<PAGE> 1
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
MARK VII, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
MARK VII, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 1997
TO ALL SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Mark VII, Inc., a Delaware corporation (the "Company"), will be
held on Friday, the 16th day of May, 1997, at 10:00 a.m., local time, at the
Peabody Hotel, 149 Union Avenue, Memphis, Tennessee, for the following purposes:
(1) To elect two Class I Directors for a term expiring in 2000 or until
their successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 31, 1997 as
the record date for the determination of the shareholders entitled to notice of
and to vote at the Annual Meeting or any adjournment or postponement thereof.
Only holders of record on such date will be entitled to vote at the Annual
Meeting. A copy of the Proxy Statement relating to the Annual Meeting, a Form of
Proxy and the Company's 1996 Annual Report to Shareholders accompany this
Notice.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James T. Graves
--------------------------
James T. Graves
Secretary
April 11, 1997
IMPORTANT-YOUR PROXY IS ENCLOSED
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING RETURN ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
MARK VII, INC.
965 Ridge Lake Boulevard, Suite 103
Memphis, Tennessee 38120
----------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 1997
----------------------
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of Mark VII, Inc., a
Delaware corporation (the "Company"), for use at the annual meeting of
shareholders (the "Annual Meeting") to be held on Friday, the 16th day of May,
1997, at 10:00 a.m., local time, at the Peabody Hotel, 149 Union Avenue,
Memphis, Tennessee, or any adjournment or postponement thereof. Shares
represented by duly executed proxies received prior to the Annual Meeting will
be voted at the Annual Meeting. If a shareholder specifies a choice on the form
of proxy with respect to any matter to be acted upon, the shares will be voted
in accordance with such directions. If no choice is specified, shares will be
voted "FOR" the nominees listed on the proxy and in this Proxy Statement. Any
person giving a proxy has the power to revoke it at any time before it is
exercised by giving written notice to the Secretary of the Company at any time
prior to its use or by attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
a revocation of such proxy).
This Proxy Statement and the accompanying form of proxy are being mailed or
given to shareholders on or about April 11, 1997. The Company will bear all of
the costs of solicitation of proxies, including preparation, assembly, printing
and mailing of this Proxy Statement, the form of proxy and any additional
information furnished to shareholders. In addition to the use of the mails,
proxies may be solicited by personal contact, telephone or telegraph by officers
or representatives of the Company and the Company may reimburse brokers or other
persons holding stock in their names or in the names of nominees for their
expenses in sending proxy soliciting material to beneficial owners. No
additional compensation will be paid to directors, officers or other regular
employees of the Company for such services.
Only shareholders of record at the close of business on March 31, 1997 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, the Company had 4,636,122 shares of common stock,
par value $.10 per share, issued and outstanding and entitled to vote. Each
outstanding share of common stock is entitled to one vote on each matter brought
to a vote. The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of common stock entitled to vote
at the Annual Meeting is necessary to constitute a quorum. Abstentions will be
counted in determining whether a quorum has been reached. The affirmative vote
of the holders of a plurality of the votes cast, in person or by properly
executed proxy and entitled to vote at the Annual Meeting, provided a quorum is
constituted, is required for election of directors. The Company has been advised
by the National Association of Securities Dealers, Inc. (the "NASD") that the
election of directors is considered a "routine" item upon which broker-dealers
holding shares in street name for their customers may vote, in their discretion,
on behalf of any customers who do not furnish voting instructions within ten
days of the date these proxy materials are sent to such customers.
Management does not know of any matters, other than those referred to in
the accompanying Notice of Annual Meeting, which are to come before the Annual
Meeting. If any other matters are properly presented to the Annual Meeting for
action, it is intended that the persons named in the accompanying form of proxy,
or their substitutes, will vote in accordance with their judgment of the best
interests of the Company on such matters.
1
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth with respect to the common stock as of April
4, 1997 (unless otherwise indicated): (i) the only persons known to be
beneficial owners of more than five percent of the common stock; (ii) shares
beneficially owned by all directors and nominees for election as a director of
the Company; (iii) shares beneficially owned by the persons named in the Summary
Compensation Table in this Proxy Statement; and (iv) shares beneficially owned
by all directors and executive officers as a group. Beneficial ownership is
direct, and the holders have sole investment power and sole voting power, unless
otherwise indicated.
<TABLE>
<CAPTION>
Number of
Shares and
Nature of
Beneficial Percent
Name and Address of Beneficial Owners (1) Ownership of Class
- ------------------------------------- --------- --------
<S> <C> <C>
Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, NY 10017 958,200 (2) 20.7%
RCM Capital Management, L.L.C.
RCM Limited L.P.
RCM General Corporation
Four Embarcadero Center, Suite 2900
San Francisco, California 94111 603,500 (3) 13.0%
R.C. Matney 503,190 (4) 10.6%
The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202 436,300 (5) 9.4%
FMR Corp.
82 Devonshire Street
Boston, MA 02109 328,800 (6) 7.1%
Wellington Management Company, L.L.P.
75 State Street
Boston, MA 02109 283,000 (7) 6.1%
Founders Asset Management, Inc.
2930 East, 3rd Avenue
Denver, CO 80206 243,550 (8) 5.3%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 241,700 (9) 5.2%
James T. Graves 65,300 (10) 1.4%
David H. Wedaman 53,871 (11) 1.2%
William E. Greenwood 8,100 (12) .2%
Dr. Jay U. Sterling 8,100 (12) .2%
Robert E. Liss 7,786 (13) .2%
Michael J. Musacchio 6,067 (14) .1%
Thomas J. Fitzgerald 5,025 (15) .1%
Douglass Wm. List 2,880 (16) .1%
All Executive Officers and Directors as a Group 691,569 (17) 14.1%
(11 persons)
</TABLE>
(1) Unless otherwise indicated, the address is the Company's principal office.
2
<PAGE> 5
(2) Warburg, Pincus Counsellors, Inc. ("Warburg"), a registered investment
adviser, is deemed to have beneficial ownership of 958,200 shares as of
December 31, 1996, which are owned by numerous investment advisory clients.
Warburg has sole voting power with regard to 722,400 shares, sole
investment power with regard to 955,200 shares and shared voting power with
regard to 67,800 shares. The information as to the beneficial ownership of
Warburg was obtained from the Schedule 13G filed by that company.
(3) RCM Capital Management, L.L.C. ("RCM Capital") is a registered investment
adviser, RCM Limited L.P. ("RCM Limited") is the general partner of RCM
Capital and RCM General Corporation ("RCM General") is the general partner
of RCM Limited. RCM Limited and RCM General are deemed to have beneficial
ownership of securities managed by RCM Capital. As of December 31, 1996,
RCM Capital, RCM Limited and RCM General have sole voting power with regard
to 516,500 shares and sole investment power with regard to 593,500 shares.
The information as to the beneficial ownership of RCM Capital, RCM Limited
and RCM General was obtained from the Schedule 13G filed by those
companies.
(4) Includes 335,430 shares owned indirectly through Mr. Matney's living trust,
45,260 shares owned indirectly through Mr. Matney's individual retirement
account, 108,216 shares issuable pursuant to non-qualified stock options
granted under the Company's 1992 Non-Qualified Stock Option Plan (the "NQSO
Plan") and 14,284 shares issuable pursuant to incentive stock options
granted under the Company's 1986 Incentive Stock Option Plan (the "ISO
Plan").
(5) The Northwestern Mutual Life Insurance Company ("Northwestern"), an
insurance company, is deemed to have beneficial ownership of 436,300 shares
as of December 31, 1996. Northwestern has sole voting power with regard to
341,100 shares, shared voting power with regard to 95,200 shares and sole
investment power with regard to 341,100 shares. The information as to the
beneficial ownership of Northwestern was obtained from the Schedule 13G
filed by that company.
(6) FMR Corp. ("FMR") is deemed to have beneficial ownership of 328,800 shares
as of December 31, 1996. Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR and a registered investment
adviser, is the beneficial owner of 156,000 shares and Fidelity Management
Trust Company, a wholly-owned subsidiary of FMR and a bank as defined in
Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial
owner of 172,800 shares. FMR has sole voting power with regard to 172,800
shares and sole investment power with regard to 328,800 shares. The
information as to the beneficial ownership of FMR was obtained from the
Schedule 13G filed by that company.
(7) Wellington Management Company ("Wellington"), a registered investment
adviser, is deemed to have beneficial ownership of 283,000 shares as of
December 31, 1996, which are owned by numerous investment advisory clients.
Wellington has shared voting power with regard to 181,000 shares and shared
investment power with regard to 283,000 shares. The information as to the
beneficial ownership of Wellington was obtained from the Schedule 13G filed
by that company.
(8) Founders Asset Management, Inc. ("Founders"), a registered investment
adviser, is deemed to have beneficial ownership of 243,550 shares as of
December 31, 1996, which are owned by numerous investment advisory clients.
Founders has sole voting power with regard to 243,550 shares and sole
investment power with regard to 243,550 shares. The information as to the
beneficial ownership of Founders was obtained from the Schedule 13G filed
by that company.
(9) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
adviser, is deemed to have beneficial ownership of 241,700 shares as of
December 31, 1996, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
serves as investment manager. Dimensional disclaims beneficial ownership of
all such shares. The information as to the beneficial ownership of
Dimensional was obtained from the Schedule 13G filed by that company.
(10) Includes 5,300 shares held in Mr. Graves' individual retirement account and
60,000 shares issuable pursuant to non-qualified stock options granted
under the NQSO Plan.
3
<PAGE> 6
(11) Includes 8,500 shares held directly by Mr. Wedaman, 36,000 shares issuable
pursuant to incentive stock options granted under the ISO Plan, 8,000
shares issuable pursuant to non-qualified stock options granted under the
1995 Omnibus Stock Incentive Plan, as amended (the "1995 Plan"), and 1,371
shares allocated to the Mark VII, Inc. Savings and Investment Plan (the
"SIP Plan") account of Mr. Wedaman. Mr. Wedaman has sole investment power
and shared voting power with respect to the shares allocated to his SIP
Plan account.
(12) Includes 1,100 shares owned directly, 5,000 shares issuable pursuant to
non-qualified stock options granted under the NQSO Plan and 2,000 shares
issuable pursuant to non-qualified stock options granted under the 1995
plan.
(13) Includes 3,750 shares owned directly, 2,800 shares owned indirectly through
Mr. Liss's individual retirement account, 100 shares owned jointly with Mr.
Liss's wife and 1,136 shares owned indirectly through Mr. Liss's wife's
individual retirement account.
(14) Includes 1,600 shares owned directly and 4,467 shares owned jointly with
Mr. Musacchio's wife.
(15) Includes 1,025 shares owned directly and 4,000 shares issuable pursuant to
non-qualified stock options granted under the 1995 Plan.
(16) Includes 880 shares owned directly and 2,000 shares owned indirectly
through Mr. List's individual retirement account.
(17) Includes 61,426 shares issuable pursuant to incentive stock options granted
under the ISO Plan, 198,324 shares issuable pursuant to non-qualified stock
options granted under the NQSO Plan and 16,000 shares issuable pursuant to
non-qualified stock options granted under the 1995 Plan.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven members and is
divided into three classes with three-year staggered terms. Two nominees (the
"Class I Directors") are to be elected at this Annual Meeting to serve for a
term of three years and until their successors are elected and qualified. The
nominees for election as Class I Directors are James T. Graves and Thomas J.
Fitzgerald. The remaining five Directors will continue to serve as set forth
below, with two Directors (the "Class II Directors") having terms expiring at
the 1998 annual meeting of shareholders and three Directors (the "Class III
Directors") having terms expiring at the 1999 annual meeting of shareholders.
Each of the nominees for election as Class I Directors is now a Director of the
Company and has agreed to serve if elected. The shares represented by the
enclosed proxy will be voted, unless otherwise indicated, for the election of
the nominees for Class I Directors. In the unanticipated event that either or
both of the nominees for director should become unavailable, the Board of
Directors, at its discretion, may designate substitute nominees, in which event
such shares will be voted for such substitute nominees.
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF THE TWO NOMINEES FOR
DIRECTOR NAMED BELOW.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS FOR
A THREE-YEAR TERM EXPIRING AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
Director Principal Occupation for
Director Since Age Last Five Years and Directorships
- ------------------------- -------- --- ---------------------------------
<S> <C> <C> <C>
James T. Graves 1987 62 Secretary of the Company since May 1992, General Counsel of the
Company since March 1993 and Vice Chairman since May 1993.
President of Missouri-Nebraska Express, Inc. ("Mo-Neb"), a
subsidiary of the Company, from September 1991 to May 1993.
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
Thomas J. Fitzgerald (1) 1995 55 Mr. Fitzgerald has a law and transportation consulting practice
based in Lake Forest, Illinois, in which he has been engaged since
1990. In that capacity he has counseled transportation companies,
purchasers of transportation and government agencies on a variety
of projects, including logistics, marketing, strategic positioning
and acquisitions.
</TABLE>
CLASS II DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1998 ANNUAL MEETING
<TABLE>
<CAPTION>
Director Principal Occupation for
Director Since Age Last Five Years and Directorships
- ------------------------- -------- --- ---------------------------------
<S> <C> <C> <C>
David H. Wedaman 1994 39 Executive Vice President of the Company since May 1991 and Chief
Operating Officer, Assistant Secretary and Assistant Treasurer of
the Company since September 1994. President, Chief Operating
Officer and Assistant Secretary of Mark VII Transportation Company,
Inc. ("Mark VII"), the Company's principal operating subsidiary,
since February 1993. From March 1991 to February 1993, he was
Executive Vice President of Mark VII.
Dr. Jay U. Sterling (1)(2) 1995 63 Dr. Sterling has been an Associate Professor of Marketing and
Logistics at the University of Alabama, Tuscaloosa since 1984. Dr.
Sterling has a Doctor of Philosophy ("Ph.D.") degree in marketing
and logistics from Michigan State University. In addition to his
teaching responsibilities, he has performed research and written
extensively in the areas of transportation, distribution and
logistics management and has also consulted extensively in the
areas of transportation and logistics management. Prior to
obtaining his Ph.D., Dr. Sterling spent 25 years in industry with
Whirlpool Corporation and The Limited in various logistics related
positions.
</TABLE>
CLASS III DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE AT THE 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
Director Principal Occupation for
Director Since Age Last Five Years and Directorships
- ------------------------- -------- --- ---------------------------------
<S> <C> <C> <C>
R. C. Matney 1989 59 Chairman of the Board of the Company since February 1992 and
President and Chief Executive Officer of the Company since July
1994. From May 1991 until February 1992, Mr. Matney was President
of the Company. Since July 1987, Mr. Matney has also been Chairman
of the Board and Chief Executive Officer of Mark VII. From July
1987 to February 1993, he was also President of Mark VII.
Douglass Wm. List (1)(2) 1993 41 Since January 1988, Mr. List has been President of List & Company,
Inc., a management consulting firm in Baltimore, Maryland.
Mr. List has also been President, since 1992, of Railway
Engineering Associates, a firm involved in developing railroad
technology. From 1988 to 1992, he was Vice President and General
Manager of Railway Engineering Associates. Since January 1997, Mr.
List has also been President of Moorgate, Inc., an investment
adviser. Mr. List is a director of Harmon Industries, Inc., a
publicly held company headquartered in Blue Springs, Missouri.
Harmon Industries, Inc. is a supplier of communication and
safety-related equipment for railroads worldwide.
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
William E. Greenwood (2) 1994 58 Mr. Greenwood is currently a self-employed consultant. He served
with the Burlington Northern Railroad Company, the largest railroad
in the United States and the principal subsidiary of Burlington
Northern Inc., a publicly held company headquartered in Fort Worth,
Texas, in various capacities from 1963 to 1994, serving as Chief
Operating Officer from 1990 to 1994. Mr. Greenwood is a director
of AmeriTruck Distribution Corporation, a large specialized
trucking company located in Fort Worth, Texas that is privately
held and is a SEC registrant due to its public debt securities. He
is a director of Transport Dynamics, Inc., a privately held
logistics software development and service company located in
Princeton, New Jersey. He is a director of Box Energy Corporation,
located in Dallas, Texas, a publicly held, independent exploration
and production company primarily engaged in the exploration for,
and the development and production of oil and natural gas.
</TABLE>
- --------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation/Stock Option Committee.
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors held five meetings and acted by unanimous written
consent on nine separate occasions during 1996.
The Audit Committee consists of Dr. Jay U. Sterling (Chairman of the
committee), Thomas J. Fitzgerald and Douglass Wm. List. The functions of the
Audit Committee are to review significant financial information of the Company,
ascertain the existence of an effective accounting and internal control system,
oversee the audit function and recommend the appointment of independent auditors
for the Company. The Audit Committee held five meetings in 1996. A
representative of the Company's independent auditors was present at those
meetings, as well as at all of the regular Board meetings.
The Compensation/Stock Option Committee consists of Douglass Wm. List
(Chairman of the committee), William E. Greenwood and Dr. Jay U. Sterling. The
Compensation/Stock Option Committee reviews salaries and bonuses of executive
officers and administers employee bonus plans, including grants of stock options
under the 1995 Plan, and other Company compensation programs. The
Compensation/Stock Option Committee held five meetings in 1996.
The Company does not have a standing nominating committee.
All directors attended at least 75% of the total number of meetings held in
1996 of the Board and committees on which they served.
DIRECTORS' FEES AND RELATED INFORMATION
Non-employee directors are compensated as follows: (i) a $500 per month
retainer, with an additional $250 per month for the chairman of each of the
Compensation/Stock Option Committee and the Audit Committee, (ii) meeting fees
of $1,500, $750 and $500 for each Board, committee and telephonic Board meeting
attended, respectively, (iii) an annual grant of options to purchase 2,000
shares of common stock pursuant to the 1995 Plan, which options are immediately
exercisable and expire three years from the date of grant, (iv) grants of 200
shares of common stock each quarter pursuant to the 1995 Plan and (v) standard
per diem rate of $1,500 per day spent on Company affairs which are outside of
normal director duties. In addition, the Company requires that each director
maintain a minimum shareholding in Company common stock of 350 shares for each
year of service as a director.
6
<PAGE> 9
EXECUTIVE OFFICERS AND KEY EMPLOYEES
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------ --- -------------------------------------------------------------
<S> <C> <C>
R. C. Matney 59 Chairman of the Board, President and Chief Executive Officer.
James T. Graves 62 Vice Chairman of the Board, General Counsel and Secretary.
David H. Wedaman 39 Executive Vice President, Chief Operating Officer, Assistant Secretary and
Assistant Treasurer; and President of Mark VII.
Philip L. Dunavant 32 Chief Financial Officer, Vice President of Finance, Treasurer and Assistant
Secretary since November 1996. Vice President of Finance, Assistant
Secretary and Assistant Treasurer from January 1995 to November 1996.
From May 1993 to January 1995, he was Assistant Vice President, and from
May 1989 to May 1993, he was Controller, of Mark VII.
J. Michael Head 43 Executive Vice President of the Company and President of the Risk Management
Division since July 1994. Chief Financial Officer, Treasurer and Assistant
Secretary of the Company from July 1994 to November 1996. President of the
Company from February 1992 to July 1994 and Chief Executive Officer of the
Company from November 1988 to July 1994.
Robert E. Liss 45 President/Special Services Division of Mark VII since January 1995; from May
1993 to January 1995, he was Vice President/Special Services Division of
Mark VII; from December 1992 to May 1993, he was Vice President of Mark
VII; from January 1989 to December 1992, he was Vice President-Intermodal
with C. H. Robinson Company, a third party agent specializing in freight
and produce brokerage.
Michael J. Musacchio 45 President/Logistics Services Division of Mark VII since January 1995; from May
1993 to January 1995, he was Executive Vice President/Logistics Services
Division of Mark VII from December 1992 to May 1993, he was Vice President
of Mark VII; from August 1992 to December 1992, he was an agent with Mark
VII; from December 1988 to July 1992, he was Vice President of
Transportation with C. H. Robinson Company.
</TABLE>
Executive officers will be elected annually by the Board of Directors and
will serve until their successors are elected or until resignation or removal.
There are no family relationships among any of the directors or executive
officers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's stock, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission (the "SEC")
and the NASD. Executive officers, directors and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent (10%) beneficial
owners were met.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years in the
period ended December 28, 1996, the compensation awarded, paid to or earned by
(i) each person who served as the Chief Executive Officer (the "CEO") of the
Company during 1996 and (ii) each of the four most highly compensated executive
officers (other than the CEO) whose total annual salary and bonus exceeded
$100,000 and who served as an executive officer of the Company or its
subsidiaries as of December 28, 1996 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
--------------------------------
Securities
Annual Compensation Underlying
---------------------- Options/ All Other
Name and Principal Position Year Salary (1) Bonus SARs(#) Compensation(3)
- ------------------------------ ---- ---------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
R.C. Matney, Chairman of 1996 $ 239,507 $130,660 - $ -
the Board, President and 1995 234,988 117,500 - -
Chief Executive Officer 1994 204,636 115,693 250,000 -
David H. Wedaman, Executive 1996 203,365 150,000 (2) - 315
Vice President, Chief Operating 1995 177,520 91,875 (2) 40,000 305
Officer and Director; 1994 135,111 96,250 (2) 7,500 315
President of Mark VII
Robert E. Liss, President 1996 127,412 513,450 - 951
Special Services Division 1995 126,208 383,243 - 696
of Mark VII 1994 125,000 145,452 - -
Michael J. Musacchio, President 1996 127,404 315,199 - 1,000
Logistics Services Division 1995 123,388 239,882 - -
of Mark VII 1994 120,142 51,686 - -
James T. Graves, Vice Chairman 1996 179,896 18,644 - -
of the Board, Secretary, 1995 175,569 3,356 - -
General Counsel and Director 1994 175,000 - - 360
</TABLE>
- ------------
(1) Salary amounts included 53 weeks in 1996 and 52 weeks in 1995 and 1994.
(2) Includes performance bonuses of $150,000, $70,000 and $43,750 and cash
payments pursuant to stock appreciation rights ("SARs") of $0, 21,875 and
$52,500 in 1996, 1995 and 1994, respectively
(3) Includes a Company matching contribution to the SIP Plan (a defined
contribution plan).
8
<PAGE> 11
The following table presents information for the last completed fiscal year
relating to (i) exercises by the Named Executive Officers of stock options
granted pursuant to the NQSO Plan, the ISO Plan and the 1995 Plan and (ii)
holdings at December 28, 1996 by the Named Executive Officers of unexercised
stock options granted pursuant to the NQSO Plan, the ISO Plan and the 1995 Plan,
and SARs granted pursuant to the Company's Stock Appreciation Rights Program.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAREND OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the Money
Shares Options/SARs at Options/SARs at
Acquired On Value Fiscal Yearend FiscalYearend (1)
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R.C. Matney None None 116,500 193,500 $1,970,625 $2,791,875
David H. Wedaman None None 44,000 43,500(2) 940,000 541,500
James T. Graves None None 60,000 - 1,200,000 -
</TABLE>
(1) Based on the yearend market price of $28.25.
(2) Includes 7,000 shares of common stock with respect to which SARs have been
granted.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Each of the Named Executive Officers has an employment contract with the
Company which could result in termination or resignation payments in excess of
$100,000. A summary of the base salary and terms provided in the employment
contracts follows:
<TABLE>
<CAPTION>
Name Base Salary Expiration of Contract
- -------------------- ----------- ----------------------
<S> <C> <C>
R.C. Matney $ 235,000 April 1, 2002
David H. Wedaman 240,000 January 1, 2000
Robert E. Liss 125,000 30 days' notice by either party(1)
Michael J. Musacchio 125,000 30 days' notice by either party(1)
James T. Graves 175,000 July 31, 1997
</TABLE>
(1) Subject to the termination payments discussed below.
Each of the contracts provides for payment of the contracted base salary
and benefits after termination as follows:
<TABLE>
<CAPTION>
Event of Termination Pay Subsequent to Termination
---------------------------------------- -----------------------------
<S> <C>
Death or Disability One year
Termination by Company, except for cause Remainder of contract term (or one year if no specified term)
</TABLE>
Under each of the contracts, the Company's obligation is reduced following an
event of termination if the terminated executive becomes employed during the
payment period. Mr. Wedaman may be terminated by the Company for failure to
achieve in any given year 50% of the pretax profit projected in the Company's
business plan for his business unit for such year, in which case he will receive
his base salary and benefits for only one year following the date of
termination. Each of Messrs. Liss and Musacchio may be terminated by the Company
with no further payments for failure to achieve pretax profit (as defined in
their respective agreements) of $250,000 in his business unit for any year. If
either of Messrs. Liss or Musacchio is terminated following a year in which
$250,000 of pretax profit was achieved, he will receive the greater of (i) three
times his prior year's compensation or (ii) $1.4 million. In the event either of
these two contracts is terminated because pretax profit of $250,000 was not
attained but the respective business unit was profitable, the Company may extend
for up to three years the confidentiality, non-
9
<PAGE> 12
compete and prohibition against solicitation of employees provisions of the
respective agreements by continuing to pay the base salary and making advance
annual payments of $300,000 for the first year, $300,000 for the second year and
$50,000 for the third year to Mr. Liss and $250,000 for the first year, $200,000
for the second year and $200,000 for the third year to Mr. Musacchio. The
Company may extend the confidentiality, non-compete and prohibition against
solicitation of employees provisions for up to three years beyond the terms of
the contracts of Messrs. Matney, Wedaman and Graves by continuing to pay all
base salary, bonuses and benefits set forth under each of their respective
contracts.
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation/Stock Option Committee of the Board of Directors (the "Committee"),
which is comprised of three non-employee directors.
The objective of the Company's executive compensation program is to provide
the compensation necessary to attract, motivate and retain dedicated and
talented executives and to provide a link between the success of the Company's
executives and its shareholders. The Committee believes that a significant
portion of the compensation of the Company's executive officers should be tied
to the performance of the Company and, where appropriate, to the performance of
specific business units for which the executives are responsible. Thus, the
program seeks to achieve these objectives through a combination of annual
salaries, performance-based bonuses and stock options.
The Committee reviews its executive compensation program continually to
ensure that the Company's executive officers are being appropriately compensated
in comparison to their respective responsibilities with the Company, the results
of the Company's business operations and compensation paid to comparable
executives at similar companies. The Committee considers several factors in its
review of executive compensation, including: (i) compensation of executives
holding comparable positions of responsibility at transportation services
companies of similar size and type of operation as the Company, including, Fritz
Companies, Inc., Air Express International Corporation, the Harper Group and
Expeditors International of Washington, Inc. (the "Peer Group"); (ii) each
executive's experience and performance history with the Company and with
previous employers and his or her suitability for his or her present assignment;
(iii) each executive's past compensation arrangements with the Company; (iv)
corporate performance; and (v) performance of business units for which the
executive is responsible. The Committee generally does not consider the
performance of the companies that comprise the Peer Group in establishing
executive officers' base salary ranges, although, as noted below under "CEO
Compensation", 50% of Mr. Matney's potential annual cash bonus is directly
related to the Company's shareholder return as compared with the shareholder
returns for the Peer Group. The Committee believes that the Company's executive
officers' total compensation is competitive with the industry, although base
salary ranges generally are below the industry median.
BASE SALARY
The minimum base salary of each of the Company's executive officers is
established in employment agreements between each such officer and the Company.
The Committee reviews the base salaries of the Company's executives annually
based on the factors described above and recommends adjustments where
appropriate. Based on the Committee's review, no adjustments were made during
1996 to the base salaries of the executive officers other than scheduled
increases included in their respective employment agreements. Under Mr.
Wedaman's employment agreement which became effective January 1, 1997, his base
salary was increased to $240,000 for 1997 from $200,000 in 1996.
ANNUAL BONUS
The Committee establishes a bonus program for each executive officer that
is designed to implement the Committee's compensation philosophy with respect to
bonus payments. The bonus programs for executives who are in charge of
particular business units are based on the profitability of their respective
business units. In most circumstances, this program is set forth in the
executive's employment agreement.
10
<PAGE> 13
Under Mr. Wedaman's employment agreement which expired on January 1, 1997,
his bonus program for 1996 was based upon the pretax profit (computed on the
basis of generally accepted accounting principles consistently applied) earned
by his business unit as compared to the annual pretax profit budget of that
unit. As reported in the Summary Compensation Table, a bonus of 75% of his
January 1, 1996 level of base salary was paid to Mr. Wedaman based on exceeding
the 1996 pretax profit budget for his business unit. Under his employment
agreement which became effective January 1, 1997, Mr. Wedaman's bonus program
will be based on the pretax profit earned by his business unit as compared to
the pretax profit of the unit for the prior fiscal year. Mr. Wedaman's bonus
will range from 30% of his base salary if the pretax profit of his business unit
exceeds the pretax profit of the unit for the prior fiscal year by 110% up to
70% of his base salary if the pretax profit of his business unit exceeds the
pretax profit of the unit for the prior fiscal year by 125%.
Each of Messrs. Liss's and Musacchio's employment agreements provide for an
annual bonus of 25% of pretax profit (computed on the basis of generally
accepted accounting principles consistently applied and defined in the
respective agreements) earned by his respective business unit, subject to
specific reductions under certain circumstances.
STOCK OPTIONS/SARS
The Committee has the discretion to grant awards of stock options or SARs
to the Company's executive officers. The Committee has not established
performance factors of general application for the grant of stock options or SAR
awards, but instead makes such decisions based on specific issues. Based on its
review of the executive compensation program, no stock options or SARs were
granted in 1996 to the executive officers.
In 1990, Mr. Wedaman was granted stock appreciation rights with respect to
7,000 shares of the Company's common stock. The stock appreciation rights
provide for cash payments to holders of the rights for increases in the market
prices of the Company's common stock as of April 1 of each year. The adjusted
base price as of April 1, 1996 was unchanged from the base price of $17.25 per
share at April 1, 1995. Therefore, no payment was made to Mr. Wedaman under this
program in 1996. The base price is adjusted each April 1 if the market closing
price on that date is greater than the previous base price.
Under the terms of his employment contract which became effective January
1, 1997, Mr. Wedaman was granted options to purchase 20,000 shares of the
Company's common stock pursuant to the 1995 Plan at an exercise price of $29.25
per share (the closing price of the Company's common stock on April 10, 1997,
the date of grant of such options). These options vest over five years,
beginning on April 10, 1998, and expire on April 9, 2007 if not exercised by
such time.
CEO COMPENSATION
As with all executive officers of the Company, the compensation of the CEO
is reviewed by the Committee on a regular basis in comparison to compensation
paid to executives holding comparable positions of responsibility, including
those employed at Peer Group companies. The Committee considers the same factors
when determining CEO compensation as it does when it sets compensation of the
Company's other executive officers. Based on such review, Mr. Matney's base
salary remained unchanged in 1996 and Mr. Matney was not granted any additional
stock options.
Pursuant to his employment agreement, as amended, Mr. Matney is paid two
annual cash bonuses, neither of which is to exceed half of his base salary. The
first bonus is an amount equal to his base salary multiplied by that percentage
of his base salary by which consolidated income from continuing operations
before income taxes exceeded $6,561,000. For 1996, that percentage was 52%,
resulting in a 50% bonus to Mr. Matney. The base for this calculation is
increased 25% each year. For any fiscal year during which a 25% increase in
consolidated income from continuing operations before income tax is not
attained, this bonus is not paid. The second bonus is an amount equal to his
base salary multiplied by the percentage increase (if any) in the Company's
stock price per share in excess of the increase in the stock price per share of
the Peer Group measured from July 1 to June 30. Thus, approximately 50% of Mr.
Matney's potential bonus is directly related to the Company's shareholder return
as compared with the shareholder returns of the Peer Group. For 1996, this
second bonus computation resulted in a bonus of $13,160 for Mr. Matney.
Effective January 1, 1997, in addition to the two bonuses paid pursuant to his
employment agreement as described above, Mr. Matney will receive an additional
bonus, payable monthly, that is directly linked to the ability of shareholders
to realize the value of their investment in the Company on a current
11
<PAGE> 14
basis. This additional bonus is an amount equal to 200 times the average fair
market value of the Company's common stock during the month for which the bonus
is paid.
The Committee has not yet adopted a policy with respect to the $1,000,000
limitation of deductibility of executive compensation under Section 162(m) of
the Internal Revenue Code of 1986, as amended, since current compensation levels
fall well below that amount.
Douglass Wm. List William E. Greenwood Jay U. Sterling, Ph.D.
REPORT OF AUDIT COMMITTEE CHAIR
The Audit Committee is comprised of three independent directors who are not
officers or employees of the Company. The Audit Committee oversees the Company's
financial reporting practices and internal controls to ensure that their
quality, integrity and objectivity are sufficient to protect shareholder assets.
This task is accomplished by meeting with the Company's independent public
accountants, management and internal auditors to assure that all are carrying
out their respective responsibilities, and to review pending litigation and
financial reporting matters. The Audit Committee is also responsible for
recommending the selection of the Company's independent auditors to the Board of
Directors and the outsourcing of internal audit activities. Both the independent
and internal auditors have unrestricted access to the audit committee, with or
without management being present.
Jay U. Sterling, Ph.D.
12
<PAGE> 15
PERFORMANCE GRAPH
The following chart compares cumulative total stockholder returns, assuming
the investment of $100 on December 31, 1991: (i) in the Company's common stock;
(ii) in the Nasdaq Stock Market-U.S. Index; and (iii) in the Nasdaq Trucking and
Transportation Index. Total return assumes reinvestment of dividends for the
indexes. The Company has never paid dividends on its common stock and has no
plans to do so.
<TABLE>
<CAPTION>
MARK VII, INC. NASDAQ STOCK MARKETS-US NASDAQ TRUCKING & TRANSPORTATION
-------------- ----------------------- --------------------------------
<S> <C> <C> <C>
12/91 100 100 100
12/92 107 116 122
12/93 168 134 149
12/94 161 131 135
12/95 221 185 157
12/96 396 227 173
</TABLE>
The Company will provide to shareholders, without charge, a list of the
component companies in the Nasdaq Trucking and Transportation Index. Requests
for the list should be addressed to Mark VII, Inc., 965 Ridge Lake Boulevard,
Suite 103, Memphis, Tennessee, Attention: Carol Clement, Manager of Financial
Reporting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with affiliates of the Company have been and will be made on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties. In addition, the Board has adopted a formal policy of not
entering into transactions with officers or affiliates of the Company unless the
Board makes a specific finding that not to enter into such transaction would be
contrary to the best interests of the Company and its public shareholders. Any
such transactions, including loans, with officers or affiliates and/or
shareholders of the Company require the approval of a majority of the
disinterested directors.
13
<PAGE> 16
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
For the Company's 1996 fiscal year, Arthur Andersen LLP audited the
consolidated financial statements of the Company, including reports to the SEC
and others. It is anticipated that representatives of Arthur Andersen LLP will
attend the Annual Meeting, will have the opportunity to make a statement and
will be available to respond to questions by shareholders.
Company management and the Audit Committee of the Board of Directors will
make their recommendation with respect to the method of selection and/or
retention of an independent public accounting firm for the year 1997 at a
meeting of the Board of Directors subsequent to the Annual Meeting of
Shareholders.
SHAREHOLDER PROPOSALS
In the event any shareholder intends to present a proposal at the Annual
Meeting of Shareholders to be held in 1998, such proposal must be received by
the Company, in writing, on or before December 10, 1997, to be considered for
inclusion in the Company's next voting Proxy and Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James T. Graves
----------------------------
James T. Graves
Secretary
April 11, 1997
14
<PAGE> 17
Appendix A
MARK VII, INC. PROXY
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. C. Matney, James T. Graves and David H.
Wedaman, jointly and individually, as Proxies, each with full power of
substitution and hereby authorizes them to represent and to vote, as designated
on the reverse side, all the shares of common stock of Mark VII, Inc. which the
undersigned would be entitled to vote, as designated on the reverse side, if
personally present at the Annual Meeting of Shareholders to be held on May 16,
1997, or at any adjournment or postponement thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
A [X] Please mark your votes as in this example.
1. ELECTION OF DIRECTORS
[ ] FOR ALL NOMINEES LISTED BELOW (except as mentioned to the contrary
below)
[ ] WITHOUT AUTHORITY to vote for all (nominees listed below)
NOMINEES: James T. Graves, Thomas J. Fitzgerald
INSTRUCTION: To withhold authority to vote for any individual nominee strike
a line through the nominee's name.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES FOR DIRECTOR.
NOTE: (Please sign exactly as name appears on stock certificates. Where stock
is registered jointly, all owners must sign. Corporate owners should
sign full corporate name by an authorized person. Executors,
administrators, trustees or guardians should indicate their status when
signing.)
Date_________________________,1997
_________________________________
Signature
_________________________________
(signature if held jointly)
Please date, sign and return this Proxy card by mail. Postage prepaid.
