UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 Rule 14a-12
NOBLE ROMAN'S, INC.
(Name of Registrant as Specified in Its Charter)
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[ ] Check the box if any part of the fee is offset as provided by
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registration statement number, or the Form or Schedule and the date
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NOBLE ROMAN'S, INC.
ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 2, 2013
To the Shareholders of Noble Roman's, Inc.:
We are notifying you that the 2013 annual meeting of shareholders of Noble
Roman's, Inc., an Indiana corporation ("Noble Roman's" or the "Company"), will
be held at 10:00 a.m. local time on Tuesday, July 2, 2012, at the Hyatt Regency,
One S. Capitol Avenue, Indianapolis, Indiana 46204, for the following purposes:
1. To elect one Class III director, to serve until the 2016 annual
meeting of shareholders or until his successor is elected and
qualified;
2. To approve on an advisory basis the compensation of the Company's
named executive officers as disclosed pursuant to Item 402 of
Regulation S-K;
3. To propose on an advisory basis the frequency of future advisory votes
on executive compensation;
4. To ratify the selection of Somerset CPAs, P.C. as the Company's
independent registered public accounting firm for the year ending
December 31, 2013; and
5. To transact any other business that is properly brought before the
annual meeting or any adjournment thereof.
Noble Roman's board of directors has fixed the close of business on May 15,
2013 as the record date to determine the shareholders who are entitled to notice
of, and to vote at, the annual meeting. Only holders of record of Noble Roman's
common stock at the close of business on that date will be entitled to notice
of, and to vote at, the annual meeting or any adjournments or postponements
thereof.
Please read carefully the accompanying proxy statement. The proxy statement
is deemed incorporated by reference in and forms a part of this Notice.
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be held on July 2, 2013 - the Proxy Statement and the
Annual Report on Form 10-K are available at www.nobleromans.com under the
heading "Investor Relations."
Whether or not you plan to attend the annual meeting in person, please
promptly complete, sign, date and return the enclosed proxy card in the enclosed
envelope, which requires no postage if mailed in the United States. You may
revoke your proxy in the manner described in the proxy statement at any time
before the proxy has been voted at the annual meeting. If you sign and send in
your proxy card and do not indicate how you want to vote, your proxy will be
counted as a vote "FOR" the matters considered at the annual meeting, except for
the advisory vote on frequency of votes on executive compensation, on which it
will be counted as proposing that the vote be held every three years.
By Order of the Board of Directors of
Noble Roman's, Inc.
/s/ Paul W. Mobley
-------------------------------------
Paul W. Mobley,
Chairman and Chief Executive Officer
May 17, 2013
NOBLE ROMAN'S, INC.
ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
PROXY STATEMENT
Annual Meeting of Shareholders
July 2, 2013
This proxy statement is furnished in connection with the solicitation of
proxies by the board of directors of Noble Roman's, Inc., an Indiana corporation
("Noble Roman's", "We" or the "Company"), for use at the annual meeting of
shareholders to be held on Tuesday, July 2, 2013 at 10:00 a.m., local time, at
the Hyatt Regency, One S. Capitol Avenue, Indianapolis, Indiana 46204, and any
adjournment or postponement thereof, for the purposes set forth in the
accompanying notice of the annual meeting of shareholders.
Unless otherwise directed by the giver of the proxy, the persons named in
the enclosed form of proxy, or the one of them who acts, will vote all shares
subject to the proxy as follows:
FOR the election of Mr. A. Scott Mobley as Class III director of the
Company, to serve until the 2016 annual meeting of shareholders or until
his successor is elected and qualified;
FOR the advisory approval of the compensation of the Company's named
executive officers as disclosed pursuant to Item 402 of Regulation S-K;
With respect to the frequency of future advisory approval of the
compensation of the Company's named executive officers, that the vote be
held every three years;
FOR the ratification of the engagement of Somerset CPAs, P.C. as the
Company's independent registered public accounting firm for the year ending
December 31, 2013; and
In their discretion on the transaction of such other business as may
properly come before the annual meeting.
This proxy statement, the notice of annual meeting and the accompanying
proxy form were first mailed to the holders of our common stock on or about May
17, 2013. We will bear the entire expense of soliciting proxies. Proxies will be
solicited by mail initially. Our directors, executive officers and employees
also may solicit proxies personally or by telephone or other means, but they
will not be specially compensated for such services. Certain holders of record,
such as brokers, custodians and nominees, may be requested to distribute proxy
materials to beneficial owners and will be reimbursed by us for their reasonable
expenses incurred in sending proxy materials to beneficial owners.
A shareholder who executes a proxy may revoke it at any time before it is
exercised by delivering to us another proxy bearing a later date, by submitting
written notice of the revocation to our corporate secretary, or by personally
appearing at the annual meeting and casting a contrary vote.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Only common shareholders and preferred shareholders of record at the close
of business on May 15, 2013 are entitled to notice of, and to vote at, the
annual meeting. On such date, there were outstanding: 19,516,589 shares of our
common stock; and 20,625 shares of Series B Convertible Preferred Stock, with
366,667 total votes. There are approximately 280 holders of record of common
stock. Each share of common stock is entitled to one vote on each matter to be
voted upon at the annual meeting. The holders of Series B Convertible Preferred
Stock are entitled to cast a number of votes equal to the number of shares of
common stock into which their shares of Series B Convertible Preferred Stock are
convertible, which is currently 17.8 votes per share.
The Company's By-Laws provide that the holders of a majority of the
Company's outstanding shares of stock entitled to vote at the meeting, present
in person or represented by proxy, shall constitute a quorum for the transaction
of business at the meeting. Abstentions and "broker non-votes" will be counted
as present for the purpose of determining the presence of a quorum.
A "broker non-vote" occurs when a broker lacks discretionary voting power
to vote on a "non-routine" proposal and a beneficial owner fails to give the
broker voting instructions on that matter. The election of directors, the
advisory approval of executive compensation, and the frequency of advisory votes
approving executive compensation are not considered "routine" matters.
Beneficial owners who hold their shares through stock brokerage accounts will
have to give voting instructions to their brokers in order for the brokers to
vote on the election of directors, the advisory approval of executive
compensation, and the advisory vote regarding frequency of future "say-on-pay"
votes. If you are a beneficial owner, failure to provide instructions to your
broker will result in your shares not being voted in connection with the
election of directors, the advisory approval of executive compensation, and the
advisory vote regarding frequency of future "say-on-pay" votes. The ratification
of the selection of Somerset CPAs, P.C. as the Company's independent registered
public accounting firm for 2013 is considered a "routine" matter and a broker
has the discretionary voting power to vote on this matter without any
instructions from the beneficial owner. Broker non-votes are counted for
purposes of determining a quorum, but will have no effect on: the election of
directors; the advisory vote on executive compensation; the advisory vote on the
frequency of future advisory votes on executive compensation; or the
ratification of the selection of Somerset CPAs, P.C. An abstention will not
count as a vote against the ratification of the selection of Somerset CPAs, P.C.
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The affirmative vote of the holders of a plurality of the shares present in
person or represented by proxy at the meeting and eligible to vote is required
for the election of the director nominee. At this year's meeting there is one
nominee to be elected as a Class III director. Therefore, that nominee will be
elected provided he receives any votes "FOR" his election, regardless of how
many votes to "WITHHOLD AUTHORITY" that nominee receives.
The affirmative vote of holders of a majority of the shares present in
person or represented by proxy at the meeting and voting on such matter will be
required for: (1) the advisory approval of the compensation of the Company's
named executive officers as disclosed pursuant to Item 402 of Regulation S-K;
(2) ratification of Somerset CPAs, P.C. as the Company's independent registered
public accounting firm for the year ending December 31, 2013; and (3) for the
approval of any other matter that might be properly raised and submitted to a
vote at the meeting. The advisory vote recommending the frequency (i.e., every
one, two, or three years) of future advisory votes on executive compensation
that receives the greatest number of votes will be considered our shareholders'
advice on the issue. However, consistent with our By-laws, the agenda for this
year's meeting is set and no additional matters, other than the proposals
described in this proxy statement, may be submitted for consideration by our
shareholders at the meeting, other than procedural issues such as adjournment,
postponement or continuation. On procedural issues, all shares represented by
proxy may be voted at the discretion of the attorneys-in-fact named in the
proxies, to the extent permitted by law.
ELECTION OF DIRECTORS
At the 2013 annual meeting of shareholders, in accordance with the
Company's By-Laws, the shareholders will elect one Class III director to serve
until the 2016 annual meeting of shareholders or until his successor is duly
elected and qualified. The board of directors has nominated Mr. A. Scott Mobley
for election as a Class III director. Mr. Mobley is currently a director of the
Company, has consented to being named in this proxy statement, and has agreed to
continue to serve as director, if elected.
Should this nominee become unavailable or decline to serve for any reason,
the Company expects that each person named in the proxy will vote for the
election of another person as may be designated by the board of directors. The
board of directors is not aware of any circumstances likely to cause the nominee
to be unavailable for election or to decline to serve.
The board of directors recommends a vote "FOR" the election of the director
nominee.
Set forth below is certain information regarding the director nominee, the
executive officers and the directors of the Company:
Name Age Positions with the Company
---- --- --------------------------
Paul W. Mobley 72 Chairman of the Board, Chief Executive
Officer, Chief Financial Officer
3
A. Scott Mobley 49 President, Secretary and Director
Douglas H. Coape-Arnold 67 Director
Jeffrey Gaither 54 Director
Troy Branson 49 Executive Vice President of Franchising
Mitchell Grunat 60 Vice President of Franchise Services
James D. Bales 43 Vice President of Operations
The executive officers of the Company serve at the discretion of the board
of directors and are elected at the annual meeting of the board of directors. In
2009, the board of directors adopted a classified board structure in which the
directors are divided into three classes with approximately one-third of the
directors standing for election each year. At this year's meeting, only the
Class III director is standing for election. Under this structure, directors
serve staggered three-year terms or until their successors are duly elected and
qualified.
The following is a brief description of the previous business background of
the director nominee, executive officers and directors:
Paul W. Mobley has been Chairman of the Board, Chief Executive Officer and
Chief Financial Officer since December 1991, and a Director since 1974. Mr.
Mobley was President of the Company from 1981 to 1997. From 1975 to 1987, Mr.
Mobley was a significant shareholder and president of a company which owned and
operated 17 Arby's franchise restaurants. From 1974 to 1978, he also served as
Vice President and Chief Operating Officer of the Company and from l978 to 1981
as its Senior Vice President. He is the father of A. Scott Mobley. Mr. Mobley
has a B.S. in Business Administration from Indiana University and is a CPA.
A. Scott Mobley has been President since 1997, a Director since January
1992, and Secretary since February 1993. Mr. Mobley was Vice President from
November 1988 to October 1997, and from August 1987 until November 1988 he also
served as Director of Marketing for the Company. Prior to joining the Company
Mr. Mobley was a strategic planning analyst with a division of Lithonia Lighting
Company. Mr. Mobley has a B.S. in Business Administration from Georgetown
University, and an MBA from Indiana University. He is the son of Paul W. Mobley.
Douglas H. Coape-Arnold has been a Director of the Company since 1999. Mr.
Coape-Arnold has been Managing General Partner of Geovest Capital Partners, L.P.
since January 1997, and was Managing Director of TradeCo Global Securities, Inc.
from May 1994 to December 2002. Mr. Coape-Arnold is a Chartered Financial
Analyst.
Jeffrey R. Gaither has been a Director of the Company since March 2010. Mr.
Gaither has been a partner with the law firm Bose McKinney & Evans, LLP since
2004, and assumed the position of Managing Partner of that firm in March 2010.
Mr. Gaither has served as counsel to the Company in various matters since 1998.
Mr. Gaither holds a J.D., cum laude, from Indiana University School of Law, and
a B.S. in public affairs from Indiana University.
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Troy Branson has been Executive Vice President of Franchising for the
Company since November 1997, and from 1992 to 1997, he was Director of Business
Development. Before joining the Company, Mr. Branson was an owner of
Branson-Yoder Marketing Group from 1987 to 1992. Mr. Branson received a B.S. in
Business from Indiana University.
Mitchell Grunat has been Vice President of Franchise Services for the
Company since August 2002. Before joining the Company, Mr. Grunat served as:
Chief Operating Officer of Lanter Eye Care from 2001 to 2002; Business
Development Officer for Midwest Bankers from 2000 to 2001; and Chief Operating
Officer for Tavel Optical Group from 1987 to 2000. Mr. Grunat has a B.A. degree
in English and Philosophy from Muskingum College.
James D. Bales has been Vice President of Operations since March 2008.
Before assuming that position, Mr. Bales held various other positions with the
Company beginning in March 2004. Before joining the Company, Mr. Bales had 15
years of management experience in operations and marketing in various positions
with TCBY Yogurt starting in 1989. Mr. Bales attended Northern Kentucky
University for Graphic Design, Inver Hills Community College for Business
Management, and obtained his B.S. in Business from the University of Phoenix.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of April 8, 2013, there were 19,516,589 shares of the Company's common
stock outstanding and 25,000,000 shares of common stock authorized. The
following table sets forth the amount and percentage of the Company's common
stock beneficially owned on April 8, 2013, including shares that may be acquired
by the exercise of options, by: (A) each director and named executive officer
individually; (B) each beneficial owner of more than five percent of the
Company's outstanding common stock known to the Company; and (C) all executive
officers and directors as a group.
Name Number of Shares Percent of
of Beneficial Owner Beneficially Owned (1) Common Stock (2)
------------------- ---------------------- ----------------
Paul W. Mobley 3,456,035 (3) 16.7%
A. Scott Mobley 1,563,660 (4) 7.6
Douglas H. Coape-Arnold 765,000 (5) 3.8
Jeffrey Gaither 100,000 (6) *
James Bales 95,000 (7) *
Troy Branson 250,000 (8) 1.3
Mitchell Grunat 110,000 (9) *
5
James W. Lewis 1,909,580 (10) 9.8
Zyville E. Lewis 1,145,396 (11) 5.9
Robert P. Stiller 3,289,240 (12) 16.9
All executive officers and
directors as a group (7 persons) 6,339,695 28.1%
-------------------------------------
*Less than one percent
(1) All shares owned directly with sole investment and voting power,
unless otherwise noted. No director or executive officer owns any
Series B Convertible Preferred Stock.
(2) The percentage calculations are based upon 19,516,589 shares of the
Company's common stock issued and outstanding as of April 8, 2013 and,
for each officer or director of the group, the number of shares
subject to options, warrants or conversion rights.
(3) The total includes 1,200,000 shares of common stock subject to options
granted under a stock option plan. Mr. Mobley's address is One
Virginia Avenue, Suite 300, Indianapolis, IN 46204.
(4) The total includes 1,020,000 shares of common stock subject to options
granted under a stock option plan. Mr. Mobley's address is One
Virginia Avenue, Suite 300, Indianapolis, IN 46204.
(5) This total includes 380,000 shares of common stock subject to options
granted under a stock option plan.
(6) The total includes 90,000 shares of common stock subject to options
granted under a stock option plan.
(7) The total includes 95,000 shares of common stock subject to options
granted under a stock option plan.
(8) The total includes 120,000 shares of common stock subject to options
granted under a stock option plan.
(9) The total includes 110,000 shares of common stock subject to options
granted under a stock option plan.
(10) The total includes 138,580 shares of common stock owned by James Lewis
Family Investments LP, 220,000 shares of common stock owned by James
W. Lewis MPPP and 200,000 shares owned by Geometry Asset Management,
Inc. Mr. Lewis's address is 335 Madison Ave., Suite 1702, New York, NY
10017.
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(11) Ms. Lewis's address is 456 N. Maple Street, Greenwich, CT 06830.
(12) Based on a Schedule 13G/A filed November 21, 2012, by Robert P.
Stiller. Mr. Stiller's address is 33 Coffee Lane, Waterbury, VT 05676.
CORPORATE GOVERNANCE
Paul W. Mobley serves both as the Chairman on the board of directors and
the Chief Executive Officer of the Company. The Company does not have a
designated lead independent director. For a number of years the Company has
operated using a common U.S. board leadership structure under which the Chief
Executive Officer also serves as Chairman of the board of directors. The board
of directors believes that, given the Company's relatively small size and
limited resources, the Company has been well-served by this leadership structure
and that this structure continues to be the optimal structure for our Company
and our shareholders. The board of directors believes that this structure
demonstrates to our employees, franchisees and shareholders strong leadership,
with a single person having primary responsibility for managing the Company's
operations.
Our whole board of directors has responsibility for the oversight of risk
management. Our whole board of directors from time to time discusses with
management areas of material risk exposures, their potential impact on the
Company, the steps we take to monitor risk exposure, and controls to mitigate
such exposures.
The Company has adopted a code of ethics for its senior executive and
financial officers. The code of ethics can be obtained without charge by
contacting the Company's executive office at One Virginia Ave., Suite 300,
Indianapolis, IN 46204, and requesting a copy of the code of ethics.
In 2012, the board of directors met three times and each of the directors
of the Company attended all three meetings of the board of directors. All
directors are encouraged to attend our annual meeting of shareholders. The
Company held an annual meeting of shareholders on June 28, 2012, at which all
directors were in attendance. The Company does not have standing audit,
compensation, or nominating and corporate governance committees.
Certain Relationships and Transactions
The Company has reviewed all transactions to which the Company and certain
officers and directors of the Company are a party or have a financial interest.
The board of directors of the Company has adopted a policy that all transactions
between the Company and its officers, directors, principal shareholders and
other affiliates must be approved by a majority of the Company's disinterested
directors, and be conducted on terms no less favorable to the Company than could
be obtained from unaffiliated third parties.
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Jeffrey Gaither is a partner with the Bose McKinney & Evans, LLP, a law
firm that performs various legal services for the Company. Amounts paid by the
Company to Bose McKinney for services rendered were $428,028 and $382,338 in
2011 and 2012, respectively.
Paul W. Mobley, the Company's Chairman of the Board and Chief Executive
Officer, loaned the Company $1,255,821 from 2010 to 2012, which was evidenced by
a promissory note, to help fund principal payments due under the Company's bank
loan and payments related to discontinued operations. The promissory note
provided for interest at the rate of 8% per annum to be paid monthly on the
unpaid principal balance of the note, which was executed on December 1, 2010,
and continued on the first day of each calendar month thereafter until the note
was paid in full. Interest paid on this Note was $45,716 and $76,246 in 2012 and
2011, respectively. This loan was repaid in full on May 15, 2012 as the result
of the Company refinancing its outstanding debt, as described in Note 3 to the
Notes to the Company's Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2012.
Other than Mr. Gaither's relationship with Bose McKinney and the former
note payable to Mr. Mobley, the board of directors has determined that there
were no transactions with related parties since January 1, 2012 which are
required to be disclosed in this proxy statement.
The Company's board of directors is currently comprised of: Paul W. Mobley,
our Chairman and Chief Executive Officer; A. Scott Mobley, our President and
Chief Operating Officer; Douglas H. Coape-Arnold; and Jeffrey Gaither. For the
purpose of determining director independence, the Company has adopted the New
York Stock Exchange definition of independence. The board of directors has
determined that Mr. Coape-Arnold is an independent director under that
definition.
Board Role in Audit Process
The board of directors does not have a separately established audit
committee. Because no separate audit committee has been established, the board
of directors, as a whole, performs certain functions ordinarily delegated to an
audit committee. The board of directors has determined that Mr. Coape-Arnold is
qualified as an "Audit Committee Financial Expert."
The board of directors has reviewed and communicated with management and
with Somerset CPAs, P.C., the Company's independent auditor, the Company's
audited consolidated financial statements as of December 31, 2012 and for the
year then ended. The board of directors also has communicated with Somerset
CPAs, P.C. the matters required to be discussed by Statement on Auditing
Standards No. 115, "Communication with Audit Committees." The board of directors
has received the written disclosures and the letter from Somerset CPAs, P.C.
required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountant's communications with the board of
directors concerning independence, and has communicated with the independent
accountant the independent accountant's independence. Based upon the board of
directors' review and communications noted above, the board of directors
authorized the audited consolidated financial statements of the Company be
8
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2012, as filed with the Securities and Exchange Commission.
Board of Directors of Noble Roman's, Inc.
Paul W. Mobley, A. Scott Mobley, Douglas Coape-Arnold
and Jeffrey R. Gaither
Board Role in Nominations
The Company does not have a standing nominating committee. The board of
directors does not believe that a nominating committee is necessary due to the
Company's relatively small size, the relatively small size of its board of
directors, and its historically limited need to add new directors. When the
Company has had a rare vacancy on the board of directors, the entire board has
participated in the nomination process. The board expects all of the directors
to participate in the nomination process and in the review of potential
nominees. The board of directors does not have a formal policy regarding the
consideration of shareholder nominees; however, the board will consider
candidates on a case-by-case basis. There are no specific qualifications that a
candidate must have in order to be considered. When a vacancy exists, the board
generally relies on the personal knowledge and references of the directors and
publicly available data to identify potential nominees.
The board of directors has adopted amended and restated By-Laws that
contain the procedures by which shareholders may nominate directors. Among other
items, these provisions set forth the procedures that shareholders must follow
in order for a shareholder nominee to be considered at a meeting, the
information that a shareholder must provide to the Company with respect to
itself and the nominee, and the deadlines by which a shareholder nomination must
be received in order to be considered at a meeting.
Board Role in Compensation Determinations
The Company does not have a standing compensation committee. The
compensation program is supervised by the entire board of directors. The board
of directors does not believe that a compensation committee is necessary due to
the Company's relatively small size and the relatively small size of its board
of directors. All directors participate in compensation discussions. A director
that is also an officer does not vote on his own compensation. The compensation
of the Chairman/CEO and the President of the Company has been set by long-term
contracts with those individuals. The compensation of other executive officers
of the Company is recommended by the Chairman/CEO and President and reviewed by
the Company's board of directors as it deems appropriate. Other than the
Chairman/CEO and President, no other executive officer participates in the
compensation process.
Communication with the Board
Communications by shareholders or by other parties may be sent to the board
of directors by U.S. mail or overnight delivery and should be addressed to the
9
board of directors c/o Secretary, Noble Roman's, Inc., One Virginia Avenue,
Suite 300, Indianapolis, IN 46204. Communications directed to the entire board
of directors, or one or more directors, will be reviewed by the Secretary and
forwarded to the board of directors as appropriate and may be made anonymously.
Section l6(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Based solely on a review of the copies of reports of ownership and changes
in ownership of the Company's common stock, furnished to the Company, the
Company believes that all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934 were complied with.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Because no separate Compensation Committee has been established, the board
of directors, as a whole, performs certain functions ordinarily delegated to a
Compensation Committee. Paul W. Mobley, A. Scott Mobley, Douglas H. Coape-Arnold
and Jeffrey R. Gaither all participated in executive compensation decisions for
the year ended December 31, 2012.
EXECUTIVE COMPENSATION
Summary Compensation Table for 2012
-----------------------------------
The following table sets forth the cash and non-cash compensation awarded
to or earned by the Chief Executive Officer and the Chief Financial Officer and
the one other highest paid executive officer of the Company.
Non-Equity
Incentive Option Total
Name and Principal Position(s) Year Salary Compensation Awards(1) Compensation
------------------------------ ---- ------ ------------ --------- ------------
Paul Mobley 2012 $400,000 $ - $ 8,500 $408,500
Chairman of the Board, Chief Executive
Officer and Chief Financial Officer 2011 $400,000 $ - $130,000 $530,000
A. Scott Mobley 2012 $306,800 $ 7,397 $ 8,500 $322,697
President and Secretary 2011 $306,800 $ 3,060 $ 78,000 $387,860
Troy Branson 2012 $100,000 $ 96,775 $ 2,550 $199,325
Executive Vice President 2011 $100,000 $ 92,375 $ 4,350 $196,275
(1) These amounts represent the grant date fair value of the option awards. See
"--Equity Incentive Awards" for information regarding valuation of stock
option grants.
10
Equity Incentive Awards
The Summary Compensation Table includes the grant date fair value for 2011
and 2012 for stock options granted to the named executive officers under the
Company's employee stock option plan. The Company determines the grant date fair
value of stock options calculated in accordance with FASB ASC Topic 718. See
Note 7 to the Notes to the Company's Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2012 for a
discussion of the Company's determination of the grant date fair value of stock
options.
The Company granted options on 1,800,000 shares on January 25, 2011 at an
exercise price of the then-current market price of $1.05 per share, and on June
22, 2011, the Company granted options for 200,000 shares at an exercise price
equal to the then-current market price of $.90 per share. The Company granted
options on 361,000 shares on June 28, 2012 at an exercise price equal to the
then-current market price of $.58 per share. The Company expects all stock
options outstanding at December 31, 2012 to vest. During 2012, employees
exercised stock options for 60,000 shares and stock options for 75,000 shares
were forfeited.
The Company maintains an employee stock option plan for our employees,
officers and directors that is designed to motivate them to increase shareholder
value. Any employee, officer or director of the Company is eligible to be
awarded options under the plan. The employee stock option plan provides that any
options issued pursuant to the plan will have a three-year vesting period and
will expire ten years after the date of grant. The vesting period is intended to
provide incentive for longevity with the Company. Awards under the plan are
periodically made at the recommendation of the Chairman/CEO and President, and
then approved by the board of directors. The employee stock option plan does not
have a limit on the number of shares that may be issued under the plan.
Employment Agreements
Paul Mobley has an employment agreement with the Company which: (A) fixes
his base compensation at $586,556 per year for 2012 (although Mr. Mobley
voluntarily reduced his base compensation to $400,000 for 2012); (B) provides
for reimbursement of travel and other expenses incurred in connection with his
employment, including the furnishing of an automobile and health and accident
insurance similar to that provided other employees; and (C) provides life
insurance in an amount related to his base salary. The initial term of the
agreement is seven years and the term automatically renews each year for a
seven-year period unless the board of directors takes specific action to not
renew. The agreement is terminable by the Company for just cause as defined in
the agreement. The agreement does not provide for any benefits payable as a
result of a change of control of the Company.
A. Scott Mobley has an employment agreement with the Company which: (A)
fixes his base compensation at $387,227 per year for 2012 (although Mr. Mobley
voluntarily reduced his base compensation to $306,800 for 2012); (B) provides
for reimbursement of travel and other expenses incurred in connection with his
employment, including the furnishing of an automobile and health and accident
insurance similar to that provided other employees; and (C) provides life
insurance in an amount related to his base salary. The initial term of the
agreement is five years, and the term automatically renews each year for a
five-year period unless the board of directors takes specific action to not
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renew. The agreement is terminable by the Company for just cause as defined in
the agreement. The agreement does not provide for any benefits payable as a
result of a change of control of the Company.
Non-Equity Incentive Arrangements
The Company currently has a non-equity incentive arrangement with our
President under which he may earn additional compensation if the Company's net
income increases for a given year as compared to the immediately prior year. For
the purposes of this calculation we exclude any one-time gains or gains or
losses from discontinued operations. For 2012, the President earned $7,397 in
non-equity incentive compensation.
The Company also currently has a non-equity incentive arrangement with our
Executive Vice President under which he may earn additional compensation. His
compensation is based on 2.5% of all royalty and fee revenue associated with
franchising less the direct expenses of those activities excluding any
administrative cost. The net revenue for this activity under this calculation in
2012 was $3.871 million. Therefore, our Executive Vice President earned $96,775
of non-equity incentive compensation for 2012.
Outstanding Equity Awards at Fiscal Year-End
--------------------------------------------
The following table sets forth information concerning the number of
outstanding equity awards of the executive officers named in the Summary
Compensation Table as of December 31, 2012.
----------------------------------------------------------------------------------------------------------
Option Awards
----------------------------------------------------------------------------------------------------------
Number of Securities Number of Securities
Underlying Unexercised Underlying Unexercised Option Exercise Option Expiration
Options (#) Exercisable Options (#) Unexercisable Price ($) Date
Name
----------------------------------------------------------------------------------------------------------
Paul W. Mobley 100,000 .95 4/28/20
----------------------------------------------------------------------------------------------------------
666,667 333,333 1.05 1/25/21
----------------------------------------------------------------------------------------------------------
100,000 .58 6/27/22
----------------------------------------------------------------------------------------------------------
A. Scott Mobley 20,000 .83 12/22/14
----------------------------------------------------------------------------------------------------------
25,000 2.30 8/28/16
----------------------------------------------------------------------------------------------------------
175,000 .36 3/24/18
----------------------------------------------------------------------------------------------------------
100,000 .95 4/28/20
----------------------------------------------------------------------------------------------------------
400,000 200,000 1.05 1/25/21
----------------------------------------------------------------------------------------------------------
100,000 .58 6/27/22
----------------------------------------------------------------------------------------------------------
Troy Branson 10,000 2.30 8/28/16
----------------------------------------------------------------------------------------------------------
50,000 .95 4/28/20
----------------------------------------------------------------------------------------------------------
30,000 .90 6/22/21
----------------------------------------------------------------------------------------------------------
30,000 .58 6/27/22
----------------------------------------------------------------------------------------------------------
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All options listed above vested or will vest three years after the date of
the grant if the optionee continues to be employed by the Company, and expire
ten years after the grant date.
DIRECTOR COMPENSATION
-----------------------------------------------------------------------------------------------
Fees Earned
or Paid in Option Awards All Other
Name Cash ($) ($) Compensation ($) Total ($)
-----------------------------------------------------------------------------------------------
Douglas H. Coape-Arnold 17,000 1,700 - 18,700
-----------------------------------------------------------------------------------------------
Jeffrey R. Gaither 17,000 1,700 - 18,700
-----------------------------------------------------------------------------------------------
Jeffrey Gaither and Douglas Coape-Arnold are compensated: $14,000 as an
annual retainer fee paid quarterly; a $1,000 fee for each board of directors
meeting attended; a $1,000 annual fee for each committee on which such director
serves; and a $900 fee for each committee meeting attended. The directors are
all eligible for stock option grants and are reimbursed for out-of-pocket
expenses incurred in connection with their board service.
The Company does not pay any separate compensation for directors that are
also employees of the Company.
NON-BINDING, ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We are requesting our shareholders to provide advisory approval of the
compensation of our named executive officers as disclosed in this proxy
statement pursuant to Item 402 of Regulation S-K. This vote, on what is
sometimes referred to as a "say-on-pay" proposal, is required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act").
This year's annual meeting will be the first time that we present our
shareholders with a "say-on-pay" vote.
The Company's executive compensation program is designed to attract,
motivate, and retain our executive officers, who are critical to the Company's
continuing success. As set forth in the "Summary Compensation" and "Outstanding
Equity Awards at Fiscal Year-End" tables above, including the accompanying
narrative disclosure to those tables, our executive compensation program is
comprised of cash and equity-based compensation. We believe this program:
enables the Company to effectively compete for qualified executive personnel;
aligns the interests of named executive officers with those of our shareholders;
and appropriately rewards our named executive officers for achievement of both
short- and long-term financial and strategic goals of the Company.
The Company's board of directors is therefore asking our shareholders to
approve a non-binding advisory vote on the following resolution:
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RESOLVED, That the shareholders approve the compensation of the
Company's named executive officers as disclosed in its proxy statement for
the 2013 annual meeting of shareholders pursuant to the compensation
disclosure rules of the Securities and Exchange Commission (which includes
the compensation tables and related narrative disclosure).
While this "say-on-pay" proposal is a non-binding advisory vote, the
Company's board of directors values the opinion of the Company's shareholders,
and will consider the outcome of this vote when making future compensation
decisions for the Company's named executive officers.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and voting is required to approve this
"say-on-pay" vote.
The board of directors recommends a vote "FOR" the proposal approving the
compensation of the Company's named executive officers.
NON-BINDING, ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY
VOTES TO APPROVE EXECUTIVE COMPENSATION
We are also requesting the Company's shareholders to vote to recommend that
future "say-on-pay" votes be held every three years. This vote, on what is
sometimes referred to as a "frequency of say-on-pay proposal," is required under
the Dodd-Frank Act. This year's annual meeting will be the first time that we
present our shareholders with a "frequency of say-on-pay" vote. The board of
directors believes that holding future "say-on-pay" votes every three years is
most consistent with the Company's approach to executive compensation, in which
the Company seeks to enhance the long-term growth of the Company, and to
attract, retain and motivate our executive officers over the long term.
As an advisory vote, this proposal is not binding upon the Company or its
board of directors; however, the board of directors values the opinion of the
Company's shareholders, and will consider the outcome of this vote when making
future decisions regarding the frequency of shareholder votes on named executive
officer compensation.
The frequency (e.g., every one, two, or three years) that receives the
greatest number of votes of holders of shares present in person or represented
by proxy will be deemed to be the shareholders' recommendation with respect to
the frequency of future "say-on-pay" voting.
The board of directors recommends a vote of "EVERY THREE YEARS" on the
frequency of future shareholder "say-on-pay" votes.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The board of directors has appointed the firm of Somerset CPAs, P.C.
("Somerset") as the Company's independent registered public accounting firm for
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2013. Somerset has served as the Company's independent registered public
accounting firm since 2006. Although action by the shareholders in this matter
is not required, the board of directors believes that in light of the critical
role played by the independent registered public accounting firm in maintaining
the integrity of the Company's financial controls and reporting, it is a matter
of good practice.
In the event our shareholders fail to approve the proposal to appoint
Somerset as the Company's independent registered public accounting firm, the
board of directors will reconsider retaining another firm. Even if the selection
is ratified, the board of directors in its discretion may direct the appointment
of a different independent registered public accounting firm at any time during
the year if it determines that such a change would be in the best interest of
the Company and our shareholders.
The board of directors recommends a vote "FOR" the proposal to ratify the
selection of Somerset CPAs, P.C. as the Company's independent registered public
accounting firm for the year ending December 31, 2013.
INDEPENDENT AUDITOR'S FEES
The following table presents fees for professional audit services rendered
by Somerset for the audit of our annual financial statements and review of our
quarterly financial statements, and fees billed for other services rendered by
Somerset during 2011 and 2012.
2012 2011
---- ----
Audit fees and review fees (1) $90,000 $90,750
-----------------
(1) Audit fees consist of fees rendered for professional services rendered by
Somerset for the audit of our financial statements included in our Forms
10-K for the years ended December 31, 2011 and 2012, and the review of the
unaudited financial statements included in our quarterly reports during
2011 and 2012.
The engagement of Somerset, for conducting the audit of the Company's
financial statements for the years ended December 31, 2011 and 2012, and for the
review of its financial statements included in its Form 10-Q's during 2011 and
2012, was pre-approved by the Company's board of directors. Somerset has not
been engaged by the Company to perform any services other than audits of the
financial statements included in its Form 10-K's and review of the financial
statements in its Form 10-Qs. The board of directors does not have a
pre-approval policy with respect to work performed by the Company's independent
auditor.
Representatives of Somerset are not expected to attend the annual meeting.
15
SHAREHOLDER PROPOSALS FOR 2013 ANNUAL MEETING
If a shareholder wishes to have a proposal included in the Company's proxy
statement for an annual meeting, the shareholder must satisfy the requirements
established under our By-Laws and the requirements established by the Securities
and Exchange Commission. Rule 14a-8 under the Securities Exchange Act of 1934,
as amended, requires that shareholders requesting to have a proposal included in
the Company's proxy statement for an annual meeting of shareholders must submit
their proposal in writing to the Company at least 120 days before the
anniversary date of the date the Company's proxy statement was released to
shareholders for the prior year's annual meeting. Therefore, any shareholder
requesting to submit a proposal for inclusion in the Company's proxy statement
for the 2014 annual shareholders' meeting must deliver a proposal to the
Secretary of the Company no later than January 10, 2014.
Any shareholder of Noble Roman's eligible to vote in an election may also
make shareholder proposals and nominations for the 2014 annual meeting outside
of the process described above for proposals subject to Rule 14a-8. In order to
be considered at the 2014 annual meeting, all shareholder proposals, nominations
and notifications submitted outside of the process described above for proposals
subject to Rule 14a-8 must (1) comply with the procedures set forth in the
Company's By-Laws, and (2) be delivered to the Secretary of the Company no
earlier than March 1, 2014 and no later than April 1, 2014.
OTHER MATTERS
The board of directors does not intend to bring any matters before the
meeting other than as stated in this proxy statement, and the Company is not
aware that any other matters will be presented for action at the meeting. If any
other matters properly come before the meeting, the persons named in the
enclosed form of proxy will vote the proxy with respect thereto in accordance
with their best judgment, pursuant to the discretionary authority granted by the
proxy. However, consistent with the Company's By-Laws, the agenda for this
year's meeting is set and no additional matters may be submitted for
consideration by our shareholders at the meeting, other than procedural issues
such as adjournment, postponement or continuation. Whether or not you plan to
attend the Meeting in person, please complete, sign, date and return the
enclosed proxy form promptly.
/s/ Paul W. Mobley
--------------------------------------
Paul W. Mobley,
Chairman and Chief Executive Officer
May 17, 2013
Indianapolis, Indiana
16