1
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 sec.240.14a-11(c) or sec.240.14a-12
CKE Restaurants, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
2
CKE RESTAURANTS, INC.
1200 NORTH HARBOR BOULEVARD
ANAHEIM, CALIFORNIA 92801
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 21, 1995
To the Stockholders of CKE Restaurants, Inc.:
The Annual Meeting of Stockholders of CKE Restaurants, Inc. ("CKE") will be
held at the Anaheim Marriott Hotel, Marriott Hall North, 700 West Convention
Way, Anaheim, California, on Wednesday, June 21, 1995 at 9:30 a.m. for the
following purposes:
1. To elect directors;
2. To approve the CKE Restaurants, Inc. 1994 Employee Stock Purchase Plan;
and
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Stockholders of record at the close of business on April 24, 1995 will be
entitled to vote at the meeting. A list of the stockholders entitled to vote at
the meeting will be maintained at the corporate headquarters in the city of
Anaheim (at the address shown above) for at least twenty days prior to the
meeting.
By Order of the Board of Directors,
Richard C. Celio
Secretary
Anaheim, California
May 18, 1995
To assure that your shares will be voted at the meeting, you are requested
to sign the attached proxy and return it promptly in the enclosed postage-paid,
addressed envelope. No additional postage is required if mailed in the United
States. If you attend the meeting you may vote in person even though you have
sent in your proxy.
3
CKE RESTAURANTS, INC.
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 21, 1995
------------------------
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of CKE Restaurants, Inc., a Delaware
corporation (together with its subsidiaries, "CKE"), for use at the Annual
Meeting of Stockholders to be held on June 21, 1995 (the "Meeting").
It is anticipated that the mailing to stockholders of this Proxy Statement
and accompanying Proxy Card will begin on or about May 19, 1995.
------------------------
THE DATE OF THIS PROXY STATEMENT IS MAY 18, 1995
4
SOLICITATION OF PROXIES
At the Meeting, the stockholders of CKE will be asked (1) to vote upon the
election of directors, (2) to approve the CKE Restaurants, Inc. 1994 Employee
Stock Purchase Plan, and (3) to act upon such other matters as may properly come
before the Meeting. CKE's Board of Directors is asking for your proxy for use at
the Meeting. A stockholder giving a proxy may revoke it at any time before it is
exercised. Any proxy that is not revoked will be voted at the Meeting in
accordance with the stockholder's instructions indicated on the enclosed Proxy
Card. If no instructions are marked on the Proxy Card, the shares represented
thereby will be voted for the election of the director nominees and for the
approval of the 1994 Employee Stock Purchase Plan. Although management does not
know of any other matter to be acted upon at the Meeting, shares represented by
valid proxies will be voted by the persons named on the Proxy Card in accordance
with their best judgment with respect to any other matters that may properly
come before the Meeting.
The cost of preparing, assembling and mailing this Notice of Annual
Meeting, Proxy Statement and Proxy Card will be paid by CKE. In addition,
following the mailing of the Proxy Statement, directors, officers and regular
employees of CKE may solicit proxies by mail, telephone, telegraph or personal
interview. Such persons will receive no additional compensation for such
services. Brokerage houses and other nominees, fiduciaries and custodians
nominally holding shares of CKE Common Stock of record will be requested to
forward proxy soliciting material to the beneficial owners of such shares and
will be reimbursed by CKE for their charges and expenses in connection
therewith. It is anticipated that the mailing of proxy materials will begin on
or about May 19, 1995.
RECORD DATE AND VOTING
Holders of CKE Common Stock of record at the close of business on April 24,
1995, are entitled to notice of, and to vote at, the Meeting. There were
18,174,838 shares of CKE Common Stock outstanding and entitled to vote at the
Meeting on such record date. On all matters to come before the Meeting, each
holder of Common Stock will be entitled to one vote for each share owned. A
stockholder giving a proxy may revoke it at any time before it is voted by
filing with CKE's Secretary either a written notice of revocation or a duly
executed proxy bearing a later date or by appearing at the Meeting and voting in
person. Unless a proxy is revoked, shares represented by a proxy will be voted.
Election of directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of Proposal 2 is
subject to the affirmative vote of the majority of shares present in person or
represented by proxy at the Meeting and entitled to vote on such matter. A proxy
may indicate that all or a portion of the shares represented by such proxy are
not being voted with respect to a specific proposal. This could occur, for
example, when a broker is not permitted to vote shares held in street name on a
proposal in the absence of instructions from the beneficial owner. Shares that
are not voted with respect to a specific proposal will be considered as not
present and entitled to vote on such proposal, even though such shares will be
considered present for purposes of determining a quorum and voting in favor of
such proposal. Abstentions on a specific proposal will be considered as present,
but not as voting in favor of such proposal. Neither broker non-votes nor
abstentions will have any effect on the vote required to elect the director
nominees. Broker non-votes will have no effect on the outcome of the vote on
Proposal 2, but abstentions will have the same effect as a vote against such
proposal.
5
PROPOSAL 1
ELECTION OF DIRECTORS
The Certificate of Incorporation of CKE provides for the division of the
Board of Directors into three classes, each class serving for a period of three
years. The foregoing notwithstanding, directors serve until their successors
have been duly elected and qualified or until they resign, become disqualified
or disabled, or are otherwise removed. The class of directors whose term expires
as of the Meeting consists of Frank P. Willey and Carl L. Karcher.
The proxies solicited hereby are intended to be voted for the nominees
whose names are listed below. Both nominees are presently directors and have
indicated their willingness to continue to serve as directors, if elected. The
persons named in the proxy will have discretionary authority to vote for others
if any nominee becomes unable or unwilling to serve prior to the meeting. To the
knowledge of CKE, both nominees are and will be able to serve.
INFORMATION CONCERNING NOMINEES AND OTHER DIRECTORS
NOMINEES FOR ELECTION
FIRST YEAR
BECAME OTHER CORPORATE
NAME AGE PRINCIPAL OCCUPATION DIRECTOR DIRECTORSHIPS
- --------------------- -------------------------- ----------- --------------------------
Carl L. Karcher 46 President, CLK, Inc., a 1992 --
franchisee of CKE
Frank P. Willey 41 President, Fidelity 1994 Fidelity National
National Financial, Inc. Financial, Inc.
Carl L. Karcher has been a franchisee of CKE since May 1985. For more than
17 years prior to that time, Mr. Karcher was employed by CKE in several
capacities, including Vice President, Manufacturing and Distribution. Mr.
Karcher first became a director in May 1992. Carl L. Karcher is Carl N.
Karcher's son.
Frank P. Willey became President of Fidelity National Financial, Inc. in
January 1995 and has been, since February 1986, a director, Executive Vice
President and General Counsel of Fidelity National Financial, Inc., a holding
company engaged in title insurance and related services.
THE BOARD OF DIRECTORS OF CKE RECOMMENDS A VOTE "FOR" THE ELECTION OF BOTH
OF THE ABOVE NOMINEES.
DIRECTORS CONTINUING TO SERVE UNTIL 1996
FIRST YEAR
BECAME OTHER CORPORATE
NAME AGE PRINCIPAL OCCUPATION DIRECTOR DIRECTORSHIPS
- --------------------------- ------------------------- ----------- -------------------------
Peter Churm 69 Chairman Emeritus, Furon 1979 Furon Company
Company
Daniel D. (Ron) Lane 60 Chairman and Chief 1993 Fidelity National
Executive Officer, Financial, Inc., Resort
Lane/Kuhn Pacific, Inc. Income Investors, Inc.
Peter Churm became a member of the Board of Directors of CKE in 1979. He
was Chairman of the Board of Furon Company, a publicly held diversified
manufacturing company headquartered in Laguna Niguel, California, from May 1980
through February 1992 and was President of that company for more than 16 years
prior to that time. He remains a member of the Board of Directors of Furon
Company.
Daniel D. (Ron) Lane became Vice Chairman of the Board of CKE in October
1994 and a director of CKE in December 1993. Mr. Lane has been a director of
Fidelity National Financial, Inc. since September 1989. Since February 1983, he
has been a principal, Chairman and Chief Executive Officer of Lane/Kuhn Pacific,
Inc., a corporation that consists of several community development and home
building partnerships,
2
6
all of which are headquartered in Newport Beach, California. Mr. Lane also
serves as a director of Resort Income Investors, Inc.
DIRECTORS CONTINUING TO SERVE UNTIL 1997
FIRST YEAR
BECAME OTHER CORPORATE
NAME AGE PRINCIPAL OCCUPATION DIRECTOR DIRECTORSHIPS
- --------------------------- ------------------------- ----------- -------------------------
William P. Foley II 49 Chairman of the Board and 1993 Fidelity National
Chief Executive Officer, Financial, Inc., Micro
CKE; Chairman of the General Corporation
Board and Chief Executive
Officer, Fidelity
National Financial, Inc.
Carl N. Karcher 78 Chairman of the Board 1966 --
Emeritus, CKE
Elizabeth A. Sanders 49 Independent Management 1983 H.F. Ahmanson, Sport
Consultant Chalet, Inc., Wal-Mart
Stores, Inc., Wolverine
Worldwide
William P. Foley II became Chief Executive Officer of CKE in October 1994,
has been a director of CKE since December 1993 and became Chairman of the Board
in March 1994. Since 1981, Mr. Foley has been Chairman of the Board, President
(until January 1995) and Chief Executive Officer of Fidelity National Financial,
Inc. Mr. Foley is also a member of the Board of Directors of Micro General
Corporation.
Carl N. Karcher, the founder of CKE, purchased his first hot dog stand on
July 17, 1941 and has been developing CKE's concepts since that time. He first
became a director of CKE in 1966. He has served as Chairman of the Board
Emeritus since January 1994. He was Chairman of the Board of CKE until October
1993, and served as Chief Executive Officer until December 1992. Prior to 1980,
he was President of CKE. Carl N. Karcher is Carl L. Karcher's father.
Elizabeth A. Sanders served as Chairman of the Board of CKE from October
1993 until February 1994 and has been a director since 1983. She is an
independent management consultant to various businesses. She was employed by
Nordstrom, Inc., which owns a chain of department stores, in several capacities
between 1971 and 1990 (including Vice President -- General Manager between 1980
and 1990). Mrs. Sanders is a member of the Board of Directors of H.F. Ahmanson,
Sport Chalet, Inc., Wal-Mart Stores, Inc. and Wolverine Worldwide.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, comprised of Mrs.
Sanders and Messrs. Foley and Lane, is empowered by the Board of Directors to
take all actions that may otherwise be taken by the Board of Directors, to the
extent permitted by law.
In addition to the Executive Committee, the Board of Directors has two
standing committees: the Audit Committee and the Compensation and Stock Option
Committee. The Board does not have a nominating committee or other committee
performing similar functions. The Audit Committee, whose current members are
Messrs. Lane (Chairman), Churm and Willey, monitors CKE's basic accounting
policies and their related system of internal control, reviews CKE's audit and
management reports and makes recommendations regarding the appointment of
independent auditors. The Compensation and Stock Option Committee, whose current
members are Messrs. Churm (Chairman) and Willey and Mrs. Sanders, considers the
hiring and election of corporate officers, salary and incentive compensation
policies for officers and directors, and the granting of stock options to
employees.
During fiscal 1995, the Board of Directors held nine meetings, the Audit
Committee held one meeting, the Compensation and Stock Option Committee held two
meetings and the Executive Committee held seven
3
7
meetings. During fiscal 1995, no director attended fewer than 75% of the
aggregate meetings of the Board of Directors and the committee or committees on
which he or she served.
STOCKHOLDER NOMINATIONS
The Certificate of Incorporation of CKE provides that any stockholder
entitled to vote for the election of directors at a meeting may nominate persons
for election as directors only if timely written notice of such stockholder's
intent to make such nomination is given, either by personal delivery or United
States mail, postage prepaid, to the Secretary, CKE Restaurants, Inc., P.O. Box
4349, Anaheim, California 92803-4349. To be timely, a stockholder's notice must
be delivered to, or mailed and received at, the address provided not later than
90 days in advance of such meeting, or, if later, the seventh day following the
first public announcement of the date of such meeting. A stockholder's notice to
the Secretary must set forth: (i) the name and address of the stockholder who
intends to make the nomination and of the person or persons to be nominated,
(ii) a representation that the stockholder is a holder of record of CKE's Common
Stock entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting and nominate the person or persons specified in the notice,
(iii) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder, (iv) any other information relating to the person that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to the Securities Exchange Act of 1934, as amended, and (v) the consent
of each nominee to serve as a director of CKE if so elected. CKE may require any
proposed nominee to furnish such other information as may be reasonably required
by CKE to determine the eligibility of such proposed nominee to serve as a
director of CKE.
COMPENSATION OF DIRECTORS
For their services as directors in fiscal 1995, Messrs. Churm and Carl L.
Karcher and Mrs. Sanders each received a base fee of $18,000. For their services
as directors in fiscal 1995, Messrs. Foley, Lane and Willey each received a
pro-rata portion of annual base director's fees of $9,000; Mr. Carl N. Karcher's
pro rata portion was $4,500. For their attendance at Board meetings (including
telephonic meetings), other than regular Board meetings, Messrs. Churm, Carl L.
Karcher, Foley, Lane and Willey and Mrs. Sanders received $14,000, $12,500,
$16,500, $16,500, $8,000 and $13,000, respectively. Through February 1994, for
her services as Chairman, Mrs. Sanders received a pro-rata portion of Chairman's
fees of $90,000 per annum totaling $15,000. Mrs. Sanders also received
reimbursement of expenses incurred attending Board meetings totaling $2,637 in
fiscal 1995. Each non-employee director is expected to receive a fee of $18,000
in fiscal 1996 for their services and $1,000 ($500 for telephonic meetings) for
each Board meeting or committee meeting other than regular meetings attended by
that director in fiscal 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of the date of this Proxy Statement, the members of the Compensation and
Stock Option Committee of the Board of Directors were Messrs. Churm and Willey
and Mrs. Sanders, none of whom was an officer, former officer or employee of CKE
during fiscal 1995. See "Transactions with Officers and Directors."
4
8
PROPOSAL 2
APPROVAL OF 1994 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors is recommending stockholder approval of the CKE
Restaurants, Inc. 1994 Employee Stock Purchase Plan (the "Purchase Plan"), a
copy of which is attached as Exhibit A hereto. The following description of the
Purchase Plan is qualified in its entirety by reference to the full text of the
Purchase Plan.
Purpose and Adoption. The purpose of the Purchase Plan, which was adopted
by the Board of Directors of CKE on September 27, 1994, is to encourage a sense
of proprietorship on the part of employees of CKE and its subsidiary
corporations (as defined in the Purchase Plan) by assisting such employees in
making regular purchases of shares of CKE Common Stock, and thus to benefit CKE
by increasing such employees' interest in the growth of CKE and its subsidiary
corporations and in such entities' financial success.
Administration. The Purchase Plan is to be administered by the Board of
Directors or a committee appointed by the Board of Directors (the "Committee").
All questions of interpretation or application of the Purchase Plan are
determined by the Board of Directors or the Committee, and its decisions are
final and binding upon all participants. Members of the Board of Directors or
the Committee who are eligible employees are permitted to participate in the
Purchase Plan. Members of the Board of Directors or the Committee receive no
additional compensation for their services in connection with the administration
of the Purchase Plan.
Securities Subject to the Plan. The maximum number of shares which may be
issued to participants over the term of the Purchase Plan may not exceed 500,000
shares of CKE's Common Stock. As of April 27, 1995, approximately 8,600 shares
had been purchased under the Purchase Plan, for an aggregate purchase price of
$61,558. The Purchase Plan has approximately 180 participants.
Eligibility. Participation in the Purchase Plan is completely voluntary.
Any person who has reached the age of majority and who is currently employed by
CKE or one of its subsidiary corporations (i) on an hourly basis as a restaurant
employee for at least 30 hours per week and has been so employed continuously
during the preceding one (1) year (provided that the Board of Directors or the
Committee may in its discretion waive such one (1) year requirement), excluding
non employees and persons on leave of absence; (ii) on an hourly basis as a
non-restaurant employee for at least 30 hours per week and has been so employed
continuously during the preceding 90 days (provided that the Board of Directors
or the Committee may in its discretion waive such 90 day requirement), excluding
non-employees and persons on leave of absence; or (iii) is exempt from the
overtime and minimum wage requirements under federal and state laws and has been
so employed continuously during the preceding 90 days (provided that the Board
of Directors or the Committee may in its discretion waive such 90-day
requirement), excluding non-employees and persons on leave of absence.
Offering Dates. Shares shall be offered pursuant to the Purchase Plan in
periods coinciding with CKE's fiscal quarters commencing on the effective date
of the Purchase Plan.
Matching Contribution. CKE will make a "Matching Contribution" equal to
one-third of a participant's contribution less withholding taxes associated
therewith for those participants that are neither officers nor directors. CKE
will make a Matching Contribution equal to one-half of the participant's
contributions less withholding taxes associated therewith for participants that
are either officers or directors.
Purchase Price. The purchase price per share shall be (i) the reported
closing price of the Common Stock on the New York Stock Exchange or other
established stock exchange on the purchase date, or if no sale shall have been
made on such date, on the preceding date on which there was a sale; (ii) if the
Common Stock is not then listed on an exchange, the average of the closing bid
and asked prices per share for the Common Stock on the over-the-counter market
as quoted on the New York Stock Exchange on such date; or (iii) if such Common
Stock is not then listed on an exchange or quoted on the New York Stock
Exchange, an amount determined in good faith by the Board of Directors.
5
9
Purchase of Stock and Delivery of Shares. Following the acceptance by CKE
of a participant's enrollment form, CKE shall direct a financial institution
designated to act as broker under the Purchase Plan (the "Broker") to open and
maintain an account (the "Brokerage Account") in the name of such participant
and to purchase shares of Common Stock on behalf of such participant as
permitted under the Purchase Plan. Merrill Lynch, Pierce, Fenner & Smith
Incorporated has agreed to act as Broker for such period as is determined by
CKE. CKE, from time to time during an offering period, shall deliver to the
Broker an amount equal to the total of all participant contributions together
with a list of the amount of such contributions from each participant. From time
to time, the Broker, as agent for the participants, shall purchase as many full
shares or fractional shares of Common Stock as such contributions will permit.
The shares to be purchased shall be purchased at the then current fair market
value and may, at the election of CKE, be either treasury shares, shares
authorized but unissued, or shares purchased on the open market. The amount of
Common Stock purchased by the Broker shall be allocated to the respective
Brokerage Account of each participant on the basis of the average cost of the
Common Stock so purchased, in proportion to the amount allocable to each
participant. Unless otherwise requested by the participant, all full shares and
fractional shares so purchased shall be registered in the name of the Broker and
will remain so registered until delivery is requested by the participant in
accordance with the Purchase Plan.
Capital Changes. If there are any changes in the capitalization of CKE,
such as through mergers, consolidations, reorganizations, recapitalizations,
stock splits or stock dividends, appropriate adjustments will be made by CKE in
the number of shares of its Common Stock subject to purchase under the Purchase
Plan.
Nonassignability. Neither payroll deductions credited to a participant's
account nor any rights of a participant under the Purchase Plan may be pledged,
assigned or transferred for any reason except by will or the laws of descent and
distribution. Any attempt at such pledge, assignment or transfer may be treated
by CKE as an election to withdraw from the Purchase Plan.
Amendment, Suspension or Termination of the Plan. The Board may at any time
terminate, suspend or amend the Purchase Plan. If the Purchase Plan is
terminated, each participant shall be entitled to receive the funds in such
participant's account but shall not be entitled to any Matching Contribution.
Tax Consequences. The Purchase Plan is not intended to qualify as an
employee stock purchase plan under Section 423 of the Internal Revenue Code of
1986 as amended (the "Code"). To the extent a participant receives shares of the
Common Stock for a price less than its fair market value, the participant will
recognize income equal to such difference. The Purchase Plan provides for the
purchase of shares to be made at fair market value; accordingly, there should be
no income to the participant upon the purchase of shares of the Common Stock.
CKE will be required to withhold federal income tax with respect to the
Matching Contributions made by CKE or the appropriate subsidiary (the direct
employer of the participant). These amounts will be withheld at the end of the
period that the shares purchased with the Matching Contribution are subject to
forfeiture. Such amounts will be withheld from the remainder of the base
earnings (as that term is defined in the Purchase Plan) of the participant and
not from amounts placed in the participant's account.
BOARD RECOMMENDATION
The Board of Directors believes that it is in the best interests of CKE and
its stockholders to approve the Purchase Plan in order to attract, retain and
motivate qualified employees.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE CKE RESTAURANTS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN.
6
10
OTHER BUSINESS
PRESENTED BY MANAGEMENT. Management does not know of any matter to be acted
upon at the Meeting other than the matters described above, but if any other
matter properly comes before the Meeting, the persons named on the enclosed
Proxy Card will vote thereon in accordance with their best judgment.
PRESENTED BY STOCKHOLDERS. Pursuant to CKE's Certificate of Incorporation
only such business shall be conducted at an annual meeting of stockholders as is
properly brought before the meeting. For business to be properly brought before
an annual meeting by a stockholder, in addition to any other applicable
requirements, timely notice of the matter must be first given to the Secretary
of CKE. To be timely, written notice must be received by the Secretary not later
than 90 days in advance of such meeting or, if later, the seventh day following
the first public announcement of the date of such meeting. Any notice to the
Secretary must include as to each matter the stockholder proposes to bring
before the meeting: (a) a brief description of the business desired to be
brought before the meeting and the reason for conducting such business at the
annual meeting, (b) the name and record address of the stockholder proposing
such business, (c) the class and number of shares of CKE which are beneficially
owned by the stockholder, and (d) any material interest of the stockholder in
such business.
7
11
OWNERSHIP OF CKE'S SECURITIES
The following table sets forth certain information regarding beneficial
ownership of CKE's Common Stock as of March 31, 1995, by (i) each person who is
known by CKE to beneficially own more than five percent of the outstanding CKE
Common Stock, (ii) each director, (iii) each Named Executive Officer listed in
the Summary Compensation Table below, and (iv) all directors and executive
officers as a group. Except as otherwise indicated, beneficial ownership
includes both voting and investment power.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (#) CLASS (%)(1)
- ---------------------------------------- ------------------ -------------
Cannae Limited Partnership (2).......... 4,343,752(2)(3)(4) 23.9(2)(3)(4)
3811 W. Charlston, Suite 210
Las Vegas, Nevada 89102
Carl N. Karcher......................... 1,442,478(5) 7.9(5)
700 North Clementine
Anaheim, California 92805
Brinson Partners, Inc................... 1,084,700(6) 6.0(6)
Brinson Trust Company
Brinson Holdings, Inc.
c/o Brinson Partners, Inc.
209 South LaSalle
Chicago, Illinois 60604-1295
Dito-Devcar, Inc........................ 1,350,000(7) 7.4(7)
Dito-Caree, LP
c/o Mr. Richard H. Pickup
500 Newport Center Drive,
Suite 550
Newport Beach, California 92660
William P. Foley II..................... 4,343,752(2)(3)(4) 23.9(2)(3)(4)
17911 Von Karman Avenue, Suite 500
Irvine, California 92714
Donald E. Doyle......................... 10,040 *
1200 North Harbor Boulevard
Anaheim, California 92801
Peter Churm............................. 12,491(8) *
Furon Company
29982 Ivy Glenn Drive
Laguna Niguel, California 92677
Carl L. Karcher......................... 69,995(9) *
73-101 Highway 111, Suite 1
Palm Desert, California 92260
Daniel D. (Ron) Lane.................... 4,343,752(2)(3)(4) 23.9(2)(3)(4)
Lane/Kuhn Pacific, Inc.
14 Corporate Plaza
Newport Beach, California 92660
Elizabeth A. Sanders.................... 6,667(10) *
The Sanders Partnership
12835 Sutter Creek Road
Sutter Creek, California 95685
Frank P. Willey......................... 4,343,752(2)(3)(4) 23.9(2)(3)(4)
17911 Von Karman Avenue, Suite 500
Irvine, California 92714
Loren C. Pannier........................ 295,461(11) 1.6(11)
1200 North Harbor Boulevard
Anaheim, California 92801
Rory J. Murphy.......................... 57,205(11) *
1200 North Harbor Boulevard
Anaheim, California 92801
8
12
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (#) CLASS (%)(1)
- ---------------------------------------- ------------------ -------------
Kerry W. Coin........................... 26,000(11) *
222 South Harbor Boulevard, Suite 300
Anaheim, California 92805
Richard C. Celio........................ 58,700(11) *
1200 North Harbor Boulevard
Anaheim, California 92801
All executive officers and directors
as a group (15 persons)............... 6,331,244(12) 34.1(12)
- ---------------
* Less than one percent.
(1) Calculated based on 18,174,838 shares of CKE Common Stock outstanding on
March 31, 1995.
(2) Based on a Schedule 13D, as restated by amendments thereto, filed by the
following persons and entities as a group, who have agreed to become Class
B Limited Partners of Cannae Limited Partners (the "Partnership"): (a)
Folco Development Corporation ("Folco"), c/o William P. Foley II, 17911 Von
Karman Avenue, Suite 500, Irvine, California 92714; (b) Daniel V., Inc. and
the Daniel P. Lane Revocable Trust U/D/T July 10, 1992 (collectively, the
"Daniel Entities"), 3811 W. Charleston, Suite 210, Las Vegas, Nevada 89102;
(c) Frank P. Willey ("Willey"), 17911 Von Karman Avenue, Suite 500, Irvine,
California 92714; (d) Ce Mar Las Vegas X, Inc., 1700 Lamb Boulevard, Las
Vegas, Nevada 89115; (e) Robert L. Berry and Nancy L. Berry, Trustees, of
the Berry Living Trust dated November 5, 1987, 17911 Von Karman Avenue,
Suite 500, Irvine, California 92714; (f) Max Hickman, 17911 Von Karman
Avenue, Suite 500, Irvine, California 92714; and (g) Vince Salvatore and
Anna M. Salvatore, Trustees of the Salvatore Family Trust dated November 8,
1991, 22932 Calle Azoria, Mission Viejo, California 92692. Such restated
Schedule 13D also states that the following persons will become Class B
Limited Partners upon completion of certain documents and the making of
certain capital contributions to the Partnership: (a) Lawrence Calida,
17911 Von Karman Avenue, Suite 500, Irvine, California 92714; (b) Wayne
Diaz, 5925 Stoneridge Drive, P.O. Box 10425, Pleasanton, California 94588;
(c) Carl Strunk, 17911 Von Karman Avenue, Suite 500, Irvine, California
92714; (d) Ron Maggard, 5700 Division Street, Suite 204, Riverside,
California 92506 and (e) Daniel M. Culnane, 17911 Von Karman Avenue, Suite
500, Irvine, California 92714. The aggregate number of shares set forth
above includes: (1) 3,820,002 shares held by the Partnership; (2) 463,750
shares held by Folco; (3) 50,000 shares held in the aggregate by the Daniel
Entities; and (4) 10,000 shares held by Willey. The restated Schedule 13D
states that the Class A Limited Partner of the Partnership is Carl N.
Karcher, as sole trustee of the Carl N. and Margaret M. Karcher Trust (the
"Trust") (see the table above and related footnotes). In its Schedule 13D,
the Trust and Mr. and Mrs. Karcher disclaim beneficial ownership of the
Partnership's shares. The General Partner of the Partnership is Bognor
Regis, Inc., a Nevada corporation. According to the Schedule 13D, William
P. Foley II is the President of Bognor Regis, Inc. and owns and controls
Folco.
(3) The restated Schedule 13D states that each of the Class B Limited Partners
described in Footnote (2) have sole voting and shared dispositive power
with respect to such shares.
(4) Excludes 497,000 shares held by Fidelity National Financial, Inc., based on
a Schedule 13D, as restated by amendments thereto. William P. Foley II is
the Chairman and Chief Executive Officer of Fidelity National Financial,
Inc. Frank P. Willey is the President of Fidelity National Financial, Inc.
Messrs. Foley, Lane and Willey are directors of Fidelity National
Financial, Inc.
(5) Based on a Schedule 13D, as restated by amendments thereto, filed by the
Trust, which states (a) that the Trust is the beneficial owner of 1,375,462
shares; (b) that 33,000 shares are held of record by the Carl N. and
Margaret M. Karcher Foundation, the beneficial ownership of which the Trust
and Mr. and Mrs. Karcher disclaim; and (c) that Mr. Karcher is individually
the beneficial owner of 620 shares and Mrs. Karcher individually is the
beneficial owner of 63 shares. Mr. Karcher is described as the sole
9
13
Trustee of the Trust and as having the sole right to vote the Trust's
shares and, subject to certain limitations set forth in the Trust's
governing instruments, to dispose of the Trust's shares. Mr. Karcher and
Margaret M. Karcher, his wife, are described as the lifetime beneficiaries
of the Trust. The Trust and Mr. and Mrs. Karcher disclaim any beneficial
ownership in the 3,820,002 shares owned by the Partnership. Also includes
33,333 shares subject to presently exercisable options or options that
become exercisable on or prior to May 30, 1995.
(6) Based on a Schedule 13G, and amendments thereto, filed by Brinson Partners,
Inc. on behalf of the named entities and includes 457,104 shares held by
Brinson Partners, Inc. and 627,596 shares held by Brinson Trust Company.
(7) Based on a Schedule 13D, as restated by amendments thereto, filed by the
following persons and entities as a group: (a) Dito-Devcar, Inc. with
respect to 1,000,000 shares, and (b) Dito-Caree, LP with respect to 350,000
shares.
(8) Includes 667 shares subject to presently exercisable options or options
that become exercisable on or prior to May 30, 1995.
(9) Includes (a) 180 shares held by Carl L. Karcher; (b) 65,366 shares held by
Carl L. Karcher and Peggy L. Karcher, as trustees under a trust dated
January 31, 1983 for the benefit of Carl L. and Peggy L. Karcher; (c) 667
shares subject to presently exercisable options or options that become
exercisable on or prior to May 30, 1995; and (d) 3,782 shares owned by Carl
L. Karcher's minor children.
(10) Includes 667 shares subject to presently exercisable options or options
that become exercisable on or prior to May 30, 1995.
(11) Includes for Messrs. Pannier, Murphy, Celio and Coin (a) 5,695, 1,501, 541
and no shares, respectively, held in trust for the benefit of such persons
under the Investment Plan (see "Executive Compensation -- Retirement
Plans"); and (b) 227,909, 55,704, 58,159 and 25,000 shares, respectively,
subject to presently exercisable options or options that become exercisable
on or prior to May 30, 1995.
(12) Includes 15,936 shares subject to presently exercisable options or options
that become exercisable on or prior to May 30, 1995 which are held by
executive officers not listed in the above table.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR THE
FISCAL YEAR ENDED JANUARY 30, 1995
The Committee, comprised of three non-employee directors, is responsible
for administering the executive compensation policies, administering the various
management incentive programs (including option plans), and making
recommendations to the Board of Directors with respect to these policies and
programs. In addition, the Committee makes annual recommendations to the Board
of Directors concerning the compensation paid to the Chief Executive Officer and
to each of the other executive officers of CKE (each, an "Executive Officer"),
including the Named Executive Officers. Set forth below is a report submitted by
the Committee addressing compensation policies for fiscal 1995 as they affected
(i) Donald E. Doyle, the President and Chief Executive Officer of CKE until
October 1994, (ii) William P. Foley II, the Chief Executive Officer of CKE at
year end, and (iii) the other Executive Officers.
COMPENSATION POLICIES TOWARDS EXECUTIVE OFFICERS. The Committee believes
that the most effective executive compensation program is one that provides
incentives to achieve both current and long-term strategic management goals,
with the ultimate objective of enhancing stockholder value. In this regard, the
Committee believes executive compensation should be comprised of cash as well as
equity-based programs. Base salaries are generally set at market levels in order
to attract and retain qualified and experienced executives. With respect to
equity-based compensation, the Committee believes that an integral part of CKE's
compensation program is the ownership and retention of CKE's Common Stock by its
Executive Officers. By providing Executive Officers with a meaningful stake in
CKE, the value of which is dependent on CKE's long-term success, a commonality
of interests between CKE's Executive Officers and its stockholders is fostered.
10
14
RELATIONSHIP OF PERFORMANCE TO COMPENSATION. Compensation that may be
earned by the Executive Officers in any fiscal year consists primarily of base
salary, cash bonus and stock options. The significant factors that were
considered in establishing the components of each Executive Officer's
compensation package for fiscal 1995 are summarized below. The Committee, in its
discretion may apply entirely different factors, particularly different measures
of financial performance, in setting executive compensation for future fiscal
years, but all compensation decisions will be designed to further the general
compensation policies indicated above.
- Base Salary. The base salary for each Executive Officer is set on
the basis of personal performance, the salary levels in effect for
comparable positions with CKE's principal competitors (including, but not
limited to, CKE's self-determined peer group set forth in the "Stock
Performance Graph" below), and CKE's financial performance relative to such
competitors. Factors relating to individual performance that are assessed
in setting base compensation are based on the particular duties and areas
of responsibility of the individual Executive Officer. Factors relating to
CKE's financial performance that may be related to increasing or decreasing
base salary include revenues and earnings. The establishment of base
compensation involves a subjective assessment and weighing of the foregoing
criteria and is not based on any specific formula. After reviewing the
major events and changes that occurred in fiscal 1995, the Committee
approved increases in some base salaries to remain competitive with market
base salaries and to reflect new responsibilities for some Executive
Officers.
- Cash Bonus. Annual bonuses are earned by each Executive Officer on
the basis of CKE's achievement of pre-tax income targets established at the
start of the fiscal year and on the basis of the particular Executive
Officer's duties and areas of responsibility. Bonus amounts are established
based on various levels of performance against such targets. Following the
completion of the fiscal year, the Committee assesses CKE and individual
performance against the established targets and provides for annual bonuses
based on the targeted performance of levels actually achieved. Because CKE
did not achieve the targeted levels of pre-tax income for fiscal 1995, the
Committee did not approve any bonuses.
- Stock Options. Stock option grants motivate Executive Officers to
manage the business to improve long-term CKE performance, and align the
interests of Executive Officers with stockholder value. Customarily, option
grants are made with exercise prices equal to the fair market value of the
shares on the grant date and will be of no value unless the market price of
CKE's outstanding shares appreciates, thereby aligning a substantial part
of the Executive Officer's compensation package with the return realized by
the stockholders. Options generally vest in equal installments over a
period of time, contingent upon the Executive Officer's continued
employment with CKE. Accordingly, an option will provide a return to the
Executive Officer only if the Executive Officer remains employed by CKE and
the market price of the underlying shares appreciates over the option term.
The size of an option grant is designed to create a meaningful opportunity
for stock ownership and is based upon the individual's current position
with CKE, internal comparability with option grants made to other CKE
executives and the individual's potential for future responsibility and
promotion over the option term. The Committee has established an award
program which takes into account the level of responsibility in the
organization, and total compensation compared to comparable companies, in
making option grants to the Executive Officers in an attempt to target a
fixed number of unvested option shares based upon the individual's position
with CKE and the Executive Officer's existing holdings of unvested options.
As such, the award of stock options requires subjective judgment as to the
amount of the option. However, the Committee does not adhere strictly to
these guidelines and will occasionally vary the size of the option grant,
if any, made to each Executive Officer as circumstances warrant.
CHIEF EXECUTIVE OFFICER COMPENSATION. Donald E. Doyle became CKE's Chief
Executive Officer and President on December 22, 1992, at which time his base
salary was set at $300,000. As a merit increase, the Committee granted Mr. Doyle
a 5% increase in base compensation to $315,000 for fiscal 1995. The balance of
Mr. Doyle's compensation was determined in accordance with the same principles
discussed above consisting of a bonus element and a stock option award. Mr.
Doyle did not receive an annual bonus in fiscal 1995. In addition, as a result
of his resignation, options to purchase 50,000 shares of CKE's Common Stock
which were granted to Mr. Doyle in fiscal 1995 were terminated.
11
15
William P. Foley II replaced Mr. Doyle as CKE's Chief Executive Officer in
October 1994. Mr. Foley did not receive any compensation during fiscal 1995 for
such position. In March 1995, Mr. Foley's base compensation was established at
$200,000 for fiscal 1996, based on information provided by Kieckhafer, Kraus &
Company ("Kieckhafer"). While certain of the companies taken into account by
Kieckhafer were the same as those considered in setting Mr. Foley's compensation
level for fiscal 1996, the Kieckhafer information also included a number of
other companies.
CORPORATE DEDUCTION FOR COMPENSATION. Section 162(m) of the Internal
Revenue Code generally limits to $1 million the corporate deduction for
compensation paid to the Named Executive Officers, unless certain requirements
are met. At this time, CKE's deduction for officer compensation is not limited
by the provisions of Section 162(m). The Committee intends to monitor
regulations issued pursuant to Section 162(m) and to take such actions with
respect to the executive compensation program as are reasonably necessary to
preserve the corporate tax deduction for executive compensation paid.
Peter Churm (Chairman)
Elizabeth A. Sanders
Frank P. Willey
The report of the Compensation and Stock Option Committee of the Board of
Directors shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that CKE specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
12
16
STOCKHOLDER PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN AMONG CKE,
RUSSELL 2000 INDEX AND SELECTED RESTAURANT PEER GROUP INDEX(1)
1/29/90 1/28/91 1/27/92 1/25/93 1/31/94 1/30/95
---------------------------------------------------------
CKE Restaurants Inc. 100 66 84 88 139 71
Russell 2000 100 91 138 157 185 174
Restaurant Peer Group 100 100 156 165 170 141
- ---------------
(1) Restaurant Peer Group Index is comprised of the following companies: Bob
Evans Farms, Inc.; Foodmaker, Inc.; Ground Round Restaurants, Inc.; Hanover
Direct, Inc.*; IHOP Corporation; Luby's Cafeterias, Inc.; Morrison, Inc.;
Piccadilly Cafeterias, Inc.; Ryan's Family Steak Houses, Inc.; Shoney's,
Inc.; Sizzler International, Inc.; and VICORP Restaurants, Inc.
* On 4/15/93, Horn & Hardart Co. merged with and into Hanover Direct, Inc.
The Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that CKE specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
13
17
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the years indicated, the compensation
awarded to, earned by or paid to (i) each of the Chief Executive Officers who
were so employed by CKE during fiscal 1995 and (ii) each of the four other most
highly compensated executive officers (collectively with the Chief Executive
Officer, the "Named Executive Officers") of CKE who were so employed by CKE as
of January 30, 1995.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------------
-------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND TITLE YEAR ($) ($) ($)(2) ($) (#) ($)(3)
- ------------------------- ------ ------- ------ ------------- ---------- ----------- ------------
William P. Foley II...... 1995 -- -- -- -- 27,500 --
Chairman, Chief 1994 -- -- -- -- -- --
Executive Officer(1) 1993 -- -- -- -- -- --
Donald E. Doyle.......... 1995 273,382 -- 56,999 -- 50,000(5) --
President and Chief 1994 289,038 75,000 238,046 -- 162,769(5) --
Executive Officer(6) 1993 23,654 -- -- 100,000(4) --
Kerry W. Coin............ 1995 191,115 -- 13,013 -- 15,000 --
President and Chief 1994 148,292 29,400 153,434 -- 30,000 --
Operating Officer, 1993 -- -- -- -- -- --
Boston Pacific, Inc.(7)
Loren C. Pannier......... 1995 193,842 -- 14,890 -- 10,000 3,224
Senior Vice President 1994 189,139 33,282 12,058 -- 23,408 2,912
and Chief Financial 1993 180,461 -- 14,152 -- 13,560 5,728
Officer(8)
Rory J. Murphy........... 1995 182,192 -- 12,284 -- 15,000 2,849
Senior Vice President, 1994 165,654 40,000 11,841 -- 61,200 2,477
Restaurant Operations, 1993 128,428 -- 4,215 -- 8,470 3,265
Carl Karcher
Enterprises, Inc.
Richard C. Celio......... 1995 146,750 -- 14,668 -- 10,000 2,175
Vice President and 1994 133,049 28,000 13,982 -- 50,108 1,435
General Counsel 1993 109,860 -- 12,664 -- 5,450 2,958
- ---------------
(1) Mr. Foley was appointed Chief Executive Officer in October 1994.
(2) "Other Annual Compensation" includes the following amounts for Messrs.
Doyle, Coin, Pannier, Murphy and Celio: (a) fiscal 1995 auto allowance
payments of $8,300, $9,960, $9,960, $9,960 and $9,960, respectively, and (b)
fiscal 1995 reimbursements by CKE for medical and dental costs of $4,949,
$3,053, $4,930, $2,324 and $4,708, respectively. In fiscal 1994, Messrs.
Doyle and Coin received reimbursements for relocation costs totaling
$174,172 and $143,474, respectively. In fiscal 1995 and 1994, Mr. Doyle
received a housing allowance in the amount of $43,750 and $52,500,
respectively.
(3) "All Other Compensation" includes matching and voluntary contributions by
CKE to CKE's voluntary contributory profit sharing and 401(k) savings plan
for Messrs. Pannier, Murphy and Celio in the amounts of (i) $2,511, $2,215
and $1,835, respectively, for the profit sharing plan and (ii) $713, $634
and $340, respectively, for the 401(k) savings plan.
(4) Mr. Doyle was awarded 12,121 shares of restricted stock pursuant to his
employment agreement. The award was valued based on the market value of
CKE's Common Stock on the date of issuance, which was $8.25 per share. In
accordance with certain vesting provisions, Mr. Doyle received 4,040 shares
in fiscal 1994. The balance of the restricted stock award was terminated
when Mr. Doyle resigned from CKE in October 1994.
(5) As part of CKE's offer to Mr. Doyle in December 1992 to become CKE's
President and Chief Executive Officer, CKE agreed to grant Mr. Doyle an
option to purchase 100,000 shares of CKE's Common Stock.
14
18
This option was subsequently granted to Mr. Doyle in April 1993 upon the
adoption by CKE's Board of Directors of the 1993 Employee Stock Incentive
Plan. Mr. Doyle's options were terminated when he resigned from CKE in
October 1994.
(6) Mr. Doyle was appointed President and Chief Executive Officer in December
1992, and resigned in October 1994.
(7) Mr. Coin was appointed Vice President, Strategic Development in February
1993, Senior Vice President and General Manager of Boston Pacific, Inc. in
January 1994, and President and Chief Operating Officer of Boston Pacific,
Inc. in October 1994. Mr. Coin is in the process of resigning as an officer
of CKE in order to accept a position with Boston West, L.L.C.
(8) In May 1995, Mr. Pannier ceased being CKE's Chief Financial Officer. Mr.
Pannier will continue as CKE's Senior Vice President and Treasurer.
STOCK OPTIONS
The following table sets forth certain information with respect to the
stock options granted during fiscal 1995 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
- --------------------------------------------------------------------------------------- VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OF OPTION TERM
OPTIONS FISCAL BASE PRICE EXPIRATION -------------------
NAME GRANTED (#) YEAR(1) ($/SHARE)(2) DATE(3) 5%($) 10%($)
- ------------------------ ----------- ------------- -------------- -------------- -------- --------
William P. Foley II..... 27,500 6.3% 9.00 June 20, 1999 69,300 150,975
Donald E. Doyle......... 50,000 11.4% (4) (4) (4) (4)
Kerry W. Coin........... 15,000 3.4% 11.38 April 7, 2004 107,541 271,413
Loren C. Pannier ....... 10,000 2.3% 11.38 April 7, 2004 71,694 180,942
Rory J. Murphy.......... 15,000 3.4% 11.38 April 7, 2004 107,541 271,413
Richard C. Celio........ 10,000 2.3% 11.38 April 7, 2004 71,694 180,942
- ---------------
(1) Based on the number of shares being subject to options granted to all
employees aggregating 437,206 in fiscal 1995.
(2) The fair market value of CKE's Common Stock on the date of grant.
(3) All the options vest 33 1/3% on the first anniversary of the date of grant,
33 1/3% on the second anniversary of the date of grant and 33 1/3% on the
third anniversary of the date of grant.
(4) Mr. Doyle's stock options were terminated when he resigned from CKE in
October 1994.
15
19
OPTION EXERCISE AND HOLDINGS
The following table sets forth certain information with respect to stock
options exercised during fiscal 1995 and year-end stock option values.
AGGREGATE OPTION EXERCISES IN FISCAL 1995
AND FISCAL 1995 YEAR-END OPTION VALUES
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END AT FISCAL YEAR END
(#) ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- --------------------------- ------------------ ------------------ ------------------- --------------------
William P. Foley II........ -- -- --/27,500 --/--
Donald E. Doyle............ -- -- --/-- --/--
Kerry W. Coin.............. -- -- 10,000/35,000 --/--
Loren C. Pannier........... 31,710 80,385 224,575/31,029 122,163/--
Rory J. Murphy............. -- -- 40,704/59,188 2,306/--
Richard C. Celio........... -- -- 46,492/45,584 2,453/--
EMPLOYMENT AGREEMENTS
In January 1993, CKE entered into employment agreements with Donald E.
Doyle, the then President and Chief Executive Officer, Loren C. Pannier, Senior
Vice President and Treasurer, Rory J. Murphy, Senior Vice President, Restaurant
Operations, and Richard C. Celio, Vice President and General Counsel. Each such
employment agreement expires in January 1996. In February 1993, CKE entered into
an employment agreement with Kerry W. Coin, President and Chief Operating
Officer of Boston Pacific, Inc., which expires in February 1996. Mr. Coin is in
the process of resigning as an officer of CKE in order to accept a position with
Boston West, L.L.C. In November 1994, CKE entered into an employment agreement
with C. Thomas Thompson, President and Chief Operating Officer of Carl Karcher
Enterprises, Inc., which expires in October 1996.
Base Salaries. The base salaries payable under these agreements are subject
to increase from time to time at the discretion of the Board of Directors. The
employment agreement with Mr. Doyle provided for an initial annual base salary
of $300,000. In March 1994, Mr. Doyle's annual base salary was increased to
$315,000. In addition, in March 1993, CKE and Mr. Doyle executed an addendum to
his employment agreement providing for a housing cost differential payment of
$4,375 per month to be paid to Mr. Doyle through December 1997 in consideration
of the markedly higher housing costs in Southern California compared to those in
Louisville, Kentucky, Mr. Doyle's former residence. Mr. Doyle's employment
agreement was terminated when he resigned from CKE in October 1994. Mr.
Thompson's annual base salary is $250,000.
Bonuses. The employment agreements for officers (other than C. Thomas
Thompson) provide for a management incentive compensation plan to be established
by the Board of Directors for the payment of cash bonuses to the executive
officers and management of CKE. Such bonuses will be paid if certain performance
targets are met. The Board of Directors has established the terms of such
management incentive compensation plan. See "Incentive Compensation Plan."
Mr. Thompson's employment agreement provides for cash bonuses during his
employment term. For the first year of his employment term, Mr. Thompson's
bonus, which may not exceed $200,000, will be based on certain percentage cost
savings, if any, realized by CKE. For the second year of his employment term,
Mr. Thompson's bonus, which may not exceed $250,000, will be based upon the
increase in market value, if any, of CKE's Common Stock.
16
20
Stock Options and Grants. Each employment agreement entitles the executive
officer to participate in CKE's stock incentive plan. Certain grants were made
to the Named Executive Officers pursuant to their employment agreements, as set
forth in the table above.
Termination of Employment; Change of Control. Each employment agreement
provides that if CKE terminates an executive officer's employment for good and
valid cause (as defined therein), CKE will not be required to pay any severance
pay or pro-rata payment that may otherwise be due such executive officer.
However, if an executive officer (other than C. Thomas Thompson) is terminated
by CKE without cause, CKE will be obligated to pay a lump sum equal to the
greater of one year's compensation or the balance of compensation due for the
remainder of the employment agreement, plus any accrued and unpaid compensation.
In the event CKE terminates Mr. Thompson's employment without cause, CKE will be
obligated to pay a lump sum equal to the lesser of six month's compensation or
the balance of compensation due for the remainder of the employment agreement,
plus any accrued and unpaid compensation. In addition, the employment agreements
provide for certain payments in the event CKE is acquired by or merged with
another entity, or another entity acquires all or substantially all of CKE's
assets, resulting in such other entity gaining direction or control of CKE (a
"Change in Control") and thereafter either (i) an executive officer is
terminated or (ii) an executive officer exercises his right upon a Change in
Control to terminate his employment agreement. In either case, such executive
officer's (other than Mr. Thompson's) employment agreement requires CKE to pay
such executive officer's base salary for the longer of one year or the balance
of such agreement's term. Mr. Thompson's agreement requires CKE to pay, in a
lump sum, Mr. Thompson's base salary for the balance of the employment term. Mr.
Pannier is also party to a Change in Control Agreement executed in 1988 that
provides that if Mr. Pannier loses his position or a substantially equivalent
position with CKE as a result of and prior to two years after a Change in
Control, Mr. Pannier is entitled to an amount equal to the product of (i) the
sum of his annual base salary at the highest annual rate in effect at any time
within the prior two years plus the highest amount awarded to such executive
under the annual bonus plan or any successor bonus plan during the prior three
years multiplied by (ii) 2.99 (subject to adjustment, if Mr. Pannier retires
within three years from that date or as necessary to make payment under the
agreement not constitute "parachute payments"). It also provides that all
outstanding options held by Mr. Pannier become fully vested and exercisable, and
employee benefit plans and programs in which he participates at such time will
continue in full force and effect for a specified period.
INCENTIVE COMPENSATION PLAN
In 1993, CKE adopted the Carl Karcher Enterprises, Inc. Incentive
Compensation Plan (the "Incentive Plan") to help CKE attract and retain
qualified employees in managerial and other key positions and to provide
incentives to those individuals to contribute to the success of CKE. The
Incentive Plan is administered by the Compensation and Stock Option Committee of
the Board of Directors (the "Committee"). The Incentive Plan provides for cash
bonus awards, the amounts of which are directly dependent upon increases in
operating income over the prior fiscal year.
Participants in the Incentive Plan must be employees of CKE nominated by
the Chief Executive Officer and approved by the Committee. Each participant in
the Incentive Plan is assigned a level of participation based on such
participant's responsibilities. Participation levels are established and
approved by the Committee following recommendations by the Chief Executive
Officer. Cash awards under the Incentive Plan for each participant are
determined by multiplying the participant's base salary in effect on the last
day of the applicable plan year by the applicable assigned percentage, which
will be increased or decreased based on whether various levels of operating
income are achieved.
Participants in the Incentive Plan who terminate employment with CKE on or
after the last day of the plan year vest with respect to any award under the
Incentive Plan for that plan year. Participants who terminate employment with
CKE prior to the end of a plan year will receive such awards as the Committee
shall determine as appropriate, if any. Employees hired or promoted during a
plan year will be eligible to receive pro-rata awards for such plan year as the
Committee shall determine, provided that the minimum pro-rata amount is
one-fourth of the full award.
17
21
If a participant in the Incentive Plan dies before the last day of the plan
year, CKE will pay a pro-rata share of an award in an amount authorized by the
Committee. If a participant in the Incentive Plan dies on or after the last day
of a plan year, CKE will pay the full amount of any award under the Incentive
Plan for that plan year.
The Committee has the right to cancel, modify or amend the Incentive Plan
in its sole discretion, provided that no cancellation, modification or amendment
may occur retroactively for a plan year that has ended, and no amendment may
modify any award that has previously been paid.
RETIREMENT PLANS
CKE has a voluntary contributory profit sharing and savings investment plan
(the "Investment Plan") for all eligible employees, excluding hourly operations
employees. The annual contribution of CKE under the profit sharing portion of
the Investment Plan is determined at the discretion of the Board of Directors.
Every employee earns credit toward vesting from his or her initial date of
employment; amounts accrued for the account of an eligible employee become
vested in increasing percentages beginning during the employee's third year of
continuous service and become fully vested after the fifth year. Benefits are
realizable upon termination, retirement, total disability or death. There were
no contributions to the plan for fiscal 1995.
The savings investment portion of the Investment Plan is administered in
accordance with the provisions of Section 401(k) of the Internal Revenue Code.
Employees who are participants in the profit sharing plan may elect to reduce
their annual salary by up to 15% and have this amount contributed to the plan.
Through December 31, 1994, up to 4% of the employees' contributions were matched
by CKE. Total contributions to the plan for all participants for fiscal 1995
were $344,000.
CKE has a defined benefit pension plan for all eligible hourly operations
employees. Each eligible employee earns credit toward vesting from his or her
initial date of employment. Employees are fully vested upon the completion of
five years of service. The plan provides a benefit of $10 per month for each
year of service since February 1, 1985, with a maximum benefit of $200 per
month. Benefits are realizable upon termination, retirement, total disability or
death. Total contributions to the plan for all participants for fiscal 1995 were
$438,000.
KEY EMPLOYEE STOCK OPTION PLAN
CKE's Key Employee Stock Option Plan (the "Plan") was adopted by the Board
of Directors on September 15, 1982, and was approved by the stockholders of CKE
on June 8, 1983. The Plan expired by its terms in September 1992. The Plan
provided for options that qualify as incentive stock options under Section 422
of the Internal Revenue Code (the "Code"), as well as options that do not so
qualify. The Plan was designed to enable CKE to attract, retain and motivate
eligible employees, consultants and directors by providing for or increasing
their proprietary interest in CKE. Persons employed on a salaried basis by CKE
or its parent or subsidiaries were eligible to receive incentive options. Such
persons, as well as consultants to and directors of CKE, were eligible to
receive nonqualified options. The Plan was administered by the Compensation and
Stock Option Committee of the Board of Directors.
Although CKE reserved 3,000,000 shares of its Common Stock for issuance
under the Plan, the Plan expired in September 1992. As of April 24, 1995, CKE
had outstanding incentive options to purchase an aggregate of 59,160 shares of
Common Stock pursuant to the Plan to five employees, with exercise prices
ranging from $5.21 to $10.58 per share with an average exercise price of $5.27
per share. As of April 24, 1995, CKE had outstanding nonqualified options to
purchase an aggregate of 434,590 shares of Common Stock pursuant to the Plan to
19 employees, with exercise prices ranging from $5.21 to $13.38 per share with
an average exercise price of $8.08 per share.
1993 EMPLOYEE STOCK INCENTIVE PLAN
CKE's 1993 Employee Stock Incentive Plan (the "1993 Plan") was adopted by
the Board of Directors of CKE on April 20, 1993, and was approved by CKE's
stockholders on June 16, 1993. As of April 24, 1995,
18
22
CKE had outstanding nonqualified options to purchase an aggregate of 620,371
shares of Common Stock pursuant to the 1993 Plan to 87 employees with exercise
prices ranging from $7.13 to $13.38 per share with an average exercise price of
$9.87 per share.
1994 STOCK INCENTIVE PLAN
CKE's 1994 Stock Incentive Plan (the "1994 Plan") was adopted by the Board
of Directors on May 12, 1994 and was approved by the stockholders on June 20,
1994. CKE has reserved 1,750,000 shares of its Common Stock for issuance under
the 1994 Plan. As of April 24, 1995, CKE had outstanding nonqualified options to
purchase an aggregate of 357,000 shares of Common Stock pursuant to the 1994
Plan to 59 employees with exercise prices ranging from $6.75 to $9.00 per share
with an average exercise price of $7.17 per share.
1994 EMPLOYEE STOCK PURCHASE PLAN
A detailed description of the CKE Restaurants, Inc. 1994 Employee Stock
Purchase Plan is set forth in Proposal 2.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires CKE's
executive officers and directors, and persons who own more than 10% of a
registered class of CKE's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than 10% stockholders are required by
SEC regulations to furnish CKE with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, CKE believes that, during fiscal 1995, all filing
requirements applicable to its executive officers, directors and greater than
10% stockholders were satisfied, except that the Form 4's required to be filed
in January 1995 by William P. Foley II, Daniel D. (Ron) Lane and Frank P.
Willey, directors and/or officers of Fidelity National Financial, Inc.,
reflecting their indirect ownership of shares of CKE's Common Stock purchased by
Fidelity National Financial, Inc. in December 1994, were filed approximately one
month late.
TRANSACTIONS WITH OFFICERS AND DIRECTORS
CKE leases the land and buildings, which include the headquarters of CKE
and its distribution center, in Carl Karcher Plaza located in 1200 North Harbor
Boulevard, Anaheim, California from the Trust. The original term of the lease
expires in April 2003, and CKE has the option to renew the lease for two
additional five-year terms. The current rent under the lease is $89,275 per
month, subject to adjustment every five years.
CKE also leases two adjacent parcels of land in Carl Karcher Plaza from the
Trust. One parcel is being utilized by CKE for its training facilities and
parking. The rent is $5,443 per month, subject to adjustment every five years.
The other parcel is being utilized, in part, for the distribution center parking
and storage. The unused portion of this parcel has been subleased to various
small commercial tenants. The rent for this second parcel is $6,250 per month,
also subject to adjustment every five years. The lease term for both parcels
expires in April 2003, and CKE has the option to renew each of these leases for
two additional five-year terms.
CKE presently has three leases with the Trust with respect to restaurant
properties. The terms of these leases range from 20 to 35 years. In two of the
leases, the minimum monthly rentals are the greater of $5,735 and $6,799,
respectively, or 5 1/2% of annual gross sales. The terms of the third lease
require minimum monthly rental for improvements of $2,871 or 4% of annual gross
sales and a fixed monthly rental of $5,699 for the land. The aggregate rentals
paid for the restaurant properties leased during fiscal 1995 were $304,107.
In November 1993, CKE purchased two restaurants from the Trust for an
aggregate purchase price of $848,000.
19
23
During fiscal 1994, CKE purchased a total of 59,750 shares of Common Stock
from Carl N. Karcher for an aggregate purchase price of $422,000. Such shares
were cancelled and retired. During fiscal 1995, CKE purchased a total of 62,500
shares of Common Stock from Carl N. Karcher for an aggregate purchase price of
$570,313. Such shares are being held as treasury stock.
In January 1994, CKE entered into an Employment Agreement with Carl N.
Karcher which expires January 1999. The contract provides that Mr. Karcher will
be employed as the Chairman Emeritus of the Board as a non-executive officer
reporting to the Chief Executive Officer. It provides for a base salary of
$400,000 with bonuses to be paid in the sole and absolute discretion of the
Chairman of the Board and the Compensation and Stock Option Committee. The
agreement entitles Mr. Karcher to participate in CKE's stock option program and
provides for an initial, one time grant of an option to purchase 100,000 shares
with an exercise price equal to the fair market value of CKE's Common Stock on
the date of grant. Future grants will be made in the discretion of CKE's
Compensation and Stock Option Committee. The agreement provides that if Mr.
Karcher is terminated by CKE without cause or, if after a change in control of
CKE following a merger, sale of assets or acquisition, Mr. Karcher is terminated
or exercises his right to terminate employment following a change in control,
Mr. Karcher becomes entitled to payments due under the agreement as they become
due for the remainder of the term without the obligation of further services.
The agreement also provides for a retirement benefit for Mr. Karcher in the
amount of $200,000 per year for life after the end of the employment term.
During fiscal 1995, CKE made two advances to Carl N. Karcher aggregating
$714,756. CKE accepted a promissory note in payment of the first, which totaled
$250,000. The note bears interest at 7%, and will be repaid through biweekly
payroll deductions commencing January 1996, through December 1998. The second
advance, which totaled $464,756, is noninterest-bearing, is currently being
repaid through biweekly payroll deductions, and will be paid in full in December
1998.
CKE has one lease with Loren C. and Suzanne Pannier. This lease is for 25
years with a minimum monthly rental equal to the greater of $4,910 or 5% of
annual gross sales of the Carl's Jr. restaurant at that location. CKE also has
two leases in which Loren C. Pannier has a 56% and a 33% undivided interest.
These leases have an initial term of 25 years and provide for a minimum monthly
rental equal to (a) the greater of $3,290 or 5 1/2% of annual gross sales of the
Carl's Jr. restaurant at that location and (b) the greater of $3,440 or 6% of
annual gross sales of the Carl's Jr. Restaurant at that location. The aggregate
rentals paid under all three leases during fiscal 1995 was $86,209.
Restaurants leased from related parties generally were constructed by CKE
on land acquired by CKE. The properties were then sold to these parties and
leased back by CKE. CKE believes that these sale and leaseback arrangements are
at rental rates generally similar to those with unaffiliated third parties.
Except as noted above, CKE presently does not intend to enter into leases for
new restaurants with related parties.
In a series of transactions between May 1985 and December 1991, CKE
franchised and sold 15 restaurants to Carl L. Karcher for an aggregate purchase
price of $4,533,533 (which includes franchise fees of $447,482 and sales tax of
$60,163). Cash down payments aggregating $941,425 were made by Mr. Karcher with
the balance paid in the form of interest-bearing promissory notes. In January
1992, Mr. Karcher paid $2,234,798 of the remaining $2,691,163 owing as of that
time on those notes. During fiscal 1995, the largest aggregate amount
outstanding under the remaining note was $407,582. As of March 27, 1995,
$370,988 was still owed to CKE on this note. The note bears interest at 12 1/2%
per annum and is due in January 2002. During fiscal 1995, CKE sold certain
restaurant equipment to Carl L. Karcher for an aggregate purchase price of
$159,608. This amount was paid by Mr. Karcher in the form of a promissory note,
which bears interest at 7% and is due in August 1997. As of March 27, 1995,
$152,914 was still owed to CKE on this note.
Carl L. Karcher has also entered into franchise agreements for four
restaurants which he developed independently between August 1985 and November
1991. CKE acted as general contractor in the development of all four restaurants
developed independently by Mr. Karcher, and Mr. Karcher paid the costs of such
construction to CKE. In addition, pursuant to three Development Agreements dated
May 17, 1985, March 22, 1991 and December 16, 1991, between Mr. Karcher and CKE,
Mr. Karcher is obligated to develop an aggregate of nine additional restaurants
and become a franchisee with respect to those restaurants.
20
24
Mr. Karcher has developed four of these restaurants. CKE acted as general
contractor in the development of two of the three restaurants developed by Mr.
Karcher pursuant to the Development Agreements and Mr. Karcher paid the costs of
such construction to CKE. Mr. Karcher is obligated to develop the remaining five
restaurants at varying times between 1995 and 2001. Mr. Karcher was obligated to
pay an aggregate of $90,000 to CKE under these Development Agreements, $30,000
of which was paid in cash, $50,000 of which was paid by delivery of a promissory
note that did not bear interest and was paid in full in fiscal 1993 and the
other $10,000 of which was waived.
In connection with Carl L. Karcher's operation of the 23 franchised
restaurants, he regularly purchases food and other products from CKE on the same
terms and conditions as other franchisees. During fiscal 1994, these purchases
totaled approximately $5,896,000. Mr. Karcher is also obligated to pay a
percentage of such restaurants' annual gross sales ranging from zero to 4% as
royalty fees and an additional zero to 4% as advertising and promotional fees to
reimburse CKE for its regional and national advertising efforts on behalf of all
franchisees. During fiscal 1995, Mr. Karcher paid royalty fees of $688,410 and
advertising and promotional fees of $537,014 for all 23 restaurants combined.
Carl L. Karcher is a lessee or sublessee of CKE with respect to 15
restaurant locations. Rental payments equal the greater of a percentage of the
annual gross sales of the restaurant or a minimum monthly rental. The 15 leases
expire between March 2000 and June 2011. The minimum monthly rentals range from
$4,157 to $8,750. The percentage of annual gross sales ranges from 5% to 10%.
The rentals paid under these 15 leases during fiscal 1995 aggregated $1,159,607.
Mr. Carl L. Karcher's restaurant holdings have been assigned to his
affiliated corporation, CLK, Inc.
In June 1994, CKE reacquired 12 restaurants located in Tucson, Arizona from
Franklin J. and Lucille J. Karcher. As part of this transaction, CKE took
possession of certain restaurant assets in exchange for the forgiveness of two
notes receivable totaling $1,359,578, and a cash payment of $650,000. CKE
additionally paid $75,000 for inventory on hand at these restaurants. Mr. and
Mrs. Karcher were lessees of CKE with respect to these 12 restaurants. The
leases were terminated when the restaurants were reacquired by CKE. The rentals
paid under the leases during fiscal 1995 aggregated $80,856. In connection with
the operation of these restaurants through June 1994, Mr. and Mrs. Karcher
regularly purchased food and other products from CKE on the same terms and
conditions as other franchisees. During fiscal 1995, these purchases totaled
approximately $833,000. Mr. and Mrs. Karcher were also obligated to pay a
percentage of such restaurants' annual gross sales ranging from 1.5% to 2.5% as
royalty fees and an additional 3.5% as advertising and promotional fees to
reimburse CKE for its regional and national advertising efforts on behalf of all
franchisees. During fiscal 1995, Mr. and Mrs. Karcher were charged royalty fees
of $30,216 and advertising and promotional fees of $50,238. Franklin J. Karcher
is the brother of Carl N. Karcher and was CKE's Vice President -- Franchising
until 1990.
Joseph C. Karcher entered into franchise agreements for seven restaurants
between March 1990 and October 1992. Six of these restaurants were developed
pursuant to two Development Agreements dated July 24, 1989 and July 8, 1992.
Under these Development Agreements, Mr. Karcher is obligated to develop three
additional restaurants at varying times between November 1996 and September
1998, and become a franchisee of CKE with respect to such restaurants. In
connection with the operation of his restaurants, Mr. Karcher regularly
purchases food and other products from CKE on the same terms and conditions as
other franchisees. During fiscal 1995, these purchases totaled approximately
$1,361,000. Mr. Karcher is also obligated to pay a percentage of such
restaurants' annual gross sales ranging from zero to 4% as royalty fees and an
additional 1.5% to 3.5% as advertising and promotional fees to reimburse CKE for
its regional and national advertising efforts on behalf of all franchisees.
During fiscal 1995, Mr. Karcher was charged royalty fees of $127,444 and
advertising and promotional fees of $179,630. Joseph C. Karcher is the son of
Carl N. Karcher. Mr. Karcher's restaurant holdings have been assigned to his
affiliated corporation, JCK, Inc.
In a series of transactions between May 1984 and December 1985, CKE
franchised and sold three restaurants to Gary L. and Anne M. Wiles for an
aggregate purchase price of $792,000. Cash down payments aggregating $92,000
were made by Mr. and Mrs. Wiles with the balance paid in the form of
interest-bearing promissory notes. During fiscal 1995, the largest aggregate
amount outstanding under the notes was $368,672.
21
25
As of March 27, 1995, $300,158 was still owed to CKE on these notes. The notes
bear interest at 12% and 12 1/2% per annum and are due in December 1995 and June
1999. Mr. and Mrs. Wiles are lessees of CKE with respect to one restaurant
location. Rental payments equal the greater of a percentage of the annual gross
sales of the restaurant or a minimum monthly rental. The lease term expires in
August 2011, with a minimum monthly rental equal to $8,768. The percentage of
annual gross sales is 8%. The rentals paid under this lease during fiscal 1995
aggregated $105,222. Mr. and Mrs. Wiles have also entered into franchise
agreements for four restaurants which they developed independently between
December 1990 and May 1992. In connection with Mr. and Mrs. Wiles' operation of
the eight franchised restaurants, they regularly purchase food and other
products from CKE on the same terms and conditions as other franchisees. During
fiscal 1995, these purchases totaled approximately $2,120,000. Mr. and Mrs.
Wiles are also obligated to pay 4% of such restaurants' annual gross sales as
royalty fees and an additional 1% to 3.5% as advertising and promotional fees to
reimburse CKE for its regional and national advertising efforts on behalf of all
franchisees. During fiscal 1995, Mr. and Mrs. Wiles paid royalty fees of
$273,719 and advertising and promotional fees of $193,138 for all eight
restaurants combined. Anne M. Wiles is the daughter of Carl N. Karcher. Mr. and
Mrs. Wiles' restaurant holdings have been assigned to their affiliated
corporation, Wiles Restaurants, Inc.
In May 1984, CKE franchised and sold two restaurants to Bernard W. Karcher
for an aggregate purchase price of $700,000. A cash down payment of $70,000 was
made by Mr. Karcher with the balance paid in the form of a 12% interest-bearing
promissory note. During fiscal 1994, the note was paid in full. Mr. Karcher is a
lessee of CKE with respect to one restaurant location. Rental payments equal the
greater of a percentage of the annual gross sales of the restaurant or a minimum
monthly rental. The lease expires in September 2012, with a minimum monthly
rental equal to $16,944. The percentage of annual gross sales is 8%. The rentals
paid under this lease during fiscal 1995 aggregated $203,324. Bernard W. Karcher
has also entered into franchise agreements for nine restaurants which were
developed independently between October 1985 and February 1993. In connection
with Mr. Karcher's operation of the eleven franchised restaurants, he regularly
purchases food and other products from CKE on the same terms and conditions as
other franchisees. During fiscal 1995, these purchases totaled approximately
$3,431,000. Mr. Karcher is also obligated to pay 4% of such restaurants' annual
gross sales as royalty fees and an additional 3.5% as advertising and
promotional fees to reimburse CKE for its regional and national advertising
efforts on behalf of all franchisees. During fiscal 1995, Mr. Karcher paid
royalty fees of $437,728 and advertising and promotional fees of $332,753 for
all eleven restaurants combined. Bernard W. Karcher is the brother of Carl N.
Karcher. Mr. Karcher's restaurant holdings have been assigned to his affiliated
corporation, Bernard Karcher Investments, Inc.
In December 1990, CKE franchised and sold six restaurants to Robert W. and
Mary Jo Wisely for an aggregate purchase price of $1,854,891 (including
franchise and development fees of $150,920 and sales tax of $39,171). Cash down
payments aggregating $75,920 were made by Mr. and Mrs. Wisely, with the balance
paid in the form of an interest-bearing promissory note. During fiscal 1995, the
largest aggregate amount outstanding under the note was $981,796. As of March
27, 1995, $869,367 was still owed to CKE on this note. The note bears interest
at 12 1/2% per annum and is due in December 2000. Under a Development Agreement
dated September 25, 1990, Mr. and Mrs. Wisely are obligated to develop three
additional restaurants, one of which was developed in December 1993, with the
balance to be developed in 1995 and 1996. In connection with the operation of
these seven restaurants, Mr. and Mrs. Wisely regularly purchase food and other
products from CKE on the same terms and conditions as other franchisees. During
fiscal 1995, those purchases totaled approximately $1,505,000. Mr. and Mrs.
Wisely are also obligated to pay a percentage of such restaurants' annual gross
sales ranging from zero to 4% as royalty fees and an additional 4.5% as
advertising and promotional fees to reimburse CKE for its regional and national
advertising efforts on behalf of all franchisees. During fiscal 1995, Mr. and
Mrs. Wisely were charged royalty fees of $80,779 and advertising and promotional
fees of $188,506. Mr. and Mrs. Wisely are sublessees of CKE with respect to six
restaurant locations. Rental payments equal a percentage of the annual gross
sales of the restaurant or a minimum monthly rental. The leases expire between
August 1999 and July 2006. The minimum monthly rentals range from $9,166 to
$9,473. The percentage of annual gross sales ranges from 4% to 12.5%. Total
rents paid under these six leases during fiscal 1995 aggregated $384,348. Robert
W. Wisely is an executive officer of CKE, and the Senior Vice President,
Marketing of Carl Karcher Enterprises, Inc. Mr. and Mrs. Wisely's restaurant
holdings have been assigned to their affiliated corporation, R.W.W., Inc.
22
26
In a series of transactions between December 1984 and January 1992, CKE
franchised and sold 14 restaurants to C. Thomas and Stella A. Thompson,
individually and as members of certain partnerships (collectively, the "Thompson
Entities"), for an aggregate purchase price of $3,308,517 (including franchise
and development fees of $422,000). Cash down payments aggregating $1,300,203
were made by the Thompson Entities, with the balance paid in the form of
interest-bearing promissory notes, which have been paid in full. Under a
Development Agreement dated January 6, 1992, the Thompson Entities are obligated
to develop four additional restaurants at various dates between 1995 and 2000,
and become franchisees with respect to those restaurants. To date, none of these
restaurants have been developed. In connection with the operation of their
restaurants, the Thompson Entities regularly purchase food and other products
from CKE on the same terms and conditions as other franchisees. During fiscal
1995, these purchases totaled approximately $3,112,000. The Thompson Entities
are also obligated to pay a percentage of such restaurants' annual gross sales
ranging from 1.5% to 4% as royalty fees and an additional 4.5% as advertising
and promotional fees to reimburse CKE for its regional and national advertising
efforts on behalf of all franchisees. During fiscal 1995, the Thompson Entities
were charged royalty fees of $326,743 and advertising and promotional fees of
$416,203. The Thompson Entities are lessees or sublessees of CKE with respect to
13 restaurant locations. Rental payments equal a percentage of the annual gross
sales of the restaurant or a minimum monthly rental. The leases expire between
February 1996 and January 2012. The minimum monthly rentals range from $4,266 to
$20,386. The percentage of annual gross sales ranges from 3.5 to 8%. Total rents
paid under these thirteen leases during fiscal 1995 aggregated $870,812. C.
Thomas Thompson is an executive officer of CKE, and is the President and Chief
Operating Officer of Carl Karcher Enterprises, Inc.
All of the franchise arrangements described above are on terms generally
similar to those with unaffiliated parties.
INDEPENDENT AUDITORS
Selection of the independent auditors is made by the Board of Directors
upon consultation with the Audit Committee. CKE's independent auditors for the
fiscal year ended January 30, 1995 were KPMG Peat Marwick LLP. The Board of
Directors will vote upon the selection of auditors for the current fiscal year
at a future Board meeting.
Representatives of KPMG Peat Marwick LLP are expected to attend the Annual
Meeting and be available to respond to appropriate questions. The
representatives of KPMG Peat Marwick LLP also will have an opportunity to make a
formal statement, if they so desire.
STOCKHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Pursuant to the rules of the Securities and Exchange Commission, proposals
by eligible stockholders (as defined below) which are intended to be presented
at CKE's Annual Meeting of Stockholders in 1996 must be received by CKE by
January 18, 1996 in order to be considered for inclusion in CKE's proxy
materials. The Board of Directors of CKE will determine whether any such
proposal will be included in its 1996 proxy solicitation materials. An eligible
stockholder is one who is the record or beneficial owner of at least 1% or
$1,000 in market value of securities entitled to be voted at the 1996 Annual
Meeting and who shall continue to own such securities through the date on which
the meeting is held.
23
27
ADDITIONAL INFORMATION AVAILABLE
CKE'S 1995 ANNUAL REPORT, INCLUDING CONSOLIDATED FINANCIAL STATEMENTS FOR
FISCAL 1995, ACCOMPANIES THIS PROXY STATEMENT. STOCKHOLDERS MAY OBTAIN A COPY OF
CKE'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FREE OF CHARGE BY WRITING TO THE SENIOR VICE PRESIDENT AND TREASURER,
P.O. BOX 4349, ANAHEIM, CALIFORNIA 92803.
Stockholders are urged to sign and return their proxies without delay.
For the Board of Directors
WILLIAM P. FOLEY II,
Chairman of the Board
May 18, 1995
24
28
CKE RESTAURANTS, INC.
(A DELAWARE CORPORATION)
1994 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose of Plan. The purpose of this 1994 Stock Purchase Plan (the
"Plan") is to encourage a sense of proprietorship on the part of employees of
CKE Restaurants, Inc., a Delaware corporation (the "Company"), and its
subsidiary corporations (as defined below) by assisting them in making regular
purchases of shares of the Company, and thus to benefit the Company by
increasing such employees' interest in the growth of the Company and subsidiary
corporations and in such entities' financial success. Participation in the Plan
is entirely voluntary, and the Company makes no recommendation to its employees
as to whether they should participate.
2. Definitions.
2.1 "Base Earnings" shall mean the Employee's regular salary rate
before deductions required by law and deductions authorized by the Employee.
Base Earnings do not include: pay for overtime, extended workweek schedules, or
any other form of extra compensation; payments by the Company or subsidiary
corporations, as applicable, of social security, worker's compensation,
unemployment compensation, any disability payments or other payments required by
statute; or contributions by the Company or subsidiary corporations, as
applicable, for insurance, annuity, or other employee benefit plans.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Broker" shall mean the financial institution designated to act as
Broker under the Plan pursuant to Paragraph 17 hereof.
2.4 "Brokerage Account" shall mean an account established on behalf of
each Participant pursuant to Paragraph 9.1 hereof.
2.5 "Committee" shall mean a Stock Purchase Committee appointed by the
Board.
2.6 "Common Stock" shall mean the Common Stock of the Company.
2.7 "Company" shall mean CKE Restaurants, Inc., a Delaware corporation,
or any successor.
2.8 "Company Account" shall mean the account established in the name of
the Company pursuant to Paragraph 7.2 hereof.
2.9 "Employee" shall mean any person who has reached the age of
majority and who is currently employed by the Company or one of its subsidiary
corporations (i) on an hourly basis as a restaurant employee for at least 30
hours per week and has been so employed continuously during the preceding one
(1) year (provided that the Board or the Committee may in its discretion waive
such one (1) year requirement), excluding non-employees and persons on leave of
absence; (ii) on an hourly basis as a non-restaurant employee for at least 30
hours per week and has been so employed continuously during the preceding 90
days (provided that the Board or the Committee may in its discretion waive such
90 day requirement) or (iii) is exempt from the overtime and minimum wage
requirements under federal and state laws and has been so employed continuously
during the preceding 90 days (provided that the Board or the Committee may in
its discretion waive such 90-day requirement), excluding non-employees and
persons on leave of absence. An Employee may also be referred to herein as a
Participant.
2.10 "Enrollment Form" shall mean the Employee Stock Purchase Plan
Enrollment Form.
2.11 "Interested Party" shall mean the persons described in Paragraph
16 hereof.
2.12 "Plan" shall mean this 1994 Employee Stock Purchase Plan.
A-1
29
2.13 "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
subsidiary corporation, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a subsidiary corporation.
3. Administration. The Plan shall be administered by the Board or, in the
discretion of the Board, by the Committee which shall consist of not less than
two persons to be appointed by, and to serve at the pleasure of, the Board. No
member of the Board or Committee who is not an Employee shall be eligible to
participate in the Plan. An aggregate of 500,000 shares of Common Stock shall be
subject to the Plan, provided that such number shall be automatically adjusted
to reflect any stock split, reverse stock split, stock dividend,
recapitalization, merger, consolidation, combination, reclassification or
similar corporate change. The Board or the Committee shall have full authority
to construe, interpret, apply and administer the Plan and to establish and amend
such rules and procedures as it deems necessary or appropriate from time to time
for the proper administration of the Plan. In addition, the Board or the
Committee may engage or hire such persons, including without limitation, the
Broker, to provide administrative, recordkeeping and other similar services in
connection with its administration of the Plan, as it may deem necessary or
appropriate from time to time. The members of the Board and the Committee and
the officers of the Company shall be entitled to rely upon all certificates and
reports made by such persons, including the Broker, and upon all opinions given
by any legal counsel or investment adviser selected or approved by the Board or
the Committee. The members of the Board and the Committee and the officers of
the Company shall be fully protected in respect of any action taken or suffered
to be taken by them in good faith in reliance upon any such certificates,
reports, opinions or other advice of any such person, and all action so taken or
suffered shall be conclusive upon each of them and upon all Participants. The
Company shall indemnify each member of the Board and the Committee and any other
officer or employee of the Company who is designated to carry out any
responsibilities under the Plan for any liability arising out of or connected
with his or her duties hereunder, except such liability as may arise from such
person's gross negligence or willful misconduct.
4. Eligibility. Any Employee as defined in Paragraph 2.9 shall be eligible
to participate in the Plan. Any Employee participating in the Plan who, after
the commencement of a particular Offering Period, as defined in Paragraph 5,
shall for any reason fail to meet the standards of eligibility shall be
considered to have withdrawn from the Plan, effective as of the date upon which
the Participant shall have become ineligible. Any reference in this Plan to
withdrawal by a Participant from the Plan shall include ineligibility as
described in this Paragraph 4.
5. Offering Periods. Shares shall be offered pursuant to this Plan in
periods which coincide with the Company's fiscal quarters ("Offering Periods"),
commencing on the effective date of the Plan pursuant to Paragraph 22 and
continuing thereafter until terminated in accordance with Paragraph 15. The
Board shall have the power to change the duration of Offering Periods if such
change is announced at least 10 days prior to the scheduled beginning of the
first Offering Period to be affected.
6. Participation. Participation in the Plan is voluntary. An eligible
Employee may apply to participate in the Plan by submitting to the Company's
Benefits Department an Enrollment Form authorizing a payroll deduction and
purchase of shares. The Enrollment Form shall be on a form provided by the
Company and may be submitted to the Company at any time. Participation shall not
be effective until the Enrollment Form is reviewed and accepted by the Company
by written notice to the Employee. Once the Enrollment Form has been reviewed
and accepted by the Company, participation in the Plan shall commence
immediately.
7. Payroll Deductions.
7.1 Election. At the time a Participant submits an Enrollment Form, the
Participant shall elect to have payroll deductions made on each payday during
the Offering Period at a whole percentage from 3% to 10% of the Base Earnings
which the Participant is to receive on such payday.
7.2 Holding of Funds. All payroll deductions authorized by each
Participant shall be held in an interest-bearing account in the name of the CKE
Restaurants, Inc. Employee Stock Purchase Plan (the "Company Account") until
used to purchase Common Stock and shall not be used for any other purpose. The
Company shall maintain records reflecting the amount in the Company Account of
each Participant. Interest
A-2
30
accruing on the payroll deductions credited to the Company Account shall be used
to defray costs associated with the engagement of the Broker and will not be
available to purchase shares of Common Stock under Paragraph 9. All withholding
taxes in connection with a Participant's payroll deduction shall be deducted
from the remainder of the Base Earnings paid to the Participant and not from the
amount to be placed in the Company Account. A Participant may not make any
additional payments into the Company Account except as provided in Paragraph 18.
All amounts in the Company Account derived from payroll deductions shall be
referred to as the "Participant Contribution."
7.3 Changes in Election. Participation in the Plan will continue until
the Participant withdraws from the Plan, is no longer eligible to participate or
the Plan is terminated. Such participation shall be on the basis of the payroll
deduction election submitted by such Employee to the Company and then currently
in effect. Each such election shall remain in effect until the effective date of
any change in the amount of payroll deduction as requested by the Participant
and accepted by the Company. To be effective in any Offering Period, a change in
the amount of payroll deduction must be requested in writing and submitted to
the Company. A Participant may change his withholding percentage at any time
during an Offering Period, but only one time during any Offering Period. If a
Participant's Base Earnings change during an Offering Period, the amount of the
payroll deduction will be changed to the figure reflecting the Participant's
previously elected deduction percentage applied to his or her new Base Earnings
(but will not in any event be in excess of 10% of the Participant's Base
Earnings).
8. Contribution by the Company or a Subsidiary. The Company or a Subsidiary
shall make matching contributions (the "Matching Contribution") as follows:
8.1 Officers and Directors as Participants. For each officer or
director of the Company or a Subsidiary who participates in the Plan and remains
an Employee of the Company or a Subsidiary for at least one year after the
termination of a particular Offering Period, the Company or Subsidiary shall
make upon the one year anniversary date after such Offering Period a Matching
Contribution equal to either one-half of the number of shares purchased on
behalf of such Participant or equal to one-half of the dollar amount contributed
by such Participant during such one year earlier Offering Period subject to
Paragraph 8.3, at the sole discretion of the Company, less all withholding taxes
in connection with such Matching Contribution. "Officer" shall mean those
individuals elected as Officers by the Board of Directors of the Company and its
Subsidiaries, and shall be determined as of the end of an Offering Period.
"Director" shall mean an employee and a member of the Board of Directors of the
Company and its subsidiaries. Withholding taxes as and when required in
connection with such Matching Contribution shall be withheld based upon the
person's existing withholding percentages or as otherwise required by law from
the Participant's base earnings.
8.2 Other Participants. For each Participant in the Plan (other than an
officer or director) who remains an Employee of the Company or a Subsidiary for
at least one year after the termination of a particular Offering Period, the
Company or Subsidiary shall make upon the one year anniversary date after such
Offering Period a Matching Contribution equal to either one-third of the number
of shares purchased on behalf of such Participant or equal to one-third of the
dollar amount contributed by such Participant during such one year earlier
Offering Period subject to Paragraph 8.3., at the sole discretion of the
Company. Withholding taxes as and when required in connection with such Matching
Contribution shall be withheld based upon the person's existing withholding
percentages or as otherwise required by law from the Participant's base
earnings.
8.3 Timing of Withholding. The Company shall withhold taxes in two
subsequent pay periods or as otherwise required by law.
9. Purchase of Shares Regarding Participant's Contribution.
9.1 Brokerage Account. Following the acceptance by the Company of a
Participant's Enrollment Form, the Company shall direct the Broker to open and
maintain an account (the "Brokerage Account") in the name of such Participant
and to purchase shares of Common Stock on behalf of such Participant as
permitted under this Plan.
A-3
31
9.2 Delivery of Funds to Broker from Company. The Company, from time to
time during an Offering Period, shall deliver to the Broker an amount equal to
the total of all Participant Contributions together with a list of the amount of
such Contributions from each Participant.
9.3 Broker's Purchase of Shares. From time to time, the Broker, as
agent for the Participants, shall purchase as many full shares or fractional
shares of Common Stock as such Contributions will permit. The shares to be
purchased shall be purchased at the then current fair market value and may, at
the election of the Company, be either treasury shares, shares authorized but
unissued, or shares purchased on the open market. The amount of Common Stock
purchased by the Broker pursuant to this Paragraph 9.3 shall be allocated to the
respective Brokerage Account of each Participant on the basis of the average
cost of the Common Stock so purchased, in proportion to the amount allocable to
each Participant. At the end of each Offering Period under the Plan, each
Participant shall acquire full ownership of all full shares and fractional
shares of Common Stock purchased for his Brokerage Account. Unless otherwise
requested by the Participant, all such full shares and fractional shares so
purchased shall be registered in the name of the Broker and will remain so
registered until delivery is requested in accordance with Paragraph 9.5.
9.4 Fees and Commissions. The Company shall pay the Broker's
administrative charges for opening and maintaining the Brokerage Accounts for
active Participants and the brokerage commissions on purchases made for such
Brokerage Accounts which are attributable to Participant Contributions and
Matching Contributions under the Plan. Such Brokerage Accounts may be utilized
for other transactions as described in Paragraph 9.5 below, but any fees,
commissions or other charges by the Broker in connection with such other
transactions shall, in certain circumstances described in Paragraph 9.5, be
payable directly to the Broker by the Participant.
9.5 Participant Accounts with Broker. Each Participant's Brokerage
Account shall be credited with all cash dividends paid with respect to full
shares and fractional shares of Common Stock purchased pursuant to Paragraphs
9.3 and 10 unless such shares are registered in the Participant's name. Unless
otherwise instructed by the Participant, dividends on such Common Stock shall
automatically be reinvested in Common Stock as soon as practicable following
receipt of such dividends by the Broker. Applicable fees and brokerage
commissions on the reinvestment of such dividends will be payable by the
Participant. Any stock dividends or stock splits which are made with respect to
shares of Common Stock purchased pursuant to Paragraphs 9.3 and 10 shall be
credited to the Participant's Brokerage Account without charge. Any Participant
may request that a certificate for any or all of the full shares of Common Stock
credited to his Brokerage Account be delivered to him at any time; provided,
however, the Participant shall be charged by the Broker for any fees applicable
to such requests. A Participant may request the Broker at any time to sell any
or all of the full shares or fractional shares of Common Stock credited to his
Brokerage Account. Unless otherwise instructed by the Participant, upon such
sale, the Broker will mail to the Participant a check for the proceeds, less any
applicable fees and brokerage commissions and any transfer taxes, registration
fees or other normal charges which shall be payable by the Participant. Except
as provided in Paragraph 13, a request by the Participant to the Broker to sell
shares of Common Stock or for delivery of certificates shall not affect an
Employee's status as a Participant. A Participant who has a Brokerage Account
with the Broker may purchase additional shares of Common Stock of the Company
for his Brokerage Account at any time by separate purchases arranged through the
Broker. When any such purchases are made, the Participant will be charged by the
Broker for any and all fees and brokerage commissions applicable to such
transactions. In addition, any subsequent transactions with respect to such
shares acquired including, but not limited to, purchases, sales, reinvestment of
dividends, requests for certificates, and crediting of stock dividends or stock
splits, shall be at the expense of the Participant and the Broker shall charge
the Participant directly for any and all fees and brokerage commissions
applicable to such transactions.
10. Issuance of Shares Regarding Matching Contribution. Subject to
Paragraph 20, on the 10th day after the first anniversary of an Offering Period,
each Participant's direct employer shall make the Matching Contribution for each
qualified Participant in an amount described in Paragraph 8 by delivering to the
Broker an amount equal to the total funds necessary to make the Matching
Contributions described in Paragraph 8 together with a list of the number of
shares allocable to the Brokerage Account of each Participant. As soon as
practicable thereafter, the Broker shall purchase the number of shares of Common
Stock required in order to
A-4
32
make the Matching Contributions. The shares to be purchased shall be purchased
at the then current fair market value and may, at the election of the Company,
be either treasury shares, shares authorized but unissued, or shares purchased
on the open market. At the time of such purchases, each Participant shall
immediately acquire full ownership of all full shares of Common Stock purchased.
Unless otherwise requested by the Participant, all such shares so purchased
shall be registered in the name of the Broker and will remain so registered
until delivery is requested in accordance with Paragraph 9.5.
11. Voting and Shares. All voting rights with respect to the full shares
and the fractional shares of Common Stock held in the Brokerage Account of each
Participant may be exercised by each Participant and the Broker shall exercise
such voting rights in accordance with the Participant's signed proxy instruction
duly delivered to the Broker.
12. Statement of Account. As soon as practicable after the end of each
Offering Period, the Broker shall deliver to each Participant a statement
regarding all activity in his or her Brokerage Account, including his or her
participation in the Plan for such Offering Period. Such statement will show the
number of shares acquired or sold, the price per share, the transaction date,
stock splits, dividends paid, dividends reinvested and the total number of
shares held in the Brokerage Account. The Broker shall also deliver to each
Participant as promptly as practicable, by mail or otherwise, all notices of
meetings, proxy statements and other material distributed by the Company to its
stockholders, including the Company's annual report to its stockholders
containing audited financial statements.
13. Withdrawal from the Plan. A Participant may withdraw from the Plan,
effective as of the end of any Offering Period, by giving written notice to the
Company not later than the 15th day prior to the end of such Offering Period.
Upon any such withdrawal, the Participant shall be entitled to receive as
promptly as possible from the Company all of the Participant's payroll
deductions credited to the Company Account in his or her name during the
applicable Offering Period, but shall not be entitled to the benefit of any
Matching Contributions. In the event a Participant withdraws from the Plan
pursuant to this Paragraph 13, the Company shall notify the Broker as soon as
practicable and the Broker shall maintain or close the Participant's Brokerage
Account in accordance with the procedures set forth in Paragraph 16. A
Participant who withdraws from the Plan may not reenter the Plan except by
execution and delivery of a new Enrollment Form and payroll deduction election,
and his or her participation shall be effective upon acceptance of the
Enrollment Form by the Company by written notice to the Employee not sooner than
30 days after receipt of the Enrollment Form, provided that the Company may in
its discretion accept an Enrollment Form prior to the expiration of such 30
days.
14. Termination of Employment. In the event of the termination of a
Participant's employment with the Company or a Subsidiary for any reason during
an Offering Period, including, but not limited to, the death of a Participant,
participation in the Plan shall terminate as well as any rights to Matching
Contributions which have not been allocated to the Participant on the date of
termination. The Participant or the personal representative of the Participant
shall be entitled to receive an amount of cash determined in the same manner and
payable at the same time as if the Participant had withdrawn from the Plan by
giving notice of withdrawal effective as of the date such termination occurs.
Notwithstanding the foregoing, termination of employment by one employer for the
purpose of being re-employed immediately by the Company or one of is
Subsidiaries shall not be considered termination under this Paragraph 14. Any
reference in this Plan to withdrawal by a Participant from the Plan shall
include termination as described in this Paragraph 14. In the event of the
termination of a Participant's employment pursuant to this Paragraph 14, the
Company shall notify the Broker as soon as practicable and the Broker shall
maintain or close the Participant's Brokerage Account in accordance with the
procedures set forth in Paragraph 16.
15. Amendment, Suspension and Termination of Plan. This Plan may be amended
or terminated by the Board at any time and such amendment or termination shall
be communicated in writing to all Participants as soon as practicable after the
date of such Board action. If the Plan is terminated, each Participant shall be
entitled to receive as promptly as possible from the Company all payroll
deductions attributable to him or her which have not been used for purchase of
Common Stock pursuant to Paragraph 9, together with the accrued interest on the
Participant's funds held in the Company Account (collectively, the
A-5
33
"Account Balance"), but he or she shall not be entitled to the benefit of any
Matching Contributions with respect to such deductions or interest or otherwise
for any past Offering Periods. In any event, this Plan shall terminate 20 years
from the date the Plan is adopted or the date the Plan is approved by the
stockholders, whichever is earlier. In the event that the Company terminates the
Plan pursuant to this Paragraph 15, the Broker shall maintain or close the
Participant's Brokerage Accounts in accordance with the procedures set forth in
Paragraph 16. Notwithstanding any other provision to the contrary, any provision
of this Plan may be amended by the Board or the Committee as required to obtain
necessary approvals of governmental agencies if such change does not materially
alter the rights and interests of stockholders of the Company. If there are any
changes in the capitalization of the Company, such as through mergers,
consolidations, reorganizations, recapitalizations, stock splits or stock
dividends, appropriate adjustments will be made by the Company in the number of
shares of its Common Stock subject to purchase under the Plan.
16. Disposition of Brokerage Account Following Withdrawal, Death,
Termination of Employment or Termination of Plan. As soon as practicable
following the notification of the withdrawal of a Participant from the Plan, the
notification of the termination of a Participant's employment with the Company
or a Subsidiary (which includes the death of the Participant) or of the
notification that the Plan is terminated pursuant to Paragraph 15 hereof, the
Broker shall notify the former Participant, or in the event of his death, his
designated beneficiary, if any, or if no designated beneficiary the estate of
the deceased Participant (collectively, an "Interested Party"), regarding the
disposition of the former Participant's or deceased Participant's Brokerage
Account. As soon as practicable following receipt of the notification set forth
in the preceding sentence, the Interested Party may request the Broker to
dispose of the former Participant's or deceased Participant's Brokerage Account,
at the Interested Party's expense, by any one of the following means:
(a) The Interested Party may request the Broker to maintain the former
Participant's or deceased Participant's Brokerage Account for the benefit
of the Interested Party or any other person. The Interested Person shall be
charged by the Broker for all maintenance fees and any and all other fees
in connection with the Brokerage Account.
(b) The Interested Party may request the Broker to sell all of the
full shares and fractional shares of Common Stock, if any, held in the
former Participant's or deceased Participant's Brokerage Account. Upon such
sale, the Broker will mail to the Interested Party a check for the
proceeds, less any applicable fees and brokerage commissions and any
transfer taxes, registration fees or other charges which shall be payable
by the Interested Party.
(c) The Interested Party may request the Broker to provide a
certificate for all of the full shares of Common Stock, if any, together
with a check in an amount equal to the proceeds of the sale any fractional
shares of Common Stock held in the former Participant's or deceased
Participant's Brokerage Account, less any applicable fees and brokerage
commissions and any transfer taxes, registration fees or other charges
which are payable by the Participant.
Maintenance of the former Participant's or deceased Participant's Brokerage
Account pursuant to this Paragraph 16 shall confer no rights under the Plan.
17. Broker. The Broker shall be Merrill Lynch, Pierce, Fenner & Smith
Incorporated which has agreed to act as Broker for such period as is determined
by the Company. Either the Company or the Broker may terminate such designation
at any time upon 30 days' written notice. In the event of such termination of
the Broker, the Company may administer the Plan without the use of a Broker or
may appoint a successor Broker. Any successor Broker shall be vested with all
the powers, rights, duties and immunities of the Broker hereunder to the same
extent as if originally named as the Broker hereunder. The relationship between
the Broker and the Participant will be the normal relationship of a broker and
its client, and the Company assumes no responsibility in this respect.
18. Initial Contribution. Any Participant who files a Enrollment Form prior
to the first Offering Period may elect to make an initial contribution ("Initial
Contribution") to be allocated to him or her in the Company Account, by check
payable to the Company, in any amount up to 10% of his or her Base Earnings for
the period between August 16, 1994, and the commencement of the first Offering
Period. The amount of
A-6
34
the Initial Contribution shall be matched as provided in Paragraph 8, and
withholding taxes in connection with such Matching Contributions shall be
deducted in the same manner as provided in Paragraph 8.
18.1. Lump Sum Contribution. The Board and/or Committee may from time
to time in its discretion allow any Participant in the Plan to make a lump sum
contribution ("Lump Sum Contribution") to be credited to him or her in the
Company Account, by check payable to the Company, in any amount up to 10% of his
or her Base Earnings, for a period prescribed by the Board and/or Committee. The
amount of the Lump Sum Contribution shall be matched as provided in Paragraph 8,
and withholding taxes in connection with such Matching Contributions shall be
deducted in the same manner as provided in Paragraph 8.
19. Conditions to Issuance of Shares. Shares shall not be issued under the
Plan unless issuance and delivery of such shares pursuant to the Plan shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, the securities laws of the state in which any Employee resides, NASD
requirements and the requirements of any stock exchange upon which the Common
Stock may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. By execution of the
Enrollment Form, the Participant covenants and agrees that all shares are being
purchased only for investment and without any present intention to sell or
distribute such shares.
20. Notice.
20.1 To Company or Subsidiaries. Any notice hereunder to the Company or
to its Subsidiaries shall be in writing and such notice shall be deemed made
only when delivered or three days after being mailed by certified mail, return
receipt requested, to the Company's principal office at 1200 North Harbor
Boulevard, Anaheim, California 92801 or to such other address as the Company may
designate by notice to the Participants.
20.2 To Participant. Any notice to a Participant hereunder shall be in
writing and any such communication and any delivery to a Participant shall be
deemed made if mailed or delivered to the Participant at such address as the
Participant may have on file with the Company and with Broker.
21. Miscellaneous.
21.1 No Limitation on Termination of Employment. Nothing in the Plan
shall in any manner be construed to limit in any way the right of the Company or
any of its Subsidiaries to terminate an Employee's employment at any time,
without regard to the effect of such termination on any right such Employee
would otherwise have under the Plan, or give any right to an Employee to remain
employed by the Company in any particular position or at any particular rate of
remuneration.
21.2 Liability. The Company, its Subsidiaries, any member of the Board
or Committee and any other person participating in any determination of any
question under the Plan, or in the interpretation, administration or application
of the Plan, shall have no liability to any party for any action taken or not
taken in good faith under the Plan, or based on or arising out of a
determination of any question under the Plan or an interpretation,
administration or application of the Plan made in good faith.
21.3 Captions. The captions of the paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.
21.4 Assignment. Any rights of Employees hereunder shall be
nonforfeitable, and no Account Balance or contribution made by any employer may
revert or inure to the benefit of the Company or any Subsidiary, provided that
no Participant shall be entitled to sell, assign, pledge or hypothecate any
right or interest in his or her Account Balance.
21.5 Governing Law. Delaware law governs this Plan.
21.6 Severability. In case any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and enforced
as if such illegal and invalid provision had never been inserted herein.
A-7
35
21.7 Successors. The provisions of this Plan shall bind and inure to
the benefit of the Company and its successors and assigns. The term "successors"
as used herein shall include any corporate or other business entity which shall
by merger, consolidation, purchase or otherwise acquire all or substantially all
of the business and assets of the Company, and successors of any such
corporation or other business entity.
22. Effective Date of Plan. The Plan shall become effective upon the first
day of the next fiscal quarter after which the Board approves the Plan, subject
to ratification by the stockholders of the Company, and all necessary approvals
of governmental agencies have been received.
A-8
36
PROXY
CKE RESTAURANTS, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
1200 North Harbor Boulevard DIRECTORS OF CKE RESTAURANTS, INC. The undersigned
Anaheim, California 92801 hereby appoints William P. Foley II and Loren
C. Pannier, and each of them, as Proxies, each with
the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote as
designated below, all the shares of Common Stock of
CKE Restaurants, Inc. held of record by the
undersigned on April 24, 1995, at the Annual Meeting
of Stockholders to be held on June 21, 1995 and any
postponements or adjournments thereof.
1. ELECTION OF DIRECTORS: FOR both of the nominees listed WITHHOLD AUTHORITY to vote for
below (except as marked to the all nominees listed below / /
contrary below) / /
INSTRUCTION: To withhold authority to vote for any individual nominee strike
a line through the nominee's name in the list below.
CARL L. KARCHER FRANK P. WILLEY
2. TO APPROVE THE CKE RESTAURANTS, INC. 1994 EMPLOYEE STOCK PURCHASE PLAN.
FOR / / AGAINST / / ABSTAIN / /
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or any and all
postponements or adjournments thereof.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE
FOR THE NOMINEES LISTED ABOVE, FOR APPROVAL OF THE CKE RESTAURANTS, INC. 1994
EMPLOYEE STOCK PURCHASE PLAN, AND IN THEIR DISCRETION ON MATTERS DESCRIBED IN
ITEM 3.
Please sign exactly as the
name appears below. When
shares are held by joint
tenants, both should sign.
When signing as an attorney,
executor, administrator,
trustee or guardian, please
give your full title as such.
If a corporation, please sign
in full corporate name by the
President or other authorized
officer. If a partnership,
please sign in the partnership
name by an authorized person.
Dated: _________________, 1995
------------------------------
Signature
------------------------------
Signature if held jointly
DO YOU PLAN TO ATTEND THE
MEETING?
YES / / NO / /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.