<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)
- --------------------------------------------------------------------------------
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] 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.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
TCBY ENTERPRISES, INC.
425 West Capitol Avenue
Little Rock, Arkansas 72201
March 9, 1999
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 Tuesday, April 13, 1999, at 10:00 a.m., Little Rock
time, to consider the following proposals:
1. the election of eight directors; and
2. 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 22, 1999,
will be entitled to notice of and to vote at the meeting. The Company had
outstanding 27,759,021 shares of common stock (inclusive of 4,839,952 shares
of treasury stock) as of the close of business on January 29, 1999. 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.
Under Delaware law and the Company's By-laws, if a quorum is present at the
meeting 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.
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 29, 1999, with respect to each
person who is known to the Company to be the beneficial owner of more than 5%
of the outstanding shares of common stock of the Company, the name and address
of such owner, the number of shares of common stock beneficially owned, the
nature of such ownership, and the percentage such shares comprised of the
outstanding shares of common stock of the Company:
<TABLE>
<CAPTION>
Amount and
Nature
of
Name and Address Beneficial Percent*
of Beneficial Owner (a) Ownership(b) of Class
----------------------- ------------ --------
<S> <C> <C>
Frank D. Hickingbotham.............................. 9,756,374 42.6%
c/o TCBY Enterprises, Inc.
425 West Capitol Avenue
Little Rock, Arkansas 72201
</TABLE>
- --------
* Percentages are based upon 22,919,069 shares outstanding and entitled to
vote (excluding 4,839,952 shares the Company holds as treasury stock which
is not entitled to vote) on January 29, 1999.
(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 footnote "(a)" under "Nominees for Election as Directors; Security
Ownership of Management" for explanation of beneficial ownership. This
figure does not include options to acquire stock of the Company.
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<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 2000 and until their respective
successors are elected and qualified. The following table sets forth certain
information as of January 29, 1999 with respect to the positions held and
beneficial ownership of the Company's common stock by its directors, nominees
for election as directors and certain named executive officers:
<TABLE>
<CAPTION>
Outstanding
Common Stock
of Company Percentage
Principal Occupation, Name of Beneficially of
Organization in Which Occupation is Owned at Outstanding
Name; Year Became Carried on, Offices and Positions, January 29, Common
Director if any, Held with the Company, and Age 1999(a) Stock(b)
----------------- ------------------------------------------------------- ------------ -----------
<S> <C> <C> <C>
Frank D. Hickingbotham Chairman of the Board and Chief Executive Officer of 9,914,860 43.0
1970 the Company; Age 62(c)
Herren C. Hickingbotham President and Chief Operating Officer of the Company; 719,050 3.1
1982 Age 40(c)
William H. Bowen Retired Chairman and Chief Executive Officer, First 30,000 *
1993 Commercial Corporation; Age 75(c)
Daniel R. Grant President Emeritus, 40,100 *
1989 Ouachita Baptist University; Age 75
F. Todd Hickingbotham President of Riverport Equipment 676,363 2.9
1990 and Distribution Company, a
subsidiary of the Company; Age 35
Don O. Kirkpatrick President and Chief Executive Officer, Quality Foods, 20,583 *
1993 Inc. (foodservice distribution);
Age 61
Marvin D. Loyd Dentist; Age 66 93,605 *
1984
Hugh H. Pollard Chief Executive Officer of Brooks-Pollard 346,000 1.5
1984 Co., Inc. (a marketing consulting firm);
Age 58(c)
Named Executives
James M. Sahene President and Chief Operating Officer, 176,600 *
TCBY Systems, Inc., a subsidiary of the Company;
Age 38
Gene H. Whisenhunt Executive Vice President and Chief Financial Officer of 117,860 *
the Company; Age 38
Jim H. Fink Executive Vice President of the Company and President, 160,825 *
Americana Foods Limited Partnership, a subsidiary of
the Company; Age 41
</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 29, 1999 (1,313,051 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
executive officers as a group beneficially own an aggregate of 12,387,703
shares (51.12% of all outstanding shares, excluding shares the Company
holds as treasury stock).
3
<PAGE>
(b) Stock options exercisable within 60 days of the date of the table were
added to the beneficial ownership total. To compute the percent of class
owned, the outstanding total was increased by the same amount.
(c) Also a member of the Executive Committee of the Board of Directors of the
Company.
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. From 1995 to 1998 Frank D. Hickingbotham was a director of
First Commercial Corporation, a bank holding company, until that company was
acquired by Regions Financial Corporation in 1998, whereupon he became and
serves as a director of that 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
remained Retired Chairman and Chief Executive Officer until that company was
acquired by Regions Financial Corporation in 1998. 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 six (6) times during the fiscal year ended November 29, 1998. 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 1998. 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 29, 1998, none of these
options had been exercised. In fiscal 1998, 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 1998 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 one meeting during fiscal 1998.
4
<PAGE>
The Audit Committee, which during fiscal 1998 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 one meeting in fiscal 1998.
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
-------------------- ------------------------
Stock
Other Annual 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 1998 371,911 50,000 61,176(c) 50,000 -- 5,712
Chairman and CEO 1997 356,098 100,000 59,058(c) 100,000 -- 5,462
1996 356,598 83,000 57,295(c) 50,000 -- 5,207
Herren C. Hickingbotham 1998 311,077 62,400 51,745(d) 50,000 -- 5,104
President and Chief 1997 298,077 99,000 -- 100,000 -- 4,817
Operating
Officer 1996 283,006 82,500 -- 100,000 -- 4,817
James M. Sahene 1998 194,231 34,320 -- 50,000 163,125(e) 5,067
President and Chief 1997 183,077 46,250 -- 100,000 -- 4,817
Operating Officer--TCBY 1996 170,257 35,200 -- 100,000 -- 4,817
Systems, Inc.
Gene H. Whisenhunt 1998 193,462 28,080 -- 50,000 203,438(f) 5,067
Executive Vice President 1997 172,308 36,750 -- 100,000 -- 4,817
and
Chief Financial Officer 1996 151,800 25,200 -- 100,000 -- 4,352
Jim H. Fink 1998 193,462 28 080 -- 50,000 150,000(g) 5,104
Executive Vice President 1997 172,557 36,750 -- 100,000 -- 4,854
of
the Company and 1996 153,716 25,784 -- 100,000 -- 4,425
President, Americana
Foods Limited
Partnership, a
subsidiary of the
Company
</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 1998, represents $20,922 for tax and accounting services, $20,050 for
personal use of corporate aircraft, $15,389 for corporate automobile usage
and expenses, and the balance in membership dues. For 1997,
5
<PAGE>
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) For 1998, represents $32,075 for tax and accounting fees, $14,028 for
corporate automobile usage and expenses, and the balance in membership
dues.
(e) Represents estimated net gain on 1998 exercise of 32,500 options to
purchase TCBY common stock at prices of $4.25 (7,500 options) and $4.0625
(25,000 options).
(f) Represents estimated net gain on 1998 exercise of 40,000 options to
purchase TCBY common stock at prices of $4.25 (15,000 options) and $4.0625
(25,000 options).
(g) Represents estimated net gain on 1998 exercise of 25,000 options to
purchase TCBY common stock at a price of $4.0625.
Option Grants in Last Fiscal Year
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended November
29, 1998:
<TABLE>
<CAPTION>
Potential
Realizable
% of Total Value at Assumed
Options Annual Rates of
Options Granted to Exercise Stock
Granted Employees Price Expiration Price Appreciation
Name (#)(a) in Fiscal 1998 ($/Share)(b) Date for Option Term
---- ------- -------------- ------------ ---------- ------------------
5%($)(c) 10%($)(c)
-------- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank D. Hickingbotham.. 50,000 8.20% $6.03125 12/12/2007 $189,984 $479,484
Herren C.
Hickingbotham.......... 50,000 8.20% 6.03125 12/12/2007 189,984 479,484
James M. Sahene......... 50,000 8.20% 6.03125 12/12/2007 189,984 479,484
Gene H. Whisenhunt...... 50,000 8.20% 6.03125 12/12/2007 189,984 479,484
Jim H. Fink............. 50,000 8.20% 6.03125 12/12/2007 189,984 479,484
</TABLE>
- --------
(a) The options become exercisable in four 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.
6
<PAGE>
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 29, 1998:
<TABLE>
<CAPTION>
Number Number
Name(a) Exercisable Value(b) Unexercisable Value(b)
------- ----------- -------- ------------- --------
<S> <C> <C> <C> <C>
Frank D. Hickingbotham............. 140,986 $248,691 155,000 $267,813
Herren C. Hickingbotham............ 172,955 362,532 179,250 455,375
James M. Sahene.................... 124,210 243,769 178,750 454,375
Gene H. Whisenhunt................. 63,860 129,581 178,000 452,875
Jim H. Fink........................ 102,210 213,188 178,750 454,375
</TABLE>
- --------
(a) For options exercised by any named executive during fiscal 1998, 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 27,
1998 ($7.3125).
Employment Arrangements
Currently there are no employment agreements between any executive officer
of the Company and the Company.
Messrs. Herren Hickingbotham, Sahene, Whisenhunt, 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 1998 year end, the
Compensation Committee was comprised of Dr. Daniel R. Grant, Mr. William H.
Bowen, and Dr. 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 1998 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;
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<PAGE>
. 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 1998, 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 1998 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.
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 1996, 1997, and
1998 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.
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 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. For fiscal 1998 the Company did not meet its overall financial plan
goal of $0.46 earnings per share, and pursuant to the terms of the bonus plan
only eighty percent (80%) of each executive officer's target bonus was paid.
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
8
<PAGE>
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 1998, options to purchase a total of 365,000
shares were granted to executive officers at a price of $6.03125 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 1998 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 1998, Mr. Hickingbotham received a bonus
of $50,000. In keeping with the Company's goal of linking executive
compensation to the creation of shareholder value, in fiscal 1998 Mr.
Hickingbotham was granted stock options to purchase 50,000 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 1998
compensation levels.
Compensation Committee:
Daniel R. Grant, William H. Bowen, Marvin D. Loyd
9
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
common stock to the Dow Jones Equity Market Index and Dow Jones Consumer
Cyclical Sector Entertainment & Leisure- Restaurants Index for the last five
years beginning November 30, 1993 and ending November 29, 1998. The graph
assumes that the value of the investment in the Company's common stock and
each index was $100 at November 30, 1993 and that all dividends, if any, were
reinvested.
[PERFORMANCE GRAPH APPEARS HERE]
10
<PAGE>
CERTAIN TRANSACTIONS
A subsidiary of the Company, TCBY Systems, Inc., 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 $183,000 in fiscal 1998, and Quality Foods, Inc. derived fees
therefrom consistent with industry standards.
During fiscal 1998, the Company maintained a banking relationship with a
subsidiary of First Commercial Corporation, which was merged into Regions
Financial Corporation effective July 31, 1998. This banking relationship
primarily involved depository accounts and other normal and customary
commercial accounts. Mr. William H. Bowen and Mr. Frank D. Hickingbotham
served on the Board of Directors of First Commercial Corporation prior to its
merger into Regions Financial Corporation, on whose Board Mr. Hickingbotham
now serves.
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 were 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 1998 as fees for providing
facilities to the Company for franchisee in-store training and 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
continued 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). Mr. F. Todd Hickingbotham
divested those corporations in 1998; he no longer has an ownership or other
interest in these TCBY stores. 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
of the building not affiliated with the Company.
Effective May 29, 1998, the Company and Mr. Frank D. Hickingbotham entered
into an agreement for use of an aircraft owned by Mr. Hickingbotham.
Contemporaneously the Company divested an aircraft it owned. The agreement
provides for use by the Company of Mr. Hickingbotham's aircraft at a below
market rate for such an aircraft, which rate is equivalent to the hourly cost
of operation of the Company's divested aircraft. The Company is under no
obligation to use Mr. Hickingbotham's aircraft, and all use by the Company is
reviewed by the Board of Directors in each of the Board's regularly scheduled
meetings. In order to have access to and use of Mr. Hickingbotham's aircraft,
the Company continues to employ its two pilots and one aircraft maintenance
technician as well as pay Mr. Hickingbotham's initial insurance on the
aircraft. In conjunction with the aircraft use agreement, Mr. Frank
Hickingbotham entered into an assignment agreement with the Company which
provides for his use of a hangar in Little Rock, Arkansas. Credits for the
lease assigned (under which credit for prepayment of rent had accrued to the
Company) and expenses set forth above are applied to the Company's actual use,
if any, of Mr. Hickingbotham's aircraft. In fiscal 1998, Mr. Hickingbotham
paid the Company a total of $196,000 as the amount due under these agreements
after taking into account the Company's usage of his aircraft, the charge for
which totaled $99,000.
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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
In accordance with the Company's By-laws, any proposal which a stockholder
intends to present at the annual meeting of stockholders in 2000 must be
received by the Company by November 28, 1999, 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 changes 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.
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.
PROXY
The undersigned hereby votes the shares of stock of TCBY ENTERPRISES, INC.
which the undersigned is entitled to vote, at the annual meeting of
stockholders held in Little Rock, Arkansas, on Tuesday April 13, 1999 at 10:00
a.m., Little Rock time, with regard to matters previously notified to the
undersigned as follows:
The election as directors of all nominees listed (except as marked to the
contrary below).
[_] FOR [_] WITHHELD [_] FOR ALL EXCEPT
(INDICATED BELOW)
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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The undersigned hereby revokes any proxy or proxies heretofore given to vote
the shares of stock of TCBY Enterprises, Inc., which the undersigned is
entitled to vote. This proxy will be voted as specified; if no specification is
made , this proxy will be voted for all directors nominated.
------------------------------------
Date
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SIGNATURE OF STOCKHOLDER (Please
sign exactly as name appears on
your stock certificate or, if held
in street name, as it appears in
your broker's records; include,
where proper, official position or
representative capacity.)
