SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
X Filed by Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PIZZA INN, INC.
(Name of Registrant as Specified In Its Charter)
PIZZA INN, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2)
$500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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.
PIZZA INN, INC.
5050 QUORUM DRIVE, SUITE 500
DALLAS, TEXAS 75240
(214) 701-9955
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 24, 1996
To our Shareholders:
The Annual Meeting of Shareholders of Pizza Inn, Inc. (the
"Company") will be held at The Westin Hotel (Galleria), 13340
Dallas Parkway, Dallas, Texas 75240, on Wednesday, January 24,
1996, 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
November 27, 1995 are entitled to notice of, and to vote at, this
meeting and any adjournments thereof.
Sincerely,
Jeff Rogers
President and Chief Executive Officer
December 6, 1995
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.
5050 QUORUM DRIVE, SUITE 500
DALLAS, TEXAS 75240
(214) 701-9955
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 24, 1996
The Board of Directors of Pizza Inn, Inc. (the "Company"), a
Missouri corporation, is soliciting proxies to be voted at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at
The Westin Hotel (Galleria), 13340 Dallas Parkway, Dallas, Texas
75240,on Wednesday, January 24, 1996, at 10:00 a.m., Dallas time,
and at any adjournments thereof. This Proxy Statement was first
mailed to the Company's shareholders on or about December 6, 1995.
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 the Company, c/o
First Interstate Bank of Texas, N.A., Proxy Department, New York,
New York 10203-0873, 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 November 27, 1995. At the close of
business on that date, the Company had issued and outstanding
13,329,801 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. Brokers' "non-votes" are treated
the same as votes withheld or abstained.
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. 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.
ELECTION OF DIRECTORS
The Company's 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,
1995, 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 January) at which the term of each
director will expire (assuming the election of each nominee).
Director Term
Nominee Directors Age Class Since Expires
C. Jeffrey Rogers 48 II 1990 1998
F. Jay Taylor 72 II 1994 1998
Steve A. Ungerman 51 II 1990 1998
Continuing Directors
Bobby L. Clairday 52 I 1990 1997
Don G. Navarro 51 I 1990 1997
Ronald W. Parker 45 I 1993 1997
Ramon D. Phillips 62 I 1990 1997
EXECUTIVE OFFICERS
The following table sets forth certain information, as of
October 1, 1995, regarding the Company's executive officers:
Executive
Officer
Name Age Position Since
C. Jeffrey Rogers 48 President, Vice 1990
Chairman and
Chief Executive Officer
Ronald W. Parker 45 Executive Vice 1992
President and
Chief Operating Officer
Jack M. Whitehurst 47 Vice President of 1988
International Development
Robert L. Soria 40 Vice President of 1993
Franchise Operations
Ward T. Olgreen 36 Vice President of 1995
International Sales
& Brand R & D
Amy E. Manning 32 Controller and Treasurer 1991
Donald W. Zentmeyer 43 General Counsel and 1993
Secretary
BIOGRAPHIES OF NOMINEE DIRECTORS AND CONTINUING DIRECTORS
Steve A. Ungerman is a Dallas, Texas attorney experienced in
business matters, commercial finance and mediation for more than 25
years. He is a shareholder of Ungerman & Ungerman, P.C. Mr.
Ungerman received his Juris Doctor degree from Southern Methodist
University. In September 1990, Mr. Ungerman was elected Chairman
of the Board of Directors of the Company.
Bobby L. Clairday is President of Clairday Food Services, Inc.
and a shareholder of Advance Food Services, Inc., which are Pizza
Inn franchisees operating restaurants in four states. From 1990
until his election as a director in January 1993, Mr. Clairday
served as an ex-officio member of the Board of Directors, as a
representative of the Company's 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.
Don G. Navarro is President and CEO of Don Navarro and
Associates, LLC, providing strategic advisory services, especially
the development and implementation of business strategies, for
individual clients and for public and private firms. Mr. Navarro
is also a director of IMCO Recycling, Inc., Southeastern Paralegal
Institute and NBIB, Inc. Mr. Navarro has been a director since
September 1990.
Ronald W. Parker is Executive Vice President and Chief
Operating Officer of the Company. He joined the Company in October
1992 and was elected a director in January 1993. From February 1990
to September 1992, he was a Vice President of Metromedia Steakhouses, Inc.
and Executive Vice President and General Manager of its Bonanza restaurant
division. From November 1983 to February 1990, Mr. Parker served as
Executive Vice President and General Manager of Metsa, Inc., a
predecessor company to Metromedia Steakhouses, Inc., and in several
executive positions for USACafes.
Ramon D. Phillips is the Chief Executive Officer and Chairman
of the Board of Hallmark Financial Services, Inc., a financial
services company. From 1987 to May 1989, Mr. Phillips was a
director and Executive Vice President, responsible for
administrative matters, for Pantera's Corporation (a predecessor of
the Company). From 1974 through 1987, Mr. Phillips was employed by
Pizza Inn, Inc. (a Delaware corporation which was also a
predecessor of the Company) in various capacities. Mr. Phillips
was elected a director in September 1990.
C. Jeffrey Rogers became President of the predecessor
corporation named Pizza Inn, Inc. in February 1990. Pursuant to
the terms of the Company's recapitalization plan, Mr. Rogers became
President, Chief Executive Officer and a director of the Company in
September 1990. 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
1994, and was elected a director of Hallmark Financial Services,
Inc. in May 1995.
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 is a director and
Chairman of the Audit Committee of Michael's Stores, Inc. and a
director of the Illinois Central Railroad. He formerly served as
a director of USACafes, Earth Resources and Mid South Railroad.
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 in January 1994.
BIOGRAPHIES OF NON-DIRECTOR OFFICERS
Amy E. Manning joined the Company in April 1990. She was
elected Controller in January 1991 and Treasurer in January 1993.
From 1988 to 1990, she was an Accounting Manager with USACafes, the
franchisor of Bonanza restaurants. Prior to 1988, Ms. Manning was
an Accounting Manager with the Dondi Group/Vernon Savings & Loan
and an auditor with the public accounting firm of Deloitte &
Touche.
Ward T. Olgreen was elected Vice President of International
Operations and Brand R&D for the Company in January 1995. He
joined the Company in September 1991 as a Franchise Operations
Consultant. Mr. Olgreen was promoted to Senior Franchise
Operations Consultant in July 1992 and Director of Franchise
Operations in July 1993. Mr. Olgreen was a Branch Manager for GCS
Service, Inc., a restaurant equipment service provider, from June
1986 through July 1991 with responsibility for sales and service
administration.
Robert L. Soria was elected Vice President of Franchise
Operations for the Company in July 1993. He joined the Company in
May 1991 as a Regional Director and he was promoted to Director of
Franchise Services in September 1991. Mr. Soria was a Regional
Franchise Manager for Popeye's Fried Chicken from May 1989 through
May 1991. Prior to May 1989, Mr. Soria served in several positions
for USACafes with responsibility for restaurant and franchise
operations.
Jack M. Whitehurst has been Vice President of International
Development for the Company since December 1992. From 1990 to 1992
he was Vice President of Franchise Sales. From 1988 to 1990, he
was Vice President of Franchise Operations of the predecessor
corporation named Pizza Inn, Inc. From 1969 to 1988, Mr.
Whitehurst served in a variety of positions with the predecessor
Pizza Inn, Inc. with responsibility for training, restaurant
operations and franchise operations.
Donald W. Zentmeyer was elected General Counsel and Secretary
of the Company in August 1993. From May 1987 through August 1993,
he was Assistant General Counsel and Assistant Secretary of ShowBiz
Pizza Time, Inc., a company which franchises and operates
restaurants. From May 1987 through October 1988, he was also
Assistant General Counsel and Assistant Secretary for Integra - A
Hotel and Restaurant Company. Prior to May 1987, Mr. Zentmeyer was
Senior Counsel for Maxus Energy Corporation.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of
October 1, 1995, 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 (12 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
(and Address of Beneficially Percent
5% Beneficial Owner) Owned of Class
C. Jeffrey Rogers 3,239,868 24.2%
5050 Quorum Drive,
Suite 500
Dallas, Texas 75240
Ronald W. Parker (a) 290,798 2.2%
Jack M. Whitehurst (a) 171,441 1.3%
Bobby L. Clairday (a) 137,600 1.0%
Don G. Navarro (a) 102,000 less than 1%
Ramon D. Phillips (a) (b) 40,646 less than 1%
Robert L. Soria (a) 30,403 less than 1%
Steve A. Ungerman (c) 23,783 less than 1%
F. Jay Taylor 10,000 less than 1%
Donald W. Zentmeyer 6,711 less than 1%
All Directors and
Executive Officers
as a Group 4,129,586 30.8%
(a) Includes vested options under the Company's stock option
plans, as follows: 200,000 shares for Mr. Parker; 115,000
shares for Mr. Whitehurst; 30,000 shares for Mr. Clairday;
30,000 shares for Mr. Navarro; 20,323 shares for Mr. Phillips;
20,000 shares for Mr. Soria; 5,000 shares for Mr. Taylor; 8,500
shares for Mr. Ungerman.
(b) Mr. Phillips shares voting and investment power for 18,490
shares with the other shareholders of Wholesale Software
International, Inc.
(c) Mr. Ungerman shares voting and investment power for 1,000
shares with the other shareholders of Ungerman & Ungerman,
P.C.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board has established Audit, Compensation, Executive,
Finance and Stock Award Plan Committees. The Audit Committee
selects independent auditors and reviews audit results. The
Compensation Committee reviews and approves remuneration for
officers of the Company and administers the 1992 Stock Award Plan.
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, 1995, Messrs. Clairday, Phillips, Taylor and
Ungerman serve on the Audit Committee; Messrs. Navarro, Phillips
and Ungerman serve on the Compensation Committee; Messrs. Navarro,
Phillips, Rogers and Ungerman serve on the Executive Committee;
Messrs. Parker, Phillips and Taylor serve on the Finance Committee;
and Messrs. Navarro, Phillips and Ungerman serve on the Stock Award
Plan Committee.
During fiscal year 1995, the Board of Directors held four
meetings. The Audit Committee met three times, the Compensation Committee
met two times, the Executive Committee met eleven times and the Finance
Committee met four times. In addition, the Compensation Committee
and the Stock Award Plan Committee 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.
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
25, 1995, June 26, 1994, and June 27, 1993 (designated as years
1995, 1994 and 1993).
Annual Compensation Long Term
Compensation Awards
Other Annual Securities under
compensation lying options
Name Year Salary($) Bonus($) ($)(a) (# of Shares)
(and Principal
Position)
C. Jeffrey Rogers 1995 $462,711 $650,000 $153,267 1,400,000(c)shares
(Chief Executive 1994 441,727 500,00 228,928 350,000
Officer) 1993 414,615 500,000 48,222 - -
Ronald W. Parker 1995 $267,554 $230,000 $115,123 800,000(c)
(Chief Operating 1994 222,500 219,500 138,820(b) 200,000
Officer) 1993 158,173 92,500 45,875 200,000
Jack M. Whitehurst 1995 $ 98,175 7,500 $ 14,439 - -
(Vice President of 1994 93,500 10,000 14,052 - -
International 1993 91,670 10,000 12,944 150,000
Develpment
Robert L. Soria 1995 $ 84,365 $ 15,000 $ 6,624 130,000(c)
(Vice President of 1994 70,769 15,000 8,625(b) 35,000
Franchise 1993 59,731 13,000 5,930 30,000
Operations)
Donald W. Zentmeyer 1995 $100,000 $ 10,000 $ 6,075 171,000(c)
(General Counsel) 1994 76,154 15,200 4,092 41,000
1993 - - - - - - - -
(a) Includes: for Mr. Rogers, supplemental retirement
benefits of $43,860 in 1995, life insurance benefits
of $42,842 in 1995, supplemental retirement benefits of
$177,383 in 1994 (for service in past and current years)
and health insurance benefits of $35,000 in 1993; for Mr.
Parker, supplemental retirement benefits of $43,860 in
1995 and life insurance benefits of $39,210 in 1995 and
supplemental retirement benefits of $99,965 in 1994 (for
service in past and current years); for Mr. Whitehurst,
car allowances of $12,000 in 1995, $12,000 in 1994 and
$10,985 in 1993; for Mr. Soria, car allowances of $4,800
in 1995, $4,750 in 1994 and $4,362 in 1993; for Mr.
Zentmeyer, car allowance of $4,800 in 1995.
(b) Includes grants of Common Stock issued pursuant to the
Company's recapitalization plan, as follows: to Mr.
Parker, 2,000 shares ($7,125 value) granted and vested 5-13-94
and 2,600 shares ($7,150 value) granted 7-6-93 and
vested 1-1-95; to Mr. Soria, 1,000 shares ($2,750 value)
granted 7-6-93 and vested 1-1-95; to Mr. Zentmeyer, 1,000
shares ($3,563 value) granted and vested 5-13-94. Dollar
values are calculated as the closing bid price (or the
average of high and low bid prices if closing price is
not published) for the Common Stock on the date of grant,
multiplied by the number of shares granted. Grants made
with deferred vesting are subject to forfeiture if the
officer's employment terminates before the vesting date.
The officer does not receive any dividends paid on the
Common Stock before the vesting date. All grants have
totally vested.
(c) Includes newly granted options as well as replacement
options granted in exchange for the cancellation of
previously granted options, as follows: for Mr. Rogers
350,000 new options on 7-21-94 and 350,000 replacement
options on 12-20-94, all subsequently replaced on 6-12-95
by the 700,000 total options which he currently holds;
for Mr. Parker 200,000 new options on 7-21-94 and 200,000
replacement options on 12-20-94, all subsequently
replaced on 6-12-95 by 400,000 options which he currently
holds; for Mr. Soria 30,000 new options on 7-21-94 and
35,000 replacement options on 12-20-94, all subsequently
replaced on 6-12-95 by 65,000 options which he currently
holds; for Mr. Zentmeyer 50,000 new options on 7-21-94
and 30,000 replacement options on 12-20-94, all
subsequently replaced (along with 11,000 previous
options) on 6-12-95 by 91,000 options which he currently
holds. For the total number of options (net of
replacement options) held by each named officer, see the
table entitled "Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values."
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 1995 and unexercised stock
options held at the end of fiscal year 1995 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 $2.6875 on June 23, 1995
(the last trading day of the Company's fiscal year).
Value of
Number of Unexercised
Unexercised In-the- Money
Options at Options at
Shares Fiscal Year Fiscal Year
Acquired End(Exercisable/ End (Exercis-
on Value Realized Unexercisable) able/Unexer-
Name Exercise(#) ($) (#) cisable ($)
C. Jeffrey Rogers -- -- 700,000(u) $ 131,250
Ronald W. Parker -- -- 200,000(e) 312,500
400,000(u) 75,000
Jack M. Whitehurst -- -- 115,000(e) 179,688
Robert L. Soria -- -- 20,000(e) 8,750
75,000(u) 14,063
Donald W. Zentmeyer-- -- 91,000(u) 17,063
(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 1995, pursuant to the Company's
1992 Stock Award Plan and 1993 Stock Award Plan, to the Chief
Executive Officer and the other four most highly compensated
executive officers of the Company.
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation for
Individual Grants Option Term
% of Total
Options
Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#) Year ($/Share) Date 5%($) 10%($)
C. Jeffrey 350,000(a) 11.7% 2.875 07-21-00 342,221(e) 776,383(e)
Rogers 350,000(b) 11.7% 2.8125 12-20-99(d) 271,965(e) 600,971(e)
350,000(c) 11.7% 2.50 12-20-99(d) 216,396 473,125
350,000(c) 11.7% 2.50 07-21-00(d) 247,713 549,253
Ronald W. 200,000(a) 6.7% 2.875 07-21-00 195,555(e) 443,648(e)
Parker 200,000(b) 6.7% 2.8125 12-20-99(d) 155,408(e) 343,412(e)
200,000(c) 6.7% 2.50 12-20-99(d) 123,655 270,357
200,000(c) 6.7% 2.50 07-21-00(d) 141,550 313,859
Jack M. - - -- -- -- -- --
Whitehurst
Robert L. 30,000(a) 1.0% 2.875 07-21-01 35,112(e) 81,827(e)
Soria 20,000(b) 0.7% 2.8125 12-20-00(d) 19,130(e) 43,400(e)
15,000(c) 0.5% 2.8125 07-01-00(d) 13,079(e) 29,349(e)
20,000(c) 0.7% 2.50 12-20-00(d) 15,484 34,739
15,000(c) 0.5% 2.50 07-01-00(d) 10,485 23,209
30,000(c) 1.0% 2.50 07-21-01(d) 26,044 59,287
Donald W. 50,000(a) 1.7% 2.875 07-21-01 58,521(e) 136,378(e)
Zentmeyer 30,000(b) 1.0% 2.8125 12-20-00(d) 28,696(e) 65,100(e)
11,000(b) 0.4% 2.50 07-09-98(d) 4,452 9,373
30,000(c) 1.0% 2.50 12-20-00(d) 23,226 52,109
50,000(c) 1.7% 2.50 07-21-01(d) 43,407 98,811
(a) New stock options granted on 7-21-94.
(b) Replacement stock options granted on 12-20-94.
(c) Replacement stock options granted on 6-12-95.
(d) The expiration date for the replacement stock options is the
same as for the options they replaced.
(e) No longer realizable because options were cancelled and
replaced as described above.
COMPENSATION COMMITTEE, STOCK AWARD PLAN COMMITTEE
AND BOARD OF DIRECTORS 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 and
administering the 1992 Stock Award Plan. The same three directors
also comprise the Stock Award Plan Committee, which administers the
1993 Stock Award Plan and the 1993 Outside Directors Stock Award
Plan.
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 heavily weighting the compensation of most executive
officers in favor of equity ownership incentives and bonuses paid
on the basis of performance.
Chief Executive Officer
In July 1994, the employment agreement between the Company and
its Chief Executive Officer, Mr. C. Jeffrey Rogers, was amended,
primarily to extend the term and to update goals and objectives to
more meaningful current standards. The amended agreement was
approved by the Compensation Committee and the Board of Directors.
See "Executive Employment Contracts."
In evaluating Mr. Rogers' agreement, the Compensation
Committee found his base salary to be in line with the overall
leadership he has provided to the employees and to the franchise
community. Consideration was also given to the recognition in
1994 of the successful turnaround of the Company, and subsequent
performance and expansion as Pizza Inn was named the number one
pizza chain by Restaurants & Institutions magazine and Mr. Rogers
was named Entrepreneur of the Year for 1994 in the turnaround
category in the Dallas/Fort Worth area by Inc. Magazine. The bonus
program established in Mr. Rogers' agreement is based on the
Company's operating performance, profitability, cash flow, debt
reduction and other financial performance objectives. Stock awards
and termination arrangements 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.
Executive Officer Salaries and Bonuses
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 1995 bonus was based on targets related to debt
reduction, cash flow and profitability. Mr. Whitehurst's 1995
bonus was based on growth of the Company's franchise base. Mr.
Soria's 1995 bonus was based on cash flow and profitability of the
restaurants operated by the Company and its franchisees. Mr.
Zentmeyer's 1995 bonus was based on the cost-effectiveness of legal
services and the Company's profitability.
Executive Officer Agreements
In July 1994, the Compensation Committee and the Board
determined that it was appropriate to further ensure the continued
dedication and services of Messrs. Parker and Zentmeyer, by
authorizing agreements which provide for compensation in the event
that employment is terminated under certain circumstances,
including a change in control of the Company. The Employment
Agreement with Mr. Rogers already provided for compensation in such
event. See "Executive Employment Contracts."
Stock Options
The Compensation and Stock Award Plan Committees believe that
equity ownership motivates 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 1992 and 1993 Stock Award Plans for the purpose of
aligning employee and shareholder interests. Under these plans,
stock options have been granted based upon relative position and
responsibilities of each executive officer and employee, as well as
historical and expected contributions to Company growth.
Stock Option Repricing
The Compensation Committee and Stock Award Plan Committee,
which administer the 1992 Stock Award Plan and the 1993 Stock Award
Plan respectively, reviewed certain options previously granted to
employees of the Company and the market price of the Company's
common stock during the past two years. The Committees recognized
that such options issued by the Company are utilized as compensation
and to provide incentives to improve Company performance and thereby
positively influence the market price for Company's common stock for
the benefit of all shareholders. The Committees determined that the
market price had declined despite the Company's significant accomplishments
and positive financial results during the same period, that certain
options previously granted under the Stock Award Plans were at exercise
prices in excess of the current market prices of the Company's common
stock, and that certain of the current outstanding stock options if
left in place would not achieve the underlying objectives.
Accordingly, on December 20, 1994 and June 12, 1995,
replacement stock options were granted to replace certain
previously issued stock options. The replacement options did not
involve the grant of any additional shares, extend the existing
expiration dates or shorten the vesting period with respect to the
options. No other option repricing or exchange has occurred in the
past ten years.
Submitted by the Board of Directors, Compensation Committee
and Stock Award Plan Committee:
Bobby L. Clairday C. Jeffrey Rogers
Don G. Navarro F. Jay Taylor
Ronald W. Parker Steve A. Ungerman
Ramon D. Phillips
TEN-YEAR OPTION REPRICING
The following table provides the specified information
concerning all repricing of options to purchase the Company's stock
held by the named executive officers during the last ten years.
Length of
original
option
term re-
Securities Market Exercise maining
underlying price of price at at date
number of stock at time of of re-
options time of repricing pricing
repriced repricing or New or amend-
or or amend- amend- exercise ment
Name Date amended(#) ment($) ment($) Price($) (Months)
C. Jeffrey 12/20/94 350,000(a) $2.8125 $3.875 2.8125 60
Rogers 06/12/95 350,000(a) $2.50 $2.8125 $2.50 54
(Chief 06/12/95 350,000(a) $2.50 $2.875 $2.50 61
Executive
Officer)
Ronald W. 12/20/94 200,000(a) $2.8125 $3.875 $2.8125 60
Parker 06/12/95 200,000(a) $2.50 $2.8125 $2.50 54
(Chief 06/12/95 200,000(a) $2.50 $2.875 $2.50 61
Operating
Officer)
Jack M. -- -- -- -- --
Whitehurst
(Vice President
of International
Development)
Robert L. 12/20/94 20,000(a) $2.8125 $3.875 $2.8125 72
Soria 12/20/94 15,000(a) $2.8125 $3.50 $2.8125 66
(Vice 06/12/95 20,000(a) $2.50 $2.8125 $2.50 66
President 06/12/95 15,000(a) $2.50 $2.8125 $2.50 61
of 06/12/95 30,000(a) $2.50 $2.875 $2.50 73
Franchise
Operations)
Donald W. 12/20/94 30,000(a) $2.8125 $3.875 $2.8125 72
Zentmeyer 06/12/95 11,000(a) $2.50 $2.88 $2.50 36
(General 06/12/95 30,000(a) $2.50 $2.8125 $2.50 66
Counsel) 6/12/95 50,000(a) $2.50 $2.875 $2.50 73
(a) These replacement options did not involve the grant of
any additional shares, extend the existing expiration
dates or shorten the vesting period.
EXECUTIVE EMPLOYMENT CONTRACTS
C. Jeffrey Rogers and the Company entered into an Employment
Agreement dated July 26, 1990, for a term which, as amended,
extended through June 30, 1997. That agreement was replaced with
a new agreement effective as of July 1, 1994 with the term
extending through June 30, 1999. The current Employment Agreement
provides for an annual base salary in fiscal year 1995 of $462,711,
which will be increased by 5% per year.
Mr. Rogers is also entitled to the following cash bonuses,
based on performance: (a) $37,500 payable quarterly, if the
Company earns a profit for the quarter; (b) $75,000 payable semi-annually,
if the Company makes all required payments when due under
its bank loans; and (c) $150,000 payable annually, if the Company
meets targets established in the agreement for cash flow from
operations (such bonus being adjustable to a maximum of $250,000
per year if such targets are exceeded by certain amounts). Mr.
Rogers was also entitled to a one-time bonus of $100,000 in fiscal
year 1995 because the Company met a five-year cash flow target.
Under the previous agreement the Company issued to Mr. Rogers
an aggregate of 3,822,000 shares of Common Stock, effective
September 1990. Under the current agreement, Mr. Rogers also
receives a $25,000 yearly allowance to purchase life and disability
insurance and a $10,000 yearly allowance to maintain secondary
health, dental and other insurance. As compensation for the use of
his personal automobile on Company business, Mr. Rogers receives
$1,350 per month as an automobile allowance, plus reimbursement of
gasoline and maintenance expenses.
Mr. Rogers may terminate his Employment Agreement with the
Company at any time within six months 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 an
outside group or entity; (b) the acquisition by an outside group or
entity of 50% or more of the stock of the Company or other
surviving corporation; or (c) an unapproved change in the majority
of the Company's Board of Directors. 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 of his base salary for the remainder of the term
of the Employment Agreement plus two times the maximum annual bonus
amounts provided in the agreement. The agreement includes a
noncompetition covenant that would apply for three years after
termination of employment.
Ronald W. Parker and Donald W. Zentmeyer entered into
Executive Compensation Agreements with the Company in July 1994.
Both agreements provide for payment of compensation (three times
annual salary and bonus for Mr. Parker, and two times annual salary
and bonus for Mr. Zentmeyer) if the Company terminates the
executive's employment without cause or if the executive terminates
his employment within six months after a change in control of the
Company. The agreements include a noncompetition covenant which
would apply for the same number of years that salary and bonus are
paid under the agreement after termination of employment.
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. Mr. Navarro receives an additional $250 per month to
partially pay for a health insurance policy. Directors are also
reimbursed for Board related expenses.
Under the Company's 1992 Stock Award Plan, each of the outside
directors who were elected by the shareholders in January 1993 were
eligible to receive stock options for Common Stock equal to the
total number of shares which he owned when elected or which he
purchased during calendar year 1993, subject to a maximum of 30,000
shares. Under the 1993 Outside Directors Stock Award Plan, first
effective in January 1994, 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 the total number of shares
which he owns when elected, purchases during the preceding fiscal
year or purchases by exercise of previously granted options during
the first ten days of the then-current fiscal year, subject to a
maximum of 20,000 shares per year. Stock options granted under
both plans 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 1995, stock options were
granted to outside directors pursuant to such plans, as follows: on
June 27, 1994, options for 20,000 shares (at $3.25) to Messrs.
Clairday and Navarro, 5,000 shares (at $3.25) to Mr. Taylor and
8,500 shares (at $3.25) to Mr. Ungerman; on June 26, 1995, options
for 20,000 shares (at $2.6875) to Mr. Navarro and 6,783 shares
(at $2.6875) to Mr. Ungerman.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during fiscal year
1995 were Messrs. Navarro, Phillips and Ungerman. During fiscal
year 1995, C. Jeffrey Rogers was elected to the Board of Directors
and the Compensation Committee of Hallmark Financial Services,
Inc., of which Mr. Phillips is Chief Executive Officer and Chairman
of the Board of Directors. 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
Bobby L. Clairday is President and a shareholder of Clairday
Food Services, Inc. and is a 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. As
franchisees, the two corporations purchase a majority of their food
and other supplies from the Company. In fiscal year 1995,
purchases by these franchisees made up 10% of the Company's food
and supply sales, and royalties and license fees from Mr. Clairday
and such franchisees made up 9% of the Company's franchise
revenues.
In September 1990, Clairday Food Services, Inc. purchased from
the Company seven Pizza Inn restaurants in Missouri for a price of
$1,308,000, paid in cash and a promissory note with an interest
rate of prime plus 2% and a maturity of July 1995. The balance on
this note was $104,566 on June 25,1995. The note has subsequently
been paid in full.
In December 1992, Mr. Clairday purchased area development
rights for Arkansas and a portion of Missouri for a price of
$1,250,000, paid in cash and a promissory note with an interest
rate of 8% and a maturity of July 1998. The balance on this note
was $218,656 on June 25, 1995.
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.
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, at the
end of each fiscal year since May 31, 1991, which was the last day
of the calendar month in which the first distribution of Common
Stock occurred pursuant to the Company's recapitalization plan and
the registration of such shares became effective. The graph
assumes $100 was invested on May 31, 1991. The Company has not
paid any 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 (Brinker International, Inc., Cracker Barrel Old Country
Store, Inc., Darden Restaurants, Inc., McDonald's Corporation,
Shoney's, Inc., Sysco, Inc., and Wendy's International, Inc.).
Comparison of Pizza Inn, Inc.; Dow Jones Equity Market; and Dow
Jones Entertainment & Leisure Restaurant Index.
5/31/91 6/30/91 6/28/92 6/27/93 6/26/94 6/25/95
Pizza Inn, Inc. 100 100 192 733 900 767
Dow Jones Equity Market 100 95 108 124 126 160
Dow Jones Entertainment &
Leisure Restaurant Index 100 94 126 138 152 189
INDEPENDENT AUDITORS
The Audit Committee has selected Price Waterhouse, certified public
accountants, as the independent auditors of the Company for fiscal year 1996.
A representative of Price Waterhouse will be present at the Annual Meeting,
will be available to respond to appropriate questions, and will have an
opportunity to make a statement.
SHAREHOLDER PROPOSALS
A shareholder wishing to present a proposal at the Annual Meeting of
Shareholders tentatively scheduled for January 1997 must deliver his or her
proposal to the Company at its principal executive offices no later than
August 8, 1996, in such form as required under rules issued by the Securities
and Exchange Commission, in order to have it included in the proxy materials
of the Company for such Annual Meeting of Shareholders.
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 22, 1995, 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.,
5050 Quorum Drive, Suite 500, Dallas, Texas 75240, Attention: Corporate
Secretary.
APPENDIX 1 FORM OF PROXY
PIZZA INN, INC.
SIDE ONE 5050 Quorum, Suite 500
Dallas, Texas 75240
PROXY
Annual Meeting of Shareholders
January 24, 1996
Proxy No.
Number of Shares in Your Name
The undersigned, revoking all proxies heretofore given, hereby
appoints Ronald W. Parker and Donald W. Zentmeyer, 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") which
the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at 10:00 a.m., Dallas time, on Wednesday,
January 24, 1996, at The Westin Hotel (Galleria), 13340 Dallas
Parkway, Dallas, Texas 75240, 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.
This proxy, when properly executed, will be voted in the manner
directed by the shareholder. If no direction is made, this proxy
will be voted for Proposal 1. This proxy is solicited on behalf
of the Company's Board of Directors.
(Continued, and to be signed and dated on the reverse side.)
P.O. Box 11132
New York, N.Y. 10203-0132
SIDE TWO
1.To elect each of the following persons as a Class II Director.
FOR all nominees listed below
WITHHOLD AUTHORITY to vote for all nominees listed below.
*EXCEPTIONS
Nominees: C. Jeffrey Rogers, F. Jay Taylor, and Steve A. Ungerman
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below.)
*Exceptions
2.In their discretion, the proxies are authorized to vote upon such
other business as may come before the meeting or any adjournments
thereof.
Change of Address or
Comments Mark Here
Please date and sign exactly as shown hereon. When shares are held
by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title. If a corporation, please sign in full corporate name by
authorized officer.
Dated: _____________________ , 199___
_______________________________
Signature(s)
_______________________________
Signature(s)
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD IN THE ENVELOPE
PROVIDED.
Votes MUST be indicated (X) in Black or Blue Ink