Last printed 01/06/03 1:55 PM PROXY2003Final.rtf
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-12
JACK IN THE BOX INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Paying 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:
{LOGO} JACK IN THE BOX INC.
January 13, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Jack in the Box Inc. to be held at 2:00 p.m. on Friday, February 14, 2003,
at the Marriott Mission Valley, 8757 Rio San Diego Drive, San Diego,
California.
We hope you will attend in person. If you plan to do so, please
indicate in the space provided on the enclosed proxy. Whether you plan to
attend the meeting or not, we encourage you to read this proxy statement and
vote your shares. Please sign, date and return the enclosed proxy as soon
as possible in the postage-paid envelope provided, or if indicated on
your proxy card, vote by telephone or Internet. This will ensure
representation of your shares in the event that you are unable to attend the
meeting.
The matters expected to be acted upon at the meeting are described in
detail in the attached Notice of Meeting and Proxy Statement.
The Directors and Officers of the Company look forward to meeting with
you.
Sincerely,
ROBERT J. NUGENT
Robert J. Nugent
Chairman of the Board
JACK IN THE BOX INC.
9330 Balboa Avenue
San Diego, California 92123
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 14, 2003
The 2003 Annual Meeting of Stockholders of Jack in the Box Inc.
will be held at 2:00 p.m. on Friday, February 14, 2003, at the Marriott
Mission Valley, 8757 Rio San Diego Drive, San Diego, California.
The meeting will be held to vote upon the following proposals:
1. To elect nine directors to serve until the next Annual Meeting
of Stockholders and until their successors are elected and
qualified;
2. To ratify the appointment of KPMG LLP as independent accountants; and
3. To act upon such other matters as may properly come before
the meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on December 20,
2002 will be entitled to vote at the meeting.
By order of the Board of Directors
LAWRENCE E. SCHAUF
Lawrence E. Schauf
Secretary
San Diego, California
January 13, 2003
JACK IN THE BOX INC.
9330 Balboa Avenue
San Diego, California 92123
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
February 14, 2003
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies. The Board of Directors of Jack in the Box Inc., a Delaware
corporation (the "Company"), is soliciting proxies for use at the 2003
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held at 2:00 p.m. on Friday, February 14, 2003, at the Marriott Mission
Valley, 8757 Rio San Diego Drive, San Diego, California, or any
postponements or adjournments thereof. This Proxy Statement, form of proxy,
and the accompanying Annual Report were mailed to stockholders on or about
January 13, 2003.
The Company will pay for the cost of preparing, assembling and mailing
the Notice of Annual Meeting of Stockholders, Proxy Statement and form of
proxy. We have engaged D.F. King and Co., Inc. ("D.F. King") to assist us in the
solicitation of proxies, for which the Company will pay a fee not to exceed
$5,000 plus out-of-pocket expenses. In addition to solicitation by mail,
proxies may be solicited personally, by telephone or other means by D.F. King,
as well as by directors, officers or employees of the Company, who will
receive no additional compensation for such services.
VOTING
We have fixed the close of business on December 20, 2002 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. On that date, there were 36,863,415 shares of Jack in the
Box Inc. Common Stock, $.01 par value (the "Common Stock"), outstanding,
excluding treasury shares. Company treasury shares will not be voted. You are
entitled to one vote for each share you own on any matter that may be presented
for consideration and action by stockholders at the meeting.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote is
necessary for us to have a quorum at the Annual Meeting. Abstentions and
broker non-votes (i.e., shares held by brokers or nominees that the broker or
nominee does not have discretionary power to vote on a particular matter and
as to which instructions have not been received from the beneficial owners or
persons entitled to vote) are counted for the purpose of determining whether
a quorum is present at the meeting. If there are insufficient votes to
constitute a quorum at the time of the Annual Meeting, we may adjourn the
Annual Meeting to solicit additional proxies.
A director will be elected by a plurality of the votes present or
represented by proxy. A majority of the votes present or represented by
proxy will be required to ratify the appointment of KPMG LLP as independent
accountants of the Company for the 2003 fiscal year.
With regard to the election of directors, your vote may be cast in
favor of the proposed directors or withheld. Votes that are withheld will
be excluded entirely from the vote and will have no effect. Abstentions
may be specified on all proposals other than the election of directors
and will be counted as present for purposes of the item on which the
abstention is voted. Therefore, such abstentions will have the effect of a
negative vote. Broker non-votes are not counted for purposes of determining
whether a proposal has been approved and, therefore, have the effect of
reducing the number of votes required to achieve a majority of the votes cast
for such proposal.
Your proxy will be voted as you direct either in writing or by
telephone or Internet. If you give no direction, your proxy will be voted
FOR management's nominees for election as directors and FOR Proposal 2. The
enclosed proxy gives discretionary authority as to any matters not
specifically referred to therein. See "Other Business". The telephone and
Internet voting procedures, available only if you are a stockholder of record,
are designed to authenticate your identity, to allow you to vote your shares
and to confirm that your instructions have been properly recorded. The
enclosed proxy card sets forth specific instructions that you must follow if
you qualify to vote via telephone or Internet and wish to do so. You may
revoke your proxy at any time before it is voted at the Annual Meeting by
giving written notice of revocation to the Secretary of the Company, by
filing a duly executed written proxy bearing a later date or, if you
qualify, by a later proxy delivered using the telephone or Internet voting
procedures. Your proxy will not be voted if you are present at the Annual
Meeting and elect to vote in person.
PROPOSAL ONE
ELECTION OF DIRECTORS
The nine directors of the Company are elected annually and serve until
the next Annual Meeting and until their successors are elected and qualified.
The current nominees for election as directors are set forth below. Should any
nominee become unavailable to serve as a director, your proxy will be voted
for such other person as the Board of Directors of the Company (the "Board")
designates. To the best of our knowledge, all nominees are and will be
available to serve. Stockholders' nominations for election of a director may
be made only pursuant to the provisions of the Company's Bylaws, described below
under "Other Business".
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
---
The following table provides certain information about each of
management's nominees for director as of January 1, 2003:
Director
Name Age Position(s) with the Company Since
------------------------------ --- -------------------------------- --------
Michael E. Alpert (4)(5)...... 60 Director 1992
Jay W. Brown (3)(5)........... 57 Director 1997
Edward W. Gibbons (3)(4)(5)... 66 Director 1985
Anne B. Gust.................. 44 Director 2003
Alice B. Hayes, Ph.D. (2)(5).. 65 Director 1999
Murray H. Hutchison (1)(2).... 64 Director 1998
Michael W. Murphy(1)(2)....... 45 Director 2002
Robert J. Nugent (3).......... 61 Chairman of the Board, Chief 1998
Executive Officer and President
L. Robert Payne (1)(4)........ 69 Director 1986
--------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) Member of the Finance Committee.
(5) Member of the Nominating and Governance Committee.
2
The business experience, principal occupations and employment of the
nominees follows:
Mr. Alpert has been a director of the Company since August 1992. Mr.
Alpert was a partner in the San Diego office of the law firm of Gibson, Dunn &
Crutcher LLP for more than five years prior to his retirement in August 1992.
He is currently Advisory Counsel to Gibson, Dunn & Crutcher LLP. Gibson, Dunn
& Crutcher LLP provides legal services to us from time to time.
Mr. Brown has been a director of the Company since February 1997. He is
currently a principal with Westgate Group, LLC. From April 1995 to
September 1998, Mr. Brown was President and CEO of Protein Technologies
International, Inc., the world's leading supplier of soy-based proteins
to the food and paper processing industries. He was Chairman and CEO of
Continental Baking Company from October 1984 to July 1995 and President of Van
Camp Seafood Company from August 1983 to October 1984. From July 1981 through
July 1983, he served as Vice President of Marketing for Foodmaker Inc. Mr.
Brown is a director of Cardinal Brands, Inc.
Mr. Gibbons has been a director of the Company since October 1985
and has been a general partner of Gibbons, Goodwin, van Amerongen, an
investment-banking firm, for more than five years. Mr. Gibbons is also a
director of Robert Half International, Inc. and Summer Winds Garden Centers,
Inc.
Ms. Gust became a director of the Company effective January 1, 2003.
She has been Chief Administrative Officer of The Gap, Inc. since March 2000
and an Executive Vice President since September 1998. Prior to her
appointment to Executive Vice President, she served as Senior Vice President,
Legal and Corporate Administration.
Dr. Hayes has been a director of the Company since September 1999.
She has been the President of the University of San Diego since 1995. From
1989 to 1995, Dr. Hayes served as Executive Vice President and Provost of
Saint Louis University. Previously, she spent 27 years at Loyola University
of Chicago, where she served in various executive positions. Dr. Hayes is
also a director of the Pulitzer Publishing Company, Con Agra, Independent
Colleges of Southern California, The San Diego Foundation and Loyola University
of Chicago.
Mr. Hutchison has been a director of the Company since May 1998. He
served 24 years as Chief Executive Officer and Chairman of International
Technology Corp., a large publicly traded environmental engineering firm,
until his retirement in 1996. Mr. Hutchison is the Chairman of the Board of
Research Design and the Huntington Hotel Corp. and serves as a director of
Cadiz Inc., Senior Resource Corp. and the Olson Company.
Mr. Murphy has been director of the Company since September 2002. He
has been President and CEO for Sharp HealthCare, San Diego's largest
integrated health system, since April 1996. Prior to his appointment to
President and CEO, Mr. Murphy served as Senior Vice President of Business
Development and Legal Affairs. His career at Sharp began in 1991 as Chief
Financial Officer of Grossmont Hospital, before moving to Sharp's system-wide
role of Vice President of Financial Accounting and Reporting.
Mr. Nugent has served as Chairman of the Board since February 2001
and Chief Executive Officer since April 1996. Mr. Nugent assumed the title
of President effective January 1, 2003, upon Mr. William's retirement
from the Company. He served as President from April 1996 to February 2001
and Executive Vice President from February 1985 to April 1996. Mr. Nugent
has 23 years of experience with the Company in various executive and
operations positions.
Mr. Payne has been a director of the Company since August 1986. He has
been President and Chief Executive Officer of Multi-Ventures, Inc. since
February 1976. Multi-Ventures, Inc. is a real estate development and
investment company that is also the managing partner of the San Diego
Mission Valley Hilton and the Red Lion Hanalei Hotel. He was a principal in
the Company prior to its acquisition by its former parent, Ralston Purina
Company, in 1968.
3
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES OF THE BOARD
The following information is provided about the Board of Directors and
certain of its committees.
The Audit Committee directs the internal and external audit
activities of the Company as deemed appropriate. All members of the Audit
Committee are independent directors. Mr. Murphy became a member of the
Audit Committee effective September 12, 2002 to replace Mr. Carter who
resigned from the Audit Committee effective November 6, 2002. In June 2000,
the Board of Directors adopted an Audit Committee Charter. The full
text of the Audit Committee Charter was set forth in Exhibit A of our 2001
Proxy Statement. The Board amended and restated the Audit Committee Charter in
August 2002. The restated Audit Committee Charter is included as Exhibit
A to this proxy statement. The Audit Committee held four meetings in fiscal
2002.
The Compensation Committee reviews compensation policies and
recommends changes when appropriate. The Compensation Committee held six
meetings in fiscal 2002, including one telephonic meeting. Mr. Murphy became
a member of the Compensation Committee effective September 12, 2002 to
replace Mr. Carter who resigned from the Compensation Committee effective
November 6, 2002.
The Finance Committee advises and consults with management concerning
the general financial affairs of the Company. In fiscal 2002, the Finance
Committee held three meetings.
The Nominating and Governance Committee recommends to the Board nominees
for election as directors and will consider nominees properly submitted by
stockholders (see "Other Business"). The Nominating and Governance
Committee also administers the Company's Corporate Governance Principles
and Practices. In fiscal 2002, the Nominating and Governance Committee held
two meetings, including one telephonic meeting.
There were no meetings of the Executive Committee in fiscal 2002.
In fiscal 2002, the Board of Directors held seven meetings, including
one telephonic meeting. Each current director attended more than 75% of the
aggregate number of the general meetings held and the meetings of
committees on which such director served. Mr. Murphy and Ms. Gust joined the
Board effective September 12, 2002 and January 1, 2003, respectively. Mr.
Williams retired from the Company and the Board effective December 31, 2002
and Mr. Carter resigned his directorship effective February 14, 2003.
Directors who are also officers of the Company or its subsidiaries
receive no additional compensation for their services as directors. The
independent directors of the Company receive compensation consisting of an
$18,000 annual retainer, $2,000 for each Board meeting attended in person and
$1,000 for each committee meeting attended in excess of five. In addition,
independent directors serving as a committee Chair also receive $1,500
per fiscal year. All directors are reimbursed for out-of-pocket and travel
expenses. No additional compensation is paid for actions taken by the
Board or committees by written consent. Under the Company's Deferred
Compensation Plan for Non-Management Directors, each independent director
may defer any portion or all of such compensation. Amounts deferred under the
plan's equity option are immediately converted to stock equivalents at
the then-current market price of the Company's Common Stock and matched
at a 25% rate by the Company. A director's stock equivalent account is
distributed in cash, based upon the ending number of stock equivalents and the
market value of the Company's Common Stock, at the conclusion of the
director's service as a member of the Board. All of the independent directors
have elected to defer their compensation pursuant to this plan.
Pursuant to the Company's Non-Employee Director Stock Option Plan, as
amended (the "Director Plan"), each year each independent director also
receives a stock option to purchase a certain number of shares of the
Company's Common Stock based on the relationship of each director's
compensation to the fair market value of the stock, but limited to fewer than
10,000 shares in any fiscal year. During fiscal 2002, under the Director Plan,
each independent director received a stock option to purchase 6,000 shares of
the Company's Common Stock at the fair market value on the date of grant.
4
PROPOSAL TWO
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board has appointed KPMG LLP as independent accountants to audit the
consolidated financial statements of the Company for the fiscal year ending
September 28, 2003, subject to ratification by stockholders. KPMG LLP has
acted as independent accountants for the Company since 1986. A representative
of the firm will be present at the Annual Meeting and will have the opportunity
to make a statement and respond to questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
---
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the "Audit Committee") is
composed of three directors, each of whom is an "independent director," as
defined in the Listing Standards of the New York Stock Exchange. The Audit
Committee operates under a written charter adopted by the Board and reviews
and assesses the adequacy of its charter on an annual basis. The Board most
recently amended and restated the Audit Committee's charter, which is included
as Exhibit A on page A-1, in August 2002.
As more fully described in its charter, the purpose of the Audit
Committee is to oversee the Company's financial reporting, internal control
and audit functions on behalf of the Board. Management is responsible for
the preparation and integrity of the Company's financial statements, accounting
and financial reporting processes and internal controls. KPMG LLP, the
Company's independent auditing firm, is responsible for performing an
independent audit of the Company's financial statements in accordance with
auditing standards generally accepted in the United States of America. Jack in
the Box Inc. has a full time Internal Audit Department that reports to the
Audit Committee and management and is responsible for reviewing and
evaluating the Company's internal controls.
The members of the Audit Committee are not professional accountants or
auditors and their functions are not intended to duplicate the activities of
management and the independent auditors. The Audit Committee serves a
Board-level oversight role in which it provides advice, counsel, and
direction to management and the auditors, and oversees the Company's internal
compliance programs.
The Audit Committee has an annual agenda that includes reviewing the
Company's financial statements and internal controls. The Audit Committee
meets each quarter with KPMG LLP, the Company's Director of Internal Audit
and management to review the Company's interim financial results before
the publication of the Company's quarterly earnings press releases. The
Audit Committee will meet separately each quarter with KPMG LLP,
management and the Director of Internal Audit.
For fiscal year 2002, the Audit Committee and the Board had the
authority to select and evaluate the Company's independent auditors. The
Audit Committee recommended to the Board of Directors the selection of KPMG
LLP as the Company's independent auditors for fiscal year 2002. Pursuant to
the Company's new Audit Committee charter adopted in August 2002, the Audit
Committee now has sole authority and responsibility to select, evaluate
and, when appropriate, to replace the Company's independent auditors. The
Audit Committee has appointed KPMG LLP as the Company's independent auditors for
fiscal year 2003.
The Audit Committee has reviewed and discussed the Company's financial
statements for fiscal year 2002 with management and the independent auditors.
Management represented to the Audit Committee that the Company's financial
statements were prepared in accordance with accounting principles generally
accepted in the United States of America, and the independent auditors
presentations included the matters required to be discussed by Statement on
Auditing Standards No. 61, "Communication with Audit Committees", as amended.
In addition, the Audit Committee has discussed with KPMG LLP their
independence from the Company and its management, including the matters in
the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," which the Audit Committee has
received.
5
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K
for the fiscal year ended September 29, 2002.
Michael W. Murphy, Chair
Murray H. Hutchison
L. Robert Payne
Audit Fees
The aggregate fees billed by KPMG LLP for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended September 29, 2002 and for the reviews of the financial
statements included in the Company's Forms 10-Q for that fiscal year were
$206,000.
Financial Information Systems Design and Implementation Fees
KPMG LLP did not perform any services related to financial information
systems design and implementation.
All Other Fees
The aggregate fees billed by KPMG LLP for professional services
rendered, other than those covered in the preceding two sections, for the
fiscal year ended September 29, 2002 were $46,500.
Auditor Independence
Other fees include fees for the audits of the Company's benefit
plans, research and consultation regarding certain accounting
principles and tax related matters. The Audit Committee has considered whether
the provision of these services is compatible with maintaining the principal
accountant's independence and has determined that the provision of such
services has not adversely affected the accountant's independence.
6
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation
of the Company's chief executive officer and the other four most highly
compensated executive officers of the Company for services in all
capacities to the Company and its subsidiaries during the fiscal years
indicated. Bonus amounts were earned during the year and paid shortly
thereafter.
Long-Term
Compensation
------------ All Other
Annual Compensation Securities Compen-
Name and --------------------------------- Underlying sation
Principal Position(s) Year Salary($) Bonus($) Other($)(1) Options(#) ($)(2)
-------------------------------- ------ ---------- --------- --------- ----------- ----------
Robert J. Nugent................ 2002 720,000 437,400 21,080 113,000 19,363
Chairman of the Board and 2001 677,539 174,225 22,850 59,600 27,342
Chief Executive Officer 2000 627,692 615,648 19,810 48,100 26,307
Kenneth R. Williams(3).......... 2002 511,539 272,950 12,510 47,000 19,862
President, Chief Operating 2001 484,308 101,250 12,451 36,500 26,044
Officer and Director 2000 424,616 334,541 16,755 28,900 24,215
John F. Hoffner(4).............. 2002 381,923 184,320 101,298 45,000 12,696
Executive Vice President and 2001 36,058 0 51,385 40,000 865
Chief Financial Officer
Linda A. Lang................... 2002 311,546 192,000 12,385 20,000 11,336
Executive Vice President, 2001 253,308 66,269 12,153 13,000 14,565
Marketing and Operations, 2000 227,308 134,165 12,231 10,300 10,955
Human Resources and
Resources and Information
Systems
Paul L. Schultz................. 2002 372,308 161,680 12,510 27,000 14,824
Senior Vice President, 2001 354,692 72,540 12,216 22,900 18,970
Operations and Franchising 2000 332,615 228,351 35,739 18,400 18,269
--------------------------
(1) Other annual compensation includes an annual car allowance for each person
of approximately $12,000. Mr. Nugent's other annual compensation also
included $9,080, $10,450 and $7,810 in 2002, 2001 and 2000,
respectively, for supplemental health insurance. Mr. Hoffner's other
annual compensation also included $88,903 for reimbursed moving
expenses in 2002 and a $50,000 sign-on bonus in 2001. Mr. Schultz's
other annual compensation also included $28,739 in 2000 for supplemental
health insurance.
(2) All other compensation represents the Company's matching contributions to
the Deferred Compensation Plan and approximately $1,400-$1,500 annually
for each person, for premiums on term life insurance paid by the Company
for the benefit of the named executive officer. The Company has no
interest in such insurance policies.
(3) Mr. Williams retired from the Company and the Board effective
December 31, 2002. He had served as President and Chief Operating
Officer since February 2001. He was Executive Vice President, Marketing
and Operations from May 1996 to February 2001 and Senior Vice President
from January 1993 to May 1996. Mr. Nugent assumed the title of
President effective January 1, 2003, upon Mr. William's retirement
from the Company.
(4) Mr. Hoffner joined the Company on August 27, 2001 as Executive Vice
President and Chief Financial Officer at an annual salary of $375,000.
7
Stock Option Grants in Fiscal 2002
Set forth below is information with respect to options granted to the
named executive officers in the Summary Compensation Table during the 2002
fiscal year.
% of Total Potential Realizable Value
Number of Options/SARs at Assumed Annual Rates of
Securities Granted to Exercise Stock Price Appreciation
Underlying Employees or Base for Option Term (2)
Options/SARs in Fiscal Price Expiration --------------------------
Name Granted (#)(1) Year ($/Share) Date 5% 10%
--------------------------- ------------ ------------ --------- ---------- ---------- -------------
Robert J. Nugent........... 113,000 14.5% 25.00 12/01/2011 $1,795,118 $4,559,948
Kenneth R. Williams........ 47,000 6.0% 25.00 12/01/2011 746,641 1,896,615
John F. Hoffner............ 12,000 1.5% 23.00 11/01/2011 175,442 445,691
33,000 4.2% 25.00 12/01/2011 524,238 1,331,666
Linda A. Lang.............. 20,000 2.6% 25.00 12/01/2011 317,720 807,070
Paul L. Schultz............ 27,000 3.5% 25.00 12/01/2011 428,922 1,089,545
--------------------------
(1) Beginning one year from the date of grant, 20% of the total number of
shares subject to the option will become exercisable annually.
(2) These amounts represent certain assumed rates of appreciation only, based
on SEC rules. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, overall market
conditions and the option holder's continued employment through the
vesting period. The appreciation amounts reflected in this table may not
necessarily be achieved.
Option Exercises in Fiscal 2002 and Fiscal Year-End Values
Set forth below is information with respect to options exercised by
the named executive officers in the Summary Compensation Table during the
2002 fiscal year, and the number and value of unexercised stock options
held by the named executive officers at the end of the fiscal year.
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs Held In-the-Money Options/SARs
Shares at Fiscal Year-End at Fiscal Year-End(1)
Acquired on Value --------------------------- --------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
--------------------------- ----------- ---------- ----------- ------------- ----------- -------------
Robert J. Nugent........... 42,000 $843,420 198,680 217,220 $1,441,926 $34,294
Kenneth R. Williams........ 20,000 356,983 129,280 110,820 1,054,284 21,763
John F. Hoffner............ 0 0 8,000 77,000 0 0
Linda A. Lang.............. 10,340 264,143 36,778 41,880 227,514 6,397
Paul L. Schultz............ 0 0 95,200 65,200 927,111 11,212
--------------------------
(1) Based on the difference between the exercise price of the options and the
closing price of the Company's Common Stock on the last trading day prior
to the end of the Company's fiscal year ended September 29, 2002
($22.36).
8
Pension Plan Table
Retirement Plan. The Company maintains a retirement plan (the
"Retirement Plan"), which was adopted effective October 21, 1985, restated
effective January 1, 2001 and amended June 7, 2002 and December 31, 2002. The
Retirement Plan is a defined benefit plan covering eligible employees
employed in an administrative, clerical, or restaurant hourly capacity who
have completed one year of service with at least 1,000 hours of service and
reached age 21. The Retirement Plan provides that a participant retiring at
age 65 will receive an annual retirement benefit equal in amount to one
percent of Final Average Pay multiplied by Benefit Service plus .4% of Final
Average Pay in excess of Covered Compensation multiplied by Benefit
Service, subject to grandfathered minimum benefit accruals under the
previous plan as of December 31, 1998. The .4% portion of the calculation is
limited to a maximum of 35 years of service. The Employee Retirement Income
Security Act of 1974 ("ERISA") and various tax laws may cause a reduction
in the annual retirement benefit payable under the Retirement Plan. (The
preceding capitalized terms are defined in the Retirement Plan.)
Although normal retirement age is 65, benefits may begin as early
as age 55 if participants meet the service requirements defined in the
Retirement Plan. Benefits payable are reduced for early commencement.
Supplemental Retirement Plan. In 1990, the Company established a
non-qualified supplemental retirement plan for selected executives, known as
the Supplemental Executive Retirement Plan, which was amended and restated
effective May 8, 2001. The plan provides for a percentage of replacement
income based on Service and Final Average Compensation (each as defined in
the plan). The target replacement income from all Company funded sources based
upon a maximum of 20 full years of service is 60% of Final Average Compensation.
For those executives who have served fewer than 20 years, the target
percentage of 60% is reduced by applying a factor determined by dividing the
number of years of actual service by 20. The plan is unfunded and represents
an unsecured claim against the Company.
Easy$aver Plus Plan. In 1985, the Company adopted the Jack in the
Box Inc. Savings Investment Plan, currently named the Jack in the Box Inc.
Easy$aver Plus Plan (the "E$P"), which was amended and restated
effective January 1, 2001. The E$P includes a cash-or-deferred arrangement
under Section 401(k) of the Internal Revenue Code. Eligible employees who have
completed at least one year of service with a minimum of 1,000 hours of work and
who have reached age 21 qualify for the E$P. Participants in the E$P may defer
up to 12% of their pay on a pre-tax basis. In addition, the Company
contributes on a participant's behalf an amount equal to 50% of the first 4%
of compensation that is deferred by the participant.
Deferred Compensation Plan. Since 1989, all executive officers and
certain other members of management have been excluded from participation in
the E$P. In 1990, the Company created for these individuals a non-qualified
deferred compensation plan known as the Capital Accumulation Plan for
Executives which was amended and restated effective June 1, 2001. Participants
in the plan may defer up to 15% of base and up to 100% (less applicable
taxes) of bonus pay. The Company contributes on a participant's behalf 100% of
the first 3% of compensation that is deferred by the participant. Benefits
paid under this plan also include an interest component based on Moody's
Average Corporate Bond Yield Index. The plan is unfunded and participants'
accounts represent unsecured claims against the Company. Effective
December 31, 2002 this plan has been frozen to participant contributions and
replaced by the Executive Deferred Compensation Plan effective January 1,
2003. Under this new plan, which is unfunded, participants may defer up to
50% of base and up to 100% (less applicable taxes) of bonus pay. The
Company contributes on a participant's behalf 100% of the first 3% of
compensation that is deferred by the participant. Benefits under this plan
also include an earnings component based upon theoretical investment
options designated by the Administrative Committee and selected by the
participant.
Summary of Retirement and Other Deferred Benefits. The following table
shows estimated annual benefits payable to participants as a straight life
annuity. The benefits are derived from some or all of the following Company
funded sources: Retirement Plan, Company contributions to the E$P, Company
contributions to the Deferred Compensation Plan and Supplemental Retirement
Plan.
Estimated Annual Benefits Based on Years of Service
------------------------------------------------------
Average Annual Earnings 10 15 20
-------------------------- ------------- ------------- -------------
$ 100,000............. $ 30,000 $ 45,000 $ 60,000
200,000............. 60,000 90,000 120,000
300,000............. 90,000 135,000 180,000
400,000............. 120,000 180,000 240,000
500,000............. 150,000 225,000 300,000
600,000............. 180,000 270,000 360,000
800,000............. 240,000 360,000 480,000
1,000,000............. 300,000 450,000 600,000
1,200,000............. 360,000 540,000 720,000
1,300,000............. 390,000 585,000 780,000
At September 29, 2002, the number of years of service under the
retirement plans for Messrs. Nugent, Williams, Hoffner and Schultz, and Ms.
Lang was 23, 33, 1, 27 and 15, respectively; and the amount of eligible
compensation for each of these individuals approximates the amounts reflected
as salary and bonus in the Summary Compensation Table.
9
Severance Arrangements
We have entered into compensation and benefits assurance agreements with
certain of our senior executives, including Messrs. Nugent, Williams, Hoffner
and Schultz, and Ms. Lang, for the payment of certain compensation and the
provision for certain benefits in the event of termination of employment
following a change in control of the Company. The agreements with Messrs.
Nugent, Williams and Schultz had an initial term expiring on September
29, 1998 and the agreements with Mr. Hoffner and Ms. Lang had an initial
term expiring on August 26, 2003 and July 2, 2004, respectively. These
agreements are automatically extended for additional two-year terms
thereafter, unless a minimum of six-months written notice is given to the
contrary. If there is a "change of control" (as defined in the agreements)
during the term of any such agreement, the executive will be entitled to
receive the payments and benefits specified in the event that employment
is terminated within 24 months thereafter: (i) involuntarily, without cause
or (ii) voluntarily for "good reason" (as defined in the agreements).
Amounts payable under each agreement include all amounts earned by the employee
prior to the date of termination and a multiple of the employee's annual base
salary, bonus and the Company's matching contributions to the Deferred
Compensation Plan. In the case of Messrs. Nugent, Williams, Hoffner and
Schultz, and Ms. Lang, the applicable multiples are 2.5, 2.5, 2.5, 1.5 and
2.5, respectively. In addition, the agreements provide for the continuation
of health insurance benefits for a period of up to 18 months following
termination and certain incidental benefits.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee assists the Board in discharge of the
Board's responsibilities relating to compensation of the directors, officers
and executives of the Company. The Compensation Committee administers the
Company's executive compensation program and reviews the Company's
succession planning and leadership development processes. The Compensation
Committee, which is comprised entirely of outside, independent
directors, (i) reviews and approves salaries and other compensation of
executive officers and (ii) reviews and recommends to the Board for approval,
compensation strategies, plans and policies, including short and long-term
incentive compensation plans, and employee welfare benefit plans.
The Chief Executive Officer ("CEO") recommends, based on the Company's
performance evaluation policies and procedures, the compensation to be paid
to executive officers of the Company other than himself; final
determination of the amount of compensation rests with the Compensation
Committee. The CEO does not participate in discussions about his compensation
matters or in the making of recommendations about his compensation. The
Compensation Committee reviews and approves the compensation of the CEO
according to established performance evaluation guidelines. The Board of
Directors reviews the Compensation Committee's report to ensure that the CEO
is providing the best leadership for the Company. To assist it in making its
determination, the Compensation Committee regularly retains the services of
third party compensation consultants.
Compensation Philosophy
The objectives of the Company's executive compensation program are
to (a) attract, motivate and retain highly competent executives by providing
total compensation that is competitive with compensation at other
comparably-sized, well-managed companies in the restaurant industry, (b)
provide incentives for achieving the Company's short-term and long-term
financial goals and (c) align the financial interests of the Company's
executives with those of its stockholders.
The Committee compares total compensation (base salary plus annual
bonus) with a selected group of peer companies consisting of companies with
which Jack in the Box Inc. competes to attract and retain talented
individuals. The Company's programs are designed to deliver (i) salary
and benefits at the median of our competitive peer group and (ii) incentive
compensation based upon the financial performance of the Company. Survey
information is gathered and assessed by a third party compensation consulting
firm, Towers Perrin.
The Company's executive officer compensation program is comprised of
base salary, bonus opportunity, long-term incentive compensation and other
benefits such as health insurance.
10
Base Salary
It is the Company's objective to maintain base salaries that approximate
the median level of compensation paid to senior executives with comparable
qualifications, experience and responsibilities at other companies engaged in
the same or similar businesses. Salary ranges and individual salaries for
executives are reviewed annually. In approving individual salaries the
Committee considers job responsibilities, individual performance, business
results, labor market conditions, the Company's budget guidelines and current
compensation as compared to market practice.
Annual Incentive
The Performance Bonus Plan provides for a bonus as a percent of base
salary which is dependent upon the Company's performance level achieved and
the job classification of the individual. The purpose of the Performance Bonus
Plan is to encourage high levels of performance and the loyalty of certain
key employees, executives and officers of the Company and its affiliates, by
providing incentives, which are aligned with Company performance. The
performance bonuses for the named executives for fiscal 2002 are reflected in
the Summary Compensation Table.
Long-Term Incentive 2002
The 2002 Stock Incentive Plan (the "Plan"), approved by shareholders in
February 2002, forms the basis for the Company's long-term incentive plan for
officers and key management employees. The purpose of the Plan is to
furnish an incentive to key employees, executives and officers of the Company,
its subsidiaries and affiliates to increase profits and provide an opportunity
to earn a bonus based on the financial performance of the Company.
Additionally, during 2003, there will be greater emphasis on stock
ownership by the executive officers by awarding a portion of certain
officers' annual incentive compensation in the form of restricted stock
units as part of the Company's long-term incentive program. The restricted
stock will not be distributed until retirement or termination from the Company.
Upon retirement or termination, the number of restricted stock shares vested
will be determined based on years of service of the individual as of the date
of such retirement or termination. Restricted stock will be subject to
forfeiture in the case of termination of employment under certain
circumstances. Awards will become vested (either partially or completely)
and shares of common stock of the Company released from an escrow account
maintained by the Company, only upon retirement or termination. The
Compensation Committee believes this program will further align the
interests of the officers with those of the stockholders and will further
encourage retention of these key personnel.
Stock Ownership Guidelines
In keeping with its belief that companies should align the financial
interests of executives to those of stockholders, the Board has established
stock ownership guidelines. Under these guidelines the officers are
expected to own Jack in the Box Inc. common stock valued at between one and
five times their individual base salary amounts, depending upon their
position in the Company.
Compensation decisions for executive officers are made with full
consideration of the Internal Revenue Code Section 162(m) implications.
(Section 162(m) limits the deductibility of compensation paid to certain
executive officers in excess of $1.0 million, but excludes "performance-
based" compensation from this limit.) The Company's Performance Bonus Plan
and the 2002 Stock Incentive Plan are intended to qualify under Section 162(m).
During fiscal 2002, options to purchase the following amounts of the
Company's common stock were granted to Messrs. Nugent, Williams, Hoffner and
Schultz, and Ms. Lang: 113,000, 47,000, 45,000, 27,000 and 20,000 shares,
respectively. All options were granted at 100% of the market price of the
Company's common stock on the date of grant. Beginning one year from the date
of grant, 20% of the total number of shares subject to the option will
become exercisable annually. Options serve to directly align the interests
of executives, including the Chief Executive Officer, with your interests
since such executives will not realize a benefit unless and until the market
price of the Company's common stock increases.
11
CEO Compensation
Mr. Nugent became Chairman of the Board on February 23, 2001 and has
been Chief Executive Officer of the Company since April 1, 1996. His base
salary as of December 24, 2001, was increased approximately 5.7% over his
previous base salary in order to maintain his salary at approximately the
mid-range of competitive industry practice. An annual cash incentive award
is payable to Mr. Nugent if the Company achieves or exceeds specified earnings
goals. Mr. Nugent's bonus for fiscal 2002 represents approximately 60% of
the potential cash bonus payable under the Company's Performance Bonus
Plan. In fiscal 2002, approximately 37% of Mr. Nugent's compensation was
incentive pay.
This report is submitted by the Compensation Committee of the Board of
Directors.
Murray H. Hutchison, Chair
Alice B. Hayes
Michael W. Murphy
This report will not be deemed to be incorporated by reference in
any filing by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this report by reference.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee, Alice B. Hayes, Murray H.
Hutchison and Michael W. Murphy are outside directors and do not have
compensation committee interlocks.
PERFORMANCE GRAPH
The following graph compares the cumulative return to holders of the
Company's Common Stock at September 30th of each year to the yearly weighted
cumulative return of a Restaurant Peer Group Index and to the Standard & Poor's
("S&P") 500 Index for the same period. The comparison assumes $100 was
invested on September 30, 1997 in the Company's Common Stock and in each of the
comparison groups, and assumes reinvestment of dividends. The Company paid
no dividends during these periods.
[A LINE GRAPH CHART WAS INCLUDED HEREIN WHICH
GRAPHICALLY REFLECTED THE FOLLOWING DATA]
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Jack in the Box Inc................... $100 $183 $233 $214 $249 $221
S&P 500 Index ........................ 100 209 239 158 216 192
Restaurant Peer Group (1)............. 100 190 189 178 207 218
--------------------------
(1) The Restaurant Peer Group Index is comprised of the following companies:
Applebee's International, Inc.; Bob Evans Farms, Inc.; Brinker
International, Inc.; CBRL Group, Inc.; CKE Restaurants, Inc.; Luby's,
Inc.; Papa John's International, Inc.; Ruby Tuesday, Inc.; Ryan's Family
Steakhouse, Inc. and Sonic Corp.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 13, 2002, information
with respect to beneficial ownership of voting securities of the Company by
(i) each person who is known to us to be the beneficial owner of more than 5%
of any class of the Company's voting securities, (ii) each director and
nominee for director of the Company, (iii) each executive officer listed in the
Summary Compensation Table herein and (iv) all directors and executive
officers of the Company as a group. Each of the following stockholders has
sole voting and investment power with respect to shares beneficially owned by
such stockholder, except to the extent that authority is shared with
spouses under applicable law or as otherwise noted.
Number of Shares
of Common Stock Percent of
Name Beneficially Owned(1) Class(1)
-------------------------------------------------------------------------------
Fidelity Investments (2)................. 5,864,116 15.8%
Franklin Resources, Inc. (3)............. 2,510,100 6.8%
Robert J. Nugent......................... 747,591 2.0%
Edward W. Gibbons (4).................... 433,336 1.2%
Kenneth R. Williams (5).................. 212,760 *
Paul L. Schultz.......................... 149,205 *
Linda A. Lang............................ 100,438 *
L. Robert Payne.......................... 95,740 *
Paul T. Carter (6)....................... 86,050 *
John F. Hoffner.......................... 72,000 *
Michael E. Alpert........................ 71,100 *
Jay W. Brown............................. 58,600 *
Murray H. Hutchison...................... 28,600 *
Alice B. Hayes........................... 20,600 *
Anne B. Gust............................. 0 *
Michael W. Murphy........................ 0 *
All directors and executive officers as a
group (21 persons)....................... 2,352,180 6.2%
--------------------------
* Less than one percent
(1) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares as of a given date which such
person has the right to acquire within 60 days after such date. For
purposes of computing the percentage of outstanding shares held by
each person or group of persons named above on a given date, any security
which such person or persons has the right to acquire within 60 days
after such date is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person. Messrs. Nugent, Gibbons, Williams, Schultz, Payne,
Carter, Hoffner, Alpert, Brown and Hutchison, and Ms. Lang and Dr.
Hayes have the right to acquire through the exercise of stock options
within 60 days of the above date, 242,820, 68,600, 151,760, 108,860,
68,600, 68,600, 17,000, 68,600, 48,600, 28,600, 45,438 and 18,600,
respectively, of the shares reflected above as beneficially owned. As a
group, all directors and executive officers have the right to acquire
through the exercise of stock options within 60 days of the above date
1,097,038 of the shares reflected above as beneficially owned. In
addition, the shares reflected as beneficially owned by Mr. Hoffner
and Ms. Lang include 55,000 shares each for restricted stock awards
issued on November 8, 2002. As a group, the shares reflected as
beneficially owned by all directors and executive officers include
217,600 shares of restricted stock awards. Restricted stock shares
may be voted by such executive officers; however, the shares are not
available for sale or other disposition until the expiration of vesting
restrictions upon retirement or termination.
(2) FMR Corp., on behalf of certain of its direct and indirect subsidiaries,
Fidelity Management & Research Company, FMR Co., Inc. and Fidelity
Management Trust Company (collectively "Fidelity"), indirectly held and
had investment discretion with respect to 5,864,116 shares as of
December 18, 2002. Fidelity had sole voting discretion with respect to
246,946 of such shares. The address of Fidelity Management & Research
Company, FMR Co., Inc. and Fidelity Management Trust Company is 82
Devonshire Street, Boston, Massachusetts 02109.
13
(3) According to its Schedule 13F-HR filing as of September 30, 2002, Franklin
Advisors, Inc., a subsidiary of Franklin Resources, Inc., exercised shared
investment discretion and sole voting power with respect to 2,510,100
shares. The address of Franklin Resources, Inc. is One Franklin Parkway,
San Mateo, California 94403.
(4) Includes 50,000 shares owned by Mr. Gibbons' wife.
(5) Mr. Williams retired from the Company and the Board effective December
31, 2002.
(6) Mr. Carter resigned from the Board effective February 14, 2003.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, each
executive officer, director and beneficial owner of more than 10% of the
Company's Common Stock is required to file certain forms with the
Securities and Exchange Commission ("SEC"). A report of beneficial ownership
of the Company's Common Stock on Form 3 is due at the time such person becomes
subject to the reporting requirements and a report on Form 4 or Form 5 must
be filed to reflect changes thereafter. Based on written statements and
copies of forms provided to us by persons subject to the reporting
requirements, we believe that all such reports required to be filed by
such persons during fiscal 2002 were filed on a timely basis.
OTHER BUSINESS
We are not aware of any other matters to come before the Annual Meeting.
If any matter not mentioned herein is properly brought before the Annual
Meeting, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their best
judgment.
Pursuant to the Company's Bylaws, in order for a stockholder to present
business at the Annual Meeting or to make nominations for election of a
director, such matters must be filed in writing with the Secretary of the
Company in a timely manner. To be timely, a stockholder's notice must be
delivered to the principal executive offices of the Company not less than
ninety (90) nor more than one hundred and twenty (120) days prior to the
meeting as originally scheduled; provided, however, that in the event that
less than 100 days' notice or prior public disclosure of the date of the
meeting is made to stockholders, notice by the stockholder must be received
not later than the close of business on the 10th day following the day on
which notice of the date of the Annual Meeting was mailed or public disclosure
was made. Such notice shall set forth, as to the stockholder giving notice,
the stockholder's name and address as they appear on the Company's books,
and the class and number of shares of the Company which are beneficially
owned by such stockholder. Additionally, (i) with respect to a stockholder's
notice regarding a nominee for director, such notice shall set forth, as to
each person whom the stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors pursuant to the Securities Exchange Act of 1934, as amended
(including such person's written consent to being named in the Proxy Statement
as a nominee and to serving as a director if elected); and (ii) with respect to
a notice relating to a matter the stockholder proposes to bring before the
Annual Meeting, a brief description of the business desired to be brought
before the meeting and any material interest of the stockholder in such
business.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Any stockholder of the Company wishing to have a proposal considered
for inclusion in the Company's proxy solicitation materials to be distributed
in connection with the Company's Annual Meeting of Stockholders to be
held in the year 2004 must set forth such proposal in writing and file it with
the Secretary of the Company on or before October 17, 2003. Any such
proposals must comply in all respects with the rules and regulations of the
Securities and Exchange Commission.
14
2002 ANNUAL REPORT AND FORM 10-K
A copy of the 2002 Annual Report to Stockholders accompanies this Proxy
Statement. The Company's Annual Report on Form 10-K for the year ended
September 29, 2002, as filed with the Securities and Exchange Commission,
contains detailed information concerning the Company and its operations which
is not included in the 2002 Annual Report. A COPY OF THE 2002 FORM 10-K WILL BE
FURNISHED TO YOU WITHOUT CHARGE UPON REQUEST IN WRITING TO: Jack in the Box
Inc., Treasury Department, 9330 Balboa Avenue, San Diego, California 92123-1516.
By order of the Board of Directors,
LAWRENCE E. SCHAUF
Lawrence E. Schauf
Secretary
15
Exhibit A
JACK IN THE BOX INC.
AUDIT COMMITTEE CHARTER
AUTHORITY
The Board by resolution dated November 1, 1985 established the Audit Committee.
PURPOSE
The Audit Committee is appointed by the Board to (a) assist the Board of
Directors in monitoring (1) the integrity of the Corporation's financial
statements, (2) the Corporation's compliance with legal and regulatory
requirements (3) the independent auditor's qualifications and independence (4)
the performance of the Corporation's internal audit function and external
auditors and (b) prepare the report required to be prepared by the Audit
Committee under the rules of the Securities and Exchange Commission ("SEC")
for inclusion in the Corporation's annual Proxy Statement.
COMMITTEE MEMBERSHIP
The Committee will have a minimum of three members.
o All Committee members will meet the independence and experience requirements
of the New York Stock Exchange. In particular, the Chair of the Audit
Committee will have accounting or related financial management expertise. A
summary of NYSE independence requirements is attached.
o No member of the Audit Committee may receive any compensation from the
Corporation other than (1) director's fees (including fees for service as a
member of any Committee of the Board) and (2) a pension or other deferred
compensation for prior service that is not contingent on future service.
o No director may serve as a member of the Audit Committee if such director
serves on the Audit Committees of more than two other public companies unless
the Board of Directors determines that such simultaneous service would not
impair the ability of such director to effectively serve on the Audit
Committee.
o No director may serve as Chair or as a voting member of the Audit Committee if
such director is a beneficial owner of 20% or more of the Corporation's
voting stock (or is a general partner, controlling shareholder or officer of
such beneficial owner) but such a director may serve as a non-voting member.
o The Board will appoint Audit Committee members and a Chair after considering
the recommendations of the Nominating and Governance Committee.
o The Board may fill vacancies on the Committee.
o The Board may remove a Committee member from the membership of the Committee
at any time with or without cause.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Audit Committee is granted the authority to investigate any
activity of the Corporation and its subsidiaries, and all employees are
directed to cooperate as requested by members of the Audit Committee. The Audit
Committee may request any officer or employee of the Corporation or the
Corporation's internal counsel, outside counsel or independent auditor to
attend a Committee meeting. The Audit Committee has the authority to retain
special legal, accounting or other consultants as necessary to advise the Audit
Committee. The outside auditors for the Corporation are accountable to the
Board and the Audit Committee as representatives of the shareholders.
In carrying out its responsibilities, the Board of Directors
believes the policies and procedures of the Audit Committee shall remain
flexible, in order to best react to changing conditions. The Audit Committee
will:
o Select, retain and when appropriate, terminate the Corporation's independent
auditors.
o Approve the fees and terms of all audit engagements and all significant
non-audit engagements with the Corporation's independent auditors.
o Review the annual written statement from the outside auditor of the
Corporation describing: the auditor's internal quality control procedures; any
material issues raised by the most recent internal quality-control review or
peer review of the 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 auditors, and any
steps taken to deal with any such issues; and (to assess the auditors'
independence) all relationships between the outside auditors and the
Corporation, including each non-audit service provided to the Corporation and
the matters set forth in Independence Standards Board # 1.
o Review the qualifications, performance and independence of the lead partner
of the independent auditor team and the audit firm itself. In making this
review, the Audit Committee will take into account the assessments of
management and the Corporation's internal auditors.
o Evaluate whether it is appropriate to rotate the lead audit partner or the
audit firm itself.
o Meet with the independent auditors and financial management of the Corporation
to review the scope of the proposed audit for the current year and the audit
procedures to be utilized, and at the conclusion thereof, review such audit
including any comments or recommendations of the independent auditors.
o Review with the independent auditor any reports or communications (and
management's and/or the internal auditor's responses) required by or referred
to in SAS #61, including any problems or difficulties the auditor may have
encountered and any management letter provided by the auditor and the
Corporation's response to that letter. Such review should include:
(1) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
requested information, and any significant disagreements with
management.
(2) Any changes required in the planned scope of the audit.
(3) Any accounting adjustments proposed by the auditor but "passed" (as
immaterial or otherwise).
o At its discretion the Committee may review with the outside auditor both (a)
communications between the audit team and the audit firm's national office
respecting any significant auditing or accounting issues presented by the
engagement and (b) the internal audit department responsibilities, budget and
staffing.
o Obtain from the outside auditors assurance that the annual audit was conducted
in a manner consistent with Section 10A of the Securities Exchange Act of
1934, as amended, which sets forth certain procedures to be followed in any
audit of financial statements required under the Securities Exchange Act of
1934.
o Review with management and the independent auditors, the Corporation's annual
audited financial statements and quarterly financial statements, including
(a) the Corporation's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operation" ("MD&A"), (b) major issues
regarding accounting principles and auditing standards and financial
statement presentation and (c) the independent auditor's judgment as to the
accuracy of financial information, adequacy of disclosures and quality of the
Corporation's accounting principles.
o Review as needed an analysis prepared by management and/or the independent
auditor of significant financial reporting issues and judgments made in
connection with the preparation and presentation of the Corporation's
financial statements, including an analysis of the effect of alternative GAAP
methods on the Corporation's financial statements and a description of any
transactions as to which management obtained Statement on Auditing Standards
#50 letters.
o Review with management and the independent auditors the Corporation's
earnings press releases as well as financial information and earnings
guidance provided to analysts and rating agencies.
o Review with management and the independent auditor any correspondence with
regulators or governmental agencies and any employee complaints or published
reports, which raise material issues regarding the Corporation's financial
statements or accounting policies.
o Set policies for the Corporation's hiring of employees or former employees of
the independent auditor who were engaged on the Corporation's account.
o Annually review with the independent auditors, the Corporation's internal
auditors, and financial and accounting personnel the adequacy and
effectiveness of the accounting and financial controls of the Corporation,
and any special audit steps adopted in light of material control deficiencies,
and make or review any recommendations for the improvement of such internal
control procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis will be given to the adequacy of
such internal controls to expose payments, transactions or procedures that
might be deemed illegal or otherwise improper.
o Review the internal audit function of the Corporation including the
independence of the function, the ability of the function to raise issues to
the appropriate level of authority, the proposed audit plans for the coming
year, and the coordination of such plans with the independent auditors. The
Committee should request copies or summaries of the significant reports to
management prepared by the internal auditing department and management's
responses. Review recommendations and findings of the internal auditors to
assure that appropriate actions are taken by management.
o Review the appointment and replacement of the senior internal auditing
executive.
o Review with management and the independent auditor the effect of regulatory
and accounting initiatives as well as off-balance sheet structures on the
Corporation's financial statements.
o Meet periodically with management to review the Corporation's policies with
respect to risk assessment and risk management, the Corporation's major
financial risk exposures and the steps management has taken to monitor and
control such exposures.
o Review and approve significant changes to the Corporation's selection or
application of accounting principles and practices as suggested by the
independent auditor, internal auditor or management.
o Review with the Corporation's General Counsel (a) legal matters that may have
a material impact on the financial statements or reflect upon the
Corporation's compliance policies, (b) any material reports or inquiries
received from regulators or governmental agencies, (c) material pending legal
proceedings involving the Corporation and (d) other contingent liabilities.
o Conduct or authorize an appropriate review of any related party transactions
deemed significant by the Committee.
o Review the Corporation's policies and procedures regarding compliance with
applicable laws and regulations and with the Corporation's Code of Conduct
(as such Code is set forth in the booklet entitled "TRUST" and other
Corporation policies.)
o Receive and review quarterly reports from the Corporation's ethics compliance
officer.
o Review reports and disclosures of insider and affiliated party transactions.
o Conduct or authorize an investigation of any matter brought to its attention
within the scope of its duties, with the power to retain outside counsel for
this purpose if, in its judgment, that is appropriate. Report to the Board of
Directors the results of its investigation and make such recommendations, as
it may deem appropriate.
o The Audit Committee will review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board for approval.
o The Audit Committee will annually review its own performance.
The function of the Audit Committee is oversight. It is not the duty of the
Audit Committee to plan or conduct audits or to determine that the
Corporation's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. This is the
responsibility of management and the Independent Auditor. Nor is it the duty of
the Audit Committee to resolve disagreements, if any, between management and
the independent auditor or to assure compliance with laws and regulations and
the Corporation's Code of Conduct.
COMMITTEE MEETINGS AND ACTION
o The majority of the members of the Audit Committee shall constitute a quorum.
o The action of a majority of those present at a meeting at which a quorum is
present will be the act of the Committee.
o Any action required to be taken at a meeting of the Committee will
nonetheless be deemed the action of the Committee if all of the Committee
members executed, either before or after the action is taken, a written
consent and the consent is filed with the Corporate Secretary.
o The Chair will make regular reports to the Board.
o The Committee may form and delegate authority to subcommittees when
appropriate.
o The Committee Secretary (who will be the Corporate Secretary) will give
notice and keep minutes of all Committee meetings.
o The Committee will meet as often as may be deemed necessary or
appropriate in its judgment, generally four times each year, either in person
or telephonically.
o The Committee will meet separately with management, the independent auditors
and Internal Auditor at least quarterly.
o The Committee Secretary will prepare a preliminary agenda. The Chair will
make the final decision regarding the agenda.
o The agenda and all materials to be reviewed at the meetings should be received
by the Committee members as far in advance of the meeting day as practicable.
o The Committee Secretary should coordinate all mailings to the Committee
members, to the extent practicable.
o The Committee may perform any other activities consistent with this Charter,
the Corporation's Bylaws and governing law as the Board deems necessary or
appropriate.
Proxy with telephone and Internet voting instructions - side one
--------------------------------------------------------------------------------
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
JACK IN THE BOX INC.
FOR ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY 14, 2003 AT 2:00 P.M.
MARRIOTT MISSION VALLEY, 8757 RIO SAN DIEGO DRIVE, SAN DIEGO, CALIFORNIA.
The undersigned hereby appoints Robert J. Nugent, John F. Hoffner and Lawrence
E. Schauf and each of them, acting by a majority or by one of them if only one
is acting, as lawful proxies, with full power of substitution, for and in the
name of the undersigned, to vote on behalf of the undersigned, with all the
powers the undersigned would possess if personally present at the Annual
Meeting of Stockholders of Jack in the Box Inc., a Delaware corporation, on
February 14, 2003, or any postponements or adjournments thereof. The above
named proxies are instructed to vote all the undersigned's shares of stock on
the proposals set forth in the Notice of Annual Meeting and Proxy Statement as
specified on the other side hereof and are authorized in their discretion to
vote upon such other business as may properly come before the meeting or any
postponements or adjournments thereof. This proxy when properly executed will
be voted in the manner directed herein by the undersigned stockholder. If no
direction is made, this proxy will be voted "FOR" all nominees listed and "FOR"
Proposal 2. The Board of Directors recommends a vote FOR the above proposals.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
/FOLD AND DETACH HERE /
JACK IN THE BOX INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 14, 2003 AT 2:00 P.M.
MARRIOTT MISSION VALLEY
8757 RIO SAN DIEGO DRIVE
SAN DIEGO, CALIFORNIA
Proxy with telephone and Internet voting instructions - side two
--------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Please mark your |X|
all nominees listed and Proposal 2. votes like this.
WITHHOLD
FOR ALL ALL
1. Election of Directors |_| |_|
Nominees:
01 Michael E. Alpert 06 Murray H. Hutchison
02 Jay W. Brown 07 Michael W. Murphy
03 Edward W. Gibbons 08 Robert J. Nugent
04 Anne B. Gust 09 L. Robert Payne
05 Alice B. Hayes
(Instruction: To withhold authority to vote
for any individual nominee write that
nominee's name below.)
____________________________________________________
2. Ratification of appointment of KPMG LLP as FOR AGAINST ABSTAIN
independent accountants. |_| |_| |_|
3. In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before the meeting.
YES NO
I plan to attend the meeting. |_| |_|
*** IF YOU WISH TO VOTE BY TELEPHONE OR
INTERNET, PLEASE READ THE INSTRUCTIONS BELOW***
[NAME, ADDRESS & SHARE INFORMATION]
Signature(s)___________________________ Dated: ___________________________,2003
Stockholder(s), please sign above exactly as name appears hereon; in the case
of joint holders, all should sign. Fiduciaries should add their full title to
their signature. Corporations should sign in full corporate name by an
authorized officer. Partnerships should sign in partnership name by an
authorized person.
--------------------------------------------------------------------------------
/FOLD AND DETACH HERE/
VOTE BY TELEPHONE OR INTERNET OR MAIL
24 HOURS A DAY - 7 DAYS A WEEK
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.
You will be asked to enter the Control Number located in the box in the lower
right hand corner of this form.
TELEPHONE
Call Toll Free 1-800-435-6710 - ANYTIME
There is NO CHARGE to you for this call
--------------------------------------------------------------------------------
Use any touch-tone phone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your CONTROL NUMBER located in
the box below, and then follow the directions given.
--------------------------------------------------------------------------------
INTERNET
http://www.eproxy.com/jbx
--------------------------------------------------------------------------------
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the website. You will be prompted to enter your CONTROL NUMBER located
in the box below, to create and submit an electronic ballot.
--------------------------------------------------------------------------------
MAIL
--------------------------------------------------------------------------------
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope provided.
--------------------------------------------------------------------------------
NOTE: If you vote by telephone or Internet, you do not need to mail back your
proxy.
THANK YOU FOR VOTING.
[Reserved for Control Number Box]
Proxy without telephone or Internet voting instructions - side one
--------------------------------------------------------------------------------
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
JACK IN THE BOX INC.
FOR ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY 14, 2003 AT 2:00 P.M.
MARRIOTT MISSION VALLEY, 8757 RIO SAN DIEGO DRIVE, SAN DIEGO, CALIFORNIA
The undersigned hereby appoints Robert J. Nugent, John F. Hoffner and Lawrence
E. Schauf and each of them, acting by a majority or by one of them if only one
is acting, as lawful proxies, with full power of substitution, for and in the
name of the undersigned, to vote on behalf of the undersigned, with all the
powers the undersigned would possess if personally present at the Annual Meeting
of Stockholders of Jack in the Box Inc., a Delaware corporation, on February 14,
2003, or any postponements or adjournments thereof. The above named proxies are
instructed to vote all the undersigned's shares of stock on the proposals set
forth in the Notice of Annual Meeting and Proxy Statement as specified on the
other side hereof and are authorized in their discretion to vote upon such other
business as may properly come before the meeting or any postponements or
adjournments thereof. This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted "FOR" all nominees listed and "FOR" Proposal 2. The
Board of Directors recommends a vote FOR the above proposals.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
/ FOLD AND DETACH HERE /
JACK IN THE BOX INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 14, 2003 AT 2:00 P.M.
MARRIOTT MISSION VALLEY
8757 RIO SAN DIEGO DRIVE
SAN DIEGO, CALIFORNIA
Proxy without telephone and Internet voting instructions - side two
--------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Please mark your |X|
all nominees listed and Proposal 2. votes like this.
WITHHOLD
FOR ALL ALL
1. Election of Directors |_| |_|
Nominees:
01 Michael E. Alpert 06 Murray H. Hutchison
02 Jay W. Brown 07 Michael W. Murphy
03 Edward W. Gibbons 08 Robert J. Nugent
04 Anne B. Gust 09 L. Robert Payne
05 Alice B. Hayes
(Instruction: To withhold authority to vote
for any individual nominee write that
nominee's name below.)
____________________________________________________
2. Ratification of appointment of KPMG LLP as FOR AGAINST ABSTAIN
independent accountants. |_| |_| |_|
3. In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before the meeting.
YES NO
I plan to attend the meeting. |_| |_|
[NAME, ADDRESS & SHARE INFORMATION]
Signature(s)___________________________ Dated: ___________________________,2003
Stockholder(s), please sign above exactly as name appears hereon; in the case of
joint holders, all should sign. Fiduciaries should add their full title to their
signature. Corporations should sign in full corporate name by an authorized
officer. Partnerships should sign in partnership name by an authorized person.
--------------------------------------------------------------------------------
/ FOLD AND DETACH HERE /
Proxy Easy $aver Plus Plan - side one
--------------------------------------------------------------------------------
Please fold and detach at perforation before mailing
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
-------------------------------------------------------------------------------
The Board of Directors of Jack in the Box Inc. recommends a vote FOR all
nominees listed and Proposal 2.
WITHHOLD FOR ALL EXCEPT
FOR ALL ALL (noted at left)
1. Election of Directors |_| |_| |_|
Nominees:
01 Michael E. Alpert 06 Murray H. Hutchison
02 Jay W. Brown 07 Michael W. Murphy
03 Edward W. Gibbons 08 Robert J. Nugent
04 Anne B. Gust 09 L. Robert Payne
05 Alice B. Hayes
---------------------------------------------
(Instruction: To withhold authority to vote for any individual nominee mark
the "FOR ALL EXCEPT" box above and write that nominee's name above.)
2. Ratification of appointment of KPMG LLP FOR AGAINST ABSTAIN
as independent accountants. |_| |_| |_|
3. In their discretion, the Proxies are
authorized to vote upon such other business
as may properly come before the meeting.
Please note: If this Voting Instruction Form is signed, but no direction is
given on Proposal #1, Mellon Bank, N.A. will vote "FOR" all nominees listed, or
if no direction is given on Proposal #2, Mellon Bank, N.A. will vote "FOR" this
Proposal.
(Continued and to be dated and signed on the other side)
Proxy Easy $aver Plus Plan - side two
--------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
This voting instruction is requested by Mellon Bank, N.A. in conjunction with
a proxy solicitation by the Board of Directors of Jack in the Box Inc.
Please read the enclosed Proxy Statement and the Annual Report
to Stockholders for more information.
CONFIDENTIAL VOTING INSTRUCTION FORM
To: Mellon Bank, N.A.
as Trustee of the Jack in the Box Inc. Easy$aver Plus Plan
Please fold and detach at perforation before mailing
--------------------------------------------------------------------------------
The undersigned hereby instructs Mellon Bank, N.A., as Trustee of the Jack in
the Box Inc. Easy$aver Plus Plan, to vote in person or by proxy at the Annual
Meeting of the Stockholders of Jack in the Box Inc., to be held on February 14,
2003, and at any postponements or adjournments thereof, all shares of
Common Stock of Jack in the Box Inc., for which the undersigned shall be
entitled to instruct, in the manner specified on the other side hereof.
Mellon Bank, N.A. will vote the shares represented by this Voting Instruction
Form if it is properly completed, signed, and received by Mellon Bank, N.A.
before 5:00 p.m. EST on February 11, 2003 at P.O. Box 9116, Hingham, MA 02043.
Please note that if this Voting Instruction Form is not properly completed
and signed, or it is not received by Mellon Bank, N.A., as indicated above,
Mellon Bank, N.A. will not vote any shares represented by such Voting
Instruction Form.
Mellon Bank, N.A. makes no recommendation regarding any voting instruction.
Any Voting Instruction Form, if properly completed, signed, and received by
Mellon Bank, N.A. in a timely manner will supersede any previously received
Voting Instruction Form. All voting instructions received by Mellon
Bank, N.A. will be kept confidential.
Dated:_____________________, 2003
_________________________________
Signature
--------------------------------------------------------------------------------
BALLOT JACK IN THE BOX INC. BALLOT
Annual Meeting of Stockholders, February 14, 2003
The undersigned votes_______________________________(______________) shares of
stock, with respect to the following:
1. Election of Directors: Michael E. Alpert, Jay W. Brown, Edward W. Gibbons,
Anne B. Gust, Alice B. Hayes, Murray H. Hutchison, Michael W. Murphy, Robert
J. Nugent and L. Robert Payne.
|_| FOR all nominees listed.
|_| WITHHOLD AUTHORITY to vote for all nominees listed.
|_| FOR all nominees listed except_______________________________________
2. Ratification of appointment of KPMG
LLP as independent accountants. |_| FOR |_| AGAINST |_| ABSTAIN
_________________________________________________________________________
Stockholder's signature (|_| check box if you are voting shares held
in Easy$aver Plus Plan)
INSTRUCTION: If ballot is cast by proxy, print stockholder name above or, if
multiple stockholders, print "Proxies Filed" above.
_________________________________________________________________________
Proxy signature (if ballot is cast by proxy)