SCHEDULE 14A
(Rule 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11 or ss.240.14a-12
DISPATCH MANAGEMENT SERVICES CORP.
(Name of Registrant as Specified in its Charter)
SAME
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
DISPATCH MANAGEMENT SERVICES CORP.
1981 Marcus Avenue, Suite C131
Lake Success, New York 11042
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of common
stock, par value $.01 per share ("Common Stock"), of Dispatch Management
Services Corp. (the "Company"), will be held at the Roslyn Claremont Hotel, 1221
Old Northern Boulevard, Roslyn, New York 11576, on June 15, 2000, at 9:00 a.m.
local time, to consider and take action with respect to the following:
1. To elect a class of two directors each for a term of three years, to
serve until their successors shall be elected and qualified.
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent accountants to audit the Company's consolidated
financial statements for the fiscal year ending December 31, 2000.
3. To conduct such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Holders of Common Stock of record at the close of business on April 17,
2000 are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
By Order of the Board of Directors,
H. Steve Swink
Chairman and Chief Executive Officer
Dated: April 28, 2000
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
DISPATCH MANAGEMENT SERVICES CORP.
1981 Marcus Avenue, Suite C131
Lake Success, New York 11042
PROXY STATEMENT
Mailed on April 28, 2000
Annual Meeting of Stockholders to be held on June 15, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Dispatch Management Services Corp. (the
"Company") to be used at the Annual Meeting of the holders of common stock, par
value $.01 per share (the "Common Stock"), of the Company to be held on June 15,
2000 and at any adjournment thereof. The time and place of the Annual Meeting
are stated in the Notice of Annual Meeting of Stockholders which accompanies
this Proxy Statement.
The Board of Directors of the Company (the "Board") has fixed the close of
business on April 17, 2000 as the record date (the "Record Date") for
determining the stockholders of the Company entitled to notice of and to vote at
the Annual Meeting and any adjournment thereof.
The expense of soliciting proxies, including the costs of preparing,
assembling and mailing the Notice, Proxy Statement and proxy, will be borne by
the Company. In addition to the use of the mail, proxies may be solicited
personally or by telephone, facsimile or telegraph. The Company may pay persons
holding shares for others their expenses in sending proxy material to their
principals.
VOTING RIGHTS
Only stockholders as of the Record Date are entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were issued and
outstanding 12,316,145 shares of Common Stock. There are no other outstanding
classes of voting securities of the Company. Each holder of a share of Common
Stock is entitled to one vote per share on each matter presented at the Annual
Meeting.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock in person or represented by duly executed proxies at the
Annual Meeting and entitled to vote on the subject matter is necessary to
constitute a quorum for the transaction of business at the Annual Meeting.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by duly executed proxies at the Annual
Meeting and entitled to vote is required for the election of directors.
Cumulative voting for the election of directors is not permitted. The
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by duly executed proxies at the Annual Meeting
and entitled to vote on the subject matter is required to ratify the appointment
of the independent accountants.
Shares entitled to vote represented by proxies which are properly executed
and returned before the Annual Meeting will be voted at the Annual Meeting as
directed therein. If no vote is specified therein, the shares will be voted
"FOR" the election of the nominees as directors named in this Proxy Statement,
and "FOR" the ratification of the appointment of Deloitte & Touche LLP as the
Company's independent accountants to audit the consolidated financial statements
of the Company for the fiscal year ending December 31, 2000. Shares represented
by proxies which are marked "WITHHELD" with regard to the election of the
nominees for director will be excluded entirely from the vote and will have no
effect. Shares represented by proxies which are marked "ABSTAIN" will be
considered to be in person or represented by proxy for quorum purposes.
<PAGE>
Under the American Stock Exchange rules, brokers who hold shares in street
name for customers have the authority to vote on some routine matters when they
have not received instructions from beneficial owners and, therefore, may vote
for the election of directors. Where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not provided voting
instructions (commonly referred to as "broker non-votes"), those shares will
have no effect on the outcome of any matter that requires a plurality vote or
the affirmative vote of a majority of the shares present in person or
represented by duly executed proxies at the Annual Meeting and entitled to vote
on the subject matter and will have the effect of a negative vote on any matter.
The Board does not know of any other business to be presented for
consideration at the Annual Meeting. If any other business properly comes before
the Annual Meeting or any adjournment thereof, the proxies will be voted on such
matters in the discretion of the proxy holders. The Delaware General Corporation
Law provides that, unless otherwise provided in the proxy and unless the proxy
is coupled with an interest, a stockholder may revoke a proxy previously given
at any time prior to its exercise at the Annual Meeting. A stockholder who has
given a proxy may revoke it at any time before it is exercised by delivering to
any of the persons named as proxies, or to the Company addressed to the
Secretary, an instrument revoking the proxy, by appearing at the Annual Meeting
and voting in person or by executing a later dated proxy which is exercised at
the Annual Meeting.
2
<PAGE>
PRINCIPAL STOCKHOLDERS
The stockholders named in the following table are those who are known to
the Company to be the beneficial owners of 5% or more of the outstanding shares
of Common Stock. Unless otherwise indicated, the information is as of April 17,
2000. For purposes of this table, and as used elsewhere in this Proxy Statement,
the term "beneficial owner" means any person who, directly or indirectly, has or
shares the power to vote, or to direct the voting of, a security or the power to
dispose, or to direct the disposition of, a security or has the right to acquire
shares within sixty (60) days.
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Common Stock
------------------- ----------------------- ------------
Gilder Gagnon Howe & Co. LLC
1775 Broadway, 26th Floor 2,313,375 (1) 18.7%
New York, New York 10019
The Kaufmann Fund, Inc.
140 E. 45th Street, 43rd Floor 1,319,700 (2) 10.7%
New York, NY 10017
Bruce Morgan 871,800 (3) 7.1%
c/o Dispatch Management
Services Corp.
(1) Gilder Gagnon Howe & Co. LLC possesses sole voting power with respect to
21,300 shares and shared dispositive power with respect to all 2,313,375
shares. The shares reported include 1,734,615 shares held in customer
accounts over which members and/or employees of Gilder Gagnon Howe & Co.
LLC have discretionary authority to dispose of or direct the disposition
of the shares, 557,460 shares held in accounts owned by the members of
Gilder Gagnon Howe & Co. LLC and their families, and 21,300 shares held in
the account of the profit-sharing plan of Gilder Gagnon Howe & Co. LLC.
(2) This amount, as reflected in a report on Schedule 13G dated August 15,
1999, consists of 1,319,700 shares as to which the reporting person claims
sole voting and dispositive power. The reporting person does not claim any
shared voting or dispositive power.
(3) This amount includes 37,500 shares that may be acquired upon the exercise
of options that are exercisable within 60 days. Bruce Morgan is the
Company's Managing Director of International Operations.
STOCK OWNERSHIP OF DIRECTORS,
NOMINEES FOR DIRECTOR, EXECUTIVE OFFICERS
AND FORMER EXECUTIVE OFFICERS
The following table and notes thereto set forth information, as of April
17, 2000, with respect to the beneficial ownership of shares of Common Stock by
each director, each nominee for director and each current and former executive
officer named by the Company in the Summary Compensation Table (the "Named
Executive Officers") and, as a group, by the current directors and executive
officers of the Company, based upon information furnished to the Company by such
persons. Except as otherwise indicated, the Company believes that each
beneficial owner listed below exercises sole voting and dispositive power.
Amount of Beneficial Ownership
------------------------------
Name of Number of Percentage of
Beneficial Owner Shares Common Stock
---------------- --------- -------------
Edward R. Allen (1) ............................ 53,000 *
D. Keith Cobb (2) .............................. 20,000 *
3
<PAGE>
Amount of Beneficial Ownership
------------------------------
Name of Number of Percentage of
Beneficial Owner Shares Common Stock
---------------- --------- -------------
Thomas J. Saporito (1) ......................... 3,000 *
Anne T. Smyth (1) .............................. 3,000 *
H. Steve Swink (3) ............................. 330,817 2.6%
Marko Bogoievski (4) ........................... 141,250 1.1%
Howard J. Ross (5) ............................. 62,500 *
All Directors and Current Executive Officers
As a Group (7 persons) ................... 1,420,054 11.1%
- ----------
* Less than one percent (1%)
(1) This figure includes 3,000 shares that may be acquired upon exercise of
options that are exercisable within 60 days.
(2) This figure includes 5,000 shares that may be acquired upon exercise of
options that are exercisable within 60 days.
(3) This figure includes 255,917 shares that may be acquired upon exercise of
options that are exercisable within 60 days.
(4) This figure includes 141,250 shares that may be acquired upon exercise of
options that are exercisable within 60 days. Mr. Bogoievski has announced
his resignation from the Company within the near future.
(5) This figure includes 62,500 shares that may be acquired upon exercise of
options that are exercisable within 60 days. Howard J. Ross resigned from
the Company on February 29, 2000.
PROPOSAL 1
ELECTION OF DIRECTORS
The bylaws of the Company authorize the Board to set the number of
directors and to classify the Board into three classes as nearly equal in number
as possible. Effective September 29, 1999, the Board fixed the size of the Board
at five to reflect the resignation of Michael Fiorito from the Board on
September 17, 1999.
The Board is divided into three classes of two, one and two directors
each. The term of office of one class of directors expires each year and at each
annual meeting the successors to the directors of the class whose term is
expiring in that year are elected to hold office for a term of three years and
until their successors shall be elected and qualified.
The two directorships to be voted upon at the Annual Meeting are presently
filled by H. Steve Swink and Anne T. Smyth. The Board has nominated each of the
two directors to stand for reelection at this annual meeting to the class of
directors whose term expires in 2003. Each nominee has informed the Company that
he or she is willing to serve for the term to which he or she is nominated if he
or she is elected. If a nominee for director should become unavailable for
election or is unable to serve as a director, the shares represented by proxies
voted in favor of that nominee will be voted for any substitute nominee as may
be named by the Board.
The information appearing in the following tables and the notes thereto
has been furnished to the Company, where appropriate, by the nominees for
director and the directors continuing in office with respect to: (i) the present
principal occupation or employment of each respective nominee and continuing
director and, if such principal occupation or employment has not been carried on
during the past five years, the occupation or employment during such period,
(ii) the names and principal businesses of the corporations or other
organizations in which such occupation or employment is carried on and/or has
been carried on during the past five years, and (iii) the directorships held by
each respective nominee or continuing director on the boards of publicly-held
and certain other corporations and entities:
4
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
If Elected,
Term Expires
Served as at Annual
Director Meeting
Name and Principal Occupation Since of Stockholders in
----------------------------- --------- ------------------
H. STEVE SWINK, age 58
Mr. Swink has been Chairman 1998 2003
of the Board and Chief Executive
Officer of the Company since
January 28, 1999. H. Steve Swink
served as acting Chairman of the
Board from December 14, 1998 until
January 28, 1999. From February
11, 1998 to January 1999, Mr.
Swink was a director of the
Company. From August 1995 to
August 1998, Mr. Swink served as
President of the Coffee and
Beverage Division of U.S. Office
Products Company. From 1977 to
August 1995, Mr. Swink served in
various executive officer
capacities, most recently as
President of Coffee Butler
Services, Inc., a coffee service
business.
ANNE T. SMYTH, age 49
Anne T. Smyth has been a 1999 2003
director of the Company since
March 8, 1999. Anne T. Smyth has
held senior information Technology
positions for the U.S. Office
Products Company, most recently as
Executive Vice President,
E-Commerce, since January 1997.
From 1979 to 1997, Ms. Smyth was
President and founder of The
Systems House, Inc., a
privately-held systems integration
organization based in Des Plaines,
Illinois that was ultimately sold
to U.S. Office Products Company in
1996.
Vote Required for Approval
The vote of the holders of a plurality of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote is required for the election of a nominee as a director of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR.
5
<PAGE>
DIRECTORS CONTINUING IN OFFICE
Term Expires
Served as at Annual
Director Meeting
Name and Principal Occupation Since of Stockholders in
----------------------------- --------- ------------------
EDWARD ALLEN, age 59
Edward Allen has been the Chairman 1999 2001
and Chief Executive Officer of
InterCoastal Communities, a
Developer of housing committees,
since 1979 and Chairman of Port
Developers L.C., a developer of
Caribbean cruise ship ports, since
1994, Mr. Allen is also a director
of Chateau Communities and
Vacation Break USA, Inc.
THOMAS J. SAPORITO, age 48
Dr. Thomas J. Saporito has 1999 2001
been the Senior Vice President of
and a member of the Executive
Council of RHR International, an
executive management consulting
firm based in Philadelphia since
1979.
D. KEITH COBB, age 59
Retired since 1996, Dr. Keith 1999 2001
Cobb was the Chief Executive
Officer of Alamo Rent A Car, Inc.,
a travel-related group of
Companies with revenues of $2
billion, between 1995 and 1996,
when Alamo was acquired by
Republic Industries, Inc. Prior to
that, Mr. Cobb served as National
Managing Partner - Financial
Services of KPMG LLP between 1993
and 1995. Mr. Cobb serves on the
Boards of Directors of the Federal
Reserve Bank of Atlanta, Miami
Branch Renaissance Cruise Lines,
RHR International, First Fleet
Corp., Laundromax and Capitol
Guaranty Corp.
6
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held five meetings and three telephonic meetings during the year
ended December 31, 1999. Not included in these totals are those instances in
which the Board took action by written unanimous consent. During the year, no
incumbent director attended fewer than 75% of the aggregate of (i) the total
number of meetings of the Board held during the period he or she served as a
director and (ii) the total number of meetings held by any committee of the
Board on which he or she served.
The current committees of the Board, their principal functions and their
respective memberships are listed below. These committees do not have the power
to act on behalf of the Board and must make recommendations to the Board as a
whole. The Company does not have a nominating committee. Its Board selects
nominees for the Board. The bylaws of the Company provide that a stockholder who
wants the Board to consider a particular person for nomination to the Board may
recommend such person to the Board only if such stockholder delivers appropriate
notice of such recommendation to the Secretary of the Company not less than 90
nor more than 150 days prior to the meeting. The Board has not addressed whether
it will consider recommendations of stockholders for director candidates. In
addition, any stockholder intending to nominate an individual for election to
the Board at the Company's 2001 Annual Meeting of Stockholders must provide
written notice to the Company not later than March 14, 2001.
Audit Committee
D. Keith Cobb, Anne T. Smyth
The Audit Committee's principal assignment is the oversight and review of
the internal and external audit functions of the Company. The Board
appointed D. Keith Cobb and Anne T. Smyth, both independent directors, to
the Audit Committee on March 11, 1999. Mr. Cobb serves as chairman of the
Audit Committee. The Audit Committee met twice during the year.
Compensation Committee
Edward R. Allen, Thomas J. Saporito
The Compensation Committee exercises overall authority with respect to the
compensation, development and succession of executive personnel, subject
to review by the Board. The Board appointed Edward R. Allen and Thomas J.
Saporito to the Compensation Committee on March 11, 1999. Mr. Allen serves
as chairman of the Compensation Committee. Prior to March 11, 1999, H.
Steve Swink and a director who resigned in January 1999 served on the
Compensation Committee. The Compensation Committee met three times during
the year.
Technology Committee
Anne T. Smyth
The Technology Committee was created on March 11, 1999. This committee's
principal assignment is to oversee the Company's investment and
development in technology. The Board appointed Anne T. Smyth and Michael
Fiorito to the Technology Committee on March 11, 1999. Ms. Smyth serves as
chairman of the Technology Committee. Michael Fiorito resigned on
September 17, 1999.
7
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of two independent, nonemployee
directors. They have served as members of the Board since March 8, 1999. Set
forth below is the report of the Compensation Committee with respect to
executive compensation.
Notwithstanding anything to the contrary, the following report of the
Compensation Committee and the Stock Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for administering the executive
officer compensation and long-term stock incentive programs of the Company. The
Company's compensation policies are designed: (a) to align closely the financial
interests of the Company's executive officers with the financial interests of
the Company's stockholders and thereby to enhance the Company's profitability
and stockholder value; (b) to provide compensation packages that are competitive
and will attract and retain qualified personnel; and (c) to reward individual
performance. The Compensation Committee's programs consist of three elements,
annual compensation, annual incentive bonus and long-term incentive
compensation. The incentive compensation policies are designed to provide an
incentive for executive officers to achieve the Company's goals by relating a
substantial portion of executive compensation directly to the Company's
performance.
The salary levels for executive officers are reviewed by the Compensation
Committee annually, taking into consideration a number of factors, including:
(i) the executive officer's individual performance, (ii) the Company's
performance, (iii) the executive officer's position and responsibility, (iv) the
executive officer's experience and expertise, and (v) market salaries for
comparable positions. In approving salary recommendations, the Compensation
Committee exercises subjective judgment using no specific weighting of the above
factors. However, the Compensation Committee believes that base salaries that
average at or are near the median for comparable companies are appropriate as a
frame of reference for base salary decisions. Specific compensation for
individual executive officers will vary from these levels as a result of the
subjective judgment of the Compensation Committee. The Compensation Committee
increased salary levels in 1999 for the executive officers other than the Chief
Executive Officer based upon the factors outlined above. The Compensation
Committee has recommended no change in executive officer base salaries for 2000.
The Company does not currently have a formalized cash bonus plan in
effect, although the Compensation Committee may award discretionary cash bonuses
periodically to reflect outstanding individual performance. No cash bonuses were
awarded to executive officers for 1999 in view of the Company's financial
condition. As part of his February 2000 severance agreement, Mr. Ross agreed to
permanently waive the right to receive a bonus for 1999, despite the terms of
his employment agreement, which provided for a bonus pursuant to the provisions
of a proposed bonus plan. In addition, Mr. Bogoievski has permanently waived the
right to receive any bonus, notwithstanding similar provisions in his employment
agreement.
Stock option grants are reviewed by the Compensation Committee
periodically, taking into consideration a number of factors, including: (i) the
executive officer's individual performance, (ii) the Company's performance,
(iii) the executive officer's position and responsibility, (iv) the executive
officer's experience and expertise, and (v) total market compensation for
comparable positions. In approving option grant recommendations, the
Compensation Committee exercises subjective judgment using no specific weighting
of the above factors. The options granted to executive officers during 1999 are
detailed in the "Executive and Director Compensation" table on page 10. These
options were granted, in part, in recognition of the Compensation Committee's
decision to not pay any cash bonuses.
Chief Executive Officer Compensation. Mr. Swink's base salary for 1999 was
determined at the time of the negotiation of his employment agreement to serve
as the Company's Chief Executive Officer. The Board determined his base salary
amount based upon the factors set forth above. The current members of the
8
<PAGE>
Compensation Committee were not members of the Board at that time. The
Compensation Committee did not increase Mr. Swink's base salary for the year
2000 from that set forth in his employment agreement dated February 1, 1999. In
addition, as noted above, the Compensation Committee determined to not pay cash
bonuses for 1999. In view of Mr. Swink's contributions to the Company's
financial turnaround in 1999, however, and to provide him with additional
incentive, the Compensation Committee awarded Mr. Swink an option to purchase
125,000 shares of Common Stock on December 21, 1999.
COMPENSATION COMMITTEE:
Edward R. Allen
Thomas J. Saporito
EXECUTIVE AND DIRECTOR COMPENSATION
Executive Compensation
Summary of Compensation. The following table shows information concerning
the annual and long-term compensation earned by the Company's Chief Executive
Officer and each of the Company's other executive officers as of December 31,
1999 whose total annual salary and bonus exceeded $100,000, (the "Named
Executive Officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
---------------------------------------- -------------------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Principal Compensa- Award(s) Options/ Compensa-
Position During 1999 Year Salary Bonus tion (1) ($) SARs(#) tion
- -------------------- ---- ------ ----- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
H. Steve Swink 1999 $275,000 -- -- -- 375,000 --
Chairman and CEO
Marko Bogoievski, 1999 244,167 -- -- -- 150,000 --
Chief Financial Officer (2)
1998 135,246 $50,000 -- -- 78,750 --
Howard J. Ross, 1999 175,000 -- -- -- 50,000 --
General Counsel (3)
1998 123,958 50,000 -- -- 25,000 --
</TABLE>
- ------------
(1) Except as otherwise indicated, any perquisites received by a Named
Executive Officer for the relevant fiscal year were in aggregate amounts
that did not exceed the lesser of $50,000 or 10% of the Named Executive
Officer's salary and bonus.
(2) Mr. Bogoievski has announced his resignation from the Company within the
near future.
(3) Effective February 29, 2000, Mr. Ross resigned as General Counsel.
9
<PAGE>
Stock Options. The following table provides information related to options
for shares of Common Stock granted to the Named Executive Officers during 1999:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
% of Total at Assumed Annual Rates of
Options Stock
Number of Granted Price Appreciation
Securities to Em- Exercise for Option Term (1)
Underlying ployees in or Base ---------------------------
Options Fiscal Price Expiration
Name Granted # Year ($/share) Grant Date Date 5% 10%
---- --------- ---------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
H. Steve Swink 250,000 21.9% $2.00 2/22/99 2/22/09 $314,447 $796,871
125,000 10.9 3.00 12/21/99 12/21/09 235,835 597,653
Marko Bogoievski 100,000 8.7 2.00 2/22/99 2/22/09 125,779 318,748
50,000 4.4 3.00 12/21/99 12/21/09 94,334 239,061
Howard J. Ross 50,000 4.4 2.00 2/22/99 2/22/09 62,889 159,374
All Optionees 1,144,500 100.0% Various Various Various N/A N/A
</TABLE>
- ----------
(1) The dollar amounts under these columns are the results of calculations at
assumed annual rates of stock price appreciation of 5% and 10%. These
assumed rates of growth were selected by the SEC for illustration purposes
only. They are not intended to forecast possible future appreciation, if
any, of the Company's stock price. Because optionees received options with
an exercise price equal to the market value on the date of grant, no gain
is possible without an increase in stock prices, which will benefit all
stockholders.
10
<PAGE>
The following table provides information related to any stock options for
shares of Common Stock exercised by the Named Executive Officers during 1999 and
certain information about unexercised options held by the Named Executive
Officers at December 31, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securi-
ties Underlying Value of Unexer-
Unexercised Options cised In-the-Money
at Fiscal Year-End Options at Fiscal
Shares Acquired Value (#) Year-End ($)
On Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ---- --------------- -------- ------------------- ------------------
<S> <C> <C> <C> <C>
H. Steve Swink -- -- 255,917/149,083 $203,125/$31,250
Marko Bogoievski -- -- 141,250/87,500 46,875/46,875
Howard J. Ross -- -- 62,500/12,500 46,875/0
</TABLE>
- ----------
(1) "In-the-money" options are options whose base (or exercise) price was less
than the market price of the Common Stock at December 31, 1999. The value
of such options was calculated assuming a stock price of $2.9375, which
was the closing price of the Common Stock on the American Stock Exchange
on December 31, 1999.
Compensation of Directors
Directors who are also employees of the Company or one of its subsidiaries
do not receive additional compensation for serving as a director. Each director
who is not an employee of the Company or one of its subsidiaries receives a fee
of $2,000 for attendance at each meeting of the Board, $1,000 for each committee
meeting attended (unless held on the same day as a meeting of the Board), and
$500 for each telephonic Board meeting. The Board recently increased director
compensation for 2000 to provide for annual cash compensation of $10,000 per
year to each director in addition to the per meeting amounts set forth in the
previous sentence. Directors are also reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board or committees thereof incurred in
their capacity as directors. Nonemployee directors receive automatically,
without any action by the Committee, stock options upon first becoming directors
with respect to 5,000 shares and then annually thereafter with respect to 3,000
shares on the first business day after each subsequent annual meeting of the
stockholders of the Company.
Employment and Severance Agreements
On February 1, 1999, H. Steve Swink entered into an employment agreement
with the Company to serve as Chief Executive Officer of the Company. The term of
the agreement runs from February 1, 1999 to January 31, 2001 and is
automatically renewable for consecutive one-year terms unless either party sends
notice of non-renewal. The employment agreement provides for an annual base
salary of $300,000. Mr. Swink is eligible to participate in the Company's
executive bonus pool, profit sharing, stock purchase plan or other incentive
program available to the Company's senior executive officers. Pursuant to his
employment agreement, on February 1, 1999 Mr. Swink was granted (i) an option to
acquire 100,000 shares of Common Stock at an exercise price of $2.00 per share,
which vested upon execution of the employment agreement, and (ii) an option to
purchase an additional 150,000 shares of Common Stock at an exercise price of
$2.00 per share, which vests ratably over the six calendar quarters following
the date of the agreement. The Company will reimburse Mr. Swink for his cost of
disability income insurance in the
11
<PAGE>
policy benefit amount of $10,000 per month, subject to customary terms and
availability. Mr. Swink also received a $50,000 relocation allowance. The
Company has agreed to maintain directors' and officers' liability insurance for
the benefit of Mr. Swink of at least $25 million and to indemnify Mr. Swink for
all third-party actions brought in connection with the performance of his duties
as Chairman and Chief Executive Officer. On March 30, 1999, Mr. Swink's
employment agreement was amended to conform the definition of "change in
control" in his employment agreement to the definition used in the Company's
1997 Stock Incentive Plan, as amended. As a result of that amendment, Mr. Swink
would have the option of terminating his employment agreement with the Company
and receiving $600,000, provided that he gives fifteen days prior written notice
of such termination within six months of a change in control.
Marko Bogoievski, entered into an employment agreement with the Company to
serve as Chief Financial Officer of the Company for an annual base salary of
$180,000. In addition, the employment agreement provides for the payment of a
bonus in the maximum amount of not less than $180,000 pursuant to a bonus plan
that the Company agreed to adopt The employment agreement is for a term of two
years commencing on February 5, 1998 and unless terminated, the term of the
employment agreement continues thereafter on a year-to-year basis on the same
terms and conditions existing at the time of renewal. The employment agreement
contains a non-solicitation covenant, which is effective during the term of such
employment agreement and for a period of one year immediately following
termination of employment. In the event of termination of employment by the
Company without "cause" (as defined in the employment agreement), Mr. Bogoievski
will be entitled to receive from the Company pursuant to the terms of the
agreement: (i) any unpaid base salary, bonuses or benefits accrued through the
date of termination; (ii) reimbursement of expenses incurred through the date of
termination; (iii) the base salary for a period of the greater of the remainder
of the term or one year from the date of termination at the annual rate thereof
immediately preceding such termination; (iv) an annual bonus for a period of the
greater of the remainder of the term of one year following such termination at
an annual rate equal to the executive officer's annual bonus over the five
fiscal years of the Company (or the period of employment if less than five
years) immediately preceding the fiscal year in which the termination occurred,
payable in equal installments together with the base salary; and (v) the
continuation of group life, health and disability benefits for a period of the
greater of the remainder of the term or one year from the date of termination.
On August 16, 1998, Mr. Bogoievski's employment agreement was amended to
temporarily reduce his salary to $90,000 for a period of 90 days. On March 1,
1999, Mr. Bogoievski's salary was increased to $250,000. On March 30, 1999, Mr.
Bogoievski's employment agreement was amended to provide that, in the event of a
"change in control" (as defined in Amendment 2 to the employment agreement), Mr.
Bogoievski would have the option of terminating his employment agreement with
the Company and receiving $500,000, provided that he gives fifteen days prior
written notice of such termination within six months of a change in control. Mr.
Bogoievski has announced his resignation from the Company within the near
future.
Howard J. Ross, who resigned on February 29, 2000 as the Company's General
Counsel, entered into an employment agreement with the Company to serve as
Associate Director -- Acquisitions. The employment agreement provided for an
annual base salary of $175,000 and a term of two years commencing on February 6,
1998. In addition, the employment agreement provided for the payment of a bonus
in a maximum amount equal to not less than $75,000 pursuant to a bonus plan that
the Company agreement to adopt. Pursuant to his employment agreement, on
February 6, 1998, Mr. Ross received an option to purchase 25,000 shares of
Common Stock of the Company at an exercise price of $13.25 per share, vesting at
a rate of 20% per year over five years. Mr. Ross's employment agreement provided
also that Mr. Ross was eligible to receive additional stock options pursuant to
the Company's 1997 Stock Incentive Plan, as amended, which are intended to be
fully vested at the end of five years after the commencement of his employment
and to have a value at that time of $1,000,000. The employment agreement
contains a non-solicitation covenant, which is effective during the term of such
employment agreement and for a period of one year immediately following
termination of employment. In the event of termination of employment by the
Company other than for "cause" (as defined in the employment agreement), death
or disability, Mr. Ross will be entitled to receive: (i) any unpaid base salary,
bonuses or benefits accrued through the date of termination; (ii) reimbursement
of expenses incurred through the date of termination; (iii) the base salary for
a period of the greater of the remainder of the term of the employment agreement
or one year from the date of termination at the annual rate thereof immediately
preceding such termination; (iv) an annual bonus for a period of the greater of
the remainder of the term of one year following such termination at an annual
rate equal to Mr. Ross's annual bonus over the five fiscal years of the Company
(or the period of employment if less than five years) immediately preceding the
fiscal year in which the termination occurred, payable in equal installments
together with the base salary; and (v) the continuation of group life, health
and disability benefits for a period of the greater of the
12
<PAGE>
remainder of the term or one year from the date of termination. On March 30,
1999, Mr. Ross's employment agreement was amended to provide that, in the event
of a "change in control" (as defined in amendment one to the employment
agreement), Mr. Ross would have the option of terminating his employment
agreement with the Company and receiving $500,000, provided that he gives
fifteen days prior written notice of such termination within six months of a
change in control.
On February 22, 2000, Mr. Ross entered into a severance agreement with the
Company pursuant to which he will receive severance pay at a rate equal to
$175,000 per year through May 31, 2000. In addition, the Board has accelerated
the vesting of his February 22, 1999 grant of an option to purchase 50,000
shares of Common Stock at a price of $2.00 per share. Mr. Ross will have until
March 1, 2001 to exercise that option.
13
<PAGE>
STOCK PERFORMANCE GRAPH
The graph reflects a cumulative total return on an investment of $100 on
February 6, 1998, the date of the Company's initial public offering (the "IPO"),
in the Company's Common Stock, the Russell 2000 Index and the Media General
Financial Services Industry Group 760 Index, comprised of business services
companies (the "MG Group Index"), and assumes dividend reinvestment through
December 31, 1999. The returns of each company in the MG Group Index are
weighted based upon market capitalization.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE IPO*
AMONG DISPATCH MANAGEMENT SERVICES CORP.,
RUSSELL 2000 INDEX AND MG GROUP INDEX
[The table below represents a line graph in the printed material.]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
------------------------------------------------------------------
COMPANY/INDEX/MARKET 2/06/1988 3/31/1998 6/30/1998 9/30/1998 12/31/1998 3/31/1999
<S> <C> <C> <C> <C> <C> <C>
Dispatch Mngt Svc 100.00 100.40 160.16 85.26 25.90 17.93
Business Services 100.00 115.71 96.63 78.70 97.96 86.77
Russell 2000 Index 100.00 111.82 106.61 85.13 98.75 93.08
<CAPTION>
FISCAL YEAR ENDING
------------------------------------------------------------------
COMPANY/INDEX/MARKET 6/30/1999 9/30/1999 12/31/1999
<S> <C> <C> <C>
Dispatch Mngt Svc 17.73 14.34 18.73
Business Services 95.50 86.87 104.75
Russell 2000 Index 107.19 100.08 118.10
</TABLE>
* Assumes $100 invested on February 6, 1998, including reinvestment of
dividends; fiscal year ending December 31, 1999.
Note: Base price date is 2/06/1998
14
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than ten percent of the Company's outstanding Common Stock
to file with the SEC initial reports of ownership and reports of changes in
ownership in Common Stock and other equity securities. Specific due dates for
these records have been established and the Company is required to report in
this proxy statement any failure to file these dates in 1999. H. Steve Swink was
required to report the purchase of shares of Common Stock on a Form 4 filed no
later than May 10, 1999, and such report was filed on June 10, 1999. Mr. Swink
was also required to report two stock option grants on a Form 5 filed by
February 14, 1999, and such grants were reported on a Form 4 filed on February
14, 2000.
15
<PAGE>
PROPOSAL 2
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee of the Board, and subject to
ratification by the stockholders, the Board has appointed Deloitte & Touche LLP
as the Company's independent public accountants to audit the Company's
consolidated financial statements for the fiscal year ending December 31, 2000.
Deloitte & Touche LLP has served as the Company's independent public accountants
since July 29, 1999. Representatives of Deloitte & Touche LLP are expected to be
present at the Annual Meeting and will have an opportunity to make a statement
if they so desire, and to respond to appropriate questions from those attending
the meeting.
Vote Required for Approval
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote is required to ratify the appointment of the Company's
independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT
THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2000.
16
<PAGE>
CERTAIN DEADLINES FOR THE 2001 ANNUAL MEETING
Any stockholder proposal submitted to the Company pursuant to SEC Rule
14a-8 under the Exchange Act for inclusion in the Company's proxy statement and
proxy relating to the Company's 2001 Annual Meeting of Stockholders must be
received by the Company no later than December 29, 2000. If the Company does not
receive notice of any other non-Rule 14a-8 matter that a stockholder wishes to
raise at the Annual Meeting in 2001 by March 14, 2001, the proxy holders will
retain discretionary authority to vote proxies on such matters if they are
raised at the 2001 Annual Meeting of Stockholders.
OTHER MATTERS
The Board does not know of any matters to be presented at the Annual
Meeting other than those listed in the Notice of Annual Meeting of Stockholders.
However, if other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote in accordance
with their best judgment on such matters insofar as the proxies are not limited
to the contrary.
To the extent that information contained in this Proxy Statement is within
the knowledge of persons other than the management of the Company, the Company
has relied on such persons for the accuracy and completeness thereof.
Upon the receipt of a written request from any stockholder entitled to
vote at the forthcoming Annual Meeting, the Company will mail, at no charge to
the stockholder, a copy of the Company's annual report on Form 10-K, including
the financial statements and schedules required to be filed with the SEC
pursuant to Rule 13a-1 under the Securities Exchange Act of 1934, for the
Company's most recent fiscal year. Requests from beneficial owners of the
Company's voting securities must set forth a good faith representation that, as
of the Record Date for the Annual Meeting, the person making the request was the
beneficial owner of securities entitled to vote at such meeting. Written
requests for such report should be directed to:
Adam Friedman Associates LLC
530 Fifth Avenue, 20th Floor
212/391-4866
You are urged to sign and return your proxy promptly to make certain your
shares will be voted at the Annual Meeting. For your convenience, a return
envelope is enclosed requiring no additional postage if mailed in the United
States.
By Order of the Board of Directors,
H. Steve Swink
Chairman and Chief Executive Officer
Dated: April 28, 2000
17
<PAGE>
DETACH HERE
[COMPANY LOGO]
DISPATCH MANAGEMENT SERVICES CORP.
COMMON STOCK PROXY
This Proxy is Solicited on Behalf of the Board of Directors for the Annual
Meeting of Stockholders on June 15, 2000.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS CARD.
The undersigned hereby appoints H. Steve Swink and David Nadler, and each of
them, proxies, with full power of substitution to appear on behalf of the
undersigned and to vote all shares of Common Stock of the undersigned at the
Annual Meeting of Stockholders to be held at the Roslyn Claremont Hotel, 1221
Old Northern Blvd., Roslyn, New York 11576, on June 15, 2000 at 9:00 a.m. local
time, and at any adjournment thereof, upon all subjects that may properly come
before the meeting, including the matters described in the proxy statement
furnished herewith, subject to any directions indicated on the reverse side of
this card, hereby revoking any and all proxies heretofore given.
The proxies will vote "FOR" the election of the nominees as directors, and "FOR"
the ratification of the appointment of Deloitte & Touche LLP as the Company's
independent accountants to audit the consolidated financial statements of the
Company for the fiscal year ending December 31, 2000 if the applicable box is
not marked, and at their discretion on any other matter that may properly come
before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS.
1. Election of H. Steve Swink and Anne T. Smyth to the class of directors
whose terms expire in 2003.
|_| FOR ALL NOMINEES |_| WITHHELD FROM NOMINEES
|_| __________________________________________
For all nominees except as noted above
2. Ratification of the appointment of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending December 31, 2000.
|_| FOR |_| AGAINST |_| ABSTAIN
Date: _______________________, 2000
__________________________________________________
Signature
__________________________________________________
Signature (if jointly held)
Please sign and return this Proxy Card so that
your shares can be represented at the meeting. If
signing for a corporation or partnership or as
agent, attorney or fiduciary, indicate the
capacity in which you are signing. If you vote
by ballot, such vote will supersede this proxy.
|_| MARK HERE IF YOU PLAN TO ATTEND THE MEETING
<PAGE>
|_| MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
PLEASE RETURN THIS CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE OR OTHERWISE TO AMERICAN STOCK TRANSFER & TRUST CO.,
ATTN: KAREN LAZAR, 6201 15TH AVENUE, THIRD FLOOR,
BROOKLYN, NY 11219, SO THAT YOUR SHARES
CAN BE REPRESENTED AT THE MEETING.
-2-
