UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to §240.14a-12
Caribou Coffee Company, 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):
þ
No fee required.
o
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:
o Fee paid previously with preliminary materials.
o 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:
3900
Lakebreeze Avenue North
Brooklyn Center, Minnesota 55429
April 30,
2008
Dear Shareholders:
You are cordially invited to attend the Caribou Coffee Company
Annual Meeting of Shareholders on Wednesday, August 6,
2008, at 10 a.m. (Central Time). The meeting will be held
at the Hotel Ivy, 201 South Eleventh Street, Minneapolis,
Minnesota.
The matters to be acted upon are described in the accompanying
notice of Annual Meeting and proxy statement. At the meeting, we
will also report on Caribou Coffee Companys operations and
respond to any questions you may have.
Very truly yours,
Rosalyn Mallet
Chief Executive Officer
YOUR VOTE IS VERY IMPORTANT
Whether or not you plan to attend the Annual Meeting of
Shareholders, we urge you to vote your proxy by telephone, the
Internet or by mail in order to ensure the presence of a quorum.
If you attend the meeting, you can revoke your proxy and vote
your shares in person. If you hold your shares through an
account with a brokerage firm, bank or other nominee, please
follow the instructions you receive from them to vote your
shares.
CARIBOU
COFFEE COMPANY
3900 Lakebreeze Avenue
North
Brooklyn Center, Minnesota 55429
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
to be held
August 6, 2008
The Annual Meeting of Shareholders of Caribou Coffee Company,
Inc. (we us Caribou or the
Company) will be held at the Hotel Ivy, 201 South
Eleventh Street, Minneapolis, Minnesota, on Wednesday,
August 6, 2008, at 10 a.m. (Central Time) for the
following purposes:
1. To elect seven directors to serve until the 2009 Annual
Meeting of Shareholders.
2. To ratify the selection of Ernst & Young LLP
as our independent registered public accounting firm for the
fiscal year ending December 28, 2008.
3. To consider any other business to properly come before
the meeting.
Only shareholders of record at the close of business on
June 16, 2008 will be entitled to notice of, and to vote,
at the Annual Meeting of Shareholders and any adjournments or
postponements of the meeting.
Our proxy statement is attached to this notice of Annual Meeting
of shareholders. Financial and other information concerning us
is contained in the Caribou Annual Report to Shareholders for
the fiscal year ended December 30, 2007.
By Order of the Board of Directors,
Dan E. Lee
Secretary
Brooklyn Center, Minnesota
April 30, 2008
TABLE OF
CONTENTS
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CARIBOU
COFFEE COMPANY
3900 Lakebreeze Avenue North
Brooklyn Center, Minnesota 55429
This proxy statement is furnished by and on behalf of the board
of directors of Caribou Coffee Company, Inc., a Minnesota
corporation (we, us, our,
Caribou or the Company), in connection
with the solicitation of proxies for use at the Annual Meeting
of Shareholders to be held at 10 a.m. (Central Time) on
Wednesday, August 6, 2008, at the Hotel Ivy, 201 South
Eleventh Street, Minneapolis, Minnesota, and at any adjournment
or postponement thereof. This proxy statement and the enclosed
proxy card will be first mailed on or about July 1, 2008,
to our shareholders of record on June 16, 2008.
We will bear the expense of preparing, printing and mailing this
proxy statement and the proxies we are soliciting. Proxies will
be solicited by mail and may also be solicited by directors,
officers and other Caribou employees, without additional
remuneration, in person or by telephone or facsimile
transmission. We will also request brokerage firms, banks,
nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares of common stock as of the
record date and will reimburse such persons for the cost of
forwarding the proxy materials in accordance with customary
practice. Your cooperation in promptly voting your shares and
submitting your proxy by telephone, the Internet or by
completing and returning the enclosed proxy card will help to
avoid additional expense. Proxies and ballots will be received
and tabulated by Wells Fargo Shareowner Services, the
Companys transfer agent and the inspector of elections for
the Annual Meeting.
ABOUT THE
MEETING
What am I
voting on?
You will be voting on the following: (1) to elect seven
directors, (2) to ratify the selection of Ernst &
Young LLP as our independent registered public accounting firm,
and (3) to transact such other business as may properly
come before the meeting or any adjournment or postponement
thereof. No cumulative rights are authorized, and
dissenters rights are not applicable to the matters being
voted upon.
Who is
entitled to vote?
You may vote if you owned our common stock as of the close of
business on June 16, 2008, the record date. Each share of
common stock is entitled to one vote. As of April 21, 2008,
we had 19,370,590 shares of common stock outstanding.
How do I
vote if I do not plan to attend the meeting?
Whether or not you plan to attend the Annual Meeting, you can
arrange for your shares to be voted at the meeting. There are
three ways to vote your Proxy:
1. VOTE BY PHONE TOLL FREE
1-800-560-1965
2. VOTE BY INTERNET
http://www.eproxy.com/cbou/
3. VOTE BY MAIL Mark, sign and return the
enclosed proxy card.
If your shares are held in the name of your broker, bank or
another nominee, you should follow the instructions provided by
your broker, bank or other nominee to vote your shares.
1
Can I
vote at the meeting?
You may vote your shares at the meeting if you attend in person
and the shares are registered in your name. If your shares are
held in street name by your broker, bank or another
nominee, you may not vote your shares in person at the meeting
unless you obtain a signed proxy from your broker, bank or
another nominee. Even if you plan to attend the meeting, we
encourage you to vote your shares by completing, signing and
returning the enclosed proxy card or voting by phone or the
Internet.
Can I
change my vote after I return my proxy card or vote via phone or
the Internet?
If you are a shareholder of record, you may change your vote at
any time before the polls close at the meeting. You may do this
by (i) executing and delivering a later dated proxy card to
the Secretary of the Company prior to the Annual Meeting,
(ii) delivering written notice of revocation of the proxy
to the Secretary of the Company prior to the Annual Meeting, or
(iii) attending and voting in person at the Annual Meeting.
Attendance at the Annual Meeting, in and of itself, will not
constitute a revocation of a proxy. If you hold your shares in
street name, you may submit new voting instructions
by contacting your broker, bank or other nominee.
If you voted by internet or by phone you may change your vote at
any time up until 24 hours prior to the Annual Meeting by
resubmitting a new internet or phone vote. Your last Internet or
phone vote will be the one, which is used for voting purposes.
What does
it mean if I receive more than one proxy card?
It means that you have multiple accounts with brokers, banks or
other nominees. Please vote all of these shares. We recommend
that you contact the record holder of your shares to consolidate
as many accounts as possible under the same name and address.
How can I
attend the meeting?
The Annual Meeting is open to all holders of our common stock as
of the record date. To attend the meeting, you will need to
bring evidence of your stock ownership. If your shares are
registered in your name, your admission card is included with
this proxy statement. You will need to bring the admission card
together with valid picture identification. If your shares are
held in the name of your broker, bank or another nominee or you
received your proxy materials electronically, you will need to
bring evidence of your stock ownership, such as your most recent
brokerage account statement, and valid picture identification.
May
shareholders ask questions at the meeting?
Yes. Representatives of the Company will answer
shareholders questions of general interest at the end of
the meeting. In order to give a greater number of shareholders
an opportunity to ask questions, individuals or groups will be
allowed to ask only one question and no repetitive or
follow-up
questions will be permitted.
How many
votes must be present to hold the meeting?
Your shares are counted as present at the meeting if you attend
the meeting in person, if you properly return the enclosed proxy
card or if you grant a proxy to vote via the Internet or Phone.
In order for us to conduct our meeting, a majority of our
outstanding shares of common stock as of June 16, 2008,
must be present in person or by proxy at the meeting. This is
referred to as a quorum. Abstentions will be counted for
purposes of establishing a quorum at the meeting.
How many
votes are needed to elect directors?
The seven nominees that receive the greatest number of votes
For will be elected as directors. This is called a
plurality. Abstentions are neither counted for or against in a
plurality.
2
How many
votes are needed to ratify the selection of the independent
registered public accounting firm?
The ratification of the selection of the independent registered
public accounting firm must receive a For vote from
a majority of the voting power of the shares present and
entitled to vote on the election of directors at a meeting which
a quorum is present. If you abstain from the vote, it will have
the same effect as a vote against.
What if I
sign and return my proxy card but do not provide voting
instructions or vote by phone or the Internet?
If the enclosed proxy card is signed and returned (and not
revoked) prior to the Annual Meeting, but does not provide
voting instructions, the shares of common stock represented
thereby will be voted: (1) For the election of
the seven director candidates nominated by the Board of
Directors; (2) For the ratification of the
selection of Ernst & Young LLP as our independent
registered public accounting firm for the fiscal year ending
December 28, 2008 (fiscal 2008); and
(3) in accordance with the best judgment of the named
proxies on any other matters properly brought before the Annual
Meeting.
Will my
shares be voted if I do not sign and return my proxy
card?
If your shares are held in street name through a
broker, bank or other nominee and you do not provide voting
instructions, under certain circumstances the nominee may vote
your shares on your behalf. Brokerage firms have authority to
vote shares for which their customers do not provide voting
instructions on certain routine matters. The
election of directors and the ratification of an accounting firm
are routine matters.
If you do not provide voting instructions to your brokerage
firm, the brokerage firm may either: (1) vote your shares
on routine matters, or (2) leave your shares unvoted. We
encourage you to provide instructions to your brokerage firm by
signing and returning your proxy or by using the Internet or
Phone voting options. This ensures your shares will be voted at
the meeting.
When a brokerage firm votes its customers unvoted shares
on routine matters, these shares are counted for purposes of
establishing a quorum to conduct business at the meeting and
determining the outcome of the vote on routine matters.
Can my
shares be voted on matters other than those described in this
proxy statement?
Yes. We have not received proper notice of, and are not aware
of, any business to be transacted at the meeting other than as
indicated in this proxy statement. If any other item or proposal
properly comes before the meeting, the proxies received will be
voted on those matters in accordance with the discretion of the
proxy holders.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with our Amended and Restated Bylaws, the number
of directors to constitute the Board shall be determined from
time to time by resolution of the Board. The number of directors
that constitute the Board is currently set at eight.
Nominees for director are elected to serve for a term of one
year and until their respective successors have been elected and
qualified. Each director shall hold office until the next
regular meeting of the shareholders after such directors
election and until a successor is elected and has qualified, or
until the earlier death, resignation, removal or
disqualification of the director.
The terms of the current eight directors, Messrs. Caffey,
Coles, Doolin, Graves, Griffith, Neal and Ogburn and
Ms. Palisi Chapin, expire upon the election and
qualification of the directors to be elected at the Annual
Meeting. The Board of Directors has nominated
Messrs. Caffey, Coles, Doolin, Graves, Griffith, and Ogburn
and Ms. Palisi Chapin for reelection to the Board of
Directors as directors at the Annual Meeting, to serve until the
2009 Annual Meeting of Shareholders. Mr. Neal has made the
decision to not stand for re-election at
3
the end of his current term. Effective August 6, 2008, the Board
seat occupied by Mr. Neal will be vacant.
Unless otherwise directed, the persons named in the proxy intend
to vote all proxies For the election of
Messrs. Caffey, Coles, Doolin, Graves, Griffith, and Ogburn
and Ms. Palisi Chapin to the Board of Directors. The
nominees have consented to serve as directors if elected. If, at
the time of the Annual Meeting, any of the nominees is unable or
declines to serve as a director, the discretionary authority
provided in the enclosed proxy will be exercised to vote for a
substitute candidate designated by the Board of Directors. The
Board of Directors has no reason to believe any of the nominees
will be unable or will decline to serve as a director.
Set forth below is certain information furnished to us by the
director nominees. The ages provided for each nominee are as of
March 30, 2008. There are no family relationships among any
of our directors or executive officers.
Nominees
for Directors
Kip R. Caffey
, age 52, has served as a director
since October 2005. Mr. Caffey has been Managing Director
of Cary Street Partners, LLC, an investment banking and wealth
management firm, since July 2004. From July 1999 to March 2004,
Mr. Caffey was employed by SunTrust Robinson Humphrey and
its predecessor firm, The Robinson-Humphrey Company, Inc., where
he was Senior Managing Director and
co-head
of
Investment Banking.
Michael J. Coles
, age 64, has served as a director
since June 2003. He previously served as our Chief Executive
Officer from June 2003 until November 2007 and as the Chairman
of our Board from July 2005 to November 2007. From June 2003
until March 2007, Mr. Coles served as our President. From
1987 until 2003, Mr. Coles served on the board of Charter
Bank & Trust, of which he was a founder, and from 1998
to 2001, Mr. Coles was chairman of the board. From 1999
through 2003, Mr. Coles was a consultant and private
investor providing strategic and management advice to a number
of private companies and served on the boards of several
not-for-profit organizations.
Wallace B. Doolin
, age 61, has served as a director
since October 2005. Mr. Doolin has been Chairman of the
Board of Directors of Buca, Inc., an owner and operator of full
service restaurants, since November 2004. Mr. Doolin is
also the former Chief Executive Officer and President of Buca,
Inc. From May 2002 to October 2004, Mr. Doolin was Chief
Executive Officer and President of La Madeleine de Corps,
Inc., a French restaurant and bakery company.
Gary A. Graves,
age 48, has served as our
Non-Executive Chairman since November 2007 and as a director
since August 2007. He is currently the Chief Executive Officer
of American Laser Centers, Inc. From August 2002 to January
2007, Mr. Graves served as President and Chief Executive
Officer for La Petite Academy, a preschool educational
facility.
Charles L. Griffith
, age 53, has served as a
director since July 2005. Mr. Griffith has been an
Executive Director of Arcapita Bank B.S.C. (c) since
February 2005. From 2003 until 2004, he served as Group
President for Johns Manville, a Berkshire Hathaway-owned company
that manufactures insulation and building products. From 2002
until 2003, Mr. Griffith served as Executive Vice President
of Electronic Data Systems Corporation, a global technology
services company.
Charles H. Ogburn
, age 52, has served as a director
since January 2003. Mr. Ogburn has been an Executive
Director of Arcapita Bank B.S.C. (c) since March 2001.
Prior to joining Arcapita, Mr. Ogburn spent more than
15 years at the investment banking firm of The
Robinson-Humphrey Company, Inc., most recently as Senior
Managing Director and co-head of Investment Banking.
Sarah Palisi Chapin
, age 46, has served as a
director since August 2007. Since 2004, Ms. Palisi Chapin
has been a founding partner in The Chain Gang, a private equity
restaurant investment practice. From 1995 to 2003,
Ms. Palisi Chapin was Chief Executive Officer of Enersyst
Development Center, a research and development, intellectual
property, food and technology incubator, and from 2002 to 2003
Ms. Palisi Chapin served as Chair. She currently serves on
the board of directors of Sandstone, IRM and PrimeSource
Foodservice Equipment.
4
Affirmative
Determinations Regarding Director Independence and Other
Matters
The Board has determined that Kip R. Caffey, Wallace B. Doolin,
Gary A. Graves, and Sarah Palisi Chapin are independent
directors as defined under NASDAQ rules.
In this proxy statement the directors who have been
affirmatively determined by the Board to be independent
directors under this rule are referred to individually as
an Independent Director and collectively as the
Independent Directors.
The Board of Directors has also determined that each member of
the three committees of the Board meets the independence
requirements applicable to those committees prescribed by Nasdaq
and the Securities and Exchange Commission (SEC).
The Board of Directors has further determined that
Mr. Caffey is an audit committee financial
expert as such term is defined by SEC rules.
Board
Committees
During fiscal 2007, the Board of Directors had three standing
committees: the Compensation Committee, the Audit Committee and
the Nominating and Corporate Governance Committee. Committee and
committee chair assignments are made annually by the Board at
its meeting immediately following the Annual Meeting of
shareholders. The current composition of each Board committee is
as follows.
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Nominating and Corporate
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Audit
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Compensation
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Governance
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Kip R. Caffey (Chair)
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Sarah Palisi Chapin (Chair)
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Wallace B. Doolin (Chair)
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Gary A. Graves
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Wallace B. Doolin
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Sarah Palisi Chapin
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Wallace B. Doolin
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Kip R. Caffey
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Gary A. Graves
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Jeffrey C. Neal
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The Board committee assignments are not expected to change
following the Annual Meeting other than that Mr. Neal will
no longer serve on the Board or the Audit Committee.
Mr. Neal has chosen not to stand for re-election at the
Annual Shareholders Meeting, but will complete his current term,
which ends on August 6, 2008.
Board and
Committee Meetings
During fiscal 2007, the Board of Directors held four meetings,
the Audit Committee held seven meetings, the Compensation
Committee held three meetings and the Nominating and Corporate
Governance Committee held two meetings. Each director attended
at least 75% or more of the meetings of the Board of Directors
and the meetings of each committee on which the director served
during fiscal 2007. We have not adopted a formal policy
regarding Board members attendance at the Annual Meetings;
however, all Board members attended the 2007 Annual Meeting.
5
NOMINATING
AND CORPORATE GOVERNANCE COMMITTEE
The
Responsibilities and Duties of the Nominating and Corporate
Governance Committee
The purpose of the Nominating and Corporate Governance Committee
is to assist the Board in fulfilling its responsibilities
relating to:
A. identification of individuals qualified to become Board
members and recommendation of director nominees to the Board
prior to each Annual Meeting of shareholders;
B. recommendation of nominees for committees of the
Board; and
C. matters concerning corporate governance practices.
To carry out its nominating function, the Committee has the
following responsibilities and duties:
1. Retain, as deemed necessary, and terminate any search
firm to be used to identify director candidates. The Committee
has sole authority to select such search firm and approve its
fees and other retention terms.
2. Determine desired board skills and attributes. The
Committee shall consider personal and professional integrity,
ability and judgment and such other factors deemed appropriate.
3. Actively seek individuals whose skills and attributes
reflect those desired and evaluate and propose nominees for
election to the Board.
4. Review the slate of directors who are to be re-nominated
to determine whether they are meeting the Boards
expectations of them.
5. Make recommendations to the full Board for appointments
to fill vacancies of any unexpired term on the Board.
6. Annually recommend to the Board nominees for submission
to shareholders for approval at the time of the Annual Meeting
of shareholders.
7. Annually review committee chairs and membership and
recommend any changes to the full Board.
The Nominating and Corporate Governance Committee has not
adopted a specific policy regarding the consideration of
shareholder director nominees, but its general policy is to
welcome future nominees recommended by shareholders.
Shareholders who wish to recommend individuals for consideration
by the Nominating and Corporate Governance Committee to become
nominees for election to our board of directors may do so by
submitting a written recommendation to Caribou Coffee Company,
Inc., 3900 Lakebreeze Avenue North, Brooklyn Center, Minnesota
55429, Attention: Secretary. Submissions must include sufficient
biographical information concerning the recommended individual,
including age, five year employment history with employer names
and a description of the employers business, whether such
individual can read and understand basic financial statements
and board memberships (if any) for the Committee to consider.
The Nominating and Corporate Governance Committee does not
intend to alter the manner in which it evaluates nominees based
on whether or not the nominee was recommended by a shareholder.
Corporate
Governance Materials
The following materials related to our corporate governance are
available publicly on our web site
at
www.cariboucoffee.com/aboutus/investorrelations.asp
under Corporate Governance.
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Audit Committee Charter
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Compensation Committee Charter
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Nominating and Corporate Governance Committee Charter
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Code of Business Conduct and Ethics
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6
Copies may also be obtained, free of charge, by writing to: Vice
President, General Counsel and Secretary, Caribou Coffee
Company, 3900 Lakebreeze Avenue North, Brooklyn Center,
Minnesota, 55429. Please specify which documents you would like
to receive.
Compensation
of Directors
Our directors who also are our employees or are affiliated with
our largest shareholder; an affiliate of Arcapita Bank B.S.C.
(c), receive no compensation for serving on the Board of
Directors. We historically have provided our independent
directors $15,000 per member in cash consideration annually for
serving on our Board of Directors, an additional $5,000 per
member for serving on any committee of our Board of Directors
and an additional $2,000 per Board meeting attended in person or
by telephone. On March 27, 2007, our Board of Directors
approved an increase in the compensation received by our
independent board members. Effective March 30, 2007, each
independent will receive $30,000 in cash consideration annually
for serving on our Board of Directors and an additional $5,000
per member for serving on any committee of our Board of
Directors, except for the chairman of the audit committee who
will receive $7,500 annually. In addition, under our 2005 Equity
Incentive Plan, each independent director will receive an
initial option grant to purchase 10,000 shares of our
common stock that will vest in four equal installments beginning
on the first anniversary of the date of grant with a per share
exercise price equal to the closing market price on the date of
grant. On March 30, 2007, we granted Messrs. Caffey,
Doolin and Neal options to purchase 5,000 shares of our
common stock with a per share exercise price equal to the
closing market price on the date of grant. We have agreed to
reimburse all of our directors for reasonable expenses incurred
in connection with their duties as directors.
The table below sets forth, for each independent director that
served during fiscal 2007, the amount of compensation paid for
his or her service.
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Fees
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Earned
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or Paid
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Option
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in Cash
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Awards
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Total
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Name
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($)(1)
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($)(2)(4)
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($)
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Kip R. Caffey
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42,250
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18,180
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60,430
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Sarah Palisi Chapin
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12,115
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1,476
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13,591
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Wallace B. Doolin
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42,250
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18,180
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60,430
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Gary A. Graves
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12,115
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1,476
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13,591
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Jeffrey C. Neal
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42,125
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18,180
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60,305
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Rosalyn Mallet(3)
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16,000
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16,000
|
|
|
|
|
(1)
|
|
Mr. Caffey, Mr. Doolin, Ms. Mallet and
Mr. Neal received $9,000 each in 2007 for 2006 board
service. Ms. Palisi Chapin and Mr. Graves were
appointed to our board of directors on August 27, 2007.
Ms. Mallet resigned from our Board on March 5, 2007.
|
|
(2)
|
|
At the end of fiscal 2007, the aggregate number of shares of
common stock underlying outstanding option awards to directors
was: Mr. Caffey 15,000; Ms. Palisi
Chapin 10,000; Mr. Doolin 15,000;
Mr. Graves 10,000; Mr. Neal
15,000.
|
|
(3)
|
|
Represents compensation received by Ms. Mallet as a
director through the date of her resignation from our Board on
March 5, 2007.
|
|
(4)
|
|
The amount shown represents the expensed fair value of options
determined under SFAS 123(R) and not the compensation
realized by the director. The Black-Scholes option pricing model
is used to estimate the fair value of stock options. Assumptions
used in the calculation of this amount is included in
Note 9 to our financial statements for the fiscal year
ended December 30, 2007, included in our annual report on
Form 10-K
filed with the SEC on March 21, 2008.
|
7
EXECUTIVE
COMPENSATION
Executive
Compensation
The Compensation Committee is responsible for all decisions
regarding the compensation of our executive officers. The
Compensation Committee is also responsible for the oversight of
our stock option plan.
The following discussion summarizes the philosophies and methods
the Compensation Committee uses in establishing and
administering our executive compensation and incentive programs,
including the development of compensation programs designed to
provide executive officers with ownership interests in Caribou
and motivation to build shareholder value.
Executive
Compensation Policies
Our executive compensation policies are designed to attract and
retain qualified executives, to reward individual achievement
and to align the financial interests of our executives with
those of our shareholders. To accomplish these objectives, the
executive compensation program generally is comprised of
(1) base salary, (2) an annual performance-based cash
bonus, (3) long-term incentive compensation, consisting of
fair market value stock options (fair market value is defined as
the closing market price for our stock on the date of grant),
and (4) other benefits that are intended to provide
competitive compensation which includes 401(k) savings, medical
and dental insurance, life insurance and short-term and
long-term disability. These four elements generally comprise our
executive officers total compensation.
In addition, in connection with the initial employment
arrangements with the Chief Executive Officer, President and
Chief Financial Officer our Compensation Committee approves any
signing bonus and equity grants.
Decisions regarding the level of base salary, performance-based
cash bonus and stock options for our executive officers are
primarily based upon (1) individual experience and
technical capability needed to administer and execute the
responsibilities of the position (2) competitive practices
for executive talent in our industry and for our size company,
and (3) our operating performance.
Base
Salary
Base salary is designed to compensate the executive for the
individual experience and technical capability needed to
administer and execute the responsibilities of their respective
position. Given our growth objectives, consideration is given to
not only the experience and technical capability needed today
but also those experiences and technical capabilities needed to
execute the responsibilities of the executive officers
position in a larger company.
Base salaries for the executive officers are reviewed annually.
In evaluating whether an adjustment to an executives base
salary is appropriate, factors such as changes in the scope of
the individuals job responsibilities, his or her
individual performance against stated objectives and our overall
performance over the past year are considered. These evaluations
along with proposed salary adjustments for all executive
officers, except our Chief Executive Officer, are forwarded by
our Chief Executive Officer to the Compensation Committee for
review and approval. Our Chief Executive Officers annual
base salary review is conducted by the Compensation Committee
and considers the same factors described above for our other
executive officers. Our Compensation Committee will review the
evaluations and proposed salary adjustments and apply their
experience, judgment, market data and practices and periodic
benchmarking data from third party executive compensation
consultants in determining the appropriateness of the
adjustments.
Performance-Based
Cash Bonus (non-equity incentive plan)
The purpose of our performance-based cash bonus plan is to unite
the interests of our executive officers with those of our
shareholders through the attainment of shareholder value added
objective approved by the Compensation Committee at the
beginning of each year.
The performance-based cash bonus plan approved by our
Compensation Committee provides our named executive officers,
excluding our Vice President of Global Franchising, an
opportunity to earn a cash bonus ranging from 20% to 100% of
base salary, upon the achievement of performance goals set by
the Compensation Committee set the performance goal a specific
Adjusted EBITDA target. Adjusted EBITDA is defined in
Item 6, Selected Financial Data, in our annual report on
Form 10-K
filed on March 21, 2008. The plan requires a minimum
8
Adjusted EBITDA be achieved before any bonus is paid. If the
actual fiscal year Adjusted EBITDA is greater than the minimum
Adjusted EBITDA but less than the target Adjusted EBTIDA, the
plan allows for a portion of the bonuses to be paid. No bonus
will be paid if we do not achieve the minimum Adjusted EBITDA.
The plan also allows for an upside if we achieve an Adjusted
EBITDA greater than the target Adjusted EBITDA.
Our Vice President of Global Franchising is eligible to receive
a performance-based cash bonus designed to motivate and
reinforce the commitment to growing our global franchising
business. This position is eligible for a bonus equal to 10% of
initial franchise fees actually received up to a maximum of 50%
of base salary. Generally, the franchisees coffeehouse
must be opened before the bonus is paid.
Long-Term
Incentive Compensation
Our long-term incentive compensation, which is comprised of
stock option grants, is intended to provide a means of
encouraging an ownership interest in our company by those
employees who have contributed, or are determined to be in a
position to contribute to our success. Because the value of
stock option grants bear a direct relationship to the price of
our shares, the Compensation Committee believes that stock
option grants are a means of encouraging our executive officers
to increase long-term shareholder value.
Equity
Grant Policies
The Compensation Committee has been given oversight
responsibility for our stock option plan by our Board of
Directors. The general terms of our stock option grants have
been pre-established by the 2005 Equity Incentive Plan (our
stock option plan), including the life of the options
(10 years) and the vesting schedule (25% per year from the
date of grant). The Compensation Committee is therefore
primarily concerned with the number of options granted, whom the
options are granted to and the date of grant. The exercise price
for all stock option grants is the closing market price on the
date of grant. We do not back-date or re-price stock options.
We typically grant options two times per year. The Compensation
Committee has pre-established the last Friday in February and
the first Friday in September as our semi-annual dates of stock
option grants. In establishing these semi-annual stock option
grant dates, the Compensation Committee considered the timing of
our routine information releases. If facts and circumstances
indicate that a pre-established stock option grant date is not
appropriate because of a pending release of non-routine material
information or other reason, the Compensation Committee
maintains the authority to change the stock option grant date to
a more appropriate date.
The Compensation Committee also maintains the authority to
approve a stock option grant on a date other than the
pre-established dates of grant. This exception is typically used
to grant stock options to a new executive officer or other key
position upon hire. The number of stock options granted to a
specific position is determined by a pre-defined stock option
grant schedule by position. It has been our practice to not only
grant stock options to our executive officers but also to other
non-executive officer managers including our coffeehouse
managers. A stock option grant schedule has been established for
all the positions, which typically are granted stock options.
The stock option grant schedule provides for more stock options
to be granted to those positions which have been determined to
contribute more to our success. For most of our executive
officers, the stock option grant schedule requires that 25,000
options to be granted upon hire followed by a 5,000 stock option
grant each year thereafter until the executive officer has been
granted 50,000 options. The Compensation Committee may in its
discretion, alter this grant schedule both in terms of timing
and in terms of the total number of stock options granted.
Other
Benefits
Our executive officers, including our Chief Executive Officer,
may participate in our other employee benefit plans at their
discretion. These other benefit plans include our 401(k) savings
plan, medical and dental insurance, life insurance, and
short-term and long-term disability. Our executive officers may
participate in these other benefit plans on the same terms,
conditions and cost that all of our other benefit eligible
employees (benefit eligibility is defined by each individual
benefit participant. We do not provide any pension plans or
deferred compensation plans to our executive officers other than
our 401(k) savings plan. We make a matching contribution to all
of our 401(k) savings plan participants equal to 25% of the
first 5% of a participants contribution. We do not provide
any other perquisites to our executive officers.
9
Summary
Compensation Table for 2007
The following table sets forth compensations information for our
named executive officers for Fiscal Years 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
Non-Equity
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Awards
|
|
|
|
Incentive Plan
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
Bonus ($)
|
|
Compensation ($)
|
|
($)(8)
|
|
($)
|
|
Rosalyn Mallet
|
|
|
2007
|
|
|
|
281,882
|
|
|
|
142,741
|
|
|
|
25,000
|
(3)
|
|
|
|
|
|
|
398
|
|
|
|
450,021
|
|
Interim Chief Executive Officer, President and Chief Operating
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Coles
(7)
|
|
|
2007
|
|
|
|
481,500
|
|
|
|
45,236
|
|
|
|
|
|
|
|
|
|
|
|
1,356,305
|
|
|
|
1,883,041
|
|
Former Chief Executive Officer and Chairman of the Board
|
|
|
2006
|
|
|
|
475,442
|
|
|
|
40,285
|
|
|
|
|
|
|
|
|
|
|
|
2,772
|
|
|
|
518,499
|
|
Amy K. ONeil
|
|
|
2007
|
|
|
|
258,320
|
|
|
|
71,625
|
|
|
|
58,122
|
(4)
|
|
|
|
|
|
|
3,459
|
|
|
|
391,526
|
|
Senior Vice President of Store Operations
|
|
|
2006
|
|
|
|
256,863
|
|
|
|
24,167
|
|
|
|
|
|
|
|
|
|
|
|
2,829
|
|
|
|
283,859
|
|
Christopher B. Rich
|
|
|
2007
|
|
|
|
261,645
|
|
|
|
60,195
|
|
|
|
|
|
|
|
50,350
|
(5)
|
|
|
1,893
|
|
|
|
374,083
|
|
Vice President of Global Franchising
|
|
|
2006
|
|
|
|
250,000
|
|
|
|
80,500
|
|
|
|
|
|
|
|
60,875
|
(6)
|
|
|
43,837
|
|
|
|
435,212
|
|
|
|
|
(1)
|
|
Represent base salary paid during the year.
|
|
(2)
|
|
Represents the expensed fair value of options determined under
SFAS 123(R) and not compensation realized by the named
executive officer. Assumptions used in the calculation of these
amounts are included in Note 9 to our financial statements
for the fiscal year ended December 30, 2007, included in
our annual report on
Form 10-K
filed with the SEC on March 21, 2008.
|
|
(3)
|
|
Represents a signing bonus paid pursuant to
Ms. Mallets employment offer letter.
|
|
(4)
|
|
Represents discretionary bonus amount awarded to
Ms. ONeil for 2007 performance. The amount was paid
in 2008.
|
|
(5)
|
|
Represents amount awarded to Mr. Rich under the Vice
President of Global Franchising Bonus Plan, $34,850 was earned
and paid in 2007 and $15,500 was earned in 2007 and paid in 2008.
|
|
(6)
|
|
Represents amount awarded to Mr. Rich under the Vice
President of Global Franchising Bonus Plan, $18,000 was earned
and paid in 2006 and $42,875 was earned in 2006 and paid in 2007.
|
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(7)
|
|
Mr. Coles employment with Caribou ended on
January 11, 2008. In November 2007, the Board of Directors
modified the vesting schedule to immediately vest all of
Mr. Coles unvested options.
|
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(8)
|
|
All Other Compensation consists of the items detailed in the
table below:
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matching
|
|
|
Life
|
|
|
Medical
|
|
|
Termination
|
|
|
Relocation
|
|
|
Total All Other
|
|
|
|
|
|
|
Contributions
|
|
|
Insurance
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Awards
|
|
|
Compensation
|
|
Name
|
|
Year
|
|
|
401(k) ($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
Rosalyn Mallet
|
|
|
2007
|
|
|
|
|
|
|
|
398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
398
|
|
Michael J. Coles
|
|
|
2007
|
|
|
|
1,325
|
|
|
|
1,980
|
|
|
|
|
|
|
|
1,353,000
|
|
|
|
|
|
|
|
1,356,305
|
|
|
|
|
2006
|
|
|
|
792
|
|
|
|
1,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,772
|
|
Amy K. ONeil
|
|
|
2007
|
|
|
|
1,325
|
|
|
|
225
|
|
|
|
1,909
|
|
|
|
|
|
|
|
|
|
|
|
3,459
|
|
|
|
|
2006
|
|
|
|
792
|
|
|
|
222
|
|
|
|
1,815
|
|
|
|
|
|
|
|
|
|
|
|
2,829
|
|
Christopher B. Rich
|
|
|
2007
|
|
|
|
1,325
|
|
|
|
568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,893
|
|
|
|
|
2006
|
|
|
|
982
|
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
42,303
|
(2)
|
|
|
43,837
|
|
|
|
|
(1)
|
|
Represents termination benefits payable pursuant to
Mr. Coles employment agreement.
|
|
(2)
|
|
Represents amounts paid to Mr. Rich for relocation benefits
of $20,833, which was paid in 2006, and $21,470 which was paid
in 2007.
|
10
Employment,
Severance and
Change-in-Control
Arrangements
Employment
Arrangements
Roslyn
Mallet
On April 2, 2007, we offered employment to Rosalyn Mallet
to be our President and Chief Operating Officer. Pursuant to the
employment offer letter, Ms. Mallet shall receive annual
base salary of $360,000 and she is eligible to earn a target
annual bonus of up to 50% of her base salary. Ms. Mallet
was paid a $25,000 signing bonus.
Upon the start of employment, Ms. Mallet received a grant
of options to purchase 200,000 shares of our common stock
at $7.30 per share that will vest in four equal annual
installments beginning on the first anniversary of her
employment and will expire on April 2, 2016. Upon a change
of control event, all of the stock option grants that were not
otherwise exercisable will be accelerated.
In the event of the termination of Ms. Mallets
employment during the first 36 months of employment for any
reason other than cause she is entitled to a
severance payment equal to 12 months of salary at the most
recent rate of pay.
Ms. Mallet has entered into an Employee, Non-Disclosure,
Non-Compete and Non-Solicitation Agreement that applies during
the term of her employment and for a
12-month
period thereafter. We have also agreed to make available to
Ms. Mallet our employee benefit plans, programs and
policies, which are generally available to employees.
Amy K.
ONeil
We entered into an employment agreement, effective as of
July 1, 2005, with Amy K. ONeil to serve as our
Senior Vice President of Store Operations. The employment
agreement for Ms. ONeil provides for an annual base
salary of $250,000 and the grant of options to purchase
133,333 shares of our common stock at $9.87 per share that
will vest in four equal annual installments beginning on the
first anniversary of her employment agreement and expire on the
tenth anniversary of the grant date. The employment agreement
provides that, if Ms. ONeil is terminated by us
without cause or by Ms. ONeil for
good reason (each as defined in the employment
agreement), Ms. ONeil will be entitled to all base
salary and bonus, if any, which were earned and payable on the
date of termination. If upon such a termination
Ms. ONeil executes a general release of claims,
Ms. ONeil will be entitled to 18 consecutive monthly
payments which, in the aggregate, will be equal to one and
one-half times:
|
|
|
|
|
Ms. ONeils annual base salary then in
effect; and
|
|
|
|
the most recent annual bonus paid to Ms. ONeil.
|
However, if Ms. ONeil is a specified
employee (as defined in Section 409A(a)(2)(B)(i) of
the Code) at the time Ms. ONeil has a
separation from service (as defined in
Section 409A(a)(2)(A)(i) of the Code), we will not make any
of the above payments before the date that is six months after
the date of Ms. ONeils termination.
The employment agreement has an initial term of two years, and
each year thereafter, the agreement automatically extends for an
additional year unless either party to the agreement notifies
the other that it wishes to terminate the agreement at least
90 days before the scheduled expiration of the agreement.
The employment agreement provides for eligibility for target
annual bonuses to be determined by our compensation committee,
which will be equal to 50% of the then applicable average annual
base salary. Also, under the employment agreement, we have
agreed to make available to Ms. ONeil our employee
benefit plans, programs and policies, which are generally
available to our similarly situated senior executives.
Under the agreement, we have agreed to make an additional tax
gross-up
payment to Ms. ONeil if any amounts paid or payable
to the executive would be subject to the excise tax imposed on
certain so-called excess parachute payments under
Section 4999 of the Code. However, if a repayment of the
payments and
11
benefits by the executive to us of $50,000 or less would render
the excise tax inapplicable, then the executive will make such
repayment to us.
If Ms. ONeils employment terminates as a result
of her death or disability, our only obligation is to pay
Ms. ONeil or, in the case of
Ms. ONeils death, Ms. ONeils
estate, the annual base salary and target annual bonus, if any,
which were earned and payable on the date
Ms. ONeils employment terminated.
The employment agreement also contains non-compete,
confidentiality and non-solicitation provisions that apply
during the term of the employment agreement and for an
18-month
period thereafter.
Michael
J. Coles
In connection with Mr. Coles resignation from the
Company on November 12, 2007, we entered into a letter
agreement (the Letter Agreement) that modifies
Mr. Coles amended and restated employment agreement
with us, dated June 29, 2005 (the Employment
Agreement). Pursuant to the Letter Agreement for a period
of 60 days, Mr. Coles remained an employee. Under the
Letter Agreement, we continued to pay Mr. Coles his current
base salary for the 60 day period, and, upon completion of
such period, we provided Mr. Coles with (1) any
accrued obligations and other benefits provided for in the
Employment Agreement, (2) an amendment immediately vesting
all of his outstanding options and allowing him to exercise such
options for a period of 90 days after he ceases to be a
director or until the end of the original option term, whichever
occurs earlier and (3) reimbursement for reasonable moving
costs, not to exceed $25,000, and reasonable attorneys
fees, not to exceed $10,000. If Mr. Coles enters into a
general release and covenant not to sue us, we will also provide
him with (1) a lump sum payment of $963,000 (two times his
last salary) plus $390,000 (two times average annual bonus) made
six months plus one day following the 60 day employment
period and (2) payment for continued group health insurance
coverage for Mr. Coles and his dependents for up to
24 months. Mr. Coles will remain subject to the
obligations in the Employment Agreement relating to
noncompetition, nonsolicitation, confidential information and
proprietary information.
Pursuant to the Letter Agreement, for so long as Mr. Coles
remains one of our directors, he will receive the same
compensation as other non-employee (and non-Arcapita) directors.
Retirement
Benefits
We do not provide any pension plans or deferred compensation
plans to our executive officers other than our 401(k) savings
plan. We make a matching contribution to all of our 401(k)
savings plan participants equal to 25% of the first 5% of a
participants contribution.
12
Outstanding
Equity Awards at December 30, 2007
Upon a change of control event, all of the
executives outstanding equity awards that are not
otherwise exercisable will be accelerated.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
|
Options
|
|
Options
|
|
Price
|
|
Expiration
|
Name
|
|
(#) Exercisable
|
|
(#) Unexercisable
|
|
($)
|
|
Date
|
|
Michael J. Coles(1)
|
|
|
666,666
|
|
|
|
|
|
|
$
|
6.70
|
|
|
|
1/14/13
|
|
|
|
|
133,333
|
|
|
|
|
|
|
|
9.87
|
|
|
|
7/15/15
|
|
|
|
|
9,135
|
|
|
|
|
|
|
|
8.95
|
|
|
|
3/17/16
|
|
Rosalyn Mallet
|
|
|
2,500
|
|
|
|
7,500
|
|
|
|
8.53
|
|
|
|
5/25/16
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
7.54
|
|
|
|
4/02/17
|
|
|
|
|
|
|
|
|
14,590
|
|
|
|
6.00
|
|
|
|
9/07/17
|
|
Amy K. ONeil(3)
|
|
|
33,333
|
|
|
|
|
|
|
|
5.62
|
|
|
|
1/2/11
|
|
|
|
|
33,333
|
|
|
|
|
|
|
|
6.70
|
|
|
|
9/15/13
|
|
|
|
|
66,667
|
|
|
|
66,666
|
|
|
|
9.87
|
|
|
|
7/15/15
|
|
|
|
|
1,370
|
|
|
|
4,110
|
|
|
|
8.95
|
|
|
|
3/17/16
|
|
Christopher B. Rich(4)
|
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|
12,500
|
|
|
|
12,500
|
|
|
|
14.00
|
|
|
|
10/4/15
|
|
|
|
|
1,563
|
|
|
|
1,562
|
|
|
|
11.00
|
|
|
|
11/14/15
|
|
|
|
|
5,469
|
|
|
|
16,406
|
|
|
|
7.70
|
|
|
|
9/17/16
|
|
|
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(1)
|
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In November 2007, the Board of Directors modified the vesting
schedule to immediately vest all of Mr. Coles
unvested options.
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(2)
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Ms. Mallet unexercisable options become exercisable as
follows: 50,000 options on April 1, 2008, 2,500 options on
May 24, 2008, 3,648 options on September 6, 2008,
50,000 options on April 1, 2009, 2,500 options on
May 24, 2009, 3,648 options on September 6, 2009,
50,000 options on April 1, 2010, 2,500 options on
May 24, 2010, 3,648 options on September 6, 2010,
50,000 options on April 1, 2011 and 3,648 options on
September 6, 2011
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(3)
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Ms. ONeil unexercisable options become exercisable as
follows: 1,370 options on March 17, 2008, 33,333 options on
July 15, 2008, 1,370 options on March 17, 2009, 33,334
options on July 15, 2009 and 1,370 options on
March 17, 2010.
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(4)
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Mr. Rich unexercisable options become exercisable as
follows: 5,469 options on September 17, 2008, 6,250 options
on October 4, 2008, 781 options on November 14, 2008,
5,469 options on September 17, 2009, 6,250 options on
October 4, 2009, 782 options on November 14, 2009 and
5,468 options on September 17, 2010.
|
Potential
Payments Upon Termination and Change in Control
Ms. Mallets employment offer letter provides for
certain severance payments in the event her employment is
terminated without cause. Ms ONeil has an employment
agreement with us that provides for certain severance payments
in the event her employment is terminated without cause or with
good reason, or due to death or disability.
Pursuant to our 2005 Equity Incentive Plan all unexercisable
stock options will become exercisable upon a change in control.
13
Definition
of a Change in Control
Under the terms of our 2005 Equity Incentive Plan, a change in
control is deemed to have occurred as a result of any one of the
following events:
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A person becomes the beneficial owner, directly or indirectly,
of securities representing 50% or more of the combined voting
power of our then outstanding securities for the election of
directors;
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Our stockholders approve a dissolution or liquidation of our
company or any sale or disposition of 50% or more of our assets
or business;
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Our stockholders approve a merger or consolidation to which we
are a party (other than a merger or consolidation with one of
our wholly-owned subsidiaries), or a share exchange in which we
exchange our shares for shares of another corporation as a
result of which the person who were our stockholders immediately
before the effective date of the merger, consolidation or share
exchange have beneficial ownership of less than 50% of the
combined voting power for election of directors of the surviving
corporation following the effective date of the merger,
consolidation or share exchange;
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The individuals who constitute the Board cease for any reason
during the period to constitute at least a majority of the
Board, unless the election or nomination for election of each
new member of the Board was approved by a vote of at least
two-thirds of the members of the Board then still in office who
were members of the Board at the beginning of the period; or
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There is a change in control of a nature that would be required
to be reported in response to the proxy rules and regulations.
|
Equity
Compensation Plan Information
The following table provides information as of December 30,
2007 regarding shares outstanding and available for issuance
under the Companys existing equity incentive plan.
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|
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(c)
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Number of Securities
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|
|
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|
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Remaining Available for
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(a)
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(b)
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Future Issuance Under
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Number of Securities
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Weighted-Average
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Equity Compensation
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to be Issued Upon
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Exercise Price of
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Plans (Excluding
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|
Exercise of
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Outstanding
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Securities Reflected in
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Plan Category
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Outstanding Options.
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Options.
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Column(a))
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2005 Equity Incentive Plan approved by security holders
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2,570,746
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$
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7.46
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213,017
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Equity compensation plans not approved by security holders
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$
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|
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|
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Total
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2,570,746
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$
|
7.46
|
|
|
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213,017
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14
BENEFICIAL
OWNERSHIP OF COMMON STOCK
The following table sets forth information as of April 1,
2008 concerning the beneficial ownership of common stock of
(i) 5% beneficial owners of the outstanding common stock,
(ii) the directors, (iii) the named executive officers
and (iv) all current directors and executive officers as a
group. Except as otherwise noted, the beneficial owners listed
have sole voting and investment power with respect to shares
beneficially owned. An asterisk in the percent of class column
indicates beneficial ownership of less than 1%.
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Amount and Nature of
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Percent of
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Name and Address of Beneficial Owner
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Beneficial Ownership
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Class(1)
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Caribou Holding Company Limited
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11,672,245
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(2)
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60.3
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%
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c/o Arcapita,
Inc.
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75 Fourteenth Street, 24th Floor
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Atlanta, GA 30309
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|
|
|
|
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Arcapita Investment Management Limited
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|
11,672,245
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(2)
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60.3
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%
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c/o Paget
Brown & Company Ltd.
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|
|
|
|
|
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West Wind Building
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|
|
|
|
|
|
|
P.O. Box 1111
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|
|
|
|
|
|
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Grand Cayman
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|
|
|
|
|
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Cayman Islands, B.W.I
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|
|
|
|
|
|
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Arcapita Bank B.S.C.(c)
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11,672,245
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(3)
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60.3
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%
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P.O. Box 1406
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|
|
|
|
|
|
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|
Manama, Bahrain
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|
|
|
|
|
|
|
|
Michael J. Coles
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|
1,080,776
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(4)
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|
|
5.6
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%
|
Kip R. Caffey
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|
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10,250
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(5)
|
|
|
*
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Wallace B. Doolin
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|
11,250
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(6)
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|
|
*
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Charles L. Griffith
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|
|
9,000
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(2)
|
|
|
*
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|
Jeffrey C. Neal
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|
|
36,250
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(7)
|
|
|
*
|
|
Charles H. Ogburn
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|
|
53,200
|
(2)
|
|
|
*
|
|
Rosalyn Mallet
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|
|
56,000
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(8)
|
|
|
*
|
|
Amy K. ONeil
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|
|
136,073
|
(9)
|
|
|
*
|
|
Christopher B. Rich
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|
|
19,531
|
(9)
|
|
|
*
|
|
All current directors and executive officers as a group
(18 persons)
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|
|
1,700,680
|
(10)
|
|
|
8.8
|
%
|
|
|
|
*
|
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Less than 1%
|
|
(1)
|
|
Based on 19,370,590 shares of Common Stock outstanding on
April 1, 2008.
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(2)
|
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As of December 31, 2006, Caribou Holding Company Limited
(CHCL) has 150,600 shares of voting stock and
6,815,038 shares of non-voting stock outstanding. 5,971,218
of the shares of non-voting stock are held by five companies
(the Five Non-Voting Holding Companies), which are
Cayman Island entities owned by approximately 160 international
investors. Arcapita Bank B.S.C. (c) (Arcapita Bank)
holds a minority interest in three of the Five Non-Voting
Holding Companies, which each own 1,587,180 shares of the
non-voting stock of CHCL. 572,820 of the remaining shares of
non-voting stock are held by Premium Coffee Holdings Limited, an
indirect subsidiary of Arcapita Bank. The remaining
271,000 shares of non-voting stock are held by Arcapita
Incentive Plan Limited (AIPL), a Cayman Islands
entity owned by management of Arcapita Bank (including
Messrs. Ogburn and Griffith). 10,040 shares of voting
stock are held by each of the 15 separate Cayman Island entities
formed by Arcapita Bank (the Voting Cayman
Entities). The Voting Cayman Entities are owned by
approximately 50 international investors (the
International Investors). Each of the Voting Cayman
Entities owns
6
2
/
3
% percent of the voting stock of CHCL. Each International
Investor has granted Arcapita Investment Management Limited
(AIML), a direct subsidiary of Arcapita Bank, a
revocable proxy to vote its shares of voting stock in the Voting
Cayman Entities on all matters. In addition, each Voting Cayman
Entity has entered into an administration agreement with AIML
pursuant to which AIML is authorized to vote the
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15
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|
|
|
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voting stock of CHCL held by such Voting Cayman Entity. Each
administration agreement is terminable by a Voting Cayman Entity
upon 60 days prior written notice to AIML by a vote
of two-thirds of its shareholders.
|
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(3)
|
|
Arcapita Bank does not directly own any stock of CHCL, Caribou
Coffee Company, Inc., AIPL or the Voting Cayman Entities. The
number of shares of stock shown as owned by Arcapita Bank
includes all of the shares of CHCL subject to the revocable
proxies granted to AIML as described in note (2) above.
Arcapita Bank is a Bahrain joint stock company.
|
|
(4)
|
|
Includes 809,134 shares subject to options exercisable
within 60 days of April 1, 2008.
|
|
(5)
|
|
Includes 6,250 shares subject to options exercisable within
60 days of April 1, 2008. The address for
Mr. Caffey is
c/o Cary
Street Partners, 3060 Peachtree Road, Suite 265, Atlanta,
Georgia 30305.
|
|
(6)
|
|
Includes 6,250 shares subject to options exercisable within
60 days of April 1, 2008. The address for
Mr. Doolin is 100 Crescent Court, Suite 700, Dallas,
Texas, 75201.
|
|
(7)
|
|
Includes 6,250 shares subject to options exercisable within
60 days of April 1, 2008. The address for
Mr. Neal is 1099 Pelham Road, Winnetka, Illinois 60093.
|
|
(8)
|
|
Includes 55,000 shares subject to options exercisable
within 60 days of April 1, 2008.
|
|
(9)
|
|
Represent shares subject to options exercisable within
60 days of April 1, 2008.
|
|
(10)
|
|
Includes 1,326,038 shares subject to options exercisable
within 60 days of April 1, 2008.
|
Certain
Relationships and Related Transactions
In accordance with our Audit Committee charter, our Audit
Committee is responsible for reviewing the terms, conditions and
arrangements involving any related party or potential conflict
of interest transaction and for overseeing our Code of Business
Conduct, which includes disclosure requirements applicable to
our employees and our directors relating to conflicts of
interest. Accordingly, the Audit Committee is responsible for
reviewing and approving the terms and conditions of all
transactions that involve the company, one of our directors or
executive officers or any of their immediate family members.
Although we have not entered into any such transactions since
January 2, 2006 that meet the requirements for disclosure
in this Proxy Statement, if there were to be such a transaction,
we would need the approval of our Audit Committee prior to
entering into such transaction.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the
Companys directors and executive officers, and persons who
beneficially own more than 10% of the Common Stock, to file with
the SEC initial reports of beneficial ownership
(Forms 3) and reports of changes in beneficial
ownership of Common Stock and other equity securities of the
Company (Forms 4). Directors, executive
officers and greater than 10% shareholders of the Company are
required by SEC rules to furnish to the Company copies of all
Section 16(a) reports that they file. The Company files
Section 16(a) reports on behalf of its directors and
executive officers to report their initial and subsequent
changes in beneficial ownership of Common Stock. To the
Companys knowledge, based solely on a review of the
reports filed by persons who beneficially own more than 10% of
the Common Stock and the reports filed on behalf of its
directors and executive officers by the Company and written
representations from such persons that no other reports were
required, all Section 16(a) filing requirements applicable
to its directors and executive officers, and persons who
beneficially own more than 10% of the Common Stock were complied
with for fiscal 2007.
AUDIT
COMMITTEE REPORT
During fiscal 2007, Messrs. Jeffrey C. Neal, Kip R. Caffey,
and Gary A. Graves served on the Audit Committee.
Messrs. Neal, Caffey and Graves (i) meet the
independence criteria prescribed by applicable law and the rules
of the SEC for audit committee membership and are
independent directors as defined in Nasdaq rules,
and (ii) meet Nasdaqs financial knowledge and
sophistication requirements. Mr. Neal has been determined
by the Board of Directors to be an audit committee
financial expert under SEC rules. The audit
16
committee will help ensure the integrity of our financial
statements and the qualifications and independence of our
independent auditors.
The audit committee:
|
|
|
|
|
evaluates the independent auditors qualifications,
independence and performance;
|
|
|
|
determines the terms of engagement of the independent auditors;
|
|
|
|
approves the retention of the independent auditors to perform
any proposed permissible non-audit services;
|
|
|
|
monitors the rotation of partners of the independent auditors on
the engagement team as required by law;
|
|
|
|
reviews our financial statements;
|
|
|
|
reviews our critical accounting policies and estimates; and
|
|
|
|
discusses with management and the independent auditors the
results of the annual audit and the review
|
of our quarterly financial statements, among other things.
Based upon the Audit Committees review of the audited
consolidated financial statements and its discussions with
management and the Companys independent registered public
accounting firm, including a discussion regarding SAS 61 and the
written disclosures and letter from Ernst & Young
required by the Independence Standards Board Standard No. 1
regarding their independence, the Audit Committee recommended to
the Board of Directors that the audited consolidated financial
statements for the fiscal year ended December 30, 2007, be
included in the Companys Annual Report on
Form 10-K
filed with the SEC.
Respectfully submitted,
Jeffrey C. Neal (Chair)
Kip R. Caffey
Gary A. Graves
As a result of the decision by Jeffrey C. Neal not to stand for
re-election at the Annual Shareholders Meeting on
August 6, 2008, Wallace B. Doolin will join the audit
committee as of May 1, 2008. As of May 1, 2008,
Mr. Caffey will assume the role of the Chair of the Audit
Committee. Mr. Caffey has been determined by the Board of
Directors to be an audit committee financial expert
under SEC rules. From May 1, 2008, to the August 6,
2008 Annual Shareholders Meeting the Audit Committee shall
be made up of Messrs. Caffey, Doolin, Graves and Neal.
PROPOSAL 2
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors requests that shareholders ratify its
selection of Ernst & Young to serve as our independent
registered public accounting firm for fiscal 2008.
Ernst & Young audited our consolidated financial
statements for fiscal 2007. A representative of
Ernst & Young will be present at the Annual Meeting,
will have an opportunity to make a statement if he or she so
desires and will be available to respond to appropriate
questions by shareholders.
17
Independent
Registered Public Accounting Firm Fees
The following table sets forth the aggregate fees billed to the
Company for fiscal 2007 and fiscal 2006 by Ernst &
Young LLP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2006
|
|
|
|
|
|
Audit Fees
|
|
$
|
493,000
|
|
|
$
|
452,500
|
|
|
|
|
|
Tax Fees
|
|
|
124,100
|
|
|
|
92,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
617,100
|
|
|
$
|
545,217
|
|
|
|
|
|
Audit Fees
for fiscal 2007 and 2006 consist of fees paid
to Ernst & Young LLP for the audit of our annual
financial statements included in the Annual Report on
Form 10-K
and review of financial statements included in the Quarterly
Reports on
Form 10-Q.
Tax Fees
consist of fees for professional services for
tax compliance, tax advice and tax planning. These services
include assistance regarding federal, state and international
tax compliance, return preparation and tax audits.
Pursuant to its charter, our Audit Committee must pre-approve
all audit and non-audit services to be performed by our
independent auditors and will not approve any services that are
not permitted by SEC rules. In fiscal 2007 and 2006, all audit
and non-audit services were pre-approved.
OTHER
BUSINESS
The Board of Directors knows of no other matters to be brought
before the Annual Meeting. If any other matters are properly
brought before the Annual Meeting, however, the persons
appointed in the accompanying proxy intend to vote the shares
represented thereby in accordance with their best judgment.
PROPOSALS OF
SHAREHOLDERS
Shareholder proposals intended for inclusion in our proxy
statement for the 2009 Annual Meeting of Shareholders (the
2008 Annual Meeting) must be received by us at our
executive offices at 3900 Lakebreeze Avenue North, Brooklyn
Center, Minnesota 55429, Attention: Corporate Secretary, on or
prior April 10, 2009.
Shareholder proposals intended for consideration at the 2009
Annual Meeting but not submitted for inclusion in the proxy
statement for the 2009 Annual Meeting, including shareholder
nominations for candidates for election as directors, generally
must be received by us at our executive offices on or prior to
April 10, 2009 in order to be considered timely under SEC
rules and our Amended and Restated Bylaws. However, if the date
of the 2009 Annual Meeting is a date that is not within
30 days before or after the anniversary date of the Annual
Meeting, notice by the shareholder of a proposal must be
received no later than the close of business on the
10th calendar day after the first public announcement of
the date of such Annual Meeting. A public announcement includes
disclosure in (1) a document filed by us with the SEC,
(2) a mailed notice of the 2009 Annual Meeting, and
(3) a press release reported by a national news service.
Under applicable rules of the SEC, our management may vote
proxies in their discretion regarding these proposals if
(1) we do not receive notice of the proposal on or prior to
April 10, 2009, or (2) we receive written notice of
the proposal on or prior to April 10, 2009, describe the
proposal in our proxy statement relating to the 2009 Annual
Meeting and state how the management proxies intend to vote with
respect to such proposal.
18
Shareholder
Communications with our Board of Directors
Shareholders wishing to communicate with the Board of Directors,
any of its committees, or one or more individual directors
should send all written communications to: Caribou Coffee
Company, Inc., 3900 Lakebreeze Avenue North, Brooklyn Center,
Minnesota 55429, Attention: Secretary. Written correspondence
will be forwarded to the appropriate directors.
Householding
As permitted by the Exchange Act, only one copy of this Proxy
Statement is being delivered to shareholders residing at the
same address, unless such shareholders have notified us of their
desire to receive multiple copies of the Proxy Statement. Upon
oral or written request, we will promptly deliver a separate
copy of the Proxy Statement to any shareholder residing at an
address to which only one copy was mailed. Shareholders who
participate in householding will continue to receive separate
proxy cards. Also, householding will not in any way affect
dividend check mailings.
Shareholders residing at the same address and currently
receiving only one copy of the Proxy Statement may contact us to
request multiple copies in the future, and shareholders residing
at the same address and currently receiving multiple copies of
the Proxy Statement may contact us to request a single copy in
the future. All such requests should be directed to Caribou
Coffee Company, Inc., 3900 Lakebreeze Avenue North, Brooklyn
Center, Minnesota 55429, Attention: Secretary, or by phone at
(763) 592-2200.
19
ANNUAL
REPORT TO SHAREHOLDERS AND
FORM 10-K
The 2007 Annual Report including our fiscal 2007
Form 10-K
(the 2007
10-K)
(which is not a part of the proxy soliciting materials) is being
mailed to shareholders with this proxy statement. The 2007
Form 10-K
and the exhibits filed with it are available at our web site at
www.cariboucoffee.com/aboutus/investorrelations.asp
under
Corporate Governance, or upon request by any shareholder to
Investor Relations at:
Investor Relations
Integrated Corporate Relations
Kathleen Heaney
(203) 803-8535
ir@cariboucoffee.com
A copy of any or all exhibits to the 2007
10-K
will be
furnished for a fee, which will not exceed our reasonable
expenses in furnishing the exhibits.
By Order of the Board of Directors,
Dan E. Lee
Secretary
Brooklyn Center, Minnesota
April 30, 2008
20
CARIBOU COFFEE
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, August 6, 2008
10:00 a.m. (Central Time)
Hotel Ivy
201 South Eleventh Street
Minneapolis, MN 55403
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Caribou Coffee Company, Inc.
3900 Lakebreeze Avenue North
Brooklyn Center, MN 55429
|
|
proxy
|
|
This proxy is solicited by the Board of Directors for use at the Annual Meeting on Wednesday,
August 6, 2008.
The shares of stock you hold in your account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted FOR Proposals 1 and 2.
By signing the proxy, you revoke all prior proxies and appoint Kaye OLeary and Dan E. Lee, and
each of them, with full power of substitution, to vote your shares on the matters shown on the
reverse side and any other matters which may come before the Annual Meeting and all adjournments
and postponements.
See reverse for voting instructions.
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There are three ways to vote your Proxy
|
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COMPANY #
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Your telephone or Internet vote authorizes the Named Proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
VOTE BY
PHONE TOLL FREE 1-800-560-1965 QUICK
*** EASY *** IMMEDIATE
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|
Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00
p.m. (CT) on August 6, 2008.
|
|
|
Please have your proxy card and the last four digits of your Social Security Number or Tax
Identification Number available. Follow the simple instructions the voice provides you.
|
VOTE BY
INTERNET
www.eproxy.com/cbou
QUICK *** EASY *** IMMEDIATE
|
|
Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on
August 6, 2008.
|
|
|
Please have your proxy card and the last four digits of your Social Security Number or Tax
Identification Number available. Follow the simple instructions to obtain your records and
create an electronic ballot.
|
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope weve provided or
return it to
Caribou Coffee,
c/o Shareowner Services
y
, P.O. Box 64873, St. Paul, MN
55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
Please detach here
The Board of Directors Recommends a Vote FOR Proposals 1 and 2.
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1.
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To elect seven (7) Directors
to hold office until
the Annual Meeting of
Stockholders in 2008:
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NOMINEES:
01 Kip R. Caffey
02 Sarah Palisi Chapin
03 Michael J. Coles
04 Wallace B.Doolin
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05 Gary A. Graves
06 Charles L. Griffith
07 Charles H. Ogburn
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o
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Vote FOR
all nominees
(except as marked)
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o
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Vote WITHHELD
from all nominees
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(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
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2.
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Ratification of appointment of Ernst & Young LLP as the independent registered
public accounting firm for fiscal year 2008
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o
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For
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o
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Against
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o
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Abstain
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In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. A properly
executed proxy will be voted in the manner directed by the
person(s)signing below. If you make no choice, your proxy will be voted FOR Proposals 1 and 2.
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Address Change? Mark Box
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Indicate changes below:
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Dated
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, 2008
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Signature(s) in Box
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Please sign exactly as
your name(s) appears at left. In
the case of joint owners, each should
sign. If signing as executor,trustee, guardian or in any other representative
capacity or as an officer of a corporation, please indicate
your full title.
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