def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by the Registrant x |
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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x Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Applebees International, 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):
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x No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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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): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o 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. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
Applebees International, Inc.
4551 W. 107th Street
Overland Park, KS 66207
(913) 967-4000
April 11, 2006
Dear Stockholder:
The Applebees 2006 Annual Meeting of Stockholders will be
held on May 11, 2006, at 10:00 a.m., CDT, at the
Sheraton Overland Park Hotel, which is located at 6100 College
Boulevard, Overland Park, Kansas 66211. We look forward to your
attendance either in person or by proxy. The Notice of Annual
Meeting of Stockholders, Proxy Statement and proxy card from
Applebees Board of Directors are enclosed.
Details of the business to be conducted at the Annual Meeting
are given in the enclosed Notice of Annual Meeting of
Stockholders and Proxy Statement.
As an Applebees stockholder, your vote is more important
than ever in 2006. Each share of Applebees stock that you
own represents one vote. If you do not vote your shares, you
will not have a say in the important issues to be voted on at
the Annual Meeting. I urge you to promptly vote and submit your
proxy by phone, via the Internet, or by signing, dating and
returning the enclosed proxy card. If you decide to attend the
Annual Meeting, you will be able to vote in person, even if you
have previously submitted your proxy.
If you have any questions concerning the Annual Meeting or the
proposals, please contact Applebees Corporate Secretary at
(913) 967-4000. For questions regarding your stock
ownership, you may contact our transfer agent, Wells Fargo Bank,
N.A., by phone at (800) 468-9716.
Sincerely yours,
Lloyd L. Hill
Chairman of the Board and Chief Executive Officer
Applebees International, Inc.
APPLEBEES INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 11, 2006
Dear Stockholder:
It is my pleasure to invite you to the 2006 Annual Meeting of
Stockholders for Applebees International, Inc. We will
hold the meeting on May 11, 2006, at 10:00 a.m., CDT,
at the Sheraton Overland Park Hotel, which is located at 6100
College Boulevard, Overland Park, Kansas 66211.
At the meeting, we will:
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1. |
Elect six directors; |
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2. |
Approve the Applebees International, Inc. 2001 Senior
Executive Bonus Plan, as amended; |
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3. |
Ratify the selection of Deloitte & Touche LLP as our
independent registered public accounting firm (the
Auditors) for the 2006 fiscal year; |
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4. |
Act on a shareholder proposal to require us to issue quarterly
reports in 2006 detailing the progress made toward accelerating
the development of an alternative method of poultry
slaughter; and |
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5. |
Transact such other business as may properly come before the
meeting or any adjournment or postponement thereof. |
We have attached a Proxy Statement to this notice that more
fully describes each of these items of business.
The Board of Directors has chosen March 13, 2006, as the
date used to determine the stockholders who will be able to
attend and vote at the Annual Meeting. If you own stock in
Applebees International, Inc. at the close of business on
that date, you are cordially invited to attend the Annual
Meeting. Seating at the meeting will be limited to
Applebees stockholders, proxy holders, and invited guests
of the Company. If you are a stockholder of record in your own
name, please bring photo identification to the Annual Meeting.
If you hold shares through a bank, broker or other third party,
please bring photo identification and a current brokerage
statement. Cameras, recording equipment and other electronic
devices will not be permitted at the meeting.
Your vote is important. If you decide not to attend the Annual
Meeting in person, you may vote on these proposals by proxy. To
do so, please complete, date, sign, and return the enclosed
proxy card promptly. We have enclosed a postage-prepaid envelope
to expedite the return of your completed proxy card. You may
also vote by telephone or over the Internet as indicated on the
proxy card instructions. If you have voted by mail or by
telephone or over the Internet and later decide to attend the
Annual Meeting, you may come to the meeting and vote in person.
We look forward to seeing you at the meeting.
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By Order of the Board of Directors |
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Rebecca R. Tilden, Secretary |
Overland Park, Kansas
April 11, 2006
APPLEBEES INTERNATIONAL, INC.
PROXY STATEMENT
TABLE OF CONTENTS
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APPLEBEES INTERNATIONAL, INC.
PROXY STATEMENT
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
Why did you send this Proxy Statement to me?
The Board of Directors of Applebees International, Inc.
(sometimes referred to herein as Applebees,
we, us, our, or the
Company) is soliciting the enclosed proxy to be used
at the Annual Meeting of Stockholders on May 11, 2006, at
10:00 a.m., CDT, and at any adjournment or postponement of
that meeting. The meeting will be held at the Sheraton Overland
Park Hotel, which is located at 6100 College Boulevard, Overland
Park, Kansas 66211. The purpose of the meeting is to:
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Elect six directors; |
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Approve the Applebees International, Inc. 2001 Senior
Executive Bonus Plan, as amended; |
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Ratify the selection of Deloitte & Touche LLP as our
Auditors for the 2006 fiscal year; |
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Act on a shareholder proposal to require us to issue quarterly
reports in 2006 detailing the progress made toward accelerating
the development of an alternative method of poultry
slaughter; and |
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Transact such other business as may properly come before the
meeting or any adjournment or postponement thereof. |
We mailed this Proxy Statement and the accompanying proxy on or
about April 11, 2006, to all stockholders entitled to vote
at the Annual Meeting.
How many votes do I have?
If we had your name on record as owning stock in Applebees
International, Inc. at the close of business on March 13,
2006, then you are entitled to vote at the Annual Meeting. You
are entitled to one vote for each share of Applebees
common stock you own as of that date. At the close of business
on March 13, 2006, 74,308,952 shares of the
Companys common stock were outstanding and eligible to
vote.
How do I vote by proxy?
Whether you plan to attend the Annual Meeting or not, we
encourage you to complete, sign, date, and return the enclosed
proxy card. We have enclosed a postage-prepaid envelope for your
convenience. You may also vote by telephone or over the Internet
as indicated on the proxy card instructions. Voting your shares
by returning the enclosed proxy card, or by telephone or over
the Internet, will not affect your right to attend the Annual
Meeting and vote in person.
How do I attend the Annual Meeting in Person?
Seating at the Annual Meeting will be limited to Applebees
stockholders or their proxyholders and the Companys
invited guests. If you are a holder of record in your own name,
please bring photo identification to the Annual Meeting. If you
hold shares through a bank, broker or other third party, please
bring photo identification and a current brokerage statement.
Cameras, recording equipment and other electronic devices will
not be permitted at the meeting. The Annual Meeting will begin
promptly at 10:00 a.m., CDT, so please plan to arrive
accordingly.
1
May I revoke my proxy?
You may change your vote or revoke your proxy any time before
the Annual Meeting by:
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Returning another proxy card with a later date; |
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Sending written notification of revocation to the Corporate
Secretary at our principal executive offices at
4551 W. 107th Street,
Overland Park, Kansas 66207; |
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Entering a later vote by telephone or over the Internet; or |
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Attending the Annual Meeting and voting in person. |
Who pays for the solicitation of proxies and how are they
solicited?
Applebees pays the entire cost of the solicitation of
these proxies. This includes preparation, assembly, printing,
and mailing of this Proxy Statement and any other information we
send to stockholders. We may supplement our efforts to solicit
your proxy in the following ways:
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We may contact you using the telephone or electronic
communication; |
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Directors, officers, or other regular employees of
Applebees may contact you personally; or |
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We may hire agents for the sole purpose of contacting you
regarding your proxy. |
If the Company hires soliciting agents, we will pay them a
reasonable fee for their services. We will not pay directors,
officers, or other regular employees any additional compensation
for their efforts to supplement our proxy solicitation.
Can I vote if my shares are held in street
name?
If the shares you own are held in street name by a
bank or brokerage firm, your bank or brokerage firm, as the
record holder of your shares, is required to vote your shares
according to your instructions. In order to vote your shares,
you will need to follow the directions your bank or brokerage
firm provides you. If you do not give instructions to your bank
or brokerage firm, it will still be able to vote your shares
with respect to certain routine items, but will not
be allowed to vote your shares with respect to certain
non-routine items. In the case of non-routine items,
the shares will be treated as broker non-votes. To
be able to vote your shares held in street name at the meeting,
you will need to obtain a proxy from the holder of record.
What constitutes a quorum?
In order for business to be conducted at the meeting, a quorum
must be present. A quorum consists of the holders of a majority
of the shares of common stock issued, outstanding and entitled
to vote at the meeting, or at least 37,154,477 shares.
Shares of common stock represented in person or by proxy
(including broker non-votes and shares that abstain or do not
vote with respect to one or more of the matters to be voted
upon) will be counted for the purpose of determining whether a
quorum exists. If a quorum is not present, the meeting will be
adjourned until a quorum is obtained.
What vote is required to approve each proposal?
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Proposal 1: Elect Six Directors |
The six nominees for director who receive the most votes will be
elected. Votes withheld will therefore have no effect on the
outcome of this proposal because only a plurality of votes
actually cast is needed to elect a director.
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Proposal 2: Approve the Applebees
International, Inc. 2001 Senior Executive Bonus Plan, as
amended |
The affirmative vote of a majority of the shares of common stock
present or represented by proxy and voting at the meeting is
required to approve this proposal. Abstentions are counted as
votes cast and have the same effect as votes against the
proposal. Broker non-votes have no effect on the outcome of the
voting on this proposal.
2
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Proposal 3: Ratify Selection of Auditors for the
2006 Fiscal Year |
The affirmative vote of a majority of the shares of common stock
present or represented by proxy and voting at the meeting is
required to approve this proposal. Abstentions are counted as
votes cast and have the same effect as votes against the
proposal. Broker non-votes have no effect on the outcome of the
voting on this proposal.
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Proposal 4: Act on Shareholder Proposal |
The affirmative vote of a majority of the shares of common stock
present or represented by proxy and voting at the meeting is
required to approve this proposal. Abstentions are counted as
votes cast and have the same effect as votes against the
proposal. Broker non-votes have no effect on the outcome of the
voting on this proposal.
How will my proxy get voted?
If you properly fill in and return the enclosed proxy card, or
vote by telephone or over the Internet, the designated Proxies
(the individuals named on your proxy card) will vote your shares
as you have directed. If you sign the proxy card but do not make
specific choices, the designated Proxies will vote your shares
as recommended by the Board of Directors as follows:
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FOR the election of the six nominees for director; |
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FOR approval of the Applebees International,
Inc. 2001 Senior Executive Bonus Plan, as amended; |
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FOR ratification of Deloitte & Touche LLP
as our Auditors for the 2006 fiscal year; and |
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AGAINST approval of the shareholder proposal. |
If necessary, and unless you have indicated on your proxy card
that you wish to vote against any of the proposals, the
individuals named on your proxy card may vote in favor of a
proposal to adjourn the meeting to a later date in order to
solicit and obtain sufficient votes for any of the proposals.
How will voting on any other business be
conducted?
Although we do not know of any business to be considered at the
Annual Meeting other than the proposals described in this Proxy
Statement, if any additional business is presented at the Annual
Meeting, your signed or electronically transmitted proxy card
gives authority to the designated Proxies to vote on such
matters in their discretion.
How do I submit a proposal for next years Annual
Meeting?
If you have a proposal, other than a nomination for the Board of
Directors, that you would like us to consider at the 2007 Annual
Meeting of Stockholders, the proxy for such meeting will confer
discretionary voting authority unless you submit your proposal
to us no later than February 25, 2007. If you would like
your proposal to be included in our Proxy Statement and proxy
relating to that meeting, it must comply with the Securities and
Exchange Commission (SEC) rules, and you must submit
it to us no later than December 12, 2006. Proposals should
be sent to our executive offices at
4551 W. 107th Street,
Overland Park, Kansas 66207 in care of the Corporate Secretary.
How do I submit a nomination for the Board of Directors?
If you wish to nominate an individual for a position on our
Board of Directors, our by-laws require that you submit your
nomination, along with certain information about the candidate,
to the Corporate Secretary between 60 and 75 days before
the date of the Annual Meeting (or other meeting at which
directors will be elected). This should be sent to our principal
executive offices at
4551 W. 107th Street,
Overland Park, Kansas 66207 in care of the Corporate Secretary.
If our first announcement of the date of the meeting comes
during the 60-day
period prior to the meeting, however, you may submit nominations
to us at any time before the close of business of the
10th day
following the day on which we announce the meeting. The notice
must include the information required by our by-laws.
3
PROPOSAL 1
ELECTION OF SIX DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
EACH NAMED NOMINEE.
Your proxy will be used to vote for the election of the Nominees
named below unless you withhold the authority to do so when you
send in your proxy. If any Nominee becomes unavailable for
election as a result of an unexpected occurrence, we would use
your shares to vote for a substitute Nominee that we would
propose. Each person nominated for election has agreed to serve
if elected, and we have no reason to believe that any Nominee
will be unavailable to serve. We have included additional
information concerning the following Nominees in the section
entitled Board Nominees and Incumbents.
Our Board of Directors has three classes. Directors in each
class serve three-year terms. The Corporate Governance/
Nominating Committee has recommended to the Board of Directors,
and the Board of Directors has nominated for election by the
stockholders, the six persons listed below. If elected, each of
the class I Nominees below will serve until the 2008 Annual
Meeting of Stockholders and each of the class II Nominees
below will serve until the 2009 Annual Meeting of Stockholders,
and in each case, until his or her successor is elected and
qualified. A directors term may end sooner due to death,
resignation or removal.
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Current Position |
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Director | |
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With The Company |
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Gina R. Boswell
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43 |
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Director |
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2005 |
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David L. Goebel
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President, Chief Operating Officer and Director |
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2006 |
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Douglas R. Conant
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54 |
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Director |
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1999 |
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II |
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D. Patrick Curran
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Director |
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1992 |
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II |
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Steven K. Lumpkin
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Chief Financial Officer, Treasurer and Director |
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2004 |
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Rogelio Rebolledo
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61 |
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Nominee |
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INFORMATION ABOUT THE BOARD OF DIRECTORS
AND EXECUTIVE AND OTHER SENIOR OFFICERS
Board Structure
The Board of Directors is divided into three classes. Directors
in each class serve for three-year terms.
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Class I |
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There are four Class I directors. Their terms expire at the
2008 Annual Meeting. Ms. Boswell was appointed in October
2005 and Mr. Goebel was appointed in January 2006 to fill
vacancies in Class I. In accordance with our by-laws, they
are being nominated at the Annual Meeting for election as
Class I directors. |
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Class II |
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There are currently three Class II directors. Their terms
expire at the 2006 Annual Meeting. Mr. Rebolledo is being
nominated for election at the Annual Meeting as a fourth
Class II director. |
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Class III |
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There are four Class III directors. Their terms expire at
the 2007 Annual Meeting. |
Board Nominees and Incumbents
Below, we have furnished information for each of the two persons
being nominated for election as a Class I director and for
each of the four persons being nominated for election as a
Class II director to a new three-year term
(Nominees). We have also furnished information for
each person who is continuing as a Class I or
Class III director of the Company (Incumbents).
4
ERLINE BELTON, age 62 (Incumbent Class I
term expiring in 2008). Ms. Belton became a director of the
Company in September 1998. Since November 1991, Ms. Belton
has served as President and Chief Executive Officer of The
Lyceum Group, a human resource consulting firm located in
Roxbury, Massachusetts. From April 1990 until September 1991,
Ms. Belton served as Senior Vice President of Human
Resources and Organizational Development for Progressive
Insurance Companies in Cleveland, Ohio. She also served as
International Human Relations Director, as well as several other
human resources positions, with Digital Equipment Corporation
from 1978 through April 1990. Ms. Belton serves as Chair of
a sub-committee of and as a member of the Executive Compensation
Committee and the Corporate Governance/ Nominating Committee.
GINA R. BOSWELL, age 43 (Nominee Class I
term expiring in 2008). Ms. Boswell became a director of
the Company in October 2005. Ms. Boswell joined Avon North
America in 2003 as Senior Vice President of Corporate Strategy
and Business Development and was named to the position of Senior
Vice President and Chief Operating Officer for Avon in February
2005. Ms. Boswell served as Vice President, Investor
Relations from 1995 to 1997 and Vice President of New Business
Development from 1997 to 1999 for The Estee Lauder Companies,
Inc. Ms. Boswell joined Ford Motor Company in 1999 to serve
as Vice President, CRM/ Consumer eBusiness. In 2001, she was
appointed Director of Vehicle Personalization and in 2002 was
appointed Director of Business Strategy, with responsibility for
the business strategy for Fords global enterprise.
Ms. Boswell serves as a member of the Corporate Governance/
Nominating Committee.
DOUGLAS R. CONANT, age 54 (Nominee
Class II term expiring in 2006). Mr. Conant became a
director of the Company in December 1999. In January 2001,
Mr. Conant joined Campbell Soup Company as President and
Chief Executive Officer and was elected to their Board of
Directors. He was President of Nabisco Foods Company, a
subsidiary of Nabisco Group Holdings Corp., from July 1995 until
January 2001. He had been with Nabisco since 1991, having served
in a number of other executive positions. Prior to joining
Nabisco, Mr. Conant spent more than 16 years with the
General Mills and Kraft Foods organizations in a variety of
senior strategic and marketing management positions.
Mr. Conant serves as Chair of the Executive Compensation
Committee.
D. PATRICK CURRAN, age 61 (Nominee
Class II term expiring in 2006). Mr. Curran became a
director of the Company in November 1992. He has served as Chief
Executive Officer of the Curran Companies in North Kansas City,
Missouri since August 1979, and as Chairman of Cook Composites
and Polymers, a joint venture with Total Petroleum Corp.
(France), since its formation in 1990. He also serves as a
member of the Board of Directors of Gold Banc Corporation, Inc.,
a publicly-traded company. Mr. Curran serves as a member of
the Audit Committee.
DAVID L. GOEBEL, age 55 (Nominee Class I
term expiring in 2008). Mr. Goebel was employed by
Applebees in February 2001 as Senior Vice President of
Franchise Operations and was promoted to Executive Vice
President of Operations in December 2002. In January 2004,
Mr. Goebel was promoted to Chief Operating Officer. In
January 2005, he was also named President. In January 2006,
Mr. Goebel was named to the Board of Directors and he
assumed additional responsibilities including serving as
principal executive officer. Prior to joining Applebees,
Mr. Goebel headed a management company that provided
consulting and strategic planning services to various businesses
from April 1998 to February 2001. Prior to 1998, he was a
franchise principal with an early developer group of the Boston
Market concept. Mr. Goebels business experience also
includes positions as Vice President of Business Development for
Rent-a-Center (a subsidiary of Thorn, EMI) and Vice President of
Operations for Ground Round restaurants.
ERIC L. HANSEN, age 57 (Incumbent Class I
term expiring in 2008). Mr. Hansen became a director of the
Company in January 1991. He is presently a shareholder in the
Kansas City law firm of Holman, Hansen &
Colville, P.C., a professional association. From September
1984 to December 1990, he served as a tax partner at
Deloitte & Touche LLP, and from September 1974 to
September 1984, he was a certified public accountant with
Deloitte & Touche LLP. Mr. Hansen serves as Chair
of the Audit Committee and as a member of the Corporate
Governance/ Nominating Committee.
JACK P. HELMS, age 53 (Incumbent Class III
term expiring in 2007). Mr. Helms became a director of the
Company in March 1994. He is presently a principal and
shareholder in the investment banking firm of Goldsmith, Agio,
Helms and Company in Minneapolis, Minnesota. From May 1978 to
January 1986, Mr. Helms was a partner in the law firm of
Fredrikson & Byron, P.A. in Minneapolis, Minnesota.
Mr. Helms serves as a member of the Audit Committee and as
Chair of the Corporate Governance/ Nominating Committee.
5
LLOYD L. HILL, age 62 (Incumbent Class III
term expiring in 2007). Mr. Hill became a director of the
Company in August 1989 and was appointed Executive Vice
President and Chief Operating Officer of the Company in January
1994. In December 1994, he assumed the role of President in
addition to his role as Chief Operating Officer. Effective
January 1, 1997, Mr. Hill assumed the role of Co-Chief
Executive Officer. In January 1998, Mr. Hill assumed the
full duties of Chief Executive Officer. In May 2000,
Mr. Hill was elected Chairman of the Board of Directors. In
January 2006, the Board of Directors announced plans to separate
the Chairman and Chief Executive Officer positions, and
implement Applebees leadership succession plan. In the
summer of 2006, Mr. Hill anticipates recommending to the
Board that Mr. Goebel become the next Chief Executive
Officer. Following the role separation, Mr. Hill will
continue to serve as Chairman of the Board. Prior to joining
Applebees, he served as President of Kimberly Quality
Care, a home health care and nurse personnel staffing company,
from December 1989 to December 1993, where he also served as a
director from 1988 to 1993, having joined that organization in
1980.
STEVEN K. LUMPKIN, age 51 (Nominee
Class II term expiring in 2006). Mr. Lumpkin became a
director of the Company in January 2004. He was employed by the
Company in May 1995 as Vice President of Administration. In
January 1996, he was promoted to Senior Vice President of
Administration. In November 1997, he assumed the position of
Senior Vice President of Strategic Development and in January
1998 was promoted to Executive Vice President of Strategic
Development. He was named Chief Development Officer in March
2001. In March 2002, Mr. Lumpkin assumed the position of
Chief Financial Officer and Treasurer. Prior to joining
Applebees, Mr. Lumpkin was a Senior Vice President of
a division of the Olsten Corporation, Kimberly Quality Care,
from July 1993 until January 1995. From June 1990 until July
1993, Mr. Lumpkin was an Executive Vice President and a
member of the Board of Directors of Kimberly Quality Care. From
January 1978 until June 1990, Mr. Lumpkin was employed by
Price Waterhouse LLP, where he served as a management consulting
partner and certified public accountant.
ROGELIO REBOLLEDO, age 61 (Nominee
Class II). Mr. Rebolledo was appointed President and
Chief Executive Officer of Pepsi Bottling Group Mexico in
January 2004 and elected to Pepsi Bottling Groups Board in
May 2004. From 2000 to 2003, Mr. Rebolledo was President
and Chief Executive Officer of Frito-Lay International
(FLI), a subsidiary of PepsiCo, Inc., operating in
Latin America, Asia Pacific, Australia, Europe, Middle East and
Africa. From 1997 to 2000, Mr. Rebolledo was the President
of the Latin America/ Asia Pacific region for FLI.
Mr. Rebolledo joined PepsiCo, Inc. in 1976 and held several
senior positions including serving as President and Chief
Executive Officer of the Latin America Region of PepsiCo Foods
International and President of the Sabritas, Gamesa, Brazil and
Spain PFI operations.
BURTON M. SACK, age 68 (Incumbent
Class III term expiring in 2007). Mr. Sack became a
director and was appointed an Executive Vice President of the
Company in October 1994. He was the principal shareholder, a
director and the President of Pub Ventures of New England, Inc.,
a former franchisee that was acquired by the Company in October
1994. In January 1996, Mr. Sack was appointed Executive
Vice President of New Business Development with responsibility
for international franchising. Mr. Sack retired as an
officer of the Company at the end of the 1997 fiscal year, but
continues to serve as a director. Mr. Sack is a private
investor and serves as the Immediate Past Chairman and an
officer of the National Restaurant Association. Mr. Sack
serves as a member of the Executive Compensation Committee and
the Corporate Governance/ Nominating Committee.
MICHAEL A. VOLKEMA, age 50 (Incumbent
Class III term expiring in 2007). Mr. Volkema has been
a director since 2004. Since 1995, he has been employed by
Herman Miller, Inc., a furniture manufacturer, in various
executive positions, including as Chief Executive Officer and
Chairman of the Board. Currently, Mr. Volkema serves as
Chairman of the Board. From 1994 to 1995, he was a consultant to
Herman Miller, Inc. and later served as President and Chief
Executive Officer of Coro, Inc. From 1993 to 1994,
Mr. Volkema was Chairman of the Board for Meridian, Inc.
Both Meridian, Inc. and Coro, Inc., are wholly-owned
subsidiaries of Herman Miller, Inc. Mr. Volkema serves as a
member of the Audit Committee and the Executive Compensation
Committee.
Board Committees and Meetings
During fiscal year 2005, the Board of Directors held four
meetings, the Audit Committee held 14 meetings, the Executive
Compensation Committee held four meetings, and the Corporate
Governance/ Nominating Committee held four meetings. During
fiscal year 2005, each director attended more than 75% of the
Board meetings and the meetings of the committees on which such
director served.
6
The Board has three standing committees: the Audit Committee,
the Executive Compensation Committee and the Corporate
Governance/ Nominating Committee. The Board has affirmatively
determined that each director who serves on these committees is
independent, as that term is defined by applicable Nasdaq
listing standards and SEC rules.
The Audit Committee, acting pursuant to its written charter,
assists the Board of Directors in fulfilling its responsibility
for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. It
engages the Companys independent registered public
accounting firm, reviews and approves services performed by such
accountants, reviews and evaluates the Companys accounting
system and its system of internal controls, and performs other
related duties delegated to such Committee by the Board of
Directors as set forth in its charter. The Audit Committee
Charter is attached hereto as Appendix A and is available
on our website at www.applebees.com under the Investors
section. The Audit Committee consists of the following
independent directors: Mr. Curran, Mr. Hansen, Chair,
Mr. Helms and Mr. Volkema. The Board of Directors has
determined that Mr. Hansen is an audit committee
financial expert as defined in Item 401(h) of SEC
Regulation S-K.
The Executive Compensation Committee, acting pursuant to its
written charter, is responsible for setting executive
compensation levels, bonus plan participation and executive and
overall compensation policies. It also reviews and approves the
various executive benefit plans and makes awards under the
Companys equity plans. The Executive Compensation
Committee consists of the following independent directors:
Ms. Belton, Mr. Conant, Chair, Mr. Sack and
Mr. Volkema. Ms. Belton is Chair of a sub-committee of
the Executive Compensation Committee. The Executive Compensation
Committee Charter is available on our website at
www.applebees.com under the Investors section.
The Corporate Governance/ Nominating Committee, acting pursuant
to its written charter, reviews corporate and board governance
matters and evaluates and recommends candidates for nomination
to the Board of Directors. The Committee is responsible for
reviewing any stockholder nominations of Board candidates. The
Committee also performs an annual assessment of the Boards
performance and periodically assesses each directors
performance. The Corporate Governance/ Nominating Committee
consists of the following independent directors:
Ms. Belton, Ms. Boswell, Mr. Hansen,
Mr. Helms, Chair and Mr. Sack. The Corporate
Governance/ Nominating Committee Charter is available on our
website at www.applebees.com under the Investors section.
Corporate Governance
The Corporate Governance/ Nominating Committee has developed,
and the Board has adopted, certain corporate governance
principles designed to formalize several existing practices and
enhance governance efficiency and effectiveness. Among other
things, these principles address the following:
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prohibit Board members from serving on more than two other
boards of public companies, unless the Board determines this
service will not materially impact service to the Company; |
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prohibit director nomination for election after the age of 75; |
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direct periodic Board self-evaluation through the Corporate
Governance/ Nominating Committee; |
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require the CEO to review succession planning on an annual basis
with the Executive Compensation Committee and the Board; |
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authorize separate meeting time for independent directors at all
regularly scheduled Board meetings; |
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authorize the Board and all committees to hire their own
advisors; |
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require directors who change job responsibilities to offer to
resign from the Board, if the Board deems it
appropriate; and |
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set certain stock ownership guidelines for outside directors. |
Our corporate governance principles are available on our website
at www.applebees.com under the Investors section. You may
also access our code of conduct under the Investors section on
our website.
Annually, the Corporate Governance/ Nominating Committee follows
a process designed to consider the re-election of existing
directors and seek individuals qualified to become new board
members for recommendation to
7
the Board to fill any vacancies. The Corporate Governance/
Nominating Committee believes that having directors with
relevant experience in business and industry, government,
finance and other areas is beneficial to the Board as a whole.
Directors with such backgrounds can provide a useful perspective
on significant risks and competitive advantages and an
understanding of the challenges the Company faces. The Corporate
Governance/ Nominating Committee monitors the mix of skills and
experience of its directors and committee members in order to
assess whether the Board has the appropriate tools to perform
its oversight function effectively.
With respect to nominating existing directors, the Corporate
Governance/ Nominating Committee reviews relevant information
available to it, including the latest board evaluations for such
persons, and assesses their continued ability and willingness to
serve as a director. The Corporate Governance/ Nominating
Committee also assesses each persons contribution in light
of the mix of skills and experience the Corporate Governance/
Nominating Committee has deemed appropriate for the Board.
With respect to considering nominations of new directors when
the opportunity arises, the Corporate Governance/ Nominating
Committee conducts a thorough search to identify candidates
based upon criteria the Corporate Governance/ Nominating
Committee deems appropriate and considering the mix of skills
and experience necessary to complement existing Board members.
The Corporate Governance/ Nominating Committee then reviews
selected candidates and makes a recommendation to the Board. The
Corporate Governance/ Nominating Committee may seek input from
other Board members or senior management in identifying
candidates.
The Corporate Governance/ Nominating Committee will consider
nominations for the Board by stockholders in the same way it
evaluates other individuals for nomination as a new director.
Such nominations must be made in accordance with the
Companys by-laws which require that the nomination be
submitted, along with certain information about the candidate,
between 60 and 75 days before the date of the Annual
Meeting.
The Company publishes in its Annual Meeting materials and SEC
filings the names of its directors, any of whom may be contacted
in writing in care of the Company at our principal executive
offices. Written communication addressed to the Board in general
is reviewed by the Chairman for appropriate handling. Written
communication addressed to an individual Board member is
forwarded to that person directly.
The Company expects its Board members to attend the Annual
Meeting of Stockholders and schedules Board and committee
meetings to coincide with the stockholder meeting to facilitate
this. All of the then current directors attended the 2005 Annual
Meeting of Stockholders.
The Board of Directors has affirmatively determined that, except
for Mr. Goebel, Mr. Hill and Mr. Lumpkin, all
other directors are independent, as that term is defined by
applicable Nasdaq listing standards and SEC rules.
Director Compensation
For director compensation purposes, Ms. Belton,
Ms. Boswell, Mr. Conant, Mr. Curran,
Mr. Eric Hansen, Mr. Helms, Mr. Sack and
Mr. Volkema were considered non-employee
directors throughout 2005. Mr. Mark Hansen was
considered a non-employee director through the end
of his term in May 2005. During 2005, Mr. Hill and
Mr. Lumpkin were employee directors. In 2005,
non-employee directors, except for Mr. Mark Hansen and
Ms. Boswell, received an annual cash retainer of $35,000
for service as a director, including participation on the three
standing committees. Committee and sub-committee Chairs received
an additional $10,000 annually. Beginning in May 2005, the Audit
Committee Chair and the Executive Compensation sub-committee
Chair received $15,000 annually. Mr. Mark Hansen received a
pro rata share of the annual cash retainer through the
completion of his term and Ms. Boswell received a pro rata
share of the annual cash retainer from her appointment date.
Compensation, if any, for service on special committees is
determined by the Board at the time of establishment of the
special committee. Employee directors do not receive any
compensation for their service on the Board.
The Amended and Restated 1995 Equity Incentive Plan also permits
non-employee directors to elect to have their annual cash
retainer paid by the grant of stock options. If, on or before
December 15th, a non-employee director elects to receive
stock options in lieu of all or a portion of his or her cash
retainer for the following year, the director will receive in
the following January an option to purchase the number of shares
equal to the cash amount foregone divided by three-tenths of the
exercise price, rounded to the next higher multiple of ten. For
example, a non-employee director electing to forego $35,000 of
retainer, assuming a share price of $30.00, would receive an
8
option to buy 3,890 shares at $30.00 per share. In
2004, Mr. Conant and Mr. Sack elected to receive all
of their cash retainer for 2005 in stock options and accordingly
in January of 2005, received 4,490 options each.
Cash compensation paid and stock options and restricted stock
granted to Mr. Hill and Mr. Lumpkin for services
rendered to the Company as an employee in fiscal 2005 are shown
in the Summary Compensation Table.
In December 2004, the Board approved, pursuant to
Section 9.1(a) of the Amended and Restated 1995 Equity
Incentive Plan, the amount and mix of cash and equity
compensation to be paid to the Companys non-employee
directors for their services to the Company in fiscal 2005. The
total annual compensation is valued at $171,000, based on, as
set forth in Section 9.1(a), providing overall compensation
in the range of the 75th percentile of non-employee
director compensation paid by a selected peer group of public
companies. Each non-employee director will receive $35,000 of
this amount in cash as an annual retainer. As discussed above, a
director may elect to receive all or a portion of this retainer
in stock options. The remaining $136,000 in value of annual
compensation is paid in stock options or a combination of stock
options and restricted stock. A director may elect to take the
restricted stock in the form of stock options at a rate of
three-to-one.
Non-employee directors were compensated for their 2005 services
as follows:
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Options | |
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Received in | |
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Lieu of Cash | |
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Cash Received | |
Name |
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Options | |
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Restricted Stock | |
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Retainer | |
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for Retainer | |
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Erline Belton
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13,900 |
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$ |
47,773 |
(1) |
Gina Boswell
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5,500 |
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2,800 |
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6,731 |
(2) |
Douglas Conant
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5,500 |
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2,800 |
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4,490 |
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10,000 |
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D. Patrick Curran
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13,900 |
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35,000 |
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Eric Hansen
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5,500 |
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2,800 |
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47,349 |
(1) |
Mark Hansen
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5,500 |
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2,800 |
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15,293 |
(2) |
Jack Helms
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13,900 |
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45,000 |
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Burton Sack
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13,900 |
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4,490 |
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Michael Volkema
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5,500 |
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2,800 |
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35,000 |
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(1) |
The cash retainer for Ms. Belton and Mr. Eric Hansen
reflects an increase of their Chair retainers from $10,000 to
$15,000 in May 2005. |
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(2) |
Ms. Boswell and Mr. Mark Hansen received a pro rata
share of their cash retainers for the period each of them held
their position. |
9
Certain Information Concerning Executive and Other Senior
Officers
Information regarding the executive and other senior officers of
the Company, who are not also current directors, is as follows:
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Name |
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Age | |
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Position |
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John C. Cywinski
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43 |
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Executive Vice President and Chief Marketing Officer |
Carin L. Stutz
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49 |
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Executive Vice President of Operations |
Stanley M. Sword
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44 |
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Executive Vice President and Chief People Officer |
Rohan M. St. George
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46 |
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President of International Division |
Philip R. Crimmins
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54 |
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Senior Vice President of Development |
Michael Czinege
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52 |
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Senior Vice President and Chief Information Officer |
Miguel Fernandez
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51 |
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Senior Vice President of Company Operations |
Kurt Hankins
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45 |
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Senior Vice President of Menu Development and Innovation |
David R. Parsley
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59 |
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Senior Vice President of Supply Chain Management |
Carol A. DiRaimo
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44 |
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Vice President of Investor Relations |
Beverly O. Elving
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52 |
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Vice President of Accounting and Controller |
Rebecca R. Tilden
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50 |
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Vice President and General Counsel and Secretary |
John C. Cywinski was employed by Applebees in July 2001 as
Senior Vice President and Chief Marketing Officer and he was
promoted to Executive Vice President in January 2004. Prior to
joining Applebees, Mr. Cywinski was employed as Vice
President of Brand Strategy for McDonalds Corporation from
April 1999 to July 2001. From October 1996 to April 1999, he was
President of Buena Vista Pictures Marketing, the motion picture
division of The Walt Disney Company. Prior to The Walt Disney
Company, Mr. Cywinski was Vice President of
U.S. Marketing for Burger King Corporation, where he held
various positions of increasing responsibility from 1989 to
1996. He started his career with the Leo Burnett Advertising
Agency in 1984.
Carin L. Stutz was employed by Applebees in November 1999
as Senior Vice President of Company Operations. In January 2005,
she was promoted to Executive Vice President of Operations.
Prior to joining Applebees, Ms. Stutz was Division
Vice President with Wendys International from July 1994 to
November 1999. From 1993 to 1994, she was Regional Operations
Vice President for Sodexho, USA. From 1990 to 1993,
Ms. Stutz was employed by NutriSystem, Inc. as Vice
President of Corporate Operations. Prior to 1990, Ms. Stutz
was employed for 12 years with Wendys International.
Stanley M. Sword was employed by Applebees in August 2005
as Executive Vice President and Chief People Officer. Prior to
joining Applebees, Mr. Sword was employed for seven
years as an executive with Cerner Corporation. Hired in August
1998 as Senior Vice President and Chief People Officer, he
became President of Cerners Great Lakes region in August
of 2003. Prior to Cerner, Mr. Sword spent five years with
AT&T (three years as the Vice President of Organization
Development of NCR Corporation and two years as a client partner
in the outsourcing practice of AT&T Solutions). Prior to
joining AT&T, Mr. Sword spent ten years with Accenture
Consulting in a variety of roles within their systems
integration practice.
Rohan M. St. George was employed by Applebees in November
2004 as President of the International Division. Prior to
joining Applebees, Mr. St. George was a managing
director for Yum Restaurants International which included
responsibility for Puerto Rico, the U.S. Virgin Islands and
Venezuela. From 1998 to 2003, he was Vice President of Global
Operations for KFC, Pizza Hut and Taco Bell. Prior to 1998,
Mr. St. George had 14 years operations experience with
Pizza Hut and KFC in various management positions.
Philip R. Crimmins was employed by Applebees in August
2002 as Vice President of Operations Excellence. In September
2003, Mr. Crimmins was promoted to Senior Vice President of
Development. Prior to joining Applebees, he was employed
by Pizza Hut, Inc. for 27 years, most recently as Vice
President of Service Strategies. While at Pizza Hut, Inc.,
Mr. Crimmins held several other positions of increasing
responsibility, including senior leadership positions in
research and development, concept development, customer
satisfaction, field training, and restaurant operations.
10
Michael Czinege was employed by Applebees in April 2004 as
Senior Vice President and Chief Information Officer. Prior to
joining Applebees, Mr. Czinege was Executive Vice
President of North American operations for Celerant Consulting.
From 1996 to 2004, he was a partner and later Vice President of
Cap Gemini Ernst & Young, one of the worlds
leading providers of consulting, technology and outsourcing
services. Mr. Czinege has nearly three decades of industry
and consulting experience in manufacturing and supply chain
management operations, business planning, sales and marketing,
and information systems.
Miguel Fernandez was employed by Applebees in January 1995
as Area Director in California before becoming Director of
Operations in 1996 for Pacific Gold, Inc., an Applebees
franchisee. He rejoined Applebees in September 1998 as
Regional Vice President of Company Operations. In January 2005,
he was appointed Senior Vice President of Company Operations.
Prior to joining Applebees, Mr. Fernandez served as
Vice President of Operations for Ninfas Mexican
Restaurants, Regional Director of Operations for Acapulco
Restaurants and Vice President of Operations for Casa Vallarta
Mexican Restaurants.
Kurt Hankins was employed by Applebees in August 2001 as
Vice President of Research and Development. In December 2003,
Mr. Hankins was promoted to Senior Vice President of Menu
Development and Innovation. Prior to joining Applebees, he
served as Vice President of Food and Beverage for Darden
Restaurants, Inc. from July 1999 through July 2001. From August
1994 to July 1999, he served as Director of Food Research and
Development for Darden Restaurants, Inc. Prior to his employment
with Darden Restaurants, Inc., he held various positions in food
and beverage research and development within the restaurant
industry.
David R. Parsley was employed by Applebees in April 2000
as Senior Vice President of Purchasing and Distribution. In
January 2003, Mr. Parsley was named Senior Vice President
of Supply Chain Management. Prior to joining Applebees,
Mr. Parsley held several positions with Prandium, Inc.,
operator of El Torito, Chi-Chis and Koo Koo Roo, from
November 1996 to April 2000, most recently as Senior Vice
President of Quality and Supply Chain Management. He has also
held purchasing positions with The Panda Management Company,
Carl Karcher Enterprises, Proficient Food Company, Inc., and
Baxter Healthcare Corporation.
Carol A. DiRaimo was employed by Applebees in November
1993 as Associate Director of Financial Planning and Reporting
and was promoted to Director in 1995. She was named Director of
Treasury and Corporate Analysis in 1998 and Director of Investor
Relations and Corporate Analysis in April 2000. She was promoted
to Executive Director of Investor Relations in January 2003 and
Vice President of Investor Relations in February 2004. Prior to
joining Applebees, she was employed by Gilbert/ Robinson,
Inc. from May 1989 to November 1993. Ms. DiRaimo, a
certified public accountant, was also employed by Deloitte
Haskins & Sells for six years.
Beverly O. Elving was employed by Applebees in June 1998
as Director of Corporate Accounting. In September 2002,
Ms. Elving was promoted to Vice President of Accounting. In
February 2005, she was named Vice President and Controller.
Prior to joining Applebees, she was Chief Financial
Officer from 1996 to 1998 for Integrated Medical Resources, a
publicly-held management services company. From 1990 to 1996,
Ms. Elving was employed by the Federal Deposit Insurance
Corporation as Director of Financial Operations and was later
promoted to Vice President of Financial Operations &
Accounting. Ms. Elving, a certified public accountant, was
also employed by Arthur Andersen & Co for five years.
Rebecca R. Tilden was employed by Applebees in November
2003 and became Vice President and General Counsel in January
2004. Prior to joining Applebees, Ms. Tilden was an
independent consultant specializing in corporate compliance and
ethics issues. From 1987 to 2000, Ms. Tilden was employed
by Aventis Pharmaceuticals, Inc., in various positions of
increasing responsibility and served most recently as Vice
President, Assistant General Counsel and Secretary.
11
STOCK OWNERSHIP OF OFFICERS, DIRECTORS AND MAJOR
STOCKHOLDERS
The following table sets forth information, as of March 13,
2006, regarding the ownership of common stock, our only class of
outstanding securities, by (i) each person known by the
Company to own beneficially more than 5% of the outstanding
shares of common stock, (ii) each director and nominee for
director and each executive officer named in the Summary
Compensation Table, and (iii) all executive officers and
directors of the Company as a group. Unless otherwise indicated,
each of the stockholders has sole voting and investment power
with respect to the shares beneficially owned.
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Beneficial Ownership(1) | |
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Number | |
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Percent | |
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of Shares | |
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Held | |
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FMR
Corp (2)
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11,688,255 |
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15.3 |
% |
|
82 Devonshire Street
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Boston, MA 02109
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Capital Research and Management
Company (3)
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6,907,000 |
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9.1 |
% |
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333 South Hope Street
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Los Angeles, CA 90071
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JPMorgan Chase &
Co. (4)
|
|
|
5,410,666 |
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|
|
7.0 |
% |
|
270 Park Avenue
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New York, NY 10017
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|
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|
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|
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Burton M.
Sack (5)(6)
|
|
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2,602,411 |
|
|
|
3.5 |
% |
Lloyd L.
Hill (5)
|
|
|
457,068 |
|
|
|
0.6 |
% |
John C.
Cywinski (5)
|
|
|
417,281 |
|
|
|
0.6 |
% |
Louis A.
Kaucic (5)
|
|
|
394,172 |
|
|
|
0.5 |
% |
D. Patrick
Curran (5)
|
|
|
305,499 |
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|
|
0.4 |
% |
Jack P.
Helms (5)
|
|
|
259,832 |
|
|
|
0.3 |
% |
David L.
Goebel (5)
|
|
|
212,607 |
|
|
|
0.3 |
% |
Steven K.
Lumpkin (5)
|
|
|
178,116 |
|
|
|
0.2 |
% |
Carin L.
Stutz (5)
|
|
|
157,668 |
|
|
|
0.2 |
% |
Douglas R.
Conant (5)
|
|
|
149,492 |
|
|
|
0.2 |
% |
Erline
Belton (5)
|
|
|
96,575 |
|
|
|
0.1 |
% |
Eric L.
Hansen (5)(7)
|
|
|
81,350 |
|
|
|
0.1 |
% |
Michael A.
Volkema (5)
|
|
|
28,550 |
|
|
|
|
|
Gina R. Boswell
|
|
|
5,600 |
|
|
|
|
|
Rogelio Rebolledo
|
|
|
|
|
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|
|
All executive officers and directors as a group (22
persons) (5)
|
|
|
5,601,685 |
|
|
|
7.5 |
% |
|
|
(1) |
The mailing address of each individual is
4551 W. 107th Street, Overland Park, Kansas
66207, unless otherwise shown. |
|
(2) |
Based on a Schedule 13G/ A filed by FMR Corp. on
February 14, 2006, reflecting beneficial ownership, FMR
Corp. has sole power to vote 348,809 shares, shared
power to vote 0 shares and sole power to dispose of all
shares. |
|
(3) |
Based on a Schedule 13G filed by Capital Research and
Management Company (CRMC) on February 10, 2006,
reflecting beneficial ownership, CRMC has sole power to
vote 5,407,000 shares, shared power to vote
0 shares and sole power to dispose of all shares. |
|
(4) |
Based on a Schedule 13G filed by JPMorgan Chase &
Co. (JPMorgan) on February 10, 2006, reflecting
beneficial ownership, JPMorgan has sole power to
vote 4,418,267 shares, shared power to
vote 867,899 shares, sole power to dispose of
4,541,767 shares and shared power to dispose of
867,899 shares. |
|
(5) |
Includes certain shares subject to options exercisable as of
March 13, 2006 or within 60 days thereafter:
307,125 shares for Mr. Sack, 187,499 shares for
Mr. Hill, 350,000 shares for Mr. Cywinski,
322,623 shares for Mr. Kaucic, 151,937 shares for
Mr. Curran, 186,669 shares for Mr. Helms,
121,874 shares for Mr. Goebel 67,499 shares for
Mr. Lumpkin, 93,749 shares for Ms. Stutz,
146,692 shares for Mr. Conant, 91,525 shares for
Ms. Belton, 61,250 shares for Mr. Hansen,
25,750 shares for Mr. Volkema and
2,246,747 shares for all executive officers and directors
as a group. |
|
(6) |
Includes 448,318 shares held in family trusts or
partnerships for which Mr. Sack disclaims beneficial
ownership. |
|
(7) |
Includes 14,500 shares held in a family trust for which
Mr. Hansen disclaims beneficial ownership. |
12
PERFORMANCE GRAPH
The following graph compares the annual change in the
Companys cumulative total stockholder return for the five
fiscal years ended December 25, 2005 (December 31,
2000 to December 25, 2005) based upon the market price of
our common stock, compared with the cumulative total return on
the Nasdaq Market Index and the Hemscott Group Index. The Nasdaq
Market Index includes both the Nasdaq NMS and Nasdaq Small-Cap
Issuers indices. The Hemscott Group Index, formerly known as the
CoreData Group Index, includes approximately 80 restaurant
companies.
APPLEBEES INTERNATIONAL, INC.
Performance Graph
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG APPLEBEES INTERNATIONAL, INC.,
NASDAQ MARKET INDEX AND HEMSCOTT GROUP INDEX
ASSUMES $100 INVESTED ON DEC. 31, 2000
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 25, 2005
Source: Hemscott Industry Group
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement Period |
|
|
|
|
|
|
(Fiscal Year Covered) |
|
Applebees |
|
Nasdaq |
|
Hemscott |
Measurement Point |
|
International, Inc. |
|
Market Index |
|
Group Index |
|
|
|
|
|
|
|
December 31, 2000
|
|
$ |
100.00 |
|
|
$ |
100.00 |
|
|
$ |
100.00 |
|
December 30, 2001
|
|
$ |
163.47 |
|
|
$ |
79.71 |
|
|
$ |
101.41 |
|
December 29, 2002
|
|
$ |
169.54 |
|
|
$ |
55.60 |
|
|
$ |
80.95 |
|
December 28, 2003
|
|
$ |
277.59 |
|
|
$ |
83.60 |
|
|
$ |
111.45 |
|
December 26, 2004
|
|
$ |
274.51 |
|
|
$ |
90.63 |
|
|
$ |
136.12 |
|
December 25, 2005
|
|
$ |
251.38 |
|
|
$ |
92.62 |
|
|
$ |
144.82 |
|
13
EXECUTIVE COMPENSATION
Executive Compensation Committee Report
This report discusses how the Executive Compensation Committee
determined the compensation for Lloyd L. Hill, our Chief
Executive Officer (CEO) and the other executives
named in the Summary Compensation Table (the Named
Executives) for the 2005 fiscal year. Please see
Board Committees and Meetings for a discussion of
the duties and responsibilities of the Executive Compensation
Committee.
We believe that our growth and success is dependent, in large
part, on our ability to attract and retain highly qualified
senior executives. Toward that end, we have developed a
competitive executive compensation program. We designed the
program to reward senior executives over the short- and
long-term for achieving Company financial objectives and
increasing shareholder value.
Our executive compensation program has three primary components:
|
|
|
|
|
Base salary |
|
|
|
Annual cash incentive, which is earned by achieving annual
earnings per share (EPS) growth and other operating
targets |
|
|
|
Long-term incentive compensation in the form of equity awards,
which consist of annual stock option and restricted stock grants |
In addition, we provide an executive retirement plan, certain
severance and
change-in-control
benefits, a deferred compensation plan, a FlexPerx program, a
bonus for early attainment of required executive stock ownership
guidelines and certain other benefits to our executives, as
described elsewhere in this report and this Proxy Statement.
We set target executive compensation ranges each year after
reviewing compensation in other companies similar to ours. For
2005, we set compensation ranges that are competitive with those
offered by a group of our peers in the restaurant business. To
do this, we reviewed publicly available compensation information
for a broad range of restaurant companies, selecting them based
on several criteria including revenue size, market
capitalization, revenue and earnings growth rates, and market
segment. The restaurant companies reviewed for compensation
comparisons are included in but are not all of the companies in
the Hemscott Group Index, which we used to measure our stock
price performance in the Performance Graph included in this
Proxy Statement. In addition, we compared our targeted
compensation ranges to those in a broad-based group of companies
with similar revenue size to ensure that our compensation is
competitive with those of companies outside the restaurant
industry.
We used the following compensation philosophy to determine
target ranges of executive compensation for 2005:
|
|
|
|
|
We set base salary midpoints for each executive level at or near
the median of the base salaries for executives in the comparison
groups. |
|
|
|
We set target annual cash incentive opportunities so that target
total cash (base salary midpoints plus target annual cash
incentive opportunities) would be at the 75th percentile of
total cash for executives in the comparison groups when the
Company and executives achieve the targeted performance levels. |
|
|
|
We set target long-term incentive equity award levels so that
total direct compensation (target total cash plus the target
present value of annual stock awards) would be at the
75th percentile of total direct compensation for executives
in the comparison groups when the Company achieves target
performance levels. To determine the value of equity awards, we
assigned a standardized present value to our stock and the stock
of companies in the comparison group. |
In developing executive compensation programs and setting target
compensation levels for 2005, the Committee also relied on the
advice of a nationally recognized independent compensation
consulting firm.
14
After base salary target ranges are set, we then determine each
component of compensation for each Named Executive and the CEO
as described below.
|
|
|
Components of Executive Compensation for 2005 |
Throughout 2005, we had written employment agreements in effect
with Mr. Hill, Mr. Lumpkin and Mr. Kaucic. We did
not use these agreements to determine 2005 compensation levels
because they were entered into prior to 2004 and address only
first year base salary levels. New agreements for
Mr. Lumpkin and Mr. Goebel were entered into in
January 2006 and are described later in the Proxy Statement. The
Committee establishes base salary, target annual incentive
opportunities, and long-term incentive levels each year.
After setting base salary target ranges, the Committee considers
several criteria to determine individual base salary amounts.
These criteria include certain strategic, operational and
leadership goals for each individual. Base salary increases for
Named Executives other than the CEO in 2005 varied based on
individual contributions to the Companys performance in
2004 and on changes in individual accountabilities in 2005.
|
|
|
Annual Cash Incentive Compensation |
The Company has two cash bonus plans under which it provides
annual cash incentive. In 2005, the 2001 Senior Executive
Officer Bonus Plan was used only for the CEO and is described
below.
Bonuses for the other Named Executives are made under the 1999
Management and Executive Incentive Plan. After setting target
ranges based on peer group comparisons, awards under this annual
incentive plan are based on the achievement of annual operating
and financial goals that contribute to the Companys short-
and long-term EPS performance. Also, for each executive, the
Committee takes into consideration individual strategic goals
that it believes will drive the Companys overall
performance. The Committee sets a percentage of base salary as
the maximum bonus potential. Based on Company and individual
performance in 2005, the Committee approved awards for the Named
Executives resulting in the bonus payments shown in the Summary
Compensation Table.
|
|
|
Long-Term Incentive Compensation |
The Committee believes that equity awards are an important
element of the Companys executive compensation program and
the primary means of rewarding executives for increasing
stockholder value over the long-term. Target levels are set
based on the peer group comparisons discussed above. Awards are
made under the Companys Amended and Restated 1995 Equity
Incentive Plan. The Committee uses a combination of stock
options and restricted stock to comprise the equity portion of
the executive compensation program. Initial award values are set
based upon a ratio of two-thirds in stock options and one-third
in restricted stock. The Committee then allows the executive to
elect to have the Committee grant additional stock options in
exchange for restricted stock at a preset value. Both options
and restricted stock are subject to a three year vesting period.
This provides a focus on goals designed to achieve continued
stock price growth over the long-term. Equity awards also serve
as the primary retention tool for the Named Executives. Option
and restricted stock grants made in fiscal 2005 are set forth in
the Summary Compensation Table.
The Committee has also focused on putting executives at
financial risk based on the Companys stock performance. We
have adopted the stock ownership guidelines discussed below to
ensure that the Companys equity compensation programs
result in significantly increased share ownership by executives.
15
The following table sets forth the fair value using the
Black-Scholes method, as of the grant date, of the stock options
and restricted stock granted to the Named Executives other than
the CEO in fiscal 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock | |
|
Restricted | |
|
|
Name |
|
Options | |
|
Stock | |
|
Total | |
|
|
| |
|
| |
|
| |
David Goebel
|
|
$ |
683,124 |
|
|
$ |
491,470 |
|
|
$ |
1,174,594 |
|
Steven Lumpkin
|
|
|
443,638 |
|
|
|
303,555 |
|
|
|
747,193 |
|
John Cywinski
|
|
|
420,082 |
|
|
|
426,478 |
|
|
|
846,560 |
|
Louis Kaucic
|
|
|
333,710 |
|
|
|
241,399 |
|
|
|
575,109 |
|
Carin Stutz
|
|
|
314,080 |
|
|
|
|
|
|
|
314,080 |
|
Mr. Cywinski met his share ownership guidelines in 2005 and
accordingly, received 4,726 shares of restricted stock
which vest after two years.
|
|
|
Other Compensation and Benefits |
Retirement Benefits. In April 2004, the Board of
Directors approved the Companys Executive Retirement Plan
pursuant to which eligible officers will receive certain
benefits from the Company following retirement. The Executive
Retirement Plan is discussed in more detail in this Proxy
Statement under Executive Compensation Executive
Retirement Plan.
Severance and
Change-in-Control
Agreements. Mr. Goebel and Mr. Lumpkin are
entitled to certain severance and
change-in-control
benefits pursuant to their employment agreements, as described
in more detail in this Proxy Statement. Mr. Kaucic,
Mr. Cywinski and Ms. Stutz are parties to
change-in-control and
noncompete agreements with the Company which provide certain
severance and
change-in-control
benefits. These agreements are described in more detail in this
Proxy Statement under Executive Compensation
Employment Agreements and Change in Control Arrangements.
Deferred Compensation Plan. The Company maintains a
Non-qualified Deferred Compensation Plan for its senior
officers. Each of the Named Executives participates in the plan.
The plan allows deferral of specified amounts of compensation
which are then invested in certain specified funds. The Company
makes certain matching contributions, as shown in the Summary
Compensation Table. The Deferred Compensation Plan is described
in more detail in this Proxy Statement under Executive
Compensation Deferred Compensation Plan.
Airplane Use. The Company maintains two airplanes that
are used by Company personnel for business travel. The Named
Executives may use the airplanes for personal travel within
specified guidelines. With the advance approval of the CEO, the
Named Executives are authorized to use the airplanes for
personal travel for a maximum of five hours jet travel or
equivalent on a slower aircraft per calendar year. The CEO may
approve additional use in extraordinary situations. The Named
Executives report income with respect to this travel at the
applicable tax rates. In this Proxy Statement, compensation to
the Named Executive is based on the incremental cost to the
Company, as shown in the Summary Compensation Table. The Named
Executives also receive a cash payment equal to their tax
liability for the airplane use. All expenses other than
customary airplane related expenses must be paid by the Named
Executive. The Committee reviews a summary of personal use for
senior executives each year.
Health Plan and Other Benefits. The Company provides an
executive health plan pursuant to which the Company will provide
eligible officers group health coverage. The terms and costs of
the coverage are determined by the Company and vary from
participant to participant. In addition, the Named Executives
are eligible for other benefit programs provided to employees
generally, based on each plans eligibility requirements.
FlexPerx Program. In 2004, the Committee approved the
FlexPerx Program for certain of the Companys officers to
promote health and foster a balanced lifestyle. FlexPerx is a
program whereby cash benefit awards, in addition to other
compensation, are granted to certain Company officers on a
calendar year basis, based upon each such officers scope
of employment responsibility. FlexPerx benefits may be used for
any purpose, at the sole discretion of the officer receiving the
benefit. The FlexPerx Program is discussed in more detail in
this Proxy Statement under Executive Compensation
FlexPerx Program.
16
|
|
|
Executive Stock Ownership Guidelines |
In 1998, we established stock ownership guidelines that became
effective for the Chairman and CEO through Senior Vice President
levels as of July 1, 1998 and for Vice Presidents as of
January 1, 1999.
The targeted stock ownership requirements for the executive
officer group were modified in 2004 and are as follows:
|
|
|
|
|
|
|
Chairman and CEO |
|
4 times base salary |
|
|
President and COO |
|
3.5 times base salary |
|
|
Executive Vice Presidents/Other Named
Executive Officers |
|
3 times base salary |
|
|
Senior Vice Presidents |
|
1.5 times base salary |
|
|
Vice Presidents |
|
1 times base salary |
An executive must achieve the applicable targeted ownership
level generally within five years in order to continue to
participate in our annual stock option and restricted stock
program after that date. If a participating executive achieves
the applicable targeted level within three years, he or she will
receive a share bonus of 50% of base salary up to $125,000. The
bonus is restricted until five years of participation have been
achieved. As of the end of 2005, the CEO and all other Named
Executives who had participated in the share ownership program
for at least three years had exceeded his or her required share
ownership level and, as a result, qualified for the restricted
share bonus.
The table below sets forth the required level of ownership for
each Named Executive and the CEO and their ownership of Company
stock as of December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
Required | |
|
|
|
|
Level | |
|
Stock | |
Name |
|
(Shares) | |
|
Ownership | |
|
|
| |
|
| |
Lloyd Hill
|
|
|
131,509 |
|
|
|
230,692 |
|
David Goebel
|
|
|
56,713 |
|
|
|
67,858 |
|
Steven Lumpkin
|
|
|
51,165 |
|
|
|
74,154 |
|
John Cywinski
|
|
|
49,932 |
|
|
|
64,212 |
|
Carin Stutz
|
|
|
36,987 |
|
|
|
63,919 |
|
Louis Kaucic retired on January 3, 2006, and is no longer
subject to the stock ownership guidelines.
|
|
|
Compensation of the Chief Executive Officer |
For the sixth consecutive year, the Committee specifically
reviewed Mr. Hills annual performance for 2005. In
2000, Ms. Belton, as a member of the Committee and with its
concurrence, designed a review process which includes interviews
with Mr. Hill, other officers who report to Mr. Hill,
members of the Board of Directors, and a cross-section of
franchise principals and Company employees. The process also
includes a review of both internal and external information
regarding the status and performance of the Company and
Mr. Hill. With the approval of the Committee, in early
2006, Ms. Belton again performed this extensive review
process regarding Mr. Hills 2005 performance. The
Committee considers this review process to be beneficial to the
Company, its stockholders and Mr. Hill. Effective May 2004,
Ms. Belton is Chair of a sub-committee to evaluate the CEO.
The Committee undertakes the same process to set base salary for
the CEO as for the other Named Executives. In addition, in late
2004, the Committee completed a review of the Companys
overall performance against its operating and strategic goals,
as a part of the annual performance review of the CEO. Based on
Company performance in 2004 and a review of the compensation
data, the 2005 CEO base salary was set at $800,000.
17
The annual cash bonus for the CEO is made under the 2001 Senior
Executive Officer Bonus Plan, which was approved by the
Committee in 2001. The plan was approved by our stockholders in
May 2001 in order to qualify the compensation paid under
section 162(m) of the Internal Revenue Code. The Committee
determined that only the CEO would participate in this plan for
fiscal year 2005. The plan calls for cash bonuses to be paid
upon achieving certain annual operating and financial goals that
contribute to the Companys short and long-term EPS
performance as set by the Committee. Based on actual 2005
performance, Mr. Hill did not receive a bonus.
|
|
|
Long-Term Incentive Compensation |
The Committee determines the long-term incentive compensation
equity awards to the CEO in the same manner as it determines
awards for the other Named Executives. Mr. Hill received
stock option and restricted stock grants in 2005 as set forth in
the Summary Compensation Table. The fair value using the
Black-Scholes model, as of the grant date, of the stock options
was $1,107,132 and the restricted stock was $780,570 for a total
of $1,887,702.
The CEO also participates in and is eligible for the other
compensation and benefits as the other Named Executives, as
described above. The Company has a policy for the use of its
airplane by the CEO which allows the CEO to use the airplane for
reasonable personal use at his discretion. All use must be
documented and the value of the use is charged to Mr. Hill
for tax purposes. The Committee reviews each year the amount of
personal use of the airplane by the CEO. In this Proxy
Statement, compensation to the CEO related to airplane use is
based on the incremental cost to the Company, and is shown in
the Summary Compensation Table. The CEO receives a cash payment
equal to his tax liability for the airplane use.
|
|
|
Review of All Components of CEO Compensation |
The Committee has reviewed all components of the CEOs
direct compensation, including salary, bonus and equity and
long-term incentive compensation. Based on this review, the
Committee finds the CEOs total direct compensation in the
aggregate to be reasonable and not excessive. It should be noted
that when the Committee considers any component of the
CEOs total direct compensation, the aggregate amounts and
mix of all the components are taken into consideration in the
Committees decisions.
|
|
|
Deductibility of Compensation |
Section 162(m) of the Internal Revenue Code places an
annual limitation of $1,000,000 on the compensation of certain
executive officers of publicly-held corporations that can be
deducted for federal income tax purposes unless such
compensation is based on performance. Generally, the Committee
believes that it is in the best interests of the Companys
stockholders to comply with such tax law, while still
maintaining the goals of the Companys executive
compensation program. However, where it is deemed necessary and
in the best interests of the Company to continue to attract and
retain the best possible executive talent, and to motivate such
executives to achieve the goals inherent in the Companys
business strategy, the Committee will approve compensation to
executive officers which may exceed the limits of deductibility.
No executive of the Company received non-performance based
compensation in excess of $1,000,000 in 2005.
|
|
|
EXECUTIVE COMPENSATION COMMITTEE |
|
Douglas R. Conant, Chair |
|
Erline Belton |
|
Burton M. Sack |
|
Michael A. Volkema |
18
Summary Compensation Table
The following Summary Compensation Table sets forth the
compensation of the Chief Executive Officer, each of the next
four most highly compensated executive officers in each of their
respective positions with the Company whose annual salary and
bonuses exceeded $100,000 for services in all capacities to the
Company during the last three fiscal years, and who were serving
at the end of the fiscal year, and for Mr. Louis Kaucic who
was not an executive officer at the end of the fiscal year but
whose salary and bonus in fiscal 2005 would have placed him
among the next four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Compensation | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Annual Compensation | |
|
Awards | |
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
|
Restricted | |
|
Securities | |
|
|
|
|
|
|
|
|
Other Annual | |
|
Stock | |
|
Underlying | |
|
LTIP | |
|
All Other | |
|
|
Fiscal | |
|
Salary(1) | |
|
Bonus(2) | |
|
Compensation(3) | |
|
Awards(4) | |
|
Options(5) | |
|
Payouts(6) | |
|
Compensation(7) | |
Name and Principal Position |
|
Year | |
|
($) | |
|
($) | |
|
($) | |
|
($) | |
|
(#) | |
|
($) | |
|
($) | |
| |
Lloyd L. Hill
|
|
|
2005 |
|
|
$ |
786,154 |
|
|
|
|
|
|
|
$104,833 |
|
|
$ |
780,570 |
|
|
|
141,000 |
|
|
|
|
|
|
|
$66,183 |
|
Chief Executive Officer |
|
|
2004 |
|
|
|
703,846 |
|
|
$ |
554,500 |
|
|
|
59,310 |
|
|
|
580,201 |
|
|
|
187,499 |
|
|
$ |
370,882 |
|
|
|
55,546 |
|
|
|
|
2003 |
|
|
|
686,154 |
|
|
|
950,730 |
|
|
|
67,721 |
|
|
|
586,125 |
|
|
|
187,499 |
|
|
|
1,294,313 |
|
|
|
47,554 |
|
|
David L. Goebel
|
|
|
2005 |
|
|
$ |
458,942 |
|
|
$ |
90,100 |
|
|
|
$ 29,743 |
|
|
$ |
491,470 |
|
|
|
87,000 |
|
|
|
|
|
|
|
$26,298 |
|
President and Chief |
|
|
2004 |
|
|
|
393,789 |
|
|
|
271,269 |
|
|
|
|
|
|
|
359,383 |
|
|
|
67,499 |
|
|
|
|
|
|
|
18,076 |
|
|
Operating Officer
|
|
|
2003 |
|
|
|
310,077 |
|
|
|
263,655 |
|
|
|
|
|
|
|
130,250 |
|
|
|
48,750 |
|
|
$ |
345,150 |
|
|
|
13,610 |
|
|
Steven K. Lumpkin
|
|
|
2005 |
|
|
$ |
408,846 |
|
|
$ |
115,300 |
|
|
|
$ 64,624 |
|
|
$ |
303,555 |
|
|
|
56,500 |
|
|
|
|
|
|
|
$29,490 |
|
Executive Vice President and |
|
|
2004 |
|
|
|
370,385 |
|
|
|
280,341 |
|
|
|
|
|
|
|
232,080 |
|
|
|
67,499 |
|
|
$ |
123,618 |
|
|
|
21,431 |
|
|
Chief Financial Officer
|
|
|
2003 |
|
|
|
349,615 |
|
|
|
366,856 |
|
|
|
|
|
|
|
221,425 |
|
|
|
67,499 |
|
|
|
431,438 |
|
|
|
17,794 |
|
|
John C. Cywinski
|
|
|
2005 |
|
|
$ |
400,385 |
|
|
$ |
34,000 |
|
|
|
$ 18,942 |
|
|
$ |
426,478 |
|
|
|
53,500 |
|
|
|
|
|
|
|
|
|
Executive Vice President and |
|
|
2004 |
|
|
|
374,769 |
|
|
|
201,416 |
|
|
|
|
|
|
|
232,080 |
|
|
|
67,499 |
|
|
$ |
98,900 |
|
|
|
$ 9,614 |
|
|
Chief Marketing Officer
|
|
|
2003 |
|
|
|
365,769 |
|
|
|
291,783 |
|
|
|
|
|
|
|
182,350 |
|
|
|
67,499 |
|
|
|
345,150 |
|
|
|
13,600 |
|
|
Louis A.
Kaucic(8)
|
|
|
2005 |
|
|
$ |
316,923 |
|
|
|
|
|
|
|
$ 19,993 |
|
|
$ |
241,399 |
|
|
|
42,500 |
|
|
|
|
|
|
|
$20,384 |
|
Executive Vice President and |
|
|
2004 |
|
|
|
296,154 |
|
|
$ |
155,415 |
|
|
|
|
|
|
|
193,400 |
|
|
|
48,749 |
|
|
$ |
123,618 |
|
|
|
17,645 |
|
|
Chief People Officer
|
|
|
2003 |
|
|
|
277,702 |
|
|
|
213,436 |
|
|
|
|
|
|
|
195,375 |
|
|
|
48,750 |
|
|
|
431,438 |
|
|
|
14,707 |
|
|
Carin L. Stutz
|
|
|
2005 |
|
|
$ |
294,607 |
|
|
$ |
93,600 |
|
|
|
$ 6,000 |
|
|
|
|
|
|
|
40,000 |
|
|
|
|
|
|
|
$17,915 |
|
Executive Vice President of |
|
|
2004 |
|
|
|
257,858 |
|
|
|
143,676 |
|
|
|
|
|
|
|
|
|
|
|
37,499 |
|
|
|
|
|
|
|
16,235 |
|
|
Company Operations
|
|
|
2003 |
|
|
|
256,338 |
|
|
|
190,026 |
|
|
|
|
|
|
$ |
135,266 |
|
|
|
37,499 |
|
|
|
|
|
|
|
9,723 |
|
|
|
|
(1) |
Mr. Hill, Mr. Goebel, Mr. Lumpkin and
Mr. Kaucic deferred $171,538, $24,086, $52,442 and $69,425,
respectively, of their 2003 salary under the Companys
deferred compensation plan. Mr. Hill, Mr. Goebel,
Mr. Lumpkin and Mr. Kaucic deferred $351,923, $31,503,
$74,077 and $94,718, respectively, of their 2004 salary under
the Companys deferred compensation plan. Mr. Hill,
Mr. Goebel, Mr. Lumpkin, Mr. Cywinski,
Mr. Kaucic and Ms. Stutz deferred $393,077, $36,715,
$81,769, $32,031, $158,462, and $23,938 respectively, of their
2005 salary under the Companys deferred compensation plan.
All deferred amounts are included in the amounts shown in the
table. |
|
(2) |
Represents amounts earned under the Companys annual cash
incentive bonus plans. Mr. Kaucic elected to receive a
portion of his 2003 bonus in stock and, accordingly, received
2,616 shares in March 2004. The portion of the bonus (in
dollars) used to obtain those shares is included in the table.
Mr. Hill, Mr. Goebel and Mr. Kaucic deferred
$237,683, $21,092 and $53,359, respectively, of their 2003 bonus
under the Companys deferred compensation plan.
Mr. Hill, Mr. Goebel, Mr. Kaucic and
Ms. Stutz deferred $526,775, $21,702, $124,332, and
$11,494, respectively, of their 2004 bonus under the
Companys deferred compensation plan. Ms. Stutz
deferred $7,488 of her 2005 bonus under the Companys
deferred compensation plan. All deferred amounts are included in
the amounts shown in the table. |
|
(3) |
Amounts applicable to Mr. Hill in 2003 and 2004 include
personal use of the corporate airplane of $67,721 and $59,310,
respectively. In 2003 and 2004, this amount was reported using
the Standard Industry Fare Level method. Amounts in 2003 and
2004 do not include perquisites and other personal benefits
where the total incremental cost of all perquisites did not
exceed $50,000 per year, as permitted under SEC rules. |
|
|
In 2005, for proxy reporting purposes, the Company has adopted
the incremental cost method to value other annual compensation
attributable to an executives personal usage of the
corporate airplane. The incremental cost method is calculated
based upon the amount invoiced to the Company plus engine
maintenance costs. Under the Companys policy for personal
use of the corporate airplane, the CEO is eligible to use the
airplane for reasonable personal purposes. Other senior
executives may use the corporate airplane for personal purposes,
subject to review by and approval of the CEO. The value of all
personal usage, as well as spousal travel, is added to the
senior executives taxable income. |
|
|
|
This column for 2005 includes personal corporate airplane usage
under the incremental cost method and amounts paid under the
FlexPerx program as outlined in the table below. |
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Personal | |
|
|
|
|
Airplane | |
|
|
Name |
|
Use(i) | |
|
FlexPerx | |
|
Total | |
|
|
| |
Lloyd L. Hill
|
|
|
$91,333 |
|
|
|
$13,500 |
|
|
|
$104,833 |
|
|
|
|
|
|
David L. Goebel
|
|
|
21,243 |
|
|
|
8,500 |
|
|
|
29,743 |
|
|
|
|
|
|
Steven K. Lumpkin
|
|
|
56,124 |
|
|
|
8,500 |
|
|
|
64,624 |
|
|
|
|
|
|
John C. Cywinski
|
|
|
10,442 |
|
|
|
8,500 |
|
|
|
18,942 |
|
|
|
|
|
|
Louis A. Kaucic
|
|
|
11,493 |
|
|
|
8,500 |
|
|
|
19,993 |
|
|
|
|
|
|
Carin L. Stutz
|
|
|
|
|
|
|
6,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
|
(i) |
Personal airplane use includes cash payments received to
reimburse the Named Executive for his or her tax liability. |
|
|
(4) |
The amounts shown in this column represent the dollar value of
the grant of restricted stock based on the value of the
Companys common stock on the grant date. All grants were
made under the Companys Amended and Restated 1995 Equity
Incentive Plan. Mr. Goebel met his share ownership
guidelines in 2004 and accordingly, received 5,431 shares
of restricted stock which vest after two years.
Mr. Cywinski met his share ownership guidelines in 2005 and
accordingly, received 4,726 shares of restricted stock,
which vest after two years. Amounts for 2003, 2004 and 2005
represent restricted stock grants aggregating 83,250 shares
for Mr. Hill, 38,931 shares for Mr. Goebel,
32,250 shares for Mr. Lumpkin, 34,726 shares for
Mr. Cywinski, 27,100 shares for Mr. Kaucic and
7,762 shares for Ms. Stutz. The aggregate value of
these shares granted in 2005, 2004 and 2003 based upon the
closing sale price of our common stock on December 23, 2005
(the last trading day of fiscal 2005) was $1,918,080 for
Mr. Hill, $896,970 for Mr. Goebel, $743,040 for
Mr. Lumpkin, $800,087 for Mr. Cywinski, $624,384 for
Mr. Kaucic and $178,836 for Ms. Stutz. Restricted
stock awards receive any dividends paid. |
|
(5) |
Represents options granted pursuant to the Companys
Amended and Restated 1995 Equity Incentive Plan. |
|
(6) |
Amounts applicable to 2003 represent the value of performance
shares earned and cash received under a three-year performance
cycle. Mr. Goebel and Mr. Cywinski elected to receive
a portion of their award in shares and accordingly received
9,052 shares each on February 17, 2004. The closing
price of our common stock on February 17, 2004 was
$25.57 per share. Mr. Hill, Mr. Goebel,
Mr. Lumpkin, Mr. Cywinski and Mr. Kaucic received
cash payments and accordingly were paid $1,294,313, $113,708,
$431,438, $113,708 and $431,438, respectively, on
February 19, 2004. Amounts applicable to 2004 represent
cash received for the value of performance shares earned under a
three-year performance cycle. Performance share awards were
discontinued in 2003. |
|
(7) |
Represents the Companys matching cash contributions under
its deferred compensation plan. |
|
(8) |
Mr. Kaucic was no longer an executive officer as of
December 2005, and retired on January 3, 2006. |
20
Stock Options Information
The following tables set forth information regarding stock
options granted and exercised during fiscal year 2005 with
respect to the Chief Executive Officer and the officers named in
the Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential | |
|
|
Individual Grants(1) | |
|
Realizable Value at | |
|
|
| |
|
Assumed Annual | |
|
|
Number of | |
|
% of Total | |
|
|
|
Rates of | |
|
|
Securities | |
|
Options | |
|
|
|
Stock Price | |
|
|
Underlying | |
|
Granted to | |
|
Exercise | |
|
|
|
Appreciation | |
|
|
Options | |
|
Employees | |
|
or Base | |
|
|
|
for Option Term(2) | |
|
|
Granted(3) | |
|
in Fiscal | |
|
Price | |
|
Expiration | |
|
| |
Name |
|
(#) | |
|
Year | |
|
($/Share) | |
|
Date | |
|
5%($) | |
|
10%($) | |
| |
Lloyd L. Hill
|
|
|
35,250 |
|
|
|
1.1 |
% |
|
$ |
28.91 |
|
|
|
03/01/12 |
|
|
$ |
414,867 |
|
|
$ |
966,816 |
|
|
Lloyd L. Hill
|
|
|
35,250 |
|
|
|
1.1 |
|
|
|
27.40 |
|
|
|
03/01/12 |
|
|
|
376,766 |
|
|
|
872,122 |
|
|
Lloyd L. Hill
|
|
|
35,250 |
|
|
|
1.1 |
|
|
|
21.65 |
|
|
|
03/01/12 |
|
|
|
284,734 |
|
|
|
654,630 |
|
|
Lloyd L. Hill
|
|
|
35,250 |
|
|
|
1.1 |
|
|
|
23.22 |
|
|
|
03/01/12 |
|
|
|
291,794 |
|
|
|
666,395 |
|
|
David L. Goebel
|
|
|
21,750 |
|
|
|
0.7 |
|
|
|
28.91 |
|
|
|
03/01/12 |
|
|
|
255,982 |
|
|
|
596,546 |
|
|
David L. Goebel
|
|
|
21,750 |
|
|
|
0.7 |
|
|
|
27.40 |
|
|
|
03/01/12 |
|
|
|
232,473 |
|
|
|
538,117 |
|
|
David L. Goebel
|
|
|
21,750 |
|
|
|
0.7 |
|
|
|
21.65 |
|
|
|
03/01/12 |
|
|
|
175,687 |
|
|
|
403,921 |
|
|
David L. Goebel
|
|
|
21,750 |
|
|
|
0.7 |
|
|
|
23.22 |
|
|
|
03/01/12 |
|
|
|
180,043 |
|
|
|
411,180 |
|
|
Steven K. Lumpkin
|
|
|
14,125 |
|
|
|
0.4 |
|
|
|
28.91 |
|
|
|
03/01/12 |
|
|
|
166,241 |
|
|
|
387,412 |
|
|
Steven K. Lumpkin
|
|
|
14,125 |
|
|
|
0.4 |
|
|
|
27.40 |
|
|
|
03/01/12 |
|
|
|
150,974 |
|
|
|
262,316 |
|
|
Steven K. Lumpkin
|
|
|
14,125 |
|
|
|
0.4 |
|
|
|
21.65 |
|
|
|
03/01/12 |
|
|
|
114,096 |
|
|
|
267,031 |
|
|
Steven K. Lumpkin
|
|
|
14,125 |
|
|
|
0.4 |
|
|
|
23.22 |
|
|
|
03/01/12 |
|
|
|
116,924 |
|
|
|
349,467 |
|
|
John C. Cywinski
|
|
|
13,375 |
|
|
|
0.4 |
|
|
|
28.91 |
|
|
|
03/01/12 |
|
|
|
157,414 |
|
|
|
366,843 |
|
|
John C. Cywinski
|
|
|
13,375 |
|
|
|
0.4 |
|
|
|
27.40 |
|
|
|
03/01/12 |
|
|
|
142,958 |
|
|
|
330,911 |
|
|
John C. Cywinski
|
|
|
13,375 |
|
|
|
0.4 |
|
|
|
21.65 |
|
|
|
03/01/12 |
|
|
|
108,037 |
|
|
|
248,388 |
|
|
John C. Cywinski
|
|
|
13,375 |
|
|
|
0.4 |
|
|
|
23.22 |
|
|
|
03/01/12 |
|
|
|
110,716 |
|
|
|
252,852 |
|
|
Louis A. Kaucic
|
|
|
10,625 |
|
|
|
0.3 |
|
|
|
28.91 |
|
|
|
03/01/12 |
|
|
|
125,049 |
|
|
|
291,417 |
|
|
Louis A. Kaucic
|
|
|
10,625 |
|
|
|
0.3 |
|
|
|
27.40 |
|
|
|
03/01/12 |
|
|
|
113,564 |
|
|
|
262,873 |
|
|
Louis A. Kaucic
|
|
|
10,625 |
|
|
|
0.3 |
|
|
|
21.65 |
|
|
|
03/01/12 |
|
|
|
85,824 |
|
|
|
197,317 |
|
|
Louis A. Kaucic
|
|
|
10,625 |
|
|
|
0.3 |
|
|
|
23.22 |
|
|
|
03/01/12 |
|
|
|
87,952 |
|
|
|
200,864 |
|
|
Carin L. Stutz
|
|
|
10,000 |
|
|
|
0.3 |
|
|
|
28.91 |
|
|
|
03/01/12 |
|
|
|
117,693 |
|
|
|
274,275 |
|
|
Carin L. Stutz
|
|
|
10,000 |
|
|
|
0.3 |
|
|
|
27.40 |
|
|
|
03/01/12 |
|
|
|
106,884 |
|
|
|
247,410 |
|
|
Carin L. Stutz
|
|
|
10,000 |
|
|
|
0.3 |
|
|
|
21.65 |
|
|
|
03/01/12 |
|
|
|
80,776 |
|
|
|
185,710 |
|
|
Carin L. Stutz
|
|
|
10,000 |
|
|
|
0.3 |
|
|
|
23.22 |
|
|
|
03/01/12 |
|
|
|
82,778 |
|
|
|
189,048 |
|
|
|
|
(1) |
Options are granted at the fair market value on the date of
grant. |
|
(2) |
The assumed rates are compounded annually for the full terms of
the options. |
|
(3) |
Options vest on March 1, 2008. The option agreements have a
provision that extends the cancellation date of the options and
allows for the continued vesting of any unvested options under
the terms of the Executive Retirement Plan. These agreements
also include a provision that would provide that the impact of a
change in control shall be as set forth in any change in control
or employment agreement with the Company. Upon approval by the
Committee, the options are transferable to certain family
members. |
21
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
Value of |
|
|
|
|
|
|
Underlying |
|
Unexercised |
|
|
|
|
|
|
Unexercised Options |
|
In-The-Money Options |
|
|
|
|
|
|
at 12/25/05 |
|
at 12/25/05(2) |
|
|
Shares | |
|
|
|
(#) |
|
($) |
|
|
Acquired | |
|
Value | |
|
|
|
|
|
|
at Exercise | |
|
Realized(1) | |
|
Exercisable/ |
|
Exercisable/ |
Name |
|
(#) | |
|
($) | |
|
Unexercisable |
|
Unexercisable |
|
Lloyd L. Hill
|
|
|
225,000 |
|
|
$ |
2,668,163 |
|
|
/515,998 |
|
/$1,918,870 |
|
David L. Goebel
|
|
|
|
|
|
|
|
|
|
73,125/203,248 |
|
$756,217/ 573,025 |
|
Steven K. Lumpkin
|
|
|
73,125 |
|
|
|
989,804 |
|
|
/191,498 |
|
/ 699,239 |
|
John C. Cywinski
|
|
|
|
|
|
|
|
|
|
307,248/188,498 |
|
3,392,505/ 694,822 |
|
Louis A. Kaucic
|
|
|
|
|
|
|
|
|
|
305,063/139,998 |
|
3,804,842/ 1,224,759 |
|
Carin L. Stutz
|
|
|
|
|
|
|
|
|
|
56,250/114,998 |
|
568,378/ 401,142 |
|
|
|
(1) |
Market value less option price. |
|
(2) |
Based upon the closing sale price of our common stock on
December 25, 2005 (the last trading day in fiscal year
2005). |
Employment Agreements and Change in Control Arrangements
We have written employment agreements with Mr. Hill,
Mr. Goebel and Mr. Lumpkin. Each of the employment
agreements provides for periodic salary adjustments as
determined by the Executive Compensation Committee.
Mr. Hills agreement was for an original term of one
year, expiring in January 1995, and automatically renews for
successive one-year terms unless otherwise terminated as
provided in the agreement. The agreement provides for a base
salary which may be periodically increased by the Executive
Compensation Committee and participation in the Companys
executive bonus plan for vice presidents as well as additional
bonuses as determined by the Executive Compensation Committee.
Additionally, the agreement sets forth certain obligations with
regard to maintaining confidential information and ownership of
any discoveries. We also entered into a severance and
noncompetition agreement with Mr. Hill which provides for
vesting of unvested options and restricted stock and a
continuation of salary, bonus and benefits for a period of three
years following certain triggering events, including
termination by the Company without cause or termination by
Mr. Hill if the Company substantially reduces his
compensation, benefits, or duties or requires a relocation from
the Kansas City area. If the three-year severance payments are
due, Mr. Hill will be bound by a three-year noncompete. If
the severance payments are not due, the Company can elect to
impose a one-year noncompete on Mr. Hill if it pays him 50%
of his base salary. Currently, the three-year cash severance
payments would total approximately $2,500,000.
Mr. Goebel entered into an employment agreement with a
three-year term commencing on January 3, 2006, and
automatically renews for additional one-year terms unless
otherwise terminated as provided in the agreement.
Mr. Goebel will receive an initial annual base salary of
$550,000 and a 2006 target bonus of 100% of his annual base
salary, which may be increased by the Board in its sole
discretion. The agreement also provides for additional
compensation and bonuses as may be determined in the sole
discretion of the Board. In the event of a termination by the
Company without cause or by Mr. Goebel for good reason, he
will receive monthly severance payments, for a period of
24 months, equal to
1/12
of his base salary and
1/12
of the greater of the average of his actual bonus for
the preceding three fiscal years or his target bonus for the
fiscal year in which termination occurred, multiplied by the
average percentage of bonus attainment over the preceding three
fiscal years. All outstanding stock options and stock
appreciation rights will fully vest and all restrictions will be
removed from any restricted stock grants. He would also be
entitled to payment under the Companys FlexPerx program
and the Companys matching portion of his Non-Qualified
Deferred Compensation Plan or other retirement arrangement.
Mr. Goebel would be subject to certain noncompetition and
nonsolicitation obligations. Currently, the cash cost to the
Company of severance benefits due Mr. Goebel would total
approximately $1,700,000.
22
If Mr. Goebel does not continue as an employee following an
expiration of the Employment Agreement, the Company may elect to
make the severance payments described above, which the Company
may extend for an additional 12 months in its sole
discretion. Mr. Goebel would be subject to the
noncompetition and nonsolicitation obligations.
If Mr. Goebels employment is terminated for any
reason following a change in control, he would be entitled to a
lump sum payment equal to (i) two times the sum of his base
salary plus (ii) the greater of (A) the average of his
actual bonus for the preceding three fiscal years or
(B) his target bonus amount for the fiscal year in which
termination occurs, multiplied by the average percentage bonus
attainment over the preceding three fiscal years. He would also
be entitled to the other equity vesting and benefit payments
described above and would be subject to a
24-month noncompetition
obligation. Currently, the cash cost to the Company of change in
control benefits due Mr. Goebel would total approximately
$1,700,000.
Mr. Lumpkin entered into an employment agreement with a
three-year term commencing on January 3, 2006 which
supersedes his prior employment agreement. The terms are
substantially the same as Mr. Goebels employment
agreement except that Mr. Lumpkins initial annual
base salary is $475,000 and his target bonus for 2006 is 85% of
his annual base salary. Mr. Lumpkin also received a grant
of 150,000 options on January 11, 2006. Currently, the cash
cost to the Company of severance benefits or change in control
benefits due Mr. Lumpkin would total approximately
$1,600,000.
Mr. Cywinski is a party to a change in control and
noncompete agreement. The agreement has a term of two years and
shall automatically be extended thereafter for additional
one-year terms. If Mr. Cywinski is terminated within
18 months following a change in control, either without
cause or by Mr. Cywinski for good reason, he will receive a
lump sum cash payment equal to up to two times the base salary
in effect plus the greater of the average of the
executives bonus for the three preceding fiscal years and
the target bonus for the current fiscal year, be entitled to
continuing health coverage, and have immediate vesting of any
unvested stock options and restricted stock. The agreement also
contains a confidentiality and nonsolicitation provision and a
twelve month noncompete provision. Currently, the cash cost to
the Company of the change in control benefits due
Mr. Cywinski would total approximately $900,000.
Ms. Stutz is a party to a change in control and noncompete
agreement which has a three-year term at which time it would
automatically extend for additional terms of one year. In the
event of a change in control, if Ms. Stutz is terminated
within 18 months without cause or if she terminates for
good reason, she will be eligible for lump sum cash payments
equal to up to two times the sum of her base salary plus the
greater of the average of her bonus for the preceding three
fiscal years or her target bonus for the current fiscal year,
continued coverage under Company health plans and immediate
vesting of any stock options and restricted stock awards. If
eligible, she will also receive benefits under the
Companys executive retirement plan. The agreement also
contains a one year noncompete provision and a confidentiality
and nonsolicitation provision. Currently, the cash cost to the
Company of the change in control benefits due Ms. Stutz
would total approximately $700,000. If, absent a change in
control, Ms. Stutz is terminated without cause and the
Company determines to impose the noncompetition and
nonsolicitation obligations, Ms. Stutz would be entitled to
cash severance payments in an amount equal to her then current
annual base salary.
Mr. Kaucic was no longer an executive officer in December
2005 and retired as of January 3, 2006. Under the terms of
his Memorandum of Understanding with the Company, as amended, he
is entitled to equity grants in fiscal 2006 commensurate with
his previous position and is eligible to participate in the
Flexperx program in fiscal 2006. All other obligations of the
Company to Mr. Kaucic under this agreement or the
Companys standard change in control agreement have been
terminated.
Currently, we have change in control arrangements with other
officers of the Company, which provide certain benefits in the
event the officer resigns or is terminated following a change in
control of the Company. The agreements have either two or
three-year terms at which time they automatically extend for
additional terms of one year each. During the term of the
agreement, the officer is eligible for a lump sum payment in the
event the employee resigns or is terminated following a change
in control of the Company. To become eligible for the change in
control benefits, a change in control of the Company must occur
and the officers employment with the Company (or its
successor) must be terminated within a time period specified in
the respective agreement following the change in control either
by the Company without cause or by the officer for good reason.
Additionally, several of the
23
agreements set forth certain obligations with regard to
noncompetition, nonsolicitation, maintaining confidential
information and ownership of any discoveries. If these officers
had been terminated as a result of a change in control, the cash
cost to the Company of benefits would total approximately
$8,250,000.
Executive Retirement Plan
We maintain the Applebees International, Inc. Executive
Retirement Plan, pursuant to which eligible officers of the
Company who enroll in this plan and who fulfill the obligations
imposed by the plan will receive certain benefits from the
Company following retirement. An officer is eligible to retire
under the Plan if his or her age is 50 or above, his or her age
plus years of service with the Company equal at least 60, the
officer has served as an officer of the Company for at least 60
full consecutive months, and the officer has both enrolled in
the plan and signed either an employment agreement or an updated
Change in Control and NonCompete Agreement. This Change in
Control and NonCompete Agreement would supercede any previous
agreement and would provide for a lump sum payment in the event
the officer resigns with good reason (as defined) or is
terminated by the Company without cause (as defined) following a
change in control of the Company in amounts up to two times the
sum of the officers annual base salary plus the greater of
(i) the officers average bonus for the three
preceding fiscal years or (ii) the officers target
bonus for the fiscal year in which his or her employment
terminates. This agreement would also provide for (i) up to
two years continued participation in a Company health plan
at Company expense, (ii) immediate vesting of any unvested
options, restricted shares and other equity compensation issued
after January 1, 2004, and (iii) impose
confidentiality, noncompetition, employee nonsolicitation and
intellectual property obligations. In the event of the
executives employment is terminated by the Company without
cause absent a change in control, to entice the noncompetition
obligation, the Company would provide benefits equal to the
amount that the officer would have received under the
Companys severance policy if the officers position
had been eliminated. To receive retirement benefits, the officer
must provide at least six months prior written notice of his or
her retirement and execute both a release of claims against the
Company and a noncompete and nonsolicitation agreement.
An officer who retires under this plan is entitled to
(i) continued group health coverage under a plan sponsored
by the Company at the officers expense,
(ii) continued vesting of options and restricted stock and
continued exercisability of options with respect to options and
restricted stock issued after January 1, 2004,
(iii) payment of a prorated target bonus for the year of
retirement, (iv) the right to elect an extended payout for
deferred compensation, and (v) continued participation in
certain benefits of the Companys perquisites plan for
officers.
This Plan may not be amended or terminated until on or after
April 1, 2007. Also, this Plan may not be amended with
respect to a particular person after that person becomes
eligible (as defined) to retire (as defined), or during the
18-month period
following a change in control (as defined). Presently, three
officers are retired under this Plan and six additional officers
are eligible for retirement.
Executive Health Plan
We maintain the Applebees International, Inc. Executive
Health Plan, pursuant to which the Company will provide eligible
officers of the Company and retired officers who elect to
participate in the Executive Retirement Plan with group health
coverage. The terms and cost of the coverage will be determined
by the Company and may vary from participant to participant.
FlexPerx Program
Effective January 2005, the Board of Directors approved the
Applebees International, Inc. FlexPerx Program, which
provide annual cash payments to officers of the Company based
upon the officers responsibilities. The program is
intended to promote health and foster a balanced lifestyle. The
benefits may be used at the sole discretion of the officer and
may be used for things such as health expenses, financial
planning expenses and other perquisites. There are four benefit
levels: (i) Chief Executive Officer is eligible to receive
$13,500 per year; (ii) Senior Team members are
eligible to receive $8,500 per year; (iii) Executive
Vice Presidents and Senior Vice Presidents are eligible to
receive $6,000 per year; and (iv) Vice Presidents are
eligible to receive $3,500 per year.
24
Deferred Compensation Plan
We maintain the Applebees International, Inc. Non
Qualified Deferred Compensation Plan pursuant to which eligible
employees can elect to defer up to 50% of their base salary, up
to 100% of any cash bonuses, and up to 100% of any compensation
that we cannot deduct as a result of section 162(m) of the
Internal Revenue Code. We make a matching contribution on behalf
of each participant equal to the matching contribution that we
would have made if the participant had deferred the amounts to
our qualified section 401(k) plan. A participant is always
100% vested in his or her deferral and matching contributions.
The participant may select from among a number of investment
alternatives to measure the investment earnings on his or her
deferrals. Generally, a participant will receive the balance of
his or her account upon termination of employment or, if
earlier, immediately following a change in control of us (as
defined in the plan). A participant may request an earlier
distribution in the event of an unforseeable financial
emergency. The plan is being operated in accordance with
section 409A of the Code and will be amended to reflect
section 409A of the Code by December 31, 2006.
Certain Indemnification Agreements
We have entered into Indemnification Agreements with each of our
directors and officers. Under the Indemnification Agreements, we
have agreed to hold harmless and indemnify each indemnitee
generally to the full extent permitted by the Delaware General
Corporation Law and against any and all liabilities, expenses,
judgments, fines, penalties and costs in connection with any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative to
which the indemnitee is made a party by reason of the fact that
the indemnitee has, is or at the time becomes a director or
officer of the Company or any other entity at our request. The
indemnity does not cover liability arising out of fraudulent
acts, deliberate dishonesty or knowing misconduct, violations of
certain securities laws, or if a court determines that such
indemnification is not lawful. In addition, our by-laws provide
indemnification to all our officers and directors to essentially
the same extent as provided in the indemnification agreements.
We presently carry director and officer liability insurance to
insure our directors and officers against certain liabilities
they might incur in connection with performing their duties for
us. If we become obligated to indemnify an officer or director
for an act which is covered by that insurance, we would be able
to recover the amount of the indemnification from the insurance
proceeds up to the amount of coverage. The insurance, however,
does not cover all liabilities that could give rise to
indemnification by us.
Equity Compensation Plan Information
The following table gives information about our common stock
that may be issued upon the exercise of options, warrants and
rights as of December 25, 2005 under the Amended and
Restated 1995 Equity Incentive Plan and the 1999 Employee
Incentive Plan and that may be purchased under our Employee
Stock Purchase Plan and Executive Nonqualified Stock Purchase
Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Number of | |
|
|
|
(a) Number of | |
|
|
|
|
|
securities remaining | |
|
|
|
securities to be | |
|
|
(b) Weighted | |
|
|
available for future | |
|
|
|
issued upon | |
|
|
average exercise | |
|
|
issuance under | |
|
|
|
exercise of | |
|
|
price of | |
|
|
equity compensation | |
|
|
|
outstanding | |
|
|
outstanding | |
|
|
plans (excluding | |
|
|
|
options, warrants | |
|
|
options, warrants | |
|
|
securities reflected | |
Plan Category |
|
|
and rights | |
|
|
and rights | |
|
|
in column (a)) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plans Approved by Stockholders
|
|
|
|
7,365,933 |
(1) |
|
|
|
$21.33 |
|
|
|
|
3,552,836 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plans Not Approved by Stockholders
|
|
|
|
664,656 |
(3) |
|
|
|
$13.73 |
|
|
|
|
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
8,030,589 |
|
|
|
|
|
|
|
|
|
3,552,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
(1) |
Issued under the Amended and Restated 1995 Equity Incentive Plan. |
|
(2) |
Includes 412,506 shares of common stock reserved for
issuance under the Employee Stock Purchase Plan and Executive
Nonqualified Stock Purchase Plan. Adjusted for a three-for-two
stock split in June, 2004. |
|
(3) |
Issued under the 1999 Employee Incentive Plan. No further
options or other awards are being granted under this plan. See
the description below of the 1999 Employee Incentive Plan.
Adjusted for a three-for-two stock split in June, 2004. |
1999 Employee Incentive Plan
In May 1999, our Board of Directors approved the Applebees
International, Inc. 1999 Employee Incentive Plan, pursuant to
which nonqualified stock options have been granted to our
employees who are not officers or directors. As of
December 25, 2005, options to acquire 664,656 shares
were outstanding under this plan, out of the
2,473,875 shares reserved for issuance. The Company also
granted 50,436 shares of restricted stock awards under this
plan.
The purpose of this plan was to promote our success by linking
the personal interests of our non-executive employees to those
of our stockholders and by providing participants with an
incentive for outstanding performance. The plan is administered
by the Executive Compensation Committee. The plan authorized the
granting of nonqualified stock options, restricted stock, stock
appreciation rights and performance units or shares. The
exercise price of an option may not be less than the fair market
value of the underlying stock on the date of grant and no option
may have a term of more than ten years. The options that are
currently outstanding under the plan generally vest over a two-
or three-year period beginning on the grant date and expire ten
years from the date of grant.
The terms of any other awards under the plan are generally at
the discretion of the Executive Compensation Committee. In the
event of a change in control of the Company, all outstanding
awards vest and become immediately exercisable, unless otherwise
determined by the Board of Directors with respect to any
particular event which would constitute a change in control.
This plan is not required to be and has not been submitted to
our stockholders for approval and the Board of Directors may
amend or terminate the plan without stockholder approval, but no
amendment or termination of the plan or any award agreement may
adversely affect any award previously granted under the plan
without the written consent of the participant. No additional
options are being granted under this plan and the Board will not
approve an increase in the authorization of this Plan beyond the
current authorization.
Compensation Committee Interlocks and Insider
Participation
During fiscal 2005, none of our executive officers served on the
board of directors of any entities whose directors or officers
served on our Executive Compensation Committee. No current or
past executive officers or employees of the Company serve on our
Executive Compensation Committee. The following directors served
as members of the Executive Compensation Committee during 2005:
Ms. Belton, Mr. Conant, Mr. Volkema and
Mr. Sack.
CERTAIN TRANSACTIONS
The Company had no reportable relationships or transactions in
fiscal 2005.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our officers, directors, and persons who own more than
10% of the common stock to file certain reports of ownership and
changes in ownership with the SEC and to furnish us with copies
of all such reports.
Based on our review of the copies of the reports we received and
other written communication, we believe that our officers,
directors, and greater-than-10% beneficial owners complied with
all filing requirements during the fiscal year ended
December 25, 2005, with the exception of the recipients of
a standard quarterly equity grant. Mr. Hill,
Mr. Lumpkin, Mr. Goebel, Mr. Cywinski,
Mr. Czinege, Mr. Parsley, Ms. Stutz,
Ms. Tilden, Ms. Elving, Ms. DiRaimo, Mr. St.
George, Mr. Sword and Mr. Kaucic each inadvertently
failed to timely file a report with respect to this grant. This
grant was reported on a Form 4 for each individual that was
filed one day late.
26
AUDIT COMMITTEE REPORT
During fiscal 2005, in accordance with its written charter, the
Audit Committee of the Board of Directors was responsible for
the oversight of the accounting and financial reporting
processes of the Company and the audit of the Companys
financial statements. The Audit Committee charter adopted by the
Board of Directors complies with all applicable provisions of
The Nasdaq Stock Market listing standards. The charter is
attached as Appendix A hereto. Each of the members of the
Audit Committee meets the independence and experience
requirements of The Nasdaq Stock Market and the independence
requirements of the Sarbanes-Oxley Act of 2002. During fiscal
year 2005, the Audit Committee met fourteen times. In addition,
the Audit Committee Chair, as representative of the Audit
Committee, and one or more of the Audit Committee members,
discussed the interim financial information contained in each
quarterly earnings announcement with the Chief Financial Officer
and the Auditors prior to public release.
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained from the Auditors the
written disclosures and the letter describing all relationships
between the Auditors and the Company that might bear on the
Auditors independence consistent with Independence
Standards Board Standard No. 1, Independence
Discussions with Audit Committees, discussed with the
Auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the Auditors
independence. The Audit Committee also discussed with
management, the internal auditors and the Auditors, with and
without management present, the quality and adequacy of the
Companys internal controls and the internal audit
functions organization, responsibilities and staffing. The
Audit Committee reviewed with both the Auditors and the internal
auditors their audit plans, audit scope and identification of
audit risks.
The Audit Committee discussed and reviewed with the Auditors all
communications required by generally accepted auditing
standards, including those described in Statement on Auditing
Standards No. 61, as amended, Communication with
Audit Committees and discussed and reviewed the results of
the Auditors examination of the financial statements. The
Audit Committee also discussed the results of the internal audit
examinations. In accordance with its charter, the Audit
Committee pre-approves all non-audit services provided by the
Auditors.
The Audit Committee reviewed and discussed the audited financial
statements for the Company as of and for the fiscal year ended
December 25, 2005, with management and the Auditors.
Management has the responsibility for the preparation of the
Companys financial statements and the Auditors have the
responsibility for the examination of those statements.
Based on the above-mentioned review and discussion with
management and the Auditors, the Audit Committee recommended to
the Board of Directors that the Companys audited financial
statements be included in its Annual Report on
Form 10-K for the
fiscal year ended December 25, 2005, for filing with the
Securities and Exchange Commission.
After reviewing the services provided by the Auditors, including
all non-audit services, the Audit Committee, in accordance with
its charter, authorized the reappointment, subject to
stockholder ratification, of the Auditors.
|
|
|
AUDIT COMMITTEE |
|
Eric L. Hansen, Chairman |
|
D. Patrick Curran |
|
Jack P. Helms |
|
Michael A. Volkema |
27
FEES AND SERVICES OF DELOITTE & TOUCHE LLP
Aggregate fees billed to the Company during fiscal years 2005
and 2004 by the Companys principal accounting firm,
Deloitte & Touche LLP, the member firms of Deloitte
Touche Tohmatsu, and their respective affiliates, which includes
Deloitte Consulting (collectively Deloitte &
Touche) were as follows:
|
|
|
|
|
|
|
|
|
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Audit Fees
|
|
$ |
923,000 |
|
|
$ |
976,000 |
|
Audit-Related Fees
|
|
|
21,000 |
|
|
|
19,000 |
|
|
|
|
|
|
|
|
Total Audit and Audit-Related Fees
|
|
|
944,000 |
|
|
|
995,000 |
|
Tax Fees
|
|
|
124,000 |
|
|
|
136,000 |
|
All Other Fees
|
|
|
|
|
|
|
3,000 |
|
|
|
|
|
|
|
|
Total Fees
|
|
$ |
1,068,000 |
|
|
$ |
1,134,000 |
|
|
|
|
|
|
|
|
Audit-related fees consisted primarily of fees for the audit of
the Companys benefit plans and other miscellaneous
audit-related fees. In 2005 and 2004, tax fees consisted
primarily of services for tax compliance and planning. All other
fees in 2004 represent payments for assistance in preparation of
a management seminar. The Audit Committee has considered whether
the provision of these services is compatible with maintaining
the principal accountants independence. The Audit
Committee pre-approves fees for all audit and non-audit services
provided by Deloitte & Touche as presented and prior to
any work being performed. The Audit Committees
pre-approval policies allow management to engage
Deloitte & Touche for audit-related matters up to an
aggregate of $25,000 annually, upon contemporaneous notice given
to the Committee Chairman. All audit related fees in 2004 and
2005 were approved in accordance with the Audit Committees
policies.
PROPOSAL 2
APPROVAL OF THE APPLEBEES INTERNATIONAL, INC.
2001 SENIOR EXECUTIVE BONUS PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS
PROPOSAL
We are asking you to approve the Applebees International,
Inc. 2001 Senior Executive Bonus Plan, as amended (the
Plan). The 2001 Plan was initially approved by the
stockholders on May 10, 2001 for qualification under
section 162(m) of the Internal Revenue Code of 1986, as
amended. In order to remain in compliance with
section 162(m), reapproval of the Plan in its current form
is necessary at this meeting. A summary of the Plan is set forth
below.
Background For Proposal 2: Reason For Seeking
Stockholder Approval
The Board of Directors is seeking stockholder approval of the
Plan so that we may continue to utilize a cash bonus plan to
attract and retain senior executives and so that amounts paid
under the plan will be deductible for federal income tax
purposes pursuant to section 162(m) of the Internal Revenue
Code of 1986, as amended. Stockholder approval relates only to
the qualification of the Plan under section 162(m).
Summary of the 2001 Plan
The following is a summary of the principal features of the Plan
and its operation. The summary is not a complete description of
all of the Plans provisions and is qualified in its
entirety by reference to the Plan, a copy of which is attached
as Appendix B hereto.
28
Purpose. The Plan is intended to provide a means
of rewarding participants based on our performance. Specifically
it is intended:
|
|
|
|
|
to attract, motivate, reward, and retain key senior executives; |
|
|
|
to strengthen key senior executives commitment to the
success of Applebees; and |
|
|
|
to align the interests of key senior executives with those of
our stockholders by providing additional compensation based on
the achievement of performance objectives. |
Administration. The Plan will be administered by a
committee appointed by the Board of Directors consisting solely
of outside directors as that term is defined within
the regulations implemented under section 162(m).
Eligibility. The individuals eligible to
participate in the Plan include the following:
|
|
|
|
|
Chairman of the Board; |
|
|
|
Chief Executive Officer; |
|
|
|
President; |
|
|
|
Chief Operating Officer; |
|
|
|
Division President; |
|
|
|
Executive Vice President; or |
|
|
|
Senior Vice President. |
Currently, 12 persons would be eligible to participate. Future
awards under the Plan are discretionary and cannot be determined
at this time. In the past, only the Chief Executive Officer has
participated in the Plan. Bonuses paid to the Chief Executive
Officer for fiscal 2003 2005 are set forth in the
Summary Compensation Table. Other eligible executives may
participate in the Plan in the future at the discretion of the
committee.
Maximum Bonus Amount. The maximum annual amount of
compensation that may be paid to a participant under the Plan is
$1,500,000 per year. All amounts payable shall be paid in a
single lump sum in the period following the period for which the
performance goals are established.
Performance Goals. Awards to participants will be
based on performance goals, which shall provide for a targeted
level or levels of achievement using one or more of the
following predetermined measurements as determined either on a
Company-wide basis or with respect to any one or more business
units:
|
|
|
|
|
earnings (either in the aggregate or on a per-share basis); |
|
|
|
company, franchise or system comparable store sales; |
|
|
|
company, franchise or system traffic growth; |
|
|
|
net income (before or after taxes); |
|
|
|
operating income; |
|
|
|
restaurant margin before pre-opening expense; |
|
|
|
cash flow; |
|
|
|
return measures (including return on assets, equity or sales); |
|
|
|
earnings before or after taxes, and before or after depreciation
and amortization; |
|
|
|
gross revenues; |
|
|
|
share price of our stock (including growth measures and total
stockholder return or attainment by the shares of a specified
value for a specified period of time); |
|
|
|
reductions in expense levels; |
|
|
|
net economic value; |
29
|
|
|
|
|
market share or related strength of brand measures related to
consumer perception, including but not limited to brand
relevance and guest satisfaction, in each case based on
objective data such as guest or market surveys; or |
|
|
|
retention of Company associates in general or in any specific
category or level of employment. |
The performance goals may differ from participant to participant
and from award to award. The specific performance goals for a
given period will be established in writing by the committee on
or before the latest date permissible to enable the award to
qualify as performance-based compensation under
section 162(m).
Beneficiaries. Each participant shall have the
right to designate a beneficiary to succeed to his or her right
to receive payments under the Plan in the event of his death. If
the participant fails to designate a beneficiary or upon the
death of a designated beneficiary without a designated
successor, payments shall be made to the participants
estate.
Interpretation of Plan. The committee shall have
the authority to interpret all provisions of the Plan, including
determining participant eligibility, annual recipients of award
payments, and the amount of any award payments to be made.
Withholding. Prior to the delivery of any payment
pursuant to the Plan, we shall have the right to deduct or
withhold or require a participant to remit to us an amount
sufficient to satisfy Federal state and local taxes required to
be withheld with respect to such delivery.
Tax Aspects. Applebees will be entitled to a
tax deduction for an award in an amount equal to the ordinary
income realized by the participant at the time the participant
recognizes such income. In addition, section 162(m)
contains special rules regarding the federal income tax
deductibility of compensation paid to the Chief Executive
Officer and to each of the other four most highly compensated
executive officers. The general rule is that annual compensation
paid to any of these specified executives will be deductible
only to the extent that it does not exceed $1 million.
Applebees can preserve the deductibility of certain
compensation in excess of $1 million, however, if we comply
with conditions imposed by section 162(m). The Plan has
been designed to permit the committee to grant awards that
satisfy the requirements of section 162(m).
Amendment of Plan. Applebees may, at its
discretion, amend or terminate the Plan at any time provided,
however, that no amendment or termination of the Plan may affect
any prior award.
PROPOSAL 3
RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE 2006 FISCAL YEAR
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS
PROPOSAL
The Audit Committee has selected the accounting firm of
Deloitte & Touche LLP to serve as our independent
registered public accounting firm for the 2006 fiscal year. This
proposal asks you to ratify this selection. Representatives of
Deloitte & Touche LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a
statement at the Annual Meeting if they wish, and they will be
available to answer any questions you may have.
PROPOSAL 4
SHAREHOLDER PROPOSAL
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS
PROPOSAL
People for the Ethical Treatment of Animals (PETA), 501 Front
St., Norfolk, Va., 23510, beneficial owner of 142 shares of
Common Stock, has notified the Company that it intends to
present a resolution at the Annual Meeting. As required by the
Securities and Exchange Commission, the resolution is included
below exactly as submitted. The Board of Directors and the
Company accept no responsibility for the proposed resolution and
supporting statement.
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For the reasons stated in the Statement of Opposition below, the
Board of Directors recommends that you vote AGAINST this
Shareholder Proposal.
PETAs Shareholders Resolution
WHEREAS, on its Web site, Applebees International,
Inc. (Applebees), makes no mention of animal
welfare policies or standards; and
WHEREAS, consumers consider animal welfare when making
dining choices; and
WHEREAS, Applebees competitors
including Dennys recognize the need for humane
slaughter methods to keep their competitive advantages and are
particularly committed to improving conditions in their poultry
suppliers slaughterhouses; and
WHEREAS, Applebees purchases chickens from
suppliers that use the outdated method of electrical stunning,
in which the birds legs are snapped into metal shackles
and the birds are shocked with an electric current, have their
throats slit, and are dropped into tanks of scalding-hot water
so that birds are often still conscious when they suffer this
hideous cruelty; and
WHEREAS, Applebees has yet to make notable progress
on implementing the new USDA-approved method of poultry
slaughter called controlled-atmosphere killing
(CAK), which replaces the oxygen that birds are breathing with
inert gasses, gently and effectively putting them to
sleep; and
WHEREAS, a report commissioned by McDonalds
(the report) concurred that CAK is, as animal
welfare experts have described it, the most humane method of
poultry slaughter ever developed and admitted that CAK has
advantages [over electrical stunning] from both an animal
welfare and meat quality perspective...obviates potential
distress and injury. . .can expeditiously and
effectively stun and kill broilers with relatively low rates of
aversion or other distress and would eliminate the pain of
premature shocks and inadequate stunning that are associated
with electrical stunning; and
WHEREAS, the report further concludes that
McDonalds European suppliers that use CAK have experienced
improvements in bird handling, stunning efficiency, working
conditions, and meat yield and quality; and
WHEREAS, although CAK is optimal for both the birds
well-being and for profit, Applebees has yet to implement
it or show any signs of progress toward that end; and
WHEREAS, while McDonalds, Burger King,
Dennys, and others continue to make progress toward
adopting the technology and it continues to be used in Europe
(as it has been for nearly a decade), Applebees has yet to
show its shareholders what it is doing to gain the competitive
advantage of adopting this humane slaughter technology.
NOW, THEREFORE, BE IT RESOLVED that shareholders request
that the Board of Directors issue interim reports to
shareholders following the second, third, and fourth quarters of
2006 detailing the progress made toward accelerating the
development of CAK.
Board of Directors Statement in Opposition of the
Proposal
Your Company, Applebees International, Inc., is committed
to the proper and humane handling of all animals in its supply
chain. We require all of the Companys protein suppliers to
adhere strictly to the USDAs Humane Methods of Slaughter
Act. Applebees also has employed the consultative services
of Dr. Temple Grandin, one of the nations most
recognized leaders in animal welfare, to assist the Company in
strengthening its animal welfare program. The Company supports
the enhanced animal welfare guidelines developed by
Dr. Grandin, and those developed by the Food Marketing
Institute and the National Council of Chain Restaurants,
whichever are more stringent.
Applebees is not directly involved in the raising,
transportation or harvesting of animals but we take seriously
our responsibility as a purchaser. For that reason, the company
is constantly evaluating new and emerging
1 These
are the same improvements that Hormel Foods recently touted in a
letter to PETA describing CAK.
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technologies related to improving animal welfare including, but
not limited to, controlled-atmosphere stunning or CAS. In its
resolution, PETA refers to this process as CAK. PETA also refers
to a report commissioned by McDonalds on this method.
Your Company has reviewed the full text of the McDonalds
report which was prepared by four independent members of
McDonalds Board of Directors. Applebees strongly
agrees with the findings of the McDonalds report which
summarizes, Based on our review of McDonalds animal
welfare program and the CAS study, we have concluded that the
Companys current standards for animal welfare are
appropriate for the Companys global supply chain at this
time. We believe that the application of CAS in commercial
environments is still in the early stage of development, and
therefore, it is premature to make any commitment on future
actions at this time. Further, we believe it would be
speculative at best to attempt to quantify the economic effect
of this science on the Company or its suppliers at this
time. Applebees encourages all interested
shareholders to read the entire report which can be found at
http://www.mcdonalds.com/corp/invest/gov/mcd cr062905.html.
Like McDonalds and other leaders in the restaurant
industry, Applebees is committed to continuing to monitor
new technologies and, where and when appropriate, taking action
to further the humane treatment of all animals in our supply
chain.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS BELIEVES
THAT THIS PROPOSAL IS NOT IN THE BEST INTEREST OF THE
COMPANY AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST THIS PROPOSAL.
OTHER MATTERS
Incorporation by Reference
In our filings with the SEC, information is sometimes
incorporated by reference. This means that we are
referring you to information that has previously been filed with
the SEC, so the information should be considered as part of the
filing you are reading. Based on SEC regulations, the
Performance Graph of this Proxy Statement, the Audit
Committee Report and the Executive Compensation
Committee Report specifically are not incorporated by
reference into any other filings with the SEC.
Additional Meeting Information
We know of no other matters for stockholders to consider at the
Annual Meeting. If a stockholder properly presents any other
matter at the meeting, the persons named in the accompanying
proxy to vote on behalf of your shares will vote on that matter
in accordance with their best judgment.
We encourage each stockholder to attend the Annual Meeting.
Whether or not you plan to attend, we urge you to complete, sign
and return the enclosed proxy in the accompanying envelope. If
you would respond promptly, it would greatly assist us in making
arrangements for the meeting. We appreciate your cooperation. If
you attend the meeting, you may vote your shares in person even
if you sent in your proxy. You may obtain our Annual Report
on Form 10-K free
of charge through our website or upon written request sent to
our Corporate Secretary at our principal executive offices.
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By Order of the Board of Directors |
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Rebecca R. Tilden, Secretary |
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Applebees International, Inc. |
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4551 W. 107th Street |
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Overland Park, Kansas 66207 |
Overland Park, Kansas
April 11, 2006
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APPENDIX A
Applebees International, Inc.
Audit Committee Charter
Organization
There shall be a committee of the Board of Directors known as
the Audit Committee. The Audit Committee shall be composed of
three or more directors who meet all applicable independence
requirements of The Nasdaq Stock Market and the Sarbanes-Oxley
Act of 2002 and the rules promulgated thereunder (the
Act). No Audit Committee member may be an officer or
employee of the Company or any of its divisions or subsidiaries
and may not have participated in the preparation of the
financial statements of the Company or any current subsidiary of
the Company at any time during the past three years.
All members of the Audit Committee shall be able to read and
understand fundamental financial statements and at least one
member of the Audit Committee shall have past or current
employment experience in finance or accounting, requisite
professional certification in accounting, or any other
comparable experience or background which results in the
individuals financial sophistication, including having
been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities. In the
determination of the Board of Directors, at least one individual
shall meet the definition of audit committee financial
expert as set forth in the Act.
Statement of Policy
The purpose of the Audit Committee is to oversee the accounting
and financial reporting process of the Company and the audits of
the Companys financial statements. In so doing, it is the
responsibility of the Audit Committee to maintain free and open
means of communication between the directors, the independent
auditors, the Chief Financial Officer, the internal auditors,
and other members of management of the Company.
The Audit Committee has the authority to engage independent
counsel and other advisors it deems necessary to carry out its
duties. The Company shall provide any necessary funds to serve
this purpose.
Election
The members of the Audit Committee shall be elected by the Board
of Directors at the annual meeting of the Board of Directors to
serve a term of one (1) year or until their successors
shall be duly elected and qualified. The Board of Directors will
appoint a Chair to preside at the Audit Committee meetings and
schedule meetings as appropriate.
Responsibilities
In carrying out its responsibilities and serving its purpose,
the Audit Committee believes its policies and procedures should
remain flexible, in order to best react to changing conditions.
The Audit Committee has the ultimate authority and
responsibility to select, evaluate and, where appropriate,
replace the independent auditors (or to nominate the independent
auditors to be proposed for stockholder approval in any proxy
statement). To effect the foregoing, the Audit Committee shall
review the independence and effectiveness of the independent
auditors and annually approve the appointment of the independent
auditors to audit the financial statements of the Company and
its divisions and subsidiaries or approve any discharge of
independent auditors, if necessary. The independent auditors
shall report directly to the Audit Committee.
In addition, as necessary and appropriate, the Audit Committee
will:
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1. Be directly responsible for approving all audit services
and the compensation paid to the independent auditors and for
oversight of their work. |
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2. Implement procedures, separate or in conjunction with
other procedures and policies of the Company, for the receipt,
retention and treatment of complaints regarding accounting,
internal accounting controls and |
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auditing matters and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or
auditing matters. |
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3. Review and reassess, at least on an annual basis, the
adequacy of this Audit Committee Charter. |
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4. Ensure receipt from the independent auditors of a formal
written statement delineating all relationships between the
independent auditors and the Company, consistent with
Independence Standards Board No. 1. |
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5. Actively engage in a dialogue with the independent
auditors with respect to any disclosed relationships or services
that may impact the objectivity and independence of the
independent auditors. In considering independence, receive
confirmation that the independent auditors are independent
pursuant to Rule 2-01 of
Regulation S-X and
pursuant to any requirements of the Act. |
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6. Take appropriate action to oversee the independence of
the independent auditors. |
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7. Review the Companys earnings release prior to the
release of year-end earnings and audited financial statements
prior to filing the Companys Annual Report on
Form 10-K. |
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8. In connection with the Companys year-end
financials, discuss with financial management and independent
auditors significant issues regarding accounting principles,
practices, and judgments and any items required to be
communicated by the independent auditors in accordance with
Statement on Accounting Standards No. 61. Review all
reports required to be delivered by the independent auditors
under the Act. Discuss policies with respect to risk assessment
and risk management. Review separately with the independent
auditors any audit problems or difficulties in managements
response to issues. |
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9. Review, as appropriate, other material financial
information submitted to any governmental or public body,
including any certification, report, opinion, or review rendered
by the independent auditors. |
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10. Review the Companys quarterly financial results
prior to the release of quarterly earnings and prior to filing
the Companys Quarterly Report on
Form 10-Q. In
connection with the Companys interim financials, discuss
with financial management and independent auditors any
significant changes to the Companys accounting principals
and any items required to be communicated by the independent
auditors in accordance with Statement of Accounting Standards
No. 71. The Chair of the Audit Committee may represent the
entire Audit Committee for purposes of the quarterly review and
communication. |
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11. Following each audit by the independent auditors,
obtain from the independent auditors assurance that
Section 10A of the Private Securities Litigation Reform Act
of 1995 has not been implicated. |
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12. Approve the report of the Audit Committee required by
the rules of the SEC to be included in the Companys annual
proxy statement. |
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13. Oversee the publication of this Audit Committee Charter
at least every three years in the Companys annual proxy
statement in accordance with SEC regulations. |
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14. Meet with the independent auditors, the CFO and the
senior financial management of the Company to review the scope
of the proposed audit for the current year and the audit
procedures to be utilized, and at the conclusion thereof review
such audit, including any comments or recommendations of the
independent auditors. |
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15. Review with the independent auditors, the
Companys internal auditor, and the CFO and other financial
and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed
controls or procedures are desirable. Further, the Audit
Committee periodically should review Company policy statements
relating to its code of conduct. |
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16. Review the internal audit function of the Company
including the independence and authority of its reporting
obligations, the proposed audit plans for the coming year, and
the coordination of such plans with the independent auditors. |
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17. Receive when appropriate, a summary of findings from
completed internal audits and a progress report on the proposed
internal audit plan, with explanations for any deviations from
the original plan. |
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18. Provide sufficient opportunity for the internal and
independent auditors to meet with the members of the Audit
Committee without members of management present. Among the items
to be discussed in these meetings are the independent
auditors evaluation of the Companys financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit. |
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19. Submit the minutes of all meetings of the Audit
Committee to, or discuss the matters discussed at each committee
meeting with, the Board of Directors. |
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20. Oversee the investigation of any matter brought to its
attention within the scope of its duties, with the power to
retain outside counsel for this purpose if, in its judgment,
that is appropriate. |
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21. Review the Companys policies concerning the
hiring of employees of the Companys independent auditors.
Evaluate compliance with the Act with respect to any such hiring. |
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22. Assess, along with the Board of Directors, the
performance of the independent auditors and whether it is in the
best interest of the Company to regularly rotate its independent
auditors. Evaluate and ensure compliance with the Act with
respect to rotation of auditor personnel in charge of or
participating in the audit. |
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23. Consider whether the engagement of the independent
auditors for non-audit services is compatible with maintaining
the independent auditors independence and review the fees
for such services. If appropriate, approve in advance such
engagement and the payment of such fees. Such services will only
be those permissible by the Act and any Nasdaq Stock Market
requirements. |
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24. Review the experience and credentials of the senior
individuals working for the independent auditors on the
Companys account. |
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25. Review the policies and procedures of the independent
auditors with respect to quality control. |
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26. Review any opinions of the independent auditors that
management received on the application of accounting principles
to a completed, proposed or hypothetical transaction pursuant to
Statement of Auditing Standards No. 50, and discuss with
financial management and the independent auditors how the
election of alternative methods permitted under GAAP would
impact the financial statements. |
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27. Discuss and review with management and the independent
auditors any off-balance sheet arrangements, as well as their
effect and the effect of emerging issues arising out of
accounting and regulatory proposals on the financial statements
of the Company. |
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28. Discuss and review with management and the independent
auditors any complaints by employees involving material concerns
related to the financial statements, audits or accounting
policies of the Company. |
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29. To do all other things and perform such tasks and
functions as are designated by the Board of Directors. |
While the Audit Committee has the responsibilities and powers
set forth in this Audit Committee Charter, it is not the duty of
the Audit Committee to plan or conduct audits or to determine
that the Companys financial statements are complete and
accurate and are in accordance with generally accepted
accounting principals. This is the responsibility of management
and the independent auditors. Nor is it the duty of the Audit
Committee to conduct investigations, to resolve disagreements,
if any, between management and the independent auditors or to
assure compliance with laws and regulations and the
Companys code of conduct.
Revised as of December 11, 2003
A-3
APPENDIX B
APPLEBEES INTERNATIONAL, INC.
2001 SENIOR EXECUTIVE BONUS PLAN
AS AMENDED FEBRUARY 2006
1. Purpose. The purpose of the 2001 Senior Executive Bonus
Plan (the Plan) is to enhance Applebees
International, Inc.s (the Company) ability to
attract, motivate, reward, and retain key senior executives, to
strengthen their commitment to the success of the Company and to
align their interests with those of the Companys
shareholders by providing additional compensation based on the
achievement of performance objectives. To this end, the Plan
provides a means of rewarding participants based on the
performance of the Company.
2. Committee. The Plan shall be administered by a committee
of the Board of Directors of the Company (the
Committee). Each member of the Committee must be an
outside director within the meaning of the
Regulations promulgated under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the Code).
3. Eligible Employees. Eligible employees shall include any
individuals holding the positions of Chairman of the Board,
Chief Executive Officer, President, Chief Operating Officer,
Division President, Executive Vice President, or Senior Vice
President (those eligible employees who are participants in
respect of any period are hereinafter referred to as
Participant). The eligible employees who will
participate in the Plan for any period will be designated by the
Committee in its sole discretion not later than 90 days
after the commencement of that period.
4. Maximum Bonus. The maximum amount of compensation that
may be paid to a Participant pursuant to this Plan is
$1,500,000 per year. All amounts payable under the Plan
with respect to a given period shall be paid in a single lump
sum in the period following the period for which the performance
goals are established by the date set by the Committee, or at
such other time as the Participant and the Committee may agree.
5. Performance Goals. Awards to Participants will be based
on performance goals, which shall provide for a targeted level
or levels of achievement using one or more of the following
predetermined measurements, in each case where applicable
determined either on a Company-wide basis or in respect of any
one or more business units: (a) earnings (either in the
aggregate or on a per-share basis); (b) company, franchise
or system comparable store sales; (c) company, franchise or
system traffic growth; (d) net income (before or after
taxes); (e) operating income; (f) restaurant margin
before pre-opening expense; (g) cash flow; (h) return
measures (including return on assets, equity or sales);
(i) earnings before or after taxes, and before or after
depreciation and amortization; (j) gross revenues;
(k) share price of Company stock (including growth measures
and total stockholder return or attainment by the shares of a
specified value for a specified period of time);
(1) reductions in expense levels; (m) net economic
value; (n) market share or related strength of brand
measures related to consumer perception, including but not
limited to brand relevance and guest satisfaction, in each case
based on objective data such as guest or market surveys; or
(o) retention of Company associates in general or in any
specific category or level of employment. The performance goals
may differ from Participant to Participant and from award to
award. The specific performance goals for a given period will be
established in writing by the Committee on or before the latest
date permissible to enable the award to qualify as
performance-based compensation under
section 162(m) of the Code.
6. Certification. Prior to payment of a bonus in respect to
a period, the Committee must certify in writing as to the
satisfaction of and compliance with the performance goals and
other material terms of the Plan for that period.
7. Amendment or Termination. The Committee may amend or
terminate the Plan at any time in its discretion; provided,
however, that no amendment or termination of the Plan may affect
any award made under the Plan prior to that time.
8. Shareholder Approval. The adoption of this Plan was
initially approved by the shareholders of the Company in May
2001. This Plan, as amended, is again being submitted to the
shareholders of the Company for approval, in accordance with
section 162(m) of the Code.
9. Books and Records; Expenses. The books and records to be
maintained for the purpose of the Plan shall be maintained under
the supervision and control of the Committee. All calculations
and financial accounting matters relevant to this Plan shall be
determined in accordance with GAAP, except as otherwise directed
by the Committee. All expenses of administering the Plan shall
be paid by the Company from the general funds of the Company.
B-1
10. Beneficiaries. Each Participant shall have the right to
designate in writing a beneficiary (a Beneficiary)
to succeed to his right to receive payments hereunder in the
event of his death. In case of a failure of designation or the
death of a designated Beneficiary without a designated
successor, payments shall be made to the Participants
estate. Beneficiaries may be changed by the Participant in
writing without the consent of any prior Beneficiaries.
11. No Attachment. To the extent permitted by law, the
right of any Participant or any Beneficiary in any benefit or to
any payment hereunder shall not be subject in any manner to
attachment or other legal process for the debts of such
Participant or Beneficiary; and any such benefit or payment
shall not be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance.
12. No Liability. No member of the Board or of the
Committee and no officer or employee of the Company shall be
liable to any person for any action taken or omitted in
connection with the administration of this Plan unless
attributable to his own fraud or willful misconduct; nor shall
the Company be liable to any person for any such action unless
attributable to fraud or willful misconduct on the part of a
director, officer or employee of the Company.
13. No Fiduciary Relationship. Nothing contained herein
shall be deemed to create a trust of any kind or create any
fiduciary relationship. To the extent that any person acquires a
right to receive payments from the Company under this Plan, such
right shall be no greater than the right of any unsecured
general creditor of the Company.
14. No Guarantee of Employment. Nothing contained in this
Plan shall be deemed to give any Participant the right to be
retained in the service of the Company or to interfere with the
right of the Company to discharge any Participant, for or
without cause, at any time, regardless of the effect which such
discharge shall have upon such individual as Participant in the
Plan.
15. Governing Law. This Plan shall be construed in
accordance with the laws of the State of Kansas.
16. Interpretation of Plan. The Committee shall have sole
and absolute discretion and authority to interpret all
provisions of this Plan and to resolve all questions arising
under this Plan; including, but not limited to, determining
whether any person is eligible under this Plan, whether any
person shall receive any payments pursuant to this Plan, and the
amount of any payments to be made pursuant to this Plan. Any
interpretation, resolution or determination of the Committee
shall be final and binding upon all concerned and shall not be
subject to review.
17. Withholding. Prior to the delivery of any payment
pursuant to this Plan, the Company shall have the power and the
right to deduct or withhold or require a Participant to remit to
the Company, an amount sufficient to satisfy Federal, state and
local taxes (including the Participants FICA obligation)
required to be withheld with respect to such delivery.
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APPLEBEES INTERNATIONAL, INC.
PROXY FOR
ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 11, 2006
10:00 a.m. (Local Time)
Sheraton Overland Park Hotel
6100 College Boulevard
Overland Park, KS 66211
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APPLEBEES INTERNATIONAL, INC.
4551 W. 107th Street
Overland Park, KS 66207
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proxy |
This Proxy is solicited by the Board of Directors for use at the Annual Meeting on May 11, 2006.
The undersigned hereby appoints Lloyd L. Hill and Rebecca R. Tilden, and either of them Proxies with full power
of substitution to vote all shares of Common Stock of Applebees International, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of Applebees International, Inc. to be held on May 11, 2006,
or at any adjournment or postponement thereof. This proxy will be voted as directed herein. If no direction is
given, this proxy will be voted FOR Proposals 1 through 3 and AGAINST Proposal 4. In their discretion, the
Proxies are authorized to vote upon such other business as may properly come before the meeting or any
adjournment or postponement thereof.
See reverse for voting instructions.
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Proxies to vote your shares in the same manner as if
you marked, signed and returned your proxy card.
VOTE BY PHONE TOLL FREE 1-800-560-1965 QUICK ««« EASY ««« IMMEDIATE
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Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on May 10, 2006. |
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Please have your proxy card and the last four digits of your Social Security Number or Tax Identification
Number available. Follow the simple instructions the voice provides you. |
VOTE
BY INTERNET http://www.eproxy.com/appb/ QUICK«
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« EASY
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« IMMEDIATE
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Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on May 10, 2006. |
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Please have your proxy card and the last four digits of your Social Security Number or Tax Identification
Number available. Follow the simple instructions to obtain your records and create an electronic ballot. |
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope weve provided or
return it to Applebees International, Inc., c/o Shareowner
ServicesSM, P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
ò Please detach here ò
The
Board of Directors Recommends a Vote FOR Proposals 1 through 3 and
AGAINST Proposal 4.
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1.
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Elect Six Directors:
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01 Gina R. Boswell
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04 D. Patrick Curran
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Vote FOR
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Vote WITHHELD |
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02 David L. Goebel
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05 Steven K. Lumpkin
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all nominees
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from all nominees |
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03 Douglas R. Conant
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06 Rogelio Rebolledo
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(except as marked) |
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(Instructions: To withhold authority to vote for any nominee,
write the number(s) of the nominee(s) in the box provided to the
right.)
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2.
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Approve the Applebees International, Inc. 2001 Senior Executive Bonus Plan, as
amended.
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For
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Against
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Abstain |
3.
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Ratify the selection of Deloitte & Touche LLP as our independent registered public
accounting firm for the 2006 fiscal year.
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For
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Against
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Abstain |
4.
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Act on a shareholder proposal to require us to issue quarterly reports in 2006 detailing the
progress made toward accelerating the development of an alternative method of poultry slaughter.
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For
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Against
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Abstain |
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE
VOTED FOR PROPOSALS 1 THROUGH 3 AND AGAINST PROPOSAL 4.
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Address Change? Mark Box o Indicate changes below:
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Date |
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Signature(s) in Box |
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Please sign name(s) exactly as shown at left. When signing
as executor, administrator, trustee, guardian or corporate
officer, give full title as such; when shares have been issued in
names of two or more persons, all should sign. |