-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WsGzW9DdLtMkH9NNptKWnY55IxrUknHIIWD/a4j2OanBYJDkS+CVn2/LsgrVDoQP jtsCAEIdCH5lE4nmSCbcjg== 0001047469-99-014319.txt : 19990413 0001047469-99-014319.hdr.sgml : 19990413 ACCESSION NUMBER: 0001047469-99-014319 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990518 FILED AS OF DATE: 19990412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHEESECAKE FACTORY INCORPORATED CENTRAL INDEX KEY: 0000887596 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 510340466 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-20574 FILM NUMBER: 99591299 BUSINESS ADDRESS: STREET 1: 26950 AGOURA RD CITY: CALABASAS HILLS STATE: CA ZIP: 91301 BUSINESS PHONE: 8188809323 MAIL ADDRESS: STREET 1: 26950 AGOURA RD STREET 2: 26950 AGOURA RD CITY: CALABASAS HILLS STATE: CA ZIP: 91301 DEF 14A 1 DEF 14A 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 Section240.14a-11(c) or Section240.14a-12 THE CHEESECAKE FACTORY INCORPORATED - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ----------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------- (5) Total fee paid: ----------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ----------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ----------------------------------------------------------------------- (3) Filing Party: ----------------------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------------------- UVWX THE CHEESECAKE FACTORY INCORPORATED 26950 AGOURA ROAD CALABASAS HILLS, CALIFORNIA 91301 ------------------------ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ------------------------ The 1999 Annual Meeting of Stockholders of THE CHEESECAKE FACTORY INCORPORATED will be held at The Cheesecake Factory Restaurant located at 605 North Harbor Drive, Redondo Beach, California, on Tuesday, May 18, 1999, beginning at 10:00 A.M. local time, for the following purposes: 1. To elect one nominee to serve as a director of the Company for a three-year term and until a respective successor shall be elected and qualified; 2. To transact such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors has fixed the close of business on April 1, 1999 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournment thereof. You are cordially invited to attend the meeting. By Order of the Board of Directors, Linda J. Candioty Corporate Secretary Calabasas Hills, California April 16, 1999 YOUR VOTE IS IMPORTANT You are urged to sign, date and promptly return the accompanying form of proxy, so that if you are unable to attend the Annual Meeting your shares may nevertheless be voted. If you do attend and wish to vote in person, the proxy is revocable. THE CHEESECAKE FACTORY INCORPORATED ------------------------ PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 1999 ------------------------ This Proxy Statement is furnished to the stockholders of THE CHEESECAKE FACTORY INCORPORATED (the "Company") in connection with the solicitation of proxies for use at the Annual Meeting of Stockholders to be held at The Cheesecake Factory Restaurant located at 605 North Harbor Drive, Redondo Beach, California, on May 18, 1999, beginning at 10:00 A.M. local time, and at any adjournment thereof. Proxies delivered pursuant to this solicitation are revocable at the option of the persons executing the same, prior to their exercise, by attendance and voting at the Annual Meeting or by written notice delivered to the Corporate Secretary of the Company prior to the meeting, and are solicited by and on behalf of the Board of Directors of the Company. Unless previously revoked, all proxies representing shares entitled to vote which are delivered pursuant to this solicitation will be voted at the meeting by the named attorneys-in-fact and agents, to the extent authorized, in accordance with the directions contained therein. If no such directions are given, the shares represented by such proxies will be voted in favor of the election of the nominee for director. The named proxies may vote in their discretion upon such other matters as may properly come before the meeting. Assuming a quorum is present in person or by proxy at the meeting, with respect to the election of directors, the nominees receiving the greatest number of votes cast will be elected to the Board. For purposes of determining whether a matter has received a majority vote, abstentions will be included in the vote totals, with the result that an abstention has the same effect as a negative vote. In instances where brokers are prohibited from exercising discretionary authority for beneficial owners who have not retained a proxy, those shares will not be included in the vote totals and therefore will have no effect on the vote. The cost of this solicitation will be borne by the Company. Proxies may be solicited by personal interview, telephone and telegraph, as well as by use of the mails. Banks, brokerage houses and other custodians, nominees or fiduciaries will be requested to forward soliciting material to their principals and to obtain authorization for the execution of proxies, and will be reimbursed for their reasonable out-of-pocket expenses incurred in that regard. Employees of the Company participating in the solicitation of proxies will not receive any additional remuneration. On April 1, 1999, the Company had outstanding 20,178,202 shares of Common Stock, and there were no outstanding shares of any other class of stock. Each holder of Common Stock is entitled to one vote for each share of such stock held. Only stockholders of record at the close of business on April 1, 1999 will be entitled to vote at the Annual Meeting. A majority of the outstanding shares, whether present in person or by proxy, is required to constitute a quorum to transact business at the meeting. The Company intends to cause this Proxy Statement to be mailed to stockholders on or about April 16, 1999. 1 BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership as of April 1, 1999 of the Company's Common Stock by (a) each person known to the Company owning beneficially more than five percent of the outstanding shares of the Company's Common Stock, (b) each director of the Company, (c) each Named Executive Officer of the Company, and (d) all Named Executive Officers and directors of the Company as a group. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned. Unless otherwise indicated, the address of each of the stockholders named below is the Company's principal executive office.
BENEFICIAL OWNERSHIP ----------------------- NAME SHARES PERCENTAGE - --------------------------------------------------------------------- ---------- ----------- David Overton(1)(2).................................................. 2,120,734 10.3% Overton Family Limited Partnership(3)................................ 293,794 1.4% Thomas L. Gregory(4)(5).............................................. 45,000 * Jerome I. Kransdorf(3)(4)(6)......................................... 22,500 * Wayne H. White(4)(5)................................................. 45,000 * Gerald W. Deitchle(7)................................................ 59,189 * Linda J. Candioty(8)................................................. 148,352 * Dresdner RCM Global Investors LLC.................................... 1,839,890 8.9% Wellington Management Company, LLP................................... 1,359,700 6.6% SMALLCAP World Fund, Inc............................................. 1,295,500 6.3% All Named Executive Officers and directors as a group (six persons)(9)................................................... 2,734,569 13.3%
- ------------------------ * Less than 1% of the issued and outstanding shares. (1) Includes 191,625 shares which he has the right to acquire upon the exercise of options granted under the Company's 1992 Performance Employee Stock Option Plan (the "1992 Plan"). Does not include an additional 54,000 shares granted under the 1992 Plan which are not currently exercisable. Does not include 19,300 shares held by Mr. Overton's spouse, 26,100 shares which she has the right to acquire upon the exercise of options granted under the 1992 Plan, or an additional 20,900 shares granted under the 1992 Plan which are not currently exercisable, all of which she has sole voting and investment power. See "Executive Compensation." (2) Named Executive Officer and director of the Company. (3) The general partner of the partnership is an Overton family trust, of which Mr. Kransdorf has sole voting and investment power over the shares in his capacity as trustee. (4) Director of the Company. (5) Includes 22,500 shares which he has the right to acquire upon the exercise of options granted under the Company's 1992 Non-Employee Director Stock Option Plan, and an additional 22,500 shares which he has the right to acquire upon the exercise of options granted under the Company's 1997 Non-Employee Director Stock Option Plan (the "1997 Director Plan"). See "Board of Directors Meetings, Attendance and Fees." (6) Includes 22,500 shares which he has the right to acquire upon the exercise of options granted under the Company's 1997 Director Plan. See "Board of Directors--Meetings, Attendance and Fees." 2 (7) Includes 59,189 shares which he has the right to acquire upon the exercise of options granted under the Company's 1992 Plan. Does not include an additional 151,374 shares granted under the 1992 Plan which are not currently exercisable. (8) Includes 45,750 shares which she has the right to acquire upon the exercise of options granted under the Company's 1992 Plan. Does not include an additional 60,500 shares granted under the 1992 Plan which are not currently exercisable. (9) Includes 409,064 shares which the Company's Named Executive Officers and outside directors have the right to acquire upon the exercise of options granted under the Company's stock option plans. The address of Dresdner RCM Global Investors LLC is Four Embarcadero Center, San Francisco, California 94111. The address of Wellington Management Company, LLP is 75 State Street, Boston, Massachusetts 02109. The address of SMALLCAP World Fund, Inc. is 333 South Hope Street, Los Angeles, California 90071. ELECTION OF DIRECTORS The Company's Bylaws provide for a Board of Directors consisting of no less than five and no more than thirteen members, the exact number within this range being determined by the Board of Directors. The Board of Directors has set the number of directors at five. The Board of Directors is classified into three classes with each director serving a three-year term. David Overton is serving a term which expires at the Annual Meeting of Stockholders to be held in 1999. Jerome I. Kransdorf and Wayne H. White are serving terms that expire at the Annual Meeting of Stockholders to be held in 2000. Thomas L. Gregory is serving a term which will expire at the Annual Meeting of Stockholders to be held in 2001. The Board currently has a vacancy for one position. The Board of Directors intends to review possible candidates for this position in order to possibly fill this vacancy during 1999. At each Annual Meeting of Stockholders, directors are elected for a full term of three years to succeed those whose terms are expiring. Officers are elected annually by the Board of Directors and serve at the discretion of the Board of Directors. The Board of Directors has nominated David Overton for reelection to the Board of Directors for a three-year term which will expire at the Annual Meeting of Stockholders to be held in the year 2002. The nominee has indicated his willingness to serve and, unless otherwise instructed, proxies will be voted for the election of such nominee unless instructions are given on the proxy to withhold authority to vote for him. Nominations for the election of directors, other than by the Board of Directors, must be made by a stockholder entitled to vote for the election of directors by giving timely written notice to the Secretary of the Company at the Company's principal offices. Such notice must be received not less than 60 calendar days nor more than 90 calendar days prior to the meeting; provided that, if in the event that notice or prior public disclosure of the date of the meeting is given or made to the stockholders for a meeting date that is not within 30 days before or after the anniversary of the immediately preceding Annual Meeting of Stockholders, notice by the stockholder will be timely if received not later than the close of business on the tenth calendar day following the day on which such notice was mailed or such public disclosure was made. Such stockholder's notice must be in writing and must set forth as to each proposed nominee all information relating to such person that is required to be disclosed in solicitations of proxies pursuant to Regulation 14A under the Securities Exchange Act of 1934 ("Exchange Act") including, but not limited to, such person's written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected. Such stockholder notice must also set forth the name and address, as they appear on the Company's books, of the nominating stockholder and the class and number of shares of Common Stock beneficially owned by such stockholder. 3 The following table sets forth certain information with respect to the nominee for director and of the other directors of the Company. THE BOARD OF DIRECTORS
NAME PRINCIPAL OCCUPATION - ------------------------------------------ --------------------------------------------------------------------- David Overton............................. David Overton, age 53, co-founded the Company's predecessor with his parents. He has served as the Company's Chairman of the Board, President and Chief Executive Officer since its incorporation in February 1992. Thomas L. Gregory......................... Thomas L. Gregory, age 63, became a director of the Company upon the consummation of its initial public offering in September 1992. Mr. Gregory has over 30 years of experience in the food service industry. He served as Vice Chairman of the Board of Directors of Sizzler International, Inc., a restaurant chain, until August 1994. Mr. Gregory served as President, Chief Executive Officer and a member of the board of directors of Sizzler from 1982 to 1991, and then served as President of its successor company until his retirement in 1992. From 1974 to 1991, Mr. Gregory served as Vice President for Collins Foods International, Inc., a food service company, and retained such position concurrently with his positions at Sizzler. Mr. Gregory is a member of the board of directors of Regis Corporation, the world's largest chain of haircare retail operations. He is also a member of the board of directors of Norths Enterprises, Inc., a buffet restaurant chain. Jerome I. Kransdorf....................... Jerome I. Kransdorf, age 60, became a director of the Company in March 1997. Mr. Kransdorf has over 38 years of investment management experience. From 1959 to 1997, he was employed in investment and senior management positions at Wertheim & Co. and its successor companies. Mr. Kransdorf currently serves as Senior Vice President of J. & W. Seligman & Co. Incorporated, an investment advisory firm. Wayne H. White............................ Wayne H. White, age 61, became a director of the Company upon the consummation of its initial public offering in September 1992. Since January 1993, Mr. White has been an independent investment banker and management consultant with a special emphasis on gaming and restaurant companies. He is currently affiliated with First Security Van Kasper in San Francisco. Mr. White has approximately ten years of senior management experience in the restaurant industry, including Victoria Station (seven years) and Famous Restaurants (two years).
4 COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors has two standing committees, the Audit Committee and the Compensation Committee. The Audit Committee recommends to the Board of Directors a firm of independent certified public accountants to conduct the annual audit of the Company's books and records. The Audit Committee also reviews with such accounting firm the scope and results of the annual audit, the performance by such accountants of professional services in addition to those related to the annual audit and the adequacy of the Company's internal controls. The members of the Audit Committee are Thomas L. Gregory, Jerome I. Kransdorf and Wayne H. White. During fiscal 1998, the Audit Committee held two meetings. The Compensation Committee reviews and recommends to the Board of Directors compensation for the Company's senior management; reviews and submits its recommendations with respect to new executive compensation programs; and administers the Company's compensation programs, including the Company's 1992 Performance Employee Stock Option Plan and the Performance Incentive Plan. The members of the Compensation Committee are Thomas L. Gregory, Jerome I. Kransdorf and Wayne H. White. During fiscal 1998, the Compensation Committee held two meetings. MEETINGS, ATTENDANCE AND FEES During fiscal 1998, the Board of Directors held four meetings. No member of the Board attended fewer than 75% of the aggregate number of meetings of the Board and the Committees on which he served. Each director who is not an employee of the Company receives an annual fee of $10,000 plus $1,000 for each meeting of the Board of Directors attended. Non-employee directors who serve on committees also receive $1,000 for each meeting attended that takes place on a date other than the day of a regularly scheduled Board of Directors meeting. Thomas L. Gregory and Wayne H. White each received options under the Company's 1992 Non-Employee Director Stock Option Plan to acquire 22,500 shares of Common Stock at prices equal to fair market value on the date of grant. These options have an exercise price of $8.89 per share which is equal to the initial public offering price as adjusted for two 3-for-2 stock splits which were completed on March 15, 1994 and April 1, 1998. The options are exercisable for a period of ten years from the date of grant and are not transferable other than by will or the laws of descent and distribution. All such options granted to Messrs. Gregory and White are fully vested and exercisable. Messrs. Gregory, Kransdorf and White each were granted options to acquire 22,500 shares of Common Stock under the 1997 Director Plan. These options have an exercise price of $13.75 per share, are exercisable on the date of grant and expire after a period of ten years from date of grant. INDEMNIFICATION OF OFFICERS AND DIRECTORS As permitted by the Delaware General Corporation Law, the Company's Certificate of Incorporation limits the personal liability of a director of the Company for monetary damages for breach of fiduciary duty of care as a director. Liability is not eliminated for (a) any breach of the director's duty of loyalty to the Company or its stockholders, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) unlawful payment of dividends or stock purchases or redemptions pursuant to Section 174 of the Delaware General Corporation Law, or (d) any transaction from which the director derived an improper personal benefit. The Company has also entered into indemnification agreements with its directors and Named Executive Officers. The indemnification agreements provide that the directors and Named Executive Officers will be indemnified to the full extent permitted by applicable law against all expenses (including attorneys' fees), judgments, fines and amounts reasonably paid or incurred by them for settlement in any threatened, pending or completed action, suit or proceeding, including any derivative action, on account of 5 their services as a director or officer of the Company or of any subsidiary of the Company or of any other company or enterprise in which they are serving at the request of the Company. No indemnification will be provided under the indemnification agreements, however, to any director or Named Executive Officer in certain limited circumstances, including knowingly fraudulent, deliberately dishonest or willful misconduct. To the extent the provisions of the indemnification agreements exceed the indemnification permitted by applicable law, such provisions may be unenforceable or may be limited to the extent they are found by a court of competent jurisdiction to be contrary to public policy. COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16 OF THE EXCHANGE ACT Under Section 16(a) of the Exchange Act, the Company's directors, Named Executive Officers and any persons holding ten percent or more of the Company's Common Stock are required to report their ownership of Common Stock and any changes in that ownership to the Securities and Exchange Commission (the "SEC") and to furnish the Company with copies of such report. Specific due dates for these reports have been established and the Company is required to report in this Proxy Statement any failure to file on a timely basis by such persons. Based solely upon a review of copies of reports filed with the SEC during fiscal 1998, all persons subject to the reporting requirements of Section 16(a) filed all required reports on a timely basis. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No directors other than those identified above served as members of the Compensation Committee during the last completed fiscal year. No member of that Committee was an officer or employee of the Company or any of its subsidiaries during the year. None of the Named Executive Officers of the Company have served on the board of directors or on the compensation committee of any other entity, any of whose officers served either on the Board of Directors or on the Compensation Committee of the Company. 6 EXECUTIVE COMPENSATION The following table shows the compensation paid by the Company during the last three fiscal years to those persons who were, at December 29, 1998, Named Executive Officers of the Company. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION ------------------- ------------------------------------------- SECURITIES OTHER ANNUAL UNDERLYING NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#)(2) - -------------------------------------------------- --------- --------- ----------- ------------------- ------------------- David Overton .................................... 1998 400,000 -- 2,865 30,000 Chairman of the Board, President and Chief 1997 350,000 -- 4,765 30,000 Executive Officer 1996 350,000 -- 18,000 -- Gerald W. Deitchle ............................... 1998 240,000 -- 2,802 22,500 Executive Vice President and 1997 235,000 -- 1,913 22,500 Chief Financial Officer 1996 225,000 -- 24,800 60,750 Michael A. Nahkunst .............................. 1998 250,000 -- 20,034 77,500 Executive Vice President and 1997 72,115 -- 29,808 150,000 Chief Operating Officer (3) 1996 -- -- -- -- Linda J. Candioty ................................ 1998 210,000 -- 10,800 22,500 Executive Vice President and 1997 205,000 -- 10,800 22,500 Secretary 1996 185,000 15,000 10,800 22,500
- ------------------------ (1) Includes compensation related to automobile allowances or the personal use of company-provided automobiles unless noted otherwise below. In 1996, Mr. Deitchle received an automobile allowance of $10,800 and relocation expense reimbursements of $14,000. In 1998, Mr. Nahkunst received automobile-related compensation of $7,721 and an employment-related bonus of $12,313. In 1997, Mr. Nahkunst received automobile-related compensation of $2,590 and an employment-related bonus of $27,218. (2) Stock options were granted under the Company's 1992 Plan. (3) Mr. Nahkunst ended his employment with the Company on January 13, 1999. He has the right to exercise stock options totaling 119,100 shares at exercise prices ranging from $16.08 to $28.38 through April 13, 1999. All other stock options previously granted to Mr. Nahkunst have been cancelled. 7 OPTION GRANTS IN LAST FISCAL YEAR The following table shows all options to acquire shares of the Company's stock granted to Named Executive Officers during fiscal 1998.
POTENTIAL REALIZED VALUE AT ASSUMED NUMBER OF ANNUAL RATES OF STOCK SECURITIES PERCENT OF TOTAL APPRECIATION FOR UNDERLYING OPTIONS GRANTED OPTION TERM($)(3) OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION --------------------- NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE 5% 10% - --------------------------- ------------- ----------------- --------------- ------------ --------- ---------- David Overton.............. 30,000 6.0% 18.00 1/23/2008 339,600 860,700 Gerald W. Deitchle......... 22,500 4.5% 18.00 1/23/2008 254,700 645,525 Michael A. Nahkunst........ 22,500 4.5% 20.33 8/05/2008 287,775 729,000 Michael A. Nahkunst........ 55,000 11.0% 28.38 12/30/2008 981,750 2,487,650 Linda J. Candioty.......... 22,500 4.5% 18.00 1/23/2008 254,700 645,525
- ------------------------ (1) These options were granted pursuant to the 1992 Plan. The options generally vest 20% per year provided, however, that no option shall vest unless the Company's performance for the year in which an option would otherwise vest meets or exceeds the average earnings performance of all full-menu table service restaurants reported in a restaurant index published by a major financial services firm or an equivalent index. The options have a term of ten years. (2) Market value on the date of grant. (3) Assumed annual rates of stock appreciation are set by the SEC and are not a forecast of future appreciation. The amounts shown are pre-tax and assume the options will be held throughout their entire term. Actual realized value, if any, is dependent on the future performance of the Company's Common Stock, as well as the continued employment of the option holder through the vesting period. AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table shows all stock options exercised by the Named Executive Officers during fiscal 1998, and the number and value of options they held at fiscal year end.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS SHARES VALUE AT FISCAL YEAR END(#)(1) AT FISCAL YEAR END($)(2) ACQUIRED ON REALIZED -------------------------- ------------------------- NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---------------------------------- ----------- --------- ----------- ------------- ---------- ------------- David Overton..................... -- -- 155,625 60,000 2,272,524 785,001 Gerald W. Deitchle................ 40,187 342,491 50,189 135,374 629,414 1,709,600 Michael A. Nahkunst............... -- -- 30,000 197,500 361,251 2,197,817 Linda J. Candioty................. 48,000 690,985 -- 86,250 -- 1,238,908
- ------------------------ (1) These options were granted pursuant to the 1992 Plan. Of the 60,000 unexercisable options for Mr. Overton at the end of fiscal 1998 (December 29, 1998), 30,000 vest on December 31, 1998 and 30,000 vest 20% per year with the final portion vesting on January 23, 2003. The unexercisable options for Mr. Deitchle at the end of fiscal 1998 vest 20% to 25% per year, with the final portion vesting on January 23, 2003. The options have a term of ten years. The unexercisable options for Mr. Nahkunst at the end of fiscal 1998 vest 20% to 33% per year with the final portion vesting on December 31, 2002. However, no option shall vest and become exercisable unless the Company's performance for the year in which an option would otherwise vest meets or exceeds the average earnings performance of all full-menu table service restaurants reported in a restaurant index published by a major financial services firm or an equivalent index. 8 (2) Represents the difference between the closing price ($28.125) of the Company's Common Stock on December 29, 1998, the last trading day of the Company's 1998 fiscal year, and the exercise price of the options. EMPLOYMENT AGREEMENTS In April 1998, the Company entered into a three-year employment agreement with Mr. Overton, the Company's Chief Executive Officer. The agreement provides Mr. Overton with an annual base salary, currently $400,000, which is subject to increase from time to time by the Board of Directors. Mr. Overton is entitled to participate equitably with other Named Executive Officers in any plan of the Company relating to bonuses, stock options, health and life insurance, compensated absences, retirement or other employee benefits. The agreement also provides Mr. Overton with an automobile allowance, reimbursement of his business expenses, and certain additional health and life insurance benefits. If Mr. Overton voluntarily resigns from the Company or is terminated with cause (as defined in the agreement), he will be entitled to receive any unpaid salary earned up through the termination date, plus any unpaid pro rata portion of any incentive plan award for the current fiscal year when such awards are paid to all other plan participants. If Mr. Overton's employment is terminated without cause prior to a change in control of the Company (as defined in the agreement), or if he dies or is permanently disabled, he or his estate will be entitled to receive a lump sum payment equal to three times his then current annual base salary. If, during the first 18 months after a change in control of the Company, Mr. Overton voluntarily terminates his employment or is terminated by the Company without cause, he will be entitled to receive a lump sum payment of $2 million, and the Company will also pay for certain health and life insurance benefits for Mr. Overton and his dependents for an additional 36 months. In the event that any payment or benefit paid or payable to Mr. Overton under the agreement is subject to any excise tax in connection with the "excess parachute payment" provisions of the Internal Revenue Code, Mr. Overton is entitled to receive an additional "gross-up" payment from the Company such that the after-tax proceeds of the payment to Mr. Overton will be sufficient to pay any such excise tax in full. In July 1995, the Company entered into an employment agreement with Gerald W. Deitchle, the Company's Chief Financial Officer. Under this agreement, Mr. Deitchle is provided with an annual base salary, currently $275,000, which is subject to increase from time to time by the Board of Directors. Mr. Deitchle is entitled to other specified benefits such as an automobile allowance, reimbursement of business expenses, health and related insurance benefits and a relocation allowance. The agreement may be terminated without cause by Mr. Deitchle with 60 days written notice, and may be terminated by the Company at any time without prior notice. If the Company terminates Mr. Deitchle's employment without cause (as defined in the agreement), he will be entitled to receive an amount equal to two times his annual base salary then in effect, plus any unpaid pro rata salary earned through the termination date. During the first 90 days after a change in control of the Company (as defined in the agreement), Mr. Deitchle may terminate the agreement and receive a lump sum payment equal to two times his then annual base salary in effect plus any unpaid pro rata salary earned through the termination date. In April 1998, the Company entered into an employment agreement with Linda J. Candioty, Executive Vice President and Secretary of the Company. Under this agreement, Ms. Candioty is provided with an annual base salary, currently $220,000, which is subject to increase from time to time by the Board of Directors. Ms. Candioty is entitled to other specified benefits such as an automobile allowance, reimbursement of business expenses, and health and life insurance benefits. The agreement may be terminated without cause by Ms. Candioty with 60 days written notice, and may be terminated by the Company at any time without prior notice. If the Company terminates Ms. Candioty's employment without cause (as defined in the agreement), she will be entitled to receive any unpaid pro rata salary earned through the date of termination, plus any unpaid pro rata portion of any incentive plan awards for the current fiscal year when awards are paid to all other plan participants, plus immediate vesting of all stock options granted to her under the Company's stock option plans. During the first 90 days after a change in control 9 of the Company (as defined in the agreement), Ms. Candioty may terminate the agreement and receive a lump sum payment equal to two times her then annual base salary in effect plus any unpaid pro rata salary earned through the termination date. In August 1997, the Company entered into an employment agreement with Michael A. Nahkunst, the Company's Chief Operating Officer. Under this agreement, Mr. Nahkunst is provided with an annual base salary, currently $250,000, which is subject to increase from time to time by the Board of Directors. Mr. Nahkunst is entitled to other specified benefits such as an automobile allowance, reimbursement of business expenses, health and related insurance benefits and a relocation allowance. The agreement may be terminated without cause by Mr. Nahkunst with 90 days written notice, and may be terminated by the Company at any time without prior notice. If the Company terminates Mr. Nahkunst's employment without cause (as defined in the agreement), he will be entitled to receive an amount equal to one-half his then annual base salary in effect, plus any unpaid pro rata salary earned up to the date of termination, plus any unpaid pro rata portion of any incentive plan awards for the current fiscal year when awards are paid to all other plan participants, plus an accelerated vesting of stock options according to a predetermined schedule in the agreement. Mr. Nahkunst ended his employment with the Company on January 13, 1999. In full settlement of the Company's obligations under this agreement, Mr. Nahkunst has the right to exercise stock options totaling 119,100 shares at exercise prices ranging from $16.08 to $28.38 through April 13, 1999. PERFORMANCE INCENTIVE PLAN The Board of Directors adopted The Cheesecake Factory Incorporated Amended Performance Incentive Plan (the "Incentive Plan") during fiscal 1998. All Named Executive Officers and other officer and director-level staff employees are eligible for annual cash bonuses under the Incentive Plan. Under the terms of the Incentive Plan, the Compensation Committee establishes, upon the recommendation of the Chief Executive Officer, targeted financial goals based on net income, net income per share, return on assets, return on equity, growth in earnings or other financial measures. Participants are assigned a target bonus equal to 10% to 50% of their annual base salaries. Actual bonuses shall be awarded by the Compensation Committee at the end of each fiscal year based on the degree of achievement of the targeted financial goals. Participants are assigned threshold, target and maximum cash bonus levels as a percentage of their respective base salaries, based upon their level of responsibility with the Company. No cash bonuses were awarded under the Incentive Plan for fiscal 1998. Financial objectives have been set for fiscal 1999 which are linked to the attainment of a predetermined net income goal established by the Committee and approved by the Board. REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION The report of the Compensation Committee shall not be deemed incorporated by reference to any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. OVERVIEW AND PHILOSOPHY The Compensation Committee of the Board of Directors (the "Committee") is composed entirely of outside directors and is responsible for developing and making recommendations to the Board with respect to the Company's executive compensation policies. In addition, the Committee, pursuant to authority delegated by the Board, determines the compensation to be paid to the Chief Executive Officer and each of the other Named Executive Officers of the Company. The Committee is also responsible for setting and administering the policies which govern the Company's 1992 Performance Employee Stock Option Plan and the Amended Performance Incentive Plan. 10 There are three key elements in the Company's executive compensation program, all determined by individual and corporate performance: - Annual base salaries; - Annual incentive compensation; and - Long-term incentive compensation. The Company's executive compensation program is designed to enable it to attract, retain and motivate the highest quality of management talent available. Furthermore, the Committee believes that the value of the program should reflect, in large part, the value created for stockholders. The key objectives of the program are as follows: - To offer fair and competitive annual base salaries consistent with similarly situated companies in the foodservice industry; - To reward executives for corporate and individual performance through an annual incentive compensation program; and - To encourage future performance through the use of long-term incentives such as stock options which align the interests of employees and stockholders. ANNUAL BASE SALARIES Annually, the Committee establishes the base salaries to be paid to the Company's Named Executive Officers during the coming year, subject to the approval of the Board. In setting base salaries, the Committee takes into account several factors including, but not limited to, the executive's experience, responsibilities, management abilities and job performance, as well as the performance of the Company as a whole and current market conditions. ANNUAL INCENTIVE COMPENSATION The Company's Amended Performance Incentive Plan (the "Incentive Plan") is the Company's annual cash bonus program for Named Executive Officers and other officer and director-level staff employees. Under the Incentive Plan, the Committee establishes, upon the recommendation of the Chief Executive Officer, targeted financial goals based on net income, net income per share, return on assets, return on equity, growth in earnings or other financial measures. Each participant is assigned a target bonus award equal to 10% to 50% of the participant's annual base salary. The actual bonuses shall be awarded by the Committee at the end of each fiscal year based on the achievement of the targeted financial goals. Participants are assigned threshold, target and maximum cash bonus levels as a percentage of their respective base salaries based upon their levels of responsibility with the Company. Financial objectives have been set for fiscal 1999 which are linked to the attainment of a predetermined net income goal established by the Committee and approved by the Board. LONG-TERM INCENTIVE COMPENSATION The Committee believes that employee stock ownership is a significant incentive in building stockholder wealth and aligning the interests of employees and stockholders. Stock options will only have value if the Company's stock price increases. Stock options utilize vesting periods to encourage key employees to continue in the employ of the Company. The Board of Directors adopted the 1992 Performance Employee Stock Option Plan (the "1992 Option Plan") concurrent with the Company's initial public offering. The 1992 Option Plan was approved by stockholders at the 1993 Annual Meeting of Stockholders. An amendment to the 1992 Option Plan was approved by stockholders at the 1998 Annual Meeting of Stockholders which, among other things, increased the number of shares authorized for stock options from 2,756,250 to 3,956,250. The 1992 Option Plan authorizes the Committee to award stock options to key 11 employees at exercise prices, vesting schedules and on other terms established by the Committee. In order for stock options granted to executive officers and key employees to vest, the Company's earnings performance for the year must meet or exceed the average earnings performance of all full-menu table service restaurants reported in a restaurant index published by a major financial services firm or an equivalent index. COMPENSATION OF THE CHIEF EXECUTIVE OFFICER At the time of the Company's initial public offering in September 1992, the Company entered into a three-year employment agreement with Mr. Overton at an annual base salary of $350,000. The Company and Mr. Overton renewed the agreement annually since September 1995 with no increase in the $350,000 annual base salary. In January 1998, the Committee reviewed Mr. Overton's annual base salary in light of his individual performance and contribution to the Company's overall growth since September 1992 and increased it to $400,000. Mr. Overton's annual base salary remains the same for fiscal 1999. In January 1999, the Committee also granted Mr. Overton an option to purchase an additional 30,000 shares of the Company's Common Stock under the 1992 Option Plan. Compensation Committee Thomas L. Gregory Jerome I. Kransdorf Wayne H. White 12 PRICE PERFORMANCE GRAPH Set forth below is a graph comparing the total return on an indexed basis of a $100 investment in the Company's Common Stock, the S&P Midcap Restaurant Index, the Nation's Restaurant News Stock Index and the Nasdaq Composite-Registered Trademark- Index. The measurement points utilized in the graph consist of the last trading day in each calendar year, which closely approximates the last day of the respective fiscal year of the Company. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON $100 INVESTMENT AMONG THE CHEESECAKE FACTORY INCORPORATED, S&P MIDCAP RESTAURANT INDEX, NATION'S RESTAURANT NEWS STOCK INDEX AND THE NASDAQ COMPOSITE-REGISTERED TRADEMARK- INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
The Cheesecake S&P Midcap Nation's Restaurant Nasdaq Composite -Registration Mark- Index Factory Incorporated Restaurant Index News Stock Index 12/31/93 $100.00 $100.00 $100.00 $100.00 12/30/94 $68.98 $68.74 $100.87 $97.75 12/29/95 $94.16 $67.52 $149.94 $138.26 12/31/96 $79.36 $64.52 $154.14 $170.01 12/31/97 $133.58 $70.54 $154.28 $208.58 12/31/98 $194.82 $86.31 $207.08 $293.21
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 The Cheesecake Factory Incorporated $ 100.00 $ 68.98 $ 94.16 $ 79.36 $ 133.58 $ 194.82 S&P Midcap Restaurant Index $ 100.00 $ 68.74 $ 67.52 $ 64.52 $ 70.54 $ 86.31 Nation's Restaurant News Stock Index $ 100.00 $ 100.87 $ 149.94 $ 154.14 $ 154.28 $ 207.08 Nasdaq Composite-Registered Trademark- Index $ 100.00 $ 97.75 $ 138.26 $ 170.01 $ 208.58 $ 293.21
13 INDEPENDENT ACCOUNTANTS The firm of PricewaterhouseCoopers LLP served as the Company's independent accountants for fiscal 1998. This firm has advised the Company that it has no direct or indirect financial interest in the Company. Representatives of this firm are expected to be present at the Annual Meeting of Stockholders, with the opportunity to make a statement should they desire to do so, and will be available to respond to appropriate questions from stockholders. OTHER MATTERS The Board of Directors knows of no business other than that described herein that will be presented for consideration at the Annual Meeting of Stockholders. If, however, other business shall properly come before the meeting, the persons named in the enclosed form of proxy intend to vote the shares represented by said proxies on such matters in accordance with their judgment in the best interests of the Company. STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING Any stockholder proposal intended to be presented at the Company's 2000 Annual Meeting of Stockholders must be received by the Company for inclusion in the Proxy Statement and form of proxy for that meeting no later than December 21, 1999. AVAILABILITY OF FORM 10-K THE COMPANY WILL PROVIDE TO ANY STOCKHOLDER WITHOUT CHARGE, UPON THE WRITTEN REQUEST OF THAT STOCKHOLDER, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 29, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH REQUESTS SHOULD BE ADDRESSED TO: JANE VALLAIRE, INVESTOR RELATIONS MANAGER, THE CHEESECAKE FACTORY INCORPORATED, 26950 AGOURA ROAD, CALABASAS HILLS, CA 91301. By Order of the Board of Directors, Linda J. Candioty Corporate Secretary 14 PROXY THE CHEESECAKE FACTORY INCORPORATED Solicited on behalf of the Board of Directors of THE CHEESECAKE FACTORY INCORPORATED (the "Company") for use at the Annual Meeting of Stockholders (the "Meeting") to be held on May 18, 1999, at 10:00 A.M. at The Cheesecake Factory Restaurant, 605 North Harbor Drive, Redondo Beach, California. The undersigned hereby appoints Gerald W. Deitchle and Linda J. Candioty, or either one of them, as Proxies, with the full power of substitution, to vote all shares of Common Stock of the Company held of record by the undersigned on April 1, 1999 at the Meeting or at any adjournments thereof, on the items set forth below and in their discretion upon such other business as may properly come before the Meeting. The Board of Directors recommends a vote in favor of Item 1. 1. ELECTION OF THE FOLLOWING DIRECTOR: DAVID OVERTON / / FOR the nominee listed above for the term set forth in the Proxy Statement. / / WITHHOLD AUTHORITY to vote for the nominee listed above. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the Meeting. (CONTINUED FROM THE OTHER SIDE) This proxy, when properly executed, will be voted in the manner directed by the undersigned stockholder. If no direction is given, this proxy will be voted for Item 1. All proxies heretofore given by the undersigned are hereby revoked. Receipt of the Proxy Statement dated April 16, 1999 is acknowledged. Please mark, sign, date and return this Proxy in the accompanying prepaid envelope. Dated: ____________________, 1999. __________________________________ (Signature) __________________________________ (Signature) Please sign exactly as name appears hereon. If signing as an attorney, executor, administrator, trustee or guardian, please give full title as such, and if signing for a corporation, give your title. When shares are in the names of more than one person, each should sign. -----END PRIVACY-ENHANCED MESSAGE-----