FROZEN FOOD EXPRESS INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2000
TO THE SHAREHOLDERS OF
FROZEN FOOD EXPRESS INDUSTRIES, INC.:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Frozen Food Express Industries, Inc. (the "Company"), a Texas
corporation, will be held on Thursday, April 27, 2000, at 3:30 p.m., Dallas,
Texas time, at Bank of America Plaza, 901 Main Street, 70th Floor, Dallas, Texas
75201 for the following purposes:
1. Electing eight (8) directors to serve until the next Annual Meeting of
Shareholders and until their respective successors are elected and
qualified, and
2. Transacting such other business as may properly be brought before the
Annual Meeting or any adjournment thereof.
You are encouraged to attend the Annual Meeting in person. Whether or not
you plan to attend the Annual Meeting, please complete, date, sign and return
the accompanying proxy at your earliest convenience. A reply envelope is
provided for this purpose, which needs no postage if mailed in the United
States. Your immediate attention is requested in order to save your Company
additional solicitation expense.
Information regarding the matters to be acted upon at the Annual Meeting is
contained in the Proxy Statement attached to this Notice.
Only shareholders of record at the close of business on March 16, 2000 are
entitled to notice of and to vote at such meeting or any adjournment thereof.
By Order of the Board of Directors
/S/ Leonard W. Bartholomew
----------------------------------
Dallas, Texas LEONARD W. BARTHOLOMEW
March 29, 2000 Secretary
<PAGE>
FROZEN FOOD EXPRESS INDUSTRIES, INC.
1145 EMPIRE CENTRAL PLACE
P. O. BOX 655888
DALLAS, TEXAS 75265-5888
TELEPHONE: (214) 630-8090
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 27, 2000
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the management of Frozen Food
Express Industries, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held at Bank of America Plaza, 901 Main Street, 70th Floor,
Dallas, Texas, on the 27th day of April, 2000 (the "Annual Meeting"), and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. This Proxy Statement and accompanying proxy are
being mailed or delivered to shareholders on or about March 29, 2000.
Solicitations of proxies may be made by personal interview, mail, telephone or
telegram by directors, officers and regular employees of the Company. The
Company may also request banking institutions, brokerage firms, custodians,
trustees, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the Company's $1.50 par value Common Stock (the "Common
Stock") held of record by such persons and may reimburse such forwarding
expenses. All costs of preparing, printing, assembling and mailing the form of
proxy and the material used in the solicitation thereof and all clerical and
other expenses of solicitation will be borne by the Company.
ANNUAL REPORT
The Company's Annual Report to Shareholders, covering the fiscal year ended
December 31, 1999, including audited financial statements, is also being mailed
to the shareholders entitled to notice of and vote at the Annual Meeting in the
envelope containing this Proxy Statement. The Annual Report does not form any
part of the material for solicitation of proxies.
SIGNATURES OF PROXIES IN CERTAIN CASES
If a shareholder is a corporation, the accompanying proxy should be signed
in its full corporate name by the President or another authorized officer, who
should indicate his title. If a shareholder is a partnership, the proxy should
be signed in the partnership name by an authorized person. If stock is
registered in the name of two or more trustees or other persons, the proxy
should be signed by each of them. If stock is registered in the name of a
decedent, the proxy should be signed by an executor or an administrator. The
executor or administrator should attach to the proxy appropriate instruments
showing his qualification and authority. Proxies signed by a person as agent,
attorney, administrator, executor, guardian or trustee should indicate such
person's full title following his signature.
REVOCATION OF PROXY
All shares represented by a valid proxy will be voted. A proxy may be
revoked at any time before it is voted by the giving of written notice to that
effect to the Secretary of the Company, by executing and delivering a
later-dated proxy or by attending the Annual Meeting and voting in person.
1
<PAGE>
OUTSTANDING CAPITAL STOCK; PRINCIPAL SHAREHOLDERS
At the close of business on the 16th day of March, 2000, the record date
for determination of shareholders entitled to notice of, and to vote at, the
Annual Meeting, there were outstanding and entitled to be voted 16,315,002
shares of Common Stock. The following table sets forth certain information, as
of March 16, 2000, with respect to each person known to the management of the
Company to be a beneficial owner of more than five percent of the outstanding
Common Stock.
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- --------------------------------------------------------------------------------
FFE Transportation Services, Inc. (2) 2,358,958 14.46%
Employee Stock Ownership Trust
Chase Bank of Texas, NA, Trustee
1700 Pacific Avenue
Dallas, Texas 75201
Frozen Food Express Industries, Inc
401(k) Savings Plan 2,058,979 12.62%
The Charles Schwab Trust Company
425 Market Street, 7th Floor
San Francisco, CA 94105
Stoney M. Stubbs, Jr.(3) 1,489,037 (4) 8.98%
158 Jellico Circle
Southlake, Texas 76092
Sarah M. Daniel (5) 1,450,510 8.89%
612 Linda
El Paso, Texas 79922
Lucile B. Fielder (5) 1,326,974 8.13%
104 South Commerce St.
Lockhart, TX 78644
Royce & Associates, Inc. 1,230,492 (6) 7.54%
and Royce Management Company
1414 Avenue of the Americas
New York, New York 10019
Dimensional Fund Advisors, Inc. 1,160,886 (7) 7.12%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
- ------------------------------
(1) Except as otherwise noted, each beneficial owner has sole voting and
investment power with respect to all shares owned by him, and all shares
are directly held by the person named.
(2) FFE Transportation Services, Inc., ("FFE") is the principal operating
subsidiary of the Company.
(3) Mr. Stubbs holds, and has held for the past twenty years, the offices of
Chairman of the Board, President and Chief Executive Officer of the Company
and FFE. Mr. Stubbs is the nephew of Edgar O. Weller, a director of the
Company.
(4) Includes 266,555 shares which Mr. Stubbs has the right to acquire pursuant
to options exercisable within 60 days, 145,255 shares allocated to his
account in the FFE Transportation Services, Inc., Employee Stock Ownership
Plan, 45,401 shares allocated to his account in the Frozen Food Express
Industries, Inc. 401(k) Savings Plan, and 769,387 shares held in family
partnerships controlled by Mr. Stubbs.
(5) Ms. Daniel has sole voting and dispositive power over 67,547 shares, of
which 6,230 shares are held as custodian for her daughter, and joint voting
and dispositive power with her husband over 59,631 shares, and shared
voting and dispositive power with Ms. Fielder over 1,323,332 shares owned
by Weller Investment, Ltd. Ms. Fielder has sole voting and dispositive
power over 3,642 shares, of which 730 shares are held as custodian for her
daughter, and shared voting and dispositive power with Ms. Daniel over
1,323,332 shares owned by Weller Investment Ltd.
(6) Information concerning the number of shares beneficially owned by Royce &
Associates, Inc. ("Royce") and Royce Management Company ("RMC") is as of
December 31, 1999, and was obtained from a Schedule 13G, dated February 9,
2000, jointly filed by Royce, RMC and Charles M. Royce with the Securities
and Exchange Commission (the "SEC"). The Schedule 13G confirms that Royce
and RMC are both investment advisers and members of a "group". Royce has
sole voting and dispositive power over 1,212,422 shares and RMC has sole
voting and dispositive power over 18,070 shares. Mr. Royce may be deemed to
be a controlling person of Royce and RMC and as such may be deemed to
beneficially own the shares beneficially owned by Royce and RMC. The
Schedule 13G indicates that Mr. Royce does not own any shares outside of
Royce and RMC and disclaims beneficial ownership of the shares held by
Royce and RMC.
(7) Information concerning the number of shares owned by Dimensional Fund
Advisors, Inc. is as of December 31, 1999 and was obtained from a Schedule
13G dated February 11, 2000.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes will be counted
in determining the presence of a quorum. A "broker non-vote" occurs when a
nominee holding shares for a beneficial owner has voted on certain matters at
the Annual Meeting pursuant to discretionary authority or instructions from the
beneficial owner but may not have received instructions or exercised
discretionary voting power with respect to other matters.
2
<PAGE>
Each shareholder will be entitled to one vote, in person or by proxy, for
each share of such stock owned of record at the close of business on March 16,
2000. A shareholder may, by checking the appropriate box on the proxy: (i) vote
for all director nominees as a group; (ii) withhold authority to vote for all
director nominees as a group; or (iii) vote for all director nominees as a group
except those nominees identified by the shareholder in the appropriate area.
Cumulative voting for directors is not permitted.
ACTION TO BE TAKEN UNDER THE PROXY
Properly executed and returned proxies will be voted, unless otherwise
specified thereon, (i) for the election of the nominees named in the following
table as directors of the Company, and (ii) in the transaction of such other
business as may properly come before the Annual Meeting or any adjournment
thereof in accordance with the judgment of the proxies. The management of the
Company does not know of any such other matter or business. If any nominee is
unable or be unwilling to accept nomination, the persons acting under the proxy
will vote for the election, in his stead, of such other person as the management
of the Company may recommend. The management of the Company has no reason to
believe that any of the nominees will be unable or unwilling to serve if elected
to office. To be elected, each director must receive the affirmative vote of the
holders of a plurality of the issued and outstanding shares of Common Stock
represented in person or by proxy at the Annual Meeting. Abstentions and broker
non-votes will have no effect in the election of directors.
NOMINEES FOR DIRECTORS
The Company's Bylaws provide that the Board of Directors shall consist of a
minimum of seven and a maximum of fifteen directors. Eight directors will be
elected at the Annual Meeting. Each director elected will serve until the next
Annual Meeting of Shareholders and until his successor has been elected and
qualified.
Named below are the Board of Directors' nominees for election as directors
and information with respect to the nominees and all directors and officers of
the Company or appointment as a group, including the beneficial ownership of
Common Stock as of March 16, 2000 by such persons and group. Each nominee has
served continuously as a director since the date of his first election or
appointment to the Board:
<TABLE>
<CAPTION>
AMOUNT
PRINCIPAL OCCUPATION FIRST AND NATURE PERCENT
DURING PAST FIVE YEARS BECAME A OF BENEFICIAL OF
NAME AGE AND DIRECTORSHIPS DIRECTOR OWNERSHIP(1) CLASS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stoney M. (Mit) Stubbs, Jr. 63 Chairman of the Board, President 1977 1,489,037(2) 8.98%
and Chief Executive Officer of
the Company
Edgar O. Weller 82 Vice Chairman of the Board 1969 554,185 3.40%
of the Company
Leroy Hallman 84 Attorney, Retired 1975 24,275(3) *
Brian R. Blackmarr 58 President, eBusLink, Inc. since 8/99 1990 29,375(4) *
Prior thereto, President
B.R. Blackmarr & Associates Inc.
T. Michael O'Connor 45 Chief Executive Officer, Ecosource, Inc., 1992 29,375(5) *
Managing Partner T. J. O'Connor
Cattle Co. and Member of
Texas A&M University Board of Regents
W. Mike Baggett 53 Chairman, President and CEO 1998 3,900(6) *
Winstead Sechrest & Minick, P.C.
Charles G. Robertson(7) 58 Executive Vice President of the Company 1982 575,245(8) 3.49%
F. Dixon McElwee, Jr.(7) 53 Senior Vice President of the Company 1998 29,691(9) *
and FFE since September 1998
and, prior thereto, Executive Vice President
and Chief Financial Officer for
Cameron-Ashley Building Products (CAB) 2,735,084(10) 16.24%
</TABLE>
All directors and executive
officers, as a group (8 people)
- ------------------------------
* less than 1%
(1) Except as otherwise noted, all shares are held directly, and the owner has
sole voting and investment power.
(2) Includes 266,555 shares issuable pursuant to options exercisable within 60
days, 145,255 shares allocated to Mr. Stubbs' account in the FFE
Transportation Services, Inc., Employee Stock Ownership Plan, 45,401 shares
allocated to his account in the Frozen Food Express Industries, Inc. 401(k)
Savings Plan, and 769,387 shares held in family partnerships controlled by
Mr. Stubbs.
(3) Includes 3,750 shares issuable pursuant to options exercisable within 60
days and 6,975 shares held by a trust of which Mr. Hallman is the Trustee.
3
<PAGE>
(4) Includes 9,375 shares issuable pursuant to options exercisable within 60
days.
(5) Represents 29,375 shares issuable pursuant to options exercisable within 60
days.
(6) Includes 3,750 shares issuable pursuant to options exercisable within 60
days.
(7) Mr. Robertson is also Executive Vice President and a director of FFE. Mr.
McElwee is also Senior Vice President and a director of FFE.
(8) Includes 184,297 shares issuable pursuant to options exercisable within 60
days, 82,424 shares allocated to Mr. Robertson's account in the FFE
Transportation Services, Inc., Employee Stock Ownership Plan, 38,674 shares
allocated to his account in the Frozen Food Express Industries, Inc. 401(k)
Savings Plan, and 192,236 shares held by a family partnership controlled by
Mr. Robertson.
(9) Includes 28,500 shares issuable pursuant to options exercisable within 60
days and 1,191 shares allocated to Mr. McElwee's account in the Frozen Food
Express Industries, Inc. 401(k) Savings Plan.
(10)Includes 525,602 shares issuable pursuant to options exercisable within 60
days, 227,679 shares allocated to the accounts of executive officers
pursuant to the FFE Transportation Services, Inc., Employee Stock Ownership
Plan, 85,266 shares allocated to the accounts of executive officers
pursuant to the Frozen Food Express Industries, Inc. 401(k) Savings Plan,
and 961,623 shares held by family partnerships controlled by directors and
executive officers, and 6,975 shares held by a trust controlled by a
director.
The Board of Directors held five meetings during 1999. Each incumbent
director attended during 1999 at least 85% of the aggregate of (i) the total
number of meetings of the Board of Directors held during the period that he was
a director and (ii) the total number of meetings held by all committees on which
he served (during the periods that he served). The Board of Directors has
standing compensation, audit and information services committees.
The Compensation Committee consists of Messrs. Blackmarr, Chairman, and
Baggett. It met twice during 1999 and is charged with recommending compensation
arrangements for the directors and executive officers of the Company and
recommending compensation programs for FFE.
The Audit Committee consists of Messrs. Hallman, Chairman, Weller and
O'Connor. During 1999, the Committee held two meetings at which it reviewed with
representatives of Arthur Andersen LLP the results of its 1998 annual audit,
plans for the 1999 annual audit and other services provided by the Independent
Public Accountants.
The Information Services Committee consists of Messrs. Stubbs, Chairman,
Blackmarr, McElwee and Robertson. The Committee reviews the Company's
information systems. The Committee met twice during 1999.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $1,000 for each
meeting attended, $500 for each telephonic meeting attended and $500 for each
committee meeting attended that is not on the same day as a Board meeting.
The 1995 Non-Employee Director Stock Option Plan (the "Director Plan") is
intended to advance the interests of the Company and its shareholders by
attracting and retaining experienced and able independent Directors. Upon a
non-employee director's initial appointment or election to the Board, he or she
is granted an option to purchase 9,375 shares of Common Stock. Upon reelection
such Directors are granted an option to purchase 1,875 shares of Common Stock.
Each such director was granted an option to purchase 1,875 shares with an
exercise price of $3.09 per share on April 22, 1999. Exercise prices are fifty
percent (50%) of the fair market value of the Common Stock at the close of
business on the day prior to the date of grant. The exercise price may be paid
in cash, check or shares of Common Stock. No option shall be granted pursuant to
the Director Plan after March 3, 2005. Grants are subject to adjustments to
reflect certain changes in capitalization.
If a non-employee director has served for one or more years prior to the
grant of an option, the option is immediately exercisable for one-seventh of the
number of shares subject to the option for each full year such non-employee
director has served. On each anniversary thereafter, one-seventh of the number
of shares subject to the option become exercisable. Options expire after the
tenth anniversary of grant. Upon death options become fully exercisable and may
be exercised by the beneficiary under the optionee's will or the executor of
such optionee's estate at any time prior to the second anniversary of his or her
death. If an optionee ceases to be a director for any other reason the vested
options may be exercised at any time prior to the second anniversary of the date
he or she ceases to be a director. In no event, however, shall the period during
which options may be exercised extend beyond the term of the options. No shares
from the options may be sold until the expiration of six months after the date
of grant.
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the last five years to the S&P 500 Index and the
Media General Industry Group Index #774 - Trucking Companies, consisting of the
Company and 45 other trucking companies (assuming the investment of $100 in the
Company's Common Stock, the S&P 500 Index and the Media General Index on
December 31, 1994, and reinvestment of all dividends).
4
<PAGE>
[GRAPH OF COMPARISON OF FIVE-YEAR TOTAL RETURN AMONG
FROZEN FOOD EXPRESS INDUSTRIES, INC., S&P 500 INDEX
AND MEDIA GENERAL INDUSTRY GROUP #774 - TRUCKING COMPANIES HERE]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frozen Food Express Industries,
Inc. 100 75 77 77 68 34
- --------------------------------- ------------- ------------- ------------- -------------- ------------- -------------
MG Industry Group Index 100 86 85 113 106 98
- --------------------------------- ------------- ------------- ------------- -------------- ------------- -------------
S&P 500 Index 100 134 161 211 268 319
- --------------------------------- ------------- ------------- ------------- -------------- ------------- -------------
</TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE:
Set forth below is information with respect to the compensation paid by the
Company for services rendered during 1999, 1998 and 1997, to each executive
officer (collectively, the "Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
-------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
---------------------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS TOTAL(1) AWARDS $(2) OPTIONS/SARS #(3) COMPENSATION(4)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stoney M. Stubbs, Jr. 1999 $317,613 -- $317,613 $ 18,713 3,500 $20,819
Chairman of the Board 1998 $302,866 $176,746 $479,612 $ 75,029 38,000 $27,883
President and Chief 1997 $291,175 $121,648 $412,823 $107,007 10,500 $23,078
Executive Officer of
the Company and FFE
Charles G. Robertson 1999 $247,595 -- $247,595 $ 19,225 3,500 $12,018
Executive Vice President 1998 $233.998 $122,900 $356,898 $ 59,446 28,000 $19,143
of the Company and FFE 1997 $221,019 $ 92,317 $313,336 $ 82,266 10,500 $13,535
F. Dixon McElwee, Jr. 1999 $184,263 -- $184,263 $ 188 3,500 $ 3,753
Senior Vice President 1998 $ 47,316 $ 70,463 $117,779 $ 30,484 25,000 --
of the Company and FFE 1997 -- -- -- -- -- --
</TABLE>
- ------------------------------
(1) Personal benefits provided to each of the named individuals under various
Company programs do not exceed the disclosure thresholds established under
SEC rules and are not included in this total.
(2) Includes restricted phantom stock units awarded pursuant to the FFE
Transportation Services, Inc. 1999 Executive Bonus and Phantom Stock Plan
(the "Executive Plan") or in accordance with the Company's Supplemental
Executive Retirement Plan (the "SERP") or FFE Transportation Services, Inc.
401(k) Wrap Plan (the "Wrap Plan"). Phantom stock units generally will be
adjusted to prevent dilution in the event of any cash and non-cash
dividends, recapitalizations and similar transactions affecting the Common
Stock. An officer may elect to cash out any number of the phantom stock
units between December 1 and December 15 of any year. In that event an
amount equal to product of the greater of (i) the Fair Market Value of a
share of Common Stock as of the last business day of the calendar year in
which such election is made and (ii) the average of the Fair Market Values
of a share of Common Stock as of the last business day of each calendar
month of the calendar year in which such election is made multiplied by the
number of units that the officer elected to cash out shall be paid to the
officer. In the event of certain mergers, the sale of all or substantially
all of the Company's assets and certain similar transactions (a
"Reorganization") within six months after the date an officer has been paid
for units and as a result of such Reorganization the holders of Common
Stock receive cash for each share so held in an amount in excess of the
amount paid to such officer for such units, then such excess shall be paid
to the officer. In 1999, Mr. McElwee elected to cash out 3,919 phantom
stock units and was paid $24,779 on January 31, 2000.
5
<PAGE>
The following table sets forth the total number of phantom stock units
awarded under the Executive Plan, the SERP and the Wrap Plan for 1999, 1998
and 1997, to each executive officer of the Company:
1999 1998 1997
-----------------------------------
Mr. Stubbs 4,829 9,526 10,674
Mr. Robertson 4,961 7,548 8,215
Mr. McElwee 48 3,871 --
As of December 31, 1999, the total number of phantom stock units allocated
to the accounts of Messrs. Stubbs, Robertson, and McElwee was 95,576;
63,413 and 3,919, respectively. The total value of such accounts, based
upon the market price of a share of Common Stock on December 31, 1999 was
$370,357; $245,727 and $15,186, respectively, for Messrs. Stubbs,
Robertson, and McElwee.
(3) Options to acquire shares of the Company's Common Stock.
(4) Company contributions to the FFE Employee Stock Ownership Plan (the "ESOP")
and the Frozen Food Express Industries, Inc. 401(k) Savings Plan (the
"Savings Plan") and the value of benefits, as determined under a
methodology required by the SEC, ascribed to life insurance policies whose
premiums are paid by the Company for the benefit of the persons in the
amounts indicated below:
SPLIT DOLLAR
NAME YEAR SAVINGS PLAN LIFE INSURANCE
--------------------------------------------------------------
Mr. Stubbs 1999 -- $20,819
1998 $6,500 $21,383
1997 $2,800 $20,278
Mr. Robertson 1999 -- $12,018
1998 $6,500 $12,643
1997 $2,800 $10,735
Mr. McElwee 1999 $3,753 --
1998 -- --
1997 -- --
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Following is information concerning the grant of stock options to the
Executive Officers in 1999 under the Company's 1992 Incentive and Nonstatutory
Stock Option Plan:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS/SARS POTENTIAL REALIZABLE VALUE AT
SECURITIES GRANTED TO ASSUMED ANNUAL RATES
UNDERLYING EMPLOYEES EXERCISE OR OF STOCK PRICE APPRECIATION
OPTIONS/SARS IN FISCAL BASE PRICE EXPIRATION FOR OPTION TERM (1)
NAME GRANTED(#)(2) YEAR ($/SH) DATE 5% 10%
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Stubbs 3,500 0.6% $7.875 01/01/2009 $ 17,334 $ 43,928
Mr. Robertson 3,500 0.6% $7.875 01/01/2009 $ 17,334 $ 43,928
Mr. McElwee 3,500 0.6% $7.875 01/01/2009 $ 17,334 $ 43,928
All Holders of
Common Stock (3) N/A N/A $7.875 N/A $80,800,785 $204,765,052
</TABLE>
- ------------------------------
(1) Represents assumed rates of appreciation only. Actual gains depend on the
future performance of the Common Stock and overall stock market conditions.
There can be no assurance that the amounts reflected in this table will be
achieved.
(2) All options granted were granted on January 1,1999, under the 1992
Incentive and Nonstatutory Stock Option Plan, are exercisable one year from
the date of grant, are exercisable for ten years from the date of grant,
and were granted with an exercise price equal to the market price of the
Common Stock on the date of grant.
(3) Assumes a total of 16,315,002 shares of Common Stock outstanding with a
value of $7.875 (the closing sales price of the Common Stock on December
31, 1998) per share held from January 1, 1999, until January 1, 2009.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION/SAR
VALUES
The following table provides information, with respect to each Executive
Officer, concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year ending December 31,
1999:
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAREND AT FISCAL YEAREND
SHARES ACQUIRED VALUE (#) EXERCISABLE/ ($) EXERCISABLE/
NAME ON EXERCISE (#) REALIZED (1) UNEXERCISABLE UNEXERCISABLE (2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mr. Stubbs -- $ -- 266,555/-- $ -- /$--
Mr. Robertson -- $ -- 184,297/-- $ -- /$--
Mr. McElwee -- $ -- 28,500 /-- $ -- /$--
</TABLE>
- ------------------------------
(1) Calculated on the basis of the difference between the closing price for the
Company's Common Stock on the date of exercise and the option exercise
price multiplied by the number of shares of Common Stock underlying the
option exercised.
(2) The closing price for the Company's Common Stock as reported by the Nasdaq
Stock Market on December 31, 1999, was $3.875. Value is calculated on the
basis of the difference between $3.875 and the option exercise price of an
"in-the-money" option multiplied by the number of shares of Common Stock
underlying the option.
6
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report has been prepared by Messrs. Brian R. Blackmarr, Chairman, and
W. Mike Baggett, serving as the Company's Compensation Committee during 1999. We
are responsible for overseeing the development and administration of all
compensation policies and programs for executive officers of the Company.
We seek to design compensation programs that align the interests of such
officers with the Company's shareholders. We have implemented compensation
programs we believe will enhance the profitability of the Company, and reward
such officers for efforts to achieve enhanced profitability. We believe the
compensation programs allow the Company to attract, motivate, and retain the
services of its executive officers.
The executive compensation package is designed to retain senior management
by providing total compensation comparable to the Company's competitors. To
align the interests of the Company's executives with the interests of
shareholders, a substantial portion of each executive's compensation is provided
through annual and long-term incentive plans. Such plans place a substantial
portion of the executives' compensation packages at risk and serve as an
integral component of the Company's executive compensation philosophy. We
believe the executives' attentions are better balanced between achieving
short-term business goals and increasing the long-term value of the Company with
a "pay-at-risk" policy. The programs reward executive officers for successful
leadership when certain levels of Company performance are achieved. The
Company's executive officer compensation program also provides base salary,
supplemental retirement benefits and other benefits, including medical and
retirement plans generally available to all Company employees.
We periodically retain the services of an outside consulting firm to review
the Company's executive compensation practices. Such a review was completed in
April 1999, and recommendations for base salary, short-term bonus, and long-term
incentive were developed. These reviews also cover retirement benefits for the
Company's executive officers as measured against the competitive pay practices
of a peer group of publicly-traded trucking companies. The major components of
executive compensation are detailed below.
BASE SALARY
As part of the review performed by outside consultants, base salary levels
of the executives are reviewed to ensure comparability with other
publicly-traded trucking companies. Base salary levels of executive officers
have been set below the market median of the amounts paid to such peer group
executives in the past. We believe that many of the 45 companies included in the
market index for the five-year shareholder return comparison differ from the
Company in size and nature of services provided. Therefore, we directed our
outside consultants to compare compensation practices with a peer group of ten
publicly traded companies with operations most similar to the Company's.
ANNUAL INCENTIVE/BONUS COMPENSATION
The Company's shareholders reapproved the incentive compensation program in
1999. The program is designed to reward key employees for the Company's
performance based on the achievement of performance goals established prior to
the particular year. Components of annual incentive compensation include an
Incentive Bonus Plan (the "Incentive Plan") covering all full-time FFE employees
(including executive officers) and the FFE Transportation Services, Inc. 1999
Executive Bonus and Phantom Stock Plan (the "Executive Plan"), which covers only
the key executive leadership. Both plans focus on operational efficiencies. An
executive officer's total cash compensation rises above the peer group market
median as the Company's performance rises above the median performance of the
Company's peer group. For 1999, reflecting Company performance, no cash bonuses
were awarded. Such bonuses averaged 59% of base salary in 1998, and 42% in 1997.
LONG-TERM INCENTIVE COMPENSATION
The Company's long-term incentive compensation is comprised of stock
options and phantom equity programs. These serve to align the interests of the
executive officers and other key employees' with shareholder interests by
linking executive pay with shareholder return. These programs also act as a
counter-balance to the short-term goals and responsibilities of the Incentive
Plan and Executive Plan.
The 1992 Incentive and Nonstatutory Stock Option Plan, (the "1992 Plan") as
approved by shareholders, provides the exercise price for incentive stock
options may not be less than the fair market value of the Common Stock on the
date of grant. We or the Board determines the exercise price of nonstatutory
stock options under the 1992 Plan. The exercise price may not be less than 50%
of the fair market value of a share of the Common Stock on the date of grant.
Options granted under the 1992 Plan may not be outstanding for more than ten
years. In 1999, Mr. Stubbs was granted an option to purchase 3,500 shares of
Common Stock under the 1992 Plan.
SUPPLEMENTAL EXECUTIVE RETIREMENT AND 401(K) WRAP PLANS
To provide supplemental retirement benefits to members of the key
management, the Company maintains the SERP and Wrap Plans, respectively. The
SERP provides benefits limited by the Internal Revenue Code of 1986 by awarding
phantom stock units. The Wrap Plan supplements the Company's 401(k) Plan by
allowing benefits supplemental to those limited by the Code.
7
<PAGE>
Both the SERP and the Wrap Plan are unfunded deferred compensation
arrangements not subject to the annual reporting and disclosure requirements of
the Employee Retirement Income Security Act of 1974. Awards under both the SERP
and the Wrap Plan for fiscal year 1999 are disclosed in the Summary Compensation
Table.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
During 1999, Mr. Stubbs served as the Chairman of the Board, President, and
Chief Executive Officer. For 1999, Mr. Stubbs' base salary was $317,613 as
compared to $302,866 and $291,175 for 1998 and 1997, respectively. For 1999, Mr.
Stubbs did not receive payments under the Company's Incentive Plan or Executive
Plan. We evaluate Mr. Stubbs' performance by the same criteria established for
all Company executives. We made an assessment of Mr. Stubbs' contributions to
enhancing the Company's performance, his individual performance, and the
compensation paid to chief executive officers of the Company's peer group to
determine Mr. Stubbs' total compensation.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The corporate income tax deduction for compensation paid to the chief
executive officer and certain other highly paid executive officers, as listed in
the Summary Compensation Table, is limited to $1 million per year unless certain
requirements are met. We have analyzed this limitation and anticipate no
financial impact for 1999. We monitor this issue and recommend changes to the
compensation program where appropriate.
/S/ Brian R. Blackmarr /S/ W. Mike Baggett
- ---------------------------- ---------------------------
Brian R. Blackmarr, Chairman W. Mike Baggett
Members of the Compensation Committee
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
A subsidiary of the Company leases certain tractors from Mr. Stubbs, Mr.
Robertson, and a family partnership controlled by Mr. Stubbs. Lease payments
were determined by reference to amounts the subsidiary pays to unaffiliated
lessors for similar equipment leased under similar terms. As of December 31,
1999, the subsidiary was also renting certain trailers from these officers.
Trailer leases are cancelable without notice by either party on a month-to-month
basis.
Rentals paid during 1999 by the subsidiary pursuant to the lease agreements
were as follows: Mr. Stubbs and the family partnership - $1,277,000 and Mr.
Robertson - $657,000. The subsidiary has an option to purchase the tractors at
the end of the lease term for fair market value. During 1999, the Company
purchased tractors valued at $1,169,000 from Mr. Stubbs and the family
partnership and $715,000 from Mr. Robertson. The aggregate future minimum lease
payments to Mr. Stubbs and the family partnership and Mr. Robertson under the
tractor leases are $1,008,000 and $531,000, respectively in 2000 $682,000 and
$375,000, respectively, in 2001, and $306,000 and $209,000, respectively in
2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Blackmarr, and Baggett and
is charged with recommending compensation arrangements for the directors and
executive officers of the Company and recommending compensation programs for
FFE. No payments other than director fees were made to Compensation Committee
members during 1999, and neither had any relationships requiring disclosure
according to applicable rules and regulations of the Securities and Exchange
Commission.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as independent public accountants for 1999. It
is expected that representatives of Arthur Andersen LLP will be present at the
Annual Meeting, with the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions. The Company intends to
select its independent public accountants for 2000 after receiving the
recommendation of the Audit Committee expected at the Audit Committee's May 2000
meeting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Rules promulgated under Section 16(a) of the Securities Exchange Act of
1934, as amended, require the Company's executive officers and directors and
person who own more than ten percent of a registered class of the Company's
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and Nasdaq(R). Such persons are
required by SEC regulations to furnish the Company with copies of such forms
they file. The Company believes that, during 1999, all section 16(a) filing
requirements applicable to such persons were complied with.
8
<PAGE>
SHAREHOLDER PROPOSALS AT 2001 ANNUAL MEETING
Shareholders intending to present proposals at the 2001 Annual Meeting and
desiring to have those proposals included in the Company's proxy statement and
form of proxy relating to that meeting must submit such proposals, in compliance
with Rule 14A-8 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to the Secretary of the Company on or before November 30, 2000.
For proposals that shareholders intend to present at the 2001 Annual Meeting of
Shareholders outside the processes of Rule 14A-8 of the Exchange Act, unless the
shareholder notifies the Secretary of the Company of such intent by February 12,
2001, any proxy solicited by the Company for such Annual Meeting will confer on
the holder of the proxy discretionary authority to vote on the proposal so long
as such proposal is properly presented at the Annual Meeting.
By Order of the Board of Directors
/S/ Leonard W. Bartholomew
--------------------------
Dallas, TX LEONARD W. BARTHOLOMEW
March 29, 2000 Secretary
A copy of the Company's Annual Report on Form 10-K for 1999, may be obtained
without charge upon written request to the Secretary of the Company, P.O. Box
655888, Dallas, Texas 75265-5888.
9
<PAGE>
DETACH HERE
PROXY
FROZEN FOOD EXPRESS INDUSTRIES, INC.
Annual Meeting of Shareholders - April 27, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (1) acknowledges receipt of the notice, dated
March 29, 2000, of the Annual Meeting of Shareholders of Frozen Food Express
Industries, Inc. (herein called the "Company") to be held on Thursday, April 27,
2000, at 3:30 p.m., Dallas, Texas time, in NationsBank Plaza, 901 Main Street,
70th Floor, Dallas, Texas 75201, and the Proxy Statement, also dated March 29,
2000, in connection therewith (herein called the "Proxy Statement"), and (2)
constitutes and appoints Stoney M. Stubbs, Jr., and F. Dixon McElwee, Jr., and
each of them (if only one be present, then by that one alone), his attorneys and
proxies, with full power of substitution and revocation to each, for and in the
name, place and stead of the undersigned, to vote, and act with respect to, all
of the shares of capital stock of the Company standing in the name of the
undersigned, or with respect to which the undersigned is entitled to vote and
act, at said meeting and at any adjournment thereof. The Board of Directors
recommends a vote FOR each of the Company's proposals set forth on the reverse.
The 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 all nominees listed in Proposal 1.
- --------------- ---------------
| SEE REVERSE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE |
| SIDE | | SIDE |
- --------------- ---------------
<PAGE>
FROZEN FOOD EXPRESS
INDUSTRIES INC.
c/o EquiServe
P.O. Box 8040
Boston, MA 02266-8040
FFE38A DETACH HERE
[X] Please mark
votes as in
this example -----
|
|
Please mark in blue or black ink.
1. ELECTION OF DIRECTORS
Nominees: Stoney M. (Mit) Stubbs, Jr., Edgar Q. Weller,
Leroy Hallman, Brian R. Blackmarr, T. Michael O'Connor,
W. Mike Baggett, Charles G. Robertson and F. Dixon McElwee, Jr.
FOR WITHHELD
ALL [_] [_] FROM ALL
NOMINEES NOMINEES
MARK HERE
[_] FOR ADDRESS [_]
CHANGE AND
-------------------------------------- NOTE BELOW
for all nominees except as noted above
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please promptly complete, date, sign and return this proxy using the enclosed
envelope.
When shares are held by joint tenants, both should sign. When signing as an
agent, attorney, administrator, executor, guardian or trustee, please give
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer who should indicate his title. If a
partnership, please sign in partnership name by authorized person. Please
date, sign and mail this proxy card in the enclosed envelope. No postage is
required if mailed in the United States.
Signature:________________ Date:_______ Signature:________________ Date:_______
