<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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
</TABLE>
<TABLE>
<S> <C>
THE CHEESECAKE FACTORY INCORPORATED
- ------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
THE CHEESECAKE FACTORY INCORPORATED
26950 AGOURA ROAD
CALABASAS HILLS, CALIFORNIA 91301
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
The 2000 Annual Meeting of Stockholders of THE CHEESECAKE FACTORY
INCORPORATED will be held at The Cheesecake Factory-Registered Trademark-
restaurant located at 605 North Harbor Drive, Redondo Beach, California, on
Tuesday, May 30, 2000, beginning at 10:00 A.M. local time, for the following
purposes:
1. To elect two nominees to serve as directors of the Company for
three-year terms and until respective successors shall be elected and
qualified;
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the maximum authorized number of shares of Common Stock from
30,000,000 to 150,000,000; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Our agenda for the Annual Meeting will also include an overview of the Company's
business operations and recent performance results.
The Board of Directors has fixed the close of business on April 10, 2000 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 Annual Meeting. However, you must be
a stockholder of record at the close of business on April 10, 2000 to vote at
the meeting. If you plan to attend, please bring the Admittance Slip on the back
cover. Regardless of whether or not you will attend, please vote by signing,
dating and returning the enclosed proxy card. Or, you can vote by telephone or
Internet (see back cover). Voting by mail, telephone or Internet will not
prevent you from voting in person at the meeting.
By Order of the Board of Directors
Linda J. Candioty
Corporate Secretary
Calabasas Hills, California
April 17, 2000
<PAGE>
THE CHEESECAKE FACTORY INCORPORATED
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2000
------------------------
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-Registered Trademark- restaurant located at 605 North Harbor
Drive, Redondo Beach, California, on May 30, 2000, 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 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 nominees 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 March 9, 2000, 20,280,288 shares of the Company's Common Stock were
outstanding, 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 10, 2000
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 17, 2000.
1
<PAGE>
BENEFICIAL OWNERSHIP
OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership as of March 9, 2000 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 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).................................... 2,104,734 10.1%
Overton Family Limited Partnership(3).................. 293,794 1.4%
Thomas L. Gregory(4)(5)................................ 50,000 *
Jerome I. Kransdorf(3)(4)(6)........................... 27,500 *
Wayne H. White(4)(5)................................... 50,000 *
Gerald W. Deitchle(7)(11).............................. 158,376 *
Linda J. Candioty(8)(11)............................... 144,129 *
Debby R. Zurzolo (9)(11)............................... 20,225 *
Wellington Management Company, LLP..................... 1,615,900 7.7%
American Express Financial Corporation................. 1,506,742 7.2%
SMALLCAP World Fund, Inc............................... 1,205,500 5.8%
All executive officers and directors as a group (seven
persons)(10)......................................... 2,554,964 12.3%
</TABLE>
- ------------------------
* Less than 1% of the issued and outstanding shares.
(1) Includes 207,625 shares which Mr. Overton has the right to acquire upon the
exercise of options granted under the Company's 1992 Performance Employee
Stock Option Plan (the "1992 Stock Option Plan"). Excludes an additional
68,000 shares granted to Mr. Overton under the 1992 Stock Option Plan which
are not currently exercisable. Excludes 19,300 shares held by Mr. Overton's
spouse; 32,200 shares which she has the right to acquire upon the exercise
of options granted under the 1992 Stock Option Plan; and an additional
14,800 shares granted under the Company's stock option plans 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 27,500 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 27,500 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 158,376 shares which Mr. Deitchle has the right to acquire upon the
exercise of options granted under the Company's 1992 Stock Option Plan. Does
not include an additional 77,187 shares granted under the 1992 Stock Option
Plan that are not currently exercisable.
(8) Includes 60,250 shares which Ms. Candioty has the right to acquire upon the
exercise of options granted under the Company's 1992 Stock Option Plan. Does
not include an additional 66,000 shares granted under the 1992 Stock Option
Plan that are not currently exercisable.
(9) Includes 20,000 shares which Ms. Zurzolo has the right to acquire upon the
exercise of options granted under the Company's 1992 Stock Option Plan. Does
not include an additional 100,000 shares granted under the 1992 Stock Option
Plan that are not currently exercisable.
(10) Includes 573,751 shares that the Company's executive officers and outside
directors have the right to acquire upon the exercise of options granted
under the Company's stock option plans.
(11) Named Executive Officer of the Company.
The address of Wellington Management Company, LLP is 75 State Street,
Boston, Massachusetts 02109. The address of American Express Financial
Corporation is IDS Tower 10, Minneapolis, Minnesota 55440. 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. Messrs. Kransdorf and
White are serving terms that expire at the Annual Meeting of Stockholders to be
held in 2000. Messrs. Gregory and Overton are serving terms that will expire at
the Annual Meeting of Stockholders to be held in 2001 and 2002, respectively.
The Board of Directors currently has a vacancy for one position. At each Annual
Meeting of Stockholders, directors are elected for a full term of three years to
succeed those directors whose terms are expiring. Company officers are elected
annually by the Board of Directors and serve at the Board's discretion.
The Board of Directors has nominated Messrs. Kransdorf and White for
reelection to the Board of Directors for three-year terms that will expire at
the Annual Meeting of Stockholders to be held in the year 2003. The nominees
have indicated their willingness to serve and, unless otherwise instructed,
proxies will be voted for the election of such nominees unless instructions are
given on the proxy to withhold authority to vote for them.
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 Annual Meeting;
provided that, if in the event that notice or prior public disclosure of the
date of the Annual 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
3
<PAGE>
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.
The following table sets forth certain information with respect to the
nominees for director and the other directors of the Company.
THE BOARD OF DIRECTORS
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ---- --------------------------------------------------------
<S> <C>
David Overton............................. David Overton, age 54, 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 64, became a director of the
Company upon the consummation of its initial public
offering in September 1992. Mr. Gregory has over 40
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 JJ North's
Grand Buffets, a buffet restaurant chain.
Jerome I. Kransdorf....................... Jerome I. Kransdorf, age 61, became a director of the
Company in March 1997. Mr. Kransdorf has over 40 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 62, 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. All of the members of the Audit and Compensation
Committees are directors independent of management who are not and never have
been officers or employees of the Company.
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 Messrs. Gregory, Kransdorf and White. During fiscal
1999, the Audit Committee held two meetings.
The Compensation Committee reviews and recommends to the Board of Directors
the levels of compensation for the Company's Named Executive Officers and
approves and administrates the Company's incentive compensation programs,
including but not limited to the Company's stock option plans and the
Performance Incentive Plan. The members of the Compensation Committee are
Messrs. Gregory, Kransdorf and White. During fiscal 1999, the Compensation
Committee held two meetings.
MEETINGS, ATTENDANCE AND FEES
During fiscal 1999, 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. Messrs. Gregory and 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 Company's 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 27,500 shares of Common Stock under the 1997 Director Plan. These
options have exercise prices ranging from $13.75 to $27.00 per share, are fully
exercisable on the date of grant and expire 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 their
5
<PAGE>
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 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
1999, 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 the Company's chief executive officer and the
Company's four most highly compensated executive officers ("Named Executive
Officers") at December 28, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ---------------------
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) OPTIONS(#)(3)
- --------------------------- -------- --------- ----------- ------------------ ---------------------
<S> <C> <C> <C> <C> <C>
David Overton ....................... 1999 400,000 160,000 3,170 30,000
Chairman of the Board, 1998 400,000 -- 2,865 30,000
President and 1997 350,000 -- 4,765 30,000
Chief Executive Officer
Gerald W. Deitchle .................. 1999 275,000 96,250 6,196 25,000
Executive Vice President and 1998 240,000 -- 2,802 22,500
Chief Financial Officer 1997 235,000 -- 1,913 22,500
Linda J. Candioty ................... 1999 220,000 77,000 10,391 20,000
Executive Vice President 1998 210,000 -- 10,800 22,500
and Secretary 1997 205,000 -- 10,800 22,500
Debby R. Zurzolo .................... 1999 156,577 51,750 8,172 100,000
Senior Vice President 1998 -- -- -- --
and General Counsel(4) 1997 -- -- -- --
</TABLE>
- ------------------------
(1) Bonuses were awarded pursuant to the Company's Amended Performance Incentive
Plan for fiscal 1999. This incentive plan was adopted in fiscal 1998;
however, no bonuses were awarded for that year.
(2) Other annual compensation includes automobile allowances or the value of the
personal use of Company-provided automobiles, and also includes the
Company's matching contribution with respect to the Executive Savings Plan
(a nonqualified deferred compensation plan that was initially activated in
October 1999).
(3) Stock options were granted under the Company's 1992 Performance Employee
Stock Option Plan (the "1992 Stock Option Plan").
(4) Ms. Zurzolo joined the Company in April 1999. Amounts presented for her
salary and bonus reflect a partial year of employment.
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 1999.
<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 7% 21.56 1/14/2009 406,800 1,030,800
Gerald W. Deitchle... 25,000 6% 21.56 1/14/2009 339,000 859,000
Linda J. Candioty.... 20,000 5% 21.56 1/14/2009 271,200 687,200
Debby R. Zurzolo..... 100,000 23% 19.91 3/08/2009 1,356,000 3,436,000
</TABLE>
- ------------------------
(1) These options were granted pursuant to the 1992 Stock Option Plan.
(2) Market value on the date of grant.
(3) Assumed annual rates of stock price appreciation are set by the SEC and are
not a forecast of future appreciation. The amounts shown are pre-tax and
also assume that the options will be held throughout their entire term.
Actual realized value, if any, will be dependent on the future price 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 1999, 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............... -- -- 191,625 54,000 4,182,146 679,512
Gerald W. Deitchle.......... -- -- 104,189 106,374 1,750,175 1,687,363
Linda J. Candioty........... -- -- 45,750 60,500 949,383 892,302
Debby R. Zurzolo............ -- -- -- 100,000 -- 1,265,700
</TABLE>
- ------------------------
(1) These options were granted pursuant to the 1992 Stock Option Plan. Of the
54,000 unexercisable options for Mr. Overton at the end of fiscal 1999,
24,000 vest 25% per year with the final portion vesting on January 23, 2003,
and 30,000 vest 33% per year with the final portion vesting on January 14,
2002. The unexercisable options for Mr. Deitchle vest 20% to 60% per year,
with the final portion vesting on January 23, 2003. The unexercisable
options for Ms. Candioty vest 20% to 100% per year with the final portion
vesting on January 23, 2003. The unexercisable options for Ms. Zurzolo vest
20% per year with the final portion vesting on March 8, 2004. The options
have a term of ten years. 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 ($32.563) of the
Company's Common Stock on December 28, 1999, the last trading day of the
Company's 1999 fiscal year, and the exercise price of the options.
EMPLOYMENT AGREEMENTS
In April 1998, the Company entered into a three-year employment agreement
with David Overton, the Company's Chief Executive Officer. The agreement
provides Mr. Overton with an annual base salary ($420,000 for fiscal 2000) which
is subject to increase from time to time by the Board of Directors. Mr. Overton
is entitled to participate equitably with other 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 Executive Vice President and Chief Financial Officer.
Under this agreement, Mr. Deitchle is provided with an annual base salary
($295,000 for fiscal 2000) which is subject to increase from time to time by the
Board of Directors. Mr. Deitchle is entitled to other specified benefits such as
participation in the Company's executive-level incentive plan, an automobile
allowance, reimbursement of business expenses and health and life insurance
benefits. 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 ($230,000 for
fiscal 2000) which is subject to increase from time to time by the Board of
Directors. Ms. Candioty is entitled to other specified benefits such as
participation in the Company's executive-level incentive plans, 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
9
<PAGE>
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 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 April 1999, the Company entered into an employment agreement with Debby
R. Zurzolo, the Company's Senior Vice President and General Counsel. Under this
agreement, Ms. Zurzolo is provided with an annual base salary, currently
$230,000, which is subject to increase from time to time by the Board of
Directors. Ms. Zurzolo is entitled to other specified benefits such as an
automobile allowance, reimbursement of business expenses and health and related
insurance benefits. The agreement may be terminated without cause by
Ms. Zurzolo with 90 days written notice, and may be terminated by the Company at
any time without prior notice. If the Company terminates Ms. Zurzolo's
employment without cause (as defined in the agreement), she will be entitled to
receive an amount equal to two times her annual base salary then 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 granted to her under the Company's stock option plans according to
a predetermined schedule in the agreement.
PERFORMANCE INCENTIVE PLAN
The Board of Directors adopted the Company's Amended Performance Incentive
Plan (the "Incentive Plan") during fiscal 1998. All 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 income from operations, 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 salary. Actual bonuses are 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 responsibilities with the Company. No cash
bonuses were awarded under the Incentive Plan for fiscal 1998, as the threshold
financial goals were not achieved. Targeted financial goals were achieved for
fiscal 1999. Financial objectives have been set for fiscal 2000 that are linked
to the attainment of a predetermined income from operations goal established by
the Compensation Committee and approved by the Board.
EXECUTIVE SAVINGS PLAN
Effective October 1999, the Company adopted the Executive Savings Plan (the
"ESP") in order to provide a tax-advantaged savings vehicle to help it attract,
retain and motivate executives with the essential qualifications to successfully
manage the Company's continuing growth. The ESP is a nonqualified deferred
compensation plan for highly compensated Company employees as defined in the ESP
and who are otherwise ineligible for participation in the Company's qualified
defined contribution savings plan under section 401(k) of the Internal Revenue
Code. The ESP allows participating executives to defer the receipt of up to 15%
of their salaries and 100% of their eligible bonuses. The Company currently
matches 25% of the first 4% of annual salaries deferred by participating
employees. The Company's matching contribution vests 25% annually beginning with
the end of the employee's second year of participation in the ESP. Employee
deferrals and the Company match are deposited into a "rabbi" trust established
by the Company, and the funds are generally invested in individual variable life
insurance contracts owned by the Company that are specifically designed to
informally fund executive savings plans of this nature.
10
<PAGE>
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 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; the Amended
Performance Incentive Plan; and the Executive Savings Plan.
There are three key elements in the Company's executive compensation
program, all determined by individual and corporate performance:
- Annual base salary;
- 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
annual incentive and deferred compensation programs; and
- To encourage future performance through the use of long-term incentives
such as stock options that align the interests of employees and
stockholders.
ANNUAL BASE SALARIES
Annually, the Committee establishes the base salaries to be paid to the
Company's 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 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.
11
<PAGE>
Participants are assigned threshold, target and maximum cash bonus levels as a
percentage of their respective base salaries based upon their levels of
responsibilities with the Company. Financial objectives have been set for fiscal
2000 that are linked to the attainment of a predetermined income from operations
goal established by the Compensation 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 Stock Option Plan") concurrent with the Company's initial public
offering. The 1992 Stock Option Plan was approved by stockholders at the 1993
Annual Meeting of Stockholders. An amendment to the 1992 Stock 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 Stock Option Plan authorizes the Committee to
award stock options to key 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 that
specified an annual base salary of $350,000. The Company and Mr. Overton renewed
the agreement from September 1995 through January 1998 with no increase in
annual base salary. In January 1998, the Compensation 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 remained unchanged during
fiscal 1999. In January 2000, the Compensation Committee again reviewed
Mr. Overton's individual performance and continuing contributions to the
Company's overall growth and increased his annual base salary to $420,000. The
Committee also granted Mr. Overton an option to purchase an additional 30,000
shares of the Company's Common Stock under the 1992 Stock 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 Nasdaq Composite-Registered Trademark- (US) Index and the Nation's
Restaurant News Stock 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,
NASDAQ COMPOSITE-REGISTERED TRADEMARK- (US) INDEX AND NATION'S RESTAURANT NEWS
STOCK INDEX
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
The Cheesecake Factory Incorporated $100.00 $136.51 $115.05 $193.65 $282.44 $333.33
S&P Midcap Restaurant Index $100.00 $ 98.22 $ 93.86 $102.61 $125.56 $105.59
Nasdaq Composite-Registered Trademark-
(US) Index $100.00 $141.34 $173.89 $213.07 $300.25 $542.44
Nation's Restaurant News Stock Index $100.00 $148.65 $152.81 $152.95 $205.30 $195.89
</TABLE>
13
<PAGE>
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
OF THE CHEESECAKE FACTORY INCORPORATED
TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
On March 7, 2000, the Board of Directors approved, subject to stockholder
approval, an amendment to the Company's Certificate of Incorporation to increase
the maximum authorized number of shares of Common Stock, $0.01 par value, from
30,000,000 to 150,000,000. After taking into account the current number of
outstanding shares of the Company's Common Stock (20,280,288 shares as of
March 9, 2000), the Board of Directors believes that the current limit of
30,000,000 authorized shares is inadequate for the future needs of the Company.
Although the Company has no present plans, agreements or understandings for the
issuance of any of the additional authorized shares, the Board of Directors
believes that the recommended increase in the number of authorized shares will
give it the flexibility to timely meet the equity capital requirements of the
Company's business in the future. If the Certificate of Incorporation is
amended, the additional shares would be available for the declaration of stock
splits, stock dividends and for any other proper corporate purpose.
If the proposed amendment is adopted, the additional shares of Common Stock
to be authorized would thereafter be subject to issuance from time to time by
the Board of Directors without stockholder approval, and without any preemptive
purchase rights by the stockholders. The issuance of such authorized shares of
Common Stock may have a dilutive effect on the equity interests of the Company's
then existing stockholders. The overall effect of an issuance of additional
shares of Common Stock and the existence of certain provisions contained in the
Company's Certificate of Incorporation and By-laws may be to render more
difficult the accomplishment of any attempted merger, takeover or other change
in control affecting the Company and/or the removal of the Company's incumbent
Board of Directors and management. However, the Board of Directors does not view
the proposed increase in the maximum number of authorized shares of Common Stock
as an anti-takeover measure.
The affirmative vote of the holders of a majority of the votes entitled to
be cast at the Annual Meeting and held by the holders of the issued and
outstanding shares of Common Stock, voting as a single class, is required to
adopt the proposed amendment increasing the number of authorized shares of
Common Stock. If approved by the stockholders, the amendment will become
effective upon the filing of the amendment with the Secretary of the State of
Delaware. The Board of Directors recommends that the stockholders vote FOR the
adoption of such amendment. It is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby in favor of adoption
unless otherwise instructed therein.
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP served as the Company's independent
accountants for fiscal 1999. 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.
14
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Any stockholder proposal intended to be presented at the Company's 2001
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, 2000.
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 28, 1999 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE ADDRESSED TO: JANE VALLAIRE,
MANAGER, INVESTOR RELATIONS AT THE CHEESECAKE FACTORY INCORPORATED, 26950 AGOURA
ROAD, CALABASAS HILLS, CA 91301.
By Order of the Board of Directors
Linda J. Candioty
Corporate Secretary
15
<PAGE>
YOUR VOTE IS IMPORTANT TO US.
YOU CAN VOTE BY MAIL, OR YOU CAN VOTE
BY TELEPHONE OR THE INTERNET.
<TABLE>
VOTE BY TELEPHONE SUBMIT YOUR PROXY BY INTERNET
- --------------------------------------------- ---------------------------------------------
<S> <C>
It's fast, convenient and your vote is It's fast, convenient and your vote is
immediately confirmed and posted. immediately confirmed and posted.
Using a touch tone telephone, call toll-free Go to the website and
and follow these four easy steps: follow these four easy steps:
1. Read the accompanying Proxy Statement and 1. Read the accompanying Proxy Statement and
voting instruction form. voting instruction form.
2. Call the toll-free number 1-800-690-6903. 2. Go to website: www.proxyvote.com.
3. Enter your 12-digit Control Number 3. Enter your 12-digit Control Number
located on your voting instruction form. located on your voting instruction form.
4. Follow the simple recorded instructions. 4. Follow the simple instructions.
</TABLE>
PLEASE DO NOT RETURN YOUR VOTING FORM IF YOU ARE VOTING BY TELEPHONE OR
INTERNET.
THANK YOU FOR YOUR PROXY SUBMISSION.
- --------------------------------------------------------------------------------
ADMITTANCE SLIP
THE CHEESECAKE FACTORY INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
<S> <C>
PLACE: THE CHEESECAKE
FACTORY-REGISTERED TRADEMARK-
605 NORTH HARBOR DRIVE
REDONDO BEACH, CALIFORNIA
TIME: MAY 30, 2000,
10:00 A.M. PST
</TABLE>
PLEASE PRESENT THIS COUPON AT THE ENTRANCE TO THE MEETING ROOM. YOU MAY
BRING GUESTS, BUT WE RESERVE THE RIGHT TO LIMIT THE NUMBER OF YOUR GUESTS IN
ORDER TO ENSURE ADEQUATE SEATING FOR STOCKHOLDERS. CAMCORDERS OR PHOTOGRAPHY
EQUIPMENT OF ANY KIND ARE EXPRESSLY PROHIBITED AT THE ANNUAL MEETING.
THE CHEESECAKE FACTORY INCORPORATED
26950 AGOURA ROAD - CALABASAS HILLS, CA 91301
TELEPHONE (818) 871-3000
WWW.THECHEESECAKEFACTORY.COM
<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 30, 2000, at 10:00 A.M. at The Cheesecake
Factory-Registered Trademark- 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 10, 2000 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 Items 1 and 2 and the
proposed amendment set forth in Item 3 below.
1. ELECTION OF JEROME I. KRANSDORF AS DIRECTOR
/ / FOR the nominee listed above for the term set forth in the Proxy
Statement.
/ / WITHHOLD AUTHORITY to vote for the nominee listed above.
2. ELECTION OF WAYNE H. WHITE AS DIRECTOR
/ / FOR the nominee listed above for the term set forth in the Proxy
Statement.
/ / WITHHOLD AUTHORITY to vote for the nominee listed above.
3. APPROVAL OF AN AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION to
increase the maximum authorized number of shares of Common Stock from
30,000,000 to 150,000,000.
/ / FOR the amendment as set forth in the Proxy Statement.
/ / AGAINST
/ / ABSTAIN
<PAGE>
(CONTINUED FROM THE OTHER SIDE)
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
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 Items 1 and 2 and the proposed amendment in Item 3. All proxies heretofore
given by the undersigned are hereby revoked. Receipt of the Proxy Statement
dated April 17, 2000 is acknowledged.
Please mark, sign, date and return this Proxy in the accompanying prepaid
envelope.
Dated: ____________________, 2000.
__________________________________
(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.
