SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GOLDEN BEAR GOLF, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee:
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate
value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO] GOLDEN BEAR GOLF, INC.
June 16, 1997
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of Golden
Bear Golf, Inc. to be held at 11:00 a.m. on Monday, July 21, 1997, at the Palm
Beach Gardens Marriott Hotel, 4000 RCA Boulevard, Palm Beach Gardens, Florida
33410. The matters to be considered at the meeting are described in the formal
notice and proxy statement on the following pages.
In addition to the specific matters to be acted upon, there will be a report on
the progress of Golden Bear Golf, Inc. and an opportunity to ask questions.
Whether or not you plan to attend in person, it is important that your shares be
represented at the Annual Meeting. Accordingly, it is important that you sign,
date and return your proxy card in the enclosed envelope as soon as possible. If
you decide to attend, you can still vote your shares in person, if you wish.
Thank you for your cooperation and your continued support.
Sincerely yours,
Jack W. Nicklaus
CHAIRMAN OF THE BOARD
<PAGE>
GOLDEN BEAR GOLF, INC.
11780 U.S. HIGHWAY ONE
NORTH PALM BEACH, FLORIDA 33408
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 21, 1997
To the Shareholders of Golden Bear Golf, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Golden Bear
Golf, Inc. will be held at 11:00 a.m. on Monday, July 21, 1997, at the Palm
Beach Gardens Marriott Hotel, 4000 RCA Boulevard, Palm Beach Gardens, Florida
33410, for the following purposes:
(1) To elect two Directors to serve until the 1998 Annual Meeting of
Shareholders, to elect two Directors to serve until the 1999 Annual
Meeting of Shareholders and to elect three Directors to serve until
the 2000 Annual Meeting of Shareholders;
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on June 5, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
By Order of the Board of Directors
Jack P. Bates
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
North Palm Beach, Florida
June 16, 1997
WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
YOU MAY REVOKE YOUR PROXY IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO
VOTE YOUR SHARES IN PERSON.
<PAGE>
GOLDEN BEAR GOLF, INC.
11780 U.S. HIGHWAY ONE
NORTH PALM BEACH, FLORIDA 33408
(561) 626-3900
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Golden Bear Golf, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at 11:00 a.m. on Monday, July 21, 1997, at the Palm
Beach Gardens Marriott Hotel, 4000 RCA Boulevard, Palm Beach Gardens, Florida
33410, or any adjournment thereof.
Only shareholders of record at the close of business on June 5, 1997 are
entitled to vote at the Annual Meeting. As of the record date, the Company had
outstanding 2,744,962 shares of Class A Common Stock (par value $.01 per share)
and 2,760,000 shares of Class B Common Stock (par value $.01 per share). Each
share of Class A Common Stock entitles the holder to one vote on each matter to
be voted upon at the Annual Meeting and each share of Class B Common Stock
entitles the holder to ten votes on each such matter, including the election of
directors.
This Proxy Statement, the accompanying form of proxy and the Company's Annual
Report to Shareholders are being mailed on or about June 17, 1997, to each
shareholder entitled to vote at the Annual Meeting.
The entire cost of soliciting proxies will be borne by the Company. The
solicitation is to be principally conducted by mail and may be supplemented by
telephone and other contacts by directors, officers and other employees of the
Company, without additional remuneration. The Company has retained Corporate
Investor Communications, Inc. to coordinate the solicitation and forwarding of
proxy materials to the beneficial owners of its shares held in "street name" for
a fee of approximately $1,200 plus expenses. Brokerage firms, banks,
fiduciaries, voting trustees or other nominees will be requested to forward the
soliciting material to each beneficial owner of shares held of record by them.
PROXY PROCEDURES AND VOTING REQUIREMENTS
Proxies properly executed and returned in a timely manner will be voted at the
Annual Meeting in accordance with the shareholder's instructions noted thereon.
In voting by proxy with regard to the election of directors, shareholders may
vote in favor of all nominees or withhold their vote as to specific nominees. If
no such instructions are specified, the proxies will be voted "for" the election
as directors of all the nominees named herein and in accordance with the
judgment of the persons acting under the proxies on any other matters presented
for a vote. A shareholder submitting a proxy may revoke it at any time before it
is voted by delivery to the Company of a subsequently executed proxy or a
written notice of revocation. In addition, returning your completed proxy will
not prevent you from voting in person at the Annual Meeting should you be
present and wish to do so. Attendance at the Annual Meeting will not, in itself,
constitute revocation of a proxy.
A majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at the Annual Meeting. Assuming a quorum is present,
the affirmative vote by a plurality of the votes cast at the Annual Meeting will
be required for the election of directors. Votes cast by proxy or in person at
the Annual Meeting will be tabulated by the inspectors of elections appointed
for the meeting and will be counted in determining whether or not a quorum is
present. For purposes of determining the number of votes cast with respect to
any voting matter, only those cast "for" or "against" are included. Abstentions
and broker non-votes are counted only for purposes of determining whether a
quorum is present. Once a share is represented for any purpose at the Annual
Meeting, it is deemed present for quorum purposes for the remainder of such
meeting or for any adjournment thereof.
<PAGE>
ELECTION OF DIRECTORS
The Bylaws of the Company give its Board of Directors the authority to set the
number of directors, provided that it is comprised of at least four persons, the
exact number of which is to be determined from time to time by resolution
adopted by the affirmative vote of a majority of all directors then holding
office. The size of the Company's Board of Directors is currently set at seven.
The Company's Bylaws further provide that commencing with the upcoming Annual
Meeting, the Board of Directors shall be divided into three classes; designated
Class I, Class II and Class III directors, with each class having as nearly an
equal number of directors as possible. At the Annual Meeting, Class I directors
shall initially be elected to hold office for a one-year term expiring at the
1998 Annual Meeting, Class II directors shall initially be elected to hold
office for a two-year term expiring at the 1999 Annual Meeting, and Class III
directors shall initially be elected to hold office for a three-year term
expiring at the 2000 Annual Meeting, with each director to hold office until his
successor is elected and qualified, or until his earlier resignation, removal
from office or death. After expiration of such initial terms, each class will be
elected for a three-year term.
The persons named below have been designated by the Board of Directors as
nominees for election as directors to serve terms that correspond to their
respective classes indicated, as discussed above. All of the following nominees
are current directors of the Company with terms that end at the Annual Meeting.
If any of the nominees is unable to serve for any reason or withdraws from
nomination, proxies will be voted for the election of such other person or
persons as the Board of Directors may designate. It is not anticipated by the
Board of Directors that any nominee will become unable to serve or will withdraw
from nomination. Information concerning the nominees for director is set forth
below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR NAMED BELOW. PROXY CARDS EXECUTED AND RETURNED WILL BE SO
VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
NOMINEES FOR ELECTION TO TERM
EXPIRING IN 1998 (CLASS I):
Mark F. Hesemann 43 Senior Vice President and Director
Roger E. Birk 66 Director
NOMINEES FOR ELECTION TO TERM
EXPIRING IN 1999 (CLASS II):
Thomas P. Hislop 40 Senior Vice President and Director
Richard F. Chapdelaine 72 Director
NOMINEES FOR ELECTION TO TERM
EXPIRING IN 2000 (CLASS III):
Jack W. Nicklaus 57 Chairman of the Board
Richard P. Bellinger 45 President, Chief Executive Officer and Director
John F. McGovern 51 Director
</TABLE>
JACK W. NICKLAUS has served as the Chairman of the Board of the Company since
its inception in 1996. Mr. Nicklaus founded Golden Bear International, Inc.
("International"), the predecessor of the Company in 1970 and has served as
Chairman of its Board since inception. Mr. Nicklaus, who has been a professional
golfer for over 35 years, continues to be one of professional golf's most
recognized players. Mr. Nicklaus also has over 25 years experience as a golf
course designer, having designed 138 courses in 23 countries. Mr. Nicklaus
received the Athlete of the Decade Award (1970-1979) from SPORTS ILLUSTRATED
magazine and the Golfer of the Century Award in 1988.
2
<PAGE>
RICHARD P. BELLINGER has served as a member of the Company's Board of Directors
and as the Company's President and Chief Executive Officer since its inception
in 1996. Mr. Bellinger joined International in 1979 as Controller for the golf
course and real estate development areas of International. In 1981, he was
promoted to Treasurer, and in 1984, became International's Chief Financial
Officer. Mr. Bellinger was promoted to Chief Operating Officer of International
in 1985 and was named President in 1989.
MARK F. HESEMANN has served as a member of the Company's Board of Directors and
as a Senior Vice President of the Company, with primary responsibility for the
Company's Golf and Construction Divisions, since its inception in 1996. Mr.
Hesemann joined International in 1982 as Director of Marketing. He became
Executive Vice President of Jack Nicklaus Club Management, a division of
International in 1984 and was named Vice President of International in 1985 with
responsibility for marketing of Jack Nicklaus Golf Services, the golf course
design division of International. He became General Manager of Jack Nicklaus
Golf Services in 1986 and assumed the additional responsibility of Senior Vice
President of International in 1992. From October 1994 to January 1996, Mr.
Hesemann served as Managing Director in charge of all of International's
business in Asia.
THOMAS P. HISLOP has served as a member of the Company's Board of Directors and
as a Senior Vice President of the Company, with primary responsibility for the
Company's Marketing Division, since its inception in 1996. Mr. Hislop joined
International in 1984 as Director of Marketing. Mr. Hislop became Vice President
of Marketing in 1985 with the responsibility for Jack Nicklaus' marketing and
endorsement relationships. Mr. Hislop was named General Manager of Jack Nicklaus
Marketing Services in 1986, Senior Vice President of International in 1992 and
member of International's Executive Committee in 1994.
ROGER E. BIRK, a private investor, was elected to the Company's Board of
Directors in October, 1996. Mr. Birk served as the President of Fannie Mae from
1987 to 1992 and is currently one of its Board members. Prior to his tenure at
Fannie Mae, Mr. Birk served as Chairman and a member of the Board of the
International Securities Clearing Corporation. He also served as Chairman of the
Board and Chief Executive Officer of Merrill Lynch & Company, Inc. from 1981 to
1984 and was named Chairman Emeritus in 1985. In addition to Fannie Mae, Mr.
Birk currently serves on the Board of Directors of Penske Corporation, Wellpoint
Health Networks, Inc., Mutual of America Capital and is a life trustee of the
University of Notre Dame.
RICHARD F. CHAPDELAINE was elected to the Company's Board of Directors in
October, 1996. In 1966, Mr. Chapdelaine founded Chapdelaine & Company, a New
York-based securities firm where he currently serves as Chairman of the Board.
Mr. Chapdelaine is also Chairman of the Board of Chapdelaine Corporate
Securities & Company and serves on the Board of Directors of Long Island Savings
Bank and St. Francis Hospital.
JOHN F. MCGOVERN was elected to the Company's Board of Directors in October,
1996. Mr. McGovern currently serves as the Executive Vice President of Finance
and Chief Financial Officer of Georgia-Pacific Corporation. Mr. McGovern joined
Georgia-Pacific Corporation in 1981 as Vice President of Project Financing and
progressed through several executive level positions until his appointment to
his current position in 1995.
BOARD OF DIRECTORS
The business and affairs of the Company are managed under the direction and
authority of the Board of Directors, which conducts its business through
meetings of the Board of Directors and two standing committees, represented by
the Audit Committee and Compensation Committee. During fiscal 1996, there were
three actions by written consent on the part of the Board of Directors and such
Board held one meeting subsequent to the Company's initial public offering. The
Audit Committee and Compensation Committee each met once in fiscal 1996. All of
the respective member directors were in attendance at all meetings. The Company
has no nominating or similar committee.
3
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee currently consists entirely of outside non-employee
directors of the Company, comprised of Messrs. Birk, Chapdelaine and McGovern.
The Audit Committee has the responsibility to oversee the retention, performance
and compensation of the independent public accountants for the Company, and the
establishment and oversight of such systems of internal accounting and auditing
control as it deems appropriate.
The Compensation Committee likewise is currently comprised of Messrs. Birk,
Chapdelaine and McGovern, all of whom are non-employee directors of the Company.
The Compensation Committee reviews the Company's compensation philosophy and
programs, exercises authority with respect to the payment of salaries and
incentive compensation to directors and executive officers, and administers
certain employee benefit plans, including the Company's 1996 Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the establishment of the Compensation Committee in October, 1996, the
Company had no separate compensation committee or other board committee
performing equivalent functions. During this period, the Company's Board of
Directors, which was comprised entirely of inside manager directors, carried out
this function, with each of the directors of the Company participating in
deliberations concerning executive compensation.
COMPENSATION OF DIRECTORS
Directors of the Company who are also employees of the Company do not receive
fees or retainers for serving as directors. Each non-employee director is
entitled to receive $20,000 per year for his services as a director plus
reimbursement of travel expenses to board and committee meetings. Each
non-employee director is also entitled to receive $1,000 per quarter for his
participation on the audit committee and compensation committee of the Company's
Board of Directors. Pursuant to the Company's 1996 Stock Option Plan,
non-employee directors are automatically granted non-qualified options each year
to purchase 1,000 shares of the Company's Class A Common Stock on the first
business day following the Company's annual meeting of shareholders. Such
options are granted with an exercise price equal to the fair market value of the
stock on the date of grant and have a term of ten years.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company. The executive officers serve at the discretion of the
Company's Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Jack W. Nicklaus(1) 57 Chairman of the Board
Richard P. Bellinger(1) 45 President, Chief Executive Officer and Director
Mark F. Hesemann(1) 43 Senior Vice President and Director
Thomas P. Hislop(1) 40 Senior Vice President and Director
Jack P. Bates 37 Senior Vice President and Chief Financial Officer
</TABLE>
(1) Messrs. Nicklaus, Bellinger, Hesemann and Hislop are currently directors of
the Company and nominees to be re-elected as directors at the Annual
Meeting. Accordingly, detailed biographical information for them is
presented herein under the caption "ELECTION OF DIRECTORS."
JACK P. BATES has served as a Senior Vice President and the Chief Financial
Officer of the Company since its inception in 1996. Mr. Bates joined
International in 1984. From 1985 to 1993, he served as Treasurer and became
Chief Financial Officer, Senior Vice President and an Executive Committee member
of International in 1993.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the annual
and long-term compensation paid or accrued by the Company during fiscal 1996 to
Mr. Nicklaus and the Company's four most highly compensated executive officers
(collectively, the "named executives").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE(1)
LONG-TERM
COMPENSA-
ANNUAL COMPENSATION TION AWARDS
------------------------------------------- ---------------
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSA- UNDERLYING COMPENSA-
PRINCIPAL POSITION ($) (2) ($) TION ($)(3) OPTIONS (#) TION ($) (4)
- ---------------------------- ----------- --------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Jack W. Nicklaus 125,000 --- --- --- 633
Chairman of the Board
Richard P. Bellinger 383,500 --- --- 96,000 15,397
President and Chief
Executive Officer
Mark F. Hesemann 198,333 --- 20,000 32,000 17,746
Senior Vice President
Thomas P. Hislop 198,333 --- --- 32,000 12,207
Senior Vice President
Jack P. Bates 141,333 --- --- 32,000 11,900
Senior Vice President
and Chief Financial
Officer
</TABLE>
- ----------------------------
(1) The amounts included under the captions "Annual Compensation" and "All
Other Compensation" are limited to those compensation related expenses for
the respective individuals that were allocated or charged directly to the
Company. Note that prior to the reorganization of the Company on August 1,
1996, the above named executives were employees of International and only a
portion of their total compensation was allocated to and included in the
historical financial statements of the Company. Only approximately 80% of
the respective total salaries earned by Messrs. Bellinger and Bates for the
first seven months of the year through August 1, 1996 are included in the
amounts under the column captioned "Salary." The remainder of the total
salaries attributable to Messrs. Bellinger and Bates for the period were
allocated and charged to International. Effective August 1, 1996, the
Company entered into employment agreements with Messrs.
Nicklaus, Bellinger, Hesemann, Hislop and Bates as discussed below.
(2) Pursuant to certain employment agreements effective August 1, 1996, Messrs.
Nicklaus, Bellinger, Hesemann, Hislop and Bates receive annual base
salaries of $125,000, $450,000, $210,000, $210,000 and $160,000,
respectively.
(3) The amount included in the "Other Annual Compensation" column for Mr.
Hesemann represents an allowance for certain foreign income taxes paid by
Mr. Hesemann during fiscal 1996.
(4) The amounts included in the "All Other Compensation" column represent
matching contributions made by the Company under the Company's 401(k) plan,
allowances for automobile related expenses, profit sharing contributions
and group term life insurance premiums paid on behalf of the named
executives.
5
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning stock options
granted to the named executives during fiscal 1996 under the Company's 1996
Stock Option Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
--------------------------------------------------------------- ---------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) (2) FISCAL YEAR $/SHARE DATE 5% ($) 10% ($)
- ----------------------- ---------------- --------------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard P. Bellinger 96,000 26.2% 16.00 7/31/06 965,982 2,447,988
Mark F. Hesemann 32,000 8.7% 16.00 7/31/06 321,994 815,996
Thomas P. Hislop 32,000 8.7% 16.00 7/31/06 321,994 815,996
Jack P. Bates 32,000 8.7% 16.00 7/31/06 321,994 815,996
</TABLE>
- -----------------------
(1) As required by the rules promulgated by the Securities and Exchange
Commission, potential realizable values are based on the prescribed
assumption that the Company's Class A Common Stock will appreciate in value
from the date of grant to the end of the option term at rates (compounded
annually) of 5% and 10%, respectively, and therefore are not intended to
forecast possible future appreciation, if any, in the price of the
Company's Class A Common Stock. The assumed annual rates of appreciation of
5% and 10% would result in the price of the Company's Class A Stock
increasing to $26.06 and $41.50, respectively, over the 10 year term of the
options granted above.
(2) These options, which were issued pursuant to certain employment agreements
with the Company effective August 1, 1996, vest in increments of 30% each
year on the grant anniversary date for the first three years. The final 10%
of such options vest over the remaining initial terms of the respective
employment agreements, which provided for initial terms ranging from three
and one half years to five years.
FISCAL YEAR END OPTION VALUES
None of the stock options issued by the Company to the named executives were
exercisable during fiscal 1996 and accordingly, no stock options were exercised
by such individuals during the last fiscal year. The following table sets forth
certain information regarding the number of unexercised stock options held by
the named executives as of December 31, 1996.
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
EXERCISABLE (E)/ EXERCISABLE (E)/
NAME UNEXERCISABLE (U) UNEXERCISABLE (U)
- ------------------------ ----------------------- -----------------------
Richard P. Bellinger 96,000 U --- U
Mark F. Hesemann 32,000 U --- U
Thomas P. Hislop 32,000 U --- U
Jack P. Bates 32,000 U --- U
6
<PAGE>
EMPLOYMENT AGREEMENTS
Upon the closing of the initial public offering of its Class A Common Stock, the
Company entered into employment agreements, effective August 1, 1996, with
Messrs. Nicklaus, Bellinger, Hesemann, Hislop and Bates.
The employment agreement with Mr. Nicklaus provides for an annual base salary of
$125,000, subject to annual increases as determined by the Compensation
Committee of the Company's Board of Directors. Under the terms of the agreement,
the Company has agreed to employ Mr. Nicklaus for a period of five years, which
period is automatically extended for additional one year periods until the
employment agreement is terminated by the Company or Mr. Nicklaus. In addition
to the time associated with serving as the Chairman of the Board of the Company,
Mr. Nicklaus is required to spend a maximum of ten days performing personal
services or making appearances in connection with the Company's licensing
arrangements and marketing partnerships. Compensation for any additional days in
which Mr. Nicklaus agrees to provide such personal services or appearances on
behalf of the Company is to be mutually agreed upon by the Company and Mr.
Nicklaus on a case-by-case basis. Pursuant to his employment agreement, Mr.
Nicklaus is also entitled to receive options to purchase 65,000 shares of Class
A Common Stock each year, for a period of four years, commencing on August 1,
1997. The options will be immediately exercisable upon grant, will expire in
2006 and will have a per share price equal to the fair market value on the date
of grant. In the event of Mr. Nicklaus' death, Mr. Nicklaus' heirs will be
entitled to continue to receive the stock options which Mr. Nicklaus would have
been entitled to receive under the employment agreement.
Pursuant to their respective employment agreements, the annual base salaries of
Messrs. Bellinger, Hesemann, Hislop and Bates for services provided to the
Company are $450,000, $210,000, $210,000 and $160,000, respectively, subject in
each case to annual increases as determined by the Compensation Committee. The
respective employment agreements also provide for the payment of annual
performance-based additional bonus compensation equal to a percentage of such
executive's base salary, based on the achievement by the Company and the
executive of certain pre-established performance objectives. Under the terms of
the respective agreements, the Company has agreed to employ Messrs. Bellinger,
Hesemann, Hislop and Bates for periods extending through September 30, 2001,
March 31, 2001, September 30, 2000 and March 31, 2000, respectively. Such
initial employment terms are automatically extended for additional two-year
periods until the respective employment agreements are terminated by the Company
or the executive.
The terms of the respective employment agreements also provide that if Messrs.
Bellinger, Hesemann, Hislop or Bates are terminated by the Company without
"cause," as defined, or if the Company does not renew their employment upon the
expiration of the original term or any renewal term thereof, such executives
will be entitled to continue to be paid for the greater of the remainder of
their current employment term or two years. The annual amounts payable under
such provision include the base salary in effect at the time of termination and
an amount equal to the additional bonus compensation paid in the most recent
fiscal year prior to termination. In addition, such executives would be entitled
to receive health insurance benefits for themselves and their families for a
period of 18 months. If an executive's employment is terminated for any of the
reasons listed above within one year of a change of control of the Company, such
executive will be entitled to receive all of the amounts described above in a
lump sum cash payment. If any of the executives are terminated for cause or
resigns, the payment of salary and additional compensation will cease.
The respective employment agreements require that Messrs. Hesemann and Hislop
devote their full business time to providing services exclusively to the
Company. Messrs. Bellinger and Bates are required to dedicate at least 80% of
their business time to providing services to the Company. The remainder of
Messrs. Bellinger's and Bates' business time may be spent on management of other
entities, including those controlled by Mr. Nicklaus. Each employee agreement
also contains certain provisions with respect to confidentiality and
non-competition.
7
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which was established in October 1996, is
responsible for making recommendations to the Board of Directors concerning
executive compensation, including base salaries, bonuses and awards of stock
options. The Board of Directors reviews these recommendations and approves all
actions regarding executive compensation. The Compensation Committee currently
consists of Messrs. Birk, Chapdelaine and McGovern, each of whom is a
non-employee director of the Company.
The principal objectives of the Company's executive compensation program are to:
(i) support the achievement of desired Company performance, (ii) align the
executive officers' interests with the success of the Company and with the
interests of the Company's shareholders and (iii) provide compensation that will
attract and retain superior talent and reward performance. These objectives are
principally achieved through compensation in the form of annual base salaries,
bonuses and stock options.
The compensation paid or granted to executive officers of the Company during
fiscal 1996 as well as the stock options granted to such executive officers was
determined by decisions on the part of the Board of Directors prior to the
creation of the Compensation Committee and appointment of outside non-employee
directors to such committee in October 1996. Prior to the reorganization of the
Company on August 1, 1996 in connection with the Company's initial public
offering, the named executives identified in the "SUMMARY COMPENSATION TABLE"
included elsewhere herein were employees of International and only a portion of
their total compensation was allocated to and included in the historical
financial statements of the Company. Only approximately 80% of the respective
total salaries earned by Messrs. Bellinger and Bates for the first seven months
of the year through August 1, 1996 are included in the amounts under the column
captioned "Salary" in the "SUMMARY COMPENSATION TABLE." The remainder of the
total salaries attributable to Messrs. Bellinger and Bates for the period were
allocated and charged to International. Effective August 1, 1996, the Company
entered into employment agreements with each of the named executives, the terms
of which were based in part, on a compensation study conducted by an outside
firm retained by the Board of Directors for this purpose. The material terms of
the respective employment agreements are described elsewhere herein under the
caption "Employment Agreements."
The Board of Directors believes that executive officers who are in a position to
make a substantial contribution to the long-term success of the Company and to
build shareholder value should have a significant stake in the Company's
on-going success. To this end, the Company's compensation objectives have been
designed to be achieved through stock ownership in the Company by executive
officers in addition to base salary and bonus payments. The purpose of the
Company's 1996 Stock Option Plan is to provide an additional incentive to
employees to work to maximize shareholder value and to facilitate broadening and
increasing stock ownership by executives and other key employees. During fiscal
1996, options to purchase an aggregate of 367,000 shares of the Company's Class
A Common Stock were granted to employees of the Company as a group, with 192,000
of those being granted to the named executives pursuant to their respective
employment agreements with the Company. The Board of Directors concurs that the
stock options granted to the executive officers pursuant to their employment
agreements were appropriate in light of its policy that equity ownership by
executive officers is an important contributor to aligning the interests of
executive officers with those of the Company's shareholders, and the number of
options awarded to individual officers was determined based in part, on the
anticipated ability of the respective officers to affect the Company's overall
future performance. The size of the initial awards also reflected, in part, the
first opportunity by senior executives to participate directly in the equity of
the Company.
Fiscal 1996 was a transitional year for the Company, with its initial public
offering, reorganization and restructuring of various business units. During the
year, the Company invested heavily in upgrading its information technology
systems, accounting controls and other processes and increased its workforce
considerably to accommodate the anticipated growth and expansion of its
businesses. The Compensation Committee believes that the overall fiscal 1996
executive compensation levels adequately reflected (i) each executive's business
results and performance in his area of responsibility, (ii) each executive's
contribution to the overall management team and involvement in the initial
public offering, and (iii) each executive's then expected future contributions
to the Company.
8
<PAGE>
The Board of Directors and its Compensation Committee have considered the impact
of Section 162(m) of the Internal Revenue Code on their executive compensation
decisions. Section 162(m) generally disallows a federal income tax deduction to
any publicly-held corporation for compensation paid to the chief executive
officer and the four other most highly compensated executive officers to the
extent that such compensation in a taxable year exceeds $1 million. Section
162(m), however, does not disallow a deduction for qualified "performance-based
compensation" the material terms of which are disclosed to and approved by
shareholders. During fiscal 1996, the Board of Directors and the Compensation
Committee believed it unlikely that any executive officer of the Company would
receive non-qualified compensation in excess of $1 million. The potential income
tax implications of Section 162(m) will continue to be evaluated in regards to
the Company's compensation strategies and decisions involving executive
compensation going forward.
Mr. Bellinger has served as a member of the Company's Board of Directors and as
the Company's President and Chief Executive Officer since its inception in 1996.
Prior to the reorganization of the Company on August 1, 1996, Mr. Bellinger's
annual base salary of $420,000 was based on a pre-existing contract with
International, of which 80% was allocated and charged to the Company. Effective
August 1, 1996, the Company entered into an employment agreement with Mr.
Bellinger which provides for a base annual salary of $450,000, subject to annual
increases as determined by the Compensation Committee. The employment agreement
also provides for the payment of annual performance-based additional bonus
compensation equal to a percentage of his base salary, based on the achievement
by the Company and Mr. Bellinger of certain pre-established performance
objectives. The provisions of the employment agreement regarding bonus
compensation are effective for fiscal years beginning 1997, and accordingly, no
bonus amounts attributable to such program were paid to Mr. Bellinger for 1996.
Pursuant to his employment agreement, Mr. Bellinger was also granted options to
purchase 96,000 shares of the Company's Class A Common Stock exercisable at the
initial public offering price of $16 per share. The options were granted
concurrent with the Company's initial public offering on August 1, 1996 and vest
in increments of 30% each year on the grant anniversary date for the first three
years and then 5% each for the next two years thereafter. In determining his
total compensation for fiscal 1996, the Compensation Committee was advised that
the Board of Directors took into account the significant contribution of Mr.
Bellinger in connection with the Company's efforts to effect a successful
initial public offering of its Class A Common Stock. The Board of Directors and
the Compensation Committee believe that the base annual salary and the number of
stock options awarded Mr. Bellinger during fiscal 1996 were appropriate
considering the services to be performed by him in his capacity as President and
Chief Executive Officer of the Company, his past business accomplishments and
expected future contributions to the Company.
Compensation Committee
Roger E. Birk
Richard F. Chapdelaine
John F. McGovern
The foregoing Compensation Committee Report on Executive Compensation and the
data with respect to the Performance Graph presented below shall not be deemed
incorporated by reference into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, and shall not
otherwise be deemed filed under either of such acts.
9
<PAGE>
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that a line graph presentation
be included in the Company's Proxy Statement that compares the cumulative total
shareholder return of its Class A Common Stock with that of a general market
index and either an industry index or a group of peers as selected by the
Company. The graph below compares the cumulative total shareholder return on the
Company's Class A Common Stock with the cumulative total return of the NASDAQ
Stock Market - U.S. Index (general market index) and the Standard & Poors
Leisure Time Products Index (industry index) over the same period. The graph
assumes the investment of $100 in the Company's Class A Common Stock and in each
index on August 1, 1996, which represents the date of the Company's initial
public offering, and the reinvestment of all dividends.
[GRAPHIC OMITTED]
CUMULATIVE TOTAL RETURN
--------------------------------------
8/1/96 9/30/96 12/31/96
---------- ---------- ----------
Golden Bear Golf, Inc. 100 123 70
NASDAQ Stock Market - U.S.(1) 100 108 114
S&P Leisure Time Products(1) 100 108 114
(1) The cumulative total return on the NASDAQ Stock Market - U.S. Index
approximates that of the Standard and Poors Leisure Time Products Index for
the periods presented above.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock as of
April 30, 1997 by (i) each person or entity who is the beneficial owner of five
percent or more of the outstanding shares of Class A Common Stock or Class B
Common Stock, (ii) each director and named executive officer of the Company and
(iii) all directors and executive officers of the Company as a group. Unless
otherwise noted, the business address of each five percent holder, director or
named executive officer listed below is the Company's corporate address. As
described in the notes to the table, voting and/or investment power with respect
to certain shares of Common Stock is shared by the named executives.
Consequently, such shares may be shown as beneficially owned by more than one
person.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF
----------------------------------------- TOTAL VOTING
NUMBER OF NUMBER OF POWER OF
SHARES OF CLASS A SHARES OF CLASS B OUTSTANDING
COMMON STOCK COMMON STOCK COMMON
BENEFICIAL OWNER OWNED OWNED(2) STOCK(1)
- ------------------------------------------------ ------------------ ------------------ ---------------
<S> <C> <C> <C>
Jack W. Nicklaus(3)(5)(10) 240,000 2,760,000 91.7%
Golden Bear International, Inc.(4) --- 1,320,000 43.5%
Richard P. Bellinger and Barbara B.
Nicklaus, as co-trustees(5) --- 573,600 18.9%
Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109(6)(9) 193,100 --- *
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010(7)(9) 152,000 --- *
State Street Research & Management Co.
One Financial Center, 30th Floor
Boston, Massachusetts 02111(8)(9) 152,000 --- *
Richard P. Bellinger(5)(10) 120,000 --- *
Mark F. Hesemann(10) 40,000 --- *
Thomas P. Hislop(10) 40,000 --- *
Jack P. Bates(10) 40,000 --- *
Roger E. Birk 2,000 --- *
Richard F. Chapdelaine 3,150 --- *
John F. McGovern 3,000 --- *
All directors and executive officers as
a group (8 persons)(3)(5)(10) 248,150 2,760,000 91.8%
</TABLE>
- ------------------------------------------------
* Represents less than 1% of the total.
(1) The calculation of the percent of total voting power of outstanding Common
Stock is based on the respective number of shares of Class A Common Stock
and Class B Common Stock outstanding as of April 30, 1997, at which date
there were 2,744,962 shares of Class A Common Stock and 2,760,000 shares of
Class B Common Stock outstanding. Each share of Class B Common Stock
entitles the holder to ten votes.
11
<PAGE>
(2) The shares of Class B Common Stock are identical to the shares of Class A
Common Stock in all respects, except for voting rights and certain
conversion rights and transfer restrictions. While each share of Class A
Common Stock entitles the holder to one vote on each matter submitted to a
vote of the Company's shareholders, each share of Class B Common Stock
entitles the holder to ten votes on each such matter, including the
election of directors. Each share of Class B Common Stock is convertible at
the option of the holder into one share of Class A Common Stock and is
automatically converted into a share of Class A Common Stock upon the
transfer to a person who is not a Nicklaus Family Member, as defined, or if
the total number of shares of Class B Common Stock is less than 20% of the
aggregate number of shares of Common Stock outstanding on the record date
of any shareholders meeting.
(3) Includes the 573,600 shares of Class B Common Stock held in family trusts
for the benefit of Mr. Nicklaus' children, and the 240,000 shares of Class
A Common Stock pledged to Mr. Nicklaus by Messrs. Bellinger, Hesemann,
Hislop and Bates as to which Mr. Nicklaus disclaims beneficial ownership.
Also includes the 1,320,000 shares of Class B Common Stock owned of record
by International.
(4) Mr. Nicklaus is the Chairman of the Board and the beneficial owner of the
controlling interest in International and, accordingly, is deemed to
beneficially own all such shares.
(5) All 573,600 shares of Class B Common Stock are held by Mr. Bellinger and
Mrs. Nicklaus as co-trustees of trusts for the benefit of Mr. And Mrs.
Nicklaus' children. Mr. Bellinger and Mrs. Nicklaus disclaim beneficial
ownership of such shares. All of these shares are subject to a
shareholders' agreement with Mr. Nicklaus which, among other things, grants
to Mr. Nicklaus the right to vote all such shares and imposes certain
limitations on the transfer of such shares. Certain of these shares are
pledged to Mr. Nicklaus to secure loans made by Mr. Nicklaus to each of the
trusts. These pledged shares are subject to further restrictions
prohibiting the sale or other disposition of any such shares for a two year
period ending in July, 1998.
(6) Total shares beneficially owned reflect 193,100 shares to which Wellington
Management Company, LLP ("Wellington") exercises shared investment power
and 51,800 shares to which it has shared voting power. Wellington does not
exercise sole voting power or sole investment power with respect to any
such shares.
(7) Total beneficially owned shares are comprised of 152,000 shares to which
Metropolitan Life Insurance Company has both sole voting power and sole
investment power.
(8) Total shares beneficially owned represent 152,000 shares to which State
Street Research & Management Company has both sole voting power and sole
investment power.
(9) The number of shares beneficially owned are based upon the most recent Form
13G filed with the Securities and Exchange Commission.
(10) All such shares are pledged to Mr. Nicklaus to secure loans made by Mr.
Nicklaus to such individuals. All of these shares are also subject to
shareholder agreements with Mr. Nicklaus, prohibiting each of Messrs.
Bellinger, Hesemann, Hislop and Bates from, without the consent of Mr.
Nicklaus, selling or otherwise disposing of any such shares for a two-year
period ending in July 1998, granting Mr. Nicklaus the right to vote all of
such shares until such shares are sold or transferred to a third party and
imposing certain limitations on the transfer of such shares. Mr. Nicklaus
disclaims beneficial ownership of such shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's
directors, executive officers and holders of in excess of 10% of the Company's
Class A Common Stock file initial reports of ownership and reports of changes in
ownership of the Company's Class A Common Stock and other equity securities with
the Securities and Exchange Commission and the Nasdaq Stock Market. Directors,
executive officers and greater than 10% shareholders are required to furnish the
Company with copies of all Section 16(a) forms that they file. Based upon a
review of the copies of such reports furnished to the Company and written
representations from the Company's directors and executive officers that no
other reports were required, the Company believes that during 1996, the
Company's directors, executive officers and greater than 10% shareholders
complied with all applicable Section 16(a) filing requirements, except that Mr.
Chapdelaine, who was appointed to the Company's Board of Directors on October
15, 1996, filed an amended report on Form 3 on February 7, 1997 reporting his
ownership of certain options to purchase 3,150 shares of the Company's Class A
Common Stock.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
REORGANIZATION
The Company, its shareholders, Golden Bear Golf Centers, Inc. ("Golf Centers"),
Paragon Golf Construction, Inc. ("Paragon") (collectively, the "Constituent
Companies"), International and certain other affiliates entered into a
reorganization agreement in connection with the Company's initial public
offering on August 1, 1996. Pursuant to the agreement, the Company acquired all
of the outstanding common stock of the Constituent Companies in exchange for
240,000 shares of its Class A Common Stock and 1,428,000 shares of its Class B
Common Stock. In addition, the Company acquired certain assets and assumed
certain liabilities of International in exchange for 1,332,000 shares of its
Class B Common Stock. The transaction was accounted for on an historical cost
basis in a manner similar to a pooling of interests as the Company and the
Constituent Companies had common stockholders and management.
Prior to the reorganization of the Company, Messrs. Bellinger, Hesemann, Hislop
and Bates acquired certain shares of the outstanding capital stock of Golf
Centers for an aggregate purchase price of $600,000. Pursuant to the
reorganization, Messrs. Bellinger, Hesemann, Hislop and Bates received an
aggregate of 240,000 shares of the Company's Class A Common Stock in exchange
for their shares in Golf Centers. All such shares acquired pursuant to the
reorganization are pledged to Mr. Nicklaus to secure loans made by Mr. Nicklaus
to such individuals to fund their purchase of shares in Golf Centers. All of
such individuals have entered into a management shareholders' agreement with Mr.
Nicklaus and the Company pursuant to which they assigned to Mr. Nicklaus the
right to vote all the shares acquired in the reorganization at Mr. Nicklaus's
discretion until such shares are sold or transferred to a third party. The
management shareholders' agreement also prohibits any of Messrs. Bellinger,
Hesemann, Hislop or Bates from, without the consent of Mr. Nicklaus, selling,
disposing or otherwise transferring any such shares for a period of two years
ending July, 1998. In addition, each of Messrs. Bellinger, Hesemann, Hislop and
Bates granted to Mr. Nicklaus a right of first offer to purchase the shares of
Class A Common Stock which he intends to sell or transfer to any person or other
outside party who is not a holder of Class B Common Stock. Any shares not
purchased pursuant to the right of first offer may be sold at or above the price
offered to Mr. Nicklaus.
Certain trusts established for the benefit of Mr. and Mrs. Nicklaus' children
also acquired shares of the outstanding capital stock of Golf Centers
immediately prior to the reorganization of the Company for an aggregate purchase
price of $900,000. In connection with the reorganization, such trusts received
an aggregate of 573,600 shares of the Company's Class B Common Stock in exchange
for their shares in Golf Centers. All such shares acquired in connection with
the reorganization are pledged to Mr. Nicklaus to secure loans made by Mr.
Nicklaus to such trusts to fund their purchase of shares in Golf Centers. Such
trusts are prohibited from selling, disposing or otherwise transferring any such
shares for a period of two years ending July, 1998.
Mr. Nicklaus, International, the Nicklaus family trusts and the Company entered
into a registration rights agreement, pursuant to which each of Mr. Nicklaus,
International and the Nicklaus family trusts has the right to demand that their
respective shares of Class A Common Stock (including Class A Common Stock issued
upon conversion of Class B Common Stock) be registered for sale pursuant to the
requirements of the Securities Act of 1933, up to three times, subject to
certain deferral rights of the Company. Additionally, Messrs. Bellinger,
Hesemann, Hislop and Bates entered into a registration rights agreement,
pursuant to which each of them will have the right, at any time during the
period until two years after repayment of the loans from Mr. Nicklaus, to cause
the Company to file a registration statement for the proposed sale from time to
time of all or any portion of their shares of Class A Common Stock acquired
pursuant to the reorganization. Each of the foregoing parties also have an
unlimited number of piggyback registration rights in respect of their shares.
ARRANGEMENTS WITH INTERNATIONAL
As described above, various businesses and operations were contributed to the
Company in the reorganization by International and its affiliates. Mr. Nicklaus,
who founded International in 1970, is the principal shareholder of International
and is also the Chairman of the Board of the Company, as well as the principal
shareholder of the Company.
13
<PAGE>
Pursuant to a trademark license agreement, International has granted the Company
a royalty-free, indefinite, exclusive right, subject to certain exceptions, to
utilize and sublicense all major trademarks, tradenames and service marks owned
or developed by International, including the GOLDEN BEAR, NICKLAUS and JACK
NICKLAUS trademarks (collectively, the "Licensed Marks") and the right, subject
to the approval of International, to obtain the registration of additional
trademarks and service marks deemed by the Company to be necessary or prudent to
the maintenance and future expansion of its businesses. International also
granted the Company the right to use the name, likeness, nickname, biographical
data and other identifying characteristics of Jack Nicklaus in connection with
the advertising, promotion, sale or rendering of the Company's products or
services throughout the world. International has retained the exclusive right to
utilize and license any of the Licensed Marks in connection with and limited to
its continuing businesses (such businesses being hereinafter referred to as the
"Retained Businesses"), which are limited to (i) golf course design and
consulting; (ii) residential community development; (iii) sponsorship, promotion
and management of golf tournaments; (iv) daily fee golf course development; (v)
the manufacture and marketing of golf clubs and equipment; (vi) the creation,
production and marketing of golf and other sporting events; (vii) the creation,
development, editing and distribution of books, articles and print media
creative works including audiovisual media programming and properties including
video games; and (viii) a membership club offering golf improvement tips.
Pursuant to the trademark license agreement, in the event International decides
to assign, transfer or otherwise convey its legal title and ownership interest
in any of the Licensed Marks, International must first offer to transfer such
interests to the Company for nominal consideration, subject to International's
exclusive rights with respect to the Retained Businesses. In the event
International desires to negotiate with any third party to (i) assign, convey or
transfer its ownership interest in or to license substantially all of its
beneficial interest in the right to license and utilize any part of the Licensed
Marks in connection with the Retained Businesses or (ii) otherwise divest itself
of all or substantially all of the assets, equity holdings or business
opportunities relating to any of the Retained Businesses, International has
agreed to enter into good faith negotiations with the Company for a period of
sixty days for the acquisition by the Company of any such rights, assets or
businesses which International desires to transfer to third parties.
The term of the Company's trademark license is initially for a period of thirty
years but is renewable by the Company for additional ten-year periods thereafter
and may only be terminated by International, after notice, in the event the
Company abandons its use of all or substantially all of the Licensed Marks in
all or substantially all of the countries where the Company has the right to use
the Licensed Marks or materially breaches the license agreement or following a
material breach by the Company after notice and an opportunity to cure and
following the completion of arbitration. In the event that an arbitrator
determines that there has been a material breach, the Company will be afforded
an additional opportunity to cure the breach or, if such breach is not subject
to cure and the arbitrator has determined actions or payments which would
appropriately ameliorate such breach, an additional period of time to do so. The
Company may transfer its rights under the license agreement, without the consent
of International, by assignment or by operation of law, to any entity which
acquires all or substantially all of the Company's licensing business and which
agrees in writing to accept and be bound by all of the terms and conditions of
the agreement to the extent such undertaking is not made by operation of law.
Pursuant to an office sharing agreement, the Company subleases its corporate
office facilities from International. The sublease commenced on August 1, 1996
and expires in January, 2000. Rent due under the sublease is calculated based on
the estimated percentage of total leased space that is utilized by the Company.
The sublease requires minimum annual payments of approximately $575,000, and the
rent expense incurred under such sublease during fiscal 1996 was $248,862.
In connection with the sublease, the Company also entered into an office staff
sharing agreement which provides for the sharing of the services of certain
specifically identified office staff and personnel that can effectively serve
the needs of both organizations. During fiscal 1996, a total of $255,000
attributable to payroll and related costs associated with such shared employees
was allocated to International.
In addition, the Company maintains certain office space in Singapore that is
shared with International. During fiscal 1996, a total of $277,818 of costs
associated with maintaining such facilities was allocated to International.
14
<PAGE>
Under the terms of a personal services management agreement, International and
Mr. Nicklaus have retained the Company as the exclusive manager and
representative to market the personal endorsement services of Mr. Nicklaus as a
celebrity and corporate spokesman to outside third parties throughout the world.
As compensation for services provided in this capacity, the Company is generally
entitled to 30% of the personal endorsement fees received by Mr. Nicklaus under
any contract or arrangement existing as of August 1, 1996 or any renewal thereof
during the term of the agreement and a percentage to be negotiated (but in no
event less than 20%) of all such revenues under any new contract signed
thereafter. Revenues earned by the Company during fiscal 1996 in this capacity
totaled $643,587.
Pursuant to a design services marketing agreement, the Company markets golf
course designs worldwide for Nicklaus Design, the golf course design division of
International. The Company generally receives 10% of the gross design fees
collected by International. Commissions earned by the Company during fiscal 1996
for these services totaled $1,281,326.
The Company began managing a golf course facility owned by International during
1996 for which it earned revenues of $75,000 during fiscal 1996. Also during
fiscal 1996, the Company purchased certain golf equipment used for promotional
purposes totaling $74,337 from Nicklaus Golf Equipment, LC, a company controlled
by Mr. Nicklaus.
As of December 31, 1996, the Company had a net receivable balance due from
International in the amount of $843,235. Such balance was comprised primarily of
International's allocable portion of certain costs associated with maintaining
shared office space in Singapore, together with reimbursements for certain legal
expenses and commissions on specific design related revenues collected by
Nicklaus Design. The balance also included amounts owed by International in
connection with the reimbursement of certain allocated payroll and other costs
which are paid by the Company.
In April 1994, Paragon entered into a fixed price contract to construct a
certain golf course located in Middle Smithfield Township, Pennsylvania on which
the design work was to be performed by Nicklaus Design. Pursuant to the
agreements among Paragon, Nicklaus Design and the owner of the project, a
portion of the compensation payable by the owner was represented by certain
contingent compensation payable to Nicklaus Design based on a share of the golf
club membership sales that were to be generated upon completion of the project.
In September 1996, Paragon received a change order aggregating $750,000 for
certain additional services and contract extras to be provided in addition to
the original fixed price services previously agreed to. Such additional work was
requested in order to enhance the quality of the project so that the finished
product would meet the standards of Nicklaus Design and Jack Nicklaus as
designers of the golf course. Under the terms of the change order, $750,000 is
payable by the owner of the project to Paragon in a lump sum on or before
December 31, 1997. In connection with the foregoing agreement by the owner,
Nicklaus Design has agreed to grant the owner a $750,000 credit against the
total contingent compensation Nicklaus Design would otherwise be entitled to
receive from golf club membership sales.
Certain of the Company's named executives, Messrs. Nicklaus, Bellinger and Bates
provide services in various capacities to International and its affiliates on an
ongoing basis. During fiscal 1996, Mr. Nicklaus received a salary of $675,000
for services rendered to International and its affiliates. Under the terms of
their respective employment agreements, Messrs. Bellinger and Bates are required
to dedicate at least 80% of their business time to the Company. The remainder of
their business time may be spent on management of other entities, including
International. During fiscal 1996, Messrs. Bellinger and Bates received salaries
of $124,000 and $35,333, respectively, for their services performed on behalf of
International and it affiliates. Such compensation for Messrs. Nicklaus,
Bellinger and Bates was charged entirely to International and is not reflected
in the Company's consolidated financial statements for fiscal 1996.
15
<PAGE>
During fiscal 1996, Messrs. Bellinger, Hesemann, Hislop and Bates each were also
paid $200,000 by International representing deferred compensation that had been
accrued for services performed in previous years prior to fiscal 1996. Such
deferred compensation had been charged to the operations of International in
previous years, and accordingly, none of the expense associated with such
deferred compensation has been reflected in the historical financial statements
of the Company.
INDEBTEDNESS TO MR. NICKLAUS
In June 1996, Mr. Nicklaus provided a bridge loan of approximately $1.6 million
to Golf Centers, the proceeds of which were used to fund the acquisition of the
Cool Springs Golf Center. The loan was evidenced by a demand promissory note,
with interest at the Federal Mid-Term annual interest rate in effect at the time
the note was executed. The bridge loan was repaid in full in August 1996 from
the proceeds of the initial public offering.
ACQUISITION OF EAST COAST FACILITIES
In September 1996, the Company purchased East Coast Facilities (comprised of an
existing Golden Bear Golf Center located in Columbus, Ohio and a Golden Bear
Golf Center in Fort Lauderdale, Florida which commenced operations in November,
1996) for approximately $5.9 million, of which $5.3 million was paid in cash at
the closing and $600,000 was evidenced by certain promissory notes. The $5.3
million paid at closing was funded from the proceeds of the Company's initial
public offering. The promissory notes are non-interest bearing and are secured
by certain property and equipment. The purchase price of the acquisition was
based on the projected return on the project as determined by the Company's
investment committee, which is comprised of certain senior executive officers of
the Company.
In connection with the acquisition, the Company issued certain principals of
East Coast Facilities options to purchase 37,500 shares of its Class A Common
Stock which fully vested on the date of acquisition. Such options are
exercisable at any time prior to their expiration in August 1997 and any
proceeds from the exercise of the options must be used to repay an equal amount
of principal under the promissory notes. Any remaining outstanding principal
balance on the notes is due in September 1997. At December 31, 1996, the
outstanding principal on these notes was $267,008.
Mr. Chapdelaine, who was elected to the Company's Board of Directors in October
1996, is one of the former shareholders of East Coast Facilities. In connection
with the acquisition, he received options to purchase 3,150 shares of the
Company's Class A Common Stock, which he exercised in January, 1997.
16
<PAGE>
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended December
31, 1996 is being mailed with this Proxy Statement. Such Annual Report to
Shareholders contains the consolidated financial statements of the Company and
the report thereon of Arthur Andersen LLP, independent certified public
accountants. The Annual Report does not form any part of the material for the
solicitation of proxies.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent auditors, selected by the Board of Directors, are
Arthur Andersen LLP, certified public accountants. Arthur Andersen LLP has
served as the auditors of the Company and its predecessors since 1994.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting and will be available to respond to appropriate questions. The
representatives will also be afforded an opportunity to make a statement if they
desire to do so.
SHAREHOLDER PROPOSALS
Under certain circumstances, shareholders are entitled to present proposals at
shareholder meetings. Any such proposal to be included in the proxy statement
for the Company's 1998 Annual Meeting of Shareholders must be received by the
Company no later than January 30, 1998 in a form that complies with applicable
regulations and the Bylaws of the Company. It is suggested that proponents
submit their proposals by certified mail and detailed information for submitting
such proposals will be provided upon written request to the Secretary of the
Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors know of no
matters other than those set forth herein which will be presented for
consideration at the Annual Meeting. However, if any other matters are properly
brought before the Annual Meeting or any adjournment thereof, it is the
intention of the persons named in the accompanying proxy to vote, or otherwise
act, on such matters in accordance with their best judgment in the manner they
believe to be in the best interest of the Company. Discretionary authority with
respect to any such matters is conferred by the proxy.
By Order of the Board of Directors
Jack P. Bates
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
North Palm Beach, Florida
June 16, 1997
17
<PAGE>
GOLDEN BEAR GOLF, INC.
CLASS A COMMON STOCK
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - JULY 21, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Golden Bear Golf, Inc. (the "Company") hereby
appoints Jack W. Nicklaus and Richard P. Bellinger, and each of them, as proxy
for the undersigned, with full power of substitution to vote and otherwise
represent all the shares of Class A Common Stock that the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at 11:00 a.m. on Monday, July 21, 1997, at the Palm Beach Gardens Marriott
Hotel, 4000 RCA Boulevard, Palm Beach Gardens, Florida 33410, or any
postponement or adjournment thereof, with the same effect as if the undersigned
were present and voting such shares, on the matters and in the manner set forth
below and as further described in the accompanying Proxy Statement.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IN THE ABSENCE OF SPECIFIED DIRECTIONS, THIS PROXY
WILL BE VOTED IN FAVOR OF THE ELECTION OF ALL NOMINEES NAMED IN THIS PROXY. The
above named proxies are also granted the authority to vote in their discretion
upon such other matters as may properly come before the meeting or any
postponement or adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED HEREIN.
(continued on other side)
(continued from other side)
(1) ELECTION OF TWO CLASS I DIRECTORS, TWO CLASS II DIRECTORS AND THREE
CLASS III DIRECTORS:
[ ] VOTE FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
Nominees for Election to Serve:
<TABLE>
<CAPTION>
ONE-YEAR TERM (CLASS I) TWO-YEAR TERM (CLASS II) THREE-YEAR TERM (CLASS III)
----------------------- ------------------------ ---------------------------
<S> <C> <C>
Mark F. Hesemann Thomas P. Hislop Jack W. Nicklaus
Roger E. Birk Richard F. Chapdelaine Richard P. Bellinger
John F. McGovern
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
__________________________________________________________________________
Please sign exactly as name appears hereon and
date. If the shares are held jointly, each holder
should sign. When signing as an attorney,
executor, administrator, trustee, guardian or as
an officer signing for a corporation, please give
full title under signature.
Dated: ____________________________________, 1997
_________________________________________________
Signature
_________________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
18
<PAGE>
GOLDEN BEAR GOLF, INC.
CLASS B COMMON STOCK
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - JULY 21, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Golden Bear Golf, Inc. (the "Company") hereby
appoints Jack W. Nicklaus and Richard P. Bellinger, and each of them, as proxy
for the undersigned, with full power of substitution to vote and otherwise
represent all the shares of Class B Common Stock that the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at 11:00 a.m. on Monday, July 21, 1997, at the Palm Beach Gardens Marriott
Hotel, 4000 RCA Boulevard, Palm Beach Gardens, Florida 33410, or any
postponement or adjournment thereof, with the same effect as if the undersigned
were present and voting such shares, on the matters and in the manner set forth
below and as further described in the accompanying Proxy Statement.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IN THE ABSENCE OF SPECIFIED DIRECTIONS, THIS PROXY
WILL BE VOTED IN FAVOR OF THE ELECTION OF ALL NOMINEES NAMED IN THIS PROXY. The
above named proxies are also granted the authority to vote in their discretion
upon such other matters as may properly come before the meeting or any
postponement or adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED HEREIN.
(continued on other side)
(continued from other side)
(1) ELECTION OF TWO CLASS I DIRECTORS, TWO CLASS II DIRECTORS AND THREE
CLASS III DIRECTORS:
[ ] VOTE FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
Nominees for Election to Serve:
<TABLE>
<CAPTION>
ONE-YEAR TERM (CLASS I) TWO-YEAR TERM (CLASS II) THREE-YEAR TERM (CLASS III)
----------------------- ------------------------ ---------------------------
<S> <C> <C>
Mark F. Hesemann Thomas P. Hislop Jack W. Nicklaus
Roger E. Birk Richard F. Chapdelaine Richard P. Bellinger
John F. McGovern
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
__________________________________________________________________________
Please sign exactly as name appears hereon and
date. If the shares are held jointly, each holder
should sign. When signing as an attorney,
executor, administrator, trustee, guardian or as
an officer signing for a corporation, please give
full title under signature.
Dated: ____________________________________, 1997
_________________________________________________
Signature
_________________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
19
