Proxy FY03

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.  )

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Sonic Corp.
(Name of Registrant as Specified In Its Charter)

 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held January 21, 2004

SONIC CORP.

300 Johnny Bench Drive
Oklahoma City, Oklahoma 73104

Dear Stockholder:

        It is my pleasure to invite you to the annual meeting of the stockholders of Sonic Corp. (the “Company”). We will hold the meeting on Wednesday, January 21, 2004, at 1:30 p.m. in the Cafeteria on the Fourth Floor of the new Sonic Headquarters Building, which is located at 300 Johnny Bench Drive, Oklahoma City, Oklahoma.

        At the meeting, we will:

  (1) Elect three directors; and

  (2) Transact any other business which is proposed in accordance with our bylaws before the meeting is adjourned or postponed.

        The Board of Directors has chosen the close of business on November 28, 2003, as the date used to determine the stockholders who will be able to attend and vote at the Annual Meeting. If you own stock in Sonic Corp. at the close of business on that date, you are cordially invited to attend the meeting.

        Your vote is important. If you decide not to attend the annual meeting in person, you may vote on these proposals by proxy. To do so, please complete, date, sign and return the enclosed proxy card promptly. We have enclosed a postage-prepaid envelope to expedite the return of your completed proxy card. If you have voted by mail and later decide to attend the annual meeting, you may revoke your proxy by coming to the meeting and voting in person.

        We look forward to seeing you at the meeting.

    By order of the Board of Directors,
     
     
    Ronald L. Matlock, Secretary
     
Oklahoma City, Oklahoma
December 15, 2003		    

PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
SONIC CORP.

To Be Held Wednesday, January 21, 2004

SOLICITATION OF PROXIES

Solicitation

        Sonic Corp. (sometimes referred to herein as “Sonic,” “we,” “us,” “our,” or the “Company”) is furnishing this proxy statement to the stockholders of the Company to solicit their proxies for use at the annual meeting of stockholders to take place on Wednesday, January 21, 2004, and at any adjournment of the meeting. We also may use the services of our directors, officers, and employees to solicit proxies personally or by telephone. We regularly retain the services of Corporate Communications, Inc., 523 Third Avenue South, Nashville, Tennessee, to assist with our investor relations and other stockholder communications issues. Corporate Communications, Inc. may assist in the solicitation of the proxies and will not receive any additional compensation for those services. Sonic will bear all of the costs of preparing, printing, assembling, and mailing this proxy statement and the proxy card and all of the costs of the solicitation of the proxies.

Reimbursement of Nominees

        Sonic will reimburse any bank, broker-dealer, or other custodian, nominee, or fiduciary for its reasonable expenses incurred in completing the mailing of proxy materials to the beneficial owners of Sonic’s voting common stock.

Revocation of Proxy

        Any proxy given pursuant to this solicitation may be revoked by the stockholder at any time prior to the voting of the proxy by giving written notice to Ronald L. Matlock, Secretary of the Company. The persons named on the proxy card will vote the proxies at the annual meeting, if received in time and not revoked.

Mailing of Proxy Statement and Proxy Card

        Sonic has had this proxy statement and the proxy card mailed to its stockholders on or about December 15, 2003.

Stockholder Proposals

        In order for the Company to include a stockholder proposal in the proxy materials for the next annual meeting of stockholders, a stockholder must deliver the proposal to the Secretary of the Company no later than August 21, 2004.

VOTING RIGHTS AND PROCEDURE

        Only the record holders of shares of the voting common stock of the Company as of the close of business on November 28, 2003, will have the right to vote at the annual meeting. As of the close of business on that date, the Company had 39,363,420 shares of common stock issued and outstanding (excluding 9,963,930 shares of common stock held as treasury stock). Each stockholder of record will have one vote for each share of common stock of the Company that the stockholder owned as of the record date. All shares of common stock may vote on all matters coming before the annual meeting, and a majority of all of the outstanding shares of common stock of the Company entitled to vote at the meeting, represented in person or by proxy, will constitute a quorum for the meeting. The Company will treat all abstentions and nominee non-votes as present or represented at the meeting for the purposes of determining whether a quorum exists for the meeting.

        With respect to the election of directors, the three nominees receiving the greatest number of votes will be elected. Abstentions and broker non-votes (discussed below) will not affect the outcome of the election because only a plurality of the votes actually cast is needed to elect directors. With respect to any other matter properly brought before the meeting, a majority of the shares represented at the meeting and entitled to vote is required for approval of these matters. Therefore, abstentions will have the effect of a vote against approval. Broker non-votes will not affect the outcome of the vote.

        Proxies submitted by brokers that do not indicate a vote because they do not have discretionary authority and have not received instructions as to how to vote on a proposal (so-called “broker non-votes”) will be considered as present for quorum purposes but not as shares counted for determining the outcome of the vote.

ELECTION OF DIRECTORS

General

        Our certificate of incorporation provides for a classified board of directors, with three classes of directors each nearly as equal in number as possible. Each class serves for a three-year term and one class is elected each year. The Board of Directors is authorized by our bylaws to fix from time to time the number of directors that shall constitute the whole Board of Directors. The Board size has been set at nine members. J. Clifford Hudson, Federico F. Peña, and Robert M. Rosenberg are members of the class to be elected at the annual meeting, and have been nominated to serve as directors for three-year terms expiring at the annual meeting to be held in 2007. The remaining six directors will continue to serve in accordance with their previous elections.

        All nominees will hold office until the stockholders elect their qualified successors. If any nominee becomes unable or unwilling to accept the election or to serve as a director (an event which the Board of Directors does not anticipate), the person or persons named in the proxy will vote for the election of the person or persons recommended by the Board of Directors.

Nominees

        The following table sets forth the name, principal occupation, age, year in which the individual first became a director, and year in which the director’s term will expire (if elected) for each nominee for election as a director at the annual meeting of stockholders.

Name and
Principal Occupation
  First Became
a Director
  Term
Expires
  Age
J. Clifford Hudson1   August 1993   2007   49
Frederico F. Peña2   January 2001  2007  56
Robert M. Rosenberg3   April 1993  2007  65

        The Board of Directors recommends a vote “For” the election of each of the three nominees as a director.

        Proxies cannot be voted for more than three nominees.

        1Mr. Hudson has served as the Company’s Chairman of the Board since January 2000 and has served as the Company’s Chief Executive Officer since April 1995. Mr. Hudson has served in various executive offices with the Company since 1985, including President from 1994 to 2000. He has served as a Director of the Company since August 1993. Mr. Hudson served as Chairman of the Board of the Securities Investor Protection Corporation, the federally-chartered organization which serves as the insurer of customer accounts with brokerage firms, from 1994 to 2001.

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        2 Mr. Peña has served as a Managing Director of Vestar Capital Partners since January 2000. He served as a Senior Advisor of Vestar Capital Partners from August 1998 until January 2000. Mr. Peña served as the U.S. Secretary of Energy from April 1997 through July 1998 and as the U.S. Secretary of Transportation from January 1993 through January 1997. He served as the Mayor of the city and county of Denver, Colorado from 1983 through 1991 and in the Colorado House of Representatives from 1979 until 1982. Mr. Peña currently serves as a Director of Principal Financial Group and Valor Telecommunications, and serves on the Board of Trustees of Marsico Capital Management, a registered investment company. He has been a member of Toyota’s North American Diversity Advisory Board since January 2002.

        3Mr. Rosenberg served as President and Chief Executive Officer of Allied Domecq Retailing USA (“Allied”) from May 1993 until his retirement in August 1998. Allied is the parent company of Dunkin’ Donuts, Inc. and Baskin-Robbins, Inc. Mr. Rosenberg served as President and Chief Executive Officer of Dunkin’ Donuts, Inc. from 1963 until May 1993, and he served as President and Chief Executive Officer of Baskin-Robbins, Inc. from December 1992 until May 1993. Mr. Rosenberg currently serves as an honorary Director of the National Restaurant Association, as well as a trustee of the educational foundation of the International Franchise Association (“IFA”). He is a past president of the IFA. Mr. Rosenberg also serves as a Director of Dominos, Inc. and Buffets, Inc.

Other Directors

        The following table sets forth the name, principal occupation, age, year in which the individual first became a director, and year in which the director’s term will expire for each director who will continue as a director after the annual meeting of stockholders.

Name and
Principal Occupation
First Became
a Director
Term
Expires
Age
Margaret M. Blair1   January 2001   2006   53
Leonard Lieberman2   December 1988  2006  74
Frank E. Richardson3   March 1991  2006  64
Pattye L. Moore4   January 2001  2005  45
H.E. "Gene" Rainbolt5   January 1996  2005  74
E. Dean Werries6   March 1991  2005  74

        1Dr. Blair has served as a Non-resident Senior Fellow of the Economic Studies Program at the Brookings Institution, a Visiting Professor at Georgetown University Law Center, and as the Research Director of the Sloan-GULC Project on Business Institutions since January 2000. She served as a Senior Fellow of the Economic Studies Program at the Brookings Institution from January 1995 until January 2000. Dr. Blair is a member of the Corporate Performance Council of the World Economic Forum, a member of the Steering Committee of the American Academy of Arts and Sciences Project on Corporate Responsibility, a member of the Board of Trustees of the Woodstock Theological Center, and was Co-Director of the Project on Understanding Intangible Sources of Value at the Brookings Institution and a member of the MIT Task Force on Reconstructing America’s Labor Market Institutions from 1997 through 2001.

        2Mr. Lieberman served as the Chief Executive Officer and a Director of Supermarkets General Corporation from 1983 to 1987. From 1987 to the present, Mr. Lieberman has primarily devoted his time to private investments. From January through April 1991, he served as Chairman, President and Chief Executive Officer of Outlet Communications, Inc. Mr. Lieberman serves as a Director of Enterprise News Media, Inc. and as a member of the Management Committee of Consolidated Container Company, LLC.

        3Mr. Richardson has served as Chairman of F. E. Richardson & Co., Inc. of New York City, a firm specializing in acquisitions of and investments in growth companies, since June 1995. Since 1997, he has served as Chairman of Enterprise News Media, Inc., which owns newspapers in Brockton, Quincy, and Plymouth, Massachusetts. From 1986

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to June 1995, Mr. Richardson served as President of Wesray Capital Corporation, a firm which also specialized in acquisitions of and investments in growth companies.

        4Ms. Moore has served as President of the Company since January 2002 and as a Director of the Company since January 2001. She served as Executive Vice President of the Company from January 2000 until January 2002 and served as Senior Vice President of Marketing and Brand Development of the Company from August 1996 until January 2000. Ms. Moore serves as a Director of ONEOK, Inc., a publicly-held company engaged in several aspects of the energy business.

        5Mr. Rainbolt has served as Chairman of the Board of BancFirst Corp. of Oklahoma City, Oklahoma, since 1989. From 1985 to 1989, he served as Chairman of the Board of Directors of United Community Corp., a bank holding company in Oklahoma City, Oklahoma, and a predecessor of BancFirst Corp. From 1974 to 1985, Mr. Rainbolt served as Chairman of the Board of Federal National Bank of Shawnee, Oklahoma.

        6Mr. Werries served as non-executive Chairman of the Board of the Company from April 1995 until January 2000. From 1988 through October 1993, he served as the Chief Executive Officer of Fleming Companies, Inc. (“Fleming”), a wholesale food distribution company, and served as Chairman of the Board of Directors of Fleming from 1989 through April 1994. Mr. Werries is a past Chairman of the Food Marketing Institute in Washington, D.C.

Chairman Emeritus of the Board of Directors

        Troy N. Smith, Sr., founder of the Company, has served as Chairman Emeritus of the Board of Directors since May 1991. As Chairman Emeritus, Mr. Smith has the right to attend and participate on a non-voting basis at all meetings of the Board of Directors and receives the same director fees as the other non-management directors.

Committees, Compensation, and Meetings of the Board of Directors

        The Company has a Nominating and Corporate Governance Committee, an Audit Committee, and a Compensation Committee.

        Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee identifies individuals qualified to become Board members, recommends to the Board director nominees, and monitors significant developments in the law and practice of corporate governance. On November 13, 2003, the Nominating and Corporate Governance Committee nominated the three individuals named above for election as directors at the annual meeting of stockholders. The members of the Nominating and Corporate Governance Committee consist of all of the non-management directors of the Company. Frank E. Richardson is the Chairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee held four meetings during the Company’s last fiscal year. The Nominating and Corporate Governance Committee will consider nominees recommended by the Company’s stockholders. In order to recommend a nominee for the next annual meeting, stockholders must deliver the recommendation in writing to the Company on or before August 21, 2004, addressed to the attention of Ronald L. Matlock, Secretary of the Company, and must provide the full name, address, and business history of the recommended nominee.

        Audit Committee. In accordance with its written charter adopted by the Board of Directors, the Audit Committee provides assistance to the Board in fulfilling its oversight responsibility relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company’s financial statements, and the compliance by the Company with certain legal and regulatory requirements. The committee encourages free and open communication among the committee members, independent auditors, and management of the Company. Throughout the year, the committee periodically meets with the independent auditors and also meets with representatives of the internal audit function, without management present. The members of the Audit Committee are H. E. Rainbolt (Chairman), Margaret M. Blair, Robert M. Rosenberg, and E. Dean Werries. Each of the members of the Audit Committee is “independent,” as defined by the rules of the Securities & Exchange Commission and the NASDAQ stock market listing standards.  In accordance with the rules of the Securities & Exchange Commission, the Board has determined that Messrs. Rainbolt, Rosenberg

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and Werries are the Audit Committee Financial Experts.  In fiscal 2003, the Audit Committee met eight times, including meetings to review the quarterly financial statements prior to the releases of earnings to the public. The Board of Directors of the Company adopted a written charter for the Audit Committee in April 2000, a copy of which was attached to the proxy statement for the 2001 Annual Meeting of Stockholders. The Board of Directors of the Company amended and restated the written charter for the Audit Committee in November 2002, a copy of which was attached to the proxy statement for the 2002 Annual Meeting of Stockholders.

        Compensation Committee. The Compensation Committee’s functions include reviewing and approving the base salary, annual incentive bonus awards and other compensation awards to the executive officers of the Company, as well as administering the Company’s various stock option, stock incentive, and stock purchase plans. The members of the Compensation Committee are Leonard Lieberman (Chairman), Federico F. Peña, and Frank E. Richardson. The Compensation Committee held four meetings during the Company’s last fiscal year.

        Compensation of Directors. During the last fiscal year, the Company compensated the non-management directors for their services in the amount of $12,000 per year, plus $2,000 for every meeting of the Board of Directors attended. Audit Committee members received an additional $1,000 per quarter for serving on the Audit Committee. Mr. Lieberman received an additional annual fee of $2,500 for his role as Chairman of the Compensation Committee. Mr. Rainbolt also received an additional annual fee of $2,500 for his role as Chairman of the Audit Committee. Other than the compensation described above, the Company did not pay any additional fees to directors for serving on its standing committees. The Company does not compensate directors who also serve as an officer or employee of the Company or its subsidiaries for their services as a director. The 2001 Sonic Corp. Directors’ Stock Option Plan, as adopted in January 2001, provides for the grant of 10-year, non-qualified stock options to purchase 33,750 shares of common stock of the Company to each non-management director of the Company upon the individual’s initial election as a director, and provides for the annual grant of 10-year, non-qualified stock options to purchase 4,500 shares of common stock of the Company to each non-management director of the Company beginning with the first year of the director’s second three-year term and continuing annually for so long as the individual serves on the Board. The exercise price of the stock options equals the market value of the common stock at the date of the grant, and the stock options become exercisable with regard to one-third of the shares of common stock underlying the option on each of the first three anniversary dates of the grant of the stock option. In January 2003, the Company granted options to purchase 4,500 shares of common stock of the Company at $22.21 per share to Messrs. Lieberman, Rainbolt, Richardson, Rosenberg and Werries.

        Meetings of the Board of Directors. The Board of Directors of the Company held four meetings during the Company’s last fiscal year. Each director attended at least 75% of the meetings of the Board and the Board committees on which he or she served.

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EXECUTIVE COMPENSATION

        Summary Compensation Table. The following table sets forth the compensation paid for the last three fiscal years to our chief executive officer, our four other highest paid executive officers and one individual who served as an executive officer during a portion of fiscal year 2003, but was not serving as an executive officer at the end of fiscal year 2003.

Annual Compensation
Long-term
Compensation
Name and
Principal Position
Year
Salary($)
Bonus($)1
Other
Annual
Compen-
sation($)2
Securities
Underlying
Stock
Options(#)
All
Other
Compen-
sation($)3
J. Clifford Hudson     2003     $ 516,708   $ 259,854   —   33,905     $9,864
   Chairman of the Board and   2002    483,360    257,769   —  25,289    9,782
   Chief Executive Officer   2001    433,411    227,717   —  42,153    3,933
                           
Pattye L. Moore   2003    341,683    168,892   —  20,666    9,752
   President and Director   2002    308,333    166,808   —  47,711    8,657
    2001    266,667    139,392   —  25,760    8,174
                           
W. Scott McLain   2003    260,005    94,070   —  13,690    9,414
   Senior Vice President and   2002    240,005    92,819   —  11,379    8,844
   Chief Financial Officer   2001    206,745    79,726   —  18,548    6,233
                           
Ronald L. Matlock   2003    226,674    82,779   —  11,882    9,414
   Senior Vice President,   2002    213,335    81,946   —  10,014    7,944
   General Counsel and   2001    195,003    73,370   —  16,682    8,658
   Secretary                          
                           
William T. Pierquet4   2003    205,333    72,594   —  10,362    9,604
   Senior Vice President of   2002    200,000    1,507   —  9,103    7,008
   Development of Sonic   2001    —    —   —  15,001    —
   Restaurants, Inc.                          
                           
Frank B. Young5   2003    205,936    81,557   —  10,162    7,428
   Senior Vice President of   2002    195,155    80,932   —  9,103    7,538
   Operations of Sonic   2001    180,229    70,469   —  15,597    6,224
   Restaurants, Inc.                          

        1The amounts include incentive bonus awards granted pursuant to the incentive bonus program described under “Report on Executive Compensation,” as well as a holiday bonus equal to one-half month’s base salary.

        2The amount of other annual compensation did not exceed the lesser of $50,000 or 10% of the annual salary and bonus reported for the named individual.

        3The amounts include the Company’s matching contribution to the Company’s defined contribution plan and premiums for life insurance paid on behalf of the named individuals. During the last fiscal year, the Company made matching contributions to the Company’s 401(k) defined contribution plan in the amount of $9,062 for Mr. Hudson, $9,063 for Ms. Moore, $8,950 for Mr. McLain, $8,800 for Mr. Matlock, $8,740 for Mr. Pierquet and $6,708 for Mr.

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Young. During the last fiscal year, the Company paid life insurance premiums in the amount of $864 for Messrs. Hudson, McLain, Matlock and Pierquet and Ms. Moore, and $720 for Mr. Young.

        4 Mr. Pierquet commenced his employment with the Company in August 2001.

        5 Mr. Young resigned from his employment with the Company in June 2003.

        Stock Option Table. The following table sets forth information regarding the stock options granted during the last fiscal year to the Company’s chief executive officer and the other executive officers named above.

Name
Number of
Securities
Underlying
Options
Granted(#)1
Percent of
Total Options
Granted to
Employees in
Fiscal Year
Exercise
Price
($/Sh)
Expiration
Date
Potential Realizable Value
at Assumed Annual Rates of
Price Appreciation for
Option Term2
5% ($)
 10% ($)
J. Clifford Hudson     33,905   6.02 %   $ 27.20   4-10-13   $ 579,977   $ 1,469,775
                            
Pattye L. Moore   20,666   3.67 %  27.20   4-10-13    353,511    895,867
                            
W. Scott McLain   13,690   2.43 %  27.20   4-10-13    234,180    593,459
                            
Ronald L. Matlock   11,882   2.11 %  27.20   4-10-13    203,253    515,082
                            
William T. Pierquet   10,362   1.84 %  27.20   4-10-13    177,252    449,191
                            
Frank B. Young3   10,162   1.80 %  27.20   4-10-13    173,830    440,520

        1Each option becomes exercisable with regard to one-third of the shares of common stock underlying the option on each of the three anniversary dates of the grant of the option.

        2The assumed annual rates of 5% and 10% would result in the Company’s common stock price increasing during the 10-year term of the option from the $27.20 per share exercise price to $44.31 and $70.55 respectively.

        3Each of Mr. Young’s options granted in the last fiscal year expired before becoming exercisable upon Mr. Young’s resignation from the Company in June 2003.

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        Option Exercises and Year End Value Table. The following table sets forth information regarding stock options exercised during the last fiscal year by the Company’s chief executive officer and the other individuals named above and the value of unexercised stock options as of the end of the last fiscal year.

Name
 Shares
Acquired on
Exercise (#)
Value
Realized ($)
Number of Unexercised
Options as of Fiscal Year
End Exercisable/
Unexercisable (#)
Value of Unexercised
In-the-Money Options as
of Fiscal Year End
Exercisable/
Unexercisable ($)1
J. Clifford Hudson   156,5032   $2,606,028   489,078     $7,515,138  
          64,814   96,008
Pattye L. Moore  45,0002  1,005,463   244,068   3,205,542
          61,059   58,671
W. Scott McLain  0   0   151,314   2,113,888
          27,457   42,237
Ronald L. Matlock  0   0   171,054   2,500,575
          24,178   38,403
William T. Pierquet  0   0   13,037   24,072
          21,429   12,031
Frank B. Young  206,5043  3,896,351   0   0

        1These amounts represent the value of unexercised options granted each year since 1994 for Mr. Hudson and Ms. Moore and the value of unexercised options granted each year since 1996 for Messrs. McLain and Matlock.

        2Of these option exercises, all options exercised by Mr. Hudson and 26,094 options exercised by Ms. Moore would have expired in fiscal year 2003 if not exercised.

        3Mr. Young exercised these options upon his resignation from the Company in June 2003. If not exercised, these options would have expired.

        Termination and Change in Control Arrangements. The Company has employment contracts with J. Clifford Hudson, its Chairman of the Board and Chief Executive Officer, and the other senior executive officers. Mr. Hudson’s contract, which expires in August 2004 (and which automatically extends each year for one additional year to maintain successive terms of two years unless specifically terminated or not renewed by the Company), provides that, if the Company terminates Mr. Hudson’s employment other than for cause or fails to renew his contract, he will receive his base compensation for a 24-month period after termination (at an annualized base of $525,000 as of August 31, 2003). Mr. Hudson’s contract defines “cause” as (1) the willful and intentional failure substantially to perform his duties (other than because of physical or mental incapacity), (2) the commission of an illegal act in connection with his employment, or (3) the commission of any act which falls outside the ordinary course of his responsibilities and which exposes the Company to a significant level of undue liability. A determination of “cause” requires the affirmative vote of at least two-thirds of all members of the Board of Directors. The contracts for Pattye L. Moore, Ronald L. Matlock and Michael A. Perry, Senior Vice President of Operations of Sonic Restaurants, Inc., expire in August 2004. The contract for W. Scott McLain expires in January 2004. The contracts for all senior executive officers (except Mr. Hudson) automatically renew for successive one-year terms unless specifically terminated or not renewed by the Company. Those contracts provide for 12 months’ salary upon termination of employment other than for cause. The contracts for all of the foregoing officers contain the same definition of “cause” as Mr. Hudson’s contract.

        The contracts for all of the foregoing officers also provide that, upon a change in control of the Company, if the Company terminates the officer’s employment other than for cause or violates any term of the contract, the Company must pay the officer a lump sum equal to a specified multiple of the officer’s then current salary, not to exceed the

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maximum payable without a loss of the deduction under Section 280(g) of the Internal Revenue Code. The specified multiple equals two times the amount of their annual salary for all of the officers of the Company, except for Mr. Hudson (who would receive three times his annual salary). The same lump sum provision applies if the officer should resign for “good reason,” which includes (without limitation) the occurrence without the officer’s consent after a change in control of the Company of (1) the assignment to the officer of duties inconsistent with the officer’s office with the Company, (2) a change in the officer’s title or office with the Company, or (3) a reduction in the officer’s salary. The officers’ contracts generally define a “change in control” to include any consolidation or merger of the Company in which the Company does not continue or survive or pursuant to which the shares of capital stock of the Company convert into cash, securities, or other property; any sale, lease, exchange, or transfer of all or substantially all of the assets of the Company; the acquisition of 50% or more of the outstanding capital stock of the Company by any person; or, a change in the make-up of the Board of Directors of the Company during any period of two consecutive years, pursuant to which individuals who at the beginning of the period made up the entire Board of Directors of the Company cease for any reason to constitute a majority of the Board of Directors, unless at least two-thirds of the directors then and still in office approved the nomination of the new directors.

        Other than the foregoing agreements, the Company has no compensatory plan or arrangement with respect to its executive officers which would result from the resignation, retirement, or termination of any executive officer’s employment with the Company, from a change in control of the Company, or from a change in an executive officer’s responsibilities following a change in control of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        We lease two parcels of real estate, upon which we operate two Company-owned restaurants, from Plains Realty Corp. (“Plains”), a corporation in which J. Clifford Hudson, Chairman of the Board of Directors and Chief Executive Officer of the Company, owns a minority interest. The Company made rental payments during fiscal year 2003 for both parcels pursuant to leases entered into in 1988 and 1989. Both leases expire in January 2009. During the last fiscal year, the Company paid Plains a total of $94,607 in rent pursuant to those two leases. We believe that the terms and conditions of the leases are no less favorable than those we could have obtained from third parties in arm’s length transactions.

        H.E. Rainbolt, a director of the Company, is Chairman of the Board and a principal stockholder of BancFirst Corp., the holding company of BancFirst of Oklahoma City (“BancFirst”). BancFirst is a participant in the Company’s $125 million revolving line of credit. During the last fiscal year, the largest amount outstanding under that line of credit was approximately $95.6 million, in which BancFirst participated in approximately $11.5 million.

        Leonard Lieberman, a director of the Company, served as a director of Michael Foods, Inc. (“Michael Foods”) during the last fiscal year. Another director, Federico Peña, is a managing director of Vestar Capital Partners, which owned a majority of the outstanding common stock of Michael Foods during the last fiscal year. Michael Foods supplied vanilla soft serve mix and egg products to the Company’s restaurants and the restaurants owned by the Company’s franchisees. During the last fiscal year, the Company and its franchisees purchased approximately $26.6 million of such products from Michael Foods through the Company’s authorized distributors. The amount of food products purchased from Michael Foods represented approximately 4.4% of the amount of all food and paper products purchased by the Company and its franchisees for the fiscal year ended August 31, 2003. In October 2003, Michael Foods sold its dairy products division and in November 2003, Vestar Capital Partners and the other owners of Michael Foods, Inc. sold their interest in Michael Foods. Mr. Lieberman no longer serves as a director of Michael Foods. The Company currently purchases its vanilla soft serve mix from the new owner of Michael Foods’ dairy products division and continues to purchase its egg products from Michael Foods.

REPORT OF COMPENSATION COMMITTEE

        The following report of the Compensation Committee of the Board of Directors describes the committee’s compensation policies with regard to the Company’s executive officers for the last fiscal year, including the specific relationship of corporate performance to executive compensation. The report also discusses the committee’s basis for the chief executive officer’s compensation for the last fiscal year, including the factors and criteria upon which the

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committee based that compensation. As described above under “Committees, Compensation, and Meetings of the Board of Directors,” the Compensation Committee’s functions include reviewing and approving the base salary, annual incentive bonus awards, and other compensation awards to the Company’s chief executive officer and certain other executive officers of the Company. The Compensation Committee’s functions also include the administration of the Company’s stock option plans and the granting of stock options under those plans, the administration of the Company’s stock purchase plan, and the administration of the Company’s employee stock incentive plan and the granting of stock under that plan.

        The following report shall not constitute a document deemed incorporated by reference by any general statement incorporating this proxy statement by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates the information by reference, and the report shall not constitute information otherwise deemed filed under either of those acts.

Independent Compensation Consultant Report

        For several years we have retained independent compensation consultants to advise us on the structure and competitiveness of the Company’s executive compensation program and to recommend programs appropriate for the Company in the areas of salary, annual incentive programs, long-term incentives, and benefits and employment contract provisions. In conducting the initial review, the consultant interviewed the executive officers of the Company, as well as the members of the Compensation Committee; identified a peer group of 11 comparable multi-outlet restaurant companies; and analyzed the cash compensation, stock option and long-term incentive programs, and employment contract provisions available in that peer group according to available proxy statement information, as well as compensation data from other published surveys. Since the initial review, we have obtained annual updates of the review and report to the Company. The results of these reviews continue to show that the total compensation of the Company’s executive officers falls below the average level of total compensation of the peer group executive officers. The Company and the Compensation Committee intend to continue to work with a consultant to develop changes to the Company’s executive compensation program, when and if appropriate.

Compensation Policy and Overall Objectives

        In order to attract, retain, and motivate superior executive talent, the Compensation Committee seeks to maintain compensation programs competitive with those provided by leading companies in the multi-unit restaurant business with similar size and business focus as the Company. The committee has adopted a compensation strategy to provide: (1) base salaries which are competitive but not above industry averages, (2) average or above-average total annual cash opportunities, through incentives based on operating results, (3) above-average long-term incentives based on stock appreciation, and (4) other benefits for executives which are competitive but not above industry norms.

        The primary components of the Company’s executive compensation package consist of base salary, annual incentive bonus awards, and stock option awards. In connection with making decisions with respect to executive compensation, the Compensation Committee has taken into account as one of the factors which it considers, the provisions of Section 162(m) of the Internal Revenue Code which limits the deductibility by the Company of certain categories of compensation in excess of $1,000,000 paid to certain executive officers. No executive officer’s total compensation for the fiscal year ending August 31, 2003 exceeded the $1,000,000 deductibility cap.

Discussion of Compensation Components

        Base Salary. In reviewing each executive officer’s base salary, the Compensation Committee takes into consideration the executive officer’s responsibilities and performance, salaries for comparable positions at other companies, and fairness issues relating to pay for other Company executives. In making salary recommendations or decisions, the committee exercises its discretion and judgment based on those factors. The committee does not apply any specific formula to determine the weight of each factor.

        Incentive Bonus Awards. The Company has adopted an incentive bonus plan, which covers all of the Company’s executive officers, as well as other mid-level management personnel. Under the plan, the Compensation

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Committee measures the performance of the Company against an annual business plan prepared by management and reviewed and approved by the Board of Directors. Achievement of the earnings per share target set forth in the annual business plan may result in the payment of incentive payments equal to a percentage of the base salary of the covered officer (68% for Mr. Hudson, 60% for Ms. Moore, 40% for Messrs. Matlock and McLain and 25% for Michael A. Perry, Senior Vice President of Operations of Sonic Restaurants, Inc.) Under the plan, the committee may award up to 50% of the incentive payments if the Company’s earnings per share equal 85% or more of the annual business plan earnings per share goal and may award up to 100% of the incentive payments as the percentage of earnings per share achieved increases from 85% to 100% of the goal. The plan also allows the committee to increase the incentive payments ratably to the extent the Company exceeds the earnings per share target. However, the committee has the discretion whether and in what amounts to award any incentive bonuses.

        Stock Option Grants. The 2001 Sonic Corp. Stock Option Plan is a stock-based incentive compensation plan under which employees selected by the Compensation Committee may receive awards in the form of stock options. Under that plan, employees may receive an annual grant of stock options to purchase a number of shares of common stock computed by (1) dividing the employee’s annual salary and bonus by the current market price of the common stock and (2) multiplying that amount by a factor ranging up to two. In addition, the Compensation Committee grants special stock option awards to new members of management and to existing members of management who may have received a promotion.

        Stock Incentive Plan. In November 1995, the Compensation Committee (formerly the Stock Plan Committee) adopted and the Board of Directors approved the Stock Incentive Plan. Under that plan, the Company may issue up to 405,000 shares of common stock of the Company to key employees selected for participation in the plan by the Compensation Committee, which administers the plan. Participants in the Stock Incentive Plan receive awards of shares of restricted common stock (the “Restricted Stock”), subject to not vesting if the Company fails to achieve certain annual performance criteria. As the Company achieves the performance criteria, the portion of the award tied to the criteria will vest. Until the Restricted Stock vests, an escrow agent will hold the Restricted Stock. However, the participant will have the right to vote the Restricted Stock and receive any dividends on the stock. If the Company does not achieve the performance criteria, the portion of the award tied to that criteria will not vest and the right to receive dividends and to vote that portion of the Restricted Stock will terminate. Upon vesting, all restrictions on the vested portion will terminate and the participant will have the right to receive certificates representing the shares of vested Restricted Stock. There are no Restricted Stock grants currently outstanding.

Compensation of Chief Executive Officer

        Mr. Hudson has served as the Company’s Chairman of the Board since January 2000 and as its Chief Executive Officer since April 1995. On January 28, 2003, the Compensation Committee set Mr. Hudson’s annual compensation at $525,000. The committee considered the results of the most recent update of the Company’s independent compensation consultant regarding the range of compensation for the chief executive officers of the Company’s competitive peer group and set Mr. Hudson’s level of compensation below the average of that group. On April 30, 2003, the Compensation Committee granted Mr. Hudson options to purchase 33,905 shares of common stock, consistent with the standard formula described above. Effective October 20, 2003, the Compensation Committee approved the award of 78.3% of Mr. Hudson’s potential incentive bonus for the fiscal year ended August 31, 2003, pursuant to the terms of the Company’s incentive bonus plan, which percentage is consistent with the percentages approved for the other executive officers of the Company, after taking into account the performance of the Company for that year.

  Respectfully submitted,
   
   
  The Compensation Committee
  /s/ Leonard Lieberman, Chairman
  /s/ Federico F. Peña
  /s/ Frank E. Richardson

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REPORT OF AUDIT COMMITTEE

        The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements included in the Annual Report of the Company for the fiscal year ended August 31, 2003 with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

        The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. In addition, the Audit Committee has discussed with the independent auditors the auditors’ independence from management and the Company including the matters in the written disclosures required by the Independence Standards Board, a board jointly developed by the American Institute of Certified Public Accountants and the Securities and Exchange Commission to establish and improve auditor independence standards.

        The Audit Committee discussed with the Company’s internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held eight meetings during fiscal year 2003.

        In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended August 31, 2003, for filing with the Securities and Exchange Commission.

  Respectfully submitted,
   
   
  The Audit Committee
   
  /s/ H.E. Rainbolt, Chairman
  /s/ Margaret M. Blair
  /s/ Robert M. Rosenberg
  /s/ E. Dean Werries

Audit Fees

        The following table sets forth the aggregate fees billed to the Company for the fiscal years ended August 31, 2003 and 2002 by the Company’s principal accountants. (See “Independent Auditors” on page 16.)

2003
 2002
Audit Fees 1     $ 195,082   $ 191,929
Audit-Related Fees 2    42,265    32,900
Tax Fees 3    124,375    14,892
All Other Fees 4    23,550    59,800
     Total   $ 385,272   $ 299,521

        1 Audit fees relate to professional services rendered for the annual audit of the consolidated financial statements of the Company and the quarterly reviews relating to Securities and Exchange Commission filings of the Company’s financial statements.

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        2 Audit-related fees relate to professional services rendered for the annual audit of the Company’s benefit plan, reviews relating to consents for uniform franchise offering circulars and consultations relating to financial accounting and reporting standards.

        3 Tax fees include fees for tax planning and consultations, reviews of tax returns and audit support.

        4 All other fees are primarily comprised of fees for consultations relating to risk management.

        The Audit Committee has the sole authority to approve in advance any non-audit services permissible under applicable law to be provided by the independent auditor. The Committee also reviews with the lead audit partner whether any of the senior audit team members receive any discretionary compensation from the audit firm with respect to non-audit services performed by the independent auditor.

        The Audit Committee has considered whether the provision of these services is compatible with maintaining the principal accountant’s independence and has determined that such services have not adversely affected the accountant’s independence. All of the fees for fiscal year 2003 and 2002 were pre-approved by the Audit Committee and there were no instances of waiver of approval requirements during those periods.

PERFORMANCE GRAPH

        The following graph compares the cumulative total return on the Company’s common stock with the cumulative total returns on two published indices — the Total Return Index for The Nasdaq Stock Market (U.S. Companies) (“Nasdaq U.S. Stocks”) and the Index for Nasdaq Retail Trade Stocks (“Nasdaq Retail Stocks”). The graph assumes a $100 investment on August 31, 1998, in the Company’s common stock and in the stocks comprising the two identified indices. “Cumulative total return” means the appreciation in stock price, plus dividends paid, assuming the reinvestment of all dividends.

        The following graph shall not constitute a document deemed incorporated by reference by any general statement incorporating this proxy statement by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates the information by reference, and the graph shall not constitute information otherwise deemed filed under either of those acts.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Certain Beneficial Owners. The following table shows the total number and percentage of the outstanding shares of the Company’s voting common stock beneficially owned as of September 30, 2003, with respect to each person (including any “group” as used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) the Company knows to have beneficial ownership of more than 5% of the Company’s common stock. The Company computed the percentage ownership amounts in accordance with the provisions of Rule 13d-3(d), which includes as beneficially owned all shares of common stock which the person or group has the right to acquire within the next 60 days.

Beneficial Owner
 Number
of Shares
Percent1
FMR Corp.2   5,846,802   14.9%
82 Devonshire Street      
Boston, Massachusetts 02109      
         
Morgan Stanley & Co., Incorporated 3   2,416,686  6.2%
1585 Broadway      
New York, NY 10036      
         
T. Rowe Price Associates, Inc. 4   2,343,575  6.0%
100 E. Pratt Street      
Baltimore, Maryland 21202      
         
Delaware Management Holdings, Inc.5   2,152,254  5.5%
One Commerce Square      
2005 Market Street      
Philadelphia, Pennsylvania 19103      

        1Based on the number of outstanding shares of common stock on September 30, 2003.

         2Reflects shares beneficially owned by FMR Corp. (“FMR”) according to a 13F Holdings Report filed by FMR with the SEC on November 14, 2003, reflecting ownership of shares as of September 30, 2003. Based on the 13F Holdings Report, Fidelity Management & Research Company (“Fidelity”), a wholly-owned subsidiary of FMR, and FMR Co., Inc. have defined dispositive power over 5,574,840 shares, sole voting power over 20,390 shares and no voting power over 5,554,450 shares. Fidelity Management Trust Company (“Fidelity Management”), another wholly-owned subsidiary of FMR, has defined dispositive power and sole voting power over 271,962 shares. According to a statement on Schedule 13G filed by FMR with the SEC on February 14, 2003, as of December 31, 2002, FMR, Mr. Edward C. Johnson 3d, Chairman of FMR, and Abigail R. Johnson, a Director of FMR, each had sole dispositive power over (and beneficially owned) 5,804,057 shares, representing (a) 5,474,240 shares beneficially owned by Fidelity as a result of its role as an investment advisor to various investment companies, one of which, Fidelity Low Priced Stock Fund, owned 4,200,000 shares, (b) 310,062 shares beneficially owned by Fidelity Management as a result of its role as an investment manager for certain institutional accounts, and (c) 19,755 shares owned by Geode Capital Management, LLC, a registered investment advisor wholly owned by Fidelity Investors III Limited Partnership, whose general partner is Fidelity Investors Management, LLC. The managers of Geode Capital Management, LLC, the members of Fidelity Investors Management, LLC and the limited partners of Fidelity Investors III Limited Partnership are certain shareholders and employees of FMR. Fidelity and Fidelity Management have the same address as FMR. The address of Geode Capital Management is 53 State Street, Boston, Massachusetts 02109.

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        3 Reflects shares beneficially owned by Morgan Stanley & Co. Incorporated according to a 13F Holdings Report filed by Morgan Stanley & Co. Incorporated with the SEC on November 17, 2003, reflecting ownership of shares as of September 30, 2003, including (a) 295,793 shares over which it had sole voting and defined dispositive power; (b) 545,869 shares over which Morgan Stanley Investment Advisors Inc. had sole voting and others had dispositive power; (c) 672,900 shares over which Morgan Stanley Investments L.P. had sole voting and others had dispositive power and 6,900 shares over which others had dispositive power and voting power; (d) 885,124 shares over which Morgan Stanley Investment Management Inc. had voting power and others had dispositive power and 45,700 shares over which others had dispositive power and voting power; (e) 10,100 shares over which Morgan Stanley Investment Management Limited had sole voting and others had dispositive power; and (f) 163 shares over which Van Kampen Funds, Inc. had sole voting and others had dispositive power.

        4Reflects shares beneficially owned by T. Rowe Price Associates, Inc. (“Price Associates”) according to a 13F Holdings Report filed by Price Associates with the SEC on November 14, 2003, reflecting ownership of shares as of September 30, 2003. According to a statement on Schedule 13G filed by Price Associates with the SEC on February 14, 2003, as of December 31, 2002, Price Associates beneficially owns such shares as a result of its role as an investment adviser to various individual and institutional investors. Price Associates has sole voting power for 341,050 shares and sole dispositive power of all 2,343,575 shares.

        5Reflects shares beneficially owned by Delaware Management Holdings, Inc. (“Delaware Holdings”) according to a 13F Holdings Report filed by Delaware Management Co. Inc. (“Delaware Management”) with the SEC on November 6, 2003, reflecting ownership of shares as of September 30, 2003. Based on the 13F Holdings Report, Delaware Management has sole voting power with respect to 2,145,661 shares and no voting power with respect to 6,593 shares and sole dispositive power with respect to all 2,152,254 shares. Delaware Holdings is the parent company of Delaware Management.

        Management. The following table sets forth information obtained from our directors and executive officers as to their beneficial ownership of the Company’s voting common stock as of October 31, 2003. We computed the percentage ownership amounts in accordance with the provisions of Rule 13d-3(d), which rule includes as beneficially owned all shares of common stock which the person or group has the right to acquire pursuant to stock options exercisable within the next 60 days (“Currently Exercisable Options”). Unless indicated otherwise, each stockholder holds sole voting and investment power with regard to the shares of common stock.

Beneficial Owner
Number of
Shares
Number of
Currently Exercisable
Options
Percent 1
J. Clifford Hudson2 568,018   489,078   2.66%
Pattye L. Moore4 69,454   244,068   3
W. Scott McLain5 1,059   151,314   3
Ronald L. Matlock5 3,638   171,054   3
Michael A. Perry 6 21,914   47,460   3
Margaret M. Blair 385   22,500   3
Leonard Lieberman 31,868   36,000   3
Federico F. Peña 516   22,500   3
H. E. Rainbolt 52,875   64,125   3
Frank E. Richardson 916,191   36,000   2.42%
Robert M. Rosenberg 75,298   27,000   3
E. Dean Werries7 48,675   36,000   3
Directors and executive officers 1,782,966   1,476,378   8.03%
   as a group (14) 8          

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        1Pursuant to Rule 13(d)(3), the Company includes the shares of common stock underlying the Currently Exercisable Options as outstanding for the purposes of computing the percentage ownership of the person or group holding those options but not for the purposes of computing the percentage ownership of any other person.

        2Includes (a) 285,020 shares of common stock held by Mr. Hudson in trust for himself, (b) 234,416 shares of common stock held by Mr. Hudson’s wife in trust for herself (of which Mr. Hudson disclaims beneficial ownership), and (c) 48,582 shares of common stock held by Mr. Hudson in trust for his two minor children (of which Mr. Hudson disclaims beneficial ownership).

        3Represents less than 1% of the Company’s outstanding shares.

        4Includes 1,371 shares held for Ms. Moore in the Company’s 401(k) plan.

        5All of such shares are held in the Company’s 401(k) plan.

        6Includes 1,779 shares held for Mr. Perry in the Company’s 401(k) plan and 1,470 shares held in the Company’s employee stock purchase plan.

        7Includes 45,075 shares of common stock held by a limited partnership of which Mr. Werries serves as the general partner.

        8Includes (a) 8,712 shares of common stock held for certain executive officers in the Company’s 401(k) plan and (b) 3,574 shares held for certain executive officers in the Company’s employee stock purchase plan.

        Changes in Control. We do not know of any arrangements (including the pledge by any person of securities of the Company), the operation of which may result at a subsequent date in a change in control of the Company.

SECTION 16 COMPLIANCE

        Based upon a review of the original and amended Forms 3 and 4 furnished to the Company during its last fiscal year, we do not know of any person who failed to file on a timely basis any reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended.

INDEPENDENT AUDITORS

        The Board of Directors, based on the recommendation of the Audit Committee, has re-appointed the firm of Ernst & Young LLP, as the Company’s independent auditors for the fiscal year ending August 31, 2004. Ernst & Young LLP served as the Company’s auditors from 1984 to 2001 and again since 2002. Arthur Andersen LLP served as the principal accountant of the Company from December 14, 2001 until June 3, 2002. On June 3, 2002, the Company appointed Ernst & Young LLP as its principal accountant and terminated Arthur Andersen LLP as principal accountant. The decision to change accountants was made because the accountants handling the Company’s matters in the Oklahoma City office of Arthur Andersen LLP joined the Oklahoma City office of Ernst & Young LLP effective as of May 24, 2002. The Company made the decision in December 2001 to change accountants from Ernst & Young LLP to Arthur Andersen LLP on the basis that the Oklahoma City office of Arthur Andersen LLP had a larger number of accountants with more areas of expertise available in its Oklahoma City office at that time than Ernst & Young. After the combination of the two offices, the Ernst & Young LLP office in Oklahoma City has a full complement of accounting services available. The decision to change the Company’s independent accountants was recommended by the Company’s Audit Committee and approved by its Board of Directors.

        In connection with the audits of the two fiscal years ended August 31, 2001 and 2002 (prior to the change on December 14, 2001 from Ernst & Young LLP to Arthur Andersen LLP), there were no disagreements with Ernst & Young LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused Ernst & Young LLP to

16

make reference in connection with their opinion to the subject matter of the disagreement.  Additionally, during the fiscal years ended August 31, 2001 and 2002, there were no reportable events.

        During the interim periods subsequent to August 31, 2001, preceding the decision to change independent accountants from Arthur Andersen LLP back to Ernst & Young LLP, there were no disagreements with Arthur Andersen LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused Arthur Andersen LLP to make reference in connection with their opinion to the subject matter of the disagreement.  Additionally, during the interim periods subsequent to August 31, 2001, preceding the decision to change independent accountants from Arthur Andersen LLP back to Ernst & Young LLP, there were no reportable events.

        The audit reports of Ernst & Young LLP on the Company’s financial statements for the years ended August 31, 2001 and 2002, did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles.

        During the interim periods subsequent to August 31, 2001, preceding the decision to change independent accountants from Arthur Andersen LLP back to Ernst & Young LLP, the Company did not consult with Ernst & Young LLP regarding any of the matters described in Regulation S-K, Item 3-4(a)(2)(I) or (ii), other than consultations with Ernst & Young LLP as principal accountants for the Company on matters regarding their audit of the company’s financial statements for the years ended August 31, 2000 and 2001.

        Representatives of Ernst & Young LLP will be present at the annual meeting and will have an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions presented at the annual meeting.

OTHER MATTERS

        The Board of Directors knows of no other matters which may come before the annual meeting. If any other business properly comes before the meeting, the persons named in the proxy will vote with respect to that matter in accordance with their best judgment.

2003 ANNUAL REPORT AND FORM 10-K

        A copy of the 2003 Annual Report to Stockholders accompanies this Proxy Statement. The Company’s Annual Report on Form 10-K for the year ended August 31, 2003, as filed with the Securities and Exchange Commission, contains detailed information concerning the Company and its operations which is not included in the 2003 Annual Report. A copy of the 2003 Form 10-K will be furnished to each stockholder without charge upon request in writing to: Ronald L. Matlock, Secretary, Sonic Corp., 300 Johnny Bench Drive, Oklahoma City, OK 73104. The 2003 Form 10-K is also available via the Internet at www.sonicdrivein.com.

        Only one proxy statement and annual report may be delivered to multiple stockholders sharing an address, unless the Company receives contrary instructions from one or more of the stockholders. Any stockholder at a shared address to which a single copy of the proxy statement and annual report have been sent who would like a separate copy of this proxy statement and annual report or future proxy statements and annual reports may make a written or oral request to Ronald L. Matlock, Secretary, Sonic Corp., 300 Johnny Bench Drive, Oklahoma City, OK 73104 or by telephone at (405) 225-5000. Similarly, requests may be made for delivery of a single copy of a proxy statement and annual report to be delivered to an address where multiple stockholders are currently receiving multiple copies of proxy statements and annual reports.



17

PROXY

For the Annual Meeting
of Stockholders of

SONIC CORP.

THE BOARD OF DIRECTORS OF SONIC CORP. IS SOLICITING THIS PROXY

        The undersigned hereby appoints Pattye L. Moore and Ronald L. Matlock, and each of them, the undersigned’s proxy, with full power of substitution, to attend the annual meeting of the stockholders of Sonic Corp. (the “Company”) on Wednesday, January 21, 2004, at 1:30 p.m., in the Cafeteria on the Fourth Floor of the new Sonic Headquarters Building, 300 Johnny Bench Drive, Oklahoma City, Oklahoma, and at any adjournment of that meeting, and to vote the undersigned’s shares of common stock as designated below.

(1) Election of Directors

     __               For All Nominees Listed Below (Except as marked to the contrary below)


     __               Withhold Authority to Vote for All Nominees Listed Below


        (Instruction: To withhold authority to vote for any individual nominee, strike through the nominee's name below.)

J. Clifford Hudson Robert M. Rosenberg Federico F. Peña

        The Board of Directors recommends a vote “For” the election of all of the above-named nominees.

(2) Any other matter properly coming before the meeting, upon which the persons named above will vote for or against, in their sole discretion, or upon which the persons named above will abstain from voting, in their sole discretion.

____ To Grant Authority ____ To Withhold Authority

        The persons named above will vote the shares of common stock represented by this proxy card in accordance with the specifications made in Item 1. If the undersigned makes no specification, the persons named above will vote the shares in favor of Item 1, and will vote the shares as if the undersigned had granted the authority in Item 2.

        Please sign exactly as your name appears below, date and return this proxy card promptly, using the self-addressed, prepaid envelope enclosed for your convenience. Please correct your address before returning this proxy card. Persons signing in a fiduciary capacity should indicate that fact and give their full title. If a corporation, please sign in the full corporate name by the president or other authorized officer. If a partnership, please sign in the partnership name by an authorized person. If joint tenants, both persons should sign.

   
Name of Stockholder (Please Print) 
   
  New Address (Street, City, State, Zip Code)
   
  Signature and Title
   
  Signature and Title
   
  Date