<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:
[ ] 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 sec. 240.14a-11(c) or sec. 240.14a-12
ADMINISTAFF, 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ADMINISTAFF, INC.
A DELAWARE CORPORATION
19001 CRESCENT SPRINGS DRIVE
KINGWOOD, TEXAS 77339-3802
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1998
KINGWOOD, TEXAS
The Annual Meeting of the Stockholders of Administaff, Inc., a Delaware
corporation (the "Company"), will be held at the Company's Corporate
Headquarters, Centre II in the University Rooms, located at 29801 Loop 494,
Kingwood, Texas 77339, on May 5, 1998 at 10:00 a.m., Central Daylight Savings
Time, for the following purposes:
1.To elect three Class III directors to serve until the annual
stockholders' meeting in 2001 or until their successors have been elected
and qualified;
2.To ratify and approve the appointment of Ernst & Young LLP as the
Company's independent auditors for the 1998 fiscal year;
3.To act upon such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on March 6, 1998 are
entitled to notice of, and to vote at, the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING OF
STOCKHOLDERS REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT THE
MEETING, AND WISH TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
JOHN H. SPURGIN, II
Vice President of Legal,
General Counsel and Secretary
March 27, 1998
Kingwood, Texas
<PAGE> 3
ADMINISTAFF, INC.
A DELAWARE CORPORATION
19001 CRESCENT SPRINGS DRIVE
KINGWOOD, TEXAS 77339-3802
-------------------------
PROXY STATEMENT
-------------------------
The accompanying proxy is solicited by the Board of Directors of
Administaff, Inc., a Delaware corporation (the "Company"), for use at the 1998
Annual Meeting of Stockholders to be held on May 5, 1998, and at any
adjournments thereof. The Annual Meeting of Stockholders will be held at 10:00
a.m., Central Daylight Savings Time, at the Company's Corporate Headquarters,
Centre II in the University Rooms, located at 29801 Loop 494, Kingwood, Texas
77339. If the accompanying proxy is properly executed and returned, the shares
it represents will be voted at the meeting in accordance with the directions
noted thereon or, if no direction is indicated, will be voted in favor of the
proposals described in this Proxy Statement. In addition, the proxy confers
discretionary authority to the persons named in the proxy authorizing those
persons to vote, in their discretion, on any other matters properly presented at
the Annual Meeting of Stockholders. The Board of Directors is not currently
aware of any such other matters. Any stockholder giving a proxy has the power to
revoke it by oral or written notice to the Secretary of the Company at any time
before it is voted.
The expense of preparing, printing and mailing proxy materials to the
Company's stockholders will be borne by the Company. The Company has engaged
Corporate Investor Communications, Inc. to assist in the solicitation of proxies
from stockholders at a fee of approximately $3,000 plus reimbursement of
reasonable out-of-pocket expenses. In addition, proxies may be solicited
personally or by telephone by officers or employees of the Company, none of whom
will receive additional compensation. The Company will also reimburse brokerage
houses and other nominees for their reasonable expenses in forwarding proxy
materials to beneficial owners of Common Stock.
The approximate date on which this Proxy Statement and the accompanying
proxy card will first be sent to stockholders is March 27, 1998.
At the close of business on March 6, 1998, the record date for the
determination of stockholders of the Company entitled to receive notice of, and
to vote at, the 1998 Annual Meeting of Stockholders or any adjournments thereof,
13,906,321 shares of the Company's Common Stock, par value $0.01 per share (the
"Common Stock"), were outstanding. Each share of Common Stock is entitled to one
vote upon each of the matters to be voted on at the meeting. The presence, in
person or by proxy, of at least a majority of the outstanding shares of Common
Stock is required for a quorum. Abstentions are counted as "shares present" at
the meeting for purposes of determining the presence of a quorum, and thus will
be treated as votes against a particular proposal. Broker non-votes (which
result when a broker holding shares for a beneficial owner has not received
timely voting instructions on certain matters from such beneficial owner) are
not considered "shares present" with respect to any matter, and thus will not
affect the outcome of the voting on a particular proposal.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of February 25, 1998, certain information
with respect to the shares of Common Stock beneficially owned by (i) each person
known by the Company to own beneficially five percent or more of the Common
Stock, (ii) each director and director nominee of the Company, (iii) each of the
executive officers of the Company named below under "Election of
Directors -- Executive Compensation," and (iv) all directors, director nominees
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------------ ------------ --------
<S> <C> <C> <C>
Paul J. Sarvadi.......................................... 2,170,267 (2) 15.6%
Gerald M. McIntosh....................................... 1,546,436 (3) 11.2%
Scott C. Hensel.......................................... 682,800 (4) 4.9%
Richard G. Rawson........................................ 809,360 (5) 5.8%
Jack M. Fields, Jr....................................... 9,612 (6) *
Paul S. Lattanzio........................................ 2,612 (7) *
Linda Fayne Levinson..................................... 12,612 (8) *
Jerald L. Broussard...................................... 83,130 (9) *
Jay E. Mincks............................................ 11,741 (10) *
A. Steve Arizpe.......................................... 31,526 (11) *
Michael W. Brown......................................... 2,500 (12) *
Anne M. Busquet.......................................... 2,760,641 (13) 16.6%
American Express Travel Related Services Company, Inc.... 2,758,141 (14) 16.6%
Pyramid Ventures, Inc ("PVI")............................ 1,410,564 (15) 10.2%
Capital Group Companies, Inc. ........................... 1,096,800 (16) 7.9%
Robert Day............................................... 1,267,500 (17) 9.1%
Executive Officers and Directors as a group (12
persons)............................................... 8,123,237 48.6%
</TABLE>
- ---------------
* Represents less than 1%.
(1) Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the securities shown to be owned by such
stockholder. The address for each officer and director is Administaff,
Inc., 19001 Crescent Springs Drive, Kingwood, Texas 77339-3802 unless
otherwise noted.
(2) Includes 1,368,200 shares owned by Our Ship Limited Partnership, Ltd.,
588,000 shares owned by the Sarvadi Children's Partnership, Ltd., 213,967
shares owned by the Sarvadi Family Foundation, and 100 shares owned by Paul
J. Sarvadi and Vicki D. Sarvadi, JTWROS.
(3) Includes 956,132 shares held in trust by David W. Russell, Trustee of the
McIntosh Charitable Remainder Unitrust, 432,132 shares owned by Gerald M.
McIntosh, 100,000 shares owned by the G&B McIntosh Family Limited
Partnership, 45,000 shares owned by the McIntosh Foundation, 60,572 shares
owned by Gerald M. & Barbara McIntosh, Trustees FBO McIntosh Revocable
Trust, 100 shares owned by Jerry McIntosh & Bobbi McIntosh TNCOM and 2,500
options which will have vested within 60 days following the 1998 Annual
Stockholders' Meeting. Also reflects the effects of a sale to the Company
of 25,000 shares by each of Gerald M. McIntosh and David W. Russell,
Trustee of the McIntosh Charitable Remainder Unitrust in connection with
the transaction described in footnote (14) below.
(4) Includes 677,800 shares owned by the Hensel Family Limited Partnership and
5,000 options to purchase Common Stock which will have vested within 60
days following the 1998 Annual Stockholders' Meeting.
(5) Includes 369,049 shares owned by the RDKB Rawson LP, 354,251 shares owned
by the R&D Rawson LP, 84,710 shares owned by Richard G. Rawson, 25 shares
owned by Dawn M. Rawson (spouse), 25 shares owned by Richard G. Rawson as
Custodian for Kimberly Rawson UGMA, 25 shares owned
2
<PAGE> 5
by Richard G. Rawson as Custodian for Barbie Rawson UGMA, 1,200 options to
purchase Common Stock held by Richard G. Rawson and 75 options to purchase
Common Stock held by Dawn M. Rawson which will have vested within 60 days
following the 1998 Annual Stockholders' Meeting.
(6) Includes 2,000 shares owned by Jack Fields as Custodian for Jordan Fields
UGMA and 7,500 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(7) Includes 2,500 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(8) Includes 12,500 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(9) Includes 32,463 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(10) Includes 11,120 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(11) Includes 30,515 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(12) Represents 2,500 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(13) Includes 693,126 shares of Common Stock and 2,065,015 warrants to purchase
Common Stock owned by American Express Travel Related Services Company,
Inc. ("American Express"), an affiliate of American Express Relationship
Services, Inc. for which Mrs. Busquet serves as President. Mrs. Busquet was
elected a director of the Company by the Board of Directors at a meeting
held on March 10, 1998 and holds such position in accordance with the terms
of that certain Securities Purchase Agreement dated January 27, 1998 by and
between American Express and the Company described in footnote (14) below.
Also includes 2,500 options to purchase Common Stock which will have vested
within 60 days following the 1998 Annual Stockholders' Meeting.
(14) Reflects the purchase on March 10, 1998 of 693,126 shares of Common Stock
and 2,065,515 warrants to purchase Common Stock pursuant to that certain
Securities Purchase Agreement dated January 27, 1998, by and between
American Express and the Company. American Express' address is World
Financial Center, 200 Vesey Street, New York, NY 10285.
(15) Reflects the sale of 50,000 shares of Common Stock to the Company in
connection with the transaction described in footnote (14) above. The
address of PVI is 1 BT Plaza, 25th Floor, 130 Liberty Street, New York, NY
10006.
(16) The Capital Group Companies, Inc. is the parent holding company of a group
of investment management companies that provide investment advisory and
management services for their respective clients which include registered
investment companies and accounts. Capital Research and Management Company,
an investment advisor registered under Section 203 of the Investment
Advisors Act of 1940 and a wholly owned subsidiary of The Capital Group
Companies, Inc., is the beneficial owner of 1,096,800 shares, or 7.9% of
the Common Stock outstanding as a result of acting as investment advisor to
various investment companies registered under Section 8 of the Investment
Company Act of 1940. The Capital Group Companies, Inc.'s address is 333
South Hope Street, Los Angeles, CA 90071.
(17) Includes shares of Common Stock held by The TCW Group, Inc., of which Mr.
Day is deemed to be the beneficial owner. The TCW Group, Inc., through its
subsidiaries, holds an aggregate of 680,700 shares of Common Stock of the
Company. Also includes shares of Common Stock held by Oakmont Corporation
and Cypress International Partners Limited, both of which are investment
advisors registered under Section 203 of the Investment Advisors Act of
1940. Mr. Day's address is 200 Park Avenue, Suite 2200, New York, NY 10166.
3
<PAGE> 6
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
GENERAL
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors on the Board shall be fixed from time to time by the Board
of Directors but shall not be less than three nor more than 15 persons. The
Company's Board of Directors currently has nine members.
In accordance with the Certificate of Incorporation of the Company, the
members of the Board of Directors are divided into three classes and are elected
for a term of office expiring at the third succeeding annual stockholders'
meeting following their election to office or until a successor is duly elected
and qualified. The Certificate of Incorporation also provides that such classes
shall be as nearly equal in number as possible. The terms of office of the Class
I, Class II and Class III directors expire at the annual meeting of stockholders
in 1999, 2000 and 1998, respectively.
The term of office of each of the current Class III directors expires at
the time of the 1998 Annual Meeting of Stockholders, or as soon thereafter as
their successors are elected and qualified. Mr. Fields, Mr. Lattanzio and Mr.
Rawson have been nominated to serve an additional three-year term as Class III
directors. All of the nominees have consented to be named in this Proxy
Statement and to serve as a director if elected.
It is the intention of the person or persons named in the accompanying
proxy card to vote for the election of all three nominees named below unless a
stockholder has withheld such authority. The affirmative vote of holders of a
majority of the Common Stock present in person or by proxy at the 1998 Annual
Meeting of Stockholders and entitled to vote is required for election of the
nominees.
If, at the time of or prior to the 1998 Annual Meeting of Stockholders, any
of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy may be used to vote for a substitute or
substitutes designated by the Board of Directors. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required. No
proxy will be voted for a greater number of persons than the number of nominees
named herein.
NOMINEES -- CLASS III DIRECTORS (FOR TERMS EXPIRING AT THE 2001 ANNUAL MEETING)
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jack M. Fields, 46 Director
Jr.................
Paul S. Lattanzio.... 34 Director
Richard G. Rawson.... 49 Director, Executive Vice President of
Administration, Chief Financial Officer, and
Treasurer
</TABLE>
Jack M. Fields, Jr. Mr. Fields joined the Company as a director on January
3, 1997 following his retirement from the United States House of
Representatives, where he served for 16 years. During 1995 and 1996, Mr. Fields
served as Chairman of the House Telecommunications and Finance Subcommittee
which has jurisdiction and oversight of the Federal Communication Commission and
the Securities and Exchange Commission. Mr. Fields is Chief Executive Officer of
Texana Global, Inc. in Humble, Texas as well as Chief Executive Officer of 21st
Century Group in Washington, D.C. Mr. Fields earned a Bachelor of Arts degree in
1974 from Baylor University, and graduated from Baylor Law School in 1977.
Paul S. Lattanzio. Mr. Lattanzio, a director of the Company since 1995, is
a Senior Managing Director for NationsBanc Montgomery Securities LLC. Mr.
Lattanzio previously served in several positions with various affiliates of
Bankers Trust New York Corporation for over 13 years, most recently as Managing
Director of BT Capital Partners, Inc. Mr. Lattanzio has experience in a variety
of investment banking disciplines, including mergers and acquisitions, private
placements and restructuring advisory areas. Mr. Lattanzio received his Bachelor
of Science degree in Economics with honors from the University of Pennsylvania's
Wharton School of Business in 1984.
4
<PAGE> 7
Richard G. Rawson. Mr. Rawson, who serves as Executive Vice President of
Administration, Chief Financial Officer and Treasurer, has served as a director
of the Company since 1989. Prior to joining Administaff in 1989, Mr. Rawson
served as a Senior Financial Officer and Controller for several companies in the
manufacturing and seismic data processing industries. Mr. Rawson served as
Chairman of the Accounting Practices Committee of the National Association of
Professional Employer Organizations ("NAPEO") for five years and currently
serves as Second Vice President of NAPEO. He is also currently serving as a
member of its Accounting Practices Committee and the Executive Committee of its
Board of Directors. Mr. Rawson has a Bachelor of Business Administration degree
in Finance from the University of Houston.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF EACH OF THE ABOVE-NAMED NOMINEES, AND PROXIES EXECUTED AND RETURNED WILL BE
SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
DIRECTORS REMAINING IN OFFICE
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION CLASS
---- --- -------- --------
<S> <C> <C> <C>
Paul J. Sarvadi........ 41 Director, President and Chief Executive Officer II
Gerald M. McIntosh..... 57 Director II
Anne M. Busquet........ 48 Director II
Scott C. Hensel........ 52 Director I
Linda Fayne Levinson... 55 Director I
Michael W. Brown....... 52 Director I
</TABLE>
Paul J. Sarvadi. Mr. Sarvadi is President, Chief Executive Officer and
co-founder of the Company and has been a director since its inception. He
attended Rice University and the University of Houston prior to starting and
operating several small companies. Mr. Sarvadi has served as President of NAPEO
and was a member of its Board of Directors for five years. Mr. Sarvadi also
served as President of the Texas Chapter of NAPEO ("TC-NAPEO") for three of the
first four years of its existence. In 1995, he was selected as Houston's
Entrepreneur of the Year for service industries.
Gerald M. McIntosh. Mr. McIntosh is a co-founder of the Company and, until
his retirement in December 1997, served as Senior Vice President of Research and
Development. He has also served as a director since the Company's inception.
Prior to founding the Company, he was founder and President of Kingwood Trails,
Inc., a planned community maintenance company and ISSCO Trading Company, an
import/export firm. Mr. McIntosh has a Bachelor of Science degree from La Sierra
University and a Master of Science degree in Public Administration from the
University of Southern California.
Anne M. Busquet. Mrs. Busquet, a director of the Company since March 1998,
has served as President of American Express Relationship Services since October
1995. She also is a member of the American Express Planning and Policy
Committee. Since joining American Express in 1978, Mrs. Busquet has held several
senior management positions. Before joining American Express, she served as
operations analyst for Hilton International and Holiday Inn. Mrs. Busquet is a
member of the Board of Trustees for Teach for America, Rheedlen Centers for
Children and Families and the Cornell University Trustees Council. She also
serves on the Board of Directors for PersonaLogic, InfoBeat and Epsilon. Mrs.
Busquet holds a B.S. degree from Cornell University and an M.B.A. from the
Columbia Graduate School of Business.
Scott C. Hensel. Mr. Hensel, a director of the Company since 1987, served
as Senior Vice President of Benefits Administration of the Company until his
retirement in 1997. Prior to joining the Company in 1987, he spent 14 years with
Exxon U.S.A. and subsequently served as Vice President of Technology & Business
Consultants, a computer consulting firm. Mr. Hensel has a Bachelor of Science
degree and Bachelor of Arts degree with a minor in Political Science from Brown
University and a Master of Business Administration degree in Management from
Fairleigh-Dickenson University.
Linda Fayne Levinson. Ms. Levinson, a director of the Company since April
1996, has served as a principal of Global Retail Partners, L.P. since April
1997. From 1994 to 1997, she served as President of
5
<PAGE> 8
Fayne Levinson & Associates, an independent consulting firm located in Santa
Monica, California that advises both major corporations and start-up
entrepreneurial ventures. Prior to starting Fayne Levinson & Associates, Ms.
Levinson served as an executive with Creative Artists Agency, Inc. in 1993, a
partner of Wings Partners, Inc., a merchant banking firm from 1989 to 1992,
Senior Vice President for American Express Travel Related Services Company, Inc.
from 1984 to 1987, and as a partner of the consulting firm of McKinsey and Co.
from 1979 to 1981. Ms. Levinson holds a Bachelor of Arts degree in Russian
Studies from Barnard College, a Master of Business Administration degree from
New York University School of Business and a Master of Arts degree in Russian
Literature from Harvard University. Ms. Levinson also currently serves as a
director for Genentech, Inc., Jacobs Engineering Group, Inc. and NCR, Inc.
Michael W. Brown joined the Company as a director on November 5, 1997. Mr.
Brown is currently serving as the Chairman of the Nasdaq Stock Market Board of
Governors. Mr. Brown joined Microsoft Corporation in 1989 as its Treasurer and
became its Chief Financial Officer in 1993, in which capacity he served until
his retirement in July 1997. Prior to joining Microsoft, he spent 18 years with
Deloitte & Touche LLP. Mr. Brown is also a director of Wang Laboratories Inc.,
Kurzweil Educational Systems, Inc. and Citrix Systems, Inc., a trustee of the
Financial Executives Research Foundation, and is a member of the Center for
Strategic and International Studies, the Financial Executives Institute, the
American Institute of Certified Public Accountants, and the University of
Washington School of Business Advisory Board.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has appointed three committees: a Finance, Risk
Management and Audit Committee, a Compensation Committee and a Nominating
Committee. The Finance, Risk Management and Audit Committee was formed as a
successor to the Audit Committee. The members of the Finance, Risk Management
and Audit Committee are Mr. Brown, Ms. Levinson, Mr. Lattanzio and Mr. Hensel.
The Finance, Risk Management and Audit Committee oversees the financial affairs
of the Company, reviews the Company's policies and procedures with respect to
risk management, reviews the scope and results of the annual audit of the
Company's consolidated financial statements conducted by the Company's
independent accountants, reviews the scope of other services provided by the
Company's independent accountants, reviews proposed changes in the Company's
financial and accounting standards and principles and the Company's policies and
procedures with respect to its internal accounting, auditing and financial
controls and makes recommendations to the Board of Directors on the engagement
of the independent accountants, as well as other matters which may come before
it as directed by the Board of Directors. The members of the Compensation
Committee are Ms. Levinson, Mr. Lattanzio and Mr. Fields. The Compensation
Committee administers the Company's compensation programs and performs such
other duties as may from time to time be determined by the Board of Directors.
The members of the Nominating Committee are Mr. Sarvadi, Ms. Levinson and Mr.
McIntosh. The Nominating Committee considers and makes recommendations to the
Board of Directors regarding persons to be nominated by the Board of Directors
for election as directors.
INFORMATION REGARDING MEETINGS
During 1997, the Audit Committee (now known as the Finance, Risk Management
and Audit Committee) had four meetings, the Compensation Committee had five
meetings, the Nominating Committee had two meetings and the Board of Directors
had 10 meetings. Each director attended more than 75% of the meetings of the
Board and committees of which they were members during the fiscal year ended
December 31, 1997.
DIRECTOR COMPENSATION
Directors of the Company who are not employees of the Company are paid (i)
an annual retainer of $10,000, (ii) $2,500 for each Board of Directors meeting
attended, (iii) an annual fee of $1,000 payable for each committee of the Board
(if any) of which such person is the Chairperson and (iv) reasonable expenses
incurred in serving as a director. The annual compensation can be taken in cash
or Common Stock, at the director's option. In addition, pursuant to the
Company's Incentive Plan, each such director automatically receives on the date
such person first becomes a director, a grant of non-qualified options to
purchase 7,500
6
<PAGE> 9
shares of Common Stock, which will vest one-third on each anniversary of the
date of grant. In addition, following each annual meeting of the Company's
Stockholders, each outside director who was not initially elected at such
meeting, will receive an annual grant of options to purchase an additional 2,500
shares of Common Stock, all of which are fully vested on the date of grant. The
exercise price of all such options is the fair market value at the time the
options are granted. Ms. Levinson has been granted options to purchase a total
of 12,500 shares, Mr. Fields has been granted options to purchase a total of
10,000 shares, Mr. Brown has been granted options to purchase a total of 7,500
shares, Mr. Hensel has been granted options to purchase a total of 2,500 shares
and Mrs. Busquet has been granted options to purchase a total of 7,500 shares of
Common Stock under such arrangement. In addition, Mr. Lattanzio, Mr. Fields and
Ms. Levinson have each elected to and have received 112 shares of Common Stock
in lieu of a portion of the cash compensation due for their service as directors
in 1997.
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding aggregate cash
compensation, stock option and restricted stock awards and other compensation
earned by the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company (collectively the "Named
Executive Officers") for services rendered in all capacities to the Company
during 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION TOTAL
------------ UNEXERCISED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
--------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Paul J. Sarvadi, President and Chief 1997 $239,292 -- -- $1,020
Executive Officer 1996 $206,674 -- -- $ 660
1995 $198,600 $ 36,000 -- $ 922
Richard G. Rawson, Executive Vice 1997 $226,400 $103,911 14,000 $1,740
President of Administration, Chief 1996 $206,753 $ 88,351 -- $1,740
Financial Officer and Treasurer 1995 $198,600 $ 71,000 -- $2,139
A. Steve Arizpe, Executive Vice 1997 $203,517 $ 24,452 14,000 --
President of Client Services 1996 $176,393 -- -- --
1995 $143,587 $ 12,227 43,486 --
Jay E. Mincks, Vice President of Sales 1997 $171,592 $ 11,823 23,000 --
and Marketing 1996 $154,371 $ 11,864 -- --
1995 $122,039 $ 13,767 17,568 --
Jerald L. Broussard, Senior Vice 1997 $180,214 $ 34,217 8,000 --
President of Business Development 1996 $153,691 $ 13,722 -- --
1995 $156,727 $ 15,628 47,266 --
</TABLE>
- ---------------
(1) Represents the Company's payments with respect to life insurance policies
benefitting the named executive. Excludes perquisites and other personal
benefits because such compensation did not exceed the lesser of $50,000 or
10% of the total annual salary reported for each executive officer.
7
<PAGE> 10
STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS/ ANNUAL RATES OF STOCK
NUMBER OF SARS GRANTED PRICE APPRECIATION
SECURITIES TO EMPLOYEES EXERCISE OR FOR OPTION TERM
UNDERLYING OPTIONS/ IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME SARS GRANTED YEAR ($/SH) DATE 5%($) 10%($)
---- -------------------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Rawson..... 6,000 1.6% $18.37 5/28/2007 $ 69,317 $175,662
8,000 2.2% 23.00 11/18/2007 115,717 293,249
A. Steve Arizpe....... 6,000 1.6% 18.37 5/28/2007 69,317 175,662
8,000 2.2% 23.00 11/18/2007 115,717 293,249
Jay E. Mincks......... 3,000 0.8% 18.37 5/28/2007 34,658 87,831
20,000 5.4% 23.00 11/18/2007 289,292 733,122
Jerald L. Broussard... 3,000 0.8% 18.37 5/28/2007 34,658 87,831
5,000 1.4% 23.00 11/18/2007 72,323 183,280
</TABLE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
---- ----------- -------- --------------- ----------------
<S> <C> <C> <C> <C>
Richard G. Rawson........................... -- -- 0/ $0/
14,000 $68,030
A. Steve Arizpe............................. -- -- 29,314/ $511,763/
28,172 $243,409
Jerald L. Broussard......................... -- -- 31,862/ $556,247/
23,404 $227,515
Jay E. Mincks............................... 1,250 $20,625 9,270/ $149,006/
30,048 $167,234
</TABLE>
- ---------------
(1) Represents the difference between the closing price of the Company's Common
Stock on December 31, 1997 and the exercise price of the options.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors of the Company
consists of Ms. Levinson, Mr. Lattanzio and Mr. Fields, none of whom are
officers or employees of the Company. This committee is responsible for
evaluating the performance of and determining the compensation for, certain
executive officers of the Company. The Compensation Committee has furnished the
following report on executive compensation for 1997.
The Company has developed a compensation policy which is designed to
attract and retain key executives responsible for the success of the Company and
motivate management to enhance long-term stockholder value. The annual
compensation package of executive officers has included, and may in the future
include, some or all of the following components: (i) a cash salary which
reflects the responsibilities relating to the position and individual
performance, (ii) variable performance awards payable in cash or, in certain
situations, in phantom shares, performance units, or bonus stock, and tied to
the individual's or the Company's
8
<PAGE> 11
achievement of certain goals or milestones, (iii) other stock-based awards, and
(iv) stock options which align the interests of the executive officers with
those of the Company's stockholders.
In determining the level of compensation for each of the Company's
executive officers, the Compensation Committee takes into account various
qualitative and quantitative indicators of corporate and individual performance.
Although no specific target has been established, the Compensation Committee
generally seeks to set salaries at the median to high end of the range in
comparison to peer group companies. In setting such salaries, the Compensation
Committee considers its peer group to be certain companies in the service
industry with similar revenue as the Company. In addition, in evaluating the
performance of management, the Compensation Committee also takes into
consideration such factors as revenue growth, acquisitions, achievement of
expansion goals and profitability. The Compensation Committee also recognizes
performance and achievements that are more difficult to quantify, such as the
successful supervision of major corporate projects, demonstrated leadership
ability, and contributions to the industry and the community.
Base compensation is established by the Compensation Committee of the Board
of Directors and reviewed annually. When establishing or reviewing base
compensation levels for each executive officer, the Committee, in accordance
with its general compensation policy, considers numerous factors, including the
responsibilities relating to the position, the qualifications of the executive,
the relative experience the individual brings to the Company, strategic goals
for which the executive has responsibility and compensation levels of comparable
companies. No predetermined weights are given to any one of such factors. The
salaries for each of the executive officers in 1997, including the President and
Chief Executive Officer, were determined based upon the foregoing factors.
In addition to each executive officer's base compensation, the Compensation
Committee may award cash bonuses and/or grant awards under the Company's
Incentive Plan to chosen executive officers depending on the extent to which
certain personal and corporate performance goals are achieved. Such goals are
the same as those discussed above.
Since the Company has not yet exceeded the $1,000,000 compensation
threshold, the Compensation Committee has not yet adopted a policy with respect
to the limitation under the Federal Tax Code that generally limits the Company's
ability to deduct compensation in excess of $1,000,000 to a particular executive
officer in any year. The Compensation Committee, in consultation with the Board
of Directors, will adopt such a policy if the Company exceeds such amount.
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The foregoing report is given by the following members of the Compensation
Committee of the Board of Directors:
Linda Fayne Levinson
Paul S. Lattanzio
Jack M. Fields, Jr.
9
<PAGE> 12
PERFORMANCE GRAPH
Comparison of Eleven-Month Cumulative Total Return for the Company, S&P 500
Stock Index and a peer group index.
COMPARISON OF 11 MONTH CUMULATIVE TOTAL RETURN*
AMONG ADMINISTAFF, INC., THE S&P 500 INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ADMINISTAFF PEER GROUP S&P 500
<S> <C> <C> <C>
2/03/97 100 100 100
12/31/97 152 46 125
</TABLE>
* $100 INVESTED ON 2/03/97 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
The above graph compares the eleven-month cumulative total return on the
Company's Common Stock with the cumulative total return of the Standard & Poor's
500 Stock Index and an industry peer group index for the period from February 3,
1997 to December 31, 1997 (assuming reinvestment of any dividends and an
investment of $100 in each on February 3, 1997.) The peer group consists of
Vincam, Inc., Employee Solutions, Inc., Team America Corporation and Digital
Solutions, Inc., each of which provides professional employer services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, no executive officer of the Company served as (i) a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company, or (ii) a director of another entity, one of
whose executive officers served on the Board of Directors of the Company or its
subsidiaries.
During fiscal 1997, no member of the Compensation Committee (or board
committee performing equivalent functions) (i) was an officer or employee of the
Company, (ii) was formerly an officer of the Company or (iii) had any business
relationship or conducted any transactions with the Company, other than the
relationships disclosed under "Certain Relationships and Other Transactions."
10
<PAGE> 13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of the
Common Stock, to file initial reports of ownership and reports of changes in
ownership (Forms 3, 4, and 5) of Common Stock with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange. Officers, directors and
greater than 10% stockholders are required by SEC regulation to furnish the
Company with copies of all such forms that they file.
Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that all filing requirements with respect to fiscal year 1997
applicable to its officers, directors and greater than 10% beneficial owners
were complied with except that the following persons or entities each filed one
late report (with the number of transactions reported late indicated in
parenthesis): James W. Hammond (2); The Hammond Family Foundation (1); Scott C.
Hensel (1); Gerald M. McIntosh (1); Pyramid Ventures, Inc. (2); the Board of
Trustees of the Texas Growth Fund as Trustee for the Texas Growth Fund -- 1991
Trust, Stephen M. Soileau and TGF Management Corp. (joint filing) (3); Richard
G. Rawson (1) and William E. Lange (18).
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
In June 1995, Richard G. Rawson, Executive Vice President of
Administration, Chief Financial Officer, Treasurer and a director of the
Company, exercised options to purchase 448,667 shares of Common Stock at a price
of $0.75 per share. The purchase price was paid in cash by Mr. Rawson. In
connection with the exercise of the options, the Company entered into a loan
agreement with Mr. Rawson in the amount of approximately $694,000, whereby the
Company paid certain federal income tax withholding requirements related to the
stock option exercise. The loan agreement called for an additional amount to be
advanced to Mr. Rawson in the event the ultimate tax liability resulting from
the exercise exceeded the statutory withholding requirements. In April 1996, an
additional $300,000 was loaned to Mr. Rawson pursuant to this provision of the
agreement. Mr. Rawson, his wife and a family limited partnership of which Mr.
Rawson is the general partner are obligors of such loans. The loans are
repayable in five years, accrue interest at 6.83% and are secured by 388,415
shares of Common Stock owned by the obligors.
In September 1995, Jerald L. Broussard, Senior Vice President of Business
Development, exercised options to purchase 40,000 shares of Common Stock at a
price of $1.50 per share. The purchase price was paid in cash by Mr. Broussard.
In connection with the exercise of the options, the Company entered into a loan
agreement with Mr. Broussard whereby the Company paid certain federal income tax
withholding requirements related to the stock option exercise on behalf of Mr.
Broussard in the amount of $141,000. The loan agreement called for an additional
amount to be advanced to Mr. Broussard in the event the ultimate tax liability
resulting from the exercise exceeded the statutory withholding requirements. In
June 1997, the Company loaned Mr. Broussard an additional $46,000 pursuant to
this provision of the agreement. The loans are repayable in five years, accrue
interest at 6.83% for the 1995 loan and 6.60% for the 1997 loan, and are secured
by 40,000 shares of the Company's Common Stock.
In January 1997, the Company entered into an employment agreement with John
H. Spurgin, II, pursuant to which the Company agreed to employ Mr. Spurgin on
the terms set forth therein as the Company's Vice President of Legal and General
Counsel. During 1997, the Company paid $293,151 in legal fees to McGinnis,
Lochridge & Kilgore, L.L.P. ("McGinnis Lochridge"), a law firm in which Mr.
Spurgin served as a partner. Mr. Spurgin resigned from McGinnis Lochridge
effective January 31, 1997.
BT Securities Inc., an affiliate of PVI, participated in the underwriting
syndicate for the public offering of Common Stock in January 1997 and received
customary compensation in connection with such participation. In addition,
180,293 of the shares of Common Stock owned by PVI were purchased by the
underwriters to cover over-allotments.
In February 1997, the Company utilized a portion of the proceeds from its
initial public offering to (i) repay $4.0 million in subordinated notes to The
Texas Growth Fund, (ii) repurchase 348,945 shares of
11
<PAGE> 14
Common Stock from PVI for an aggregate exercise price of approximately $2.0
million, and (iii) repurchase 173,609 warrants to purchase shares of Common
Stock from the Texas Growth Fund for an aggregate exercise price of
approximately $0.5 million.
In February 1998, the Company entered into agreements to purchase 50,000
shares of Common Stock from PVI, 25,000 shares of Common Stock from Gerald M.
McIntosh, 25,000 shares of Common Stock from David W. Russell, Trustee of the
McIntosh Charitable Remainder Unitrust, 30,000 shares of Common Stock from Solar
Vineyard Limited, 15,000 shares of Common Stock from The Hammond 1994 Family
Limited Partnership and 5,000 shares of Common Stock from The Hammond Family
Foundation in connection with the consummation of the Securities Purchase
Agreement between the Company and American Express. The purchase price paid to
such shareholders was $21.00 per share.
PROPOSAL NUMBER 2:
APPROVAL OF AUDITORS
GENERAL
The Board of Directors has appointed the firm of Ernst & Young LLP as the
Company's independent public accountants for the fiscal year ending December 31,
1998, subject to ratification by the Company's stockholders. Ernst & Young LLP
has served as the Company's independent public accountants since 1991.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting of Stockholders and will have an opportunity to make a statement, if
they desire to do so, and to respond to appropriate questions from those
attending the meeting.
REQUIRED AFFIRMATIVE VOTE
The affirmative vote of holders of a majority of the shares of Common Stock
entitled to vote in person or by proxy at the 1998 Annual Meeting of
Stockholders is required to ratify the appointment of Ernst & Young LLP as the
Company's independent public accountants for fiscal 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF ERNST & YOUNG LLP'S APPOINTMENT, AND PROXIES EXECUTED AND RETURNED WILL BE SO
VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
PROPOSALS OF STOCKHOLDERS
Any proposal of a stockholder intended to be presented at the 1999 Annual
Meeting must be received at the Company's principal executive offices no later
than the close of business on November 27, 1998.
12
<PAGE> 15
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997, INCLUDING ANY FINANCIAL STATEMENTS AND SCHEDULES AND EXHIBITS
THERETO, MAY BE OBTAINED WITHOUT CHARGE BY WRITTEN REQUEST TO RUTH HOLUB,
INVESTOR RELATIONS ADMINISTRATOR, ADMINISTAFF, INC., 19001 CRESCENT SPRINGS
DRIVE, KINGWOOD, TEXAS 77339-3802.
By Order of the Board of Directors
/s/ JOHN H. SPURGIN, II
John H. Spurgin, II
Vice President of Legal,
General Counsel and Secretary
March 27, 1998
Kingwood, Texas
13
<PAGE> 16
PROXY ADMINISTAFF, INC. PROXY
Proxy Solicited on Behalf of The Board of Directors
For the Annual Meeting of Stockholders - May 5, 1998
The undersigned hereby appoints PAUL J. SARVADI and JOHN H. SPURGIN, II,
and each or either of them, lawful attorneys and proxies of the undersigned,
each acting alone with full power of substitution, for and in the name, place
and stead of the undersigned, to attend the annual meeting of stockholders of
Administaff, Inc., to be held at the Company's Corporate Headquarters, Centre
II in the University Rooms, located at 29801 Loop 494, Kingwood, Texas on the
5th day of May, 1998 at 10:00 a.m., Central Daylight Savings Time, and any
adjournment(s) thereof, with all powers the undersigned would possess if
personally present and to vote thereat, as provided below, the number of shares
the undersigned would be entitled to vote if personally present. Every
properly signed proxy will be voted in accordance with the specification made
thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1
AND 2. All prior proxies are hereby revoked. This Proxy will also be voted in
accordance with the discretion of the proxies or proxy on any other business.
1. To elect three directors of the Company each to serve until the Company's
Annual Meeting of Stockholders in 2001, or until their respective
successors have been duly elected and qualified:
FOR ALL [ ] AGAINST ALL [ ] FOR ALL EXCEPT [ ]
Nominees: R. Rawson, P. Lattanzio, J. Fields, Jr. Except for
nominee(s)________________________________________________________
2. To approve the appointment of Ernst & Young LLP as the Company's
independent auditors for the year 1998:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To act upon such other business as may properly come before the meeting or
any adjournments thereof.
(TO BE DATED AND SIGNED ON REVERSE SIDE)
<PAGE> 17
Only stockholders of record at the close of business of March 6, 1998 will
be entitled to notice of and to vote at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting
regardless of whether you plan to attend. THEREFORE, PLEASE MARK, DATE AND
SIGN THIS PROXY AND RETURN IT IN THE ACCOMPANYING POSTPAID ENVELOPE AS PROMPTLY
AS POSSIBLE. If you are present at the Annual Meeting, and wish to do so, you
may revoke the Proxy and vote in person.
The undersigned acknowledges receipt of the Notice
of Annual Meeting of Stockholders and of the Proxy
Statement.
Dated:_____________________________, 1998
Signature(s) _____________________________
_______________________________________
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. JOINT
OWNERS SHOULD EACH SIGN PERSONALLY. WHERE
APPLICABLE, INDICATE YOUR OFFICIAL POSITION OR
REPRESENTATION CAPACITY.
