<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Section 240.14a-11(c) or Section
240.15a-12
STAFFMARK, 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.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] 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 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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with written 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
STAFFMARK, INC.
302 EAST MILLSAP ROAD
FAYETTEVILLE, ARKANSAS 72703
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 1998
To the Stockholders:
Notice is hereby given that the annual meeting of stockholders (the
"Annual Meeting") of StaffMark, Inc. ("StaffMark" or the "Company") will be held
at the Northwest Arkansas Convention Center, 1500 South 48th, Springdale,
Arkansas on the 8th day of May, 1998, at 10:00 a.m., Central Standard Time, for
the following purposes:
1. To elect ten directors to serve terms scheduled to end in
conjunction with the next annual meeting of stockholders or
until their successors are elected and qualify;
2. To consider and act upon a proposal of the Board of Directors
of the Company to approve and adopt the amendment to the
Company's Certificate of Incorporation, as amended, to
increase the number of authorized shares of common stock from
26,000,000 to 200,000,000 and the number of authorized shares
of preferred stock from 1,000,000 to 10,000,000;
3. To ratify and approve the Company's Amended and Restated 1996
Stock Option Plan; and
4. To transact such other business as may properly come before
the meeting or any adjournments thereof.
All stockholders are cordially invited to attend the Annual Meeting;
however, only stockholders of record as of the close of business on March 16,
1998 are entitled to receive notice of and to vote at the Annual Meeting.
The Company's Proxy Statement and Annual Report are submitted herewith.
By Order of the Board of Directors
TERRY C. BELLORA
Secretary
Fayetteville, Arkansas
March 25, 1998
YOUR VOTE IS IMPORTANT WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
ANNUAL MEETING. YOU ARE URGED TO FILL IN, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES OF
COMMON STOCK PERSONALLY EVEN IF YOU HAVE PREVIOUSLY
SUBMITTED A PROXY.
<PAGE> 3
STAFFMARK, INC.
302 EAST MILLSAP ROAD
FAYETTEVILLE, ARKANSAS 72703
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD MAY 8, 1998
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of StaffMark, Inc., a Delaware corporation (the "Company" or
"StaffMark") for use only at the annual meeting of stockholders (the "Annual
Meeting") of StaffMark to be held at the Northwest Arkansas Convention Center,
1500 South 48th, Springdale, Arkansas on the 8th day of May, 1998, at 10:00
a.m., Central Standard Time, and at any adjournments thereof. The approximate
date on which this Proxy Statement and accompanying Proxy will first be given or
sent to stockholders is March 26, 1998.
Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter, by written notice to that effect to the attention of the
Company's Secretary, before the Annual Meeting, or to the Company's Secretary or
the Inspectors of Election at the Annual Meeting, or by a duly executed Proxy
bearing a later date.
Proxies in the accompanying form will be voted in accordance with the
specifications made and, where no specifications are given, such Proxies will be
voted:
FOR the election as directors of the nominees named herein;
FOR the approval and adoption of an amendment to the Company's
Certificate of Incorporation, as amended; and
FOR the ratification and approval of the Company's Amended and
Restated 1996 Stock Option Plan.
In the discretion of the Proxy holders, the Proxies will also be voted
FOR or AGAINST such other matters as may properly come before the Annual
Meeting. Management of the Company is not aware of any other matters to be
presented for action at the Annual Meeting.
The cost of preparing, assembling and mailing the Notice of Annual
Meeting of Stockholders, 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 by officers, directors and regular supervisory and
executive employees of the Company, none of whom will receive any additional
compensation for their services. 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.
<PAGE> 4
OUTSTANDING STOCK AND VOTING RIGHTS
At the Annual Meeting, each stockholder will be entitled to one vote
for each share of common stock of the Company, $.01 par value ("Common Stock"),
owned of record at the close of business on March 16, 1998 (the "Record Date").
The outstanding Common Stock of the Company as of the Record Date totaled
19,273,632 shares. Votes may be cast in person or by Proxy.
The presence at the Annual Meeting, in person or by Proxy, of the
holders of a majority of the shares of Common Stock entitled to vote at the
Annual Meeting will constitute a quorum. For the purpose of determining whether
a quorum exists so that the Annual Meeting may proceed, shares of Common Stock
represented by Proxies containing abstentions or indicating broker non-votes (as
defined below), in addition to those shares of Common Stock otherwise voted at
the Annual Meeting, will be counted for determining the presence of a quorum.
Director nominees will be elected by a plurality vote (i.e., the ten nominees
receiving the greatest number of votes will be elected). Votes that are withheld
will be excluded entirely from the vote and will have no effect on the election
of directors. The proposal concerning the approval of the amendment to the
Company's Certificate of Incorporation, as amended (Proposal 2) and the proposal
concerning the ratification and approval of the Company's Amended and Restated
1996 Stock Option Plan (Proposal 3) require the affirmative vote of a majority
of the shares of Common Stock cast at the Annual Meeting by the holders entitled
to vote thereon, provided a quorum is present.
The enclosed form of Proxy provides a method for stockholders to
withhold authority to vote for any one or more of the director nominees while
still granting authority to the Proxy to vote for the remaining nominees. The
names of all nominees are listed on the Proxy card. If you wish to grant the
Proxy authority to vote for all nominees, check the box marked "FOR." If you
wish to withhold authority to vote for all nominees, check the box marked
"WITHHOLD AUTHORITY." If you wish your shares to be voted for some nominees and
not for one or more of the others, indicate the name(s) of the nominee(s) for
whom you are withholding the authority to vote by writing the name(s) of such
nominee(s) in the space provided on the form of Proxy.
Abstentions may be specified on all proposals excluding the election of
directors and will be counted as present for purposes of the item on which the
abstention is noted. Under the rules of the New York Stock Exchange, Inc.,
brokers who hold shares in street name for customers have the authority to vote
on the election of directors proposal when they have not received instructions
from beneficial owners. However, brokers that do not receive instructions are
not entitled to vote on the proposal concerning approval of the amendment to the
Company's Certificate of Incorporation, as amended (Proposal 2) and the proposal
concerning ratification and approval of the Company's 1996 Amended and Restated
Stock Option Plan (Proposal 3) and a Proxy submitted by a broker in such
circumstances will be considered a "broker non-vote" with regard to Proposals 2
and 3. Under applicable Delaware Law, a broker non-vote will not have any effect
on the outcome of Proposal 2 or 3 since these Proposals will be decided by a
majority of the votes cast; however, abstentions will have the effect of a
negative vote with regard to Proposals 2 and 3.
DIRECTOR NOMINEES AND NAMED EXECUTIVE OFFICERS
The following sets forth information concerning each of the nominees
for election to the Board of Directors, including his or her name, age,
principal occupation or employment during at least the past five years and the
period during which such person has served as a director of the Company. Except
as otherwise noted, all nominees have served on the Board of Directors of
StaffMark since October 1996.
2
<PAGE> 5
Nominees for Election to the Board of Directors
<TABLE>
<CAPTION>
Name Age Experience
- ---- --- ----------
<S> <C> <C>
Jerry T. Brewer 57 Co-founded StaffMark in March 1996 and has served since then as its Chairman
of the Board. Mr. Brewer also co-founded Brewer Personnel Services, Inc.
("Brewer"), currently a wholly-owned subsidiary of the Company, in July
1988, and currently serves as its Chairman of the Board. From July 1988 to
April 1995, Mr. Brewer served as President and Chief Executive Officer of
Brewer.
Clete T. Brewer 32 Co-founded StaffMark in March 1996 and has served since then as its
President and Chief Executive Officer and a director. Mr. Brewer also
co-founded Brewer in July 1988, and has served since April 1995 as
President, Chief Executive Officer and a director of Brewer. From July 1988
to April 1995, Mr. Brewer served as Vice President of Brewer. Mr. Brewer is
the son of Jerry T. Brewer.
W. David Bartholomew 41 Executive Vice President - Eastern Operations since October 1996. Mr.
Bartholomew served as Secretary/Treasurer and a principal of HRA, Inc.
("HRA"), one of the StaffMark founding companies, from August 1993 through
October 1996. From 1991 through August 1993, Mr. Bartholomew was President
of Cobble Personnel of Nashville.
Steven E. Schulte 35 Executive Vice President - Administration since October 1996. Mr. Schulte
was employed by Prostaff Personnel Services, Inc. ("Prostaff"), one of the
StaffMark founding companies from August 1987 through October 1996.
John H. Maxwell, Jr. 54 Executive Vice President - Medical Services since October 1996. Mr. Maxwell
served as the Chief Executive Officer of Maxwell Staffing, Inc., one of the
StaffMark founding companies from 1973 through October 1996. Mr. Maxwell is
a Certified Personnel Consultant and a Certified International Personnel
Consultant.
Janice Blethen 54 Executive Vice President - Clinical Trials Support Services since October
1996. Ms. Blethen has served as Chief Executive Officer of Blethen
Group, Inc., one of the StaffMark founding companies, from its
inception in 1975 through October 1996. Ms. Blethen is a Certified
Personnel Consultant.
William T. Gregory 55 Vice President and General Manager - Carolina Region since October 1996.
Mr. Gregory served as President of First Choice Staffing, Inc., one of the
StaffMark founding companies, from 1985 through October 1996. Mr. Gregory
is a Certified Personnel Consultant.
William J. Lynch 55 Since March 1996, Mr. Lynch has served as a Managing Director of Capstone
Partners, LLC, a venture capital firm. From October 1989 to March 1996, Mr.
Lynch was a partner of the law firm of Morgan, Lewis & Bockius LLP. Mr.
Lynch also serves as a director of
Coach USA, Inc., a publicly traded
motorcoach services company.
R. Clayton McWhorter 64 In 1996, Mr. McWhorter founded Clayton Associates, LLC, a venture capital
company. Mr. McWhorter is a member of the Board of Directors of
Columbia/HCA Healthcare Corporation, a public company ("Columbia/HCA"), and
served as its Chairman of the Board from April 1995 to May 1996. Mr.
McWhorter served as Chairman, President and Chief Executive Officer of
Healthtrust, Inc. from 1987 to April 1995 and served as
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
Name Age Experience
- ---- --- ----------
<S> <C> <C>
President and Chief Executive Officer of Hospital Corporation of America
from 1985 to April 1987 (both of which are now a part of Columbia/HCA). In
addition, Mr. McWhorter is a director of Suntrust Bank - Nashville (a
subsidiary of a public company) and is a director for Corrections
Corporation of America, a publicly traded company.
Charles A. Sanders, M.D. 66 Dr. Sanders is retired from Glaxo, Inc. where he served as Chief Executive
Officer from 1989 through 1994 and Chairman from 1992 through 1995. Dr.
Sanders currently serves as Chairman of The Commonwealth Fund and Project
HOPE and serves on the Board of Trustees of The University of North Carolina
at Chapel Hill. Dr. Sanders is also a director of Pharmacopeia, Inc., Scios,
Inc., Vertex Pharmaceuticals Incorporated, Magainin Pharmaceuticals, Inc.
Trimeris, Inc. and Kendle International, Inc., which are all publicly traded
companies.
</TABLE>
The following sets forth information concerning executive officers of
the Company identified under "Executive Compensation" who are not presently
members, or nominated herein to become members, of the Board of Directors.
Other Named Executive Officers
<TABLE>
<CAPTION>
Name Age Experience
- ---- --- ----------
<S> <C> <C>
Terry C. Bellora 51 Chief Financial Officer and Secretary of StaffMark since August 1996. Prior
to joining StaffMark, Mr. Bellora served as Chief Financial Officer of Pace
Industries, Inc. ("Pace") from 1986 to August 1996. Mr. Bellora served as
director of Pace from 1988 to 1993 and as an advisory director of Pace from
1993 to 1996. Mr. Bellora is a certified public accountant and was
previously an audit partner for a regional accounting firm.
Ted Feldman 44 Chief Operating Officer of the Company since October 1996. Mr. Feldman
founded HRA in 1991 and since its inception has served as its President and
Chief Executive Officer. From 1979 until 1992, Mr. Feldman served as
President of Nashville Trunk & Bag Co. Mr. Feldman is also an independent
trustee of CCA Prison Realty Trust, a
publicly traded real estate investment
trust.
Donald A. Marr, Jr. 33 Executive Vice President - Western Operations since October 1996. Mr. Marr
oversees the Company's Commercial and Professional divisions in that region.
He has been employed by Brewer since 1990 and has served as Brewer's Vice
President of Operations since 1994.
</TABLE>
ELECTION OF DIRECTORS (PROPOSAL 1)
The Company has nominated for reelection to the Board of Directors ten
candidates who currently comprise all of the members of the Company's Board of
Directors. For more information concerning these director nominees, see
"Director Nominees and Named Executive Officers; Nominees for Election to the
Board of Directors." Unless otherwise designated, the enclosed Proxy will be
voted FOR the election of the foregoing
4
<PAGE> 7
nominees as directors. The Board of Directors does not contemplate that any
of these nominees will be unable to stand for election, but should any nominee
unexpectedly become unavailable for election, the persons named as Proxies shall
have the authority to vote for the election of any other nominee proposed by the
Board of Directors. In the event of any director's death, disqualification or
inability to serve, the resulting vacancy in the Board of Directors will be
filled by a vote of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES DESCRIBED HEREIN AS DIRECTORS OF THE COMPANY.
BOARD ORGANIZATION AND COMMITTEES
Regular meetings of the Board of Directors are held approximately four
times a year, with special meetings conducted as needed. During 1997, the Board
of Directors held four regular meetings, one annual meeting and nine special
meetings. Each director attended at least 75% of the aggregate of: (i) all
regular, annual and special meetings of the Board of Directors; and (ii) all
meetings of the Board Committees on which he or she served during 1997.
The Board of Directors (hereinafter the "Board") has established
committees to perform certain of its functions, including the Audit Committee,
the Compensation Committee and the Acquisition Committee. The functions of each
of these committees, and its members, are set forth below. The Board does not
have a nominating committee since nominating functions are performed by the
Board as a group.
The Audit Committee reviews the internal controls of the Company,
reviews the objectivity of its financial reporting and meets with appropriate
Company financial personnel and the Company's independent certified public
accountants in connection with these reviews. The Audit Committee also
recommends to the Board the appointment of independent certified public
accountants to serve as auditors for the following year. The Audit Committee met
twice during 1997. The Audit Committee currently consists of Dr. Sanders, Mr.
Lynch, and Mr.
Jerry Brewer.
The Compensation Committee advises and makes recommendations to the
Board with respect to salaries and bonuses to be paid to executive officers and
other employees of the Company. The Compensation Committee also administers the
Company's Amended and Restated 1996 Stock Option Plan. It also recommends to the
Board adoption of any compensation plans in which officers and directors of the
Company are eligible to participate. The Compensation Committee met twice during
1997. The Compensation Committee currently consists of Mr. Lynch and Mr.
McWhorter.
While all of the Company's executive officers are integrally involved
in the Company's acquisition program, the Acquisition Committee has been
provided guidelines by the Company's full Board to approve offers and the form
of consideration to be offered for the acquisition of other businesses, without
full Board approval. The Acquisition Committee currently consists of: Mr. Jerry
Brewer; Mr. Clete Brewer; Mr. Steve Schulte; Mr. Ted Feldman; Mr. Terry C.
Bellora; and Mr. Robert H. Janes III, Executive Vice President - Mergers and
Acquisitions. The Acquisition Committee held one meeting in 1997, where it
exercised its discretion within the prescribed guidelines as to one of the
Company's 19 acquisitions during 1997.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 2, 1998, information
regarding the beneficial ownership of the Common Stock of the Company by: (i)
each person known to beneficially own more than 5% of the outstanding shares of
Common Stock; (ii) each of the Company's directors; (iii) each Named Executive
Officer, as defined below; and (iv) all executive officers and directors as a
group. Unless otherwise indicated in the footnotes following the table, all
persons listed have an address in care of the Company's principal executive
offices referenced herein and have sole voting and investment power with respect
to their shares.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
-------------------
NAME NUMBER PERCENT
- ---- ------ -------
<S> <C> <C>
Jerry T. Brewer(2)............................................................... 596,323 3.09%
Clete T. Brewer(3)............................................................... 1,002,084 5.20
Terry C. Bellora(4).............................................................. 100,200 *
Ted Feldman(5)................................................................... 318,611 1.65
Donald A. Marr, Jr.(6)........................................................... 111,667 *
David Bartholomew(7)............................................................. 259,437 1.35
Steven E. Schulte(8)............................................................. 445,258 2.31
John H. Maxwell, Jr.(9).......................................................... 677,392 3.52
Janice Blethen(10)............................................................... 444,810 2.31
William T. Gregory(11)........................................................... 435,850 2.26
William J. Lynch(12)............................................................. 47,972 *
Clayton McWhorter(13)............................................................ 7,332 *
Charles A. Sanders, M.D.(14)..................................................... 17,332 *
All directors and executive officers as a group (17 persons)............ 4,717,417 24.28
</TABLE>
- --------------
*Less than 1%.
(1) The percentages shown with respect to any identified individual or
group are calculated by dividing (i) the sum of (a) the number of
shares of Common Stock actually owned as of March 2, 1998 plus (b) the
number of shares of Common Stock that may be acquired through the
exercise of options or other rights on or before April 30, 1998
("Currently Exercisable Options"), by (ii) the sum of 19,271,421 shares
of Common Stock outstanding on March 2, 1998 plus the amount referenced
in clause (i)(b).
(2) Includes 175,000 shares held by Mr. Brewer's spouse, as to which Mr.
Brewer disclaims beneficial ownership.
(3) Includes 750 shares held by Mr. Brewer's spouse, as to which Mr. Brewer
disclaims beneficial ownership, and 5,000 shares subject to Currently
Exercisable Options.
(4) Includes 100,000 shares subject to Currently Exercisable Options, and
200 shares held by a trust of which Mr. Bellora is the trustee.
(5) Includes 1,000 shares held by Mr. Feldman's spouse, as to which Mr.
Feldman disclaims beneficial ownership, and 15,000 shares subject to
Currently Exercisable Options.
(6) Includes 11,667 shares subject to Currently Exercisable Options.
(7) Includes 246,937 shares are held by Bartfund I Limited Partnership, of
which Mr. Bartholomew is the general partner, and 12,500 shares subject
to Currently Exercisable Options.
(8) Includes 437,025 shares held by trusts for which Mr. Schulte is
trustee, and 3,333 shares subject to Currently Exercisable Options.
(9) Includes 346,620 shares held by the John H. Maxwell, Jr. Revocable
Living Trust, of which Mr. Maxwell is the trustee, and 330,772 shares
beneficially owned by Mr. Maxwell's spouse, as to which Mr. Maxwell
disclaims beneficial ownership. John H. Maxwell, Jr. is the spouse of
Mary Sue Maxwell.
(10) Includes 71,905 shares held by Blethen Family Investments Limited
Partnership, the general partner of which is a corporation controlled
by Ms. Blethen and 3,333 shares subject to Currently Exercisable
Options.
(11) Includes 2,500 shares owned by Mr. Gregory's spouse, as to which Mr.
Gregory disclaims beneficial ownership.
(12) Includes 3,033 shares held by a trust for which Mr. Lynch is trustee
and 7,332 shares subject to Currently Exercisable Options.
(13) Includes 7,332 shares subject to Currently Exercisable Options.
(14) Includes 7,332 shares subject to Currently Exercisable Options.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years indicated to the Company's Chief
Executive Officer and to the Company's four most highly compensated executive
officers whose total salary and bonus exceeded $100,000 during the year ended
December 31, 1997 (the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying Other Annual
Name and Principal Position Year Salary($)(1) Bonus($) Options Compensation
- ------------------------------------- ----- ----------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1997 $150,000 $116,000 65,000 $16,737(2)
Clete T. Brewer, President, 1996 40,869 N/A 10,000 2,487
Chief Executive Officer and Director....
Terry C. Bellora, Chief Financial 1997 150,000 106,000 102,500 7,200(2)
Officer and Secretary................... 1996 41,538 N/A 160,000 2,824
Ted Feldman, Chief Operating Officer.... 1997 145,000 105,556 70,000 6,000(2)
1996 39,769 N/A 10,000 1,025
W. David Bartholomew, Executive Vice 1997 125,000 91,375 57,500 6,000(2)
President - Eastern Operations; 1996 34,615 N/A 10,000 1,025
Director................................
Donald A. Marr, Jr., Executive Vice 1997 125,000 78,594 50,000 26,524(3)
President - Western Operations.......... 1996 31,259 N/A 10,000 1,500
</TABLE>
- -----------------------
(1) Salary for 1996 reflects partial year compensation for the period from
the completion of the Company's initial public offering, October 2,
1996, through December 31, 1996.
(2) Consists of automobile allowances and, as to Mr. Brewer, the
distribution of the cash surrender value of a key man life insurance
policy in the amount of $10,737.
(3) Includes the net book value ($11,988) of a Company automobile that was
given to Mr. Marr during 1997, automobile allowances, and the
distribution of the cash surrender value of a key man life insurance
policy in the amount of $8,536.
7
<PAGE> 10
The following table sets forth information concerning each grant of
stock options to the Named Executive Officers during the year ended December 31,
1997.
Option Grants in Fiscal 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------
Number of Percentage of
Securities Total
Underlying Options Granted Exercise or Grant Date
Options to Employees in Base Price Expiration Present
Name Granted Fiscal 1997 ($/Share)(1) Date Value ($)(2)
---- ---------- --------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Clete T. Brewer........ 15,000 1.64% $12.875 3/03/07 97,728
50,000 5.46 27.00 8/22/07 683,150
Terry C. Bellora....... 27,500 3.00 12.875 3/03/07 179,168
75,000 8.19 27.00 8/22/07 1,024,725
Ted Feldman............ 45,000 4.91 12.875 3/03/07 293,184
25,000 2.73 27.00 8/22/07 341,575
W. David Bartholomew... 37,500 4.09 12.875 3/03/07 244,320
20,000 2.18 27.00 8/22/07 273,260
Donald A. Marr, Jr..... 35,000 3.82 12.875 3/03/07 228,032
15,000 1.64 27.00 8/22/07 204,945
</TABLE>
- --------------------
(1) All options were granted at the market value on the date of grant based
on the last sale price of the Company's Common Stock on the date of
grant.
(2) The grant date present value was based on the Black-Scholes Option
Valuation Model, a widely-recognized method of valuing options. The
following underlying assumptions were used to derive the present value
of these options: volatility of the Company's Common Stock of 51%,
based upon the actual weekly volatility of the Company's stock during
1997; a risk-free rate of return of 5.25%, based on the yield of
five-year U.S. Treasury notes as of the grant date; and exercise of the
option five years after the grant date. The actual value, if any, the
Named Executive Officers may realize upon exercise will depend on the
excess of the stock price over the exercise price on the actual date
the option is exercised; consequently, there is no assurance the value
realized by the Named Executive Officers will approximate the value
estimated by the Black-Scholes Option Valuation Model.
The following table sets forth information concerning the value of
unexercised options as of December 31, 1997, by the Named Executive Officers.
None of the Named Executive Officers exercised options during the year ended
December 31, 1997.
Stock Option Exercises and Year End Values
<TABLE>
<CAPTION>
Number Of Securities Underlying Value of
Unexercised Options held at In-the-
December 31, 1997 Money Options at
----------------- December 31, 1997(1)
--------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Clete T. Brewer.......................... -0- 75,000 -0- $ 708,750
Terry C. Bellora......................... 100,000 162,500 $1,587,500 2,415,000
Ted Feldman.............................. -0- 80,000 -0- 1,155,625
W. David Bartholomew..................... -0- 67,500 -0- 991,875
Donald A. Marr, Jr....................... -0- 60,000 -0- 921,875
</TABLE>
- --------------------
(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options. The value of
the unexercised options represents the difference between the closing
market price of the Company's Common Stock on December 31, 1997,
$31.625, and the exercise price of such options.
8
<PAGE> 11
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company receives a fee of $2,000 for attendance at each regular Board of
Directors meeting and $500 for each committee meeting (unless held on the same
day as a Board of Directors meeting). Under the Company's Amended and Restated
Option Plan, each non-employee director automatically receives non-qualified
stock options to purchase 10,000 shares of Common Stock upon such person's
initial election as a director. Non-employee directors also receive annual
grants of non-qualified stock options to purchase 2,000 shares of Common Stock
following re-election at each Annual Meeting of Stockholders. All of such
options have or will have an exercise price equal to the fair market value of
the Common Stock on the date of grant, are exercisable in three equal
installments on each of the first through third anniversaries of the date of
grant and will expire five years from the date of grant. All directors of the
Company are reimbursed for out-of-pocket expenses incurred in attending meetings
of the Board of Directors or committees thereof and for other expenses incurred
in their capacity as directors.
EMPLOYMENT AGREEMENTS
Clete Brewer, Ted Feldman, David Bartholomew and Donald Marr entered
into employment agreements with the Company, or a subsidiary thereof, commencing
on the date of the closing of the Company's initial public offering on October
2, 1996 (the "IPO"). Each of these employment agreements is for a term of five
years and provides for an annual base salary which may be adjusted in the
discretion of the Compensation Committee of the Board. Unless terminated or not
renewed by the Company or the employee, the term will continue after the initial
five-year term on a year-to-year basis on the same terms and conditions existing
at the time of renewal. Pursuant to such employment agreements, each such
officer is eligible for additional year-end bonus compensation to be determined
pursuant to an incentive bonus plan established by the Company. See "Report of
the Compensation Committee; 1997 Compensation; Chief Executive Officer
Compensation."
Each of the employment agreements for Messrs. Brewer, Feldman,
Bartholomew and Marr provides that, in the event of a termination of employment
by the Company, except for specific instances of "cause" as defined in the
employment agreement, such employee shall be entitled to receive from the
Company such employee's then current salary for a period no longer than five
years after the IPO. Each employment agreement contains a covenant not to
compete with the Company for a period of two years immediately following the
termination of his employment.
Mr. Bellora entered into a five-year employment agreement with the
Company in October 1996 providing for an annual base salary, a bonus to be
determined annually pursuant to an incentive bonus plan established by the
Company and options to purchase 150,000 shares of Common Stock at the IPO
price, which options are scheduled to become exercisable over a period of five
years and terminate in October 2006. Subject to certain exceptions, Mr.
Bellora's employment agreement contains a covenant not to compete with the
Company for the two-year period immediately following termination of employment
with the Company. In the event of termination without cause in the absence of a
change in control of the Company, the agreement obligates the Company to pay
Mr. Bellora an amount equal to the lesser of (i) his base salary payable over
the remaining term of the agreement or (ii) his base salary for a two-year
period (the "Payout"); and obligates Mr. Bellora to comply with a one-year
non-compete covenant. In the event of a change in control of the Company, Mr.
Bellora may elect to terminate his employment and receive an amount equal to
the Payout, in which case Mr. Bellora would be subject to a one-year
non-compete covenant. In the event of a change in control of the Company
without 15 days advance notice, Mr. Bellora would be entitled to receive the
Payout, but would not be obligated to comply with the non-compete covenant.
REPORT OF THE COMPENSATION COMMITTEE
The following report of the Compensation Committee of the Board shall
not be deemed incorporated by reference by any general statement incorporating
this Proxy statement by reference into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and shall not be deemed filed under
either of the Securities Act or the Exchange Act except to the extent that
StaffMark specifically incorporates this information by reference. The
9
<PAGE> 12
Compensation Committee is comprised entirely of independent, nonemployee
directors, none of whom has any "interlocking" relationships as defined for
proxy statement disclosure purposes.
OVERVIEW
The key components of executive officer compensation are salary, bonus
and stock option awards. Each of the Company's Named Executive Officers is a
party to a five-year employment agreement (collectively the "Executive
Employment Agreements") that was negotiated at arms-length at the time of the
IPO. The Compensation Committee believes that the base salary levels provided
for in the Executive Employment Agreements are below the base salary levels paid
to executives holding comparable positions with other publicly held staffing and
service companies.
The members of the Compensation Committee hold primary responsibility
for determining executive officer compensation levels, subject to the terms of
the Executive Employment Agreements. The Compensation Committee is composed
entirely of independent outside directors of StaffMark, none of whom are or have
been officers or employees of StaffMark. The Compensation Committee has adopted
a compensation philosophy that is intended to align compensation with
StaffMark's overall business strategy. The philosophy guiding the executive
compensation program is designed to link executive compensation and stockholder
value. The goals of the program are:
o To compensate executive employees in a manner that aligns the
employee's interests with the interests of the stockholders;
o To encourage continuation of StaffMark's entrepreneurial spirit;
o To reward executives for successful long-term strategic management;
o To recognize outstanding performance; and
o To attract and retain highly qualified and motivated executives.
The strategy established by the Compensation Committee with respect to
executive compensation includes maintaining base salaries for executives at a
level somewhat below the industry average, while providing bonuses and stock
options which, when combined with base salary amounts, give StaffMark's
executives the potential to earn in excess of competitive industry compensation
if subjective and objective performance goals for StaffMark are achieved. The
Compensation Committee intends to continue to grant to StaffMark's executives
and other key employees stock options at the current market value, which options
have no monetary value to the executives unless and until the market price of
StaffMark's Common Stock increases above the exercise price. The mix of base
salary, bonuses and stock option awards reflects the Compensation Committee's
intention to link executive compensation to StaffMark's operational performance.
The Compensation Committee anticipates that future option grants will be based
on a subjective analysis of various performance criteria, primarily earnings per
share and operating profits, but will not directly be tied to any one factor.
Future bonus payments will be in accordance with the Bonus Plan described
herein. The Compensation Committee intends to continue to examine ways to more
closely link its annual bonus and long-term incentive plans to StaffMark's
performance, with the objective of creating plans that strengthen the
relationship between stockholder value and executive compensation.
1997 COMPENSATION
During fiscal 1997, the Compensation Committee developed a new plan with
respect to the cash bonus portion of the compensation payable to executive
officers of the Company (the "Bonus Plan"). Under the Bonus Plan, the
Compensation Committee is charged with responsibility for the establishment of
specific annual "performance targets" for each executive officer who
participates in the Bonus Plan. The performance targets may be based on one or
more of the following business criteria: net income, return on equity, return on
assets or earnings per share (in each case as defined in the Bonus Plan), or on
any combination thereof, and must be established while the performance relative
to the target remains substantially uncertain within the meaning of Section
162(m) of the Code. Concurrently with the selection of the performance targets,
the Committee must establish an objective formula or standard for calculating
the maximum bonus payable to each participating executive officer. Under the
Bonus Plan, the maximum bonus during 1997 could not exceed one hundred percent
(100%) of the Named
10
<PAGE> 13
Executive Officer's base salary for such fiscal year. In addition to this
overall maximum, the Committee has sole discretion to determine whether any or
all of the maximum permissible bonus will actually be paid, or whether payment
or vesting of any bonus will be deferred. The Compensation Committee is also
authorized to exercise its "negative discretion" by establishing additional
conditions and terms of payment of bonuses, including the achievement of other
financial, strategic or individual goals, which may be objective or subjective,
as it deems appropriate. The Board of Directors believes that the Bonus Plan is
consistent with the Company's existing policies that closely relate executive
compensation to the Company's performance. The Bonus Plan also serves the
Company's interests by granting the Compensation Committee discretion both in
selecting the criteria by which performance is to be measured and in determining
the actual amount of each eligible executive's bonus within the maximum limits
imposed pursuant to the Bonus Plan. All bonuses under the Bonus Plan are to be
paid in cash or cash equivalents. The performance targets established by the
Compensation Committee for fiscal 1997 were based primarily upon earnings per
share. All of the Named Executive Officers were eligible to participate in the
Bonus Plan in 1997.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation paid during 1997 to Clete T. Brewer, StaffMark's President
and Chief Executive Officer, was comprised of $150,000 in base salary, a
$116,000 cash bonus pursuant to the Bonus Plan and the award of 65,000 stock
options. In March 1997 and August 1997, the Compensation Committee granted Mr.
Brewer options to acquire 15,000 shares and 50,000 shares, respectively, of the
Company's Common Stock at the fair market value of the Common Stock on the dates
of grant. All of such options have been granted to Mr. Brewer in recognition of
his continued service and efforts towards the growth and success of the Company.
Total cash compensation for the other Named Executive Officers during 1997 was
paid in accordance with each such officer's Executive Employment Agreement and
cash bonuses were paid in accordance with the Bonus Plan. Stock option grants
were awarded based upon such individuals= contributed service and efforts toward
the growth and success of the Company and were approved by the Compensation
Committee. This report is submitted by the members of the Compensation
Committee.
The Compensation Committee
William J. Lynch
R. Clayton McWhorter
11
<PAGE> 14
PERFORMANCE GRAPH
The following chart compares the cumulative total stockholder return on
the Company's Common Stock with the cumulative total return on the S&P 500 Index
and the common stock of eight companies in the temporary staffing industry, for
the period beginning September 27, 1996 (the date that trading of Common Stock
first began on the Nasdaq National Market) and ending December 31, 1997 (the
last trading date in the Company's 1997 fiscal year) assuming a $100 investment
in each and assuming the reinvestment of dividends. Although the Company's
initial offering price was $12.00, the closing price of $14.00 on the first day
of trading was used as the beginning price of the Common Stock. The Company paid
no dividends during the period. Companies in the self selected peer group are as
follows: AccuStaff Incorporated; COREstaff, Inc.; Norrell Corporation; Personnel
Management, Inc.; Personnel Group of America, Inc.; RemedyTemp, Inc.; SOS
Staffing Services, Inc.; and Western Staff Services, Inc.
COMPARISON OF CUMULATIVE TOTAL RETURN
[TOTAL RETURNS TO STOCKHOLDERS GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Return Analysis 9/27/96 12/31/96 12/31/97
- --------------------------------------------------------------------------------------------------------
StaffMark, Inc. $100 $89 $225
- --------------------------------------------------------------------------------------------------------
Peer Group $100 $87 $95
- --------------------------------------------------------------------------------------------------------
Nasdaq Composite (US) $100 $105 $128
- --------------------------------------------------------------------------------------------------------
</TABLE>
Source: Carl Thompson
Associates www.ctaonline.com
(303) 494-5472.
Data from Bloomberg Financial
Markets
12
<PAGE> 15
CERTAIN TRANSACTIONS
In connection with the acquisition of Brewer, the Company assumed a
lease by Brewer of property in Fayetteville, Arkansas that is owned by Brewer
Investments, an Arkansas limited partnership whose partners are Jerry T. Brewer
and Kay Brewer, Clete Brewer's parents. The property is now the Company's
headquarters. The total lease payments to Brewer Investments in 1997
approximated $225,000, and the lease extends for five years. StaffMark is
responsible for all real estate taxes, insurance, utilities and maintenance.
In connection with the acquisition of Prostaff, the Company assumed
leases by Prostaff of property in Little Rock, Arkansas used by Prostaff in its
operations that are owned by an Arkansas limited liability company, one of whose
members is Steven E. Schulte. Rent for 1997 approximated $127,000, and StaffMark
is responsible for all real estate taxes, insurance, utilities and maintenance.
The Company also leases its Tulsa, Oklahoma offices from John H. Maxwell, Jr.
and Mary Sue Maxwell. The total lease payments to the Maxwells in 1997
approximated $100,000.
The Company believes that the foregoing rent payments for leased
facilities with related parties are on terms that are as favorable to the
Company as those that could have been obtained from unaffiliated third parties.
In October 1996, StaffMark advanced Donald A. Marr, Jr. the principal
amount of $80,000 due on October 2, 1999 pursuant to a promissory note that
accrues interest at six percent per annum.
ADOPTION OF AN AMENDMENT TO THE COMPANY's CERTIFICATE OF
INCORPORATION, AS AMENDED, TO INCREASE THE COMPANY'S AUTHORIZED COMMON STOCK
AND PREFERRED STOCK (PROPOSAL 2)
The Company is currently authorized to issue 26,000,000 shares of
common stock ("Common Stock") and 1,000,000 shares of preferred stock
("Preferred Stock"). At the Annual Meeting, a vote will be taken on a proposal
to adopt an amendment to the Company's Certificate of Incorporation, as amended,
to increase the number of authorized shares of Common Stock from 26,000,000 to
200,000,000 and to increase the number of authorized shares of Preferred Stock
from 1,000,000 to 10,000,000. If the stockholders approve the amendment, the
first paragraph of Article Four of the Company's Certificate of Incorporation,
as amended, will read as follows:
"The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two hundred and ten
million (210,000,000) shares, divided into two classes of which ten
million (10,000,000) shares, par value $.01 per share, shall be
designated preferred stock, and two hundred million (200,000,000)
shares, par value $.01 per share, shall be designated as common stock."
The Board of Directors has proposed the increase in the number of
authorized shares of Common Stock and Preferred Stock to assure that an adequate
supply of shares of Common Stock and Preferred Stock are available for general
corporate purposes, including future acquisitions, raising additional capital,
and stock dividends and splits. The Board of Directors believes that an increase
in the total number of shares of Common Stock and Preferred Stock authorized
will better enable the Company to meet its future needs and give it greater
flexibility to respond quickly to advantageous business situations. Since
October 1996, the Company delivered cash, Common Stock or a combination of cash
and Common Stock in completing 25 acquisition transactions. In the aggregate,
the Company issued a total of 2,302,852 shares of Common Stock in such
acquisition transactions, excluding shares that may be issued after the Record
Date with respect to earn-out or other contingent payment provisions contained
in relevant acquisition agreements. Given its acquisition strategies and past
acquisition activities, it is possible that the Company may become party to
agreements to acquire additional entities between the Record Date and the date
of the Annual Meeting. However, such developments, should they occur, would not
individually or in the aggregate, alter the terms of this Proposal 2, which will
be pursued in accordance with the terms described herein, irrespective of any
acquisition developments or the absence of acquisition developments.
13
<PAGE> 16
Although it did not form a basis for the Board's decision to recommend
the amendment, the existence of additional authorized shares of Common Stock
could, under certain circumstances, have an anti-takeover effect. For example,
in the event of a hostile attempt to take over control of the Company, the
Company could, in an attempt to discourage or make more difficult a hostile
takeover attempt, issue shares of Common Stock or Preferred Stock, thereby
diluting the voting power of outstanding shares and increasing the potential
cost to acquire control of the Company. The amendment, therefore, may have the
effect of discouraging unsolicited takeover attempts. In such a case,
stockholders might be deprived of benefits that could result from such an
attempt, such as realization of a premium over the market price of their shares
in a tender offer or the temporary increase in market price that could result
from such an attempt. The Company is not aware of any existing or planned
attempt to acquire the Company by means of an unsolicited merger, tender offer,
solicitation of proxies in opposition to management or otherwise, or to change
the Company's management. The Board has not presented this amendment with the
intent that it be used as a type of anti-takeover device.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
AND ADOPT THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION, AS
AMENDED, TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND
PREFERRED STOCK.
APPROVAL AND RATIFICATION OF THE AMENDED AND RESTATED
1996 STOCK OPTION PLAN (PROPOSAL 3)
PURPOSE OF PROPOSAL
At the Annual Meeting, stockholders will be asked to ratify and approve
the Company's Amended and Restated 1996 Stock Option Plan (the "Option Plan"),
which was originally adopted in June 1996 and amended by the Board of Directors
in March 1998. The Option Plan, as amended, is being submitted to stockholders
in order to satisfy the stockholder approval requirements of Section 162(m)
("Section 162(m)") of the Internal Revenue Code of 1986, as amended (the
"Code").
OPTION PLAN INTENDED TO COMPLY WITH SECTION 162(m) OF THE CODE
Section 162(m) of the Code disallows a public company's deductions for
employee remuneration exceeding $1,000,000 per year for its Chief Executive
Officer and other four most highly compensated officers, but contains an
exception for "performance-based compensation" that meets certain requirements.
In order for the Option Plan to meet these requirements, the material terms of
the Option Plan must be approved by the Company's stockholders, as set forth
herein. The Option Plan is intended to qualify grants of stock options made
under the Option Plan as "performance-based compensation" pursuant to section
162(m) of the Code. The Option Plan limits the number of shares subject to
options granted to any individual in any calendar year to no more than 500,000
shares.
DESCRIPTION OF AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The purpose of the Option Plan is to provide directors, officers, key
employees and consultants with additional incentives by increasing their
ownership interests in the Company. Directors, officers and other key employees
of the Company and its subsidiaries are eligible to participate in the Option
Plan. In addition, awards may be granted to consultants providing valuable
services to the Company. As of February 16, 1998, the Company and its affiliates
employed approximately 1,400 individuals and retained approximately 1,100
consultants who were eligible to participate in the Option Plan. Awards under
the Option Plan are granted by the Compensation Committee of the Board and may
include incentive stock options ("ISOs") and/or non-qualified stock options
("NQSOs").
The Compensation Committee of the Board administers the Option Plan.
The Compensation Committee generally has discretion to determine the terms of an
option grant, including the number of option shares, option price, term, vesting
schedule, the post-termination exercise period, and whether the grant will be an
ISO or NQSO.
14
<PAGE> 17
Notwithstanding this discretion: (i) the number of shares subject to
options granted to any individual in any calendar year may not exceed 500,000
shares; (ii) the option price per share of Common Stock may not be less than
100% of the fair market value of such share at the time of grant, or 110% of the
fair market value of such shares if the option is intended to be an ISO and is
granted to a stockholder owning more than 10% of the combined voting power of
all classes of the stock of the Company or a parent or subsidiary on the date of
the grant of the option (a "10% stockholder"); and (iii) the term of any option
may not exceed 10 years, or five years if the option is intended to be an ISO
and is granted to a 10% stockholder. In addition, unless otherwise specified by
the Compensation Committee, all outstanding options vest upon a "change in
control" of the Company (as defined by the Option Plan), and all options will
terminate three months following any termination of employment. No outstanding
stock option has been awarded subject to the receipt of stockholder approval of
the Option Plan.
The Option Plan also provides for automatic option grants to directors
who are not otherwise employed by the Company or its subsidiaries. Upon
commencement of service (or upon agreeing to serve in the case of the initial
non-employee directors), a non-employee director will receive an NQSO to
purchase 10,000 shares of Common Stock, and thereafter a non-employee director
will receive annual options to purchase 2,000 shares of Common Stock. The annual
options are granted following re-election to the Board of Directors. Options
granted to non-employee directors become exercisable in three equal installments
on each of the date of grant and the first and second anniversaries of the date
of grant. Non-employee director options have a term of five years from the date
of grant and an exercise price equal to the fair market value of Common Stock on
the date of grant. The closing price of the Common Stock reported on the Nasdaq
National Market for March 2, 1998 was $33.00 per share.
The maximum number of shares of Common Stock that may be subject to
outstanding options, determined immediately after the grant of any option, is
the greater of 1,500,000 or 12% of the aggregate number of shares of the
Company's Common Stock outstanding; provided, however, that options to purchase
no more than 1,500,000 shares of Common Stock may be granted as ISOs as of the
preceding January 1, less, in each case, the number of shares subject to
previously outstanding awards under the Option Plan. Shares of Common Stock
which are attributable to awards which have expired, terminated or been canceled
or forfeited during any calendar year are available for issuance or use in
connection with future awards during such calendar year.
The Option Plan will remain in effect until terminated by the Board of
Directors. No ISO may be granted more than 10 years after the adoption of the
Option Plan by the Board or approval of the Plan by the stockholders, whichever
is earlier. The Option Plan may be amended by the Board of Directors without the
consent of the stockholders of the Company, except that any amendment, although
effective when made, will be subject to stockholder approval within one year
after approval by the Board of Directors if required by any federal or state law
or regulation or by the rules of any stock exchange or automated quotation
system on which the Common Stock may then be listed or quoted.
The Board of Directors recently amended the Option Plan by adding a
provision which permits officers, with the prior approval of the Compensation
Committee (or its designee), to transfer their stock options to members of their
immediate families, either directly or through trusts or similar vehicles.
TAX TREATMENT OF STOCK OPTIONS
Non-Qualified Stock Options. There are no federal income tax
consequences to an individual or to the Company upon the grant of an NQSO under
the Option Plan. Upon the exercise of an NQSO, an individual will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the shares at the time of exercise over the exercise price of the NQSO,
and the Company generally will be entitled to a corresponding federal income tax
deduction. Upon the sale of shares acquired by the exercise of an NQSO, an
individual will have a capital gain or loss (long-term or short-term depending
upon the length of time the shares were held) in an amount equal to the
difference between the amount realized upon the sale and the individual's
adjusted tax basis in the shares (the exercise price plus the amount of ordinary
income recognized by the individual at the time of exercise of the NQSO).
Incentive Stock Options. An employee will not recognize federal taxable
income, upon either the grant or exercise of the ISO. However, for purposes of
the alternative minimum tax imposed under the Code, in the year in
15
<PAGE> 18
which an ISO is exercised, the amount by which the fair market value of the
shares acquired upon exercise exceeds the exercise price will be treated as an
item of adjustment and included in the computation of the recipient's
alternative minimum taxable income. An employee who disposes of the shares
acquired upon exercise of an ISO after two years from the date the ISO was
granted and after one year from the date such shares were transferred to him or
her upon exercise of the ISO will recognize capital gain or loss (long-term or
short-term capital gain, depending upon the length of time the employee held his
or her shares prior to the disposition) in the amount of the difference between
the amount realized on the sale and the exercise price, and the Company will not
be entitled to any tax deduction by reason of the grant or exercise of the ISO.
As a general rule, if an employee disposes of the shares acquired upon exercise
of an ISO before satisfying both holding period requirements (a "disqualifying
disposition"), his or her gain recognized on such a disposition will be taxed as
ordinary income to the extent of the difference between the fair market value of
such shares on the date of exercise and the exercise price, and the Company will
be entitled to a deduction in that amount. The gain, if any, in excess of the
amount recognized as ordinary income on such a disqualifying disposition will be
long-term or short-term capital gain, depending upon the length of time the
Grantee held his or her shares prior to the disposition.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL AND RATIFICATION OF THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires StaffMark's officers and
directors, and persons who own more than 10% of a registered class of
StaffMark's equity securities, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission (the "SEC")
and the Nasdaq National Market. Such persons are required by SEC regulation to
furnish StaffMark with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of other such forms received
by it with respect to 1997, or written representations from certain reporting
persons, StaffMark believes that all other filing requirements applicable to its
executive officers, directors and persons who own more than 10% of a registered
class of StaffMark's equity securities have been complied with, except for the
purchase of 5,000 shares of the Company's Common Stock by Charles A. Sanders,
M.D. in March 1997, which was reported on a Form 5 for 1997 filed by Mr.
Sanders.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Arthur Andersen LLP as the Company's independent
public accountants and auditors, a position that firm has held since the IPO.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal to be presented at the 1999 Annual Meeting
should be directed to Terry C. Bellora, Secretary of the Company, 302 East
Millsap Road, Fayetteville, Arkansas 72703, and must be received by the Company
on or before November 26, 1998. Any such proposal must comply with the
requirements of Rule 14a-8 under the Exchange Act.
16
<PAGE> 19
ADDITIONAL INFORMATION AVAILABLE
The Company's Annual Report to stockholders accompanies this Proxy
Statement. The Company filed its Annual Report on Form 10-K for the year ended
December 31, 1997 with the SEC on March 13, 1998. A copy of the Form 10-K,
including any financial statements and schedules and a list describing any
exhibits not contained therein, may be obtained without charge by any
stockholder. Written requests for copies of the report should be directed to
Terry C. Bellora, Secretary, StaffMark, Inc., 302 East Millsap Road,
Fayetteville, Arkansas 72703.
OTHER MATTERS
The Board does not intend to present and does not have any reason to
believe that others will present any items of business at the Annual Meeting
other than as stated in the Notice of Annual Meeting of Stockholders. If,
however, other matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying Proxy to vote the shares
represented thereby in accordance with their best judgment, and discretionary
authority to do so is included in the Proxy.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING ARE URGED TO SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
TERRY C. BELLORA
Secretary
Fayetteville, Arkansas
March 25, 1998
17
<PAGE> 20
APPENDIX A
STAFFMARK, INC.
302 EAST MILLSAP ROAD
FAYETTEVILLE, ARKANSAS 72703
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS, MAY 8, 1998.
KNOW ALL MEN BY THESE PRESENTS that I, the undersigned stockholder of
StaffMark, Inc., a Delaware corporation, do hereby nominate, constitute, and
appoint Jerry T. Brewer, Clete T. Brewer, and Gordon Y. Allison, or any one or
more of them, my true and lawful attorney(s) with full power of substitution for
me and in my name, place and stead, to vote all of the Common Stock, par value
$.01 per share, of the Company, standing in my name on its books on March 16,
1998, at the Annual Meeting of its Stockholders to be held on May 8, 1998 at the
Northwest Arkansas Convention Center, 1500 South 48th, Springdale, Arkansas, at
10:00 a.m., Central Standard Time, and at any and all adjournments thereof.
(1) Election of the following nominees as directors: Jerry T. Brewer, Clete
T. Brewer, W. David Bartholomew, Steven E. Schulte, John H. Maxwell,
Jr., Janice Blethen, William T. Gregory, William J. Lynch, R. Clayton
McWhorter, and Charles A. Sanders, M.D.
For all nominees listed [ ] WITHHOLD AUTHORITY to vote for [ ]
(except as marked to the all nominees listed above
contrary)
(INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write that nominee's name(s) on the space provided below.
-----------------------------------------------------------------
(2) To approve and adopt an amendment to the Company's Certificate of
Incorporation, as amended, to increase the number of authorized shares
of common stock from 26,000,000 to 200,000,000 and increase the number
of authorized shares of preferred stock from 1,000,000 to 10,000,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) To ratify and approve the Company's Amended and Restated 1996 Stock
Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) In their discretion, upon any other matters which may properly come
before the meeting or any adjournment thereof.
ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE
DIRECTED, WILL BE VOTED "FOR" PROPOSAL 1 (ALL NOMINEES), "FOR" PROPOSAL 2, AND
"FOR" PROPOSAL 3 AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE
PROXY WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING.
-1
<PAGE> 21
REVERSE SIDE
The undersigned acknowledges receipt of the Notice of Annual Meeting, a
Proxy Statement and an Annual Report and revokes all prior Proxies for said
meeting. This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder.
---------------------------------
Signature
---------------------------------
Signature if jointly held
DATED:__________________, 1998
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, OR
GUARDIAN, PLEASE 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. MAKE SURE THAT
THE NAME ON YOUR STOCK
CERTIFICATE(S) IS EXACTLY AS YOU
INDICATE ABOVE. PLEASE MARK,
SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED, POSTAGE PREPAID
ENVELOPE.
-2
