SCHEDULE 14A
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 Section 240.14a-12
PANERA BREAD COMPANY
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PANERA BREAD COMPANY
6710 CLAYTON ROAD
RICHMOND HEIGHTS, MISSOURI 63117
May 2, 2002
Dear Stockholder,
You are cordially invited to attend the 2002 Annual Meeting of
Stockholders of Panera Bread Company to be held at 10:30 a.m. Central Time on
Thursday, June 6, 2002 at our offices at 6710 Clayton Road, Richmond Heights,
Missouri 63117.
At the Annual Meeting, one person will be elected to the Board of
Directors. We also will ask you to approve an amendment to our Certificate of
Incorporation to increase the number of authorized shares of our Class A Common
Stock from 50,000,000 to 75,000,000 and our Class B Common Stock from 2,000,000
to 10,000,000 and we will ask you to ratify the selection of
PricewaterhouseCoopers LLP as our independent public accountants. The Board of
Directors recommends the approval of all of these proposals.
We hope you will be able to attend the Annual Meeting. Whether you plan
to attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, we urge you to complete, sign, date and return the
enclosed proxy card promptly in accordance with the instructions.
On behalf of all of our employees and directors, I would like to thank
you for your continuing support and confidence.
Sincerely,
Ronald M. Shaich
Chairman of the Board
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
PANERA BREAD COMPANY
6710 CLAYTON ROAD
RICHMOND HEIGHTS, MISSOURI 63117
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 6, 2002, 10:30 A.M.
The Annual Meeting of Stockholders of Panera Bread Company will be held
on Thursday, June 6, 2002 at 10:30 a.m., Central Daylight Time, at our offices
at 6710 Clayton Road, Richmond Heights, Missouri 63117, Baguette University
Conference Room, to consider and act upon the following matters:
1. To elect one (1) Director to the Board of Directors to serve for a term
ending in 2005 and until his successor is duly elected and qualified;
2. To consider and act upon a proposal to approve an amendment to the
Certificate of Incorporation to increase the number of authorized
shares of Class A Common Stock, $.0001 par value, from 50,000,000 to
75,000,000 and Class B Common Stock, $.0001 par value, from 2,000,000
to 10,000,000;
3. To consider and act upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as our independent public accountants for
the fiscal year ending December 28, 2002; and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or adjournments thereof.
If you are unable to attend the meeting personally, please be sure to
complete, date, sign and return the enclosed proxy as soon as possible in the
envelope provided to: EquiServe, 150 Royall Street, Canton, Massachusetts 02021.
Stockholders of record on our books at the close of business on April
15, 2002 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
William W. Moreton
Secretary
Dated: May 2, 2002
PANERA BREAD COMPANY
6710 CLAYTON ROAD
RICHMOND HEIGHTS, MISSOURI 63117
PROXY STATEMENT
INFORMATION ABOUT THE MEETING AND VOTING
SOLICITATION OF PROXIES
We are first mailing this proxy statement and the accompanying proxy
card to stockholders on or about May 2, 2002. The Board of Directors solicits
the accompanying proxy for use at our Annual Meeting of Stockholders to be held
on June 6, 2002, and any adjournment. We will pay the cost of soliciting
proxies. Our directors, officers and employees may assist in the solicitation of
proxies by mail, telephone, telegraph and personal interview without additional
compensation.
PROPOSALS TO BE VOTED UPON
Proposal 1. The first proposal is to elect one (1) Director to our
Board of Directors to serve for a term ending 2005 and until his successor is
duly elected and qualified.
Proposal 2. The second proposal is to consider and act upon a proposal
to approve an amendment to our Certificate of Incorporation to increase the
number of authorized shares of Class A Common Stock, $.0001 par value, from
50,000,000 to 75,000,000 and Class B Common Stock, $.0001 par value, from
2,000,000 to 10,000,000.
Proposal 3. The other proposal is to consider and act upon a proposal
to ratify the appointment of PricewaterhouseCoopers LLP as our independent
public accountants for the fiscal year ending December 28, 2002.
When you return your proxy properly signed, your shares will be voted
by the persons named as proxies in accordance with your directions. You are
urged to specify your choices on the enclosed proxy card. If you sign and return
your proxy without specifying choices, your shares will be voted "FOR" proposals
1, 2, and 3 and in the discretion of the persons named as proxies in the manner
they believe to be in Panera's best interests as to other matters that may
properly come before the meeting.
REVOCATION OF PROXIES
You may revoke your proxy at any time before its use by delivering to
us a written notice of revocation or a duly executed proxy bearing a later date.
If you execute a proxy but are present at the meeting, and you wish to vote in
person, you may do so by revoking your proxy. Shares represented by valid
proxies, received in time for use at the meeting and not revoked at or prior to
the meeting, will be voted at the meeting.
STOCKHOLDERS ENTITLED TO VOTE
The Board of Directors has fixed April 15, 2002 as the record date for
the meeting. On the record date, we had 13,125,571 shares of Class A Common
Stock, (each of which entitles its holder to one vote), and 1,283,678 shares of
Class B Common Stock, (each of which entitles its holder to three votes) issued
and outstanding. We sometimes refer to our Class A and Class B Common Stock in
this proxy statement as the "Common Stock." Holders of Common Stock do not have
cumulative voting rights.
QUORUM
For all proposals on the agenda for the meeting, the holders of a
majority in interest of the combined voting power of the Common Stock entitled
to vote must be present in person or by proxy for a quorum. Shares represented
by all proxies received, including proxies that withhold authority for the
election of the Director and/or abstain from voting on a proposal, as well as
"broker non-votes" discussed below, will be counted toward establishing the
presence of a quorum.
VOTES REQUIRED
The Director will be elected by plurality vote of the combined voting
power of the shares of Common Stock voted. Shares for which the vote is withheld
will be excluded entirely and will have no effect on the election of the
Director.
The other proposals require an affirmative vote of a majority of the
combined voting power of the shares of Common Stock voted. Shares for which the
vote is withheld and "broker non-votes" will be excluded entirely and will have
no effect on these proposals.
If you hold shares of Common Stock through a broker, bank or other
representative, generally the broker or representative may only vote the Common
Stock in accordance with your instructions. However, if your representative does
not timely receive instructions, your representative may only vote on those
matters for which it has discretionary voting authority. If a broker or
representative cannot vote on a particular matter because it does not have
discretionary voting authority, this is a "broker non-vote" on that matter.
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MANAGEMENT
INFORMATION REGARDING DIRECTORS AND DIRECTOR NOMINEES
Our Certificate of Incorporation provides for a classified Board of
Directors, in which the Board of Directors is divided into three classes, each
having as nearly as possible an equal number of Directors. The term of service
of each class of Directors is staggered so that the term of one class expires at
each annual meeting of the stockholders.
The Board of Directors currently consists of five (5) members, divided
into three (3) classes as follows: Ronald M. Shaich constitutes a class with a
term ending in 2002 (the "Class I Director"); Domenic Colasacco and Robert T.
Giaimo constitute a class with a term ending in 2003 (the "Class II Directors");
and George E. Kane and Larry J. Franklin constitute a class with a term ending
in 2004 (the "Class III Directors"). Ronald M. Shaich is nominated for
re-election as a Class I Director at the upcoming meeting with a term to expire
in 2005, if elected. At each annual meeting of stockholders, Directors are
elected for a full term of three (3) years to succeed those Directors whose
terms are expiring.
The following table and biographical descriptions set forth information
regarding the principal occupation, other affiliations, committee memberships
and age, for the nominee for election as Directors and for each Director
continuing in office, based on information furnished to us by those persons. The
following information is as of March 1, 2002 unless otherwise noted.
TERM AS A
---------
DIRECTOR
--------
NAME AGE POSITION(S) WITH THE COMPANY ENDS CLASS
---- ---------------------------- ---- -----
Nominee for Election:
Ronald M. Shaich (2)................... 48 Chairman of the Board and Chief 2002 I
Executive Officer
Directors Continuing in Office:
Domenic Colasacco (1) (2) (3) ......... 53 Director 2003 II
Robert T. Giaimo (1) (3)............... 50 Director 2003 II
Larry J. Franklin (1).................. 53 Director 2004 III
George E. Kane (2)(3).................. 97 Director 2004 III
(1) Member of the Compensation Committee.
(2) Member of the Committee on Nominations.
(3) Member of the Audit Committee.
Nominee for Election as Director
RONALD M. SHAICH, Director since 1981, our co-founder, Chairman of the
Board since May, 1999, Co-Chairman of the Board from January 1988 to May 1999,
Chief Executive Officer since May 1994 and Co-Chief Executive Officer from
January 1988 to May 1994. Mr. Shaich is a member of the Board of Trustees of
Clark University. Mr. Shaich serves as a director of Lown Cardiovascular
Research Foundation.
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Directors Continuing in Office
DOMENIC COLASACCO, Director since March 2000. Mr. Colasacco has been
President and Chief Executive Officer of United States Trust Company since 1992.
He joined USTC in 1974 after beginning his career in the research division of
Merrill Lynch & Co., in New York City. Mr. Colasacco is also a Director of
Hometown Auto Retailers, Inc., a publicly traded chain of automobile
dealerships.
LARRY J. FRANKLIN, Director since June 2001. Mr. Franklin has been the
President and Chief Executive Officer of Franklin Sports, Inc., a leading sports
equipment company, since 1986. Mr. Franklin joined Franklin Sports, Inc. in 1970
and served as its Executive Vice President from 1981 to 1986. Mr. Franklin
currently serves as a director of the Sporting Goods Manufacturer's Association
and of the International Mass Retail Association. He is also on the board of
directors of the New England chapter of the Juvenile Diabetes Research
Foundation.
ROBERT T. GIAIMO, Director since July 2000. Mr. Giaimo has been the
Chairman of the Board, President, Chief Executive Officer and Treasurer of
Silver Diner, Inc., a publicly traded chain of restaurants, since March 1996.
Mr. Giaimo has been the Co-Founder, Director, President, Chief Executive Officer
and Treasurer of Silver Diner Development, Inc. since its inception in 1989.
From 1971 to January 1987, Mr. Giaimo was President, Chief Executive Officer and
Director of Monolith Enterprises, Inc. From 1972 through 1976, Mr. Giaimo
co-founded and operated, through Monolith, Blimpie's Restaurant in Georgetown.
In 1977, Mr. Giaimo co-founded and operated The American Cafe restaurant, an
award-winning restaurant chain.
GEORGE E. KANE, Director since November 1988. Mr. Kane was one of our
Directors from December 1981 to December 1985 and a Director Emeritus from
December 1985 to November 1988. Mr. Kane retired in 1970 as President of Garden
City Trust Company (now University Trust Company) and served as an Honorary
Director of University Trust Company from December 1985 to January 2000.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held four meetings during the fiscal year ended
December 29, 2001. The Board of Directors has established an Audit Committee, a
Compensation Committee and a Committee on Nominations.
The Audit Committee, which held one meeting during the fiscal year
ended December 29, 2001, meets with our independent accountants and
principal financial personnel to review the results of the annual audit. The
Audit Committee also reviews the scope of, and establishes fees for, audit and
non-audit services performed by the independent accountants, reviews the
independence of the independent accountants and the adequacy and effectiveness
of our internal accounting controls. The Audit Committee consists of three
members, currently Domenic Colasacco, Robert T. Giaimo and George E. Kane.
The Compensation and Stock Option Committee, (which we refer to as the
Compensation Committee), held four meetings during the fiscal year ended
December 29, 2001. The Compensation Committee establishes the compensation,
including stock options and other incentive arrangements, of our Chairman and
Chief Executive Officer. It also administers our
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1992 Equity Incentive Plan, 1992 Employee Stock Purchase Plan, and the 2001
Employee, Director and Consultant Stock Option Plan. The Compensation Committee
consists of three members, currently Domenic Colasacco, Robert T. Giaimo and
Larry J. Franklin.
The Committee on Nominations, which held one meeting during the fiscal
year ended December 29, 2001, selects nominees for election as Directors. That
Committee considers written recommendations from any stockholder with respect to
nominees for Directors. A stockholder's recommendation must be made by written
notice received by us, in a timely manner, at our principal executive office.
The nomination must set forth all of the information required to be included by
our By-laws. The Committee on Nominations consists of three members, currently
Ronald M. Shaich, Domenic Colasacco and George E. Kane.
In the 2001 fiscal year, all Directors attended all of the Board
meetings and the meetings of committees of which they were members.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has interlocking or
other relationships with other boards or with Panera Bread Company.
COMPENSATION OF DIRECTORS
Directors who are not employees receive a quarterly fee ranging from
$3,000 to $3,500 for serving on the Board, plus reimbursement of out-of-pocket
expenses for attendance at each Board or committee meeting.
Under a formula-based stock option plan for independent Directors,
(which we refer to as the Directors' Plan), each current Director who is not an
employee or principal stockholder, or an independent director and who was first
elected after June 12, 2001, receives, upon election to the Board, a one-time
grant of an option to purchase 5,000 shares of Class A Common Stock. Each
independent director in office at the end of each of our fiscal years receives
an option to purchase an additional 5,000 shares of Class A Common Stock. All
options issued under the Directors' Plan have a per share exercise price equal
to the closing price of the Class A Common Stock on the trading day immediately
before the grant date. The options fully vest when granted, and are exercisable
for a period of 10 years, subject to earlier termination following termination
of service as a Director.
Directors also are eligible to receive options (to the extent granted
by the Board of Directors or the Compensation Committee) under our 2001
Employee, Director and Consultant Stock Option Plan, or the 2001 Plan. On June
19, 2001, we granted options to our outside directors under the 2001 Plan.
Messrs. Kane, Giaimo and Colasacco each received a grant of an option to
purchase 4,800 shares of Class A Common Stock, and Mr. Franklin received a grant
of an option to purchase 5,000 shares of Class A Common Stock. All of these
options were exercisable immediately upon grant at a price of $31.99 per share,
and have a term of seven years from the grant date.
5
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The names of, and certain information regarding, our executive
officers, as of March 1, 2002, who are not also Directors are set forth below.
Except for executive officers who have employment agreements with us, the
executive officers serve at the pleasure of the Board of Directors.
NAME AGE POSITION(S) WITH PANERA
- ---- --- -----------------------
William W. Moreton.................. 42 Executive Vice President and Chief Financial Officer
Scott G. Davis...................... 38 Senior Vice President and Chief Concept Officer
Jonathan R. Jameson................. 53 Senior Vice President and Chief Brand Officer
Michael J. Kupstas.................. 44 Senior Vice President and Chief Franchise Officer
John M. Maguire..................... 36 Senior Vice President, Company Operations and Bakery
Supply Chain
Michael J. Nolan.................... 42 Senior Vice President and Chief Development Officer
WILLIAM W. MORETON, Executive Vice President and Chief Financial
Officer, since May 1999. From October 1998 to May 1999, Mr. Moreton served as
Senior Vice President and Chief Financial Officer of the Saint Louis Bread
Co./Panera Bread business unit. From April 1997 to October 1998, Mr. Moreton
served as Executive Vice President and Chief Financial Officer of Quality
Dining, Inc. From October 1992 to April 1997, Mr. Moreton served as Executive
Vice President and Chief Financial Officer of Houlihan's Restaurants, Inc.
SCOTT G. DAVIS, Senior Vice President and Chief Concept Officer since
May 1996, which includes service as our Vice President, Customer Experience,
from May 1996 to May 1999. From June 1994 to May 1996, Mr. Davis served as our
Director of Concept Services and Customer Experience.
JONATHAN R. JAMESON, Senior Vice President and Chief Brand Officer
since August 2001. From 1996 to 2001, Mr. Jameson served as Vice President,
Marketing and Product Development, Senior Vice President, Chief Operating
Officer and ultimately Executive Vice President, Chief Strategy Officer for
Denny's Restaurant, Inc. From 1988 to 1995, Mr. Jameson served in a variety of
roles with Marriott Corporation, ultimately serving as Vice President, Marketing
and Sales for Host Marriott Services, Inc. Prior to that, Mr. Jameson spent 15
years with Walgreen Company, Walgreen Food Service Division, serving finally as
Director of Marketing.
MICHAEL J. KUPSTAS, Senior Vice President and Chief Franchise Officer
since November 2001. Between August 1999 and November 2001, Mr. Kupstas held the
position of Vice President Franchising and Brand Communication. Between January
1996 and August 1999, Mr. Kupstas was our Vice President of Company and
Franchise Operations. Between April 1991 and January 1996, Mr. Kupstas was
Senior Vice President/Division Vice President for Long John Silver's, Inc.
JOHN M. MAGUIRE, Senior Vice President, Company Operations and Bakery
Supply Chain since April 2000. From November 1998 to March 2000, Mr. Maguire
served as our Vice President, Commissary Operations. From January 1990 to
October 1998, Mr. Maguire was successively Manager, Director and Vice President
of Commissary Operations for the Au Bon Pain and Panera Bread/Saint Louis Bread
divisions.
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MICHAEL J. NOLAN, Senior Vice President and Chief Development Officer
since August 2001. From December 1997 to March 2001, Mr. Nolan served as
Executive Vice President & Director for John Harvard's Brew House, L.L.C. and
Senior Vice President, Development for American Hospitality Concepts, Inc. From
March 1996 to December 1997, Mr. Nolan was Vice President of Real Estate &
Development for Apple South Incorporated and from July 1989 to March 1996, Mr.
Nolan was Vice President of Real Estate and Development for Morrison Restaurants
Inc. Prior to 1989, Mr. Nolan served in various real estate and development
capacities for Cardinal Industries, Inc. and Nolan Development and Investment.
EXECUTIVE COMPENSATION
COMPENSATION TABLE
The following tables set forth information concerning the compensation we paid
or accrued during the fiscal years ended December 25, 1999, December 30, 2000
and December 29, 2001 to or for our Chief Executive Officer and our four other
most highly compensated executive officers whose salary and bonus combined
exceeded $100,000 for fiscal year 2001 and one executive officer who left Panera
before the end of 2001. (We sometimes refer to these persons as the "named
executive officers.")
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM
---------------------------------------------- COMPENSATION
------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME OF PRINCIPAL POSITION(S) YEAR SALARY ($) COMPENSATION(A) ($) BONUS ($) OPTIONS (#)
- ----------------------------- ---- ---------- ------------------- --------- -----------
Ronald M. Shaich.................... 2001 337,750 * 375,000 ---
Chairman and Chief Executive Officer 2000 325,002 * 100,000 ---
1999 325,000 * --- ---
William W. Moreton.................. 2001 297,220 * 108,034 ---
Executive Vice President and Chief 2000 286,418 * 100,000 ---
Financial Officer 1999 274,993 * 41,250 ---
Michael J. Kupstas.................. 2001 173,178 * 59,008 ---
Senior Vice President and Chief Franchise 2000 166,886 * 51,125 ---
Officer 1999 160,231 * 20,029 ---
John Maguire........................ 2001 153,327 * 50,108 12,000
Senior Vice President, 2000 140,000 * 37,623 15,000
Company Operations 1999 121,050 * 12,105 ---
and Bakery Supply Chain
Richard Postle...................... 2001 248,390 * --- ---
Former President and 2000 323,396 * 100,000 ---
Chief Operating Officer 1999 314,151 * 46,575 108,178
Thomas Howley............................. 2001 156,000 * 50,980 ---
Former Vice President, Construction 2000 156,231 * 29,839 15,000
and Design 1999 145,770 * 15,000 ---
_____________________
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*We did not pay "other annual compensation" to any named executive officer,
except for perquisites and other personal benefits, which for each executive
officer did not exceed the lesser of $50,000 or 10% of such individual's salary
plus bonus.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding each stock option
we granted during fiscal year 2001 to each of the named executive officers.
AGGREGATED OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM ($)(1)
----------------------------------------------------------------------------------------------------
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED TO EXERCISE OR
UNDERLYING OPTIONS EMPLOYEES IN FISCAL BASE PRICE
NAME GRANTED (#) YEAR (%) ($/SHARE) EXPIRATION DATE 5% 10%
- ---- ----------- -------- --------- --------------- --- ---
Ronald M. Shaich --- --- --- --- --- ---
William W. Moreton --- --- --- --- --- ---
Michael J. Kupstas --- --- --- --- --- ---
John Maguire 12,000 4.9% $38.53 08/22/2008 $188,226.95 $438,648.84
Richard Postle --- --- --- --- --- ---
Thomas Howley --- --- --- --- --- ---
(1) The dollar amounts in these columns are the result of calculations at
stock appreciation rates specified by the Securities and Exchange
Commission and are not intended to forecast actual future appreciation
rates of our stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information regarding the exercises of
options by each for the named executive officers during the 2001 fiscal year. In
addition, this table includes the number of shares covered by both exercisable
and unexercisable stock options as of December 29, 2001 and the values of
"in-the-money" options, which represent the positive spread between the exercise
price of any such option and the fiscal year-end value of our Class A Common
Stock
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL YEAR
SHARES ACQUIRED VALUE OPTIONS AT FY-END (#) END ($)(1)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------------------------------------------------------------------------------------------
Ronald M. Shaich 276,000 $7,904,532 401,330/0 $18,602,138/$0
William W. Moreton 37,500 $1,472,475 0/75,000 $0/$3,560,250
Michael J. Kupstas 8,875 $ 285,330 22,500/24,500 $1,160,775/$1,068,075
John Maguire 8,925 $ 271,705 0/30,250 $0/$988,308
Richard Postle 40,000 $1,443,200 125,116/30,000 $5,912,985/$1,422,850
Thomas Howley 10,689 $ 364,061 16,856/0 $765,091/$0
- --------------------------
(1) Based upon a fair market value of $53.85 per share of Class A Common Stock,
which was the closing price of a share of Class A Common Stock on the
Nasdaq National Market on December 29, 2001.
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EXECUTIVE OFFICER COMPENSATION
Our Chief Executive Officer is responsible for establishing the
compensation, including salary, bonus and incentive compensation, for all of the
Company's executive officers other than the Chief Executive Officer and Chairman
of the Board.
Philosophy
In compensating our executive officers, the Chief Executive Officer
seeks to structure a salary, bonus and incentive compensation package that will
help attract and retain talented individuals and align the interests of the
executive officers with the interests of our stockholders.
Components of Compensation
There are two components to the compensation of our executive officers:
annual cash compensation (consisting of salary and bonus incentives) and
long-term incentive compensation.
Annual Cash Compensation
We participate annually in an industry-specific survey of executive
officers, which serves as the basis for determining total target cash
compensation packages, which are crafted individually for each executive
officer. The individual's compensation consists of a base salary and contingent
compensation based on actual performance against agreed-upon expectations of
performance. The individual compensation packages are structured so that, if the
executive officer attains the expected level of achievement of each performance
goal, the cash compensation of the executive officer will be approximately at
the 75th percentile of the compensation of individuals occupying similar
positions in the industry, using generally available surveys of executive
compensation within the retail industry for companies with comparable revenues.
At the beginning of each fiscal year, the Chief Executive Officer and
each executive officer establish a series of individual performance goals which
are specific to the executive's responsibilities. These goals establish a
measure of performance for each executive officer. For executive officers whose
responsibilities are operational in nature, attainment of operating group goals
and objectives is stressed, and for corporate staff officers, overall Panera
performance is utilized, measured by corporate profits and attainment of
individual objectives. The maximum cash bonus for our executive officers (other
than the Chairman/CEO) does not exceed 60% of the executive officer's base
salary, and historically has ranged from 20% to 60%.
Thus, our cash compensation practices seek to motivate executives by
requiring excellent performance measured against both internal goals and
competitive performance.
Long-Term Incentive Compensation. The second element of executive
compensation is long-term incentive compensation, which currently takes the form
of stock options granted under our stock option plans, (the 1992 Equity
Incentive Plan and the 2001 Employee, Director and Consultant Stock Option
Plan). Currently, we grant stock options under a performance-based option
program, a series of guidelines which provide for the periodic granting of
specific amounts of stock options, denominated in dollars rather than in numbers
of shares, depending
9
upon the executive's position. Existing holdings of stock or stock options are
not a factor in determining the dollar value of an individual executive
officer's award.
As often as seems appropriate, but at least annually, the Chief
Executive Officer reviews our executive compensation program to judge its
consistency with our compensation philosophy, whether it supports our strategic
and financial objectives, and whether it is competitive within our industry.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
This report is made by the Compensation Committee, which is responsible
for establishing the compensation, including base salary and incentive
compensation, for the Company's Chairman of the Board and Chief Executive
Officer, Ronald M. Shaich.
Philosophy
The Compensation Committee seeks to set the compensation of our Chief
Executive Officer and Chairman at a level which is competitive with companies of
similar size in our industry. Mr. Shaich has the overall responsibility of
Chairman of the Board of Directors and Chief Executive Officer. The Compensation
Committee examined compensation structures for the chief executive officer of
companies in the restaurant industry using generally available source material
from business periodicals and other sources, and sought to structure the
Chairman and Chief Executive Officer's compensation at a competitive level
appropriate to the comparable companies' group. The companies examined for
purposes of evaluating and setting compensation of the Chairman and Chief
Executive Officer are not necessarily included in the "Standard & Poor's
400-MidCap Restaurant Index" used in the Stock Performance Graph set forth under
"Stock Performance" below.
Compensation Structure
The compensation of the Chairman and Chief Executive Officer is
structured to be competitive within our industry and is based upon Panera's
general performance, and is reviewed annually by the Compensation Committee.
Components of Compensation
Salary. The salary shown in the Summary Compensation Table represents
the fixed portion of compensation for the Chairman and Chief Executive Officer
for the year. Changes in salary depend upon overall Panera performance as well
as levels of base salary paid by companies of similar size in our industry.
Bonus. The cash bonus is the principal incentive-based compensation
paid annually to the Chairman and Chief Executive Officer. The Chairman and
Chief Executive Officer receives a bonus in a predetermined amount if Panera
achieves its financial and strategic objectives for the fiscal year. A higher
bonus is paid if Panera exceeds these objectives by a predetermined percentage.
In determining the bonus amount, the Compensation Committee seeks to create an
overall compensation package for the Chairman and Chief Executive Officer which
is at the 75th percentile for comparable companies in the restaurant industry,
if objectives established for such
10
year are achieved. For the fiscal year ended December 29, 2001, the Board
awarded Mr. Shaich a bonus of $375,000.
The Chairman and Chief Executive Officer may elect to take the bonus in
the form of 10-year, fully vested stock options for that number of shares of
Class A Common Stock that could be purchased with an amount equal to two times
the cash value of his bonus. The exercise price of the option would be equal to
the fair market value of our Class A Common Stock on the date of grant.
Stock Options. Mr. Shaich is eligible to participate in the 2001
Employee, Director and Consultant Stock Option Plan, but does not participate in
the performance-based option program for other executive officers.
Deductibility of Executive Compensation
The Compensation Committee has reviewed the potential consequences for
Panera of Section 162(m) of the Code, which imposes a limit on tax deductions
for annual compensation in excess of one million dollars paid to any of the five
most highly compensated executive officers. Based on such review, the
Compensation Committee believes that the limitation will have no effect on
Panera in fiscal year 2002.
Historically, none of our executive officers received salary and
bonuses approaching the $1 million cap level under Section 162(m). We have
always paid the long-term component of our compensation in stock, which is
"performance-based" compensation under Section 162(m) and therefore not subject
to the $1 million cap. As total compensation opportunities for our executives
increase, based on the success of our business, the Compensation Committee
intends to consider structuring bonus payments for our most highly compensated
executive officers in a manner that meets the "performance-based" compensation
definition under Section 162(m).
Respectfully submitted,
Domenic Colasacco
Larry J. Franklin
Robert T. Giaimo
Compensation Committee
EMPLOYMENT ARRANGEMENTS
William W. Moreton. Panera and William W. Moreton are parties to an
Executive Employment Letter Agreement dated September 29, 1998, which provides
Mr. Moreton with a base salary of $275,000, a bonus of $25,000 based on
continued employment paid in March 2000, stock options for 150,000 shares of
Class A Common Stock vesting over five years and a relocation assistance
package. The Letter Agreement also provides that under the terms of a separate
severance agreement, in the event of an involuntary termination of Mr. Moreton's
employment without cause, Mr. Moreton will be entitled to continue to receive
his base salary, car allowance and medical and/or dental benefits for a period
of up to twelve months, such
11
payments to be reduced by any compensation received by Mr. Moreton in connection
with any future employment during such twelve month period.
Michael J. Kupstas. Panera and Michael J Kupstas are parties to an
Executive Employment Letter Agreement dated December 22, 1995, which provides
Mr. Kupstas with a base salary of $150,000, a right to participate in our
performance compensation program with a guaranteed minimum bonus under the plan
of 20% of his fiscal 1996 annual salary, subject to continued employment, stock
options for 11,500 shares of Class A Common Stock, subject to the discretion of
our Board of Directors, reimbursement of one year of COBRA expenses and a
relocation assistance package. The Letter Agreement also provides that under the
terms of a separate severance agreement, in the event of an involuntary
termination of Mr. Kupstas' employment without cause, Mr. Kupstas will be
entitled to continue to receive his base salary, car allowance and medical
and/or dental benefits for a period of up to twelve months, such payments to be
reduced by any compensation received by Mr. Kupstas in connection with any
future employment during such twelve month period.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors, which consists of three
independent directors and operates under a written charter adopted by the Board
of Directors, has furnished the following report:
The Audit Committee assists the Board in overseeing and monitoring the
integrity of our financial reporting process, its compliance with legal and
regulatory requirements and the quality of its internal and external audit
processes. The role and responsibilities of the Audit Committee are set forth in
a written charter adopted by the Board. The Audit Committee reviews and
reassesses the charter annually and recommends any changes to the Board for
approval. The Audit Committee is responsible for overseeing our overall
financial reporting process. In fulfilling its responsibilities for the
financial statements for fiscal year 2001, the Audit Committee took the
following actions:
- Reviewed and discussed the audited financial statements for the
fiscal year ended December 29, 2001 with management and
PricewaterhouseCoopers LLP, or PWC, our independent public
accountants;
- Discussed with PWC the matters required to be discussed by Statement
on Auditing Standards No. 61 relating to the conduct of the audit;
and
- Received written disclosures and the letter from PWC regarding its
independence as required by Independence Standards Board Standard
No. 1. The Audit Committee discussed with PWC their independence.
The Audit Committee also considered the status of pending
litigation, taxation matters and other areas of oversight relating
to the financial reporting and audit process that the Committee
determined appropriate.
Based on the Audit Committee's review of the audited financial
statements and discussions with management and PWC, the Audit Committee
recommended to the Board that
12
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 2001 for filing with the
Securities and Exchange Commission.
Respectfully submitted,
George E. Kane
Domenic Colasacco
Robert T. Giaimo
Audit Committee
COMPARISON OF CUMULATIVE TOTAL RETURN
(ASSUMES $100 INVESTMENT ON DECEMBER 28, 1996)
The following graph and chart compares the cumulative annual
stockholder return on the Company's Class A Common Stock over the period
commencing December 28, 1996, and continuing through December 29, 2001, to that
of the total return index for The Nasdaq Composite Index and the Standard &
Poor's MidCap Restaurants Index, assuming the investment of $100 on December 28,
1996. In calculating total annual stockholder return, reinvestment of dividends
is assumed. The stock performance graph and chart below are not necessarily
indicative of future price performance. This graph is not "soliciting material,"
is not deemed filed with the Securities and Exchange Commission (which we refer
to as the "Commission") and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing. We
obtained information used on the graph from Research Data Group, a source we
believe to be reliable, but we disclaim any responsibility for any errors or
omissions in such information.
13
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG PANERA BREAD COMPANY,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P MIDCAP RESTAURANTS INDEX
[LINE GRAPH]
Cumulative Total Return
-------------------------------------------------------------------
12/28/96 12/27/97 12/26/98 12/25/99 12/30/00 12/29/01
PANERA BREAD COMPANY 100.00 119.63 95.33 116.83 341.13 805.23
NASDAQ STOCK MARKET 100.00 117.73 170.15 312.67 192.77 155.94
S &P MIDCAP RESTAURANTS 100.00 117.20 133.77 97.43 135.83 171.16
(1) For the S&P Midcap Restaurants Index and the Nasdaq Composite
Index, the total return to stockholders is based on the values of such indices
as of the last trading day of the relevant calendar year, which may be different
from the end of our fiscal year.
OWNERSHIP OF OUR COMMON STOCK
The following table sets forth certain information as of March 1, 2002,
with respect to our Class A and Class B Common Stock owned by (1) each Director
and Director Nominee, (2) the named executive officers in the Summary
Compensation Table, (3) all of our Directors, Director Nominees and executive
officers as a group and (4) each person we know to beneficially own more than
five percent of any class of our capital stock. In accordance with the rules
promulgated by the Commission, such ownership includes shares presently owned,
as well as shares that the named person has the right to acquire within 60 days
of March 1, 2002,
14
including shares that the named person has the right to acquire through the
exercise of any option or warrant. Unless otherwise indicated in the footnotes
to the table, all stock is owned of record and beneficially by the person listed
in the table.
Class A Common Class B Common
Name and, with Respect to -------------- -------------- Combined Voting
------------------------- ---------------
Owner of More Than 5%, Address Number Percent (1) Number Percent (2) Percentage (3)
------------------------------ ------ ----------- ------ ----------- --------------
Ronald M. Shaich....................... 403,471(4) 3.0% 1,221,687(4) 94.4% 21.6%
c/o Panera Bread Company
6710 Clayton Road
Richmond Heights, MO 63117
George E. Kane......................... 38,439(5) * 8,000 * *
Domenic Colasacco...................... 16,931(6) * - - *
Robert T. Giaimo....................... 16,931(6) * - - *
Larry J. Franklin...................... 10,000(7) * - - *
William W. Moreton..................... 0 - - - *
Michael J. Kupstas..................... 26,858(8) * - - *
All directors and executive officers as a
group (11 persons) 513,430(9) 3.8% 1,229,687 95.0% 21.8%
Brown Capital Management, Inc.
1201 N. Calvert Street
Baltimore, MD 21201................. 1,581,875(10) 12.4% - - 9.3%
Merrill Lynch & Co., Inc.
Merrill Lynch Investment Managers
Master Small Cap Value Trust
800 Scudders Mill Road
Plainsboro, NJ 08536 ............... 1,141,000(11) 8.6% - - 6.7%
- --------------------
* Less than one percent.
(1) Percentage ownership of Class A Common Stock is based on 13,095,047
shares issued and outstanding plus shares of Class A Common Stock subject
to options exercisable within 60 days of March 1, 2002 held by the
stockholder or group.
(2) Percentage ownership of Class B Common Stock is based on 1,293,801 shares
issued and outstanding as of March 1, 2002.
(3) This column represents voting power rather than percentage of equity
interest as each share of Class A Common Stock is entitled to one vote
while each share of Class B Common Stock is entitled to three votes.
Combined, the Class A Common Stock (13,095,047 votes) and the Class B
Common Stock (3,881,403 votes) entitle their holders to an aggregate of
16,976,450 votes as of March 1, 2002.
(4) Includes, (i) with respect the Class A Common Stock, options exercisable
within 60 days of March 1, 2002 for 401,330 shares of Class A Common
Stock, and (ii) with respect to the Class B Common Stock, 100,000 shares
of Class B Common Stock held in two qualified annuity interest trusts.
(5) Includes options for 31,939 shares of Class A Common Stock exercisable
within 60 days of March 1, 2002, issued pursuant to the Directors' Plan.
15
(6) Consists of options for 16,931 shares of Class A Common Stock exercisable
within 60 days of March 1, 2002, issued pursuant to the Directors' Plan.
(7) Consists of options for 10,000 shares of Class A Common Stock exercisable
within 60 days of March 1, 2002.
(8) Consists of options for 22,500 shares of Class A Common Stock exercisable
within 60 days of March 1, 2002.
(9) Includes options for 499,631 shares of Class A Common Stock exercisable
within 60 days of March 1, 2002.
(10) All of the shares of Class A Common Stock are owned by various investment
advisory clients of Brown Capital Management, Inc., or Brown, which is
deemed to be a beneficial owner of those shares pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, due to Brown's discretionary
power to make investment decisions over such shares for its clients and
Brown's ability to vote such shares. In all cases, persons other than
Investment Counselors of Maryland, Inc. have the right to receive, or the
power to direct the receipt of, dividends from, or the proceeds from the
sale of the shares. No individual client of Brown holds more than five
percent of the class. We obtained information regarding beneficial
ownership of these shares solely from the Schedule 13G, Amendment No. 3,
filed with the Commission on February 5, 2002.
(11) Merrill Lynch Investment Managers or MLIM, an operating division of
Merrill Lynch & Co., Inc., is comprised of the following legal entities:
Merrill Lynch Investment Managers, L.P., or MLIMLP, doing business as
Merrill Lynch Investment Managers; QA Advisers, LLC, or QA, doing
business as Merrill Lynch Investment Managers Quantitative Advisers; Fund
Asset Management, L.P., doing business as Fund Asset Management, or FAM;
Merrill Lynch Asset Management U.K. Limited or, MLAM UK; Merrill Lynch
(Suisse) Investment Management Limited, or MLS; Merrill Lynch Investment
Managers International Limited, or MLIMI; Merrill Lynch Investment
Managers, Ltd. (Asia Pacific Limited); Merrill Lynch Investment Managers
Limited (Australia); Merrill Lynch Investment Managers (Isle of Man)
Limited; Merrill Lynch Investment Managers Asia Limited; Merrill Lynch
Investment Managers Kapitalanlagegesellschaft MBH; Munich London
Investment Management, Ltd.; Merrill Lynch Investment Managers Ltda.;
Merrill Lynch Investment Managers Japan Limited; Merrill Lynch Investment
Managers Canada, Inc.; DSP Merrill Lynch Asset Management (India)
Limited; PT Merrill Lynch Indonesia; Merrill Lynch Phatra Securities Co.,
Ltd.; Merrill Lynch Global Asset Management, Limited; Merrill Lynch
Investment Managers Channel Islands Limited; Mercury Asset Management
International Channel Islands Limited or, MAMCI; Grosvenor Venture
Managers Limited; and Merrill Lynch Fund Managers Limited. Each of MLIM
LP, FAM, MLAM UK, MAMCI, QA, MLS, and MLIMI is an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940,
which acts as investment adviser operating under the laws of a
jurisdiction other than the United States. The investment advisers that
comprise MLIM exercise voting and investment powers over portfolio
securities independently from other direct and indirect subsidiaries of
ML&Co. The following asset management subsidiaries hold certain shares of
our Class A Common Stock: FAM, MLIM and QA. We obtained
16
information regarding beneficial ownership of ML & Co.'s shares of Class
A Common Stock solely from the joint Schedule 13G, Amendment No. 5, filed
with the Commission on February 5, 2002.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 23, 1999, we entered into a Franchise Agreement with Lee C.
Howley, pursuant to which Mr. Howley agreed to open and operate 20 franchised
bakery-cafe locations in the states of Rhode Island, Connecticut and
Massachusetts by May 31, 2007. Lee Howley is the brother of Thomas R. Howley,
our Vice President of Development Operations through 2001. After the end of our
fiscal year, Thomas Howley resigned to join his brother's franchise operation.
We receive $30,000 per bakery-cafe opened by Lee Howley and 5% of sales as a
royalty. During the fiscal year ended December 29, 2001, we received royalties
and franchise store opening fees in the aggregate amount of approximately
$191,000 from Lee Howley.
Through a 90%-owned indirect subsidiary, we entered into an Operating
Agreement for a joint venture with our former president and chief operating
officer, Rick Postle, effective October 7, 2001. The joint venture will develop
and manage fifty bakery-cafes in the Northern Virginia and Central Pennsylvania
markets. The joint venture partner receives a specified percentage of the cash
flows from the bakery-cafes developed and operated. The joint venture partner
was required to invest a specified interest and is prohibited from selling or
transferring his interest to another party without our consent. After five
years, we have the right to purchase the joint venture partner's interest at a
contractually determined value, based on a multiple of cash flow. The joint
venture partner also has the right to sell his interest back to us at a
contractually determined value based on a multiple of cash flow.
Each of the foregoing transactions are on terms no less favorable to us
than those that could have been obtained from third parties in agreements
negotiated at arm's length.
In connection with the termination of Mr. Postle's employment with
Panera, we agreed to extend a portion of his stock options for shares of our
Class A Common Stock that would otherwise have expired shortly after the
termination of his employment, as follows:
NUMBER OF SHARES SUBJECT TO EXTENDED OPTIONS VESTING DATE
7,500 10-10-01
25,000 11-19-01
2,500 12-02-01
25,000 11-19-03
5,000 6-03-04
-----
TOTAL 65,000
Mr. Postle forfeited all of his remaining unvested options at the time his
employment terminated (other than the options for the 65,000 shares described
above). In addition, Mr Postle agreed to pay us $248,390 and to provide services
for 3 1/2 days per week through the end of 2001 to assist in the transition.
17
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our Directors, executive
officers and beneficial owners of more than 10% of our Common Stock to file
reports of ownership and changes of ownership with the Commission on Forms 3, 4
and 5. We believe that during the fiscal year ended December 29, 2001, our
Directors, executive officers and beneficial owners of more than 10% of our
Common Stock timely complied with all applicable filing requirements, except
that Scott Davis, Domenic Colasacco, Larry Franklin, George Kane, and Robert
Giaimo each filed a Form 5 six days late.
In making these disclosures we relied solely on a review of copies of
such reports filed with the Commission and furnished to us and written
representations that no other reports were required.
ELECTION OF DIRECTORS
(PROPOSAL 1 ON PROXY CARD)
Our Certificate of Incorporation provides for a classified Board of
Directors. This means our Board of Directors is divided into three classes, with
each class having as nearly as possible an equal number of Directors. The term
of service of each class of Directors is staggered so that the term of one class
expires at each annual meeting of the stockholders.
The Board of Directors currently consists of five (5) members, divided
into three (3) classes as follows: Ronald M. Shaich constitutes a class with a
term ending at the upcoming meeting (the "Class I Director"); Domenic Colasacco
and Robert T. Giaimo constitute a class with a term ending in 2003 (the "Class
II Directors"); and George E. Kane and Larry J. Franklin constitute a class with
a term ending in 2004 (the "Class III Directors"). At each annual meeting of
stockholders, Directors are elected for a full term of three (3) years to
succeed those Directors whose terms are expiring.
Nominee Ronald M. Shaich is a current Director whose term will expire
at the upcoming meeting. He is nominated for re-election as a Class I Director
with a term which will end in 2005.
We currently have 10 Board seats authorized, and five Board members.
Our Board of Directors is in the process of examining the composition and size
of our Board to determine what is in the best interest of Panera and its
shareholders. When the Board completes that process, we intend to add one or
more suitable Board members. At that time, the Board also will determine whether
to reduce the total number of board seats available.
Unless otherwise instructed in the proxy, all proxies will be voted for
the election of Mr. Shaich to a three-year term expiring in 2005, to hold office
until his successor has been duly elected and qualified. Stockholders who do not
wish their shares to be voted for may so indicate by striking out his name on
the proxy card. We do not contemplate that Mr. Shaich will be unable to serve,
but in that event, proxies solicited hereby will be voted for the election of
another person to be designated by the Board of Directors.
18
A plurality of the combined voting power of the shares of Class A and
Class B Common Stock voted in person or represented by proxy at the meeting is
required to elect a nominee as a Director.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" the
ELECTION OF RONALD M. SHAICH.
APPROVAL OF AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF CLASS A AND CLASS B COMMON STOCK
(PROPOSAL 2 ON PROXY CARD)
Our Certificate of Incorporation currently authorizes us to issue up to
50,000,000 shares of Class A Common Stock, $.0001 par value, and 2,000,000
shares of Class B Common Stock, $.0001 par value. The Board of Directors has
adopted, subject to stockholder approval, on amendment to our Certificate of
Incorporation to increase the authorized number of shares of our Class A Common
Stock to 75,000,000 shares and our Class B Common Stock to 10,000,000 shares.
Under the amendment, Section 4.1 of the Certificate of Incorporation would read
as follows:
4. Capitalization.
_______________
4.1 The total number of shares which the
corporation shall have authority to issue is
87,000,000 shares, consisting of 75,000,000
shares of Class A Common Stock, $.0001 par
value, and 10,000,000 shares of Class B
Common Stock, $.0001 par value (such Class A
Common Stock and Class B Common Stock
hereinafter referred to as "Common Stock"),
and 2,000,000 shares of Class B Preferred
Stock, $.0001 par value.
The Board also has approved, subject to shareholder approval of this
proposal, a stock split to be effected in the form of a stock dividend of one
share of Class A Common Stock for each share of Class A Common Stock and one
share of Class B Common Stock for each share of Class B Common Stock. If the
stockholders approve this Proposal, the stock split effected in the form of a
stock dividend would be payable on June 24, 2002 to holders of record at the
close of business on June 10, 2002.
As of December 29, 2001, we had 12,954,539 shares of our Class A Common
Stock outstanding and 3,451,015 shares reserved for issuance upon exercise of
outstanding and future awards under our incentive compensation and benefit
plans. We also had 1,294,300 shares of Class B Common Stock outstanding on that
date. If our stockholders approve the proposed amendments, after the stock
split, we expect to have approximately 26,252,200 shares of Class A Common Stock
issued and outstanding and, an additional 6,703,400 shares of Class A Common
Stock reserved for future issuance upon exercise of outstanding and future
grants of awards under our incentive compensation and benefit plans, and
2,567,400 shares of Class B Common Stock outstanding.
19
The Board is recommending the proposed increase in the authorized
number of shares of our Common Stock to provide adequate shares of Class B
Common Stock for the proposed stock split and to make additional shares of Class
A Common Stock and Class B Common Stock available for issuance, without the
delay and expense of obtaining the approval of stockholders at a special
meeting, to afford us greater flexibility in acting upon proposed transactions.
The additional authorized shares will be available for general corporate needs,
such as any future stock splits, stock dividends or issuances under our
incentive and employee benefit plans. Additionally, we could use the shares for
such purposes as raising additional capital or in connection with acquisitions
or investments. We do not currently have any other plans, agreements,
commitments, or understandings with respect to the issuance of the additional
shares of Class A Common Stock and Class B Common Stock.
We may issue the additional shares of Common Stock, together with
currently authorized but unused and unreserved shares of Common Stock, at such
time, to such persons and for such consideration as our Board may determine to
be in Panera's best interests without further stockholder approval, except as
otherwise required by law or stock exchange rules.
While we do not intend the proposed amendment to deter or to prevent a
change in control, we could use the additional shares of Common Stock (as we
could use the currently authorized but unissued shares of our stock) to hinder
persons seeking to acquire or take control of Panera or to dilute voting power
of the outstanding shares. We are not aware of any efforts to obtain control of
Panera and we have not made this proposal in response to any such efforts.
Our stockholders have no preemptive rights to purchase additional
shares and the issuance of additional shares of our Common Stock may dilute our
stockholders' existing equity interest. If this Proposal is approved by
stockholders, the amendment will become effective upon the filing of an Amended
Certificate of Incorporation with the Secretary of State of Delaware, which we
intend to file promptly upon approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2.
RATIFICATION OF CHOICE OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 3 ON PROXY CARD)
The Board of Directors has appointed the firm of PricewaterhouseCoopers
LLP, independent public accountants, to audit our books, records and accounts
for the fiscal year ending December 28, 2002. This appointment is being
presented to the stockholders for ratification at the annual meeting.
PricewaterhouseCoopers LLP has no direct or indirect material financial
interest in Panera or our subsidiaries. Representatives of
PriceWaterhouseCoopers LLP are expected to be present at the meeting and will be
given the opportunity to make a statement on the firm's behalf if they so
desire. The representatives also will be available to respond to appropriate
questions.
20
AUDIT FEES
We paid PricewaterhouseCoopers LLP a total of $134,900 for their audit
of our annual financial statements for the fiscal year ended December 29, 2001
and for their review of our Quarterly Reports on Form 10-Q filed during the last
fiscal year.
ALL OTHER FEES
During our fiscal year ended December 29, 2001, we paid
PricewaterhouseCoopers LLP a total of $353,215 for their review of our income
tax provisions, their preparation of our state sales and use tax returns, state
income tax returns and federal income tax returns, their assistance on a state
income tax minimization project, and their audit of our 401(k) plan.
The Audit Committee has considered whether the provisions of the
services described above under the caption "All Other Fees" is compatible with
maintaining PricewaterhouseCoopers LLP's independence.
Proxies solicited by management will be voted for the ratification
unless stockholders specify otherwise. Ratification by the stockholders is not
required. If the proposal is not approved by the stockholders, the Board of
Directors will not change the appointment for fiscal 2002, but will consider the
stockholder vote in appointing auditors for fiscal year 2003.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION
OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANTS
FOR FISCAL YEAR 2002.
OTHER BUSINESS
In addition to the business described above, the Chairman of the Board
and Chief Executive Officer will make brief remarks about Panera.
As of the date of this proxy statement, we know of no matter not
specifically referred to above as to which any action is expected to be taken at
the annual meeting of stockholders. The persons named as proxies will vote the
proxies, insofar as they are not otherwise instructed, regarding such other
matters and the transaction of such other business as may be properly brought
before the meeting, as seems to them to be in the best interest of Panera and
our stockholders.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
To be considered for inclusion in the proxy statement relating to our
Annual Meeting of stockholders to be held in 2003, stockholder proposals must be
received no later than January 2, 2003. We must receive other proposals of
stockholders (including Director nominations) intended to be presented at the
2003 Annual Meeting of Stockholders but not included in the proxy statement by
April 7, 2003, but not before January 7, 2003. However, in the event the annual
meeting is scheduled to be held on a date before May 7, 2003, or after August 5,
2003, your notice may be received by us at our principal executive office not
later than the close of business on the later of (i) the 60th day before the
scheduled date of such annual meeting or (ii) the 10th day after the day on
which we first make a public announcement of the date of such annual meeting.
Proposals received not in accordance with the above standards will not be voted
on at the 2003 Annual Meeting.
21
YOU MAY OBTAIN A COPY OF OUR ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K FOR FISCAL YEAR 2001 WITHOUT CHARGE UPON
WRITTEN REQUEST TO: INVESTOR RELATIONS COORDINATOR, PANERA BREAD COMPANY, 6710
CLAYTON ROAD, RICHMOND HEIGHTS, MISSOURI 63117.
22
[BACK COVER]
ABPCM-PS-02
APPENDIX A
DETACH HERE
PANERA BREAD COMPANY
6710 CLAYTON ROAD
RICHMOND HEIGHTS, MO 63117
ANNUAL MEETING OF STOCKHOLDERS - JUNE 6, 2002
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints William W. Moreton
and Diane Parsons-Salem as Proxies, with full power of substitution for and on
behalf of the undersigned at the 2002 Annual Meeting of Stockholders of PANERA
BREAD COMPANY to be held at the Company's offices at 6710 Clayton Road, Richmond
Heights, Missouri 63117, on Thursday, June 6, 2002, at 10:30 a.m. Central Time,
and at any adjournment or adjournments thereof. The undersigned hereby directs
the said Proxies to vote in accordance with their judgment on any matters which
may properly come before the Annual Meeting, all as indicated in the Notice of
Annual Meeting, receipt of which is hereby acknowledged, and to act on the
following matters set forth in such notice as specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, HEREIN BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1, 2 AND 3.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY USING THE ENCLOSED
ENVELOPE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally. Trustees, custodians, and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If the shareholder is a corporation, the
signature should be that of an authorized officer who should indicate his or her
title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------- ------------------------------------
- --------------------------------- ------------------------------------
- --------------------------------- ------------------------------------
A-1
PANERA BREAD COMPANY
Dear Stockholder,
Please take note of the important information enclosed with this proxy card.
There are a number of issues related to the management and operation of the
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, June 6,
2002.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Panera Bread Company
DETACH HERE
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/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
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PANERA BREAD COMPANY
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CONTROL NUMBER:
RECORD DATE SHARES:
1. Election of one (1) Director to the Board of Directors to serve for a
term ending in 2005 and until his successor is duly elected and
qualified.
For the Withhold
Nominee From the Nominee
Ronald M. Shaich / / / /
2. Adoption of an amendment to the Company's Certificate of Incorporation
to increase the authorized shares of Class A Common Stock, $.0001, to
75,000,000 shares from 50,000,000 shares and to increase the authorized
shares of Class B Common Stock, $.0001 par value per share, to
10,000,000 shares from 2,000,000 shares.
For Against Abstain
/ / / / / /
3. Ratification of the appointment of PricewaterhouseCoopers LLP as
independent public accountants for the Company for the fiscal year
ending December 28, 2002.
For Against Abstain
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon any other
business that may properly come before the meeting or at any
adjournment(s) thereof.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. / /
Please be sure to sign and date this proxy.
Signature: _________________ Date:_______ Signature:________________ Date:______
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