<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)
H.D. VEST, INC.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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:
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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>
[LOGO OF H.D. VEST APPEARS HERE]
May 5, 1998
Dear Fellow Shareholder:
Your officers and directors join me in inviting you to attend the 1998 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 Albuquerque Convention Center, 401 2nd Street,
N.W., Albuquerque, NM on Friday, June 5, 1998 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.
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>
[LOGO OF H.D. VEST APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5,1998
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 Albuquerque Convention Center, 401 2nd Street, N.W., Albuquerque, NM
on Friday, June 5, 1998 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
auditors for the fiscal year ending September 30, 1998; 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 22, 1998 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 6333 North State Highway 161,
Fourth Floor, Irving, TX 75038 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
May 5, 1998
<PAGE>
H.D. VEST, INC.
6333 NORTH STATE HIGHWAY 161
FOURTH FLOOR
IRVING, TEXAS 75038
MAY 5, 1998
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 5, 1998
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, June 5, 1998
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 22, 1998 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 May 5, 1998 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 Corporate 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 53, is the Company's Chairman of the Board of Directors,
Chief Executive Officer, President and primary shareholder. In addition to
his Juris Doctorate and Doctorate in International Business Administration,
Mr. Vest holds three master's degrees and 13 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 51, 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 68, 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 Board of Directors of the Texas Center for
Education Research 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.
2
<PAGE>
KENNETH E. REYNOLDS, age 69, 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 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 55, 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 Manufacturing Co., Hill & Wilkinson and Quazon Corporation.
Mr. Prater also currently serves as a trustee of the Dallas County
Community College District and serves as Chairman of its Audit Committee.
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 44, 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 two formal meetings during the fiscal
year ended September 30, 1997. In addition, management confers frequently
with its Directors on an informal basis to discuss Company affairs. During
fiscal year ended September 30, 1997, no Director attended fewer than 75
percent of the meetings of the Board of Directors. Directors are
reimbursed for travel and other expenses related to attendance at Board and
committee meetings. Total compensation to the Directors for the year ended
September 30, 1997 is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NAME TITLE Compensation
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Herb D. Vest Chairman of the Board of Directors $45,774
Barbara Vest Director 27,126
Jack B. Strong Director and Member-Audit Committee 30,126
Kenneth E. Reynolds Director 27,126
Jerry M. Prater Director and Chairman of the Audit Committee 31,626
Phillip W. Mayer Director and Member-Audit Committee 30,126
Lynn R. Niedermeier Director 27,126
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Current monthly compensation being paid to the Directors is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NAME TITLE Monthly Compensation
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Herb D. Vest Chairman of the Board of Directors $4,475
Barbara Vest Director 2,458
Jack B. Strong Director and Member-Audit Committee 2,792
Kenneth E. Reynolds Director 2,458
Jerry M. Prater Director and Chairman of the Audit Committee 2,958
Phillip W. Mayer Director and Member-Audit Committee 2,792
Lynn R. Niedermeier Director 2,458
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 twice
during the fiscal year ended September 30, 1997. 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 1997 were Jerry Prater, Jack Strong and Phillip
Mayer.
The Company's Board of Directors has a Compensation Committee which met
once during the fiscal year ended September 30, 1997. The function of the
Compensation Committee is to review, discuss and advise management and
officers of the Company regarding compensation and other employment
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 LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY
The firm of Arthur Andersen LLP has been selected as the Company's
independent auditors for the fiscal year ended September 30, 1998.
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.
4
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
------------------------------
The following information is furnished as of September 30, 1997, 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 AMOUNT BENEFICIALLY PERCENT OF VOTE
OWNER OWNED
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Herb D. Vest (1) (2) (3) 3,028,440 52%
Barbara Vest (1) 1,499,301 28%
Jerry M. Prater (4) 30,000 *
Phillip Mayer (4) 28,000 *
Lynn R. Niedermeier 21,337 *
Shannon A. Soefje 1,339 *
Kenneth E. Reynolds 550 *
Jack B. Strong 100 *
W. Ted Sinclair 25 *
Roger C. Ochs 1,909 *
- --------------------------------------------------------------------------------------------------------
Officers and Directors as a Group 4,609,092 78%
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(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 would have
been 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.
(2) Includes 250,000 exercisable Common Stock Options with an exercise
price of $5.00.
(3) Includes 166,667 exercisable Convertible Series A Preferred Stock with
an exercise price of $6.00.
(4) Includes 28,000 exercisable Common Stock Options with an exercise
price ranging from $2.38 to $5.06.
5
<PAGE>
EXECUTIVE COMPENSATION
----------------------
The following Summary Compensation Table sets forth all remuneration earned
in salary and bonus during the fiscal years ended September 30, 1997, 1996
and 1995, 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 POSITION FISCAL RESTRICTED
YEAR SALARY BONUS STOCK STOCK OPTIONS ALL OTHER
AWARDS (1) COMPENSATION
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Herb D. Vest, Chairman of the 1997 $862,500 $1,869,497 - - $ 45,774
Board of Directors, Chief 1996 687,500 1,500,000 - - 21,996
Executive Officer and 1995 500,000 - - - 20,766
President
Barbara Vest, Director and 1997 $284,167 - - - $ 43,793
Director of Representative 1996 - - - - 220,008
Relations 1995 - - - - 218,937
Lynn R. Niedermeier 1997 - - - - $ 27,126
Director (2) 1996 - - - - 20,004
1995 $245,834 - $100,000 - 86,004
Roger C. Ochs 1997 $150,000 $ 155,791 - - -
Director of Marketing 1996 136,045 125,000 - - -
1995 107,000 - - - -
Shannon A. Soefje Senior 1997 $135,000 $ 65,851 - - -
Vice President and Corporate 1996 125,500 62,500 - - -
Secretary (3) 1995 - - - - -
W. Ted Sinclair 1997 $140,000 $ 73,753 - - -
Vice President and Chief 1996 130,625 62,500 - - -
Financial Officer (3) 1995 - - - - -
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All officers and 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 1997.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR 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 1997:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME SHARES ACQUIRED VALUE REALIZED NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED, IN-THE-MONEY
THROUGH OPTIONS HELD AT FISCAL YEAR END (#) OPTIONS FISCAL YEAR END (1)(2)
EXERCISED
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Herb D. Vest - - 250,000 45,148 $15,000 -
Barbara Vest - - - 45,148 - -
W. Ted Sinclair - - - 1,456 - -
Jerry M . Prater - - 28,000 - 39,600 -
Phillip W. Mayer - - 28,000 - 39,600 -
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the difference between the closing price of the
Company's Common Stock on September 30, 1997 and
the exercise price of the options.
(2) The closing price of the stock at September 30, 1997 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
7
<PAGE>
be greater or less 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 Shareholders voted to approve 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 at the sole and
absolute discretion of the Company, which establishes eligibility
provisions of the Plan and which it may change at any time at 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, 1997.
Under the Plan, the Board of Directors may set revenue goals annually. 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 may 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 may be 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 1995, 1996 or 1997.
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 including 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, 1997, the
Company increased the annual management fee due to Mr. Vest to $900,000
from $750,000. The 30% increase in the Company's revenues,
8
<PAGE>
combined with positive earnings after consideration of the bonus, resulted
in the payment of a $1,869,497 bonus under the plan. The Company paid a
bonus of $1,500,000 in fiscal 1996. No bonus was accrued or paid under the
plan for the fiscal year ended September 30, 1995. Management fees,
including bonuses, under these agreements were $500,000, $2,187,500 and
$2,731,997 for the years ended September 30, 1995, 1996 and 1997,
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 1997.
COMPENSATION COMMITTEE MEMBERS
Herb D. Vest Kenneth E. Reynolds
Barbara Vest Jerry M. Prater
Jack B. Strong Phillip W. Mayer
Lynn R. Niedermeier
9
<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 53 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]
ASSUMES $100 INVESTED ON OCTOBER 1, 1992
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPTEMBER 30, 1997
The peer group is made up of the following:
<TABLE>
<S> <C> <C>
Advest Group, Inc. Interstate-Johnson Lane Oxford Tax Exempt Fund II
American Express Company Investment Technology Gp Paine Webber Group, Inc.
Ameritrade Holding Cp Cl A JB Oxford Holdings, Inc. Paulson Capital Corp.
Bear Stearns Companies Jefferies Group, Inc. Piper Jaffray Companies
Dain Rauscher Corporation John Nuveen Co. Cl A Quick & Reilly Group, Inc.
Donaldson Lufkin/Jenrett JW Charles Financial Svc Raymond James Financial
E*Trade Group, Inc. Kent Financial Services Rodman & Renshaw Cap Gr
Edwards, A.G., Inc. Kinnard Investments Ryan Beck & Co., Inc.
Everen Capital Corporation Kirlin Holdings Corporation Salomon, Inc.
Fahnestock Viner Holding Legg Mason, Inc. Schwab Charles Corporation
First Albany Companies Lehman Bros Hldg, Inc. Scott & Stringfellow Financial
Fronteer Financial Hldgs M.H. Meyerson & Co. SEI Investments Company
GKN Holding Corporation Mackenzie Financial Corp. Siebert Financial Corp
H.D. Vest, Inc. McDonald & Co. Investment Siebert Financial Corporation
Hambrecht & Quist Group Merrill Lynch & Co. Southwest Securities Group
Helmstar Group, Inc. Morgan Keegan, Inc. Stifel Financial Corp.
Hoenig Group, Inc. National Discount BR & Grp United Asset Mgmt Corp.
Internat Asset Holding Corp. Olympic Cascade Fncl Corp Ziegler Companies, Inc.
</TABLE>
10
<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, 1997, the Company
increased the annual management fee due to Mr. Vest to $900,000 from
$750,000.
The Company also had a consulting agreement with Ms. Barbara Vest through
October 1996. In November 1996, Ms. Vest was employed by the Company as
its Representative Relations Director, thereby terminating her consulting
contract. Amounts paid to Ms. Vest during the years ended September 30,
1995, 1996, and 1997 under these arrangements were $200,000, $200,000, and
$300,384, respectively.
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 $551,379, $416,298 and $538,700, for the years ended
September 30, 1995, 1996, and 1997, respectively, for management services
rendered. As of September 30, 1997, the Company had a receivable of
approximately $142,145 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, 1997, Mr.
Vest had drawn $2,000,000 in principal against the line of credit. As of
September 30, 1997, the Company had recorded $190,039 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, 1997, Ms.
Vest had drawn $482,216 in principal against the line of credit. As of
September 30, 1997, the Company had recorded $45,679 of accrued interest
receivable on this line.
SEVERANCE AGREEMENTS
In December 1995, Lynn R. Niedermeier resigned as President of the Company.
The Company agreed to pay her $16,600 per month until October 1, 1996.
11
<PAGE>
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, 1997, are included on pages 6 through 23 of the Company's
1997 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 1999 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
1999 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, 1998.
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: May 5, 1998
12
<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 JUNE 5, 1998
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 Albuquerque
Convention Center, 401 2nd Street, N.W., Albuquerque, NM on June 5, 1998 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 SHARE UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
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.
1. Election FOR WITHHELD
of
Directors [_] [_]
(see reverse)
For, except vote withheld from the following
nominee(s):
--------------------------------------------
2. Approval of the accounting FOR AGAINST ABSTAIN
firm of Arthur Andersen LLP
as independent auditors of [_] [_] [_]
the Company for 1998.
3. Other business -- In their
discretion, the 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.
