<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
CROWN GROUP, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 0-11:1
4) Proposed maximum aggregate value of transaction:
[ ] 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:
- --------
(1) Set forth the amount on which the filing fee is calculated
and state how it was determined.
<PAGE> 2
CROWN GROUP, INC.
4040 NORTH MACARTHUR BOULEVARD, SUITE 100
IRVING, TEXAS 75038
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 25, 1999
To the Holders of Common Stock of
Crown Group, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of
Crown Group, Inc., a Texas corporation (the "Company"), will be held in
accordance with its Bylaws at the Four Seasons Hotel and Resort, 4150 North
MacArthur Boulevard, Irving, Texas 75038, on Monday, October 25, 1999, at
10:00 a.m., local time, for the following purposes:
(1) To elect seven directors to serve for a term of one year and
until their successors have been elected and qualified; and
(2) To conduct such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record as of the close of business on August 27,
1999, will be entitled to notice of and to vote at said meeting or any
adjournment thereof.
By Order of the Board of Directors.
Edward R. McMurphy
Chairman of the Board,
President and Chief Executive Officer
September 27, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU
ARE URGED TO COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
ACCOMPANYING RETURN ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED BY THE SENDER
IF MAILED WITHIN THE UNITED STATES.
<PAGE> 3
CROWN GROUP, INC.
4040 NORTH MACARTHUR BOULEVARD, SUITE 100
IRVING, TEXAS 75038
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 25, 1999
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement, which is first being mailed to stockholders on or
about September 30, 1999, is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Crown Group, Inc. (the
"Company"), for use at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting") to be held at the Four Seasons Hotel and Resort, 4150 North
MacArthur Boulevard, Irving, Texas 75038, on Monday, October 25, 1999, at 10:00
a.m., local time, and at any or all adjournments thereof. The address of the
principal executive offices of the Company is 4040 North MacArthur Boulevard,
Suite 100, Irving, Texas 75038 and the Company's telephone number at such
address is (972) 717-3423.
The total cost of this solicitation will be borne by the Company. In
addition to the U.S. mail, proxies may be solicited by officers and regular
employees of the Company, without remuneration, by personal interviews,
telephone and facsimile. It is anticipated that banks, brokerage houses and
other custodians, nominees and fiduciaries will forward soliciting material to
beneficial owners of stock entitled to vote at the Annual Meeting.
Any person giving a proxy pursuant to this Proxy Statement may revoke
it at any time before it is exercised at the Annual Meeting by notifying in
writing the Secretary of the Company, Mark D. Slusser, at the offices of the
Company, 4040 North MacArthur Boulevard, Suite 100, Irving, Texas 75038, prior
to the Annual Meeting date. In addition, if the person executing the proxy is
present at the Annual Meeting, he may, but need not, revoke the proxy, by
notice of such revocation to the Secretary of the Annual Meeting, and vote his
shares in person. Proxies in the form enclosed, if duly signed and received in
time for voting, and not so revoked, will be voted at the Annual Meeting in
accordance with the instructions specified therein. Where no choice is
specified, proxies will be voted FOR the election of the nominees for director
named herein and, on any other matters presented for a vote, in accordance with
the judgment of the persons acting under the proxies. Abstentions and broker
non-votes will not be counted as votes either in favor of or against the matter
with respect to which the abstention or broker non-vote relates; however, with
respect to any proposal other than the election of directors, abstentions and
broker non-votes would have the effect of a vote against the proposal.
Only stockholders of record at the close of business on August 27,
1999 will be entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. Each share of Common Stock issued and outstanding on such
record date is entitled to one vote. As of August 23, 1999, the Company had
outstanding 9,741,796 shares of Common Stock.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 23,
1999, with respect to ownership of the outstanding Common Stock by (i) all
persons known to the Company to own beneficially more than five percent (5%) of
the outstanding Common Stock of the Company (whose address is shown), (ii) each
director and nominee for director of the Company, (iii) each of the executive
officers of the Company named in the Summary Compensation Table on page 5, and
(iv) all directors and executive officers as a group. Unless otherwise
indicated, each person possesses sole voting and investment power with respect
to the shares owned by him.
<TABLE>
<CAPTION>
Number of Shares Percent
Name Beneficially Owned of Class
<S> <C> <C>
Robert J. Kehl 969,167(1) 9.9%
Third St., Ice Harbor
Dubuque, Iowa 52004
Edward R. McMurphy 974,540(2) 9.4%
4040 N. MacArthur Blvd
Suite 100
Irving, Texas 75038
Gerald L. Adams 565,000(3) 5.8%
1225 East 9th St
Lockport, Illinois 60441
Tilman J. Falgout, III 659,000(4) 6.6%
4040 N. MacArthur Blvd
Irving, Texas 75038
Gerard M. Jacobs 428,280(5) 4.4%
John David Simmons 49,650(6) *
David J. Douglas 64,300(7) *
Mark D. Slusser 102,500(8) 1.0%
All Directors and Executive 3,812,437(9) 35.3%
Officers as a Group (8 persons)
</TABLE>
- -------------------
* Less than 1%.
(1) Includes 956,667 shares issued in the name of Kehl River Boats, Inc.,
of which Mr. Kehl is president and a principal shareholder. Also
includes 12,500 shares subject to stock options.
(2) Includes 600,000 shares subject to presently exercisable stock
options.
(3) Includes 15,000 shares subject to presently exercisable stock options.
(4) Includes 242,500 shares subject to presently exercisable stock options
and 400,000 shares held in a corporation controlled by Mr. Falgout.
(5) Includes 2,300 shares held by a corporation controlled by Mr. Jacobs,
120,000 shares owned by Mr. Jacobs' spouse, 12,000 shares held by a
partnership of which Mr. Jacobs is a general partner, and 12,500
shares subject to presently exercisable stock options.
(6) Includes 47,500 shares subject to presently exercisable stock options.
2
<PAGE> 5
(7) Includes 42,500 shares subject to presently exercisable stock options.
(8) Includes 100,000 shares subject to presently exercisable stock
options.
(9) Includes an aggregate of 1,072,500 shares subject to presently
exercisable stock options, 402,300 shares held in corporations
controlled by certain directors, 956,667 shares issued in the name of
Kehl River Boats, Inc. of which a director is president and a
principal shareholder, 12,000 shares held in a partnership of which a
director is a general partner, and 120,000 shares owned by a spouse of
a director.
AGENDA ITEM ONE
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Company, the Board of Directors has set
the number of directors for the ensuing year at seven, all of whom are proposed
to be elected at the Annual Meeting. In the event any nominee is unable or
declines to serve as a director at the time of the meeting, the persons named
as proxies therein will have discretionary authority to vote the proxies for
the election of such person or persons as may be nominated in substitution by
the present Board of Directors. Management knows of no current circumstances
which would render any nominee named herein unable to accept nomination or
election. Directors shall be elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election of directors at a meeting of
shareholders at which a quorum is present.
Members of the Board of Directors are elected annually to serve until
the next annual meeting of stockholders and until their successors are elected
and qualified.
The following persons have been nominated for election to the Board of
Directors.
EDWARD R. MCMURPHY, age 48, has served as the Company's Chief
Executive Officer since July 1984. He has been a director of the Company since
its inception in April 1983. From 1979 to June 1986, Mr. McMurphy served as
President of Marion Properties, Inc., a real estate development company and
former parent of the Company from July 1984 to June 1986.
TILMAN J. FALGOUT, III, age 50, has served as Executive Vice President
and General Counsel of the Company since March 1995 and as a director of the
Company since September 1992. From 1978 until June 1995, Mr. Falgout was a
partner in the law firm of Stumpf & Falgout, Houston, Texas.
JOHN DAVID SIMMONS, age 63, has served as a director of the Company
since August 1986. Since 1970, he has been President of Simmons & Associates,
Inc., a real estate development company, and Management Resources Company, a
management consulting firm.
DAVID J. DOUGLAS, age 35, has served as managing director of Tuesday
Afternoon, Inc. (investment company) since January 1998. From February 1993
through December 1997, Mr. Douglas served as managing director of Triple S
Capital Corporation (investment banking firm). From July 1989 through January
1993, Mr. Douglas served as Vice President of Hatchett Capital Group, Inc.
(investment banking firm). From 1986 through 1988, Mr. Douglas was employed in
the investment banking division of Paine Webber Incorporated. Mr. Douglas has
served as a director of the Company since September 1992.
GERALD L. ADAMS, age 64, has been an entrepreneur for the past 30
years, starting, developing and operating a number of businesses primarily
related to the shipping, trucking, and real estate industries. Mr. Adams
currently owns and operates several companies, including TriRiver Dock, Inc.
(stevedoring), Clover Ridge Estates, Inc. (residential construction), Barge
Terminal Trucking, Inc. (trucking) and Adams Enterprises, Inc. (trucking and
crane services). Mr. Adams has served as a director of the Company since
October 1993.
GERARD M. JACOBS, age 44, has been President of Huntington AluTech,
Inc., a holding company engaged in the consolidation of the aluminum forging
industry, since March 1999. From April 1996 to February 1999, Mr. Jacobs was
Chief Executive Officer and a director of Metal Management, Inc., a company
specializing in scrap metal. From 1983 through 1995, Mr. Jacobs developed
resource recovery, landfill and hydroelectric projects for his own
3
<PAGE> 6
account and for the investment banking firm of Russell, Rea & Zappala, Inc.,
Pittsburgh, Pennsylvania. From 1978 to 1983, Mr. Jacobs practiced securities,
corporate and banking law with the law firms of Reed, Smith, Shaw & McClay and
Manion, Alder & Cohen, P.C., Pittsburgh, Pennsylvania. Mr. Jacobs has been a
director of the Company since September 1994.
ROBERT J. KEHL, age 64, has been an entrepreneur for the past 35
years, starting, developing and operating businesses primarily in the riverboat
construction, gaming, riverboat touring and restaurant industries. Since 1993,
Mr. Kehl has served as president of Kehl River Boats, Inc., a riverboat
construction firm in Las Vegas, Nevada. Mr. Kehl currently has interests in
companies involved in gaming and riverboat construction or operation. Mr. Kehl
has been a director of the Company since September 1994.
COMMITTEES OF THE BOARD AND ATTENDANCE
The Board of Directors of the Company presently has the following
standing committees:
(A) the Audit Committee, currently comprised of Messrs. Douglas,
Kehl and Jacobs. The Audit Committee, which held two meetings
during the Company's last fiscal year, is authorized to
nominate the Company's independent auditors and to review
with the independent auditors the scope and results of the
audit engagement.
(B) the Compensation and Stock Option Committee, currently
comprised of Messrs. Adams, Douglas, McMurphy and Simmons.
This Committee, which held three meetings during the
Company's last fiscal year, recommends compensation levels
for executive officers of the Company, and is authorized to
consider and make grants of options pursuant to the Company's
1997 Stock Option Plan and to administer its stock option
plans.
During the Company's last fiscal year, the Board of Directors held
three meetings and took action 13 times by unanimous written consent. Each
incumbent director attended at least 75% of the aggregate number of meetings
held by the Board and by the Committees of the Board on which he served.
The Company does not have a Directors Nominating Committee, such
function being reserved to the entire Board of Directors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers, and persons who own more than 10% of the
outstanding Common Stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of the
Company held by such persons. Officers, directors and greater than 10%
stockholders are also required to furnish the Company with copies of all forms
they file under this regulation. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company, during the
fiscal year ended April 30, 1999, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% stockholders were
complied with, except as follows: Edward R. McMurphy, Tilman J. Falgout, III
and Mark D. Slusser, officers of the Company, each filed one report on Form 5
late reporting certain option grants made to them during the fiscal year.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company to or on behalf of the Company's Chief Executive Officer and any other
executive officer whose salary and bonus, if any, exceeded $100,000 in fiscal
1999 (the "Named Executive Officers"), for the years ended April 30, 1999, 1998
and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Long-Term
Fiscal Other Annual Compensation All Other
Name and Principal Position Year Salary Bonus Compensation Stock Options Compensation(1)
- --------------------------- --------- ------------ -------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Edward R. McMurphy 1999 $312,500 $800,000 -- 400,000 $16,900
Chairman of the Board, 1998 300,000 150,000 -- 25,000 --
President and Chief 1997 312,500 200,000 -- 25,000 --
Executive Officer
Tilman J. Falgout, III 1999 $237,500 $425,000 -- 145,000 $12,728
Executive Vice President 1998 225,000 75,000 -- 20,000 --
and General Counsel 1997 231,250 125,000 -- 20,000 --
Mark D. Slusser 1999 $156,250 $250,000 -- 115,000 $ 7,732
Chief Financial Officer, 1998 150,000 50,000 -- 15,000 --
Vice President Finance 1997 156,250 87,500 -- 15,000 --
and Secretary
</TABLE>
- --------------------
(1) These amounts include contributions to the Company's 401(k) Plan and
certain insurance premiums as follows:
<TABLE>
<CAPTION>
Disability 401(k)
Insurance Plan
<S> <C> <C> <C>
Edward R. McMurphy 1999 $8,525 $8,375
1998 -- --
1997 -- --
Tilman J. Falgout, III 1999 5,811 6,917
1998 -- --
1997 -- --
Mark D. Slusser 1999 2,207 5,525
1998 -- --
1997 -- --
</TABLE>
SEVERANCE AGREEMENTS
In July 1996, the Board of Directors authorized the Company to enter
into severance agreements with each of Mr. McMurphy, Mr. Falgout and Mr.
Slusser, which agreements provide that in the event of a sale, merger,
consolidation, change in control, or liquidation of the Company, or similar
extraordinary corporate transaction causing a change in control, each such
officer shall be entitled to 2.99 times the annual compensation paid to the
executive as well as accelerated vesting of options under the Company's stock
option plans.
5
<PAGE> 8
STOCK OPTION PLAN
In July 1997, the Board of Directors adopted the Company's 1997 Stock
Option Plan which was subsequently approved by the stockholders at the 1997
Annual Meeting (the "1997 Plan"). During the fiscal year ended April 30, 1999,
the following options were granted under the 1997 Plan:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term(1)
- -----------------------------------------------------------------------------------------------------------------------
% Total
Number of Options
Securities Granted to
Underlying Employees Exercise
Options in Price Expiration
Name Granted(2) Fiscal year Per Share Date 5% 10%
- ---- ---------- ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Edward R 25,000 $ 3.5625 7-01-08 $ 56,011 $ 141,943
McMurphy 250,000 3.125 10-16-08 491,324 1,245,111
125,000(3) 57.6% 5.50 12-30-08 432,365 1,095,698
Tilman J. Falgout, 20,000 3.5625 7-01-08 44,809 113,554
III 125,000(3) 20.9% 5.50 12-30-08 432,365 1,095,698
Mark D. Slusser 15,000 3.5625 7-01-08 33,607 85,166
100,000(3) 16.5% 5.50 12-30-08 345,892 876,558
</TABLE>
- -----------------------
(1) The dollar amounts under these columns represent the potential
realizable value of each option assuming that the market price of the
Common Stock appreciates in value from the date of grant at the 5% and
10% annual rates prescribed by regulation and therefore are not
intended to forecast possible future appreciation, if any, of the
price of the Common Stock.
(2) Unless otherwise indicated, the options shown are immediately
exercisable.
(3) These options vest in equal 20% increments over five years, beginning
at the date of grant of the option.
6
<PAGE> 9
The following table provides certain information concerning each
exercise of stock options under the Company's stock option plans during the
fiscal year ended April 30, 1999, by the Named Executive Officers and the
fiscal year-end value of unexercised options held by such persons under the
Company's stock option plans:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Unexercised Value of
Shares Options at Fiscal Unexercised Options
Acquired Year-End at Fiscal Year-End
On Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable(1)
- --------------------------- ----------------------- ---------------------- ----------------- --------------------
<S> <C> <C> <C> <C>
Edward R. McMurphy 25,000 $77,736 600,000/100,000 $1,482,813/$25,000
Tilman J. Falgout, III -- -- 242,500/100,000 535,625/25,000
Mark D. Slusser -- -- 100,000/80,000 216,875/20,000
</TABLE>
- --------------------
(1) The market value of the Company's Common Stock on April 30, 1999 was $5.75
per share, and options to purchase 1,220,000 shares held by the above
officers were in-the-money. The actual value, if any, an executive may
realize will depend upon the amount by which the market price of the
Company's Common Stock exceeds the exercise price when the options are
exercised.
DIRECTOR COMPENSATION
Effective August 1, 1998, non-employee directors of the Company
receive a $24,000 annual retainer, $2,000 per Board meeting attended in person,
and $500 per Committee meeting attended in person. Directors who are also
employees of the Company do not receive separate compensation for their
services as a director. Pursuant to the Company's 1997 Stock Option Plan (the
"Plan"), on the first business day of July in each year, each then serving
non-employee director of the Company is automatically granted an option to
purchase 2,500 shares of Common Stock, at an exercise price equal to the fair
market value of such stock on the date of grant. Options granted under the Plan
are exercisable for a period of up to ten years. In the event that a director
ceases to be a director of the Company for any reason, options granted to the
director will generally expire upon the earlier to occur of (1) the tenth
anniversary of the date of grant of the option, or (2) ninety days following
the date on which such director ceased to be a director.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Report of the Compensation and Stock Option Committee on Executive Compensation
and the Stockholder Return Performance Graph shall not be incorporated by
reference into any such filings.
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Board of Directors of the Company has a Compensation and Stock
Option Committee ("Compensation Committee") which recommends compensation
levels for the executive officers of the Company, including the Chief Executive
Officer, and is authorized to consider and make grants of options pursuant to
the Company's 1997 Stock Option Plan and to administer its option plans. The
Compensation Committee held three meetings during fiscal 1999. During fiscal
1999 the Company had three executive officers, including Edward R. McMurphy,
President and Chief Executive Officer; Tilman J. Falgout, III, Executive Vice
President and General Counsel; and Mark D. Slusser, Chief Financial Officer,
Vice President Finance and Secretary.
7
<PAGE> 10
The Compensation Committee (then comprised of Messrs. Douglas, Simmons
and Adams) met in January 1999 to discuss executive compensation. Upon
recommendation from the Compensation Committee, the Board of Directors adopted a
compensation package for the Company's executive officers that will remain in
effect for a five-year period (unless modified by the Board of Directors or the
Committee). As a result of such meeting, effective February 1, 1999, Mr.
McMurphy's annual salary was set at $350,000 by the Compensation Committee. In
determining such salary, the Compensation Committee considered Mr. McMurphy's
recent performance in identifying and completing various acquisitions by the
Company and his contribution to the overall performance of the Company in the
last fiscal year, as well as his contribution to the Company's growth.
The Compensation Committee considers from time to time the payment of
bonuses to the executive officers in light of the performance of the Company and
the effort made by the executive officers to promote the Company's businesses.
Also in January 1999, the Board of Directors, upon recommendation of the
Compensation Committee, approved and adopted a bonus program whereby in each
fiscal year beginning with the fiscal year commencing May 1, 1998, a bonus equal
to five percent of the Company's consolidated pre-tax income (before the bonus
computation) would be earned collectively by the Company's executive officers.
For purposes of the calculation, pre-tax income shall (i) exclude earnings or
losses attributable to subsidiary minority shareholders, (ii) convert equity in
earnings or loss of unconsolidated subsidiaries/investments to a pre-tax amount,
(iii) to the extent there is a pre-tax loss in a particular fiscal year, such
loss shall be carried forward to offset pre-tax income in subsequent fiscal
years, and (iv) be otherwise calculated in accordance with generally accepted
accounting principles. This bonus program is intended to remain in effect for
five fiscal years. Pursuant to this bonus program, for the fiscal year ended
April 30, 1999, the executive officers were paid the following bonuses: Mr.
McMurphy - $800,000, Mr. Falgout - $425,000 and Mr. Slusser - $250,000.
In July 1996, the Board of Directors also authorized the Company to
enter into severance agreements with each of Mr. McMurphy, Mr. Falgout and Mr.
Slusser, which agreements provide that in the event of a sale, merger,
consolidation, change in control, or liquidation of the Company, or similar
extraordinary corporate transaction causing a change in control, each such
officer shall be entitled to 2.99 times the annual compensation paid to the
executive as well as accelerated vesting of options under the Company's stock
option plans.
The Compensation Committee believes that the foregoing agreements and
actions are reasonable and provide competitive compensation packages necessary
in order for the Company to retain the management expertise it needs.
The Compensation Committee takes action from time to time, based upon
guidelines and recommendations provided by the Board of Directors, to provide
additional incentive compensation to the executive officers and other employees
through the award of stock options under the Company's existing stock option
plans. During fiscal 1999, awards of stock options to purchase shares of the
Company's Common Stock were made to the executive officers, as follows: Edward
R. McMurphy (400,000 shares), Tilman J. Falgout, III (145,000 shares), and Mark
D. Slusser (115,000 shares).
The Company's future compensation policies will be developed in light
of the Company's financial position and results of operations and with the goal
of rewarding members of management for their contributions to the Company's
success.
DAVID J. DOUGLAS JOHN DAVID SIMMONS GERALD L. ADAMS EDWARD R. MCMURPHY
8
<PAGE> 11
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the fiscal year end
percentage change in the cumulative total stockholder return on the Company's
Common Stock against (i) the cumulative total return of the NASDAQ Market Index
(U.S. Companies), and (ii) the MG Group Index 744 - Auto Dealerships
("Automobile Index"), for the period of five fiscal years commencing on May 1,
1994 and ending on April 30, 1999.
As the largest portion of the Company's revenues during the fiscal
year ended April 30, 1999 were generated from automobile operations, the
Company has determined that the Automobile Index is presently the most
appropriate "peer group" index. The Company believes the Automobile Index is an
accurate reflection of the Company's peer group as the Automobile Index is
comprised of companies involved in the sale of automobiles and other vehicles
through dealerships. The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 on May 1, 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR CROWN GROUP, INC.
<TABLE>
<CAPTION>
4/30/94 4/30/95 4/30/96 4/30/97 4/30/98 4/30/99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Crown Group, Inc. 100.0 64.46 25.62 28.10 56.20 76.03
Nasdaq Market Index (U.S. Companies) 100.0 116.25 165.73 175.42 262.30 356.45
Automobile Index 100.0 87.29 114.82 81.15 75.11 71.65
</TABLE>
The dollar value at April 30, 1999 of $100 invested in the Company's Common
Stock on May 1, 1994 was $76.03, compared to $71.65 for the Automobile Index
described above and $356.45 for the Nasdaq Market Index (U.S.
Companies).
9
<PAGE> 12
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent
auditors for the fiscal year ended April 30, 1999. The Company has not as yet
executed an engagement letter with respect to the audit of the Company's
financial statements for the fiscal year ending April 30, 2000, but expects to
do so in due course.
A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting, will have an opportunity to make a statement,
and will be available to respond to appropriate questions which stockholders
might have. The Company knows of no direct or indirect material financial
interest or relationship that members of this firm have with the Company.
REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 1999, as filed with the Securities and Exchange Commission, is
available to stockholders who make written request therefor to the Secretary of
the Company, Mark D. Slusser, at the offices of the Company, 4040 North
MacArthur Boulevard, Suite 100, Irving, Texas 75038. Copies of exhibits filed
with that report or referenced therein will be furnished to stockholders of
record upon request and payment of the Company's expenses in furnishing such
documents.
STOCKHOLDER PROPOSALS
Any proposal to be presented at next year's Annual Meeting must be
received at the principal executive offices of the Company not later than April
29, 2000, directed to the attention of the Secretary, for consideration for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting. In connection with the Company's Annual Meeting of Stockholders to be
held in 2000, if the Company does not receive notice of a matter or proposal to
be considered by July 13, 2000, then the persons appointed by the Board of
Directors to act as the proxies for such Annual Meeting (named in the form of
proxy) will be allowed to use their discretionary voting authority with respect
to any such matter or proposal at the Annual Meeting, if such matter or
proposal is raised at that Annual Meeting. Any such proposals must comply in
all respects with the rules and regulations of the Securities and Exchange
Commission.
OTHER MATTERS
Management does not know of any matter to be brought before the
meeting other than those referred to above. If any other matter properly comes
before the meeting, the persons designated as proxies will vote on each such
matter in accordance with their best judgment.
By Order of the Board of Directors.
Edward R. McMurphy
Chairman of the Board,
President and Chief Executive Officer
September 27, 1999
10
<PAGE> 13
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
CROWN GROUP, INC.
The undersigned stockholder(s) of Crown Group, Inc., a Texas
corporation, hereby appoints Edward R. McMurphy and Mark D. Slusser, and each
of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the 1999 Annual Meeting of Stockholders of Crown Group, Inc. to
be held on Monday, October 25, 1999 at 10:00 a.m. local time at the Four
Seasons Hotel and Resort, 4150 North MacArthur Boulevard, Irving, Texas 75038,
to vote the shares of Common Stock which the undersigned would be entitled to
vote if then and there personally present, on the matters set forth below:
(1) To elect seven directors for a term of one year and until their
successors are elected and qualified:
[ ] FOR all nominees listed below (except as indicated to the
contrary below)
[ ] AGAINST AUTHORITY to vote for all nominees
Edward R. McMurphy Tilman J. Falgout, III
John David Simmons Gerald L. Adams
David J. Douglas Gerard M. Jacobs
Robert J. Kehl
If you wish to withhold authority to vote for any individual
nominee(s), write the name(s) on the line below:
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(2) In their discretion, upon such other matter or matters which may
properly come before the meeting or any adjournment or adjournments
thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This proxy, when
properly executed, will be voted in accordance with directions given by the
undersigned stockholder. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR PROPOSAL
1 AND AS THE PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE
THE MEETING.
Dated , 1999
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Signature
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Signature
(This Proxy should be marked, dated, and signed by the
stockholder(s) exactly as his or her name appears
hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as
community property, both should sign.)
