BUTLER NATIONAL CORPORATION
1546 East Spruce Road
Olathe, Kansas 66061
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 3, 1995
To the Shareholders of Butler National Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of Butler
National Corporation (the "Company") will be held at the Holiday Inn-Olathe,
1010 West 151st Street, Olathe, Kansas, on Tuesday, October 3, 1995, at 11:00
a.m., for the following purposes:
1. To elect four (4) directors to hold office until the next Annual Meeting
of Shareholders or until their successors are elected.
2. To ratify the selection of Arthur Andersen LLP as auditors for the
fiscal year ending April 30, 1996.
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on August 11, 1995, as
the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors,
WILLIAM A. GRIFFITH, Secretary
Olathe, Kansas
August 11, 1995
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND IN
PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND
VOTE IN PERSON IF THEY DESIRE.
<PAGE>
BUTLER NATIONAL CORPORATION
1546 East Spruce Road
Olathe, Kansas 66061
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Butler National
Corporation (the "Company") in connection with the solicitation of proxies
by the Board of Directors of the Company to be voted at the Annual Meeting
of Shareholders to be held on October 3, 1995, or any adjournment or
adjournments thereof. The cost of this solicitation will be borne by the
Company. In addition to solicitation by mail, officers, directors and
employees of the Company may solicit proxies by telephone, telegraph, or in
person. The Company may also request banks and brokers to solicit their
customers who have a beneficial interest in the Company's Common Stock
registered in the names of nominees and will reimburse such banks and
brokers for their reasonable out-of-pocket expenses.
Any proxy may be revoked at any time before it is voted by written notice to
the Secretary, by receipt of a proxy properly signed and dated subsequent to
an earlier proxy, or by revocation of a written proxy by request in person at
the Annual Meeting; but if not so revoked, the shares represented by such
proxy will be voted. The mailing of this proxy statement to shareholders of
the Company commenced on or about August 21, 1995. The Company's corporate
offices are located at 1546 East Spruce Road, Olathe, Kansas 66061 and its
telephone number is (913) 780-9595.
The Company has outstanding only one class of Common Stock, par value $.01
per share ("Common Stock"), of which 8,507,100 shares were issued,
outstanding and entitled to vote at the Annual Meeting. Each share is
entitled to one vote. Only shareholders of record at the close of business on
August 11, 1995, will be entitled to vote at the meeting. The presence in
person or by proxy of the holders of 35% of the shares of Common Stock
entitled to vote at the Annual Meeting of Shareholders constitutes a quorum
for the transaction of business. The shares represented by the enclosed
proxy will be voted if the proxy is properly signed and received prior to
the meeting.
The proxy rules of the Securities and Exchange Commission permit
shareholders of a company, after timely notice to the company, to present
proposals for shareholder action in the company's proxy statements where such
proposals are consistent with applicable law, pertain to matters appropriate
for shareholder action and are not properly omitted by company action in
accordance with the proxy rules. The Butler National Corporation 1996
Annual Meeting of Shareholders is expected to be held on or about September
24, 1996, and proxy materials in connection with that meeting are expected to
be mailed on orabout August 21, 1996. Shareholder proposals prepared in
accordance with the proxy rules must be received by the Company on or before
June 5, 1996.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth, with respect to the Company's common stock
(the only class of voting securities), the only persons known to be
beneficial owners of more than five percent (5%) of any class of the Company's
voting securities as of July 17, 1995.
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership<F1> of Class
<S> <C> <C>
Clark D. Stewart
1546 East Spruce Road
Olathe, Kansas 66061 2,220,100<F2> 21.11%
Marvin J. Eisenbath
1546 East Spruce Road
Olathe, Kansas 66061 670,000 6.37%
<FN>
<F1> Unless otherwise indicated by footnote, nature of beneficial ownership of
securities is direct, and beneficial ownership as shown in the table
arises from sole voting power and sole investment power.
<F2> Includes 1,470,000 shares which may be acquired by Mr. Stewart pursuant
to the exercise of stock options which are exercisable.
</FN>
</TABLE>
<TABLE>
The following table sets forth, with respect to the Company's common stock
(the only class of voting securities), (i) shares beneficially owned by all
directors and named executive officers of the Company, and (ii) total shares
beneficially owned by directors and officers as a group, as of July 17, 1995.
<CAPTION>
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership<F1> of Class
<S> <C> <C>
Clark D. Stewart 2,220,100<F2> 21.11%
Marvin J. Eisenbath 670,000 6.37%
William E. Logan 270,000<F3> 2.57%
R. Warren Wagoner 235,000<F4> 2.23%
William A. Griffith 224,000<F5> 2.13%
Brenda Brainard Shadwick 8,333<F7> -
All Directors and Officers as a
Group (11 persons) 3,896,213<F6> 37.04%
<FN>
<F1> Unless otherwise indicated by footnote, nature of beneficial
ownership of securities is direct, and beneficial ownership as shown
in the table arises from sole voting power and sole investment power.
<F2> Includes 1,470,000 shares which may be acquired by Mr. Stewart
pursuant to the exercise of stock options which are exercisable.
<F3> Includes 160,000 shares which may be acquired by Mr. Logan pursuant
to the exercise of stock options which are exercisable.
<F4> Includes 135,000 shares which may be acquired by Mr. Wagoner pursuant
to the exercise of stock options which are exercisable.
<F5> Includes 110,000 shares which may be acquired by Mr. Griffith
pursuant to the exercise of stock options which are exercisable.
<F6> Includes 2,111,500 shares for all directors and officers as a group,
which are subject to options exercisable.
<F7> Since Ms. Shadwick is no longer with the Company, and further
information is not available, included are 8,333 shares which
were held by Ms. Shadwick at her termination.
</FN>
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
(Proposal No. 1)
The Board of Directors has nominated for election the four (4) persons named
below. All of the nominees are currently members of the Board of Directors.
All of the nominees were elected by the shareholders. It is intended that
proxies solicited will be voted for such nominees. The Board of Directors
believes that each nominee named below will be able to serve, but should any
nominee be unable to serve as a director, the persons named in the proxies
have advised that they will vote for the election of such substitute nominee
as the Board of Directors may propose.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
The names and ages of the directors, their principal occupations for at least
the past five years are set forth below, based on information furnished to
the Company by the directors.
<CAPTION>
Name of Nominee
and Director and Served Principal Occupation for Last Five Years
Age Since and other Directorships
<S> <C> <C>
Clark D. Stewart (55) 1989 President of the Company from September 1,
1989 to present. President of Tradewind
Systems, Inc. (consulting and computer
sales) 1980 to present; Executive Vice
President of RO Corporation (manufacturing)
1986 to 1989; President of Tradewind
Industries, Inc. (manufacturing) 1979 to
1985.
R. Warren Wagoner (43) 1986 Chairman of the Board of Directors of the
Company since August 30, 1989 and President
of the Company from July 26, 1989 to
September 1, 1989. Sales Manager of
Yamazen Machine Tool, Inc. from March, 1992
to March, 1994; President of Stelco, Inc.
(manufacturing) 1987 to 1989; General
Manager, AmTech Metal Fabrications, Inc.,
Grandview, MO 1982 to 1987.
William E. Logan (57) 1990 Vice President and Treasurer of Wendy's
Hamburgers of Kansas City, Inc. June,
1984 to present. Vice President and
Treasurer of Valley Foods Services, Inc.
(wholesale food distributor) June, 1988
to April, 1993. Professional practice as
a Certified Public Accountant 1965 to 1984.
William A. Griffith (48) 1990 Secretary of the Company, President of
Griffith and Associates (management
consulting) since 1984. Management
consultant for Diversified Health
Companies (management consulting) from
1986 to 1989 and for Health Pro (health
care) from 1984 to 1986. Chief Executive
Officer of Southwest Medical Center
(hospital) from 1981 to 1984.
</TABLE>
During the fiscal year ended April 30, 1995, the Board of Directors met
two times. Each director attended 100% of the meetings of the Board of
Directors. Members of the Board who are not otherwise paid employees of the
Company (all except Mr. Stewart) are paid $100 for each meeting attended.
The Board of Directors has an Audit Committee and Compensation Committee,
but no Nominating Committee. During fiscal 1995, the Audit Committee
consisted of Randal W. Wagoner, William E. Logan and William A. Griffith.
Its function is to assist the President in the review of the financial
performance and operations of the Company. The Audit Committee met once
during the fiscal year ended April 30, 1995.
<PAGE>
During fiscal 1995, the Compensation Committee consisted of the Board of
Directors. Its function is to assist the President in periodic reviews of
the performance of management which in turn leads to salary review and
recommendations for salary adjustment. The Compensation Committee met two
times during the fiscal year ended April 30, 1995.
The Board of Directors recommends a vote "FOR" each of Messrs. Wagoner,
Stewart, Logan and Griffith for election as directors of the Company.
<TABLE>
The executive officers of the Company are elected each year at the annual
meeting of the Board of Directors held in conjunction with the annual
meeting of shareholders and at special meetings held during the year. The
executive officers are as follows:
<CAPTION>
Name Age Position
<S> <C> <C>
R. Warren Wagoner 43 ChairmAn of the Board of Directors
Clark D. Stewart 55 President and Chief Executive Officer
Jack L. Graham 71 Vice President, Aircraft Modifications
Thomas E. Woodson 57 Vice President, Avionics
Jon C. Fischrupp 55 President of Butler National Services, Inc.,
a wholly-owned subsidiary of the Company
Marvin J. Eisenbath 43 President of R F, Inc., a wholly-owned subsidiary
of the Company ("RFI")
Stephanie S. Ruskey 30 Vice President, Chief Financial Officer and
Assistant Secretary
Edward J. Matukewicz 47 Treasurer
William A. Griffith 48 Secretary
</TABLE>
R. Warren Wagoner was General Manager, Am-Tech Metal Fabrications, Inc. from
1982 to 1987. From 1987 to 1989, Mr. Wagoner was President of Stelco, Inc.
Mr. Wagoner was Sales Manager for Yamazen Machine Tool, Inc. from March 1992
to March 1994. Mr. Wagoner was President of the Company from July 26, 1989,
to September 1, 1989. He became Chairman of the Board of the Company on
August 30, 1989.
Clark D. Stewart was President of Tradewind Industries, Inc., a manufacturing
company, from 1979 to 1985. From 1986 to 1989, Mr. Stewart was Executive
Vice President of RO Corporation. In 1980, Mr. Stewart became President of
Tradewind Systems, Inc. He became President of the Company in September 1989.
Jack L. Graham was President of Avcon Industries for 19 years and joined the
Company in December 1983, at the time of the acquisition of Avcon Industries
by the Company. Mr. Graham is Vice President, Aircraft Modifications.
<PAGE>
Thomas E. Woodson has been President of Plectron Corporation since 1980.
Mr. Woodson became General Manager of Woodson Avionics, Inc. in February 1990,
and Vice President of Avionics in November 1990.
John C. Fischrupp was President of Lauderdale Services, Inc. ("LSI") from
June 14, 1978, until May 1, 1986, at which time the Company acquired LSI and
he became President of LSI (now known as Butler National Services, Inc.).
Marvin J. Eisenbath was a sole-proprietor of Redi-Foods from January 1988 to
December 1993, was President of Duffers Outlet Golf, Inc. from January 1994
to April 21, 1994, at which time the Company acquired Duffers Outlet Golf,
Inc. (RFI) and he became President of RFI. Mr. Eisenbath was the Vice
President of Purchasing of Sysco Corporation from 1981 to 1987.
Stephanie S. Ruskey, CPA, was a senior accountant with Arthur Andersen &
Co. from May 1987 until December 1990.
Edward J. Matukewicz was Vice President of Master Fund Company from 1987 to
1990 and Vice President of First Trust of Mid America from 1990 to 1991.
William A. Griffith was Chief Executive Officer of Southwest Medical Center
(hospital) from 1981 to 1984. Mr. Griffith was a management consultant for
Health Pro from 1984 to 1986 and for Diversified Health Companies from 1986
to 1989. Mr. Griffith has been President of Griffith and Associates,
management consultants, since 1984.
Except for the following, based on the information filed with the Company,
all reports required to be filed for the fiscal year ending April 30, 1995
with the Securities and exchange Commission under Section 16 of the
Securities Exchange Act of 1934, as amended, by the Company's executive
officers, directors and 10% stockholders have been filed in accordance with
applicable rules. Ms. Brenda Brainard Shadwick has not filed a Form 3
reflecting her employment with the Company (beginning July 1994), a Form 4
reflecting her holdings of 8,333 shares of the Company's common stock
(restricted shares issued per her employment agreement on June 24, 1994) or
a Form 5 reflecting her status as of April 30, 1995. On April 17, 1995, Ms.
Shadwick's employment was terminated.
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the other most highly compensated
executive officers of the Company whose salary and bonus exceeded $100,000
(determined as of the end of the last fiscal year) for the fiscal years ended
April 30, 1995, 1994 and 1993:
<PAGE>
<TABLE>
Summary Compensation Table
Annual Compensation
<CAPTION>
Other Annual
Name and Salary Bonus Compensation
Principal Position Year ($) ($) ($)
<S> <C> <C> <C> <C>
Clark D. Stewart, President 95 195,590 --- ---
and CEO, Director 94 166,185 --- ---
93 158,348 --- ---
Marvin J. Eisenbath, 95 307,469 --- ---
President, R. F., Inc.<F2> 94 6,923 --- ---
93 N/A N/A N/A
Brenda Brainard Shadwick, 95 133,709 --- ---
Indian Affairs counsel<F3> 94 N/A N/A N/A
93 N/A N/A N/A
<CAPTION>
Annual Compensation (Continued)
Long Term Compensation
Awards Payouts
Restricted Securities LTIP
Stock Underlying All Other
Name and Award(s) Options Payouts Compensation
Principal Position Year ($) ($)<F1> ($) ($)
<S> <C> <C> <C> <C> <C>
Clark D. Stewart, President 95 --- 100,000 --- ---
and CEO, Director 94 --- 970,000 --- ---
93 --- --- --- ---
Marvin Eisenbath, 95 --- --- --- ---
President, R.F. Inc. 94 --- --- --- ---
93 N/A N/A N/A N/A
Brenda Brainard Shadwick, 95 24,999 --- --- ---
Indian Affairs Counsel 94 N/A N/A N/A N/A
93 N/A N/A N/A N/A
<FN>
<F1>Represents options granted pursuant to the Company's 1989 Nonqualified
Stock Option Plan (100,000) in 1995 and 1993 Nonqualified Stock Option
Plan (20,000) and 1993 Nonqualified Stock Option Plan II (950,000) in
1994.
<F2>Mr. Eisenbath, President of RFI, became an executive officer of the
Company on April 22, 1994.
<F3>Ms. Shadwick, Indian Affairs counsel, employed July 5, 1994 to April 17,
1995. Ms. Shadwick was issued 8,333 shares of common stock with a value
of $24,999 on June 24, 1994. Ms. Shadwick received these shares on her
termination date.
</FN>
</TABLE>
OPTION GRANTS, EXERCISES AND HOLDINGS
<TABLE>
The following table provides further information concerning grants of stock
options pursuant to the 1989 Nonqualified Stock Option Plan during the fiscal
1995 year to the named executive officers:
<CAPTION>
Individual Grants
Percent of
Number of Total
Securities Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted(#) in FY ($/Sh) Date
<S> <C> <C> <C> <C>
Clark D. Stewart, 100,000 57.9% 2.3125 09/08/99
Chief Executive Officer<F1>
Marvin J. Eisenbath -0- N/A N/A N/A
Brenda Brainard Shadwick -0- N/A N/A N/A
<CAPTION>
Individual Grants (continued)
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
For Option Term
Name 5% ($) 10% ($)
<S> <C> <C>
Clark D. Stewart,
Chief Executive Officer 162,889 259,374
Marvin J. Eisenbath N/A N/A
Brenda Brainard Shadwick N/A N/A
<FN>
<F1>Except in the event of death or retirement for disability, if Mr. Stewart
ceases to be employed by the Company, his option shall terminate
immediately. Upon death or retirement for disability, Mr. Stewart (or
his representative) shall have three months or one year, respectively,
following the date of death or retirement, as the case may be, in which
to exercise such options. The option granted for 100,000 shares of
Common Stock was granted on January 3, 1995 from the 1989 Stock Option
Plan. All such options are immediately exercisable.
</FN>
</TABLE>
<PAGE>
<TABLE>
The following table provides information with respect to the named executive
officers concerning options exercised and unexercised options held as of the
end of the Company's last fiscal year:
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at FY-End (#) Options at FY-End ($)<F1>
Name Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C>
Clark D. Stewart,
Chief Executive Officer 1,470,000 / 0 2,915,000 / 0
Marvin J. Eisenbath N/A N/A
Brenda Brainard Shadwick N/A N/A
<FN>
<F1>Based on the price of the Company's common stock at the close of business
on Friday, April 28, 1995 and the exercise price of the options.
</FN>
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is comprised of Mr.
Wagoner, Mr. Stewart, Mr. Griffith and Mr. Logan. Mr. Stewart is the
President and Chief Executive Officer of the Company and Mr. Griffith is the
Secretary of the Company.
During fiscal 1995, the consulting firm of Griffith & Associates was paid
for business consulting services rendered to the Company in the approximate
amount of $130,000. William A. Griffith, who is a director for the Company,
is a principal at Griffith & Associates. It is anticipated that Griffith &
Associates will continue to provide services for the Company.
During the past fiscal year, sales to Wendy's Hamburgers of Kansas City,
Inc. ("WH of KC, Inc.") accounted for approximately 6% of the net sales of the
Company ($790,000). William E. Logan, who is a director for the Company, is
Vice President and Treasurer of WH of KC, Inc. Mr. Logan sold the WH of KC,
Inc. restaurants as of June 3, 1994. The Company no longer provided temporary
services subsequent to June 3, 1994.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.
On March 17, 1994, the Company entered into a five-year employment agreement
with Clark D. Stewart under the terms of which Mr. Stewart was employed as
the President and Chief Executive Officer of the Company at an initial
minimum annual salary of $198,000 and a minimum salary of $208,000, $218,500,
$229,500 and $241,000, respectively, in years two through five. In the event
Mr. Stewart is terminated from employment with the Company other than "for
cause," Mr. Stewart shall receive as severance pay an amount equal to the
unpaid salary for the remainder of the term of the employment agreement. Mr.
Stewart was also granted an automobile allowance of $600 per month.
On April 22, 1994, the Company entered into a five-year employment agreement
with Marvin J. Eisenbath under the terms of which Mr. Eisenbath was employed
at an annual salary of $300,000 plus an annual incentive bonus based on the
net profits of the food distribution division. This incentive arrangement is
<PAGE>
consistent with the incentive arrangements made with the Company's other
division managers. In the event Mr. Eisenbath is terminated from employment
with the Company other than "for cause," Mr. Eisenbath shall receive as
severance pay an amount equal to the unpaid salary for the remainder of the
term of the employment agreement.
On June 6, 1994, the Company entered into a five-year employment agreement
with Brenda Brainard Shadwick under the terms of which Ms. Shadwick was
employed at an annual salary of $150,000 plus additional compensation to be
issued in stock options or warrants having fair market value of $25,000.
The contract provided that in the event Ms. Shadwick was terminated from
employment with the Company other than "for cause," Ms. Shadwick would
receive as severance pay an amount equal to the unpaid salary for the
remainder of the term of the employment agreement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
On an annual basis, the Compensation Committee reviews the salaries and
performance adjustments of the executive officers and oversees the
administration of the Company's compensation program.
In accordance with Securities and Exchange Commission rules designed to
enhance disclosure of companies' policies toward executive compensation, the
following report is submitted by the below listed committee members in their
capacity as the Board's Compensation Committee. The report addresses the
Company's compensation policy as it related to the executive officers for
fiscal 1995.
General Compensation Policy. The Compensation Committee of the Board of
Directors was, and continues to be, guided by a belief that executive
compensation should reflect the Company's performance (as evidenced by
revenue, operating ratio (operating expenses divided by operating revenue),
operating income and earnings per share), while at the same time considering
surrounding competitive pressures, retention of key executive officers and
individual performance as evidenced by informal evaluations. The Compensation
Committee has not yet adopted a policy with respect to the $1,000,000
limitation on deductibility of executive compensation under Section 162(m) of
the Internal Revenue Code of 1986, as amended.
1995 Compensation. To accomplish the Company's compensation policy, the
executive compensation package integrates (i) annual base salary, (ii)
current year performance adjustments to such salary, and (iii) stock option
grants under the Company's 1993 Plans. The overall compensation policy, as
implemented,endeavors to enhance the profitability of the Company (and, thus,
shareholder value) by tying the financial interests of the management with
those of the Company.
Base Salary. The Compensation Committee, upon the recommendation of the
CEO, initially determines the amount of executive officer base salary based on
factors such as prior level of pay, quality of experience, responsibilities of
position and salary levels of similarly positioned executives in other
companies.
For all officers, raises are determined subjectively by recommendation of the
CEO and which are approved by the Compensation Committee. Such raises are
based upon informal evaluation by the CEO and, to a lesser extent, other
executive officers.
<PAGE>
Performance Adjustments. Once base salary has been determined, the
Compensation Committee divides the executive officers into two groups:
Operating Officers and Administrative Officers. The Operating Officers
consist of Mr. Stewart (CEO), Mr. Graham (Vice President-Aircraft
Modifications), Mr. Woodson (Vice President-Avionics), Mr. Fischrupp
(President-BNSI), and Mr. Eisenbath (President-RFI). The Administrative
Officers consists of the remaining executive officers, Mrs. Ruskey (Vice
President-Chief Financial Officer) and Mr. Matukewicz (Treasurer). For some
of the Operating Officers, the Company has in place a Performance Plan which
couples the executive's cash compensation with specific improvements in the
Company's operating income. Each Performance Plan is specific to the
Operating Officer's segment. Generally, the incentive bonus is five percent
(5%) of the business segmentnet income before income taxes from the business
segment currently under the control of the officer. Business segment net
income is defined to include all ordinary and necessary business expenses
associated with the operations and financing of the business segment but
does not include an allocation of corporate overhead.
In 1995, two of the Operating Officers received performance adjustments.
Administrative Officers do not participate in the Performance Plan and, thus,
do not receive a performance incentive bonus.
Stock Option Awards. The Compensation Committee may also award stock options
to executive officers under the 1993 Plans. In general, the Committee
believes that stock options are an effective incentive for executive to
create value for shareholders since the value of an option bears a direct
relationship to appreciation in the Company's stock price. Obviously, when
shareholder value decreases, the stock options granted to executives either
decrease in value or have no value.
In 1995, the Compensation Committee did not grant any options to executive
officers, other than Mr. Stewart, President and CEO.
President and CEO Compensation. Clark D. Stewart, President and CEO of the
Company, entered into a five year employment agreement with the Company. The
Compensation Committee granted to Mr. Stewart 100,000 options subjectively
based upon his performance. See Employment Contracts, Termination of
Employment and Change-In-Control Arrangements.
Summary. The Compensation Committee believes that the executive officers of
the Company are dedicated to achieving significant improvements in long-term
financial performance and that the compensation policies and programs
contribute to achieving this senior management focus. The Compensation
Committee believes that the compensation levels during 1995 adequately
reflect the Company's compensation goals and policies.
The Compensation Committee report is submitted by:
Randal W. Wagoner Clark D. Stewart
William A. Griffith William E. Logan
<PAGE>
STOCK PERFORMANCE CHART
In April 1994, the Company acquired R F, Inc., and thereby entered into the
Food Distribution Industry. Until April 1994, the Company's largest business
segment was Temporary Services. The Company entered into the Temporary
Services segment in December 1990. This segment became inactive on June 3,
1994, due to the loss of its only customer. Therefore, in order to provide a
representative companion of the Company's stock performance, the following
chart compares the cumulative stockholder return on the Company's common stock
for the last five years with the cumulative return on the NASDAQ Stock Market
Index and an industry peer group index (based upon companies which are traded
on a listed exchange) for each the Temporary Services industry and the Food
Distribution industry. The following chart assumes $100 invested May 1,
1990, in each of the above groups. The total return assumes the
reinvestment of dividends.
PERFORMANCE GRAPH
Assumes $100 invested December 3, 1990.
Assumes dividends reinvested.
Fiscal year ending April 30, 1995.
The Peer Group was chosen as having a representative group of companies that
consist of: Watsco Inc., General Employment Enterprises and Joule Inc. The
Industry Index was developed in the absence of a published index and
represents a broad market group consisting of the following companies:
Kelly Temporary Services, Adia Personnel, Olsten, Staff Builders, Uniforce
Temporary Personnel Inc., Winston Resources Inc., and Raycomm Transworld
Industries.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal No. 2)
The Company engaged Arthur Andersen LLP to audit the financial statements
for the year ended April 30, 1995, and 1994. Arthur Andersen LLP was able to
express an opinion on the financial statements for the year ended April 30,
1995, and 1994. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting of Shareholders, and they will have an
opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
The Company has selected Arthur Andersen LLP to be the independent public
accountants for fiscal year 1996 and recommends that the appointment of the
auditors be ratified by the Shareholders. Although Shareholder approval is
not required, it is the policy of the Board of Directors to request, whenever
possible, Shareholder ratification of the appointment or reappointment of
independent public accountants.
The Board of Directors recommends a vote "FOR" the shareholder ratification
of Arthur Andersen LLP as the Company's independent public accountant.
OTHER MATTERS
Management knows of no other matters that will be presented at the meeting.
If any other matter arises at the meeting, it is intended that the shares
represented by the proxies in the accompanying form will be voted in
accordance with the judgment of the persons named in the proxy.
The Annual Report of the Company for the fiscal year 1995 is enclosed.
The 1995 Annual Report includes the Annual Report on Form 10-K containing
the Company's financial statements for the fiscal year ended April 30, 1995.
A copy of Form 10-K, the Annual Report filed by the Company with the
Securities and Exchange Commission, will be furnished without charge to
any shareholder who requests it in writing to the Company at the address
noted on the first page of this Statement.
By Order of the Board of Directors
WILLIAM A. GRIFFITH, Secretary
