<PAGE>
SCHEDULE 14A
(RULE 14a-101)
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:
/X/ Preliminary Proxy Statement / / Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
PINNACLE GLOBAL GROUP, INC.
(Name of Registrant as specified in its Charter)
NOT APPLICABLE
(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 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 (set forth amount
on which the filing fee is calculated and state how it was
determined): NOT APPLICABLE
(4) Proposed maximum aggregate value of the transaction: NOT
APPLICABLE
(5) Total fee paid: NOT APPLICABLE
/ / 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: NOT APPLICABLE
(2) Form, Schedule or Registration Statement Number: NOT
APPLICABLE
(3) Filing Party: NOT APPLICABLE
(4) Date Filed: NOT APPLICABLE
<PAGE>
[LETTERHEAD]
ROBERT E. GARRISON II
President and
Chief Executive Officer
May 1, 2000
Dear Shareholder,
On behalf of our entire Board of Directors, I cordially invite you to
attend the Company's annual meeting of shareholders on Tuesday, June 6, 2000. At
the meeting among other things, we will review our performance for 1999 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 1999 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 6th and addressing your questions
and comments.
Sincerely,
Robert E. Garrison II
<PAGE>
[LETTERHEAD]
May 1, 2000
Notice of the 2000
Annual Meeting of Shareholders
The annual meeting of shareholders of Pinnacle Global Group, Inc. will
be held on Tuesday, June 6, 2000, at 10:00 a.m., at the Omni Houston Hotel, Four
Riverway, Houston, Texas 77056, to consider and take action on the following
matters:
1. Election of two directors;
2. An amendment to the Articles of Incorporation to declassify the
Board of Directors; and
3. Transaction of any other business properly raised at the
meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES AND
"FOR" THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF
DIRECTORS.
Sincerely,
Pamela S. Caloway
SECRETARY
<PAGE>
PINNACLE GLOBAL GROUP, INC.
5599 San Felipe, Suite 555
Houston, Texas 77056
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
ANNUAL MEETING INFORMATION
This proxy statement contains informa-tion related to the annual meeting of
share-holders of Pinnacle Global Group, Inc. to be held on Tuesday, June 6,
2000, beginning at 10 a.m., at the Omni Houston Hotel, Four Riverway, Houston,
Texas, 77056 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
May 3, 2000.
WHO IS ENTITLED TO VOTE?
Shareholders owning our common stock on April 20, 2000 (the "Record Date")
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 the Record Date there were 14,111,301 common shares outstanding.
WHAT AM I VOTING ON?
You will be asked to elect nominees to serve on the Board of Directors, to
vote on amending our Articles of Incorporation to declassify 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 and a
vote FOR amending our Articles of Incorporation to declassify the Board of
Directors.
<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 and for the amendment to our Articles of Incorporation
declassifying the Board of Directors. You can revoke your proxy at any time
before it is exercised. To do so, you must either:
- - give written notice of revocation to our Corporate Secretary, Pinnacle
Global Group, Inc., 5599 San Felipe, Suite 555, Houston, Texas 77056;
- - submit another properly signed proxy card with a more recent date; or
- - 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
election of directors but will have the same effect as a vote against the
amendment to our Articles of Incorporation.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
The director nominees will be elected by a plurality of the votes cast at
the meeting. The amendment to our Articles of Incorporation declassifying our
Board of Directors requires the affirmative vote of at least two-thirds of the
outstanding common shares. 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.
<PAGE>
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
Commission. We must receive proposals intended for inclusion in next year's
proxy statement and proxy card no later than December 31, 2000. If we do not
receive notice of any matter that a shareholder wishes to raise at the annual
meeting in 2001 by April 7, 2001 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 on our behalf. 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 our subsidiaries
may solicit proxies personally or by telephone or facsimile without additional
compensation.
<PAGE>
STRUCTURE OF THE COMPANY
The following chart shows our corporate structure following the combination
earlier this year of Harris Webb & Garrison, Inc. ("HWG") with Sanders Morris
Mundy Inc. to form Sanders Morris Harris Inc. The Sanders transaction was
completed February 1, 2000. For more information about the Sanders transaction,
see the section below entitled "Changes in Control".
------------ ------------
Prior Former
Pinnacle Sanders
Shareholders Shareholders
------------ ------------
50% 50%
---------------
Pinnacle Global
Group, Inc.
---------------
- -------------- --------------- --------- ------------------- ---------------
Sanders Morris PGG TEI, Inc. Pinnacle Management Spires
Harris Inc. Capital, Inc. ("TEI") & Trust Company Financial, L.P.
("SMH") ("PGG Captial") ("PMT") ("Spires")(1)
- -------------- --------------- --------- ------------------- ---------------
-------------------------------
Energy Recovery Resources, Inc.
("ERRI")(2)
-------------------------------
(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.
(2) The operations of ERRI were discontinued effective December 31, 1998, and we
anticipate completing its sale by the end of 2000.
<PAGE>
- --------------------------------------------------------------------------------
ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
NOMINEES
Our Board of Directors is currently divided into three classes for election
purposes. One class is elected at each annual meeting of shareholders to serve
for a three-year term. If the proposal to approve the amendment to our Articles
of Incorporation declassifying the Board of Directors is approved, each board
member will stand for election annually beginning with our next annual meeting.
At this annual meeting, the terms of five directors are expiring and only
two are standing for reelection. The other nine directors are not up for
election. Following this annual meeting the Board intends to reduce the total
authorized number of directors from 14 to 11.
If the charter amendment is not approved, the two directors nominated for
election at this annual meeting would hold office for a three-year term expiring
in 2003 and the remaining nine directors will continue in office for the
remainder of their terms. If the charter amendment is approved, the terms of all
members of the Board of Directors will expire at our 2001 annual meeting. If a
nominee is unavailable for election, the proxy holders will vote for another
nominee proposed by the Board of Directors or, as an alternative, the Board of
Directors may reduce the number of directors to be elected at the meeting. Your
proxy cannot be voted for more than two nominees.
DIRECTORS NOMINATED THIS YEAR FOR TERMS EXPIRING IN 2003 (OR 2001, IF THE
CHARTER AMENDMENT IS APPROVED)
- --------------------------------------------------------------------------------
BEN T. MORRIS
DIRECTOR SINCE FEBRUARY 2000
AGE 54
- --------------------------------------------------------------------------------
Mr. Morris was appointed to the board of directors on February 1, 2000
as part of the Sanders transaction. He co-founded Sanders Morris Mundy Inc.
in 1987 and served as its President and Chief Executive Officer and as a
director at the time of its combination with Harris Webb & Garrison, Inc.
Since the Sanders transaction, Mr. Morris has served as President, Chief
Executive Officer and a director of SMH and as a director of PMT, PGG Capital
and Spires. Mr. Morris served as the Chief Operating Officer of Tatham
Corporation from 1980 to 1984. Before then, he served in a number of
executive positions with Mid-American Oil and Gas, Inc. and predecessor
companies from 1973 to 1980, and was its President from 1979 to 1980. From
1967 to 1973, Mr. Morris was employed by what is now PricewaterhouseCoopers
LLP, last serving as audit manager. He is a director of Capital Title Group,
Inc., a public title agency and escrow services company, and American Equity
Investment Life Holding Company, a public life insurance company. Mr. Morris
is a certified public accountant.
<PAGE>
- --------------------------------------------------------------------------------
W. BLAIR WALTRIP
DIRECTOR SINCE JANUARY 1999
AGE 45
- --------------------------------------------------------------------------------
Mr. Waltrip has been a director of the Company since January 1999 and a
director of TEI since July 1988. He is also a director of Service Corporation
International and was employed in various capacities by that company from 1977
until January 2000, last serving as an Executive Vice President for more than
five years.
DIRECTORS UP FOR ELECTION IN 2001
- --------------------------------------------------------------------------------
TITUS H. HARRIS, JR.
DIRECTOR SINCE JANUARY 1999
AGE 68
- --------------------------------------------------------------------------------
Mr. Harris has been Chairman of the Company since January 1999. Mr. Harris
co-founded HWG in February 1994 prior to its combination with the Sanders firm
in February 200, and now serves as one of SMH's Executive Vice Presidents and a
director, as well as a director of PMT. From September 1991 to February 1994, he
served as a Registered Representative at S.G. Cowen & Company, the former
correspondent broker of HWG. Before then, Mr. Harris served as Senior Vice
President of Lovett Underwood Neuhaus & 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 40 years experience in the securities industry.
- --------------------------------------------------------------------------------
ROBERT E. GARRISON II
DIRECTOR SINCE JANUARY 1999
AGE 58
- --------------------------------------------------------------------------------
Mr. Garrison has been President, Chief Executive Officer and a director
of the Company since January 1999. He also serves as a director of SMH. Mr.
Garrison co-founded HWG and until January 1999 served as its Executive Vice
President and head of investment banking. Until January 1999, he also served
as Chairman and Chief Executive Officer of PMT, which he co-founded in 1994,
and still serves as a director. Mr. Garrison also serves as Chairman and a
director of PGG Capital and a director of Spires. From 1990 to 1991, Mr.
Garrison served as President and Chief Executive Officer 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 Director of Research for Underwood Neuhaus and Co. from 1971
to 1982. Mr. Garrison serves as a director of Intelect Communications, Inc.,
a public telecommunications equipment company, FirstCity Financial
Corporation, a public financial services 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 34 years experience
in the securities industry and is a Chartered Financial Analyst.
<PAGE>
- --------------------------------------------------------------------------------
PETER W. BADGER
DIRECTOR SINCE JANUARY 1999
AGE 53
- --------------------------------------------------------------------------------
Mr. Badger has been a director of the Company since January 1999. He also
serves as President, Chairman and a director of Spires. Mr. Badger founded and
was a partner and President of Spires since its inception in January 1995. He is
also a director of PMT and SMH. From April 1976 to July 1994, he served as a
securities broker and Executive Vice President of Westcap Corporation. Mr.
Badger has over 21 years experience in the institutional securities market. He
has NASD Series 24, 7 and 63 licenses.
- --------------------------------------------------------------------------------
DONALD R. CAMPBELL
DIRECTOR SINCE SEPTEMBER 1998
AGE 59
- --------------------------------------------------------------------------------
Mr. Campbell has been a Vice-Chairman of the Company since January 1999
and a director since September 1998. He is also a director of SMH, Spires,
PMT and PGG Capital. 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.
<PAGE>
- --------------------------------------------------------------------------------
GEORGE L. BALL
DIRECTOR SINCE FEBRUARY 2000
AGE 61
- --------------------------------------------------------------------------------
Mr. Ball was appointed to the board of directors on February 1, 2000 as
part of the Sanders transaction. At the time of the Sanders transaction he
served as Chairman of the Board and a director of Sanders Morris Mundy Inc.
Since the Sanders transaction, Mr. Ball has served as Chairman of the Board
and a director of SMH and as a director of PMT, PGG Capital and Spires. He
served as a director of Sanders Morris Mundy since May 1992, and was its
non-executive Chairman of the Board from May 1992 to July 1997. From
September 1992 to January 1994, Mr. Ball was a Senior Vice Executive Vice
President of Smith Barney Shearson Inc. From September 1991 to September
1992, he was a consultant to J. & W. Seligman & Co. Incorporated. In 1982,
Mr. Ball was elected President and Chief Executive Officer of
Prudential-Bache Securities, Inc., and in 1986 was elected Chairman of the
Board, serving in those positions until his resignation in 1991. He also
served as a member of the Executive Office of Prudential Insurance Company of
America from 1982 to 1991. Before Joining Prudential, Mr. Ball served as
President of E.F. Hutton group, Inc. Mr. Ball is a former governor of the
American Stock Exchange and the Chicago Board Options Exchange, and served on
the Executive Committee of the Securities Industries Association.
DIRECTORS UP FOR ELECTION IN 2002 (OR 2001, IF THE CHARTER AMENDMENT IS
APPROVED)
- --------------------------------------------------------------------------------
DON A. SANDERS
DIRECTOR SINCE FEBRUARY 2000
AGE 63
- --------------------------------------------------------------------------------
Mr. Sanders was appointed to the board of directors on Febraury 1, 2000 as
part of the Sanders transaction. At the time of the Sanders transaction, he
served as Chairman of the Executive Committee and a director of Sanders Morris
Mundy Inc., which he co-founded in 1987. Since the Sanders transaction, Mr.
Sanders has served as a Vice-Chairman and director of the Company and as a
director of SMH. From 1987 to 1996, Mr. Sanders was President of Sanders Morris
Mundy. Before joining Sanders Morris Mundy, he was employed by E.F. Hutton &
Co., Inc. where he served from 1959 in various capacities, including as an
Executive Vice President of E.F. Hutton from 1982 to 1987 and as a member of its
board of directors from 1983 to 1987. Mr. Sanders has over 40 years of
experience in the securities industry.
- --------------------------------------------------------------------------------
JOHN H. STYLES
DIRECTOR SINCE JUNE 1999
AGE 64
- --------------------------------------------------------------------------------
Mr. Styles has been the Chairman, President and Chief Executive Officer of
HEALTHPLUS Corporation since 1995. He served in the same capacities for
<PAGE>
Mid-America Healthcare Group from 1984 until its sale in 1995 and for Outpatient
Healthcare, Inc. from 1985 until its sale in 1992. Mr. Styles is also a private
venture capitalist, focusing on the healthcare and other growth industries.
- --------------------------------------------------------------------------------
STEPHEN M. RECKLING
DIRECTOR SINCE JANUARY 1999
AGE 37
- --------------------------------------------------------------------------------
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
is one of its directors. Since June 1994, he has served in various executive
capacities at PMT, including Executive Vice President and Chief Investment
Officer and as a director. Mr. Reckling has over 15 years of investment
management experience.
- --------------------------------------------------------------------------------
RICHARD C. WEBB
DIRECTOR SINCE JANUARY 1999
AGE 66
- --------------------------------------------------------------------------------
Mr. Webb has been a director of the Company since January 1999. Mr. Webb
co-founded HWG prior to its combination with the Sanders firm in February 2000,
and now serves as one of SMH's Executive Vice Presidents, as well as a director
of SMH and PMT. From 1991 to 1994, he was Regional Partner of S.G. Cowen &
Company, the former 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 39 years experience in the securities industry.
DIRECTORS NOT STANDING FOR RE-ELECTION
- --------------------------------------------------------------------------------
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 Chief Executive of ETC w/tci, Inc., an education and
training technology subsidiary of Tele-Communications, Inc. From 1989 to
<PAGE>
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 Chief Executive Officer 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
<PAGE>
BOARD COMMITTEES AND MEETING
ATTENDANCE
The Board of Directors has four committees, the Executive, Audit,
Nominating and Compensation Committees. Committees report their actions to the
full Board of Directors at its next regular meeting following a committee
meeting. The following table shows the current membership of the four
committees. A description of the current duties of each committee follows the
table below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
COMMITTEE MEMBERSHIP AND MEETINGS HELD (1)
- -----------------------------------------------------------------------------------------------
NAME EXECUTIVE AUDIT NOMINATING(2) COMPENSATION(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mr. Garrison X
- -----------------------------------------------------------------------------------------------
Mr. Harris
- -----------------------------------------------------------------------------------------------
Mr. Campbell
- -----------------------------------------------------------------------------------------------
Mr. Reckling
- -----------------------------------------------------------------------------------------------
Mr. Badger
- -----------------------------------------------------------------------------------------------
Mr. Webb
- -----------------------------------------------------------------------------------------------
Mr. Coelho X
- -----------------------------------------------------------------------------------------------
Mr. Waltrip X X X X
- -----------------------------------------------------------------------------------------------
Mr. Greer X X
- -----------------------------------------------------------------------------------------------
Mr. Styles X X
- -----------------------------------------------------------------------------------------------
Mr. Benson X
- -----------------------------------------------------------------------------------------------
Mr. Sanders(4)
- -----------------------------------------------------------------------------------------------
Mr. Morris(4) X
- -----------------------------------------------------------------------------------------------
Mr. Ball(4) X
- -----------------------------------------------------------------------------------------------
No. of Meetings in 1999(5) 2 1 N/A 1
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------
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
Pinnacle's former Board of Directors and Committees before the Sanders
transaction.
(2) The Nominating Committee was established on February 1, 2000.
(3) The directors currently serving on the Compensation Committee also served in
that capacity in 1999.
(4) Became a director on February 1, 2000.
(5) The Pinnacle Board held 3 meetings in 1999. Messrs. Badger and Coehlo
attended less than 75% of the aggregate of all meetings of the Board of
Directors and committees of the Board to which they belonged.
<PAGE>
EXECUTIVE COMMITTEE
- Has full power of the Board between meetings of the Board, with
specified limitations relating to major corporate matters.
AUDIT COMMITTEE
- 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.
- Reviews our audit report and management letter before its release.
- Receives reports from the internal auditors and reviews the scope of
the internal audit program.
- Reviews our accounting policies and the objectivity of its financial
reporting.
NOMINATING COMMITTEE
- Makes recommendations to the Board of Directors regarding nominees for
election as directors, the structure, size and composition of the
Board, compensation of Board members and organization and
responsibility of board committees.
- Reviews general responsibilities and functions of the Board of
Directors, the balance of expertise among Board members, and the
overall Company organizational health, particularly plans for
management succession and development.
Any shareholder who wishes to recommend a prospective Board nominee should
deliver written notice containing the information required by our bylaws to
Pamela S. Caloway, Corporate Secretary, 5599 San Felipe, Suite 555, Houston,
Texas 77056. To be timely filed, we must receive the notice not less than 60
days nor more that 180 days prior to the first anniversary of our preceding
year's annual meeting.
<PAGE>
COMPENSATION COMMITTEE
- Reviews and recommends the compensation for executive officers and key
employees.
- 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.
- Reviews personnel compensation policies, benefit programs, and any
major changes to such policies and programs, and administers them.
COMPENSATION OF DIRECTORS
The following table shows all components of director compensation for all
Pinnacle directors during 1999:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
DIRECTORS' COMPENSATION(1)
- ----------------------------------------------------------------------------------------------------
CASH COMPENSATION CASH COMPENSATION STOCK OPTIONS
PER FULL BOARD MEETINGS PER COMMITTEE MEETING
------------------------------
1998 INCENTIVE
PLAN (#)(2)
----------------------------------------------------------------------------
<S> <C> <C> <C>
Non-Employee Directors $1,500 $1,000/$750 5,000
- ----------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------
(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 1998 Incentive Plan, the Company granted each non-employee
director immediately exercisable options for 5,000 shares of common stock at
an exercise price of $4.625 per share, the price at market close on the
grant date of October 12, 1999.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ROLE OF THE COMMITTEE
Our Compensation Committee is comprised solely of outside directors whose
role is to recommend to the Board of Directors the compensation to be paid to
our officers and key employees. In addition, the Committee is generally
responsible for administering executive compensation plans, incentive plans, and
other forms of direct or indirect compensation of officers and key employees.
EXECUTIVE COMPENSATION PROGRAM
The Compensation Committee, composed entirely of non-employee directors,
establishes our compensation philosophy on behalf of the Board of Directors,
determines the compensation of our Chief Executive Officer, and approves the
compensation of our executive officers. As part of the January 1999
combinations with the three financial services firms, there was an
understanding among the parties that the 1999 compensation programs of the
executive officers would remain consistent with the existing programs at each
of the financial service firms before the combinations and with the addition
of some form of equity-based incentive awards. Our 2000 executive
compensation program, particularly after the February 2000 merger with the
Sanders firm, will be reevaluated based on the expertise and critical mass
gained through the Sanders merger as well as the compensation programs at
comparable companies within the financial services industry.
COMPONENTS OF EXECUTIVE OFFICER COMPENSATION
The three components of executive officer compensation are base salary,
bonus and long-term incentive compensation.
BASE SALARY
For 1999, the base salary levels of our executive officers were consistent
with the salary levels earned by the executive officers while employed at the
combining company immediately before the January 1999 combination.
BONUSES
For 1999, we awarded bonuses to two executive officers. Mr. Dobson's
bonus was based on a percentage of revenues at Spires consistent with prior
practices. Mr. Dobson resigned his executive officer and director positions
on January 10, 2000. Similar to prior years, Mr. Reckling's bonus was tied to
a percentage of earnings before taxes achieved at PMT.
<PAGE>
LONG-TERM INCENTIVE COMPENSATION
Under Pinnacle's 1998 Incentive Plan, executive officers, key employees,
and others may be granted incentive and non-statutory stock options, stock
appreciation rights, restricted stock, performance units and performance shares,
other stock-based awards, and supplemental payments dedicated to payments of
income taxes. The 1998 Incentive Plan is administered by the Compensation
Committee. During October 1999, a total of 507,050 non-statutory stock options
were awarded to executive officers and key employees. The level of option awards
were based in part on a report commissioned by the Compensation Committee from
an independent compensation consultant. In February 2000 and as part of the
Sanders merger, we granted an additional 488,000 non-statutory stock options to
the executive officers and key employees of Sanders Morris Harris who joined us
in the Sanders merger. This option grant was to equalize the grant made in
October 1999 to our executive officers and key employees prior to the merger.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of our Chief Executive Officer for 1999 was established
based on his compensation level at HWG and PMT prior to the January 1999
combination.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code establishes a limit on
corporate income tax deductions of $1 million per year paid to any executive
officer. In designing compensation plans to meet the executive compensation
objectives described above, we reserve the right to establish plans which may
result in our inability to deduct compensation under Section 162(m).
SUMMARY
For 1999, the compensation plans for our executive officers were based on
the compensation plans in place at the firms where they were employed
immediately before the January 1999 combination. For 2000, Pinnacle will
reevaluate compensation of executive officers to ensure that it is consistent
with a compensation philosophy designed to reward outstanding individual
performance and align officers' compensation to the performance of the company,
the individual business units, and our stock price.
T. CRAIG BENSON
JAMES H. GREER
W. BLAIR WALTRIP
<PAGE>
CORPORATE PERFORMANCE
The line graph below shows a four-year comparison of the cumulative total
shareholder return on TEI's common stock as compared to the cumulative total
return of the S&P 500 Index and a selected group of peer companies for fiscal
years 1995, 1996, 1997 and 1998. TEI was our predecessor issuer and was 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.
[GRAPH]
<TABLE>
<CAPTION>
BASE PERIOD
DEC 94 DEC 95 DEC 96 DEC 97 DEC 98
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TEI, INC. 100 80.58 88.89 70.84 77.78
S & P 500 INDEX 100 134.11 161.29 211.30 267.65
PEER GROUP (1) 100 71.46 49.60 51.33 32.05
</TABLE>
- -----------------------------
(1) The peer group represented for the periods from December 1994 to December
1998 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.
<PAGE>
Since discontinuing TEI's liquid waste and recycling business in December
1998 and completing the combination with the three financial services firms in
January 1999, we have focused our business on financial services. The line graph
below shows a comparison of the cumulative total shareholder return on our
common stock as compared to the cumulative total return of the S&P 500 Index and
the Nasdaq Financial Stocks Index for the period from January 29, 1999 to the
end of last fiscal year.
[GRAPH]
<TABLE>
<CAPTION>
BASE PERIOD
01/29/00 DEC 99
- -----------------------------------------------------------
<S> <C> <C>
PINNACLE 100 47.76
S & P 500 INDEX 100 114.82
NASDAQ FINANCIAL STOCKS INDEX (1) 100 99.02
</TABLE>
- --------------------------
(1) The Nasdaq Financial Stocks Index is composed of all Nasdaq companies with
two-digit Standard Industrial Classification codes in the range 60 through
67.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF EXECUTIVE COMPENSATION
The following table shows, for the last fiscal year, the annual
compensation paid to or earned by our Chief Executive Officer and the other four
most highly compensated executive officers (the "Named Officers") in all
capacities in which they served. None of the Named Officers were officers or
employees of the Company prior to last fiscal year.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
NAME AND PRINCIPAL
POSITION YEAR
---------------------------------------------
SALARY BONUS SECURITIES UNDERLYING
($) ($) OPTIONS (#)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert E. Garrison II, 1999 223,248 -- 40,000
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
- -----------------------------------------------------------------------------------
Sean A. Dobson,(1) 1999 264,628 100,000(2) 21,700
EXECUTIVE VICE PRESIDENT
OF SPIRES
- -----------------------------------------------------------------------------------
Peter W. Badger, 1999 267,259 -- 21,700
PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF
SPIRES
- -----------------------------------------------------------------------------------
Stephen M. Reckling, 1999 168,240 63,000(3) 38,000
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF PMT
- -----------------------------------------------------------------------------------
Titus H. Harris, Jr., 1999 220,552 -- 20,400
CHAIRMAN
- -----------------------------------------------------------------------------------
</TABLE>
- -------------------------------------
(1) Mr. Dobson resigned from his officer and director positions on January 10,
2000.
(2) Represents cash bonus paid in 1999 with respect to the 1999 revenue of
Spires.
(3) Represents cash bonus paid in 1999 with respect to the 1999 pretax earnings
of PMT.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options under the Company's 1998 Incentive Plan to the Named Officers during the
Company's last fiscal year.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- -----------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED (#)(1) IN 1999 PRICE ($) DATE 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Garrison II 40,000 7.89 4.625 10/11/09 116,346 294,842
- -----------------------------------------------------------------------------------------------------------
Sean A. Dobson(2) 21,700 4.28 4.625 10/11/09 63,117 159,952
- -----------------------------------------------------------------------------------------------------------
Peter W. Badger 21,700 4.28 4.625 10/11/09 63,117 159,952
- -----------------------------------------------------------------------------------------------------------
Stephen M. Reckling 38,000 7.49 4.625 10/11/09 110,528 280,100
- -----------------------------------------------------------------------------------------------------------
Titus H. Harris, Jr. 20,400 4.02 4.625 10/11/09 59,336 150,370
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------
(1) The options were granted at an exercise price equal to the price of
Pinnacle's common stock at market close on October 12, 1999, the date of
grant. All of the options granted to the Named Officers vest on the same
schedule; one-quarter on the grant date and an additional quarter on each of
the first three anniversaries of the grant date.
(2) Mr. Dobson resigned from his officer and director positions on January 10,
2000, and the options granted to him in 1999 have expired.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR ENDED OPTION VALUES
None of the Named Officers exercised any options during the last fiscal
year. The following table provides information about unexercised options held by
the Named Officers as of the end of the last fiscal year. None of the options
held by the Named Officers are in-the-money.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING UNEXERCISED
NAME OPTIONS AT FISCAL YEAR END (#)
- -----------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE
----------------------------------------------
<S> <C> <C>
Robert E. Garrison II 10,000 30,000
- -----------------------------------------------------------------------------------------
Sean A. Dobson(1) 5,425 16,275
- -----------------------------------------------------------------------------------------
Peter W. Badger 5,425 16,275
- -----------------------------------------------------------------------------------------
Stephen M. Reckling 9,500 28,500
- -----------------------------------------------------------------------------------------
<PAGE>
Titus H. Harris, Jr. 5,100 15,300
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Dobson resigned from his officer and director positions on January 10,
2000, and the options granted to him in 1999 have expired.
EXECUTIVE EMPLOYMENT CONTRACTS
We currently have no employment contracts in effect with any of our
directors or executive officers.
SECURITIES OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares of our common stock
beneficially owned by each director, director nominee, executive officer and
five percent shareholder, and by all directors and executive officers as a
group. The table shows ownership at April __, 2000.
Directors and executive officers as a group own approximately 48.3% of our
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 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
NUMBER OF
COMMON SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Don A. Sanders (1)(2) 2,090,656 14.8
- -----------------------------------------------------------------------------------------------
Ben T. Morris (1)(3) 1,911,661 13.5
- -----------------------------------------------------------------------------------------------
George L. Ball (1)(4) 1,207,688 8.6
- -----------------------------------------------------------------------------------------------
Peter W. Badger (5) 332,905 2.4
- -----------------------------------------------------------------------------------------------
Robert E. Garrison, II (6) 315,263 2.2
- -----------------------------------------------------------------------------------------------
W. Blair Waltrip (7)(8)(9) 315,056 2.2
- -----------------------------------------------------------------------------------------------
Titus H. Harris, Jr. (10) 169,934 1.2
- -----------------------------------------------------------------------------------------------
Stephen M. Reckling (11) 142,762 1.0
- -----------------------------------------------------------------------------------------------
Richard W. Webb (10) 133,376 *
- -----------------------------------------------------------------------------------------------
John H. Styles (12) 125,059 *
- -----------------------------------------------------------------------------------------------
T. Craig Benson (13) 44,847 *
- -----------------------------------------------------------------------------------------------
Donald R. Campbell (14) 36,665 *
- -----------------------------------------------------------------------------------------------
James H. Greer (15) 21,750 *
- -----------------------------------------------------------------------------------------------
Tony Coelho (13) 10,917 *
- -----------------------------------------------------------------------------------------------
All directors and executive officers as a group (14 persons) 6,858,539 48.3
- -----------------------------------------------------------------------------------------------
</TABLE>
* Less than 1% of outstanding shares.
(1) Became an officer and director in February 2000 and has a principal
business address of 600 Travis, Suite 3100, Houston, Texas 77002.
(2) Includes 7,500 shares issuable on exercise of stock options.
<PAGE>
(3) Includes 6,250 shares issuable on exercise of stock options and 703,973
shares owned by the Sanders 1998 Children's Trust, of which Mr. Morris is a
co-trustee, and as to which Mr. Morris disclaims beneficial ownership.
(4) Includes 6,250 shares issuable on exercise of stock options.
(5) Includes 253,333 shares held by Spires Financial P.B., Inc., an entity 100%
owned by Mr. Badger and 5,425 shares issuable on exercise of stock options.
(6) Includes 10,000 shares issuable on exercise of stock options.
(7) Includes 5,000 shares issuable on exercise of stock options and 254,056
shares owned by the William Blair Waltrip Trust, of which Mr. Waltrip is
the trustee and beneficiary.
(8) 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.
(9) Includes 28,000 shares owned by the Waltrip 1987 Grandchildren's Trust for
the benefit of the grandchildren of R. L. Waltrip, of which W. Blair
Waltrip are co-trustees, as to which both Robert L. Waltrip, Jr. and W.
Blair Waltrip disclaim beneficial ownership.
(10) Includes 5,100 shares issuable on exercise of stock options.
(11) Includes 9,500 shares issuable on exercise of stock options.
(12) Includes 5,000 shares issuable on exercise of stock options and 19,198
shares owned by Mr. Styles' wife.
(13) Includes 5,000 shares issuable on exercise of stock options.
(14) Includes 17,500 shares issuable on exercise of stock options.
(15) Includes 5,000 shares issuable on exercise of stock options and 15,000
shares owned by Mr. Greer's wife.
SECTION 16(a) -- BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Based on our records, we believe that Edward C. Hutcheson, Jr., the
Company's Chief Operating Officer during 1999, and John H. Styles were each late
filing their Initial Statement of Beneficial Ownership of Securities on SEC Form
3.
CHANGES IN CONTROL
On January 29, 1999, Pinnacle completed a business combination with TEI,
PMT, Harris Webb & Garrison, Inc. and Spires, with Pinnacle 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 then
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
three financial services companies in exchange for their shares in their
companies. Following the Sanders transaction described below, the former
shareholders of TEI and the three financial services companies hold slightly
less than 50% of our currently outstanding shares.
As part of the 1999 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
continued as our Vice-Chairman.
On February 1, 2000, Pinnacle completed the combination of Harris Webb &
Garrison, Inc. with Sanders Morris Mundy Inc. Sanders Morris Mundy Inc., renamed
Sanders Morris Harris Inc., survived the combination as our wholly owned
subsidiary. Just over 50% of our currently outstanding shares were issued to
former Sanders' shareholders in exchange for their Sanders shares.
<PAGE>
As part of the transaction, three former Sanders directors, Don A. Sanders,
Ben T. Morris and George L. Ball, were appointed to our Board of Directors. Mr.
Sanders was appointed as one of our Vice-Chairmen and Messrs. Morris and Ball
were appointed executive officers and directors of Sanders Morris Harris and
directors of PMT, PGG Capital and Spires.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Under our January 1999 combination agreement with TEI, 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 1999,
was 6.47%. The loans are secured by pledges of all the shares of our common
stock issued to the borrowers in the combination transaction in exchange for
their PMT common shares 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.
In January 1999, Harris Webb & Garrison purchased for $285,131 furniture
and equipment it had previously leased from St. James Place Corp. At the time of
the purchase, each of Messrs. Harris, Webb and Garrison was an executive officer
and a 20% shareholder of St. James Place.
Mr. Garrison serves as Chairman and a director of Biocyte Theraputics,
Inc., one of our indirect subsidiaries, and owns 1,332,670 shares of or
approximately 15.5% its outstanding common shares. Through PGG Capital, we
indirectly own 2,000,000 shares of Biocyte, or approximately 23.3% of its
common stock. PGG Capital also holds a warrant for 80,000 Biocyte common
shares and a $500,000 note receivable from Biocyte with accrued interest of
$23,000 at December 31, 1999. Additionally, we had outstanding receivables
from Biocyte of $128,061 at December 31, 1999.
Mr. Harris is a member of the board of directors of an investment banking
client. Fee income of $66,394 and reimbursable expenses of $16,074 were recorded
from this client during 1999 and remained outstanding at December 31, 1999.
On February 1, 2000, we completed the merger of Harris Webb & Garrison, our
investment banking subsidiary, with Sanders Morris Mundy Inc. Sanders Morris
Mundy survived the merger, was renamed "Sanders Morris Harris Inc." and became
our wholly owned subsidiary. In the Sanders merger, we issued 7,125,220 of our
common shares to the former shareholders of the Sanders firm, increasing our
total outstanding common shares to approximately 14.25 million. As a result of
the Sanders merger, three former directors of the Sanders firm became Pinnacle
directors, with one director, Don A. Sanders, becoming our Vice-Chairman. The
other two Sanders director designees retained primary management responsibility
of the new Sanders Morris Harris subsidiary.
Since these transactions, we have adopted a policy under which any
transactions with directors, officers, or
<PAGE>
principal shareholders will be on terms we believe to be no less favorable than
those obtainable from independent third parties.
- --------------------------------------------------------------------------------
PROPOSAL TO APPROVE AMENDMENT TO ARTICLES OF INCORPORATION TO DECLASSIFY THE
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
Your Board of Directors has approved, and is proposing that shareholders
approve, an amendment to the Company's Articles of Incorporation to eliminate
the classification of our Board of Directors and cause each director to stand
for election annually, beginning at next year's annual shareholders' meeting.
The Board of Directors recommends a vote FOR the charter amendment.
Article Seven of our Articles of Incorporation now divides our Board of
Directors into three classes as nearly equal in number as possible. Directors
of each class serve staggered three-year terms, with the term of office of
one class expiring each year. Directors can be removed only for cause, and
then only with the affirmative vote of holders of at least two-thirds of our
outstanding voting shares. Article Seven may be amended only with the
approval of holders of at least two-thirds of our outstanding voting shares.
If the charter amendment is approved, the classes and staggered three-year
terms of directors would be eliminated, the current term of office of each
director will end at our 2001 annual meeting, and all directors will
thereafter be elected for one-year terms at each annual shareholders' meeting.
Proponents of classified boards believe they help maintain a greater
continuity of experience because the majority of directors at any given time
will have at least one year of experience with a company. This continuity may
assist a company in long-term strategic planning. Additionally, proponents
argue that a classified board reduces the possibility of a sudden change in
majority control of a board of directors. In a hostile takeover attempt, a
classified board may encourage a person seeking control of a company to
initiate arm's length discussions with the board, which may be in a position
to negotiate a higher price or more favorable terms for shareholders or to
try and prevent a takeover that the board believes is not in the best
interest of shareholders. However, the Board of Directors believes that a
classified board of directors limits the ability of shareholders to elect
directors and exercise influence over the Company, and may discourage proxy
contests in which shareholders have an opportunity to vote for a competing
slate of nominees. The election of directors is the primary means for
shareholders to influence corporate governance policies and to hold
management accountable for its implementation of those policies. In keeping
with its goal of ensuring that our corporate governance policies maximize
management accountability to shareholders, the Board of Directors has
determined that declassifying the board, so that shareholders have the
opportunity each year to register their views on the performance of the board
and management, would better serve the interests of you company and its
shareholders.
The charter amendment would amend Sections 2, 3 and 4 of Article Seven of
our Articles of Incorporation, as follows:
<PAGE>
SECTION 2. NUMBER, ELECTION AND TERMS OF DIRECTORS. The number of directors
which shall constitute the whole Board of Directors shall be fixed from time to
time by a majority of the directors then in office; PROVIDED, HOWEVER, that from
and after the first date as of which the Corporation has a class or series of
capital stock registered under the Exchange Act, the number of directors which
shall constitute the whole Board of Directors shall be not less than three. Each
director shall serve for a term ending on the next annual meeting following the
annual meeting at which such director was elected. Each director shall hold
office until the annual meeting at which such director's term expires and, the
foregoing notwithstanding, shall serve until his successor shall have been duly
elected and qualified or until his earlier death, resignation or removal.
In the event of any changes in the authorized number of directors, each
director then continuing to serve shall nevertheless continue as a director
until the next annual meeting, or his prior death, resignation or removal.
Election of directors need not be by written ballot unless the Bylaws of
the Corporation shall so provide.
SECTION 3. REMOVAL OF DIRECTORS. No director of the Corporation shall be
removed from office as a director by vote or other action of the stockholders or
otherwise except for cause, and then only by the affirmative vote of the holders
of at least two-thirds of the voting power of all outstanding shares of capital
stock of the Corporation generally entitled to vote in the election of
directors, voting together as a single class. Except as may otherwise be
provided by law, cause of removal of a director shall be deemed to exist only
if: (i) the director whose removal is proposed has been convicted, or where a
director is granted immunity to testify where another has been convicted, of a
felony by a court of competent jurisdiction and such conviction is no longer
subject to direct appeal; (ii) such director has been found by the affirmative
vote of a majority of the entire Board of Directors at any regular or special
meeting of the Board of Directors called for that purpose or by a court of
competent jurisdiction to have been grossly negligent or guilty of misconduct in
the performance of his duties to the Corporation in a matter of substantial
importance to the Corporation; or (iii) such director has been adjudicated by a
court of competent jurisdiction to be mentally incompetent, which mental
incompetency directly affects his ability as a director of the Corporation.
SECTION 4. VACANCIES. Subject to any requirements of law to the
contrary, newly created directorships resulting from any increase in the
number of directors and any vacancies on the Board of Directors resulting
from death, resignation, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office until the
next annual meeting and until such director's successor shall have been
elected and qualified or until his earlier death, resignation or removal. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
<PAGE>
Texas law requires that a corporation desiring to classify its board of
directors expressly provide for classification in its bylaws. Those provisions
may be set forth in the corporation's articles of incorporation rather than its
bylaws. By deleting the provisions of Article Seven relating to the
classification of the Board, we intend to remove any express provision for the
classification of our Board, thereby declassifying our Board. Our bylaws do not
expressly provide for classification of the board.
If the charter amendment is approved, we intend to formally amend our
charter by a filing with the Secretary of State of the state of Texas. The
charter amendment will become effective on filing.
Our directors and executive officers (who currently beneficially own
shares representing approximately __% of the shares entitled to vote) have
indicated that they intend to vote their common shares for approval of the
charter amendment.
Texas law provides that the affirmative vote of the holders of at least
two-thirds of the outstanding shares entitled to vote is required to approve
the charter amendment. Abstentions and broker non-votes will have the same
effect as a vote against the charter amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE CHARTER
AMENDMENT.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP was Pinnacle'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.
<PAGE>
PINNACLE GLOBAL GROUP, INC.
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 6, 2000
The undersigned shareholder of Pinnacle Global Group, Inc. (the "Company")
hereby appoints Robert E. Garrison II and Titus H. Harris, Jr., or either of
them, the true and lawful attorneys, agents and proxies of the undersigned, each
with full power of substitution, to vote on behalf of the undersigned at the
Annual Meeting of Shareholders of the Company to be held at the Omni Houston
Hotel, Four Riverway, Houston, Texas 77056, on Tuesday, June 6, 2000, 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.
THE ELECTION OF DIRECTORS
1. / / FOR the election of Ben T. Morris and W. Blair Waltrip 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:
PROPOSAL
2. Amendment to the Company's Articles of Incorporation to declassify the
Board of Directors.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
*NOTE* In their discretion, upon such other matters as may properly come
before the meeting or any adjournment thereof; hereby revoking any proxy or
proxies heretofore given by the undersigned.
(THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE.)
<PAGE>
(CONTINUED FROM OTHER SIDE)
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR the election of the nominees above, FOR the amendment to the
Company's Articles of Incorporation to declassify the Board of Directors and in
accordance with the discretion of the persons designated above with respect to
any other business properly before the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders, the Proxy Statement furnished with the notice, and the 1999
Annual Report.
Dated ____________________, 2000
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
