<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/X/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Wendy's International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Dana Klein -- Senior Corporate Counsel
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
- --------------------------------------------------------------------------------
PROXY STATEMENT
Wendy's
International,
Inc.
WENDY's LOGO
<PAGE> 3
WENDY'S INTERNATIONAL, INC.
P.O. BOX 256
DUBLIN, OHIO 43017-0256
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Wendy's International, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Wendy's
International, Inc. (the "Company") will be held at the Holiday Inn --
Worthington, 175 Hutchinson Avenue, Columbus, Ohio 43235, on Monday, May 2,
1994, at 10:00 a.m., local time, for the following purposes, all of which are
more completely set forth in the accompanying Proxy Statement:
1. To elect four Directors, each for a term of three years.
2. To ratify the selection of Coopers & Lybrand as the auditors of the
Company for the current year.
3. To approve amendments to the Company's 1978 Stock Option Plan.
4. To approve amendments to the Company's 1982 Stock Option Plan.
5. To approve amendments to the Company's 1984 Stock Option Plan.
6. To approve amendments to the Company's 1987 Stock Option Plan.
7. To approve amendments to the Company's 1990 Stock Option Plan.
8. To approve the performance goals of the Senior Executive Earnings
Maximization Plan.
9. To transact such other business as may properly come before the meeting.
The proposed amendments to the Company's stock option plans are summarized
on pages 20 to 29 of the accompanying Proxy Statement.
Only shareholders of record at the close of business on March 7, 1994 are
entitled to notice of and to vote at the Annual Meeting of Shareholders.
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return the enclosed Proxy so that
your shares may be voted in accordance with your wishes and so that the presence
of a quorum may be assured. The prompt return of your signed Proxy, regardless
of the number of shares you hold, will aid the Company in reducing the expense
of additional Proxy solicitation. The giving of such Proxy does not affect your
right to vote in person in the event you attend the meeting. You are cordially
invited to attend the meeting, and we request that you indicate your plans in
this respect in the space provided on the enclosed form of Proxy.
LAWRENCE E. SCHAUF
Secretary
Dublin, Ohio
March 11, 1994
<PAGE> 4
WENDY'S INTERNATIONAL, INC.
P.O. BOX 256
DUBLIN, OHIO 43017-0256
(614) 764-3100
PROXY STATEMENT
The enclosed Proxy, for use at the Annual Meeting of Shareholders to be
held on Monday, May 2, 1994, and any adjournments thereof, is being solicited on
behalf of the Board of Directors of the Company. Without affecting any vote
previously taken, the Proxy may be revoked by the shareholder by giving notice
of revocation to the Company in writing or in open meeting. Unless otherwise
specified, all properly executed Proxies received by the Board of Directors will
be voted "FOR" the election as Directors of the nominees listed below under
"ELECTION OF DIRECTORS", "FOR" the ratification of the selection of auditors,
"FOR" approval of the amendments to the 1978 Stock Option Plan, "FOR" approval
of the amendments to the 1982 Stock Option Plan, "FOR" approval of the
amendments to the 1984 Stock Option Plan, "FOR" approval of the amendments to
the 1987 Stock Option Plan, "FOR" approval of the amendments to the 1990 Stock
Option Plan, and "FOR" approval of the performance goals of the Senior Executive
Earnings Maximization Plan.
Solicitation of Proxies may be made by mail, personal interview, telephone
and telegraph by Officers, Directors and regular employees of the Company. In
addition, the Company has retained, at an estimated cost of $10,000 plus
reasonable outside expenses, Georgeson & Co., a firm specializing in proxy
solicitation. All costs of solicitation will be borne by the Company. This Proxy
Statement, including the Notice of Meeting, was first mailed to shareholders on
March 17, 1994.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING RIGHTS
The total number of outstanding shares entitled to vote at the meeting is
101,015,355 and only shareholders of record at the close of business on March 7,
1994, are entitled to notice of and to vote at said meeting or any adjournments
thereof. Each shareholder is entitled to one vote for each share held and has
cumulative voting rights in the election of Directors. A shareholder wishing to
exercise cumulative voting must so notify the President, a Vice President or the
Secretary of the Company in writing not less than 48 hours before the meeting.
If cumulative voting is requested and if an announcement of such request is made
upon the convening of the meeting by the Chairman or Secretary or by or on
behalf of the shareholder requesting cumulative voting, each shareholder will
have a number of votes equal to the number of Directors to be elected multiplied
by the number of shares owned by such shareholder and will be entitled to
distribute his votes among the nominees as the shareholder sees fit. If
cumulative voting is requested, as described above, the enclosed Proxy would
grant discretionary authority to the Proxies named therein to cumulate votes and
to distribute the votes among the candidates.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information (based upon filings with
the Securities and Exchange Commission) with respect to the persons known to the
Company to own beneficially more than five percent of the outstanding common
shares of the Company as of March 7, 1994:
<TABLE>
<CAPTION>
(3) AMOUNT AND
(2) NAME AND ADDRESS NATURE OF BENEFICIAL
(1) TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP (4) PERCENT OF CLASS
- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C>
Common shares R. David Thomas 6,001,931(a) 5.9%
P.O. Box 256
Dublin, Ohio 43017
<FN>
- ---------------
(a) Includes common shares in which Mr. Thomas has shared voting and investment
power.
</TABLE>
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 7, 1994, certain information
with respect to the Company's common shares owned beneficially by each Director,
by each nominee for election as a Director of the Company, the Executive
Officers named in the Summary Compensation Table set forth on page 7 of this
Proxy Statement and by all Directors and Executive Officers as a group:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
(3) AMOUNT
AND NATURE
OF BENEFICIAL
(2) NAME OF OWNERSHIP (4) PERCENT
(1) TITLE OF CLASS BENEFICIAL OWNER (A)(B) OF CLASS
- ----------------------------------------- ----------------------- --------------- -------------------
<S> <C> <C> <C>
(All of these are common shares.) R. David Thomas 6,001,931 5.9%
James W. Near 1,147,556 1.1%
John K. Casey 157,642 .2%
Gordon F. Teter 146,704 .1%
Ronald E. Musick 213,462 .2%
W. Clay Hamner 7,744 --
Ernest S. Hayeck 500 --
Thomas F. Keller 1,086 --
Fielden B. Nutter, Sr. 39,776 --
James V. Pickett 47,691 --
Thekla R. Shackelford 12,119 --
Arthur I. Vorys 68,339 .1%
Edwin L. Ourant 1,554 --
All Directors and
Executive Officers as a
group (25 persons) 8,312,540 8.2%
</TABLE>
- ---------------
(a) The amounts reflected in this table include common shares in which there is
shared voting and investment power.
(b) Includes options exercisable within 60 days following March 7, 1994.
The information with respect to beneficial ownership is based upon
information furnished by each Director, nominee or Executive Officer, or
information contained in filings made with the Securities and Exchange
Commission.
2
<PAGE> 6
ELECTION OF DIRECTORS
The Board of Directors has designated the following nominees for election
as Directors of the Company with their terms to expire in 1997:
<TABLE>
<CAPTION>
DIRECTORS AND THEIR DIRECTOR
PRINCIPAL OCCUPATIONS AGE SINCE
--------------------- --- --------
<S> <C> <C>
Fielden B. Nutter, Sr.(1)...................................................... 69 1980
President, F.B. Nutter Leasing Co.
Pompano Beach, Florida
Chairman and Chief Executive Officer, John Henry Rock Drills, Inc.
Belle, West Virginia
James W. Near (1).............................................................. 55 1981
Chairman of the Board and Chief Executive Officer
James V. Pickett(1)............................................................ 52 1982
Chairman, The Pickett Companies; Managing Director of the real estate
investment group of Banc One Capital Corporation
Dublin, Ohio
Thomas F. Keller(2)............................................................ 62 1991
Dean and R.J. Reynolds Professor of Business Administration, Fuqua School of
Business, Duke University
Durham, North Carolina
</TABLE>
The following Directors will continue to serve after the 1994 Annual
Meeting:
<TABLE>
<S> <C> <C>
TERMS EXPIRING IN 1995
R. David Thomas(2)............................................................. 61 1969
Senior Chairman of the Board and Founder
John K. Casey(1)............................................................... 61 1988
Vice Chairman and Chief Financial Officer
Ernest S. Hayeck(1)............................................................ 69 1993
Retired Central District Court Judge for Worcester County, Massachusetts
TERMS EXPIRING IN 1996
Arthur I. Vorys, Esq.(1)(2).................................................... 70 1980
Of counsel, Vorys, Sater, Seymour and Pease
Columbus, Ohio
Thekla R. Shackelford(2)....................................................... 59 1984
Owner, School Selection Consulting
Columbus, Ohio
Ronald E. Musick(1)............................................................ 53 1987(3)
Executive Vice President
W. Clay Hamner (1)(2).......................................................... 48 1987
Chairman and Chief Executive Officer, Montrose Capital Corporation
Durham, North Carolina
Gordon F. Teter (1)............................................................ 50 1990
President and Chief Operating Officer
</TABLE>
- ---------------
(1) Mr. Nutter became President of F.B. Nutter Leasing Co. in 1981. He was
President of Pinnacle Industries, Inc. from October, 1986 until that company
finished development of a coal mining facility in
3
<PAGE> 7
1991. He was Chairman and Chief Executive Officer of Kare Electronics, Inc.
from December, 1988 until June 1, 1993, when that company was dissolved. Mr.
Nutter has been Chairman and Chief Executive Officer of Dickirson Drills,
Inc. since April, 1992. He assumed his current position with John Henry Rock
Drills, Inc. on September 1, 1993. F.B. Nutter Leasing Co. is a real estate
leasing and management company. Kare Electronics, Inc. distributed
electronic monitoring devices. Dickirson Drills, Inc. manufactures rotary
blast hole drills. John Henry Rock Drills, Inc. manufactures hydraulic rock
drills.
Mr. Near was President and Chief Operating Officer of Sisters
International, Inc. from 1981 until August 12, 1986, when he assumed the
position of President and Chief Operating Officer of the Company. He
assumed the duties of Chief Executive Officer on February 21, 1989. Mr.
Near became Chairman of the Board on February 18, 1991.
Mr. Pickett has served as President and Chief Executive Officer of various
companies generally known as The Pickett Companies since 1969. The Pickett
Companies are involved in real estate development, ownership and
management. Due to declining economic conditions, certain of the companies
which comprise The Pickett Companies filed a petition under Chapter 11 of
the United States Bankruptcy Code on February 1, 1991. A consolidated plan
of reorganization was filed on December 30, 1991 and approved by the
bankruptcy court on April 19, 1992. Mr. Pickett became the Managing
Director of the real estate investment group of Banc One Capital
Corporation on February 1, 1993.
Mr. Casey was Senior Vice President of the Company from February 20, 1984
to April 30, 1987, at which time he became Executive Vice President. Mr.
Casey became Executive Vice President -- Finance and Administration, on
December 23, 1987. He assumed his current position on February 18, 1991.
Judge Hayeck was Central District Court Judge for Worcester County,
Massachusetts, from January 27, 1970 until he retired on January 26, 1993.
Mr. Hayeck was awarded the American Bar Association Franklin N. Flaschner
Judicial Award in 1992. He is also a faculty member of the National
Judicial College. He became a Director of the Company on February 8, 1993.
Mr. Vorys was a partner in the law firm of Vorys, Sater, Seymour and Pease
until December 31, 1992.
Mr. Musick was Vice President, Secretary and Treasurer of Sisters
International, Inc. from March 27, 1981 to October 12, 1982. He was Senior
Vice President, Secretary and Treasurer of Sisters International, Inc. from
October 12, 1982 to March 31, 1987. Mr. Musick was Senior Vice President of
the Company from October 28, 1986 to August 1, 1991, at which time he
assumed his current position.
Montrose Capital Corporation is a private investment company.
Mr. Teter was President of Casa Lupita Restaurants and Executive Vice
President of its parent company, Ponderosa, Inc., from 1985 to May, 1987.
Mr. Teter became a Senior Vice President of the Company in September, 1987,
and Executive Vice President in February, 1988. He assumed his present
duties on February 18, 1991.
Each of the other Directors has had the same principal occupation and
employer during the past five years as set forth in this table.
(2) Also, Mr. Keller serves as a director of Ladd Furniture Company, Hatteras
Income Securities, Inc., Nations Funds, Inc., Nations Fund Trust, Mentor
Growth Fund, Monk-Austin, Inc., American Business Products and Cambridge
Investment Trust; Mr. Thomas serves as a director of Clinton Gas Systems,
Inc.; Mr. Vorys serves as a director of Willis Corroon plc and Ohio Casualty
Corporation; Mrs. Shackelford serves as a director of Banc One Corporation;
and Mr. Hamner serves as a director of Vista Resources, Inc. and
Interstate/Johnson Lane, Inc.
(3) Mr. Musick was a Director of the Company from 1970 to 1981.
Unless otherwise directed, the persons named in the Proxy will vote the
Proxies for the election of Messrs. Nutter, Near, Pickett and Keller as
Directors of the Company, each to serve for a term of three years and until
their successors are elected and qualified. While it is contemplated that all
nominees will stand for
4
<PAGE> 8
election, in the event any person nominated fails to stand for election, the
Proxies will be voted for such other person or persons as may be designated by
the Directors. Management has no reason to believe that any of the
above-mentioned persons will not stand for election or serve as a Director.
Under Ohio law and the Company's Code of Regulations, the four nominees
receiving the greatest number of votes will be elected as Directors. Shares as
to which the authority to vote is withheld and broker non-votes are not counted
toward the election of Directors or toward the election of the individual
nominees specified on the Proxy.
COMMITTEES OF DIRECTORS
A total of seven meetings of the Board of Directors of the Company were
held during 1993. No Director attended less than 75 percent of the aggregate of
(1) the total number of meetings of the Board of Directors, and (2) the total
number of meetings held by all committees of the Board of Directors on which
that Director served during the period each served as a Director.
The Board of Directors has an Audit Committee, a Board Membership Committee
and a Compensation Committee.
The members of the Audit Committee are Messrs. Keller (Chairman), Hayeck,
Hamner, Pickett and Vorys. The Committee met four times during 1993. Its
function is to review the accounting and financial reporting practices of the
Company and the adequacy of the Company's system of internal control, to review
the scope and adequacy of internal audit activities and the work of the
Company's independent Certified Public Accountants, and to recommend to the
Directors a firm of accountants to serve as the Company's independent Certified
Public Accountants.
The members of the Board Membership Committee are Messrs. Pickett
(Chairman), Hamner, Near, Thomas and Vorys. The Committee met twice during 1993.
Its function is to recommend candidates for membership to the Board of
Directors. The Board Membership Committee will consider nominees recommended by
shareholders, provided that the names of such nominees are submitted in writing,
not later than November 17, 1994, to R. David Thomas, P. O. Box 256, Dublin,
Ohio 43017-0256. Each such submission must include a statement of the
qualifications of the nominee, a consent signed by the nominee evidencing a
willingness to serve as a Director, if elected, and a commitment by the nominee
to meet personally with the Committee members.
Until May 3, 1993, the Board of Directors had used an Executive
Compensation Committee to examine the levels and methods of compensation for
certain Executive Officers, and a Stock Option Committee to consider the
adoption of stock option plans and the granting of stock options thereunder.
Those committees were combined to become the Compensation Committee on May 3,
1993. The members of the Compensation Committee are Messrs. Nutter (Chairman)
and Hamner, and Mrs. Shackelford. The Compensation Committee or the separate
committees which were combined into it met four times during 1993. The
Compensation Committee's function is to examine the levels and methods of
compensation employed by the Company with respect to the individuals named or to
be named in the Company's proxy statement, to review and evaluate alternative
and additional compensation programs for these individuals, and to make
recommendations to the Board of Directors on such matters. Until February 22,
1994, the Compensation Committee also recommended to the full Board of Directors
those employees to whom stock options should be granted pursuant to the
Company's stock option plans, recommended to the full Board of Directors the
terms and conditions of such stock options, and made administrative decisions as
provided in the Company's stock option plans.
Effective February 22, 1994, the Compensation Committee was delegated the
authority to make all decisions regarding the individuals to whom options are to
be granted under the Company's stock option plans, and the timing, pricing,
number of options to be granted and the other terms of such grants, subject to
shareholder approval of the proposed amendments to the stock option plans as
discussed in the section of this Proxy Statement entitled "APPROVAL OF
AMENDMENTS TO STOCK OPTION PLANS". In addition, effective February 22, 1994, the
Compensation Committee was delegated the authority to adopt one
5
<PAGE> 9
or more cash bonus plans which will qualify compensation paid thereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and to implement and administer such
plans. Please refer to the section of this Proxy Statement entitled "APPROVAL OF
PERFORMANCE GOALS OF THE SENIOR EXECUTIVE EARNINGS MAXIMIZATION PLAN" (beginning
at page 29) for the discussion of Section 162(m).
In addition to the three committees set forth above, the Board of Directors
has an Executive Committee and a Finance Committee.
Directors who are not employees of the Company are paid $7,000 quarterly,
plus $1,500 for each Board meeting and $1,000 for each qualified committee
meeting attended, including telephonic meetings, for all services, plus
expenses. If more than one qualified meeting is held on the same day, a separate
fee is paid for each such meeting. Meetings of the Audit and Compensation
Committees are qualified meetings, together with any special committees
established from time to time.
Directors who are not employees of the Company also receive grants of stock
options under Part II of the Company's 1990 Stock Option Plan. The number of
shares for which options are presently granted to each non-employee Director is
equal to 50% of the amount paid to such Director during the preceding fiscal
year as director's fees (including quarterly retainer fees and Board meeting
fees but excluding committee meeting fees and expense reimbursements), divided
by the option exercise price and rounded to the nearest whole share. The option
exercise price is 100% of the fair market value of the Company's common shares
on the date of grant. Options are granted on the date on which the regularly
scheduled Board meeting is held during the Company's third fiscal quarter. Each
option is granted for a period of 10 years. 25% of the options granted each year
become exercisable on each of the first four anniversaries of the grant date for
such options. If the proposed amendments to the 1990 Stock Option Plan are
approved by shareholders, directors who are not employees of the Company will
receive an annual grant of options to purchase 1,100 common shares. The proposed
amendments will not affect the other terms described in this paragraph.
The Company entered into a consulting agreement with Ernest S. Hayeck
effective February 8, 1993. The agreement provided that upon the request of the
Company, Judge Hayeck would consult with the Company regarding the
identification of prospective minority franchise owners and suppliers, and
matters pertaining to international development. Judge Hayeck was compensated
for his services at the rate of $1,000 per day, plus reasonable expenses. The
consulting agreement was terminated by mutual agreement of the Company and Judge
Hayeck effective July 31, 1993. Judge Hayeck was paid a total of $12,000.00 for
services rendered under the agreement, plus expenses of $4,402.11.
6
<PAGE> 10
COMPENSATION OF MANAGEMENT
The following table summarizes compensation awarded or paid to, or earned
by, each of the named Executive Officers during each of the Company's last three
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
- -------------------------------------- ----- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
James W. Near, 1993 618,808 708,251 140,746 6,179
Chairman of the Board 1992 578,462 650,000 150,717 6,366
and Chief Executive 1991 515,000 421,800 161,062 3,866
Officer
R. David Thomas, 1993 736,674(2) 287,500 0 6,179
Senior Chairman of 1992 713,183(2) 278,125 0 6,366
the Board and 1991 586,234(2) 205,000 0 3,866
Founder
Gordon F. Teter, 1993 395,577 476,915 82,401 6,179
President and Chief 1992 367,308 346,563 79,720 6,366
Operating Officer 1991 317,308 272,767 83,848 3,866
John K. Casey, 1993 316,462 398,653 60,956 6,179
Vice Chairman and 1992 296,154 332,500 63,924 6,366
Chief Financial 1991 260,577 261,308 71,467 3,866
Officer
Edwin L. Ourant, 1993 262,346 277,315 45,423 6,179
Executive Vice 1992 240,866 229,525 55,428 6,366
President and 1991 225,000 192,700 50,159 3,866
President -- Wendy's Restaurants
of Canada Inc.
</TABLE>
- ---------------
(1) The amounts shown in this column for each named Executive Officer consist of
(i) executive health insurance premiums paid by the Company for coverage for
the named Executive Officers of $2,940, $2,940 and $2,940 for 1993, 1992 and
1991, respectively; and (ii) aggregate contributions or other allocations to
the Company's defined contribution plans of $3,239, $3,426, and $926 made in
1993, 1992, and 1991, respectively.
(2) The amounts shown in this column for Mr. Thomas include payments made to Mr.
Thomas for services rendered as the principal spokesman in the Company's
television and radio commercials (the "Advertising Payments") in the amounts
of $241,097, $248,183 and $176,234 in 1993, 1992 and 1991, respectively. Mr.
Thomas was paid for these services at the minimum rate permitted by
applicable union contract provisions. The Advertising Payments were not
acted on by the Compensation Committee since they were not made for services
rendered by Mr. Thomas in his capacity as an Executive Officer. The
Advertising Payments are therefore not included in the compensation data set
forth in the section of this Proxy Statement entitled "REPORT OF THE
COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION" (which begins on page 10).
The following table sets forth information concerning individual grants of
stock options made during the last fiscal year to each of the named Executive
Officers.
7
<PAGE> 11
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE $(3)
- ---- ------------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
James W. Near 140,746 6.75% $ 14.375 8/4/03 $ 727,657
R. David Thomas 0 N/A N/A N/A N/A
Gordon F. Teter 82,401 3.95% $ 14.375 8/4/03 $ 426,013
John K. Casey 60,956 2.92% $ 14.375 8/4/03 $ 315,143
Edwin L. Ourant 45,423 2.18% $ 14.375 8/4/03 $ 234,837
</TABLE>
- ---------------
(1) 25% of the options listed in this column become exercisable on August 5,
1994. An additional 25% becomes exercisable each successive August 5. These
exercise dates may be accelerated if the Company is involved in certain
change-in-control transactions as specified in the Company's various stock
option plans. If the Executive Officer's employment is terminated for any
reason other than death or disability, the options will be canceled as of
the date of such termination. If the Executive Officer's employment is
terminated by reason of his death or disability, the options may be
exercised at any time during the six month period after his death or date of
becoming disabled, subject to the stated term of the options.
(2) The exercise price is determined in accordance with the Company's stock
option plans. The plans provide that the exercise price is the mean of the
high and low prices at which common shares of the Company are traded on the
New York Stock Exchange on the date of grant.
(3) All values shown are pre-tax. Values shown were calculated using the
Black-Scholes option pricing model and the following assumptions: expected
volatility .283; risk-free rate of return 5.45%; dividend yield 1.32%; and
an expected time of exercise of seven years. No adjustments were made for
the non-transferability of the options or for the risk of forfeiture. The
Company is not aware of any model which will determine with reasonable
accuracy a present value based on future unknown or volatile factors. No
gain to the optionees is possible without an increase in the market price of
the Company's common shares above the market price on the date of grant. If
such increase occurs, all shareholders will benefit commensurately. If no
increase in the market price occurs, optionees will realize no value from
stock options.
The following table sets forth information regarding each individual
exercise of stock options made during the last fiscal year by each of the named
Executive Officers.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James W. Near 15,555 $ 117,751 775,736 523,632 $ 8,233,121 $ 3,822,595
R. David Thomas 0 N/A 0 0 0 0
Gordon F. Teter 238,727 $1,879,547 61,852 245,360 $ 427,769 $ 1,598,341
John K. Casey 88,065 $ 563,797 61,839 199,699 $ 468,077 $ 1,349,925
Edwin L. Ourant 94,789 $ 683,376 481 160,949 $ 2,735 $ 1,116,751
</TABLE>
- ---------------
(1) All values as shown are pre-tax.
(2) Based on the fiscal year-end closing price of $17.375 per share.
The following table sets forth the estimated total retirement benefit that
would be payable to Executive Officers (and other officers) from the qualified
and supplemental retirement plans combined of the Company.
<TABLE>
<CAPTION>
FINAL AVERAGE ESTIMATED ANNUAL PENSION PAYABLE AT AGE
COMPENSATION 65,
AT AGE 60 BASED ON YEARS OF SERVICE INDICATED (1)
- ------------ ----------------------------------------
5 10 15 OR MORE(2)
- -- -------------
<S> <C> <C> <C>
$ 100,000........................................... $ 16,667 $ 33,333 $ 50,000
$ 150,000........................................... $ 25,000 $ 50,000 $ 75,000
$ 200,000........................................... $ 33,333 $ 66,667 $ 100,000
$ 250,000........................................... $ 41,667 $ 83,333 $ 125,000
$ 300,000........................................... $ 50,000 $100,000 $ 150,000
$ 400,000........................................... $ 66,667 $133,333 $ 200,000
$ 500,000........................................... $ 83,333 $166,667 $ 250,000
$ 600,000........................................... $100,000 $200,000 $ 300,000
$ 700,000........................................... $116,667 $233,333 $ 350,000
$ 800,000........................................... $133,333 $266,667 $ 400,000
$ 900,000........................................... $150,000 $300,000 $ 450,000
$1,000,000.......................................... $166,667 $333,333 $ 500,000
</TABLE>
- ---------------
(1) Based on benefits commencing at age 65 and the employee continuing
employment with the Company or its subsidiaries until age 65.
(2) The amount of the benefit payable at age 65 would not exceed the amount
shown in this column even if the employee had more than 15 years of service.
The Company has three retirement plans which apply to Executive Officers in
addition to other Officers and/or employees. Mr. Thomas is the sole remaining
participant in a fourth plan, and he does not continue to accrue benefits under
that plan. The table set forth above shows the estimated total retirement
benefits that would be payable from all plans combined.
The benefits listed in the above table are based on final average
compensation at age 60 for a participant, with termination of employment and
payments commencing at age 65. Final average compensation is one-fifth of the
highest aggregate compensation received during five consecutive calendar years
within the last 10 complete calendar years of employment preceding the
participant's attainment of age 60. "Compensation" for purposes of the
retirement plans is defined as the sum of all amounts includable for W-2
purposes and paid by the Company to an employee and amounts of pay reduced in
accordance with an arrangement established
9
<PAGE> 13
by the Company which qualifies under Section 125 of the Internal Revenue Code of
1986, as amended, except that prizes, awards, imputed income from excess group
life insurance amounts, moving expenses, adjustments for cost of living, housing
allowances, compensation arising from the leasing of automobiles by the Company,
income tax differentials and other similar differentials are not included in the
definition of "compensation". Due to differences in the definition of
"compensation" between the applicable regulations of the Securities and Exchange
Commission and the Internal Revenue Service, the amounts shown as annual
compensation in the Summary Compensation Table are different than the amount of
"compensation" used to determine benefits payable to the Company's retirement
plans. The amounts shown as annual compensation in the Summary Compensation
Table include bonus amounts paid to the named Executive Officers in 1994 for the
Company's performance in 1993 fiscal year, and excludes amounts paid to the
named Executive Officers in 1993 based on the Company's performance during its
1992 fiscal year. The final average compensation amounts as of the end of fiscal
year 1993 for Messrs. Near, Thomas, Teter, Casey and Ourant are $901,865,
$495,458, $505,738, $382,512 and $307,625, respectively.
Benefits vest after a participant has attained five years of service.
Messrs. Near, Thomas, Teter, Casey and Ourant have been credited with 13, 24, 6,
13 and 7 years of service, respectively, under the plans.
The estimated annual pension amounts are computed on a single straight-life
annuity payment basis. Benefits listed in the table are not subject to deduction
for Social Security or other offset amounts.
Company contributions or accruals on behalf of each named Executive Officer
under the Company's defined contribution plans were included in the "All other
compensation" column of the Summary Compensation Table.
Notwithstanding anything to the contrary as set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Report and the performance graph on page 15 shall not be incorporated by
reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Company's executive compensation policy has been "pay for performance"
since well before the current popularity of that concept. In an effort to
provide shareholders with a better understanding of the Company's executive
compensation practices, this report provides information beyond the information
required by the new proxy rules issued in 1992 by the Securities and Exchange
Commission.
COMPENSATION PHILOSOPHY
The Company's executive compensation program is based on two objectives:
Providing market-competitive compensation opportunities, and
Creating a strong link between the interests of the shareholders, the
Company's financial performance, and the total compensation of the
Company's Executive Officers.
There are three components to the Company's executive compensation program:
annual cash compensation, longer-term incentive compensation and benefits. The
annual cash compensation program is comprised of base salary and annual
incentive compensation. Base salary and annual incentive compensation
opportunities are set by periodic comparison to external rates of pay for
comparable positions within the food-service industry. The companies used for
this comparison are the same companies which comprise the "Restaurant Index"
shown on the graph on page 15, except that compensation data for Perkins Family
Restaurants, L.P. is not used because such data is not publicly available.
Base salaries are targeted at the 50th percentile of competitive data.
Individual variability is based on performance and experience. Adjustments are
normally considered annually, based upon general movement in
10
<PAGE> 14
external salary levels, individual performance and potential, and/or changes in
the position's duties and responsibilities.
Annual incentive compensation opportunities are targeted at the 50th
percentile of competitive data. The Company had two cash bonus plans which
applied to Executive Officers for the 1993 fiscal year. Under the Earnings
Maximization Plan, participants received annual incentive awards which were
based on the extent to which the Company exceeded specified net income goals for
the year. The net income goals were established in 1991 and increase annually.
The goals have been specified through the Company's 1998 fiscal year. Under the
Management Incentive Plan, 1993 incentive awards were based on the extent to
which the Company achieved or exceeded specified earnings per share and return
on assets goals for the year. The awards to participants under this plan were
based on the payout percentages specified in the following table multiplied by
the participant's base salary and the targeted bonus percentage applicable to
such employee's grade (which ranged from 10% to 25% of base salary). For 1993
the Company attained between 100 percent and 109.9 percent of its earnings per
share and return on assets goals.
MANAGEMENT INCENTIVE PLAN PAYOUT PERCENTAGES
<TABLE>
<CAPTION>
% ATTAINMENT
---------------
<S> <C> <C> <C> <C> <C> <C>
E
A 120.0%+ 100% 125% 150% 175% 200%
R
N
I 110.0% - 119.9% 75% 100% 125% 150% 175%
N
G
S 100.0% - 109.9%(1) 50% 75% 100% 125% 150%
P
E
R 85.0% - 99.9% 25% 50% 75% 100% 125%
S
H
A 80.0% - 84.9% 0% 25% 50% 75% 100%
R ===================================================================================
E 80.0 - 84.9% 85.0 - 99.9% 100.0 - 109.9%(1) 110.0 - 119.9% 120.0% + % ATTAINMENT
--------------
</TABLE>
RETURN ON ASSETS
- ---------------
(1) Indicates percentage of attainment applicable for fiscal year 1993.
Total annual cash compensation may be well below the 50th percentile when
target performance is not achieved. When targets are significantly exceeded,
total annual cash compensation may equal or exceed the 75th percentile.
The longer-term incentive compensation program primarily consists of stock
options (although one of the cash incentive award programs has a longer-term
orientation, since the annual financial performance goals have been specified
through fiscal 1998). Award opportunities under the stock option program are
also set by periodic comparison to stock option grants made to comparable
positions within the food-service industry, and are set at approximately the
75th percentile. The companies used for this comparison are the same companies
which comprise the "Restaurant Index" shown on the graph on page 15, except that
compensation data for Perkins Family Restaurants, L.P. is not used because such
data is not publicly available. Options are exercisable at not less than 100% of
the fair market value of the Company's common shares on the date of grant.
Beginning in 1994, award opportunities under the stock option program will be
based on a fixed number of options for each eligible employee grade. The fixed
number of options to be awarded will be adjusted periodically by comparison to
comparable positions within the food-service industry. As a result, the Black-
Scholes value of options awarded will increase or decrease based on how the
Company's stock price has changed since the previous year's option awards
(assuming that the other inputs used in the Black-Scholes calculation remain
constant). Grantees do not receive a benefit from stock options unless and until
the market price of the Company's common shares increases. This program
accomplishes the objective of linking each Executive Officer's opportunity for
financial gain to increases in shareholder wealth, as reflected by the market
price of the Company's common shares.
11
<PAGE> 15
The benefits program is comprised of retirement income and group insurance
plans. The objective of the program is to provide Executive Officers with
reasonable and competitive levels of protection against the four contingencies
(retirement, death, disability and ill health) which will interrupt the
Executive Officer's employment and/or income received as an active employee. The
retirement program consists of two tax-qualified plans that cover all full-time
management and administrative employees, and a supplemental retirement plan
which covers the Executive Officers and other Officers of the Company. Mr.
Thomas is the sole remaining participant in a fourth retirement plan, and he
does not continue to accrue benefits under that plan. The group insurance
program consists of life, disability and health insurance benefit plans that
cover all full-time management and administrative employees and the executive
health care reimbursement plan, which covers Executive Officers and other
Officers.
Section 162(m) of the Internal Revenue Code of 1986, as amended, prohibits
a publicly held corporation, such as the Company, from claiming a deduction on
its federal income tax return for compensation in excess of $1 million paid for
a given fiscal year to the chief executive officer (or person acting in that
capacity) at the close of the corporation's fiscal year and the four most highly
compensated officers of the corporation, other than the chief executive officer,
at the end of the corporation's fiscal year. The $1 million compensation
deduction limitation does not apply to "performance-based compensation". The
Internal Revenue Service issued proposed regulations on December 15, 1993 which
give some guidance to publicly held companies about how to qualify compensatory
plans to meet the "performance-based compensation" requirements. However, the
final regulations are not expected to be issued until at least later this year.
Since there are a number of significant unanswered questions about how the
proposed regulations will affect the Company's annual cash incentive and
non-qualified retirement plans and the Company cannot predict what requirements
the final rules will contain, the Company has adopted a new cash incentive plan
and amended its stock option plans, and is seeking shareholder approval with
regard to the new cash incentive plan and the amendments to the stock option
plans, in a good faith effort to qualify compensation received under those plans
as "performance-based" for purposes of Section 162(m). The Company will continue
to review its compensatory plans and to assess the desirability of further
revisions as the final regulations are issued, the Internal Revenue Service
begins to issue interpretations, and competitive practices begin to emerge.
PAY/PERFORMANCE LINK
The Committee believes that the Company's executive compensation program
has resulted in a positive relationship between the compensation paid to
Executive Officers and the Company's performance. The net income and earnings
per share/return on assets goals for 1993 were met or exceeded. As a result,
incentive cash compensation was 51% of the total cash compensation paid to
Executive Officers for 1993.
Total cash compensation (salary and bonus) for Mr. Near and for the named
Executive Officers as a group increased 8.0% and 12.0%, respectively, over the
prior year. For the same years, the Company's net income increased 22.5% to
$79,267,000 (or $.76 per share, fully diluted) from $64,698,000 (or $.63 per
share, fully diluted). The Company's fully diluted earnings per share have risen
153.3% since 1988, while the average total cash compensation for the named
Executive Officers has risen 62.2%. The following table and graphs show the
correlation between the Company's performance, measured as earnings per share,
and the average total cash compensation for the Chief Executive Officer and the
five named Executive Officers since 1988.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Percentage change from prior year in earnings
per share (fully diluted)................... 6.7% 28.1% 26.8% 21.2% 20.6%
Percentage change from prior year in average
cash compensation for five named Executive
Officers.................................... (11.8)% 6.3% 25.8% 22.8% 12.0%
Percentage change from prior year in cash
compensation for CEO........................ (14.4)%(1) 14.6% 30.1% 31.1% 8.0%
</TABLE>
- ---------------
(1) Based on amounts paid to Robert L. Barney, the then-CEO, in 1988.
12
<PAGE> 16
EARNINGS PER SHARE
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) WEN
<S> <C>
1988 $.30
1989 .32
1990 .41
1991 .52
1992 .63
1993 .76
</TABLE>
AVERAGE CASH COMPENSATION FOR FIVE NAMED EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) WEN
<S> <C>
1988 $522,586
1989 461,138
1990 490,017
1991 616,292
1992 756,901
1993 847,481
</TABLE>
CASH COMPENSATION OF CEO
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) WEN
<S> <C>
1988 $ 733,348
1989 628,046
1990 720,000
1991 936,800
1992 1,228,46
1993 1,327,05
</TABLE>
13
<PAGE> 17
The following table shows the total cash compensation paid to the Chief
Executive Officer and to the named Executive Officers since 1988 as a percentage
of the increase in the Company's market capitalization. Cash compensation paid
to the Chief Executive Officer and the average cash compensation paid to the
five named Executive Officers was a small percentage of the overall wealth
created for shareholders since 1988, expressed as a percentage of market
capitalization.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Market capitalization(1) (millions)................ $ 447 $ 605 $ 962 $1,248 $1,751
Percentage change from prior year in market
capitalization................................... (19.6)% 35.3% 59.0% 29.7% 40.3%
Average cash compensation for five named Executive
Officers as a percentage of market capitalization
increase......................................... -- (2) .31% .17% .26% .17%
Cash compensation of CEO as a percentage of market
capitalization increase.......................... -- (2)(3) .46% .26% .43% .26%
</TABLE>
- ---------------
(1) Calculated as closing price on the last day of the fiscal year multiplied by
the number of common shares issued at year end.
(2) Not calculable since market capitalization decreased from 1988 to 1989.
(3) Based on amounts paid to Robert L. Barney, the then-CEO, in 1988.
COMPENSATION FOR CHIEF EXECUTIVE OFFICER
The total increase in the Company's market capitalization for 1993 over
1992 was $503 million. The increase in Mr. Near's annual cash compensation for
the same period was $98,597, or two-hundredths of one percent (.02%) of the
increase in market capitalization. Mr. Near's cash compensation in 1993 was
twenty-six hundredths of one percent (.26%) of the increase in market
capitalization. Viewed over the period since Mr. Near became the Chief Executive
Officer of the Company, Mr. Near's annual cash compensation has increased by
$699,013, while the Company's market capitalization increased by $1.195 billion.
Mr. Near's salary for 1993 was targeted at the 50th percentile of
competitive data, consistent with the policy previously discussed. His salary
for 1993 was a 5.9% increase over his salary in 1992. In setting Mr. Near's base
salary level, the Compensation Committee also considered Mr. Near's vast
experience in the quick-service restaurant industry and the Company's
performance under his leadership.
An annual cash incentive award is payable to Mr. Near only if the Company
achieves or exceeds specified annual net income goals. The amount of the award
can increase if the Company exceeds the specified goals. Conversely, no award is
payable if the Company does not achieve the specified goals. The payment to Mr.
Near for 1993 was based on the Company exceeding its 1993 goals. 53% of Mr.
Near's cash compensation for 1993 was incentive pay. Since the incentive award
increases as the Company's performance increases, and decreases (or becomes
zero) if the specified goals are not met, Mr. Near's cash compensation is
significantly affected by the Company's performance.
Long-term incentives in the form of stock options were granted to Mr. Near
in 1993. Stock options were granted at 100% of the fair market value of the
Company's common shares on August 5, 1993, the date of grant. Options serve to
directly align Mr. Near's interests with the interests of other shareholders,
since Mr. Near will not realize a benefit unless and until the market price of
the Company's common shares increases.
The number of options granted to Mr. Near during 1993 was designed to
approximate the 75th percentile of comparable positions within the food-service
industry, consistent with the policy previously described. The options granted
to Mr. Near should provide a significant long-term incentive which will benefit
both Mr. Near and the Company's other shareholders.
14
<PAGE> 18
The Committee believes that the information set forth in this report
strongly supports the conclusion that Mr. Near has been reasonably compensated
for the job he has done since he became the Chief Executive Officer. His
opportunities to increase his future compensation depend on the Company's future
performance. The compensation programs applicable to Mr. Near have accomplished
the objective of linking shareholder and financial performance to Mr. Near's
total compensation.
Respectfully submitted,
COMPENSATION COMMITTEE
Fielden B. Nutter, Sr., Chairman
W. Clay Hamner
Thekla R. Shackelford
The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return (as measured by dividing (i) the sum of (A)
the cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the Company's share price at the
end and the beginning of the measurement period; by (ii) the share price at the
beginning of the measurement period) against the cumulative total return of the
S&P 500 Stock Index and an index comprised of the "restaurant companies"
(excluding the Company) that were listed in the Value Line Investment Survey
(the "Restaurants Index").
COMPARISON OF FIVE-YEAR TOTAL RETURN(1)
FOR WENDY'S INTERNATIONAL, INC.,
THE RESTAURANTS INDEX(2)
AND THE S&P 500 INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD RESTAURANTS
(FISCAL YEAR COVERED) WEN INDEX S&P INDEX
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 83.81 140.59 131.49
1990 118.70 118.31 127.32
1991 192.60 158.20 166.21
1992 251.04 198.73 179.30
1993 351.25 226.37 197.23
</TABLE>
- ---------------
(1) Assumes $100 invested on December 31, 1988, in Wendy's International, Inc.
common shares, the Restaurants Index and the S&P 500 Index. Total return
assumes dividend reinvestment.
(2) The Restaurants Index has been computed by the Company, and is comprised of
the following 16 companies: Bob Evans Farms, Inc.; Carl Karcher Enterprises,
Inc.; Frisch's Restaurants, Inc.; International Dairy Queen; JB's
Restaurants, Inc.; Luby's Cafeterias, Inc.; McDonald's Corporation; Morrison
15
<PAGE> 19
Inc.; National Pizza Co.; Perkins Family Restaurants, L.P.; Piccadilly
Cafeterias, Inc.; Ryan's Family Steak Houses, Inc.; Shoney's, Inc.; Sizzler
Restaurants, Inc.; TCBY Enterprises, Inc.; and VICORP Restaurants, Inc. It
excludes Wendy's International, Inc., the 17th "restaurant company" in the
Value Line Investment Survey(C) on the relevant date. This Index has been
weighted by market capitalization of each component company. Component
companies in the Restaurants Index were the restaurant companies listed in
the Value Line Investment Survey(C) Edition 2 dated December 25, 1992. The
Value Line Investment Survey(C) is published by Value Line Publishing, Inc.
STOCK OPTION COMMITTEE INTERLOCK
AND INSIDER PARTICIPATION
R. David Thomas, Senior Chairman of the Board and Founder, was the Chairman
of the Stock Option Committee until February 23, 1993, at which time he resigned
from that Committee. Mr. Thomas did not receive stock option grants during 1993.
The Stock Option Committee was combined with another committee to become the
Compensation Committee on May 3, 1993.
Kenneth Thomas, the son of R. David Thomas, is a 50% shareholder in
Consolidated Restaurants of California, Inc., which owns the right to operate
eight Wendy's Old Fashioned Hamburgers restaurants in a portion of Orange
County, California. Kenneth Thomas serves as a co-Franchise Owner with the
corporation and another individual under the applicable Unit Franchise
Agreements with the Company. Another restaurant formerly operated by
Consolidated Restaurants of California, Inc., Kenneth Thomas and the other
individual was transferred to another Franchise Owner effective January 7, 1993.
In the opinion of the Company, the terms of these franchises are no less
favorable than the Company could have obtained from unrelated third parties.
Until August 3, 1993, Kenneth Thomas had also been a 50% shareholder in
Consolidated Restaurants of the Pacific, Inc., which together with Kenneth
Thomas and another individual had the right to operate three restaurants in
Riverside County, California. Kenneth Thomas sold his interest in Consolidated
Restaurants of the Pacific, Inc. to an unrelated individual on August 3, 1993.
The ownership interest of Kenneth Thomas in both Consolidated Restaurants
of California, Inc. and Consolidated Restaurants of the Pacific, Inc. had been
33 1/3%, and Kenneth Thomas had been a co-Franchise Owner with two other
individuals, until January 14, 1993. On that date, Kenneth Thomas increased his
ownership interest in the two corporations to 50% as part of the Florida
transaction described below.
From time to time a number of the Company's franchisees have experienced
financial difficulty which have resulted in deferred payments of royalties to
the Company and deferred payments of national advertising obligations to an
affiliate of the Company. Consolidated Restaurants of California, Inc.,
Consolidated Restaurants of the Pacific, Inc., Kenneth Thomas and two other
individuals have executed notes payable to the Company or its affiliate. The
largest aggregate amount of the debt owed to the Company at any time since
January 4, 1993 was $92,959. The aggregate amount of the debt owed to the
Company on January 2, 1994 was $55,678. These notes represent past due sums
payable for royalties, national advertising and late charges and bear interest
at the rate of 10% per annum. In the opinion of the Company, the terms of these
notes are no less favorable than the Company and its affiliate could have
received from unrelated third parties.
On January 14, 1993, the Company acquired the real estate interests to
eight Wendy's Old Fashioned Hamburgers restaurants located in Florida. Seven of
the sites were owned in fee, and one was a leasehold interest. The total
purchase price was $5.35 million. The sellers for seven of the locations were
two partnerships in which Kenneth Thomas was a partner, the other location was
owned by Kenneth Thomas and another person individually as tenants in common.
Kenneth Thomas received $650,000 of the purchase price together with an
additional $150,000 as consideration for a noncompetition and confidentiality
agreement which prohibits Kenneth Thomas from operating a competing
quick-service restaurant in Broward and Monroe counties, Florida, for a period
of two years. The purchase price was agreed upon by John K. Casey, Vice Chairman
& Chief Financial Officer of the Company, in conjunction with financial
management of the Company, after arms-length negotiations with Kenneth Thomas
and his other partners, one of whom had filed
16
<PAGE> 20
a petition under Chapter 11 of the United States Bankruptcy Code. The
transaction was also approved by the Board of Directors of the Company. The
Company agreed to the transaction after the partner in bankruptcy proposed a
plan of reorganization which would have resulted in Kenneth Thomas selling his
interest in the partnerships and being indemnified against all claims of
creditors of the partnerships. The total purchase price paid by the Company was
no more than the Company would have paid to an unrelated third party.
Melinda Morse, the daughter of R. David Thomas, is a 49% shareholder in a
corporation which owns the right to operate a Wendy's Old Fashioned Hamburgers
restaurant in Texas. Mrs. Morse serves as a co-Franchise Owner with the
corporation and her husband under the applicable Restaurant Franchise Agreement
with the Company. The corporation acquired a leasehold interest in the land,
building and equipment related to the restaurant from the Company on July 1,
1991 pursuant to the Company's ongoing program of franchising restaurants. On
February 17, 1993, the corporation exercised an option to purchase the land,
building and equipment for this restaurant from the Company for $358,750. In the
opinion of the Company, the terms of this transaction were no less favorable
than the Company could have obtained from unrelated third parties.
Until August 9, 1993, Mrs. Morse, her husband and the corporation
referenced in the preceding paragraph also owned the right to operate a second
Wendy's Old Fashioned Hamburgers restaurant in Texas. A leasehold interest in
the land, building and equipment related to that restaurant had also been
acquired from the Company on July 1, 1991. On August 9, 1993, the Company
acquired the corporation's interest in the restaurant. The purchase price was
$162,500, excluding closing adjustments such as tax prorations and rental
payments through the date of closing. The purchase price was determined by
Gordon F. Teter, President and Chief Operating Officer of the Company, in
conjunction with financial management of the Company. The purchase price was
equal to the amount paid to the Company to acquire the leasehold interest in the
restaurant in 1991. Sales at the restaurant had improved since 1991. In the
opinion of the Company, the terms of this transaction were no less favorable
than the Company could have obtained from unrelated third parties.
Molly Postlewaite, the daughter of R. David Thomas, is a 48% shareholder in
a corporation which owns the right to operate one Wendy's Old Fashioned
Hamburgers in Ohio. The corporation operates the restaurant under a Restaurant
Franchise Agreement with the Company. The corporation acquired the restaurant
from the Company on June 21, 1993. The Company leases the land, building and
equipment for the restaurant to the corporation for 7 1/2% of sales. The Company
also received $300,000 cash for the sale of intangibles associated with the
restaurant. The sale price was determined by Walter Fuehrer, the Vice President
of Corporate Development, in conjunction with financial management of the
Company, based on the valuation method the Company generally uses for franchisee
dispositions. In the opinion of the Company, the terms of this transaction were
no less favorable than the Company could have obtained from unrelated third
parties.
EXECUTIVE AGREEMENTS
The Company has entered into employment agreements ("Key Executive
Agreements") with Messrs. James W. Near and R. David Thomas. The Company has
also entered into employment agreements ("New Key Executive Agreements") with
Messrs. John F. Brownley, John K. Casey, George Condos, Lawrence A. Laudick,
Ronald E. Musick, Edwin L. Ourant, Charles W. Rath, Lawrence E. Schauf, Gordon
F. Teter and John W. Wright. The Key Executive Agreements and the New Key
Executive Agreements (collectively the "Agreements") are intended to assure the
Company that it will have the continued dedication, undivided loyalty, and
objective advice and counsel from these key executives in the event of a
proposed transaction, or the threat of a transaction, which could result in a
change of control of the Company.
Messrs. Brownley, Casey, Laudick, Musick, Ourant, Rath, Schauf and Teter
had previously entered into Key Executive Agreements with the Company. The New
Key Executive Agreements were executed in 1989 with those key executives to
replace and clarify certain provisions, to provide protections to both the
Company and the covered executives consistent with current executive
compensation practices, and to reduce the costs to the Company. Except as
otherwise noted, the provisions of the New Key Executive Agreements are
substantially the same as the provisions of the Key Executive Agreements.
17
<PAGE> 21
The Agreements provide that in the event of a change of control (as defined
in the respective Agreements), the key executives will be employed by the
Company in their present positions for a period of approximately five years (ten
years in the case of Mr. Thomas), or until the executive dies, is terminated for
good cause by the Company or terminates employment himself without good reason
or good cause, or, in the case of the Key Executive Agreements, reaches the
normal retirement age, whichever occurs first (the "Employment Term").
In the event of a change of control, the key executives will be entitled to
continue to receive during their Employment Term the annual salary, bonus, and
other benefits made available to them by the Company immediately prior to the
change of control. The Board of Directors will review annually the performance
of each key executive during such Employment Term to determine whether or not
such salary and bonus should be increased.
The Agreements may be terminated for good cause by the Company as defined
in the respective Agreements. If a key executive is terminated for good cause by
the Company under either Agreement, the Company has no further obligation to pay
any compensation or to provide benefits to the key executive.
The Key Executive Agreement may be terminated by the key executive for good
cause if the Company assigns him to a position of lesser importance, the Company
attempts to terminate his employment other than for good cause or the Company
breaches any of its obligations under the Key Executive Agreement. The New Key
Executive Agreement may be terminated by the key executive for good reason if
the Company (i) changes the key executive's status, title, position or
responsibilities in a way that does not represent a promotion, (ii) either
reduces the key executive's base salary or provides an annual salary increase
less than the increase in a defined consumer price index, (iii) requires the key
executive to relocate beyond a 30 mile radius from Dublin, Ohio, (iv) takes
action which results in a material reduction in compensation and benefits
otherwise payable to the key executive, (v) materially breaches the Agreement,
or (vi) fails to notify the key executive that a successor to the Company has
agreed to perform under the Agreement.
If the Key Executive Agreement is terminated by the key executive for good
cause, the Company is obligated to continue to pay the compensation and to
provide the benefits to the key executive for the remainder of the Employment
Term, subject to offset for any compensation earned by the key executive from
subsequent employment. If the New Key Executive Agreement is terminated by the
key executive for good reason, the Company will be obligated to make a lump-sum
payment to the key executive of three times the sum of such executive's current
salary plus average annual bonuses over the prior three years (or the term of
employment, if less than three years). The lump-sum payment will not be subject
to offset. If a key executive terminates a New Key Executive Agreement for good
reason, such key executive will also be entitled to (i) continuation of group
insurance benefits for three years, subject to offset for any benefits from
subsequent employment, if any, (ii) purchase his or her Company automobile at
the then-current book value, and (iii) a lump-sum payment equal to the present
value of accrued retirement benefits after adding three additional years of
benefit accrual, reduced by any vested benefits. In addition, any awards granted
under all long-term incentive plans of the Company (including, without
limitation, options granted under the Company's stock option plans) will become
immediately vested.
The New Key Executive Agreements with Messrs. Casey and Musick will also
require the Company to gross-up the payments made under such Agreements to
permit these key executives to receive a net amount (after taxes) equal to what
would have been received had no excise tax been imposed. The amounts paid to the
other key executives who are parties to the New Key Executive Agreements will be
subject to a maximum benefit where such payment results in an excise tax
liability to the individual. In such case, the amount otherwise payable to such
individual will be reduced if, and to the extent that, such reduction will
entitle the executive to a larger net benefit, taking into account the payment
of any excise tax.
The Company has established a benefits protection trust to provide for the
payment of benefits to the key executives and to provide for the payment of any
legal fees or expenses incurred by such key executives in enforcing their rights
under the Agreements.
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<PAGE> 22
The Company has entered into a Separation and Consulting Agreement with
James W. Near. The Separation and Consulting Agreement recognizes the
significant professional and personal contributions Mr. Near has made to the
successful operation and recognized good will and reputation of the Company. The
Agreement provides for a monthly severance benefit, after termination of
employment for any reason other than death, of one-twelfth of the highest annual
base salary of Mr. Near for the five years preceding the termination of
employment. The monthly severance benefit ends on the earliest of (i) 24 months
after termination of employment, (ii) death, or (iii) attainment of age 65.
Until the severance period expires, Mr. Near will continue to participate in the
other employee benefit plans of the Company.
After the severance period expires (or in the event that Mr. Near does not
retire until age 65), Mr. Near will receive an annuity in monthly installments
equal to one-half of his average annual base salary for the three years
preceding the severance period reduced by the actuarial equivalent of the
aggregate amounts payable to Mr. Near under the other retirement plans of the
Company. Thereafter, if Mr. Near dies and is survived by his wife, she will be
entitled to one-half of the annuity to which Mr. Near would have otherwise been
entitled.
If Mr. Near dies while actively employed by the Company or during the
severance period and is survived by his wife, she will be entitled to one-half
of the annuity to which he would have been entitled had he retired immediately
preceding the date of his death.
The Agreement further provides that Mr. Near will make himself available to
provide advice and counsel to the Company upon request after termination of
employment. The Agreement also provides that the Company may require Mr. Near to
return to active employment for up to 12 months under certain conditions. Mr.
Near is prohibited from competing against the Company for two years following
termination of employment.
If Mr. Near is also entitled to receive benefits at the time of the
termination of employment under a Key Executive Agreement, he must elect whether
to receive benefits under that Agreement or the Separation and Consulting
Agreement.
CERTAIN TRANSACTIONS INVOLVING MANAGEMENT
On November 22, 1993, the Company transferred three restaurants to Total
Quality, Inc. for $2.9 million cash. John L. Rome, who until September 13, 1993,
was Senior Vice President and President -- International Division of the
Company, is a 34% shareholder of Total Quality, Inc. Daryle Busch, the
father-in-law of John L. Rome, is a 28% shareholder of the corporation, and
Cheryl Rome, the wife of John L. Rome, is a 21% shareholder of such corporation.
The corporation, John L. Rome, Daryle Busch and two other individuals serve as
co-Franchise Owners under the applicable Restaurant Franchise Agreements with
the Company. A fourth restaurant was leased to the corporation with rental equal
to 9% of sales, with an option to purchase the land, building and equipment for
$850,000. The sale price was determined by Walter Fuehrer, the Vice President of
Corporate Development, in conjunction with financial management of the Company,
based on the valuation method the Company generally uses for franchisee
dispositions. The transaction was also approved by the Board of Directors of the
Company. In the opinion of the Company, the terms of this transaction were no
less favorable than the Company could have obtained from unrelated third
parties.
On December 31, 1992, the Company sold the land, building and equipment of
one restaurant to Wengard, Inc. for $1 million cash. Gary Rome, the brother of
John L. Rome, is a 20% shareholder of Wengard, Inc. Daryle Busch, the
father-in-law of John L. Rome, is an 80% shareholder of Wengard, Inc. The
corporation acquired the restaurant from the Company pursuant to the ongoing
program of franchising restaurants. Gary Rome and Daryle Busch serve as
co-Franchise Owners with the corporation under the applicable Restaurant
Franchise Agreement with the Company. The sale price was determined by Walter
Fuehrer, the Vice President for Corporate Development, in conjunction with
financial management of the Company, based on the valuation method the Company
generally uses for franchisee dispositions. In the opinion of the Company, the
terms of this transaction were no less favorable than the Company could have
obtained from unrelated third parties.
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<PAGE> 23
Arthur I. Vorys, a Director of the Company, is of counsel to the law firm
of Vorys, Sater, Seymour and Pease, legal counsel for the Company, which
rendered legal services to the Company during the last fiscal year and which
continues to do so. Mr. Vorys was a partner of the firm until December 31, 1992.
The descriptions of certain transactions involving the son and two of the
daughters of R. David Thomas are hereby incorporated by reference from pages 16
and 17 of this Proxy Statement.
APPROVAL OF AMENDMENTS TO STOCK OPTION PLANS
The Company believes stock options more strongly align the interests of key
employees with the interests of its other shareholders. The Company's stock
option plans were adopted to benefit the Company and its shareholders by
providing the means for employees and Directors of the Company who are not
employees of the Company or of any of its subsidiaries ("Non-Employee
Directors") to increase their ownership interest in the Company. The stock
option plans are intended to accomplish three major objectives: (i) encourage
the judgment, initiative and efforts of key employees and Non-Employee Directors
toward the continuing success of the Company; (ii) increase stock ownership
levels of key employees; and (iii) assist the Company in attracting, retaining
and motivating key employees and Non-Employee Directors. Key employees may
include not only the Executive Officers of the Company but also other Officers
or employees of the Company and its subsidiaries who are able to contribute
significantly to the success and growth of the Company.
The Company has five stock option plans pursuant to which stock options are
granted to Executive Officers of the Company -- the Wendy's International, Inc.
1978 Non-Qualified Stock Option Plan (the "1978 Stock Option Plan"); the Wendy's
International, Inc. 1982 Stock Option Plan (the "1982 Stock Option Plan"); the
Wendy's International, Inc. 1984 Stock Option Plan (the "1984 Stock Option
Plan"); the Wendy's International, Inc. 1987 Stock Option Plan (the "1987 Stock
Option Plan"); and the Wendy's International, Inc. 1990 Stock Option Plan (the
"1990 Stock Option Plan"). Each of the plans has previously been approved by the
Company's shareholders. Each of the plans, other than the 1978 Stock Option
Plan, provides for the grant of either incentive stock options ("ISOs") as
defined under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or non-qualified stock options ("Non-Qualified Options"). The 1978
Stock Option Plan only permits grants of Non-Qualified Options.
The Company is proposing to amend the plans to provide more flexibility
with respect to the terms of options which may be granted thereunder allowing
the Company to respond to competitive practices and to comply with Section
162(m) of the Code which was enacted as part of the Omnibus Budget
Reconciliation Act of 1993. The proposed amendments include the following:
(1) Amendment of the provisions of each stock option plan governing
the administration of such plan (other than the provisions of the 1990
Stock Option Plan governing grants of options to Non-Employee Directors) to
provide that all decisions regarding the individuals to whom options are to
be granted, and the timing, pricing, amount and other terms of such grants
are to be made by the Compensation Committee of the Company's Board of
Directors (the "Committee") and to prohibit the adjustment or amendment of
the exercise price of options previously granted (other than in connection
with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of the plan) unless the
Company's shareholders have approved such adjustment or amendment.
(2) Amendment of the provisions of each stock option plan governing
the option exercise price to require that the exercise price of each option
be not less than one hundred percent (100%) of the fair market value of the
underlying common shares on the date of grant.
(3) Amendment of the provisions of each stock option plan governing
the exercisability of options upon the termination of an optionee's
employment to permit (a) both ISOs and Non-Qualified Options to become
immediately exercisable and to be exercised for up to one year after
termination of employment due to the optionee's death or disability; (b)
ISOs to be exercised three months after termination of employment due to
the optionee's retirement or in connection with a disposition of one or
more restaurants by the Company or one of its subsidiaries; and (c)
Non-Qualified Options to be
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<PAGE> 24
exercised 48 months after termination of employment due to the optionee's
retirement and one year after termination of employment in connection with
a disposition of one or more restaurants by the Company or one of its
subsidiaries.
(4) Amendment of the provisions of each stock option plan governing
the number of common shares which may be subject to options granted to an
optionee to provide that during each fiscal year of the Company, no
optionee may be granted options under the plan covering more than five
percent (5%) of the maximum number of common shares authorized to be issued
under that plan (as specified in the plan document).
(5) Amendment of Part I of the 1990 Stock Option Plan to make an
additional 4,500,000 common shares available for the grant of options to
key employees.
(6) Amendment of the formula for determining the number of options to
be granted to Non-Employee Directors under Part II of the 1990 Stock Option
Plan to provide for the automatic grant each year to each Non-Employee
Director of options to purchase 1,100 common shares.
(7) Amendment of the provisions of Part II of the 1990 Stock Option
Plan governing the exercisability of options upon the termination of an
optionee's status as a director to permit options to be exercised 48 months
after termination of such status by reason of retirement, and to permit
options to become immediately exercisable and to be exercised for up to one
year after termination of such status due to death or disability.
The proposed amendments to each of the stock option plans are discussed in
greater detail below.
STOCK OPTION PLANS COVERING KEY EMPLOYEES
- -----------------------------------------
The Company's present stock option program for key employees consists of
two plans, the WeShare Stock Option Plan and the 1990 Stock Option Plan. In
August, 1990, the Company established its WeShare Stock Option Plan. All
full-time, regular employees of the Company and its subsidiaries, other than the
Company's Executive Officers, participate in that Plan (approximately 5,000
employees including approximately 60 key employees who are not Executive
Officers). The number of options awarded to each employee under the WeShare
Stock Option Plan is based on the employee's earnings during the prior year. The
Company's Executive Officers are granted options under the same formula as that
which applies to all other employees under the WeShare Stock Option Plan;
however, such options are granted to the Executive Officers under the 1978 Stock
Option Plan, the 1982 Stock Option Plan, the 1984 Stock Option Plan, or the 1987
Stock Option Plan. It is estimated that approximately 18 Executive Officers of
the Company and its subsidiaries, including the five Executive Officers named in
the Summary Compensation Table, are eligible to participate in those plans.
The Company's Executive Officers as well as its other Officers and key
employees also receive grants of stock options under the 1990 Stock Option Plan.
The number of options granted under the 1990 Stock Option Plan is based on a
periodic comparison of option grants to persons holding comparable positions at
other companies within the food-service industry.
The following table sets forth, as of the date of this Proxy Statement, the
number of common shares which could be issued under each of the stock option
plans under which options may be granted to key employees and Executive
Officers:
<TABLE>
<CAPTION>
NUMBER OF
NAME OF PLAN COMMON SHARES
------------------------------ -------------
<S> <C>
1978 Stock Option Plan................................ 73,884
1982 Stock Option Plan................................ 29,477
1984 Stock Option Plan................................ 168,284
1987 Stock Option Plan................................ 38,284
1990 Stock Option Plan, Part I........................ 877,023
</TABLE>
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<PAGE> 25
The common shares offered under each stock option plan may be either
authorized but unissued common shares or treasury shares. The number of common
shares issuable under each stock option plan will be adjusted to include any
additional common shares which may result from any share distributions effected
in the future by the Board of Directors, although no such distributions are
contemplated at this time. If an option expires or terminates for any reason
without having been exercised in full, the unpurchased common shares will remain
available for issuance under the respective stock option plan.
The Board of Directors believes that it is desirable to continue the
incentive program provided by the plans and therefore recommends that the
shareholders approve an amendment to the 1990 Stock Option Plan to make an
additional 4,500,000 common shares available thereunder. The Board anticipates
that these additional common shares will cover the option grants which the
Company expects to make in 1994, 1995 and 1996.
The following table sets forth the number and exercise price of options
granted during the last fiscal year under the 1978 Stock Option Plan and under
the 1990 Stock Option Plan to (i) each of the Executive Officers of the Company
named in the Summary Compensation Table; (ii) all current Executive Officers of
the Company as a group; (iii) all current Directors who are not Executive
Officers as a group; (iv) each nominee for election as a Director of the
Company; and (v) all employees, including all current Officers who are not
Executive Officers, as a group. No options were granted under the 1982 Stock
Option Plan, the 1984 Stock Option Plan or the 1987 Stock Option Plan during the
last fiscal year. No options were granted to associates of any of the Directors,
Executive Officers or nominees for election as a Director of the Company, and
other than the persons identified in the following table, no person received
five percent (5%) or more of the options granted under each stock option plan
during the last fiscal year.
<TABLE>
<CAPTION>
1978 STOCK OPTION 1990 STOCK OPTION
PLAN PLAN
--------------------- ---------------------
NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- -------- --------- --------
<S> <C> <C> <C> <C>
James W. Near, Chairman of the Board and Chief
Executive Officer(1) 10,311 $ 14.375 130,435 $ 14.375
R. David Thomas, Senior Chairman of the Board and
Founder 0 -- 0 --
Gordon F. Teter, President and Chief Operating
Officer 5,879 $ 14.375 76,522 $ 14.375
John K. Casey, Vice Chairman and Chief Financial
Officer 5,304 $ 14.375 55,652 $ 14.375
Edwin L. Ourant, Executive Vice President and
President -- Wendy's Restaurants of Canada Inc. 3,962 $ 14.375 41,461 $ 14.375
All Current Executive Officers as a Group 52,129 $ 14.375 4,682 $13.3125
597,566 $ 14.375
71,255 $16.4375
All Current Directors who are not Executive
Officers as a Group 0 -- 3,546 $ 14.375
Fielden B. Nutter, Sr.(1) 0 -- 591 $ 14.375
James V. Pickett(1) 0 -- 591 $ 14.375
Thomas F. Keller(1) 0 -- 591 $ 14.375
All Employees (including All Current Officers who
are not Executive Officers, as a Group) 3,294 $ 14.375 12,889 $12.5625
8,288 $13.3125
461,094 $ 14.375
8,649 $16.4375
</TABLE>
- ---------------
(1) Nominee for election as a Director of the Company.
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<PAGE> 26
The material terms of the Company's stock option plans, and the amendments
to each of the plans being submitted for shareholder approval, are summarized in
the following paragraphs. This summary is qualified in its entirety by reference
to the copies of the plans, as amended, attached to this Proxy Statement as
Exhibits A through E. Since the proposed amendments to each stock option plan
are identical, each amendment is discussed, without separately discussing each
plan.
PURCHASE PRICE
Under the terms of the stock option plans as currently in effect, the
purchase price for all common shares covered by each option granted is equal to
one hundred percent (100%) of the fair market value of the common shares on the
date of the grant. In the case of any ISO granted to an individual who, on the
effective date of the grant, owns shares possessing more than ten percent (10%)
of the total combined voting power of the Company, the exercise price per share
must be at least one hundred ten percent (110%) of the fair market value of a
common share on the date of the grant. Fair market value is defined as the mean
of the high and low prices at which common shares of the Company are traded on
the New York Stock Exchange on the grant date (the "Market Price"). On March 7,
1994, the Market Price for the common shares of the Company was $17.6875.
One of the proposed amendments to each stock option plan will provide that
the purchase price for all common shares covered by each option granted (other
than ISOs granted to ten percent (10%) shareholders) must be at least one
hundred percent (100%) of the fair market value of the common shares on the date
of grant. This amendment will permit the issuance of options with a purchase
price above the fair market value of the common shares on the date of grant, a
practice sometimes referred to as the granting of "premium options". Although it
is not contemplated that premium options will be granted in the near future,
this amendment would permit the issuance of premium options where, for example,
such options are determined to be appropriate by the Committee.
The purchase price for common shares covered by an option must be paid in
full at the time of exercise of the option by cash or check in United States
Dollars, by the delivery of common shares of the Company having a fair market
value on the date of exercise equal to the exercise price or by tender of other
property acceptable to the Committee.
AUTHORITY OF THE COMMITTEE
The stock option plans are administered by the Committee, which consists of
not less than three members of the Board. All members of the Committee are
qualified to administer the stock option plans for purposes of Securities and
Exchange Commission Rule 16b-3. Presently, the members of the Committee are
Messrs. Nutter (Chairman) and Hamner, and Mrs. Shackelford.
Under the stock option plans as currently in effect, the Committee
recommends to the Board of Directors the individuals to whom, and the time or
times at which, options will be granted, the number of common shares to be
subject to each option, the exercise price, and the duration of leaves of
absence which may be granted to participants without constituting a termination
of their employment for purposes of the stock option plans. The Committee may
also impose waiting periods or vesting requirements as conditions of a grant.
The Board of Directors may grant options to any full-time key employees of the
Company or any of its subsidiaries from those nominated by the Committee. The
Board of Directors makes the final decision as to the persons to whom options
will be granted, the number of common shares covered by each option, and the
term of each option, taking into account the nature of the services rendered by
such persons, their present and potential contributions to the success and
growth of the Company and its subsidiaries, and such other factors as the Board
and the Committee deem relevant. In addition, under Part I of the 1990 Stock
Option Plan, the Board of Directors may grant options to key employees who are
foreign nationals on such terms and conditions different from those specified in
such Plan as may in the judgment of the Board be necessary or desirable to
foster and promote achievement of the purpose of such Plan. Options may be
granted for terms of up to but not exceeding ten years, as determined by the
Board. The Board also determines when the options become exercisable.
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<PAGE> 27
Section 162(m) of the Code prohibits a publicly held corporation, such as
the Company, from claiming a deduction on its federal income tax return for
compensation in excess of $1 million paid for a given fiscal year to the chief
executive officer (or person acting in that capacity) at the close of the
corporation's fiscal year and the four most highly compensated officers of the
corporation, other than the chief executive officer, at the end of the
corporation's fiscal year. The $1 million compensation deduction limitation does
not apply to "performance-based compensation". The proposed regulations issued
by the Internal Revenue Service under Section 162(m) on December 15, 1993 (the
"Proposed IRS Regulations") set forth a number of provisions which compensatory
plans, such as the Company's stock option plans, must contain if the
compensation paid under such plans is to qualify as performance-based for the
purposes of Section 162(m).
One amendment necessary in order that each of the Company's stock option
plans will satisfy the requirements set forth in the Proposed IRS Regulations
relates to the authority of the Committee. Under the Proposed IRS Regulations,
the Committee must make the grants of options under the stock option plans.
Accordingly, if the amendments are approved by the shareholders, the Committee
will have the authority to select the individuals, including foreign nationals,
to whom, and the time or times at which, options will be granted, the number of
common shares to be subject to each grant, the exercise price, and the duration
of leaves of absence which may be granted to participants without constituting a
termination of their employment for purposes of the stock option plans. The
Committee will also have the authority to impose waiting periods or vesting
requirements as conditions of a grant. In addition, the Committee will have the
authority to determine the term of the options, up to a maximum of ten years,
and each option will be exercisable as determined by the Committee. The Board of
Directors will no longer make the final decision as to the persons to whom
options can be granted, the number of common shares covered by each option, and
the term of each option. However, the Board of Directors will retain its
authority to amend or terminate each stock option plan as described below and to
appoint the members of the Committee.
Each of the stock option plans will also be amended to prohibit the
Committee and the Board of Directors from making any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of the plan) or amendment of
the exercise price of an option previously granted, whether through amendment,
cancellation or replacement grants, or any other means, unless the Company's
shareholders have approved such adjustment or amendment.
At any time after an option granted under Part I of the 1990 Stock Option
Plan becomes exercisable, the Board of Directors currently has the right, in its
sole discretion and without the consent of an optionee, to cancel the option and
pay to the optionee the excess of the fair market value of the common shares
covered by such option over the option exercise price at the date the Board
provides written notice of its intention to exercise such right. Such amount may
be paid in cash, in common shares of the Company, or partly in cash and partly
in common shares of the Company, as the Board deems advisable. To the extent
payment is made in common shares, the number of common shares is determined by
dividing the amount of the payment to be made by the fair market value of the
common shares on the date of the notice of election to the optionee. For
purposes of this provision, fair market value is equal to the mean of the high
and the low prices at which common shares of the Company were traded on the New
York Stock Exchange on the relevant date. If the proposed amendments to the
stock option plans are approved by the shareholders, this authority would be
lodged in the Committee rather than the Board of Directors.
NUMBER OF OPTIONS
Under the stock option plans as currently in effect, there is no maximum
number of options which can be granted to any one person except that no
individual may be granted ISOs under any of the plans if such grant would cause
the aggregate fair market value (determined as of the date the ISOs are granted)
of the common shares with respect to which ISOs are exercisable for the first
time by such optionee during any calendar year under all stock option plans
maintained by the Company and its subsidiaries to exceed $100,000.
Under the Proposed IRS Regulations, the maximum number of options which can
be granted during a specified period to any optionee must be specified in each
stock option plan. If the proposed amendments are
24
<PAGE> 28
approved by the shareholders, each stock option plan will be amended to provide
that no optionee can be granted options under that plan in any one fiscal year
covering more than five percent (5%) of the maximum number of common shares
authorized to be issued under that plan (as specified in the plan document).
EXERCISE AFTER TERMINATION OF EMPLOYMENT
During an optionee's lifetime, options are exercisable only by the
optionee. Under the existing plan provisions, options are not transferable and
expire upon termination of the optionee's employment for any reason other than
death or disability, in which event the estate of the deceased optionee (or the
optionee in the event of disability) has the right to exercise his or her
options for a period of six months after the date of death or disability,
including any options which become exercisable during such six month period. If
the proposed amendments are approved by the shareholders, all options held by
the optionee will become immediately exercisable on the date of death or
disability, and the estate of the deceased optionee (or the optionee in the
event of disability) will have the right to exercise his or her options for a
period of one year after the date of death or disability. In addition, an
optionee will have the right to exercise Non-Qualified Options for a period of
48 months and ISOs for a period of three months after the date the optionee
retires, including any options which become exercisable during such three or 48
month periods. Further, optionees whose employment with the Company or its
subsidiaries is terminated in connection with a disposition of one or more
restaurants will have the right to exercise Non-Qualified Options for a period
of one year and ISOs for a period of three months following termination of
employment, including any options which become exercisable during such three
month or one year periods. These amendments as to the exercisability of options
upon the termination of an optionee's employment with the Company and its
subsidiaries will only be applicable with respect to options granted after
February 23, 1994.
ADJUSTMENTS
In the event any dividend upon the common shares payable in shares is
declared by the Company, or in case of any subdivision or a combination of the
outstanding common shares, the aggregate number of common shares to be delivered
upon exercise of all options granted under the stock option plans will be
increased or decreased proportionately so that there will be no change in the
aggregate purchase price payable upon exercise of the options. In the event of
any other recapitalization or any reorganization, merger, consolidation or any
change in the corporate structure or stock of the Company, the Committee will
make such adjustment, if any, as it may deem appropriate to reflect accurately
the terms of the options as to the number and kind of shares deliverable upon
subsequent exercising of the options and in the option prices under the options.
AMENDMENT OR TERMINATION
The Board of Directors may amend or terminate each of the stock option
plans at any time, provided that the Board may not make any change in an
outstanding option which will impair the rights of the optionee therein, without
the consent of the optionee.
FEDERAL INCOME TAX CONSEQUENCES
Based on current provisions of the Code and the existing regulations
thereunder, the anticipated federal income tax consequences in respect of
options granted under the stock option plans are as described below. The
following discussion is not intended to be a complete statement of applicable
law and is based upon the federal income tax laws as in effect on the date
hereof.
ISOS
An optionee who is granted an ISO does not recognize taxable income either
on the date of grant or on the date of exercise. Upon the exercise of an ISO,
the difference between the fair market value of the common shares of the Company
received and the option price is a tax preference item potentially subject to
the alternative minimum tax. However, on the later sale or other disposition of
the common shares, generally only
25
<PAGE> 29
the difference between the fair market value of the common shares on the
exercise date and the amount realized on the sale or disposition is includable
in alternative minimum taxable income.
Upon disposition of common shares acquired from exercise of an ISO,
long-term capital gain or loss is generally recognized in an amount equal to the
difference between the amount realized on the sale or disposition and the
exercise price. However, if the optionee disposes of the common shares within
two years of the date of grant or within one year of the date of the transfer of
the common shares to the optionee (a "Disqualifying Disposition"), then the
optionee will recognize ordinary income, as opposed to capital gain, at the time
of disposition. In general, the amount of ordinary income recognized will be
equal to the lesser of (a) the amount of gain realized on the disposition, or
(b) the difference between the fair market value of the common shares received
on the date of exercise and the exercise price. Any remaining gain or loss is
treated as a short-term or long-term capital gain or loss, depending upon the
period of time the common shares have been held. The Company is not entitled to
a tax deduction upon either exercise of an ISO or disposition of common shares
acquired pursuant to such exercise, except to the extent that the optionee
recognizes ordinary income in a Disqualifying Disposition.
If an optionee pays the exercise price, in whole or in part, with
previously acquired common shares, the exchange should not affect the ISO tax
treatment of the exercise. Upon such exchange, and except as otherwise described
herein, no gain or loss is recognized by the optionee upon delivering previously
acquired common shares to the Company for payment of the exercise price. The
common shares received by the optionee, equal in number to the previously
acquired common shares exchanged therefor, will have the same basis and holding
period for long-term capital gain purposes as the previously acquired common
shares. The optionee, however, will not be able to utilize the prior holding
period for the purpose of satisfying the ISO statutory holding period
requirements. Common shares received by the optionee in excess of the number of
previously acquired common shares will have a basis of zero and a holding period
which commences as of the date the common shares are transferred to the optionee
upon exercise of the ISO. If the exercise of any ISO is effected using common
shares previously acquired through the exercise of an ISO, the exchange of such
previously acquired common shares will be considered a disposition of such
common shares for the purpose of determining whether a Disqualifying Disposition
has occurred.
NON-QUALIFIED OPTIONS
An optionee receiving a Non-Qualified Option does not recognize taxable
income on the date of grant of the Non-Qualified Option, provided that the
Non-Qualified Option does not have a readily ascertainable fair market value at
the time it is granted. In general, the optionee must recognize ordinary income
at the time of exercise of the Non-Qualified Option in the amount of the
difference between the fair market value of the common shares of the Company on
the date of exercise and the option price. The ordinary income recognized will
constitute compensation for which tax withholding generally will be required.
The amount of ordinary income recognized by an optionee will be deductible by
the Company in the year that the optionee recognizes the income if the Company
complies with the applicable withholding requirement.
If the sale of the common shares could subject the optionee to liability
under Section 16(b) of the Securities Exchange Act of 1934, as amended, the
optionee generally will recognize ordinary income only on the date that the
optionee is no longer subject to such liability in an amount equal to the fair
market value of the common shares on such date less the option price.
Nevertheless, the optionee may elect under Section 83(b) of the Code within 30
days of the date of exercise to recognize ordinary income as of the date of
exercise, without regard to the restriction of Section 16(b).
Common shares acquired upon exercise of a Non-Qualified Option will have a
tax basis equal to their fair market value on the exercise date or other
relevant date on which ordinary income is recognized, and the holding period for
the common shares generally will begin on the date of exercise or such other
relevant date. Upon subsequent disposition of the common shares, the optionee
will recognize long-term capital gain or loss if the optionee has held the
common shares for more than one year prior to disposition, or short-term capital
gain or loss if the optionee has held the common shares for one year or less.
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<PAGE> 30
If an optionee pays the exercise price, in whole or in part, with
previously acquired common shares, the optionee will recognize ordinary income
in the amount by which the fair market value of the common shares received
exceeds the exercise price. The optionee will not recognize gain or loss upon
delivering such previously acquired common shares to the Company. Common shares
received by an optionee, equal in number to the previously acquired common
shares exchanged therefor, will have the same basis and holding period for
long-term capital gain purposes as the previously acquired common shares. Common
shares received by an optionee in excess of the number of such previously
acquired common shares will have a basis equal to the fair market value of such
additional common shares as of the date ordinary income is recognized. The
holding period for such additional common shares will commence as of the date of
exercise or such other relevant date.
STOCK OPTION PLAN COVERING NON-EMPLOYEE DIRECTORS
- -------------------------------------------------
Part II of the 1990 Stock Option Plan governs the automatic grant of
options to the Non-Employee Directors of the Company. Only Non-Qualified Options
may be granted to Non-Employee Directors.
As of the date of this Proxy Statement, 44,978 common shares could be
issued under Part II of the 1990 Stock Option Plan. The common shares offered
under Part II of the 1990 Stock Option Plan may be either authorized but
unissued common shares or treasury shares. The number of common shares issuable
under Part II will be adjusted to include any additional common shares which may
result from any share distributions effected in the future by the Board of
Directors. If an option expires or terminates for any reason without having been
exercised in full, the unpurchased common shares will remain available for
issuance under Part II of the 1990 Stock Option Plan.
The following is a brief summary of the proposed amendments to, and of
certain other provisions of, Part II of the 1990 Stock Option Plan, which
summary is qualified in its entirety by reference to the copy of the 1990 Stock
Option Plan, as amended, attached to this Proxy Statement as Exhibit E.
NUMBER AND TERM OF OPTIONS
Under Part II of the 1990 Stock Option Plan, as currently in effect, each
year, each Non-Employee Director is automatically granted options covering that
number of common shares which is equal to fifty percent (50%) of the amount paid
to such director during the preceding fiscal year as director's fees (including
quarterly retainer fees and Board meeting fees but excluding committee meeting
fees and expense reimbursements), divided by the option exercise price and
rounded to the nearest whole share. Such options are granted on the date on
which the regularly scheduled Board meeting is held during the Company's third
fiscal quarter. If the proposed amendments are approved, each year, each
Non-Employee Director will automatically be granted options to purchase 1,100
common shares. The date on which such options are granted will not change.
Each option is granted for a term of ten years. Twenty-five percent (25%)
of the options granted each year become exercisable on each of the first four
anniversaries of the grant date for such options.
PURCHASE PRICE
The purchase price for all common shares covered by each option granted
under Part II of the 1990 Stock Option Plan is one hundred percent (100%) of the
fair market value of the common shares on the date of the grant. Fair market
value is determined in the same manner as under the stock option plans covering
key employees (see page 23). The manner of payment for common shares covered by
an option granted pursuant to Part II of the 1990 Stock Option Plan is also the
same (see page 23).
ADMINISTRATION
Part II of the 1990 Stock Option Plan will be administered by the
Committee. The authority of the Committee with respect to options granted to
Non-Employee Directors is limited to the making of administrative decisions and
interpretations of Part II of the 1990 Stock Option Plan.
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<PAGE> 31
EXERCISE FOLLOWING TERMINATION OF STATUS AS A DIRECTOR
During an optionee's lifetime, options are exercisable only by the
optionee. Options are not transferable, and under the current provisions of Part
II of the 1990 Stock Option Plan, options expire at such time as an optionee is
no longer a Non-Employee Director or employed by the Company other than by
reason of death or disability, in which event the estate of the deceased
optionee (or the optionee in the case of disability) has a right to exercise the
options granted under Part II of the 1990 Stock Option Plan for a period of six
months after the date of death or disability. If the proposed amendments are
approved, options will be exercisable for a period of 48 months if the optionee
retires as a Non-Employee Director or an employee of the Company, and all
options held will become immediately exercisable and may be exercised for a
period of one year after the date of death or disability, as applicable.
Retirement will be defined as termination of membership on the Company's Board
of Directors at or after attaining age 55 with at least ten years of service as
a member of the Board, other than by reason of death or disability or for cause.
These amendments as to the exercisability of options upon the termination of an
optionee's status as a Director will only be applicable with respect to options
granted after the amendments have been approved by the Company's shareholders.
AMENDMENT OR TERMINATION
The Board of Directors may amend or terminate Part II of the 1990 Stock
Option Plan at any time, provided that no change in outstanding options which
will impair the rights of an optionee may occur without the consent of the
optionee. In addition, no amendment which will (i) materially increase the
benefits accruing to participants, (ii) materially increase the number of common
shares which may be issued, (iii) materially modify the requirements as to
eligibility or participation, or (iv) otherwise amend Part II of the 1990 Stock
Option Plan in such manner that shareholder approval is necessary to comply with
any legal, tax or regulatory requirement, including any approval requirement
which is a prerequisite for exemption relief from Section 16(b) of the Exchange
Act, may occur without the approval of the shareholders of the Company. Part II
may not be amended more frequently than once every six months other than to
comport with changes in the Code or the rules thereunder or changes in the
Employee Retirement Income Security Act of 1974.
At any time after an option granted under Part II of the 1990 Stock Option
Plan becomes exercisable, the Board of Directors will have the right, in its
sole discretion and without the consent of the optionee, to cancel the option
and pay the optionee the excess of the fair market value of the common shares
covered by such option over the option exercise price at the date the Board
provides written notice of its intention to exercise such right. A Non-Employee
Director for whom the Board is considering making such buy-out payment cannot
participate in such decision. Payments of buy-out amounts, the number of common
shares to be issued where payment is made in common shares, and the method for
determining the fair market value of such common shares are determined in the
same manner as with respect to options granted to key employees under Part I of
the 1990 Stock Option Plan (see page 24).
FEDERAL INCOME TAX CONSEQUENCES
All of the options granted under Part II of the 1990 Stock Option Plan are
Non-Qualified Options. The federal income tax treatment for such Non-Qualified
Options is the same for both the Company and each optionee as set forth in the
discussion of Non-Qualified Options granted under the stock option plans
applicable to key employees of the Company.
VOTE REQUIRED
- -------------
The set of amendments applicable to each of the Company's stock option
plans is being submitted to a separate vote of the Company's shareholders. For
each stock option plan, the affirmative vote of the holders of a majority of the
common shares represented in person or by proxy is necessary to approve the
amendments to such plan. Under Ohio law and the Company's Code of Regulations,
abstentions and broker non-votes are counted as present; the effect of an
abstention or broker non-vote for each plan is the same as a "no" vote.
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<PAGE> 32
Unless otherwise indicated, the persons named in the Proxy will vote all Proxies
in favor of the approval of the amendments to each of the stock option plans.
APPROVAL OF PERFORMANCE GOALS OF THE
SENIOR EXECUTIVE EARNINGS MAXIMIZATION PLAN
The Compensation Committee has established, subject to the approval of the
Company's shareholders, the Senior Executive Earnings Maximization Plan (the
"SEEMP") to provide incentive cash compensation to certain of its senior
executives. Section 162(m) of the Code and the Proposed IRS Regulations
generally would disallow the Company a federal income tax deduction for
compensation in excess of $1 million paid in any year to any of those Executive
Officers included in the Summary Compensation Table who are employed by the
Company on the last day of the taxable year. Section 162(m) does not disallow a
deduction for payments of "performance-based compensation", the material terms
of which have been approved by shareholders. Payments under the SEEMP are
intended to be "performance-based compensation". The aggregate bonuses payable
to the Eligible Employees (as defined below) who participate in the SEEMP for
any fiscal year are intended to be comparable to amounts that would have been
expected to be paid to such Eligible Employees under the Company bonus plans in
which they previously participated. However, as more fully discussed below, the
SEEMP provides for bonuses on a fixed and predetermined basis (subject to the
Compensation Committee's discretion to reduce the amount provided by the fixed
formula).
The employees eligible (the "Eligible Employees") to participate in and
receive compensation under the SEEMP are Executive Officers with the titles of
Senior Chairman of the Board, Chairman of the Board, Chief Executive Officer,
President, Chief Operating Officer and Chief Financial Officer, provided that no
more than three Executive Officers are eligible to participate in the SEEMP in
any one fiscal year. The Compensation Committee will designate those Eligible
Employees who will participate in the SEEMP for any fiscal year. The
Compensation Committee has designated those Executive Officers occupying the
offices of Senior Chairman of the Board, Chairman of the Board and Chief
Executive Officer, and President and Chief Operating Officer, as participants in
the SEEMP for fiscal years 1994 through 1998. If, prior to the beginning of any
fiscal year, an Executive Officer is not occupying one of those offices, the
Compensation Committee, prior to the beginning of such fiscal year, will
designate one of the Eligible Employees not already a participant to participate
in the SEEMP for all remaining fiscal years through 1998.
The Compensation Committee has established Net Income (as defined below)
targets at three levels for each fiscal year through 1998. A bonus pool will be
established in a fiscal year only if the Company achieves one of those specified
targets for the fiscal year. The bonus pool for any fiscal year in which a
target is achieved will equal either 1%, 1.4%, or 1.75% of Net Income, depending
upon which target is achieved. "Net Income" means net income of the Company as
reflected in the Company's consolidated audited financial statements for the
applicable fiscal year. The Chief Executive Officer will receive 50% of the
bonus pool. The other Executive Officers participating in the SEEMP for that
fiscal year will each receive 25% of the bonus pool. To be eligible for a bonus
in respect of any fiscal year, a participant in the SEEMP must be employed by
the Company on the last day of such fiscal year unless the participant's
employment was terminated because of his or her death, disability or retirement,
in which event the participant will be entitled to a pro-rata portion of the
bonus otherwise payable in respect of that fiscal year. In no event can the
aggregate amount paid to all participants under the SEEMP for any fiscal year
exceed the amount of the bonus pool for that fiscal year. The Compensation
Committee has the discretion to reduce the bonus payment otherwise payable under
the SEEMP to any or all of the participants. Any portion of the bonus pool
established in respect of any fiscal year that is not paid to participants in
that fiscal year will not be paid to any Eligible Employee in that year or in
any succeeding fiscal year.
The amounts that will be received by each of the Eligible Employees (and as
a group) under the SEEMP cannot be determined at this time. The following table
sets forth the amounts which would have been received by each of the Eligible
Employees (and as a group) for the last completed fiscal year if the SEEMP had
been in effect instead of the principal bonus plan in which the individuals
actually participated in such fiscal year.
29
<PAGE> 33
<TABLE>
<CAPTION>
AMOUNT WHICH WOULD HAVE
NAME OF INDIVIDUAL BEEN RECEIVED OR
OR GROUP ALLOCATED
------------------------------------------------------ ------------------------
<S> <C>
James W. Near, Chairman of the Board and Chief
Executive Officer $693,586
R. David Thomas, Senior Chairman of the Board and
Founder $346,793
Gordon F. Teter, President and Chief Operating Officer $346,793
John K. Casey, Vice Chairman and Chief Financial
Officer Not Applicable
Edwin L. Ourant, Executive Vice President and
President -- Wendy's Restaurants of Canada Inc. Not Applicable
All Current Executive Officers as a Group $1,387,172
</TABLE>
No other employees or Non-Employee Directors would have been eligible to
receive benefits or allocations under the SEEMP if such plan had been in effect
for the last completed fiscal year. A copy of the SEEMP is attached to this
Proxy Statement as Exhibit F.
The affirmative vote of the holders of a majority of the common shares
represented in person or by proxy at the meeting is necessary to approve the
performance goals of the SEEMP. Under Ohio law and the Company's Code of
Regulations, abstentions and broker non-votes are counted as present; the effect
of an abstention or broker non-vote is the same as a "no" vote. Unless otherwise
indicated, the persons named in the Proxy will vote all Proxies in favor of
approving the performance goals of the SEEMP.
SELECTION OF AUDITORS
The Directors have selected Coopers & Lybrand as the auditors of the
Company for the current fiscal year. Management recommends that the shareholders
ratify the selection. This firm has audited the Company's books for each of the
last 24 years. Management expects that representatives of Coopers & Lybrand will
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the common shares
represented in person or by proxy is necessary to ratify the selection of the
Company's auditors. Under Ohio law and the Company's Code of Regulations,
abstentions and broker non-votes are counted as present; the effect of an
abstention or broker non-vote on this proposal is the same as a "no" vote.
Unless otherwise indicated, the persons named in the Proxy will vote all Proxies
in favor of ratifying the selection of auditors.
OTHER MATTERS
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the proxy statement distributed
to shareholders prior to the Annual Meeting in 1995 a shareholder proposal must
be received by the Company no later than November 17, 1994. Written requests for
inclusion should be addressed to: Corporate Secretary, P. O. Box 256, Dublin,
Ohio 43017-0256. It is suggested that you mail your proposal by certified mail,
return receipt requested.
A COPY OF FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WILL BE SENT TO ANY SHAREHOLDER WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED TO
INVESTOR RELATIONS DEPARTMENT, P. O. BOX 256, 4288 WEST DUBLIN-GRANVILLE ROAD,
DUBLIN, OHIO 43017-0256.
Management knows of no other business which may be brought before the
Annual Meeting of Shareholders. However, if any other matters shall properly
come before such meeting, it is the intention of the persons named in the
enclosed form of Proxy to vote such Proxy in accordance with their best judgment
on such matters.
30
<PAGE> 34
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN
AND RETURN THE PROXY IN THE ENCLOSED STAMPED, SELF-ADDRESSED ENVELOPE.
By order of the Board of Directors.
LAWRENCE E. SCHAUF
Secretary
31
<PAGE> 35
EXHIBIT A
WENDY'S INTERNATIONAL, INC.
1978 NON-QUALIFIED STOCK OPTION PLAN
(Reflects amendments through February 23, 1994)
Section 1. PURPOSE. This 1978 Non-Qualified Stock Option Plan (hereinafter
referred to as the "Plan") is intended as a means whereby key employees
(hereinafter referred to as "Employee" or "Employees" and "Optionee" or
"Optionees") of Wendy's International, Inc. (hereinafter referred to as the
"Company") or its subsidiaries (hereinafter referred to as the "Subsidiaries")
can each enlarge his proprietary interest in the Company, thereby assuring
closer identification of his interest with those of the Company and thereby
encouraging the judgment, initiative and efforts of the Employees for the
successful conduct of the Company's business.
Section 2. ADMINISTRATION OF THE PLAN. The Board of Directors of the
Company shall appoint a Compensation Committee (hereinafter referred to as the
"Committee") of not less than three (3) Directors to administer the Plan. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power at any time, or from time to time, to remove members from the
Committee or to add members thereto. No member of the Committee, while serving
as such, shall be eligible to participate in the Plan. The Committee shall
construe and interpret the Plan, establish such rules as it deems necessary for
the proper administration of the Plan and make such determinations and take such
other action in connection with the Plan as it deems necessary and advisable. It
shall determine the individuals to whom and the time or times at which Options
shall be granted, the number of shares to be subject to each Option, the Option
price and the duration of leaves of absence which may be granted to participants
without constituting a termination of their employment for the purposes of the
Plan. Any such construction, interpretation, rule, determination or other action
taken by the Committee pursuant to the Plan shall be binding and conclusive upon
the approval by the Board of Directors.
Actions by a majority of the Committee at a meeting at which a quorum is
present, or actions approved in writing by all of the members of the Committee,
shall be the valid acts of the Committee. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
The Committee shall have no authority to make any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of this Plan) or amendment
of the exercise price of an Option previously granted under this Plan, whether
through amendment, cancellation or replacement grants, or other means, unless
the Company's shareholders shall have approved such adjustment or amendment.
Section 3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN. Subject to any
adjustment as provided in the Plan, the shares to be offered under the Plan may
be, in whole or in part, authorized but unissued Common Shares of the Company,
or issued Common Shares which shall have been reacquired by the Company and held
by it as treasury shares. The aggregate number of Common Shares to be delivered
upon exercise of all Options granted under the Plan shall not exceed 200,000
shares. If any Option granted hereunder shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares with respect
thereto shall again be available for other Options to be granted under the Plan
unless the Plan shall have been terminated.
Section 4. SELECTION OF OPTIONEES. The Committee, from time to time,
subject to the terms and provisions of the Plan, may grant Options to any
present and future full-time key employees of the Company and of its present and
future Subsidiaries. In determining the persons to whom Options shall be granted
and the number of shares to be covered by each Option, the Committee may take
into account the nature of the services rendered by such persons, their present
and potential contributions to the success and growth of the Company and its
Subsidiaries, and such other factors as the Committee, in its discretion, shall
deem relevant. Any person who has been granted an Option under the Plan or under
a prior stock option plan of the Company may be granted an additional Option or
Options under the Plan if the Committee shall so determine.
A-1
<PAGE> 36
Section 5. OPTION PRICE. The purchase price for the shares covered by each
Option granted shall be not less than one hundred percent (100%) of the fair
market value of the shares on the date of the grant of the Option. Such fair
market value shall be equal to the mean of the high and low prices at which
Common Shares of the Company are traded on the New York Stock Exchange on such
date.
Section 6. OPTION REQUIREMENTS. The Options granted pursuant to the Plan
shall be authorized by the Committee and shall be evidenced in writing in a form
recommended by the Committee and approved by the Board of Directors and shall
include the following terms and conditions:
(a) OPTIONEE. Each Option shall state the name of the Optionee.
(b) NUMBER OF SHARES. Each Option shall state the number of shares to
which that Option pertains. During any fiscal year of the Company, no
Optionee shall be granted Options covering more than five percent (5%) of
the maximum number of Common Shares which may be issued upon exercise of
Options granted under the Plan.
(c) PURCHASE PRICE. Each option shall state the Option price, which
shall be not less than one hundred percent (100%) of the fair market value
of the shares covered by such Option on the date of the grant of such
Option.
(d) PAYMENT. Each Option shall state that the Option price shall be
payable upon the exercise of the Option and may be paid in cash or by check
in United States Dollars.
(e) LENGTH OF OPTION. Each Option shall be granted for a period to be
determined by the Committee but in no event to exceed more than 10 years.
However, subject to Sections 9 and 10, each Option shall be exercisable
only during such portion of its term as the Committee shall determine, and
only if the Optionee is employed by the Company and the Subsidiary of the
Company at the time of such exercise.
(f) EXERCISE OF OPTION. Each Optionee shall have the right to
exercise his Option in the manner specified in the agreement evidencing the
granting of such Option.
Section 7. METHOD OF EXERCISE OF OPTIONS. Each Option shall be exercised
pursuant to the terms of such Option and pursuant to the terms of the Plan by
giving written notice to the Company at its principal place of business,
accompanied by cash or a check in payment of the Option price for the number of
shares specified and paid for. The Company shall make delivery of such shares as
soon as possible; provided, however, that if any law or regulation requires the
Company to take action with respect to the shares specified in such notice
before issuance thereof, the date of delivery of such shares shall then be
extended for the period necessary to take such action.
Section 8. NON-TRANSFERABILITY OF OPTIONS. During the Optionee's lifetime,
the Options shall be exercised only by him. The Options shall not be
transferable and shall terminate as provided in this Plan.
Section 9. EARLIER TERMINATION OF OPTIONS. Except as set forth in Section
10, upon the termination of the Optionee's employment for any reason whatsoever,
the Options will terminate as to all shares covered by Options which have not
yet been exercised as of the date of such termination.
Section 10.
(a) EXERCISE UPON DEATH OR DISABILITY. In the event an Optionee dies
while employed by the Company or a Subsidiary, then all Options held by the
Optionee shall become immediately exercisable as of the date of death, and
the estate of the deceased Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of
one year after the date of the Optionee's death, with exercise to be made
as set forth in Section 7.
In the event an Optionee becomes Disabled while employed by the
Company or a Subsidiary, then all Options held by the Optionee shall become
immediately exercisable as of the date the Optionee becomes Disabled, and
the Optionee (or, in the event the Optionee is incapacitated and unable to
exercise Options, the Optionee's legal guardian or legal representative
whom the Committee deems
A-2
<PAGE> 37
appropriate based on applicable facts and circumstances) shall have the
right to exercise any rights the Optionee would otherwise have under this
Plan for a period of one year after the date the Optionee becomes Disabled,
with exercise to be made as set forth in Section 7.
(b) EXERCISE UPON RETIREMENT. In the event an Optionee's employment
with the Company and its Subsidiaries is terminated by reason of the
Optionee's retirement, the Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of 48
months after the date the Optionee retires, with exercise to be made as set
forth in Section 7. For purposes of this Section 10(b), "retirement" shall
mean termination of employment at or after attaining age 55 with at least
ten (10) years of service (as defined in the Company's qualified retirement
plans), other than by reason of death or Disability or for cause.
(c) EXERCISE UPON TERMINATION OF EMPLOYMENT IN CONNECTION WITH A
DISPOSITION OF RESTAURANTS. In the event an Optionee's employment with the
Company and its Subsidiaries is terminated without cause in connection with
a disposition of one or more restaurants by the Company or its
Subsidiaries, the Optionee shall have the right to exercise any rights the
Optionee would otherwise have under this Plan for a period of one year
following the Optionee's termination of employment, with exercise to be
made as set forth in Section 7.
Section 11. REVOCATION OF THE PLAN AND OPTIONS. This Plan and the various
Options granted, but not yet exercised hereunder, are revocable at the
discretion of the Board of Directors.
Section 12. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN. In the event
any dividend upon the Common Shares payable in shares is declared by the
Company, or in case of any subdivision or combination of the outstanding Common
Shares, the number of shares allotted under the Plan for Options already granted
shall be increased or decreased proportionately so that there will be no change
in the aggregate purchase price payable upon the exercise of the Options. In the
event of any other recapitalization or any reorganization, merger, consolidation
or any other change in the corporate structure or stock of the Company, the
Committee shall make such adjustment, if any, as it may deem appropriate to
accurately reflect the terms of the Options as to the number and kind of shares
available under the Plan and the number and kind of shares deliverable upon
subsequent exercising of the Options and in the Option prices under the Options.
Section 13. LISTING AND REGISTRATION OF SHARES. If at any time the Board
of Directors shall deem it necessary that listing, registration or qualification
of the shares covered by the Options upon any securities exchange or under any
state or federal law or the consent or the approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with the purchase of shares under the Options, the Options may not be exercised
in whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable by the Board.
Section 14. RIGHT AS SHAREHOLDER. Neither the Optionee, nor his executor,
administrator, heirs, or legatees, shall be or have any rights or privileges of
a shareholder of the Company in respect to the shares transferable upon exercise
of any Option granted hereunder, unless and until certificates representing such
shares shall have been endorsed, transferred and delivered and the transferee
has caused his name to be entered as the shareholder of record on the books of
the Company.
Section 15. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
Section 16. AMENDMENT OR TERMINATION. The Board of Directors may amend or
terminate the Plan at any time, provided that the Board shall not (except as
provided in Sections 9, 10, 11 and 12 hereof) make any change in the Options
which will impair the rights of the Optionee therein, without the consent of the
Optionee.
Section 17. LAWS GOVERNING PLAN. This Plan shall be construed under and
governed by the laws of the State of Ohio.
Section 18. CAPTIONS. The captions to the several sections hereof are not
a part of this Plan, but are merely guides or labels to assist in locating and
reading the several sections hereof.
A-3
<PAGE> 38
EXHIBIT B
WENDY'S INTERNATIONAL, INC.
1982 STOCK OPTION PLAN
(Reflects amendments through February 23, 1994)
Section 1. PURPOSE. This 1982 Stock Option Plan (hereinafter referred to
as the "Plan") is intended as a means whereby key employees (hereinafter
referred to as "Employee" or "Employees" and "Optionee" or "Optionees") of
Wendy's International, Inc. (hereinafter referred to as the "Company") or its
subsidiaries (hereinafter referred to as the "Subsidiaries") can each enlarge
his proprietary interest in the Company, thereby encouraging the judgment,
initiative and efforts of the Employees for the successful conduct of the
Company's business.
Section 2. ADMINISTRATION OF THE PLAN. The Board of Directors of the
Company shall appoint a Compensation Committee (hereinafter referred to as the
"Committee") of not less than three (3) Directors to administer the Plan. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power at any time, or from time to time, to remove members from the
Committee or to add members thereto. No member of the Committee, while serving
as such, shall be eligible to participate in the Plan. The Committee shall
construe and interpret the Plan, establish such rules as it deems necessary for
the proper administration of the Plan and make such determinations and take such
other action in connection with the Plan as it deems necessary and advisable. It
shall determine the individuals to whom and the time or times at which Options
shall be granted, the number of shares to be subject to each Option, the Option
price and the duration of leaves of absence which may be granted to participants
without constituting a termination of their employment for the purposes of the
Plan. Any such construction, interpretation, rule, determination or other action
taken by the Committee pursuant to the Plan shall be binding and conclusive upon
the approval by the Board of Directors.
Actions by a majority of the Committee at a meeting at which a quorum is
present, or actions approved in writing by all of the members of the Committee,
shall be the valid acts of the Committee. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
The Committee shall have no authority to make any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of this Plan) or amendment
of the exercise price of an Option previously granted under this Plan, whether
through amendment, cancellation or replacement grants, or other means, unless
the Company's shareholders shall have approved such adjustment or amendment.
Section 3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN. Subject to any
adjustment as provided in the Plan, the shares to be offered under the Plan may
be, in whole or in part, authorized but unissued Common Shares of the Company,
or issued Common Shares which shall have been reacquired by the Company and held
by it as treasury shares. The aggregate number of Common Shares to be delivered
upon exercise of all Options granted under the Plan shall not exceed 400,000. If
any Option granted hereunder shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares with respect thereto shall
again be available for other Options to be granted under the Plan unless the
Plan shall have been terminated.
Section 4. SELECTION OF OPTIONEES. The Committee, from time to time,
subject to the terms and provisions of the Plan, may grant Options to any
present and future full-time key employees of the Company and of its present and
future Subsidiaries. In determining the persons to whom Options shall be granted
and the number of shares to be covered by each Option, the Committee may take
into account the nature of the services rendered by such persons, their present
and potential contributions to the success and growth of the Company and its
Subsidiaries, and such other factors as the Committee, in its discretion, shall
deem relevant. Any person who has been granted an Option under a prior stock
option plan of the Company may be granted an additional Option or Options under
the Plan if the Committee shall so determine.
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Section 5. OPTION PRICE. The purchase price for the shares covered by each
Option granted shall be not less than one hundred percent (100%) of the fair
market value of the shares on the date of the grant of the Option. Such fair
market value shall be equal to the mean of the high and low prices at which
Common Shares of the Company are traded on the New York Stock Exchange on such
date.
Section 6. OPTION REQUIREMENTS. The Options granted pursuant to the Plan
shall be authorized by the Committee and shall be evidenced in writing in a form
recommended by the Committee and approved by the Board of Directors and shall
include the following terms and conditions:
(a) OPTIONEE. Each Option shall state the name of the Optionee.
(b) NUMBER OF SHARES. Each Option shall state the number of shares to
which that Option pertains. During any fiscal year of the Company, no
Optionee shall be granted Options covering more than five percent (5%) of
the maximum number of Common Shares which may be issued upon exercise of
Options granted under the Plan.
(c) PURCHASE PRICE. Each Option shall state the Option price, which
shall be not less than one hundred percent (100%) of the fair market value
of the shares covered by such Option on the date of grant of such Option.
See Section 5, Option Price.
(d) PAYMENT. Each Option shall state that the Option price shall be
payable upon the exercise of the Option and may be paid in cash, or by
check in United States Dollars, or by the surrender of a sufficient number
of shares of stock in the Company, based on fair market value of such
shares on the date of exercise. See Section 5.
(e) LENGTH OF OPTION. Each Option shall be granted for a period to be
determined by the Committee but in no event to exceed more than 10 years.
However, subject to Sections 9 and 10, each Option shall be exercisable
only during such portion of its term as the Committee shall determine, and
only if the Optionee is employed by the Company or a Subsidiary of the
Company at the time of such exercise.
(f) EXERCISE OF OPTION. Each Optionee shall have the right to
exercise his Option in the manner specified in the agreement evidencing the
granting of such Option.
(g) No Option shall be exercisable while there is outstanding any
qualified stock option (as defined in Section 422 of the 1954 Internal
Revenue Code), incentive stock option (as defined in Section 422A of the
1954 Internal Revenue Code), or restricted stock option (as defined in
Section 424 of the 1954 Internal Revenue Code), which qualified, incentive
or restricted stock option was granted before the granting of such other
Option, to the person to whom such other Option is granted to purchase
stock in the Company or in a company, which, at the time such other Option
is granted, is a parent or subsidiary company (as those terms are defined
in Section 425 of the 1954 Internal Revenue Code) of the Company or is a
predecessor corporation of the Company or of such parent or subsidiary
company. If the outstanding qualified, incentive or restricted stock
options or such other Options granted to the same Optionee are to purchase
stock of the same class in the same corporation, the immediately preceding
sentence shall apply with respect to an outstanding qualified or restricted
stock option only if the purchase price of such outstanding Option is
higher than the purchase price of such other Option.
This subparagraph 6(g) shall not apply to any grant made after
January 2, 1987.
Section 7. METHOD OF EXERCISE OF OPTIONS. Each Option shall be exercised
pursuant to the terms of such Option and pursuant to the terms of the Plan by
giving written notice to the Company at its principal place of business,
accompanied by cash, check, or shares, in payment of the Option price for the
number of shares specified and paid for. The Company shall make delivery of such
shares as soon as possible; provided, however, that if any law or regulation
requires the Company to take action with respect to the shares specified in such
notice before issuance thereof, the date of delivery of such shares shall then
be extended for the period necessary to take such action.
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Section 8. NON-TRANSFERABILITY OF OPTIONS. During the Optionee's lifetime,
the Options shall be exercised only by him. The Options shall not be
transferable and shall terminate as provided in this Plan.
Section 9. EARLIER TERMINATION OF OPTIONS. Except as set forth in Section
10, upon the termination of the Optionee's employment for any reason whatsoever,
the Options will terminate as to all shares covered by Options which have not
yet been exercised as to the date of such termination.
Section 10.
(a) EXERCISE UPON DEATH OR DISABILITY. In the event an Optionee dies
while employed by the Company or a Subsidiary, then all Options held by the
Optionee shall become immediately exercisable as of the date of death, and
the estate of the deceased Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of
one year after the date of the Optionee's death, with exercise to be made
as set forth in Section 7.
In the event an Optionee becomes Disabled while employed by the
Company or a Subsidiary, then all Options held by the Optionee shall become
immediately exercisable as of the date the Optionee becomes Disabled, and
the Optionee (or, in the event the Optionee is incapacitated and unable to
exercise Options, the Optionee's legal guardian or legal representative
whom the Committee deems appropriate based on applicable facts and
circumstances) shall have the right to exercise any rights the Optionee
would otherwise have under this Plan for a period of one year after the
date the Optionee becomes Disabled, with exercise to be made as set forth
in Section 7.
(b) EXERCISE UPON RETIREMENT. In the event an Optionee's employment
with the Company and its Subsidiaries is terminated by reason of the
Optionee's retirement, the Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of 48
months after the date the Optionee retires in the case of non-qualified
stock options and for a period of three months after the date the Optionee
retires in the case of Incentive Stock Options, in each case with exercise
to be made as set forth in Section 7. In the event that an Optionee does
not exercise the Optionee's Incentive Stock Options prior to the expiration
of the three-month period after the date the Optionee retires, such Options
shall be treated as non-qualified stock options upon exercise by the
Optionee after such three-month period. For purposes of this Section 10(b),
"retirement" shall mean termination of employment at or after attaining age
55 with at least ten (10) years of service (as defined in the Company's
qualified retirement plans), other than by reason of death or Disability or
for cause.
(c) EXERCISE UPON TERMINATION OF EMPLOYMENT IN CONNECTION WITH A
DISPOSITION OF RESTAURANTS. In the event an Optionee's employment with the
Company and its Subsidiaries is terminated without cause in connection with
a disposition of one or more restaurants by the Company or its
Subsidiaries, the Optionee shall have the right to exercise any rights the
Optionee would otherwise have under this Plan for a period of one year
following the Optionee's termination of employment in the case of
non-qualified stock options and for a period of three months following the
Optionee's termination of employment in the case of Incentive Stock
Options, in each case with exercise to be made as set forth in Section 7.
Section 11. INCENTIVE STOCK OPTIONS. Options granted pursuant to this Plan
may include Incentive Stock Options (as defined in Section 422A of the 1954
Internal Revenue Code).
A. Notwithstanding Section 4, above, no Incentive Stock Option shall
be granted to an individual owning stock possessing more than ten percent
(10%) of the total combined voting power of the Company, or its parent or
subsidiary corporations, unless (i) the Option price at the time such
Option is granted is at least one hundred ten percent (110%) of the fair
market value of the shares subject to the Option, and (ii) such Option by
its terms is not exercisable after the expiration of five (5) years from
the date such Option is granted.
B. There shall not be granted to an individual, Incentive Stock
Options for stock having an aggregate fair market value (determined as of
the time the Options are granted) in excess of $100,000 in any one calendar
year, plus any carryover amount provided for in this subparagraph. The
carryover amount allowed for an individual shall be one-half of the amount
by which $100,000 exceeds the aggregate fair market value of stock for
which Incentive Stock Options were granted in the prior calendar year. Fair
market value for purposes of this subparagraph shall be determined as of
the time of grant of
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<PAGE> 41
such Options. (See Section 5.) Such amounts may be carried over three (3)
years. Options granted in any year shall use all of the $100,000 current
year limitation first, and then the carryover from the earliest year in
which carryover arose.
C. With respect to Incentive Stock Options granted on or after January
1, 1987, subsection (B) shall not apply. Instead, with respect to Incentive
Stock Options granted on or after January 1, 1987, the aggregate fair
market value (determined at the time the Option is granted) of the stock
with respect to which Incentive Stock Options are exercisable for the first
time by the individual during any calendar year (under all such plans of
the Company and the Subsidiaries) shall not exceed $100,000.
Section 12. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN. In the event
any dividend upon the Common Shares payable in shares is declared by the
Company, or in case of any subdivision or combination of the outstanding Common
Shares, the aggregate number of Common Shares to be delivered upon exercise of
all Options granted under the Plan shall be increased or decreased
proportionately so that there will be no change in the aggregate purchase price
payable upon the exercise of the Options. In the event of any other
recapitalization or any reorganization, merger, consolidation or any change in
the corporate structure or stock of the Company, the Committee shall make such
adjustment, if any, as it may deem appropriate to accurately reflect the terms
of the Options as to the number and kind of shares deliverable upon subsequent
exercising of the Options and in the Option prices under the Options.
Section 13. LISTING AND REGISTRATION OF SHARES. If at any time the Board
of Directors shall deem it necessary that listing, registration or qualification
of the shares covered by the Options upon any securities exchange or under any
state or federal law or the consent or the approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with the purchase of shares under the Options, the Options may not be exercised
in whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable by the Board.
Section 14. RIGHT AS SHAREHOLDER. Neither the Optionee, nor his executor,
administrator, heirs, or legatees, shall be or have any rights or privileges of
a shareholder of the Company in respect to the shares transferable upon exercise
of any Option granted hereunder, unless and until certificates representing such
shares shall have been endorsed, transferred and delivered and the transferee
has caused his name to be entered as the shareholder of record on the books of
the Company.
Section 15. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
Section 16. MERGER, CONSOLIDATION, ETC. In the event that the Company is a
party to a plan or agreement for merger or consolidation or reclassification of
its securities or the exchange of its securities for the securities of another
person which has acquired the Company's assets or which is in control (as
defined in Section 360(c) of the Internal Revenue Code of 1954) of a person
which has acquired the Company's assets where the terms of such plan or
agreement are binding upon all shareholders of the Company, except to the extent
that dissenting shareholders may be entitled to relief under Section 1701.85 of
the Ohio Revised Code, then Options granted and outstanding pursuant to the Plan
for more than six months, notwithstanding the date of exercise fixed in the
grant of such Options, shall become immediately exercisable and each Optionee
shall be entitled to receive, upon payment of the amount required for exercise
of each Option, securities or cash consideration, or both, equal to those the
Optionee would have been entitled to receive under such plan or agreement if the
Optionee had already exercised such Option.
Section 17. AMENDMENT OR TERMINATION. The Board of Directors may amend or
terminate the Plan at any time, provided that the Board shall not (except as
provided in Sections 9, 10 and 12 hereof) make any change in the Options which
will impair the rights of the Optionee therein, without the consent of the
Optionee.
Section 18. LAWS GOVERNING PLAN. This Plan shall be construed under and
governed by the laws of the State of Ohio.
Section 19. CAPTIONS. The captions to the several sections hereof are not
a part of this Plan, but are merely guides or labels to assist in locating and
reading the several sections hereof.
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<PAGE> 42
EXHIBIT C
WENDY'S INTERNATIONAL, INC.
1984 STOCK OPTION PLAN
(Reflects amendments through February 23, 1994)
Section 1. PURPOSE. This 1984 Stock Option Plan (hereinafter referred to
as the "Plan") is intended as a means whereby key employees (hereinafter
referred to as "Employee" or "Employees" and "Optionee" or "Optionees") of
Wendy's International, Inc. (hereinafter referred to as the "Company") or its
subsidiaries (hereinafter referred to as the "Subsidiaries") can each enlarge
his proprietary interest in the Company, thereby encouraging the judgment,
initiative and efforts of the Employees for the successful conduct of the
Company's business.
Section 2. ADMINISTRATION OF THE PLAN. The Board of Directors of the
Company shall appoint a Compensation Committee (hereinafter referred to as the
"Committee") of not less than three (3) Directors to administer the Plan. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power at any time, or from time to time, to remove members from the
Committee or to add members thereto. No member of the Committee, while serving
as such, shall be eligible to participate in the Plan. The Committee shall
construe and interpret the Plan, establish such rules as it deems necessary for
the proper administration of the Plan and make such determinations and take such
other action in connection with the Plan as it deems necessary and advisable. It
shall determine the individuals to whom and the time or times at which Options
shall be granted, the number of shares to be subject to each Option, the Option
price and the duration of leaves of absence which may be granted to participants
without constituting a termination of their employment for purposes of the Plan.
Any such construction, interpretation, rule, determination or other action taken
by the Committee pursuant to the Plan shall be binding and conclusive upon the
approval by the Board of Directors.
Actions by a majority of the Committee at a meeting at which a quorum is
present, or actions approved in writing by all of the members of the Committee,
shall be the valid acts of the Committee. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
The Committee shall have no authority to make any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of this Plan) or amendment
of the exercise price of an Option previously granted under this Plan, whether
through amendment, cancellation or replacement grants, or other means, unless
the Company's shareholders shall have approved such adjustment or amendment.
Section 3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN. Subject to any
adjustment as provided in the Plan, the shares to be offered under the Plan may
be, in whole or in part, authorized but unissued Common Shares of the Company,
or issued Common Shares which shall have been reacquired by the Company and held
by it as treasury shares. The aggregate number of Common Shares to be delivered
upon exercise of all Options granted under the Plan shall not exceed 300,000,
plus the amount of any additional Common Shares which may result from any share
distributions effected after the approval of this Plan by the Board of Directors
of the Company. If any Option granted hereunder shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares with
respect thereto shall again be available for other Options to be granted under
the Plan unless the Plan shall have been terminated.
Section 4. SELECTION OF OPTIONEES. The Committee, from time to time,
subject to the terms and provisions of the Plan, may grant Options to any
present and future full-time key employees of the Company and of its present and
future Subsidiaries. In determining the persons to whom Options shall be granted
and the number of shares to be covered by each Option, the Committee may take
into account the nature of the services rendered by such persons, their present
and potential contributions to the success and growth of the Company and its
Subsidiaries, and such other factors as the Committee, in its discretion, shall
deem relevant. Any person who has been granted an Option under a prior stock
option plan of the Company may be granted an additional Option or Options under
the Plan if the Committee shall so determine.
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<PAGE> 43
Section 5. OPTION PRICE. The purchase price for the shares covered by each
Option granted shall be not less than one hundred percent (100%) of the fair
market value of the shares on the date of the grant of the Option. Such fair
market value shall be equal to the mean of the high and low prices at which
Common Shares of the Company are traded on the New York Stock Exchange on such
date.
Section 6. OPTION REQUIREMENTS. The Options granted pursuant to the Plan
shall be authorized by the Committee and shall be evidenced in writing in a form
recommended by the Committee and approved by the Board of Directors and shall
include the following terms and conditions:
(a) OPTIONEE. Each Option shall state the name of the Optionee.
(b) NUMBER OF SHARES. Each Option shall state the number of shares to
which that Option pertains. During any fiscal year of the Company, no
Optionee shall be granted Options covering more than five percent (5%) of
the maximum number of Common Shares which may be issued upon exercise of
Options granted under the Plan.
(c) PURCHASE PRICE. Each Option shall state the Option price, which
shall be not less than one hundred percent (100%) of the fair market value
of the shares covered by such Option on the date of the grant of such
Option. See Section 5, Option Price.
(d) PAYMENT. Each Option shall state that the Option price shall be
payable upon the exercise of the Option and may be paid in cash or by check
in United States Dollars, or by the surrender of a sufficient number of
shares of stock in the Company, based on fair market value of such shares
on the date of exercise. See Section 5.
(e) LENGTH OF OPTION. Each Option shall be granted for a period to be
determined by the Committee but in no event to exceed more than 10 years.
However, subject to Sections 9 and 10, each Option shall be exercisable
only during such portion of its term as the Committee shall determine, and
only if the Optionee is employed by the Company or a Subsidiary of the
Company at the time of such exercise.
(f) EXERCISE OF OPTION. Each Optionee shall have the right to
exercise his or her Option in the manner specified in the agreement
evidencing granting of such Option.
(g) No Option shall be exercisable while there is outstanding any
qualified stock option (as defined in Section 422 of the Internal Revenue
Code of 1954, as amended (the "Code")), incentive stock option, (as defined
in Section 422A of the Code) or restricted stock option (as defined in
Section 424 of the Code), which qualified, incentive or restricted stock
option was granted before the granting of such other Option, to the person
to whom such other Option is granted to purchase stock in the Company or in
a company, which, at the time such other Option is granted, is a parent or
subsidiary (as those terms are defined in Section 425 of the Code) of the
Company or is a predecessor corporation of the Company or of such parent or
subsidiary. If the outstanding qualified, incentive or restricted stock
options or such other Options granted to the same Optionee are to purchase
stock of the same class in the same corporation, the immediately preceding
sentence shall apply with respect to an outstanding qualified or restricted
stock option only if the purchase price of such outstanding Option is
higher than the purchase price of such other Option.
This subparagraph 6(g) shall not apply to any grant made after
January 2, 1987.
Section 7. METHOD OF EXERCISE OF OPTIONS. Each Option shall be exercised
pursuant to the terms of such Option and pursuant to the terms of the Plan by
giving written notice to the Company at its principal place of business,
accompanied by cash, check, or shares, in payment of the Option price for the
number of shares specified and paid for. The Company shall make delivery of such
shares as soon as possible; provided, however, that if any law or regulation
requires the Company to take action with respect to the shares specified in such
notice before issuance thereof, the date of delivery of such shares shall then
be extended for the period necessary to take such action.
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<PAGE> 44
Section 8. NON-TRANSFERABILITY OF OPTIONS. During the Optionee's lifetime,
the Options shall be exercised only by him. The Options shall not be
transferable and shall terminate as provided in this Plan.
Section 9. EARLIER TERMINATION OF OPTIONS. Except as set forth in Section
10, upon the termination of the Optionee's employment for any reason whatsoever,
the Options will terminate as to all shares covered by Options which have not
yet been exercised as to the date of such termination.
Section 10.
(a) EXERCISE UPON DEATH OR DISABILITY. In the event an Optionee dies
while employed by the Company or a Subsidiary, then all Options held by the
Optionee shall become immediately exercisable as of the date of death, and
the estate of the deceased Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of
one year after the date of the Optionee's death, with exercise to be made
as set forth in Section 7.
In the event an Optionee becomes Disabled while employed by the
Company or a Subsidiary, then all Options held by the Optionee shall become
immediately exercisable as of the date the Optionee becomes Disabled, and
the Optionee (or, in the event the Optionee is incapacitated and unable to
exercise Options, the Optionee's legal guardian or legal representative
whom the Committee deems appropriate based on applicable facts and
circumstances) shall have the right to exercise any rights the Optionee
would otherwise have under this Plan for a period of one year after the
date the Optionee becomes Disabled, with exercise to be made as set forth
in Section 7.
(b) EXERCISE UPON RETIREMENT. In the event an Optionee's employment
with the Company and its Subsidiaries is terminated by reason of the
Optionee's retirement, the Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of 48
months after the date the Optionee retires in the case of non-qualified
stock options and for a period of three months after the date the Optionee
retires in the case of Incentive Stock Options, in each case with exercise
to be made as set forth in Section 7. In the event that an Optionee does
not exercise the Optionee's Incentive Stock Options prior to the expiration
of the three-month period after the date the Optionee retires, such Options
shall be treated as non-qualified stock options upon exercise by the
Optionee after such three-month period. For purposes of this Section 10(b),
"retirement" shall mean termination of employment at or after attaining age
55 with at least ten (10) years of service (as defined in the Company's
qualified retirement plans), other than by reason of death or Disability or
for cause.
(c) EXERCISE UPON TERMINATION OF EMPLOYMENT IN CONNECTION WITH A
DISPOSITION OF RESTAURANTS. In the event an Optionee's employment with the
Company and its Subsidiaries is terminated without cause in connection with
a disposition of one or more restaurants by the Company or its
Subsidiaries, the Optionee shall have the right to exercise any rights the
Optionee would otherwise have under this Plan for a period of one year
following the Optionee's termination of employment in the case of
non-qualified stock options and for a period of three months following the
Optionee's termination of employment in the case of Incentive Stock
Options, in each case with exercise to be made as set forth in Section 7.
Section 11. INCENTIVE STOCK OPTIONS. Options granted pursuant to this Plan
may include Incentive Stock Options (as defined in Section 422A of the Code).
A. Notwithstanding Section 4, above, no Incentive Stock Option shall
be granted to an individual owning stock possessing more than ten percent
(10%) of the total combined voting power of the Company, or its parent or
subsidiary corporations, unless (i) the Option price at the time such
Option is granted is at least one hundred ten percent (110%) of the fair
market value of the shares subject to the Option, and (ii) such Option by
its terms is not exercisable after the expiration of five (5) years from
the date such Option is granted.
B. There shall not be granted to an individual, Incentive Stock
Options for stock having an aggregate fair market value (determined as of
the time the Options are granted) in excess of $100,000 in any one calendar
year, plus any carryover amount provided for in this subparagraph. The
carryover amount allowed for an individual shall be one-half of the amount
by which $100,000 exceeds the
C-3
<PAGE> 45
aggregate fair market value of stock for which Incentive Stock Options were
granted in the prior calendar year. Fair market value for purposes of this
subparagraph shall be determined as of the time of grant of such Options.
(See Section 5.) Such amounts may be carried over three (3) years. Options
granted in any year shall use all of the $100,000 current year limitation
first, and then the carryover from the earliest year in which carryover
arose.
C. With respect to Incentive Stock Options granted on or after January
1, 1987, subsection (B) shall not apply. Instead, with respect to Incentive
Stock Options granted on or after January 1, 1987, the aggregate fair
market value (determined at the time the Option is granted) of the stock
with respect to which Incentive Stock Options are exercisable for the first
time by the individual during any calendar year (under all such plans of
the Company and the subsidiaries) shall not exceed $100,000.
Section 12. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN. In the event
any dividend upon the Common Shares payable in shares is declared by the
Company, or in case of any subdivision or combination of the outstanding Common
Shares, the aggregate number of Common Shares to be delivered upon exercise of
all Options granted under the Plan shall be increased or decreased
proportionately so that there will be no change in the aggregate purchase price
payable upon the exercise of the Options. In the event of any other
recapitalization or any reorganization, merger, consolidation or any change in
the corporate structure or stock of the Company, the Committee shall make such
adjustment, if any, as it may deem appropriate to accurately reflect the terms
of the Options as to the number and kind of shares deliverable upon subsequent
exercising of the Options and in the Option prices under the Options.
Section 13. LISTING AND REGISTRATION OF SHARES. If at any time the Board
of Directors shall deem it necessary that listing, registration or qualification
of the shares covered by the Option upon any securities exchange or under any
state or federal law or the consent or the approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with the purchase of shares under the Option, the Option may not be exercised in
whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable by the Board.
Section 14. RIGHT AS SHAREHOLDER. Neither the Optionee, nor his executor,
administrator, heirs, or legatees, shall be or have any rights or privileges of
a shareholder of the Company in respect to the shares transferable upon exercise
of any Option granted hereunder, unless and until certificates representing such
shares shall have been endorsed, transferred and delivered and the transferee
has caused his name to be entered as the shareholder of record on the books of
the Company.
Section 15. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
Section 16. MERGER, CONSOLIDATION, ETC. In the event that the Company is a
party to a plan or agreement for merger or consolidation or reclassification of
its securities or the exchange of its securities for the securities of another
person which has acquired the Company's assets or which is in control (as
defined in Section 360(c) of the Code) of a person which has acquired the
Company's assets, where the terms of such plan or agreement are binding upon all
shareholders of the Company, except to the extent that dissenting shareholders
may be entitled to relief under Section 1701.85 of the Ohio Revised Code, then
Options granted and outstanding pursuant to the Plan for more than six (6)
months, notwithstanding the date of exercise fixed in the grant of such Options,
shall become immediately exercisable and each Optionee shall be entitled to
receive, upon payment of the amount required for exercise of each Option,
securities or cash consideration, or both, equal to those the Optionee would
have been entitled to receive under such plan or agreement if the Optionee had
already exercised such Option.
Section 17. AMENDMENT OR TERMINATION.The Board of Directors may amend or
terminate the Plan at any time, provided that the Board shall not (except as
provided in Sections 9, 10 and 12 hereof) make any change in the Options which
will impair the rights of the Optionee therein, without the consent of the
Optionee.
Section 18. LAWS GOVERNING PLAN. This Plan shall be construed under and
governed by the laws of the State of Ohio.
Section 19. CAPTIONS. The captions to the several sections hereof are not
a part of this Plan, but are merely guides or labels to assist in locating and
reading the several sections hereof.
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EXHIBIT D
WENDY'S INTERNATIONAL, INC.
1987 STOCK OPTION PLAN
(Reflects amendments through February 23, 1994)
Section 1. PURPOSE. This 1987 Stock Option Plan (hereinafter referred to
as the "Plan") is intended as a means whereby key employees (hereinafter
referred to as "Employee" or "Employees" and "Optionee" or "Optionees") of
Wendy's International, Inc. (hereinafter referred to as the "Company") or its
subsidiaries (hereinafter referred to as the "Subsidiaries") can each enlarge
his proprietary interest in the Company, thereby encouraging the judgment,
initiative and efforts of the Employees for the successful conduct of the
Company's business.
Section 2. ADMINISTRATION OF THE PLAN. The Board of Directors of the
Company shall appoint a Compensation Committee (hereinafter referred to as the
"Committee") of not less than three (3) Directors to administer the Plan. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power at any time, or from time to time, to remove members from the
Committee or to add members thereto. No member of the Committee, while serving
as such, shall be eligible to participate in the Plan. The Committee shall
construe and interpret the Plan, establish such rules as it deems necessary for
the proper administration of the Plan and make such determinations and take such
other action in connection with the Plan as it deems necessary and advisable. It
shall determine the individuals to whom and the time or times at which Options
shall be granted, the number of shares to be subject to each Option, the Option
price and the duration of leaves of absence which may be granted to participants
without constituting a termination of their employment for purposes of the Plan.
Any such construction, interpretation, rule, determination or other action taken
by the Committee pursuant to the Plan shall be binding and conclusive upon the
approval by the Board of Directors.
Actions by a majority of the Committee at a meeting at which a quorum is
present, or actions approved in writing by all of the members of the Committee,
shall be the valid acts of the Committee. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
The Committee shall have no authority to make any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of this Plan) or amendment
of the exercise price of an Option previously granted under this Plan, whether
through amendment, cancellation or replacement grants, or other means, unless
the Company's shareholders shall have approved such adjustment or amendment.
Section 3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN. Subject to any
adjustment as provided in the Plan, the shares to be offered under the Plan may
be, in whole or in part, authorized but unissued Common Shares of the Company,
or issued Common Shares which shall have been reacquired by the Company and held
by it as treasury shares. The aggregate number of Common Shares to be delivered
upon exercise of all Options granted under the Plan shall not exceed 300,000,
plus the amount of any additional Common Shares which may result from any share
distributions effected after the approval of this Plan by the Board of Directors
of the Company. If any Option granted hereunder shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares with
respect thereto shall again be available for other Options to be granted under
the Plan unless the Plan shall have been terminated.
Section 4. SELECTION OF OPTIONEES. The Committee, from time to time,
subject to the terms and provisions of the Plan, may grant Options to any
present and future full-time key employees of the Company and of its present and
future Subsidiaries. In determining the persons to whom Options shall be granted
and the number of shares to be covered by each Option, the Committee may take
into account the nature of the services rendered by such persons, their present
and potential contributions to the success and growth of the Company and its
Subsidiaries, and such other factors as the Committee, in its discretion, shall
deem relevant. Any person who has been granted an Option under a prior stock
option plan of the Company may be granted an additional Option or Options under
the Plan if the Committee shall so determine.
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Section 5. OPTION PRICE. The purchase price for the shares covered by each
Option granted shall be not less than one hundred percent (100%) of the fair
market value of the shares on the date of the grant of the Option. Such fair
market value shall be equal to the mean of the high and low prices at which
Common Shares of the Company are traded on the New York Stock Exchange on such
date.
Section 6. OPTION REQUIREMENTS. The Options granted pursuant to the Plan
shall be authorized by the Committee and shall be evidenced in writing in a form
recommended by the Committee and approved by the Board of Directors and shall
include the following terms and conditions:
(a) OPTIONEE. Each Option shall state the name of the Optionee.
(b) NUMBER OF SHARES. Each Option shall state the number of shares to
which that Option pertains. During any fiscal year of the Company, no
Optionee shall be granted Options covering more than five percent (5%) of
the maximum number of Common Shares which may be issued upon exercise of
Options granted under the Plan.
(c) PURCHASE PRICE. Each Option shall state the Option price, which
shall be not less than one hundred percent (100%) of the fair market value
of the shares covered by such Option on the date of grant of such Option.
See Section 5, Option Price.
(d) PAYMENT. Each Option shall state that the Option price shall be
payable upon the exercise of the Option and may be paid in cash, by check
in United States Dollars, or by the surrender of a sufficient number of
shares of stock in the Company, based on fair market value of such shares
on the date of exercise. See Section 5.
(e) LENGTH OF OPTION. Each Option shall be granted for a period to be
determined by the Committee but in no event to exceed more than ten (10)
years. However, subject to Sections 9 and 10, each Option shall be
exercisable only during such portion of its term as the Committee shall
determine, and only if the Optionee is employed by the Company or a
Subsidiary of the Company at the time of such exercise.
(f) EXERCISE OF OPTION. Each Optionee shall have the right to
exercise his or her Option in the manner specified in the agreement
evidencing granting of such Option.
Section 7. METHOD OF EXERCISE OF OPTIONS. Each Option shall be exercised
pursuant to the terms of such Option and pursuant to the terms of the Plan by
giving written notice to the Company at its principal place of business,
accompanied by cash, check, or shares, in payment of the Option price for the
number of shares specified and paid for. The Company shall make delivery of such
shares as soon as possible; provided, however, that if any law or regulation
requires the Company to take action with respect to the shares specified in such
notice before issuance thereof, the date of delivery of such shares shall then
be extended for the period necessary to take such action.
Section 8. NON-TRANSFERABILITY OF OPTIONS. During the Optionee's lifetime,
the Options shall be exercised only by him. The Options shall not be
transferable and shall terminate as provided in this Plan.
Section 9. EARLIER TERMINATION OF OPTIONS. Except as set forth in Section
10, upon the termination of the Optionee's employment for any reason whatsoever,
the Options will terminate as to all shares covered by Options which have not
been exercised as to the date of such termination.
Section 10.
(a) EXERCISE UPON DEATH OR DISABILITY. In the event an Optionee dies
while employed by the Company or a Subsidiary, then all Options held by the
Optionee shall become immediately exercisable as of the date of death, and
the estate of the deceased Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of
one year after the date of the Optionee's death, with exercise to be made
as set forth in Section 7.
In the event an Optionee becomes Disabled while employed by the
Company or a Subsidiary, then all Options held by the Optionee shall become
immediately exercisable as of the date the Optionee
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<PAGE> 48
becomes Disabled, and the Optionee (or, in the event the Optionee is
incapacitated and unable to exercise Options, the Optionee's legal guardian
or legal representative whom the Committee deems appropriate based on
applicable facts and circumstances) shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of
one year after the date the Optionee becomes Disabled, with exercise to be
made as set forth in Section 7.
(b) EXERCISE UPON RETIREMENT. In the event an Optionee's employment
with the Company and its Subsidiaries is terminated by reason of the
Optionee's retirement, the Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of 48
months after the date the Optionee retires in the case of non-qualified
stock options and for a period of three months after the date the Optionee
retires in the case of Incentive Stock Options, in each case with exercise
to be made as set forth in Section 7. In the event that an Optionee does
not exercise the Optionee's Incentive Stock Options prior to the expiration
of the three-month period after the date the Optionee retires, such Options
shall be treated as non-qualified stock options upon exercise by the
Optionee after such three-month period. For purposes of this Section 10(b),
"retirement" shall mean termination of employment at or after attaining age
55 with at least ten (10) years of service (as defined in the Company's
qualified retirement plans), other than by reason of death or Disability or
for cause.
(c) EXERCISE UPON TERMINATION OF EMPLOYMENT IN CONNECTION WITH A
DISPOSITION OF RESTAURANTS. In the event an Optionee's employment with the
Company and its Subsidiaries is terminated without cause in connection with
a disposition of one or more restaurants by the Company or its
Subsidiaries, the Optionee shall have the right to exercise any rights the
Optionee would otherwise have under this Plan for a period of one year
following the Optionee's termination of employment in the case of
non-qualified stock options and for a period of three months following the
Optionee's termination of employment in the case of Incentive Stock
Options, in each case with exercise to be made as set forth in Section 7.
Section 11. INCENTIVE STOCK OPTIONS. Options granted pursuant to this Plan
may include Incentive Stock Options (as defined in Section 422A of the Internal
Revenue Code of 1986, as amended).
Notwithstanding Section 4, above, no Incentive Stock Option shall be
granted to an individual owning stock possessing more than ten percent (10%) of
the total combined voting power of the Company, or its parent or subsidiary
corporations, unless (i) the Option price at the time such Option is granted is
at least one hundred ten percent (110%) of the fair market value of the shares
subject to the Option, and (ii) such Option by its terms is not exercisable
after the expiration of five (5) years from the date such Option is granted.
Further, the aggregate fair market value (determined at the time the Option is
granted) of the Common Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all such plans of the Company and its Subsidiaries) shall not exceed $100,000.
Section 12. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN. In the event
any dividend upon the Common Shares payable in shares is declared by the
Company, or in case of any subdivision or combination of the outstanding Common
Shares, the aggregate number of Common Shares to be delivered upon exercise of
all Options granted under the Plan shall be increased or decreased
proportionately so that there will be no change in the aggregate purchase price
payable upon the exercise of the Options. In the event of any other
recapitalization or any reorganization, merger, consolidation or any change in
the corporate structure or stock of the Company, the Committee shall make such
adjustment, if any, as it may deem appropriate to reflect accurately the terms
of the Options as to the number and kind of shares deliverable upon subsequent
exercising of the Options and in the Option prices under the Options.
Section 13. LISTING AND REGISTRATION OF SHARES. If at any time the Board
of Directors shall deem it necessary that listing, registration or qualification
of the shares covered by the Option upon any securities exchange or under any
state or federal law or the consent or the approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with the purchase of shares under the Option, the Option may not be exercised in
whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable by the Board.
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Section 14. RIGHT AS SHAREHOLDER. Neither the Optionee, nor his executor,
administrator, heirs, or legatees, shall be or have any rights or privileges of
a shareholder of the Company in respect to the shares transferable upon exercise
of any Option granted hereunder, unless and until certificates representing such
shares shall have been endorsed, transferred and delivered and the transferee
has caused his name to be entered as the shareholder of record on the books of
the Company.
Section 15. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
Section 16. MERGER, CONSOLIDATION, ETC. In the event that the Company is a
party to a plan or agreement for merger or consolidation or reclassification of
its securities or the exchange of its securities for the securities of another
person which has acquired the Company's assets or which is in control (as
defined in Section 368(c) of the Code) of a person which has acquired the
Company's assets, where the terms of such plan or agreement are binding upon all
shareholders of the Company, except to the extent that dissenting shareholders
may be entitled to relief under Section 1701.85 of the Ohio Revised Code, then
Options granted and outstanding pursuant to the Plan for more than six (6)
months, notwithstanding the date of exercise fixed in the grant of such Options,
shall become immediately exercisable and each Optionee shall be entitled to
receive, upon payment of the amount required for exercise of each Option,
securities or cash consideration, or both, equal to those the Optionee would
have been entitled to receive under such plan or agreement if the Optionee had
already exercised such Option.
Section 17. AMENDMENT OR TERMINATION. The Board of Directors may amend or
terminate the Plan at any time, provided that the Board shall not (except as
provided in Sections 9, 10 and 12 hereof) make any change in the Options which
will impair the rights of the Optionee therein, without the consent of the
Optionee.
Section 18. LAWS GOVERNING PLAN. This Plan shall be construed under and
governed by the laws of the State of Ohio.
Section 19. CAPTIONS. The captions to the several sections hereof are not
a part of this Plan, but are merely guides or labels to assist in locating and
reading the several sections hereof.
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EXHIBIT E
WENDY'S INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
(Reflects amendments through February 23, 1994)
PART I -- KEY EMPLOYEES
Section 1. PURPOSE. This Wendy's 1990 Stock Option Plan (hereinafter
referred to as the "Plan") is intended as a means whereby key employees
(hereinafter referred to as "Employee" or "Employees" and "Optionee" or
"Optionees") of Wendy's International, Inc. (hereinafter referred to as the
"Company") or its subsidiaries (hereinafter referred to as the "Subsidiaries")
can each enlarge his proprietary interest in the Company, thereby encouraging
the judgment, initiative and efforts of the Employees for the successful conduct
of the Company's business. The Plan is also intended to create common interests
between the Employees and the other shareholders of the Company, and to assist
the Company in attracting, retaining and motivating Employees.
Section 2. ADMINISTRATION OF THE PLAN. The Board of Directors of the
Company shall appoint a Compensation Committee (hereinafter referred to as the
"Committee") of not less than three (3) Directors to administer the Plan. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power at any time, or from time to time, to remove members from the
Committee or to add members thereto. All members of the Committee shall be
qualified to administer the Plan as contemplated by Securities and Exchange
Commission Rule 16b-3 as amended or superseded from time to time. The Committee
shall construe and interpret the Plan, establish such operating guidelines and
rules as it deems necessary for the proper administration of the Plan and make
such determinations and take such other action in connection with the Plan as it
deems necessary and advisable. It shall determine the individuals to whom and
the time or times at which Options shall be granted, the number of shares to be
subject to each Option, the Option price and the duration of leaves of absence
which may be granted to participants without constituting a termination of their
employment for purposes of the Plan. Any such construction, interpretation,
rule, determination or other action taken by the Committee pursuant to the Plan
shall be final, binding and conclusive on all interested parties, including the
Company and all former, present and future Employees of the Company.
Actions by a majority of the Committee at a meeting at which a quorum is
present, or actions approved in writing by all of the members of the Committee,
shall be the valid acts of the Committee. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
The Committee shall have no authority to make any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of this Plan) or amendment
of the exercise price of an Option previously granted under this Plan, whether
through amendment, cancellation or replacement grants, or other means, unless
the Company's shareholders shall have approved such adjustment or amendment.
Section 3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN. Subject to any
adjustment as provided in the Plan, the shares to be offered under the Plan may
be, in whole or in part, authorized but unissued Common Shares of the Company,
or issued Common Shares which shall have been reacquired by the Company and held
by it as treasury shares. The aggregate number of Common Shares to be delivered
upon exercise of all Options granted under the Plan shall not exceed 12,430,000,
plus the amount of any additional Common Shares which may result from any share
distributions effected after the approval of this Plan by the Board of Directors
of the Company. If any Option granted hereunder shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares with
respect thereto shall again be available for other Options to be granted under
the Plan unless the Plan shall have been terminated.
Section 4. SELECTION OF OPTIONEES. The Committee, from time to time,
subject to the terms and provisions of the Plan, may grant Options to any
present and future full-time key employees of the Company and of its present and
future Subsidiaries. In determining the persons to whom Options shall be granted
and the number of shares to be covered by each Option, the Committee may take
into account the nature of the
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<PAGE> 51
services rendered by such persons, their present and potential contribution to
the success and growth of the Company and its Subsidiaries, and such other
factors as the Committee, in its discretion, shall deem relevant. Any person who
has been granted an Option under a prior stock option plan of the Company may be
granted an additional Option or Options under the Plan if the Committee shall so
determine.
Section 5. OPTION PRICE. The purchase price for the shares covered by each
Option granted shall be not less than one hundred percent (100%) of the fair
market value of the shares on the date of the grant of the Option. Such fair
market value shall be equal to the mean of the high and low prices at which
Common Shares of the Company are traded on the New York Stock Exchange on such
date.
Section 6. OPTION REQUIREMENTS. The Options granted pursuant to the Plan
shall be authorized by the Committee and shall be evidenced in writing in a form
recommended by the Committee and approved by the Board of Directors and shall
include the following terms and conditions:
(a) OPTIONEE. Each Option shall state the name of the Optionee.
(b) NUMBER OF SHARES. Each Option shall state the number of shares to
which that Option pertains. During any fiscal year of the Company, no
Optionee shall be granted Options covering more than five percent (5%) of
the maximum number of Common Shares which may be issued upon exercise of
Options granted under the Plan.
(c) PURCHASE PRICE. Each Option shall state the Option price, which
shall be not less than one hundred percent (100%) of the fair market value
of the shares covered by such Option on the date of grant of such Option.
See Section 5, Option Price, and Section 27, date of grant.
(d) PAYMENT. The purchase price for the Options being exercised must
be paid in full at the time of exercise in a manner acceptable to the
Committee. In addition, in order to enable the Company to meet any
applicable foreign, federal (including FICA), state and local withholding
tax requirements, an Optionee shall also be required to pay the amount of
tax to be withheld at the time of exercise. No Common Shares will be
delivered to any Optionee until all such amounts have been paid.
(e) LENGTH OF OPTION. Each Option shall be granted for a period to be
determined by the Committee but in no event to exceed more than ten (10)
years. However, subject to Sections 9 and 10, each Option shall be
exercisable only during such portion of its term as the Committee shall
determine, and only if the Optionee is employed by the Company or a
Subsidiary of the Company at the time of such exercise.
(f) EXERCISE OF OPTION. With respect to Options offered pursuant to
this Plan to an Employee who is subject to Section 16 of the Securities
Exchange Act of 1934 ("Section 16 of the Exchange Act"), no option can be
exercised for at least six (6) months after the date of grant except in the
case of death or Disability as set forth in Section 10 where the Option is
otherwise exercisable. Otherwise each Optionee shall have the right to
exercise his or her Option in the manner specified in this Plan or in the
agreement evidencing granting of such Option.
Section 7. METHOD OF EXERCISE OF OPTIONS. Each Option shall be exercised
pursuant to the terms of such Option and pursuant to the terms of the Plan by
giving written notice to the Company at its principal place of business or other
address designated by the Company, accompanied by cash, check, shares, or other
property acceptable to the Committee, in payment of the Option price for the
number of shares specified and paid for. From time to time the Committee may
establish procedures relating to effecting such exercises. No fractional shares
shall be issued as a result of exercising an Option. The Company shall make
delivery of such shares as soon as possible; provided, however, that if any law
or regulation requires the Company to take action with respect to the shares
specified in such notice before issuance thereof, the date of delivery of such
shares shall then be extended for the period necessary to take such action.
Section 8. NON-TRANSFERABILITY OF OPTIONS. Except as set forth in Section
10, an Option is exercisable during an Optionee's lifetime only by the Optionee.
The Options shall not be transferable except by will or the laws of descent and
distribution, and shall terminate as provided in this Plan.
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<PAGE> 52
Section 9. EARLIER TERMINATION OF OPTIONS. Except as set forth in Section
10, upon the termination of the Optionee's employment for any reason whatsoever,
the Options will terminate as to all shares covered by Options which have not
been exercised as of the date of such termination.
Section 10.
(a) EXERCISE UPON DEATH OR DISABILITY. In the event an Optionee dies
while employed by the Company or a Subsidiary, then all Options held by the
Optionee shall become immediately exercisable as of the date of death, and
the estate of the deceased Optionee shall have the right to exercise any
rights the Optionee would otherwise have under this Plan for a period of
one year after the date of the Optionee's death, with exercise to be made
as set forth in Section 7.
In the event an Optionee becomes Disabled while employed by the
Company or a Subsidiary, then all Options held by the Optionee shall become
immediately exercisable as of the date the Optionee becomes Disabled, and
the Optionee (or, in the event the Optionee is incapacitated and unable to
exercise Options, the Optionee's legal guardian or legal representative
whom the Committee deems appropriate based on applicable facts and
circumstances) shall have the right to exercise any rights the Optionee
would otherwise have under this Plan for a period of one year after the
date the Optionee becomes Disabled, with exercise to be made as set forth
in Section 7.
(b) EXERCISE UPON RETIREMENT. In the event an Optionee's employment with
the Company and its Subsidiaries is terminated by reason of the Optionee's
retirement, the Optionee shall have the right to exercise any rights the
Optionee would otherwise have under this Plan for a period of 48 months after
the date the Optionee retires in the case of non-qualified stock options and for
a period of three months after the date the Optionee retires in the case of
Incentive Stock Options, in each case with exercise to be made as set forth in
Section 7. In the event that an Optionee does not exercise the Optionee's
Incentive Stock Options prior to the expiration of the three-month period after
the date the Optionee retires, such Options shall be treated as non-qualified
stock options upon exercise by the Optionee after such three-month period. For
purposes of this Section 10(b), "retirement" shall mean termination of
employment at or after attaining age 55 with at least ten (10) years of service
(as defined in the Company's qualified retirement plans), other than by reason
of death or Disability or for cause.
(c) EXERCISE UPON TERMINATION OF EMPLOYMENT IN CONNECTION WITH A
DISPOSITION OF RESTAURANTS. In the event an Optionee's employment with the
Company and its Subsidiaries is terminated without cause in connection with a
disposition of one or more restaurants by the Company or its Subsidiaries, the
Optionee shall have the right to exercise any rights the Optionee would
otherwise have under this Plan for a period of one year following the Optionee's
termination of employment in the case of non-qualified stock options and for a
period of three months following the Optionee's termination of employment in the
case of Incentive Stock Options, in each case with exercise to be made as set
forth in Section 7.
Section 11. TYPES OF STOCK OPTIONS. The Options granted under the Plan may
be non-qualified stock options or Incentive Stock Options (as defined in Section
422A of the Internal Revenue Code of 1986, as amended).
Notwithstanding Section 4, above, no Incentive Stock Option shall be
granted to an individual owning stock possessing more than ten percent (10%) of
the total combined voting power of the Company, or its parent or subsidiary
corporations unless (i) the Option price at the time such Option is granted is
equal to at least one hundred ten percent (110%) of the fair market value of the
shares subject to the Option, and (ii) such Option by its terms is not
exercisable after the expiration of five (5) years from the date such Option is
granted. Further, the aggregate fair market value (determined at the time the
Option is granted) of the Common Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year (under all such plans of the Company and its Subsidiaries) shall not exceed
one hundred thousand dollars ($100,000.00).
Section 12. EFFECT OF CHANGE IN COMMON SHARES SUBJECT TO THE PLAN. In the
event any dividend upon the Common Shares payable in shares is declared by the
Company, or in case of any subdivision or combination of the outstanding Common
Shares, the aggregate number of Common Shares to be delivered
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<PAGE> 53
upon exercise of all Options granted under the Plan shall be increased or
decreased proportionately so that there will be no change in the aggregate
purchase price payable upon the exercise of the Options. In the event of any
other recapitalization or any reorganization, merger, consolidation or any
change in the corporate structure or stock of the Company, the Committee shall
make such adjustment, if any, as it may deem appropriate to reflect accurately
the terms of the Options as to the number and kind of shares deliverable upon
subsequent exercising of the Options and in the Option prices under the Options.
Section 13. LISTING AND REGISTRATION OF COMMON SHARES. If at any time the
Board of Directors shall determine that listing, registration or qualification
of the Common Shares covered by the Option upon any securities exchange or under
any state or federal law or the consent or the approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with the purchase of Common Shares under the Option, the Option may not be
exercised in whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board. Any person exercising an Option
shall make such representations and agreements and furnish such information as
the Board or the Committee may request to assure compliance with the foregoing
or any other applicable legal requirements.
Section 14. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
Section 15. MISCONDUCT. In the event that an Optionee has (i) used for
profit or disclosed to unauthorized persons, confidential information or trade
secrets of the Company or its Subsidiaries, or (ii) breached any contract with
or violated any fiduciary obligation to the Company or its Subsidiaries, or
(iii) engaged in unlawful trading in the securities of the Company or its
Subsidiaries or of another company based on information gained as a result of
that Optionee's employment with the Company or its Subsidiaries, then that
Optionee shall forfeit all rights to any unexercised Options granted under the
Plan and all of that Optionee's outstanding Options shall automatically
terminate and lapse, unless the Committee shall determine otherwise.
Section 16. FOREIGN EMPLOYEES. Without amending the Plan, the Committee
may grant Options to eligible Employees who are foreign nationals on such terms
and conditions different from those specified in this Plan as may in the
judgment of the Committee be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of such purposes,
the Committee may make such modifications, amendments, procedures, and the like
as may be necessary or advisable to comply with provisions of laws of other
countries in which the Company or its Subsidiaries operate or have employees.
Section 17. BUY OUT OF OPTION GAINS. At any time after any Option becomes
exercisable, the Committee shall have the right to elect, in its sole discretion
and without the consent of the holder thereof, to cancel such Option and pay to
the Optionee the excess of the fair market value of the Common Shares covered by
such Option over the Option price of such Option at the date the Committee
provides written notice (the "Buy Out Notice") of the intention to exercise such
right. Buy outs pursuant to this provision shall be effected by the Company as
promptly as possible after the date of the Buy Out Notice. Payments of buy out
amounts may be made in cash, in Common Shares, or partly in cash and partly in
Common Shares, as the Committee deems advisable. To the extent payment is made
in Common Shares, the number of shares shall be determined by dividing the
amount of the payment to be made by the fair market value of a Common Share at
the date of the Buy Out Notice. In no event shall the Company be required to
deliver a fractional Common Share in satisfaction of this buy out provision.
Payments of any such buy out amounts shall be made net of any applicable
foreign, federal (including FICA), state and local withholding taxes. For the
purposes of this Section 17, fair market value shall be equal to the mean of the
high and low prices at which Common Shares of the Company are traded on the New
York Stock Exchange on the relevant date.
Section 18. NO RIGHTS TO OPTIONS OR EMPLOYMENT. No Employee or other
person shall have any claim or right to be granted an Option under the Plan.
Having received an Option under the Plan shall not give an Employee any right to
receive any other grant under the Plan. An Optionee shall have no rights to or
interest in any Option except as set forth herein. Neither the Plan nor any
action taken herein shall be construed as giving any Employee any right to be
retained in the employ of the Company or its Subsidiaries.
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Section 19. MERGER, CONSOLIDATION, ETC. In the event that the Company is a
party to a plan or agreement for merger or consolidation or reclassification of
its securities or the exchange of its securities for the securities of another
person which has acquired the Company's assets or which is in control (as
defined in Section 368(c) of the Internal Revenue Code of 1986, as amended) of a
person which has acquired the Company's assets, where the terms of such plan or
agreement are binding upon all shareholders of the Company, except to the extent
that dissenting shareholders may be entitled to relief under Section 1701.85 of
the Ohio Revised Code, then Options granted and outstanding pursuant to the Plan
for more than six (6) months, notwithstanding the date of exercise fixed in the
grant of such Options, shall become immediately exercisable and each Optionee
shall be entitled to receive, upon payment of the amount required for exercise
of each Option, securities or cash consideration, or both, equal to those the
Optionee would have been entitled to receive under such plan or agreement if the
Optionee had already exercised such Option.
Section 20. AMENDMENT OR TERMINATION. The Board of Directors may amend or
terminate the Plan at any time, provided that the Board of Directors shall not
(except as provided in Sections 9, 10 and 12 hereof) make any change in the
Options which will impair the rights of the Optionee therein, without the
consent of the Optionee.
Section 21. OTHER ACTIONS. This Plan shall not restrict the authority of
the Committee, the Board of Directors or of the Company or its Subsidiaries for
proper corporate purposes to grant or assume stock options, other than under the
Plan, to or with respect to any Employee or other person.
Section 22. COSTS AND EXPENSES. Except as provided in Section 6(d) hereof
with respect to taxes, the costs and expenses of administering the Plan shall be
borne by the Company, and shall not be charged to any grant nor to any Employee
receiving a grant.
Section 23. PLAN UNFUNDED. The Plan shall be unfunded. Except for
reserving a sufficient number of authorized shares to the extent required by law
to meet the requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure payment of any grant under the Plan.
Section 24. LAWS GOVERNING PLAN. This Plan shall be construed under and
governed by the laws of the State of Ohio.
Section 25. CAPTIONS. The captions to the several sections hereof are not
a part of this Plan, but are merely guides or labels to assist in locating and
reading the several sections hereof.
Section 26. EFFECTIVE DATE. The Plan shall become effective on the date it
is approved by the Board of Directors of the Company.
Section 27. DEFINITIONS. Unless the context clearly indicates otherwise,
the following terms, when used in this Plan, shall have the meaning set forth
below:
(a) The "date of grant" or "grant date" of an Option shall be the date
on which an Option is granted under the Plan.
(b) "Option" means the right granted under the Plan to an Optionee to
purchase a Common Share of the Company at a fixed price for a specified
period of time.
(c) "Option price" means the price at which a Common Share covered by
an Option granted hereunder may be purchased.
(d) With regard to any particular Employee, "Disabled" shall have (i)
the meaning set forth in Section 22(e)(3) of the Internal Revenue Code of
1986, as amended, in the context of determining the period during which
Incentive Stock Options granted to such Employee may be exercised and (ii)
the meaning set forth in the Company's long term disability program
applicable to such Employee in the context of determining the period during
which non-qualified stock options granted such Employee may be exercised.
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PART II: NON-EMPLOYEE DIRECTORS
Section 1. PURPOSE. Part II of the Wendy's 1990 Stock Option Plan
(hereinafter referred to as the "Plan") is intended as a means whereby
Non-Employee Directors (hereinafter referred to as "Optionee" or "Optionees") of
Wendy's International, Inc. (hereinafter referred to as the "Company") can each
enlarge his proprietary interest in the Company, thereby encouraging the
judgment, initiative and efforts of the Non-Employee Directors for the
successful conduct of the Company's business. The Plan is also intended to
create common interests between the Non-Employee Directors and the other
shareholders of the Company, and to assist the Company in attracting, retaining
and motivating the Non-Employee Directors.
Section 2. ADMINISTRATION OF THE PLAN. The Board of Directors of the
Company shall appoint a Compensation Committee (hereinafter referred to as the
"Committee") of not less than three (3) Directors to administer the Plan. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power at any time, or from time to time, to remove members from the
Committee or to add members thereto. All members of the Committee shall be
qualified to administer the Plan as contemplated by Securities and Exchange
Commission Rule 16b-3 as amended or superseded from time to time. The Committee
shall construe and interpret the Plan, establish such operating guidelines and
rules as it deems necessary for the proper administration of the Plan and make
such determinations and take such other action in connection with the Plan as it
deems necessary and advisable. Any such construction, interpretation, rule,
determination or other action taken by the Committee pursuant to the Plan shall
be final, binding and conclusive on all interested parties, including the
Company and all former, present and future Non-Employee Directors of the
Company.
Actions by a majority of the Committee at a meeting at which a quorum is
present, or actions approved in writing by all of the members of the Committee,
shall be the valid acts of the Committee. No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
The Committee shall have no authority to make any adjustment (other than in
connection with a stock dividend, recapitalization or other transaction where an
adjustment is permitted or required under the terms of this Plan) or amendment
of the exercise price of an Option previously granted under this Plan, whether
through amendment, cancellation or replacement grants, or other means, unless
the Company's shareholders shall have approved such adjustment or amendment.
Section 3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN. Subject to any
adjustment as provided in the Plan, the shares to be offered under the Plan may
be, in whole or in part, authorized but unissued Common Shares of the Company,
or issued Common Shares which shall have been reacquired by the Company and held
by it as treasury shares. The aggregate number of Common Shares to be delivered
upon exercise of all Options granted under the Plan shall not exceed 70,000,
plus the amount of any additional Common Shares which may result from any share
distributions effected after the approval of this Plan by the Board of Directors
of the Company. If any Option granted hereunder shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares with
respect thereto shall again be available for other Options to be granted under
the Plan unless the Plan shall have been terminated.
Section 4. STOCK OPTION GRANTS.
(a) Each Non-Employee Director of the Company on the effective date of
the Plan shall be granted the number of Options equal to three (3) times
the number of Options calculated for each such Director as follows: 50% of
the amount paid to such Director in 1990 as director's fees (including
quarterly retainer fees and Board meeting fees but excluding committee
meeting fees and expense reimbursements), divided by the Option exercise
price and rounded to the nearest whole share.
(b) In 1992 and 1993, each year, the number of Options to be granted
to each Non-Employee Director of the Company shall be equal to 50% of the
amount paid to such Director during the preceding fiscal year as director's
fees (including quarterly retainer fees and Board meeting fees but
excluding committee meeting fees and expense reimbursements), divided by
the Option exercise price and rounded to the nearest whole share. Such
Options shall be granted on the date on which the regularly scheduled
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Board meeting is held during the Company's third fiscal quarter. In the
event that an insufficient number of shares remains available under the
Plan for issuance to all Non-Employee Directors in a fiscal year, then
unless the Plan is amended to provide additional shares or the Company
adopts another stock option plan under which the Non-Employee Directors can
participate, the Non-Employee Directors shall participate on a prorata
basis.
(c) Commencing in 1994, each year, each Non-Employee Director of the
Company shall be granted Options to purchase 1,100 Common Shares. Such
Options shall be granted on the date on which the regularly scheduled Board
meeting is held during the Company's third fiscal quarter. In the event
that an insufficient number of shares remains available under the Plan for
issuance to all Non-Employee Directors in a fiscal year, then unless the
Plan is amended to provide additional shares or the Company adopts another
stock option plan under which the Non-Employee Directors can participate,
the Non-Employee Directors shall participate on a prorata basis.
Section 5. OPTION PRICE. The purchase price for the shares covered by each
Option granted shall be the fair market value of the shares on the date of the
grant of the Option. Such fair market value shall be equal to the mean of the
high and low prices at which Common Shares of the Company are traded on the New
York Stock Exchange on such date.
Section 6. OPTION REQUIREMENTS. The Options granted pursuant to the Plan
shall be evidenced in writing in a form recommended by the Committee and
approved by the Board of Directors and shall include the following terms and
conditions:
(a) OPTIONEE. Each Option shall state the name of the Optionee.
(b) NUMBER OF SHARES. Each Option shall state the number of shares to
which that Option pertains.
(c) PURCHASE PRICE. Each Option shall state the Option price, which
shall be one hundred percent (100%) of the fair market value of the shares
covered by such Option on the date of grant of such Option. See Section 5,
Option Price, and Section 26, date of grant.
(d) PAYMENT. The purchase price for the Options being exercised must
be paid in full at the time of exercise in a manner acceptable to the
Committee. In addition, in order to enable the Company to meet any
applicable foreign, federal (including FICA), state and local withholding
tax requirements, an Optionee shall also be required to pay the amount of
tax to be withheld at the time of exercise. No Common Shares will be
delivered to any Optionee until all such amounts have been paid.
(e) LENGTH OF OPTION. Each Option shall be granted for a period of
ten (10) years. However, subject to Sections 9 and 10, each Option shall be
exercisable only during such portion of its term as hereinafter set forth
and only if the Optionee is either a Non-Employee Director of the Company
or is employed by the Company or a Subsidiary of the Company at the time of
such exercise.
(f) EXERCISE OF OPTION. Twenty-five (25%) percent of the Options
covered by each grant shall become exercisable on each of the four
anniversaries of the grant date for such Options. Otherwise, each Optionee
shall have the right to exercise his or her Options in the manner specified
in this Plan.
Notwithstanding any provision in the Plan to the contrary, the Options
shall not be exercisable in whole or in part unless and until the Plan is
approved by the shareholders of the Company.
Section 7. METHOD OF EXERCISE OF OPTIONS. Each Option shall be exercised
pursuant to the terms of such Option and pursuant to the terms of the Plan by
giving written notice to the Company at its principal place of business or other
address designated by the Company, accompanied by cash, check, shares, or other
property acceptable to the Committee in payment of the Option price for the
number of shares specified and paid for. From time to time the Committee may
establish procedures relating to effecting such exercises. No fractional shares
shall be issued as a result of exercising an Option. The Company shall make
delivery of such shares as soon as possible; provided, however, that if any law
or regulation requires the Company to take action
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with respect to the shares specified in such notice before issuance thereof, the
date of delivery of such shares shall then be extended for the period necessary
to take such action.
Section 8. NON-TRANSFERABILITY OF OPTIONS. Except as set forth in Section
10, an Option is exercisable during an Optionee's lifetime only by the Optionee.
The Options shall not be transferable except by will or the laws of descent and
distribution, and shall terminate as provided in this Plan.
Section 9. EARLIER TERMINATION OF OPTIONS. Except as set forth in Section
10 of this Plan, if the Optionee ceases to be a Non-Employee Director of the
Company or an employee of the Company or its Subsidiaries for any reason
whatsoever, the Options will terminate as to all shares covered by Options which
have not been exercised as of such date.
Section 10.
(a) EXERCISE UPON DEATH OR DISABILITY. In the event an Optionee dies
while either a Non-Employee Director of the Company or while employed by
the Company or a Subsidiary, then all Options held by the Optionee shall
become immediately exercisable as of the date of death, and the estate of
the deceased Optionee shall have the right to exercise any rights the
Optionee would have under this Plan for a period of one year after the date
of the Optionee's death, with exercise to be made as set forth in Section
7.
In the event an Optionee becomes Disabled while either a
Non-Employee Director of the Company or while employed by the Company or a
Subsidiary, then all Options held by the Optionee shall become immediately
exercisable as of the date the Optionee becomes Disabled, and the Optionee
(or, in the event the Optionee is incapacitated and unable to exercise
Options, the Optionee's legal guardian or legal representative whom the
Committee deems appropriate based on applicable facts and circumstances)
shall have the right to exercise any rights the Optionee would otherwise
have under this Plan for a period of one year after the date the Optionee
becomes Disabled, with exercise to be made as set forth in Section 7.
(b) EXERCISE UPON RETIREMENT. In the event an Optionee retires as a
Non-Employee Director or as an employee of the Company and its
Subsidiaries, the Optionee shall have the right to exercise any rights the
Optionee would otherwise have under this Plan for a period of 48 months
after the date of such retirement, with exercise to be made as set forth in
Section 7. For purposes of this Section 10(b), "retirement" shall mean
termination of membership on the Company's Board of Directors at or after
attaining age 55 with at least ten (10) years of service as a member of the
Board, other than by reason of death or Disability or for cause, and
"termination for cause" shall mean termination of membership on the Board
of Directors on account of any fraud, intentional misrepresentation,
embezzlement or misappropriation or conversion of assets or opportunities
of the Company or its Subsidiaries.
Section 11. TYPES OF STOCK OPTIONS. The Options granted under the Plan
shall be non-qualified stock options.
Section 12. EFFECT OF CHANGE IN COMMON SHARES SUBJECT TO THE PLAN. In the
event any dividend upon the Common Shares payable in shares is declared by the
Company, or in case of any subdivision or combination of the outstanding Common
Shares, the aggregate number of Common Shares to be delivered upon exercise of
all Options granted under the Plan shall be increased or decreased
proportionately so that there will be no change in the aggregate purchase price
payable upon the exercise of the Options. In the event of any other
recapitalization or any reorganization, merger, consolidation or any change in
the corporate structure or stock of the Company, the Board of Directors shall
make such adjustment, if any, as it may deem appropriate to reflect accurately
the terms of the Options as to the number and kind of shares deliverable upon
subsequent exercising of the Options and in the Option prices under the Options.
Section 13. LISTING AND REGISTRATION OF COMMON SHARES. If at any time the
Board of Directors shall determine that listing, registration or qualification
of the Common Shares covered by the Option upon any securities exchange or under
any state or federal law or the consent or the approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with the purchase of Common
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Shares under the Option, the Option may not be exercised in whole or in part
unless and until such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Board. Any person exercising an Option shall make such representations and
agreements and furnish such information as the Board or the Committee may
request to assure compliance with the foregoing or any other applicable legal
requirements.
Section 14. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
Section 15. MISCONDUCT. In the event that an Optionee has (i) used for
profit or disclosed to unauthorized persons, confidential information or trade
secrets of the Company or its Subsidiaries, or (ii) breached any contract with
or violated any fiduciary obligation to the Company or its Subsidiaries, or
(iii) engaged in unlawful trading in the securities of the Company or its
Subsidiaries or of another company based on information gained as a result of
that Optionee serving as a Non-Employee Director of the Company, then that
Optionee shall forfeit all rights to any unexercised Options granted under the
Plan and all of that Optionee's outstanding Options shall automatically
terminate and lapse, unless the Committee shall determine otherwise.
Section 16. BUY OUT OF OPTION GAINS. At any time after any Option becomes
exercisable, the Board of Directors (excluding any Director who holds Options
for which the buy out election is being considered) shall have the right to
elect, in its sole discretion and without the consent of the holder thereof, to
cancel such Option and pay to the Optionee the excess of the fair market value
of the Common Shares covered by such Option over the Option price of such Option
at the date the Board provides written notice (the "Buy Out Notice") of the
intention to exercise such right. Buy outs pursuant to this provision shall be
effected by the Company as promptly as possible after the date of the Buy Out
Notice. Payments of buy out amounts may be made in cash, in Common Shares, or
partly in cash and partly in Common Shares, as the Board deems advisable. To the
extent payment is made in Common Shares, the number of shares shall be
determined by dividing the amount of the payment to be made by the fair market
value of a Common Share at the date of the Buy Out Notice. In no event shall the
Company be required to deliver a fractional Common Share in satisfaction of this
buy out provision. Payments of any such buy out amounts shall be made net of any
applicable foreign, federal (including FICA), state and local withholding taxes.
For the purposes of this Section 16, fair market value shall be equal to the
mean of the high and low prices at which Common Shares of the Company are traded
on the New York Stock Exchange on the relevant date.
Section 17. NO OTHER RIGHTS. An Optionee shall have no rights to or
interest in any Option except as set forth herein. Neither the Plan nor any
action taken herein shall be construed as giving any Optionee any right to
remain as a Director of the Company.
Section 18. MERGER, CONSOLIDATION, ETC. In the event that the Company is a
party to a plan or agreement for merger or consolidation or reclassification of
its securities or the exchange of its securities for the securities of another
person which has acquired the Company's assets or which is in control (as
defined in Section 368(c) of the Internal Revenue Code of 1986, as amended) of a
person which has acquired the Company's assets, where the terms of such plan or
agreement are binding upon all shareholders of the Company, except to the extent
that dissenting shareholders may be entitled to relief under Section 1701.85 of
the Ohio Revised Code, then Options granted and outstanding pursuant to the Plan
for more than six (6) months, notwithstanding the date of exercise fixed in the
grant of such Options, shall become immediately exercisable and each Optionee
shall be entitled to receive, upon payment of the amount required for exercise
of each Option, securities or cash consideration, or both, equal to those the
Optionee would have been entitled to receive under such plan or agreement if the
Optionee had already exercised such Option.
Section 19. AMENDMENT OR TERMINATION. The Board of Directors may amend or
terminate the Plan at any time, provided that the Board of Directors shall not
(except as provided in Sections 9, 10 and 12 hereof) make any change in the
Options which will impair the rights of the Optionee therein, without the
consent of the Optionee, and further provided that any amendment which would (i)
materially increase the benefits accruing to participants under the Plan, (ii)
materially increase the number of Common Shares which may be issued under the
Plan, (iii) materially modify the requirements as to eligibility or
participation in the Plan, or
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(iv) otherwise amend the Plan in such manner where shareholder approval is
necessary to comply with any legal, tax or regulatory requirement, including any
approval requirement which is a prerequisite for exemptive relief from Section
16(b) of the Securities Exchange Act of 1934, shall not be made without the
approval of the shareholders of the Company.
Section 20. OTHER ACTIONS. This Plan shall not restrict the authority of
the Committee, the Board of Directors or of the Company or its Subsidiaries for
proper corporate purposes to grant or assume stock options, other than under the
Plan, to or with respect to any Optionee or other person.
Section 21. COSTS AND EXPENSES. Except as provided in Section 6(d) hereof
with respect to taxes, the costs and expenses of administering the Plan shall be
borne by the Company, and shall not be charged to any grant nor to any Optionee
receiving a grant.
Section 22. PLAN UNFUNDED. The Plan shall be unfunded. Except for
reserving a sufficient number of authorized shares to the extent required by law
to meet the requirements of the Plan, the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure payment of any grant under the Plan.
Section 23. LAWS GOVERNING PLAN. This Plan shall be construed under and
governed by the laws of the State of Ohio.
Section 24. CAPTIONS. The captions to the several sections hereof are not
a part of this Plan, but are merely guides or labels to assist in locating and
reading the several sections hereof.
Section 25. EFFECTIVE DATE. The Plan shall become effective on the date it
is approved by the Board of Directors of the Company.
Section 26. DEFINITIONS. Unless the context clearly indicates otherwise,
the following terms, when used in this Plan, shall have the meaning set forth
below:
(a) The "date of grant" or "grant date" of an Option shall be the date
on which an Option is granted under the Plan.
(b) The phrase "Non-Employee Director" means a member of the Board of
Directors of the Company who is not an employee of the Company or any of
its Subsidiaries.
(c) "Option" means the right granted under the Plan to an Optionee to
purchase a Common Share of the Company at a fixed price for a specified
period of time.
(d) "Option price" means the price at which a Common Share covered by
an Option granted hereunder may be purchased.
(e) "Subsidiaries" means the subsidiaries of Wendy's International,
Inc.
(f) With regard to any particular Employee, "Disabled" shall have the
meaning set forth in the Company's long term disability program generally
applicable to officers of the Company.
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EXHIBIT F
WENDY'S INTERNATIONAL, INC.
SENIOR EXECUTIVE EARNINGS MAXIMIZATION PLAN
1. PURPOSE. The purpose of the Senior Executive Earnings Maximization Plan
(the "Plan") is to enhance Wendy's International, Inc.'s (the "Company") ability
to attract, motivate, reward, and retain key employees, to strengthen their
commitment to the success of the Company and to align their interests with those
of the Company's shareholders by providing additional compensation to designated
key employees of the Company based on the achievement of performance objectives.
To this end, the Plan provides a means of rewarding participants based on the
performance of the Company.
2. COMMITTEE. The Plan shall be administered by a committee of the Board
of Directors of the Company (the "Committee"). Each member of the Committee must
be an "outside director" within the meaning of the Regulations proposed under
Section 162(m) of the Internal Revenue Code of 1986, as amended.
3. ELIGIBLE EMPLOYEES. Eligible employees shall include the individuals
holding the positions of Senior Chairman of the Board, Chairman of the Board,
Chief Executive Officer, President, Chief Operating Officer or Chief Financial
Officer; provided, however, that no more than three persons will participate in
the Plan for any particular fiscal year of the Company (those Eligible Employees
who are participants in respect of any fiscal year are hereinafter referred to
as "Participants"). The Eligible Employees who will participate in the Plan for
any fiscal year will be designated by the Committee in its sole discretion prior
to commencement of that fiscal year.
4. CREATION OF A BONUS POOL. The Committee shall establish Net Income
targets at three levels for each fiscal year. A bonus pool (the "Bonus Pool")
will be created in respect of any fiscal year in which Net Income exceeds one of
those target levels. The amount of the Bonus Pool in any such fiscal year shall
be a percentage of the Net Income of the Company for such year, such percentage
to be based on which target level of Net Income was achieved. The Committee may
establish such targets and percentages for a period of years, but in all
circumstances prior to the commencement of the year to which the targets and
percentages relate (except in the case of 1994, in which case the targets and
percentages must be established before April 1, 1994). "Net Income" as used in
this Plan shall mean net income of the Company as reflected in the Company's
consolidated audited financial statements for the applicable fiscal year.
The Net Income target for each fiscal year is based on an assumed Federal
Statutory Tax Rate applicable to the Company of 34%. If the Federal Statutory
Tax Rate applicable to the Company for any fiscal year is other than 34%, then
the Net Income targets for such fiscal year shall be adjusted based on the same
pre-federal tax income amount which could be calculated using the stated Net
Income targets for such fiscal year (at the assumed 34% Federal Statutory Tax
Rate) multiplied by the actual Federal Statutory Tax Rate for such fiscal year,
provided that no adjustment will be made for any fiscal year unless the
Company's Effective Federal Tax Rate for the fiscal year is more than the
Company's actual Federal Statutory Tax Rate for such fiscal year. If the Federal
Statutory Tax Rate applicable to the Company changes during a fiscal year, the
Net Income target for such year shall be adjusted pro-rata for such portion of
the fiscal year that each Federal Statutory Tax Rate was in effect. "Federal
Statutory Tax Rate" as used in this Plan shall mean the highest federal marginal
tax rate applicable to the Company for a stated fiscal year (or portion
thereof). "Effective Federal Tax Rate" as used in this Plan shall mean the
quotient obtained by dividing the Company's federal income taxes for a given
year by its income before federal income taxes for the same year, multiplied by
100.
5. ALLOCATION. The Bonus Pool created in respect of any fiscal year shall
be allocated among the Participants in the manner established by the Committee
prior to the beginning of such fiscal year; provided, however, that the
Committee in its sole discretion may reduce at any time, including during or
following the fiscal year, the amount of the bonus payable to any or all
participants in respect of such fiscal year. No bonus shall be payable to any
Participant unless he is employed by the Company on the last day of the fiscal
year, unless the Participant's employment was terminated because of his death,
disability or retirement after
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attaining age 55 and the completion of 10 years of continuous service with the
Company, in which event the Participant will be entitled to a pro-rata portion
of the bonus otherwise payable in respect of that fiscal year, subject to the
Committee's discretion as set forth in the proviso to the preceding sentence.
Any portion of the Bonus Pool that is not paid to a Participant in respect of
any fiscal year shall not be paid to any Eligible Employee.
6. CERTIFICATION. Prior to payment of a bonus in respect of a fiscal year,
the Committee must certify in writing as to the satisfaction of and compliance
with the performance goals and other material terms of the Plan for that fiscal
year.
7. AMENDMENT OR TERMINATION. The Committee may amend or terminate the Plan
at any time in its discretion; provided, however, that no amendment or
termination of the Plan may affect any award made under the Plan prior to that
time.
8. SHAREHOLDER APPROVAL. The adoption of this Plan is subject to the
approval of the shareholders of the Company.
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Appendix
Map to Wendy's International, Inc.
Annual Meeting of Shareholders
Columbus, Ohio
A map showing the location of the Wendy's International, Inc. Annual Meeting of
Shareholders is included as the back cover page of the Proxy
Statement. This map shows the location of the Annual Meeting of Shareholders in
relation to the major highways in Columbus, Ohio and Port Columbus
International Airport.
Monday, May 2, 1994
Meeting begins at 10:00 a.m. Doors open at 9:30 a.m.
Holiday Inn Worthington 175 Hutchinson Avenue (614) 885-3334.
For further information, call 1-800-443-7266 and ask for extension 3251.
<PAGE> 63
WENDY'S INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS OF THE COMPANY FOR
ANNUAL MEETING MAY 2, 1994
The undersigned hereby constitutes and appoints R. David Thomas,
James W. Near and John K. Casey, and each of them, his true and
lawful agents and proxies with full power of substitution in each,
to represent the undersigned at the Annual Meeting of Shareholders
of Wendy's International, Inc. to be held at the Holiday Inn-
Worthington, 175 Hutchinson Avenue, Columbus, Ohio 43235, on Monday,
May 2, 1994, and at any adjournments thereof, on all matters coming
before said meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ELECTION OF DIRECTORS, FOR APPROVAL OF INDEPENDENT ACCOUNTANTS,
FOR APPROVAL OF AMENDMENTS TO THE 1978 STOCK OPTION PLAN, FOR
APPROVAL OF AMENDMENTS TO THE 1982 STOCK OPTION PLAN, FOR APPROVAL
OF AMENDMENTS TO THE 1984 STOCK OPTION PLAN, FOR APPROVAL OF
AMENDMENTS TO THE 1987 STOCK OPTION PLAN, FOR APPROVAL OF AMENDMENTS
TO THE 1990 STOCK OPTION PLAN AND FOR APPROVAL OF THE PERFORMANCE
GOALS OF THE SENIOR EXECUTIVE EARNINGS MAXIMIZATION PLAN.
COMMENTS: (Change of address)
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(IF YOU HAVE WRITTEN IN THE ABOVE SPACE, PLEASE MARK THE
CORRESPONDING BOX ON THE REVERSE SIDE OF THE CARD)
/ SEE REVERSE /
/ SIDE /
<PAGE> 64
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<S> <C> <C> <C>
/ X / PLEASE MARK YOUR ---- |
VOTES AS IN THIS | |
EXAMPLE. ---------
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NOMINEES: Fielden B. Nutter, Sr., James W. Near, James V. Pickett, and Thomas F.
Keller
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<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Approval of / / / / / /
Directors Independent
Accountants
FOR, except vote withheld from the following nominee(s): 3. Approval of / / / / / /
amendments to
the 1978 Stock
Option Plan
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES
FOR DIRECTORS AND FOR PROPOSALS 2 THROUGH 8.
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<CAPTION> FOR AGAINST ABSTAIN
<S> <C> <C> <C>
4. Approval of amendments / / / / / /
to the 1982 Stock Option
Plan
5. Approval of amendments / / / / / /
to the 1984 Stock Option
Plan
6. Approval of amendments / / / / / /
to the 1987 Stock Option
Plan
7. Approval of amendments / / / / / /
to the 1990 Stock Option
Plan
8. Approval of the performance goals / / / / / /
of the Senior Executive Earnings
Maximization Plan
9. In their discretion, the proxies Change of / /
are authorized to vote on such Address/comments
other business as may properly on reverse side
come before the meeting
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<S> <C> <C> <C>
SIGNATURE(S)_____________________________________________ DATE ___________ I plan to / / I do not / /
NOTE: Please sign exactly as name appears hereon. Joint owners should each attend plan to
sign. When signing as attorney, executor, administrator, trustee meeting attend
or guardian, please give full title as such. I hereby revoke all meeting
proxies heretofore given by me to vote at said meeting or any
adjournments thereof.
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