20
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-B(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO 240.14A-11(C) OR 240.14A-12
PIZZA INN, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES: 2)
AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED PURSUANT TO
EXCHANGE ACT RULE 0-11 (SET FOR THE AMOUNT ON WHICH THE FILING FEE IS CALCULATED
AND STATE HOW IT WAS DETERMINED):
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
5) TOTAL FEE PAID:
[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS. [ ] CHECK
BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE 0-11(A)(2)
AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID PREVIOUSLY.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR
SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID: 2) FORM, SCHEDULE OR REGISTRATION STATEMENT
NO:
3) FILING PARTY: 4) DATE FILED:
PIZZA INN, INC.
3551 PLANO PARKWAY
THE COLONY, TEXAS 75056
(469) 384-5000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 19, 2001
To our Shareholders:
The Annual Meeting of Shareholders of Pizza Inn, Inc. (the "Company") will
be held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas 75056, on Wednesday, December 19, 2001, at 10:00 a.m., Dallas time, for
the following purposes:
1. To elect three Class II directors; and
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on October 21, 2001 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof.
Sincerely,
Jeff Rogers
Chief Executive Officer
November 9, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED
FOR YOUR CONVENIENCE. THE ENCLOSED PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.
YOUR VOTE IS IMPORTANT.
PIZZA INN, INC.
3551 PLANO PARKWAY
THE COLONY, TEXAS 75056
(469) 384-5000
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 19, 2001
The Board of Directors of Pizza Inn, Inc., a Missouri corporation (the
"Company"), is soliciting proxies to be voted at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the Company's corporate
offices, 3551 Plano Parkway, The Colony, Texas 75056, on Wednesday, December 19,
2001, 10:00 a.m., Dallas time, and at any adjournments thereof. This Proxy
Statement and the enclosed form of proxy were first mailed to the Company's
shareholders on or about November 9, 2001.
If the proxy is signed and returned before the Annual Meeting, it will be
voted in accordance with the directions on the proxy. A proxy may be revoked at
any time before it is voted by execution of a subsequent proxy, by signed
written notice to Pizza Inn, Inc., c/o American Stock Transfer, 59 Maiden Lane,
New York, NY 10007, or by voting in person at the Annual Meeting.
OUTSTANDING CAPITAL STOCK
The record date for shareholders entitled to notice of, and to vote at, the
Annual Meeting is October 21, 2001. At the close of business on that date,
there were outstanding 10,061,238 shares of Common Stock, $.01 par value
("Common Stock"). No other class of securities of the Company is entitled to
notice of, or to vote at, the Annual Meeting.
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the shareholder otherwise specifies in the
proxy, will be voted:
1. FOR the election of the three Class II director nominees named herein,
to serve for a term of two years each or until their respective successors are
elected and qualified; and
2. In the discretion of the proxy holders, as to the transaction of such
other business as may properly come before the meeting or any adjournments
thereof.
The Board of Directors is not presently aware of any other business to be
brought before the Annual Meeting.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. In deciding all questions, a holder of Common Stock (a
"Shareholder") is entitled to one vote, in person or by proxy, for each share
held in his name on the record date. Solely with respect to the election of
directors, a Shareholder has that number of votes equal to the number of shares
held by him on the record date multiplied by the number of directors being
elected and he is entitled to cumulate his votes and cast them all for any
single nominee or to spread his votes, so cumulated, among as many nominees and
in such manner as he sees fit. Directors must be elected by a plurality of the
votes cast. To be elected as a director, a candidate must be one of the three
candidates who receive the most votes out of all votes cast at the Annual
Meeting.
A Shareholder who is present, in person or by proxy, and who withholds his
vote in the election of directors, will be counted for purposes of determining
whether a quorum exists, but the withholding of his vote will not affect the
election of directors. A Shareholder who is present, in person or by proxy, and
who abstains from voting on other proposals, will be counted for purposes of a
quorum, and the abstention will have the same effect as a vote against the
proposals. Broker non-votes will be considered shares present and counted for
purposes of determining whether a quorum exists if voting instructions are given
as to at least one of the matters to be voted on; however, the presence of such
shares will have no effect on the outcome of the vote. If a quorum is not
present, in person or by proxy, the meeting may adjourn from time to time until
a quorum is obtained.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy or, in the absence of such direction, FOR the election of the nominees
as directors. The proxy holders will not cumulate votes. If any other matters
properly come before the meeting, the enclosed proxy will be voted by the proxy
holders in accordance with their best judgment.
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation and By-laws provide that
the Board of Directors shall be divided into two Classes. The terms of the
three Class II directors expire at the Annual Meeting. The Board has nominated
for election at the Annual Meeting all three incumbent Class II directors, each
to serve for a term of two years. Each nominee of the Board has expressed his
intention to serve the entire term for which election is sought. Directors will
be elected by cumulative voting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH OF THE THREE NOMINEE DIRECTORS.
The following table lists the names and ages, as of October 1, 2001, of the
three nominee directors and the four directors whose terms of office will
continue after the Annual Meeting, the class to which each director has been or
will be elected, the year in which each director was first elected, and the
annual meeting (assuming that it is held in December) at which the term of each
director will expire.
Director Term
Nominee Directors Age Class Since Expires
------------------ --- ----- ----- -------
C. Jeffrey Rogers 54 II 1990 2001
F. Jay Taylor 78 II 1994 2001
Steve A. Ungerman 57 II 1990 2001
Continuing Directors
---------------------
Bobby L. Clairday 58 I 1990 2002
Ronald W. Parker 51 I 1993 2002
Ramon D. Phillips 68 I 1990 2002
Butler E. Powell 62 I 1998 2002
EXECUTIVE OFFICERS
The following table sets forth certain information, as of October 1, 2001,
regarding the Company's executive officers:
Executive
Officer
Name Age Position Since
---- --- -------- -----
C. Jeffrey Rogers 54 Vice Chairman and Chief Executive Officer 1990
Ronald W. Parker 51 President and Chief Operating Officer 1992
B. Keith Clark 38 Senior Vice President, General Counsel
and Secretary 1997
Ward T. Olgreen 42 Senior Vice President of Concept
Development 1995
Shawn M. Preator 32 Vice President of Finance, Treasurer
and Assistant Secretary 1999
William R. Miniat 44 Vice President of Customer Sales
and Service-Norco Division 2000
Brian L. Waters 50 Vice President of Purchasing - Norco
Division 2000
Michael L. Iglesias 40 Vice President of Franchise Development 2001
Susan A. Milliman 36 Vice President of Recruiting and Employee
Services 2001
BIOGRAPHIES OF NOMINEE DIRECTORS AND CONTINUING DIRECTORS
Steve A. Ungerman is a practicing attorney in Dallas, Texas. From January
1, 1998 through December 31, 2000 he was Of Counsel to the law firm of Boswell &
Kober, P.C. From August 1997 to December 1997, he was employed by MedSynergies,
Inc., a physician practice management company, in the capacity of Special
Projects. From September 1996 to August 1997, he was President of MedSynergies,
Inc. From September 1996 to December 1997, he was Of Counsel to the law firm of
Ungerman, Sweet & Brousseau. Prior to September 1996, he practiced law as a
shareholder of Ungerman & Ungerman, P.C. and its predecessors for 28 years in
the areas of business matters, commercial finance and mediation. Mr. Ungerman
received his Juris Doctor degree from Southern Methodist University. He was
elected a Director and Chairman of the Board of Directors of Pizza Inn in
September 1990.
Bobby L. Clairday is an Area Developer of Pizza Inn restaurants and he is
President, a Director and sole shareholder of Clairday Food Services, Inc., a
Pizza Inn franchisee operating Pizza Inn restaurants in Arkansas. Mr. Clairday
is also sole shareholder of Advance Food Services, Inc., a franchisee operating
Pizza Inn restaurants in Arkansas. From 1990 until his election as a Director
of the Company in January 1993, Mr. Clairday was an ex-officio member of the
Board of Directors, serving as a representative of our franchisees. He has
served as the President of the Pizza Inn Franchisee Association and as a member
of various committees
and associations affiliated with the Pizza Inn restaurant system. Mr. Clairday
has been a franchisee of the Company for over twenty years.
Ronald W. Parker was elected President of the Company in July 2000. Mr.
Parker joined the Company in October 1992 and was elected Executive Vice
President, Chief Operating Officer and a Director in January 1993. From October
1989 to September 1992, he was Executive Vice President and General Manager of
the Bonanza restaurant division of Metromedia Steakhouses, Inc. and its
predecessor Metsa, Inc. From 1983 to 1989, Mr. Parker served in several
executive positions for USACafes, the franchisor of the Bonanza restaurant
chain.
Ramon D. Phillips is the former Chairman of the Board, President and Chief
Executive Officer of Hallmark Financial Services, Inc., a financial services
company. He served as President and Chief Executive Officer of Hallmark from
1989 through 2000, and as Chairman from 1989 through August 2001. He continues
to serve as a Board member. Prior to Hallmark, Mr. Phillips had over fifteen
years experience in the franchise restaurant industry, serving in an executive
position with Kentucky Fried Chicken (1969-1974) and Pizza Inn, Inc.
(1974-1989).
Butler E. Powell is Vice President of Business Banking with Hibernia
National Bank in Metairie, Louisiana. He has served in various capacities with
the bank and its predecessors since 1983. He graduated from Loyola University
in New Orleans with BBA and MBA degrees and spent 3 1/2 years with the national
accounting firm, Ernst and Ernst, before entering the banking industry. Mr.
Powell was former President and a Director of the New Orleans Athletic Club and
served on the Foundation Board of East Jefferson Hospital. He was elected a
Director of Pizza Inn in January 1998.
C. Jeffrey Rogers is Chief Executive Officer of the Company. He was
appointed President of the Company's predecessor in February 1990 and he became
President, Chief Executive Officer and a Director of the Company in September
1990 pursuant to the terms of the Company's recapitalization plan. From 1983 to
1989, Mr. Rogers was President, Chief Executive Officer and a Director of
USACafes General Partner, Inc., the general partner of the limited partnership
that owned the Bonanza family restaurant system and franchised approximately 650
Bonanza restaurants, and its predecessor USACafes. Mr. Rogers was elected Vice
Chairman of the Board of Directors of the Company in January 1994.
F. Jay Taylor is an arbitrator in Ruston, Louisiana who is affiliated with
the American Arbitration Association and the Federal Mediation and Conciliation
Service. He formerly served as a Director of USACafes, Earth Resources and Mid
South Railroad. He was elected a director of First Guaranty Bank in 2001. Dr.
Taylor, who received his Ph.D. from Tulane University, served as President of
Louisiana Tech University from 1962 to 1987 and currently serves as its
President Emeritus. Mr. Taylor was elected a Director of the Company in 1994.
BIOGRAPHIES OF NON-DIRECTOR OFFICERS
B. Keith Clark was elected Senior Vice President in June 2000. He joined
the Company in February 1997 and was elected General Counsel and Secretary of
the Company in March 1997. From June 1994 through February 1997, he was
Assistant General Counsel and Assistant Secretary of American Eagle Group, Inc.,
a property and casualty insurance holding company. From January 1990 through May
1994, Mr. Clark was a corporate associate in the Dallas office of Akin, Gump,
Strauss, Hauer & Feld, L.L.P., a diversified international law firm.
Michael L. Iglesias was elected Vice President of Franchise Development in May
2001. From May 1996 through May 2001, he was Director of Franchise Development
for the Company. Prior to joining the Company, Mr. Iglesias was an Area Sales
Representative for TCBY Systems, Inc.
Ward T. Olgreen was elected Senior Vice President of Concept Development in July
2000. He was appointed Vice President of Concept Development in February 1999.
He joined the Company in September 1991 and served in a variety of operational
positions until his appointment in January 1995 as Vice President of
International Operations and Brand R& D. Mr. Olgreen was a Branch Manager for
GCS Service, Inc., a restaurant equipment service provider, from June 1986
through July 1991.
William R. Miniat was appointed Vice President of Customer Sales and
Service - Norco Division in February 2000. He joined the Company in January
1995 and in September 1996 he was appointed Director of Sales for Norco. Prior
to joining the Company, he was a National Sales Manager for Western Merchandise
from 1992 to 1995.
Shawn M. Preator was elected Vice President in June 2000. He was elected
Controller, Treasurer and Assistant Secretary in April 1999. Mr. Preator had
been Assistant Controller for the Company since July 1998. Prior to joining the
Company, Mr. Preator was a Senior Financial Analyst at LSG/Sky Chefs, an
international airline caterer, from September 1996 to July 1998. Prior to
September 1996, Mr. Preator worked for the accounting firm Ernst & Young LLP in
its audit department.
Brian L. Waters was appointed Vice President of Purchasing - Norco Division in
September 2000. He joined the Company in August 1996 as Director of Purchasing.
Prior to joining the Company, Mr. Waters was Senior Purchasing Manager for Fast
Food Merchandisers from 1993 to 1996.
Susan A. Milliman was appointed Vice President of Recruiting and Employee
Services in July 2001. Ms. Milliman had been Director of Human Resources for the
Company since 1996. Prior to joining the Company, Ms. Milliman was a Human
Resources Generalist for Claim Services Resource Group.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of October 1, 2001,
with respect to the beneficial ownership of Common Stock by: (a) each person
known to be a beneficial owner of more than five percent of the outstanding
Common Stock; (b) each director, nominee director, and executive officer named
in the section entitled "Summary Compensation Table"; and (c) all directors and
executive officers as a group (14 persons). Except as otherwise indicated, each
of the persons named in the table below is believed by the Company to possess
sole voting and investment power with respect to the shares of Common Stock
beneficially owned by such person. Information as to the beneficial ownership
of Common Stock by directors and executive officers of the Company has been
furnished by the respective directors and executive officers.
Name Shares Percent
and Address of Beneficially Of Class
5% Beneficial Owner Owned
------------------- --------- -------
C. Jeffrey Rogers (a)
3551 Plano Parkway
The Colony, Texas 75056 3,981,790 36.50%
Ronald W. Parker (a)
3551 Plano Parkway
The Colony, TX 75056 1,449,049 13.45%
Butler E. Powell 16,000 less than 1%
Bobby L. Clairday (a) (b) 68,300 less than 1%
Ramon D. Phillips (a) (c) 60,543 less than 1%
Steven A. Ungerman (a) (d) 45,849 less than 1%
F. Jay Taylor 20,000 less than 1%
B. Keith Clark (a)(e) 93,479 less than 1%
Ward T. Olgreen (a) 129,468 1.28%
Shawn M. Preator (a) 16,822 less than 1%
All Directors and 5,997,550 55.55%
Executive Officers as a Group
(a) Includes vested options and options vesting within 60 days of October 1,
2001 under the Company's stock option plans, as follows: 822,500 shares for Mr.
Rogers; 686,000 shares for Mr. Parker; 20,000 shares for Mr. Clairday; 22,650
shares for Mr. Phillips; 8,500 shares for Mr. Powell; 10,000 shares for Mr.
Taylor; 15,283 shares for Mr. Ungerman; 76,500 shares for Mr. Clark; 61,500
shares for Mr. Olgreen; and 14,500 shares for Mr. Preator.
(b) Mr. Clairday shares voting and investment power for 18,200 shares with
his wife.
(c) Mr. Phillips shares voting and investment power for 5,333 shares with
the other shareholders of Wholesale Software International, Inc.
(d) Mr. Ungerman shares voting and investment power for 12,283 shares with
his wife.
(e) Includes 4,000 shares held by K&A Clark Family Partnership, L.P.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board has established Audit, Compensation, Executive, Finance and Stock
Award Plan Committees. The Company does not have a Nominating Committee. The
Audit Committee selects independent auditors and reviews audit results. The
Compensation Committee reviews and approves remuneration for officers of the
Company. The Finance Committee reviews and oversees the Company's capital
structure and operating results. The Executive Committee considers business as
directed by the Chairman of the Board. The Stock Award Plan Committee
administers the 1993 Stock Award Plan and the 1993 Outside Directors Stock Award
Plan.
As of October 1, 2001, Messrs. Phillips, Powell, Taylor and Ungerman serve
on the Audit Committee; Messrs. Powell, Taylor and Ungerman serve on the
Compensation Committee; Messrs. Powell, Ungerman and Clairday serve on the Stock
Award Plan Committee; Messrs. Phillips, Rogers and Ungerman serve on the
Executive Committee; and Messrs. Parker, Phillips, Powell and Taylor serve on
the Finance Committee.
During fiscal year 2001, the Board of Directors held four meetings. The Audit
Committee met three times, the Compensation Committee met once, the Executive
Committee met nine times and the Finance Committee met four times. In addition,
the Board of Directors and the Compensation and Stock Award Plan Committees took
several actions by unanimous written consent in lieu of meetings. Each of the
directors attended at least three-fourths of the total number of meetings held
by the Board and the committees on which he served.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board is responsible for providing independent
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee is composed of four independent directors and acts under a
written charter adopted and approved by the Board of Directors on May 23, 2000.
Each of the members of the Audit Committee is independent as defined by the
National Association of Securities Dealters' listing standards. A copy of the
Audit Committee Charter has been previously filed.
The responsibilities of the Audit Committee include reviewing the financial
reports and other financial information provided by the Company to any
governmental body or the public; the Company systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Company auditing, accounting and financial
reporting processes generally. Consistent with this function, the Audit
Committee encourages continuous improvement of, and adherence to, the Company's
policies, procedures and practices at all levels. The Audit Committee's primary
duties and responsibilities are to:
- serve as an independent and objective party to monitor the Company
financial reporting process and internal control system,
- review and appraise the audit efforts of the Company's independent
accountants, and
- provide an open avenue of communication among the independent accountants,
financial and senior management, and the Board of Directors.
The Committee reviewed and discussed the Company's audited financial
statements with management. The Committee also discussed with the independent
accountants the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees). The Company's
independent accountants also provided to the Committee the written disclosures
and the letter required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
The Audit Committee is responsible for recommending to the Board that the
Company's financial statements be included in the Company's annual report.
Based on the discussions with the independent accountants concerning the audit,
the financial statement review, and other such matters deemed relevant and
appropriate by the Audit Committee, the Audit Committee recommended to the Board
that the June 24, 2001 financial statements be included in the Company's 2001
Annual Report on Form 10-K.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
Dr. F. Jay Taylor, Chairman
Ramon D. Phillips
Steve Ungerman
Butler Powell
SUMMARY COMPENSATION TABLE
The following table sets forth the annual compensation of the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company for the fiscal years ended June 24, 2001, June 25, 2000 and June
27, 1999 (designated as years 2001, 2000 and 1999).
Annual Compensation
-------------------
Long-Term
Compensation
Awards
-----------------
Securities Under-
Name Other Annual lying Options
(and Principal Position) Year Salary ($) Bonus ($) Compensation ($) (a) (# of shares)
------------------------ ----------------- --------------- ---------- --------------------- -------------
C. Jeffrey Rogers. . . . 2001 $ 619,424 $ 475,000 $ 263,233 62,500
(Chief Executive . . . . 2000 $ 590,144 $ 550,000 $ 262,882 0
Officer) . . . . . . . . 1999 $ 562,333 $ 600,000 $ 252,670 180,000
Ronald W. Parker . . . . 2001 $ 473,892 $ 275,000 $ 203,945 62,500
(President). . . . . . . 2000 $ 445,379 $ 262,500 $ 210,584 0
1999 $ 424,871 $ 235,000 $ 231,658 180,000
B. Keith Clark (Senior . 2001 $ 148,538 $ 22,000 $ 0 40,000
Vice President and . . . 2000 $ 129,615 $ 17,000 $ 0 5,000
General Counsel) . . . . 1999 $ 120,000 $ 5,000 $ 0 16,500
Ward T. Olgreen. . . . . 2001 $ 134,615 $ 17,250 $ 0 37,500
(Senior Vice President . 2000 $ 119,250 $ 8,000 $ 0 2,500
of Concept . . . . . . . 1999 $ 98,077 $ 5,000 $ 0 16,500
Development)
Shawn M. Preator . . . . 2001 $ 92,737 $ 22,500 $ 0 36,000
(Vice President of . . . 2000 $ 75,153 $ 5,000 $ 0 5,000
Finance and Treasurer)(b) 1999 $ 49,827 $ 0 $ 0 3,500
(a) Includes: for Mr. Rogers, life insurance benefits (which includes the
payment of related taxes) of $86,489 in 2001 and 2000, and $76,702 in 1999,
supplemental retirement benefits (which includes the payment of related taxes)
of $43,860 in 2001, 2000, and 1999, and life and disability insurance benefits
(which includes the payment of related taxes) of $43,860 in 2001, 2000 and 1999;
for Mr. Parker, life insurance benefits (which includes the payment of related
taxes) of $77,546 in 2001, $74,037 in 2000 and $72,139 in 1999, supplemental
retirement benefits (which includes the payment of related taxes) of $43,860 in
2001, 2000, and 1999, and life and disability insurance benefits (which includes
the payment of related taxes) of $43,860 in 2001, 2000, and 1999.
(b) Includes compensation for Mr. Preator from his employment date of July
27, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding stock options
exercised during fiscal year 2001 and unexercised stock options held at the end
of fiscal year 2001 by the Chief Executive Officer and the other four most
highly compensated executive officers of the Company. The closing bid price for
the Company's Common Stock, as reported by the National Association of
Securities Dealers Automated Quotation System, was $2.17 on June 22, 2001, the
last trading day of the Company's fiscal year.
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year End Fiscal Year
Acquired on Value Realized (Exercisable/ End (Exercisable/
Name Exercise (#) ($) Unexercisable) (#) Unexercisable)
----------------- ------------ ---------------- ------------------ -------------------
C. Jeffrey Rogers -- -- 760,000 (e) $0
62,500 (u) $ 0
Ronald W. Parker. 200,000 212,500 623,500 (e) $0
62,500 (u) $ 0
B. Keith Clark. . -- -- 55,500 (e) $0
51,000 (u) $ 5,100
Ward. T. Olgreen. -- -- 45,500 (e) $ 0
46,000 (u) $ 5,100
Shawn M. Preator. -- -- 3,500 (e) $ 0
41,000 (u) $ 5,100
(e) Denotes exercisable options.
(u) Denotes unexercisable options.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
during fiscal year 2001, pursuant to the Company's 1993 Stock Award Plan, to the
Chief Executive Officer and the other four most highly compensated executive
officer
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term
----------------- -----------------------------
% of Total Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year ($/Share) Date 5% 10%
----------------- ----------------------------- ------------ --------- ----------- ---------- --------
C. Jeffrey Rogers 62,500 (a) 14.43 $3.5625 7/3/06 $90,643 $211,238
Ronald W. Parker 62,500 (a) 14.43 $3.5625 7/3/06 $90,643 $211,238
B. Keith Clark 10,000 (a) 9.24 $3.5625 7/3/06 $14,503 $ 33,798
30,000 (b) 2.0000 5/3/07 $24,426 $ 56,923
Ward T. Olgreen 7,500 (a) 8.66 $3.5625 7/3/06 $10,877 $25,349
30,000 (b) 2.0000 5/3/07 $24,426 $56,923
Shawn M. Preator 6,000 (a) 8.31 $3.5625 7/3/06 $ 8,702 $ 20,279
30,000 (b) 2.0000 5/3/07 $24,426 $56,923
(a) All of such options were granted on July 3, 2000 and become exercisable
on July 3, 2001.
(b) All of such options were granted on May 3, 2001 and become exercisable
on May 3, 2002.
COMPENSATION COMMITTEE AND STOCK AWARD PLAN COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of three
independent, non-employee directors. The Compensation Committee is responsible
for establishing the level of compensation of the executive officers of the
Company. The Stock Award Plan Committee, which administers the 1993 Stock Award
Plan, is also composed of three independent, non-employee directors.
In its administration and periodic review of executive compensation, the
Compensation Committee believes in aligning the interests of the executive
officers with those of the Company's shareholders. To accomplish this, the
Compensation Committee seeks to structure and maintain a compensation program
that is directly and materially linked to operating performance and enhancement
of shareholder value. This has been effectively accomplished in the past by
weighting the compensation of most executive officers in favor of equity
ownership incentives and bonuses paid on the basis of performance.
The Company intends for all compensation paid to its executives to be fully
deductible under federal income tax laws. Recently adopted changes to the
Internal Revenue Code impose certain limitations on compensation in excess of $1
million per year paid to executives. The Compensation Committee believes that
performance based bonuses and stock options granted to its executive officers
will continue to be fully deductible.
CHIEF EXECUTIVE OFFICER
The salary and bonus of C. Jeffrey Rogers, Chief Executive Officer of the
Company, is set forth in his most recent Employment Agreement, effective as of
July 1, 1999, as amended on April 20, 2001. The agreement provides for an
annual base salary (on a cash basis) in fiscal year 2002 of $650,395, increasing
by 5% on each anniversary date of the agreement.
In reviewing Mr. Rogers' agreement, the Compensation Committee found his
base salary and bonus to be in line with the overall leadership he has provided
to the employees and to the franchise community. The bonus program established
in Mr. Rogers' agreement is based on new store openings, pre-tax net income
growth, and pre-tax operating cash flow. Termination provisions were found to
be industry competitive and in line with historical performance and expected
future contributions as well as helping to ensure his continued leadership. See
the section entitled "Executive Employment Contracts."
EXECUTIVE OFFICERS
Salaries of the executive officers, excluding Mr. Rogers, are reviewed
annually and adjusted based on competitive practices, changes in level of
responsibilities and, in certain cases, individual performance measured against
goals. The Compensation Committee strongly believes that maintaining a
competitive salary structure is in the best interest of shareholders. It
believes the Company's long-term success in its marketplace is best achieved
through recruitment and retention of high caliber executives who are among the
most skilled and talented in the industry.
Bonus targets for the four most highly paid executive officers, other than
the Chief Executive Officer, are set annually. Mr. Parker's 2001 bonus was
based on individual performance and targets related to the Company's
profitability, cash flow and debt repayments. The 2001 bonuses for Mr. Clark,
Mr. Olgreen, and Mr. Preator were based on individual performance and targets
related to profitability of the Company for the fiscal year.
STOCK OPTIONS
The Compensation Committee and Stock Award Plan Committee believe that
equity ownership motivates officers and employees to provide effective
leadership that contributes to the Company's long-term financial success as
measured by appreciation in its stock price. The Company established the 1993
Stock Award Plan for the purpose of aligning employee and shareholder interests.
Under this plan, stock options have been granted in fiscal year 2001 to certain
executive officers, as well as other employees, based upon their relative
positions and responsibilities, as well as historical and expected contributions
to Company growth.
Submitted by the:
COMPENSATION COMMITTEE STOCK AWARD PLAN COMMITTEE
F. Jay Taylor Bobby L. Clairday
Steve A. Ungerman Butler E. Powell
Butler E. Powell Steve A. Ungerman
EXECUTIVE EMPLOYMENT CONTRACTS
C. Jeffrey Rogers and the Company entered into an Employment Agreement,
executed October 1, 1999 and effective as of July 1, 1999, and an Amendment to
the Employment Agreement executed April 20, 2001, for a term that currently
extends through June 30, 2004. The agreement provides for an annual base salary
(on a cash basis) in fiscal year 2002 of $650,395, increasing by five percent on
each anniversary date of the agreement.
Under the agreement, Mr. Rogers is also entitled to the following cash
bonuses, based on performance: (a) $100,000 payable at the end of each fiscal
year, if the Company's operating results report pre-tax income growth or
earnings per share growth of at least 10% more than the preceding fiscal year;
(b) $25,000 for each quarter in which the Company's distribution division meets
certain sales targets; (c) $25,000 for each quarter in which the Company's
general and administrative expenses do not exceed 8.5% of total revenues; (d)
$3,000 per new restaurant opened in each half of the Company's fiscal year, but
only if 18 new restaurants are opened in that half of the year or 36 new
restaurants are opened during the entire year; and (e) a bonus of between
$120,000 and $200,000 payable at the end of each fiscal year based on the
Company's EBITDA cash flow for the fiscal year.
Under the agreement, Mr. Rogers also receives a $50,000 annual allowance to
purchase life and disability insurance and a $10,000 annual allowance to
maintain secondary health, dental and other insurance. As compensation for the
use of his personal automobile on Company business, Mr. Rogers received a
monthly automobile allowance, plus reimbursement of gasoline and maintenance
expenses for the first seven months of the fiscal year. For the last five
months, the Company provided Mr. Rogers with a leased vehicle. The payments by
the Company related to this vehicle expense totaled $20,995 for the fiscal year.
Ronald W. Parker and the Company entered into an Employment Agreement,
executed October 1, 1999 and effective as of July 1, 1999, for a term that
currently extends through June 30, 2004. B. Keith Clark and Ward T. Olgreen each
entered into an Employment Agreement with the Company on October 17, 2001, with
each such agreement having a term that currently extends through December 31,
2002. Each of the agreements provides that the executive's compensation will be
determined each year by the Compensation Committee.
Mr. Rogers, Mr. Parker, Mr. Clark or Mr. Olgreen may terminate their
respective agreements at any time within six months after a "change in control"
of the Company occurs or within twelve months under certain circumstances after
a change in control of the Company occurs. Change in control is defined as: (a)
a transfer of substantially all of the assets of the Company to any person,
group or entity other than a person, group or entity that is controlled by the
executive; (b) the Company is merged with or into another corporation and the
stockholders of the Company prior to such merger own less than 50% of the voting
stock of the Company or other surviving corporation after the merger; (c) an
unapproved change in the majority of the Company's Board of Directors; or (d) a
person, entity or group (other than (i) the Company or (ii) an employee benefit
plan sponsored by the Company) acquires 50% or more of the voting stock of the
Company. If the Company terminates Mr. Rogers' employment without cause, or if
Mr. Rogers terminates his employment upon a "change in control," he will be
entitled to a lump sum payment equal to his base salary for the remainder of the
term of the agreement plus two times the maximum amounts of certain annual
bonuses as provided in the agreement. If the Company terminates Mr. Parker's
employment without cause, or if Mr. Parker terminates his employment upon a
"change in control," he will be entitled to a lump sum payment equal to three
times (i) his highest annual salary over the last three years plus (ii) the
highest bonus and other cash compensation received by Mr. Parker during the last
three years. If the Company terminates Mr. Clark's employment without cause, or
if Mr. Clark terminates his employment upon a "change of control", he will be
entitled to a lump sum payment equal to two times the base amount of his annual
compensation, as calculated according to Section 280G of the Internal Revenue
Code. If the Company terminates Mr. Olgreen's employment without cause, or if
Mr. Olgreen terminates his employment upon a "change of control", he will be
entitled to a lump sum payment equal to two times the base amount of his annual
compensation, as calculated according to Section 280G of the Internal Revenue
Code. Each agreement includes a noncompetition covenant that would apply for a
stated number of years after termination of employment. The number of years for
the non-competition covenant is three years for Mr. Rogers and Mr. Parker and
two years for Mr. Clark and Mr. Olgreen.
COMPENSATION OF DIRECTORS
A director who is an employee of the Company is not compensated for service
as a member of the Board of Directors or any Committee of the Board. Outside
directors receive an annual fee of $17,000 plus meeting fees equal to $1,000 per
Board meeting and $250 per Committee meeting attended. The Chairman of the
Board receives an additional $6,000 annual fee for serving in that capacity.
Directors are also reimbursed for Board related expenses.
Under the 1993 Outside Directors Stock Award Plan each elected outside
director is eligible to receive, as of the first day of the Company's fiscal
year, options for Common Stock equal to twice the number of shares of Common
Stock purchased during the preceding fiscal year or purchases by exercise of
previously granted options during the first ten days of the current fiscal year.
On the first day of the first fiscal year immediately following the day on which
an outside director first becomes eligible to participate in this plan, that
outside director shall receive an option to acquire one share of Common Stock
for each share of Common Stock owned by such director on this first day of the
fiscal year. No outside director shall be entitled to options for more than
20,000 shares per fiscal year. Stock options granted under the plan have an
exercise price equal to the market price of the Common Stock on the date of
grant and are first exercisable one year after grant.
Since the beginning of fiscal year 2001, stock options were granted to
outside directors pursuant to such plan as follows: on June 26, 2000, options
for 17,160 shares (at $3.500) to Mr. Phillips, and 4,000 shares (at $3.500) for
Mr. Powell.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
For fiscal year 2001, through April 19, 2001, the members of the
Compensation Committee were Messrs. Powell, Phillips, and Ungerman. After that
date, the Compensation Committee is composed of Messrs. Powell, Taylor, and
Ungerman. During fiscal year 2001, through May 2001, C. Jeffrey Rogers served on
the Board of Directors and the Compensation Committee of Hallmark Financial
Services, Inc., of which Mr. Phillips was Chairman of the Board of Directors
through August 2001. Mr. Rogers did not stand for re-election at Hallmark's
annual meeting in May 2001. Prior to 1990, Mr. Phillips served as a director and
officer of two predecessors of the Company. See "Biographies of Nominee
Directors and Continuing Directors."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 6, 1999, the Company loaned C. Jeffrey Rogers, the Company's Chief
Executive Officer, approximately $1.95 million to acquire 700,000 shares of the
Company's Common Stock through the exercise of vested stock options previously
granted to him by the Company. The interest rate on the loan is the same
floating interest rate the Company pays on its credit facility with Wells Fargo
(Texas), N. A. ("Wells Fargo"). As collateral for the loan, Mr. Rogers granted
the Company a second lien on 2,749,000 shares of the Company's Common Stock and
certain real property. The Company has agreed to subordinate its loan to an
existing personal loan made by Wells Fargo to Mr. Rogers. The Wells Fargo loan
is secured by a first lien on the collateral pledged to the Company. The
principal amount outstanding at all times during the fiscal year was
approximately $1,949,000.
On October 6, 1999, the Company loaned Ronald W. Parker, the Company's President
and Chief Operating Officer, approximately $560,000 to acquire 200,000 shares of
the Company's Common Stock through the exercise of vested stock options
previously granted to him by the Company. On July 7, 2000, the Company loaned
Mr. Parker approximately $302,000 to acquire an additional 200,000 shares of the
Company's Common Stock through the exercise of vested stock options previously
granted to him by the Company. The interest rate on the loans is the same
floating interest rate the Company pays on its credit facility with Wells Fargo.
As collateral for the loans, Mr. Parker granted the Company (i) a first lien on
100,000 previously purchased shares of the Company's Common Stock and certain
real property, and (ii) a second lien in certain additional real property. After
the July 7 loan, the principal amount outstanding was $862,000. On October 30,
2000, Mr. Parker paid the Company approximately $165,000 of the principal amount
of the loans, leaving a current principal loan balance at fiscal year end of
approximately $696,000.
The Board of Directors approved each loan, with the specific terms and
collateral being approved by the Compensation Committee.
Bobby L. Clairday is President and sole shareholder of Clairday Food
Services, Inc. and is sole shareholder of Advance Food Services, Inc., both of
which are franchisees of the Company. Mr. Clairday also holds area development
rights in his own name. Mr. Clairday currently operates 13 restaurants in
Arkansas, either individually or through the corporations noted above. As
franchisees, the two corporations purchase a majority of their food and other
supplies from the Company's distribution division. In fiscal year 2001,
purchases by these franchisees made up 6% of the Company's food and supply
sales, and royalties, license fees and area development fees from Mr. Clairday
and such franchisees made up 3% of the Company's franchise revenues.
Ramon D. Phillips is a Vice President, board member and shareholder of
Wholesale Software International, Inc., which is a franchisee operating one
Pizza Inn restaurant.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and the persons who own more than ten percent
of the Company's Common Stock to file initial reports of ownership of Common
Stock and reports of changes of ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. and to
furnish the Company with copies of such reports. The Company believes that,
during the preceding fiscal year, all of the Company's executive officers,
directors and holders of more than 10% of its Common Stock complied with all
Section 16(a) filing requirements.
INDEPENDENT AUDITORS
The Audit Committee has selected PricewaterhouseCoopers LLP certified
public accountants as the independent auditors of the Company for fiscal year
2002. A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting, will be available to respond to appropriate questions, and will
have an opportunity to make a statement.
AUDIT FEES. The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of the Company's annual financial
statements for the year ended June 24, 2001 and the reviews of the financial
statements included in the Company's Forms 10-Q for that year were $88,750.
ALL OTHER FEES. All other fees billed by PricewaterhouseCoopers LLP for fiscal
year 2001 totaled $17,850, including audit-related services of $14,250 and
non-audit services of $3,600. Non-audit services generally include fees for cost
segregation analysis services in connection with the relocation of the Company's
corporate office, warehouse and training facilities and review of the Company's
Franchise Offering Circular.
In considering and authorizing these payments to PricewaterhouseCoopers LLP for
services unrelated to performance of the audit of the Company's financial
statements, the Audit Committee has determined that the cost segregation
analysis services undertaken by PricewaterhouseCoopers LLP are not inconsistent
with its performance of the audit and financial statement review functions and
are compatible with maintaining its independence.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative annual total shareholder return
(change in share price plus reinvestment of any dividends) on the Company's
Common Stock versus two indexes for the past five fiscal years. The graph
assumes $100 was invested on the last trading day of the fiscal year ending June
28, 1996. Prior to the first quarter of fiscal year 1998 and subsequent to the
second quarter of fiscal year 2000, the Company did not pay cash dividends on
its Common Stock during the applicable period. The Dow Jones Equity Market
Index is a published broad equity market index. The Dow Jones Entertainment and
Leisure Restaurant Index is compiled by Dow Jones and Company, Inc., and is
comprised of seven public companies, weighted for the market capitalization of
each company, engaged in restaurant or related businesses (CKE Restaurants,
Inc., Brinker International, Inc., Cracker Barrel Old Country Store, Inc.,
Darden Restaurants, Inc., McDonald's Corporation, Tricon Global Restaurants,
Inc., and Wendy's International, Inc.).
PIZZA INN INC NEW
Cumulative Total Return
6/28/96 6/29/97 6/28/98 6/27/99 6/25/00 6/24/01
PIZZA INN, INC.. . . . 100.00 88.24 127.70 89.30 96.35 61.91
DOW JONES TOTAL MARKET 100.00 131.22 168.27 195.18 220.60 188.35
DOW JONES RESTAURANTS. 100.00 99.30 128.04 142.66 112.78 115.68
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal at the Annual Meeting of
Shareholders tentatively scheduled for December 11, 2002, the shareholder must
deliver his or her proposal to the Company at its principal executive offices no
later than July 8, 2002, in such form as required under rules issued by the
Securities and Exchange Commission, in order to have that proposal included in
the proxy materials of the Company for such Annual Meeting of Shareholders.
If a shareholder wishes to present a proposal at the 2002 Annual Meeting of
Shareholders, but does not wish to include the proposal in the proxy materials
of the Company for such Annual Meeting of Shareholders, the shareholder must
notify the Company in writing of his or her intent to make such presentation no
later than September 24, 2002 or the Company shall have the right to exercise
its discretionary voting authority when such proposal is presented at the Annual
Meeting of Shareholders, without including any discussion of that proposal in
the proxy materials for the Annual Meeting.
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
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
directors, officers and employees of the Company by personal interview,
telephone or telefax. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of stock held of record by such persons, and
the Company may reimburse them for reasonable out-of-pocket expenses of such
solicitation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K EXCLUDING EXHIBITS,
DATED SEPTEMBER 19, 2001, IS BEING FURNISHED TO SHAREHOLDERS WITH THIS PROXY
STATEMENT. COPIES OF SUCH EXHIBITS WILL BE FURNISHED UPON WRITTEN REQUEST AND
UPON REIMBURSEMENT OF THE COMPANY'S REASONABLE EXPENSES FOR FURNISHING SUCH
EXHIBITS. REQUESTS SHOULD BE ADDRESSED TO PIZZA INN, INC., 3551 PLANO PARKWAY,
THE COLONY, TEXAS 75056, ATTENTION: CORPORATE SECRETARY.
This Proxy, when properly executed, will be voted by the Proxies in the manner
designated below. If this Proxy is returned signed but without a clear voting
designation, the Proxies will vote FOR Item 1.
Please mark Your votes as indicated
IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
Item 1. ELECTION OF CLASS II DIRECTORS. Nominees: C. Jeffrey Rogers, F.
Jay Taylor, Steve A. Ungerman
WITHHELD
FOR FOR ALL WITHHELD FOR: (Write that nominee's name in the space
provided below).
[ ] [ ]
If you plan to attend the Annual
Meeting, please mark the WILL
ATTEND block.
WILL
ATTEND
[ ]
Date: , 2001
Signature
Signature if held jointly
NOTE: Please sign as name appears hereon.
Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give
full title as such.
FOLD AND DETACH HERE
PROXY
(1) THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PIZZA INN, INC.
3551 PLANO PARKWAY
THE COLONY, TEXAS 75056
ANNUAL MEETING OF SHAREHOLDERS ON DECEMBER 19, 2001
The undersigned, revoking all proxies heretofore given, hereby appoints C.
Jeffrey Rogers and B. Keith Clark, or either of them, as proxies of the
undersigned, with full power of substitution and resubstitution, to vote on
behalf of the undersigned the shares of Pizza Inn, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
at 10:00 a.m., Dallas time, on Wednesday, December 19, 2001, at the Company's
corporate offices, 3551 Plano Parkway, The Colony, Texas 75056, and at all
adjournments thereof, as fully as the undersigned would be entitled to vote if
personally present, as specified on the reverse side of this card and on such
other matters as may properly come before the meeting or any adjournments
thereof. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.