<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE GYMBOREE CORPORATION
- --------------------------------------------------------------------------------
(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)(1) 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:
<PAGE> 2
THE GYMBOREE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 1997
TO THE STOCKHOLDERS OF THE GYMBOREE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The
Gymboree Corporation, a Delaware corporation (the "Company"), will be held on
Friday, May 16, 1997 at 9:00 a.m., local time, at the San Francisco Airport
Marriott, 1800 Old Bayshore Highway, Burlingame, California 94010 for the
following purposes:
1. To elect three Class I directors to serve for three year terms
expiring upon the year 2000 Meeting of Stockholders or until
their successors are elected.
2. To ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending
January 31, 1998.
3. To transact such other business as may properly come before
the meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 31, 1997
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the meeting in
person. However, to ensure your representation at meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any stockholder
attending the meeting may vote in person even if such stockholder has returned
a proxy.
FOR THE BOARD OF DIRECTORS
JEFFREY D. SAPER
Secretary
Burlingame, California
April 18, 1997
IMPORTANT: Whether or not you plan to attend the meeting, you are requested
to complete and promptly return the enclosed proxy in the envelope provided.
<PAGE> 3
THE GYMBOREE CORPORATION
---------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
The Gymboree Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held May 16,1997 at 9:00 a.m., local time, or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at
the San Francisco Airport Marriot, 1800 Old Bayshore Highway, Burlingame,
California 94010. The telephone number of the Company's principal offices is
(415)579-0600.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended February 2, 1997, including financial
statements, were mailed on or about April 18, 1997 to all stockholders entitled
to vote at the meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 31, 1997 (the
"Record Date") are entitled to notice of and to vote their shares at the
meeting. At the Record Date, 25,024,198 shares of the Company's Common Stock,
$0.001 par value per share, were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common
Stock on all matters presented at the Annual Meeting. Stockholders do not have
the right to cumulative voting in the election of directors.
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation materials to
such beneficial owners. Solicitation of proxies by mail may be supplemented by
telephone, telegram, facsimile or personal solicitation by directors, officers
or regular employees of the Company. No additional compensation will be paid to
such persons for such services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual
Meeting is a majority of the votes eligible to be cast by holders of shares of
Common Stock issued and outstanding on the Record Date. Shares that are voted
"FOR," "AGAINST," "WITHHELD" or "ABSTAIN" are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matter.
1
<PAGE> 4
Although there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the
presence or absence of quorum for the transaction of business and (ii) the
total number of Votes Cast with respect to a proposal (other than the election
of directors). In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. Accordingly, abstentions
will have the same effect as a vote against a proposal.
The Delaware Supreme Court has held that, while broker non-votes
should be counted for purposes of determining the presence or absence of a
quorum for the transaction of business, broker non-votes should not be counted
for purposes of determining the number of Votes Cast with respect to the
particular proposal on which the broker has expressly not voted. The Company
intends to treat broker non-votes in a manner consistent with such holding.
Thus, a broker non-vote will not affect the outcome of the voting on a
proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's 1998 Annual Meeting must be
received by the Company no later than December 19, 1997 in order that they may
be considered for inclusion in the proxy statement and form of proxy relating
to that meeting.
PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES
The number of directors authorized by the Company's Bylaws is a range
from six to eleven, with the exact number currently fixed by the Board at nine.
The Company's Restated Certificate of Incorporation provides that the directors
shall be divided into three classes, with the classes serving for staggered,
three year terms. Currently there are three directors in Class I, three
directors in Class II and three directors in Class III.
Three Class I directors are to be elected at the Annual Meeting. Each
of the three Class I directors elected at the Annual Meeting will hold office
until the Annual Meeting of Stockholders in 2000 or until his or her successor
has been duly elected and qualified. The term of each Class II director will
expire at the Annual Meeting of Stockholders in 1998. The term of each Class
III director will expire at the Annual Meeting of Stockholders in 1999.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's three nominees named in the table below, all
of whom are currently directors of the Company. In the event that any nominee
of the Company becomes unable or declines to serve as a director at the time of
the Annual Meeting, the proxy holders will vote the proxies for any substitute
nominee who is designated by the current Board of Directors to fill the
vacancy. It is not expected that the nominees listed below will be unable or
will decline to serve as a director.
The names of the three Class I nominees for director and certain
information about each of them are set forth in the table below. The names of,
and certain information about, the current Class II and Class III directors
with unexpired terms are also set forth below.
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
- ------------------------------- --- ----------------------------------------------------------------
<S> <C> <C>
NOMINEES FOR CLASS I DIRECTORS
Arthur S. Berliner 53 General Partner, Walden Group of Venture Capital Funds
Walter F. Loeb 72 President, Loeb Associates Inc.
Peter L. Thigpen 57 Partner, Executive Reserves
CONTINUING CLASS II DIRECTORS
Gary White 45 President and Chief Executive Officer, The Gymboree Corporation
Barbara L. Rambo 44 Group Executive Vice President, Bank of America
James P. Curley 41 Senior Vice President and Chief Administrative Officer/
Chief Financial Officer, The Gymboree Corporation
CONTINUING CLASS III DIRECTORS
Stuart G. Moldaw 70 Chairman of the Board, The Gymboree Corporation
William U. Westerfield 65 Consultant, Price Waterhouse LLP
Jerome A. Chazen 69 Chairman of Chazen Capital Partners
</TABLE>
Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships between any directors or executive officers
of the Company.
Arthur S. Berliner has been a director of the Company since June 1987.
Mr. Berliner has been a General Partner of Walden Group of Venture Capital
Funds, a venture capital investment firm, since 1974. Mr. Berliner is a
director of Natural Wonders, Inc., a specialty retail store, and Mark's Work
Wearhouses, Ltd., a work and casual wear retailer in Canada.
Walter F. Loeb has been a director of the Company since March 1995.
Mr. Loeb has been president of Loeb Associates Inc., a retail consulting firm,
since February 1990. Mr. Loeb is also the publisher of "Loeb Retail Letter,"
which provides a monthly analysis of the retail industry. Following ten years
of service as a senior retail analyst with Morgan Stanley & Company, Inc., Mr.
Loeb was a principal at Morgan Stanley from 1984 to 1990. Mr. Loeb also serves
as a director of specialty apparel retailers, Mothers Work, Inc., and The Wet
Seal, Inc., and InterTAN, Inc., an international electronics retailer. Mr.
Loeb is also a director of the Federal Realty Investment Trust, a real estate
investment trust and Warnaco Group, Inc.
Peter L. Thigpen has been a director of the Company since March 1995.
Mr.Thigpen has been a partner of Executive Reserves, a consulting firm, since
its inception in March 1991. From 1967 until 1991, Mr. Thigpen was employed by
Levi Strauss & Co., an apparel company, most recently as Senior Vice President
- - U.S. Operations. Mr. Thigpen has been a lecturer at the Haas Graduate School
of Business at the University of California, Berkeley, since 1992. Mr. Thigpen
is also a director of Designs, Inc., a retail apparel company.
Gary White has been the Company's Chief Executive Officer, and
President and a director since February 1997, and served as a Senior Vice
President and the Chief Operating Officer of the Company from January 1996
until February 1997. Prior to joining the Company, Mr. White served as
Executive Vice President of Mervyn's, a division of Dayton Hudson Corporation.
Mr. White was employed by Dayton Hudson Corporation since 1976 having served in
various positions as an officer with Dayton Hudson Corporation from January
1988 to January 1996.
3
<PAGE> 6
Barbara L. Rambo has been a director of the Company since January
1996. Ms. Rambo is Group Executive Vice President and head of the Commercial
Banking Division of Bank of America. Ms. Rambo has been an employee of Bank of
America since 1974 and has held various positions within BankAmerica
International in New York, the New York Corporate Banking Office and the U.S.
Division Corporate Banking Group.
James P. Curley has been the Company's Senior Vice President and Chief
Administrative Officer/ Chief Financial Officer and a director since February
1996. Previously, Mr. Curley served as the Company's Senior Vice President and
Chief Financial Officer since joining the Company in July 1992. From May 1989
to July 1992, Mr. Curley was Senior Vice President, Chief Financial Officer and
Treasurer of Gantos, Inc., an apparel retailer. Mr. Curley is also a director
of West Marine, Inc., a boating supplies retailer.
Stuart G. Moldaw has been the Chairman of the Board of Directors of
the Company since January 1994, and has been a director of the Company since
May 1982. Mr. Moldaw previously served as Chairman of the Board of Directors
of the Company from January 1990 through January 1993. From 1980 through
February 1990, Mr. Moldaw served as a general partner of U.S. Venture Partners
and he is currently a special venture partner of U.S. Venture Partners. From
February 1987 through January 1988, Mr. Moldaw served as Chief Executive
Officer of Ross Stores, Inc., an off-price retailer, and is currently a
director and Chairman Emeritus of Ross Stores, Inc.
William U. Westerfield has been a director of the Company since August
1994. Mr. Westerfield has served as a consultant to the public accounting firm
of Price Waterhouse LLP since July 1992. Mr. Westerfield was employed by Price
Waterhouse LLP from 1956 through June 1992 and served as a partner from 1965
through June 1992.
Jerome A. Chazen has been a director since February 1997. Mr. Chazen
is the founder and chairman of Chazen Capital Partners LLC, a private
investment firm. Mr. Chazen is also Chairman Emeritus and a member of the
Board of Directors of Liz Claiborne, Inc., and is one of the four founding
partners who established the Company in 1976. Mr. Chazen also serves on the
Board of Directors of Learningsmith and Taubman Centers, Inc.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings
during the fiscal year ended February 2, 1997, and no director attended fewer
than 75% of the meetings of the Board of Directors or the committees upon which
such director served.
The Board of Directors has an Audit Committee, a Compensation
Committee and a Real Estate Committee. The Board of Directors has no
nominating committee or any committee performing similar functions.
The Audit Committee currently consists of Directors Thigpen, Rambo,
and Westerfield, Chairman. The Audit Committee principally reviews the scope
and results of the work of the Director of Internal Audit and of the annual
audit of the financial statements and other services provided by the Company's
independent auditors. In addition, the Audit Committee reviews the information
provided to stockholders and the Company's systems of internal controls. The
Audit Committee held six meetings during the last fiscal year.
The Compensation Committee currently consists of Directors Berliner,
Thigpen and Loeb, Chairman. The Compensation Committee is responsible for
reviewing and approving the Company's compensation policies and the
compensation paid to executive officers. The Compensation Committee held four
meetings during the last fiscal year.
4
<PAGE> 7
The Real Estate Committee currently consists of Directors Moldaw,
White and Curley. The Real Estate Committee reviews and approves all new store
locations and store lease arrangements. The Real Estate Committee held more
than twelve meetings during the last fiscal year.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives an annual retainer
of $18,000 and an additional $1,000 for each Board meeting attended and $500
for each Committee meeting attended (including telephonic meetings). Each
non-employee director of the Company is entitled to participate in the
Company's 1993 Stock Option Plan by receiving automatic grants of options to
purchase Common Stock of the Company. Each non-employee director is
automatically granted an option to purchase 2,000 shares of the Company's
Common Stock upon each anniversary of such director's initial election to the
Board. In the event that an additional non-employee director is elected to
the Board, such person shall be entitled to receive an option to purchase 2,000
shares of the Company's Common Stock upon election.
VOTE REQUIRED
The three nominees receiving the highest number of affirmative votes
of the shares entitled to vote on this matter shall be elected as the Class I
directors. Votes withheld from any director will be counted for purposes of
determining the presence or absence of a quorum but are not counted as
affirmative votes. A broker non-vote will be counted for purposes of
determining the presence or absence of a quorum, but, under Delaware law, it
will have no other legal effect upon the election of directors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE NOMINEES SET FORTH HEREIN.
PROPOSAL TWO:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending January 31, 1998, and recommends that the stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting of Stockholders and will have the opportunity to make a
statement if they so desire. The representatives also are expected to be
available to respond to appropriate questions from stockholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JANUARY 31, 1998.
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<PAGE> 8
ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table shows the compensation paid by the Company during
fiscal years 1994, 1995 and 1996 to (i) the Company's Chief Executive Officer
during fiscal 1996 and (ii) each of the four other most highly compensated
executive officers during fiscal 1996 (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION(1)
--------------------------- ---- ------ ----- ------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nancy J. Pedot(2)............. 1996 $452,042 $256,128 --- --- 53,013 $450
President and Chief 1995 370,184 209,475 --- --- 46,570 360
Executive Officer 1994 358,924 301,000 $2,081,200(3) $2,081,200(3) 63,070 646
Gary White(4)................. 1996 303,387 138,000 --- --- --- 450
Senior Vice President and 1995 --- --- --- --- 50,000 ---
Chief Operating Officer
Stuart G. Moldaw.............. 1996 203,475 100,000 --- --- 25,000 ---
Chairman of the 1995 188,667 104,738 --- --- --- ---
Board of Directors 1994 185,219 150,500 --- --- 150,000 ---
James P. Curley............... 1996 253,224 115,000 --- --- 25,000 450
Senior Vice President and 1995 210,828 68,533 --- --- --- 297
Chief Financial Officer/ 1994 200,496 109,928 --- --- --- 618
Chief Administrative Officer
Mindy Meads................... 1996 234,062 140,000 --- --- 50,000 419
Senior Vice President and
General Merchandise
Manager
- --------------------------
</TABLE>
(1) The amount included under "All Other Compensation" represents the dollar
value of term life insurance premiums paid by the Company for the benefit of
each Named Officer.
(2) On February 12, 1997, Ms. Pedot resigned as the Company's President and
Chief Executive Officer.
(3) In May 1994, Ms. Pedot was granted 100,000 shares of Common Stock at
an aggregate purchase price of $50. At the time of grant, the aggregate fair
market value of the shares was $2,081,200. The amounts included under "Other
Annual Compensation" and under "Restricted Stock Awards" represent the fair
market value of the Common Stock at the time of grant less the cost of the
100,000 shares of Common Stock purchased. The shares are subject to a
repurchase option that lapses over a period of 60 months. In event that
dividends are paid to the holders of Common Stock, the shares will be
entitled to dividends in the same manner as any other shares of Common
Stock.
(4) Mr. White joined the Company in January 1996 as Senior Vice President and
Chief Operating Officer. On February 12, 1997, Mr. White was named
President and Chief Executive Officer.
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<PAGE> 9
OPTION GRANTS AND EXERCISES
The following table sets forth certain information with respect to
stock option grants during the fiscal year ended February 2, 1997 to the Named
Officers. In accordance with the rules of the Securities and Exchange
Commission (the "SEC"), also shown below is the potential realizable value over
the term of the option (the period from the grant date to the expiration date)
based on assumed rates of stock appreciation from the option exercise price of
5% and 10%, compounded annually. These amounts are based on certain assumed
rates of appreciation and do not represent the Company's estimate of future
stock price. Actual gains, if any, on stock option exercise will be dependent
on the future performance of the Common Stock.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATE OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR BASE PRICE DATE 5% 10%
- --------------- ---------- ------------ ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Nancy J. Pedot(1)........ 53,013 7.3% $23.50 02/20/06 $783,480 $1,985,493
Stuart G. Moldaw......... 25,000 3.4 24.25 04/04/06 381,267 966,206
James P. Curley.......... 25,000 3.4 23.50 02/20/06 369,476 936,324
Gary White............... ---- ---- ---- ---- ---- ----
Mindy Meads.............. 50,000 6.9 25.50 03/27/06 801,841 2,032,022
</TABLE>
(1) Ms. Pedot resigned as the Company's President and Chief Executive
Officer in February 1997. Pursuant to the terms of her severance
arrangements with the Company, the option continues to vest and remains
exercisable until February 28, 1998. At such time, 26,507 shares of
Common Stock subject to the option will be returned to the Company's
1993 Stock Option Plan.
The following table sets forth information with respect to options
exercised in the fiscal year ended February 2, 1997 by the Named Officers and
the value of unexercised options at February 2, 1997.
AGGREGATE OPTION EXERCISES IN FISCAL 1996 AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FEBRUARY 2, 1997 AT FEBRUARY 2, 1997
ACQUIRED VALUE ------------------------------ ------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nancy J. Pedot.......... 35,547 $559,622 333,853 103,800 $3,418,473 $294,493
Stuart G. Moldaw........ ---- ---- 109,062 80,938 383,750 139,375
James P. Curley......... 25,000 497,917 159,123 29,271 2,096,809 130,000
Gary White.............. ---- ---- 12,500 37,500 78,125 234,375
Mindy Meads............. ---- ---- ---- 50,000 ---- ----
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In connection with Ms. Pedot's resignation as the Company's President
and Chief Executive Officer in February 1997, the Company agreed that, subject
to certain conditions, Ms. Pedot will continue to receive payments equivalent
to her fiscal 1996 base salary until the earlier of February 28, 1998 or the
commencement of employment
7
<PAGE> 10
by Ms. Pedot with another company. Further, in the event that Ms. Pedot's
salary in such new employment does not equal or exceed her 1996 base salary,
the Company agreed to continue paying Ms. Pedot the difference through February
1998. In April 1997, Ms. Pedot received payment of her bonus relating to the
1996 fiscal year. In addition, subject to certain conditions, the Company
agreed that all of Ms. Pedot's unvested options to purchase Common Stock and
all of Ms. Pedot's Common Stock subject to a right of repurchase will continue
to vest until February 1998.
In July 1992, the Company entered into an employment agreement with
James P. Curley, the Senior Vice President, Chief Administrative Officer/Chief
Financial Officer and a director of the company. The employment agreement
provides that, following the termination of Mr. Curley's employment by the
Company for any reason, Mr. Curley's salary and benefits will continue to be
paid to him until the earlier of six months following his termination or such
time as he obtains alternate employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended February 2, 1997, the Compensation
Committee of the Board of Directors consisted of Messrs. Berliner, Thigpen and
Loeb, Chairman. No member of the Compensation Committee has a relationship
that would constitute an interlocking relationship with executive officers or
directors of another entity. The Committee is comprised of the members named
above. None of the Committee members is an employee of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To the Board of Directors:
As members of the Compensation Committee, we are responsible for
reviewing and approving the Company's compensation policies and the levels of
compensation paid to executive officers.
The following is the report to the Board of Directors describing
compensation policies and rationales applicable to the Company's executive
officers with respect compensation paid to such executive officers for the
fiscal year ended February 2, 1997. The information contained in the following
report shall not be deemed to be "soliciting material" or to be filed with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates it by reference into such
filing.
The Compensation Committee of the Board of Directors is responsible
for reviewing and approving the Company's compensation policies and the
compensation paid to executive officers. The Committee is comprised of the
members named above, none of whom is an employee of the Company.
Compensation Philosophy
The general philosophy of the Company's compensation program is to
offer executive officers competitive compensation based both on the Company's
performance and on the individual's contribution and performance. The
Company's compensation policies are intended to motivate, reward and retain
highly qualified executives for long-term strategic management and the
enhancement of stockholder value, to support a performance-oriented environment
that rewards achievement of specific internal Company goals and to attract and
retain executives whose abilities are critical to the long-term success and
competitiveness of the Company.
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<PAGE> 11
There are three main components to the Company's executive
compensation program:
o Base Salary
o Annual Bonus
o Stock Incentives
Base Salary
Executive officers' salaries have been targeted at a level that, when
combined with the annual bonus, is at or above the average rates paid by
competitors. The Committee believes that these rates are necessary to retain
key employees. The Committee reviews and approves salaries for the Chief
Executive Officer and the executive officers on an annual basis, generally in
the first fiscal quarter.
In reviewing the salaries for executive officers, the Committee
examined salary surveys prepared in late 1995 by a national, independent
compensation consulting company for rapidly growing specialty retailers. The
Committee reviewed individual base salaries of executive officers, and adjusted
salaries based on individual job performance and changes in the position's
duties and responsibilities. In making salary decisions, the Committee
exercised its discretion and judgment based on these factors. No specific
formula was applied to determine the weight of each factor.
Annual Bonus
Annual incentive bonuses for executive officers are intended to
reflect the Committee's belief that a significant portion of the annual
compensation of each executive officer should be contingent upon the
performance of the Company, as well as the individual contribution of each
officer.
To carry out this philosophy, the Company has implemented The Gymboree
Corporation Bonus Plan (the "Bonus Plan"), which provides executive officers
and other employees the opportunity to earn annual incentive bonuses. The
purpose of the bonus plan is to attract, retain, motivate and reward employees
by directly linking the amount of any cash bonus to specific corporate and/or
divisional financial goals. To this end, specific earnings measurements are
defined each year and threshold, target and maximum payout levels are
established to reflect the Company's objectives. These goals and the potential
amounts of bonuses are reviewed and approved by the Committee in the first
fiscal quarter of each year. In fiscal 1996, the Company experienced a 17%
net sales increase and a 20% increase in net income. As a result, the Chief
Executive Officer and other Named Officers received bonuses for fiscal 1996
which aggregated $749,128. The Committee believes that the Bonus Plan provides
an excellent link between earnings performance and the incentives paid to
executives.
Stock Incentives
The Company utilizes stock options as long term incentives to reward
and retain executive officers. The Committee believes that these programs
serve to link management interests with stockholder interests and to motivate
executive officers to make long- term decisions that are in the best interests
of the Company and that will, over the long-term, promote better returns to
stockholders.
Stock options are granted to executive officers periodically.
Generally, stock options vest over four years after the grant date and
optionees must be employed by the Company at the time of vesting in order to
exercise the options. The Committee believes that stock option grants provide
an incentive which focuses the executives'
9
<PAGE> 12
attention on the Company from the perspective of an owner with an equity stake
in the business. Because options are typically granted with an exercise price
equal to the fair market value of the Common Stock on the date of grant, the
Company's stock options are tied to the future performance of the Company's
Common Stock and will provide value to the recipient only when the price of the
Company's stock increases above the exercise price, that is, only to the extent
that stockholders as a whole have benefitted.
In order to determine the appropriate number of options to be granted
to its executive officers, the Company has relied on competitive guidelines
prepared by a national, independent compensation consultant. In fiscal 1996,
the Named Officers were granted options to purchase an aggregate of 153,013
shares of Common Stock with a weighted average exercise price of $24.27 per
share. All options were granted with an exercise price equal to the fair market
value of the Common Stock on the date of grant.
Compensation of the Chief Executive Officer
Nancy J. Pedot resigned as the Company's President and Chief Executive
Officer in February 1997. Ms. Pedot's fiscal 1996 base salary was established
by the Compensation Committee in accordance with the guidelines applicable to
all executive officers, as set forth above. Ms. Pedot received a bonus of
$256,128 for fiscal 1996. The bonus was determined in accordance with the
practices described above.
Ms. Pedot was succeeded as President and Chief Executive Officer of
the Company by Gary White. Mr. White's fiscal 1996 compensation, earned in his
prior capacities as Senior Vice President and Chief Operating Officer, was
established in accordance with the guidelines set forth above. Mr. White's
salary and targeted bonus for fiscal 1997 have been established by the
Compensation Committee in accordance with the practices described above.
THE COMPENSATION COMMITTEE
Walter F. Loeb, Chairman
Arthur S. Berliner
Peter L. Thigpen
10
<PAGE> 13
PERFORMANCE GRAPH
The following line graph compares the annual percentage change in the
cumulative total stockholder return for the Company's Common Stock with the
Nasdaq U.S. Index and a peer group of companies selected by the Company (the
"Peer Group"), consisting of 45 companies whose primary business is the
operation of apparel and accessory retail stores. The graph assumes that $100
was invested on the date of the Company's initial public offering, March 30,
1993. In accordance with the guidelines of the SEC, the stockholder return for
each entity in the Peer Group has been weighted on the basis of market
capitalization as of each measurement date set forth in the graph. The
information in the graph is provided in annual intervals. Historic stock price
performance should not be considered indicative of future stock price
performance.
THE GYMBOREE CORPORATION - GRAPH POINT
<TABLE>
<CAPTION>
NASDAQ RETAIL GYMBO
<S> <C> <C> <C>
3/30/93 100.00 100.00 100.00
1/30/94 114.80 88.27 193.13
1/29/95 110.69 81.00 231.25
2/ 4/96 158.30 79.90 173.75
2/ 2/97 205.20 94.18 229.99
</TABLE>
11
<PAGE> 14
SECURITY OWNERSHIP
The following table sets forth certain information known to the
Company with respect to beneficial ownership of the Company's Common Stock as
of March 31, 1997 by (i) each beneficial owner of more than 5% of the
Company's Common Stock, (ii) each director and each nominee, (iii) each Named
Officer and (iv) all directors and executive officers as a group. Except as
otherwise indicated, each person has sole voting and investment power with
respect to all shares shown as beneficially owned, subject to community
property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL SHARES OF TOTAL
--------------------------------------------- ----------- --------
<S> <C> <C>
Wellington Management Company(1) . . . . . . . . . . 3,087,690 12.3%
75 State Street
Boston, Massachusetts 02109
Massachusetts Financial Service Company (2) . . . . 2,970,945 11.9
500 Boylston Street
Boston, Massachusetts 02116
FMR Corp. (3) . . . . . . . . . . . . . . . . . . . 2,294,870 9.2
82 Devonshire Street
Boston, Massachusetts 02109
The Capital Group Companies, Inc. (4) . . . . . . . 2,035,600 8.1
333 South Hope Street
Los Angeles, California 90071
AIM Management Group, Inc. (5) . . . . . . . . . . . 1,540,200 6.2
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
Nancy J. Pedot (6) . . . . . . . . . . . . . . . . . 836,242 3.3
Stuart G. Moldaw (7) . . . . . . . . . . . . . . . . 356,325 1.4
James P. Curley (8) . . . . . . . . . . . . . . . . 291,637 1.2
Gary White (9) . . . . . . . . . . . . . . . . . . . 21,353 *
Mindy Meads (10) . . . . . . . . . . . . . . . . . . 16,541 *
Arthur S. Berliner (11) . . . . . . . . . . . . . . 23,000 *
Jerome A. Chazen . . . . . . . . . . . . . . . . . . --- --
Walter Loeb (12) . . . . . . . . . . . . . . . . . . 2,200 *
Barbara L. Rambo (13) . . . . . . . . . . . . . . . 500 *
Peter L. Thigpen (14) . . . . . . . . . . . . . . . 3,000 *
William U. Westerfield (15) . . . . . . . . . . . . 1,600 *
All directors and executive officers as a group
(11 persons) (16) . . . . . . . . . . . . . . . . 1,552,398 6.2
- ----------------------
</TABLE>
* Percentage of shares beneficially owned is less than one percent of
total.
(1) Based solely on information contained in a Schedule 13G filed
with the SEC on January 24, 1997.
(2) Based solely on information contained in a Schedule 13G filed with the
SEC on February 12, 1997.
(3) Based solely on information contained in a Schedule 13G filed with
the SEC on February 14, 1997.
(4) Based solely on information contained in a Schedule 13G filed with the
SEC on February 12, 1997.
(5) Based solely on information contained in a Schedule 13G filed with the
SEC on February 12, 1997.
(6) Includes 449,046 shares which may be acquired upon exercise of
options exercisable within 60 days of March 31, 1997.
(7) Includes 121,770 shares which may be acquired upon exercise of
options exercisable within 60 days of March 31, 1997.
(8) Includes 159,114 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(9) Includes 21,353 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(10) Includes 16,041 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(11) Includes 23,000 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(12) Includes 1,500 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(13) Includes 500 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(14) Includes 1,500 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(15) Includes 1,500 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
(16) Includes 795,324 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1997.
12
<PAGE> 15
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percentage of a registered class of the Company's
equity securities to file an initial report of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the SEC and the National Association of
Securities Dealers, Inc. Executive officers, directors and greater than ten
percent stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons, the Company believes that, with respect to fiscal year 1996,
all filing requirements applicable to its officers, directors and ten percent
stockholders were met.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting.
If any other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of proxy to vote the shares they represent as the Board of Directors may
recommend.
FOR THE BOARD OF DIRECTORS
JEFFREY D. SAPER
Secretary
Dated: April 18, 1997
13
<PAGE> 16
April 15, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 9:00 a.m. on Friday, May 16, 1997, at the San Francisco Airport
Marriott Hotel, located at 1800 Old Bayshore Highway, Burlingame, CA. Detailed
information as to the business to be transacted at the meeting is contained in
the accompanying Notice of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that
your shares be voted. Accordingly, we ask that you sign and return your proxy
as soon as possible in the envelope provided.
Sincerely,
Gary White
President and Chief Executive Officer
<PAGE> 17
DETACH HERE
Please mark
[X] votes as in
this example.
The Board of Directors recommends a vote FOR each of the matters listed below.
This Proxy, when properly executed, will be voted as specified below. This
Proxy will be voted FOR Proposals No. 1, 2 and 3 if no specification is made.
<TABLE>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Election of three Class I Directors 2. To ratify the appointment of Deloitte
NOMINEES: Arthur S. Berliner, & Touche LLP as independent auditors [ ] [ ] [ ]
Walter F. Loab, of the Company for the Fiscal year ending
Peter L. Thigpen January 31, 1998.
FOR WITHHELD
[ ] [ ]
3. In their discretion with respect to such other business as may properly
[ ] come before the meeting and any adjournment or postponement thereof.
---------------------------------------
For all nominees except as noted above
MARK HERE
FOR ADDRESS [ ]
CHANGE AND NOTE AT
LEFT
Please sign your name exactly as it appears hereon. If acting as attorney,
executor, trustee or in other representative capacity, sign name and title.
Signature: Date: Signature: Date:
--------------------------- ---------------- --------------------- --------------------
</TABLE>
<PAGE> 18
DETACH HERE
THE GYMBOREE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, MAY 16, 1997
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE GYMBOREE CORPORATION
R
O The undersigned revokes all previous proxies, acknowledges receipt of
the notice of the Annual Meeting of Stockholders to be held May 16, 1997 and
X the proxy statement related thereto and appoints Gary White and James P.
Curley, or either of them, the proxy of the undersigned, with full power of
Y substitution, to vote all shares of Common Stock of The Gymboree Corporation
which the undersigned is entitled to vote, either on his or her own behalf or
on behalf of an entity or entities, at the Annual Meeting of Stockholders of
the Company to be held at the San Francisco Airport Marriott Hotel, 1800 Old
Bayshore Highway, Burlingame, California 94010 on Friday, May 16, 1997 at
9:00 a.m., and at any adjournment or postponement thereof, with the same
force and effect as the undersigned might or could do it personally present
thereat. The shares represented by this proxy shall be voted in the manner
set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE -------------
SEE REVERSE
SIDE
-------------
