<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
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1999
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 21st day of May, 1999, at 11:00 a.m., local time, at
the Peabody Hotel, 149 Union Avenue, Memphis, Tennessee, for the following
purposes:
(1) To elect three Class III Directors for a term expiring in 2002
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 26,
1999 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 1998 Annual Report to Shareholders accompany
this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James T. Graves
------------------------------------------
James T. Graves
Secretary
April 16, 1999
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
965 Ridge Lake Boulevard, Suite 100
Memphis, Tennessee 38120
----------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1999
----------------------
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 21st day of May,
1999, at 11:00 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 16, 1999. 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 26, 1999
(the "Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. On the Record Date, the Company had 8,957,370 shares of common stock,
par value $.05 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 and herein, 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
March 5, 1999 (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. On March 5, 1999, the
Company had 8,963,270 shares of common stock issued and outstanding. 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 Asset Management, Inc.
466 Lexington Avenue
New York, NY 10017 1,992,200 (2) 22.2%
Dresdner RCM Global Investors L.L.C.
Dresdner RCM Global Investors U.S. Holdings L.L.C.
Dresdner Bank AG
Four Embarcadero Center, Suite 2900
San Francisco, CA 94111 1,346,400 (3) 15.0%
R.C. Matney 1,079,380 (4) 11.6%
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202 873,700 (5) 9.7%
FMR Corp.
82 Devonshire Street
Boston, MA 02109 769,800 (6) 8.6%
Wellington Management Company, L.L.P.
75 State Street
Boston, MA 02109 657,400 (7) 7.3%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 466,600 (8) 5.2%
David H. Wedaman 167,342 (9) 1.8%
James T. Graves 130,600 (10) 1.4%
Philip L. Dunavant 27,766 (11) .3%
William E. Greenwood 27,000 (12) .3%
Dr. Jay U. Sterling 23,000 (13) .3%
Thomas J. Fitzgerald 20,850 (14) .2%
Michael J. Musacchio 17,334 (15) .2%
Douglass Wm. List 15,360 (16) .2%
All Executive Officers and Directors as a Group 1,524,204 (17) 15.7%
(10 persons)
</TABLE>
(1) Unless otherwise indicated, the address is the Company's principal
office.
(2) Warburg Pincus Asset Management, Inc. ("Warburg"), a registered
investment adviser, is deemed to have beneficial ownership of 1,992,200
shares as of December 31, 1998, which are owned by numerous investment
advisory clients. Warburg has sole voting power with regard to
1,587,200 shares, sole investment power with
2
<PAGE> 5
regard to 1,992,200 shares and shared voting power with regard to
389,700 shares. The information as to the beneficial ownership of
Warburg was obtained from the Schedule 13G/A filed by that company.
(3) Dresdner RCM Global Investors L.L.C. ("Dresdner RCM"), a registered
investment adviser and wholly-owned subsidiary of Dresdner RCM U.S.
Holdings L.L.C. ("DRCM Holdings") is deemed to have beneficial
ownership of 1,346,400 shares as of December 31, 1998. DRCM Holdings is
a wholly-owned subsidiary of Dresdner Bank AG. Dresdner Bank AG and
DRCM Holdings are deemed to have beneficial ownership of securities
managed by Dresdner RCM. Dresdner RCM has sole voting power with regard
to 1,101,325 shares, sole investment power with regard to 1,276,400
shares and shared investment power with regard to 70,000 shares. The
information as to the beneficial ownership of Dresdner RCM, DRCM
Holdings and Dresdner Bank AG was obtained from the Schedules 13G/A
filed by those companies.
(4) Includes 610,860 shares owned indirectly through Mr. Matney's living
trust, 90,520 shares owned indirectly through Mr. Matney's individual
retirement account, 378,000 shares issuable pursuant to stock options
granted under the Company's 1995 Omnibus Stock Incentive Plan, as
amended (the "1995 Plan"), the 1992 Non-Qualified Stock Option Plan
(the "1992 Plan") and the 1986 Incentive Stock Option Plan (the "1986
Plan").
(5) The Northwestern Mutual Life Insurance Company ("Northwestern"), an
insurance company, is deemed to have beneficial ownership of 873,700
shares as of December 31, 1998. Northwestern has sole voting power with
regard to 632,100 shares, shared voting power with regard to 241,600
shares, sole investment power with regard to 632,100 shares and shared
investment power with regard to 241,600 shares. The information as to
the beneficial ownership of Northwestern was obtained from the Schedule
13G/A filed by that company.
(6) FMR Corp. ("FMR") is deemed to have beneficial ownership of 769,800
shares as of December 31, 1998. Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR and a registered
investment adviser, is the beneficial owner of 525,400 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 244,400 shares. FMR has sole voting
power with regard to 244,400 shares and sole investment power with
regard to 769,800 shares. The information as to the beneficial
ownership of FMR was obtained from the Schedule 13G/A filed by that
company.
(7) Wellington Management Company, L.L.P. ("Wellington"), a registered
investment adviser, is deemed to have beneficial ownership of 657,400
shares as of December 31, 1998, which are owned by numerous investment
advisory clients. Wellington has shared voting power with regard to
429,000 shares and shared investment power with regard to 657,400
shares. The information as to the beneficial ownership of Wellington
was obtained from the Schedule 13G/A filed by that company.
(8) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 466,600 shares as of
December 31, 1998, which are owned by numerous investment advisory
clients. Dimensional has sole voting power with regard to 466,600
shares and sole investment power with regard to 466,600 shares. The
information as to the beneficial ownership of Dimensional was obtained
from the Schedule 13G/A filed by that company.
(9) Includes 147,600 shares issuable pursuant to stock options granted
under the 1986 Plan and the 1995 Plan, and 2,742 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.
(10) Includes 10,600 shares held in Mr. Graves' individual retirement
account and 120,000 shares issuable pursuant to stock options granted
under the 1992 Plan. Of the 120,000 shares issuable pursuant to stock
options, 80,000 are held indirectly through the James T. Graves Family
Trust.
(11) Includes 27,766 shares issuable pursuant to stock options granted under
the 1986 and 1995 Plans.
(12) Includes 22,000 shares issuable pursuant to stock options granted under
the 1992 and 1995 Plans.
3
<PAGE> 6
(13) Includes 12,000 shares issuable pursuant to stock options granted under
the 1995 Plan.
(14) Includes 8,850 shares owned jointly with Mr. Fitzgerald's wife and
12,000 shares issuable pursuant to stock options granted under the 1995
Plan.
(15) Includes 13,434 shares owned jointly with Mr. Musacchio's wife.
(16) Includes 3,000 shares owned indirectly through Mr. List's individual
retirement account and 8,000 shares issuable pursuant to stock options
granted under the 1995 Plan.
(17) Includes 727,366 shares issuable pursuant to stock options granted
under the 1986, 1992 and 1995 Plans.
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of seven members and is
divided into three classes each with three-year staggered terms. Three nominees
(the "Class III Directors") are to be elected at this Annual Meeting to serve
for a term of three years or until their successors are elected and qualified.
The nominees for election as Class III Directors are R.C. Matney, Douglass Wm.
List and William E. Greenwood. The remaining four Directors will continue to
serve as set forth below, with two Directors (the "Class I Directors") having
terms expiring at the 2000 annual meeting of shareholders and two Directors (the
"Class II Directors") having terms expiring at the 2001 annual meeting of
shareholders. Each of the nominees for election as Class III 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 III Directors. In the unanticipated event
that any one, or all three, 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 THREE NOMINEES
FOR DIRECTOR NAMED BELOW.
NOMINEES FOR ELECTION AS CLASS III DIRECTORS FOR
A THREE-YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
<TABLE>
<CAPTION>
Director Principal Occupation for
Director Since Age Last Five Years and Directorships
-------- ----- --- ---------------------------------
<S> <C> <C> <C>
R. C. Matney 1989 61 Chairman of the Board of the Company since February 1992 and
Chief Executive Officer of the Company since July 1994. From
May 1991 until January 1999, 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
Transportation Company, Inc. ("Mark VII Transportation"), the
Company's principal operating subsidiary. From July 1987 to
February 1993, he was also President of Mark VII
Transportation.
Douglass Wm. List (1,2,4) 1993 43 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., a registered 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>
4
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
William E. Greenwood (2,3,4) 1994 60 Mr. Greenwood is currently a self-employed consultant. He
served with the Burlington Northern Railroad Company, one of
the largest railroads 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 an 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>
CLASS I DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE 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 64 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.
Thomas J. Fitzgerald (1,3,4) 1995 57 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 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
Director Principal Occupation for
Director Since Age Last Five Years and Directorships
-------- ----- --- ---------------------------------
<S> <C> <C> <C>
David H. Wedaman 1994 41 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 since February 1993. From March 1991 to
February 1993, he was Executive Vice President of Mark VII
Transportation.
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Dr. Jay U. Sterling (1,2,3) 1995 65 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>
- --------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation/Stock Option Committee.
(3) Member of the Strategic Planning Committee
(4) Member of the Corporate Governance Committee
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors held six meetings during 1998.
The Audit Committee consists of Dr. Jay U. Sterling (Chairman), 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 six meetings in 1998. 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), 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 six meetings in 1998.
The Strategic Planning Committee consists of William E. Greenwood
(Chairman), Dr. Jay U. Sterling and Thomas J. Fitzgerald. The Strategic Planning
Committee conducted its initial meeting on September 18, 1998 and is responsible
for developing and guiding an effective short and long-term planning process
that will fully develop the potential of the Company. The Strategic Planning
Committee held three meetings in 1998.
The Corporate Governance Committee conducted its initial meeting on
September 18, 1998 and consists of Thomas J. Fitzgerald (Chairman), William E.
Greenwood and Douglass Wm. List. The Corporate Governance Committee serves as
the nominating committee for the Board, assisting the Board in matters
pertaining to the overall structure and organization of the Board and its
effective operation and conduct. The Corporate Governance Committee held three
meetings in 1998.
All directors attended at least 75% of the total number of meetings
held in 1998 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
Board Committees, (ii) meeting fees of $1,500, $750 and $500 for
6
<PAGE> 9
each Board, committee and telephonic Board meeting attended, respectively, (iii)
an annual grant of options to purchase 4,000 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 400 shares of common stock each quarter
pursuant to the 1995 Plan and (v) a 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 700 shares for each year of service as a
director.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
Set forth below is certain information regarding each of the current
executive officers and key employees of the Company. See "Election of Directors"
for further information about Messrs. Matney, Wedaman and Graves.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------ ---- -------------------------------------------------------------------------------
<S> <C> <C>
R. C. Matney 61 Chairman of the Board and Chief Executive Officer.
Mark A. Skoda 44 President since January 1999. From June 1998 to January 1999, Mr. Skoda was
Executive Vice President of Penske Logistics, a division of Penske Truck
Leasing, Inc. From June 1995 to May 1998, he was Senior Vice President of
TNT Logistics, Inc. and from March 1994 to May 1995 he was Vice President
of FedEx Logistics, a division of Federal Express Corporation. Mr. Skoda
was Director of Sales and Marketing for Business Logistics Services, a
division of Federal Express Corporation, from May 1993 to February 1994. He
was Vice President of UPS Worldwide Logistics, a division of United Parcel
Service, Inc. from September 1992 to April 1993 and Executive Vice
President of UPS Yomato, Inc. from January 1990 to August 1992.
David H. Wedaman 41 Executive Vice President, Chief Operating Officer, Assistant Secretary and
Assistant Treasurer; and President of Mark VII Transportation.
Michael J. Musacchio 47 President of Mark VII Worldwide Logistics, Inc., a wholly-owned subsidiary of
Mark VII Transportation, since October 1998. President of Logistics Services
Division of Mark VII Transportation from June 1995 to October 1998; from
January 1993 to June 1995, he was Executive Vice President of Logistics
Services Division of Mark VII Transportation.
Robert E. Liss 47 President of Special Services Division of Mark VII Transportation since
January 1995; from May 1993 to January 1995, he was Vice President of
Special Services Division of Mark VII Transportation.
James T. Graves 64 Vice Chairman of the Board, General Counsel and Secretary.
Philip L. Dunavant 34 Executive Vice President, Chief Financial Officer, 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. The Company has
previously announced Mr. Dunavant's resignation from the Company effective
May 28, 1999.
</TABLE>
Executive officers are elected annually by the Board of Directors and
serve until their successors are elected or until resignation or removal. There
are no family relationships among any of the directors or executive officers.
7
<PAGE> 10
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 (on Form 3)
and reports of changes in ownership (on Form 4 or Form 5) 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.
EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years in
the period ended January 2, 1999, the compensation awarded, paid to or earned by
(i) the Chief Executive Officer (the "CEO") of the Company during 1998 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 January 2, 1999
(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
- --------------------------- ---- --------- ----- ------- ------------
<S> <C> <C> <C> <C> <C>
R.C. Matney, Chairman of 1998 $ 279,135 $256,279 - $ -
the Board and Chief 1997 234,988 302,578 40,000 35,000 (5)
Executive Officer 1996 239,507 130,660 - -
David H. Wedaman, Executive 1998 240,000 176,875 (2) - 570 (4)
Vice President, Chief Operating 1997 239,231 295,938 (2) 68,000 570 (4)
Officer and Director; 1996 203,365 150,000 - 315 (4)
President of Mark VII
Transportation
Michael J. Musacchio, President 1998 125,000 564,230 - 1,002 (4)
of Mark VII Worldwide 1997 125,000 323,788 - 1,000 (4)
Logistics, Inc. 1996 127,404 319,851 - 1,000 (4)
James T. Graves, Vice Chairman 1998 189,520 15,000 - 1,002 (4)
of the Board, Secretary, 1997 189,520 15,000 - 855 (4)
General Counsel and Director 1996 179,896 18,644 - -
Philip L. Dunavant, Executive 1998 141,827 90,000 (3) - 570 (4)
Vice President, Chief Financial 1997 118,268 65,625 (3) - 570 (4)
Officer, Treasurer and Assistant 1996 96,082 35,984 - 580 (4)
Secretary
</TABLE>
- ------------
(1) Salary amounts included 52 weeks in 1998 and 1997 and 53 weeks in 1996.
(2) Includes performance bonuses of $120,000 and $180,000 and cash payments
pursuant to stock appreciation rights ("SARs") of $56,875 and $115,938 in
1998 and 1997, respectively.
8
<PAGE> 11
(3) Includes performance bonuses of $60,000 and $60,000 and cash payments
pursuant to stock appreciation rights ("SARs") of $30,000 and $5,625 in
1998 and 1997, respectively.
(4) Company matching contribution to the SIP Plan (a defined contribution
plan).
(5) Initial club dues.
No options were granted to any of the Named Executive Officers for the
last completed fiscal year. The following table presents information for
exercises of stock options for the last completed fiscal year and holdings at
January 2, 1999 by the Named Executive Officers of unexercised stock options
granted pursuant to the 1986 Plan, the 1992 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 YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Fiscal Year End Fiscal Year End(1)
Acquired On Value ---------------------------- -------------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R.C. Matney None None 378,000 282,000 $4,678,250 $3,034,250
David H. Wedaman None None 139,600 103,400(2) 1,806,400 596,350
Michael J. Musacchio None None - - - -
James T. Graves None None 120,000 - 1,740,000 -
Philip L. Dunavant None None 33,866 40,134(3) 312,297 190,953
</TABLE>
(1) Based on the year end market price of $18.625.
(2) Includes 14,000 shares of common stock with respect to which SARs have been
granted.
(3) Includes 6,000 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 $ 330,000 April 1, 2002
Mark A. Skoda(1) 300,000 January 15, 2001
David H. Wedaman 260,000 January 1, 2000
Michael J. Musacchio 125,000 30 days' notice by either party(2)
James T. Graves 190,000 30 days' notice by either party(2)
Philip L. Dunavant 175,000 May 28, 1999
</TABLE>
(1) Mr. Skoda is not a Named Executive Officer for the purposes of this proxy
statement. Mr. Skoda was appointed President of the Company in January
1999. The Company has elected to disclose the terms of his employment
contract herein.
(2) Subject to the termination payments discussed below.
9
<PAGE> 12
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. Mr. Musacchio may be terminated by the Company with no further
payments for failure to achieve pretax profit (as defined in his agreement) of
$250,000 in his business unit for any year. If Mr. 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 this contract 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-compete and
prohibition against solicitation of employees provisions of the agreement by
continuing to pay the base salary and making advance annual payments of $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, Skoda, Wedaman and Graves
by continuing to pay all base salary, bonuses and benefits set forth under each
of their respective contracts. Upon Mr. Graves' termination of employment, he
will receive one year's base salary and benefits. Mr. Dunavant's employment will
terminate on May 28, 1999. According to the termination provisions of Mr.
Dunavant's contract, he will receive one year's base salary and benefits and a
pro rata portion of his bonus.
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 other transportation services
companies, including Hub Group, Inc., Fritz Companies, Inc., Air Express
International Corporation, Circle Financial Group, Expeditors International of
Washington, Inc. and C.H. Robinson Worldwide, 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 believes that the Company's executive
officers' total compensation is competitive with the industry.
10
<PAGE> 13
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, Mr. Matney, Mr. Wedaman and Mr.
Dunavant have received salary increases. Under Mr. Matney's addendum to his
employment agreement dated February 1, 1999, his base salary was increased to
$330,000 from $280,000 in 1998. Mr. Wedaman's salary was increased from $240,000
to $260,000 effective January 1, 1999 and Mr. Dunavant's salary was increased
from $150,000 to $175,000 pursuant to an addendum to his employment agreement
dated January 1, 1999.
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.
According to Mr. Wedaman's employment agreement, his bonus program is
based on the pretax profit earned by his business unit as compared to the pretax
profit of the unit for the prior fiscal year. Effective January 1, 1999, Mr.
Wedaman's bonus ranges from 50% of his base salary if the pretax profit of his
business unit exceeds 110% of the pretax profit of the unit for the prior fiscal
year up to 100% of his base salary if the pretax profit of his business unit
exceeds the target set by the committee, approximately 117% of the pretax profit
of the unit for the prior fiscal year. Prior to January 1, 1999, Mr. Wedaman's
bonus ranged from 30% of his base salary if the pretax profit of his business
unit exceeded 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 exceeded the
pretax profit of the unit for the prior fiscal year by 125%.
Mr. Musacchio's employment agreement provides for an annual bonus of 25%
of pretax profit (computed on the basis of generally accepted accounting
principles consistently applied and defined in the agreement) earned by his
business unit, subject to specific reductions under certain circumstances. Mr.
Dunavant receives an annual bonus of 40% of his base salary if the Company's
consolidated pre-tax profit meets or exceeds 120% of the Company's prior year
consolidated pre-tax profit, as defined in the agreement. If this earnings
target is not achieved in any given year, Mr. Dunavant receives a bonus of 25%
of his base salary.
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. There were no
grants of SARs or options to any of the Company's named executive officers
during the year ended January 2, 1999.
Both Mr. Wedaman and Mr. Dunavant hold stock appreciation rights which
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, 1998 was $18.50, as compared to the base price of
$15.25 per share at April 1, 1997. Accordingly, payments of $56,875 and $30,000
were made to Mr. Wedaman and Mr. Dunavant, respectively, under this program in
1998. The base price is adjusted each April 1 if the market closing price on
that date is greater than the previous base price.
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 and
as set forth above, Mr. Matney's base salary was increased to $330,000 for 1999.
11
<PAGE> 14
Pursuant to his employment agreement, Mr. Matney is paid two annual cash
bonuses. The first bonus is based upon the increase in consolidated income from
continuing operations before income tax ("net pre-tax income") as compared to
the increase prescribed in the Company's operating plan. If the Company's
increase in net pre-tax income is equal to or greater than the planned increase
in net pre-tax income, Mr. Matney will receive a bonus in the amount of 50% of
his base salary (the "target payment"), plus the percentage by which the
increase in net pre-tax income exceeds the planned percentage increase, if any,
multiplied by the target payment. If the increase in net pre-tax income is less
than the planned increase but greater than 25% of the planned increase, Mr.
Matney will receive the percentage of the planned increase in net pre-tax income
attained multiplied by the target payment. If the increase in net pre-tax income
attained is less than 25% of the planned increase, Mr. Matney will receive no
bonus under this provision of the agreement. For 1998, this calculation resulted
in a bonus of $182,000 for Mr. Matney. 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. This bonus computation resulted
in no bonus for Mr. Matney for the period July 1, 1997 to June 30, 1998. This
second bonus was discontinued as of January 1, 1999, with a partial year payment
of $42,647 for the period July 1, 1998 to December 31, 1998.
Mr. Matney also receives 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 basis. Effective January 1, 1999, this
additional bonus is an amount equal to 800 times the average fair market value
of the Company's common stock during the month for which the bonus is paid. From
January 1, 1998 to December 31, 1998, the bonus was equal to 600 times the
average fair market value of the Company's common stock. Mr. Matney received
monthly bonuses pursuant to this provision of $74,279 in the aggregate during
1998. Prior to January 1, 1998, the bonus was an amount equal to 400 times the
average fair market value of the Company's common stock.
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, 1993: (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.
NASDAQ STOCK NASDAQ TRUCKING
MARK VII, INC. MARKETS-US & TRANSPORTATION
-------------- ---------- ----------------
12/94 96 98 91
12/95 132 138 106
12/96 236 170 117
12/97 283 209 149
12/98 317 293 132
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 100, Memphis, Tennessee, 38120, Attention: Carol Davis, Assistant Vice
President.
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 1998 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 1999 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 2000, such proposal must be received by
the Company, in writing, on or before December 17, 1999, 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 16, 1999
14
<PAGE> 17
Appendix A
PROXY
MARK VII, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints 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 below, all the
shares of common stock of Mark VII, Inc. which the undersigned would be entitled
to vote, as designated below, if personally present at the Annual Meeting of
Shareholders to be held on May 21, 1999, or any adjournment or postponement
thereof.
ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW WITHOUT AUTHORITY (to vote
(except as marked to the contrary below) for all nominees below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee strike a
line through the nominee's name.
R.C. MATNEY, DOUGLASS WM. LIST, WILLIAM E. GREENWOOD
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.
Please date, sign and return this Proxy card by mail. Postage prepaid.
Date: , 1999
----------------------------
---------------------------------------
Signature
----------------------------------------
Signature
(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.)
