<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Corestaff, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
April 2, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of CORESTAFF, Inc. to be held at 9:00 a.m. on Tuesday, May 6,
1997, at The Ritz-Carlton Hotel, 1919 Briar Oaks Lane, Houston, Texas. Your
Board of Directors and Executive Officers look forward to personally greeting
those stockholders able to attend.
The matters to be acted on at the meeting are set forth in the
accompanying Notice of Annual Meeting and Proxy Statement. It is important
that your shares be represented at the meeting. Please sign, date and mail the
enclosed proxy in the envelope provided at your earliest convenience.
Sincerely,
Michael T. Willis
Chairman of the Board,
Chief Executive Officer and
President
<PAGE> 3
CORESTAFF, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 6, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
CORESTAFF, Inc. (the "Company") will be held at The Ritz-Carlton Hotel, 1919
Briar Oaks Lane, Houston, Texas at 9:00 a.m., on Tuesday, May 6, 1997, for the
following purposes:
1. To elect three Class II directors of the Company to terms of
office expiring at the 2000 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified;
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of common stock of
the Company from 40,000,000 shares to 100,000,000 shares of common stock;
3. To approve an amendment to the Company's 1995 Long-Term Incentive
Plan to increase the number of shares available for issuance under the 1995
Plan from 2,700,000 shares to 3,840,000 shares of common stock;
4. To ratify the Board of Directors' appointment of Ernst & Young
LLP as the Company's independent auditors for the fiscal year ending December
31, 1997; and
5. To transact such other business as may properly be brought before
the meeting or any adjournment(s) thereof.
Holders of record of the Company's common stock at the close of business
on March 31, 1997 will be entitled to notice of and to vote at the meeting or
any adjournment(s) thereof.
The voting stock of the Company should be represented as fully as
possible at the Annual Meeting. Therefore, it would be appreciated if you
would sign, date and return the enclosed proxy at your earliest convenience.
You may, of course, change or withdraw your proxy at any time prior to the
voting at the meeting. However, signing and returning the proxy will assure
your representation at the Annual Meeting.
By Order of the Board of Directors,
PETER T. DAMERIS
General Counsel, Senior Vice
President and Secretary
Houston, Texas
April 2, 1997
YOUR VOTE IS IMPORTANT
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AT THE MEETING
AND SAVE THE EXPENSE OF A SECOND MAILING, PLEASE SIGN, DATE
AND MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
CORESTAFF, INC.
FIVE POST OAK PARK
4400 POST OAK PARKWAY
SUITE 1130
HOUSTON, TEXAS 77027
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
------------------------
The enclosed form of proxy is solicited by the Board of Directors of
CORESTAFF, Inc. (the "Company") to be used at the 1997 Annual Meeting of
Stockholders (the "Meeting") to be held at The Ritz-Carlton Hotel, 1919 Briar
Oaks Lane, Houston, Texas at 9:00 a.m., on Tuesday, May 6, 1997. This Proxy
Statement and the related proxy are to be first sent or given to the
stockholders of the Company on or about April 3, 1997. Each properly executed
proxy received at or before the Meeting on May 6, 1997 will be voted at the
Meeting as specified therein. If a stockholder does not specify otherwise, the
shares represented by his or her proxy will be voted FOR the election of all
the nominees as Class II directors, FOR the amendment to the Certificate of
Incorporation, FOR the amendment to the 1995 Long-Term Incentive Plan, and FOR
the ratification of the appointment of Ernst & Young LLP as independent
auditors. The shares held by each stockholder who signs and returns the
enclosed proxy will be counted for purposes of determining the presence of a
quorum at the Meeting unless such proxy is timely revoked. Any stockholder
giving a proxy may revoke it at any time provided written notice of such
revocation is received by the Secretary of the Company before such proxy is
voted; otherwise, if received in time, properly completed proxies will be voted
at the Meeting in accordance with the instructions specified thereon.
Stockholders attending the Meeting may revoke their proxies and vote in person.
The Board of Directors has established March 31, 1997 as the record date
(the "Record Date") for determination of stockholders entitled to notice of and
to vote at the Meeting. Only holders of record of the Company's common stock,
$.01 par value per share ("Common Stock"), at the close of business on the
Record Date will be entitled to vote at the Meeting. Each share of Common
Stock is entitled to one vote per share on each matter submitted to a vote of
the stockholders at the Meeting. On the Record Date, __________ shares of
Common Stock and 707,232 shares of Class B Non-Voting Common Stock, the only
other class of capital stock of the Company outstanding, were issued and
outstanding.
The Company's 1996 Annual Report to Stockholders, including financial
statements, is being mailed herewith to all stockholders entitled to vote at
the Meeting. The Annual Report does not constitute a part of the proxy
soliciting material. See "Availability of Annual Report on Form 10-K."
<PAGE> 5
STOCK OWNERSHIP
The following table sets forth certain information with respect to
beneficial ownership of the Company's equity securities as of March 1, 1997:
(a) by each person known to the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (b) by each director of the Company, (c) by
each of the executive officers named in the Summary Compensation Table, and (d)
by all directors and officers of the Company as a group. Each stockholder has
(i) sole voting and investment power with respect to such stockholder's shares
of stock except to the extent that authority is shared by his or her spouse
under applicable law and (ii) record and beneficial ownership with respect to
such stockholder's shares of stock.
<TABLE>
<CAPTION>
Shares Owned
Beneficially(1)
-----------------------
Name Number Percent
---- ---------- -------
<S> <C> <C>
SHARES OF COMMON STOCK:
Golder, Thoma, Cressey Fund III
Limited Partnership (2) ................ 8,701,921 27.8%
Michael T. Willis (3) .................... 3,520,011 11.2%
Bruce V. Rauner (4) ...................... 8,701,921 *
Joseph V. Amella ......................... 121,500 *
Rocco N. Aceto ........................... 115,300 *
George W. Fink ........................... 114,750 *
Peter T. Dameris ......................... 85,650 *
Charles R. Schneider ..................... 18,255 *
Austin P. Young .......................... 10,482 *
Charles H. Cotros ........................ 8,250 *
John T. Turner ........................... 5,880 *
Donald J. Edwards (5) .................... 2,250 *
Nuala Beck ............................... 750 *
All officers and directors as a group
(13 persons) ............................. 12,766,124 40.6%
SHARES OF CLASS B NON-VOTING COMMON STOCK:
First Union Corporation (6) ................. 707,232 100.0%
</TABLE>
- -----------------
* Less than 1%
(1) Shares of common stock that are not outstanding but that may be
acquired by a person upon exercise of options within 60 days of
the date of this Proxy Statement are deemed outstanding for the
purpose of computing the percentage of outstanding shares
beneficially owned by such person. However, such shares are not
deemed to be outstanding for the purpose of computing the
percentage of outstanding shares beneficially owned by any other
person.
(2) Golder, Thoma, Cressey Fund III Limited Partnership's ("GTC III")
sole general partner is Golder, Thoma, Cressey, Rauner Limited
Partnership ("GTCR Partnership"). The address for GTC III is
6100 Sears Tower, Chicago, Illinois 60606.
(3) The address for Mr. Willis is 4400 Post Oak Parkway, Suite 1130,
Houston, Texas 77027.
(4) Includes all of the shares of Common Stock owned by GTC III. Mr.
Rauner is a general partner of GTCR Partnership, which serves as
the sole general partner of GTC III and over which he may be
deemed to have voting and investment power. The address for Mr.
Rauner is 6100 Sears Tower, Chicago, Illinois 60606.
(5) Mr. Edwards is a Principal with Golder, Thoma, Cressey, Rauner,
Inc. ("GTCR Inc."), an affiliate of GTC III.
(6) The address for First Union Corporation ("First Union") is One
First Union Center, 18th Floor, Charlotte, North Carolina 28288.
2
<PAGE> 6
ITEM 1
ELECTION OF DIRECTORS
The Company's First Amended and Restated Certificate of Incorporation
("Certificate of Incorporation") provides for a Board of Directors to serve in
three classes having staggered terms of three years each. At present, there
are eight directors: three directors whose terms of office expire at the 1997
Annual Meeting; three directors whose terms of office expire at the 1998 Annual
Meeting; and two directors whose terms of office expire at the 1999 Annual
Meeting. Information regarding each of the incumbent directors is set forth
below. At the 1997 Annual Meeting, the stockholders will be asked to elect
three Class II directors. The three nominees for Class II director, each of
whom is currently serving in that capacity, and whose new terms would expire at
the 2000 Annual Meeting of Stockholders, are: Nuala Beck, Charles R. Schneider
and John T. Turner.
Proxies cannot be voted for a greater number of persons than the number
of nominees named on the enclosed form of proxy. A plurality of the votes cast
in person or by proxy by the holders of Common Stock is required to elect a
director. Accordingly, under Delaware law and the Company's Certificate of
Incorporation and Amended and Restated Bylaws ("Bylaws"), abstentions and
"broker non-votes" would not have the same legal effect as a vote against a
particular director. A broker non-vote occurs if a broker or other nominee
does not have discretionary authority and has not received instructions with
respect to a particular item. Stockholders may not cumulate their votes in the
election of directors. The Board of Directors recommends a vote "FOR" each of
the following nominees. Unless otherwise instructed or unless authority to
vote is withheld, the enclosed proxy will be voted "FOR" the election of the
nominees listed below. Although the Board of Directors does not contemplate
that any of the nominees will be unable to serve, if such a situation arises
prior to the Meeting, the persons named in the enclosed proxy will vote for the
election of such other person(s) as may be nominated by the Board of Directors.
DIRECTOR NOMINEES
NUALA BECK, age 45, has served as a director of the Company since April
1996. Ms. Beck, an international economist, serves as the President and is the
founder of Nuala Beck & Associates, Inc., a management consulting firm. Ms.
Beck also serves as a director of Ontario Hydro.
CHARLES R. SCHNEIDER, age 56, has served as a director of the Company
since October 1994. Mr. Schneider founded U.S. Security Associates, Inc. and
has served as its President and Chief Executive Officer and a director since
November 1993. From October 1986 to November 1993, Mr. Schneider served as
President of Baker Industries, Inc. ("Baker") and as a Vice President of Borg-
Warner Security Corp., a subsidiary of Baker, from August 1987 to September
1993.
JOHN T. TURNER, age 53, has served as a director of the Company since
October 1994. Mr. Turner currently is self-employed, managing a variety of
personal investments. From November 1990 to March 1993, Mr. Turner served as a
Senior Vice President and director of The Loewen Group, Inc. Mr. Turner was
also a founder of Paragon Family Services, Inc. and served as its President
from November 1986 to November 1990.
3
<PAGE> 7
DIRECTORS
MICHAEL T. WILLIS, age 52, has served as Chairman of the Board, Chief
Executive Officer and President of the Company since its formation and has been
in the personnel and temporary services industry for more than 20 years. Mr.
Willis founded The Talent Tree Corporation ("Talent Tree") in 1976 and built it
into one of the largest temporary services companies in the United States. Mr.
Willis sold Talent Tree to Hestair plc in 1987 and then continued as President
and Chief Executive Officer until April, 1993. Mr. Willis is also a director
of the Southwest Bank of Texas, a publicly-traded financial institution.
CHARLES H. COTROS, age 59, has served as a director of the Company since
November 1995. Mr. Cotros has served as Executive Vice President and Chief
Operating Officer of Sysco Corporation ("Sysco") since January 1995 and has
held various positions for Sysco for more than the past five years. Mr. Cotros
has also served as a director of Sysco since 1984 and is a member of the
Executive Committee of the Board of Directors of Sysco.
DONALD J. EDWARDS, age 31, has served as a director of the Company since
August 1995. In addition, Mr. Edwards served as a Vice President of the
Company from May 1995 to August 1995. Mr. Edwards joined Golder, Thoma,
Cressey, Rauner, Inc. in August 1994 and became a Principal in April 1996.
From September 1992 to June 1994, Mr. Edwards attended the Harvard Business
School and received his MBA. Prior to that time, Mr. Edwards served as an
analyst with Lazard Freres & Co. from August 1988 to January 1990 and as an
associate from January 1990 to April 1992. Mr. Edwards also serves as a
director of American Habilitation Services, Inc., Select Medical Corporation
and Shahdill, Inc.
BRUCE V. RAUNER, age 41, has served as a director of the Company since
July 1993. Mr. Rauner joined Golder, Thoma, Cressey, Rauner, Inc. in 1981 and
became a Principal in 1984. Mr. Rauner also serves as a director of ERO
Industries.
AUSTIN P. YOUNG, age 56, has served as a director and Executive Vice
President - Finance and Administration of the Company since September 1996.
Prior to joining the Company, Mr. Young served as Senior Vice President and
Chief Financial Officer of American General Corporation. Prior to joining
American General Corporation in 1987, Mr. Young was a partner with KMPG Peat
Marwick where his career spanned 22 years.
OTHER EXECUTIVE OFFICERS
ROCCO N. ACETO, age 40, has served as Executive Vice President -
Staffing Services since September 1996 and President of CORESTAFF Services,
Inc., a subsidiary of the Company, since August 1994. Prior to joining the
Company in August 1994, Mr. Aceto was a corporate Vice President and General
Manager of Pagenet of Orange County, California from March 1992 to August 1994.
From July 1980 until joining Pagenet, Mr. Aceto worked with Pitney Bowes where
he served as a division Vice President.
JOSEPH V. AMELLA, age 41, has served as Executive Vice President -
Eastern Division, Staffing Services since August 1994 and has over 14 years of
experience in the staffing industry. Prior to joining the Company, Mr. Amella
served in various capacities with Talent Tree including Vice President and
General Manager, and Senior Vice President - Mid-Atlantic Division from March
1984 to April 1993.
4
<PAGE> 8
PETER T. DAMERIS, age 37, has served as Senior Vice President, General
Counsel and Secretary of the Company since September 1996. Mr. Dameris
previously served as Vice President, General Counsel and Secretary since
January 1995. Prior to joining the Company in January 1995, Mr. Dameris served
as outside counsel to the Company since its inception as a partner with the law
firm of Cochran, Rooke and Craft, LLP. Mr. Dameris was associated with
Cochran, Rooke and Craft, LLP from June 1989 to January 1995.
GEORGE W. FINK, age 49, has served as Executive Vice President -
Information Technology Services and President of COMSYS Technical Services,
Inc., a subsidiary of the Company, since September 1995. Prior to joining the
Company, Mr. Fink was self-employed, managing a variety of personal
investments. From June 1986 until July 1993 and from August 1993 until March
1994, Mr. Fink served as President and Chief Executive Officer of Remco
America, Inc. and Rent-A-Center, respectively. Prior to joining Remco, Mr.
Fink was a partner with Ernst & Young LLP and a director of the Houston Office
Entrepreneurial Services Group.
EDWARD L. PIERCE, age 40, has served as Senior Vice President, Chief
Financial Officer and Assistant Secretary of the Company since September 1996.
Mr. Pierce previously served as Vice President-Finance and prior thereto as
Vice President and Controller of the Company. Prior to joining the Company in
November 1994, Mr. Pierce served in various capacities with American Oil and
Gas Corporation, including Director of Accounting, Taxation, and Reporting,
Assistant Controller, and Corporate Controller, from January 1990 to November
1994 and as an Audit Manager for Arthur Andersen LLP prior thereto.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
BOARD MEETINGS. The Board of Directors held six meetings during the
fiscal year ended December 31, 1996 and took various corporate actions during
1996 by means of unanimous written consent. During the fiscal year ended
December 31, 1996, each director attended more than 75% of the total number of
meetings of the Board of Directors and the committees on which each such
director served. The Company has the following committees of the Board of
Directors:
THE AUDIT COMMITTEE. The Audit Committee of the Board of Directors,
which is comprised of Messrs. Edwards (Chairman), Schneider and Turner,
examines and considers matters relating to the financial affairs of the
Company, including reviewing the Company's annual financial statements, the
scope of the independent annual audit and the independent auditor's letter to
management concerning the effectiveness of the Company's internal financial and
accounting controls. The Audit Committee held two meetings during fiscal year
1996.
THE COMPENSATION COMMITTEE. The Compensation Committee, comprised of
Messrs. Schneider (Chairman), Cotros and Edwards, considers and makes
recommendations to the Company's Board of Directors with respect to programs
for human resource development and management organization and succession,
approves changes in senior executive compensation, and makes recommendations to
the Company's Board of Directors with respect to compensation matters and
policies. The Compensation Committee held two meetings during fiscal year 1996
and took various corporate actions during 1996 by means of unanimous written
consent.
5
<PAGE> 9
THE 1995 LONG-TERM INCENTIVE PLAN COMMITTEE. The 1995 Long-Term
Incentive Plan Committee, which was comprised of Messrs. Edwards and Schneider,
administered the Company's 1995 Long-Term Incentive Plan (the "1995 Plan").
The 1995 Long-Term Incentive Plan Committee held two meetings during fiscal
year 1996 and took various corporate actions during 1996 by means of unanimous
written consent. The 1995 Long-Term Incentive Plan Committee was dissolved in
January 1997 and all duties were transferred to the Compensation Committee at
that time.
THE STOCK PURCHASE PLAN COMMITTEE. The Stock Purchase Plan Committee,
comprised of Ms. Beck and Mr. Young, administers the Company's Employee Stock
Purchase Plan (the "Stock Purchase Plan"). The Stock Purchase Plan Committee
held two meetings during fiscal year 1996.
THE PENSION PLAN COMMITTEE. The Pension Plan Committee, comprised of
Messrs. Edwards and Young, administers the CORESTAFF, Inc. 401(k) Retirement
Savings Plan and the CORESTAFF, Inc. Executive Retirement Savings Plan. The
Pension Plan Committee held one meeting during fiscal year 1996 and took
various corporate actions during 1996 by means of unanimous written consent.
COMPENSATION OF DIRECTORS
All directors of the Company are entitled to reimbursement for certain
expenses in connection with their travel to and attendance at meetings of the
Board of Directors or committees thereof. Directors who are not officers of
the Company receive a $3,500 fee for each meeting of the Board of Directors
attended by such director. In addition, each director who is not an officer of
the Company or associated with GTC III will receive an annual grant of options
to purchase 2,250 shares of Common Stock (at an exercise price equal to the
fair market value of the Common Stock on the date the option is granted) under
the 1995 Plan for each year he or she serves as a director. Such options vest
one-third per year over a three-year period. Other than reimbursement of their
expenses, directors who are employees or officers of the Company will not
receive any compensation for services as a director.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the fiscal year ended December 31,
1996, the annual, long-term and other compensation paid to the Company's Chief
Executive Officer and to each of its four most highly compensated executive
officers whose total salary and bonus for 1996 exceeded $100,000 (the "Named
Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
NAME AND --------------------------
PRINCIPAL POSITION YEAR SALARY BONUS
- ------------------ ---- ------ -----
<S> <C> <C> <C>
Michael T. Willis 1996 $350,000 $175,000
Chief Executive Officer and President 1995 308,140 150,000
1994 246,304 84,375
George W. Fink 1996 285,000 142,500
Executive Vice President - 1995 91,833 --
Information Technology Services
Joseph V. Amella 1996 240,000 129,653
Executive Vice President - 1995 182,500 172,000
Eastern Division of Staffing Services
Rocco N. Aceto 1996 267,164 --
Executive Vice-President - 1995 212,614 460,948
Staffing Services 1994 84,375 25,000
Peter T. Dameris 1996 174,375 70,000
Senior Vice President, General 1995 149,724 60,000
Counsel and Secretary
</TABLE>
----------------
(1) Annual Compensation excludes the aggregate value of perquisites
as such value is less than either $50,000 or 10% of total annual
Salary and Bonus for each Named Officer.
6
<PAGE> 10
EMPLOYMENT AGREEMENTS
MICHAEL T. WILLIS. In November 1995, the Company entered into a new
employment agreement with Michael T. Willis which remains in effect until
November 15, 1998, and thereafter automatically renews for three year terms
until November 15, 2001, unless either party notifies the other at least 90
days prior to the expiration of any such three year term. Mr. Willis'
employment contract provides for an annual base salary of $350,000, subject to
annual review for adjustments by the Board of Directors and the Compensation
Committee, and an annual bonus at the discretion of the Board. In addition,
Mr. Willis will be eligible to participate in all benefit plans of the Company.
Mr. Willis' contract will provide for two years of severance in the event of
termination of his employment with the Company or in the event Mr. Willis
resigns with good reason following a change of control of the Company. Mr.
Willis' severance payment will be determined based on Mr. Willis' annual salary
prior to termination and the highest bonus paid to Mr. Willis in the two years
prior to termination. However, in the event of termination, Mr. Willis will be
subject to a two year non-compete covenant following the termination of his
employment. In addition, the Company has the option to extend the term of Mr.
Willis' non-compete covenant for one year upon the payment of an additional
year of severance benefits.
OTHER EMPLOYMENT AGREEMENTS. The Company has also entered into
employment agreements with each of Messrs. Aceto, Amella, Dameris and Fink.
The annual base salaries being paid to Messrs. Aceto, Amella, Dameris and Fink
are $280,000, $240,000, $175,000, and $285,000, respectively, as of December
31, 1996, and such agreements provide for periodic salary increases and bonuses
in the discretion of the Company and, in some cases, the Company's achievement
of certain performance objectives. The agreements with Messrs. Aceto, Amella,
Dameris and Fink continue until August 8, 1997, December 31, 1997, January 15,
1998 and September 6, 1998, respectively, and annually thereafter until
terminated. In addition, the agreements provide for severance benefits in the
event of termination of employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Schneider, Cotros and
Edwards. Mr. Schneider serves as the Chairman of the Committee. None of
Messrs. Schneider, Cotros and Edwards have been an employee or officer of the
Company or any of its subsidiaries during the 1996 fiscal year; however, Mr.
Edwards was an officer of the Company from May through August of 1995. Mr.
Willis, Chairman of the Board, Chief Executive Officer and President of the
Company served on the Compensation Committee until September 1996. Mr. Willis
is a limited partner in Acquest International L.P., a mergers and acquisitions
advisory and merchant banking firm which provided investment banking services
on certain acquisitions or acquisition targets of the Company. The Company
paid Acquest International L.P. approximately $129,000 during the 1996 fiscal
year.
7
<PAGE> 11
REPORT FROM THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION
As members of the Compensation Committee, it is our duty to administer
the executive compensation program for the Company. The Compensation Committee
is responsible for establishing appropriate compensation goals for the
executive officers of the Company and evaluating the performance of such
executive officers in meeting such goals and making recommendations to the
Board of Directors with regard to executive compensation
The Company's compensation philosophy is to ensure that executive
compensation be directly linked to continuous improvements in corporate
performance, achievement of specific operational, financial and strategic
objectives and increases in stockholder value. The Compensation Committee
regularly reviews the compensation packages of the Company's executive
officers, taking into account factors which it considers relevant, such as
business conditions within and outside the industry, the Company's financial
performance, the market compensation for executives of similar background and
experience and the performance of the executive officer under consideration.
The particular elements of the Company's compensation programs for executive
officers are described below.
The goals of the Compensation Committee in establishing the Company's
executive compensation program are as follows:
(1) To fairly compensate the executive officers of the Company
and its subsidiaries for their contributions to the Company's short-term
and long-term performance. The elements of the Company's executive
compensation program are (a) annual base salaries, (b) annual bonuses
and (c) equity incentives.
(2) To allow the Company to attract, motivate and retain the
management personnel necessary to the Company's success by providing an
executive compensation program comparable to that offered by companies
with which the Company competes for such management personnel.
The elements of the executive compensation program described above are
implemented and periodically reviewed and adjusted by the Compensation
Committee. The annual base salaries of the Chief Executive Officer of the
Company and the other executive officers are determined based on individual
performance, experience and comparison with salaries paid by the Company's
industry peers and other companies in similar industries with comparable
revenues while linking the payment of compensation to the Company's achievement
of certain financial goals. In developing salary recommendations, the
Compensation Committee reviewed salaries of similar positions in similarly
sized companies which engage in the Company's business. The Compensation
Committee confirmed that the overall compensation packages, including the
executive officers' equity ownership in the Company were consistent with the
Compensation Committee's stated objective.
Compensation Committee of the Board of Directors
Charles R. Schneider
Charles H. Cotros
Donald J. Edwards
8
<PAGE> 12
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The following is a summary of certain agreements, arrangements and
transactions between or among the Company, its subsidiaries and/or certain
related parties. It is the Company's policy to enter into transactions with
related parties on terms that, on the whole, are no less favorable than those
that would be available from unaffiliated parties. Based on the Company's
experience in the industry and the terms of its transactions with unaffiliated
parties, it is the Company's belief that all of the transactions described
below involving the Company met that standard at the time such transactions
were effected.
STOCKHOLDER LOANS. Messrs. Aceto, Amella, Dameris and Schneider are
indebted to the Company in the amounts shown below. These debts were incurred
in connection with the acquisition by each of them of shares of Common Stock
pursuant to a Senior Management Agreement and, in the case of Mr. Schneider, a
Director Stock Purchase Agreement, on the dates and in the amounts shown below.
The notes relating to these loans are recourse, payable on demand, bear
interest at 8% per annum, with interest due only upon payment of principal, and
are secured by a pledge of such shares of Common Stock.
<TABLE>
<CAPTION>
ORIGINAL DATE OUTSTANDING NUMBER OF PRICE
PRINCIPAL OF AMOUNT SHARES PER
NAME AMOUNT ISSUANCE OF NOTE(1) PURCHASED SHARE
---- --------- ------------ ----------- --------- -----
<S> <C> <C> <C> <C> <C>
Rocco N. Aceto .......... $ 355,000 April 1995 $402,929.86 171,000 $2.08
Joseph V. Amella ........ 355,000 April 1995 402,929.86 171,000 2.08
Peter T. Dameris ........ 75,000 January 1995 86,868.49 171,000 0.44
Charles R. Schneider .... 2,250 January 1995 2,606.05 5,130 0.44
</TABLE>
- -----------------
(1) Includes accrued interest through December 31, 1996.
SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than 10% of the Company's
Common Stock ("10% Stockholders"), to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. To the knowledge of the
Company, all of these filing requirements were satisfied by the Company's
directors and officers and the 10% Stockholders.
ITEM 2
APPROVAL OF AMENDMENT TO
CERTIFICATE OF INCORPORATION
By resolution adopted on March 20, 1997, the Board of Directors proposed
the adoption by the Company's stockholders of an amendment to the First Amended
and Restated Certificate of Incorporation of CORESTAFF, Inc. (the "Certificate
of Incorporation"), pursuant to which the number of authorized shares of Common
Stock of the Company would be increased from 40,000,000 shares to 100,000,000
shares, and the Board of Directors directed that the proposed amendment be
submitted to a vote of the stockholders at the Annual Meeting. The affirmative
vote of the holders of a majority of the outstanding shares of Common Stock is
required to approve the amendment to the Certificate of Incorporation. If the
stockholders approve the amendment, the Certificate of Incorporation of the
9
<PAGE> 13
Company will be amended as proposed by the Board of Directors, and the number
of authorized shares of Common Stock will be increased to 100,000,000. The
newly authorized shares of Common Stock will have voting and other rights
identical to the currently authorized shares of Common Stock.
Of the 40,000,000 currently authorized shares of Common Stock, as of
March 1, 1997, 31,283,075 shares were outstanding and an additional 2,577,715
shares and 416,688 shares were reserved for issuance under the 1995 Plan and
the Stock Purchase Plan, respectively. The Company also has 707,232 shares of
Class B Non-Voting Common Stock outstanding that is convertible at any time
into shares of Common Stock that has also been reserved for future issuance.
Although currently authorized shares are sufficient to meet all known present
requirements, the Board of Directors believes it is desirable that the Company
have the flexibility to issue a substantial number of shares of Common Stock
without further stockholder action unless required by applicable law or
regulation. The availability of additional shares will enhance the Company's
flexibility in connection with possible future actions, such as corporate
mergers, acquisitions of property, stock dividends, stock splits and employee
benefit programs. The Board of Directors will determine whether, when and on
what terms the issuance of shares of Common Stock may be warranted in
connection with any of the foregoing purposes.
The Board of Directors does not intend to seek further stockholder
approval prior to the issuance of any additional shares in future transactions
unless required by law, the Certificate of Incorporation or the rules of any
stock exchange upon which the stock may be listed, or unless the Company deems
it advisable to do so to qualify an employee benefit plan in accordance with
Rule 16b-3 under the Exchange Act. Further, the Board of Directors does not
intend to issue any Common Stock to be authorized under the amendment to the
Certificate of Incorporation except upon terms the Board of Directors deems to
be in the best interest of the Company and its stockholders. The issuance of
additional Common Stock without further stockholder approval may, among other
things, have a dilutive effect on earnings per share and on the equity of the
present holders of Common Stock and their voting rights. Holders of the Common
Stock of the Company have no preemptive rights.
The availability for issuance of additional shares of Common Stock also
could have the effect of rendering more difficult or discouraging an attempt to
obtain control of the Company. For example, the issuance of shares of Common
Stock (within the limits imposed by applicable law and the rules of any
exchange upon which the Common Stock is listed) in a public or private sale,
merger or similar transaction would increase the number of outstanding shares,
thereby possibly diluting the interest of a party attempting to obtain control
of the Company. The additional shares also could be used to render more
difficult a merger or similar transaction even if it appears to be desirable to
a majority of the stockholders. The Company is not aware of any pending or
threatened efforts to obtain control of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
10
<PAGE> 14
ITEM 3
AMENDMENT TO THE 1995
LONG-TERM INCENTIVE PLAN
The Board has recommended to the stockholders of the Company the
adoption of an amendment to the 1995 Plan to increase the number of shares
available for issuance under the 1995 Plan from 2,700,000 shares to 3,840,000
shares of Common Stock. Adoption of the amendment to the 1995 Plan shall be
effective upon receiving the affirmative vote of the holders of a majority of
the Common Stock present or represented by proxy and entitled to vote at the
Meeting. Under Delaware law, an abstention would have the same legal effect as
a vote against this proposal, but a broker non-vote would not be counted for
purposes of determining whether a majority had been achieved. The Board of
Directors recommends voting "FOR" adoption by the stockholders of the amendment
to the 1995 Plan.
1995 LONG-TERM INCENTIVE PLAN
The Plan provides for the grant of any or all of the following types of
awards: (i) stock options, including incentive stock options and non-qualified
stock options; (ii) stock appreciation rights ("SARs") in tandem with stock
options or freestanding; (iii) restricted stock; (iv) performance share awards;
(v) stock value equivalent awards; and (vi) cash awards. Any stock option
granted in the form of an incentive stock option must satisfy the applicable
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). Awards may be made to the same person on more than one occasion
and may be granted singly, in combination, or in tandem as determined by the
Compensation Committee which is currently comprised of Messrs. Schneider,
Cotros and Edwards. As of December 31, 1996, the Company had non-qualified
stock options to purchase an aggregate of 2,311,317 shares of Common Stock
outstanding under the 1995 Plan.
TERM. The Plan was adopted effective as of August 1995 and will
terminate in August 2005 unless earlier terminated by the Board of Directors.
Termination of the 1995 Plan will not affect awards made prior to termination,
but awards will not be made after termination.
ADMINISTRATION. The 1995 Plan is currently administered by the
Compensation Committee. Subject to the terms of the 1995 Plan, and to such
approvals and other authority as the Board of Directors may reserve to itself
from time to time, the Compensation Committee, consistent with the terms of the
1995 Plan, has authority to (i) select employees to receive an award, (ii)
determine the timing, form, amount, or value and term of grants and awards,
(iii) determine the conditions and restrictions, if any, subject to which
grants and awards are made and become payable under the 1995 Plan, (iv)
construe the 1995 Plan and prescribed rules and regulations with respect to the
administration of the 1995 Plan, and (v) make such other determinations
authorized under the 1995 Plan as the Compensation Committee deems necessary or
appropriate.
ELIGIBILITY. All full-time employees of the Company and its affiliates
and all directors of the Company who are not otherwise employees of the Company
or any of its affiliates ("non-employee directors"), are eligible to
participate in the 1995 Plan. The selection of participants from eligible
employees is within the discretion of the Compensation Committee.
SHARES SUBJECT TO THE 1995 PLAN. There are 2,700,000 shares of Common
Stock reserved for issuance under the 1995 Plan. An additional 1,140,000
shares of Common Stock have been reserved
11
<PAGE> 15
for issuance subject to approval by the stockholders of the Company. These
shares may be authorized and unissued shares or treasury shares. Shares are
deemed to be issued under the 1995 Plan only to the extent actually issued
pursuant to an award. To the extent that an award lapses or the rights of an
awardee terminate or the award is paid in cash, any shares subject to such
award are again made available for grant. In the event of any increases or
decreases in the number of issued and outstanding shares of Common Stock
pursuant to stock splits, mergers, reorganizations, recapitalizations, stock
dividends, or other events described under the terms of the 1995 Plan, the
Compensation Committee shall make appropriate adjustments to the aggregate
number of shares available for issuance under the 1995 Plan and the number and
kinds of shares which may be distributed under the 1995 Plan. The Compensation
Committee approved appropriate adjustments for outstanding options as of the
record date of the Company's three-for-two stock splits in March and September
of 1996.
STOCK OPTIONS. Under the 1995 Plan, the Compensation Committee may
grant awards in the form of options to purchase shares of Common Stock. The
Compensation Committee will, with regard to each stock option, determine the
number of shares subject to the option, the manner and time of the option's
exercise, and the exercise price per share of the stock subject to the option.
The exercise price of an incentive stock option will not be less than the fair
market value of the Common Stock on the date the option is granted. The
Compensation Committee will designate each option as a non-qualified or an
incentive stock option. Each option agreement may provide that the option
price upon exercise can be paid by a participant in cash, shares of Common
Stock, or a combination thereof.
In addition, under the 1995 Plan, each non-employee director who serves
in such capacity on the effective date of the 1995 Plan shall receive, as of
such date, non-qualified stock options to purchase 2,250 shares of Common Stock
(after giving effect to the stock splits). Each non-employee director who is
elected or appointed to the Board of Directors for the first time after the
effective date of the 1995 Plan shall receive, as of the date of his or her
election or appointment, non-qualified stock options to purchase 2,250 shares
of Common Stock. Each non-employee director who is in office immediately after
the annual meeting of stockholders each year the 1995 Plan is in effect and who
is not entitled to receive an option pursuant to the preceding provisions set
forth in this paragraph shall receive non-qualified stock options to purchase
2,250 shares of Common Stock.
STOCK APPRECIATION RIGHTS. The 1995 Plan also authorizes the
Compensation Committee to grant SARs either independent of, or in connection
with, a stock option. If granted with a stock option, exercise of the SAR will
result in the surrender of the right to purchase the shares under the option as
to which the SAR was exercised. Upon exercising an SAR, the holder receives
for each share with respect to which the SAR is exercised, an amount equal to
the difference between the exercise price, as determined by the Compensation
Committee, and the fair market value of the Common Stock on the date of
exercise. Payment of such amount may be made in shares of Common Stock, cash
or a combination thereof, as determined by the Compensation Committee. The
Compensation Committee shall specify the effect of termination of employment
(by reason of death, disability, retirement or otherwise) on the exercisability
of the SAR.
RESTRICTED STOCK. The 1995 Plan provides that shares of Common Stock
subject to certain restrictions ("Restricted Stock") may be awarded to eligible
employees from time to time as determined by the Compensation Committee. The
Compensation Committee will determine the nature and extent of the restrictions
on such shares, the duration of such restrictions, and any circumstance under
which the Restricted Stock will be forfeited. During any such period of
restriction, recipients shall have most of the rights of a holder of Common
Stock, including but not limited to the right to receive dividends and voting
rights. The Compensation Committee shall determine the effect of the
termination of
12
<PAGE> 16
employment of a recipient of Restricted Stock (by reason of retirement,
disability, death or otherwise) prior to the lapse of any applicable
restrictions. With respect to outstanding awards of Restricted Stock, the
Compensation Committee may in its discretion provide for full vesting and
termination of restrictions on Restricted Stock.
PERFORMANCE SHARE AWARDS. The Plan permits the Compensation Committee
to grant Performance Share Awards to eligible employees under the 1995 Plan
from time to time. Performance Share Awards are awards that are contingent on
the achievement of certain performance objectives, valued by reference to the
price performance of the Common Stock, by reference to the financial or
economic performance of the Company in comparison to a peer group of companies
in the same industry, or by reference to other factors, over a specified period
of time.
The length of time over which performance will be measured, the
performance objectives and the criteria to be used in determining whether and
to what degree such objectives have been obtained will be determined by the
Compensation Committee. The Compensation Committee shall also determine the
effect of termination of employment (by reason of death, retirement, disability
or otherwise) during the performance period.
STOCK VALUE EQUIVALENT AWARDS. The Plan permits the Compensation
Committee to grant Stock Value Equivalent Awards to eligible employees from
time to time. Stock Value Equivalent Awards are rights to receive the fair
market value of a specified number of shares of Common Stock, or the
appreciation in the fair market value thereof, over a specified period of time,
pursuant to a vesting schedule, all as determined by the Compensation
Committee. The vested portion of a Stock Value Equivalent Award will be
payable in cash based on the fair market value of the Common Stock on the
payment date. The Compensation Committee shall determine the effect of
termination of employment during the vesting period (by reason of death,
retirement, disability or otherwise) on an employee's Stock Value Equivalent
Award.
AMENDMENT. The Board may at any time terminate or amend the 1995 Plan
in any respect, except that the Board may not, without approval of the
stockholders of the Company, amend the 1995 Plan so as to (i) increase the
aggregate number of shares of Common Stock that may be issued under the 1995
Plan (except for adjustments in the number of shares permitted with respect to
certain stock splits, stock dividends, mergers, reorganizations or
recapitalizations as described under "-- Shares Subject to the 1995 Plan") or
change the minimum option exercise price, (ii) modify the requirements as to
eligibility for participation, (iii) materially increase the benefits accruing
to participants under the 1995 Plan or (iv) extend the duration of the 1995
Plan beyond August 2005. No amendment or termination of the 1995 Plan shall,
without the consent of the optionee or participant in the 1995 Plan, alter or
impair the rights of such person under any options, awards or agreements
evidencing options or awards theretofore granted under the 1995 Plan.
13
<PAGE> 17
PLAN BENEFITS. The following table sets forth certain information
concerning options granted under the 1995 Plan through December 31, 1996:
<TABLE>
<CAPTION>
Options
Outstanding
(shares of
Group Common Stock)
----- -------------
<S> <C>
Michael T. Willis 187,500
George W. Fink 188,800
Rocco N. Aceto 90,000
Joseph V. Amella 90,000
Peter T. Dameris 90,000
All current executive officers as a group 860,050
All current directors who are not executive
officers as a group 9,000
All employees who are not executive
officers as a group 1,442,267
</TABLE>
ITEM 4
APPOINTMENT OF INDEPENDENT AUDITORS
Pursuant to the recommendation of the Audit Committee, the Board of
Directors has appointed Ernst & Young LLP, independent auditors, to audit the
consolidated financial statements of the Company for the year ending December
31, 1997. The Company is advised that no member of Ernst & Young LLP has any
direct financial interest or material indirect financial interest in the
Company or any of its subsidiaries in the capacity of promoter, underwriter,
voting trustee, director, officer or employee.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Meeting. Under Delaware law,
an abstention would have the same legal effect as a vote against this proposal,
but a broker non-vote would not be counted for purposes of determining whether
a majority has been achieved. The Board of Directors recommends voting "FOR"
ratification by the stockholders of this appointment.
Representatives of Ernst & Young LLP are expected to be present at the
Meeting, will have the opportunity to make a statement of if they desire to do
so, and are expected to be available to respond to appropriate questions at the
Meeting.
14
<PAGE> 18
COMPARATIVE STOCK PERFORMANCE
As required by applicable rules of the Securities and Exchange Commission,
set forth below is a performance graph prepared based upon the following
assumptions:
1. $100 was invested on November 8, 1995 (the date the Common Stock
commenced trading on the Nasdaq National Market), in the
Company's Common Stock, the Standard & Poor's 500 Stock Index
(the "S&P 500 Index") and a peer group, selected in good faith,
comprised of Accustaff Incorporated, Interim Services, Inc.,
Kelly Services, Inc., Manpower, Inc. and Norrell Corp. (the "Peer
Group").
2. Dividends are reinvested on the ex-dividend dates.
COMPARATIVE TOTAL RETURNS
CORESTAFF, INC. S&P 500 INDEX, PEER GROUP
(PERFORMANCE RESULTS FROM NOVEMBER 8, 1995 TO DECEMBER 31, 1996)
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------
11/08/95 12/95 12/96
-------- ----- -----
<S> <C> <C> <C>
CORESTAFF, INC. 100 215 313
PEER GROUP 100 104 124
S&P 500 100 104 128
</TABLE>
15
<PAGE> 19
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented at the 1998
Annual Meeting of Stockholders must be received by the Company for inclusion in
the proxy statement and form of proxy relating to the meeting not later than
December 2, 1997. It is suggested that proponents submit their proposals by
certified mail, return receipt requested. Detailed information for submitting
resolutions will be provided upon written request to the Secretary of the
Company, 4400 Post Oak Parkway, Suite 1130, Houston, Texas 77027, attention:
Peter T. Dameris, Esq. No stockholder proposals were received for inclusion in
this Proxy Statement.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
Copies of the Company's Annual Report to Stockholders or its Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, as filed with
the Securities and Exchange Commission, are available without charge to
stockholders upon written request to Investor Relations, CORESTAFF, Inc., 4400
Post Oak Parkway, Suite 1130, Houston, Texas 77027.
OTHER MATTERS
As of the date of this Proxy Statement, the management of the Company
has no knowledge of any business to be presented for consideration at the
Meeting other than that described above. If any other business should properly
come before the Meeting, it is intended that the shares represented by proxies
will be voted with respect thereto in accordance with the judgment of the
persons named in such proxies.
The cost of any solicitation of proxies by mail will be borne by the
Company. Arrangements may be made with brokerage firms and other custodians,
nominees and fiduciaries for the forwarding of material to and solicitation of
proxies from the beneficial owners of Common Stock held of record by such
persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out of pocket expenses incurred by them
in connection therewith. In addition, the Company has retained American Stock
Transfer & Trust Company to perform a proxy search to determine the beneficial
owners of the Common Stock as of the Record Date and will pay a fee to such
firm of approximately $125 plus reimbursement of expenses.
The information contained in this Proxy Statement in the sections
entitled "Report From the Compensation Committee Regarding Executive
Compensation" and "Comparative Stock Performance" shall not be deemed
incorporated by reference by any general statement incorporating by reference
any information contained in this Proxy Statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent
that the Company specifically incorporates by reference the information
contained in such sections, and shall not otherwise be deemed filed under the
Securities Act or the Exchange Act.
16
<PAGE> 20
FRONT OF PROXY
CORESTAFF, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Michael T. Willis, Edward L. Pierce and Peter
T. Dameris as Proxies, with the power of substitution, and authorizes them to
represent and to vote at the Annual Meeting of Stockholders to be held May 6,
1997, or any adjournment thereof, all the shares of common stock of CORESTAFF,
Inc. held of record by the undersigned on March 31, 1997, as designated below.
1. Election of directors - director nominees:
Nuala Beck, Charles R. Schneider and John T. Turner
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
except authority withheld as to the to vote for all nominees
persons named below, if any.
- -------------------------------------
2. To approve an amendment to the Certificate of Incorporation:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the 1995 Long-Term Incentive Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the appointment of Ernst & Young LLP as COREStaff's
independent auditors for the fiscal year ending December 31, 1997:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. The Proxies are authorized to vote in their best judgment upon such
other business as may properly be brought before the meeting or any
adjournment(s) thereof.
<PAGE> 21
BACK OF PROXY
This Proxy when properly executed, will be voted in the manner directed
by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR EACH OF THE PROPOSALS.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. If acting as attorney, executor, trustee, or
in any other representative capacity, sign name and title.
Dated , 1997
-------------------
-------------------------------
Signature
-------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
