<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Dorsey Trailers, 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)(1) 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:
(4) Date Filed:
<PAGE> 2
DORSEY TRAILERS, INC.
ONE PACES WEST, SUITE 1700
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
March 22, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Dorsey Trailers, Inc. which will be held at One Paces West, 2727 Paces Ferry
Road, Atlanta, Georgia, on Monday, April 26, 1999, at 10:30 A.M. local time.
We look forward to your attendance at the Annual Meeting so that you can
vote your shares in person and become better acquainted with the members of your
Board of Directors and your management team. The items of business to be
conducted at the Annual Meeting are explained in the accompanying Proxy
Statement. Even if you are planning to attend, please complete the enclosed
proxy card and return it in the enclosed envelope so that your shares may be
voted. You will still be able to vote your shares in person if you attend the
Annual Meeting.
Your past support is sincerely appreciated, and, with your continued
support, we look forward to the next year.
If you have any questions about the Proxy Statement or the 1998 Annual
Report, please contact Kurt Herbst at (770) 438-9595.
We look forward to seeing you on April 26, 1999.
Sincerely,
/S/ MARILYN R. MARKS
MARILYN R. MARKS
Chairman of the Board,
and Chief Executive Officer
<PAGE> 3
DORSEY TRAILERS, INC.
ONE PACES WEST, SUITE 1700
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
---------------------
NOTICE TO THE HOLDERS OF COMMON STOCK
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 1999
---------------------
Notice is hereby given to the holders of Common Stock of Dorsey Trailers,
Inc. (the "Company") that the Annual Meeting of Stockholders (the "Annual
Meeting") of the Company will be held at One Paces West, 2727 Paces Ferry Road,
Atlanta, Georgia, on Monday, April 26, 1999, at 10:30 A.M., local time, for the
following purposes:
(i) to elect one person to serve as a director of the Company;
(ii) to ratify the selection of PricewaterhouseCoopers LLP as
independent certified public accountants for the year ending
December 31, 1999; and
(iii) to consider and act upon such other business as may properly
come before the meeting or any adjournments thereof.
Only those stockholders of record at the close of business on March 12,
1999, are entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof. The transfer books will not be closed. A complete list of
stockholders entitled to vote at the Annual Meeting will be available at the
Annual Meeting.
By Order of the Board of Directors,
/s/ Kurt Herbst
Kurt Herbst
Secretary
March 22, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY APPOINTMENT AND VOTE IN PERSON.
<PAGE> 4
DORSEY TRAILERS, INC.
ONE PACES WEST, SUITE 1700
2727 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
---------------------
PROXY STATEMENT
---------------------
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 1999
March 22, 1999
INTRODUCTION
This Proxy Statement is furnished by and on behalf of the Board of
Directors of Dorsey Trailers, Inc. to holders of the common stock, $.01 par
value per share ("Common Stock"), of Dorsey Trailers, Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of proxies by
the Company's Board of Directors from holders of the outstanding shares of
Common Stock for use at the Annual Meeting of Stockholders to be held at 10:30
A.M. local time at One Paces West, 2727 Paces Ferry Road, Atlanta, Georgia, on
Monday, April 26, 1999, and at any adjournments thereof (the "Annual Meeting").
The Annual Meeting will be held for the following purposes:
(i) to elect one person to serve as a director of the Company;
(ii) to ratify the selection of PricewaterhouseCoopers LLP as
independent certified public accountants for the year ending
December 31, 1999; and
(iii) to consider and act upon such other business as may properly
come before the meeting or any adjournments thereof.
The Company's mailing address and the location of its principal executive
offices are One Paces West, Suite 1700, 2727 Paces Ferry Road, Atlanta, Georgia
30339. This Proxy Statement and the accompanying Proxy are first being mailed to
stockholders of the Company on or about March 31, 1999.
STOCKHOLDERS ENTITLED TO VOTE
Only stockholders of record of the Company at the close of business on
March 12, 1999 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. On the Record Date, there were 5,020,280 shares of
Common Stock issued and outstanding held by approximately 93 stockholders of
record. Notwithstanding the Record Date specified above, the Company's stock
transfer books will not be closed and shares may be transferred subsequent to
the Record Date. However, all votes must be cast in the names of stockholders of
record on the Record Date.
Pursuant to the Company's Certificate of Incorporation (the "Certificate of
Incorporation"), holders of Common Stock will be entitled to one vote for each
share held. The election of a director requires the affirmative vote of a
plurality of the votes cast by the shares of Common Stock at the Annual Meeting,
provided a quorum is present, and, therefore, abstentions and broker non-votes
will have no effect. The ratification of the selection of PricewaterhouseCoopers
LLP as independent certified public accountants requires the affirmative vote of
a majority of the votes cast by the shares of Common Stock at the Annual
Meeting, provided a quorum is present, and, therefore, abstentions or broker
non-votes will have no effect. Pursuant to the Company's Bylaws (the "Bylaws"),
a majority of the shares of Common Stock must be present to establish a quorum.
For the purpose of determining the presence of a quorum, abstentions will be
counted as present, but broker non-votes will not be counted.
<PAGE> 5
PROXIES
If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED
(I) FOR THE ELECTION OF THE NOMINEE FOR DIRECTOR OF THE COMPANY, (II) FOR
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1999,
AND (III) IN THE BEST JUDGMENT OF SUCH PROXIES AS TO ANY OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
A stockholder who has given a Proxy may revoke it at any time prior to its
exercise at the Annual Meeting by either (i) giving written notice of revocation
to the Secretary of the Company, (ii) properly submitting to the Company a duly
executed Proxy bearing a later date, or (iii) appearing at the Annual Meeting
and voting in person. All written notices of revocation of Proxies should be
addressed as follows: Dorsey Trailers, Inc., One Paces West, Suite 1700, 2727
Paces Ferry Road, Atlanta, Georgia 30339, Attention: Kurt Herbst, Secretary.
PROPOSAL I
ELECTION OF A DIRECTOR
The Company's Bylaws provide that the number of directors shall be
authorized by resolution of a majority of the Board of Directors. The Board of
Directors has by resolution set the number of directors at four. The Company's
Certificate of Incorporation provides for the Board of Directors to consist of
three classes of directors serving staggered terms of office with each class to
consist, as nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. Upon the expiration of the term of
office for a class of directors, the nominees for that class will be elected for
a three-year term to serve until the election and qualification of their
successors. The Class II director, Lawrence E. Mock, Jr. has been nominated for
re-election at the Annual Meeting. The Class I and Class III directors have two
years and one year, respectively, remaining on their terms of office and will
not be voted upon at the Annual Meeting.
It is the intention of the persons named as proxies to vote the proxies for
the nominee's election as Class II director of the Company, unless the
stockholders direct otherwise in their proxies. The nominee has consented to
serve as a director of the Company. In the unanticipated event that the nominee
refuses or is unable to serve as a director, the persons named as proxies
reserve full discretion to vote for such other person as may be nominated. The
Board of Directors has no reason to believe that Lawrence E. Mock, Jr. will be
unable or will decline to serve as a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MR. MOCK. THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A PLURALITY OF THE SHARES CAST IN THE
ELECTION AT THE ANNUAL MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR THE
ELECTION OF MR. MOCK.
DIRECTOR AND DIRECTOR NOMINEE INFORMATION
Based on information supplied by them, set forth below is certain
information concerning the nominee for election as Class II director and the
directors in Classes I and III whose terms of office will continue after the
Annual Meeting, including the name and age of each, their current principal
occupations (which has continued for five years unless otherwise indicated), the
names and principal businesses of the organizations in which their occupations
are carried on, the year each was elected to the Board of Directors of the
Company, their positions with the Company, and their directorships in other
companies.
2
<PAGE> 6
NOMINEE FOR DIRECTOR
Class II Nominee for Director
Lawrence E. Mock, Jr. (age 52) was an advisor to the Company from 1992 to
1994 and has been a director of the Company since May 1994. Mr. Mock is
currently President and Chief Executive Officer of Mellon Ventures, Inc., a
subsidiary of Mellon Bank Corporation. Prior to this, Mr. Mock was President of
Strategic Equity Advisors, Inc. (a personal holding company) from 1994 to
mid-1995. From 1983 through 1993, he was President, Chief Executive Officer and
General Partner of River Capital, Inc. and River Capital Partners, L.P.,
Atlanta-based equity investment firms. Prior to 1983, Mr. Mock was Chief
Operating Officer of Hangar One, Inc. (an aviation sales and service company).
CONTINUING DIRECTORS
Class III Directors Continuing in Office (Term expires 2000)
Marilyn R. Marks (age 46) has been the Chief Executive Officer and a
director of the Company since 1987 when she led a leveraged buyout of the
Company's predecessor. Before the leveraged buyout, Miss Marks held several
executive positions with the former parent company, The Dorsey Corporation,
whose shares were listed on the New York Stock Exchange. Miss Marks serves as a
Director on the Boards of Eastman Chemical Company and Dana Corporation.
Neil A. Springer (age 60) was an advisor to the Company from 1990 until
1994 and has been a director of the Company since May 1994. Mr. Springer has
been Managing Director of Springer & Associates (an executive placement company)
since June 1994. Mr. Springer was Senior Vice President of Slayton
International, Inc. (an executive placement company) from August 1992 until June
1994. He was President -- Central Region of Alexander Proudfoot Company (a
management consulting firm) from July 1991 to July 1992. Previously, he was the
President and Chief Operating Officer of Navistar International Corp. from April
1990 through October 1990. From 1989 to March 1990, he was the Chairman,
President and Chief Executive Officer of Navistar International Transportation
Corp., a wholly-owned subsidiary of Navistar International Corp. Mr. Springer is
a director of US Freightways Corporation and IDEX.
Class I Director Continuing in Office (Term expires 2001)
J. Hoyle Rymer (age 54) was an advisor to the Company from 1992 to 1994 and
has been a director of the Company since May 1994. He has been the President of
JHR Co. (a private investment company) since July 1989 and ExecUSource, Inc. (a
consulting and temporary management service firm) since 1996. He was President
of Magic Chef Co., a division of Maytag, Inc., from 1978 to 1988. Mr. Rymer is a
director of First American National Bank of Cleveland, Tennessee and Plasti-Line
Inc.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has established standing Audit and Compensation
Committees. The Company does not have a standing nominating committee.
Audit Committee. The Audit Committee, which is comprised of Messrs. Rymer
and Springer, is responsible for reviewing and making recommendations regarding
the Company's employment of independent certified public accountants, the annual
audit of the Company's financial statements and the Company's internal controls,
accounting practices and policies. During 1998, the Audit Committee met one
time.
Compensation Committee. The Compensation Committee, which is comprised of
Messrs. Mock and Rymer, is responsible for determining the compensation of the
Company's executive officers, establishing targets and incentive awards under
incentive compensation plans and administering employee benefits. During 1998,
the Compensation Committee met one time.
During 1998, the Board of Directors met four times. Each director, during
the period he or she was a director, attended at least 75% of the meetings of
the Board of Directors and at least 75% of the total number of meetings of all
of the committees on which he or she served.
3
<PAGE> 7
DIRECTOR COMPENSATION
The Company pays non-employee directors an annual retainer of $10,000
payable in cash and $10,000 payable in shares of Common Stock pursuant to the
Dorsey Trailers, Inc. Stock Plan for Non-Employee Directors, as amended in 1998.
The chairman of each Board committee also receives an additional $1,000 per
year. In addition, directors receive $1,000 for each Board meeting and $500 for
each committee meeting attended, plus reimbursement of expenses incurred in
attending meetings. No additional fee is paid for committee meetings held in
conjunction with Board meetings.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are Marilyn R. Marks (who is
identified previously), Lorri M. Palko, Kurt Herbst, David A. Kemp, and Michael
F. Toelkes.
Lorri M. Palko (age 38) joined the Company in November 1997 as President
and Chief Operating Officer. From 1994 until joining the Company, Ms. Palko was
President and Chief Executive Officer of Morgan Corporation (a truck body
manufacturer) and was with Morgan Corporation in various other positions since
1987.
Kurt Herbst (age 48) joined the Company in March 1995 as Director of Parts
Sales and Dealer Development and was promoted to Director of Materials in
December 1995. In April 1998, Mr. Herbst was assigned as Director of Marketing
until his promotion to Vice President of Finance, Chief Financial Officer, and
Secretary in July 1998. Prior to joining the Company, Mr. Herbst was General
Sales Manager for Ohio Moulding Corporation (a manufacturer of steel products)
from 1992.
David A. Kemp (age 40) joined the Company in January 1991 as Director of
Engineering and was promoted to Vice President -- Engineering in January 1993.
In 1998, Mr. Kemp was reassigned as Vice President Information and Engineering
Systems. From 1983 until joining the Company, he was a project engineer at Great
Dane Trailers.
Michael F. Toelkes (age 55) joined the Company in September 1998 as Vice
President -- Sales and Marketing. Prior to joining the Company Mr. Toelkes was
with Ryder System, Inc. (a worldwide provider of transportation and logistic
services) as Vice President -- National Sales in 1997 and Director of National
Sales from 1991.
4
<PAGE> 8
EXECUTIVE COMPENSATION
The following table presents certain information concerning compensation
earned for services rendered in all capacities to the Company by the Company's
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
for the years ended December 31, 1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- -------------
SECURITIES
FISCAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- --------------------------- ------ --------- ------- -------------
<S> <C> <C> <C> <C>
Marilyn R. Marks................................. 1998 $232,000 $ -- --
Chief Executive Officer 1997 232,000 -- --
1996 232,000 -- --
Lorri M. Palko................................... 1998 $265,000 $ -- --
President 1997 265,000 -- 75,000 shares
Kurt Herbst...................................... 1998 $115,000 $5,000 10,000 shares
Vice President -- Finance
David A. Kemp.................................... 1998 $127,720 $ -- --
Vice President -- Information and 1997 124,000 -- --
Engineering Systems 1996 124,000 -- --
Michael F. Toelkes............................... 1998 $135,000 $ -- 15,000 shares
Vice President -- Sales and Marketing
James E. Clements(1)............................. 1998 $130,000 $ -- --
Vice President -- Finance 1997 125,000 -- 50,000 shares
</TABLE>
- ---------------
(1) Mr. Clements resigned from his position with the Company in July 1998.
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement with Ms. Palko, who
serves the Company as its President through December 31, 1999 with automatic
annual renewals. Ms. Palko is guaranteed certain payments in the event of her
termination without good reason, as defined, or with a change in control through
a merger, consolidation or other business combination. The agreement also
contains a twelve month noncompete clause.
5
<PAGE> 9
STOCK OPTIONS
Option Grants in the Year Ended December 31, 1998. The following table
sets forth certain information concerning the grant of options to purchase
Common Stock pursuant to the Company's Stock Incentive Plan to Named Executive
Officers during the year-end December 31, 1998:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM(2)
OPTIONS IN FISCAL EXERCISE EXPIRATION -------------------
NAME GRANTED(1) YEAR 1998 PRICE ($/SH) DATE 5% ($) 10% ($)
- ---- ---------- ---------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kurt Herbst....................... 10,000 14.3% 2.875 7/13/08 $46,831 $74,570
Michael F. Toelkes................ 15,000 21.4% 1.375 9/28/08 33,596 53,496
</TABLE>
- ---------------
(1) Options were issued under the Company's Stock Incentive Plan. These options
vest in one-third increments beginning one year after the date of grant.
(2) Based upon the market price on the date of grant and on annual appreciation
at the rate stated of such market price through the expiration date of such
options. The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the SEC and therefore are not
intended to forecast possible future appreciation, if any, of the Company's
stock price.
Option Exercises and Year-End Values. The following tables set forth all
options exercised by the Named Executive Officers during the year ended December
31, 1998, and the number and value of options held by such Named Executive
Officers at fiscal year end:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE OF VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED
EXERCISABLE/UNEXERCISABLE IN-THE-MONEY IN-THE-MONEY
NUMBER OF OPTIONS AT OPTIONS AT OPTIONS AT
SHARES ACQUIRED VALUE DECEMBER 31, DECEMBER 31, DECEMBER 31,
ON EXERCISE REALIZED 1998 1998(1) 1998(1)
--------------- -------- ------------------------- -------------- ---------------
(EXERCISEABLE) (UNEXERCISABLE)
<S> <C> <C> <C> <C> <C>
Marilyn R. Marks........ -- $ -- -- $ -- $ --
Lorri M. Palko.......... -- -- 25,000/50,000 -- --
Kurt Herbst............. -- -- 13,333/16,667 -- --
David A. Kemp........... 30,000 73,416 10,045/39,022 7,193 28,095
Michael F. Toelkes...... -- -- 0/15,000 -- --
</TABLE>
- ---------------
(1) Based on the closing price on the OTC -- Bulletin Board of the Company's
Common Stock on December 31, 1998 ($1.00).
INCENTIVE PLANS
Pension Plans. The Company sponsors a defined benefit pension plan for
employees, which has been maintained in compliance with the tax qualification
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). The
plan provides monthly payments in the form of a life annuity to salaried
employees of the Company who retire at normal or early retirement age (65 and 60
respectively). The monthly payments are not subject to offset for Social
Security or other payments. Cash contributions are made by the Company on an
annual basis to an irrevocable pension trust in order to fund the future pension
payments. The Company also adopted an excess benefit plan in 1994 for executives
earning over $150,000. The excess plan provides the pension benefits which
cannot be provided under the defined benefit plan because of the $150,000
compensation limit under the Code. The excess plan benefits are not funded. Any
benefits due under the excess plan will be paid from the Company's general
assets.
6
<PAGE> 10
The following table shows the total estimated annual pension benefits
payable to a covered participant at normal retirement age under the defined
benefit and excess plans:
YEARS OF SERVICE AT NORMAL RETIREMENT AGE
<TABLE>
<CAPTION>
REMUNERATION(1) 10 15 20(2)
- --------------- ------- -------- --------
<S> <C> <C> <C>
$100,000 $19,610 $ 29,415 $ 39,220
125,000 24,610 36,915 49,220
150,000 29,610 44,415 59,220
175,000 34,610 51,915 69,220
200,000 39,610 59,415 79,220
225,000 44,610 66,915 89,220
250,000 49,610 74,415 99,220
300,000 59,610 89,415 119,220
350,000 69,610 104,415 139,220
</TABLE>
- ---------------
(1) The remuneration taken into account under these plans is the average annual
compensation reported to the covered employee on IRS Form W-2 for the five
calendar years preceding retirement.
(2) A maximum of 20 years of service is taken into account in determining
pension benefits.
Benefits under the plans generally vest after the participant has completed
five years of employment with the Company. The retirement benefit payable at age
65 to a participant is 1.35% of the first $6,000 of the participant's
remuneration and 2% of the participant's remuneration in excess of $6,000 both
multiplied by the participant's years of service (to a maximum of 20 years).
Benefits under the plans are reduced (i) if at retirement the participant has
fewer than 20 years of employment with the Company and (ii) if the participant
begins to receive benefits prior to age 62.
As of December 31, 1998, Miss Marks had an average five-year compensation
of $229,000 and eleven years of credited service; Ms. Palko had an average
five-year compensation of $265,000 and fourteen months of credited service; Mr.
Herbst had an average five-year compensation of $92,468 and three years of
credited service; Mr. Kemp had an average five-year compensation of $131,120 and
seven years of credited service; Mr. Toelkes had an average five-year
compensation of $135,000 and four months of credited service; and Mr. Clements
who resigned from his position with the Company in July 1998 did not vest in the
pension plan.
7
<PAGE> 11
STOCKHOLDER RETURN COMPARISON
The following line graph presentation compares cumulative stockholder
returns of the Company with the Nasdaq Stock Market (U.S. Companies) and a Peer
Index for the period beginning July 28, 1994 (assuming the investment of $100 in
the Company's Common Stock, the Nasdaq Stock Market (U.S. Companies) and the
Peer Index and reinvestment of all dividends). The Peer Index is composed of
stocks in the Nasdaq Trucking and Transportation Stock Index.
<TABLE>
<CAPTION>
Measurement Period Dorsey The Nasdaq
(Fiscal Year Covered) Trailers, Inc. Stock Market Peer Index
<S> <C> <C> <C>
7/28/94 100.00 100.00 100.00
12/31/94 116.30 106.40 94.40
12/31/95 40.40 150.30 109.30
12/31/96 25.00 185.10 121.30
12/31/97 19.70 227.20 156.30
12/31/98 7.70 318.80 138.40
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The elements of executive compensation consist of base salary, annual cash
incentive bonus compensation, long-term incentive compensation in the form of
stock options, and various other benefits which are generally available to all
employees of the Company.
Base Salary. The base salary for an executive officer is based on the
officer's responsibilities and is set at a level that the Compensation Committee
believes is competitive with other companies in the trucking and transportation
industry. For 1998, the Board of Directors relied primarily upon the advice of
Miss Marks in determining salaries for executive officers. For 1998, Miss Marks'
salary was $232,000. The 1998 compensation of Marilyn R. Marks, the Company's
Chief Executive Officer, was reviewed to determine that the salary was not in
excess of salaries paid by other manufacturing enterprises of similar size
within the geographic area. Miss Marks' salary has remained the same for 1998,
1997, and 1996.
Bonus Plan. Executive officers are also eligible for participation in the
Company's annual bonus plan. This plan awards executive officers with cash
bonuses based upon the achievement of certain levels of pretax earnings by the
Company. The Committee believes that the bonus plan provides appropriate
incentives to the
8
<PAGE> 12
executive officers to increase the value of the Company in a manner that also
increases the value of the Company for its stockholders.
Under the bonus plan adopted by the Board of Directors for 1998, executive
officers were eligible to receive a bonus ranging from 15% to 75% of their base
salaries depending on the level of pretax earning achieved by the Company. No
bonuses were awarded to Named Executive Officers under this plan for the year
ended December 31, 1998.
Long-Term Incentives. Long-term incentive for executive officers is
provided by the grant of stock options. The Committee believes that the grant of
stock options provides the executive officers with the long-term incentive to
enhance the value of the Company by directly tying the compensation of the
executive officers to increases in stockholder value. During 1998, the Committee
granted two stock options for an aggregate of 25,000 shares of Common Stock to
Named Executive Officers as of December 31, 1998.
Other Compensation Plans. The Company maintains several broadly-based
employee benefit plans in which the executive officers are permitted to
participate on the same terms as other employees. These include a retirement
savings plan designed to qualify under section 401(k) of the Code and a defined
benefit pension plan that provides monthly payment in the form of a life annuity
following five years of employment with the Company. Certain executive officers
are also eligible for participation in an excess benefit plan for highly
compensated individuals which increases payouts under the defined benefit
pension plan.
Tax Deductibility of Compensation. Section 162(m) of the Code generally
disallows a tax deduction to public companies for compensation over $1.0 million
to each of the Named Executive Officers. Certain performance-based compensation
is, however, exempted from the deduction limit. For 1998, the Committee did not
take section 162(m) into account as no executive was near the $1.0 million
threshold. In the future, the Committee will consider the effect of section
162(m) on its compensation decisions, but has no policy to limit executive
compensation so that all compensation is deductible.
COMPENSATION COMMITTEE
Lawrence E. Mock, Jr.
J. Hoyle Rymer
March 22, 1999
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Rymer and Mock served as members of the Compensation Committee
throughout 1998. During 1998, the Company paid ExecUSource, Inc., a consulting
and temporary management service firm, $90,573 for professional services.
ExecUSource, Inc. is a S-Corporation of which Mr. Rymer, a director of the
Company, is a fifty-percent owner.
9
<PAGE> 13
CERTAIN TRANSACTIONS
The following is a summary of certain transactions entered into between the
Company and certain of its executive officers and directors:
Marilyn R. Marks guarantees 33% of the amount of the Company's loan from
the U.S. Small Business Administration (the "SBA Loan"). As of December 31,
1998, the principal balance of the SBA Loan was $6,909,000.
Subsequent to year-end 1996 through March 28, 1997, the Company sold used
trailers at various dates, upon the approval of the Board of Directors of the
Company, in the amount of approximately $4,657,000 to TYM, Inc. TYM, Inc. is a
corporation which is wholly-owned by Marilyn R. Marks, Chief Executive Officer
of the Company. The Company incurred losses of approximately $819,000 on the
sales to TYM, Inc. In the opinion of management, based upon actual third-party
offers, the terms of the sale of these used trailers were no less favorable than
terms that could have been obtained from unaffiliated parties. There were no
such transactions subsequent to March 28, 1997.
During 1998, the Company paid Springer & Associates, an executive placement
firm, $5,234 for assistance in recruiting of executive officers. Springer &
Associates is a partnership in which Mr. Springer, a director of the Company, is
a partner.
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock as of March 12, 1999 by (i) each director
and nominee for director of the Company; (ii) the Named Executive Officers of
the Company; (iii) each person known by the Company to own beneficially more
than 5% of the outstanding shares of the Common Stock; and (iv) all directors
and executive officers of the Company as a group. Unless otherwise indicated,
each stockholder has sole voting and investment power with respect to the
indicated shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME BENEFICIALLY OWNED(1) OF CLASS
---- --------------------- --------
<S> <C> <C>
Marilyn R. Marks(2)......................................... 1,556,233(4) 31.0%
Lorri M. Palko.............................................. 40,000(5) *
Kurt Herbst................................................. 13,333(6) *
David A. Kemp............................................... 49,067(7) 1.0%
Michael F. Toelkes.......................................... -- *
Lawrence E. Mock, Jr........................................ 9,909(8) *
J. Hoyle Rymer(2)........................................... 383,888(9) 7.6%
Neil A. Springer............................................ 9,709 *
T. Charles Chitwood(3)...................................... 351,152 7.0%
All directors and executive officers as a group (8
persons).................................................. 2,062,139(10) 40.8%
</TABLE>
- ---------------
* Represents less than 1% of the Common Stock outstanding.
(1) Information relating to the beneficial ownership of Common Stock by the
above individuals is based upon information furnished by each such
individual using "beneficial ownership" concepts set forth in rules
promulgated by the Securities and Exchange Commission under Section 13(d)
of the Securities Exchange Act of 1934, as amended.
(2) The named person's address is One Paces West, Suite 1700, 2727 Paces Ferry
Road, Atlanta, Georgia 30339.
(3) The named person's address is 1412 Waterford Greenway, Marietta, Georgia
30068. Mr. Chitwood retired from his position with the Company in September
1997.
(4) Of these shares, 265,485 shares are subject to stock options issued by Miss
Marks, all of which are currently exercisable. Not included in the amount
above is 95,833 shares of Common Stock owned by
10
<PAGE> 14
the Marilyn R. Marks Foundation, which Miss Marks disclaims beneficial
ownership of the Common Stock.
(5) Consists of 15,000 shares owned individually and on a vested option to
purchase 25,000 shares of Common Stock granted by the Company.
(6) Consists of vested options to purchase shares of Common Stock granted by
the Company.
(7) Consists of options to purchase 49,067 shares of Common Stock granted by
Miss Marks.
(8) Includes 200 shares held by Mr. Mock as custodian for his children.
(9) Includes 75,000 shares of Common Stock held by Mr. Rymer as trustee for his
child as to which he has sole investing power.
(10) Includes 49,067 shares of Common Stock that are currently held by Miss
Marks, but are subject to options held by all executive officers and
directors as a group.
PROPOSAL II
APPROVAL OF SELECTION OF AUDITORS
The Company's Board of Directors, at the recommendation of the Audit
Committee, has selected PricewaterhouseCoopers LLP to conduct the annual audit
of the financial statements of the Company for the year ending December 31,
1999. PricewaterhouseCoopers LLP also audited the Company's financial statements
for 1998. PricewaterhouseCoopers LLP has no financial interest, direct or
indirect, in the Company, and does not have any connection with the Company
except in its professional capacity as an independent certified public
accountants.
The ratification by the stockholders of the selection of
PricewaterhouseCoopers LLP as independent certified public accountants is not
required by law or by the Bylaws of the Company. The Board of Directors,
consistent with the practice of most publicly held corporations, is
nevertheless, submitting this selection to the stockholders. If this selection
is not ratified at the Annual Meeting, the Board of Directors intends to
reconsider its selection of independent certified public accountants for the
year ending December 31, 1999.
The Audit Committee approves in advance all material non-audit services to
be provided by PricewaterhouseCoopers LLP and believes that these services have
no effect on audit independence.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting and will have an opportunity to make a statement, if they so desire, and
to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1999. RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP REQUIRES THAT THE VOTES CAST FOR RATIFICATION EXCEED
THE VOTES CAST AGAINST RATIFICATION, PROVIDED A QUORUM IS PRESENT.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder would like to be presented at the next
annual meeting of stockholders to be held in 2000 must be received by the
Company at Dorsey Trailers Inc., One Paces West, Suite 1700, 2727 Paces Ferry
Road, Atlanta, Georgia 30339, Attention, Secretary, on or before November 23,
1999. Only proper proposals which are timely received will be included in the
Proxy Statement and Proxy. Stockholders may intend to present a proposal from
the floor of the 2000 Annual Meeting, and they may commence their own proxy
solicitation, rather than having the proposal included in the Company's 2000
annual proxy statement. Under the Company's Bylaws, the Company must receive
notice of any such Stockholder proposal at least sixty (60) days prior to the
2000 Annual Meeting in order for the notice to be timely. If the Company does
not receive timely notice of the Stockholder proposal, the Company will retain
discretionary voting authority over the proxies returned by Stockholders for the
2000 Annual Meeting with respect to such Stockholder proposal. Discretionary
voting authority is the ability to vote proxies that stockholders have executed
and returned to the Company, on matters not specifically reflected on the proxy
card, and on which stockholders have not had an opportunity to vote by proxy.
11
<PAGE> 15
OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Officers, directors and greater than ten percent beneficial owners are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that during 1998 all of its officers and
directors complied with all applicable filing requirements, except as follows:
Form 4 Statement of Changes in Beneficial Ownership of Securities
David A. Kemp
A Form 5 has been filed with the Securities and Exchange Commission for Mr.
Kemp noting the delinquent Form 4 filing.
EXPENSES OF SOLICITATION
The Company will bear the cost of soliciting proxies. In addition to the
use of the mails, proxies may be solicited by directors, officers or other
employees of the Company, personally, by telephone or by telegraph. The Company
does not expect to pay any compensation for the solicitation of proxies, but may
reimburse brokers, custodians or other persons holding stock in their names or
in the names of nominees for their expenses in sending proxy materials to
principals and obtaining their instructions.
AVAILABILITY OF ANNUAL REPORT
ACCOMPANYING THIS PROXY STATEMENT IS A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998. STOCKHOLDERS WHO WOULD LIKE
ADDITIONAL COPIES OF THE ANNUAL REPORT SHOULD DIRECT THEIR REQUESTS IN WRITING
TO: DORSEY TRAILERS, INC., ONE PACES WEST, SUITE 1700, 2727 PACES FERRY ROAD,
ATLANTA, GEORGIA 30339, ATTENTION: KURT HERBST, SECRETARY.
12
<PAGE> 16
PROXY
DORSEY TRAILERS, INC.
ATLANTA, GEORGIA
ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Dorsey Trailers, Inc. (the "Company"),
Atlanta, Georgia, hereby constitutes and appoints Marilyn R. Marks and Kurt
Herbst or either one of them, proxies, each with full power of substitution, for
and in the name of the undersigned, to vote the number of shares of Common Stock
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders to be held at One Paces West, 2727 Paces Ferry
Road, Atlanta, Georgia, on Monday, April 26, 1999, at 10:30 A.M., local time, or
at any adjournments thereof (the "Annual Meeting"), upon the proposals described
in the Notice of Annual Meeting of Stockholders and Proxy Statement, both dated
March 22, 1999, the receipt of which is acknowledged, unless otherwise specified
herein. The proxies, in their discretion, are further authorized to vote for the
election of a person to the Board of Directors if the nominee named herein
becomes unable to serve or for good cause will not serve, are further authorized
to vote on matters which the Board of Directors does not know a reasonable time
before making the proxy solicitation will be presented at the Annual Meeting,
and are further authorized to vote on other matters which may properly come
before the Annual Meeting and any adjournments thereof. The Board of Directors
recommends a vote for Proposals 1 and 2.
1. ELECTION OF DIRECTORS. On the proposal to elect the following person to
serve as a Class II Director for a three year period and until his successor is
elected and qualified:
Lawrence E. Mock, Jr.
<TABLE>
<S> <C>
[ ] FOR THE NOMINEE LISTED [ ] WITHHOLD AUTHORITY TO VOTE FOR THE
NOMINEE LISTED
</TABLE>
2. RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. On the proposal
to ratify the selection of PricewaterhouseCoopers LLP as independent certified
public accountants for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued, and to be signed on reverse side)
(continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS. THIS PROXY WILL
ALSO BE VOTED WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears on your stock certificate and date.
Where shares are held jointly, each stockholder should sign. When signing as
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Shares Held:
--------------------------------
--------------------------------
Signature of Stockholder
--------------------------------
Signature of Stockholder (If
held Jointly)
Dated: , 1999
--------------------
Month Day
THIS PROXY IS SOLICITED ON BEHALF OF DORSEY TRAILERS, INC.'S BOARD OF DIRECTORS
AND MAY BE REVOKED BY THE STOCKHOLDER PRIOR TO ITS EXERCISE.
