Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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
Triarc Companies, Inc.
..................................................................
(Name of Registrant as Specified In Its Charter)
..................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
.......................................................
[TRIARC LOGO]
TRIARC COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
PLEASE COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY PROMPTLY
WEDNESDAY, JUNE 9, 2004
AT 12:00 NOON
AT THE OFFICES OF BEAR, STEARNS & CO., INC.
383 MADISON AVENUE, 2ND FLOOR
NEW YORK, NEW YORK
[TRIARC LOGO]
TRIARC COMPANIES, INC.
280 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 451-3000
April 23, 2004
Dear Stockholders:
It is our pleasure to invite you to join us at the 2004 Annual Meeting of
Stockholders of Triarc Companies, Inc., which will be held at 12:00 noon, local
time, on Wednesday, June 9, 2004, in Auditorium D, at the offices of Bear,
Stearns & Co., Inc., 383 Madison Avenue, 2nd Floor, New York, New York 10167.
The Board of Directors and management hope that many of you will be able to
attend in person.
At the meeting, you will be asked to consider and vote on the election of
nine (9) directors, a proposal to amend Article IV of the Company's Certificate
of Incorporation that would increase the number of authorized shares of the
Company's Class B Common Stock, a proposal to re-approve the Performance Goal
Bonus Awards portion of the Company's 1999 Executive Bonus Plan and a proposal
to ratify the appointment of Deloitte & Touche LLP as the Company's independent
certified public accountants. The Board of Directors has unanimously approved
these proposals and recommends that you vote FOR each of them.
The Notice of Annual Meeting and the Proxy Statement follow. It is important
that your shares be represented and voted, regardless of the size of your
holdings. Accordingly, whether or not you plan to attend the meeting in person,
please complete, sign, date and return the enclosed proxy. If you attend the
meeting and wish to vote your shares personally, you may revoke your proxy.
Sincerely,
[NELSON PELTZ SIGNATURE] [PETER W. MAY SIGNATURE]
NELSON PELTZ PETER W. MAY
Chairman and Chief President and Chief
Executive Officer Operating Officer
[TRIARC LOGO]
TRIARC COMPANIES, INC.
NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 9, 2004
12:00 NOON, LOCAL TIME
-------------------
The 2004 Annual Meeting of Stockholders of Triarc Companies, Inc. will be
held on Wednesday, June 9, 2004, at 12:00 noon, local time, in Auditorium D, at
the offices of Bear, Stearns & Co., Inc., 383 Madison Avenue, 2nd Floor, New
York, New York 10167, for the following purposes:
(1) to elect nine (9) directors to hold office as specified in the
accompanying Proxy Statement;
(2) to amend the Certificate of Incorporation of the Company to increase
the total number of shares of capital stock which the Company has authority
to issue from three hundred million (300,000,000) to three hundred fifty
million (350,000,000) shares and to increase the total number of authorized
shares of Class B Common Stock from one hundred million (100,000,000) to one
hundred fifty million (150,000,000) shares;
(3) to re-approve the Performance Goal Bonus Awards portion of the
Company's 1999 Executive Bonus Plan, which was originally approved by the
Company's stockholders in September 1999;
(4) to ratify the appointment of Deloitte & Touche LLP as the Company's
independent certified public accountants; and
(5) to transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Stockholders entitled to vote at the meeting or any adjournment or
postponement thereof are holders of record of the Company's Class A Common Stock
and holders of record of the Company's Class B Common Stock, Series 1, in each
case at the close of business on April 13, 2004. All such stockholders of record
are invited to attend the Meeting. Admission to the Meeting will be by ticket
only and packages and bags may be inspected and required to be checked in at the
registration desk. You also will be required to present identification
containing a photograph. If you are a registered stockholder (your shares are
held in your name) and plan to attend the Meeting, please check the appropriate
box on the proxy card and retain the top portion of your proxy card, which
serves as your admission ticket. If you are a beneficial owner (your shares are
held by a bank, broker or other holder of record) and you plan to attend the
Meeting, the left side of your voting information form is your admission ticket.
The Proxy Statement also includes information on how to obtain a ticket from the
Company. Stockholders who do not obtain tickets in advance may obtain them upon
verification of ownership at the registration desk on the day of the Meeting.
By Order of the Board of Directors
[STUART I. ROSEN SIGNATURE]
STUART I. ROSEN
Secretary
April 23, 2004
YOUR VOTE IS IMPORTANT! STOCKHOLDERS ARE CORDIALLY
INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOU MAY
NEVERTHELESS VOTE IN PERSON IF YOU ATTEND THE MEETING.
TRIARC COMPANIES, INC.
280 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 451-3000
-------------------
PROXY STATEMENT
-------------------
INTRODUCTION
GENERAL
The accompanying proxy is solicited by the Board of Directors (the 'Board of
Directors' or the 'Board') of Triarc Companies, Inc. (the 'Company' or 'Triarc')
in connection with the 2004 Annual Meeting of Stockholders of the Company (the
'Meeting'), to be held on Wednesday, June 9, 2004, at 12:00 noon, local time, in
Auditorium D, at the offices of Bear, Stearns & Co., Inc., 383 Madison Avenue,
2nd Floor, New York, New York and at any adjournment or postponement of the
Meeting. This Proxy Statement and a proxy are first being mailed to stockholders
on April 26, 2004. The mailing address of the Company's principal executive
office is 280 Park Avenue, New York, New York 10017.
When a proxy is returned properly dated and signed, the shares represented
thereby will be voted by the persons named as proxies in accordance with each
stockholder's directions. Stockholders may specify their choices by marking the
appropriate boxes on the enclosed proxy. If a proxy is dated, signed and
returned without specifying choices, the shares will be voted as recommended by
the Board of Directors FOR the election of each of the nine (9) nominees for
directors named below and FOR Proposals (2), (3) and (4). The Company does not
have cumulative voting. Under the Company's By-Laws (the 'By-Laws'), business
transacted at the Meeting is confined to the purposes stated in the Notice of
the Meeting. The proxy being solicited does, however, convey discretionary
authority to the persons named therein as proxies to vote on matters incident to
the conduct of the Meeting. The proxy may be revoked by the stockholder at any
time prior to the time it is voted by giving notice of such revocation either
personally or in writing to the Secretary of the Company at the address provided
above.
Only holders of the Company's Class A Common Stock, par value $.10 per share
(the 'Class A Common Stock'), and holders of the Company's Class B Common Stock,
Series 1, par value $.10 per share (the 'Class B Common Stock'), at the close of
business on April 13, 2004, their authorized representatives and guests of the
Company will be able to attend the Meeting. For your comfort and security,
admission to the Meeting will be by ticket only. If you are a registered
stockholder (your shares are held in your name) and plan to attend the Meeting,
please check the appropriate box on the enclosed proxy card. Your admission
ticket can be detached from the bottom portion of the proxy card. If you are a
beneficial owner (your shares are held in the name of a bank, broker or other
holder of record) and plan to attend the meeting, your admission ticket is the
left side of your voting information form. In addition, you can obtain an
admission ticket in advance by writing to Investor Relations, Triarc Companies,
Inc., 280 Park Avenue, New York, New York 10017. Please be sure to enclose proof
of ownership, such as a bank or brokerage account statement or a letter from the
bank or broker verifying
such ownership. Stockholders who do not obtain tickets in advance may obtain
them upon verification of ownership at the registration desk on the day of the
Meeting.
Tickets may be issued to others at the discretion of the Company.
VOTING SECURITIES
All holders of record of the Company's Class A Common Stock and/or Class B
Common Stock at the close of business on April 13, 2004 are entitled to vote on
all business transacted at the Meeting. At the close of business on April 13,
2004, the Company had 20,240,452 shares of Class A Common Stock and 40,493,049
shares of Class B Common Stock outstanding and entitled to vote at the Meeting.
Each share of Class A Common Stock entitles the holder to one vote per share.
Each share of Class B Common Stock entitles the holder to one-tenth of a vote
per share. Accordingly, a total of 24,289,756.9 votes may be cast at the
Meeting. The presence, in person or by proxy, of stockholders entitled to cast
at least a majority of the votes that all stockholders are entitled to cast
shall constitute a quorum. Broker 'non-votes' and the shares as to which a
stockholder abstains are included for purposes of determining whether a quorum
of shares is present at the Meeting. A broker 'non-vote' occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that proposal and has not received instructions from the beneficial owner.
Under the General Corporation Law of the State of Delaware (the 'Delaware
Law'), the state in which the Company is incorporated, the Company's Certificate
of Incorporation and the By-Laws, if a quorum is present at the Meeting,
(i) directors are elected by a plurality vote, (ii) the affirmative vote of a
majority of the votes entitled to be cast by the holders of the outstanding
shares of Class A Common Stock and holders of the outstanding shares of Class B
Common Stock voting together as a single class is required for approval of
Proposal (2), and (iii) the affirmative vote of a majority of the voting power
present (in person or by proxy) and entitled to vote at the Meeting is required
for approval of Proposal (4). With respect to Proposal (3), the Treasury
regulations under Section 162(m) of the Internal Revenue Code of 1986, as
amended, require the affirmative vote of a majority of the votes cast on the
issue to approve Proposal (3) in accordance with such regulations. Under the
Delaware Law, an abstention is not deemed to be a 'vote cast.' As a result,
abstentions and broker 'non-votes' are not included in the tabulation of the
voting results on the election of directors (Proposal (1)) or issues requiring
approval of a majority of the votes cast (Proposal (3)) and, therefore, do not
have the effect of votes in opposition in such tabulations. Abstentions and
broker 'non-votes' will have the effect of a vote against Proposal (2) because
it requires the approval of a majority of the votes entitled to be cast by the
holders of the outstanding shares of Class A Common Stock and holders of the
outstanding shares of Class B Common Stock. Abstentions are included in the
tabulation of the voting results on Proposal (4) and have the effect of votes in
opposition in such tabulations, while broker 'non-votes' are not included in the
tabulation of the voting results on such Proposal and therefore do not have the
effect of votes against in such tabulation.
The Company has been informed that the 6,840,402 shares of Class A Common
Stock and the 11,401,332 shares of Class B Common Stock owned as of the record
date by DWG Acquisition Group, L.P., a Delaware limited partnership of which
Nelson Peltz and Peter W. May are the sole general partners ('DWG Acquisition'),
Nelson Peltz, Peter W. May and the Peltz Family Limited Partnership
representing, in the aggregate, approximately 32.9% of votes entitled to be cast
by the holders of Class A Common Stock and/or Class B Common Stock at the
Meeting, will be voted in accordance with
2
the recommendation of the Board of Directors FOR the election of each of the
nine (9) nominees for director named below and FOR Proposals (2), (3) and (4).
PROPOSAL 1.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
It is recommended that the nine (9) nominees named below be elected as
directors of the Company, with each director to hold office until the next
annual meeting of the Company's stockholders, and until his successor is elected
and qualified or until his prior death, resignation or removal. All of the nine
(9) nominees are presently serving as directors of the Company and, except for
Mr. Wasserman, were elected directors at the Company's annual meeting of
stockholders held on June 3, 2003 to serve until the next annual meeting of the
Company's stockholders and until such director's successor is duly chosen and
qualified or until his prior death, resignation or removal. Effective as of
March 15, 2004, the number of directors constituting the Board of Directors was
increased to nine (9) and Mr. Wasserman was named by the Board of Directors to
fill the vacancy and to serve until his successor is duly chosen and qualified
or until his prior death, resignation or removal. Mr. Wasserman was recommended
by our Chairman and Chief Executive Officer to fill the vacancy. The Company is
unaware of any reason why any of the nominees named herein would be unwilling or
unable to serve as a director. Should, however, any nominee for director be
unwilling or unable to serve at the time of the Meeting or any adjournment or
postponement thereof, the persons named in the proxy will vote for the election
of such other person for such directorship as the Board of Directors may
recommend.
Certain information regarding each person nominated by the Board of
Directors, including his principal occupation during the past five years and
current directorships, is set forth below. Unless otherwise indicated, all
nominees have had the indicated principal occupations for the past five years.
BUSINESS EXPERIENCE DURING PAST
NAME OF DIRECTOR FIVE YEARS, AGE AND OTHER INFORMATION
---------------- -------------------------------------
Nelson Peltz......................... Mr. Peltz has been a director and the Chairman and Chief
Executive Officer of the Company since April 1993. Since
then, he has also been a director or manager and officer
of certain of the Company's subsidiaries. He is also a
general partner of DWG Acquisition, whose principal
business is ownership of securities of the Company. From
its formation in January 1989 to April 1993, Mr. Peltz
was Chairman and Chief Executive Officer of Trian Group,
Limited Partnership ('Trian'), which provided investment
banking and management services for entities controlled by
Mr. Peltz and Mr. May. From 1983 to December 1988, he was
Chairman and Chief Executive Officer and a director of
Triangle Industries, Inc. ('Triangle'), which, through
wholly-owned subsidiaries, was, at that time, a
manufacturer of packaging products, copper electrical wire
and cable and steel conduit and currency and coin handling
products. Mr. Peltz has also served as a director of
Encore Capital Group, Inc. (formerly MCM Capital
3
BUSINESS EXPERIENCE DURING PAST
NAME OF DIRECTOR FIVE YEARS, AGE AND OTHER INFORMATION
---------------- -------------------------------------
Group, Inc.) since January 2003. Mr. Peltz is the
father-in-law of Edward P. Garden, an Executive Vice
President of the Company. Mr. Peltz is 61 years of age.
Peter W. May......................... Mr. May has been a director and the President and Chief
Operating Officer of the Company since April 1993. Since
then, he has also been a director or manager and officer
of certain of the Company's subsidiaries. He is also a
general partner of DWG Acquisition. From its formation in
January 1989 to April 1993, Mr. May was President and
Chief Operating Officer of Trian. He was President and
Chief Operating Officer and a director of Triangle from
1983 until December 1988. Mr. May has also served as a
director of Encore Capital Group, Inc. since
February 1998. Mr. May is the father of Jonathan P. May,
Senior Vice President -- Corporate Development of Triarc
and Chairman of Arby's, Inc. Mr. May is 61 years of age.
Hugh L. Carey........................ Mr. Carey has been a director of the Company since
June 1994. He was an Executive Vice President of W.R. Grace
& Co. ('Grace') from 1987 through December 1995. From 1993
to December 1995, he served Grace as director of its
Government Relations Division, and from 1987 until 1993,
he ran Grace's office of environmental policy. Mr. Carey
was the Governor of the State of New York from 1975 until
1983 and a member of Congress from 1960 until 1975. From
1991 until 1993, he was Chairman of the National Institute
of Former Governors. Mr. Carey is also a director of China
Trust Bank, and a partner of Harris Beach LLP, a law firm.
Mr. Carey is 85 years of age.
Clive Chajet......................... Mr. Chajet has been a director of the Company since
June 1994. He has been Chairman of Chajet Consultancy,
L.L.C., a consulting firm specializing in identity and
image management, since January 1997. Prior to that time,
Mr. Chajet was Chairman of Lippincott & Margulies Inc.,
also a consulting firm specializing in identity and image
management, from 1983 to January 1997. Mr. Chajet is 67
years of age.
Joseph A. Levato..................... Mr. Levato has been a director of the Company since
June 1996. Mr. Levato served as Executive Vice President
and Chief Financial Officer of Triarc and certain of its
subsidiaries from April 1993 to August 1996. Prior to
April 1993, he was Senior Vice President and Chief
Financial Officer of Trian from January 1992 to April
1993. From 1984 to December 1988, he served as Senior Vice
President and Chief Financial Officer of Triangle.
Mr. Levato is 63 years of age.
4
BUSINESS EXPERIENCE DURING PAST
NAME OF DIRECTOR FIVE YEARS, AGE AND OTHER INFORMATION
---------------- -------------------------------------
David E. Schwab II................... Mr. Schwab has been a director of the Company since
October 1994. Mr. Schwab has been a Senior Counsel of
Cowan, Liebowitz & Latman, P.C., a law firm, since January
1998. Prior to that time, he was a partner of Schwab
Goldberg Price & Dannay, a law firm, for more than five
years. Mr. Schwab also serves as Chairman of the Board of
Trustees of Bard College. Mr. Schwab is 72 years of age.
Raymond S. Troubh.................... Mr. Troubh has been a director of the Company since
June 1994. He has been a financial consultant since prior to
1989. Mr. Troubh is Chairman of Enron Corp. (and, in
connection with his duties as Chairman of Enron Corp., a
director of its wholly-owned subsidiary Portland General
Electric Company) and a director of Diamond Offshore
Drilling, Inc., General American Investors Company,
Gentiva Health Services, Inc. and WHX Corporation. He is
also a trustee of Petrie Stores Liquidating Trust. Mr.
Troubh is 77 years of age.
Gerald Tsai, Jr...................... Mr. Tsai has been a director of the Company since October
1993. Mr. Tsai is a private investor. From February 1993 to
October 1997, he was Chairman of the Board, President and
Chief Executive Officer of Delta Life Corporation, a life
insurance and annuity company with which Mr. Tsai became
associated in 1992. Mr. Tsai also serves as a director of
Sequa Corporation, Zenith National Insurance Corporation,
United Rentals, Inc. and Apollo Capital Corporation. He is
an honorary trustee of Boston University, a trustee of NYU
Hospitals Center, New York University School of Medicine
Foundation and the Norton Museum of Art in Palm Beach,
Florida. Mr. Tsai is 75 years of age.
Jack G. Wasserman.................... Mr. Wasserman has been a director of the Company since March
2004. Mr. Wasserman has practiced law as a solo
practitioner since September 2001. Prior to that time, he
was a senior partner of Wasserman, Schneider, Babb & Reed
(and its predecessors) from 1966 until September 2001. Mr.
Wasserman serves as a director of American Property
Investors, Inc., the general partner of American Real
Estate Partners, L.P., National Energy Group, Inc. and
Cadus Corporation. Mr. Wasserman is 67 years of age.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NINE (9) NOMINEES NAMED ABOVE.
5
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of Triarc, all of whom are U.S. citizens.
NAME AGE POSITIONS
---- --- ---------
Nelson Peltz....................... 61 Director; Chairman and Chief Executive Officer
Peter W. May....................... 61 Director; President and Chief Operating Officer
Douglas N. Benham.................. 47 President and Chief Executive Officer of Arby's, Inc.
Edward P. Garden................... 42 Executive Vice President
Brian L. Schorr.................... 45 Executive Vice President, General Counsel, and
Assistant Secretary
Jonathan P. May.................... 37 Senior Vice President -- Corporate Development;
Chairman of Arby's, Inc.*
Francis T. McCarron................ 47 Senior Vice President and Chief Financial Officer
Stuart I. Rosen.................... 44 Senior Vice President and Associate General Counsel,
and Secretary
Fred H. Schaefer................... 59 Senior Vice President and Chief Accounting Officer
Anne A. Tarbell.................... 45 Senior Vice President -- Corporate Communications and
Investor Relations
---------
(*) Mr. Jonathan May has announced his resignation, effective as of April 30,
2004, as Senior Vice President -- Corporate Development of the Company and
as Chairman of Arby's, Inc. ('Arby's').
-------------------
Set forth below is certain additional information concerning the persons
listed above (other than Messrs. Peltz and May, for whom such information has
been provided under 'Nominees for Election,' above).
Douglas N. Benham has been the President and Chief Executive Officer of
Arby's, which does business as the Triarc Restaurant Group, since January 2004.
Mr. Benham has also been President and Chief Executive Officer of Sybra, Inc.
('Sybra') since January 2004. From August 2003 to December 2003, Mr. Benham
served as President and Chief Executive Officer of DNB Advisors, LLC, a
consulting firm. From January 1999 through August 2003, he served as Senior Vice
President and Chief Financial Officer of RTM Restaurant Group ('RTM'), the
largest franchisee of Arby's'r' restaurants. Mr. Benham also served as a
director of RTM from January 1999 through December 2003.
Edward P. Garden has been an Executive Vice President of Triarc since August
2003. Prior thereto, Mr. Garden was a managing director of Credit Suisse First
Boston, where he served as a senior investment banker in the Financial Sponsors
Group since 1999. From 1994 to 1999, he was a managing director at BT Alex Brown
where he was a senior member of the Financial Sponsors Group and, prior to that,
Co-Head of Equity Capital Markets. Mr. Garden is the son-in-law of Nelson Peltz.
Brian L. Schorr has been Executive Vice President and General Counsel of
Triarc and certain of its subsidiaries since June 1994. Prior thereto, Mr.
Schorr was a partner of Paul, Weiss, Rifkind, Wharton &
6
Garrison LLP, a law firm which he joined in 1982. That firm provides legal
services to Triarc and its subsidiaries.
Jonathan P. May has been Senior Vice President -- Corporate Development of
Triarc and Chairman of Arby's since June 2002. From January 2001 to June 2002,
Mr. May served as a Senior Vice President of Triarc and Chairman of Arby's. From
July 1999 to January 2001 he served as Chief Executive Officer of Arby's and
certain of its subsidiaries. From 1996 to July 1999, Mr. May was Vice President,
Concept Development of Arby's. From 1995 to 1996, Mr. May was Vice President,
Worldwide Planning of Arby's. Mr. May was Director, Corporate Development of the
Company from 1993 to 1995. Previously, Mr. May was employed by McKinsey & Co.,
Inc. from September 1989 to June 1991. Mr. May is the son of Peter W. May.
Francis T. McCarron has been Senior Vice President and Chief Financial
Officer of Triarc since June 30, 2001. Prior thereto, he was Senior Vice
President -- Taxes of Triarc and certain of its subsidiaries since April 1993.
Mr. McCarron served as Vice President -- Taxes of Trian from its formation in
January 1989 to April 1993.
Stuart I. Rosen has been Senior Vice President and Associate General
Counsel, and Secretary of Triarc and certain of its subsidiaries since
November 16, 2000. From August 1994 to November 2000 he served as Vice President
and Associate General Counsel, and Secretary of Triarc and certain of its
subsidiaries. Prior thereto, he was an associate with Paul, Weiss, Rifkind,
Wharton & Garrison LLP since 1985.
Fred H. Schaefer has been Senior Vice President and Chief Accounting Officer
of Triarc and certain of its subsidiaries since November 16, 2000. From April
1993 to November 2000 he served as Vice President and Chief Accounting Officer
of Triarc and certain of its subsidiaries. Prior thereto, he was Vice President
and Chief Accounting Officer of Trian from its formation in January 1989 to
April 1993.
Anne A. Tarbell has been Senior Vice President -- Corporate Communications
and Investor Relations of Triarc, and Senior Vice President of certain of its
subsidiaries, since May 1998. From June 1995 to April 1998, Ms. Tarbell was Vice
President and Director -- Investor Relations of ITT Corporation and served as
Assistant Director -- Investor Relations of ITT Corporation from August 1991 to
May 1995.
The term of office of each executive officer is until the organizational
meeting of the Board following the next annual meeting of the Company's
stockholders and until his or her successor is elected and qualified or until
his or her prior death, resignation or removal.
CORPORATE GOVERNANCE
INDEPENDENCE OF DIRECTORS
Under the New York Stock Exchange's listing requirements, the Board of
Directors must have a majority of directors who meet the criteria for
independence required by the New York Stock Exchange. Pursuant to the Company's
Corporate Governance Guidelines (the 'Guidelines'), the Board is to determine
whether each director satisfies the criteria for independence based on all of
the relevant facts and circumstances. No director qualifies as independent
unless the Board of Directors affirmatively determines that such director has no
material relationship with the Company. In accordance with the Guidelines, the
Board of Directors has adopted categorical standards ('Independence Standards')
to
7
assist it in determining the independence of the Company's directors. Pursuant
to the Independence Standards, any relationship described below will be presumed
to be material if, within the preceding year or, commencing November 4, 2004,
the preceding three years:
the director was an employee of the Company or an immediate family member
(as defined) of the director was an executive officer of the Company;
the director or an executive officer of the Company who is an immediate
family member of the director received more than $100,000 per year in
direct compensation from the Company, other than director and committee
fees and pension or other deferred compensation for prior service (provided
that such compensation is not contingent in any way on continued service);
the director was affiliated with or employed by, or the director's
immediate family member was affiliated with or employed in a professional
capacity by, the Company's present or former internal or external auditor;
the director, or the director's immediate family member, was employed as an
executive officer of another company where an executive officer of the
Company then served on the compensation committee of that company's board
of directors (the one or three year 'look-back' period referred to above in
the lead-in paragraph, as applicable, will be measured from the termination
of either the employment relationship or the service on the compensation
committee);
the director is an employee or executive officer, or has an immediate
family member who is an executive officer, of another company that makes
payments to or receives payments from the Company for property or services
in an amount that, in any single fiscal year, exceeds 2% or $1 million,
whichever is greater, of such other company's consolidated gross revenues.
Both the payments and the consolidated gross revenues to be measured will
be those of such other company's last completed fiscal year. Also, the one
or three year 'look-back' period referred to above in the lead-in
paragraph, as applicable, applies only to the financial relationship
between the Company and the director's or immediate family member's current
employer (i.e., former employment of the director or immediate family
member need not be considered); or
the director, or an immediate family member of the director, is employed as
an executive officer of a non-profit organization, foundation or university
to which the Company makes discretionary contributions that (excluding for
this purpose matching funds paid by the Company as a result of
contributions by the Company directors and employees) in any fiscal year of
the non-profit organization, foundation or university exceed 2% or $1
million, whichever is greater, of the entity's consolidated gross revenues
from all sources for the most recently ended fiscal year for which
financial information is available to the Company.
The foregoing clauses are to be interpreted by the Board of Directors taking
into account any commentary or other guidance provided by the New York Stock
Exchange with respect to Section 303 of the New York Stock Exchange Listed
Company Manual.
The Independence Standards further provide that the relationship between the
Company and an entity for which a director serves solely as a non-management
director is not material. In addition, any other relationship not described
above will not be deemed material unless (i) the director would have thereby a
'direct or indirect material interest' within the meaning of Item 404(a) of
Regulation S-K and the material terms of the relationship were materially more
favorable than those that would be offered at the time and in comparable
circumstances to persons unaffiliated with the Company or (ii) the Board of
Directors, in exercising its judgment in light of all the facts and
circumstances, determines that the
8
relationship should be considered to be material and to affect the independence
of the director in question.
The Board of Directors and the Nominating and Corporate Governance Committee
reviewed the independence of the director nominees. As a result of this review,
a determination was made that each of the following director nominees is
independent of the Company and its management: Messrs. Carey, Chajet, Levato,
Schwab, Troubh, Tsai and Wasserman.
BOARD MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
Seven meetings of the full Board of Directors were held during the fiscal
year ended December 28, 2003. Each incumbent director who served on the Board of
Directors in 2003 and is a nominee for reelection, attended at least 75% or more
of the meetings of the Board of Directors and its committees that he was
eligible to attend in 2003. While we do not have a formal policy requiring them
to do so, directors are expected to attend the Company's annual meeting of
stockholders. All persons then serving as directors attended the 2003 Annual
Meeting of Stockholders.
The Company has standing audit, nominating and corporate governance and
compensation committees whose current functions and members are described below.
As noted above, the Board of Directors has determined that each of the current
members of such committees is independent as required by the New York Stock
Exchange listing requirements. It is anticipated that at its first meeting
following the Meeting, the Board will designate the directors to serve on each
of these committees until the next annual meeting of stockholders.
Audit Committee. The Audit Committee is composed of Messrs. Raymond S.
Troubh (Chairman), Joseph A. Levato and David E. Schwab II. The primary purpose
of the Audit Committee is to assist the Board of Directors in fulfilling its
oversight responsibility relating to: (i) the integrity of the Company's
financial statements and financial reporting process, the Company's systems of
internal accounting and financial controls and other financial information
provided by the Company; (ii) the performance of the internal audit services
function; (iii) the annual independent audit of the Company's financial
statements, the engagement of the independent auditors and the evaluation of the
independent auditors' qualifications, independence and performance; (iv) the
compliance by the Company with legal and regulatory requirements, including the
Company's disclosure controls and procedures; (v) the evaluation of risk
assessment and risk management policies; and (vi) the fulfillment of the other
responsibilities set out in its charter. The Board of Directors has determined
that each of the committee members are 'financially literate' and at least one
member, Mr. Levato, qualifies as an 'audit committee financial expert' within
the meaning of the regulations of the Securities and Exchange Commission. The
Audit Committee met eleven times during 2003. The formal report of the Audit
Committee with respect to fiscal year 2003 begins on page 31 herein.
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee is composed of Messrs. Joseph A. Levato (Chairman), Hugh L.
Carey, David E. Schwab II and Gerald Tsai, Jr. This committee is charged with
the responsibility of: (i) identifying individuals qualified to become members
of the Board of Directors, consistent with any guidelines and criteria approved
by the Board of Directors; (ii) considering and recommending director nominees
for the Board to select in connection with each annual meeting of stockholders;
(iii) considering and recommending nominees for election to fill any vacancies
on the Board of Directors and to address related matters; (iv) developing and
recommending to the Board of Directors corporate governance principles
applicable to the Company; and (v) overseeing an annual evaluation of the Board
of
9
Directors' and management's performance. The Nominating and Corporate Governance
Committee met once during 2003.
The Nominating and Corporate Governance Committee reviews possible
candidates for the Board of Directors and recommends the nominees for directors
to the Board of Directors for approval. The Board of Directors has adopted
general criteria for nomination to the Board of Directors, which, as part of the
Guidelines, can be found on the Company's website at www.triarc.com. The Board
of Directors seeks members from diverse professional and personal backgrounds
who combine a broad spectrum of experience and expertise with a reputation for
integrity. The Board's assessment of potential candidates includes consideration
of diversity, age, educational background, other board experience and
commitments, business and professional achievements, skills and experience in
the context of the needs of the Board. The Nominating and Corporate Governance
Committee considers suggestions from any source, including stockholders,
regarding possible candidates for directors. Possible candidates who have been
suggested by stockholders are evaluated by the Nominating and Corporate
Governance Committee in the same manner as are other possible candidates.
The Nominating and Corporate Governance Committee has adopted the following
rules with respect to considering nominations by stockholders: (i) the
nominating stockholder must have owned, for at least six months prior to the
date the nomination is submitted, shares of (x) Class A Common Stock,
(y) Class B Common Stock or (z) other classes of common stock or preferred
stock, if any, entitled to vote for directors; (ii) the nomination must be
received by the Nominating and Corporate Governance Committee at least 120 days
before the mailing date for proxy material applicable to the annual meeting for
which such nomination is proposed for submission; and (iii) a detailed statement
setting forth the qualifications, as well as the written consent, of each party
nominated must accompany each nomination submitted.
Compensation Committee and Performance Compensation Subcommittee. The
Compensation Committee is composed of Messrs. David E. Schwab II (Chairman),
Clive Chajet and Joseph A. Levato. The Compensation Committee is charged with
discharging the responsibility of the Board of Directors relating to
compensation of the Company's directors and executive officers, administering
the Triarc Companies, Inc. 1997 Equity Participation Plan (the '1997 Plan'), the
Deferral Plan for Senior Executive Officers of Triarc Companies, Inc. (the
'Deferral Plan') and such other salary, compensation or incentive plans as the
Compensation Committee is designated to administer, and related matters. The
Compensation Committee met four times during 2003.
The Performance Compensation Subcommittee (the 'Subcommittee' or the
'Performance Committee') is composed of Messrs. David E. Schwab II (Chairman)
and Clive Chajet. The Subcommittee was established in August 1997 to assume
certain functions which were previously the responsibility of the Compensation
Committee. The purpose of the Subcommittee is limited to administering the
Company's compensation plans that are intended to meet the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the 'Code'),
including the Triarc Companies, Inc. 1993 Equity Participation Plan, as amended
(the '1993 Plan'), the 1998 Equity Participation Plan (the '1998 Plan'), the
2002 Equity Participation Plan (the '2002 Plan'), the 1999 Executive Bonus Plan
(the '1999 Executive Bonus Plan' or the '1999 Plan'), and such other salary,
compensation or incentive plans as the Subcommittee is designated to administer,
and related matters. The Subcommittee met two times in 2003.
Charters for the Audit Committee, the Nominating and Corporate Governance
Committee and the Compensation Committee and Performance Compensation
Subcommittee, as well as the Guidelines
10
and the Company's Code of Business Conduct and Ethics (including code of ethics
provisions that apply to the Company's principal executive, financial and
accounting officers) may be found under the Investor Relations section of the
Company's website at www.triarc.com and are also available in print, free of
charge, to any stockholder who requests them.
COMPENSATION OF DIRECTORS
Each non-management director of the Company receives an annual retainer of
$30,000 for serving on the Board. In addition, each non-management director of
the Company receives $1,500 for each meeting of the Board or of a committee (or
subcommittee) of the Board that such director attends. Under the 2002 Plan, each
non-management director may elect to have all or a portion of the annual
retainer and these meeting attendance fees paid in shares of Class A Common
Stock and/or Class B Common Stock rather than in cash. See 'Executive
Compensation -- Certain Employment Arrangements with Executive Officers' below
for certain information relating to compensation of the Company's management
directors.
In addition, pursuant to the 2002 Plan, each director of the Company who is
not also an employee of the Company or any subsidiary receives options to
purchase an aggregate of 15,000 shares of Class A Common Stock and 30,000 shares
of Class B Common Stock on the date of such director's initial election or
appointment to the Board of Directors. On the date of each subsequent annual
meeting of stockholders of the Company at which a director is reelected, such
director receives options to purchase 4,000 shares of Class A Common Stock and
8,000 shares of Class B Common Stock.
EXECUTIVE SESSIONS OF THE BOARD OF DIRECTORS
The Company has instituted executive sessions of the Board of Directors
whereby non-management directors will meet in regularly scheduled sessions. The
chairpersons of the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee will rotate presiding over these
sessions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
'Exchange Act'), requires the Company's directors, executive officers, and
persons who own more than ten percent of the Company's common stock, to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the 'SEC') and the New York Stock Exchange.
Directors, executive officers and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with copies of all Forms 3, 4
and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, including amendments thereto, or written representations from certain
reporting persons that no Form 5s were required for these persons, the Company
believes that all its directors, executive officers and greater than ten percent
beneficial owners complied with all filing requirements applicable to them with
respect to 2003, except for the inadvertent omission by Mr. Chajet to file
reports on a timely basis with respect to two gifts of shares of stock that he
made in 2003 and by Mr. Jarrett Posner, the Company's former Senior Vice
President -- Corporate Finance, to file a report on a timely basis with respect
to two exercises of stock options and the sales of the shares received. In
addition, prior timely filings were amended by Mr. Posner to add a sale of
shares to a report filed in 2000, by Mr. McCarron to correct in
11
one report the sales prices for shares received by him upon the exercise of
stock options and by Mr. Jonathan May to correct in one report the inadvertent
omission of shares held by him as a result of the Stock Dividend (defined below)
and to correct the sales prices for shares received by him upon the exercise of
stock options.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth the beneficial ownership as of April 13, 2004
by each person known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of Class A Common Stock and/or Class B Common Stock
(constituting the only classes of voting capital stock of the Company), each
director of the Company and nominee for director of the Company who has such
ownership, each of the Named Officers (as defined in the Introduction to Summary
Compensation Table below) and all directors and executive officers as a group.
Except as otherwise indicated, each person has sole voting and dispositive power
with respect to such shares.
PERCENTAGE OF
TOTAL VOTING
POWER OF
AMOUNT AND NATURE OF PERCENTAGE OF CLASS OUTSTANDING
BENEFICIAL OWNERSHIP BENEFICIALLY OWNED CLASS A AND
NAME AND ADDRESS OF ------------------------- ------------------- CLASS B
BENEFICIAL OWNER CLASS A CLASS B CLASS A CLASS B COMMON STOCK(1)
---------------- ------- ------- ------- ------- ---------------
DWG Acquisition Group, L.P. ....... 6,024,662(2) 10,006,324(2) 29.8% 24.7% 28.9%
1201 North Market Street
Wilmington, DE 19801
Nelson Peltz ....................... 9,639,619 17,094,355 41.2% 36.6% 31.2%
280 Park Avenue (2)(3)(4) (2)(3)(4)
New York, NY 10017
Peter W. May ....................... 8,325,444 14,513,299 37.5% 32.7% 30.5%
280 Park Avenue (2)(3) (2)(3)
New York, NY 10017
Wachovia Corporation ............... -- (5) 2,752,060(5) -- 6.8% 1.1%
One Wachovia Center
Charlotte, NC 28288-0137
Snyder Capital Management, L.P. .... 1,186,600(6) 2,373,600(6) 5.9% 5.9% 5.9%
Snyder Capital Management, Inc. ...
350 California Street
San Francisco, CA 94104
Hugh L. Carey....................... 64,469 128,938 * * *
Clive Chajet........................ 36,800(7) 73,600(7) * * *
Joseph A. Levato.................... 53,000 46,000 * * *
David E. Schwab II.................. 53,737 98,974 * * *
Raymond S. Troubh................... 43,000 86,000 * * *
Gerald Tsai, Jr. ................... 24,018 48,036 * * *
Jack G. Wasserman................... 0 0 * * *
Brian L. Schorr..................... 179,622(8) 359,244(8) * * *
Francis T. McCarron................. 81,666 163,332 * * *
Jonathan P. May..................... 122,917 245,834 * * *
Michael C. Howe..................... 38,334 76,668 * * *
Directors and Executive Officers as
a group (16 persons).............. 12,838,906 23,283,690 49.2% 44.6% 33.4%
(footnotes on next page)
12
(footnotes from previous page)
* Less than 1%
(1) Based on total votes that may be cast at the meeting.
(2) The Company is informed that as of the record date DWG Acquisition had
pledged all such shares of Class A Common Stock and 5,596,214 of such shares
of Class B Common Stock to a financial institution on behalf of Messrs.
Peltz and May to secure loans made to them.
(3) Includes 6,024,662 shares of Class A Common Stock and 10,006,324 shares of
Class B Common Stock held by DWG Acquisition, of which Mr. Peltz and Mr. May
are the sole partners. The Company is informed that (i) a Peltz family
limited partnership has pledged 21,200 shares of Class A Common Stock and
41,400 shares of Class B Common Stock owned by it to a financial institution
to secure loans made to Mr. Peltz and (ii) Mr. May has pledged 287,316
shares of Class A Common Stock and 480,043 shares of Class B Common Stock
owned by him to a financial institution to secure loans made to him.
(4) Includes 23,750 shares of Class A Common Stock and 47,500 shares of Class B
Common Stock owned by a family limited partnership of which Mr. Peltz is a
general partner. Mr. Peltz disclaims beneficial ownership of these shares.
(5) The information set forth herein with respect to Wachovia Corporation
('Wachovia') is based solely on information contained in a Schedule 13G
filed with the Securities and Exchange Commission on February 11, 2004.
According to the Schedule 13G, Wachovia's subsidiaries, Wachovia Securities
LLC and Evergreen Investment Management Company, are investment advisors for
mutual funds and/or other clients and such mutual funds or other clients
beneficially own such shares, Wachovia Bank, N.A., a subsidiary of Wachovia,
holds the securities in a fiduciary capacity for its customers and Wachovia
and its subsidiaries have the sole power to vote or dispose of these shares.
The Schedule 13G did not contain any information regarding beneficial
ownership by Wachovia of shares of Class A Common Stock.
(6) The information set forth herein with respect to Snyder Capital Management,
L.P. ('Snyder L.P.') and Snyder Capital Management, Inc. (the general
partner of Snyder L.P., 'Snyder Inc.') is based solely on information
contained in a Schedule 13G filed with the Securities and Exchange
Commission on February 13, 2004. According to the Schedule 13G, Snyder L.P.,
a registered investment advisor, and Snyder Inc. have shared voting power
over 1,102,200 shares of Class A Common Stock and 2,204,600 shares of
Class B Common Stock and have shared dispositive power over 1,186,600 shares
of Class A Common Stock and 2,373,600 shares of Class B Common Stock.
(7) Includes 1,300 shares of Class A Common Stock and 2,600 shares of Class B
Common Stock owned by Mr. Chajet's wife, as to which shares Mr. Chajet
disclaims beneficial ownership.
(8) Includes 100 shares of Class A Common Stock and 200 shares of Class B Common
Stock owned by a minor child of Mr. Schorr, as to which shares Mr. Schorr
disclaims beneficial ownership.
-------------------
Except for the arrangements relating to the shares described in footnote (2)
to the beneficial ownership table, there are no arrangements known to the
Company the operation of which may at a subsequent date result in a change in
control of the Company.
13
The above beneficial ownership table includes options to purchase shares of
Class A Common Stock and Class B Common Stock that have vested or will vest
within 60 days of April 13, 2004 by the following persons:
NUMBER OF CLASS A NUMBER OF CLASS B
NAME OF COMMON SHARES COMMON SHARES
BENEFICIAL OWNER REPRESENTED BY OPTIONS REPRESENTED BY OPTIONS
---------------- ---------------------- ----------------------
Nelson Peltz........................................ 3,133,333(1) 6,266,666(1)
Peter W. May........................................ 1,966,666(1) 3,933,332(1)
Hugh L. Carey....................................... 44,000 88,000
Clive Chajet........................................ 29,000 58,000
Joseph A. Levato.................................... 23,000 46,000
David E. Schwab II.................................. 44,000 88,000
Raymond S. Troubh................................... 23,000 46,000
Gerald Tsai, Jr..................................... 15,000 30,000
Jack G. Wasserman................................... 0 0
Brian L. Schorr..................................... 173,332 346,664
Francis T. McCarron................................. 81,666 163,332
Jonathan P. May..................................... 121,666 243,332
Michael C. Howe..................................... 28,334 56,668
Directors and Executive Officers as a group
(16 persons)...................................... 5,874,664 11,749,328
---------
(1) Includes options to acquire 1,635,000 shares of Class A Common Stock and
3,270,000 shares of Class B Common Stock previously granted to Mr. Peltz,
and options to acquire 1,090,000 shares of Class A Common Stock and
2,180,000 shares of Class B Common Stock previously granted to Mr. May, that
were exercised on April 20, 2004. Payment of the exercise price for such
options was made through the use of 3,145,734 and 2,097,156 shares of the
Company's Class B Common Stock owned by Messrs. Peltz and May, respectively.
Delivery to Mr. Peltz of 600,921 shares of Class A Common Stock and
1,201,843 shares of Class B Common Stock, and to Mr. May of 400,614 shares
of Class A Common Stock and 801,229 shares of Class B Common Stock, issuable
upon exercise of their respective options was deferred in accordance with
procedures adopted by the Performance Committee in November 2002. See
'Long-Term Incentive Compensation' and 'CEO and COO Compensation
Arrangements' in the Executive Compensation Report of the Compensation
Committee and Performance Compensation Subcommittee below. Mr. Peltz and Mr.
May also deferred the delivery of shares issuable to them upon the exercise
of options in accordance with such deferral procedures in each of April 2003
and February 2004. The amounts set forth in the above beneficial ownership
table do not include a total of 844,947 shares of Class A Common Stock and
1,689,886 shares of Class B Common Stock held as of April 23, 2004 in a
deferral trust pending their future delivery to Mr. Peltz, and 563,298
shares of Class A Common Stock and 1,126,591 shares of Class B Common Stock
held as of April 23, 2004 in a deferral trust pending their future delivery
to Mr. May. Wilmington Trust Company, as trustee, has the right to vote the
shares held in the trusts. Messrs. Peltz and May may confer with the trustee
before it takes any action with respect to the shares held in the trusts.
Each trust currently will terminate on January 2, 2005, subject to extension
by Messrs. Peltz and May under certain circumstances and subject to
acceleration under certain other circumstances.
14
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE AND
PERFORMANCE COMPENSATION SUBCOMMITTEE*
The Compensation Committee's Role. The Compensation Committee of the Board
of Directors (the 'Compensation Committee') is responsible for setting policy
for compensation of executive officers of the Company, for reviewing and
approving compensation programs for the executive officers of the Company (the
'Executive Compensation Program') and for administering the 1997 Plan and the
Deferral Plan. The Performance Compensation Subcommittee's (the 'Subcommittee'
or the 'Performance Committee') principal function is to administer the 2002
Plan, the 1998 Plan, the 1993 Plan and the 1999 Executive Bonus Plan.
Accordingly, the Subcommittee joins the Compensation Committee in this report.
The Company's Executive Compensation Program is designed to motivate
executives to achieve the Company's business objectives, with a particular
emphasis on building the value of the Company. Key components of the Executive
Compensation Program consist of base salaries, formula-based cash bonus plans,
performance-based cash bonus plans, stock-based compensation plans, deferred
compensation plans and discretionary bonuses. The Compensation Committee and/or
the Subcommittee may in the future consider awarding executives equity or
profits interests in subsidiaries of the Company. To fulfill its principal
function, the Compensation Committee reviews and approves each of the elements
of the Executive Compensation Program and assesses the effectiveness of the
Executive Compensation Program as a whole. This includes reviewing the design of
the Company's various incentive plans for executive officers and assessing the
competitiveness of the overall Executive Compensation Program. From time to
time, the Company retains external compensation consultants to advise it with
respect to competitive pay levels and the development and design of compensation
plans.
The Company provides its executive officers with a total compensation
package that -- at expected levels of performance -- is generally intended to be
highly competitive with compensation packages provided to similarly situated
executives in the consumer products, restaurant and food industries and in
investment management and private equity/mergers and acquisitions firms. The
Company periodically assesses an executive's competitive level of compensation
based on comparable information drawn from a variety of sources, including proxy
statements, compensation surveys and external compensation consultants. In
addition, such compensation takes into account the various roles and
combinations of responsibilities undertaken by Triarc's executive officers, as
well as their individual performance and contribution to the success of the
Company.
The Compensation Committee is aware that companies selected for compensation
comparison purposes differ from those used for relative stockholder return
comparison purposes in this proxy statement's performance graph. The
Compensation Committee believes stockholders' interests are best served by
providing compensation necessary to attract needed exceptional executive talent
from relevant labor markets and that, in many cases, this talent will be
attracted from companies or institutions that are not included in the peer group
index in the performance graph set forth below.
---------
* This Report does not constitute soliciting material and should not be deemed
filed or incorporated by reference into any Company filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent the Company specifically incorporates this
Report by reference into such other filing.
15
Incentive Compensation Varies With Performance and Other Factors. While the
expected value of an executive's total compensation package is set at a highly
competitive level, each executive officer's pay package places a significant
portion of total compensation at risk, and the actual value of the package may
exceed or fall below such competitive compensation levels, both annually and
over time, based on various factors, including:
the Company's financial and operating performance;
the Company's common stock performance;
the successful completion of acquisitions, dispositions, financings and
other significant transactions;
the return on the Company's investment portfolio;
the performance of the executive's area of responsibility;
individual executive performance; and
the executive's experience in his or her role.
Awards paid under annual and long-term incentive plans to senior operating unit
officers are also tied to that business unit's short- and long-term financial
performance and strategic accomplishments of the Company.
The Company also believes that effectively rewarding individual performance
helps drive managers to contribute in ways that enhance the financial and stock
performance of the Company and its various business units. Although the
Executive Compensation Program provides compensation that varies with financial
performance and strategic accomplishments, an executive officer's incentive
awards may also be influenced by qualitative assessments of Company, business
unit and individual performance, as appropriate. For all executive officers,
these assessments are made by either the Compensation Committee or the
Subcommittee, as appropriate.
Overview of the Executive Compensation Program. Key components of the
Executive Compensation Program include: (i) the base salary program, (ii) the
annual incentive program, including awards under the 1999 Executive Bonus Plan,
discretionary bonuses and special deferred compensation and (iii) the long-term
incentive program.
Base Salary Compensation. The Company's base salary program is intended
to provide base salary levels that are competitive in the external market
for executive talent and reflect an individual's ongoing performance. Base
salaries are periodically adjusted based on the executive's performance, the
Company's overall financial performance and expected salary increases in the
market for executive talent.
Annual Incentive Compensation. During 1999, the Company's stockholders
approved the 1999 Executive Bonus Plan which seeks to provide compensation
opportunities to eligible executive officers and key employees of the
Company and its subsidiaries that are directly related to the financial and
operating performance of the Company. During 2003, six executive officers
(including the Chairman and Chief Executive Officer and President and Chief
Operating Officer) participated in the 1999 Executive Bonus Plan. The 1999
Executive Bonus Plan provides for two types of bonuses: formula bonus awards
and performance goal bonus awards. Formula bonus awards are based solely on
the Company's financial performance using certain predetermined earnings and
capitalization related criteria outlined in the 1999 Executive Bonus Plan.
Performance goal bonus awards are based on the attainment of specific levels
of performance by the Company (or operating units of the Company) with
reference to one or more objective criteria outlined in the 1999
16
Executive Bonus Plan. The Subcommittee establishes the performance bonus
award targets for each participant eligible for such an award no later than
90 days after the commencement of each 1999 Executive Bonus Plan year. The
Subcommittee determines whether the formula based criteria and performance
goals were met and, based on such determinations, the actual amount of each
formula bonus award and each performance goal bonus award and whether
payment of all or a portion of such bonus will be deferred. Performance goal
bonus awards may not exceed $5.0 million to any single participant for any
1999 Executive Bonus Plan year. The Subcommittee may also exercise 'negative
discretion' and reduce performance goal bonuses otherwise payable under the
objective criteria. Bonus payments under the 1999 Executive Bonus Plan are
intended to be exempt from the tax deduction limitation of Section 162(m) of
the Internal Revenue Code of 1986, as amended ('Code'). As discussed in
Proposal 3 below, the Board of Directors has recommended that stockholders
re-approve that portion of the 1999 Executive Bonus Plan that relates to
performance goal bonus awards.
In addition, from time to time the Compensation Committee may award
discretionary bonuses to the Company's executive officers. The amount of
such bonuses are based on the Compensation Committee's evaluation of such
individual's performance and contribution to the Company's overall
performance.
The Compensation Committee may defer payment of bonuses in accordance
with the terms of the Deferral Plan described below.
The annual cash incentive plan for executive officers of Arby's, the
Company's principal business unit (the 'Annual Plan'), provides competitive
annual pay opportunities with amounts payable being linked to the business
unit's annual financial performance, and to the individual's annual
performance. The Annual Plan sets annual incentive target awards at levels
that are competitive in the context of the Company's total Executive
Compensation Program, and the appropriate mix of variable and fixed
compensation. Financial performance is assessed annually against financial
and strategic objectives. Each such executive's individual performance award
is related to performance measures most appropriate to his or her
responsibilities. To reinforce the need for teamwork and focus attention on
overall Company objectives, all participants have a significant portion of
their award linked to corporate financial performance, as defined by
operating income and other measures.
Annual Bonus Awards for 2003. All of the annual bonus compensation for
2003 for the Named Officers (as defined in the Introduction to the Summary
Compensation Table below), was provided pursuant to the 1999 Executive Bonus
Plan and, in the case of Arby's officers, the Annual Plan and/or the
Mid-Term Plan (described below). In 2003, although significant strategic or
financial transactions completed by the Company were the completion of the
sale of $175 million principal amount of 5% convertible note dues 2023, the
filing of an effective 'universal shelf' registration statement in
connection with the possible future offer and sale, from time to time of up
to $2 billion aggregate amount of the Company's common stock, preferred
stock, debt securities and warrants to purchase any of such securities, and
the completion of a distribution of the Company's Class B Common Stock, no
special discretionary bonuses were awarded to the Named Officers. In
addition, in accordance with the terms of the 1999 Executive Bonus Plan, and
notwithstanding the fact that certain specified levels of performance goals
had been attained by the Company, the Subcommittee, in consultation with
management, exercised 'negative discretion' with respect to 2003 and reduced
the performance goal bonus awards that would otherwise have been payable to
participating Named Officers. Accordingly, as explained below under 'CEO and
COO Compensation
17
Arrangements,' total cash compensation payable to the Company's Chairman and
Chief Executive Officer and President and Chief Operating Officer with
respect to 2003 was generally comparable to that paid with respect to 2002,
and total cash compensation payable with respect to 2003 to the other Named
Officers was also generally comparable to that paid with respect to 2002.
In addition, the Compensation Committee reviewed the fiscal 2003
performance of executive corporate officers not participating in the 1999
Executive Bonus Plan and took into account the significant strategic or
financial transactions completed by the Company in 2003 noted above.
Accordingly, no special discretionary bonuses were paid to such executive
corporate officers with respect to 2003. The annual bonuses payable to such
officers primarily reflected individual qualitative executive contributions
based upon the level of the executive's responsibilities, the efficiency and
effectiveness with which the executive oversaw the matters under such
executive's supervision, and the degree to which such executive contributed
to the accomplishment of the Company's goals. Since these officers generally
have overall corporate policy-making and administrative responsibilities,
and do not directly oversee principal operating units of the Company, the
Compensation Committee's assessment of these executives relates generally to
their performance and accomplishment of personal goals and the Company's
achievements as a whole. No specific weighting was assigned to any one
factor over others in determining bonuses paid to such executive officers
with respect to fiscal 2003. Accordingly, the total cash compensation
payable to such officers was generally comparable with respect to 2003 as
compared to the prior year.
Long-Term Incentive Compensation. The Company provides executive
officers and key employees of its principal business units with incentives
linked to longer-term business unit and corporate performance through the
2002 Plan, which provides for the grant of options to purchase shares of
Company Stock and restricted stock of the Company. The Subcommittee believes
equity ownership among executives aligns management's interests with those
of stockholders and provides long-term incentives for the Company's
officers. As authorized by the Board of Directors, in November 2002, the
Performance Committee, in the case of the 1993 Plan, the 1998 Plan and the
2002 Plan, and the Compensation Committee, in the case of the 1997 Plan,
adopted procedures to implement a deferral arrangement whereby the senior
officers of the Company and Arby's would have the ability to defer receipt
of the shares issuable upon exercise of their stock options. The
Compensation Committee and/or the Subcommittee may in the future consider
awarding executives equity or profits interests in subsidiaries of the
Company.
In addition, executive officers and key employees of Arby's participate
in a mid-term cash incentive plan (the 'Mid-Term Plan'), which provides for
cash awards to participants based on the unit's profit over a three year
period. A pool is created based upon the amount by which the unit's actual
profit reaches or exceeds a targeted level.
Grant of Equity-Based Incentives for Fiscal 2003. To date, no
equity-based incentive awards have been awarded in respect of fiscal 2003,
other than option grants made in connection with the commencement of
employment.
CEO and COO Compensation Arrangements. The Company is a party to employment
agreements effective as of May 1, 1999 with Nelson Peltz, the Company's Chairman
and Chief Executive Officer, and Peter W. May, the Company's President and Chief
Operating Officer. The agreements are described in 'Certain Employment
Arrangements with Executive Officers.' Pursuant to such agreements, in addition
to receiving their base salaries, Messrs. Peltz and May are entitled to
participate in the 1999 Executive Bonus Plan. Pursuant to the 1999 Executive
Bonus Plan, Mr. Peltz and Mr. May were awarded approximately $3.8 million and
$1.65 million, respectively, in respect of fiscal 2003 (as
18
compared to $3.6 million and $1.57 million, respectively, in respect of fiscal
2002) based on pre-determined earnings and capitalization related criteria
outlined in the 1999 Executive Bonus Plan. In addition, the Subcommittee
exercised 'negative discretion' and significantly reduced the performance goal
awards that would otherwise have been payable to the participating Named
Officers, including Messrs. Peltz and May. Furthermore, no special discretionary
bonuses or deferred bonuses were awarded in respect of fiscal 2003 to Messrs.
Peltz and May. As noted above, to date, Messrs. Peltz and May have not received
any equity-based incentive awards with respect to 2003.
In accordance with the procedures adopted in November 2002 by the
Performance Committee, in October 2003, Messrs. Peltz and May elected to defer
receipt of the shares issuable to them upon exercise of their stock options that
were to expire on March 1, 2004 and April 21, 2004. On February 27, 2004, each
of Messrs. Peltz and May exercised options that were to expire on March 1, 2004
and, in connection with such deferral elections, 27,549 shares of Class A Common
Stock and 55,089 shares of Class B Common Stock were credited to a deferred
compensation account on the Company's books pending their future delivery to
Mr. Peltz, and 18,366 shares of Class A Common Stock and 36,726 shares of
Class B Common Stock were credited to a deferred compensation account on the
Company's books pending their future delivery to Mr. May. In addition, on
April 20, 2004, each of Messrs. Peltz and May exercised options that were to
expire on April 21, 2004 and, in connection with such deferral elections,
600,921 shares of Class A Common Stock and 1,201,843 shares of Class B Common
Stock were credited to a deferred compensation account on the Company's books
pending their future delivery to Mr. Peltz, and 400,614 shares of Class A Common
Stock and 801,229 shares of Class B Common Stock were credited to a deferred
compensation account on the Company's books pending their future delivery to
Mr. May.
Other Executive Compensation. In addition, the Company provides executive
officers with benefits and perquisites such as a 401(k) plan, health and life
insurance benefits and, in certain cases, tax and financial planning advice,
automobile allowances and other transportation related benefits. Overall, the
Compensation Committee believes the provided levels of benefits and perquisites
are necessary and competitive and, in combination with the previously mentioned
compensation elements, facilitate the Company's ability to secure the needed
executive talents.
Section 162(m) Considerations. The Company's general policy is to award
incentive compensation to Named Officers which is exempt from the deduction
limits of Section 162(m) of the Code. Nevertheless, each of the Compensation
Committee and Subcommittee believes it is important to maintain the flexibility
to authorize compensation that is not exempt from Section 162(m). Further,
because of ambiguities and uncertainties as to the application and
interpretation of Section 162(m), no assurance can be given, notwithstanding the
Company's efforts, that compensation intended by the Company to be exempt from
the deduction limits of Section 162(m) will in fact be so. The Board of
Directors has recommended that the Company's stockholders approve Proposal 3
regarding the reapproval of the Performance Goals Bonus Awards portion of the
1999 Executive Bonus Plan, at the 2004 Annual Meeting of Stockholders. If
Proposal 3 is not approved by stockholders, no further bonus awards will be
payable pursuant to the Performance Goals Bonus Awards portion of the 1999
Executive Bonus Plan. The Compensation Committee and the Performance Committee,
however, reserve the right to pay discretionary bonuses to Named Officers that
are not deductible under Section 162(m).
The Compensation Committee: The Performance Compensation Subcommittee:
David E. Schwab II, Chairman David E. Schwab II, Chairman
Clive Chajet Clive Chajet
Joseph A. Levato
19
INTRODUCTION TO SUMMARY COMPENSATION TABLE
The Summary Compensation Table sets forth salary of, cash bonus awards,
deferred compensation awards as well as non-cash awards granted under the 1998
Plan and the 1999 Executive Bonus Plan with respect to the fiscal year ended
December 30, 2001, the fiscal year ended December 29, 2002 and the fiscal year
ended December 28, 2003 to Triarc's Chairman and Chief Executive Officer,
President and Chief Operating Officer, the other executive officers of Triarc
who constituted Triarc's most highly compensated executive officers during
fiscal 2003 and Arby's chief executive officer during fiscal 2003 (the 'Named
Officers'). Additional information with respect to the compensation arrangements
for the Chairman and Chief Executive Officer and the other Named Officers is set
forth below under 'Certain Employment Arrangements with Executive Officers.' No
stock option awards were made to any of the Named Officers during fiscal 2003
and no restricted stock awards were made to any of the Named Officers during
fiscal 2001, fiscal 2002 or fiscal 2003.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
----------------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION PERIOD SALARY($) BONUS($) COMPENSATION($)
--------------------------- ------ --------- -------- ---------------
Nelson Peltz ................. 2003 1,400,000 3,799,000 263,800(3)
Chairman and Chief Executive 2002 1,400,000 3,640,000 706,509(3)
Officer of Triarc 2001 1,400,000 7,209,000 1,195,262(3)
Peter W. May ................. 2003 950,000(2) 1,649,000 161,803(3)
President and Chief Operating 2002 950,000(2) 1,570,000 660,802(3)
Officer of Triarc 2001 1,200,000 3,354,000 691,937(3)
Brian L. Schorr .............. 2003 475,000 525,000 -- (4)
Executive Vice President and 2002 475,000 525,000 -- (4)
General Counsel of Triarc 2001 475,000 525,000 -- (4)
Francis T. McCarron .......... 2003 350,000 525,000 -- (4)
Senior Vice President and 2002 350,000 525,000 -- (4)
Chief Financial Officer of 2001 294,856 575,000 -- (4)
Triarc
Jonathan P. May .............. 2003 250,000 540,625 -- (4)
Senior Vice President -- 2002 250,000 475,000 -- (4)
Corporate Development of 2001 247,917 406,250 -- (4)
Triarc and Chairman of Arby's
Michael C. Howe .............. 2003 355,000 266,250(7) -- (4)
Former President and Chief 2002 351,250 292,875 -- (4)
Executive Officer of Arby's 2001 340,000 255,000 -- (4)
LONG TERM COMPENSATION
-------------------------------------------------
AWARDS PAYOUTS
------------------ ----------
SECURITIES
UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION OPTIONS/SARS(#)(1) PAYOUTS($) COMPENSATION($)
--------------------------- ------------------ ---------- ---------------
Nelson Peltz ................. -- -- 13,000(5)
Chairman and Chief Executive 350,000 -- 12,500(5)
Officer of Triarc 250,000 -- 10,200(5)
Peter W. May ................. -- -- 13,000(5)
President and Chief Operating 175,000 -- 12,500(5)
Officer of Triarc 125,000 -- 10,200(5)
Brian L. Schorr .............. -- -- 16,374(6)
Executive Vice President and 30,000 -- 15,874(6)
General Counsel of Triarc 25,000 -- 13,574(6)
Francis T. McCarron .......... -- -- 13,000(5)
Senior Vice President and 30,000 -- 12,500(5)
Chief Financial Officer of 40,000 -- 10,200(5)
Triarc
Jonathan P. May .............. -- 59,375 13,000(5)
Senior Vice President -- 30,000 137,500 12,500(5)
Corporate Development of 25,000 206,250 10,200(5)
Triarc and Chairman of Arby's
Michael C. Howe .............. -- 510,313(7) 6,000(5)
Former President and Chief 30,000 292,875 12,500(5)
Executive Officer of Arby's 25,000 280,500 10,200(5)
---------
(1) All stock option grants with respect to 2001 and 2002 were made pursuant to
the 1998 Plan. To date, no equity-based incentive awards have been made with
respect to 2003.
(2) Mr. May waived the right to receive $250,000 of his annual base salary
during each of fiscal 2002 and 2003.
(3) The Company, pursuant to a security program established by the Board of
Directors and administered by independent committees of the Board of
Directors, requires Messrs. Peltz and May to use corporate aircraft for
personal as well as business travel and encourages members of their families
to use such aircraft when they travel. For fiscal 2003, excludes $322,454
that Mr. Peltz reimbursed the Company, representing the approximate cost to
the Company relating to his personal non-commuting use of Company aircraft,
and excludes $251,641 that Mr. May reimbursed
(footnotes continued on next page)
20
(footnotes continued from previous page)
the Company, representing the approximate cost to the Company relating to
his personal use of Company aircraft. Includes approximate costs of:
$132,376 (net of reimbursed costs), $594,845 and $1,067,559 for fiscal 2003,
fiscal 2002 and fiscal 2001, respectively, for use of such aircraft by Mr.
Peltz; and $486,937 and $542,540 for fiscal 2002 and fiscal 2001,
respectively, for use of such aircraft by Mr. May. Also includes $96,545 for
other transportation benefits and $40,000 for tax and financial planning
services for Mr. May in fiscal 2003.
(4) Perquisites and other personal benefits did not exceed the lesser of either
$50,000 or 10% of the total annual salary and bonus reported under the
headings of 'Salary' and 'Bonus.'
(5) Represents amounts contributed to a 401(k) plan by Triarc on behalf of the
Named Officer.
(6) Includes $13,000, $12,500 and $10,200 contributed to a 401(k) plan by Triarc
on behalf of Mr. Schorr in fiscal 2003, fiscal 2002 and fiscal 2001,
respectively, and $3,374 of other compensation paid by Triarc in an amount
equal to premiums for life insurance in each of fiscal 2003, fiscal 2002 and
fiscal 2001.
(7) The bonus payment and LTIP payout made to Mr. Howe in respect of 2003 were
made in accordance with the terms of a separation agreement entered into by
Mr. Howe and Arby's. See Certain Employment Arrangements with Executive
Officers.
CERTAIN EMPLOYMENT ARRANGEMENTS WITH EXECUTIVE OFFICERS
Nelson Peltz and Peter W. May. Employment agreements were entered into by
the Company and Messrs. Peltz and May, effective as of May 1, 1999. The
agreements, which currently extend through April 30, 2009, provide for a five
year term, unless otherwise terminated as provided therein, with automatic
annual one year extensions unless either the Company or the executive gives
written notice not later than 180 days preceding the date of any such extension
that such party does not wish to extend the term. The agreements provide for
annual base salaries of $1,400,000 per year for Mr. Peltz and $1,200,000 per
year for Mr. May, subject to increase but not decrease from time to time. Mr.
May has waived his right to receive $250,000 of his 2004 annual base salary. In
addition, the executives will receive an annual bonus for each fiscal year at
least equal to the Formula Bonus Award actually earned under the 1999 Executive
Bonus Plan; provided that the Board of Directors (including the Performance
Committee of the Board of Directors) may award Performance Goal Bonus Awards
under the 1999 Executive Bonus Plan and additional bonuses in its discretion. In
the event employment is terminated by the Company without 'cause,' or by the
executive for 'good reason' (as each such term is defined in the agreements), or
at the executive's option following a 'change of control,' the agreements
provide that each executive will be entitled to receive within ten days of
termination, among other things, an amount equal to the sum of: (i) the
executive's then current base salary through the date of termination, any bonus
amounts payable, and accrued vacation pay; (ii) the executive's then current
base salary through the remainder of the employment term; (iii) five times the
highest bonus as calculated under the agreements; and (iv) five times the sum of
Company contributions paid or accrued on the executive's behalf to any defined
contribution retirement plans during the year preceding termination. In
addition, the executives will be entitled to receive a pro rata bonus for the
year in which the termination occurs. 'Change of control' would generally
include the following events: (i) a majority of the Company's directors being
replaced; (ii) any 'person,' as defined in the Exchange Act, acquires
21
50% or more of the combined voting power of the Company's voting securities;
(iii) a sale of all or substantially all of the assets of the Company; (iv) a
merger or similar transaction that requires stockholder approval, unless the
Company's stockholders continue to own 50% or more of the combined voting power
of the resulting entity's voting securities; (v) the Company's stockholders
approve a plan of complete liquidation or dissolution of the Company; or
(vi) such other events as may be designated by the Board of Directors. Under the
agreements, in the event that any benefit paid to Messrs. Peltz and May becomes
subject to excise tax imposed under Section 4999 of the Internal Revenue Code,
the Company will indemnify Messrs. Peltz and May so that after payment of such
excise taxes, Messrs. Peltz and May will be in the same after-tax position as if
no excise tax had been imposed. The agreements also provide that in the event
that employment is terminated without 'cause' by the Company, by Messrs. Peltz
or May for 'good reason,' or under other specified circumstances (including a
change of control), all non-vested stock options and other non-vested stock or
stock-based awards then owned by the executives will, subject to certain
limitations, vest immediately and (i) subject to certain limitations, all of
such awards granted on or after February 24, 2000 and (ii) all of the Company
stock options granted before February 24, 2000 with an exercise price greater
than $17.6875 per share (the closing price of the Company's common stock on such
date), will remain exercisable until the earlier of one year following
termination or the award's stated expiration date. In addition, the Company,
pursuant to a security program established by the Board of Directors and
administered by independent committees of the Board of Directors, authorized
certain security measures for Messrs. Peltz and May and their immediate family
members. The Company provides the security measures for the Company's benefit
rather than as a personal benefit or perquisite for these executives. The costs
of these services for Mr. Peltz were $222,775 in fiscal 2003, $225,625 in fiscal
2002 and $351,414 in fiscal 2001, and for Mr. May were $73,435 in fiscal 2003,
$50,103 in fiscal 2002 and $53,148 in fiscal 2001.
Brian L. Schorr. Mr. Schorr, the Company's Executive Vice President and
General Counsel, is a party to an employment agreement with the Company entered
into effective as of February 24, 2000. The agreement, which currently extends
through February 24, 2007, provides for a three year term, unless otherwise
terminated as provided therein, with automatic annual one year extensions unless
either the Company or Mr. Schorr gives written notice not later than 180 days
preceding the date of any such extension that such party does not wish to extend
the term. The agreement provides for an annual base salary of $475,000 per year,
subject to increase but not decrease from time to time. In addition, Mr. Schorr
is eligible to receive bonuses during each of the Company's fiscal years from
time to time as appropriate, in the sole discretion of the Company, and to
participate in the 1999 Executive Bonus Plan. In the event employment is
terminated by the Company without 'cause,' or by Mr. Schorr for certain
specified reasons (including following a 'change of control' or for 'good
reason'), the agreement provides that Mr. Schorr will be entitled to receive
within ten days of termination, among other things, an amount equal to the sum
of: (i) Mr. Schorr's then current base salary through the date of termination,
any bonus amounts payable, accrued vacation pay, and two and one-half times the
sum of Company contributions paid or accrued on Mr. Schorr's behalf to any
defined contribution retirement plans during the year preceding termination;
(ii) Mr. Schorr's then current salary through the remainder of the employment
term (but in no event for more than two and one-half years); and (iii) two and
one-half times the highest bonus, as calculated under the agreement. In
addition, Mr. Schorr will be entitled to receive a pro rata bonus for the year
in which the termination occurs. Under the agreement, in the event that any
benefit paid to Mr. Schorr becomes subject to excise tax imposed under Section
4999 of the Internal Revenue Code, the Company will indemnify Mr. Schorr so that
after payment of such excise taxes, Mr. Schorr will be in the same after-tax
position as if no excise tax had been imposed.
22
The agreement also provides that in the event that employment is terminated
without 'cause' by the Company, or by Mr. Schorr for certain specified reasons
(including following a 'change of control' or for 'good reason'), all non-vested
stock options and other non-vested stock or stock-based awards of the Company or
any subsidiary then owned by Mr. Schorr will, subject to certain limitations,
vest immediately and (i) all of such awards granted on or after February 24,
2000 and (ii) all of the Company stock options granted before February 24, 2000
with an exercise price greater than $17.6875 per share (the closing price of the
Company's common stock on such date), will remain exercisable until the earlier
of one year following termination or the award's stated expiration date.
Jonathan P. May. Mr. May entered into a separation agreement with the
Company on April 19, 2004. Effective as of April 30, 2004, Mr. May will resign
as an officer and employee of the Company, as Chairman of Arby's and as an
officer and director of all other subsidiaries of the Company. Pursuant to the
agreement, Mr. May will receive his base salary through April 30, 2004.
Following such date, Mr. May has agreed to serve as a consultant, on a part-time
non-exclusive basis, to the Company during the period from May 1, 2004 through
December 31, 2004 and in consideration for such services will receive
semi-monthly payments of $10,417 during such period. Pursuant to the agreement,
Mr. May will be entitled to receive a pro-rata bonus with respect to fiscal
2004. In addition, Package Options (as defined below) to purchase 28,334 shares
of Class A Common Stock and 56,668 shares of Class B Common Stock previously
granted to Mr. May that will not have vested by their own terms as of April 30,
2004 will be vested effective as of such date and remain exercisable by Mr. May
until April 30, 2005.
Michael C. Howe. Mr. Howe entered into a separation agreement with Arby's
effective as of December 26, 2003. Effective as of such date, Mr. Howe resigned
as an officer, director and employee of Arby's and all other subsidiaries of the
Company. Pursuant to such agreement, Mr. Howe received his base salary through
December 26, 2003. Following such date, Mr. Howe is entitled to receive (i) his
annual base salary in effect as of December 26, 2003, payable in semi-monthly
installments for a period of twelve months and (ii) commencing twelve months
after December 26, 2003, his annual base rate of salary in effect as of
December 26, 2003, payable in semi-monthly installments for a period of twelve
months, subject, in the case of the payments referred to in this clause (ii), to
offset by any compensation earned during such twelve month period by Mr. Howe
from any new employer. Mr. Howe is also entitled to continue to receive his car
allowance at the rate in effect as of December 26, 2003, payable in semi-monthly
installments for a period of six months. Pursuant to the agreement, Mr. Howe
received his annual target incentive bonus ($266,250) for services performed
during Arby's fiscal year ended December 28, 2003 and the following payments
under the Mid-Term Plan: $252,938 with respect to the 2001-2003 cycle; $177,500
with respect to the 2002-2004 cycle; and $79,875 with respect to the 2003-2005
cycle. In addition, all of the stock options granted to Mr. Howe that had vested
as of December 26, 2003 remained exercisable until March 25, 2004 in accordance
with the terms of the Company's equity participation plans. In addition, options
to purchase 28,334 shares of Class A Common Stock and 56,668 shares of Class B
Common Stock issued to Mr. Howe that had not vested by their own terms as of
December 26, 2003 were vested effective as of such date and remain exercisable
by Mr. Howe until December 26, 2004. The separation agreement supercedes Mr.
Howe's employment agreement dated as of August 1, 1999.
1999 EXECUTIVE BONUS PLAN
The Company's 1999 Executive Bonus Plan is designed to provide incentive
compensation for designated executive officers and key employees of the Company
and its subsidiaries that is directly
23
related to the financial performance of the Company. The plan was approved by
the Company's stockholders on September 23, 1999. The 1999 Executive Bonus Plan,
which became effective as of May 3, 1999, provides for two types of bonuses to
be awarded to designated participants: 'Formula Bonus Awards' and 'Performance
Goal Bonus Awards'. Formula Bonus Awards are based solely on the Company's
financial performance using certain predetermined earnings and capitalization
related criteria outlined in the plan. Performance Goal Bonus Awards are based
on the Company (or operating units of the Company) achieving certain specific
levels of performance with reference to one or more objective criteria outlined
in the 1999 Executive Bonus Plan. Performance bonus award targets are
established annually by the Performance Committee, based on specific categories
of criteria set forth in the 1999 Executive Bonus Plan. Such criteria include
the successful completion of acquisitions, dispositions, recapitalizations,
financings and refinancings, return on the Company's investment portfolio and
other market and operating performance measures, including, among other things,
earnings per share, market share, margins, productivity improvement and stock
price. The Performance Committee establishes the performance goals as to each
participant for each plan year and, if more than one performance goal is
established, the weighting of the performance goals. Messrs. Peltz and May are
eligible to receive Formula Bonus Awards and each of Messrs. Peltz, P. May,
Garden, Schorr, McCarron and J. May has, and one other Company executive has,
been designated by the Performance Committee as being eligible to receive a
Performance Goal Bonus Award under the 1999 Executive Bonus Plan for plan year
2004. Performance Goal Bonus Awards may not exceed $5,000,000 to any single
participant for any plan year. The Performance Committee may, in its sole and
absolute discretion, adjust or modify the calculation of the performance goals
in certain circumstances. In addition, the 1999 Executive Bonus Plan provides
that the Performance Committee may reduce or eliminate a Performance Goal Bonus
Award even if certain performance goals have been achieved if the Performance
Committee, in its sole discretion, determines to do so. The Performance
Committee may also amend, suspend, or terminate the 1999 Executive Bonus Plan or
any portion thereof at any time; provided that no such amendment or alteration
shall be made that would impair the rights of any participant without the
participant's consent. Payments of awards under the 1999 Executive Bonus Plan
are intended to be exempt from the tax deduction limitation of Section 162(m) of
the Internal Revenue Code, which generally limits deductions for compensation
paid to senior executive officers to $1,000,000 per year. In order for the
Company to continue to benefit from these deductions, the material terms of the
performance goal must be disclosed and re-approved by stockholders no later than
five years after stockholder approval was first received if the committee
administering the plan has the authority to change the targets under a
performance goal after stockholder approval of the goal. Therefore, the Board of
Directors is recommending that the stockholders re-approve the material terms of
the performance goals applicable to the Performance Goal Bonus Awards portion of
the 1999 Executive Bonus Plan, as described further in Proposal 3 below.
CASH INCENTIVE PLANS
Arby's has an annual cash incentive plan (the 'Annual Incentive Plan') and a
mid-term cash incentive plan (the 'Mid-Term Incentive Plan') for executive
officers and key employees, including Messrs. Jonathan May (through 2002, with
respect to the Annual Incentive Plan and 2003, with respect to the Mid-Term
Incentive Plan) and Michael Howe (through 2003).
The Annual Incentive Plan is designed to provide annual incentive awards to
participants, with amounts payable being linked to whether Arby's has met
certain pre-determined financial goals and the performance of the participant
during the preceding year. Under the Annual Incentive Plan,
24
participants may receive awards of a specified percentage of their then current
base salaries, which percentage varies depending upon the level of seniority and
responsibility of the participant. Such percentage is set by the company's
management in consultation with management of Triarc. The board of directors of
Arby's, in consultation with management of Triarc and the Compensation Committee
of the Triarc Board of Directors, may elect to adjust awards on a discretionary
basis to reflect the relative individual contribution of the executive or key
employee, to evaluate the 'quality' of the company's earnings or to take into
account external factors that affect performance results. The board of directors
of Arby's may also decide that multiple performance objectives related to the
company's and/or the individual's performance may be appropriate and in such
event, such factors would be weighted in order to determine the amount of the
annual incentive awards. The Annual Incentive Plan may be amended or terminated
at any time.
Under the Mid-Term Incentive Plan, incentive awards are granted to
participants if Arby's achieves an agreed upon profit over a three year
performance cycle. During each plan year, an amount is accrued for each
participant based upon the amount by which the company's profit for such year
exceeds a certain minimum return. A new three-year performance cycle begins each
year, such that after the third year the annual cash amount paid to participants
pursuant to the Mid-Term Incentive Plan should equal the target award if Arby's
profit goals have been achieved for the full three-year cycle. Except as may
otherwise be set forth in a participant's employment agreement, the board of
directors of Arby's, together with Triarc's management and the Compensation
Committee of the Board of Directors, may adjust an individual's award, upward or
downward, based upon an assessment of the individual's relative contribution to
the company's longer-term profit performance. The Mid-Term Incentive Plan may be
amended or terminated at any time.
DISCRETIONARY BONUSES
From time to time, the Compensation Committee of the Board may award
discretionary or special bonuses or deferred compensation based on performance
to certain executive officers. The amounts of such bonuses or deferred
compensation will be based on the Compensation Committee's evaluation of each
such individual's contribution.
DEFERRAL PLAN FOR SENIOR EXECUTIVE OFFICERS OF TRIARC COMPANIES, INC.
The Deferral Plan for Senior Executive Officers of Triarc Companies, Inc.
(the 'Deferral Plan') was approved by the Compensation Committee of the Board of
Directors effective December 14, 2000. Pursuant to the Deferral Plan, the
Company establishes one or more bookkeeping accounts to reflect bonuses awarded
to participants the payment of which has been deferred. These accounts are
adjusted from time to time for earnings and investment gains and losses.
Deferred bonus accounts for each participant are deemed invested in certain
approved investments selected by the participant or an investment manager chosen
by the Company and reasonably acceptable to the participant. The Company may
replicate any deferred bonus account in a trust, in which event the value of the
deferred bonus account on the books of the Company will be equal to the value of
the actual approved investments related to such account in the trust. A
participant may receive the value of a deferred bonus account, in cash or
approved investments, or any combination thereof, from the Company upon the
earliest of: (i) the first business day in January of the fourth calendar year
following the calendar year in which the related bonus was awarded to the
participant; (ii) no later than five business days following the participant's
'separation from service' (as defined in the Deferral Plan); and (iii) such time
as the payment would be deductible by the Company for Federal income tax
purposes without
25
regard to the limitation of Section 162(m) of the Internal Revenue Code. On or
before the June 30 preceding the payment date specified in clause (i) above, a
participant may elect to defer such date for up to three additional whole years.
A participant may make such an election more than one time. Although a
participant is at all times fully vested in his or her deferred bonus accounts,
participants have the status of general unsecured creditors of the Company with
respect to the Company's obligation to make payment to them under the Deferral
Plan and any assets contained in a trust formed under the Deferral Plan are
subject to claims by creditors of the Company. Deferred bonus accounts have been
established for Messrs. Peltz and May and the Company has established grantor
trusts with a financial institution for the purpose of paying amounts due to
Messrs. Peltz and May under the Deferral Plan.
EQUITY OR PROFITS INTEREST AWARDS
In 1997, the Company established the Snapple Beverage Group, Inc. 1997 Stock
Option Plan, and pursuant to that plan awarded options to executives of the
Company and to its subsidiaries to acquire shares of Snapple Beverage Group,
Inc., a subsidiary of the Company. That plan terminated in 2000 when the Triarc
Beverage Group was sold. The Compensation Committee and/or the Performance
Committee may, from time to time in the future, consider awarding certain
executive officers of the Company and its subsidiaries equity or profits
interests in subsidiaries of the Company in order to motivate such executives to
achieve the Company's business objectives.
EQUITY PARTICIPATION PLAN INFORMATION
In connection with the dividend of the Class B Common Stock that was
declared in August 2003 (the 'Stock Dividend'), each stock option outstanding
under our equity participation plans as of August 21, 2003 was adjusted so as to
become exercisable for a package (the 'Package Options') consisting of one share
of Class A Common Stock and two shares of Class B Common Stock. All stock
options that were granted during 2003 following the distribution of the Class B
Common Stock are exercisable each for one share of Class B Common Stock (the
'Class B Options').
The following table gives information about our equity participation plans
as of December 28, 2003.
(A) (B) (C) (D)
NUMBER OF NUMBER OF
CLASS A CLASS B
SHARES SHARES
REMAINING REMAINING
AVAILABLE FOR AVAILABLE FOR
WEIGHTED-AVERAGE FUTURE ISSUANCE FUTURE ISSUANCE
EXERCISE PRICE OF UNDER EQUITY UNDER EQUITY
NUMBER OF SECURITIES TO BE OUTSTANDING COMPENSATION COMPENSATION
ISSUED UPON EXERCISE OPTIONS, PLANS (EXCLUDING PLANS (EXCLUDING
OF OUTSTANDING OPTIONS WARRANTS AND SECURITIES REFLECTED SECURITIES REFLECTED
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS IN COLUMN (A)) IN COLUMN (A))
------------- ------------------- ------ -------------- --------------
Equity compensation plans
approved by security
holders(1).................... 7,371,832 Package Options (2) $ 20.84 4,976,000(3) 9,748,000(3)
204,000 Class B Options $ 11.25
Equity compensation plans not
approved by security
holders(4).................... 197,587 Package Options (2) $ 23.3825 0 0
Total....................... 7,569,419 Package Options (2) $ 20.91 4,976,000(3) 9,748,000(3)
204,000 Class B Options $ 11.25
---------
(1) 1993, 1998 and 2002 Equity Participation Plans
(footnotes continued on next page)
26
(footnotes continued from previous page)
(2) Each Package Option is exercisable for one share of Class A Common Stock and
two shares of Class B Common Stock.
(3) Includes securities issuable to directors as fees in lieu of cash.
(4) 1997 Equity Participation Plan
1993 EQUITY PARTICIPATION PLAN
The 1993 Plan provided for the grant of options to purchase Class A Common
Stock, stock appreciation rights ('SARs'), restricted shares of Class A Common
Stock and, to non-employee directors of Triarc, at their option, shares of
Class A Common Stock in lieu of annual retainer fees and/or Board of Directors
or committee meeting attendance fees ('Fees') that would otherwise be payable in
cash. Directors, selected officers and key employees of, and key consultants to,
Triarc and its subsidiaries were eligible to participate in the 1993 Plan. A
maximum of 10,000,000 shares of Class A Common Stock (subject to certain
adjustments) were authorized to be delivered by the Company pursuant to options,
SARs and restricted shares granted under the 1993 Plan. The term during which
awards could be granted under the 1993 Plan expired on April 24, 1998. As a
result of the Stock Dividend, all outstanding options under the 1993 Plan at
August 21, 2003 were adjusted so as to be exercisable for one share of Class A
Common Stock and two shares of Class B Common Stock (i.e., Package Options). As
of April 13, 2004, Package Options to acquire a total of 4,085,500 shares of
Class A Common Stock and 8,171,000 shares of Class B Common Stock were
outstanding under the 1993 Plan. The 1993 Plan is administered by the
Performance Committee.
1997 EQUITY PARTICIPATION PLAN
The 1997 Equity Participation Plan (the '1997 Plan') was approved by the
Executive Committee of the Board of Directors on December 11, 1997 and provided
for the granting of stock options to purchase shares of Class A Common Stock.
Participants in the 1997 Plan were limited to selected key employees and
consultants of Triarc, its subsidiaries and affiliates who are important to the
success and growth of the Company, its subsidiaries and affiliates, but who were
not 'directors,' 'executive officers' or 'officers' of Triarc. A maximum of
500,000 shares of Class A Common Stock were authorized to be issued under the
1997 Plan. The term during which options could be granted under the 1997 Plan
expired on December 11, 2002. As a result of the Stock Dividend, all outstanding
options under the 1997 Plan at August 21, 2003 were adjusted so as to be
exercisable for one share of Class A Common Stock and two shares of Class B
Common Stock (i.e. Package Options). As of April 13, 2004, Package Options to
acquire a total of 132,001 shares of Class A Common Stock and 264,002 shares of
Class B Common Stock, were outstanding under the 1997 Plan. The 1997 Plan is
administered by the Compensation Committee.
1998 EQUITY PARTICIPATION PLAN
The 1998 Plan was approved by the Board of Directors on March 10, 1998 and
was approved by the Company's stockholders on May 6, 1998. The 1998 Plan
replaced the 1993 Plan pursuant to which awards could no longer be granted after
April 24, 1998. The 1998 Plan provides for the granting of stock options, SARs
and restricted stock to officers and key employees of, and consultants to,
Triarc and its
27
subsidiaries and affiliates. The 1998 Plan provides for automatic awards of
options to non-employee directors of Triarc and permits non-employee directors
to elect to receive all or a portion of their Fees in shares of Class A Common
Stock. A maximum of 5,000,000 aggregate shares of Class A Common Stock (subject
to certain adjustments) were authorized to be delivered on the exercise of
options or SARs or upon a director's election to receive Fees in Triarc shares
pursuant to the 1998 Plan. The term during which awards could be granted under
the 1998 Plan expired on April 30, 2003. As a result of the Stock Dividend, all
outstanding options under the 1998 Plan at August 21, 2003 were adjusted so as
to be exercisable for one share of Class A Common Stock and two shares of
Class B Common Stock (i.e., Package Options). As of April 13, 2004, Package
Options to acquire a total of 2,858,001 shares of Class A Common Stock and
5,716,002 shares of Class B Common Stock were outstanding under the 1998 Plan.
The 1998 Plan is administered by the Performance Committee.
2002 EQUITY PARTICIPATION PLAN
The 2002 Equity Participation Plan (the '2002 Plan') was approved by the
Board of Directors on April 25, 2002 and was approved by the Company's
stockholders on June 4, 2002. The 2002 Plan provides for the granting of stock
options, SARs and restricted stock to officers, key employees of, and
consultants to, the Company and its subsidiaries and affiliates. The 2002 Plan
also provides for automatic awards of options to non-employee directors of the
Company and permits non-employee directors to elect to receive all or a portion
of their Fees, in shares of Class A Common Stock. Subject to certain
anti-dilution adjustments, a maximum of 5,000,000 aggregate shares of Class A
Common Stock and 10,000,000 aggregate shares of Class B Common Stock may be
granted as restricted shares or to be delivered on the exercise of options or
SARs or upon a director's election to receive Fees in Triarc shares pursuant to
the 2002 Plan. In addition, the maximum number of shares of Class A Common Stock
that may be granted as restricted shares, options or SARs to any individual in a
calendar year is 1,000,000 shares. The 2002 Plan replaces the 1997 Equity
Participation Plan, the term during which options may be granted thereunder
expired on December 11, 2002, and the 1998 Equity Participation Plan, the term
during which options may be granted thereunder expired on April 30, 2003. As a
result of the Stock Dividend, all outstanding options under the 2002 Plan at
August 21, 2003 were adjusted so as to be exercisable for one share of Class A
Common Stock and two shares of Class B Common Stock (i.e., Package Options). As
of April 13, 2004, (i) Package Options to acquire a total of 24,000 shares of
Class A Common Stock and 48,000 shares of Class B Common Stock, (ii) 15,000
options to acquire shares of Class A Common Stock and (iii) 384,000 Class B
Options were outstanding under the 2002 Plan. The 2002 Plan is administered by
the Performance Committee. The term during which awards may be granted under the
2002 Plan will expire on June 4, 2012.
OPTIONS GRANTED IN FISCAL 2003
No stock options were granted to any of the Named Officers in fiscal 2003.
OPTION VALUES AT END OF FISCAL 2003
The following table sets forth certain information concerning each exercise
of options by the Named Officers during fiscal 2003, as well as the value as of
December 28, 2003 of unexercised in-the-money options granted to the Named
Officers and outstanding as of the end of fiscal 2003.
28
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES UNDERLYING
OPTIONS AT FISCAL YEAR-END(#)
SHARES ACQUIRED -------------------------------------------
ON EXERCISE(1) VALUE EXERCISABLE UNEXERCISABLE
------------------- REALIZED --------------------- -------------------
NAME CLASS A CLASS B ($)(2) CLASS A CLASS B CLASS A CLASS B
---- ------- ------- ------ ------- ------- ------- -------
Nelson Peltz......... (4) (4) -0-(4) 3,208,333 6,416,666 316,667 633,334
Peter W. May......... (4) (4) -0-(4) 2,016,666 4,033,332 158,334 316,668
Brian L. Schorr...... -0- -0- -0- 173,332 346,664 28,334 56,668
Francis T. McCarron.. 50,000 100,000 836,569 86,666 173,332 33,334 66,668
Jonathan P. May...... 32,000 28,000 548,342 146,666 293,332 28,334 56,668
Michael C. Howe...... -0- -0- -0- 198,500 397,000 0(5) 0(5)
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END($)(3)
---------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
Nelson Peltz......... 41,129,080 1,913,670
Peter W. May......... 26,430,287 956,838
Brian L. Schorr...... 1,846,835 173,272
Francis T. McCarron.. 698,916 212,072
Jonathan P. May...... 1,510,891 173,272
Michael C. Howe...... 2,126,441 0(5)
---------
(1) Each of the options exercised in 2003 by Messrs. Peltz, Peter May and
McCarron was a Package Option. In 2003, Mr. Jonathan May exercised 18,000
options to acquire shares of Class A Common Stock prior to the Stock
Dividend and 14,000 Package Options subsequent to the Stock Dividend.
(2) This amount is the aggregate of the market value of one share Class A Common
Stock and two shares of Class B Common Stock at the time each stock option
was exercised minus the exercise price for that option.
(3) Each of the options held by the Named Officers at December 28, 2003 was a
Package Option. This amount is the aggregate of the market value on
December 26, 2003 (the last trading day during fiscal 2003) of the one share
of Class A Common Stock and two shares of Class B Common Stock under the
options minus the exercise price of the options. On December 26, 2003 the
closing prices of Class A Common Stock and Class B Common Stock on the New
York Stock Exchange were $11.06 and $10.65 per share, respectively.
(4) On April 23, 2003, Messrs. Peltz and May exercised options to acquire
600,000 shares of Class A Common Stock and 400,000 shares of Class A Common
Stock, respectively. Payment of the exercise price for such options were
made through the use of shares of Triarc Class A Common Stock owned by
Messrs. Peltz and May. Delivery to Mr. Peltz of 216,477 shares of Class A
Common Stock and to Mr. May of 144,318 shares of Class A Common Stock
issuable upon such exercise was deferred pursuant to procedures adopted by
the Performance Committee in November 2002 and were delivered to deferral
trusts established to hold these shares pending future delivery of such
shares to Messrs. Peltz and May. In connection with the Stock Dividend, two
shares of Class B Common Stock were distributed with respect to each such
share of Class A Common Stock held by the deferral trusts. See 'Long-Term
Incentive Compensation' and 'CEO and COO Compensation Arrangements' in the
Executive Compensation Report of the Compensation Committee and Performance
Compensation Subcommittee above.
(5) All of Mr. Howe's options vested in December 2003 in accordance with the
terms of his separation agreement. See 'Certain Employment Agreements with
Executive Officers -- Michael C. Howe' above.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
No awards were made during fiscal 2003 to any Named Officer, other than Mr.
Howe, pursuant to any long-term incentive plan, including the Mid-Term Incentive
Plan. Pursuant to the terms of his separation agreement, in March 2004 that
award was vested and Mr. Howe received a payment of
29
$79,875 in respect of the 2003-2005 cycle. Payments for prior award cycles
pursuant to the Mid-Term Incentive Plan were made to Mr. Jonathan May and Mr.
Howe during fiscal 2003 and are reflected in the Summary Compensation Table. For
additional information regarding the Mid-Term Incentive Plan, see ' -- Cash
Incentive Plans' above. For information regarding payments made to Mr. Howe
under the Mid-Term Incentive Plan, see 'Certain Employment Arrangements with
Executive Officers -- Michael C. Howe' above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Levato was appointed to the Compensation Committee of the Board of
Directors in July 1997. Mr. Levato has been a director of the Company since July
1996 and retired as Executive Vice President and Chief Financial Officer of the
Company in August 1996. Mr. Levato is not a member of the Performance Committee.
30
AUDIT COMMITTEE REPORT*
In accordance with its written charter, the Audit Committee assists the
Board in oversight of the accounting, auditing, and financial reporting
practices of the Company. The Audit Committee consists of three independent
members (as independence is defined by the rules of the New York Stock
Exchange). The Company's management is responsible for the financial reporting
process and for preparing the Company's financial statements and the Company's
outside auditors are responsible for performing an independent audit of such
financial statements in accordance with generally accepted auditing standards
and for issuing a report thereon. The members of the Audit Committee are not
professionally engaged in the practice of accounting or auditing. The Audit
Committee relies, without independent verification, on the information provided
to it and on the representations made by management and the independent auditors
that the financial statements have been prepared in conformity with generally
accepted accounting principles.
In performing its oversight function, the Audit Committee reviewed and
discussed the audited consolidated financial statements of the Company as of and
for the fiscal year ended December 28, 2003 with management and Deloitte &
Touche LLP, the Company's independent auditors. The Audit Committee also
discussed with Deloitte & Touche all matters required to be discussed by
Statement on Auditing Standards No. 61, 'Communication with Audit Committees,'
as amended, and, with and without management present, discussed and reviewed the
results of Deloitte & Touche's examination of the Company's financial
statements.
The Audit Committee received from Deloitte & Touche a written statement
regarding all relationships between Deloitte & Touche and the Company that might
bear on the Deloitte & Touche's independence consistent with Independence
Standards Board Standard No. 1, 'Independence Discussions with Audit
Committees,' as amended. The Audit Committee discussed with Deloitte & Touche
any relationships that may have an impact on their objectivity and independence
and satisfied itself as to Deloitte & Touche's independence. The Audit Committee
also considered whether the provision of services by Deloitte & Touche to the
Company not related to the audit of the financial statements referred to above
and to the reviews of the interim financial statements included in the Company's
Forms 10-Q is compatible with maintaining Deloitte & Touche's independence.
Based on the above-mentioned review and discussions with management and
Deloitte & Touche, and subject to the limitations on the role of the Audit
Committee and the Audit Committee's responsibility described above and in the
Audit Committee's written charter, the Audit Committee recommended to the Board
of Directors that the Company's audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 2003.
The Audit Committee:
Raymond S. Troubh (Chairman)
Joseph A. Levato
David E. Schwab II
---------
* This Audit Committee Report does not constitute soliciting material and should
not be deemed filed or incorporated by reference into any Company filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, except to the extent the Company specifically incorporates
this Audit Committee Report by reference into such other filing.
31
STOCK PRICE PERFORMANCE GRAPH(*)
TRIARC COMPANIES, INC.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN:
TRIARC VS. S&P 500 INDEX AND S&P SMALL CAP 600 INDEX
The following graph compares the cumulative five year total return of
Triarc's Class A Common Stock, and the total return of Triarc's Class B Common
Stock since its initial issuance in September 2003, with the S&P 500 Index and
the S&P Small Cap 600 Index (the 'Peer Group'). The Peer Group has been selected
because the Company does not believe it can reasonably identify a peer group
comprised of publicly-traded companies focused, during the applicable period, on
non-alcoholic beverages and restaurants that are comparable to the Company in
terms of revenues or product mix. Accordingly, the Company has chosen the Peer
Group on the basis of comparing the Company's performance to that of the
companies with similar market capitalizations comprising the S&P Small Cap 600
Index. The stockholders' returns set forth below assume an initial investment of
$100 and that all dividends have been reinvested.
[GRAPHIC]
S&P
TRIARC TRIARC S&P SMALLCAP
YEARS COS INC COS INC 500 600
ENDING -CL A -CL B INDEX INDEX
------ ------- ------- ----- --------
DEC98 100 000 100 100
DEC99 116 000 121 112
DEC00 153 000 110 126
DEC01 153 000 97 134
DEC02 165 000 76 114
SEP03 201 100 89 145
DEC03 244 101 97 159
---------
(*) The stock price performance graph does not constitute soliciting material
and should not be deemed filed or incorporated by reference into any Company
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent the Company specifically
incorporates the stock price performance graph by reference into such other
filing.
32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company currently owns approximately 9.1% of the outstanding common
stock of Encore Capital Group, Inc. (formerly known as MCM Capital Group, Inc.)
('Encore'). Encore is a financial services company specializing in the
collection, restructuring, resale and securitization of receivable portfolios
acquired at deep discounts. On January 12, 2000 the Company entered into a
guaranty (the 'Note Guaranty') of $10,000,000 principal amount (reduced to
$6,698,000 in April 2003) of senior notes maturing 2007 (the 'Encore Notes')
issued by Encore to a major financial institution in consideration of a fee of
$200,000 and warrants to purchase 100,000 shares of Encore common stock at $.01
per share with an estimated fair value on the date of grant of $305,000. In
connection with a public offering by Encore in October 2003, the Company
exercised all of such warrants. Encore repaid all of the Encore Notes with
proceeds from the public offering and the Note Guaranty has been terminated.
Certain officers of the Company, including entities controlled by them and
immediate family members, collectively own 24.5% of the outstanding common stock
of Encore as of April 1, 2004. In addition to the Note Guaranty, the Company and
certain other stockholders of Encore, including certain of the officers of the
Company referred to above, on a joint and several basis, entered into guaranties
(the 'Bank Guaranties') and certain related agreements to guarantee up to
$15,000,000 (reduced to $5,000,000 in April 2003) of revolving credit borrowings
of a subsidiary of Encore. The bank line of credit was terminated on
October 14, 2003 and the Bank Guaranties have been terminated.
During 2002, the Company, entities affiliated with Messrs. Peltz, Peter May
and Jonathan May, certain other officers of the Company, including Messrs.
Schorr and Rosen, and other significant stockholders of Encore invested in newly
issued convertible preferred stock of Encore (the 'Encore Preferred Stock'). The
Company invested $873,000, affiliates of Mr. Peltz invested approximately
$936,000, an affiliate of Mr. Peter May invested approximately $210,000 and an
affiliate of both Messrs. Peter May and Jonathan May invested approximately
$210,000, of the aggregate $5,000,000 of Encore Preferred Stock issued. The
$5,000,000 of Encore Preferred Stock issued was convertible into an aggregate of
10,000,000 shares of Encore common stock. Pursuant to an agreement between
Encore and the holders of the Encore Preferred Stock, all of the Encore
Preferred Stock was converted into 10,000,000 shares of Encore's common stock
simultaneously with the closing of the public offering of Encore's common stock
on October 1, 2003. The holders of the Encore Preferred Stock were paid accrued
dividends to the conversion date in accordance with the terms of the Encore
Preferred Stock, but did not pay or receive any other consideration in
connection with the conversion. In connection with the Encore public offering,
certain selling stockholders, including a subsidiary of the Company, entities
affiliated with Messrs. Peltz, Peter May and Jonathan May, and certain officers
of the Company, including Mr. Garden and Mr. Schorr, sold an aggregate of
2,750,000 shares of Encore common stock. Pursuant to such sale, before
commissions, the Company received $4,169,469, entities affiliated with Mr. Peltz
received $4,335,870, entities affiliated with Mr. Peter May (other than the
entity affiliated with Mr. Jonathan May) received $1,000,505, the entity
affiliated with Mr. Jonathan May received $1,000,505, Mr. Garden received
$119,658 and Mr. Schorr received $56,694.
In October 2002, the Company made a restricted stock award of 90,000 shares
of Encore Common Stock owned by it to an officer of the Company, other than one
of the Company's executive officers, who began serving on Encore's board of
directors. Such award reduced the Company's then current ownership of Encore
Common Stock by 1.2% to 7.2%. The award vests over a three year period from the
date of grant and the first one-third of the grant vested in October 2003.
33
As part of its overall retention efforts, the Company has provided certain
of its officers and employees with the opportunity to co-invest in some of the
investment opportunities available to the Company. In connection therewith,
prior to the enactment of the Sarbanes-Oxley Act of 2002, the Company advanced a
portion of the funds for the purchases by certain of its officers and employees
in four co-investments, EBT Holding Company, LLC ('EBT'), 280 KPE Holdings, LLC
('280 KPE'), K12 Inc. and 280 BT Holdings LLC. In connection with these four
investments, the Company received notes due the Company in the original face
amount of $4,046,000, in the aggregate (of which $1,959,776 was outstanding as
of April 1, 2004), of which one-half of the principal amount of these notes (or
$979,888 as of April 1, 2004), is non-recourse. The notes bear interest at the
prime rate adjusted annually. During 2003, the largest outstanding principal
amount owed to the Company by Messrs. Peltz, Peter May and Schorr pursuant to
the notes was $1,069,866, $979,377 and $60,108, respectively, in connection with
these investments (of which $888,888, $888,888 and $40,000, respectively, was
outstanding as of April 1, 2004). In March 2002, the loans related to the
investment in 280 KPE became due. In accordance with the terms of such notes,
each of the executives repaid, in full, the recourse portion of such executive's
note (plus interest thereon) and the non-recourse portion of such notes
(approximately $72,352 for Mr. Peltz, $36,176 for Mr. May and $10,853 for Mr.
Schorr) were forgiven. In addition, in March 2003, the loans related to the
investment in EBT became due. In accordance with the terms of such notes, each
of the executives repaid, in full, the recourse portion of such executive's note
(plus interest thereon) and the non-recourse portion of such notes
(approximately $90,489 for Mr. Peltz, $45,245 for Mr. May and $10,054 for
Mr. Schorr) were forgiven. In connection with the foregoing, each of the
executives transferred to Triarc all of their right, title and interest in and
to of such executive's membership interest in 280 KPE (67.11% of such interest,
in the case of Messrs. Peltz and May) and 100% of such executive's membership
interest in EBT. Under the Sarbanes-Oxley Act of 2002, the Company may not make
any new loans to its executive officers and the Company's co-investment policy
no longer permits loans.
In connection with the court-approved settlement of the Malekan litigation,
described in 'Item 3. Legal Proceedings' in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000, Messrs. Peltz and May
delivered a Promissory Note in the aggregate principal amount of $5,000,000,
dated as of April 1, 2000. The third and final installment of the note was
repaid in full by Messrs. Peltz and May on March 31, 2003.
Mr. Peter May and the Company's wholly-owned subsidiary, Sybra, Inc., have
an interest in a franchisee that owns an Arby's restaurant. That franchisee is a
party to a standard Arby's franchise license agreement and pays to Arby's fees
and royalty payments that unaffiliated third-party franchisees pay. Mr. May
acquired his interest in the franchisee prior to the acquisition by the Company
of Sybra in December 2002. Under an arrangement that pre-dated the Sybra
acquisition, Mr. May contributed all of the capital in the franchisee and Sybra
manages the restaurant for the franchisee. Under the pre-existing arrangement,
Sybra agreed to waive its management fee until Mr. May's capital is returned.
Andrew Peltz, a son of the Company's Chairman and Chief Executive Officer,
was employed by the Company from January 18, 1999 to March 31, 2003, most
recently as the Company's Vice President -- Investment Services. Mr. Peltz was
paid an aggregate salary and bonus of $112,500 for his services during fiscal
2003. Such aggregate cash compensation was approved by the Compensation
Committee. In addition, at the request of Messrs. Nelson Peltz and Peter May,
the Company has engaged Mr. Peltz as investment manager for the deferred bonus
accounts established for Nelson Peltz and Peter May under the Deferral Plan
(described above). Under this arrangement, which may be terminated by the
Company at any time, the Company pays Mr. Peltz a fee (approximately 1% per
annum) based on the
34
value, at the end of each month, of the trusts established with respect to the
liabilities to Mr. Nelson Peltz and Mr. May pursuant to the Deferral Plan.
Messrs. Peltz and May will ultimately bear the cost of such fees ($210,999 with
respect to 2003) through a concurrent reduction of their deferred bonus
accounts. In addition, since February 1, 2004, the Company has been renting
office space on a month to month basis to an affiliate of Andrew Peltz. Such
affiliate pays rent (which includes all utilities and other charges) for the
space in an amount equal to base rent paid by the Company for such space
(approximately $875 per month). Mr. Edward Garden, a son-in-law of the Company's
Chairman and Chief Executive Officer, is an Executive Vice President of Triarc.
Mr. Garden commenced his employment with the Company on July 1, 2003 and
received an aggregate base salary and bonus of $525,000 for his services during
fiscal 2003. Mr. Garden also was awarded options to acquire 150,000 shares of
Class B Common Stock. Such aggregate cash compensation was approved by the
Compensation Committee and the stock option award was approved by the
Performance Committee.
During fiscal 2003, the Company made a charitable contribution of $100,000
to the Intrepid Museum Foundation 'Fallen Heroes Fund.' Mr. Peltz is a trustee
of the Intrepid Museum Foundation.
PROPOSAL 2.
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
INTRODUCTION
Article IV of the Company's Certificate of Incorporation currently provides
that the total number of shares of capital stock which the Company is authorized
to issue is three hundred million (300,000,000), of which one hundred million
(100,000,000) are shares of Class A Common Stock, par value ten cents ($.10) per
share (the 'Class A Common Stock'), one hundred million (100,000,000) are shares
of Class B Common Stock, par value ten cents ($.10) per share (as used in this
Proposal 2, the 'Class B Common Stock'), and one hundred million (100,000,000)
are shares of Preferred Stock, par value ten cents ($.10) per share (the
'Preferred Stock'). No shares of Preferred Stock are currently outstanding.
At the Meeting, the Company's stockholders are being asked to consider and
vote upon a proposal to approve an amendment, in the form attached hereto as
Annex B (the 'Amendment'), to Article IV of the Company's Certificate of
Incorporation that would (i) increase the total number of shares of capital
stock which the Company has authority to issue to three hundred fifty million
(350,000,000) shares and (ii) increase the total number of authorized shares of
Class B Common Stock to one hundred fifty million (150,000,000) shares.
The Board of Directors believes that the authorization of additional shares
of Class B Common Stock will provide added flexibility in raising capital and in
responding to future acquisition opportunities and has approved, and unanimously
recommends that the stockholders of the Company approve, the Amendment.
REQUIRED VOTE
Approval of the Amendment requires the affirmative vote of a majority of the
votes entitled to be cast by the holders of the outstanding shares of Class A
Common Stock and holders of the outstanding shares of Class B Common Stock
voting together as a single class.
35
DESCRIPTION OF THE AMENDMENT
The full text of Article IV as proposed to be amended is set forth as Annex
B to this Proxy Statement and is incorporated herein by reference. The following
summary should be read in conjunction with, and is qualified in its entirety to
reference to, Annex B.
1. The Amendment will increase the total number of shares of capital stock
which the Company is authorized to issue from three hundred million
(300,000,000) to three hundred fifty million (350,000,000) shares.
2. The Amendment will increase the total number of authorized shares of
Class B Common Stock from one hundred million (100,000,000) shares to one
hundred fifty million (150,000,000) shares. As currently provided in the
Company's Certificate of Incorporation the powers, designations, preferences,
rights and qualifications, limitations or restrictions thereof for any series of
Class B Common Stock may be stated and expressed in a resolution or resolutions
of the Board of Directors of the Company providing for the issue of any series
thereof, as set forth in a certificate of designation filed with the Secretary
of State of the State of Delaware (the 'Secretary of State'). The powers,
designations, preferences, rights and qualifications, limitations or
restrictions for the Class B Common Stock, Series 1, the only currently
outstanding series of Class B Common Stock, are as set forth in a certificate of
designation filed with the Secretary of State on August 11, 2003. All of the
currently authorized shares of Class B Common Stock have been designated as
Class B Common Stock, Series 1. All or a portion of the additional shares of
Class B Common Stock that would be authorized pursuant to the Amendment may, but
need not be, designated as additional shares of Class B Common Stock, Series 1.
The proposed Amendment would not change the terms of any of the Company's
outstanding classes or series of Common Stock.
The Company has no present plan or intention to issue any additional shares
of Class B Common Stock (either as additional shares of Class B Common Stock,
Series 1, or as a new series of Class B Common Stock), other than upon
conversion of the Company's 5% Convertible Notes due 2023 and pursuant to its
existing equity participation plans. As noted above, on April 13, 2004, the
Company had outstanding 20,240,452 shares of Class A Common Stock and 40,493,049
shares of Class B Common Stock. On such date, on a fully diluted basis (taking
into account shares issuable upon conversion of the Company's 5% Convertible
Notes due 2023 and shares issuable upon exercise of outstanding stock options
under the Company's existing equity participation plans), there would be
31,729,954 shares of Class A Common Stock and 63,826,053 shares of Class B
Common Stock outstanding.
Existing holders of the Company's Class A Common Stock and Class B Common
Stock do not have any pre-emptive rights under the Company's Certificate of
Incorporation or otherwise to purchase any additional shares of Class B Common
Stock issued by the Company. If the Amendment is approved, the additional shares
of Class B Common Stock may be issued from time to time upon authorization of
the Board of Directors, without further approval by stockholders, unless
otherwise required by applicable law or regulation and for such consideration as
the Board of Directors may determine is appropriate and as may be permitted by
applicable law. The additional shares of Class B Common Stock that would be
authorized if the Amendment is approved would not have any immediately dilutive
effect on the proportionate voting power or other rights of the Company's
stockholders. It is possible, however, that shares of Class B Common Stock may
be issued at a time and under circumstances that may dilute the voting power of
existing stockholders, decrease the Company's earnings per share and decrease
the book value per shares presently held.
36
If the proposed amendment is approved, the Company intends to file a
Certificate of Amendment to the Company's Certificate of Incorporation on or
about June 10, 2004.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL 3.
REAPPROVAL OF PERFORMANCE GOAL BONUS AWARDS
PORTION OF THE TRIARC COMPANIES, INC. 1999 EXECUTIVE BONUS PLAN
GENERAL
The Company's 1999 Executive Bonus Plan is designed to provide incentive
compensation for designated executive officers and key employees of the Company
and its subsidiaries that is directly related to the financial performance of
the Company. The 1999 Plan was approved by the Company's stockholders on
September 23, 1999. The 1999 Plan, which became effective as of May 3, 1999,
provides for two types of bonuses to be awarded to designated participants:
'Formula Bonus Awards' and 'Performance Goal Bonus Awards.' Formula Bonus Awards
are based solely on the Company's financial performance using certain
predetermined earnings and capitalization related criteria outlined in the plan.
A description of the Formula Bonus Awards portion of the 1999 Plan has been
previously disclosed to stockholders in the annual proxy statement for the
September 23, 1999 annual stockholders' meeting (the '1999 Proxy Statement').
Section 162(m) of the Code generally does not allow publicly held companies
to obtain tax deductions for compensation of more than $1 million paid in any
year to their chief executive officer, or any of their other four most highly
compensated executive officers, unless such payments are 'performance-based' in
accordance with conditions specified under Section 162(m) and the related
Treasury Regulations. One of those conditions requires the Company to obtain
stockholder approval of the material terms of the performance goals set by a
committee of outside directors. In addition, if such committee has the authority
to change the targets under a performance goal after shareholder approval of the
goal, the material terms of the performance goals must be disclosed and
reapproved by stockholders no later than five years after such stockholder
approval was first received. The Performance Committee, which administers the
1999 Plan, does not have the authority to change the targets with respect to
Formula Bonus Awards under the 1999 Plan. However, the Performance Committee
does have that authority with respect to Performance Goal Bonus Awards granted
under the 1999 Plan. Therefore, the Performance Committee is recommending that
the stockholders reapprove the material terms of the performance goals
applicable to the Performance Goal Bonus Awards portion of the 1999 Plan, as
described below. Subject to such reapproval, and if the applicable performance
goals are satisfied, this proposal would enable the Company to continue to pay
performance-based compensation to executive officers of the Company pursuant to
the Performance Goal Bonus Awards portion of the 1999 Plan and to obtain tax
deductions for such payments, without regard to the limitations of Section
162(m). If this Proposal 3 is not approved by stockholders, no further bonus
awards will be payable pursuant to the Performance Goal Bonus Awards portion of
the 1999 Plan. The Compensation Committee and Performance Committee, however,
reserve the right to pay discretionary bonuses to Named Officers that are not
deductible under Section 162(m).
Performance Goal Bonus Awards are based on the Company (or operating units
of the Company) achieving certain specific levels of performance with reference
to one or more objective criteria outlined
37
in the 1999 Plan and as described below. Performance bonus award targets are
established annually by the Performance Committee based on specific categories
of criteria set forth in the 1999 Plan. Such criteria include the successful
completion of acquisitions, dispositions, recapitalizations, financings and
refinancings, return on the Company's investment portfolio and other market and
operating performance measures, including, among other things, earnings per
share, market share, margins, productivity improvement and stock price. The
Performance Committee establishes the performance goals as to each participant
for each plan year and, if more than one performance goal is established, the
weighting of the performance goals. Each of Messrs. Peltz, P. May, Garden,
Schorr, McCarron and J. May has, and one other Company executive has, been
designated by the Performance Committee as being eligible to receive a
Performance Goal Bonus Award under the 1999 Plan for plan year 2004. Performance
Goal Bonus Awards may not exceed $5,000,000 to any single participant for any
plan year. The Performance Committee may, in its sole and absolute discretion,
adjust or modify the calculation of the performance goals in certain
circumstances. In addition, the 1999 Plan provides that the Performance
Committee may reduce or eliminate a Performance Goal Bonus Award even if certain
performance goals have been achieved if the Performance Committee, in its sole
discretion, determines to do so.
SUMMARY OF THE PERFORMANCE GOAL BONUS AWARDS PORTION
OF THE 1999 EXECUTIVE BONUS PLAN
The following description of the Performance Goal Bonus Awards portion of
the 1999 Plan is merely a summary of certain provisions thereof and is qualified
in its entirety by the full text of the 1999 Plan which was filed as Exhibit A
to the 1999 Proxy Statement and should be read in conjunction with the following
summary. Stockholders may request a copy of the 1999 Plan by contacting the
Company at: Triarc Companies, Inc., 280 Park Avenue, New York, New York 10017,
Attention: Investor Relations (212) 451-3000.
ADMINISTRATION. The Performance Goal Bonus Awards portion of the 1999 Plan
is administered by a committee (the 'Committee') that is selected by the Board
and is composed of two or more members of the Board, each of whom is required to
be an 'outside director' (within the meaning of Section 162(m)). The Committee
is currently the Performance Committee and will be the Compensation Committee if
it meets the preceding requirements.
The Committee has all the authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to the Performance Goal
Bonus Awards portion of the 1999 Plan. Without limiting the generality of the
foregoing, and in addition to any authority or responsibility specifically
granted to the Committee elsewhere in the 1999 Plan, the Committee has the
exclusive right to (a) interpret the 1999 Plan, (b) determine eligibility for
participation in the 1999 Plan, (c) decide all questions concerning eligibility
for and the amount of awards payable under the 1999 Plan, (d) construe any
ambiguous provision of the 1999 Plan, (f) correct any default, (g) supply any
omission, (h) reconcile any inconsistency, (i) issue administrative guidelines
as an aid to administer the 1999 Plan, (j) make regulations for carrying out the
1999 Plan and to make changes in such regulations as they from time to time deem
proper and (k) decide any and all questions arising in the administration,
interpretation and application of the 1999 Plan.
The Committee has full discretionary authority in all matters related to the
discharge of its responsibilities and the exercise of its authority under the
1999 Plan including, without limitation, its construction of the terms of the
1999 Plan and its determination of eligibility for participation and
38
awards under the 1999 Plan. The decisions of the Committee and its action with
respect to the 1999 Plan are final, binding and conclusive upon all persons
having or claiming to have any right or interest in or under the 1999 Plan.
However, except to the extent otherwise prohibited by law or to the extent such
delegation would cause any award to fail to satisfy the requirements of
Section 162(m), the Committee may delegate in writing to one or more persons
some or all of its authority; provided, however, that awards to participants who
are 'covered employees' within the meaning of section 162(m) of the Code
('Covered Employees') must be made by the Committee.
EFFECTIVE DATE. The 1999 Plan became effective as of May 3, 1999.
ELIGIBILITY. The 1999 Plan provides that the Committee designate for each
Plan Year which executive officers and key employees of the Company and its
subsidiaries, if any, will be eligible for a Performance Goal Bonus Award for
such Plan Year. The Committee designates such individuals prior to the date on
which the Committee establishes the Performance Goals for a Plan Year (as
discussed below).
PERFORMANCE GOAL BONUS AWARDS. Each Performance Goal Bonus Award is payable
only upon achievement over the Plan Year of pre-established objective
performance goals established by the Committee for such Plan Year (the
'Performance Goals'). The Committee may designate one or more Performance Goals
with respect to Performance Goal Bonus Awards available under the 1999 Plan. The
Performance Goals will be based on attainment of specific levels of performance
of the Company (or operational units of the Company) with reference to one or
more of the following criteria:
(1) earnings per share;
(2) market share;
(3) margins (limited to gross margin, Adjusted EBITDA (as defined above)
margin, and Adjusted EBITDA (as defined above but excluding clause (1)
thereof) margin);
(4) productivity improvement;
(5) costs or expenses;
(6) successful completion of acquisitions, dispositions, recapitalizations,
financings or refinancings;
(7) total return on investment portfolio;
(8) pre-tax net realized capital gains;
(9) stock price; and
(10) net investment income.
The Committee establishes the Performance Goals as to each participant and,
if more than one Performance Goal is established, the weighting of the
Performance Goals, no later than 90 days after the commencement of the Plan Year
or such earlier date as may be required in order for the Performance Goal Bonus
Awards in respect of such Plan Year to qualify as 'performance based
compensation' for purposes of Section 162(m) of the Code (the 'Performance Goals
Date'). On or before the Performance Goals Date as to each Plan Year, the
Committee establishes a written schedule of the amount of a Performance Goal
Bonus Award that will be payable to a participant under the 1999 Plan if the
Performance Goals are satisfied.
As soon as practicable following the end of the applicable Plan Year, the
Committee certifies in writing the attainment of the Performance Goals
established for the Plan Year and calculates the Performance Goal Bonus Award,
if any, payable to each participant under the schedule established
39
above. Performance Goal Bonus Awards are paid in a lump sum cash payment, as
soon as practicable after the amount thereof has been determined and certified
by the Committee and following the delivery of the audited consolidated
financial statements of the Company with respect to such Plan Year.
The Committee may at any time prior to the Performance Goals Date for a Plan
Year, or, subject to the following paragraph at any time thereafter in its sole
and absolute discretion, adjust or modify the calculation of a Performance Goal
for such Plan Year in order to prevent the dilution or enlargement of the rights
of participants (a) in the event or in anticipation of any unusual or
extraordinary corporate item, transaction, event or development, (b) in
recognition or in anticipation of any other unusual or nonrecurring events
affecting the Company, or the financial statements of the Company, or in
response to or in anticipation of changes in applicable laws, regulations,
accounting principles or business conditions and (c) in view of the Committee's
assessment of the business strategy of the Company, performance of comparable
organizations, economic and business conditions, and any other circumstances
deemed relevant.
The Committee may exercise such discretion set forth in the preceding
paragraph after the Performance Goals Date only if it reasonably determines that
such exercise would not cause the payment of a Performance Goal Bonus Award to
fail to qualify as 'performance-based compensation' under Section 162(m) of the
Code. In determining entitlement to payment in respect of a Performance Goal
Bonus Award, the Committee may through use of 'negative discretion' reduce or
eliminate such award, provided such discretion is permitted under
Section 162(m) of the Code.
Notwithstanding any provision to the contrary, in no event will a
Performance Goal Bonus Award be paid for a Plan Year in which performance fails
to attain or exceed the minimum level for any of the Performance Goals, and in
no event shall any Performance Goal Bonus Award in respect of any Plan Year
exceed $5 million to any single participant.
AMENDMENT TO PLAN
The Committee may amend, suspend, or terminate the 1999 Plan or any portion
thereof at any time; provided that no such amendment or alteration shall be made
that would impair the rights of any participant without the participant's
consent. No amendment will be made that shall cause the compensation payable
under the 1999 Plan in respect of any Performance Goal Bonus Award previously
granted or pending to fail to satisfy the requirements of the performance-based
compensation exception of Section 162(m) of the Code. No amendment will be made
without stockholder approval to the extent stockholder approval is necessary to
cause any Performance Goal Bonus Award previously granted or pending to satisfy
the performance-based compensation exception of Section 162(m) of the Code.
NEW PLAN BENEFITS
Because Performance Goal Bonus Awards payable under the 1999 Plan are based
on satisfaction of certain performance goals in each Plan Year, it cannot be
determined at this time what amounts under the Performance Goal Bonus Awards
portion of the 1999 Plan, if any, will be received by any participants with
respect to the 2004 fiscal year.
Each of the Named Officers (other than Mr. Howe), as well as Mr. Edward
Garden and one additional officer of the Company, have been designated as
participants in the 1999 Plan and are eligible to receive Performance Goal Bonus
Awards in respect of the 2004 fiscal year.
40
REQUIRED VOTE
The Treasury Regulations require the affirmative vote of a majority of the
votes cast on the issue at the Meeting to reapprove the Performance Goal Bonus
Awards portion of the 1999 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE REAPPROVAL OF THE
PERFORMANCE GOAL BONUS AWARDS PORTION OF THE 1999 PLAN.
PROPOSAL 4.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
INTRODUCTION
The Audit Committee of the Board of Directors has selected Deloitte & Touche
LLP ('Deloitte') to be the Company's independent certified public accountants
for fiscal 2004. Deloitte has acted as the Company's independent certified
public accountants since July 9, 1994.
Representatives of Deloitte will be present at the Meeting with the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
REQUIRED VOTE
Ratification of the appointment of the independent certified public
accountants requires the affirmative vote of a majority of the voting power
present (in person or by proxy) and entitled to vote at the Meeting. In the
event that the Company's stockholders fail to ratify the appointment of
Deloitte, the selection of the Company's independent certified public
accountants will be submitted to the Company's Board of Directors for
reconsideration.
AUDITOR FEES
The following is a description of the fees billed to the Company by Deloitte
during the fiscal years ended December 28, 2003 and December 29, 2002:
Audit Fees: Audit fees paid by the Company to Deloitte in connection with
Deloitte's review and audit of the Company's annual financial statements,
Deloitte's review of the Company's interim financial statements included in the
Company's Quarterly Reports on Form 10-Q and for services that are normally
provided by Deloitte in connection with statutory and regulatory filings or
engagements totaled approximately $1,257,000 for fiscal 2003 and $644,000 for
fiscal 2002.
Audit-Related Fees: The aggregate fees billed by Deloitte for assurance and
related services that are reasonably related to the performance of the audit or
review of the Company's financial statements and are not reported under the
'Audit Fees' above were $1,212,000 for fiscal 2003 (principally for due
diligence with respect to two proposed acquisitions, post-closing matters
relating to the sale of the Snapple Beverage Group, which were concluded in
2003, and subsidiary stand-alone reports) and $1,336,000 for fiscal 2002
(principally for post-closing matters relating to the sale of the Snapple
Beverage Group, which were concluded in 2003, due diligence with respect to a
proposed acquisition and subsidiary stand-alone reports).
Tax Fees: The aggregate fees billed by Deloitte for professional services
rendered by Deloitte for tax compliance, tax advice and tax planning were
$100,000 for fiscal 2003 (principally related to
41
tax-related due diligence with respect to a potential investment and
consultations with respect to federal and state tax audits), and $109,000 for
2002 (principally related to the acquisition of Sybra, Inc.).
All Other Fees: Fees billed to the Company by Deloitte for all other
products and services provided to the Company and not reported under the three
prior headings were $0 for fiscal 2003 and $0 for fiscal 2002.
As noted in the Audit Committee Report (see page 31), the Audit Committee
has considered whether the provision of services by Deloitte that were not
related to the audit of the Company's consolidated financial statements referred
to above and to the reviews of the interim financial statements included in the
Company's Forms 10-Q is compatible with maintaining Deloitte's independence.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a pre-approval policy that provides that the
Company's independent auditor may provide only those services that are
pre-approved by the Audit Committee. The Audit Committee must also pre-approve
any services provided to the Company or any subsidiary by any separate firm that
audits the financial statements of any subsidiary if the Company's independent
auditor expressly relies on the audit report of such separate firm in its own
report on the Company's financial statements. In general, predictable and
recurring covered services may be approved by the Audit Committee (and not any
delegate of the committee) on an annual basis. Pre-approval in such
circumstances will generally be by reference to classes of covered service,
provided that the pre-approval is sufficiently detailed to identify the scope of
service to be provided. The policy includes a list of covered services that may
be pre-approved, by class, on annual basis. Any engagement of the independent
auditor to perform a pre-approved non-audit service is to be reported by
management to the Audit Committee at its next scheduled meeting following the
engagement of the independent auditor for such service.
Services proposed to be provided by the independent auditor that have not
been pre-approved, by class, and the fees for such proposed services must be
pre-approved on an individual basis by the Audit Committee or its delegate.
The Audit Committee may delegate to one or more of its members the authority
to grant specific pre-approvals under its policy with respect to audit, review,
attest and permitted non-audit services, provided that the aggregate estimated
fees for the current and all future periods in which the service is to be
rendered will not exceed $100,000 for any applicable fiscal year and any such
grant of pre-approval shall be reported to the full Audit Committee no later
than its next scheduled meeting.
None of the non-audit services provided by Deloitte in 2003 were approved
under the Securities and Exchange Commission's de minimis exception to audit
committee pre-approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS.
42
OTHER MATTERS
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, some of the officers, directors
and regular employees of the Company and its subsidiaries, none of whom will
receive additional compensation therefor, may solicit proxies in person or by
telephone, telegraph or other means. Solicitation will also be made by employees
of Georgeson & Company, which firm will be paid a fee of $8,000, plus expenses.
As is customary, the Company will, upon request, reimburse brokerage firms,
banks, trustees, nominees and other persons for their out-of-pocket expenses in
forwarding proxy materials to their principals.
CONTACTING DIRECTORS
If you would like to contact the Board of Directors, the non-management
directors as a group or any individual director, you may send an e-mail to
corporate-secretary@triarc.com or you may write to Triarc Companies, Inc.,
280 Park Avenue, New York, New York 10017, Attention: Corporate Secretary. Such
communications should specify the intended recipient or recipients and will be
forwarded by the Corporate Secretary to such recipient or recipients. Any
communications that relate to the Company's accounting, internal accounting
controls or auditing matters will also be referred to the Chairman of the Audit
Committee.
STOCKHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING
From time to time, stockholders present proposals which may be proper
subjects for inclusion in a proxy statement and for consideration at an annual
meeting. To be considered, proposals must be submitted on a timely basis. It is
currently expected that the next Annual Meeting will be held during the early
part of June 2005, with the related proxy statement being first mailed to
stockholders on or about April 26, 2005. To be considered for the 2005 Annual
Meeting of Stockholders of the Company, proposals must be received by the
Company no later than December 28, 2004, and must otherwise comply with Rule
14a-8 under the Exchange Act.
Stockholders who do not wish to follow Rule 14a-8 under the Exchange Act in
proposing a matter for action at the next annual meeting may also submit a
proposal pursuant to the procedural requirements set forth in Triarc's
Certificate of Incorporation. Any such proposals must be specified in a written
notice given by or on behalf of a stockholder of record on the record date for
such meeting entitled to vote thereat or a duly authorized proxy for such
stockholder, in accordance with all of the following requirements. Such notice
must be delivered personally to, or mailed to and received at, the principal
executive office of the Company addressed to the attention of the Secretary, not
less than 45 days nor more than 60 days prior to the meeting; provided, however,
that in the event that less than 55 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual or special meeting was mailed or such public disclosure was made,
whichever first occurs. Such notice must set forth (i) a full description of
each such item of business proposed to be brought before the meeting and the
reasons for conducting such business at such meeting, (ii) the name and address
of the person proposing to bring such business before the meeting, (iii) the
class and number of shares held of record, held beneficially and represented by
proxy by such person as of the record date for the meeting (if such date has
then been made publicly available) and as of the date of such notice, (iv) if
any item of such business involves a nomination for director, all information
regarding each such nominee that would be required to be set forth in a
definitive proxy statement filed with the SEC pursuant to Section 14 of the
Exchange Act, or any successor thereto, and the written consent of each such
nominee to serve if
43
elected, (v) any material interest of the stockholder in such item of business
and (vi) all other information that would be required to be filed with the SEC
if, with respect to the business proposed to be brought before the meeting, the
person proposing such business was a participant in a solicitation subject to
Section 14 of the Exchange Act, or any successor thereto. The Company may
require a proposed nominee for director to furnish such other information as may
be required to be set forth in a stockholder's notice of nomination which
pertains to the nominee or which may be reasonably required to determine the
eligibility of such proposed nominee to serve as a director of the Company. At
the request of the Board of Directors, any individual nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Company that information required to be set forth in a stockholder's notice of
nomination which pertains to a nominee. The Nominating and Corporate Governance
Committee has adopted certain rules with respect to nominations for Board
membership. See 'Proposal 1. Election of Directors -- Board Meetings and Certain
Committees of the Board -- Nominating and Corporate Governance Committee' above.
The Chairman of the meeting may, if the facts warrant, determine that a
nomination or stockholder proposal was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to the meeting and
the defective nomination or proposal shall be disregarded. Any questions
relating to stockholder proposals should be submitted in writing to the
Secretary of the Company, at 280 Park Avenue, New York, New York 10017.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominees are participating in the practice of
'householding' proxy statements and annual reports. This means that beneficial
owners of our Class A Common Stock or Class B Common Stock who share the same
address or household may not receive separate copies of this proxy statement and
our 2003 Annual Report. We will promptly deliver an additional copy of either
document to you if you write or call us at: Triarc Companies, Inc., 280 Park
Avenue, New York, NY 10017, Attention: Investor Relations (212) 451-3000.
Stockholders may also call or write to us at the above address or contact
our transfer agent, American Stock Transfer & Trust Company at 59 Maiden Lane,
New York, NY 10038, (800) 937-5449 or (718) 921-8124 if they wish to receive a
separate annual report or proxy statement either now or in the future.
ANNUAL REPORT ON FORM 10-K
The Company will provide copies of the Form 10-K, as amended, without
charge, upon a written or oral request, by first class mail or other equally
prompt means within one business day of such request. Such copies may be
obtained by contacting the Company at 280 Park Avenue, New York, New York 10017,
Attn: Investor Relations; Telephone: (212) 451-3000. Copies of the Form 10-K may
also be obtained from the Company's website at http://www.triarc.com.
By Order of the Board of Directors
[STUART I. ROSEN SIGNATURE]
STUART I. ROSEN
Secretary
New York, New York
April 23, 2004
44
ANNEX A
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. PURPOSE
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibility relating to: (i) the
integrity of the Company's financial statements and financial reporting process,
the Company's systems of internal accounting and financial controls and other
financial information provided by the Company; (ii) the performance of the
internal audit services function; (iii) the annual independent audit of the
Company's financial statements, the engagement of the independent auditors and
the evaluation of the independent auditors' qualifications, independence and
performance; (iv) the compliance by the Company with legal and regulatory
requirements, including the Company's disclosure controls and procedures;
(v) the evaluation of risk assessment and risk management policies; and
(vi) the fulfillment of the other responsibilities set out herein. The Audit
Committee shall also prepare the report of the Audit Committee required by the
Securities and Exchange Commission to be included in the Company's annual proxy
statement.
II. ORGANIZATION
The Audit Committee shall be appointed by the Board of Directors and shall
consist of three or more directors, as determined by the Board of Directors,
each of whom shall satisfy the independence, financial literacy and experience
requirements of Section 10A of the Securities Exchange Act and the rules
thereunder, the requirements of the New York Stock Exchange and any other
applicable legal or regulatory requirements. At least one member of the Audit
Committee shall have accounting or related financial management expertise, as
the Board of Directors interprets such qualification in its business judgment.
The Board of Directors shall also designate the Audit Committee Chairman. While
there is no limit on the number of public company audit committees on which a
director may serve, if a director serves on more than three, his or her service
on this Audit Committee shall be subject to the Board of Director's
determination that such simultaneous service on such other audit committees will
not impair his or her ability to effectively serve on this Audit Committee. The
Audit Committee may form and delegate authority to subcommittees comprised of
one or more members of the Audit Committee. The Audit Committee may also
delegate authority to the Chairman of the Audit Committee. No member of the
Audit Committee may accept, either directly or indirectly, consulting, advisory
or other compensatory fees from the Company or any of its subsidiaries, other
than the Company's or its subsidiaries' standard directors' fees (including,
additional amounts, if any, that may be paid for serving on the Audit Committee
or other committees of the Board of Directors).
III. MEETINGS
The Audit Committee shall meet as circumstances require. The Audit Committee
may require any officer or employee of the Company or its subsidiaries, the
Company's outside auditors, the Company's outside counsel, the Company's
internal audit service providers or others to attend meetings of the Audit
Committee or to meet with any members of, or consultants to, the Audit
Committee, and to provide pertinent information as necessary. As part of its job
to foster open communication, the Audit Committee shall meet periodically with
management, the internal audit service provider and the
A-1
independent auditors in separate executive sessions to discuss any matters that
the Audit Committee or any of these groups believe should be discussed
privately.
IV. AUTHORITY AND RESPONSIBILITIES
In recognition of the fact that the independent auditors are ultimately
accountable to the Audit Committee, the Audit Committee shall have the sole
authority and responsibility to select, evaluate and, where appropriate, replace
the independent auditors (or to recommend or nominate the independent auditors
for stockholder approval), and shall approve all audit engagement fees and terms
and all non-audit engagements with the independent auditors. The Audit Committee
shall consult with management and the internal audit service provider, but shall
not delegate these responsibilities.
To fulfill its responsibilities, the Audit Committee shall:
WITH RESPECT TO THE INDEPENDENT AUDITORS:
1. Be directly responsible for the appointment, compensation, retention (and
termination) and oversight of the work of the independent auditors
(including resolution of disagreements between management and the
independent auditors regarding financial reporting) for the purpose of
preparing or issuing an audit report or performing other audit, review,
attest services or tax services for the Company, and such independent
auditors must report directly to the Audit Committee.
2. Have the sole authority to review in advance, and grant any appropriate
pre-approvals, of (a) all auditing services to be provided by the
independent auditors and (b) all non-audit services to be provided by the
independent auditors as permitted by Section 10A of the Securities Exchange
Act, and, in connection therewith, to approve all fees and other terms of
engagement, all as required by applicable law or New York Stock Exchange
listing standards. The Audit Committee shall approve guidelines for the
retention of the independent auditors for any non-audit service and the fee
for such service and shall determine policies and procedures for the
approval of audit and non-audit services in advance. The Audit Committee
shall also review and approve disclosures required to be included in
Securities and Exchange Commission periodic reports filed under
Section 13(a) of the Securities Exchange Act with respect to audit, audit
related and non-audit services. The Audit Committee shall consult with
management but shall not delegate these responsibilities.
3. Review on an annual basis (a) the performance of the independent auditors,
including the lead audit partner and (b) the experience and qualifications
of the senior members of the independent auditors' team assigned to the
Company and its subsidiaries. At least annually, obtain and review a report
from the independent auditors describing (a) the independent auditors'
internal quality control procedures and (b) any material issues raised by
the most recent internal quality control review, or peer review, of the
independent auditors, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting one or
more independent audits carried out by the independent auditors, and any
steps taken to deal with any such issues.
4. Request and ensure that the independent auditors submit to the Audit
Committee on an annual basis a written statement consistent with Independent
Standards Board Standard No. 1 delineating all relationships between the
independent auditors and the Company, discuss with the independent auditors
any disclosed relationships or services that may impact the objectivity and
independence of the independent auditors and satisfy itself that the
provision of services by the independent auditors not related to the audit
of the Company's annual financial statements and the review of the
A-2
Company's interim financial statements included in the Company's Form 10-Q
for such year is compatible with maintaining the outside auditors'
independence.
5. Confirm, on an annual basis, that each of the lead audit partner, the audit
partner responsible for reviewing the audit and all other audit partners
have been and will be rotated in accordance with the requirements of the
Securities Exchange Act and the rules promulgated thereunder. In addition,
the Audit Committee should consider, on an annual basis, whether there
should be regular rotation of the independent auditors.
6. Review all reports required to be submitted by the independent auditors to
the Audit Committee under Section 10A of the Securities Exchange Act.
7. Review, based upon the recommendation of the independent auditors, the scope
and plan of the work to be done by the independent auditors, including any
special audit steps adopted in light of any material control deficiencies.
WITH RESPECT TO THE ANNUAL FINANCIAL STATEMENTS:
8. Review and discuss with management, the internal audit service provider and
the independent auditors the Company's annual audited financial statements,
including disclosures made in 'Management's Discussion and Analysis of
Financial Condition and Results of Operations.' This review shall include a
discussion of major issues regarding accounting principles and financial
statement presentations, including a review of any analyses prepared by
management and/or the independent auditors setting forth significant
financial reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses of the effects
of alternative GAAP methods on the Company's financial statements. The
review shall also include a discussion of the independent auditors'
judgments about the quality and appropriateness of the Company's accounting
principles and financial disclosure practices, as applied in its financial
reporting, including, without limitation, a review of critical accounting
policies, estimates, reserves and accruals, judgmental areas, audit
adjustments, whether or not recorded, any significant changes in the
Company's selection or application of accounting principles, the effects of
significant policies in controversial or emerging areas for which there is a
lack of authoritative guidance, all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations) and other
relationships of the Company with unconsolidated entities or other persons,
that may have a material current or future effect on financial condition,
changes in financial condition, results of operations, liquidity, capital
resources, capital reserves or significant components of revenues or
expenses, and such other inquiries as may be appropriate. Based on this
review, the Audit Committee shall make its recommendation to the Board of
Directors as to the inclusion of the Company's audited financial statements
in the Company's Annual Report on Form 10-K for filing with the Securities
and Exchange Commission.
9. Discuss with the independent auditors the matters required to be discussed
by Statement on Auditing Standards No. 61, as amended, relating to the
conduct of the audit and any other material written communications between
the independent auditor and management, including but not limited to, the
management representation letter and schedule of adjusted differences and a
listing of adjustments and reclassifications not recorded, if any.
10. Prepare the report required by the Securities and Exchange Commission to be
included in the Company's annual proxy statement and any other reports of
the Audit Committee that may be required by applicable securities laws or
New York Stock Exchange listing requirements or rules.
A-3
11. Discuss with the independent auditors and internal audit provider whether
they are aware of any action by an officer, director, or person acting under
their direction which would violate Rule 13b2-2(b)(1) under the Securities
Exchange Act of 1934 which prohibits improper influence on the conduct of
audits.
WITH RESPECT TO QUARTERLY FINANCIAL STATEMENTS:
12. Review and discuss with management, the internal audit service provider and
the independent auditors the Company's quarterly financial statements,
including disclosures made in 'Management's Discussion and Analysis of
Financial Condition and Results of Operations', and the independent
auditors' review of the quarterly financial statements (including a review
of the matters included in paragraph 8 above), prior to submission to
stockholders, any governmental body, the New York Stock Exchange or the
public. The Chairman of the Audit Committee or any subcommittee of the Audit
Committee may represent the entire Audit Committee for the purpose of this
review.
13. Discuss with the independent auditors the matters required to be discussed
by Statement on Auditing Standards No. 61, as amended, relating to the
conduct of their review.
PERIODIC REVIEWS:
14. Periodically review separately with each of management, the independent
auditors and the internal audit service provider (a) any significant
disagreement between management and the independent auditors or the internal
audit service provider in connection with the preparation of the financial
statements, (b) any difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information and (c) management's response to each.
15. Periodically discuss with the independent auditors, without management being
present, (a) their judgments about the quality and appropriateness of the
Company's accounting principles and financial disclosure practices as
applied in its financial reporting and (b) the completeness and accuracy of
the Company's financial statements.
16. Consider and approve, if appropriate, significant changes to the Company's
accounting principles and financial disclosure practices as suggested by
management. Review with the independent auditors, management and the
internal audit service provider, at appropriate intervals, the extent to
which any changes or improvements in accounting or financial practices, as
approved by the Audit Committee, have been implemented.
17. Review and discuss with management, the internal audit service provider, the
independent auditors and the Company's in-house and independent counsel, as
appropriate, any legal, accounting, regulatory or compliance matters that
could have a significant impact on the Company's financial statements,
including the effect of any new or proposed regulatory or accounting
initiatives, statements or rules, as well as off-balance sheet structures,
on the Company's financial statements and other public disclosures.
DISCUSSIONS WITH MANAGEMENT:
18. Review and discuss with management the Company's earnings press releases,
including the use, if any, of 'pro forma' or 'adjusted' non-GAAP financial
measures (as defined in Regulation G), as well as any financial information
and earnings guidance that may be provided to analysts and rating agencies.
Such discussions may be done generally (i.e., discussion of the types of
information to be disclosed and the types of presentations to be made).
A-4
WITH RESPECT TO THE INTERNAL AUDIT FUNCTION AND INTERNAL CONTROLS:
19. Review, based upon the recommendation of the internal audit service
provider, the scope and plan of the work to be done by the internal audit
service provider and the responsibilities, budget and staffing needs of the
internal audit service provider. In this connection, the Audit Committee
shall discuss with management, the internal audit service providers and the
independent auditors, the Company's major risk exposures (whether financial,
operating, or otherwise), the adequacy and effectiveness of the accounting
and financial controls, and the steps management has taken to monitor and
control such exposures, including the Company's risk assessment and risk
management policies and the guidelines and policies to govern the processes
by which risk assessment and risk management are undertaken.
20. Review and approve the appointment and replacement of the Company's internal
audit service provider and the fees to be paid to the internal audit service
provider.
21. Review periodically the performance of the internal audit service provider.
22. In consultation with the independent auditors and the internal audit service
provider, review the adequacy of the Company's internal control structure
and procedures.
23. Establish procedures for (a) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters and (b) the confidential, anonymous submission
by employees of the Company of concerns regarding the questionable
accounting or auditing matters.
24. Review (i) the internal control report prepared by management, including
management's assessment of the effectiveness of the Company's internal
control structure and procedures for financial reporting and (ii) the
independent auditors' attestation, and report, on the assessment made by
management. Management and the internal audit service providers shall report
periodically to the Audit Committee regarding any significant deficiencies
and material weaknesses in the design or operation of the Company's internal
control over financial reporting which are reasonably likely to adversely
affect the Company's ability to record, process, summarize and report
financial information; and any fraud (whether or not material) involving
management or other employees having a significant role in internal control
over financial reporting, as well as any change in internal control over
financial reporting that occurred during the Company's most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
OTHER:
25. Review and approve related-party and conflict of interest transactions,
using appropriate specialists and counsel as necessary.
26. Review and approve (a) any change or waiver in the Company's code of ethics
for executive officers, including the chief executive officer, the president
and chief operating officer, the general counsel and senior financial
officers (including the chief financial officer and chief accounting
officer) and (b) any public disclosure made regarding such change or waiver.
27. Establish and review and approve a policy addressing the Company's hiring of
employees or former employees of the independent auditors.
28. Review and reassess the adequacy of this Charter annually and recommend to
the Board of Directors any changes deemed appropriate by the Audit
Committee.
A-5
29. Review its own performance annually to the extent required by applicable
laws, regulations, or New York Stock Exchange requirements.
30. Report regularly to the full Board of Directors and review with the full
Board of Directors any issues that have arisen with respect to the quality
or integrity of the Company's financial statements, the Company's compliance
with legal or regulatory requirements, the performance and independence of
the Company's independent auditors or the performance of the internal audit
service provider.
31. Perform any other activities consistent with this Charter, the Company's
by-laws and governing law, as the Audit Committee or the Board of Directors
deems necessary or appropriate. The Audit Committee shall also carry out
such other duties that may be delegated to it by the Board of Directors from
time to time.
V. RESOURCES
The Audit Committee shall have the authority (i) to investigate any matter
brought to its attention with full access to all books, records, facilities, and
personnel of the Company and (ii) to retain independent legal, accounting and
other consultants to advise the Audit Committee as it deems necessary. The
Company shall provide such funding as is determined by the Audit Committee to be
necessary for payment of compensation to the independent auditors for the
purpose of rendering or issuing an annual audit report or performing other
audit, review, or attest services for the Company, and to any independent legal,
accounting and other consultants retained to advise the Audit Committee. The
members of the Audit Committee shall be reimbursed for ordinary administrative
expenses necessary or appropriate in carrying out their duties.
* * *
While the Audit Committee has the responsibilities and powers set forth in
this Charter, the Company's management is responsible for preparing the
Company's financial statements and the Company's independent auditors are
responsible for performing an independent audit of such financial statements in
accordance with generally accepted auditing standards and for issuing a report
thereon. The Audit Committee is responsible for overseeing the conduct of these
activities and is not expected to audit the Company, to define the scope of the
audit, to control the Company's accounting practices or to define the standards
to be used in the preparation of the Company's financial statements. Nor is it
the duty of the Audit Committee to conduct investigations or to assure
compliance with laws and regulations or the Company's Code of Conduct. The Audit
Committee may rely, without independent verification, on the information
provided to it and on the representations made by management that the financial
statements have been prepared in conformity with generally accepted accounting
principles and the corresponding reports of the independent auditors prepared in
connection with their reviews and audits. Consequently, in carrying out its
responsibilities, the Audit Committee is not determining that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles, nor is the Audit Committee providing
any expert or special assurance as to the Company's financial statements or any
professional certification as to the independent auditors' work.
A-6
ANNEX B
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TRIARC COMPANIES, INC.
(PURSUANT TO SECTION 242 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
TRIARC COMPANIES, INC. a corporation organized and existing under the laws
of the State of Delaware (the 'Corporation'), does hereby certify as follows:
1. The name of the Corporation is Triarc Companies, Inc.
2. The date of filing of the Certificate of Incorporation of the Corporation
with the Secretary of State was May 6, 1994.
3. This Certificate of Amendment amends the Certificate of Incorporation, as
amended on June 4, 1997 and October 25, 2001 and now in effect, to
(a) increase the total number of authorized shares of Class B Common
Stock, par value ten cents ($.10) per share, from one hundred million
(100,000,000) to one hundred fifty million (150,000,000) and
(b) increase the total number of shares of stock the ('Capital Stock')
that the Corporation shall have the authority to issue to three hundred
fifty million (350,000,000).
4. The first paragraph of Article IV of the Certificate of Incorporation is
hereby amended to read in its entirety as follows: 'The total number of
shares of all classes of stock (the 'Capital Stock') which the
Corporation shall have the authority to issue is three hundred fifty
million (350,000,000) of which
(a) one hundred million (100,000,000) shall be shares of Class A Common
Stock, par value ten cents ($.10) per share (the 'Class A Common
Stock');
(b) one hundred fifty million (150,000,000) shall be shares of Class B
Common Stock, par value ten cents ($.10) per share (the 'Class B
Common Stock' and together with the Class A Common Stock, the
'Common Stock'); and
(c) one hundred million (100,000,000) shall be shares of Preferred
Stock, par value ten cents ($.10) per share (the 'Preferred
Stock').'
5. Such amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has authorized the undersigned to
execute this Certificate of Amendment of the Certificate of Incorporation of the
Corporation this day of , 2004.
TRIARC COMPANIES, INC.
BY:
..................................
NAME:
TITLE:
B-1
APPENDIX I
ANNUAL MEETING OF STOCKHOLDERS OF
TRIARC COMPANIES, INC.
--------- Wednesday, June 9, 2004
PROOF # 4
--------- Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
ADMISSION TICKET
Please detach along perforated line and mail in the envelope provided.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION EACH OF THE
NINE (9) NOMINEES NAMED BELOW AND "FOR" PROPOSALS 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
1. To elect nine (9) directors to hold office as specified in the
accompanying Proxy Statement.
NOMINEES:
[ ] FOR ALL NOMINEES O Nelson Peltz
O Peter W. May
[ ] WITHHOLD AUTHORITY O Hugh L. Carey
FOR ALL NOMINEES O Clive Chajet
O Joseph A. Levato
[ ] FOR ALL EXCEPT O David E. Schwab II
(See instructions below) O Raymond S. Troubh
O Gerald Tsai, Jr.
O Jack G. Wasserman
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: O
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that [ ]
changes to the registered name(s) on the account may not be submitted via
this method.
--------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to the Company's [ ] [ ] [ ]
Certificate of Incorporation as described in the
Proxy Statement.
3. Proposal to re-approve the Performance Goal Bonus [ ] [ ] [ ]
Awards portion of the Company's 1999 Executive Bonus
Plan as described in the Proxy Statement.
4. To ratify the appointment of Deloitte & Touche LLP [ ] [ ] [ ]
as the Company's independent certified public
accountants.
5. To transact such other matters as may properly come
before the meeting or any adjournment or
postponement thereof.
Stockholders entitled to vote at the meeting or any adjournment or postponement
thereof are holders of record of the Company's Class A Common Stock and/or
Class B Common Stock, Series 1, at the close of business on April 13, 2004.
Your vote is important! Stockholders are cordially invited to attend the
meeting. Whether or not you plan to attend, please complete, sign and date the
enclosed proxy card and return it promptly in the enclosed envelope. You may
nevertheless vote in person if you attend the meeting.
Please check here if you plan to attend the meeting. [ ]
--------------------------------- ----------------
Signature of Stockholder Date:
--------------------------------- ----------------
--------------------------------- ----------------
Signature of Stockholder Date:
--------------------------------- ----------------
Note: Please sign exactly as your name or names appear on this Proxy.
When shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please sign
full corporate name by duly authorized officer, giving full title
as such. If signer is a partnership, please sign in partnership
name by authorized person.
---------
PROOF # 2
---------
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
TRIARC COMPANIES, INC.
Wednesday, June 9, 2004
ADMISSION TICKET
TRIARC COMPANIES, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 9, 2004
The 2004 Annual Meeting of Stockholders of Triarc Companies, Inc. will
be held on Wednesday, June 9, 2004, at 12:00 noon, local time, in Auditorium D,
at the offices of Bear, Stearns & Co., Inc., 383 Madison Avenue, 2nd floor, New
York, New York, for the purposes listed on the reverse side:
(Continued and to be signed on the reverse side)
14475
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as.................... 'r'