HANSEN NATURAL CORPORATION
1010 Railroad Street
Corona, California 92882
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 18, 2002
September 16, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Hansen Natural Corporation to be held on Friday, October 18, 2002 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 18, 2002
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
18, 2002 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, 2002.
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 30, 2002 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 16, 2002
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 18, 2002 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
16, 2002, together with the Company's 2001 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 30,
2002 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, 10,053,003
shares of the Company's common stock were issued and outstanding. The following
table sets forth, as of the most recent practical date August 30, 2002, 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 6.5%
Brandon Limited Partnership No. 2 (2) 2,831,667 28.2%
Rodney C. Sacks (3) 3,991,489 (4) 39.7%
Hilton H. Schlosberg (5) 3,952,586 (6) 39.3%
James Douglas and Jean Douglas
Irrevocable Descendants' Trust (7) 711,811 (8) 7.1%
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.
3 The mailing address of Mr. Sacks is 1010 Railroad Street, Corona, California
92882.
1
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; and options
presently exercisable to purchase 80,000 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.
Mr. Sacks disclaims beneficial ownership of all shares deemed beneficially owned
by him hereunder except (i) 387,500 shares of common stock; (ii) the 117,500
shares presently exercisable under 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; and options presently exercisable to purchase 80,000
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.
Mr. Schlosberg disclaims beneficial ownership of all shares deemed beneficially
owned by him hereunder except (i) 348,597 shares of common stock; (ii) the
117,500 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 265,582 shares of common stock owned by Kevin and Michelle Douglas;
222,409 shares of common stock owned by James and Jean Douglas Irrevocable
Descendant's Trust; and 223,820 shares of common stock owned by Douglas Family
Trust. 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.
Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file by specific dates with the Securities
and Exchange Commission (the "SEC"), initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Officers, directors
and greater than 10% stockholders of the Company are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on review of copies of such
reports furnished to the Company during the two fiscal years ended December 31,
2001, all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than 10% stockholders of the Company were
complied with.
2
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 2003. Accordingly, 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 June 30, 2003 in order that they may
be considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
3
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......................52 1990
Hilton H. Schlosberg.................49 1990
Benjamin M. Polk.....................51 1990
Norman C. Epstein....................61 1992
Harold C. Taber, Jr..................63 1992
Mark S. Vidergauz....................49 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 ("HBC") from
June 1992 to the present. Chief Financial Officer of the Company from November
1990 to July 1996.
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. Member of the Audit Committee of the Board of
Directors of the Company from September 1997 until April 2000. Vice Chairman of
the Board of Directors, Secretary and a director of HBC from July 1992 to the
present. Director and/or Deputy Chairman of AAF Industries PLC, a United Kingdom
publicly quoted industrial group, from June 1990 until April 1995.
4
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. Member of the Audit Committee of the Board of Directors of the
Company from September 1997 to November 2000. Member of the Compensation
Committee of the Board of Directors of the Company from April 1991 until
September 1997. Partner with Winston and Strawn 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.
Consultant to the Company from July 1, 1997 to June 30, 2000. Member of the
Audit Committee of the Board of Directors since April 2000. Consultant to
diverse consumer product corporations since September 1997. President and Chief
Executive Officer and a director of HBC from July 1992 to June 1997. On June 30,
1997, Mr. Taber resigned from his employment as well as director, President and
Chief Executive Officer of HBC. In addition, effective June 30, 1997, Mr. Taber
resigned as a member of the Executive Committee on which he served since October
1992.
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 and Managing Director 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. Prior to joining ING Baring Furman
Selz LLC in April 1995, Mr. Vidergauz was a managing director at Wedbush Morgan
Securities, an investment banking firm in Los Angeles, from 1991 to 1995. Prior
to joining Wedbush, Mr. Vidergauz was a corporate finance attorney in the Los
Angeles office of O'Melveny & Meyers.
5
Security Ownership of Management
The following table sets forth information as to the beneficial ownership
of shares of common stock as at August 30, 2002 held by persons who are
directors of the Company naming them, and as to directors and officers of the
Company as a group, without naming them.
Name of Amount and Nature Percent
Beneficial Owner of Beneficial Owner of Class
---------------------- ---------------------- ----------
Rodney C. Sacks 3,991,489 (1) 39.7%
Hilton H. Schlosberg 3,952,586 (2) 39.3%
Harold C. Taber, Jr. 97,419 (3) 1.0%
Mark S. Vidergauz 12,000 (4) *%
Officers and Directors as a group (6 members:
4,567,005 shares or 44.3% in aggregate)
- -------------
*Less than 1%
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR SET FORTH ABOVE.
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; and options
presently exercisable to purchase 80,000 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.
Mr. Sacks disclaims beneficial ownership of all shares deemed beneficially owned
by him hereunder except (i) 387,500 shares of common stock; (ii) the 117,500
shares presently exercisable under 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; and options presently exercisable to purchase 80,000
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.
Mr. Schlosberg disclaims beneficial ownership of all shares deemed beneficially
owned by him hereunder except (i) 348,597 shares of common stock; (ii) the
117,500 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.
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.
6
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.
7
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, 2002. 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, 2001. Rodney C. Sacks, Hilton H. Schlosberg, Norman C.
Epstein, Harold C. Taber, Jr. and Mark Vidergauz attended both meetings.
Benjamin M. Polk attended one meeting.
The Audit Committee, composed of Norman C. Epstein (Chairman), Harold C.
Taber, Jr. and Mark S. Vidergauz, held one meeting during the year ended
December 31, 2001. The Audit Committee last met in April 2002 in connection with
the audit of the Company's financial statements for the year ended December 31,
2001. See "Audit Committee"
The Compensation Committee, composed of Norman C. Epstein and Mark S.
Vidergauz, did not hold any meetings during the year ended December 31, 2001.
Awards granted under the Company's Stock Option Plan during the year ended
December 31, 2001 were authorized by written consent of the Compensation
Committee.
The Executive Committee composed of Rodney C. Sacks and Hilton H.
Schlosberg held one meeting during the year ended December 31, 2001.
Employment Agreements
The Company entered into an employment agreement dated as of January 1,
1999, 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
$180,000, for the twelve-month period ending December 31, 1999, increasing by a
minimum of 8% 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. The employment
period commenced on January 1, 1999 and ends on December 31, 2003.
8
The Company also entered into an employment agreement dated as of January
1, 1999, 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 $180,000, for the twelve-month period
ending December 31, 1999, increasing by a minimum of 8% 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. The employment period commenced on January 1, 1999 and
ends on December 31, 2003.
The preceding descriptions of the employment agreements for Messrs. Sacks
and Schlosberg are qualified in their entirety by reference to such agreements
which have previously been filed or incorporated by reference as exhibits to the
Company's annual report on Form 10-K for the year ended December 31, 2001.
Executive Compensation
The following tables set forth certain information regarding the total
remuneration earned and grants of options/SARs made to the chief executive
officer and each of the four most highly compensated executive officers of the
Company and its subsidiaries who earned total cash compensation in excess of
$100,000 during the year ended December 31, 2001. These amounts reflect total
cash compensation paid by the Company and its subsidiaries to these individuals
during the fiscal years December 31, 1999 through 2001.
9
SUMMARY COMPENSATION TABLE
================================================================================
Long Term
Compensation(4)
----------------
ANNUAL COMPENSATION Awards (5)
- ----------------------------- --------------------------------- ----------------
Other Securities
Annual underlying
Name and Principal Salary Bonus Compensation Options/SARs
Positions Year (1) ($) (2) ($) ($) (#)
- ---------------------- ------ --------- -------- -------------- ----------------
Rodney C. Sacks 2001 194,400 8,000 7,314 (3) -
Chairman, CEO 2000 194,400 10,000 6,262 (3) -
and Director 1999 180,000 25,000 6,088 (3) 100,000
- ---------------------- ------ --------- -------- -------------- ----------------
Hilton H. Schlosberg
Vice-Chairman, CFO 2001 194,400 8,000 7,314 (3) -
President, Secretary 2000 194,400 10,000 6,263 (3) -
and Director 1999 180,000 25,000 6,088 (3) 100,000
- ---------------------- ------ --------- -------- -------------- ----------------
Mark J. Hall 2001 160,000 8,000 7,349 (3) -
Sr. Vice President 2000 160,000 20,000 8,061 (3) -
Distributor Division 1999 150,000 40,000 7,551 (3) 30,000
- ---------------------- ------ --------- -------- -------------- ----------------
Kirk S. Blower 2001 115,000 3,000 7,364 (3) -
Sr. Vice President 2000 115,000 4,000 7,316 (3) -
Juice Division 1999 110,000 16,800 7,099 (3) 12,500
- ---------------------- ------ --------- -------- -------------- ----------------
Stephen B. Edgar 2001 107,000 21,400 86,160 (6) -
Vice President 2000 102,250 8,000 10,114 (3) -
Sales 1999 98,000 20,000 2,593 (3) 10,000
====================== ====== ========= ======== ============== ================
1 SALARY - Pursuant to their employment agreements, Messrs. Sacks and Schlosberg
are each entitled to an annual base salary of $209,952and $194,400 and $180,000
for 2001, 2000 and 1999 respectively. During 2001, Messrs. Sacks and Schlosberg
received salaries of $194,400 respectively.
2 BONUS - Payments made in 2002, 2001 and 2000 for bonuses accrued in 2001, 2000
and 1999.
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 RESTRICTED STOCK AWARDS - The Company does not have a plan for restricted
stock awards.
6 Includes $75,257 representing the dollar value of the difference between the
price paid for common stock of the Company through the exercise of stock options
and the fair market value of the common stock on the date of exercise; and
$10,903 for automobile expense reimbursement.
ALL OTHER COMPENSATION - none paid
10
AGGREGATED OPTION/SAR EXERCISES DURING THE YEAR ENDED DECEMBER 31 2001 AND
OPTION/SAR VALUES AT DECEMBER 31, 2001
===============================================================================================
Number of Value of
underlying unexercised
unexercised in-the-money
Options/SARs at options/SARs at
December 31, December 31,
2001 (#) 2001 ($)
------------------ ------------------
Shares acquired on Value Exercisable/ Exercisable/
Name exercise (#) Realized ($) Unexercisable Unexercisable
- --------------------- -------------------- -------------- ------------------ ------------------
Rodney C. Sacks - - 94,000/43,500(1) 97,875 / 0
- --------------------- -------------------- -------------- ------------------ ------------------
Hilton H. Schlosberg - - 94,000/43,500(1) 97,875 / 0
- --------------------- -------------------- -------------- ------------------ ------------------
Mark J. Hall - - 92,000/24,000(2) 278,280 / 75,360
- --------------------- -------------------- -------------- ------------------ ------------------
Kirk S. Blower - - 5,000/7,500(3) 0 / 0
- --------------------- -------------------- -------------- ------------------ ------------------
Steven B. Edgar 47,332 128,743 4,000/6,000(4) 0 / 0
===================== ==================== ============== ================== ==================
1 Includes options to purchase 37,500 shares of common stock, out of an original
grant of options to purchase 75,000 shares of common stock, at $1.59 per share
of which all are exercisable at December 31, 2001, granted pursuant to Stock
Option Agreements dated January 30, 1998 between the Company and Messrs. Sacks
and Schlosberg, respectively; and options to purchase 100,000 shares of common
stock at $4.25 per share of which 56,500 are exercisable at December 31, 2001,
granted pursuant to Stock Option Agreements dated February 2, 1999 between the
Company and Messrs. Sacks and Schlosberg, respectively. In addition, in July
2002, options to purchase 150,000 shares of common stock at $3.57 per share were
granted to both Messrs. Sacks and Schlosberg 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, out of an original
grant of options to purchase 120,000 shares of common stock, at $1.06 per share
of which 72,000 are exercisable at December 31, 2001, granted pursuant to a
Stock Option Agreement dated February 10, 1997 between the Company and Mr. Hall
and options to purchase 20,000 shares of common stock, out of an original grant
of options to purchase 30,000 shares of common stock, at $1.59 per share of
which all are exercisable at December 31, 2001, granted pursuant to a Stock
Option Agreement dated January 30, 1998 between the Company and Mr. Hall. In
addition, in July 2002, options to purchase 20,000 shares of common stock at
$3.57 per share were granted to Mr. Hall pursuant to a Stock Option Agreement
dated July 12, 2002 between the Company and Mr. Hall.
3 Includes options to purchase 12,500 share of common stock at $4.25 per share
of which 5,000 are exercisable at December 31, 2001, granted pursuant to a Stock
Option Agreement dated February 2, 1999 between the Company and Mr. Blower. In
addition, in July 2002, options to purchase 12,500 shares of common stock at
$3.57 per share were granted to Mr. Blower pursuant to a Stock Option Agreement
dated July 12, 2002 between the Company and Mr. Blower.
4 Includes options to purchase 10,000 shares of common stock at $4.25 per share
of which 4,400 are exercisable at December 31, 2001, granted pursuant to a Stock
Option Agreement dated February 1, 1999 between the Company and Mr. Edgar. In
addition, in July 2002, options to purchase 15,000 shares of common stock at
$3.57 per share were granted to Mr. Edgar pursuant to a Stock Option Agreement
dated July 12, 2002 between the Company and Mr. Edgar.
11
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 1997 1998 1999 2000 2001
- ---------------------- -------- -------- -------- -------- --------
HANSEN NAT CORP 70.62 196.63 (19.77) (10.14) 8.39
S&P SMALLCAP 600 INDEX 25.58 (1.31) 12.40 11.80 6.54
PEER GROUP 34.05 (43.03) 9.15 17.06 47.15
INDEXED RETURNS
For the years ended December 31,
Base
Period
Company Name/Index 1996 1997 1998 1999 2000 2001
- ---------------------- ------ -------- -------- -------- -------- --------
HANSEN NAT CORP 100 170.62 506.12 406.07 364.88 395.48
S&P SMALLCAP 600 INDEX 100 125.58 123.95 139.32 155.76 165.94
PEER GROUP 100 134.05 76.37 83.36 97.58 143.58
1 Annual return assumes reinvestment of dividends. Cumulative total return
assumes an initial investment of $100 on December 31, 1996. The Company's
self-selected peer group is comprised of Saratoga Beverage Group, National
Beverage Corporation, Clearly Canadian Beverage Company, Triarc Companies, Inc.,
Leading Brands, Inc., Cott Corporation, Northland Cranberries and Jones Soda Co.
All of the companies in the peer group traded during the entire five-year period
with the exception of Saratoga Beverage Group, which traded through 1999, Triarc
Companies, Inc., which sold their beverage business in October 2000 and Jones
Soda Co., which started trading in August 2000.
Compensation of Directors
The Company's current policy is to pay outside directors (non-executive
officers who are not contractually entitled to be nominated to serve as
directors) annual fees of $7,000 plus $500 for each meeting attended of the
Board of Directors of the Company or any committee thereof. Norman E. Epstein,
Harold C. Taber, Jr. and Mark S. Vidergauz each earned director's fees of $8,000
for the one-year period ended December 31, 2001 and Benjamin M. Polk earned
director's fees of $7,500 for the one-year period ended December 31, 2001.
Company Stock Option Plan
12
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 the common stock of the
Company to certain key employees of the Company and its subsidiaries. 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.
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,
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.
Outside Directors Stock Option Plan
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
statements and exhibits thereto filed or to be filed by the Company with the SEC
under the 34 Act and the Securities Act of 1933, 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 and payment of a fee in the amount of the Company's reasonable
expenses in furnishing such documents.
13
Benjamin M. Polk is a partner of Winston and Strawn and was a partner of
its predecessors, Whitman, Breed, Abbott & Morgan, LLP and Whitman & Ransom, law
firms retained by the Company since 1992 and in the current fiscal year.
Billings for services provided by Winston & Strawn and its predecessor for 2001,
2000 and 1999 were $193,350, $180,954 and $414,932, respectively.
During 2001, 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 2001, 2000 and 1999 were $164,638, $115,520 and
$121,289 respectively. The Company continues to purchase promotional items from
IFM Group, Inc. in 2002.
During 2001, the Company purchased office supplies from Filterfresh Orange
County ("Filterfresh"). Rodney C. Sacks, together with members of his family,
own approximately 45% of the issued shares of Filterfresh. Purchases from
Filterfresh in 2001, 2000 and 1999 were $4,607, $3,476 and $3,178, respectively.
The Company continues to purchase office supplies from Filterfresh in 2002.
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 of the Board of Directors oversees the Company's
financial reporting process on behalf of the Board of Directors. It meets with
management and the Company's independent public accountants and reports the
results of its activities to the Board of Directors. In this connection, the
Audit Committee has done the following:
o Reviewed and discussed the audited financial statements for the fiscal year
ended December 31, 2001 with the Company's management;
o Discussed with Deloitte & Touche, LLP, the Company's independent
accountants, the matters required to be discussed by SAS 61 (Codification
of Statements on Auditing Standards), as amended; and
o Received written disclosure regarding independence from Deloitte & Touche,
LLP as required by Independent Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with Deloitte & Touche,
LLP its independence.
14
Based on the foregoing, 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, 2001.
Audit Committee
Norman C. Epstein, Chairman
Harold C. Taber, Jr.
Mark S. Vidergauz
Audit Fees
The aggregate charges for services rendered by Deloitte & Touche LLP during
the year ended December 31, 2001 are as follows:
Category Aggregate Fees
-------------------------------------- ----------------
Audit Fees $ 99,146
Financial Information, System Design
and Implementation Fees -
All other fees 7,500
-----------------
$106,646
=================
The Audit Committee has considered whether Deloitte & Touche LLP's
provision of the services covered under the captions "Financial Information
Systems Design and Implementation Fees" and "All Other Fees" above is compatible
with maintaining Deloitte & Touche LLP's independence and has determined that it
is.
Selected Financial Data
The consolidated statements of operations data set forth below with respect
to each of the years ended December 31, 1999 through 2001 are derived from the
consolidated financial statements audited by Deloitte & Touche, LLP, independent
certified public accountants, and should be read in conjunction with those
financial statements and notes thereto included elsewhere in this proxy
statement and in the 1999, 2000, and 2001 Forms 10-K.
Effective January 1, 2002, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets. This statement discontinued the amortization of goodwill and
indefinite-lived intangible assets, subject to periodic impairment testing. Upon
adoption of SFAS No. 142, the Company evaluated the useful lives of its various
trademark licenses and trademarks and concluded that certain of the trademark
licenses and trademarks have indefinite lives. Unamortized trademark licenses
and trademarks ceased to be amortized effective January 1, 2002 and will be
subject to periodic impairment analysis.
15
For the years ended December 31,
2001 2000 1999
------------ ------------ ------------
Net income, as reported $3,019,353 $3,915,126 $4,477,868
Add back: Amortization of
trademark licenses and
trademarks (net of tax effect) 292,241 211,716 175,670
------------ ------------ ------------
Adjusted net income $3,311,594 $4,126,842 $4,653,538
============ ============ ============
Net income per common share -
basic, as reported $ 0.30 $ 0.39 $ 0.45
Amortization of trademark
licenses and trademarks (net of
tax effect) 0.03 0.02 0.02
------------ ------------ ------------
Adjusted net income per common
share - basic $ 0.33 $ 0.41 $ 0.47
============ ============ ============
Net income per common share -
diluted, as reported $ 0.29 $ 0.38 $ 0.43
Amortization of trademark
licenses and trademarks (net of
tax effect) $ 0.03 0.02 0.02
------------ ------------ ------------
Adjusted net income per common
share - diluted $ 0.32 $ 0.40 $ 0.45
============ ============ ============
On January 1, 2002, the trademark licenses and trademarks were tested for
impairment in accordance with the provisions of SFAS No. 142. Fair values were
estimated based on the Company's best estimate of the expected present value of
future cash flows. In respect of certain trademark licenses and trademarks, no
amounts were impaired at that time. The remaining useful lives of the remaining
trademark licenses and trademarks being amortized were reviewed and deemed to be
appropriate. The following provides additional information concerning the
Company's trademark licenses and trademarks as of December 31, 2001, as
presented in accordance with SFAS No. 142:
Amortizing trademark licenses and trademarks $ 1,113,882
Accumulated amortization (38,075)
---------------
1,075,807
Non-amortizing trademark licenses and trademarks 16,274,414
---------------
$ 17,350,221
===============
All amortizing trademark licenses and trademarks have been assigned an
estimated finite useful life, and are amortized on a straight-line basis over
the number of years that approximate their respective useful lives ranging from
1 to 40 years. The straight-line method of amortization allocates the cost of
the trademark licenses and trademarks to earnings in proportion to the amount of
16
economic benefits obtained by the Company in that report period. As of December
31, 2001, future estimated amortization expense related to amortizing trademark
licenses and trademarks through the year ended December 31, 2006 is:
2002 $ 47,752
2003 37,952
2004 36,014
2005 36,014
2006 36,014
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 16, 2002
17
PROXY SOLICITED BY THE BOARD OF DIRECTORS
HANSEN NATURAL CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 18, 2002
The undersigned hereby appoints Rodney C. Sacks and Hilton H. Schlosberg, or
either of them, with full power of substitution as proxyholders to represent and
to vote, as designated on the reverse hereof, the common stock of the
undersigned at the Annual Meeting of Stockholders of the Company to be held on
October 18, 2002, and any adjournments thereof.
(Continued and to be signed on reverse side)
Please mark your
X votes as in this
- ----- example.
The Board of Directors Recommends a Vote "For" All Proposals.
FOR all nominees WITHHOLD
below at right AUTHORITY
(except as to vote for all nominees
instructed below) listed at right
1. To elect six NOMINEES:
Directors Rodney C. Sacks
------- ------- Hilton H. Schlosberg
Benjamin M. Polk
INSTRUCTION: To withold authority Norman C. Epstein
to vote for any individual nominee, Harold C. Taber, Jr.
strike through the name of the Mark S. Vidergauz
nominee(s) for whom authority is
withheld.
2. To ratify the appointment of Deloitte &
Touche, LLP as independent auditors. ------- ------- -------
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. IN THEIR DISCRETION, THE PROXYHOLDERS ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY.
SIGNATURE DATE SIGNATURE DATE
---------------- -------- ----------------- --------
TITLE TITLE
Important: Sign exactly as your name appears above hereof. Give full title of
executor, administrator, trustee, guardian, etc. Joint owners should each sign
personally.