<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
CKE RESTAURANTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
CKE RESTAURANTS, INC.
401 WEST CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 2000
To the Stockholders of CKE Restaurants, Inc.:
The Annual Meeting of Stockholders of CKE Restaurants, Inc. ("CKE" or the
"Company"), will be held at the Irvine Marriott, 18000 Von Karman Avenue,
Irvine, California, on Tuesday, June 13, 2000 at 9:30 a.m. for the following
purposes:
1. To elect two directors, each for a term of three years;
2. To consider and vote upon a proposal to approve an amendment to CKE's
1999 Stock Incentive Plan (the "Plan"); and
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 21, 2000 will
be entitled to notice of and to vote at the meeting or any postponement or
adjournment thereof.
By Order of the Board of Directors,
/s/ Andrew F. Puzder
Andrew F. Puzder,
Secretary
Anaheim, California
May 8, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, TO ASSURE THAT YOUR SHARES WILL
BE VOTED AT THE MEETING, YOU ARE REQUESTED TO SIGN THE ATTACHED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. NO ADDITIONAL
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING,
YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE> 3
CKE RESTAURANTS, INC.
401 WEST CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 2000
------------------------
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of CKE Restaurants, Inc., a Delaware
corporation ("CKE" or the "Company"), for use at the Annual Meeting of
Stockholders to be held at the Irvine Marriott, 18000 Von Karman Avenue, Irvine,
California on Tuesday, June 13, 2000 at 9:30 a.m. (the "Meeting"), and at any
postponements or adjournments thereof.
This Proxy Statement and accompanying proxy card are first being mailed to
stockholders on or about May 8, 2000.
SOLICITATION OF PROXIES
At the Meeting, the stockholders of CKE will be asked (1) to vote upon the
election of two directors, each for a term of three years, (2) to approve an
amendment to the CKE 1999 Stock Incentive Plan, and (3) to act upon such other
matters as may properly come before the Meeting or any postponements or
adjournments thereof. CKE's Board of Directors is asking for your proxy for use
at the Meeting. All shares of CKE Common Stock represented by any properly
executed proxy that is not revoked will be voted at the Meeting in accordance
with the instructions indicated in such proxy. If no instructions are marked on
a properly executed returned proxy, the shares represented thereby will be voted
FOR the election of the director nominees listed below and FOR the proposed
amendment to the CKE 1999 Stock Incentive Plan. Although management does not
know of any other matter to be acted upon at the Meeting, shares represented by
valid proxies will be voted by the persons named on the Proxy Card in accordance
with their best judgment with respect to any other matters that may properly
come before the Meeting. A stockholder giving a proxy may revoke it at any time
before it is exercised by filing with CKE's Secretary either a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
Meeting and voting in person. Attendance at the meeting will not, in itself,
constitute revocation of a previously granted proxy.
The cost of solicitation of proxies in the enclosed form will be paid by
CKE. In addition, following the mailing of this Proxy Statement, directors,
officers and regular employees of CKE may solicit proxies by mail, telephone,
telegraph or personal interview. Such persons will receive no additional
compensation for such services. Brokerage houses and other nominees, fiduciaries
and custodians nominally holding shares of CKE Common Stock of record will be
requested to forward proxy soliciting material to the beneficial owners of such
shares and will be reimbursed by CKE for their charges and expenses in
connection therewith. In addition, CKE may use the services of individuals or
companies it does not regularly employ in connection with the solicitation of
proxies if management determines that it is advisable to do so, at an estimated
cost of $5,000 plus out-of-pocket expenses.
RECORD DATE AND VOTING
Only holders of CKE Common Stock of record at the close of business on
April 21, 2000 (the "Record Date") are entitled to notice of, and to vote at,
the Meeting. There were 50,501,421 shares of CKE Common Stock outstanding on the
Record Date. The presence at the Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on the Record Date will
constitute a quorum, and abstentions and broker non-votes will be included in
the calculation of the number of shares considered to be present at the Meeting.
On all matters to come before the Meeting, each holder of Common Stock will be
1
<PAGE> 4
entitled to one vote per share, except that voting for directors may be
cumulative. In the election of directors, holders of Common Stock are entitled
to as many votes as shall equal the number of votes that he or she would be
entitled to cast (but for the cumulative voting provision) multiplied by the
number of directors to be elected, and may cast all of such votes for a single
director or may distribute them among the number to be voted for, or for any two
or more of them, as he or she may see fit.
Election of directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of Proposal 2 will
require the affirmative vote of the majority of shares represented in person or
by proxy at the Meeting and entitled to vote on such matters. A proxy may
indicate that all or a portion of the shares represented by such proxy are not
being voted with respect to a specific proposal. This could occur, for example,
when a broker is not permitted to vote shares held in street name on a proposal
in the absence of instructions from the beneficial owner. Neither broker
non-votes nor abstentions will have any effect on the vote required to elect
directors. With respect to Proposal 2, abstentions will be treated as shares
that are present and entitled to vote for purposes of determining a quorum and
will have the effect of a vote against the proposal. Broker non-votes will be
considered as present for quorum purposes, but not as shares entitled to vote
with respect to Proposal 2. Accordingly, broker non-votes will have no effect on
such matters.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of CKE is divided into three classes, as nearly
equal in number as possible. Each class serves for a period of three years, with
the terms of office of the respective classes expiring in successive years. The
foregoing notwithstanding, directors serve until their successors have been duly
elected and qualified or until they resign, become disqualified or disabled, or
are otherwise removed. The class of directors whose term expires as of the date
of the Meeting consists of William P. Foley II and Carl N. Karcher.
The proxies solicited hereby are intended to be voted for the nominees
whose names are listed below. Discretionary authority to cumulate votes
represented by proxies is solicited by the Board of Directors because, in the
event nominations are made in opposition to the nominees of the Board of
Directors, it is the intention of the persons named in the accompanying Proxy
Card to cumulate votes represented by proxies for individual nominees in
accordance with their best judgment in order to assure the election of as many
of the Board's nominees as possible. The two nominees are presently directors
and have indicated their willingness to continue to serve as directors, if
elected. The persons named in the proxy will have discretionary authority to
vote for others if any nominee becomes unable or unwilling to serve prior to the
Meeting. To the knowledge of CKE, both nominees are and will be able to serve.
INFORMATION CONCERNING NOMINEES AND OTHER DIRECTORS
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE PRINCIPAL OCCUPATION DIRECTOR OTHER CORPORATE DIRECTORSHIPS
---- --- -------------------- ---------- -----------------------------
<S> <C> <C> <C> <C>
William P. Foley II... 55 Chairman of the Board 1993 Checkers Drive-In Restaurants,
and Chief Executive Inc.; Santa Barbara Restaurant
Officer, Fidelity Group, Inc.; Pierre Foods, Inc.;
National Financial, Micro General Corporation;
Inc.; Chairman of the Miravant Medical Technologies,
Board, CKE Inc.; American National
Financial, Inc.
Carl N. Karcher....... 83 Chairman Emeritus, CKE 1966 --
</TABLE>
WILLIAM P. FOLEY II became Chairman of the Board of Directors in March 1994
and served as Chief Executive Officer from October 1994 until March 2000. Since
1981, Mr. Foley has been Chairman of the Board of Directors, President (until
January 1995) and Chief Executive Officer of Fidelity National Financial, Inc.
("FNF"). Mr. Foley also serves as Chairman of the Boards of Santa Barbara
Restaurant Group, Inc.,
2
<PAGE> 5
("SBRG"), and Checkers Drive-In Restaurants, Inc. ("Checkers"), and as a member
of the Boards of Directors of Pierre Foods, Inc., American National Financial,
Inc. ("ANFI"), Micro General Corporation and Miravant Medical Technologies, Inc.
CARL N. KARCHER, the Company's founder, purchased his first hot dog stand
on July 17, 1941 and has been developing the Carl's Jr. concept since that time.
He first became a director of CKE in 1966 and has served as Chairman Emeritus
since January 1994. He was Chairman of the Board of CKE until October 1993 and
Chief Executive Officer until December 1992. Prior to 1980, he served as
President of CKE. Carl N. Karcher is Carl L. Karcher's father.
THE BOARD OF DIRECTORS OF CKE RECOMMENDS A VOTE "FOR" THE ELECTION OF BOTH
OF THE ABOVE NOMINEES.
DIRECTORS CONTINUING TO SERVE UNTIL 2001
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE PRINCIPAL OCCUPATION DIRECTOR OTHER CORPORATE DIRECTORSHIPS
---- --- -------------------- ---------- -----------------------------
<S> <C> <C> <C> <C>
Carl L. Karcher.......... 51 President, CLK, Inc. 1992 --
Frank P. Willey.......... 46 Vice Chairman, FNF 1994 FNF; Ugly Duckling Holdings,
Inc.; SBRG
Byron Allumbaugh......... 68 Business Consultant 1996 El Paso Energy Company;
Ultramar Diamond Shamrock
Incorporated
</TABLE>
CARL L. KARCHER is the President of CLK, Inc., a Carl's Jr. franchisee. Mr.
Karcher has been a Carl's Jr. franchisee since May 1985. For more than 17 years
prior to that time, Mr. Karcher was employed by CKE in several capacities,
including Vice President, Manufacturing and Distribution. Mr. Karcher first
became a director in May 1992. Carl L. Karcher is Carl N. Karcher's son.
FRANK P. WILLEY became Vice Chairman of FNF in March 2000 and served as
President from January 1995 to March 2000. Mr. Willey has been a director and
Executive Vice President of FNF since February 1984. Mr. Willey was General
Counsel of FNF from 1984 to January 1995. Mr. Willey also serves on the Boards
of Directors of Ugly Duckling Holdings, Inc. and SBRG.
BYRON ALLUMBAUGH retired as Chairman of the Board of Ralphs Grocery Company
on January 31, 1997, where he held numerous management positions from 1958,
serving as Chairman of the Board and Chief Executive Officer from 1976 to 1995,
and Chairman of the Board from 1995 until his retirement. Currently a
self-employed business consultant, Mr. Allumbaugh is also a member of the Boards
of Directors of El Paso Energy Company and Ultramar Diamond Shamrock
Incorporated.
DIRECTORS CONTINUING TO SERVE UNTIL 2002
<TABLE>
<CAPTION>
FIRST YEAR
BECAME
NAME AGE PRINCIPAL OCCUPATION DIRECTOR OTHER CORPORATE DIRECTORSHIPS
---- --- -------------------- ---------- -----------------------------
<S> <C> <C> <C> <C>
Peter Churm............ 74 Chairman Emeritus, 1979 Diedrichs Coffee, Inc.
Furon Company
Daniel D. (Ron) Lane... 65 Chairman and Chief 1993 FNF
Executive Officer,
Lane/Kuhn Pacific, Inc.
C. Thomas Thompson..... 50 Chief Executive Officer 2000 SBRG; Checkers
and President, CKE
</TABLE>
PETER CHURM was Chairman of the Board of Furon Company from May 1980
through February 1992 and was President of that company for more than 16 years.
Since February 1992, he has been Chairman Emeritus and a member of the Board of
Directors of Furon Company. Mr. Churm is also a member of the Board of Directors
of Diedrichs Coffee, Inc.
3
<PAGE> 6
DANIEL D. (RON) LANE became Vice Chairman of the Board of CKE in October
1994. Since February 1983, he has been a principal, Chairman and Chief Executive
Officer of Lane/Kuhn Pacific, Inc. Mr. Lane is a director of FNF.
C. THOMAS THOMPSON became Chief Executive Officer of CKE in March 2000.
Since October 1994, he has been President and from October 1994 through March
2000 Chief Operating Officer of CKE. Mr. Thompson is a partner in TWM
Industries, a Carl's Jr. franchisee. Mr. Thompson has been a Carl's Jr.
franchisee since December 1984. Mr. Thompson is also a member of the Boards of
Directors of SBRG and Checkers.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, comprised of Messrs.
Foley and Lane, is empowered by the Board of Directors to take all actions that
may otherwise be taken by the Board of Directors, to the extent permitted by
law. The Independent Committee of the Board of Directors, comprised of Byron
Allumbaugh, Peter Churm and Frank P. Willey, was formed by the Board of
Directors to review and evaluate certain transactions involving the sale of
restaurants to investor groups comprised of, among others, directors and
executive officers of CKE. In addition to the Executive Committee and
Independent Committee, the Board of Directors has three standing committees: the
Audit Committee, the Compensation Committee and the Franchise Committee. The
Board does not have a nominating committee or other committee performing similar
functions. The Audit Committee, whose current members are Messrs. Churm, Willey
(Chairman), and Allumbaugh, monitors CKE's basic accounting policies and their
related system of internal control, reviews CKE's audit and management reports
and makes recommendations regarding the appointment of independent auditors. The
Compensation Committee, whose current members are Messrs. Churm (Chairman) and
Willey, considers the hiring and election of corporate officers, salary and
incentive compensation policies for officers and directors, and the granting of
stock options to employees. The Franchise Committee, whose current members are
Messrs. Foley, Willey and Lane, considers potential repurchases of franchised
restaurants.
During fiscal 2000, the Board of Directors held seven meetings, the
Executive Committee held no meetings, the Independent Committee held five
meetings, the Audit Committee held one meeting, the Compensation Committee held
two meetings and the Franchise Committee held no meetings. During fiscal 2000,
no director attended fewer than 75% of the aggregate meetings of the Board of
Directors and the committee or committees on which he served.
STOCKHOLDER NOMINATIONS
The Bylaws of CKE provide that any stockholder entitled to vote for the
election of directors at a meeting may nominate persons for election as
directors only if timely written notice of such stockholder's intent to make
such nomination is given, either by personal delivery or United States mail,
postage prepaid, to the Secretary, CKE Restaurants, Inc., P.O. Box 4349,
Anaheim, California 92803-4349. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the address provided not later than 90
days in advance of such meeting, or, if later, the seventh day following the
first public announcement of the date of such meeting. A stockholder's notice to
the Secretary must set forth: (i) the name and address of the stockholder who
intends to make the nomination and of the person or persons to be nominated,
(ii) a representation that the stockholder is a holder of record of CKE's Common
Stock entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting and nominate the person or persons specified in the notice,
(iii) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder, (iv) such other information relating to the person that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to the Securities Exchange Act of 1934, as amended, and (v) the consent
of each nominee to serve as a director of CKE if so elected. CKE may require the
stockholders making such nomination to furnish such other information as may be
reasonably requested by CKE.
4
<PAGE> 7
COMPENSATION OF DIRECTORS
For their services as directors in fiscal 2000, each non-employee director
received a base annual fee of $18,000 for attendance at the quarterly Board
meetings. For attendance at each special Board meeting (meetings other than
quarterly Board meetings), each non-employee director received a fee of $1,000.
For attendance at Board Committee meetings which are held on a day other than
the date of a scheduled Board meeting, each non-employee director received a fee
of $1,000. For participation in telephonic Board meetings or Board Committee
meetings, each non-employee director received a fee of $500. Each non-employee
director is expected to receive a fee of $18,000 in fiscal 2001 and $1,000 ($500
for telephonic meetings) for each Board meeting or Board Committee meeting other
than regular meetings attended in fiscal 2001.
PROPOSAL 2
APPROVAL OF THE AMENDMENT TO
THE CKE RESTAURANTS, INC.
1999 STOCK INCENTIVE PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval, an amendment to the CKE Restaurants, Inc. 1999 Stock Incentive Plan
(the "Plan") to increase the number of shares of Common Stock which may be
granted under the Plan from an aggregate of 4,650,000 to an aggregate of
6,650,000 (the "Amendment"). The Board of Directors believes that the Plan will
enhance the ability of the Company or an Affiliated Company (as defined in the
Plan) to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the business of the Company or an
Affiliated Company largely depends, by providing them with an opportunity to
participate in the ownership of the Company and thereby have an interest in the
success and increased value of the Company. The issuance of the newly authorized
shares of Common Stock as stock options will, upon exercise by the holder, have
a dilutive effect on the Company's outstanding shares of Common Stock.
VOTE REQUIRED FOR APPROVAL OF THE AMENDMENT
Approval of a majority of the shares of Common Stock present or represented
by proxy and entitled to vote at the Annual Meeting is required to approve the
Amendment. Broker non-votes with respect to this matter will not be deemed to
have been cast either "for" or "against" the matter, although they will be
counted in determining if a quorum is present. Proxies marked "abstain" or a
vote to abstain by a stockholder present in person at the Annual Meeting will
have the same legal effect as a vote "against" the matter because it represents
a share present or represented at the meeting and entitled to vote, thereby
increasing the number of affirmative votes required to approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT.
DESCRIPTION OF THE PLAN
The following description of the principal features of the Plan, as
amended, subject to stockholder approval, is qualified in its entirety by
reference to the text of the Plan, a restated copy of which is attached to this
Proxy Statement as Appendix A.
The Plan authorizes up to 3,500,000 shares (assuming stockholder approval
of this Proposal 2) of Common Stock, plus, an additional 350,000 shares of
Common Stock on the date of each annual meeting of the stockholders of the
Company, for issuance under the terms of the Plan. The authorized number of
shares is subject to adjustment in the event of stock splits, stock dividends or
certain other similar changes in the capital structure of the Company. The Plan
provides for grants of "incentive stock options" as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options and rights to purchase shares of Common Stock ("Purchase Rights").
Incentive stock options, nonqualified stock options and Purchase Rights may be
granted to employees of the Company and its affiliated companies.
5
<PAGE> 8
Nonqualified stock options and Purchase Rights may be granted to employees, or
prospective employees in connection with their hiring, retention or otherwise,
of the Company and its affiliated companies, non-employee directors and
officers, consultants and other service providers; provided, however, that no
such nonqualified stock options or Purchase Rights granted to prospective
employees shall vest before the employee first performs services for the Company
or its affiliated companies. All of the Company's employees and non-employee
directors are eligible to participate in the Plan.
The Board of Directors, or a committee consisting of two or more members of
the Board of Directors, administers the Plan (the "Compensation Committee"). The
Compensation Committee has full power and authority to interpret the Plan,
select the recipients of options and Purchase Rights, determine and authorize
the type, terms and conditions of, including vesting provisions, and the number
of shares subject to, grants under the Plan, and adopt, amend and rescind rules
relating to the Plan. The term of options may not exceed 10 years from the date
of grant (5 years in the case of an incentive stock option granted to a person
who owns more than 10% of the combined voting power of all classes of stock of
the Company). The option exercise price for each share granted pursuant to an
incentive stock option may not be less than 100% of the fair market value of a
share of Common Stock at the time such option is granted (110% of fair market
value in the case of an incentive stock option granted to a person who owns more
than 10% of the combined voting power of all classes of stock of the Company).
There is no minimum purchase price for shares of Common Stock purchased pursuant
to a Purchase Right, and any such purchase price shall be determined by the
Compensation Committee. The maximum number of shares for which options or
Purchase Rights may be granted to any one person during any one calendar year
under the Plan is 500,000 and in no event shall the aggregate number of shares
subject to incentive stock options exceed 6,650,000 (assuming stockholder
approval of this Proposal 2). The aggregate fair market value of the Common
Stock (determined as of the date of grant) with respect to which incentive stock
options granted under the Plan or any other stock option plan of the Company
become exercisable for the first time by any optionee during any calendar year
may not exceed $100,000.
The option price of an incentive stock option or nonqualified stock option
is payable in full upon exercise, and the purchase price of stock purchased
pursuant to a Purchase Right must be paid in full upon the acceptance of the
Purchase Right. Payment of the option price upon exercise of a stock option or
for shares purchased pursuant to a Purchase Right may be made in cash, by check,
by the delivery of shares of Common Stock (valued at their fair market value as
of the date of the exercise of an option or Purchase Right), by the optionee's
or purchaser's promissory note in a form and on terms acceptable to the
Compensation Committee, by the cancellation of indebtedness of the Company to
the optionee or purchaser, by the waiver of compensation due or accrued to the
optionee or purchaser for services rendered, or by any combination of the
foregoing methods of payment. In addition, the option price for options granted
under the Plan may be made by a "same day sale" commitment from the optionee and
a broker-dealer that is a member of the National Association of Securities
Dealers, Inc. ("NASD Dealer") whereby the optionee irrevocably elects to
exercise his or her option and to sell a portion of the shares so purchased to
pay for the exercise price and whereby the NASD Dealer irrevocably commits upon
receipt of such shares to forward the exercise price directly to the Company, by
a "margin" commitment from the optionee and an NASD Dealer whereby the optionee
irrevocably elects to exercise his or her option and to pledge the shares so
purchased to the NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the exercise price
directly to the Company, or any combination of the foregoing methods of payment.
Except as otherwise provided by the Compensation Committee, neither options
nor Purchase Rights granted under the Plan may be transferred other than by will
or by the laws of descent and distribution. Shares purchased pursuant to
Purchase Rights generally shall be restricted for a period of time, during which
such shares may be repurchased by the Company, and therefore these shares may
not be sold, assigned, pledged or transferred until such time as the Company no
longer has the right to reacquire any such shares.
In the event that the outstanding shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of merger, consolidation or
reorganization in which the Company is the surviving corporation, or of a
recapitalization,
6
<PAGE> 9
stock split, combination of shares, reclassification, reincorporation, stock
dividend (in excess of 2%) or other change in the corporate structure of the
Company while the Plan is in effect, appropriate adjustments shall be made by
the Board of Directors to the aggregate number and kind of shares subject to the
Plan, and the number and kind of shares and the price per share subject to
outstanding incentive options, nonqualified options and restricted shares in
order to preserve, but not to increase, the benefits to persons then holding
incentive options, nonqualified options or restricted shares.
In the event of a Change of Control (as defined below) of the Company, the
time period relating to the exercise or realization of all outstanding options
and Purchase Rights shall automatically accelerate immediately prior to the
consummation of such Change of Control. For purposes of the Plan, "Change in
Control" means (i) the acquisition, directly or indirectly, by any person or
group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) of the beneficial ownership of securities of the Company
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding securities of the Company; (ii) a merger or consolidation in
which the Company is not the surviving entity, except for a transaction in which
the holders of the outstanding voting securities of the Company immediately
prior to such merger or consolidation hold, in the aggregate, securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the surviving entity immediately after such
merger or consolidation; (iii) a reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of all outstanding voting securities of
the Company are transferred to or acquired by a person or persons different from
the persons holding those securities immediately prior to such merger; (iv) the
sale, transfer or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; or (v)
the approval by the stockholders of a plan or proposal for the liquidation or
dissolution of the Company.
The Board of Directors may alter, amend, suspend or terminate the Plan at
any time. However, any changes which affect or impair the rights of any person
who holds an outstanding stock option or Purchase Right may not be effected
without such person's consent. Unless sooner terminated by the Board of
Directors, the Plan will terminate on March 16, 2009.
It is not possible to determine the number of options or Purchase Rights
that may be granted to any individual under the Plan. Such selections and
determinations shall be made by the Compensation Committee of the Board of
Directors.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES
The summary of United States federal income tax consequences set forth
below is intended for general information only and should not be relied on as
being a complete statement. State and local income tax consequences are not
discussed, and may vary from locality to locality.
Incentive Stock Options. An employee will not realize taxable income on an
incentive stock option when that option is granted or when that option is
exercised; however, the amount by which the fair market value of the stock at
the time of exercise exceeds the option price generally will be included in the
employee's alternative minimum taxable income on the date of exercise. If stock
received on exercise of an incentive stock option is disposed of in the same
year the option was exercised, and the amount realized is less than the stock's
fair market value at the time of exercise, the amount includable in alternative
minimum taxable income will be the amount realized upon the sale or exchange of
the stock, less the taxpayer's basis in the stock. Gain or loss realized by an
optionee on the sale of stock issued upon exercise of an incentive stock option
is taxable as long-term capital gain or loss, and no tax deduction is available
to the Company, unless the optionee disposes of the stock in a "disqualifying
disposition." A disqualifying disposition of the stock includes any sale,
exchange, gift or other transfer of the stock within two years after the date of
grant of the option or within one year after the date of exercise, except that
it does not include transfers pursuant to certain tax-free reorganizations and
exchanges, transfers between spouses or incident to divorce, transfers into the
name of the optionee and another person as joint tenants, transfers from a
decedent to an estate, transfers by will or inheritance upon the optionee's
death, or a mere pledge or hypothecation of the stock. Upon a disqualifying
7
<PAGE> 10
disposition of the stock, the optionee will realize ordinary income in an amount
equal to the difference between the option exercise price and the lesser of (i)
the fair market value of the stock on the date of exercise, or (ii) the amount
realized on a sale or exchange of the stock. Subject to Section 162(m) of the
Code (which limits the deductibility of compensation in excess of $1,000,000 for
certain executive officers), the Company will be entitled to a deduction equal
to the amount of ordinary income recognized by the optionee, provided certain
reporting requirements are met. Additionally, if the amount realized on a sale
or exchange of the stock is greater than or less than the fair market value of
the stock on the date of exercise, the difference will be taxed as capital gain
or loss.
Nonqualified Stock Options. A participant will not realize taxable income
on a nonqualified stock option when that option is granted, nor will the Company
be entitled to take any deduction. Upon the exercise of a nonqualified stock
option, the optionee will realize ordinary income in an amount equal to the
difference between the option exercise price and the fair market value of the
stock on the date of exercise. Subject to Section 162(m) of the Code, the
Company will be entitled to a deduction on the date of exercise equal to the
amount of ordinary income recognized by the optionee, provided certain reporting
requirements are met. An optionee's basis in the stock for purposes of
determining gain or loss on any subsequent disposition of the stock generally
will be the fair market value of the stock on the date of exercise of the
nonqualified stock option.
Purchase Rights. A participant will not realize taxable income on the
receipt of restricted stock pursuant to a Purchase Right until the expiration of
any repurchase rights retained by the Company with respect to such stock, unless
the participant makes an election under Section 83(b) of the Code to be taxed on
the date of receipt. If no repurchase rights are retained, or if a Section 83(b)
election is made, the participant will recognize ordinary income on the date of
receipt in an amount equal to the difference between the purchase price paid for
the stock and the fair market value of such stock on the date of receipt. If
repurchase rights are retained by the Company and no Section 83(b) election is
made, the participant will recognize ordinary income on each date that the
Company's repurchase rights lapse as to any shares of stock (i.e. on each date
that any shares of stock vest) in an amount equal to the difference between the
purchase price paid for such shares and the fair market value of such shares on
the date that they vest. Subject to Section 162(m) of the Code, the Company will
be entitled to a deduction on each date that the participant recognizes ordinary
income equal to the amount of ordinary income recognized by the participant on
such date, provided certain reporting requirements are met. A participant's
basis in the stock for purposes of determining gain or loss on any subsequent
disposition of the stock generally will be the purchase price paid for the stock
plus any ordinary income recognized on receipt or vesting of the stock.
TAX WITHHOLDING
The Plan grants the Company the power to withhold, or require a participant
to remit to the Company, an amount sufficient to satisfy Federal, state and
local tax withholding requirements with respect to any options exercised or
restricted stock issued under the Plan. To the extent permissible under
applicable tax, securities, and other laws, the Compensation Committee may, in
its sole discretion, permit a participant to satisfy an obligation to pay any
such tax, in whole or in part, up to an amount determined on the basis of the
highest marginal tax rate applicable to such participant, by (i) directing the
Company to apply shares of Common Stock to which the participant is entitled as
a result of the exercise of an option or as a result of the lapse of
restrictions on restricted stock, or (ii) delivering to the Company shares of
Common Stock owned by the participant.
OTHER BUSINESS
Presented by Management. Management does not know of any matter to be acted
upon at the Meeting other than the matters described above, but if any other
matter properly comes before the Meeting, the persons named on the enclosed
Proxy Card will vote thereon in accordance with their best judgment.
Presented by Stockholders. Pursuant to CKE's Bylaws, only such business
shall be conducted at an annual meeting of stockholders as is properly brought
before the meeting. For business to be properly brought before an annual meeting
by a stockholder, in addition to any other applicable requirements, timely
notice of
8
<PAGE> 11
the matter must be first given to the Secretary of CKE. To be timely, written
notice must be received by the Secretary not later than 90 days in advance of
such meeting or, if later, the seventh day following the public announcement of
the date of such meeting. Any notice to the Secretary must include as to each
matter the stockholder proposes to bring before the meeting: (a) a brief
description of the business desired to be brought before the meeting and the
reason for conducting such business at the annual meeting; (b) the name and
record address of the stockholder proposing such business; (c) the class and
number of shares of CKE which are beneficially owned by the stockholder; and (d)
any material interest of the stockholder in such business. In addition, the
stockholders making such proposal shall promptly provide any other information
reasonably requested by CKE.
OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth certain information regarding beneficial
ownership of CKE's Common Stock as of April 21, 2000, by (i) each person who is
known by CKE to beneficially own more than five percent of the outstanding CKE
Common Stock, (ii) each director of CKE, (iii) CKE's Chief Executive Officer and
each of its four most highly compensated executives (collectively, the "Named
Executive Officers") and (iv) all directors and executive officers of CKE as a
group. Except as otherwise indicated, beneficial ownership includes both voting
and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (#) CLASS(1)
------------------------------------ ----------------- ----------
<S> <C> <C>
Legg Mason, Inc...................................... 5,188,120(2) 10.3%
100 Light Street
Baltimore, Maryland 21202
The Prudential Insurance Company of America.......... 4,504,060(3) 8.9
751 Broad Street
Newark, New Jersey 07102
Snyder Capital Management, L.P....................... 2,636,041(4) 5.2
350 California Street, #1460
San Francisco, California 94104
Franklin Mutual Advisors, L.L.C. .................... 2,592,886(5) 5.1
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Cannae Limited Partnership........................... 2,568,211(6) 5.1
500 N. Rainbow Boulevard, #100
Las Vegas, Nevada 89107
Carl N. Karcher...................................... 871,344(7) 1.7
William P. Foley II.................................. 1,591,450(8) 3.1
Daniel D. (Ron) Lane................................. 595,823(9) 1.2
Frank P. Willey...................................... 68,527(10) *
Peter Churm.......................................... 113,618(11) *
Carl L. Karcher...................................... 197,742(12) *
Byron Allumbaugh..................................... 63,721(13) *
C. Thomas Thompson................................... 920,165(14) 1.8
Rory J. Murphy....................................... 598,006(15) 1.2
Carl A. Strunk....................................... 108,837(16) *
Andrew F. Puzder..................................... 115,092(17) *
All executive officers and directors as a group (14
persons)........................................... 5,815,951(18) 10.7%
</TABLE>
- ---------------
* Less than one percent.
(1) Calculated based on 50,501,421 shares of CKE Common Stock outstanding on
April 21, 2000.
(2) Based on a Schedule 13G filed by Legg Mason, Inc. The aggregate number of
shares set forth above includes: (a) 4,000,000 beneficially held by Legg
Mason Fund Adviser, Inc., a wholly-owned subsidiary
9
<PAGE> 12
of Legg Mason, Inc.; (b) 1,029,300 beneficially held by Brandywine Asset
Management, Inc., a wholly-owned subsidiary of Legg Mason, Inc.; (c)
158,600 beneficially held by Legg Mason Capital Management, Inc., a
wholly-owned subsidiary of Legg Mason, Inc.; and (d) 220 shares
beneficially held by Legg Mason Wood Walker, Inc., a wholly-owned
subsidiary of Legg Mason, Inc. Legg Mason, Inc. has sole voting power over
4,000,000 shares, shared voting power over 1,188,120 shares and sole
dispositive power over 5,188,120 shares.
(3) Based on a Schedule 13G filed by The Prudential Insurance Company of
America ("Prudential") with sole voting and dispositive power over 768,238
shares and shared voting and dispositive power over 3,735,822 shares.
Prudential presently holds 2,480 shares for the benefit of its general
account. Prudential may have direct or indirect voting and/or investment
discretion over 4,501,580 shares which are held for the benefit of its
clients by its separate accounts, externally managed accounts, registered
investment companies, subsidiaries and/or other affiliates.
(4) Based on a Schedule 13G filed by Snyder Capital Management, L.P. ("SCMLP")
and Snyder Capital Management, Inc. ("SCMI"). SCMLP and SCMI each
beneficially own 2,636,041 and have shared voting and dispositive powers
over the shares. SCMI is the sole general partner of SCMLP. Both SCMLP and
SCMI are wholly owned by Nvest Companies, L.P. ("Nvest Companies"), a
limited partnership affiliated with Nvest, L.P., a publicly traded limited
partnership. The general partner of Nvest, L.P. and the managing general
partner of Nvest Companies is an indirect, wholly-owned subsidiary of
Metropolitan Life Insurance Company ("MetLife"). As of June 30, 1998,
MetLife beneficially owned all of the general partner interests in Nvest
Companies and Nvest, L.P. and, in the aggregate, general partner and
limited partner interests of Nvest Companies and Nvest, L.P. representing
approximately 47% of the economic interests in the business of Nvest
Companies. SCMI and Nvest Companies operate under an understanding that all
investment and voting decisions regarding advisory accounts managed by
SCMLP are to be made by SCMI and SCMLP and not by Nvest Companies or any
entity controlling Nvest Companies. Accordingly, SCMI and SCMLP do not
consider Nvest Companies or any entity controlling Nvest Companies to have
any direct or indirect control over the securities held in managed
accounts.
(5) Based on a Schedule 13G filed by Franklin Mutual Advisers, L.L.C. ("FMA").
The securities are beneficially owned by one or more open-ended investment
companies or other managed accounts which, pursuant to advisory contracts,
are advised by FMA, formerly Franklin Mutual Advisers, Inc., an indirect
wholly owned subsidiary of Franklin Resources, Inc. ("FRI"). Such advisory
contracts grant to FMA all investment and voting power over the securities
owned by such advisory clients. Therefore, FMA may be deemed to be, for
purposes of Rule 13d-3 under the Securities Exchange Act of 1934, the
beneficial owner of the securities covered by these statements. Charles B.
Johnson and Rupert H. Johnson, Jr. (the "Principal Shareholders") each own
in excess of 10% of the outstanding Common Stock of FRI and are the
principal shareholders of FRI. However, because FMA exercises voting and
investment powers on behalf of its advisory clients independently of FRI,
the Principal Shareholders, and their respective affiliates, beneficial
ownership of the securities held by FMA is attributed only to FMA. FMA
disclaims any economic interest or beneficial ownership in any of the
securities.
(6) Based on a Form 4 filed by Cannae Limited Partnership ("Cannae"). A
Schedule 13D states that each of the limited partners of Cannae, including
without limitation, Messrs. Foley, Lane, Strunk and Willey, has sole voting
and dispositive power with respect to the Cannae shares directly held by
him. The general partner of the Partnership is Bognor Regis, Inc., a Nevada
corporation, of which Mr. Foley is a director.
(7) Includes (a) 698,606 shares beneficially held by the Carl N. and Margaret
M. Karcher Trust (the "Trust"), (b) 113 shares held by Mrs. Karcher, and
(c) 159,491 shares subject to currently exercisable options. Excludes
11,000 shares held by the Carl N. and Margaret M. Karcher Foundation, the
beneficial ownership of which the Trust and Mr. and Mrs. Karcher disclaim.
(8) Includes 478,705 shares held directly by Folco Development Corporation,
owned and controlled by Mr. Foley, and 1,077,251 shares subject to
currently exercisable options. Excludes shares held by Cannae which is
reported in footnote (6) above, of which Mr. Foley is a limited partner,
627,155 shares
10
<PAGE> 13
held by FNF, of which Mr. Foley is a director and an executive officer, and
274,900 shares held by SBRG, of which Mr. Foley is a director. Mr. Foley
disclaims beneficial ownership of the shares held by FNF and SBRG.
(9) Includes 68,063 shares held directly by the Daniel D. Lane Revocable Trust
U/D/T July 10, 1992 and 201,472 shares subject to currently exercisable
options. Excludes shares held by Cannae which is reported in footnote (6)
above, of which Mr. Lane is a limited partner, and 627,155 shares held by
FNF, of which Mr. Lane is a director. Mr. Lane disclaims beneficial
ownership of the shares held by Cannae and FNF.
(10) Includes 63,989 shares subject to currently exercisable options. Excludes
shares held by Cannae which is reported in footnote (6) above, of which Mr.
Willey is a limited partner, 627,155 shares held by FNF, of which Mr.
Willey is a director, and 274,900 shares held by SBRG, of which Mr. Willey
is a director. Mr. Willey disclaims beneficial ownership of the shares held
by Cannae, FNF and SBRG.
(11) Includes 67,619 shares subject to currently exercisable options.
(12) Includes (a) 118,394 shares held by Carl L. Karcher and Peggy L. Karcher,
as trustees under a trust for the benefit of Carl L. and Peggy L. Karcher,
(b) 59,451 shares subject to currently exercisable options, and (c) 6,864
shares owned by Carl L. Karcher's minor children.
(13) Includes 22,420 shares beneficially owned by the Byron E. and Sharon K.
Allumbaugh Living Trust and 41,301 shares subject to currently exercisable
options.
(14) Includes 857,418 shares subject to currently exercisable options and 182
shares owned by Mr. Thompson's minor children. Excludes 274,900 shares held
by SBRG, of which Mr. Thompson is a director.
(15) Includes 583,279 shares subject to currently exercisable options and 1,917
shares held for Mr. Murphy's benefit under CKE's voluntary contributory
profit sharing and savings investment plan.
(16) Includes 105,193 shares subject to currently exercisable options. Excludes
shares held by Cannae which is reported in footnote (6) above, of which Mr.
Strunk is a limited partner. Mr. Strunk disclaims beneficial ownership of
the shares held by Cannae.
(17) Includes 90,608 shares subject to currently exercisable options. Excludes
274,900 shares held by SBRG, of which Mr. Puzder is a director and
executive officer and 627,155 shares held by FNF, of which Mr. Puzder is an
executive officer. Mr. Puzder disclaims beneficial ownership of the shares
held by SBRG and FNF.
(18) Includes shares described in footnotes (7) through (17) above and 379,430
shares subject to currently exercisable options which are held by executive
officers not listed in the above table.
11
<PAGE> 14
STOCKHOLDER PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL STOCKHOLDER RETURN
AMONG CKE RESTAURANTS, INC., S&P 500 INDEX AND
SELECTED RESTAURANT PEER GROUP INDEX(1)
This graph compares the Company's cumulative total return to stockholders
during the past five years with that of the S&P 500 Index and a Selected
Restaurant Peer Group Index. In past years, such comparison has been made with
the Russell 2000 Index and a Selected Restaurant Peer Group Index. The Company
selected four quick-service restaurants with similar menu offerings and
complimentary geographic markets.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
CKE RESTAURANTS, INC. S&P 500 COMP-LTD PEER GROUP
--------------------- ---------------- ----------
<S> <C> <C> <C>
Jan 95 $100.00 $100.00 $100.00
Jan 96 $244.62 $138.67 $153.53
Jan 97 $469.33 $175.19 $141.80
Jan 98 $1096.15 $222.33 $148.67
Jan 99 $649.82 $294.57 $244.55
Jan 00 $177.55 $325.05 $221.45
</TABLE>
- ---------------
(1) Peer Group is comprised of the following companies: Jack in the Box, Inc.,
McDonalds Corp., Tricon Global Restaurants, and Wendy's International, Inc.
The Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that CKE specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
12
<PAGE> 15
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the years indicated, the compensation
awarded to, earned by or paid to the Named Executive Officers of CKE who were so
employed by CKE as of January 31, 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
---------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY COMPENSATION OPTIONS COMPENSATION
NAME AND TITLE YEAR ($) BONUS ($) ($)(1) (#)(2) ($)(3)
-------------- ------ ------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
William P. Foley II(4).......... 2000 420,769 -- -- 400,000 107,687
Chairman 1999 500,000 700,000 -- 165,000 12,782
1998 330,817 1,121,000 -- 242,000 10,577
C. Thomas Thompson(4)........... 2000 687,500 -- 56,314 300,000 142,720
Chief Executive Officer 1999 650,000 700,000 38,398 137,500 27,851
and President 1998 462,830 1,402,000 33,044 242,000 38,040
Rory J. Murphy.................. 2000 450,000 -- 85,255 170,000 23,437
President, 1999 435,577 500,000 64,532 82,500 9,134
Hardee's Food Systems, Inc. 1998 308,510 123,730 26,272 242,000 7,677
Carl A. Strunk.................. 2000 312,500 -- 39,655 75,000 --
Executive Vice President, 1999 150,000 87,473 33,360 22,000 --
Chief Financial Officer 1998 109,615 63,000 7,470 63,525 --
Andrew F. Puzder................ 2000 312,500 -- 33,810 75,000 --
Executive Vice President 1999 152,000 56,269 9,960 22,000 --
General Counsel & Secretary 1998 110,256 52,500 7,470 63,525 --
</TABLE>
- ---------------
(1) "Other Annual Compensation" for fiscal 2000 includes the following amounts
for Messrs. Thompson, Murphy, Strunk and Puzder: (a) auto related payments
of $9,660, $12,357, $9,055, and $9,055, respectively, (b) reimbursements for
medical and dental costs of $5,000, $743, $0 and $0, respectively, (c)
personal living and travel allowances of $38,154, $68,788, $30,600 and
$24,755, respectively, and (d) payments of life insurance premiums of
$3,500, $3,367, $0 and $0, respectively.
(2) The number of securities underlying options has been adjusted to reflect
CKE's 10% stock dividends in January 1999 and February 1998.
(3) "All Other Compensation" includes matching and voluntary contributions by
CKE to CKE's employee stock purchase plan for Messrs. Foley, Thompson and
Murphy. For fiscal 2000, the amounts matched by CKE in the employee stock
purchase plan were $107,687, $142,720, and $23,437, respectively.
(4) On March 20, 2000, Mr. Foley resigned as Chief Executive Officer of CKE and
was succeeded by Mr. Thompson.
13
<PAGE> 16
STOCK OPTIONS
The following table sets forth certain information with respect to the
stock options granted during fiscal 2000 to the Named Executive Officers and the
potential realizable value of such stock options.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(3)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE)(1) DATE (2) 5%($) 10%($)
---- ---------- ------------- ------------ -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William P. Foley II....... 20,688(4) $14.50 April 8, 2009 $ 188,985 $ 476,962
179,312(5) $14.50 April 8, 2009 $1,638,015 $4,134,038
200,000(5) $18.13 March 23, 2009 $2,283,750 $5,763,750
-------
400,000 21.9%
C. Thomas Thompson........ 20,688(4) $14.50 April 8, 2009 $ 188,985 $ 476,962
179,312(5) $14.50 April 8, 2009 $1,638,015 $4,134,038
100,000(5) $18.13 March 23, 2009 $1,141,875 $2,881,875
-------
300,000 16.4%
Rory J. Murphy............ 20,688(4) $14.50 April 8, 2009 $ 188,985 $ 476,962
79,312(5) $14.50 April 8, 2009 $ 724,515 $1,828,538
70,000(5) $18.13 March 23, 2009 $ 799,313 $2,017,313
-------
170,000 9.3%
Carl A. Strunk............ 20,688(4) $14.50 April 8, 2009 $ 188,985 $ 476,962
29,312(5) $14.50 April 8, 2009 $ 267,765 $ 675,788
25,000(5) $18.13 March 23, 2009 $ 285,469 $ 720,469
-------
75,000 4.1%
Andrew F. Puzder.......... 20,688(4) $14.50 April 8, 2009 $ 188,985 $ 476,962
29,312(5) $14.50 April 8, 2009 $ 267,765 $ 675,788
25,000(5) $18.13 March 23, 2009 $ 285,469 $ 720,469
-------
75,000 4.1%
</TABLE>
- ---------------
(1) The fair market value of the Company's Common Stock on the date of grant.
(2) The options vest 33 1/3% on the first anniversary of the date of grant,
33 1/3% on the second anniversary of the date of grant and 33 1/3% on the
third anniversary of the date of grant.
(3) Calculated over a ten-year period, representing the terms of the options.
These are assumed rates of appreciation, and are not intended to forecast
future appreciation of the Company's Common Stock.
(4) Incentive stock options.
(5) Nonqualified stock options.
14
<PAGE> 17
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to stock
options exercised during fiscal 2000 and year-end stock option values for each
of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED (#) ($)
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(1)
---- --------------- -------------- ------------------- -------------------
<S> <C> <C> <C> <C>
William P. Foley II............... 49,913 $395,131 863,251/413,999 $360,718/$0
C. Thomas Thompson................ 5,000 $ 22,655 676,751/313,999 $109,759/$0
Rory J. Murphy.................... 5,000 $ 19,213 526,612/136,666 $238,561/$0
Carl A. Strunk.................... -- -- 59,017/79,508 $ 0/$0
Andrew F. Puzder.................. -- -- 43,892/79,508 $ 0/$0
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission,
values are calculated by subtracting the exercise price from the fair market
value of the underlying Common Stock. For purposes of this table, the fair
market value is deemed to be $6.44, the closing price of the Common Stock of
CKE reported by the New York Stock Exchange on January 31, 2000.
EMPLOYMENT AGREEMENTS
On April 9, 1999, CKE entered into a five-year employment agreement with
William P. Foley II, pursuant to which Mr. Foley agreed to serve as Chairman of
the Board and Chief Executive Officer. Mr. Foley's annual base salary under this
agreement is $500,000 subject to periodic increases at the discretion of the
Compensation Committee of the Board of Directors. On September 2, 1999, Mr.
Foley authorized a reduction in his annual base salary from $500,000 to
$300,000. Mr. Foley resigned as Chief Executive Officer in March 2000. As a
result, his annual base salary under the Employment Agreement is currently
$400,000. Mr. Foley's agreement also provides for annual cash bonuses during his
employment term. Mr. Foley did not receive a bonus for the fiscal year ended
January 31, 2000. For fiscal 2001 and all subsequent years, Mr. Foley's annual
bonus will be calculated by first determining the amount by which the Company's
net income increases over the prior fiscal year. If such increase is 15%, Mr.
Foley shall receive a bonus equal to 25% of his then current annual base salary.
For each 5% increase in the Company's net income over the 15% base increase, Mr.
Foley's annual bonus will increase by an amount equal to 25% of his annual base
salary. In no event shall the annual bonus exceed 100% of Mr. Foley's minimum
annual base salary. If net income increases less than 15% or decreases, Mr.
Foley will not receive a bonus for that year. The employment agreement entitled
Mr. Foley to participate in CKE's stock incentive plan and granted him an option
to purchase 200,000 shares under CKE's 1999 Stock Incentive Plan. The options
vest 33 1/3% on the effective date of the employment agreement and 33 1/3% on
each of the next two anniversaries of the grant date, and are for a ten year
term. The employment agreement allows Mr. Foley to fulfill duties with certain
other public companies including FNF, SBRG, Checkers and ANFI. The employment
agreement can be terminated by the Company for cause as defined in the
employment agreement. In the event CKE terminates Mr. Foley's employment without
cause, CKE will be obligated to pay a lump sum consisting of Mr. Foley's minimum
annual base salary then in effect times one, plus annual bonus assuming a 30%
increase in net income (100% of employee's minimum annual base salary times
one), and maintain for one year any benefits plans and programs in which Mr.
Foley was entitled to participate immediately prior to the date of termination.
In the event of a change in control of the Company resulting in Mr. Foley's
termination, the Company shall pay Mr. Foley, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination an amount equal to the product of his minimum annual base salary
multiplied by the number of
15
<PAGE> 18
years remaining in the term or the number two (2), whichever is greater, plus an
annual bonus equal to 100% of Mr. Foley's annual base salary multiplied by the
number of years remaining in the term or the number two (2), whichever is
greater. Additionally, all options granted which have not vested as of the date
of termination shall vest immediately, and the Company shall maintain, for the
number of years remaining in the term, all employee benefit plans and programs
in which Mr. Foley was entitled to participate immediately prior to the date of
termination. In the event of his death, Mr. Foley's legal representatives will
receive the minimum annual base salary for the remainder of the term, and all
unvested options will immediately vest and be exercisable for 90 days from Mr.
Foley's death.
On April 9, 1999, CKE entered into a five-year employment agreement with C.
Thomas Thompson. Mr. Thompson's annual base salary under this agreement is
$650,000 subject to periodic increases at the discretion of the Compensation
Committee of the Board of Directors. Mr. Thompson's agreement also provides for
annual cash bonuses during his employment term. Mr. Thompson did not receive a
bonus for the fiscal year ended January 31, 2000. For fiscal 2001 and all
subsequent years, Mr. Thompson's annual bonus will be calculated by first
determining the amount by which the Company's net income increases over the
prior fiscal year. If such increase is 15%, Mr. Thompson shall receive a bonus
equal to 25% of his then current annual base salary. For each 5% increase in the
Company's net income over the 15% base increase, Mr. Thompson's annual bonus
will increase by an amount equal to 25% of his annual base salary. In no event
shall the annual bonus exceed 100% of Mr. Thompson's minimum annual base salary.
If net income increases less than 15% or decreases, Mr. Thompson will not
receive a bonus for that year. The employment agreement entitled Mr. Thompson to
participate in CKE's stock incentive plan and granted him an option to purchase
200,000 shares under CKE's 1999 Stock Incentive Plan. The options vest 33 1/3%
on the effective date of the Employment Agreement and 33 1/3% on each of the
next two anniversaries of the grant date, and are for a ten year term. The
employment agreement allows Mr. Thompson to fulfill duties with certain other
public companies including SBRG and Checkers. The employment agreement can be
terminated by the Company for cause as defined in the employment agreement. In
the event CKE terminates Mr. Thompson's employment without cause, CKE will be
obligated to pay a lump sum consisting of Mr. Thompson's minimum annual base
salary then in effect times one, plus annual bonus assuming a 30% increase in
net income (100% of employee's minimum annual base salary times one), and
maintain for one year any benefits plans and programs in which Mr. Thompson was
entitled to participate immediately prior to the date of termination. In the
event of a change in control of the Company resulting in Mr. Thompson's
termination, the Company shall pay Mr. Thompson, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination, an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Thompson's
annual base salary multiplied by the number of years remaining in the term or
the number two (2), whichever is greater. Additionally, all options granted
which had not vested as of the date of termination shall vest immediately, and
the Company shall maintain, for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Thompson was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Thompson's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Thompson's death.
On April 9, 1999, CKE entered into a four-year employment agreement with
Rory J. Murphy. Mr. Murphy's annual base salary under this agreement is $450,000
subject to periodic increases at the discretion of the Compensation Committee of
the Board of Directors. Mr. Murphy's agreement also provides for annual cash
bonuses during his employment term. Mr. Murphy did not receive a bonus for the
fiscal year ended January 31, 2000. For fiscal 2001 and all subsequent years,
Mr. Murphy's annual bonus will be calculated by first determining the amount by
which the Company's net income increases over the prior fiscal year. If such
increase is 15%, Mr. Murphy shall receive a bonus equal to 25% of his then
current annual base salary. For each 5% increase in the Company's net income
over the 15% base increase, Mr. Murphy's annual bonus will increase by an amount
equal to 25% of his annual base salary. In no event shall the annual bonus
exceed 100% of Mr. Murphy's minimum annual base salary. If net income increases
less than 15% or decreases, Mr. Murphy will not receive a bonus for that year.
The employment agreement entitled Mr. Murphy to participate in CKE's stock
incentive plan and granted him an option to purchase
16
<PAGE> 19
100,000 shares under CKE's 1999 Stock Incentive Plan. The options vest 33 1/3%
on the effective date of the employment agreement and 33 1/3% on each of the
next two anniversaries of the grant date, and are for a ten year term. The
employment agreement can be terminated by the Company for cause as defined in
the employment agreement. In the event CKE terminates Mr. Murphy's employment
without cause, CKE will be obligated to pay a lump sum consisting of Mr.
Murphy's minimum annual base salary then in effect times one, plus annual bonus
assuming a 30% increase in net income (100% of employee's minimum annual base
salary times one), and maintain for one year any benefits plans and programs in
which Mr. Murphy was entitled to participate immediately prior to the date of
termination. In the event of a change in control of the Company resulting in Mr.
Murphy's termination, the Company shall pay Mr. Murphy, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination, an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Murphy's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
have not vested as of the date of termination shall vest immediately, and the
Company shall maintain for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Murphy was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Murphy's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Murphy's death.
On April 9, 1999, CKE entered into a three-year employment agreement with
John J. Dunion. Mr. Dunion's annual base salary under this agreement is $190,000
subject to periodic increases at the discretion of the Compensation Committee of
the Board of Directors. Mr. Dunion's agreement also provides for annual cash
bonuses during his employment term. Mr. Dunion did not receive a bonus for the
fiscal year ended January 31, 2000. For fiscal 2001 and all subsequent years,
Mr. Dunion's annual bonus will be calculated by first determining the amount by
which the Company's net income increases over the prior fiscal year. If such
increase is 15%, Mr. Dunion shall receive a bonus equal to 25% of his then
current annual base salary. For each 5% increase in the Company's net income
over the 15% base increase, Mr. Dunion's annual bonus will increase by an amount
equal to 25% of his annual base salary. In no event shall the annual bonus
exceed 100% of Mr. Dunion's minimum annual base salary. If net income increases
less than 15% or decreases, Mr. Dunion will not receive a bonus for that year.
The employment agreement entitled Mr. Dunion to participate in CKE's stock
incentive plan and granted him an option to purchase 50,000 shares under CKE's
1999 Stock Incentive Plan. The options vest 33 1/3% on the effective date of the
employment agreement and 33 1/3% on each of the next two anniversaries of the
grant date, and are for a ten year term. The employment agreement can be
terminated by the Company for cause as defined in the employment agreement. In
the event CKE terminates Mr. Dunion's employment without cause, CKE will be
obligated to pay a lump sum consisting of Mr. Dunion's minimum annual base
salary then in effect times one, plus annual bonus assuming a 30% increase in
net income (100% of employee's minimum annual base salary times one), and
maintain for one year any benefits plans and programs in which Mr. Dunion was
entitled to participate immediately prior to the date of termination. In the
event of a change in control of the Company resulting in Mr. Dunion's
termination, the Company shall pay Mr. Dunion, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination, an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Dunion's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
have not vested as of the date of termination shall vest immediately, and the
Company shall maintain for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Dunion was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Dunion's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Dunion's death.
On April 9, 1999, CKE entered into a three-year employment agreement with
Andrew F. Puzder. Mr. Puzder's annual base salary under this agreement is
$312,500 subject to periodic increases at the discretion of the Compensation
Committee of the Board of Directors. Mr. Puzder's agreement also provides
17
<PAGE> 20
for annual cash bonuses during his employment term. Mr. Puzder did not receive a
bonus for the fiscal year ended January 31, 2000. For fiscal 2001 and all
subsequent years, Mr. Puzder's annual bonus will be calculated by first
determining the amount by which the Company's net income increases over the
prior fiscal year. If such increase is 15%, Mr. Puzder shall receive a bonus
equal to 25% of his then current annual base salary. For each 5% increase in the
Company's net income over the 15% base increase, Mr. Puzder's annual bonus will
increase by an amount equal to 25% of his annual base salary. In no event shall
the annual bonus exceed 100% of Mr. Puzder's minimum annual base salary. If net
income increases less than 15% or decreases, Mr. Puzder will not receive a bonus
for that year. The employment agreement entitled Mr. Puzder to participate in
CKE's stock incentive plan and granted him an option to purchase 50,000 shares
under CKE's 1999 Stock Incentive Plan. The options vest 33 1/3% on the effective
date of the Employment Agreement and 33 1/3% on each of the next two
anniversaries of the grant date, and are for a ten year term. The employment
agreement allows Mr. Puzder to fulfill duties with certain other public
companies including SBRG and FNF. The employment agreement can be terminated by
the Company for cause as defined in the employment agreement. In the event CKE
terminates Mr. Puzder's employment without cause, CKE will be obligated to pay a
lump sum consisting of Mr. Puzder's minimum annual base salary then in effect
times one, plus annual bonus assuming a 30% increase in net income (100% of
employee's minimum annual base salary times one), and maintain for one year any
benefits plans and programs in which Mr. Puzder was entitled to participate
immediately prior to the date of termination. In the event of a change in
control of the Company resulting in Mr. Puzder's termination, the Company shall
pay Mr. Puzder, as severance, a lump sum consisting of, in addition to his base
salary due him through the date of termination, an amount equal to the product
of his minimum annual base salary multiplied by the number of years remaining in
the term or the number two (2), whichever is greater, plus an annual bonus equal
to 100% of Mr. Puzder's annual base salary multiplied by the number of years
remaining in the term or the number two (2), whichever is greater. Additionally,
all options granted which have not vested as of the date of termination shall
vest immediately, and the company shall maintain, for the number of years
remaining in the term, all employee benefit plans and programs in which Mr.
Puzder was entitled to participate immediately prior to the date of termination.
In the event of his death, Mr. Puzder's legal representatives will receive the
minimum annual base salary for the remainder of the term, and all unvested
options will immediately vest and be exercisable for 90 days from Mr. Puzder's
death.
On April 9, 1999, CKE entered into a three-year employment agreement with
Carl A. Strunk. Mr. Strunk's annual base salary under this agreement is $312,500
subject to periodic increases at the discretion of the Compensation Committee of
the Board of Directors. Mr. Strunk's agreement also provides for annual cash
bonuses during his employment term. Mr. Strunk did not receive a bonus for the
fiscal year ended January 31, 2000. For fiscal 2001 and all subsequent years,
Mr. Strunk's annual bonus will be calculated by first determining the amount by
which the Company's net income increases over the prior fiscal year. If such
increase is 15%, Mr. Strunk shall receive a bonus equal to 25% of his then
current annual base salary. For each 5% increase in the Company's net income
over the 15% base increase, Mr. Strunk's annual bonus will increase by an amount
equal to 25% of his annual base salary. In no event shall the annual bonus
exceed 100% of Mr. Strunk's minimum annual base salary. If net income increases
less than 15% or decreases, Mr. Strunk will not receive a bonus for that year.
The employment agreement entitled Mr. Strunk to participate in CKE's stock
incentive plan and granted him an option to purchase 50,000 shares under CKE's
1999 Stock Incentive Plan. The options vest 33 1/3% on the effective date of the
employment agreement and 33 1/3% on each of the next two anniversaries of the
grant date, and are for a ten year term. The employment agreement allows Mr.
Strunk to fulfill duties with certain other public companies including SBRG, FNF
and ANFI. The employment agreement can be terminated by the Company for cause as
defined in the employment agreement. In the event CKE terminates Mr. Strunk's
employment without cause, CKE will be obligated to pay a lump sum consisting of
Mr. Strunk's minimum annual base salary then in effect times one, plus annual
bonus assuming a 30% increase in net income (100% of employee's minimum annual
base salary times one), and maintain for one year any benefits plans and
programs in which Mr. Strunk was entitled to participate immediately prior to
the date of termination. In the event of a change in control of the Company
resulting in Mr. Strunk's termination, the Company shall pay Mr. Strunk, as
severance, a lump sum consisting of, in addition to his base salary due him
through the date of termination, an amount equal to the product of his minimum
annual base salary multiplied by the number of years remaining in the term or
the number two (2),
18
<PAGE> 21
whichever is greater, plus an annual bonus equal to 100% of Mr. Strunk's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
have not vested as of the date of termination shall vest immediately, and the
Company shall maintain, for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Strunk was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Strunk's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Strunk's death.
On April 9, 1999, CKE entered into a three-year employment agreement with
Robert W. Wisely. Mr. Wisely's annual base salary under this agreement is
$300,000 subject to periodic increases at the discretion of the Compensation
Committee of the Board of Directors. Mr. Wisely's agreement also provides for
annual cash bonuses during his employment term. Mr. Wisely did not receive a
bonus for the fiscal year ended January 31, 2000. For fiscal 2001 and all
subsequent years, Mr. Wisely's annual bonus will be calculated by first
determining the amount by which the Company's net income increases over the
prior fiscal year. If such increase is 15%, Mr. Wisely shall receive a bonus
equal to 25% of his then current annual base salary. For each 5% increase in the
Company's net income over the 15% base increase, Mr. Wisely's annual bonus will
increase by an amount equal to 25% of his annual base salary. In no event shall
the annual bonus exceed 100% of Mr. Wisely's minimum annual base salary. If net
income increases less than 15% or decreases, Mr. Wisely will not receive a bonus
for that year. The employment agreement entitled Mr. Wisely to participate in
CKE's stock incentive plan and granted him an option to purchase 50,000 shares
under CKE's 1999 Stock Incentive Plan. The options vest 33 1/3% on the effective
date of the employment agreement and 33 1/3% on each of the next two
anniversaries of the grant date, and are for a ten year term. The employment
agreement can be terminated by the Company for cause as defined in the
employment agreement. In the event CKE terminates Mr. Wisely's employment
without cause, CKE will be obligated to pay a lump sum consisting of Mr.
Wisely's minimum annual base salary then in effect times one, plus annual bonus
assuming a 30% increase in net income (100% of employee's minimum annual base
salary times one), and maintain for one year any benefits plans and programs in
which Mr. Wisely was entitled to participate immediately prior to the date of
termination. In the event of a change in control of the Company resulting in Mr.
Wisely's termination, the Company shall pay Mr. Wisely, as severance, a lump sum
consisting of, in addition to his base salary due him through the date of
termination, an amount equal to the product of his minimum annual base salary
multiplied by the number of years remaining in the term or the number two (2),
whichever is greater, plus an annual bonus equal to 100% of Mr. Wisely's annual
base salary multiplied by the number of years remaining in the term or the
number two (2), whichever is greater. Additionally, all options granted which
have not vested as of the date of termination shall vest immediately, and the
Company shall maintain for the number of years remaining in the term, all
employee benefit plans and programs in which Mr. Wisely was entitled to
participate immediately prior to the date of termination. In the event of his
death, Mr. Wisely's legal representatives will receive the minimum annual base
salary for the remainder of the term, and all unvested options will immediately
vest and be exercisable for 90 days from Mr. Wisely's death.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, the members of the Compensation Committee of CKE's
Board of Directors were Messrs. Churm and Willey. Neither Messrs. Churm or
Willey was an officer, former officer or employee of CKE during fiscal 2000.
During fiscal 2000, Mr. Foley served as Chairman of the Board and Chief
Executive Officer of FNF and Chairman of the Board of SBRG, Mr. Lane served as a
director of FNF and Mr. Willey served as President and a director of FNF and a
director of SBRG.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires CKE's
executive officers and directors, and persons who own more than 10% of a
registered class of CKE's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than 10% stockholders are required by
SEC regulations to furnish CKE with copies of all Section 16(a) forms they file.
19
<PAGE> 22
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, CKE believes that, during fiscal 2000, all filing
requirements applicable to its executive officers, directors and greater than
10% stockholders were satisfied.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR THE FISCAL YEAR
ENDED JANUARY 31, 2000
The Committee, currently comprised of two non-employee directors, is
responsible for administering the executive compensation policies, administering
the various management incentive programs (including option plans), and making
recommendations to the Board of Directors with respect to these policies and
programs. In addition, the Committee makes annual recommendations to the Board
of Directors concerning the compensation paid to the Chief Executive Officer and
to each of the other executive officers of CKE (each, an "Executive Officer"),
including the Named Executive Officers. Set forth below in a report submitted by
the Committee addressing compensation policies for fiscal 2000 as they affected
(i) William P. Foley II, the Chief Executive Officer of CKE, and (ii) the other
Executive Officers. On March 20, 2000, Mr. Foley resigned as Chief Executive
Officer of CKE and was succeeded by C. Thomas Thompson.
Compensation Policies Toward Executive Officers. The Committee believes
that the most effective executive compensation program is one that provides
incentives to achieve both current and long-term strategic management goals,
with the ultimate objective of enhancing stockholder value. In this regard, the
Committee believes executive compensation should be comprised of cash as well as
equity-based programs. Base salaries are generally set at market levels in order
to attract and retain qualified and experienced executives. With respect to
equity-based compensation, the Committee believes that an integral part of CKE's
compensation program is the ownership and retention of CKE's Common Stock by its
Executive Officers. By providing Executive Officers with a meaningful stake in
CKE, the value of which is dependent on CKE's long-term success, a commonality
of interests between CKE's Executive Officers and its stockholders is fostered.
On April 9, 1999, pursuant to the approval of the Compensation Committee,
William P. Foley II, C. Thomas Thompson, Rory J. Murphy, John J. Dunion, Andrew
F. Puzder, Carl A. Strunk and Robert W. Wisely entered into employment
agreements with the Company.
Relationship of Performance to Compensation. Compensation that may be
earned by the Executive Officers in any fiscal year consists primarily of base
salary, cash bonus and stock options. The significant factors considered in
establishing the components of each Executive Officer's compensation package for
fiscal 2000 are summarized below. The Committee, in its discretion, may apply
entirely different factors, particularly different measures of financial
performance, in setting executive compensation for future fiscal years, but all
compensation decisions will be designed to further the general compensation
policies indicated above.
- Base Salary. The base salary for each Executive Officer is set on the
basis of personal performance, the salary levels in effect for comparable
positions with CKE's principal competitors (including, but not limited
to, CKE's self-determined peer group set forth in the "Stockholder
Performance Graph") and CKE's financial performance relative to such
competitors. Factors relating to individual performance that are assessed
in setting base compensation are based on the particular duties and areas
of responsibility of the individual Executive Officer. Factors relating
to CKE's financial performance that may be related to increasing or
decreasing base salary include revenues and earnings. The establishment
of base compensation involves a subjective assessment and weighing of the
foregoing criteria and is not based on any specific formula.
- Cash Bonus. Annual bonuses are earned by each Executive Officer on the
basis of CKE's achievement of earnings per share increases based on
targets established at the start of each fiscal year and on the basis of
the particular Executive Officer's duties and areas of responsibility.
Bonus amounts are established based on various levels of performance
against such targets. The Committee assesses CKE and individual
performance against the established targets and provides for bonuses
based on the
20
<PAGE> 23
targeted performance levels actually achieved. CKE did not achieve the
targeted levels of earnings per share growth for fiscal 2000, and no
bonuses were paid to CKE's executive officers for fiscal 2000.
- Stock Options. Stock option grants motivate Executive Officers to manage
the business to improve long-term CKE performance and align the interests
of Executive Officers with stockholder value. Customarily, option grants
are made with exercise prices equal to the fair market value of the
shares on the grant date and will be of no value unless the market price
of CKE's shares of Common Stock appreciates, thereby aligning a
substantial part of the Executive Officer's compensation package with the
return realized by the stockholders. Options generally vest in equal
installments over a period of time, contingent upon the Executive
Officer's continued employment with CKE. Accordingly, an option will
provide a return to the Executive Officer only if the Executive Officer
remains employed by CKE and the market price of the underlying shares
appreciates over the option term. The size of an option grant is designed
to create a meaningful opportunity for stock ownership and is based upon
the individual's current position with CKE, internal comparability with
option grants made to other CKE executives and the individual's potential
for future responsibility and promotion over the option term. The
Committee has established an award program which takes into account the
level of responsibility in the organization and total compensation
compared to comparable companies in making option grants to the Executive
Officers, in an attempt to target a fixed number of unvested option
shares based upon the individual's position with CKE and the Executive
Officer's existing holdings of unvested options. As such, the award of
stock options requires subjective judgment as to the amount of the
option. However, the Committee does not adhere strictly to these
guidelines and will occasionally vary the size of the option grant, if
any, made to each Executive Officer as circumstances warrant.
Chief Executive Officer Compensation. William P. Foley II became CKE's
Chief Executive Officer in October 1994. Mr. Foley did not receive any
compensation during fiscal 1995 for such position. In March 1995, Mr. Foley's
base compensation was established at $200,000 for fiscal 1996. In June 1997, Mr.
Foley's base compensation was increased to $500,000 by the Compensation
Committee of the Board of Directors. Mr. Foley was paid $500,000 in salary for
fiscal 1999. In fiscal 1999, Mr. Foley received a bonus pursuant to his bonus
program. Mr. Foley's compensation under that bonus program was substantially
related to the Company's performance and was determined pursuant to a specific
formula based on the achievement of certain financial goals of the Company. On
April 9, 1999 Mr. Foley entered into an employment agreement with the Company,
pursuant to which, Mr. Foley's base compensation in fiscal 2000 initially was
$500,000. On September 2, 1999, Mr. Foley authorized a reduction in his annual
base salary to $300,000. Mr. Foley resigned as Chief Executive Officer in March
2000. As a result, his annual base salary under the Employment Agreement is
currently $400,000.
Corporate Deduction for Compensation. Section 162(m) of the Internal
Revenue Code generally limits to $1.0 million the corporate deduction for
compensation paid to certain executive officers, unless certain requirements are
met. The Company's policy with respect to the deductibility limit of Section
162(m) generally is to preserve the federal income tax deductibility of
compensation paid to executive officers. However, while the tax impact of any
compensation arrangement is an important factor to be considered, the impact is
evaluated in light of the Company's overall compensation philosophy.
Accordingly, the Company will authorize the payment of non-deductible
compensation if it deems that it is consistent with its compensation philosophy
and in the best interests of the Company and its stockholders.
Dated: April 28, 2000 Compensation Committee
Peter Churm (Chairman)
Frank P. Willey
The report of the Compensation Committee of the Board of Directors shall
not be deemed incorporated by reference by 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 CKE
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
21
<PAGE> 24
TRANSACTIONS WITH OFFICERS AND DIRECTORS
William P. Foley, the Company's Chairman, C. Thomas Thompson, its Chief
Executive Officer and President, and Andrew F. Puzder, its Executive Vice
President, General Counsel and Secretary are executive officers and/or directors
of SBRG. Frank Willey, one of the Company's directors, is also a director of
SBRG. Mr. Foley is also the Chairman and Chief Executive Officer and a principal
stockholder of FNF. Mr. Puzder is an officer of FNF, and Mr. Willey is a
director of FNF. Daniel D. Lane, one of the Company's directors, is also a
director of FNF. CKE and FNF are the beneficial owners of approximately 9% and
41%, respectively, of the outstanding shares of SBRG. CKE paid $1,201,290 in
royalty, advertising and franchise fees to SBRG in fiscal 2000. Carl Karcher
Enterprises, Inc. has agreements with SBRG for the dual branding of Carl's Jr.
with The Green Burrito.
Messrs. Foley, Thompson and Puzder are directors or executive officers of
Checkers. CKE, FNF and SBRG beneficially own approximately 24%, 4% and 4%,
respectively, of the outstanding shares of Checkers Common Stock, and CKE and
FNF hold warrants to purchase 612,536 shares and 175,689 shares, respectively,
of Checkers Common Stock.
CKE leases the land and buildings, which include the headquarters of CKE,
its distribution center and one restaurant location in Carl Karcher Plaza,
located at 401 West Carl Karcher Way, Anaheim, California, from Carl N. Karcher,
as co-trustee of the Trust. The term of the lease expires in April 2008, and CKE
has the option to renew the lease for one additional five-year term. The lease
was amended in March 1999, increasing the land area of the restaurant and
distribution center parcels, and increasing the rent and general insurance
requirements. The current rent under this lease is: (a) $15,580 per month and
6.5% of annual gross sales in excess of $2,436,369 for the restaurant; (b)
$67,835 per month for the distribution center, subject to adjustment every five
years; and (c) $21,296 per month for the headquarters offices, subject to
adjustment every five years. CKE also leases two adjacent parcels of land in
Carl Karcher Plaza from the Trust which are being utilized by CKE for its
training facilities and distribution center parking and storage. The rent is
$5,987 per month for one parcel and $6,875 per month for the other parcel, both
subject to adjustment every five years. The term for both leases expires in
April 2008, and CKE has the option to renew each of these leases for one
additional five-year term. The aggregate rents paid by CKE to the Trust for the
corporate offices and adjacent facilities during fiscal 2000 were $1,421,758.
CKE presently has two leases with the Trust with respect to two restaurant
properties. The terms of these leases range from 20 to 35 years. The minimum
monthly rental is the greater of $6,799 or 5.5% of annual gross sales in one of
the leases, and a minimum monthly rental for improvements of $2,871 or 4% of
annual gross sales, and a fixed monthly rental of $5,699 for the land in the
other lease. The leases expire in May 2004 and May 2010. The aggregate rents
paid by CKE to the Trust for these two restaurant properties during fiscal 2000
were $243,227.
In January 1994, CKE entered into an Employment Agreement with Carl N.
Karcher which was amended in November 1997 and expires December 31, 2003. The
Employment Agreement, as amended, provides that Mr. Karcher will be employed as
the Chairman Emeritus of the Board and as a non-executive officer reporting to
the Chief Executive Officer at a base salary of $400,000. If Mr. Karcher is
terminated or exercises his right to terminate employment following a change in
control of CKE following a merger, sale of assets or acquisition, Mr. Karcher
becomes entitled to payments due under the agreement as they become due for the
remainder of the term without the obligation of further services. The Employment
Agreement, as amended, also provides for a retirement benefit for Mr. Karcher in
the amount of $200,000 per year for life after the end of the employment term,
eligibility to participate in any management incentive compensation bonus pool
plans, death benefits to include payment of any compensation due Mr. Karcher to
his estate for services rendered prior to the date of his death, payment of Mr.
Karcher's base salary to Mrs. Karcher for one full year following his death and,
thereafter, payment of Mr. Karcher's retirement benefits to Mrs. Karcher for the
remainder of her life.
CKE leases a restaurant property from Pannier Enterprises, L.P. Loren C.
Pannier, an Executive Officer of CKE, is an affiliate of Pannier Enterprises,
L.P. This lease expires in July 2004 and provides for a minimum monthly rental
equal to the greater of $4,910 or 5% of annual gross sales of the Carl's Jr.
restaurant at that
22
<PAGE> 25
location. CKE leases two additional restaurant properties in which Pannier
Enterprises, L.P. has a 56% and a 33% undivided interest, respectively. These
leases expire between January 2001 and February 2002 and provide for minimum
monthly rentals equal to (a) the greater of $3,290 or 5.5% of annual gross sales
of the Carl's Jr. restaurant at one location, and (b) the greater of $3,440 or
6% of annual gross sales of the Carl's Jr. restaurant at the other location. The
aggregate rents paid by CKE to Pannier Enterprises, L.P. under all three leases
during fiscal 2000 were $123,055.
CLK, Inc. ("CLK") is a franchisee of CKE and currently operates 23 Carl's
Jr. restaurants, six of which are Carl's Jr./Green Burrito dual-brand
restaurants. Carl L. Karcher is a son of Carl N. Karcher, a director of CKE, and
an affiliate of CLK. In connection with the operation of its 23 franchised
restaurants, CLK regularly purchases food and other products from CKE on the
same terms and conditions as other franchisees. During fiscal 2000, these
purchases totaled approximately $6,979,804. During fiscal 2000, CLK paid royalty
fees of $864,541, including royalties fees paid to CKE for the Green Burrito
dual-brand restaurants, and advertising and promotional fees of $811,486 for all
23 restaurants combined. CLK is also a lessee or sublessee of CKE with respect
to 14 restaurant locations. Rental payments equal a percentage of the annual
gross sales of the restaurants ranging from 0% to 8%, and/or minimum monthly
rentals ranging from $4,157 to $9,846. The leases expire between September 2002
and June 2011. The rents paid under these leases during fiscal 2000 aggregated
$1,124,028. CLK also licenses one restaurant from CKE under which CLK is
obligated to remit 50% of the restaurant's net profit to CKE. During fiscal
2000, CLK paid CKE $107,529 under this license agreement.
CLK New-Star, L.P. ("New-Star") is a franchisee of CKE. Carl L. Karcher is
the son of Carl N. Karcher, a director of CKE and an affiliate of New-Star. New
Star currently has no Carl's Jr. restaurants in operation. In fiscal 2000, New
Star entered into a Development Agreement with CKE pursuant to which New Star is
obligated to develop and become a franchisee with respect to fifteen (15) Carl's
Jr. restaurants at varying times between 2000 and 2005. New-Star paid an
aggregate of $150,000 to CKE in development fees in fiscal 2000.
KWK Foods, L.L.C. ("KWK") is a franchisee of CKE and currently operates
eight Carl's Jr. restaurants, one of which is a Carl's Jr./Green Burrito
dual-brand restaurant. Carl L. Karcher is the son of Carl N. Karcher, a director
of CKE and an affiliate of KWK. Joseph C. Karcher is the son of Carl N. Karcher
and an affiliate of KWK. Gary Wiles is the son-in-law of Carl N. Karcher and an
affiliate of KWK. KWK, pursuant to a Development Agreement with CKE, is
obligated to develop and become a franchisee with respect to five additional
Carl's Jr. restaurants at varying times between 2001 and 2004. In connection
with the operation of its eight franchised restaurants, KWK regularly purchases
food and other products from CKE on the same terms and conditions as other
franchisees. During fiscal 2000, these purchases totaled approximately
$1,842,258. During fiscal 2000, KWK paid royalty fees of $229,815, including
royalties paid to CKE for its Green Burrito dual-brand restaurant, and
advertising and promotional fees of $290,471, for all eight restaurants
combined. KWK was also a sublessee of CKE with respect to three restaurant
locations during fiscal 2000. Rental payments equal a percentage of annual gross
sales of the restaurants ranging from 0% to 1% and/or fixed monthly rentals
ranging from $4,583 to $8,183. The leases expire between October 2015 and
February 2018. Total rents paid under these three leases during fiscal 2000
aggregated $213,196.
JCK, Inc. ("JCK") is a franchisee of CKE and currently operates 10 Carl's
Jr. restaurants. Joseph C. Karcher is a son of Carl N. Karcher and an affiliate
of JCK. JCK, pursuant to a Development Agreement with CKE, is obligated to
develop and become a franchisee with respect to five additional Carl's Jr.
restaurants at varying times between 2000 and 2004. In connection with the
operation of its 10 franchised restaurants, JCK regularly purchases food and
other products from CKE on the same terms and conditions as other franchisees.
During fiscal 2000, these purchases totaled approximately $1,954,760. During
fiscal 2000, JCK paid royalty fees of $182,104, and advertising and promotional
fees of $332,931, for all 10 restaurants combined.
Wiles Restaurants, Inc. ("Wiles") is a franchisee of CKE and currently
operates nine Carl's Jr. restaurants, two of which are Carl's Jr./Green Burrito
dual-brand restaurants. Anne M. Wiles is the daughter of Carl N. Karcher and an
affiliate of Wiles. Wiles is obligated, pursuant to a Development Agreement with
CKE, to develop and become a franchisee with respect to three additional Carl's
Jr. restaurants at varying
23
<PAGE> 26
times between 2001 and 2004. In connection with the operation of its nine
franchised restaurants, Wiles regularly purchases food and other products from
CKE on the same terms and conditions as other franchisees. During fiscal 2000,
these purchases totaled approximately $2,664,041. During fiscal 2000, Wiles paid
royalty fees of $334,289, including royalty fees paid to CKE for its Green
Burrito dual-brand restaurants, and advertising and promotional fees of
$360,734, for all nine restaurants combined. Wiles is also a lessee of CKE with
respect to one restaurant location. Minimum monthly rental payments equal
$10,270. The lease expires in August 2011. The rents paid under this lease
during fiscal 2000 aggregated $123,240.
Estrella del Rio Grande, L.L.C. ("ERG") is a franchisee of CKE and
currently operates one Carl's Jr. restaurant. Anne M. Wiles is the daughter of
Carl N. Karcher and an affiliate of ERG. In fiscal 2000, ERG entered into a
Development Agreement with CKE for the development of 10 Carl's Jr. restaurants.
Of the 10 development obligations, ERG has satisfied one, and is obligated to
develop and become a franchisee with respect to nine additional Carl's Jr.
restaurants at varying times between 2001 and 2005. ERG paid an aggregate of
$115,000 in franchise and development fees in fiscal 2000. In connection with
the operation of its one franchised restaurant, ERG regularly purchases food and
other products from CKE on the same terms and conditions as other franchisees.
During fiscal 2000, these purchases totaled approximately $6,169. ERG began
operating this restaurant on January 19, 2000. Payment of royalty fees and
advertising and promotion fees were waived for its first four weeks of
operation. Accordingly, during fiscal 2000, ERG did not pay royalty fees or
advertising and promotional fees for its one restaurant.
Bernard Karcher Investments, Inc. ("BKI") is a franchisee of CKE and
currently operates 12 Carl's Jr. restaurants. Bernard W. Karcher is the brother
of Carl N. Karcher and an affiliate of BKI. In connection with the operation of
its 12 franchised restaurants, BKI regularly purchases food and other products
from CKE on the same terms and conditions as other franchisees. During fiscal
2000, these purchases totaled approximately $3,912,770. During fiscal 2000, BKI
paid royalty fees of $444,042, and advertising and promotional fees of $509,018,
for all 12 restaurants combined. BKI is also a lessee of CKE with respect to two
restaurant locations. Minimum monthly rental payments equal $8,972 on one lease,
and $9,600 on the other. The leases expire in January 2006 and September 2012.
The rentals paid under these two leases during fiscal 2000 aggregated $177,029.
B&J, L.L.C. ("B&J") is a franchisee of CKE and currently operates five
Carl's Jr. restaurants. Bernard W. Karcher is the brother of Carl N. Karcher and
an affiliate of B&J. B&J, pursuant to a Development Agreement with CKE, is
obligated to develop and become a franchisee with respect to one additional
Carl's Jr. restaurant in 2002. In connection with the operation of its five
franchised restaurants, B&J regularly purchases food and other products from CKE
on the same terms and conditions as other franchisees. During fiscal 2000, these
purchases totaled approximately $1,092,283. During fiscal 2000, B&J paid royalty
fees of $94,979, and advertising and promotional fees of $142,501, for all five
restaurants combined. B&J is also a sublessee of CKE with respect to one
restaurant location. Rental payments equal the greater of $3,900 per month or 4%
of annual gross sales. This lease expires in January 2018. Total rents paid
under this lease during fiscal 2000 aggregated $46,800.
TWM Industries ("TWM") is a franchisee of CKE and currently operates 16
Carl's Jr. restaurants, four of which are Carl's Jr./Green Burrito dual-brand
restaurants. C. Thomas Thompson, a director and Executive Officer of CKE, is an
affiliate of TWM. TWM, pursuant to a Development Agreement with CKE, is
obligated to develop and become a franchisee with respect to six additional
Carl's Jr. restaurants at varying times between 2000 and 2003. In connection
with the operation of its 16 franchised restaurants, TWM regularly purchases
food and other products from CKE on the same terms and conditions as other
franchisees. During fiscal 2000, these purchases totaled approximately
$4,270,369. During fiscal 2000, TWM paid royalty fees of $614,433, including
royalties fees paid to CKE for the Green Burrito dual-brand restaurants, and
advertising and promotional fees of $664,535, for all 16 restaurants combined.
TWM was also a lessee or sublessee of CKE with respect to nine restaurant
locations during fiscal 2000. Rental payments equal a percentage of the annual
gross sales of the restaurants ranging from 0% to 5.5% and/or a minimum monthly
rental ranging from $3,669 to $8,056. The leases expire between February 2001
and December 2013. Total rents paid under these nine leases during fiscal 2000
aggregated $615,065.
24
<PAGE> 27
The Chowchilla Connection, L.L.C. ("Chowchilla") is a franchisee of CKE and
currently operates one Carl's Jr./Green Burrito dual-brand restaurant. C. Thomas
Thompson, a director and Executive Officer of CKE, is an affiliate of
Chowchilla. In connection with the operation of its one franchised restaurant,
Chowchilla regularly purchases food and other products from CKE on the same
terms and conditions as other franchisees. During fiscal 2000, these purchases
totaled approximately $238,058. During fiscal 2000, Chowchilla paid royalty fees
of $24,957, including royalty fees paid to CKE for its Green Burrito dual-brand
restaurants, and advertising and promotional fees of $36,944.
M & N Foods, L.L.C. ("M & N") is a franchisee of CKE and currently operates
15 Carl's Jr. restaurants, six of which are Carl Jr./Green Burrito dual-brand
restaurants. Daniel D. ("Ron") Lane is a director of CKE and an affiliate of M &
N. In fiscal 2000, M & N entered into a Development Agreement with CKE pursuant
to which M & N is obligated to develop and become a franchise with respect to
five Carl's Jr. restaurants at varying times between 2001 and 2005. On January
31, 2000, M & N purchased 14 Carl's Jr. restaurants, six of which were Carl's
Jr./Green Burrito dual-brand restaurants, for $14.1 million, of which $498,750
related to franchise and development fees, including Green Burrito franchise
fees. CKE recorded a gain on the sale of these restaurants of $12.2 million and
also received a note receivable from M & N for $665,000. The note bears interest
at 9 1/4% and is due the earlier of March 31, 2000, or within three days of M &
N executing an agreement which extends the lease for one of the Carl's Jr.
restaurants it operates. M & N also entered into a management agreement to
manage one Carl's Jr. restaurant which M & N plans to purchase in May 2000. This
transaction closed on the last day of CKE's fiscal year 2000; accordingly, no
purchases of food and other products nor rental, royalty or advertising and
promotional fees were paid by M & N to CKE in fiscal 2000.
R.W.W., Inc. ("RWW") is a franchisee of CKE and currently operates eight
Carl's Jr. restaurants. Robert W. Wisely, an Executive Officer of CKE, is an
affiliate of RWW. In connection with the operation of its eight restaurants, RWW
regularly purchases food and other products from CKE on the same terms and
conditions as other franchisees. During fiscal 2000, these purchases totaled
approximately $2,595,686. During fiscal 2000, RWW paid royalty fees of $320,433
and advertising and promotional fees of $489,596, for all eight restaurants
combined. RWW is also a sublessee of CKE with respect to six restaurant
locations. Rental payments equal a percentage of the annual gross sales of the
restaurants ranging from 5% to 7% and/or minimum monthly rentals ranging from
$4,950 to $11,473. The leases expire between June 2001 and July 2006. Total
rents paid under these six leases during fiscal 2000 aggregated $635,370.
CKE has a limited-term guarantee with an independent third party on behalf
of certain of its Carl's Jr. franchisees. CKE agreed to guarantee the payment
obligations of RWW, ERG, BKI, Wiles, JCK and KWK under these arrangements in
fiscal 2000 up to a maximum amount of $203,745.
Restaurants leased from related parties generally were constructed by CKE
on land acquired by CKE. The properties were then sold to these parties and
leased back by CKE. CKE believes that these sale and leaseback arrangements are
at rental rates generally similar to those with unaffiliated third parties. The
foregoing franchise and lease arrangements are on terms generally similar to
those with unaffiliated parties.
INDEPENDENT AUDITORS
Selection of an independent auditor is made by the Board of Directors upon
consultation with the Audit Committee. CKE's independent auditor for the fiscal
year ended January 31, 2000 was KPMG LLP. The Board of Directors will vote upon
the selection of an auditor for the current fiscal year at a future Board
meeting.
Representatives of KPMG LLP are expected to attend the Meeting and be
available to respond to appropriate questions. The representatives of KPMG LLP
also will have an opportunity to make a formal statement, if they so desire.
25
<PAGE> 28
STOCKHOLDERS' PROPOSALS FOR 2001 ANNUAL MEETING
Pursuant to the rules of the Securities and Exchange Commission, proposals
by eligible stockholders (as defined below) which are intended to be presented
at CKE's Annual Meeting of Stockholders in 2001 must be received by CKE by
January 14, 2001 in order to be considered for inclusion in CKE's proxy
materials. The Board of Directors of CKE will determine whether any such
proposal will be included in its 2001 proxy solicitation materials. An eligible
stockholder is one who is the record or beneficial owner of at least 1% or
$1,000 in market value of securities entitled to be voted at the 2001 Annual
Meeting and has held such securities for at least one year, and who shall
continue to own such securities through the date on which the meeting is held.
ANNUAL REPORT
CKE's 2000 Annual Report, including consolidated financial statements for
fiscal 2000, accompanies this Proxy Statement. The Annual Report is not to be
regarded as proxy solicitation material.
Stockholders are urged to sign and return their proxies without delay.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 31, 2000, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WILL BE PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO INVESTOR
RELATIONS, CKE RESTAURANTS, INC., P. O. BOX 4349, ANAHEIM, CALIFORNIA 92803.
26
<PAGE> 29
APPENDIX A
CKE RESTAURANTS, INC.
1999 STOCK INCENTIVE PLAN*
This 1999 STOCK INCENTIVE PLAN (the "Plan") is hereby established by CKE
RESTAURANTS, INC., a Delaware corporation (the "Company"), and adopted by its
Board of Directors as of the 16th day of March, 1999 (the "Effective Date").
ARTICLE 1.
PURPOSES OF THE PLAN
1.1 PURPOSES. The purposes of the Plan are (a) to enhance the Company's
ability to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company's business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the Company.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1 ADMINISTRATOR. "Administrator" means the Board or, if the Board
delegates responsibility for any matter to the Committee, the term Administrator
shall mean the Committee.
2.2 AFFILIATED COMPANY. "Affiliated Company" means any subsidiary of the
Company, or any business venture which the Company has a significant interest,
as determined at the discretion of the Administrator. However, for purposes of
eligibility to receive Incentive Options, "Affiliated Company" means any "parent
corporation" or "subsidiary corporation" of the Company, whether now existing or
hereafter created or acquired, as those terms are defined in Sections 424(e) and
424(f) of the Code, respectively.
2.3 BOARD. "Board" means the Board of Directors of the Company.
2.4 CHANGE IN CONTROL. "Change in Control" shall mean (i) the acquisition,
directly or indirectly, by any person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) of the beneficial
ownership of securities of the Company possessing more than fifty percent (50%)
of the total combined voting power of all outstanding securities of the Company;
(ii) a merger or consolidation in which the Company is not the surviving entity,
except for a transaction in which the holders of the outstanding voting
securities of the Company immediately prior to such merger or consolidation
hold, in the aggregate, securities possessing more than fifty percent (50%) of
the total combined voting power of all outstanding voting securities of the
surviving entity immediately after such merger or consolidation; (iii) a reverse
merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the Company are transferred to or acquired
by a person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other disposition
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; or (v) the approval by the shareholders of a
plan or proposal for the liquidation or dissolution of the Company.
2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
- ---------------
* As amended by resolution of the Board of Directors on March 16, 2000, subject
to the approval of the stockholders.
A-1
<PAGE> 30
2.6 COMMITTEE. "Committee" means a committee of two or more members of the
Board appointed to administer the Plan, as set forth in Section 7.1 hereof.
2.7 COMMON STOCK. "Common Stock" means the Common Stock, $.0001 par value
of the Company, subject to adjustment pursuant to Section 4.2 hereof.
2.8 DISABILITY. "Disability" means permanent and total disability as
defined in Section 22(e)(3) of the Code. The Administrator's determination of a
Disability or the absence thereof shall be conclusive and binding on all
interested parties.
2.9 EFFECTIVE DATE. "Effective Date" means the date on which the Plan is
adopted by the Board, as set forth on the first page hereof.
2.10 EXERCISE PRICE. "Exercise Price" means the purchase price per share
of Common Stock payable upon exercise of an Option.
2.11 FAIR MARKET VALUE. "Fair Market Value" on any given date means the
value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading on a
national stock exchange or a NASDAQ market system which reports closing
sale prices, the Fair Market Value shall be the closing sale price on the
date of valuation on the principal stock exchange or NASDAQ market system
on which the Common Stock is then listed or admitted to trading, or, if no
closing sale price is quoted on such day, then the Fair Market Value shall
be the closing sale price of the Common Stock on such exchange or NASDAQ
market system on the next preceding day for which a closing sale price is
reported.
(b) If the Common Stock is not then listed or admitted to trading on a
national stock exchange or NASDAQ market system which reports closing sale
prices, the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock in the over-the-counter market on the date
of valuation.
(c) If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the Administrator in good
faith using any reasonable method of evaluation, which determination shall
be conclusive and binding on all interested parties.
2.12 INCENTIVE OPTION. "Incentive Option" means any Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
2.13 INCENTIVE OPTION AGREEMENT. "Incentive Option Agreement" means an
Option Agreement with respect to an Incentive Option.
2.14 NASD DEALER. "NASD Dealer" means a broker-dealer that is a member of
the National Association of Securities Dealers, Inc.
2.15 NONQUALIFIED OPTION. "Nonqualified Option" means any Option that is
not an Incentive Option. To the extent that any Option designated as an
Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Shareholder or because it exceeds the annual limit provided for in Section
5.6 below, it shall to that extent constitute a Nonqualified Option.
2.16 NONQUALIFIED OPTION AGREEMENT. "Nonqualified Option Agreement" means
an Option Agreement with respect to a Nonqualified Option.
2.17 OFFEREE. "Offeree" means a Participant to whom a Right to Purchase
has been offered or who has acquired Restricted Stock under the Plan.
2.18 OPTION. "Option" means any option to purchase Common Stock granted
pursuant to the Plan.
2.19 OPTION AGREEMENT. "Option Agreement" means the written agreement
entered into between the Company and the Optionee with respect to an Option
granted under the Plan.
A-2
<PAGE> 31
2.20 OPTIONEE. "Optionee" means a Participant who holds an Option.
2.21 PARTICIPANT. "Participant" means an individual or entity who holds an
Option, a Right to Purchase or Restricted Stock under the Plan.
2.22 PURCHASE PRICE. "Purchase Price" means the purchase price per share
of Restricted Stock payable upon acceptance of a Right to Purchase.
2.23 RESTRICTED STOCK. "Restricted Stock" means shares of Common Stock
issued pursuant to Article 6 hereof, subject to any restrictions and conditions
as are established pursuant to such Article 6.
2.24 RIGHT TO PURCHASE. "Right to Purchase" means a right to purchase
Restricted Stock granted to an Offeree pursuant to Article 6 hereof.
2.25 SERVICE PROVIDER. "Service Provider" means a consultant or other
person or entity who provides services to the Company or an Affiliated Company
and who the Administrator authorizes to become a Participant in the Plan.
2.26 STOCK PURCHASE AGREEMENT. "Stock Purchase Agreement" means the
written agreement entered into between the Company and the Offeree with respect
to a Right to Purchase offered under the Plan.
2.27 10% SHAREHOLDER. "10% Shareholder" means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.
ARTICLE 3.
ELIGIBILITY
3.1 INCENTIVE OPTIONS. Officers and other key employees of the Company or
of an Affiliated Company (including members of the Board if they are employees
of the Company or of an Affiliated Company) are eligible to receive Incentive
Options under the Plan.
3.2 NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE. Officers and other key
employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service
Providers are eligible to receive Nonqualified Options or Rights to Purchase
under the Plan. Nonqualified Options or Rights to Purchase may also be granted
to an employee, in connection with the hiring, retention or otherwise, prior to
the date the employee first performs services for the Company or an Affiliated
Company, provided that no such Options or shares of Restricted Stock shall
become vested prior to the date the employee first performs such services.
3.3 LIMITATION ON SHARES. In no event shall any Participant be granted
Options or Rights to Purchase in any one calendar year pursuant to which the
aggregate number of shares of Common Stock that may be acquired thereunder
exceeds 500,000 shares. In no event shall the aggregate number of shares subject
to Incentive Options exceed 6,650,000.
ARTICLE 4.
PLAN SHARES
4.1 SHARES SUBJECT TO THE PLAN. A total of 3,500,000 shares of Common
Stock, plus, on the date of each annual meeting of the stockholders an
additional 350,000 shares of Common Stock, may be issued under the Plan subject
to adjustment as to the number and kind of shares pursuant to Section 4.2
hereof. For purposes of this limitation, in the event that (a) all or any
portion of any Option or Right to Purchase granted or offered under the Plan can
no longer under any circumstances be exercised, or (b) any shares of Common
Stock are reacquired by the Company pursuant to an Incentive Option Agreement,
Nonqualified Option Agreement or Stock Purchase Agreement (including shares
received as payment of Exercise Price), the
A-3
<PAGE> 32
shares of Common Stock allocable to the unexercised portion of such Option or
such Right to Purchase, or the shares so reacquired, shall again be available
for grant or issuance under the Plan.
4.2 CHANGES IN CAPITAL STRUCTURE. In the event that the outstanding shares
of Common Stock are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, stock dividend, or other change in the capital structure of
the Company, then appropriate adjustments shall be made by the Administrator to
the aggregate number and kind of shares subject to this Plan, and the number and
kind of shares and the price per share subject to outstanding Option Agreements,
Rights to Purchase and Stock Purchase Agreements in order to preserve, as nearly
as practical, but not to increase, the benefits to Participants.
ARTICLE 5.
OPTIONS
5.1 OPTION AGREEMENT. Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, the Exercise Price per share, and whether the Option is an
Incentive Option or Nonqualified Option. As soon as is practical following the
grant of an Option, an Option Agreement shall be duly executed and delivered by
or on behalf of the Company to the Optionee to whom such Option was granted.
Each Option Agreement shall be in such form and contain such additional terms
and conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable, including, without
limitation, the imposition of any rights of first refusal and resale obligations
upon any shares of Common Stock acquired pursuant to an Option Agreement. Each
Option Agreement may be different from each other Option Agreement.
5.2 EXERCISE PRICE. The Exercise Price per share of Common Stock covered
by each Option shall be determined by the Administrator, subject to the
following: (a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is granted, and (b)
if the person to whom an Incentive Option is granted is a 10% Shareholder on the
date of grant, the Exercise Price shall not be less than 110% of Fair Market
Value on the date the Option is granted.
5.3 PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall be made
upon exercise of an Option and may be made, in the discretion of the
Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c)
the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Optionee's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Optionee; (f) the waiver of compensation due or accrued to the Optionee for
services rendered; (g) provided that a public market for the Common Stock
exists, a "same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (h) provided that a public market for
the Common Stock exists, a "margin" commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (i) any combination of
the foregoing methods of payment or any other consideration or method of payment
as shall be permitted by applicable corporate law.
5.4 TERM AND TERMINATION OF OPTIONS. The term and provisions for
termination of each Option shall be as fixed by the Administrator, but no Option
may be exercisable more than ten (10) years after the date it is granted. An
Incentive Option granted to a person who is a 10% Shareholder on the date of
grant shall not be exercisable more than five (5) years after the date it is
granted.
A-4
<PAGE> 33
5.5 VESTING AND EXERCISE OF OPTIONS. Each Option shall vest and become
exercisable in one or more installments at such time or times and subject to
such conditions, including without limitation the achievement of specified
performance goals or objectives, as shall be determined by the Administrator.
5.6 ANNUAL LIMIT ON INCENTIVE OPTIONS. To the extent required for
"incentive stock option" treatment under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock shall
not, with respect to which Incentive Options granted under this Plan and any
other plan of the Company or any Affiliated Company become exercisable for the
first time by an Optionee during any calendar year, exceed $100,000.
5.7 NONTRANSFERABILITY OF OPTIONS. Except as otherwise provided by the
Administrator, no Option shall be assignable or transferable except by will or
the laws of descent and distribution, and during the life of the Optionee shall
be exercisable only by such Optionee.
5.8 RIGHTS AS SHAREHOLDER. An Optionee or permitted transferee of an
Option shall have no rights or privileges as a shareholder with respect to any
shares covered by an Option until such Option has been duly exercised and
certificates representing shares purchased upon such exercise have been issued
to such person.
ARTICLE 6.
RIGHTS TO PURCHASE
6.1 NATURE OF RIGHT TO PURCHASE. A Right to Purchase granted to an Offeree
entitles the Offeree to purchase, for a Purchase Price determined by the
Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives.
6.2 ACCEPTANCE OF RIGHT TO PURCHASE. An Offeree shall have no rights with
respect to the Restricted Stock subject to a Right to Purchase unless the
Offeree shall have accepted the Right to Purchase within ten (10) days (or such
longer or shorter period as the Administrator may specify) following the grant
of the Right to Purchase by making payment of the full Purchase Price to the
Company in the manner set forth in Section 6.3 hereof and by executing and
delivering to the Company a Stock Purchase Agreement. Each Stock Purchase
Agreement shall be in such form, and shall set forth the Purchase Price and such
other terms, conditions and restrictions of the Restricted Stock, not
inconsistent with the provisions of this Plan, as the Administrator shall, from
time to time, deem desirable. Each Stock Purchase Agreement may be different
from each other Stock Purchase Agreement.
6.3 PAYMENT OF PURCHASE PRICE. Subject to any legal restrictions, payment
of the Purchase Price upon acceptance of a Right to Purchase Restricted Stock
may be made, in the discretion of the Administrator, by: (a) cash; (b) check;
(c) the surrender of shares of Common Stock owned by the Offeree that have been
held by the Offeree for at least six (6) months, which surrendered shares shall
be valued at Fair Market Value as of the date of such exercise; (d) the
Offeree's promissory note in a form and on terms acceptable to the
Administrator; (e) the cancellation of indebtedness of the Company to the
Offeree; (f) the waiver of compensation due or accrued to the Offeree for
services rendered; or (g) any combination of the foregoing methods of payment or
any other consideration or method of payment as shall be permitted by applicable
corporate law.
6.4 RIGHTS AS A SHAREHOLDER. Upon complying with the provisions of Section
6.2 hereof, an Offeree shall have the rights of a shareholder with respect to
the Restricted Stock purchased pursuant to the Right to Purchase, including
voting and dividend rights, subject to the terms, restrictions and conditions as
are set forth in the Stock Purchase Agreement. Unless the Administrator shall
determine otherwise, certificates evidencing shares of Restricted Stock shall
remain in the possession of the Company until such shares have vested in
accordance with the terms of the Stock Purchase Agreement.
6.5 RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided in the Stock Purchase Agreement. In the
A-5
<PAGE> 34
event of termination of a Participant's employment, service as a director of the
Company or Service Provider status for any reason whatsoever (including death or
disability), the Stock Purchase Agreement may provide, in the discretion of the
Administrator, that the Company shall have the right, exercisable at the
discretion of the Administrator, to repurchase (i) at the original Purchase
Price, any shares of Restricted Stock which have not vested as of the date of
termination, and (ii) at Fair Market Value, any shares of Restricted Stock which
have vested as of such date, on such terms as may be provided in the Stock
Purchase Agreement.
6.6 VESTING OF RESTRICTED STOCK. The Stock Purchase Agreement shall
specify the date or dates, the performance goals or objectives which must be
achieved, and any other conditions on which the Restricted Stock may vest.
6.7 DIVIDENDS. If payment for shares of Restricted Stock is made by
promissory note, any cash dividends paid with respect to the Restricted Stock
may be applied, in the discretion of the Administrator, to repayment of such
note.
6.8 NONASSIGNABILITY OF RIGHTS. No Right to Purchase shall be assignable
or transferable except by will or the laws of descent and distribution or as
otherwise provided by the Administrator.
ARTICLE 7.
ADMINISTRATION OF THE PLAN
7.1 ADMINISTRATOR. Authority to control and manage the operation and
administration of the Plan shall be vested in the Board, which may delegate such
responsibilities in whole or in part to a committee consisting of two (2) or
more members of the Board (the "Committee"). Members of the Committee may be
appointed from time to time by, and shall serve at the pleasure of, the Board.
As used herein, the term "Administrator" means the Board or, with respect to any
matter as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.
7.2 POWERS OF THE ADMINISTRATOR. In addition to any other powers or
authority conferred upon the Administrator elsewhere in the Plan or by law, the
Administrator shall have full power and authority: (a) to determine the persons
to whom, and the time or times at which, Incentive Options or Nonqualified
Options shall be granted and Rights to Purchase shall be offered, the number of
shares to be represented by each Option and Right to Purchase and the
consideration to be received by the Company upon the exercise thereof; (b) to
interpret the Plan; (c) to create, amend or rescind rules and regulations
relating to the Plan; (d) to determine the terms, conditions and restrictions
contained in, and the form of, Option Agreements and Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be entitled to
exercise a Participant's rights under any Option or Right to Purchase under the
Plan; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or Stock Purchase
Agreement; (g) to accelerate the vesting of any Option or release or waive any
repurchase rights of the Company with respect to Restricted Stock; (h) to extend
the exercise date of any Option or acceptance date of any Right to Purchase; (i)
to provide for rights of first refusal and/or repurchase rights; (j) to amend
outstanding Option Agreements and Stock Purchase Agreements to provide for,
among other things, any change or modification which the Administrator could
have provided for upon the grant of an Option or Right to Purchase or in
furtherance of the powers provided for herein; and (k) to make all other
determinations necessary or advisable for the administration of the Plan, but
only to the extent not contrary to the express provisions of the Plan. Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Participants.
7.3 LIMITATION ON LIABILITY. No employee of the Company or member of the
Board or Committee shall be subject to any liability with respect to duties
under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person's conduct in the performance of duties
under the Plan.
A-6
<PAGE> 35
ARTICLE 8.
CHANGE IN CONTROL
8.1 CHANGE IN CONTROL. In order to preserve a Participant's rights in the
event of a Change in Control of the Company, (i) the time period relating to the
exercise or realization of all outstanding Options, Rights to Purchase and
Restricted Stock shall automatically accelerate immediately prior to the
consummation of such Change in Control, and (ii) with respect to Options and
Rights to Purchase, the Administrator in its discretion may, at any time an
Option or Right to Purchase is granted, or at any time thereafter, take one or
more of the following actions: (A) provide for the purchase or exchange of each
Option or Right to Purchase for an amount of cash or other property having a
value equal to the difference, or spread, between (x) the value of the cash or
other property that the Participant would have received pursuant to such Change
in Control transaction in exchange for the shares issuable upon exercise of the
Option or Right to Purchase had the Option or Right to Purchase been exercised
immediately prior to such Change in Control transaction and (y) the Exercise
Price of such Option or the Purchase Price under such Right to Purchase, (B)
adjust the terms of the Options and Rights to Purchase in a manner determined by
the Administrator to reflect the Change in Control, (C) cause the Options and
Rights to Purchase to be assumed, or new rights substituted therefor, by another
entity, through the continuance of the Plan and the assumption of outstanding
Options and Rights to Purchase, or the substitution for such Options and Rights
to Purchase of new options and new rights to purchase of comparable value
covering shares of a successor corporation, with appropriate adjustments as to
the number and kind of shares and Exercise Prices, in which event the Plan and
such Options and Rights to Purchase, or the new options and rights to purchase
substituted therefor, shall continue in the manner and under the terms so
provided, or (D) make such other provision as the Administrator may consider
equitable. If the Administrator does not take any of the forgoing actions, all
Options and Rights to Purchase shall terminate upon the consummation of the
Change in Control, unless the Common Stock remains listed or admitted to trading
on a national stock exchange or a NASDAQ market system. The Administrator shall
cause written notice of the proposed Change in Control transaction to be given
to all Participants not less than fifteen (15) days prior to the anticipated
effective date of the proposed transaction.
ARTICLE 9.
AMENDMENT AND TERMINATION OF THE PLAN
9.1 AMENDMENTS. The Board may from time to time alter, amend, suspend or
terminate the Plan in such respects as the Board may deem advisable. The Board
may alter or amend the Plan to comply with requirements under the Code relating
to Incentive Options or other types of options which give Optionees more
favorable tax treatment than that applicable to Options granted under this Plan
as of the date of its adoption. Upon any such alteration or amendment, any
outstanding Option granted hereunder may, if the Administrator so determines and
if permitted by applicable law, be subject to the more favorable tax treatment
afforded to an Optionee pursuant to such terms and conditions.
9.2 PLAN TERMINATION. Unless the Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options or Rights to Purchase may be granted under the
Plan thereafter, but Option Agreements, Stock Purchase Agreements and Rights to
Purchase then outstanding shall continue in effect in accordance with their
respective terms.
ARTICLE 10.
TAX WITHHOLDING
10.1 WITHHOLDING. The Company shall have the power to withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy any
applicable Federal, state, and local tax withholding requirements with respect
to any Options exercised or Restricted Stock issued under the Plan. To the
extent permissible under applicable tax, securities and other laws, the
Administrator may, in its sole discretion and upon such terms and conditions as
it may deem appropriate, permit a Participant to satisfy his or her
A-7
<PAGE> 36
obligation to pay any such tax, in whole or in part, up to an amount determined
on the basis of the highest marginal tax rate applicable to such Participant, by
(a) directing the Company to apply shares of Common Stock to which the
Participant is entitled as a result of the exercise of an Option or as a result
of the purchase of or lapse of restrictions on Restricted Stock or (b)
delivering to the Company shares of Common Stock owned by the Participant. The
shares of Common Stock so applied or delivered in satisfaction of the
Participant's tax withholding obligation shall be valued at their Fair Market
Value as of the date of measurement of the amount of income subject to
withholding.
ARTICLE 11.
MISCELLANEOUS
11.1 BENEFITS NOT ALIENABLE. Other than as provided above, benefits under
the Plan may not be assigned or alienated, whether voluntarily or involuntarily.
Any unauthorized attempt at assignment, transfer, pledge or other disposition
shall be without effect.
11.2 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Participant to be consideration for, or an
inducement to, or a condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give the right to any Participant to be
retained as an employee of the Company or any Affiliated Company or to limit the
right of the Company or any Affiliated Company to discharge any Participant at
any time.
11.3 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to Option Agreements and Stock Purchase
Agreements, except as otherwise provided herein, will be used for general
corporate purposes.
A-8
<PAGE> 37
PROXY
CKE RESTAURANTS, INC.
401 WEST CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CKE RESTAURANTS,
INC. The undersigned hereby appoints C. Thomas Thompson and Carl A. Strunk, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and to vote as designated on
reverse, all the shares of Common Stock of CKE Restaurants, Inc. held of record
by the undersigned on April 21, 2000, at the Annual Meeting of Stockholders to
be held on June 13, 2000 and any postponements or adjournments thereof.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
- -------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE> 38
Please mark
your votes as
indicated in
this example. [X]
FOR WITHHOLD
all of the nominees AUTHORITY
listed below except to vote for all
as withheld to nominees listed
the contrary below) below
1. Election of Directors: [ ] [ ]
(Instruction: To withhold
authority to vote for any
individual nominee strike
a line through the nominee's
name in the list below.)
Nominees: William P. Foley II, Carl N. Karcher
FOR AGAINST ABSTAIN
2. APPROVE AMENDMENT TO THE CKE RESTAURANTS, [ ] [ ] [ ]
INC. 1999 STOCK INCENTIVE PLAN.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or any and all postponements
or adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IN GIVEN, THE PROXIES WILL VOTE
FOR THE NOMINEES LISTED ABOVE, AND IN THEIR DISCRETION ON MATTERS DESCRIBED IN
ITEM 2.
YES NO
DO YOU PLAN TO ATTEND THE MEETING? [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Signature(s)_______________________________ Dated:______________________,2000
Please sign exactly as the name appears above. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by the President or other authorized officer.
If a partnership, please sign in the partnership name by an authorized person.
- -------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
