<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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
TCBY ENTERPRISES, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TCBY ENTERPRISES, INC.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $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 (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:
[X] 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: $125.00
(2) Form, Schedule or Registration Statement No.: PRELIMINARY PROXY
STATEMENT AND PROXY CARD
(3) Filing Party: TCBY ENTERPRISES, INC.
(4) Date Filed: FEBRUARY 17, 1995
Notes:
<PAGE>
TCBY ENTERPRISES, INC.
425 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
March 1, 1995
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 Wednesday, April 12, 1995, at 10:00
a.m., Little Rock time, to consider the following proposals:
1. to elect nine directors;
2. to amend the 1992 Employee Stock Option Plan; and
3. 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 1, 1995 will be
entitled to notice of and to vote at the meeting. The Company had outstanding
26,911,333 shares of common stock (inclusive of treasury stock) as of the close
of business on February 1, 1995. 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. Broker non-votes
are not relevant to the proposal to elect directors but will be counted for
quorum purposes. Broker non-votes will have the same effect as abstentions for
purposes of determining whether the proposal to approve the Amendment to the
1992 Employer Stock Option Plan has been approved.
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.
1
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 15, 1995, 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>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT*
OF BENEFICIAL OWNER(A) OF BENEFICIAL OWNERSHIP OF CLASS
---------------------- ----------------------- --------
<S> <C> <C>
Frank D. Hickingbotham(b)................ 9,932,376 38.8%
c/o TCBY Enterprises, Inc.
425 West Capitol Avenue
Little Rock, Arkansas 7220
</TABLE>
- --------
* Percentages are based upon 25,594,264 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 1, 1995.
(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."
[THIS SPACE LEFT BLANK INTENTIONALLY]
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 1996 and until their respective successors
are elected and qualified. The following table sets forth certain information
as of January 1, 1995 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>
FIRST OUTSTANDING
BECAME A COMMON STOCK
PRINCIPAL OCCUPATION, NAME OF DIRECTOR OF OF COMPANY
ORGANIZATION IN WHICH OCCUPATION IS THE COMPANY BENEFICIALLY
CARRIED ON, OFFICES AND POSITIONS, OR OF A OWNED AT
NAME IF ANY, HELD WITH THE COMPANY, AND AGE PREDECESSOR JANUARY 1, 1995(A)
---- -------------------------------------- ----------- ------------------
<S> <C> <C> <C>
Frank D. Hickingbotham.. Chairman of the Board and Chief 1970 9,951,126
Executive Officer of the Company; Age
58(b)
Herren C. Hickingbotham. President of the Company; Age 36(b) 1982 582,884
William H. Bowen........ President and Chief Executive Officer, 1993 *
Healthsource Arkansas Ventures, Inc.
(health maintenance organization); Age
71(b)
Daniel R. Grant......... President Emeritus, Ouachita Baptist 1989 *
University; Age 71
F. Todd Hickingbotham... President of Riverport Equipment and 1990 531,407
Distribution Company, a subsidiary of
the Company; Age 31
Don O. Kirkpatrick...... President and Chief Executive Officer, 1993 *
Quality Foods, Inc. (foodservice
distribution); Age 57
Gale Law................ Senior Vice President, Treasurer and 1989 *
Chief Financial Officer of the Company;
Age 49(b)
Marvin D. Loyd.......... Dentist; Age 62 1984 *
Hugh H. Pollard......... Chief Executive Officer of Brooks- 1984 330,000
Pollard Co., Inc. (a marketing
consulting firm); Age 54(b)
<CAPTION>
NAMED EXECUTIVES
- ----------------
<S> <C> <C> <C>
Charles A. Cocotas...... President, TCBY Systems, Inc., a N/A *
subsidiary of the Company; Age 59(c)
Thomas R. Tipps......... President, Americana Foods Limited N/A *
Partnership, subsidiary of the Company;
Age 48
William P. Creasman..... Senior Vice President and General N/A *
Counsel of the Company; Age 42
</TABLE>
- --------
* Denotes ownership of less than 1% of the outstanding common stock of the
Company.
(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, 1995 (501,247 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 10,813,982 shares (42.3% of all
outstanding shares, excluding shares the Company holds as treasury stock).
(b) Also a member of the Executive Committee of the Board of Directors of the
Company.
(c) Mr. Cocotas' employment by the Company ended as of July 31,1994.
3
<PAGE>
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. Mr. Bowen
began his current service as President and Chief Executive Officer of
Healthsource Arkansas Ventures, Inc., in September, 1993.
Except as set forth above each of the foregoing nominees has served 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, 1994. 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 1994. 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, 1995,
none of these options had been exercised. In fiscal 1994, 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 1994 consisted of Mr. Bowen,
Dr. Grant and Dr. Loyd, considers, approves and reports to the 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 1994.
The Audit Committee, which during fiscal 1994 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 2 meetings in fiscal 1994.
4
<PAGE>
AMENDMENT OF 1992 EMPLOYEE STOCK OPTION PLAN
At the Annual Meeting of Stockholders on April 14, 1992, the Stockholders of
the Company approved the 1992 Employee Stock Option Plan of TCBY Enterprises,
Inc. (the "Plan"). The Plan provides for up to one million (1,000,000) shares
to be made available to key employees of the Company and its subsidiaries who
render those types of services which tend to contribute materially to the
success of the Company and its subsidiaries. The Plan is administered by the
Compensation Committee of the Board of Directors, and in keeping with that
Committee's philosophy regarding incentive compensation (see section entitled
"BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION," below), an
additional five hundred thousand (500,000) unissued shares are deemed necessary
and are therefore requested to be authorized for grant under the terms and
conditions of the Plan. No other amendment is requested. Approval of this Plan
amendment requires the affirmative vote of a majority of shares of the
Company's common stock present, in person or by proxy, at the Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL TO AMEND THE PLAN AS STATED.
The following is a brief summary of the Plan. The Plan provides for the
granting of options to purchase up to one million shares of the Company's
common stock. The Plan is administered by the Board's Compensation Committee
whose members are "disinterested persons" within the meaning of federal
securities laws.
The number and kind of shares subject to the Plan would be appropriately
adjusted in the event of any change in the capital structure of the Company.
Further, the Plan specifically provides that if the Company adopts a dual class
of capital stock whereby one class of stock would have voting rights superior
to another, then unexercised options would automatically convert to options to
acquire the lesser voting stock in number and with such exercise price as
determined by the Board's Compensation Committee to be in proportion to the
original option grant. Stockholders would have no preemptive rights with regard
to shares allotted to the Plan.
Participants are selected by the Compensation Committee itself upon the
recommendation of management. The Compensation Committee determines the number
of shares to be optioned to any individual under the Plan. Options vest and
become exercisable in the manner and within the periods specified by the
Compensation Committee.
The Board of Directors is able to suspend, terminate, or amend the Plan. The
Board is not required to obtain Stockholder approval of any amendment to the
Plan except where such approval is necessary to assure the Plan's continued
qualification under Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), under New York Stock Exchange Rules or under the
Internal Revenue Code of 1986, as amended (the "Code").
The Plan enables the Company to grant either "incentive stock options"
(within the meaning of the Code) or options that are not intended to be
"incentive stock options." No options can be granted under the Plan later than
April 14, 2002. Any options granted under the Plan must have an exercise period
of no more than ten years. No option shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution, and each
option is exercisable during the lifetime of an optionee only by such optionee
and at death by his heirs, executors, or administrators. The Plan provides that
upon termination of employment of the optionee for a cause other than death,
disability, or retirement, the rights to exercise the option which have accrued
at the date of termination cease, whether or not accrued at the date of
termination, unless the Compensation Committee otherwise specifies. In the
event of termination of employment due to death, full disability, or
retirement, the period of time following the date of such termination in which
a subject option may be exercised is three months for "incentive stock
options."
5
<PAGE>
The exercise price per share for each option is and will be not less than the
fair market value on the date of grant, determined as prescribed by the Code.
It is provided that payment for the portion exercised may be made only in whole
at the time of exercise of the option in cash or in the Company's common stock
(whether or not owned prior to the exercise date) valued at its fair market
value on the exercise date. Proceeds received from optioned shares will be used
for general corporate purposes.
The aggregate fair market value (determined as of the time such option is
granted) of the common stock for which any employee may have incentive stock
options vest in any calendar year may not exceed $100,000.
No determination has been made with respect to future recipients of options
under the Plan and it is not possible to specify the names or positions of the
persons to whom options may be granted, or the number of shares, within the
limitations of the Plan, to be covered by such options.
Under currently applicable provisions of the Code, as amended, an optionee
will not be deemed to receive any income for Federal tax purposes upon the
grant of any option under the Plan, nor will the Company be entitled to a tax
deduction at that time. Upon the exercise of a non-incentive option, the
optionee will be deemed to have received ordinary income in an amount equal to
the difference between the option price and the market price of the shares on
the exercise date. The Company will be allowed an income tax deduction equal to
the excess of market value of the shares on the date of exercise over the cost
of such shares to the optionee. Upon the exercise of an incentive stock option,
there is no income recognized by the optinee at the time of exercise. If the
stock is held at least one year following the exercise date and at least two
years from the date of grant of the option, the optionee will realize a capital
gain or loss upon sale, measured as the difference between exercise price and
the sale price. If both of these holding period requirements are not satisfied,
ordinary income tax treatment will apply to the amount of gain at sale or
exercise, whichever is less. If the actual gain exceeds the amount of ordinary
income, the excess will be considered short-term or long-term capital gain
depending on how long the shares are actually held. No income tax deduction
will be allowed the Company with respect to shares purchased by an optionee
upon the exercise of an incentive stock option, provided such shares are held
for the required periods as described above. Under the Code, as amended, an
option will generally be disqualified from receiving incentive stock option
treatment if it is exercised more than three months following termination of
employment. However, if the optionee is disabled, such statutory treatment is
available for one year following termination. If the optionee dies while
employed by the Company or within three months thereafter, the statutory time
limit is waived altogether. In no event do these statutory provisions extend
the rights to exercise an option beyond those provided by its terms.
6
<PAGE>
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
ANNUAL COMPENSATION COMPENSATION
------------------------------ -------------
AWARDS
OTHER ANNUAL ------------- ALL OTHER
SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (IN SHARES) ($)
- --------------------------- ---- ------- ------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.. 1994 412,692 68,475 12,431 20,000 4,620(a)
Chairman and CEO 1993 410,192(d) -- 16,422 12,500 4,497(a)
1992 410,000(d) -- 15,000 4,000(a)
Herren C. Hickingbotham. 1994 242,221 40,095 15,871 32,000 4,620(a)
President 1993 244,041(d) -- 24,266 11,000 4,497(a)
1992 234,000(d) -- 12,500 4,000(a)
Charles A. Cocotas...... 1994 98,308 50,000 78,213(c) 15,000 --
President--TCBY 1993 186,550 75,000 976(b) 10,000 --
Systems, Inc. 1992 106,731 30,000 3,841(b) 100,000 --
Thomas R. Tipps......... 1994 178,365 8,000 2,825 15,000 3,618(a)
President--Americana 1993 168,074(d) -- 15,826(b) 10,000 1,851(a)
Foods Limited
Partnership 1992 115,000 45,000 43,000(b) 100,000 --
William P. Creasman..... 1994 143,715 14,420 109 13,000 2,379(a)
Senior Vice President 1993 144,231(d) -- 102 8,000 2,158(a)
and General Counsel
1992 135,012(d) -- 71 10,000 1,275(a)
</TABLE>
- --------
(a) Represents amounts contributed as matching contributions under the
Company's 401(k) Plan.
(b) Primarily attributed to relocation expenses.
(c) Represents estimated net gain on exercise of 102,500 options (100,000
options at a price of $5.125 per share and 2,500 options at a price of
$4.75 per share) at various times in 1994.
(d) Includes non-performance based Christmas gift equal to base salary for two
weeks (one week in the case of Mr. Tipps).
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the named
executive officers of the Company during the fiscal year ended November 30,
1994:
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS POTENTIAL REALIZABLE
GRANTED TO VALUE AT ASSUMED
OPTIONS EMPLOYEES EXERCISE ANNUAL RATES OF STOCK
GRANTED IN FISCAL PRICE EXPIRATION PRICE APPRECIATION FOR
NAME (#)(A) 1994 ($/SHARE)(B) DATE OPTION TERM
---- ------- ---------- ------------ ---------- -----------------------
5%($)(C) 10%($)(C)
---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.. 20,000 2.69% $7.438 12/9/2003 $ 93,219 $ 236,528
Herren C. Hickingbotham. 17,000 2.28% 7.438 12/9/2003 79,661 201,049
15,000(d) 2.02% 5.438 4/14/2004 51,389 129,696
Charles A. Cocotas...... 15,000 2.02% 7.438 12/9/2003 70,289 177,396
Thomas R. Tipps......... 15,000 2.02% 7.438 12/9/2003 70,289 177,396
William P. Creasman..... 13,000 1.74% 7.438 12/9/2003 60,917 153,743
</TABLE>
- --------
(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.
7
<PAGE>
(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.
(d) These options were a part of a special grant given to 19 officers of the
Company or subsidiaries of the Company who had sales responsibilities at
time of grant.
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 end of the Company,
November 30, 1994:
<TABLE>
<CAPTION>
NUMBER NUMBER
NAME(A) EXERCISABLE VALUE(B) UNEXERCISABLE VALUE(B)
------- ----------- -------- ------------- --------
<S> <C> <C> <C> <C>
Frank D. Hickingbotham............. 10,625 $ 3,125 36,875 $ 9,375
Herren C. Hickingbotham............ 33,341 9,409 46,500 12,930
Charles A. Cocotas................. -0- -0- -0- -0-
Thomas R. Tipps.................... 102,500 65,000 22,500 7,500
William P. Creasman................ 14,170 2,000 16,000 6,000
</TABLE>
- --------
(a) There were no options exercised by any named executive during fiscal 1994,
except in the case of Mr. Cocotas (see Summary Compensation Table).
(b) This represents the aggregate of the increases, if any, from the grant
prices to the closing price of common stock of the Company on November 30,
1994 ($5.75).
EMPLOYMENT ARRANGEMENTS
Currently there are no employment agreements between any executive officer of
the Company and the Company. An employment agreement previously entered into
between Mr. Tipps and a subsidiary of the Company has expired.
Messrs. Herren Hickingbotham, Tipps, and Creasman each, as well as certain
other officers of the Company, have entered into change of control agreements
with the Company in which a multiple (2.99 in the case of Mr. Hickingbotham and
Mr. Creasman; other officers have the same or lower multiple) of 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 1994 year end, the
Compensation Committee was comprised of Mr. William H. Bowen, Dr. Daniel R.
Grant, and Marvin D. Loyd, 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.
8
<PAGE>
Set forth below is the Compensation Committee's report which describes the
components of the Company's executive compensation program for fiscal 1994 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 1994, 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 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 1994 and fiscal 1993. 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.
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 and 1994 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
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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 1994 the general bonus program was
modified (a) by deleting the fourth component (overall Company performance) for
every full-time employee and then evenly reallocating the total bonus
percentage among the remaining three components of the 1993 plan and (b) by
rewriting the plan for executive officers to base half of an officer's bonus on
the third element of the 1993 plan (subsidiary or division performance) and
half on the fourth element of the 1993 plan (overall Company performance). For
fiscal 1994, the Company failed to achieve its goal as set in its financial
plan, so executive officers' eligibility for bonus payments was limited to the
fifty percent (50%) conditioned upon an executive officer's subsidiary or
division performance.
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 1994, options to purchase a total of 378,000 shares were granted to
executive officers at a price of $7.438 per share ($5.438 in the case of six
executive officers who received special grants due to their sales
responsibilities).
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 1994 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 1994, Mr. Hickingbotham received a bonus of $68,475.
In keeping with the Company's goal of linking executive compensation to the
creation of shareholder value, in fiscal 1994 Mr. Hickingbotham was granted
stock options to purchase 20,000 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.
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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 1994 compensation
levels.
COMPENSATION COMMITTEE:
William H. Bowen, Daniel R. Grant, Marvin D. Loyd
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, 1989 and ending November 30, 1994. The graph
assumes that the value of the investment in the Company's Common Stock and each
index was $100 at November 30, 1989 and that all dividends, if any, were
reinvested.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG TCBY ENTERPRISES, DOW JONES EQUITY MARKET INDEX AND
DOW JONES CONSUMER CYCLICAL SECTOR ENTERTAINMENT & LEISURE--RESTAURANTS INDEX
<TABLE>
<CAPTION>
Dow Jones
Consumer Cyclical
Dow Jones Sector Entertainment
Measurement period TCBY Equity Market & Leisure--Restaurants
(Fiscal Year Covered) Enterprises Index Index
- --------------------- ----------- ------------- ----------------------
<S> <C> <C> <C>
Measurement PT -
11/30/89 $ 100 $ 100 $ 100
FYE 11/30/90 $ 27 $ 95 $ 88
FYE 11/30/91 $ 25 $ 117 $ 110
FYE 11/30/92 $ 23 $ 157 $ 139
FYE 11/30/93 $ 31 $ 183 $ 153
FYE 11/30/94 $ 30 $ 170 $ 154
</TABLE>
The performance graph in this space has a vertical axis indicating Dollars and
is numbered in units of 50 from 0 to 300; the horizontal axis indicates dates of
each November 30 from 1989 to 1994. The three lines appearing in the graph
represent the performance of TCBY Enterprises, Inc., common stock, the Dow
Jones Consumer Cyclical Sector Entertainment & Leisure--Restaurants Index, and
the Dow Jones Equity Market Index; each of the three lines start at a value of
$100 on November 30, 1989. The TCBY Enterprises, Inc. line moves to $27 on
11/30/90, $25 on 11/30/91, $23 on 11/30/92, $31 on 11/30/93, and $30 on
11/30/94. The Dow Jones Consumer Cyclical Sector Entertainment &
Leisure--Restaurants Index line moves to $88 on 11/30/90, $110 on 11/30/91, $157
on 11/30/92, $183 on 11/30/93, and $170 on 11/30/94. The Dow Jones Equity Market
Index line moves to $95 on 11/30/90, $117 on 11/30/91, $139 on 11/30/92, $153 on
11/30/93, and $154 on 11/30/94.
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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 the
Company in its public relations efforts. The Company paid to Brooks-Pollard
Co., Inc. approximately $205,000 primarily for consultation services in fiscal
1994.
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
1994 the Company paid fees of $88,000 to Spradley & Coker.
The Company contracts with Quality Foods, Inc., of which Mr. Don O.
Kirkpatrick is President and Chief Executive Officer, 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
$447,000 in fiscal 1994, and Quality Foods, Inc. derived fees therefrom
consistent with industry standards.
During fiscal 1994, 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. FDH Bancshares,
Inc., also leases from the Company office space located at an office building
(the Company's former headquarters) owned by the Company and leased to various
businesses not affiliated with the Company; the lease to FDH Bancshares, Inc.,
is at market rates and comparable to rates paid by other tenants not affiliated
with the Company.
AUDITORS
Representatives of Ernst & Young LLP, 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 1996 must be received by the Company by November 16, 1995 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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PROXY TCBY ENTERPRISES, INC.
The undersigned hereby appoints FRANK D. HICKINGBOTHAM, HERREN C.
HICKINGBOTHAM AND GALE LAW, and each of them, proxies with power of substitution
and revocation, acting by majority of those present and voting, or if only one
is present and voting then that one, to vote the shares of stock of TCBY
ENTERPRISES, INC. which is the undersigned is entitled to vote, at the annual
meeting of stockholders to be held in Little Rock, Arkansas, on Wednesday, April
12, 1995 at 10:00 a.m., Little Rock time, and at any adjournment thereof, with
all the powers the undersigned would possess if present:
1. The election as directors of all nominees listed (except as marked to the
contrary below).
[_] FOR [_] VOTE WITHHELD
Frank D. Hickingbotham, Herren C. Hickingbotham, Don O. Kirkpatrick, Daniel
R. Grant, F. Todd Hickingbotham, Gale Law, Marvin D. Loyd, Hugh H. Pollard
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the space provided:
2. The amendment of the 1992 employee stock option plan (increasing authorized
shares by 500,000)."
[_] FOR [_] VOTE WITHHELD
3. To transact such other business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TCBY ENTERPRISES,
INC. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
---
PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
CONTINUED AND TO BE SIGNED ON OTHER SIDE
The undersigned hereby revokes any proxy heretofore given to vote such shares
and appoints the aforementioned proxies to vote as set forth above at said
meeting or at any adjournment thereof.
Date: ____________________________, 1995
________________________________________
SIGNATURE OF STOCKHOLDER (please sign
exactly as name appears on this proxy,
including, where proper, official
position or representative capacity.)
