<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. 1)
Filed by Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
REMEDYTEMP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
REMEDYTEMP, INC.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transactions
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions
applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(set forth the
amount on which the filing fee is calculated and state how it
was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
REMEDYTEMP, INC.
32122 Camino Capistrano
San Juan Capistrano, California 92675
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 19, 1997
To the Shareholders of REMEDYTEMP, INC.
The Annual Meeting of Shareholders of RemedyTemp, Inc., a California
corporation (the "Company"), will be held at Highland Hall, St. Margaret's
School, 31641 La Novia, San Juan Capistrano, California, on February 19, 1997,
at 9:00 a.m. for the following purposes:
1. To elect a board of seven directors to serve until the next annual
meeting of shareholders of the Company and until their successors are elected
and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on
January 6, 1997 as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. YOU ARE
URGED TO SIGN, DATE AND OTHERWISE COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
IF YOU ATTEND THE MEETING AND WISH TO DO SO, YOU MAY VOTE YOUR SHARES IN PERSON
EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.
By Order of the Board of Directors
/s/ ALAN M. PURDY
-----------------------------
Alan M. Purdy
Chief Financial Officer and Assistant Secretary
San Juan Capistrano, California
January 17, 1997
<PAGE> 3
REMEDYTEMP, INC.
32122 Camino Capistrano
San Juan Capistrano, California 92675
PROXY STATEMENT
1997 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of RemedyTemp, Inc., a
California corporation (the "Company"), for use at the Company's 1997 Annual
Meeting of Shareholders to be held on February 19, 1997 at 9:00 a.m. (the
"Meeting") and at any and all postponements and adjournments of the Meeting. The
Meeting will be held at Highland Hall, St. Margaret's School, 31641 La Novia,
San Juan Capistrano, California. This Proxy Statement and the accompanying form
of proxy will be first mailed to shareholders on or about January 21, 1997.
The cost of preparing, assembling and mailing the Notice of Annual
Meeting of Shareholders, Proxy Statement and form of proxy and the cost of
soliciting proxies will be paid by the Company. Proxies may be solicited in
person or by telephone, telegraph or cable by personnel of the Company who will
not receive any additional compensation for such solicitation. The Company will
pay brokers or other persons holding stock in their names or the names of their
nominees for the reasonable expenses of forwarding soliciting material to their
principals.
VOTING
The Board has fixed the close of business on January 6, 1997 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting. On that date, there were 5,830,100 shares of the Company's
Class A Common Stock ("Common Stock") outstanding. Each share of Common Stock is
entitled to one vote on any matter that may be presented for consideration and
action by the shareholders at the Meeting, except that each holder of Common
Stock entitled to vote upon the election of directors may cumulate votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which the shareholder's shares are
normally entitled, or distribute the shareholder's votes on the same principle
among as many candidates as the shareholder thinks fit. However, no shareholder
or proxy shall be entitled to cumulate votes unless such candidate or candidates
have been nominated prior to the voting and the shareholder has given notice at
the meeting, prior to voting, of the shareholder's intention to cumulate the
shareholder's votes. If any one shareholder gives such notice, all holders of
Common Stock may cumulate their votes for candidates in nomination. Holders of
the Company's Class B Common Stock are not entitled to any vote in the election
of directors or on matters submitted to a shareholder vote except as to certain
amendments to the Company's Articles of Incorporation, certain mergers and as
otherwise required by law.
The holders of a majority of the shares of Common Stock outstanding on
the record date and entitled to be voted at the Meeting, present in person or by
proxy, will constitute a quorum for the transaction of business at the Meeting
and any adjournments and postponements thereof. Abstentions and broker non-votes
are counted for the purpose of determining the presence or absence of a quorum
for the transaction of business, but have no legal effect on directors'
elections, which are determined by plurality.
Each proxy submitted by a shareholder will, unless otherwise directed
by the shareholder in the proxy, be voted for election of the seven director
nominees named herein. If a shareholder has submitted a proxy appropriately
directing how the shares represented thereby are to be voted, such shares will
be voted according to the shareholder's direction. Any shareholder has the power
to revoke his or her proxy at any time before it is voted at the Meeting by
submitting a written notice of revocation to the Secretary or Assistant
Secretary of the Company or by filing a duly executed proxy bearing a later
date. A proxy will not be voted if the shareholder who executed it is present at
the Meeting and elects to vote the shares represented thereby in person.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's
Class A and Class B Common Stock beneficially owned as of January 6, 1997 by
those known by the Company to be beneficial owners of more than five percent
(5%) of the outstanding shares of the Company's Class A or Class B Common Stock,
by each of the present directors, by each of the executive officers named in the
Summary Compensation Table on page 6, and by all directors and executive
officers of the Company as a group. On January 6, 1997, there were 5,830,100
shares of Class A Common Stock outstanding and 3,058,333 shares of Class B
Common Stock outstanding. Unless otherwise stated, and except for voting powers
held jointly with a person's spouse, the persons and entities named in the table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them. All information with respect to beneficial ownership
is based on filings made by the respective beneficial owners with the Securities
and Exchange Commission (the "Commission") or information provided to the
Company by such beneficial owners.
<TABLE>
<CAPTION>
Class B Common Stock:
Class A Common Stock: Amount and Nature of
Amount and Nature of Percent of Beneficial Percent of
Beneficial Owner Beneficial Ownership(1) Class (%) Ownership(1)(2) Class (%)
---------------- -------------------- ---------- --------------------- ----------
<S> <C> <C> <C> <C>
William D. Cvengros (3) 10,000 * -- --
James L. Doti (3) 10,000 * -- --
Robert E. McDonough, Sr. (4) 2,087,000 35.8 469,185 15.3
R. Emmett McDonough (4)(5) 99,660 1.7 1,074,678 35.1
Paul W. Mikos (4)(5)(6) 81,540 1.4 1,514,470 49.5
Jeffrey A. Elias -- * -- --
Alan M. Purdy 50 * -- --
Joseph J. Pulaski 1,500 * -- --
Susan M. Mikos (4)(5)(6) 81,540 1.4 1,514,470 49.5
John P. Unroe (7) 15,000 * -- --
John B. Zaepfel (7) 10,000 * -- --
All directors and executive officers as
a group (18 persons) 2,219,090 38.1 1,983,655 64.9
</TABLE>
- ---------------------------
* Less than 1%
(1) The information contained in this table reflects "beneficial ownership" as
defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended. Shares not outstanding that are subject to vested
options, or options that vest and become exercisable by the holder thereof
within 60 days of January 6, 1997 are deemed outstanding for the purposes
of calculating the number and percentage owned by such shareholder, but
not deemed outstanding for the purpose of calculating the percentage owned
by each other shareholder listed. Unless otherwise noted, all shares
listed as beneficially owned by a shareholder are actually outstanding.
(2) Holders of Class B Common Stock are not entitled to any vote on matters
submitted to a shareholder vote except as to certain amendments to the
Company's Articles of Incorporation, certain mergers and as otherwise
required by law. The Class B Common Stock automatically converts into
Class A Common Stock on a share-for-share basis upon the earliest to occur
of (i) a transfer to a non-affiliate of the holder thereof in a public
offering pursuant to an effective registration statement or Rule 144
promulgated under the Securities Act of 1933, as amended, (ii) the death
or legal incapacity of Robert E. McDonough, Sr., and (iii) the tenth
anniversary of the closing of the Company's initial public offering.
(3) 5,000 shares are issuable upon exercise of vested non-employee director
stock options. The remaining 5,000 shares are issuable upon exercise of
non-employee director stock options that vest on the date of the Meeting
if the director remains a director until then.
(4) Includes shares held by certain trusts established for the benefit of the
shareholder and/or the shareholder's family.
(5) Includes shares held as community property.
2
<PAGE> 5
(6) Paul W. Mikos and Susan McDonough Mikos have beneficial ownership of the
same shares.
(7) All shares are issuable upon exercise of vested non-employee director
stock options.
ELECTION OF DIRECTORS
Nominees for Election
The Company's directors are elected at each annual meeting of
shareholders. Currently, the number of authorized directors of the Company is
seven. At the Meeting, seven directors will be elected to serve until the next
annual meeting of shareholders and until their successors are elected and
qualified. The nominees receiving the greatest number of votes at the Meeting up
to the number of authorized directors will be elected.
The nominees for election as directors at the Meeting set forth in the
table below are all incumbent directors. Messrs. McDonough, Mikos, Unroe,
Zaepfel and Ms. Mikos were elected at the Company's 1996 annual meeting of
shareholders. Mr. Cvengros and Dr. Doti were elected by the Board on July 25,
1996 to fill vacancies. Each of the nominees has consented to serve as a
director if elected. Except to the extent that authority to vote for any
directors is withheld in a proxy, shares represented by proxies will be voted
FOR such nominees. In the event that any of the nominees for director should
before the Meeting become unable to serve if elected, shares represented by
proxies will be voted for such substitute nominees as may be recommended by the
Company's existing Board, unless other directions are given in the proxies. To
the best of the Company's knowledge, all the nominees will be available to
serve.
The following biographical information is furnished with respect to the
seven nominees for election at the Meeting as of January 6, 1997:
<TABLE>
<CAPTION>
Nominee Age Principal Occupation Director Since
- ------- --- -------------------- --------------
<S> <C> <C> <C>
William D. Cvengros 49 Chief Executive Officer and President of PIMCO 1996
Advisors L.P.
James L. Doti 50 President, Chapman University 1996
Robert E. McDonough, Sr. 74 Chairman of the Board of the Company 1978
Paul W. Mikos 52 Chief Executive Officer and President of the 1993
Company
Susan McDonough Mikos 49 Corporate Secretary of the Company 1992
John P. Unroe 50 Chief Executive Officer and President of 1993
Judicial Arbitration and Mediation
Services/Endispute
John B. Zaepfel 60 Private Investor 1995
</TABLE>
William D. Cvengros has served as a director of the Company since July
1996. Mr. Cvengros has been the Chief Executive Officer and President of PIMCO
Advisors L.P. and a member of its Equity and Operating Boards since November
1994. From February 1986 until November 1994, Mr. Cvengros served as both
Chairman of the Board and Director of Pacific Investment Management Company. Mr.
Cvengros is also a director of Furon Corporation.
James L. Doti, Ph.D. has served as a director of the Company since July
1996. Since July 1991, Dr. Doti has served as the President of Chapman
University. Dr. Doti has been a member of the Chapman University faculty since
1974 and is also a member of the Board of Directors of Fleetwood Enterprises,
Standard Pacific Corp. and First American Financial Corporation.
Robert E. McDonough, Sr. has served as Chairman of the Board since
August 1978. Mr. McDonough founded the Company in 1965 and has been continuously
involved in the management and long-term operation and planning of the Company
since that time. For 29 years, until May 1994, he served as the Company's Chief
Executive Officer. Mr. McDonough is the father of Susan McDonough Mikos and the
father-in-law of Paul W. Mikos.
3
<PAGE> 6
Paul W. Mikos has served in various positions in the Company since
1977, including as President since 1985. Mr. Mikos has served as Chief Executive
Officer of the Company since January 1996 and as a Director of the Company since
May 1993. From May 1994 until January 1996, he served as co-Chief Executive
Officer of the Company. Prior to joining the Company, Mr. Mikos worked for ARA
as a Regional Sales Director from August 1976 until October 1977. From July 1968
until August 1976, Mr. Mikos worked for IBM in sales management. Mr. Mikos is
the husband of Susan McDonough Mikos, the brother of Alice Bowers and the
son-in-law of Robert E. McDonough, Sr.
Susan McDonough Mikos has served as the Company's Corporate Secretary
since January 1996 and has been a Director of the Company since November 1992.
For the past five years, Ms. Mikos has been a homemaker. Ms. Mikos is the
daughter of Robert E. McDonough, Sr., and the wife of Paul W. Mikos.
John P. Unroe has been a director of the Company since January 1993.
Since August 1992, he has served as the President and Chief Executive Officer of
Judicial Arbitration and Mediation Services/Endispute, an alternative dispute
resolution company. From June 1988 to July 1992, Mr. Unroe was a Senior Vice
President with Adia Services, Inc., a temporary staffing company, where he was
responsible for its U.S. operations. From 1969 until 1988, Mr. Unroe worked for
Xerox Corporation in various positions including Vice President, West Coast
Region Manager.
John B. Zaepfel has been a director of the Company since June 1995.
From 1974 until 1985, Mr. Zaepfel was President and Chief Executive Officer of
Chartpak-Picket Industries, Inc., a wholly-owned subsidiary of The Times Mirror
Company. In 1985, Mr. Zaepfel founded CPG International, Inc., a graphics art
and engineering firm, and served as its President and Chief Executive Officer
from 1985 until its sale in 1989. Since 1989, Mr. Zaepfel has been a private
investor and a self-employed consultant. Mr. Zaepfel is Chairman of the Board of
Directors of Acordia of Southern California, Inc. and is also a director of
American Lock & Supply, Inc. and Pro-Dex, Inc.
Classified Board and Elimination of Cumulative Voting
The Amended and Restated Bylaws of the Company provide that when the
Company becomes a "listed corporation" within the meaning of the California
Corporations Code (i.e., has at least 800 holders of its equity securities as of
the record date of the Company's most recent annual meeting of shareholders),
cumulative voting rights will be eliminated and the Board will be divided into
three classes. The Company had more than 800 shareholders on January 6, 1997.
Accordingly, the power to cumulate votes will be eliminated and in connection
with the Company's 1998 annual meeting, the Board will be divided into three
classes, with directors initially elected for one, two, and three years,
respectively, and thereafter elected every three years for three-year terms.
Board Committees and Meetings
The Audit Committee of the Board currently consists of Dr. Doti, Mr.
Unroe, and Mr. Zaepfel. The Audit Committee meets with the Company's independent
accountants, makes recommendations to the Board concerning the acceptance of the
reports of such accountants and the accounting policies and procedures of the
Company, and reviews financial plans and operating results of the Company.
The Compensation Committee of the Board currently consists of Messrs.
Cvengros, Unroe and Zaepfel. The Compensation Committee advises the Board with
respect to the annual salary and incentive compensation the Company's executive
officers and its key employees. Additionally, the Compensation Committee
administers the Company's 1996 Stock Incentive Plan and 1996 Employee Stock
Purchase Plan.
The Executive Committee of the Board currently consists of Messrs.
McDonough, Unroe and Zaepfel. The Executive Committee reviews and evaluates the
performance of the Company's Chief Executive Officer and annually sets the Chief
Executive Officer's base salary and performance goals relating to cash bonuses.
The Executive Committee also advises the Board regarding strategic planning of
the Company.
The Nominating Committee of the Board currently consists of Dr. Doti
and Mr. Mikos. The Nominating Committee identifies, interviews and recommends to
the Board potential new board members.
4
<PAGE> 7
The Board acts as a committee of the whole with respect to nominations
for membership on the Board. The Board will consider nominees recommended by
shareholders. A shareholder desiring to make such a recommendation should submit
the name, address, telephone number, and qualifications of the proposed nominee
in writing to the Company's Secretary.
During the Company's fiscal year ended September 29, 1996, there were
12 meetings of the Board, one meeting of the Audit Committee, four meetings of
the Compensation Committee, and two meetings of the Executive Committee. While a
director, each current Board member attended 100% of the meetings of the Board.
DIRECTORS' COMPENSATION
Directors who are also employees of the Company receive no extra
compensation for their service on the Board. Non-employee directors receive an
annual retainer of $18,000, fees of $2,000 per Board meeting attended and $750
for each meeting of a committee of the Board. Additionally, non-employee
directors receive reimbursement for out-of-pocket expenses relating to Company
business.
Pursuant to the Company's 1996 Stock Incentive Plan (the "Incentive
Plan"), each non-employee director of the Company automatically receives, upon
becoming a director, a one-time grant of an option to purchase up to 10,000
shares of the Company's Common stock at an exercise price equal to the fair
market value of the Common Stock on the date of the option's grant. These
non-employee director options have a term of ten years and become exercisable
with respect to 50% of the underlying shares on the grant date and with respect
to an additional 50% of the underlying shares on the date of the next annual
meeting of shareholders of the Company following the grant date (or, if an
annual meeting of shareholders occurs within six months after the grant date,
then on the date of the second annual shareholders' meeting after the grant
date), if the recipient has remained a director since the grant date. In
addition to an initial grant, each non-employee director will also receive, upon
each re-election to the Company's board (or immediately following an annual
meeting at which the director is continuing without being re-elected due to the
classification of the board), an automatic grant of an option to purchase up to
5,000 additional shares of Common Stock. These additional options will vest and
become exercisable upon the earlier to occur of (i) the first anniversary of the
grant date, or (ii) immediately prior to the annual meeting of shareholders of
the Company next following the grant date, if the director has served as a
director from the grant date to such earlier date. All non-employee director
options will have a term of ten years and an exercise price equal to the fair
market value of a share of Common Stock on the date of grant. Vesting of
non-employee director options accelerates if the recipient of the option ceases
to be a director of the Company or its successor in connection with a change in
control.
Grants of non-employee directors' options under the Incentive Plan
count against the plan's limit of 900,000 shares of Common Stock. Shares
underlying non-employee director options that expire or are terminated or
canceled will again become available for further awards under the plan. In the
event that a recipient of non-employee director options ceases to be a director
of the Company, all such options granted to him will be exercisable, to the
extent they were exercisable at the date directorship ceased, for a period of
365 days or, if earlier, the expiration of the option according to its terms.
Vesting accelerates upon certain transactions including dissolution, merger and
change in control. The Incentive Plan provides that the exercise price may be
paid by Company loan or withholding of underlying stock, or deferred until
completion of broker-assisted exercise and sale transactions.
Upon the completion of the Company's initial public offering of Common
Stock, Mr. Unroe and Mr. Zaepfel were each awarded one-time grants of
non-employee directors options to purchase 15,000 and 10,000 shares of Common
Stock, respectively, pursuant to the Incentive Plan. Upon their election to the
Board, Mr. Cvengros and Dr. Doti were each awarded non-employee directors
options to purchase 10,000 shares of Common Stock pursuant to the Incentive
Plan.
5
<PAGE> 8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned for the last
three fiscal years by (i) each person who served as the Company's Chief
Executive Officer ("CEO") during the fiscal year ended September 29, 1996 and
(ii) the Company's four most highly compensated executive officers other than
the CEO who were serving as executive officers at the end of the fiscal year
ended September 29, 1996 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($)
- --------------------------- ---- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Paul W. Mikos (1)(2) 1996 390,000 390,000 23,872 108,449
President and 1995 300,700 175,000 -- 92,462
Chief Executive Officer 1994 299,720 75,000 -- *
Robert E. McDonough, Sr. (3) 1996 390,000 390,000 23,872 80,879
Chairman of the 1995 527,887 1,250,000 -- 70,127
Board of Directors 1994 326,923 -- -- 49,933
Alan M. Purdy 1996 162,966 100,000 23,872 *
Vice President and Chief 1995 163,302 60,000 -- *
Financial Officer 1994 87,754 50,000 -- *
Jeffrey A. Elias 1996 149,439 105,000 23,872 *
Vice President, Human Resources 1995 123,344 60,000 -- *
and Risk Management 1994 98,486 48,332 -- *
1996
Joseph J. Pulaski 1995 128,004 109,000 23,872 *
Vice President 1994 115,243 76,744 -- *
107,885 131,781 -- *
1996
R. Emmett McDonough (1)(4) 1995 96,169 150,000 -- 292,256
1994 300,391 175,000 -- 85,401
299,720 75,000 -- *
</TABLE>
- ---------------------------
* Less than 10% of salary plus bonus.
(1) Paul W. Mikos and R. Emmett McDonough served as co-CEOs during the fiscal
year ended September 29, 1996 and until January 1996, when R. Emmett
McDonough resigned as an officer and director of the Company. Mr. Mikos is
now the Company's sole CEO, and R. Emmett McDonough continues as a
consultant of the Company.
(2) 1996 other annual compensation represents $71,431 in life insurance
premiums paid by the Company and $37,018 in use of Company-owned vehicles.
1995 other annual compensation represents $68,631 in life insurance
premiums paid by the Company and $23,831 in use of Company-owned vehicles.
Insurance premiums cover life insurance policies with cash surrender values
owned by Mr. Mikos and death benefits payable to Mr. Mikos' beneficiaries.
6
<PAGE> 9
(3) 1996 other annual compensation represents $58,454 in life insurance
premiums paid by the Company and $22,425 in use of Company-owned vehicles.
1995 bonus represents a one-time special bonus following Robert E.
McDonough, Sr.'s retirement as CEO in consideration for approximately 30
years of service during which he was deemed by the Board to have been
undercompensated. 1995 other annual compensation represents $55,535 in
life insurance premiums paid by the Company and $14,592 in use of
Company-owned vehicles. 1994 other annual compensation represents $35,183
in life insurance premiums paid by the Company and $14,750 in use of
Company-owned vehicles. Insurance premiums cover life insurance policies
with cash surrender values owned by Mr. McDonough and death benefits
payable to Mr. McDonough's beneficiaries. Upon termination of certain of
the policies, a portion of the premiums paid is refundable to the Company.
(4) The Company entered into an employment and consulting agreement with R.
Emmett McDonough effective February 6, 1996. Pursuant to the terms of the
agreement, R. Emmett McDonough served as the Company's Vice Chairman -
Special Projects from February 1996 until August 1996. From August 1996
until August 1999, R. Emmett McDonough has agreed to serve as a consultant
to the Company. R. Emmett McDonough's entire 1996 salary represents
consideration for his services as co-CEO of the Company. The entire 1996
bonus is pursuant to the employment and consulting agreement for his
services as Vice Chairman - Special Projects. 1996 other annual
compensation represents $157,796 for services as Vice Chairman - Special
Projects, $40,385 for services as a consultant of the Company, $77,172 in
life insurance premiums paid by the Company, and $16,903 in use of
Company-owned vehicles. 1995 other annual compensation represents $57,318
in life insurance premiums paid by the Company, and $28,083 in use of
Company-owned vehicles. Insurance premiums cover life insurance policies
with cash surrender values owned by R. Emmett McDonough and death benefits
payable to R. Emmett McDonough's beneficiaries.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options
granted to the Named Executive Officers during the fiscal year ended September
29, 1996.
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Number % of Total Price Appreciation for
of Securities Options Option Term ($)(4)
Underlying Granted to Exercise --------------------------
Options Employees in Price Expiration
Name Granted (#)(1) Fiscal Year ($/share) (2) Date (3) 5% ($) 10% ($)
---- -------------- ----------- ------------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Mikos 23,872 6.5 $13.00 2006 195,273 494,628
R. Emmett McDonough -- -- -- -- -- --
Robert E. 23,872 6.5 $13.00 2006 195,273 494,628
McDonough, Sr.
Alan M. Purdy 23,872 6.5 $13.00 2006 195,273 494,628
Jeffrey A. Elias 23,872 6.5 $13.00 2006 195,273 494,628
Joseph J. Pulaski 23,872 6.5 $13.00 2006 195,273 494,628
</TABLE>
- ---------------------------
(1) All options were granted under the Company's Incentive Plan and are
generally exercisable with respect to 20% of the shares covered thereby
starting on the first anniversary of the grant date, and thereafter with
respect to an additional 20% of the shares covered thereby on each
successive anniversary date. The Incentive Plan is administered by the
Compensation Committee, which has broad discretion and authority to
construe and interpret the Incentive Plan and to modify outstanding
options.
(2) The exercise price and tax withholding obligations related to the exercise
may be paid by delivery of already owned shares or by offset of the
underlying shares, subject to certain conditions. The Incentive Plan
permits the Company to amend outstanding options, including to lower their
exercise price.
7
<PAGE> 10
(3) All of the options were granted for a term of ten years, subject to
earlier termination upon certain events related to termination of
employment or a change in control of the Company.
(4) The potential realizable values listed are based on an assumption that the
market price of the Company's Common Stock appreciates at the stated rate,
compounded annually, from the date of grant to the expiration date. The 5%
and 10% assumed rates of appreciation are determined by the rules of the
Commission and do not represent the Company's estimate of the future
market value of the Common Stock. Actual gains, if any, are dependent on
the future market price of the Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the number of shares acquired on
exercise of stock options and the aggregate gains realized on exercise during
the fiscal year ended September 29, 1996 by the Named Executive Officers. The
table also sets forth the number of shares covered by exercisable and
unexercisable options held by such executives on September 29, 1996, and the
aggregate gains that would have been realized had these options been exercised
on September 29, 1996, even though these options were not exercised, and the
unexercisable options could not have been exercised, on that date.
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options at Fiscal In-the-Money Options
on Value Year End (#) At Fiscal Year End ($)(1)
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Mikos -- -- -- 23,872 -- 161,136
R. Emmett McDonough -- -- -- -- -- --
Robert E. McDonough -- -- -- 23,872 -- 161,136
Alan M. Purdy -- -- -- 23,872 -- 161,136
Jeffrey A. Elias -- -- -- 23,872 -- 161,136
Joseph J. Pulaski -- -- -- 23,872 -- 161,136
</TABLE>
- ---------------------------
(1) These amounts represent the difference between the exercise price of the
in-the-money options and the market price of the Company's Common Stock on
September 29, 1996 (the last trading day of Fiscal 1996). The closing
price of the Company's Common Stock on that day on The Nasdaq National
Market was $19.75. Options are in-the-money if the market value of the
shares covered thereby is greater than the option exercise price.
EMPLOYMENT AND CONSULTING CONTRACTS
The Company has an employment agreement with Paul W. Mikos that expires
in April 1999, pursuant to which the Company employs Mr. Mikos as its CEO and
President. The agreement provides for a base salary of $390,000 per year and an
annual performance bonus of up to $390,000 based upon satisfaction of certain
performance goals set annually by the Executive Committee of the Board. Pursuant
to the employment agreement, if the Company terminates Mr. Mikos' employment as
the Company's CEO and President without cause (as defined in the employment
agreement), he shall be entitled to receive from the Company severance payments
consisting of $390,000 per year for two years, payable on a semi-monthly basis.
The Company has an amended and restated employment agreement with
Robert E. McDonough, Sr. that expires in December 4, 2001, pursuant to which the
Company employs Mr. Robert McDonough as Chairman of the Board. The agreement
provides for a base salary of $390,000 per year and such annual bonuses, not
less than $160,000 or more than $390,000 per year, based upon his performance
and the Company's satisfaction of certain performance goals set annually by the
Compensation Committee of the Board. Additionally, pursuant to the terms of the
amended and restated employment agreement, Mr. McDonough is entitled to annual
demand registration rights and certain "piggyback" registration rights in future
registrations by the Company of its securities.
8
<PAGE> 11
The Company entered into a consulting agreement with R. Emmett
McDonough effective February 6, 1996. Under the terms of the agreement, Mr.
Emmett McDonough will serve as a consultant to the Company until August 1999 and
will receive annual compensation of $350,000. During his tenure as a consultant
to the Company, Mr. Emmett McDonough shall be entitled to receive the same
employee benefits package that he received as Co-CEO of the Company prior to his
resignation. See "Certain Transactions."
The Company has employment agreements with Alan M. Purdy and Jeffrey A.
Elias providing for a severance payment of at least 12 months' salary and bonus
if employment with the Company is terminated within 24 months of certain changes
in ownership or management.
CERTAIN TRANSACTIONS
The Company leases its 13,185 square foot national headquarters
building in San Juan Capistrano, California from Robert E. McDonough, Sr., the
Company's Chairman. The cost of the leased space is $25,052 per month ($1.90 per
square foot per month). Management believes that the Company's lease with Mr.
McDonough contains terms that are at least as favorable as those terms that the
Company might have obtained for the lease of similar premises available from an
unaffiliated party at the time the lease was executed. On August 31, 1996, the
lease expired and on September 1, 1996 the lease term became month-to-month
until a new lease agreement is finalized.
In May 1995, the Company loaned $500,000 to Paul W. Mikos, the
Company's CEO and a member of the Company's Board at an interest rate of 6.62%
per annum. As of December 31, 1996, the total amount of indebtedness outstanding
on this loan was $250,000. The remaining amount of indebtedness is due and
payable by Mr. Mikos to the Company upon the earlier of (i) May 1, 1998 and (ii)
a transfer of shares of Common Stock in which Mr. Mikos receives cash
consideration of at least $200,000.
From April 1996 to December 1996, the Company advanced, in various
installments, $980,000 to Robert E. McDonough, Sr. and $294,129 to Paul W.
Mikos, representing portions of the anticipated distribution to them relating to
their income tax obligations in connection with the Company's undistributed S
corporation earnings from October 2, 1995 through July 9, 1996, the date
immediately preceding the date of termination of the Company's S corporation
status in connection with the consummation of the Company's initial public
offering. The advances are interest-free and become due and payable once such
distribution has been made. The Company intends to make such distribution in
April 1997.
In August 1993, the Company advanced an interest-free $60,000
management education scholarship to Meghan Mikos, an employee of the Company
from June 1992 to July 1995 and the daughter of Paul W. and Susan McDonough
Mikos. The entire amount of the scholarship remains outstanding and will be
forgiven if Ms. Mikos works for the Company for at least three years after
receipt of an M.B.A. degree.
9
<PAGE> 12
REPORT OF THE COMPENSATION COMMITTEE AND
EXECUTIVE COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board is composed of three
non-employee directors and is responsible for setting and administering the
policies governing annual compensation of the executive officers of the Company
other than the CEO, whose annual performance goals and compensation are set by
the Executive Committee of the Board. The Executive Committee set Mr. Mikos'
salary and stock option grant for fiscal 1996 by reference to market standards
and reflected the Executive Committee's favorable evaluation of his overall
leadership of the Company through its significant recent growth. The Executive
Committee considered, among other qualitative factors, Mr. Mikos' contributions
to the strategic management of the Company-owned and independently-managed
offices. Mr. Mikos' fiscal 1996 cash bonus was based primarily on quantitative
factors such as the Company's financial performance as well as the price of the
Company's Common Stock, as well as his role in the successful completion of the
Company's initial public offering.
In general, the Compensation Committee designed the Company's executive
compensation program to provide levels of base compensation that are competitive
with compensation paid to executives of similarly situated temporary staffing
companies to attract, retain and motivate high-quality employees, tie individual
total compensation to individual performance and the success of the Company, and
align the interests of the Company's executive officers with those of its
shareholders. The Compensation Committee strives to set a fair and competitive
base salary for each of its executive officers coupled with an incentive cash
bonus tied to annual performance-based personal and Company goals. In October
1996, the Compensation Committee granted bonuses to certain executive officers
based upon the executive's achievement of such individual performance goals and
Company goals. To ensure that the Compensation Committee achieves its goal of
setting competitive compensation levels, the Compensation Committee commissioned
a comprehensive compensation analysis by an independent consultant, which
concluded that the Company's executive base salaries were competitive with other
temporary services companies and industrial service organizations, and that
executive bonuses were competitive on a percentage basis to the levels
identified by surveys for other temporary services companies and industrial
service organizations.
Regarding compensation other than base salary and cash bonuses, the
Compensation Committee also administers the Company's Incentive Plan, pursuant
to which the Company may grant various stock-based awards intended to compensate
Company personnel and align the interests of recipients with those of the
Company's shareholders. To date, only stock options and performance grants have
been granted under the Incentive Plan, although the Compensation Committee may,
in the future, utilize other types of incentive awards available under the
Incentive Plan. It is the general practice of the Company to grant stock options
to executive officers when they join the Company. The Compensation Committee
believes that these initial grants give the recipients a meaningful stake in the
Company's long-term performance, with any ultimate realization of significant
value from those options being commensurate with returns available on
investments in the Company's Common Stock. In addition to initial grants, the
Compensation Committee has adopted a policy of providing additional long-term
incentives to the Company's executive officers primarily through periodic stock
option grants. The Compensation Committee believes that these incentives are
essential to the long-term success of the Company and align the interest of the
Company's officers with that of its shareholders. In awarding stock options to
executive officers, the Compensation Committee considers individual performance,
overall contribution to the Company and retention. Options are exercisable in
the future at the fair market value at the time of grant, so that an executive
officer granted an option is rewarded only by the appreciation in price of the
Company's stock. Such grants, if any, are generally determined by the
Compensation Committee in the latter part of each fiscal year with the input and
recommendation of the Company's CEO. In fiscal 1996, the Compensation Committee
awarded each executive officer stock options based upon each officer's
respective work performance, level of responsibility and initiative.
COMPENSATION COMMITTEE
William D. Cvengros, John P. Unroe and John B. Zaepfel
EXECUTIVE COMMITTEE
Robert E. McDonough, Sr., John P. Unroe and John B. Zaepfel
10
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board consists of Messrs. Cvengros,
Unroe and Zaepfel. No current member of the Compensation Committee is a current
or former officer or employee of the Company. There are no Compensation
Committee interlocks between the Company and other entities involving the
Company's executive officers and Board members who serve as executive officers
or Board members of such other entities.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock for the period from July 11, 1996 (the date on which
the Company's Common Stock was first publicly traded) and ending on December 31,
1996 with the Nasdaq Stock Market Composite Index and peer issuers in the
temporary staffing industry. The graph assumes that $100 was invested on July
11, 1996 in the Company's Common Stock and each index and that all dividends
were reinvested. No cash dividends have been declared on the Company's Common
Stock. Although the graph would normally cover a five-year period, the Company's
Common Stock has been publicly traded only since July 11, 1996, so the graph
commences as of that date. The comparisons in the graph are required by the
Commission and are not intended to forecast or be indicative of possible future
performance of the Company's Common Stock.
<TABLE>
<CAPTION>
DATE REMEDY-TEMP NASDAQ COMPOSITE STAFFING COMPOSITE
---- ----------- ---------------- ------------------
<S> <C> <C> <C>
07/10/96 $100.00 $100.00 $100.00
07/12/96 117.31 96.70 99.46
07/17/96 113.46 96.19 99.52
07/24/96 107.69 94.59 98.59
07/31/96 109.62 98.58 106.77
08/07/96 155.77 99.65 111.76
08/14/96 144.23 99.34 109.11
08/21/96 142.31 100.16 108.25
08/28/96 144.23 100.03 107.57
09/04/96 146.15 99.84 108.25
09/11/96 147.12 104.16 109.86
09/18/96 146.15 106.88 106.46
09/25/96 151.92 107.79 108.73
10/02/96 169.23 109.32 111.15
10/09/96 161.54 109.38 108.09
10/16/96 155.77 108.88 105.63
10/23/96 161.54 107.14 105.85
10/30/96 153.85 107.06 103.21
11/06/96 150.00 110.19 103.50
11/13/96 153.85 110.57 105.10
11/20/96 128.85 111.67 94.11
11/27/96 123.08 113.27 94.25
12/04/96 113.46 112.84 90.68
12/11/96 132.69 112.60 91.57
12/18/96 125.00 112.91 91.22
12/25/96 126.92 113.16 90.49
12/31/96 132.69 113.13 91.65
</TABLE>
(a) Includes the following companies: Accustaff, COREstaff, Interim Services,
Kelly Services, Manpower, Norrell, Olsten, On Assignment, RemedyTemp, Robert
Half International and Western Staff.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the directors and
officers of the Company and persons who own more than ten percent of the
Company's equity securities are required to report their initial ownership of
the Company's equity securities and any subsequent changes in that ownership to
the Commission and the Nasdaq National Market. Specific due dates for these
reports have been established, and the Company is required to disclose in this
Proxy Statement any late filings during the fiscal year ended September 29,
1996. To the Company's knowledge, based solely on its review of the copies of
such reports required to be furnished to the Company during the fiscal year
ended September 29, 1996, all of these reports were timely filed.
11
<PAGE> 14
SHAREHOLDER PROPOSALS
Shareholders who wish to include proposals for action at the Company's
1998 Annual Meeting of Shareholders in next year's proxy statement and proxy
card must cause their proposals to be received in writing by the Company at its
address set forth on the first page of this Proxy Statement no later than
September 19, 1997. Such proposals should be addressed to the Company's
Secretary, and may be included in next year's proxy statement if they comply
with certain rules and regulations promulgated by the Commission.
OTHER MATTERS
The Board does not know of any other matters that are to be presented
for action at the Meeting. Should any other matters come before the Meeting or
any adjournments and postponements thereof, the persons named in the enclosed
proxy will have the discretionary authority to vote all proxies received with
respect to such matters in accordance with their judgment.
INDEPENDENT ACCOUNTANTS
By selection of the Board, the firm of Price Waterhouse LLP has served
as the Company's independent accountants since 1989. The Board has again
selected Price Waterhouse LLP to serve as the Company's independent accountants
for the fiscal year ending September 30, 1997. One or more representatives of
Price Waterhouse LLP are expected to be present at the Meeting, will have an
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
ANNUAL REPORT
The Company's 1996 Annual Report to Shareholders has been mailed to
shareholders concurrently with this Proxy Statement, but such report is not
incorporated herein and is not deemed to be a part of this proxy solicitation
material.
San Juan Capistrano, California
January 17, 1997
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD
IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL, AND YOUR
COOPERATION WILL BE APPRECIATED.
12
<PAGE> 15
REVOCABLE PROXY
REMEDYTEMP, INC.
32122 CAMINO CAPISTRANO
SAN JUAN CAPISTRANO, CALIFORNIA 92675
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
REMEDYTEMP, INC.
The undersigned hereby appoints Paul W. Mikos and Alan M. Purdy, or either of
them, each with full power of substitution, as the lawful proxies of the
undersigned and hereby authorizes such persons to represent and to vote as
designated on the reverse of this proxy all shares of the Common Stock of
RemedyTemp, Inc. ("RemedyTemp") which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Shareholders of RemedyTemp to be
held on February 19, 1997 and at any adjournments or postponements thereof (the
"1997 Annual Meeting"). The matters referred to on this proxy are described in
the Proxy Statement for the Annual Meeting.
CONTINUED ON THE REVERSE AND TO BE SIGNED AND RETURNED.
<PAGE> 16
/ X / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR WITHHOLD
all nominees listed AUTHORITY
at right (except as indicated to vote for all
to the contrary below nominees listed below
1. ELECTION OF
DIRECTORS / / / /
NOMINEES: William D. Cvengros, James L. Doti, Robert E. McDonough, Sr., Paul
W. Mikos, Susan McDonough Mikos, John P. Unroe and John B. Zaepfel
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name here:
- -----------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
matters and to transact such other business as may properly come before the
1997 Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES NAMED ABOVE FOR DIRECTOR.
The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement for the 1997 Annual Meeting.
Please sign, date and promptly return this proxy card using the enclosed reply
envelope. Whether or not you plan to attend the 1997 Annual Meeting, you are
urged to execute, date and return this proxy, which may be revoked at any time
prior to its use.
DATE ______________________, 1997 SIGNATURE _______________________________
Signature of Shareholder
SIGNATURE _____________________________________ DATE __________________, 1997
If Held Jointly
Please sign your name exactly as it appears hereon. When shares are held by
joint tenants both should sign. If you receive more than one proxy card,
please sign, date and return all cards received. When signed as attorney,
executor, administrators, trustee or guardian, please sign as such and give
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
