SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X| | |
Filed by a Party other than the Registrant |_| | |
Check the appropriate box: | |
|_| | Preliminary Proxy Statement |
|_| | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|X| | Definitive Proxy Statement |
|_| | Definitive Additional Materials |
|_| | Soliciting Material Pursuant to Rule 14a-12 |
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| | No fee required. | |
|_| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
1. | Title of each class of securities to which transaction applies: | |
2. | Aggregate number of securities to which transaction applies: | |
3. | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
4. | Proposed maximum aggregate value of transaction: | |
5. | Total fee paid: | |
|_| | Fee paid previously with preliminary materials. | |
|_| | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
1. | Amount Previously Paid: | |
2. | Form, Schedule or Registration Statement No.: | |
3. | Filing Party: | |
4. | Date Filed: | |
May 13, 2003
Dear Stockholder:
![](https://capedge.com/proxy/DEF 14A/0001206774-03-000436/lharpersig.jpg)
Chairman of the Board
THE GYMBOREE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 25, 2003
TO THE STOCKHOLDERS OF THE GYMBOREE CORPORATION:
1. | To elect two Class I directors, each to serve for a three-year term expiring upon the 2006 Annual Meeting of Stockholders or until his successor is elected. |
2. | To approve an amendment to the Company’s 2002 Stock Incentive Plan reserving an additional 1,400,000 shares of common stock to be available for issuance under the plan. |
3. | To ratify the appointment of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending January 31, 2004. |
4. | To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. |
![](https://capedge.com/proxy/DEF 14A/0001206774-03-000436/mylesmccormicksig.jpg)
Secretary
Burlingame, California
May 13, 2003
IMPORTANT: Whether or not you plan to attend the Annual Meeting, you are requested to complete and promptly return the enclosed proxy in the envelope provided.
THE GYMBOREE CORPORATION
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
Record Date, Quorum and Voting of Securities
Proxy Solicitation
1
the beneficial owners of shares of common stock as of the record date and will reimburse such persons for the cost of forwarding the proxy materials in accordance with customary practice. We have retained Georgeson Shareholder Communications, Inc. to aid in the solicitation of proxies. We estimate that the fees to be paid to Georgeson Shareholder Communications, Inc. for its role as our proxy solicitor will be approximately $15,000 plus expenses. Your cooperation in promptly voting your shares and submitting your proxy by telephone or by completing and returning the enclosed proxy card will help to avoid additional expense.
Revocability of Proxies
PROPOSAL ONE:
ELECTION OF DIRECTORS
Nominees
Name | Exp. of Term | Age | Principal Occupation | ||||
---|---|---|---|---|---|---|---|
NOMINEES FOR CLASS I DIRECTORS | |||||||
Blair W. Lambert | 2006 | 45 | Retail Consultant and Vineyard Owner | ||||
Gary M. Heil | 2006 | 52 | Business and Retail Consultant, Lecturer and Author | ||||
CONTINUING CLASS II DIRECTORS | |||||||
Lisa M. Harper | 2004 | 43 | Chairman of the Board and Chief Executive Officer, The Gymboree Corporation | ||||
Barbara L. Rambo | 2004 | 50 | Chief Executive Officer, Nitech Corporation |
2
Name | Exp. of Term | Age | Principal Occupation | ||||
---|---|---|---|---|---|---|---|
CONTINUING CLASS III DIRECTORS | |||||||
Stuart G. Moldaw | 2005 | 76 | Chairman Emeritus and Management Advisor, The Gymboree Corporation; Chairman Emeritus, Ross Stores | ||||
John C. Pound | 2005 | 48 | President, Integrity Partners, Inc. | ||||
William U. Westerfield | 2005 | 71 | Director, The Gymboree Corporation, Twinlab Corporation and West Marine, Inc. |
3
of Ross Stores from February 1987 through January 1988. Since 1993, Mr. Moldaw has been a director and Chairman Emeritus of Ross Stores.
Board Meetings and Board Committees
4
compensation policies, including the compensation paid to executive officers. The Compensation Committee held five meetings during the last fiscal year.
Compensation of Directors
THE COMPANY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
THE NOMINEES SET FORTH HEREIN.
5
PROPOSAL TWO:
APPROVAL OF 2002 AMENDED AND RESTATED STOCK INCENTIVE PLAN
6
7
participants to consult their own tax advisors as to the specific federal income tax or other tax consequences of their participation in the 2002 Plan.
THE COMPANY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE APPROVAL OF THE GYMBOREE CORPORATION 2002 AMENDED AND
RESTATED STOCK INCENTIVE PLAN.
8
PROPOSAL THREE:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
THE COMPANY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING “FOR”
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE
COMPANY’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JANUARY 31, 2004.
Audit Committee Report
John C. Pound
Barbara L. Rambo
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Compensation | Long-Term Compensation Awards | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Principal Position | Year | Salary ($) | Bonus ($) | Securities Underlying Options (#) | All Other Compensation ($) | |||||||||||
Lisa M. Harper (1) | 2002 | 565,769 | 518,593 | 100,000 | 540(2 | ) | ||||||||||
Chairman of the Board and Chief Executive Officer | 2001 2000 | 447,115 326,346 | 146,250 170,288 | 300,000 450,000 | 750(2 495(2 | ) ) | ||||||||||
Marina Armstrong (3) | 2002 | 220,289 | 147,452 | 50,000 | 1,055(2 | ) | ||||||||||
Vice President, Human Resources and Assistant Secretary | 2001 2000 | 186,635 155,750 | 23,750 37,981 | 31,252 60,000 | 798(2 897(2 | ) ) | ||||||||||
Donald Hendricks (4) | 2002 | 198,077 | 145,982 | 20,000 | 897(2 | ) | ||||||||||
Vice President, Operations & Technology | 2001 2000 | 173,654 154,418 | 21,875 43,538 | 20,000 42,000 | 951(2 531(2 | ) ) | ||||||||||
Myles McCormick (5) | 2002 | 198,846 | 138,524 | 130,000 | 317(2 | ) | ||||||||||
Chief Financial Officer, Vice President, Finance and Secretary | 2001 | 106,730 | 33,750 | 40,000 | 138(2 | ) | ||||||||||
Deborah J. Nash (6) | 2002 | 206,288 | 110,345 | 20,000 | 905(2 | ) | ||||||||||
General Merchandise Manager and Vice President | 2001 2000 | 194,327 166,778 | 24,375 36,279 | 20,886 60,000 | 869(2 899(2 | ) ) |
(1) | Ms. Harper joined Gymboree in January 1999 as Vice President, Design. In December 1999, she was named Senior Vice President, Merchandising and Design. In February 2000, she was named General Merchandise Manager. She was elected to the Board of Directors in June 2000. In September 2000, she was named President. She was named Chief Executive Officer and Vice Chair of the Board in February 2001. She was named Chairman of the Board in June 2002. |
(2) | Amount includes the sum of the values of (a) premiums paid by the Company for term life insurance for the benefit of the insured and (b) with respect to Ms. Armstrong, Mr. Hendricks and Ms. Nash, Company contributions to 401(k) plans of the Company. |
(3) | Ms. Armstrong joined Gymboree in May 1997 as a District Manager. In June 1998, she was named Director Recruiting and Staffing. In June 1999, Ms. Armstrong was named Vice President, Organizational Development, and in January 2000 was named Vice President, Human Resources. Ms. Armstrong was named Assistant Secretary in March 2002. |
(4) | Mr. Hendricks joined Gymboree in November 1998 as Director, Product IS&T. Mr. Hendricks was named Senior Director, IS&T Operations in November 1999. He was named Vice President, Technology Services in September 2000, and was named Vice President, Operations & Technology in June 2002. |
(5) | Mr. McCormick joined Gymboree in May 2001 as Vice President, Finance. He was appointed Chief Financial Officer in February 2002. He was named Secretary in March 2002. |
(6) | Ms. Nash joined Gymboree in April 1997 as a Merchandise Manager. She was named Director, Merchandising in February 2000, and was named Vice President, Merchandising in September 2000. Ms. Nash was named General Merchandise Manager and Vice President in January 2003. |
10
Option Grants and Exercises
Option Grants in Fiscal 2002
Individual Grants | Potential Realizable Value at Assumed Annual Rate of Stock Price Appreciation for Option Term ($)(3) | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Options Granted (#)(1) | Percent of Total Options Granted to Employees in Fiscal Year (%)(2) | Exercise or Base Price ($/Share) | Expiration Date | 5% | 10% | |||||||||||||
Lisa M. Harper | 100,000 | 6.8% | 13.37 | Mar. 14, 2012 | 840,831 | 2,130,833 | |||||||||||||
Marina Armstrong | 50,000 | 3.4% | 15.70 | June 25, 2012 | 389,426 | 986,883 | |||||||||||||
Donald Hendricks | 20,000 | 1.4% | 18.50 | Sept. 18, 2012 | 232,691 | 589,684 | |||||||||||||
Myles McCormick | 30,000 100,000 | 2.0% 6.8% | 13.66 15.70 | Feb. 12, 2012 June 25, 2012 | 257,720 987,363 | 653,115 2,502,174 | |||||||||||||
Deborah J. Nash | 20,000 | 6.4% | 18.50 | Sept. 18, 2012 | 232,690 | 589,684 |
(1) | The options granted to the Named Executive Officers during fiscal year 2002 have ten-year terms and will vest and become exercisable over a four-year period. Option grants made on initial hiring typically vest 25% on the first anniversary and 1/48th per month thereafter. Grants to existing employees typically vest at a rate of 1/48th per month from the date of grant. In the event of a “Change of Control” as defined in our 2002 Stock Incentive Plan and our 1993 Stock Option Plan, as amended, the options will vest 100% and will be settled for cash upon the occurrence of the Change of Control according to a formula set forth under the 2002 Plan and the 1993 Plan. |
(2) | Based on an aggregate of 1,478,000 options granted to employees of Gymboree under our 2002 Stock Incentive Plan and under our 1993 Stock Option Plan, as amended, during the fiscal year ended February 1, 2003. |
(3) | In accordance with the rules of the SEC, the potential realizable value over the term of the option (the period from the grant date to the expiration date) is based on SEC-mandated assumed rates of stock appreciation from the option exercise price of 5% and 10%, compounded annually. These amounts are based on certain assumed rates of appreciation and do not represent our estimates of our future stock price. Actual gains, if any, on stock option exercises will be dependent on the future performance of our common stock. |
Aggregate Option Exercises in Fiscal 2002 and Year-End Values
Number of Securities Underlying Unexercised Options at February 1, 2003 | Value of Unexercised In-the-Money Options at February 1, 2003 (1) | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Shares Acquired on Exercise (#) | Value Realized ($) | Exercisable (#) | Unexercisable (#) | Exercisable ($) | Unexercisable ($) | |||||||||||||
Lisa M. Harper | 20,000 | 283,586 | 415,968 | 420,837 | 2,924,649 | 2,533,875 | |||||||||||||
Marina Armstrong | 10,624 | 145,049 | 47,224 | 85,960 | 229,877 | 334,065 | |||||||||||||
Donald Hendricks | 14,432 | 167,955 | 4,124 | 49,903 | 18,167 | 241,890 | |||||||||||||
Myles McCormick | 10,833 | 116,334 | 25,623 | 133,544 | 41,305 | 236,317 | |||||||||||||
Deborah J. Nash | 10,000 | 167,172 | 51,721 | 53,937 | 333,033 | 306,678 |
(1) | Value is based on the $14.26 per share closing price of our common stock on the Nasdaq Stock Market on January 31, 2003, the last trading day of fiscal year 2002, less the exercise price. |
11
Plans Not Subject to Stockholder Action
Plan Category | Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Shares Remaining Available for Issuance Under Equity Compensation Plans | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Equity Compensation Plans Approved by Stockholders | 4,725,130 | (1) | $11.40 | 297,007 | |||||||
Equity Compensation Plans Not Approved by Stockholders | 0 | 0 | 0 | ||||||||
Total | 4,725,130 | $11.40 | 297,007 | ||||||||
(1) | Of these shares, options to purchase 3,554,413 shares of common stock were outstanding under our 1993 Stock Option Plan and options to purchase 1,170,717 shares of common stock were outstanding under our 2002 Stock Incentive Plan. |
Employment Contracts and Termination of Employment and Change-of-Control Arrangements
12
Compensation Committee Report on Executive Compensation
• | Base Salary |
• | Annual Bonus |
• | Stock Incentives |
13
established to reflect our objectives. These goals and the potential amounts of bonuses are reviewed and approved by the Compensation Committee in the first fiscal quarter of each year. The Compensation Committee also takes into consideration the need to recruit and retain senior management talent in a competitive employment environment. The Compensation Committee believes that the Discretionary Bonus Plan provides an excellent link between earnings performance and the incentives paid to executives.
Michael Steinberg
14
Performance Graph
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG THE GYMBOREE CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
15
Certain Relationships and Related Transactions
Security Ownership
16
Name and Address of Beneficial Owners | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
---|---|---|---|---|---|---|---|---|
Stuart G. Moldaw (1) | 1,543,078 | 5.3 | % | |||||
Lisa M. Harper (2) | 494,928 | 1.7 | % | |||||
Marina Armstrong (3) | 57,771 | * | ||||||
Donald Hendricks (4) | 6,090 | * | ||||||
Myles McCormick (5) | 40,660 | * | ||||||
Deborah J. Nash (6) | 60,588 | * | ||||||
Walter F. Loeb (7) | 54,536 | * | ||||||
John C. Pound (8) | 344,602 | 1.2 | % | |||||
Barbara L. Rambo (9) | 15,625 | * | ||||||
Michael Steinberg (10) | 2,292 | * | ||||||
William U. Westerfield (11) | 12,719 | * | ||||||
Gary M. Heil | 0 | * | ||||||
Blair W. Lambert | 0 | * | ||||||
All directors, nominee directors and officers as a group (13 persons) (12) | 2,632,889 | 9.0 | % |
* | Less than 1%. |
(1) | Includes 850,659 shares underlying options that are exercisable within 60 days of April 11, 2003. Voting and/or dispositive power is shared for certain of these shares with Stuart G. Moldaw and Phyllis I. Moldaw, Trustees for the SGM and PIM Trust, a California living trust, the Moldaw Family Foundation and the Moldaw Family Supporting Foundation. |
(2) | Includes 494,928 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(3) | Includes 48,241 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(4) | Includes 6,090 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(5) | Includes 39,792 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(6) | Includes 57,053 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(7) | Includes 17,125 shares underlying options and 5,051 shares underlying warrants that are exercisable within 60 days of April 11, 2003. |
(8) | Includes 2,344 shares underlying options that are exercisable within 60 days of April 11, 2003. Also includes 66,500 shares and 75,758 shares underlying warrants held by Asdale, Ltd., and 200,000 shares held by Nettlestone, Ltd., corporations for which Mr. Pound acts as an advisor by virtue of being the controlling stockholder in Integrity Partners, Inc. |
(9) | Includes 14,625 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(10) | Includes 2,292 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(11) | Includes 12,719 shares underlying options that are exercisable within 60 days of April 11, 2003. |
(12) | Includes 1,545,868 shares underlying options and 80,809 shares underlying warrants that are exercisable within 60 days of April 11, 2003. |
17
Section 16(a) Beneficial Ownership Reporting Compliance
Householding Information
Deadline for Receipt of Stockholder Proposals for 2004 Annual Meeting
18
OTHER MATTERS
![](https://capedge.com/proxy/DEF 14A/0001206774-03-000436/mylesmccormicksig.jpg)
Secretary
Dated: May 13, 2003
19
ANNEX A
THE GYMBOREE CORPORATION
AUDIT COMMITTEE CHARTER
Purpose and Authority:
Composition:
Duties and Responsibilities:
A-1
• | Select and retain the independent auditor; approve compensation of the independent auditor; resolve disagreements between management and the independent auditor; oversee and evaluate the independent auditor and, where appropriate, replace the independent auditor, with the understanding that the independent auditor shall report directly to the Committee and shall be ultimately accountable to the Committee and to the Board, as representatives of the shareholders of the Company. |
• | Pre-approve the retention of the independent auditor for all audit and such non-audit services as the independent auditor is permitted to provide the Company and approve the fees for such services, other than de minimis non-audit services allowed by relevant law. The Committee may pre-approve services by establishing detailed pre-approval policies and procedures as to the particular services, provided the Committee is informed of each service pre-approved. Pre-approval of audit and non-audit services shall not be delegated to management, but may be delegated to one or more independent members of the Committee so long as that member or members report their decisions to the Committee at all regularly scheduled meetings. In considering whether to pre-approve any non-audit services, the Committee or its delegees shall consider whether the provision of such services is compatible with maintaining the independence of the auditor. |
• | Ensure that the Committee’s approval of any non-audit services is publicly disclosed pursuant to applicable laws, rules and regulations. |
• | Annually evaluate the independent auditor’s qualifications, performance and independence, including that of the lead partner. |
• | Annually obtain and review a report by the independent auditor describing the firm’s internal quality control procedures; any material issues raised by the most recent internal quality control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, relating to one or more audits carried out by the firm and any steps taken to deal with any such issues. |
• | Annually obtain and review the letter and written disclosures from the independent auditor consistent with Independence Standards Board Standard No. 1, including a formal written statement by the independent auditor delineating all relationships between the auditor and the Company; actively engage in a dialogue with the auditor with respect to that firm’s independence and any disclosed relationships or services that may impact the objectivity and independence of the auditor; and take, or recommend that the Board take, appropriate action to oversee the independence of the independent auditor. |
• | Discuss with the independent auditor the matters required to be discussed by Statement of Auditing Standards (“SAS”) No. 61,Communications with Audit Committee, SAS No. 89,Audit Adjustments, and SAS No. 90,Audit Committee Communications, all as amended from time to time, together with any other matters as may be required for public disclosure or otherwise under applicable laws, rules and regulations. |
• | Ensure that the independent auditor’s lead partner and reviewing partner are replaced every five years. |
• | Present the Committee’s conclusions regarding the performance, qualifications and independence of the independent auditor to the full Board. |
• | Meet with management and the independent auditor to review and discuss the annual audited financial statements and quarterly financial statements, and the reports of the independent auditor thereon and to discuss any significant issues encountered in the course of the audit work, including any restrictions on the scope of activities, access to required information or the adequacy of internal controls. |
• | Review with the independent auditor any audit problems or difficulties and management’s response, including significant disagreements with management, adjustments noted by the independent auditor but |
A-2
not taken by management, communications between the audit team and the national office, and any management or internal control letters issued or proposed to be issued. |
• | If so determined by the Committee, based on its review and discussion of the audited financial statements with management and the independent auditor, its discussions with the independent auditor regarding the matters required to be discussed by SAS 61, and its discussions regarding the auditor’s independence, recommend to the Board that the audited financial statements be included in the Company’s annual report on Form 10-K. |
• | Review with management and the independent auditor each earnings press release prior to its release and prior to the filing of the earnings release on Form 8-K and the filing of the related report on Form 10-Q or 10-K, as applicable. |
• | Discuss earnings guidance provided to analysts and rating agencies. This may be done generally and does not require the Committee to discuss in advance each instance in which the Company may provide earnings guidance. |
• | Discuss with the independent auditor (1) critical accounting policies to be used, (2) alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor, and (3) other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences. |
• | Review with management and the independent auditor the effect of regulatory and accounting initiatives, as well as off-balance sheet structures on the financial statements of the Company. |
• | Review changes in promulgated accounting and auditing standards that may materially affect the Company’s financial reporting practices. |
• | Review any reports by management regarding the effectiveness of, or any deficiencies in, the design or operation of internal controls and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls. Review any report issued by the Company’s independent auditor regarding the Company’s internal controls. |
• | Review and approve all related-party transactions, including transactions between the Company and its officers or directors or affiliates of officers or directors. |
• | Review the responsibilities, functions and performance of the Company’s internal audit function, including internal audit plans, budget, and the scope and results of internal audits. |
• | Prepare the report required by the rules of the SEC to be included in the Company’s annual proxy statement. |
• | Develop and monitor compliance with a code of ethics for senior financial officers pursuant to and to the extent required by regulations applicable to the Company from time to time. |
• | Review and monitor compliance with a code of conduct for all Company employees, officers and directors pursuant to and to the extent required by regulations applicable to the Company from time to time. |
• | Establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters. |
A-3
• | Establish procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters, and the treatment of those concerns. |
Reports to Board
• | Report regularly to the Board any issues that arise with respect to the quality and integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements and the performance and independence of the independent auditor. |
• | Provide minutes of Committee meetings to the Board and report to the Board on any significant matters arising from the Committee’s work. |
Meetings:
Evaluation:
A-4
ANNEX B
THE GYMBOREE CORPORATION
2002 AMENDED AND RESTATED STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this 2002 Stock Incentive Plan are:
• | to attract and retain the best available personnel, |
• | to provide additional incentive to Employees, Consultants and Outside Directors, and |
• | to promote the success of the Company’s business. |
2. Definitions. As used herein, the following definitions shall apply:
B-1
Common Stock as reported by that market for regular session trading for a single trading day (b) listed on the New York Stock Exchange or the American Stock Exchange, the closing sales price for the Common Stock as such price is officially quoted in the composite tape of transactions on such exchange for regular session trading for a single trading day, (c) quoted on the Nasdaq SmallCap Market, the last sales price as reported by that market for a single trading day, or (d) quoted on the OTC Bulletin Board Service or by the National Quotation Bureau, Inc., the average of the high bid and low asked prices reported by such service for a single trading day. If there is no such reported price for the Common Stock for the date in question, then such price on the last preceding date for which such price exists shall be determinative of Fair Market Value.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be authorized for issuance under the Plan is 2,500,000 Shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. However, should the Company reacquire Shares that were issued pursuant to the exercise of an Option, such Shares shall not become available for future grant under the Plan.
B-2
4. Administration of the Plan.
(i) | Multiple Administrative Bodies. The Plan may be administered by different Committees with respect to different groups of persons providing services to the Company. |
(ii) | Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code. |
(iii) | Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. |
(iv) | Other Administration. Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. |
(i) | to select the Consultants and Employees to whom Options may be granted hereunder; |
(ii) | to determine whether and to what extent Options are granted hereunder; |
(iii) | to determine the number of shares of Common Stock to be covered by each Option; |
(iv) | to approve forms of agreements for use under the Plan; |
(v) | to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option. Such terms and conditions may include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; |
(vi) | to determine whether, to what extent and under what circumstances Common Stock and other amounts payable with respect to an Option shall be deferred either automatically or at the election of the participant (including providing for and determining the amount (if any) of any deemed earnings on any deferred amount during any deferral period); |
(vii) | to construe and interpret the terms of the Plan; |
(viii) | to prescribe, amend and rescind rules and regulations relating to the Plan; |
(ix) | to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator; |
(x) | to determine the terms and restrictions applicable to Options; and |
(xi) | to make all other determinations deemed necessary or advisable for administering the Plan. |
B-3
5. Eligibility.
(i) | On the date first elected to the Board (the “Initial Grant”) and on each anniversary date of such election (the “Annual Grant”) thereafter during his or her term as an Outside Director, each Outside Director shall automatically receive an Option to purchase 2,500 Shares. In addition, each Outside Director who is appointed the chairperson of a committee of the Board shall receive an Option to purchase 500 Shares as of the date of Board approval of such appointment (the “Committee Grant”). |
(ii) | The terms of an Option granted to an Outside Director shall be as follow: |
(A) | the term of the Option shall be ten (10) years; |
(B) | except as otherwise provided in Section 10 of the Plan, the Option shall be exercisable only while the Outside Director remains a Director; |
(C) | the exercise price shall be 100% of the Fair Market Value on the date of grant of the Option; |
(D) | the Initial Grant shall vest and become exercisable one-fourth (1/4th) on the one-year anniversary of the date of grant, and an additional one-forty-eighth (1/48th) shall vest at the end of each one month period thereafter; |
(E) | the Annual Grant shall vest and become exercisable one-forty-eighth (1/48th) at the end of each one month period following the date of grant; and |
(F) | the Committee Grant shall vest and become exercisable one-forty-eighth (1/48th) at the end of each one month period following the date of grant; provided, that if the date of grant occurs before the first anniversary of an Outside Director’s initial election to the Board (“First Anniversary Date”), no vesting shall occur prior to the First Anniversary Date but on the First Anniversary Date, vesting shall occur on a pro-rated basis for the period from the date of grant to the First Anniversary Date. |
6. Limitations.
(i) | No Employee shall be granted, in any fiscal year of the Company, Options to purchase more than 400,000 Shares. |
B-4
(ii) | In connection with his or her initial service or promotion, an Employee may be granted Options to purchase up to an additional 400,000 Shares, which shall not count against the limit set forth in subsection (i) above. |
(iii) | The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 12. |
7. Term of Plan. The Plan shall continue in effect for a term of ten (10) years until March 14, 2012, unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice of Grant; provided, however, that in the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Notice of Grant. However, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Notice of Grant.
9. Option Exercise Price and Consideration.
(i) | In the case of an Incentive Stock Option |
(A) | granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. |
(B) | granted to any Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. |
(ii) | In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. |
(i) | cash; |
(ii) | check; |
(iii) | promissory note (which note shall bear a rate of interest and contain such terms, including that such note shall be full recourse, as necessary to avoid charges to the Company’s earnings for financial reporting purposes); |
(iv) | other Shares which (A) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; |
(v) | as long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed exercise notice, together with irrevocable instructions to a brokerage |
B-5
firm designated by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board; or |
(vi) | such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. |
10. Exercise of Option.
B-6
11. Non-Transferability of Options. Unless determined otherwise by the Administrator, an Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset Sale or Change of Control.
B-7
Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in Fair Market Value to the per share consideration received by holders of Common Stock in the merger or sale of assets.
(i) | Any Options outstanding as of the date on which such Change of Control is determined to have occurred that are not yet exercisable and vested on such date shall become fully exercisable and vested; |
(ii) | To the extent that they are exercisable and vested, all outstanding Options, unless otherwise determined by the Board at or after grant, shall be terminated in exchange for a cash payment at the Change of Control Price (defined below), reduced by the exercise price applicable to such Options. These cash proceeds shall be paid to the Optionee or, in the event of death of an Optionee prior to payment, to the estate of the Optionee or to a person who acquired the right to exercise the Option by bequest or inheritance. |
(i) | When any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company employee benefit plan, including any trustee of such plan acting as trustee) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; or |
(ii) | The stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets; or |
(iii) | A change in the composition of the Board of Directors of the Company, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date the Plan is approved by the stockholders, or (B) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). |
13. Withholding. The Company may require the Optionee to pay to the Company the amount of any taxes that the Company is required by applicable federal, state, local or foreign law to withhold with respect to the grant, vesting or exercise of an Option. The Company shall not be required to issue any shares of Common Stock under the Plan until such obligations are satisfied.
B-8
due or to become due from the Company to the Optionee, or (c) having the Company withhold a number of shares of Common Stock that would otherwise be issued to the Optionee having a value equal to the tax withholding obligations, or (d) surrendering a number of shares of Common Stock the Optionee already owns having a value equal to the tax withholding obligations. The value of the Shares so withheld may not exceed the employer’s minimum required tax withholding rate, and the value of the Shares so tendered may not exceed such rate to the extent the Optionee has owned the surrendered shares for less than six months if such limitation is necessary to avoid a charge to the Company for financial reporting purposes.
14. Date of Grant. The date of grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
16. Conditions Upon Issuance of Shares.
17. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares 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.
18. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
19. Choice of Law. The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the state of California without giving effect to principles of conflicts of law.
20. Stockholder Approval. Continuance of the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Law.
B-9
![](https://capedge.com/proxy/DEF 14A/0001206774-03-000436/gymboreelogo.jpg)
THE GYMBOREE CORPORATION
700 AIRPORT BLVD., SUITE 200
BURLINGAME, CA 94010
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site. You will be prompted to enter your 12-digit Control Number which is located below to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call. You will be prompted to enter your 12-digit Control Number which is located below and then follow the simple instructions the Vote Voice provides you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to The Gymboree Corporation, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | GMBRE1 | KEEP THIS PORTION FOR YOUR RECORDS | ||
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
THE GYMBOREE CORPORATION |
The Board of Directors recommends a vote FOR the matters listed below. This Proxy, when properly executed, will be voted as specified below. This Proxy will be voted FOR Proposals 1, 2 and 3 if no specification is made. |
1. | Proposal to elect two Class I directors. | For | Withhold | For All | To withhold authority to vote, mark “For All Except” | ||||||
NOMINEES: 01) Blair W. Lambert | All | All | Except | and write the nominee’s number on the line below. | |||||||
02) Gary M. Heil | |_| | |_| | |_| | ||||||||
Vote On Proposals | For | Against | Abstain | |||||
2. | Proposal to approve an amendment to The Gymboree Corporation 2002 Stock Incentive Plan increasing the number of shares available for issuance under the plan. | |_| | |_| | |_| | ||||
3. | Proposal to ratify the appointment of Deloitte & Touche LLP as independent auditors for the fiscal year ending January 31, 2004. | |_| | |_| | |_| |
In their discretion, with respect to such other business as may properly come before the meeting and any adjournment or postponement thereof. | |
Please sign your name exactly as it appears hereon. If acting as attorney, executor, trustee or in other representative capacity, sign name and title. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
DETACH HERE
PROXY
THE GYMBOREE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, JUNE 25, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE GYMBOREE CORPORATION
PROXY
The undersigned revokes all previous proxies, acknowledges receipt of the notice of the Annual Meeting of Stockholders to be held June 25, 2003 and the Proxy Statement related thereto and appoints Lisa M. Harper and Myles B. McCormick, and each of them, the proxy of the undersigned, with full power of substitution, to vote all shares of Common Stock of The Gymboree Corporation which the undersigned is entitled to vote, either on his or her own behalf or on behalf of an entity or entities, at the Annual Meeting of Stockholders of the Company to be held at the Embassy Suites Hotel located at 150 Anza Boulevard, Burlingame, California 94010 on Wednesday, June 25, 2003 at 9:00 a.m., and at any adjournment or postponement thereof, with the same force and effect as the undersigned might or could do if personally present thereat. The shares represented by this proxy shall be voted in the manner set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE | SEE REVERSE SIDE |