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. )
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[ ] 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
Dynamex Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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DYNAMEX INC.
1870 CROWN DRIVE
DALLAS, TEXAS 75234
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 14, 2003
-----------------
To the Shareholders of DYNAMEX INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Dynamex Inc.,
a Delaware corporation, will be held at the DoubleTree Club Hotel, 11611 Luna
Road, Dallas, Texas 75234, on Tuesday, January 14, 2003, at 10:00 A.M. Dallas
time for the following purposes:
1. To elect six (6) directors of the Company;
2. To approve an amendment to the Company's Amended and Restated
1996 Stock Option Plan to increase the number of shares
available for the grant of stock options thereunder;
3. To ratify the appointment of BDO Seidman, LLP as independent
auditors of the Company for the year ending July 31, 2003; and
4. To transact such other business as may properly come before
the Annual Meeting and any adjournments thereof.
Only shareholders of record at the close of business on November19, 2002
are entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
Whether or not you plan to attend the Annual Meeting and regardless of
the number of shares you own, you are requested to sign and return the enclosed
proxy card in the enclosed envelope (which requires no postage if mailed in the
United States).
By Order of the Board of Directors,
--------------------------------------
Wayne Kern
Secretary
Dallas, Texas
November 26, 2002
1
DYNAMEX INC.
1870 CROWN DRIVE
DALLAS, TEXAS 75234
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 14, 2003
This Proxy Statement is furnished to shareholders of Dynamex 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 Tuesday, January 14, 2003, and at any adjournments
or postponements thereof.
This Proxy Statement with the accompanying Proxy is first being mailed
to shareholders on or about November 26, 2002. The Company's Annual Report,
covering the Company's 2002 fiscal year, is enclosed herewith but does not form
any part of the materials for solicitation of proxies.
ACTIONS TO BE TAKEN AT THE MEETING
At the Annual Meeting, holders of the Company's Common Stock (the
"Common Stock") will consider and vote (1) to elect as directors of the Company
Messrs. Richard K. McClelland, Kenneth H. Bishop, Brian J. Hughes, Wayne Kern,
Stephen P. Smiley and Bruce E. Ranck, (2) to approve an amendment to the
Company's Amended and Restated 1996 Stock Option Plan to increase the number of
shares available for the grant of stock options thereunder, (3) to ratify the
appointment of BDO Seidman, LLP as independent auditors of the Company for the
year ending July 31, 2003, and (4) to transact such other business as may
properly come before the Annual Meeting.
Only shareholders of record at the close of business on November 19,
2002 (the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting. As of the close of business on the Record Date, the Company had issued
and outstanding, and entitled to vote at the Annual Meeting, 11,206,817 shares
of Common Stock. Holders of record of Common Stock are entitled to one vote per
share on the matters to be considered at the Annual Meeting.
The presence, either in person or by properly executed proxy, of the
holders of record of a majority of the voting power entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting. The
election as a director of each nominee set forth above requires the affirmative
vote of the holders of record of a plurality of the shares of Common Stock
present in person or by proxy and entitled to vote on the election of directors
at the meeting. The affirmative vote of the holders of a majority of the
outstanding common stock represented in person or by proxy, at the Annual
Meeting is required to approve the proposal to amend the Stock Plan and ratify
the selection of auditors.
The enclosed proxy may be revoked at any time before it is exercised by
filing with the Corporate Secretary an instrument revoking it, by submitting a
subsequently dated proxy, or by appearing at the annual meeting and voting in
person. Unless revoked, a properly signed and dated proxy that is returned will
be voted in accordance with the directions thereon. If no instructions are
specified, the shares will be voted for the election of the nominees for
Director, for the approval of the amendment to the Company's stock option plan
and for the ratification of BDO Seidman, LLP as independent auditors. If any
other matter or business is brought before the meeting, the proxy holders may
vote the proxies at their discretion. The directors do not know of any such
other matter or business.
2
If a shareholder owns shares in "street name" by a broker, the broker,
as the record holder of the shares, is required to vote those shares in
accordance with your instructions. If a shareholder does not give instructions
to the broker, the broker will nevertheless be entitled to vote the shares with
respect to "discretionary" items but will not be permitted to vote the shares
with respect to "non-discretionary" items (in which case, the shares will be
treated as "broker non-votes"). Where shareholders have appropriately specified
how their proxies are to be voted, they will be voted accordingly. An automated
system administered by the Company's transfer agent tabulates the votes.
Abstentions and broker non-votes will be counted toward determining whether a
quorum is present at the Annual Meeting. Votes submitted as abstentions on
matters to be voted on at the Annual Meeting will be counted as votes against
such matters. Broker non-votes will not count for or against the matters to be
voted on at the Annual Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
A brief description of each director and executive officer of the
Company is provided below. All current directors of the Company are nominees for
director at the Annual Meeting. Directors hold office until the next annual
meeting of the shareholders or until their successors are elected and qualified.
All officers serve at the discretion of the Board of Directors. Should any
director nominee become unable or unwilling to accept nomination or election,
the proxy holders may vote the proxies for the election in his stead of any
other person the Board of Directors may recommend. Each nominee has expressed
his intention to serve the entire term for which election is sought.
DIRECTORS
Richard K. McClelland, 51, became the President, Chief Executive Officer and
a director of the Company in May 1995 upon the closing of the Company's
acquisition of Dynamex Express (the ground courier division of Air Canada),
where he also served as President since 1988. He was elected as Chairman of the
Board of the Company in February 1996. Prior to joining Dynamex Express in 1986,
Mr. McClelland held a number of advisory and management positions with the
Irving Group, Purolator Courier Ltd. and Sunbury Transport Ltd., where he was
engaged in the domestic and international same-day air, overnight air, and
trucking businesses.
Kenneth H. Bishop, 65, has served as a director of the Company since August
1996. From 1974 to August 1996, Mr. Bishop was President and General Manager of
Zipper Transportation Services, Ltd. and a related company (together "Zipper")
which operated a same-day delivery business in Winnipeg, Manitoba. The Company
acquired Zipper in August 1996.
Brian J. Hughes, 41, has served as a director of the Company since May 1995.
Mr. Hughes has served as the Vice President -- Investments of GuideOne Insurance
Group since September 1992. From 1986 to 1992, Mr. Hughes served as Assistant
Vice President -- Investments at Boatmen's National Bank.
Wayne Kern, 70, has served as a director of the Company since February 1996.
Mr. Kern served as Senior Vice President and Secretary of Heritage Media
Corporation from 1987 through August 1997. From 1991 to 1995, Mr. Kern also
served as Executive Vice President of Crown Media, Inc. From 1979 to 1991, Mr.
Kern served as the Executive or Senior Vice President, General Counsel and
Secretary of Heritage Communications, Inc.
Stephen P. Smiley, 53, has served as a director of the Company since 1993
and was a Vice President of the Company from December 1995 through February
1996. Mr. Smiley was President of Hoak Capital Corporation from 1991 through
February 1996. Mr. Smiley joined Hunt Financial Corporation (a private
investment company) as Executive Vice President in February 1996, and was
appointed President in January 1997.
Bruce E. Ranck, 53, has served as a director of the Company since March
2002. Mr. Ranck is a partner in Bayou City Partners, a venture capital firm.
From 1970 through 1995 Mr. Ranck held increasing positions of responsibility
with Browning-Ferris Industries ("BFI"). In 1990 he was elected to the Board of
BFI and in 1995 became Chief
3
Executive Officer as well as President. Mr. Ranck has served on the Boards of
Furon Company, Chase Bank of Texas and SITA, the largest non-North American
waste services company in the world.
EXECUTIVE OFFICERS
Ray E. Schmitz, 56, was elected Vice President and Chief Financial Officer
in March 2002. Mr. Schmitz joined the Company and was elected Vice President -
Controller in January 1999. Prior to joining the Company, Mr. Schmitz was Vice
President - Controller of EEX Corporation from 1997 to 1999. Previous to that,
he was Assistant Controller of ENSERCH Corporation and Controller of Enserch
Exploration, Inc., a subsidiary of ENSERCH Corporation and predecessor to EEX
Corporation, from 1984 to 1996.
Mr. James H. Wicker III, 33, was elected Vice President - Information
Systems in January 1999. Mr. Wicker joined the Company as Director, Information
Technology in April 1998. Prior to joining the Company, Mr. Wicker held the
position of Director of Information Services at Heritage Media Corporation from
March 1997 to April 1998. Previous to that, he was Director of Information
Services of Denton County from February 1988 to March 1997.
OPERATIONS AND COMPENSATION OF THE BOARD OF DIRECTORS
There were four (4) meetings of the Board of Directors during fiscal
year 2002. No director attended fewer than 75% of the meetings of the Board (and
any committees thereof) that he was required to attend.
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company will receive an annual fee of $7,500 as compensation for his or her
services as a member of the Board of Directors. Non-employee directors will
receive an additional fee of $600 for each meeting of the Board of Directors
attended in person by such director and $300 for each telephonic meeting in
which such director participates. Non-employee directors who serve on a
committee of the Board of Directors will receive $600 for each committee meeting
attended in person and $300 for each telephonic committee meeting in which such
director participates. On the date upon which a non-employee director is first
elected or appointed a member of the Board, he shall receive a grant of a
non-qualified stock option to purchase 2,500 shares of common stock.
Non-employee directors subsequently re-elected at any annual meeting of
shareholders shall receive as of the date of such annual meeting, the grant of a
non-qualified stock option to purchase 2,500 shares of common stock. Options
granted to non-employee directors are immediately exercisable. All directors of
the Company are reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board of Directors or committees thereof, and for other expenses
incurred in their capacities as directors of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established three committees: an Audit
Committee, a Compensation Committee and an Executive Committee. Each of these
committees has two or more members who serve at the discretion of the Board of
Directors.
The Audit Committee hires and replaces independent auditors as
appropriate, evaluates the performance of, independence of and the non-audit
services provided by independent auditors, evaluates the quality of the
Company's accounting principles and financial reporting and makes
recommendations with respect to those matters to the Board of Directors. The
Audit Committee consists of all five outside directors, Messrs. Bishop, Hughes,
Kern, Smiley and Ranck. The Audit Committee met two times during fiscal year
2002 and plans to meet on a quarterly basis in FY 2003 and future years. The
Audit Committee operates pursuant to a charter adopted by the Board of
Directors. See "Report of the Audit Committee" included elsewhere in this
prospectus.
The Compensation Committee is responsible for reviewing and making
recommendations to the Board of Directors with respect to compensation of
executive officers, other compensation matters and awards under the Company's
stock option plan. During fiscal year 2002, the Compensation Committee consisted
of three members, Messrs. Hughes, Bishop and Smiley (none of whom is an officer
or employee of the Company). The Compensation Committee met one time during
fiscal year 2002. See "Report of the Compensation Committee" included elsewhere
in this prospectus.
4
The Executive Committee exercises all of the powers and authority of
the Board of Directors in the management of the business and affairs of the
Company, except as otherwise reserved in the Company Bylaws or designated by
resolution of the Board of Directors for action by the full board or another
committee thereof. The Executive Committee consists of two members, Messrs.
McClelland and Smiley. There were no meetings held by the Executive Committee
during fiscal year 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board of Directors or Compensation
Committee.
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission nor shall this information be incorporated by reference into any
future filing under the Securities Act of 1933 of the Securities Exchange Act of
1934, each as amended, except to the extent that Dynamex specifically
incorporates it by reference into a filing.
The Audit Committee evaluates audit performance, engages and manages
relations with the Company's independent accountants and evaluates policies and
procedures relating to internal accounting functions and controls. The Board of
Directors has adopted a written charter for the Audit Committee that details the
responsibilities of the Audit Committee.
The Audit Committee members are not professional accountants or
auditors, and their functions are not intended to duplicate or to certify the
activities of management and the independent auditor. The Audit Committee
oversees the Company's reporting process on behalf of the Board of Directors.
The Company's management has primary responsibility for the financial statements
and reporting process, including systems of internal controls. In fulfilling its
oversight responsibilities, the Audit Committee has reviewed and discussed with
management the audited financial statements included in the Annual Report on
Form 10-K for the fiscal year ended July 31, 2002, which management has
represented to the Audit Committee, have been prepared in accordance with
accounting principles generally accepted in the United States of America.
The Committee discussed with representatives of BDO Seidman, LLP, the
Company's independent auditors, the matters required to be discussed by
Statement on Auditing Standards Number 61. In addition, the Audit Committee
received from BDO Seidman, LLP written disclosures required by the Independence
Standards Board Standard Number 1 (Independent Discussions with Audit
Committee), and has discussed with that firm the independent auditor's
independence, and has considered whether the provision of non-audit services is
compatible with maintaining such firm's independence.
The Audit Committee further discussed with the independent accountants
the overall scope and plans for their respective audits. The Audit Committee
meets periodically with the independent accountants, with and without management
present, to discuss the results of their examination, their evaluations of our
internal controls, and the overall quality of our financial reporting.
Based upon the foregoing disclosures, representations, reports and
discussions, the Audit Committee recommended to the Board of Directors that the
audited financial statements for the Company's 2002 fiscal year be included in
the Company's Annual Report on Form 10-K for the year ended July 31, 2002 for
filing with the Securities and Exchange Commission.
Audit Committee
Wayne Kern, Chairperson
Kenneth L. Bishop
Brian J. Hughes
Bruce E. Ranck
Stephen P. Smiley
5
REPORT OF THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission nor shall this information be incorporated by reference into any
future filing under the Securities Act of 1933 of the Securities Exchange Act of
1934, each as amended, except to the extent that Dynamex specifically
incorporates it by reference into a filing.
The Company's Compensation Committee (the "Committee") is empowered to
review and recommend to the full Board of Directors the annual compensation and
compensation procedures for all executive officers of the Company. The Committee
(comprised solely of non-employee directors) also administers the Company's
Stock Option Plan.
As a matter of policy, the Compensation Committee believes that the
annual compensation of the executive officers should consist of both a base
salary component and bonus component. The base salary component should be based
on generally subjective factors and include the contribution the executive
officer made and is anticipated to make to the success of the Company, the level
of experience and responsibility of the executive officer, the competitive
position of the Company's executive compensation and the Company's historical
levels of compensation for executive officers. The Compensation Committee does
not expect to assign quantitative relative weights, however, to any of these
factors. The bonus component of the annual compensation of the executive
officers should provide executive officers with the opportunity to earn a
significant portion of their base salary in the form of incentive compensation,
which therefore puts a significant portion of their total compensation "at
risk." This incentive compensation is contingent upon the achievement of certain
agreed upon individual goals for each executive officer and the achievement of
certain corporate objectives such as continued growth in the Company's earnings
and revenues.
The Company does not provide for any long-term compensation for
executive officers other than through the granting of stock options. The
Committee believes that the grant of stock options enables the Company to more
closely align the economic interest of the executive officers to those of the
shareholders. Option grants are made at the discretion of the Compensation
Committee. The number of stock options granted to each executive employee is
based primarily on their relative positions and responsibilities within the
Company.
Pursuant to his employment contract with the Company, Richard K.
McClelland, the Company's chief executive officer, may not be awarded an annual
bonus in an amount greater than 60% of his base pay for the fiscal year then
ended. The Company did not achieve all of the fiscal year 2002 corporate
objectives due, at least in part, to events of September 11 and the resultant
impact on the economy and operations of the Company. However, the Compensation
Committee took into account these extenuating circumstances and awarded Mr.
McClelland a discretionary bonus of $68,750 (25% of base pay) based upon his
achievement of certain objectives, the improvement in the Company's earnings and
the reduction in long-term debt.
Dated October 14, 2002
Compensation Committee
Stephen P. Smiley (chairman)
Brian J. Hughes
Kenneth L. Bishop
6
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the total annual
compensation paid or accrued by the Company to or for the account of the Chief
Executive Officer and the other executive officers of the Company whose total
salary and bonus for the fiscal year ended July 31, 2002 exceeded $100,000:
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
Long-term
Compensation
Awards
------------
Annual Compensation Securities
--------------------------------------------- Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options
- --------------------------- -------------- ------------- -------------- ------------
Richard K. McClelland (1) 2002 275,000 -- 30,000
President and Chief Executive Officer 2001 280,961 137,500 --
2000 267,308 213,927 (1) 22,000
Ray E. Schmitz 2002 189,258 -- 20,000
Vice President - Chief 2001 169,423 42,356 --
Financial Officer 2000 144,500 60,540 18,000
James H. Wicker III 2002 160,238 -- 20,000
Vice President - Information Services 2001 160,000 39,615 --
2000 140,000 49,000 18,000
</Table>
- --------------
(1) Includes $88,927 for the fiscal year ended July 31, 2000, for the exercise
on May 15, 1998 of certain options to purchase 48,000 shares of common
stock.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has entered into an employment agreement with Mr.
McClelland which provides for the payment of a base salary in the annual amount
of $275,000, participation in an executive bonus plan, an auto allowance of Cdn
$1,000 per month and participation in other employee benefit plans. Unless
terminated earlier, the employment agreement shall continue until November 30,
2003, upon which date such agreement will be automatically extended for
successive one-year renewal terms unless notice is given upon the terms provided
in such agreement. Additionally, upon a sale or transfer of substantially all of
the assets of the Company or certain other events that constitute a change of
control of the Company, including the acquisition by a shareholder, other than
certain named shareholders, of securities representing 15% of the votes that may
be cast for director elections, the Company shall continue to pay Mr. McClelland
the compensation set forth in such agreement for the greater of two years from
the date of such change of control or the remainder of the agreement term.
During the term of the employment agreement and pursuant to such agreement, Mr.
McClelland shall be a member of the Board of Directors of the Company.
Messrs. McClelland, Schmitz and Wicker have executed retention
agreements with the Company that provide certain benefits in the event their
employment is terminated subsequent to a change in control of the Company, as
defined in the retention agreements. The retention agreements provide that if
the officer is terminated, or if the officer elects to terminate employment
under certain circumstances, the officer shall be entitled to a lump-sum payment
of two times the sum of the officer's base salary and target bonus, an 18 month
continuation of employee benefits, and reimbursement of certain legal fees,
expenses, and any excise taxes.
7
1996 STOCK OPTION PLAN
The following table sets forth information regarding the grant of stock
options under the Company's Amended and Restated 1996 Stock Option Plan ("Option
Plan") during fiscal 2002 to the named executive officers:
OPTION GRANTS IN FISCAL YEAR 2002
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
Individual Grants
----------------------------
% of Total Potential
Number of Options/ Realized Value at Assumed
Securities SARs Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation for
Options/ Employees Or Base Option Term (1)
SARs in Fiscal Price Expiration ------------------------------
Granted (#) Year ($/Share) Date 5%($) 10%($)
-------------- ------------ ------------ ----------- ------------- ---------------
Richard K. McClelland 30,000 15.2% $ 2.30 06/18/12 43,000 110,000
Ray E. Schmitz 20,000 10.1% $ 2.30 06/18/12 29,000 73,000
James H. Wicker III 20,000 10.1% $ 2.30 06/18/12 29,000 73,000
</Table>
- ----------
(1) The 5% and 10% assumed annual rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not reflect the
Company's estimates or projections of future prices of the shares of
the Company's common stock. There can be no assurance that the amounts
reflected in this table will be achieved.
In fiscal year 2002, none of the executive officers named in the
Summary Compensation Table exercised any of the options granted to him under the
Option Plan. The following table sets forth information with respect to the
unexercised options to purchase shares of the Company's Common Stock granted
under the Option Plan to the executive officers named in the Summary
Compensation Table and held by them at July 31, 2002.
FISCAL YEAR-END OPTION VALUES
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired FY-End FY-End
On Value Exercisable/ Exercisable/
Exercise Realized Unexercisable Unexercisable (1)
------------- --------------- --------------------- --------------------
Richard K. McClelland -- -- 244,800/76,200 $10,638/$14,906
Ray E. Schmitz -- -- 22,200/40,800 $7,844/$11,442
James H. Wicker III -- -- 26,400/43,600 $7,844/$11,442
</Table>
- ----------
(1) Based on the closing price of the Company's Common Stock on July 31, 2002
which price was $2.34 per share.
8
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information concerning the shares of
Common Stock that may be issued, upon exercise of options or the grant of
restricted stock awards, to all directors and eligible employees, including
officers.
<Table>
<Caption>
Number of securities
remaining available for
Number of securities to Weighted-average future issuance under
be issued upon exercise exercise price of equity compensation plans
of outstanding options, outstanding options, (excluding securities
warrants and rights warrants and rights reflected in column (a)
Plan category (a) (b) (c)
Equity compensation plans
approved by security holders 858,180 $4.771 106,436 (1)
Equity compensation plans not
approved by security holders none none none
Total 858,180 $4.771 106,436
</Table>
(1) Includes 67,000 shares reserved for future issuance to non-employee
directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors
and executive officers, and persons who own more than 10% of the Company's
common stock, are required to report their initial ownership of the Company's
common stock and any subsequent changes in that ownership to the Securities and
Exchange Commission ("SEC"). Such persons are required by SEC regulation to
furnish the Company with copies of all such reports.
To the Company's knowledge, based solely on its review of the copies of
such reports and amendments thereto furnished to the Company, the Company
believes that during the Company's fiscal year ended July 31, 2002, all Section
16(a) filing requirements applicable to the Company's officers, directors, and
ten percent shareholders were met except as follows: Messrs. Smiley, Bishop,
Kern and Ranck failed to timely file one report associated with an option grant
for service on the Board of Directors.
9
STOCK PRICE PERFORMANCE
Set forth below is a line graph indicating the stock price performance
of the Company's common stock for the period beginning August 1, 1997 and ending
July 31, 2002 as contrasted with the AMEX Market Index and the Russell 2000
Stock Index**. The graph assumes that $100 was invested at the beginning of the
period and has been adjusted for any stock dividends distributed after August 1,
1997. No cash or stock dividends have been paid during this period.
COMPARATIVE CUMULATIVE TOTAL RETURN
AMONG DYNAMEX INC.,
NASDAQ COMPOSITE INDEX
AND RUSSELL 2000 INDEX
<Table>
<Caption>
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Dynamex Inc $100.00 $158.62 $ 44.83 $ 18.97 $ 27.31 $ 32.28
RUSSELL 2000 $100.00 $102.31 $109.92 $125.37 $123.33 $101.18
AMEX COMPOSITE $100.00 $110.64 $125.07 $146.05 $147.62 $141.18
</Table>
ASSUMES $100 INVESTED ON AUGUST 1, 1997
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING JULY 31, 2002
- ----------
** The Russell 2000 Stock Index represents companies with a market
capitalization similar to that of the Company. The Company does not believe
it can reasonably identify a peer group because it believes that there is
only one public company engaged in lines of business directly comparative
to those of the Company.
10
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of October 31, 2002 for (i) each
person known by the Company to own beneficially more than 5% of the common
stock, (ii) each director, (iii) each Named Executive and (iv) all directors and
executive officers of the Company as a group. Except pursuant to applicable
community property laws and except as otherwise indicated, each shareholder
identified in the table possesses sole voting and investment power with respect
to its or his shares.
<Table>
<Caption>
SHARES BENEFICIALLY
OWNED
------
NAME OF BENEFICIAL OWNER NUMBER(1) PERCENT
- ---------------------------------------- --------- -------
Richard K. McClelland............................................. 257,800 *
Kenneth H. Bishop................................................. 17,922 *
Brian J. Hughes(2)................................................ -- *
Wayne Kern........................................................ 20,960 *
Bruce E. Ranck.................................................... 22,500 *
Ray E. Schmitz.................................................... 31,200 *
Stephen P. Smiley................................................. 16,660 *
James H. Wicker III............................................... 27,800 *
All directors and executive officers as a group................... 394,842 3.52%
Other 5% shareholders:
James M. Hoak, Jr. (3)............................................ 1,406,765 12.55%
Steel Partners II, L.P. (4)....................................... 1,406,219 12.55%
150 East 52nd Street, 21st Floor
New York, NY 10022
Nathan H. Dardick (5)............................................ 765,024 6.83%
2331 Orrington Avenue
Evanston, IL 60201
</Table>
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* Indicates less than 1%.
(1) Includes shares issuable upon the exercise of stock options outstanding and
fully vested on or within 60 days after July 31, 2002.
(2) Excludes 254,000 shares beneficially owned by GuideOne Insurance Group,
Inc., which employs Mr. Hughes as Vice President -- Investments. Mr. Hughes
disclaims beneficial ownership of such shares.
(3) Mr. Hoak's address is One Galleria Tower, Suite 1050, 13355 Noel Road,
Dallas, Texas 75240. Excludes an aggregate of 38,661 shares owned by Mr.
Hoak's wife and children, to which shares Mr. Hoak disclaims beneficial
ownership. 215,334 of the shares beneficially owned by Mr. Hoak are owned
directly by CCP Investment Corporation, a Texas corporation, of which Mr.
Hoak is the sole owner and director.
(4) Based on information as of October 28, 2002 and an Amendment No. 1 on
October 5, 2001, as reported on Schedule 13D by Steel Partners II, L.P., a
Delaware limited partnership and Warren G. Lichtenstein. Steel Partners,
L.L.C., a Delaware limited liability company is the general partner of
Steel Partners II. The sole executive officer and managing member of Steel
Partners LLC is Warren Lichtenstein who is Chairman of the Board, Chief
Executive Officer and Secretary.
(5) Based on information as of July 22, 1999, as reported on Schedule 13G and
subsequently updated by Mr. Dardick on December 3, 2001. Also includes
15,624 shares issued to Mr. Dardick and his wife on April 3, 2002 as part
of the class-action lawsuit settlement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF ALL OF
THE NOMINEES TO THE BOARD OF DIRECTORS.
11
PROPOSAL NO. 2
APPROVAL OF AMENDED STOCK OPTION PLAN.
At the Annual Meeting, shareholders will be asked to approve the amendment to
the Amended and Restated 1996 Stock Option Plan (the "Option Plan") to increase
the number of options for disbursement under the Option Plan from 1,100,000 to
1,300,000.
On November 6, 2002, the Board approved an amendment to the Option Plan to
increase the number of shares authorized for issuance under the Option Plan by
200,000 shares to 1,300,000 shares.
As of July 31, 2002, options (net of cancelled or expired options) covering an
aggregate of 993,564 shares had been granted under the Option Plan and 106,436
shares (plus any shares that might in the future be returned to the Option Plan
as a result of cancellations or expiration of options) remained available for
future grant under the Option Plan. Of the total available for future grants,
67,000 options were reserved for the Board of Directors and 39,436 options are
available for employees.
This amendment is intended to afford the Company greater flexibility in granting
employees stock options and ensures that the Company can continue to grant such
stock options at levels determined appropriate by the Board. During the last
fiscal year, options to purchase 80,000 shares were granted to current executive
officers or directors who are not executive officers and 128,000 shares were
granted to employees who were not executive officers.
The Option Plan and the terms to be amended are summarized below
Plan Summary
General. The purpose of the Option Plan is to attract and retain the
best available employees and directors of the Company and its subsidiaries, to
provide additional incentive to such persons and to promote the success of the
business of the Company. Under the Option Plan, any employee, including an
employee who is a director, is eligible to receive incentive stock options
("ISOs") (as defined in Section 422 (formerly Section 422A) of the Internal
Revenue Code of 1986, as amended (the "Code")), nonqualified stock options
(which do not meet the requirements of Section 422) and restricted stock grants
(which restrictions may include, without limitation, restrictions on the right
to vote or receive dividends with respect to such shares). Non-employee
directors are only eligible to receive nonqualified stock options pursuant to a
specified formula described below. There are approximately 1,100 persons
eligible to participate in the Option Plan.
The Committee administers and interprets the Option Plan and is
authorized to grant options and restricted stock to all directors and eligible
employees, including officers. The maximum number of shares of Common Stock
approved for issuance under the Option Plan is 1,300,000, of which no more than
130,000 shares may be delivered pursuant to restricted stock grants and the
exercise of options awarded to non-employee directors. Options to purchase more
than an aggregate of 500,000 shares may not be granted to any one participant.
Restricted stock grants covering more than an aggregate of 130,000 shares may
not be granted to any one participant. The Committee designates the optionees or
stock recipients, the number of shares subject to such award and the terms and
conditions of each award. The purchase price under each option will be 100% of
the fair market value of the Common Stock of the Company on the date of award.
No option shall be exercisable more than ten years after the date the option is
awarded. An ISO may not be granted under the Option Plan to an employee who owns
more than 10% of the outstanding Common Stock unless the purchase price is 110%
of the fair market value of the Common Stock at the date of award and the option
is not exercisable more than five years after it is awarded.
The Committee may provide that the purchase price for shares subject to
an option be paid in full by cash, check, or share exchange, may arrange for
cashless exercise procedures, or may arrange financing for such purchase
(subject to applicable laws and regulations). The Committee may determine the
effect on (which effect may include termination of) an option or restricted
stock grant (other than an option or restricted stock grant granted to
non-
12
employee directors) upon the disability, death, retirement or other termination
of employment of a Option Plan participant and shall determine the extent to
which the period during which the participant's legal representative, or
beneficiary may exercise rights under such award. Shares of restricted stock,
prior to the lapse of all restrictions thereon, and options, may not be
transferred other than by will or the laws of descent and distribution. No
option shall be exercisable during the lifetime of an optionee by any person
other than the optionee or his guardian or legal representative. Unless sooner
terminated, the Option Plan will terminate on June 5, 2006, and no awards may
thereafter be granted under the Option Plan.
Non-Employee Directors. Non-employee directors are granted a
nonqualified option to purchase 2,500 shares on the date of their initial
election or appointment to the Board. Non-employee directors subsequently
reelected at any Annual Meeting of shareholders receive as of the date of such
meeting (commencing with the 1998 Annual Meeting) a nonqualified option to
purchase 2,500 shares. Options granted to each non-employee director are
immediately exercisable. If a non-employee director ceases to be a director of
the Company, such director's options shall be exercisable by him only during the
six months following the date he ceases to be a director (or if he dies while a
director, by his or his estate's legal representative within 6 months of the
date of death) except that, a non-employee director's options shall terminate
immediately on the date such person is removed "for cause", which is defined as
fraud, intentional misrepresentation, embezzlement, misappropriation or
conversion of assets or opportunities of the Company.
Acceleration of Exercisability for Executive Officers and Directors. An
option or restricted stock grant awarded to an executive officer or director,
unless such award provides otherwise, will become immediately exercisable, and
all restrictions on any shares of restricted stock subject to a restricted stock
grant will immediately lapse, upon the occurrence of any of the following: (a)
the sale, transfer or other conveyance of all or substantially all of the assets
of the Company, (b) the acquisition of beneficial ownership of securities
representing 15% or more of the voting power of the Company by any person or
entity other than the Company and certain named shareholders, (c) the
commencement of a tender offer or (d) the failure at any shareholders meeting
following an election contest of any person nominated by the Company in the
mailed proxy materials to win election to the Board.
Amendment of Plan. The Board may amend or terminate the Option Plan
without the approval of the shareholders, unless shareholder approval is
necessary to comply with any applicable tax or regulatory requirements and
provided that, the section of the Option Plan addressing awards to non-employee
directors, and the section concerning acceleration of exercisability under
certain changes of control, to the extent such section relates to awards to
non-employee directors, may not be amended more than once every six months other
than to comport with changes in the tax or regulatory requirements. If any
amendment or termination materially and adversely affects the rights of any
award holder then outstanding, such amendment or termination shall not be deemed
to alter such rights unless the holder shall consent thereto.
Tax Status of Options and Restricted Stock Grants
The following discussion is based on relevant provisions of the Code,
the Treasury Regulations promulgated thereunder, published revenue rulings and
judicial decisions in effect at the date hereof. There can be no assurance that
future changes in applicable law or administrative and judicial interpretations
thereof will not adversely affect the tax consequences discussed herein or that
there will not be differences of opinion as to the interpretation of applicable
law.
Incentive Stock Options. All stock options that qualify under the rules
of Section 422 of the Code will be entitled to ISO treatment. Among other
requirements, to receive ISO treatment, an optionee is not permitted to dispose
of the acquired stock (i) within two years after the option is granted or (ii)
within one year after exercise. In addition, the individual must have been an
employee of the Company for the entire time from the date of granting of the
option until three months (one year if the employee is disabled) before the date
of the exercise. The requirement that the individual be an employee and the
two-year and one-year holding periods are waived in the case of death of the
employee. If all such requirements are met, no tax will be imposed upon exercise
of the option, and any gain upon sale of the stock will be entitled to capital
gain treatment (assuming the stock constitutes a capital asset in the hands of
the optionee). The applicable capital gain rate depends on how long the ISO
shares are held after exercise. If ISO shares are sold one year or later after
exercise (and two years after grant) the gain will be taxed at the
13
maximum rate of 20%. The employee's gain on exercise (the excess of fair market
value at the time of exercise over the exercise price) of an ISO is a tax
preference item and, accordingly, is included in the computation of alternative
minimum taxable income.
If an employee does not meet the two-year and one-year holding
requirement (a "disqualifying disposition"), but does meet all other
requirements, tax will be imposed at the time of sale of the stock, but the
employee's gain realized on exercise will be treated as ordinary income rather
than capital gain and the Company will get a corresponding deduction at the time
of sale. Any additional gain on sale will be short-term or long-term capital
gain, depending on the holding period of the stock (assuming the stock
constitutes a capital asset in the hands of the optionee). If the amount
realized on the disqualifying disposition is less than the value at the date of
exercise, the amount includible in gross income, and the amount deductible by
the Company, will equal the excess of the amount realized on the sale or
exchange over the exercise price.
An optionee's stock option agreement may permit payment for stock upon
the exercise of an ISO to be made with other shares of the Company's Common
Stock. In such a case, in general, if an employee uses stock acquired pursuant
to the exercise of an ISO to acquire other stock in connection with the exercise
of an ISO, it may result in ordinary income if the stock so used has not met the
minimum statutory holding period necessary for favorable tax treatment as an
ISO.
Nonqualified Stock Options. In general, no taxable income will be
recognized by the optionee, and no deduction will be allowed to the Company,
upon the grant of an option. Upon exercise of a nonqualified option an optionee
will recognize ordinary income (and the Company will be entitled to a
corresponding tax deduction if applicable withholding requirements are
satisfied) in an amount equal to the amount by which the fair market value of
the shares on the exercise date exceeds the option price. Any gain or loss
realized by an optionee on disposition of such shares generally is a capital
gain or loss and does not result in any further tax deduction to the Company.
Restricted Stock Grants. The award of restricted stock under the Option
Plan will result in the award recipient's recognition of ordinary income in the
amount of the fair market value of such stock on the date of the award and the
Company will be entitled to a corresponding deduction. This is so unless the
stock is issued subject to a substantial risk of forfeiture, in which case the
recognition of income may be deferred until the restrictions have lapsed. Gain
or loss recognized on a subsequent sale or exchange of the stock received will
be capital gain or loss (assuming the stock constitutes a capital asset in the
hands of the optionee), which will be long-term or short-term depending on how
long the shares have been held at the time of the sale or exchange.
Other Tax Matters. If an optionee's option becomes immediately
exercisable because of a change in (i) the ownership or effective control of the
Company or (ii) the ownership of a substantial portion of the assets of the
Company (a "Change in Control") and the participant is an officer, shareholder
or highly-compensated employee of the Company, such acceleration could be
subject to the "golden parachute" provisions of Sections 280G and 4999 of the
Code. In addition, Section 162(m) of the Code imposes limitations on the
deductibility of compensation paid to any covered employee in excess of
$1,000,000 for such employee for a taxable year.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO
AMEND THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
14
PROPOSAL NO.3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed BDO Seidman, LLP as the Company's
independent public accountants for the year ending July 31, 2003. BDO Seidman,
LLP has served as the Company's independent public accountants for the prior
four fiscal years ended July 31, 2002. Although the appointment of independent
public accountants is not required to be approved by the shareholders, the Board
of Directors believes shareholders should participate in the selection of the
Company's independent public accountants. Accordingly, the shareholders will be
asked at the meeting to ratify the Board's appointment of BDO Seidman, LLP as
the Company's independent public accountants for the year ending July 31, 2003.
Representative of BDO Seidman, LLP will be present at the meeting. They
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions of the shareholders.
AUDIT FEES
The aggregate fees billed by BDO Seidman, LLP for professional services
rendered for the audit of the Company's annual financial statements for fiscal
year ended July 31, 2002 and for reviews of the financial statements included in
the Company's Quarterly Reports on Form 10-Q during fiscal year 2002 were
$280,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
No fees were billed by BDO Seidman, LLP during fiscal year 2002 for
financial systems design and implementation services.
ALL OTHER FEES
The aggregate fees billed by BDO Seidman, LLP for fiscal year 2002 for
services other than those described in the preceding two paragraphs were
$120,224, primarily for tax compliance and tax consulting services.
The Audit Committee has considered whether the provision of the
non-audit services rendered by BDO Seidman is compatible with maintaining the
firm's independence.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS AS
DESCRIBED ABOVE.
15
OTHER MATTERS
MISCELLANEOUS
The Board of Directors knows of no other matters that are likely to
come before the Annual Meeting. If any other matters should properly come before
the Annual Meeting, it is the intention of the persons named in the accompanying
form of Proxy to vote on such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 2004 PROXY STATEMENT
Any shareholder proposal to be presented for action at the 2004 Annual
Meeting of Shareholders must be received at the Company's principal executive
offices no later than July 17, 2003, for inclusion in the proxy statement and
form of proxy relating to the 2004 annual meeting.
The solicitation of proxies is made on behalf of the Board of Directors
of the Company, and the cost thereof will be borne by the Company. The Company
will also reimburse brokerage firms and nominees for their expenses in
forwarding proxy material to beneficial owners of the Common Stock of the
Company. In addition, officers and employees of the Company (none of whom will
receive any compensation therefore in addition to their regular compensation)
may solicit proxies. The solicitation will be made by mail and, in addition, may
be made by telegrams, personal interviews, or telephone.
By Order of the Board of Directors
--------------------------------------------
Wayne Kern
Secretary
DATED: November 26, 2002
16
PROXY
DYNAMEX INC.
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Dynamex Inc. (the "Company") to be held on January
14, 2003, at 10:00 a.m., Dallas, Texas time, and the Proxy Statement in
connection therewith, and (b) appoints Richard K. McClelland his proxy, with
full power of substitution and revocation, 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 said meeting or
at any adjournment thereof, and the undersigned directs that his proxy be voted
as follows:
ELECTION OF DIRECTORS
FOR nominees listed below except as marked to
--- the contrary below
WITHHOLD AUTHORITY to vote for all nominees
---- listed below
Richard K. McClelland, Kenneth H. Bishop, Brian J. Hughes, Wayne Kern, Bruce E.
Ranck and Stephen P. Smiley
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below.
- -------------------------------------------------------------------------------
APPROVAL OF AMENDMENT TO STOCK OPTION PLAN
FOR AGAINST ABSTAIN
--- --- ---
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
FOR AGAINST ABSTAIN
--- --- ---
IN THE DISCRETION OF THE PROXY, ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
FOR AGAINST ABSTAIN
--- --- ---
IMPORTANT: SIGN ON OTHER SIDE
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTORS
AND FOR THE PROPOSALS TO AMEND THE STOCK OPTION AND RATIFY THE APPOINTMENT OF
INDEPENDENT AUDITORS.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms all
that said 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:
------------------------------------
-------------------------------------------
Signature
-------------------------------------------
(Signature if held jointly)
Please date the proxy and sign your name
exactly as it appears hereon. Where there is
more than one owner, each should 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 sign the
proxy and return it promptly whether or not
you expect to attend the meeting. You may
nevertheless vote in person if you do
attend.