<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
AHL SERVICES, 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)(1) 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LETTERHEAD OF AHL SERVICES, INC.]
March 31, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of AHL Services, Inc. to be held on May 14, 1998 at the Swissotel, 3391
Peachtree Road, N.E., Atlanta, Georgia 30326. The meeting will begin promptly at
9:00 a.m., local time, and we hope that it will be possible for you to attend.
The items of business are listed in the following Notice of Annual Meeting
and are more fully addressed in the Proxy Statement provided herewith.
Please date, sign, and return your proxy card in the enclosed envelope at
your convenience to assure that your shares will be represented and voted at the
Annual Meeting even if you cannot attend. If you attend the Annual Meeting, you
may vote your shares in person even though you have previously signed and
returned your proxy.
On behalf of your Board of Directors, thank you for your continued support
and interest in AHL Services, Inc.
Sincerely,
Frank A. Argenbright, Jr.
Chairman of the Board and
Co-Chief Executive Officer
<PAGE> 3
[AHL LOGO]
AHL SERVICES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of AHL
Services, Inc. will be held at the Swissotel, 3391 Peachtree Road, N.E.,
Atlanta, Georgia 30326, on May 14, 1998 at 9:00 a.m., local time, for the
following purposes:
(i) To elect two directors to serve until the 2001 Annual Meeting of
Shareholders;
(ii) To consider and act upon a proposal to amend the 1997 Stock
Incentive Plan (the "Plan") to (a) increase the number of shares authorized
to be issued pursuant to the Plan from 385,000 to 3,500,000 and (b)
increase the maximum number of options that can be granted to any
individual in a calendar year from 100,000 to 250,000;
(iii) To ratify the appointment of Arthur Andersen LLP as independent
auditors; and
(iv) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only the holders of record of Common Stock of the Company at the close of
business on March 20, 1998 are entitled to notice of and to vote at the Annual
Meeting of Shareholders and any adjournment thereof. A list of shareholders as
of the close of business on March 20, 1998, will be available at the Annual
Meeting of Shareholders for examination by any shareholder, his or her agent, or
his or her attorney.
Your attention is directed to the Proxy Statement provided with this
Notice.
By Order of the Board of Directors,
David L. Gamsey
Chief Financial Officer
and Secretary
Atlanta, Georgia
March 31, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND
THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 4
AHL SERVICES, INC.
3353 PEACHTREE ROAD, N.E.
ATLANTA, GEORGIA 30326
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1998
The 1998 Annual Meeting of Shareholders (the "Annual Meeting") of AHL
Services, Inc. (the "Company") will be held on May 14, 1998, for the purposes
set forth in the Notice of Annual Meeting of Shareholders attached hereto. The
enclosed form of proxy is solicited by the Board of Directors of the Company
(the "Board" or "Board of Directors") and the cost of the solicitation will be
borne by the Company. When the proxy is properly executed and returned, the
shares of Common Stock of the Company it represents will be voted as directed at
the Annual Meeting or any adjournment thereof or, if no direction is indicated,
such shares of Common Stock will be voted in favor of the proposals set forth in
the Notice of Annual Meeting of Shareholders attached hereto. Any shareholder
giving a proxy has the power to revoke it at any time before it is voted. All
proxies delivered pursuant to this solicitation are revokable at any time at the
option of the persons executing them by giving written notice to the Secretary
of the Company, by delivering a later-dated proxy or by voting in person at the
Annual Meeting.
Only holders of Common Stock of record as of the close of business on March
20, 1998 (the "record date") will be entitled to vote at the Annual Meeting. As
of that date, the Company had outstanding 13,605,000 shares of Common Stock.
Shareholders of record as of the close of business on March 20, 1998 are
entitled to one vote for each share of Common Stock held. No cumulative voting
rights are authorized and dissenters' rights for shareholders are not applicable
to the matters being proposed. It is anticipated that this Proxy Statement and
the accompanying proxy will first be mailed to holders of Common Stock of the
Company on or about April 3, 1998.
The presence in person or by proxy of holders of a majority of the shares
of Common Stock outstanding on the record date will constitute a quorum for the
transaction of business at the Annual Meeting or any adjournment thereof. The
affirmative vote of a plurality of the shares of Common Stock present in person
or by proxy and entitled to vote is required to elect directors. With respect to
any other matter that may properly come before the Annual Meeting, the approval
of any such matter would require a greater number of votes cast in favor of the
matter than the number of votes cast opposing such matter. Shares of Common
Stock held by nominees for beneficial owners will be counted for purposes of
determining whether a quorum is present if the nominee has the discretion to
vote on at least one of the matters presented even if the nominee may not
exercise discretionary voting power with respect to other matters and voting
instructions have not been received from the beneficial owner (a "broker
non-vote"). Broker non-votes will not be counted as votes for or against matters
presented for shareholder consideration, including the election of directors.
Abstentions with respect to a proposal are counted for purposes of establishing
a quorum. If a quorum is present, abstentions have no effect on the outcome of
any vote, including the election of directors.
ELECTION OF DIRECTORS
Under the Articles of Incorporation and Bylaws of the Company, the Board of
Directors shall determine the number of directors on the Board. The Bylaws
divide the Board into three classes with the directors in each class serving a
term of three years. There are two directors, Edwin R. Mellett and Hamish Leslie
Melville, whose term expires at the Annual Meeting. Mr. Mellett and Mr. Melville
have been nominated to stand for reelection as directors at the Annual Meeting
to serve until the 2001 annual shareholders' meeting. In addition to Mr. Mellett
and Mr. Melville, there are two other directors continuing to serve on the
Board, whose terms expire in 1999 and 2000.
Except as otherwise provided herein, the proxy solicited hereby cannot be
voted for the election of a person to fill a directorship for which no nominee
is named in this Proxy Statement. The Board has no reason to believe that the
nominee for the office of director will be unavailable for election as a
director. However, if
<PAGE> 5
at the time of the Annual Meeting any nominee should be unable to serve or, for
good cause, will not serve, the persons named in the proxy will vote as
recommended by the Board to elect a substitute nominee recommended by the Board.
In no event, however, can a proxy be voted to elect more than two directors.
The following list sets forth the incumbent directors and the name of the
nominees for reelection to the Board to serve until the Annual Meeting of
Shareholders in 2001, or until their successors are duly elected and qualified.
Such list also contains, as to the nominees and incumbent directors, certain
biographical information, a brief description of principal occupation and
business experience during the past five years, directorships of companies
(other than the Company) presently held, and certain other information, which
information has been furnished by the respective individuals.
NOMINEES FOR ELECTION -- TERM EXPIRING 1998
Edwin R. Mellett has been Vice Chairman and Co-Chief Executive Officer of
the Company since December 1994 and served on the Company's Advisory Board
during 1994. From 1993 to 1994, he was a consultant and private investor. From
1984 to 1992, Mr. Mellett was Senior Vice President of The Coca-Cola Company,
serving also as President of Coca-Cola Northern Europe from 1990 to 1992 and
President of Coca-Cola USA from 1986 to 1988. From 1972 to 1984, Mr. Mellett was
President of the Food Services Division of PepsiCo. Mr. Mellett is 59 years old.
Hamish Leslie Melville has been a director of the Company since
consummation of its initial public offering in March 1997. Mr. Melville has been
Chairman of Scottish Woodlands Limited since 1992. He was Chairman of Dunedin
Fund Managers Limited from 1992 to 1995, Chairman and Chief Executive Officer of
Capel Cure Myers Capital Management from 1988 to 1991 and Founder and Chief
Executive of Enskilda Securities from 1982 to 1987. Mr. Melville is a director
of Fleming Mercantile Investment Trust PLC, Mithras Investment Trust PLC, Old
Mutual South Africa Trust plc, Persimmon plc, and the Scottish Investment Trust
PLC. He is also Chairman of the National Trust for Scotland. Mr. Melville is 53
years old.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EDWIN R. MELLETT AND HAMISH
LESLIE MELVILLE TO HOLD OFFICE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS IN 2001
OR UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
INCUMBENT DIRECTOR -- TERM EXPIRING 1999
Robert F. McCullough has been a director of the Company since consummation
of its initial public offering in March 1997. Mr. McCullough has been Chief
Financial Officer and a member of the Board of Directors of AMVESCO PLC
(formerly INVESCO PLC) since April 1996. He was a partner for Arthur Andersen
LLP from 1974 until April 1996. Mr. McCullough is 55 years old.
INCUMBENT DIRECTOR -- TERM EXPIRING 2000
Frank A. Argenbright, Jr. founded the Company in 1979 and has been its
Chairman and Chief Executive Officer since that time. Mr. Argenbright graduated
from the Owner/President Management Program at Harvard Business School in 1991.
Mr. Argenbright is 50 years old.
MEETINGS OF THE BOARD OF DIRECTORS
During 1997, the Board held three regular meetings. All of the directors
attended at least 75% of all Board and committee meetings in 1997.
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee. The Board of Directors has established an Audit Committee
(the "Audit Committee") that consists of Messrs. McCullough and Melville. Mr.
McCullough is chairman of the Audit Committee. The Audit Committee is
responsible for (a) recommending to the Board the firm to be employed as
independent auditors of the Company, (b) meeting with the Company's independent
auditors at least annually to (i) review with the independent auditor the
Company's financial statements and internal accounting controls and (ii) to
review the plans and results of the audit engagement, (c) approving the
2
<PAGE> 6
professional services provided by the independent auditor, (d) reviewing the
independence of the independent auditor, (e) considering the range of audit and
non-audit fees and (f) reviewing the adequacy of the Company's internal
accounting controls. During 1997, the Audit Committee held two meetings.
Compensation Committee. The Board of Directors has established a
Compensation Committee (the "Compensation Committee") that consists of Messrs.
McCullough and Melville. Mr. Melville is chairman of the Compensation Committee.
The Compensation Committee is responsible for, among other things, (a)
reviewing, approving, recommending and reporting to the Co-Chief Executive
Officers and the Board of Directors matters regarding the compensation of the
Company's Co-Chief Executive Officers and other key executives and compensation
levels or plans affecting the compensation of the Company's other employees and
(b) administering the Company's 1997 Stock Incentive Plan. During 1997, the
Compensation Committee held two meetings.
The Company does not have a nominating committee.
COMPENSATION OF DIRECTORS
Prior to the Company's initial public offering, directors did not receive
compensation for their service as directors. Since consummation of the initial
public offering in March 1997, the Company has paid its independent directors
$10,000 annually plus $1,000 for each Board meeting attended and $500 for each
committee meeting attended. In addition, directors are reimbursed for expenses
incurred in connection with attendance at Board and committee meetings. The
Company has granted to each independent director options to purchase (i) 5,000
shares of Common Stock at an exercise price of $10.00 per share and (ii) 5,000
shares of Common Stock at an exercise price of $17.875 per share (subject to
shareholder approval of the amendments to the 1997 Stock Incentive Plan
described herein).
APPROVAL OF THE AMENDMENTS TO THE 1997 STOCK INCENTIVE PLAN
The Company maintains the 1997 Stock Incentive Plan (the "Plan"), which was
approved previously by the Board of Directors and the Company's shareholders.
The primary purpose of the Plan is to attract, retain and motivate selected
employees and directors of the Company. The Board of Directors has approved and
recommends that the shareholders approve an amendment to the Plan to increase
the number of shares of Common Stock which may be issued under the Plan from
385,000 shares to 3,500,000 shares of Common Stock. The Board also has approved
and recommends that the shareholders approve an amendment to the Plan to
increase the maximum number of shares subject to options that may be granted in
any calendar year from 100,000 shares to 250,000 shares. All other provisions of
the Plan will remain unchanged.
In October 1997, the Company granted 442,500 stock options to various
executive officers, directors, senior managers and employees of the Company,
contingent upon shareholder approval of the amendments to the Plan. If the
amendments to the Plan are approved by the shareholders, 2,686,000 shares of
Common Stock would remain available for the grant of future options under the
Plan. The following table sets forth the October 1997 grants to (i) executive
officers of the Company, (ii) the executive officers as a group, (iii) the
non-executive director group and (iv) the non-executive officer employee group.
3
<PAGE> 7
NEW PLAN BENEFITS
1997 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF OPTIONS
- ----------------- -----------------
<S> <C>
Frank A. Argenbright, Jr. .................................. 150,000
Chairman and Co-Chief
Executive Officer
Edwin R. Mellett............................................ 150,000
Vice-Chairman and
Co-Chief Executive Officer
Thomas J. Marano............................................ 50,000
President and Chief
Operating Officer -- Argenbright
Holdings Limited
David L. Gamsey............................................. 50,000
Chief Financial Officer
Ernest Patterson............................................ --
Chief Executive -- The ADI Group
Limited
A. Trevor Warburton......................................... --
Managing Director -- The ADI Group
Limited
-------
Total Executive Officers Group.................... 400,000
-------
Non-Executive Director Group................................ 10,000
Non-Executive Officer Employee Group........................ 32,500
-------
Total............................................. 442,500
=======
</TABLE>
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENTS TO THE PLAN.
The material features of the Plan, assuming approval of the amendments, are
outlined below.
ADMINISTRATION
This Plan is administered by the Compensation Committee. The Compensation
Committee acting in its absolute discretion may exercise such powers and take
such action as expressly called for under the Plan and, further, the
Compensation Committee has the power to interpret the Plan and to take such
other action in the administration and operation of the Plan as the Compensation
Committee deems equitable under the circumstances, and not contrary to the terms
of the Plan, which action is binding on the Company, on each affected option
holder and on each other person directly or indirectly affected by such action.
The Compensation Committee establishes the exercise period for each option
grant, which period may not exceed five years for ISOs (as hereinafter defined)
or ten years for Non-ISOs.
TERMINATION AND AMENDMENT
The Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate. Shareholder approval is required for
an amendment (a) to increase the number of shares reserved for issuance under
the Plan, or (b) to change the class of employees eligible to receive options
under the Plan. The Board also may suspend the granting of options under the
Plan at any time and may terminate the Plan at any time. However, the Board may
not unilaterally modify, amend or cancel any option granted before such
suspension or termination unless (i) the option holder consents in writing to
such modification,
4
<PAGE> 8
amendment or cancellation, or (ii) there is a dissolution, liquidation, sale,
merger, consolidation or reorganization of the Company.
ELIGIBILITY
The Board, or at the Board's discretion, the Compensation Committee, acting
in its absolute discretion has the right to grant options to key employees under
the Plan from time to time to purchase shares of Common Stock and has the right
to grant new options in exchange for the cancellation of outstanding options
which have a higher or lower exercise price. However, no option or options,
individually or collectively, may be granted in any calendar year to any key
employee for more than 250,000 shares of Common Stock. If the Board, or at the
Board's discretion, the Compensation Committee, grants an incentive stock option
("ISO") and a non-incentive stock option ("Non-ISO") to a key employee on the
same date, the right of the key employee to exercise the ISO shall not be
conditioned on his or her failure to exercise the Non-ISO. At March 31, 1998, 36
individuals held options granted under the Plan.
The Board, or at the Board's discretion, the Compensation Committee, acting
in its absolute discretion has the right to grant Non-ISOs to directors under
the Plan from time to time to purchase shares of Common Stock and, further, has
the right to grant new Non-ISOs in exchange for the cancellation of outstanding
Non-ISOs which have a higher or lower exercise price.
STOCK SUBJECT TO THE PLAN
As of March 31, 1998, 814,000 shares of Common Stock were reserved for
issuance upon exercise of options previously granted under the Plan and
2,686,000 shares remained available for the grant of future options under the
Plan. If any shares of stock subject to an option granted under the Plan remain
unissued after the cancellation, expiration or exchange of such option for
another option, such shares shall again become available for issuance under the
Plan. The stock subject to the Plan may be unissued shares of Common Stock or
treasury shares, or both.
TERMS
The exercise price for each share of Common Stock subject to an ISO shall
be no less than the fair market value of a share of Common Stock on the date the
ISO is granted or, if the ISO is granted to a key employee who is a ten percent
shareholder of Common Stock, the exercise price for each share of Common Stock
subject to such ISO shall be no less than one hundred ten percent (110%) of the
fair market value of a share of Common Stock on the date the ISO is granted. In
addition, the exercise price for a Non-ISO shall be no less than the fair market
value of a share of Common Stock on the date the Non-ISO is granted. The
exercise price shall be payable in full and in cash upon the exercise of any
option.
An option granted under the Plan shall not be transferable by a key
employee or director other than by will or by the laws of descent and
distribution, and any such option shall be exercisable during the lifetime of a
key employee or director only by such key employee or director. The person or
persons to whom an option is transferred by will or by the laws of descent and
distribution thereafter shall be treated as the key employee or director under
the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Non-ISOs. An individual receiving a Non-ISO under the Plan does not
recognize taxable income on the date of grant of the option, assuming (as is
usually the case with plans of this type) that the option does not have a
readily ascertainable fair market value at the time it is granted. However, the
individual must generally recognize ordinary income at the time of exercise of
the Non-ISO in the amount of the difference between the option exercise price
and the fair market value of the Common Stock on the date of exercise. The
amount of ordinary income recognized by an individual is tax deductible by the
Company in the year that the income is recognized by the individual. Upon
subsequent disposition, any further gain or loss is taxable either as a short-
term or long-term capital gain or loss, depending upon the length of time that
the shares of Common Stock are held by the individual.
5
<PAGE> 9
ISOs. An individual who is granted an ISO under the Plan does not
recognize taxable income either on the date of grant or on the date of its
timely exercise. However, the excess of the fair market value of the Common
Stock received upon the exercise of the ISO over the option exercise price is
includable in the optionee's alternative minimum taxable income and may be
subject to the alternative minimum tax ("AMT"). For AMT purposes only, the basis
of the Common Stock acquired by the exercise of an ISO is increased by the
amount of such excess.
Upon the disposition of the Common Stock acquired upon exercise of an ISO,
long-term capital gain or loss will be recognized by the individual in an amount
equal to the difference between the sales price and the option exercise price
(except that for AMT purposes, the gain or loss would be the difference between
the sales price and the individual's basis increased as described in the
preceding paragraph), provided that the individual has not disposed of the
Common Stock within two years after the date of grant or within one year from
the date of exercise. If the individual disposes of the Common Stock without
satisfying both holding period requirements (a "Disqualifying Disposition"), the
individual will generally recognize ordinary income at the time of such
Disqualifying Disposition to the extent of the lesser of (a) the difference
between the exercise price and the fair market value of the Common Stock on the
date the ISO is exercised or (b) the difference between the exercise price and
the amount realized on such Disqualifying Disposition. Any remaining gain or any
net loss is treated as a short-term or long-term capital gain or loss, depending
upon the length of time that the Common Stock is held. Unlike the case in which
a Non-ISO is exercised, the Company is not entitled to a tax deduction upon
either the timely exercise of an ISO or upon disposition by the individual of
the Common Stock acquired pursuant to such exercise, except to the extent that
the individual recognizes ordinary income in a Disqualifying Disposition.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has audited the accounts of the Company and its
subsidiaries for fiscal year 1997 and has been appointed by the Board of
Directors to continue in that capacity for the Company's fiscal year ending
December 31, 1998, subject to ratification by the shareholders at the Annual
Meeting. Should this firm be unable to perform the requested services for any
reason or not be ratified by the shareholders, the Board will appoint other
independent auditors to serve for the remainder of the year. A representative of
Arthur Andersen LLP will be present at the Annual Meeting, will have the
opportunity to make a statement and will be available to respond to appropriate
questions.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT AUDITORS.
6
<PAGE> 10
COMMON STOCK OWNERSHIP BY MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of shares of Common
Stock as of March 31, 1998 for (i) directors of the Company, (ii) the Co-Chief
Executive Officers and each of the three most highly compensated executive
officers of the Company (collectively the "Named Executive Officers"), (iii) the
directors and executive officers of the Company as a group and (iv) each person
who is a shareholder of the Company holding more than a 5% interest in the
Company. Unless otherwise indicated in the footnotes, all of such interests are
owned directly, and the indicated person or entity has sole voting and
disposition power. The number of shares of Common Stock represents (a) the
number of shares of Common Stock the person beneficially owns plus (b) the
number of shares of Common Stock issuable upon exercise of currently outstanding
vested options.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT OF CLASS
- ------------------------------------ --------------------- ----------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Frank A. Argenbright, Jr.(2)................................ 8,005,000 58.8%
Edwin R. Mellett(3)......................................... 218,750 1.6
Thomas J. Marano(3)......................................... 110,000 *
David L. Gamsey(3).......................................... 44,000 *
Ernest Patterson............................................ -- --
A. Trevor Warburton......................................... -- --
Robert F. McCullough(4)..................................... 2,250 *
Hamish Leslie Melville(4)................................... 15,975 *
All executive officers &
directors as a group (8 persons)(5)....................... 8,395,975 60.1
OTHER FIVE PERCENT SHAREHOLDERS:
Caledonia Investments (Bermuda) Limited(6).................. 1,102,000 8.1
HLM Management Co., Inc.(7)................................. 570,300 4.2
</TABLE>
- ---------------
* Less than 1.0%.
(1) Based on an aggregate of 13,605,000 shares of Common Stock issued and
outstanding as of March 31, 1998. Includes shares of Common Stock that may
be acquired upon the exercise of stock options exercisable within 60 days.
Each person named above has sole voting and dispositive power with respect
to all shares listed opposite such person's name, except as otherwise noted.
(2) Includes (a) 668,660 shares beneficially owned by Argenbright Partners,
L.P., of which a limited liability company managed by Mr. Argenbright and
his spouse is the general partner and (b) 2,500 shares owned by Mr.
Argenbright's spouse. Mr. Argenbright's address is c/o AHL Services, Inc.,
Atlanta Financial Center, 3353 Peachtree Road, NE, Suite 1120, North Tower,
Atlanta, Georgia 30326.
(3) Represents shares of Common Stock issuable pursuant to exercisable options.
(4) Includes 1,250 shares issuable pursuant to exercisable options.
(5) Includes 375,250 shares issuable pursuant to exercisable options.
(6) Represents shares of Common Stock beneficially owned by Caledonia
Investments (Bermuda) Limited, an investment holding company ("Caledonia").
This information is included in reliance upon a Schedule 13D filed by
Caledonia on November 7, 1997. Caledonia's address is c/o Caledonia
Investments plc, Cayzer House, 1 Thomas More Street, London E1 9AR.
(7) Represents shares of Common Stock beneficially owned by HLM Management Co.,
Inc., an investment adviser ("HLM"). This information is included in
reliance upon a Schedule 13G filed by HLM on February 13, 1998. HLM's
address is 222 Berkeley Street, Boston, Massachusetts 01246.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation paid to the Company's Named Executive Officers whose salary and
bonus compensation for the year ended December 31, 1997 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
--------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank A. Argenbright,
Jr. ..................... 1997 $354,615 $ 0 $ -- 150,000(1) $ 6,500(3)
Chairman and Co-Chief 1996 600,000 0 200,388(2) 12,000(3)
Executive Officer
Edwin R. Mellett........... 1997 217,307 200,000 -- 157,500(1) --
Vice-Chairman and 1996 160,577 100,000 -- 322,500 --
Co-Chief Executive
Officer
Thomas J. Marano........... 1997 273,077 165,000 -- 56,250(1) --
President and Chief 1996 250,000 125,000 -- 268,750 --
Operating Officer --
Argenbright Holdings
Limited
David L. Gamsey............ 1997 169,038 100,000 -- 52,500(1) --
Chief Financial Officer 1996 153,173 65,000 -- 107,500 --
Ernest Patterson(5)........ 1997 162,900 82,000 -- 150,000 --
Chief Executive -- 1996 -- -- -- -- --
The ADI Group Limited
A. Trevor Warburton........ 1997 147,500 59,000 -- 30,000 29,178(4)
Managing Director -- 1996 144,000 45,000 -- -- 27,176(4)
The ADI Group Limited
</TABLE>
- ---------------
(1) Subject to shareholder approval of the amendments to the Plan.
(2) Includes approximately $55,000 relating to club dues and initiation fees.
Effective January 1, 1997, other annual compensation was significantly
reduced as the Company revised its expense reimbursement policies.
(3) Represents life insurance premiums paid by the Company.
(4) Represents medical and life insurance payments and contributions to Mr.
Warburton's pension plan.
(5) Joined the Company in June 1997.
8
<PAGE> 12
OPTION GRANTS TABLE
The following table sets forth information regarding option grants during
fiscal 1997 to each of the Named Executive Officers:
GRANTS
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE OF ASSUMED
NUMBER OF PERCENT OF ANNUAL RATE OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
GRANTED FISCAL 1997 SHARE DATE 5% 10%
---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Frank A. Argenbright, Jr....... 150,000(1) 17.6% $17.875 10/31/07 $1,686,210 $4,273,215
Edwin R. Mellett............... 7,500 0.9 10.00 02/28/07 47,167 115,531
150,000(1) 17.6 17.875 10/31/07 1,686,210 4,273,215
Thomas J. Marano............... 6,250 0.7 10.00 02/28/07 39,306 99,609
50,000(1) 5.9 17.875 10/31/07 562,070 1,424,405
David L. Gamsey................ 2,500 0.3 10.00 02/28/07 15,722 39,844
50,000(1) 5.9 17.875 10/31/07 562,070 1,424,405
Ernest Patterson............... 150,000 17.6 15.00 06/23/07 1,415,003 3,585,920
A. Trevor Warburton............ 30,000 3.5 10.00 03/27/07 188,667 478,122
</TABLE>
- ---------------
(1) Subject to shareholder approval of the amendments to the Plan.
FISCAL YEAR-END OPTION VALUE
The following table sets forth certain information with respect to the
value of unexercised in-the-money options held by the Named Executive Officers
of the Company at December 31, 1997. No options were exercised by the Named
Executive Officers of the Company during 1997.
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END(#)(1) AT FY-END($)(2)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Frank A. Argenbright, Jr. ...................... -- 150,000 $ -- $1,012,500
Edwin R. Mellett................................ 218,000 262,000 3,764,450 2,650,500
Thomas J. Marano................................ 110,000 215,000 1,608,750 2,725,625
David L. Gamsey................................. 44,000 116,000 643,500 1,277,750
Ernest Patterson................................ -- 150,000 -- 1,443,750
A. Trevor Warburton............................. -- 30,000 -- 438,750
</TABLE>
- ---------------
(1) Assumes shareholder approval of the amendments to the Plan.
(2) Based on a closing price of $24.625 per share of Common Stock on December
31, 1997.
NONCOMPETITION AND EMPLOYMENT CONTRACTS
The Company has entered into employment agreements with Messrs. Mellett,
Marano and Gamsey. The agreement with Mr. Mellett expires on December 1, 2000,
and the agreements with Messrs. Marano and Gamsey expire on December 1, 2002
(the "Expiration Date"). Each agreement also may be terminated by the Company
with or without cause or upon the employee's death or inability to perform his
duties on account of a disability for a period of three months during any
consecutive twelve-month period or by the employee. If any agreement is
terminated by the Company prior to the Expiration Date, except for cause or upon
the employee's death or disability, the Company must continue to pay the
employee's base salary and bonus for one year (six months with respect to Mr.
Gamsey) from the date of termination. The agreements provide for
9
<PAGE> 13
annual base salaries of $350,000, $300,000 and $200,000 for Messrs. Mellett,
Marano and Gamsey, respectively, and for annual bonuses dependent upon the
Company's financial performance and achievement of personal objectives
established for each employee by the Board of Directors.
The Company also has an employment agreement with Mr. Patterson. The
agreement is indefinite in length but provides that in the event Mr. Patterson
is terminated without cause, he will be entitled to receive 12 months' salary.
The agreement provides for an annual base salary of approximately $300,000 and
for an annual bonus of up to 50% of base salary, based upon the Company's
financial performance and achievement of personal objectives established for Mr.
Patterson by the Board of Directors. The agreement also grants Mr. Patterson
options to purchase 150,000 shares of Common Stock, exercisable 25% per year
over four years, at an exercise price of $15.00 per share. As a condition to
employment, Mr. Patterson also agreed to one year noncompetition and
nonsolicitation provisions.
The Company also has an employment agreement with Mr. Warburton. The
agreement is indefinite in length but may be terminated (a) immediately by the
Company for cause, (b) by the Company on December 31 of any year with or without
cause provided that the Company gives at least twelve months prior written
notice, (c) automatically upon Mr. Warburton's sixtieth birthday or (d) by Mr.
Warburton at any time provided that he gives at least six months prior written
notice. The agreement provides for an annual base salary of $144,000 and for
annual bonus dependent upon the Company's financial performance and achievement
of personal objectives established for Mr. Warburton by the Board of Directors.
The agreement also contains one year noncompetition and nonsolicitation
provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisting of Messrs. McCullough and Melville,
both independent directors, was formed on March 27, 1997. Neither Mr. McCullough
nor Mr. Melville has engaged in related party transactions with the Company.
CERTAIN TRANSACTIONS
On February 1, 1997, pursuant to the Reorganization, Mr. Argenbright
contributed all of the outstanding shares of common stock of Argenbright
Holdings Limited ("Argenbright") and The ADI Group Limited ("ADI") to the
Company in exchange for 8,352,430 shares of Common Stock of the Company and
$5,000 in cash.
In March 1989, the Company borrowed $650,000 from Mr. Argenbright as
evidenced by a subordinated promissory note due January 12, 1999 at an interest
rate of 12% per annum. The Company used the proceeds of the loan for general
working capital purposes. The outstanding balance was approximately $528,000 at
December 31, 1996. The Company paid interest of $78,000 and $75,000 for the
years ended December 31, 1995 and 1996, respectively. On February 1, 1997, Mr.
Argenbright contributed this note to the Company as part of the Reorganization,
along with certain Company-occupied offices and facilities in Atlanta, Orlando
and Memphis and other assets. These properties were transferred at their
carrying values (which were less than their appraised values). In connection
with this transaction, the Company assumed the associated mortgage debt of
approximately $2.5 million, which was less than the appraised value. The Company
was a guarantor of certain of these mortgages.
Through the end of December 1996, the Company periodically made loans to
unrelated businesses which were solely owned by Mr. Argenbright in the aggregate
principal amount of $438,000. In addition, Mr. Argenbright periodically borrowed
money from the Company which aggregated approximately $449,000. These loans,
which did not bear interest, were unsecured and repayable on demand. Mr.
Argenbright repaid all of such indebtedness in May 1997.
The Company has adopted a policy, effective upon the consummation of the
initial public offering in March 1997, prohibiting loans (other than travel
advances in the ordinary course of business) to its executive officers,
directors and principal shareholders unless such loans first are approved by the
Compensation Committee, which must determine that such loans are in the best
interests of the Company. Any loans made
10
<PAGE> 14
will bear interest at a rate and be on such terms as determined by the
Compensation Committee to be fair to the Company.
During 1997, the Company purchased uniforms for approximately $1.8 million
from ASAP Uniform Company, Inc., a company that is 20% owned by AHL, and
purchased access control services for approximately $1.2 million from Premium
Services Management, Inc., a company that is 49% owned by AHL.
Any future transactions between the Company and its officers, directors or
principal shareholders will be approved by a majority of the disinterested
members of the Board of Directors.
11
<PAGE> 15
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of is responsible for ensuring that a proper
system of short and long-term compensation is in place to provide
performance-oriented incentives to management. Its report on compensation is as
follows:
Each executive officer's compensation is determined annually by the
Compensation Committee. Senior management makes recommendations to the
Compensation Committee regarding each executive officer's compensation (except
the Co-Chief Executive Officers' compensation), including recommendations for
base salary for the succeeding year and discretionary cash bonuses and stock
incentive awards.
The Company's compensation philosophy is based on a pay for performance
approach. The compensation program seeks to reward individual action that
contributes to operating unit performance and Company performance. The Company's
goal is to be competitive with the marketplace on a total compensation basis,
including base salary and annual and long-term incentives:
- Base Salary. Each executive officer's base salary is based upon the
competitive market for the executive officer's services, including the
executive's specific responsibilities, experience and overall performance.
In keeping with the Company's pay for performance approach, it is the
objective of the Company to set the base salary at the market base salary
level of the Company's peers in its industry. Base salaries are adjusted
annually. Changes in responsibilities are also taken into account in the
review process.
- Annual Incentive Compensation. The Company awards discretionary year-end
bonuses. These bonuses reflect the contribution of the individual as well
as the performance of the operating unit and the Company as a whole.
Ranges of potential bonuses and performance measures are established
annually for each position.
The performance measures applicable to a particular position vary
according to the functions of the position. Performance measures
considered by the Compensation Committee include obtaining certain
profitability and revenue goals as well as each individual meeting
personal objectives relative to operational enhancements.
- Long-Term Incentive Compensation. The Company uses long-term incentive
compensation to compensate for achievement of performance measures which
extend beyond one year, while at the same time aligning management's
interests with that of the shareholders. The Compensation Committee
believes that stock-based awards are most appropriate for long-term
incentive compensation. In 1997, the Company adopted the 1997 Stock
Incentive Plan. Under this Plan, stock options may be granted by the
Compensation Committee. In October 1997, the Compensation Committee
granted stock options to all of the Company's executive officers,
contingent upon approval by shareholders of an increase in the number of
shares available for issuance under the Plan.
Frank A. Argenbright, Jr. has been the Chairman and Chief Executive Officer
of the Company since its founding in 1979 and Co-Chief Executive Officer since
December 1994 and beneficially owns approximately 58.8% of the Company's common
stock. Mr. Edwin R. Mellett has been Vice Chairman and Co-Chief Executive
Officer since December 1994. The Compensation Committee believes that Messrs.
Argenbright and Mellett are responsible for much of the Company's success. Mr.
Argenbright and Mellett have hired and developed an outstanding management group
and have furnished leadership in all areas of the Company's business.
12
<PAGE> 16
Because he is the majority shareholder of the Company, Mr. Argenbright did
not receive an annual cash bonus in fiscal years 1997 and 1996. In determining
Mr. Mellett's bonus levels for 1997, the Compensation Committee considered his
significant role in the Company's 1997 accomplishments, including the
performance measures referred to above.
COMPENSATION COMMITTEE
Hamish Leslie Melville, Chairman
Robert F. McCullough
March 31, 1998
13
<PAGE> 17
THE FOREGOING REPORT SHOULD NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (TOGETHER, THE "ACTS"), EXCEPT TO THE EXTENT
THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND
SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
STOCK PRICE PERFORMANCE GRAPH
The following stock price performance graph compares the Company's
performance to The Nasdaq Stock Market and the index of Nasdaq Non-Financial
Stocks. The stock price performance graph assumes an investment of $100 in the
Company on March 27, 1997 and an investment of $100 in the two indexes on March
31, 1997 and further assumes the reinvestment of all dividends. The difference
in the initial start date is due to the fact that the Company's Common Stock did
not start trading publicly until March 27, 1997. The Company believes that the
net effect of this difference in start dates will not have a material effect on
the performance graph. Stock price performance, presented monthly for the period
from March 31, 1997 through December 31, 1997 is not necessarily indicative of
future results.
<TABLE>
<CAPTION>
Measurement Period The Nasdaq Stock Nasdaq Non-
(Fiscal Year Covered) AHL Market Financial Stocks
<S> <C> <C> <C>
Mar97 100.00 100.00 100.00
Apr97 95.00 103.10 103.30
May97 122.50 114.80 115.80
Jun97 155.00 118.30 118.50
Jul97 171.25 130.80 131.60
Aug97 181.25 130.60 131.40
Sep97 182.50 138.30 138.90
Oct97 178.75 131.20 130.40
Nov97 207.50 131.80 130.20
Dec97 246.25 129.70 125.80
</TABLE>
THE STOCK PRICE PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE ACTS EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE
BE DEEMED FILED UNDER SUCH ACT.
14
<PAGE> 18
OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires executive officers and directors of the Company and
persons who beneficially own more than ten percent of the Company's Common Stock
to file with the Securities and Exchange Commission certain reports, and to
furnish copies thereof to the Company, with respect to each such person's
beneficial ownership of the Company's equity securities. Based solely upon a
review of the copies of such reports furnished to the Company and certain
representations of such persons, the Company believes that all filings were
timely except: (a) Mr. Argenbright filed a Form 4 reporting his disposition of
353,430 shares of Common Stock approximately eight days late; (b) Mr. Melville
filed a Form 4 reporting the acquisition of 2,000 shares of Common Stock and
1,125 shares of Common Stock approximately eight days date; (c) Mr. Patterson
filed a Form 3 reporting his beneficial ownership of Common Stock approximately
three months late; and (d) Messrs. McCullough and Melville each filed a Form 5
reporting the grant of certain options approximately one month late.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report of the Company for the year ended December 31, 1997,
including audited financial statements, accompanies this Proxy Statement. The
Annual Report does not form any part of the material for the solicitation of
proxies.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE, AT THE WRITTEN REQUEST OF ANY
HOLDER OF COMMON STOCK OF RECORD AS OF THE CLOSE OF BUSINESS ON MARCH 20, 1998,
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, EXCEPT EXHIBITS THERETO. The Company will provide copies of
the exhibits, should they be requested by eligible shareholders, and the Company
may impose a reasonable fee for providing such exhibits. Request for copies of
the Company's Annual Report on Form 10-K should be mailed to:
AHL Services, Inc.
3353 Peachtree Road, NE
Suite 1120
Atlanta, Georgia 30326
Attention: Corporate Secretary
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the Company's 1999
Annual Meeting of Shareholders must be received by the Company on or before
December 12, 1998 to be eligible for inclusion in the Proxy Statement and form
of proxy to be distributed by the Board of Directors in connection with such
meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting.
15
<PAGE> 19
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the meeting as possible, special
solicitation of proxies may, in certain instances, be made personally or by
telephone, telegraph or mail by one or more employees of the Company. The
Company also will reimburse brokers, banks, nominees and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy material to
their principals who are beneficial owners of the Company's Common Stock.
By Order of the Board of Directors,
/s/ DAVID L. GAMSEY
David L. Gamsey
Secretary
Atlanta, Georgia
March 31, 1998
16
<PAGE> 20
AHL SERVICES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON MAY 14, 1998
The undersigned hereby appoints David L. Gamsey and Edwin R. Mellett and
each of them, proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of common stock of AHL
Services, Inc. which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders to be held on Thursday, May 14,
1998, at 9:00 a.m., local time, at the Swissotel, 3391 Peachtree Road, N.E.,
Atlanta, Georgia 30326, or at any adjournment thereof, upon the matters
described in the accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement, receipt of which is hereby acknowledged, and upon any other business
that may properly come before the Annual Meeting of Shareholders or any
adjournment thereof. Said proxies are directed to vote on the matters described
in the Notice of Annual Meeting of Shareholders and Proxy Statement as follows,
and otherwise in their discretion upon such other business as may properly come
before the Annual Meeting of Shareholders or any adjournment thereof.
1. To elect two (2) directors to serve until the 2001 Annual Meeting of
Shareholders:
<TABLE>
<S> <C>
[ ] FOR the nominees listed [ ] WITHHOLD AUTHORITY to vote for the nominee listed
</TABLE>
To serve until the 2001 Annual Meeting of Shareholders:
Edwin R. Mellett
Hamish Leslie Melville
2. To approve the amendments to the 1997 Stock Incentive Plan (the
"Amendments"):
[ ] FOR approval of the Amendments [ ] WITHHOLD AUTHORITY to vote for
approval of the
Amendments
3. To ratify appointment of Arthur Andersen LLP as the Company's independent
public accountants:
[ ] FOR the ratification of Arthur Andersen LLP [ ] WITHHOLD AUTHORITY to
vote for ratification of the appointment of
Arthur Andersen LLP.
(Continued and to be signed on other side)
(Continued from other side)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE ABOVE-STATED PROPOSALS.
Date:
--------------------------------,
1998
--------------------------------
--------------------------------
Please sign exactly as your name
or names appear hereon. For more
than one owner as shown above,
each should sign. When signing
in a fiduciary or representative
capacity, please give full
title. If this proxy is
submitted by a corporation, it
should be executed in the full
corporate name by a duly
authorized officer, if a
partnership, please sign in
partnership name by authorized
person.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ON MAY 14, 1998.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
