<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Consolidated Products, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ 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:
------------------------------------------------------------------------
<PAGE>
CONSOLIDATED PRODUCTS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 7, 2001
TO THE SHAREHOLDERS OF CONSOLIDATED PRODUCTS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Consolidated Products, Inc. will be held at the Company's Corporate Office, 4th
Floor, Century Building, 36 South Pennsylvania Street, Indianapolis, Indiana
46204, on Wednesday, February 7, 2001 at 1:30 p.m., Eastern Standard Time, for
the following purposes:
1. To elect eight directors to serve until the next Annual Meeting
of Shareholders and until their respective successors shall be
elected and qualified.
2. To act upon an amendment to the Articles of Incorporation
changing the name of the Company to The Steak n Shake Company.
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on December 6,
2000, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting.
We urge you to date, sign and mail the enclosed proxy in the envelope
provided whether or not you expect to be present in person. You may revoke the
proxy at any time prior to the time the proxy is exercised by filing with the
Secretary of Consolidated Products, Inc. a properly executed instrument revoking
such proxy, or by filing a properly executed proxy bearing a later date, or by
attending the Annual Meeting and withdrawing your proxy and voting in person.
By Order of the Board of Directors
Mary E. Ham, Secretary
December 22, 2000
Indianapolis, Indiana
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE
<PAGE>
CONSOLIDATED PRODUCTS, INC.
500 CENTURY BUILDING
36 SOUTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
(317) 633-4100
PROXY STATEMENT
For Annual Meeting of Shareholders
To be Held February 7, 2001
This proxy statement is furnished to the shareholders of Consolidated
Products, Inc. (the "Company") in connection with the solicitation by the
Company of proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at the Company's Corporate Office, 4th Floor,
Century Building, 36 South Pennsylvania Street, Indianapolis, Indiana 46204, on
Wednesday, February 7, 2001, at 1:30 p.m., Eastern Standard Time, and at any
adjournment thereof. This proxy statement and the accompanying form of proxy
were first mailed to shareholders on or about December 22, 2000.
Each properly executed proxy returned prior to the meeting will be
voted in accordance with the directions contained therein. The enclosed proxy
may be revoked by the person giving it at any time before it is voted by giving
written notice to the Secretary of the Company.
OUTSTANDING COMMON STOCK
The record date for shareholders entitled to vote at the Annual
Meeting was December 6, 2000. At the close of business on that date, the Company
had issued and outstanding 28,900,000 shares of Common Stock entitled to vote at
the meeting. Unless otherwise stated, all references herein to numbers and
prices of shares of Common Stock, options and capital appreciation shares of the
Company have been adjusted to reflect all stock dividends and stock splits
declared prior to the date of this proxy statement.
ACTION TO BE TAKE AT THE MEETING
Unless the shareholder otherwise specifies in the proxy, the
accompanying proxy will be voted (i) FOR the election, as directors of the
Company, of the eight persons named under the caption "Election of Directors",
and (ii) FOR the approval of an amendment to the Articles of Incorporation
changing the name of the Company to The Steak n Shake Company.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock is necessary to constitute a quorum at
the Annual Meeting. In deciding all questions, a holder of Common Stock is
entitled to one vote, in person or by proxy, for each share registered in
his/her name on the record date. Directors of the Company are elected by a
plurality of the votes cast by the holders of the shares represented at the
meeting. Abstentions, broker non-votes and instructions on the enclosed form of
proxy to withhold authority to vote for one or more of the nominees will result
in the nominee receiving fewer votes; however, the number of shares present for
purposes of determining a quorum will not be reduced by such action. Other
matters coming before the shareholders will be approved if the number of shares
voted in favor of the proposal exceeds the number of shares voted against the
proposal.
2
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders may submit proposals for inclusion in the Company's proxy
statement and form of proxy for shareholder action at the 2002 Annual Meeting of
Shareholders if such proposals are in accordance with the regulations of the
Securities and Exchange Commission and are received by the Company no later than
September 7, 2001. Shareholder proposals may be presented at the Annual Meeting
even though they do not comply with these procedures.
OWNERSHIP OF COMMON STOCK
The following table shows the number and percentage of outstanding
shares of Common Stock beneficially owned as of December 6, 2000 by each person
who is known to be the beneficial owner of more than 5% of the Common Stock of
the Company:
<TABLE>
<CAPTION>
Amount and Nature of
Name & Address of Beneficial Owner Beneficial Ownership (1) (2) Percent of Class
---------------------------------- ---------------------------- ----------------
<S> <C> <C>
E. W. Kelley 3,638,790 (3) 12.6%
131 Woden Way, S.E.
Winter Haven, FL 33884
Kelley & Partners, Ltd. 2,030,805 (4) 7.0%
36 South Pennsylvania Street, Suite 550
Indianapolis, IN 46204
T. Rowe Price Associates, Inc. 1,607,456 5.6%
100 East Pratt Street
Baltimore, MD 21202
Capital Research & Management Co. 1,718,750 5.9%
SMALLCAP World Fund, Inc.
333 South Hope Street
Los Angeles, CA 90071
FMR Corporation
82 Devonshire Street
Boston, MA 02109
</TABLE>
(1) THIS TABLE IS BASED UPON INFORMATION SUPPLIED BY DIRECTORS AND EXECUTIVE
OFFICERS, SCHEDULES 13D AND 13G, IF ANY, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AND INFORMATION SUPPLIED BY THE COMPANIES LISTED ABOVE.
(2) INCLUDES SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS UNDER THE COMPANY'S STOCK OPTION PLANS. SEE "AGGREGATED
OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR END OPTION VALUES."
(3) INCLUDES 68,269 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS; 556,235 SHARES OWNED DIRECTLY BY MR. KELLEY;
2,030,805 SHARES OWNED OF RECORD AND BENEFICIALLY BY KELLEY & PARTNERS,
LTD.; 565,448 SHARES AND 44,044 SHARES OWNED BY KELLEY, INC. AND KAHM,
INC., RESPECTIVELY, BOTH OF WHICH ARE CORPORATIONS CONTROLLED BY MR.
KELLEY, AND 373,989 SHARES OWNED BY ARAMIAN, KELLEY & CONSOLIDATED, LTD.,
AN INDIANA LIMITED PARTNERSHIP OF WHICH MR. KELLEY IS MANAGING GENERAL
PARTNER.
3
<PAGE>
(4) MR. KELLEY AND MS. ARAMIAN ARE MANAGING GENERAL PARTNERS AND MR. WILLIAMSON
IS A GENERAL PARTNER OF KELLEY & PARTNERS, LTD.
The following table shows the total number of shares of Common Stock
beneficially owned as of December 6, 2000, and the percentage of Common Stock so
owned as of that date, with respect to (i) each director, (ii) each executive
officer named in the Summary Compensation Table, and (iii) all directors and
executive officers, as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership (1) Percent of Class
------------------------ ------------------------ ----------------
<S> <C> <C>
S. Sue Aramian 2,445,963 (2) (3) (4) 8.5%
James W. Bear 506,950 (5) 1.8%
Alan B. Gilman 401,006 (6) 1.4%
Stephen Goldsmith 2,200 (7) *
E. W. Kelley 3,638,790 (3) (8) 12.6%
Charles E. Lanham 441,200 (9) 1.5%
Gary T. Reinwald 369,799 (10) 1.3%
J. Fred Risk 176,503 (11) *
John W. Ryan 17,443 (12) *
Gary S. Walker 25,590 (13) *
James Williamson, Jr. 2,295,134 (3) (14) 7.9%
All directors and executive officers
as a group (20 persons) 6,636,914 (15) 23.0%
</TABLE>
*LESS THAN 1%.
(1) INCLUDES SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS UNDER THE COMPANY'S STOCK OPTION PLANS.
(2) INCLUDES 60,218 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS.
(3) INCLUDES 2,030,805 SHARES OWNED OF RECORD AND BENEFICIALLY BY KELLEY &
PARTNERS, LTD.
(4) INCLUDES 74,585 SHARES OWNED OF RECORD AND BENEFICIALLY BY KING COLA, INC.,
WHICH REPRESENTS MS. ARAMIAN'S BENEFICIAL INTEREST IN THE COMPANY'S SHARES
HELD BY THAT CORPORATION. MS. ARAMIAN IS AN OFFICER AND DIRECTOR OF KING
COLA, INC.
(5) INCLUDES 47,532 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS. ALSO INCLUDES 97,259 SHARES OWNED OF RECORD AND
BENEFICIALLY BY MR. BEAR'S WIFE, WITH RESPECT TO WHICH HE DISCLAIMS
BENEFICIAL OWNERSHIP.
(6) INCLUDES 98,203 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS.
4
<PAGE>
(7) INCLUDES 1,320 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS.
(8) INCLUDES 68,269 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS AND 1,539,716 SHARES OWNED OF RECORD AND
BENEFICIALLY BY MR. KELLEY AND HIS AFFILIATES, KELLEY, INC., KAHM, INC.,
AND ARAMIAN, KELLEY AND CONSOLIDATED, LTD.
(9) INCLUDES 19,144 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS. ALSO INCLUDES 10,928 SHARES OWNED OF RECORD AND
BENEFICIALLY BY MR. LANHAM'S WIFE, WITH RESPECT TO WHICH HE DISCLAIMS
BENEFICIAL OWNERSHIP.
(10) INCLUDES 54,863 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS.
(11) INCLUDES 10,748 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS. ALSO INCLUDES 7,726 SHARES OWNED OF RECORD AND
BENEFICIALLY BY MR. RISK'S WIFE, WITH RESPECT TO WHICH HE DISCLAIMS
BENEFICIAL OWNERSHIP, AND 43,687 SHARES OWNED BY MR. RISK'S AFFILIATE,
CANTERBURY CORPORATION.
(12) INCLUDES 8,368 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS.
(13) INCLUDES 7,590 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS.
(14) INCLUDES 19,144 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS. ALSO INCLUDES 19,011 SHARES OWNED OF RECORD AND
BENEFICIALLY BY MR. WILLIAMSON'S WIFE, WITH RESPECT TO WHICH HE DISCLAIMS
BENEFICIAL OWNERSHIP.
(15) INCLUDES 525,600 SHARES WHICH MAY BE ACQUIRED PURSUANT TO STOCK OPTIONS
EXERCISABLE WITHIN 60 DAYS HELD BY ALL DIRECTORS AND OFFICERS AS A GROUP.
Section 16(a) of the Securities Exchange Act of 1934 sets forth
certain filing requirements relating to securities ownership by directors,
executive officers and 10% shareholders of a publicly held company. To the
Company's knowledge, based on representations of its directors and executive
officers and copies of their respective reports filed with the Securities and
Exchange Commission, all filing requirements were satisfied by each such person
during the fiscal year ended September 27, 2000.
MISCELLANEOUS
The entire cost of soliciting proxies will be paid by the Company. In
addition to the solicitation of proxies by use of the mails, certain officers,
directors and employees of the Company, none of whom will receive additional
compensation therefor, may solicit proxies by telephone, facsimile or personal
interview at the expense of the Company. The Company will also request brokers,
dealers, banks and voting trustees, and their nominees, to forward this proxy
statement and the accompanying form of proxy to beneficial owners and will
reimburse such record holders for their reasonable expense in forwarding
solicitation material.
1. ELECTION OF DIRECTORS
Eight directors will be elected to serve until the next Annual Meeting
and until their respective successors shall have been duly elected and
qualified. Each of the nominees named below is currently a director of the
Company, and each was elected at the Annual Meeting of Shareholders held
February 9, 2000.
5
<PAGE>
At the time of the Annual Meeting, if any of the nominees named below
is not available to serve as a director (an event which the Board of Directors
does not now anticipate), the proxies will be voted for the election as
directors of such other person or persons as the Board of Directors may
designate, unless the Board of Directors, in its discretion, amends the
Company's Bylaws to reduce the number of directors.
The nominees for the Board of Directors of the Company are listed
below, along with the age, tenure as director and business background for at
least the last five years for each:
<TABLE>
<CAPTION>
Served As
Name Age Director Since Business Experience
---- --- -------------- -------------------
<S> <C> <C> <C>
S. Sue Aramian 68 1981 Vice Chairwoman of the Company since 1990; Managing General Partner
of Kelley & Partners, Ltd. since 1974.
Alan B. Gilman 70 1992 President and Chief Executive Officer of the Company since 1992.
Stephen Goldsmith 54 1999 Partner, Baker & Daniels, a law firm headquartered in Indianapolis;
Mayor of Indianapolis, Indiana from 1992 through 1999; member of
the Board of Directors of The Finish Line, Inc. and MAXIMUS;
Chairman of the Manhattan Institute's Center for Civic Innovation.
E. W. Kelley 83 1981 Chairman of the Company since 1984; Managing General Partner of
Kelley & Partners, Ltd. since 1974.
Charles E. Lanham 68 1971 Chairman of the Board of Directors of Overhead Door Company of
Indianapolis, Inc.; Vice Chairman of Klipsch Lanham Investments.
J. Fred Risk 72 1971 Chairman of the Board of Directors of Sovereign Group, Inc.
John W. Ryan 71 1996 Chancellor for the State University of New York Systems from 1996
through 1999; President of Indiana University from 1971 through
1987.
James Williamson, Jr. 69 1985 Former President and Chief Executive Officer of the Company from
April 1985 to July, 1990; General Partner of Kelley & Partners,
Ltd. since 1985.
</TABLE>
There is no family relationship among any of the nominees for director.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors, which held seven meetings and acted one time
by written consent during fiscal 2000, has six standing committees: an Executive
Committee, a Personnel/Benefits Committee, an Audit Committee, a Stock Option
Committee, an Employee Stock Purchase Committee and an Investment Committee.
The Executive Committee may exercise all of the powers of the Board of
Directors in the management of the affairs of the Company to the extent
permitted by law. The Executive Committee also performs the functions of a
compensation committee in setting guidelines for the administration of salaries
and incentive compensation plans, including awards under the Company's Capital
Appreciation Plan, and otherwise determining compensation levels. See "Report of
the Executive Committee." During the fiscal year ended September 27, 2000, the
Executive Committee met one time and acted several times by written consent. Mr.
Kelley serves as Chairman and Messrs. Gilman, Risk and Williamson serve as
members of the Executive Committee.
6
<PAGE>
The Audit Committee, among other duties, serves in an oversight role
intended to ensure the integrity and objectivity of the Company's financial
reporting process. The Committee meets with representatives of management and
the independent auditors to review matters of a material nature related to
auditing, financial reporting, internal accounting controls and audit results.
The Audit Committee is also responsible for making recommendations to the Board
of Directors concerning the selection of the Company's independent auditors.
During the fiscal year ended September 27, 2000, the Audit Committee met twice.
Mr. Risk serves as Chairman of the Committee and Messrs. Goldsmith, Lanham and
Ryan serve as members.
The Stock Option Committee directs the administration of the Company's
employee stock option plans in accordance with the terms of the plans. During
fiscal 2000, the Stock Option Committee acted on two occasions by written
consent. Dr. Ryan serves as Chairman of the Committee and Messrs. Lanham and
Williamson are members of the Committee.
The Personnel/Benefits Committee recommends personnel policies and
employee benefit plans, administers the Company's Profit Sharing Plan and
performs such other functions with respect to personnel and benefit matters as
may be requested by the Board of Directors. The Personnel/Benefits Committee met
one time during fiscal 2000. Mr. Lanham is Chairman of the Committee and Mr.
Ryan is a member, together with Mr. James W. Bear, Senior Vice President and
Treasurer, Mr. Gary T. Reinwald, Senior Vice President, Mr. Robert L. Grimm,
Vice President, Human Resources, and Ms. B. Charlene Boog, Associate Vice
President, Administration. Mr. Kelley and Mr. Gilman are ex officio members of
the Committee.
The Employee Stock Purchase Committee directs the administration of
the Company's Employee Stock Purchase Plan in accordance with the terms of the
Plan. Mr. Risk serves as Chairman of the Committee and Messrs. Lanham and Bear
are members of the Committee.
The Investment Committee establishes investment guidelines for the
Company's Profit Sharing Plan and manages the investment of the assets of the
Plan. During fiscal 2000, the Investment Committee met one time. Ms. Aramian and
Messrs. Gilman and Bear are members of the Committee.
No director attended less than 80% in the aggregate of (i) the total
meetings of the Board of Directors, and (ii) the total number of meetings held
by all committees of the Board on which he or she served.
COMPENSATION OF DIRECTORS
Directors receive an annual fee of $16,000 plus $2,000 per board
meeting and $800 per telephonic board meeting and committee meeting attended.
Mr. Risk is paid an additional annual fee of $3,500 for services as a member of
the Executive Committee. Mr. Williamson is paid as a consultant for certain
administrative services at an annual fee of $12,000, subject to termination by
the Company at any time. Mr. Williamson's compensation for services as a member
of the Executive Committee is included in his consultant fee. Directors who are
officers of the Company are not paid for their services as directors. In the
fiscal year ended September 27, 2000, the total compensation paid to nonemployee
directors was $211,600. In addition, the ordinary and necessary expenses of
members of the Board of Directors incurred in attending board and committee
meetings are paid by the Company.
The Company also believes in compensating its directors partly on the
basis of the Company's success in increasing the value of its stock.
Consequently, an important part of director's compensation is from stock options
and the increase in their value. The Company has had nonemployee director stock
option plans (the "Plans") in place since 1990, which provide for the
non-discretionary grant of nonqualified stock options to nonemployee directors
of the Company at a price equal to the fair market value of the Common Stock on
the date of grant. Options outstanding under the plans are exercisable as to 20%
on the date of grant and 20% on each anniversary of the date of grant until
fully exercisable. The options expire five years from the date of grant.
7
<PAGE>
Options for the purchase of an aggregate of 25,782 shares of Common
Stock were issued pursuant to the 1998 Plan, which was approved by the
shareholders on February 11, 1998. As of December 6, 2000, former directors Alva
T. Bonda and Neal Gilliatt, and Messrs. Lanham, Risk, Ryan and Williamson each
held options to purchase 4,297 shares at an option price of $11.20 per share. No
options granted under this Plan have been exercised.
Options for the purchase of an aggregate of 24,750 shares of Common
Stock were issued on October 16, 1998, with each non-employee director
abstaining as to the grant to himself. As of December 6, 2000, Messrs Bonda,
Gilliatt, Lanham, Risk, Ryan and Williamson each held options to purchase 4,125
shares at an option price of $12.09 per share. No options granted under this
Plan have been exercised.
Options for the purchase of an aggregate of 19,800 shares of Common
stock were issued on November 10, 1999, with each non-employee director
abstaining. As of December 6, 2000, Messrs. Gilliatt, Goldsmith, Lanham, Risk,
Ryan and Williamson each held options to purchase 3,300 shares at an option
price of $11.08 per share. No options granted under this Plan have been
exercised.
MANAGEMENT RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 2000, the Company paid $168,000 to Kelley & Partners,
Ltd. ("KPL") for management and administrative services and certain office
expenses. Consolidated Specialty Restaurants, Inc., a subsidiary of the Company,
leases one restaurant property from KPL. The term of this lease extends to
September 30, 2002, and the annual rent paid by Consolidated Specialty
Restaurants to KPL is $39,000. Mr. E. W. Kelley, Chairman, and Ms. S. Sue
Aramian, Vice Chairwoman of the Company, are Managing General Partners of KPL;
Mr. Williamson, a director of the Company, is a General Partner of KPL, and Mr.
Lanham, also a director of the Company, is a Limited Partner of KPL. Mr. Wayne
L. Kelley, a General Partner of KPL and son of Mr. E. W. Kelley, is a director
of Steak n Shake, Inc., a subsidiary of the Company.
The Company granted exclusive franchise rights in 1991 to Kelley
Restaurants, Inc., for development of Steak n Shake restaurants in the Atlanta,
Georgia and Charlotte, North Carolina markets. The franchisee currently operates
twelve restaurants in Atlanta, Georgia and two in Charlotte, North Carolina.
Kelley & Partners, Ltd. and Mr. E. W. Kelley, together, own a controlling
interest in Kelley Restaurants, Inc. Mr. E. W. Kelley, Mr. Wayne L. Kelley and
Ms. S. Sue Aramian serve as officers and directors. Mr. Williamson and Mr.
Gilman also serve as directors of Kelley Restaurants, Inc.
Steak n Shake, Inc., a subsidiary of the Company, receives certain
annual incentive and promotional fees from its soft drink supplier. Under a
termination agreement with a former distributor, King Cola, Inc., the Company
agreed to share a portion of the incentive fees, not to exceed $60,000 per year,
with the former distributor. During fiscal 2000, a payment of $60,000 was made
to King Cola, Inc. pursuant to this agreement. Ms. Aramian and Mr. Wayne L.
Kelley are officers, directors and shareholders of King Cola, Inc.
The Board of Directors believes that the transactions described above
were on terms no less favorable to the Company than would have been available in
the absence of the relationships described.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation paid to the Company's Chief
Executive Officer and its other four most highly compensated executive officers
(the "Named Executive Officers") for the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
--------------------------- --------- ------------------------------- ------------------------------------ ------------------
Annual Compensation Long-Term Compensation
--------------------------- --------- ------------------------------- ------------------------------------ ------------------
Restricted All Other
Fiscal Salary ($) Bonus ($) Stock Awards Stock Options Compensation
Year ($) (1) (#) (2) ($) (3)
--------------------------- --------- -------------- ---------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Gilman (4) 2000 $ 417,460 None None None $
President and Chief 1999 $ 376,835 $ 150,000 $ 172,600 44,440 $ 16,791
Executive Officer 1998 $ 346,365 $ 200,000 $ 198,650 35,200 $ 17,391
--------------------------- --------- -------------- ---------------- ----------------- ------------------ ------------------
E. W. Kelley (5) 2000 $ 310,000 None None None $
Chairman 1999 $ 110,000 $ 200,000 None 37,125 $ 21,316
1998 $ 110,000 $ 190,000 None 24,750 $ 24,975
--------------------------- --------- -------------- ---------------- ----------------- ------------------ ------------------
James W. Bear 2000 $ 210,290 None None None $
Senior Vice President 1999 $ 190,000 $ 37,422 $ 110,500 20,753 $ 12,074
and Treasurer 1998 $ 179,690 $ 58,140 $ 126,400 15,485 $ 11,944
--------------------------- --------- -------------- ---------------- ----------------- ------------------ ------------------
Gary T. Reinwald 2000 $ 210,290 None None 8,428 $
Senior Vice President 1999 $ 190,000 $ 37,123 $ 110,500 20,715 $ 12,361
1998 $ 179,690 $ 57,006 $ 126,400 14,427 $ 12,941
--------------------------- --------- -------------- ---------------- ----------------- ------------------ ------------------
Gary S. Walker (6) 2000 $ 176,230 None None None $
Senior Vice President 1999 $ 160,000 $ 30,835 $ 69,100 6,600 $
1998 $ 42,000 $ 20,400 $ 77,990 8,250 $
--------------------------- --------- -------------- ---------------- ----------------- ------------------ ------------------
</TABLE>
(1) THE AMOUNTS SHOWN IN THIS COLUMN REPRESENT THE MARKET VALUE OF THE
RESTRICTED STOCK AWARDED UNDER THE COMPANY'S CAPITAL APPRECIATION PLAN AND
WERE CALCULATED BY MULTIPLYING THE CLOSING MARKET PRICE OF THE COMPANY'S
COMMON STOCK ON THE DATE OF AWARD BY THE NUMBER OF SHARES AWARDED. THE
NUMBER AND VALUE OF THE AGGREGATE UNVESTED RESTRICTED STOCK HOLDINGS OF
EACH OF THE NAMED EXECUTIVE OFFICERS ARE AS FOLLOWS: MR. GILMAN, 28,875
SHARES ($371,250); MR. BEAR, 18,425 SHARES ($236,900); MR. REINWALD, 18,425
SHARES ($236,900) AND MR. WALKER, 11,000 SHARES ($147,090). MR. KELLEY
HOLDS NO UNVESTED RESTRICTED STOCK AND HAS DECLINED GRANTS UNDER THE
CAPITAL APPRECIATION PLAN SINCE 1991. THE SHARES OF COMMON STOCK ARE ISSUED
AT THE TIME OF THE AWARD; HOWEVER, THESE SHARES MAY NOT BE TRANSFERRED
DURING A PERIOD OF THREE YEARS THEREAFTER AND ARE FORFEITED TO THE COMPANY
IF THE GRANTEE IS NOT EMPLOYED BY THE COMPANY (EXCEPT FOR REASONS OF
RETIREMENT, PERMANENT DISABILITY OR DEATH) AT THE END OF THE PERIOD. THE
AMOUNTS DO NOT REFLECT THE CASH VALUE OF BOOK UNITS AWARDED IN TANDEM WITH
THE RESTRICTED COMMON STOCK, WHICH REPRESENT THE NET CHANGE IN THE BOOK
VALUE PER SHARE OF THE COMMON STOCK AS ADJUSTED FOR STOCK DIVIDENDS AND
SPLITS FROM THE DATE OF AWARD TO THE DATE OF VESTING. THE RECIPIENT OF THE
AWARD IS ENTITLED TO ANY DIVIDENDS PAID ON OUTSTANDING COMMON STOCK
SUBSEQUENT TO THE DATE OF THE AWARD.
(2) OPTIONS GRANTED UNDER THE EMPLOYEE STOCK OPTION PLANS PROVIDE FOR A RELOAD
OPTION (THE "RELOAD OPTION") IN THE EVENT THE OPTIONEE SURRENDERS OTHER
SHARES OF THE COMPANY'S COMMON STOCK IN PAYMENT FOR OPTION SHARES, IN WHOLE
OR IN PART. ANY SUCH RELOAD OPTION (i) WILL BE FOR A NUMBER OF SHARES EQUAL
TO THE NUMBER OF SHARES SO SURRENDERED; (ii) WILL HAVE AN EXPIRATION DATE
WHICH IS 5 YEARS FROM THE RELOAD OPTION ISSUANCE DATE; (iii) WILL BE FULLY
EXERCISABLE ON THE DATE OF GRANT; AND (iv) WILL HAVE AN EXERCISE PRICE
EQUAL TO THE AVERAGE MARKET PRICE OF THE COMPANY'S COMMON STOCK ON THE FIVE
(5) BUSINESS DAYS BEFORE THE SHARES WERE SURRENDERED TO EXERCISE THE
OPTION. THERE IS NO RELOAD OPTION WITH RESPECT TO THE EXERCISE OF A RELOAD
9
<PAGE>
OPTION. MR. GILMAN'S 1998 STOCK OPTION GRANTS INCLUDE THE GRANT OF AN
OPTION FOR 27,500 SHARES ON APRIL 29, 1998, AND THE GRANT OF A RELOAD
OPTION FOR 7,700 SHARES ON APRIL 14, 1998. HIS 1999 STOCK OPTION GRANTS
INCLUDE THE GRANT OF OPTIONS ON OCTOBER 16, 1998 AND MAY 6, 1999 FOR 13,750
SHARES AND 27,500 SHARES, RESPECTIVELY, AND THE GRANT OF A RELOAD OPTION
FOR 3,190 SHARES ON APRIL 2, 1999. MR. BEAR'S 1998 STOCK OPTION GRANTS
INCLUDE THE GRANT OF AN OPTION FOR 11,000 SHARES ON APRIL 29, 1998, AND THE
GRANT OF A RELOAD OPTION FOR 4,485 SHARES ON DECEMBER 26, 1997. HIS 1999
STOCK OPTION GRANTS INCLUDE THE GRANT OF OPTIONS FOR 5,500 SHARES AND
11,000 SHARES ON OCTOBER 16, 1998 AND MAY 6, 1999, RESPECTIVELY, AND THE
GRANT OF RELOAD OPTIONS FOR 2,782 SHARES AND 1,471 SHARES ON DECEMBER 9,
1998 AND JUNE 7, 1999, RESPECTIVELY. MR. REINWALD'S 1998 STOCK OPTION
GRANTS INCLUDE THE GRANT OF AN OPTION FOR 11,000 SHARES ON APRIL 29, 1998,
AND THE GRANT OF RELOAD OPTIONS FOR 1,770 SHARES AND 1,657 SHARES ON
DECEMBER 29, 1997 AND JUNE 9, 1998, RESPECTIVELY. HIS 1999 STOCK OPTION
GRANTS INCLUDE THE GRANT OF OPTIONS FOR 5,500 SHARES AND 11,000 SHARES ON
OCTOBER 16, 1998 AND MAY 6, 1999, RESPECTIVELY, AND THE GRANT FOR A RELOAD
OPTION FOR 4,215 SHARES ON JANUARY 27, 1999. INFORMATION REGARDING THE
FISCAL 2000 STOCK OPTION GRANTS TO THE NAMED EXECUTIVE OFFICERS IS SET
FORTH IN THE OPTION/SAR GRANTS IN LAST FISCAL YEAR TABLE, WHICH FOLLOWS.
(3) INCLUDES (i) AMOUNTS PAYABLE PURSUANT TO THE COMPANY'S EXECUTIVE MEDICAL
REIMBURSEMENT PLAN WHICH PROVIDES FOR PAYMENT OF CERTAIN MEDICAL EXPENSES,
AS DEFINED, UP TO $3,500 FOR EACH PLAN YEAR ENDING OCTOBER 31, (ii) AMOUNTS
PAID BY THE COMPANY FOR OR ON BEHALF OF EACH EXECUTIVE WITH RESPECT TO
GROUP LIFE INSURANCE PREMIUMS FOR COVERAGE IN EXCESS OF $50,000, AND (iii)
AMOUNTS OF ANNUAL CONTRIBUTIONS BY THE COMPANY FOR THE ACCOUNT OF THE NAMED
EXECUTIVE OFFICERS UNDER THE COMPANY'S PROFIT SHARING PLAN.
(4) THE COMPANY HAS AGREED THAT IF MR. GILMAN LEAVES THE COMPANY'S EMPLOYMENT
FOR ANY REASON OTHER THAN RETIREMENT OR TERMINATION BY THE COMPANY FOR
CAUSE, HE WILL BE PAID AT HIS BASE COMPENSATION RATE ON THE DATE OF
TERMINATION FOR A PERIOD OF NINE MONTHS THEREAFTER.
(5) MR. KELLEY'S FISCAL 2000 SALARY INCLUDES A ONE-TIME SUPPLEMENTAL PAYMENT OF
$200,000 IN RECOGNITION OF HIS EXTRAORDINARY EFFORTS ON BEHALF OF THE
COMPANY DURING THE PAST YEAR.
(6) MR. WALKER JOINED THE COMPANY ON MAY 26, 1998. HIS 1998 SALARY REFLECTS A
PARTIAL YEAR.
The following table presents certain information for the Named
Executive Officers relating to stock option grants during fiscal 2000 under the
Company's Employee Stock Option Plans:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percentage Of Potential Realizable
Total Options Value at Assumed Annual
Number of Granted To Rates of Stock Price
Options Employees In Exercise Price Expiration Appreciation for Option Term (2)
Name Granted (1) Fiscal 2000 ($ per share)(1) Date 5% ($) 10% ($)
---- ------- ------------- ------------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Gilman None N/A N/A N/A N/A N/A
E. W. Kelley None N/A N/A N/A N/A N/A
James W. Bear None N/A N/A N/A N/A N/A
Gary T. Reinwald 8,428 4.5% 10.59 2/1/05 24,700 54,530
Gary S. Walker None N/A N/A N/A N/A N/A
</TABLE>
10
<PAGE>
(1) OPTIONS GRANTED UNDER THE COMPANY'S EMPLOYEE STOCK OPTION PLAN MAY BE
EITHER NONQUALIFIED OPTIONS OR INCENTIVE OPTIONS AT THE DISCRETION OF
THE STOCK OPTION COMMITTEE. NO OPTIONS WERE GRANTED TO EXECUTIVE
OFFICERS OF THE COMPANY IN FISCAL 2000. THE SHARES SHOWN FOR MR.
REINWALD IN THE TABLE ARE RELOAD OPTION SHARES. SEE FOOTNOTE 2 TO THE
SUMMARY COMPENSATION TABLE, ABOVE.
(2) THE DOLLAR AMOUNTS UNDER THESE COLUMNS ARE THE RESULT OF CALCULATIONS
AT THE 5% AND 10% RATES SET BY THE SECURITIES AND EXCHANGE COMMISSION
AND ARE NOT A RELIABLE FORECAST OF POSSIBLE FUTURE APPRECIATION, IF
ANY, OF THE COMPANY'S STOCK PRICE. THE COMPANY'S PER SHARE STOCK PRICE
WOULD BE $13.52 AND $ 17.06 IF INCREASED BY 5% AND 10%, RESPECTIVELY,
COMPOUNDED ANNUALLY OVER A FIVE-YEAR OPTION TERM ON A GRANT PRICE OF
$10.59.
The following table presents certain information for the Named
Executive Officers relating to exercises of stock options during fiscal year
2000 under the Company's Employee Stock Option Plans and, in addition,
information relating to the valuation of unexercised stock options:
AGGREGATED OPTION EXERCISES IN
FISCAL 2000 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares Underlying Value of Shares Underlying
Unexercised Options At Unexercised Options At
Number of Dollar September 27, 2000 September 27, 2000 (1)
Shares Acquired Value -------------------------- ---------------------------
Name On Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan B. Gilman 4,991 $ 9,034 95,453 40,906 nil nil
E. W. Kelley 20,797 $ 24,748 65,794 36,471 nil nil
James W. Bear 14,558 $ 26,350 46,432 16,877 nil nil
Gary T. Reinwald 14,558 $ 26,350 53,763 16,878 nil nil
Gary S. Walker None N/A 7,590 7,260 nil nil
</TABLE>
(1) BASED ON THE NEW YORK STOCK EXCHANGE CLOSING PRICE OF THE COMPANY'S
COMMON STOCK ON SEPTEMBER 27, 2000, OF $7.94 PER SHARE.
11
<PAGE>
The following table sets forth awards of restricted Common Stock made
to the Named Executive Officers in fiscal 2000 under the Company's Capital
Appreciation Plan:
LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Performance Or
Number of Other Period
Shares, Units Until Maturation Expiration of
Name Or Other Rights (1) Or Payment (1) Forfeiture Period
---- ------------------- -------------- -----------------
<S> <C> <C> <C>
Alan B. Gilman None N/A N/A
E. W. Kelley None N/A N/A
James W. Bear None N/A N/A
Gary T. Reinwald None N/A N/A
Gary S. Walker None N/A N/A
</TABLE>
(1) AWARDS UNDER THE COMPANY'S 1997 CAPITAL APPRECIATION PLAN CONSIST OF
RESTRICTED COMMON STOCK AND BOOK UNITS. THE SHARES OF COMMON STOCK ARE
ISSUED AT THE TIME OF THE AWARD; HOWEVER, THESE SHARES MAY NOT BE
TRANSFERRED DURING A PERIOD OF THREE YEARS THEREAFTER AND ARE
FORFEITED TO THE COMPANY IF THE GRANTEE IS NOT EMPLOYED BY THE COMPANY
(EXCEPT FOR REASON OF RETIREMENT, PERMANENT DISABILITY OR DEATH) AT
THE END OF THE PERIOD. BOOK UNITS AWARDED IN TANDEM WITH THE
RESTRICTED COMMON STOCK ARE CASH AWARDS PAID TO THE GRANTEE AT THE END
OF THE FORFEITURE PERIOD AND REPRESENT THE NET CHANGE IN BOOK VALUE
PER SHARE OF THE COMMON STOCK AS ADJUSTED FOR STOCK DIVIDENDS AND
SPLITS FROM THE DATE OF AWARD TO THE DATE OF VESTING. THE TERM OF THE
COMPANY'S 1997 CAPITAL APPRECIATION PLAN WAS EXTENDED TO DECEMBER 31,
2001 BY ACTION OF THE COMPANY'S BOARD OF DIRECTORS ON NOVEMBER 10,
1999.
REPORT OF THE EXECUTIVE COMMITTEE
The compensation of the Company's executive officers, including awards
under the Company's Capital Appreciation Plan and Stock Option Plans, is
determined by the Board of Directors, generally upon recommendation of the
Executive Committee (the "Committee"). See "Committee Interlocks and Insider
Participation." The following report with respect to certain cash and stock
compensation paid or awarded to the Company's executive officers, including the
Named Executive Officers, during fiscal 2000 is furnished by the directors who
comprise the Executive Committee.
GENERAL POLICIES
The Company's compensation programs are intended to enable the Company
to attract, motivate, reward and retain the high level management talent
required to achieve corporate objectives and, thereby, increase shareholder
value. It is the Company's policy to provide cash and stock incentives to its
senior management to achieve both short-term and long-term objectives and to
reward exceptional performance and contributions to the success of the Company's
business. To attain these objectives, the Company's Executive Compensation
Program includes a competitive base salary, coupled with an added cash incentive
component which is "at risk" based on the performance of the Company's business,
primarily as reflected in the achievement of predetermined financial and
operational
12
<PAGE>
objectives. In addition, awards are made under the Company's Capital
Appreciation Plan to a select group of management, which includes certain of the
Named Executive Officers, and under the Company's Employee Stock Option Plan to
a broader group of management employees, including the Named Executive Officers,
based upon the potential contributions of each to the long-term profitability
and growth of the Company's business. As a general matter, as an executive
officer's level of management responsibility in the Company increases, a greater
portion of his or her potential total compensation depends upon the Company's
performance as measured by the attainment of defined financial and/or
operational performance objectives and accomplishment of the individual
objectives of the executive established at the beginning of the fiscal year. In
addition, all eligible Company employees, including its eligible executive
officers, participate in the Profit Sharing Plan. Subject to the discretion of
the Board of Directors, the Company makes annual contributions to a trust for
the benefit of employees participating in the Profit Sharing Plan.
RELATIONSHIP OF COMPENSATION TO PERFORMANCE
From time to time, the Executive Committee establishes, subject to the
approval of the Board of Directors, the salaries which will be paid to the
Company's executive officers. In setting base salaries, the Executive Committee
takes into account a number of factors, including competitive compensation data,
the extent to which an individual may participate in the incentive compensation
plans maintained by the Company, and qualitative factors bearing on an
individual's experience, responsibilities, management and leadership abilities
and job performance.
The Committee also determines, with the approval of the Board of
Directors, the terms of the Company's Incentive Bonus Plan in which the
executive officers participate. In doing so, the Committee reviews management's
plans for the Company's growth and profitability, determines the criteria for
bonus awards, and recommends to the Board the levels of target and maximum
awards for participants and the level of attainment of financial performance
objectives necessary for awards to be made under the Plan.
In connection with the compensation determinations to be made, the
Company utilizes the Hay Guide Chart-Profile Method of Job Evaluations developed
by Hay Management Consultants, a nationally recognized compensation consulting
firm, to evaluate and rank executive and management positions within the
Company. This Guide Chart-Profile method of measuring job content, as updated
from time to time, together with the Towers Perrin Annual Chain Restaurant
Compensation survey, serve as reference points for the Committee and the Board
of Directors in establishing compensation programs for the Company's executive
officers and other management which are competitive within the industry and
appropriate to the Company's objectives. Other studies may also used as they
become available.
For fiscal 2000, none of the Company's executive officers received
compensation pursuant to the Company's annual Incentive Bonus Plan. Each year
the Board establishes, in advance, a targeted profit growth goal. Each executive
job classification has a specific bonus percentage level based on the job rating
(as explained above). Bonuses are determined based on the Company's actual
earnings results as compared to the targeted profit goal. No bonus is paid for
performance below the target. Bonus payments escalate as high as 4 times the
bonus percentage level, however, for increases substantially above the targeted
profit goal. In fiscal 2000, the Company did not achieve the targeted profit
growth goal set by the Board.
STOCK OPTION AWARDS
Stock options are granted to key employees, including the Named
Executive Officers, by the Stock Option Committee under the Company's Stock
Option Plans (the "Plans"). The number of shares subject to options granted to
each individual generally depends upon his or her base salary and level of
management responsibility. The largest grants are awarded to the employees, who,
in the view of the Stock Option Committee, have the greatest potential to impact
the Company's profitability and growth. Options under the Plans may be either
incentive stock options or nonqualified stock options at the discretion of the
Committee, and except as described below, are granted at an exercise price equal
to 100% of the fair market value on the date of grant. Incentive options granted
to Mr. Kelley are granted at an
13
<PAGE>
exercise price equal to 110% of the fair market value on the date of the grant,
as required by Section 422A of the Internal Revenue Code. The Stock Option
Committee has discretion, as limited by the Plans, as to the duration of the
option exercise period and the vesting of the right to exercise within that
period. Options currently outstanding under the Plans are exercisable as to 20%
on the date of grant and 20% on each anniversary of the date of grant thereafter
until fully exercisable, with the exception of Reload Options, which are fully
exercisable on the date of the grant. Current options expire five years from the
date of grant. Stock option awards to the Named Executive Officers over the past
three fiscal years are disclosed in the Summary Compensation Table.
RESTRICTED STOCK AWARDS
Restricted stock awards under the Company's Capital Appreciation Plan
are granted by the Board of Directors, upon recommendation of the Executive
Committee, to executive officers and key employees of the Company. The number of
restricted shares and book units awarded are intended to serve as a retention
vehicle and are based on the Board's evaluation of the contributions of each
grantee to the long-term profitability and growth of the Company. The grantee
holds all of the ownership rights to the stock from the date of grant, including
the right to receive dividends thereon if paid, but may not transfer or assign
the stock during a period of three years following the date of the grant. These
shares are forfeited to the Company if the grantee is not employed by the
Company (except for reasons of retirement, permanent disability or death) at the
end of the period. Book units granted in conjunction with the Common Stock are
paid in cash at the end of the forfeiture period in an amount equal to the net
change in the book value per share of the Common Stock, as adjusted for stock
dividends and splits from the date of grant to the end of the three-year
forfeiture period. Mr. Kelley has declined grants of Restricted Stock Awards
under the Plan since 1991. Restricted Stock Awards to the Named Executive
Officers over the past three fiscal years are disclosed in the Summary
Compensation Table.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Alan B. Gilman was appointed to his position as President on July 13,
1992, and he assumed the additional title of Chief Executive Officer on October
1, 1992. The total compensation paid to Mr. Gilman during fiscal 2000 was
determined by the Board of Directors in accordance with the criteria described
in the "Relationship of Compensation to Performance," "Stock Option Awards" and
"Restricted Stock Awards" sections in this report. He received a base
compensation of $417,460 in fiscal 2000, which reflects the Board's assessment
of his performance and his broad involvement in the operations and growth of the
Company. Mr. Gilman received no stock awards in fiscal 2000. Additional details
of Mr. Gilman's total cash and stock compensation over the past three fiscal
years are disclosed in the Summary Compensation Table.
The foregoing report is hereby submitted by the members of the
Executive Committee.
EXECUTIVE COMMITTEE
E.W. Kelley Alan B. Gilman J. Fred Risk James Williamson, Jr.
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Kelley, Chairman of the Company, serves as Chairman of the
Executive Committee but does not participate in deliberations or recommendations
of that Committee as to his compensation. Mr. Gilman, President and Chief
Executive Officer of the Company, is a member of the Executive Committee, but
does not participate in deliberations or recommendations of that Committee as to
his compensation. Mr. Williamson and Mr. Risk are members of the Executive
Committee, but are not employees of the Company or any of its affiliates.
14
<PAGE>
OTHER MATTERS
Mr. Kelley was Chairman of Shakespearin, Inc., the managing member of
a limited liability company, and Mr. Lanham was director of an unrelated
corporation, each of which filed for protection under Chapter 11 of the federal
bankruptcy laws between 1995 and 2000. The bankruptcy proceeding for the company
identified with Mr. Kelley was later changed to a Chapter 7 proceeding and was
discharged in 1996. The bankruptcy proceeding for the company identified with
Mr. Lanham was discharged in 1995, but refiled in 1996. The company emerged from
the Chapter 11 proceeding in January 1997 and was operating on a profitable
basis when it was sold to an unrelated party in 1998.
COMPANY PERFORMANCE
The graph below compares for each of the last five fiscal years the
cumulative total return of the Company, the S&P 500, the S&P SmallCap 600 and
the S&P Restaurants Indices. The Company is included among the companies
comprising the SmallCap 600, a major market index. The S&P Restaurants Index is
included in the graph in order to provide a more direct comparison of the
Company's returns to those of other companies in the restaurant business. The
cumulative total returns displayed below have assumed $100 invested on September
30, 1995 in the Company's Common Stock, the S&P 500, the S&P SmallCap 600 and
the S&P Restaurants Indices, and reinvestment of dividends paid since September
30, 1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
SPECIFIC PLOT POINTS OF PERFORMANCE GRAPH
(In dollars)
<TABLE>
<CAPTION>
9/95 9/96 9/97 9/98 9/99 9/00
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Products, Inc. COP 100 115.50 156.80 177.09 122.89 110.91
Standard & Poors 500 1500 100 120.34 169.01 184.30 235.54 266.83
Standard & Poors SmallCap 600 1600 100 115.31 157.94 133.70 157.15 184.27
Standard & Poors Restaurants Index IRET 100 119.26 121.42 151.72 209.15 155.47
</TABLE>
* $100 invested on 9/30/95 in stock or index, including reinvestment of
dividends. Assumes fiscal year ending September 30.
15
<PAGE>
2. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
The current name of the Company was intended to reflect the
diversified nature of the Company's restaurant service offerings. Over the past
decade, the Steak n Shake brand has tripled in size while the Company's
specialty restaurant operations were unprofitable and the number of specialty
restaurants was gradually reduced. On September 18, 2000, the Company announced
that it intended to change its corporate name to The Steak n Shake Company, and
that the specialty restaurant operations, which were conducted by the Company's
Consolidated Specialty Restaurants, Inc. subsidiary, would be discontinued.
The Board of Directors has proposed to the shareholders that they
approve an amendment to the Articles of Incorporation of the Company for the
purpose of changing the corporate name and has submitted this matter to a vote
at the Annual Meeting. The Board of Directors recommends the approval of the
amendment. The change in name reflects and embodies the Company's decision to
concentrate its energies to build the Steak n Shake brand.
VOTE REQUIRED
Shareholder approval of the Amendment to the Company's Articles of
Incorporation changing the name of the Company to The Steak n Shake Company will
require the affirmative vote of the holders of a majority of the Company's
Common Stock present or represented and voting at the 2001 Annual Meeting.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE
PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
CHANGE THE NAME OF THE COMPANY, AS DESCRIBED ABOVE.
3. OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of the
Company has no knowledge of any matters to be presented for consideration at the
Annual Meeting other than those referred to above. If any other matters should
properly come before the meeting, the proxies will be voted in accordance with
the recommendations of the Board of Directors of the Company.
16
<PAGE>
PROXY
CONSOLIDATED PRODUCTS, INC.
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 7, 2001
The undersigned appoints E.W. Kelley, J. Fred Risk and S. Sue Aramian and each
of them, the proxies of the undersigned with full power of substitution, to vote
all shares of Common Stock of Consolidated Products, Inc., which the undersigned
is entitled to vote at the Annual Meeting of Shareholders to be held February 7,
2001, or at any adjournment thereof, as follows:
1. ELECTION OF DIRECTORS:
FOR all nominees listed below (except as marked to the contrary) / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
S. SUE ARAMIAN, E. W. KELLEY, ALAN B. GILMAN, STEPHEN GOLDSMITH,
CHARLES E. LANHAM, J. FRED RISK, JOHN W. RYAN AND JAMES WILLIAMSON, JR.
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below:
--------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE ARTICLES OF INCORPORATION
CHANGING THE NAME OF THE COMPANY TO THE STEAK N SHAKE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
3. The proxies are authorized to vote, in their discretion, on matters which
may properly come before the Annual Meeting to the extent set forth in the
Proxy Statement.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Your vote is important. If you do not expect to attend the Annual Meeting or if
you plan to attend but wish to vote by proxy, please date, sign and mail this
proxy. A return envelope is provided for this purpose.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
______________________________________________
DATE: ____________________ ______________________________________________
(Signatures)
Please date this proxy. If shares are held jointly, both joint owners should
sign. If signing as attorney, executor, administrator, guardian or in any other
capacity, please give your full title as such.
