BRINKER INTERNATIONAL
LOGO
September 24, 1996
6820 LBJ Freeway
Dallas, Texas 75240
(972) 980-9917
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 7, 1996, at the General Cinema NorthPark Theater I & II,
located at 1100 NorthPark Center, Dallas, Texas. At this meeting you will be
asked
(A) to elect eleven (11) 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 approve an amendment to the Company's 1992
Incentive Stock Option Plan;
(C) to approve an amendment to the Company's 1991 Stock
Option Plan for Non-Employee Directors and
Consultants; and
(D) 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 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 7, 1996
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 General Cinema NorthPark Theater I & II, located at 1100 NorthPark
Center, Dallas, Texas, on Thursday, November 7, 1996, at 10:00 a.m., local
time, for the following purposes:
(A) to elect eleven (11) 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 approve an amendment to the Company's 1992
Incentive Stock Option Plan;
(C) to approve an amendment to the Company's 1991 Stock
Option Plan for Non-Employee Directors and
Consultants; and
(D) 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 9,
1996, 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 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.
By Order of the Board of Directors,
ROGER F. THOMSON
Secretary
Dallas, Texas
September 24, 1996
BRINKER INTERNATIONAL, INC.
6820 LBJ Freeway
Dallas, Texas 75240
(972) 980-9917
==============
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 7, 1996
==============
This Proxy Statement is first being mailed on or about September 24,
1996, 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 7, 1996. 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. The proxy may be revoked at any time before it is
voted by giving written notice or a duly executed proxy bearing a later date
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 9, 1996 (the "Record Date"). At the close of business on the
Record Date, the Company had issued and outstanding and entitled to vote at
the meeting 77,282,328 shares of Common Stock, $0.10 par value ("Common
Stock").
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the shareholder otherwise specifies in
the proxy, will be voted (i) for the election as directors of the Company of
the eleven (11) persons named under the caption "Security Ownership of
Management and Election of Directors", (ii) for the amendment to the Company's
1992 Incentive Stock Option Plan, (iii) for the amendment to the Company's
1991 Stock Option Plan for Non-Employee Directors and Consultants, and (iv) at
the discretion of the proxy holders, on any other matter that may properly
come before the meeting or any adjournment thereof.
Where shareholders have appropriately specified how their proxies are to
be voted, they will be voted accordingly. 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. Abstentions are counted in tabulations of
votes cast on proposals presented to shareholders. Broker non-votes are not
counted for purposes of determining whether a proposal has been 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
Number of
Name and Address Shares (1) Percent
Fidelity Management Research 11,494,200 14.9%
82 Devonshire Street
Boston, Massachusetts 02109
The Capital Group Companies, Inc. 11,448,250 14.8%
333 South Hope Street
Los Angeles, California 90071
(1) As of June 30, 1996. Based on information supplied via
direct communication.
SECURITY OWNERSHIP OF MANAGEMENT
AND ELECTION OF DIRECTORS
Eleven (11) directors are to be elected at the meeting. Each nominee
will be elected to hold office until the next annual meeting of the
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 Within 60 Days of Percent of
Name as of September 9, 1996 (1)(2) September 9, 1996 Class
Norman E. Brinker 1,922,759 (3) 832,500 2.49%
Douglas H. Brooks 417,850 406,228 *
F. Lane Cardwell, Jr 207,897 187,875 *
Gerard V. Centioli 300,462 (4) -0- *
Creed L. Ford, III 884,729 852,519 1.15%
Ronald A. McDougall 608,772 588,750 *
Debra L. Smithart 179,785 145,716 *
Jack W. Evans, Sr. 83,592 15,250 *
Rae F. Evans 15,335 (5) 11,875 *
J.M. Haggar, Jr. 117,520 17,250 *
Frederick S. Humphries 1,150 1,000 *
James E. Oesterreicher 1,500 1,000 *
Roger T. Staubach 17,500 7,000 *
All executive officers
and directors as a
group (15 persons) 4,943,781 3,243,871 6.40%
* Less than one percent (1%)
(1) Beneficial ownership has been determined in accordance with the rules of the Securities
and Exchange Commission. Except as noted, 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 exercisable options
granted or vesting under the Company's 1983 Incentive Stock Option Plan, the 1984 Non-
Qualified Stock Option Plan, the 1992 Incentive Stock Option Plan and the 1991 Stock
Option Plan for Non-Employee Directors and Consultants, as applicable.
(3) Includes 20,250 shares of Common Stock held of record by a family trust of which
Mr. Brinker is trustee.
(4) Includes 2,000 shares of Common Stock held of record by a family trust of which Mr.
Centioli is trustee.
(5) Includes 1,875 shares of Common Stock held of record by a family trust of which Ms. Evans
is trustee.
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 minimum 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. All nominees are currently serving as directors of
the Company, each having been elected at the last annual meeting of the
Company's shareholders held on November 2, 1995.
Norman E. Brinker, 65, served as Chairman of the Board of Directors and
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 continues to serve as Chairman of the Board of
Directors. Mr. Brinker is a member of the Executive and Nominating Committees
of the Company. He was the founder of S&A Restaurant Corp., having served as
its President from February 1966 through May 1977 and as its Chairman of the
Board of Directors and Chief Executive Officer from May 1977 through July
1983. From June 1982 through July 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 Apparel Company.
Gerard V. Centioli, 42, was elected Senior Vice President -
Maggiano's/Corner Bakery Concepts President in August 1995 and Senior Vice
President - Italian Concepts President in January 1996. Mr. Centioli
previously served as Senior Partner of Lettuce Entertain You Enterprises, Inc.
and President and Chief Executive Officer of the Maggiano's Little Italy and
The Corner Bakery Divisions. Prior to joining Lettuce Entertain You in 1984,
Mr. Centioli served as Vice President - Division President of Collins Foods
International, Inc. Mr. Centioli has served as a member of the Board of
Directors of the Company since November 1995.
Creed L. Ford, III, 43, elected Executive Vice President and Chief
Operating Officer in October 1995, joined the Company's predecessor in
September 1976 as an Assistant Manager and was promoted to the position of
Restaurant General Manager in March 1977. In September 1978, Mr. Ford became
Director of Operations of the Company. He was elected Vice President -
Operations of the Company in October 1983, Senior Vice President - Operations
in November 1984, and Executive Vice President - Operations in April 1986.
Mr. Ford has served as a member of the Board of Directors of the Company since
April 1985. Mr. Ford also is a director of Howard Wolf, Inc.
Ronald A. McDougall, 54, was elected President and Chief Executive
Officer of the Company in June 1995 having formerly held the office of
President and Chief Operating Officer since 1986. 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 September
1983 and is a member of the Executive and Nominating Committees of the
Company. Mr. McDougall is also a director of Excel Communications, Inc.
Debra L. Smithart, 42, was elected Executive Vice President - Chief
Financial Officer of the Company in September 1991. Ms. Smithart joined the
Company as Assistant Controller in June 1985. In February 1986 she was
promoted to the position of Controller and served in this capacity until
December 1988 when she was elected Vice President - Controller. In March
1991, Ms. Smithart was promoted to Vice President - Finance and held this
position until September 1991. Prior to joining the Company, Ms. Smithart
worked in various financial/accounting capacities in the public accounting,
oil & gas, real estate, and manufacturing industries. Ms. Smithart has served
as a member of the Board of Directors of the Company since September 1991.
Jack W. Evans, 74, is currently President of Jack Evans Investments,
Inc. and Chairman of the Board of American Title Company. Mr. Evans is a
member of the Executive, Nominating and Compensation Committees of the Company
and has served as a member of the Company's Board of Directors since September
1983. He served as Chairman, Chief Executive Officer and President of Cullum
Companies, Inc., a retail food and drugstore chain from 1977 to 1990. He
served as Mayor of the City of Dallas from May 1981 to May 1983. He is also a
director of Randall's-Tom Thumb, Morning Star Group, and Ray Acquisitions,
Inc.
Rae F. Evans, 48, is currently President of Rae Evans & Associates, a
firm specializing in Washington corporate strategies. From 1982 until January
1995, Mrs. Evans was the Vice President, National Affairs of Hallmark Cards,
Inc. Mrs. Evans is a member of the Nominating Committee of the Company and
has served as a member of the Board of Directors since January 1990. She is a
member of the Business-Government Relations Council and is a past president of
the organization. She is President of the Capitol Forum and a member of the
Economic Club of Washington. Mrs. Evans is also a member of the Catalyst
Board of Advisors and the National Women's Economic Alliance. Mrs. Evans
serves on the Board of Directors of Haggar Apparel Company.
J. M. Haggar, Jr., 71, is currently the owner of J.M. Haggar, Jr.
Investments, a business he has operated since retiring as Chairman of the
Board of Directors of Haggar Apparel Company, in February 1995. Mr. Haggar
previously held the positions of President and Chief Executive Officer of
Haggar Apparel Company until 1991. He is also a director of ENSERCH
Corporation. Mr. Haggar is a member of the Executive, Compensation, and Audit
Committees of the Company and has served as a member of the Company's Board of
Directors since April 1985.
Frederick S. Humphries, 60, 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 11 years. Dr. Humphries serves as Chairman
of the State Board of Education Advisory Committee on the Education of Blacks
in Florida and is Chairman of the Board of Regents, Five-Year Working Group
for Agriculture, State University System of Florida in addition to being
involved in various civic and community activities. Mr. 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 Pride of Florida and Wal-Mart, Inc.
James E. Oesterreicher, 55, is the Vice Chairman and Chief Executive
Officer of J.C. Penney Company, Inc., having been elected to this position in
January 1995. Mr. Oesterreicher served as President of JCPenney Stores and
Catalog from 1992 to 1995 and as Executive Vice President of JCPenney Stores
and Catalog 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 Presbyterian Healthcare Systems,
Presbyterian Hospital of Plano, Circle Ten Council--Boy Scouts of America,
National 4-H Council, National Organization on Disabilities, Texas Utilities
Company, and March of Dimes Birth Defects Foundation. He also serves as an
advisory board member for the Center for Retailing, Education and Research at
the University of Florida. Mr. Oesterreicher has served as a member of the
Board of Directors of the Company since May 1994 and is a member of the Audit
and Nominating Committees of the Company.
Roger T. Staubach, 54, 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. He has served as a member
of the Board of Directors of the Company since May 1993 and is a member of the
Executive and Compensation Committees of the Company. 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 Halliburton Company,
First USA, Inc., Life Partners Group, American AAdvantage Funds and Columbus
Realty Trust and is active in numerous civic, charity and professional
organizations.
Executive Officers
The following persons are executive officers of the Company who are not
nominated to serve on the Company's Board of Directors:
Douglas H. Brooks, 44, joined the Company as an Assistant Manager in
February 1978 and was promoted to General Manager in April 1978. In March
1979, Mr. Brooks was promoted to Area Supervisor and in May 1982 to Regional
Director. He was again promoted in March 1987 to Senior Vice President-
Central Region Operations and to the position of Concept Head and Senior Vice
President-Chili's Operations in June 1992. Mr. Brooks was promoted to his
current position of Senior Vice President - Chili's Grill & Bar Concept
President in June 1994. Prior to joining the Company, Mr. Brooks helped
manage the first two Luther's Barbecue units.
F. Lane Cardwell, Jr., 44, was elected Executive Vice President -
Eatzi's Concept President in June 1996, having formerly held the positions of
Executive Vice President - Strategic Development from June 1992 until October
1995 and Executive Vice President and Chief Administrative Officer from
October 1995 until June 1996. Prior to this time, Mr. Cardwell held the
position of Senior Vice President - Strategic Development since December 1990.
Mr. Cardwell joined the Company as Vice President - Strategic Development in
August 1988, having been previously employed by S&A Restaurant Corp. from
November 1978 to August 1988, during which time he served as Vice President -
Strategic Planning and Senior Vice President - Strategic Planning.
Mr. Cardwell served as a member of the Board of Directors of the Company from
1991 to 1996.
John C. Miller, 41, joined the Company as Vice President-Special
Concepts in September 1987. In October 1988, he was elected as Vice
President-Joint Venture/Franchise and served in this capacity until August
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 as Senior Vice President - Mexican Concepts
President in October 1995. Mr. Miller worked in various capacities with the
Taco Bueno Division of Unigate Restaurants prior to joining the Company.
Roger F. Thomson, 47, joined the Company as Senior Vice President,
General Counsel and Secretary in April 1993 and was promoted to Executive Vice
President, General Counsel and Secretary in March 1994. In June 1996,
Mr. Thomson was promoted to the position of Executive Vice President, Chief
Administrative Officer, General Counsel and Secretary and was a Director of
the Company from 1993 until 1995. From 1988 until April 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.
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: Mr. Staubach comprises Class 4 and will be
considered a Retiring Director as of the annual meeting of shareholders
following the end of the 1997 fiscal year. Messrs. Evans, Humphries, and
Oesterreicher and Mrs. Evans comprise Class 1 and will be considered Retiring
Directors as of the annual meeting of shareholders following the end of the
1998 fiscal year. There are no members of Class 2. Mr. Haggar comprises
Class 3 and will be considered a Retiring Director as of the annual meeting of
shareholders following the end of the 2000 fiscal year. Although not a
Retiring Director, Mr. J. Ira Harris has chosen not to seek reelection to the
Board of Directors.
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,
Evans, Haggar and Staubach) met seven (7) times during the fiscal year and has
authority to act for the Board on most matters during the intervals between
Board meetings.
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. Haggar, Harris, Humphries and Oesterreicher and the Committee met two
(2) 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 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. Evans,
Haggar, Harris and Staubach and it met six (6) times during the fiscal year.
Functions performed by the Compensation Committee include: ensuring the
effectiveness of senior management and management continuity, 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,
approval of the adoption and amendment of significant compensation plans and
approval of all compensation actions for officers, particularly at and above
the level of executive vice president. The specific nature of the Committee's
responsibilities as it relates to executive officers are set forth below under
"Report of the Compensation Committee."
The purpose of the Nominating Committee is to recommend to the Board of
Directors potential non-employee members to be added as new or replacement
members to the Board of Directors. The Nominating Committee is composed of
Messrs. Brinker, Evans, McDougall and Oesterreicher and Mrs. Evans and did not
meet during the fiscal year.
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. New directors who are not employees of the Company have the
option at the beginning of each Director term to receive as additional
compensation for serving on the Board of Directors either an annual cash
payment of $30,000 during the term such non-employee serves as a director, a
one-time grant of 12,000 stock options under the Company's 1991 Stock Option
Plan for Non-Employee Directors and Consultants, or a combination of cash and
stock options. If the 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 the director elects to receive cash, the first
payment will be made at such Board of Directors meeting and the following
payments will be made on the date of each annual meeting of shareholders
thereafter. If the director elects to receive stock options, they 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). The stock options will
be granted at the fair market value on the date of grant. One-third of the
options will vest on each of the second, third and fourth anniversaries of the
date of grant.
If a Retiring Director is renominated to serve on the Board of Directors
for an additional four-year period, such Retiring Director will be treated as
a new director for purposes of determining compensation during such additional
four-year period.
If the shareholders of the Company approve the amendment described under
"Amendment of 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 cash 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
(1/3rd) of the options will vest on each of the second, third and fourth
anniversaries of the date of grant. If a director 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.
Current directors who are not employees of the Company are also eligible
for additional compensation under this compensation program. Each of the
current non-employee directors will receive for each year remaining in such
director's term on the Board of Directors (i) an additional $6,000 in annual
cash compensation and (ii) a grant of 5,000 stock options.
For purposes of applying this new compensation program to the current
non-employee directors of the Company, Mrs. Evans would receive an annual cash
retainer of $16,000 and a grant of 15,000 stock options; Mr. Evans would
receive an annual cash retainer of $6,000 and a grant of 15,000 stock options;
Mr. Haggar would receive an annual cash retainer of $16,000 and a grant of
5,000 stock options; Dr. Humphries would receive an annual cash retainer of
$16,000 and a grant of 15,000 stock options; Mr. Oesterreicher would receive
an annual cash retainer of $6,000 and a grant of 15,000 stock options; and Mr.
Staubach would receive an annual cash retainer of $6,000 and a grant of 10,000
stock options.
During the year ended June 26, 1996, the Board of Directors held seven
(7) meetings; each incumbent director attended 75% of the aggregate total of
meetings of the Board of Directors and Committees on which he or she served.
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 1996.
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
President and Chief 1996 $ 744,808 $ --- 375,000 $ 69,860 $ 18,396
Executive Officer 1995 $ 574,038 $ 278,839 125,000 $ 86,565 $ 50,555
1994 $ 529,327 $ 567,439 202,500 $ 93,940 $ 22,547
Creed L. Ford, III
Executive Vice 1996 $ 409,038 $ --- 90,000 $ 46,574 $ 8,271
President and Chief 1995 $ 359,615 $ 130,361 30,000 $ 63,481 $ 8,795
Operating Officer 1994 $ 343,942 $ 275,154 56,250 $ 68,889 $ 7,305
Debra L. Smithart
Executive Vice 1996 $ 304,423 $ --- 90,000 $ 46,574 $ 6,828
President and Chief 1995 $ 264,038 $ 95,714 30,000 $ 63,481 $ 11,805
Financial Officer 1994 $ 232,500 $ 186,000 56,250 $ 50,101 $ 5,471
Douglas H. Brooks
Senior Vice President 1996 $ 311,058 $ --- 90,000 $ 31,049 $ 12,830
- Chili's Grill & Bar 1995 $ 266,249 $ 77,212 30,000 $ 40,397 $ 15,636
Concept President 1994 $ 232,884 $ 135,772 45,000 $ 43,839 $ 12,582
F. Lane Cardwell, Jr.
Executive Vice 1996 $ 290,385 $ --- 90,000 $ 46,574 $ 15,007
President - Eatzi's 1995 $ 224,422 $ 81,353 30,000 $ 63,481 $ 19,236
Concept President 1994 $ 201,346 $ 161,077 56,250 $ 43,839 $ 9,760
(1) All other compensation represents Company match on deferred compensation.
Option Grants During 1996 Fiscal Year
The following table contains certain information concerning the grant of
stock options 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 125,000 $12.00 10/25/05 $ 943,342 $2,390,614
250,000 $13.00 1/30/06 $2,043,908 $5,179,663
375,000 17.90% $2,987,250 $7,570,277
Creed L. Ford, III 30,000 $12.00 10/25/05 $ 226,402 $ 573,747
60,000 $13.00 1/30/06 $ 490,538 $1,243,119
90,000 4.30% $ 716,940 $1,816,866
Debra L. Smithart 30,000 $12.00 10/25/05 $ 226,402 $ 573,747
60,000 $13.00 1/30/06 $ 490,538 $1,243,119
90,000 4.30% $ 716,940 $1,816,866
Douglas H. Brooks 30,000 $12.00 10/25/05 $ 226,402 $ 573,747
60,000 $13.00 1/30/06 $ 490,538 $1,243,119
90,000 4.30% $ 716,940 $1,816,866
F. Lane Cardwell, Jr. 30,000 $12.00 10/25/05 $ 226,402 $ 573,747
60,000 $13.00 1/30/06 $ 490,538 $1,243,119
90,000 4.30% $ 716,940 $1,816,866
(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 $15.50 fiscal year-end price of the Company's Common Stock.
Shares Value of Unexercised
Acquired Number of Unexercised In-the-Money Options at
On Value Options at Fiscal Year End Fiscal Year End
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Ronald A. McDougall -0- -0- 588,750 601,250 $ 715,478 $1,062,500
Creed L. Ford, III -0- -0- 852,519 148,125 $7,196,672 $ 255,000
Debra L. Smithart 11,509 $38,682 145,716 148,125 $ 66,000 $ 255,000
Douglas H. Brooks 6,000 $79,032 406,228 142,500 $3,236,365 $ 255,000
F. Lane Cardwell, Jr. -0- -0- 187,875 148,125 $ 358,405 $ 255,000
Long-Term Executive Profit Sharing Plan and Awards
Executives of the Company participate in the Long-Term Executive Profit
Sharing 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
Executive Profit Sharing Plan.
Number of Estimated Future Payouts
Name Units Awarded Under Non-Stock Based Plans
(Dollars)
Threshold Target Maximum
Ronald A. McDougall 1,000 $66,667 $100,000 *
Creed L. Ford, III 600 $40,000 $ 60,000 *
Debra L. Smithart 600 $40,000 $ 60,000 *
Douglas H. Brooks 500 $33,333 $ 50,000 *
F. Lane Cardwell, Jr. 600 $40,000 $ 60,000 *
* There is no maximum future payout under the Long-Term Executive Profit Sharing Plan.
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 premier 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 are targeted to be competitive at the 75th
percentile of the market for positions of similar responsibility and scope at
the Vice President and Senior Vice President levels and, to reflect the
exceptionally high level of executive talent required to execute the growth
plans of the Company, at the 90th percentile of the market for the President
and Chief Executive Officer and for the Executive Vice Presidents.
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 reliable
executive salary surveys that reflect both the chain restaurant industry as
well as a broader cross-section of high growth companies from many industries.
Individual base salary levels are determined by considering each officer's
level of responsibility, performance, experience, and tenure. 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 Dallas-based 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 executives the same as for all other Company
employees.
At the beginning of a fiscal year, each executive is assigned an
Individual Participation Percentage ("IPP") which is tied to the base salary
for such executive and 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 salaried employees with a tax-deferred long-term savings
vehicle. The Company provides a matching contribution equal to 25% of a
participant's contribution, up to a maximum of 5% of such participant's
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 25% 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 highly compensated employees according
to the Internal Revenue Service. A participant's contributions vest
immediately while Company contributions vest 25% annually, beginning in the
participant's second year of eligibility since Plan II inception.
Long-Term Incentives
All salaried employees of the Company, including executives, are
eligible for annual grants of tax-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 on 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 (50%) of a stock option grant
becomes exercisable two years after the grant date; the remaining 50% of a
grant becomes exercisable three years after the grant date.
The number of stock options granted to an executive is based on grant
guidelines that reflect an officer's position within the Company. The
Compensation Committee reviews and approves grant amounts for executives.
Executives also participate in the Long-Term Executive Profit Sharing
Plan, a non-qualified long-term performance cash plan. This plan provides an
additional mechanism for focusing executives on the sustained improvement in
operating results over the long term. This is a performance-related plan
using overlapping three-year cycles paid annually. Performance units (valued
at $100 each) are granted to individuals and paid in cash based upon the
Company's attainment of predetermined performance objectives. Long-term
operating results are measured by evaluating both pre-tax net income (weighted
70%) and changes in shareholders' equity (weighted 30%) over three-year
cycles.
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 salary increases in the amount of 9% and
4%, effective January 1, 1996 and June 1, 1996, respectively, 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 1,000 units under the Long-Term Executive
Profit Sharing Plan for the cycle which includes fiscal years 1996, 1997, and
1998. Mr. McDougall was also awarded 375,000 stock options under the
Company's stock option plan. Due to the Company's short-fall from plan, none
of Mr. McDougall's compensation for 1996 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
1996 fiscal year, Mr. McDougall's total compensation declined 16.5% from its
level in the 1995 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. Due to the Company's short-fall from plan during
the past year, none of the Company's executives received incentive pay
pursuant to the Company's Profit Sharing Plan. The Company's financial
performance supports the compensation practices employed during the past year.
Respectfully submitted,
COMPENSATION COMMITTEE
JACK W. EVANS, SR.
J.M. HAGGAR, JR.
J. IRA HARRIS
ROGER T. STAUBACH
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.
[GRAPH INCLUDED IN SUPPLEMENTAL FILED COPY]
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.
1991 1992 1993 1994 1995 1996
Brinker International 100.00 129.42 201.47 185.30 152.21 132.36
S&P 500 100.00 113.41 128.87 130.68 164.75 207.59
S&P Restaurants 100.00 136.55 148.22 171.50 225.54 265.39
STOCK OPTIONS
In 1992, the shareholders of the Company adopted the 1992 Incentive
Stock Option Plan ("Plan"). See "Amendment of 1992 Incentive Stock Option
Plan" below for a more detailed description of the Plan.
In 1991, the shareholders of the Company adopted the 1991 Stock Option
Plan for Non-Employee Directors and Consultants (the "1991 Plan"). See
"Amendment of 1991 Stock Option Plan for Non-Employee Directors and
Consultants" below for a more detailed description of the 1991 Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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. Through an inadvertent
omission, there was one late filing on behalf of Mr. Haggar relating to the
disposition of the Company's Common Stock during the 1996 fiscal year. Except
as set forth herein, the Company believes that all filing requirements were
satisfied. In making these disclosures and filing of 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 plans or benefit programs. 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.
On January 19, 1996, the Company purchased an office complex containing
three buildings for the expansion of its corporate headquarters. A company
controlled by Roger T. Staubach received a brokerage commission of $450,000
for services rendered in connection with this office complex acquisition. In
addition, Mr. Staubach's company is a tenant in this office complex and pays
rent to the Company pursuant to a lease entered into with an unrelated party
prior to the acquisition of the office complex by the Company.
AMENDMENT OF 1992 INCENTIVE STOCK OPTION PLAN
To strengthen the Company's ability to attract and retain key employees
and to furnish additional incentives to such persons by encouraging them to
become owners of Common Stock, the Board of Directors and the shareholders of
the Company adopted the Plan in 1992. The Plan initially covered the issuance
of up to 1,500,000 shares of Common Stock, which amount was increased to
3,375,000 shares of Common Stock as the result of two stock splits, effected
in the form of 50% stock dividends. On November 2, 1995, the shareholders of
the Company approved an amendment to the Plan, increasing the number of shares
of Common Stock which may be issued under the Plan from 3,375,000 to
5,375,000. The Board of Directors of the Company, relying upon the
recommendation of the Compensation Committee of the Board of Directors,
approved an amendment to the Plan (a) increasing the number of shares of
Common Stock which may be issued under the Plan from 5,375,000 to 7,875,000
and (b) limiting the maximum number of shares with respect to which options
may be granted pursuant to the Plan to any individual employee during any
fiscal year of the Company to 500,000. At the Annual Meeting, the
shareholders of the Company are being asked to approve such amendment.
As of June 26, 1996, options to purchase an aggregate of 4,814,325
shares of Common Stock had been granted pursuant to the Plan and 560,675
shares remain available for future grant. As of June 26, 1996, the market
value of all shares of Common Stock subject to outstanding options granted
pursuant to the Plan was $74,622,038 (based upon the closing sale price of
Common Stock as reported on the New York Stock Exchange on such date). As of
June 26, 1996, Ronald A. McDougall, Creed L. Ford, III, Debra L. Smithart,
Douglas H. Brooks, and F. Lane Cardwell, Jr. had been granted options covering
an aggregate of 702,500; 176,250; 176,250; 165,000; and 176,250 shares of
Common Stock pursuant to the Plan, respectively. All current executive
officers, as a group, have been granted 1,805,000 options covering shares of
Common Stock pursuant to the Plan.
Summary of the Plan
The Plan is designed to permit the granting of options to all employees
of the Company and its subsidiaries (for which there were approximately 39,900
employees as of June 26, 1996), although the Company has historically granted
options only to salaried employees. The administration of the Plan is
provided by the Compensation Committee which has the authority to determine
the terms on which options are granted under the Plan. The Compensation
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 Plan.
The exercise price of options is payable in cash or the holder of an
option may request approval from the Compensation 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.
Unless sooner terminated by action of the Board of Directors, the Plan
will terminate on September 7, 2002, and no options may thereafter be granted
under the Plan. The Plan may be amended, altered or discontinued by the
Compensation Committee without the approval of the shareholders, except that
the Compensation Committee does not have the power or authority to materially
increase the benefits accruing to participants under the Plan, materially
change the participants or class of participants who are eligible to receive
options, or materially increase the aggregate number of shares that may be
issued under the Plan. The Compensation Committee, however, may make
appropriate adjustments in the number of shares covered by the Plan, the
number of outstanding options, and the option prices, to reflect any stock
dividend, stock split, share combination, merger, consolidation,
reorganization, liquidation or the like, of or by the Company.
Both incentive stock options ("ISOs") and non-qualified stock options
may be granted under the Plan. The Plan requires that the exercise price of
each ISO will not be less than 100% of the fair market value of the Common
Stock on the date of the grant of the option. No ISO, however, may be granted
under the Plan to anyone who owns more than 10% of the outstanding Common
Stock unless the exercise price is at least 110% of the fair market value of
the Common Stock on the date of grant and the option is not exercisable more
than five years after it is granted. There is no limit on the fair market
value of ISOs that may be granted to an employee in any calendar year, but no
employee may be granted ISOs that first become exercisable during a calendar
year for the purchase of stock with an aggregate fair market value (determined
as of the date of grant of each option) in excess of $100,000 and no employee
may be granted more than 20% of the total options granted in a calendar year.
An option (or an installment thereof) counts against the annual limitation
only in the year it first becomes exercisable.
Tax Status of Stock Options
Pursuant to the Plan, the Compensation Committee may provide for an
option to qualify either as an "ISO" or as a "non-qualified option."
Incentive Stock Options. All stock options that qualify under the rules
of Section 422 of the Internal Revenue Code, will be entitled to ISO
treatment. To receive ISO treatment, an optionee is not permitted to dispose
of the acquired stock (i) within two years after the option is granted or (ii)
within one year after exercise. In addition, the individual must have been an
employee of the Company for the entire time from the date of granting of the
option until three months (one year if the employee is disabled) before the
date of the exercise. The requirement that the individual be an employee and
the two-year and one-year holding periods are waived in the case of death of
the employee. If all such requirements are met, no tax will be imposed upon
exercise of the option, and any gain upon sale of the stock will be entitled
to capital gain treatment. The employee's gain on exercise (the excess of
fair market value at the time of exercise over the exercise price) of an ISO
is a tax preference item and, accordingly, is included in the computation of
alternative minimum taxable income.
If an employee does not meet the two-year and one-year holding
requirement, but does meet all other requirements, tax will be imposed at the
time of sale of the stock, but the employee's gain on exercise will be treated
as ordinary income rather than capital gain and the Company will receive a
corresponding deduction at the time of sale. Any remaining gain on sale will
be short-term and long-term capital gain, depending on the holding period of
the stock.
An optionee's stock option agreement may permit payment for stock upon
the exercise of an ISO to be made with other shares of Common Stock. In such
a case, in general, if an employee uses stock acquired pursuant to the
exercise of an ISO to acquire other stock in connection with the exercise of
an ISO, it may result in ordinary income if the stock so used has not met the
minimum statutory holding period necessary for favorable tax treatment as an
ISO.
Non-Qualified Stock Options. 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 if applicable withholding requirements are
satisfied) 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 gain or loss
realized by an optionee on disposition of such shares generally is a capital
gain or loss and does not result in a tax deduction to the Company.
Internal Revenue Code Section 162(m). 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. It is intended that the Plan meet the performance-based
compensation exception to the limitation on deductions. The Plan meets the
first requirement of this exception because options were awarded or priced at
not less than the fair market value of the stock on the date of grant. In
addition, the administration of the Plan by the Compensation Committee helped
satisfy a second requirement for exemption from the $1,000,000 cap. Finally,
as the Plan has already been approved by the shareholders of the Company, it
is only necessary to further amend the Plan to limit the number of shares that
may be granted to any single employee during any fiscal year of the Company in
order to satisfy the last requirement for exemption from the cap.
Amendments
The Plan provides for the issuance of up to 5,375,000 shares of Common
Stock, which amount may be adjusted to reflect any stock dividend, stock
split, share combination, recapitalization, or the like, of or by the Company.
The Board of Directors recommends that the shareholders vote in favor of
amending the Plan (a) to allow the issuance of up to 7,875,000 shares of
Common Stock, which amount may be adjusted to reflect any stock dividend,
stock split, share combination, recapitalization, or the like, of or by the
Company, and (b) to limit the maximum number of shares with respect to which
options may be granted pursuant to the Plan to any individual employee during
any fiscal year of the Company to 500,000. The Board of Directors believes
this to be in the best interest of the Company as having shares available to
be issued under the Plan will strengthen the Company's ability to attract and
retain key employees and furnish additional incentives to such persons by
encouraging them to become owners of Common Stock of 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 proposed amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL TO AMEND THE PLAN.
AMENDMENT OF 1991 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS AND CONSULTANTS
In 1991, the Board of Directors and shareholders of the Company adopted
the 1991 Plan pursuant to which options may be granted to non-employee
directors and consultants. The 1991 Plan originally permitted the issuance of
100,000 shares of Common Stock, which amount was increased to 337,500 shares
of Common Stock as the result of three stock splits, effected in the form of
50% stock dividends. The Board of Directors has approved an amendment to the
1991 Plan (a) increasing the number of shares of Common Stock which may be
issued under the 1991 Plan from 337,500 to 587,500 and (b) limiting the
maximum number of shares with respect to which options may be granted pursuant
to the 1991 Plan to any individual director or consultant during any fiscal
year of the Company to 100,000. At the Annual Meeting, the shareholders of
the Company are being asked to approve such amendment.
As of June 26, 1996, options to purchase an aggregate of 205,250 shares
of Common Stock had been granted pursuant to the 1991 Plan, options to
purchase 3,375 shares had been exercised, options to purchase 201,875 shares
remain outstanding, and 132,250 shares remain available for future grant. As
of June 26, 1996, the market value of all shares of Common Stock subject to
outstanding options granted pursuant to the Plan was $3,129,063 (based upon
the closing sale price of Common Stock as reported on the New York Stock
Exchange on such date). As of June 26, 1996, the current non-employee
directors of the Company had each been granted options pursuant to the 1991
Plan as set forth below:
Total Options Issued
Name Under 1991 Plan
(As of June 26, 1996)
Jack W. Evans, Sr. 28,250
Rae F. Evans 24,250
J.M. Haggar, Jr. 20,250
Frederick S. Humphries 10,000
James E. Oesterreicher 14,000
Roger T. Staubach 14,000
In fiscal 1996, options covering 3,000 shares of Common Stock were
granted to non-employee directors and consultants of the Company pursuant to
the 1991 Plan.
Summary of the 1991 Plan
The 1991 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 purpose of
the 1991 Plan is to provide such directors, consultants and advisors with a
proprietary interest in the Company through the granting of options 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 exercise price of options is payable in cash or, if an option
agreement so provides, the holder of an option may request approval from the
Company 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.
Unless sooner terminated by action of the Board of Directors, the 1991
Plan will terminate on May 14, 2001, and no options may thereafter be granted
under the 1991 Plan. The 1991 Plan may be amended, altered or discontinued by
the Board of Directors without the approval of the shareholders, except that
the Board of Directors does not have the power or authority to materially
increase the benefits accruing to participants under the Plan, materially
change the participants or class of participants who are eligible to receive
options, or materially increase the aggregate number of shares that may be
issued under the 1991 Plan. The Board of Directors, however, may make
appropriate adjustments in the number of shares covered by the 1991 Plan, the
number of outstanding options, and in the option prices, to reflect any stock
dividend, stock split, share combination, merger, consolidation,
reorganization, liquidation or the like, of or by the Company.
The 1991 Plan requires that the exercise price of each option will not
be less than 100% of the fair market value of the Common Stock on the date of
grant of the option.
Tax Status of Stock Options
Only non-qualified stock options may be granted under the 1991 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 if
applicable withholding requirements are satisfied) 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 gain or loss realized by an optionee on
subsequent disposition of such shares after recognition of ordinary income at
the date of exercise generally is a capital gain or loss and does not result
in a tax deduction to the Company.
Amendments
The 1991 Plan currently provides that the director may receive, as
compensation for serving on the Board of Directors, an annual cash fee, a
grant of stock options, or a combination of cash and stock options. The
amendment to the 1991 Plan would provide that at the beginning of his or her
term on the Board of Directors, a director would receive (a) 20,000 stock
options and (b) an annual cash payment of $36,000, at least 25% of which must
be taken in the form of stock options. If a director 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. See "Directors and Executive Officers - Classes of
Directors". In addition, current directors who are not employees of the
Company will receive for each year remaining in such director's term on the
Board of Directors (i) an additional $6,000 in cash compensation and (ii) a
grant of 5,000 stock options. See "Directors and Executive Officers -
Directors' Compensation."
The 1991 Plan provides for the issuance of up to 337,500 shares of
Common Stock, which amount may be adjusted to reflect any stock dividend,
stock split, share combination, recapitalization, or the like, of or by the
Company. The Board of Directors recommends that the shareholders vote in
favor of amending the 1991 Plan (a) to allow the issuance of 587,500 shares of
Common Stock, which amount may be adjusted to reflect any stock dividend,
stock split, share combination, recapitalization, or the like, of or by the
Company and (b) to limit the maximum number of shares with respect to which
options may be granted pursuant to the 1991 Plan to any individual director or
consultant during any fiscal year of the Company to 100,000. The Board of
Directors believes this to be in the best interest of the Company, as having
shares available to be issued under the 1991 Plan will strengthen the
Company's ability to attract and retain key directors and furnish additional
incentives to such persons to maintain his or her long-term interest in the
welfare of 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 proposed amendment to the 1991 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL TO AMEND THE 1991 PLAN.
SHAREHOLDERS' PROPOSALS
Any proposals that shareholders of the Company desire to have presented
at the 1997 annual meeting of shareholders must be received by the Company at
its principal executive offices no later than May 27, 1997.
INDEPENDENT AUDITORS
Representatives of KPMG Peat Marwick 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 26, 1996, 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, 1996
BRINKER INTERNATIONAL, INC.
PROXY
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Brinker International, Inc. (the "Company") to be
held at the General Cinema NorthPark Theater I & II, 1100 NorthPark Center,
Dallas, Texas, on Thursday, November 7, 1996 at 10:00 a.m., local time, and
the Proxy Statement in connection therewith, and (b) appoints Norman E.
Brinker and Ronald A. McDougall, and each of them, his proxies with full power
of substitution and revocation, for and in the name, place and stead of the
undersigned, to vote upon and act with respect to all of the shares of Common
Stock of the Company standing in the name of the undersigned or with respect
to which the undersigned is entitled to vote and act at said meeting or at any
adjournment thereof, and the undersigned directs that his proxy be voted as
shown on the reverse side hereof.
If more than one of the proxies listed on the reverse side shall be
present in person or by substitute at the meeting or any adjournment thereof,
all of said proxies so present and voting, either in person or by substitute,
shall exercise all of the powers hereby given.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED AS FOLLOWS: FOR ALL NOMINEES
FOR DIRECTOR NAMED; FOR THE PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S
1992 INCENTIVE STOCK OPTION PLAN; AND FOR THE PROPOSAL TO APPROVE AN AMENDMENT
TO THE COMPANY'S 1991 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS AND
CONSULTANTS.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms
all that said proxies, their substitutes, or any of them, may lawfully do by
virtue hereof.
(Continued On Reverse Side)
(a) ELECTION OF DIRECTORS
FOR all nominees listed (except WITHHOLD AUTHORITY to vote
as marked to the contrary) for all nominees listed
NOMINEES: Norman E. Brinker, Gerard V. Centioli, Creed L. Ford,
III, Ronald A. McDougall, Debra L. Smithart, Jack W. Evans, Sr.,
Rae F. Evans, J. M. Haggar, Jr., Dr. Frederick S. Humphries,
James E. Oesterreicher and Roger T. Staubach.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.
(b) PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1992 INCENTIVE STOCK
OPTION PLAN.
FOR AGAINST ABSTAIN
(c) PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1991 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS AND CONSULTANTS.
FOR AGAINST ABSTAIN
(d) IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated: , 1996
Please sign
Please date this proxy and sign your name exactly
as it appears hereon. Where there is more than
one owner, each should sign. When signing as an
attorney, administrator, executor, guardian, or
trustee, please add your title as such. If
executed by a corporation, the proxy should be
signed by a duly authorized officer.
Please sign this proxy and return it promptly
whether or not you expect to attend the meeting.
You may nevertheless vote in person if you do
attend.
APPENDIX I
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ONLY
NOT PROVIDED TO SECURITY HOLDERS
BRINKER INTERNATIONAL, INC.
1992 INCENTIVE STOCK OPTION PLAN
Brinker International, Inc., a Delaware corporation (the "Company"),
hereby adopts the following plan, as approved by the Company's stockholders on
November 11, 1992:
1. PURPOSE. The purpose of the Plan is to provide employees with a
proprietary interest in the Company through the granting of options which will
(a) increase the interest of the employees in the Company's welfare;
(b) furnish an incentive to the employees to continue their services
for the Company; and
(c) provide a means through which the Company may attract able
persons to enter its employ.
2. ADMINISTRATION. The Plan will be administered by the Committee.
3. PARTICIPANTS. The Committee shall, from time to time, select the
particular employees of the Company and its Subsidiaries to whom options are
to be granted, and who will, upon such grant, become participants in the Plan.
4. STOCK OWNERSHIP LIMITATION. No Incentive Option may be granted to
an employee who owns more than 10% of the voting power of all classes of stock
of the Company or its Parent or Subsidiaries. This limitation will not apply
if the option price is at least 110% of the fair market value of the stock at
the time the Incentive Option is granted and the Incentive Option is not
exercisable more than five years from the date it is granted.
5. SHARES SUBJECT TO PLAN. The Committee may not grant options under
the Plan for more than 5,375,000 shares of Common Stock of the Company, but
this number may be adjusted to reflect, if deemed appropriate by the
Committee, any stock dividend, stock split, share combination, reca-
pitalization or the like, of or by the Company. Shares to be optioned and
sold may be made available from either authorized but unissued Common Stock or
Common Stock held by the Company in its treasury. Shares that by reason of
the expiration of an option or otherwise are no longer subject to purchase
pursuant to an option granted under the Plan may be re-offered under the Plan.
6. LIMITATION ON AMOUNT. The aggregate fair market value (determined
at the time of grant) of the shares of Common Stock which any employee is
first eligible to purchase in any calendar year by exercise of Incentive
Options granted under this Plan and all incentive stock option plans (within
the meaning of Section 422A of the Internal Revenue Code) of the Company or
its Parent or Subsidiaries shall not exceed $100,000. For this purpose, the
fair market value (determined at the respective date of grant of each option)
of the stock purchasable by exercise of an Incentive Option (or an installment
thereof) shall be counted against the $100,000 annual limitation for an
employee only for the calendar year such stock is first purchasable under the
terms of the option.
7. ALLOTMENT OF SHARES. The Committee shall determine the number of
shares of Common Stock to be offered from time to time by grant of options to
employees of the Company or its Subsidiaries. The grant of an option to an
employee shall not be deemed either to entitle the employee to, or to
disqualify the employee from, participation in any other grant of options
under the Plan. No participant may receive in any calendar year in excess of
twenty percent (20%) of the options granted in such calendar year.
8. GRANT OF OPTIONS. The Committee is authorized to grant Incentive
Options and Nonqualified Options under the Plan (additionally, the Board may
grant nonqualified options outside of the Plan as determined in its
discretion). The grant of options shall be evidenced by stock option
agreements containing such terms and provisions as are approved by the
Committee, but not inconsistent with the Plan, including provisions that may
be necessary to assure that any option that is intended to be an Incentive
Option will comply with Section 422A of the Internal Revenue Code. The
Company shall execute stock option agreements upon instructions from the
Committee.
9. OPTION PRICE. The option price for Incentive Options shall not be
less than 100% of the fair market value per share of the Common Stock on the
date the option is granted. The Committee shall determine the fair market
value of the Common Stock on the date of grant, and shall set forth the
determination in its minutes, using any reasonable valuation method. The
option price for Nonqualified Options shall be determined in the discretion of
the Committee.
10. OPTION PERIOD. The Option Period will begin on the date the option
is granted, which will be the date the Committee authorizes the option unless
the Committee specifies a later date. No option may terminate later than ten
years from the date the option is granted. The Committee may provide for the
exercise of options in installments and upon such terms, conditions and
restrictions as it may determine. The Committee may provide for termination
of the option in the case of termination of employment or any other reason.
11. RIGHTS IN EVENT OF DEATH OR DISABILITY. If a participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Internal
Revenue Code) prior to termination of his right to exercise an option in
accordance with the provisions of his stock option agreement without totally
having exercised the option, the option may be exercised subject to the
provisions of Paragraph 13 hereof, by (i) the participant's estate or by the
person who acquired the right to exercise the option by bequest or inheritance
or, (ii) by reason of death of the participant.
12. PAYMENT. Full payment for shares purchased upon exercising an
option shall be made in cash or by check at the time of exercise, or on such
other terms as are set forth in the applicable option agreement. No shares
may be issued until full payment of the purchase price therefor has been made,
and a participant will have none of the rights of a stockholder until shares
are issued to him.
13. EXERCISE OF OPTION. Options granted under the Plan may be
exercised during the Option Period, at such times, in such amounts, in
accordance with such terms and subject to such restrictions and vesting
requirements as are determined by the Committee and set forth in the
applicable stock option descriptions.
14. CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The number of shares of
Common Stock covered by each outstanding option granted under the Plan and the
option price may be adjusted to reflect, as deemed appropriate by the
Committee, any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like, of or by the Company. Notwithstanding anything in
this Plan to the contrary, all options granted pursuant to the Plan shall
become fully vested and exercisable at the election of the Participant at any
time prior to the expiration date of such option upon a material change in
control of the Company. For purposes hereof, a "material change in control of
the Company" shall be deemed to include, but not be limited to, the
dissolution or liquidation of the Company, a merger of the Company into
another corporation, partnership, trust or other business entity, (other than
a merger into a subsidiary or parent of the Company, or a merger the primary
purpose of which is reincorporation), the acquisition of the Company by
another corporation, partnership, trust, or other business entity, the sale or
conveyance of all or substantially all of the assets of the Company, or change
in control of the majority of the voting securities of the Company, or any
other event as determined by the Committee.
15. NON-ASSIGNABILITY. Options may not be transferred other than by
will or by the laws of descent and distribution. During a participant's
lifetime, options granted to a participant may be exercised only by the
participant.
16. INTERPRETATION. The Committee shall interpret the Plan and shall
prescribe such rules and regulations in connection with the operation of the
Plan as it determines to be advisable for the administration of the Plan. The
Committee may rescind and amend its rules and regulations.
17. AMENDMENT OR DISCONTINUANCE. The Plan may be amended or
discontinued by the Committee without the approval of the stockholders of the
Company, except that any amendment that would (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities that may be issued under the Plan, or (c) materially
modify the requirements of eligibility for participation in the Plan must be
approved by the stockholders of the Company.
18. EFFECT OF PLAN. Neither the adoption of the Plan by the Board nor
any action of the Committee shall be deemed to give any officer or employee
any right to be granted an option to purchase Common Stock of the Company or
any other rights except as may be evidenced by the stock option agreement, or
any amendment thereto, duly authorized by the Committee and executed on behalf
of the Company and then only to the extent and on the terms and conditions
expressly set forth therein.
19. TERM. Unless sooner terminated by action of the Board, this Plan
will terminate on September 7, 2002. The Committee may not grant options
under the Plan after that date, but options granted before that date will
continue to be effective in accordance with their terms.
20. DEFINITIONS. For the purpose of this Plan, unless the context
requires otherwise, the following terms shall have the meanings indicated:
(a) "Board" means the board of directors of the Company.
(b) "Committee" means the Compensation Committee of the Board, composed
of independent and disinterested members of the Board qualified to be members
of the Committee pursuant to Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended.
(c) "Common Stock" means the Common Stock which the Company is
currently authorized to issue or may in the future be authorized to issue.
(d) "Incentive Option" means an option granted under the Plan which
meets the requirements of Section 422A of the Internal Revenue Code.
(e) "Nonqualified Option" means an option granted under the Plan which
is not intended to be an Incentive Option.
(f) "Option Period" means the period during which an option may be
exercised.
(g) "Parent" means any corporation in an unbroken chain of corporations
ending with the Company if, at the time of granting of the option, each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
(h) "Plan" means this 1992 Incentive Stock Option Plan, as amended from
time to time.
(i) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the
option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain,
and "Subsidiaries" means more than one of any such corporations.
APPENDIX II
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ONLY
NOT PROVIDED TO SECURITY HOLDERS
BRINKER INTERNATIONAL, INC.
1991 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS AND CONSULTANTS
INTRODUCTION
On May 15, 1991, the Board of Directors of Brinker International, Inc.
(the "Company") adopted a program for granting non-qualified stock options to
non-employee directors and consultants which is formalized by the following
Stock Option Plan for Non-Employee Directors and Consultants (the "Plan"):
1. PURPOSE. The purpose of the Plan is to provide directors of the
Company who are not employees of the Company or its subsidiaries and certain
consultants and advisors with a proprietary interest in the Company through
the granting of options which will:
a. increase their interest in the Company's welfare;
b. furnish them an incentive to continue their services for the
Company; and
c. provide a means through which the Company may attract able
persons to serve on its Board of Directors and act as consultants or advisors.
2. ADMINISTRATION. The Plan will be administered by the Committee.
3. PARTICIPANTS. The directors of the Company who are not employees of
the Company or its subsidiaries are to be granted options under the Plan. In
addition, certain Consultants may be granted options under the Plan. Upon
such grant, the optionees will become participants in the Plan.
4. SHARES SUBJECT TO PLAN. Options may not be granted under the Plan
for more than 337,500 shares of Common Stock of the Company, but this number
may be adjusted to reflect, if deemed appropriate by the Committee, any stock
dividend, stock split, share combination, recapitalization or the like, of or
by the Company. Shares to be optioned and sold may be made available from
either authorized but unissued Common Stock or Common Stock held by the
Company in its treasury. Shares that by reason of the expiration of an option
or otherwise are no longer subject to purchase pursuant to an option granted
under the Plan may be reoffered under the Plan.
5. ALLOTMENT OF SHARES. As part of the overall compensation for
directors of the Company, each eligible director, upon being elected to the
Board of Directors shall elect to receive as partial compensation for serving
on the Board of Directors either (a) an annual cash payment, (b) a grant of
12,000 stock options, or (c) a combination of stock options and cash, the
total value of which is equal to the annual cash payment described in
clause (a) above, provided that (i) such director receives at least Four
Thousand (4,000) stock options and (ii) the value of a stock option for
purposes of this clause (c) is equal to (A) the annual cash payment described
in clause (a) above divided by (B) 12,000. If the director elects to receive
stock options, they will be granted as of the 60th day (or if the 60th day is
not a business day, on the first business day thereafter) following the date
of the annual meeting of shareholders at which such director was elected to
the Board of Directors (or, if such director was elected or appointed to the
Board of directors other than at an annual meeting of shareholders, the
election whether to receive stock options or cash shall be made at the meeting
of the Board of Directors held contemporaneous with the next annual meeting of
shareholders and such Director shall 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, and if any such
Director elects to receive stock options, such options will be granted as of
the 60th day following the date of the next annual meeting of shareholders).
Members of the Board of Directors who have served on the Board of Directors
for four years and are asked by the Nominating Committee to serve an
additional four years, also shall be entitled to make the election described
in the first sentence of this Section 5. Each of the non-employee directors
of the Board of Directors as of November 3, 1994, will be given the option at
such time to receive as additional compensation for serving on the Board of
Directors either (a) an annual cash payment, (b) a one-time grant of stock
options equal to the product of (i) 3,000 multiplied by (ii) the remaining
years of anticipated service on the Board of Directors for such director, or
(c) a combination of stock options and cash, the total value of which is equal
to the annual cash payment described in clause (a) above, provided that
(i) such director receives at least one-third ( ) of the options described in
clause (b) above, and (ii) the value of a stock option for purposes of this
clause (c) is equal to (A) the annual cash payment described in clause (a)
divided by (B) the number of options described in clause (b) above. The number
of stock options received and the vesting period for such options will be
prorated based upon the number of years remaining until such director has
completed his current four year term as director. The Committee shall
determine the number of shares of Common Stock to be offered from time to time
by grant of options to Consultants. The grant of an option to a Consultant
shall not be deemed either to entitle the Consultant to, or to disqualify the
Consultant from, participation in any other grant of options under the Plan.
6. GRANT OF OPTIONS. All director options under the Plan shall be
granted as provided in Section 5. All Consultant options under the Plan shall
be granted by the Committee. The grant of options shall be evidenced by stock
option agreements containing such terms and provisions as are approved by the
Committee, but not inconsistent with the Plan. The Company shall execute
stock option agreements upon instructions from the Committee.
7. OPTION PRICE. The option price shall be equal to the closing price
of Common Stock on the date the option is granted.
8. OPTION PERIOD. The Option Period will begin on the effective date
of the option grant and will terminate on the 10th anniversary of that date.
A director option will also terminate at 5:00 p.m. on the date the option
holder ceases to be a director of the Company for reasons of dishonesty,
whether in the course of directorship or otherwise, or for assisting a
competitor of the Company or its subsidiary without permission, or for
interfering with the Company's relationship with a customer, or for any
similar action or willful breach of duty to the Company (hereinafter
collectively referred to as "disloyalty"). The Committee may provide for the
exercise of director or Consultant options in installments and upon such
terms, conditions, and restrictions as it may determine. The Committee may
provide for termination of a Consultant's option in the case of termination of
Consultant status or any other reason.
9. RIGHTS IN THE EVENT OF DEATH OR DISABILITY. If a participant dies
or becomes disabled prior to termination of his right to exercise an option in
accordance with the provisions of his stock option agreements without totally
having exercised the option, the unvested portion of the option will become
immediately vested and the option may be exercised subject to the provisions
of Section 11 hereof, (a) in the case of death, by the participant's estate or
by the person who acquired the right to exercise the option by bequest or
inheritance or by reason of death of the participant or (b) in the case of
disability, by the participant or his personal representative.
10. PAYMENT. Full payment for the shares purchased upon exercising an
option shall be made in cash or by check at the time of exercise, or on such
other terms as are set forth in the applicable option agreement. No shares
may be issued until full payment of the purchase price therefor has been made,
and a participant will have none of the rights of a stockholder until shares
are issued to him.
11. EXERCISE OF OPTION.
a. Options granted under the Plan to directors may be exercised
during the Option Period, at such times, in such amounts, in accordance with
such terms and subject to such restrictions as are determined by the Committee
and set forth in the applicable stock option agreements. Except as provided
in the fourth and fifth sentences of Section 5 and in Section 9, director
options shall be exercisable in the following cumulative installments:
i. Up to one-third of the total optioned shares at any time
after the second anniversary of the effective date of grant if the
holder is still a director on such anniversary date;
ii. Up to an additional one-third of the total optioned shares
at any time after the third anniversary of the effective date of
grant if the holder is still a director on such anniversary date;
and
iii. Up to an additional one-third of the total optioned shares
at any time after the fourth anniversary of the effective date of
grant if the holder is still a director on such anniversary date.
Notwithstanding the foregoing, if a director retires from the Board of
Directors after serving a four year term, any stock options vesting within
ninety (90) days from the date of retirement may be exercised by the retiring
director effective as of the date of vesting.
b. Options granted to Consultants under the Plan may be exercised
during the Option Period, at such times, in such amounts, in accordance with
such terms and subject to such restrictions and vesting requirements as are
determined by the Committee and set forth in the applicable stock option
agreements.
c. The Committee shall provide in stock option agreements that,
notwithstanding the grant of an option requiring the exercise thereof in
periodic installments, the total number of options granted may be exercisable,
at the election of the holder, upon a material change in control of the voting
securities of the Company. For purposes hereof, a material change in control
of the voting securities of the Company shall be deemed to include, but not
necessarily be limited to, the dissolution or liquidation of the Company, a
merger of the Company into, or acquisition of the Company by, another entity,
the sale or conveyance of all or substantially all of the assets of the
Company, the acquisition of a majority of the voting securities of the Company
by any person or entity or group of affiliated persons or entities, or any
other event as determined by the Committee.
12. CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The number of shares of
Common Stock covered by each outstanding option granted under the Plan and the
option price may be adjusted to reflect, as deemed appropriate by the
Committee, any stock dividend, stock split, share combination, exchange of
shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation, or the like, of or by the Company.
13. NON-ASSIGNABILITY. Options may not be transferred other than by will
or by the laws of descent and distribution. During a participant's lifetime,
options granted to a participant may be exercised only by the participant.
14. INTERPRETATION. The Committee shall interpret the Plan and shall
prescribe such rules and regulations in connection with the operation of the
Plan as it determines to be advisable for the administration of the Plan. The
Committee may rescind and amend its rules and regulations.
15. AMENDMENT OR DISCONTINUANCE. The Plan may be amended or discontinued
by the Board of Directors of the Company without the approval of the
stockholders of the Company, except that any amendment that would
(a) materially increase the benefits accruing to participants under the Plan,
(b) materially increase the number of securities that may be issued under the
Plan, or (c) materially modify the requirements of eligibility for
participation in the Plan must be approved by the stockholders of the Company.
In addition, to the extent that an amendment would affect director options,
the Plan shall not be amended more than once every six (6) months, other than
to comport with changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
16. EFFECT OF PLAN. Neither the adoption of the Plan nor any action of
the Committee shall be deemed to give any director or Consultant any right to
be granted an option to purchase Common Stock of the Company or any other
rights except as may be evidenced by the stock option agreement, or any
amendment thereto, duly authorized by the Committee and executed on behalf of
the Company and then only to the extent and on the terms and conditions
expressly set forth therein.
17. TERM. Unless sooner terminated by action of the Committee, this Plan
will terminate on May 14, 2001. The Committee may not grant options under the
Plan after that date, but options granted before that date will continue to be
effective in accordance with their terms.
18. DEFINITIONS. For the purpose of this Plan, unless the context
requires otherwise, the following terms shall have the meanings indicated:
a. "Committee" means the Executive Committee of the Board of
Directors of the Company;
b. "Common Stock" means the Common Stock which the Company is
currently authorized to issue or may in the future be authorized to issue (as
long as the common stock varies from that currently authorized, if at all,
only in amount of par value);
c. "Company" means Brinker International, Inc., a Delaware
corporation;
d. "Consultant" means a consultant or advisor who is not an officer,
director, or ten percent (10%) stockholder of the Company within the meaning
of Section 16 of the Securities Exchange Act of 1934 and who renders bona fide
services to the Company or a subsidiary of the Company otherwise than in
connection with the offer or sale of securities in a capital-raising
transaction;
e. "Option Period" means the period during which an option may be
exercised;
f. "Plan" means this Stock Option Plan for Non-Employee Directors
and Consultants, as amended from time to time; and
g. "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of
this option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in the chain, and "Subsidiaries" means more than one of any such corporations.
