<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
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] 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):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
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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:
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Notes:
<PAGE>
TCBY ENTERPRISES, INC.
425 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
March 8, 1996
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 17, 1996, at
10:00 a.m., Little Rock time, to consider the following proposals:
1. to elect eight 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 8, 1996 will
be entitled to notice of and to vote at the meeting. The Company had
outstanding 27,062,345 shares of common stock (inclusive of treasury stock) as
of the close of business on January 31, 1996. 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 January 31, 1996, 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)................ 9,872,376 38.7%
c/o TCBY Enterprises, Inc.
425 West Capitol Avenue
Little Rock, Arkansas 72201
</TABLE>
- --------
* Percentages are based upon 25,525,776 shares outstanding and entitled to
vote (excluding 1,536,569 shares the Company holds as treasury stock which
is not entitled to vote) on January 31, 1996.
(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
Eight persons are nominated for election as directors to hold office until
the annual meeting of stockholders in 1997 and until their respective
successors are elected and qualified. The following table sets forth certain
information as of January 31, 1996 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>
PRINCIPAL OCCUPATION,
NAME OF
ORGANIZATION IN WHICH FIRST OUTSTANDING
OCCUPATION IS BECAME A COMMON STOCK
CARRIED ON, OFFICES AND DIRECTOR OF OF COMPANY
POSITIONS, THE COMPANY BENEFICIALLY
IF ANY, HELD WITH THE OR OF A OWNED AT
NAME COMPANY, AND AGE PREDECESSOR JANUARY 31, 1996(A)
---- ------------------------ ----------- ------------------
<C> <S> <C> <C>
Frank D. Hickingbotham... Chairman of the Board 1970 9,925,994
and Chief Executive
Officer of the Company;
Age 59(b)
Herren C. Hickingbotham.. President and Chief 1982 569,383
Operating Officer of the
Company; Age 37(b)
William H. Bowen......... Dean, School of Law, 1993 *
University of Arkansas
at Little Rock; Age 72(b)
Daniel R. Grant.......... President Emeritus, 1989 *
Ouachita Baptist
University; Age 72
F. Todd Hickingbotham.... President of Riverport 1990 523,452
Equipment and
Distribution Company, a
subsidiary of the
Company; Age 32
Don O. Kirkpatrick....... President and Chief 1993 *
Executive Officer,
Quality Foods, Inc.
(foodservice
distribution); Age 58
Marvin D. Loyd........... Dentist; Age 63 1984 *
Hugh H. Pollard.......... Chief Executive Officer 1984 334,000
of Brooks-Pollard Co.,
Inc. (a marketing
consulting firm);
Age 55(b)
<CAPTION>
NAMED EXECUTIVES
----------------
<C> <S> <C> <C>
Terry A. Elliott......... Executive Vice President N/A *
of the Company; Age 49(c)
Thomas R. Tipps.......... President, Americana N/A *
Foods Limited
Partnership, subsidiary
of the Company;
Age 49(d)
James H. Sahene.......... President and Chief N/A *
Operating Officer, TCBY
Systems, Inc., a
subsidiary of the
Company; Age 35
William P. Creasman...... Senior Vice President N/A *
and General Counsel of
the Company; Age 43
Jim H. Fink.............. Executive Vice President N/A *
of the Company; Age 38
</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 31, 1996 (563,254
shares) or which have or will become exercisable within 60 days
thereafter; or in which the nominee otherwise has a
3
<PAGE>
beneficial interest. All directors and officers as a group beneficially own
an aggregate of 11,880,445 shares (46.4% 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. Elliott's employment by the Company ended as of November 30, 1995.
(d) Mr. Tipps' employment by the Company ended as of June 27, 1995.
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
served as President and Chief Executive Officer of Healthsource Arkansas
Ventures, Inc., from September, 1993 to July, 1995. Mr. Bowen began his
current service as Dean of the School of Law for the University of Arkansas at
Little Rock in July, 1995.
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 nine (9) times during the fiscal year ended November 30, 1995. All of
the Company's incumbent director nominees attended each of these meetings
except for Mr. Herren C. Hickingbotham who missed one meeting. 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 1995. 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 January 31, 1996, none of these
options had been exercised. In fiscal 1995, 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 1995 consisted of Dr. Grant,
Mr. Bowen 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 5 meetings during fiscal 1995.
4
<PAGE>
The Audit Committee, which during fiscal 1995 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 1995.
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 at the April 12, 1995,
Annual Meeting of Stockholders, the Stockholders of the Company authorized an
additional five hundred thousand (500,000) unissued shares for grant under the
terms and conditions of the Plan. In keeping with the Compensation 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, five hundred thousand
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.
5
<PAGE>
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."
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 optionee 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 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 STOCK ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($) (IN SHARES) ($)
------------------ ---- ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham. 1995 398,915 30,000 20,313 48,486 4,620(a)
Chairman and CEO 1994 412,692 68,475 12,431 20,000 4,620(a)
1993 410,192(b) -- 16,422 12,500 4,497(a)
Herren C. 1995 251,598 30,000 28,427(c) 33,680 4,620(a)
Hickingbotham..........
President and Chief
Operating Officer 1994 242,221 40,095 15,871 32,000 4,620(a)
1993 244,041(b) -- 24,266 11,000 4,497(a)
Terry A. Elliott....... 1995 298,178(d) 14,044 292 22,000 1,161(a)
Executive Vice 1994 20,769 2,500 16 10,000 --
President
1993 -- -- -- -- --
Thomas R. Tipps........ 1995 222,885(d) -- 62,951(e) 21,250 2,188(a)
President--Americana
Foods Limited 1994 178,365 8,000 2,825 15,000 3,618(a)
Partnership 1993 168,074(b) -- 15,826(f) 10,000 1,851(a)
James M. Sahene........ 1995 148,846 20,000 4,020 22,500 4,620(a)
President and Chief
Operating Officer--
TCBY 1994 133,615 17,500 315 39,000 4,620(a)
Systems, Inc. 1993 94,730(b) -- 55 9,000 3,008(a)
William P. Creasman.... 1995 149,374 15,044 104 18,999 2,477(a)
Senior Vice President
and General Counsel 1994 143,715 14,420 109 13,000 2,379(a)
1993 144,231(b) -- 102 8,000 2,158(a)
Jim H. Fink............ 1995 137,192 14,044 121 22,000 3,854(a)
Executive Vice 1994 113,290 11,500 67 13,000 3,163(a)
President
1993 101,877(b) -- 67 8,000 2,597(a)
</TABLE>
- --------
(a) Represents amounts contributed as matching contributions under the
Company's 401(k) Plan.
(b) Includes non-performance based Christmas gift equal to base salary for two
weeks (one week in the case of Mr. Tipps).
(c) Represents estimated net gain on exercise of 3,468 options at a price of
$3.83 in 1995 (which otherwise would have expired) plus $23,502 for
various perquisites.
(d) Includes severance payments accrued in fiscal 1995 but payable in 1996.
(e) Represents estimated net gain on exercise of 97,100 options (92,100
options at a price of $5.125 per share and 5,000 options at a price of
$4.75 per share) at various times in 1995, plus $16,338 for various
perquisites.
(f) Primarily attributed to relocation expenses.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended November
30, 1995:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
GRANTED TO STOCK
OPTIONS EMPLOYEES EXERCISE PRICE APPRECIATION
GRANTED IN FISCAL PRICE EXPIRATION FOR
NAME (#)(A) 1995 ($/SHARE)(B) DATE OPTION TERM
---- ------- ---------- ------------ ---------- ------------------
5%($)(C) 10%($)(C)
-------- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.. 48,486 5.98% $5.3125 12/16/2004 $162,277 $409,555
Herren C. Hickingbotham. 33,680 4.16% 5.3125 12/16/2004 112,723 284,491
Terry A. Elliott........ 22,000 2.71% 5.3125 12/16/2004 73,631 185,831
Thomas R. Tipps......... 21,250 2.62% 5.3125 12/16/2004 71,121 179,496
James M. Sahene......... 22,500 2.78% 5.3125 12/16/2004 75,305 190,055
William P. Creasman..... 18,999 2.34% 5.3125 12/16/2004 63,587 160,482
Jim H. Fink............. 22,000 2.71% 5.3125 12/16/2004 73,631 185,831
</TABLE>
- --------
(a) The options become exercisable in either 2 or 4 equal annual installments
(see "Compensation Elements," below) 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.
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, 1995:
<TABLE>
<CAPTION>
NUMBER NUMBER
NAME(A) EXERCISABLE VALUE(B) UNEXERCISABLE VALUE(B)
------- ----------- ------- ------------- --------
<S> <C> <C> <C> <C>
Frank D. Hickingbotham.............. 22,500 $-0- 73,486 $-0-
Herren C. Hickingbotham............. 43,748 -0- 66,305 -0-
Terry A. Elliott.................... 2,500 -0- 29,500 -0-
Thomas R. Tipps..................... -0- -0- -0- -0-
James M. Sahene..................... 27,118 -0- 59,250 -0-
William P. Creasman................. 21,920 -0- 35,249 -0-
Jim H. Fink......................... 18,905 -0- 38,250 -0-
</TABLE>
- --------
(a) For options exercised by any named executive during fiscal 1995, 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,
1995 ($4.375).
8
<PAGE>
EMPLOYMENT ARRANGEMENTS
Currently there are no employment agreements between any executive officer
of the Company and the Company.
Messrs. Herren Hickingbotham, Sahene, Creasman, and Fink 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; 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 1995 year end, the
Compensation Committee was comprised of Dr. Daniel R. Grant, Mr. William H.
Bowen, 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.
Set forth below is the Compensation Committee's report which describes the
components of the Company's executive compensation program for fiscal 1995 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 1995, 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.
Individual salaries are based upon past and anticipated individual
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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
1995, fiscal 1994, and fiscal 1993. This occurred despite increased
responsibilities for most members of management as Company staff reductions
continued 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, 1994, and
1995 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 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. For fiscal 1995, the same general bonus program continued as it
did in fiscal 1994, but for executive officers half of an officer's bonus was
based on subsidiary or division performance and half was granted in the
beginning of the fiscal year in the form of stock option grants in amounts
determined by the Compensation Committee; for these options, vesting occurs
over a two-year period in equal installments as opposed to over a four-year
period normally granted for stock options. Subsidiary and division performance
goals were met for fiscal 1995 only partially in some cases.
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
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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 1995, options to purchase a total of 232,056 shares were granted to
executive officers at a price of $5.3125 per share.
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 in accordance with
employee contributions 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 1995 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 1995, Mr. Hickingbotham received a bonus of $30,000.
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 48,486 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 1995
compensation levels.
COMPENSATION COMMITTEE:
Daniel R. Grant, William H. Bowen, Marvin D. Loyd
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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, 1990 and ending November 30, 1995. The graph
assumes that the value of the investment in the Company's Common Stock and
each index was $100 at November 30, 1990 and that all dividends, if any, were
reinvested.
[GRAPH APPEARS HERE]
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 1990 to 1995. 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, 1990. The TCBY Enterprises, Inc. line moves to $93 on
11/30/91, $84 on 11/30/92, $117 on 11/30/93, $112 on 11/30/94, and $92 on
11/30/95.. The Dow Jones Consumer Cyclical Sector Entertainment & Leisure-
Restaurants Index line moves to $126 on 11/30/91, $179 on 11/30/92, $209 on
11/30/93, $193 on 11/30/94, and $279 on 11/30/95. The Dow Jones Equity Market
Index line moves to $122 on 11/30/91, $146 on 11/30/92, $160 on 11/30/93, $162
on 11/30/94, and $233 on 11/30/95.
CERTAIN TRANSACTIONS
The Company in fiscal 1995 engaged 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 $180,000 primarily for
consultation services in fiscal 1995.
The Company's health plans administrator, Spradley & Coker, Inc., was
acquired by Healthsource Arkansas Ventures, Inc., in 1993. Mr. William H.
Bowen was President and Chief Executive Officer of the acquiring company and
served in such capacity until July, 1995. In fiscal 1995, the Company paid
fees of $77,000 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 $440,000 in fiscal 1995, and Quality Foods, Inc. derived fees therefrom
consistent with industry standards.
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During fiscal 1995, 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. During 1995, banks owned by FDH
Bancshares, Inc., were acquired by First Commercial Corporation, on the Board
of Directors of which currently serve Mr. William H. Bowen and Mr. Frank D.
Hickingbotham (who joined that Board following the acquisition of banks from
FDH Bancshares, Inc.); the Company has had and continues to have a banking
relationship primarily involving depository accounts and other normal and
customary commercial accounts with First Commercial Bank, which is owned by
First Commercial Corporation.
On October 2, 1995, 15 Company-owned TCBY stores were sold or otherwise
divested to three separate franchisee groups each comprised of an individual
and a corporation; the corporations in each transaction are owned indirectly
by Mr. F. Todd Hickingbotham. In the aggregate the franchisee groups paid the
Company $1,065,000 by way of promissory notes; the Company will also pay the
three franchise groups an aggregate of $140,000 annually as fees for managing
underperforming stores over the course of operating agreements entered into in
connection with the sales transaction. The sales prices were determined by
multiplying cash flow for each store by a weighted factor which was itself
dependent upon the historic performance of the store, and management fees were
determined with reference to historic and anticipated cash flow deficits and
fixed so as to place each such store in a break even position for the
remaining term of that store's lease for its premises. The person determining
the sales price or management fee to be paid for each store pursuant to these
principles was Mr. Gene H. Whisenhunt, Executive Vice President and Chief
Financial Officer of 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 1997 must be received by the Company by November 30, 1996 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 GENE H. WHISENHUNT, 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 the undersigned is entitled to vote, at the annual
meeting of stockholders to be held in Little Rock, Arkansas, on Wednesday, April
17, 1996 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, William H. Bowen, Don O.
Kirkpatrick, Daniel R. Grant, F.Todd Hickingbotham, Marvin D. Loyd, Hugh H.
Pollard
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the space provided:
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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.
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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 or proxies 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 ,1996
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SIGNATURE OF STOCKHOLDER (please sign
exactly as name appears on this proxy,
including, where proper, official
position or representative capacity.)
