PRE-PAID LEGAL SERVICES, INC.
321 East Main Street
P 0. Box 145
Ada, Oklahoma 74820
NOTICE OF ANNUAL SHAREHOLDERS MEETING
TO THE HOLDERS OF SHARES OF COMMON STOCK:
The Annual Meeting of shareholders of PRE-PAID LEGAL SERVICES, INC.
("PRE-PAID") will be held in the Liberty Room of PRE-PAID located at 321 East
Main Street in Ada, Oklahoma, on Friday, June 2, 1995, at 10:00 a.m., local
time, for the following purposes:
1. To elect two members to PRE-PAID's Board of Directors.
2. To transact such other business as may properly be brought
before the Annual Meeting or any adjournment thereof.
The Annual Meeting may be recessed from time to time and, at any
reconvened meeting, action with respect to the matters specified in this notice
may be taken without further notice to shareholders unless required by the
bylaws.
Shareholders of record of Common Stock at the close of business on
April 14, 1995, are entitled to notice of, and to vote on all matters at, the
Annual Meeting. A list of all shareholders will be available for inspection at
the Annual Meeting and, during normal business hours the ten days prior thereto,
at the offices of PRE-PAID, 321 East Main Street, Ada, Oklahoma.
BY ORDER OF THE BOARD OF DIRECTORS
Kathryn Walden, Secretary
DATE: April 28, 1995
Please Sign The Enclosed Form Of Proxy And Return It Promptly In The Envelope
Enclosed For That Purpose. You May Nevertheless Vote In Person If You Do Attend
The Meeting.
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PROXY STATEMENT
PRE-PAID LEGAL SERVICES, INC.
321 East Main Street
P. 0. Box 145
Ada, Oklahoma 74820
1995 ANNUAL MEETING OF SHAREHOLDERS
The following information is furnished in connection with the 1995
Annual Meeting of Shareholders of PRE-PAID LEGAL SERVICES, INC. ("PRE-PAID") to
be held in the Liberty Room of PRE-PAID located at 321 East Main Street in Ada,
Oklahoma, on Friday, June 2, 1995 at 10:00 a.m., local time. This Proxy
Statement and accompanying materials will be mailed on or about April 28, 1995
to holders of record of Common Stock as of the record date.
The record date for determining shareholders entitled to notice of the
Annual Meeting and to vote has been established as the close of business on
April 14, 1995. On that date, PRE-PAID had 17,986,801 shares of Common Stock,
par value $.01 per share, outstanding and eligible to vote, exclusive of
treasury stock. Holders of record of PRE-PAID's Common Stock on the record date
will be entitled to one vote for each share held on all matters properly brought
before the Annual Meeting.
The enclosed Proxy is being solicited by the Board of Directors of
PRE-PAID. All costs of soliciting proxies for the Annual Meeting will be borne
by PRE-PAID. In addition to use of the mails, proxies may be solicited by
personal interview, telephone and telecopy, and by banks, brokerage houses and
other institutions. PRE-PAID shall, upon request, reimburse banks, brokerage
houses, other institutions, nominees and fiduciaries for their reasonable
expenses in forwarding proxy materials to beneficial owners.
Any shareholder returning the accompanying proxy may revoke such proxy
at any time prior to its exercise by (a) giving written notice to PRE-PAID of
such revocation, (b) voting in person at the Annual Meeting, or (c) executing
and delivering to PRE-PAID a later dated proxy. Written revocations and later
dated proxies should be sent to PRE-PAID LEGAL SERVICES, INC., P. 0. Box 145,
Ada, Oklahoma 74820, Attention: Kathryn Walden, Secretary.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors consists of seven members and is divided into
three classes as nearly equal in size as possible, with the term of office of
one class expiring each year. The Board of Directors has nominated and proposes
that Randy Harp and Peter K. Grunebaum, whose terms as directors expire as of
the Annual Meeting, be re-elected for three-year terms as directors.
The election of Directors will require the affirmative vote of a
plurality of the shares of Common Stock voting in person or by proxy at the
Annual Meeting. All proxies received by the Board of Directors of PRE-PAID will
be voted, in the absence of instructions to the contrary, FOR the re-election of
Randy Harp and Peter K. Grunebaum to the Board of Directors.
Should the nominees for re-election to the Board of Directors be
unable to serve for any reason, the Board of Directors may, unless the Board by
resolution provides for a lesser number of Directors, designate substitute
nominees in which event all proxies received without instructions will be voted
for the election of such substitute nominees. However, to the best knowledge of
the Board of Directors of PRE-PAID, the named nominees will serve if elected.
The Board of Directors recommends that the shareholders vote "FOR" the
re-election of Mr. Harp and Mr. Grunebaum to the Board of Directors.
The following is certain information about each director of PRE-PAID:
<TABLE>
<CAPTION>
Name Age Director Since Term Expires
- ---------------------------------- -- -------------- ------------
<S> <C> <C> <C>
Harland C. Stonecipher ........... 56 1976 1996
Wilburn L. Smith ................. 54 1993 1996
Jack Mildren ..................... 45 1995 1996
Peter K. Grunebaum ............... 61 1980 1995
Randy Harp ....................... 39 1990 1995
Charles H. Walls ................. 63 1993 1997
Kathleen S. Pinson ............... 42 1990 1997
</TABLE>
Harland C. Stonecipher
Mr. Stonecipher has been the Chairman of the Board of Directors and
Chief Executive Officer of PRE-PAID since its organization in 1976 and, prior to
1984 and since May 1987 through January, 1995, has been its President (except
for the period from May 1989 to March 1990). Mr. Stonecipher also serves as an
executive officer of various subsidiaries of PRE-PAID. Mr. Stonecipher is
employed pursuant to an employment agreement which, unless sooner terminated,
expires on June 30, 2003, with PRE-PAID retaining the right to extend the
agreement for up to ten additional years.
<PAGE>
Wilburn L. Smith
Mr. Smith was named Vice President of Marketing and Agency Director in
July 1991. Mr. Smith has been active in the marketing division of PRE-PAID since
1980.
Jack Mildren
Mr. Mildren was named President of the Company on January 23, 1995. Mr.
Mildren was the Lieutenant Governor of the State of Oklahoma from 1991 until
January 1995. Mr. Mildren is employed pursuant to an employment agreement which,
unless sooner terminated, expires on January 22, 1996.
Peter K. Grunebaum
Mr. Grunebaum is currently Director of Corporate Finance, ICA
International, an investment firm headquartered in New York, New York. He was
affiliated with Rauscher, Pierce, Refsnes, Inc. in the corporate finance
department in New York from March 1988 to April 1989. From June 1985 until March
1988, Mr. Grunebaum was Senior Vice President - Corporate Finance of Moseley
Securities, Inc., New York. Mr. Grunebaum's term as a director expires at the
Annual Meeting and he has been nominated for reelection as a director.
Randy Harp
Mr. Harp was named Chief Financial Officer in March 1990. From 1983 to
July 1991, Mr. Harp was the president, treasurer, chief financial officer and a
director of Ratex Resources Incorporated, a small publicly-held oil and gas
exploration company in Oklahoma City, Oklahoma. Mr. Harp is a Certified Public
Accountant. Mr. Harp's term as a director expires at the Annual Meeting and he
has been nominated for reelection as a director.
Charles H. Walls
Mr. Walls was a principal and teacher in the Rattan, Oklahoma Public
School system from 1980 until his retirement in May 1992. Previously, Mr. Walls
served as a Senior Vice President of Paramount Life Insurance Company of Little
Rock, Arkansas.
Kathleen S. Pinson
Ms. Pinson was named Controller of PRE-PAID in May 1989 and has been a
Vice President of PRE-PAID since June 1982. Ms. Pinson has been employed by
PRE-PAID since 1979 and has been the chief accounting officer since 1982. Ms.
Pinson is a Certified Public Accountant.
No family relationships exist among executive officers and directors of
PRE-PAID.
The Board of Directors held five meetings during the year ended
December 31, 1994. Directors who are also employees of PRE-PAID or its
subsidiaries receive no additional compensation for their services as directors.
Non-employee directors of PRE-PAID receive per meeting $500 and options to
purchase 2,500 shares of PRE-PAID's Common Stock at the closing price on the day
of each meeting as quoted by the American Stock Exchange. All directors attended
at least 75% of the meetings of the full Board and the committees on which they
serve.
<PAGE>
The Board of Directors has established an Executive Committee
consisting of Messrs. Stonecipher, Harp and Grunebaum, a Stock Option Committee
consisting of Messrs. Stonecipher and Grunebaum, and an Audit Committee, of
which Mr. Grunebaum is presently the sole member. The Executive Committee may
exercise all of the powers of the Board of Directors, except to the extent
limited by law. The Stock Option Committee administers PRE-PAID's Stock Option
Plan. The Audit Committee makes recommendations to the Board of Directors
concerning the selection of and oversees PRE-PAID's independent auditors and
reviews with the independent auditors the scope and results of the annual audit.
The Audit Committee also monitors internal control policies. The Audit Committee
held three meetings during 1994. The Board of Directors does not have standing
nominating or compensation committees.
VOTING
Directors will be elected by a plurality of the votes of the shares
present in person or represented by proxy at the Annual Meeting. Any other
matters properly brought before the Annual Meeting will be decided by a majority
of the votes cast on the matter, unless otherwise required by law.
Shares represented by proxies which are marked "withhold authority"
with respect to the election of any one or more nominee for election as director
will be counted for purposes of determining the number of shares represented by
proxy at the Annual Meeting. However, because directors are elected by a
plurality rather than a majority of the shares present in person or represented
by proxy at the Annual Meeting, proxies marked "withhold authority" with respect
to any one or more nominee will not affect the outcome of the nominee's election
unless the nominee receives no affirmative votes or unless other candidates are
nominated for election as directors.
INDEPENDENT PUBLIC ACCOUNTANTS
On August 9, 1994, PRE-PAID dismissed Price Waterhouse LLP as its
independent accountants. The reports of Price Waterhouse LLP with respect to
PRE-PAID's financial statements for the fiscal years ended December 31, 1992 and
December 31, 1993 contained no adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting
principle. The Audit Committee participated in and approved the decision to
change independent accountants.
During the fiscal years ended December 31, 1992 and December 31, 1993
and through August 9, 1994, there were no disagreements with Price Waterhouse
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Price Waterhouse LLP would have caused them to make
reference thereto in their reports on the financial statements of PRE-PAID.
<PAGE>
PRE-PAID engaged Deloitte & Touche LLP as its new independent
accountants as of September 1, 1994. Deloitte & Touche LLP served as PRE-PAID's
independent accountants for the fiscal year ended December 31, 1994 and has been
appointed by the Board of Directors of PRE-PAID as independent auditors for
PRE-PAID and its subsidiaries for 1995. Representatives of Deloitte & Touche LLP
are expected to be present at the Annual Meeting, with the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
ANNUAL REPORT
PRE-PAID's Annual Report to shareholders, covering the fiscal year
ended December 31, 1994, including audited financial statements, accompanies
this Proxy Statement. Except as otherwise indicated herein, the Annual Report is
not incorporated by reference into this Proxy Statement or deemed to be a part
of the materials for the solicitation of proxies.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Certain information required to be included herein pursuant to Items 6
through 8 of Schedule 14A under the Securities Exchange Act of 1934 with respect
to the security ownership of certain beneficial owners and management, the
compensation of PRE-PAID's executive officers, and certain transactions between
PRE-PAID and its executive officers or directors is incorporated herein by
reference to Items 9 through 12 of PRE-PAID's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1994 contained in the Annual Report to
Shareholders which accompanies this Proxy Statement.
PROPOSALS OF SHAREHOLDERS
The Board of Directors of PRE-PAID will consider proposals of
shareholders intended to be presented for action at the 1996 Annual Meeting of
Shareholders. According to the rules of the Securities and Exchange Commission,
for a shareholder proposal to be included in PRE-PAID's proxy statement relating
to the 1996 Annual Meeting, a written proposal complying with the requirements
established by the Securities and Exchange Commission must be received at
PRE-PAID's principal executive offices, P. O. Box 145, Ada, Oklahoma 74821-0145,
no later than December 31, 1995.
OTHER MATTERS
The Board of Directors of PRE-PAID does not know of any other matters
to be presented for actions at the Meeting other than those listed in the Notice
of Meeting and referred to herein. If any other matters properly come before the
Meeting or any adjournment thereof, it is intended that the proxy solicited
hereby be voted in respect thereof, in accordance with the recommendations of
the Board of Directors of PRE-PAID.
