<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PANERA BREAD COMPANY
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
August 18, 1999
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<PAGE>
PANERA BREAD COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 17, 1999--9:00 A.M.
You are hereby notified that the Annual Meeting of Stockholders of Panera
Bread Company will be held on Friday, September 17, 1999 at 9:00 A.M., at
Mercantile Bank, 7(th) and Washington, One Mercantile Center, St, Louis, MO
63101, to consider and act upon the following matters:
1. To elect one (1) Director;
2. To ratify the action of the Directors reappointing
PricewaterhouseCoopers L.L.P. as auditors for the Company for the fiscal
year ending December 25, 1999;
3. To transact such other business as may properly come before the meeting.
If you are unable to attend the meeting personally, please be sure to date,
sign and return the enclosed proxy in the envelope provided to: Boston EquiServe
Limited Partnership, 150 Royall Street, Canton, Massachusetts 02021.
Only stockholders of record on the books of the Company at the close of
business on July 30, 1999 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
WALTER D. WEKSTEIN, Secretary
Dated: August 18, 1999
<PAGE>
PANERA BREAD COMPANY
EXECUTIVE OFFICES:
7930 BIG BEND BOULEVARD,
WEBSTER GROVES, MO 63119
PROXY STATEMENT
VOTING PROCEDURES
This proxy statement and the accompanying proxy card are first being mailed
to stockholders commencing on or about August 18, 1999. The accompanying proxy
is solicited by the Board of Directors of Panera Bread Company (the "Company"),
for use at the Annual Meeting of Stockholders to be held on September 17, 1999
and any adjournment or adjournments thereof. The cost of soliciting proxies will
be borne by the Company. Directors, officers and employees of the Company may
assist in the solicitation of proxies by mail, telephone, telegraph and personal
interview without additional compensation.
When a proxy is returned properly signed, the shares represented thereby
will be voted by the persons named as proxies in accordance with the
stockholder's directions. You are urged to specify your choices on the enclosed
proxy card. If a proxy is signed and returned without specifying choices, the
shares will be voted "FOR' proposals 1 and 2 and in the discretion of the
persons named as proxies in the manner they believe to be in the best interests
of the Company as to other matters that may properly come before the meeting. A
stockholder giving a proxy may revoke it at any time before it is voted at the
meeting by written notice to the Company, by oral notice to the Secretary at the
meeting or by submitting a later dated proxy.
The Board of Directors has fixed July 30, 1999 as the record date for the
meeting. Only stockholders of record on the record date are entitled to notice
of and to vote at the meeting. On the record date, there were 10,604,999 shares
of Class A Common Stock (each of which is entitled to one vote), and 1,538,247
shares of Class B Common Stock (each of which is entitled to three votes) of the
Company issued and outstanding. The Class A and Class B Common Stock are
referred to in this proxy statement as the "Common Stock." The holders of Common
Stock do not have cumulative voting rights.
For all proposals on the agenda for the meeting, the holders of a majority
in interest of the combined voting power of the Class A and Class B Common Stock
issued and outstanding and entitled to vote and present in person or represented
by proxy, will constitute a quorum. Shares represented by all proxies received,
including proxies that withhold authority for the election of directors and/or
abstain from voting on a proposal, as well as "broker non-votes," discussed
below, count toward establishing the presence of a quorum.
Assuming the presence of a quorum, Directors of the Company are elected by
plurality vote of the combined voting power of the shares of Class A and Class B
Common Stock present in person or represented by proxy and voting in the
election of Directors. Shares may be voted for or withheld from each nominee for
election as a Director. Shares for which the vote is withheld and "broker
non-votes" will be excluded entirely and will have no effect on the election of
Directors of the Company.
Assuming the presence of a quorum, the ratification of the appointment of
PricewaterhouseCoopers LLP must be approved by affirmative vote of a majority of
the combined voting power of the shares of Class A and Class B Common Stock
present in person or represented by proxy and voting on each matter. Shares
represented by proxies which are marked "abstain" for this proposal on the proxy
card and proxies which are marked to deny discretionary authority on other
matters will not be included in the vote totals for the respective proposals
and, therefore, will have no effect on the vote.
Under applicable rules, brokers who hold shares of the Company's Common
Stock in street name have the authority to vote the shares in the broker's
discretion on "routine" matters if they have not received specific instructions
from the beneficial owner of the shares. Item 1, the uncontested election of a
director, and Item 2, the ratification of independent accountants are "routine"
matters for this purpose. With respect to matters which are determined by the
appropriate broker-dealer regulatory organization to
<PAGE>
be "non-routine," none of which appear on the Agenda for this meeting of the
Company's stockholders, brokers may not vote shares held in street name without
specific instructions from the beneficial owner. If a broker holding shares in
street name submits a proxy card on which the broker physically lines out the
matter (whether it is "routine" or "non-routine") or does not indicate a
specific choice ("for," "against" or "abstain") on a matter that is
"non-routine," that action is called a "broker non-vote" as to that matter.
Broker "non-votes" with respect to "routine" matters such as Items 1 and 2 on
the agenda for this meeting, or "non-routine" matters, are not counted in
determining the number of votes cast with respect to the matter. If a broker
submits a proxy but does not indicate a specific choice on a "routine" matter,
the shares will be voted as specified in the proxy card. At this meeting of the
Company's stockholders, shares represented by such proxy card would be voted for
the election of the director nominees and for the ratification of the
independent accountants.
ELECTION OF DIRECTOR
(ITEM 1 ON PROXY CARD)
According to the Company's Certificate of Incorporation, the Board of
Directors is divided as nearly as possible into three classes each having an
equal number of directors, with the terms of each class staggered so that the
term of one class expires at each annual meeting of the stockholders.
Nominee Ronald M. Shaich is a current Director whose term expires at the
1999 Annual Meeting. Unless otherwise instructed in the proxy, all proxies will
be voted for the election of the nominee to a three-year term expiring at the
2002 Annual Meeting, such nominee to hold office until his successor has been
duly elected and qualified. Stockholders who do not wish their shares to be
voted for a particular nominee may so indicate by striking out the name of the
nominee(s) on the proxy card. Management does not contemplate that the nominee
will be unable to serve, but in that event, proxies solicited hereby will be
voted for the election of another person to be designated by the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEE.
INFORMATION REGARDING NOMINEE, DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographical descriptions sets forth information
regarding the principal occupation, other affiliations, committee memberships
and age, for the nominee for election as a Director, each director continuing in
office and the executive officers of the Company who are not Directors, based on
information furnished to the Company by each nominee, director and officer. The
following information is as of August 1, 1999 unless otherwise noted.
<TABLE>
<CAPTION>
TERM AS A
NAME AGE POSITION WITH COMPANY DIRECTOR ENDS
- ------------------------------------ --- ----------------------------- ---------------
<S> <C> <C> <C>
NOMINEE FOR ELECTION:............... 45 Chairman, Director, Chief 2002*
Ronald M. Shaich(2) Executive Officer
DIRECTORS CONTINUING IN OFFICE:
George E. Kane(1)(2)(3)........... 93 Director 2001
Henry J. Nasella(1)(2)(3)......... 51 Director 2001
</TABLE>
- ------------------------
* Assuming election at this Annual Meeting.
(1) Member of the Compensation and Stock Option Committee.
(2) Member of the Committee on Nominations.
(3) Member of the Audit Committee.
2
<PAGE>
NOMINEE FOR ELECTION AS DIRECTORS
RONALD M. SHAICH, Director since 1981, co-founder of the Company,
Co-Chairman of the Board between January 1988 and May 1999, sole Chairman of the
Board since May 1999 and Chief Executive Officer since May 1994. From January
1988 to May 25, 1994, Mr. Shaich served as Co-Chief Executive Officer of the
Company. Mr. Shaich is Chairman of the Board of Trustees of Clark University.
DIRECTORS CONTINUING IN OFFICE
GEORGE E. KANE, Director since November 1981 Mr. Kane retired in 1970 as
President of Garden City Trust Company (now University Trust Company). Mr. Kane
is an Honorary Director of USTrust. Mr. Kane is the father of Louis I. Kane,
former Co-Chairman of the Company.
HENRY J. NASELLA, Director since June 1995. Mr. Nasella was the President,
Chief Executive Officer and Chairman of Star Markets Company, Inc. from
September 1994 until June 1999. From January 1994 to September 1994, he was a
principal of Phillips-Smith Specialty Venture Capital. From 1988 to July 1993,
Mr. Nasella served as the President and Chief Operating Officer of Staples, Inc.
Mr. Nasella served as President and Chief Executive Officer of Staples USA
(Domestic) from 1992 to July 1993. Mr. Nasella currently is a member of the
Board of Visitors of Northeastern University School of Business and a member of
the Board of Trustees of Northeastern University Corporation.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
ANTHONY M. COLEMAN, 56, Vice President, Design for Panera, Inc. since April
1995. Director of Design for Panera, Inc. between November 1994 and April 1995.
SCOTT DAVIS, 36, Vice President, Customer Experience for Panera, Inc. since
May 1996. Director-- Concept Services and Customer Experience between June 1994
and May 1996.
PAUL J. EVANS, 45, Vice President, Franchise Development of Panera, Inc.
since June 1999. Between October 1994 and June 1999, Mr. Evans was Director,
International Franchise Development for Metromedia Restaurant Group, with
responsibilities for Bennigan's, Steak & Ale, Ponderosa and Bonanza franchising.
DENIS G. FREDRICK, 55, Vice President, Information Technology of Panera,
Inc. since June 1999. Between 1988 and June 1999, Mr. Fredrick was Vice
President of Information Systems for Value City Department Stores, Inc.
PAUL R. GEIST, 36, Vice President and Controller of Panera, Inc. since
December 1998 and of the Company since August 1999. Prior to such time, Mr.
Geist held several positions with Houlihan's Restaurant Group, Inc., Senior Vice
President and Chief Financial Officer (April 1997--August 1998), Vice President
and Controller (February 1995--April 1997) and Director of Finance (August
1993-- February 1995).
LARRY G. HOUSE, 52, Vice President, Real Estate for Panera, Inc. since
January 1998. Between July 1993 and January 1998, Mr. House was Vice President
of Leasing for Eddie Bauer, Inc.
THOMAS R. HOWLEY, 47, Vice President, General Counsel and Assistant
Secretary of the Company since January 1993 and Vice President, Construction,
and Assistant Secretary of Panera, Inc. since August 1999. Prior to that time
and for the five years preceding December 28, 1996, Mr. Howley was an attorney
with the law firm of Rackemann, Sawyer & Brewster.
MICHAEL J. KUPSTAS, 42, Vice President, Operations for Panera, Inc. since
January 1996. Between April 1991 and January 1996, Mr. Kupstas was Senior Vice
President/Division Vice President for Long John Silver's Inc..
3
<PAGE>
JOHN M. MAGUIRE, 33, Vice President, Commissary Operations for Panera, Inc.
since October 1998. Prior thereto since October 1994, Mr. Maguire was
successively Manager, Director and Vice President of Commissary Operations for
the Au Bon Pain and Panera Bread/Saint Louis Bread divisions of the Company.
WILLIAM W. MORETON, 39, Senior Vice President and Chief Financial Officer of
Panera, Inc. since October 1998 and of the Company since May 1999 Prior to that
time since April 1997, Mr. Moreton served as Executive Vice President and Chief
Financial Officer of Quality Dining, Inc.. Between October 1992 and April 1997,
Mr. Moreton served as Executive Vice President and Chief Financial Officer of
Houlihan's Restaurants Inc.
RICHARD C. POSTLE, 50, President and Chief Operating Officer of the Company
since May 1999 and Executive Vice President between August 1995 and May 1999.
President and Chief Operating Officer, Panera, Inc. since August 1995. From
August 1994 through August 1995, Mr. Postle was President and Chief Operating
Officer of Checkers Drive-In Restaurants, Inc. From January 1992 through August
1994, Mr. Postle was Senior Vice President, Operations of KFC-USA. From 1988
through December 1991, Mr. Postle was Chief Operating Executive of Brice Foods
Inc.
LAWRENCE A. RUSINKO, 36, Vice President, Marketing for Panera, Inc. since
February 1997. Prior thereto between May 1995 and January 1997, Mr. Rusinko held
the position of Director of Marketing for Panera, Inc. Between January 1994 and
April 1995, Mr. Rusinko was Manager, Creative Services for Taco Bell Corp.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company's Board of Directors held 12 meetings, including 7 actions by
written consent, during fiscal year 1998. The Board of Directors has established
an Audit Committee, a Compensation and Stock Option Committee and a Committee on
Nominations.
The Audit Committee, which held one meeting in fiscal year 1998, meets with
the Company's auditors and principal financial personnel to review the results
of the annual audit. The Audit Committee also reviews the scope of, and
establishes fees for, audit and non-audit services performed by the independent
accountants, reviews the independence of the independent accountants and the
adequacy and effectiveness of the Company's internal accounting controls. The
Audit Committee consists of two members, currently Messrs. George E. Kane and
Henry J. Nasella, and is reconstituted annually.
The Compensation and Stock Option Committee ("Compensation Committee"),
which held four meetings in fiscal year 1998, establishes the compensation,
including stock options and other incentive arrangements, of the Company's
Chairman and Chief Executive Officer. It also administers the Company's 1992
Equity Incentive Plan and 1992 Employee Stock Purchase Plan. The Compensation
Committee consists of two members, currently Messrs. George E. Kane and Henry J.
Nasella, and is reconstituted annually.
The Committee on Nominations was established in November 1995 and held no
meetings in 1998. The Committee on Nominations consists of three members,
currently Messrs. Ronald M. Shaich, George E. Kane and Henry J. Nasella, and is
reconstituted annually. The Committee on Nominations selects nominees for
election as Directors and will consider written recommendations from any
stockholder of record with respect to nominees for Directors of the Company.
All Directors attended at least 75% of the meetings of the Board and of the
committees of which they are members in fiscal 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has interlocking or other
relationships with other boards or with the Company that would call into
question his independence as a Committee member.
4
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a quarterly fee
ranging from $3,000 to $3,500 for serving on the Board, plus reimbursement of
out-of-pocket expenses for attendance at each Board or committee meeting.
Under a formula-based stock option plan for independent directors (the
"Directors' Plan"), as amended by the stockholders at the 1995 Annual Meeting of
Stockholders, each current Director who is not an employee or principal
stockholder of the Company ("Independent Director") first elected after the
effective date of the Directors' Plan will receive, upon his or her election to
the board, a one-time grant of an option to purchase 5,000 shares of Class A
Common stock. All Independent Directors who serve as such at the end of each of
the Company's fiscal years will receive an option to purchase 5,000 shares of
Class A Common Stock. All such options will have an exercise price per share
equal to the fair market value of a share of Class A Common Stock as of the
close of the market the trading day immediately preceding the grant date, will
be fully vested when granted, and will be exercisable for a period of 10 years.
RATIFICATION OF CHOICE OF INDEPENDENT ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
The Board of Directors has reappointed the firm of PricewaterhouseCoopers
L.L.P., independent accountants, to audit the books, records and accounts of the
Company and its subsidiaries for the fiscal year ending December 25, 1999. In
accordance with a resolution of the Board of Directors, this reappointment is
being presented to the stockholders for ratification at the meeting.
PricewaterhouseCoopers L.L.P. has no direct or indirect material financial
interest in the Company or its subsidiaries. Representatives of
PricewaterhouseCoopers L.L.P. are expected to be present at the meeting and will
be given the opportunity to make a statement on behalf of PricewaterhouseCoopers
L.L.P. if they so desire. The representatives also will be available to respond
to appropriate questions raised by those in attendance at the meeting.
Proxies solicited by management will be so voted unless stockholders specify
otherwise. Ratification by the stockholders is not required. If the proposal is
not approved by the stockholders, the Board of Directors will not change the
appointment for fiscal 1999, but will consider the stockholder vote in
appointing auditors for fiscal 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR' THE REAPPOINTMENT OF
PRICEWATERHOUSECOOPERS L.L.P. AS INDEPENDENT ACCOUNTANTS FOR FISCAL YEAR 1999.
OTHER BUSINESS
In addition to the business described above, there will be remarks by the
Chairman of the Board and Chief Executive Officer and a general discussion
period during which stockholders will have an opportunity to ask questions about
the Company.
As of the date of this proxy statement, the management of the Company knows
of no matter not specifically referred to above as to which any action is
expected to be taken at the meeting of stockholders. It is intended, however,
that the persons named as proxies will vote the proxies, insofar as they are not
otherwise instructed, regarding such other matters and the transaction of such
other business as may be properly brought before the meeting, as seems to them
to be in the best interest of the Company and its stockholders.
5
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE (THIS REPORT WAS DELIVERED IN MARCH
1999 PRIOR TO THE SALE OF THE AU BON PAIN DIVISION. AS PART OF THAT TRANSACTION,
LOUIS I. KANE, RESIGNED AS CO-CHAIRMAN.)
This report is made by the Compensation and Stock Option Committee (the
"Compensation Committee") of the Board of Directors, the committee which is
responsible for establishing the compensation, including base salary and
incentive compensation, for the Company's Co-Chairman of the Board, Louis I.
Kane and its Co-Chairman and Chief Executive Officer, Ronald M. Shaich.
PHILOSOPHY
The Compensation Committee seeks to set the compensation of the Company's
Chief Executive Officer and Co-Chairmen at levels which are competitive with
companies of similar size in the Company's industry. Messrs. Kane and Shaich
share the overall responsibilities of Chairman of the Board of Directors. Mr.
Shaich also has the overall responsibilities of Chief Executive and Chief
Operating Officer. In addition to his responsibilities as Co-Chairman, Mr. Kane
is actively involved in a number of areas of the Company, including real estate
development, finance and international franchise development. The Compensation
Committee examined compensation structures for the chief executive and chief
operating officers of companies in the restaurant industry using generally
available source material from business periodicals and other sources, and
sought to structure the Chief Executive Officer's and Co-Chairmen's compensation
at a competitive level appropriate to the comparable companies' group. The
companies examined for purposes of evaluating and setting compensation of the
Chief Executive Officer and Co-Chairmen are not necessarily included in the
"Standard & Poor's 400--MidCap Restaurant Index" used in the Stock Performance
Graph set forth under "Stock Performance" below.
COMPENSATION STRUCTURE
The compensation of the Chief Executive Officer and Co-Chairmen is
structured to be competitive within the Company's industry and is based upon the
general performance of the Company, and is reviewed annually by the Committee.
COMPONENTS OF COMPENSATION
SALARY. The salary shown in the Summary Compensation Table represents the
fixed portion of compensation for the Chief Executive Officer and Co-Chairmen
for the year. Changes in salary depend upon overall Company performance as well
as levels of base salary paid by companies of similar size in the Company's
industry.
BONUS. The cash bonus is the principal incentive-based compensation paid
annually to the Chief Executive Officer and Co-Chairmen. The Chief Executive
Officer and Co-Chairmen will receive a bonus in a predetermined amount if the
Company achieves its net income objective for the fiscal year. A higher bonus is
paid if the Company exceeds the net income objective by a predetermined
percentage. In determining the bonus amount, the Compensation Committee seeks to
create an overall compensation package for the Chief Executive Officer and
Co-Chairmen which is at the mid-point for comparable companies in the restaurant
industry. For 1998, the Company did not achieve the net income objective and,
therefore, no cash bonuses were paid to the Chief Executive Officer and
Co-Chairmen.
The Chief Executive Officer and Co-Chairmen may elect to take their
respective bonuses in the form of 10-year, fully vested stock options for that
number of shares of the Company's Class A Common Stock that could be purchased
with an amount equal to two times the cash value of his bonus. The exercise
price of the option equals the fair market value of the Company's Class A Common
Stock on the date of grant.
STOCK OPTIONS. Neither Mr. Kane nor Mr. Shaich participates in either the
Performance-Based Option Program under the Company's 1992 Equity Incentive Plan
or the 1992 Employee Stock Purchase
6
<PAGE>
Plan. In order to provide what the Compensation Committee believes to be
appropriate and continuing long-term incentives to its Chief Executive Officer
and Co-Chairmen, and in order to align more fully the interests of the
stockholders and the Chief Executive Officer and Co-Chairmen, the Compensation
Committee on June 12, 1997 granted, to each of Messrs. Kane and Shaich a 10-year
option, vesting equally over a five-year period (subject to continued
employment), to purchase 400,000 shares of the Company's Class A Common Stock at
an exercise price equal to the fair market value of a share of the Class A
Common Stock calculated immediately preceding the date of grant. These grants
were made in order to retain the services of Messrs. Kane and Shaich over the
next five years, at a minimum. As these options have exercise prices equal to
the market value of the Company's Class A Common Stock on the grant date, they
provide incentive for the creation of stockholder value over the long term since
their full benefit cannot be realized unless there occurs over time an
appreciation in the price of the Company's Class A Common Stock. The
Compensation Committee considers the number of shares to be an appropriate
incentive for the Chief Executive officer and Co-Chairmen to continue to focus
on building stockholder value. The Compensation Committee has not determined
whether any ongoing program of long-term incentive compensation should or will
be adopted with respect to its Chief Executive Officer and Co-Chairmen.
In November 1998 the Compensation Committee determined that it was desirable
to provide an additional incentive to certain employees who had been granted
options in June 1998. The options granted in June 1998 had an exercise price of
$10.94, the market price for the shares of Class A Common Stock on the grant
date. Following the option issuances, the stock price declined, such that by
November 1998 the price was in the $6.25 to $7.00 range (per reported closing
prices). The Compensation Committee determined that the services of Richard
Postle were of great importance to the success of the Panera Bread/St. Louis
Bread Co. Business Unit. Therefore, taking into account the significant change
in stock price closely following the June grant, the Committee determined that
it was appropriate, and in the Company's best interests, to cancel the June
option grant to Mr. Postle for 100,000 shares and to reissue the option at the
market price of $6.38 as of the date of grant (November 19, 1998).
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Compensation Committee has reviewed the potential consequences for the
Company of Section 162(m) of the Code which imposes a limit on tax deductions
for annual compensation in excess of one million dollars paid to any of the five
most highly compensated executive officers. Based on such review, the
Compensation Committee believes that the limitation will have no effect on the
Company in 1999.
Respectfully submitted,
JAMES R. MCMANUS
Chairman, FRANCIS W. HATCH, HENRY J. NASELLA
REPORT OF THE CHIEF EXECUTIVE OFFICER
This report is made by the Company's Chief Executive Officer, who is
responsible for establishing the compensation, including salary, bonus and
incentive compensation, for all of the Company's executive officers other than
the Chief Executive Officer and Co-Chairmen of the Board.
PHILOSOPHY
In compensating its executive officers, the Chief Executive Officer seeks to
structure a salary, bonus and incentive compensation package that will help
attract and retain talented individuals and align the interests of the executive
officers with the interests of the Company's stockholders.
7
<PAGE>
COMPONENTS OF COMPENSATION
There are two components to the compensation of the Company's executive
officers: annual cash compensation (consisting of salary and bonus incentives)
and long-term incentives.
CASH COMPENSATION. The Company participates annually in an
industry-specific survey of executive officers, which serves as the basis for
determining total target cash compensation packages, which are crafted
individually for each executive officer. The individual's compensation consists
of a base salary and contingent compensation based on actual performance against
agreed-to expectations of performance. The individual compensation packages are
structured so that, if the executive officer attains the expected level of
achievement of each performance goal, the cash compensation of the executive
officer will be approximately at the 75th percentile of the compensation of
individuals occupying similar positions in the industry, using generally
available surveys of executive compensation within the retail industry for
companies with comparable revenues.
At the beginning of each fiscal year, the Chief Executive Officer and each
executive officer establish a series of individual performance goals which are
specific to the executive's responsibilities. These goals seek to measure
performance of each executive officer's job responsibilities: for executive
officers whose responsibilities are operational in nature, attainment of
operating group goals and objectives is stressed, and for corporate staff
officers, overall Company performance measured by earnings-per share growth is
utilized. Currently, the maximum potential cash bonus for the Company's
executive officers, as a percentage of base salary, ranges from 20% to 60%.
Thus, the Company's cash compensation practices seek to motivate executives
by requiring excellent performance measured against both internal goals and
competitive performance.
LONG-TERM INCENTIVE COMPENSATION. The second element of executive
compensation, long-term incentive compensation, currently takes the form of
stock options granted under the Company's 1992 Equity Incentive Plan. Currently,
stock options are granted under a program, which consists of a series of
guidelines which provide for the periodic granting of specific amounts of stock
options,, depending upon the executive's position within the Company and
performance. Existing holdings of stock or stock options are not a factor in
determining the dollar value of an individual executive officer's award.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Chief Executive Officer has reviewed the potential consequences for the
Company of Section 162(m) of the Code which imposes a limit on tax deductions
for annual compensation in excess of one million dollars paid to any of the five
most highly compensated executive officers. Based on such review, the Chief
Executive Officer believes that the limitation will have no effect on the
Company in 1998.
Respectfully submitted,
RONALD M. SHAICH
Chief Executive Officer
SEVERANCE ARRANGEMENTS
Pursuant to certain employment agreements, the Company has agreed to provide
Mr. Postle with severance benefits equal to one year's base salary plus car
allowance and insurance benefits if employment is terminated other than for
cause.
8
<PAGE>
COMPENSATION TABLES
The following tables set forth information concerning the compensation paid
or accrued by the Company during the fiscal years ended December 28, 1996,
December 27, 1997 and December 26, 1998, to or for the Company's Chief Executive
Officer and its four other most highly compensated executive officers whose
salary and bonus combined exceeded $100,000 for fiscal year 1998 (hereinafter
referred to as the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
NAME AND COMPENSATION SALARY BONUS OTHER ANNUAL COMPENSATION ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) COMP.($) OPTIONS/SARS (#) COMPENSATION ($)
- ---------------------------------- --------------- --------- --------- ------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Shaich.................. 1998 254,807 -- 1,428 -- --
Co-Chairman and Chief 1997 250,000 -- 1,428 400,000(b) --
Executive Officer 1996 249,519 -- 1,428 -- --
Louis I. Kane..................... 1998 254,807 -- 17,640 -- --
Co-Chairman (a) 1997 250,000 -- 17,640 400,000(b) --
1996 249,519 -- 17,640 -- --
Richard C. Postle................. 1998 316,067 -- 5,096 100,000 --
President, Saint Louis 1997 295,192 75,000 8,846 10,000 --
Bread/Panera 1996 250,000 75,000 7,436 35,000(c) --
Bread Business Unit
Mark A. Borland................... 1998 214,275 150,000 6,759 25,000 --
Chief Operating Officer, 1997 194,205 -- 5,516 15,000 --
Au Bon Pain Business 1996 188,370 -- 5,939 -- --
Unit (a)
Anthony J. Carroll................ 1998 167,450 125,000 6,487 42,500 --
Senior Vice President, 1997 144,816 -- 5,528 10,000 --
Treasurer and Chief 1996 139,819 18,200 6,392 2,212 --
Financial Officer (a)
</TABLE>
- ------------------------
(a) Messrs. Kane, Borland and Carroll resigned from the Company concurrently
with the sale of the Au Bon Pain Division in May 1999.
(b) Consists of a ten-year option, vesting equally over a five year period
beginning June 12, 1997 subject to continued employment.
(c) Includes an option for 5,000 shares granted in fiscal 1997 in order to
reflect compensation earned for performance in fiscal 1996.
9
<PAGE>
AGGREGATED OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS ANNUAL RATES OF STOCK
--------------------------
PERCENT OF VALUED AT ASSUMED
NUMBER OF TOTAL PRICE
SECURITIES OPTIONS / APPRECIATION
UNDERLYING SARS PRICES FOR OPTION
OPTIONS / GRANTED TO TERM
SARS EMPLOYEES EXERCISE OR ($)*
GRANTED IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME (#) YEAR (%) ($ / SH) DATE 5% 10%
- ------------------------------------------------- ----------- ------------- ------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Shaich................................. -0- N/A N/A N/A N/A N/A
Louis I. Kane (1)................................ -0- N/A N/A N/A N/A N/A
Richard C. Postle................................ 100,000 11.9 6.38 6/25/08 401,235 1,016,808
Mark A. Borland (1).............................. 25,000 3.0 10.94 6/25/08 172,003 435,889
Anthony J. Carroll (1)........................... 22,500 2.7 6.38 11/19/08 90,278 228,782
20,000 2.4 10.94 6/25/08 137,602 348,711
</TABLE>
- ------------------------
* The dollar amounts in this table are the result of calculations at stock
appreciation rates specified by the Securities and Exchange Commission and
are not intended to forecast actual future appreciation rates of the
Company's stock price.
(1) Messrs. Kane, Borland and Carroll resigned from the Company concurrently
with the sale of the Au Bon Pain Division in May 1999. Each of their options
became fully vested concurrently with such event.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN
OPTIONS / SARS AT FY SARS AT FISCAL YEAR END
SHARES VALUE ------------------------ ------------------------
ACQUIRED ON REALIZED EXERCISABLE / EXERCISABLE /
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------ ------------- ----------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Ronald M. Shaich.................... -- -- 357,330/320,000 0/0
Louis I. Kane (1)................... -- -- 357,330/320,000 0/0
Richard C. Postle................... -- -- 30,912/160,910 1,875/5,625
Mark A. Borland (1)................. -- -- 36,757/40,661 6,560/0
Anthony J. Carroll (1).............. 12,500 $ 2,562 20,431/59,270 1,235/0
</TABLE>
- ------------------------
(1) Messrs. Kane, Borland and Carroll each resigned from the Company
coincidentally with the sale of the Au Bon Pain Division in May 1999.
TEN YEAR OPTION/SAR REPRICINGS
As discussed in the Report of the Compensation and Stock Option Committee on
Executive Compensation, in November 1998 the Company cancelled and reissued
options issued in June 1998 to certain individuals including Richard C. Postle a
named executive officer. The repricing was based on the market price of the
Class A Common Stock on November 19, 1998. The new options were for the same
number of shares and retained the original vesting and expiration dates of the
old stock options; the new options did not accelerate or extend the time for
exercise of any old options. The table below sets forth information with respect
to Mr. Postle's options and with respect to all former or current executive
officers of the Company concerning their participation in other option repricing
programs implemented by the Company during the last ten fiscal years.
10
<PAGE>
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS/SARS MARKET PRICE OF EXERCISE PRICE NEW
REPRICED OR STOCK AT TIME AT TIME OF EXERCISE
AMENDED OF REPRICING OR REPRICING OR PRICE
NAME DATE (1) (1) (#) AMENDMENT ($) AMENDMENTS ($) ($)
- --------------------------------------- ------------------ ------------ ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Ronald M. Shaich....................... October 9, 1995 2,448 $ 7.25 $ 20.00 $ 7.25
October 9, 1995 45,536 $ 7.25 $ 23.75 $ 7.25
October 9, 1995 1,961 $7.25 $23.75 $7.25
October 9, 1995 55,092 $7.25 $24.00 $7.25
October 9, 1995 72,293 $7.25 $15.50 $7.25
Louis I. Kane.......................... October 9, 1995 2,448 $ 7.25 $ 20.00 $ 7.25
October 9, 1995 45,536 $ 7.25 $ 23.75 $ 7.25
October 9, 1995 1,961 $7.25 $23.75 $7.25
October 9, 1995 55,092 $7.25 $24.00 $7.25
October 9, 1995 72,293 $7.25 $15.50 $7.25
Samuel H. Yong......................... October 9, 1995 5,808 $ 7.25 $ 25.00 $ 7.25
October 9, 1995 717 $ 7.25 $ 20.25 $ 7.25
October 9, 1995 744 $7.25 $20.00 $7.25
October 9, 1995 1,024 $7.25 $16.69 $7.25
October 9, 1995 1,105 $7.25 $16.00 $7.25
October 9, 1995 1,433 $7.25 $13.63 $7.25
October 9, 1995 12,698 $7.25 $11.88 $7.25
October 9, 1995 1,717 $7.25 $12.13 $7.25
October 9, 1995 3,156 $7.25 $7.75 $7.25
Mark A. Borland........................ October 9, 1995 12,837 $ 7.25 $ 12.50 $ 7.25
October 9, 1995 4,937 $ 7.25 19.$78 $20.00 $ 7.25
October 9, 1995 2,644 $7.25 $7.25
John P. Billingsley.................... October 9, 1995 3,154 $ 7.25 $ 19.78 $ 7.25
October 9, 1995 5,067 $ 7.25 $ 20.00 $ 7.25
October 9, 1995 2,638 $7.25 $16.63 $7.25
October 9, 1995 4,056 $7.25 $11.88 $7.25
Mariel Clark........................... October 9, 1995 6,732 $ 7.25 $ 17.00 $ 7.25
October 9, 1995 3,154 $ 7.25 $ 19.78 $ 7.25
October 9, 1995 4,223 $7.25 $20.00 $7.25
October 9, 1995 5,297 $7.25 $15.38 $7.25
October 9, 1995 8,112 $11.88
David J. Peterman...................... October 9, 1995 16,510 $ 7.25 $ 15.50 $ 7.25
Maxwell T. Abbott...................... October 9, 1995 15,741 $ 7.25 $ 12.13 $ 7.25
Richard C. Postle...................... Nov. 19, 1998 100,000 $ 6.38 $ 10.94 $ 6.38
October 9, 1995 46,822 $ 7.25 $ 9.25 $ 7.25
Peter E. McNally....................... October 9, 1995 16,504 $ 7.25 $ 15.50 $ 7.25
Anthony J. Carroll..................... October 9, 1995 3,154 $ 7.25 $ 19.78 $ 7.25
October 9, 1995 4,223 $ 7.25 $ 20.00 $ 7.25
October 9, 1995 8,112 $7.25 $11.88 $7.25
Thomas R. Howley....................... October 9, 1995 5,284 $ 7.25 $ 19.75 $ 7.25
October 9, 1995 3,154 $ 7.25 $ 19.78 $ 7.25
October 9, 1995 3,378 $7.25 $20.00 $7.25
October 9, 1995 4,056 $7.25 $11.88 $7.25
Michael J. Kupstas..................... Nov. 19, 1998 45,000 $ 6.38 $ 10.94 $ 6.38
<CAPTION>
LENGTH OF ORIGINAL
OPTION TERM
REMAINING AT
DATE
OF REPRICING OR
NAME AMENDMENT
- --------------------------------------- -------------------
<S> <C>
Ronald M. Shaich....................... 6.5
7.3
7.5
8.3
9.3
Louis I. Kane.......................... 6.5
7.3
7.5
8.3
9.3
Samuel H. Yong......................... 8.3
8.5
8.7
9.0
9.2
9.5
9.6
9.7
10.0
Mark A. Borland........................ 6.0
7.4
8.6
John P. Billingsley.................... 7.4
8.6
8.8
9.6
Mariel Clark........................... 6.6
7.4
8.6
8.9
9.6
David J. Peterman...................... 9.0
Maxwell T. Abbott...................... 9.6
Richard C. Postle...................... 9.6
9.9
Peter E. McNally....................... 8.9
Anthony J. Carroll..................... 7.4
8.6
9.6
Thomas R. Howley....................... 7.0
7.4
8.6
9.6
Michael J. Kupstas..................... 9.6
</TABLE>
11
<PAGE>
In connection with the 1995 repricing program, the number of options held
was also reduced. The following chart shows the number of options outstanding
prior to the 1995 repricing, and the number outstanding after such repricing:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SECURITIES SECURITIES
UNDERLYING UNDERLYING
OPTIONS/SARS OPTIONS/SARS
OUTSTANDING PRIOR OUTSTANDING
NAME TO REPRICING AFTER REPRICING
- ---------------------------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Ronald M. Shaich.............................................................................. 5,000 2,448
100,000 45,536
4,211 1,961
110,000 55,092
100,000 72,293
Louis I. Kane................................................................................. 5,000 2,448
100,000 45,536
4,211 1,961
110,000 55,092
100,000 72,293
Samuel H. Yong................................................................................ 12,000 5,808
1,234 717
1,250 744
1,498 1,024
1,563 1,105
1,835 1,433
15,152 12,698
2,062 1,717
3,226 3,156
Mark A. Borland............................................................................... 18,000 12,837
9,100 4,937
4,500 2,644
John P. Billingsley........................................................................... 5,814 3,154
8,625 5,067
3,909 2,638
4,840 4,056
Mariel Clark.................................................................................. 11,765 6,732
5,814 3,154
7,188 4,223
7,421 5,297
9,680 8,112
David J. Peterman............................................................................. 23,226 16,510
Maxwell T. Abbott............................................................................. 18,961 15,741
Richard C. Postle............................................................................. 50,000 46,822
Peter E. McNally.............................................................................. 23,226 16,504
Anthony J. Carroll............................................................................ 5,814 3,154
7,188 4,223
9,680 8,112
Thomas R. Howley.............................................................................. 10,127 5,284
5,814 3,154
5,750 3,378
4,840 4,056
</TABLE>
12
<PAGE>
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON DECEMBER 31, 1993)
The following graph and chart compare the cumulative annual stockholder
return on the Company's Class A Common Stock over the period commencing December
31, 1993 through December 31, 1998 to that of the total return index for the
NASDAQ Stock Market (U.S. Companies) and the Standard & Poor's 400--MidCap
Restaurant Index, assuming the investment of $100 on December 31, 1993. In
calculating total annual stockholder return, reinvestment of dividends is
assumed. The stock performance graph and chart below are not necessarily
indicative of future price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN TO STOCKHOLDERS
<S> <C> <C> <C>
(ASSUMES $100 INVESTMENT ON 12/31/93)
Total Return Analysis
Panera Bread Company S&P MidCap Restaurants Nasdaq Composite
12/31/93 $100.00 $100.00 $100.00
12/31/94 $70.33 $68.74 $96.79
12/29/95 $36.26 $67.92 $136.45
12/30/96 $28.57 $65.15 $167.88
12/31/97 $33.24 $71.42 $205.06
12/31/98 $26.67 $87.40 $297.02
</TABLE>
13
<PAGE>
OWNERSHIP OF PANERA BREAD COMPANY COMMON STOCK
The following table sets forth certain information as of July 1, 1999, with
respect to the Company's Class A and Class B Common Stock owned by (1) each
director of the Company, (2) the executive officers named in the Summary
Compensation Table, (3) all directors and executive officers of the Company as a
group, and (4) each person who is known by the Company to beneficially own more
than five percent of the Company's capital stock. Unless otherwise indicated in
the footnotes to the table, all stock is owned of record and beneficially by the
persons listed in the table.
<TABLE>
<CAPTION>
CLASS CLASS
NAME AND, WITH RESPECT TO OWNER ------------------------- ------------------------- COMBINED VOTING
OF MORE THAN 5%, ADDRESS NUMBER PERCENT (1) NUMBER PERCENT (2) PERCENTAGE (3)
- ------------------------------------------------ ---------- ------------- ---------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Ronald M. Shaich................................ 740,865(4) 6.6% 1,272,540 82.7% 28.2%
Co-Chairman, Director and Chief Executive
Officer c/o Panera Bread Company
159 Overland Road
Waltham, MA 02451
Louis I. Kane................................... 693,580(5) 6.2% 53,406 3.5% 5.2%
Co-Chairman and Director c/o ABP Corporation
19 Fid Kennedy Avenue
Boston, MA 02210
George E. Kane.................................. 33,942(6) * 20,000 1.3% *
Director
Henry J. Nasella................................ 25,080(7) * -- -- *
Director
Richard C. Postle............................... 70,826(8) * -- -- *
President, Saint Louis/Panera Bread Business
Unit
Mark A. Borland................................. 69,918(9) * -- -- *
Chief Operating Officer, Au Bon Pain Business
Unit
Anthony J. Carroll.............................. 79,101 10) * 19,911 1.3% *
Senior Vice President, Treasurer and Chief
Financial Officer
All Directors and officers as a group (19
persons)...................................... 1,810,841 11) 18.8% 1,365,857 88.8% 38.8%
Morgan Stanley Group Inc........................ 1,332,385 12) 12.6% -- -- 8.8%
PG Investors, Inc.
Princes Gate Investors, L.P.
1251 Avenue of the Americas
New York, NY 10020
Brown Capital Management........................ 1,319,450 13) 12.4% -- -- 8.7%
809 Cathedral Street
Baltimore, MD 21201
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
CLASS CLASS
NAME AND, WITH RESPECT TO OWNER ------------------------- ------------------------- COMBINED VOTING
OF MORE THAN 5%, ADDRESS NUMBER PERCENT (1) NUMBER PERCENT (2) PERCENTAGE (3)
- ------------------------------------------------ ---------- ------------- ---------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Princeton Services, Inc. 1,166,800 14) 11.0% 7.7%
Fund Asset Management, L.P...................... -- --
Merrill Lynch Special Value Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
Dimensional Fund Advisors Inc................... 755,900 15) 7.1% -- -- 5.0%
1299 Ocean Avenue, 11(th) Floor
Santa Monica, CA 90401
Cobalt Capital Management, Inc.................. 567,800 16) 5.4% -- -- 3.7%
237 Park Avenue
Suite 801
New York, New York 10012
</TABLE>
- ------------------------
* Less than one percent.
(1) Percentage ownership of Class A Common Stock is based on 10,604,999 shares
issued and outstanding plus shares subject to options exercisable within
sixty days of July 1, 1999 held by the stockholder or group.
(2) Percentage ownership of Class B Common Stock is based on 1,538,247 shares
issued and outstanding plus shares subject to options exercisable within
sixty days of July 1, 1999 held by the stockholder or group.
(3) This column represents voting power rather than percentage of equity
interest as each share of Class A Common Stock is entitled to one vote while
each share of Class B Common Stock is entitled to three votes.
(4) Includes options exercisable within 60 days for 677,330 shares.
(5) Mr. Kane resigned as Co-Chairman of the Company in May 1999 concurrently
with the sale of the Au Bon Pain Division. He resigned as Director in June
1999. Consists of (a) 1,200 shares owned by Mr. Kane's spouse and as to
which Mr. Kane disclaims beneficial ownership; (b) 15,050 shares owned by
Mr. Kane and (c) options exercisable within 60 days for 677,330 shares.
(6) Includes options for 28,542 shares exercisable within sixty days of July 1,
1999 pursuant to the Directors' Plan for independent directors.
(7) Consists of 1,000 shares jointly owned by Mr. Nasella and his spouse and
options for 24,080 shares exercisable within sixty days of July 1, 1999
pursuant to the Directors' Plan for independent directors.
(8) Includes options for 32,162 shares exercisable within 60 days of July 1,
1999.
(9) Mr. Borland resigned from the Company in May 1999 concurrently with the sale
of the Au Bon Pain Division.
(10) Mr. Carroll resigned from the Company in May 1999 concurrently with the
sale of the Au Bon Pain Division.
(11) Includes options for 1,685,992 shares exercisable within sixty days of July
1, 1999. Excluding Messrs. Kane, Carroll and Borland, who resigned effective
with the sale of the Au Bon Pain Division in May 1999, the shares
outstanding and percentages for all directors and officers as a group for
Class A Common Stock, Class B Common Stock and combined voting percentage
would be 968,242 and 13.0%, 1,292,540 and 84.0%, and 31.8%, respectively.
15
<PAGE>
(12) Information included is based solely upon a Schedule 13D filed with the
Commission, jointly on behalf of Morgan Stanley Group Inc. ("MS Group"), PG
Investors, Inc. ("PGI") and Princes Gate Investors, L.P. ("Princes Gate
L.P."). PGI Investors, Inc. is a wholly-owned subsidiary of Morgan Stanley
Group Inc., and is the general partner of Princes Gate L.P. On December 22,
1993, the Company issued to several purchasers, including Princes Gate L.P.,
$30,000,000 in aggregate principal amount of 4.75% Convertible Subordinated
Notes due 2001 (the "Notes"). The Notes are convertible into fully paid and
non-assessable shares of Class A Common Stock at a conversion price (subject
to adjustment) equal to $25.50 principal amount for each share of Class A
Common Stock, or currently 1,176,468 shares of Class A Common Stock in the
aggregate. The amount of shares disclosed includes (a) 317 shares of Class A
Common Stock owned by MS Group's wholly-owned subsidiary, Morgan Stanley &
Co. Incorporated ("MS & Co.") in its capacity as a market-maker in the
Company's Class A Common Stock, (b) 5,600 shares of Class A Common Stock
over which MS & Co. exercises discretionary authority on behalf of
customers, and (c) since PGI exercises investment management, voting and/or
disposition control over all of the Notes and the underlying shares of Class
A Common Stock obtainable upon conversion of the Notes, 1,176,468 shares of
Class A Common Stock obtainable upon conversion of the Notes. In connection
with a financing transaction consummated in July 1996, the number of shares
also includes a Class A Common Stock purchase warrant issued for 150,000
shares, exercisable at $5.62 per share through July 24, 2001. (With respect
to Princes Gate, L.P., the total of 1,332,385 shares includes 881,504 shares
of Class A Common Stock obtainable upon conversion of the Notes, and, in
connection with the financing transaction consummated in July 1996, includes
a Class A Common Stock purchase warrant issued for 112,392 shares,
exercisable at $5.62 per share through July 24, 2001).
(13) Information included is based solely upon a Schedule 13G dated January 8,
1999.
(14) Princeton Services, Inc. ("PSI") is a parent holding company in accordance
with the Securities and Exchange Act of 1934 and is the corporate managing
general partner of Fund Asset Management, L.P. Fund Asset Management, L.P.
d/b/a Fund Asset Management ("FAM") is an investment adviser registered
under section 203 of the Investment Advisers Act of 1940 (the "Advisers
Act"). Merrill Lynch Special Value Fund, Inc. (the "Fund") is an investment
company registered under Section 8 of the Investment Company Act of 1940
(the "Investment Company Act"). FAM acts as an investment adviser to
investment companies registered under Section 8 of the Investment Company
Act and private accounts. With respect to securities held by those
investment companies and private accounts, several persons have the right to
receive, or the power to direct the receipt of dividends from or the
proceeds from the sale of such securities. The Fund, a reporting person for
which FAM serves as investment adviser, has an interest that relates to more
than 5% of the class of the class of securities reported herein. No other
person has an interest that relates to more than 5% of the class of
securities reported herein. PSI is deemed to be the beneficial owner of, and
has shared voting and dispositive power with respect to 1,166,800 shares,
and FAM and the Fund are deemed to be the beneficial owners of, and have
shared voting and dispositive power with respect to 1,140,200 shares.
Information regarding beneficial ownership of the shares has been obtained
solely from the joint Schedule 13G of PSI, FAM and the Fund filed with the
Commission on February 3, 1998.
(15) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 755,900 shares, all of
which shares are held in portfolios of DFA Investment Dimensions Group Inc.,
a registered open-end investment company, or in series of the DFA Investment
Trust Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(16) Information included is based solely upon a 13G dated June 24, 1999.
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no Certain Relationships or Related Transactions during the fiscal
year ended December 26, 1998 to report.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of stockholders of the Company (including director nominations)
intended to be presented at the 2000 Annual Meeting of Stockholders must be
received by the Company not later than January 31, 2000 to be included in the
Company's proxy statement and form of proxy relating to the 2000 Annual Meeting
of Stockholders. Stockholder proposals submitted outside of the process
described in Rule 14a-8 of the Securities Exchange Act of 1934, as amended will
not be considered at any annual meeting of stockholders. Nominations and
proposals of stockholders may be submitted to the Company for consideration at
the 2000 Annual Meeting of Stockholders if certain conditions set forth in the
Company's By-laws are satisfied, although such nominations and proposals will
not be included in the proxy statement and form of proxy relating to that annual
meeting unless submitted in accordance with the time limits and other
requirements set forth above and in the related rules of the Securities and
Exchange Commission.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than 10% of the Company's
outstanding shares of Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC") and Nasdaq.
Officers, Directors and greater than 10% stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
In accordance with the provisions of Item 405 of Regulation S-K, to the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required during the fiscal year ended December 26, 1998, all Section 16(a)
filing requirements applicable to its executive officers, Directors and greater
than 10% beneficial owners were satisfied.
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR 1998 MAY BE OBTAINED WITHOUT CHARGE
UPON WRITTEN REQUEST TO INVESTOR RELATIONS COORDINATOR, PANERA BREAD COMPANY,
7930 BIG BEND BOULEVARD, WEBSTER GROVES, MO 63119.
17
