<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
</TABLE>
<TABLE>
<S> <C>
7-ELEVEN, INC.
- ------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
7-ELEVEN, INC.
2711 NORTH HASKELL AVENUE - BOX 711 - DALLAS, TEXAS 75221-0711
March 23, 2000
Dear 7-Eleven Shareholder:
We invite you to attend the Annual Meeting of Shareholders of
7-Eleven, Inc. on Wednesday, April 26, 2000, at 9:30 a.m., Central Daylight
Time, in the Joe C. Thompson Auditorium, on the ground floor at Cityplace
Center, 2711 North Haskell Avenue, Dallas, Texas. If you are planning to attend
the meeting in person, please mark the appropriate space on the enclosed proxy
card. A map of Cityplace is included on the outside back cover of the attached
Proxy Statement showing entrances to the parking garage. This booklet contains
the formal Notice of Annual Meeting and the Proxy Statement. The Proxy Statement
tells you about the proposals being presented to the shareholders for
consideration at this meeting and also provides additional important information
about the procedures for the meeting.
At this meeting you will be voting on the election of thirteen directors,
ratification of the selection of auditors, and an amendment to the Company's
Articles of Incorporation to effect a five-for-one reverse stock split of the
Company's Common Stock.
As described in the accompanying Proxy Statement, the Board of Directors
unanimously recommends that you vote FOR each of the persons nominated for
election as a director, and FOR each of the other items presented.
A copy of 7-Eleven's 1999 Annual Report is being sent to you along with this
Proxy Statement and Notice of Annual Meeting. As always, we appreciate your
continued interest in 7-Eleven.
Please complete, sign and mail the enclosed proxy card as soon as possible
so that your vote will be counted at the meeting.
Sincerely,
[LOGO]
Clark J. Matthews, II
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
SECRETARY AND DIRECTOR
<PAGE>
7-ELEVEN, INC.
2711 NORTH HASKELL AVENUE
BOX 711
DALLAS, TEXAS 75221-0711
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2000
------------------------
To the Shareholders of
7-ELEVEN, INC.:
The Annual Meeting of Shareholders of 7-Eleven, Inc. (the "Company") will be
held on Wednesday, April 26, 2000, at 9:30 a.m., Central Daylight Time, in the
Joe C. Thompson Conference Center, on the ground floor at Cityplace Center, 2711
North Haskell Avenue, Dallas, Texas, for the following purposes:
1. To elect thirteen directors to serve for the ensuing year;
2. To consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP, certified public accountants, to be the
independent auditors of the Company for the year 2000;
3. To consider and vote upon the approval of Articles of Amendment to the
Company's Second Restated and Amended Articles of Incorporation to amend
Article Four to effect a five-for-one reverse stock split of the
Company's Common Stock, $.0001 par value (the "Common Stock"); and
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business Friday, March 3, 2000,
will be entitled to receive notice of, and to vote at, the meeting.
Your attention is directed to the Proxy Statement for further information
about each of the matters to be considered.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND, PLEASE DATE AND SIGN THE ACCOMPANYING PROXY CARD EXACTLY AS YOUR NAME
APPEARS ON IT, INDICATING YOUR VOTES BY MARKING THE APPROPRIATE BOXES, AND
RETURN THE PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
By order of the Board of Directors,
[LOGO]
Clark J. Matthews, II
SECRETARY
Dallas, Texas
March 23, 2000
IF YOU PLAN TO ATTEND THE MEETING, PLEASE CHECK
THE APPROPRIATE BOX ON THE PROXY CARD
<PAGE>
7-ELEVEN, INC.
2711 NORTH HASKELL AVENUE
DALLAS, TEXAS 75204
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2000
DATE FIRST SENT OR GIVEN TO SECURITY HOLDERS: MARCH 27, 2000
------------------------
GENERAL INFORMATION
SOLICITATION AND REVOCABILITY OF PROXIES
The Board of Directors of 7-Eleven, Inc. (the "Company" or "7-Eleven") is
soliciting the accompanying proxy for use at the Annual Meeting of Shareholders
to be held April 26, 2000, and at any adjournments thereof. The Company's
officers and directors who held office during the last fiscal year, as well as
nominees and associates of any of the aforementioned persons, do not have any
interest, direct or indirect, in the matters to be voted upon, other than
election to office and as specifically disclosed in this Proxy Statement.
The Board of Directors requests that you execute and return the proxy
promptly, whether or not you plan to attend the meeting. In addition, if you
plan to attend the meeting in person, please indicate that by marking the
appropriate space on the proxy card. Unless you revoke your proxy or indicate a
contrary instruction on the proxy, each properly executed proxy will grant
authority to vote and it will be voted for the election of thirteen directors,
for ratification of the appointment of the accounting firm of
PricewaterhouseCoopers LLP to be the independent auditors of the Company for
2000 and for approval of the proposed amendment to Article Four of the Company's
Second Restated and Amended Articles of Incorporation to effect a five-for-one
reverse stock split of the Company's Common Stock. Any shareholder may revoke a
previously submitted proxy by giving written notice of revocation to the Company
at any time prior to the meeting or by advising the Inspector of Election of the
revocation at the meeting; however, presence at the meeting will not
automatically revoke the proxy and revocation during the meeting will not affect
any votes previously taken. The signing of the proxy grants discretionary
authority to vote upon matters which may properly come before the meeting from
the floor or if we do not know about the matters in time to give you additional
notice. We are not aware that any matter other than those described in this
Proxy Statement will be presented, except approval of the minutes of the 1999
Annual Meeting of Shareholders.
The cost of soliciting proxies will be paid by 7-Eleven. 7-Eleven has
retained Innisfree M&A Incorporated, New York, New York, to assist in the
solicitation, at an estimated cost of $2,500, plus reimbursement of reasonable
out-of-pocket expenses. In addition, the Company will reimburse brokers or other
persons holding stock in their names or in the names of their nominees for
charges and expenses incurred in forwarding proxies and proxy material to the
beneficial owners. Solicitation may also be made by officers and regular
employees of 7-Eleven, without additional compensation, by use of the mails,
telephone, telegraph or in person.
1
<PAGE>
SHARES OUTSTANDING AND VOTING RIGHTS
Shareholders of record as of the close of business March 3, 2000, are
entitled to notice of, and to vote at, the meeting. At the record date there
were 410,112,375 shares of common stock, $.0001 par value (the "Common Stock"),
outstanding and entitled to vote, the only class of voting securities of the
Company outstanding, and there were 3,999 record holders on such date. Each
outstanding share is entitled to one vote.
With respect to the election of directors, each director must be elected by
a plurality of the votes cast by the holders of shares entitled to vote in such
election at the meeting. All other matters to be voted upon must be approved by
the affirmative vote of the holders of a majority of the shares entitled to vote
at the meeting.
Cumulative voting is not permitted for the election of directors or on any
other matter. In addition, an abstention from voting or a broker non-vote will
be counted toward determining the presence of a quorum, but will not be included
in determining the number of votes "for" the election of directors and will not
be counted "for" or "against" any other item being voted upon.
OTHER INFORMATION
THE COMPANY'S RESTRUCTURING. On October 24, 1990, the Company filed a
voluntary petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
Court (the "Bankruptcy Court") for the Northern District of Texas, Dallas
Division (Case No. 390-37119-HCA-11). In accordance with the Company's Plan of
Reorganization (the "Plan of Reorganization") IYG Holding Company ("IYG"), which
is jointly owned by Ito-Yokado Co., Ltd. ("Ito-Yokado") and Seven-Eleven Japan
Co., Ltd. ("Seven-Eleven Japan"), acquired, for an aggregate purchase price of
$430 million in cash, approximately 70% of the Company's outstanding Common
Stock following the consummation of the Plan of Reorganization. As of the record
date for this meeting, IYG owned shares of the Common Stock, representing 65.09%
of the shares entitled to vote at this meeting.
On March 1, 2000, IYG signed a Subscription Agreement to acquire an
additional 113.7 million newly issued shares of Common Stock. This transaction
closed on March 16, 2000. Therefore, the number of shares outstanding and
entitled to vote on the record date does not include these additional shares.
IYG's ownership is now approximately 72% of the total number of issued and
outstanding shares. See "Security Ownership of Certain Beneficial Owners,"
below.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
BOARD OF DIRECTORS
The Board of Directors has set the number of directors to be elected at this
meeting at thirteen, which shall constitute the entire board of directors. Each
director shall be elected to hold office until the next Annual Meeting of
Shareholders or until his earlier death, removal or resignation or until his
successor is duly elected and qualified.
Although there is currently no agreement that controls the composition of
the Board of Directors, the fact that IYG owns over 65% of the Company's
outstanding Common Stock (see "Security Ownership of Certain Persons" below)
means that IYG can control the composition of the Company's Board of Directors.
The nominees for election as directors for 2000 have been nominated by
resolution adopted by the current Board of Directors.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1999, there were three meetings of the Board of Directors.
2
<PAGE>
The Board of Directors has an Audit Committee, which was composed of three
directors in 1999: Mr. Chai, who served as Chairman, Mr. Fernandes, and
Dr. Pacholder. The Audit Committee met eight times during 1999. The functions of
the Audit Committee include: recommending the engagement of independent auditors
for the Company and reviewing with them the plan and scope of the audit, its
status during the year, the results when completed and the fees for services
performed, as well as reviewing the engagement of the independent auditors to
perform nonaudit services and the effect, if any, this may have on their
independence; reviewing with the Company's internal auditors the plan, scope and
results of their operations; discussing with management, the independent
auditors and the internal auditors the adequacy of internal accounting controls
and, if deemed necessary or appropriate, discussing with each of them,
independently of the other, any recommendations on matters which any of them
considers to be of importance; reviewing the Company's accounting and financial
reporting principles, policies and practices; and reviewing, prior to
publication, the annual audited financial statements as well as such other
Company financial information or releases as the Committee deems desirable. The
Audit Committee also undertakes such other duties as may be assigned to it by
the Board of Directors.
At the end of 1999 both the Securities and Exchange Commission and Nasdaq
adopted new rules relating to Audit Committees. Under the new rules, members of
the Committee must be able to read and evaluate financial statements and must be
"independent" as defined in the rules. The Company believes that each of the
members of the Audit Committee understands and can read and evaluate financial
statements. Moreover, each member of the Committee has at some time been, and
each currently is, serving as either a Chief Executive Officer or a Chief
Financial Officer of a large corporate entity with responsibility for financial
decision-making. Mr. Fernandes and Dr. Pacholder are "independent" directors as
defined in the rules. Mr Chai is an executive officer of ITOCHU International
and ITOCHU Corporation. These companies own an interest in two companies that do
business with 7-Eleven. These relationships may create a question about
Mr. Chai's classification as an "independent" director. The rules allow the
Board of Directors to make a determination that one member of the Committee who
is not "independent" can remain on the Committee because it is in the Company's
best interests. The Board of Directors will meet in April, following the Annual
Meeting. At that meeting, the Board will have the opportunity to determine if it
is in the Company's best interests to keep Mr. Chai on the Committee. The
Company expects that the Board will vote to keep Mr. Chai on the Audit
Committee.
The new rules also require the Audit Committee to adopt a written charter.
The Company's Board of Directors adopts resolutions each year setting forth the
Committee's responsibilities. The Committee has now adopted a formal charter,
attached to this Proxy Statement as Appendix A, and will present the charter to
the full Board of Directors for approval and adoption at the April meeting.
The Board of Directors has a Compensation and Benefits Committee, composed
of three directors: Mr. Suzuki, who served as Chairman, Mr. Fernandes and
Mr. Otsuka. During 1999 the Compensation and Benefits Committee did not meet and
actions which would have been taken by the Committee, such as the granting of
stock options, were taken by the full Board of Directors. (See "Compensation of
Directors and Executive Officers," below, for a description of the functions of
the Compensation and Benefits Committee.)
The Board of Directors does not have a Nominating Committee.
During 1999, each of the current directors attended more than 75% of the
combined meetings of the Board of Directors and committees of which such
director is a member.
REPORT OF AUDIT COMMITTEE
During 1999, the Company's Audit Committee met eight times. At these
meetings the Audit Committee reviewed and discussed the audited financial
statements and the conduct of the audit with management and the independent
auditors.
3
<PAGE>
In addition, in connection with the Committee's review of the Company's 1999
financial statements, the Committee discussed with the independent auditors the
matters required to be discussed by Statements of Auditing Standards Nos. 61 and
89, including, among other things, the auditor's responsibility under generally
accepted auditing standards, any significant accounting policies (particularly
as they relate to unusual transactions), management judgments and accounting
estimates and fees paid to the independent auditors for consulting services.
In January 2000, the independent auditors presented the Committee Chairman
with a written letter containing the disclosures required by Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees). This letter was discussed by
the Committee with the independent auditors at its January 21, 2000 meeting.
After this discussion, the Committee considered the qualifications of the
independent auditors and decided to recommend to the full Board of Directors
that the firm be engaged as the Company's independent auditors for fiscal year
2000.
In March 2000, after completion of the year-end financial reporting work and
drafting of the financial statements by the Company's financial management and
the completion of the independent audit of those financial statements by the
independent auditor, the Committee reviewed in detail the Company's audited
consolidated financial statements for 1999, and recommended to the Board of
Directors that the audited financial statements be included in the company's
Annual Report on Form 10-K for the year ended December 31, 1999 to be filed with
the Securities and Exchange Commission prior to March 30, 2000.
Jay Chai, Chairman
Gary Fernandes
Asher O. Pacholder
COMPENSATION OF DIRECTORS
The compensation for members of the Board of Directors is established by
resolution adopted by the Board. The annual fee for a director who is a
non-employee of the Company, Ito-Yokado or Seven-Eleven Japan is set at $30,000
a year, plus $1,000 for attendance at each Regular or Special Meeting of the
Board or of any Board Committee of which the director is a member, including
meetings held by means of conference telephone or similar communications
equipment. Participation in any Committee meeting while in attendance at a Board
or other Committee meeting or the signing of any consent in lieu of holding a
meeting, is not deemed attendance at a meeting for purposes of compensation. The
annual fee for a director who is an employee of Ito-Yokado, or of Seven-Eleven
Japan is set at $18,000 a year. The Chairman of the Audit Committee receives an
additional fee of $5,000 a year. During 1998, the Board approved and adopted the
Stock Compensation Plan for Non-Employee Directors. Under this plan, a
non-employee director can elect to receive all, none or a portion of his
director's fees in shares of Common Stock, instead of in cash. Shares are valued
as of the closing price on the last trading day of the calendar quarter during
which the fees were earned and are issued shortly thereafter. Directors who are
employees of the Company receive only their compensation as an employee and no
director's fees for their service on the Board or any committee thereof.
In addition, as described elsewhere herein, Mr. Ashida is paid $138,000 per
year, inclusive of the director's fees to which he would otherwise be entitled,
under an Independent Consultant's Agreement entered into on July 1, 1991, and
amended in 1995, pursuant to which he serves as liaison with the Board of
Directors. Mr. Asakura is a Senior Vice President of 7-Eleven and receives
compensation from 7-Eleven for his service as a director and officer of the
Company pursuant to the terms of an agreement entered into in 1997 concerning
his service (see "Proposal 1. Election of Directors--Information About
Nominees," below, for additional details concerning Mr. Ashida's and
Mr. Asakura's compensation).
4
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
INFORMATION ABOUT NOMINEES
The following biographical information includes the names, ages and year
first elected a director, the principal occupation or employment, as of
March 1, 2000, of each person nominated, including all positions and offices
with 7-Eleven, and the principal directorships held by such persons in
non-7-Eleven companies. Also included is information regarding compensation paid
to certain directors of the Company.
<TABLE>
<CAPTION>
POSITION WITH 7-ELEVEN, PRINCIPAL OCCUPATION YEAR FIRST ELECTED
NAME AGE AND BUSINESS EXPERIENCE PAST FIVE YEARS DIRECTOR
- ---- -------- -------------------------------------------- ------------------
<S> <C> <C> <C>
Masatoshi Ito............ 75 Chairman of the Board and Director(1) 1991
Toshifumi Suzuki......... 67 Vice Chairman of the Board and Director(2) 1991
Clark J. Matthews, II.... 63 President, Chief Executive Officer, 1981-1987 and 1991
Secretary and Director(3)
Yoshitami Arai........... 68 Director(4) 1991
Masaaki Asakura.......... 57 Senior Vice President; Director(5) 1997
Timothy N. Ashida........ 60 Director(6) 1991
Jay W. Chai.............. 66 Director(7) 1991
Gary J. Fernandes........ 56 Director(8) 1991
Masaaki Kamata........... 60 Director(9) 1991
James W. Keyes........... 44 Executive Vice President and Chief Operating 1997
Officer; Director(10)
Kazuo Otsuka............. 53 Director(11) 1991
Asher O. Pacholder....... 62 Director(12) 1991
Nobutake Sato............ 61 Director(13) 1991
</TABLE>
- ------------------------
(1) Chairman of the Board and Director of the Company since March 5, 1991.
Director and Honorary Chairman of Ito-Yokado Group, which includes
Ito-Yokado Co., Ltd., Seven-Eleven Japan Co., Ltd. and Denny's Japan
Co., Ltd., as well as other companies. Ito-Yokado Co., Ltd. is one of
Japan's leading diversified retailing companies which, together with its
subsidiaries and affiliates, operates superstores, convenience stores,
department stores, supermarkets, specialty shops and discount stores.
President of Ito-Yokado Co., Ltd. from 1958 to 1992. Chairman of
Seven-Eleven Japan Co., Ltd. from 1978 to 1992, and President from 1973 to
1978. Chairman of Denny's Japan Co., Ltd. from 1981 to 1992, and President
from 1973 to 1981. Chairman of Famil Co., Ltd. since 1986. Chairman of York
Mart Co., Ltd. since 1979. Chairman of Robinson's Japan Co., Ltd. since
1995. Chairman of Maryann Co., Ltd. since 1977. President of Oshman's Japan
Co., Ltd. since 1984. Statutory Auditor of Steps Co., Ltd. since 1992.
Chairman of York-Keibi Co., Ltd. since 1989. President of Union Lease
Co., Ltd. since 1985. Statutory Auditor of Daikuma Co., Ltd. since 1982.
Chairman of Marudai Co., Ltd. since 1989. Director of Seven-Eleven
(Hawaii), Inc. since 1989. Chairman of Umeya Co., Ltd. since 1981. Director
and Chairman of the Board of IYG Holding Company since 1990.
(2) Vice Chairman of the Board and Director of the Company since March 5, 1991.
President and Chief Executive Officer of Ito-Yokado Co., Ltd. since
October, 1992 and Director since 1971; Executive Vice President from 1985
to 1992; Senior Managing Director from 1983 to 1985; Managing Director from
1977 to 1983; employee since 1963. Chairman of the Board and Chief
Executive Officer of Seven-Eleven Japan Co., Ltd. since October, 1992 and
Director since 1973; President from 1975 to 1992; Senior Managing Director
from 1973 to 1975. Statutory Auditor of Robinson's Japan Co., Ltd. since
1984. Chairman of Daikuma Co., Ltd. since 1985. President of Seven-Eleven
(Hawaii), Inc. since 1989. President and Director of IYG Holding Company
since 1990.
5
<PAGE>
(3) Director of the Company since March 5, 1991, and from 1981 until 1987;
President and Chief Executive Officer since March 5, 1991 and Secretary
since April 26, 1995; Executive Vice President (or Senior Executive Vice
President) and Chief Financial Officer from 1979 to 1991; Vice President
and General Counsel from 1973 to 1979; employee since 1965. The Company has
announced that Mr. Matthews will be retiring from the position of President
and Chief Executive Officer, effective April 30, 2000. (See Compensation of
Directors and Executive Officers--Arrangements Related to Termination of
Employment," below.)
(4) Director of the Company since March 5, 1991. Chairman of the Board of
Systems International Incorporated, a consulting firm for international
joint-ventures, licensing and investment arrangements, since 1977 and
President from 1970 to 1977. President of Tokyu Hotels International from
1977 to 1989. Chairman of Catalina Pacific Media L.L.C. Director of
Catalina Marketing Japan K.K., Entry Strategies Inc., Industrial Suppliers
S.A., Pacific Media K.K. and Parallel Inc. Member of Pacific Basin Economic
Council, APEC Business Advisory Council and other international non-profit
organizations. Senior Advisor, Welsh Development Agency, a British
government organization, since 1996.
(5) Director of the Company since April 23, 1997, and Senior Vice President
since May 1, 1998; General Manager and Overseas Liaison, Planning
Department, Seven-Eleven Japan Co., Ltd., from 1995 to present; Director
since 1991, and Executive Vice President and General Manager, Seven-Eleven
(Hawaii), Inc., from 1991 to 1994; employee of Seven-Eleven Japan since
1976. In connection with Mr. Asakura's employment with the Company and
service on the Board of Directors, he and his family relocated to Dallas,
Texas. Relocation and moving expenses were paid by the Company. In
addition, Mr. Asakura received compensation from 7-Eleven of $193,000 in
1999, plus a housing allowance from the Company and the use of a
company-leased car. Mr. Asakura's annual compensation is now $200,000. The
Company also reimbursed him for his US resident tax liability on the value
of these benefits. As an employee of the Company, he is not entitled to
receive any additional director's fees for his service on the Board of
Directors. Mr. Asakura and his family are eligible to participate in the
Company's group medical and dental plans, but, pursuant to the conditions
of his employment, Mr. Asakura is not eligible to participate in other
benefit plans (such as Annual Performance Incentive, Stock Incentive or
Performance Plans).
(6) Director of the Company since March 5, 1991. President of A.K.K.
Associates, Inc., a consulting firm for Japanese/American investments, in
Glendale, California, since 1972. Director of Seven-Eleven Japan Co., Ltd.
since 1991; General Manager, Far East Division of Travel Systems
International in Los Angeles from 1969 to 1972. Interpreter/Technical
Coordinator at Kawaguchi Tour Services in Los Angeles from 1966 to 1969.
Mr. Ashida has entered into an "Independent Consultant's Agreement" with
the Company pursuant to which (as amended in 1995) he is paid $11,500 per
month to serve as liaison with the Board of Directors. This fee is
inclusive of any director's fees to which he would otherwise be entitled.
(7) Director of the Company since March 5, 1991. Chairman of the Board and
Chief Executive Officer of ITOCHU International Inc. (formerly known as C.
Itoh & Company (America) Inc.) since April 1991; Chief Operating Officer
from 1989 to 1991; Executive Vice President from 1986 to 1991; Senior Vice
President from 1982 to 1985; Director since 1983. Executive Vice President
of ITOCHU Corporation (formerly C. Itoh & Co., Ltd.), a Japanese trading
company, since July 1993; Senior Managing Director from 1991 to 1993;
Managing Director from 1989 to 1991; Director from 1986 to 1989. Managing
Director with Representation Rights, ITOCHU Corporation, since 1989.
Director of Isuzu Motors Limited since 1984. Strategic Planning Advisor
with General Motors Corporation throughout 1982.
(8) Director of the Company since April 11, 1991. Chief Executive Officer,
GroceryWorks.com, since January, 2000, a privately owned, home fulfillment
internet service with warehouse and distribution
6
<PAGE>
facilities, currently enabling people to order groceries over the internet.
Partner, Convergent Partners, Ltd., a venture capital partnership, from
January, 1999 to December, 1999. Director of John Wiley & Sons, Inc. since
April 1988 and of Paging Network, Inc., since March 1999. Previously Vice
Chairman of Electronic Data Systems Corporation ("EDS"), an information
technology service company, from 1996 to 1998, Senior Vice President from
1984 to 1996, and Director from 1981 to 1998. Director and Chairman of the
Board of A.T. Kearney, Inc. from September 1995 to 1998. Governor of the
Boys and Girls Clubs of America and Director of the Boys and Girls Clubs of
Greater Dallas, Inc.
(9) Director of the Company since March 5, 1991. Director, since 1978, and Vice
Chairman of Seven-Eleven Japan Co., Ltd. since 1997; Executive Vice
President from 1992 to 1997; Senior Managing Director from 1989 to 1992;
Managing Director from 1985 to 1989; employee since 1973. Director, since
1989, and President of Seven-Eleven (Hawaii), Inc. since 1992. Director and
Treasurer of IYG Holding Company since 1990.
(10) Director of the Company since April 23, 1997; Executive Vice President and
Chief Operating Officer since May 1, 1998; Chief Financial Officer from
May 1, 1996; Senior Vice President, Finance, from June 1993 to
April 1996; Vice President, Planning and Finance, from August 1992 to
June 1, 1993; Vice President and/or Vice President, National Gasoline,
from August 1991 to August 1992; General Manager, National Gasoline, from
1986 to 1991; employee of the Company since 1985. The Company has
announced that Mr. Keyes will be promoted to the position of President and
Chief Executive Officer, effective May 1, 2000.
(11) Director of the Company since March 5, 1991. General Manager, Corporate
Development, Ito-Yokado Co., Ltd., since 1986; Manager, Corporate
Development from 1982 to 1986; Assistant to Mr. Masatoshi Ito, President
and Chief Executive Officer, from 1978 to 1982; employee of Ito-Yokado
Co., Ltd. since 1975. Assistant Secretary of IYG Holding Company since
1990.
(12) Director of the Company since March 5, 1991. Chairman of the Board and
Chief Financial Officer, ICO, Inc., an oil field service company, since
February 1995; Chairman of the Board and Managing Director of Pacholder
Associates, Inc., an investment advisory firm, since 1984. Director of
TC/GP, Inc., and USF&G Pacholder Fund, Inc.
(13) Director of the Company since March 5, 1991. Director, since 1977 and
Executive Vice President, Ito-Yokado Co., Ltd., since 1993, Executive Vice
President and Chief Financial Officer, from 1996 to 1998; Senior Managing
Director from 1985 to 1993; Managing Director from 1983 to 1985; Director
from 1977 to 1983; employee since 1964. Director of Denny's Japan
Co., Ltd. since 1973, Maryann Co., Ltd. since 1982, Oshman's Japan
Co., Ltd. since 1984 and Marudai Co., Ltd. since 1989. President of Urawa
Building Co., Ltd. since 1985, Nitsu Systems Kaihatsu Co., Ltd. since 1986
and Waiaru Kaihatsu Co., Ltd. since 1988. Director and Vice President of
IYG Holding Company since 1990.
Each of the nominees presented for election has been recommended by the
Board of Directors. All nominees are currently members of the Board of
Directors. Each nominee has consented to serve as a director if elected. If any
nominee becomes unavailable for any reason or should a vacancy occur before the
election (which events are not anticipated), proxies may be voted for a
substitute nominee. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES, WHICH REQUIRES THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES CAST
BY THE HOLDERS OF SHARES REPRESENTED AND ENTITLED TO VOTE AT THE MEETING. VOTES
WILL BE TABULATED BY AN INSPECTOR OF ELECTION. AN ABSTENTION FROM VOTING OR A
BROKER NON-VOTE WILL BE TABULATED AS A VOTE WITHHELD ON THE ELECTION, AND WILL
BE INCLUDED IN COMPUTING THE NUMBER OF SHARES PRESENT FOR PURPOSES OF
DETERMINING THE PRESENCE OF A QUORUM FOR THE SHAREHOLDERS MEETING AND WHETHER
NOMINEES HAVE RECEIVED THE VOTE OF A MAJORITY OF THE SHARES PRESENT AT THE
MEETING.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
At March 3, 2000, the record date for the Annual Meeting, the Company was
aware of the following beneficial owners of 5% or more (as determined under the
applicable rules of the Securities and Exchange Commission) of the Company's
shares of Common Stock (the only class of voting security of the Company). As of
the record date 410,112,375 shares of Common Stock were issued and outstanding.
The following table, however, in accordance with the applicable requirements,
includes certain shares which IYG, Ito-Yokado and Seven-Eleven Japan have the
power to acquire within sixty days after March 3, 2000.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- -------------- ----------------------------------- -------------------- ----------------
<S> <C> <C> <C>
Common Stock,
$.0001 par
value............. IYG Holding Company 380,622,144 Shares(a)(b) 72.68%(b)
4-1-4, Shibakoen
Minato-ku, Tokyo Japan 105
Common Stock,
$.0001 par
value............. Ito-Yokado Co., Ltd. 36,777,078 Shares(c) 8.23%(c)
4-1-4, Shibakoen
Minato-ku, Tokyo Japan 105
Common Stock,
$.0001 par
value............. Seven-Eleven Japan Co., Ltd. 35,334,839 Shares(c) 7.94%(c)
4-1-4, Shibakoen
Minato-ku, Tokyo Japan 105
</TABLE>
- ------------------------
(a) IYG Holding Company is a Delaware corporation, created specifically for the
purpose of purchasing shares of Common Stock of the Company issued in
connection with consummation of the Company's Plan of Reorganization and as
contemplated therein and in the Stock Purchase Agreement (see "Other
Information," above). It is a jointly owned subsidiary of Ito-Yokado
Co., Ltd. and Seven-Eleven Japan Co., Ltd. Ito-Yokado owns 51%, and
Seven-Eleven Japan owns 49%, of IYG's outstanding common stock. Ito-Yokado
owns 51% of Seven-Eleven Japan's outstanding common stock. Messrs. Ito,
Suzuki, Sato, Kamata and Otsuka are the officers and directors of IYG (see
"Security Ownership of Management" and "Information About Nominees"). They
each, individually, disclaim beneficial ownership of the shares held by IYG.
(b) As required by the rules and regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the numbers shown in this table
include 113,684,211 shares of newly issued common stock acquired by IYG on
March 16, 2000 (the "Stock Purchase"), for $540 million ($4.75 per share).
The additional shares are added to both the numerator and denominator in
determining the percentage owned by IYG.
(c) As required by the rules and regulations under the Exchange Act, the numbers
shown in this table include shares of Common Stock acquirable by Ito-Yokado
(36,777,078 shares) and Seven-Eleven Japan (35,334,839 shares) upon
conversion of $300 million 4.5% Convertible Quarterly Income Debt Securities
due 2010, issued by the Company in November 1995 (the "1995 QUIDS") which
are convertible into 72,111,917 shares of 7-Eleven Common Stock at a
conversion price of $4.1602 per share. IYG, Ito-Yokado and Seven-Eleven
Japan signed an "Agreement As to Shares" in which they waived registration
rights with respect to these shares, as well as the shares acquirable upon
conversion of the "1998 QUIDs" (see below), and agreed not to dispose of
shares owned by IYG prior to the Stock Purchase for nine months after
consummation of the Stock Purchase.
8
<PAGE>
The percentage ownership shown in this table and the table that follows is
calculated as required by Rule 13d-3(d)(1) under the Exchange Act. The actual
percentage owned by IYG, Ito-Yokado and Seven-Eleven Japan, if the 1995 QUIDS
were converted and including the newly issued shares purchased by IYG, would be
76%. IYG currently owns 72.67% of the Company's outstanding Common Stock.
Ito-Yokado and Seven-Eleven Japan do not currently own any shares of the Common
Stock.
In February, 1998, the Company issued $80 million 4.5% Convertible Quarterly
Income Debt Securities due 2013 (the "1998 QUIDS", which together with the 1995
QUIDS are hereinafter referred to as the "Convertible Debt Securities") to
Ito-Yokado ($40.8 million) and Seven-Eleven Japan ($39.2 million). The shares
acquirable upon conversion of the 1998 QUIDS, at a price of $2.4609 per share,
(a total of 32,508,432 shares) are not shown in the above table because the 1998
QUIDS are not convertible until February, 2001 and then become mandatorily
convertible under certain conditions related to the trading price of 7-Eleven
Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table, and the footnotes that follow, show the beneficial
ownership of 7-Eleven Common Stock as of March 1, 2000, as required by the rules
and regulations of the Securities and Exchange Commission, by each director and
each person nominated for director, by the Chief Executive Officer and the next
four most highly compensated executive officers of the Company, and by all
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(A) PERCENT OF CLASS(A)
- ------------------------ -------------------------- -------------------
<S> <C> <C>
Masatoshi Ito.......................................... 2,011,419(b) .49%(b)
Toshifumi Suzuki....................................... 1,005,711(c) .25%(c)
Clark J. Matthews, II.................................. 1,323,042(d) .32%
Yoshitami Arai......................................... 36,344(e) *
Masaaki Asakura........................................ 10,000(f) *
Timothy N. Ashida...................................... 30,000(g) *
Rodney A. Brehm........................................ 233,854(h) *
Jay W. Chai............................................ 0(i)
Gary J. Fernandes...................................... 64,165(j) *
Masaaki Kamata......................................... 111,419(k) * (k)
James W. Keyes......................................... 640,000(l) *
Kazuo Otsuka........................................... 37,613(m) * (m)
Asher O. Pacholder..................................... 295,316(n) *
Nobutake Sato.......................................... 107,613(o) * (o)
Ezra Shashoua.......................................... 112,297(p) *
Bryan F. Smith, Jr..................................... 273,971(q) *
All officers and directors as a group (30
persons)(r).......................................... 459,917,791(r) 77.18%(r)
</TABLE>
- ------------------------
* Rounds to less than one-tenth of one percent
(a) At March 3, 2000, there were 410,112,375 shares of Common Stock outstanding.
The nature of beneficial ownership of the shares reported, if not direct, is
described in this footnote (a) and the footnotes that follow. Included in
the numbers of shares shown, as required by the rules and regulations of the
Securities and Exchange Commission, are those shares as to which such
persons have or share voting and/or investment power, or with respect to
which they have a right to receive such power within 60 days.
(b) Mr. Ito owns 2,011,419 shares directly, of which 11,419 shares were acquired
under the 7-Eleven, Inc. Stock Compensation Plan for Non-Employee Directors.
Additionally, Mr. Ito is Chairman of the
9
<PAGE>
Board and a Director of IYG Holding Company. See "Security Ownership of
Certain Beneficial Owners," above.
(c) Mr. Suzuki owns 1,005,711 shares directly, of which 5,711 shares were
acquired under the 7-Eleven, Inc. Stock Compensation Plan for Non-Employee
Directors. Additionally, Mr. Suzuki is President and a Director of IYG
Holding Company. See "Security Ownership of Certain Beneficial Owners,"
above.
(d) Mr. Matthews owns 151,042 shares directly, of which 143,334 shares were
acquired under the Company's Grant Stock Plan; and holds options to acquire
2,740,000 shares pursuant to options granted under the 1995 Stock Incentive
Plan, 1,172,000 of which are currently exercisable (see "Compensation of
Directors and Officers--Executive Officers' Compensation," below).
(e) Mr. Arai owns 36,344 shares directly, of which 6,344 shares were acquired
under the 7-Eleven, Inc. Stock Compensation Plan for Non-Employee Directors.
(f) Mr. Asakura disclaims beneficial ownership of 10,000 shares held in a
brokerage account for his daughter.
(g) Mr. Ashida owns 30,000 shares directly.
(h) Mr. Brehm owns 8,334 shares directly which were acquired under the Company's
Grant Stock Plan; and holds options to acquire 483,600 shares pursuant to
options granted under the 1995 Stock Incentive Plan, 225,520 of which are
currently exercisable (see "Compensation of Directors and
Officers--Executive Officers' Compensation," below).
(i) Mr. Chai owns no shares directly. ITC Asset Management, a wholly owned
subsidiary of ITOCHU International, Inc., of which Mr. Chai is Chairman of
the Board and Chief Executive Officer, owns 12,198,917 shares of 7-Eleven
common stock and ITOCHU Corporation, of which Mr. Chai is Executive Vice
President, owns 8,198,917 shares of 7-Eleven common stock. Mr. Chai
disclaims beneficial ownership of all shares owned by ITC Asset Management
and ITOCHU Corporation.
(j) Mr. Fernandes owns 64,165 shares directly, of which 24,165 shares were
acquired under the 7-Eleven, Inc. Stock Compensation Plan for Non-Employee
Directors.
(k) Mr. Kamata owns 111,419 shares directly, of which 11,419 shares were
acquired under the 7-Eleven, Inc. Stock Compensation Plan for Non-Employee
Directors. Additionally, Mr. Kamata is Treasurer and a Director of IYG
Holding Company and a Director and Executive Vice President of Seven-Eleven
Japan. See "Security Ownership of Certain Beneficial Owners," above.
(l) Mr. Keyes owns 20,000 shares which are held in his IRA custodial account;
and holds options to acquire 1,650,000 shares pursuant to options granted
under the 1995 Stock Incentive Plan, of which 620,000 are currently
exercisable (see "Compensation of Directors and Officers--Executive
Officers' Compensation," below).
(m) Mr. Otsuka owns 37,613 shares directly, of which 7,613 shares were acquired
under the 7-Eleven, Inc. Stock Compensation Plan for Non-Employee Directors.
Additionally, Mr. Otsuka is Assistant Secretary of IYG Holding Company and
General Manager, Corporate Development of Ito-Yokado. See "Security
Ownership of Certain Beneficial Owners," above.
(n) Dr. Pacholder is a member of the general partner of a limited partnership
that owns 270,700 shares. Of the total shares shown, Dr. Pacholder's
beneficial interest is a total of approximately 27,070 shares. In addition,
Dr. Pacholder's wife shares with him the beneficial interest in the shares
held by the partnership. Dr. Pacholder also owns 24,616 shares directly
which were acquired under the 7-Eleven, Inc. Stock Compensation Plan for
Non-Employee Directors.
(o) Mr. Sato owns 107,613 shares directly, of which 7,613 shares were acquired
under the 7-Eleven, Inc. Stock Compensation Plan for Non-Employee Directors.
Additionally, Mr. Sato is Chief Financial
10
<PAGE>
Officer and a Director of IYG Holding Company and Chief Financial Officer of
Ito-Yokado. See "Security Ownership of Certain Beneficial Owners," above.
(p) Mr. Shashoua owns 697 shares directly and 10,000 shares in a trust for the
benefit of his children. He holds options to acquire 278,000 shares pursuant
to options granted under the 1995 Stock Incentive Plan, 101,600 of which are
currently exercisable
(q) Mr. Smith owns 251 shares directly and holds options to acquire 684,600
shares pursuant to options granted under the 1995 Stock Incentive Plan,
273,720 of which are currently exercisable (see "Compensation of Directors
and Officers--Executive Officers' Compensation," below).
(r) The total shares shown are as follows: 3,927,150 shares owned by officers
and directors directly or with family members (including the entire 270,700
shares described in footnote (n), above); 3,276,580 shares pursuant to
options currently exercisable by 19 officers under the 1995 Stock Incentive
Plan; 266,937,933 shares held by IYG Holding Company as of March 1, 2000,
plus 113,684,211 newly issued shares which IYG acquired on March 16, 2000
(Messrs. Ito, Suzuki, Sato, Kamata and Otsuka are the directors and officers
of IYG, although they each disclaim individual beneficial ownership of such
shares), and 72,111,917 shares acquirable by Ito-Yokado and Seven-Eleven
Japan (of either or both of which Messrs. Ito, Suzuki, Kamata, Sato, Otsuka
and Asakura are directors or officers) upon conversion of the 1995 QUIDS (as
to which Messrs. Ito, Suzuki, Kamata, Sato, Otsuka and Asakura disclaim
beneficial ownership). In addition, eight non-employee directors who are
participants in the Stock Compensation Plan for Non-Employee Directors will
receive additional shares after April 1, 2000, but the exact number cannot
be determined until after the close of business on March 31, 2000.
Therefore, these acquirable shares are not included in this table.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. The Company believes that during the fiscal year ended
December 31, 1999, its officers, directors and holders of more than 10% of the
Company's Common Stock complied with all Section 16(a) filing requirements,
except that Dr. Pacholder did not report a December 29, 1999 sale of 46,000
shares of Common Stock by a limited partnership in which he has an interest. A
Form 4 was filed in January 2000 to report this sale. In addition,
Mr. Fernandes did not report the acquisition of a total of 20,000 shares of
Common Stock in April and June 1998. A Form 4 reporting these transactions is
being filed. In making this statement, the Company has relied upon the written
representations of its directors and officers.
PROPOSAL 2. RATIFICATION OF THE SELECTION OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") to be the
independent auditors of the Company for 2000. Although not legally required to
do so, upon the recommendation of the Audit Committee, the Board is submitting
to the shareholders for ratification at this meeting the appointment of
PricewaterhouseCoopers as the Company's independent auditors for 2000.
The services provided to the Company by PricewaterhouseCoopers in 2000 will
include, in addition to performing the Company's audit, audits of certain
domestic and foreign subsidiaries and related companies and those of various
employee benefit plans; review of quarterly reports; issuance of letters to
underwriters in connection with registration statements, if any, filed by the
Company with the Securities and Exchange Commission; and consultation on
accounting, financial reporting, tax and related matters.
PricewaterhouseCoopers, a nationally known firm, has no direct or indirect
interest in the Company. The firm of Coopers & Lybrand L.L.P., predecessor to
PricewaterhouseCoopers, was originally appointed as the Company's auditor in
1992.
Representatives of PricewaterhouseCoopers will be at the meeting, will have
an opportunity to make a statement, if desired, and will be available to respond
to questions.
11
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP TO BE THE INDEPENDENT AUDITORS OF THE
COMPANY FOR 2000, WHICH REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
SHARES REPRESENTED AND ENTITLED TO VOTE AT THE MEETING. VOTES WILL BE TABULATED
BY AN INSPECTOR OF ELECTION. AN ABSTENTION FROM VOTING AND BROKER NON-VOTES WILL
BE INCLUDED IN COMPUTING THE NUMBER OF SHARES PRESENT FOR PURPOSES OF
DETERMINING THE PRESENCE OF A QUORUM FOR THE SHAREHOLDERS MEETING AND WHETHER
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES PRESENT AT THE MEETING HAS BEEN
RECEIVED, BUT WILL NOT BE COUNTED AS A VOTE EITHER "FOR" OR "AGAINST"
RATIFICATION.
PROPOSAL 3. APPROVAL OF ARTICLES OF AMENDMENT TO THE COMPANY'S
SECOND RESTATED AND AMENDED ARTICLES OF INCORPORATION
REVERSE STOCK SPLIT:
The Board of Directors of the Company has adopted a proposal to effect a
five-for-one reverse split of the issued and outstanding Common Stock, par value
$.0001 per share, in the manner described below. Pursuant to the Company's
Second Restated Articles of Incorporation, the Company is currently authorized
to issue 1,000,000,000 shares of Common Stock, $.0001 par value and 5,000,000
shares of preferred stock. At March 3, 2000, there were 410,112,375 shares of
Common Stock outstanding and no shares of preferred stock outstanding. An
amendment to Article Four, paragraph (b), of the Company's Second Restated and
Amended Articles of Incorporation is required to effect the reverse stock split.
IYG, THE COMPANY'S MAJORITY SHAREHOLDER, HAS THE POWER TO DETERMINE THE
OUTCOME OF THE VOTE ON THE REVERSE STOCK SPLIT. AS OF THE RECORD DATE FOR THIS
MEETING IYG OWNED APPROXIMATELY 65% OF THE OUTSTANDING SHARES OF 7-ELEVEN, INC.
COMMON STOCK. IF IYG VOTES IN FAVOR OF THE REVERSE STOCK SPLIT, IT WILL BE
APPROVED BY THE SHAREHOLDERS OF 7-ELEVEN, INC. DESPITE THE VOTE OF ANY OTHER
7-ELEVEN, INC. SHAREHOLDERS.
The proposed Articles of Amendment to the Company's Second Restated Articles
of Incorporation (the "Articles of Amendment") will be substantially in the form
attached hereto as Appendix B.
Upon the effective date of the reverse stock split and upon the filing of
the Articles of Amendment, each five outstanding shares of Common Stock, $.0001
par value per share (the "Old Common Stock"), will automatically be converted
into one share of new common stock (the "New Common Stock"), $.0001 par value
per share. The then outstanding stock certificates for shares of Old Common
Stock will represent one-fifth as many shares of New Common Stock after the
reverse stock split is effective. The Company will not issue fractional shares
of New Common Stock. In lieu thereof, the Company shall pay to each holder who
would otherwise be entitled to a fraction of a share of New Common Stock, for
each share of Old Common Stock that would otherwise have been converted into a
fraction of a share of New Common Stock, an amount equal to the closing price of
the Old Common Stock on the Nasdaq Stock Market on the last trading day before
the Articles of Amendment become effective. The surrender of certificates
representing shares of Old Common Stock shall not be necessary to effect the
combination of shares contemplated hereby; however, the Company will request
that holders of the Old Common Stock send in their certificates to be exchanged
into certificates for the New Common Stock.
As of March 3, 2000, the Company had approximately 3,999 shareholders of
record.
REASONS FOR THE REVERSE STOCK SPLIT. Many investors look upon low priced
stock as unduly speculative in nature and, as a matter of policy, avoid
investment in these stocks. Investors may believe that low stock prices reflect
companies that are of low quality or poor performers. Accordingly, the 7-Eleven
board believes that the current per share price of the 7-Eleven common stock may
reduce the effective marketability of the shares because of the reluctance of
many leading brokerage firms to recommend low priced stocks to their clients.
Brokerage firm policies and practices tend to discourage individual brokers from
dealing in low priced stocks for various reasons, including the perception that
those stocks are unduly
12
<PAGE>
speculative. Some of those policies and practices pertain to the payment of
brokers' commissions and to time-consuming procedures that function to make the
handling of low priced stocks unattractive to brokers from an economic
standpoint. Additionally, many institutional investors have policies prohibiting
them from holding low priced stock in their own portfolios. In addition, the
structure of trading commissions tends to have an adverse impact upon holders of
low priced stock because the brokerage commission on a purchase or sale of low
priced stock generally represents a higher percentage of the sales price than
the commission on higher priced stocks. Moreover, the analysts at many brokerage
firms will not monitor the trading activity of lower priced stocks.
The 7-Eleven board believes that the reverse stock split should result in a
stock price of approximately five times the current price range, putting the
7-Eleven common stock in a price range that will enhance its marketability to
the financial community and investing public and will mitigate any reluctance on
the part of brokers and investors to trade in the 7-Eleven common stock.
However, there can be no assurance that the market price of the common stock
immediately after implementation of the reverse stock split will increase and,
if it increases, no assurance that the increase can be maintained for any period
of time, or that the market price will approximate five times the market price
before the reverse stock split. In addition, there can be no assurance that any
increase in the market price of the common stock will increase investment in the
stock by brokerage firms or individual investors, or otherwise facilitate
7-Eleven's access to the equity markets, especially since there are many other
factors that affect demand for stock.
EFFECTIVENESS OF THE REVERSE STOCK SPLIT. If the 7-Eleven shareholders
approve the five-for-one reverse stock split it would become effective when
7-Eleven files the Articles of Amendment with the Secretary of State of Texas,
which is anticipated to occur as soon as practicable following the 7-Eleven
Annual Meeting. While it is the Company's current intention to effect the
reverse stock split as soon as practicable after approval by the shareholders,
in the event of unforeseen circumstances and notwithstanding such shareholder
approval, the Board of Directors reserves the right in its discretion to
determine whether to delay or forego entirely the implementation of the reverse
stock split. Upon the filing of the Articles of Amendment, all of the 7-Eleven
Old Common Stock will evidence the effect of the five-for-one reverse stock
split. No fractional shares will be issued in the reverse stock split. In lieu
of any fractional shares, each 7-Eleven shareholder who is entitled to a
fractional share of 7-Eleven common stock will instead receive an amount of
cash, without interest, determined by multiplying:
the fractional interest to which the shareholder would otherwise be
entitled, after taking into account all shares of 7-Eleven Old Common Stock then
held by the shareholder; and
the product of five multiplied by the closing price of 7-Eleven Old Common
Stock on The Nasdaq Stock Market immediately preceding the date on which the
reverse stock split is effective.
EFFECTS OF THE REVERSE STOCK SPLIT. If the 7-Eleven shareholders approve
the reverse stock split, the principal effect of the five-for-one reverse stock
split will be to decrease the number of outstanding shares of 7-Eleven Common
Stock from 410,112,375 to approximately 82,022,475 shares of 7-Eleven common
stock, based on share information as of the 7-Eleven record date. The reverse
stock split would not affect the proportionate equity interest in 7-Eleven of
any holder of 7-Eleven common stock, except as may result from the provisions
for the elimination of fractional shares, as described herein. In addition, the
7-Eleven board will take appropriate action to adjust proportionately the number
of shares of 7-Eleven common stock issuable upon exercise of outstanding options
and other convertible securities, and to adjust the related exercise and
conversion prices, to reflect the reverse stock split. The reverse stock split
will not affect the registration of the 7-Eleven common stock under the
Securities Exchange Act of 1934 or the listing of the 7-Eleven common stock on
the Nasdaq. The relative rights and preferences of the 7-Eleven New Common Stock
will be identical to the relative rights and preferences of the 7-Eleven Old
Common Stock.
13
<PAGE>
The reverse stock split may leave some 7-Eleven shareholders with one or
more "odd lots" of 7-Eleven common stock, which means stock in amounts of less
than 100 shares. The odd lots may be more difficult to sell or require greater
transaction costs per share to sell, than shares in even multiples of 100.
Each shareholder's percentage ownership of the 7-Eleven common stock will
not be altered except for the effect of the elimination of fractional shares.
7-Eleven estimates that it will cost less than $200,000 to pay for fractional
shares. The reverse stock split will greatly reduce the number of shares of
Common Stock outstanding.
EXCHANGE OF STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES. If the
shareholders approve and adopt the reverse stock split, shareholders will be
required to exchange their stock certificates for new certificates representing
the revised shares of New Common Stock which will evidence the effect of the
five-for-one reverse stock split. 7-Eleven shareholders of record on the date
that the reverse stock split takes effect will be furnished the necessary
materials and instructions for the surrender and exchange of share certificates
at the appropriate time by 7-Eleven's transfer agent, Harris Trust and Savings
Bank. 7-Eleven shareholders will not have to pay a transfer fee or other fee in
connection with the exchange of certificates.
No fractional shares of 7-Eleven New Common Stock will be issued as a result
of the reverse stock split. Instead of receiving fractional shares, 7-Eleven
shareholders who hold a number of shares not evenly divisible by five
immediately prior to the date that the reverse stock split takes effect will be
entitled to receive cash for any fractional share as described above.
Any 7-Eleven shareholder whose certificate for Old Common Stock has been
lost, destroyed or stolen will be entitled to issuance of a certificate
representing the shares of New Common Stock after giving effect to the
five-for-one reverse stock split upon satisfying the requirements of 7-Eleven
and the transfer agent.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The following discussion summarizes the material federal income tax
consequences of the five-for-one reverse stock split on 7-Eleven shareholders
and is based upon the Internal Revenue Code of 1986, as amended, the regulations
under the Code, Internal Revenue Service rulings, and judicial and
administrative rulings in effect as of the date of this document, all of which
are subject to change, possibly with retroactive effect. This discussion does
not address all aspects of U.S. federal income taxation that may be relevant to
a 7-Eleven shareholder in light of the shareholder's particular circumstances,
such as shareholders who are not citizens or residents of the United States,
financial institutions, tax-exempt organizations, insurance companies, dealers
in securities, shareholders who acquired their common stock by the exercise of
options or similar derivative securities or otherwise as compensation or
shareholders who hold their common stock as part of a straddle or conversion
transaction. This discussion assumes that 7-Eleven shareholders hold their
shares of common stock as capital assets within the meaning of Section 1221 of
the Code.
The five-for-one reverse stock split will qualify as a recapitalization
described in Section 368(a)(1)(E) of the Code, and no gain or loss will be
recognized by 7-Eleven in connection with the reverse stock split. The receipt
by a 7-Eleven shareholder of shares of common stock, except to the extent that
cash is received in lieu of fractional shares, in the reverse stock split will
be a nontaxable transaction for federal income tax purposes. Consequently,
except with respect to cash received in lieu of fractional shares of 7-Eleven
common stock, a shareholder will not recognize taxable gain or loss with respect
to shares of common stock received as a result of the reverse stock split. In
addition, the aggregate tax basis of the shareholder's shares of 7-Eleven Old
Common Stock prior to the reverse stock split, excluding the portion of the
basis allocable to fractional shares of 7-Eleven common stock, will carry over
as the tax basis of the shareholder's shares of 7-Eleven New Common Stock
received as a result of the reverse stock split. Each shareholder will be
required to allocate his or her basis in the shares of Old Common Stock ratably
among the total number of shares of 7-Eleven New Common Stock received as a
result of the reverse stock split. The holding
14
<PAGE>
period of the shares of 7-Eleven New Common Stock will include the holding
period during which the shareholder held the 7-Eleven Old Common Stock, provided
that the common stock is held by the shareholder as a capital asset when the
reverse stock split is completed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO ARTICLE FOUR OF THE COMPANY'S SECOND RESTATED AND AMENDED ARTICLES OF
INCORPORATION, WHICH REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES
REPRESENTED AND ENTITLED TO VOTE AT THE MEETING. VOTES WILL BE TABULATED BY AN
INSPECTOR OF ELECTION. AN ABSTENTION FROM VOTING AND BROKER NON-VOTES WILL BE
INCLUDED IN COMPUTING THE NUMBER OF SHARES PRESENT FOR PURPOSES OF DETERMINING
THE PRESENCE OF A QUORUM FOR THE SHAREHOLDERS MEETING AND WHETHER THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES PRESENT AT THE MEETING HAS BEEN
RECEIVED, BUT WILL NOT BE COUNTED AS A VOTE EITHER "FOR" OR "AGAINST" THE
APPROVAL OF THE AMENDMENT TO ARTICLE FOUR OF THE COMPANY'S SECOND RESTATED AND
AMENDED ARTICLES OF INCORPORATION. THIS IS FUNCTIONALLY EQUIVALENT TO A VOTE
AGAINST THE PROPOSAL.
15
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE OFFICERS' COMPENSATION
The Company's Board of Directors is provided with information concerning the
Company's executive compensation program. The Compensation and Benefits
Committee of the Board of Directors is composed of three directors, as follows:
Mr. Suzuki (Chairman of the Committee), Mr. Fernandes and Mr. Otsuka. From time
to time, the Committee may be consulted on matters relating to executive
compensation. Mr. Suzuki is Vice Chairman of the Board of Directors of the
Company. He is also President of Ito-Yokado and IYG Holding Company and Chairman
of Seven-Eleven Japan. As described elsewhere herein, IYG Holding Company,
which, as of the record date owned approximately 65% of the Common Stock of the
Company, is a jointly owned subsidiary of Ito-Yokado and Seven-Eleven Japan. IYG
acquired an additional 113,684,211 shares of Common Stock on March 16, 2000.
Ito-Yokado has, since 1992, unconditionally guaranteed the Company's commercial
paper facility for which Ito-Yokado has received no fee. Seven-Eleven Japan, a
51%-owned subsidiary of Ito-Yokado, is the Company's area licensee in Japan and,
through its subsidiary, Seven-Eleven (Hawaii), Inc., is the Company's area
licensee in Hawaii. In addition, Ito-Yokado and Seven-Eleven Japan acquired an
aggregate of $300 million of the 1995 QUIDS and $80 million of the 1998 QUIDS
(see "Security Ownership of Certain Beneficial Owners and Management--Security
Ownership of Certain Beneficial Owners," above). Interest is payable quarterly
to Ito-Yokado and Seven-Eleven Japan on the Convertible Debt Securities.
The Company's Executive Officers, as well as all other management personnel,
receive annual compensation consisting of base salary and annual variable
incentive pay, or "bonus," under the Company's Annual Performance Incentive
("API" or "Annual Bonus") Plan. The amount paid as API under this plan is based
upon the employee's or officer's base salary, salary administration grade level
and the achievement of certain pre-established performance criteria for the
Company each year, as more fully described in the Report of the Compensation and
Benefits Committee, included elsewhere herein.
The following table shows the compensation paid, or earned, during 1999, by
the Company's Chief Executive Officer and the next four most highly compensated
Executive Officers, as specifically required by the rules and regulations
relating to Proxy Statement disclosure.
16
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- --------------------------------------------------
AWARDS PAYOUTS
OTHER ---------------------- -------------------------
ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/ LTIP COMPENSATION
POSITION IN 1999 YEAR ($) ($) ($)(I) AWARD(S)($) SARS(#) PAYOUTS($) ($)(II)
- ------------------ -------- -------- -------- ------------ ----------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Clark J. Matthews, II ...... 1999 487,000 307,150 N/A -0- 500,000 -0- 6,627
Director; President and 1998 480,000 339,840 N/A 500,000 -0- 8,286
Chief Executive Officer; 1997 480,000 141,120 N/A 500,000 -0- 7,767
Secretary(iii)
James W. Keyes ............. 1999 385,420 198,630 N/A -0- 350,000 -0- 5,968
Director; Executive Vice 1998 350,000 206,500 N/A 350,000 -0- 7,984
President and Chief 1997 250,000 61,250 N/A 350,000 -0- 6,945
Operating Officer
Bryan F. Smith, Jr. ........ 1999 256,790 118,630 N/A -0- 137,000 -0- 5,703
Senior Vice President 1998 240,000 127,490 N/A 137,000 -0- 7,592
and General Counsel 1997 215,000 47,408 N/A 137,000 -0- 6,824
Rodney A. Brehm ............ 1999 220,625 104,565 N/A -0- 90,000 -0- 5,639
Senior Vice President, 1998 210,000 111,510 N/A 70,000 -0- 7,270
Store Operations 1997 210,000 46,305 N/A 50,000 -0- 6,810
Ezra Shashoua, ............. 1999 204,250 79,456 N/A 70,000 -0- 5,547
Treasurer (iv) 1998 200,000 87,320 N/A 58,000 -0- 8,091
</TABLE>
- ------------------------------
(i) No "Other Annual Compensation" is shown because the total amounts paid for
perquisites in 1997, 1998 and 1999 to the five named executive officers did
not exceed the lesser of $50,000 or 10% of the named executive officer's
salary and bonus for such years.
(ii) The amounts shown for 1999 include only (a) the amount of Company
contribution to each of the named executive officer's accounts in the
7-Eleven, Inc. Employees' Savings and Profit Sharing Plan (the "Savings
and Profit Sharing Plan"), a Section 401(k) defined contribution plan with
over 20,000 participants, which for 1999 was as follows: $4,915 for each
of the named executive officers; and (b) for each of the named executive
officers, the full premiums paid for basic term life insurance under the
Company's group plan for all employees, which for 1999 were as follows:
Mr. Matthews--$1,712; Mr. Keyes--$1,053; Mr. Smith--$788;
Mr. Brehm--$724; and Mr. Shashoua--$632.
(iii) Mr. Matthews will be retiring as President and Chief Executive Officer,
effective April 30, 2000. See "Arrangements Related to Termination of
Employment," below.
(iv) Mr. Shashoua was elected as an officer in 1998.
OPTION/SAR GRANTS IN 1999 FISCAL YEAR
In 1995, the Company's Board of Directors unanimously approved the adoption
of the 1995 Stock Incentive Plan, which was approved by the Company's
shareholders in 1996. Pursuant to the Stock Incentive Plan, the Board of
Directors granted nonqualified stock options to approximately 81 of the
Company's key employees in 1999, including each of the named executive officers,
as well as all other officers. Options to purchase an aggregate of 3,863,000
shares, over the five-year vesting period, were granted. Under the terms of the
plan, vesting will be accelerated if certain target prices for the Company's
Common Stock are achieved and maintained.
17
<PAGE>
The following table provides information on the number of options granted,
the exercise price and expiration date of such options, as well as the potential
realizable value of the options assuming that the underlying Common Stock
appreciates in value from the date of grant at the annualized rates of 5% and
10%, as required by the Securities and Exchange Commission, and is not intended
to forecast future appreciation of the Company's stock price.
OPTION GRANTS IN 1999 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (II)
- ---------------------------------------------------------------------------------------------------------------------------
-------------------------------
NUMBER OF PERCENT OF 5% 10%
SECURITIES TOTAL OPTIONS/ ASSUMING ASSUMING
UNDERLYING SARS GRANTED EXERCISE OR 10/08/09 STOCK 10/08/09 STOCK
OPTIONS/SARS TO EMPLOYEES BASE PRICE EXPIRATION PRICE OF PRICE OF
NAME GRANTED (#)(I) IN FISCAL YEAR ($/SH) DATE $3.05 $4.86
- ---- -------------- -------------- ----------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Clark J. Matthews, II........ 500,000 12.94% $1.8750 10-08-09 $587,500 $1,492,500
James W. Keyes............... 350,000 9.06% $1.8750 10-08-09 411,250 1,044,750
Bryan F. Smith, Jr........... 137,000 3.55% $1.8750 10-08-09 160,975 408,945
Rodney A. Brehm.............. 90,000 2.33% $1.8750 10-08-09 105,750 268,650
Ezra Shashoua................ 70,000 1.81% $1.8750 10-08-09 82,250 208,950
</TABLE>
- ------------------------
(i) Options become exercisable as to 20% of the shares subject thereto on the
first through fifth anniversaries of the grant date. Thirty percent (30%)
of the shares received upon exercise will bear a legend restricting the
transfer or sale of such shares for 24 months after the date acquired,
unless the optionee dies, retires, becomes disabled or his employment is
terminated due to divestiture.
(ii) The amounts shown under these columns are the result of calculations at
the 5% and 10% rates required by the Securities and Exchange Commission
and are not intended to forecast future appreciation of the Company's
stock price.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information on the number of options
outstanding under the 1995 Stock Incentive Plan, as well as the value of
unexercised options, both exercisable and unexercisable, under the plan.
AGGREGATED OPTION/SAR EXERCISES IN 1999 FISCAL YEAR
AND 1999 YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON VALUE SARS AT FISCAL YEAR END (#) AT FISCAL YEAR-END ($)(III)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE (I) UNEXERCISABLE (II) EXERCISABLE (IV) UNEXERCISABLE
- ---- ------------ ------------ --------------- ------------------ ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clark J. Matthews, II... -- -- 1,172,000 1,568,000 N/A N/A
James W. Keyes.......... -- -- 620,000 1,030,000 N/A N/A
Bryan F. Smith, Jr...... -- -- 273,720 410,880 N/A N/A
Rodney A. Brehm......... -- -- 225,520 258,080 N/A N/A
Ezra Shashoua........... -- -- 101,600 176,400 N/A N/A
</TABLE>
- ------------------------
(i) The exercisable options shown are held pursuant to the 1995 Stock Incentive
Plan (pursuant to which 80% of the options granted in 1995, 60% of the
options granted in 1996, 40% of the options granted in 1997 and 20% of the
options granted in 1998 became exercisable on October 23, September 30,
November 12, and October 13, 1999, respectively).
18
<PAGE>
(ii) The unexercisable options shown are Nonqualified Stock Options granted in
1995, 1996, 1997, 1998 and 1999 under the 1995 Stock Incentive Plan, at an
exercise price of $3.1875 per share, $3.00 per share, $2.469 per share,
$1.90625 per share and $1.8750 respectively. The options granted will
become exercisable 20% per year for five years, which schedule can be
accelerated if certain share price targets are achieved.
(iii) No SARs are held by any of the named executive officers nor are any SARs
currently outstanding.
(iv) Based on the closing price of $1.78125 on The Nasdaq Stock Market on the
last business day of the Company's fiscal year, however, the closing price
on March 3, 2000 was $3.75.
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
The Company does not maintain a defined benefit pension plan for its
employees. It does maintain an Executive Protection Plan, covering approximately
50 executives, including each of the named executive officers. This plan
provides three benefits: salary continuation upon retirement at age 65 (or
later) equal to 150% of the executive's "final compensation," as determined for
plan purposes, payable in ten equal annual installments (if the executive
retires between the ages of 55 and 65, a reduced benefit is payable);
post-retirement life insurance benefit equal to 200% of the executive's "final
compensation," as determined for plan purposes, plus $15,000 (or, in lieu
thereof, if the executive dies prior to retirement, a salary continuation death
benefit shall be paid to the executive's named beneficiary, equal to 200% of
such compensation, payable in ten equal annual installments); and disability
income in excess of the amount provided under the Company's group long-term and
short-term disability plans. If the executive becomes disabled while a
participant in this plan, the total amount paid to the executive as disability
benefits will equal 80% of the executive's "final compensation" prior to the
disability. The Company maintains various insurance policies to fund the amounts
payable under this plan.
Under the current plan provisions, the "final compensation" on which
benefits would be calculated for each of the named executive officers would be
based on that executive's 1996 earnings (which may be adjusted to 1999 earnings
in mid-2000). Based on such compensation, the annual installment of salary
continuation, assuming retirement at age 65, and no adjustments to compensation
between 1996 and retirement, would be as follows: Mr. Matthews--$93,972,
Mr. Keyes--$42,764, Mr. Smith $41,880, Mr. Brehm--$43,974, and
Mr. Shashoua--$34,142. Under the plan, normal retirement age is 65; however, if
an executive retires between the ages of 55 and 65, a reduced benefit is payable
under the plan. At age 55, the benefit is 50% of what would have been paid at
age 65; the benefit increases to 55% at age 56, and increases 5% per year
thereafter for each year up to age 65.
ARRANGEMENTS RELATED TO TERMINATION OF EMPLOYMENT
On February 4, 2000, the Company announced that Mr. Matthews will be
retiring as President and Chief Executive Officer, effective April 30, 2000. He
has been nominated to remain on the Board of Directors. In connection with his
retirement, and in recognition of his 34 years of service to the Company,
Mr. Matthews will receive a "Retirement Grant" in the approximate amount of
$3.6 million, which will be payable in May, 2000.
The Retirement Grant represents the discounted present value of (i) four
years' salary ($1,960,000); (ii) 100% of his normal Annual Performance Incentive
for 2000 and 2001 ($294,000 per year); (iii) certain benefits that he would have
received from the Company under the Executive Protection Plan had he retired at
age 65; (iv) the sums he would have received under the Company's Car Allowance
Program through April, 2004 ($48,000); (v) the sums required to reimburse him
for the difference between the cost of Retiree Medical Coverage in excess of the
cost of employee coverage through April, 2004; (vi) his accrued but unused
vacation benefits for 2000; and (vii) a special retirement bonus in the net
amount of $526,000.
19
<PAGE>
Mr. Matthews will also be provided with office space and secretarial
assistance during the three years commencing April 30, 2000. He will also
continue to participate in the Annual Executive Physical Program through 2004.
He will also be provided certain life insurance policies that were previously
assigned to him. Mr. Matthews' retirement will be classified as an early
retirement under the 1995 Stock Incentive Plan and his options will continue to
vest pursuant to their terms.
The full amount of these benefits has been accrued in the Company's
financial statements for 1999. Additionally, the Company currently maintains
sufficient insurance to be completely reimbursed the full cost of providing
these benefits to Mr. Matthews.
DIRECTORS' COMPENSATION
For information about compensation of the Board of Directors see
"Information About The Board of Directors and Committees of the
Board--Compensation of Directors," above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described above, the Compensation and Benefits Committee of the Board of
Directors is composed of three directors, as follows: Mr. Suzuki (Chairman of
the Committee), Mr. Fernandes and Mr. Otsuka. Mr. Suzuki is Vice Chairman of the
Board of Directors of the Company. He is also President of Ito-Yokado and IYG
Holding Company and Chairman of Seven-Eleven Japan. As described elsewhere
herein, IYG Holding Company, which as of the record date owned approximately 65%
of the Common Stock of the Company, is a jointly owned subsidiary of Ito-Yokado
and Seven-Eleven Japan. IYG acquired an additional 113,684,211 shares of Common
Stock on March 16, 2000. Ito-Yokado has, since 1992, unconditionally guaranteed
the Company's commercial paper facility for which Ito-Yokado has received no
fee. Seven-Eleven Japan, a 51%-owned subsidiary of Ito-Yokado, is the Company's
area licensee in Japan and, through its subsidiary, Seven-Eleven
(Hawaii), Inc., is the Company's area licensee in Hawaii. In addition,
Ito-Yokado and Seven-Eleven Japan acquired an aggregate of $300 million of the
1995 QUIDS and $80 million of the 1998 QUIDS (see "Security Ownership of Certain
Beneficial Owners and Management--Security Ownership of Certain Beneficial
Owners," above). Interest is payable quarterly to Ito-Yokado and Seven-Eleven
Japan on the Convertible Debt Securities. Kazuo Otsuka is an officer of
Ito-Yokado and of IYG Holding Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The functions of the Compensation and Benefits Committee are to review the
level, coverage and competitiveness of the Company's compensation, incentives,
benefits and perquisites and its plans, goals and objectives for officer-level
and other executive positions, so as to retain and reward high-quality personnel
in key positions; to administer the Company's various incentive plans, including
the 1995 Stock Incentive Plan; to make recommendations to the Board regarding
amendments to the various plans and institution of new plans and other related
matters. It also undertakes such other duties as may be assigned to it by the
Board of Directors.
The following is a summary of the Company's compensation practices and
current programs.
Decisions about executive compensation are made based upon recommendations
presented by the Company's Compensation and Benefits Department, as well as by
outside consultants who have been utilized from time to time to assist the
Company in determining the competitiveness of its compensation policies, as well
as on recommendations of the Company's executive officers with regard to the
specific performance of individuals in carrying out their job responsibilities,
and on data collected and utilized by the Company's Compensation and Benefits
Department about compensation structure, practices and payment levels in certain
"Comparable Companies" (as described below). In addition, in making compensation
decisions, the Company considers overall performance factors such as increases
in same store merchandise sales, as well as the impact of management's focus on
implementation of the Company's strategic initiatives during the year.
20
<PAGE>
The Company's compensation structure is based on grade level classifications
for all exempt positions, with a salary range and target annual variable
compensation, which is set at a percentage of base salary for each grade level.
There were no changes to the structure in 1999. Annual compensation for exempt
employees consisted of salary (or "base" compensation) and variable Annual
Performance Incentive (called "API" or "Annual Bonus"). The API that is
potentially payable to any employee is a set percentage of the employee's
salary, based on grade level. The combined total of full annual salary and full
API is designed to achieve a compensation level that is slightly above the
median compensation level for the same job responsibilities in "Comparable
Companies," as defined below.
FOCUS ON STORE STAFF. During 1999, the Executive Committee had the
Compensation Department review the compensation and benefits strategy for store
staff and assess its competitiveness with compensation packages (including such
benefits as healthcare and vacation) being offered by "Comparable Companies."
The result of this review was the implementation of an enhanced benefit package
for 2000 with much of the work still underway.
DESCRIPTION OF 1999 COMPENSATION
BASE SALARY. For 1999, officers' base compensation was increased
approximately 8.6%.
ANNUAL PERFORMANCE INCENTIVE. All the Company's officers and all other
exempt personnel have the potential to earn API. The API potential for the Chief
Executive Officer, if the Company's earnings target is reached, is 60% of his
base salary. The Company's senior officers have API potential of from 45% to 50%
of their base salary. Other officers have a potential to earn between 37% and
45% of their base salary. In 1999, the amount of API that was earned was based
on the achievement of certain earnings and, if applicable, performance targets.
The Company exceeded the earnings targets and the corporate component of 1999
API (which was paid in February 2000) was 105%. Certain field operations
personnel (including Division Vice Presidents, Division Managers and certain
other field operations management) received a portion of their 1999 API based on
the achievement of performance targets that were established for their specific
operating unit.
1995 STOCK INCENTIVE PLAN. This plan provides for the Company to award a
variety of stock-based incentives, including options, stock units, restricted
stock, phantom stock and stock appreciation rights. Based on the study of
practices at Comparable Companies, the Board has set aside from the Company's
authorized, but unissued, shares, approximately 10% of the Company's currently
issued and outstanding shares, for awards under this plan over the ten-year term
of the plan, with the intention that options will be granted each year for
approximately one-tenth of the total shares reserved for issuance under this
plan. Shareholder approval of this plan was obtained in April 1996. The option
grants made in 1999 were approved by the full Board of Directors, including all
members of the Committee and therefore, the Committee took no separate action to
approve the option grants.
Options have been granted under this plan each year beginning in 1995. The
options granted become exercisable over a five-year period starting one year
after the date of grant. Approximately 15.7 million shares of the Company's
authorized but unissued Common Stock are now subject to outstanding options
under this plan. The option exercise price is $3.1875 for the options granted in
1995, $3.00 for the options granted in 1996, $2.469 for the options granted in
1997, $1.90625 for the options granted in 1998 and $1.875 for the options
granted in 1999, in each case being equal to the closing price of the stock on
the date of grant. All outstanding options, as well as those that will be
granted in the future, will be adjusted to reflect the affect of the reverse
stock split (see Proposal 3, herein) on the numbers of options and the exercise
price. The Committee believes this plan, over the life of the plan, which
provides for an accelerated vesting schedule if the Company's stock price
reaches and stays above certain levels for a significant period of time, has the
potential to reward the executives who are responsible for the success of the
Company's long-term growth and encourage them to focus on initiatives that will
have a positive effect on the price of the Company's stock.
21
<PAGE>
CHIEF EXECUTIVE COMPENSATION. Mr. Matthews' base pay in 1999 was $487,000,
and his API was $307,150. On February 4, 2000, the Company announced that
Mr. Matthews was retiring from his position as President and Chief Executive
Officer, effective April 30, 2000. He will remain on the Board of Directors.
Mr. Matthews will receive a package of enhanced retirement benefits. (See
"Arrangements Related to Termination of Employment," included in this Proxy
Statement, above.)
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN FOR ELIGIBLE EMPLOYEES
("SERP"). Effective in January 1998, the Company adopted the SERP, an unfunded,
non-qualified deferred compensation arrangement for a select group of highly
compensated management employees. Eligible employees are permitted to defer up
to 12 percent of their income into the SERP. The amounts deferred earn interest,
set each December, at 120 percent of the federal long-term rate for compounding
annually, as set by the Internal Revenue Service. For 1999, the interest rate
was 6.32 percent. The Company may make a matching contribution to the SERP,
roughly equivalent to the amount a SERP participant was prevented from receiving
under the Savings and Profit Sharing Plan due to federally mandated
discrimination testing. The matching contribution, if any, will only apply on
deferrals of up to a total of six percent of a participant's income, after
deducting any matching contribution the participant received in the Savings and
Profit Sharing Plan. The Company elected not to make a matching contribution to
the SERP for 1999.
STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS. In October 1998, the
Board approved the Stock Compensation Plan for Non-Employee Directors. The
purpose of this plan is to encourage non-employee directors to increase their
ownership of 7-Eleven common stock by electing, under the terms of this plan, to
receive a portion, or all, of their directors' fees in shares of Common Stock
instead of in cash. All non-employee directors (the only directors who receive
directors' fees) are eligible to participate, however, two directors who have
assigned their fees to their corporate employers have elected not to participate
because the registration statement that covers the shares issued under this plan
would not cover shares issued to their employers.
EMPLOYEE STOCK PURCHASE PLAN/FRANCHISEE STOCK PURCHASE PLAN. In 1999 the
Company established two stock purchase plans--one for employees and one for
franchisees. Under these plans, both administered by the Company's transfer
agent, employees and franchisees can purchase shares of 7-Eleven common stock
through payroll deduction for employees and deductions from net worth for
franchisees. All amounts are remitted by the Company to the administrator who
then purchases shares in the open market. No new shares are issued for these
plans, but the Company does pay the administrative fees and brokerage
commissions to purchase the shares. The plan administration is completely
independent from the Company.
FUTURE COMPENSATION:
2000 COMPENSATION. The human resources team has been asked to study and
develop a new Annual Performance Incentive plan for all exempt employees, with
the initial focus on field personnel, that will be designed to reward employees
as directly as possible based upon their individual unit's performance. In
addition, the Compensation and Benefits Department is also reviewing other
aspects of management's compensation, including all other benefit plans, to
determine if the plan structures and benefits are comparable to those being
offered currently by Comparable Companies. This is called the "Benchmarking
Study." In December, 1998, the Company announced that for 1999 and future years,
annual salary administration for exempt employees would take place in April,
instead of in January, as had been done previously. This will give the Company
additional time to assess prior year results when making decisions about
compensation for the following year. Thus, any salary increases for 2000 will
not be effective until April, 2000.
SECTION 162(m). Changes in the tax laws for 1994 and thereafter do not
permit public companies to recognize a tax deduction for compensation paid in
excess of $1,000,000 to any of the five most highly compensated officers, unless
the plan under which such compensation is paid is not only approved by the
22
<PAGE>
Board's Compensation Committee but is also performance-based and approved by the
Company's shareholders, in which case the compensation paid under such plan is
exempt from the $1,000,000 limitation. The Committee does not believe that any
executive will earn in excess of $1,000,000 of non-exempt compensation in 2000;
however, the 1995 Stock Incentive Plan was approved by the shareholders, in
order to comply with Section 162(m). In addition, the Committee intends to take
other actions, if required, to comply with the regulations under
Section 162(m).
COMPARATIVE DATA. In carrying out its functions, the Committee may be asked
to review data collected from various sources by the Company's Compensation and
Benefits Department and benefits consultants utilized by the Company on
particular issues. The Company believes that, to effectively recruit talented
executives, it must compete with other national companies having a similar
employee base, approximately the same range of revenue and similar geographic
locations, although such companies are not in the same line of business as
7-Eleven (the "Comparable Companies"). Therefore, the companies used for
compensation comparisons are not the same companies as those included in the
peer group index shown on the Performance Graph appearing elsewhere herein. The
companies included in that peer group are specifically selected because they
(a) are publicly owned with actively traded common stock, (b) have a market
capitalization that can be analyzed for comparison with 7-Eleven's rate of
return on equity, and (c) engage in either the convenience retailing or food
retailing business. The Company believes it competes with a much broader range
of companies in its quest for executive talent.
The Committee will continue to review the compensation issues presented to
it by the Company, making adjustments that are deemed appropriate, both in
compensation policies and practices, compensation structure and the actual
amounts paid and will look to the Company's executive officers for
recommendations resulting from the currently ongoing review of the Company's
compensation program and strategies.
Toshifumi Suzuki, Chairman
Gary J. Fernandes
Kazuo Otsuka
23
<PAGE>
PERFORMANCE GRAPH
The Performance Graph, below, shows the value, at year-end 1995, 1996, 1997,
1998 and 1999, of an investment in 7-Eleven Common Stock of $100 on January 1,
1995. Also shown are the values, assuming $100 invested in the NASDAQ Market
Index and a peer group index selected by the Company consisting of three
publicly traded convenience store companies (Casey's General Stores, Inc., Dairy
Mart Convenience Stores, Inc. and Uni-Marts, Inc.) and two food retailers (The
Kroger Co. and Safeway, Inc.), also beginning on January 1, 1995, and at
year-end 1995, 1996, 1997, 1998 and 1999. In prior years, The Vons
Companies, Inc. was also included in the peer group; however, The Vons
Companies, Inc. was acquired by Safeway, Inc., in April 1997, ceased public
trading, and has therefore been deleted from the peer group. In addition, two of
the Company's major convenience store competitors: the Circle K Corporation and
National Convenience Stores (operator of "Stop N Go") are not included in the
peer group. Both companies have been acquired and do not issue securities to the
public at this time. The Company may decide, in future years, to change the
composition of the peer group if the Company believes that better comparative
data is available.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
AMONG 7-ELEVEN, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
DOLLARS
7-ELEVEN, INC. PEER GROUP NASDAQ MARKET INDEX
1994 100 100 100
1995 73.61 157.79 129.71
1996 65.97 227.30 161.18
1997 47.22 342.89 197.16
1998 42.36 615.46 278.08
1999 39.58 371.10 490.46
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR-END DECEMBER 31
<TABLE>
<CAPTION>
COMPANY 1995 1996 1997 1998 1999
- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
7-Eleven, Inc....................... 73.61 65.97 47.22 42.36 39.58
Peer Group.......................... 157.79 227.30 342.89 615.46 371.10
Broad Market........................ 129.71 161.18 197.16 278.08 490.46
</TABLE>
24
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company currently has a commercial paper program under which it can
issue up to $650 million based upon the Company's needs. The commercial paper
facility is unconditionally guaranteed by Ito-Yokado.
On March 1, 2000, IYG signed a Subscription Agreement to purchase an
additional 113.7 million newly issued shares of Common Stock for $540 million.
The purchase closed on March 16, 2000, and brought IYG's ownership percentage to
72% of the Company's outstanding Common Stock. IYG is jointly owned by
Ito-Yokado and Seven-Eleven Japan.
In November 1995, the Company issued $300 million 4.5% Convertible Quarterly
Income Debt Securities due 2010 (the "1995 QUIDS") to Ito-Yokado ($153 million)
and Seven-Eleven Japan ($147 million). An additional $80 million 4.5%
Convertible Quarterly Income Debt Securities due 2013 (the "1998 QUIDS") were
issued in February 1998, to Ito-Yokado ($40.8 million) and Seven-Eleven Japan
($39.2 million). Interest on both series of QUIDS is payable quarterly, and in
1998, the Company paid aggregate interest to Ito-Yokado of $8,721,000 and to
Seven-Eleven Japan of $8,379,000 on both series of QUIDS. The Company may defer
the interest payments for up to 20 consecutive quarters but currently intends to
make interest payments as they come due. In addition, the 1995 QUIDS are
convertible in whole or in part into a total of 72,111,917 shares of 7-Eleven
Common Stock at a conversion price of $4.16 per share and, beginning in 2001,
the 1998 QUIDS are convertible in whole or in part into a total of 32,508,432
shares of 7-Eleven Common Stock, at a conversion price of $2.4609 per share, at
which time, if certain conditions with regard to the closing price of 7-Eleven's
Common Stock are met, the 1998 QUIDS have a mandatory conversion feature.
Seven-Eleven Japan is the largest area licensee of the Company, operating,
as of December 1999, over 8,027 7-Eleven stores in Japan under an area license
agreement entered into in 1973. In 1988, the Company entered into a
yen-denominated financing arrangement pursuant to which it pledged the royalty
stream from Seven-Eleven Japan as collateral for the financing until the earlier
of twenty years or the date the indebtedness is paid in full. In 1998, it was
anticipated that the payments would be satisfied earlier than the twenty-year
term and the Company entered into an additional yen-denominated financing
related to subsequent royalties which, pursuant to the terms of the original
financing, will be at a reduced percentage. In 1999, the royalties from
Seven-Eleven Japan that were paid under this arrangement totaled $55,739,947.
In addition, Seven-Eleven (Hawaii), Inc., the Company's area licensee in
Hawaii, is a subsidiary of Seven-Eleven Japan, and operates 50 stores in Hawaii.
During 1999, Seven-Eleven (Hawaii), Inc. paid the Company $73,603 in connection
with the area license arrangement.
As of December 31, 1999, the Savings and Profit Sharing Plan leased a total
of 579 operating convenience stores to the Company plus 15 other locations.
Rentals, including percentage rents, paid by the Company to the Savings and
Profit Sharing Plan for 1999 aggregated $18,620,070. During 1999, the Savings
and Profit Sharing Plan sold 34 locations to third parties, 12 of which were
leased to the Company at the time of the sale which leases were assigned to the
buyer. The leases with the Company were terminated on 5 locations upon payment
by the Company of $186,173 in termination fees, $35,000 of which was payment for
deed restrictions requested in connection with the sale of two sites. In
addition, the Company purchased six (6) properties from the Savings and Profit
Sharing Plan in 1999.
Mr. Chai is Chairman and Chief Executive Officer of ITOCHU
International Inc. and Executive Vice President of ITOCHU Corporation. Both
ITOCHU International and ITOCHU Corporation are general trading companies and
each has a 10% direct equity interest in Prime Deli, Inc., ("Prime Deli"), a
company that operates a fresh food commissary for 7-Eleven, Inc., serving
approximately 283 7-Eleven stores in Texas. During 1999, 7-Eleven, Inc.
purchased fresh food products from the commissary for approximately
$6.5 million.
25
<PAGE>
In addition, SIG Logistics, which is partially owned by ITOCHU Corporation
and ITOCHU International, operated six combined distribution centers in Florida
and Virginia that served a total of 847 7-Eleven stores. During 1999 the
distribution fees paid to SIG Logistics totaled approximately $9.3 million.
C. Itoh & Co. (now ITOCHU Corporation) entered into a Consulting Agreement
with The Southland Corporation (now 7-Eleven, Inc.) and Seven-Eleven Japan
Co., Ltd. in 1973, related to the 7-Eleven convenience store chain operating in
Japan, and has performed under this agreement since then.
In addition, ITOCHU International and ITOCHU Corporation may, from time to
time, negotiate with the Company to provide additional goods or services.
Mr. Chai has no personal material interest in any transactions between the
Company and ITOCHU Corporation and ITOCHU International Inc. other than as a
director and/or officer of such companies.
SHAREHOLDER PROPOSALS
If you want to present a proposal and have it included in the Proxy
Statement for the Company's 2001 Annual Meeting of Shareholders, which is
expected to be held during April or May 2001, you must send your proposal to the
Company at its principal office, 2711 North Haskell Avenue, Dallas, Texas 75204,
Attn: Office of the Secretary. The Company must receive a proposal not later
than December 1, 2000, for the proposal to be considered by the Company and the
proposal must comply with the then current rules of the Securities and Exchange
Commission relating to shareholder proposals.
FINANCIAL AND OTHER INFORMATION
WHERE YOU CAN FIND MORE INFORMATION
7-Eleven files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. Our SEC filings
are available to the public over the internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this Proxy Statement, and information we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference our Annual Report on Form 10-K for the year ended December 31, 1999.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address: MANAGER, INVESTOR RELATIONS,
7-ELEVEN, INC., 2711 NORTH HASKELL AVENUE, DALLAS, TEXAS 75204. Telephone
(214) 828-7011
The Annual Report of the Company for the year ended December 31, 1999 is
being mailed to shareholders with this Proxy Statement but such report is not
incorporated in this Proxy Statement and is not deemed to be part of the proxy
soliciting material.
OTHER BUSINESS
We do not know of any other matters that will be presented at this meeting.
However, if other business does come before the meeting, each person named in
the proxy will vote such proxy in accordance with his or her respective judgment
on such matters. Minutes of the last Annual Meeting of Shareholders will be
approved. Management's reports will be heard and received. Even though you hear
the reports and approve the minutes, it does not mean that you approve or
disapprove of the matters contained in the reports or minutes.
INDEMNIFICATION
Pursuant to the Company's Articles of Incorporation and Bylaws and the Texas
Business Corporation Act, the Company has indemnified certain current and former
officers and directors in connection with pending litigation as well as with
other actions they may have taken while serving as directors or officers of the
Company.
26
<PAGE>
APPENDIX A
7-ELEVEN, INC. AUDIT COMMITTEE--CHARTER
1. Each year the Company's Board of Directors shall adopt resolutions electing
a minimum of three members of the Board of Directors to be members of the
Company's Audit Committee.
2. Each member of the Audit Committee shall be a person who qualifies for
membership under the then-current listing requirements of the
self-regulatory agency on which the Company's common stock is then traded.
If the applicable listing standards require only one member of the Committee
to have a certain competence or expertise, then the remaining members shall
not have to meet such standard, but shall be subject to all other
qualification standards. In addition, qualification for membership shall be
construed broadly to include any exceptions or determinations of eligibility
that are left to the Board's discretion under the applicable listing
requirements. The Board shall select one member of the Committee to serve as
the Chairman.
3. The Audit Committee shall meet, at such times and places, either in person
or by means of telephone conference call or video conference, as may be
determined by the Committee members, as necessary to carry out the functions
and duties of the Committee as set forth in this Charter and in such other
documents as may be adopted by the Committee or the Company's Board of
Directors setting forth duties of the Committee.
4. The Audit Committee shall serve as a conduit to encourage and facilitate
free and open communication between the Board of Directors, the independent
auditors, the internal auditors and the financial management of the Company.
5. The Audit Committee shall have the following areas of responsibility:
(a) To recommend to the Board the engagement of the independent auditors for
the Company;
(b) To review with the independent auditors the plan and scope of their
audit, its status during the year, the results when completed, the
required communications under Statements of Auditing Standards Nos. 61
and 89, their report or opinion and any recommendations they may have for
improving or changing the audit and the control environment, as well as
management's letter in response thereto, and the fees for audit services;
(c) To review the professional services performed by the independent
auditors and determine whether these interfere with their exercise of
independent judgment and to approve in advance any proposed changes of
the Engagement Partner assigned to the Company by such independent
auditors;
(d) To review with the independent auditors the disclosure required by the
Independence Standards Board Standard No.1 as to relationships between
the independent auditors and the Company;
(e) To review the Company's accounting principles, policies and practices
and its financial reporting policies and practices;
(f) To review with the Company's internal auditors the plan, scope, and
results of their audits and investigations;
(g) To discuss with both the independent auditors and, independently, the
Company's internal auditors, as well as with the Company's financial
staff and management, including their recommendations with respect to
(i) the Company's policies and procedures with respect to the adequacy of
internal auditing, accounting, and financial controls, (ii) any areas
that are discretionary or involve any judgmental issues and (iii) all
high risk areas that could adversely impact the Company;
A-1
<PAGE>
(h) To review and, prior to publication, recommend the adoption by the Board
of Directors, for inclusion in the Company's Annual Report to
Shareholders and Form 10-K, the annual audited financial statements of
the Company;
(i) To review with the Company's financial management and the independent
auditors the quarterly earnings releases and the schedule of unrecorded
adjustments to the Company's financial statements and the reasons
underlying the Company's assessment of the immateriality of such
adjustments;
(j) To review, and prior to publication, approve such other Company
financial information, including appropriate regulatory filings and
releases that include financial information as the Committee deems
desirable;
(k) To annually review the Committee's Charter and make recommendations to
the Board of Directors that such changes and adjustments be made to this
Charter as the Committee deems appropriate;
(l) To annually provide a report to the Company, that will be included in
the Company's Proxy Statement, in compliance with Rule 306 of
Regulation S-K;
(m) To undertake such other functions as are assigned to the Committee by
the Board, including those under the Company's Code of Business Conduct
and those relating to transactions between the Company and entities
affiliated with Directors and Officers of the Company; and
(n) To review any matters it deems necessary or desirable which are
consistent with its areas of responsibility.
6. The Audit Committee shall adopt a duties matrix at the beginning of each
calendar year, setting forth the functions and duties of the Committee and
the meetings at which each duty shall be performed.
7. The Audit Committee shall provide information to the full Board of Directors
related to matters considered by the Audit Committee that it deems
appropriate for consideration by the full Board, and shall, on matters of
financial reporting and other financial issues provide recommendations to
the full Board on matters to be decided.
8. With respect to the preparation and auditing of the Company's financial
statements, the Audit Committee's role is one of oversight. The Company's
management is responsible for preparing the Company's financial statements.
The Company's independent auditors are responsible for auditing those
financial statements. Nothing in this Charter should be construed to imply
that the Audit Committee is required to provide any assurance or
certification as to the Company's financial statements or the services of
the independent auditors.
A-2
<PAGE>
APPENDIX B
PROPOSED
ARTICLES OF AMENDMENT
TO THE
SECOND RESTATED ARTICLES OF INCORPORATION OF
7-ELEVEN, INC.
* * * * *
Pursuant to the provisions of the Texas Business Corporation Act,
7-Eleven, Inc., a corporation organized under the laws of the State of Texas,
hereby amends its Second Restated Articles of Incorporation (the "Articles of
Incorporation") and for that purpose, submits the following statement:
ARTICLE ONE
The name of the corporation is 7-Eleven, Inc.
ARTICLE TWO
Article Four (b) of the Articles of Incorporation is hereby deleted in its
entirety and replaced with a new paragraph (b) as follows:
"ARTICLE FOUR
(b) Upon the filing of these Articles of Amendment to the Articles of
Incorporation with the Texas Secretary of State, each share of the Corporation's
common stock, par value $0.0001 per share (the "Old Common Stock"), issued and
outstanding immediately prior to the filing hereof shall, without any action on
the part of the holder thereof, be converted and reclassified into, and
immediately represent one-fifth of a validly issued, fully paid and
non-assessable share of Common Stock. No holder will be entitled to receive a
fractional share of Common Stock and any fraction of a share of Common Stock
that would otherwise be due a holder as a result of the preceding sentence shall
automatically be eliminated and, in lieu thereof, the holder thereof shall be
entitled to receive a cash adjustment in respect of such fraction of a share in
an amount based upon a value of the Common Stock equal to the product of five
multiplied by the closing price of a share of the Old Common Stock on the last
trading day immediately preceding the date of the filing hereof as reported by
The Nasdaq Stock Market. Each certificate which theretofore represented shares
of Old Common Stock shall thereafter represent that number of shares of Common
Stock determined in the previous sentences; provided, however, that each person
holding of record a stock certificate or certificates which represented a share
of Old Common Stock shall receive, upon surrender of such certificate or
certificates, a new certificate or certificates evidencing and representing the
number of shares of Common Stock to which such person is entitled."
ARTICLE THREE
The amendment to the Articles of Incorporation was adopted by a vote of the
shareholders of the corporation on April 26, 2000.
ARTICLE FOUR
The number of shares of the corporation outstanding at the time of such
adoption was 523xxxxxxxx; and the number of shares entitled to vote thereon was
410,112,375.
B-1
<PAGE>
The designation and number of shares of each class or series entitled to
vote thereon as a class or series were as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES OUTSTANDING
CLASS OR SERIES AND ENTITLED TO VOTE
- ------------------------------------- -------------------------------------
<S> <C>
None
</TABLE>
ARTICLE FIVE
The number of shares voted for such amendment was XXXXXXXX and the number of
shares voted against such amendment was xxxxxxxxx.
The number of shares of each class or series entitled to vote as a class or
series voted for or against such amendment as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES VOTED
-----------------------------------------
CLASS OR SERIES FOR AGAINST
- --------------------- --- -------
<S> <C> <C>
None
</TABLE>
ARTICLE SIX
The effective date of this amendment shall be , 2000.
Dated the xxxth day of , 2000.
(to be effective )
7-ELEVEN, INC.
By:_____________________________________
Name and Title:
________________________
Vice President
B-2
<PAGE>
For EDGAR Version only:
On the outside back cover of the Proxy Statement there is a map showing the
underground parking at Cityplace. Under the map, the text is as follows:
Cityplace Center East is located on the southeast corner of the intersection of
Haskell Avenue and Central Expressway.
To enter underground parking garages use Ramp #2, #3, or #5.
#2 is entered from left lane while eastbound on Haskell.
#3 is entered from left lane while westbound on Haskell.
#5 is entered from southbound Weldon.
- At entrance ramp gate--push button to raise gate and enter, parking is
complimentary.
- Proceed along roadway to entrance of garage "A", "B", "C" or "D" (note
compact car spaces).
- Locate garage elevators, take elevator to Concourse Level "C".
- Exit Level "C" at the elevator lobby and follow signs to Cityplace Tower
entrance.
- Enter Cityplace Tower at revolving door and proceed through the corridor
to information Kiosk.
- Take the Concourse elevator to the ground floor lobby and conference
center.
<PAGE>
PROXY PROXY
7-ELEVEN, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS -- APRIL 26, 2000
The undersigned appoints Clark J. Matthews, II, Bryan F. Smith, Jr. and Carol S.
Hilburn, and each of them (acting by majority, or if only one be present,
then by that one alone) as my true and lawful agents and proxies, with full
power of substitution and revocation, to vote, as designated on the reverse
side hereof, all the Common Stock of 7-Eleven, Inc. which the undersigned has
power to vote, with all powers which the undersigned would possess if
personally present, at the Annual Meeting of Shareholders of 7-Eleven, Inc.
to be held on April 26, 2000 and at any adjournments thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named and FOR Proposals No. 2 and 3. The proxy holders will use
their discretion with respect to any other matter that is properly brought
before the meeting, as referred to in Item 4.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
7-ELEVEN, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
[ ]
For all,
except
Nominee(s)
For All written
1. ELECTION OF DIRECTORS-Nominees: For Withheld Except in below
01 - Masatoshi Ito; / / / / / / ___________________
02 - Toshifumi Suzuki; Nominee(s) Excepted
03 - Clark J. Matthews, II;
04 - Yoshitami Arai;
05 - Masaaki Asakura;
06 - Timothy N. Ashida;
07 - Jay W. Chai;
08 - Gary J. Fernandes;
09 - Masaaki Kamata;
10 - James W. Keyes;
11 - Kazuo Otsuka;
12 - Asher O. Pacholder;
13 - Nobutake Sato.
2. Ratification of the appointment For Against Abstain
of the accounting firm of / / / / / /
PricewaterhouseCoopers LLP, as
independent auditors of the Company
for 2000.
3. Approval of Articles of Amendment For Against Abstain
to the Company's Second Restated / / / / / /
and Amended Articles of
Incorporation to effect a five-for-one
reverse split of the Company's common
stock.
4. Other Business. In their discretion,
the proxies are authorized to vote
upon such other matters as may
properly come before the meeting or
any adjournments thereof.
If you plan to attend the meeting / /
in person, please mark this oval
SIGNATURE(S) __________________________ DATE _____________
SIGNATURE(S) __________________________ DATE _____________
Date and sign exactly as your name appears hereon. Joint
owners should each sign. When signing as an administrator,
executor, trustee, attorney, guardian, corporate officer,
or in any other capacity, please give full title as such.
Receipt of 1999 Annual Report and March 23, 2000 Notice
and Proxy Statement is hereby acknowledged.
