UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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CBRL Group, Inc.
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[Logo of CBRL Group, Inc.]
Dear Shareholder:
We have enclosed with this letter the Proxy Statement for our 2004 Annual
Meeting of Shareholders and our 2004 Annual Report. We hope you find them
interesting and useful in understanding your company.
The Annual Meeting will be held on Tuesday, November 23, 2004, at 10:00
a.m. Central Time, at our offices at 305 Hartmann Drive, Lebanon, Tennessee
37087, and you are most welcome to attend.
At this year's meeting, you will have an opportunity to vote on the
election of 9 directors, vote on certain changes to the CBRL 2002 Incentive
Compensation Plan, and approve the selection of Deloitte & Touche LLP as CBRL's
independent registered public accounting firm. We will discuss CBRL and its
performance during the past fiscal year, particularly commenting on the results
of business operations of our Cracker Barrel Old Country Store(R) and Logan's
Roadhouse(R) restaurants. Representatives from our independent registered public
accounting firm also will be available at the meeting and we will try to answer
your appropriate questions as well as we can following our report.
Your interest in CBRL and your vote are very important to us, so please
review the Proxy Statement and our Annual Report in detail and return your proxy
card as soon as possible. We all want your vote to be represented at the Annual
Meeting. For those of you who plan to visit with us in person at the Annual
Meeting, we look forward to seeing you, and please have a safe trip.
Sincerely,
/s/ Dan W. Evins
Dan W. Evins
Chairman
/s/ Michael A. Woodhouse
Michael A. Woodhouse
October 22, 2004 President and Chief Executive Officer
[Logo of CBRL Group, Inc.]
305 Hartmann Drive
Lebanon, Tennessee 37087
Notice of Annual Meeting of Shareholders
DATE: Tuesday, November 23, 2004
TIME: 10:00 a.m. Central Time
PLACE: 305 Hartmann Drive
Lebanon, Tennessee 37087
ITEMS OF BUSINESS: 1) to elect 9 directors;
2) to vote on certain changes to the CBRL 2002
Incentive Compensation Plan;
3) to approve the selection of Deloitte &
Touche LLP as our independent registered
public accounting firm for the 2005 fiscal
year; and
4) to conduct other business properly brought
before the meeting.
WHO MAY VOTE: You may vote if you were a shareholder of
record on September 24, 2004.
DATE OF MAILING: This Proxy Statement and the form of proxy are
first being mailed to shareholders on or about
October 22, 2004.
By Order of the Board of Directors,
/s/ James F. Blackstock
James F. Blackstock
Secretary
Lebanon, Tennessee
October 22, 2004
TABLE OF CONTENTS
GENERAL INFORMATION............................................................1
VOTING MATTERS.................................................................3
PROPOSAL 1: ELECTION OF DIRECTORS..............................................6
BOARD OF DIRECTORS AND COMMITTEES.............................................11
EXECUTIVE COMPENSATION........................................................15
Summary Compensation Table...........................................15
Option Grants in Last Fiscal Year....................................16
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values........................................................16
Equity Compensation Plan Information.................................17
Do any named executive officers have employment agreements?..........18
What are the terms of Mr. Evins' employment agreement?...............18
What are the terms of Mr. Woodhouse's employment agreement?..........19
Does CBRL have any other agreements with its named executive
officers?............................................................19
What are the material terms of the change in control agreements?.....20
Has the Board adopted a code of ethics for senior financial
officers?............................................................20
Compensation Committee Interlocks and Insider Participation..........20
COMPENSATION AND STOCK OPTION COMMITTEE REPORT................................21
AUDIT COMMITTEE REPORT........................................................24
CERTAIN TRANSACTIONS..........................................................26
SHAREHOLDER RETURN PERFORMANCE GRAPH..........................................27
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS...................28
PROPOSAL 2: AMENDMENT OF 2002 INCENTIVE COMPENSATION PLAN.....................29
PROPOSAL 3: APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM..........................................................................31
FEES PAID TO AUDITORS.........................................................32
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING.................................33
SHAREHOLDER COMMUNICATIONS....................................................33
ANNUAL REPORT AND FINANCIAL INFORMATION.......................................33
OTHER BUSINESS................................................................34
Appendix A--Form of Proxy Card...............................................A-1
i
GENERAL INFORMATION
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What is this document?
This document is the Proxy Statement of CBRL Group, Inc. being sent in
connection with our Annual Meeting of Shareholders to be held on Tuesday,
November 23, 2004. A form of proxy card accompanies this document.
We have tried to make this document simple and easy to understand. The
Securities and Exchange Commission ("SEC") encourages companies to use "plain
English" and we will always try to communicate with you clearly and effectively.
We will refer to your company throughout as "we" or "us" or "CBRL."
Why am I receiving a proxy statement?
We are sending this Proxy Statement and the form of proxy card to you to
solicit your proxy (i.e., your permission) to vote your shares of CBRL stock
upon certain matters at the Annual Meeting.
Who is paying the costs of the proxy statement and the solicitation of my proxy?
CBRL will pay all expenses of this solicitation, including the cost of
preparing and mailing this Proxy Statement, and all costs of any proxy solicitor
employed by us.
Who is soliciting my proxy and will anyone be compensated to solicit my proxy?
Your proxy is being solicited by and on behalf of our Board of Directors.
In addition to solicitation by use of the mails, proxies may be solicited by our
officers and employees in person or by telephone, facsimile or other means of
communication. Our officers and employees will not be additionally compensated,
but may be reimbursed for out-of-pocket expenses in connection with any
solicitation. We also may reimburse custodians, nominees and fiduciaries for
their expenses in sending proxies and proxy material to beneficial owners.
We retain Corporate Communications, Inc., 523 Third Avenue South,
Nashville, Tennessee to assist in the management of our investor relations and
other shareholder communications issues. Corporate Communications, Inc. receives
a fee of approximately $2,000 per month, plus reimbursement of out-of-pocket
expenses. As part of its duties, Corporate Communications, Inc. assists us in
the general solicitation of proxies.
We may also employ a professional proxy solicitation service and we will
pay all costs of that solicitor.
We will employ SunTrust-Atlanta to receive and tabulate the proxies, and
independent inspectors of election will certify the results.
1
What is CBRL Group, Inc.?
We are the parent of the following wholly-owned subsidiaries: Cracker
Barrel Old Country Store, Inc. ("Cracker Barrel") and Logan's Roadhouse, Inc.
("Logan's"). Each of these companies is a Tennessee corporation. Through Cracker
Barrel, we also own a number of related operating companies.
Where is CBRL Group, Inc. located?
Our corporate headquarters are located at 106 Castle Heights Avenue North,
Lebanon, Tennessee 37087. We conduct our business from there, from Cracker
Barrel's offices located at 305 Hartmann Drive, Lebanon, Tennessee 37087 and
from Logan's offices located at 3011 Armory Drive, Suite 300, Nashville,
Tennessee 37204. Our telephone number is 615.443.9869.
Where is CBRL Group, Inc. common stock traded?
Our common stock is traded and quoted on The Nasdaq Stock Market under the
symbol "CBRL."
2
VOTING MATTERS
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What am I voting on?
You will be voting on the following:
o the election of 9 directors;
o certain changes to the CBRL 2002 Incentive Compensation Plan (the
"Incentive Plan");
o the approval of the appointment of our independent registered public
accounting firm, Deloitte & Touche LLP; and
o any other matter properly brought before the Annual Meeting.
Who is entitled to vote?
You may vote if you owned shares of CBRL common stock at the close of
business on September 24, 2004. Each share of stock is entitled to one vote. As
of September 24, 2004, there were 48,859,733 shares of CBRL common stock
outstanding.
How do I vote?
In addition to voting in person at the meeting, you may vote:
o by completing, signing and returning the enclosed proxy card in the
postage-paid envelope;
o for shares held in a broker's name, over the Internet at the address
shown in the information provided with your broker's vote instruction
form (if you have access to the Internet, we encourage you to vote in
this manner); or
o for shares held in a broker's name, by telephone through the number
shown in the information provided with your broker's vote instruction
form.
The availability of telephone and Internet voting depends on the voting
processes of your broker. Neither telephone nor Internet voting is available to
you if you hold shares directly in your name. Please follow the directions on
your proxy card or vote instruction form carefully.
In order to assist us in tabulating votes at the Annual Meeting, we
encourage you to vote by proxy even if you plan to be present at the Annual
Meeting.
How will my proxy be voted?
The individuals named on the proxy card will vote your proxy in the manner
you indicate on the proxy card. If your proxy card is signed but does not
3
contain specific instructions, your proxy will be voted: "FOR" all nominees in
the election of directors, "FOR" the approval of the amendment to the Incentive
Plan, and "FOR" approval of the selection of Deloitte & Touche LLP as our
independent registered public accounting firm.
Can I change my mind and revoke my proxy?
Yes. To revoke a proxy given pursuant to this solicitation, you must:
o sign another proxy with a later date and return it to our Corporate
Secretary at CBRL Group, Inc., P.O. Box 787, Lebanon, Tennessee 37088-
0787 at or before the Annual Meeting;
o provide our Corporate Secretary with a written notice of revocation
dated later than the date of the proxy at or before the Annual Meeting;
or
o attend the Annual Meeting and vote in person. Note that attendance at
the Annual Meeting will not revoke a proxy if you do not actually
vote at the Annual Meeting.
What if I receive more than one proxy card?
The receipt of multiple proxy cards means that you have more than one
account with brokers or our transfer agent. Please vote all of your shares. We
also recommend that you contact your broker and our transfer agent to
consolidate as many accounts as possible under the same name and address. Our
transfer agent is SunTrust Bank-Atlanta, which may be contacted at
1.800.568.3476.
How will abstentions and broker non-votes be treated?
Abstentions and broker non-votes will be treated as shares that are present
and entitled to vote for purposes of determining whether a quorum is present,
but will not be counted as votes cast either in favor of or against a particular
proposal.
What are broker non-votes?
If you are the beneficial owner of shares held in "street name" by a
broker, your broker is the record holder of the shares; however, the broker is
required to vote those shares in accordance with your instructions. If you do
not give instructions to your broker, your broker may vote the shares with
respect to "discretionary" items, (i.e., routine matters such as uncontested
elections of directors and appointment of the independent registered public
accounting firm), but the broker may not vote your shares with respect to
"non-discretionary" items, such as incentive compensation plans that authorize
grants of stock and stock options that exceed 5% of the class outstanding, and
shareholder proposals. In the case of non-discretionary items, shares for which
the owner has not given voting instructions will be treated as "broker
non-votes." To avoid giving them the effect of negative votes, broker non-votes
are disregarded for the purpose of determining the total number of votes cast or
entitled to vote with respect to a proposal.
4
How many votes must be present to hold the Annual Meeting?
A quorum must be present at the Annual Meeting for any business to be
conducted. A quorum exists if the holders of a majority of the 48,859,733 shares
of CBRL common stock outstanding on September 24, 2004 are present at the
meeting, in person or by proxy.
How many votes are needed to elect directors and approve other matters?
Directors are elected by a plurality of the votes cast by the holders of
shares entitled to vote at the Annual Meeting. This means that the director
nominee with the most affirmative votes for a particular slot is elected for
that slot. You may vote in favor of all nominees, withhold your vote as to all
nominees or withhold your vote as to specific nominees.
Except for the election of directors, each proposal submitted to the
shareholders at the Annual Meeting will be approved if the number of votes cast
for the proposal exceeds the number of votes cast against it.
Will my vote be confidential?
Yes. We will continue our practice of keeping the votes of all shareholders
confidential. Shareholder votes will not be disclosed to our directors,
officers, employees or agents, except:
o to allow the independent inspectors of election to certify the results;
o as necessary to meet applicable legal requirements and to assert or
defend claims for or against us;
o in the case of a contested proxy solicitation; or
o when a shareholder makes a written comment on the proxy card or
otherwise communicates the vote to management.
5
PROPOSAL 1: ELECTION OF DIRECTORS
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What is the structure of the Board of Directors?
Pursuant to our Bylaws, our Board of Directors must consist of at least
five directors, but the exact number is set by the Board. There currently are 10
members of the Board; however, Dan W. Evins, on September 23, 2004, notified us
of his decision not to stand for re-election. Accordingly, the Board of
Directors, effective with the date of the Annual Meeting, has fixed the size of
the Board at nine. All nominees currently are serving as directors. All
directors are elected annually by our shareholders.
Who are the nominees this year?
The nominees for the Board of Directors consist of nine of our current
directors. These nominees are: James D. Carreker, Robert V. Dale, Robert C.
Hilton, Charles E. Jones, Jr., B. F. "Jack" Lowery, Martha M. Mitchell, Andrea
M. Weiss, Jimmie D. White and Michael A. Woodhouse. If elected, each nominee
would hold office until the 2005 Annual Meeting of Shareholders and until his or
her successor is elected and qualified.
What are the backgrounds of this year's nominees?
Name, Age, Position First Became Business Experience During
with CBRL a Director Past Five Years
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James D. Carreker, 57 2002 Chairman and CEO of The
Director Bombay Company, Inc., a
home-furnishing retail
chain, Fort Worth, TX,
since June 2003; Founder
and owner, JDC Holdings,
Inc., a private equity and
investment firm, Dallas,
TX, since October 2000;
Chairman and CEO, Wyndham
Hotels, a hotel and resort
operator and developer,
Dallas, TX, from 1995 to
October 2000, and
President and CEO from
1988 to 1995; President
and CEO, Trammell Crow
Company, Dallas, TX, in
1993-1994; Director,
Carreker Corporation since
1984; Director, The Bombay
Company, Inc. since
December 2002
Robert V. Dale, 67 1986 Retired; President, Windy
Director Hill Pet Food Company,
Nashville, TN, from March
6
Name, Age, Position First Became Business Experience During
with CBRL a Director Past Five Years
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1995 until its sale in
July 1998; Partner in PFB
Partnership, Nashville,
TN, from August 1994 to
March 1995; President of
Martha White Foods, Inc.,
Nashville, TN, from
October 1985 to August
1994; Director, Genesco,
Inc. since June 2000
Robert C. Hilton, 67 1981 President, Autumn Capital,
Director an investment firm,
Nashville, TN, since
August 1999; Chairman,
President and CEO, Home
Technology Healthcare,
Inc., Nashville, TN, from
October 1991 to August
1999
Charles E. Jones, Jr., 59 1981 President, Corporate
Director Communications, Inc., an
investor/shareholder
communications and public
relations firm, Nashville,
TN
B. F. "Jack" Lowery, 67 1971 Attorney; Chairman and
Director CEO, LoJac Enterprises,
Inc., an asphalt paving,
highway construction and
building materials
supplier and contractor,
Lebanon, TN
Martha M. Mitchell, 64 1993 Senior Vice President
Director since January 1987 and
Partner since January 1993
and Senior Partner since
July 1998, Fleishman-
Hillard, Inc., an
international
communications consulting
and public relations firm,
St. Louis, MO
Andrea M. Weiss, 49 2003 President and CEO of
Director Retail Consulting, LLC, a
retail consulting firm,
since October 2002;
President of dELiA*s
Corp., a multichannel
retailer to teenage girls
and young women, from May
2001 to October 2002;
Executive Vice President
and Chief Store Officer of
The Limited, Inc. and
Intimate Brands, Inc.,
units of Limited Brands,
Inc., a women's retailer,
from May 1998 to February
2001; Director,
Brookstone, Inc. since
June 2002; Director,
eDiets.com, Inc. since
July 2004
7
Name, Age, Position First Became Business Experience During
with CBRL a Director Past Five Years
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Jimmie D. White, 63 1993 Retired on December 11,
Director 1995; Senior Vice
President- Finance and CFO
of the predecessor to CBRL
from 1985 to 1995
Michael A. Woodhouse, 59 1999 President and CEO of CBRL
Director, President and Chief since August 4, 2001;
Executive Director President and COO of CBRL
from July 2000 through
August 3, 2001; Executive
Vice President and COO of
CBRL from July 1999 to
July 2000; Senior Vice
President and CFO of CBRL
from January 1999 to July
1999; Senior Vice
President Finance and CFO
of Cracker Barrel Old
Country Store, Inc., from
December 1995 to December
1998
What if a nominee is unwilling or unable to serve?
If a director nominee becomes unwilling or unable to serve, proxies may be
voted for a substitute nominee designated by our Board of Directors.
Are there any family relationships between any of the nominees?
There are no family relationships between any of the nominees or executive
officers.
Are the members of our Board "independent"?
A majority of our Board members are "independent" in accordance with
National Association of Securities Dealers listing standards.
What is the background of Mr. Evins, who is not standing for re-election?
Mr. Evins, age 69, is our founder and has been Chairman of CBRL (and its
predecessor) since 1970; CEO from August 1995 to April 1999 and July 2000 to
August 2001; President and CEO from 1970 to August 1995 and April 1999 to July
2000.
Are the members of our Board required to attend the annual shareholder meetings?
Our Board has adopted a policy that requires all directors to attend the
annual shareholder meetings, unless attendance is not feasible due to
unavoidable circumstances. All Board members attended our 2003 Annual Meeting of
Shareholders.
8
How are directors nominated?
The Nominating and Corporate Governance Committee of our Board of Directors
is responsible for identifying, and recommending to the Board all persons to be
nominated to serve as a director of CBRL. The committee will consider director
candidates timely submitted by our shareholders in accordance with the notice
provisions as discussed below under "Can shareholders recommend nominees for
directors?". The committee applies the same criteria to the evaluation of
shareholder-nominated director candidates as it applies to other director
candidates. Our Board is responsible for nominating the slate of directors for
the Annual Meeting, upon the committee's recommendation.
How are nominees identified?
All director nominees are current directors who are standing for
re-election. Generally, when there is a vacancy to be filled on the Board of
Directors, the Nominating and Corporate Governance Committee retains a
third-party search firm to assist in identifying candidates to fill the vacancy.
That search firm reports directly to the committee. The main functions served by
the search firm include identifying potential candidates who meet the
qualification and experience requirements described below, as well as compiling
information regarding each candidate's qualifications, experience and
independence and conveying the information to the committee.
How are nominees evaluated; what are the minimum qualifications?
The Nominating and Corporate Governance Committee identifies, recruits and
recommends to the Board only those candidates that the committee believes are
qualified to become Board members consistent with the criteria for selection of
new directors adopted from time to time by the Board. We endeavor to have a
Board representing diverse experience at policy-making levels in business,
marketing, finance and areas that are relevant to our business. The committee
recommends candidates, including those submitted by shareholders, only if the
committee believes the candidate's knowledge, experience and expertise would
strengthen the Board and that the candidate is committed to representing the
long-term interests of all of our shareholders. A majority of the Board must
consist of independent directors (as defined by National Association of
Securities Dealers listing standards and our Corporate Governance Guidelines).
No person who has reached the age of 70 is eligible for appointment, election or
re-election as a director.
The committee assesses a candidate's independence, background and
experience, as well as the current Board skill needs and diversity. With respect
to incumbent directors selected for re-election, the committee also assesses
each director's contributions, attendance record at Board and applicable
committee meetings and the suitability of continued service. In addition,
individual directors and any person nominated to serve as a director should
possess all of the following personal characteristics and be in a position to
devote an adequate amount of time to the effective performance of director
duties: integrity and accountability, informed judgment, financial literacy,
cooperative behavior, record of achievement, loyalty, and ability to consult and
advise.
9
Can shareholders recommend nominees for directors?
Shareholders can recommend nominees for directors. If a shareholder wishes
to recommend a candidate for director, the shareholder must provide notice in
writing to the Chair of the Nominating and Corporate Governance Committee, CBRL
Group, Inc., c/o Corporate Secretary, P. O. Box 787, Lebanon, TN, 37088-0787.
For consideration at the 2005 Annual Meeting, the notice must be received by
June 23, 2005. The notice must provide the following information for each
proposed nominee who is not an incumbent director that the shareholder wishes to
nominate:
o the name, age, business address and residence address of the person;
o the principal occupation or employment of the person;
o the number of shares of common stock that are owned beneficially or of
record by the person; and
o any other information relating to the person that would be required to
be disclosed in a proxy statement or other filings required to be made
in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Securities Exchange Act of 1934 (the
"Exchange Act") and related rules and regulations.
The notice must also provide the following information about the shareholder
giving the notice:
o the name and record address of the shareholder;
o the number of shares of common stock that are owned beneficially or of
record by the shareholder;
o a description of all arrangements or understandings between the
shareholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be
made by the shareholder;
o a representation that the shareholder intends to appear in person or by
proxy at the meeting to nominate the person named in the notice; and
o any other information relating to the shareholder that would be required
to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and related rules
and regulations.
The notice must be accompanied by a written consent of each proposed nominee to
be named as a nominee and to serve as a director if elected. No director
candidates were recommended by our shareholders for election at the 2004 Annual
Meeting.
What does the Board of Directors recommend?
Our Board of Directors recommends that you vote FOR the election of
these nominees.
10
BOARD OF DIRECTORS AND COMMITTEES
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How are directors compensated?
Each outside director has been paid an annual retainer of $30,000 plus a
director's fee of $1,000 for each Board and committee meeting attended, other
than the Audit Committee and the Compensation and Stock Option Committee members
who have been paid $2,000 for each committee meeting attended. The chairperson
of each committee, other than the Audit Committee and the Compensation and Stock
Option Committee, has been paid an additional annual retainer of $5,000, while
the chairperson of each of the Audit Committee and the Compensation and Stock
Option Committee has been paid an additional annual retainer of $10,000. We
reimburse all non-employee directors for out-of-pocket expenses incurred in
connection with attendance at meetings. Directors who also are employees of CBRL
are not paid director's fees or a retainer. Beginning in fiscal 2005, the
director's fee for each Board and committee meeting attended by a non-employee
director has been raised to $1,500. The meeting fees for the Audit Committee and
the Compensation and Stock Option Committee remains at $2,000 per meeting.
Directors also are offered the option to participate in our Deferred
Compensation Plan. The Deferred Compensation Plan allows a participant to defer
a percentage or sum of his or her compensation and earn interest on that
deferred compensation at a rate equal to the 10-year Treasury bill rate (as in
effect at the beginning of each calendar quarter) plus 1.5%.
Pursuant to our Incentive Plan, on the date of each annual shareholders
meeting, each non-employee director who is elected at that annual meeting of
shareholders currently receives an option to purchase 5,000 shares of CBRL
common stock at fair market value pursuant to the plan, 1/3 of which will vest
and become exercisable each year beginning on the first anniversary date of the
option grant date. These options expire on the 10th anniversary of the date of
the grant.
Also pursuant to the Incentive Plan, each non-employee director who is
elected or appointed to our Board between annual meetings of our shareholders
and prior to the July 31 immediately preceding the first annual meeting of
shareholders following the election or appointment will receive an option to
purchase 5,000 shares of CBRL common stock at fair market value pursuant to the
plan, 1/3 of which will vest and become exercisable each year beginning on the
first anniversary date of the option grant date. These options will expire on
the 10th anniversary of the date of the grant.
As discussed in the section entitled "Proposal 2: Amendment to 2002
Incentive Compensation Plan," we are proposing to amend the Incentive Plan to
allow directors to be compensated, in addition to their fees, through either (1)
options to purchase up to 5,000 shares of CBRL common stock or (2) grants of up
to 2,000 shares of restricted stock or restricted stock units. If the amendment
is approved by shareholders, we intend initially to substitute grants of 2,000
shares of restricted stock for the option to purchase 5,000 shares of CBRL
common stock, which previously has been part of each director's annual
compensation.
11
Mr. Evins, our Chairman of the Board, and Mr. Woodhouse, our President and
Chief Executive Officer, are compensated pursuant to their employment agreements
and certain benefit plans described below under "Executive Compensation."
How often did the Board of Directors meet in fiscal year 2004?
Our Board of Directors met 13 times during fiscal year 2004. Each director
attended at least 75% of the combined total of all meetings of the Board and all
meetings of the committee(s) on which he or she served.
What are the committees of the Board?
Our Board has the following standing committees: audit, compensation and
stock option, nominating and corporate governance, public responsibility, and
executive. All members of the Nominating and Corporate Governance Committee and
the Audit Committee are independent as defined in the National Association of
Securities Dealers listing standards, and our Board has adopted a written
charter for each of these committees. A copy of the Nominating and Corporate
Governance Committee Charter and the Audit Committee Charter are posted on
CBRL's Internet website at www.cbrlgroup.com. In addition, the Audit Committee
Charter was included as Appendix A to our Proxy Statement for the 2003 Annual
Meeting of Shareholders. Current information regarding all of our standing
committees is set forth below.
Name of Functions of Number of Meetings in
Committee & Members the Committee Fiscal Year 2004
--------------------------------------------------------------------------------
AUDIT: o Appoints and oversees 11
Robert C. Hilton, Chair outside auditors
James D. Carreker o Acts as liaison between
Robert V. Dale the Board and outside auditors
Jimmie D. White o Reviews and approves audit fees
o Discusses the independence of
our outside auditors
o Pre-approves all audit and
non-audit services rendered by
our outside auditors
o Responsible for developing
procedures to receive
information and address
complaints regarding the status
of our financial condition and
effectiveness of our internal
controls or audit process
o Reviews internal accounting
controls and systems, including
internal audit plan
12
Name of Functions of Number of Meetings in
Committee & Members the Committee Fiscal Year 2004
--------------------------------------------------------------------------------
o Reviews results of the annual
audit and related financial
reports
o Reviews quarterly earnings
press releases and financial
results
o Reviews our significant
accounting policies and any
changes to those policies
o Pre-approves new or renewal
transactions between the
Company and related parties
and annually reviews and
confirms on-going contractual
or lease obligations
o Sole authority to hire, fire,
and approve compensation for
Director of Internal Audit
o Determines financial expertise
and continuing education
requirements of members
COMPENSATION AND STOCK
OPTION: o Reviews and recommends salaries, 6
Robert V. Dale, Chair bonuses and other cash compensation
James D. Carreker of executive officers
Andrea M. Weiss o Administers compensation plans for
Jimmie D. White executive officers, and approves
all option grants and stock grants
o Reviews executive management's
performance, particularly with
respect to financial goals for
the concluding fiscal year
NOMINATING AND CORPORATE
GOVERNANCE: o Considers and recommends to the 2
Robert V. Dale, Chair Board nominees for director
Robert C. Hilton o Considers nominees recommended
Charles E. Jones, Jr. by shareholders in writing prior
Martha M. Mitchell to the annual deadline for
submission of shareholder
proposals
o Reviews and recommends changes
to corporate governance policies
and practices
o Reviews and recommends candidates
to serve on Board committees
13
Name of Functions of Number of Meetings in
Committee & Members the Committee Fiscal Year 2004
--------------------------------------------------------------------------------
PUBLIC RESPONSIBILITY: o Advises the Board concerning 2
Martha M. Mitchell, Chair public relations matters when
Dan W. Evins it is not possible or convenient
Charles E. Jones, Jr. for the entire Board to meet
B.F. "Jack" Lowery o Considers litigation strategy
Andrea M. Weiss and diversity issues when it is
not possible or convenient for
the entire Board to meet
EXECUTIVE: o Meets at the call of the Chairman 1
Dan W. Evins, Chair of the Board
Robert V. Dale o Meets when the timing of certain
Charles E. Jones, Jr. actions makes it appropriate to
B. F. "Jack" Lowery convene the Committee rather
Martha M. Mitchell than the entire Board
Michael A. Woodhouse o May carry out all functions and
powers of the Board subject to
certain exceptions under
applicable law
o Advises senior management
regarding actions contemplated
by CBRL whenever it is not
convenient or appropriate to
convene the entire Board
14
EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
The following tables discuss the compensation earned during the last three
fiscal years by our Chief Executive Officer and our four most highly compensated
executive officers as of the end of the 2004 fiscal year. We will refer to these
officers as our "named executive officers" throughout this document.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------------ ------------------------------
Securities
Underlying
Restricted Options All Other
Name and Principal Salary Bonus Stock Awards Granted Compensation
Position in FY 2004 Year ($) ($) ($) (Shares) ($)(1)
---------------------------------------------------------------------------------------------------------------------
Michael A. Woodhouse, 2004 800,000 959,512 -- 90,347 562,128
President and 2003 700,000 1,640,625 -- 160,000 269,000
Chief Executive Officer 2002 600,000 1,209,445 919,200 58,769 336,207
Donald M. Turner, 2004 545,000 491,605 -- 45,210 333,445
President and Chief Operating 2003 500,000 720,445 -- 70,000 192,427
Officer--Cracker Barrel Old 2002 400,000 573,623 -- 44,701 261,129
Country Store, Inc.
Dan W. Evins, 2004 500,000 399,797 -- -- 200,518
Chairman 2003 500,000 781,250 -- -- 441,233
2002 500,000 671,914 -- 108,831 588,342
Lawrence E. White, 2004 360,000 287,854 -- 25,000 100,357
Senior Vice President, Finance 2003 340,000 531,250 -- 30,000 128,196
and Chief Financial Officer 2002 315,000 423,306 -- 30,090 169,267
David L. Gilbert 2004 335,000 251,816 -- 20,000 111,518
Chief Administrative 2003 310,000 399,521 -- 35,000 111,931
Officer--Cracker Barrel Old 2002 275,000 382,108 -- 28,731 105,016
Country Store, Inc.
------------------------------------
(1) Amounts shown in this column for 2004 include certain long-term incentive
cash awards that were granted in fiscal 2000 (or more recently in certain
cases related to newly hired or promoted officers), in tandem with certain
stock options. These awards cliff vested at the end of fiscal year 2004, 5
years after the grant. The following cash amounts were accrued for each of
the named executive officers during 2004: Mr. Turner, $300,771 and Mr.
Gilbert, $98,893. Amounts shown in this column for 2004 include certain
long-term incentive awards that were granted at the beginning of fiscal
year 2004 and vested at the end of fiscal year 2004, and the following
amounts were accrued for each of the named executive officers during 2004:
Mr. Woodhouse, $504,000; Mr. Evins, $157,500; and Mr. White, $85,680.
Amounts shown in this column for 2004 also include premiums paid on life
and disability insurance for coverage above that available to all salaried
employees generally of $21,519 for Mr. Woodhouse; $13,692 for Mr. Turner;
$41,480 for Mr. Evins; $5,034 for Mr. White and $4,301 for Mr. Gilbert; and
CBRL's contributions to its 401(k) Employee Savings Plan and any
non-qualified deferred compensation plan for each named executive officer
in fiscal 2004.
15
Option Grants In Last Fiscal Year
Potential Realizable Value
% of Total at Assumed Annual Rates of
Number of Options Stock Price Appreciation
Securities Granted to for Option Term(2)
Underlying Employees in Exercise or --------------------------
Options Fiscal Year Base Price Expiration
Name Granted ($/Share)(1) Date 5% 10%
--------------------------------------------------------------------------------------------------------------------
Mr. Woodhouse 90,347 7.88% $37.19 9/25/2013 $2,113,089 $5,354,983
Mr. Turner 41,033 3.58% $37.19 9/25/2013 $ 959,704 $2,432,079
4,177 0.36% $35.19 3/29/2005 $ 12,452 $ 25,306
Mr. Evins -- -- -- -- -- --
Mr. White 25,000 2.18% $37.19 9/25/2013 $ 584,715 $1,481,782
Mr. Gilbert 20,000 1.74% $37.19 9/25/2013 $ 467,772 $1,185,426
------------------------------------
(1) The exercise price of the options granted equals the closing market price
during normal trading hours of our common stock on the day prior to the
grant date. The options generally vest and become exercisable at a
cumulative rate of 33-1/3% per year. All remaining options also vest upon a
defined change in control of CBRL. The grant to Mr. Turner of the 4,177
options that expires on March 29, 2005 has already vested.
(2) The potential realizable values illustrate values that might be realized
upon exercise immediately prior to the expiration of the option term using
5% and 10% appreciation rates from the price at the grant date (which is
equal to the exercise price), as required by the SEC, compounded annually.
These values do not, and are not intended to, forecast possible future
appreciation, if any, of CBRL's stock price. Also, these values do not take
into consideration any provisions for vesting over a period of years or
termination of options following termination of employment.
Aggregated Option Exercises In Last Fiscal Year
And Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options at
#Shares Options at FY-End FY-End(2)
Acquired Value -------------------------------------
Upon Realized
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------
Mr. Woodhouse 62,871 $ 1,687,679 464,781 216,603 $6,737,741 $1,285,281
Mr. Turner 107,387 $ 2,593,956 56,263 99,017 $1,069,897 $ 598,352
Mr. Evins 722,197 $15,242,614 0 36,277 $ 0 $ 475,954
Mr. White 33,104 $ 933,972 66,902 55,030 $1,110,636 $ 324,394
Mr. Gilbert 32,860 $ 649,343 28,035 52,909 $ 435,372 $ 350,571
---------------------------------------
(1) Value realized is calculated based on the difference between the fair
market value of the securities underlying the option and the exercise or
base price of the options at exercise or fiscal year-end, respectively.
(2) The last trade of CBRL common stock, as reported by Nasdaq on July 30,
2004, was at $33.22. That price was used in calculating the value of
unexercised options.
16
Equity Compensation Plan Information
The following table summarizes share and exercise price information about
our equity compensation plans as of July 30, 2004.
Number of
Securities to be Number of Securities
Issued Upon Remaining Available for
Exercise of Weighted-Average Future Issuance Under
Outstanding Exercise Price of Equity Compensation Plans
Options, Warrants Outstanding Options, (Excluding Securities
Plan Category and Rights Warrants and Rights Reflected in Column (A))
------------- ------- ------------------- ------------------------
(A) (B) (C)
Equity compensation plans approved by
security holders (1) 3,220,193 23.68 3,628,118
Equity compensation plans not approved
by security holders (2) 2,624,554 25.30 159,428
Total 5,844,747 24.40 3,787,546
---------------------------------------
(1) These plans consist of our 1987 Stock Option Plan, as amended; Amended and
Restated Stock Option Plan, as amended; 1989 Stock Option Plan for
Non-Employee Directors, as amended; and 2002 Incentive Compensation Plan.
(2) This plan category consists of awards to non-officer employees under our
2000 Non-Executive Stock Option Plan and a grant of 20,000 shares of
restricted stock to Mr. Woodhouse.
Material features of the 2000 Non-Executive Stock Option Plan (the "Stock Option
Plan")
General. The Stock Option Plan provides for the grant of stock options. As
of September 24, 2004, we have outstanding stock options under the Stock Option
Plan for future exercise of 2,732,180 shares of our common stock. Currently,
there are no shares of CBRL common stock reserved for future issuance under the
Stock Option Plan as all available options have been granted; however, this
reserve could increase if employees leave the employment of the Company or any
of its subsidiaries either prior to all or any portion of the options vesting or
without exercising their options to the extent they are vested. The shares
subject to these unvested or unexercised options once again become available for
future grant. The aggregate number of shares of common stock which may be
granted under the Stock Option Plan cannot exceed 4,750,000 shares (subject to
adjustment in the event of certain stock splits, stock dividends, share
combinations or recapitalizations).
Eligibility. The persons eligible to participate in the Stock Option Plan
as recipients of options are employees of the Company or any of its subsidiaries
who are not officers or directors of the Company. In addition, any person who is
a participant in the CBRL Group Long Term Incentive Plan is not eligible to
participate in or receive options under the Stock Option Plan.
17
Option Price; Payment. The option price per share is the fair market value
of the Company's common stock. From time to time the Compensation and Stock
Option Committee selects, from among those who are eligible, the individuals to
whom options are granted and determines the number of options to be granted. The
date of the grant is determined by the date on which the option recommendation
is approved, or selection of an employee as a participant in any grant under the
Stock Option Plan is made, by the Compensation and Stock Option Committee.
Shares purchased by exercising an option must be paid in full by delivery
to the Company of consideration equal to the product of each option price and
the number of shares purchased, plus applicable taxes. The consideration must be
paid in cash or by check. The option price may also be paid, at the discretion
of the Board, by delivery of other shares of our common stock, subject to
applicable holding periods, or any other consideration the Compensation and
Stock Option Committee permits.
Term. Each option specifies the rate at which the option vests or becomes
exercisable, which is in the discretion of the Compensation and Stock Option
Committee. Each option expires at the end of a specified period, which shall not
exceed 10 years. The option may expire earlier or even terminate if employment
is terminated. The Stock Option Plan terminates on July 29, 2005 unless extended
by the Board.
Material features of the restricted stock grants for Mr. Woodhouse
In fiscal 2000 we granted Mr. Woodhouse 20,000 shares of CBRL common stock,
as restricted stock, of which all shares vest on July 27, 2005.
Do any named executive officers have employment agreements?
Yes. We have an employment agreement with each of Mr. Evins and Mr.
Woodhouse.
What are the terms of Mr. Evins' employment agreement?
Mr. Evins' employment agreement provides for the payment of an annual
salary in the amount of $500,000, which amount shall not be decreased, and which
may be increased from time to time. The agreement also provides for target bonus
potential of 100% of Mr. Evins' base salary, but that bonus can be as high as
225% or as low as 0% depending on Company performance relative to the annual
business plan. In the event CBRL terminates Mr. Evins' employment without
"cause" (as defined in the agreement), the agreement entitles him to a severance
payment equal to the unpaid amount due during the employment term prior to the
termination, plus approximately three times his annual salary in effect on the
date of termination, as well as a lump sum cash distribution determined by a
formula based on his unvested stock options which otherwise would have vested
during the original term. The agreement specifies that Mr. Evins' participation
in CBRL's life, medical and disability insurance programs will continue if his
employment is terminated by CBRL without "cause" until he is either employed
elsewhere and is permitted to be covered by that employer's benefit plans, CBRL
no longer provides those benefit plans to its management employees, or the
expiration of the term of the agreement. The agreement also describes rights to
18
compensation if Mr. Evins' employment is terminated or suspended due to death,
disability or "cause." This agreement generally does not preclude Mr. Evins from
participating in any other CBRL benefit plan or arrangement. The agreement
contains an agreement by Mr. Evins not to compete with CBRL during the term of
the agreement, and for a period of one year following the date of termination of
employment by Mr. Evins or by CBRL for "cause."
As stated above, Mr. Evins notified us on September 23, 2004 of his
decision not to stand for re-election to the Board. Accordingly, his service as
a director will end on the date of the Annual Meeting. The Board has elected Mr.
Evins to serve as Chairman Emeritus effective the date of the Annual Meeting.
Mr. Evins will provide consulting and other services to the Company as directed
by the Board of Directors pursuant to his existing employment agreement.
What are the terms of Mr. Woodhouse's employment agreement?
Mr. Woodhouse's employment agreement provides for the payment of an annual
salary in the initial amount of $600,000, which amount shall not be decreased,
and which may be increased from time to time. The agreement also provides for
target bonus potential of 150% of Mr. Woodhouse's base salary, but that bonus
can be as high as 337.5% or as low as 0% depending on Company performance
relative to the annual business plan. In the event CBRL terminates Mr.
Woodhouse's employment without "cause" (as defined in the agreement), the
agreement entitles him to a severance payment equal to the unpaid amount due
during the employment term prior to the termination, plus three times his annual
salary in effect on the date of termination, as well as a lump sum cash
distribution determined by a formula based on his unvested stock options which
otherwise would have vested during the current term. The agreement specifies
that Mr. Woodhouse's participation in CBRL's life, medical and disability
insurance programs will continue if his employment is terminated by CBRL without
"cause" until he is either employed elsewhere and is permitted to be covered by
that employer's benefit plans, CBRL no longer provides those benefit plans to
its management employees, or the expiration of the term of the agreement. The
agreement also describes rights to compensation if Mr. Woodhouse's employment is
terminated or suspended due to death, disability or "cause." This agreement
generally does not preclude Mr. Woodhouse from participating in any other CBRL
benefit plan or arrangement. The agreement contains a promise by Mr. Woodhouse
not to compete with CBRL during the term of the agreement, and, if Mr. Woodhouse
accepts his severance payment, for a period of one year following the date of
termination of employment by CBRL without "cause."
As stated above, effective the date of the Annual Meeting, Mr. Evins will
cease to be our chairman and Mr. Woodhouse, effective that date, will become our
chairman. No agreements have been reached at this time as to what effect this
will have upon the current terms of Mr. Woodhouse's employment agreement.
Does CBRL have any other agreements with its named executive officers?
Yes. On September 30, 1999, our Board of Directors approved a plan
responding to change in control issues. The plan is based on recommendations
from an independent, outside compensation consultant and is designed to
19
encourage retention of key employees. Generally, our senior officers, including
the named executive officers, and other key personnel have been provided
agreements stating that upon a "change in control," they will receive specified
salary payments and other benefits.
What are the material terms of the change in control agreements?
The change in control agreements provide that the named executive officers
will receive specified benefits if after a "change in control" there is: (1) a
material change in duties or responsibilities resulting in the assignment of
duties and responsibilities inferior to the duties and responsibilities in
effect at the time of change in control, (2) a reduction in salary or a material
change in benefits (excluding discretionary bonuses), or (3) a change in the
location of work assignments from the location at the time of change in control
to any other location that is further than 50 miles away from the location at
the time of change in control. The salary payments will equal 2.00 or 2.99 times
the average salary and bonus for the 3 years prior to a change in control
(including, when required, a gross-up payment to cover excise taxes), and
benefits will include continuation of and payments for health benefits for a
2-year period. The agreements define "change in control" to include certain
circumstances in which a person becomes the beneficial owner of securities
representing 20% or more of the combined voting power of our voting stock, a
majority of our Board changes within a 2-year period, or we merge, consolidate
or reorganize.
Has the Board adopted a code of ethics for senior financial officers?
The Board of Directors has adopted a code of ethics for its senior
financial officers, as defined by SEC regulations, that applies to CBRL's chief
executive officer, chief financial officer, and chief accounting officer. This
code of ethics is posted on CBRL's Internet website at www.cbrlgroup.com. Any
amendments to, or a waiver from, a provision of this code of ethics will be
posted on CBRL's Internet website.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation and Stock Option Committee has been an
officer or employee of CBRL or any of our subsidiaries at any time, except
Jimmie D. White, who retired in 1995, and no relationships exist requiring
disclosure under applicable regulations of the SEC. None of our executive
officers has served on the board of directors or on the compensation committee
of any other entity, any officers of which served either on our Board or on our
Compensation and Stock Option Committee.
20
COMPENSATION AND STOCK OPTION
COMMITTEE REPORT
--------------------------------------------------------------------------------
What is the Compensation and Stock Option Committee and what does it do?
The Compensation and Stock Option Committee of the Board of Directors
administers our compensation policies for our executive officers and other
senior management personnel. The committee recommends to the Board the salaries
and bonus plan for our executive officers, and it administers the stock option
plans pursuant to which all employee stock options are granted.
Are the members of the committee "independent"?
This committee is comprised of four directors who are independent as
determined in accordance with the National Association of Securities Dealers
listing standards and our Corporate Governance Guidelines, which are posted on
our Internet website at www.cbrlgroup.com.
What are the components of executive compensation?
Our compensation program for executive officers consists of three key
elements: base salary, annual performance bonus and longer-term incentives such
as stock options. Base salaries are targeted to be competitive at the 60th
percentile and total compensation generally is targeted to be competitive at the
75th percentile of the market for positions of similar responsibilities as
determined by an independent outside compensation consultant. We consider it
necessary and appropriate to position compensation packages at these levels to
attract, retain and motivate executives and other key management personnel with
the essential qualifications for managing our operations and growth.
Base Salary. In setting the fiscal 2004 base salary for each executive
officer, the committee reviewed the then-current salary for each of the officers
in relation to average salaries within the industry for comparable areas of
responsibility as presented in a report prepared for the committee by
independent executive compensation consultants. The committee also considered
the contribution made by each executive officer during fiscal 2004, as reported
by the Chief Executive Officer, and it considered salary recommendations made by
the Chief Executive Officer, based on information prepared by management, for
the executive officers other than the Chief Executive Officer. Except for
recommendations from management, the committee employed procedures similar to
those used for each of the other executive officers to determine the fiscal 2004
salary for the Chief Executive Officer.
Bonus. This committee continues the policy that the financial performance
of CBRL should be a significant factor in rewarding our executive officers. In
July of each year, this committee reviews the expected financial performance of
CBRL for the concluding fiscal year and considers the internal budget
established for the next fiscal year in setting certain financial goals and
specific objective criteria for executive officer bonuses.
21
Generally, bonus awards are calculated based on the following factors: (1)
CBRL or operating unit annual financial results compared to the CBRL or
operating unit business plan, (2) the individual's performance measured by CBRL
or operating unit annual financial results compared to its business plan, (3)
the individual's fiscal year base salary amount, and (4) the individual's target
bonus percentage. In fiscal 2004, maximum bonus percentages available to
executive officers ranged from 225.0% to 367.5% of base salary (337.5% for Mr.
Woodhouse, 225.0% for Mr. Evins, 367.5% for Mr. Turner, 225.0% for Mr. White and
306.3% for Mr. Gilbert).
Cash bonuses were paid under the bonus plan for fiscal 2004 as detailed
above in the "Summary Compensation Table" contained in the section entitled
"Executive Compensation."
Long-Term Incentives. Our long-term incentive program in effect in fiscal
2004 for executive officers was designed to recognize market effects on senior
management compensation, to foster a long-term commitment to us and our
subsidiaries, to encourage future performance which contributes to stock price
appreciation, and to provide a comprehensive method of compensating executive
officers while balancing our costs. Our officers' long-term incentive is
comprised of 2 parts: stock options and separate "Cash and Equity Opportunity
Awards."
Stock Options.
--------------
In contrast to salary and bonus awards, which generally are for past effort
and performance, annual stock options are intended to engender loyalty and
commitment to CBRL and to encourage future performance which contributes to
stock price appreciation. They generally are granted at an exercise price which
is equal to the closing market price of CBRL common stock on the day before the
grant date, and therefore have no realizable value to the option holder until
the stock trading price increases. We generally have granted non-qualified stock
options annually, and those awards are based on targets and valuations
recommended by an independent, outside compensation consultant.
Cash and Equity Opportunity Awards.
-----------------------------------
The Cash and Equity Opportunity Awards were comprised of a tandem cash and
equity award (which may be in the form of stock or options). The 2000 Cash and
Equity Opportunity Award was designed to focus specifically on employee
retention. It vested at the end of fiscal year 2004, but it vested earlier for
CBRL participants at the end of fiscal year 2003, upon achievement of specified
CBRL performance goals. All the performance goals were specified by our Board
when this program was adopted. The cash portion of the 2000 Cash and Equity
Opportunity Award did not increase over the incentive plan period, but the cash
amount was reduced proportionately based on the price of CBRL common stock on
the vesting date of $33.22 as compared to the price of $35.19 on some options
for Mr. Turner (the stock price as of the award grant date). The stock options
originally granted under the 2000 Cash and Equity Opportunity Award have an
exercise price of $10.75 (and some later options were granted at $20.10 and
$35.19) for Mr. Turner, and $17.69 for Mr. Gilbert. As a result of the vesting
of the 2000 Cash and Equity Opportunity Award, a total of 73,276 options vested
22
with the operating company participants who are named executive officers. These
options will expire at March 29, 2005.
The 2004 Cash and Equity Opportunity Award was designed to focus
specifically on employee retention for the executive officers at the holding
company in response to the early vesting at the end of fiscal 2003 of their 2000
Cash and Equity Opportunity Award until a new program was instituted for
executive officers at the holding company and the operating companies in fiscal
2005. It vested at the end of fiscal year 2004 and the amount of cash and equity
award was determined based upon the achievement of specified CBRL performance
goals. All the performance goals were specified by our Board when this program
was adopted. As a result of the vesting of the 2004 Cash and Equity Opportunity
Award, a total of 11,244 shares of unrestricted stock were granted to the
holding company participants who are named executive officers.
How are the limitations on deductibility of compensation handled?
Section 162(m) of the Internal Revenue Code limits the deductibility of
executive compensation paid by publicly held corporations to $1 million per
employee, unless certain requirements are met. CBRL policy generally is to
design our compensation plans and programs to maximize full deductibility. This
committee attempts to balance this policy with compensation programs designed to
motivate management to maximize shareholder value. If this committee determines
that the shareholders' interests are best served by the implementation of
compensation policies that are affected by Section 162(m), CBRL policies do not
restrict this committee from exercising discretion in approving compensation
packages even though that flexibility may result in certain non-deductible
compensation expenses. Committee member Jimmie D. White abstains from
participating in the discussion of or voting on matters affected by Section
162(m).
Who has furnished this report?
This report on executive compensation has been furnished by the members of
the Compensation and Stock Option Committee:
o Robert V. Dale, Chairman
o James D. Carreker
o Andrea M. Weiss
o Jimmie D. White
23
AUDIT COMMITTEE REPORT
--------------------------------------------------------------------------------
What is the Audit Committee and what does it do?
The Audit Committee of the Board is responsible for providing independent,
objective oversight and review of CBRL's accounting functions and internal
controls. The committee recommends to the Board that our audited financial
statements be included in our annual report.
Are the members of the committee "independent"?
This committee is comprised of four directors who are independent as
determined in accordance with the National Association of Securities Dealers
listing standards and our Corporate Governance Guidelines, which are posted on
our Internet website at www.cbrlgroup.com.
Is a member of the committee an "audit committee financial expert"?
The Board has determined that each of the members of the audit committee
satisfy the attributes of an audit committee financial expert, as defined by SEC
regulations.
Has the committee adopted a Charter?
On May 25, 2000, the Board of Directors adopted an Audit Committee Charter
to govern this committee, and on September 25, 2003, the Board of Directors
approved amendments to that Charter to update it with respect to currently
applicable laws and rules. A copy of that amended Charter is posted on CBRL's
Internet website at www.cbrlgroup.com.
What steps did the committee take in recommending that our audited financial
statements be included in our annual report?
In connection with recommending that our audited financial statements be
included in our annual report, this committee took the following steps:
o Discussed with our independent registered public accounting firm their
judgment as to the quality, not just the acceptability, of our
accounting policies and principles and such other matters as are
required to be discussed under generally accepted auditing standards,
including information concerning the scope and result of the audit.
These communications and discussions are intended to assist this
committee in overseeing the financial reporting and disclosure process.
o Discussed with our independent registered public accounting firm its
independence and received written disclosures from our independent
registered public accounting firm regarding independence as required
under applicable independence standards for independent registered
24
public accounting firms of public companies. In addition, this committee
considered the compatibility of certain non-audit services with the
independent registered public accounting firm's independence. This
discussion and disclosure informed this committee of the independent
registered public accounting firm's independence, and assisted this
committee in evaluating that independence.
o Reviewed and discussed, with our management and independent registered
public accounting firm, our audited consolidated balance sheets as of
July 30, 2004 and August 1, 2003 and the related consolidated statements
of operations, shareholders' equity and cash flows for each of the years
in the three-year period ended July 30, 2004, including associated
footnotes and Management's Discussion and Analysis of Financial
Condition and Results of Operations.
o Reviewed and pre-approved all audit and permissible non-audit services
currently planned for fiscal 2005 by our independent registered public
accounting firm.
o Reviewed and discussed CEO and CFO Certifications concerning the
Company's Form 10-K.
Based on the discussions with our independent registered public accounting
firm concerning the audit, the independence discussions, the financial statement
review, and additional matters deemed relevant and appropriate by this
committee, including internal audit activities, this committee authorized these
audited financial statements to be included in our Annual Report on Form 10-K.
What is the Audit Committee's pre-approval policy and procedure with respect to
audit and non-audit services provided by our auditors?
In order to ensure that our independent registered public accounting firm
is engaged only to provide audit and non-audit services that are compatible with
maintaining independence as defined by applicable laws and regulations, the
Audit Committee requires that all services provided and fees charged by the
independent registered public accounting firm be pre-approved by the Audit
Committee. The authority to grant any pre-approval sought by the Audit Committee
during the time period between regularly scheduled Audit Committee meetings is
delegated to the Chair of the Audit Committee. All of the services described
below under the caption "Fees Paid to Auditors" that required pre-approval were
pre-approved by the Audit Committee.
Who has furnished this report?
This report has been furnished by the members of the Audit Committee:
o Robert C. Hilton, Chairman
o James D. Carreker
o Robert V. Dale
o Jimmie D. White
25
CERTAIN TRANSACTIONS
--------------------------------------------------------------------------------
Except as disclosed under "Executive Compensation," and except as set forth
below, our executive officers, directors and director nominees did not have
significant business relationships with us which would require disclosure under
applicable SEC regulations and no other transactions which need to be disclosed
are anticipated during the 2005 fiscal year.
Through a subsidiary, we lease a restaurant property in Macon, Georgia from
a limited partnership controlled by B. F. "Jack" Lowery, one of our directors.
The annual rent is the greater of (i) 12% of the total initial cost of the land,
buildings and improvements, or (ii) 5% of the total restaurant sales plus 3% of
the gift shop sales. The lease, which was originally entered into in 1981,
expires on June 1, 2011 with one 10-year option remaining. During the 2004
fiscal year, our subsidiary paid a total of $186,126 in lease payments to the
limited partnership.
We and our subsidiaries also use the services of Fleishman-Hillard, Inc.,
an international public relations firm, in connection with our product and
service marketing efforts, as well as with general CBRL public relations
activities. Martha M. Mitchell, a director, is a Senior Partner in that firm.
During the past fiscal year, we, or our subsidiaries, paid $342,884 to
Fleishman-Hillard, Inc. for its consulting services, including corporate media
consulting and response and concept marketing, plus reimbursement of direct
expenses.
We negotiated each of these transactions on an arms-length basis and each
of these transactions have been reviewed and approved by the Audit Committee of
the Board of Directors. We believe that these transactions are fair and
reasonable and that their terms are no less favorable than could be obtained
from unaffiliated persons.
Although not required to be disclosed by SEC regulations, we also note that
we use the services of Corporate Communications, Inc., a financial public
relations firm in Nashville, Tennessee, of which Charles E. Jones, Jr., a
director, is president and the major shareholder. During the past fiscal year,
we paid $24,000 to Corporate Communications, Inc. for services, plus
reimbursement of direct expenses including distribution of our annual report,
proxy materials, and financial press releases.
26
SHAREHOLDER RETURN
PERFORMANCE GRAPH
--------------------------------------------------------------------------------
This graph compares the cumulative percentage change in the return on the
shares of our common stock (assuming reinvestment of dividends) each year for
the last five years with the Standard & Poor's 400 MidCap Index and a Total
Return Index comprised of all Nasdaq companies with the same two-digit SIC
(Standard Industrial Classification) code (58-Eating and Drinking Places) as
CBRL. The data set forth in the chart below has been provided by The Nasdaq
Stock Market.
[SEE ACCOMPANYING PDF FILE FOR GRAPH]
1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------
CBRL 100 79 127 175 234 219
NASDAQ(SIC Code 58xx) 100 93 132 147 176 206
S&P 400 Midcap 100 118 126 103 121 142
27
STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
--------------------------------------------------------------------------------
As of September 24, 2004, no person who was not a director or executive
officer of CBRL was known to management to beneficially own more than 5% of our
outstanding common stock.
The following table shows how much of our common stock is owned, as of
September 24, 2004, by all directors and named executive officers, and by all
current directors and executive officers as a group. Unless otherwise noted,
these persons may be contacted at our executive offices, and they have sole
voting and investment power with respect to the shares indicated.
Name of Beneficial Owner Shares Beneficially Owned (1) Percent of Class
--------------------------------------------------------------------------------------------------------------
Michael A. Woodhouse 642,705 1.3%
Donald M. Turner 104,592 *
Dan W. Evins 72,647 *
Lawrence E. White 106,555 *
David L. Gilbert 60,445 *
James D. Carreker 1,667 *
Robert V. Dale 71,083 *
Robert C. Hilton 102,966 *
Charles E. Jones, Jr. 79,116 *
B. F. "Jack" Lowery 231,792 *
Martha M. Mitchell 43,739 *
Andrea M. Weiss 0 *
Jimmie D. White 23,170 *
All executive officers and directors as a
group (18 persons) 1,664,506 3.3%
--------------------------
*Less than one percent.
(1) Includes the following number of restricted shares and shares subject to
options exercisable by the named holders within 60 days:
Michael A. Woodhouse 567,820 Robert C. Hilton 93,713
Donald M. Turner 104,592 Charles E. Jones, Jr. 68,401
Dan W. Evins 36,277 B. F. "Jack" Lowery 124,337
Lawrence E. White 95,266 Martha M. Mitchell 43,089
David L. Gilbert 55,945 Andrea M. Weiss 0
James D. Carreker 0 Jimmie D. White 1,667
Robert V. Dale 68,401
All executive officers and directors 1,379,520
as a group (18 persons)
The shares described in this note are considered outstanding for the purpose of
computing the percentage of outstanding CBRL common stock owned by each named
individual and by the group. They are not considered outstanding for the purpose
of computing the percentage ownership of any other person.
28
PROPOSAL 2:
AMENDMENT TO 2002 INCENTIVE COMPENSATION PLAN
--------------------------------------------------------------------------------
What is the Incentive Plan?
The Incentive Plan is a compensation plan that is intended to motivate
selected employees of CBRL and certain of our subsidiaries and affiliates to put
forth maximum efforts toward our continued growth, profitability and success.
The Incentive Plan also enables us to attract, retain and reward directors who
are not our employees and meet our "independence" requirements. Shareholders
approved the Incentive Plan on November 26, 2002, and the plan became effective
at that time. The Incentive Plan provides for a number of types of incentive
compensation to our executives, including options, stock appreciation rights,
cash awards and restricted stock. In the case of our directors, however, the
Incentive Plan provides only for an annual grant of options to purchase 5,000
shares of our common stock.
What is the proposed amendment to the Incentive Plan?
The amendment proposes to modify the Incentive Plan to allow us more
flexibility in equity awards for our directors. The amendment will allow us to
provide for annual grants to our directors of options to acquire up to 5,000
shares of our common stock, or awards of up to 2,000 shares of restricted stock
or restricted stock units.
Why is the Board recommending amendment of the Incentive Plan?
The Board believes it must have more flexibility in the forms of equity
compensation that will be received by directors to both ensure that we are
competitive in our director compensation in order to continue to attract and
retain the highest caliber of directors and to ensure that we are continuing to
closely align the interests of directors with the long term interests of
shareholders. We believe that the proposed amendment will help us to increase
shareholders' value and further the goals of the Incentive Plan by providing
outside directors with a more direct interest in CBRL through a restricted stock
or restricted stock unit grant as part of their compensation. Additionally, the
Board of Directors has determined that it would be in the best interests of the
Company if the directors were encouraged to achieve certain share ownership
requirements over a five-year period. The specific guidelines were determined
based on a compensation practice review by independent director compensation
consultants and are effective in fiscal 2005 for incumbents and in the first
full fiscal year after election to the Board of Directors for new directors.
Has the Board adopted the amendment to the Incentive Plan?
Yes, but the Board's adoption of the amendment is subject to shareholder
approval at the Annual Meeting.
29
When will the amendment become effective?
The amendment to the Incentive Plan will become effective on the date it is
approved by our shareholders. If the amendment is approved at the Annual
Meeting, it will become effective on November 23, 2004.
What are the benefits or amounts that will be received by directors if the
amendment is approved?
The amendment to the Incentive Plan affects only awards to directors. If
the amendment is approved by shareholders, we intend to initially substitute
grants of 2,000 shares of restricted stock for the option to purchase 5,000
shares of CBRL common stock, which previously has been part of each director's
annual compensation. As proposed, subject to shareholder approval, this 2,000
share grant would vest in its entirety three years from the date of grant. The
following table sets forth the annual award of restricted stock to be made under
the Incentive Plan to our current directors who are not executive officers, as a
group, assuming the amendments are adopted by our shareholders at the Annual
Meeting. Future awards to directors under the Incentive Plan, as proposed to be
amended, are not determinable because any awards are in the Compensation
Committee's discretion and no determination for future awards has been made at
this time.
New Plan Benefits--CBRL 2002 Incentive Compensation Plan
Number of Restricted
Name and Position Dollar Value(1) Stock Shares
----------------- --------------- ------------
Non-Executive Director Group $575,200 16,000
--------------------------
(1) The dollar value of the restricted stock shares will fluctuate depending on
the value of the underlying common stock. For purpose of this disclosure,
we have determined the dollar value of the restricted stock shares based on
the fair market value of our common stock on September 24, 2004 ($35.95).
What are the benefits or amounts that will be received by executives if the
amendment is approved?
The amendment to the Incentive Plan affects only awards that will be
granted to non-executive directors.
What happens if shareholders fail to approve this amendment?
If this amendment is not approved by the shareholders at the Annual
Meeting, directors will not receive restricted stock or restricted stock unit
grants under the Incentive Plan as part of their annual compensation; however,
the grant of an option to purchase 5,000 shares of CBRL common stock, as
previously approved by shareholders under the Incentive Plan and described above
under the caption "Board of Directors and Committees--How are directors
compensated?", will continue in the future.
What does the Board of Directors recommend?
Our Board recommends that you vote FOR the amendment to the Incentive Plan.
30
PROPOSAL 3:
APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
Who has the Audit Committee retained as our independent registered public
accounting firm?
The Audit Committee has retained Deloitte & Touche LLP as our independent
registered public accounting firm for the current fiscal year.
How long has Deloitte & Touche LLP served as our independent registered public
accounting firm?
Deloitte & Touche LLP has served as our independent registered public
accounting firm since 1972.
Will representatives of Deloitte & Touche LLP attend the Annual Meeting?
Representatives of Deloitte & Touche LLP have been requested to attend the
Annual Meeting. These representatives will have the opportunity to make a
statement if they so desire and are expected to be available to respond to
appropriate questions.
What happens if shareholders fail to approve the appointment of Deloitte &
Touche LLP as our independent registered public accounting firm?
If shareholders fail to approve the appointment of Deloitte & Touche LLP,
the Audit Committee will reconsider the appointment but in its discretion may
still direct the appointment of Deloitte & Touche LLP. Also, if the appointment
of Deloitte & Touche LLP is approved, the Audit Committee in its discretion may
still direct the appointment of a different independent registered public
accounting firm at any time and without shareholder approval if the Audit
Committee believes that such a change would be in our best interest and the best
interest of our shareholders.
What does the Board of Directors recommend?
Our Board recommends that you vote FOR the appointment of Deloitte & Touche
LLP as our independent registered public accounting firm for the 2005 fiscal
year.
31
FEES PAID TO AUDITORS
--------------------------------------------------------------------------------
What fees have been paid to the independent registered public accounting firm
during the last two years?
The following table sets forth certain fees billed to CBRL by Deloitte &
Touche LLP in connection with various services provided to us throughout fiscal
year 2003 and fiscal year 2004.
Aggregate Fees Aggregate Fees
Service Billed for FY 2003($) Billed for FY 2004($)
------- ------------------------- --------------------------
Audit Fees(1) 365,655 499,641
Audit-Related Fees(2) 15,094 319,450
Tax Fees(3) 1,684,196 870,141
All Other Fees 0 0
-------------------------- --------------------------
Total Fees 2,064,945 1,689,232
========================== ==========================
(1) Represents aggregate fees for professional services rendered for the audit
of our consolidated financial statements contained in our Annual Reports on
Form 10-K for the fiscal years ended 2004 ($350,731) and 2003 ($310,649),
for reviews of our consolidated financial statements contained in our
Quarterly Reports on Form 10-Q for the first three quarters of fiscal 2004
($60,684) and 2003 ($38,361), review during 2004 of our internal control
documentation for our assessment of internal control that will be required
in 2005 by regulations promulgated pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002 ($63,926), for the issuance of consents during
2004 ($8,000) and 2003 ($3,345) and for review of documents filed with the
SEC during 2004 ($16,300) and 2003 ($13,300).
(2) Represents aggregate fees for professional services rendered for the audit
of the Company's retirement savings plan for 2004 ($17,461) and 2003
($15,094) and permitted advisory services relative to Section 404 of the
Sarbanes-Oxley Act of 2002 during 2004 ($301,989).
(3) Represents aggregate fees for tax services rendered for audit examination
support, consulting and compliance for 2004 ($57,875, $173,362 and
$638,904, respectively) and 2003 ($216,375, $1,161,926 and $305,895,
respectively).
32
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
--------------------------------------------------------------------------------
To be considered for inclusion in our proxy materials relating to the 2005
Annual Meeting of Shareholders, proposals must be submitted by eligible
shareholders who have complied with the relevant regulations of the SEC and must
be received no later than June 23, 2005. In addition, if we are not notified of
a shareholder proposal by September 7, 2005, then the proxies held by our
management may provide the discretion to vote against such shareholder proposal,
even though the proposal is not discussed in our proxy materials sent in
connection with the 2005 Annual Meeting of Shareholders. Shareholder proposals
should be mailed to Corporate Secretary, CBRL Group, Inc., P. O. Box 787,
Lebanon, Tennessee 37088-0787.
SHAREHOLDER COMMUNICATIONS
--------------------------------------------------------------------------------
Our Board provides a process for shareholders to send communications to the
Board. All correspondence addressed to the Board of Directors or to one or more
members of the Board of Directors should be sent to: CBRL Group, Inc., c/o
Corporate Secretary, P. O. Box 787, Lebanon, TN, 37088-0787, or e-mail at
jim.blackstock@cbrlgroup.com, or via fax at (615) 443-9818, or website
communication on the Investor Relations section of our website located at
www.cbrlgroup.com.
All correspondence received by the Corporate Secretary will be promptly
acknowledged and reviewed by the Corporate Secretary, who will determine whether
the correspondence should be forwarded immediately to the Board of Directors or
any member of the Board of Directors or whether the correspondence should be
presented to the Board of Directors at its next regular meeting. The Corporate
Secretary will consult with the chair of the Nominating and Corporate Governance
Committee if there is a question concerning the need for immediate review by the
Board of Directors or by any member of the Board of Directors.
ANNUAL REPORT AND FINANCIAL INFORMATION
--------------------------------------------------------------------------------
A copy of our Annual Report to Shareholders for fiscal year 2004 is being
mailed to each shareholder with this Proxy Statement. A copy of our Annual
Report on Form 10-K, and a list of all its exhibits, will be supplied without
charge to any shareholder upon written request sent to our principal executive
offices: CBRL Group, Inc., Attention: Investor Relations, P. O. Box 787,
Lebanon, Tennessee 37088-0787. Exhibits to the Form 10-K are available for a
reasonable fee. You may also view our Annual Report on Form 10-K and its
exhibits on-line at the SEC website at www.sec.gov, or via our website at
www.cbrlgroup.com.
33
OTHER BUSINESS
--------------------------------------------------------------------------------
Our management is not aware of any other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect to those matters in
accordance with their best judgment.
34
Appendix A
Form of Proxy Card
CBRL GROUP, INC.
Proxy Solicited by and on behalf of the Board of Directors for the
Annual Meeting of Shareholders to be held on Tuesday, November 23, 2004.
The undersigned hereby appoints Michael A. Woodhouse and James F.
Blackstock, and each of them, as proxies, with full power of substitution, to
vote all shares of the undersigned as shown below on this proxy at the Annual
Meeting of Shareholders of CBRL Group, Inc. to be held at the Company's offices
located at 305 Hartmann Drive, Lebanon, Tennessee, on Tuesday, November 23,
2004, at 10:00 a.m., Central Time, and at any adjournments of that meeting.
The Board of Directors recommends a vote "FOR" each of the proposals.
1. TO ELECT DIRECTORS:
[ ] FOR ALL of the following nominees: James D. Carreker, Robert V. Dale,
Robert C. Hilton, Charles E. Jones, Jr., B.F. "Jack" Lowery, Martha M.
Mitchell, Andrea M. Weiss, Jimmie D. White and Michael A. Woodhouse.
[ ] FOR ALL nominees EXCEPT* [withhold authority to vote for the
following nominee(s)]: *Please print name(s) of nominees for whom you
wish to withhold authority to vote:
-------------------------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. TO APPROVE THE AMENDMENT TO THE CBRL 2002 INCENTIVE COMPENSATION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO APPROVE THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, TO TRANSACT ALL OTHER BUSINESS, INCLUDING A VOTE
TO ADJOURN THE MEETING, THAT IS PROPERLY BROUGHT BEFORE THE MEETING OR
ANY ADJOURNMENT OF THE MEETING.
[Please sign and date this Proxy.]
A-1
Your shares will be voted in accordance with your instructions. If no choice is
specified, shares will be voted FOR all nominees in the election of directors,
FOR the approval of the amendment to the CBRL 2002 Incentive Compensation Plan
and FOR approval of the selection of Deloitte & Touche LLP as the Company's
independent registered public accounting firm.
Date , 2004
----------------------------
PLEASE SIGN HERE AND RETURN PROMPTLY
---------------------------------------
---------------------------------------
Please sign exactly as your name
appears at left. If registered in the
names of two or more persons, each
should sign. Executors, administrators,
trustees, guardians, attorneys and
corporate officers should show their
full titles.
--------------------------------------------------------------------------------
If you have changed your address, please PRINT your new address on this line.
A-2