<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
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 Rule 14a-11(c) or Rule 14a-12
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
GYMBOREE LOGO
April 27, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held at 8:30 a.m. on Friday, June 2, 2000, at Gymboree's corporate offices,
700 Airport Boulevard, Burlingame, California 94010 in the 4th floor conference
room.
At the meeting, we will elect two directors, ratify the appointment of our
auditors, and answer your questions. 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,
/s/ STUART MOLDAW
Stuart Moldaw
Chairman and Chief Executive Officer
<PAGE> 3
GYMBOREE LOGO
THE GYMBOREE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 2, 2000
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, June 2, 2000 at 8:30 a.m., local time, at the Company's corporate
offices, 700 Airport Boulevard, Burlingame, California, 94010 in the 4th floor
conference room for the following purposes:
1. To elect two Class I directors to serve for three year terms expiring
upon the 2003 Annual 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 February 3, 2001.
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 April 12, 2000 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 the 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
/s/ LAWRENCE H. MEYER
LAWRENCE H. MEYER
Secretary
Burlingame, California
April 27, 2000
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> 4
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 June 2, 2000 at 8:30 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
Company's corporate offices, 700 Airport Boulevard, Burlingame, California
94010. The telephone number of the Company's principal offices is (650)
579-0600.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended January 29, 2000, including financial
statements, were mailed on or about April 27, 2000 to all stockholders entitled
to vote at the meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on April 12, 2000 (the
"Record Date") are entitled to notice of and to vote their shares at the
meeting. At the Record Date, 24,401,604 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.
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.
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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 2001 Annual Meeting must be received by
the Company no later than December 29, 2000 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 seven. 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 two directors in Class I, one director in
Class II and three directors in Class III.
Two Class I directors are to be elected at the Annual Meeting. Each of the
two Class I directors elected at the Annual Meeting will hold office until the
Annual Meeting of Stockholders in 2003 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 2001. The term of each Class III director
will expire at the Annual Meeting of Stockholders in 2002.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's two 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 two 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.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
<S> <C> <C>
NOMINEES FOR CLASS I DIRECTORS
Walter F. Loeb......................... 75 President, Loeb Associates Inc.
Alan R. Schlesinger.................... 58 Chairman, Chief Executive Officer and President,
Lamonts Apparel, Inc.
CONTINUING CLASS II DIRECTORS
Barbara L. Rambo....................... 47 President, Openclose.com
CONTINUING CLASS III DIRECTORS
Stuart G. Moldaw....................... 74 Chairman of the Board and Chief Executive Officer,
The Gymboree Corporation
William U. Westerfield................. 68 Consultant, Price Waterhouse LLP
Deborah A. Sorondo..................... 48 Chief Operating and Development Officer, Sierra Club
</TABLE>
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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.
Walter F. Loeb has been a director of the Company since March 1995. Mr.
Loeb is President of Loeb Associates, Inc., a retail consulting firm he founded
in February 1990. Mr. Loeb is the publisher of "Loeb Retail Letter," which
provides a monthly analysis of the retail industry. Mr. Loeb was employed by
Morgan Stanley & Company, Inc. from 1974 to 1990, serving as principal from 1984
to 1990. Mr. Loeb is also a director of Hudson's Bay Company, Warnaco Group,
Inc. and Federal Realty Investment Trust, a real estate investment trust.
Alan R. Schlesinger has been a director of the Company since March 2000. He
is the Chairman, President and Chief Executive Officer of Lamonts Apparel, Inc.,
an apparel company, a position he has held since 1993. From 1991 to 1993, Mr.
Schlesinger served as a Senior Vice President with the May Company, a retailer.
From 1987 through 1990, Mr. Schlesinger served as Executive Vice President of
Merchandising and Marketing for Ross Stores, an off-price retailer, and also
served on the Ross Stores Board of Directors. Mr. Schlesinger was a member of
the Board of Directors of Gymboree during 1989.
Barbara L. Rambo has been a director of the Company since January 1996.
Since 1999, Ms. Rambo has served as President of Openclose.com, an internet
mortgage company. From 1974 to 1998, Ms. Rambo was employed by Bank of America
and held various positions within BankAmerica International, most recently
serving as Group Executive Vice President and head of the Commercial Banking
Division of Bank of America.
Stuart G. Moldaw has been the Chairman of the Board of Directors of
Gymboree since January 1994 and has been Chief Executive Officer since February
2000. Mr. Moldaw has served as a director of Gymboree since May 1982. Mr. Moldaw
previously served as Chairman of the Board of Directors of Gymboree from January
1990 through January 1993. Mr. Moldaw is a member of the board of directors of
iParty.com, an on-line party resource company. From 1980 through 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, a venture capital firm. 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.
Deborah A. Sorondo has been a director of the Company since April 1999.
Since 1997, Ms. Sorondo has served as the Chief Operating and Development
Officer of the Sierra Club, an environmental organization. From 1993 to 1997,
Ms. Sorondo served as Chief Operating Officer of the Sierra Club. Prior to that,
Ms. Sorondo served in executive financial positions with American Express Travel
Related Services Co., including Vice President and Chief Financial Officer for
the consumer insurance division of AMEX Life Assurance Co.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of ten meetings during
the fiscal year ended January 29, 2000. No director attended fewer than 75% of
the meetings of the Board of Directors or the committees upon which such
director served, except Mr. Moldaw, who attended 60% of the meetings.
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 Rambo, Sorondo and
Westerfield, Chairman. The Audit Committee principally reviews the scope and
results of the work of the Director of Internal Audit and of
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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 eleven meetings during the last fiscal year.
The Compensation Committee currently consists of Directors Schlesinger 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.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives an annual retainer of
$25,000 and an additional $1,000 for each Board meeting attended and $500 for
each Committee meeting attended (including telephonic meetings), except for the
chairman of the Board. The Chairman of the Board receives an annual salary of
$200,000 and, when deemed appropriate by the Compensation Committee, an annual
bonus for his services as Chairman of the Board. Each non-employee director of
the Company is entitled to participate in the Company's Amended and Restated
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 2,500 shares of the Company's Common Stock upon each
anniversary of such director's initial election to the Board. Committee
chairpersons are awarded an option to purchase an additional 500 shares of the
Company's Common Stock. 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 2,500 shares of the Company's Common Stock upon election.
VOTE REQUIRED
The two 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 February 3, 2001, and recommends that the stockholders vote for
ratification of such appointment.
Deloitte & Touche LLP has served as the Company's independent auditors
since 1987. 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 FEBRUARY 3, 2001.
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ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table shows the compensation paid by the Company during
fiscal years 1997, 1998 and 1999 to (i) the Company's Chief Executive Officer
during fiscal 1999 and (ii) each of the four other most highly compensated
executive officers during fiscal 1999 and certain key employees (collectively,
the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------
----------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION($)
--------------------------- ---- -------- -------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stuart Moldaw(1)............. 1999 -- -- -- -- -- --
Chairman and Chief
Executive Officer
Gary White(2)................ 1999 $483,500 $ -- -- -- 325,000 1,281,275(3)
Vice-Chair and Chief 1998 477,118 -- -- -- 75,000 --
Executive Officer 1997 385,540 242,775 450,000 --
Melanie B. Cox(4)............ 1999 425,000 255,000 -- -- 300,000 968,853(5)
President 1998 -- -- -- -- 300,000 110,000(6)
Lawrence H. Meyer............ 1999 296,667 -- -- -- 115,000 63,532(11)
Senior Vice President and 1998 91,538 -- -- -- 40,000 97,671(7)
Chief Financial Officer 1997 -- -- -- -- -- --
Kenneth F. Meyers(8)......... 1999 233,500 -- -- -- 100,000 --
Senior Vice President, 1998 227,118 93,400 -- -- 55,894 81,931(11)
Human Resources 1997 214,060 77,190 -- -- 27,749
Edward Wong(9)............... 1999 188,333 47,500 -- -- 55,894 1,014
Senior Vice President, 1998 83,284 30,000 -- -- 27,749 --
Supply Chain and Technology
Lisa Harper(10).............. 1999 210,834 52,709 -- -- 60,000 --
Senior Vice President and 1998 4154 -- -- -- 20,000 35,628(11)
General Merchandise Manager
</TABLE>
- ---------------
(1) Mr. Moldaw became Chief Executive Officer in February 2000. Mr. Moldaw has
been Chairman of the Board since May 1982. For fiscal year 2000, Mr. Moldaw
will be compensated at an annual rate of $500,000 for his service as Chief
Executive Officer and $200,000 for his service as Chairman of the Board.
(2) Mr. White terminated his employment with Gymboree in February 2000.
(3) Represents payments made in February 2000 in connection with the officer's
resignation.
(4) Ms. Cox terminated her employment with Gymboree in February 2000.
(5) Represents moving expenses paid in 1999 and payments expected to be made in
May 2000 in connection with the officer's separation from employment.
(6) Represents signing bonus.
(7) Represents signing bonus and moving expenses.
(8) Mr. Meyers joined Gymboree in March 1997 as Senior Vice President, Human
Resources.
(9) Mr. Wong joined Gymboree in August 1998 as Vice President, and became
Senior Vice President in February 2000.
(10) Ms. Harper joined Gymboree in December 1998 as Vice President, Design. In
December 1999, she was named Senior Vice President, Merchandising and
Design. In February 2000, she was named General Merchandise Manager.
(11) Represents moving expenses.
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OPTION GRANTS AND EXERCISES
The following table sets forth certain information with respect to stock
option grants during the fiscal year ended January 29, 2000 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 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------- AT ASSUMED ANNUAL RATE
NUMBER OF PERCENT OF 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>
Stuart Moldaw.................... -- -- -- -- -- --
Gary White....................... 325,000 23.7% $ 9.00 03/04/09 $1,839,517 $ 4,661,697
Melanie B. Cox................... -- -- -- -- -- --
Lawrence H. Meyer................ 40,000 2.9 9.00 03/04/09 226,402 573,747
75,000 5.5 6.56 11/19/09 309,534 784,420
Kenneth F. Meyers................ 100,000 7.3 9.00 03/04/09 566,005 1,434,368
Lisa Harper...................... 10,000 0.7 12.31 05/28/09 77,433 196,230
10,000 0.7 5.69 07/23/09 35,768 90,644
40,000 2.9 5.44 12/15/09 136,785 345,639
Edward Wong...................... 15,000 1.1 9.00 03/04/09 84,901 215,155
5,000 0.4 5.25 08/25/09 16,508 41,836
</TABLE>
AGGREGATE OPTION EXERCISES IN FISCAL 1999 AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT JANUARY 29, 2000 AT JANUARY 29, 2000
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ---------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Stuart Moldaw.................. -- -- 523,853 16,147 -- --
Gary White..................... -- -- 395,831 504,169 -- --
Melanie B. Cox................. -- -- 75,000 225,000 -- --
Lawrence H. Meyer.............. -- -- 24,790 130,210 -- --
Kenneth F. Meyers.............. -- -- 63,102 120,541 -- --
Lisa Harper.................... -- -- 10,159 69,841 -- --
Edward Wong.................... -- -- 9,249 27,751 -- --
</TABLE>
- ---------------
(1) The value of unexercised options at fiscal year end represents the
difference between the exercise price of the options and the closing price
of the Company's Common Stock on January 28, 2000 of $4.688 per share. As of
such date, the exercise price of such options was more than the fair market
value of the Common Stock.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Gymboree offers its executives certain benefits under its Change of Control
Plan and Severance Pay Plan. Under the first plan, executives who are
participants in the plan are eligible to receive certain lump sum payments if
their employment terminates on an involuntary basis following a Change of
Control of the Company as defined in the plan.
Under the Severance Pay Plan, executives who are participants in the plan
are eligible to receive certain lump sum payments if their employment with the
Company terminates on an involuntary basis unrelated to a Change of Control of
the Company.
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In February 2000, the Company entered into a promissory note with Lawrence
Meyer, Senior Vice President and Chief Financial Officer, under which Mr. Meyer
is obligated to repay the Company a principal sum of $105,000 at an interest
rate of 6.125% per annum due on receipt of his retention bonus. If Mr. Meyer
ceases to be a full-time employee of the Company at any time during this period,
the note will be immediately due and payable.
In April 2000, the Company entered into a promissory note with Lisa Harper,
Senior Vice President and General Merchandise Manager, under which Ms. Harper is
obligated to repay the Company a principal sum of $85,000 at an interest rate of
6.125% per annum due on receipt of her retention bonus. If Ms. Harper ceases to
be a full-time employee of the Company at any time during this period, the note
will be immediately due and payable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 29, 2000, the Compensation Committee
of the Board of Directors consisted of Mr. Loeb, as Chairman, and Carole J.
Whitacre. As of the date hereof, the Compensation Committee consisted of Mr.
Loeb, Chairman, and Mr. Schlesinger. 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 comprises 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 to compensation paid to such executive officers for the
fiscal year ended January 29, 2000. 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.
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.
There are three main components to the Company's executive compensation
program:
- Base Salary
- Annual and Retention Bonus
- 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 offered by
competitive organizations. The Committee believes that these rates are
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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 1998 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 and Retention 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 Discretionary Bonus Plan (the "Discretionary Bonus Plan"), which
provides executive officers and other employees the opportunity to earn annual
incentive bonuses. The purpose of the Discretionary 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. The Committee also took into
consideration the need to recruit and retain senior management talent in a
competitive employment environment. The Committee believes that the
Discretionary Bonus Plan provides an excellent link between earnings performance
and the incentives paid to executives.
In order to ensure the retention of executive officers in a locally
competitive employment market, in the event that annual bonuses are not paid at
the targeted amount, the Company has committed to pay the targeted bonus amount
for both 1999 and 2000 to Messrs. Meyer and Meyers, and for 2000 to Ms. Harper
and Messrs. Moldaw and Wong, if the executive officer is employed as of February
3, 2001. In addition, vice presidents are eligible for this bonus.
In adopting this Retention Program, the company engaged the services of a
national, independent compensation consulting company that reviewed the
company's current circumstances as well as national standards for employment.
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 following 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' 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 the 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
benefited.
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 1999, the
Named Officers were granted options to purchase an aggregate of 620,000 shares
of
8
<PAGE> 12
Common Stock with a weighted average exercise price of $8.59 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
Former CEO Gary White's fiscal 1999 compensation was established in
accordance with the guidelines applicable to all executive officers, set forth
above. Current CEO Stuart Moldaw's compensation was established in accordance
with the guidelines applicable to all executive officers, set forth above.
THE COMPENSATION COMMITTEE
Walter F. Loeb, Chairman
Alan R. Schlesinger
9
<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 50 companies whose primary business is the
operation of apparel and accessory retail stores. The graph assumes that $100
was invested in the Company's Common Stock on January 29, 1994. 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. Historical stock price performance should not be
considered indicative of future stock price performance.
COMPOSITION OF THE GYMBOREE CORPORATION'S CUMULATIVE TOTAL RETURNS
TO NASDAQ MARKET INDEX AND PEER GROUP INDEX
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
THE GYMBOREE CORPORATION NASDAQ MARKET INDEX PEER GROUP INDEX
------------------------ ------------------- ----------------
<S> <C> <C> <C>
1/28/94 100 100 100
1/27/95 119 96 92
2/2/96 90 137 91
1/31/97 119 178 107
1/30/98 136 210 133
1/29/99 41 328 181
</TABLE>
10
<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, 2000 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 OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES TOTAL
------------------------------------ --------- ----------
<S> <C> <C>
First Pacific Advisors, Inc.(1)............................. 2,958,400 12.1
11400 W. Olympic Blvd.
Los Angeles, California
Massachusetts Financial Service Company(2).................. 1,815,332 7.4
500 Boylston Street
Boston, Massachusetts 02116
Dimensional Fund Advisors Inc.(3)........................... 1,567,500 6.4
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
FPA Capital Fund, Inc.(1)................................... 1,428,800 5.9
11400 W. Olympic Blvd.
Los Angeles, California 90064
Stuart G. Moldaw(4)......................................... 182,083 *
Kenneth F. Meyers(5)........................................ 78,405 *
Lawrence H. Meyer(6)........................................ 37,706 *
Lisa Harper(7).............................................. 16,614 *
Edward Wong(8).............................................. 12,332 *
Deborah A. Sorondo(9)....................................... 6,250 *
Walter Loeb(10)............................................. 5,750 *
Barbara L. Rambo(11)........................................ 5,583 *
William U. Westerfield(12).................................. 5,250 *
Alan Schlesinger............................................ 0 *
All directors and executive officers as a group (10
persons)(13).............................................. 349,973 1.4
</TABLE>
- ---------------
* Percentage of shares beneficially owned is less than one percent of total.
(1) Based solely on information contained in Schedule 13G filed with the SEC on
February 11, 2000.
(2) Based solely on information contained in a Schedule 13G filed with the SEC
on February 8, 2000.
(3) Based solely on information contained in a Schedule 13G filed with the SEC
on February 3, 2000.
(4) Includes 182,083 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(5) Includes 72,675 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(6) Includes 37,706 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(7) Includes 16,614 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(8) Includes 12,332 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(9) Includes 6,250 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
11
<PAGE> 15
(10) Includes 5,750 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(11) Includes 5,583 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(12) Includes 5,250 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
(13) Includes 344,243 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 2000.
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 percent 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 1999,
all filing requirements applicable to its officers, directors and ten percent
stockholders were met, except Kenneth Meyers, an executive officer of the
Company, did not file a Form 4 on a timely basis with respect to his purchase of
1,000 shares of Common Stock in August 1999, and, to the Company's knowledge,
Melanie Cox has not yet filed a Form 5. 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 1998, all filing
requirement applicable to its officers, directors and ten percent shareholders
were met, except Stuart Moldaw, a director of the Company, did not file a Form 4
on a timely basis with respect to two option grants totaling $20,000 shares of
common stock.
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
/s/ LAWRENCE H. MEYER
LAWRENCE H. MEYER
Secretary
Dated: April 27, 2000
12
<PAGE> 16
1166-PS-00
<PAGE> 17
PROXY
P
DETACH HERE
R
THE GYMBOREE CORPORATION
O
ANNUAL MEETING OF STOCKHOLDERS, JUNE 2, 2000
X
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
Y THE GYMBOREE CORPORATION
The undersigned revokes all previous proxies, acknowledges receipt of
the notice of the Annual Meeting of Stockholders to be held June 2, 2000 and the
proxy statement related thereto and appoints Stuart Moldaw and Lawrence H.
Meyer, and each of them, the proxy of the undersigned, with full power of
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 Gymboree Corporate Headquarters, 700 Airport
Boulevard, 4th Floor Conference Room, Burlingame, California 94010 on Friday,
June 2, 2000 at 8:30 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 SEE REVERSE
SIDE SIDE
- ----------- ------------
<PAGE> 18
DETACH HERE
[X] PLEASE MARK 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>
FOR AGAINST ABSTAIN
1. Election of two Class I Directors 2. To ratify the appointment of Deloitte
NOMINEES: (01) Walter Loeb, & Touche LLP as independent auditors [ ] [ ] [ ]
(02) Alan R. Schlesinger of the Company for the Fiscal year
ending February 3, 2001.
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
</TABLE>
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:_____________
