SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
Monro Muffler Brake, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
MONRO MUFFLER BRAKE, INC.
200 HOLLEDER PARKWAY
ROCHESTER, NEW YORK 14615
---------------------
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
AUGUST 6, 2002
---------------------
To the Shareholders of
MONRO MUFFLER BRAKE, INC.
The Annual Meeting of Shareholders of Monro Muffler Brake, Inc. (the
"Company") will be held at The Hutchison House, 930 East Avenue, Rochester, New
York 14607, on Tuesday, August 6, 2002, commencing at 10 a.m., for the following
purposes:
1. to elect four directors to Class 1 of the Board of Directors to
serve a two-year term, and until their successors are duly
elected and qualified at the 2004 annual meeting of shareholders;
2. to elect one director to Class 2 of the Board of Directors to
serve a one-year term, and until his successor is duly elected
and qualified at the 2003 annual meeting of shareholders;
3. to ratify the amendment to the Monro Muffler Brake, Inc.
Non-Employee Directors' Stock Option Plan;
4. to ratify the adoption of the Monro Muffler Brake, Inc.
Management Incentive Compensation Plan;
5. to ratify the proposal regarding reevaluating the selection of
independent public accountants; and
6. to consider such other business as may properly be brought before
the meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on June 18,
2002, will be entitled to vote at the meeting.
By Order of the Board of
Directors
/s/ Robert W. August
Robert W. August
Secretary
Rochester, New York
July 5, 2002
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED,
SELF-ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
PROXY STATEMENT
MONRO MUFFLER BRAKE, INC.
200 HOLLEDER PARKWAY
ROCHESTER, NEW YORK 14615
---------------------
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 6, 2002
---------------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Monro
Muffler Brake, Inc., a New York corporation (the "Company" or "Monro"), for use
at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at The
Hutchison House, 930 East Avenue, Rochester, New York 14607, on Tuesday, August
6, 2002, commencing at 10 a.m., or at any adjournment or postponement thereof.
A shareholder who executes a proxy may revoke it at any time before it is
voted. Attendance at the meeting shall not have the effect of revoking a proxy
unless the shareholder so attending shall, in writing, so notify the secretary
of the meeting at any time prior to the voting of the proxy. A proxy which is
properly signed and not revoked will be voted for the nominees for election as
directors listed herein, for the ratification of the amendment to the Monro
Muffler Brake, Inc. Non-Employee Directors' Stock Option Plan, for the
ratification of the adoption of the Monro Muffler Brake, Inc. Management
Incentive Compensation Plan and for the ratification of the proposal regarding
reevaluating the selection of independent public accountants as proposed herein,
unless contrary instructions are given, and such proxy may be voted by the
persons named in the proxy in their discretion upon such other business as may
be properly brought before the meeting.
The cost of soliciting proxies will be borne by the Company. In addition
to solicitation by mail, directors, officers and employees of the Company may
solicit proxies by telephone or otherwise. The Company will reimburse brokers or
other persons holding shares in their names or in the names of their nominees
for their charges and expenses in forwarding proxies and proxy material to the
beneficial owners of such shares. It is anticipated that the mailing of this
Proxy Statement will commence on or about July 5, 2002.
VOTING SECURITIES
Only shareholders of record at the close of business on Tuesday, June 18,
2002, the record date, will be entitled to vote. At May 31, 2002, the Company
had outstanding 8,315,823 shares of common stock, par value $.01 per share
("Common Stock"). Each share of Common Stock is entitled to one vote on each
matter as may properly be brought before the meeting.
The voting rights of holders of Common Stock are subject to the voting
rights of the holders of 65,000 shares outstanding of the Company's Class C
Convertible
1
Preferred Stock, par value $1.50 per share ("Class C Preferred Stock"). The vote
of the holders of at least 60% of the shares of Class C Preferred Stock at the
time outstanding, voting as a separate class, or, alternatively, the written
consent of the holders of all outstanding shares of Class C Preferred Stock, is
needed to effect or validate any action approved by a vote of the holders of
shares of Common Stock. Therefore, such preferred shareholders have an effective
veto over all matters put to a vote of common shareholders, and such veto power
could be used, among other things, to block the election of directors, the
amendment of the Non-Employee Directors' Stock Option Plan, the adoption of the
Management Incentive Compensation Plan, the proposal regarding selection of
independent public accountants, or any other transaction that the holders of
Common Stock might otherwise approve at the Annual Meeting. It is expected that
the holders of Class C Preferred Stock will approve, by unanimous written
consent, all matters currently proposed to be put to a vote of common
shareholders at the Annual Meeting.
With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee. Director nominees must receive a plurality of the
votes cast at the meeting to be elected. Votes that are withheld from any
nominee are counted as present for purposes of determining the existence of a
quorum but are not deemed cast at the meeting and, thus, have no effect on the
determination of a plurality. Abstentions may be specified on proposals other
than the election of directors, which proposals require a majority of the votes
cast at the meeting for approval. Abstentions will be counted as present for
purposes of determining the existence of a quorum but are not deemed cast at the
meeting and, thus, have no effect on the determination of a majority. With
respect to shares of Common Stock held in street name, where no vote is
indicated on a matter because the nominee or broker lacks authority to vote such
shares without specific instructions from the beneficial owner, and the nominee
or broker has received no such instructions (a "broker non-vote"), such shares
are not counted as present for the purpose of determining the existence of a
quorum and are not counted as votes cast with respect to any such matter.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into two classes having
terms which expire at the Annual Meeting (Class 1) and at the 2003 annual
meeting of shareholders (Class 2). The four Class 1 directors are proposed for
re-election at the Annual Meeting. In addition, one new Class 2 director is
proposed for election at the Annual Meeting. In fiscal 2002, the Company
initially had 10 directors. In March 2002, directors Charles J. August, Jack M.
Gallagher and Burton S. August resigned, effective May 13, 2002, May 13, 2002
and August 6, 2002, respectively. Also in May 2002, the Board of Directors
appointed Francis R. Strawbridge to the Board as a Class 2 director. As of
August 6, 2002, the Board of Directors is fixed at eight members, equally
divided between Class 1 and Class 2.
CURRENT NOMINEES
It is proposed to elect at the Annual Meeting four persons to Class 1 of
the Board of Directors to serve (subject to the Company's by-laws) until the
election and qualification of their successors at the 2004 annual meeting of
shareholders. It is also proposed to elect at the annual meeting one person to
Class 2 of the Board of Directors
2
to serve (subject to the Company's by-laws) until the election and qualification
of his successor at the 2003 annual meeting of shareholders. If any such person
should be unwilling or unable to serve as a director of the Company (which is
not anticipated), the persons named in the proxy will vote the proxy for
substitute nominees selected by the Board of Directors unless the number of
directors to be elected has been reduced to the number of nominees willing and
able to serve.
The following summarizes biographical information for the Class 1
directors, each of whom is nominated for re-election:
Robert W. August, 50, was elected to the Board of Directors in July 1982.
He has been Senior Vice President - Store Support since October 1996 and
Secretary since July 1984. Mr. August was Senior Vice President - Marketing from
May 1992 through October 1996, Vice President - Marketing from July 1989 to May
1992, Executive Vice President from 1984 through July 1989, and has worked for
Monro in various other capacities since 1968.
Donald Glickman, 69, was elected to the Board of Directors in July 1984.
He is a private investor and has been a partner of J.F. Lehman & Company, an
investment banking firm, since January 1992. He was an executive employee of
Peter J. Solomon Company Limited, an investment banking firm, from July 1989 to
June 1992. From July 1988 to July 1989, he was a managing director of Lehman
Brothers (Shearson Lehman Hutton, Inc.). Prior to July 1988, Mr. Glickman was a
Senior Vice President of the First National Bank of Chicago. Mr. Glickman is a
director of Burke Industries, Inc., MSC Software Corporation, Racal Instruments,
Inc. and SDI, Inc., and a trustee of MassMutual Corporate Investors and
MassMutual Participation Investors. He is Chairman of Elgar Electronics.
Lionel B. Spiro, 63, was elected to the Board of Directors in August
1992. He was the Chairman and President of Charrette Corporation of Woburn,
Massachusetts, a distributor of design supplies and imaging services, until July
1997, when he retired. Mr. Spiro co-founded Charrette Corporation in 1964.
W. Gary Wood, 51, was elected to the Board of Directors in February 1993.
Mr. Wood currently is an independent business owner with operations in computer
services and specialty manufacturing. He was a principal with Deloitte & Touche
(in Michigan), an accounting, tax and consulting firm, from 1984 through 1993 in
the management consulting practice, and has extensive experience in retail
strategy and operations.
The following summarizes biographical information for the Class 2
director who is nominated for election:
Francis R. Strawbridge, 64, was appointed to the Board of Directors in
May 2002 to fill a vacancy created by the resignation of two Class 2 directors.
Mr. Strawbridge is standing for election to the Board at the Annual Meeting. He
was Chairman of Strawbridge & Clothier, a regional general merchandise retailer
of Philadelphia, Pennsylvania from 1984-1997, when he retired. From 1961 through
1983, Mr. Strawbridge served in various other capacities in the family-managed,
publicly traded retail chain.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
DIRECTOR.
3
The following summarizes biographical information for each of the
continuing Class 2 directors:
Frederick M. Danziger, 62, was elected to the Board of Directors in July
1984. He is President and a Director of Griffin Land & Nurseries, Inc. Mr.
Danziger was previously of counsel in the law firm of Latham & Watkins from 1995
to 1997, and was a partner of the law firm of Mudge Rose Guthrie Alexander &
Ferdon from 1974 to 1995. Mr. Danziger is a director of Bloomingdale Properties,
Inc. and Centaur Communications, Ltd.
Robert G. Gross, 44, was elected to the Board of Directors in February
1999. He has been President and Chief Executive Officer since January 1, 1999.
Prior to joining the Company, Mr. Gross was Chairman and Chief Executive Officer
of Tops Appliance City, Inc., a consumer electronics and appliance store chain
based in Edison, New Jersey, from 1995 to 1998. Mr. Gross also held various
management positions with Eye Care Centers of America, Inc., a San Antonio,
Texas based optometry company owned by Sears, Roebuck & Co., including President
and Chief Operating Officer from 1992 through 1994, Executive Vice President and
Chief Operating Officer from 1991 through 1992 and Senior Vice President from
1990 through 1991.
Peter J. Solomon, Chairman of the Board, 63, was elected to the Board of
Directors in July 1984. He has been Chairman of Peter J. Solomon Company
Limited, an investment banking firm, since May 1989. From 1985 to May 1989, he
was a Vice Chairman and a member of the board of directors of Shearson Lehman
Hutton, Inc. Mr. Solomon is a director of Office Depot, Inc., Phillips-Van
Heusen Corporation and BKF Capital Group Inc.
EXECUTIVE OFFICERS
The name and business experience of each of the executive officers of the
Company, as of June 1, 2002, is set forth below to the extent not provided
above:
Catherine D'Amico, 46, has been Senior Vice President - Finance, Chief
Financial Officer and Treasurer since August 1993. Ms. D'Amico, a certified
public accountant, was previously a Senior Audit Manager with Price Waterhouse
(PricewaterhouseCoopers LLP) in Rochester, New York and was affiliated with such
firm from 1978 to 1993. Effective May 13, 2002, Ms. D'Amico was promoted to
Executive Vice President.
Thomas J. Budreau, 45, has been Divisional Vice President - Eastern
Operations since December 1998. From October 1995 to November 1998, Mr. Budreau
was Vice President - Eastern Operations. Prior to joining the Company, Mr.
Budreau was the National Auto Express Service Manager for Montgomery Ward & Co.,
Incorporated ("Montgomery Ward") from March 1994 to October 1995. From November
1990 to March 1994, Mr. Budreau was a Regional Auto Express Manager for
Montgomery Ward. From 1975 to November 1990, Mr. Budreau held various other
management positions with Montgomery Ward.
Christopher R. Hoornbeck, 51, has been Divisional Vice President -
Western Operations since December 1998. From October 1996 to November 1998, Mr.
Hoornbeck was a Zone Manager and has worked for Monro in various other
capacities since 1973.
4
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of Common Stock and Common
Stock equivalents beneficially owned as of May 31, 2002 by (i) each person or
entity known to the Company to be the beneficial owner of more than five percent
of the Common Stock, (ii) each Class 1 director, each of whom is nominated for
re-election, (iii) the Class 2 director who is nominated for election, (iv) each
continuing Class 2 director, (v) the executive officers named in the Summary
Compensation Table and (vi) all directors and executive officers as a group.
Unless otherwise indicated, each of the named individuals and each member of the
group has sole voting power and sole investment power with respect to the shares
shown.
PERCENT OF
5% SHAREHOLDERS, COMMON STOCK OPTION SHARES CLASS
DIRECTORS AND BENEFICIALLY OWNED EXERCISABLE INCLUDING
EXECUTIVE OFFICERS EXCLUDING OPTIONS WITHIN 60 DAYS OPTIONS
------------------ ------------------ -------------- ----------
Peter J. Solomon 1,440,660(1) 24,312(8) 16.7
767 Fifth Avenue
New York, NY 10153
FMR Corp. 816,800(2) 9.8
82 Devonshire Street
Boston, MA 02109
Wellington Management Company,
LLP 771,700(5) 9.3
75 State Street
Boston, MA 02109
Paradigm Capital Management,
Inc. 636,325(3) 7.7
9 Elk Street
Albany, NY 12207
Donald Glickman 588,249(4) 24,312(8) 7.3
2001 Jefferson Davis Highway
Arlington, VA 22202
Dimensional Fund Advisors 474,074(6) 5.7
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Robert G. Gross 110,000 362,348 5.4
Robert W. August 265,371(7) 14,625 3.4
Christopher R. Hoornbeck 14,506 16,090 *
Frederick M. Danziger 13,226 24,312(8) *
Catherine D'Amico 2,600 45,445 *
W. Gary Wood 4,432 24,312(8) *
Lionel B. Spiro 4,149 24,312(8) *
Francis R. Strawbridge 400 *
Thomas J. Budreau 10,641 *
All directors and executive
officers as a group (11
persons) 2,443,593 570,709 32.3(9)
---------
* Less than 1% of the shares deemed outstanding.
(1) Includes 65,000 shares of Class C Preferred Stock (including 45,000 shares
held in trust for the benefit of Mr. Solomon's children for which Mr.
Solomon is trustee) presently convertible into 450,450 shares of Common
Stock. Mr. Solomon disclaims beneficial ownership of all such shares
5
held in trust. Also includes 878,845 shares of Common Stock held in trusts
for the benefit of Mr. Solomon's children for which Mr. Solomon is the
trustee. Mr. Solomon disclaims beneficial ownership of all such shares held
in trust. Peter J. Solomon is a principal shareholder and a Class 2
director.
(2) Beneficial ownership reported as of December 31, 2001, according to a
statement on Schedule 13G, dated February 14, 2002, of FMR Corp., a parent
holding company of Fidelity Management & Research Company, a registered
investment adviser.
(3) Beneficial ownership reported as of December 31, 2001, according to a
statement on Schedule 13G, dated February 14, 2002, of Paradigm Capital
Management, Inc., a registered investment adviser.
(4) Excludes shares of Common Stock owned by Mr. Glickman's children. Mr.
Glickman disclaims beneficial ownership of such shares. Mr. Glickman is a
principal shareholder and a Class 1 director.
(5) Beneficial ownership reported as of December 31, 2001, according to a
statement on Schedule 13G, dated February 14, 2002, of Wellington Management
Company, LLP, a registered investment adviser.
(6) Beneficial ownership reported as of December 31, 2001, according to a
statement on Schedule 13G, dated January 30, 2002, of Dimensional Fund
Advisors Inc., a registered investment adviser.
(7) Includes 22,602 shares of Common Stock held in The Charles J. and Burton S.
August Family Foundation, a charitable trust for which Mr. August is a
trustee. Mr. August disclaims beneficial ownership of such shares held in
trust.
(8) Options granted pursuant to the Non-Employee Directors' Stock Option Plan.
(9) Exclusive of shares as to which beneficial ownership has been disclaimed,
executive officers and directors of the Company as a group owned
beneficially approximately 19.3% of Common Stock deemed outstanding on May
31, 2002.
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into an employment agreement (the "Agreement") in
November 1998 with Robert G. Gross, its President and Chief Executive Officer.
The Agreement, which provides for a base salary plus a bonus, subject to the
discretion of the Compensation Committee, has a five-year term ending December
1, 2003. The Agreement includes a covenant against competition with the Company
for two years after termination. The Agreement provides the executive with a
minimum of one year's salary and certain additional rights in the event of a
termination without cause (as defined therein), or a termination in the event of
change in control (as defined therein).
The Company entered into an employment agreement in December 2000 with
Catherine D'Amico, now its Executive Vice President and Chief Financial Officer.
The Agreement provides a base salary, to be reviewed annually, plus a bonus,
subject to the discretion of the Compensation Committee. The Agreement has a 30
month term ending May 31, 2003, and includes a covenant against competition with
the Company for two years after termination. The Agreement provides Ms. D'Amico
with a minimum of one year's salary and certain additional rights in the event
of a termination without cause (as defined therein), or a termination in the
event of a change in control (as defined therein).
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four meetings during fiscal 2002(1). During
the fiscal year, each director attended at least 75% of the aggregate number of
all meetings of the Board of Directors and committees on which he served.
Non-employee directors of the Company receive directors' fees at the rate of
$2,000 per year plus $750 per
---------
(1) References in this Proxy Statement to fiscal years are to the Company's
fiscal years ending or ended fiscal March of each year (e.g., references to
"fiscal 2002" are to the Company's fiscal year ended March 30, 2002).
6
meeting attended. All directors are reimbursed for actual expenses incurred in
connection with attendance at meetings of the Board of Directors or committees
thereof. In addition, each non-employee director receives an annual grant of an
option to purchase 3,039 shares of Common Stock.
The Board of Directors has created three standing committees: a
four-member Governance Committee, a four-member Audit Committee and a
four-member Compensation Committee.
The Governance Committee has and may exercise, between meetings of the
Board of Directors, all the power and authority of the full Board of Directors,
subject to certain exceptions. During fiscal 2002, the Governance Committee held
three meetings. Its members are Robert W. August, Donald Glickman, Robert G.
Gross and Peter J. Solomon.
The Audit Committee has the power and authority to select and engage
independent auditors for the Company, subject to the approval of shareholders,
and reviews with the auditors and with the Company's management all matters
relating to the annual audit of the Company. The Audit Committee held five
meetings in fiscal 2002. It consists of four members: Frederick M. Danziger,
Lionel B. Spiro and W. Gary Wood, each of whom is an independent director, and
Donald Glickman who is not independent. Donald Glickman receives payments from
Peter J. Solomon Company Limited, a firm with which the Company has a management
agreement. (See "Compensation Committee Interlocks and Insider Participation".)
The Board of Directors believes that the Audit Committee benefits from Mr.
Glickman's strong financial background.
The Compensation Committee has the power and authority to review and
approve the remuneration arrangements for executive officers and employees of
the Company and to select participants, approve awards under, interpret and
administer the employee benefit plans of the Company. The Compensation Committee
held two meetings in fiscal 2002. In fiscal 2002 its members were Donald
Glickman, Robert G. Gross, Peter J. Solomon and Lionel B. Spiro. In June 2002,
Frederick M. Danziger, Lionel B. Spiro, Francis R. Strawbridge and W. Gary Wood
were appointed by the Board as the only members of this Committee.
In fiscal 2002, the Board of Directors also had a Stock Option Committee,
which had the power and authority to select participants and approve awards
under, and to interpret and administer or otherwise act with respect to, the
Company's stock option plans. During fiscal 2002, the Stock Option Committee met
once. In fiscal 2002, its members were Donald Glickman, Peter J. Solomon,
Charles J. August and Jack M. Gallagher. Messrs. August and Gallagher resigned
from the Board on May 13, 2002. In May 2002, Frederick M. Danziger and Lionel B.
Spiro were appointed by the Board as the only members of this Committee. In June
2002, this Committee was dissolved, and its duties were assumed by the
Compensation Committee.
7
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Committee") is
composed of four non-employee directors and operates under a written charter
adopted by the Board of Directors.
Management is responsible for the Company's internal controls and the
financial reporting process. The external auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Committee's responsibility is to monitor and oversee these
processes.
In this context, the Committee has met and held discussions with
management and the external auditors. Management represented to the Committee
that the Company's consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Committee has reviewed
and discussed the consolidated financial statements with management and the
external auditors. The Committee discussed with the external auditors matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Company's external auditors also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the external auditors that firm's independence.
Based on the Committee's discussion with management and the external
auditors and the Committee's review of the representation of management and the
report of the external auditors to the Committee, the Committee recommended to
the Board of Directors, and the Board has approved, that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended March 30, 2002, for filing with the Securities and
Exchange Commission. The Committee and the Board also have approved, subject to
shareholder ratification, the decision to reevaluate the selection of the
Company's external auditors for fiscal 2003.
Audit Committee
W. Gary Wood, Chairman
Frederick M. Danziger
Donald Glickman
Lionel B. Spiro
8
EXECUTIVE COMPENSATION
The following table sets forth, for the Company's last three fiscal
years, the annual and long-term compensation of those persons who were, at March
30, 2002, (i) the Chief Executive Officer and (ii) the other four most highly
compensated executive officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
NAME AND FISCAL ----------------- ------------ ALL OTHER
PRINCIPAL YEAR ENDED SALARY BONUS OPTIONS COMPENSATION(1)
POSITION MARCH ($) ($) (#) ($)
------------------------------------------------------------------------------------------
Robert G. Gross 2002 420,000 258,552 0 834,150
President and 2001 420,000 264,600 0 111,420
Chief Executive Officer 2000 420,000 0 0 158,985
Robert W. August 2002 150,400 38,475 6,500 3,051
Senior Vice President - 2001 150,400 39,375 5,000 3,258
Store Support, and 2000 150,400 0 0 197
Secretary
Catherine D'Amico 2002 140,000 35,910 16,000 2,395
Executive Vice President 2001 140,000 36,750 0 3,017
- Finance and Chief 2000 130,000 0 20,000 170
Financial Officer
Thomas J. Budreau 2002 120,400 24,624 5,000 7,760
Divisional Vice President 2001 115,400 24,150 5,000 2,492
- Eastern Operations 2000 110,404 0 0 53,905
Christopher R. Hoornbeck 2002 120,400 24,624 5,000 10,115
Divisional Vice President 2001 115,400 24,150 5,000 375
- Western Operations 2000 110,404 0 0 38,899
---------
(1) For all officers, All Other Compensation represents the Company's 401(k)
matching or other contributions to the Monro Muffler Brake, Inc. Profit
Sharing Plan and Non-Qualified Deferred Compensation Plan for the accounts
of the Named Officers.
For Mr. Gross, All Other Compensation also includes the following:
- In fiscal 2002, Mr. Gross earned $726,600 related to compensation associated
with the vesting of performance-based stock options.
- In fiscal 2002, 2001 and 2000, Mr. Gross's compensation includes $104,595 of
forgiveness of principal due on the loan described in "Compensation
Committee Interlocks and Insider Participation."
- In fiscal 2000, Mr. Gross's compensation includes reimbursement of $54,390
for relocation expenses.
For Messrs. Budreau and Hoornbeck, All Other Compensation in fiscal 2002 also
includes a special bonus of $5,833 and $10,000, respectively, for assuming
additional field operations responsibility. All Other Compensation for fiscal
2000 also includes reimbursement for relocation expenses of $53,760 and
$38,754, respectively, for Messrs. Budreau and Hoornbeck.
9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, for the Company's fiscal year ended March
30, 2002, information concerning the granting of options to the Named Officers:
INDIVIDUAL GRANTS POTENTIAL
---------------------------------------------------- REALIZABLE VALUE
% OF TOTAL ASSUMING RATES
OPTIONS EXERCISE OF STOCK PRICE
NO. OF GRANTED IN PRICE EXPIRATION APPRECIATION OF
NAME OPTIONS(2) FISCAL YEAR(3) ($/SHARE) DATE 5%(1) 10%(1)
-----------------------------------------------------------------------------------------------
Robert G. Gross 0 -- -- -- 0 0
Robert W. August 6,500 5.69 11.99 5/13/11 49,010 124,215
Catherine D'Amico 16,000 14.02 11.99 5/13/11 120,640 305,760
Thomas J. Budreau 5,000 4.38 11.99 5/13/11 37,700 95,550
Christopher R. 5,000 4.38 11.99 5/13/11 37,700 95,550
Hoornbeck
---------
(1) These values are calculated by comparing the exercise price of such options
to the market value of the shares of Common Stock subject to such options,
assuming that the market price of such shares increases by 5% and 10%,
respectively, during each year of the options' term. Actual gains, if any,
on the stock option exercises are dependent on the future performance of the
Common Stock and overall stock conditions, as well as the option holder's
continued employment through the vesting period. The value stated may not
necessarily be achieved.
(2) Options granted in fiscal 2002 under the Company's 1998 Employees' Incentive
Stock Option Plan. Subject to certain conditions, 25% of such options become
exercisable each year beginning one year after the date of grant.
(3) Based on a total of 114,150 options granted to 173 employees of the Company
in fiscal 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for the Company's fiscal year ended March
30, 2002, information concerning the exercise of options by the Named Officers
and the value of unexercised options of the Named Officers:
NUMBER OF
SHARES TOTAL NUMBER OF TOTAL VALUE OF UNEXERCISED,
ACQUIRED ON VALUE UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS HELD
EXERCISE REALIZED AT MARCH 30, 2002 AT MARCH 30, 2002
NAME (#) ($) (#) ($)
---------------------------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Robert G. Gross 0 0 262,348 162,652 2,463,448 1,527,302
Robert W. August 0 0 9,125 12,875 24,100 72,565
Catherine D'Amico 0 0 39,906 28,625 205,499 174,560
Thomas J. Budreau 3,750 22,175 7,920 10,221 37,342 70,529
Christopher R.
Hoornbeck 0 0 13,327 10,263 64,251 70,278
10
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
NUMBER OF REMAINING AVAILABLE
SECURITIES TO BE FOR FUTURE ISSUANCE
ISSUED UPON WEIGHTED-AVERAGE UNDER EQUITY
EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OUTSTANDING (EXCLUDING SECURITIES
OPTIONS, WARRANTS OPTIONS, WARRANTS REFLECTED
AND RIGHTS AND RIGHTS IN COLUMN (A))
-------------------------------------------------------------------------------------------
(A) (B) (C)
Equity compensation plans
approved by security
holders 1,043,156 $10.34 499,689
Equity compensation plans
not approved by security
holders 0 0 0
--------- ------ -------
Total 1,043,156 $10.34 499,689
========= ====== =======
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
setting the Chief Executive Officer's compensation and making annual
recommendations for the compensation of the other executive officers to the full
Board of Directors after considering recommendations made by the Chief Executive
Officer.
Executive compensation is a mix of salary, annual bonus awarded under the
executive bonus plan, Company contributions to the profit sharing plan and
pension plan, long-term compensation in the form of stock options and other
benefits generally available to all employees. The Company relies to a large
degree on bonus, stock options and stock ownership to attract and retain
executives of outstanding ability and to motivate them to work to their fullest
potential. Under the executive bonus plan, the Compensation Committee seeks to
enhance the profitability of the Company by aligning closely the financial
interest of the Company's executives with those of its shareholders through the
payment of bonuses based on attainment of profit targets. In setting base
salaries, the Company refers to the National Executive Compensation Survey
published by The Management Association of Illinois.
The Chief Executive Officer's fiscal 2002 compensation consisted of a
base salary of $420,000 in accordance with his employment agreement (see also
"Employment Agreements and Change-in-Control Arrangements"), a bonus of
$258,552, and other benefits extended to all full-time employees. Mr. Gross's
bonus, which may reach a maximum of 200% of his base salary, is based on the
Company's attainment of specific profit targets for fiscal 2002 and 2001. Mr.
Gross did not receive a bonus for fiscal 2000 because the Company did not attain
the minimum required percentage of targeted profit performance set by the
Compensation Committee. The Chief Executive Officer does not participate in the
Compensation Committee's determination of his compensation.
In fiscal 2002, Mr. Gross also received compensation totaling $726,600
related to the vesting of 100,000 performance-based stock options awarded to Mr.
Gross upon his joining the Company in December 1998. The purpose of the options
was to link the Executive's rewards with shareholder value over time. The
options vested during the
11
first quarter of fiscal 2002 when the Company's stock traded at $13.00 or above
for 20 consecutive trading days.
The salaries of other executive officers are set at amounts the Company
believes to be comparable to those paid to executives holding similar positions
at other automotive service companies of comparable size. Bonuses are paid based
on attainment of profit targets, which were achieved in fiscal 2002 and 2001.
Executive officers did not receive profit-based bonuses for fiscal 2000 because
the Company did not attain the minimum required percentage of targeted profit
performance.
All employees, including executive officers, may receive stock options
from time to time under the Company's stock option plans. Stock option grants
are recommended by the Compensation Committee of the Board of Directors, a
committee composed entirely of non-management directors. In fiscal 2002, stock
option grants were recommended by the Stock Option Committee of the Board of
Directors, a committee, dissolved in June 2002, that was composed primarily of
non-management directors. The stock option grant size is based upon the
individual's overall compensation package, job performance, future potential,
awards made to executives at comparable companies and other factors. Under the
stock option plans, 469,763 shares were available for grants to employees at
March 30, 2002. During fiscal 2002, the Stock Option Committee granted 114,150
options, including 6,500 to Robert W. August, Senior Vice President - Store
Support and Secretary; 16,000 to Catherine D'Amico, Senior Vice President -
Finance and Chief Financial Officer; 5,000 to Thomas J. Budreau, Divisional Vice
President - Eastern Operations; and 5,000 to Christopher R. Hoornbeck,
Divisional Vice President - Western Operations.
Options exercisable for an aggregate of 21,273 shares were also granted
to seven non-employee directors of the Company under the terms of the
Non-Employee Directors' Stock Option Plan approved by shareholders in August
1995 and amended in fiscal 1998 and 2000 and, subject to shareholder approval,
amended in fiscal 2003.
The executive officers participate in the Company's qualified, profit
sharing/401(k) and pension plans on the same basis as all other employees. The
Company offers health care, life insurance, disability insurance and other
benefits to the executive officers on substantially the same terms as available
to all employees of the Company. The executive officers are also eligible to
participate in a non-qualified Deferred Compensation Plan to provide an
opportunity for additional tax-deferred savings. In addition, it allows the
Company to credit to participant accounts such amounts as would have been
contributed to the profit sharing/401(k) plan but for the limitations that are
imposed under the Internal Revenue Code of 1986, as amended, based upon the
participants' status as highly compensated employees. (See additional discussion
under "Deferred Compensation Plan"). The amount of perquisites received by any
executive officer in fiscal 2002 did not exceed $50,000 or ten percent of his or
her cash compensation.
The federal income tax laws impose limitations on the deductibility of
compensation in excess of $1 million paid to executive officers in certain
circumstances. The Compensation Committee intends that all compensation paid to
executive officers in fiscal 2002 will be deductible by the Company under such
tax laws. For federal income tax purposes, the Company is generally entitled to
a compensation deduction at the time an officer or employee exercises a stock
option in an amount equal to the excess of the value of the shares received upon
such exercise and the exercise price of
12
the option. Since the amount of the compensation deduction is based on the
number of the options exercised and the spread between the value of the
Company's stock and the exercise price on the exercise date, the amount of any
such deduction cannot be determined in advance. Accordingly, if certain
executive officers exercise options during fiscal 2003 and the value of the
Company's stock significantly exceeds the exercise price of the options, it is
possible that the Company would not be entitled to deduct a portion of the
compensation attributable to such exercise.
Compensation Committee
Fiscal 2002: Current:
Donald Glickman Frederick M. Danziger, Chairman
Robert G. Gross Lionel B. Spiro
Peter J. Solomon Francis R. Strawbridge
Lionel B. Spiro W. Gary Wood
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Frederick M. Danziger,
Lionel B. Spiro, Francis R. Strawbridge and W. Gary Wood. In fiscal 2002, the
members of this Committee were Donald Glickman, Robert G. Gross, Peter J.
Solomon and Lionel B. Spiro.
In December 1998, the Company loaned $523,000 to Robert G. Gross, its
President and Chief Executive Officer, to purchase 75,000 shares of the
Company's common stock at the then fair market value. This loan, which bears an
interest rate of 5.5% per annum, matures on December 1, 2003, and requires five
equal annual installments of principal beginning on the first anniversary of the
loan. If the Executive is employed with the Company when a principal payment is
due, that installment will be forgiven by the Company. Accordingly,
approximately $314,000 has been forgiven to date. All interest is due on the
fifth anniversary of the loan, and shall also be forgiven if the Executive is
employed with the Company at that time. The loan is secured by the common stock.
The Company has a management agreement, effective July 1, 1991, with
Peter J. Solomon Company Limited ("PJSC"), pursuant to which PJSC provides to
the Company strategic and financial advice relating to financing, capital
structure, mergers and acquisitions and offensive/defensive positioning, for a
fee of $160,000 per year (plus reimbursement of out-of-pocket expenses).
Pursuant to such agreement, the Company has agreed to indemnify PJSC against
certain liabilities. In addition, PJSC, from time to time, provides additional
investment banking services to the Company for customary fees. No additional
fees were paid in fiscal 2000, 2001 or 2002. Peter J. Solomon, Chairman of the
Board and principal shareholder of the Company, is Chairman of PJSC. Of the fees
paid by the Company to PJSC, approximately half were paid to Donald Glickman, a
director and principal shareholder of the Company, by PJSC for consulting
services.
13
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
shareholder return on the Company's Common Stock, on an indexed basis, against
the cumulative total returns of the S&P 400 Index and the S&P Retail
Stores-Specialty Index for the sixty month period from March 31, 1997 to March
30, 2002 (March 31, 1997 = 100):
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MONRO MUFFLER BRAKE, INC., THE S&P INDUSTRIAL INDEX
AND THE S&P SPECIALTY STORES INDEX
[GRAPH]
MONRO MUFFLER S&P RETAIL
BRAKE, INC. (SPECIALTY) S&P INDUSTRIALS
------------- ----------- ---------------
3/97 100 100 100
3/98 105 113.02 143.75
3/99 47.25 89.97 146.26
3/00 55.13 59.11 168.9
3/01 72.12 56.46 161.94
3/02 114.06 81.64 168.26
* $100 INVESTED ON 3/31/97 IN STOCK OR INDEX -- INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING MARCH.
14
PENSION PLAN
The Company sponsors a noncontributory retirement plan which is intended
to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Pension Plan"). As of September 30, 1999, participants ceased to accrue
benefits under the Pension Plan and no employees will become plan participants
after this date. Compensation and services after this date are not taken into
consideration in determining benefits under the Pension Plan. Prior to September
30, 1999, each employee who attained age 21 became a participant on the April 1
or October 1 following the date the employee completed one year of service.
Benefit payments generally begin upon retirement at age 65 or age 60 with 20
years of service.
Benefits under the Pension Plan are 100% vested in each participant upon
completion of five years of service, attainment of age 65 or the termination of
the Pension Plan. Lump sum distributions are available at termination or
retirement only for accrued benefits of $5,000 or less.
The following table shows the estimated annual benefits payable to
participants under the Pension Plan upon retirement at age 65. The table does
not show the reduction for Social Security benefits (see formula below).
PENSION PLAN TABLE
AVERAGE COMPENSATION NUMBER OF YEARS OF SERVICE
----------------------------- -----------------------------------------------
(Prior to September 30, 1999) 5 10 15 20 25
------- ------- ------- ------- -------
$100,000 $22,500 $45,000 $45,000 $45,000 $45,000
80,000 18,000 36,000 36,000 36,000 36,000
For the purpose of determining amounts payable under the Pension Plan for
each of the Named Officers, compensation includes the average of ten years (i)
base salary (including the amount of any reductions in the executive's otherwise
payable compensation attributable to any "cafeteria plan") plus (ii) cash
bonuses. For the last three years, the base salaries and bonuses of each Named
Officer are shown in the Summary Compensation Table. Compensation does not
include stock options ("Long Term Compensation" column) or the Company's
contributions to the Profit Sharing Plan ("All Other Compensation" column) shown
in the Summary Compensation Table. Compensation is limited to $100,000 for
determining amounts payable under the Pension Plan.
The following are the years of credited service as of September 30, 1999
(rounded to the nearest year) under the Pension Plan for each of the Named
Officers: Robert G. Gross - 0 years; Robert W. August - 26 years; Catherine
D'Amico - 7 years; Thomas J. Budreau - 5 years; and Christopher R. Hoornbeck -
27 years.
The basic benefit under the Pension Plan is a straight life annuity.
Subject to certain limits required by law, benefits are payable monthly in an
amount equal to (i) 45% of a participant's average monthly earnings for the
highest ten consecutive years prior to September 30, 1999, less (ii) 45% of the
monthly primary Social Security benefit payable to the participant at
retirement. The amount of the benefit is also reduced for short service
participants and participants terminating employment prior to retirement.
15
Due to the fact that the Pension Plan was frozen as of September 30,
1999, the amount of the benefit will be multiplied by a fraction (not greater
than one), the numerator of which is the participant's total number of years of
service as of September 30, 1999, and the denominator of which is the number of
years of service the participant would have accumulated if he had continued his
employment until the earlier of (i) age 65 or (ii) the date after age 60 but
before age 65 on which the participant had at least 20 years of vesting service
under the Pension Plan.
PROFIT SHARING PLAN
The Company sponsors a profit sharing plan with a 401(k) feature (the
"Profit Sharing Plan"). The Profit Sharing Plan is intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("the Code").
Each employee who has attained age 21 becomes a participant as of the
first day of the month following completion of three months of service.
Participants may elect to reduce their compensation by up to the lesser of 15%
of their annual compensation or the statutorily prescribed annual limit ($11,000
in 2002) and to have the amount of the reduction contributed to their account in
the Profit Sharing Plan. One of the investment options available to participants
is the Company's Common Stock.
The Company may make discretionary matching contributions to the matching
accounts of those employees who are contributing to the Profit Sharing Plan. The
Board approves matching contributions quarterly. A discretionary Company profit
sharing contribution may also be made on an annual basis.
DEFERRED COMPENSATION PLAN
The Company has adopted the Monro Muffler Brake, Inc. Deferred
Compensation Plan (the "Plan") to provide an opportunity for additional
tax-deferred savings to a select group of management or highly compensated
employees. The Plan is an unfunded arrangement and the participants or their
beneficiaries have an unsecured claim against the general assets of the Company
to the extent of their Plan benefits.
The Compensation Committee designates the individuals eligible to
participate in the Plan. Currently, only those employees who are "highly
compensated employees" as that term is defined under Section 414(q) of the Code,
have been designated as eligible to participate in the Plan.
The Plan permits participants to defer all or any portion of the
compensation that would otherwise be payable to them for the calendar year. In
addition, the Company will credit to the participants' accounts such amounts as
would have been contributed to the Monro Muffler Brake, Inc. Profit Sharing Plan
but for the limitations that are imposed under the Code based upon the
participants' status as highly compensated employees. The Company may also make
such additional discretionary allocations as are determined by the Compensation
Committee.
No amounts credited under the Plan are funded and the Company maintains
accounts to reflect the amounts owed to each participant. At least annually, the
accounts are credited with earnings or losses calculated on the basis of an
interest rate or other formula as determined by the Compensation Committee.
16
Benefits are payable at a participant's election in a single cash sum or
in monthly installments for a period not to exceed 10 years at the date
designated by the participant upon his or her initial enrollment in the Plan,
but in no event later than the date the participant attains age 65. Payments are
made earlier in the event a participant dies or incurs an unanticipated
emergency.
CERTAIN TRANSACTIONS
AFFILIATE LEASES
The Company leases 40 stores from the father and uncle of Robert W.
August and others or partnerships or trusts in which such persons or members of
their families, including Robert W. August, have interests. In fiscal 2002, the
Company paid or accrued $1,643,000 as rent for these stores. Robert W. August is
a director of the Company.
The Company has not entered into any affiliate leases, other than
renewals or modifications of existing leases, since May 1989, and as a matter of
policy, will not do so.
(See also "Compensation Committee Interlocks and Insider Participation").
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than ten percent of the Company's Common
Stock, to file with the Securities and Exchange Commission (the "SEC") initial
reports of ownership and reports of changes in ownership of Common Stock.
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 a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during fiscal 2002, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with, except that Robert W. August, director, Senior Vice
President - Store Support and Secretary, reported a sale of 4,000 shares of
Common Stock on a Form 4 that was filed late.
PROPOSAL TO RATIFY THE AMENDMENT TO THE
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The Company has a Non-Employee Directors' Stock Option Plan (the "Plan")
adopted in 1995, amended in 1997 and twice in 1999, and previously approved by
shareholders. The Plan initially provided that options for a maximum of 66,852
shares (as restated to give retroactive effect to stock dividends) of Common
Stock, in the aggregate, may be granted.
On May 14, 1997 and May 18, 1999, the Board of Directors of the Company
approved increases in the aggregate number of shares of Common Stock authorized
for
17
awards of options under the Plan to 135,102 shares and 200,102 shares,
respectively (as restated to give retroactive effect to stock dividends). These
increases were approved by shareholders in August 1997 and August 1999,
respectively. As of March 30, 2002, options covering 170,176 shares of Common
Stock, in the aggregate, were outstanding under the Plan, leaving 29,926 shares
of Common Stock available for grant of future options.
On August 2, 1999, the Board of Directors of the Company approved an
amendment to the Plan to reflect certain changes in the rules promulgated
pursuant to Section 16 of the Securities Exchange Act of 1934, as amended. The
amendment also clarified the ability of the Stock Option Committee to amend the
Plan and that any amendment that would materially increase the aggregate number
of shares which may be issued under the Plan, materially increase the benefits
accruing to participants under the Plan, or materially modify the requirements
as to eligibility for participation in the Plan, shall be subject to the
approval of the Company's shareholders.
Under the Plan in its current form, retiring Board members must exercise
their options within one year of retirement notwithstanding that the options
have a term of ten years measured from the date of grant. In June 2002, the
Stock Option Committee approved an amendment to the Plan to permit retiring
Board members, age 65 and older, to exercise options until the date of the
options' termination. As required by the terms of the Plan, shareholders are
asked to approve this amendment to the Plan (as so amended, the "Amended Plan").
Other than this change, the Amended Plan will be identical to the Plan as
currently in effect.
PURPOSE OF AMENDED PLAN
The purpose of the Amended Plan is to secure for the Company and its
shareholders the benefits of the incentive inherent in increased Common Stock
ownership by members of the Board who are not employees of the Company or any of
its subsidiaries ("Non-Employee Directors"). The Amended Plan is designed to
provide a means of giving existing and new Non-Employee Directors an increased
opportunity to acquire an investment in the Company, thereby maintaining and
strengthening their desire to remain with or join the Company's Board of
Directors and stimulating their efforts on the Company's behalf. The purpose of
the amendment is to help attract and incentivize non-employee directors, and to
reward them for remaining on the Company's Board through their retirement.
SUMMARY OF PLAN
The Amended Plan authorizes the Company to grant options ("Options") to
purchase Common Stock to Non-Employee Directors. Six directors are currently
eligible to receive Options under the Amended Plan.
The Amended Plan is administered by the Compensation Committee of the
Board (the "Committee"). The Committee is authorized to construe and interpret
the Amended Plan and Options granted thereunder, to establish and amend rules
for its administration and to correct any defect or omission or reconcile any
inconsistency in the Amended Plan or in any Option to the extent the Committee
deems desirable to carry the Amended Plan or any Option into effect.
18
Options granted under the Amended Plan are non-qualified stock options.
The exercise price per share of Common Stock under each Option (the "Exercise
Price") is the Fair Market Value of a share of Common Stock on the date of
grant. The Amended Plan provides for an annual grant of an Option to purchase
3,039 shares of Common Stock (as restated to give retroactive effect to stock
dividends) to each Non-Employee Director on the date of the Annual Shareholders
Meeting. The Fair Market Value is determined by reference to the closing sale
price of the Common Stock as reported on the NASDAQ National Market System. The
term of each Option is ten years.
Options granted under the Amended Plan are subject to such terms and
conditions and evidenced by agreements in such form as is determined from time
to time by the Committee and are in any event subject to the terms and
conditions set forth in the Amended Plan. Options granted under the Amended Plan
are not transferable, except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order.
Under the Amended Plan, Options may be exercised immediately on the date
of grant, provided, however, that no shares of the Company's Common Stock
underlying any Option may be sold, assigned, pledged or otherwise transferred
for a period of six months after the date of the grant of such Option.
Under the Plan prior to amendment, each Option shall be exercisable only
during the holder's term as a director, except that an Option may be exercisable
after the death, disability, as defined under Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code") ("Disability"), or retirement from
the Board at the age of 65 or thereafter ("Retirement"), of a holder while a
director of the Company until the earlier of (i) the one year anniversary of the
termination of the director's term due to death, Disability or Retirement and
(ii) the expiration of the Option (ten years after the date of grant). Under the
Plan as amended, Options held by a director who retires at age 65 or thereafter
would continue to be exercisable until the date of the Option's termination.
Options may be exercised by written notice to the Company accompanied by
payment in full of the Exercise Price. Payment of the Exercise Price may be made
(i) in cash (including check, bank draft or money order), (ii) by delivery of
Common Stock (valued at the Fair Market Value thereof on the date of exercise),
or (iii) by delivery of a combination of cash and Common Stock.
The Company has filed a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), to register the Common Stock issued
to Non-Employee Directors under the Amended Plan. Persons who are "affiliates"
of the Company (i.e., persons who are deemed to control the Company directly or
indirectly) may resell Common Stock acquired under the Amended Plan only by
complying with the requirements and limitations of Rule 144 under the Securities
Act.
The Amended Plan provides that the Board or the Committee may at any time
suspend or terminate the Amended Plan or make such additions or amendments as
they deem advisable; provided, that certain of such additions or amendments are
made with approval of the Company's shareholders. No Options may be granted
under the Amended Plan after August 1, 2004, although Options previously granted
under the Amended Plan and outstanding on August 1, 2004 remain outstanding,
unless termi-
19
nated, in accordance with the terms of the Amended Plan and the Option agreement
under which they were granted.
The Amended Plan provides that in the event of a reorganization, merger,
consolidation, recapitalization, stock split-up, stock dividend, combination of
shares or other change in the Common Stock, appropriate changes to prevent
dilution or enlargement of Options will be made by the Committee in the
aggregate number of shares subject to Options to be granted, and in the number
of shares and price per share subject to outstanding Options.
The Amended Plan provides that in the event of a merger of the Company
with or into another corporation constituting a change of control, a sale of all
or substantially all of the Company's assets or a sale of a majority of the
Company's outstanding voting securities (a "Sale of the Company"), the Options
may be assumed by the successor corporation or substantially equivalent Options
substituted by the successor corporation, and if the successor corporation does
not assume the Options or substitute Options, then the Options shall terminate
if not exercised as of the date of the Sale of the Company or other prescribed
period of time. In the event of a liquidation or dissolution of the Company, the
Options shall terminate immediately prior to the liquidation or dissolution.
APPROVAL OF AMENDMENT
The amendment to the Plan requires the approval of a majority of the
votes cast at the Annual Meeting (in person or by proxy) by the holders of
shares entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE THEIR SHARES FOR
APPROVAL OF THE AMENDMENT TO THE PLAN AS DESCRIBED ABOVE.
PROPOSAL TO APPROVE THE MANAGEMENT INCENTIVE
COMPENSATION PLAN
The success of the Company depends, in large measure, on its ability to
recruit and retain key executives with outstanding ability and experience. The
Board of Directors also believes there is a need to motivate executives with
compensation conditioned upon achievement of the Company's financial goals.
To accomplish these objectives, the Board of Directors has adopted,
subject to approval by the shareholders, the Monro Muffler Brake, Inc.
Management Incentive Compensation Plan (the "Plan"). The Plan is intended to
allow for the grant of annual incentive awards to certain executive officers of
the Company which meet the requirements of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). Other Executive Officers may
continue to receive incentive awards outside the Plan.
MATERIAL TERMS OF THE PLAN
The following summary of the terms of the Plan is qualified in its
entirety by reference to the text of the Plan, which is attached as Exhibit A to
this proxy statement. If adopted by the shareholders, the Plan will be effective
as of June 1, 2002.
20
ADMINISTRATION
The Plan will be administered by the Compensation Committee of the Board
of Directors or any other duly established committee or subcommittee appointed
by the Board to administer incentive awards under the Plan, consisting solely of
two or more outside directors, as defined under Section 162(m) of the Code (the
"Committee").
ELIGIBILITY
Only executive officers of the Company who are also insiders of the
Company under Section 16 of the Exchange Act ("Executive Officers") are eligible
to participate in the Plan. The Committee shall designate Executive Officers to
receive incentive awards under the Plan. Presently, five Executive Officers are
eligible to participate.
DESCRIPTION OF AWARDS UNDER THE PLAN
Under the Plan, the Committee may award to Executive Officers annual
incentive awards. Within 90 days after the beginning of each fiscal year (the
"Determination Date"), the Committee shall select the Executive Officers who
will participate in the Plan during that year and adopt in writing, with respect
to each such Executive Officer, a target ("Target") equal to a desired level for
such fiscal year of income before provision for taxes (the "Financial Goal").
The Committee shall also decide on a base amount ("Base Amount"), based upon the
Financial Goal, representing a minimum amount which, if not exceeded, would
result in no amounts being payable to the Executive Officer, and a base salary
percentage, representing the percentage of the Executive Officer's base salary
which shall be payable as an incentive award in the event that 100% or more of
the Executive Officer's Target is achieved. Finally, the Committee shall
determine on each Determination Date for each Executive Officer a mathematical
formula or matrix which shall indicate the extent to which incentive awards will
be made if the Base Amount is exceeded, including if the Target is attained or
exceeded.
As soon as practicable after the close of each fiscal year in which any
Executive Officer is participating in the Plan, the Committee shall determine
with respect to each Executive Officer whether and the extent to which the
applicable Base Amount is exceeded, including the extent to which, if any, the
Target was attained or exceeded. Payment of Incentive Awards shall be made in
such form and at such time or times as designated by the Committee.
The Committee anticipates that, in FY03, Robert G. Gross, Chief Executive
Officer, will be selected as a participant in the Plan. In future years, the
Committee may select additional Executive Officers to be participants in the
Plan.
TERMINATION OF EMPLOYMENT
In the event a participant shall die or become disabled, the Committee
may provide for the partial or full payment of any incentive award for the year
of termination and any incentive award from any prior year which has not yet
been paid. If a participant shall terminate employment for any other reason, he
or she will not be eligible to receive payment for any such award.
21
NONTRANSFERABILITY
Incentive awards are not transferable other than by will or by the laws
of descent and distribution.
LIMITATIONS WITH RESPECT TO AWARDS
In no event shall any individual Covered Employee receive an incentive
award in excess of $2,000,000 for any fiscal year.
DEFERRAL OF AWARDS
The Committee may permit or require that a participant defer receipt of
payment of cash that would otherwise be due to the participant under an
incentive award.
AMENDMENT
The Committee may amend the Plan at any time, although, shareholder
approval of such amendment will be obtained if required by applicable law.
DURATION OF THE PLAN
The Plan will remain in effect until terminated by the Board of
Directors.
SECTION 162(m) OF THE CODE
Under Section 162(m) of the Code, compensation paid by the Company in
excess of $1 million for any taxable year to Covered Employees generally is
deductible by the Company or its affiliates for federal income tax purposes if
it is based on the performance of the Company, is paid pursuant to a plan
approved by shareholders of the Company, and meets certain other requirements.
Generally, "Covered Employee" under Section 162(m) means the chief executive
officer and the four other highest paid executive officers of the Company on the
last day of the taxable year.
It is presently anticipated that the Committee will at all times consist
of "non-employee directors" as required for purposes of Section 162(m), and that
the Committee will take the effect of Section 162(m) into consideration in
structuring Plan awards.
NEW PLAN BENEFITS
The benefits that will be received under the Plan by particular
individuals or groups are not determinable at this time.
APPROVAL OF PLAN
The adoption of the Plan requires the approval of a majority of the votes
cast at the Annual Meeting (in person or by proxy) by the holders of the shares
entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE THEIR SHARES FOR
APPROVAL OF THE PLAN AS DESCRIBED ABOVE.
22
NEW PLAN BENEFITS
The following table sets forth the benefits that would have been received
by those persons who were eligible to participate in the Management Incentive
Compensation Plan for the fiscal year ended March 30, 2002 if the plan had been
in effect. The table also sets forth the number of stock options that will be
received by the Non-Executive Director Group under the Non-Employee Directors'
Stock Option Plan.
MANAGEMENT INCENTIVE NON-EMPLOYEE DIRECTORS'
NAME AND COMPENSATION PLAN STOCK OPTION PLAN
POSITION DOLLAR VALUE ($) NUMBER OF OPTIONS
-------------------------------------------------------------------------------
Robert G. Gross 258,552 0
President and
Chief Executive Officer
Robert W. August 38,475 0
Senior Vice President -
Store Support, and Secretary
Catherine D'Amico 35,910 0
Executive Vice President -
Finance and Chief Financial
Officer
Thomas J. Budreau 24,624 0
Divisional Vice President -
Eastern Operations
Christopher R. Hoornbeck 24,624 0
Divisional Vice President -
Western Operations
Executive Group 382,185 0
Non-Executive Director Group 0 18,234
Non-Executive Officer Employee
Group 0 0
APPROVAL OF INDEPENDENT ACCOUNTANTS
Shareholder ratification of the Company's independent public accountants
is not required by the Company's Amended and Restated By-laws or otherwise. The
Audit Committee and the Board may direct the appointment of different
independent accountants at any time during the fiscal year if they determine
that such a change would be in the best interests of the Company and its
shareholders. However, as good corporate practice, the Board is requesting that
the shareholders approve its proposal to reevaluate the selection of independent
public accountants to audit the books and accounts for fiscal 2003. In any case,
the Audit Committee and the Board intend to select PricewaterhouseCoopers LLP or
one of the other "big four" accounting firms as independent public accountants
for fiscal 2003.
PricewaterhouseCoopers LLP has been engaged as the Company's independent
accountants since 1984. A representative of PricewaterhouseCoopers LLP will be
23
present at the Annual Meeting to respond to questions and will have an
opportunity to make a statement if he or she desires to do so.
Aggregate fees billed to the Company for services rendered by
PricewaterhouseCoopers LLP for fiscal 2002 were:
Annual Audit Fees, including quarterly reviews $ 62,500
--------
Financial Information Systems Design and
Implementation 0
All Other Fees:
Tax Services 93,600
Actuarial and Benefit Plan Services 50,400
Other Consulting 28,600
--------
Total All Other Fees 172,600
--------
Total Fees $235,100
========
The Audit Committee has considered whether the non-audit services
provided by PricewaterhouseCoopers LLP are compatible with
PricewaterhouseCoopers LLP maintaining its independence and has determined that
they are compatible.
THE BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE FOR RATIFICATION
OF THE PROPOSAL REGARDING REEVALUATING THE SELECTION OF INDEPENDENT PUBLIC
ACCOUNTANTS.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the annual
meeting to be held in 2003 must be received by the Company by March 7, 2003 in
order that they may be considered for inclusion in the proxy statement and form
of proxy relating to that meeting. The Company's Certificate of Incorporation
provides that shareholders who do not present a proposal for inclusion in the
proxy statement, but who still intend to submit the proposal at the 2003 annual
meeting, and shareholders who intend to submit nominations for directors at the
meeting, are required to deliver or mail the proposal or nomination to the
Secretary of the Company, Monro Muffler Brake, Inc., 200 Holleder Parkway,
Rochester, New York 14615, so that the Secretary receives the proposal or
nomination not less than 120 days nor more than 180 days prior to the meeting,
except that if less than 50 days notice or prior public disclosure of the
meeting date is given or made to shareholders, the Secretary must receive such
proposal or nomination not later than the close of business on the tenth day
following the day on which notice of the meeting was mailed or such public
disclosure was made, whichever first occurs. Each proposal or nomination must
set forth the information required by the Certificate of Incorporation. If the
chairman of the meeting determines that a proposal or nomination was not made in
accordance with the required procedures, such proposal or nomination will be
disregarded. Additional information and a copy of the Certificate of
Incorporation may be obtained by submitting a written request to the Secretary
of the Company.
24
ADDITIONAL INFORMATION
THE COMPANY WILL FURNISH TO ANY SHAREHOLDER, UPON WRITTEN REQUEST, A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 30,
2002, AS FILED WITH THE SEC, WITHOUT CHARGE, EXCEPT THAT COPIES OF ANY EXHIBIT
TO SUCH REPORT WILL BE FURNISHED UPON PAYMENT BY SUCH SHAREHOLDER OF THE
COMPANY'S REASONABLE EXPENSES IN FURNISHING SUCH EXHIBIT. WRITTEN REQUESTS MAY
BE DIRECTED TO THE COMPANY, 200 HOLLEDER PARKWAY, ROCHESTER, NEW YORK 14615,
ATTENTION: SECRETARY.
By Order of the Board of
Directors
/s/ Robert W. August
Robert W. August
Secretary
Rochester, New York
July 5, 2002
25
EXHIBIT A
MONRO MUFFLER BRAKE, INC.
MANAGEMENT INCENTIVE COMPENSATION PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. Monro Muffler Brake, Inc., a New York
corporation (the "Company"), hereby establishes an incentive compensation plan
to be known as the "Monro Muffler Brake, Inc. Management Incentive Compensation
Plan" (the "Plan"), as set forth in this document. The Plan permits the grant of
Incentive Awards to certain executives of the Company.
Subject to approval by the Company's shareholders, the Plan shall become
effective as of June 1, 2002 (the "Effective Date"), and shall remain in effect
as provided in Section 1.3 hereof.
1.2. PURPOSE OF THE PLAN. The Plan is intended to allow for the grant to
certain executives of the Company of Incentive Awards that comply with the
requirements of Code Section 162(m).
1.3. DURATION OF THE PLAN. The Plan shall commence on the Effective Date,
as described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend the Plan at any time pursuant to
Article 9 hereof, until terminated by the Board of Directors in accordance with
Article 9.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below, and when the meaning is intended, the initial letter of the
word shall be capitalized:
2.1. "AFFILIATE" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act.
2.2. "BASE AMOUNT" shall have the meaning ascribed thereto in Section
5.2(b) hereof.
2.3. "BASE SALARY PERCENTAGE" shall have the meaning ascribed thereto in
Section 5.2(c) hereof.
2.4. "BENEFICIAL OWNER" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.5. "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
2.6. "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor thereto.
2.7. "COMMITTEE" means the Compensation Committee of the Board of
Directors, or any other duly established committee or subcommittee appointed by
the Board to administer Incentive Awards under the Plan, consisting solely of
two or more outside Directors, as defined under Section 162(m) of the Code (and
the Treasury
26
Regulations promulgated thereunder). Except as permitted by Rule 16b-3 of the
Exchange Act and by Section 162(m) of the Code (and the Treasury Regulations
promulgated thereunder), no member of the Board may serve on the Committee if
such member: (i) is a current employee of the Company; (ii) is a former employee
of the Company who is currently receiving compensation for prior services (other
than benefits under a tax-qualified retirement plan) during the tax year; (iii)
has been an officer of the Company; or (iv) receives remuneration, either
directly or indirectly, in any capacity other than as a Director.
2.8. "COMPANY" means Monro Muffler Brake, Inc., a New York corporation,
including any and all Subsidiaries and Affiliates, and any successor thereto as
provided in Article 12 herein.
2.9. "COVERED EMPLOYEE" shall mean any Participant who is designated by
the Committee, prior to the Determination Date (defined below), to be a "covered
employee" within the meaning of Section 162(m) of the Code.
2.10. "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company or any Subsidiary or Affiliate.
2.11. "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.12. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
2.13. "EXECUTIVE OFFICER" means any executive officer of the Company.
2.14. "INCENTIVE AWARD" means an award granted to a Participant, as
described in Article 5 herein.
2.15. "PARTICIPANT" means an Executive Officer who has been selected to
receive an Incentive Award or who has outstanding an Incentive Award granted
under the Plan.
2.16. "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
2.17. "PLAN YEAR" shall mean the Company's fiscal year, unless otherwise
designated by the Company.
2.18. "SUBSIDIARY" means any corporation, partnership, joint venture, or
other entity in which the Company has a majority voting interest.
2.19. "TARGET" shall have the meaning ascribed thereto in Section 5(a)
hereof.
ARTICLE 3. ADMINISTRATION
3.1. GENERAL. The Plan shall be administered by the Committee. The
members of the Committee (i) shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors and (ii) shall satisfy the
requirements for membership on the Committee set forth in Section 2.7 hereof.
The Committee shall have the authority to delegate ministerial duties to
officers or Directors of the Company.
27
3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Executive
Officers who shall participate in the Plan; determine the size and type of
Incentive Awards; determine the terms and conditions of Incentive Awards in a
manner consistent with the Plan; construe and interpret the Plan and any
agreement or instrument entered into under the Plan; establish, amend, or waive
rules and regulations for the Plan's administration; and (subject to the
provisions of Article 9 herein) amend the terms and conditions of any
outstanding Incentive Award as provided in the Plan. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan.
3.3. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Committee shall be final, conclusive and binding on all
persons, including the Company, its shareholders, Directors, Executive Officers,
Participants, and their estates and beneficiaries.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1. ELIGIBILITY AND PARTICIPATION. Only Executive Officers are eligible
to participate in the Plan. The Committee shall designate Executive Officers to
receive Incentive Awards under the Plan.
4.2. PARTIAL YEAR PARTICIPATION/CHANGE IN STATUS. Subject to the
provisions of the Plan, in the event an Executive Officer becomes eligible to
participate in the Plan or has a change in status which makes such individual
eligible for participation or changes his or her eligibility in any way after
the commencement of a Plan Year, the Committee may, in its discretion, allow
such individual to receive Incentive Awards under the Plan on such terms as it
so designates.
ARTICLE 5. INCENTIVE AWARDS
5.1. GRANT OF INCENTIVE AWARDS. Subject to the terms of the Plan, the
Committee may designate Executive Officers of the Company to receive Incentive
Awards under the Plan.
5.2. DETERMINATION OF TARGET, BASE AMOUNT, AND BASE SALARY PERCENTAGE.
Within ninety (90) days of the commencement of the Plan Year (the "Determination
Date"), the Committee shall select the Participants for the Plan Year and adopt
in writing, with respect to each Participant, each of the following:
(a) a Target which shall be equal to a desired level for such Plan
Year of income before provision for taxes (the "Financial Goal"), in each
case determined in accordance with generally accepted accounting
principles (subject to modifications approved by the Committee)
consistently applied for the Company on a consolidated basis; PROVIDED,
HOWEVER, that, with respect to Participants who are employees of any of
the Company's divisions, the Financial Goals may be based on divisional
rather than consolidated results, or a combination of the two;
28
(b) a Base Amount, with respect to each Target, based upon the
Financial Goal, representing a minimum amount which, if not exceeded,
would result in no amounts being payable to the Participant hereunder;
and
(c) a Base Salary Percentage, representing the percentage of the
Participant's base salary (as of the Determination Date) which shall be
payable as an Incentive Award in the event that 100% or more of the
Participant's Target is achieved.
The Committee shall also determine on each Determination Date for each
Participant a mathematical formula or matrix which shall indicate the extent to
which Incentive Awards will be made if the Base Amount is exceeded, including if
the Target is attained or exceeded, and the Committee may also determine on any
Determination Date alternative formulas or matrices to account for potential or
anticipated significant transactions or events during such Plan Year.
5.3. DETERMINATION OF INCENTIVE AWARDS. As soon as practicable after the
close of each Plan Year in which any Participant is participating in the Plan,
the Committee shall determine with respect to each Participant whether and the
extent to which the applicable Base Amount is exceeded, including the extent to
which, if any, the Target was attained or exceeded. Each Participant's Incentive
Award, if any, for such Plan Year shall be determined in accordance with the
mathematical formula or matrix determined pursuant to Section 5.2, as reduced in
the sole discretion of the Committee, and subject to the limitations set forth
in Section 5.7 hereof. The Committee shall certify in writing to the Board of
Directors the amounts of such Incentive Awards and whether each material term of
the Plan relating to such Incentive Awards has been satisfied. In no event may a
Participant's bonus be increased as a result of a reduction of any other
Participant's bonus. In reducing a Participant's Incentive Award, the Committee
may consider any such factors it determines applicable.
5.4. PAYMENT OF INCENTIVE AWARDS. Payment of Incentive Awards shall be
made in such form and at such time or times as designated by the Committee.
5.5. PARTIAL AWARDS. In the event a Participant ceases employment because
of death or disability prior to the date which the Committee determines
Incentive Awards under the Plan for any Plan Year, the Committee may, but need
not, provide for the partial or full payment of an Incentive Award for the year
of termination and any Incentive Award from any prior Plan Year which has not
yet been paid out. Unless otherwise specified by the Committee, Participants who
terminate employment for reasons other than death or disability prior to the
date the Committee determines the Incentive Awards under the Plan will not be
eligible to receive an Incentive Award for the year of termination or any payout
of any Incentive Awards from a prior Plan Year which has not yet been paid out.
5.6. NONTRANSFERABILITY. Except as otherwise provided by the Committee,
Incentive Awards may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided by the Committee, a
Participant's rights under the Plan shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's legal
representative.
5.7. LIMITATIONS WITH RESPECT TO AWARDS. In no event shall any individual
Covered Employee receive an Incentive Award in excess of $2,000,000 for any Plan
Year.
29
ARTICLE 6. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. In
the absence of any such designation, or if the designated beneficiary dies prior
to the payment of any Incentive Award, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
ARTICLE 7. DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash that would otherwise be due to such
Participant by virtue of the satisfaction of any requirements or goals with
respect to Incentive Awards. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish rules and
procedures for such payment deferrals consistent with preserving the
deductibility of Incentive Awards under Section 162(m) of the Code.
ARTICLE 8. RIGHTS OF EXECUTIVE OFFICERS
8.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
8.2. PARTICIPATION. No Executive Officer shall have the right to be
selected to receive an Incentive Award under this Plan, or, having been so
selected, to be selected to receive a future Incentive Award.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1. AMENDMENT, MODIFICATION, AND TERMINATION. Subject to the terms of
the Plan, the Committee may at any time and from time to time, alter, amend,
suspend or terminate the Plan in whole or in part; provided, however, unless the
Committee specifically provides otherwise, any revision or amendment that would
cause the Plan to fail to comply with any requirement of applicable law,
regulation, or rule, if such amendment were not approved by the Company's
shareholders, shall not be effective unless and until such approval of
shareholders of the Company is obtained.
9.2. AWARDS PREVIOUSLY GRANTED. Notwithstanding any other provision of
the Plan to the contrary, no termination, amendment, or modification of the Plan
shall adversely affect in any material way any Incentive Award previously
granted under the Plan, without the written consent of the Participant holding
such Incentive Award.
ARTICLE 10. WITHHOLDING
The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result
of this Plan.
30
ARTICLE 11. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle or
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
ARTICLE 12. SUCCESSORS
All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
ARTICLE 13. LEGAL CONSTRUCTION
13.1. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
13.2. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included and had been replaced
by a provision that is legal and valid and that comes closest to expressing the
intention of such illegal or invalid provision. If any provision of this Plan
would cause any Incentive Award not to constitute performance-based compensation
under Section 162(m)(4)(C) of the Code, the Committee shall have discretion to
sever that provision from this Plan and, thereupon, such provision shall not be
deemed to be a part of this Plan.
13.3. REQUIREMENTS OF LAW. The granting of Incentive Awards under the
Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required.
13.4. GOVERNING LAW. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of New York.
31
MONRO MUFFLER BRAKE, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSE. The purpose of this Non-Employee Directors' Stock Option
Plan (the "Plan") is to secure for Monro Muffler Brake, Inc., a New York
corporation (the "Company"), and its shareholders the benefits of the incentive
inherent in increased common stock ownership by members of the Company's Board
of Directors (the "Board") who are not also employees of the Company or any of
its subsidiaries (a "Non-Employee Director"). Options to purchase shares of the
Company's Common Stock, $.01 par value, or such other shares as are substituted
pursuant to paragraph 5(e) or (f) below (the "Common Stock"), shall be granted
to Non-Employee Directors of the Company pursuant to the terms of this Plan.
2. ELIGIBILITY. Each Non-Employee Director shall be eligible to receive
awards of non-qualified stock options in accordance with the specific provisions
of paragraph 4 below ("Options"). The adoption of this Plan shall not be deemed
to give any director any right to be granted an Option to purchase Common Stock
except to the extent and upon such terms and conditions consistent with the Plan
as may be determined by the Stock Option Committee of the Board (the
"Committee").
3. LIMITATION ON AGGREGATE SHARES. The maximum number of shares of
Common Stock with respect to which Options may be granted under this Plan and
which may be issued upon the exercise thereof shall not exceed, in the
aggregate, 55,000 shares, subject to adjustment pursuant to paragraph 5(e)
below; provided, however, that if any Options granted under this Plan expire
unexercised or are cancelled, terminated or forfeited in any manner without the
issuance of Common Stock thereunder, the shares with respect to which such
Options were granted shall be available under this Plan. Such shares of Common
Stock may be either authorized and unissued shares, treasury shares or a
combination thereof, as the Committee shall determine.
4. TERMS AND CONDITIONS OF OPTIONS. Options granted under this Plan
shall be subject to such terms and conditions and evidenced by written
agreements in such form as shall be determined from time to time by the
Committee and shall in any event be subject to the terms and conditions set
forth in this Plan. In the event of any conflict between a written agreement and
the Plan, the terms of the Plan shall govern.
(a) OPTIONS TO CURRENT DIRECTORS. Each Non-Employee Director
as of August 1, 1994 shall receive, as of such date, an Option (an "August
Option") to purchase 2,500 shares of Common Stock.
(b) ANNUAL OPTIONS. Each year on the date of the Annual
Meeting of the Company's Shareholders (the "Annual Shareholders Meeting"),
commencing with the 1995 Annual Shareholders Meeting, each Non-Employee Director
shall automatically receive an Option to purchase 2,500 shares of Common Stock.
(c) OPTION PRICE. The Option price per share of Common Stock
shall be 100% of the "Fair Market Value" of a share of Common Stock on the date
of grant (the
"Option Price"). The Fair Market Value of the Common Stock on any given date
means (i) the mean between the highest and lowest reported sale prices on the
New York Stock Exchange--Composite Transactions Table (or, if not so reported,
on any domestic stock exchanges on which the Common Stock is then listed); (ii)
if the Common Stock is not listed on any domestic stock exchange, the closing
sale price or mean between the closing high bid and low asked prices as reported
by the National Association of Securities Dealers Automated Quotation System
(or, if not so reported, by the system then regarded as the most reliable source
of such quotations); (iii) if the Common Stock is listed on a domestic exchange
or quoted in the domestic over-the-counter market, but there are no reported
sales or quotations, as the case may be, on the given date, the value determined
pursuant to (i) or (ii) using the reported sale prices or quotations on the last
previous date on which so reported; or (iv) if none of the foregoing clauses
apply, the fair market value as determined in good faith by the Committee.
(d) TERM OF OPTIONS. Each Option shall be exercisable for ten
years after the date of grant.
(e) EXERCISE OF OPTIONS. Options shall be exercised by written
notice to the Company (to the attention of the Secretary of the Company)
accompanied by payment in full of the Option Price. Payment of the Option Price
may be made, at the discretion of the Non-Employee Director, (i) in cash
(including check, bank draft or money order), (ii) by delivery of Common Stock
(valued at the Fair Market Value thereof on the date of exercise) or (iii) by
delivery of a combination of cash and Common Stock; provided, however, that the
Committee may, in any instance, in order to prevent any possible violation of
law, require the Option Price to be paid in cash; and provided, further, that
the right to deliver Common Stock in payment of the Option Price may be limited
or denied in any Option agreement.
(f) RIGHTS AS A SHAREHOLDER. No Non-Employee Director shall
have any rights as a shareholder with respect to any shares covered by an Option
until the date a stock certificate for such shares is issued to him or her.
Except as otherwise provided herein, no adjustments shall be made for dividends
or distributions of other rights for which the record date is prior to the date
such stock certificate is issued.
5. ADDITIONAL PROVISIONS.
(a) CONDITIONS AND LIMITATIONS ON EXERCISE. Any Option shall
be exercisable immediately upon the date of grant. Notwithstanding the
foregoing, (i) no Option shall be exercisable prior to the adoption of the Plan
by the Company's shareholders at the Company's 1995 Annual Shareholders Meeting,
as provided in paragraph 9 below, and (ii) no shares of Common Stock issuable
upon the exercise of an Option may be sold, assigned, pledged or otherwise
transferred for a period of six months after the later to occur of (x) the
adoption of the Plan by the Company's shareholders and (y) the grant of the
Option, as is specified in Rule 16b-3 (or other period of time specified in such
rule as such rule may be amended from time to time) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(b) TERMINATION OF TERM OF DIRECTORSHIP. Any Option shall be
exercisable only during the holder's term as a director of the Company, except
that an Option may be exercisable after the death, disability, as defined in
Section 22(e)(3) of the Internal
-2-
Revenue Code of 1986, as amended (the "Code") ("Disability"), or retirement from
the Board at the age of 65 or thereafter ("Retirement"), of a holder while a
director of the Company at any time until the earlier to occur of (i) the one
year anniversary of the date of death, Disability, or Retirement and (ii) the
termination of such Option pursuant to paragraph 4(d) above.
(c) LISTING, REGISTRATION AND COMPLIANCE WITH LAWS AND
REGULATIONS. Each Option shall be subject to the requirement that if at any time
the Committee shall determine in its discretion, that the listing, registration
or qualification of the shares subject to the Option upon any securities
exchange or automated quotation system or under any state or federal securities
or other law or regulation, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition to or in connection
with the granting of such Option or the issuance or purchase of shares
thereunder, no such Option may be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee. The
holder of such Option will supply the Company with such certificates,
representations and information as the Company shall request and shall otherwise
cooperate with the Company in obtaining such listing, registration,
qualification, consent or approval. The Committee may at any time impose any
limitations upon the exercise of an Option or the sale of the Common Stock
issued upon exercise of an Option that, in the Committee's discretion, are
necessary or desirable in order to comply with Section 16 of the Exchange Act
and the rules and regulations thereunder.
(d) NONTRANSFERABILITY OF OPTIONS. Options may not be
transferred, assigned, pledged or hypothecated (whether by operation of law or
otherwise) other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined by Section 4.l4(p)
of the Code, Section 206(d)(3)(B) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or the rules thereunder, and, during the lifetime
of the person to whom they are granted, may be exercised only by such person (or
his or her guardian or legal representative).
(e) ADJUSTMENT FOR CHANGE IN COMMON STOCK. If the outstanding
Common Stock is hereafter changed by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, combination,
exchange of shares, or the like, or dividends payable in shares of the Common
Stock or other securities or assets, an appropriate adjustment shall be made by
the Committee in the aggregate number of shares available under the Plan, in the
number of shares subject to Options to be granted thereafter pursuant to
paragraphs 4(a) and 4(b), and in the number of shares and price per share
subject to outstanding Options. Any adjustment in the number of shares shall
apply appropriately to only the unexercised portion of any Option granted
hereunder. If fractions of a share would result from any such adjustment, the
adjustment shall be revised to the next higher whole number of shares.
(f) SALE OF THE COMPANY. In the event of a merger of the
Company with or into another corporation constituting a change of control, a
sale of all or substantially all of the Company's assets or a sale of a majority
of the Company's outstanding voting securities (a "Sale of the Company"), the
Options may be assumed by the successor corporation or a parent of such
successor corporation or substantially equivalent options may be substituted by
the successor corporation or a parent of such successor corporation, and if the
successor corporation
-3-
does not assume the Options or substitute options, then the Options shall
terminate if not exercised as of the date of the Sale of the Company or other
prescribed period of time.
(g) LIQUIDATION OR DISSOLUTION. In the event of the
liquidation or dissolution of the Company, Options shall terminate immediately
prior to the liquidation or dissolution.
(h) TAXES. The Company shall be entitled, if necessary or
desirable, to withhold (or secure payment from the Non-Employee Director in lieu
of withholding) the amount of any withholding or other tax due from the Company
with respect to any shares issuable under this Plan, and the Company may defer
such issuance unless indemnified to its satisfaction. The Committee may, in its
sole discretion and subject to such rules as it may adopt, permit a Non-Employee
Director to elect to satisfy any such withholding obligation, in whole or in
part, by having the Company withhold shares of Common Stock that are otherwise
issuable upon the exercise of such Option and have a Fair Market Value (as of
the date of exercise) equal to the amount required to be withheld, or by
surrendering to the Company previously-acquired shares of Common Stock that have
such a Fair Market Value.
6. ADMINISTRATION. This Plan shall be administered by the Committee.
The Committee shall consist of two or more directors designated by the Board. It
is intended that the Plan will constitute a "formula plan" within the meaning of
Rule 16b-3 under the Exchange Act. The provisions of the Plan and of any Option
agreement made pursuant to the Plan will be interpreted and applied accordingly.
The Committee shall have full power to construe and interpret this Plan
and Options granted hereunder, to establish and amend rules for its
administration and to correct any defect or omission and to reconcile any
inconsistency in this Plan or in any Option granted hereunder to the extent the
Committee deems desirable to carry this Plan or any Option granted hereunder
into effect. All actions taken and interpretations and determinations made by
the Committee in good faith shall be final and binding upon the Company, all
Non-Employee Directors who have received awards under the Plan and all other
interested parties.
The Committee may act a meeting or by an instrument executed by all of
its members. All actions taken and decisions made by the Committee pursuant to
this Plan shall be binding and conclusive on all persons interested in this
Plan.
7. TERMINATION AND AMENDMENT. At any time the Committee may suspend or
terminate this Plan and make such additions or amendments as it deems advisable;
provided, that such additions or amendments are made in compliance with Rule
16b-3 of the Exchange Act (as such rule may be amended from time to time); and
provided, further, that paragraphs 4 and 5(a) and (b) shall not be amended more
than once every six months (other than to comply with the federal securities
laws, the Code, or ERISA). No Options shall be granted hereunder after August 1,
2004. Notwithstanding any termination (other than pursuant to paragraph 5(a)
above), the terms of the Plan shall continue to apply to Options granted prior
to any such termination.
8. LIABILITY. No member of the Committee shall be personally liable for
any action, interpretation or determination made with respect to the Plan or
awards made thereunder,
-4-
and each member of the Committee shall be fully indemnified and protected by the
Company with respect to any liability he or she may incur with respect to any
such action, interpretation or determination, to the extent permitted by
applicable law and to the extent provided by the Company's Certificate of
Incorporation and By-laws, as amended from time to time.
9. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of August 1,
1994 or such later date as the Board may determine, provided that the adoption
of the Plan shall have been approved by the Company's shareholders at the
Company's 1995 Annual Shareholders Meeting. If the Plan is not so approved by
the Company's shareholders, the Plan and all Options granted hereunder shall
terminate.
10. NOTICES. Notices required or permitted to be made under the Plan
shall be sufficiently made if personally delivered to the Non-Employee Director
or sent by regular mail addressed (a) to the Non-Employee Director's address as
set forth in the books and records of the Company, or (b) to the Company or the
Committee at the principal office of the Company clearly marked "Attention:
Stock Option Committee".
11. GOVERNING LAW. The Plan and each agreement hereunder shall be
governed in all respects by the laws of the State of New York.
-5-
MONRO MUFFLER BRAKE, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDMENT, dated as of May 12, 1997
WHEREAS, Monro Muffler Brake, Inc., a New York corporation
(the "Corporation"), established on [date] the Monro Muffler Brake, Inc.
Non-Employee Directors' Stock Option Plan (the "Directors' Plan"); and
WHEREAS, in order to maintain the benefits of the incentive
inherent in increased ownership of the Corporation's common stock, par value
$.01 per share ("Common Stock"), by members of the Corporation's Board of
Directors who are not employees of the Corporation or its subsidiaries, the
Board of Directors of the Corporation desires to increase the amount of shares
of Common Stock authorized for awards under the Directors' Plan, pursuant to the
exercise of stock options, from 60,637 (as restated to give effect to the 5%
stock dividends paid August 1995 and August 1996) to 125,637;
NOW, THEREFORE, subject to ratification by the shareholders of
the Corporation, the Directors' Plan is hereby amended as follows:
1. By deleting "55,000 shares" from Section 3 of the
Directors' Plan and inserting in its place "125,637 shares".
2. Except as hereinabove amended, the Directors' Plan shall
remain in full force and effect.
Dated approved by
Board of Directors - May 12, 1997
Shareholders - August 12, 1997
MONRO MUFFLER BRAKE, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
AMENDMENT, dated as of May 18, 1999
WHEREAS, Monro Muffler Brake, Inc., a New York corporation
(the "Corporation"), established on [date] the Monro Muffler Brake, Inc.
Non-Employee Directors' Stock Option Plan (the "Directors' Plan"); and
WHEREAS, in order to maintain the benefits of the incentive
inherent in increased ownership of the Corporation's common stock, par value
$.01 per share ("Common Stock"), by members of the Corporation's Board of
Directors who are not employees of the Corporation or its subsidiaries, the
Board of Directors of the Corporation desires to increase the amount of shares
of Common Stock authorized for awards under the Directors' Plan, pursuant to the
exercise of stock options, from 135,102 (as restated to give effect to the 5%
stock dividends paid August 1995, August 1996, August 1997 and June 1998) to
200,102;
NOW, THEREFORE, subject to ratification by the shareholders of
the Corporation, the Directors' Plan is hereby amended as follows:
1. By deleting "125,637 shares" from Section 3 of the
Directors' Plan and inserting in its place "200,102 shares".
2. Except as hereinabove amended, the Directors' Plan shall
remain in full force and effect.
Dated approved by
Board of Directors - May 18, 1999
Shareholders - August 2, 1999
AMENDMENT NO. 3 TO THE
MONRO MUFFLER BRAKE, INC. NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
AMENDMENT NO. 3 to the Monro Muffler Brake, Inc. Non-Employee
Directors' Stock Option Plan, dated as of this 2nd day of August, 1999.
WHEREAS, Monro Muffler Brake, Inc. (the "Company") has a
Non-Employee Directors' Stock Option Plan (the "Plan") in place to secure for
the Company, the benefits of the incentive inherent in increased common stock
ownership by members of the Company's Board of Directors (the "Board") who are
not also employees of the Company or any of its subsidiaries; and
WHEREAS, the Company desires to amend the Plan to reflect
certain changes in the rules promulgated pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended, and clarify the ability of the
Committee and the Board to amend the Plan.
NOW, therefore, the Company amends the Plan as follows:
1. Section 6 of the Plan is hereby amended by deleting the following
sentences: "It is intended that the Plan will constitute a "formula
plan" within the meaning of Rule 16b-3 under the Exchange Act. The
provisions of the Plan and of any Option agreement made pursuant to the
Plan will be interpreted and applied accordingly."; and adding "Subject
to Section 7 hereof," to the beginning of the second paragraph of
Section 6 of the Plan."
2. Section 7 of the Plan is hereby amended and restated in its entirety as
follows:
"7. TERMINATION AND AMENDMENT. At any time the Committee may
suspend or terminate this Plan and make such additions or
amendments as it deems advisable; PROVIDED, that such
additions or amendments are made in compliance with Rule 16b-3
of the Exchange Act (as such rule may be amended from time to
time); and PROVIDED, FURTHER, that any amendment that would
(i) materially increase the aggregate number of shares which
may be issued the Plan, (ii) materially increase the benefits
accruing to Non-Employee Directors under the Plan, or (iii)
materially modify the requirements as to eligibility for
participation in the Plan, shall be subject to the approval of
the Company's shareholders, except that any such increase or
modification that may result from adjustments authorized by
Article 5(e) hereof shall not require such shareholder
approval. No Options shall be granted hereunder after August
1, 2004. Notwithstanding any termination (other than pursuant
to paragraph 5(a) above), the terms of the Plan shall continue
to apply to Options granted prior to any such termination."
3. GOVERNING LAW
The Plan and this Amendment shall be governed in all respects
by the laws of the State of New York.
* * *
AMENDMENT NO. 4 TO THE
MONRO MUFFLER BRAKE, INC. NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
AMENDMENT NO. 4 to the Monro Muffler Brake, Inc. Non-Employee
Directors' Stock Option Plan, dated as of this 12th day of June, 2002.
WHEREAS, Monro Muffler Brake, Inc. (the "Company") maintains
the Monro Muffler Brake, Inc. Non-Employee Directors' Stock Option Plan (the
"Plan") to secure for the Company the benefits of the incentive inherent in
increased common stock ownership by members of the Company's Board of Directors
(the "Board") who are not also employees of the Company or any of its
subsidiaries;
WHEREAS, pursuant to section 7 of the Plan, the Stock Option
Committee of the Board of Directors of the Company (the "Committee") may amend
the Plan as it deems advisable, provided that such amendments of the Plan are
made in compliance with Rule 16b-3 of the Securities Exchange Act of 1934, as
amended;
WHEREAS, pursuant to section 7 of the Plan, amendments that
materially increase the benefits accruing to Non-Employee Directors under the
Plan are subject to the approval of the Company's shareholders; and
WHEREAS, the Committee desires to amend the Plan to permit
participants to exercise their options following retirement until the
termination of such option.
NOW, THEREFORE, pursuant to and in exercise of the authority
retained by the Committee under Section 7 of the Plan, subject to ratification
by the shareholders of the Company, the Plan is hereby amended, effective June
12, 2002, to provide as follows:
1. Section 5(b) of the Plan is hereby amended to read as follows:
"TERMINATION OF TERM OF DIRECTORSHIP. Any Option shall be
exercisable only during the holder's term as a director of the
Company, except that an Option may be exercisable after (i)
the death or disability, as defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")
("Disability"), of a holder while a director of the Company at
any time until the earlier to occur of (A) the one year
anniversary of the date of death or Disability and (B) the
termination of such Option pursuant to paragraph 4(d) above;
and (ii) the retirement from the Board at the age of 65 or
thereafter ("Retirement") of a holder while a director of the
Company until the termination of such Option pursuant to
paragraph 4(d) above."
2. The Plan, except as otherwise set forth herein, shall remain in full force
and effect in all other respects.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed, to be effective as of the day and year first written above.
MONRO MUFFLER BRAKE, INC.
STOCK OPTION COMMITTEE
-----------------------------
Frederick M. Danziger
-----------------------------
Lionel B. Spiro
MONRO MUFFLER BRAKE, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, AUGUST 6, 2002
The undersigned hereby appoints Robert G. Gross and Catherine D'Amico, as
proxies, each with the power to appoint his substitute and hereby authorizes
such person acting individually, to represent and to vote, as specified on the
reverse side hereof, all of the shares of common stock of Monro Muffler Brake,
Inc. which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders to be held at The Hutchison House, 930 East Avenue, Rochester, New
York, 14607, commencing at 10:00 a.m. on August 6, 2002 and at any postponement
or adjournment thereof; and in the discretion of the proxies, their substitutes
or delegates, to vote such shares and to represent the undersigned in respect of
other matters properly brought before the meeting.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS SPECIFIED BY THE
SIGNING SHAREHOLDER ON THE REVERSE SIDE HEREOF. UNLESS THE AUTHORITY TO VOTE FOR
ELECTION OF ANY NOMINEE FOR DIRECTOR IS WITHHELD IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE REVERSE SIDE HEREOF, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
(TO BE SIGNED ON REVERSE SIDE.)
- Please Detach and Mail in the Envelope Provided -
A [X] Please mark your
votes as in this
example.
FOR WITHHOLD FOR WITHHOLD
all authority for the authority for
nominees all nominee(s) nominee the nominee
1. To elect four [ ] [ ] Nominees: Robert W. August 2. To elect one director to [ ] [ ]
Class 1 directors Donald Glickman Class 2 of the Board of
to the Board of Lionel B. Spiro Directors to serve a
Directors to W. Gary Wood one-year term and until
serve a two-year term, and until their his successor is duly
successors are duly elected and qualified elected and qualified at
at the 2004 annual meeting of shareholders. the 2003 annual meeting of
(INSTRUCTIONS: To withhold authority to vote shareholders.
for any individual nominee, write the person's Nominee: Francis R. Strawbridge
name below.)
----------------------------------------------
FOR AGAINST ABSTAIN
3. Ratification of the amendment
to the Monro Muffler Brake, [ ] [ ] [ ]
Inc. Non Employee Directors'
Stock Option Plan.
4. Ratification of the adoption [ ] [ ] [ ]
of the Monro Muffler Brake,
Inc. Management Incentive
Compensation Plan.
5. Ratification of the proposal [ ] [ ] [ ]
regarding reevaluating the
selection of independent public
accountants for the Company for
the fiscal year ending
March 29, 2003.
6. Considering such other business Mark here for
as may properly be brought change of address [ ]
before the meeting or any and note at left.
adjournment or postponement
thereof.
I will not I will
attend [ ] attend [ ]
meeting meeting
SIGNATURE DATE DATE
------------------------------- ------------ -------------------------------------- ----------------------
Signature, if shares held jointly
Instruction: Please sign exactly as your name appears hereon. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please
sign in partnership name by authorized person.