UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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]
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<Table>
[ ] 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-12
</Table>
The Dwyer Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
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THE DWYER GROUP, INC.
1010 N. University Parks Drive
Waco, Texas 76707
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 2002
To the Shareholders of
THE DWYER GROUP, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
The Dwyer Group, Inc., a Delaware corporation (the "Company") will be held at
the offices of the Company located at 1010 N. University Parks Drive, Waco,
Texas, on Friday, June 25, 2002, at 10:00 A.M., local time, for the following
purposes:
(a) To elect seven directors of the Company to serve until the
next annual meeting of the shareholders or until their
respective successors shall be elected and qualified;
(b) To amend the Company's 1997 Stock Option Plan;
(c) To ratify the appointment of BDO Seidman, LLP as independent
accountants for the Company and its wholly owned subsidiaries
for the year ended December 31, 2002; and
(d) To transact such other business as may properly come before
the meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on May 15, 2002
are entitled to notice of, and to vote at, the meeting or any adjournment
thereof. A list of shareholders entitled to vote at the meeting will be
available at the meeting for examination by any shareholder.
It is desirable that as large a proportion as possible of the
shareholders' interests be represented at the meeting. WHETHER OR NOT YOU PLAN
TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED SO THAT YOUR STOCK WILL BE REPRESENTED. The
giving of such proxy will not affect your right to vote in person, should you
later decide to attend the meeting. You may revoke the proxy at any time before
the proxy is exercised by delivering written notice of revocation to the
Secretary of the Company, by delivering a subsequently dated proxy or by
attending the annual meeting of shareholders and withdrawing the proxy. Please
date and sign the enclosed proxy and return it promptly in the enclosed
envelope.
By Order of the Board of Directors
DEBORAH WRIGHT-HOOD
Secretary
WACO, TEXAS
May 25, 2002
THE DWYER GROUP, INC.
1010 N. University Parks Drive
Waco, Texas 76707
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 2002
This Proxy Statement is furnished to shareholders of The Dwyer Group,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
annual meeting of shareholders to be held on Friday, June 25, 2002 at 10:00 a.m.
CDT at the Company's headquarters in Waco, Texas. Proxies in the form enclosed,
if properly executed, returned to the Company prior to the meeting, and not
revoked, will be voted at the meeting. The proxy may be revoked at any time
before it is exercised by giving written notice to the Secretary of the Company.
This Proxy Statement and the enclosed proxy card will first be sent to the
shareholders on May 25, 2002. The enclosed 2001 Annual Report of the Company
does not form any part of the proxy solicitation material.
OUTSTANDING COMMON STOCK
The record date for shareholders entitled to vote at the annual meeting
is May 15, 2002. At the close of business on that date, the Company had issued
and outstanding and entitled to vote at the meeting 6,997,931 shares of Common
Stock, $0.10 par value ("Common Stock"), and 647,254 shares of Common Stock were
held in the Company's treasury.
ACTION TO BE TAKEN AT MEETING
The accompanying proxy, if signed and returned, unless the shareholder
otherwise specifies in the proxy, will be voted (1) FOR the election as
directors of the Company, the seven persons named under "Election of Directors";
(2) FOR the proposed amendment to the Company's 1997 Stock Option Plan ("Option
Plan"); (3) FOR the ratification of the appointment of BDO Seidman, LLP as the
Company's independent accountants for the fiscal year ending December 31, 2002;
and (4) at the discretion of the proxy holder, on any other matter or business
that may properly come before the meeting or any postponements or any
adjournments thereof. Where shareholders have appropriately specified how their
proxies are to be voted, they will be voted accordingly. If any other matter or
business is brought before the meeting, the Secretary of the Company ("Proxy
Holder") may vote the proxies in her discretion. The directors do not know of
any such other matter or business.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock is necessary to constitute a quorum at
the annual meeting. In deciding all questions, a holder of Common Stock is
entitled to one vote, in person or by proxy, for each share held in their name
at the close of business on the record date. Abstentions will be included in
vote totals and, as such, will have the same effect on each proposal (other than
the election of directors) as a negative vote. Broker non-votes, if any, will
not be included in vote totals and, as such, will have no effect on any
proposal.
To be elected a director, each nominee must receive a plurality of all
of the votes cast at the meeting for the election of directors. Should any
nominee become unable or unwilling to accept nomination or election, the Proxy
1
Holder may vote the proxies for election of any other person the Board of
Directors may recommend. Each nominee has expressed their intention to serve the
entire term for which election is sought.
A favorable vote by the holders of a majority of the outstanding shares
of Common Stock, present in person or by proxy and entitled to vote thereon at
the annual meeting, is required to approve the amendment to the Option Plan and
to ratify and approve the appointment of BDO Seidman, LLP as independent
accountants for the Company for the year ended December 31, 2002.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of December 31, 2001, certain
information regarding the beneficial ownership of Common Stock by (i) each of
named executive officers, (ii) each person known by the Company to own
beneficially more than 5% of the outstanding Common Stock, (iii) each director
of the Company and (iv) all directors and officers as a group:
<Table>
<Caption>
BENEFICIAL OWNERSHIP (1)
------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT (2)
- ------------------------------------ ---------------- -----------
Dwyer Investments, Ltd. (4) 3,800,706 54.3%
Donald J. Dwyer Family Trust (4) 115,659 1.7%
Theresa Dwyer (3) (5) (6) (7) 4,305,853 61.5%
Donald J. Dwyer, Jr. (3) (7) (8) (9) 685,422 9.8%
Dina Dwyer-Owens (3) (8) (10) 569,191 8.1%
Robert Tunmire (3) (8) (11) 683,934 9.6%
Deborah Wright-Hood (3) (8) 562,460 8.0%
Thomas Buckley (3) (12) 101,864 1.4%
John Hayes (13) 45,386 *
James Sirbasku (14) 25,000 *
Donald E. Latin (15) 21,500 *
Michael Bidwell (3) (16) 114,145 1.6%
Darren Dwyer (3) (8) 533,391 7.6%
Douglas Dwyer (3) (8) 550,773 7.9%
Donna Dwyer-Van Zandt (3) (8) 560,055 8.0%
Renaissance Capital Growth & Income Fund III (17) 675,000 9.6%
All officers and directors as a group (nine persons) (5) (6) (18) 4,804,005 64.5%
</Table>
- ----------
*Less than 1%.
(1) Each beneficial owner's percentage ownership is determined by including
shares over which the person has voting power or dispositive power and
by assuming that options that are held by such person (but not those
held by any other person) and which are exercisable, have been
exercised. Except as noted, the Company believes that all persons named
in the table have voting and dispositive power with respect to all
shares of Common Stock beneficially owned by them.
2
(2) Based on a total of 6,997,931 shares of Common Stock outstanding prior
to the exercise of any outstanding options or warrants.
(3) The principal business address of each of these individuals is c/o the
Company, 1010 N. University Parks Drive, Waco, Texas 76707.
(4) Mr. Dwyer, former Chairman of the Board, President and CEO of the
Company, died December 4, 1994. On April 10, 1997, his Estate
distributed 4,077,501 shares of Common Stock beneficially owned by the
Estate to Ms. Theresa Dwyer with the remaining 115,423 shares
distributed to the Donald J. Dwyer Family Trust (the "Trust), of which
Ms. Theresa Dwyer and Mr. Donald Dwyer, Jr. are Co-Trustees. On
September 4, 1997, Ms. Theresa Dwyer contributed 3,899,182 beneficially
owned shares, and the Trust contributed 115,092 beneficially owned
shares, to Dwyer Investments, Ltd. (the "Partnership") in exchange for
equity interests. On April 10, 1998, Ms. Dwyer sold 13.3% limited
partnership interests in the Partnership to The Donald J. Dwyer, Jr.
GST Trust, The Donna Dwyer-Van Zandt GST Trust, The Deborah Wright-Hood
GST Trust, The Dina Dwyer-Owens GST Trust, The Darren Dwyer GST Trust,
The Douglas Dwyer GST Trust, (each individual is trustee of their
generation-skipping trusts), and to Mr. Robert Tunmire, individually,
each acquiring a 13.3% limited partnership interest. Ms. Dwyer, as
managing partner, has sole dispositive power over the stock owned by
the Partnership. The principal address for the Partnership and the
Trust is c/o the Company, 1010 N. University Parks Drive, Waco, Texas,
76707.
(5) Includes beneficial ownership of 295,000 shares of Common Stock
acquired in 1999 pursuant to a stock option agreement with the Company.
(6) Includes 3,800,706 shares of Common Stock of the Partnership over which
Ms. Theresa Dwyer has sole dispositive power as Managing Partner.
(7) Includes 115,659 shares of Common Stock of the Trust over which Ms.
Theresa Dwyer and Donald J. Dwyer, Jr., have shared voting power as
Co-Trustees.
(8) Includes 533,215 shares of Common Stock of the Partnership over which
the individual has full voting power, but no dispositive power.
(9) Includes 5,000 shares of Common Stock now exercisable under an
Incentive Stock Option Plan.
(10) Includes 5,000 shares of Common Stock now exercisable under an
Incentive Stock Option Plan.
(11) Includes 100,000 shares of Common Stock now exercisable under an
Incentive Stock Option Plan.
(12) Includes 71,864 shares of Common Stock now exercisable or exercisable
within 60 days under an Incentive Stock Option Plan and 30,000 warrants
purchased from an unrelated third party in 2000.
(13) Includes 45,136 shares of Common Stock now exercisable or exercisable
within 60 days pursuant to options granted Mr. Hayes. The principal
business address of Mr. Hayes is 6612 Dupper Court, Dallas, Texas
75252.
(14) Includes 20,000 shares of Common stock now exercisable or exercisable
within 60 days pursuant to options granted Mr. Sirbasku. The principal
business address of Mr. Sirbasku is 5205 Lakeshore Drive, Waco, TX
76710.
(15) Includes 11,000 shares of Common Stock now exercisable pursuant to
options granted Mr. Latin. The principal business address of Mr. Latin
is 3102 Maple Avenue, Suite 450, Dallas, TX 75201.
(16) Includes 72,400 shares of Common Stock now exercisable under an
Incentive Stock Option Plan and 30,000 warrants purchased from an
unrelated third party in 2000.
3
(17) The principal business address of Renaissance Capital Growth & Income
Fund III, Inc. is c/o Renaissance Capital Group, Inc., 8080 N. Central
Expressway, Suite 210, Dallas, TX 75206.
(18) Includes 395,700 shares of Common Stock now exercisable or exercisable
within 60 days under an Incentive Stock Option Plan and 60,000 warrants
exercisable by officers of the Company.
PROPOSAL 1: ELECTION OF DIRECTORS
Seven directors are to be elected at the annual meeting. Directors are
elected to serve until the next annual meeting of shareholders or until their
successors are elected and qualified. Shareholders are not permitted to
cumulatively vote their shares in connection with the election of directors.
NOMINEES FOR DIRECTOR
Set forth below is certain information concerning the persons nominated
for election as directors of the Company.
Theresa Dwyer, 67, has been Chairperson of the Board of Directors since
July of 1995, and Director of the Company since December of 1994. She is the
majority stockholder of the following privately held companies: Worldwide
Refinishing Systems, Inc., Worldwide Supply, Inc., and Dwyer Real Estate. Mrs.
Dwyer also serves as Managing Partner of Dwyer Investments, Ltd.
Dina Dwyer-Owens, 39, has served as President and Chief Executive
Officer since January 1, 1999 and has been a Director of the Company since 1989.
Prior to that time, she served as Vice President of Operations since September
of 1995 after serving as Co-Chairperson of the Board of Directors from December
of 1994 to July of 1995. Ms. Dwyer-Owens also served as Secretary of the Company
from 1989 through December of 1998. She also serves as Director of Rainbow, Mr.
Rooter and National Accounts. Ms. Dwyer-Owens has approximately 21 years
experience in the franchising industry.
Robert Tunmire, 43, has been Executive Vice President, Director of
Franchise Sales and President of Glass Doctor since January of 1999. Prior to
that time, he served as President and Chief Executive Officer of the Company
since December of 1994 after serving as Executive Vice President since June of
1993. Mr. Tunmire served as President of the Company, then operating as Mr.
Rooter Corporation, from January of 1992 through May of 1993. From 1989 to 1992,
he served as Vice President of Mr. Rooter. From December of 1980 until May of
1989, Mr. Tunmire was employed by Rainbow, most recently as Executive Vice
President of Franchise Counseling. He also serves as Director of Mr. Rooter and
National Accounts. Mr. Tunmire has approximately 26 years experience in the
franchising industry.
Donald J. Dwyer, Jr., 37, has served as a Director since May of 1989.
Mr. Dwyer is currently, and has been since 1994, employed by the Company as
Director of International Operations. He previously served as Director of
International Operations for Rainbow from 1987 to 1994. He also serves as
Director of Rainbow and Mr. Rooter. Mr. Dwyer has approximately 18 years
experience in the franchising industry.
John P. Hayes, 52, has served as a Director since July of 1994. He
founded and served, from January of 1987 to 1995, as President of The Hayes
Group, Inc., an international marketing and promotion company specializing in
franchised businesses. Since January of 1996, Mr. Hayes has served as a
consultant to franchisors. Mr. Hayes has approximately 23 years experience in
the franchising industry.
Donald E. Latin, 71, has served as a Director since July of 1995. He
founded and, since 1986, has served as President of D. Latin and Company, Inc.,
an investment banking company which provides such corporate finance
4
services as: the raising of capital, mergers and acquisitions, valuation of
businesses, fairness opinions, and other financial advisory services.
Burton D. Cohen, 62, was elected as a Director in May of 2002. Since
July of 1999, Mr. Cohen has served as a business consultant. In July of 1999, he
retired as Senior Vice President and Chief Franchising Officer of McDonald's
Corporation, a position he held since 1980. In that role, he was responsible for
overseeing McDonald's franchising activities worldwide. During that time, he
also served as Advisory Member of McDonald's Corporation Board of Directors. Mr.
Cohen was with McDonald's for a total of 35 years. Prior to 1980, he served as
Assistant General Counsel and Director of McDonald's corporate legal department.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE
NOMINEES.
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Dina Dwyer-Owens......................... 39 ................ President, Chief Executive Officer and Director
Robert Tunmire........................... 43 ................ Executive Vice President and Director
Thomas J. Buckley........................ 55 ................ Vice President, Treasurer and Chief Financial
Officer
Deborah Wright-Hood...................... 40 ................ V.P. of Administration, Secretary and Assistant
Treasurer
Michael Bidwell.......................... 43 ................ Chief Operating Officer
</Table>
(1) Information concerning the business experience of Mr. Tunmire and Ms.
Dwyer-Owens is provided under the section entitled "Election of Directors".
Thomas J. Buckley has served as Treasurer and Chief Financial Officer
since August of 1997 and as Vice President since June of 1998. He has also
served as President of Mr. Electric since May of 1999. Prior to employment by
the Company, he served as Chief Financial Officer of Watermarc Food Management
Co. ("Watermarc") since 1994. Mr. Buckley resigned as an officer of Watermarc
effective July 1, 1997. In January of 1999, Watermarc filed for bankruptcy
protection under Chapter XI of the U.S. Bankruptcy Code. From 1990 to 1994, Mr.
Buckley served as Vice President of Finance and Franchising for Western Sizzlin'
Restaurants. Mr. Buckley has also owned and operated his own franchising
business as a regional franchisor of SpeeDee Oil Change & Tune-Up, and has 20
years overall experience in the franchising industry.
Deborah Wright-Hood has served as Secretary of the Company since
December of 1998 and as Vice President of Administration since June of 1998.
Prior to that time, she was employed by the Company in various capacities since
1985, including Director of Administration since 1994. Ms. Wright-Hood was also
President of Worldwide Supply, Inc. from 1985 until December of 2000. She also
serves as Director of Aire Serv, Mr Appliance, Mr. Electric, Rainbow and Glass
Doctor. Ms. Wright-Hood has over 22 years experience in the franchising
industry.
Michael Bidwell has been Chief Operating Officer since July of 2000,
has been President of Rainbow since July of 1995 and President of Mr. Rooter and
Mr. Appliance since August of 1998. Mr. Bidwell was a Rainbow franchisee in
Tucson, Arizona from April of 1984 to June of 1995, and a Mr. Rooter franchisee
from August of 1992 to June of 1995. From 1986 to June of 1995, Mr. Bidwell
served as President of Ramsoo, Inc., an Arizona corporation, which operated the
Rainbow and Mr. Rooter franchises in Tucson, Arizona. From November of 1987
until July of 1995, Mr. Bidwell was also a franchisee and regional director for
Worldwide Refinishing Systems, Inc., a third party associated with the Company.
Mr. Bidwell also serves as a Director of National Accounts. Mr. Bidwell has over
18 years experience in the franchising industry.
5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information sets forth compensation earned by the Company's Chief
Executive Officer and all other of its named executive officers whose annual
compensation exceeded $100,000 in 2001, for services rendered for the Company
and its Subsidiaries during the fiscal years indicated:
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- ------------
NAME AND SECURITIES UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OTHER($) OPTIONS
------------------ ---- --------- -------- -------- -------
Dina Dwyer-Owens, 2001 $ 152,942 $ 19,615 -- --
President and CEO 2000 142,822 40,172 -- --
1999 81,125 300 -- --
Robert Tunmire, 2001 (1) $ 128,124 $175,566 -- --
Executive Vice President 2000 (1) 125,716 132,650 -- --
1999 (1) 125,215 104,932 -- --
Thomas J. Buckley, 2001 $ 126,500 $ 33,065 -- 25,000
Vice President & Chief 2000 126,890 68,072 -- 5,000
Financial Officer 1999 112,692 1,555 -- 12,000
Michael Bidwell, 2001 $ 130,062 $119,424 -- --
Chief Operating Officer 2000 117,756 235,372 -- 5,000
1999 117,305 96,816 -- 16,000
Deborah Wright-Hood 2001 $ 100,486 $ 11,038 -- --
Secretary & Vice 2000 87,000 19,149 -- --
President of 1999 74,889 1,647 -- --
Administration
</Table>
- ----------
(1) Includes salary plus commissions from franchise sales.
THIS SECTION LEFT INTENTIONALLY BLANK.
6
The following table sets forth information regarding options granted to the
named executive officers during the fiscal year ended December 31, 2001:
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE EXPIRATION
NAME OPTIONS GRANTED IN FISCAL YEAR PRICE (1) DATE
---- --------------- ------------------- --------- ----------
Dina Dwyer-Owens -- -- -- --
Robert Tunmire -- -- -- --
Thomas J. Buckley 25,000 17.1% $2.25 3/1/11
Michael Bidwell -- -- -- --
</Table>
- ----------
(1) Reflects the per share exercise price, which is equal to or greater
than the closing market price of the underlying security on the date of
grant.
The following table shows option exercises during the year ended December 31,
2001 and the value of unexercised options at December 31, 2001 for the named
executive officers who exercised options during 2001 or who had unexercised
options at December 31, 2001:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<Table>
<Caption>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS AT FISCAL THE-MONEY OPTIONS
YEAR END AT FISCAL YEAR END
SHARES ACQUIRED (EXERCISABLE/ (EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE) UNEXERCISABLE) (1)
---- --------------- -------------- ----------------- --------------------
Dina Dwyer-Owens -- -- 5,000 / -0- $15,375 / $0
Robert Tunmire -- -- 100,000 / -0- $245,000 / $0
Thomas J. Buckley -- -- 66,164 / 55,041 $201,908 / $156,482
Michael Bidwell -- -- 72,400 / 23,600 $173,397 / $67,783
</Table>
- ----------
(1) The closing price of the Common Stock on December 31, 2001 was $4.95
per share.
7
COMPENSATION OF DIRECTORS
Directors are not compensated for their attendance at meetings, but the
Company reimburses the non-employee directors for expenses incurred by them in
attending the meetings. Non-employee directors are eligible to receive stock
options.
PROPOSAL 2: AMENDMENT OF OPTION PLAN
On December 23, 1997, the Board of Directors adopted (ratified by the
Company's shareholders on June 30, 1998), the Company's 1997 Option Plan
("Option Plan") as a replacement for the Company's 1986 Option Plan, which had
expired, as to the issuance of additional shares.
The purpose of the Option Plan is to provide key employees and eligible
officers and directors with a proprietary interest in the Company through the
granting of options that will (a) increase the interest of such persons in the
Company's welfare, (b) furnish an incentive to such persons to continue their
services to the Company, and (c) provide a means through which the Company may
attract persons to enter its employ or accept a directorship. On March 1, 2001,
the Board of Directors unanimously approved, subject to shareholder approval, an
amendment to the Option Plan that would increase the number of shares available
under the Option Plan from 850,000 to 990,000.
Approval of the proposed amendment to the Option Plan requires the
affirmative vote of a majority of the outstanding shares of Common Stock of the
Company entitled to be voted, in person or by proxy, at the Annual Meeting.
DESCRIPTION OF PLAN
The Option Plan provides for the grant of options to eligible
employees, officers, and directors for the purchase of Common Stock of the
Company. The Option Plan currently covers, in the aggregate (including any and
all options exercised or outstanding under the Company's 1986 Option Plan), a
maximum of 850,000 shares of Common Stock. The Option Plan provides for the
granting of qualified ("Incentive Options") stock options (options which meet
the requirements of Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code") and nonqualified ("Non-Incentive Options") stock options
(options which do not meet the requirements of Section 422A of the Code) to
eligible key employees, officers, consultants and directors of the Company.
The Board of Directors currently administers the Option Plan,
designates the optionees, the number of shares subject to the options and the
terms and conditions of each option. If the Board of Directors so elects, the
Option Plan may be administered by a stock option committee (the "Committee")
appointed by the Board of Directors and comprised of members of the Board of
Directors. Shares of Common Stock issued upon exercise of the options granted
under the Option Plan may be treasury or authorized but unissued shares. If an
option under the Option Plan expires or terminates before it has been exercised
in full, the shares of Common Stock allocable to the unexercised portion of such
option may again be subject to an option under the Option Plan. The number of
shares available for options and subject to options, and the exercise price
hereinafter described, are to be adjusted upward or downward, as the case may
be, in the event of any subdivision or consolidation of share or other capital
readjustment, stock dividend, merger, consolidation or similar transactions
affecting the shares.
The exercise price of each option granted under the Option Plan may not
be less than 100% of the fair market value of the Common Stock on the date of
grant (110% in the case of Incentive Options granted to employees owning more
than 10% of the Common Stock of the Company). No option may terminate later than
10 years from the date of grant.
Options granted under the Option Plan become exercisable at the rate of
20% of the number of shares covered thereby per year, beginning one year from
the date of grant, unless otherwise determined by the Board of Directors or the
Committee at the time an option is granted.
8
The Board of Directors may amend, alter, suspend or discontinue the
Option Plan or alter or amend (including decreasing the option price by
cancellation and substitution of options or otherwise) any option agreements
granted under the Option Plan. However, without the approval of the
shareholders, the Board of Directors may not alter the provisions of the Option
Plan to materially increase the benefit accruing to participants under the
Option Plan, to materially increase the number of securities which may be issued
under the Option Plan, or to materially modify the requirements as to the
eligibility for participation in the Option Plan.
At December 31, 2001, a total of 720,250 options were outstanding. In
addition, 52,500 options granted under the Plan had been exercised as of that
date.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
AMENDMENT TO THE OPTION PLAN, AS PROPOSED ABOVE.
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company, upon recommendation of the Audit
Committee, has appointed the firm of BDO Seidman, LLP to serve as independent
accountants of the Company for the year ending December 31, 2002, subject to
ratification of this appointment by the shareholders of the Company. BDO
Seidman, LLP is considered by the Board of Directors of the Company to be well
qualified.
One or more representatives of BDO Seidman, LLP will be available
during the Annual Meeting of Shareholders to respond to appropriate questions.
Ratification of the appointment of the independent accountants requires
the affirmative vote of a majority of the votes cast by the holders of the
shares of Common Stock of the Company voting in person or by proxy at the Annual
Meeting of Shareholders. If the shareholders do not ratify the appointment of
BDO Seidman, LLP, the Board of Directors will reconsider the appointment.
DISCLOSURE OF AUDIT AND OTHER FEES
Fees paid by the Company for the year 2001 annual audit were
approximately $84,000. The Company did not pay any fees to its auditors during
the last fiscal year for financial information systems design and implementation
fees. The Company paid approximately $71,000 to its auditors for all other fees,
which includes fees for tax consulting and the audit of the Company's employee
benefit plan. All fees were paid to the Company's principal accounting firm, BDO
Seidman, LLP. The Audit Committee has considered whether the provision of the
services included in other fees is compatible with maintaining the auditor's
independence.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY, AS
PROPOSED ABOVE.
9
CERTAIN TRANSACTIONS
The Company engages in a number of transactions with its Chair of the
Board and majority stockholder, Ms. Theresa Dwyer ("Ms. Dwyer"), and with
entities controlled by Ms. Dwyer ("Affiliates"). Such affiliates are: Dwyer Real
Estate ("DRE"), Worldwide Supply, Inc. ("WWS") and Worldwide Refinishing
Systems, Inc. ("WWR").
In April of 2001, the Company purchased its principal executive and
administrative facilities (land, buildings and equipment) from Ms. Dwyer for
approximately $3.7 million, which equaled the appraised value of the facilities.
In accordance with generally accepted accounting principles, the transaction was
recorded at her basis of approximately $2.8 million, with the difference being
reflected as a reduction in stockholders' equity. A portion of the $3.7 million
payment was funded by a $2.9 million bank loan collateralized by the facilities.
Ms. Dwyer used a portion of the monies received in the sale of the facilities to
pay off approximately $2.2 million of related party debt to the Company. The
Company is using the excess cash of approximately $1.5 million netted from the
above transactions for improvements to the property, payment of existing debt,
and for additional working capital.
In addition to rent, the Company receives repairs and maintenance,
promotional materials and other services from DRE and WWS. The Company expensed
approximately $288,000 for these rents and services in 2001, and $425,000 in
2000.
The Company recognized income from DRE, WWS and WWR for accounting,
legal and administrative services, interest income, product sales commissions,
rent, and management fees of approximately $479,000 in 2001, and $612,000 in
2000. In addition, from time-to-time, the Company and the Affiliates have made
advances to each other, which generally have not had specific repayment terms
and have been reflected in the Company's financial statements as accounts
receivable or payable from related parties. These advances typically result from
the payment of an invoice by one entity for services or items performed or
delivered on behalf of the Company and one or more of the Affiliates. The
company that pays the invoice is eventually reimbursed by the other companies
for the appropriate amount based on a pro rata allocation of the services
provided to each company.
The Company paid Don Latin, an independent director, approximately
$33,000 in 2001 and $31,000 in 2000 for consulting services. In addition, John
Hayes, another independent director provides consulting services regarding
public relations, marketing and special projects to the Company. The Company
paid approximately $108,000 and $113,000, in 2001 and 2000, respectively, for
these services.
At December 31, 2001 and 2000, the Company had accounts, interest and
notes receivable from related parties totaling approximately $490,000 and
$2,679,000, respectively, the majority of which was due from WWS, WWR, and Don
Dwyer Estate. Ms. Dwyer has guaranteed payment of all amounts due from these
affiliates.
Dina Dwyer-Owens, Deborah Wright-Hood, Donald J. Dwyer, Jr., Darren
Dwyer, Douglas Dwyer, and Donna Dwyer-Van Zandt are the children of Ms. Dwyer
and the late founder, Donald J. Dwyer, Sr.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the officers and directors of the Company and persons who beneficially
own more than ten percent of the Company's Common Stock to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors, and greater than 10
percent beneficial owners also are required by rules promulgated by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it
with respect to the fiscal year ended December 31, 2001, or written
representations from certain reporting persons, the Company believes that all
filing
10
requirements applicable to its directors, officers and persons who own more than
ten percent of a registered class of the Company's equity securities have been
complied with.
BOARD AND COMMITTEE MEETINGS AND STRUCTURE
The Board of Directors met four times during 2001 and additionally took
action 54 times by means of written consent. Each director attended all of the
meetings with the exception of Mr. Sirbasku, who was not present at two of the
meetings. Non-employee directors are reimbursed for expenses incurred for their
attendance at Board of Directors meetings and are eligible to receive stock
options.
Audit Committee
The Audit Committee, comprised of three independent directors, Messrs.
Latin, Hayes and Sirbasku, met twice during 2001. Each member attended all of
the meetings with the exception of Mr. Sirbasku, who was not present at either
of the meetings. The Committee recommends the independent certified public
accountants to the Board of Directors for approval, holds discussions with the
independent accountants regarding their independence and objectivity, reviews
the adequacy of internal controls, reviews management's responses to any
weaknesses reported by the independent accountants or others, considers the
adequacy of the Audit Committee Charter (See Exhibit A), reviews the Company's
Securities and Exchange Commission filings and other public financial reports,
and reviews significant financial reporting issues with the Company's Chief
Financial Officer and independent accountants.
Compensation Committee
The Compensation Committee, comprised of Ms. Dwyer, Messrs. Hayes,
Latin and Sirbasku, met five times during 2001 and took action one time by means
of written consent. All members attended with the exception of Mr. Sirbasku, who
was not present at any of the meetings. The Committee sets the compensation and
benefit packages for key executives and makes determinations in regard to the
Company's 1997 Stock Option Plan.
The Board of Directors does not have a nominating committee.
INDEPENDENT ACCOUNTANT AND AUDIT COMMITTEE MATTERS
General
BDO Seidman, LLP served as the Company's independent public accountant
for the year ended December 31, 2001. A representative of BDO Seidman, LLP will
be available to respond to appropriate questions during the annual meeting.
Audit Committee Report
Management is responsible for the Company's internal controls and the
financial reporting process. The independent public accountant is responsible
for performing an independent audit of the consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes. In this context, the Audit Committee of the Board of Directors has
reviewed the audited financial statements of the Company for the fiscal year
ended December 31, 2001 with management. Management represented to the Audit
Committee that the consolidated financial statements were prepared in accordance
with generally accepted accounting principles.
The Audit Committee has discussed the consolidated financial statements
with BDO Seidman, LLP, and the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees) relating to the
conduct of the audit. The Audit Committee has also received written disclosures
and a
11
letter from BDO Seidman, LLP regarding its independence from the Company as
required by Independence Standards Board Standard No 1 (Independence Discussions
with Audit Committees), has discussed with BDO Seidman, LLP the independence of
that firm and has considered the compatibility of non-audit services with the
independence of BDO Seidman, LLP.
Based upon the above materials and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2001.
The Audit Committee
Donald E. Latin, Chairman
John Hayes
James L. Sirbasku
SHAREHOLDER PROPOSALS
Any proposals that shareholders of the Company desire to have presented
at the 2003 annual meeting of shareholders must be received by the Company at
its principal executive offices no later than December 31, 2002.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy and the material used in solicitation thereof will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone, and telegram by directors and regular officers
and employees of the Company. Arrangements may also be made with brokerage
houses and other custodians, nominees, and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company may reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
By Order of the Board of Directors
DEBORAH WRIGHT-HOOD
Secretary
Waco, Texas
May 25, 2002
12
THE DWYER GROUP, INC.
The undersigned hereby (i) acknowledges receipt of the Notice dated May 25,
2002, of the Annual Meeting of Shareholders of The Dwyer Group, Inc. (the
"Company") to be held at the Company's offices located at 1010 N. University
Parks Drive, Waco, Texas on Friday, June 25, 2002, at 10:00 A.M., local time,
and the Proxy Statement in connection therewith; and (ii) appoints Deborah
Wright-Hood as proxy with full power of substitution, for and in the name,
place, and stead of the undersigned, to vote upon and act with respect to all of
the shares of Common Stock of the Company standing in the name of the
undersigned or with respect to which the undersigned is entitled to vote and
act, at the meeting and at any adjournment thereof, and the undersigned directs
that the proxy vote as follows:
(a) Proposal to elect the seven directors to serve until the next annual
meeting of the shareholders or until their respective successors are
elected and qualified.
<Table>
[ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY to vote for all
as marked to the contrary) nominees listed below
</Table>
Directors: Donald J. Dwyer, Jr., Theresa Dwyer, Dina Dwyer-Owens, John P.
Hayes, Donald E. Latin, Burton D.Cohen, and Robert Tunmire
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW).
- --------------------------------------------------------------------------------
(b) Proposal for the amendment to the Company's 1997 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) Proposal to ratify the appointment of BDO Seidman, LLP as independent
accountants for the Company and its wholly owned subsidiaries for the
year ended December 31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) In the discretion of the proxy on any other matter that may properly
come before the meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL THE NAMED NOMINEES FOR DIRECTOR AND FOR THE MATTERS
SPECIFICALLY REFERRED TO ABOVE.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such Common Stock and hereby ratifies and confirms
that all proxies, their substitutes, or any of them may lawfully do by virtue
hereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated:
--------------------------------------
Signed:
-------------------------------------
Signed:
-------------------------------------
Please date this Proxy and sign your name
exactly as it appears hereon. Where there is
more than one owner, each must sign. When
signing as an attorney, administrator,
executor, guardian or trustee, please add
your title as such. If executed by a
corporation, the Proxy should be signed by a
duly authorized officer.
Please date, sign and mail this proxy card
in the enclosed envelope. No postage is
required.