-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kq8TxGQIhYWfVhv8/my7pX6OQkTS2cgenLc9VwSsYFp4jwV6SXNTwiLSgZfhjnCZ VC1IiKZcknnjPmzJVekE0w== 0000897101-97-000199.txt : 19970223 0000897101-97-000199.hdr.sgml : 19970223 ACCESSION NUMBER: 0000897101-97-000199 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970318 FILED AS OF DATE: 19970221 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL DAIRY QUEEN INC CENTRAL INDEX KEY: 0000051207 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 410852869 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-06116 FILM NUMBER: 97541121 BUSINESS ADDRESS: STREET 1: 7505 METRO BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55439 BUSINESS PHONE: 6128300200 MAIL ADDRESS: STREET 1: 7505 METRO BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55439 DEF 14A 1 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the registrant [X] Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement [X] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) INTERNATIONAL DAIRY QUEEN, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transactions 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: NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF INTERNATIONAL DAIRY QUEEN, INC. To the Stockholders of International Dairy Queen, Inc.: PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of International Dairy Queen, Inc. will be held on Tuesday, March 18, 1997, at 10:00 a.m. in the General Offices of the Company at 7505 Metro Boulevard, Minneapolis, Minnesota, to consider and act upon the following matters: I. To elect directors for the ensuing year. II. To consider and act upon the matter of ratifying the appointment of Ernst & Young LLP as the independent auditors of the Company for the fiscal year ending November 30, 1997. III. To transact such other business as may properly come before the meeting. In accordance with Delaware law, a list of the Company's stockholders entitled to vote at the meeting will be available for examination at the General Offices of the Company for ten business days prior to the meeting, between the hours of 9:00 a.m. and 5:00 p.m. Minneapolis time, and at the meeting, during the whole time thereof. Accompanying this notice is a Proxy and Proxy Statement and a copy of the Company's Annual Report for the year ended November 30, 1996. Whether or not you expect to be present at the meeting, please sign and date the Proxy and return it in the enclosed envelope provided for that purpose. The Proxy may be revoked at any time prior to the time that it is voted. Only stockholders of record at the close of business on January 31, 1997, will be entitled to vote at the meeting. BY ORDER OF THE BOARD OF DIRECTORS Michael P. Sullivan President February 21, 1997. PROXY STATEMENT INTERNATIONAL DAIRY QUEEN, INC. 7505 METRO BOULEVARD MINNEAPOLIS, MINNESOTA 55439 ANNUAL MEETING OF STOCKHOLDERS -- MARCH 18, 1997 GENERAL The enclosed Proxy is solicited by the Board of Directors of International Dairy Queen, Inc. (the "Company"). Such solicitation is being made by mail and may also be made by directors, officers and employees of the Company. Any Proxy given pursuant to such solicitation may be revoked by the stockholder at any time prior to the voting thereof by so notifying the Company in writing at the above address, attention: David M. Bond, Secretary, or by appearing in person at the meeting. Shares represented by Proxies will be voted as specified in such Proxies. In the absence of specific instructions, Proxies received by the Board of Directors will be voted (to the extent they are entitled to be voted on such matters): (1) in favor of the nominees for directors named in this Proxy Statement; (2) for the ratification of the appointment of Ernst & Young LLP as the independent auditors of the Company; and (3) in the Proxies' discretion upon such other business as may properly come before the meeting. Votes cast by proxy or in person at the Annual Meeting will be tabulated by the election inspectors appointed for the meeting and will determine whether or not a quorum is present. The election inspectors will treat abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum but as unvoted for purposes of determining the approval of any matter submitted to the stockholders for a vote. If a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter. All of the expenses involved in preparing, assembling and mailing this Proxy Statement and the material enclosed herewith will be paid by the Company. The Company may reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy material to beneficial owners of stock. This Proxy Statement is being mailed to stockholders on or about February 21, 1997. PROPOSALS OF STOCKHOLDERS Proposals of stockholders intended to be presented at the Company's 1998 Annual Meeting of Stockholders should be received by the President of the Company at the above address no later than November 18, 1997, in order to be included in the Company's Proxy Statement and form of Proxy relating to that meeting. OUTSTANDING STOCK Class A Common Stock, $.01 par value ("Class A Common Stock"), of which there were 13,925,670 shares outstanding on the record date, and Class B Common Stock, $.01 par value ("Class B Common Stock"), of which there were 8,208,575 shares outstanding on the record date, constitute the only classes of outstanding voting securities issued by the Company. Each holder of Class A Common Stock will be entitled to cast one vote in person or by proxy for each share of Class A Common Stock held for the election of directors to be elected by the holders of the Class A Common Stock. Each holder of Class B Common Stock will be entitled to cast one vote in person or by proxy for each share of Class B Common Stock held for the election of the directors to be elected by the holders of the Class B Common Stock and for all other matters voted on at the meeting. Only stockholders of record at the close of business on January 31, 1997, will be entitled to vote at the meeting. Information as to the name, address and stock holdings of each person known by the Company to be the beneficial owner of more than 5% of its Class A Common Stock or Class B Common Stock and as to name and the stock holdings of each director and nominee for election to the Board of Directors and by all officers, directors and nominees, as a group, as of January 31, 1997, is set forth below. Except as indicated below, the Company believes that each of such persons has the sole (or joint with spouse) voting and investment powers with respect to such shares.
CLASS A COMMON STOCK CLASS B COMMON STOCK AMOUNT PERCENT AMOUNT PERCENT BENEFICIALLY OF BENEFICIALLY OF STOCKHOLDER/DIRECTOR OWNED CLASS OWNED CLASS Rudy Luther Revocable Trust (1) 1,548,934 11.1% 1,631,850(1)(2) 19.9% 5353 Wayzata Blvd. Minneapolis, MN 55416 C. David Luther 1,599,642(3) 11.5% 2,201,850(1)(3) 26.8% 7505 Metro Boulevard Minneapolis, MN 55439 Nicholas Company, Inc. (4) 1,819,800 13.1% 779,000 9.5% 700 North Water Street Milwaukee, WI 53202 Private Capital 1,132,180 8.2% None -- Management, Inc. (4) 3003 Tamiamini Trail N. Suite 360 Naples, FL 34103 The Capital Group Companies, Inc. (4) 806,400 5.8% None -- 333 South Hope Street Los Angeles, CA 90071 John W. Mooty 550,849(5) 4.0% 824,049(2)(5) 10.0% 33 South Sixth Street Suite 3400 Minneapolis, MN 55402 Gilbert Stein 114,880(6) * 845,760(6) 10.3% 4 Bay Ridge Springfield, IL 62707 Luther Family Limited None -- 550,000(2) 6.7% Partnership 7505 Metro Boulevard Minneapolis, MN 55439 Jane N. Mooty 49,043(7) * 575,882(2)(7) 7.0% 7505 Metro Boulevard Minneapolis, MN 55439 Ernest F. Dorn, Jr. 1,308 * None -- Richard I. Giertsen 38,302(8) * 118,126(8) 1.4% Frank L. Heit 308 * 3,000 * Thomas R. Stuart 308 * 1,000 * Michael P. Sullivan 87,223(9) * 39,820(9) * All officers and directors as a group (22 persons) 2,977,053(10) 20.6% 4,177,567(10) 50.9%
* Less than one percent (1) Shares are held by the Rudy Luther Revocable Trust, the trustees of which are Rudy Luther, C. David Luther and R. Dan Luther. (2) During March 1994, members of the John W. Mooty and Jane N. Mooty families granted certain rights to acquire their shares of the Company's Class B Common Stock to the members of the Rudy Luther family and the members of the Rudy Luther family granted reciprocal rights to their shares of Class B Common Stock to the members of the John W. Mooty and Jane N. Mooty families. Members of these families, in the aggregate, own approximately 54% of the Company's outstanding shares of Class B Common Stock and approximately 18% of the Company's outstanding shares of Class A Common Stock. (3) Includes: 50,400 shares of Class A Common Stock owned by the Rudy Luther Trust for Children; 1,548,934 shares of Class A and 1,631,850 shares of Class B Common Stock owned by the Rudy Luther Revocable Trust and 550,000 shares of Class B Common Stock owned by the Luther Family Limited Partnership. R. Dan Luther, the brother of C. David Luther, is also the indirect owner of such shares. Separate information for R. Dan Luther is not included in the table as it would be duplicative of information already provided. (4) The Nicholas Company, Inc., Private Capital Management, Inc. and The Capital Group Companies, Inc. are investment advisors. Based on information provided by these companies, affiliated companies, funds and other client accounts managed by them hold sole voting power with respect to the shares shown opposite their names. (5) Does not include securities shown opposite Mrs. Mooty's name. (6) Includes shares owned by Capitol Dairy Queen, Inc. and Illinois Dairy Queen, Inc. (7) Does not include securities shown opposite Mr. Mooty's name. (8) Includes 23,998 shares of Class A Common Stock and 74,544 shares of Class B Common Stock owned by trusts of which Mr. Giertsen is a trustee, 500 shares of Class A and 1060 shares of Class B Common Stock owned by Mr. Giertsen's spouse and 2,260 shares of Class B Common Stock owned by one of Mr. Giertsen's children. (9) Does not include 100,800 shares of Class A Common Stock owned by the Rudy Luther Trusts for Children, the trustee of which is Mr. Sullivan, and 550,000 shares of Class B Common Stock owned by the Luther Family Limited Partnership of which Mr. Sullivan is a less than 1% limited partner and is a minor shareholder of the corporate general partner of the Partnership. Includes 9,927 shares of Class A and 5,000 shares of Class B Common Stock owned by Mr. Sullivan's spouse, 270 shares of Class A Common Stock owned by one of Mr. Sullivan's children and 63,687 shares subject to options to acquire shares of the Company's Class A Common Stock which are exercisable within 60 days of the date of this Proxy Statement. (10) Includes shares owned by the Rudy Luther Trusts for Children. Includes 501,299 shares subject to options to acquire shares of the Company's Class A Common Stock which are exercisable within 60 days of the date of this Proxy Statement. ELECTION OF DIRECTORS The Company's by-laws provide that the size of the Board of Directors shall be not less than five nor more than fifteen directors. The Proxies granted by the holders of Class A Common Stock will be voted at the meeting for the election of the two persons listed below as Class A Nominees as directors of the Company. The Proxies granted by the holders of Class B Common Stock will be voted at the meeting for the election of the six persons listed below as Class B Nominees as directors of the Company. All of the following persons were elected as directors at the Annual Meeting of Stockholders on March 19, 1996 to hold office until the next Annual Meeting of Stockholders and thereafter until their successors have been duly elected and qualified. In the event that one or more of the below-named persons shall unexpectedly become unavailable for election (the Company has no knowledge of any such unavailability), votes will be cast pursuant to authority granted by the enclosed proxy for such person or persons as may be designated by the Board of Directors, unless the Board determines to reduce its size appropriately. In no event will the proxies granted by stockholders be voted for more than two Class A Nominees or six Class B Nominees.
NAME, AGE AND POSITIONS DIRECTOR PRINCIPAL OCCUPATION AND WITH THE COMPANY SINCE BUSINESS EXPERIENCE CLASS A NOMINEES: *Michael P. Sullivan -- 62 1984 President of the Company since November 30, 1987. Mr. President and Chief Executive Sullivan is a director of The Valspar Corporation. Officer of the Company and a Director *Frank L. Heit -- 60 1992 Private Investor. Mr. Heit retired from his position Director as Executive Vice President and Treasurer of the Company in January 1994. Mr. Heit had held this position for more than five years. CLASS B NOMINEES: *John W. Mooty -- 74 1970 Member of the Minneapolis law firm of Gray, Plant, Chairman of the Board of Mooty, Mooty & Bennett, P.A. for more than the last Directors and Executive Committee five years. Ernest F. Dorn, Jr. -- 64 1995 President of Community Credit Co., auto financing and consumer loans, a subsidiary of Norwest Financial Services, Inc., for more than the last five years. Richard I. Giertsen -- 51 1993 President of Giertsen Company, a construction Director company, for more than five years; Vice President of Nebco Evans, Inc., a food distribution company, since December 1990; President of LL Distribution Systems, Inc., a food distribution company, from February 1976 to December 1990; and Secretary/Treasurer of MIRI Enterprises, Inc. a fast food restaurant, for more than five years. C. David Luther -- 40 1995 President of Motors Management Corporation, owner and Director operator of an auto leasing company and a number of auto dealerships, since June 1992. Mr. Luther has served as a director of Motors Management Corporation for more than the last five years. Jane N. Mooty -- 75 1970 Private investor for more than the last five years. Director Thomas R. Stuart -- 52 1996 Chairman of the Board and Chief Executive Officer of Director Bureau of Engraving, Inc., a company engaged in offset printing, home study education and manufacturer of printed circuit boards, for more than five years.
* Member of the Executive Committee of the Board of Directors. Jane N. Mooty is the wife of John W. Mooty. There is no other family relationship between any of the persons listed above. Board members are paid $1,000 per board meeting attended and annually receive shares of the Company's Class A Common Stock purchased by the Company in the open market for $6,000 on the last business day of the fiscal year. During fiscal 1996, the Board of Directors of the Company met six times and the Executive Committee of the Board of Directors met two times. During this period all directors attended at least 75% of the meetings of the Board of Directors and all committees of the Board of Directors on which they served. The Board of Directors does not have a nominating committee. John W. Mooty, C. David Luther and Frank L. Heit serve on the Board of Directors' Compensation Committee. The Compensation Committee met two times during fiscal 1996. Messrs. Giertsen, Heit and Dorn are members of the Board of Directors' Audit Committee. This committee met three times during fiscal 1996 to review the results of the 1995 audit and the plan for the 1996 audit. The functions of the Audit Committee include recommending to the Board of Directors, subject to stockholder approval, the independent auditors; reviewing and approving the results of the annual audit; and instructing the auditors, as deemed appropriate, to undertake special assignments. EXECUTIVE COMPENSATION REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION COMPENSATION COMMITTEE CHARTER. The purpose of the Compensation Committee of the Board of Directors is to oversee compensation of officers, key employees, and directors of the Company. The Committee's policy is to insure that compensation programs contribute directly to the success of the Company. The Committee comprises three members of the Board of Directors, none of whom is an employee of the Company. EXECUTIVE COMPENSATION POLICIES AND PROGRAMS. The Company's executive compensation programs are designed to attract and retain qualified executives. There are three basic components to the Company's executive compensation program: base pay, annual incentive bonus, and long-term, equity-based incentive compensation in the form of stock options. Each component is established in light of individual and Company performance, compensation levels generally in the Minneapolis/ St. Paul metropolitan area, equity among employees, and cost effectiveness. BASE PAY. Base pay is designed to be competitive, although conservative as compared to salary levels for equivalent positions at comparable companies in the Minneapolis/St. Paul metropolitan area. The executive's actual salary within this competitive framework depends on the individual's performance, responsibilities, experience, leadership, and potential future contribution. ANNUAL INCENTIVE BONUS. In addition to base pay, each executive is eligible to receive an annual cash bonus. For fiscal 1996 the bonus was based on the Company's and the individual's performance in comparison to a plan established at the beginning of the year. In its evaluation of executive officers and the determination of discretionary bonuses, the Committee makes a judgment after considering the factors it deems relevant, which may include consequences for performance that is below expectations. The initial recommendation with respect to all executive officers other than the President, is made by the President. LONG-TERM, EQUITY-BASED INCENTIVE COMPENSATION. The long-term, equity-based compensation program is tied directly to stockholder return. Under the current program, long-term incentive compensation consists of stock options that generally do not fully vest until after five years. Stock options are awarded with an exercise price equal to the fair market value of the Company's Common Stock on the date of grant. Accordingly, the executive is rewarded only if the stockholders receive the benefit of appreciation in the price of the Common Stock. Because long-term options vest over time, the Company periodically (generally once each year) grants new options to provide continuing incentives for future performance. The size of previous grants and the number of options held are considered by the Committee, but are not entirely determinative of future grants. Like the annual bonus, each executive's actual grants are based upon performance measured against the criteria described in the preceding paragraphs. ANNUAL REVIEWS. Each year the Committee reviews its executive compensation policies and programs and determines what changes, if any, are appropriate for the following year. In addition, the Committee reviews the performance of the President. CHIEF EXECUTIVE OFFICER. The President and Chief Executive Officer's compensation is established by the Committee based on a subjective consideration of his performance and the extent to which the Company achieves its strategic and economic goals established at the beginning of the year, his current level of compensation in comparison with the level of compensation paid the Chief Executive Officers of the largest 100 companies in the Minneapolis/St. Paul metropolitan area and, with respect to grants of additional stock options, the number of shares of the Company's Common Stock and options he currently owns. The Committee also considers the President's level of compensation as it relates to other executive officers of the Company and to the Company's employees in general. The foregoing report is submitted by C. David Luther, Frank L. Heit and John W. Mooty, current members of the Compensation Committee. SUMMARY COMPENSATION TABLE The following table sets forth the cash and non-cash compensation awarded to or earned by the Chief Executive Officer of the Company and the four other highest paid executive officers for fiscal 1996, all of whom were executive officers at the end of the fiscal year (the "Named Executive Officers"). LONG-TERM FISCAL ANNUAL COMPENSATION COMPENSATION NAME/PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) Michael P. Sullivan 1996 $353,424 $ 95,000 14,000 shs. President and Chief 1995 339,166 130,000 14,000 shs. Executive Officer 1994 329,500 120,000 19,250 shs. Edward A. Watson 1996 208,053 45,000 12,000 shs. Executive Vice 1995 184,388 60,000 12,000 shs. President -- Operations 1994 176,699 55,000 15,850 shs. Charles W. Mooty 1996 162,811 35,000 12,000 shs. Executive Vice 1995 124,583 14,458 10,000 shs. President and 1994 114,660 11,080 10,325 shs. Chief Financial Officer Mark S. Broin 1996 166,642 10,700 7,800 shs. Vice President 1995 157,048 12,500 8,000 shs. Information Services 1994 151,287 12,565 10,625 shs. Gary H. See 1996 165,219 10,952 10,000 shs. Vice President 1995 155,500 15,500 10,000 shs. Marketing and 1994 149,396 15,364 13,500 shs. Consumer Research OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth for the Named Executive Officers the stock options granted by the Company in fiscal 1996 and the potential value of these stock options determined pursuant to Securities and Exchange Commission requirements.
INDIVIDUAL GRANTS (1) POTENTIAL REALIZABLE PERCENT OF VALUE AT ASSUMED TOTAL OPTIONS RATES OF STOCK GRANTED TO EXERCISE OR PRICE APPRECIATION OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION FOR OPTION TERM (2) NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($) Michael P. Sullivan 14,000 5.2% $21.75 2/01/03 $123,962 $288,884 Edward A. Watson 12,000 4.4% 21.75 2/01/03 106,253 247,615 Charles W. Mooty 12,000 4.4% 21.75 2/01/03 106,253 247,615 Mark S. Broin 7,800 2.9% 21.75 2/01/03 69,065 160,950 Gary H. See 10,000 3.7% 21.75 2/01/03 88,544 206,346
(1) All stock options granted have an exercise price equal to the fair market value on the date of grant. (2) The hypothetical potential appreciation shown in these columns reflects the required calculations at annual rates of 5% and 10% set by the Securities and Exchange Commission and therefore is not intended to represent either historical appreciation or anticipated future appreciation of the Company's Common Stock price. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table sets forth for the Named Executive Officers the value realized from stock options exercised during fiscal 1996 and the number and value of exercisable and unexercisable stock options held at November 30, 1996.
NUMBER OF VALUE OF UNEXERCISED SHARES UNEXERCISED IN-THE-MONEY ACQUIRED ON VALUE OPTIONS OPTIONS EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/ (#) $ UNEXERCISABLE UNEXERCISABLE Michael P. Sullivan None -- 54,975/37,625 $99,222/$57,750 Edward A. Watson None -- 31,475/31,925 44,025/ 48,525 Charles W. Mooty None -- 12,762/25,413 30,227/ 33,489 Mark S. Broin None -- 30,937/21,363 58,326/ 32,814 Gary H. See 7,000 $34,906 31,500/26,500 48,500/ 40,500
CERTAIN TRANSACTIONS During fiscal 1996, the Company leased cars from a company, the President of which is C. David Luther, a director of the Company, and in connection therewith paid to such company $961,109. During fiscal 1996, the Company utilized the services of a travel agency affiliated with Mr. Luther. The agency primarily is compensated for such services by airlines, hotels and others with which the agency makes travel arrangements for the Company. The Company believes that the lease payments for the cars and the services provided by the travel agency were as favorable as could have been obtained from nonaffiliated companies. During fiscal 1996, the Company paid the law firm of Gray, Plant, Mooty, Mooty & Bennett, P.A., of which firm John W. Mooty, the Chairman of the Board of Directors and Executive Committee of the Company, is a member, $2,542,738 for legal services. STOCKHOLDER RETURN COMPARISON Shown below is a line graph comparing the yearly dollar change in the cumulative total stockholder return on the Company's Common Stock as against the cumulative total return of the NASDAQ Total Return Index and a "Peer" group of companies selected by the Company for the period November 30, 1991 through November 30, 1996. The graph and table assume the investment of $100 on November 30, 1991 in each of the Company's Common Stock, the NASDAQ Total Return Index and the Peer Group. [GRAPH]
11/91 11/92 11/93 11/94 11/95 11/96 International Dairy Queen INDQA 100 100 94 96 125 107 PEER GROUP PPEER1 100 148 153 115 153 176 NASDAQ STOCK MARKET-US INAS 100 126 146 146 208 255
(1) The Peer Group, each of which companies is engaged to varying degrees in the franchising of restaurants, includes the following: CKE Restaurants, Inc., Checkers Drive-In Restaurants, Rally's Hamburgers Inc., Sbarro Inc., Sonic Corp., TCBY Enterprises Inc. and Wendys International Inc. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are also required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company and representations that no other reports were required, during the fiscal year ended November 30, 1996, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with. SELECTION OF INDEPENDENT AUDITORS The Board of Directors has appointed Ernst & Young LLP as independent auditors of the Company for the fiscal year ending November 30, 1997, it being intended that such appointment would be presented for ratification by the holders of Class B Common Stock. This firm audited the financial statements of the Company for the year ended November 30, 1996, and for prior years. Ernst & Young LLP will have representatives at the meeting who will have an opportunity to make a statement and will be able to respond to appropriate questions. In the event the holders of Class B Common Stock (the only class of stock entitled to vote on this matter) do not ratify the appointment of Ernst & Young LLP, the selection of other independent auditors will be considered by the Board of Directors. The Board of Directors recommends that the holders of Class B Common Stock vote for ratification of the appointment of Ernst & Young LLP. OTHER MATTERS The Board of Directors does not intend to bring before the meeting any business other than as set forth in this Proxy Statement, and has not been informed that any other business is to be presented to the meeting. However, if any matters other than those referred to above should properly come before the meeting, it is the intention of the persons named in the enclosed Proxy to vote such Proxy in accordance with their best judgment. Please sign and return promptly the enclosed Proxy or Proxies if you are both a holder of Class A Common Stock and Class B Common Stock in the envelope provided. The signing of a Proxy will not prevent your attending the meeting and voting in person. BY ORDER OF THE BOARD OF DIRECTORS Michael P. Sullivan President Dated: February 21, 1997 CLASS A COMMON STOCK INTERNATIONAL DAIRY QUEEN, INC. PROXY FOR CLASS A COMMON STOCK SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS MARCH 18, 1997 The undersigned stockholder of International Dairy Queen, Inc. (the "Company"), hereby appoints John W. Mooty and Michael P. Sullivan or either of them, as attorneys, agents and proxies of the undersigned with full power of substitution in each of them, to vote, in the name and on behalf of the undersigned at the Annual Meeting of Stockholders of the Company to be held on March 18, 1997, at 10:00 a.m., in the General Offices of the Company, 7505 Metro Boulevard, Minneapolis, Minnesota, and at all adjournments thereof, all of the shares of Class A Common Stock of the Company which the undersigned would be entitled to vote if personally present, with all powers the undersigned would possess if personally present. I. [ ] Grant authority to vote for the election of the following persons [ ] Withhold to serve as directors (the Board recommends that you GRANT this authority): M. Sullivan F. Heit YOU MAY WITHHOLD AUTHORITY TO VOTE FOR A NOMINEE BY LINING THROUGH THE NOMINEE'S NAME OF THE ABOVE LIST all as set out in the Notice of Annual Meeting of Stockholders and Proxy Statement dated February 21, 1997, receipt of which is hereby acknowledged. (CONTINUED, AND TO BE SIGNED, ON OTHER SIDE) (CONTINUED FROM OTHER SIDE) ALL SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED FOR THE NOMINEES. Either of said attorneys or their substitutes who shall be present and act, or if only one shall attend, then that one, shall have and may exercise all the powers of said attorneys hereunder. Dated: _______________________, 1997. _____________________________________ (Signature) _____________________________________ (Joint Owner's Signature) When signing as attorney, guardian, executor, administrator or trustee, please give title. If the signer is a corporation, please give the full corporate name, and sign by a duly authorized officer, showing the officer's title. EACH joint owner is required to sign. PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY. YOUR COOPERATION WILL BE APPRECIATED. CLASS B COMMON STOCK INTERNATIONAL DAIRY QUEEN, INC. PROXY FOR CLASS B COMMON STOCK SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS MARCH 18, 1997 The undersigned stockholder of International Dairy Queen, Inc. (the "Company"), hereby appoints John W. Mooty and Michael P. Sullivan or either of them, as attorneys, agents and proxies of the undersigned with full power of substitution in each of them, to vote, in the name and on behalf of the undersigned at the Annual Meeting of Stockholders of the Company to be held on March 18, 1997, at 10:00 a.m., in the General Offices of the Company, 7505 Metro Boulevard, Minneapolis, Minnesota, and at all adjournments thereof, all of the shares of Class B Common Stock of the Company which the undersigned would be entitled to vote if personally present, with all powers the undersigned would possess if personally present. I. [ ] Grant authority to vote for the election of the following persons [ ] Withhold to serve as directors (the Board recommends that you GRANT this authority): E. Dorn, Jr. C.D. Luther J.W. Mooty R. Giertsen T. Stuart J.N. Mooty YOU MAY WITHHOLD AUTHORITY TO VOTE FOR A NOMINEE BY LINING THROUGH THE NOMINEE'S NAME ON THE ABOVE LIST II. [ ] For approving the appointment of Ernst & Young LLP by the Board [ ] Against of Directors as the independent auditors of the Company for [ ] Abstain the fiscal year ending November 30, 1997 (the Board recommends you vote FOR this proposal). III. [ ] Grant authority to vote, in their discretion, upon such other [ ] Withhold business as may properly come before the meeting (the Board of Directors recommends that you GRANT this authority). (CONTINUED, AND TO BE SIGNED, ON OTHER SIDE) (CONTINUED FROM OTHER SIDE) all as set out in the Notice of Annual Meeting of Stockholders and Proxy Statement dated February 21, 1997, receipt of which is hereby acknowledged. ALL SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED FOR THE NOMINEES, TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP AND IN ACCORDANCE WITH THE PROXIES' DISCRETION IN CONNECTION WITH SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. Either of said attorneys or their substitutes who shall be present and act, or if only one shall attend, then that one, shall have and may exercise all the powers of said attorneys hereunder. Dated: _______________________, 1997. _____________________________________ (Signature) _____________________________________ (Joint Owner's Signature) When signing as attorney, guardian, executor, administrator or trustee, please give full title. If the signer is a corporation, please give the full corporate name, and sign by a duly authorized officer, showing the officer's title. EACH joint owner is required to sign. PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY. YOUR COOPERATION WILL BE APPRECIATED. -----END PRIVACY-ENHANCED MESSAGE-----