
In fiscal year 2016, the
Compensation Committee chose to incent senior management performance and
retention with service-based RSUs. Service-based RSUs incent retention because
receipt is dependent upon continued employment. Simultaneously, the value of the
award is dependent upon the value of the Companys stock. Consequently, the
Compensation Committee concluded that the use of RSUs correlates executive
compensation with return to our shareholders. The 2016 service-based RSUs vest
in one-third
38
|
|
2016 Proxy Statement
|
Table of Contents
increments over three years or earlier
under certain events such as death, disability, or retirement, or a change in
control.
Performance-Based RSUs
. In fiscal year
2016, the Compensation Committee chose to explicitly incent management to
achieve Total Shareholder Return by tying a portion of the long-term incentive
package directly to the Companys relative Total Shareholder Return. The 2016
performance-based RSUs vest based on the Companys Total Shareholder Return
9
compared to a group of peer companies over a three-year period. The awards may
vest earlier under certain events such as death, disability, termination without
Cause (as defined, as applicable, in the 1996 SIP or the SIP), but the payout is
nevertheless dependent upon actual performance. The number of shares was
determined with the assistance of a valuation firm. The firm determined the
value of the shares based on a Monte Carlo simulation. The simulation determined
the value of each share to be $7.37. The Company then divided each recipients
total award value by the per share value to arrive at the number of shares to be
awarded. The Companys Total Shareholder Return is compared to the following
group of restaurant companies:
Ark Restaurant Corp.
|
Cosi Inc.
|
Ignite Restaurant Group,
Inc.
|
BJs Restaurants, Inc.
|
Cracker Barrel Old Country Store,
|
Kona Grill, Inc.
|
|
Inc.
|
|
Bloomin Brands, Inc.
|
Darden Restaurants,
Inc.
|
Lubys, Inc.
|
Bob Evans Farms, Inc.
|
Del Friscos Restaurant Group,
Inc.
|
Noodles &
Company
|
Bravo Brio Restaurant Group,
Inc.
|
Dennys Corporation
|
Panera Bread
Company
|
Brinker International,
Inc.
|
DineEquity, Inc.
|
Potbelly
Corporation
|
Buffalo Wild Wings Inc.
|
Diversified Restaurant Holdings,
|
RAVE Restaurant Group,
Inc.
|
|
Inc.
|
|
Chanticleer Holdings,
Inc.
|
Famous Daves of America
Inc.
|
Red Robin Gourmet Burgers
Inc.
|
Chipotle Mexican Grill,
Inc.
|
Fiesta Restaurant Group,
Inc.
|
Texas Roadhouse,
Inc.
|
Chuys Holdings, Inc.
|
Frischs Restaurants, Inc.
(1)
|
The Cheesecake
Factory
|
|
|
Incorporated
|
(1)
|
Frischs Restaurants, Inc. ceased being a public company on September 4,
2015 and therefore will not have an effect on the
Companys percentile ranking,
|
The performance-based RSUs vest
depending on the percentile ranking of the Company compared to the peer group
based on the following scale:
____________________
9
|
The performance-based RSUs define
Total Shareholder Return to mean the change in stock price plus
dividends. For purposes of the RSUs, Total Shareholder Return determined
by the difference between the average closing stock price over the first
20 trading days of fiscal year 2016 and the average closing stock price
over the last 20 trading days of fiscal year
2018.
|
2016 Proxy
Statement
|
|
39
|
Table of Contents
Company Percentile v.
Peer Group
|
Payout as a Percentage
of Target
|
> 75th
Percentile
|
150%
|
50th Percentile to 75th
Percentile
|
Straight-line
Interpolation
|
50th
Percentile
|
100%
|
Above 25th Percentile to
50th Percentile
|
Straight-line
Interpolation
|
25th Percentile and
below
|
0%
|
Performance-Based Cash
Awards
. In fiscal year 2016, the
Compensation Committee chose to explicitly incent management to achieve
longer-term same-restaurant sales improvement by tying a portion of the
long-term incentive package directly to the Companys average Same Restaurant
Sales
10
over a three-year period. The 2016 performance-based cash awards vest based on the Companys
average annual Same Restaurant Sales. The awards may vest earlier under certain
events such as death, disability, termination without Cause (as defined, as
applicable, in the 1996 SIP or the SIP), but the payout is nevertheless
dependent upon actual performance. Vesting
and payout is determined using the following scale:
|
3-Year Average Same
Restaurant
|
Payout as a Percentage
of Target
|
Performance
Level
|
Sales Performance Result
(%)
|
(%)
|
Maximum
|
4.0
|
200
|
Target
+1.5
|
3.5
|
175
|
Target
+1.0
|
3.0
|
150
|
Target
+0.5
|
2.5
|
125
|
Target
|
2.0
|
100
|
Threshold
+1.5
|
1.5
|
95
|
Threshold
+1.0
|
1.0
|
80
|
Threshold
+0.5
|
0.5
|
65
|
Threshold
|
0.0
|
50
|
As noted above, the Compensation
Committee added the performance-based RSUs and the performance-based cash awards
to the fiscal year 2016 long-term incentive compensation package based on
significant feedback from the Companys shareholders. After considering that
feedback, and evaluating the Companys progress in its brand transformation, the
Compensation Committee concluded it was appropriate to make the shift toward a
more strongly performance-based compensation package.
____________________
10
|
The awards define Same
Restaurant Sales to mean the year-to-year comparison of sales volumes
for restaurants that, in the year being measured, have been open at least
18 months. If the three-year average Same Restaurant Sales performance
result is below 0.0%, there is no
payout.
|
40
|
|
2016 Proxy Statement
|
Table of Contents
Executive Stock Ownership
Guidelines
The Company believes that equity
ownership plays a key role in aligning the interests of Company personnel with
Company shareholders. To reinforce this philosophy, ownership guidelines for
Common Stock have been developed for the Companys top executives, which each
executive must meet by July 2018 or five years after the executives
appointment, whichever is later. The guidelines provide that certain executive
officers must hold the lesser of (i) a specified number of shares or (ii) any
number of shares, so long as their aggregate total value is equal to a specified
multiple of the executives salary. Those guidelines are as follows:
Position
|
Multiple of
Base
Salary
|
Number of
Shares
|
Chief Executive
Officer
|
3.0
|
300,000
|
Ruby Tuesday Concept
President;
all other senior executives
|
1.0
|
30,000
|
Certain other vice
presidents
|
-
|
5,000
|
These objectives may be accomplished
only through actual stock ownership or unvested time-based restricted stock or
RSU awards. Stock options and performance-based equity awards do not count
toward satisfying the guideline unless they are exercised and held (in the case
of options) or have vested and the performance criteria is achieved (in the case
of performance-based equity awards). Once an executive attains the required
ownership levels, he or she will not fall out of compliance solely because of a
change in the Companys stock price. During fiscal year 2016, the guidelines
were amended such that, until the executive reaches the specified ownership
level, he or she must retain at least 50% (on an after-tax basis) of
compensation-based equity awarded to the executive by the Company.
Ruby Tuesday, Inc. Executive
Severance Plan and Ruby Tuesday, Inc. Change In Control Severance
Plan
In fiscal year 2014, the Company
terminated the Ruby Tuesday, Inc. Severance Pay Plan because the Board viewed
its payouts as incongruent with market practice and an impediment to the
Companys transformation strategy.
After receiving feedback from
candidates for certain senior executive positions, and with the advice from
Meridian, the Compensation Committee concluded that the adoption of revised
severance plans were prudent and necessary to aid in recruiting and retaining
critical talent. Therefore, in fiscal year 2016, it adopted the Ruby Tuesday,
Inc. Executive Severance Plan (the Severance Plan) and the Ruby Tuesday, Inc.
Change in Control Severance Plan (the CIC Plan; collectively the Severance
Plans) for employees of the Company at the level of Vice President or above,
including the Named Executives.
2016 Proxy
Statement
|
|
41
|
Table of Contents
The Severance Plans require executives
to execute a general release of claims against the Company as a condition of
receipt of payments thereunder, and both plans provide that any payment pursuant
thereto is in lieu of any other payments that may be due to the executive under
any other plan or agreement (excluding any outstanding long-term incentive plan
awards, whose treatment is determined pursuant to the applicable long-term
incentive plan under which the award was granted and the related award
agreement). In addition, both Severance Plans require compliance with certain
restrictive covenants, including noncompetition, nonsolicitation, nondisclosure
of confidential information, and nondisparagement.
Both Severance Plans became effective
on May 1, 2016, and will remain in effect for three years, following which time
the plans automatically renew for successive one-year periods unless the Board
or the Committee provide written notice of termination to the then-covered
executives at least 120 days prior to the end of the then-applicable
term.
Executive
Compensation Clawback Policy
The Company has an Executive
Compensation Clawback Policy (the Clawback Policy) for the purpose of
recovering any compensation, whether already paid or calculated to be paid,
granted to an executive of the Company as a result of material noncompliance
with financial reporting requirements that results in a restatement of the
Companys financial results, to the extent that such compensation is
attributable to the erroneous financial data in excess of what would have been
paid under the accounting restatement. The recovery period pursuant to the
policy is up to three years preceding the date on which the Company is required
to prepare the accounting restatement. In fiscal year 2016, the Board amended
the Clawback Policy to clarify and restrict its ability to waive clawbacks. The
Company intends to review the Clawback Policy in connection with the
implementation of the SECs and NYSEs rules, as required by the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
Other
Benefits
Executive Supplemental
Pension Plan
The ESPP is a nonqualified, unfunded,
defined-benefit retirement plan for select employees. As a condition of entry
into the ESPP, participants generally must complete five years of continuous
service in one or more qualifying job positions and must have achieved a minimum
salary threshold, as described in the ESPP. Benefits payable under the ESPP are
reduced by the amount of benefits payable to a participant in the Retirement
Plan.
Pursuant to his Employment Agreement,
Mr. Buettgen received credit under the ESPP for his years of service during his
most recent tenure with Darden. This credit only applied to the determination of
vesting under the ESPP; it does not count for benefit accrual purposes. As a
result, Mr. Buettgen vested in the ESPP during fiscal year 2016.
42
|
|
2016 Proxy Statement
|
Table of Contents
During fiscal year 2016, the
Compensation Committee determined that the plan is out of step with market
practice and is no longer appropriate for the Company. It therefore froze the
ESPP as of January 1, 2016, prohibiting new entrants and the accrual of new
benefits, with a limited exception for two long-serving, non-Named Executive
employees, who will be permitted to enter the ESPP on January 1, 2018.
Deferred Compensation Plan
The Company does not offer top
executives the opportunity to participate in the 401(k) Plan. Instead, the
Company maintains the Ruby Tuesday, Inc. 2005 Deferred Compensation Plan (the
Deferred Compensation Plan), under which eligible employees currently may
elect to defer up to 50% of their annual base compensation to a maximum
generally of $18,000 annually. The Company does not make matching contributions
for executives who hold a position of Senior Vice President or above and who
participate in the ESPP. To improve employee retention throughout the Company
and to align with market practices, during fiscal year 2016 the Company amended
the Deferred Compensation Plan and the 401(k) Plan to initiate matching
contributions to eligible participants based upon their individual
contributions.
Mr. Buettgens Employment Agreement
provides that he is eligible to participate in the Deferred Compensation Plan
pursuant to the plans terms. The Employment Agreement further provides that Mr.
Buettgen receive credit for his years of service during his most recent tenure
with Darden. This credit applies to the determination of eligibility; vesting;
and Company contributions, if any, under the plan.
11
Long-Term Disability
Insurance Program
The Company sponsors a group long-term
disability plan for all full-time employees. This plan provides a benefit of 60%
of the employees income up to a maximum of $10,000 per month. This coverage is
paid for by the employee.
The Company has secured additional
long-term disability coverage for certain executives who would not receive a
benefit of 60% of their income because of the $10,000 maximum benefit.
Specifically, the executive coverage provides an initial $5,000 benefit and then
the group policy provides up to $10,000 to reach the 60% income replacement
goal. The Named Executives have coverage in addition to the group policy to
reach the 60% income replacement level. The executive long-term disability
coverage is delivered through individual policies for which the Company pays the
premiums until the coverage terminates at either retirement or separation from
service.
__________________
11
|
As noted above, the Deferred
Compensation Plan does not permit matching contributions for executives
above the level of Senior Vice President who participate in the ESPP.
|
2016 Proxy Statement
|
|
43
|
Table of Contents
Executive Life Insurance
Plan
The Company also maintains an Executive
Life Insurance Plan (ELIP) which provides participants with a life insurance
benefit equal to four times their annual base salary. Under the ELIP, the
Company purchases a term life insurance policy in each participants name and
pays the premium on such policy during the participants employment with the
Company. At retirement, the participant may choose to assume payment of the
premium to continue the coverage.
The Company also provides a group
Accidental Death & Dismemberment policy for executives who participate in
the ELIP. This policy provides for coverage in the amount of four times base
salary up to a maximum of $1 million. The Company pays the premiums on this
policy until coverage terminates at either retirement or separation from
service.
Perquisites
In fiscal year 2016, the Company
maintained one airplane for business travel by the Companys employees. In
addition to business travel, the Board permits the Chief Executive Officer and,
upon the approval of the Chief Executive Officer or the Chief Financial Officer,
other executives, to use the Companys airplane for personal travel. The Chief
Executive Officer and other executives are required to pay the Company for the
incremental cost of such use.
Tax
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue
Code limits the amount of individual compensation for certain executives that
may be deducted by the employer for federal tax purposes in any one fiscal year
to $1 million, unless such compensation is performance-based. In order to
maximize the Companys ability to deduct certain performance-based compensation
under Section 162(m) of the Internal Revenue Code, the Company obtained
shareholder approval for the 2015 Executive Incentive Plan and the performance
targets contained in the SIP at the 2015 Annual Meeting. While it is possible
for the Company to compensate or make awards under incentive plans and otherwise
that do not qualify as performance-based compensation that is tax deductible
under Section 162(m), the Compensation Committee, in structuring compensation
programs for the Companys top executive officers, gives strong consideration to
the tax deductibility of awards.
Analysis of
Risk Associated with Executive Compensation Plans
In setting compensation, the
Compensation Committee also considers the risks to shareholders and to
achievement of our goals that may be inherent in the compensation program.
Although a significant portion of our executives compensation is
performance-based and at-risk, the Company believes that its executive
compensation plans are appropriately structured and do not encourage executives
to take unnecessary and excessive risks.
44
|
|
2016 Proxy Statement
|
Table of Contents
The following elements of our fiscal
year 2016 executive compensation plans and policies were considered when
evaluating whether such plans and policies encourage our executives to take
unreasonable risks:
○
|
we set performance goals that we believed were
reasonable in light of past performance and market conditions;
|
○
|
the short-term incentive compensation package
targets Adjusted EBITDA, Restaurant-Level Margin, and Guest Count Growth,
incenting executives to make decisions that the Compensation Committee
believes will drive immediate shareholder value;
|
○
|
we used a blend of service- and
performance-based equity and cash awards to discourage excessive risk
taking while simultaneously incenting future performance;
|
○
|
the service-based RSUs vest over three years to
help recruitment and retention and help ensure that our executives
interests aligned with those of our shareholders for the long-term
performance of the Company;
|
○
|
the performance-based RSUs target
relative Total Shareholder Return compared to a group of peers over a
multi-year period, incenting executives to deliver longer-term value to
shareholders;
|
○
|
the performance-based cash awards target Same
Restaurant Sales growth over a multi-year period, incenting executives to
make investments that will drive longer-term performance for the Company;
|
○
|
our short- and long-term incentive compensation
performance metrics and performance periods differ in order to incent
executives to balance short-term shareholder return with investments that
will help ensure shareholder value over the longer term;
|
○
|
assuming achievement of at least a minimum
level of performance, payouts under our performance-based plans resulted
in some compensation at levels below full target achievement, rather than
an all-or-nothing approach;
|
○
|
our executive stock ownership policy required
our executives to hold certain levels of stock, including restricted stock
and RSUs but excluding stock options, which aligns a portion of their
personal wealth to the Companys long-term performance; and
|
○
|
we have a Clawback Policy as described above
under the Executive Compensation Clawback Policy section above.
|
COMPENSATION
COMMITTEE REPORT
|
The Compensation Committee has reviewed
and discussed the foregoing Compensation Discussion and Analysis section of
this Proxy Statement with management. Based on this review, the Compensation
Committee has recommended to the Board of Directors that the Compensation
Discussion and Analysis section of this Proxy Statement be included in this
Proxy Statement for filing with the SEC. This report is submitted by the
Compensation Committee, the current members of which are named below.
F. Lane Cardwell,
Jr.
Kevin T. Clayton
Donald E.
Hess
Stephen I. Sadove (Chair)
2016 Proxy Statement
|
|
45
|
Table of Contents
2016 SUMMARY
COMPENSATION TABLE
|
The following table summarizes the
total compensation paid to or earned by each of the Named Executives during
fiscal years 2016, 2015, and 2014.
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
Non-Equity
|
Nonqualified
|
|
|
|
|
|
|
|
Incentive Plan
|
Deferred
|
All Other
|
|
Name and
|
|
Salary
|
Stock
|
Option
|
Compensation
|
Compensation
|
Compensation
|
|
Principal
Position
(1)
|
Year
|
($)
(2)
|
Awards
(3)
|
Awards
(3)
|
($)
(4)
|
Earnings ($)
(5)
|
($)
(6)
|
Total ($)
|
J.J. Buettgen,
|
2016
|
850,000
|
980,873
|
-
|
-
|
503,653
|
12,410
|
2,346,936
|
President, CEO
|
2015
|
800,000
|
750,003
|
750,951
|
1,600,000
|
-
|
44,052
|
3,945,006
|
|
2014
|
800,000
|
375,001
|
750,816
|
-
|
-
|
113,766
|
2,039,583
|
B.A. Patterson,
|
2016
|
357,121
|
229,894
|
-
|
-
|
-
|
12,197
|
599,212
|
PRT, Ops
|
|
|
|
|
|
|
|
|
R.J. Parish,
|
2016
|
325,000
|
122,614
|
-
|
-
|
-
|
169,722
|
617,336
|
CLO and
|
2015
|
65,000
|
-
|
-
|
71,250
|
-
|
115,000
|
251,250
|
Secretary
|
|
|
|
|
|
|
|
|
D.W. Skena, CMO
|
2016
|
234,808
|
122,614
|
-
|
-
|
-
|
60,621
|
418,043
|
J.M. Golder,
|
2016
|
357,981
|
275,870
|
-
|
-
|
-
|
3,617
|
637,468
|
Former
|
2015
|
375,000
|
387,503
|
187,739
|
450,000
|
-
|
112,406
|
1,512,648
|
EVP, CFO
|
2014
|
275,000
|
31,252
|
207,766
|
-
|
-
|
56,173
|
570,191
|
__________________
(1)
|
Messrs. Patterson and Skena were not Named Executives in
fiscal 2015 or 2014, and Ms. Parish was not a Named Executive in fiscal
2014.
|
(2)
|
Represents actual base salary payments made to the Named
Executives in fiscal 2016, 2015, and 2014. Mr. Patterson was promoted to
his current position during fiscal year 2016, and his annualized salary
for that year was $375,000. Mr. Skena and Ms. Golder were not employees of
the Company for all of fiscal year 2016, and their annualized salaries for
that year were $325,000 and $400,000 respectively. Ms. Parish was not an
employee of the Company for all of fiscal year 2015, and her annualized
salary in that year was $325,000.
|
(3)
|
Represents the grant date fair value of the equity
awards expected to vest. The assumptions used in calculating the grant
date fair value of these awards are disclosed in Note 10 to the
consolidated financial statements contained within the Companys Annual
Report on Form 10-K for the fiscal year ended May 31, 2016. Messrs.
Buettgen, Patterson, Skena, and Mses. Parish and Golder received stock
awards in fiscal year 2016 which had a grant date fair value of $6.51. Mr.
Buettgen and Ms. Golder received stock awards in fiscal year 2015 which
had a grant date fair value of $5.91. Ms. Golder also received a stock
award in fiscal year 2015 with a grant date fair value of $7.31. Mr.
Buettgen and Ms. Golder received stock awards in fiscal year 2014 which
had a grant date fair value of $9.34.
|
|
The Company calculates the grant date fair value of
service-based stock options using a Black-Scholes option pricing model and
calculates the grant date fair value of performance-based stock options
with a market condition using a Monte Carlo simulation. The assumptions
used in calculating the grant date fair value of the stock option awards
are described below:
|
Grant Date
|
Interest Rate
|
Volatility (%)
|
Dividend Yield
|
Expected Term
|
|
(%)
|
|
(%)
|
(Years)
|
August 4, 2014
|
1.3
|
42.9
|
0.0
|
4.0
|
August 4, 2014
|
1.5
|
44.5
|
0.0
|
4.5
|
46
|
|
2016 Proxy Statement
|
Table of Contents
August 4, 2014
|
1.7
|
45.5
|
0.0
|
5.0
|
July 24, 2013
|
0.5
|
42.9
|
0.0
|
2.4
|
July 24, 2013
|
1.0
|
45.3
|
0.0
|
4.0
|
July 24, 2013
|
1.2
|
59.8
|
0.0
|
4.5
|
July 24, 2013
|
1.4
|
69.0
|
0.0
|
5.0
|
|
Additionally, the assumptions
used in calculating the grant date fair value of these awards are
disclosed in Note 10 of the
Company's Annual Report on Form 10-K for the fiscal year ended May
31, 2016.
|
|
|
|
A portion of fiscal year 2016
long-term incentives were granted in the form of performance-based cash
awards and are excluded from this table. Should performance and vesting
criteria be met, the earned award value will be reflected in fiscal
2018.
|
(4)
|
Other than as shown in the
Salary or All Other Compensation columns of this table, no
non-performance-based cash payments were made to the Named Executives in
fiscal years 2016, 2015, or 2014. The amounts reflected in this column are
performance-based cash incentives.
|
(5)
|
Represents the actuarial
increase during fiscal years 2016, 2015, and 2014 in the pension value
provided under pension plans only as the Company does not pay above-market
or preferential earnings on non-qualified deferred
compensation.
|
(6)
|
All Other Compensation is as
follows:
|
|
Executive
|
|
|
|
|
|
|
Life
|
Accidental Death
|
Long-Term
|
|
|
|
|
Insurance
|
&
|
Disability
|
Auto
|
Relocation-
|
|
|
Payments
|
Dismemberment
|
Premiums
|
Allowance
|
Related
|
|
Name
|
($) (a)
|
Premiums
($)
|
($)
|
($)
|
Costs ($)
|
Total
($)
|
J.J. Buettgen
|
7,743
|
432
|
4,235
|
-
|
-
|
12,410
|
B.A. Patterson
|
2,273
|
432
|
2,639
|
6,853
|
-
|
12,197
|
R.J. Parish
|
-
|
-
|
2,937
|
-
|
166,785
|
169,722
|
D.W. Skena
|
-
|
-
|
634
|
-
|
59,987
|
60,621
|
J.M. Golder
|
-
|
396
|
3,221
|
-
|
-
|
3,617
|
__________________
|
(a)
|
The Company maintains an
Executive Life Insurance Plan (ELIP) which provides participants with a
life insurance benefit equal to four times their projected annual base
salary at age 60. Under the ELIP, the Company purchases a term life
insurance policy in each participants name and pays the premium on such
policy during the participants employment with the Company. At
retirement, the participant may choose to assume payment of the premium to
continue the coverage. The Company also provides a group Accidental Death
& Dismemberment policy for executives who participate in the ELIP.
This policy provides for coverage in the amount of four times base salary
up to a maximum of $1 million. The Company pays the premiums on this
policy until coverage terminates at either retirement or separation from
service.
|
Chief Executive Officer
Compensation
In order to secure the employment of
Mr. Buettgen, and to protect the Companys interests in the event of a
separation of employment, the Company entered into an employment agreement with
Mr. Buettgen (the Employment Agreement). The material terms of the Employment
Agreement beyond those related to Mr. Buettgens transition in fiscal year 2013
are as follows:
○
|
Base Salary. Base salary of
$800,000 per year;
12
|
__________________
12
|
As noted above, the
Compensation Committee increased Mr. Buettgens base salary in fiscal year
2016.
|
2016 Proxy Statement
|
|
47
|
Table of Contents
○
|
Annual Cash Incentive
Compensation. Eligibility for Annual Cash Incentive Compensation up to a
total of 200% of base salary;
|
○
|
Annual Equity Awards. Eligibility
for equity awards of such type, of such amount, and with such terms and
conditions as determined in the sole discretion of the Compensation
Committee;
13
|
○
|
One-Time Equity Awards. Grants of
certain equity awards, which have previously been disclosed. As of the end
of fiscal year 2016, no equity awards issued under Mr. Buettgens
Employment Agreement are outstanding; all such awards have either vested
or failed to vest pursuant to their terms;
14
|
○
|
Employee Benefits. Eligibility to
participate in Company-sponsored retirement and health and welfare benefit
plans;
|
○
|
Termination Without Cause or
Resignation for Good Reason. Lump-sum payment of 300% of base salary in
the event of Termination Without Cause or Resignation for Good Reason, so
long as Mr. Buettgen complies with the terms of his Employment
Agreement;
15
and
|
○
|
Leadership Covenants. Mr.
Buettgen must:
|
|
|
refrain from disclosing
confidential and trade secret information;
|
|
|
refrain from soliciting Company
employees for three years following his termination; and
|
|
|
refrain from other employment
while employed with the Company.
16
|
Under the terms of his stock option and
restricted stock awards in his Employment Agreement, Mr. Buettgen is
prohibited from competing with the Company for a
period of 2 years after the awards vest.
Mr. Buettgen is also eligible to
participate in the Companys ESPP and Deferred Compensation Plan, and is subject
to the Companys executive stock ownership policy and clawback policy, each of
which are described further elsewhere in this Compensation Discussion and
Analysis section of this Proxy Statement.
__________________
13
|
Pursuant to this
provision, the Compensation Committee has included Mr. Buettgen in the
annual incentive compensation packages awarded to senior management.
|
14
|
This includes a
High-Performance Award of 250,000 shares of performance-based stock
options that vested only in the event the Companys stock price
appreciates to $14 per share (or more) for a period of 20 consecutive
trading days within the first three
years
of Mr. Buettgens employment. During fiscal year 2016, these
High-Performance Award options were canceled, having failed to vest in the
required timeframe. The final tranches of Mr. Buettgens service-based
High-Performance stock option award and his Make-Whole stock option award
vested during fiscal year 2016.
|
15
|
Should Mr. Buettgen receive
payment under one of the Companys Severance Plans, such payment would
require that any payment under the Employment Agreement be waived.
|
16
|
Capitalized terms herein are
defined in Mr. Buettgens Employment Agreement.
|
48
|
|
2016 Proxy Statement
|
Table of Contents
GRANTS OF
PLAN-BASED AWARDS IN FISCAL YEAR
2016
|
The following table provides
information concerning the annual performance bonus and long-term incentive
awards made to each of the Named Executives during fiscal year 2016. For a
complete understanding of the table, please read the narrative disclosures that
follow the table.
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Grant
|
|
|
|
|
|
|
|
|
Awards:
|
|
Date Fair
|
|
|
|
|
|
|
|
|
Number
|
Exercise
|
Value of
|
|
|
Estimated Future Payouts
Under
|
Estimated Future Payouts
Under
|
of Shares
|
or Base
|
Stock and
|
|
|
Non-Equity Incentive Plan Awards
|
Equity Incentive Plan Awards
|
of Stock
|
Price of
|
Option
|
|
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
or Units
|
Awards
(5)
|
Awards
(6)
|
Name
|
Grant Date
|
($)
|
($)
|
($)
|
(#)
|
(#)
|
(#)
|
(#)
|
($/Sh)
|
($)
|
J.J.
|
08/23/15
|
212,500
|
850,000
|
1,700,000
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
Buettgen
|
08/23/15
|
-
|
-
|
-
|
36,183
|
72,365
|
108,548
(2)
|
81,925
(3)
|
6.51
|
980,873
|
B.A.
|
08/23/15
|
71,760
|
287,042
|
574,084
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
Patterson
|
08/23/15
|
-
|
-
|
-
|
8,481
|
16,961
|
25,442
(2)
|
19,201
(3)
|
6.51
|
229,894
|
R.J.
|
08/23/15
|
40,625
|
162,500
|
325,000
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
Parish
|
08/23/15
|
-
|
-
|
-
|
4,523
|
9,046
|
13,569
(2)
|
10,241
(3)
|
6.51
|
122,614
|
D.W.
|
08/23/15
|
35,156
|
140,625
|
281,250
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
Skena
|
08/23/15
|
-
|
-
|
-
|
4,523
|
9,046
|
13,569
(2)
|
10,241
(3)
|
6.51
|
122,614
|
J.M.
|
08/23/15
|
80,000
|
320,000
|
640,000
(1)
|
-
|
-
|
-
|
-
|
-
|
-
|
Golder
|
08/23/15
|
-
|
-
|
-
|
10,177
|
20,353
|
30,530
(2);(4)
|
23,041
(3);(4)
|
6.51
|
275,870
|
____________________
(1)
|
Represents the potential payout
range as established under the 2015 Executive Incentive Compensation Plan.
The payout range under the 2015 Executive Incentive Compensation Plan is
from 25% to 200% of base salary for Mr. Buettgen, 20% to 160% of base
salary for Mr. Patterson and Ms. Golder, and 12.5% to 100% for Ms. Parish
and Mr. Skena. The amounts presented in the table above for Messrs.
Patterson and Skena are prorated based on the date for which they became a
named executive and their respective annual salaries. Further discussion
of the 2015 Executive Incentive Compensation Plan and non-equity incentive
awards for the Named Executives can be found in the "Annual Cash Incentive
Compensation" section of the "Compensation Discussion and Analysis"
section of this Proxy Statement. The actual fiscal year 2016 payout can be
found in the column titled "Non-Equity Incentive Plan Compensation" in the
"Summary Compensation Table" section of this Proxy Statement.
|
(2)
|
Represents the potential payout
range of performance-based restricted stock units granted in fiscal year
2016. Awards vest based on a total shareholder return metric for fiscal
years 2016-2018. The combined maximum payout under the performance goals
is 150% of the target award. In addition to the performance conditions,
the Named Executives must satisfy a service condition in order for the
award to vest. Further details on the vesting criteria of these awards can
be found in the Outstanding Equity Awards at Fiscal Year-End For 2016
section of this Proxy Statement.
|
(3)
|
Represents service-based
restricted stock units which will vest in three equal installments
following August 23, 2015, the grant date of the award.
|
(4)
|
Ms. Golder forfeited her
restricted stock unit awards on April 11, 2016, which was her last day of
employment.
|
(5)
|
Represents the closing stock
price of our Common Stock on August 21, 2015, the last trading day before
the grant date.
|
(6)
|
Represents the grant date fair
value of the performance-based and service-based restricted stock units
granted in fiscal year 2016. The assumptions used in calculating the grant
date fair value of these awards are disclosed in Note 10 to the
consolidated financial statements contained within the Companys Annual
Report on Form 10-K for the fiscal year ended May 31,
2016.
|
2016 Proxy Statement
|
|
49
|
Table of Contents
OUTSTANDING EQUITY
AWARDS AT FISCAL YEAR-END FOR
2016
|
The following table summarizes
information as of May 31, 2016 about the Named Executives exercisable stock
options, unexercisable stock options, and unvested service-based restricted
stock.
|
Option Awards
|
Stock Awards
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Equity
|
Plan
|
|
|
|
|
|
|
|
Incentive
|
Awards:
|
|
|
|
|
|
|
|
Plan
|
Market or
|
|
|
|
|
|
|
|
Awards:
|
Payout
|
|
|
|
|
|
|
|
Number of
|
Value of
|
|
Number of
|
Number of
|
|
|
|
Market
|
Unearned
|
Unearned
|
|
Securities
|
Securities
|
|
|
Number of
|
Value of
|
Shares,
|
Shares,
|
|
Underlying
|
Underlying
|
|
|
Shares or
|
Shares or
|
Units or
|
Units or
|
|
Unexercised
|
Unexercised
|
|
|
Units of
|
Units of
|
Other
|
Other
|
|
Options
|
Options
|
Option
|
Option
|
Stock That
|
Stock That
|
Rights That
|
Rights That
|
|
Exercisable
|
Unexercisable
|
Exercise
|
Expiration
|
Have Not
|
Have Not
|
Have Not
|
Have Not
|
Name
|
(#)
|
(#)
|
Price ($)
|
Date
|
Vested (#)
|
Vested ($)
|
Vested (#)
|
Vested ($)
|
J.J.
Buettgen
|
250,000
|
|
7.81
|
12/03/19
|
|
|
|
|
252,939
|
|
7.81
|
12/03/19
|
|
|
|
|
112,867
|
56,433
(1)
|
9.34
|
07/24/20
|
|
|
|
|
110,620
|
221,238
(2)
|
5.91
|
08/24/21
|
126,904
(3)
|
492,388
|
|
|
|
|
|
|
81,925
(4)
|
317,869
|
|
|
|
|
|
|
|
|
72,365
(5)
|
280,776
|
|
15,238
|
7,618
(1)
|
9.34
|
07/24/20
|
7,995
(6)
|
31,021
|
|
|
B.A.
|
11,062
|
22,124
(2)
|
5.91
|
08/24/21
|
12,690
(3)
|
49,237
|
|
|
Patterson
|
|
|
|
|
19,201
(4)
|
74,500
|
|
|
|
|
|
|
|
|
|
16,961
(5)
|
65,809
|
R.J. Parish
|
|
|
|
|
10,241
(4)
|
39,735
|
|
|
|
|
|
|
|
|
9,046
(5)
|
35,098
|
D.W.
|
|
|
|
|
10,241
(4)
|
39,735
|
|
|
Skena
|
|
|
|
|
|
|
9,046
(5)
|
35,098
|
J.M.
|
9,406
(7)
|
|
9.34
|
07/24/20
|
|
|
|
|
Golder
|
27,655
(7)
|
|
5.91
|
08/04/21
|
|
|
|
|
____________________
50
|
|
2016 Proxy Statement
|
Table of Contents
(1)
|
Represents nonqualified stock
options, of which the unexercisable portion will vest on July 24,
2016.
|
(2)
|
Represents nonqualified stock
options, one-third of which became vested on August 4, 2015. Of the
unexercisable options, one-half will vest on August 4, 2016 and one-half
will vest on August 4, 2017.
|
(3)
|
Represents service-based
restricted shares which will cliff vest on February 4, 2017. The shares
presented are further subject to a six-month holding
period.
|
(4)
|
Represents service-based
restricted stock units which will cliff vest in three equal annual
installments following August 23, 2015, the grant date of the
award.
|
(5)
|
Represents performance-based
restricted stock units which will vest and pay out based on the attainment
of a total shareholder return metric for fiscal years 2016-2018. The
number of shares displayed reflects the target number of shares that will
be earned if the Company meets its target goal.
|
(6)
|
Represents service-based
restricted shares which will vest on July 11, 2016. The shares presented
are further subject to a six-month holding period.
|
(7)
|
Ms. Golder departed the
Company on April 11, 2016. Her exercisable stock options will expire on
July 10, 2016, 90 days after her departure
date.
|
OPTION EXERCISES
AND STOCK VESTED IN FISCAL
YEAR 2016
|
The following table presents
information regarding exercises of options to purchase shares of Common Stock
and stock awards that vested during fiscal year 2016 for each of the Named
Executives.
|
Option
Awards
|
Stock
Awards
|
|
Number of
Shares
|
|
Number
of
|
|
|
Acquired
on
|
Value
Realized
|
Shares
Acquired
|
Value Realized
on
|
Name
|
Exercise
(#)
|
on Exercise
($)
|
on Vesting
(#)
|
Vesting
($)
|
J.J. Buettgen
|
|
-
|
|
|
-
|
|
|
40,150
|
|
|
223,234
|
|
B.A. Patterson
|
|
-
|
|
|
-
|
|
|
13,416
|
|
|
83,069
|
|
R.J. Parish
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
D.W. Skena
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
J.M. Golder
|
|
-
|
|
|
-
|
|
|
34,444
|
|
|
193,028
|
|
2016 Proxy Statement
|
|
51
|
Table of Contents
2016 NONQUALIFIED
DEFERRED COMPENSATION
|
The following table presents
information regarding the Deferred Compensation Plan account for each of the
Named Executives.
|
Executive
|
Registrant
|
|
Aggregate
|
Aggregate
|
|
Contributions
|
Contributions
in
|
Aggregate
|
Withdrawals/
|
Balance
at
|
|
in Last
Fiscal
|
Last Fiscal
Year
|
Earnings in
Last
|
Distributions
|
Last
Fiscal
|
Name
|
Year
($)
(1)
|
($)
|
Fiscal Year
($)
|
($)
|
Year-End
($)
|
J.J. Buettgen
|
|
-
|
|
|
-
|
|
|
12
|
|
|
-
|
|
|
34,493
|
|
B.A. Patterson
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
R.J. Parish
|
|
5,500
|
|
|
625
|
|
|
1
|
|
|
-
|
|
|
6,126
|
|
D.W. Skena
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
J.M. Golder
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
____________________
(1)
|
Represents the base salary deferred
by each Named Executive during fiscal year 2016. These deferrals are
included in the Salary column of the 2016 Summary Compensation Table
section of this Proxy Statement.
|
Descriptions of the Deferred
Compensation Plan and the Predecessor Plan can be found in the Deferred
Compensation Plan section of the Compensation Discussion and Analysis section
of this Proxy Statement.
The timing and form of distributions
under the Deferred Compensation Plan are determined by the elections of each
plan participant. A participants election may be different for each annual
deferral, and under certain circumstances, a participant may change one or more
of his or her annual deferral elections. Under the default rule, deferrals are
paid in a lump sum in January immediately following the calendar year in which
the participant attains age 55 if a termination of employment occurs prior to
that age. Otherwise, benefits under the Deferred Compensation Plan will be paid
in the form of a lump sum distribution in the month of January immediately
following a termination of employment but no later than the end of January
following the year in which the participant attains age 65. As an alternative to
the default rule, a participant may elect one of the following payment choices:
(i) payment in a lump sum in January of the year of the participants choice or,
if earlier, in the month of January following the calendar year in which the
participant terminates employment, or (ii) payment in annual installments for a
period of the participants choice not exceeding ten years, commencing in
January of the year of the participants choice or, if earlier, commencing in
the month of January following the calendar year in which the participant
terminates employment.
52
|
|
2016 Proxy Statement
|
Table of Contents
PENSION BENEFITS FOR FISCAL
YEAR 2016
|
The following table shows the
present value of accumulated benefits payable to the Named Executives,
including the number of years of service
credited to each such Named Executive, under the ESPP.
|
|
Number
of
|
Present
|
|
|
|
Years
|
Value of
|
|
|
|
Credited
|
Accumulated
|
Payments During Last
|
Name
|
Plan
Name
|
Service (#)
|
Benefit ($)
|
Fiscal
Year ($)
|
J.J.
Buettgen
|
Ruby
Tuesday, Inc. Executive
Supplemental Pension
Plan
|
|
3.08
|
|
|
503,653
|
|
|
-
|
|
B.A. Patterson
(1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
R.J. Parish
(1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
D.W. Skena
(1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
J.M.
Golder
(1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
____________________
(1)
|
Messrs. Patterson and
Skena and Mses. Parish and Golder were not participants in a Company-sponsored
defined benefit plan during fiscal year 2016.
|
Material terms and conditions of the
ESPP are described below.
Executive
Supplemental Pension Plan
A participants accrued benefit in the
ESPP equals 2.5% of the participants highest five-year average base salary
multiplied by the participants years and fractional years of continuous service
(as defined in the ESPP) but not in excess of 20 years of such service, plus 1%
of the participants highest five-year average base salary multiplied by the
participants years and fractional years of continuous service in excess of 20
years, but not in excess of 30 years of such service, less the retirement
benefit payable in the form of a single life annuity payable to the participant
under the Morrison Retirement Plan and less an offset for Social Security
benefits calculated based on a full Social Security earnings assumption and an
assumption that his or her wages equaled or exceeded the Social Security taxable
wage base.
ESPP Benefit = 2.5% x Average
Five-Year Base Salary x Years of Continuous Service
(not in excess of
20) + 1.0% x Average Five-Year Base Salary x Years of Continuous
Service (greater than 20 but not in excess of 30) Morrison
Retirement Plan Benefit -
Social Security
Benefit
|
Base salary includes commissions, but
excludes bonuses and other forms of remuneration other than salary. Benefits
become vested after the participant has completed ten years of continuous
service. Normal retirement age for purposes of the ESPP is age 60, although a
participant may retire with an actuarially reduced benefit as early
2016 Proxy Statement
|
|
53
|
Table of Contents
as age 55. Supplemental early
retirement provisions allow designated participants to receive unreduced
benefits, enhanced benefits, and/or early commencement of benefit payments,
depending on age and service criteria specified in the ESPP. A participants
receipt of unreduced early retirement benefits is conditioned on not competing
with the Company for a period of two years following retirement.
In fiscal year 2008, the Compensation
Committee approved and adopted the restated and amended ESPP which provided for,
among other things, a lump-sum payment option. Accordingly, participants
retiring after that date may elect to receive payment of their benefit in the
following forms, provided the election is made on a timely basis:
○
|
a lump-sum payment;
|
○
|
a life annuity
providing for monthly payments for the life of the
participant;
|
○
|
a life annuity
providing for monthly payments for the life of the participant with a
guaranteed term certain of ten years (10-year certain) or 20 years
(20-year certain) as specified by the participant;
|
○
|
a 100%/50% joint and survivor
annuity;
|
○
|
a 100%/75% joint and survivor
annuity; or
|
○
|
a 100%/100% joint and
survivor annuity.
|
As described above, the Compensation
Committee froze the ESPP to new entrants and froze the level of accrued benefits
as of January 1, 2016, with limited exceptions. Mr. Buettgen entered the ESPP
during fiscal year 2016, but no other Named Executive is eligible to enter the
plan, and none of the Named Executives, including Mr. Buettgen, are participants
in the Morrison Retirement Plan.
POTENTIAL PAYMENTS
UPON TERMINATION OR CHANGE IN
CONTROL
|
The information below describes and
quantifies certain payments and benefits that would be provided under existing
contracts, agreements, plans or arrangements, whether written or unwritten, for
various scenarios involving a change in control or termination of employment of
each of the Named Executives, assuming a May 31, 2016 termination date or
change-in-control date and, where applicable, using a closing price of $3.88 per
share for the Companys Common Stock on that date.
Due to the number of factors that
affect the nature and amount of any payments or benefits provided upon
the
events discussed below, any actual amounts
paid or distributed may be different.
54
|
|
2016 Proxy Statement
|
Table of Contents
Individual
Agreements
James J.
Buettgen
Upon his appointment as President and
Chief Executive Officer, Mr. Buettgen entered into an Employment Agreement with
the Company. The Employment Agreement provides for severance payments in the
event of a termination. It specifically contemplates three types of severance
payments, depending upon the type of termination at issue, which are outlined
below. In any scenario, however, Mr. Buettgen would be entitled to any unpaid
reimbursements relating to business expenses incurred by him prior to the
termination and any benefits to which he is entitled under Company benefit
plans.
In the event of termination due to
death or disability,
17
Mr. Buettgen would be entitled to: (i) any accrued but unpaid
base salary; (ii) any earned but unpaid annual bonus with respect to fiscal
years completed prior to the termination; and (iii) any cash or equity awards
granted pursuant to the Employment Agreement that have vested or would vest
according to their terms based on the termination, provided that any unvested
cash or equity awards would be forfeited.
In the event of termination for
cause
18
or resignation without good reason,
19
Mr. Buettgen would be entitled to any accrued but unpaid base salary. Any
unvested cash or equity awards would be forfeited.
In the event of termination without
cause or a resignation for good reason, Mr. Buettgen would be entitled to: (i) a
lump sum payment equal to the amount of (A) any accrued but unpaid base salary
and (B) any earned but unpaid annual bonus with respect to fiscal years
completed prior to the termination; (ii) a lump sum severance payment equal to
300% of Mr. Buettgens then-applicable base salary; and (iii) any cash or equity
awards granted
____________________
17
|
Under the Employment Agreement,
disability means that Mr. Buettgen is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can reasonably be expected to result in
death or last for a continuous period of not less than 12
months.
|
18
|
The Employment Agreement defines
cause to mean conduct amounting to: (i) fraud or dishonesty in the
performance of Mr. Buettgens duties with the Company or its affiliates;
(ii) willful misconduct, refusal to follow the reasonable directions of
the Board, or knowing violation of law, rules or regulations (including
misdemeanors relating to public intoxication, driving under the influence,
use or possession of controlled substances or relating to conduct of a
similar nature); (iii) acts of moral turpitude or personal conduct in
violation of the Companys Code of Business Conduct and Ethics; (iv)
repeated and extended absence from work without reasonable excuse; (v) a
conviction or plea of guilty or
nolo
contendere
to a felony; or (vi) a
material breach or violation of the terms of any agreement to which Mr.
Buettgen and the Company (or any affiliate) are party.
|
19
|
Under the Employment Agreement,
good reason means without Mr. Buettgens consent: (i) any change in Mr.
Buettgens principal place of employment to a location more than 50 miles
from Maryville, Tennessee; (ii) any material reduction in Mr. Buettgens
authority, duties or responsibilities, including any change that results
in Mr. Buettgen either (A) not acting as the senior-most executive of the
Company or (B) directly reporting to anyone other than the Board; (iii)
any reduction in Mr. Buettgens base salary; (iv) any failure by the
Company to pay Mr. Buettgens annual bonus or long-term incentives in
accordance with the terms of the Employment Agreement; or (v) any other
breach of the Employment Agreement that is material and fundamental to the
entirety of the Employment Agreement by the
Company.
|
2016 Proxy Statement
|
|
55
|
Table of Contents
pursuant to the Employment Agreement
that have vested or would vest according to their terms based on the
termination, provided that any unvested cash or equity awards would be
forfeited. Under the Employment Agreement, payment of the amounts in (ii) and
(iii) above are dependent upon Mr. Buettgen (A) executing a general waiver and
release of claims against the Company and its affiliates within 45 days of the
termination and (B) complying with certain covenants regarding confidentiality,
non-solicitation, trade secrets, and outside employment. Any violation of the
covenants could subject Mr. Buettgens severance payments to clawback under the
Employment Agreement.
Any severance payment made to Mr.
Buettgen pursuant to his Employment Agreement would be in lieu of severance
payment under either of the Severance Plans discussed below. Likewise, any
payment to Mr. Buettgen under the Severance Plans would be in lieu of any
severance payment under his Employment Agreement.
Ruby Tuesday, Inc.
Executive Severance Plan
Mr. Buettgen, Ms. Parish, Mr.
Patterson, and Mr. Skena are covered by the Severance Plan.
20
The Severance
Plan provides for the payment of severance and other benefits to eligible
employees in the event of a termination of employment with the Company, other
than for Cause or death, or termination of employment with the Company for Good
Reason, each as defined in the Severance Plan (and each a Qualifying
Termination). In the event of a Qualifying Termination, and subject to the
execution of a general release of liability against the Company and certain
other restrictions, the Severance Plan provides the following payments and
benefits to the Named Executives:
○
|
A lump-sum payment in an amount
equal to the product of (i) the applicable severance multiple (for Mr.
Buettgen, 3; for Ms. Parish, Mr. Patterson, and Mr. Skena, 1.5); and (ii)
the executives base salary;
|
○
|
A lump-sum payment in an amount
equal to the amount the executive would have earned under the Companys
applicable annual incentive plan had the executive remained employed
through the date the Compensation Committee determined the Companys
performance under the incentive plan, adjusted on a
pro rata
basis based
on the number of days the executive was actually employed during the
incentive plan year; and
|
○
|
A lump-sum payment in an amount
equal to the product of (i) 1.5 and (ii) the annual employer contributions
to the executives medical, dental, optical, and group term-life insurance
coverage in effect for the year of termination based on the same coverage
level and cost to the executive as in effect immediately prior to the
executives termination.
|
____________________
20
|
Ms. Golder departed the Company
before the Severance Plans were adopted.
|
56
|
|
2016 Proxy Statement
|
Table of Contents
Ruby Tuesday, Inc. Change in Control
Plan
Mr. Buettgen, Ms. Parish, Mr.
Patterson, and Mr. Skena are also covered by the CIC Plan. The CIC Plan provides
for the payment of severance and other benefits to eligible employees in the
event of a termination of employment with the Company, other than for Cause or
death, or termination of employment with the Company for Good Reason, provided
such termination occurs within 24 months after a Change in Control, all as
defined by the CIC Plan (such terminations are a CIC Qualifying Termination).
In the event of a CIC Qualifying Termination, and subject to the execution of a
general release of liability against the Company and certain other restrictions,
the CIC Plan provides the following payments and benefits to the Named
Executives:
○
|
A lump-sum payment in an amount
equal to the product of (i) the applicable severance multiple (for Mr.
Buettgen, 3; for Ms. Parish, Mr. Patterson, and Mr. Skena, 2); and (ii)
the executives base salary, including Target Annual Bonus, as defined in
the CIC Plan;
|
○
|
A lump-sum payment in an amount
equal to the executives Target Annual Bonus, adjusted on a
pro rata
basis based on the number of days the executive was actually
employed during the applicable incentive plan year;
|
○
|
A lump-sum payment in an amount
equal to the product of (i) 1.5 and (ii) the annual employer contributions
to the executives medical, dental, optical, and group term-life insurance
coverage in effect for the year of termination based on the same coverage
level and cost to the executive as in effect immediately prior to the
executives termination; and
|
○
|
Reimbursement for outplacement
service costs incurred within 18 months following the termination up to a
maximum of $30,000, subject to certain restrictions.
|
Both Severance Plans require execution
of a general release of claims against the Company and provide that any payment
is in lieu of any other payments that may be due to the executive under any
other plan or agreement (excluding any outstanding long-term incentive plan
awards, whose treatment is determined pursuant to the applicable long-term
incentive plan under which the award was granted and the related award
agreement). In addition, both Severance Plans require compliance with certain
restrictive covenants, including noncompetition, nonsolicitation, nondisclosure
of confidential information, and nondisparagement.
Neither the Severance Plan nor the CIC
Plan provides for a gross-up payment to any Named Executive, or any other
eligible employee, to offset any excise taxes that may be imposed on excess
parachute payments under Section 4999 of the Internal Revenue Code or any
similar federal, state, or local tax that may be imposed (the Excise Tax).
Instead, the Severance Plans provide that in the event that the payments
described would, if paid, be subject to the Excise Tax, then the payments will
be reduced to the extent necessary so that no portion of the payments is subject
to the Excise Tax, provided that the net amount of the reduced payments, after
giving effect to the income tax consequences, is greater than or equal to the
net amount of the payments without such reduction, after giving effect to the
Excise Tax and income tax consequences.
2016 Proxy Statement
|
|
57
|
Table of Contents
Deferred Compensation
The Named Executives are eligible to
participate in the Deferred Compensation Plan. Mr. Buettgen participated in the
Deferred Compensation Plan during calendar years 2012 and 2013, but did not
contribute to it during calendar years 2014 or 2015. No Named Executive
contributed to the Deferred Compensation Plan in calendar year 2015.
The last column of the 2016
Nonqualified Deferred Compensation table of this Proxy Statement reports each
Named Executives aggregate balance in the Deferred Compensation Plan at May 31,
2016. If the Named Executives had terminated employment on the last day of
fiscal year 2016, the Company would have been required to distribute from its
general assets to each Named Executive the amount in his or her deferred
compensation account. As described below, the timing and form of distribution
would have depended upon the participants election and the plan rules. The
account balances continue to be credited with increases and decreases reflecting
changes in the value of the underlying investments; therefore, amounts actually
received by the Named Executives may differ from those shown in the 2016
Nonqualified Deferred Compensation table
of this Proxy Statement.
Equity Awards
Stock Options
If any of the Named Executives
employment were to be terminated (i) involuntarily other than for cause, (ii)
due to death, disability, divestiture, or retirement, or (iii) if the Company
experienced a change in control, any non-exercisable stock options would become
exercisable, as those criteria are defined in the applicable plan or agreement.
In the event of termination due to early retirement prior to the end of fiscal
year 2016, a portion of the stock options would become exercisable for Mr.
Buettgen, Ms. Parish, Mr. Patterson, and Mr. Skena. Upon her departure from the
Company in fiscal year 2016, Ms. Golder forfeited her outstanding unvested stock
options.
Restricted Stock Awards
Service-based restricted stock awarded
to the Named Executives is subject to service conditions and performance-based
restricted stock is subject to performance and service conditions.
21
Vesting of
restricted stock awards will be accelerated upon certain events. Therefore, if
an involuntary termination of employment without cause or due to death,
disability or attainment of a certain age or satisfaction of the Rule of 90
under the ESPP had occurred or, in the case of certain awards, had a divestiture
or a change in control occurred on the last day of fiscal year 2016, the vesting
of restricted stock awards would have been accelerated. For service-based
restricted stock, all of the restricted shares would have vested under the early
vesting scenarios described above. In connection her departure, Ms. Golder
forfeited her outstanding restricted stock
awards.
____________________
21
|
The Company did not award any
performance-based restricted stock in fiscal year 2016.
|
58
|
|
2016 Proxy Statement
|
Table of Contents
Restricted Stock Unit Awards
Service-based RSUs awarded to the Named
Executives are subject to service conditions and performance-based RSUs are
subject to performance and service conditions. Vesting of RSU awards will be
accelerated upon certain events. Full vesting of the service-based RSUs
accelerates upon an involuntary termination of employment without cause, death,
or disability, or upon a change in control. Vesting of the performance-based
RSUs accelerates upon an involuntary termination of employment without cause,
death, disability, or upon voluntary termination after attaining a specified
age. The number of performance-based RSUs that vest in such situations is equal
to the number of RSUs that would have vested based solely upon the performance
level achieved multiplied by a fraction where the numerator is the number of
whole twelve-month periods commencing with July 1 of the year in which the grant
was made through and including the effective date of the termination of
employment and the denominator is 3. Upon a change in control, all of the
performance-based RSUs vest at the target performance level. In connection with
her departure, Ms. Golder forfeited her outstanding RSU awards.
The following table provides the
intrinsic value (the value of the option award based upon the closing price of
the Companys Common Stock on May 31, 2016 minus the exercise price) of stock
option, restricted stock, RSUs, and performance-based cash incentives that would
become exercisable or vested if the Named Executive had terminated employment or
if the Company had experienced a change in control as of May 31, 2016.
|
Involuntary
|
|
|
|
|
Termination
|
|
|
|
|
Other Than For
|
|
|
|
Name of
|
C
ause,
(1)
Death
|
Change in
|
Executive
|
or Disability ($)
|
Control ($)
(2)
|
J.J. Buettgen
|
|
810,257
|
|
|
1,091,033
|
|
B.A. Patterson
|
|
154,758
|
|
|
220,566
|
|
R.J. Parish
|
|
39,735
|
|
|
74,834
|
|
D.W. Skena
|
|
39,735
|
|
|
74,834
|
|
J.M. Golder
|
|
-
|
|
|
-
|
|
____________________
(1)
|
For Mr. Buettgen, the terms Cause and Disability are provided
in his Employment Agreement and defined above.
|
|
For the other Named Executives,
Cause is defined for the restricted stock, RSU, and stock option awards
as conduct amounting to (a) fraud or dishonesty in the performance of the
executives duties, (b) the executives willful misconduct, refusal to
follow the reasonable directions of his/her supervisors, or knowing
violation of law, rules, or regulations (including misdemeanors relating
to public intoxication, driving under the influence, use or possession of
controlled substances or relating to conduct of a similar nature), (c)
acts of moral turpitude or personal conduct in violation of the Companys
Code of Business Conduct and Ethics, (d) absence from work without a
reasonable excuse, (e) intoxication with alcohol or drugs while on
Companys or affiliates premises, (f) conviction or plea of guilty or
nolo contendere
to a crime involving dishonesty, or (g) a breach or
violation of the terms of any agreement to which the Named Executive and
the Company are a party. For the restricted stock and stock option awards
for the other Named Executives, the term Disability is defined under the
SIP as having the same meaning as provided
in
|
2016 Proxy Statement
|
|
59
|
Table of Contents
|
the long-term disability plan
or policy maintained by the Company. For the RSUs for the other Named
Executives, the term Disability means the Named Executive is (i) unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result
in death or can be expected to last for a continuous period of not less
than twelve (12) months or (ii) by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering
employees of the Company and its affiliates. The determination of
Disability will be made in accordance with the definition of disability
under Internal Revenue Service Code Section 409A.
|
(2)
|
Amounts shown in this column
include amounts that are change in control payments. Pursuant to the
restricted stock and stock option awards, Change in Control means:
|
|
(i) the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934 (a Person) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934) of voting securities of the Company
where such acquisition causes any such Person to own twenty-five percent
(25%) or more of the combined voting power of the then outstanding voting
securities then entitled to vote generally in the election of directors
(the Outstanding Voting Securities); provided, however, that the
following shall not constitute a Change in Control: (1) any acquisition
directly from the Company, unless such a Person subsequently acquires
additional shares of Outstanding Voting Securities other than from the
Company; or (2) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
affiliate.
|
|
(ii) within any twelve-month
period (beginning on or after the Effective Date), the persons who were
directors of the Company immediately before the beginning of such
twelve-month period (the Incumbent Directors) shall cease to constitute
at least a majority of the Board of Directors of the Company; provided
that any director who was not a director as of the Effective Date shall be
deemed to be an Incumbent Director if that director was elected to the
Board of Directors by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors; and provided further that no director whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of directors shall be deemed to be an Incumbent
Director;
|
|
(iii) the consummation of a
reorganization, merger or consolidation, with respect to which persons who
were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter,
own more than fifty percent (50%) of the combined voting power entitled to
vote in the election of directors of the reorganized, merged or
consolidated companys then outstanding voting securities;
|
|
(iv) the sale, transfer or
assignment of all or substantially all of the assets of the Company and
its affiliates to any third party; or
|
|
(v) the liquidation or
dissolution of the Company.
|
|
Pursuant to the RSUs, Change
in Control means:
|
|
(i) the acquisition by any one
person, or more than one person acting as a group (other than any person
or more than one person acting as a group who is considered to own more
than fifty percent (50%) of the total voting power of the stock of the
Company prior to such acquisition) of stock of the Company that, together
with stock held by such person or group, constitutes more than fifty
percent (50%) of the total voting power of the stock of the Company;
|
|
(ii) within any twelve-month
period (beginning on or after the Grant Date) the date a majority of
members of the Companys Board of Directors is replaced by directors whose
appointment or election is not endorsed by a majority of the members of
the Companys Board of Directors before the date of the appointment or
election;
|
60
|
|
2016 Proxy Statement
|
Table of Contents
(iii) within any twelve-month
period (beginning on or after the Grant Date) the acquisition by any one
person, or more than one person acting as a group, of ownership of stock
of the Company possessing thirty percent (30%) or more of the total voting
power of the stock of the Company; or
|
(iv) within any twelve-month
period (beginning on or after the Grant Date) the acquisition by any one
person, or more than one person acting as a group, of the assets of the
Company that have a total gross fair market value of eighty-five percent
(85%) or more of the total gross fair market value of all of the assets of
the Company.
|
The foregoing definition of
Change in Control for the RSU awards are to be construed in a manner
consistent with the requirements for a change in the ownership of a
corporation, a change in the effective control of a corporation, and a
change in the ownership of a substantial portion of a corporations
assets within the meaning of Internal Revenue Code Section 409A and the
rules and regulations promulgated
thereunder.
|
Pension Benefits
Prior to being frozen on January 1,
2016, the Named Executives were eligible to participate in the ESPP subject to
certain service requirements. Of the Named Executives, only Mr. Buettgen was a
participant and would have been eligible for a benefit under the ESPP if he had
retired on May 31, 2016. Under the terms of the ESPP, benefits are subject to
forfeiture or actuarial reduction based upon certain willful misconduct or
prohibited business competition by the participant. Had Mr. Buettgen retired on
May 31, 2016 and elected to receive an immediate lump-sum payment, the lump-sum
payment would have been $576,425. Had Mr. Buettgen retired on May 31, 2016 and
elected to receive a lump-sum payment at the age of 60, the lump-sum payment
would have been $603,625.
Retiree Health Insurance Plan
Named Executives who participate in the
ESPP and terminate employment after becoming early-retirement eligible under the
ESPP are eligible, along with their spouse and dependents, to participate in the
retiree health insurance plan. The Named Executive pays 100% of the premium
under the retiree health insurance plan. Once a Named Executive reaches age 65,
he or she is no longer eligible to participate in the retiree health insurance
plan. Instead, the Company will provide $70 per month toward Medicare supplement
coverage until the Named Executives death.
Life Insurance
Under the ELIP, if Messrs. Buettgen or
Patterson had died on May 31, 2016, their survivors would have received $3.5
million and $1.0 million, respectively. If Messrs. Buettgen or Patterson had
died on May 31, 2016 as the result of an accident, their survivors would have
received an additional $1.0 million.
Disability
The short-term and long-term disability
plans are available generally to all salaried employees. The short-term disability benefit is equal to 70% of
salary for 26 weeks. This benefit is limited to $10,000 per month. The
long-
2016 Proxy Statement
|
|
61
|
Table of Contents
term disability plan for employees
holding the position of vice president and higher, including the Named
Executives, defines disability as being disabled from the position previously
held with the Company while the definition of disability for all other
participants in the plan requires that, after two years of disability, the
employee must be disabled from any job in order to continue to receive benefits
under the plan.
SECURITIES
AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION
PLANS
|
The following table presents
information as of the end of fiscal year 2016 with respect to equity
compensation plans of the Company:
|
|
|
|
(b)
|
|
|
|
|
(a)
|
Weighted-
|
(c)
|
|
Number of
Securities
|
Average Exercise
|
Number of Securities
|
|
to be Issued
Upon
|
Price of
|
Remaining Available for
|
|
Exercise of
|
Outstanding
|
Future Issuance Under
|
|
Outstanding
Options,
|
Options,
|
Equity
Compensation Plans
|
|
Warrants
and
|
Warrants
and
|
(Excluding
Securities
|
Plan
Category
|
Rights
(#)
|
Rights
($)
|
Reflected
in Column (a)) (#)
|
Equity compensation
plans approved by
security holders
|
|
1,563,053
|
|
|
7.92
|
|
|
5,433,569
|
(1)
|
Equity compensation
plans not
approved by security holders
|
|
502,939
|
(2)
|
|
7.81
|
|
|
-
|
|
Total
|
|
2,065,992
|
|
|
7.89
|
|
|
5,433,569
|
|
____________________
(1)
|
This amount consists of 19,475 shares available for issuance under
the 1996 SIP and 5,414,094 shares available for issuance under the
SIP.
|
(2)
|
This amount consists of 250,000
service-based stock options awarded to Mr. Buettgen as part of a
High-Performance Award and 252,939 service-based stock options awarded to
Mr. Buettgen as part of a Make-Whole Award.
|
PROPOSAL
TWO:
ADVISORY RESOLUTION ON EXECUTIVE
COMPENSATION
|
Pursuant to the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the Dodd-Frank Act), we are asking
shareholders to approve the compensation of the Named Executives as described in
the Compensation Discussion and Analysis section of this Proxy Statement. The
Company has designed its compensation program to attract and retain the best
possible executive talent and to motivate the Companys executives to achieve
the goals of the Companys business strategy through a pay for performance
compensation structure that rewards executive performance that maximizes
financial return to shareholders, prudently invests capital and achieves certain
targets for sales and profits. In addition to the discussion of our executive
compensation program found in
62
|
|
2016 Proxy Statement
|
Table of Contents
the Compensation Discussion and
Analysis section of this Proxy Statement, we urge you to consider the following
factors in deciding how to vote on this proposal:
○
|
our senior management and
Compensation Committee have thoughtfully considered the prior say-on-pay
vote results and shareholder feedback and have worked to respond
appropriately, including by adopting many of the features specifically
requested by our shareholders;
|
○
|
executive pay is tied to
performance;
|
○
|
our Compensation Committee has
positioned executive pay near the 50th percentile of the Companys Peer
Group;
|
○
|
undue risk is mitigated by the
utilization of caps on potential payments, clawback provisions, and
lengthy vesting periods;
|
○
|
we provide only modest
perquisites that benefit the Companys business purposes;
|
○
|
we have adopted reasonable share
ownership guidelines;
|
○
|
our Compensation Committee has
engaged an independent consultant that reports directly to the
Compensation Committee and provides no other services to the Company;
|
○
|
we do not have separate change in
control agreements beyond the CIC Plan, and we do not have excise tax
gross-ups in connection with changes in control; and
|
○
|
we do not include the value of
short-term or long-term incentive compensation in pension calculations.
|
The Board recommends a vote FOR the
following advisory resolution because it believes that the policies and
practices described in the Compensation Discussion and Analysis section of
this Proxy Statement are effective in achieving the Companys goals of
attracting and retaining the best possible executive talent, motivating
sustained financial and operational performance, and aligning executives
interest with those of shareholders:
RESOLVED, that the Companys
shareholders approve, on an advisory basis, the compensation of the Companys
Named Executives, as disclosed in the Companys Proxy Statement for the 2016
Annual Meeting of Shareholders pursuant to the compensation disclosure rules of
the Securities and Exchange Commission (which disclosure includes the
Compensation Discussion and Analysis section of this Proxy Statement and the
accompanying compensation tables and related narrative).
This advisory resolution, commonly
referred to as the say-on-pay resolution, is non-binding on the Board. At our
October 2011 shareholder meeting, the Companys shareholders elected to conduct
such an advisory vote on executive compensation on an annual basis. Although
non-binding, the Board and the Compensation Committee will review and consider
the voting results when evaluating our executive compensation program.
2016 Proxy Statement
|
|
63
|
Table of Contents
Shareholder Approval
To approve, on an advisory basis, the
compensation of the Named Executives per the Proposal, the number of votes cast
in favor of approval must constitute a majority of votes cast, not including
abstentions or broker non-votes.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR
APPROVAL OF
THE ADVISORY RESOLUTION ON EXECUTIVE
COMPENSATION.
|
RELATED
PERSON TRANSACTIONS
|
The Board has adopted a written policy
that all related person transactions with the Company must be approved in
advance by the Audit Committee. All potential related person transactions must
be submitted to the Secretary for subsequent submission to the Audit Committee.
The Audit Committee or Board evaluates whether to approve a proposed related
person transaction based on the following factors:
○
|
whether the terms of the proposed
transaction are fair to the Company and on the same basis as would apply
if the transaction did not involve a related person;
|
○
|
whether there are any business
reasons for the Company to enter into the proposed transaction;
|
○
|
whether the proposed transaction
would impair the independence of an outside director;
|
○
|
whether the proposed transaction
would present an improper conflict of interest for any related person,
taking into account the size of the transaction, the overall financial
position of the related person, the direct or indirect nature of the
related persons interest in the transaction, and the ongoing nature of
any proposed relationship; and
|
○
|
any other factors the Audit
Committee or Board deems relevant.
|
There were no related person
transactions with the Company in fiscal year 2016.
Audit Committee Report
The Audit Committee reports as follows
with respect to the audit of the Companys fiscal year 2016 consolidated
financial statements (the Financial Statements):
○
|
management is primarily
responsible for the preparation of the Financial Statements in accordance
with GAAP and the financial reporting process, including the system of
internal control over financial reporting. KPMG, our independent
registered public accounting firm, is responsible for performing
independent audits of the Companys Financial Statements and the
effectiveness of the Companys system of internal control over financial
reporting and for issuing reports thereon;
|
64
|
|
2016 Proxy Statement
|
Table of Contents
○
|
the Audit Committee has been
updated quarterly on managements process to assess the adequacy of the
Companys system of internal control over financial reporting, the
framework used to make the assessment, and managements conclusions about
the effectiveness of the Companys internal control over financial
reporting;
|
○
|
the Audit Committee has reviewed
and discussed the Financial Statements with KPMG and the Companys
management, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of
significant estimates and accounting judgments, and the transparency of
disclosures in the Financial Statements;
|
○
|
the Audit Committee has discussed
with KPMG the matters required to be discussed by Auditing Standard No.
16, Communications with Audit Committees, as adopted by the Public Company
Accounting Oversight Board (PCAOB);
|
○
|
the Audit Committee has received
the written disclosures and letter from KPMG required by the NYSE Listing
Standards and the applicable requirements of the PCAOB regarding KPMGs
communications with the Audit Committee concerning independence from the
Company and has discussed with KPMG the firms independence;
|
○
|
the Audit Committee has held
meetings with KPMG throughout the fiscal year without management present,
to discuss financial reporting matters;
|
○
|
in its meetings with KPMG, the
Audit Committee asks KPMG to address several topics that the Audit
Committee believes are particularly relevant to its oversight, including:
whether KPMG would have in any way prepared the Financial Statements
differently from the manner selected by management; if the auditor were an
investor, would the investor have received, in plain English, the
information essential to understanding the Companys financial performance
during the reporting period; and whether the Company is following the same
internal controls that would be followed if KPMG were the Companys Chief
Executive Officer; and
|
○
|
based on reviews and discussions
of the Financial Statements with management and discussions with KPMG
described above, the Audit Committee recommended to the Board of Directors
that the Financial Statements be included in the Companys Annual Report
on Form 10-K for the fiscal year ended May 31, 2016.
|
The Audit Committee, comprised of all
non-management directors, meets at regularly scheduled executive sessions
at which Mr. Lanigan, the Audit Committee
Chairman, presides.
This report is submitted by the Audit
Committee, the current members of which are named below.
Mark W.
Addicks
F. Lane Cardwell, Jr.
Bernard Lanigan, Jr. (Chair)
Jeffrey J. ONeill
2016 Proxy Statement
|
|
65
|
Table of Contents
Audit Committee Charter
The Board has adopted a written charter
for the Audit Committee, a copy of which, as amended to date, is available on
our website at http://rubytuesday.com/investors/governance. The Audit Committee
reviews and reassesses the adequacy of the Audit Committee Charter and the Board
approves it on an annual basis.
Independence of Audit Committee
Members
Each of the members of our Audit
Committee meets the requirements for independence as defined by the
applicable listing standards of the NYSE and the SEC rules.
PROPOSAL
THREE:
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
The Board has selected KPMG to serve as
the Companys independent registered public accounting firm for the fiscal year
ending June 6, 2017. At the Annual Meeting, we will ask shareholders to ratify
the Boards selection. KPMG has served in this same capacity since 2000 and is
expected to be represented at the Annual Meeting. A representative of KPMG will
have an opportunity to make a statement if the representative so desires and
will be available to respond to appropriate questions.
The Board has submitted this Proposal
to our shareholders as required by the Audit Committee Charter. If the
shareholders do not ratify the Boards proposal, the Board will reconsider its
action with respect to the engagement of KPMG. Approval of the resolution,
however, will in no way limit the Boards authority to terminate or otherwise
change the engagement of KPMG during the fiscal year ending June 6, 2017.
66
|
|
2016 Proxy Statement
|
Table of Contents
Accountants Fees and Expenses
The following table sets forth fees for
professional services rendered by KPMG for the audit of the Companys annual
financial statements for fiscal years ended May 31, 2016 and June 2, 2015, and
fees billed for other services by KPMG.
|
Fiscal
Year Ended
|
|
May
31, 2016
|
June
2, 2015
|
Audit Fees
(1)
|
|
$1,100,000
|
|
|
$892,500
|
|
Audit-related Fees
(2)
|
|
35,000
|
|
|
30,500
|
|
Tax Fees
(3)
|
|
196,000
|
|
|
46,000
|
|
Total Fees
|
|
$1,331,000
|
|
|
$969,000
|
|
____________________
(1)
|
Audit fees include fees for the
audits of the Companys annual consolidated financial statements, audits
of the effectiveness of internal control over financial reporting, reviews
of the interim condensed consolidated financial statements included in our
quarterly reports on Form 10-Q for the first three quarters of fiscal
years 2016 and 2015, and the services that are normally rendered by the
auditor in connection with statutory or regulatory filings.
|
(2)
|
Audit-related fees include fees for
audits of the financial statements of one of the Companys employee
benefit plans.
|
(3)
|
Tax fees include fees for tax consultation
services.
|
Audit Committee Policy for the
Engagement of the Independent Auditor for Audit and Permitted Non-Audit Services
The Audit Committee has adopted a
policy governing the provision of audit and permitted non-audit services by our
independent registered public accounting firm. Pursuant to this policy, the
Audit Committee will consider annually, and, if appropriate, approve, the
engagement of the independent registered public accounting firm to provide
audit, review, and attest services for the relevant fiscal year. Any changes to
the terms and conditions of the annual engagement, resulting from changes in
audit scope or Company structure or from other subsequent events, must be
approved in advance by the Audit Committee.
The policy also provides that any
proposed engagement of the independent registered public accounting firm for
non-audit services that are permitted under applicable laws, rules, and
regulations, must be approved in advance by the Audit Committee, except that the
pre-approval requirement is waived with respect to the provision of non-audit
services if (i) the aggregate amount of such services does not exceed five
percent of the total fees paid by the Company to the accounting firm in the
fiscal year in which the services are provided; (ii) such services are not
recognized to constitute non-audit services at the time of engagement of the
independent registered public accounting firm; and (iii) such services are
promptly brought to the attention of the Audit Committee and properly approved
prior to completion of the service. Such approvals are to be obtained at
regularly scheduled meetings of the Audit Committee, except in special
circumstances where delaying such approval until the next regularly scheduled
meeting of the Audit Committee is impractical. In such special circumstances,
approval of such engagements may be obtained by special approval of the Audit
Committee or by approval of the Audit Committee
2016 Proxy Statement
|
|
67
|
Table of Contents
Chairman, to whom the Audit Committee
has delegated specific approval authority. The policy prohibits the engagement
of an independent registered public accounting firm in instances in which the
engagement is prohibited by applicable laws, rules, and regulations.
All of the services, if any, provided
under Audit Fees, Audit-related Fees, and Tax Fees were pre-approved by the
Audit Committee.
Determination of Auditor
Independence
The Audit Committee has considered and
evaluated the services provided by KPMG and has determined that the
provision of such services was not incompatible with
maintaining KPMGs independence.
Shareholder Approval
To ratify the selection of KPMG as the
Companys independent registered public accounting firm for the fiscal year
ending June 6, 2017, the number of votes cast in favor of election must
constitute a majority of votes cast, not including abstentions or broker
non-votes.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR
THE
RATIFICATION OF THE
SELECTION OF KPMG AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
|
Any shareholder of the Company who
wishes to submit a proposal for action at our 2017 Annual Meeting of
Shareholders and who desires the proposal to be considered for inclusion in our
proxy materials must provide a written copy of the proposal to the Company not
later than April 28, 2017 and must otherwise comply with the rules of the SEC
relating to shareholder proposals. Shareholder proposals should be sent by mail
to the Companys principal executive office or by facsimile at (865) 379-6826
followed by mail submission, in each case to the attention of Rhonda Parish,
Chief Legal Officer and Secretary of the Company.
The proxy or proxies designated by the
Company will have discretionary authority to vote on any matter properly
presented by a shareholder for consideration at the 2017 Annual Meeting of
Shareholders but not submitted for inclusion in the proxy materials for such
meeting unless (a) with respect to any nomination for director, written notice
of the intent to make the nomination is submitted to the Company at least 90
days in advance of the meeting and is otherwise made in accordance with the
nomination procedures contained in the Articles of Incorporation and certain
other procedures contained in the Bylaws of the Company, or (b) with respect to
any other shareholder proposal, notice of the matter is received by the Company
at its principal executive office at least 90 days in advance of the meeting and
complies with certain other procedures contained in the Bylaws of the Company,
and in either case, certain other conditions of the applicable rules of the SEC
are satisfied.
68
|
|
2016 Proxy Statement
|
Table of Contents
Management does not know of any other
business to come before the Annual Meeting. If, however, other matters do
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote on such matters in accordance with their
best judgment.
A list of shareholders entitled to be
present and vote at the Annual Meeting will be available for inspection by
shareholders at the time and place of the Annual
Meeting.
This Proxy Statement and our Annual
Report on Form 10-K for the fiscal year ended May 31, 2016 are available without charge
to shareholders upon written request to the Secretary, Ruby Tuesday, Inc., 150 West
Church Avenue, Maryville, Tennessee 37801, telephone number (865) 379-5700 and are available
on our website at http://rubytuesday.com/investors/annual reports. Additional
copies of these documents may be requested by contacting the Secretary at the
address and phone number listed above. In addition, you may access these
materials on the Internet at https://materials.proxyvote.com/781182 which does not
have cookies that identify visitors to the site.
By Order of the Board of Directors,
Rhonda Parish
Chief Legal Officer and Secretary
August 26, 2016
Maryville, Tennessee
2016 Proxy Statement
|
|
69
|
Table of Contents
RUBY TUESDAY, INC.
ATTN:
RHONDA SALLAS
150 W. CHURCH AVENUE
MARYVILLE, TN
37801
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the annual meeting. Have your proxy
card in hand when you access the web site and follow the instructions to obtain
your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the annual meeting. Have your proxy card in hand when you call
and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK
INK AS FOLLOWS:
|
|
|
|
E12858-P81702
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
DETACH AND RETURN THIS PORTION
ONLY
|
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED.
|
RUBY TUESDAY, INC.
|
|
|
|
|
To Elect Two Class III Directors For a Term of Three Years to
the Board of Directors:
|
|
|
|
The Board of Directors recommends a vote FOR all Director
Nominees listed below.
|
|
1.
|
Election of
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees:
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
1a.
|
JAMES J. BUETTGEN
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
1b.
|
BERNARD LANIGAN, JR.
|
|
☐
|
|
☐
|
|
☐
|
|
The Board of Directors recommends you vote FOR proposals 2
and 3.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
2.
|
TO APPROVE AN ADVISORY
RESOLUTION ON EXECUTIVE COMPENSATION.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
3.
|
TO RATIFY THE SELECTION OF
KPMG LLP TO SERVE AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 6, 2017.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
NOTE:
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENT(S) THEREOF.
|
|
|
|
|
|
|
|
Please sign exactly as your
name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as
such.
Joint owners should each sign personally. All holders must sign. If
a corporation or partnership, please sign in full corporate or partnership
name by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
[PLEASE SIGN WITHIN
BOX]
|
Date
|
|
Signature (Joint
Owners)
|
Date
|
|
Table of Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report with Form
10-K are available at
www.proxyvote.com.
RUBY TUESDAY, INC.
Annual Meeting of
Shareholders
October 5, 2016 11:00 AM
This
proxy is solicited by the Board of Directors
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
each dated August 26, 2016. The undersigned hereby appoints James J. (JJ)
Buettgen and Sue Briley and either of them, with full power of substitution, as
proxy or proxies to represent the undersigned and to vote all shares of Ruby
Tuesday, Inc.
(the "Company") common stock that the undersigned would be entitled to
vote if personally present at the Annual Meeting of Shareholders, to be held at
11:00 AM, EDT on October 5, 2016 at the Ruby Tuesday, Inc., Restaurant Support
Center, 150 West Church Avenue, Maryville, TN 37801, and any adjournment(s)
thereof, as designated on the reverse side hereof and in their discretion as to
other matters as described in the Proxy Statement and as to any other business
as may lawfully come before the meeting, hereby revoking any proxies as to said
shares heretofore given by the undersigned.
If you hold Ruby Tuesday stock in the
Ruby Tuesday, Inc. Salary Deferral Plan (the "401 (K) Plan"), this proxy/voting
instruction card is solicited by the Trustee, Wells Fargo Shareholder Services.
You may vote these shares by phone and/or Internet as described on the reverse
side. If you do not provide voting instructions with respect to the shares held
in the 401 (K) Plan, those shares will not be voted.
This proxy/voting instruction card,
when properly executed, will be voted in accordance with the directions given by
the undersigned shareholder. If no such direction is made, this proxy will be
voted in accordance with the Board of Directors' recommendations. This proxy is
revocable at or anytime prior to the meeting.
Continued and to be marked, dated and
signed on reverse side
Ruby Tuesday, Inc. (NYSE:RT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ruby Tuesday, Inc. (NYSE:RT)
Historical Stock Chart
From Jul 2023 to Jul 2024