HANSEN NATURAL CORPORATION
1010 Railroad Street
Corona, California 92882
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 17, 2003
September 17, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Hansen Natural Corporation to be held on Friday, October 17, 2003 at 3:00 p.m.,
at the Boardroom, 1010 Railroad Street, Corona, California 92882.
In addition to the specific matters to be voted on at the meeting, there
will be a report on the Company's business and an opportunity for stockholders
of the Company to ask questions. I hope that you will be able to join us. If you
are unable to attend, I strongly urge you to complete your enclosed proxy. Your
vote is very important.
Sincerely,
Rodney C. Sacks
Chairman of the Board
HANSEN NATURAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 17, 2003
TO THE STOCKHOLDERS OF THE COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Hansen
Natural Corporation ("Hansen" or the "Company") will be held on Friday, October
17, 2003 at 3:00 p.m., at the Boardroom, 1010 Railroad Street, Corona,
California 92882, for the following purposes:
1. To elect six directors to hold office until the next annual
meeting of stockholders of the Company.
2. To ratify the appointment of Deloitte & Touche, LLP as
independent auditors of the Company for the year ending
December 31, 2003.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement for Annual Meeting of Stockholders accompanying this Notice.
Only stockholders of the Company of record at the close of business on
August 25, 2003 are entitled to notice of and to vote at the meeting and any
adjournment thereof.
All stockholders of the Company are cordially invited to attend the meeting
in person. However, to assure your representation at the meeting, you are urged
to mark, sign, date and return the enclosed proxy card as promptly as possible
in the postage-prepaid envelope enclosed for that purpose. You may revoke your
voted proxy at any time prior to the meeting or vote in person if you attend the
meeting.
A copy of the Company's Annual Report to Stockholders of the Company is
enclosed.
Sincerely,
Rodney C. Sacks
Chairman of the Board
Corona, California
September 17, 2003
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
HANSEN NATURAL CORPORATION
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of Hansen Natural Corporation
("Hansen" or the "Company") for use at the Annual Meeting of Stockholders of the
Company to be held Friday, October 17, 2003 at 3:00 p.m. local time, or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders of the Company. The Annual Meeting of
Stockholders of the Company will be held at the Boardroom, 1010 Railroad Street,
Corona, California 92882.
These proxy solicitation materials are being mailed on or about September
17, 2003, together with the Company's 2002 Annual Report to Stockholders of the
Company, to all stockholders of the Company entitled to vote at the meeting.
Record Date and Principal Stockholders
Holders of record of common stock at the close of business on August 25,
2003 are entitled to notice of and to vote at the meeting. There are no other
outstanding voting securities of the Company. At the record date, 10,262,203
shares of the Company's common stock were issued and outstanding. The following
table sets forth, as of the most recent practical date August 25, 2003, those
persons known to the Company to be the beneficial owners of more than 5% of the
Company's common stock:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------------------------- ---------------------- ----------
Brandon Limited Partnership No. 1 (1) 654,822 6.0%
Brandon Limited Partnership No. 2 (2) 2,831,667 25.8%
Rodney C. Sacks (3) 4,041,489 (4) 36.9%
Hilton H. Schlosberg (5) 4,002,586 (6) 36.5%
James Douglas and Jean Douglas
Irrevocable Descendants' Trust (7) 1,026,461 (8) 9.4%
Fidelity Low Priced Stock Fund (9) 751,775 6.9%
1 The mailing address of Brandon No. 1 is P.O. Box 30749, Seven Mile Beach,
Grand Cayman, British West Indies. The general partners of Brandon No. 1
are Rodney C. Sacks and Hilton H. Schlosberg.
2 The mailing address of Brandon No. 2 is P.O. Box 30749, Seven Mile Beach,
Grand Cayman, British West Indies. The general partners of Brandon No. 2
are Rodney C. Sacks and Hilton H. Schlosberg.
1
3 The mailing address of Mr. Sacks is 1010 Railroad Street, Corona,
California 92882.
4 Includes 387,500 shares of common stock owned by Mr. Sacks; 654,822 shares
beneficially held by Brandon No. 1 because Mr. Sacks is one of Brandon No.
1's general partners; and 2,831,667 shares beneficially held by Brandon No.
2 because Mr. Sacks is one of Brandon No. 2's general partners. Also
includes options to purchase 37,500 shares of common stock exercisable at
$1.59 per share granted pursuant to a Stock Option Agreement dated January
30, 1998; options presently exercisable to purchase 100,000 shares of
common stock, out of options to purchase a total of 100,000 shares,
exercisable at $4.25 per share, granted pursuant to a Stock Option
Agreement dated February 2, 1999 between the Company and Mr. Sacks; and
options presently exercisable to purchase 30,000 shares of common stock,
out of options to purchase a total of 150,000 shares, exercisable at $3.57
per share, granted pursuant to a Stock Option Agreement dated July 12, 2002
between the Company and Mr. Sacks.
Mr. Sacks disclaims beneficial ownership of all shares deemed beneficially
owned by him hereunder except (i) 387,500 shares of common stock; (ii) the
167,500 shares presently exercisable under the Stock Option Agreements;
(iii) 243,546 shares held by Brandon No. 1 allocable to the limited
partnership interests in Brandon No. 1 held by Mr. Sacks, his children, a
limited partnership of which Mr. Sacks is the general partner and his
children and he are the limited partners, and a trust for the benefit of
his children; and (iv) 250,000 shares held by Brandon No. 2 allocable to
the limited partnership interests in Brandon No. 2 held by Mr. Sacks, his
children, a limited partnership of which Mr. Sacks is the general partner
and his children and he are the limited partners, and a trust for the
benefit of his children.
5 The mailing address of Mr. Schlosberg is 1010 Railroad Street, Corona,
California 92882.
6 Includes 348,597 shares of common stock owned by Mr. Schlosberg, of which
2,000 shares are owned jointly by Mr. Schlosberg and his wife; 654,822
shares beneficially held by Brandon No. 1 because Mr. Schlosberg is one of
Brandon No. 1's general partners; and 2,831,667 shares beneficially held by
Brandon No. 2 because Mr. Schlosberg is one of Brandon No. 2's general
partners. Also includes options to purchase 37,500 shares of common stock
exercisable at $1.59 per share granted pursuant to a Stock Option Agreement
dated January 30, 1998 between the Company and Mr. Schlosberg; options
presently exercisable to purchase 100,000 shares of common stock, out of
options to purchase a total of 100,000 shares, exercisable at $4.25 per
share, granted pursuant to a Stock Option Agreement dated February 2, 1999
between the Company and Mr. Schlosberg; and options presently exercisable
to purchase 30,000 shares of common stock, out of options to purchase a
total of 150,000 shares, exercisable at $3.57 per share, granted pursuant
to a Stock Option Agreement dated July 12, 2002 between the Company and Mr.
Schlosberg.
Mr. Schlosberg disclaims beneficial ownership of all shares deemed
beneficially owned by him hereunder except (i) 348,597 shares of common
stock; (ii) the 167,500 shares presently exercisable under Stock Option
Agreements; (iii) 247,911 shares held by Brandon No. 1 allocable to the
limited partnership interests in Brandon No 1 held by Mr. Schlosberg and
his children; and (iv) 250,000 shares held by Brandon No. 2 allocable to
the limited partnership interests in Brandon No. 2 held by Mr. Schlosberg
and his children.
7 The mailing address of this reporting person is 4040 Civic Center Drive,
Suite 530, San Rafael, California 94903.
8 Includes 392,794 shares of common stock owned by Kevin and Michelle
Douglas; 300,219 shares of common stock owned by James and Jean Douglas
Irrevocable Descendant's Trust; 314,668 shares of common stock owned by
Douglas Family Trust; and 18,780 shares of common stock owned by James E.
Douglas, III. Kevin and Michelle Douglas, Douglas Family Trust and James
Douglas and Jean Douglas Irrevocable Descendants' Trust are deemed members
of a group that shares voting and dispositive power over the shares.
9 The mailing address of this reporting person is 82 Devonshire Street,
Boston, Massachusetts 02109.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act 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 by specific dates with the SEC
initial reports of ownership and reports of changes in ownership of equity
securities of the Company. Executive officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms that they file. The Company is required to
report in this proxy statement any failure of its directors and executive
2
officers and greater than ten percent stockholders to file by the relevant due
date any of these reports during the most recent fiscal year or prior fiscal
years.
To the Company's knowledge, based solely on review of copies of such
reports furnished to the Company during the year ended December 31, 2002, all
Section 16(a) filing requirements applicable to the Company's executive
officers, directors and greater than ten percent stockholders were complied
with, except that Form 5's in respect of option grants required to be filed by
each of Rodney C. Sacks and Hilton H. Schlosberg were inadvertently filed late.
One transaction was reported on each of the Form 5's.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or duly executed proxy bearing a later date or by attending
the meeting and voting in person.
Voting and Solicitation
In accordance with the Company's by-laws, directors shall be elected by the
affirmative vote of a plurality of the votes cast in person or by proxy by the
holders of shares entitled to vote in the election at the Annual Meeting of
Stockholders of the Company and the ratification of Deloitte & Touche as
independent auditors shall be by the affirmative vote of the majority of the
shares voting on the proposal in person or by proxy at the Annual Meeting of
Stockholders of the Company, in each case, provided a quorum is present. Thus,
abstentions and broker non-votes will not be included in vote totals and will
have no effect on the outcome of the vote. No stockholder shall be entitled to
cumulate votes.
The cost of soliciting proxies will be borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone, telegram or letter.
Deadline for Receipt of Stockholder Proposals
It is presently intended that next year's Annual Meeting of Stockholders of
the Company will be held in October of 2004. Pursuant to Rule 14a-8 of the
Securities Exchange Act of 1934, as amended, proposals of stockholders of the
Company which are intended to be presented by such stockholders of the Company
at next year's Annual Meeting of Stockholders must be received by the Company by
no later than May 16, 2004 in order that they may be considered for inclusion in
the proxy statement and form of proxy relating to that meeting. Additionally,
any stockholder proposal for next year's Annual Meeting of Stockholders of the
Company that is submitted outside the processes of Rule 14a-8 will be considered
untimely for purposes of Rule 14a-4(c)(1) of the Exchange Act if it is not
submitted to the Company on or before August 4, 2004. Proxies for that meeting
3
may confer discretionary authority to vote on any untimely proposal without
express discretion from the shareholders giving the proxies.
4
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A Board of six directors is to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's six nominees named below, all of whom are presently directors of the
Company. In the event that any nominee of the Company is unable or declines to
serve as a director at the time of the Annual Meeting of Stockholders, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors of the Company to fill the vacancy. The Company is not aware
of any nominee who will be unable or will decline to serve as a director. The
term of office of each person elected as a director will continue until the next
Annual Meeting of Stockholders or until a successor has been elected and
qualified.
The names of the nominees, and certain information about them, are set
forth below.
Name of Nominee Age Director Since
Rodney C. Sacks 53 1990
Hilton H. Schlosberg 50 1990
Benjamin M. Polk 52 1990
Norman C. Epstein 62 1992
Harold C. Taber, Jr. 64 1992
Mark S. Vidergauz 50 1998
Set forth below is a description of each nominee's principal occupation and
business background during the past five years.
Rodney C. Sacks has been Chairman of the Board of Directors, Chief
Executive Officer and director of the Company from November 1990 to the present.
Member of the Executive Committee of the Board of Directors of the Company since
October 1992. Chairman and a director of Hansen Beverage Company, a wholly owned
subsidiary of the Company ("HBC"), from June 1992 to the present.
Hilton H. Schlosberg has been Vice Chairman of the Board of Directors,
President, Chief Operating Officer, Secretary, and a director of the Company
from November 1990 to the present and Chief Financial Officer of the Company
since July 1996. Member of the Executive Committee of the Board of Directors of
the Company since October 1992. Vice Chairman of the Board of Directors,
Secretary and a director of HBC from July 1992 to the present.
5
Benjamin M. Polk has been a director of the Company from November 1990 to
the present. Assistant Secretary of HBC since October 1992 and a director of HBC
since July 1992. Partner with Winston & Strawn LLP (New York, New York) where
Mr. Polk has practiced law with that firm and its predecessors, Whitman Breed
Abbott & Morgan, LLP and Whitman & Ransom, from August 1976 to the present.
Norman C. Epstein has been a director of the Company and member of the
Compensation Committee of the Board of Directors of the Company since June 1992.
Member and Chairman of the Audit Committee of the Board of Directors of the
Company since September 1997. Director of HBC since July 1992. Director of
Integrated Asset Management Limited, a company listed on the London Stock
Exchange, since June 1998. Managing Director of Cheval Acceptances, a mortgage
finance company based in London, England. Partner with Moore Stephens, an
international accounting firm, from 1974 to December 1996 (senior partner
beginning 1989 and the managing partner of Moore Stephens, New York from 1993
until 1995).
Harold C. Taber, Jr. has been a director of the Company since July 1992.
Member of the Audit Committee of the Board of Directors since April 2000.
President and Chief Executive Officer and a director of HBC from July 1992 to
June 1997. Consultant for The Joseph Company from October 1997 to March 1999 and
for Costa Macaroni Manufacturing Company from July 2000 to January 2002.
Director of Mentoring at Biola University from July 2002 to present.
Mark S. Vidergauz has been a director of the Company and member of the
Compensation Committee of the Board of Directors of the Company since June 1998.
Member of the Audit Committee of the Board of Directors since April 2000. Chief
Executive Officer of Sage Group, LLC since April 2000. Managing director and
head of the Los Angeles office of ING Baring Furman Selz LLC, a diversified
financial services institution headquartered in the Netherlands from April 1995
to April 2000.
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR SET FORTH ABOVE.
6
Security Ownership of Management
The following table sets forth information as to the beneficial ownership
of shares of common stock of the Company as at August 25, 2003 held by persons
who are directors and/or officers of the Company, naming each of them, and as to
directors and officers of the Company as a group, without naming them.
Amount and Nature Percent
Name of Beneficial Owner* of Beneficial Owner of Class
- ----------------------------------- ------------------- --------
Rodney C. Sacks, Chairman and
Chief Executive Officer 4,041,489 (1) 36.9%
Hilton H. Schlosberg, Vice Chairman,
President, Chief Operating Officer
and Secretary 4,002,586 (2) 36.5%
Harold C. Taber, Jr., Director 97,419 (3) **%
Mark S. Vidergauz, Director 12,000 (4) **%
Norman C. Epstein **%
Mark S. Vidergauz **%
Officers and Directors as a group (6 members: 4,666,705 shares or 42.6% in
aggregate)
- -------------
*Except as noted otherwise, the address for each of the named stockholders is
1010 Railroad Street, Corona, California 92882.
**Less than 1%
1 Includes 387,500 shares of common stock owned by Mr. Sacks; 654,822 shares
beneficially held by Brandon No. 1 because Mr. Sacks is one of Brandon No.
1's general partners; and 2,831,667 shares beneficially held by Brandon No.
2 because Mr. Sacks is one of Brandon No. 2's general partners. Also
includes options to purchase 37,500 shares of common stock exercisable at
$1.59 per share granted pursuant to a Stock Option Agreement dated January
30, 1998; options presently exercisable to purchase 100,000 shares of
common stock, exercisable at $4.25 per share, granted pursuant to a Stock
Option Agreement dated February 2, 1999 between the Company and Mr. Sacks;
and options presently exercisable to purchase 30,000 shares of common
stock, out of options to purchase a total of 150,000 shares, exercisable at
$3.57 per share, granted pursuant to a Stock Option Agreement dated July
12, 2002 between the Company and Mr. Sacks.
Mr. Sacks disclaims beneficial ownership of all shares deemed beneficially
owned by him hereunder except (i) 387,500 shares of common stock; (ii) the
167,500 shares presently exercisable under the Stock Option Agreements;
(iii) 243,546 share held by Brandon No. 1 allocable to the limited
partnership interests in Brandon No. 1 held by Mr. Sacks, his children, a
limited partnership of which Mr. Sacks is the general partner and his
children and he are the limited partners, and a trust for the benefit of
his children; and (iv) 250,000 shares held by Brandon No. 2 allocable to
the limited partnership interests in Brandon No. 2 held by Mr. Sacks, his
children, a limited partnership of which Mr. Sacks is the general partner
and his children and he are the limited partners, and a trust for the
benefit of his children.
2 Includes 348,597 shares of common stock owned by Mr. Schlosberg of which
2,000 shares are owned jointly by Mr. Schlosberg and his wife; 654,822
shares beneficially held by Brandon No. 1 because Mr. Schlosberg is one of
Brandon No. 1's general partners; and 2,831,667 shares beneficially held by
Brandon No. 2 because Mr. Schlosberg is one of Brandon No. 2's general
partners. Also includes options to purchase 37,500 shares of common stock
exercisable at $1.59 per share granted pursuant to a Stock Option Agreement
dated January 30, 1998 between the Company and Mr. Schlosberg; options
presently exercisable to purchase 100,000 shares of common stock
exercisable at $4.25 per share, granted pursuant to a Stock Option
Agreement dated February 2, 1999 between the Company and Mr. Schlosberg;
and options presently exercisable to purchase 30,000 shares of common
stock, out of options to purchase a total of 150,000 shares, exercisable at
$3.57 per share, granted pursuant to a Stock Option Agreement dated July
12, 2002 between the Company and Mr. Schlosberg.
Mr. Schlosberg disclaims beneficial ownership of all shares deemed
beneficially owned by him hereunder except (i) 348,597 shares of common
stock; (ii) the 167,500 shares presently exercisable under Stock Option
Agreements; (iii) 247,911 shares held by Brandon No. 1 allocable to the
limited partnership interests in Brandon No. 1 held by Mr. Schlosberg and
his children; and (iv) 250,000 shares held by Brandon No. 2 allocable to
the limited partnership interests in Brandon No. 2 held by Mr. Schlosberg
and his children.
7
3 Includes 61,137 shares of common stock owned by Mr. Taber; and 36,281.7
shares of common stock owned by the Taber Family Trust of which Mr. Taber
and his wife are trustees.
4 Includes options to purchase 12,000 shares of common stock, exercisable at
$3.72 per share, granted under a Stock Option Agreement with the Company
dated as of June 18, 1998 pursuant to the Directors Plan.
Change of Control
There are no arrangements known to the Company, the operation of which may,
at a subsequent date, result in a change of control of the Company.
8
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Deloitte & Touche, LLP,
independent auditors, to audit the financial statements of the Company for the
year ending December 31, 2003. In the event of a negative vote on such
ratification, the Board of Directors of the Company will reconsider its
selection.
Representatives of Deloitte & Touche, LLP are expected to be present at the
meeting with the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions from
stockholders of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF
DELOITTE & TOUCHE AS THE COMPANY'S INDEPENDENT AUDITORS.
MANAGEMENT
Board Meetings and Committees
The Board of Directors of the Company held two meetings during the year
ended December 31, 2002. All directors attended both meetings.
The Audit Committee, composed of Norman C. Epstein (Chairman), Harold C.
Taber, Jr. and Mark S. Vidergauz, held five meetings during the year ended
December 31, 2002. The Audit Committee last met in August 2003 in connection
with the review of the Company's financial statements for the quarter ended June
30, 2003. See "Audit Committee" below for more information.
The Compensation Committee, composed of Norman C. Epstein and Mark S.
Vidergauz, did not hold any meetings during the year ended December 31, 2002.
Awards granted under the Company's Stock Option Plan during the year ended
December 31, 2002 were authorized by written consent of the Compensation
Committee. The Compensation Committee authorizes all grants of options to
purchase shares of the Company's common stock.
The Executive Committee composed of Rodney C. Sacks and Hilton H.
Schlosberg held one meeting during the year ended December 31, 2002. The
Executive Committee manages and directs business of the Company between meetings
of the Board of Directors.
The Board of Directors does not have a Nominating Committee.
Employment Agreements
The Company entered into an employment agreement dated as of June 1, 2003,
with Rodney C. Sacks pursuant to which Mr. Sacks renders services to the Company
as its Chairman and Chief Executive Officer for an annual base salary of
9
$230,000 for the seven-month period ending December 31, 2003, increasing to
$245,000 for the twelve-month period ending December 31, 2004 and increasing by
a minimum of 5% for each subsequent twelve-month period during the employment
period, plus an annual bonus in an amount determined at the discretion of the
Board of Directors of the Company and certain fringe benefits. Additionally, Mr.
Sacks was granted options to purchase 150,000 shares of common stock of the
Company in connection with this employment agreement. The employment period
commenced on June 1, 2003 and ends on December 31, 2008.
The Company also entered into an employment agreement dated as of June 1,
2003, with Hilton H. Schlosberg pursuant to which Mr. Schlosberg renders
services to the Company as its Vice Chairman, President and Chief Financial
Officer, for an annual base salary of $230,000 for the seven-month period ending
December 31, 2003, increasing to $245,000 for the twelve-month period ending
December 31, 2004 and increasing by a minimum of 5% for each subsequent
twelve-month period during the employment period, plus an annual bonus in an
amount determined at the discretion of the Board of Directors of the Company and
certain fringe benefits. Additionally, Mr. Schlosberg was granted options to
purchase 150,000 shares of common stock of the Company in connection with this
employment agreement. The employment period commenced on June 1, 2003 and ends
on December 31, 2008.
Executive Compensation
The following tables set forth certain information regarding the total
remuneration earned and grants of options made to the Chief Executive Officer
and each of the four other most highly compensated executive officers of the
Company and its subsidiaries who earned total cash compensation in excess of
$100,000 during the year ended December 31, 2002. These amounts reflect total
cash compensation paid by the Company and its subsidiaries to these individuals
during the years ended December 31, 2000, 2001 and 2002.
10
SUMMARY COMPENSATION TABLE
========================================= ==================================================== ======================
Long Term
ANNUAL COMPENSATION Compensation (4)
- ----------------------------- ----------- ---------------- ------------ ---------------------- ----------------------
Other Securities
Name and Principal Positions Bonus (2) Annual underlying
Year Salary (1)($) ($) Compensation ($) Options (#)
- ----------------------------- ----------- ---------------- ------------ ---------------------- ----------------------
Rodney C. Sacks 2002 225,504 - 10,331 (3) 150,000
Chairman, CEO 2001 194,400 8,000 7,314 (3)
and Director 2000 194,400 10,000 6,262 (3)
- ----------------------------- ----------- ---------------- ------------ ---------------------- ----------------------
Hilton H. Schlosberg 2002 225,504 - 7,753 (3) 150,000
Vice-Chairman, CFO, COO, 2001 194,400 8,000 7,314 (3)
President, Secretary and 2000 194,400 10,000 6,263 (3)
Director
- ----------------------------- ----------- ---------------- ------------ ---------------------- ----------------------
Mark J. Hall 2002 160,000 10,000 7,733 (3) 20,000
Senior Vice President 2001 160,000 8,000 7,349 (3)
Single Serve Products 2000 160,000 20,000 8,061 (3)
- ----------------------------- ----------- ---------------- ------------ ---------------------- ----------------------
Kirk S. Blower 2002 118,000 4,000 7,238 (3) 12,500
Senior Vice President 2001 115,000 3,000 7,364 (3)
Juice and Non-Carbonated 2000 115,000 4,000 7,316 (3)
Products
- ----------------------------- ----------- ---------------- ------------ ---------------------- ----------------------
Timothy M. Welch 2002 115,500 11,300 57,942 (5)
Senior Vice President 2001 111,269 4,000 14,587 (6)
Soda Products 2000 110,000 3,000 14,202 (7)
============================= =========== ================ ============ ====================== ======================
1 SALARY - Pursuant to employment agreements, Messrs. Sacks and Schlosberg
were entitled to an annual base salary of $226,748, $209,952, and $194,400
for 2002, 2001 and 2000, respectively.
2 BONUS - Payments made in 2003, 2002 and 2001 are for bonuses accrued in
2002, 2001 and 2000, respectively.
3 OTHER ANNUAL COMPENSATION - The cash value of perquisites of the named
persons did not total $50,000 or 10% of payments of salary and bonus for
the years shown.
4 LONG-TERM INCENTIVE PLAN PAYOUTS - None paid. No plan in place.
5 Includes $46,483 for reimbursement of moving expense, $6,000 for auto
reimbursement expenses, $3,500 for housing expenses and $1,959 for other
miscellaneous perquisites.
6 Includes $6,000 for auto reimbursement expenses, $6,000 for housing
expenses and $2,587 for other miscellaneous perquisites.
7 Includes $6,000 for auto reimbursement expenses, $6,000 for housing
expenses and $2,202 for other miscellaneous perquisites.
11
OPTION GRANTS FOR THE YEAR ENDED DECEMBER 31, 2002
============================================================================================ ==========================
Potential realizable
value at assumed annual
rates of stock price
appreciate for option
Individual Grants term
- -------------------------------------------------------------------------------------------- --------------------------
Number of Percent of
Securities total Options Exercise
underlying granted to or base
Options granted employees in price Expiration 5% 10%
Name (#) 2002 ($/Share) Date ($) ($)
- --------------------------- ------------------ ----------------- ------------ -------------- ------------ -------------
Rodney C. Sacks 150,000 (1) 28.3% $3.57 7/12/2012 336,773 853,449
- --------------------------- ------------------ ----------------- ------------ -------------- ------------ -------------
Hilton H. Schlosberg 150,000 (1) 28.3% $3.57 7/12/2012 336,773 853,449
- --------------------------- ------------------ ----------------- ------------ -------------- ------------ -------------
Mark J. Hall 20,000 (1) 3.8% $3.57 7/12/2012 44,903 113,793
- --------------------------- ------------------ ----------------- ------------ -------------- ------------ -------------
Kirk S. Blower 12,500 (1) 2.4% $3.57 7/12/2012 28,064 71,121
- --------------------------- ------------------ ----------------- ------------ -------------- ------------ -------------
Timothy M. Welch -
=========================== ================== ================= ============ ============== ============ =============
1 Options to purchase the Company's common stock become exercisable in equal
annual increments over 5 years beginning July 12, 2003.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED
DECEMBER 31, 2002 AND OPTION/SAR VALUES AT DECEMBER 31, 2002
============================= =================== ================== ========================= =====================
Value of
Number of underlying unexercised
unexercised in-the-money
options at options at December
December 31, 2002 (#) 31, 2002($)
------------------------- ---------------------
Shares acquired Value Exercisable/ Exercisable/
Name on exercise (#) Realized ($) Unexercisable Unexercisable
- ----------------------------- ------------------- ------------------ ------------------------- ---------------------
Rodney C. Sacks - - 117,500/170,000 (1) 98,625/97,500
- ----------------------------- ------------------- ------------------ ------------------------- ---------------------
Hilton H. Schlosberg - - 117,500/170,000 (1) 98,625/97,500
- ----------------------------- ------------------- ------------------ ------------------------- ---------------------
Mark J. Hall - - 116,000/20,000 (2) 355,960/13,000
- ----------------------------- ------------------- ------------------ ------------------------- ---------------------
Kirk S. Blower - - 7,500/17,500 (3) 0/8,125
- ----------------------------- ------------------- ------------------ ------------------------- ---------------------
Timothy M. Welch - - 36,000/36,000 (4) 0/0
============================= =================== ================== ========================= =====================
1 Includes options to purchase 37,500 shares of common stock at $1.59 per
share of which all are exercisable at December 31, 2002, granted pursuant
to Stock Option Agreements dated January 30, 1998 between the Company and
Messrs. Sacks and Schlosberg, respectively; options to purchase 100,000
shares of common stock at $4.25 per share of which 80,000 are exercisable
at December 31, 2002, granted pursuant to Stock Option Agreements dated
February 2, 1999 between the Company and Messrs. Sacks and Schlosberg,
respectively; and options to purchase 150,000 shares of common stock at
$3.57 per share of which none are exercisable at December 31, 2002, granted
pursuant to Stock Option Agreements dated July 12, 2002 between the Company
and Messrs. Sacks and Schlosberg, respectively.
2 Includes options to purchase 96,000 shares of common stock at $1.06 per
share which are exercisable at December 31, 2002, granted pursuant to a
Stock Option Agreement dated February 10, 1997 between the Company and Mr.
Hall; options to purchase 20,000 shares of common stock at $1.59 per share
which are exercisable at December 31, 2002, granted pursuant to a Stock
Option Agreement dated January 30, 1998 between the Company and Mr. Hall;
options to purchase 20,000 shares of common stock at $3.57 per share of
which none are exercisable at December 31, 2002, granted pursuant to a
Stock Option Agreement dated July 12, 2002 between the Company and Mr.
Hall. On January 21, 2003, Mr. Hall exercised the options in respect of (i)
96,000 shares at an exercise price of $1.06 per share and (ii) 20,000
shares at an exercise price of $1.59 per share.
12
3 Includes options to purchase 12,500 shares of common stock at $4.25 per
share of which 7,500 are exercisable at December 31, 2002, granted pursuant
to a Stock Option Agreement dated February 2, 1999 between the Company and
Mr. Blower; and options to purchase 12,500 shares of common stock at $3.57
per share of which none are exercisable at December 31, 2002, granted
pursuant to a Stock Option Agreement dated July 12, 2002 between the
Company and Mr. Blower.
4 Includes options to purchase 72,000 shares of common stock at $4.44 per
share of which 36,000 are exercisable at December 31, 2002, granted
pursuant to a Stock Option Agreement dated February 1, 1999 between the
Company and Mr. Welch.
Performance Graph
The following graph shows a five-year comparison of cumulative total
returns: 1
TOTAL SHAREHOLDER RETURNS
ANNUAL RETURN PERCENTAGES
For the years ended December 31,
Company Name/Index 1998 1999 2000 2001 2002
- ---------------------- -------- -------- -------- -------- --------
HANSEN NAT CORP 196.63 (19.77) (10.14) 8.39 0.50
S&P SMALLCAP 600 INDEX (1.31) 12.40 11.80 6.54 (14.63)
PEER GROUP (43.18) 8.47 17.06 47.07 14.40
INDEXED RETURNS
For the years ended December 31,
Base
Period
Company Name/Index 1997 1998 1999 2000 2001 2002
- ---------------------- ------ -------- -------- -------- -------- --------
HANSEN NAT CORP 100 296.63 238.00 213.85 231.79 232.95
S&P SMALLCAP 600 INDEX 100 98.69 110.94 124.03 132.13 112.80
PEER GROUP 100 56.82 61.63 72.15 106.10 121.38
1 Annual return assumes reinvestment of dividends. Cumulative total return
assumes an initial investment of $100 on December 31, 1997. The Company's
self-selected peer group is comprised of National Beverage Corporation,
Clearly Canadian Beverage Company, Triarc Companies, Inc., Leading Brands,
Inc., Cott Corporation, Northland Cranberries, Inc. and Jones Soda Co. All
of the companies in the peer group traded during the entire five-year
period with the exception of Triarc Companies, Inc., which sold their
beverage business in October 2000 and Jones Soda Co., which started trading
in August 2000.
13
Compensation of Directors
The Company pays outside directors annual fees of $7,000 plus $500 for each
meeting attended of the Board of Directors or any committee thereof. In 2002, we
paid each of Norman E. Epstein, Harold C. Taber, Jr. and Mark S. Vidergauz
$8,000 and we paid Benjamin M. Polk $7,500 for services provided for the
one-year period ended December 31, 2001. In 2003, we paid each of Norman E.
Epstein, Benjamin M. Polk, Harold C. Taber, Jr. and Mark S. Vidergauz director's
fees of $8,000 for services provided for the one-year period ended December 31,
2002. Commencing in 2003, the Company will pay outside directors an annual fee
of $10,000 plus $1,000 for each meeting of the Board of Directors attended.
Additionally, the Company will pay outside directors $500 for each committee
meeting attended in person and $250 for each meeting attended by telephone.
Company Stock Option Plan
The Company has a stock option plan (the "Plan") that provided for the
grant of options to purchase up to 3,000,000 shares of common stock of the
Company to certain key employees of the Company and its subsidiaries. Options
granted under the Plan may either be incentive stock options qualified under
Section 422 of the Internal Revenue Code of 1986, as amended, or non-qualified
options. Such options are exercisable at fair market value on the date of grant
for a period of up to ten years. Under the Plan, shares subject to options may
be purchased for cash, or for shares of common stock valued at fair market value
on the date of purchase. Under the Plan, no additional options may be granted
after July 1, 2001.
During 2001, the Company adopted the Hansen Natural Corporation 2001 Stock
Option Plan ("2001 Option Plan"). The 2001 Option Plan provides for the grant of
options to purchase up to 2,000,000 shares of the common stock of the Company to
certain key employees of the Company and its subsidiaries. Options granted under
the 2001 Stock Option Plan may be incentive stock options under Section 422 of
the Internal Revenue Code, as amended (the "Code"), nonqualified stock options,
or stock appreciation rights.
The Plan and the 2001 Option Plan are administered by the Compensation
Committee of the Board of Directors of the Company, comprised of directors who
satisfy the "non-employee" director requirements of Rule 16b-3 under the
Securities Exchange Act of 1934 and the "outside director" provision of Section
162(m) of the Code. Grants under the Plan and the 2001 Option Plan are made
pursuant to individual agreements between the Company and each grantee that
specifies the terms of the grant, including the exercise price, exercise period,
vesting and other terms thereof.
Pursuant to the Plan, Messrs. Sacks and Schlosberg were each granted
options to purchase 75,000 shares of Common Stock, pursuant to individual stock
option agreements each dated January 30, 1998 exercisable for a ten-year period
at an exercise price of $1.59 per share. 37,500 shares of Common Stock out of
the original grant remain eligible for exercise.
In addition, pursuant to the Plan, Messrs. Sacks and Schlosberg have each
been granted options to purchase 100,000 shares of Common Stock, which vests as
follows: 9,500 on February 2, 1999; 23,500 on February 2, 2000; 23,500 on
February 2, 2001; 23,500 on February 2, 2002; and 20,000 on February 2, 2003,
14
pursuant to individual stock option agreements each dated February 2, 1999
exercisable for a ten-year period at an exercise price of $4.25 per share.
Pursuant to the 2001 Option Plan, Messrs. Sacks and Schlosberg have each
been granted options to purchase 150,000 shares of Common Stock, which vests as
follows: 30,000 on July 12, 2003; 40,000 on July 12, 2004; 40,000 on July 12,
2005; and 40,000 on July 12, 2006, pursuant to individual stock option
agreements each dated July 12, 2002 exercisable for a ten-year period at an
exercise price of $3.57 per share.
In addition, pursuant to the 2001 Option Plan, Messrs. Sacks and Schlosberg
have each been granted options to purchase 150,000 shares of Common Stock, which
vests as follows: 30,000 on January 1, 2004; 30,000 on January 1, 2005; 30,000
on January 1, 2006; 30,000 on January 1, 2007; and 30,000 on January 1, 2008,
pursuant to individual stock option agreements each dated May 28, 2003
exercisable for a ten-year period at an exercise price of $4.20 per share.
Outside Directors Stock Option Plan
The Company has an option plan for its outside directors (the "Directors
Plan") that provides for the grant of options to purchase up to an aggregate of
100,000 shares of common stock of the Company to directors of the Company who
are not and have not been employed by or acted as consultants to the Company and
its subsidiaries or affiliates and who are not and have not been nominated to
the Board of Directors of the Company pursuant to a contractual arrangement. On
the date of the annual meeting of stockholders at which an eligible director is
initially elected, each eligible director is entitled to receive a one-time
grant of an option to purchase 6,000 shares (12,000 shares if the director is
serving on a committee of the Board) of the Company's Common Stock exercisable
at the closing price for a share of common stock on the date of grant. Options
become exercisable one-third each on the first, second and third anniversary of
the date of grant; provided that all options owned by an eligible director
become fully and immediately exercisable upon a change in control of the
Company. Options granted under the Directors Plan that are not exercised
generally expire ten years after the date of grant. Option grants may be made
under the Directors Plan for ten years from the effective date of the Directors
Plan. The Directors Plan is a "formula plan" so that a non-employee director's
participation in the Directors Plan does not affect his status as a
"disinterested person" (as defined in Rule 16b-3 under the Securities Exchange
Act of 1934).
Mr. Vidergauz has been granted options to purchase 12,000 shares of the
Company's common stock, pursuant to an individual stock option agreement, dated
as of June 18, 1998, exercisable for a ten-year period at an exercise price of
$3.27 per share, under an option plan that the Company has for its outside
directors.
Certain Relationships and Related Transactions
The description of the agreements and relationships set forth below is
qualified by reference to the specific terms of such agreements and the
description of such relationships set forth in reports and registration
15
statements and exhibits thereto filed or to be filed by the Company with the SEC
under the Securities Act of 1934, as amended, and the Securities Act of 1933, as
amended including any post-effective amendments to the Company's registration
statement on Form S-3 (No. 33-35796) and on Form S-8 (No. 333-41333). Copies of
any such reports and registration statement or exhibits thereto will be provided
upon written request directed to the Chairman, Hansen Natural Corporation, 1010
Railroad Street, Corona, California 92882.
Benjamin M. Polk is a partner of Winston & Strawn LLP and was a partner of
its predecessors, Whitman, Breed, Abbott & Morgan, LLP and Whitman & Ransom, law
firms retained by the Company since 1992.
Rodney C. Sacks is currently acting as the sole Trustee of a trust formed
pursuant to an Agreement of Trust dated July 27, 1992 for the purpose of holding
the Hansen's (R) trademark. The Company and HBC have agreed to indemnify Mr.
Sacks and hold him harmless from any claims, loss or liability arising out of
his acting as Trustee.
During 2002, the Company purchased promotional items from IFM Group, Inc.
("IFM"). Rodney C. Sacks, together with members of his family, own approximately
27% of the issued shares of IFM. Hilton H. Schlosberg, together with members of
his family, own approximately 43% of the issued shares of IFM. Purchases from
IFM of promotional items in 2002, 2001 and 2000 were $164,199, $164,638 and
$115,520, respectively. The Company continues to purchase promotional items from
IFM Group, Inc. in 2003.
AUDIT COMMITTEE
The Board of Directors has adopted a written charter for the Audit
Committee. The Board of Directors has determined that the members of the Audit
Committee are "independent," as defined in the rules of the National Association
of Securities Dealers relating to audit committees, meaning that they have no
relationship to the Company that may interfere with the exercise of their
independence from management and the Company.
Report of the Audit Committee
The Audit Committee consists of three independent directors (as
independence is defined by NASD Rule 4200(a)(14)). The Audit Committee appoints,
determines funding for, oversees and evaluates the auditor with respect to
accounting, internal controls and other matters, and makes other decisions with
respect to audit and finance matters. The Audit Committee also pre-approves the
retention of the auditors, and the auditor's fees for all audit and non-audit
services provided by the auditor and determines whether the provision of
non-audit services is compatible with maintaining the independence of the
auditor. All members of the Audit Committee are able to read and understand
financial statements and have experience in finance and accounting that provide
them with financial sophistication.
16
Duties and Responsibilities
The Audit Committee operates under a written charter approved by the Board
of Directors. Pursuant to authority delegated by the Board of Directors and the
Audit Committee's written charter, the Audit Committee assists the Board of
Directors in fulfilling its oversight responsibilities with respect to:
o the integrity of the Company's financial statements;
o the Company's systems of internal controls regarding finance and
accounting as established by management;
o the independent auditor's qualifications and independence;
o the performance by the Company's independent auditors;
o the Company's auditing, accounting and financial reporting processes
generally; and
o compliance with the Company's ethical standards for senior financial
officers and all personnel.
In fulfilling its duties, the Audit Committee maintains free and open
communication with the Board, the independent auditors, financial management and
all employees.
In connection with these responsibilities, the Audit Committee met with
management and Deloitte and Touche, LLP, the Company's independent accountants,
to review and discuss the Company's audited financial statements. The Audit
Committee also discussed with the independent accountants the matters required
by the Statement on Auditing Standards No. 61 (Certification of Statements on
Auditing Standards), as may be modified or supplemented. The Audit Committee
also received from Deloitte and Touche, LLP the written disclosures and the
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) as may be modified or supplemented, and has
discussed with Deloitte and Touche, LLP its independence.
Based on the foregoing reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002.
Audit Committee
----------------------------
Norman C. Epstein, Chairman
Harold C. Taber, Jr.
Mark S. Vidergauz
17
Principal Accounting Firm Fees
Aggregate fees billed to the company for the years ended December 31, 2002,
and 2001 by the Company's principal accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, "Deloitte & Touche"):
Year ended December 31,
2002 2001
--------------- ---------------
Audit Fees $105,325 $ 86,591
Audit-Related Fees (1) 5,650
--------------- ---------------
Total audit and audit-related fees 105,325 92,241
Tax Fees (2) 15,679 7,500
All other Fees
--------------- ---------------
Total Fees (3) $120,004 $ 99,741
=============== ===============
1 Includes fees paid during 2001 for consultation in connection with the
Company's adoption of EITF 01-9 "Accounting for Consideration Given by a
Vendor to a Customer or Reseller of the Vendor's Products".
2 Tax fees consisted of fees for tax consultation services including advisory
services for state tax analysis and tax audit assistance.
3 For year ended December 31, 2002, all of the services performed by Deloitte
& Touche LLP have been pre-approved by the Audit Committee.
The Audit Committee has considered whether Deloitte & Touche LLP's
provision of the non-audit services covered above is compatible with maintaining
Deloitte & Touche LLP's independence and has determined that it is.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board of Directors of the Company may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are, therefore, urged to execute and
return, at your earliest convenience, the accompanying proxy card in the
stamped, self-addressed envelope which has been enclosed.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: September 17, 2003
18
PROXY FOR
HANSEN NATURAL CORPORATION
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 17, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Hansen Natural Corporation (the "Company")
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
proxy statement, each dated September 17, 2003, and hereby appoints Rodney C.
Sacks and Hilton H. Schlosberg, or either of them, as proxies and
attorneys-in-fact, each with the power to appoint his substitute, on behalf and
in the name of the undersigned, to represent the undersigned at the Annual
Meeting of Stockholders of the Company to be held on October 17, 2003, and at
any postponement or adjournments thereof, and to vote all the stock of the
Company that the undersigned would be entitled to vote as designated on the
reverse hereof if then and there personally present, on matters set forth in the
Notice of Annual Meeting of Stockholders and proxy statement. In their
discretion, such proxies are each authorized to vote upon such other business as
may properly come before such Annual Meeting of Stockholders or any adjournment
or postponement thereof.
(Continued and to be signed on reverse side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE X
---
1. Proposal to elect six Directors:
____ FOR ALL NOMINEES
____ WITHHOLD AUTHORITY FOR ALL NOMINEES
____ FOR ALL EXCEPT (See instructions below)
NOMINEES:
____ Rodney C. Sacks
____ Hilton H. Schlosberg
____ Benjamin M. Polk
____ Norman C. Epstein
____ Harold C. Taber, Jr.
____ Mark S. Vidergauz
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: X
----
2. Proposal to ratify the appointment of Deloitte & Touche LLP as independent
auditors of Hansen Natural Corporation for the year ending December 31,
2003.
FOR AGAINST ABSTAIN
____ ____ ____
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
The shares represented in this proxy card will be voted as directed above.
IF NO DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE SHARES WILL
BE VOTED FOR ALL LISTED PROPOSALS.
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via _____
this method.
Signature of Stockholder ________________________________ Date ___________
Signature of Stockholder ________________________________ Date ___________
Note:Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
