<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
THE CHEESECAKE FACTORY INCORPORATED
- --------------------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE>
UVWX
THE CHEESECAKE FACTORY INCORPORATED
26950 AGOURA ROAD
CALABASAS HILLS, CALIFORNIA 91301
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
The 1999 Annual Meeting of Stockholders of THE CHEESECAKE FACTORY
INCORPORATED will be held at The Cheesecake Factory Restaurant located at 605
North Harbor Drive, Redondo Beach, California, on Tuesday, May 18, 1999,
beginning at 10:00 A.M. local time, for the following purposes:
1. To elect one nominee to serve as a director of the Company for a
three-year term and until a respective successor shall be elected and
qualified;
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 1, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof.
You are cordially invited to attend the meeting.
By Order of the Board of Directors,
Linda J. Candioty
Corporate Secretary
Calabasas Hills, California
April 16, 1999
YOUR VOTE IS IMPORTANT
You are urged to sign, date and promptly return the accompanying form of
proxy, so that if you are unable to attend the Annual Meeting your shares
may nevertheless be voted. If you do attend and wish to vote in person, the
proxy is revocable.
<PAGE>
THE CHEESECAKE FACTORY INCORPORATED
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999
------------------------
This Proxy Statement is furnished to the stockholders of THE CHEESECAKE
FACTORY INCORPORATED (the "Company") in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders to be held at The
Cheesecake Factory Restaurant located at 605 North Harbor Drive, Redondo Beach,
California, on May 18, 1999, beginning at 10:00 A.M. local time, and at any
adjournment thereof.
Proxies delivered pursuant to this solicitation are revocable at the option
of the persons executing the same, prior to their exercise, by attendance and
voting at the Annual Meeting or by written notice delivered to the Corporate
Secretary of the Company prior to the meeting, and are solicited by and on
behalf of the Board of Directors of the Company. Unless previously revoked, all
proxies representing shares entitled to vote which are delivered pursuant to
this solicitation will be voted at the meeting by the named attorneys-in-fact
and agents, to the extent authorized, in accordance with the directions
contained therein. If no such directions are given, the shares represented by
such proxies will be voted in favor of the election of the nominee for director.
The named proxies may vote in their discretion upon such other matters as may
properly come before the meeting. Assuming a quorum is present in person or by
proxy at the meeting, with respect to the election of directors, the nominees
receiving the greatest number of votes cast will be elected to the Board.
For purposes of determining whether a matter has received a majority vote,
abstentions will be included in the vote totals, with the result that an
abstention has the same effect as a negative vote. In instances where brokers
are prohibited from exercising discretionary authority for beneficial owners who
have not retained a proxy, those shares will not be included in the vote totals
and therefore will have no effect on the vote.
The cost of this solicitation will be borne by the Company. Proxies may be
solicited by personal interview, telephone and telegraph, as well as by use of
the mails. Banks, brokerage houses and other custodians, nominees or fiduciaries
will be requested to forward soliciting material to their principals and to
obtain authorization for the execution of proxies, and will be reimbursed for
their reasonable out-of-pocket expenses incurred in that regard. Employees of
the Company participating in the solicitation of proxies will not receive any
additional remuneration.
On April 1, 1999, the Company had outstanding 20,178,202 shares of Common
Stock, and there were no outstanding shares of any other class of stock. Each
holder of Common Stock is entitled to one vote for each share of such stock
held. Only stockholders of record at the close of business on April 1, 1999 will
be entitled to vote at the Annual Meeting. A majority of the outstanding shares,
whether present in person or by proxy, is required to constitute a quorum to
transact business at the meeting.
The Company intends to cause this Proxy Statement to be mailed to
stockholders on or about April 16, 1999.
1
<PAGE>
BENEFICIAL OWNERSHIP
OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership as of April 1, 1999 of the Company's Common Stock by (a) each person
known to the Company owning beneficially more than five percent of the
outstanding shares of the Company's Common Stock, (b) each director of the
Company, (c) each Named Executive Officer of the Company, and (d) all Named
Executive Officers and directors of the Company as a group. Unless otherwise
indicated, each of the stockholders has sole voting and investment power with
respect to the shares beneficially owned. Unless otherwise indicated, the
address of each of the stockholders named below is the Company's principal
executive office.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-----------------------
NAME SHARES PERCENTAGE
- --------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
David Overton(1)(2).................................................. 2,120,734 10.3%
Overton Family Limited Partnership(3)................................ 293,794 1.4%
Thomas L. Gregory(4)(5).............................................. 45,000 *
Jerome I. Kransdorf(3)(4)(6)......................................... 22,500 *
Wayne H. White(4)(5)................................................. 45,000 *
Gerald W. Deitchle(7)................................................ 59,189 *
Linda J. Candioty(8)................................................. 148,352 *
Dresdner RCM Global Investors LLC.................................... 1,839,890 8.9%
Wellington Management Company, LLP................................... 1,359,700 6.6%
SMALLCAP World Fund, Inc............................................. 1,295,500 6.3%
All Named Executive Officers and directors as a group
(six persons)(9)................................................... 2,734,569 13.3%
</TABLE>
- ------------------------
* Less than 1% of the issued and outstanding shares.
(1) Includes 191,625 shares which he has the right to acquire upon the exercise
of options granted under the Company's 1992 Performance Employee Stock
Option Plan (the "1992 Plan"). Does not include an additional 54,000 shares
granted under the 1992 Plan which are not currently exercisable. Does not
include 19,300 shares held by Mr. Overton's spouse, 26,100 shares which she
has the right to acquire upon the exercise of options granted under the 1992
Plan, or an additional 20,900 shares granted under the 1992 Plan which are
not currently exercisable, all of which she has sole voting and investment
power. See "Executive Compensation."
(2) Named Executive Officer and director of the Company.
(3) The general partner of the partnership is an Overton family trust, of which
Mr. Kransdorf has sole voting and investment power over the shares in his
capacity as trustee.
(4) Director of the Company.
(5) Includes 22,500 shares which he has the right to acquire upon the exercise
of options granted under the Company's 1992 Non-Employee Director Stock
Option Plan, and an additional 22,500 shares which he has the right to
acquire upon the exercise of options granted under the Company's 1997
Non-Employee Director Stock Option Plan (the "1997 Director Plan"). See
"Board of Directors Meetings, Attendance and Fees."
(6) Includes 22,500 shares which he has the right to acquire upon the exercise
of options granted under the Company's 1997 Director Plan. See "Board of
Directors--Meetings, Attendance and Fees."
2
<PAGE>
(7) Includes 59,189 shares which he has the right to acquire upon the exercise
of options granted under the Company's 1992 Plan. Does not include an
additional 151,374 shares granted under the 1992 Plan which are not
currently exercisable.
(8) Includes 45,750 shares which she has the right to acquire upon the exercise
of options granted under the Company's 1992 Plan. Does not include an
additional 60,500 shares granted under the 1992 Plan which are not currently
exercisable.
(9) Includes 409,064 shares which the Company's Named Executive Officers and
outside directors have the right to acquire upon the exercise of options
granted under the Company's stock option plans.
The address of Dresdner RCM Global Investors LLC is Four Embarcadero Center,
San Francisco, California 94111. The address of Wellington Management Company,
LLP is 75 State Street, Boston, Massachusetts 02109. The address of SMALLCAP
World Fund, Inc. is 333 South Hope Street, Los Angeles, California 90071.
ELECTION OF DIRECTORS
The Company's Bylaws provide for a Board of Directors consisting of no less
than five and no more than thirteen members, the exact number within this range
being determined by the Board of Directors. The Board of Directors has set the
number of directors at five. The Board of Directors is classified into three
classes with each director serving a three-year term. David Overton is serving a
term which expires at the Annual Meeting of Stockholders to be held in 1999.
Jerome I. Kransdorf and Wayne H. White are serving terms that expire at the
Annual Meeting of Stockholders to be held in 2000. Thomas L. Gregory is serving
a term which will expire at the Annual Meeting of Stockholders to be held in
2001. The Board currently has a vacancy for one position. The Board of Directors
intends to review possible candidates for this position in order to possibly
fill this vacancy during 1999. At each Annual Meeting of Stockholders, directors
are elected for a full term of three years to succeed those whose terms are
expiring. Officers are elected annually by the Board of Directors and serve at
the discretion of the Board of Directors.
The Board of Directors has nominated David Overton for reelection to the
Board of Directors for a three-year term which will expire at the Annual Meeting
of Stockholders to be held in the year 2002. The nominee has indicated his
willingness to serve and, unless otherwise instructed, proxies will be voted for
the election of such nominee unless instructions are given on the proxy to
withhold authority to vote for him.
Nominations for the election of directors, other than by the Board of
Directors, must be made by a stockholder entitled to vote for the election of
directors by giving timely written notice to the Secretary of the Company at the
Company's principal offices. Such notice must be received not less than 60
calendar days nor more than 90 calendar days prior to the meeting; provided
that, if in the event that notice or prior public disclosure of the date of the
meeting is given or made to the stockholders for a meeting date that is not
within 30 days before or after the anniversary of the immediately preceding
Annual Meeting of Stockholders, notice by the stockholder will be timely if
received not later than the close of business on the tenth calendar day
following the day on which such notice was mailed or such public disclosure was
made. Such stockholder's notice must be in writing and must set forth as to each
proposed nominee all information relating to such person that is required to be
disclosed in solicitations of proxies pursuant to Regulation 14A under the
Securities Exchange Act of 1934 ("Exchange Act") including, but not limited to,
such person's written consent to being named in the Proxy Statement as a nominee
and to serving as a director if elected. Such stockholder notice must also set
forth the name and address, as they appear on the Company's books, of the
nominating stockholder and the class and number of shares of Common Stock
beneficially owned by such stockholder.
3
<PAGE>
The following table sets forth certain information with respect to the
nominee for director and of the other directors of the Company.
THE BOARD OF DIRECTORS
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
David Overton............................. David Overton, age 53, co-founded the Company's predecessor with his
parents. He has served as the Company's Chairman of the Board,
President and Chief Executive Officer since its incorporation in
February 1992.
Thomas L. Gregory......................... Thomas L. Gregory, age 63, became a director of the Company upon the
consummation of its initial public offering in September 1992. Mr.
Gregory has over 30 years of experience in the food service industry.
He served as Vice Chairman of the Board of Directors of Sizzler
International, Inc., a restaurant chain, until August 1994. Mr.
Gregory served as President, Chief Executive Officer and a member of
the board of directors of Sizzler from 1982 to 1991, and then served
as President of its successor company until his retirement in 1992.
From 1974 to 1991, Mr. Gregory served as Vice President for Collins
Foods International, Inc., a food service company, and retained such
position concurrently with his positions at Sizzler. Mr. Gregory is a
member of the board of directors of Regis Corporation, the world's
largest chain of haircare retail operations. He is also a member of
the board of directors of Norths Enterprises, Inc., a buffet
restaurant chain.
Jerome I. Kransdorf....................... Jerome I. Kransdorf, age 60, became a director of the Company in
March 1997. Mr. Kransdorf has over 38 years of investment management
experience. From 1959 to 1997, he was employed in investment and
senior management positions at Wertheim & Co. and its successor
companies. Mr. Kransdorf currently serves as Senior Vice President of
J. & W. Seligman & Co. Incorporated, an investment advisory firm.
Wayne H. White............................ Wayne H. White, age 61, became a director of the Company upon the
consummation of its initial public offering in September 1992. Since
January 1993, Mr. White has been an independent investment banker and
management consultant with a special emphasis on gaming and
restaurant companies. He is currently affiliated with First Security
Van Kasper in San Francisco. Mr. White has approximately ten years of
senior management experience in the restaurant industry, including
Victoria Station (seven years) and Famous Restaurants (two years).
</TABLE>
4
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has two standing committees, the Audit Committee and
the Compensation Committee.
The Audit Committee recommends to the Board of Directors a firm of
independent certified public accountants to conduct the annual audit of the
Company's books and records. The Audit Committee also reviews with such
accounting firm the scope and results of the annual audit, the performance by
such accountants of professional services in addition to those related to the
annual audit and the adequacy of the Company's internal controls. The members of
the Audit Committee are Thomas L. Gregory, Jerome I. Kransdorf and Wayne H.
White. During fiscal 1998, the Audit Committee held two meetings.
The Compensation Committee reviews and recommends to the Board of Directors
compensation for the Company's senior management; reviews and submits its
recommendations with respect to new executive compensation programs; and
administers the Company's compensation programs, including the Company's 1992
Performance Employee Stock Option Plan and the Performance Incentive Plan. The
members of the Compensation Committee are Thomas L. Gregory, Jerome I. Kransdorf
and Wayne H. White. During fiscal 1998, the Compensation Committee held two
meetings.
MEETINGS, ATTENDANCE AND FEES
During fiscal 1998, the Board of Directors held four meetings. No member of
the Board attended fewer than 75% of the aggregate number of meetings of the
Board and the Committees on which he served.
Each director who is not an employee of the Company receives an annual fee
of $10,000 plus $1,000 for each meeting of the Board of Directors attended.
Non-employee directors who serve on committees also receive $1,000 for each
meeting attended that takes place on a date other than the day of a regularly
scheduled Board of Directors meeting. Thomas L. Gregory and Wayne H. White each
received options under the Company's 1992 Non-Employee Director Stock Option
Plan to acquire 22,500 shares of Common Stock at prices equal to fair market
value on the date of grant. These options have an exercise price of $8.89 per
share which is equal to the initial public offering price as adjusted for two
3-for-2 stock splits which were completed on March 15, 1994 and April 1, 1998.
The options are exercisable for a period of ten years from the date of grant and
are not transferable other than by will or the laws of descent and distribution.
All such options granted to Messrs. Gregory and White are fully vested and
exercisable.
Messrs. Gregory, Kransdorf and White each were granted options to acquire
22,500 shares of Common Stock under the 1997 Director Plan. These options have
an exercise price of $13.75 per share, are exercisable on the date of grant and
expire after a period of ten years from date of grant.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the personal liability of a director of the
Company for monetary damages for breach of fiduciary duty of care as a director.
Liability is not eliminated for (a) any breach of the director's duty of loyalty
to the Company or its stockholders, (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) unlawful
payment of dividends or stock purchases or redemptions pursuant to Section 174
of the Delaware General Corporation Law, or (d) any transaction from which the
director derived an improper personal benefit.
The Company has also entered into indemnification agreements with its
directors and Named Executive Officers. The indemnification agreements provide
that the directors and Named Executive Officers will be indemnified to the full
extent permitted by applicable law against all expenses (including attorneys'
fees), judgments, fines and amounts reasonably paid or incurred by them for
settlement in any threatened, pending or completed action, suit or proceeding,
including any derivative action, on account of
5
<PAGE>
their services as a director or officer of the Company or of any subsidiary of
the Company or of any other company or enterprise in which they are serving at
the request of the Company. No indemnification will be provided under the
indemnification agreements, however, to any director or Named Executive Officer
in certain limited circumstances, including knowingly fraudulent, deliberately
dishonest or willful misconduct. To the extent the provisions of the
indemnification agreements exceed the indemnification permitted by applicable
law, such provisions may be unenforceable or may be limited to the extent they
are found by a court of competent jurisdiction to be contrary to public policy.
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16 OF THE EXCHANGE ACT
Under Section 16(a) of the Exchange Act, the Company's directors, Named
Executive Officers and any persons holding ten percent or more of the Company's
Common Stock are required to report their ownership of Common Stock and any
changes in that ownership to the Securities and Exchange Commission (the "SEC")
and to furnish the Company with copies of such report. Specific due dates for
these reports have been established and the Company is required to report in
this Proxy Statement any failure to file on a timely basis by such persons.
Based solely upon a review of copies of reports filed with the SEC during fiscal
1998, all persons subject to the reporting requirements of Section 16(a) filed
all required reports on a timely basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No directors other than those identified above served as members of the
Compensation Committee during the last completed fiscal year. No member of that
Committee was an officer or employee of the Company or any of its subsidiaries
during the year. None of the Named Executive Officers of the Company have served
on the board of directors or on the compensation committee of any other entity,
any of whose officers served either on the Board of Directors or on the
Compensation Committee of the Company.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation paid by the Company during the
last three fiscal years to those persons who were, at December 29, 1998, Named
Executive Officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------
------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#)(2)
- -------------------------------------------------- --------- --------- ----------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
David Overton .................................... 1998 400,000 -- 2,865 30,000
Chairman of the Board, President and Chief 1997 350,000 -- 4,765 30,000
Executive Officer 1996 350,000 -- 18,000 --
Gerald W. Deitchle ............................... 1998 240,000 -- 2,802 22,500
Executive Vice President and 1997 235,000 -- 1,913 22,500
Chief Financial Officer 1996 225,000 -- 24,800 60,750
Michael A. Nahkunst .............................. 1998 250,000 -- 20,034 77,500
Executive Vice President and 1997 72,115 -- 29,808 150,000
Chief Operating Officer (3) 1996 -- -- -- --
Linda J. Candioty ................................ 1998 210,000 -- 10,800 22,500
Executive Vice President and 1997 205,000 -- 10,800 22,500
Secretary 1996 185,000 15,000 10,800 22,500
</TABLE>
- ------------------------
(1) Includes compensation related to automobile allowances or the personal use
of company-provided automobiles unless noted otherwise below. In 1996, Mr.
Deitchle received an automobile allowance of $10,800 and relocation expense
reimbursements of $14,000. In 1998, Mr. Nahkunst received automobile-related
compensation of $7,721 and an employment-related bonus of $12,313. In 1997,
Mr. Nahkunst received automobile-related compensation of $2,590 and an
employment-related bonus of $27,218.
(2) Stock options were granted under the Company's 1992 Plan.
(3) Mr. Nahkunst ended his employment with the Company on January 13, 1999. He
has the right to exercise stock options totaling 119,100 shares at exercise
prices ranging from $16.08 to $28.38 through April 13, 1999. All other stock
options previously granted to Mr. Nahkunst have been cancelled.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all options to acquire shares of the Company's
stock granted to Named Executive Officers during fiscal 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM($)(3)
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE 5% 10%
- --------------------------- ------------- ----------------- --------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
David Overton.............. 30,000 6.0% 18.00 1/23/2008 339,600 860,700
Gerald W. Deitchle......... 22,500 4.5% 18.00 1/23/2008 254,700 645,525
Michael A. Nahkunst........ 22,500 4.5% 20.33 8/05/2008 287,775 729,000
Michael A. Nahkunst........ 55,000 11.0% 28.38 12/30/2008 981,750 2,487,650
Linda J. Candioty.......... 22,500 4.5% 18.00 1/23/2008 254,700 645,525
</TABLE>
- ------------------------
(1) These options were granted pursuant to the 1992 Plan. The options generally
vest 20% per year provided, however, that no option shall vest unless the
Company's performance for the year in which an option would otherwise vest
meets or exceeds the average earnings performance of all full-menu table
service restaurants reported in a restaurant index published by a major
financial services firm or an equivalent index. The options have a term of
ten years.
(2) Market value on the date of grant.
(3) Assumed annual rates of stock appreciation are set by the SEC and are not a
forecast of future appreciation. The amounts shown are pre-tax and assume
the options will be held throughout their entire term. Actual realized
value, if any, is dependent on the future performance of the Company's
Common Stock, as well as the continued employment of the option holder
through the vesting period.
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table shows all stock options exercised by the Named Executive
Officers during fiscal 1998, and the number and value of options they held at
fiscal year end.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT FISCAL YEAR END(#)(1) AT FISCAL YEAR END($)(2)
ACQUIRED ON REALIZED -------------------------- -------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- --------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Overton..................... -- -- 155,625 60,000 2,272,524 785,001
Gerald W. Deitchle................ 40,187 342,491 50,189 135,374 629,414 1,709,600
Michael A. Nahkunst............... -- -- 30,000 197,500 361,251 2,197,817
Linda J. Candioty................. 48,000 690,985 -- 86,250 -- 1,238,908
</TABLE>
- ------------------------
(1) These options were granted pursuant to the 1992 Plan. Of the 60,000
unexercisable options for Mr. Overton at the end of fiscal 1998 (December
29, 1998), 30,000 vest on December 31, 1998 and 30,000 vest 20% per year
with the final portion vesting on January 23, 2003. The unexercisable
options for Mr. Deitchle at the end of fiscal 1998 vest 20% to 25% per year,
with the final portion vesting on January 23, 2003. The options have a term
of ten years. The unexercisable options for Mr. Nahkunst at the end of
fiscal 1998 vest 20% to 33% per year with the final portion vesting on
December 31, 2002. However, no option shall vest and become exercisable
unless the Company's performance for the year in which an option would
otherwise vest meets or exceeds the average earnings performance of all
full-menu table service restaurants reported in a restaurant index published
by a major financial services firm or an equivalent index.
8
<PAGE>
(2) Represents the difference between the closing price ($28.125) of the
Company's Common Stock on December 29, 1998, the last trading day of the
Company's 1998 fiscal year, and the exercise price of the options.
EMPLOYMENT AGREEMENTS
In April 1998, the Company entered into a three-year employment agreement
with Mr. Overton, the Company's Chief Executive Officer. The agreement provides
Mr. Overton with an annual base salary, currently $400,000, which is subject to
increase from time to time by the Board of Directors. Mr. Overton is entitled to
participate equitably with other Named Executive Officers in any plan of the
Company relating to bonuses, stock options, health and life insurance,
compensated absences, retirement or other employee benefits. The agreement also
provides Mr. Overton with an automobile allowance, reimbursement of his business
expenses, and certain additional health and life insurance benefits. If Mr.
Overton voluntarily resigns from the Company or is terminated with cause (as
defined in the agreement), he will be entitled to receive any unpaid salary
earned up through the termination date, plus any unpaid pro rata portion of any
incentive plan award for the current fiscal year when such awards are paid to
all other plan participants. If Mr. Overton's employment is terminated without
cause prior to a change in control of the Company (as defined in the agreement),
or if he dies or is permanently disabled, he or his estate will be entitled to
receive a lump sum payment equal to three times his then current annual base
salary. If, during the first 18 months after a change in control of the Company,
Mr. Overton voluntarily terminates his employment or is terminated by the
Company without cause, he will be entitled to receive a lump sum payment of $2
million, and the Company will also pay for certain health and life insurance
benefits for Mr. Overton and his dependents for an additional 36 months. In the
event that any payment or benefit paid or payable to Mr. Overton under the
agreement is subject to any excise tax in connection with the "excess parachute
payment" provisions of the Internal Revenue Code, Mr. Overton is entitled to
receive an additional "gross-up" payment from the Company such that the
after-tax proceeds of the payment to Mr. Overton will be sufficient to pay any
such excise tax in full.
In July 1995, the Company entered into an employment agreement with Gerald
W. Deitchle, the Company's Chief Financial Officer. Under this agreement, Mr.
Deitchle is provided with an annual base salary, currently $275,000, which is
subject to increase from time to time by the Board of Directors. Mr. Deitchle is
entitled to other specified benefits such as an automobile allowance,
reimbursement of business expenses, health and related insurance benefits and a
relocation allowance. The agreement may be terminated without cause by Mr.
Deitchle with 60 days written notice, and may be terminated by the Company at
any time without prior notice. If the Company terminates Mr. Deitchle's
employment without cause (as defined in the agreement), he will be entitled to
receive an amount equal to two times his annual base salary then in effect, plus
any unpaid pro rata salary earned through the termination date. During the first
90 days after a change in control of the Company (as defined in the agreement),
Mr. Deitchle may terminate the agreement and receive a lump sum payment equal to
two times his then annual base salary in effect plus any unpaid pro rata salary
earned through the termination date.
In April 1998, the Company entered into an employment agreement with Linda
J. Candioty, Executive Vice President and Secretary of the Company. Under this
agreement, Ms. Candioty is provided with an annual base salary, currently
$220,000, which is subject to increase from time to time by the Board of
Directors. Ms. Candioty is entitled to other specified benefits such as an
automobile allowance, reimbursement of business expenses, and health and life
insurance benefits. The agreement may be terminated without cause by Ms.
Candioty with 60 days written notice, and may be terminated by the Company at
any time without prior notice. If the Company terminates Ms. Candioty's
employment without cause (as defined in the agreement), she will be entitled to
receive any unpaid pro rata salary earned through the date of termination, plus
any unpaid pro rata portion of any incentive plan awards for the current fiscal
year when awards are paid to all other plan participants, plus immediate vesting
of all stock options granted to her under the Company's stock option plans.
During the first 90 days after a change in control
9
<PAGE>
of the Company (as defined in the agreement), Ms. Candioty may terminate the
agreement and receive a lump sum payment equal to two times her then annual base
salary in effect plus any unpaid pro rata salary earned through the termination
date.
In August 1997, the Company entered into an employment agreement with
Michael A. Nahkunst, the Company's Chief Operating Officer. Under this
agreement, Mr. Nahkunst is provided with an annual base salary, currently
$250,000, which is subject to increase from time to time by the Board of
Directors. Mr. Nahkunst is entitled to other specified benefits such as an
automobile allowance, reimbursement of business expenses, health and related
insurance benefits and a relocation allowance. The agreement may be terminated
without cause by Mr. Nahkunst with 90 days written notice, and may be terminated
by the Company at any time without prior notice. If the Company terminates Mr.
Nahkunst's employment without cause (as defined in the agreement), he will be
entitled to receive an amount equal to one-half his then annual base salary in
effect, plus any unpaid pro rata salary earned up to the date of termination,
plus any unpaid pro rata portion of any incentive plan awards for the current
fiscal year when awards are paid to all other plan participants, plus an
accelerated vesting of stock options according to a predetermined schedule in
the agreement. Mr. Nahkunst ended his employment with the Company on January 13,
1999. In full settlement of the Company's obligations under this agreement, Mr.
Nahkunst has the right to exercise stock options totaling 119,100 shares at
exercise prices ranging from $16.08 to $28.38 through April 13, 1999.
PERFORMANCE INCENTIVE PLAN
The Board of Directors adopted The Cheesecake Factory Incorporated Amended
Performance Incentive Plan (the "Incentive Plan") during fiscal 1998. All Named
Executive Officers and other officer and director-level staff employees are
eligible for annual cash bonuses under the Incentive Plan. Under the terms of
the Incentive Plan, the Compensation Committee establishes, upon the
recommendation of the Chief Executive Officer, targeted financial goals based on
net income, net income per share, return on assets, return on equity, growth in
earnings or other financial measures. Participants are assigned a target bonus
equal to 10% to 50% of their annual base salaries. Actual bonuses shall be
awarded by the Compensation Committee at the end of each fiscal year based on
the degree of achievement of the targeted financial goals. Participants are
assigned threshold, target and maximum cash bonus levels as a percentage of
their respective base salaries, based upon their level of responsibility with
the Company. No cash bonuses were awarded under the Incentive Plan for fiscal
1998. Financial objectives have been set for fiscal 1999 which are linked to the
attainment of a predetermined net income goal established by the Committee and
approved by the Board.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The report of the Compensation Committee shall not be deemed incorporated by
reference to any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of outside directors and is responsible for developing and
making recommendations to the Board with respect to the Company's executive
compensation policies. In addition, the Committee, pursuant to authority
delegated by the Board, determines the compensation to be paid to the Chief
Executive Officer and each of the other Named Executive Officers of the Company.
The Committee is also responsible for setting and administering the policies
which govern the Company's 1992 Performance Employee Stock Option Plan and the
Amended Performance Incentive Plan.
10
<PAGE>
There are three key elements in the Company's executive compensation
program, all determined by individual and corporate performance:
- Annual base salaries;
- Annual incentive compensation; and
- Long-term incentive compensation.
The Company's executive compensation program is designed to enable it to
attract, retain and motivate the highest quality of management talent available.
Furthermore, the Committee believes that the value of the program should
reflect, in large part, the value created for stockholders. The key objectives
of the program are as follows:
- To offer fair and competitive annual base salaries consistent with
similarly situated companies in the foodservice industry;
- To reward executives for corporate and individual performance through an
annual incentive compensation program; and
- To encourage future performance through the use of long-term incentives
such as stock options which align the interests of employees and
stockholders.
ANNUAL BASE SALARIES
Annually, the Committee establishes the base salaries to be paid to the
Company's Named Executive Officers during the coming year, subject to the
approval of the Board. In setting base salaries, the Committee takes into
account several factors including, but not limited to, the executive's
experience, responsibilities, management abilities and job performance, as well
as the performance of the Company as a whole and current market conditions.
ANNUAL INCENTIVE COMPENSATION
The Company's Amended Performance Incentive Plan (the "Incentive Plan") is
the Company's annual cash bonus program for Named Executive Officers and other
officer and director-level staff employees. Under the Incentive Plan, the
Committee establishes, upon the recommendation of the Chief Executive Officer,
targeted financial goals based on net income, net income per share, return on
assets, return on equity, growth in earnings or other financial measures. Each
participant is assigned a target bonus award equal to 10% to 50% of the
participant's annual base salary. The actual bonuses shall be awarded by the
Committee at the end of each fiscal year based on the achievement of the
targeted financial goals. Participants are assigned threshold, target and
maximum cash bonus levels as a percentage of their respective base salaries
based upon their levels of responsibility with the Company. Financial objectives
have been set for fiscal 1999 which are linked to the attainment of a
predetermined net income goal established by the Committee and approved by the
Board.
LONG-TERM INCENTIVE COMPENSATION
The Committee believes that employee stock ownership is a significant
incentive in building stockholder wealth and aligning the interests of employees
and stockholders. Stock options will only have value if the Company's stock
price increases. Stock options utilize vesting periods to encourage key
employees to continue in the employ of the Company. The Board of Directors
adopted the 1992 Performance Employee Stock Option Plan (the "1992 Option Plan")
concurrent with the Company's initial public offering. The 1992 Option Plan was
approved by stockholders at the 1993 Annual Meeting of Stockholders. An
amendment to the 1992 Option Plan was approved by stockholders at the 1998
Annual Meeting of Stockholders which, among other things, increased the number
of shares authorized for stock options from 2,756,250 to 3,956,250. The 1992
Option Plan authorizes the Committee to award stock options to key
11
<PAGE>
employees at exercise prices, vesting schedules and on other terms established
by the Committee. In order for stock options granted to executive officers and
key employees to vest, the Company's earnings performance for the year must meet
or exceed the average earnings performance of all full-menu table service
restaurants reported in a restaurant index published by a major financial
services firm or an equivalent index.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
At the time of the Company's initial public offering in September 1992, the
Company entered into a three-year employment agreement with Mr. Overton at an
annual base salary of $350,000. The Company and Mr. Overton renewed the
agreement annually since September 1995 with no increase in the $350,000 annual
base salary. In January 1998, the Committee reviewed Mr. Overton's annual base
salary in light of his individual performance and contribution to the Company's
overall growth since September 1992 and increased it to $400,000. Mr. Overton's
annual base salary remains the same for fiscal 1999. In January 1999, the
Committee also granted Mr. Overton an option to purchase an additional 30,000
shares of the Company's Common Stock under the 1992 Option Plan.
Compensation Committee
Thomas L. Gregory
Jerome I. Kransdorf
Wayne H. White
12
<PAGE>
PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing the total return on an indexed basis of
a $100 investment in the Company's Common Stock, the S&P Midcap Restaurant
Index, the Nation's Restaurant News Stock Index and the Nasdaq
Composite-Registered Trademark- Index. The measurement points utilized in the
graph consist of the last trading day in each calendar year, which closely
approximates the last day of the respective fiscal year of the Company.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON $100 INVESTMENT
AMONG THE CHEESECAKE FACTORY INCORPORATED, S&P MIDCAP RESTAURANT INDEX,
NATION'S RESTAURANT NEWS STOCK INDEX AND THE NASDAQ
COMPOSITE-REGISTERED TRADEMARK- INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
The Cheesecake S&P Midcap Nation's Restaurant Nasdaq Composite -Registration Mark- Index
<S> <C> <C> <C> <C>
Factory Incorporated Restaurant Index News Stock Index
12/31/93 $100.00 $100.00 $100.00 $100.00
12/30/94 $68.98 $68.74 $100.87 $97.75
12/29/95 $94.16 $67.52 $149.94 $138.26
12/31/96 $79.36 $64.52 $154.14 $170.01
12/31/97 $133.58 $70.54 $154.28 $208.58
12/31/98 $194.82 $86.31 $207.08 $293.21
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
The Cheesecake Factory Incorporated $ 100.00 $ 68.98 $ 94.16 $ 79.36 $ 133.58 $ 194.82
S&P Midcap Restaurant Index $ 100.00 $ 68.74 $ 67.52 $ 64.52 $ 70.54 $ 86.31
Nation's Restaurant News Stock Index $ 100.00 $ 100.87 $ 149.94 $ 154.14 $ 154.28 $ 207.08
Nasdaq Composite-Registered Trademark-
Index $ 100.00 $ 97.75 $ 138.26 $ 170.01 $ 208.58 $ 293.21
</TABLE>
13
<PAGE>
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP served as the Company's independent
accountants for fiscal 1998. This firm has advised the Company that it has no
direct or indirect financial interest in the Company. Representatives of this
firm are expected to be present at the Annual Meeting of Stockholders, with the
opportunity to make a statement should they desire to do so, and will be
available to respond to appropriate questions from stockholders.
OTHER MATTERS
The Board of Directors knows of no business other than that described herein
that will be presented for consideration at the Annual Meeting of Stockholders.
If, however, other business shall properly come before the meeting, the persons
named in the enclosed form of proxy intend to vote the shares represented by
said proxies on such matters in accordance with their judgment in the best
interests of the Company.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Any stockholder proposal intended to be presented at the Company's 2000
Annual Meeting of Stockholders must be received by the Company for inclusion in
the Proxy Statement and form of proxy for that meeting no later than December
21, 1999.
AVAILABILITY OF FORM 10-K
THE COMPANY WILL PROVIDE TO ANY STOCKHOLDER WITHOUT CHARGE, UPON THE WRITTEN
REQUEST OF THAT STOCKHOLDER, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 29, 1998, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE ADDRESSED TO: JANE VALLAIRE,
INVESTOR RELATIONS MANAGER, THE CHEESECAKE FACTORY INCORPORATED, 26950 AGOURA
ROAD, CALABASAS HILLS, CA 91301.
By Order of the Board of Directors,
Linda J. Candioty
Corporate Secretary
14
<PAGE>
PROXY THE CHEESECAKE FACTORY INCORPORATED
Solicited on behalf of the Board of Directors of THE CHEESECAKE FACTORY
INCORPORATED (the "Company") for use at the Annual Meeting of Stockholders (the
"Meeting") to be held on May 18, 1999, at 10:00 A.M. at The Cheesecake Factory
Restaurant, 605 North Harbor Drive, Redondo Beach, California.
The undersigned hereby appoints Gerald W. Deitchle and Linda J. Candioty, or
either one of them, as Proxies, with the full power of substitution, to vote all
shares of Common Stock of the Company held of record by the undersigned on April
1, 1999 at the Meeting or at any adjournments thereof, on the items set forth
below and in their discretion upon such other business as may properly come
before the Meeting.
The Board of Directors recommends a vote in favor of Item 1.
1. ELECTION OF THE FOLLOWING DIRECTOR:
DAVID OVERTON
/ / FOR the nominee listed above for the term set forth in the Proxy
Statement.
/ / WITHHOLD AUTHORITY to vote for the nominee listed above.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
<PAGE>
(CONTINUED FROM THE OTHER SIDE)
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholder. If no direction is given, this proxy will be voted
for Item 1. All proxies heretofore given by the undersigned are hereby revoked.
Receipt of the Proxy Statement dated April 16, 1999 is acknowledged.
Please mark, sign, date and return this Proxy in the accompanying prepaid
envelope.
Dated: ____________________, 1999.
__________________________________
(Signature)
__________________________________
(Signature)
Please sign exactly as name
appears hereon. If signing as an
attorney, executor, administrator,
trustee or guardian, please give
full title as such, and if signing
for a corporation, give your
title. When shares are in the
names of more than one person,
each should sign.
