<PAGE>
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:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
H.D. VEST, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
April 30, 1997
Dear Fellow Shareholder:
Your officers and directors join me in inviting you to attend the 1997
Annual Meeting of Shareholders of H.D. Vest, Inc. The formal notice of
this meeting and the Proxy Statement accompany this letter.
The meeting will be held at the Washington Hilton and Towers, 1919
Connecticut Avenue, N.W., Washington, DC on Friday, May 30, 1997 at 2:00
p.m. By attending the meeting, you will have an opportunity to meet your
officers and directors and participate in the business of the meeting.
Please call Joan Rivers or me at 972-863-6000 to R.S.V.P. for the
meeting. If it is not possible for you to attend, please return the
enclosed proxy immediately to ensure that your shares will be voted.
Since mail delays do occur, it is important that the proxy be returned as
promptly as possible.
Thank you for the confidence you have placed in H.D. Vest, Inc. If you
have any questions or need further assistance, please do not hesitate to
call.
Sincerely,
- ---------------------------------------------
Shannon A. Soefje
Senior Vice President and Corporate Secretary
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 1997
To the Holders of the Common Stock of H.D. Vest, Inc.:
The Annual Meeting of Shareholders of H.D. Vest, Inc. ("the Company")
will be held at the Washington Hilton and Towers, 1919 Connecticut
Avenue, N.W., Washington, DC on Friday, May 30, 1997 at 2:00 p.m. to
consider and act upon the following matters:
1. To elect seven (7) Directors to serve until the next Annual Meeting of
Shareholders, and until their successors are elected and qualified;
2. To vote on the approval of Arthur Andersen LLP as independent
accountants for the fiscal year ending September 30, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Information regarding the matters to be acted upon at the Annual Meeting
of Shareholders is contained in the Proxy Statement attached to this
Notice. The Board of Directors has fixed the close of business on April
18, 1997 as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting or any adjournment
thereof. A list of shareholders will be made available at the Company's
offices located at 433 E. Las Colinas Blvd., Third Floor, Irving, TX
75039 at least ten (10) days prior to the meeting for examination by any
shareholder for any purpose germane to the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED
ENVELOPE.
By Order of the Board of Directors
------------------------------------
Shannon A. Soefje
Senior Vice President and Corporate
Secretary
Irving, Texas
April 30, 1997
<PAGE>
H.D. VEST, INC.
433 EAST LAS COLINAS BOULEVARD
THIRD FLOOR
IRVING, TEXAS 75039
APRIL 30, 1997
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 30, 1997
To Our Shareholders:
Your Board of Directors furnishes this Proxy Statement in connection with
its solicitation of your proxy in the form enclosed to be used at the
Company's Annual Meeting of Shareholders to be held on Friday, May 30,
1997 at 2:00 p.m. and for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. Only shareholders of record at
the close of business on April 18, 1997 will be entitled to vote at the
meeting. There were 5,423,341 shares of Common Stock outstanding at that
date.
The Company is mailing this Proxy Statement and the enclosed Proxy
commencing on April 30, 1997 to shareholders entitled to vote at the
meeting. Shareholders of record with shares in their name have been
previously mailed an Annual Report. All other shareholders entitled to
vote are receiving an Annual Report with this Proxy Statement.
We cordially invite you to attend the meeting. Whether or not you plan
to attend, we urge you to date, sign and return your proxy promptly in
the envelope enclosed. Your proxy will be voted as specified at the
Annual Meeting. You may revoke your proxy at any time prior to its
exercise at the Annual Meeting by notice to the Company's Secretary, and,
if you attend the meeting, you may vote your shares in person.
At the Annual Meeting, all shareholders will have the opportunity to
elect seven (7) Directors for the ensuing year. In addition, you will be
asked to vote on the selection of the Company's auditors. Each
shareholder of Common Stock is entitled to one vote for each share held.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the election inspector appointed for the meeting, and the inspector
will determine whether or not a quorum is present. The election inspector
will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of any matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
The persons named as proxies in the enclosed forms are Herb D. Vest,
Chairman of the Board of Directors, Chief Executive Officer, President
and primary shareholder, and Shannon A. Soefje, Corporate Secretary.
1
<PAGE>
ITEM I: ELECTION OF DIRECTORS
---------------------
At the meeting, management will recommend to the shareholders that each of
the seven (7) nominees listed below be elected to serve for a term of one
(1) year, and until their successors are duly elected and qualified. The
affirmative vote of a majority of the shareholders represented at the
meeting and entitled to vote is required for the election of each Director.
Cumulative voting is not permitted.
Herb D. Vest Jerry M. Prater
Barbara Vest Phillip W. Mayer
Jack B. Strong Lynn R. Niedermeier
Kenneth E. Reynolds
Each nominee has agreed to serve, if elected. Should any nominee become
unable to serve as a Director, the persons named in the enclosed form of
proxy will, unless otherwise directed, vote for the election of such other
person for such office as the present Board of Directors may recommend in
place of such nominee. The following information is furnished with respect
to the nominees for election to the Board of Directors.
NOMINEES FOR DIRECTOR
---------------------
HERB D. VEST, age 52, is the Company's Chairman of the Board of Directors,
Chief Executive Officer, President and primary shareholder. In addition to
his doctorate in international business administration, Mr. Vest holds
three master's degrees and 17 professional designations. Mr. Vest
currently serves on the Board of Directors of the United States/Mexico
Chamber of Commerce and was previously a member of the U.S. Trade
Representatives' Investment Policy Advisory Board. Mr. Vest has been a
Director of the Company since its inception in 1983. Additionally, he is a
member of the Investment Policy Advisory Board for H.D. Vest's Advisory
Services division.
BARBARA VEST, age 50, is co-founder of the Company and presently serves as
Director of Representative Relations. Previously, Ms. Vest held the
position of Executive Vice President with the Company and was a member of
the Board of Directors until her resignation in 1991. She again became a
member of the Board of Directors in 1992.
JACK B. STRONG, age 67, was elected to the Texas State Senate in 1962,
where he served until his retirement in 1971. After leaving the Senate, he
served on various state committees, boards and commissions, including
chairing Lt. Governor Hobby's Blue Ribbon Committee on Ethics Reform, the
Regional Medical Program of Texas and the Texas State Board of Education.
He currently serves on the Interstate Oil Compact Commission and as
president of Texas-based General Equities, Inc. and Strongworth, Inc. Mr.
Strong served as an advisor to the Company's Board from January 1992
through January 1993. He was elected as a Director of the Company in 1993.
Mr. Strong is currently a member of the Audit Committee.
KENNETH E. REYNOLDS, age 68, started his Norman, Oklahoma-based Certified
Public Accounting practice in 1965. He served as chairman of the Personal
Financial Planning Committee of the Oklahoma Society of CPAs from 1988-1991
and as president of the Norman Chapter of the Oklahoma Society of CPAs in
1989. Additionally, Mr. Reynolds served on the Arthur Andersen A-plus Tax
User Advisory Committee from 1991-1993. He became a Registered
Representative
2
<PAGE>
of H.D. Vest Investment Securities, Inc. in 1987, and a Director of the
Company in 1993. He is also an independent Registered Investment Advisor.
JERRY M. PRATER, age 54, has been a practicing Certified Public Accountant
since 1983, when he founded his own company in Dallas, Texas. He also has
held positions with agencies of the U.S. Department of Defense, Continental
Electronics Mfg Co., Hill & Wilkinson and Quazon Corporation. Mr. Prater
was elected as a public Director of the Company's Board in 1994. He is the
current chairman of the Audit Committee.
PHILLIP W. MAYER, age 55, held a variety of command and staff positions as
an Infantry Officer in the United States Army prior to his retirement in
1982. Mr. Mayer holds two master's degrees and was designated a Certified
Public Manager by Arizona State University's Advanced Public Executive
Program in 1990. Since 1985, he has worked in the corrections profession
as a program manager and director of staff training. He currently serves
as a staff training manager for the Santa Clara County Department of
Correction in San Jose, California. Mr. Mayer was elected as a public
Director of the Company's Board in 1994. He is currently a member of the
Audit Committee.
LYNN R. NIEDERMEIER, age 43, is a Certified Public Accountant and owner and
operator of Cyberstreet Cafe, Inc., in Green Bay, Wisconsin. She served as
President of the Company until December 1995. Prior to holding that
office, she was an Executive Vice President and Vice President. Prior to
joining H.D. Vest, she was a manager for Arthur Andersen LLP. Ms.
Niedermeier is a former City Councilwoman for Grapevine, Texas. She was
elected to the Company's Board of Directors in June 1994.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
-----------------------------------------------------
The Company's Board of Directors held four formal meetings during the
fiscal year ended September 30, 1996. In addition, management confers
frequently with its Directors on an informal basis to discuss Company
affairs. During fiscal year ended September 30, 1996, no Director, other
than Mr. Prater, attended fewer than 75 percent of the meetings of the
Board of Directors. Mr. Prater attended two of four total meetings (50
percent) for the year. Directors are reimbursed for travel and other
expenses related to attendance at Board and committee meetings. Except for
the Chairman of the Board, compensation to the Directors for the fiscal
year ended September 30, 1996 was $20,000 per year and was paid in monthly
installments of $1,667. For the fiscal year ended September 30, 1996, the
Chairman of the Board was paid $22,000 per year in installments of
$1,833.33 per month. Also, independent Board members are entitled to
receive quarterly stock options for 2,000 shares of Common Stock,
exercisable at the price of the Common Stock on the date of issuance. Mr.
Strong and Strongworth, Inc., an entity with which Mr. Strong is
affiliated, received approximately $30,000 in professional fees for
services performed for the Company.
The Company's Board of Directors has an Audit Committee which met once
during the fiscal year ended September 30, 1996. The function of the Audit
Committee is 1) to oversee the Company's system of internal accounting
control and the financial reporting process; 2) to review the internal
audit function; 3) to approve the selection of the Company's independent
accountants; and 4) to review audit reports. The members of the Audit
Committee during fiscal 1996 were Jerry Prater, Jack Strong and Phillip
Mayer.
The Company's Board of Directors has a Compensation Committee which met
twice during the fiscal year ended September 30, 1996. The function of the
Compensation Committee is to review, discuss and advise management and
officers of the Company regarding compensation and other employment
3
<PAGE>
benefits afforded officers and employees of the Company. The current
members of the Compensation Committee are the members of the Board of
Directors: Herb D. Vest, Barbara Vest, Lynn R. Niedermeier, Jack B.
Strong, Kenneth E. Reynolds, Jerry M. Prater and Phillip W. Mayer.
ITEM II: PROPOSAL TO APPROVE APPOINTMENT OF ARTHUR ANDERSEN AS AUDITORS
--------------------------------------------------------------
FOR THE COMPANY
---------------
The firm of Arthur Andersen LLP has been selected as the Company's
independent accountants for the fiscal year ended September 30, 1997.
Management recommends the ratification of such selection. It is expected
that representatives of Arthur Andersen LLP will be present at the annual
meeting, with the opportunity to make a statement, should they desire to do
so, and will be available to respond to appropriate questions from
shareholders.
BENEFICIAL OWNERSHIP OF SHARES
------------------------------
The following information is furnished as of September 30, 1996, to
indicate beneficial ownership by each Director, nominee and certain
executive officers, individually, and all officers and Directors of the
Company, as a group, of shares of the Company's Common Stock.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NAME OF BENEFICIAL OWNER AMOUNT BENEFICIALLY OWNED PERCENT OF VOTE
- -------------------------------------------------------------------------------
<S> <C> <C>
Herb D. Vest ** 2,606,612 48%
- -------------------------------------------------------------------------------
Barbara Vest ** 1,519,646 28%
- -------------------------------------------------------------------------------
Lynn R. Niedermeier 41,087 *
- -------------------------------------------------------------------------------
Jerry M. Prater 2,000 *
- -------------------------------------------------------------------------------
Kenneth E. Reynolds 550 *
- -------------------------------------------------------------------------------
Shannon A. Soefje 775 *
- -------------------------------------------------------------------------------
Jack B. Strong 100 *
- -------------------------------------------------------------------------------
W. Ted Sinclair 25 *
- -------------------------------------------------------------------------------
Roger C. Ochs 1 *
- -------------------------------------------------------------------------------
Officers and Directors as a Group 4,170,795 77%
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</TABLE>
* Less than 1%
** Herb D. Vest and Barbara Vest escrowed substantially all of their stock,
including shares pledged on outstanding lines of credit, with an independent
escrow agent in order to meet certain conditions required by the State of Texas
under a previous Form S-18 registration statement. Under these requirements, the
escrowed shares were eligible for release provided certain specified conditions
regarding net income requirements were met. If no stock had been released
pursuant to the net income requirements, then commencing in 1994, 20% of the
escrowed shares would, and have been, released each subsequent year.
4
<PAGE>
EXECUTIVE COMPENSATION
----------------------
The following Summary Compensation Table sets forth all remuneration earned
in salary and bonus during the fiscal years ended September 30, 1996, 1995
and 1994, to the Chief Executive Officer and the highest paid directors,
officers and senior managers, each receiving in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
NAME AND PRINCIPAL FISCAL RESTRICTED STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS STOCK (1) COMPENSATION
AWARDS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Herb D. Vest, Chairman of the Board of 1996 $687,500 $1,500,000 - - $ 21,996
Directors, Chief Executive Officer and 1995 500,000 - - - 20,766
President 1994 543,750 88,778 - - 7,200
Barbara Vest, Director and Consultant 1996 - - - - $220,008
1995 - - - - 218,937
1994 - - - - 207,200
Lynn R. Niedermeier 1996 - - - - $ 20,004
Director (2) 1995 $245,834 - $100,000 - 86,004
1994 224,361 - - - 6,668
Roger C. Ochs 1996 $136,045 $ 125,000 - - -
Director of Marketing (3) 1995 107,000 - - - -
1994 - - - - -
Shannon A. Soefje Senior Vice 1996 $150,500 $ 62,500 - - -
President and Corporate Secretary (3) 1995 - - - - -
1994 - - - - -
W. Ted Sinclair 1996 $130,625 $ 62,500 - - -
Vice President and Chief Financial 1995 - - - - -
Officer (3) 1994 - - - - -
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All key employees are covered under a stock option plan.
(2) Ms. Niedermeier resigned as President in December 1995.
(3) Compensation below disclosure requirement in prior years.
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------------------
No options were granted to officers during fiscal 1996.
5
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR END AND FISCAL YEAR END
- -----------------------------------------------------------------------
OPTION VALUES
- -------------
The following table provides information with respect to the named officers
and Directors concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year 1996:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME SHARES ACQUIRED VALUE NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED, IN-THE-MONEY
THROUGH OPTIONS REALIZED HELD AT FISCAL YEAR END (#) OPTIONS FISCAL YEAR END (1)
EXERCISED
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Herb D. Vest - - 100,000 45,148 (2) (2)
Barbara Vest - - - 45,148 - (2)
W. Ted Sinclair - - - 1,456 - (2)
Jerry M Prater - - 20,000 - $31,375 -
Phillip W. Mayer - - 20,000 - 31,375 -
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the difference between the closing price of the Company's Common
Stock on September 30, 1996 and the exercise price of the options.
(2) The closing price of the stock at September 30, 1996 was below the
option exercise price.
COMPENSATION COMMITTEE REPORT
-----------------------------
The Company's executive compensation program is administered by the
Compensation Committee of the Board (the "Committee"). All members of the
Board are members of the Committee. The Committee determines the
compensation of all executive officers of the Company. In reviewing the
compensation of individual executive officers (other than Mr. Vest), the
Committee takes under consideration the recommendations of management and
the input of compensation consultants. The Committee's determinations on
the compensation of the Chief Executive Officer and other executive
officers are reviewed with all nonemployee directors who constitute a
majority of the full Board.
OVERALL POLICY
The Company's compensation programs are aimed at enabling it to attract and
retain the best possible executive talent, and rewarding those executives
commensurately with their ability to drive increases in shareholder value.
At least once each year, the Committee conducts a comprehensive review of
the Company's executive compensation programs. The purpose of the review
is to ensure that the Company's executive compensation programs remain
consistent with competitive practice, and that the programs are meeting
their objective of creation of shareholder value. In its review, the
Committee considers data provided by management and compensation
consultants.
The Compensation Committee's goal is to develop an overall level of
executive officer compensation that is competitive with the financial
services industry and with a broader group of companies of comparable size
and complexity. Actual executive officer compensation levels may be
greater or less
6
<PAGE>
than average competitive levels in surveyed companies based upon actual and
long-term Company performance, as well as individual performance. The
Compensation Committee will use its discretion to set executive compensation
where, in its judgment, external, internal or an individual's circumstances
warrant it.
COMPENSATION PROGRAM
The Company adopted an Executive Officers Compensation Plan ("Plan") as of May
31, 1996. The purpose of the Plan is to provide additional compensation to a
select group of management employees of the Company in order to motivate and
retain them, as well as to provide them an incentive to guide the Company in
attaining higher revenue goals. The Company will provide this additional
compensation under the Plan in the form of salary, restricted stock, incentive
cash and restricted stock bonuses, as well as severance and change-in-control
benefits.
As an unfunded plan of deferred compensation, it is administered by the Chief
Executive Officer of the Company, who is presently Herb D. Vest. Eligibility to
participate in the Plan is determined in the sole and absolute discretion of the
Company, which establishes eligibility provisions of the Plan and which it may
change at any time in its sole and absolute discretion.
Currently, to be eligible to participate in the Plan, the individual must be an
executive employee of the Company, have completed at least two (2) full years of
service with the Company, and be part of the select group of management
employees as designated by the Board of Directors of the Company. The individual
employee must also sign an Officers Deferred Compensation Agreement and an
Officer Agreement as a condition precedent to becoming a participant in the
Plan.
Under the Restricted Stock portion of the Plan, a number of shares of restricted
stock is determined by the Chief Executive Officer of the Company as allocable
to a particular participant. This restricted stock is credited to each
participant's account and will be vested and distributable upon the first to
occur of the following events: (1) Long-term disability or death of the
participant, or attaining the preselected Deferral Date; or (2) The date of a
"change-in-control" of the Company (as that term is defined in the Plan). No
stock was earned under the Plan for the fiscal year ended September 30, 1996.
Under the Plan, the Board of Directors also annually sets revenue goals. If
attained, the revenue goals will generate a set cash bonus for the participant,
payable unless certain losses are also incurred.
In addition, bonus stock will be credited to participants' accounts in the form
of restricted stock on the basis of the Company's attaining three-year
cumulative revenue goals. Each year these goals are set by the Board of
Directors for the next three years and are based in part on the previous year's
goals that consist of a Threshold, a Target and a Maximum cumulative revenue
goal. Upon attaining one of these goals, bonus stock credited in the form of
restricted stock to the participant's plan vests and will become distributable
only upon the retirement, long-term disability or death of the participant, or
the date of a "change-in-control" of the Company (as that term is defined in the
Plan). No bonus stock was credited to participants' accounts in fiscal 1994,
1995 or 1996.
The Company has an agreement with Herb D. Vest, Chairman of the Board of
Directors, Chief Executive Officer, President and primary shareholder, for
management services to the Company. The agreement with Herb D. Vest provides for
a management fee per year plus an annual bonus based on the Company's
performance related to revenue and net income goals established by the Board of
Directors. Effective January 1, 1996, the Company increased the annual
management fee due to Mr.
7
<PAGE>
Vest to $750,000 from $500,000. The potential annual bonus for fiscal 1996
ranged from $0 to $1,500,000. The 51% increase in the Company's revenues,
combined with positive earnings after consideration of the bonus, resulted in
the payment of the maximum bonus under the plan. No bonus was accrued or paid
under the plan for the fiscal year ended September 30, 1994 or 1995. A bonus of
$88,778 was paid during fiscal 1994 related to a previous plan. Management fees,
including bonuses, under these agreements were $632,528, $500,000 and $2,187,500
for the years ended September 30, 1994, 1995 and 1996, respectively.
The Company provides to the executive officers medical benefits that are
generally available to Company employees. The amount of perquisites to executive
officers did not exceed $50,000 or 10 percent of salary for fiscal 1996.
COMPENSATION COMMITTEE MEMBERS
Herb D. Vest Kenneth E. Reynolds
Barbara Vest Jerry M. Prater
Jack B. Strong Phillip W. Mayer
Lynn R. Niedermeier
8
<PAGE>
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
---------------------------------------
The graph below compares cumulative total shareholder return on the Common
Stock of the Company for the last five (5) fiscal years with the
cumulative total return on the NASDAQ Market Value Index, and an index of
peer companies with the same SIC code 6211 -- Security Brokers, Dealers,
and Flotation Companies. The peer group, consisting of 55 other financial
services firms, has been used for the purpose of this performance
comparison, which appears below. These companies were selected by the
Company based on the fact that they offer investment and other financial
services similar to those offered by the Company. A list of the companies
follows the graph.
H.D. VEST, INC. STOCK PRICE PERFORMANCE
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN AMONG H.D. VEST, INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
FISCAL YEAR ENDING
COMPANY 1991 1992 1993 1994 1995 1996
H.D. VEST INC. 100 52.38 85.71 69.05 54.76 90.48
INDUSTRY INDEX 100 113.24 195.38 154.41 241.92 259.53
BROAD MARKET 100 101.79 132.38 140.08 170.08 198.57
ASSUMES $100 INVESTED ON NOVEMBER 25, 1991
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPTEMBER 30, 1996
The peer group is made up of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
Advest Group, Inc. Interstate-Johnson Lane Paulson Capital Corp.
Alex Brown, Inc. Investment Technology Gp. Piper Jaffray Cos.
American Express Co. J.B. Oxford Holdings, Inc. Quick & Reilly Group, Inc.
Bear Stearns Cos. Jefferies Group, Inc. Raymond James Financial
BHC Financial, Inc. John Nuveen, Co. CL A Rodman & Renshaw Cap. Group
Charles JW Financial Svc. Kent Financial Services Ryan Beck & Co., Inc.
Donaldson Lufkin/Jenrett Kinnard Investments Salomon, Inc.
E*Trade Group, Inc. Kirlin Holdings Corp. Schwab Charles Corp.
Edwards, AG Inc. Legg Mason, Inc. Scott & Stringfellow Fin.
Fahnestock Viner Hldg. Lehman Bros. Holding, Inc. SEI Investments Company
First Albany Cos. M.H. Meyerson & Co. Sherwood Group, Inc.
Fronteer Financial Hldgs. Mackenzie Financial Corp. Southwest Securities Group
GKN Holding Corp. McDonald & Co. Investment Stifel Financial Corp.
H.D. Vest, Inc. Merrill Lynch & Co. Synergistic Hldg. Corp
Hambrecht & Quist Group Morgan Keegan, Inc. United Asset Mgmt Corp.
Helmstar Group, Inc. Morgan Stanley Group, Inc. Waterhouse Investors Serv.
Hoenig Group, Inc. Olympic Cascade Fncl. Corp. Westamerica Corp.
Internat Asset Holding Corp. Paine Webber Group, Inc. Ziegler Cos., Inc.
Interra Financial, Inc.
</TABLE>
9
<PAGE>
TRANSACTIONS WITH MANAGEMENT
----------------------------
The Company has an agreement with Herb D. Vest, Chairman of the Board of
Directors, Chief Executive Officer, President and primary shareholder, for
management services to the Company. Effective January 1, 1996, the Company
increased the annual management fee due to Mr. Vest to $750,000 from
$500,000.
In September 1992, Barbara Vest was contracted by the Company as an
independent consultant to assist with Representative communication. Ms.
Vest received $200,000 in fiscal year 1996 as an independent consultant.
The Company entered into a Facilities and Services Agreement, effective January
1, 1987, with H.D. Vest Insurance Services ("HDVIns"), a sole proprietorship
operated by Mr. Vest. Under the terms of this agreement, the Company provides
HDVIns certain management and other services. The Company has charged HDVIns
$314,196, $551,379 and $416,298, for the years ended September 30, 1994, 1995,
and 1996, respectively, for management services rendered. As of September 30,
1996, the Company had a receivable of approximately $130,280 from HDVIns.
LINES OF CREDIT
The Company has an agreement to provide Herb D. Vest a revolving line of
credit in an amount not to exceed $2,000,000, collateralized by Mr. Vest's
unrestricted Company Common Stock in an amount equal to the unadjusted
current balance of the line of credit based on the stock's current ask
price. The terms of the agreement require an annual payment to be made on
November 30 of each year equal to one-seventh of the then outstanding
principal plus accrued interest. The final payment of all outstanding
principal and accrued interest shall be due and payable on or before
November 30, 2001. Under the agreement, interest accrues on unpaid
principal balances at an annual rate of 11%. At September 30, 1996, Mr.
Vest had drawn $2,000,000 in principal against the line of credit. As of
September 30, 1996, the Company had $190,600 of accrued interest receivable
on this line.
The Company has an agreement to provide Barbara Vest a revolving line of
credit in an amount not to exceed $700,000, collateralized by Ms. Vest's
unrestricted Company Common Stock in an amount equal to the unadjusted
current balance of the line of credit based on the stock's current ask
price. The terms of the agreement require an annual payment to be made on
November 30 of each year equal to one-seventh of the then outstanding
principal plus accrued interest. The final payment of all outstanding
principal and accrued interest shall be due and payable on or before
November 30, 2001. Under the agreement, interest accrues on unpaid
principal balances at an annual rate of 11%. At September 30, 1996, Ms.
Vest had drawn $431,813 in principal against the line of credit. As of
September 30, 1996, the Company had $41,658 of accrued interest receivable
on this line.
SEVERANCE AGREEMENTS
During 1994, Lynn R. Niedermeier, Executive Vice President, resigned her
position with the Company. The Company and Ms. Niedermeier entered into a
severance agreement that provided for the payment of severance of $16,667
per month and continuing for 30 months, in exchange for an agreement
restricting the use of Company materials and information for a period of 48
months. In connection with this agreement the Company charged $500,000 to
general and administrative expense during the fiscal year ended September
30, 1994.
10
<PAGE>
During fiscal 1995, Ms. Niedermeier rejoined the Company as President. In
connection with the her return, she and the Company agreed to rescind her
severance agreement. During the first quarter of fiscal 1995, the Company
credited the then remaining unpaid severance of $381,331 to general and
administrative expenses. In December 1995, Ms. Niedermeier resigned as
President of the Company. Under her existing employment agreement, the
Company agreed to pay her $16,600 per month until October 1, 1996, in
exchange for her agreement, among other things, not to solicit clients of
the Company's Representatives.
ANNUAL REPORT
The Company's audited consolidated financial statements and notes thereto,
including selected financial data and management's discussion and analysis
of financial condition and results of operations for the fiscal year ended
September 30, 1996, are included on pages 6 - 16 of the Company's 1996
Annual Report to Shareholders. Shareholders of record with shares in their
name have been previously mailed an Annual Report. All other shareholders
entitled to vote are receiving an Annual Report with this Proxy Statement.
Additional copies of the Annual Report are available without charge upon
request.
SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
1998 Annual Meeting of Shareholders must be received by the Company for
inclusion in the proxy statement and form of proxy for that meeting no
later than December 22, 1997.
METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the Notice
of Meeting, this Proxy Statement, the Proxy itself and the cost of
soliciting proxies relating to the meeting will be borne by the Company.
In addition to use of the mails, proxies may be solicited by officers,
Directors and other regular employees of the Company by telephone,
telegraph or personal solicitation, and no additional compensation will be
paid to such individuals. The Company will use the services of Corporate
Investor Communications, Inc. to assist in obtaining shareholder addresses
for proxy mailing. The Company will, if requested, reimburse banks,
brokerage houses, and other custodians, nominees and certain fiduciaries
for their reasonable expenses incurred in mailing proxy material to their
beneficial holders.
By Order of the Board of Directors
- ----------------------------------
Shannon A. Soefje
Senior Vice President and Corporate Secretary
Dated: April 30, 1997
11
<PAGE>
P R O X Y
H.D. VEST, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MAY 30, 1997
The undersigned hereby constitutes and appoints Herb D. Vest and Shannon A.
Soefje, and each of them, his true and lawful agents and proxies with full power
of substitution in each, to represent the undersigned at the Annual Meeting of
Shareholders of H.D. Vest, Inc. to be held at the Washington Hilton and Towers,
1919 Connecticut Avenue, N.W., Washington, DC 20009, on Friday, May 30, 1997,
at 2:00 p.m., and at any adjournment thereof, on all matters coming before said
meeting.
Election of Directors, Nominees: (change of address)
Herb D. Vest Jerry M. Prater ---------------------
Barbara Vest Phillip W. Mayer ---------------------
Jack B. Strong Lynn R. Niedermeier ---------------------
Kenneth E. Reynolds ---------------------
(If you have written in
the above space, please
mark the corresponding box
on the reverse side of
this card.)
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxies cannot vote your
shares unless you sign and return this card.
SEE REVERSE
SIDE
<PAGE>
SHARES IN YOUR NAME
[X] PLEASE MARK YOUR
votes as in this example.
This proxy, when properly executed, will be voted in the manner directed herein
by the above named stockholder. If no direction is made, this proxy will be
voted FOR the Proposals.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [_] [_] 2. Approval of the [_] [_] [_]
Directors accounting firm of
(see reverse) Arthur Andersen LLP
as independent auditors
of the Company for 1997.
For, except vote withheld from 3. Other business - In their discretion, the
the following nominee(s): proxies are authorized to vote upon such
other matters as may properly come before
- ------------------------------ the meeting or any adjournment thereof.
Change of
Address [_]
Attend
Meeting [_]
Signature(s) Date
-------------------------- ----------
Signature(s) Date
-------------------------- ----------
NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
