SCHEDULE 14A INFORMATION
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o Soliciting Material Pursuant toRule 14a-11(c) or Rule 14a-12§240.14a-12JACK IN THE BOX INC.
(Name(Name of Registrant as Specified in Its Charter)JACK IN THE BOX INC. (Name(Name of Person(s) Filing ProxyStatement)Statement if other than the Registrant)Paying of Filing Fee (Check the appropriate box):
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|_| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed:[LOGO} JACK IN THE BOX INC.
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| JACK IN THE BOX INC. |
January 18, 2002
13, 2005
You are cordially invited to attend the Annual Meeting of Stockholders of Jack in the Box Inc. to be held at 2:00 p.m. on Friday,Monday, February 22, 2002,14, 2005, at the Marriott Mission Valley, 8757 Rio San Diego Drive, San Diego, California.
We hope you will attend in person. If you plan to do so, please indicate in the space provided on the enclosed proxy. Whether you plan to attend the meeting or not, we encourage you to read this proxy statementProxy Statement and vote your shares. Please sign, date and return the enclosed proxy as soon as possible in the postage-paid envelope provided, or if indicated on your proxy card, vote by telephone.telephone or Internet. This will ensure representation of your shares in the event that you are unable to attend the meeting.
The matters expected to be acted upon at the meeting are described in detail in the attached Notice of Meeting and Proxy Statement.
The Directors and Officers of the Company look forward to meeting with you.
Sincerely,
ROBERT J. NUGENT
Robert J. Nugent
Chairman ofseeing you at the Board
| Sincerely, |
| Robert J. Nugent | |
| Chairman of the Board |
TABLE OF CONTENTS
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| Exhibit A — Jack in the Box Director Independence Guidelines | A-1 | ||||
| Exhibit B — Audit Committee Charter | B-1 | ||||
| Exhibit C — 2004 Stock Incentive Plan | C-1 | ||||
| Exhibit D — Policy for Audit Committee Pre-Approval of Services | D-1 | ||||
To Be Held on February 22, 200214, 2005
To the Stockholders of Jack in the Box Inc.:
The 20022005 Annual Meeting of Stockholders of Jack in the Box Inc. will be held at 2:00 p.m. on Friday,Monday, February 22, 2002,14, 2005, at the Marriott Mission Valley, 8757 Rio San Diego Drive, San Diego, California.
The meeting will be held to vote upon the following proposals:
1. To elect nine
| 1. | To elect ten directors to serve until the next Annual Meeting of Stockholders | |
| 2. | To approve an amendment to the 2004 Stock Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance under such plan by 2,000,000 shares; | |
| 3. | To ratify the appointment of KPMG LLP (“KPMG”) as independent registered public accountants; | |
| 4. | To act upon such other matters as may properly come before the meeting, or any postponements or adjournments thereof. |
Only stockholders of record at the close of business on December 26, 2001,23, 2004 will be entitled to vote at the meeting.
By Order of the Board of Directors
LAWRENCE E. SCHAUF
Lawrence E. Schauf
Secretary
| By order of the Board of Directors | |
 | |
| Lawrence E. Schauf | |
| Secretary |
San Diego, California
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JACK IN THE BOX INC.
PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
February 22, 2002
14, 2005
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of proxies. The Board of Directors of Jack in the Box Inc., a Delaware corporation, (the "Company"), is soliciting proxies for use at the 20022005 Annual Meeting of Stockholders of the Company (the "Annual Meeting"“Annual Meeting”) to be held at 2:00 p.m. on Friday,Monday, February 22, 2002,14, 2005, at the Marriott Mission Valley, 8757 Rio San Diego Drive, San Diego, California, or any postponements or adjournments thereof. This Proxy Statement, and form of proxy, and the accompanying Jack in the Box Inc. 2004 Summary Annual Report and Annual Report on Form 10-K were mailed to stockholders on or about January 18, 2002.
13, 2005. References in this Proxy Statement to the “Company,” “we,” “us,” and “our” refer to Jack in the Box Inc.
The Company will pay for the cost of preparing, assembling and mailing the Notice of Annual Meeting of Stockholders, Proxy Statement, and form of proxy.proxy, Summary Annual Report and Annual Report on Form 10-K. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of common stock beneficially owned by others, to forward to such beneficial owners. The Company may reimburse persons representing beneficial owners of common stock for their costs of forwarding solicitation materials to such beneficial owners. We have engaged D.F. King & Co., Inc. ("(“D.F. King"King”) to assist us in the solicitation of proxies, for which theythe Company will be paidpay a fee not to exceed $5,000$5,500 plus out-of-pocket expenses. In addition to solicitation by mail, proxies may be solicited personally, or by telephone or other means by D.F. King, as well as by directors, officers or employees of the Company, who will receive no additional compensation for such services.
VOTING We have fixedINFORMATION
Only holders of record of common stock at the close of business on December 26, 2001 as the record date
for the determination of stockholders23, 2004 (the “Record Date”) will be entitled to notice of and to vote at the Annual Meeting. On that date,At the close of business on the Record Date, there were 39,288,11636,363,994 shares of Jack in the Box Inc. Common Stock, $.01 par value (the "Common Stock"“Common Stock”), outstanding, excluding treasury shares. Company treasury shares will not be voted. You are entitled to one vote for each share you own on any matter that may be properly presented for consideration and action by stockholders at the meeting.
The presence, in person or by proxy, of the holders of at least a majority of the total number of shares of Common Stock entitled to vote, is necessary for
us to have a quorum at the Annual Meeting. Abstentions and broker non-votes (i.e., shares held by brokers or nominees that the broker or nominee does not
have discretionary power to vote on a particular matter and as to which
instructions have not been received from the beneficial owners or persons
entitled to vote)(described below) are counted for the purpose of determining whether a quorum is present at the meeting.present. If there are insufficient votes to constitute a quorum at the time of the Annual Meeting, we may adjourn the Annual Meeting to solicit additional proxies.
Broker Non-Votes.A director will be elected by“broker non-vote” occurs when your broker submits a plurality ofproxy card for your shares but does not indicate a vote on a particular matter because the votes present or
represented by proxy. A majority of the votes present or represented by proxy
will be requiredbroker has not received voting instructions from you and does not have authority to approve the 2002 Stock Incentive Plan and to ratify the
appointment of KPMG LLP as independent accountants of the Company for the 2002
fiscal year.
With regard to the election of directors, your vote may be cast in favor of
the proposed directors or withheld. Voteson that matter without such instructions. “Broker non-votes” are withheld will be excluded
entirely from the vote and will have no effect. Abstentions may be specified on
all proposals other than the election of directors and will be countedtreated as present for purposes of the item on which the abstention is voted. Therefore,
such abstentions will have the effect ofdetermining a negative vote. Broker non-votesquorum but are not counted for purposes ofas withheld votes, votes against the matter in question, or as abstentions, nor are they counted in determining whether a proposal has been approved
and, therefore, have the effect of reducing the number of votes required to
achieve a majoritypresent for the particular matter. Under the rules of the votes cast for such proposal.
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Voting and Revocability of Proxies.All shares represented by valid proxies received and not revoked will be voted at the meeting. Your proxy will be voted as you direct, either in writing or by telephone.telephone or Internet. If you give no direction, your proxy will be votedFOR management's the nominees for election as directors, andFOR Proposals 2 and 3. The enclosed proxy gives discretionary authority as to any matters not specifically referred to therein. See "Other Business"“Other Business”. The telephone and Internet voting procedures, available only if you are a stockholder of record, are designed to authenticate your identity, to allow you to vote your shares and to confirm that your instructions have been properly recorded. The enclosed proxy card sets forth specific instructions that you must follow if you qualify to vote via telephone or Internet and wish to do so. You may revoke your proxy at any time before it is voted at the Annual Meeting by givingfiling a written notice of revocation towith the Secretary of the Company at the Company’s executive offices at 9330 Balboa Avenue, San Diego, California 92123, by filing a duly executed written proxy bearing a later date or, if you qualify, by a later proxy delivered using the telephone or Internet voting procedures. Your proxy will not be voted if you are present at the Annual Meeting and elect to vote in person. Attendance at the meeting will not, by itself, revoke a proxy.
PROPOSAL ONE
ELECTION OF DIRECTORS
The nineten directors of the Company are elected annually and serve until the next Annual Meeting and until their successors are elected and qualified. The current nominees for election as directors are set forth below. Should any nominee become unavailable to serve as a director, your proxy will be voted for such other person as the Board of Directors of the Company (the "Board"“Board”) designates. To the best of our knowledge, all nominees are and will be available to serve. Stockholders'Stockholders’ nominations for election of a director may be made only pursuant to the provisions of the Company'sCompany’s Bylaws, described below under "Other
Business"“Other Business”.
Your vote may be cast in favor of the proposed directors or withheld. A plurality of the votes cast at the meeting (assuming a quorum) will be sufficient to elect the directors. Accordingly, withheld votes or broker non-votes will have no effect on the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES.
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Nominees for Director
The following table provides certain information about each of management's
nomineesnominee for director as of January 1, 2002:
Position(s) Director
Name Age with2005:
| Director | ||||||
| Name | Age | Position(s) with the Company | Since | |||
| Michael E. Alpert(4)(5) | 62 | Director | 1992 | |||
| Edward W. Gibbons(3)(4) | 68 | Director | 1985 | |||
| Anne B. Gust(2)(5) | 46 | Director | 2003 | |||
| Alice B. Hayes, Ph.D.(2)(5) | 67 | Director | 1999 | |||
| Murray H. Hutchison(1)(2) | 66 | Director | 1998 | |||
| Linda A. Lang | 46 | President, Chief Operating Officer and Director | 2003 | |||
| Michael W. Murphy(1)(2) | 47 | Director | 2002 | |||
| Robert J. Nugent(3) | 63 | Chairman of the Board and Chief Executive Officer | 1988 | |||
| L. Robert Payne(1)(3)(4) | 71 | Director | 1986 | |||
| David M. Tehle | 48 | Director | 2004 |
| (1) | Current Member of the Audit Committee. |
| (2) | Current Member of the Compensation Committee. |
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| (3) | Current Member of the Executive Committee. |
| (4) | Current Member of the Finance Committee. |
| (5) | Current Member of the Nominating and Governance Committee. |
Effective February 17, 2005, the Company Since
- --------------------------------- --- ------------------------- -----
Michael E. Alpert (4)(5)......... 59 Director 1992
Jay W. Brown (3)(5).............. 56 Director 1997
Paul T. Carter (1)(2)............ 79 Director 1991
Edward W. Gibbons (3)(4)(5)...... 65 Director 1985
Alice B. Hayes, Ph.D. (2)(5)..... 64 Director 1999
Murray H. Hutchison (1)(2)....... 63 Director 1998
Robert J. Nugent (3)............. 60 Chairman of the Board, 1988
Chief Executive Officer
L. Robert Payne (1)(4)........... 68 Director 1986
Kenneth R. Williams.............. 59 President, Chief Operating 2001
Officer and Director
- --------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Member of the Finance Committee.
(5) Member of the Nominating and Governance Committee.
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The business experience, principal occupations and employment of the nominees follows:
Mr. Alpert has been a director of the Company since August 1992 and is currently Chairman of the Nominating and Governance Committee. Mr. Alpert was a partner in the San Diego office of the law firm of Gibson, Dunn & Crutcher LLP for more than five years prior to his retirement in August 1992. He is currently Advisory Counsel to Gibson, Dunn & Crutcher LLP.LLP, although he no longer provides services to or receives any compensation from the firm. Gibson, Dunn & Crutcher LLP provides legal services to the Companyus from time to time.
time-to-time.
Mr. Brown is currently a principal with Westgate Group, LLC. From April
1995 to September 1998, Mr. Brown was President and Chief Executive Officer of
Protein Technologies International, Inc., the world's leading supplier of
soy-based proteins to the food and paper processing industries. He was Chairman
and Chief Executive Officer of Continental Baking Company from October 1984 to
July 1995 and President of Van Camp Seafood Company from August 1983 to October
1984. From July 1981 through July 1983, he served as Vice President of Marketing
for the Company. Mr. Brown isGibbons has been a director of Agribrands International, Inc. and
Cardinal Brands, Inc.
Mr. Carterthe Company since October 1985. He has been an insurance consultant for the Government Division of
Corroon & Black Corporation since February 1987. He retired in February 1987 as
Chairman and Chief Executive Officer of Corroon & Black Corporation,
Southwestern Region and as Director and Senior Vice President of CorroonGibbons & Black
Corporation. Mr. Carter is a directorCo. Inc., an investment banking firm, for two years. Prior to his appointment to President of Borrego Springs National Bank.
Mr. Gibbons has been& Company Inc., he was a general partner of the investment banking firm Gibbons, Goodwin, van Amerongen
an investment banking firm, for more than five years. Mr. Gibbons is alsoserves as a director of Robert Half International, Inc.
Ms. Gust has been a director of the Company since January 2003. She has been Chief Administrative Officer of The Gap, Inc. since March 2000 and Summer Winds Garden Centers,
Inc.
an Executive Vice President since September 1998. Prior to her appointment to Executive Vice President, she served as Senior Vice President, Legal and Corporate Administration.
Dr. Hayes has been a director of the Company since September 1999. She was the President of the University of San Diego since 1995.from 1995 to 2003, and is now President Emerita. From 1989 to 1995, Dr. Hayes served as Executive Vice President and Provost of Saint Louis University. Previously, she spent 27 years at Loyola University of Chicago, where she served in various executive positions. Dr. Hayes is alsoserves as a director of the Pulitzer Publishing Company the Old Globe Theatre, Independent
Colleges of Southern California, The San Diego Foundation, Loyola University of
Chicago, and Catholic Charities, Diocese of San Diego.
Con Agra.
Mr. Hutchison has been a director of the Company since May 1998 and is currently Chairman of the Compensation Committee. He served 1824 years as Chief Executive Officer and Chairman of International Technology Corp., a large publicly traded environmental engineering firm, until his retirement in 1996. Mr. Hutchison is the Chairman of
the Board of Sunrise Medical, Inc. and the Huntington Hotel Corp. and serves as a director of Cadiz Inc.,
Ms. Lang has been a director of the Company since November 7, 2003, when she was also promoted to President and Chief Operating Officer. She was Executive Vice President from July 2002 to November 2003, Senior Resource Corp.Vice President, Marketing from May 2001 to July 2002, Vice President and Regional Vice President, Southern California Region from April 2000 to May 2001, Vice President, Marketing from March 1999 to April 2000 and Vice President, Products, Promotions and Consumer Research from February 1996 until March 1999. Ms. Lang has 16 years of experience with the OlsonCompany in various marketing, finance and operations positions. Ms. Lang serves as a director of WD-40 Company.
Mr. Murphy has been director of the Company since September 2002 and is currently Chairman of the Audit Committee. He has been President and CEO of Sharp HealthCare, San Diego’s largest integrated health system, since April 1996. Prior to his appointment to President and CEO, Mr. Murphy served as Senior Vice President of Business Development and Legal Affairs. His career at Sharp began in 1991 as Chief Financial Officer of Grossmont Hospital, before moving to Sharp’s system-wide role of Vice President of Financial Accounting and Reporting.
Mr. Nugent has served asbeen Chairman of the Board since February 2001 and is currently Chairman of the Executive Committee. He has been Chief Executive Officer since April 1996. Mr. Nugent assumed the title of President effective January 1, 2003 until November 7, 2003 upon Ms. Lang’s promotion to President. He served aswas President from April 1996 to February 2001 and Executive Vice President from February 1985 to April 1996. Mr. Nugent has 2225 years of experience with the Company in various executive and operations positions.
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Mr. Payne has served asbeen a director of the Company since August 1986 and is currently Chairman of the Finance Committee. He has been President and Chief Executive Officer of Multi-Ventures, Inc. since February 1976. Multi-Ventures, Inc. is a real estate development and investment company that is also the managing partner of the San Diego Mission Valley Hilton and the Red Lion Hanalei Hotel. He was a principal in the Company prior to its acquisition by its former parent, Ralston Purina Company, in 1968.
Mr. WilliamsTehle has served asbeen a director since December 20, 2004. He has been Executive Vice President and Chief OperatingFinancial Officer of Dollar General Corporation, a large discount retailer, since February 2001. He wasJune 2004. Mr. Tehle served from 1997 to June 2004 as Executive Vice President Marketing and Operations from
MayChief Financial Officer of Haggar Corporation, a manufacturing, marketing and retail corporation. From 1996 to February 2001 and Senior1997, he was Vice President of Finance for a division of The Stanley Works, one of the world’s largest manufacturer of tools and from January 1993 to May
1996. Mr. Williams1996, he was Vice President and Chief Financial Officer of Hat Brands, Inc.
2005 Committee Assignments
The Board of Directors has 36 yearsapproved changes to the Board Committees to be effective February 17, 2005. The Committees shall be as follows:
Audit Committee | Finance Committee | |
| Michael W. Murphy (Chair) | Edward W. Gibbons (Chair) | |
| Murray H. Hutchison | Michael E. Alpert | |
| David M. Tehle | L. Robert Payne | |
Compensation Committee | Executive Committee | |
| Alice B. Hayes (Chair) | Robert J. Nugent (Chair) | |
| Anne B. Gust | Edward W. Gibbons | |
| Murray H. Hutchison | L. Robert Payne | |
| David M. Tehle | Michael W. Murphy | |
Nominating and Governance Committee | ||
| Michael E. Alpert (Chair) | ||
| Anne B. Gust | ||
| Alice B. Hayes | ||
Committees of experiencethe Board of Directors
The Board has analyzed the independence of each director and determined that the following directors are independent under the New York Stock Exchange listing standards and the additional Independence Guidelines adopted by the Board, and have no material relationships with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company): Messrs. Alpert, Gibbons, Hutchison, Murphy, Payne, and Tehle, Ms. Gust and Dr. Hayes. Mr. Nugent and Ms. Lang are not considered independent because they are officers of the Company. The Jack in various
operations positions.
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INFORMATION ABOUT THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES OF THE BOARDthe Box Inc. Independence Guidelines are attached hereto as Exhibit A.
The following informationBoard of Directors has five standing committees, Audit, Compensation, Nominating and Governance, Finance and Executive. The Board has determined that each current and anticipated member of the Audit, Compensation, Nominating and Governance and Finance Committees is providedindependent as defined under the requirements of the New York Stock Exchange, as well as under the additional Independence Guidelines adopted by the Board. In addition, the members of the Audit and Finance Committee are all independent as required under Section 10A(m)(3) of the Securities Exchange Act of 1934, and the members of the Compensation Committee are independent as required under Section 162(m) of the Internal Revenue Code. Independence determinations reflect upon both the membership of the above committees as presently constituted and after rotations effective February 17, 2005.
The authority and responsibility of each committee is summarized below. A more detailed description of the functions of the Audit, Compensation, Nominating and Governance and Finance Committees is included in each committee charter as adopted by the Board of Directors. The charters can be found in the Corporate Governance section of the Company’s corporate website
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Audit Committee.As more fully described in its charter, the Audit Committee assists the Board of Directors in overseeing the integrity of the Company’s financial reports; the Company’s compliance with legal and regulatory requirements; the independent registered public accountant’s performance, qualifications and independence; and the performance of the Company’s internal auditors. The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent registered public accountants. The Audit Committee meets each quarter with the Company’s independent registered public accountant KPMG LLP (“KPMG”), the Company’s Director of Internal Audit, and management, to review the Company’s annual and interim consolidated financial results before the publication of quarterly earnings press releases. The Audit Committee also meets separately each quarter with each of KPMG, management and the Director of Internal Audit. The Board of Directors has determined that all members of the Audit Committee satisfy the financial literacy requirements of the New York Stock Exchange and that both Mr. Murphy and Mr. Tehle qualify as “audit committee financial experts” as defined by Securities and Exchange Commission (“SEC”) rules. The Audit Committee held eight meetings in fiscal 2004.
Compensation Committee. The Compensation Committee assists the Board in discharging the Board’s responsibilities relating to director, officer and executive compensation and oversight of evaluation of management. The Compensation Committee evaluates the performance of the Chief Executive Officer; reviews and approves the Corporation’s compensation philosophy and compensation for the Chief Executive Officer and other executive officers of the Company; reviews market data to assess the Corporation’s competitive position regarding compensation, approves the adoption and amendment of incentive compensation and stock-related plans and the granting of stock options and restricted stock awards; makes recommendations to the Board regarding the compensation of directors; and reviews and makes recommendations to the Board regarding long range plans for management development and executive succession. The Compensation Committee held seven meetings in fiscal 2004.
Nominating and Governance Committee.The Nominating and Governance Committee assists the Board in identifying and recommending to the Board qualified candidates to become directors, including considering nominees properly submitted by stockholders; developing and recommending to the Board a set of corporate governance guidelines; providing oversight with respect to the evaluation of Board performance; and recommending to the Board director nominees for each Board committee. All nominees for election as Directors currently serve on the Board of Directors and are known to the Nominating and Governance Committee in that capacity. The Nominating and Governance Committee held six meetings in fiscal 2004.
Finance Committee.The Finance Committee assists the Board in advising and consulting with management concerning financial matters of importance to the Company. Topics considered by the Committee include the Company’s capital structure, financing arrangements, stock repurchase programs, capital investment policies, oversight of the Company’s pension and 401(k) plans, and the financial implications of major acquisitions and divestitures. The Finance Committee held five meetings in fiscal 2004.
Executive Committee.The Executive Committee is currently composed of three directors. In February 2005, the size of the Executive Committee will be increased to four directors. The Committee is authorized to exercise all the powers of the Board in the management of the business and affairs of the Company while the Board is not in session. The Executive Committee did not meet during fiscal 2004.
Additional Information about the Board of Directors and
certain of its committees.
The Audit Committee directs the internal and external audit activities of
the Company as deemed appropriate. All members of the Audit Committee are
independent directors. In June 2000, the Board of Directors adopted an Audit
Committee Charter. The full text of the Audit Committee Charter was set forth in
Exhibit A of our Proxy Statement for last year. No substantive changes have been
made to the charter. The Audit Committee held four meetings, including one
telephonic meeting, in fiscal 2001 and on one occasion acted by unanimous
written consent.
The Compensation Committee reviews compensation policies and recommends
changes when appropriate. The Compensation Committee held four meetings in
fiscal 2001 and on one occasion acted by unanimous written consent.
The Nominating and Governance Committee recommends to the Board nominees
for election as directors and will consider nominees properly submitted by
stockholders (see "Other Business"). The committee also administers the
Company's Corporate Governance Principles and Practices.
In fiscal 2001, the
Nominating and Governance Committee held four meetings, including two telephonic
meetings.
In fiscal 2001,2004, the Board of Directors held sixfive meetings including one
telephonic meeting, and on one occasion acted once by unanimous written consent. Committees of the Board held a total of 26 meetings. Directors are expected to attend Board meetings and meetings of the Committees on which they serve. Each current director attended more than 75%100% of the aggregate number of the generalBoard meetings held and the meetings of committees on which such director served.
served except Mr. Gibbons and Dr. Hayes. Mr. Gibbons attended 70%, and Dr. Hayes, who is
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Director Compensation.Directors who are also officers of the Company or its subsidiaries receive no additional compensation for their services as directors. The independent directors of the Company each receive compensation consisting of an $18,000 annual
retainer, $2,000 for each Board meeting attended in person and $1,000 for each
committee meeting attended in excess of five.of:
| Annual Stock Option Grant for fiscal year 2004* | 10,000 | shares | |||||||
| Annual Retainer | $ | 25,000 | |||||||
| Board Attendance Fee (per in-person meeting) | $ | 2,000 | |||||||
| Committee Attendance Fee (per in-person meeting) | $ | 1,000 | |||||||
| Committee Attendance Fee (telephonic meeting) | $ | 500 | |||||||
| Annual Retainer for Committee Chair | |||||||||
| Audit | $ | 10,000 | |||||||
| Compensation | $ | 5,000 | |||||||
| Nominating and Governance | $ | 5,000 | |||||||
| Executive | None | ||||||||
| Finance | $ | 5,000 | |||||||
| * | Options were granted on November 6, 2003, at an exercise price of $18.90 (closing price of the Company’s Common Stock on November 6, 2003). Options are granted at the fair market value on the date of grant and may not be repriced. Pursuant to the Company’s Non-Employee Director Stock Option Plan, as amended (the “Director Plan”), each year each independent director receives stock options to purchase a certain number of shares of the Company’s Common Stock based on the relationship of each director’s compensation to the fair market value of the stock, but limited to 10,000 shares in any fiscal year. |
The Company does not provide pensions, medical benefits or other benefit programs to non-employee directors.
All directors are reimbursed for out-of-pocket and travel expenses. No additional compensation is paid for written consent actions taken by the Board or committees by written consent.committees. Under the Company'sCompany’s Deferred Compensation Plan for Non-Management Directors, each independent director may defer any portion or all of such above compensation. Amounts deferred under the plan'splan’s equity option are immediately converted to stock equivalents at the then-current market price of the Company'sCompany’s Common Stock and matched at a 25% rate by the Company. A director'sdirector’s stock equivalent account is distributed in cash, based upon the ending number of stock equivalents and the market value of the Company'sCompany’s Common Stock, at the conclusion of the director'sdirector’s service as a member of the Board. All
Policy Regarding Consideration of Candidates for Director. The Nominating and Governance Committee has the responsibility to identify, screen and recommend qualified candidates to the Board. The Nominating and Governance Committee will evaluate any recommendation for director candidates proposed by a stockholder. In order to be evaluated in connection with the Nominating and Governance’s Committee’s established procedures, stockholder recommendations for candidates for the Board must be sent in writing to the following address, at least 120 days prior to the anniversary of the independentdate proxy statements were mailed to stockholders in connection with the prior year’s annual meeting of stockholders:
| Nominating and Governance Committee of the Board of Directors c/o Office of the Corporate Secretary Jack in the Box Inc. 9330 Balboa Avenue San Diego, CA 92123 |
Stockholder recommendations should include the name of the candidate, age, contact information, present principal occupation or employment, qualifications and skills, background, last five
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| • | The appropriate size of the Board. | |
| • | The needs of the Company with respect to particular talents and experience. | |
| • | The knowledge, skills and experience of candidates in light of the knowledge, skills and experience already possessed by other members of the Board. | |
| • | Experience with accounting rules and practices, and executive compensation. | |
| • | Applicable regulatory and listing requirements, including independence requirements. | |
| • | The benefits of constructive working relationships among directors. | |
| • | The desire to balance the considerable benefit of continuity with the periodic injection of fresh perspective provided by new members. |
The Nominating and Governance Committee may also consider such other factors as it may deem are in the best interests of the Company and its stockholders. The Nominating and Governance Committee believes it appropriate for at least one member of the Board to meet the criteria for an “audit committee financial expert” as defined by SEC Rules, and for a majority of the Board to meet the definition of independence under the listing standards of the New York Stock Exchange. The Nominating and Governance Committee also believes it appropriate for certain key members of management to participate as members of the Board.
The Committee considers all candidates regardless of the source of the recommendation. In addition to stockholder recommendations, the Committee considers recommendations from current directors, Company personnel and others. From time-to-time the Committee may engage the services of outside search firms to help identify candidates. During fiscal year 2004, the Company engaged one such search firm, the Alexander Group, and paid approximately $71,000 in connection with identification of possible candidates.
After initial screening of a potential candidate’s qualifications, the Committee determines appropriate next steps, including requests for additional information, reference checks and interviews with potential candidates. All candidates must submit a completed form of the Company’s Directors and Officers Questionnaire as part of the consideration process.
Corporate Governance
The Board of Directors is committed to promoting ethical business practices and believes that strong corporate governance is important to ensure that the Company is managed for the long-term benefit of its stockholders. The Company regularly monitors developments in the area of corporate governance. The following Corporate Governance documents appear on the Company’s website (www.jackinthebox.com) under the “Investors,” “Corporate Governance” tabs.
| • | Corporate Governance Principles and Practices | |
| • | Communications with the Board of Directors or individual directors, including procedures for bringing concerns or complaints to the attention of the Audit Committee and the Board. | |
| • | Code of Conduct. In 1998, the Company adopted a Code of Ethics applicable to all directors, officers and employees. The Company actively promotes ethical behavior by all employees. The Company employs a full-time Director of Ethics, and has conducted more than 300 ethics training sessions for all levels of employees and officers. The Company also provides significant vendors with its Code of Ethics, as well as procedures for the communication of any concerns. In satisfaction of the requirements of SEC Regulation S-K Item 406(d), the Company states its intention to post on the Company’s websitewww.jackinthebox.com, any amendment to, or waiver of, any provision of the Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller or persons |
8
| performing similar functions. The Company has not made any such waivers and does not anticipate ever making any such waiver. |
Director Independence Guidelines. In addition to the Corporate Governance Principles and Practices, the Board has adopted Independence Guidelines, which are attached as Exhibit A.
Meetings of Non-Management Directors. The non-management directors of the Company meet separately on a regular basis in executive session.
Lead Director. The non-management directors will appoint a lead director each year to set the agenda for and preside over the executive sessions of the Board. The lead director will act as the primary communication channel between the Board and the CEO, and determine the format and the adequacy of information required by the Board. For 2005, the non-management directors have elected to defer
their compensation pursuant to this plan.
Pursuantappointed Murray Hutchison as lead director.
Board and Committee Evaluations.Each year the Directors complete an evaluation process focusing on an assessment of Board operations as a whole, and each of the Audit, Compensation, Finance and Nominating and Governance Committees conducts a separate evaluation of its own performance and the adequacy of its Charter. The Nominating and Governance Committee coordinates the evaluation of the Board operations and reviews and reports to the Company's Non-Employee Director Board on the annual self-evaluations completed by the committees.
Attendance at Annual Meetings. The Board has a new policy regarding attendance at our annual meeting of stockholders. It states that all directors shall make every effort to attend the annual meeting. All Board members attended the Company’s 2004 annual meeting of stockholders.
Stock OptionOwnership Guidelines.The Board has established ownership guidelines for senior officers as described in the Report of the Compensation Committee.
PROPOSAL TWO
APPROVAL OF AN AMENDMENT TO INCREASE SHARE RESERVE
The Board of Directors and the stockholders approved the adoption of our 2004 Stock Incentive Plan as
amended (the "Director Plan"“2004 Plan”), each year each independent director also receives
a stock option in November 2003 and February 2004, respectively.
As of December 10, 2004, an aggregate of 734,174 shares of our Common Stock remained available for future grants under the 2004 Plan. The Board believes it important to purchase a certain numberthe continued success of the Company that we have available an adequate reserve of shares of the Company's Common
Stock based on the relationship of each director's compensation to the fair
market value of the stock, but limited to fewer than 10,000 shares in any fiscal
year. During fiscal 2001, under the Director2004 Plan each independent director
received a stock optionfor use in attracting, retaining and rewarding the high caliber employees, consultants and directors essential to purchase 7,000 shares of the Company's Common Stock
at the fair market value on the date of grant.
4
PROPOSAL TWO
APPROVAL OF THE 2002 STOCK INCENTIVE PLANour success and in motivating these individuals to strive to enhance our growth and profitability.
At the Annual Meeting,annual meeting, the stockholders will be asked to approve the Company's
2002 Stock Incentiveamendment to the 2004 Plan (the "2002 Plan"), which was adoptedin order to increase, by 2,000,000 shares, the Boardnumber of Directors in November 2001,shares that may be issued under the 2004 Plan. On December 28, 2004 the Compensation Committee approved, subject to stockholder approval, bythis amendment. In light of historical usage and expected future grants, we expect that the Company's stockholders.
The Company's Boardaddition of Directors considersthese shares will be sufficient to provide a competitive equity incentive program for approximately three years.
We intend to register the 2002 Plan to be important to the
Company's ability to appropriately compensate its officers and employees as the
Company's operations continue to grow. In this respect, the 2002 Plan will serve
the objectives previously implemented2,000,000 share increase on a Registration Statement on Form S-8 under the Company's 1992 Employee Stock
Incentive Plan,Securities Act of 1933 as amended (the "1992 Plan"). Substantially all of the shares
authorized under the 1992 Plan have either been issued or are subject to
currently outstanding options or other awards under that plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
---
soon as is practicable after receiving stockholder approval.
Summary of the New2004 Plan
The 2002 Plan is designed to enable the Company to attract, retain and
motivate its officers and other key employees, and to further align their
interests with those of the stockholders of the Company, by providing for or
increasing the proprietary interest of such persons in the Company.
The following summary of the main features of the 20022004 Plan is qualified in its entirety by reference to the complete textspecific language of the 20022004 Plan, a copy of which is set
forthattached hereto as Exhibit AC.
General.The purpose of the 2004 Plan is to this Proxy Statement.
The 2002 Plan authorizesadvance the interests of the Company by providing an incentive program that will enable the Company to attract and retain employees, consultants and directors upon whose judgment, interest and efforts the Company’s success is dependent, and to provide them with an equity interest in the success of the Company in order to motivate superior
9
Authorized Shares.If the stockholders approve this proposal to authorize an additional 2,000,000 shares for issuance of two different types of
Awards:
o Stock Options, which can qualify as "incentive stock options" under the Internal Revenue Code2004 Plan, the cumulative aggregate share authorization under our 2004 Plan will increase to 3,250,000. In addition, as originally approved by the stockholders, no more than 250,000 shares of 1986, as amended (the "Tax Code")this 2004 Plan reserve could have been issued upon the exercise or as
"non-qualifiedsettlement of any restricted stock options;"
o Incentive Stock, which ispurchase rights, restricted stock that vests based on continued
employment, passagebonuses, restricted stock units, performance shares and performance units. If the stockholders approve this share increase proposal, thereafter no more than 650,000 shares of timethis newly increased share reserve under the 2004 Plan may be issued upon the exercise or satisfactionsettlement of performance criteria.
The 2002 Plan has asuch awards. Including the proposed 2,000,000 share increase, but deducting the number of special terms and limitations, including:
o The exercise price for stock options grantedshares subject to outstanding awards under the plan must equal
the Company's stock price on the date the option is granted;
o Stock options granted2004 Plan as of December 10, 2004, a total of 2,734,174 shares would be available under the 20022004 Plan cannot be "repriced," as
definedif this proposal is approved by our stockholders.
If any award expires, lapses or otherwise terminates for any reason without having been exercised or settled in full, or if shares subject to forfeiture or repurchase are forfeited or repurchased by the 2002 Plan;
o Only 1,900,000Company, any such shares that are proposedreacquired or subject to besuch a terminated award will again become available for issuance under the 2002 Plan;
o No more than 15% of2004 Plan. Upon any stock dividend, stock split, reverse stock split, recapitalization or similar change in our capital structure, appropriate adjustments will be made to the shares available under the 2002 Plan may be
issued in the form of awards other than stock options;
o Awards under the 2002 Plan typically are subject to one-year minimum
vesting requirements, subject to exceptions for retirement, death or
disability of an employee or upon a change of control;
o Stockholder approval is required for certain types of amendmentsthe 2004 Plan, to the 2002 Plan.
The 2002 Plan provides that Awards may, but need not, qualify for an
exemption from the "short swing liability" provisions of Section 16(b) of the
Exchange Act pursuant to Rule 16b-3 and/or qualify as "performance-based
compensation" that is exempt from the $1 million limitation on the deductibility
of compensation under Tax Code Section 162(m). In order for Awards under the
2002 Plan to qualify as "performance-based compensation" under Tax Code Section
162(m), the 2002 Plan is required to provide (i) stockholder approval of the
class of eligible participants, (ii) per person annual award grant limitations and (iii) the "Qualifying Performance Criteria."
5
Administration
to all outstanding awards.
Administration.The 20022004 Plan will be administered by the Compensation Committeecompensation or other committee of the Board of Directors althoughduly appointed to administer the 2004 Plan, or, in the absence of such committee, by the Board of DirectorsDirectors. In the case of awards intended to qualify for the performance-based compensation exemption under Section 162(m) of the Code, administration must be by a compensation committee comprised solely of two or more “outside directors” within the meaning of Section 162(m). (For purposes of this summary, the term “Committee” will refer to either such duly appointed committee or the Board of Directors.) Subject to the provisions of the 2004 Plan, the Committee determines in its discretion the persons to whom and the times at which awards are granted, the types and sizes of such awards, and all of their terms and conditions. The Committee may, subject to certain limitations on the exercise of its discretion required by Section 162(m), amend, cancel, renew, or grant a new award in substitution for, any authorityaward, waive any restrictions or conditions applicable to any award, and accelerate, continue, extend or defer the vesting of any award. However, the 2004 Plan forbids, without stockholder approval, the repricing of any outstanding stock option and/or stock appreciation right. In addition, the 2004 Plan forbids any restricted stock award to be granted, or subsequently amended to provide, for (1) any acceleration of vesting for any reason other than upon a Change in Control or after a participant’s death or disability, (2) vesting of one hundred percent (100%) of any such award prior to the passage of three years of service (unless the award will vest after satisfying specified performance measurements) and (3) for a performance period shorter than twelve (12) months. The 2004 Plan provides, subject to certain limitations, for indemnification by the Company of any director, officer or employee against all reasonable expenses, including attorneys’ fees, incurred in connection with any legal action arising from such person’s action or failure to act in administering the 2004 Plan. The Committee will interpret the 2004 Plan and awards granted thereunder, and all determinations of the Committee will be final and binding on all persons having an interest in the 2004 Plan or any award.
Eligibility.Awards may be granted to employees, directors and consultants of the Company or any present or future parent or subsidiary corporations of the Company. Incentive stock options may be granted only to employees who, as of the time of grant, are employees of the Company or any parent or subsidiary corporation of the Company. As of December 20, 2004, the Company had approximately 45,000 employees, including 13 executive officers, and eight non-management directors who would be eligible under the 20022004 Plan.
Stock Options.Each option granted under the 2004 Plan in lieu ofmust be evidenced by a written agreement between the Committee's exercise
thereof. The Committee may designate subcommitteesCompany and may delegate certain
administrative functions to others.
Subject to the express provisions of the 2002 Plan, the Committee has broad
authority to administer and interpret the 2002 Plan, including, without
limitation, authority to determine who is eligible to participate in the 2002
Plan and to which of such persons, and when, Awards are granted, to determineoptionee specifying the number of shares subject to the option and the other terms and conditions of the option, consistent with the requirements of the 2004 Plan. The exercise price of each option may not be less than the fair market value of a share of
10
The 2004 Plan but currently there are 69
individuals holding awardsprovides that the option exercise price may be paid in cash, by check, or in cash equivalent, by the assignment of the proceeds of a sale with respect to some or all of the shares being acquired upon the exercise of the option, to the extent legally permitted, by tender of shares of Common Stock owned by the optionee having a fair market value not less than the exercise price, by such other lawful consideration as approved by the Committee, or by any combination of these. Nevertheless, the Committee may restrict the forms of payment permitted in connection with any option grant. No option may be exercised unless the optionee has made adequate provision for federal, state, local and foreign taxes, if any, relating to the exercise of the option, including, if permitted or required by the Company, through the optionee’s surrender of a portion of the option shares to the Company.
Options will become vested and exercisable at such times or upon such events and subject to such terms, conditions, performance criteria or restrictions as specified by the Committee. The maximum term of any option granted under the 1992 Plan. While it2004 Plan is generally
expectedten years, provided that an incentive stock option granted to a Ten Percent Stockholder must have a term not exceeding five years. The Committee will specify in each written option agreement, and solely in its discretion, the same categoriesperiod of executivespost-termination exercise applicable to each option.
Stock options are nontransferable by the optionee other than by will or by the laws of descent and management who participatedistribution, and are exercisable during the optionee’s lifetime only by the optionee. However, a nonstatutory stock option may be assigned or transferred to the extent permitted by the Committee and set forth in the option agreement.
Stock Appreciation Rights.Each stock appreciation right granted under the 19922004 Plan willmust be eligible to participate underevidenced by a written agreement between the 2002 Plan, Awards
may from time to time be granted to employees who are not in these groups but
who have otherwise distinguished themselves for their contributions toCompany and the Company.
Awards
The 2002 Plan authorizes the grant and issuance of the following types of
Awards: Stock Options and Incentive Stock.
Stock Options. Subject to the provisions of the 2002 Plan, the Committee
has discretion to determine the vesting schedule of options, the events causing
an option to expire,participant specifying the number of shares subject to any option, the restrictions on transferability of an option,award and such furtherthe other terms and conditions in each case not inconsistentof the award, consistent with the 2002 Plan, as may be
determined from time to time by the Committee except that no option granted to
an employee may become exercisable within one (1) yearrequirements of the grant date other
than upon2004 Plan.
A stock appreciation right gives a change of control or uponparticipant the employee's retirement, death or
disability. The 2002 Plan expressly provides that options cannot be "repriced,"
as definedright to receive the appreciation in the 2002 Plan. The exercise price for options may not be less than
6
100% of the fair market value of theCompany Common Stock between the date of grant of the award and the date of its exercise. The Company may pay the appreciation either in cash or in shares of Common Stock. The Committee may grant stock appreciation rights under the 2004 Plan in tandem with a related stock option or as a freestanding award. A tandem stock appreciation right is exercisable only at the time and to the same extent that the related option is exercisable, and its exercise causes the related option to be canceled. Freestanding stock appreciation rights vest and become exercisable at the times and on the dateterms established by the optionCommittee. The maximum term of any stock appreciation right granted under the 2004 Plan is granted. ten years. Subject to appropriate adjustment in the event of any change in the capital structure of the Company, no employee may be granted in any fiscal year of the Company stock appreciation rights which in the aggregate are for more than two hundred and fifty thousand (250,000) shares.
Stock appreciation rights are nontransferable by the participant other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant.
Restricted Stock Awards.The total numberCommittee may grant restricted stock awards under the 2004 Plan, either in the form of sharesa restricted stock purchase right, giving a participant an immediate right to purchase Common Stock, or in the form of a restricted stock bonus, for which the participant furnishes consideration in the form of services to the Company. The Committee determines the
11
Restricted Stock Units.The Committee may grant restricted stock units under the 2004 Plan which represent a right to receive shares of Common Stock byat a reductionfuture date determined in accordance with the participant’s award agreement. No monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award, the consideration for which is furnished in the form of the participant’s services to the Company. The Committee may grant restricted stock unit awards subject to the attainment of performance goals similar to those described below in connection with performance shares and performance units, or may make the awards subject to vesting conditions similar to those applicable to restricted stock awards. Participants have no voting rights or rights to receive cash dividends with respect to restricted stock unit awards until shares of Common Stock are issued in settlement of such awards. However, the Committee may grant restricted stock units that entitle their holders to receive dividend equivalents, which are rights to receive additional restricted stock units for a number of Shares issuable pursuantshares whose value is equal to such option, or by a
promissory note or other commitmentany cash dividends we pay. Subject to pay (including such a commitment by a
stock broker to pay over proceeds fromappropriate adjustment in the saleevent of Shares issuable under a Stock
Option). Options granted underany change in the 2002 Plancapital structure of the Company, no employee may be either incentivegranted in any fiscal year of the Company more than one hundred thousand (100,000) restricted stock options ("ISOs") qualifying under Tax Code Section 422 or non-qualified stock
options ("NQSOs"),units on which the restrictions are not intended to qualify as ISOs.
Incentive Stock. Incentive Stock is an award or issuance of Shares thebased on performance criteria.
Performance Awards.The Committee may grant issuance, retention, vesting and/or transferability of which isperformance awards subject
during specified periods of time to such conditions (includingand the attainment of such performance conditions) and termsgoals over such periods as the Committee deems appropriate.determines in writing and sets forth in a written agreement between the Company and the participant. These awards may be designated as performance shares or performance units. Performance shares and performance units are unfunded bookkeeping entries generally having initial values, respectively, equal to the fair market value determined on the grant date of a share of Common Stock and $100 per unit. Performance awards will specify a predetermined amount of performance shares or performance units that may be earned by the participant to the extent that one or more predetermined performance goals are attained within a predetermined performance period. To the extent earned, performance awards may be settled in cash, shares of Common Stock (including shares of restricted stock) or any combination thereof. Subject to appropriate adjustment in the provisionsevent of any change in the capital structure of the 2002 Plan,Company, for each fiscal year of the Company contained in the applicable performance period, no employee may be granted performance shares that could result in the employee receiving more than one hundred thousand (100,000) shares of Common Stock or performance units that could result in the employee receiving more than one million dollars ($1,000,000). A participant may receive only one performance award with respect to any performance period.
Prior to the beginning of the applicable performance period or such later date as permitted under Section 162(m) of the Code, the Committee has discretionwill establish one or more performance goals applicable to determine the termsaward. Performance goals will be based on the attainment of any Incentive Stock Award, includingspecified target levels with respect to one or more measures of business or financial performance of the numberCompany and each parent and subsidiary corporation consolidated therewith for financial reporting purposes, or such division or business unit of Shares subject to an
Incentive Stock Award or a formula for determining such, the purchase price, if
any, for the Shares (which may be below fair market value), the conditions that
determine the number of Shares granted, issued, retainable and/or vested,
forfeiture provisions, the effect of termination of employment for various
reasons, and such further terms and conditions, in each case not inconsistent
with the 2002 Plan,Company as may be establishedselected by the Committee. Incentive Stock
AwardsThe Committee, in its discretion, may be granted, issued, retainable and/or vested based upon continued
employment, the passage of time or the satisfaction ofbase performance criteria, as
specified by the Committee, except that any condition that is based upon
continued employment or the passage of time shall not provide for vesting of any
portion of an Incentive Stock Award in less than one (1) year from the date the
award is made, other than upon the retirement, death or disability of the
employee or upon a change of control. The total number of shares of Incentive
Stock issued or issuable to any employee during any calendar year may not exceed
100,000. The performance criteria upon which Incentive Stock Awards are granted,
issued, retained and/or vested may be based on financial performance and/or
personal performance evaluations. However, any Incentive Stock that is intended
by the Committee to satisfy the requirements for "performance-based
compensation" under Tax Code Section 162(m), the performance criteria shall be a
measure basedgoals on one or more Qualifying Performance Criteria. Notwithstanding
satisfaction of anythe following such measures: revenue, gross margin, operating margin, operating income, pre-tax profit, earnings before interest, taxes, depreciation and/or amortization, net income, cash flow, expenses, stock price, earnings per share, return on stockholder equity, return on capital, return on capital, return on net assets, economic value added, number of customers, market share, same store sales, return on investment, profit after tax and guest and/or customer satisfaction. The target levels with respect to these performance measures may be expressed on an absolute basis or relative to a standard specified by the Committee. The degree of
12
Following completion of the applicable performance period, the Committee will certify in writing the terms of an Award atextent to which the time of its grant,applicable performance goals have been attained and the number of Shares granted, issued, retainable and/resulting value to be paid to the participant. The Committee retains the discretion to eliminate or vested under an Incentive Stock Award mayreduce, but not increase, the amount that would otherwise be reduced bypayable to the Committeeparticipant on the basis of the performance goals attained. However, no such further considerations asreduction may increase the amount paid to any other participant. In its discretion, the Committee may provide for the payment to a participant awarded performance shares of dividend equivalents with respect to cash dividends paid on the Company’s Common Stock. Performance award payments may be made in its sole discretion
shall determine.
Transferabilitylump sum or in installments. If any payment is to be made on a deferred basis, the Committee may provide for the payment of Awards
Generally, Awards granted underdividend equivalents or interest during the 2002deferral period.
Unless otherwise provided by the Committee, if a participant’s service terminates due to the participant’s death, disability or retirement prior to completion of the applicable performance period, the final award value will be determined at the end of the performance period on the basis of the performance goals attained during the entire performance period but will be prorated for the number of months of the participant’s service during the performance period. If a participant’s service terminates prior to completion of the applicable performance period for any other reason, the 2004 Plan provides that, unless otherwise determined by the Committee, the performance award will be forfeited. No performance award may not be sold assigned,
conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner
prior to the vesting or lapse of any and all restrictions applicable thereto, other than by will or the laws of descent and distribution except thatprior to the Committee may permit an Award to be transferable to a member or membersend of the Participant's family or to entities owned or established for the benefit ofapplicable performance period.
Change in Control.The 2004 Plan defines a Participant's family.
Qualifying Performance Criteria and Tax Code Section 162(m) Limits
Subject to stockholder approval“Change in Control” of the 2002 Plan, the performance criteria
for any Incentive Stock that is intended to satisfy the requirements for
"performance-based compensation" under Tax Code Section 162(m) shall be any one
or more of the following performance criteria, either individually,
alternatively or in any combination, applied to either the Company as a whole or
to a business unit or subsidiary, either individually, alternatively or in any
combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to previous
years' results or to a designated comparison group, in each case as specified by
the Committee in the Award: (a) cash flow, (b) earnings per share, (c) earnings
before taxes, (d) earnings before interest, taxes, depreciation and
amortization, (e) return on equity, (f) total stockholder return, (g) share
7
price performance, (h) return on capital, (i) return on assets or net assets,
(j) revenue, (k) income or net income, (l) operating income or net operating
income, (m) operating profit or net operating profit, (n) operating margin or
profit margin, (o) return on operating revenue, (p) market share, (q) overhead
or other expense reduction and (r) any other similar performance criteria
contemplated by the regulations under Tax Code Section 162(m). The Committee may
appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii)upon which the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs, and (v) any extraordinary
non-recurring items.
The aggregate number of Shares subject to options granted under the 2002
Plan during any calendar year to any one Participant may not exceed 400,000,
unless such limitation is not required under Tax Code Section 162(m). The
aggregate number of Shares issued or issuable under all Awards granted under the
2002 Plan (other than options) during any calendar year to any one Participant
shall not exceed 100,000.
Other Provisions Applicable to Awards
The 2002 Plan has provisions designed so that it qualifies as an "eligible
plan" under the margin provisions of Regulation U, by expressly providing that
the Committee may, but is not required to, loan the amount necessary to purchase
Shares and/or pay taxes under any award. The 2002 Plan also provides that the
Committee may, but need not, provide that the holder of an Award has a right
(such as a stock appreciation right) to receive a number of Shares or cash, or a
combination thereof, the amount of which is determined by reference to the valuestockholders of the Award. Finally,Company immediately before the 2002 Plan doesevent do not limitretain immediately after the Company's right to make
other arrangements to provideevent, in substantially the same proportions as their ownership of shares of the Company’s voting stock options and other forms of compensation
arrangements as it determines appropriate.
Change of Control
The Committee may provide that in connection with a change of control (as
defined inimmediately before the 2002 Plan), Awards will become exercisable, payable, vested,
paid,event, direct or canceled, and may provide for an absolute or conditional exercise,
payment or lapse of conditions or restrictions on an Award that would be
effective only if, upon the announcementindirect beneficial ownership of a transaction intendedmajority of the total combined voting power of the voting securities of the Company, its successor or reasonably
expectedthe corporation to resultwhich the assets of the Company were transferred: (i) a sale or exchange by the stockholders in a changesingle or series of control, no provision is made under the termsrelated transactions of such transaction for the holder of an Award to realize the full benefitmore than 50% of the Award. A change of control is defined to include (i) anyCompany’s voting stock; (ii) a merger or consolidation in which the Company is nota party; (iii) the surviving entity (or survives only
as a subsidiary of another entity whose shareholders did not own allsale, exchange or substantially all of the Company's Common Stock immediately prior to such
transaction), (ii) the saletransfer of all or substantially all of the Company's assets of the Company; or (iv) a liquidation or dissolution of the Company. If a Change in Control occurs, the surviving, continuing, successor or purchasing corporation or parent corporation thereof may either assume all outstanding awards or substitute new awards having an equivalent value.
In the event of a Change in Control, in which the outstanding stock options and stock appreciation rights are not assumed or replaced, then all unexercisable, unvested or unpaid portions of such outstanding awards will become immediately exercisable, vested and payable in full immediately prior to the date of the Change in Control.
In the event of a Change in Control, the lapsing of all vesting conditions and restrictions on any shares subject to any other personrestricted stock award, restricted stock unit and performance award held by a participant whose service with the Company has not terminated prior to the Change in Control shall be accelerated effective as of the date of the Change in Control. For this purpose, the value of outstanding performance awards will be determined and paid on the basis of the greater of (i) the degree of attainment of the applicable performance goals prior the date of the Change in Control or entity (other than(ii) 100% of the pre-established performance goal target.
Any award not assumed, replaced or exercised prior to the Change in Control will terminate. The 2004 Plan authorizes the Committee, in its discretion, to provide for different treatment of any award, as may be specified in such award’s written agreement, which may provide for acceleration of the vesting or settlement of any award, or provide for longer periods of exercisability, upon a wholly-owned subsidiary),Change in Control.
Termination or Amendment.The 2004 Plan will continue in effect until the first to occur of (i) its termination by the Committee, (ii) the date on which all shares available for issuance under the 2004 Plan have been issued and all restrictions on such shares under the terms of the 2004 Plan and the
13
Summary of U.S. Federal Income Tax Consequences
The following summary is intended only as a contested electiongeneral guide to the U.S. federal income tax consequences of directors,participation in the 2004 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances.
Incentive Stock Options.An optionee recognizes no taxable income for regular income tax purposes as a result of whichthe grant or in
connection with which the persons who were directorsexercise of an incentive stock option qualifying under Section 422 of the Company before such
election orCode. Optionees who neither dispose of their nominees cease to constitute a majorityshares within two years following the date the option was granted, nor within one year following the exercise of the Board,option, will normally recognize a capital gain or (vi)loss equal to the difference, if any, other event specified bybetween the Committee.
Amendmentssale price and Termination
The Board of Directors may amend, alter or discontinue the 2002 Plan or any
agreement evidencing an Award made under the 2002 Plan, but no such amendment
shall, without the approvalpurchase price of the stockholdersshares. If an optionee satisfies such holding periods upon a sale of the Company: (a) materially
increaseshares, the maximum numberCompany will not be entitled to any deduction for federal income tax purposes. If an optionee disposes of shares of Common Stock for which Awards may be
granted under the 2002 Plan; (b) reduce the price at which Stock Options may be
granted; (c) reduce the exercise price of outstanding Options; (d) extend the
term of the 2002 Plan; (e) change the class of persons eligible to participate
under the 2002 Plan; (f) increase the number of shares that are eligible for
issuance under Incentive Stock Awards; or (g) after any change of control,
impair the rights of any Award holder without such holder's consent. No Award
shall be granted under the 2002 Plan more than 10within two years after the date of grant or within one year after the stockholders' adoptiondate of exercise (a “disqualifying disposition”), the difference between the fair market value of the 2002 Plan.
8
Federal Income Tax Consequences
The followingshares on the determination date (see discussion under “Nonstatutory Stock Options” below) and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the optionee upon the disqualifying disposition of the federal income tax consequences ofshares generally should be deductible by the 2002
Plan is intended to be a summary of applicable federal law as currently in
effect. State and local tax consequences may differ, and tax laws may be amended
or interpreted differently during the term of the 2002 Plan or of Awards
thereunder. Because the federal income tax rules governing Awards and related
payments are complex and subject to frequent change, and they depend on the
Participant's individual circumstances, Participants are advised to consult
their tax advisors prior to exercise of options or other Awards or dispositions
of stock acquired pursuant to Awards.
ISOs and NQSOs are treated differentlyCompany for federal income tax purposes.
ISOs are intendedpurposes, except to comply with the requirementsextent such deduction is limited by applicable provisions of Tax Code Section 422. NQSOs
need not comply with such requirements.
An optionee is not taxed on the grant or, except as described below,
exercise of an ISO.Code.
The difference between the option exercise price and the fair market value of the Sharesshares on the exercisedetermination date will, however, beof an incentive stock option (see discussion under “Nonstatutory Stock Options” below) is treated as an adjustment itemin computing the optionee’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax and thus an optionee could becredits which may arise with respect to optionees subject to the alternative minimum tax.
Nonstatutory Stock Options and Indexed Stock Options.Options not designated or qualifying as incentive stock options, or as an indexed stock option, will be nonstatutory stock options having no special tax status. An optionee generally recognizes no taxable income as athe result of the grant of such an option. Upon exercise of an ISO. If
ana nonstatutory stock option, the optionee holdsnormally recognizes ordinary income in the Shares acquired upon exerciseamount of an ISO for at least two
years following the option grant date and at least one year following exercise,
the optionee's gain, if any, upon a subsequent disposition of such Shares is
long-term capital gain. The measure of the gain is the difference between the proceeds received on disposition and the optionee's basis in the Shares (which
generally equals theoption exercise price). If an optionee disposes of Shares acquired
pursuant to exercise of an ISO before satisfying the one and two-year holding
periods described above, the optionee may recognize both ordinary income and
capital gain in the year of disposition. The amount of the ordinary income will
be the lesser of (i) the amount realized on disposition less the optionee's
adjusted basis in the Shares (usually the exercise price) or (ii) the difference
between the fair market value of the Shares on the exercise date and the
exercise price. The balance of the consideration received on such a disposition
will be long-term capital gain if the stock had been held for at least one year
following exercise of the ISO. The Company is not entitled to an income tax
deduction on the grant or exercise of an ISO or on the optionee's disposition of
the Shares after satisfying the holding period requirements described above. If
the holding periods are not satisfied, the Company will be entitled to a
deduction in the year the optionee disposes of the Shares in an amount equal to
the ordinary income recognized by the optionee.
An optionee is not taxed on the grant of an NQSO. On exercise, however, the
optionee recognizes ordinary income equal to the difference between the option price and the fair market value of the shares acquired on the determination date (as defined below). If the optionee is an employee, such ordinary income generally is subject to withholding of exercise.income and employment taxes. The “determination date” is the date on which the option is exercised unless the shares are subject to a substantial risk of forfeiture (as in the case where an optionee is permitted to exercise an unvested option and receive unvested shares which, until they vest, are subject to the Company’s right to repurchase them at the original exercise price upon the optionee’s termination of service) and are not transferable, in which case the determination date is the earlier of (i) the date on which the shares become transferable or (ii) the date on which the shares are no longer subject to a substantial risk of forfeiture. If the determination date is after the exercise date, the optionee may elect, pursuant to Section 83(b) of the Code, to have the exercise date be the determination date by filing an
14
Restricted Stock Awards.A participant acquiring restricted stock generally are required towill recognize ordinary income with
respect to Incentive Stock equal to the fair market value of the Shares (less
any amount paid to acquireshares on the Shares) when“determination date” (as defined above under “Nonstatutory Stock Options”). If the Shares are both received and no
longer subject to vesting restrictions, except that a Participant who receives
Incentive Stock thatparticipant is an employee, such ordinary income generally is subject to vesting restrictionswithholding of income and who properly makesemployment taxes. If the determination date is after the date on which the participant acquires the shares, the participant may elect, pursuant to Section 83(b) of the Code, to have the date of acquisition be the determination date by filing an election under Tax Code Section 83(b) (an "83(b) election") withinwith the Internal Revenue Service no later than 30 days after the date the shares are acquired. Upon the sale of receipt will recognize ordinary incomeshares acquired pursuant to a restricted stock award, any gain or loss, based on the value ofdifference between the underlying
Shares (determined without regard tosale price and the vesting restrictions)fair market value on the determination date, of
initial receipt (as opposed to the date of vesting) and may treat appreciation
subsequent to the date of receiptwill be taxed as capital gain (depending on the holding
period for the Shares). Participants receiving Incentive Stock should consult
their tax advisors regarding the ability and advisability of making the 83(b)
election, including the limitations on claiming a loss if the Shares decline in
value or are forfeited after receipt.loss. The Company generally receivesshould be entitled to a deduction equal to the amount of ordinary income recognized by the recipientparticipant on the determination date, except to the extent such deduction is limited by applicable provisions of Incentive Stock.
9
Certain officers, directorsthe Code.
Performance and significantRestricted Stock Units Awards.A participant generally will recognize no income upon the grant of a performance share, performance units or restricted stock units award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any nonrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above (see discussion under “Restricted Stock Awards”). Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on the “determination date” (as defined above under “Nonstatutory Stock Options and Indexed Stock Options”), will be taxed as capital gain or loss. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.
New Plan Benefits
No awards will be granted under the 2004 Plan with respect to this share increase prior to approval by the stockholders of the Company who
are subject to Section 16(b) of the Exchange Act should consult their tax
advisors regardingamended 2004 Plan containing the share reserve increase. Awards under the 2004 Plan will be granted at the discretion of the Committee and accordingly, are not yet determinable. In addition, benefits under the 2004 Plan will depend on a number of factors, including the fair market value of the Company’s Common Stock on future dates, actual Company performance against performance goals established with respect to performance awards and decisions made by the participants. Consequently it is not possible to determine the benefits that might be received by participants under the 2004 Plan with respect to this share reserve increase.
Required Vote and Board of Directors Recommendation
The affirmative vote of a majority of the votes cast at the meeting, at which a quorum is present, either in person or by proxy, is required to approve the adoption of the proposed amendment to the 2004 Plan. If you hold your shares in your own name and abstain from voting on this matter, your abstention will have the effect of Section 16(b)a negative vote. If you hold your shares through a broker and you do not instruct the broker on the amount and timing of
incomehow to vote on this proposal, your broker will not have authority to vote your shares. Broker non-votes will be recognized in connection with an Award, including the ability and
advisability of making an 83(b) election in connection with an Award.
Special rules will apply in cases where a recipient of an Award pays the
exercise or purchase price of the Award or applicable withholding tax
obligations under the 2002 Plan by delivering previously owned Shares or by
reducing the number of Shares otherwise issuable pursuant to the Award. The
surrender or withholding of such Shares will in certain circumstances result in
the recognition of income with respect to such Shares or a carryover basis in
the Shares acquired, and may constitute a dispositioncounted as present for purposes of applyingdetermining the ISO holding periods discussed above. The Company generallypresence of a quorum but will be entitled
to withholdnot have any required taxes in connection witheffect on the exercise or payment of an
Award, and may require the Participant to pay such taxes as a condition to
exercise of an Award.
The termsoutcome of the agreements or other documents pursuant to which specific
Awards are made underproposal.
15
The Board believes that the 2002 Plan may provide for accelerated vesting or
payment of an Award in connection with a change in ownership or controlproposed adoption of the Company. In that event and depending uponamendment to the individual circumstances of2004 Plan is in the Participant, certain amounts with respect to such Awards may constitute "excess
parachute payments" under the "golden parachute" provisions of the Tax Code.
Pursuant to these provisions, a Participant will be subject to a 20% excise tax
on any "excess parachute payments" and the Company will be denied any deduction
with respect to such payments. Participants should consult their tax advisors as
to whether accelerated vesting of an Award in connection with a change of
ownership or controlbest interests of the Company would give rise to an excess parachute
payment.
As described above, Awardsand its stockholders for the reasons stated above.THEREFORE, THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE ADOPTION OF THE AMENDMENT TO THE 2004 PLAN.
EQUITY COMPENSATION TABLE
The following table summarizes the equity compensation plans under the 2002 Planwhich Company Common Stock may qualifybe issued as "performance-based compensation" under Tax Code Section 162(m) in order to
preserve federal income tax deductions byof October 3, 2004. Stockholders of the Company with respect to any
compensation required to be taken into account under Tax Code Section 162 that
is in excess of $1,000,000 and paid to a Covered Employee (as defined in Tax
Code Section 162). Compensation for any year that is attributable to an Award
granted to a Covered Employee and that does not so qualify may not be deductible
by the Company to the extent such compensation, when combined with other
compensation paid to such employee for the year, exceeds $1,000,000.
Interests of Directors and Officers
The Committee has full discretion to determine the timing and recipients of
any stock option grants under the 2002 Plan and the number of shares subject to
any such options that may be granted under the 2002 Plan, subject to an annual
limitation on the total number of options that may be granted to any optionee.
Therefore, the benefits and amounts that will be received by each of the Named
Executive Officers, the executive officers as a group, andapproved all other key
employees under the 2002 Plan are not presently determinable.
10
| (c) | ||||||||||||
| Number of securities | ||||||||||||
| (a) | (b) | remaining for future issuance | ||||||||||
| Number of securities to be | Weighted-average | under equity compensation | ||||||||||
| issued upon exercise of | exercise price of | plans (excluding securities | ||||||||||
| outstanding options | outstanding options | reflected in column (a)) | ||||||||||
| Equity compensation plans approved by security holders | 5,590,047 | $ | 21.80 | 823,274 | ||||||||
16
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Jack in the Box Inc. Board of Directors (the "Committee"“Audit Committee”) is composed of the three independent directors.directors named below, each of whom is an “independent director” as defined in the applicable listing standards of the New York Stock Exchange. The duties of the Audit Committee are summarized in this Proxy Statement under “Committees of the Board of Directors” on page 5 and are more fully described in the Audit Committee charter adopted by the Board of Directors. The Audit Committee reviews our financial reporting process on behalfand assesses the adequacy of its charter each fiscal year. The Audit Committee recently revised its charter, which was then approved by the Board of Directors. In
fulfillingDirectors, in November 2004. The revised charter is attached to this Proxy Statement as Exhibit B.
As more fully described in its responsibilities,charter, one of the Audit Committee has reviewed and discussedCommittee’s primary responsibilities is to assist the auditedBoard in its oversight of the integrity of the Company’s financial statements contained in the 2001 Annual Report on Form
10-K with management and the independent accountants.reports. Management is responsible for the Company’s accounting and financial statementsreporting processes, internal controls and the reporting process, includingpreparation and integrity of the system of
internal controls. TheCompany’s consolidated financial statements. KPMG, the Company’s independent accountants areregistered public accountant, is responsible both for performing an independent audit of the Company'sCompany’s consolidated financial statements in accordance with the Standards of the Public Company Accounting Oversight Board (United States) and expressing an opinion on the conformity of those audited consolidated financial statements with U.S. generally accepted accounting principles. Jack in the Box Inc. has a full time Internal Audit Department that reports to the Audit Committee and management, and is responsible for reviewing and evaluating the Company’s internal controls. The function of the Audit Committee is not to duplicate the activities of management, or the internal or external auditors, but to serve a Board-level oversight role in which it provides advice, counsel, and direction to management and the auditors.
The Audit Committee has sole authority to select, evaluate and when appropriate, to replace the Company’s independent registered public accountants. The Audit Committee has appointed KPMG as the Company’s independent registered public accountants for fiscal year 2005 and has requested stockholder ratification of its appointment.
The Committee has reviewed and discussed with management and KPMG the disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2004. This review included a discussion with management and KPMG regarding the quality of the Company’s accounting principles, the reasonableness of significant estimates and judgments, and the clarity and completeness of disclosure of the Company’s consolidated financial statements. Management represented to the Audit Committee that the Company’s consolidated financial statements, on which KPMG issued an unqualified opinion, were prepared in accordance with accounting principles generally accepted in the United States of America. The Committee discussed with the independent accountants,KPMG, the matters required to be discussed by Statement on Auditing Standards No. 61, Communication“Communications with Audit Committees,Committees”, as amended.
In addition, the Audit Committee has
discussed with the independent accountants, their independence from the Company
and its management, including the matters inreceived the written disclosures and the letter from KPMG required by Independence Standards Board Standard No. 1, Independence“Independence Discussions with Audit Committees.Committees,” and discussed with KPMG its independence from the Company.
The Committee has discussed with management and KPMG such other matters and received such assurances from them as the Committee deemed appropriate.
In reliance on the reviewsreview and discussions referred to above, and the report of KPMG, the Audit Committee recommended to the Board of Directors, and the Board of Directors has approved, includingthe inclusion of the audited consolidated financial statements in the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended September 30, 2001, filedOctober 3, 2004 for filing with the SEC.
| Michael W. Murphy, Chair | |
| Murray H. Hutchison | |
| L. Robert Payne |
17
INDEPENDENT REGISTERED PUBLIC ACCOUNTANT FEES AND SERVICES
The following table presents fees billed for professional services rendered by KPMG for the fiscal years ending October 3, 2004 and September 28, 2003.
| 2004 | 2003 | ||||||||
| Audit Fees(1) | $ | 589,500 | $ | 295,475 | |||||
| Audit Related Fees(2) | 127,125 | 81,800 | |||||||
| Tax Fees(3) | 250,000 | 500 | |||||||
| All Other Fees | 0 | 0 | |||||||
| KPMG Total Fees | $ | 966,625 | $ | 377,775 | |||||
| (1) | Audit fees represent fees billed by KPMG for professional services rendered for the audit of the Company’s annual consolidated financial statements and for the reviews of the consolidated financial statements included in the Company’s Form 10-Q filings for each fiscal year. Audit fees are higher in fiscal 2004, primarily due to additional audit work necessitated by a change in the Company’s accounting policy and a subsequent restatement of the Company’s consolidated financial statements for fiscal years 2002 and 2003, and the first three quarters of fiscal year 2004. |
| (2) | These fees consist of assurance and services performed by KPMG that are reasonably related to the performance of the audit or review of the Company’s financial statements. This category includes: employee benefit and compensation plan audits; work related to the requirements of Section 404 of the Sarbanes Oxley Act; due diligence related to mergers and acquisitions; attestations by KPMG that are not required by statute or regulation; and consulting on financial accounting/ reporting standards. |
| (3) | Tax fees consist of aggregate fees billed for professional services rendered by KPMG for tax compliance, tax advice and tax planning. Tax fees are higher in fiscal 2004 due to a fixed fee tax engagement that involved all aspects of identifying and securing a sales tax refund for the Company |
Registered Public Accountant Independence.The Audit Committee has considered whether the provision of the above noted services is compatible with maintaining the principal registered public accountant’s independence and has determined that the provision of such services has not adversely affected the registered public accountant’s independence.
Policy on Audit Committee Pre-Approval.The Company and its Audit Committee are committed to ensuring the independence of the independent registered public accountant, both in fact and in appearance. In this regard, the Audit Committee has established a pre-approval policy in accordance with applicable Securities and Exchange Commission.
Paul T. Carter, Chair
L. Robert Payne
Murray H. Hutchison
rules. The Audit Committee’s pre-approval policy is set forth in the Policy for Audit Committee Pre-Approval of Services, included as Exhibit D to this Proxy Statement.
18
PROPOSAL THREE
RATIFICATION OF THE APPOINTMENT
The BoardAudit Committee has appointed the firm of KPMG LLPas the Company’s independent registered public accountant for fiscal year 2005. Although action by stockholders in this matter is not required, the Audit Committee believes it is appropriate to seek stockholder ratification of this appointment in light of the critical role played by the independent registered public accountant in maintaining the integrity of Company financial controls and reporting
KPMG has served as independent accountants to audit the
consolidated financial statements of the Company for the fiscal year ending
September 29, 2002, subject to ratification by stockholders. KPMG LLP has acted
as independent accountantsauditor for the Company since 1986. A representativeOne or more representatives of the
firmKPMG will be present at the Annual Meeting and will have the opportunity to make a statement and to respond to appropriate questions from stockholders. The following proposal will be presented at the Annual Meeting:
Action by the Audit Committee appointing KPMG as the Company’s independent registered public accountant to conduct the annual audit of the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending October 2, 2005 is hereby ratified, confirmed and approved.
Approval of this proposal requires the affirmative vote of a majority of the votes cast at the annual meeting of stockholders, (assuming a quorum). For this proposal, abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR THIS PROPOSAL.
---
Audit Fees
The aggregate fees billed by” RATIFICATION OF THE APPOINTMENT OF KPMG LLP for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended September 30, 2001 and for the reviews of the financial statements
included in the Company's Forms 10-Q for that fiscal year were $196,000.
Financial Information Systems Design and Implementation Fees
KPMG LLP did not perform services relating to financial information systems
design and implementation.
All Other Fees
The aggregate fees billed by KPMG LLP for professional services rendered,
other than those covered in the preceding two sections, for the fiscal year
ended September 30, 2001 were $50,900.
Auditor Independence
Other fees include fees for the audits of the Company's benefit plans,
accounting pronouncement implementation and tax-related services. The Audit
Committee has considered whether the provision of these services is compatible
with maintaining the principal accountant's independence and has determined that
the provision of such services have not adversely affected the accountant's
independence.
11
19
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning theprovides a summary of cash and non-cash compensation of Jack in the Company's chief executive officerBox Inc’s Chairman of the Board and CEO and the other four most highly compensated executive officers of the Company for services in all capacities to the Company and its subsidiaries during the fiscal years indicated. Bonus amounts were accruedearned for performance during the year and paid shortly thereafter.
| Long-Term Compensation | |||||||||||||||||||||||||||||
| Annual Compensation | Restricted | Securities | All Other | ||||||||||||||||||||||||||
| Fiscal | Stock | Underlying | Compensation | ||||||||||||||||||||||||||
| Name and Principal Position(s) | Year | Salary($) | Bonus($) | Other($)(1) | Awards($)(2) | Options(#) | ($)(3) | ||||||||||||||||||||||
| Robert J. Nugent | 2004 | 806,077 | 1,194,000 | 26,667 | 0 | 250,000 | 61,262 | ||||||||||||||||||||||
| Chairman of the Board and | 2003 | 756,923 | 0 | 21,482 | 0 | 170,000 | 31,078 | ||||||||||||||||||||||
| Chief Executive Officer | 2002 | 720,000 | 437,400 | 21,080 | 0 | 113,000 | 19,363 | ||||||||||||||||||||||
| Linda A. Lang | 2004 | 498,077 | 675,000 | 13,777 | 1,012,200 | 167,000 | 36,452 | ||||||||||||||||||||||
| President, Chief Operating | 2003 | 400,000 | 0 | 12,091 | 1,152,250 | 40,900 | 19,090 | ||||||||||||||||||||||
| Officer and Director | 2002 | 311,546 | 192,000 | 12,385 | 0 | 20,000 | 11,336 | ||||||||||||||||||||||
| John F. Hoffner | 2004 | 423,269 | 501,600 | 17,686 | 0 | 116,000 | 29,006 | ||||||||||||||||||||||
| Executive Vice President and | 2003 | 397,539 | 0 | 12,092 | 1,152,250 | 40,900 | 18,786 | ||||||||||||||||||||||
| Chief Financial Officer | 2002 | 381,923 | 184,320 | 101,298 | 0 | 45,000 | 12,696 | ||||||||||||||||||||||
| Paul L. Schultz | 2004 | 408,596 | 423,150 | 43,695 | 0 | 84,000 | 26,213 | ||||||||||||||||||||||
| Executive Vice President, | 2003 | 387,000 | 0 | 12,919 | 0 | 35,000 | 17,791 | ||||||||||||||||||||||
| Operations and Franchising | 2002 | 372,308 | 161,680 | 12,510 | 0 | 27,000 | 14,824 | ||||||||||||||||||||||
| Lawrence E. Schauf | 2004 | 336,538 | 398,400 | 18,706 | 0 | 71,000 | 23,308 | ||||||||||||||||||||||
| Executive Vice President | 2003 | 318,308 | 0 | 12,111 | 1,047,500 | 42,600 | 15,329 | ||||||||||||||||||||||
| and Secretary | 2002 | 306,923 | 148,320 | 12,486 | 0 | 19,000 | 12,504 | ||||||||||||||||||||||
| (1) | Other Annual Compensation |
| Financial | Supplemental | Reimbursed | ||||||||||||||||||||||
| Fiscal | Car | Planning | Health | Supplemental | Moving | |||||||||||||||||||
| Year | Allowance($) | Services($) | Insurance($) | LTD($) | Expenses($) | |||||||||||||||||||
| Robert J. Nugent | 2004 | 12,231 | 4,000 | 10,436 | 0 | 0 | ||||||||||||||||||
| 2003 | 12,000 | 0 | 9,482 | 0 | 0 | |||||||||||||||||||
| 2002 | 12,000 | 0 | 9,080 | 0 | 0 | |||||||||||||||||||
| Linda A. Lang | 2004 | 12,231 | 1,546 | 0 | 0 | 0 | ||||||||||||||||||
| 2003 | 12,000 | 0 | 0 | 91 | 0 | |||||||||||||||||||
| 2002 | 12,000 | 0 | 0 | 385 | 0 | |||||||||||||||||||
| John F. Hoffner | 2004 | 12,231 | 5,455 | 0 | 0 | 0 | ||||||||||||||||||
| 2003 | 12,000 | 0 | 0 | 92 | 0 | |||||||||||||||||||
| 2002 | 12,000 | 0 | 0 | 395 | 88,903 | |||||||||||||||||||
| Paul L. Schultz | 2004 | 12,231 | 5,091 | 26,373 | 0 | 0 | ||||||||||||||||||
| 2003 | 12,000 | 0 | 801 | 118 | 0 | |||||||||||||||||||
| 2002 | 12,000 | 0 | 0 | 510 | 0 | |||||||||||||||||||
| Lawrence E. Schauf | 2004 | 12,231 | 5,455 | 1,020 | 0 | 0 | ||||||||||||||||||
| 2003 | 12,000 | 0 | 0 | 111 | 0 | |||||||||||||||||||
| 2002 | 12,000 | 0 | 0 | 486 | 0 | |||||||||||||||||||
| (2) | Represents the |
20
| November 8, 2002, the date of grant. At October 3, 2004, Ms. Lang, Mr. Hoffner and Mr. Schauf each held an aggregate of 90,000, 55,000 and 50,000 shares, respectively, with a value of $2,907,900, $1,777,050 and $1,615,500, respectively, based on the closing price of the Company’s Common Stock | |
| (3) | All other compensation |
| Deferred Compensation | Company Paid Term | |||||||||||||||||||||||
| Matching Contributions($) | Life Premiums($)(a) | |||||||||||||||||||||||
| 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
| Robert J. Nugent | 60,002 | 29,748 | 17,885 | 1,260 | 1,330 | 1,478 | ||||||||||||||||||
| Linda A. Lang | 35,192 | 17,760 | 9,858 | 1,260 | 1,330 | 1,478 | ||||||||||||||||||
| John F. Hoffner | 27,746 | 17,456 | 11,458 | 1,260 | 1,330 | 1,478 | ||||||||||||||||||
| Paul L. Schultz | 24,953 | 16,461 | 13,346 | 1,260 | 1,330 | 1,478 | ||||||||||||||||||
| Lawrence E. Schauf | 22,048 | 13,999 | 11,026 | 1,260 | 1,330 | 1,478 | ||||||||||||||||||
| (a) | The Company has no interest in such insurance policies. |
Stock Option Grants in Fiscal 2001
2004
Set forth below is information with respect to options granted to the named executive officers in the Summary Compensation Table during the 2001fiscal year 2004.
| Number of | Potential Realizable Value | |||||||||||||||||||
| Securities | % of Total | at Assumed Annual Rates | ||||||||||||||||||
| Underlying | Options/SARs | of Stock Price Appreciation | ||||||||||||||||||
| Options/SARs | Granted to | Exercise or | for Option Term($)(2) | |||||||||||||||||
| Granted | Employees in | Base Price | Expiration | |||||||||||||||||
| Name | (#)(1)(3) | Fiscal Year | ($/Share) | Date | 5% | 10% | ||||||||||||||
| Robert J. Nugent | 160,000 | 12.0 | % | 18.90 | 11/06/2013 | 1,901,777 | 4,819,477 | |||||||||||||
| 90,000 | 6.7 | % | 28.92 | 09/10/2014 | 1,636,887 | 4,148,193 | ||||||||||||||
| Linda A. Lang | 110,000 | 8.0 | % | 18.90 | 11/06/2013 | 1,307,472 | 3,313,391 | |||||||||||||
| 57,000 | 4.3 | % | 28.92 | 09/10/2014 | 1,036,695 | 2,627,188 | ||||||||||||||
| John F. Hoffner | 90,000 | 6.7 | % | 18.90 | 11/06/2013 | 1,069,750 | 2,710,956 | |||||||||||||
| 26,000 | 2.0 | % | 28.92 | 09/10/2014 | 472,878 | 1,198,367 | ||||||||||||||
| Paul L. Schultz | 59,000 | 4.4 | % | 18.90 | 11/06/2013 | 701,280 | 1,777,182 | |||||||||||||
| 25,000 | 1.9 | % | 28.92 | 09/10/2014 | 454,691 | 1,152,276 | ||||||||||||||
| Lawrence E. Schauf | 45,000 | 3.4 | % | 18.90 | 11/06/2013 | 534,875 | 1,355,478 | |||||||||||||
| 26,000 | 2.0 | % | 28.92 | 09/10/2014 | 472,878 | 1,198,367 | ||||||||||||||
| (1) | Beginning one year from the date of grant, 25% of the total number of shares subject to the option will become exercisable annually. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | These amounts represent certain assumed rates of appreciation only, based on SEC rules. Actual gains, if any, on stock option exercises are dependent on the future performance of the Common Stock, overall market conditions and the option holder’s continued employment through the vesting period. The appreciation amounts reflected in this table may not necessarily be achieved. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) | Over the past several years, the Company has made its option grants in November. However, in fiscal 2004, the Company changed the grant date to September, which is the last period in its fiscal year. 21 Option Exercises in Fiscal Set forth below is information with respect to options exercised by the named executive officers in the Summary Compensation Table during
Pension Plan Table Retirement Plan. The Company maintains a retirement plan (the Although normal retirement age is 65, benefits may begin as early as age 55 if participants meet the service requirements defined in the Retirement Plan. Benefits payable are reduced for early commencement. Supplemental Retirement Plan. In 1990, the Company established a non-qualified supplemental retirement plan for selected executives, known as the Supplemental Executive Retirement Easy$aver Plus Plan.In 1985, the Company adopted the Jack in the Box Inc. Savings Investment Plan, currently named the Jack in the Box Inc. Easy$aver Plus Plan (the 22 established by the Internal Revenue Service. In addition, the Company contributes on a Deferred Compensation Plan.Since 1989, all executive officers and certain other members of management Summary of Retirement and Other Deferred Benefits.The following table shows estimated annual benefits payable to participants as a straight life annuity. The benefits are derived from some or all of the following Company funded sources: Retirement Plan, Company contributions to the E$P, Company contributions to the Deferred Compensation Plan and Supplemental Retirement Plan.
At Employment Contracts and Severance Arrangements On November 17, 2004, Jack in the Box Inc. announced the upcoming retirement of Executive Vice President and Chief Financial Officer (“CFO”) John Hoffner. The Company also announced the decision to promote Jerry P. Rebel, effective January 24, 2005, to the position of Senior Vice President and Chief Financial Officer. Mr. Hoffner will continue to serve as CFO until January 23, 2005, and thereafter will continue to serve as Vice President of Financial Strategy until December 31, 2005. In connection with the retirement of Mr. Hoffner, he and Jack in the Box Inc. entered into a Retirement and Release Agreement (the “Retirement Agreement”) setting forth certain understandings associated with Mr. Hoffner’s retirement and the transition of the new Chief Financial Officer. The following description is a brief summary of material terms and conditions of the Retirement Agreement. Mr. Hoffner will continue to serve as CFO through January 23, 2005; thereafter he will continue to serve the Company during a transition period ending December 31, 2005. Mr. Hoffner is not eligible to receive benefits under the Company’s qualified pension plan or its Supplemental Executive Retirement Plan. During the transition period, Mr. Hoffner’s salary and benefits, including insurance coverage, will continue at approximately the same levels, and Mr. Hoffner will continue to be eligible for stock option vesting and restricted stock vesting through the transition period, which will result in the additional vesting of 56,225 option shares and 8,250 restricted shares. In addition, Mr. Hoffner will be eligible for a bonus at the end of the transition period of approximately $200,000. The Retirement Agreement contains additional customary and usual covenants and understandings. 23 The Company has entered into compensation and benefits assurance agreements with certain of our senior executives, including Messrs. Nugent, Compensation of Directors The independent directors of the Company receive compensation for their services as described in the section of this Proxy Statement captioned “Additional Information about the Board of Directors”. Compensation Committee Interlocks and Insider Participation The current members of the Compensation Committee are Anne B. Gust, Alice B. Hayes, Murray H. Hutchison and Michael W. Murphy. All of the members of the Compensation Committee, as presently constituted and as reconstituted effective February 17, 2005, are outside directors and do not have compensation committee interlocks. 24 REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The Compensation Committee assists the Board in discharge of the Board’s responsibilities relating to compensation of the directors, officers and executives of the Company and oversight and evaluation of management. These responsibilities pertain to all executives designated as subject to Section 16 of the Securities Act of 1934. The duties of the Compensation Committee are summarized in this Proxy Statement under “Committees of the Board of The Compensation Committee is comprised of the directors named below, each of whom have been determined by the Board to be independent based upon applicable requirements of Section 162(m) of the Internal Revenue Code, the New York Stock Exchange listing standards and Jack in the Box Inc.’s additional Independence Guidelines. These Independence Guidelines are attached as Exhibit A to this Proxy Statement. The Committee has the Compensation Philosophy Our compensation philosophy is to provide pay commensurate with the level of The Company’s executive compensation pay levels are targeted to approximate the market median for individuals in similar positions in peer companies in the restaurant industry and in companies of similar scope in general industry. Executive salary progression is based on individual performance. Incentive compensation is based upon the financial and market performance of the Company. The Committee relies on information provided by its retained compensation consultant to determine market competitive pay levels. Comparison Group The Company’s pay structure and its business and financial performance is compared to a benchmark group in the restaurant industry and general industry. The Committee’s compensation consultant analyzes general industry executive compensation surveys and the Restaurant Peer Group survey of companies included in the Performance Graph on page 29 and other restaurant companies with which we compete for talent, in order to determine the median level of the competitive market. The Committee periodically reviews the Peer Group’s composition with its consultant and with management to ensure it remains relevant, and updates it accordingly. Review of Components of Compensation In 2004 the Compensation Committee’s consultant conducted a comprehensive review of Jack in the Box Inc. executive compensation and benefit programs. The Committee reviewed with management and the outside consultant the various components of the CEO’s and Section 16 officers’ compensation, including salary, bonus, equity and long-term incentive programs, perquisites and other personal benefits. A tally sheet was prepared and reviewed detailing the values of various components of CEO Compensation. The results of that analysis, corroborated by the Committee and 25 management, included the following observations about the Company’s 2004 executive compensation:
Based on this review, the Committee finds that compensation to the CEO and Section 16 officers is reasonable and aligned with the Company’s compensation philosophy and strategy. The Components of Compensation There are four major components of the Company’s executive compensation: base salary, Base Salary It is Annual Incentive The purpose of the Company’s annual incentive plan, the Performance Bonus Plan (the “Plan”), is to encourage high levels of performance and the loyalty of certain key employees, executives and officers of the Company and its affiliates, by providing annual incentives which are aligned with Company Long-Term Incentive Plans The 26 Stock Options Stock options are granted to certain officers on an Restricted Stock A greater emphasis has been placed on stock ownership by executive officers (see Stock Ownership Guidelines) through awards of restricted stock in 2003 to Messrs. Hoffner, Schauf and Ms. Lang, and in 2004 to Ms. Lang in the amount of 35,000 shares, as reflected in the Summary Compensation Table, as part of their annual long-term incentive compensation. The restricted stock is subject to continued employment and will not be distributed until retirement or termination from the Company. Upon retirement or termination, the number of restricted stock shares vested will be determined based on years of service of the Stock In keeping with its belief that companies should align the financial interests of executives to those of stockholders, the Board has established stock ownership guidelines. Under these guidelines, the officers (Senior Vice Presidents and above) are expected to own Jack in the Box Inc. common stock valued at between one and five times their individual base salary amounts, depending on their position with the Company. Section 162(m) Compensation decisions for executive officers are made with full consideration of the Internal Revenue Code Section 162(m) implications. Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid to certain executive officers in excess of $1.0 million, but excludes “performance-based” compensation from this limit. The Company’s Performance Bonus Plan and its Stock Incentive Plans are intended to qualify under Section 162(m). For fiscal 2004, grants of stock options under the 2004 Stock Incentive Plan, and payments of bonus under the Performance Bonus Plan should satisfy the requirements for deductible compensation. While the Company’s general policy is to preserve the deductibility of most compensation paid to the Company’s covered executives, we may authorize payments that might not be deductible if we believe they are in the best interests of the Company and its stockholders. Other Benefits In keeping with its philosophy to provide total compensation that is competitive with other companies in both general industry and the restaurant industry, Jack in the Box Inc. maintains a limited 27 level of perquisites. The Company does not own or lease a Company airplane, purchase country club memberships, provide officers with the use of permanent residences, home security systems or defray the cost of personal entertainment or family travel. The Company provides a car allowance, supplemental health insurance, company-paid term life insurance with a maximum value of three times salary or $750,000, whichever is less, a supplemental executive retirement plan and an executive deferred compensation plan, both of which are described in detail in the Executive Compensation section of this Proxy Statement on page 19. In addition, in fiscal 2004, the Company made available financial planning services to a maximum of $20,000 annually, based on position level. CEO Compensation A substantial portion of the CEO’s compensation is at risk and is tied to company performance results. The CEO does not participate in discussions about his compensation matters. The Compensation Committee reviews and approves the compensation of the CEO according to established performance evaluation guidelines and competitive survey data. The Board of Directors reviews the Compensation Committee’s report to ensure that the CEO is providing the best leadership for the Company. To assist it in making its determination, the Compensation Committee relies on competitive pay information and advice from its outside compensation consultant. Mr. Nugent became Chairman of the Board on February 23, 2001 and has been Chief Executive Officer of the Company since April 1, 1996. In November 2003, Mr. Nugent’s compensation targets for fiscal 2004 were established by the Compensation Committee at the median of the comparison group and as recommended by the Committee’s compensation consultant. His bonus earned in fiscal 2004 was $1,194,000. This bonus was based on Company performance relative to the goals established at the beginning of the fiscal year for the annual incentive plan described on page 26. Actual total compensation was above these targets because of strong financial performance at the Company. His base salary as of Mr. Nugent’s compensation is determined by the Compensation Committee in executive session without the presence of
This report is 28 PERFORMANCE GRAPH The following graph compares the cumulative return to holders of the
29 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of December
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Pursuant to Section 16(a) of the Securities Exchange Act of 1934, each executive officer, director and beneficial owner of more than 10% of the OTHER BUSINESS We are not aware of any other matters to come before the Annual Meeting. If any matter not mentioned herein is properly brought before the Annual Meeting, the persons named in the enclosed proxy will have discretionary authority to vote all proxies with respect thereto in accordance with their best judgment. Pursuant to the The Nominating and Governance Committee considers suggestions from many sources, including stockholders, regarding possible candidates for director. In order for stockholder suggestions regarding 31 possible candidates for director to be considered by the Nominating and Governance Committee, such information should be provided to the Committee in writing at least one hundred twenty (120) days prior to the date of the next scheduled annual meeting. Stockholders should include in such communications the name and biographical data of the individual who is the subject of the communication and the individual’s relationship to the stockholder. Stockholders may send any recommendations for director nominees or other communications to the Board of Directors or any Committee or individual director at the following address. All communications received are reported to the Board or the individual directors:
STOCKHOLDER PROPOSALS FOR Any stockholder of the Company wishing to have a proposal considered for inclusion in the 32 Exhibit A JACK IN THE BOX INC. DIRECTOR INDEPENDENCE GUIDELINES
A-1 Exhibit B JACK IN THE BOX INC. AUDIT COMMITTEE CHARTER Adopted July 16, 1999 Amended and Adopted June 6, 2000 Amended and Adopted August 3, 2001 Amended and Adopted August 2, 2002 Amended and Adopted September 11, 2003 Amended and Adopted November 12, 2004 A. Authority The Board of B. Purpose The Committee is appointed by the Board to assist the Board in fulfilling its oversight responsibilities by reviewing and reporting to the Board on (i) the integrity of the financial reports, and (ii) the Corporation’s compliance with legal and regulatory requirements. The Committee will also review the qualifications, independence and performance, and approve the terms of engagement of the Corporation’s independent registered public accountant, review the performance of the Corporation’s internal audit function and prepare any reports required of the Committee under rules of the Securities and Exchange Commission. (“SEC”)
The Committee will have a minimum of three members.
B-1 D. Committee Authority and Responsibilities The Corporation will provide appropriate funding, as determined by the Committee, to permit the Committee to perform its duties under this Charter, to compensate its advisors and to compensate any registered public accounting firm engaged for the purpose of rendering or issuing an audit report or related work or performing other audit, review or attest services for the Corporation. The Committee, at its discretion, has the authority to initiate special investigations and hire special legal, accounting or other outside advisors or experts to assist the Committee, as it deems necessary to fulfill its duties under this Charter. The independent registered public accountants for the Corporation are accountable to the Board and the Committee and report directly to the Committee. In carrying out its responsibilities, the Board believes the policies and procedures of
The Committee will:
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2. Review of Financial Reporting Policies and Procedures The Committee will:
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3. Risk Management, Related Party Transactions, Legal Compliance and Ethics The Committee will:
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E. 1. The majority of the members of the Audit Committee will constitute a quorum. 2. The action of a majority of those present at a meeting at which a quorum is present will be the act of the Committee. 3. Any action required to be taken at a meeting of the Committee will nonetheless be deemed the action of the Committee if all of the Committee members executed, either before or after the action is taken, a written consent and the consent is filed with the Corporate Secretary. 4. The Chair will make regular reports to the Board. 5. The Committee may form and delegate authority to subcommittees or to one or more members of the Committee when appropriate. 6. The Committee Secretary, 7. The Committee will meet as often as may be deemed necessary or appropriate in its judgment, but not less frequently than quarterly, either in person or telephonically. 8. The Committee will meet with the independent registered public accountant and with management on a quarterly basis to review the Corporation’s financial statements and financial reports. 9. The Committee will meet separately with management, the independent registered public accountant and Internal Auditor, as appropriate. 10. The Committee Secretary will prepare a preliminary agenda. The Chair will make the final decision regarding the agenda. 11. The agenda and all materials to be reviewed at the meetings should be received by the Committee members as far in advance of the meeting day as practicable. 12. The Committee Secretary should coordinate all mailings to the Committee members, to the extent practicable. 13. The Committee may perform any other activities consistent with this Charter, the Corporation’s Bylaws and governing law as the Board deems necessary or appropriate. B-5 Exhibit JACK IN THE BOX 2004 STOCK INCENTIVE PLAN INDEX TO 2004 STOCK INCENTIVE PLAN
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C-2 JACK IN THE BOX INC. 2004 STOCK INCENTIVE PLAN 1. Establishment, Purpose and Term of 1.1 Establishment. Jack in the Box Inc., a Delaware corporation (the 1.2 Purpose. The purpose of the Plan is to 1.3 Term of Plan. The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Awards granted under the Plan have lapsed. However, all Awards shall be granted, if at all, within ten (10) years from the Effective Date. 2. Definitions and Construction. 2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below:
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2.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. 3. Administration. 3.1 Administration by the Committee. The Plan shall be administered by the Committee. All questions of interpretation of the Plan or of any Award shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Award. 3.2 Authority of Officers. Any officer of a Participating Company shall have the authority to act on behalf of the Company with 3.3 Powers of the Committee. In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion:
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3.4 Administration with Respect to Insiders. With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3. 3.5 Committee Complying with Section 162(m). If the Company is a “publicly held corporation” within the meaning of Section 162(m), the Board may establish a Committee of “outside directors” within the meaning of Section 162(m) to approve the grant of any Award which might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section 162(m). 3.6 No Repricing. Without the affirmative vote of holders of a majority of the shares of Stock cast in person or by proxy at a meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding shares of Stock is present or represented by proxy, the Board shall not approve a program providing for either (a) the cancellation of outstanding Options and/or 3.7 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Committee or as officers or employees of the Participating Company Group, members of the Board or the Committee and any officers or employees of the Participating Company Group to whom authority to act for the Board, the Committee or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in C-7 such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such 4. Shares Subject to Plan. 4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section Adjustments for Changes in Capital Structure. In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the 5. Eligibility and Award Limitations. 5.1 Persons Eligible for Incentive Stock Options. Incentive Stock Options may be granted only to Employees. For purposes of the foregoing sentence, the term “Employees” shall include prospective Employees to whom Incentive Stock Options are granted in connection with written offers of employment with the Participating Company Group, provided that any such Incentive Stock Option shall be deemed granted effective on the date such person commences Service as an Employee, with an exercise price determined as of such date in accordance with Section 6.1. Eligible persons may be granted more than one (1) Incentive Stock Option. 5.2 Persons Eligible for Other Awards. Awards other than Incentive Stock Options may be granted only to Employees, Consultants and Directors. For purposes of the foregoing sentence, “Employees,” “Consultants” and “Directors” shall include prospective Employees, prospective Consultants and prospective Directors to whom Awards are granted in connection with written offers of an employment or other service relationship with the Participating Company Group; provided, however, that no Stock subject to any such Award shall vest, become exercisable or be issued prior to the date on which such person commences Service. Eligible persons may be granted more than one (1) Award. C-8 5.3 Fair Market Value Limitation on Incentive Stock Options. To the extent that options designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section 5.3, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this Section 5.3, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 5.3, the Participant may designate which portion of such Option the Participant is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. 5.4 Award Limits. (a) Aggregate Limit on Restricted Stock Awards and Performance Awards. Subject to adjustment as provided in Section 4.2, in no event shall more than Two Hundred Fifty Thousand (250,000) shares of Stock in the aggregate be issued under the Plan pursuant to the exercise or settlement of Restricted Stock Awards and Performance Awards. (b) Section 162(m) Award Limits. The following limits shall apply to the grant of any Award if, at the time of grant, the Company is a “publicly held corporation” within the meaning of Section 162(m).
5.5 Performance Awards. Subject to adjustment as provided in Section 4.2, no Employee shall be granted (A) Performance Shares which could result in such Employee receiving more than One Hundred Thousand (100,000) shares of Stock for each full fiscal year of the Company contained in the Performance Period for such Award, or (B) Performance Units which could result in such Employee receiving more than One Million dollars ($1,000,000) for each full fiscal year of the Company contained in the Performance Period for such Award. No Participant may be granted more than one Performance Award for the same Performance Period. 6. Terms and Conditions of Options. Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Committee shall from time to time establish. No Option or purported Option shall be a valid and binding obligation of the Company unless evidenced by a fully executed Option Agreement. Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions: 6.1 Exercise Price. The exercise price for each Option shall be established in the discretion of the Committee; provided, however, that (a) the exercise price per share shall be not less than the Fair Market Value of a share of Stock on the effective date of grant of the Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall have an exercise price per share less than one hundred C-9 ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option, and (c) in the case of an Indexed Option, the Committee shall determine the exercise price of such Indexed Option and the terms and conditions that affect, if any, any adjustments to the exercise price of such Indexed Option. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code. 6.2 Exercisability and Term of Options. Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Option Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, (c) no Option granted to a prospective Employee, prospective Consultant or prospective Director may become exercisable prior to the date on which such person commences Service. Subject to the foregoing, unless otherwise specified by the Committee in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. 6.3 Payment of Exercise Price. (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value not less than the exercise price, (iii) by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale with respect to some or all of the shares being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of (b) Limitations on Forms of Consideration.
6.4 Effect of Termination of Service. (a) Option Exercisability. An Option granted to a (b) Extension if Exercise Prevented by Law. Notwithstanding the foregoing C-10 remain exercisable until one (1) month (or such longer period of time as determined by the Committee, in its discretion) after the date the Participant is notified by the Company that the Option is exercisable, but in any event no later than the Option Expiration Date. (c) Extension if Participant Subject to Section 16(b). Notwithstanding the foregoing other than termination of a Participant’s Service for Cause, if a sale within the applicable time periods set forth in an Option Agreement of shares acquired upon the exercise of the Option would subject the Participant to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Participant would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Participant’s termination of Service, or (iii) the Option Expiration Date. 6.5 Transferability of Options. During the lifetime of the Participant, an Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative. No Option shall be assignable or transferable by the Participant, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Committee, in its discretion, and set forth in the Option Agreement evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to the applicable limitations, if any, 7. Terms and Conditions of SARs shall be evidenced by Award Agreements specifying the number of shares of Stock subject to the Award, in such form as 7.1 Types of SARs Authorized. SARs may be 7.2 Exercise Price. The exercise price 7.3 Exercisability and Term of SARs. (a) Tandem SARs. Tandem SARs shall be exercisable only at the time and to the extent that the related Option is exercisable, subject to such provisions as the Committee may specify where the Tandem SAR is granted with respect to less than the full number of shares of Stock subject to the related Option. The Committee may, in its discretion, provide in any Award Agreement evidencing a Tandem SAR that such SAR may not be exercised without the advance approval of the (b) Freestanding SARs. Freestanding SARs shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Committee and set forth in the Award Agreement evidencing such C-11 7.4 Exercise of SARs. Upon the exercise (or deemed exercise pursuant to Section 7.5) of a SAR, the Participant (or the Participant’s legal representative or other person who acquired the right to exercise the SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for each share with respect to which the SAR is exercised equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of exercise of the SAR over the exercise price. Payment of such amount shall be made in cash, shares of Stock, or any combination thereof as determined by the Committee. 7.5 Deemed Exercise of 7.6 Effect of Termination of Service. An SAR shall be 7.7 Nontransferability of SARs.SARs may not be assigned or 8. Terms and Conditions of Restricted Stock Awards. The Committee may 8.1 Purchase Price.The purchase price under each Restricted Stock Purchase Right shall be established by the Committee. No monetary payment (other than applicable tax withholding) shall be required as a condition of receiving a Restricted Stock Bonus or Restricted Stock Unit, the consideration for which shall be services actually rendered to a Participating Company or for its benefit. 8.2 Purchase Period.A Restricted Stock Purchase Right shall be exercisable within a period established by the Committee, which shall in no event exceed thirty (30) days from the effective date of the grant of the Restricted Stock Purchase Right; provided, however, that no Restricted Stock Purchase Right granted to a prospective Employee, prospective Director or prospective Consultant may become exercisable prior to the date on which such person commences Service. 8.3 Payment of Purchase Price.Except as otherwise provided below, payment of the purchase price for the number of shares of Stock being purchased pursuant to any Restricted Stock Purchase Right shall be made (i) in cash, by check, or cash equivalent, (ii) provided that the Participant is an C-12 Employee (unless otherwise not prohibited by law, including, without limitation, any regulation promulgated by the Board of Governors of the Federal Reserve System) and in the Company’s sole discretion at the time the Restricted Stock Purchase Right is exercised, by delivery of the Participant’s promissory note in a form approved by the Company for the aggregate purchase price, provided that, if the Company is incorporated in the State of Delaware, the Participant shall pay in cash that portion of the aggregate purchase price not less than the par value of the shares being acquired, (iii) by such other consideration as may be approved by the Committee from time to time to the extent permitted by applicable law, or (iv) by any combination thereof. Payment by means of the Participant’s promissory note shall be subject to the conditions described in Section 6.3(b)(iii). The Committee may at any time or from time to time grant Restricted Stock Purchase Rights which do not permit all of the foregoing forms of consideration to be used in payment of the purchase price or which otherwise restrict one or more forms of consideration. Restricted Stock Bonuses and Restricted Stock Units shall be issued in consideration for services actually rendered to a Participating Company or for its benefit. 8.4 Vesting and Restrictions on Transfer.Shares issued pursuant to any Restricted Stock Award may be made subject to vesting conditioned upon the satisfaction of such Service requirements, conditions, restrictions or performance criteria, including, without limitation, Performance Goals as described in Section 9.3 (the “Vesting Conditions”), as shall be established by the Committee and set forth in the Award Agreement evidencing such Award. During any period (the “Restriction Period”) in which shares acquired pursuant to a Restricted Stock Award remain subject to Vesting Conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of other than pursuant to an Ownership Change Event, as defined in Section 11.1, or as provided in Section 8.7. Restriction Periods shall be a minimum of three years. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. 8.5 Voting Rights; Dividends.Except as provided in this Section and Section 8.4, during the Restriction Period applicable to shares subject to a Restricted Stock Purchase Right and a Restricted Stock Bonus held by a Participant, the Participant shall have all of the rights of a stockholder of the Company holding shares of Stock, including the right to vote such shares and to receive all dividends and other distributions paid with respect to such 8.6 Effect of Termination of Service.The effect of the Participant’s termination of Service on any Restricted Stock Award shall be determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such Restricted Stock Award. 8.7 Nontransferability of Restricted Stock Award Rights.Rights to acquire shares of Stock pursuant to a Restricted Stock Award may not be assigned or transferred in any manner except by will or the laws of descent and distribution, and, during the lifetime of the Participant, shall be exercisable only by the Participant. 9. Terms and Conditions of Performance Awards. The Committee may from time to time grant Performance Awards upon such conditions as the Committee shall determine. Performance Awards may be in the form of either Performance Shares, which shall be evidenced by a Performance Share Agreement, or Performance Units, which shall be evidenced by a Performance Unit Agreement. Each such Award Agreement shall specify the number of Performance Shares or Performance Units subject thereto, the method of computing the value of each Performance Share or Performance Unit, the Performance Goals and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award, and shall be in such form as the Committee shall establish from time to time. No Performance Award or purported Performance Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement. Performance Share and Performance Unit Agreements may incor- C-13 porate all or any of the terms of the Plan by reference and shall comply with and be subject to the following terms and conditions: 9.1 Initial Value of Performance Shares and Performance Units.Unless otherwise provided by the Committee in granting a Performance Award, each Performance Share shall have an 9.2 Establishment of Performance Goals and Performance Period.The Committee shall establish in writing the Performance Period applicable to each Performance Award and one or more Performance Goals which, when measured at the end of the Performance Period, shall determine the final value of the Performance Award to be 9.3 Measurement of Performance Goals.Performance Goals shall be established by the Committee on the basis of targets to be attained (“Performance Targets”) with respect one or more measures of business or financial performance (each, a “Performance Measure”). Performance Measures shall have the same meanings as used in the Company’s financial statements, or if such
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9.4 Determination of Final Value of Performance Awards.As soon as 9.5 Dividend Equivalents. In its discretion, the Committee may 9.6 Payment in Settlement of Performance Awards. Payment of the final value of a Performance Award earned by a Participant as determined following the completion of the applicable Performance Period pursuant to Sections 9.4 and 9.5 may be made in 9.7 Restrictions Applicable to Payment in Shares.Shares of Stock issued in payment of any Performance Award may be fully vested and freely transferable shares or may be shares of Stock subject to Vesting Conditions as provided in Section 8.4. Any shares subject to C-15 9.8 Effect of Termination of Service. The effect of the Participant’s termination of Service on any Performance Award shall be determined by the Committee, in its discretion, and set forth in the Award Agreement evidencing such 9.9 Nontransferability of Performance Awards. Performance Shares and Performance Units may not be sold, exchanged, transferred, pledged, assigned, or otherwise disposed of other than by will or by the laws of descent and distribution until the completion of the applicable Performance Period. All rights with respect to Performance Shares and Performance Units granted to a Participant hereunder shall 10. Standard Forms of Award Agreement. 10.1 Award Agreements. Each Award shall comply with and be subject to the terms and conditions set forth in the appropriate form of Award Agreement approved by the Committee concurrently with its adoption of the Plan and as amended from time to time. Any Award Agreement may consist of an appropriate form of Notice of Grant and a form of Agreement incorporated therein by reference, or such other form or forms as the Committee may approve from time to time. 10.2 Authority to Vary Terms. The Committee shall have the authority from time to time to vary the terms of any standard form of Award 11. Change in Control. 11.1 Definitions. (a) An “Ownership Change Event” shall be deemed to have occurred if (b) A “Change in Control” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, a “Transaction”) wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership 11.2 Effect of Change in Control on Options. In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent corporation thereof, as the case may be C-16 and the provisions of such Option Agreement shall be conditioned upon the consummation of the Change in Control. Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with 11.3 Effect of Change in Control on SARs. In the event of a Change in Control, the Acquiring Corporation may, without the consent of any Participant, either assume the Company’s rights and obligations under outstanding SARs or substitute for outstanding SARs substantially equivalent SARs for the Acquiring Corporation’s stock. In the event the Acquiring Corporation elects not to assume or substitute for outstanding SARs in connection with a Change in Control, then any unexercised and/or unvested portions of outstanding SARs shall be immediately exercisable and vested in full as of the date thirty (30) days prior to the date of the Change in Control. The exercise and/or vesting of any SAR that was permissible solely by reason of this paragraph 11.3 shall be conditioned upon the consummation of the Change in Control. Any SARs which are not assumed by the Acquiring Corporation in connection with the Change in Control nor exercised as of the time of consummation of the Change in Control shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control. 11.4 Effect of Change in Control on Restricted Stock Awards. In the event of a Change in Control, the lapsing of the Vesting Conditions applicable to the shares subject to the Restricted Stock Award held by a Participant whose Service has not terminated prior to such date shall be accelerated effective as of the date of the Change in Control. Any acceleration of the lapsing of Vesting Conditions that was permissible solely by reason of this Section 11.4 and the provisions of such Award Agreement shall be conditioned upon the consummation of the Change in Control. 11.5 Effect of Change in Control on Performance Awards. In the event of a Change in Control, the Performance Award held by a Participant whose Service has not terminated prior to such date (unless the Participant’s Service terminated by reason of the Participant’s death or Disability) shall become payable effective as of the date of the Change in Control. For this purpose, the final value of the Performance Award shall be determined by the greater of (a) the extent to which the applicable Performance Goals have been attained during the Performance Period prior to the date of the Change in Control or (b) the pre-established 100% level with respect to each Performance Target comprising the applicable Performance Goals. Any acceleration of a Performance Award that was permissible solely by reason of this Section 11.5 and the provisions of such Award Agreement shall be conditioned upon the consummation of the Change in Control. 12. Compliance with Securities Law. The grant of Awards and the issuance of shares of Stock pursuant to any Award shall be subject to compliance with all applicable requirements of federal, state and foreign C-17 hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to issuance of any Stock, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and 13. Tax 13.1 Tax Withholding in General. The Company shall have the right to require the Participant, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise of an Option, to make adequate provision for the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to an Award or the shares acquired pursuant thereto. The Company shall have no obligation to deliver shares of Stock, to release shares of Stock from an escrow established pursuant to an Award Agreement, or to make any payment in cash under the Plan until the Participating Company Group’s tax 13.2 Withholding in Shares. The Company shall have the right, but not 14. Termination or Amendment of Plan. The Committee may terminate or amend the Plan at any time. However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule. No termination or amendment of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. In any event, no termination or amendment of the Plan may adversely affect any then outstanding Award without the consent of the Participant, unless such termination or amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option or 15. Miscellaneous Provisions. 15.1 Provision of Information. Each Participant shall be given access to information concerning the Company equivalent to that information generally made available to the Company’s common stockholders. 15.2 Rights as Employee, Consultant or Director. No person, even though eligible pursuant to Section 5, shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. Nothing in the Plan or any Award granted 15.3 Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any shares covered by an Award until the date of the issuance of a certificate for such shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in Section C-18 15.4 Beneficiary Designation. Each Participant may file with the Company a written designation of a beneficiary who is to receive any benefit under the Plan to which the Participant is entitled in the event of such Participant’s death before he or she receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and 15.5 Unfunded Obligation. Any amounts payable to Participants pursuant to the Plan shall be C-19 EXHIBIT D JACK IN THE BOX INC. POLICY FOR AUDIT COMMITTEE PRE-APPROVAL OF SERVICES Jack in the Box Inc. (the Company) and its Audit Committee are committed to ensuring the independence of the The Audit Committee hereby pre-approves services to be rendered by the Audit Related Services Subject to the
Tax Compliance Services Subject to the limitations described below, the Audit Committee pre-approves the following tax compliance service that management may request to be performed by the independent registered public accountant that are an extension of normal audit work and are not inconsistent with the attestation role of the registered public accountant:
Pre-Approval Limitations The non-audit services detailed above shall only be pre-approved by the Audit Committee subject to limitations as follows:
Other Services For all services to be performed by the independent registered public accountant that are not specifically detailed above, an engagement letter confirming the scope and terms of the work to be D-1 performed shall be Authorized Delegate The Audit Committee delegates to its Chairperson the authority to pre-approve proposed services as Competitive Bidding Process Nothing in this policy should be read to imply that the independent registered public accountants have a preferred supplier arrangement in respect to the services listed above. Certain services, by their nature, may only be performed by the independent registered public accountant (i.e. issuing a consent or D-2 PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY The undersigned hereby appoints Robert J. Nugent, (Continued, and to be marked, dated and signed, on the other side)
pDetach here from proxy voting card.p JACK IN THE BOX INC. ANNUAL MEETING OF STOCKHOLDERS MARRIOTT MISSION VALLEY The Board of Directors recommends a vote FOR
(Instruction: To withhold authority to vote for any individual nominee write that
4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the ChooseMLinkSM for Fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on to
Stockholder(s), please sign above exactly as name appears hereon; in the case of joint holders, all should sign. Fiduciaries should add their full title to their signature. Corporations should sign in full corporate name by an authorized officer. Partnerships should sign in partnership name by an authorized person. pDetach here from proxy voting cardp Vote by Internet or Telephone or Mail Internet and telephone voting is available through 11:59 PM EST Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Internet Use the
Telephone Use any touch-tone telephone to vote
Mark, sign and NOTE: If you vote by telephone THANK YOU FOR (REV 01/16/04) Proxy PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF FOR ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY The undersigned hereby appoints Robert J. Nugent, (Continued, and to be marked, dated and signed, on the other side) éFOLD AND DETACH HERE JACK IN THE BOX INC. ANNUAL MEETING OF STOCKHOLDERS MARRIOTT MISSION VALLEY Proxy without telephone or Internet voting instructions
Stockholder(s), please sign above exactly as name appears hereon; in the case of joint holders, all should sign. Fiduciaries should add their full title to their signature. Corporations should sign in full corporate name by an authorized officer. Partnerships should sign in partnership name by an authorized person. éFOLD AND DETACH HERE PROXY PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD Please read the enclosed Proxy Statement and the Annual Report to Stockholders for more information. CONFIDENTIAL VOTING INSTRUCTION FORM
▲Detach here from proxy voting card.▲ The undersigned hereby instructs Mellon Bank, N.A., as Trustee of the Jack in the Box Inc. Easy$aver Plus Plan, to vote in person or by proxy at the Annual Meeting of the Stockholders of Jack in the Box Inc., to be held on February Mellon Bank, N.A. will vote the shares represented by this Voting Instruction Form if it is properly completed, signed, and received by Mellon Bank, N.A. before 5:00 p.m. EST on February Mellon Bank, N.A. makes no recommendation regarding any voting instruction. Any Voting Instruction Form, if properly completed, signed, and received by Mellon Bank, N.A. in a timely manner will supersede any previously received Voting Instruction Form. All voting instructions received by Mellon Bank, N.A. will be kept confidential.
(Instruction: To withhold authority to vote for any individual nominee write that nominee’s name below.)
Please note: If this Voting Instruction Form is signed, but no direction is given on Proposal #1, Mellon Bank, N.A. will vote “FOR” all nominees listed, or if no direction is given on Proposals #2 and #3, Mellon Bank, N.A. will vote “FOR” these Proposals. 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting including with respect to any adjournment thereof. ChooseMLinkSM for Fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents and more. Simply log on toInvestor ServiceDirect® at www.melloninvestor.com/isd where step-by-step instructions will prompt you through enrollment.
Stockholder(s), please sign above exactly as name appears hereon; in the ▲Detach here from proxy voting | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
