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:
( ) Preliminary Proxy Statement
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Rule 14a-11(c) or Rule
14a-12
CDI CORP.
- ---------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CDI CORP.
- ---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
( X ) $125 Per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
( ) 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:
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2) Aggregate number of securities to which
transaction applies:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11:
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Set forth the amount on which the filing fee is calculated and
state how it was determined.
( ) 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:
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<PAGE>
CDI CORP.
1717 Arch Street, 35th Floor
Philadelphia, Pennsylvania 19103-2768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 2, 1995
To Shareholders:
The Annual Meeting of the Shareholders of CDI Corp. (the "Company"), a
corporation organized under the laws of the Commonwealth of Pennsylvania,
will be held in the Furness Forum on the 50th Floor of the Bell Atlantic
Tower, 1717 Arch Street, Philadelphia, Pennsylvania 19103, on Tuesday, May
2, 1995, at 10:00 A.M., for the following purposes:
1. To elect nine directors of the Company to serve during the ensuing
year or until their successors have been duly elected and
qualified;
2. To act upon a proposal to increase the number of shares of Common
Stock which may be issued under the Company's Non-Qualified Stock
Option and Stock Appreciation Rights Plan from 800,000 to
1,100,000;
3. To act upon a proposed amendment to the Company's Non-Qualified
Stock Option and Stock Appreciation Rights Plan limiting the number
of options and stock appreciation rights that may be granted to an
eligible individual in any one calendar year; and
4. To transact such other business as may properly come before the
meeting or any and all adjournments or postponements of the
meeting.
Only shareholders of record on March 10, 1995 are entitled to notice of and
to vote at the Annual Meeting. If you do not expect to attend the meeting
in person and desire to have the stock registered in your name represented
and voted at the meeting, please fill in, sign, date and promptly return
the proxy in the accompanying envelope, to which postage need not be added
if mailed in the United States. If you attend the meeting, you may revoke
your proxy and vote in person.
By Order of the Board of Directors
Dated: March 21, 1995 JOSEPH R. SEIDERS, Secretary
Philadelphia, Pennsylvania
<PAGE>
CDI CORP.
1717 Arch Street, 35th Floor
Philadelphia, Pennsylvania 19103-2768
_______________________________________
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 2, 1995
_______________________________________
GENERAL INFORMATION
This Proxy Statement and the accompanying form of proxy are furnished
in connection with the solicitation of proxies by the Board of Directors
(the "Board") of CDI Corp. (the "Company") to be used at the Annual Meeting
of Shareholders to be held on Tuesday, May 2, 1995 at 10:00 A.M. in the
Furness Forum on the 50th Floor of the Bell Atlantic Tower, 1717 Arch
Street, Philadelphia, Pennsylvania and at any and all adjournments or
postponements of that meeting. The date of mailing of this Proxy Statement
and the form of proxy to the Company's shareholders is on or about March
21, 1995.
The solicitation of proxies is being handled by the Company at its
cost, principally through the use of the mails. If it appears desirable to
do so in order to assure adequate representation of shareholders at the
meeting, officers and regular employees of the Company may communicate with
shareholders, banks, brokerage firms or nominees by telephone or in person
to request that proxies be furnished in time for the meeting. No
solicitation is being made by specially engaged employees of the Company or
paid solicitors.
If the enclosed form of proxy is executed and returned, it may,
nevertheless, be revoked by giving written notice of such revocation to the
Secretary of the Company at any time prior to the voting thereof. The proxy
is in such a form that authority to vote for the election of all or any one
of the directors can be withheld and that separate approval or disapproval
can be indicated with respect to Proposal Two and Proposal Three, which are
identified in the proxy and the accompanying Notice of Annual Meeting
of Shareholders and set forth and commented upon in this Proxy Statement.
The shares represented by the proxy will be voted for the election of all
of the directors unless authority to do so is withheld and will be voted
for approval of the amendments to the Company's Non-Qualified Stock Option
and Stock Appreciation Rights Plan set forth in Proposal Two and Proposal
Three unless a contrary choice is specified.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the year ended
December 31, 1994 is being mailed to all shareholders together with this
Proxy Statement. That report is not to be regarded as proxy solicitation
material or as a part of this Proxy Statement.
VOTING RIGHTS
There were issued and entitled to vote, as of March 10, 1995,
19,714,928 shares of the common stock, par value $.10 per share, of the
Company ("Common Stock"), the only class of stock of the Company now issued
and outstanding. Shareholders are entitled to one vote for each share of
stock held. The presence, in person and by proxy, of a majority of the
number of outstanding shares of stock
<PAGE>
entitled to vote at the Annual Meeting will constitute a quorum for the
transaction of business. A quorum being present, proposals will be decided
by a majority of the votes cast, in person and by proxy, at the Annual
Meeting by all shareholders entitled to vote thereon. Shares represented
by proxies that reflect abstentions and shares referred to as "broker
nonvotes" (i.e., shares held by brokers or nominees as to which instructions
have not been received from beneficial owners and as to which the broker
or nominee does not have discretionary voting power on a particular matter,
such as Proposal Two and Proposal Three described below) will be treated as
being present for purposes of determining the presence of a quorum but will
not constitute a vote cast with respect to any matter. Only shareholders of
record at the close of business on March 10, 1995 will be entitled to vote
at the meeting.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP
As of February 6, 1995, the following persons and entities were known
by the Company to be beneficial owners of more than 5% of the outstanding
Common Stock of the Company. The following table shows, as of that date,
the number of shares of Common Stock so owned and the percentage of
outstanding Common Stock represented by the number of shares so owned.
Number of Shares Percentage of
Name and Address of of Common Stock Outstanding
Beneficial Owner Owned Beneficially* Common Stock
- -------------------------------------------------------------------------------
Donald W. Garrison, Christian M. Hoechst, 6,344,911 32.0%
Allen I. Rosenberg and Barton J. Winokur, (1)
as Co-Trustees, or Messrs. Rosenberg and
Winokur, as Co-Trustees, of various
trusts for the benefit of members of
Walter R. Garrison's family
c/o Robert L. Freedman, Esquire
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Walter R. Garrison 1,979,158 10.0%
1717 Arch Street, 35th Floor (2)
Philadelphia, PA 19103-2768
FMR Corp. 1,539,020 7.8%
82 Devonshire Street
Boston, MA 02109
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* Except as indicated below, the Company is informed that the respective
beneficial owners have sole voting power and sole investment power with
respect to the shares shown opposite their names.
(1) The trustees under these family trusts share voting and investment
power with respect to these shares with the other trustees but disclaim
any beneficial interest except as fiduciaries. Those trustees who are
also directors of the Company own of record and beneficially the number
of shares of stock shown opposite their names on the table on page 3,
with respect to which they have sole voting and investment power.
(2) Includes 28,000 shares held by Mr. Garrison's wife and 67,000 shares
held by a trust for the benefit of Mr. Garrison's wife (of which Mr.
Garrison is a trustee). Does not include the shares held by the various
family trusts referred to in the table above or 175,000 shares held by
The Garrison Foundation or 22,000 shares held by The Garrison Family
Foundation. See footnotes (1) and (3) on page 3.
<PAGE>
The following table sets forth, as to each director and executive
officer of the Company individually and as to all directors and executive
officers of the Company as a group, the number of shares of Common Stock
owned as of February 6, 1995 and the percentage of outstanding Common Stock
represented by the number of shares so owned.
Number of Shares Percentage of
of Common Stock Outstanding
Name of Individual or Group Owned Beneficially* Common Stock
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Walter E. Blankley 1,000 Less than .1%
Walter R. Garrison 1,979,158 (1)(2)(3) 10.0%
Christian M. Hoechst 381,338 (2)(3) 1.9%
Lawrence C. Karlson 25,000 .1%
Edgar D. Landis 375,000 1.9%
Allen M. Levantin 15,333 (4) .1%
Alan B. Miller 0 0%
John W. Pope 831,800 (3)(5) 4.2%
Allen I. Rosenberg 0 (2) 0%
Barton J. Winokur 213,628 (2)(3)(6) 1.1%
All directors and executive 3,822,257 (7) 19.3%
officers as a group (10 persons)
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* Except as indicated below, the Company is informed that the respective
beneficial owners have sole voting power and sole investment power with
respect to the shares shown opposite their names.
(1) Includes 28,000 shares held by Mr. Garrison's wife and 67,000 shares
held by a trust for the benefit of his wife (of which Mr. Garrison is a
trustee). Does not include the 22,000 shares held by The Garrison
Family Foundation, which is a charitable trust. Mr. Garrison is one of
fifteen trustees of The Garrison Family Foundation, but disclaims
beneficial ownership of the foundation's shares except as a fiduciary.
(2) Does not include 6,344,911 shares of Common Stock held in various
trusts created by Walter R. Garrison for the benefit of members of his
family. These shares are referenced above in the Principal Shareholders
table under the names of the co-trustees of the various trusts. The co-
trustees of some of the trusts are Messrs. Donald W. Garrison, Hoechst,
Rosenberg and Winokur. The co-trustees of the remainder of these trusts
are Messrs. Rosenberg and Winokur. Except for Donald W. Garrison, who
is Walter R. Garrison's brother, each trustee of these trusts is either
a director or both an officer and director of the Company. Walter R.
Garrison disclaims beneficial ownership of these shares, as do the
trustees except as fiduciaries.
(3) Does not include 175,000 shares held by The Garrison Foundation, a
charitable trust established for the benefit of the Pennsylvania
Institute of Technology. The trustees of The Garrison Foundation are
Messrs. Hoechst, Pope, Winokur, Walter R. Garrison and Joseph L.
Carboni. Except for Mr. Carboni, each trustee is either a director or
both an officer and director of the Company. The trustees disclaim
beneficial ownership of these shares except as fiduciaries.
(4) Includes 13,333 shares which Mr. Levantin presently has the right to
acquire through the exercise of options.
(5) Consists of 818,300 shares held by Variety Wholesalers, Inc. (of which
Mr. Pope is Chairman of the Board, President and Chief Executive
Officer) and 13,500 shares held by Mr. Pope's wife. Does not include
299,200 shares held by the John William Pope Foundation, a non-profit
foundation of which Mr. Pope is a non-voting Director Emeritus. Mr.
Pope disclaims beneficial ownership of the shares held by that
foundation.
<PAGE>
(6) Does not include 20,000 shares held by an irrevocable trust of which
Mr. Winokur is the sole trustee. Mr. Winokur has no beneficial interest
in the income or corpus of this trust and disclaims beneficial
ownership of those shares except as a fiduciary.
(7) If the 6,344,911 shares held in the Garrison family trusts referred to
in footnote (2) above and the 175,000 shares held by The Garrison
Foundation were combined with the 3,822,257 shares shown in the table
as held by directors and executive officers as a group, the total would
be 10,342,168 shares or 52.2% of the outstanding Common Stock.
PROPOSAL ONE
ELECTION OF DIRECTORS
Nine directors are to be elected at the Annual Meeting of
Shareholders, to hold office until the next Annual Meeting of Shareholders
or until their successors are elected and qualified. The persons named in
the enclosed form of proxy (Joseph R. Seiders and Craig H. Lewis) have
advised the Company that they intend to vote FOR the nine nominees below
unless authority to do so is withheld. Each of these nominees has been
designated by, and each is currently a member of, the Board of Directors.
The Board is not aware of any reason why any nominee will be unable to
stand for election as a director or serve if elected, but if any such
nominee should become unavailable, the Board may nominate, and the persons
named in the accompanying form of proxy may vote for, a substitute nominee.
Information About the Nominees
The following table sets forth information about the nominees for
election to the Board of Directors.
Principal Present Position,
Business Experience During
Director of Past Five Years and Other
Name Age Company Since** Directorships
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Walter E. Blankley +# 59 1994 Chairman and Chief Executive
Officer of AMETEK, Inc.,
Paoli, PA (manufacturer of
electric motors, precision
instruments and industrial
materials) since 1993; Presi-
dent and Chief Executive
Officer of AMETEK, Inc. from
1990-1993; Director of Amcast
Industrial Corporation
Walter R. Garrison * 68 1958 Chairman of the Board, Presi-
dent and Chief Executive
Officer of the Company since
1961
Christian M. Hoechst * 58 1974 Executive Vice President of
the Company since 1971
Lawrence C. Karlson +# 52 1989 Chairman of the Board and
Chief Executive Officer of
Karlson Corporation, Blue
Bell, PA (consulting ser-
vices) since April 1993;
Chairman of the Board of
Spectra-Physics AB, Stock-
holm, Sweden (instrumenta-
tions manufacturer) from
1990-1993; Director of
Meridian Bancorp Inc.
Edgar D. Landis * 63 1975 Executive Vice President,
Finance of the Company since
1987
<PAGE>
Principal Present Position,
Business Experience During
Director of Past Five Years and Other
Name Age Company Since** Directorships
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Allen M. Levantin 62 1989 Chairman and Chief Executive
Officer of Todays Temporary,
Inc., a subsidiary of the
Company, since November 1,
1994 (serving part-time);
President and Chief Executive
Officer of CDI Temporary Ser-
vices Inc., a subsidiary of
the Company, from July 1991
to December 1992; Vice
President-Corporate Develop-
ment of Rohm and Haas
Company, Philadelphia, PA
(maker of chemicals and
plastics) from 1985-1990
Alan B. Miller + 57 1994 Chairman of the Board, Presi-
dent and Chief Executive
Officer of Universal Health
Services, Inc. (hospital
management and health care
services); Director (Chairman
of the Board) of Universal
Health Realty Income Trust;
Director of Penn Mutual Life
Insurance Co. and Genesis
Health Ventures Inc.
John W. Pope #& 70 1989 Chairman of the Board, Presi-
dent and Chief Executive
Officer of Variety
Wholesalers, Inc., Raleigh,
NC (operator of variety
retail stores)
Barton J. Winokur *+#& 55 1968 Partner in the law firm of
Dechert Price & Rhoads,
Philadelphia, PA; Director of
AmeriSource Corp., The Bibb
Company, DavCo Restaurants,
Inc. and Farm Fresh, Inc.
* Member of the Executive Committee
+ Member of the Audit Committee
# Member of the Compensation Committee
& Member of the Stock Option Committee
** References to periods served as a director of the Company include periods
served as a director of CDI Corporation, the Company's predecessor
registrant under the Securities Exchange Act of 1934.
Information About the Board and its Committees
The Board of Directors of the Company held five meetings during 1994,
and acted on two other occasions by unanimous written consent. The Board of
Directors has four standing committees: an Executive Committee, an Audit
Committee, a Compensation Committee and a Stock Option Committee. There is
no Nominating Committee or any committee performing the function of a
nominating committee.
The Executive Committee has the general authority of the Board,
subject to certain limitations, to act on behalf of the Board. This
Committee held six meetings during 1994, and acted on four other occasions
by unanimous written consent.
The Audit Committee reviews with KPMG Peat Marwick LLP, the Company's
independent auditors, the proposed scope of their examination and their
subsequent report on each annual audit, preliminary to the consideration
thereof by the full Board of Directors; monitors the independence of the
auditors; and reviews the Company's internal accounting controls, practices
and policies as well as the Company's internal audit function. The Audit
Committee held four meetings during 1994.
The Compensation Committee advises the Company on executive
compensation matters. This Committee held four meetings during 1994 and
acted on one other occasion by unanimous written consent.
<PAGE>
The Stock Option Committee administers the Company's Non-Qualified
Stock Option and Stock Appreciation Rights Plan. This Committee held no
meetings during 1994.
Mr. Pope attended fewer than 75% of the total number of meetings held
during 1994 of the Board and the committees of the Board on which he served
during the year. Mr. Pope attended 80% of the Board meetings held during
1994.
Compensation of Directors
Directors currently receive the following compensation for their
participation on the Board: each director who is not a full-time employee
of the Company or one of its subsidiaries is paid a fee of $5,000 per
quarter for service on the Board plus meeting attendance fees of $1,000 for
each Board meeting attended plus $500 for each Audit Committee meeting
attended. Any director who is also a full-time employee of the Company or
one of its subsidiaries does not receive any fees for service on the Board
or any of its committees.
In January 1995 one of the directors, Lawrence C. Karlson, entered
into a consulting agreement with the Company. Under this arrangement, Mr.
Karlson will provide consulting services as requested from time to time by
the Chief Executive Officer of the Company. Mr. Karlson will be paid a fee
of $4,000 for each eight-hour day that he provides such services and he
will be reimbursed for the expenses that he incurs in connection with
providing such services. No consulting fees were paid by the Company to
Mr. Karlson during 1994.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth certain information regarding the
compensation for services to the Company and its subsidiaries during each
of the last three fiscal years which was earned by the three executive
officers of the Company, constituting the only three key policy-making
members of management. These officers are elected annually by the Board of
Directors.
All Other
Annual Compensation Compensation
Name and Principal Position Year Salary Bonus (1)
- -------------------------------------------------------------------------------
Walter R. Garrison, 1994 $ 65,000 $1,037,584 $53,231
Chairman of the Board, President 1993 65,000 352,683 20,641
and Chief Executive Officer 1992 65,000 162,212 6,347
Christian M. Hoechst, 1994 80,000 617,583 28,168
Executive Vice President 1993 80,000 261,648 18,476
1992 80,000 307,891 20,410
Edgar D. Landis, 1994 217,800 150,000 13,032
Executive Vice President, 1993 200,000 50,000 10,148
Finance 1992 185,000 -0- 9,445
(1) All other Compensation in 1994, 1993 and 1992 consisted entirely of
Company contributions and allocations to the following employee benefit
plans: the Company's qualified Retirement Plan ($6,743 to the account
of each of Messrs. Garrison, Hoechst and Landis in 1994), the Company's
qualified 401(k) plan ($400 to the account of each of Messrs. Garrison,
Hoechst and Landis in 1994) and the Company's non-qualified excess
benefits plan ($46,088 to the account of Mr. Garrison, $21,025 to the
account of Mr. Hoechst and $5,889 to the account of Mr. Landis in
1994).
<PAGE>
Employment Agreements
The Company has employment agreements with all three of the executive
officers included in the above Summary Compensation Table.
Mr. Garrison's current employment agreement, which was entered into in
1973, provides for a base salary of $65,000 and a bonus based on a
percentage of the Company's pre-tax earnings. The bonus is 2% of the first
$500,000 of pre-tax earnings and 23/4% of pre-tax earnings in excess of
$500,000. The agreement is automatically renewed on an annual basis unless
terminated by either party at the end of any fiscal year on two months'
notice. The agreement contains certain noncompetition and nonsolicitation
covenants of Mr. Garrison which are effective for a period of two years
after termination of employment for any reason.
Mr. Hoechst's current employment agreement, which was entered into in
1986, provides for a base salary of $80,000 and a bonus made up of three
components. The first component is 21/2% of the pre-tax earnings of those
operations under his direct supervision. The second component is 1/2% of
the pre-tax earnings of the remaining operations of the Company, with the
bonus relating to this second component capped at $70,000 per year. The
third component is also based on a percentage of the pre-tax earnings of
those operations under his direct supervision, with the applicable
percentage depending on the pre-tax earnings return on the net working
assets used in those operations. Mr. Hoechst's employment agreement is
automatically renewed on an annual basis unless terminated by either party
on at least 60 days' notice prior to the end of a contract year. The
agreement contains certain noncompetition and nonsolicitation covenants of
Mr. Hoechst which are effective for a period of two years after termination
of employment for any reason so long as the Company makes monthly payments
of $5,000 to Mr. Hoechst during that two-year period.
Mr. Landis' employment agreement, which was entered into in 1973,
provides for a salary which has since been increased to the level indicated
in the Summary Compensation Table above. The agreement can be terminated by
either party on two weeks' notice. The agreement contains certain
noncompetition and nonsolicitation covenants of Mr. Landis which are
effective for a period of six months after termination of employment for
any reason.
Supplemental Pension Agreement
Under a 1978 supplemental pension agreement with Mr. Garrison, the
Company will, upon his retirement, pay him an additional pension of $35,000
per year for 15 years. If Mr. Garrison dies prior to receiving all such
payments, his beneficiaries will receive the balance remaining in a lump-
sum payment. The Company's obligation to make such payments is conditioned
upon the satisfactory performance by Mr. Garrison of his duties until
retirement.
Report of the Compensation Committee of the
Board of Directors on Executive Compensation
It is the policy of the Committee that a substantial portion of the
annual compensation of each of the company's executive officers should be
dependent upon the Company's performance, as measured principally by its
pre-tax earnings. Accordingly, the Employment Agreements with Walter R.
Garrison and Christian M. Hoechst, which were described in more detail
previously in this Proxy Statement, provide for modest salaries of $65,000
and $80,000, respectively, and a bonus based upon the Company's pre-tax
earnings. The base salaries of Messrs. Garrison and Hoechst and the
formulas for their bonuses have remained unchanged since their current
Employment Agreements were signed in 1973 and 1986, respectively. While the
Committee has considered increasing the base salaries of Mr. Garrison and
Mr. Hoechst, the Committee and the executives have agreed that making
compensation largely
<PAGE>
dependent on the Company's financial performance is in the Company's
best interests and sets the proper example for compensation
arrangements with other Company managers. The correlation between the total
compensation paid to Messrs. Garrison and Hoechst and the financial
performance of the company is illustrated by comparing the results in 1994
to those in 1991. In 1994, when the Company's pre-tax earnings were
approximately $37 million, the total salary and bonus earned by Messrs.
Garrison and Hoechst were $1,102,584 and $697,583, respectively. In 1991,
when the Company had negative pre-tax earnings, the total salary and bonus
earned by Messrs. Garrison and Hoechst were $65,000 and $275,434,
respectively. The Committee has reviewed various surveys of compensation
paid to executives of companies in service businesses of a size similar to
the Company and believes that the total compensation paid to Messrs.
Garrison and Hoechst is, on average over recent years, roughly comparable
to that paid to similar executives.
The Committee desires Mr. Landis' salary (which was $217,800 in 1994)
to be roughly comparable to the average salary paid to chief financial
officers of companies in service businesses of a similar size to the
Company, though the Committee does not seek to adhere rigidly to this
comparison in setting Mr. Landis' salary. Bonuses to Mr. Landis
are determined in the sole discretion of the Committee.
In recent years, in determining Mr. Landis' bonus, the
Committee has examined factors such as the level of the
Company's earnings, the average total compensation given to chief financial
officers of other companies with similar levels of revenues as the Company,
and Mr. Landis' contribution to the performance of the Company during the
year. The Committee does not assign any particular priority or relative
weight to these factors, and acknowledges that the determination of Mr.
Landis' compensation is subjective. In 1994, the Committee awarded a
$150,000 bonus to Mr. Landis, which was $100,000 higher than the bonus
awarded to him in 1993. Prior to the Committee's consideration of Mr.
Landis' bonus in 1992, Mr. Landis requested that he not be considered for a
bonus that year in light of the financial performance of the Company, and
the Committee agreed to that request.
The Committee believes that these long-standing compensation
arrangements for the three executive officers have served the Company well.
The Committee has considered the impact of recently-enacted Section
162(m) of the Internal Revenue Code, which limits the deductibility by the
Company of certain compensation in excess of $1 million that is paid to the
executive officers named in this Proxy Statement. Counsel to the Company
have advised that, presently, compensation paid to Messrs. Garrison and
Hoechst under their 1973 and 1986 employment agreements is not subject to
this limitation because it is exempt under the rule's "grandfather"
provisions. That particular exemption would be lost at such time as either
of their employment agreements were modified. As a result of the
"grandfather" provisions applicable to Messrs. Garrison and Hoechst and
because the historic level of compensation paid to Mr. Landis has not
approached the $1 million level, the Compensation Committee has not needed
to adopt a policy with respect to the deductibility limit. The Committee
will consider the adoption of such a policy when the deductibility
limitation becomes relevant to the Company's executive officers. However,
in an effort to make compensation earned by executives under the Company's
Non-Qualified Stock Option and Stock Appreciation Rights Plan exempt from
the deductibility limitation, the Board has proposed that such plan be
amended to restrict the number of stock options and stock appreciation
rights that may be granted to an individual in any one calendar year. That
amendment is described below in this Proxy Statement as "Proposal Three".
COMPENSATION COMMITTEE:
Lawrence C. Karlson, Chairman
Walter E. Blankley
John W. Pope
Barton J. Winokur
<PAGE>
Compensation Committee Interlocks and Insider Participation
Lawrence C. Karlson, Chairman of the Compensation Committee, entered
into a consulting agreement with the Company in January 1995 pursuant to
which he will be paid a fee of $4,000 (plus expenses) for each eight-hour
day that he renders consulting services to the Company, as requested by the
Chief Executive Officer of the Company. Walter R. Garrison, who served on
the Compensation Committee during the period from January 1, 1994 to May 3,
1994, was and is the Chairman of the Board, President and Chief Executive
Office of the Company. Allen M. Levantin, who served on the Compensation
Committee during the period from May 3, 1994 to October 1, 1994, was
elected Chairman and Chief Executive Officer of Todays Temporary, Inc., a
subsidiary of the Company, on November 1, 1994 and served as President and
Chief Executive Officer of CDI Temporary Services, Inc., a subsidiary of
the Company, from July 20, 1991 to December 17, 1992. Barton J. Winokur, a
member of the Compensation Committee since May 3, 1994, is a partner of
Dechert Price & Rhoads, which performed legal services for the Company
during 1994.
Comparative Stock Performance
The following graph sets forth the cumulative total shareholder return
(assuming an investment of $100 on December 31, 1989 and the reinvestment
of any dividends) for the last five fiscal years on (a) the Common Stock of
the Company, (b) the Standard & Poor's (S&P) 500 Index, and (c) a peer
group index. The peer group selected by the Company consists of the
following companies: (i) Butler International Inc., Kelly Services, Inc.,
Manpower Inc., Olsten Corporation, Robert Half International Inc., Uniforce
Temporary Personnel, Inc. and Volt Information Sciences, Inc., all of which
are in the staffing business (including the temporary placement of office
and technical personnel and permanent placement), and (ii) Foster Wheeler
Corporation, Jacobs Engineering Group, Inc. and Stone & Webster, Inc., all
of which are in the engineering, design and construction business. While
the latter three companies often work on projects significantly larger in
size than does the Company in its engineering and design business and only
occasionally compete directly with the Company, the Company believes that
it and these three companies share various important business
characteristics. Two companies, Adia Services, Inc. and CRSS Inc., were
included in the Company's peer group index in last year's Proxy Statement
but not in the peer group index in this year's Proxy Statement. Adia
Services, Inc. was eliminated because that company entered into a merger
and reorganization involving its Swiss parent corporation and, as a result
of that transaction, Adia Services, Inc.'s securities have ceased to be
publicly traded. CRSS Inc. was eliminated because it sold its engineering,
design and construction business in 1994 and is no longer in a business
similar to that of the Company.
LINE GRAPH SHOWING COMPARISON BETWEEN CDI CORP., PEER GROUP AND S & P 500
IS IN THIS POSITION IN THE PRINTED PROXY STATEMENT. A PAPER COPY OF THE
GRAPH IS BEING SUBMITTED TO THE FILER'S BRANCH CHIEF IN THE DIVISION OF
CORPORATION FINANCE.
<PAGE>
Year Ended December 31
------------------------------------------------------
1989 1990 1991 1992 1993 1994
- ----------------------------------------------------------------------
CDI Corp. $100 $46.55 $ 49.14 $ 57.76 $ 86.21 $137.07
Peer Group 100 86.69 109.72 126.47 136.44 161.11
S&P 500 100 96.89 126.42 136.05 149.76 151.74
PROPOSALS TWO AND THREE
PROPOSED AMENDMENTS TO THE COMPANY'S
NON-QUALIFIED STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
The Company maintains a Non-Qualified Stock Option and Stock
Appreciation Rights Plan (the "Plan") under which the Company may grant
options ("Options") to purchase shares of its Common Stock or stock
appreciation rights ("SARs"), either alone or in tandem with Options. A
more complete description of the Plan begins on page 11 in this Proxy
Statement.
Description of and Reasons for the Proposed Amendments to the Plan
On December 15, 1994, the Board of Directors of the Company approved,
subject to shareholder approval, an amendment to the Plan increasing the
number of shares of Common Stock which may be issued under the Plan on and
after April 30, 1991, pursuant to the exercise of Options or SARs, from
800,000 to 1,100,000. This proposed amendment to the Plan is referred to in
this Proxy Statement and on the accompanying proxy as "Proposal Two". On
February 27, 1995, the Board of Directors of the Company approved, subject
to shareholder approval, an amendment to the Plan providing that no
eligible individual may be granted, in any one calendar year, options or
SARs with respect to more than 400,000 shares of Common Stock (such number
of shares to be subject to appropriate adjustment in the event of certain
changes in capitalization of the Company, such as stock dividends and
splits). This proposed amendment to the Plan is referred to in this Proxy
Statement and on the accompanying proxy as "Proposal Three".
The Board believes that the Plan provides an important means to
attract, motivate and retain valuable personnel. Of the 800,000 shares
which presently may be issued under the Plan, 11,250 Option shares have
previously been exercised and 340,000 Options are presently outstanding
(not all of which are currently exercisable). No SARs are presently
outstanding. If all of the presently outstanding Options were exercised,
there would remain 448,750 shares available for future grants of Options or
SARs. The Board believes it would be desirable and in the best interest of
the Company to increase the number of shares available for future grants of
Options or SARs in order to continue the benefits inuring to the Company
under the Plan. The proposed amendment would increase the number of shares
still available for grants by 300,000 and bring the total number of shares
which may be issued under the Plan on and after April 30, 1991 to
1,100,000. Under the Plan, an amendment to increase the number of shares
which may be delivered pursuant to the Plan requires the approval of the
shareholders of the Company.
It is anticipated that, prior to the Annual Meeting of Shareholders,
the Board will approve a program under which those directors of the Company
who are not full-time employees of the Company or any of its subsidiaries
and who are not members of the Stock Option Committee would be paid half of
their annual retainer fees in Options (in lieu of cash) and could also
elect to be paid all or a portion of the remaining half of their retainer
fees in Options. The exercise price of such Options is expected to be the
market value of the Common Stock as of the date of grant, and the
number of Options to be granted to
<PAGE>
a director in lieu of his or her cash retainerfees is currently
expected to be based on 25% of the option exercise price. Under such
a program, if all of the eligible directors elected to be paid
all of their retainer fees in Options during the twelve-month period
following the Annual Meeting, a total of 13,763 Options would be granted
during that year (assuming a market price of $23.25, which was the market
price of a share of Common Stock as of March 14, 1995). If such a program
is not adopted by the Board, the Options would be available for grant to
other eligible persons under the Plan. It is also anticipated that, during
this year, the Board will approve a program under which certain key
executives of the Company and its subsidiaries may elect to use a portion
of their incentive compensation to purchase Options. The specific terms of
such a program, including the purchase price of Options, has not yet been
decided. Neither the directors' stock option program nor the key
executives' stock option program described in this paragraph would require
shareholder approval. (See the last paragraph of "Description of the Plan"
below for a summary of the Plan requirements regarding shareholder
approval.) Aside from the possible grant of Options to certain directors
and key executives under the two programs described above, neither the
Board nor the Stock Option Committee has any immediate plans to grant any
additional Options or SARs. The number of Options and SARs which may be
granted in the future, and the related prices, will depend on contingent
and variable factors and cannot be estimated at this time. The closing
price per share of the Company's Common Stock on the New York Stock
Exchange on March 14, 1995 was $23.25.
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to
the Internal Revenue Code of 1986. Under Section 162(m), the allowable
deduction for compensation paid or accrued with respect to the chief
executive officer and each of the four most highly compensated executive
officers (other than the chief executive officer) of a publicly-held
company is limited to no more than $1,000,000 per year for fiscal years
beginning on or after January 1, 1994. This limitation does not apply to
compensation attributable to stock options or SARs if, among other things,
the option plan includes limits on option and SAR grants to employees such
as the limitation set forth in Proposal Three and the limitation has been
approved by the shareholders of the company. The Plan does not presently
contain any limitation on the number of options or SARs which may be
granted to any individual, other than to the extent that the Plan contains
an overall limit on the number of shares which may be delivered under the
Plan. The Board has approved Proposal Three because it desires to preserve
for the Company the benefit of receiving a tax deduction for the full
amount of income recognized by the Company's executive officers upon their
exercise of stock options or SARs.
Description of the Plan
The Plan provides for two incentive elements, Options and SARs. An
Option gives the holder the right to purchase from the Company a specified
number of shares of Common Stock for a specified price during a specified
period. An SAR gives the holder the right, without payment to the Company,
to receive its "value", one-half in cash and one-half in shares of Common
Stock. The "value" of an SAR which is attached to an Option (see the
description below of when an SAR is attached to an Option) is the excess,
if any, of the market price of one share of Common Stock of the Company on
the date the SAR is exercised over the option price of one share under the
attached Option. The "value" of an SAR which is not attached to an Option
is the excess, if any, of the market price of the Common Stock on the date
the SAR is exercised over the amount fixed by the committee which
administers the Plan on the date the SAR was granted (the "SAR Reference
Price").
The Plan is administered by a committee (the "Committee") composed of
not less than two directors of the Company appointed by the full Board of
Directors. Committee members are not eligible to receive Options or SARs
under the Plan. Under the Plan, the Committee may grant SARs and Options
(either with or without SARs attached) to salaried employees (including
executive officers), consultants and directors (other than Committee
members) of the Company and certain of its subsidiaries. As of
<PAGE>
December 31, 1994 there were approximately 1,300 eligible participants,
consisting of approximately twenty consultants, thirteen non-employee
directors and the remainder being salaried employees. Subject to the
provisions of the Plan, the Committee has full authority to determine
which eligible participants shall be granted Options and SARs and the
amounts and other terms of such Options and SARs. However, any Options
or SARs granted to a member of the Board of Directors must be approved
by a majority of the Board not including the recipient.
The option price for Options granted under the Plan is determined by
the Committee, but may not be less than 50% of the fair market value of the
shares subject to the Option on the date of grant of such Option. The
option price may be paid in cash, in shares of Common Stock which have an
aggregate fair market value equal to the option price or in any combination
of cash and shares with an aggregate value equal to the option price. Upon
exercise of an Option, any SAR attached to such Option automatically
expires.
The Committee may grant Options to eligible participants with or
without SARs attached. When SARs are granted in conjunction with Options
each SAR will attach to an Option to purchase one share of Common Stock.
Upon exercise of an SAR attached to an Option, the related Option
automatically expires. The Committee may also grant SARs which are not
attached to Options. With respect to SARs not attached to Options, the SAR
Reference Price is determined by the Committee, but may not be less than
50% of the fair market value of one share of Common Stock on the date of
grant of the SAR.
Options and SARs granted under the Plan are not exercisable after five
years from the date of grant unless the Committee otherwise provides.
Options and SARs are not transferable except by will or the laws of descent
and distribution, and during the lifetime of the participant are
exercisable only by him or her. Options and SARs terminate upon the death
of the participant or, unless otherwise determined by the Committee, on the
termination of his or her qualifying relationship with the Company or its
subsidiaries. However, if a participant dies, to the extent provided in his
or her Option or SAR agreement, the participant's estate or the
participant's heirs or beneficiaries may exercise the unexercised portion
of his or her Option or SAR within six months after the participant's
death. In no event, however, may an Option or SAR be exercised after its
stated date of expiration.
The Board of Directors may terminate or amend the Plan at any time,
but any amendment which (i) increases the number of shares that may be
issued under the Plan, (ii) changes the class of persons eligible to
receive Options or SARs, (iii) deprives the Committee of authority to
administer the Plan, or (iv) otherwise requires the approval of the
shareholders of the Company in order to maintain the exemption available
under Rule 16b-3 of the Securities Exchange Act of 1934 will require the
prior approval of the shareholders of the Company.
Summary of Federal Income Tax Consequences
The Company has been advised by its counsel that under present federal
income tax laws, the federal income tax consequences of the grant or
exercise of Options and SARs are as follows:
Non-Qualified Stock Options. A participant will recognize no
income and the Company will receive no deduction for federal income
tax purposes when an Option is granted. Upon exercise of an Option a
participant will recognize ordinary income in an amount measured by
the excess of the fair market value of the shares on the date of
exercise over the option price, and the Company will be entitled to a
deduction in the same amount, provided, in the case of certain
executive officers, that the requirements of Section 162(m) of the
Internal Revenue Code are met. Section 162(m) is summarized above in
"Description of and Reasons for the Proposed Amendments to the Plan".
The participant's holding period for shares received upon exercise of
an Option will begin to run from the date of exercise of the Option.
<PAGE>
Upon the sale of the Option shares, the participant will
recognize short-term or long-term capital gain (or loss), depending
upon whether the shares have been held for more than one year. Such
gain (or loss) will be measured by the difference between the sale
price of the shares and the fair market value of the shares on the
date that the Option was exercised.
If a participant pays the Option price with previously-owned
shares of Common Stock he or she will be treated as having exchanged
the number of shares surrendered for an equal number of shares
received upon the exercise of the Option in a tax-free exchange.
However, he or she will recognize income, and the Company will be
entitled to a corresponding deduction (subject to Section 162(m)), in
an amount equal to the fair market value of the number of shares
received in excess of the fair market value of the number of shares
surrendered. The participant's tax basis in the shares received in the
tax-free exchange will be equal to his or her tax basis in the shares
surrendered in the exchange. The tax basis in the remaining shares
received will be equal to the amount included in the participant's
income.
Stock Appreciation Rights. A participant who is granted an SAR
(whether or not attached to an Option) under the Plan will not
recognize income at the time of the grant, nor will the Company be
entitled to a deduction at that time. In general, when a participant
exercises an SAR, he or she will recognize ordinary income, and the
Company will be entitled to a corresponding deduction (provided, in
the case of certain executive officers, that the requirements of
Section 162(m) are met), in an amount equal to the sum of the cash
plus the fair market value of the stock received. The participant's
holding period for the stock received will begin to run from the date
of exercise of the SAR.
Upon the sale of the shares received on exercise of an SAR, the
participant will recognize short-term or long-term capital gain (or
loss), depending upon whether the shares have been held for more than
one year. Such gain (or loss) will be measured by the difference
between the sale price of the shares and the fair market value of the
shares on the date that the SAR was exercised.
The Board of Directors has approved Proposal Two and Proposal Three and
recommends that you vote "FOR" both proposals.
The persons named in the enclosed form of proxy (Joseph R. Seiders and
Craig H. Lewis) have advised the Company that they intend to vote FOR
approval of both Proposal Two and Proposal Three unless a contrary choice
is specified. Shareholders may vote FOR Proposal Two and AGAINST Proposal
Three, or visa versa.
INDEPENDENT AUDITORS
The Company's independent auditors have been KPMG Peat Marwick LLP and
it is expected that they will continue in that capacity for the current
year. A representative of KPMG Peat Marwick LLP will be present at the
meeting and will have the opportunity to make a statement, if he or she so
desires, and to respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no other matters which may come before
the meeting. However, if any such matter should properly come before the
meeting, it is the intention of the persons named in the enclosed proxy to
vote such proxy in accordance with their best judgment on such matter.
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders of the Company are entitled to submit proposals for
inclusion in the Company's 1996 Proxy Statement, to be considered for
action at the 1996 Annual Meeting of Shareholders. Proposals so submitted
must be received by the Company at its principal executive offices no later
than November 21, 1995 and must comply in all other respects with
applicable rules and regulations of the Securities and Exchange Commission
relating to such inclusion.
By Order of the Board of Directors
JOSEPH R. SEIDERS, Secretary
Dated: March 21, 1995
Philadelphia, Pennsylvania
<PAGE>
PROXY
CDI CORP.
1717 Arch Street, 35th Floor
Philadelphia, PA 19103-2768
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Joseph R. Seiders and Craig H. Lewis, or
either of them, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the
shares of common stock of CDI Corp. held of record by the undersigned on
March 10, 1995, at CDI Corp.'s annual meeting of shareholders to be held on
May 2, 1995, or any adjournments or postponements thereof. The undersigned
acknowledges receipt of the Proxy Statement dated March 21, 1995 and hereby
expressly revokes any and all proxies heretofore given or executed by the
undersigned with respect to the shares of stock represented by this proxy
and by filing this proxy with the Secretary of CDI Corp. gives notice of
such revocation.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ELECTION TO THE BOARD OF DIRECTORS OF ALL NOMINEES LISTED
IN PROPOSAL ONE ON THE REVERSE SIDE HEREOF, FOR APPROVAL OF THE INCREASE IN
THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UNDER THE CDI CORP. NON-
QUALIFIED STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN, AS DESCRIBED IN
PROPOSAL TWO, AND FOR APPROVAL OF THE LIMITATION ON THE NUMBER OF OPTIONS
AND STOCK APPRECIATION RIGHTS WHICH MAY BE GRANTED TO AN ELIGIBLE
INDIVIDUAL IN ANY ONE CALENDAR YEAR, AS DESCRIBED IN PROPOSAL THREE. WITH
RESPECT TO OTHER MATTERS OF BUSINESS PROPERLY BEFORE THE MEETING, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS THE NAMED PROXIES SHALL
DECIDE.
FOLD AND DETACH HERE
<PAGE>
1. PROPOSAL ONE--ELECTION OF DIRECTORS--The nominees are Walter E.
Blankley, Walter R. Garrison, Christian M. Hoechst, Lawrence C. Karlson,
Edgar D. Landis, Allen M. Levantin, Alan B. Miller, John W. Pope and Barton
J. Winokur.
[ ] VOTE FOR all nominees listed above (except as indicated to
the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
INSTRUCTION: To withhold authority to vote for any individual nominee or
nominees, write the name of that nominee or nominees on the line provided
below.
- -------------------------------------------------------------------------
2. PROPOSAL TWO--Increase the number of shares of common stock which may be
issued under the Non-Qualified Stock Option and Stock Appreciation Rights
Plan from 800,000 to 1,100,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL THREE--Amend the Non-Qualified Stock Option and Stock
Appreciation Rights Plan to limit the number of options and stock
appreciation rights that may be granted to an eligible individual in any
one calendar year
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the named proxies, are authorized to vote upon such
other business as may properly come before the meeting or any adjournments
or postponements thereof.
DATED: _______________________________________________________ , 1995
____________________________________________________________________
Signature of Shareholder(s)
____________________________________________________________________
Signature of Shareholder(s)
Please sign exactly as your name appears hereon. When shares are held by
joint tenants, both should sign. When signing as an 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 INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL
RECORD YOUR VOTES"
FOLD AND DETACH HERE
CDI CORP.
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE ABOVE
PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
===========================================================================
In connection with Proposal Two and Proposal Three in the above Proxy
Statement and in accordance with Instruction 3 to Item 10 of Schedule 14A,
below is text of the CDI Corp. Non-Qualified Stock Option and Stock
Appreciation Rights Plan. The text of this Plan is not a part of the Proxy
Statement and is not being distributed to the Company's shareholders.
===========================================================================
(As of 3/17/95)
CDI CORP.
NON-QUALIFIED STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
1. Purpose. The purpose of this plan ("Plan") is to
provide a more effective method of compensating employees,
consultants and directors of the Company than is currently
available and to complement the other incentive plans of the
Company, thus encouraging greater personal interest in the
success of the Company on the part of such personnel and
furnishing them with a further incentive to remain with the
Company and to increase their efforts on its behalf.
2. Definitions:
(a) "Board" means the board of directors of the Parent
Company.
(b) "Committee" means the committee described in
Paragraph 5.
(c) "Company" means CDI Corp. and each of its
Subsidiary Companies.
(d) "Date of Exercise" means the date on which notice
of exercise of an Option or SAR is delivered to the Parent
Company.
(e) "Date of Grant" means the date on which an Option
or SAR is granted.
(f) "Holder" means a person to whom an SAR not
attached to an Option has been granted under the Plan, which SAR
has not been exercised and has not expired or terminated.
(g) "Option" means a non-qualified stock option
granted under the Plan and described in Paragraph 4(a).
(h) "Optionee" means a person to whom an Option or an
Option with an SAR attached has been granted under the Plan,
which Option or SAR has not been exercised and has not expired or
terminated.
(i) "Parent Company" means CDI Corp.
(j) "SAR" means a stock appreciation right granted
under the Plan and described in Paragraphs 4(b) or 4(c).
(k) "Shares" means shares of common stock, par value
$.10 per share, of the Parent Company.
(l) "Subsidiary Company" means any corporation
controlled by the Parent Company or by an subsidiary controlled
by the Parent Company ("control" having the meaning set forth in
Section 368(c) of the Internal Revenue Code or corresponding
provisions of successor laws), provided that if the corporation
is controlled by a subsidiary of the Parent Company, either the
Parent Company must own 100% of the stock of the subsidiary or
the subsidiary must own 100% of the stock of the corporation.
(m) "Fair Market Value" means the closing price of
actual sales of Shares on the New York Stock Exchange on a given
date or, if there are no such sales on such date, the closing
price of the Shares on such Exchange on the last date on which
there was a sale.
(n) "Value" of an SAR shall mean the excess of the
Fair Market Value of a Share on the Date of Exercise over an
amount fixed by the Committee on the Date of Grant (the "SAR
Reference Price"); provided that the SAR Reference Price may not
be less than 50% of the Fair Market Value of a Share on the Date
of Grant. Where an SAR is attached to an Option, the SAR
Reference Price shall be equal to the option price of one Share
under the attached Option.
3. Shares Subject to the Plan. On and after April 30,
1991, not more than 800,000 Shares may be delivered pursuant to
the exercise of Options or SARs under the Plan. The Shares so
delivered may, at the election of the Company, be either treasury
Shares or Shares originally issued for the purpose. When an
Option is granted (whether or not attached to an SAR), the number
of Shares subject to such Option shall be reserved for issuance
out of the Shares remaining available for grant under the Plan.
When SARs not attached to an Option are granted, there shall be
reserved for issuance thereunder Shares in an amount equal to
one-half of the number of SARs granted. If Options or SARs
granted under the Plan terminate or expire without being
exercised in whole or in part, other Options or SARs may be
granted covering the Shares not delivered.
4. Rights to be Granted. Rights which may be granted
under the Plan are:
(a) Options, which give the Optionee the right for a
specified time period to purchase a specified number of Shares at
a specified price;
(b) SARs, which are attached to Options and which give
the Optionee the right for a specified time period, without
payment to the Company, to receive the Value of such SARs, to be
paid in cash and Shares in accordance with Paragraph 8 below, in
lieu of purchasing Shares under the related Option; and
(c) SARs, which are not attached to Options and which
give the Holder the right for a specified time period, without
payment to the Company, to receive the Value of such SARs, to be
paid in cash and Shares in accordance with Paragraph 8 below.
5. Administration. The Plan shall be administered by the
Stock Option Committee, which shall be composed of not less than
two directors of the Parent Company, appointed by the Board,
neither of whom shall be eligible (or shall have been eligible
within one year prior to the date of their appointments) to be
granted Options or SARs under the Plan or to be selected as a
participant under any other discretionary plan of the Company or
any of its affiliates entitling them to acquire stock, stock
options or stock appreciation rights of the Company or any of its
affiliates. The Committee may determine from time to time which
eligible participants shall be granted Options or SARs under the
Plan, the number of Shares to be subject to the Option in each
case, the number and type of SARs, if any, to be awarded in each
case, and the other substantive provisions of each Option and SAR
agreement. However, any Options or SARs granted to a member of
the Board must also be approved by a majority of the Board not
including the recipient.
6. Eligibility. Eligible participants under the Plan
shall be all salaried employees, consultants and directors of the
Parent Company (except Committee members) or any Subsidiary
Company.
7. Option Price.
(a) The price at which Shares may be purchased on
exercise of an Option shall be determined in each case by the
Committee, but may not be less than 50% of the Fair Market Value
of the Shares on the Date of Grant.
(b) Upon exercise of any Option granted pursuant to
this Plan, the Optionee shall pay to the Parent Company the full
Option price:
(i) By certified check or bank draft; or
(ii) By delivering to the Parent Company
certificates for Shares owned by the Optionee and endorsed to the
Parent Company representing a number of Shares having a then
current Fair Market Value equal to the Option price; or
(iii) Any combination of the above.
Upon payment of the Option price the appropriate accounts of the
Parent Company shall then be credited accordingly.
8. Issuance of Certificates; Payment of Cash.
(a) Upon payment of the Option price, a certificate
for the number of whole Shares and a check for the Fair Market
Value on the Date of Exercise of the fractional Share, if any, to
which the Optionee is entitled shall be delivered to such
Optionee by the Parent Company, provided that the Optionee has
remitted to his employer an amount, determined by such employer,
sufficient to satisfy the applicable requirements to withhold
federal, state, and local taxes, or made other arrangements with
his employer for the satisfaction of such withholding
requirements.
(b) Upon exercise of SARs, the Value of such SARs
shall be paid one-half in cash and one-half in Shares. The
number of Shares to be delivered by the Parent Company shall be
an amount equal to 50% of the Value of such SARs divided by the
Fair Market Value of a Share on the Date of Exercise of such
SARs. Any right to a fractional Share shall be satisfied by the
Parent Company in cash. The employer of the Optionee or Holder
shall deduct from the amount of cash payable any amount necessary
to satisfy applicable federal, state, or local withholding
requirements.
9. Term. Unless otherwise determined by the Committee,
Options or SARs granted under the Plan shall not be exercisable
after five years from the Date of Grant.
10. Exercise of Options and SARs. Unless otherwise
determined by the Committee and subject to the provisions of
Paragraphs 11 and 13, an Option or SAR may be exercised in whole
or in part during its term, provided that an Option or SAR shall
be exercisable only by the Optionee or Holder during his lifetime
and, unless otherwise determined by the Committee, only while he
is a salaried employee, consultant or director of the Parent
Company or of a Subsidiary Company.
11. Death or Termination of Employment. Options and SARs
shall terminate on the death of the Optionee or Holder, or,
unless otherwise determined by the Committee, on the termination
for any reason of his qualifying relationship with the Company,
except that, to the extent provided in his Option or SAR
agreement, if an Optionee or Holder dies while holding an Option
or SAR not fully exercised or expired, the unexercised portion
may be exercised by his estate or his heirs or beneficiaries
within the period of six months following the date of death. In
no event, however, may an Option or SAR be exercised after its
stated date of expiration. For purposes of this Plan, a transfer
of a participant between two employers, each of which is a part
of the Company, shall not be deemed a termination of employment.
12. Relationship Between Options and SARs. Upon exercise
of an Option, any SAR attached to such Option shall automatically
expire. Upon exercise of an SAR attached to an Option, the
related Option shall automatically expire. Except as set forth
above, the grant, exercise, termination or expiration of any
Option granted to an Optionee or Holder shall have no effect upon
any SAR held by such Optionee or Holder, and the grant, exercise,
termination or expiration of an SAR granted to any Optionee or
Holder shall have no effect upon any Option held by such Optionee
or Holder.
13. Transferability of Options and SARs. No Option or SAR
may be transferred except by will or the applicable laws of
descent and distribution.
14. Adjustment on Change in Capitalization. In case the
number of outstanding Shares is changed as a result of a stock
dividend, stock split, recapitalization, combination,
subdivision, issuance of rights or other similar corporate
change, the Board shall make an appropriate adjustment in the
aggregate number of Shares which may be issued under the Plan and
in the number of Shares subject to, and the Option price or Value
of, any then outstanding Options or SARs.
15. Certain Corporate Transactions. If during the term of
any Option or SAR the Parent Company or any of the Subsidiary
Companies shall be merged into or consolidated with or otherwise
combined with or acquired by another person or entity, or there
is a divisive reorganization or a liquidation or partial
liquidation of the Parent Company, the Parent Company may (but
shall not be required to) take any of the following courses of
action with regard to the Options or SARs outstanding:
(a) Not less than 10 days nor more than 60 days prior
to any such transaction, all Optionees and Holders shall be
notified that their Options and SARs shall expire on the 10th day
after the date of such notice, in which event all Optionees and
Holders shall have the right to exercise all of their Options and
SARs prior to such new expiration date; or
(b) The Parent Company shall provide in any agreement
with respect to any such merger, consolidation, combination or
acquisition that the surviving, new or acquiring corporation
shall grant options and stock appreciation rights to the
Optionees and Holders to acquire shares, or stock appreciation
rights in shares, in such corporation provided that the excess of
the fair market value of the shares of such corporation
immediately after the consummation of such merger, consolidation,
combination or acquisition over the option price, or the value of
such stock appreciation rights at the time of grant, shall not be
greater than the excess of the Fair Market Value of the Shares
over the Option price of Options, or the Value of the SARs as
determined under Paragraph 2(n), immediately prior to the
consummation of such merger, consolidation, combination or
acquisition; or
(c) The Parent Company shall take such other action as
the Board shall determine to be reasonable under the
circumstances in order to permit Optionees and Holders to realize
the value of rights granted to them under the Plan.
16. Plan Not to Affect Relationship With the Company.
Neither the Plan nor any Option or SAR shall confer upon any
participant any right to continue in the service of the Company.
17. Amendment. The Board may at any time terminate the
Plan or make such changes therein as it shall deem advisable.
The Board may not, however, without the approval of the voting
shareholders of the Parent Company, (i) increase the total number
of Shares which may be delivered under the Plan, (ii) change the
class of persons eligible to receive Options or SARs, (iii)
withdraw the authority to administer the Plan from a committee
consisting of directors or (iv) otherwise amend the Plan in a
manner which would require the approval of the shareholders of
the Parent Company in order to maintain the exemption available
under Rule 16b-3 (or any similar rule) of the Securities and
Exchange Commission. No outstanding Option or SAR shall be
affected by any such amendment without the written consent of the
Optionee, Holder or other person then entitled to exercise such
Option or SAR.
18. Effective Date. The Plan shall be effective as of the
date of shareholder approval in the manner required under the
rules of the New York Stock Exchange.
19. Securities Laws. The Committee shall make each grant
under the Plan subject to such conditions as shall cause both the
grant and exercise of any Option or SAR to comply with the then-
existing requirements of Rule 16b-3 (or any similar rule) of the
Securities and Exchange Commission.
Unless otherwise permitted by the Committee, the date
of any exercise of an SAR by a Holder or an Optionee who is an
officer, director or beneficial owner of ten percent or more of
any class of any registered equity security of the Parent Company
shall be required to occur within the period beginning with the
third and ending with the twelfth business day after the date of
the release of the Parent Company's quarterly or annual sales and
earnings information to the public.
20. General. Each Option or SAR granted shall be evidenced
by a written instrument containing such terms and conditions not
inconsistent with the Plan as the Committee may determine. The
issuance of Shares on the exercise of an Option or SAR shall be
subject to all of the applicable requirements of the Pennsylvania
Business Corporation Law and other applicable laws. Among other
things the Optionee or Holder may be required to deliver an
investment representation to the Company in connection with any
exercise of an Option or SAR or to agree to refrain from selling
or otherwise disposing of the Shares acquired for a specified
period of time.
