<PAGE>
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
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TCBY ENTERPRISES, INC.
(Name of Registrant as Specified In Its Charter)
TCBY ENTERPRISES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 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:
------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
TCBY ENTERPRISES, INC.
425 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
March 14, 1994
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of TCBY
Enterprises, Inc. will be held at the State House Convention Center, 1
Statehouse Plaza, Little Rock, Arkansas, on Thursday, April 14, 1994, at 10:00
a.m., Little Rock time, to consider the following proposals:
1. to elect nine directors; and
2. to transact such other business as may properly come before the
meeting.
By order of the Board of Directors,
BETTE D. CLAY
SECRETARY
------------------------
PROXY STATEMENT
Only stockholders of record at the close of business on March 14, 1994 will
be entitled to notice of and to vote at the meeting. The Company had outstanding
26,807,047 shares of common stock (inclusive of treasury stock) as of the close
of business on February 18, 1994. There are no other outstanding voting
securities. Each stockholder is entitled to one vote per share for the election
of directors, as well as on other matters. The accompanying proxy form is
solicited on behalf of the Board of Directors. If the proxy form is signed and
returned, the shares represented thereby will be voted; and it is intended that
they will be voted for the nominees named herein, except to the extent authority
to vote is withheld. The stockholder may revoke the proxy at any time prior to
the voting thereof by giving written notice of such revocation to the Company,
by executing and duly delivering a subsequent proxy or by attending the meeting
and voting in person. In addition to the use of the mails, proxies may be
solicited by directors, officers, or regular employees of the Company and its
subsidiaries in person, by telegraph or by telephone.
The Company knows of no matter to be brought before the meeting other than
that referred to in the accompanying notice of annual meeting. If, however, any
other matters properly come before the meeting, the proxy solicited hereby
confers discretionary authority to the proxies to vote in their sole discretion
with respect to such matters, as well as other matters incident to the conduct
of the meeting.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 18, 1994, with respect to each
person who is known to the Company to be the beneficial owner of more than 5% of
the outstanding shares of common stock of the Company, the name and address of
such owner, the number of shares of common stock beneficially owned, the nature
of such ownership, and the percentage such shares comprised of the outstanding
shares of common stock of the Company:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT*
OF BENEFICIAL OWNER (A) OWNERSHIP OF CLASS
- ----------------------------------------------------------- --------------------- ------------
<S> <C> <C>
Frank D. Hickingbotham(b) ................................. 10,031,712 39.4%
c/o TCBY Enterprises, Inc.
425 West Capitol Avenue
Little Rock, Arkansas 72201
<FN>
- ------------------------
* Percentages are based upon 25,489,978 shares outstanding and entitled to
vote (excluding 1,317,069 shares the Company holds as treasury stock which
is not entitled to vote) on February 18, 1994.
(a) The Company is relying on reports filed under Section 13 of the Securities
Exchange Act of 1934, as amended, for purposes of determining ownership of
more than 5% of its common stock by any person or group.
(b) See the table and footnote (a) under "Nominees for Election as Directors."
</TABLE>
2
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS;
SECURITY OWNERSHIP OF MANAGEMENT
Nine persons are nominated for election as directors to hold office until
the annual meeting of stockholders in 1995 and until their respective successors
are elected and qualified. The following table sets forth certain information as
of January 1, 1994 with respect to the positions held and beneficial ownership
of the Company's Common Stock by its directors, nominees for election as
directors and certain named executive officers:
<TABLE>
<CAPTION>
OUTSTANDING COMMON
STOCK
PRINCIPAL OCCUPATION; NAME OF FIRST BECAME A OF COMPANY
ORGANIZATION IN WHICH OCCUPATION IS DIRECTOR OF THE BENEFICIALLY OWNED
CARRIED ON; OFFICES AND POSITIONS, IF ANY, COMPANY OR OF A AT JANUARY 1,
NAME HELD WITH THE COMPANY; AND AGE PREDECESSOR 1994(A)
- ------------------------------------ -------------------------------------------- --------------- ------------------
<S> <C> <C> <C>
DIRECTOR NOMINEES
Frank D. Hickingbotham.............. Chairman of the Board and Chief Executive 1970 10,031,712
Officer of the Company; Age 57(b)
Herren C. Hickingbotham............. President of the Company; Age 35(b) 1982 572,912
William H. Bowen.................... President and Chief Executive Officer, 1993 *
Healthsource Arkansas Ventures, Inc.
(health maintenance organization); Age
70(b)
Daniel R. Grant..................... President Emeritus, Ouachita Baptist 1989 *
University; Age 70
F. Todd Hickingbotham............... President of Riverport Equipment and 1990 533,890
Distribution Company, a subsidiary of the
Company; Age 30
Don O. Kirkpatrick.................. President and Chief Executive Officer, 1993 *
Quality Foods, Inc. (foodservice
distribution); Age 56
Gale Law............................ Senior Vice President, Treasurer and Chief 1989 *
Financial Officer of the Company; Age 48(b)
Marvin D. Loyd...................... Dentist; Age 61 1984 *
Hugh H. Pollard..................... Chief Executive Officer of Brooks-Pollard 1984 286,000
Co., Inc. (a marketing consulting firm);
Age 53(b)
NAMED EXECUTIVES
Kevin Carlin........................ President, Carlin Manufacturing, Inc., a N/A *
subsidiary of the Company; Age 39(c)
Charles A. Cocotas.................. President, TCBY Systems, Inc., a subsidiary N/A *
of the Company; Age 58
Thomas Tipps........................ President, Americana Foods Limited N/A *
Partnership and the National Sales Division
of TCBY Systems, Inc., subsidiaries of the
Company; Age 47
<FN>
- ------------------------
* Denotes ownership of less than 1% of the outstanding common stock of the
Company.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(a) Includes shares, if any, held by spouse; held in joint tenancy with spouse;
held by or for the benefit of nominee or one or more members of nominee's
immediate family; held by a charitable foundation of which the nominee is
the trustee; credited to nominee's account in the Company's employee or
non-employee director stock option plans; with respect to which the nominee
has or shares voting or investment powers; subject to employee stock
options which were exercisable on January 1, 1994 (355,132 shares) or which
have or will become exercisable within 60 days thereafter; or in which the
nominee otherwise has a beneficial interest. All directors and officers as
a group beneficially own an aggregate of 11,791,613 shares (44% of all
outstanding shares).
(b) Also a member of the Executive Committee of the Board of Directors of the
Company.
(c) Mr. Carlin's employment by the Company ended as of November 30, 1993.
</TABLE>
Frank D. Hickingbotham is the father of Herren C. Hickingbotham and F. Todd
Hickingbotham. No other family relationships exist among any of the above named
individuals.
Mr. Bowen served as Chairman and Chief Executive Officer of First Commercial
Corporation, a bank holding company, from 1984 to 1991 and currently remains a
director of that company. From September 1991 to December 1992, Mr. Bowen served
as Chief of Staff to former Arkansas Governor Bill Clinton.
Except as set forth above each of the foregoing nominees has served on the
nominee's respective company in the capacity set forth or in various
administrative or executive positions with such company, its parents or
subsidiaries for at least five years.
BOARD OF DIRECTORS
The Board of Directors of the Company held meetings or acted by written
consent five (5) times during the fiscal year ended November 30, 1993. All of
the Company's incumbent director nominees attended each of these meetings. The
Board of Directors has standing compensation and audit committees; it does not
have a standing nominating committee. Directors who are not officers of the
Company or any subsidiary of the Company are paid $1,000 for each day of
attendance at Board meetings, are reimbursed for expenses and were paid
additional fees of $5,000 for fiscal 1993. In 1992, the Company's stockholders
approved the adoption of the 1992 Nonemployee Director Stock Option Plan
("Director Plan") pursuant to which each director of the Company who was not
otherwise an employee of the Company or any subsidiary on April 1, 1992
("Effective Date") automatically was granted options to purchase shares of the
Company's common stock on such date, determined by multiplying one plus the
number of whole years of continuous service on the Board during the period
commencing on March 31, 1985 through March 30, 1991 times 4,000. Each director
elected to the Board after the Effective Date shall upon such election
automatically be granted an option to purchase 4,000 shares. Additionally, on
each succeeding April 1 following the Effective Date, each director shall
automatically be granted an option to purchase 4,000 shares of common stock;
provided however, that such option grants shall only be made to those directors
who (i) are not otherwise employees of the Company or any subsidiary on the date
of grant; (ii) were not employees of the Company or any subsidiary at any time
during the period commencing on the date of the last annual meeting through the
date of grant (the "Eligibility Period"); (iii) served on the Board for the
entire Eligibility Period; and (iv) attended at least 50% of the meetings of the
Board during the Eligibility Period. As of February 15, 1994, none of these
options had been exercised. In fiscal 1993 4,000 options were granted under this
plan to each of the five non-employee directors now nominated for election.
Outstanding options terminate three months after a director's service ends,
except in case of the death or permanent disability of such director. The
exercise price of all options under this plan is equal to the fair market value
of the common stock of the Company as of the close of trading on the date of the
grant.
The Compensation Committee, which during fiscal 1993 consisted of Mr. Bowen,
Dr. Grant and Dr. Loyd, considers, approves and reports to the
4
<PAGE>
Board of Directors the compensation to be paid to the officers of the Company,
determines the amounts of grants under the Company's stock option plans and
makes recommendations to the Board with respect to the Company's compensation
policies. The Compensation Committee held 3 meetings during fiscal 1993.
The Audit Committee, which during fiscal 1993 consisted of Dr. Loyd, Dr.
Grant and Mr. Kirkpatrick, recommends independent public accountants for
appointment by the Board of Directors as auditors of the Company and its
subsidiaries, reviews and makes recommendations to the Board with respect to the
scope of the annual audit of the Company and its subsidiaries, reviews
recommendations made by the auditors with respect to the accounting methods used
and the adequacy of the Company's internal control structure and advises the
Board with respect to such recommendations, and approves non-audit services. The
Audit Committee held 3 meetings in fiscal 1993.
REMUNERATION
The following table shows the cash compensation paid by the Company, and its
subsidiaries, as well as certain other compensation paid or accrued, during the
fiscal years indicated, to each of the five most highly compensated executive
officers of the Company and its subsidiaries, in all capacities in which they
served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION
----------------------------------- AWARDS
OTHER ANNUAL ------------- ALL OTHER
SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(A) (IN SHARES) ($)(A)
- ------------------------------------------ --------- --------- --------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.................... 1993 410,192 16,422 12,500 4,497(b)
Chairman and CEO 1992 410,000 15,000 4,000(b)
1991 406,000
Herren C. Hickingbotham................... 1993 244,041 24,266 11,000 4,497(b)
President 1992 234,000 12,500 4,000(b)
1991 230,000
Kevin Carlin.............................. 1993 251,216 2,367(e) 3,000 3,551(b)
President -- Carlin Manufacturing, Inc. 1992 240,000 132,000 3,000 4,000(b)
1991 218,000
Charles A. Cocotas(c)..................... 1993 186,550 75,000 10,000 976(d)
President -- TCBY Systems, Inc. 1992 106,731 100,000 3,841(d)
Thomas R. Tipps(c)........................ 1993 168,074 1,851 15,826(d) 10,000 1,851(b)
President -- Americana Foods Limited 1992 115,000 45,000 43,000(d) 100,000
Partnership
<FN>
- ------------------------
(a) In accordance with Securities and Exchange Commission ("SEC") rules,
information with respect to fiscal year 1991 has been omitted.
(b) Represents amounts contributed as matching contributions under the
Company's 401(k) Plan.
(c) Mr. Tipps and Mr. Cocotas were not executive officers of the Company prior
to fiscal 1992.
(d) Primarily relocation expenses incurred in fiscal 1993.
(e) Primarily represents net gain on exercise of 2,100 options (1,350 options
at a price of $6.375 and 750 options at a price of $5.75) and subsequent
sale at a per share price of $7.25.
</TABLE>
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended November
30, 1993:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE
GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION --------------------
NAME (#)(A) 1992 ($/SHARE)(B) DATE 5%($)(C) 10%($)(C)
- ------------------------------------------ --------- ----------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.................... 12,500 3.74% $ 4.75 12/10/2002 $ 37,341 $ 94,628
Herren C. Hickingbotham................... 11,500 3.29% 4.75 12/10/2002 32,860 83,273
Kevin Carlin.............................. 3,000 0.89% 4.75 12/10/2002 8,962 22,711
Charles A. Cocotas........................ 10,000 2.99% 4.75 12/10/2002 29,872 75,703
Thomas R. Tipps........................... 10,000 2.99% 4.75 12/10/2002 29,872 75,703
<FN>
- ------------------------
(a) Except as noted, the options become exercisable in 4 equal annual
installments beginning one year after the date of grant assuming continued
employment with the Company or its subsidiaries.
(b) The exercise price reflects the fair market value of the Company's Common
Stock on the date of grant. Currently, the exercise price may be paid in
cash or in shares of the Company's Common Stock having a fair market value
on the date of exercise equal to the aggregate option price. Any obligation
to pay federal or state withholding taxes must be paid in cash.
(c) As required by rules of the SEC, potential values stated are based on the
prescribed assumption that the Company's Common Stock will appreciate in
value from the date of grant to the end of the option term (ten years from
the date of grant) at annualized rates of 5% and 10% (total appreciation of
63% and 159%), respectively, and therefore are not intended to forecast
possible future appreciation, if any, in the price of the Company's Common
Stock.
</TABLE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
The following table provides information concerning unexercised options held
by the named executive officers as of the fiscal year ended November 30, 1993:
<TABLE>
<CAPTION>
NUMBER NUMBER
NAME(A) EXERCISABLE MARKET VALUE UNEXERCISABLE MARKET VALUE
- ----------------------------------------------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Frank D. Hickingbotham......................... 20,675 $ 1,875 26,425 $ 24,375
Herren C. Hickingbotham........................ 25,459 9,956 22,382 20,625
Kevin Carlin................................... -0- -0- 6,600 5,625
Charles A. Cocotas............................. 50,000 56,250 60,000 71,250
Thomas R. Tipps................................ 50,000 56,250 60,000 71,250
<FN>
- ------------------------
(a) There were no options exercised by any named executive during fiscal 1993,
except in the case of Mr. Carlin (see Summary Compensation Table).
</TABLE>
EMPLOYMENT ARRANGEMENTS
Messrs. Cocotas and Tipps each entered into substantially similar employment
agreements with subsidiary companies; Mr. Cocotas entered into an agreement with
TCBY Systems, Inc., as of February 17, 1992, and Mr. Tipps entered into an
agreement with Americana Foods Limited Partnership as of March 3, 1992. The
material terms of each agreement provide for minimum, fixed compensation of
$150,000 (increased subsequently by the Company), a grant of 100,000 stock
options under the
6
<PAGE>
Company's current plans but vesting half on the first and half on the second
anniversary date of grant, accelerated vesting of the 100,000 option grant in
the event of a change of control of the Company, termination of the agreement on
the second anniversary of the agreement, and a post-employment covenant against
competition with the Company for a term of one year.
Messrs. Herren Hickingbotham, Cocotas, and Tipps, each, as well as certain
other officers of the Company have entered into change of control agreements
with the Company in which 2 times (2.99 in Mr. Hickingbotham's case; other
officers have the same or lower multiple) the average of the immediately
preceding five year's annual includable compensation will be paid to them upon
an involuntary termination of employment for either (i) a one year period
following a change of control of the Company or (ii) a voluntary termination of
employment between the 90th day following up to the anniversary date of a change
of control. "Change of control" is defined in the agreements. Any payments under
these agreements are expressly limited by so called "safe harbor" provisions of
Section 280G of the Internal Revenue Code of 1986 and the regulations
promulgated thereunder.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. At fiscal 1993 year end, the
Compensation Committee was comprised of Mr. William H. Bowen, Dr. Marvin D.
Loyd, and Dr. Daniel R. Grant, all of whom are nonemployee directors of the
Company. The Compensation Committee establishes policies relating to the
compensation of executive officers, approves management's recommendations on
executive compensation amounts, and oversees the administration of the Company's
employee benefit plans.
Set forth below is the Compensation Committee's report which describes the
components of the Company's executive compensation program for fiscal 1993 and
the underlying policies upon which compensation determinations were based.
COMPENSATION POLICIES
The goal of the Company's compensation policy is to ensure that executive
compensation is related to and supports the Company's overall objective of
enhancing shareholder value. To achieve this goal the following objectives have
been adopted by the Compensation Committee as guidelines for compensation
decisions:
- Provide a competitive compensation package that enables the
Company to attract and retain key executives;
- Relate compensation to past and anticipated individual and
Company performance; and
- Align employees' interests with the interests of shareholders
by encouraging executive stock ownership.
COMPENSATION ELEMENTS
The Committee believes that the above objectives are obtained by combining
cash and equity based compensation. For fiscal 1993, the Company's compensation
program consisted of (i) base salary, adjusted from the prior year; (ii)
discretionary bonuses based upon individual initiatives and performance; (iii)
stock option grants under the Company's 1992 Employee Stock Option Plan and (iv)
matching contributions under the Company's deferred compensation plan.
BASE SALARY. Executives' base salary levels are reviewed annually to
determine whether they are near the median range of persons holding comparable
positions at companies engaging in similar businesses of similar size and
complexity and whether they fairly compensate executives for past and
anticipated efforts. Various salary studies reviewed by the Compensation
Committee indicate that the executive officers of the Company generally are paid
at or below the median salary of all executives performing similar functions at
companies engaged in similar businesses of similar size. New executive
management was hired in 1992, and salaries established for these persons were
believed to be
7
<PAGE>
commensurate with each such officer's experience and anticipated contribution to
the profitability of the Company. Individual salaries are based upon past and
anticipated individual performance, level and scope of responsibility, and
experience within a competitive salary range in line with the pay practices of
similarly situated companies. Base salaries for executives increased only
slightly during fiscal 1993 and fiscal 1992, except for Messrs. Cocotas and
Tipps (see below). This occurred despite increased responsibilities for most
members of management as Company staff was reduced during this period. The
Compensation Committee believes that such salaries were competitive within a
range that the Committee believes to be reasonable and necessary to accomplish
the Company's compensation objectives. The base salaries of Messrs. Cocotas and
Tipps were increased in fiscal 1993 to reflect the Compensation Committee's
belief that their respective performances merited the increases.
CASH BONUSES. In prior fiscal years the Compensation Committee determined
whether to award bonuses to executive officers based upon their individual
performances and the performance of the Company. For fiscal 1993 the
Compensation Committee adopted the Company's general bonus program for all
executive and other officers of the Company. Bonus participation was set at a
percentage of base salary for each full-time employee of the Company (except for
full-time employees who were already covered by a bonus program, such as those
operating Company-owned stores, at Carlin Manufacturing, Inc., and at Americana
Foods Limited Partnership) by the Company's internal salary administration
committee, and in the case of executives and officers by the Compensation
Committee; the percentage assigned to the position was determined in all cases
based upon the relative value to the Company of the work to be performed by the
employee holding such position. The bonus participation assigned was attainable
in four equal parts by each employee: (i) individual performance, as determined
by the employee's immediate supervisor or Compensation Committee, in the case of
the executive officers of the Company; (ii) departmental or group performance,
as determined with reference to the financial plan for that department or group
established and approved prior to commencement of the fiscal year; (iii)
subsidiary or division performance, also as determined with reference to the
financial plan for that subsidiary or division established prior to commencement
of the fiscal year; and (iv) overall Company performance, also as determined
with reference to the financial plan for the Company. In addition, for fiscal
1993 an additional condition existed for all bonus plan participants: No bonus
would be payable for the fiscal year unless the Company achieved at least 75% of
its planned earnings; the Company failed to achieve such goal for fiscal 1993,
and payments under the bonus program were not made. Discretionary payments
ranging from $100 to two weeks' salary (based upon employment longevity) were
paid as Christmas bonuses to reflect employee efforts for fiscal 1993, and such
payments for executive officers were approved by the Compensation Committee. In
fiscal 1993 discretionary cash bonuses totalling $75,000 were paid to Mr.
Cocotas reflecting his perceived contributions to the Company and his efforts on
behalf of the Company; the bonus payments made were not pursuant to the
aforementioned or any other plan.
STOCK OPTIONS. The Compensation Committee strongly believes that the
interests of shareholders and executives become more closely aligned when such
executives are provided an opportunity to acquire a proprietary interest in the
Company through ownership of the Company's common stock. Accordingly, key
employees of the Company, including executive officers, as part of their overall
compensation package, are eligible for participation in the Company's Employee
Stock Option Plan, whereby they are granted options to purchase shares of the
Company's Common Stock in the future at a price specified at time of grant.
Stock options are granted at no less than fair market value on the date of
grant, and are exercisable in four annual installments beginning one year after
the date of grant. Because no benefit is received unless the Company's stock
price performs favorably, awards under the stock option plan are intended to
provide incentives for executive officers to enhance long-term corporate
performance, as reflected in stock price appreciation, thereby increasing
shareholder value. Individual stock option grants are determined after
considering a number of factors such as individual performance, Company
performance, and the relative mix of cash and non-cash compensation. During
fiscal 1993, options to purchase a total of 90,000 shares were granted to
executive officers at a price of $4.75 per share.
8
<PAGE>
DEFERRED COMPENSATION. The Company has adopted a broad-based pre-tax
savings plan (the "401(k) Plan") to provide a means for eligible employees to
defer a portion of their compensation and encourage savings to provide
additional financial security for the future. While the Compensation Committee
considers this to be an important element of its employees' compensation
package, Company contributions under the 401(k) plan are fixed and therefore are
not directly tied to individual or corporate performance.
CEO COMPENSATION
Mr. Frank D. Hickingbotham has been Chairman and Chief Executive Officer of
the Company since its inception in 1981. As with other executive officers, Mr.
Hickingbotham's compensation package has been designed to encourage short and
long-term performance in line with the stockholder interests. The Compensation
Committee believes that Mr. Hickingbotham's base salary is reflective of his
position and responsibility, and various salary surveys reviewed by the
Compensation Committee indicate that he is paid comparably to chief executive
officers of companies of similar size. Mr. Hickingbotham's 1993 salary was
determined based upon the factors considered in determining the base salary for
all executives.
In accordance with the Company's overall policy with regard to and treatment
of cash bonuses in fiscal 1993, Mr. Hickingbotham received a Christmas bonus
equal to two weeks' base salary. In keeping with the Company's goal of linking
executive compensation to the creation of shareholder value, Mr. Hickingbotham
was granted stock options to purchase 12,500 shares of the Company's Common
Stock. In granting such options, the Compensation Committee considered Mr.
Hickingbotham's level and scope of responsibility, contributions to the Company
and the extent to which such options were being granted in lieu of other
cash-based compensation.
SUMMARY
The Compensation Committee believes that the combination of base salary and
bonuses based upon individual and corporate performance in conjunction with
equity based compensation linking executives interests with the interests of the
Company's shareholders, provides a competitive program which reflects the
Company's compensation policies described above. The Committee further believes
that these policies are specifically reflected in fiscal 1993 compensation
levels.
COMPENSATION COMMITTEE
William H. Bowen
Daniel R. Grant
Marvin D. Loyd
9
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the Dow Jones Equity Market Index and Dow Jones Consumer
Cyclical Sector Entertainment & Leisure-Restaurants Index for the last five
years beginning November 30, 1988 and ending November 30, 1993. The graph
assumes that the value of the investment in the Company's Common Stock and each
index was $100 at November 30, 1988 and that all dividends, if any, were
reinvested.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
TCBY Enterprises, Inc. $ 217 $ 59 $ 55 $ 50 $ 68
Dow Jones Equity Market Index $ 145 $ 127 $ 160 $ 228 $ 266
Dow Jones Consumer Cyclical Sector Entertainment & Leisure-Restaurants
Index $ 131 $ 125 $ 152 $ 182 $ 200
</TABLE>
CERTAIN TRANSACTIONS
The Company engages Brooks-Pollard Co., Inc., a marketing consulting firm of
which Mr. Hugh H. Pollard is Chief Executive Officer, to advise and assist its
marketing department. The Company paid to Brooks-Pollard Co., Inc. approximately
$190,619 primarily for consultation services in fiscal 1993.
The Company's health plans administrator, Spradley & Coker, Inc., was
acquired by Healthsource Arkansas Ventures, Inc., in 1993. Mr. William H. Bowen
is President and Chief Executive Officer of the acquiring company. In fiscal
1993 the Company paid fees of $76,400 to Spradley & Coker.
The Company contracts with Quality Foods, Inc., for certain foodservice
distribution, primarily within the State of Arkansas in connection with
deliveries to accounts of the National Sales Division of TCBY Systems, Inc. The
value of goods handled by Quality Foods for the National Sales Division was
$329,235 in fiscal 1993, and Quality Foods, Inc. derived fees therefrom
consistent with industry standards.
During fiscal 1993, the Company deposited monies in banks owned by FDH
Bancshares, Inc., a bank holding company, the sole shareholder of which is Mr.
Frank D. Hickingbotham. Deposits bore market rates of interest.
10
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AUDITORS
Representatives of Ernst & Young, the Company's auditors, are expected to be
present at the meeting and will be available to respond to questions and may
make a statement if they so desire.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the annual meeting of
stockholders in 1995 must be received by the Company by November 18, 1994 in
order to be eligible for inclusion in the proxy statement and proxy form
relating to such meeting.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made by officers, directors and employees of the Company personally or by
mail, telephone, telegraph or other similar means of communication; provided
that solicitation by such persons is made on a part time basis and no special
compensation, other than actual expenses incurred, will be paid.
IMPORTANT
All stockholders are cordially invited to attend the meeting in person. If
you cannot be present at the meeting, please sign and date the enclosed Proxy
and mail it PROMPTLY in the enclosed self-addressed envelope. No postage need be
affixed if mailed in the United States.
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