<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 (S) 240.14a-11(c) or (S) 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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
May 4, 1999
Dear Fellow Shareholder:
Your officers and directors join me in inviting you to attend the 1999 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 Ernest N. Morial Convention Center, 900
Convention Center Boulevard, New Orleans, LA on Friday, June 4, 1999, 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,
/s/ SHANNON A. SOEFJE
- ------------------------------------
Shannon A. Soefje
Senior Vice President and Corporate Secretary
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 4, 1999
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 Ernest N. Morial Convention Center, 900 Convention Center Boulevard,
New Orleans, LA on Friday, June 4, 1999, 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, 1999; 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 21, 1999, 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
/s/ SHANNON A. SOEFJE
------------------------------------
Shannon A. Soefje
Senior Vice President and Corporate Secretary
Irving, Texas
May 4, 1999
<PAGE>
H.D. VEST, INC.
6333 North State Highway 161
Fourth Floor
Irving, Texas 75038
May 4, 1999
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 4, 1999
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 4, 1999, 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 21,
1999, 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 4, 1999 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.
<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 Hancock Phillip W. Mayer
Jack B. Strong Kenneth R. Petree
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 54, 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
four 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 subsidiary.
Barbara Vest Hancock, age 52, is co-founder of the Company and presently serves
as Director of Representative Relations. Previously, Ms. Vest Hancock 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 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 56, 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 a
public Director of the Company's Board in 1994. He is the current chairman of
the Audit Committee.
Phillip W. Mayer, age 56, 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 a public Director of the Company's Board in 1994. He is
currently a member of the Audit Committee.
Kenneth R. Petree, age 55, is a Business Development Officer in the Small
Business Lending Division of Bank United for Central, East and West Texas, and
all of New Mexico, Oklahoma, Louisiana and Arkansas. He currently serves on the
Board of Directors of the Fort Worth Economic Development Corporation (a
nonprofit organization) and serves as Chairman of their Loan Committee. Mr.
Petree has extensive experience in the banking industry and previously held
executive positions with Overton Bank and Trust Company (currently Frost
National Bank) and Irving National Bank. Mr. Petree was appointed to the Board
of Directors to complete the term of Ms. Lynn R. Niedermeier, who accepted a
position with Arthur Andersen LLP in its Phoenix, Arizona practice and was
required to resign her position because the Company is an Arthur Andersen LLP
audit client.
Further Information Concerning the Board of Directors
-----------------------------------------------------
The Company's Board of Directors held five formal meetings during the fiscal
year ended September 30, 1998. In addition, management confers frequently with
its Directors on an informal basis to discuss Company affairs. During fiscal
year ended September 30, 1998, no Director, other than Ms. Vest Hancock,
attended fewer than 75 percent of the meetings of the Board of Directors. Ms.
Vest Hancock attended three of five total meetings (60 percent) for the year.
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, 1998 is as follows:
Name Title Compensation
- --------------------------------------------------------------------------------
Herb D. Vest Chairman of the Board of Directors $53,700
Barbara Vest Hancock Director 29,500
Jack B. Strong Director and Member-Audit Committee 33,500
Kenneth E. Reynolds Director 29,500
Jerry M. Prater Director and Chairman of the Audit Committee 35,500
Phillip W. Mayer Director and Member-Audit Committee 33,500
Kenneth R. Petree Director 2,458
- --------------------------------------------------------------------------------
3
<PAGE>
Prior to June 1998 the independent Board members were 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 three times
during the fiscal year ended September 30, 1998. 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 1998
were Jerry M. Prater, Jack B. Strong and Phillip W. Mayer.
The Company's Board of Directors has a Compensation Committee which met
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
Hancock, Kenneth R. Petree, 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, 1999. 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, 1998, 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.
- --------------------------------------------------------------------------------
Name of Beneficial Amount Beneficially Percent of Vote
Owner Owned
- --------------------------------------------------------------------------------
Herb D. Vest (1) 3,137,478 53%
Barbara Vest Hancock 1,475,481 27%
Shannon A. Soefje 1,339 *
Kenneth E. Reynolds 550 *
Jack B. Strong 100 *
W. Ted Sinclair 1,481 *
Roger C. Ochs 2,324 *
- -------------------------------------------------------------------------------
Officers and Directors as 4,618,753 78%
a Group
- -------------------------------------------------------------------------------
* Less than 1%
(1) Includes 2,611,663 shares of Outstanding Common Stock, 314,000 Common Stock
Options with an exercise price ranging from $2.38 to $5.06, 45,148 Common
Stock Options with an exercise price of $8.50, and 166,667 Exercisable
Convertible Series A Preferred Stock with a conversion rate of one
preferred share for one share of common stock. Ownership percentage
excluding Common Stock Options and the Convertible Series A Preferred Stock
is 48%.
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, 1998, 1997 and
1996, to the Chief Executive Officer and the highest paid directors, officers
and executive managers, each receiving in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Name and Principal Fiscal Restricted Stock All Other
Position Year Salary Bonus Stock Options (1) Compensation
Awards
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Herb D. Vest, Chairman of the 1998 $900,000 $2,340,148 - - $ 53,700
Board of Directors, Chief 1997 862,500 1,869,497 - - 45,774
Executive Officer and 1996 687,500 1,500,000 - - 21,996
President
Barbara Vest Hancock, Director 1998 $325,000 27,283 - - $ 29,500
and Director of 1997 284,167 - - - 43,793
Representative Relations 1996 - - - - 220,008
Roger C. Ochs 1998 $150,000 $ 194,898 - - -
Director of Marketing 1997 150,000 155,791 - - -
1996 136,045 125,000 - - -
Shannon A. Soefje Senior 1998 $140,000 $ 90,952 - - -
Vice President and Corporate 1997 135,000 65,851 - - -
Secretary 1996 125,500 62,500 - - -
W. Ted Sinclair 1998 $145,000 $ 90,952 - - -
Vice President and Chief 1997 140,000 75,753 - - -
Financial Officer 1996 130,625 62,500 - - -
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Officers and select employees are eligible to participate in a
stock option plan.
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------------------
No options were granted to officers during fiscal 1998.
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 1998:
<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 - - 359,148 $735,080 -
W. Ted Sinclair - - 1,456 - -
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the difference between the closing price of the Company's
Common Stock on September 30, 1998, and the exercise price of the
options.
(2) The closing price of the stock at September 30, 1998, 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 may 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 may be 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, 1998.
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 1996,
1997 or 1998.
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 38% increase in
the Company's revenues,
8
<PAGE>
combined with positive earnings after consideration of the bonus, resulted in
the payment of a $2,340,148 bonus under the plan. The Company paid a bonus of
$1,869,497 in fiscal 1997 and $1,500,000 in fiscal 1996. Management fees,
including bonuses, under these agreements were $2,187,500, $2,731,997 and
$3,240,148 for the years ended September 30, 1996, 1997 and 1998, 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 1998.
Compensation Committee Members
Herb D. Vest Kenneth E. Reynolds
Barbara Vest Hancock Jerry M. Prater
Jack B. Strong Phillip W. Mayer
Kenneth R. Petree
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 56 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
<TABLE>
<CAPTION>
- --------------------------------------- FISCAL YEAR ENDING ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX MARKET 9/30/1993 9/30/1994 9/29/1995 9/30/1996 9/30/1997 9/30/1998
H. D. Vest Inc 100.00 80.56 63.89 105.56 112.50 158.33
Security Brokers & Dealers 100.00 79.03 123.02 132.83 258.66 217.61
NASDAQ Market Index 100.00 105.82 128.48 150.00 203.88 211.88
</TABLE>
ASSUMES $100 INVESTED ON OCTOBER 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPTEMBER 30, 1998
The peer group is made up of the following:
<TABLE>
<S> <C> <C>
A.G. Edwards, Inc. Helmstar Group, Inc. Morgan Keegan, Inc.
- --------------------------------------------------------------------------------------------------------------------
Advest Group, Inc. Hoenig Group, Inc. National Discount BR & Grp
- --------------------------------------------------------------------------------------------------------------------
American Capital Strat Internat Asset Holding Corp. Olympic Cascade Fncl Corp
- --------------------------------------------------------------------------------------------------------------------
American Express Company Interstate/Johnson Lane Oxford Tax Exempt Fund II
- --------------------------------------------------------------------------------------------------------------------
Ameritrade Holding Cp Cl A Investment Technology Gp Paine Webber Group, Inc.
- --------------------------------------------------------------------------------------------------------------------
Annaly Mortgage Mngt, Inc. JB Oxford Holdings, Inc. Paulson Capital Corp.
- --------------------------------------------------------------------------------------------------------------------
Bear Stearns Companies Jefferies Group, Inc. Ragen Mackenzie Group
- --------------------------------------------------------------------------------------------------------------------
Chapman Holdings, Inc. John Nuveen Co. Cl A Raymond James Financial
- --------------------------------------------------------------------------------------------------------------------
Dain Rauscher Corporation JWGenesis Financial Research Partners Intl. Inc.
- --------------------------------------------------------------------------------------------------------------------
Donaldson Lufkin/Jenrett Kent Financial Services Schwab Charles Corporation
- --------------------------------------------------------------------------------------------------------------------
E*Trade Group, Inc. Kinnard Investments Scott & Stringfellow Financial
- --------------------------------------------------------------------------------------------------------------------
Everen Capital Corporation Kirlin Holdings Corporation SEI Investments Company
- --------------------------------------------------------------------------------------------------------------------
Fahnestock Viner Holding Knight/Trimark Group, Inc. Siebert Financial Corporation
- --------------------------------------------------------------------------------------------------------------------
First Albany Companies Legg Mason, Inc. Southwest Securities Group
- --------------------------------------------------------------------------------------------------------------------
Freedom Securities Corp. Lehman Bros Hldg, Inc. Stifel Financial Corp.
- --------------------------------------------------------------------------------------------------------------------
Friedman Billings Ramsey M.H. Meyerson & Co. United Asset Mgmt Corp.
- --------------------------------------------------------------------------------------------------------------------
Fronteer Financial Hldgs Mackenzie Financial Corp. Waddell & Reed Financial, Inc.
- --------------------------------------------------------------------------------------------------------------------
H.D. Vest, Inc. McDonald & Co. Investment Ziegler Companies, Inc.
- --------------------------------------------------------------------------------------------------------------------
Hambrecht & Quist Group Merrill Lynch & Co.
- --------------------------------------------------------------------------------------------------------------------
</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 Barbara Vest Hancock through
October 1996. In November 1996, Ms. Vest Hancock was employed by the Company as
its Representative Relations Director, thereby terminating her consulting
contract. Amounts paid to Ms. Vest Hancock during the years ended September 30,
1996, 1997, and 1998 under these arrangements were approximately $200,000,
$300,000, and $325,000, 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
$416,298, $538,700 and $493,604, for the years ended September 30, 1996, 1997,
and 1998, respectively, for management services rendered. As of September 30,
1998, the Company had a receivable of approximately $138,496 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. In June 1998, Mr. Vest reduced to zero
the outstanding principal balance, together with the accrued interest, of his
revolving line of credit from the Company. At September 30, 1998, Mr. Vest had
no outstanding principal or accrued interest outstanding on this line.
The Company has an agreement to provide Barbara Vest Hancock a revolving line of
credit in an amount not to exceed $700,000, collateralized by Ms. Vest Hancock'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. In December 1998, Ms.
Hancock reduced to zero the outstanding principal balance, together with the
accrued interest, of her revolving line of credit from the Company. At December
31, 1998, Ms. Hancock had no outstanding principal or accrued interest due on
this line.
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, 1998, are included on pages 7 through 26 of the Company's 1998
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 2000 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's 2000
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, 1999.
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
/s/ SHANNON A. SOEFJE
- ----------------------------
Shannon A. Soefje
Senior Vice President and Corporate Secretary
Dated: May 4, 1999
12
<PAGE>
PROXY H.D. VEST, INC. PROXY
Proxy Solicited on Behalf of the Board of Directors of the
Company for the Annual Meeting of Shareholders on June 4, 1999
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 Ernest N. Morial
Convention Center, 900 Convention Center Boulevard, New Orleans, LA on June 4,
1999 at 2:00 p.m., and at any adjournment thereof, on all matters coming before
said meeting.
1. Election of Directors, FOR [_] WITHHELD [_]
Nominees:Herb D. Vest, For, except vote withheld from the
Barbara Vest Hancock, Jack following nominee(s):
B. Strong, Kenneth E. --------------------------------
Reynolds, Jerry M. Prater,
Phillip W. Mayer, Kenneth R.
Petree
2. Approval of the accounting firm of Arthur Andersen LLP as independent
auditors of the Company for 1999.
FOR [_] AGAINST [_] ABSTAIN [_]
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.
You are encouraged to specify your choices by marking the appropriate boxes,
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.
Change of Address [_] Attend Meeting [_]
<PAGE>
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.
Date: _____________________ , 1999
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Signature(s)
NOTE: Please sign exactly as name
appears hereon. Joint owners
should each sign. When signing as
attorney, executor, administra-
tor, trustee or guardian, please
give full title as such.
(change of address)
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----------------------------------
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(If you have written in the above
space, please mark the corre-
sponding box on the reverse side
of this card.)
