Director's Compensation Project: Ruby Tuesday Holdings Inc.

This post is part of an ongoing series that examines the compensation paid to independent directors of public companies. We are using information found in the 2011 proxy statements of the selected companies.

In addition to state standards and Sarbanes-Oxley (“SOX”) requirements, the major U.S. stock exchanges each have their own standards for independence. While the NYSE and NASDAQ rules are substantially the same, there are some minor differences between the two that are worth noting.

NYSE Rule 303A.01, requires that each listed company’s board of directors be comprised of a majority of independent directors. A director is considered independent under NYSE Rule303A.02(b)(ii) if the director received less than $120,000 in direct compensation, other than director’s fees, in any one year period over the last three years. The NYSE “direct compensation” standard is less restrictive than the corresponding NASDAQ Rule, 5605(a)(2)(B), which includes "any compensation."

NYSE Rule 303A.06 requires a listed company’s audit committee members to comport with the requirements of Rule 10A-3 (C.F.R. §240.10A-3).  SOX Section 301 imposes similar requirements.

Independent directors are compensated for their service on the board.  The amount of compensation can be seen from examining the non-management director compensation table from Ruby Tuesday Holdings (NYSE:RT) 2011 proxy statement. According to the proxy statement, the company paid the directors the following amounts:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Claire L. Arnold	76,000	110,001	-	-	186,001
Kevin T. Clayton	78,000	110,001	-	-	188,001
James A. Haslam, III	93,000	110,001	-	-	203,001
Bernard Lanigan, Jr.	88,000	110,001	-	-	198,001
R. Brad Martin*	75,500	110,001	-	-	185,501
Dr. Donald Ratajczak	78,000	110,001	-	-	188,001
Stephen I. Sadove	88,000	110,001	-	-	198,001

*Compensation amount reflects fees earned through retirement date.

Director Compensation  During fiscal year 2011, the Board of Directors met twice via telephone and four times at regularly scheduled meetings.  With the exception of one director, who attended at least 80% of all Board meetings, each director attended all Board meetings.  Each director attended at least 80% of the total meetings of the Board committees of which he or she was a member that were held during the fiscal year.  In October 2008, Ruby Tuesdays initiated the Ruby Tuesday Stock Incentive and Deferred Compensation Plan for Directors.  The Directors’ Plan permits non-employee directors to defer all or a portion of their retainers, and any additional meeting and committee fees, to a deferred compensation account.  A director’s deferred compensation account is credited as of the last day of each fiscal quarter with an assumed rate of income equal to 90-day U.S. Treasury Bills, based on the weighted average balance of that account during the respective fiscal quarter.  The Directors’ Plan also provides for annual equity grants to each non-employee director in an amount equal to the present value of $110,000 on the date of grant, which is the date of the annual shareholders’ meeting, if the director is elected, re-elected, or otherwise continues to serve on the Board of Directors at each annual meeting of the shareholders of the Company.

Director Tenure  Dr. Donald Ratajczak, a member of the Board of Directors since 1981, is the longest serving director followed by Mr. Samuel E. Beall III, who was elected in 1982.  Dr. Ratajczak also leads the board in number of directorships, serving on the boards of Crown Crafts Inc., Citizens Bancshares Corporation, and Assurance America Corporation.  Mr. Mathew Drapkin is the newest and youngest director at 38 years of age, he was elected in 2011.

CEO Compensation  Samuel E. Beall III, Ruby Tuesday’s Chief Executive Officer, received $4,633,115 in total compensation during the fiscal year, of which $1,100,000 was base salary, $1,164,332 was a stock award, $2,328,250 was an option award, and $14,647 was categorized as other compensation.  The Board of Directors authorized the CEO and his family to use the Company’s airplane for personal travel, provided they pay the Company in advance of such travel in an amount equal to the incremental cost to the Company for such flights.  Other executives and their families are allowed use of the jet provided Mr. Beall approves such use.  

Chief Financial Officer Marguerite N. Duffy received $1,319,064 in total compensation during the fiscal year, of which $430,560 was base salary, $215,331 was in stock, $775,859 was in options, and $2,043 was categorized as other compensation.  The board also elected to cover $461, 421 in relocation expenses for Mr. D.P. Dillion Jr. when he joined Ruby Tuesday management as a senior vice president.