<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 Section 240.14a-11(c) or Section 240.14a-12
TCBY ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TCBY ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
-------------------------------------------------------------------------
(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
FEBRUARY 27, 1998
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 Excelsior Hotel, Three Statehouse Plaza,
Little Rock, Arkansas, on Thursday, April 16, 1998, at 10:00 a.m., Little Rock
time, to consider the following proposals:
1.the election of eight directors;
2.the amendment of the 1992 Employee Stock Option Plan; and
3.the transaction of such other business as may properly come before the
meeting.
By order of the Board of Directors,
WILLIAM P. CREASMAN
Secretary
----------------
PROXY STATEMENT
Only stockholders of record at the close of business on February 24, 1998,
will be entitled to notice of and to vote at the meeting. The Company had
outstanding 27,142,445 shares of common stock (inclusive of 3,720,269 shares
of treasury stock) as of the close of business on January 31, 1998. 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 be counted as votes in favor of the proposal to approve the
Amendment to the 1992 Employee Stock Option Plan.
Under Delaware law and the Company's By-laws, if a quorum is present at the
meeting (a) the nominees for election of directors at the meeting who receive
the greatest number of votes cast for the election of directors at the meeting
by the shares present in person or by proxy and entitled to vote shall be
elected directors and (b) the proposal to amend the 1992 Employee Stock Option
Plan must be approved by the affirmative vote of the majority of shares
present in person or by proxy and entitled to vote on such matter if such
matter is to be 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.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of January 31, 1998, 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)................ 9,756,374 41.7%
c/o TCBY Enterprises, Inc.
425 West Capitol Avenue
Little Rock, Arkansas 72201
</TABLE>
- --------
* Percentages are based upon 23,422,176 shares outstanding and entitled to
vote (excluding 3,720,269 shares the Company holds as treasury stock which
is not entitled to vote) on January 31, 1998.
(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 1999 and until their respective
successors are elected and qualified. The following table sets forth certain
information as of January 31, 1998 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
OCCUPATION IS OUTSTANDING
CARRIED ON, OFFICES AND FIRST BECAME A COMMON STOCK OF
POSITIONS, IF ANY, HELD DIRECTOR OF THE COMPANY BENEFICIALLY
WITH THE COMPANY, AND COMPANY OR OF A OWNED AT
NAME AGE PREDECESSOR JANUARY 31, 1998 (A)
---- ------------------------ --------------- --------------------
<C> <S> <C> <C>
Frank D. Hickingbotham.... Chairman of the Board 1970 9,859,860
and Chief Executive
Officer of the Company;
Age 61(b)
Herren C. Hickingbotham... President and Chief 1982 659,250
Operating Officer of the
Company; Age 39(b)
William H. Bowen.......... Retired Chairman and 1993 *
Chief Executive Officer,
First Commercial
Corporation; Age 74(b)
Daniel R. Grant........... President Emeritus, 1989 *
Ouachita Baptist
University; Age 74
F. Todd Hickingbotham..... President of Riverport 1990 608,783
Equipment and
Distribution Company, a
subsidiary of the
Company; Age 34
Don O. Kirkpatrick........ President and Chief 1993 *
Executive Officer,
Quality Foods, Inc.
(foodservice
distribution); Age 60
Marvin D. Loyd............ Dentist; Age 65 1984 *
Hugh H. Pollard........... Chief Executive Officer 1984 342,000
of Brooks-Pollard Co.,
Inc. (a marketing
consulting firm); Age
57(b)
<CAPTION>
NAMED EXECUTIVES
----------------
<C> <S> <C> <C>
James M. Sahene........... President and Chief N/A *
Operating Officer, TCBY
Systems, Inc., a
subsidiary of the
Company; Age 37
Gene H. Whisenhunt........ Executive Vice President N/A *
and Chief Financial
Officer of the Company;
Age 37
William P. Creasman....... Senior Vice President, N/A *
General Counsel, and
Secretary of the
Company; Age 45
</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, 1998 (958,220
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
12,107,322 shares (49.52% 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.
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. Frank D. Hickingbotham is also a director of First
Commercial Corporation, a bank holding company.
Mr. Bowen served as Chairman and Chief Executive Officer of First Commercial
Corporation, a bank holding company, from 1984 to 1991, and currently remains
Retired Chairman and Chief Executive Officer and a director of that company.
Mr. Bowen served as President and Chief Executive Officer of Healthsource
Arkansas Ventures, Inc., from September, 1993 to July, 1995. Mr. Bowen was
Dean of the School of Law for the University of Arkansas at Little Rock from
July, 1995, until July, 1997.
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, 1997. All of
the Company's incumbent director nominees attended at least seventy five
percent of the total number 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 of attending Board meetings, and were
paid additional fees of $10,000 for fiscal 1997. 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; the number of options for shares
granted was 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, 1998, none of these
options had been exercised. In fiscal 1997, 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 1997 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 2 meetings during fiscal 1997.
The Audit Committee, which during fiscal 1997 consisted of Dr. Loyd, Dr.
Grant and Mr. Kirkpatrick, recommends independent 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 controls, advises the Board with respect to
such recommendations, and approves non-audit services. The Audit Committee
held 1 meeting in fiscal 1997.
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, as initially approved, provided 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, April 17, 1996, and April 17, 1997, Annual Meetings
of Stockholders, the Stockholders of the Company authorized an additional five
hundred thousand (500,000) unissued shares, an additional five hundred
thousand (500,000) unissued shares, and an additional one million (1,000,000)
unissued shares, respectively, for grant under the terms and conditions of the
Plan. Stockholders have thus authorized three million (3,000,000) shares for
grant under the Plan since its adoption in 1992. In keeping with the
Compensation Committee's philosophy regarding incentive compensation (see
section entitled "BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION," below), an additional one million (1,000,000) 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 now provides for the
granting of options to purchase up to three million shares of the Company's
common stock. The Plan is administered by the Board's Compensation Committee
whose members are "non-employee directors" 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 or disability the rights to exercise the
option which have accrued at the date of termination cease three months
following the date of termination of employment, unless the Compensation
Committee otherwise specifies. In the event of termination of employment due
to death or full disability the period of time following the date of such
termination in which a subject option may be exercised is twelve months.
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 optionee at the time of exercise.
If the stock is held at least eighteen months 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
ANUAL COMPENSATION COMPENSATION
--------------------------------- --------------------
OTHER ANNUAL STOCK OPTION ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($)(A) (IN SHARES) ($) ($)(B)
------------------ ---- ------- ------- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.. 1997 356,098 100,000 59,058(c) 100,000 -- 5,462
Chairman and CEO 1996 356,598 83,000 57,295(c) 50,000 -- 5,207
1995 398,915 30,000 -- 48,486 -- 5,077
Herren C. Hickingbotham. 1997 298,077 99,000 -- 100,000 -- 4,817
President and Chief 1996 283,006 82,500 -- 100,000 -- 4,817
Operating Officer 1995 251,598 30,000 -- 33,680 4,925(d) 4,687
James M. Sahene......... 1997 183,077 46,250 -- 100,000 -- 4,817
President and Chief
Operating 1996 170,257 35,200 -- 100,000 -- 4,817
Officer--TCBY Systems,
Inc. 1995 148,846 20,000 -- 22,500 -- 4,687
Gene H. Whisenhunt...... 1997 172,308 36,750 -- 100,000 -- 4,817
Executive Vice President 1996 151,800 25,200 -- 100,000 -- 4,352
and Chief Financial
Officer 1995 98,894 14,000 -- 15,200 -- 1,766
William P. Creasman..... 1997 182,572 38,850 -- 50,000 -- 3,534
Senior Vice President, 1996 158,997 27,620 -- 50,000 -- 2,820
General Counsel and
Secretary 1995 149,374 15,044 -- 18,999 -- 2,581
</TABLE>
- --------
(a) Amounts not in excess of the lesser of $50,000 or 10% of salary and bonus
are not listed.
(b) Represents amounts contributed as matching contributions under the
Company's 401(k) Plan and life insurance premiums paid by the Company.
(c) For 1997, represents $12,329 for tax and accounting services, $27,031 for
personal use of corporate aircraft, and the balance in automobile usage
and membership dues. For 1996, represents $17,250 paid for tax and
accounting services, $26,963 for personal use of corporate aircraft, and
the balance in automobile usage and membership dues.
(d) Represents estimated net gain on exercise of 3,468 options to purchase
TCBY Common Stock at a price of $3.83 in 1995 (which otherwise would have
expired).
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended November
30, 1997:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS OPTIONS GRANTED EXERCISE FOR OPTION TERM
GRANTED TO EMPLOYEES PRICE EXPIRATION ------------------
NAME (#)(A) IN FISCAL 1997 ($/SHARE)(B) DATE 5%($)(C) 10%($)(C)
---- ------- --------------- ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.. 100,000 10.66% $5.5625 04/16/2007 $350,438 $884,438
Herren C. Hickingbotham. 100,000 10.66% 4.0625 12/12/2006 255,938 645,938
James M. Sahene......... 100,000 10.66% 4.0625 12/12/2006 255,938 645,938
Gene H. Whisenhunt...... 100,000 10.66% 4.0625 12/12/2006 255,938 645,938
William P. Creasman..... 50,000 5.33% 4.0625 12/12/2006 127,969 322,969
</TABLE>
- --------
(a) The options become exercisable in 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 Securities and Exchange Commission, 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 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, 1997:
<TABLE>
<CAPTION>
NUMBER NUMBER
NAME(A) EXERCISABLE VALUE(B) UNEXERCISABLE VALUE(B)
- ------- ----------- -------- ------------- --------
<S> <C> <C> <C> <C>
Frank D. Hickingbotham............. 93,486 $70,489 152,500 $113,594
Herren C. Hickingbotham............ 112,235 87,884 191,500 335,264
James M. Sahene.................... 93,810 81,788 192,250 336,169
Gene H. Whisenhunt................. 48,360 51,806 183,500 330,657
William P. Creasman................ 59,274 44,827 97,250 168,173
</TABLE>
- --------
(a) For options exercised by any named executive during fiscal 1997, 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 December 1,
1997 ($6.125).
EMPLOYMENT ARRANGEMENTS
Currently there are no employment agreements between any executive officer
of the Company and the Company.
Messrs. Herren Hickingbotham, Sahene, Whisenhunt, 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;
8
<PAGE>
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 1997 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 1997 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 1997, the Company's
compensation program consisted of (i) base salary, adjusted from the prior
year; (ii) performance-based bonuses based upon the Company's 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
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 during fiscal 1997 to
reflect increased responsibilities for most members of management as the
effect of 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.
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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 1995, 1996, and
1997 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
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.
For fiscal 1995, the general bonus program for executive officers was based
half 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 occurred
over a two-year period in equal installments as opposed to over a four-year
period normally granted for stock options. For fiscal 1996 and 1997 bonus
participation for employees in general was attainable in only two parts: (a)
50% was dependent upon the employee's subsidiary or division performance, as
determined with reference to the financial plan for that department or group
established and approved prior to commencement of the fiscal year, and (b) 50%
was dependent upon the overall Company performance, also determined with
reference to the financial plan for the Company. Executive officers of the
Company had their bonus participation made attainable, and completely
dependent upon, the Company's meeting or exceeding the financial plan of the
Company for fiscal 1996 and 1997. Subsidiary and division performance goals
were met for fiscal 1995 only partially in some cases, which affected bonus
payments accordingly. For fiscal 1996 and 1997 the Company met or exceeded its
overall financial plan goal of $0.26 earnings per share and $0.32 earnings per
share, respectively, and full bonus payments accordingly were made for
executive officers.
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 1997, options to purchase a total of 665,000 shares were granted to
executive officers at prices of $4.0625 and $5.5625 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. 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 1997 salary was
determined based upon the factors considered in determining the base salary
for all executives.
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In accordance with the Company's overall policy with regard to and treatment
of cash bonuses in fiscal 1997, Mr. Hickingbotham received a bonus of
$100,000. In keeping with the Company's goal of linking executive compensation
to the creation of shareholder value, in fiscal 1997 Mr. Hickingbotham was
granted stock options to purchase 100,000 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.
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 1997
compensation levels.
Compensation Committee:
Daniel R. Grant, William H. Bowen, 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, 1992 and ending November 30, 1997. The graph
assumes that the value of the investment in the Company's Common Stock and
each index was $100 at November 30, 1992 and that all dividends, if any, were
reinvested.
[PERFORMANCE GRAPH APPEARS HERE]
The performance graph in this space has a vertical axis indicating Dollars
and is numbered in units of 50 starting at 75 and increasing to 275; the
horizontal axis indicates dates of each November 30 from 1992 to 1997. 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, 1992.
The TCBY Enterprises, Inc., line moves to $141 on 11/30/93, $135 on 11/30/94,
$110 on 11/30/95, $112 on 11/30/96, and $160 on 11/30/97. The Dow Jones
Consumer Cyclical Sector Entertainment & Leisure--Restaurants Index line moves
to $117 on 11/30/93, $108 on 11/30/94, $156 on 11/30/95, $167 on 11/30/96, and
$169 on 11/30/97. The Dow Jones Equity Market Index line moves to $110 on
11/30/93, $111 on 11/30/94, $152 on 11/30/95, $194 on 11/30/96, and $250 on
11/30/97.
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CERTAIN TRANSACTIONS
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 TCBY Systems, Inc. The value of goods handled by
Quality Foods for TCBY Systems, Inc. was approximately $307,000 in fiscal
1997, and Quality Foods, Inc. derived fees therefrom consistent with industry
standards.
During fiscal 1997, the Company used the services of First Commercial Bank,
which is owned by First Commercial Corporation, on the Board of Directors of
which currently serve Mr. William H. Bowen and Mr. Frank D. Hickingbotham; 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.
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 paid the three
franchise groups an aggregate of $130,000 in fiscal 1997 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. Mr. F. Todd Hickingbotham's corporations
continue to be current on their notes, franchise agreements, and assigned
leases (one lease has expired without renewal, and as other renewals occur the
Company is removed from the lease agreement.) One of Mr. F. Todd
Hickingbotham's companies currently leases 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 Mr. F.
Todd Hickingbotham's corporation 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 FOR NEXT MEETING
Any proposal which a stockholder intends to present at the annual meeting of
stockholders in 1998 must be received by the Company by October 30, 1998 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.
SECTION 16(B) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's officers and directors are required to file under the Exchange
Act reports of ownership and charges of ownership with the Securities and
Exchange Commission. Based solely on information provided to the Company by
individual directors and officers, the Company believes all filing
requirements applicable to directors and officers have been complied with
during the preceding year.
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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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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 Thursday, April
16, 1998 at 10:00 a.m., Little Rock time, and at any adjournment thereof, with
all the powers the undersigned would possess if present.
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
PROPOSALS 1 and 2.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
such shares and appoints the aforementioned proxies to vote as set forth at
said meeting or at any adjournment thereof.
PLEASE VOTE, DATE, AND SIGN ON REVERSE AND RETURN PROMPTLY USING THE
ENCLOSED ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
- --------------------------------------------------------------------------------
Please sign exactly as name appears on this proxy including, where
proper, official position or representative capacity.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- -------------------------------- --------------------------------------------
- -------------------------------- --------------------------------------------
- -------------------------------- --------------------------------------------
1. The election as directors of all nominees listed (except as marked to the
contrary below).
William H. Bowen, Daniel R. [_] FOR [_] WITHHOLD [_] FOR ALL EXCEPT
Grant, F. Todd Hickingbotham,
Frank D. Hickingbotham, Herren C.
Hickingbotham, Don O.
Kirkpatrick, Marvin D. Loyd, Hugh
H. Pollard
INSTRUCTION: To withhold your vote from any individual nominee, mark the
"For All Except" box and strike a line through that nominee's name in the
list above.
2. The amendment of the 1992 employee
stock option plan (increasing
authorized shares by 1,000,000).
[_] FOR [_] AGAINST [_] ABSTAIN
3. To transact such other business as may
properly come before the meeting.
Date: ______________________________
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(Stockholder sign here)
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(Co-Owner sign here)
Please be sure to sign and date
this Proxy.
