DEF 14A 1 RYANS FAMILY STEAK HOUSE PROXY STATEMENT 57440 DEF14A SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] 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 mark)240.14a-11(c) or (section mark)240.14a-12 Ryan's Family Steak House, Inc. Ryan's Family Steak House, Inc. 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(j)(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. 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: 4) Proposed maximum aggregate value of transaction: [ ] 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: RYAN'S FAMILY STEAK HOUSES, INC. 405 LANCASTER AVENUE (29650) POST OFFICE BOX 100 GREER, SOUTH CAROLINA 29652 March 24, 1995 TO OUR SHAREHOLDERS: You are cordially invited to attend the Annual Meeting of Shareholders of Ryan's Family Steak Houses, Inc. to be held on Thursday, April 27, 1995 at 11:00 a.m. at the Greenville/Spartanburg Airport Marriott in Greenville, South Carolina. The official Notice of Annual Meeting, Proxy Statement and Form of Proxy are enclosed with this letter. The Notice of the Annual Meeting and Proxy Statement describe the formal business to be transacted at the Annual Meeting. The vote of every shareholder is important, and to ensure proper representation of your shares at the meeting, please sign, date and return the enclosed proxy card as soon as possible, even if you currently plan to attend the Annual Meeting. This will not prevent you from voting in person, but will ensure that your vote will be counted if you are unable to attend. Sincerely, (Signature of Janet J. Gleitz appears here) Janet J. Gleitz SECRETARY RYAN'S FAMILY STEAK HOUSES, INC. 405 LANCASTER AVENUE (29650) POST OFFICE BOX 100 GREER, SOUTH CAROLINA 29652 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 27, 1995 TO OUR SHAREHOLDERS: The Annual Meeting of Shareholders of Ryan's Family Steak Houses, Inc. (the "Company") will be held at the Greenville/ Spartanburg Airport Marriott, Greenville, South Carolina, on Thursday, April 27, 1995 at 11:00 a.m. for the following purposes: (1) To elect seven (7) Directors to hold office until the next annual meeting of shareholders or until their successors have been duly elected and qualified; and (2) To transact such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors has fixed the close of business on March 1, 1995 as the record date for the determination of the shareholders entitled to notice of and to vote at the meeting. BY ORDER OF THE BOARD OF DIRECTORS (Signature of Janet J. Gleitz appears here) Janet J. Gleitz SECRETARY March 24, 1995 Greer, South Carolina A FORM OF PROXY IS ENCLOSED. TO ENSURE THAT YOUR SHARES WILL BE VOTED AT THE ANNUAL MEETING, YOU ARE REQUESTED TO COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID, ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN THE EVENT YOU ATTEND THE MEETING. RYAN'S FAMILY STEAK HOUSES, INC. 405 LANCASTER AVENUE (29650) POST OFFICE BOX 100 GREER, SOUTH CAROLINA 29652 (803) 879-1000 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of Ryan's Family Steak Houses, Inc. (the "Company"), to be voted at the Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be held at 11:00 a.m. on Thursday, April 27, 1995 at the Greenville/Spartanburg Airport Marriott, Greenville, South Carolina. The approximate mailing date of this Proxy Statement is March 24, 1995. Shareholders of record at the close of business on March 1, 1995 are entitled to notice of and to vote at the Annual Meeting. As of such date, a total of 53,432,005 shares of common stock, $1 par value, of the Company ("Common Stock") were outstanding. Holders of Common Stock are entitled to one vote for each share held of record on March 1, 1995 upon all matters presented at the Annual Meeting. A shareholder giving a proxy may revoke it at any time before it is exercised by written notice dated later than the date of the proxy. A shareholder may revoke a proxy by: (i) delivery to the Secretary of the Company, at or before the Annual Meeting, of an instrument revoking the proxy bearing a date later than the proxy; (ii) delivery to the Secretary of the Company, at or before the Annual Meeting, of a duly executed proxy bearing a later date; or (iii) attending the Annual Meeting and giving notice of revocation to the Secretary of the Company or expressing to the Secretary of the Company, before his or her shares are voted, a desire to vote his or her shares in person in a manner contrary to that set forth in his or her previous proxy, if any (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). Any instrument revoking a proxy should be delivered to the Secretary of the Company at the Annual Meeting or sent prior to the Annual Meeting to Ryan's Family Steak Houses, Inc., 405 Lancaster Avenue, Greer, South Carolina 29650 or P.O. Box 100, Greer, South Carolina 29652, Attn: Janet J. Gleitz. Unless revoked, such proxy will be voted in accordance with the specifications thereon. If no contrary instructions are given, all shares represented by a proxy will be voted FOR the proposal to elect as directors of the Company the nominees named in this Proxy Statement, and in accordance with the best judgment of the proxy holders on any other matter that may properly come before the Annual Meeting. An automated system administered by the Company's transfer agent tabulates the votes. Abstentions and broker non-votes are each included in the determination of the number of shares present and voting. Each is tabulated separately. In connection with the election of directors, abstentions and broker non-votes are not counted for purposes of determining the votes cast for directors. The presence, either in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock at March 1, 1995 is necessary to constitute a quorum at the Annual Meeting. Directors will be elected by a plurality of votes cast at the Annual Meeting. Shareholders do not have a right to cumulate their votes for directors. ELECTION OF DIRECTORS (ITEM #1 ON THE PROXY) The following seven persons are nominees for election at the Annual Meeting as Directors to serve until the next annual meeting of the Company or until their successors are duly elected and qualified: Charles D. Way, James D. Cockman, Brian S. MacKenzie, G. Edwin McCranie, Barry L. Edwards, Harold K. Roberts, Jr. and James M. Shoemaker, Jr. Unless authority to vote for the Board's nominees in the election of directors is withheld, it is the intention of the persons named in the enclosed proxy to nominate and vote for such nominees. Management believes that all of the nominees will be available and able to serve as directors, but in the event any nominee is not available or able to serve, the Common Stock represented by the proxies will be voted for such substitute as shall be designated by the Board of Directors. 1 The following table sets forth the name, age, principal occupation, years of service as a director, and Common Stock beneficially owned as of March 1, 1995 of or by each nominee for director.
SHARES THAT CAN BE ACQUIRED OUTSTANDING WITHIN 60 TOTAL OF SHARES DAYS UPON SHARES PRINCIPAL DIRECTOR BENEFICIALLY EXERCISE BENEFICIALLY NAME AGE OCCUPATION SINCE OWNED OF OPTIONS OWNED Charles D. Way 42 Chairman of the Board, President 1981 314,081(7) 345,000 659,081(7) (3,4) and Chief Executive Officer of the Company G. Edwin McCranie 46 Executive Vice President of the 1991 1,600 91,000 92,600 (4) Company Barry L. Edwards 47 Executive Vice President, 1982 38,588(8) 30,000 68,588(8) (1,2,3,5) Treasurer and Chief Financial Officer, AMRESCO, Inc. Harold K. Roberts, Jr. 44 Partner in the firm of Roberts & 1988 11,422(9) 30,000 41,422(9) (2,3,4) Morgan, CPAs; Chairman and Chief Executive Officer, Statewide Title, Inc. James M. Shoemaker, Jr. 62 Member, Wyche, Burgess, Freeman 1982 39,325(10) 30,000 69,325(10) (1,2,5) & Parham, P.A. Brian S. MacKenzie 43 President and Chief Executive 1993 2,000(11) 5,000 7,000(11) (1,4,5) Officer, Builder Marts of America, Inc. James D. Cockman 62 Chairman and Chief Executive 1993 1,000 5,000 6,000 (4) Officer, Ocean Fresh Express International Seafood PERCENT OF TOTAL NAME OUTSTANDING (6) Charles D. Way 1.2% (3,4) G. Edwin McCranie 0.2% (4) Barry L. Edwards 0.1% (1,2,3,5) Harold K. Roberts, Jr. 0.1% (2,3,4) James M. Shoemaker, Jr. 0.1% (1,2,5) Brian S. MacKenzie (12) (1,4,5) James D. Cockman (12) (4)
(1) Member of the Compensation Committee. The Compensation Committee met once during fiscal 1994 for the purpose of reviewing and submitting to the Board recommendations respecting the salary, bonus and other non-stock compensation to be provided to the Company's executive officers. (2) Member of the Audit Committee. The Audit Committee met with representatives of the Company's independent auditors once during fiscal 1994 for the purpose of reviewing the scope and results of such firm's audit. (3) Member of the Nominating Committee. The Nominating Committee met once during fiscal 1994 for the purpose of recommending members of the Board. The Company's Nominating Committee will consider nominees to the Board recommended by shareholders of the Company for the 1996 Annual Meeting of Shareholders. See "Proposals of Shareholders". (4) Member of the Long Range Planning Committee. The Committee met twice during fiscal 1994 for the purpose of providing long-term direction for the Company. (5) Member of Stock Option Committee. The Stock Option Committee met twice during fiscal 1994 for the purpose of considering option grants under the Company's 1991 Stock Option Plan to the Company's executive officers and key employees. (6) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), percentages of total outstanding shares have been computed on the assumption that shares that can be acquired within 60 days upon the exercise of options by a given person or group are outstanding, but no other such shares similarly subject to acquisition by other persons are outstanding. (7) The figure shown includes 29,380 shares owned by Mr. Way's wife and an aggregate of 6,000 shares owned by Mr. Way's wife as custodian for Mr. Way's sons. Mr. Way may be deemed to share voting and investment power with respect to such shares. (8) The figure shown includes 3,282 shares held in an individual retirement account for the benefit of Mr. Edwards and his wife and an aggregate of 4,460 shares held by Mr. Edwards' sons, as to which shares Mr. Edwards may be deemed to share voting and investment power. (9) The figure shown includes 615 shares held by Statewide Title, Inc., of which Mr. Roberts is Chairman, Chief Executive Officer, and an owner of 95% of the outstanding common stock. 2 (10) The figure shown includes 2,000 shares owned by Mr. Shoemaker's wife and 4,000 shares in a trust, of which Mr. Shoemaker is a co-trustee and trustee, for the benefit of Mr. Shoemaker's two adult children. Mr. Shoemaker may be deemed to share voting and investment power with respect to such shares. (11) The figure shown includes 500 shares held in trust for the benefit of Mr. MacKenzie's minor child. (12) Less than one-tenth of one percent. The Board met four times during fiscal 1994. All directors attended personally or by telephone all meetings of the Board and committees on which they served. BUSINESS EXPERIENCE OF NOMINEES FOR DIRECTOR CHARLES D. WAY became the Chairman of the Board of the Company on October 29, 1992. Mr. Way assumed the position of President and Chief Executive Officer of the Company in October 1989. From June 1988 to October 1989, he served as President. From May 1986 to June 1988, he served as Executive Vice President, Treasurer and Secretary. From January 1981 through April 1986, he served as Vice President-Finance, Treasurer and Secretary. Mr. Way joined the Company in June 1979 as Controller. Mr. Way is also a Director of World Acceptance Corporation. G. EDWIN MCCRANIE joined the Company in 1986 as Director of Purchasing. He assumed the position as Executive Vice President of the Company in January 1995. From November 1991 to December 1994, he served as Executive Vice President-Purchasing. From January 1989 to October 1991, he served as Vice President-Purchasing. From 1986 until 1989, he served as Director of Purchasing of the Company. BARRY L. EDWARDS has served as Executive Vice President, Treasurer and Chief Financial Officer of AMRESCO, Inc., an asset management company, since November 1994. He served as Vice President and Treasurer of The Liberty Corporation from 1979 to November 1994. HAROLD K. ROBERTS has been a partner in the firm of Roberts & Morgan, certified public accountants, since October 1989 and was a partner in the firm of Hinkle and Roberts, certified public accountants, from 1983 until 1989. Mr. Roberts has served as Chairman and Chief Executive Officer of Statewide Title, Inc., a real estate title insurance agency, since 1989. From 1972 to 1982, Mr. Roberts served as Controller and Assistant Treasurer of Food Lion, Inc. JAMES M. SHOEMAKER has been a member of Wyche, Burgess, Freeman & Parham, P.A., the law firm which is general counsel to the Company, since 1965. Mr. Shoemaker is a director of Palmetto Bancshares, Inc., One Price Clothing Stores, Inc., and Span-America Medical Systems, Inc. BRIAN S. MACKENZIE has served as President and Chief Executive Officer of Builder Marts of America, Inc. ("BMA") since November 1993. From April 1991 to July 1991, he served as its Chief Operating Officer. From July 1990 to April 1991, Mr. MacKenzie served as President of the Building Materials Retail Division of BMA. BMA is a wholesale distributor of building materials and supplies. From January 1990 to June 1990, Mr. MacKenzie served as Senior Vice President of Franchise Retailing of Coast To Coast Stores, Inc. ("Coast To Coast"), a hardware distributor, and served as Senior Vice President of Marketing and Merchandising of Coast To Coast from 1987 through January of 1990. Coast To Coast was acquired by Amdura, Inc. as a wholly-owned subsidiary in December 1988. In April 1990, Amdura, Inc., and its subsidiaries, including Coast To Coast, filed under Chapter 11 of the Federal Bankruptcy Laws. Coast To Coast was sold to a third party three months after the Chapter 11 filing, following which Mr. MacKenzie joined BMA. JAMES D. COCKMAN has served as Chairman and Chief Executive Officer of Ocean Fresh Express International Seafood, which is engaged in the business of distributing and processing seafood, since September 1992. From 1989 until 1992, he served as Chairman of the Sara Lee Food Service division of Sara Lee Corp., which engaged in the business of processing and distributing food products, and from 1985 to 1989, he served as Chairman of the Board and Chief Executive Officer of PYA Monarch, Inc., also a division of Sara Lee Corp. Mr. Cockman also serves as a director of Dollar General Stores and Clayton Homes, Inc. COMPENSATION OF DIRECTORS During 1994, directors who are not officers of the Company were paid an annual retainer of $10,000, plus $500 per meeting of the Board, and $250 for attendance at committee meetings. Pursuant to this arrangement, Messrs. Cockman, Edwards, Mackenzie, Roberts and Shoemaker were paid $12,500, $13,250, $13,250, $13,000, and $13,000, respectively, during fiscal 1994. Directors who are also officers of the Company were paid $100 per board meeting attended in 1994 and received no payments for committee meetings attended. 3 In addition, each director who is not an officer of the Company receives options for 5,000 shares of Common Stock in January of each year. Pursuant to such arrangement, on each of January 31, 1994 and January 31, 1995, options were granted with respect to 5,000 shares of Common Stock to each of Messrs. Edwards, Roberts, MacKenzie, Cockman and Shoemaker. The options granted on January 31, 1994 had an exercise price of $7.68 per share (the per share market value on the date of grant) and the options granted on January 31, 1995 had an exercise price of $8.0625 per share (the per share market value on the date of grant). The options granted on January 31, 1994 became exercisable on July 31, 1994 and expire January 31, 2004; the options granted on January 31, 1995 become exercisable on July 31, 1995 and expire on January 31, 2005. In addition, the Company issued in March 1995 to Mr. Cockman, as a consulting fee, an aggregate of 1,000 shares of Common Stock for his work in leading three strategic planning meetings for the Company during 1994. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During fiscal 1994, Messrs. Edwards, MacKenzie and Shoemaker, each a non-employee director, served on the Company's Compensation Committee of the Board and on the Stock Option Committee of the Board. Mr. Shoemaker is a member of the law firm of Wyche, Burgess, Freeman & Parham, P.A., which serves as general counsel to the Company. On April 11, 1994, the Company entered into a contract with Restaurant Development, Inc. ("RDI"), a North Carolina corporation with its principal office in Salisbury, North Carolina. Under the contract, RDI agreed to provide to the Company a total comprehensive package of services, including legal services, related to the acquisition of real estate sites for restaurant facilities to be constructed and operated by the Company. For their services, the contract provides that RDI shall be paid 3% of the contract purchase price of each transaction. Prior to the Company's contract with RDI, similar real estate services were provided by two different parties. Statewide Title, Inc. ("Statewide Title") provided title and other closing services, and independent attorneys performed the related legal services. The Company paid RDI approximately $173,500 during 1994 and Statewide Title approximately $33,700, $70,200, and $76,400 during 1994, 1993 and 1992, respectively, for services pursuant to this contract (and its predecessor). The Company estimates that for 1995, RDI will receive approximately $300,000 for their services. Mr. Roberts is Chairman and Chief Executive Officer of Statewide Title. Mr. Roberts also owns 95% of the outstanding stock of Statewide Title. Statewide Title owns 35% of the outstanding stock of RDI. The Company believes that the amounts that it has paid to RDI and Statewide Title and that it proposes to pay to RDI for the services described above are less than the amounts that it would have to pay to third parties for similar services. CERTAIN BENEFICIAL OWNERS OF COMMON STOCK To the extent known to the Company, other than Trimark Investment Management Inc. ("TIM"), which owned 4,295,000 shares of Common Stock (8% of the Company's total outstanding Common Stock), as of February 10, 1995 (according to information provided by TIM), there is no person or group that beneficially owns 5% or more of the outstanding shares of Common Stock of the Company as of March 1, 1995. According to the Amendment No. 1 to Schedule 13-G filed by TIM, each of Trimark Fund and Trimark Select Growth Fund (the "Funds") are record owners of a portion of the 4,295,000 shares of Common Stock. TIM is the manager of the assets of the Funds and sole trustee of the Funds and, as such, has sole voting power and sole dispositive power with respect to such shares of Common Stock, and consequently may be deemed to be the beneficial owner of such shares of Common Stock. The address of Trimark Investment Management Inc. is One First Canadian Place, Suite 5600, Toronto, Ontario, Canada, M5X 1E5. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent of the Common Stock, to file with the Securities and Exchange Commission initial reports of beneficial ownership and reports of changes in beneficial ownership of Common Stock. Executive officers, directors and greater than ten-percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required for the fiscal year ended December 28, 1994, all Section 16(a) filings required of its executive officers or Directors for fiscal 1994 were made on a timely basis. 4 EXECUTIVE OFFICERS The following table sets forth the name, age, principal occupation, years of service as an officer of the Company and Common Stock beneficially owned as of March 1, 1995 of or by each executive officer of the Company, and all executive officers and directors as a group.
SHARES THAT CAN BE ACQUIRED OUTSTANDING WITHIN 60 TOTAL OF COMPANY SHARES DAYS UPON SHARES COMPANY OFFICES OFFICER BENEFICIALLY EXERCISE BENEFICIALLY NAME AGE CURRENTLY HELD SINCE OWNED OF OPTIONS OWNED Charles D. Way 42 Chairman of the Board, 1981 314,081(2) 345,000 659,081(2) President and Chief Executive Officer G. Edwin McCranie 46 Executive Vice President 1989 1,600 91,000 92,600 and Director John C. Jamison 36 Vice President-Real 1988 0 124,000 124,000 Estate James R. Hart 47 Vice President-Human 1988 0 51,000 51,000 Resources Fred T. Grant, Jr. 39 Vice President-Finance, 1990 0 50,000 50,000 Treasurer and Assistant Secretary Morgan A. Graham 58 Vice 1991 585 50,000 50,585 President-Construction Alan E. Shaw 36 Vice 1990 167 74,500 74,667 President-Operations Janet J. Gleitz 52 Secretary 1988 0 18,000 18,000 All executive officers and 408,768 903,500 1,312,268 directors as a group (13 persons) PERCENT OF TOTAL NAME OUTSTANDING (1) Charles D. Way 1.2% G. Edwin McCranie .2% John C. Jamison .2% James R. Hart .1% Fred T. Grant, Jr. .1% Morgan A. Graham .1% Alan E. Shaw .1% Janet J. Gleitz (3) All executive officers and 2.4% directors as a group (13 persons)
(1) Pursuant to Rule 13d-3 under the Exchange Act, percentages of total outstanding shares have been computed on the assumption that shares that can be acquired within 60 days upon the exercise of options by a given person are outstanding, but no other such shares similarly subject to acquisition by other persons are outstanding. (2) The figure shown includes 29,380 shares owned by Mr. Way's wife and an aggregate of 6,000 shares owned by Mr. Way's wife as custodian for Mr. Way's sons. Mr. Way may be deemed to share voting and investment power with respect to such shares. (3) Less than .1% of the outstanding shares of stock as of March 1, 1995. BACKGROUND OF EXECUTIVE OFFICERS Below is a summary of the background of the Company's executive officers who are not also directors of the Company. Mr. John C. Jamison joined the Company in 1980 and served as a manager trainee and store manager until February 1983. Since that time he served as Assistant Director of Development and Director of Development until January 1988 when he assumed the position of Vice President-Development. In May 1991 he assumed his present position as Vice President-Real Estate. Mr. James R. Hart joined the Company in 1979 and served as a store manager until September 1983. Since that time he served as Director of Human Resources until April 1988 when he became Vice President-Human Resources. Mr. Fred T. Grant, Jr. joined the Company in January 1990 as Director of Finance. He served in that position until April 1990 when he became Vice President-Finance. In January 1994, Mr. Grant was named Vice President-Finance, Treasurer and Assistant Secretary. Prior to joining the Company, Mr. Grant was a Senior Manager with the Greenville, South Carolina office of KPMG Peat Marwick, an international accounting and consulting firm, since 1985. Mr. Morgan A. Graham has been Vice President-Construction since November 1991. After joining the Company in July 1987 as a Construction Superintendent, he served in several construction-related positions, including Project Manager, Architectural Coordinator, Procurement Manager and Director of Construction, until assuming his present position. Mr. Alan E. Shaw joined the Company in 1979 and served as a store manager until being promoted to Supervisor in 1982. From 1984 through 1989, he served as Assistant Director of Operations and Regional Director of Operations prior to 5 his promotion to Regional Vice President-Operations in January 1990. In November 1991, Mr. Shaw assumed his present position as Vice President-Operations. Ms. Janet J. Gleitz joined the Company in 1981 and served as Corporate Relations Administrator until June 1988 when she assumed her present position of Secretary. EXECUTIVE COMPENSATION AND OTHER INFORMATION SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table shows, for the fiscal years 1994, 1993 and 1992, the cash compensation paid by the Company and its subsidiaries, as well as certain other compensation paid or accrued for those years, to the five executive officers of the Company whose salary and bonus in fiscal 1994 exceeded $100,000 (collectively the "Named Executive Officers"): SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION SECURITIES FISCAL SALARY UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) OPTIONS COMPENSATION ($)(1) Charles D. Way, 1994 $204,558 $30,600 60,000 $61,246 Chairman of the Board, 1993 $184,474 0 30,000 $57,768 President and Chief Executive 1992 $162,895 0 0 $26,117 Officer Alan E. Shaw, Vice 1994 $101,150 $42,300 20,000 $32,771 President-Operations 1993 $ 90,172 $25,313 10,000 $31,448 1992 $ 81,383 $38,437 0 $ 6,567 G. Edwin McCranie, Executive Vice 1994 $106,024 $10,500 20,000 $34,175 President 1993 $ 97,257 0 10,000 $33,992 1992 $ 89,593 0 0 $ 3,360 John C. Jamison, Vice 1994 $104,197 $13,936 20,000 $25,948 President-Real Estate 1993 $ 98,502 0 10,000 $24,509 1992 $ 95,552 0 0 $ 5,707 Fred T. Grant, Jr. 1994 $104,198 $13,936 20,000 $31,035 Vice President-Finance, 1993 $ 94,196 0 10,000 $29,876 Treasurer and Assistant 1992 $ 85,498 0 0 $ 6,178 Secretary
(1) "All Other Compensation" for 1994 includes the following: (i) contributions of $2,250, $2,012, $1,542, $1,519, and $1,527 to the Company's 401(k) Plan (the "Plan") on behalf of Mr. Way, Mr. Shaw, Mr. McCranie, Mr. Jamison, and Mr. Grant, respectively, to match 1994 pre-tax elective deferral contributions (included under Salary and Bonus) made by each to such Plan; (ii) premium payments of $6,300 on behalf of each of Mr. Way, Mr. Shaw, Mr. Jamison and Mr. Grant and $2,700 for Mr. McCranie for a policy of health insurance providing a level of coverage not otherwise available under the Company's standard health plan; (iii) premium payments of $72 on behalf of Messrs. Way, Shaw, McCranie, Jamison, and Grant for an additional $50,000 in life insurance above the coverage available to salaried employees generally; (iv) a premium payment of $2,428 for disability insurance coverage for Mr. Way; (v) an accrual of $22,457 pursuant to the Deferred Compensation-Salary Continuation Agreement between the Company and Mr. Way; and (vi) the Company's estimate of the imputed benefit to Messrs. Way, Shaw, McCranie, Jamison, and Grant of $27,739, $24,387, $29,861, $18,057, and $23,136, respectively, of split-dollar life insurance coverage (including the value of the term insurance portion) purchased by the Company on each officer's life in the policy amounts of $1,005,000, $910,000, $1,101,000, $675,000, and $840,000, respectively. Under the Company's insurance plan, the Company pays premiums on such policies on the life of participating executive officers for a period of ten years. The Company owns the policy for the first five years of the policy. After the fifth year, the Company transfers ownership of the policy to the participating executive. The Company is repaid the aggregate amount of the premiums, without interest, at the earlier of the executive's dying, reaching age 60 or the termination of the policy. 6 SUMMARY OF OPTION GRANTS AND HOLDINGS The following table illustrates the value of the stock options granted to the Named Executive Officers during fiscal 1994: OPTION GRANTS IN 1994 FISCAL YEAR
INDIVIDUAL GRANTS % OF TOTAL OPTIONS NUMBER OF GRANTED TO SECURITIES EMPLOYEES UNDERLYING IN 1994 EXERCISE OPTIONS FISCAL PRICE EXPIRATION GRANT DATE NAME GRANTED (#) YEAR ($/SH) DATE PRESENT VALUE (1) Charles D. Way 30,000 2.9% 7.625 01/27/04 (2) $ 107,444 30,000 2.9% 6.1875 10/27/04 (3) $ 97,008 Alan E. Shaw 10,000 .95% 7.625 01/27/04 (2) $ 35,815 10,000 .95% 6.1875 10/27/04 (3) $ 32,336 G. Edwin McCranie 10,000 .95% 7.625 01/27/04 (2) $ 35,815 10,000 .95% 6.1875 10/27/04 (3) $ 32,336 John C. Jamison 10,000 .95% 7.625 01/27/04 (2) $ 35,815 10,000 .95% 6.1875 10/27/04 (3) $ 32,336 Fred T. Grant, Jr. 10,000 .95% 7.625 01/27/04 (2) $ 35,815 10,000 .95% 6.1875 10/27/04 (3) $ 32,336
(1) In accordance with Securities and Exchange Commission rules, the dollar amounts under this column are the result of calculations using the Black-Scholes based option valuation model. The Company's use of this model should not be construed as an endorsement of its accuracy at valuing options. All stock option models require a prediction about the future movement of stock price. The valuation assumes an expected volatility of .3127, a 0% dividend yield, a 7 1/2-year holding term prior to exercise, a risk free rate of return of 5 1/2% for the options expiring January 27, 2004, and a risk free rate of return of 7.7% for the options expiring October 27, 2004, reflecting the yield on a zero coupon U.S. Treasury security for the holding term prior to exercise of the option. No adjustments have been made for non-transferability or risk of forfeiture. The actual value of the options, if any, will depend on the extent to which the market value of the Common Stock exceeds the exercise price of the option on the date of exercise. (2) These options became exercisable in full on July 26, 1994. (3) These options become exercisable in full on April 25, 1995. 7 The following table sets forth information with respect to the Named Executive Officers concerning the unexercised options held as of the end of the fiscal year and the value of such options. No Named Executive Officer exercised any options during 1994. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS AT 1994 OPTIONS SHARES FISCAL YEAR-END AT 1994 FISCAL ACQUIRED ON (#) YEAR-END $ (1) EXERCISE VALUE EXERCISABLE/ EXERCISABLE/ NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE Charles D. Way 0 n/a 315,000/30,000 $210,938/26,250 Alan E. Shaw 0 n/a 64,500/10,000 $ 23,906/8,750 G. Edwin McCranie 0 n/a 81,000/10,000 $ 64,125/8,750 John C. Jamison 0 n/a 114,000/10,000 $ 87,281/8,750 Fred T. Grant, Jr. 0 n/a 40,000/10,000 $ 9,375/8,750
(1) The value of unexercised in-the-money options was calculated for each officer as follows: market price of the Common Stock as of December 28, 1994 times the number of shares covered by such in-the-money options held by such officer minus the product of the exercise price with respect to such options and the number of shares covered by such options. DEFERRED COMPENSATION-SALARY CONTINUATION AGREEMENTS In April 1987, the Board of Directors approved a Deferred Compensation-Salary Continuation Agreement between the Company and Mr. Charles Way. The agreement with Mr. Way provides for cash payments of $60,000 per year for each of the 10 years following Mr. Way's retirement, death or total disability, with retirement age set at 55, such benefits to vest 10% per annum commencing in 1987. The total deferred compensation liability as of December 28, 1994 relating to this agreement was $107,890. An aggregate of $22,457 of deferred compensation was accrued under this agreement for the benefit of Mr. Way during fiscal 1994. The Company is the owner and beneficiary of a life insurance policy on the life of Mr. Way. On the basis of reasonable assumptions as to mortality, dividends and other factors, it is expected that the cost of benefits under this arrangement will be recovered through a combination of general corporate funds and the cash surrender value of the insurance policy. REPORT OF THE COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE The Compensation Committee (the "Compensation Committee") of the Board of Directors periodically submits to the Board recommendations respecting the salary, bonus and other non-stock compensation to be provided to the Company's executive officers. The Stock Option Committee (the "Stock Option Committee") of the Board grants options for the Company's Common Stock to the Company's executive officers and employees. The Compensation Committee and the Stock Option Committee are referred to collectively as the "Committees". The Committees provide the following joint report. EXECUTIVE OFFICER COMPENSATION The Committees attempt to act on the shareholders' behalf in establishing executive compensation programs, for the Company's shareholders ultimately bear the cost of these programs. The Company's executive compensation policies and specific executive compensation programs are adopted and administered in accordance with that belief. The Committees annually review the Company's corporate performance and that of its executive officers to determine appropriate compensation. The Committees seek to achieve a balance between the Company's need to attract and retain qualified and motivated executives, on the one hand, and the maximization of the Company's operating performance, on the other. The Committees' executive compensation philosophy is to set compensation levels in its discretion to provide for compensation opportunities that reflect Company and individual performances. The Company's current executive compensation structure consists of base salary and stock options, with an incentive cash bonus arrangement. 8 Over the years, the Compensation Committee has attempted to set executive officer cash compensation amounts at levels somewhat lower than levels that the committee believes prevail within the restaurant industry, and has complemented these cash amounts with significant stock option grants. In the case of all executive officers except Mr. Way, the Compensation Committee adjusted their salaries in 1994 based upon the recommendations of Mr. Way. Factors considered by Mr. Way were generally subjective, such as his perception of individual performance and the level of individual responsibility. Mr. Way recommended increases in the base salaries of executive officers ranging from 5% to 10%. The Compensation Committee determined that these increases were appropriate to compensate executive officers for the increased level of responsibility associated with the increase in the Company's size. The stock option grants are generally made on an annual basis at the then stock market price and have the purpose of providing the Company's executive officers and key employees with an equity ownership opportunity in the Company and with incentives to maximize shareholder values. During 1994, the Stock Option Committee made two option grants to each executive officer: one with respect to 1994 and one with respect to 1995. In determining the size of any stock option grant, the Stock Option Committee considers the following qualitative factors: the Committee's perception of the Company's overall performance, the individual's performance, the potential effect which the individual's future performance may have on the Company and the number of options previously granted to the individual. Each of these factors was given approximately equal weight. During 1994, Alan Shaw, Vice President-Operations, was paid quarterly bonuses based on three factors: (1) same-store sales comparisons; (2) profits compared to the immediately preceding year; and (3) customer service as reported through a "hidden shopper" program and various other subjective considerations, including management turnover, team work and creativity. Each of these factors was weighted equally. The Compensation Committee considered each of these factors and awarded bonuses to Mr. Shaw as noted in the Summary Compensation Table. During 1994, the Compensation Committee adopted an Executive Bonus Plan to provide additional incentives to its other executive officers, effective for the 1994 fiscal year. The bonus plan covers seven of the Company's eight executive officers. Alan Shaw already participates in the plan described above. Pursuant to the plan, each year the Compensation Committee establishes a percentage of each participating executive's annual base salary, ranging from 10%-30%, as a target bonus amount. The executive is eligible to receive this bonus amount, or a portion thereof, if the executive meets objectives set by the Compensation Committee. In the case of all executive officers other than Charles Way and Edwin McCranie, the receipt of the target bonus was based upon the achievement of Company objectives in: (i) increase in average unit sales; (ii) increase in net earnings; and (iii) subjective departmental and personal objectives. Each of these factors was weighted equally. In the case of Messrs. Way and McCranie, the receipt of their entire target bonus was based upon the achievement of Company objectives in: (i) increase in average unit sales; and (ii) increase in net earnings. Each of these factors was weighted equally. At the end of 1994, the Compensation Committee considered each of these objectives and awarded bonuses as noted in the Summary Compensation Table in accordance with the bonus plan. Commencing in 1994, the Omnibus Budget Reconciliation Act of 1993 denies publicly traded companies the ability to deduct for federal income tax purposes certain compensation paid (including gains on exercised stock option grants) to top executive officers in excess of $1 million per person. The Compensation Committee and Stock Option Committee intend to administer the Company's executive compensation programs in such a way that compensation to executive officers will be fully deductible under the Internal Revenue Code, including submitting plans for shareholder approval where necessary and determining compensation on an objective basis where necessary. CHIEF EXECUTIVE OFFICER COMPENSATION Mr. Way joined the Company in 1979, has served as its President and Chief Executive Officer since 1989, and became Chairman of the Board in 1992. In setting Mr. Way's compensation, the Compensation and Stock Option Committees tend to set a relatively low base salary for an individual with Mr. Way's responsibilities and emphasize option grants as a component of his overall compensation package. The Committees believe that this approach to Mr. Way's compensation has resulted in an appropriate alignment of his long-term rewards from the Company with the interests of shareholders. During 1994, the Compensation Committee adjusted Mr. Way's base salary upward by approximately 10.9%. In making this adjustment, the Compensation Committee considered subjective factors including the perception of the committee as to Mr. Way's overall performance and objective factors such as the increase in the Company's earnings per share, operating margins, and return on equity. Each of these factors was given approximately equal weight. In addition, Mr. Way received a 9 bonus of $30,600 pursuant to the bonus plan described above because of the Company's attainment of its average unit sales objectives. The Company's per share earnings increased 7.5% from 1993 to 1994. In addition, during 1994, the Stock Option Committee granted Mr. Way options with respect to an aggregate of 60,000 shares of Common Stock. These grants consisted of options with respect to an aggregate of 30,000 shares of Common Stock granted for 1994 and options with respect to an aggregate of 30,000 shares of Common Stock granted for 1995. In determining the size of each of these grants, the committee considered the following qualitative factors: the committee's perception of the Company's overall performance, Mr. Way's performance, the potential effect of his future performance on the Company and the number of options previously granted to him. Each of these factors was given approximately equal weight. At fiscal 1994 year-end, the value of Mr. Way's outstanding exercisable in-the-money stock options was $210,938 as compared to $558,750 at the end of 1993, a decrease of 62.2%. The Stock Option Committee believes that the stock options provide Mr. Way with appropriate incentives to promote long-term shareholder value. COMPENSATION COMMITTEE STOCK OPTION COMMITTEE James M. Shoemaker, Jr., Chairman James M. Shoemaker, Jr., Chairman Barry L. Edwards Barry L. Edwards Brian S. MacKenzie Brian S. MacKenzie
PERFORMANCE GRAPH A line graph comparing the cumulative, total shareholder return on the Common Stock of the Company for the last five fiscal years with the cumulative total returns of the NASDAQ Market Index and a peer group consisting of all publicly traded companies whose SIC code is 5812, the code for eating places, over the same period (assuming a $100 initial investment) is presented below. The Company will promptly furnish without charge to any shareholder of record on March 1, 1995, the identity of the companies included in the peer group. Requests should be directed to the Company, Post Office Box 100, Greer, South Carolina 29652; attn: Shareholder Relations. Note: The stock price performance shown on the graph below is not necessarily indicative of future price performance. COMPARISON OF CUMULATIVE TOTAL RETURNS AMONG RYAN'S FAMILY STEAK HOUSES, INC., NASDAQ MARKET INDEX AND SIC CODE INDEX FOR THE FIVE-YEAR PERIOD ENDING DECEMBER 28, 1994 (Plot points appear below for chart: 1989 1990 1991 1992 1993 1994 Ryans Family Steaks 100 70 115 140 110 90 NASDAQ Market Index 100 85 105 108 127 132 SIC Code Index 100 90 120 158 180 160 ASSUMES $100 INVESTED ON JAN. 3, 1990 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING DEC. 28, 1994) 10 AUDITORS KPMG Peat Marwick LLP, independent certified public accountants, has been appointed as auditors for the Company for the current fiscal year and to examine and report to shareholders upon the financial statements as of and for the year ending January 3, 1996. Representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting, and such representatives will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions which the shareholders may have. KPMG Peat Marwick LLP has acted for the Company in this capacity since 1981, and neither the firm nor any of its members has any relation with the Company except in the firm's capacity as auditors and tax advisors. SOLICITATION OF PROXIES The Company will pay the cost of soliciting proxies in the accompanying form. In addition to solicitation by mail, proxies may be solicited by officers and other regular employees of the Company by telephone, telegram or personal interview for no additional compensation. The Company has engaged W. F. Doring & Company to solicit proxies and distribute materials to brokerage houses, banks, custodians, nominees and fiduciaries for an estimated fee of approximately $10,000. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation material to beneficial owners of the stock held of record by such persons, and the Company will reimburse such persons for reasonable out-of-pocket expenses incurred by them in so doing. PROPOSALS OF SHAREHOLDERS Any shareholder who wishes to present a proposal at the 1996 Annual Meeting of Shareholders of the Company and have such proposal included in the proxy statement and form of proxy relating to that meeting must cause such proposal to be received by the Company not later than November 15, 1995. Shareholders desiring to make a recommendation to the Nominating Committee of the Board of Directors should submit the name(s) and business background of the proposed nominee(s) for the Board no later than November 15, 1995. Such proposal should be sent to the Company, attention Janet J. Gleitz, Post Office Box 100, Greer, South Carolina 29652. The proposal must comply with the rules of the Securities and Exchange Commission relating to shareholder proposals. FINANCIAL INFORMATION THE COMPANY'S 1994 ANNUAL REPORT IS ENCLOSED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY SHAREHOLDER OF RECORD AS OF MARCH 1, 1995, WHO SO REQUESTS IN WRITING, A COPY OF SUCH FISCAL 1994 ANNUAL REPORT OR THE COMPANY'S 1994 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE DIRECTED TO RYAN'S FAMILY STEAK HOUSES, INC., 405 LANCASTER AVENUE, GREER, SOUTH CAROLINA 29650, OR POST OFFICE BOX 100, GREER, SOUTH CAROLINA 29652, ATTENTION: JANET J. GLEITZ. OTHER BUSINESS As of the date of this Proxy Statement, management was not aware that any business not described above would be presented for consideration at the meeting. If any other business properly comes before the meeting, it is intended that the shares represented by proxies will be voted with respect thereto in accordance with the judgment of the person voting them. By Order of the Board of Directors, (Signature of Janet J. Gleitz appears here) Janet J. Gleitz SECRETARY Greer, South Carolina March 24, 1995 11