BRINKER INTERNATIONAL
LOGO
6820 LBJ Freeway
Dallas, Texas 75240
(972) 980-9917
September 24, 1999
Dear Shareholder:
You are cordially invited to attend the annual meeting of
shareholders of Brinker International, Inc. (the "Company") to be
held at 10:00 a.m., on Thursday, November 4, 1999, at the
Maggiano's Little Italy Restaurant, located at 205 NorthPark
Center, Dallas, Texas. The meeting is being held for the
following purposes:
(A) to elect twelve directors of the Company
to serve until the next annual meeting of
shareholders or until their respective
successors shall be elected and qualified;
(B) to re-approve the Company's Profit
Sharing Plan;
(C) to approve the Company's Executive Long-
Term Incentive Plan;
(D) to approve the Company's 1999 Stock
Option and Incentive Plan for Non-Employee
Directors and Consultants; and
(E) to transact such other business as may
properly come before the meeting or any
adjournment thereof.
Our agenda for the meeting will also include a strategic
overview of the Company.
It is important that your shares be represented at the
meeting, whether or not you attend personally. I urge you to
sign, date and return the enclosed proxy, or vote via telephone
as set forth in the proxy, at your earliest convenience.
Very truly yours,
Norman E. Brinker
Chairman of the Board
BRINKER INTERNATIONAL, INC.
6820 LBJ Freeway
Dallas, Texas 75240
(972) 980-9917
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 4, 1999
To our Shareholders:
NOTICE IS HEREBY GIVEN that the annual meeting of
shareholders of Brinker International, Inc., a Delaware
corporation (the "Company"), will be held at the Maggiano's
Little Italy Restaurant, located at 205 NorthPark Center, Dallas,
Texas, on Thursday, November 4, 1999, at 10:00 a.m., local time,
for the following purposes:
(A) to elect twelve directors of the Company
to serve until the next annual meeting of
shareholders or until their respective
successors shall be elected and qualified;
(B) to re-approve the Company's Profit
Sharing Plan;
(C) to approve the Company's Executive Long-
Term Incentive Plan;
(D) to approve the Company's 1999 Stock
Option and Incentive Plan for Non-Employee
Directors and Consultants; and
(E) to transact such other business as may
properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on
September 7, 1999, are entitled to notice of, and to vote at, the
meeting or any adjournment thereof.
It is desirable that as large a proportion as possible of
the shareholders' interests be represented at the meeting.
Whether or not you plan to be present at the meeting, you are
requested to sign and return the enclosed proxy in the envelope
provided (or follow the instructions set forth in the enclosed
proxy to vote your proxy by telephone) so that your stock will be
represented. The giving of such proxy will not affect your right
to vote in person, should you later decide to attend the meeting.
Please date and sign the enclosed proxy and return it promptly in
the enclosed envelope (or follow the instructions set forth on
the enclosed proxy to vote your proxy by telephone).
By Order of the Board of Directors,
Roger F. Thomson
Secretary
Dallas, Texas
September 24, 1999
BRINKER INTERNATIONAL, INC.
6820 LBJ Freeway
Dallas, Texas 75240
(972) 980-9917
==============
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 4, 1999
==============
This Proxy Statement is first being mailed on or about
September 24, 1999, to shareholders of Brinker International,
Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the
Company for use at the annual meeting of shareholders to be held
on November 4, 1999. Proxies in the form enclosed will be voted
at the meeting if properly executed, returned to the Company
prior to the meeting, and not revoked, or if voted by telephone
in accordance with the instructions set forth in the enclosed
proxy, and not revoked. The proxy may be revoked at any time
before it is voted by giving written notice or a subsequently
dated proxy (either by mail or by telephone), to the Secretary of
the Company, or voting in person.
OUTSTANDING CAPITAL STOCK
The record date for shareholders entitled to vote at the
annual meeting is September 7, 1999 (the "Record Date"). At the
close of business on the Record Date, the Company had 65,820,477
shares of Common Stock, $0.10 par value ("Common Stock"), issued
and outstanding and entitled to vote at the meeting.
ACTION TO BE TAKEN AT THE MEETING
The annual meeting is being held (a) to elect twelve
directors of the Company to serve until the next annual meeting
of shareholders or until their respective successors shall be
elected and qualified, (b) to re-approve the Company's Profit
Sharing Plan, (c) to approve the Company's Executive Long-Term
Incentive Plan, and (d) to approve the Company's 1999 Stock
Option and Incentive Plan for Non-Employee Directors and
Consultants. If any other matter or business is brought before
the meeting, the proxy holders may vote the proxies at their
discretion. The directors do not know of any such other matter
or business.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock as of the
Record Date is necessary to constitute a quorum at the annual
meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for
the transaction of business. However, only the number of shares
voted in person or by proxy and abstentions are counted for
purposes of determining the presence or absence of a quorum for a
specific proposal. A majority of the number of shares voted in
person or by proxy and abstentions must vote in favor of a
proposal in order for it to be approved. In deciding all
questions, a holder of Common Stock is entitled to one vote, in
person or by proxy, for each share held in his or her name on the
Record Date.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as to the
number of shares of Common Stock of the Company beneficially
owned by the principal shareholders of the Company.
Beneficial Ownership
Name and Address Number of Shares Percent
FMR Corp. 7,314,600(1) 11.11%
82 Devonshire Street
Boston, Massachusetts 02109
Capital Research and Management 5,700,000(1) 8.66%
Company
333 South Hope Street
Los Angeles, California 90071
Morgan Stanley Dean Witter & Co. 3,910,369(1) 5.94%
1585 Broadway
New York, New York 10036
(1) Based on information contained in Schedule 13G dated as
of December 31, 1998.
SECURITY OWNERSHIP OF MANAGEMENT
AND ELECTION OF DIRECTORS
Twelve directors are to be elected at the meeting. Each
nominee will be elected to hold office until the next annual
meeting of shareholders or until his or her successor is elected
and qualified. To be elected a director, each nominee must
receive a plurality of all of the votes cast at the meeting for
the election of directors. Should any nominee become unable or
unwilling to accept nomination or election, the proxy holders may
vote the proxies for the election, in his or her stead, of any
other person the Board of Directors may recommend. All nominees
have expressed their intention to serve the entire term for which
election is sought. The following table sets forth certain
information concerning security ownership of management and
nominees for election as directors of the Company:
Number of Shares Number Attributable to
of Common Stock Options Exercisable
Beneficially Owned as of Within 60 Days of Percent
September 7, 1999(1)(2) September 7, 1999 of Class
Name
Norman E. Brinker 1,799,934(3) 1,011,875 2.69%
Ronald A. McDougall 912,522 887,500 1.37%
Douglas H. Brooks 431,324 344,500 *
John C. Miller 131,630 130,625 *
Russell G. Owens 150,469 135,708 *
Roger F. Thomson 196,000 192,500 *
Donald J. Carty 10,000 -0- *
Dan W. Cook, III -0- -0- *
Marvin J. Girouard -0- -0- *
J.M. Haggar, Jr. 72,435(4) 8,715 *
Frederick S. Humphries 26,080 25,000 *
Ronald Kirk 7,430 7,430 *
Jeffrey A. Marcus 17,048 7,048 *
James E. Oesterreicher 19,500 19,000 *
Roger T. Staubach 34,500 24,000 *
All executive officers
and directors as a
group (21 persons) 4,383,330(3)(4) 3,079,453 6.36%
* Less than one percent
(1) Beneficial ownership has been determined in accordance with
the rules of the Securities and Exchange Commission. Except as
noted, and except for any community property interests owned by
spouses, the listed individuals have sole investment power and
sole voting power as to all shares of stock of which they are
identified as being the beneficial owners.
(2) Includes shares of Common Stock which may be acquired by
exercise of options vested, or vesting within 60 days of
September 7, 1999, under the Company's 1983 Incentive Stock
Option Plan, 1992 Incentive Stock Option Plan and 1991 Stock
Option Plan for Non-Employee Directors and Consultants, as
applicable.
(3) Includes 10,250 shares of Common Stock held of record by a family
trust of which Mr. Brinker is trustee.
(4) Includes 25,000 shares of Common Stock held of record by
Joe Haggar Interest, L.P., a limited partnership controlled by
Mr. Haggar.
The Company has established a guideline that all senior
officers of the Company own stock in the Company, believing that
it is important to further encourage and support an ownership
mentality among the senior officers that will continue to align
their personal financial interests with the long-term interests
of the Company's shareholders. Pursuant to the guideline, the
minimum amount of Company Common Stock that a senior officer will
be required to own will be determined by such officer's position
within the Company as well as annual compensation. The Company
has established a program with a third-party lender pursuant to
which the senior officers will be able to obtain financing for
purposes of attaining the stock ownership levels referred to
above. Any loans obtained by such senior officers to finance
such stock acquisitions are facilitated by the Company pursuant
to an agreement in which the senior officer pledges the
underlying stock and future incentive payments which may be
receivable from the Company as security for the loan.
DIRECTORS AND EXECUTIVE OFFICERS
Directors
A brief description of each person nominated to become a
director of the Company is provided below. Except for Douglas H.
Brooks, all nominees are currently serving as directors of the
Company. Each of the current directors was elected at the last
annual meeting of the Company's shareholders held on October 29,
1998.
Norman E. Brinker, 68, has served as Chairman of the Board
of Directors since 1983. He was also Chief Executive Officer of
the Company from September 1983 to June 1995, with the exception
of a brief period during which Mr. Brinker was incapacitated due
to an injury. Mr. Brinker is a member of the Executive and
Nominating Committees of the Company. He was the founder of S&A
Restaurant Corp. in 1966, and served as its Chairman of the Board
of Directors and Chief Executive Officer from 1977 through 1983.
From 1982 through 1983, Mr. Brinker served as Chairman of the
Board of Directors and Chief Executive Officer of Burger King
Corporation, while simultaneously occupying the position of
President of The Pillsbury Company Restaurant Group. Mr. Brinker
currently serves as a member of the Board of Directors of Haggar
Clothing Company and Petsmart, Inc.
Ronald A. McDougall, 57, was elected Vice Chairman and Chief
Executive Officer in January 1999, having formerly held the
office of President and Chief Executive Officer of the Company
since June 1995 and President and Chief Operating Officer from
1986 to 1995. Mr. McDougall joined the Company in 1983 and
served as Executive Vice President - Marketing and Strategic
Development until his promotion to President. Prior to joining
the Company, Mr. McDougall held senior management positions at
Proctor and Gamble, Sara Lee, The Pillsbury Company and S&A
Restaurant Corp. Mr. McDougall has served as a member of the
Board of Directors of the Company since 1983 and is a member of
the Executive and Nominating Committees of the Company. Mr.
McDougall also serves on the Board of Trustees of the Cooper
Institute for Aerobics Research.
Douglas H. Brooks, 47, became President and Chief Operating
Officer of the Company in January 1999. Previously, Mr. Brooks
served as Chili's Grill & Bar ("Chili's") President from June
1994 to May 1998 and Executive Vice President and Chief Operating
Officer from May 1998 until January 1999. Mr. Brooks joined the
Company as an Assistant Manager in 1978 and was promoted to
General Manager later that year. He was named Area Supervisor in
1979, Regional Director in 1982, Senior Vice President - Central
Region Operations in 1987, and Senior Vice President - Chili's
Operations in 1992. He held this position until becoming
President of Chili's in 1994. Mr. Brooks serves on the Board of
Directors of Limbs for Life.
Donald J. Carty, 53, was named Chairman, President and Chief
Executive Officer of AMR Corp. and American Airlines, Inc. in May
1998, after serving as President from March 1995 until May 1998.
From 1989 to 1995, he served American Airlines, Inc. and AMR
Corp. as Executive Vice President - Finance and Planning. He
joined American in 1978 and held numerous finance and planning
positions, with the exception of a two-year hiatus as President
and Chief Executive Officer of CP Air in Canada. He serves on the
Board of Directors of Dell Computer Corporation and Sabre
Holdings Corporation. He also serves on the boards of the Canada-
U.S. Foundation for Educational Exchange and the Dallas Chamber
and is a member of the Dallas Citizens Council. Mr. Carty has
served on the Board of Directors since June 1998 and is a member
of the Executive Committee of the Company.
Dan W. Cook, III, 64, is a Senior Director of Goldman Sachs,
an investment banking firm. Mr. Cook joined Goldman Sachs Group
in 1961 and was a partner when he retired in 1992. Mr. Cook is a
member of the Executive and Compensation Committees of the
Company and has served as a member of the Board of Directors
since October 1997. Mr. Cook also serves on the Board of
Directors for Centex Corporation. Mr. Cook is a member of the
Board of Trustees of Southern Methodist University as well as
Vice-Chair of the Edwin L. Cox School of Business Executive
Board.
Marvin J. Girouard, 60, is the Chairman, President and Chief
Executive Officer of Pier 1 Imports, Inc., having been elected to
the position of Chairman in February 1999, President in August
1988 and Chief Executive Officer in June 1998. Mr. Girouard
previously served as Chief Operating Officer from 1988 to 1998.
Mr. Girouard joined Pier 1 Imports in 1975 and has served on its
Board of Directors since 1988. He serves as a Director for Tandy
Brands Accessories, Inc. and is a member of the Executive
Committee for the United States Committee for UNICEF - The United
Nations Children's Emergency Fund. Mr. Girouard has served as a
member of the Board of Directors since September 1998 and is a
member of the Audit and Compensation Committees of the Company.
J. M. Haggar, Jr., 74, is currently the owner of J.M.
Haggar, Jr. Investments, a land management and personal
investments business he has operated since retiring as Chairman
of the Board of Directors of Haggar Clothing Company in February
1995. Mr. Haggar previously held the positions of President and
Chief Executive Officer of Haggar Clothing Company until 1991.
Mr. Haggar is a member of the Compensation and Audit Committees
of the Company and has served as a member of the Company's Board
of Directors since 1985.
Frederick S. Humphries, 63, is the President of Florida A&M
University in Tallahassee, Florida, having held this position
since 1985. Prior to joining Florida A&M University,
Dr. Humphries was President of Tennessee State University in
Nashville for over 10 years. Dr. Humphries serves as a member of
the USDA Task Force of 1890 Land-Grant Institutions in addition
to being involved in various civic and community activities.
Dr. Humphries has served on the Board of Directors of the Company
since May 1994 and is a member of the Audit Committee of the
Company. He is also a member of the Board of Directors of Wal-
Mart, Inc.
Ronald Kirk, 45, is currently Mayor of the City of Dallas
and a partner in the law firm of Gardere & Wynne. He was elected
Mayor in 1995, and previously served as Secretary of State of the
State of Texas from 1994 to 1995. Mr. Kirk was engaged in the
private practice of law from 1989 to 1994, served as an Assistant
City Attorney for Dallas from 1983 to 1989 and as a legislative
aide to U.S. Senator Lloyd Bentsen from 1983 to 1989. Mayor Kirk
is an honors graduate of Austin College and earned his law degree
from The University of Texas. Mayor Kirk has served on the Board
of Directors since January 1997 and is a member of the Nominating
Committee of the Company.
Jeffrey A. Marcus, 52, is a Partner of Marcus & Partners, a
private equity investment firm he co-founded in March 1999. He
previously served as President and Chief Executive Officer of
Chancellor Media Corporation (radio broadcasting), from May 1998
until March 1999. Previously, Mr. Marcus was Chairman, President
and Chief Executive Officer of Marcus Cable Company, a company he
formed in 1990 after spending more than 20 years in the cable
television industry. Mr. Marcus is active in several civic and
charitable organizations. Mr. Marcus has served on the Board of
Directors since January 1997 and is a member of the Executive
Committee of the Company.
James E. Oesterreicher, 58, is the Chairman of the Board and
Chief Executive Officer of J.C. Penney Company, Inc., having been
elected to the position of Chairman of the Board in January 1997
and to the position of Vice Chairman and Chief Executive Officer
in January 1995. Mr. Oesterreicher served as President of
JCPenney Stores and Catalog from 1992 to 1995 and as Director of
JCPenney Stores from 1988 to 1992. Mr. Oesterreicher has been
with the J.C. Penney Company since 1964 where he started as a
management trainee. He serves as a Director for various
entities, including Texas Utilities Company (TXU Corp), Southwest
Health Systems, National Retail Federation, Circle Ten Council -
Boy Scouts of America, National Organization on Disability, March
of Dimes Birth Defects Foundation, and the Conference Board. Mr.
Oesterreicher has served as a member of the Board of Directors of
the Company since May 1994 and is a member of the Compensation
and Nominating Committees of the Company.
Roger T. Staubach, 57, has been Chairman of the Board and
Chief Executive Officer of The Staubach Company, a national real
estate company specializing in tenant representation, since 1982.
Mr. Staubach is a 1965 graduate of the U.S. Naval Academy and
served four years in the Navy as an officer. In 1968, he joined
the Dallas Cowboys professional football team as quarterback and
was elected to the National Football League Hall of Fame in 1985.
He currently serves on the Board of Directors of American
AAdvantage Funds and International Home Foods, Inc., and is
active in numerous civic, charity and professional organizations.
He has served as a member of the Board of Directors of the
Company since 1993 and is a member of the Nominating Committee of
the Company.
Executive Officers
The following persons are executive officers of the Company
who are not nominated to serve on the Company's Board of
Directors:
Leslie Christon, 45, was elected On The Border Mexican Grill
& Cantina ("On The Border") President in April 1997, having
previously served as Vice President of Operations of On The
Border since joining the Company in July 1996. Prior to this
time, Ms. Christon held the position of Senior Vice President of
Operations of Red Lobster Restaurants from November 1994 to June
1996, and she was with El Chico Restaurants, Inc. from June 1981
to November 1994. Ms. Christon serves on the Board of Directors
of the Women's Foodservice Forum and is a past president of the
Roundtable for Women in Foodservice, Inc.
Kenneth D. Dennis, 46, has been Cozymel's Coastal Mexican
Grill ("Cozymel's") President since September 1997, having
previously served as Senior Vice President and Chief Operating
Officer of Cozymel's since February 1997. Mr. Dennis joined the
Company as a Manager in 1976 and was named General Manager in
1978, Director of Internal Systems in 1979, and Director of
Marketing in 1983. Mr. Dennis was promoted to Vice President of
Marketing in 1986 and to Senior Vice President of Marketing in
1993, a position he held until February 1997. Mr. Dennis serves
on the Board of Directors of the Marketing Executives Group and
is a past Co-Chairman.
Todd E. Diener, 42, was elected Chili's Grill & Bar
President in May 1998, having previously served as Chili's Senior
Vice President and Chief Operating Officer since July 1996. Mr.
Diener joined the Company as a Chili's Manager Trainee in 1981
and was promoted to General Manager in 1983, Area Director in
1985, and Regional Director in 1987. Mr. Diener became Regional
Vice President in 1989, a position he held until July 1996.
Carol E. Kirkman, 42, was appointed Executive Vice President
of Human Resources in June 1997 after serving as Senior Vice
President of Human Resources since April 1996. Ms. Kirkman
joined the Company as Corporate Counsel in 1990 and was promoted
to Vice President/Assistant General Counsel in 1994. Ms. Kirkman
was an attorney in private practice in Dallas, Texas, from 1982
until 1987 and worked as a commercial and retail real estate
broker in southern California from 1987 until 1990.
John C. Miller, 44, has served as Romano's Macaroni Grill
President since April 1997. Mr. Miller joined the Company as
Vice President-Special Concepts in 1987. In 1988, he was elected
Vice President - Joint Venture/Franchise and served in this
capacity until 1993 when he was promoted to Senior Vice President
- - New Concept Development. Mr. Miller was named Senior Vice
President - Mexican Concepts in September 1994 and was
subsequently elected Senior Vice President and Mexican Concepts
President in October 1995, a position he held until April 1997.
Prior to joining the Company, Mr. Miller worked in various
capacities with the Taco Bueno Division of Unigate Restaurants.
Russell G. Owens, 40, has served as Executive Vice President
and Chief Financial and Strategic Officer since September 1997.
Mr. Owens joined the Company in 1983 as Controller. He was
elected Vice President of Planning in 1986 and Vice President of
Operations Analysis in 1991. Mr. Owens was promoted to Senior
Vice President of Operations Analysis in 1993 and was named
Senior Vice President of Strategic Development - Italian Concepts
in 1996, a position he held until being elected Chief Strategic
Officer in June 1997. Prior to joining the Company, Mr. Owens
worked for the public accounting firm, Deloitte & Touche.
Roger F. Thomson, 50, has served as Executive Vice
President, Chief Administrative Officer, General Counsel and
Secretary since June 1996. Mr. Thomson joined the Company as
Senior Vice President, General Counsel and Secretary in 1993 and
was promoted to Executive Vice President, General Counsel and
Secretary in March 1994. Mr. Thomson served as a Director of the
Company from 1993 until 1995. From 1988 until 1993, Mr. Thomson
served as Senior Vice President, General Counsel and Secretary
for Burger King Corporation. Prior to 1988, Mr. Thomson spent
ten years at S & A Restaurant Corp. where he was Executive Vice
President, General Counsel and Secretary.
Mark F. Tormey, 46, has served as Maggiano's Little Italy
President since November 1997, having joined the Company as
Senior Vice President and Chief Operating Officer of Maggiano's
Little Italy in August 1995. Prior to joining the Company, Mr.
Tormey worked for Lettuce Entertain You Enterprises, Inc. since
1979. In 1991, Mr. Tormey opened the first Maggiano's Little
Italy restaurant and worked with the Maggiano's Little Italy
group at Lettuce Entertain You Enterprises, Inc. until its
acquisition by the Company in August 1995.
David Wolfgram, 41, has served as Corner Bakery Cafe
("Corner Bakery") President since November 1997, having joined
the Company as Senior Vice President and Chief Operating Officer
of Corner Bakery in August 1995. Mr. Wolfgram joined Lettuce
Entertain You Enterprises, Inc. in 1980 and served as Vice
President and Managing Partner with Lettuce Entertain You
Enterprises, Inc. from 1989 until Corner Bakery was acquired by
the Company in August 1995.
Classes of Directors
For purposes of determining whether non-employee directors
will be nominated for reelection to the Board of Directors, the
non-employee directors have been divided into four classes. Each
non-employee director will continue to be subject to reelection
by the shareholders of the Company each year. However, after a
non-employee director has served on the Board of Directors for
four years, such director shall be deemed to have been advised by
the Nominating Committee that he or she will not stand for
reelection at the subsequent annual meeting of shareholders and
shall be considered a "Retiring Director." Notwithstanding this
policy, the Nominating Committee may determine that it is
appropriate to renominate any or all of the Retiring Directors
after first considering the appropriateness of nominating new
candidates for election to the Board of Directors. The four
classes of non-employee directors are as follows: Messrs.
Girouard, Humphries and Oesterreicher comprise Class 1 and will
be considered Retiring Directors as of the annual meeting of
shareholders following the end of the 2002 fiscal year. There
are no members of Class 2. Messrs. Haggar, Kirk and Marcus
comprise Class 3 and will be considered Retiring Directors as of
the annual meeting of shareholders following the end of the 2000
fiscal year. Messrs. Carty, Cook and Staubach comprise Class 4
and will be considered Retiring Directors as of the annual
meeting of shareholders following the end of the 2001 fiscal
year.
Committees of the Board of Directors
The Board of Directors of the Company has established an
Executive Committee, Audit Committee, Compensation Committee, and
Nominating Committee. The Executive Committee (currently
comprised of Messrs. Brinker, McDougall, Carty, Cook, and Marcus)
met two times during the fiscal year. The Executive Committee
reviews material matters during the intervals between Board
meetings, provides advice and counsel to Company management
during such intervals, and has the authority to act for the Board
on most matters during the intervals between Board meetings. In
addition, the Executive Committee is also charged with assuring
that the Company has a satisfactory succession management plan
for all key management positions.
All of the members of the Audit and Compensation Committees
are directors independent of management who are not and never
have been officers or employees of the Company. The Audit
Committee is currently comprised of Messrs. Girouard, Haggar, and
Humphries, and it met three times during the fiscal year.
Included among the functions performed by the Audit Committee
are: the review with independent auditors of the scope of the
audit and the results of the annual audit by the independent
auditors, consideration and recommendation to the Board of the
selection of the independent auditors for the next fiscal year,
the review with management and the independent auditors of the
annual financial statements of the Company, and the review of the
scope and adequacy of internal audit activities.
The Compensation Committee is currently comprised of
Messrs. Cook, Girouard, Haggar and Oesterreicher, and it met
three times during the fiscal year. Functions performed by the
Compensation Committee include: reviewing the performance of the
Chief Executive Officer, approving key executive promotions,
ensuring the reasonableness and appropriateness of senior
management compensation arrangements and levels, the adoption,
amendment and administration of stock-based incentive plans
(subject to shareholder approval where required), management of
the various stock option plans of the Company, approval of the
total number of available shares to be used each year in stock-
based plans, and approval of the adoption and amendment of
significant compensation plans. The specific nature of the
Committee's responsibilities as they relate to executive officers
is set forth below under "Report of the Compensation Committee."
The purposes of the Nominating Committee are to recommend to
the Board of Directors potential members to be added as new or
replacement members to the Board of Directors, to review the
compensation paid to non-management Board members, and to
recommend corporate governance guidelines to the full Board of
Directors. The Nominating Committee will consider a shareholder-
recommended nomination for director to be voted upon at the 2000
annual meeting of shareholders provided that the recommendation
must be in writing, set forth the name and address of the
nominee, contain the consent of the nominee to serve, and be
submitted on or before May 27, 2000. The Nominating Committee is
composed of Messrs. Brinker, McDougall, Kirk, Oesterreicher, and
Staubach and it met two times during the fiscal year.
During the fiscal year ended June 30, 1999, the Board of
Directors held four meetings; each incumbent director attended at
least 75% of the aggregate total of meetings of the Board of
Directors and Committees on which he or she served.
Directors' Compensation
Directors who are not employees of the Company receive
$1,000 for each meeting of the Board of Directors attended and
$1,000 for each meeting of any committee of the Board of
Directors attended. The Company also reimburses directors for
costs incurred by them in attending meetings of the Board.
Directors who are not employees of the Company receive
grants of stock options under the Company's 1991 Stock Option
Plan for Non-Employee Directors and Consultants. A new director
who is not an employee of the Company will receive as
compensation (a) 20,000 stock options at the beginning of such
director's term, and (b) an annual payment of $36,000, at least
25% of which must be taken in the form of stock options. If a
director is appointed to the Board of Directors at any time other
than at an annual meeting of shareholders, the director will
receive a prorated portion of the annual cash compensation for
the period from the date of election or appointment to the Board
of Directors until the meeting of the Board of Directors held
contemporaneous with the next annual meeting of shareholders. If
a director elects to receive cash, the first payment will be made
at the Board of Directors' meeting held contemporaneous with the
next annual meeting of shareholders. The stock options will be
granted as of the 60th day following such meeting (or if the 60th
day is not a business day, on the first business day thereafter)
at the fair market value on the date of grant. One-third (1/3)
of the options will vest on each of the second, third and fourth
anniversaries of the date of grant. If a director is a Retiring
Director who is being nominated for an additional term on the
Board of Directors, each such renominated director will receive
an additional grant of 10,000 stock options at the beginning of
such director's new term. If the 1999 Stock Option and Incentive
Plan for Non-Employee Directors and Consultants is approved by
the shareholders of the Company, an individual director will be
given the option of substituting awards of restricted stock or
stock options for cash in making his or her annual election
regarding compensation.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the
annual compensation for the Company's five highest compensated
executive officers, including the Chief Executive Officer, whose
salary and bonus exceeded $100,000 in fiscal 1999.
Summary Compensation Table
Long-Term Compensation
Awards Payouts
Securities Long-Term
Name and Annual Compensation Underlying Incentive All Other
Principal Position Year Salary Bonus Options Payouts Compensation(1)
Ronald A. McDougall
Vice Chairman and 1999 $ 929,154 $1,080,142 200,000 $106,100 $ 20,652
Chief Executive 1998 $ 861,442 $1,033,731 200,000 $ 76,633 $ 30,397
Officer 1997 $ 825,000 $ 396,000 200,000 $ 67,289 $ 29,194
Douglas H. Brooks
President and 1999 $ 541,154 $ 555,515 125,000 $ 69,505 $ 17,491
Chief Operating 1998 $ 387,308 $ 255,623 60,000 $ 45,980 $ 16,595
Officer 1997 $ 333,654 $ 120,462 50,000 $ 33,645 $ 20,818
Russell G. Owens
Executive Vice 1999 $ 350,000 $ 271,251 75,000 $ 62,898 $ 14,220
President and Chief 1998 $ 286,577 $ 229,262 50,000 $ 37,473 $ 13,319
Financial and 1997 $ 187,231 $ 41,931 20,000 $ 26,916 $ 12,589
Strategic Officer
Roger F. Thomson
Executive Vice 1999 $ 349,885 $ 271,161 50,000 $ 79,575 $ 13,909
President, Chief 1998 $ 334,692 $ 267,754 50,000 $ 57,475 $ 16,501
Administrative Officer,1997 $ 317,231 $ 104,940 50,000 $ 40,374 $ 16,680
General Counsel and
Secretary
John C. Miller
Romano's Macaroni 1999 $ 329,792 $ 204,472 60,000 $ 63,660 $ 13,623
Grill President 1998 $ 305,631 $ 131,421 50,000 $ 38,317 $ 15,865
1997 $ 277,461 $ 37,592 50,000 $ 26,916 $ 15,871
(1) All other compensation represents Company match on deferred
compensation and various fringe benefits including car allowance
and reimbursement of tax preparation, financial planning, and
health club expenses.
Option Grants During 1999 Fiscal Year
The following table contains certain information concerning
the grant of stock options pursuant to the Company's Stock Option
and Incentive Plan to the executive officers named in the above
compensation table during the Company's last fiscal year:
% of Total Realizable Value of
Options Assumed Annual Rates of
Granted to Stock Price Appreciation
Options Employees in Exercise or Expiration for Option Term(1)
Name Granted Fiscal Year Base Price Date 5% 10%
Ronald A. McDougall 200,000 10.4% $26.75 01/21/09 $3,364,586 $8,526,522
Douglas H. Brooks 125,000 6.5% $26.75 01/21/09 $2,102,866 $5,329,076
Russell G. Owens 75,000 3.9% $26.75 01/21/09 $1,261,720 $3,197,446
Roger F. Thomson 50,000 2.6% $26.75 01/21/09 $ 841,147 $2,131,631
John C. Miller 60,000 3.1% $26.75 01/21/09 $1,009,376 $2,557,957
(1) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible
future appreciation, if any, of the Company's stock price.
Stock Option Exercises and Fiscal Year End Value Table
The following table shows stock option exercises by the
named officers during the last fiscal year, including the
aggregate value of gains on the date of exercise. In addition,
this table includes the number of shares covered by both
exercisable and non-exercisable stock options at fiscal year end.
Also reported are the values for "in-the-money" options which
represent the position spread between the exercise price of any
such existing options and the $27.50 fiscal year end price of the
Company's Common Stock.
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired Value Fiscal Year End Fiscal Year End
On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name
Ronald A. McDougall 252,500 $3,424,153 787,500 750,000 $7,943,593 $8,112,500
Douglas H. Brooks 94,925 $1,823,756 314,500 270,000 $4,323,112 $2,183,125
Russell G. Owens 14,739 $ 326,553 110,708 195,000 $1,402,600 $1,765,000
Roger F. Thomson 30,000 $ 412,500 167,500 185,000 $1,548,610 $1,991,875
John C. Miller -0- -0- 105,625 195,000 $1,282,971 $1,999,375
Long-Term Performance Share Plan and Awards
Executives of the Company participate in the Long-Term
Performance Share Plan. See "Report of the Compensation
Committee - Long-Term Incentives" for more information regarding
this plan. The following table represents awards granted in the
last fiscal year under the Long-Term Performance Share Plan:
Estimated Future Payouts
Under Non-Stock Based Plans
(Dollars)
Number of
Name Units Awarded Threshold Target Maximum
Ronald A. McDougall 2,000 * $200,000 *
Douglas H. Brooks 1,500 * $150,000 *
Russell G. Owens 1,000 * $100,000 *
Roger F. Thomson 1,000 * $100,000 *
John C. Miller 1,000 * $100,000 *
* Future payouts under the Long-Term Performance Share Plan
have no minimum threshold and have no maximum limit as set
forth in more detail in "Report of the Compensation
Committee - Long Term Incentives."
REPORT OF THE COMPENSATION COMMITTEE
Compensation Philosophy
The executive compensation program is designed as a tool to
reinforce the Company's strategic principles - to be a premiere
and progressive growth company with a balanced approach towards
people, quality and profitability and to enhance long-term
shareholder value. To this end, the following principles have
guided the development of the executive compensation program:
Provide competitive levels of compensation to attract and
retain the best qualified executive talent. The Committee
strongly believes that the caliber of the Company's
management group makes a significant difference in the
Company's sustained success over the long term.
Embrace a pay-for-performance philosophy by placing
significant amounts of compensation "at risk" - that is,
compensation payouts to executives must vary according to
the overall performance of the Company.
Directly link executives' interests with those of
shareholders by providing opportunities for long-term
incentive compensation based on changes in shareholder
value.
The executive compensation program is intended to
appropriately balance the Company's short-term operating goals
with its long-term strategy through a careful mix of base salary,
annual cash incentives and long-term performance compensation
including cash incentives and incentive stock options.
Base Salaries
Executives' base salaries and total compensation are
targeted to be competitive between the 75th and 90th percentiles
of the market for positions of similar responsibility and scope
to reflect the exceptionally high level of executive talent
required to execute the growth plans of the Company. Positioning
executives' base salaries at these levels is needed for
attracting, retaining and motivating executives with the
essential qualifications for managing the Company's growth. The
Company defines the relevant labor market for such executive
talent through the use of third-party executive salary surveys
that reflect both the chain restaurant industry as well as a
broader cross-section of companies from many industries.
Individual base salary levels are determined by considering
market data for each officer's position, level of responsibility,
performance, and experience. The overall amount of base salary
increases awarded to executives reflects the financial
performance of the Company, individual performance and potential,
and/or changes in an officer's duties and responsibilities.
Annual Incentives
The Company's Profit Sharing Plan is a non-qualified annual
incentive arrangement in which all corporate employees, including
executives, participate. The program is designed to reflect
employees' contribution to the growth of the Company's Common
Stock value by increasing the earnings of the Company. The plan
reinforces a strong teamwork ethic by making the basis for
payouts to non-restaurant concept executives the same as for all
other non-restaurant concept corporate employees and by making
the basis for payouts to executives of one of the Company's
restaurant concepts the same as for all other members of such
restaurant concept's corporate team.
At the beginning of a fiscal year, each executive is
assigned an Individual Participation Percentage ("IPP") of the
base salary for such executive that targets overall total cash
compensation for executives between the 75th and 90th percentiles
of the market. The IPPs reflect the Committee's desire that a
significant percentage of executives' total compensation be
derived from variable pay programs.
401(k) Savings Plan and Savings Plan II
On January 1, 1993, the Company implemented the 401(k)
Savings Plan ("Plan I") and Savings Plan II ("Plan II"). These
Plans are designed to provide the Company's employees with a tax-
deferred long-term savings vehicle. The Company provides a
matching contribution equal to twenty-five percent of a salaried
participant's contribution, up to a maximum of five percent of
such participant's base compensation.
Plan I is a qualified 401(k) plan. Participants in Plan I
elect the percentage of pay they wish to contribute as well as
the investment alternatives in which their contributions are to
be invested. The Company's matching contribution for all Plan I
participants is made in Company Common Stock. All participants
in Plan I are considered non-highly compensated employees as
defined by the Internal Revenue Service. Participants'
contributions vest immediately while Company contributions vest
twenty-five percent annually, beginning in the participant's
second year of eligibility since Plan I inception.
Plan II is a non-qualified deferred compensation plan.
Plan II participants elect the percentage of pay they wish to
defer into their Plan II account. They also elect the percentage
of their deferral account to be allocated among various
investment options. The Company's matching contribution for all
non-officer Plan II participants is made in Company Common Stock,
with corporate officers receiving a Company match in cash.
Participants in Plan II are considered a select group of
management and highly compensated employees according to the
Department of Labor. A participant's contributions vest
immediately while Company contributions vest twenty-five percent
annually, beginning in the participant's second year of
eligibility since Plan II inception.
Long-Term Incentives
All salaried employees above a specified grade level of the
Company, including executives, are eligible for annual grants of
tax-qualified and non-qualified stock options. By tying a
significant portion of executives' total opportunity for
financial gain to increases in shareholder wealth as reflected by
the market price of the Company's Common Stock, executives'
interests are closely aligned with shareholders' long-term
interests. In addition, because the Company does not maintain
any qualified retirement programs for executives, the stock
option plan is intended to provide executives with opportunities
to accumulate wealth for later retirement.
Stock options are rights to purchase shares of the Company's
Common Stock at the fair market value as of the date of grant.
Grantees do not receive a benefit from stock options unless and
until the market price of the Company's common stock increases.
Fifty percent of a stock option grant becomes exercisable two
years after the grant date; the remaining fifty percent of a
grant becomes exercisable three years after the grant date.
The number of stock options granted to an executive is
determined by the Compensation Committee and is based on grant
guidelines set by the Compensation Committee that reflect market
data and the officer's position within the Company.
During the 2000 fiscal year, annual grants of stock options
to officers of the Company will be reduced. Pursuant to the
Executive Long-Term Incentive Plan described in more detail
below, the value of each officer's long-term compensation package
will be reallocated among stock options, restricted stock and
cash. Such restricted stock will vest fifty percent in two years
and fifty percent in three years provided that certain
performance objectives relating to the Company's revenues and
earnings are attained.
Executives also participate in the Long-Term Performance
Share Plan. The Long-Term Performance Share Plan is based on the
Company's total shareholder return in comparison to the S&P 500
Index and the S&P Restaurant Industry Index. For executives to
receive the target payout, the Company must perform at the 75th
percentile of each index over a three-year cycle and must average
at least ninety percent of its planned annual profit before taxes
over the same three-year cycle. If approved by the shareholders
of the Company, the Long-Term Performance Share Plan will be
replaced by the Executive Long-Term Incentive Plan. The
Executive Long-Term Incentive Plan is based upon the Company's
earnings per share over a three year period in comparison to a
target established by the Compensation Committee of the Board of
Directors. For a restaurant concept president, the criteria will
be the three-year profit before taxes for such restaurant concept
as compared to the target established by the Compensation
Committee of the Board of Directors. Any payouts made under the
Executive Long-Term Incentive Plan shall be made one-half in cash
and one-half in restricted stock, which restricted stock will
vest one-third per year over the next three years. In order to
transition from the current Long-Term Performance Share Plan,
payouts for the cycle including fiscal years 1998, 1999, and
2000, will be paid out based upon the performance during the 1998
and 1999 fiscal years (on a prorata basis) in the form of
restricted stock that will vest two-thirds in one year and one-
third in two years. Payments under the Long-Term Performance
Share Plan for the 1999, 2000, and 2001 three-year cycle will be
paid out based upon the performance during the 1999 fiscal year
(on a prorata basis) in the form of restricted stock that will
vest two-thirds in one year and one-third in two years. The
Executive Long-Term Incentive Plan will be phased in over a three-
year period beginning in the 2000 fiscal year. Payouts under the
Executive Long-Term Incentive Plan will commence following the
2000 fiscal year. The first payout will be based on the
performance (either earnings per share for corporate officers or
profit before taxes for concept presidents) for the 2000 fiscal
year and the target payout will be one-third of the approved
target payout. The second payout will occur following the
completion of the 2001 fiscal year and will be based on the
performance over the two-year period of fiscal years 2000 and
2001. The target payout will be two-thirds of the approved
target payout. Full target payouts will become effective after
the completion of the 2002 fiscal year when the performance
results for the full 2000, 2001, and 2002 three-year cycle are
known. These target payouts will be paid based upon performance
against the three-year target earnings per share or profit before
taxes amounts established by the Compensation Committee of the
Board of Directors.
Pay/Performance Nexus
The Company's executive compensation program has resulted in
a direct relationship between the compensation paid to executive
officers and the Company's performance. See "Five-Year Total
Shareholder Return Comparison" below.
CEO Compensation
The Compensation Committee made decisions regarding Mr.
McDougall's compensation package according to the guidelines
discussed in the preceding sections. Mr. McDougall was awarded a
salary increase in the amount of 5.4%, effective July 1, 1999, to
recognize his vast experience in the restaurant industry, the
Company's performance under his leadership and his significant
contributions to the Company's continued success. Mr. McDougall
was granted 2,000 units under the Long-Term Performance Share
Plan for the cycle which includes fiscal years 1999, 2000, and
2001. Mr. McDougall was also granted 200,000 stock options under
the Company's Stock Option and Incentive Plan. Approximately
fifty-four percent of Mr. McDougall's cash compensation for
fiscal 1999 was incentive pay pursuant to the Company's Profit
Sharing Plan. Like all Company executives, Mr. McDougall's
compensation is significantly affected by the Company's
performance. In the 1999 fiscal year, Mr. McDougall's total cash
compensation increased six percent from its level in the 1998
fiscal year.
Federal Income Tax Considerations
The Compensation Committee has considered the impact of
Section 162(m) of the Internal Revenue Code adopted under the
Omnibus Budget Reconciliation Act of 1993. This section
disallows a tax deduction for any publicly-held corporation for
individual compensation to certain executives of such corporation
exceeding $1,000,000 in any taxable year, unless compensation is
performance-based. It is the intent of the Company and the
Compensation Committee to qualify to the maximum extent possible
its executives' compensation for deductibility under applicable
tax laws. The Compensation Committee believes that the Company's
compensation programs provide the necessary incentives and
flexibility to promote the Company's performance-based
compensation philosophy while being consistent with Company
objectives.
The Compensation Committee's administration of the executive
compensation program is in accordance with the principles
outlined at the beginning of this report. The Company's
financial performance supports the compensation practices
employed during the past year.
Respectfully submitted,
COMPENSATION COMMITTEE
DAN W. COOK, III
MARVIN J. GIROUARD
J.M. HAGGAR, JR.
JAMES E. OESTERREICHER
FIVE-YEAR TOTAL SHAREHOLDER RETURN COMPARISON
The following is a line graph presentation comparing
cumulative, five-year total shareholder returns on an indexed
basis with the S&P 500 Index and the S&P Restaurant Industry
Index. A list of the indexed returns follows the graph.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Brinker
International S&P 500 S&P Restaurants
1994 100.00 100.00 100.00
1995 82.74 126.07 131.52
1996 73.81 158.86 154.75
1997 66.67 213.98 161.84
1998 94.05 278.52 219.24
1999 130.95 341.90 274.86
The graph assumes a $100 initial investment and the
reinvestment of dividends. The Common Stock prices shown are
neither indicative nor determinative of future performance.
1994 1995 1996 1997 1998 1999
Brinker International 100.00 82.74 73.81 66.67 94.05 130.95
S&P 500 100.00 126.07 158.86 213.98 278.52 341.90
S&P Restaurants 100.00 131.52 154.75 161.84 219.24 274.86
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's
directors and executive officers, and persons who own more than
ten percent of the Company's Common Stock are required to report
their initial ownership of the Company's Common Stock and any
subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates have been established
for these reports and the Company is required to disclose in this
proxy statement, any failure to file by these dates. The Company
believes that all filing requirements were satisfied. In making
these disclosures and filing the reports, the Company has relied
solely on written representations from certain reporting persons.
CERTAIN TRANSACTIONS
The policy of the Company is, to the extent practicable, to
avoid transactions (except those which are employment related)
with officers, directors, and affiliates. In any event, any such
transactions will be entered into on terms no less favorable to
the Company than could be obtained from third parties, and such
transactions will be approved by a majority of the disinterested
directors of the Company. Except for the transactions described
below, there were no transactions required to be reported in the
last fiscal year.
On June 28, 1995, Mr. Norman Brinker contractually agreed to
remain as Chairman of the Board (subject to annual reelection by
the shareholders) through the 2001 fiscal year. Under this
agreement, Mr. Brinker's compensation will not materially differ
from his compensation on June 28, 1995. However, Mr. Brinker's
total base compensation and profit sharing distributions in the
1998 through 2001 fiscal years will not exceed $1,000,000 per
year. Upon Mr. Brinker's death, retirement or termination for
cause, no further payment shall be made pursuant to this
agreement.
Upon the expiration of the agreement described above,
Mr. Brinker will remain a consultant to the Company through the
2021 fiscal year. Mr. Brinker will be compensated commensurate
with his continuing contributions to the Company; however, during
this time, he will no longer participate in any of the Company's
profit sharing or bonus plans. Upon Mr. Brinker's death,
retirement or termination for cause, no further payment shall be
made pursuant to the consulting agreement.
The Company also entered into an agreement with Mr. Brinker
whereby Mr. Brinker conveyed to the Company his likeness,
biography, photo, voice and name to be used by the Company in all
media, promotions, advertising, training, and other materials as
the Company deems appropriate. He will receive as compensation
$400,000 per year until the earlier of July 1, 2021 or his death.
The Company owns an office building and leases an adjacent
office complex containing three buildings in order to allow for
the expansion of its corporate headquarters. A company
controlled by Roger T. Staubach, a director of the Company, was
previously a subtenant in this office complex and paid
approximately $511,500 in rent to the Company during the 1999
fiscal year pursuant to a sublease entered into with an unrelated
party prior to the acquisition of the office complex by the
Company. This sublease terminated in April 1999. A company
controlled by Mr. Staubach provided real estate brokerage
services in connection with the purchase of land by the Company
during the 1999 fiscal year and was paid $36,750 for such
services by the property seller. In addition, a company
controlled by Mr. Staubach provided real estate brokerage
services during the 1999 fiscal year in connection with the
renewal of a sublease by a third party tenant in the office
complex leased by the Company and was paid $47,320 for such
services by the Company.
RE-APPROVAL OF PROFIT SHARING PLAN
The Company adopted a Profit Sharing Plan in 1984 and the
shareholders of the Company ratified the adoption of the Profit
Sharing Plan in 1994. The Profit Sharing Plan is a non-qualified
annual incentive arrangement in which all corporate employees,
including executives, participate. The Profit Sharing Plan is
designed to reflect employees' contribution to the growth of the
Company's Common Stock value by increasing the earnings of the
Company. The Profit Sharing Plan reinforces a strong team work
ethic by making the basis for payouts to all employees similar.
Under Section 162(m) of the Internal Revenue Code, a limitation
was placed on tax deductions of any publicly-held corporation for
individual compensation to certain executives of such corporation
exceeding $1,000,000 in any taxable year, unless compensation is
performance-based. In order that the Company might continue to
provide incentive compensation to its executive officers, and
continue to receive a federal income tax deduction for the
payment of such compensation, the Profit Sharing Plan has been
designed in a manner intended to meet the performance-based
compensation exception to the limitation on deductions.
The shareholders of the Company previously approved the
Profit Sharing Plan in 1994. However, Section 162(m) of the
Internal Revenue Code requires that plans such as the Profit
Sharing Plan be approved by the shareholders of the Company every
five years in order to meet the performance-based compensation
exception to the limitation on deductions. At the Annual
Meeting, the shareholders of the Company are being asked to re-
approve the Profit Sharing Plan.
Summary of the Profit Sharing Plan
Each employee is assigned an Individual Participation
Percentage ("IPP") of the base salary for such employee. Payouts
under the Profit Sharing Plan are based on a formula that
multiplies an employee's IPP times the base wages paid to the
employee during the fiscal year times a factor that measures the
difference between the Company's actual and planned performance.
Planned performance parameters based on the Company's annual plan
are approved by the Compensation Committee prior to the beginning
of the fiscal year. For each one percentage point difference
between the actual and planned performance, the factor is
adjusted by an upside or downside (as appropriate) multiplier of
five points for corporate officers and employees focused on a
single restaurant concept, and by a multiplier of four points for
other participants. To ensure that the Company achieves a
minimally acceptable level of performance before any payouts are
made to employees, a minimum level of achievement is required,
and no profit sharing payouts are made if the Company's
performance is below a minimum level. No participant in the
Profit Sharing Plan may receive a payout in excess of $2,000,000
in any fiscal year. There is a maximum cap of 150% of expected
payout for payouts under the Profit Sharing Plan for participants
focused on a single restaurant concept (subject to revision at
the discretion of the Chief Executive Officer).
Employees who have been with the Company for less than
twelve months will participate in the Profit Sharing Plan on a
prorated basis. The Profit Sharing Plan is administered by the
Human Resources Department of the Company. The IPP for a non-
officer is determined based upon the salary grade of such
individual within the Company. Individual IPPs may be changed by
promotion pursuant to the Company's internal procedures. Changes
to the IPP assigned to a salary grade or an individual must be
approved by senior management of the Company. Changes in the IPP
for an officer must be approved by the Compensation Committee.
During the 1999 fiscal year, 893 employees participated in
the Profit Sharing Plan. Payouts under the Profit Sharing Plan
during the 1999 fiscal year are summarized as follows:
Payment Received
During 1999
Name Fiscal Year
Ronald A. McDougall $ 1,080,142
Douglas H. Brooks $ 555,515
Russell G. Owens $ 271,251
Roger F. Thomson $ 271,161
John C. Miller $ 204,472
All Current Executive Officers
as a Group (11 persons) $ 3,300,920
All Employees, Including All
Current Officers Who are Not
Executive Officers, As a Group $ 7,657,893
Required Vote
A favorable vote of the holders of a majority of the shares
of Common Stock present and entitled to vote at the Annual
Meeting in person or by proxy is required to re-approve the
Profit Sharing Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THIS PROPOSAL TO RE-APPROVE THE PROFIT SHARING PLAN.
APPROVAL OF EXECUTIVE LONG-TERM INCENTIVE PLAN
The Company adopted the Executive Long-Term Incentive Plan
effective July 1, 1999, the beginning of the current fiscal year
(the "Long-Term Plan"). The Long-Term Plan is a non-qualified,
long-term performance plan in which all corporate officers of the
Company (currently 34 persons) participate. The Long-Term Plan
provides an additional mechanism for focusing executives on total
shareholder return over the long term. Under Section 162(m) of
the Internal Revenue Code, a limitation was placed on tax
deductions of any publicly-held corporation for individual
compensation to certain executives of such corporation exceeding
$1,000,000 in any taxable year, excluding certain forms of
compensation including performance-based compensation. In order
that the Company might continue to provide incentive compensation
to its executive officers, and continue to receive a federal
income tax deduction for the payment of such compensation, the
Long-Term Plan has been designed in a manner intended to meet the
performance-based compensation exception to the limitation on
deductions. The Long-Term Plan has been adopted by and will be
administered by the Compensation Committee of the Board of
Directors. The Long-Term Plan will replace the Long-Term
Performance Share Plan (the "Current Plan") approved by the
shareholders of the Company on November 6, 1997.
At the Annual Meeting, the shareholders of the Company are
being asked to approve the adoption of the Long-Term Plan.
Summary of the Long-Term Plan
The Long-Term Plan is a performance-related plan using
overlapping three-year cycles paid annually. Each participant
will be assigned a specific target payout in cash and shares of
restricted stock by the Compensation Committee of the Board of
Directors after receipt of recommendations from the Chief
Executive Officer. The participant will receive the target
payment if the target performance is achieved for the three-year
cycle. The performance criteria for corporate officers will be
the three-year target for earnings per share approved by the
Compensation Committee. The performance criteria for a corporate
officer who is a restaurant concept president will be the three-
year profit before taxes target for such restaurant concept
approved by the Compensation Committee.
If the target performance is achieved for the three-year
period, the participant will receive the target payment. Such
payment will be made in cash and restricted stock, which
restricted stock will vest one-third per year over the following
three-year period. For corporate officers, for each percent that
the earnings per share target is missed or exceeded, the expected
payment will be decreased or increased by 1%. The payment for
performance above and below the profit before taxes for concept
presidents will vary based on the size of the restaurant concept.
No participant in the Long-Term Plan may receive a payout of more
than 100,000 shares of restricted stock and $1,500,000 in cash in
any fiscal year.
All restricted stock to be awarded pursuant to the Long-Term
Plan has been previously approved by the shareholders of the
Company as part of the Company's Stock Option and Incentive Plan.
The Current Plan is based on the performance of the Company's
stock price relative to the S&P 500 Index and the S&P Restaurant
Industry Index over a three-year period. Such relative
performance can be subject to significant external influences.
By replacing the Current Plan with an evaluation of the Company's
performance against a three-year earnings per share or profit
before taxes target approved by the Board of Directors, the
officers of the Company will not be rewarded unless the long-term
business objectives of the Company are met.
Required Vote
The favorable vote of the holders of the majority of the
shares of Common Stock present and entitled to vote at the annual
meeting in person or by proxy is required to approve the adoption
of the Long-Term Plan. The Board of Directors believes that
approval of the Long-Term Plan is in the best interest of the
Company and that the Long-Term Plan will strengthen the Company's
ability to attract and retain key employees and better align the
long-term interests of such employees with the interests of the
Company's shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSAL TO APPROVE THE ADOPTION OF THE LONG-TERM PLAN.
APPROVAL OF 1999 STOCK OPTION AND INCENTIVE PLAN
FOR NON-EMPLOYEE DIRECTORS AND CONSULTANTS
In September 1999, the Board of Directors adopted the 1999
Stock Option and Incentive Plan for Non-Employee Directors and
Consultants (the "1999 Plan") subject to the approval of
shareholders at the annual meeting, covering the issuance of up
to 300,000 shares of Common Stock of the Company. The Directors
Plan will replace the 1991 Stock Option Plan for Non-Employee
Directors and Consultants (the "1991 Plan") which authorized the
issuance of up to 587,500 shares of Common Stock of the Company.
Approximately 456,000 stock options have been issued under the
1991 Plan and the authority to issue the remaining 131,500 stock
options pursuant to the 1991 Plan will be terminated. The purpose
of the 1999 Plan is to provide non-employee directors (currently
nine members of the Board of Directors are non-employee
directors), consultants and advisors with a proprietary interest
in the Company through the granting of stock options, restricted
stock, and stock appreciation rights which will increase their
interest in the Company's welfare, furnish them an incentive to
continue their services for the Company and provide a means
through which the Company may attract able persons to serve on
its Board of Directors and act as consultants or advisors. The
1999 Plan provides more flexibility than the Company's 1991 Plan
in that it allows the issuance of stock options, stock
appreciation rights, and restricted stock to eligible
participants. Under the current compensation system for non-
employee directors, each such director must take a portion of his
or her annual cash retainer in the form of stock options and may
elect to convert all or the remaining portion of such retainer
into stock options. The 1999 Plan would require each non-
employee director to take a portion of his or her annual cash
retainer in the form of stock options or restricted stock and
permit each such director to convert some or all of the remaining
portion of such retainer into stock options or restricted stock.
A more detailed description of the compensation payable to non-
employee directors is provided above under "Directors and
Executive Officers - Directors' Compensation". At the annual
meeting, the shareholders of the Company are being asked to
approve the adoption of the 1999 Plan. A copy of the 1999 Plan
is attached hereto as Appendix A. The following description is
subject in all respects to the terms of the 1999 Plan.
Summary of the 1999 Plan
Stock Options
The 1999 Plan is designed to permit the granting of options
to purchase Common Stock to directors of the Company who are not
employees of the Company or its subsidiaries and to certain
consultants and advisors. The administration of the 1999 Plan
will be provided by the Nominating Committee of the Board of
Directors which has the authority to determine the terms on which
options are granted under the 1999 Plan. The Nominating
Committee determines the number of options to be granted to
eligible participants, determines the purchase price and option
period at the time the option is granted, and administers and
interprets the 1999 Plan.
The exercise price of options is payable in cash or the
holder of an option may request approval from the Nominating
Committee to exercise an option or a portion thereof by tendering
shares of Common Stock at the fair market value per share on the
date of exercise in lieu of cash payment of the exercise price.
The 1999 Plan requires that the exercise price of an option will
not be less than 100% of the fair market value of the Common
Stock on the date of the grant of the option.
Tax Status of Stock Options
Only non-qualified stock options may be granted under the
1999 Plan. In general, no taxable income will be recognized by
the optionee, and no deduction will be allowed to the Company,
upon the grant of an option. Upon exercise of a non-qualified
option an optionee will recognize ordinary income, and the
Company will be entitled to a corresponding tax deduction, in an
amount equal to the amount by which the fair market value of the
shares on the exercise date exceeds the option price. Any
additional gain or loss after exercise realized by an optionee on
subsequent disposition of such shares generally is a capital gain
or loss and does not result in a tax deduction to the Company.
Stock Appreciation Rights and Stock Awards
The 1999 Plan also permits the issuance of stock
appreciation rights ("SARs") and restricted stock ("Stock
Awards") (SARs and Stock Awards are collectively referred to as
"Awards"). When an Award is made, the Nominating Committee will
specify (a) the amount and form of the Award, and (b) the period,
if any, during which the participant must remain on the Board of
Directors of the Company or a subsidiary or serve as a consultant
or advisor to the Company or a subsidiary as a condition of the
Award ("Vesting Period"). Full or partial acceleration of vesting
will occur in the event of death or disability. The Nominating
Committee may accelerate vesting, in whole or in part, under such
circumstances as are deemed appropriate. The Nominating Committee
may specify additional terms as it deems appropriate.
Tax Status of SARs and Stock Awards
Under the Internal Revenue Code, if Awards are made in the
form of restricted stock, no income will be realized by a
participant upon the award of restricted stock. When restricted
stock vests, the participant will recognize ordinary compensation
income equal to the then fair market value of the shares. The
Company generally will be entitled to a federal income tax
deduction upon the recognition of income on the restricted stock
by the participant.
If Awards are made in the form of SARs, no income will be
realized by the participant upon the award of SARs. When the
SARs vest, the participant will recognize ordinary compensation
income equal to the cash value of the SARs. The Company generally
will be entitled to a federal income tax deduction upon the
recognition of income on the SARs by the participant.
Amendments
The 1999 Plan may be amended, altered or discontinued by the
Nominating Committee without the approval of the shareholders,
except that the Nominating Committee does not have the power or
authority to adversely affect the rights of any participant or
beneficiary of any stock options or Awards granted under the 1999
Plan prior to the date such amendment is adopted by the
Nominating Committee in the absence of written consent to the
change by the affected participant or beneficiary. The
Nominating Committee, however, may make appropriate adjustments
in the number of shares covered by the 1999 Plan, the number of
outstanding options, option prices, and any restrictions on
outstanding Awards to reflect any stock dividend, stock split,
share combination, merger, consolidation, reorganization,
liquidation, change in control, or the like, of or by the
Company.
Required Vote
The favorable vote of the holders of a majority of the
shares of Common Stock present and entitled to vote at the annual
meeting in person or by proxy is required to approve the adoption
of the 1999 Plan. The Board of Directors believes that approval
of the 1999 Plan is in the best interest of the Company and that
the 1999 Plan will provide a means through which the Company will
attract and retain able persons to serve on its Board of
Directors and act as consultants or advisors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSAL TO APPROVE THE ADOPTION OF THE 1999 PLAN.
SHAREHOLDERS' PROPOSALS
Any proposals that shareholders of the Company desire to have
presented at the 2000 annual meeting of shareholders must be
received by the Company at its principal executive offices no
later than May 27, 2000.
INDEPENDENT AUDITORS
Representatives of KPMG LLP, independent certified public
accountants and auditors of the Company's financial statements,
are expected to be present at the meeting with the opportunity to
make a statement if they so desire and to be available to respond
to appropriate questions.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the
Board of Directors of the Company. The expense of preparing,
printing and mailing the form of proxy and the material used in
the solicitation thereof will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by directors,
officers, and employees of the Company. Arrangements may also be
made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and
the Company may reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
The Annual Report to Shareholders of the Company, including
financial statements for the fiscal year ended June 30, 1999,
accompanying this Proxy Statement is not deemed to be a part of
the Proxy Statement.
By Order of the Board of Directors,
ROGER F. THOMSON
Secretary
Dallas, Texas
September 24, 1999
APPENDIX A
BRINKER INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
FOR NON-EMPLOYEE DIRECTORS AND CONSULTANTS
SECTION 1
GENERAL
1.1 Purpose. The Brinker International, Inc. 1999 Stock
Option and Incentive Plan For Non-Employee Directors and
Consultants (the "Plan") has been established by Brinker
International, Inc. (the "Company") to provide a means through
which the Company may attract able persons to serve on its Board
and to act as consultants or advisors and to provide such
individuals with an interest in the Company's welfare and to
furnish them an incentive to continue their services for the
Company.
1.2 Participation. Subject to the terms and conditions of
the Plan, the directors of the Company who are not employees of
the Company or its subsidiaries, and certain consultants, are
eligible to become "Participants" in the Plan. In the discretion
of the Committee, a Participant may be granted any Award
permitted under the provisions of the Plan, and more than one
Award may be granted to a Participant. Awards may be granted as
alternatives to or replacement of awards outstanding under the
Plan, or any other plan or arrangement of the Company or a
Related Company (including a plan or arrangement of a business or
entity, all or a portion of which is acquired by the Company or a
Related Company).
1.3 Operation, Administration and Definitions. The
operation and administration of the Plan, including the Awards
made under the Plan, shall be subject to the provisions of
Section 4 (relating to operation and administration). Capitalized
terms in the Plan shall be defined as set forth in the Plan
(including the definition provisions of Section 8 of the Plan).
SECTION 2
OPTIONS AND SARS
2.1 Definitions.
(a) The grant of an "Option" entitles the Participant
to purchase shares of Stock at an Exercise Price
established by the Committee. Options granted
under this Section 2 will be Non-Qualified Stock
Options. A "Non-Qualified Stock Option" is an
Option that is not intended to be an "incentive
stock option" as that term is described in section
422(b) of the Code.
(b) A stock appreciation right (an "SAR") entitles the
Participant to receive, in cash or Stock (as
determined in accordance with subsection 2.5),
value equal to all or a portion of the excess of:
(a) the Fair Market Value of a specified number of
shares of Stock at the time of exercise; over (b)
an Exercise Price established by the Committee.
2.2 Exercise Price. The "Exercise Price" of each Option
and SAR granted under this Section 2 shall be established by the
Committee or shall be determined by a method established by the
Committee at the time the Option or SAR is granted, except that
the Exercise Price shall not be less than 100% of the Fair Market
Value of a share of Stock as of the Pricing Date. For purposes of
the preceding sentence, the "Pricing Date" shall be the date on
which the Option or SAR is granted, except that the Committee may
provide that if an Option or SAR is granted in tandem with, or in
substitution for, an outstanding Award, the Pricing Date is the
date of grant of such outstanding Award.
2.3 Exercise. An Option and an SAR shall be exercisable in
accordance with such terms and conditions and during such periods
as may be established by the Committee.
2.4 Payment of Option Exercise Price. The payment of the
Exercise Price of an Option granted under this Section 2 shall be
subject to the following:
(a) Subject to the following provisions of this
subsection 2.4, the full Exercise Price for shares
of Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise (except
that, in the case of an exercise arrangement
approved by the Committee and described in
paragraph 2.4(c), payment may be made as soon as
practicable after the exercise).
(b) The Exercise Price shall be payable in cash or by
tendering shares of Stock (by either actual
delivery of shares or by attestation, with such
shares valued at Fair Market Value as of the day
of exercise), or in any combination thereof, as
determined by the Committee.
(c) The Committee may permit a Participant to elect to
pay the Exercise Price upon the exercise of an
Option by authorizing a third party to sell shares
of Stock (or a sufficient portion of the shares)
acquired upon exercise of the Option and remit to
the Company a sufficient portion of the sale
proceeds to pay the entire Exercise Price and any
tax withholding resulting from such exercise.
2.5 Settlement of Award. Distribution following exercise
of an Option or SAR, and shares of Stock distributed pursuant to
such exercise, shall be subject to such conditions, restrictions
and contingencies as the Committee may establish. Settlement of
SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination
thereof, as determined in the discretion of the Committee. The
Committee, in its discretion, may impose such conditions,
restrictions and contingencies with respect to shares of Stock
acquired pursuant to the exercise of an Option or an SAR as the
Committee determines to be desirable.
SECTION 3
OTHER STOCK AWARDS
3.1 Definition. A Stock Award is a grant of shares of
Stock or of a right to receive shares of Stock (or their cash
equivalent or a combination of both) in the future.
3.2 Restrictions on Stock Awards. Each Stock Award shall
be subject to such conditions, restrictions and contingencies as
the Committee shall determine. If the right to become vested in a
Stock Award granted under this Section 3 is conditioned on the
completion of a specified period of service with the Company and
the Related Companies, then the required period of service for
vesting shall be not less than one year (subject to acceleration
of vesting, to the extent permitted by the Committee, in the
event of the Participant's death, disability, or change in
control).
SECTION 4
OPERATION AND ADMINISTRATION
4.1 Effective Date. Subject to the approval of the
shareholders of the Company at the Company's 1999 annual meeting
of its shareholders, the Plan shall be effective as of September
2, 1999 (the "Effective Date"). The Plan shall be unlimited in
duration and, in the event of Plan termination, shall remain in
effect as long as any Awards under it are outstanding.
4.2 Shares Subject to Plan.
(a) (i) Subject to the following provisions of
this subsection 4.2, the maximum number
shares of Stock that may be delivered to
Participants and their beneficiaries under
the Plan shall be 300,000.
(ii) Any shares of Stock granted under the Plan
that are forfeited because of the failure to
meet an Award contingency or condition shall
again be available for delivery pursuant to
new Awards granted under the Plan. To the
extent any shares of Stock covered by an
Award are not delivered to a Participant or
beneficiary because the Award is forfeited or
canceled, or the shares of Stock are not
delivered because the Award is settled in
cash, such shares shall not be deemed to have
been delivered for purposes of determining
the maximum number of shares of Stock
available for delivery under the Plan.
(iii) If the Exercise Price of any stock
option granted under the Plan or any Prior
Plan is satisfied by tendering shares of
Stock to the Company (by either actual
delivery or by attestation), only the number
of shares of Stock issued net of the shares
of Stock tendered shall be deemed delivered
for purposes of determining the maximum
number of shares of Stock available for
delivery under the Plan.
(iv) Shares of Stock delivered under the Plan in
settlement, assumption or substitution of
outstanding awards (or obligations to grant
future awards) under the plans or
arrangements of another entity shall not
reduce the maximum number of shares of Stock
available for delivery under the Plan, to the
extent that such settlement, assumption or
substitution is a result of the Company or a
Related Company acquiring another entity (or
an interest in another entity).
(b) Subject to the provisions of Section 6 hereof, in
the event of a corporate transaction involving the
Company (including, without limitation, any stock
dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee
may adjust Awards to preserve the benefits or
potential benefits of the Awards. Action by the
Committee may include adjustment of: (i) the
number and kind of shares which may be delivered
under the Plan; (ii) the number and kind of shares
subject to outstanding Awards; and (iii) the
Exercise Price of outstanding Options and SARs as
well as any other adjustments that the Committee
determines to be equitable.
4.3 Limit on Distribution. Distribution of shares of Stock
or other amounts under the Plan shall be subject to the
following:
(a) Notwithstanding any other provision of the Plan,
the Company shall have no liability to deliver any
shares of Stock under the Plan or make any other
distribution of benefits under the Plan unless
such delivery or distribution would comply with
all applicable laws (including, without
limitation, the requirements of the Securities Act
of 1933), and the applicable requirements of any
securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance
of stock certificates to reflect the issuance of
shares of Stock, the issuance may be effected on a
noncertificated basis, to the extent not
prohibited by applicable law or the applicable
rules of any stock exchange.
4.4 Tax Withholding. Whenever the Company proposes or is
required to distribute Stock under the Plan, the Company may
require the recipient to remit to the Company an amount
sufficient to satisfy any Federal, state and local tax
withholding requirements prior to the delivery of any certificate
for such shares or, in the discretion of the Committee, the
Company may withhold from the shares to be delivered shares
sufficient to satisfy all or a portion of such tax withholding
requirements. Whenever under the Plan payments are to be made in
cash, such payments may be net of an amount sufficient to satisfy
any Federal, state and local tax withholding requirements.
4.5 Payment Shares. Subject to the overall limitation on
the number of shares of Stock that may be delivered under the
Plan, the Committee may use available shares of Stock as the form
of payment for compensation, grants or rights earned or due under
any other compensation plans or arrangements of the Company or a
Related Company, including the plans and arrangements of the
Company or a Related Company acquiring another entity (or an
interest in another entity).
4.6 Dividends and Dividend Equivalents. An Award may
provide the Participant with the right to receive dividends or
dividend equivalent payments with respect to Stock which may be
either paid currently or credited to an account for the
Participant, and may be settled in cash or Stock as determined by
the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of
Stock, may be subject to such conditions, restrictions and
contingencies as the Committee shall establish, including the
reinvestment of such credited amounts in Stock equivalents.
4.7 Payments. Awards may be settled through cash payments,
the delivery of shares of Stock, the granting of replacement
Awards, or combination thereof as the Committee shall determine.
Any Award settlement, including payment deferrals, may be subject
to such conditions, restrictions and contingencies as the
Committee shall determine. The Committee may permit or require
the deferral of any Award payment, subject to such rules and
procedures as it may establish, which may include provisions for
the payment or crediting of interest, or dividend equivalents,
including converting such credits into deferred Stock
equivalents.
4.8 Transferability. Except as otherwise provided by the
Committee, Awards under the Plan are not transferable except as
designated by the Participant by will or by the laws of descent
and distribution.
4.9 Form and Time of Elections. Unless otherwise specified
herein, each election required or permitted to be made by any
Participant or other person entitled to benefits under the Plan,
and any permitted modification, or revocation thereof, shall be
in writing filed with the Committee at such times, in such form,
and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Committee shall
require.
4.10 Agreement With Company. At the time of an Award to a
Participant under the Plan, the Committee may require a
Participant to enter into an agreement with the Company (the
"Agreement") in a form specified by the Committee, agreeing to
the terms and conditions of the Plan and to such additional terms
and conditions, not inconsistent with the Plan, as the Committee
may, in its sole discretion, prescribe.
4.11 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall,
by reason of the Plan, acquire any right in or
title to any assets, funds or property of the
Company or any Related Company whatsoever,
including, without limitation, any specific funds,
assets, or other property which the Company or any
Related Company, in their sole discretion, may set
aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual
right to the stock or amounts, if any, payable
under the Plan, unsecured by any assets of the
Company or any Related Company. Nothing contained
in the Plan shall constitute a guarantee that the
assets of such companies shall be sufficient to
pay any benefits to any person.
(b) The Plan does not give any Participant any right
or claim to any benefit under the Plan, unless
such right or claim has specifically accrued under
the terms of the Plan. Except as otherwise
provided in the Plan, no Award under the Plan
shall confer upon the holder thereof any right as
a shareholder of the Company prior to the date on
which the individual fulfills all conditions for
receipt of such rights.
4.12 Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other information
which the person acting on it considers pertinent and reliable,
and signed, made or presented by the proper party or parties.
4.13 Action by Company or Related Company. Any action
required or permitted to be taken by the Company or any Related
Company shall be by resolution of its board of directors, or by
action of one or more members of the board (including a committee
of the board) who are duly authorized to act for the board, or
(except to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of the
company.
4.14 Gender and Number. Where the context admits, words in
any gender shall include any other gender, words in the singular
shall include the plural and the plural shall include the
singular.
SECTION 5
COMMITTEE
5.1 Administration. The authority to control and manage
the operation and administration of the Plan shall be vested in
the Nominating Committee (the "Committee") in accordance with
this Section 5. The Committee shall be selected by the Board and
shall consist of two or more members of the Board.
5.2 Powers of Committee. The authority to manage and
control the operation and administration of the Plan shall be
vested in the Committee, subject to the following:
(a) Subject to the provisions of the Plan, the
Committee will have the authority and discretion
to select those persons who shall receive Awards,
to determine the time or times of receipt, to
determine the types of Awards and the number of
shares covered by the Awards, to establish the
terms, conditions, performance criteria,
restrictions, and other provisions of such Awards,
and (subject to the restrictions imposed by
Section 6) to cancel or suspend Awards. In making
such Award determinations, the Committee may take
into account the nature of services rendered by
the individual, the individual's present and
potential contribution to the Company's success
and such other factors as the Committee deems
relevant.
(b) Subject to the provisions of the Plan, the
Committee will have the authority and discretion
to establish terms and conditions of awards as the
Committee determines to be necessary or
appropriate to conform to applicable requirements
or practices of jurisdictions outside of the
United States.
(c) The Committee will have the authority and
discretion to interpret the Plan, to establish,
amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and
provisions of any agreements made pursuant to the
Plan, and to make all other determinations that
may be necessary or advisable for the
administration of the Plan.
(d) Any interpretation of the Plan by the Committee
and any decision made by it under the Plan is
final and binding.
(e) Except as otherwise expressly provided in the
Plan, where the Committee is authorized to make a
determination with respect to any Award, such
determination shall be made at the time the Award
is made, except that the Committee may reserve the
authority to have such determination made by the
Committee in the future (but only if such
reservation is made at the time the Award is
granted and is expressly stated in the Agreement
reflecting the Award).
(f) In controlling and managing the operation and
administration of the Plan, the Committee shall
act by a majority of its then members, by meeting
or by writing filed without a meeting. The
Committee shall maintain and keep adequate records
concerning the Plan and concerning its proceedings
and acts in such form and detail as the Committee
may decide.
5.3 Delegation by Committee. Except to the extent
prohibited by applicable law or the applicable rules of a stock
exchange and subject to the prior approval of the Board, the
Committee may allocate all or any portion of its responsibilities
and powers to any one or more of its members and may delegate all
or any part of its responsibilities and powers to any person or
persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.
5.4 Information to be Furnished to Committee. The Company
and Related Companies shall furnish the Committee with such data
and information as may be required for it to discharge its
duties. Participants and other persons entitled to benefits under
the Plan must furnish the Committee such evidence, data or
information as the Committee considers desirable to carry out the
terms of the Plan.
SECTION 6
ACCELERATION OF EXERCISABILITY
AND VESTING UNDER CERTAIN CIRCUMSTANCES
Notwithstanding any provision in this Plan to the contrary,
with regard to any Award of Options, SARs and Stock Awards to any
Participant, unless the particular grant agreement provides
otherwise, all Awards will become immediately exercisable and
vested in full upon the occurrence, before the expiration or
termination of such Option, SARs and Stock Awards or forfeiture
of such Awards, of any of the events listed below:
(a) a sale, transfer or other conveyance of all or
substantially all of the assets of the Company on
a consolidated basis; or
(b) the acquisition of beneficial ownership (as such
term is defined in Rule 13d-3 promulgated under
the Exchange Act) by any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange
Act), other than the Company, directly or
indirectly, of securities representing 50% or more
of the total number of votes that may be cast for
the election of directors of the Company; or
(c) the commencement (within the meaning of Rule 14d-2
promulgated under the Exchange Act) of a "tender
offer" for stock of the Company subject to Section
14(d)(2) of the Exchange Act; or
(d) the failure at any annual or special meeting of
the Company's stockholders following an "election
contest" subject to Rule 14a-11 promulgated under
the Exchange Act, of any of the persons nominated
by the Company in the proxy material mailed to
stockholders by the management of the Company to
win election to seats on the Board, excluding only
those who die, retire voluntarily, are disabled or
are otherwise disqualified in the interim between
their nomination and the date of the meeting.
SECTION 7
AMENDMENT AND TERMINATION
The Committee may, at any time, amend or terminate the Plan,
provided that, subject to subsection 4.2 (relating to certain
adjustments to shares) and Section 6 hereof (relating to
immediate vesting upon certain events), no amendment or
termination may, in the absence of written consent to the change
by the affected Participant (or, if the Participant is not then
living, the affected beneficiary), adversely affect the rights of
any Participant or beneficiary under any Award granted under the
Plan prior to the date such amendment is adopted by the Board.
SECTION 8
DEFINED TERMS
For purposes of the Plan, the terms listed below shall be
defined as follows:
(a) Award. The term "Award" shall mean any award or
benefit granted to any Participant under the Plan,
including, without limitation, the grant of
Options, SARs, and Stock Awards.
(b) Board. The term "Board" shall mean the Board of
Directors of the Company.
(c) Code. The term "Code" means the Internal Revenue
Code of 1986, as amended. A reference to any
provision of the Code shall include reference to
any successor provision of the Code.
(d) Fair Market Value. For purposes of determining
the "Fair Market Value" of a share of Stock, the
following rules shall apply:
(i) If the Stock is at the time listed or
admitted to trading on any stock exchange,
then the "Fair Market Value" shall be the
mean between the lowest and highest reported
sale prices of the Stock on the date in
question on the principal exchange on which
the Stock is then listed or admitted to
trading. If no reported sale of Stock takes
place on the date in question on the
principal exchange, then the reported closing
asked price of the Stock on such date on the
principal exchange shall be determinative of
"Fair Market Value."
(ii) If the Stock is not at the time listed or
admitted to trading on a stock exchange, the
"Fair Market Value" shall be the mean between
the lowest reported bid price and highest
reported asked price of the Stock on the date
in question in the over-the-counter market,
as such prices are reported in a publication
of general circulation selected by the
Committee and regularly reporting the market
price of Stock in such market.
(iii) If the Stock is not listed or admitted
to trading on any stock exchange or traded in
the over-the-counter market, the "Fair Market
Value" shall be as determined in good faith
by the Committee.
(f) Exchange Act. The term "Exchange Act" means the
Securities Exchange Act of 1934, as amended.
(g) Related Companies. The term "Related Company"
means any company during any period in which it is
a "parent company" (as that term is defined in
Code section 424(e)) with respect to the Company,
or a "subsidiary corporation" (as that term is
defined in Code section 424(f)) with respect to
the Company.
(h) Stock. The term "Stock" shall mean shares of
Common Stock of the Company.
