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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 Section 240.14a-11(c) or Section 240.14a-12
THE GYMBOREE CORPORATION
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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)(4) 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.
[_] 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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(4) Date Filed:
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Notes:
[LOGO OF GYMBOREE CORPORATION]
April 26, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 9:00 a.m. on Wednesday, May 26, 1999, at the San Francisco Airport
Marriott Hotel, located at 1800 Old Bayshore Highway, Burlingame, California
94010. Detailed information as to the business to be transacted at the meeting
is contained in the accompanying Notice of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that
your shares be voted. Accordingly, we ask that you sign and return your proxy
as soon as possible in the envelope provided.
Sincerely,
/s/ Gary White
Gary White
Vice-Chair and Chief Executive
Officer
THE GYMBOREE CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 26, 1999
TO THE STOCKHOLDERS OF THE GYMBOREE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The
Gymboree Corporation, a Delaware corporation (the "Company"), will be held on
Wednesday, May 26, 1999 at 9:00 a.m., local time, at the San Francisco Airport
Marriott, 1800 Old Bayshore Highway, Burlingame, California 94010 for the
following purposes:
1. To elect three Class III directors to serve for three year terms
expiring upon the year 2002 Meeting of Stockholders or until their
successors are elected.
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending January 29, 2000.
3. To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 5, 1999 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
/s/ Jeffrey D. Saper
JEFFREY D. SAPER
Secretary
Burlingame, California
April 26, 1999
IMPORTANT: Whether or not you plan to attend the meeting, you are
requested to complete and promptly return the enclosed proxy
in the envelope provided.
THE GYMBOREE CORPORATION
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PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of The
Gymboree Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held May 26, 1999 at 9:00 a.m., local time, or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at
the San Francisco Airport Marriott, 1800 Old Bayshore Highway, Burlingame,
California 94010. The telephone number of the Company's principal offices is
(650) 579-0600.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended January 30, 1999, including financial
statements, were mailed on or about April 26, 1999 to all stockholders
entitled to vote at the meeting.
Record Date and Voting Securities
Stockholders of record at the close of business on April 5, 1999 (the
"Record Date") are entitled to notice of and to vote their shares at the
meeting. At the Record Date, 24,265,920 shares of the Company's Common Stock,
$0.001 par value per share, were issued and outstanding.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
Voting and Solicitation
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the
right to cumulative voting in the election of directors.
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Solicitation of proxies by mail may be
supplemented by telephone, telegram, facsimile or personal solicitation by
directors, officers or regular employees of the Company. No additional
compensation will be paid to such persons for such services.
Quorum; Abstentions; Broker Non-votes
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST," "WITHHELD" or "ABSTAIN" are treated as being present at the meeting
for purposes of establishing a quorum and are also treated as shares entitled
to vote at the Annual Meeting (the "Votes Cast") with respect to such matter.
Although there is no definitive statutory or case law authority in Delaware
as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the
1
presence or absence of quorum for the transaction of business and (ii) the
total number of Votes Cast with respect to a proposal (other than the election
of directors). In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. Accordingly, abstentions
will have the same effect as a vote against a proposal.
The Delaware Supreme Court has held that, while broker non-votes should be
counted for purposes of determining the presence or absence of a quorum for
the transaction of business, broker non-votes should not be counted for
purposes of determining the number of Votes Cast with respect to the
particular proposal on which the broker has expressly not voted. The Company
intends to treat broker non-votes in a manner consistent with such holding.
Thus, a broker non-vote will not affect the outcome of the voting on a
proposal.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2000 Annual Meeting must be received by
the Company no later than December 21, 1999 in order to be considered for
inclusion in the proxy statement and form of proxy relating to that meeting.
2
PROPOSAL ONE:
ELECTION OF DIRECTORS
Nominees
The number of directors authorized by the Company's Bylaws is a range from
six to eleven, with the exact number currently fixed by the Board at seven.
The Company's Restated Certificate of Incorporation provides that the
directors shall be divided into three classes, with the classes serving for
staggered, three year terms. Currently there are two directors in Class I, two
directors in Class II and three directors in Class III.
Three Class III directors are to be elected at the Annual Meeting. Each of
the three Class III directors elected at the Annual Meeting will hold office
until the Annual Meeting of Stockholders in 2002 or until his or her successor
has been duly elected and qualified. The term of each Class I director will
expire at the Annual Meeting of Stockholders in 2000. The term of each Class
II director will expire at the Annual Meeting of Stockholders in 2001.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's three nominees named in the table below,
all of whom are currently directors of the Company. In the event that any
nominee of the Company becomes unable or declines to serve as a director at
the time of the Annual Meeting, the proxy holders will vote the proxies for
any substitute nominee who is designated by the current Board of Directors to
fill the vacancy. It is not expected that the nominees listed below will be
unable or will decline to serve as a director.
The names of the three Class III nominees for director and certain
information about each of them are set forth in the table below. The names of,
and certain information about, the current Class I and Class II directors with
unexpired terms are also set forth below.
Name Age Principal Occupation
---- --- --------------------
NOMINEES FOR CLASS III DIRECTORS
Stuart G. Moldaw................ 72 Chairman of the Board, The Gymboree
Corporation
William U. Westerfield.......... 67 Consultant, Price Waterhouse LLP
Deborah A. Sorondo.............. 47 Chief Operating and Development Officer,
Sierra Club
CONTINUING CLASS I DIRECTORS
Walter F. Loeb.................. 74 President, Loeb Asociates Inc.
Carole J. Whitacre.............. 43 Vice President, Design and Merchandising,
Infant Advantage, Inc.
CONTINUING CLASS II DIRECTORS
Gary White...................... 47 Vice-Chair and Chief Executive Officer,
The Gymboree Corporation
Barbara L. Rambo................ 46 Former Group Executive Vice President,
Bank of America
Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five
years. There are no family relationships between any directors or executive
officers of the Company.
Stuart G. Moldaw has been the Chairman of the Board of Directors of the
Company since January 1994, and has been a director of the Company since May
1982. Mr. Moldaw previously served as Chairman of the Board of Directors of
the Company from January 1990 through January 1993. From 1980 through
February 1990, Mr. Moldaw served as a general partner of U.S. Venture Partners
and he is currently a special venture partner of U.S. Venture Partners. From
February 1987 through January 1988, Mr. Moldaw served as Chief Executive
Officer of Ross Stores, Inc., an off-price retailer, and is currently a
director and Chairman Emeritus of Ross Stores, Inc.
3
William U. Westerfield has been a director of the Company since August 1994.
Mr. Westerfield has served as a consultant to the public accounting firm of
Price Waterhouse LLP since July 1992. Mr. Westerfield was employed by Price
Waterhouse LLP from 1956 through June 1992 and served as a partner from 1965
through June 1992.
Deborah A. Sorondo has been a director of the Company since April 1999. Ms.
Sorondo is the Chief Operating and Development Officer of the Sierra Club, a
position she has held since 1997. She joined the Sierra Club in 1993 as Chief
Operating Officer. Prior to this, she spent 11 years in executive financial
positions with American Express Travel Related Services Co. culminating in her
service as Vice President and Chief Financial Officer for the consumer
insurance division of AMEX Life Assurance Co.
Walter F. Loeb has been a director of the Company since March 1995. Mr. Loeb
is President of Loeb Associates, Inc., a retail consulting firm he founded in
February 1990. Mr. Loeb is the publisher of "Loeb Retail Letter," which
provides a monthly analysis of the retail industry. Mr. Loeb was employed by
Morgan Stanley & Company, Inc. from 1974 to 1990, serving as principal of that
firm from 1984 to 1990. Mr. Loeb is also a director of Hudson's Bay Company,
Warnaco Group, Inc. and Federal Realty Investment Trust, a real estate
investment trust.
Carole J. Whitacre has been a director of the Company since March 1999. In
1995, Ms. Whitacre joined Infant Advantage, Inc., where she is Vice President,
Design and Merchandising. Prior to that, Ms. Whitacre was employed by The Gap,
Inc. for eight years in executive positions with its Banana Republic, Gap and
Gap Kids divisions, where she served as Senior Vice President, Merchandising
and Production from 1990 to 1994. In addition, Ms. Whitacre's career includes
eight years with Federated Department Stores in merchandising executive
positions.
Gary White has been the Company's Vice-Chair since March 1999, and its Chief
Executive Officer and a director since February 1997. Prior to being named
Vice-Chair, Mr. White served as the President of the Company from February
1997 to March 1999 and also served as a Senior Vice President and Chief
Operating Officer of the Company from January 1996 until February 1997. Prior
to joining the Company, Mr. White served as Executive Vice President of
Mervyn's, a division of Dayton Hudson Corporation. Mr. White was employed by
Dayton Hudson Corporation since 1976 having served in various positions as an
officer with Dayton Hudson Corporation from January 1988 to January 1996.
Barbara L. Rambo has been a director of the Company since January 1996. Ms.
Rambo is the former Group Executive Vice President and head of the Commercial
Banking Division of Bank of America. Ms. Rambo was an employee of Bank of
America from 1974 to 1998 and held various positions within BankAmerica
International in New York, the New York Corporate Banking Office and the U.S.
Division Corporate Banking Group.
Board Meetings and Committees
The Board of Directors of the Company held a total of six meetings during
the fiscal year ended January 30, 1999, and no director attended fewer than
75% of the meetings of the Board of Directors or the committees upon which
such director served.
The Board of Directors has an Audit Committee, a Compensation Committee and
a Real Estate Committee. The Board of Directors has no nominating committee or
any committee performing similar functions.
The Audit Committee currently consists of Directors Rambo, Sorondo and
Westerfield, Chairman. The Audit Committee principally reviews the scope and
results of the work of the Director of Internal Audit and of the annual audit
of the financial statements and other services provided by the Company's
independent auditors. In addition, the Audit Committee reviews the information
provided to stockholders and the Company's systems of internal controls. The
Audit Committee held seven meetings during the last fiscal year.
4
The Compensation Committee currently consists of Directors Whitacre and
Loeb, Chairman. The Compensation Committee is responsible for reviewing and
approving the Company's compensation policies and the compensation paid to
executive officers. The Compensation Committee held five meetings during the
last fiscal year.
The Real Estate Committee currently consists of Directors Moldaw and White,
Chairman. The Real Estate Committee reviews and approves all new store
locations and store lease arrangements. The Real Estate Committee held more
than twelve meetings during the last fiscal year.
Compensation of Directors
Each non-employee director of the Company receives an annual retainer of
$25,000 and an additional $1,000 for each Board meeting attended and $500 for
each Committee meeting attended (including telephonic meetings). Each non-
employee director of the Company is entitled to participate in the Company's
Amended and Restated 1993 Stock Option Plan by receiving automatic grants of
options to purchase Common Stock of the Company. Each non-employee director is
automatically granted an option to purchase 2,500 shares of the Company's
Common Stock upon each anniversary of such director's initial election to the
Board. In the event that an additional non-employee director is elected to the
Board, such person shall be entitled to receive an option to purchase 2,500
shares of the Company's Common Stock upon election.
Vote Required
The three nominees receiving the highest number of affirmative votes of the
shares entitled to vote on this matter shall be elected as the Class III
directors. Votes withheld from any director will be counted for purposes of
determining the presence or absence of a quorum but are not counted as
affirmative votes. A broker non-vote will be counted for purposes of
determining the presence or absence of a quorum, but, under Delaware law, it
will have no other legal effect upon the election of directors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
PROPOSAL TWO:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending January 29, 2000, and recommends that the stockholders vote for
ratification of such appointment. Deloitte & Touche LLP has served as the
Company's independent auditors since 1987. In the event of a negative vote on
such ratification, the Board of Directors will reconsider its selection.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting of Stockholders and will have the opportunity to make a
statement if they so desire. The representatives also are expected to be
available to respond to appropriate questions from stockholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JANUARY 29, 2000.
5
ADDITIONAL INFORMATION
Executive Compensation
The following table shows the compensation paid by the Company during fiscal
years 1996, 1997 and 1998 to (i) the Company's Chief Executive Officer during
fiscal 1998 and (ii) each of the four other most highly compensated executive
officers during fiscal 1998 and certain key employees (collectively, the
"Named Officers").
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
------------------------------- ---------------------
Restricted Securities
Name and Principal Other Annual Stock Underlying All Other
Position Year Salary($) Bonus($) Compensation Awards Options Compensation($)
- ------------------ ---- --------- -------- ------------ ---------- ---------- ---------------
Gary White(1)........... 1998 477,118 -- -- -- 75,000 --
Vice-Chair and 1997 385,540 242,775 -- -- 450,000 --
Chief Executive Officer 1996 303,387 138,000 -- -- -- --
Melanie B. Cox(2)....... 1998 -- -- -- -- 300,000 110,000(6)
President
Lawrence H. Meyer(3).... 1998 91,538 -- -- -- 40,000 72,671(7)
Senior Vice President
and
Chief Financial Officer
Kenneth F. Meyers....... 1998 227,118 93,400 -- -- 55,894 --
Senior Vice President, 1997 214,060 77,190 -- -- 27,749 --
Human Resources
Edward A. Loseman....... 1998 206,895 102,125 -- -- 40,000 81,931(8)
Senior Vice President,
Sourcing and Logisitics
Mindy Meads(4).......... 1998 299,176 -- -- -- 57,073 353,163(9)
Senior Vice President 1997 358,197 140,602 -- -- 23,333 --
and General Merchandise 1996 234,062 140,000 -- -- 50,000 --
Manager
R. Mark Syrstad(5)...... 1998 255,725 -- -- -- 22,610 280,243(9)
Senior Vice President, 1997 247,492 93,375 -- -- 35,000 --
Operations
- --------
(1) Mr. White joined the Company in January 1996 as Senior Vice President and
Chief Operating Officer. In February 1997, Mr. White was named President
and Chief Executive Officer. In March 1999, Mr. White was named Vice-
Chair.
(2) Ms. Cox joined the Company in March 1999 as President.
(3) Mr. Meyer joined the Company in September 1998 as Chief Financial Officer.
(4) Ms. Meads terminated her employment with the Company in December 1998.
(5) Mr. Syrstad terminated his employment with the Company in January 1999.
(6) Represents Ms. Cox's signing bonus.
(7) Represents Mr. Meyer's signing bonus and moving expenses.
(8) Represents Mr. Loseman's moving expenses.
(9) Represents payments made in connection with the officer's resignation.
6
Option Grants and Exercises
The following table sets forth certain information with respect to stock
option grants during the fiscal year ended January 30, 1999 to the Named
Officers. In accordance with the rules of the Securities and Exchange
Commission (the "SEC"), also shown below is the potential realizable value
over the term of the option (the period from the grant date to the expiration
date) based on assumed rates of stock appreciation from the option exercise
price of 5% and 10%, compounded annually. These amounts are based on certain
assumed rates of appreciation and do not represent the Company's estimate of
future stock price. Actual gains, if any, on stock option exercise will be
dependent on the future performance of the Common Stock.
Option Grants in Fiscal 1998
Individual Options
--------------------------------------------
Potential Realizable
Value at Assumed
Number of Percent of Annual Rate of Stock
Securities Total Options Price Appreciation
Underlying Granted to Exercise for Option Term
Options Employees in or Base Expiration --------------------
Name Granted Fiscal Year Price Date 5% 10%
- ---- ---------- ------------- -------- ---------- ---------- ---------
Gary White.............. 75,000 4.8% $5.43 12/28/08 $ 256,471 $ 649,948
Melanie B. Cox.......... 300,000 19.1 8.25 1/25/09 1,556,514 3,944,512
Lawrence H. Meyer....... 40,000 2.5 8.62 9/8/08 216,968 549,841
Kenneth F. Meyers....... 35,894 2.3 27.06 2/25/08 610,896 1,548,131
Kenneth F. Meyers....... 20,000 1.3 5.43 12/28/08 68,392 173,319
Edward A. Loseman....... 20,000 1.3 27.06 2/25/08 340,389 862,613
Edward A. Loseman....... 20,000 1.3 5.43 12/28/08 68,392 173,319
Mindy C. Meads.......... 57,073 3.6 27.06 2/25/08 971,351 2,461,595
R. Mark Syrstad......... 22,610 1.4 27.06 2/25/08 384,810 975,184
The following table sets forth information with respect to options exercised
in the fiscal year ended January 30, 1999 by the Named Officers and the value
of unexercised options at January 30, 1999.
Aggregate Option Exercises in Fiscal 1998 and Year-end Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options at
Shares January 31, 1999 January 31, 1999
Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
Gary White.............. 0 $ 0 184,373 390,627 $3,807 $179,005
Melanie B. Cox.......... 0 0 0 300,000 0 0
Lawrence H. Meyer....... 0 0 0 40,000 0 0
Kenneth F. Meyers....... 0 0 21,358 62,285 1,014 47,735
Edward A. Loseman....... 0 0 5,416 34,584 1,014 47,735
Mindy C. Meads.......... 0 0 0 0 0 0
R. Mark Syrstad......... 0 0 0 0 0 0
Employment Contracts and Termination of Employment and Change-in-control
Arrangements
Gymboree offers its executives certain benefits under its Change of Control
Plan and Severance Pay Plan. Under the first plan, executives who are
participants in the plan are eligible to receive certain lump sum payments if
their employment terminates on an involuntary basis following a Change of
Control of the Company as defined in the plan.
7
Under the Severance Pay Plan, executives who are participants in the plan
are eligible to receive certain lump sum payments if their employment with the
Company terminates on an involuntary basis unrelated to a Change of Control of
the Company.
In January 1999, the Company entered into a promissory note with Gary White
under which Mr. White is obligated to repay the Company a principal sum of
$250,000 at an interest rate of 5.87% per annum due on January 1, 2001. Under
the terms of the note, if Mr. White continues to be a full-time employee, 50%
of the original principal amount of the note will be forgiven on January 1,
2000, and the remaining 50% of the original principal amount will be forgiven
on January 1, 2001. Otherwise, if Mr. White ceases to be a full-time employee
of the Company at any time during this period, the note will be immediately
due and payable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 30, 1999, the Compensation Committee of
the Board of Directors consisted at times of Messrs. Walter F. Loeb, as
Chairman, Arthur S. Berliner, Jerome A. Chazen and Peter L. Thigpen. As of the
date hereof, the Compensation Committee consisted of Mr. Loeb, Chairman, and
Ms. Carole J. Whitacre. No member of the Compensation Committee has a
relationship that would constitute an interlocking relationship with executive
officers or directors of another entity. The Committee is comprised of the
members named above. None of the Committee members is an employee of the
Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To the Board of Directors:
As members of the Compensation Committee, we are responsible for reviewing
and approving the Company's compensation policies and the levels of
compensation paid to executive officers.
The following is the report to the Board of Directors describing
compensation policies and rationales applicable to the Company's executive
officers with respect to compensation paid to such executive officers for the
fiscal year ended January 30, 1999. The information contained in the following
report shall not be deemed to be "soliciting material" or to be filed with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates it by reference into such
filing.
Compensation Philosophy
The general philosophy of the Company's compensation program is to offer
executive officers competitive compensation based both on the Company's
performance and on the individual's contribution and performance. The
Company's compensation policies are intended to motivate, reward and retain
highly qualified executives for long-term strategic management and the
enhancement of stockholder value, to support a performance-oriented
environment that rewards achievement of specific internal Company goals and to
attract and retain executives whose abilities are critical to the long-term
success and competitiveness of the Company.
There are three main components to the Company's executive compensation
program:
. Base Salary
. Annual Bonus
. Stock Incentives
8
Base Salary
Executive officers' salaries have been targeted at a level that, when
combined with the annual bonus, is at or above the average rates offered by
competitive organizations. The Committee believes that these rates are
necessary to retain key employees. The Committee reviews and approves salaries
for the Chief Executive Officer and the executive officers on an annual basis,
generally in the first fiscal quarter.
In reviewing the salaries for executive officers, the Committee examined
salary surveys prepared in 1998 by a national, independent compensation
consulting company for rapidly growing specialty retailers. The Committee
reviewed individual base salaries of executive officers, and adjusted salaries
based on individual job performance and changes in the position's duties and
responsibilities. In making salary decisions, the Committee exercised its
discretion and judgment based on these factors. No specific formula was
applied to determine the weight of each factor.
Annual Bonus
Annual incentive bonuses for executive officers are intended to reflect the
Committee's belief that a significant portion of the annual compensation of
each executive officer should be contingent upon the performance of the
Company, as well as the individual contribution of each officer.
To carry out this philosophy, the Company has implemented The Gymboree
Corporation Discretionary Bonus Plan (the "Discretionary Bonus Plan"), which
provides executive officers and other employees the opportunity to earn annual
incentive bonuses. The purpose of the Discretionary Bonus Plan is to attract,
retain, motivate and reward employees by directly linking the amount of any
cash bonus to specific corporate and/or divisional financial goals. To this
end, specific earnings measurements are defined each year and threshold,
target and maximum payout levels are established to reflect the Company's
objectives. These goals and the potential amounts of bonuses are reviewed and
approved by the Committee in the first fiscal quarter of each year. The
Committee also took into consideration the need to recruit and retain senior
management talent in a competitive employment environment. The Committee
believes that the Discretionary Bonus Plan provides an excellent link between
earnings performance and the incentives paid to executives.
Stock Incentives
The Company utilizes stock options as long term incentives to reward and
retain executive officers. The Committee believes that these programs serve to
link management interests with stockholder interests and to motivate executive
officers to make long-term decisions that are in the best interests of the
Company and that will, over the long-term, promote better returns to
stockholders.
Stock options are granted to executive officers periodically. Generally,
stock options vest over four years after the grant date and optionees must be
employed by the Company at the time of vesting in order to exercise the
options. The Committee believes that stock option grants provide an incentive
which focuses the executives' attention on the Company from the perspective of
an owner with an equity stake in the business. Because options are typically
granted with an exercise price equal to the fair market value of the Common
Stock on the date of grant, the Company's stock options are tied to the future
performance of the Company's Common Stock and will provide value to the
recipient only when the price of the Company's stock increases above the
exercise price, that is, only to the extent that stockholders as a whole have
benefitted.
In order to determine the appropriate number of options to be granted to its
executive officers, the Company has relied on competitive guidelines prepared
by a national, independent compensation consultant. In fiscal 1998, the Named
Officers were granted options to purchase an aggregate of 590,577 shares of
Common Stock with a weighted average exercise price of $12.05 per share. All
options were granted with an exercise price equal to the fair market value of
the Common Stock on the date of grant.
9
Compensation of the Chief Executive Officer
Gary White's fiscal 1998 compensation was established in accordance with the
guidelines applicable to all executive officers, as set forth above. Mr.
White's performance is reviewed annually by the Compensation Committee.
THE COMPENSATION COMMITTEE
Walter F. Loeb, Chairman
Carole J. Whitacre
10
Performance Graph
The following line graph compares the annual percentage change in the
cumulative total stockholder return for the Company's Common Stock with the
Nasdaq U.S. Index and a peer group of companies selected by the Company (the
"Peer Group"), consisting of 50 companies whose primary business is the
operation of apparel and accessory retail stores. The graph assumes that $100
was invested in the Company's Common Stock on January 28, 1994. In accordance
with the guidelines of the SEC, the stockholder return for each entity in the
Peer Group has been weighted on the basis of market capitalization as of each
measurement date set forth in the graph. The information in the graph is
provided in annual intervals. Historic stock price performance should not be
considered indicative of future stock price performance.
Composition of The Gymboree Corporation's Cumulative Total Returns
to Nasdaq Market Index and Peer Group Index
[LOGO OF PERFORMANCE GRAPH]
1/28/94 1/27/95 2/2/96 1/31/97 1/30/98 1/29/99
------- ------- ------ ------- ------- -------
The Gymboree Corporation.... 100 119 90 119 136 41
Nasdaq Market Index......... 100 96 137 178 210 328
Peer Group Index............ 100 92 91 107 133 181
11
Security Ownership
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of March 31,
1999 by (i) each beneficial owner of more than 5% of the Company's Common
Stock, (ii) each director and each nominee, (iii) each Named Officer and (iv)
all directors and executive officers as a group. Except as otherwise
indicated, each person has sole voting and investment power with respect to
all shares shown as beneficially owned, subject to community property laws
where applicable.
Number of Percent
Name and Address of Beneficial Owner Shares of Total
- ------------------------------------ --------- --------
Massachusetts Financial Service Company(1)................... 3,023,517 13.0
500 Boylston Street
Boston, Massachusetts 02116
First Pacific Advisors, Inc.(2).............................. 2,747,900 11.4
11400 W. Olympic Blvd.
Los Angeles, CA 90064
FPA Capital Fund, Inc.(2).................................... 1,700,000 7.0
11400 W. Olympic Blvd.
Los Angeles, CA 90064
Smallcap World Fund, Inc.(3)................................. 1,435,600 5.9
333 South Hope Street
Los Angeles, California 90071
Capital Research and Management Company(3)................... 1,435,600 5.9
333 South Hope Street
Los Angeles, California 90071
Stuart G. Moldaw(4).......................................... 384,859 1.6
Gary White(5)................................................ 233,352 1.0
Melanie Cox(6)............................................... 0 *
Lawrence H. Meyer(7)......................................... 0 *
Kenneth F. Meyers(8)......................................... 29,406 *
Edward A. Loseman(9)......................................... 11,122 *
R. Mark Syrstad(10).......................................... 0 *
Mindy C. Meads (11).......................................... 500 *
Walter Loeb(12).............................................. 5,950 *
Barbara L. Rambo(13)......................................... 3,333 *
Deborah A. Sorondo(14)....................................... 0 *
William U. Westerfield(15)................................... 5,100 *
Carole J. Whitacre(16)....................................... 0 *
All directors and executive officers as a group
(13 persons) (17)........................................... 673,622 2.8%
- -------
* Percentage of shares beneficially owned is less than one percent of total.
(1) Based solely on information contained in a Schedule 13G filed with the SEC
on February 11, 1999.
(2) Based solely on information contained in a Schedule 13G filed with the SEC
on February 10, 1999.
(3) Based solely on information contained in a Schedule 13G filed with the SEC
on February 11, 1999.
(4) Includes 171,352 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(5) Includes 232,289 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(6) Includes 0 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(7) Includes 0 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(8) Includes 28,329 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(9) Includes 8,749 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(10) Includes 0 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(11) Includes 0 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(12) Includes 5,250 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(13) Includes 3,333 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(14) Includes 0 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(15) Includes 5,000 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(16) Includes 0 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
(17) Includes 454,302 shares which may be acquired upon exercise of options
exercisable within 60 days of March 31, 1999.
12
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers and directors and
persons who own more than ten percent of a registered class of the Company's
equity securities to file an initial report of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the SEC and the National Association of
Securities Dealers, Inc. Executive officers, directors and greater than ten
percent stockholders are also required by SEC rules to furnish the Company
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, the Company believes that, with respect to fiscal
year 1998, all filing requirements applicable to its officers, directors and
ten percent stockholders were met.
Other Matters
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of proxy to vote the shares they represent as the Board of Directors may
recommend.
FOR THE BOARD OF DIRECTORS
/s/ Jeffrey D. Saper
JEFFREY D. SAPER
Secretary
Dated: April 26, 1999
13
1166-PS-99
DETACH HERE
THE GYMBOREE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, MAY 26, 1999
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE GYMBOREE CORPORATION R
R
The undersigned revokes all previous proxies, acknowledges receipt of
O the notice of the Annual Meeting of Stockholders to be held May 26, 1999
and the proxy statement related thereto and appoints Gary White and
X Lawrence H. Meyer, and each of them, the proxy of the undersigned, with
full power of substitution, to vote all shares of Common Stock of The
Y Gymboree Corporation which the undersigned is entitled to vote, either on
his or her own behalf or on behalf of an entity or entities, at the Annual
Meeting of Stockholders of the Company to be held at the San Francisco
Airport Marriott Hotel, 1800 Old Bayshore Highway, Burlingame, California
94010 on Wednesday, May 26, 1999 at 9:00 a.m., and at any adjournment or
postponement thereof, with the same force and effect as the undersigned
might or could do it personally present thereat. The shares represented by
this proxy shall be voted in the manner set forth on the reverse side.
_____________
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
____________
DETACH HERE
[X] Please mark
votes as in
The Board of Directors recommends a vote FOR each of the matters listed below.
This Proxy, when properly executed, will be voted as specified below. This Proxy
will be voted FOR Proposals No. 1, 2 and 3 if no specification is made.
FOR AGAINST ABSTAIN
1. Election of three Class III Directors 2. To ratify the appointment of Deloitte & [_] [_] [_]
NOMINEES: Stuart G. Moldaw, Touche LLP as independent auditors of
William U. Westerfield, the Company for the Fiscal year ending
Deborah A. Sorondo January 29, 2000.
FOR WITHHELD
[_] [_]
[_] ______________________________________ 3. In their discretion with respect to such other business as may properly
For all nominees except as noted above come before the meeting and any adjournment or postponement thereof.
MARK HERE
FOR ADDRESS [_]
CHANGE AND NOTE AT
LEFT
Please sign your name exactly as it appears hereon. If acting as attorney,
executor, trustee or in other representative capacity, sign name and title.
Signature: Date: Signature: Date:
____________________________________ ___________ __________________________________ ______________