<PAGE> 1
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 240.14a-11(c) or 240.14a-12
JENNY CRAIG, 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
JENNY CRAIG, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 5, 1997
The Stockholders of Jenny Craig, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Jenny
Craig, Inc. (the "Company") will be held at the Sheraton Grand Torrey Pines
Hotel, 10950 North Torrey Pines Road, La Jolla, California 92037, on Wednesday,
November 5, 1997, at 2:00 p.m. (Pacific Standard Time), for the following
purposes:
1. To elect six directors for terms of one year each and until their
successors are duly elected and qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
certified public accountants for fiscal year 1998; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on September 22,
1997, as the record date for determining the stockholders entitled to notice of,
and to vote at, the meeting and at any adjournment thereof. A list of the
stockholders entitled to vote at the meeting will be available for examination
by a stockholder for any purpose germane to the meeting during ordinary business
hours during the ten days prior to the meeting at the offices of the Company,
11355 North Torrey Pines Road, La Jolla, California 92037.
You are cordially invited to attend this meeting. Whether you expect to
attend the meeting or not, we encourage you to vote your shares by dating and
signing the enclosed proxy and returning it as promptly as possible in the
accompanying postage guaranteed envelope.
By order of the Board of Directors
Marvin Sears
Secretary
La Jolla, California
October 6, 1997
<PAGE> 3
JENNY CRAIG, INC.
11355 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA 92037
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 5, 1997
This Proxy Statement and the accompanying proxy are being furnished to
stockholders of Jenny Craig, Inc. (the "Company") in connection with the
solicitation of the enclosed proxy by or on behalf of the Board of Directors for
use at the Annual Meeting of Stockholders of the Company to be held at the
Sheraton Grand Torrey Pines Hotel, 10950 North Torrey Pines Road, La Jolla,
California 92037, on November 5, 1997, at 2:00 p.m. and at any and all
adjournments thereof. This Proxy Statement and the accompanying proxy are being
first mailed on or about October 6, 1997.
PROXY; VOTING
When the enclosed proxy is properly executed and returned, the shares it
represents will be voted at the Annual Meeting and at any adjournment thereof as
directed by the stockholder executing the proxy, unless it is earlier revoked.
If no directions are given on the proxy with respect to any particular matter to
be acted upon at the Annual Meeting or at any adjournment thereof, the shares
represented by the proxy will be voted in favor of such matter. Any stockholder
executing and delivering the proxy has the right to revoke it at any time before
the authority granted thereby is exercised, by the due execution of another
proxy bearing a later date or by written notification of revocation to the
Secretary of the Company. Stockholders who are present in person at the Annual
Meeting may also revoke their proxy and vote in person if they so desire.
At September 22, 1997, the Company had outstanding 20,687,771 shares of
Common Stock. Each share of Common Stock entitles its owner to one vote upon
each matter to come before the Annual Meeting. Only stockholders of record at
the close of business on September 22, 1997 (the "Record Date") will be entitled
to vote at the Annual Meeting and at any adjournment thereof.
The election of directors requires a plurality of the votes cast. Broker
non-votes will not have any effect on the proposals being submitted to the
stockholders at the 1997 Annual Meeting. Votes returned by proxy to the
Company's transfer agent will be tabulated by the transfer agent. The Company's
transfer agent will act as Inspector of Election at the meeting and will count
the votes based on the votes returned by proxy and votes cast at the meeting.
SOLICITATION OF PROXIES
This solicitation of proxies is being made by the Board of Directors of the
Company and the expenses thereof will be borne by the Company. The principal
solicitation is being made by mail; however, additional solicitations may be
made by telephone, telegraph, or personal interview by officers of the Company.
The Company expects to reimburse brokerage houses, banks and other fiduciaries
for reasonable expenses of forwarding proxy materials to beneficial owners.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
The following table and the notes thereto set forth information as of
September 1, 1997, relating to beneficial ownership (as defined in Rule 13d-3 of
the Securities Exchange Act of 1934 (the "Exchange Act")) of the equity
securities of the Company, SJF Enterprises, Inc. ("SJF") and Craig Enterprises,
Inc. ("Craig Enterprises") by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of the voting stock of the
Company, SJF or Craig Enterprises, (ii) each director and nominee of the Company
and each of the executive officers named in the Summary Compensation Table and
(iii) all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
OF THE COMPANY
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED(1)(2) OWNERSHIP
--------------------------------------------------- -------------- ---------
<S> <C> <C>
Sidney Craig(3).................................... 14,212,500 68.7%
Jenny Craig(3)..................................... 14,212,500 68.7%
SJF Enterprises, Inc.(3)........................... 13,838,600 66.9%
FMR Corp.(4)....................................... 1,158,900 5.6%
82 Devonshire Street
Boston, Massachusetts 02109
C. Joseph LaBonte.................................. 850,100(5) 4.1%
Scott Bice......................................... 16,000(5) *
Marvin Sears....................................... 17,500(5) *
Andrea Van de Kamp................................. 16,500(5) *
Robert Wolf........................................ 16,000(5) *
Michael L. Jeub.................................... 75,000(5) *
Leslie A. Koll..................................... 50,000(5) *
All directors and executive officers as a group (14
persons)(3)(5)................................... 15,302,600 70.3%
</TABLE>
- ---------------
* Less than 1%.
(1) The Common Stock is the only class of equity securities of the Company
outstanding.
(2) Except as otherwise noted, all persons listed in the table have sole voting
and investment power with respect to their shares, subject to the rights of
their spouses under applicable community property laws.
(3) The address for these beneficial holders is: Jenny Craig, Inc., 11355 North
Torrey Pines Road, La Jolla, California 92037. SJF and its wholly-owned
subsidiary, DA Holdings, Inc., are the record owners of the aggregate number
of shares set forth opposite SJF's name. Because of the facts described
below, Sidney and Jenny Craig may be deemed to be the beneficial owners of
these shares pursuant to Rule 13d-3 under the Exchange Act. The only class
of equity securities outstanding of SJF is common stock, par value $.01 per
share, of which 980 shares are outstanding and beneficially owned by Craig
Enterprises. The only equity securities outstanding of Craig Enterprises are
90 shares of common stock, par value $.01 per share, which are beneficially
owned (as defined in Rule 13d-3 of the Exchange Act) by Sidney and Jenny
Craig. Sidney and Jenny Craig each are directors and the Company's Chairman
and Vice-Chairman, respectively. See "Nominees for Election to Board of
Directors." Sidney and Jenny Craig hold their shares of Craig Enterprises
common stock as community property and exercise joint voting and investment
power with respect to such shares. Of the 14,212,500 shares shown as
beneficially owned by Sidney Craig and Jenny Craig as of September 1, 1997,
13,838,600 are the shares beneficially owned by SJF on such date and 373,900
are shares owned by The Sidney and Jenny Craig Foundation of which Sidney
Craig is President and a director and Jenny Craig is Vice President and
Chief Financial Officer and a director.
(4) Based solely on information contained in the Schedule 13G of FMR Corp., as
amended, filed with the Securities and Exchange Commission on May 8, 1997,
which indicates that FMR Corp., together with its
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<PAGE> 5
wholly-owned subsidiary, Fidelity Management & Research Company, is the
beneficial owner of 1,158,900 shares of Common Stock as of May 8, 1997 and
possesses sole dispositive power with respect to all of the shares of Common
Stock beneficially owned by it.
(5) Includes shares of Common Stock which may be acquired as of September 1,
1997 or within 60 days thereafter pursuant to the exercise of options as
follows: Scott Bice (16,000); C. Joseph LaBonte (850,100); Marvin Sears
(17,500); Andrea Van de Kamp (16,500); Robert Wolf (16,000); Leslie A. Koll
(50,000); and Michael L. Jeub (75,000).
ELECTION OF DIRECTORS
The Company's Board of Directors consists of six members. Six directors
will be elected at the Annual Meeting to serve until the 1998 Annual Meeting or
until their successors are duly elected and qualified. Proxies representing
shares of Common Stock held on the record date which are returned duly executed
will be voted, unless otherwise specified, in favor of the six nominees for the
Board of Directors named below. All such nominees are members of the present
Board of Directors. All nominees have consented to serve if elected, but should
any nominee be unavailable to serve (which event is not anticipated), the
persons named in the proxy intend to vote for such substitute nominee as the
Board of Directors may recommend. SJF, which beneficially owned 13,838,600
shares of the Company's Common Stock as of the Record Date (representing
approximately 66.9% of the Common Stock outstanding as of the Record Date),
intends to vote for the election of the nominees listed below, thereby assuring
the presence of a quorum and their election.
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
The following table sets forth certain information with respect to each
nominee:
<TABLE>
<CAPTION>
AGE
---
<S> <C> <C>
Sidney Craig(1)............ 65 Chairman of the Board and Chief Executive Officer
Jenny Craig(1)............. 65 Vice-Chairman and President
Scott Bice(3).............. 54 Director
Marvin Sears(3)............ 70 Secretary and Director
Andrea Van de Kamp(2)(3)... 53 Director
Robert Wolf(2)............. 55 Director
</TABLE>
- ---------------
(1) Member of Executive Committee.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
Sidney Craig has been Chairman of the Company or its predecessors since
1983 and served as Chief Executive Officer from 1983 through April, 1994. In
October 1997, Mr. Craig was elected Chief Executive Officer of the Company.
Jenny Craig has served as Vice-Chairman of the Company since September,
1991, as President and Chief Operating Officer of the Company or its
predecessors from 1983 to August, 1991 and as a director of the Company or its
predecessors from 1983 to date. Mrs. Craig was elected President of the Company
in October 1997. Sidney and Jenny Craig are husband and wife.
Marvin Sears, a director of the Company since July 1989, has served as the
Secretary of the Company since June, 1991, and as Assistant Secretary of the
Company from August 1985 to June, 1991. Mr. Sears is a practicing attorney in
Los Angeles, California where, since May 1989, he has been a partner in the law
firm of Proskauer Rose LLP, counsel to the Company during fiscal 1997 and
currently. From June 1960 until May 1989, Mr. Sears was a senior partner of the
Los Angeles law firm of Pacht, Ross, Warne, Bernhard & Sears, Inc., and its
successor, Shea & Gould. Mr. Sears is a member of the Board of various
privately-owned business enterprises.
3
<PAGE> 6
Scott Bice has served as a director of the Company since February, 1995.
Mr. Bice has been the Dean of the University of Southern California Law Center
since 1980, and serves as a director of various privately-owned corporations.
Andrea Van de Kamp has served as a director of the Company since August,
1994. Ms. Van de Kamp was Senior Vice President and Managing Director of West
Coast Operations, Sotheby's, from 1989 through May, 1997 and has been Chairman,
West Coast Operations of Sotheby's since May, 1997. Prior to joining Sotheby's,
Ms. Van de Kamp was President and Chief Executive Officer of the Independent
Colleges of Southern California, and is currently a director of City National
Corporation.
Robert Wolf has served as a director of the Company since February, 1995.
Mr. Wolf is the President and Chief Executive Officer of Bob Wolf Company, a
marketing and advertising consulting company. Mr. Wolf was the Chairman and
Chief Executive Officer of Chiat/Day North America, an advertising firm, from
1989 through November, 1995.
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors held six meetings in fiscal year 1997. The
Board of Directors established standing Audit and Compensation Committees in
August, 1991. During fiscal 1997, each member of the Board of Directors other
than Jenny Craig attended 75% or more of the meetings of the Board of Directors
and of each committee of the Board of which such person was a member.
As directed by the Board, the functions of the Audit Committee include (a)
annually recommending to the Board of Directors independent public accountants
as auditors of the books, records and accounts of the Company; (b) reviewing the
scope of audits made by the independent public accountants; (c) receiving and
reviewing the audit reports submitted by the independent public accountants; (d)
determining and reviewing the duties and responsibilities of the Controller and
internal auditing staff; (e) reviewing the annual program for the internal audit
of the operational procedures of the Company and all major accounting policy
matters; and (f) making recommendations to the Board of Directors with respect
to auditing policies and procedures and the scope and extent of audits. During
fiscal year 1997, the Audit Committee held two meetings.
The functions of the Compensation Committee generally are to determine and
oversee the Company's policies with respect to the compensation of the executive
officers of the Company. The Compensation Committee also administers the
Company's Stock Option Plan. During fiscal year 1997, the Compensation Committee
held three meetings.
4
<PAGE> 7
CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain information concerning the
compensation for services rendered to the Company and its subsidiaries for the
fiscal years ended June 30, 1995, 1996 and 1997 of the Company's Chief Executive
Officer and the four (4) remaining most highly compensated executive officers
serving at June 30, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ----------------------- ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS OTHER ANNUAL OPTIONS LTIP COMPENSATION
POSITION YEAR ($) ($) COMPENSATION (#) PAYOUTS($) ($)(6)
- --------------------------- ------ --------- ------- ------------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
C. Joseph LaBonte.......... 1997 750,000 82,500(1) 2,375
President and Chief 1996 750,000 287,025 87,843(1) 969
Executive Officer(1) 1995 750,000 125,000 155,235(1)
Sidney Craig............... 1997 500,000
Chairman(2) 1996 500,000 385,210
1995 500,000 173,630
Jenny Craig................ 1997 500,000
Vice Chairman(2) 1996 500,000 385,210
1995 500,000 173,630 1,665(5)
Michael L. Jeub............ 1997 250,000 5,335 25,000 2,188
Senior Vice President, 1996 250,000 80,000 781
Treasurer and Chief 1995 230,128 62,500 100,000
Financial Officer(3)
Leslie A. Koll............. 1997 250,000 4,801 25,000 1,813
Senior Vice President, 1996 250,000 35,000 781
Marketing(4) 1995 138,301 50,000 100,000
</TABLE>
- ---------------
(1) Mr. LaBonte was elected President and Chief Executive Officer in April,
1994. In the fiscal year ended June 30, 1995, pursuant to the terms of Mr.
LaBonte's employment agreement, the Company paid approximately $150,300 of
relocation and related expenses and loaned Mr. LaBonte, interest free,
$1,500,000 to purchase a residence. See "Employment Agreements." $82,500 was
included in other annual compensation in fiscal 1996 and fiscal 1997
representing interest at 5.5% on this loan during those fiscal years. Mr.
LaBonte resigned as President and Chief Executive Officer and as a director
in October 1997.
(2) Mr. Craig was elected to the additional office of Chief Executive Officer in
October 1997. Mrs. Craig was elected to the additional office of President
in October 1997.
(3) Mr. Jeub became Senior Vice President, Treasurer and Chief Financial Officer
of the Company in July, 1994.
(4) Mr. Koll became Senior Vice President, Marketing of the Company in November,
1994.
(5) Represents payments required to be made under applicable union contracts to
Mrs. Craig by an advertising agency used by the Company for appearances in
television commercials produced by the advertising agency for the Company.
The Company reimbursed the advertising agency for all such amounts paid to
Mrs. Craig.
(6) Represents the Company's contributions to the accounts of the named
executive officers pursuant to the Company's 401(k) plan.
5
<PAGE> 8
OPTION GRANTS TABLE
The following table sets forth information with respect to the grant of
options to named executive officers during the fiscal year dated June 30, 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
----------------------------------------------- STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS FOR
GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---------------------------------- ------- ------------ --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Michael Jeub(1)................... 25,000 11.6% $9.38 2/11/2007 $147,500 $373,700
Leslie Koll(1).................... 25,000 11.6% $9.38 2/11/2007 $147,500 $373,700
</TABLE>
- ---------------
(1) These options become exercisable in 25% installments commencing one year
from the date of grant, February 11, 1997, with full vesting occurring on
the fourth anniversary of the grant date.
(2) These amounts represent potentially realizable values at assumed rates of
appreciation in value of the Common Stock of the Company. No gain will be
realized by the optionees without an increase in the value of shares of
Common Stock of the Company which will benefit all shareholders.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information with respect to the exercise of
options during the fiscal year ended June 30, 1997, options held at the end of
the fiscal year and the value of unexercised options at the end of the fiscal
year with respect to named executive officers.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. Joseph LaBonte........... 0 0 770,100 240,000 $ 279,200 $88,200
Michael L. Jeub............. 0 0 50,000 75,000 $ 52,875 $52,875
Leslie A. Koll.............. 0 0 50,000 75,000 -0- -0-
</TABLE>
- ---------------
(1) The closing price of the Company's Common Stock on June 30, 1997, the last
trading day of the fiscal year, as quoted on the New York Stock Exchange,
was $6.9375.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee's function is determining and overseeing the
Company's policies with respect to the compensation of the executive officers of
the Company. The Compensation Committee also administers the Company's Stock
Option Plan. The Committee's goal is to have a competitive compensation plan
which provides appropriate incentives to executive officers based upon the
performance of the Company and which attracts and retains key managers. The
Committee currently intends to structure its executive compensation in a manner
that will enable the Company to deduct such compensation under the federal
income tax laws.
The compensation of the Company's Chairman, Sidney Craig, the Company's
Vice Chairman, Jenny Craig, the Company's Chief Executive Officer, C. Joseph
LaBonte, the Company's Senior Vice President, Treasurer and Chief Financial
Officer, Michael L. Jeub, and the Company's Senior Vice President, Marketing,
Leslie A. Koll, was determined pursuant to the Company's employment agreements
with these officers which are summarized below under "Employment Agreements."
The following description of the Company's compensation policy applies to
the executive officers other than the Chairman, Vice-Chairman, President and
Chief Executive Officer.
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<PAGE> 9
The compensation program of the Company for executive officers during
fiscal 1997 consisted of cash compensation in the form of base salary, the
Management Deferred Bonus Program described below, and an award of stock options
under the Company's Stock Option Plan. The fiscal 1997 base salaries for
executive officers of the Company were determined in accordance with their
employment agreements, or by the Chief Executive Officer of the Company.
Executive officers of the Company are eligible to participate in the
Management Deferred Bonus Program which provides for a bonus pool to be
determined by the Board of Directors which cannot exceed 1% of operating income
and specified percentages of the increase, if any, in operating income over the
prior year. Amounts awarded under the Management Deferred Bonus Program are paid
25% in cash approximately 90 days after the end of the fiscal year with the
remaining 75% deferred for five years and vesting 20% in each of those years.
The stock option component of executive officer compensation is to reward
management for performance over the long term as reflected in the Company's
stock price. Stock options only produce value to executives if the price of the
Company's stock appreciates, thereby directly linking the interests of
executives with those of stockholders. The amount of stock options awarded to
executive officers during fiscal 1997 was based upon recommendations of the
Chief Executive Officer and took into account, where applicable, the number of
options previously granted to an executive officer. In granting options and
establishing the amount of the grant, the Committee considered the recipient's
position with the Company and subjective evaluations of the recipient's
individual performance and potential contribution. Options granted during fiscal
1997 were at exercise prices equal to market price on the date of grant.
Andrea Van de Kamp
Robert Wolf
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements, effective November 5, 1991,
with each of Sidney and Jenny Craig, members of its Board of Directors and
indirect principal stockholders, and the Company's Chairman and Vice-Chairman,
respectively. Each of the employment agreements was for a term of three years
(which has been extended as described below), and provides for compensation of
$500,000 plus an annual bonus of .5% of operating income if operating income
increases by 16% or more over the prior year, and 1% of operating income if
operating income increases by 25% or more over the prior year, provided that the
annual bonus is to be pro rated for the fiscal year in which the employment
agreements terminate. Each of the employment agreements has been extended on the
same terms and conditions, such extensions to be automatic, on a year-by-year
basis, subject to the right of either party to terminate the employment
agreement at the end of any employment year during the extended term by written
notice given 60 days prior to the termination date.
The Company has entered into an employment agreement with Mr. LaBonte
providing for his employment as President and Chief Executive Officer of the
Company through June 30, 1998. Mr. LaBonte's annual base salary is $750,000 and
the agreement provides for a sign-on bonus of $250,000, 50% of which was paid in
fiscal 1994 and 50% of which was paid in fiscal 1995. Commencing with fiscal
1995, Mr. LaBonte is entitled to receive an annual bonus equal to 2.5% of the
amount (less $250,000 in the case of the bonus for fiscal 1995) by which the
Company's income before taxes exceeds $30,000,000. Mr. LaBonte was granted
options to purchase 1,000,000 shares of common stock of the Company at an
exercise price of $6.57 per share. The options become exercisable at the rate of
20,000 per month commencing in May, 1994. Under the employment agreement, the
Company agreed to lend Mr. LaBonte up to $1,500,000 interest free for the
purpose of purchasing a principal residence in the vicinity of Del Mar,
California. This loan was made in June, 1995, is secured by a first trust deed
on the residence and is due at the earlier of the sale of the residence or one
year after termination of employment. Craig Enterprises has agreed with Mr.
LaBonte that if his employment was not terminated for cause as defined in his
employment agreement, as and when the loan became due Craig Enterprises would
use its best efforts to cause the Company to forgive the loan or, if the
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<PAGE> 10
loan was not forgiven, Craig Enterprises would indemnify Mr. LaBonte for the
amount of the loan. The Company agreed to reimburse Mr. LaBonte for relocation
expenses and for up to $10,000 per month of expenses for temporary lodging for
up to one year or the earlier purchase of a residence in the vicinity of Del
Mar, California. If Mr. LaBonte's employment terminates as the result of his
death or disability, or as a result of a termination by the Company, without
cause, Mr. LaBonte or his estate will receive the base salary for the balance of
the employment term plus six months and any unpaid annual bonus. The amount of
base salary payable by the Company in the event of Mr. LaBonte's death would be
offset by insurance proceeds payable to Mr. LaBonte from any policy maintained
by the Company and in the case of disability by payments under any long term
disability plan maintained by the Company. Mr. LaBonte may terminate his
employment following a change of control and in such event he would receive, in
a lump sum discounted at the prime rate, the base salary payable through the
date six months after the end of the employment term and any unpaid annual
bonus. Mr. LaBonte resigned as the President and Chief Executive Officer and as
a director of the Company in October 1997. Mr. LaBonte will receive as severance
pay his base salary through December 31, 1998 (the balance of the employment
term plus six months); options for 180,000 shares of common stock of the Company
(the balance of the 1,000,000 options granted on commencement of employment)
will become exercisable on an accelerated basis; and the loan from the Company
to Mr. LaBonte in the amount of $1,500,000 will be forgiven by the Company.
The Company has entered into an employment agreement with Mr. Michael L.
Jeub providing for his employment as Senior Vice President, Treasurer and Chief
Financial Officer. Mr. Jeub's annual base salary under the agreement is $250,000
with a bonus at the discretion of the Board. Mr. Jeub also received options to
purchase 100,000 shares of common stock of the Company at an exercise price of
$5.88 per share. The options vest and become exercisable in four equal annual
installments commencing one year from the date of grant. If the Company
terminates Mr. Jeub's employment without cause, all of his options not then
exercisable become exercisable. If the Company terminates Mr. Jeub's employment
without cause, or if Mr. Jeub terminates his employment within ninety (90) days
following a change of control of the Company, Mr. Jeub is entitled to receive a
severance payment equal to one year's salary payable in twelve (12) equal
monthly installments.
The Company has entered into an employment agreement with Mr. Leslie A.
Koll providing for his employment as Senior Vice President of Marketing of the
Company. Mr. Koll's annual base salary under the agreement is $250,000 with a
bonus at the discretion of the Board. Mr. Koll also received options to purchase
100,000 shares of common stock of the Company at an exercise price of $7.07 per
share. The options vest and become exercisable in four equal annual installments
commencing one year from the date of grant. If the Company terminates Mr. Koll's
employment without cause, all of his options not then exercisable become
exercisable. If the Company terminates Mr. Koll's employment without cause, or
if Mr. Koll terminates his employment within ninety (90) days following a change
of control of the Company, Mr. Koll is entitled to receive a severance payment
equal to one year's salary payable in twelve (12) equal monthly installments.
8
<PAGE> 11
STOCK PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly percentage change in
cumulative total stockholder return for the Company's Common Stock compared to
the cumulative total return of the Standard & Poor's 500 Stock Index and the Dow
Jones Consumer & Household Services Index. The graph and the values set forth in
the table below assume $100.00 invested in Common Stock of the Company, the S&P
500 Index and the Dow Jones Consumer & Household Services Index on June 30,
1992.
<TABLE>
<CAPTION>
Dow Jones
Consumer &
Measurement Period Household
(Fiscal Year Covered) Jenny Craig, Inc. S&P 500 Services
<S> <C> <C> <C>
6/30/92 100.00 100.00 100.00
6/30/93 125.00 114.00 111.00
6/30/94 48.00 115.00 127.00
6/30/95 67.00 145.00 144.00
6/30/96 144.00 183.00 179.00
6/30/97 56.00 247.00 199.00
</TABLE>
COMPENSATION OF DIRECTORS
Outside directors are paid $5,000 per quarter plus $2,000 for each meeting
of the Board of Directors and each meeting of a committee of the Board of
Directors which takes place other than on the date of a Board meeting.
Directors, including non-employee directors, are eligible to receive
non-qualified options to purchase the Company's Common Stock under the Company's
Stock Option Plan. Non-employee directors who became directors prior to November
1, 1996 received an option for 5,000 shares upon joining the Board and receive a
grant of 500 shares on each anniversary thereof. In February, 1997, the Board of
Directors granted to each of Ms. Van de Kamp and Messrs. Bice, Sears and Wolf an
option for 10,000 shares of Common Stock at an exercise price of $9.38 per
share, the mean of the high and low sales price of a share of common stock on
the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Andrea Van de Kamp and
Robert Wolf, directors of the Company.
CERTAIN TRANSACTIONS
Sidney and Jenny Craig own all of the outstanding stock of Jenny Craig
Weight Loss Centres (N.Z.) Limited, a New Zealand corporation which owns the 16
franchised Centres in New Zealand. For the year
9
<PAGE> 12
ended June 30, 1997 aggregate gross revenues to the Company from the New Zealand
operation amounted to $4,997,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Stuart Gaiber inadvertently failed to timely file a Form 3 upon assuming
his position as Vice President - Information Systems on May 19, 1997. The Form 3
was filed on June 23, 1997 after the matter was brought to his attention.
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, acting on the recommendation of its Audit
Committee, has selected the firm of KPMG Peat Marwick LLP to conduct an audit,
in accordance with generally accepted auditing standards, of the Company's
financial statements for the fiscal year ending June 30, 1998. KPMG Peat Marwick
LLP has served as independent auditors for the past thirteen fiscal years. A
representative of that firm is expected to be present at the Annual Meeting to
respond to appropriate questions and will be given an opportunity to make a
statement if so desired. This selection is being submitted for ratification at
the meeting. SJF, which beneficially owned 13,838,600 shares of the Company's
Common Stock as of the Record Date (representing approximately 66.9% of the
Common Stock outstanding as of the Record Date) intends to vote for ratification
of the independent auditors, thereby assuring such ratification.
The Board of Directors recommends that stockholders vote FOR ratification
of KPMG Peat Marwick LLP as independent auditors for the Company.
OTHER MATTERS
The Board of Directors is not aware presently of any matters to be
presented at the Annual Meeting other than the matters set forth herein. If,
however, other matters are properly brought before the Annual Meeting, the
enclosed proxy gives discretionary authority to the persons named therein to act
in accordance with their best judgment on such matters. Stockholder proposals,
intended to be included in the proxy materials relating to the Annual Meeting of
Stockholders expected to be held in 1998, must be received by the Company not
later than June 8, 1998. Such proposals should be addressed to the Secretary of
the Company.
ANNUAL REPORT
The Company's Annual Report to Stockholders containing audited financial
statements for the year ended June 30, 1997 is being mailed herewith to all
stockholders of record.
By order of the Board of Directors
Marvin Sears
Secretary
La Jolla, California
October 6, 1997
10
<PAGE> 13
Please mark
your vote as
indicated in
this example. /X/
FOR all nominees WITHHOLD AUTHORITY
listed to the right to vote for all
(except as marked to nominees listed
the contrary)
1. ELECTION OF DIRECTORS: / / / /
NOMINEES: Sidney Craig, Jenny Craig, Marvin Sears, Scott Bics, Andrea Van de
Kamp, Robert Wolf
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
----------------------------------------------------------------------------
2. Proposal to approve the appointment of FOR AGAINST ABSTAIN
KPMG Peat Marwick LLP as independent auditors. / / / / / /
3. In their discretion, upon any and all such other matters as may properly come
before the meeting or any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS
AND FOR PROPOSAL 2.
Signature ____________________________________________
Signature (if held jointly)_________________________________ Dated:_______, 1997
Note: Please date this Proxy and sign exactly as your name appears thereon.
Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person. The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting or any adjournments thereof.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTPAID ENVELOPE
<PAGE> 14
PROXY
JENNY CRAIG, INC.
11355 NORTH TORREY PINES ROAD, LA JOLLA, CALIFORNIA 92037
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF JENNY CRAIG, INC.
CALLED FOR WEDNESDAY, NOVEMBER 5, 1997
The undersigned hereby appoints Sidney Craig, Jenny Craig, and Marvin Sears,
and each of them, as proxies, each with full power of substitution, and hereby
authorizes each of them to vote and represent as designated below all shares of
common stock of Jenny Craig, Inc. held of record by the undersigned at the
Annual Meeting of Stockholders of Jenny Craig, Inc. to be held at the Sheraton
Grand Torrey Pines Hotel, 10950 North Torrey Pines Road, La Jolla, California
92037, on Wednesday, November 5, 1997, at 2:00 p.m. (Pacific Standard Time)
and at any and all adjournments or postponements thereof.
(Continued and to be signed on reverse side)
- -------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
[JENNY CRAIG LOGO]
