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
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PINNACLE GLOBAL GROUP, INC.
(Name of Registrant as specified in its Charter)
PINNACLE GLOBAL GROUP, INC.
(Name of Person(s) Filing Proxy Statement)
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 the transaction
applies: NOT APPLICABLE
(2) Aggregate number of securities to which the transaction
applies: NOT APPLICABLE
(3) Per unit price or other underlying value of the transaction
computed pursuant to Exchange Act Rule 0-11: NOT APPLICABLE
(4) Proposed maximum aggregate value of the transaction: NOT
APPLICABLE
|_| 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: NOT APPLICABLE
(2) Form, Schedule or Registration Statement Number: NOT
APPLICABLE
(3) Filing Party: NOT APPLICABLE
(4) Date Filed: NOT APPLICABLE
<PAGE>
5599 San Felipe, Suite 555, Houston, Texas 77056 -- 713-993-4610
[PINNACLE GLOBAL GROUP, INC. LOGO]
ROBERT E. GARRISON II
President and
Chief Executive Officer
April 29, 1999
Dear Shareholder,
On behalf of our entire Board of Directors, I cordially invite you to
attend the Company's annual meeting of shareholders on Thursday, June 3, 1999.
At the meeting, we will review our performance for 1998 and our expectations for
the future.
A notice of the meeting and proxy statement follow. You will also find
enclosed your proxy voting card and the 1998 Annual Report. Your vote is
important. Please take a moment now to complete, sign and date the enclosed
proxy voting card and return it in the postage-paid envelope we have provided.
I look forward to seeing you on June 3rd and addressing your questions and
comments.
Sincerely,
Robert E. Garrison II
<PAGE>
5599 San Felipe, Suite 555, Houston, Texas 77056 -- 713-993-4610
[PINNACLE GLOBAL GROUP, INC. LOGO]
April 29, 1999
NOTICE OF THE 1999
ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Pinnacle Global Group, Inc. will be
held on Thursday, June 3, 1999, at 10:00 a.m., at The Houstonian Hotel, 111 Post
Oak Lane, Houston, Texas 77024, to consider and take action on the following
matters:
1. Election of four directors to serve until the 2002 annual meeting of
shareholders; and
2. Transaction of any other business properly raised at the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
Sincerely,
Pamela S. Caloway
SECRETARY
ii
<PAGE>
PINNACLE GLOBAL GROUP, INC.
5599 San Felipe, Suite 555
Houston, Texas 77056
PROXY STATEMENT
ANNUAL MEETING INFORMATION
This proxy statement contains information related to the annual meeting of
shareholders of Pinnacle Global Group, Inc. to be held on Thursday, June 3,
1999, beginning at 10 a.m., at The Houstonian Hotel, 111 Post Oak Lane, Houston,
Texas, 77024 and at any postponements or adjournments of the meeting. The proxy
statement was prepared under the direction of our Board of Directors to solicit
your proxy for use at the annual meeting. It is being mailed to shareholders on
April 29, 1999.
WHO IS ENTITLED TO VOTE?
Shareholders owning our common stock on April 15, 1999 are entitled to vote
at the annual meeting or at any postponement or adjournment of the meeting. Each
shareholder has one vote per share on all matters to be voted on. On April 15,
1999, there were 7,125,264 common shares outstanding.
WHAT AM I VOTING ON?
You will be asked to elect nominees to serve on the Board of Directors and to
vote on any other matters properly raised at the meeting. The Board of Directors
is not aware of any other matters to be presented for action at the meeting. If
any other matters requiring a vote of the shareholders arise, your signed proxy
card gives authority to Robert E. Garrison II, our President and Chief Executive
Officer, and Titus H. Harris, Jr., our Chairman of the Board, to vote on such
matters at their discretion.
HOW DOES THE BOARD OF DIRECTORS
RECOMMEND I VOTE ON THE PROPOSALS?
The Board of Directors recommends a vote FOR each of the nominees.
<PAGE>
HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the prepaid
envelope. If you sign your proxy card, but do not mark your choices, your proxy
holders, Mr. Garrison and Mr. Harris, will vote for the persons nominated for
election as directors. You can revoke your proxy card at any time before it is
exercised. To do so, you must either:
o give written notice of revocation to our Corporate Secretary,
Pinnacle Global Group, Inc., 5599 San Felipe, Suite 555, Houston,
Texas 77056;
o submit another properly signed proxy card with a more recent date;
or
o vote in person at the meeting.
WHAT IS A QUORUM?
A "quorum" is the presence at the meeting, in person or by proxy, of the
holders of a majority of the outstanding shares. There must be a quorum for the
meeting to be held. Abstentions are counted in determining the presence or
absence of a quorum, but under Texas law are not considered a vote. Shares held
by brokers in street name and for which the beneficial owners have withheld from
brokers the discretion to vote are called "broker non-votes." They are not
counted to determine if a quorum is present and under Texas law are not
considered a vote. Broker non-votes will not affect the outcome of a vote on a
particular matter.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
The director nominees will be elected by a plurality of the votes cast at the
meeting. All other matters to be considered at the meeting require the
affirmative vote of a majority of the votes cast.
WHO WILL COUNT THE VOTE?
A representative of Harris Trust and Savings Bank, our transfer agent, will
tabulate the votes cast by proxy or in person at the meeting.
WHAT ARE THE DEADLINES FOR SHAREHOLDER
PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING?
You may submit proposals on matters appropriate for shareholder action at
future annual meetings by following the rules of the Securities and Exchange
2
<PAGE>
Commission. We must receive proposals intended for inclusion in next year's
proxy statement and proxy card no later than December 31, 1999. If we do not
receive notice of any matter that a shareholder wishes to raise at the annual
meeting in 2000 by April 3, 2000 and a matter is raised at that meeting, the
proxy holders for next year's meeting will have discretionary authority to vote
on the matter. All proposals and notifications should be addressed to our
Corporate Secretary.
HOW MUCH DID THIS PROXY SOLICITATION COST?
We have not engaged anyone to solicit proxies for the Company. We will,
however, reimburse banks, brokerage firms and other institutions, nominees,
custodians and fiduciaries for their reasonable expenses for sending proxy
materials to beneficial owners and obtaining their voting instructions. Certain
directors, officers and regular employees of the Company and its subsidiaries
may solicit proxies personally or by telephone or facsimile without additional
compensation.
3
<PAGE>
STRUCTURE OF THE COMPANY
The following table shows the ownership and structure of the Company
following its combination earlier this year with three financial services
companies and TEI, Inc. The combination transaction was completed in January
1999. For more information about the combination transaction, see the section
below entitled "Changes in Control".
- - ----------------- ------------------ ----------------- ---------------
| | | | | | | |
| Former | | Former | | Former | | |
| TEI | | HWG | | PMT | | Spires |
| Shareholders | | Shareholders | | Shareholders | | Transferors |
| | | | | | | |
- - ----------------- ------------------ ----------------- ---------------
| | | |
| 50.02% | 16.66% | 16.66% | 16.66%
| | | |
-----------------------------------------------------------------
|
|
------------------------------
| |
| The Company |
| |
------------------------------
|
|
-------------------------------------------------------------------
| | | |
| | | |
- - ----------- ------------------------ --------------------- --------------------
| | | | |Pinnacle Management| | |
|TEI, Inc.| |Harris Webb & Garrison| | & Trust Company | |Spires Financial, |
|("TEI") | | ("HWG") | | ("PMT") | |L.P. ("Spires")(1)|
- - ----------- ------------------------ --------------------- -------------------
|
|
- - -------------------
| |
| Energy Recovery |
| Resources, Inc. |
| ("ERRI") |
- - -------------------
____________________
(1) Spires is an indirect wholly-owned subsidiary of the Company. All of the
general and limited partnership interests of Spires are held by several
corporate and partnership intermediaries that are also wholly owned
subsidiaries of the Company but are not shown on this chart.
4
<PAGE>
ITEM 1 -- ELECTION OF DIRECTORS
NOMINEES
Our Board of Directors is divided into three classes for election purposes.
One class is elected at each annual meeting of shareholders to serve for a
three-year term. Except for Donald R. Campbell, each of the incumbent directors
was appointed to the board of directors in January 1999, in connection with the
combination transaction.
At this annual meeting, the terms of four directors are expiring. Those
directors nominated for election at this annual meeting would hold office for a
three-year term expiring in 2002. The other eight directors are not up for
election this year and will continue in office for the remainder of their terms.
If a nominee is unavailable for election, the proxy holders will vote for
another nominee proposed by the Board or, as an alternative, the Board may
reduce the number of directors to be elected at the meeting.
DIRECTORS NOMINATED THIS YEAR FOR TERMS EXPIRING IN 2002
JOHN H. STYLES
NEW DIRECTOR NOMINEE
AGE 63
Mr. Styles has been the Chairman, President and CEO of HEALTHPLUS
Corporation since 1995. He served in the same capacities
for Mid-America Healthcare Group from 1984 until its sale in 1995 and for
Outpatient Healthcare, Inc. from 1985 until its sale in 1992. He was a founding
shareholder and director of Healthsouth, Inc. in 1984. Mr. Styles is also a
private venture capitalist, focusing on the healthcare and other growth
industries.
SEAN DOBSON
DIRECTOR SINCE JANUARY 1999
AGE 30
Mr. Dobson has been a director of the Company since January 1999. Mr. Dobson
founded Spires and has been a partner since its inception in January 1995. He
currently serves as its Executive Vice President-Trading & New Business
5
<PAGE>
Development. Mr. Dobson has over twelve years experience in the mortgage
securities market. Before joining Spires, he served as a registered
representative for the Westcap Corporation from February 1994 to July 1994, a
mortgage securities trader for the MMAR Group from November 1989 to January 1994
and a research director for Robert Thomas Securities from October 1987 to
November 1989. He has NASD Series 7 and 63 licenses.
STEPHEN M. RECKLING
DIRECTOR SINCE JANUARY 1999
AGE 36
Mr. Reckling became a director of the Company and Chairman and Chief
Executive Officer of PMT in January 1999. He is one of the founders of PMT and
since June 1994 has served in various executive capacities at PMT, including
Executive Vice President and Chief Investment Officer and as a director. He has
over 14 years of investment management experience.
RICHARD C. WEBB
DIRECTOR SINCE JANUARY 1999
AGE 65
Mr. Webb has been a director of the Company since January 1999. Mr. Webb
co-founded HWG and now serves as its President, as well as a director of HWG and
PMT. From 1991 to 1994, he was Regional Partner of S.G. Cowen & Company, the
correspondent broker of HWG. Before then, Mr. Webb served in various capacities
with Lovett Mitchell Webb & Garrison (a division of the Kemper Securities Group,
Inc.) which he co-founded in 1981. He is also a director of Kent Electronics,
Inc., a public electronic distribution company. Mr. Webb has served on the
boards of several Houston-based community organizations, including a science
museum and education and hospital groups. He has over 38 years experience in the
securities industry.
6
<PAGE>
DIRECTORS UP FOR ELECTION IN 2000
TONY COELHO
DIRECTOR SINCE JANUARY 1999
AGE 56
Mr. Coelho has been a director of the Company since January 1999 and a
director of TEI since March 1990. Since September of 1997, Mr. Coelho has served
as a consultant to Tele-Communications, Inc., a company that operates cable
television and other telecommunications services. From October 1995 to September
1997, he was Chairman and CEO of ETC w/tci, Inc., an education and training
technology subsidiary of Tele-Communications, Inc. From 1989 to June 1995, he
was a Managing Director of Wertheim Schroder & Co., Incorporated, a New York
investment banking firm. From 1990 to June 1995, he served as President and CEO
of Wertheim Schroder Investment Services. Mr. Coelho currently serves as
Chairman of the Board of International Thoroughbred Breeders, Inc., an owner and
operator of diversified gaming properties in New Jersey and Nevada, and is a
director of Service Corporation International, a public company which owns and
operates funeral homes, cemeteries and related businesses.
W. BLAIR WALTRIP
DIRECTOR SINCE JANUARY 1999
AGE 44
Mr. Waltrip has been a director of the Company since January 1999 and a
director of TEI since July 1988. He has been employed in various capacities for
Service Corporation International since 1977 and now serves as that company's
Executive Vice President and as a director.
JAMES H. GREER
DIRECTOR SINCE JANUARY 1999
AGE 72
Mr. Greer has served as a director of the Company since January 1999 and as a
director of TEI since March 1990. He has been Chairman of Shelton W. Greer Co.,
Inc., a building specialty products company, for over 25 years. Mr. Greer is
also a director of Service Corporation International and AmeriCredit
Corporation, a consumer credit company.
7
<PAGE>
T. CRAIG BENSON
DIRECTOR SINCE JANUARY 1999
AGE 37
Mr. Benson has been a director of the Company since January 1999 and a
director of TEI since March 1990. Mr. Benson has been employed in various
capacities for Service Corporation International since 1987 and now serves as
that company's Vice President of International Operations.
DIRECTORS UP FOR ELECTION IN 2001
TITUS H. HARRIS, JR.
DIRECTOR SINCE JANUARY 1999
AGE 67
Mr. Harris has been Chairman of the Company since January 1999. Mr. Harris
co-founded HWG in February 1994 and serves as HWG's Chairman, Chief Executive
Officer and as a director of PMT. From September 1991 to February 1994, he
served as a Registered Representative at S.G. Cowen & Company, HWG's
correspondent broker. Before then, Mr. Harris served as Senior Vice President of
Lovett Underwood Newhaus & Webb (a division of Kemper Securities Group, Inc.)
from January 1983 to August 1991, and as Regional Sales Manager for the
Houston-office of E.F. Hutton and Co., Inc. from January 1978 to December 1982.
Mr. Harris has over 39 years experience in the securities industry.
ROBERT E. GARRISON II
DIRECTOR SINCE JANUARY 1999
AGE 57
Mr. Garrison has been President, Chief Executive Officer and a director of
the Company since January 1999. Mr. Garrison co-founded HWG and served as its
Executive Vice President and head of investment banking prior to January 1999.
He also served as Chairman, CEO and a director of PMT, which he co-founded in
1994. Mr. Garrison serves as Chairman and a director of Biocyte Theraputics,
Inc., and as a director of HWG Capital, L.L.C., both of which are our
affiliates. From 1990 to 1991, Mr. Garrison served as president and CEO of
Medical Center Bank & Trust Company. Before then, he served as managing partner
of Lovett Mitchell Webb & Garrison (a division of Kemper Securities Group, Inc.)
from 1983 to 1989 and
8
<PAGE>
Director of Research for Underwood Newhaus and Co. from 1971 to 1982. Mr.
Garrison serves as a director of Intelect Communications, Inc., a public
telecommunications equipment company, First Capital Bankers, Inc. and Somerset
House Publishing. He also serves on the Board of Directors Finance Committee of
the Memorial Hermann Hospital Systems and the Board of Directors of the Memorial
Hermann Foundation. He has over 33 years experience in the securities industry
and is a Chartered Financial Analyst.
PETER W. BADGER
DIRECTOR SINCE JANUARY 1999
AGE 52
Mr. Badger serves as President of Spires and has been a director of the
Company since January 1999. Mr. Badger founded and was a partner and President
of Spires since its inception in January 1995. He is also a director of PMT.
From April 1976 to July 1994, he served as a securities broker and executive
vice president of Westcap Corporation. Mr. Badger has over 22 years experience
in the institutional securities market. He has NASD Series 24, 7 and 63
licenses.
DONALD R. CAMPBELL
DIRECTOR SINCE SEPTEMBER 1998
AGE 58
Mr. Campbell has been Vice Chairman of the Company since January 1999 and a
director since September 1998. Mr. Campbell has been President and Chief
Operating Officer of TEI, Inc. since December 1991, a director of TEI since
September 1990, and its Chief Executive Officer since April 1994. Mr. Campbell
was Executive Vice President of Finance and Chief Financial Officer of TEI from
September 1990 to December 1991, and was Treasurer of TEI from October 1990 to
December 1991.
9
<PAGE>
DIRECTORS NOT NOMINATED FOR RE-ELECTION
T.G. BOGLE
DIRECTOR SINCE JANUARY 1999
AGE 68
Mr. Bogle has been a director of the Company since January 1999 and a
director of TEI since July 1988. Mr. Bogle served as TEI's President and Chief
Operating Officer from July 1988 to December 1991. From 1977 to 1988, he was
owner and President of Houston International, Inc., which provided technical
services and supplies to the international petroleum industry.
10
<PAGE>
BOARD COMMITTEES AND MEETING
ATTENDANCE
The Board of Directors has three committees, the Executive, Audit and
Compensation Committees. Committees report their actions to the full Board at
its next regular meeting following a committee meeting. The following table
shows the current membership of the three committees. A description of the
current duties of each committee follows the table below.
COMMITTEE MEMBERSHIP AND MEETINGS HELD (1)
------------------------------------------
NAME EXECUTIVE AUDIT COMPENSATION
---- --------- ----- ------------
Mr. Garrison(2) X
- - --------------------------------------------- ---------- --------- ------------
Mr. Harris(2)
- - --------------------------------------------- ---------- --------- ------------
Mr. Campbell X
- - --------------------------------------------- ---------- --------- ------------
Mr. Reckling(2)
- - --------------------------------------------- ---------- --------- ------------
Mr. Badger(2) X
- - --------------------------------------------- ---------- --------- ------------
Mr. Webb(2)
- - --------------------------------------------- ---------- --------- ------------
Mr. Dobson(2)
- - --------------------------------------------- ---------- --------- ------------
Mr. Coelho X
- - --------------------------------------------- ---------- --------- ------------
Mr. Waltrip X
- - --------------------------------------------- ---------- --------- ------------
Mr. Greer X X X
- - --------------------------------------------- ---------- --------- ------------
Mr. Bogle
- - --------------------------------------------- ---------- --------- ------------
Mr. Benson X
- - --------------------------------------------- ---------- --------- ------------
No. of Meetings in 1998(3) 0 1 0
- - --------------------------------------------- ---------- --------- ------------
X Member
(1) The table shows the current composition of the Board and its committees. The
number of meetings held, however, reflects meetings of the committees of the
former Board of Directors of TEI before the combination transaction. Messrs.
Campbell, Coelho, Waltrip, Greer, Bogle and Benson were members of TEI's
Board in 1998. Additional members of the TEI Board of Directors who were not
appointed to the Company's Board of Directors in connection with the
combination transaction include R. L. Waltrip and Samuel W. Rizzo.
(2) In 1998, none of Messrs. Garrison, Harris, Reckling, Badger, Webb, or Dobson
were members of the Board of Directors of TEI.
(3) The TEI Board held six meetings in 1998. All previous directors of TEI
attended at least 75% of the aggregate of all meetings of the Board of
Directors and committees of the Board.
11
<PAGE>
EXECUTIVE COMMITTEE
o Has full power of the Board between meetings of the Board, with
specified limitations relating to major corporate matters.
AUDIT COMMITTEE
o Examines the activities of our independent auditors and internal audit
department to determine whether these activities are reasonably
designed to assure the soundness of accounting and financial
procedures.
o Reviews our audit report and management letter before its release.
o Receives reports from the internal auditors and reviews the scope of
the internal audit program.
o Reviews our accounting policies and the objectivity of its financial
reporting.
COMPENSATION COMMITTEE
o Reviews and recommends the compensation for executive officers and key
employees.
o Recommends the granting of stock options and other incentive awards,
including the number of shares subject to and the exercise price of
each stock option and the terms and conditions of other incentive
awards granted under our incentive plans.
o Reviews personnel compensation policies, benefit programs, and any
major changes to such policies and programs, and administers them.
12
<PAGE>
COMPENSATION OF DIRECTORS
The following table shows all components of director compensation for all
TEI directors during 1998:
DIRECTORS' COMPENSATION(1)
- - --------------------------------------------------------------------------------
STOCK
CASH COMPENSATION CASH COMPENSATION --------------
PER FULL BOARD PER COMMITTEE 1991 INCENTIVE
MEETINGS MEETING PLAN (#) (2)
- - ----------------------- ------------------ ------------------- -----------------
Employee Directors $1,500 --- ---
- - ----------------------- ------------------ ------------------- -----------------
Non-Employee Directors $1,500 $1,000/$750 1,000
- - ----------------------- ------------------ ------------------- -----------------
(1) Currently, our non-employee directors receive $1,500 for each meeting of
the Board of Directors attended and $1,000 for each Executive Committee
meeting attended. Each non-employee director receives $750 for any other
committee meeting attended. Our employee directors are not compensated for
their service on the Board of Directors.
(2) Under the 1991 Incentive Plan, TEI granted to each non-employee director
1,000 shares of restricted common stock of TEI, Inc. on January 1, 1998. The
restricted stock became fully vested one year from the date of the grant for
each director who remained on the board at that date.
DIRECTORS' EQUITY COMPENSATION PLANS
On January 1, 1998, TEI granted each non-employee director 1,000 shares of
restricted common stock of TEI. This restricted stock became fully vested for
non-employee directors who remained on TEI's Board of Directors on January 1,
1999. The Company is now formulating its equity compensation policy for current
employee and non-employee directors going forward after the combination
transaction.
13
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ROLE OF THE COMMITTEE
Our Compensation Committee is comprised of outside directors whose role is
to recommend to the Board of Directors the compensation to be paid to our
directors, officers and key employees. In addition, the Committee is generally
responsible for administering executive compensation plans, stock option plans,
and other forms of direct or indirect compensation of officers and key
employees.
EXECUTIVE COMPENSATION PROGRAM
The Committee does not believe that the compensation policies applicable to
TEI's executives before the combination are relevant for evaluating compensation
on a going-forward basis. The Committee is in the process of formulating the
types of compensation policies for our officers, directors and key employees
after the combination transaction.
T. CRAIG BENSON
JAMES H. GREER
W. BLAIR WALTRIP
14
<PAGE>
CORPORATE PERFORMANCE
The line graph shown below shows a five-year comparison of the cumulative
total shareholder return on TEI common stock as compared to the cumulative total
return of two other indexes: the S&P 500 Index and a selected group of peer
companies. The graph covers the five years ended December 31, 1998. The average
annualized returns reflected in the graph were 30.71% for TEI, 186.92% for the
S&P 500 Index and 34.73% for the peer group.
TEI is in the business of industrial wastewater and waste oil treatment and
recycling. The performance graph reflects these operations only, which
operations were discontinued by us effective December 31, 1998. Since the
combination transaction, we have focused our business on financial services.
Therefore, the performance graph may not be indicative of future shareholder
returns.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
BASE PERIOD
DEC 93 DEC 94 DEC 95 DEC 96 DEC 97 DEC 98
- - ------------------- ------------- -------- --------- -------- -------- --------
THE COMPANY 100 36.73 29.58 32.65 26.02 28.57
S & P 500 INDEX 100 101.32 139.40 171.40 228.59 293.91
PEER GROUP(1) 100 57.04 40.76 28.29 29.28 18.28
(1) The peer group was composed of American Ecology Corp., American Waste
Services, Clean Harbors, Inc., Matrix Service Company, Omega Environmental,
Inc. and Serv-Tech, Inc. which are or were in businesses similar to TEI's
discontinued operations.
15
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The executive officers of the Company serve at the pleasure of the Board of
Directors and are subject to annual appointment by the Board at its first
meeting following the annual meeting of shareholders. All of TEI's executive
officers who served during 1998 are listed in the following table:
NAME AGE POSITION (APPOINTMENT DATE)
---- --- ---------------------------
Donald R. Campbell 58 Director, President and Chief Operating Officer (Dec.
1991) and Chief Executive Officer (Apr. 1994)
Rick Berry 45 Executive Vice President and Chief Financial Officer
(Dec. 1991)
Richard J. Martin 40 President of ERRI (Jan. 1997)
SUMMARY OF EXECUTIVE COMPENSATION
The following table provides information concerning compensation paid or
accrued during the fiscal years ended December 31, 1998, 1997 and 1996 to the
CEO and other highly-paid executive officers of TEI, the Company's predecessor
issuer. During 1998, 1997 and 1996, no executive officers of TEI other than
Messrs. Campbell, Berry and Martin received more than $100,000 in compensation.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------
ALL
OTHER
NAME AND PRINCIPAL SALARY BONUS COMP.
POSITION YEAR ($) ($) ($)
- - ------------------ ---- ------- ------------- ---------
Donald R. Campbell, 1998 172,000 -- 9,000 (2)
President, COO, 1997 172,000 50,000(4) (1) 6,000 (2)
and CEO 1996 172,000 -- 7,500 (2)
Rick Berry, 1998 112,308 -- --
Exec. VP/CFO 1997 125,000 20,000(5) (1) --
1996 123,311 35,000(3) (1) --
Richard J. Martin, 1998 138,308 -- --
President, ERRI 1997 131,885 5,000(4) (1) --
1996 70,962 15,000(4) (1) --
__________
(1) Received certain perquisites totaling not more than the lesser of $50,000 or
10% of salary and bonus.
(2) Director fees.
(3) Represents cash bonus approved by Compensation Committee and paid in 1996
with respect to 1995 earnings of the Company.
(4) Represents cash bonus approved by Compensation Committee and paid in 1997
with respect to 1996 earnings of the Company.
(5) Represents cash bonus approved by Compensation Committee and paid in 1998
with respect to 1997 earnings of the Company.
16
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options or SAR's were granted in 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR ENDED OPTION VALUES
The following table provides certain information about option exercises by
TEI's executive officers during the fiscal year ended December 31, 1998.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS AT
UNEXERCISED OPTIONS AT FISCAL YEAR END
NAME FISCAL YEAR END (#) ($) REALIZED
- - ---------------------- ---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- ------------- ------------- --------------
Donald R. Campbell 15,000 35,000 -- --
Rick Berry 9,000 21,000 -- --
EXECUTIVE EMPLOYMENT CONTRACTS
During 1998, an employment contract was in effect between TEI and Mr.
Berry. The contract with Mr. Berry, which expired on December 31, 1998, provided
that if Mr. Berry's employment was terminated by TEI without cause, TEI was
obligated to continue Mr. Berry's base salary through the term of the contract.
If, on the other hand, Mr. Berry terminated his employment, TEI was obligated to
continue to pay 50% of his base salary through the term of the contract. The
contract also allowed TEI to elect to continue to pay Mr. Berry beyond the term
of the contract in exchange for Mr. Berry's agreement not to compete with TEI.
On April 30, 1998, Mr. Berry terminated his employment with TEI, but agreed to
serve as a consultant until the end of 1998 for a fee equal to 50% of his salary
at that time.
We currently have no employment contracts in effect with any of our
directors, officers or employees.
17
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares of the Company's common stock
beneficially owned by each director and executive officer of the Company, and by
all of directors and executive officers as a group. The table shows ownership as
of April 15, 1999.
Directors and executive officers as a group own approximately 26.1% of the
Company's outstanding common stock. For purposes of reporting total beneficial
ownership, shares of common stock which may be acquired through stock option
exercises that have vested or will vest within 60 days following the record date
are included.
The Company knows of no person or group of affiliated persons who own 5% or
more of the Company's common stock. The information in this section is based on
information required to be reported and filed with the Securities and Exchange
Commission under Section 16 of the Exchange Act.
NUMBER OF
COMMON SHARES
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
---- ----- --------
Peter W. Badger (4) 332,905 4.7
W. Blair Waltrip (1)(2)(3) 325,235 4.6
Robert E. Garrison, II 305,263 4.3
Sean Dobson (5) 256,302 3.6
Titus H. Harris, Jr. 164,834 2.3
Stephen M. Reckling 133,262 1.9
Richard W. Webb 128,276 1.8
John H. Styles (9) 120,059 1.4
T.G. Bogle (6) 75,543 1.1
T. Craig Benson (6) 47,347 *
Donald R. Campbell (7) 34,165 *
James H. Greer (8) 24,250 *
Tony Coelho (6) 13,417 *
All directors and executive
officers as a group (12 persons) 1,840,799 26.1
________________
* Less than 1% of outstanding shares.
(1) Includes 7,500 shares issuable on exercise of stock options and 261,735
shares owned by the William Blair Waltrip Trust, of which Mr. Waltrip is the
trustee and beneficiary.
(2) Includes 26,250 shares owned by the Robert L. Waltrip 1992 Trust #1, of
which Robert L. Waltrip, Jr., W. Blair Waltrip, and Holly Waltrip Benson are
Co-Trustees.
(3) Includes 28,000 shares owned by the Waltrip 1987 Grandchildren's Trust for
the benefit of the grandchildren of R. L. Waltrip, of which Robert L.
Waltrip, Jr. and W. Blair Waltrip are co-trustees, as to which both Robert
L. Waltrip, Jr. and W. Blair Waltrip disclaim beneficial ownership.
(4) Includes 253,333 shares held by Spires Financial P.B., Inc., an entity 100%
owned by Mr. Badger.
(5) Includes 253,333 shares held by Spires Financial S.D., Inc. an entity 100%
owned by Mr. Dobson.
(6) Includes 7,500 shares issuable on exercise of stock options.
(7) Includes 15,000 shares issuable on exercise of stock options.
(8) Includes 7,500 shares issuable on exercise of stock options and 15,000
shares owned by Mr. Greer's wife.
(9) Mr. Styles is a new directors nominee. His shares include 19,198
shares owned by his wife, but none of his shares are counted in
determining the number of shares beneficially owned by all directors
and officers as a group.
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SECTION 16(a) -- BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Based on our records, we believe that during 1998 TEI's directors and
officers complied with all SEC filing requirements applicable to them.
CHANGES IN CONTROL
On January 29, 1999, the Company completed a business combination with TEI,
PMT, HWG and Spires, with the Company emerging as the new public holding company
and successor issuer to TEI, which is now our wholly owned subsidiary. In that
combination transaction, just over 50% of our currently outstanding shares were
issued to TEI's former shareholders in exchange for their TEI shares and
slightly less than 50%, were issued to former owners of the other three
financial services companies in exchange for their shares in their companies.
As part of the combination transactions, six former directors of TEI were
appointed to our Board of Directors, along with six persons designated by the
financial services companies.
The executive officers of the financial services companies became our
executive officers, together with TEI's President and Chief Executive Officer
and Chief Operating Officer, who will continue as our Vice
Chairman.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Under the combination agreement, TEI lent $162,500 to Mr. Garrison and
$237,500 to Mr. Reckling. All proceeds of these loans were used to exercise
options to purchase 6,500 shares, in the case of Mr. Garrison, and 9,500 shares,
in the case of Mr. Reckling, of PMT common stock. The loans bear interest at a
variable rate which, based on figures available for December 1998, was 5.25%.
The loans are secured by pledges of all the shares of the Company's common stock
issued to the borrowers in the combination transaction in exchange for the
shares of PMT common stock acquired on exercise of their options. The terms of
these loans did not result from arm's length negotiation. While the interest
rate on these loans may be considered below-market, the other provisions of the
loans are on commercially reasonable terms.
Mr. Garrison owns 1,332,670 shares of Biocyte Theraputics, Inc., one of our
indirect subsidiaries, or 13.6% of the outstanding shares on a fully diluted
basis.
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We indirectly own 2,000,000 shares in Biocyte, or 20.4% on a fully diluted
basis.
Mr. Martin, the president of Energy Recovery Resources, Inc., a wholly
owned subsidiary of TEI, is the Chairman and majority stockholder of Culp
Petroleum Co. Inc., which provides fuels and lubricants to ERRI. During 1997,
Culp supplied fuel and lubricants to ERRI costing about $158,000. In 1998, Culp
sold TEI fuels and lubricants costing an estimated $185,000. TEI believes this
arrangement was on terms no less favorable to TEI than those that would have
resulted from arm's length negotiations.
Since these transactions, the Company has adopted a policy under which any
transactions with directors, officers, or principal shareholders will be on
terms the Company believes to be no less favorable than those obtainable from
independent third parties.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP was TEI's independent auditor during the
previous fiscal year. A representative of PricewaterhouseCoopers LLP is expected
to be at the annual meeting. The representative will have the opportunity to
make a statement at the meeting if he or she wishes, and will be available to
respond to appropriate questions. We have selected PricewaterhouseCoopers LLP as
our independent auditor for the current fiscal year.
OTHER MATTERS
The Board of Directors is not aware of any other matter to be presented for
action at the meeting. If another matter requiring a vote of the shareholders
arises, the proxy holders will vote in their best judgment.
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PINNACLE GLOBAL GROUP, INC.
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 3, 1999
The undersigned shareholder of Pinnacle Global Group,
Inc. (the "Company") hereby appoints Robert E. Garrison II
PROXY and Titus H. Harris, Jr., or either of them, the true and
FOR lawful attorneys, agents and proxies of the undersigned,
ANNUAL each with full power of substitution, to vote on behalf of
MEETING the undersigned at the Annual Meeting of Shareholders of the
OF Company to be held at The Houstonian Hotel, located at 111
SHAREHOLDERS Post Oak Lane, Houston, Texas 77024, on Thursday, June 3,
JUNE 3, 1999 1999, at 10:00 a.m., Houston Time, and at any adjournments
of said meeting, all of the shares of the Company's common
stock in the name of the undersigned or which the
undersigned may be entitled to vote.
1. THE ELECTION OF DIRECTORS
[ ] FOR the election of John H. Styles, Sean Dobson, Stephen M. Reckling
and Richard C. Webb as directors.
[ ] WITHHOLD AUTHORITY to vote on ALL nominees for director listed above.
[ ] WITHHOLD AUTHORITY to vote ONLY for the nominee or nominees, written
on the line provided below:
_____________________________________________________________________
2. In their discretion, upon such other matters as may properly come before
the meeting; hereby revoking any proxy or proxies heretofore given by the
undersigned.
(THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE.)
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<PAGE>
PROXY This Proxy, when properly executed, will be voted in the
FOR manner directed herein by the undersigned shareholder. If no
ANNUAL direction is made, this Proxy will be voted FOR the election
MEETING of the nominees above and in accordance with the discretion
OF of the persons designated above with respect to any other
SHAREHOLDERS business properly before the meeting.
JUNE 3, 1999
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and the Proxy Statement furnished herewith.
Dated ____________________, 1999
________________________________________
Shareholder's Signature
________________________________________
Signature if held jointly
Signature should agree with name printed
hereon. If Stock is held in the name of
more than one person, EACH joint owner
should sign. Executors, administrators,
trustees, guardians and attorneys should
indicate the capacity in which they
sign. Attorneys should submit powers of
attorney.
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENVELOPE ENCLOSED
