SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 ss. 240.14a-11(c) or ss. 240.14a-12
RAILTEX, 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:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
[RAILTEX LOGO]
April 21, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders of
RailTex, Inc. to be held on Wednesday, May 21, 1997, at 10:00 a.m. (CDT) at the
San Antonio Central Library, 600 Soledad Plaza, San Antonio, Texas. We look
forward to this opportunity to update you on developments here at RailTex and to
greet our new shareholders.
We hope you will attend the meeting in person. WHETHER OR NOT YOU EXPECT TO BE
PRESENT AND REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE MARK, SIGN AND
MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. Matters on which action will
be taken at the meeting are explained in detail in the Notice and Proxy
Statement following this letter.
Sincerely,
/s/ BRUCE M. FLOHR
Bruce M. Flohr
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
/s/ LAURA D. DAVIES
Laura D. Davies
VICE PRESIDENT-FINANCE, CHIEF FINANCIAL OFFICER
AND CORPORATE SECRETARY
Enclosure
<PAGE>
RAILTEX, INC.
4040 Broadway, Suite 200
San Antonio, Texas 78209
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997
To the Shareholders of RailTex, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
RailTex, Inc., a Texas corporation, will be held at the San Antonio Central
Library, 600 Soledad Plaza, San Antonio, Texas, on Wednesday, May 21, 1997, at
10:00 a.m.(CDT) for the following purposes:
(1) To elect three (3) Directors to serve as Class II Directors for
terms expiring in 2000 and until their respective successors are
duly elected and qualified;
(2) To approve the appointment of Arthur Andersen LLP as the
Company's auditors for the 1997 fiscal year; and,
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with the Bylaws of the Company and a resolution of the
Board of Directors, the record date for the meeting has been fixed at March 24,
1997. Only shareholders of record at the close of business on that date will be
entitled to vote at the meeting or any adjournment thereof.
A complete list of shareholders entitled to vote at the meeting will be
on file at the Company's corporate office at 4040 Broadway, Suite 200, San
Antonio, Texas, for a period of ten (10) days prior to the meeting. During such
time, the list will be open to the examination of any shareholder during
ordinary business hours for any purpose germane to the meeting.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED
TO SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY. A RETURN ENVELOPE IS ENCLOSED
FOR THAT PURPOSE.
RAILTEX, INC.
/s/ LAURA D. DAVIES
Laura D. Davies
CORPORATE SECRETARY
Dated: April 21, 1997
<PAGE>
RAILTEX, INC.
4040 Broadway, Suite 200
San Antonio, Texas 78209
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of
RailTex, Inc., a Texas corporation (the "Company"), to be voted at the 1997
Annual Meeting of Shareholders at 10:00 a.m. (CDT) on Wednesday, May 21, 1997,
or at any adjournment thereof. This proxy statement and the accompanying proxy
are first being mailed to shareholders on or about April 21, 1997.
VOTING AND PROXIES
Only holders of record of Common Stock of the Company at the close of
business on March 24, 1997 will be entitled to vote at the meeting. There were
9,152,260 shares of common stock outstanding on the record date. Each share of
common stock outstanding is entitled to one vote. A majority of the shares
outstanding will constitute a quorum at the meeting.
All shares represented by proxies will be voted in accordance with the
shareholders' directions. If the proxy card is signed and returned without any
direction given, shares will be voted in accordance with the recommendations of
the Board of Directors as described in this proxy statement. Any shareholder
giving a proxy may revoke it at any time before the proxy is voted by giving
written notice of revocation to the Corporate Secretary, by submitting a
later-dated proxy, or by attending the meeting and voting in person.
The election of each nominee for Director requires a plurality of the
votes cast. The affirmative vote of a majority of the shares present and voting
at the meeting in person or by proxy is required for approval of the appointment
of auditors. Abstentions and broker non-votes will be included in determining
the presence of a quorum at the meeting; however, abstentions and broker
non-votes will not be included in determining the number of votes cast on any
matter.
PROPOSAL #1
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors of not less
than three (3) members and not more than ten (10) members. Currently, there are
eight (8) Directors. At the 1995 Annual Meeting of Shareholders, the Company's
Bylaws were amended to classify the Board of Directors into three classes, each
of which class of Directors, after an interim arrangement, will serve for three
years, with one class being elected each year. At the 1995 Annual Meeting of
Shareholders, the classified Board of Directors was implemented by the election
of the initial Class I, Class II, and Class III Directors to serve for terms of
one year, two years, and three years, respectively.
The Board of Directors propose the election of three (3) Directors at
the 1997 Annual Meeting of Shareholders to serve as Class II Directors. The
Class II Director nominees are Henry M. Chidgey, Heather J. Gradison and Ferd.
C. Meyer, Jr. The nominees for Class II Directors, if elected, will serve for a
three year term expiring in 2000 and until their respective successors are
elected and qualified. The Board of Directors recommends a vote FOR such
nominees.
1
<PAGE>
The proxies named in the accompanying proxy, who have been designated
by the Board of Directors, intend to vote for the above mentioned nominees for
election as Directors, unless otherwise specified. Such nominees have indicated
a willingness to serve as Directors, but should any of them decline or be unable
to serve, the persons named as proxies may vote for another person in the place
of such nominees according to their best judgment and in the interest of the
Company.
The following information is furnished with respect to each of the
nominees. Such information includes all positions with the Company and principal
occupations during the last five years.
Notice for election as Class II Directors, whose terms expire in 2000:
HENRY M. CHIDGEY, age 47, has served as a Director and Executive Vice
President since June 1995. Mr. Chidgey joined RailTex as Chief Operating Officer
in April 1995. In October 1995, Mr. Chidgey was appointed President of RailTex.
From 1993 through March 1995, Mr. Chidgey was employed by Southern Pacific
Transportation Company as Vice President and Chief Mechanical Officer. From 1989
to 1993, Mr. Chidgey was Vice President and Chief Mechanical Officer of the
Illinois Central Railroad Company. Prior to joining the Illinois Central
Railroad Company, Mr. Chidgey was employed for 19 years by the Southern Pacific
Transportation Company where he held various operating positions.
HEATHER J. GRADISON, age 44, has served as a Director since 1990 and is
a member of the Nominating and Compensation Committees. Mrs. Gradison is an
international and domestic consultant specializing in advising on issues for
regulatory reform. From 1990 until 1994, Mrs. Gradison served as Assistant to
the President for the American Enterprise Institute for Public Policy Research.
From 1985 until 1990, Mrs. Gradison served as Chairman of the Interstate
Commerce Commission, and from 1982 until 1985, she was a Commissioner of the
Interstate Commerce Commission. From 1975 to 1982, Mrs. Gradison was employed by
the Southern Railway System.
FERD. C. MEYER, JR., age 57, has served as a Director since 1977 and is
a member of the Audit and Compensation Committees. Mr. Meyer has been Senior
Vice President and General Counsel of Central and South West Corporation, a
public holding company for five electric utility companies operating in Texas,
Oklahoma, Arkansas, Louisiana, and the United Kingdom, since 1988. From 1986 to
1988, Mr. Meyer was Vice President and Assistant General Counsel of Central and
South West Services, Inc., a subsidiary of Central and South West Corporation.
The following information is furnished with respect to each of the
continuing Directors. Such information includes all positions with the Company
and principal occupations during the last five years.
Class III Directors, whose terms expire in 1998:
ROBERT R. LENDE, age 56, served as a Director, Executive Vice
President, and Chief Financial Officer of RailTex from 1980 until he retired in
June 1995. He currently serves as a Director of RailTex and is a member of the
Nominating and Audit Committees. From 1975 through 1980, Mr. Lende was employed
by Rotan Mosle, Inc., a Texas-based regional investment banking firm, most
recently as Vice President-Corporate Finance. From 1971 to 1975, Mr. Lende was
Vice President-Marketing for Heatransfer Corporation, a manufacturer of
automobile air conditioners. Mr. Lende is also an Advisory Director of Alamo
Group, Inc.
ROBERT M. AYRES, JR., age 70, has served as a Director since 1988 and
is a member of the Compensation and Nominating Committees. Mr. Ayres is
currently a financial consultant and investor. From 1977 until 1988, Mr. Ayres
was President, Vice Chancellor, and Chief Executive Officer of the University of
the South. From 1973 to 1977, Mr. Ayres was Senior Vice President and a Director
of Rotan Mosle, Inc. From 1962 to 1973, he was President and Director of Russ
and Company, Inc., an investment banking firm. Mr. Ayres is also a Director of
Howell Corporation, Rochelle Communications, PatOil Corporation, and James Avery
Craftsmen.
2
<PAGE>
Class I Directors, whose terms expire in 1999:
BRUCE M. FLOHR, age 57, founded RailTex in 1977, and currently serves
as Chairman of the Board of Directors and Chief Executive Officer. From 1977 to
October 1995, Mr. Flohr had served as President of RailTex. From 1975 through
1977, Mr. Flohr held the positions of Deputy Administrator and Acting
Administrator of the Federal Railroad Administration in Washington, D.C. In
those positions, he had primary responsibility for rail safety, operation of the
Alaska Railroad, and operation of the Transportation Test Center at Pueblo,
Colorado. Mr. Flohr was employed by Southern Pacific Transportation Company from
1965 through 1975 and served as Division Superintendent of its San Antonio
Division from 1971 through 1975. He is a founder and past Chairman of the
Regional Railroads of America and is a Director of the Association of American
Railroads. Mr. Flohr is also a Director of Harmon Industries, Inc.
PALMER L. MOE, age 53, has served as a Director since June 1996 and is
a member of the Audit Committee. Since 1992, Mr. Moe has been President of
Storen Resources, Inc., a privately owned corporation which provides consulting
services, primarily in the energy sector. From 1983 to 1992, Mr. Moe was
President and Chief Operating Officer of Valero Energy Corporation. From 1965 to
1983, Mr. Moe held various positions with Arthur Andersen LLP, including
Managing Partner of the San Antonio office from 1978 to 1983.
LAURA D. DAVIES, age 38, has served as a Director of RailTex since June
1996. She has been Vice President-Finance and Administration and Chief Financial
Officer of RailTex since July 1995. Mrs. Davies was Vice President-Finance of
RailTex Service Co., Inc. ("RSC"), a subsidiary of RailTex, from February 1995
to June 1995 and served as Controller of RSC since 1986. Mrs. Davies is a
Certified Public Accountant and from 1981 to 1986 was employed by Arthur
Andersen LLP.
MEETINGS AND COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 1996, the Board of Directors
held ten (10) meetings. During the fiscal year ended December 31, 1996, no
Director attended fewer than seventy-five percent (75%) of the aggregate of (i)
the total number of meetings of the Board of Directors held during the period
for which he has been a Director and (ii) the total number of meetings held by
all committees of the Board of Directors on which he has served.
The members of the Board of Directors who are not full time employees
of the Company are compensated at the rate of $20,000 per year and $1,000 per
meeting attended. Members of committees of the Board of Directors are
compensated at the rate of $1,000 per meeting attended. In addition, each
Outside Director of the Company receives an annual grant of options to purchase
3,000 shares of Common Stock. The exercise price for these options is the
closing sale price on the last business day prior to January 1 of the year for
which the options are granted ($25.25 per share for 1997).
AUDIT COMMITTEE
The Audit Committee of the Board of Directors, which currently consists
of Robert R. Lende, Palmer L. Moe and Ferd. C. Meyer, Jr., met twice during the
1996 fiscal year. The functions of the Audit Committee are to recommend the
selection of independent accountants, review and recommend approval of annual
audited financial statements, and review significant changes in accounting
policies and procedures. In addition, the Audit Committee reviews the adequacy
of internal control and record-keeping systems, reviews compliance with
applicable regulations and policies (including environmental regulations and
policies on insider trading), and monitors litigation, fraud, and conflict of
interest and their potential impact on financial results.
3
<PAGE>
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors currently consists
of Robert M. Ayres, Jr., Heather J. Gradison and Ferd. C. Meyer, Jr. The
Compensation Committee met four (4) times during the 1996 fiscal year. The
functions of the Compensation Committee are to review the compensation of
officers and other management personnel and to make recommendations concerning
such compensation. The Compensation Committee also administers the employee
benefit plans of the Company, including the Company's 1993 Stock Plan, as
amended. No officer of the Company is a member of the Compensation Committee.
NOMINATING COMMITTEE
The Nominating Committee of the Board of Directors currently consists
of Robert M. Ayres, Jr., Heather J. Gradison and Robert R. Lende. The Committee
met once during fiscal year 1996. The function of the Nominating Committee is to
consider and recommend nominees for election as Directors. The Nominating
Committee will consider nominees recommended by security holders. The names of
any nominees to be recommended by security holders to the Nominating Committee
must be submitted in writing to the Nominating Committee at the Company's
corporate office at 4040 Broadway, Suite 200, San Antonio, Texas 78209, no later
than December 19, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors, executive officers, and any persons holding more than ten
percent of the Company's Common Stock to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities Exchange Commission and to provide copies of such reports to the
Company. Based upon the Company's review of copies of such reports received by
the Company and written representations of its Directors and executive officers,
the Company believes that during the year ended December 31, 1996, all Section
16(a) filing requirements were satisfied, except for (i) an inadvertent late
filing of a Form 4 for Robert R. Lende reporting the acquisition of 1,879
non-qualified stock options on March 20, 1996 and (ii) an inadvertent late
filing of a Form 3 for Michael A. Nosil, Vice President-Human Resources after
joining the Company in June 1996.
4
<PAGE>
PRINCIPAL AND MANAGEMENT SHAREHOLDERS
The following table sets forth the beneficial ownership of the
Company's Common Stock at March 24, 1997 by (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each Director, (iii) the Chief Executive Officer and the other four
most highly compensated officers of the Company (the "Named Executives"), and
(iv) all Directors and executive officers as a group. The address for each of
the Directors and the Named Executives is the address of the Company.
SHARES % OF TOTAL
BENEFICIALLY SHARES
5% SHAREHOLDERS, DIRECTORS AND NAMED EXECUTIVES OWNED(1) OUTSTANDING
- -------------------------------------------------- --------- ----
RCM Capital Management, L.L.C .................... 688,000 7.5%
Neuberger & Berman, L.L.C ........................ 589,900 6.5
Bruce M. Flohr(2) ................................ 586,708 6.4
Capital Guardian Trust ........................... 498,000 5.5
Robert M. Ayres, Jr.(3) .......................... 198,374 2.2
Robert R. Lende(4) ............................... 139,739 1.5
Laura D. Davies(5) ............................... 67,896 0.7
David P. Valentine(6) ............................ 64,340 0.7
Ferd. C. Meyer, Jr.(7) ........................... 17,950 0.2
Palmer L. Moe (8) ................................ 14,318 0.2
Heather J. Gradison(9) ........................... 10,000 0.1
Henry M. Chidgey (10) ............................ 6,522 0.1
Michael T. Brigham (11) .......................... 3,866 0.0
Directors and executive officers
as a group (10 persons)(12) .................... 1,109,713 11.9
- --------------
(1) Each holder has advised the Company that, except as noted below, it has
sole investment and voting power with respect to the shares indicated.
(2) The number of shares of Common Stock beneficially owned by Mr. Flohr
includes 35,862 shares of Common Stock reserved for issuance under
stock options which are exercisable within 60 days, and 4,000 shares
of stock held in trusts for members of Mr. Flohr's family for which Mr.
Flohr has voting but not investment power. Not included are an
aggregate of 20,565 shares beneficially owned by certain relatives of
Mr. Flohr not living in his home.
(3) The number of shares of Common Stock beneficially owned by Mr. Ayres
include 5,000 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days. Also included are 10,000
shares of Common Stock held by a private foundation for which Mr. Ayres
has voting and investment power.
(4) The number of shares of Common Stock beneficially owned by Mr. Lende
includes 27,668 shares of Common Stock reserved for issuance under
stock options which are exercisable within 60 days. Also included are
7,500 shares held by a private foundation, of which Mr. Lende is a
co-trustee. Mr. Lende disclaims beneficial ownership of these shares.
(5) The number of shares of Common Stock beneficially owned by Mrs. Davies
includes 47,159 shares of Common Stock reserved for issuance under
stock options which are exercisable within 60 days.
(6) The number of shares of Common Stock beneficially owned by Mr.
Valentine includes 52,881 shares of Common Stock reserved for issuance
under stock options which are exercisable within 60 days and does not
include an aggregate of 12,936 shares of Common Stock beneficially
owned by Mr. Valentine's adult children.
(7) The number of shares of Common Stock beneficially owned by Mr. Meyer
includes 5,000 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days.
(8) The number of shares of Common Stock beneficially owned by Mr. Moe
includes 3,000 shares of common stock reserved for issuance under stock
options which are exercisable within 60 days.
(9) The number of shares of Common Stock beneficially owned by Mrs.
Gradison includes 5,000 shares of Common Stock reserved for issuance
under stock options which are exercisable within 60 days.
(10) The number of shares of Common Stock beneficially owned by Mr. Chidgey
includes 772 shares of common stock reserved for issuance under stock
options which are exercisable within 60 days.
(11) The number of shares of Common Stock beneficially owned by Mr. Brigham
includes 2,616 shares of Common Stock reserved for issuance under stock
options which are exercisable within 60 days.
(12) The number of shares of Common Stock beneficially owned by the
Directors and executive officers as a group includes 184,958 shares of
Common Stock reserved for issuance under stock options which are
exercisable within 60 days.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table shows all cash and non-cash compensation paid to
the Company's Chief Executive Officer and each of the four most highly
compensated executive officers (collectively, the "Named Executives") for their
services to the Company during the years ended December 31, 1996, 1995, and
1994. The Company does not have employment contracts with any of the Named
Executives. There are no arrangements under which any Named Executive will
receive compensation in excess of $100,000 as a result of resignation,
retirement or other termination of employment or as a result of any change in
control of the Company (or a change in the individual's responsibilities as a
result of such a change in control).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
------------------------------------------- ----------
FISCAL OTHER ANNUAL ALL OTHER
YEAR SALARY BONUS(1)(2) COMPENSATION OPTIONS COMPENSATION(4)
---- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Flohr ................... 1996 $261,397 $ 68,750 $ -- 6,260 $80,846
CHAIRMAN AND CHIEF ............... 1995 234,192 41,733 -- 14,338 71,134
EXECUTIVE OFFICER .............. 1994 221,270 95,589 26,518 10,500 --
Henry M. Chidgey ................. 1996 220,000 48,125 -- 238,859 40,515
PRESIDENT, CHIEF ................. 1995 172,838 124,978(3) -- -- 22,981
OPERATING OFFICER .............. 1994 -- -- -- -- --
David P. Valentine ............... 1996 159,086 19,884 -- 2,416 --
VICE PRESIDENT-LINE .............. 1995 159,086 16,107 -- 5,213 --
ACQUISITIONS .................. 1994 154,450 34,752 -- 3,900 --
Laura D. Davies .................. 1996 150,000 28,125 -- 22,593 28,175
VICE PRESIDENT-FINANCE ........... 1995 129,363 17,289 -- 4,085 13,454
CHIEF FINANCIAL OFFICER ........ 1994 100,860 27,232 -- 3,450 --
Michael T. Brigham ............... 1996 110,000 13,200 -- 21,840 45,739
VICE PRESIDENT-SALES AND ......... 1995 91,773 12,265 -- 2,696 32,866
MARKETING ..................... 1994 83,200 17,791 -- 1,950 --
</TABLE>
- --------
(1) Bonuses are paid to executive officers, as well as all other employees
of the Company, pursuant to the Company's performance-based incentive
compensation program. In 1994, one-half of the bonus was paid to the
executive officers in shares of the Company's Common Stock.
(2) The amount shown in the bonus column reflects bonuses paid in
subsequent periods for performance during the named period. In the
Company's 1994 proxy statement, the amount shown in the bonus column
had reflected cash paid in the corresponding fiscal period.
(3) Includes a signing bonus paid to Mr. Chidgey of $99,250.
(4) Consists of amounts contributed by the Company pursuant to the
Company's 401(k) profit sharing plan in the amounts of $19,000, $9,486
and $11,250 for Mr. Flohr, Mr. Chidgey and Mrs. Davies, respectively,
in 1996. In addition, ALL OTHER COMPENSATION consists of premiums paid
by the Company for split dollar life insurance in the amounts of
$61,846, $31,029, $16,925 and $45,739 for Mr. Flohr, Mr. Chidgey, Mrs.
Davies and Mr. Brigham, respectively.
6
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS IN 1996 FOR OPTION TERM (1)
-------------------------------------------------------- ----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(2) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
------- ---- ------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Flohr ................... 6,260 1.4% $24.75(3) 3/20/2006 $ 97,468 $ 246,957
Henry M. Chidgey ................. 3,859 0.9 24.75(3) 3/20/2006 60,085 152,238
Henry M. Chidgey ................. 235,000 52.9 24.25(4) 6/12/2006 3,583,750 9,082,750
David P. Valentine ............... 2,416 0.5 24.75(3) 3/20/2006 37,617 95,311
Laura D. Davies .................. 2,593 0.6 24.75(3) 3/20/2006 40,373 102,294
Laura D. Davies .................. 20,000 4.5 24.25(4) 6/12/2006 305,000 773,000
Michael T. Brigham ............... 1,840 0.4 24.75(3) 3/20/2006 28,649 72,588
Michael T. Brigham ............... 20,000 4.5 24.25(4) 6/12/2006 305,000 773,000
</TABLE>
- --------
(1) Potential gains are net of exercise price, but before taxes associated
with exercise. The amounts represent certain assumed rates of
appreciation only, based on rules promulgated by the Securities and
Exchange Commission. Actual gains, if any, on stock option exercises
are dependent on the future performance of the Common Stock, overall
market conditions and the option holders' continued employment through
the vesting period. The amounts reflected in this table may not
necessarily be achieved. One share of stock purchased at $24.75 in 1996
would yield profits of $15.57 at 5.0% appreciation per year over ten
years, or $39.45 at 10.0% appreciation per year over the same period.
One share of stock purchased at $24.25 in 1996 would yield profits of
$15.25 at 5.0% appreciation per year over ten years, or $38.65 at 10.0%
appreciation per year over the same period.
(2) All options granted in 1996 by the Company vest over a five year period
from the date of grant, provided the option holder remains employed
with the Company.
(3) The options were granted in March 1996. The exercise price was set at
$24.75, the last sale price for the Company's Common Stock on March 19,
1996.
(4) The options were granted in June 1996. The exercise price was set at
$24.25, the last sale price for the Company's Common Stock on June 11,
1996.
The following table describes the exercisable and unexercisable options
to purchase shares of the Company's Common Stock held by the Company's Named
Executives and the value of such options as of December 31, 1996. No options
were exercised by these individuals during 1996.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT 12/31/96 OPTIONS AT 12/31/96
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --- ------ ------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Flohr ......................... None N/A 72,591 31,785 $1,314,237 $135,410
Henry M. Chidgey ....................... None N/A -- 238,859 -- 236,929
David P. Valentine ..................... None N/A 46,791 14,844 883,515 101,859
Laura D. Davies ........................ None N/A 41,559 33,353 781,805 113,955
Michael T. Brigham ..................... None N/A 1,319 25,167 -- 20,920
</TABLE>
(1) The value of unexercised options is based on the difference between the
closing sales price of $25.25 per share of Common Stock on December 31,
1996 and the option exercise price.
7
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors, consisting of
non-employee Directors (the "Committee"), presents the following report on
executive compensation. The report describes the Company's executive
compensation programs and the basis on which the Committee made compensation
decisions for 1996 with respect to the Company's executive officers, including
those named in the above compensation tables.
COMPENSATION OBJECTIVES. The Company's executive compensation programs are
designed to attract, retain and motivate the highest quality of management
talent. To achieve that objective, the Committee has developed a compensation
program which combines annual base salaries with annual bonuses and stock option
grants tied to corporate and individual performance.
ANNUAL BASE SALARIES. The Committee annually establishes the base salaries
to be paid to the Company's executive officers during the coming year, subject
to approval by the Board of Directors. The Committee's decisions regarding the
1996 base salary to be paid to each executive officer and the executive officers
as a group were based upon several factors (without any particular emphasis
given by the Committee to one factor over another), including the executive's
job performance, competitive compensation data, and the executive's experience,
responsibilities and management abilities. The Committee also considered the
Company's performance in 1995, noting the Company's 1995 consolidated net income
increased by 31.3%, excluding the impact of a special charge recorded in 1995,
representing the write-down in the amount of $2,140,000 ($1,389,000 or $0.15 per
share after taxes) to reflect the unamortized value of leasehold improvements of
the AUNW, and its operating revenues increased by 44.7%.
ANNUAL INCENTIVE COMPENSATION. The Company maintains a performance-based,
incentive compensation program through which a portion of the Company's earnings
are distributed as compensation to all of its employees. Cash incentive
compensation to the Company's executive officers are paid annually. In January
1996, a new incentive compensation plan for executive officers was established
by the Committee. The incentive compensation plan for executive officers
provides for cash incentive compensation to be paid based upon Company
performance achieved relative to the business plan and the executive officer's
personal performance. In addition, executive officers are also awarded, through
the 1993 Stock Plan, as amended, a calculated value of stock options and
performance shares based upon a multiple value of the cash incentive
compensation, as defined in the incentive compensation plan. The Compensation
Committee may also award special bonuses to recognize special achievements. The
executive officer bonuses for 1996 were determined and paid in March 1997.
STOCK OPTIONS. In order to encourage executive officers to focus on the
Company's long-term performance, the Committee (subject to the approval of the
Board of Directors) granted each executive officer (except Michael A. Nosil,
Vice President-Human Resources, who was not employed by the Company until June
1996) on March 20, 1996 options to purchase shares of the Company's Common
Stock. The exercise price of the options was set at $24.75 per share, the last
sale price of the Company's Common Stock on March 19, 1996. In addition, on June
12, 1996, the Company granted each executive officer (except Bruce M. Flohr,
Chairman and Chief Executive Officer) options to purchase shares of the
Company's Common Stock. The exercise price of the options was set at $24.25 per
share, the last sale price of the Company's Common Stock on June 11, 1996. The
options, with a ten-year term, vest and become exercisable at the rate of 20%
per year commencing on the first anniversary of the date of grant, provided the
executive officer remains an employee of the Company.
8
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Mr. Flohr's base annual salary
for the year ended December 31, 1996 was $261,397, a 12% increase over 1995. In
March 1997, he was paid a bonus for 1996 of $68,750, which constituted 26% of
his base annual salary and a 65% increase from the $41,733 bonus paid to him for
1995. Mr. Flohr also received options to purchase 6,260 shares of the Company's
Common Stock at $24.75 per share. In establishing the 1996 annual salary for Mr.
Flohr, the Committee considered the same factors it considered in setting the
1996 annual salaries for the other executive officers as described above.
COMPENSATION COMMITTEE:
ROBERT M. AYRES, JR.
HEATHER J. GRADISON
FERD. C. MEYER, JR.
STOCK PRICE PERFORMANCE GRAPH
The Company's Common Stock first began publicly trading on the National
Market System of NASDAQ on November 18, 1993. The graph below compares the
cumulative total shareholder return on the Company's Common Stock for the period
November 18, 1993 through December 31, 1996, with the cumulative total return on
the Nasdaq U.S. Composite Index, the Nasdaq Truck and Transportation Index, and
a composite comparison group determined by the Company consisting of certain
Class I railroads, trucking companies, and rail equipment companies. The return
calculations presented assume an investment of $100 on November 18, 1993 in the
Company's Stock and each of the indices, and the reinvestment of all dividends.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
11/18/93 12/31/93 12/30/94 12/29/95 12/31/96
--- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Railtex ............................ 100 168 144 127 153
NASDAQ US Composite Index .......... 100 106 103 146 179
NASDAQ Truck/Transportation Index .. 100 103 93 109 120
Comparator Group ................... 100 103 86 122 143
</TABLE>
9
<PAGE>
PROPOSAL #2
APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed the firm of Arthur
Andersen LLP to audit the accounts of the Company for the 1997 fiscal year.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting of Shareholders with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
Approval of the appointment of auditors is not a matter which is
required to be submitted to a vote of shareholders, but the Board of Directors
considers it appropriate for the shareholders to express or withhold their
approval of the appointment. If shareholder approval should be withheld, the
Board would consider an alternative appointment for the succeeding year. The
Board recommends that the shareholders vote FOR approval of the appointment of
Arthur Andersen LLP. The affirmative vote of a majority of the shares present
and voting at the meeting in person and by proxy is required for approval.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1998 Annual
Meeting of Shareholders must be received in writing by the Company at its
corporate office no later than December 21, 1997. The Company's corporate office
is located at 4040 Broadway, Suite 200, San Antonio, Texas 78209.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies
may be solicited through the mail and through telephonic or telegraphic
communication to, or by meeting with, shareholders or their representatives by
Directors, officers and other employees of the Company who will receive no
additional compensation therefor.
The Company requests persons such as brokers, nominees and fiduciaries
holding stock in their names for others, or holding stock for others who have
the right to give voting instructions, to forward proxy material to their
principals and to request authority for the execution of the proxy. The Company
reimburses such persons for their reasonable expenses.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Company.
RAILTEX, INC.
/s/LAURA D. DAVIES
Laura D. Davies
VICE PRESIDENT-FINANCE, CHIEF FINANCIAL OFFICER,
AND CORPORATE SECRETARY
Dated: April 21, 1997
10
<PAGE>
RAILTEX, INC.
4040 Broadway, Suite 200 San Antonio, TX 78209
PROXY FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RAILTEX, INC.
P The undersigned acknowledges receipt of the Notice of Annual Meeting of
RailTex, Inc. ("the Company") and hereby appoints Bruce M. Flohr and
R Laura D. Davies, and each of them, the attorneys of the undersigned,
with power of substitution, for and in the name of the undersigned, to
O vote as proxies for the undersigned according to the number of shares of
Common Stock the undersigned would be entitled to vote if then
X personally present at the Annual Meeting of Shareholders of the Company
to be held May 21, 1997, or at any adjournment thereof and to vote all
Y shares of Common Stock of the Company held by the undersigned and
entitled to be voted upon the following matters as indicated on the
reverse side.
This Proxy may be revoked at any time prior to the voting thereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS NUMBER 1, NUMBER 2 AND NUMBER 3.
________________________________________________________
Comments/Address Change
<PAGE>
Please mark [X]
your votes as
indicated in
this example
(1) ELECTION OF CLASS II DIRECTORS
FOR all WITHHOLD HENRY M. CHIDGEY, HEATHER J. GRADISON
nominees listed AUTHORITY AND FERD. C. MEYER, JR.
to the right to vote for
all nominees (INSTRUCTIONS: To withhold authority to
listed to the right vote for any individual nominee, write
that nominee's name in the space
[ ] [ ] provided below).
______________________________________
(2) To approve the appointment of
Arthur Andersen LLP as the
Company's auditors for the year
ending December 31, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(3) In their discretion, to vote upon
such other business as may properly COMMENTS/ADDRESS CHANGE [ ]
come before the meeting or any
adjournment thereof.
The undersigned(s) acknowledges receipt of the Notice of 1997 Annual Meeting of
Stockholders and the proxy statement accompanying the same, each dated April 21,
1997.
Please date this proxy and sign your name exactly as it appears hereon. If there
is more than one owner, each should sign. When signing as an agent, attorney,
administrator, guardian or trustee, please indicate your title as such. If
executed by a corporation this proxy should be signed in the corporate name by a
duly authorized officer who should so indicate his or her title.
PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
_______________________________________
Date
_______________________________________
Signature
_______________________________________
Signature if held jointly
