0000926274-12-000003.txt : 20120416
0000926274-12-000003.hdr.sgml : 20120416
20120416165926
ACCESSION NUMBER: 0000926274-12-000003
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20120627
FILED AS OF DATE: 20120416
DATE AS OF CHANGE: 20120416
EFFECTIVENESS DATE: 20120416
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NOBLE ROMANS INC
CENTRAL INDEX KEY: 0000709005
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812]
IRS NUMBER: 351281154
STATE OF INCORPORATION: IN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-11104
FILM NUMBER: 12761747
BUSINESS ADDRESS:
STREET 1: ONE VIRGINIA AVE
STREET 2: STE 800
CITY: INDIANAPOLIS
STATE: IN
ZIP: 46204
BUSINESS PHONE: 3176343377
MAIL ADDRESS:
STREET 1: ONE VIRGINIA AVENUE
STREET 2: SUITE 800
CITY: INDIANAPOLIS
STATE: IN
ZIP: 46204
DEF 14A
1
nr-2012prxy.txt
2012 NOTICE & PROXY
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)
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 the 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 the 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 No.:
(3) Filing Party:
(4) Date Filed:
NOBLE ROMAN'S, INC.
ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 27, 2012
To the Shareholders of Noble Roman's, Inc.:
We are notifying you that the 2012 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 Wednesday, June 27, 2011, at the Hyatt
Regency, One S. Capitol Avenue, Indianapolis, Indiana 46204, for the following
purposes:
1. To elect two Class II directors, to serve until the 2015 annual
meeting of shareholders or until his successor is elected and
qualified;
2. To ratify the selection of Somerset CPAs, P.C. as the Company's
independent registered public accounting firm for the year ending
December 31, 2012; and
3. 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 2,
2012 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 June 27, 2012.
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.
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 7, 2012
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NOBLE ROMAN'S, INC.
ONE VIRGINIA AVENUE, SUITE 300
INDIANAPOLIS, INDIANA 46204
(317) 634-3377
PROXY STATEMENT
Annual Meeting of Shareholders
June 27, 2012
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 Wednesday, June 27, 2012 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 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. Paul W. Mobley and Jeffrey R. Gaither as Class II
directors of the Company, to serve until the 2015 annual meeting of
shareholders or until his successor is elected and qualified;
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, 2012; 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
7, 2012. 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 2, 2011 are entitled to notice of, and to vote at, the annual
meeting. On such date, there were 19,489,317 shares of our common stock
outstanding and 20,625 shares of Series B Convertible Preferred Stock with total
votes of 366,667. There are approximately 283 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 is not
considered a "routine" matter. 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. 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
ratification of the selection of Somerset CPAs, P.C. as the Company's
independent registered public accounting firm for 2012 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 or the ratification of the selection of Somerset CPAs, P.C. An
abstention will count as a vote against the ratification of the selection of
Somerset CPAs, P.C.
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 on such
matter is required for the election of each director nominee. A "plurality" in
an election of directors means that the nominees of each class with the largest
number of votes cast will be elected as directors of that class, up to the
maximum number of directors of that class to be chosen at the meeting. At this
year's meeting there are two nominees to be elected as Class II directors.
Therefore, that nominee is assured of election 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 ratification of Somerset CPAs, P.C. as the Company's independent
registered public accounting firm for the year ending December 31, 2012 and for
2
the approval of any other matter that might be properly raised and submitted to
a vote at the meeting. 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 2012 annual meeting of shareholders, in accordance with the
Company's By-Laws, the shareholders will elect two Class II directors to serve
until the 2015 annual meeting of shareholders or until his successor is duly
elected and qualified. The board of directors has nominated Paul W. Mobley and
Jeffrey R. Gaither for election as Class II directors. Mr. Mobley and Mr.
Gaither: are currently directors of the Company; have consented to being named
in this proxy statement; and have agreed to serve as directors, if elected.
Should these nominees 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
nominees to be unavailable for election or to decline to serve.
The board of directors recommends a vote "FOR" the election of the director
nominees.
Set forth below is certain information regarding the director nominees, the
executive officers and the directors of the Company:
Name Age Positions with the Company
---- --- --------------------------
Paul W. Mobley 71 Chairman of the Board, Chief Executive
Officer, Chief Financial Officer
A. Scott Mobley 48 President, Secretary and Director
James Basili 36 Director
Douglas H. Coape-Arnold 66 Director
Jeffrey Gaither 53 Director
Troy Branson 48 Executive Vice President of Franchising
Mitchell Grunat 59 Vice President of Franchise Services
Juel Tillery 55 Vice President of National Franchise
Sales
James D. Bales 42 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.
During 2009, the board of directors adopted a classified board structure in
which the directors are divided into three classes with approximately one-third
3
of the directors standing for election each year. At this years's meeting, only
the Class II directors are 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 nominees, 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.
James F. Basili has been a Director of the Company since March 2010. Mr.
Basili is the founder and Managing Partner of Blacktree Capital Management, a
partnership that makes long-term investments in undervalued businesses, which he
founded in November 2007. Prior to founding Blacktree, Mr. Basili was a Partner
at Kinderhook Partners, an investment firm he co-founded in 2003. Earlier, he
was a Principal at Geocapital Partners, a leading venture capital firm managing
over $500 million in institutional funds across North America and Europe. He
began his career at the Mitchell Madison Group, a global management consulting
firm. Mr. Basili received his B.A. degree, cum laude, from Harvard University.
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.
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
4
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.
Juel Tillery has been Vice President of National Franchise Sales since
January 2012. Before joining the Company, Mr. Tillery was the founder of
MaggieMoo's Ice Cream as well as the Director of Business Development for Hot
Stuff Pizza. Prior to that he had many years experience with both Pizza Inn and
McDonald's. Mr. Tillery has an MBA from St. Mary's College of the Plains.
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 4, 2012, there were 19,489,317 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 4, 2012, 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 3,356,035 (3) 16.3%
A. Scott Mobley 1,476,388 (4) 7.2
James Basili 223,105 (5) 1.1
Douglas H. Coape-Arnold 422,500 (6) 2.1
5
Jeffrey Gaither 80,000 (7) *
James Bales 75,000 (8) *
Troy Branson 220,100 (9) 1.1
Mitchell Grunat 90,000 (10) *
James W. Lewis 1,909,580 (11) 9.8
Zyville E. Lewis 1,145,396 (12) 5.9
Timothy Riley 1,220,300 (13) 6.3
Robert P. Stiller 3,859,240 (14) 19.8
Austin W. Marxe and
David M. Greenhouse 1,033,250 (15) 5.3
All executive officers and
directors as a group (9 persons) 5,943,128 26.6%
*Less than one percent
(1) All shares owned directly with sole investment and voting power,
unless otherwise noted.
(2) The percentage calculations are based upon 19,469,317 shares of the
Company's common stock issued and outstanding as of April 4, 2012 and,
for each officer or director of the group, the number of shares
subject to options, warrants or conversion rights.
(3) The total includes 1,120,000 shares of common stock subject to options
granted under an employee stock option plan. Mr. Mobley's address is
One Virginia Avenue, Suite 300, Indianapolis, IN 46204.
(4) The total also includes 940,000 shares of common stock subject to
options granted under an employee stock option plan. Mr. Mobley's
address is One Virginia Avenue, Suite 300, Indianapolis, IN 46204.
(5) The total includes 70,000 shares of common stock subject to options
granted under an employee stock option plan. The remaining shares of
stock are held in the account of Blacktree Partners, L.P. (the
"Partnership") for which Blacktree Capital Management, LLC (the
"General Partner") serves as general partner. Mr. Basili is the sole
owner of the General Partner. Mr. Basili may be deemed to beneficially
own these securities held by the Partnership by virtue of the General
6
Partner's position in the Partnership and Mr. Basili's status as the
sole member of the General Partner. Mr. Basili disclaims any
beneficial ownership of the securities except to the extent of his
pecuniary interest therein, and this shall not be deemed an admission
that Mr. Basili is the beneficial owner of these securities for
purposes of Section 16 of the Securities Act of 1934, as amended, or
for any other purpose.
(6) This total includes 360,000 shares of common stock subject to options
granted under an employee stock option plan. This total does not
include 184,000 shares reported to be held by Geovest Capital
Partners, LP on a Form 4 filed June 1, 2011. Although Mr. Coape-Arnold
is a Managing Partner of Geovest Capital Partners, LP, he disclaims
beneficial ownership of such shares beyond his interest in Geovest
Capital Partners.
(7) The total includes 70,000 shares of common stock subject to options
granted under an employee stock option plan.
(8) This total includes 75,000 shares of common stock subject to options
granted under an employee stock option plan.
(9) This total includes 90,000 shares of common stock subject to options
granted under an employee stock option plan.
(10) This total includes 90,000 shares of common stock subject to options
granted under an employee stock option plan.
(11) This 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' address is 335 Madison Ave., Suite 1702,
New York, NY 10017.
(12) Ms. Lewis' address is 456 N. Maple Street, Greenwich, CT 06830.
(13) Based on a Schedule 13G/A filed January 18, 2011, by Timothy Riley and
Angela Riley. Mr. Riley's address is 11 Pratt Island, Darien, CT
06820. Mr. Riley reported sole voting and dispositive power over
1,050,000 shares. Ms. Riley reported sole voting and dispositive power
over 170,300 shares.
(14) Based on a Schedule 13G/A filed January 26, 2012, by Robert P.
Stiller. Mr. Stiller's address is 33 Coffee Lane, Waterbury, VT 05676.
(15) Based on a Schedule 13G/A filed February 11, 2011, by Austin W. Marxe
and David M. Greenhouse, whose address is 527 Madison Avenue, #2600,
New York, NY 10022. Mr. Marxe and Mr. Greenhouse reported shared
voting and investment power over 1,033,250 shares owned by Special
Situations Fund III OP, L.P. because they are the controlling
principals of AWM Investment Company, Inc., the general partner of MGP
Advisors Limited Partnership, the general partner of Special
Situations Fund III, OP, L.P.
7
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 the traditional 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 2011, the board of directors met five times and each of the directors of
the Company attended all five 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 22, 2011, at which all directors were in
attendance. The Company does not have standing audit, nominating and
compensation 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.
Jeffrey Gaither is a partner with the Bose McKinney & Evans, LLP, a law
firm that performs various legal services for the Company. The Company paid Bose
McKinney for services rendered approximately $320,186 and $428,028 in 2010 and
2011, respectively.
8
Paul W. Mobley, the Company's Chairman of the Board and Chief Executive
Officer, loaned the Company $855,821 in 2010 and $400,000 in 2011 for a total of
$1,255,821 to help fund $1,125,000 in principal payments in 2010 and $925,000 in
2011 due under its bank loan and to help fund $933,809 in payments related to
discontinued operations in 2010 and $709,816 in payments related to discontinued
operations in 2011. The payments related to the discontinued operations were
largely for legal fees related to the Heyser lawsuit, which is described in Note
10 of the notes to the accompanying consolidated financial statements. The
advances are evidenced by a promissory note in the principal amount of
$1,255,821, which provides for interest at the rate of 8% per annum to be paid
monthly on the unpaid principal balance of the note which began December 1,
2010, and has continued on the first day of each calendar month thereafter and
will continue until the note is paid in full. The Company is current on the
required interest payments. The Company paid interest of $76,246 to director
Mobley during 2011. In addition, the note requires principal payments commencing
on November 1, 2012 and on the first day of each calendar month thereafter in
the amount of $100,000 per month through September 1, 2013 and $125,500 on
October 1, 2013. The Third Amendment to the Loan Agreement with Wells Fargo
states that no principal payment on the officer note can commence until the
Wells Fargo loan is paid in full.
Other than Mr. Gaither's relationship with Bose McKinney and the note
payable to Mr. Mobley, the board of directors has determined that there were no
transactions with related parties since January 1, 2011 that are required to be
disclosed in this proxy statement. In making this determination, the board of
directors considered consulting fees paid to Mr. Coape-Arnold and determined
these items were not required to be disclosed due to the amount of the payments.
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; James Basili; 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 Messrs. Basili and Coape-Arnold are independent
directors 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, C.P., the Company's independent auditor, the Company's
audited consolidated financial statements as of December 31, 2011 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
9
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
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2011, 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,
Jeffrey R. Gaither and James F. Basili
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 had a recent, 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 within 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 approved by
the Company's board of directors. Other than the Chairman/CEO and President, no
other executive officer participates in the compensation process.
10
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
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, James Basili and Jeffrey Gaither all participated in executive
compensation decisions for the year ended December 31, 2011.
EXECUTIVE COMPENSATION
Summary Compensation Table for 2011
-----------------------------------
The following table sets forth the cash and non-cash compensation awarded
to or earned by the Chief Executive Officer and Chief Financial Officer and the
two other highest paid executive officers of the Company.
Non-Equity
Incentive Option Total
Name and Principal Position(s) Year Salary Compensation Awards(1) Compensation
Paul Mobley 2011 $400,000 $ -- $130,000 $530,000
Chairman of the Board, Chief Executive
Officer and Chief Financial Officer 2010 $400,000 $ -- $ 9,300 $409,300
A. Scott Mobley 2011 $306,800 $ 3,060 $ 78,000 $387,860
President and Secretary 2010 $306,800 $ -- $ 9,300 $316,100
Troy Branson 2011 $100,000 $ 92,375 $ 4,350 $196,275
Executive Vice President of Franchising 2010 $100,000 $ 91,813 $ 4,650 $196,463
(1) These amounts represent the grant date fair value of the option awards.
11
Equity Incentive Awards
The Summary Compensation Table includes the grant date fair value for 2010
and 2011 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, 2011 for a
discussion of the Company's determination of the grant date fair value of stock
options.
The Company granted options on April 28, 2010 for 491,000 shares at an
exercise price equal to the then-current market price of $.95 per share. 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,
2011the Company granted options for 200,000 shares at an exercise price equal to
the then-current market price of $.90 per share. The Company expects all stock
options outstanding at December 31, 2011 to vest. During 2011, an employee
exercised a stock option for 50,000 shares and stock options for 50,000 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 fixes his
base compensation at $553,355 per year for 2011 (although Mr. Mobley voluntarily
reduced his base compensation to $400,000 for 2011), 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 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 fixes
his base compensation at $365,403 per year for 2011 (although Mr. Mobley
voluntarily reduced his base compensation to $306,800 for 2011), provides for
reimbursement of travel and other expenses incurred in connection with his
employment, including the furnishing of an automobile and health and accident
12
insurance similar to that provided other employees; and 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 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 2011, the President earned $3,060 in
non-equity incentive compensation.
The Company also currently has a non-equity incentive arrangement with our
Executive Vice President of Franchising 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 2011 was $3.695 million. Therefore, our Executive Vice President
of Franchising earned $92,375 of non-equity incentive compensation for 2011.
Outstanding Equity Awards at Fiscal Year-End
--------------------------------------------
The following table sets forth information concerning the number of
outstanding equity awards of the executive officers named in the Summary
Compensation Table as of December 31, 2011.
Option Awards
---------------------------------------------------------------------------------------------------------------
Number of Securities Number of Securities
Underlying Unexercised Underlying Unexercised Option Exercise Option Expiration
Name Options (#) Exercisable Options (#) Unexercisable Price ($) Date
---------------------------------------------------------------------------------------------------------------
Paul W. Mobley 20,000 $ .55 8/7/12
100,000 $ .95 4/28/20
333,333 666,667 $ 1.05 1/25/21
---------------------------------------------------------------------------------------------------------------
A. Scott Mobley 20,000 $ .55 8/7/12
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
200,000 400,000 $ 1.05 1/25/21
---------------------------------------------------------------------------------------------------------------
Troy Branson 10,000 $ 2.30 8/28/16
50,000 $ .95 4/28/20
30,000 $ .90 6/22/21
---------------------------------------------------------------------------------------------------------------
13
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 $18,000 $ 28,900 - $ 46,900
------------------------------------------------------------------------------------------------------
James F. Basili $18,000 $ 2,900 - $ 20,900
------------------------------------------------------------------------------------------------------
Jeffrey R. Gaither $18,000 $ 2,900 - $ 20,900
------------------------------------------------------------------------------------------------------
James Basili, 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.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The board of directors has appointed the firm of Somerset CPAs, C.P.
("Somerset") as the Company's independent registered public accounting firm for
2012. 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 whether or not to retain the 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, 2012.
14
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 2010 and 2011.
2011 2010
---- ----
Audit fees and review fees (1) $90,750 $87,000
----------
(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, 2010 and 2011, and the review of the
unaudited financial statements included in our quarterly reports during
2010 and 2011.
The engagement of Somerset, for conducting the audit of the Company's
financial statements for the years ended December 31, 2010 and 2011, and for the
review of its financial statements included in its Form 10-Q's during 2010 and
2011, 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
Company's financial statements included in its Form 10-K's and review of 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.
SHAREHOLDER PROPOSALS FOR 2012 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 2013 annual shareholders' meeting must deliver a proposal to the
Secretary of the Company no later than January 2, 2013.
Any shareholder of Noble Roman's eligible to vote in an election may also
make shareholder proposals and nominations for the 2013 annual meeting outside
of the process described above for proposals subject to Rule 14a-8. In order to
be considered at the 2013 annual meeting, all shareholder proposals, nominations
and notifications submitted outside of the process described above for proposals
15
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 February 26, 2013 and no later than March 29, 2013.
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 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 7, 2012
Indianapolis, Indiana
16
NOBLE ROMAN'S, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul W. Mobley and A. Scott Mobley, and each of
them, with or without the other, true and lawful attorney(s), with full power of
substitution, for the undersigned and in the name, place and stead of the
undersigned to vote as designated below all of the shares of Common Stock, no
par value, of Noble Roman's, Inc. that the undersigned is entitled to vote at
the Annual Meeting of Shareholders of Noble Roman's, Inc. to be held at the
Hyatt Regency, One S. Capitol Avenue, Indianapolis, Indiana 46204, at 10:00
a.m., local time, June 27, 2012, and at any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED AND FOR THE
RATIFICATION OF AUDITORS:
1. Election of two Class II directors:
Paul W. Mobley [ ] FOR [ ] WITHHOLD VOTE
Jeffrey R. Gaither [ ] FOR [ ] WITHHOLD VOTE
2. Ratification of Somerset CPAs, P.C. as the Company's independent registered
public accounting firm for the year ending December 31, 2012:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy also may be voted, in the discretion of the proxies, on any matter
that may properly come before the meeting and any adjournment or postponement
thereof.
This proxy, when properly executed will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is made, this proxy will be
voted "FOR" the nominee listed above in the election of director and "FOR"
approval of the matter listed in Proposal 2 above.
The undersigned acknowledges receipt of the Company's Annual Report on Form 10-K
for the year ended December 31, 2011 and the Notice of the Annual Meeting and
the Proxy Statement.
Dated this 7th day of May 2012.
PLEASE DATE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
----------------------------------------------------------
Date
----------------------------------------------------------
Signature
Please date and sign in the exact name in which you own
Noble Roman's, Inc. Common Stock. Executors, administrators,
trustees and others acting in a representative or fiduciary
capacity should so indicate when signing.