<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.
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(Name of Registrant as Specified In Its Charter)
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(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 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
JENNY CRAIG, INC.
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 9, 2000
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 Hilton La Jolla Torrey Pines
Hotel, 10950 North Torrey Pines Road, La Jolla, California 92037, on Thursday,
November 9, 2000, at 2:00 p.m. (Pacific Standard Time), for the following
purposes:
1. To elect eight directors for terms of one year each and until their
successors are duly elected and qualified;
2. To ratify the appointment of KPMG LLP as independent certified public
accountants for fiscal year 2001; 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,
2000 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 purposes 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 10, 2000
<PAGE> 3
JENNY CRAIG, INC.
11355 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA 92037
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 9, 2000
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
Hilton La Jolla Torrey Pines Hotel, 10950 North Torrey Pines Road, La Jolla,
California 92037, on November 9, 2000, 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 10, 2000.
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, 2000, the Company had outstanding 20,688,971 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, 2000 (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
stockholders at the 2000 Annual Meeting. However, such broker non-votes are
counted towards the establishment of a quorum. 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, 2000, 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%
Scott Bice.................................................. 18,500(4) *
Marvin Sears................................................ 19,000(4) *
Andrea Van de Kamp.......................................... 17,500(4) *
Robert Wolf................................................. 17,500(4) *
Patricia Larchet............................................ 44,144(4) *
Duayne Weinger.............................................. 9,300 *
Alan Dobies................................................. 45,400(4) *
James S. Kelly.............................................. 38,430(4) *
All directors and executive officers as a group (17
persons)(3)(4)............................................ 14,683,524 69.4%
</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
87,820 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 Chief Executive Officer and Chairman of the Executive
Committee, 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, 2000, 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) Includes shares of Common Stock which may be acquired as of September 1,
2000 or within 60 days thereafter pursuant to the exercise of options as
follows: Scott Bice (17,500); Marvin Sears (19,000); Andrea Van de Kamp
(17,500); Robert Wolf (17,500); Patricia Larchet (44,144); Alan Dobies
(45,400); and James S. Kelly (38,430). Also includes 250,000 shares of
Common Stock which may be acquired as of September 1, 2000 pursuant to the
exercise of options by Philip Voluck, a former President of the Company.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Company's Board of Directors consists of eight members. Eight directors
will be elected at the Annual Meeting to serve until the 2001 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 eight 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>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Sidney Craig(1)........................... 68 Chairman of the Board and Chief Executive Officer
Jenny Craig(1)............................ 68 Chairman of the Executive Committee
Scott Bice(2)(3)(4)....................... 57 Director
Patricia Larchet.......................... 38 President, Chief Operating Officer and Director
Marvin Sears(1)(3)(4)..................... 73 Secretary and Director
Andrea Van de Kamp(2)(3)(4)............... 56 Director
Duayne Weinger............................ 51 Vice-Chairman and Chief Administrative Officer
Robert Wolf(3)............................ 58 Director
</TABLE>
---------------
(1) Member of Executive Committee.
(2) Member of Performance Compensation Committee.
(3) Member of Audit Committee.
(4) Member of Compensation 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 Chairman of the Executive Committee since
September 2000, as Vice-Chairman of the Company from September, 1991 to
September, 2000, 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 served as President of the Company
from October 1997 through December, 1998. 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 2000 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.
Scott Bice has served as a director of the Company since February, 1995.
Mr. Bice is the Robert C. Packard Professor of Law at the University of Southern
California Law Center and served as Dean of the University of Southern
California Law Center from 1980 until June, 2000. Mr. Bice serves as a director
of various privately-owned corporations.
3
<PAGE> 6
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 a director of The Walt Disney Co. and
City National Corporation.
Robert Wolf has served as a director of the Company since February, 1995.
Mr. Wolf is a Managing Partner of Bob Wolf Partners, 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.
Patricia Larchet, a director of the Company since September, 2000, has
served as the President and Chief Operating Officer of the Company since
December, 1999. Prior to serving as the Company's President, Ms. Larchet was
General Manager of the Australian division of the Company. Ms. Larchet has
worked for the Company since 1985.
Duayne Weinger has served as the Chief Administrative Officer of the
Company since December, 1999, and as Vice-Chairman of the Company since
September, 2000. From 1994 until joining the Company, Mr. Weinger was a private
investor. From 1987 until 1994, Mr. Weinger owned and operated franchised
Centres of the Company. Mr. Weinger is a director of Party City Corporation. Mr.
Weinger is the son-in-law of Sidney and Jenny Craig.
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors held nine meetings in fiscal year 2000.
The Board of Directors established standing Audit and Compensation Committees in
August, 1991 and in November, 1997 established a Performance Compensation
Committee. During fiscal 2000, each member of the Board of Directors 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.
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 Performance Compensation Committee, consisting
solely of members of the Compensation Committee who, to the extent legally
required, qualify as "Outside Directors" under Section 162(m) of the Internal
Revenue Code and as "Non-Employee Directors" under rule 16b-3(c) of the
Securities Exchange Act of 1934, as amended, administers the Stock Option Plan
of the Company. In addition, the Performance Compensation Committee is
responsible for awarding compensation intended to qualify for the exception for
performance-based compensation under Section 162(m) of the Code. The
Compensation Committee did not hold any meetings during fiscal 2000. During
fiscal year 2000, the Performance Compensation Committee held one meeting.
The functions of the Audit Committee include (a) monitoring the integrity
of the Company's financial reporting process and systems of internal controls
and the independence and performance of the Company's independent auditors; (b)
providing an avenue of communication among the independent auditors, management
and the Board; (c) reviewing the Company's annual audited financial statements
and discussing with management and the auditors significant accounting issues,
financial risks and exposures and significant findings of the independent
auditors; (d) approving the fees and other significant compensation paid to the
independent auditors and requiring the auditors to submit on a periodic basis a
written statement delineating all relationships between the independent auditors
and the Company; (e) reviewing the audit plan of the independent auditors and
discussing the results of the audit with the independent auditors prior to the
release of year end earnings; and (f) reviewing with the Company's counsel legal
matters that could have a significant impact on the Company's financial
statements. During fiscal year 2000, the Audit Committee held two 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, 1998, 1999 and 2000 of the Company's Chief Executive
Officer and the four (4) remaining most highly compensated executive officers
serving at June 30, 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------- ------------ ALL
NAME AND PRINCIPAL FISCAL SALARY BONUS OTHER ANNUAL OPTIONS LTIP OTHER
POSITION YEAR $ $ COMPENSATION(4) # PAYOUTS($) COMP.
------------------ ------ ------- ------ --------------- ------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Sidney Craig....................... 2000 500,000
Chairman and Chief 1999 500,000
Executive Officer(1) 1998 500,000
Jenny Craig........................ 2000 500,000
Chairman of the Executive 1999 500,000
Committee(1) 1998 500,000
Patricia Larchet(2)................ 2000 298,052 48,465 57,221 500,000
President and Chief 1999 125,180 45,667
Operating Officer 1998 135,843 44,953 63,200
Alan Dobies........................ 2000 219,458 418 3,846 20,000 2,511(3)
Vice President, 1999 207,000 3,740 3,596 2,793(3)
Corporate Services 1998 170,000 3,269 54,000 2,360(3)
James S. Kelly..................... 2000 200,000 921 3,846 48,000 2,655(3)
Vice President, 1999 155,569 3,305 2,981 2,383(3)
Chief Financial Officer 1998 130,000 2,500 54,000 2,021(3)
and Treasurer
Philip Voluck(5)................... 2000 400,000 22,744
1999 349,744 2,404 500,000
Leslie A. Koll(6).................. 2000 275,000 4,227 28,480 25,000
1999 275,000 5,288 5,288 2,676(3)
1998 250,000 771 175,000 2,281(3)
</TABLE>
---------------
(1) Mr. Craig was elected to the additional office of Chief Executive Officer in
October 1997. Mrs. Craig served as President from October 1997 through
December 1998.
(2) Ms. Larchet was elected to the offices of President and Chief Operating
Officer in November 1999.
(3) Represents the Company's contributions to the accounts of the named
executive officers pursuant to the Company's 401(k) plan.
(4) Represents amounts paid to these persons for accrued vacation and sick leave
which was not used.
(5) Mr. Voluck was Executive Vice President and Chief Operating Officer from
July, 1998 through December, 1998, and served as President and Chief
Operating Officer from December, 1998 through December 1999. In connection
with his resignation, Mr. Voluck will receive his former salary ($400,000
annually) through December, 2000, the Company agreed to pay relocation
expenses of up to $5,000, the Company assumed responsibility for the
mortgages on Mr. Voluck's home with a total principal amount of $550,000 and
the Company was given the right to the proceeds from sale of the home, and
the Company agreed to allow Mr. Voluck until December, 2000 to exercise
stock options for 250,000 shares of common stock of the Company in
consideration of Mr. Voluck's cancellation of other options to purchase
shares of common stock of the Company.
(6) Mr. Koll was Senior Vice President, Marketing from November, 1994 through
December, 1999. In connection with his resignation, Mr. Koll will receive
his former salary ($275,000 annually) through December, 2000 and a severance
payment of $25,000.
5
<PAGE> 8
OPTION GRANTS TABLE
The following table sets forth information with respect to the grant of
options to named executive officers during the fiscal year ended June 30, 2000.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ------- ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patricia Larchet......... 500,000(1) 42.16% $2.07 12/3/09 650,906 1,649,523
Alan Dobies.............. 20,000(2) 1.69% $1.97 4/11/10 24,778 62,793
James S. Kelly........... 48,000(2) 4.05% $1.97 4/11/10 59,468 150,704
</TABLE>
---------------
(1) These options become exercisable in 33%, 34% and 33% installments commencing
one year from the date of grant, December 3, 1999, with full vesting
occurring on the third anniversary of the grant date.
(2) These options become exercisable in 33%, 34% and 33% installments commencing
one year from the date of grant, April 11, 2000, with full vesting occurring
on the third anniversary of the grant date.
(3) These amounts represent potentially realizable values at assumed rates of
appreciation in value of the Common Stock of the Company. No gain will be
realized by the optionee without an increase in the value of shares of
Common Stock of the Company which will benefit all shareholders.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information with respect to the exercise of
options during the fiscal year ended June 30, 2000, options held at the end of
the fiscal year and the value of the unexercised options at the end of the
fiscal year with respect to named executive officers.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patricia Larchet............ 0 0 44,144 520,856 0 685,000
Alan Dobies................. 0 0 45,400 43,600 0 29,400
James S. Kelly.............. 0 0 38,430 70,570 0 70,560
Philip Voluck............... 0 0 250,000 0 0 0
</TABLE>
---------------
(1) The closing price of the Company's Common Stock on June 30, 2000, the last
trading day of the fiscal year, as quoted on the New York Stock Exchange,
was $3.44.
REPORT OF COMPENSATION COMMITTEE AND
PERFORMANCE 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 Performance Compensation Committee administers the Company's
Stock Option Plan and awards compensation intended to qualify for the exception
for performance based compensation under Section 162(m) of the Internal Revenue
Code. 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 Committees
currently intend to structure executive compensation in a manner that will
enable the Company to deduct such compensation under the federal income tax
laws.
The compensation and/or severance arrangements of the Company's Chairman
and Chief Executive Officer, Sidney Craig, the Company's Chairman of the
Executive Committee, Jenny Craig, the Company's President and Chief Operating
Officer, Patricia Larchet, the Company's Vice-Chairman and Chief Adminis-
6
<PAGE> 9
trative Officer, Duayne Weinger, the Company's Vice President, Corporate
Services, Alan Dobies, and the Company's Vice President, Chief Financial Officer
and Treasurer, James S. Kelly, was determined pursuant to the Company's
employment or severance 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 and Chief Executive Officer and
Chairman of the Executive Committee.
The compensation program of the Company for executive officers during
fiscal 2000 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 2000 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.
Because the Company did not have operating income during fiscal 2000, no awards
were made under the Management Deferred Bonus Program.
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 2000 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 Performance Compensation 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 2000 were at exercise prices equal to market price on the
date of grant.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE PERFORMANCE COMPENSATION COMMITTEE
<S> <C>
Andrea Van de Kamp Andrea Van de Kamp
Marvin Sears Scott Bice
Scott Bice
</TABLE>
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 Chief Executive
Officer and Chairman of the Executive Committee, respectively. Each of the
employment agreements was for a term of three years (which has been extended as
described below), and provides for annual 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 Patricia Larchet
providing for her employment as President and Chief Operating Officer of the
Company. Ms. Larchet's annual base salary under the agreement is $400,000. If
the Company terminates Ms. Larchet's employment without cause, or if Ms. Larchet
terminates her employment within ninety (90) days following a change of control
of the
7
<PAGE> 10
Company, Ms. Larchet 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 Duayne Weinger
providing for his employment as Vice-Chairman and Chief Administrative Officer
of the Company. Mr. Weinger's base salary under the agreement is $30,000 per
month. If the Company terminates Mr. Weinger's employment without cause, or if
Mr. Weinger terminates his employment within ninety (90) days following a change
of control of the Company, Mr. Weinger 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 agreement with Alan Dobies, Vice President,
Corporate Services of the Company, under which Mr. Dobies is entitled to receive
a severance payment equal to one year's salary payable in twelve (12) equal
monthly installments if the Company terminates Mr. Dobies' employment without
cause, or if Mr. Dobies terminates his employment within ninety (90) days
following a change of control of the Company.
The Company has entered into an agreement with James S. Kelly, Vice
President, Chief Financial Officer and Treasurer of the Company, under which Mr.
Kelly is entitled to receive a severance payment equal to one year's salary
payable in twelve (12) equal monthly installments if the Company terminates Mr.
Kelly's employment without cause, or if Mr. Kelly terminates his employment
within ninety (90) days following a change in control of the Company.
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 Russell 2000 Stock Index and the Dow Jones
Consumer Services Index. The graph and the values set forth in the table below
assume $100.00 invested in Common Stock of the Company, the Russell 2000 Stock
Index and the Dow Jones Consumer Services Index on June 30, 1995.
[STOCK PERFORMANCE GRAPH]<QC>
<TABLE>
<CAPTION>
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MEASUREMENT PERIOD (FISCAL YEAR COVERED) 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
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Jenny Craig, Inc. 100.00 216.67 84.09 73.48 42.42 41.67
Russell 2000 100.00 123.89 144.12 167.90 170.42 175.62
Dow Jones Consumer Services 100.00 132.40 150.35 236.02 563.99 504.31
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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 addition, Scott Bice, Robert
Wolf and Andrea Van de Kamp served as members of a special committee of
independent directors formed to consider the proposal of Craig Enterprises, Inc.
to acquire the outstanding shares of the Company not already owned by SJF
Enterprises, Inc. Each of Messrs. Bice and Wolf and Ms. Van de Kamp were paid
$25,000 for their services as members of the special committee.
9
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Andrea Van de Kamp,
Scott Bice, and Marvin Sears, and the Performance Compensation Committee is
currently composed of Ms. Van de Kamp and Mr. Bice. Marvin Sears, a director and
Secretary of the Company, is a partner in the law firm Proskauer Rose LLP,
counsel to the Company during fiscal 2000 and currently.
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 18
franchised Centres in New Zealand. For the year ended June 30, 2000, aggregate
gross revenues to the Company from the New Zealand operation amounted to
$4,978,000.
In March, 1999, the Company entered into an agreement with Denise Altholz,
the daughter of Jenny Craig, under which Ms. Altholz appears in certain of the
Company's commercials and performs related public relations services (the
"Altholz Contract"). The Altholz Contract provides that Ms. Altholz will receive
a monthly retainer of $5,000 plus a fee of $5,000 per day while appearing on
behalf of the Company. In fiscal 2000, payments to Ms. Altholz for her services
under the Altholz Contract totaled $70,000.
In December, 1999, the Company entered into an employment agreement with
Duayne Weinger, the son-in-law of Sidney and Jenny Craig. See "Employment
Agreements."
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, acting on the recommendation of its Audit
Committee, has selected the firm of KPMG 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, 2001. KPMG LLP has served as
independent auditors for the past sixteen 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 LLP as independent auditors for the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
In June, 2000, Barbara Barry became Vice President, Marketing of the
Company. Ms. Barry does not beneficially own any Company securities. Ms. Barry
did not timely file a Form 3 upon being hired by the Company. When Ms. Barry
became aware of the filing requirement, she promptly filed a Form 3.
In July, 2000, Paul Maas became Vice President and General Counsel of the
Company. Mr. Maas does not beneficially own any Company securities. Mr. Maas did
not timely file a Form 3 upon being hired by the Company. When Mr. Maas became
aware of the filing requirement, he promptly filed a Form 3.
The Annual Statement of Changes in Beneficial Ownership, reported on Form
5, was filed by each of Andrea Van de Kamp, Robert Wolf, Marvin Sears, Scott
Bice, Alan Dobies and James S. Kelly one day after such Forms were due to be
filed under United States Securities and Exchange Commission rules.
10
<PAGE> 13
OTHER MATTERS; STOCKHOLDER PROPOSALS
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 2001 must be received by the Company not
later than June 13, 2001. A stockholder who intends to submit a proposal for the
Company's 2001 annual meeting that the stockholder does not intend to be
included in the Company's proxy materials in accordance with SEC rules must give
notice to the Company prior to August 27, 2001. If the stockholder does not
provide the Company with timely notice of such a proposal, the persons
designated as management proxies on the Company's proxy card may exercise their
discretionary authority to vote on that proposal. If the stockholder does
provide the Company with timely notice of such a proposal, depending on the
circumstances, management's proxies may not be able to exercise their
discretionary authority to vote on the proposal. All stockholder 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, 2000 is being mailed herewith to all
stockholders of record.
By order of the Board of Directors
Marvin Sears
Secretary
La Jolla, California
October 10, 2000
11
<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 THURSDAY, NOVEMBER 9, 2000
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 Hilton La
Jolla Torrey Pines Hotel, 10950 North Torrey Pines Road, La Jolla, California
92037, on Thursday, November 9, 2000, 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)
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-FOLD AND DETACH HERE-
<PAGE> 15
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Please mark
your votes as [X]
indicated in
this example.
FOR all nominees listed WITHHOLD AUTHORITY
below (except as to vote for all
marked to the contrary) nominees listed FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS: [ ] [ ] 2. Proposal to approve the [ ] [ ] [ ]
appointment of KPMG LLP
as independent auditors.
NOMINEES: Sidney Craig, Jenny Craig, Marvin Sears, Scott Bice, Andrea
Van de Kamp, Robert Wolf, Patricia Larchet, Duayne Weinger 3. In their discretion, upon
any and all such other
INSTRUCTION: To withhold authority to vote for any individual nominee, matters as may properly come
write that nominee's name in the space provided below.) 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:_____________________, 2000
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.
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-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
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