<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-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.
[_] 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 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.:
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(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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[LOGO]
STAFFMARK, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 22, 2000
________________
NOTICE AND PROXY STATEMENT
<PAGE>
[STAFFMARK, INC. LETTERHEAD]
April 18, 2000
Dear StaffMark Stockholder:
I am pleased to invite you to StaffMark's Annual Meeting of Stockholders.
The meeting will be at 10:00 a.m. on Monday, May 22, 2000 at the Northwest
Arkansas Convention Center, 1500 South 48th, Springdale, Arkansas.
At the meeting, you and the other stockholders will elect eight directors
to the StaffMark Board of Directors and vote on the ratification and approval of
the StaffMark 1999 Employee Stock Purchase Plan. You will find other detailed
information about StaffMark and its operations, including its audited financial
statements, in the enclosed Annual Report.
We hope you can join us on May 22, 2000. Whether or not you can attend,
please read the enclosed Proxy Statement. When you have done so, please mark
your vote on the enclosed proxy, sign and date the proxy, and return it to us in
the enclosed envelope. Your vote is important, so please return your proxy
promptly.
Sincerely,
CLETE T. BREWER
Chairman and Chief Executive Officer
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STAFFMARK, INC.
234 East Millsap Road
Fayetteville, Arkansas 72703
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 22, 2000
To the Stockholders:
StaffMark, Inc. will hold its Annual Meeting of Stockholders at the
Northwest Arkansas Convention Center, 1500 South 48/th/, Springdale, Arkansas,
on Monday, May 22, 2000 at 10:00 a.m., Central Standard Time.
We are holding this meeting:
. to elect eight directors to serve until the 2001 Annual Meeting of
Stockholders;
. to ratify and approve the StaffMark 1999 Employee Stock Purchase Plan;
and
. to transact any other business that may properly come before the
meeting.
Your Board of Directors selected April 3, 2000 as the record date for
determining stockholders entitled to vote at the meeting. A list of
stockholders on that date will be available for inspection at the corporate
headquarters of StaffMark, Inc., 234 East Millsap Road, Fayetteville, Arkansas,
for ten days before the meeting. Only holders of our common stock as of the
close of business on April 3, 2000 are entitled to vote at the meeting or any
adjournment thereof.
This Proxy Statement, proxy and StaffMark's 1999 Annual Report to
Stockholders are being distributed on or about April 21, 2000.
By Order of the Board of Directors
GORDON Y. ALLISON
Corporate Secretary
Fayetteville, Arkansas
April 18, 2000
ii
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
GENERAL INFORMATION.............................................................................. 1
Annual Meeting Information.................................................................. 1
ITEM 1 - ELECTION OF DIRECTORS................................................................... 3
Nominees for Election....................................................................... 4
Other Named Executive Officers.............................................................. 6
Committees and Meetings..................................................................... 7
STOCK OWNERSHIP.................................................................................. 8
Beneficial Ownership of Certain Stockholders, Directors and Executive Officers.............. 8
Section 16(a) Beneficial Ownership Reporting Compliance..................................... 9
COMPENSATION OF OUTSIDE DIRECTORS AND THE NAMED EXECUTIVE OFFICERS............................... 9
Compensation of Outside Directors........................................................... 9
Compensation of the Named Executive Officers................................................ 10
Option Grants in 1999....................................................................... 11
1999 Year-End Option Values................................................................. 11
Employment Agreements....................................................................... 12
Deferred Executive Compensation Plan........................................................ 13
Severance Agreement with Former Executive................................................... 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.......................................... 14
Compensation Committee Membership and Interlocks............................................ 14
Executive Compensation Components and Goals................................................. 14
Policy on Deductibility of Compensation..................................................... 14
1999 Executive Compensation................................................................. 15
1999 Chief Executive Officer Compensation................................................... 15
CERTAIN TRANSACTIONS............................................................................. 16
PERFORMANCE GRAPH AND TOTAL RETURN ANALYSIS...................................................... 17
ITEM 2 - RATIFICATION AND APPROVAL OF THE STAFFMARK, INC. 1999
EMPLOYEE STOCK PURCHASE PLAN............................................................ 18
Purpose of the Proposal and the 1999 Plan................................................... 18
Shares Issuable Pursuant to the 1999 Plan................................................... 18
Eligible Participants....................................................................... 18
Material Features of the 1999 Plan.......................................................... 19
1999 Plan Restrictions Concerning Resales on Shares and Distribution of Share Certificates.. 19
Prospective 1999 Plan Participation......................................................... 19
Tax Treatment............................................................................... 19
Plan Administration and Termination......................................................... 20
Recommendation.............................................................................. 20
ITEM 3 - OTHER MATTERS........................................................................... 20
ADDITIONAL INFORMATION........................................................................... 20
Independent Public Accountants.............................................................. 20
Annual Report............................................................................... 21
Information Not Incorporated................................................................ 21
ANNEX A - STAFFMARK, INC. EMPLOYEE STOCK PURCHASE PLAN
</TABLE>
iii
<PAGE>
GENERAL INFORMATION
Annual Meeting Information
This Proxy Statement contains information related to the Annual Meeting of
Stockholders of StaffMark, Inc. to be held on Monday, May 22, 2000, beginning at
10:00 a.m., at the Northwest Arkansas Convention Center, 1500 South 48th, in
Springdale, Arkansas and any postponements or adjournments thereof. This Proxy
Statement was prepared under the direction of our Board of Directors to solicit
your proxy for use at the Annual Meeting. It will be mailed to stockholders on
or around April 21, 2000.
Q: Who is soliciting my proxy?
A: We, the Board of Directors of StaffMark, Inc., are sending you this Proxy
Statement in connection with our solicitation of proxies for use at
StaffMark's 2000 Annual Meeting of Stockholders. Certain directors,
officers and employees of StaffMark and Corporate Communications, Inc. (our
proxy solicitor) may solicit proxies on our behalf by mail, phone, fax, or
in person.
Q: Who is paying for this solicitation?
A: StaffMark will pay for the solicitation of proxies, including Corporate
Communications Inc.'s estimated fee of $5,000 plus out-of-pocket expenses.
StaffMark also will reimburse banks, brokers, custodians, nominees and
fiduciaries for their reasonable charges and expenses to forward our proxy
materials to the beneficial owners of StaffMark common stock.
Q: What am I voting on?
A: The election of Clete T. Brewer, W. David Bartholomew, Stephen R. Bova,
William J. Lynch, R. Clayton McWhorter, Charles A. Sanders, M.D., Bob L.
Martin and Michael R. Loeb to the Board of Directors, and the ratification
and approval of StaffMark, Inc.'s 1999 Employee Stock Purchase Plan (the
"1999 Plan").
Q: Who can vote?
A: Only those who owned common stock at the close of business on April 3,
2000, the record date for the Annual Meeting, can vote. If you beneficially
owned common stock on the record date, you have one vote per share for each
director up for election at the Annual Meeting and one vote per share for
the ratification and approval of the 1999 Plan.
Q: What does "beneficially owned" mean?
A: Under the Securities and Exchange Commission's (the "SEC") definition,
"beneficial ownership" of shares means shares over which a person has sole
or shared voting or investment power.
Q: How do I vote?
A: You may vote your shares either in person or by proxy. To vote by proxy,
you should mark, date, sign and mail the enclosed proxy in the prepaid
envelope. Giving a proxy will not affect your right to vote your shares if
you attend the Annual Meeting and want to vote in person - by voting at the
Annual Meeting you automatically revoke your proxy. You also may revoke
your proxy at any time before the voting by giving the Corporate Secretary
written notice of your revocation or by submitting a later-dated proxy. If
you wish the individuals named as proxies to vote for all nominees, then
check the box marked "FOR." If you return your proxy but do not mark your
voting preference, the individuals named as proxies will vote your shares
"FOR" the election of the nominees for director and the ratification and
approval of the 1999 Plan and in their discretion with respect to any other
matter properly brought before the Annual Meeting.
<PAGE>
Q: What constitutes a quorum?
A: On the record date, we had 29,475,842 shares of common stock, $.01 par
value, outstanding. Each share of our common stock is entitled to one vote
per share. Voting can take place at the Annual Meeting only if
stockholders owning a majority of the total number of votes entitled to be
cast as of the record date are present in person or represented by
effective proxies.
Q: What happens if a quorum is not present?
A: If a quorum is not present at the scheduled time of the Annual Meeting,
then the stockholders who are represented may adjourn the Annual Meeting
until a quorum is present. The time and place of an adjourned meeting, if
necessary, would be announced at the time the adjournment is taken and no
other notice would be given.
Q: What vote is required in the election of directors?
A: Directors are elected by a plurality of the votes of shares present in
person or represented by proxy at the Annual Meeting. This means that the
eight nominees will be elected if they receive more affirmative votes than
any other nominees.
Q: What vote is required for the ratification and approval of the 1999 Plan?
A: The affirmative vote of the holders of a majority of the shares of our
common stock present in person or represented by effective proxies entitled
to vote at the Annual Meeting is required to ratify and approve the 1999
Plan.
Q: What are broker non-votes and abstentions?
A: If you are the beneficial owner of shares held in "street name" by a
broker, then the broker, as the record holder of the shares, is required to
vote those shares in accordance with your instructions. If you do not give
instructions to the broker, then the broker will be entitled to vote the
shares with respect to "discretionary" items, but will not be permitted to
vote the shares with respect to "non-discretionary" items (in which case,
the shares will be treated a "broker non-vote"). Under the rules of the New
York Stock Exchange, Inc., the election of directors is a discretionary
matter, enabling brokers to vote on the election of directors even if they
have not received instructions from beneficial owners. Even though brokers
are entitled to exercise their discretion and vote on director elections
without instructions from beneficial owners, they are not required to do
so. An abstention is a decision by a stockholder to take a neutral position
on a proposal being submitted to stockholders at a meeting, although taking
a neutral position through an "abstention" is considered a vote cast on a
proposal being submitted at a meeting.
Q: How do broker non-votes and abstentions effect the existence of a quorum
and the vote required in the election of directors and the ratification and
approval of the 1999 Plan?
A: Broker non-votes and abstentions are included in determining the number of
shares represented for purpose of determining whether a quorum is present
at a stockholders' meeting. Because directors will be elected by a
plurality of the votes cast (i.e., the eight director nominees receiving
the greatest number of votes will be elected) at the Annual Meeting, an
abstention would have no effect on the vote concerning the election of
directors and thus, is not being offered as voting option in the election
of directors. A broker non-vote with respect to the 1999 Plan will have no
effect on the outcome of these particular matters because it is not
considered a vote cast under Delaware law. However, absententions, which
are considered to be a vote cast under Delaware law, will have the effect
of a negative vote with respect to the 1999 Plan, since this proposal
requires a majority of the votes cast at the Annual Meeting in favor of the
proposal.
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Q: What happens if I withhold my vote for an individual director?
A: Withheld votes are counted as "NO" votes for the individual director. 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 voted for others, then indicate the name(s) of the
nominee(s) for whom you are withholding authority to vote by writing the
name(s) of such nominee(s) in the space provided in the proxy.
Q: Can I vote on other matters?
A: Our Amended and Restated Bylaws limit the matters presented at an annual
meeting to those in the notice of annual meeting and those otherwise
properly presented at an annual meeting. For nominations of persons for
election to the Board of Directors and other business matters, in each
instance, other than those persons listed or matters included in the notice
of annual meeting, to be properly presented at an annual meeting, our
Amended and Restated Bylaws require that both of the following conditions
be satisfied: (a) the alternative director nominees or other matter(s) must
be a proper subject for stockholder action under the Delaware General
Corporation Law; and (b) the stockholder must have given timely written
notice of the alternative director nominees or other matters to be brought
before an annual meeting. To be timely, a stockholder's notice must have
been delivered to our Corporate Secretary not less than sixty (60) days nor
more than ninety (90) days prior to the first anniversary of our prior
year's annual meeting. Since none of our stockholders provided notice for
any alternative director nominees or any other business matters during the
period of February 7, 2000 to March 8, 2000 (which is the 60-90 day period
prior to the first anniversary (i.e., May 7, 2000) of last year's annual
meeting), no director nominees or other business matters, other than those
included in the Notice of Annual Meeting, may properly come before the
Annual Meeting.
Q: Who will count the vote?
A: Representatives of EquiServe, our transfer Agent, will tabulate the votes.
Q: When are 2001 stockholder proposals or other stockholder business matters
due?
A: To be considered for presentation at our 2001 Annual Meeting of
Stockholders, inclusion in the proxy statement and on the proxy card, a
stockholder proposal must be received at our offices no later than December
20, 2000. For stockholder proposals or other business matters submitted
outside the proposal process identified in the proceeding sentence, if we
do not receive notice of any such matter that a stockholder wishes to raise
at the 2001 Annual Meeting during the thirty day period of February 21,
2001 through March 23, 2001, then no business matters, other than those
included in the notice of annual meeting for next year's annual meeting,
may properly come before next year's annual meeting. All proposals and
notifications should be addressed in writing and satisfying the
particularity requirements in our Amended and Restated Bylaws to Gordon Y.
Allison, Corporate Secretary, StaffMark, Inc., 234 East Millsap Road,
Fayetteville, Arkansas 72703.
ITEM 1 - ELECTION OF DIRECTORS
Our Board of Directors currently consists of ten persons each of whose term
expires at the Annual Meeting. With the exception of Mr. Bova, Mr. Martin and
Mr. Loeb, the directors began serving their term at last year's annual meeting
on May 7, 1999. Ms. Blethen and Mr. Schulte, who began their directorships with
our company in October 1996, will serve their current respective director terms
through and until the Annual Meeting. Ms. Blethen and Mr. Schulte have not been
nominated for election to the Board at the Annual Meeting. The Board, consistent
with this information and in accordance with the Amended and Restated Bylaws of
our company, has reduced the number of directorships up for election at the
Annual Meeting to eight. Consequently, at the Annual Meeting, you and the other
stockholders will elect eight individuals to serve as directors until the 2001
Annual Meeting or until their successors are duly elected and qualified.
The individuals named as proxies will vote the enclosed proxy for the
election of all nominees, unless you direct them to withhold your votes. If any
nominee becomes unable to serve as a director before the Annual Meeting (or
decides not to serve), the individuals named as proxies may vote for a
substitute or we may reduce the number of members of
3
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the Board. WE RECOMMEND A VOTE FOR EACH OF THE NOMINEES LISTED BELOW.
Below are the names and ages of the director nominees, the year they became
directors, their principal occupations or employment for at least the past five
years and certain of their other directorships.
Nominees for Election
Name Age Experience
- ---- --- ----------
Clete T. Brewer 35 Co-founded our company in March 1996 and
served until September 1999 as our
President, Chief Executive Officer and a
director. In September 1999, Mr. Brewer
became our Chairman, retained his
position as our Chief Executive Officer
and retained his position as a director.
Mr. Brewer also co-founded Brewer
Personnel Services, Inc. ("Brewer"), one
of the StaffMark founding companies, in
July 1988, and has served since April
1994 as President, Chief Executive
Officer and a director of Brewer. From
July 1988 to April 1994, Mr. Brewer
served as Vice President of Brewer.
Stephen R. Bova 53 President and Chief Operating Officer
and a director of our company since
September 1999. Prior to joining our
company, Mr. Bova served as the Managing
Director of International Operations for
IntelliGroup, Inc., an information
technology company, from 1998 to 1999.
From 1996 to 1998, Mr. Bova served as
President of the Global Banking Division
for Electronic Data Systems. From 1986
to 1996, Mr. Bova was with ALLTEL
Information Systems, the Information
Systems division of ALLTEL Corp., where
he founded their International Division,
later becoming President of the Wireless
Telecommunications Division, then
President of the Global Financial
Division.
W. David Bartholomew 43 President - Commercial Staffing Segment
of our company since July 1998 and a
director since October 1996. From
October 1996 to June 1998, Mr.
Bartholomew served as Executive Vice
President - Eastern Operations for our
Commercial Staffing Segment. Mr.
Bartholomew served as
Secretary/Treasurer and a principal of
HRA, Inc., 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.
William J. Lynch 57 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 company. Mr.
Lynch has served as a director of our
company since October 1996.
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Name Age Experience
- ---- --- ----------
R. Clayton McWhorter 66 In 1996, Mr. McWhorter founded Clayton
Associates, LLC, a venture capital firm,
and currently serves as its Chairman and
Chief Executive Officer. Mr. McWhorter
is a member of the Board of Directors of
Columbia/HCA Healthcare Corporation, a
public company, and served as its
Chairman of the Board from April 1995 to
May 1996. Mr. McWhorter served as
Chairman, President and Chief Operating
Officer of Healthtrust, Inc. from 1987
to April 1995 and served as President
and Chief Executive Officer of Hospital
Corporation of America from 1985 to
April 1987. In addition, Mr. McWhorter
is a director of Suntrust Bank -
Nashville, a subsidiary of a public
company, and is a director of
Corrections Corporation of America, a
publicly traded company. Mr. McWhorter
has served as a director of our company
since October 1996.
Charles A. Sanders, M.D. 68 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., Kendle
International, Inc., Genentech, Inc. and
Biopure, Corp., which are all publicly
traded companies. Dr. Sanders has served
as a director of our company since
October 1996.
Bob L. Martin 51 Mr. Martin became one of our directors
in September 1999. From 1993 to 1999,
Mr. Martin was President and Chief
Executive Officer of Wal-Mart
International, the international
division of Wal-Mart Stores, Inc. Prior
to his position as President and Chief
Executive Officer of Wal-Mart
International, Mr. Martin served nine
years as the Chief Information Officer
of Wal-Mart Stores, Inc. Mr. Martin is
also a director for Students in Free
Enterprise, Sabre Group Holdings, Inc.,
a publicly traded company and Santa
Clara University. Mr. Martin is a member
of the Council of the Americas and
serves on the Executive Advisory Board
of the University of Arkansas.
Michael R. Loeb 44 Mr. Loeb became one of our directors in
April 2000. Since 1991, Mr. Loeb has
been President of the Synapse Group,
Inc. and its Chief Executive Officer
since December 1997. Mr. Loeb has also
been a director of the Synapse Group,
Inc. since March 1993. Prior to co-
founding the Synapse Group, Inc. and
becoming its President in 1991, Mr. Loeb
had an eight year career at Time Inc.,
where he held a number of positions,
including Consumer Marketing Director
for Sports Illustrated and Vice
President of Consumer Marketing of
Entertainment Weekly. At Time, he also
helped introduce SI for Kids. Mr. Loeb
was also responsible for starting the
direct response division of Deutsch
agency immediately prior to co-founding
the Synapse Group, Inc. Mr. Loeb is also
a director of Gift Services, L.L.C.
5
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Other Named Executive Officers
Name Age Experience
- ---- --- ----------
Terry C. Bellora 53 Chief Financial Officer of our company
since August 1996. Prior to joining our
company, Mr. Bellora served as Chief
Financial Officer of Pace Industries,
Inc. from 1986 to August 1996. Mr.
Bellora served as a director of Pace
Industries, Inc. from 1988 to 1993 and
as an advisory director of Pace
Industries, Inc. from 1993 to August
1996. Mr. Bellora is a certified public
accountant and was previously an audit
partner for a regional accounting firm
prior to his employment with Pace
Industries, Inc.
Gordon Y. Allison 40 Executive Vice President - General
Counsel of our company since June 1997.
Prior to joining us, Mr. Allison served
as the Vice President - General Counsel
of Pace Industries, Inc. from February
1995 to June 1997. Beginning in May
1992, Mr. Allison practiced law at the
firm of Giroir, Gregory, Holmes & Hoover
LLC in Little Rock, Arkansas and was a
partner from January 1994 until his
employment began with Pace Industries,
Inc. From 1990 to 1992, Mr. Allison was
a special counsel in the Division of
Corporation Finance at the SEC in
Washington, D.C. and from 1988 to 1990
he was a staff attorney in the Division
of Corporation Finance of the SEC.
Mr. Allison is a certified public
accountant and worked at Arthur Andersen
LLP prior to attending law and graduate
business school. Mr. Allison received
his Masters of Laws in Securities
Regulation and Taxation from the
Georgetown University Law School. Prior
to attending the Georgetown University
Law School, Mr. Allison received his
Juris Doctor from the University of
Arkansas School of Law and his Masters
of Business Administration from the
University of Arkansas School of
Business.
Steven E. Schulte 37 Executive Vice President -Administration
of our company and a director since
October 1996. Mr. Schulte was employed
by Prostaff Personnel Services, Inc.,
one of the StaffMark founding companies
since August 1987 and served as its
President and Chief Executive Officer
from June 1992 through October 1996.
6
<PAGE>
Committees and Meetings
We have three standing committees.
The Audit Committee
. Reviews with the independent accountants, the accountants' annual report
and scope of the next year's audit.
. Nominates the independent accountants to the Board of Directors.
. Reviews any consulting services provided by the independent accountants
and evaluates the effect these services may have on the accountants'
independence.
. Reviews with the independent accountants the adequacy of internal
accounting and control systems.
. Reviews with management and the independent accountants the accounting
and financial reporting requirements and practices.
The members are William J. Lynch (Chairman), Charles A. Sanders, M.D. and
R. Clayton McWhorter.
The Compensation Committee
. Reviews annually and recommends to the Board of Directors the Chief
Executive Officer's total compensation.
. Reviews compensation and recommends changes for executive officers of
our company and its subsidiaries.
. Administers the stock incentive plans and the executive officer
incentive bonus plan.
The members are R. Clayton McWhorter (Chairman), William J. Lynch and Bob
L. Martin.
The Nominating Committee
. Recommends the size of the Board.
. Recommends nominees for election to serve as directors and to serve on
committees of the Board.
. Suggests changes in compensation and retirement policies for directors.
The members are Charles A. Sanders, M.D. (Chairman) and Bob L. Martin.
During fiscal 1999, our Board and various Board Committees held the
following number of meetings: Board of Directors, eleven (four of which were
regular meetings, one annual meeting and six of which were special meetings);
Audit Committee, five; Compensation Committee, seven; Nominating Committee, one.
No director attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees on which that director served.
7
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STOCK OWNERSHIP
Beneficial Ownership of Certain Stockholders, Directors and Executive Officers
The following table provides information as of April 3, 2000 about the
beneficial ownership of common stock by: (1) the persons known to us to be
beneficial owners of more than 5% of the outstanding common stock; (2) our
directors; (3) each Named Executive Officer (identified in the Summary
Compensation Table that follows); and (4) our directors and executive officers
as a group. To the best of our knowledge, each such person has sole voting and
investment power over the shares shown in this table, except as otherwise
indicated.
<TABLE>
<CAPTION>
Shares Beneficially
Owned(1)
---------------------------------
Number Percent
----------------- --------------
<S> <C> <C>
Name and Address of Principal Stockholders
T. Rowe Price Associates, Inc. (2) 1,535,200 5.21%
100 East Pratt Street
Baltimore, MD 21202
Name of Directors and Named Executive Officers (3)
- ----------------------------------------------
Clete T. Brewer(4)............................................................... 1,085,584 3.68%
Stephen R. Bova(5)............................................................... 17,060 *
Terry C. Bellora(6).............................................................. 246,560 *
W. David Bartholomew(7).......................................................... 319,870 1.08
Gordon Y. Allison(8)............................................................. 27,000 *
Steven E. Schulte(9)............................................................. 458,925 1.56
Janice Blethen(10)............................................................... 459,211 1.56
William J. Lynch(11)............................................................. 65,007 *
R. Clayton McWhorter(12)......................................................... 24,367 *
Charles A. Sanders, M.D.(13)..................................................... 34,367 *
Bob L. Martin(14)................................................................ 6,667 *
Michael R. Loeb(15).............................................................. 6,667 *
All directors and executive officers as a group (12 persons)................ 2,751,285 9.25
</TABLE>
- ------------------------
*Less than 1%.
(1) The percentages shown with respect to any identified individual or group
other than the entity listed under Principal Stockholders are calculated by
dividing: (i) the sum of (a) the number of shares of common stock actually
owned as of April 3, 2000 plus (b) the number of shares of common stock
that may be acquired through the exercise of stock options or other rights
on or before June 2, 2000 ("Currently Exercisable Options") by (ii) the sum
of 29,475,842 shares of common stock outstanding on April 3, 2000 plus the
amount referenced in clause (i)(b).
(2) These securities are owned by various individuals and institutional
investors, which T. Rowe Price Associates, Inc. ("Price Associates") serves
as investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
Information for Price Associates is based on its Schedule 13G filing with
the SEC made on February 8, 2000.
(3) The address of each of the directors and executive officers listed above is
c/o StaffMark, Inc., 234 E. Millsap Rd, Fayetteville, AR 72703.
(4) Includes 15,750 shares held by Mr. Brewer=s spouse, as to which Mr. Brewer
disclaims beneficial ownership, and 63,000 shares subject to Currently
Exercisable Options.
(5) Includes 2,060 shares held by Mr. Bova's spouse, as to which Mr. Bova
disclaims beneficial ownership.
(6) Includes 245,260 shares subject to Currently Exercisable Options, 200
shares held by a trust of which Mr. Bellora is the trustee and 100 shares
owned by Mr. Bellora's minor child, to which Mr. Bellora disclaims
beneficial ownership.
(7) Includes 246,937 shares held by Bartfund I Limited Partnership, of which
Mr. Bartholomew is the general partner, and 72,833 shares subject to
Currently Exercisable Options.
(8) Includes 27,000 shares subject to Currently Exercisable Options.
(9) Includes 440,359 shares held by trusts for which Mr. Schulte is trustee and
17,666 shares subject to Currently Exercisable Options.
(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 17,734 shares subject to Currently Exercisable Options.
(11) Includes 3,033 shares held by a trust for which Mr. Lynch is trustee and
18,620 shares subject to Currently Exercisable Options.
(12) Includes 18,620 shares subject to Currently Exercisable Options.
(13) Includes 18,620 shares subject to Currently Exercisable Options.
(14) Includes 6,667 shares subject to Currently Exercisable Options.
(15) Includes 6,667 shares subject to Currently Exercisable Options.
8
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Under the U.S. securities laws, directors, executive officers and persons
holding more than 10% of StaffMark's common stock must report their initial
ownership of the common stock and any changes in that ownership to the SEC. The
SEC has designated specific due dates for these reports and we must identify in
this Proxy Statement those persons who did not file these reports when due.
Based solely on our review of copies of the reports filed with the SEC and
written representations of its directors and executive officers, we believe all
persons subject to reporting filed the required reports on time in 1999.
COMPENSATION OF OUTSIDE DIRECTORS AND THE NAMED EXECUTIVE OFFICERS
This section describes the compensation paid or payable to, the directors,
the Chief Executive Officer and the other Named Executive Officers in 1999.
Compensation of Outside Directors
Annual Compensation. Each outside director, that is a director who is not one
of our employees, receives a $6,000 fee for each regular Board meeting, the
annual Board meeting and certain special Board meetings that the director
attends in person or by telephone. In addition, each outside director receives a
$2,500 fee for each Board Committee meeting that the director attends in person
or by telephone. In order to retain our existing outside directors and attract
new qualified and experienced outside directors, we increased our fees to
outside directors for Board and Board Committee meetings from $4,000 to $6,000
and $1,000 to $2,500, respectively, in September 1999.
We offer each of our outside directors the alternative of taking all or a
portion of their directors' fees for annual and regular Board meetings in shares
of our common stock in lieu of cash through our Non-Employee Director Stock
Election Plan. Messrs. Lynch, McWhorter, Sanders and Martin have each elected
under this plan to receive their directors' fees for Board Meetings in shares of
our common stock, as opposed to cash. Board Committee fees are paid in cash to
Messers. Lynch, McWhorter and Sanders, while Mr. Martin has elected to receive
his Board Committee fees in shares of our common stock, as opposed to cash.
Since Mr. Loeb recently joined the Board, he will be offered the opportunity to
receive shares of our common stock in lieu of cash for Board fees and Board
Committee fees (for those Board Committees to which he is elected) under this
plan. Under this plan, our outside directors may also defer receipt of their
Board fees and Board Committee fees until they decide to receive any such fees.
Mr. Martin has deferred receipt of all of his Board and Board Committee fees.
For 1999, our outside directors in the aggregate, received fees (both for Board
Meetings and Board Committee meetings) in a combination of cash and common stock
totaling $153,000 for Board of Director and Board Committee meetings. We also
reimbursed the outside directors for their reasonable out-of-pocket expenses in
attending Board and Board Committee meetings.
Stock Options. Under the Amended and Restated StaffMark, Inc.1996 Stock
Option Plan, each outside director receives a nonqualified stock option to
purchase 20,000 shares of our common stock upon that person's initial election
as a director. Following initial election and on the date of each annual
stockholders' meeting, each outside director receives an additional nonqualified
option to purchase 5,000 shares of StaffMark common stock. In September 1999,
the Amended and Restated StaffMark, Inc. 1996 Stock Option Plan was modified to
increase initial stock option grants to new outside directors from stock option
grants for 10,000 shares to stock option grants for 20,000 shares. At this time,
this plan was also modified, effective in September 1999, to increase annual
stock option grants for outside directors from stock option grants for 2,000
shares to stock option grants for 5,000 shares. In May 1999, which was prior to
the previously noted plan modifications, each outside director at such time
received a stock option to purchase 2,000 shares of our common stock at an
exercise price of $10.25 per share under this plan. These options vest in three
equal installments beginning on the grant date and the first and second
anniversaries of the grant date. These options will expire five years after the
grant date, unless earlier terminated or exercised.
9
<PAGE>
Compensation of the Named Executive Officers
The following table summarizes the total compensation for each of the last
three years paid or accrued by us for services rendered during the years
indicated to our Chief Executive Officer and our four most highly compensated
executive officers whose total salary and bonus exceeded $100,000 during the
year-ended December 31, 1999 (the "Named Executive Officers")(1).
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying Other Annual
Name and Principal Position Year Salary ($) Bonus ($) Options Compensation(2)
- --------------------------- ---- ---------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Clete T. Brewer, Chairman, 1999 $232,500 $ 42,500 - $11,331
Chief Executive Officer and 1998 150,000 127,500 19,000 5,500
Director......................... 1997 150,000 116,000 65,000 16,737
Terry C. Bellora, Chief Financial 1999 212,500 24,250 65,000 13,812
Officer.......................... 1998 150,000 112,500 14,000 6,600
1997 150,000 106,000 102,500 7,200
W. David Bartholomew, President - 1999 177,000 125,000 48,000 12,926
Commercial 1998 144,000 102,975 15,000 7,750
Staffing Segment and Director..... 1997 125,000 91,375 57,500 6,000
Gordon Y. Allison, Executive Vice 1999 132,000 70,000 15,000 4,920
President - 1998 120,000 86,560 5,000 3,600
General Counsel(3)................ 1997 60,000 30,000 40,000 1,800
Steven E. Schulte, Executive Vice 1999 125,000 - 5,000 12,792
President - 1998 125,000 93,750 5,000 9,106
Administration.................... 1997 125,000 15,000 10,000 6,000
</TABLE>
_____________
(1) Mr. Bova became our President, Chief Operating Officer and a director in
September 1999. Mr. Bova's employment agreement provides, among other
compensatory matters, that he will receive an annual salary of $325,000.
Based on Mr. Bova's annual salary, he would have been one of the Named
Executive Officers in 1999, except that his employment and resulting salary
compensation payments did not begin until September 1999. It is
anticipated that Mr. Bova would be one of the Named Executive Officers for
the 2000 year and thus be reflected as such in our 2001 Annual
Stockholders' Meeting proxy statement. A description of Mr. Bova's
employment agreement is included in the "--Employment Agreements" section
of this Proxy Statement. Ted Feldman, formerly our Chief Operating
Officer, ended employment with us in September 1999. From January 1, 1999
through the end of Mr. Feldman's employment in September 1999, Mr. Feldman
was paid a salary pursuant to his employment agreement of $119,000. As
described under the "--Severance Agreement with Former Executive" section
of this Proxy Statement, Mr. Feldman also received $65,000 of severance
payments during 1999, with the first payment being made on or around
September 15, 1999. Based on these amounts, if Mr. Feldman had been one of
our employees at December 31, 1999, then he would have been included in the
compensation table reflected above.
(2) During 1999, the other annual compensation for the Named Executive Officers
consisted of automobile allowances, club dues, matching payments with
respect to a non-qualified deferred executive compensation plan, payments
of life insurance premiums relating to term life policies on certain of the
Named Executive Officers which were paid for by us and medical insurance
premiums under our company medical insurance plan that were paid by us. The
maximum matching amount by us under the non-qualified executive deferred
plan for each participating executive officer for each year is $5,000. For
1998, the other annual compensation consists of automobile allowances,
other than $2,250 of Mr. Bartholomew's amount and $3,106 of Mr. Schulte's
amount in 1998, which were matching payments by us with respect to the non-
qualified executive deferred compensation plan. As to Mr. Brewer during
1997, he received the cash surrender value of key man life insurance policy
in the amount of $10,737, in addition to an automobile allowance of $6,000.
The remaining 1997 amounts for other annual compensation consisted of
automobile allowances for the other Named Executive Officers.
(3) Salary for 1997 reflects partial year compensation from the date of Mr.
Allison's initial employment with us on June 27, 1997 through the end of
the December 31, 1997 fiscal year.
10
<PAGE>
Option Grants in 1999
The following table sets forth information concerning each grant of stock
options to the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------------------------
Percentage of Total
Number of Securities Options Granted Exercise or Grant Date
Underlying Options to Employees in Base Price Expiration Present
Name Granted in 1999 1999 ($/Share) /(1)/ Date Value ($)/(2)/
- ---- -------------------- ------------------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Clete T. Brewer................ - - N/A N/A N/A
Terry C. Bellora............... 65,000 4.09 8.625 4/19/09 $385,353
W. David Bartholomew........... 30,000 1.89 7.188 10/29/09 148,224
18,000 1.13 8.625 4/19/09 106,713
Gordon Y. Allison.............. 15,000 0.94 8.625 4/19/09 88,928
Steven E. Schulte.............. 5,000 0.31 8.625 4/19/09 29,643
</TABLE>
_______________
(1) All options were granted at the market value on the date of grant based on
the last sales price of our 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 our common stock of 80%, based upon the actual
daily volatility of our stock during 1999; a risk-free rate of return of
6.34%, 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.
1999 Year-End Option Values
The following table sets forth information concerning the value of options
exercised during 1999 and the value of unexercised options as of December 31,
1999 by the Named Executive Officers. Only one of the Named Executive Officers
exercised options during the year ended December 31, 1999.
<TABLE>
<CAPTION>
Stock Option Exercises and Year End Values
------------------------------------------
Number Of
Securities Value of
Shares Underlying In-the-
Acquired on Value Unexercised Options Money Options at
Exercise Realized/(1)/ held at December 31, 1999 December 31, 1999/(2)/
----------- ----------- ------------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clete T. Brewer............. 4,000 $15,752 51,667 38,333 - $ -
Terry C. Bellora............ - - 205,094 136,406 - -
W. David Bartholomew........ - - 49,333 81,167 - 11,190
Gordon Y. Allison........... - - 20,334 39,666 - -
Steven E. Schulte........... - - 11,000 15,666 - -
</TABLE>
___________
(1) Calculated using the difference between: (a) the closing sales price of our
common stock on the date of exercise; and (b) the exercise price.
(2) Options are "in-the-money" if the closing market price of our common stock
exceeds the exercise price of the options. The value of the unexercised
options represents the difference between the closing market price of our
common stock on December 31, 1999, $7.563 and the exercise price of such
options.
11
<PAGE>
Employment Agreements
Clete T. Brewer, W. David Bartholomew and Steve E. Schulte entered into
employment agreements with us on October 2, 1996. Each of these employment
agreements, subject to the amendments described in the following paragraph for
Messers. Brewer and Bartholomew, is for a term of five years and provides for an
annual base salary which may be adjusted upward at the discretion of the
Compensation Committee of the Board. Subject to the amendments described below
to the agreements for Messrs. Brewer and Bartholomew, the term for each of these
agreements will continue after the initial five-year term on a year-to-year
basis at the time of a renewal, unless any of these agreements are terminated
early or are not renewed. These agreements allow each of these Named Executive
Officers to be eligible for year-end bonus compensation which is determined
under an incentive bonus plan established and administered by the Compensation
Committee of the Board. The employment agreements referred to above provide
that, in the event of a termination of employment by us, except for "cause,"
that these employees will be entitled to receive the employee's then current
salary for a period no longer than five years after October 2, 1996. Each of
these agreements contains a covenant not to compete with us for a period of two
years immediately following the termination of employment for any reason,
subject to certain exceptions described in the paragraph below.
On September 17, 2000, Mr. Brewer and Mr. Bartholomew's employment
agreements were amended by us, based on the recommendations of the Compensation
Committee, to: (1) increase the base salary; (2) extend the term through April
1, 2002; and (3) include a change of control provision. If Mr. Brewer or Mr.
Bartholomew are terminated by us without cause or if they terminate based on
Good Reason (assignment of any duties inconsistent with his position, authority,
duties, responsibilities or location) within two years after we undergo a change
of control, then the respective agreement require certain payments. For Mr.
Brewer, he would receive a lump sum payment in an amount equal to two times the
sum of: (a) his base salary then in effect plus (b) the greater of $125,000 or
his bonus for the year immediately preceding the year in which the termination
of his employment occurs. For Mr. Bartholomew, he would receive a lump sum
payment in an amount equal to two times the sum of: (a) his base salary then in
effect plus (b) his bonus for the year in which the termination of his
employment occurs. In this circumstance, the non-competes in the agreements for
each of Messrs. Brewer and Bartholomew shall apply for one year if either of
them terminates employment and shall not apply at all if we terminate
employment.
Mr. Bellora entered into a five-year employment agreement with us on
October 2, 1996, which agreement was amended on September 17, 1999, with the
amendment extending the term until April 1, 2002, increasing Mr. Bellora's base
salary and including a change of control provision similar to Mr. Brewer's
agreement. The term will renew on a year-to-year basis after the initial term,
as amended, unless this agreement is terminated early or not renewed. This
agreement, as amended, provides for an annual base salary, a bonus to be
determined annually in accordance with the incentive bonus plan administered by
the Compensation Committee and an option to purchase 150,000 shares of our
common stock at $12 per share. The shares underlying this option grant become
exercisable in different increments over a period of five years from the date of
grant on October 2, 1996. The option grant has a ten-year term, unless earlier
exercised by Mr. Bellora. Mr. Bellora's employment agreement contains a covenant
not to compete with us for the two year period immediately following termination
of employment with us, with certain exceptions. If Mr. Bellora is terminated
without cause in the absence of a change of control involving us, then the
agreement requires us to pay Mr. Bellora an amount equal to the lesser of: (1)
his base salary payable over the remaining term of the agreement; or (2) his
base salary for a two-year period. In this circumstance, Mr. Bellora is
obligated to comply with a one-year non-compete covenant involving our business,
employees and customers. If Mr. Bellora is terminated without cause or if he
terminates for Good Reason within two years after we undergo a change of
control, then the agreement requires a payment to Mr. Bellora in a lump sum
amount equal to two times the sum of: (a) his base salary then in effect plus
(b) the greater of $100,000 or his bonus for the year immediately preceding the
year in which the termination of his employment occurs. In this circumstance,
Mr. Bellora's non-compete shall apply for one year if he terminates employment
and shall not apply at all if we terminate employment.
Mr. Allison entered into a four-year employment agreement with us on June
23, 1997, which agreement was amended on September 17, 1999, with the amendment
extending the term until April 1, 2002 and including a change of control
provision similar to Mr. Bartholomew's agreement. The term will renew on a year-
to-year basis after the initial term, as amended, unless this agreement is
terminated early or not renewed. This agreement, as amended, provides for an
annual base salary and a bonus to be determined annually in accordance with the
incentive bonus plan administered by the Compensation Committee and an option to
purchase 30,000 shares of our common stock
12
<PAGE>
at $16 per share. The shares underlying this option grant become exercisable in
20% increments over a five year period from the date of grant on June 27, 1997.
The option grant has a ten-year term, unless earlier exercised by Mr. Allison.
Mr. Allison's employment agreement contains a covenant not to compete with us
for the two year period immediately following termination of employment with us,
with certain exceptions. If Mr. Allison is terminated by us without cause or if
he terminates for Good Reason, in the absence of a change in control involving
us, then the agreement requires us to pay Mr. Allison an amount equal to the
lesser of: (1) his base salary payable over the remaining term of the agreement;
or (2) his base salary for a two-year period. In this circumstance, Mr. Allison
is obligated to comply with a one-year non-compete covenant involving our
business, employees and customers. If Mr. Allison is terminated without cause or
if he terminates based on Good Reason within two years after we undergo a change
of control, then the agreement requires a lump sum payment to Mr. Allison in a
lump sum amount equal to two times the sum of: (a) his base salary then in
effect plus (b) his bonus for the year immediately preceding the year in which
the termination occurs. In this circumstance, Mr. Allison's non-compete shall
apply for one year if he terminates employment and shall not apply at all if we
terminate employment.
In September 1999, we named Stephen R. Bova as our President and Chief
Operating Officer. Mr. Bova entered into a three-year employment agreement with
us on August 18, 1999, which agreement became effective on September 9, 1999.
The term will renew on a year-to-year basis after the initial term, as amended,
unless this agreement is terminated early or not renewed. This agreement
provides for an annual base salary and a bonus to be determined annually in
accordance with the incentive bonus plan administered by the Compensation
Committee. Mr. Bova's employment agreement contains a covenant not to compete
with us for the two year period immediately following termination of employment
with us; provided that such period ends immediately if we terminate Mr. Bova
without cause or if Mr. Bova terminates for Good Reason. If Mr. Bova is
terminated by us without cause or if he terminates for Good Reason, in the
absence of a change of control involving us, then the agreement requires us to
pay Mr. Bova an amount equal to the lesser of: (1) his base salary payable over
the remaining term of the agreement; or (2) his base salary for a two-year
period. If Mr. Bova is terminated without cause or if he terminates based on
Good Reason within two years after we undergo a change of control, then the
agreement requires a lump sum payment to Mr. Bova in the amount of two times the
sum of: (a) his base salary then in effect plus (b) the greater of $100,000 or
his bonus percentage for the year immediately preceding his termination
multiplied by his base salary in effect at the time of such termination.
Deferred Executive Compensation Plan
We maintain an optional deferred compensation plan for certain members of
management (including the Named Executive Officers) allowing them to defer a
portion of their annual compensation. We match 50% of the first six percent of
the annual compensation deferred by a participant. However, the annual match by
us may not exceed $5,000 per participant. The funds attributable to a
participant (including voluntary contributions and matching contributions) are
invested among various funds designated by the plan administrator. Upon the
death or retirement of a participant, the funds attributable to the participant
(including any earnings on contributions) are distributed to the participant or
the participant's beneficiary in a lump sum or in annual installments over a
period of up to 15 years. A participant whose employment with us is terminated
prior to death or retirement is entitled to receive his or her contributions to
the plan (and any earnings thereon). However, a participant may only receive
100% of the matching contributions if he or she has completed five years of
service with us. During 1999, Mr. Bartholomew and Mr. Schulte were the only
Named Executive Officers to participate in this plan.
Severance Agreement with Former Executive
We entered into a severance agreement with a former executive officer, Ted
Feldman, formerly our Chief Operating Officer, whose employment with us ended in
September 1999. The severance payments to Mr. Feldman during 1999 totaled
$65,000. The severance payments are being paid in equal monthly increments
through September 30, 2001, which would have been the expiration date of Mr.
Feldman's prior employment agreement with us.
13
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Membership and Interlocks
Our Compensation Committee is primarily responsible for determining the
executive officer compensation levels of our company. Our Compensation
Committee is composed entirely of independent outside directors. No member of
the Compensation Committee is or has ever been one of our officers or employees.
No interlocking relationship exists between the members of the Compensation
Committee and the board of directors or compensation committee of any other
company.
Executive Compensation Components and Goals
Executive officer compensation consists of a combination of salary, bonus
and stock option awards. Each Named Executive Officer, is a party to a five-
year employment agreement (in this report we will refer to these as the
"Executive Employment Agreements") that was negotiated at arms-length. The
Executive Employment Agreements were executed at the time of our initial public
offering on October 2, 1996, certain of which agreements were amended in
September 1999, as described under the section entitled "Compensation of Outside
Directors and the Named Executive Officers--Employment Agreements." Our
executive compensation strategy generally is for executives to receive a salary
at a level somewhat below industry averages, while being eligible for bonuses
based on performance and stock option grants. Notwithstanding this general
strategy for executive compensation, our Chairman and Chief Executive Officer's
salary was raised to an annual amount closer to industry averages, when our
company hired Mr. Bova as our President and Chief Operating Officer in September
1999. We believe that lower or competitive base salary levels in combination
with performance based bonuses provide our executives the potential to earn in
excess of competitive industry total executive compensation if subjective and/or
objective performance goals for our company are achieved. We also intend to
continue to grant to our executives and other key employees stock options at the
current market value of our stock. The options have no monetary value to the
executives unless the market price of our common stock increases above the
exercise price. We anticipate that future option grants will be based on a
subjective analysis of various performance criteria, primarily earnings per
share and operating profits, although future grants may not directly be tied to
any one factor. Options will be granted at an exercise price equal to the
closing sales price of our common stock, as reported on NASDAQ, on the date of
grant. Future cash bonus payments will be made in accordance with an incentive
bonus plan that we adopt at the beginning of each year based on criteria such as
net income, return on equity, return on assets, revenue diversification mix,
divisional operating income performance, earnings per share and/or discretionary
matters. We believe the mix of base salary, bonuses and stock option grants
links executive compensation to our company's operational performance.
In summary, the goals of our executive compensation program are:
.To compensate executive employees in a manner that aligns the employee's
interests with the interests of our stockholders;
.To encourage continuation of our company's entrepreneurial spirit;
.To reward executives for successful long-term strategic management;
.To recognize outstanding performance; and
.To attract and retain highly qualified and motivated executives.
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for the compensation paid to the Chief Executive Officer and the other
Named Executive Officers, unless certain requirements are met. One of the
requirements is that compensation over $1 million must be based upon the
attainment of performance goals and in some instances approved by stockholders.
The Amended and Restated 1996 StaffMark, Inc. Stock Option Plan was approved by
our stockholders at our May 8, 1998 Annual Meeting and was designed to meet the
requirements of Section 162(m) with respect to stock option awards. The
performance based targets for the 1999 Bonus Plan (as defined below) were
established on March 11, 1999, when the performance relative to these annual
targets remained substantially uncertain within the meaning of Section 162(m) of
the Internal Revenue Code.
14
<PAGE>
1999 Executive Compensation
Each of the Named Executive Officers received their annual salary in
accordance with their Executive Employment Agreement during 1999, as amended.
During 1999, our incentive cash bonus plan (the "1999 Bonus Plan") was tied to
"performance targets." In 1999, the performance-based targets for the 1999
Bonus Plan included earnings per share, operating targets and revenue mix
diversification. During 1999, we also reserved discretionary authority to pay
bonuses even if the performance targets were not satisfied. When we selected
the performance-based targets, we also established an objective formula for
calculating the maximum bonus payable to each Named Executive Officer. Under
the 1999 Bonus Plan, the 1999 maximum bonus could not exceed one hundred fifty
percent (150%) of Messrs. Brewer's and Bellora's then current year-end annual
base salary, one hundred twenty-five percent (125%) of Mr. Bartholomew's then
current year-end annual base salary and one hundred percent (100%) of Messrs.
Allison's and Schulte's then current year-end annual base salary. We also had
discretion under the 1999 Bonus Plan in determining whether any or all of the
maximum permissible bonus would actually be paid, or whether payment or vesting
of any bonus would be deferred. We were also authorized under the 1999 Bonus
Plan to exercise "negative discretion" by establishing additional conditions and
terms of payment of bonuses, including the achievement of other financial,
strategic, individual goals or discretionary matters, which could be objective
or subjective. While Messrs. Brewer's and Bellora's bonus eligibility was
primarily related to earnings per share targets which were not satisfied and for
which they did not receive any bonus related thereto, Messrs. Brewer and Bellora
did receive $42,500 and $24,250, respectively, as discretionary bonuses based on
the Committee's retained discretion during 1999. Messrs. Bartholomew's and
Allison's bonus eligibility under the 1999 Bonus Plan was based on a combination
of operating targets, earnings per share targets and discretionary matters, with
the earnings per share targets portion for each of Messrs. Bartholomew and
Allison accounting for fifty percent (50%) of their bonus eligibility, with the
operating targets portion accounting for the other fifty percent (50%) of Mr.
Bartholomew's bonus eligibility and with the discretionary matters portion
accounting for the other fifty percent (50%) of Mr. Allison's bonus eligibility.
Since we did not achieve the earnings per share targets under the 1999 Bonus
Plan, Messrs. Bartholomew and Allison received only fifty percent (50%) of their
bonus eligibility resulting from satisfaction of certain operational targets for
Mr. Bartholomew and discretionary matters for Mr. Allison. As to Mr. Schulte,
he did not receive a bonus under the 1999 Bonus Plan since his bonus possibility
was tied entirely to earnings per share targets for our company that were not
satisfied. All bonuses payable to Messrs. Brewer, Bellora, Bartholomew and
Allison under the 1999 Bonus Plan either have been or will be paid in cash or
cash equivalents in 1999 or 2000. All of the Named Executive Officers were
eligible to participate in the 1999 Bonus Plan.
1999 Chief Executive Officer Compensation
Compensation paid during 1999 to Clete T. Brewer, our President and Chief
Executive Officer, was comprised of $232,500 in base salary in accordance with
his Executive Employment Agreement, as amended during 1999 and a discretionary
bonus of $42,500 pursuant to the 1999 Bonus Plan as described above. Mr. Brewer
did not receive any stock option grants during 1999. This report is submitted
by the members of the Compensation Committee.
The Compensation Committee:
William J. Lynch
R. Clayton McWhorter
Bob L. Martin
15
<PAGE>
CERTAIN TRANSACTIONS
We lease our corporate headquarters in Fayetteville, Arkansas from Brewer
Investments II, L.C. The members of the limited liability company are Jerry T.
Brewer, our Chairman Emeritus, and Kay Brewer, Mr. Brewer's spouse, who are the
parents of Clete T. Brewer. The total lease payments to Brewer Investments II,
L.C. in 1999 approximated $551,000. The lease expires in 2009, although we have
an option to renew this lease for two consecutive five year terms following
expiration of the initial ten-year term. We are responsible for all real estate
taxes, insurance, utilities and maintenance. We lease property for several
branch offices in Little Rock, Arkansas from a limited liability company. One
member of this limited liability company is Steven E. Schulte, a director and
our Executive Vice President - Administration. Rent for 1999 approximated
$117,000 on this lease and we are responsible for all real estate taxes,
insurance, utilities and maintenance. During 1999, we also leased several of our
offices in Tulsa, Oklahoma from John H. Maxwell, Jr., our former Executive Vice
President -Medical Staffing and formerly a director who resigned both of these
positions in September 1999. The total lease payments paid in 1999 for these
leases approximated $112,000. We believe that the rental payments for these
leased facilities with the related parties described above are on terms that are
as favorable to us as those that could have been obtained from unaffiliated
third parties.
In October 1996, we advanced Donald A. Marr, Jr., the Chief Operating
Officer of our Commercial Staffing Segment, $80,000, which was originally due on
October 2, 1999. This advance was evidenced by a promissory note that accrued
interest at six percent (6.0%) per annum. During 1999, we extended payment of
the $80,000 principal amount and accrued but unpaid interest under the note,
into equal installments of one-half of the outstanding principal and accrued but
unpaid interest on December 31, 2000 and December 31, 2001, respectively. At the
due date of the original note, Mr. Marr executed a new note with the extended
payment dates.
In March 1998, we loaned Terry C. Bellora, our Chief Financial Officer, the
principal amount of $300,000 pursuant to a loan agreement and promissory note
that accrues interest at six percent (6.0%) per annum. The outstanding principal
and accrued interest on this note and loan agreement is due in March 2001. In
November 1999, we loaned John Willett, our Executive Vice President - IT
Solutions of our IntelliMark, Inc. subsidiary, the principal amount of $73,000,
pursuant to a promissory note that accrued interest at six percent (6.0%) per
annum. The note was due and repaid on April 14, 2000.
During 1999, our Edgewater Technology, Inc. subsidiary, which comprises our
E-solutions segment, received approximately $9.3 million from the Synapse Group,
Inc. for e-solutions services. Mr. Loeb, who joined our Board in April 2000, is
also the President and Chief Executive Officer of the Synapse Group, Inc.
16
<PAGE>
PERFORMANCE GRAPH AND TOTAL RETURN ANALYSIS
The following chart compares the cumulative total stockholder return on our
common stock with the cumulative total return on the NASDAQ Composite Index and
the common stock of seven companies in the temporary staffing industry, for the
period beginning on September 27, 1996 (the date that trading of our common
stock first began on the Nasdaq National Market) and ending on December 31, 1999
(the last trading date for our common stock in the 1999 fiscal year) assuming a
$100 investment in each and assuming the reinvestment of dividends. Although
our initial offering price was $12.00, the closing price of $14.00 on the first
trading day in our common stock was used as the beginning price of the common
stock. We did not pay any dividends during the period. Our self-selected peer
group companies are: Modis Professional Services, Inc. (formerly AccuStaff
Incorporated); Romac International Inc.; Norrell Corporation (acquired by
Interim Services, Inc. in July 1999); Personnel Group of America, Inc.;
RemedyTemp, Inc.; SOS Staffing Services, Inc.; and Interim Services Inc.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Total Return Analysis 9/27/96 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
StaffMark, Inc. $ 100 $ 89.29 $ 225.89 $ 159.82 $ 54.01
- ---------------------------------------------------------------------------------------------------------------------
Peer Group $ 100 $ 84.04 $ 101.18 $ 76.71 $ 65.76
- ---------------------------------------------------------------------------------------------------------------------
Nasdaq Composite (US) $ 100 $ 104.63 $ 128.20 $ 180.65 $ 326.37
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Standard & Poor's Compustat Custom Products Division
Website: www.compustat.com
-----------------
Phone: (303) 721-4819; Fax: (303) 694-4021
17
<PAGE>
ITEM 2 - RATIFICATION AND APPROVAL OF THE
STAFFMARK, INC. 1999 EMPLOYEE STOCK PURCHASE PLAN
Purpose of the Proposal and the 1999 Plan
At the Annual Meeting, there will be submitted to stockholders a proposal
to ratify and approve the StaffMark, Inc. 1999 Employee Stock Purchase Plan (the
"1999 Plan"). The 1997 Employee Stock Purchase Plan (the "Previous Plan"), which
was approved by our stockholders at our May 2, 1997 annual meeting, authorized
300,000 shares of our .01 par value per share common stock ("Common Stock") to
be issued. The shares of Common Stock authorized under the Previous Plan were
not sufficient to meet the demand of employee purchases subsequent to
September 30, 1999. Accordingly, the 1999 Plan, which authorizes an additional
700,000 shares of our Common Stock for employee stock purchases, was approved by
our Board in September 1999 and placed into operation with an effective date of
October 1, 1999 so employee participation under substantially the same terms as
the Previous Plan would not be interrupted. To retain the favorable tax features
of the 1999 Plan under Section 423 of the Internal Revenue Code (the "'Code"),
among other things, the 1999 Plan must be approved by our stockholders within
twelve months of the October 1, 1999 effective date (the "Window Period").
Accordingly, the 1999 Plan is now being submitted to stockholders during the
Window Period for ratification and approval to satisfy this requirement under
the Code. If the 1999 Plan is not ratified and approved at the Annual Meeting or
not later ratified and approved by our stockholders during the Window Period,
then the favorable tax features described under the section titled "Tax
Treatment" below for plan participants would be lost effective October 1, 1999.
In particular, plan participants would have additional salary or wage
compensation attributed to them based on the fifteen percent (15%) share
purchase price discount beginning with purchases under the 1999 Plan for the
fourth quarter of 1999. In addition, while our company would receive certain tax
deductions, if the 1999 Plan failed to satisfy this qualification requirement
under the Code, our company would nevertheless incur additional expense charges
under generally accepted accounting principles with respect to the fifteen
percent (15%) share purchase price discount under the 1999 Plan.
In addition to the favorable tax features of the 1999 Plan, the 1999 Plan
is designed to encourage and assist a broad spectrum of the Company's employees
(both on a full-time, part-time and temporary employment basis) to acquire an
equity interest in our company through the purchase of Common Stock by means of
payroll deductions. The Board believes that employee participation in the
ownership of our company enhances the interest of our employees in the success
and progress of the Company and that the 1999 Plan is the primary vehicle for
obtaining employee stock ownership in our company.
The following description of the 1999 Plan is not intended to be complete
and is qualified in its entirety by the complete text of the 1999 Plan, which is
attached to this Proxy Statement as Annex A.
Shares Issuable Pursuant to the 1999 Plan
The maximum number of shares of Common Stock that may be issued under the
1999 Plan will be the sum of 700,000 plus the remainder of any unissued shares
under the Previous Plan, which was 9,514 shares (subject to equitable
adjustments to reflect any stock splits, stock dividends or other changes
affecting the Common Stock), which may be originally issued or reacquired
shares, including shares bought on the market or otherwise for purposes of the
1999 Plan. As of December 31, 1999, 63,528 shares of Common Stock had been
purchased for issuance under the 1999 Plan.
Eligible Participants
Our regular full or part-time employees (whether of our company or
subsidiaries) other than employees of our foreign subsidiaries,are eligible to
participate in the 1999 Plan, on a purely voluntary basis. However, an employee
who owns five percent (5%) or more of the total combined voting power or value
of all classes of stock of our company will not be eligible to participate in
the 1999 Plan. Our eligible full or part-time employees under the 1999 Plan
includes our temporary employees. Approximately 33,000 employees (full-time,
part-time and temporary employees) were eligible to participate in the 1999 Plan
as of March 31, 2000.
18
<PAGE>
Material Features of the 1999 Plan
Eligible employees participate in the 1999 Plan through exercising options
to purchase Common Stock. Options may be granted for each purchase period to
eligible employees. Each quarter will be a purchase period unless otherwise
established by the committee administering the 1999 Plan (the "Committee").
Common Stock will be purchased through a participant's payroll deductions at a
stated dollar amount not less than $10 per pay period (or $20 if the pay period
is every month), and not more than 10% of a participant's compensation, as
determined by the participant, at a price that shall be an amount equal to the
lower of 85% of the fair market value of the Common Stock as of the first or the
last trading day of each purchase period. The fair market value of the Common
Stock will be determined by reference to the Common Stock price on the NASDAQ
National Market on each relevant date. No employee will be permitted to purchase
Common Stock under the 1999 Plan in excess of 4,000 shares during any purchase
period (unless the Committee sets another limit). In addition, no participant
may purchase shares at a rate which exceeds $25,000 of the fair market value of
such stock (determined at the beginning of each purchase period) for each
calendar year.
Each eligible employee who elects to participate in the 1999 Plan will,
without any action on his or her part, be automatically deemed to have exercised
his or her option on the last day of each purchase period if he or she is then
employed, to the extent that the amount withheld through payroll deduction
throughout the purchase period is sufficient to purchase, at the option price,
one or more whole shares of Common Stock. All funds received or held by us
under the 1999 Plan are our general assets, free of any trust or other
restriction, and may be used for any corporate purpose. No interest on such
funds will be credited to or paid to any participant under the 1999 Plan. An
option granted under the 1999 Plan shall not be transferable by an employee
other than by will or by the laws of descent and distribution and is exercisable
during his or her lifetime only by the employee.
A participant may voluntarily suspend his or her payroll deductions at any
time, but will not be permitted to resume the payroll deductions again until the
January 1 or July 1 following the suspension of payroll deductions. A
participant may change the rate of his or her payroll deductions on any January
1 or July 1. If a participant terminates his or her employment with us, his or
her participation in the 1999 Plan will be automatically terminated as of the
date of termination of employment, and subject to the restriction on issuance
and resale in the paragraph immediately following, the shares held in his or her
stockholder account will either be sold as directed by the terminated
participant, or distributed to the terminated participant, together with cash
equal to the sum of fair market value of any fractional shares owned by the
participant and amounts withheld through payroll deduction that had not been
applied to purchase Common Stock under the 1999 Plan.
1999 Plan Restrictions Concerning Resales on Shares and Distribution of Share
Certificates
A participant may not sell his or her shares or obtain stock certificates
evidencing shares acquired under the 1999 Plan until the one year anniversary
date of the purchase date for each separate purchase of shares under the 1999
Plan. Thereafter, a participant may order the sale of his or her shares that
have satisfied the one year anniversary requirement, or acquire his or her stock
certificate for shares that have satisfied the one year anniversary requirement
at any time by providing written request and notice to the Committee. A
participant whose employment has been terminated with us, will be subject to the
same one year restrictions on issuance and resale of shares from the date of
such termination of employment with us as for any unissued shares in the 1999
Plan. Notwithstanding the foregoing restrictions, shares issuable under the 1999
Plan have been registered under the Securities Act of 1933, as amended.
Prospective 1999 Plan Participation
It is not possible to determine how many eligible employees will
participate in the 1999 Plan in the future or the level of such participation.
Tax Treatment
Subject to obtaining stockholder approval of the 1999 Plan during the
Window Period as described above, the 1999 Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code.
Under the Code, an employee who elects to participate in the 1999 Plan will not
realize income at the time the offering commences or when the shares are
actually purchased under the 1999 Plan. If an employee disposes of such shares
after two years from the date of the grant of the option and after one year from
the actual date of purchase of such shares under the 1999 Plan (collectively,
the "Holding Period"), a portion of the employee's gain will be ordinary income
and a portion will be capital gain. The employee will be taxed at ordinary
income tax rates on the excess of the value of
19
<PAGE>
the shares when the option was granted over the purchase price, or, if less, the
entire gain on the sale. The employee will have additional capital gain or loss
equal to the difference, if any, between the proceeds of the sale and the
employee's basis in the shares (the purchase price plus any ordinary income
realized). The capital gain rate will depend on how long the stock is held by
the employee. We will not be entitled to any tax deduction with respect to a
sale by an employee after the Holding Period.
If any employee disposes of the shares purchased under the 1999 Plan during
the Holding Period, the employee will be required to include in income, as
compensation for the year in which such disposition occurs, an amount equal to
the excess, if any, of the fair market value of such shares on the date of sale
over the purchase price. The employee's basis in such shares disposed of will be
increased by an amount equal to the amount includable in his or her income as
compensation, and any gain or loss computed with reference to such adjusted
basis which is recognized at the time of disposition will be capital gain or
loss, either short-term or long-term, depending on the length of the Holding
Period for such shares. In the event of a disposition during the Holding Period,
we (or the subsidiary by which the employee is employed) will be entitled to a
deduction from income equal to the amount the employee is required to include in
income as a result of such disposition.
An employee who is a nonresident of the United States will generally not be
subject to the U.S. federal income tax with respect to the shares of Common
Stock purchased under the 1999 Plan.
Plan Administration and Termination
The 1999 Plan provides for administration of the 1999 Plan by the Committee
appointed by the Board. The Board may terminate, suspend or amend the 1999 Plan
in any respect at any time, except that the approval of our stockholders is
required for any amendment to increase the number of shares available for
purchase under the 1999 Plan. Unless earlier terminated, the 1999 Plan will
continue in effect until October 1, 2009, except that if at the end of any
purchase period the aggregate funds available for purchase of Common Stock would
purchase a greater number of shares than is available for purchase, the number
of shares that would otherwise be purchased by each participant at the end of
the purchase period will be proportionately reduced in order to eliminate the
excess. The 1999 Plan would then automatically terminate after such purchase
period.
Recommendation
Ratification and approval of this proposal requires a favorable vote of the
majority of the votes cast at the Annual Meeting. Any shares not voted (whether
by broker non-vote or otherwise) therefore would not have any impact on this
proposal. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION AND APPROVAL OF THE STAFFMARK, INC. 1999 EMPLOYEE STOCK PURCHASE
PLAN.
ITEM 3 - OTHER MATTERS
The Board of Directors is not aware of any other matter to be presented for
action at the Annual Meeting. If any other matter requiring a vote of
stockholders should arise, then the proxies (or their substitutes) will vote in
accordance with their best judgement.
ADDITIONAL INFORMATION
Independent Public Accountants
Our Board has selected Arthur Andersen LLP as our independent public
accountants, a position the firm has held since our initial public offering. We
expect representatives of Arthur Andersen LLP to be present at the Annual
Meeting. We will provide this accounting firm the opportunity to make a
statement, if they so desire and to respond to appropriate questions.
20
<PAGE>
Annual Report
Our 1999 Annual Report to Stockholders accompanies this Proxy Statement.
Our Annual Report on Form 10-K for the year ended December 31, 1999 was filed
with the SEC on March 20, 2000. A copy of our 1999 Form 10-K, including any
financial statements and schedules and a list describing any exhibits not
included in this report, may be obtained without charge by any stockholder.
Written requests for copies of the report should be directed to Gordon Y.
Allison, Corporate Secretary, StaffMark, Inc., 234 East Millsap Road,
Fayetteville, Arkansas 72703.
Information Not Incorporated
The SEC's rules allow the information in this Proxy Statement to be
incorporated by reference to and form a part of our 1999 Form 10-K. The
information incorporated by reference is deemed to be part of our 1999
Form 10-K, with one exception. The SEC's rules do not require the Compensation
Committee Report to be incorporated in any filing made under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended. The
Compensation Committee Report shall not be deemed to be filed under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, unless we specifically incorporate this report by reference in some
other filed document.
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD
IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE
21
<PAGE>
ANNEX A
STAFFMARK, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
ARTICLE I
Introduction
Sec. 1.01 Statement of Purpose. The purpose of the StaffMark, Inc.
Employee Stock Purchase Plan is to provide eligible employees of the Company and
its subsidiaries, who wish to become shareholders, an opportunity to purchase
common stock of the Company. The Board of Directors of the Company believes
that employee participation in stock ownership will be to the mutual benefit of
the employees and the Company.
Sec. 1.02 Internal Revenue Code Considerations. The Plan is intended to
constitute an "employee stock purchase plan" within the meaning of section 423
of the Internal Revenue Code of 1986, as amended. The Plan shall be submitted
to the Company's shareholders for approval within 12 months after the Plan is
adopted by the Board of Directors.
Sec. 1.03 ERISA Considerations. The Plan is not intended and shall not
be construed as constituting an "employee benefit plan," within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
ARTICLE II
Definitions
Sec. 2.01 "Board of Directors " means the board of directors of the
Company or a committee of the board of directors authorized to act on its
behalf.
Sec. 2.02 "Code " means the Internal Revenue Code of 1986, as amended, and
any successor statute of similar nature. References to specific sections of the
Code shall be taken to be references to corresponding sections of any successor
statute.
Sec. 2.03 "Committee " means the committee appointed by the Board of
Directors to administer the Plan, as provided in Section 6.03 hereof.
Sec. 2.04 "Company " means StaffMark, Inc., a Delaware corporation.
Sec. 2.05 "Effective Date" means October 1, 1999.
Sec. 2.06 "Election Date " means each January 1 and July 1 or such other
dates as the Committee shall specify.
Sec. 2.07 "Eligible Employee" means each person employed as an employee
of an Employer who is not deemed for purposes of section 423(b)(3) of the Code
to own stock possessing five percent or more of the total combined voting power
or value of all classes of stock of the Company or any Subsidiary.
Sec. 2.08 "Employer" means the Company and each Subsidiary.
<PAGE>
2
Sec. 2.09 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and as the same may hereafter be amended.
Sec. 2.10 "Market Value" means the last price for the Stock as reported
on the Nasdaq National Market for the date of reference. If there was no such
price reported for the date of reference, "Market Value" means the "Market
Value" as of the date next preceding the date of reference for which such price
was reported.
Sec. 2.11 "Participant" means each Eligible Employee who elects to
participate in the Plan.
Sec. 2.12 "Plan" means the StaffMark, Inc. 1999 Employee Stock Purchase
Plan, as the same is set forth herein and as the same may hereafter be amended.
Sec. 2.13 "Purchase Agreement" means the instrument prescribed by the
Committee pursuant to which an Eligible Employee may enroll as a Participant and
subscribe for the purchase of shares of Stock on the terms and conditions
offered by the Company. The Purchase Agreement also is intended to evidence the
Company's offer of an option to the Eligible Employee to purchase Stock on the
terms and conditions set forth therein and herein.
Sec. 2.14 "Purchase Date" means December 31, 1999 and the last day of
each Purchase Period ending thereafter.
Sec. 2.15 "Purchase Period " means, beginning October 1, 1999, each
calendar quarter or other period specified by the Board of Directors during
which the Participant's stock purchase is funded through payroll deduction
accumulations.
Sec. 2.16 "Stock" means the common stock of the Company.
Sec. 2.17 "Subsidiary " means any present or future corporation (i) which
constitutes a "subsidiary corporation" of the Company as that term is defined in
section 424 of the Code, and (ii) is designated as a participating entity in the
Plan by the Committee. Unless the Committee specifically designates otherwise,
a Canadian or other foreign subsidiary shall not be considered a Subsidiary for
purposes of the Plan, and employees of such a subsidiary shall not be Eligible
Employees.
<PAGE>
3
ARTICLE III
Admission to Participation
Sec. 3.01 Initial Participation. Any Eligible Employee may elect to be
participate in the Plan and may become a Participant by executing and filing
with the Committee a Purchase Agreement at such time in advance of the effective
date of the election as the Committee shall prescribe. An Eligible Employee's
initial election to participate in the Plan may be made at any time after he or
she first becomes eligible to participate in the Plan and shall be effective as
soon as practicable after the Eligible Employee submits the necessary
documentation to the Committee. After an Eligible Employee has first become a
Participant in the Plan, subsequent elections to participate in the Plan shall
be made pursuant to Section 3.03. A Participant's Purchase Agreement shall
remain in effect until modified or canceled in accordance with the further terms
of this Plan, as hereinafter set forth.
Sec. 3.02 Discontinuance of Participation. A Participant may voluntarily
cease his or her participation in the Plan and stop payroll deductions at any
time by filing a notice of cessation of participation on such form and at such
time in advance of the effective date as the Committee shall prescribe.
Notwithstanding anything in the Plan to the contrary, if a Participant ceases to
be an Eligible Employee, his or her participation automatically shall cease and
no further purchase of Stock shall be made for such Participant hereunder.
Sec. 3.03 Readmission to Participation. Any Eligible Employee who has
previously been a Participant, who has discontinued participation (whether by
cessation of eligibility or otherwise), and who wishes to be reinstated as a
Participant may again become a Participant by executing and filing with the
Committee a new Purchase Agreement. Reinstatement to Participant status shall
be effective as of any Election Date, provided the Participant files such new
Purchase Agreement with the Committee at such time in advance of such Election
Date as the Committee shall prescribe.
ARTICLE IV
Stock Purchase and Resale
Sec. 4.01 Reservation of Shares. There shall be 700,000 shares of Stock
reserved for issuance under the Plan, plus any shares of Stock that were
authorized for issuance under the Company's prior Employee Stock Purchase Plan
(which terminates after the end of the purchase period ending September 30,
1999) and were not issued under that Plan, subject to adjustment in accordance
with the antidilution provisions hereinafter set forth. Except as provided in
Section 5.02 hereof, the aggregate number of shares of Stock that may
<PAGE>
4
be purchased under the Plan shall not exceed the number of shares of Stock
reserved for the Plan.
Sec. 4.02 Limitation on Shares Available.
(a) Subject to the limitations of Section 4.04, the maximum
number of shares of Stock that may be purchased for each Participant on a
Purchase Date is the lesser of (a) the number of whole and fractional shares of
Stock that can be purchased by applying the full balance of the Participant's
withheld funds to the purchase of shares of Stock at the Purchase Price, or (b)
the Participant's proportionate part of the maximum number of shares of Stock
available under the Plan, as stated in Section 4.01.
(b) Notwithstanding the foregoing, if any person entitled to
purchase shares pursuant to any offering under the Plan would be deemed for
purposes of section 423(b)(3) of the Code to own stock (including any number of
shares of Stock that such person would be entitled to purchase under the Plan)
possessing five percent or more of the total combined voting power or value of
all classes of stock of Company, the maximum number of shares of Stock that such
person shall be entitled to purchase pursuant to the Plan shall be reduced to
that number which, when added to the number of shares of stock that such person
is deemed to own (excluding any number of shares of Stock that such person would
be entitled to purchase under the Plan), is one less than such five percent. Any
amounts withheld from a Participant's compensation that cannot be applied to the
purchase of Stock by reason of the foregoing limitation shall be returned to the
Participant as soon as practicable.
Sec. 4.03 Purchase Price of Shares. The Purchase Price per share of the
Stock sold to Participants pursuant to any offering hereunder shall be the lower
of (i) 85% of the Market Value per share on the first day of the Purchase Period
or (ii) 85% of the Market Value per share on the Purchase Date. Notwithstanding
the foregoing, the Board of Directors may determine that the Purchase Price
shall be the Market Value, or a percentage of the Market Value on either of such
dates or the lower of such dates, so long as such percentage shall not be lower
than 85% of such Market Value.
Sec. 4.04 Exercise of Purchase Privilege.
(a) Each Participant shall be granted an option to purchase
shares of Stock as of the first day of each Purchase Period at the Purchase
Price specified in Section 4.03. The option shall continue in effect through the
Purchase Date for the Purchase Period. Subject to the provisions of Section 4.02
above and Sections 4.04(b) and 4.04(d) below, on each Purchase Date, the
Participant shall be automatically deemed to have exercised his or her option to
purchase shares of Stock on the Purchase Date, unless he or she notifies the
Committee, in such manner and at such time in advance of the Purchase Date as
the Committee shall prescribe, of his or her desire not to make such purchase.
<PAGE>
5
(b) The maximum number of shares which a Participant may
purchase during a Purchase Period is 4,000 shares, adjusted as described in
Section 5.02 and subject to Section 4.04(d) below, or such other number as the
Committee establishes before the beginning of the Purchase Period.
(c) There shall be purchased for the Participant on such
Purchase Date at the Purchase Price for such Purchase Period the largest number
of whole and fractional shares of Stock as can be purchased with the amounts
withheld from the Participant's compensation during the Purchase Period. Each
such purchase shall be deemed to have occurred on the Purchase Date occurring at
the close of the Purchase Period for which the purchase was made.
(d) Notwithstanding the foregoing, a Participant may not
purchase shares of Stock having an aggregate Market Value of more than $25,000,
determined at the beginning of each Purchase Period, for any calendar year in
which one or more such offerings are outstanding at any time, and a Participant
may not purchase a share of Stock under any offering after the expiration of the
Purchase Period for such offering.
Sec. 4.05 Payroll Deductions. Each Participant shall authorize payroll
deductions from his or her compensation for the purpose of funding the purchase
of Stock pursuant to his or her Purchase Agreement. In the Purchase Agreement,
each Participant shall authorize an after-tax payroll deduction from each
payment of his compensation during a Purchase Period, of an amount not less than
$10 per paycheck ($20 for any Participant on a monthly payroll period) and not
more than 10% of such Participant's compensation. A Participant may change the
deduction to any permissible level effective as of any Election Date. Such
change shall be made by the Participant's filing with the Committee a notice in
such form and at such time in advance of the date on which such change is to be
effective as the Committee shall prescribe.
Sec. 4.06 Payment for Stock. The Purchase Price for all shares of Stock
purchased by a Participant under the Plan shall be paid out of the Participant's
authorized payroll deductions. All funds received or held by the Company under
the Plan are general assets of the Company, free of any trust or other
restriction, and may be used for any corporate purpose.
Sec. 4.07 Share Ownership; Issuance of Certificates.
(a) The shares of Stock purchased by a Participant on a Purchase
Date shall, for all purposes, be deemed to have been issued or sold at the close
of business on such Purchase Date. Prior to that time, none of the rights or
privileges of a shareholder of the Company shall inure to the Participant with
respect to such shares of Stock. All the shares of
<PAGE>
6
Stock purchased under the Plan shall be delivered by the Company in a manner as
determined by the Committee.
(b) The Committee, in its sole discretion, may determine that
the shares of Stock shall be delivered by the Company by (i) issuing and
delivering to the Participant a certificate for the number of shares of Stock
purchased by such Participant on a Purchase Date or during a calendar year or
other period determined by the Committee, (ii) issuing and delivering a
certificate or certificates for the number of shares of Stock purchased by all
Participants on a Purchase Date or during a calendar year or other period
determined by the Committee to a firm which is a member of the National
Association of Securities Dealers, as selected by the Committee from time to
time, which shares shall be maintained by such firm in separate brokerage
accounts of each Participant, or (iii) issuing and delivering a certificate or
certificates for the number of shares of Stock purchased by all Participants on
a Purchase Date or during the calendar year or other period determined by the
Committee to a bank or trust company or affiliate thereof, as selected by the
Committee from time to time, which shares may be held by such bank or trust
company or affiliate in "street name", but with separate accounts maintained by
such entity for each Participant reflecting such Participant's whole share
interests in the Stock. Each certificate or account, as the case may be, may be
in the name of the Participant or, if he or she designates on the Participant's
Purchase Agreement, in the Participant's name jointly with the Participant's
spouse, with right of survivorship. A Participant who is a resident of a
jurisdiction that does not recognize such joint tenancy may have a certificate
or account in the Participant's name as tenant in common with the Participant's
spouse, without right of survivorship. Such designation may be changed by filing
notice thereof.
(c) In addition to any restrictions or limitations on the resale
of Stock purchased under the Plan set forth in Section 4.08 hereof or otherwise
hereunder, the Committee, in its sole discretion, may impose such restrictions
or limitations, as it shall determine, on the resale of Stock, the issuance of
individual stock certificates or withdrawal from any shareholder accounts
established for a Participant pursuant to the terms hereof.
(d) Any dividends payable with respect to whole or fractional
shares of Stock credited to a shareholder account of a Participant established
pursuant to Section 4.07(b) hereof will be reinvested in shares of Stock and
credited to such Participant's account. Such reinvestment shall be made based on
the Market Value of the Stock at the date of the reinvestment, with no discount
from Market Value.
Sec. 4.08 Withdrawal of Shares or Resale of Stock.
(a) A Participant may not sell any shares of Stock purchased
hereunder or withdraw his or her shares of Stock from any shareholder account
established pursuant to Section 4.07(b) hereof prior to the first anniversary of
the Purchase Date on which
<PAGE>
7
the shares were purchased. After the first anniversary of the Purchase Date for
shares of Stock, the Participant may request a withdrawal of those shares or
order the sale of those shares at any time by making a request in such form and
at such time as the Committee shall prescribe.
(b) In the event a Participant terminates his or her employment
with all Employers or otherwise ceases to be an Eligible Employee, he or she
shall receive a distribution of his or her shares of Stock held in any
shareholder account established pursuant to Section 4.07(b) after the first
anniversary of the Purchase Date on which the shares were purchased or, after
such first anniversary, he or she may elect to have such shares of Stock sold in
accordance with such procedures as the Committee shall prescribe.
(c) If a Participant is to receive a withdrawal or distribution
of shares of Stock, the withdrawal or distribution shall be paid in whole shares
of Stock, with fractional shares paid in cash.
ARTICLE V
Special Adjustments
Sec. 5.01 Shares Unavailable. If, on any Purchase Date, the aggregate
funds available for the purchase of Stock would purchase a number of shares in
excess of the number of shares of Stock then available for purchase under the
Plan, the following events shall occur:
(a) The number of shares of Stock that would otherwise be
purchased by each Participant shall be proportionately reduced on the Purchase
Date in order to eliminate such excess; and
(b) The Plan shall automatically terminate immediately after the
Purchase Date as of which the supply of available shares is exhausted.
Sec. 5.02 Anti-Dilution Provisions. The aggregate number of shares of
Stock reserved for purchase under the Plan, as hereinabove provided, and the
calculation of the Purchase Price per share may be appropriately adjusted to
reflect any increase or decrease in the number of issued shares of Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend, or other increase or decrease in
such shares, if effected without receipt of consideration by the Company. Any
such adjustment shall be made by the Committee acting with the consent of, and
subject to the approval of, the Board of Directors.
Sec. 5.03 Effect of Certain Transactions. Subject to any required action
by the shareholders, if the Company shall be the surviving or resulting
corporation in any merger or consolidation, any offering hereunder shall pertain
to and apply to the shares of stock of the
<PAGE>
8
Company. However, in the event of a dissolution or liquidation of the Company,
or of a merger or consolidation in which the Company is not the surviving or
resulting corporation, the Plan and any offering hereunder shall terminate upon
the effective date of such dissolution, liquidation, merger or consolidation,
and the balance of any amounts withheld from the Participant's compensation,
which had not by such time been applied to the purchase of stock shall be
returned to the Participant.
ARTICLE VI
Miscellaneous.
Sec. 6.01 Non-Alienation. The right to purchase shares of Stock under
the Plan is personal to the Participant, is exercisable only by the Participant
during the Participant's lifetime except as hereinafter set forth, and may not
be assigned or otherwise transferred by the Participant. Notwithstanding the
foregoing, there shall be delivered to the executor, administrator or other
personal representative of a deceased Participant such shares of Stock and such
residual amounts as may remain to the Participant's credit from amounts withheld
from the Participant's compensation as of the Purchase Date occurring at the
close of the period in which the Participant's death occurs, including shares of
Stock purchased as of that date or prior thereto with moneys withheld from the
Participant's compensation.
Sec. 6.02 Administrative Costs. The Company shall pay all administrative
expenses associated with the operation of the Plan.
<PAGE>
9
Sec. 6.03 The Committee. The Board of Directors shall appoint a
Committee, which shall have the authority and power to administer the Plan and
to make, adopt, construe, and enforce rules and regulations not inconsistent
with the provisions of the Plan. The Committee shall adopt and prescribe the
contents of all forms required in connection with the administration of the
Plan, including, but not limited to, the Purchase Agreement, payroll withholding
authorizations, withdrawal documents, and all other notices required hereunder.
The Committee shall have the fullest discretion permissible under law in the
discharge of its duties. The Committee's interpretations and decisions in
respect of the Plan, the rules and regulations pursuant to which it is operated,
and the rights of Participants hereunder shall be final and conclusive.
Sec. 6.04 Withholding of Taxes. All acquisitions of Stock under the Plan
shall be subject to applicable federal, state and local tax withholding
requirements if the Internal Revenue Service or other taxing authority requires
such withholding. The Company may require that Participants pay to the Company
(or make other arrangements satisfactory to the Company for the payment of) the
amount of any federal, state or local taxes that the Company is required to
withhold with respect to the purchase of Stock or the sale of Stock acquired
under the Plan, or the Company may deduct from the Participant's wages or other
compensation the amount of any withholding taxes dues with respect to the
purchase of Stock or the sale of Stock acquired under the Plan.
Sec. 6.05 Amendment of the Plan. The Board of Directors (or its delegate)
may amend or terminate the Plan at any time; provided, however, that the Board
of Directors (or its delegate) shall not amend the Plan without stockholder
approval if such approval is required by section 423 of the Code.
<PAGE>
10
Sec. 6.06 Expiration and Termination of the Plan. The Plan shall continue
in effect for 10 years from the Effective Date, unless terminated prior thereto
pursuant to the provisions of the Plan or pursuant to action by the Board of
Directors, which shall have the right to terminate the Plan at any time without
prior notice to any Participant and without liability to any Participant. Upon
the expiration or termination of the Plan, the balance, if any, then standing to
the credit of each Participant from amounts withheld from the Participant's
compensation which had not, by such time, been applied to the purchase of Stock
shall be refunded to the Participant.
Sec. 6.07 Repurchase of Stock. The Company shall not be required to
purchase or repurchase from any Participant any of the shares of Stock that the
Participant acquired under the Plan.
Sec. 6.08 Notice. A Purchase Agreement and any notice that a Participant
files pursuant to the Plan shall be on the form prescribed by the Committee and
shall be effective only when received by the Committee. Delivery of such forms
may he made by hand or by certified mail, sent postage prepaid, to StaffMark,
Inc. 302 East Millsap Road, Fayetteville, AR 72703 Attention: Employee Stock
Purchase Plan Administrator. Delivery by any other mechanism shall be deemed
effective at the option and discretion of the Committee.
Sec. 6.09 Government Regulation. The Company's obligation to sell and to
deliver the Stock under the Plan is at all times subject to all approvals of any
governmental authority required in connection with the authorization, issuance,
sale or delivery of such Stock.
Sec. 6.10 Headings, Captions, Gender. The headings and captions herein
are for convenience of reference only and shall not be considered as part of the
text. The masculine shall include the feminine, and vice versa.
Sec. 6.11 Severability of Provisions, Prevailing Law. The provisions of
the Plan shall be deemed severable. In the event any such provision is
determined to be unlawful or unenforceable by a court of competent jurisdiction
or by reason of a change in an applicable statute, the Plan shall continue to
exist as though such provision had never been included therein (or, in the case
of a change in an applicable statute, had been deleted as of the date of such
change). The Plan shall be governed by the laws of the State of Delaware to the
extent such laws are not in conflict with, or superseded by, federal law.
<PAGE>
STAFFMARK, INC.
234 EAST MILLSAP ROAD
FAYETTEVILLE, ARKANSAS 72703
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS, MAY 22, 2000.
KNOW ALL MEN BY THESE PRESENTS that I, the undersigned stockholder of
StaffMark, Inc., a Delaware corporation, do herby nominate, constitute, and
appoint Clete T. Brewer, Gordon Y. Allison and Steven E. Schulte, 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 April 3,
2000, at the Annual Meeting of its Stockholders to be held on May 22, 2000 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.
ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED "FOR" ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2 AND IN ACCORDANCE
WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO ANY OTHER
BUSINESS PROPERLY BROUGHT BEFORE THE MEETING.
SEE REVERSE SIDE
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FOLD AND DETACH HERE
[LOGO] STAFFMARK
ANNUAL MEETING
OF STOCKHOLDERS
MAY 22, 2000
10:00 a.m. (CST)
NORTHWEST ARKANSAS CONVENTION CENTER
1500 SOUTH 48TH, SPRINGDALE, ARKANSAS
<PAGE>
__ |
Please mark your | | 2209
[X] votes as in this |______
example.
FOR all nominees WITHHOLD
listed (except as AUTHORITY
marked to the to vote for all Election of the following
contrary) nominees listed nominees as directors:
Clete T. Brewer, Stephen
1. Election of [_] [_] R. Bova, W. David
Directors Bartholomew, William J.
Lynch, R. Clayton McWhorter,
Charles A. Sanders, M.D.,
Bob L. Martin and Michael R.
Loeb
(INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name(s) on the space provided below.)
- --------------------------------------------------------------------------------
2. Ratification and Approval of FOR AGAINST ABSTAIN
the Staffmark, Inc. 1999
Employee Stock Purchase [_] [_] [_]
Plan
3. In their discretion, upon any other matters which may properly come before
the meeting or any adjournment thereof.
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. PLEASE MARK,
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED SELF-
ADDRESSED, POSTAGE PREPAID ENVELOPE.
The stockholder 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 stockholder and in accordance with the instructions set in bold on the
reverse side of this Proxy.
- ----------------------------------------
- ----------------------------------------
SIGNATURE(S) DATE
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FOLD AND DETACH HERE
