<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
<TABLE>
<CAPTION>
Filed by the Registrant ( X )
Filed by a Party other than the Registrant ( )
<S> <C>
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Rule 14a-11(c) or Rule
14a-12
</TABLE>
CDI CORP.
---------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
( X ) No Fee Required
( ) Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1) Title of each class of securities to which
transaction applies:
------------------------------------------------
2) Aggregate number of securities to which
transaction applies:
------------------------------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was
determined):
------------------------------------------------
4) Proposed maximum aggregate value of transaction:
<PAGE>
------------------------------------------------
5) Total fee paid:
------------------------------------------------
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------
3) Filing Party:
----------------------------------------------------
4) Date Filed:
----------------------------------------------------
<PAGE>
CDI CORP.[LOGO]
1717 ARCH STREET, 35TH FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-2768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1998
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 5, 1998,
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 approve the CDI Corp. 1998 Non-Qualified Stock
Option Plan; and
3. 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, 1998 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
ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. No postage is necessary 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
/s/ Joseph R. Seiders
Dated: April 2, 1998
JOSEPH R. SEIDERS, Secretary
Philadelphia, Pennsylvania
<PAGE>
CDI CORP.[LOGO]
1717 ARCH STREET, 35TH FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-2768
-----------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 1998
-----------------------------------------------
GENERAL INFORMATION
This Proxy Statement and the accompanying 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 5, 1998, 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 Proxy to the Company's
shareholders is on or about April 2, 1998.
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 other 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 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, which is identified in the Proxy and the accompanying
Notice of Annual Meeting of Shareholders and is 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 in favor of Proposal Two unless a contrary choice is
specified.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the year ended December 31,
1997 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.
1
<PAGE>
VOTING RIGHTS
There were outstanding and entitled to vote, as of March 10, 1998,
19,923,535 shares of the common stock, par value $.10 per share, of the
Company ("CDI 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 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 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, 1998 will be entitled to vote at the meeting.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP
As of February 17, 1998, the following persons and entities were known by
the Company to be beneficial owners of more than 5% of the outstanding CDI
Stock. The following table shows, as of that date, the number of shares of CDI
Stock so owned and the percentage of outstanding CDI Stock represented by the
number of shares so owned.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF OF CDI STOCK OUTSTANDING
BENEFICIAL OWNER OWNED BENEFICIALLY* CDI STOCK
------------------- ------------------- -------------
<S> <C> <C>
Donald W. Garrison, Lawrence C. Karlson, 5,829,006 29.1%
Allen I. Rosenberg and Barton J. Winokur, as (1)
Trustees, or Messrs. Rosenberg and Winokur,
as Trustees, of various trusts for the benefit
of
Walter R. Garrison's children
c/o Robert L. Freedman, Esquire
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Walter R. Garrison 1,843,230 9.2%
1717 Arch Street, 35th Floor (2)
Philadelphia, PA 19103-2768
</TABLE>
- --------
* Except as indicated in the footnotes 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) Each trustee under these trusts has joint voting and investment power with
the other trustees with respect to these shares but disclaims any
beneficial interest except as a fiduciary. 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 following table, with
respect to which they have sole voting and investment power.
2
<PAGE>
(2) Includes 20,635 shares held by Mr. Garrison's wife, 63,162 shares held by
a trust for the benefit of Mr. Garrison's wife (of which Mr. Garrison is a
trustee) and 42 shares for which Mr. Garrison's wife is custodian. Does
not include the shares held by the various family trusts referred to in
this table or 175,000 shares held by The Garrison Foundation or 32,000
shares held by The Garrison Family Foundation. See footnotes (2) and (4)
to the following table.
The following table sets forth, as to each director, director nominee and
executive officer of the Company individually and as to all directors,
director nominees and executive officers of the Company as a group, the number
of shares of CDI Stock owned as of February 17, 1998 and the percentage of
outstanding CDI Stock represented by the number of shares so owned.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF CDI STOCK PERCENTAGE OF
OWNED OUTSTANDING
NAME OF INDIVIDUAL OR GROUP BENEFICIALLY* CDI STOCK
- --------------------------- ---------------- -------------
<S> <C> <C>
Walter E. Blankley 9,175 (1) Less than .1%
John M. Coleman 2,500 Less than .1%
Walter R. Garrison 1,843,230 (2)(3)(4) 9.2%
Kay Hahn Harrell 500 Less than .1%
Christian M. Hoechst 44,728 (5) .2%
Lawrence C. Karlson 42,400 (1)(3) .2%
Edgar D. Landis 375,000 1.9%
Allen M. Levantin 28,175 (6) .1%
Robert J. Mannarino 6,000 (7) Less than .1%
Alan B. Miller 10,175 (1) Less than .1%
John D. Sanford 5,400 (8) Less than .1%
Mitch Wienick 33,000 (9) .2%
Barton J. Winokur 207,653 (3)(4)(10) 1.0%
All directors, director nominees and
executive
officers as a group (13 persons) 2,596,536 (11) 13.0%
</TABLE>
- --------
* Except as indicated in the footnotes 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 8,175 shares which Messrs. Blankley, Karlson and Miller each
presently has the right to acquire through the exercise of options.
(2) Includes 20,635 shares held by Mr. Garrison's wife, 63,162 shares held by
a trust for the benefit of Mr. Garrison's wife (of which Mr. Garrison is
a trustee) and 42 shares for which Mr. Garrison's wife is custodian. Does
not include the 32,000 shares held by The Garrison Family Foundation,
which is a charitable trust. Mr. Garrison is one of eleven trustees of
The Garrison Family Foundation, but disclaims beneficial ownership of the
foundation's shares except as a fiduciary.
(3) Does not include 5,829,006 shares of CDI Stock held in various trusts
created by Walter R. Garrison for the benefit of his children. These
shares are referenced above in the Principal
3
<PAGE>
Shareholders table under the names of the trustees of the various trusts.
Two of the trustees, Mr. Karlson and Mr. Winokur, are directors of the
Company and a third trustee, Donald W. Garrison, is Walter R. Garrison's
brother. Walter R. Garrison disclaims beneficial ownership of these
shares, as do the trustees except as fiduciaries.
(4) Does not include 175,000 shares held by The Garrison Foundation, a
charitable trust established for the benefit of the Pennsylvania
Institute of Technology. Among the four trustees of The Garrison
Foundation are Messrs. Garrison and Winokur, who are directors of the
Company. The trustees disclaim beneficial ownership of these shares
except as fiduciaries.
(5) Includes 4,000 shares which Mr. Hoechst presently has the right to
acquire through the exercise of options.
(6) Includes 18,175 shares which Mr. Levantin presently has the right to
acquire through the exercise of options.
(7) Consists of 6,000 shares of restricted stock which are subject to
vesting. For more information regarding the vesting terms, see below
under the caption "Employment Agreement with Robert J. Mannarino".
(8) Consists of 5,400 shares of restricted stock which are subject to
vesting. For more information regarding the vesting terms, see below
under the caption "Employment Agreement with John D. Sanford".
(9) Includes 30,000 shares of restricted stock which are subject to vesting.
For more information regarding the vesting terms, see below under the
caption "Employment Agreement with Mitch Wienick".
(10) Does not include 19,000 shares held by a foundation of which Mr. Winokur
is the sole trustee. Mr. Winokur has no beneficial interest in the income
or assets of that foundation and disclaims beneficial ownership of those
shares except as a fiduciary.
(11) If the 5,829,006 shares held in the Garrison family trusts referred to in
footnote (3) above, the 175,000 shares held by The Garrison Foundation
and the 32,000 shares held by The Garrison Family Foundation were
combined with the 2,596,536 shares shown in the table as held by
directors, director nominees and executive officers as a group, the total
would be 8,632,542 shares or 43.2% of the outstanding CDI 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 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 the Board of
Directors. Each of the nominees is currently a member of the Board except for
Mr. Coleman and Ms. Harrell, who are first-time nominees. 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
Proxy may vote for, a substitute nominee. Two of the current directors of the
Company, Christian M. Hoechst and Edgar D. Landis, have decided not to stand
for reelection.
4
<PAGE>
INFORMATION ABOUT THE NOMINEES
The following table sets forth information about the nominees for election to
the Board of Directors.
<TABLE>
<CAPTION>
PRINCIPAL PRESENT POSITION, BUSINESS
EXPERIENCE
DIRECTOR OF DURING PAST FIVE YEARS AND OTHER
NAME AGE COMPANY SINCE** DIRECTORSHIPS
- ---- --- --------------- --------------------------------------------
<S> <C> <C> <C>
Walter E. Blankley +# 62 1994 Chairman of the Board (since 1993) and Chief
Executive Officer (since 1990) of AMETEK,
Inc., Paoli, PA (manufacturer of air moving
electric motors and precision electronic
instruments); Director of Amcast Industrial
Corporation
John M. Coleman 48 -- Senior Vice President and General Counsel of
The Gillette Company, Boston, MA since
February 1998; Senior Vice President, Law
and Public Affairs of Campbell Soup Company,
Camden, NJ from 1990-1997
Walter R. Garrison *+(S) 71 1958 Chairman of the Board of the Company;
Chairman, President and Chief Executive
Officer of the Company from 1961-April 1997
Kay Hahn Harrell 57 -- Chairman and Chief Executive Officer of
Fairmarsh Consulting, St. Simons Island, GA
since 1993; Director of Wheelabrator
Technologies Inc.
Lawrence C. Karlson 55 1989 Private investor and consultant; Director
*+(S) and non-executive Chairman of AmeriSource
Health Corporation; Director of Spectra-
Physics Lasers, Inc.
Allen M. Levantin 65 1989 Retired Chairman and Chief Executive Officer
of Todays Temporary, Inc., a subsidiary of
the Company (1994-1997)
Alan B. Miller +# 60 1994 Chairman of the Board, President and Chief
Executive Officer of Universal Health
Services, Inc., King of Prussia, PA
(hospital management and health care
services) since 1978; Director and Chairman
of the Board of Universal Health Realty
Income Trust; Director of Genesis Health
Ventures Inc. and Penn Mutual Life Insurance
Co.
Mitch Wienick *(S) 49 1997 President and Chief Executive Officer of the
Company since April 1997; President-Consumer
Services, Ameritech Corporation (1995-March
1997); President-Small Business Services,
Ameritech Corporation (1993-1995); Senior
Group Vice President-Dairy Group, Borden,
Inc.
(1992-1993)
Barton J. Winokur *+(S) 58 1968 Chairman and Partner in the law firm of
Dechert Price & Rhoads, Philadelphia, PA;
Director of AmeriSource Health Corporation
and DavCo Restaurants, Inc.
</TABLE>
- --------
*Member of the Executive Committee
+Member of the Audit Committee
5
<PAGE>
#Member of the Compensation and Stock Option Committee
(S)Member of the Nominating 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 eight meetings during 1997. The
Board of Directors has four standing committees: an Executive Committee, an
Audit Committee, a Compensation and Stock Option Committee, and 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 1997, and acted on one other occasion 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 1997.
The Compensation and Stock Option Committee advises the Company on executive
compensation matters and administers the Company's Non-Qualified Stock Option
and Stock Appreciation Rights Plan. This Committee held four meetings during
1997 and acted on seven other occasions by unanimous written consent.
The Nominating Committee provides the Board of Directors with
recommendations relating to the selection of new members of the Board. The
Committee evaluates possible candidates, assists in attracting qualified
candidates and interviews candidates prior to making its recommendations to
the Board. Shareholders wishing to recommend candidates for nomination to the
Board of Directors should submit to the Secretary of the Company the name, a
statement of qualifications and the written consent of the candidate.
Recommendations may be submitted at any time and will be brought to the
attention of the Nominating Committee. The Nominating Committee held four
meetings during 1997.
COMPENSATION OF DIRECTORS
The Board of Directors has approved a modified compensation package for
directors, which will become effective after this year's Annual Meeting. Under
both the old and the new arrangements, fees are payable only to directors who
are not full-time employees of the Company or one of its subsidiaries. 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.
Under the old arrangement, which was in effect during 1997 and will continue
until this year's Annual Meeting, each eligible director receives a retainer
fee of $20,000 per year as compensation for the director's service on the
Board. However, in lieu of the annual cash retainer fees, each director whose
compensation for service as a director is not included in the income of a
corporation or partnership of which the director is an employee or partner is
granted options to purchase 4,000 shares
6
<PAGE>
of CDI Stock (at an exercise price equal to the market value of CDI Stock at
the time of grant) each year for the director's service on the Board. In
addition, each director who is not a full-time employee of the Company or one
of its subsidiaries receives meeting attendance fees of $1,000 for each Board
meeting attended plus $500 for each Audit Committee meeting attended.
Under the new arrangement, each eligible director will receive a retainer
fee of $50,000 per year as compensation for the director's service on the
Board, $30,000 of which will be paid in the form of Company stock options
(having an exercise price equal to the market value of CDI Stock at the time
of grant), and the balance of which will be paid in cash in quarterly
installments. The number of options will be determined each year using a
Black-Scholes valuation. Any director eligible to be paid a retainer fee but
whose compensation for service as a director is included in the income of a
corporation or partnership of which the director is an employee or partner,
will be paid the entire retainer fee in cash. In addition, each eligible
director will be paid meeting attendance fees of $1,000 for each Board meeting
and $500 for each Committee meeting held on a date other than the date of a
Board meeting.
The Company has consulting arrangements with three of its directors,
Lawrence C. Karlson, Walter R. Garrison and Christian M. Hoechst, which
resulted in compensation to each such director during 1997. In addition, the
Company paid $12,000 to Allen M. Levantin in 1997 for a single four-day
consulting assignment. Mr. Hoechst has decided not to stand for reelection as
a director of the Company.
Mr. Karlson's arrangement provides for him to furnish consulting services as
requested from time to time by the Chief Executive Officer of the Company, for
which Mr. Karlson is paid a fee of $4,000 for each eight-hour day that he
provides such services and is reimbursed for the expenses that he incurs in
connection with providing such services. During 1997, Mr. Karlson earned
consulting fees of $30,792.
Mr. Garrison's consulting arrangement is described in more detail below
under the caption "Consulting Agreement with Walter R. Garrison". During 1997,
Mr. Garrison was paid $300,000 for consulting services.
In October 1995, following the decision by Mr. Hoechst to retire as an
officer and employee of the Company effective April 30, 1996, the Company and
Mr. Hoechst entered into a Non-Competition and Consulting Agreement. That
agreement contains various noncompetition and nonsolicitation obligations of
Mr. Hoechst that extend until July 31, 2001. Subject to his continued
compliance with those obligations, the Company will make quarterly payments of
$66,250 to Mr. Hoechst from July 31, 1996 through July 31, 2001 and will pay
the costs of certain insurance coverages for Mr. Hoechst through July 31,
2001. In addition, Mr. Hoechst agreed to render up to 25 days of consulting
services to the Company during the period May 1, 1996 through July 29, 2001,
for total compensation of $100,000. The $100,000 for consulting services was
payable to Mr. Hoechst in four installments of $25,000 each, the last
installment of which was paid on February 1, 1997. During 1997, Mr. Hoechst
was paid $290,000 under his Non-Competition and Consulting Agreement, $265,000
of which relates to his restrictive covenants and $25,000 of which relates to
consulting services.
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
IDENTIFICATION OF EXECUTIVE OFFICERS
The Board of Directors of the Company annually elects the executive officers
of the Company, traditionally at the meeting of the Board immediately
following the Annual Meeting of Shareholders. The Company's executive officers
at the end of 1997 were:
Mitch Wienick, President and Chief Executive Officer. For additional
information about Mr. Wienick, see the table earlier in this Proxy
Statement under the caption "Information about the Nominees".
Robert J. Mannarino, age 40, has been the Company's Executive Vice
President and Chief Operating Officer since August 1997. Prior to joining
the Company, Mr. Mannarino was the Chief Operating Officer of the
Investment Services Division of Checkfree Corp. (provider of electronic
data processing services). From 1995 to 1996, he was an officer of Security
APL, Inc., an investment services firm. From 1992 to 1995, he was Division
Vice President in the Employer Services Division of Automatic Data
Processing Inc.
John D. Sanford, age 44, has been the Company's Executive Vice President
and Chief Financial Officer since November 1997. Prior to joining the
Company, he was Senior Vice President and Chief Financial Officer of Waste
Management, Inc. (beginning in January 1997). From May 1996 to January
1997, he was Vice President and Treasurer of Waste Management, Inc. From
1993 to January 1997, Mr. Sanford was the Chief Financial Officer of
Wheelabrator Technologies Inc., a developer, owner and operator of waste
energy facilities.
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the
compensation for services to the Company and its subsidiaries during the last
three fiscal years which was earned by each person who was an executive
officer of the Company during 1997. Mr. Garrison served as an executive
officer during only a portion of last year, retiring on April 7, 1997. Mr.
Landis resigned as an executive officer of the Company as of November 10, 1997
but remained as an employee of the Company through the remainder of the year.
Messrs. Wienick, Mannarino and Sanford joined the Company during 1997, so
information provided for them for 1997 reflects a partial year and no
information is provided for them for 1996 and 1995.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- --------------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL RESTRICTED UNDERLYING COMPENSATION
POSITION YEAR SALARY($) BONUS($) STOCK AWARDS($) OPTIONS(#) ($)(1)
- ------------------ ---- --------- --------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mitch Wienick, 1997 365,393 303,314 1,061,250 250,000 17,853
President and Chief 1996 -- -- -- -- --
Executive Officer 1995 -- -- -- -- --
(beginning on
April 7, 1997)
Robert J. Mannarino, 1997 105,776 136,105 231,000 60,000 4,514
Executive Vice
President 1996 -- -- -- -- --
and Chief Operating 1995 -- -- -- -- --
Officer (beginning on
August 11, 1997)
John D. Sanford, 1997 35,675 17,931 218,700 50,000 1,009
Executive Vice
President 1996 -- -- -- -- --
and Chief Financial
Officer 1995 -- -- -- -- --
(beginning on
November 10, 1997)
Walter R. Garrison, 1997 28,750 545,900 -- -- 334,583(2)
Former President and 1996 65,000 1,683,320 -- -- 23,689
Chief Executive Officer 1995 65,000 1,038,143 -- -- 55,668
(retired on
April 7, 1997)
Edgar D. Landis, 1997 248,108 200,000 -- -- 20,027
Former Executive Vice 1996 238,000 150,000 -- -- 19,663
President, Finance 1995 227,000 150,000 -- -- 18,525
(retired on
December 31, 1997)
</TABLE>
- --------
(1) Except as described in footnote (2) below, All Other Compensation in 1997,
1996 and 1995 consisted entirely of Company contributions and allocations
to the following employee benefit plans: the Company's qualified
Retirement Plan or a nonqualified supplemental arrangement to provide
comparable benefits (in 1997, $7,183 to the accounts of Messrs. Wienick,
Garrison and
9
<PAGE>
Landis, $4,514 to the account of Mr. Mannarino and $1,009 to the account of
Mr. Sanford), the Company's qualified 401(k) plan or a nonqualified
supplemental arrangement to provide comparable benefits (in 1997, $400 to
the accounts of Messrs. Wienick, Garrison and Landis) and the Company's
non-qualified excess benefit plan (in 1997, $10,270 to the account of Mr.
Wienick, $27,000 to the account of Mr. Garrison and $12,444 to the account
of Mr. Landis).
(2) Includes $300,000 paid to Mr. Garrison in 1997 following his retirement
pursuant to his Consulting Agreement. For a more complete description, see
below under "Consulting Agreement with Walter R. Garrison".
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning all grants of stock
options to executive officers named in the preceding Summary Compensation
Table during 1997. Mr. Garrison and Mr. Landis are omitted from the following
table because they did not receive any stock options during 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------- VALUE AT ASSUMED
PERCENT ANNUAL RATES OF
NUMBER OF OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR ($/SH)(1) DATE 5%($) 10%($)
- ---- ---------- ------------ --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mitch Wienick 250,000 (3) 62.1% 33.25 03/11/07 5,227,687 13,247,984
Robert J. Mannarino 60,000 (4) 14.9% 38.3125 08/04/04 935,822 2,180,863
John D. Sanford 50,000 (5) 12.4% 40.6875 11/09/07 1,279,408 3,242,270
</TABLE>
- --------
(1) All options were granted with exercise prices equal to the closing price
of CDI Stock on the New York Stock Exchange on the last trading day
immediately preceding the date of grant.
(2) The dollar amounts under these calculations are the result of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the price of CDI Stock or the present or future value of the
options.
(3) The options granted to Mr. Wienick are not exercisable until they vest.
50,000 option shares vest on each of March 11, 1999, March 11, 2000 and
March 11, 2001, and 100,000 option shares vest on March 11, 2002.
(4) The options granted to Mr. Mannarino are not exercisable until they vest.
12,000 option shares vest on August 4th of each of 1998, 1999, 2000, 2001
and 2002.
(5) The options granted to Mr. Sanford are not exercisable until they vest.
10,000 option shares vest on November 10th of each of 1998, 1999, 2000,
2001 and 2002.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
The following table sets forth information regarding the number of
unexercised stock options and the value of unexercised in-the-money stock
options at the end of 1997 held by executive officers named in the preceding
Summary Compensation Table. As indicated by the table, none of the executive
officers named in the preceding Summary Compensation Table exercised any
Company stock options during 1997. Mr. Garrison and Mr. Landis are omitted
from the following table because they neither exercised any stock options
during 1997 nor held any stock options at the end of the year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END (#) AT FY-END ($)*
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mitch Wienick -- -- -- 250,000 -- 3,125,000
Robert J. Mannarino -- -- -- 60,000 -- 446,250
John D. Sanford -- -- -- 50,000 -- 253,125
</TABLE>
- --------
* The value of each option share is based on the fair market value of CDI
Stock of $45.75 per share on December 31, 1997 minus the option exercise
price.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company has (or had, in the case of Mr. Garrison and Mr. Landis, who
have retired) employment agreements with all of the executive officers
included in the above Summary Compensation Table. The Company has consulting
agreements with Mr. Garrison and with Mr. Landis. Following is a summary of
the principal terms of those employment and consulting agreements.
Employment Agreement with Mitch Wienick
In March 1997, the Company entered into an Employment Agreement with Mitch
Wienick pursuant to which Mr. Wienick became the Company's President and Chief
Executive Officer beginning on April 7, 1997. The initial term of the
agreement is three years. The agreement provides for the following elements of
compensation to Mr. Wienick: (i) a base salary at the rate of $500,000 per
year; (ii) a cash bonus based on the percentage achievement of pre-determined
financial and other goals, with the maximum bonus award in any calendar year
being $500,000; (iii) the grant of 30,000 restricted shares of CDI Stock, half
of which will vest over time (3,000 shares on each of the first five
anniversaries of the date of his Employment Agreement) and half of which (up
to 3,000 shares per year for five years) will vest depending on the percentage
achievement of the goals applicable to the cash bonus (shares which do not
vest are forfeited); and (iv) the grant of non-qualified stock options to
purchase 250,000 shares of CDI Stock, at an exercise price equal to the fair
market value of the shares on the last trading date immediately preceding the
date of grant ($33.25 per share) and having a maximum term of ten years.
The option shares described in (iv) of the preceding paragraph vest as
follows: 50,000 shares on each of the second, third and fourth anniversaries
of the date of grant and 100,000 shares on the fifth anniversary of the date
of grant. The option shares, as well as the 15,000 shares of restricted stock
that vest based on the passage of time, will vest immediately in the event Mr.
Wienick's employment terminates following a change in control of the Company
if such termination is by the Company without cause or by Mr. Wienick either
because he is assigned duties materially inconsistent with his previous
11
<PAGE>
duties or because his place of employment is moved outside the Philadelphia
metropolitan area. Whenever Mr. Wienick purchases shares upon exercise of his
options, half of the purchased shares may not be sold or transferred until the
second anniversary of the date of exercise; provided, however, that as to the
purchase of 50,000 of the shares which vest on the fifth anniversary of the
date of grant, those shares may not be sold or transferred until the earlier
of (a) one year after the date on which the fair market value of CDI Stock has
been greater than or equal to $90.00 per share for 180 consecutive days, or
(b) the ninth anniversary of the date of the option grant. The restricted
stock described in (iii) above is also subject to a restriction on transfer
such that whenever any of those shares vest, one-half of the shares may not be
sold or transferred until the second anniversary of the vesting date.
Employment Agreement with Robert J. Mannarino
In August 1997, the Company entered into an Employment Agreement with Robert
J. Mannarino pursuant to which Mr. Mannarino became the Company's Executive
Vice President and Chief Operating Officer beginning on August 11, 1997. The
initial term of the agreement expires on December 31, 1999. The agreement
provides for the following elements of compensation to Mr. Mannarino: (i) a
base salary at the rate of $275,000 per year; (ii) a cash bonus based on the
percentage achievement of pre-determined financial and other goals, with the
maximum bonus award being $175,000 in 1997 (one-half of which was guaranteed)
and $200,000 in 1998 and 1999; (iii) the grant of 6,000 restricted shares of
CDI Stock, half of which will vest over time (500 shares vest on December 31,
1998, 1,000 shares vest on December 31, 1999, 1,000 shares vest on December
31, 2000, and 500 shares vest on December 31, 2001) and half of which will
vest depending on the percentage achievement of the goals applicable to the
cash bonus (up to 500 shares vest based on 1998 performance, up to 1,000
shares vest based on 1999 performance, up to 1,000 shares vest based on 2000
performance, and up to 500 shares vest based on 2001 performance) (shares
which do not vest are forfeited); and (iv) the grant of non-qualified stock
options to purchase 60,000 shares of CDI Stock, at an exercise price equal to
the fair market value of the shares on the last trading date immediately
preceding the date of grant ($38.3125 per share) and having a maximum term of
seven years.
The option shares described in (iv) of the preceding paragraph vest as
follows: 12,000 shares on each of the first five anniversaries of the date of
grant. The option shares, as well as the 3,000 shares of restricted stock that
vest based on the passage of time, will vest immediately in the event
Mr. Mannarino's employment terminates following a change in control of the
Company if such termination is by the Company without cause or by Mr.
Mannarino either because he is assigned duties materially inconsistent with
his previous duties or because his place of employment is moved outside the
Philadelphia metropolitan area. Whenever Mr. Mannarino purchases shares upon
exercise of his options, half of the purchased shares may not be sold or
transferred until the second anniversary of the date of exercise. The
restricted stock described in (iii) above is also subject to a restriction on
transfer such that whenever any of those shares vest, one-half of the shares
may not be sold or transferred until the second anniversary of the vesting
date.
Employment Agreement with John D. Sanford
In October 1997, the Company entered into an Employment Agreement with John
D. Sanford pursuant to which Mr. Sanford became the Company's Executive Vice
President and Chief Financial
12
<PAGE>
Officer beginning on November 10, 1997. The initial term of the agreement is
three years. The agreement provides for the following elements of compensation
to Mr. Sanford: (i) a base salary at the rate of $265,000 per year during
1997, $270,000 per year during 1998 and $275,000 per year during 1999; (ii) a
cash bonus based on the percentage achievement of pre-determined financial and
other goals, with the maximum bonus award being $150,000 in 1997, $155,000 in
1998 and $160,000 in 1999; (iii) the grant of 5,400 restricted shares of CDI
Stock, half of which will vest over time (540 shares vest on the first five
anniversaries of November 10, 1997) and half of which will vest depending on
the percentage achievement of the goals applicable to the cash bonus (a
maximum of 540 shares vest based on the performance in each of 1998, 1999,
2000, 2001 and 2002) (shares which do not vest are forfeited); and (iv) the
grant of non-qualified stock options to purchase 50,000 shares of CDI Stock,
at an exercise price equal to the fair market value of the shares on the last
trading date immediately preceding the date of grant ($40.6875 per share) and
having a maximum term of ten years.
The option shares described in (iv) of the preceding paragraph vest as
follows: 10,000 shares on each of the first five anniversaries of the date of
grant. The option shares, as well as the 2,700 shares of restricted stock that
vest based on the passage of time, will vest immediately in the event
Mr. Sanford's employment terminates following a change in control of the
Company if such termination is by the Company without cause or by Mr. Sanford
either because he is assigned duties materially inconsistent with his previous
duties or because his place of employment is moved outside the Philadelphia
metropolitan area. Whenever Mr. Sanford purchases shares upon exercise of his
options, half of the purchased shares may not be sold or transferred until the
second anniversary of the date of exercise. The restricted stock described in
(iii) above is also subject to a restriction on transfer such that whenever
any of those shares vest, one-half of the shares may not be sold or
transferred until the second anniversary of the vesting date.
Employment Agreement with Walter R. Garrison
Mr. Garrison's employment agreement terminated upon his retirement in April
1997, when his successor, Mitch Wienick, assumed the offices of President and
Chief Executive Officer of the Company. Mr. Garrison's employment agreement,
which was entered into in 1973, provided for a base salary of $65,000 and a
bonus based on a percentage of the Company's pre-tax earnings from continuing
operations. The bonus was 2% of the first $500,000 of pre-tax earnings and 2
3/4% of pre-tax earnings in excess of $500,000. Effective upon Mr. Garrison's
retirement, the Company and Mr. Garrison entered into a consulting agreement
which is described below.
Employment Agreement with Edgar D. Landis
Mr. Landis' employment agreement, which was entered into in 1973 and which
terminated upon his retirement on December 31, 1997, provided for a salary
which had been increased over the years. Effective upon Mr. Landis'
retirement, the Company and Mr. Landis entered into a consulting agreement
which is described below.
Consulting Agreement with Walter R. Garrison
In April 1997, in connection with the retirement of Mr. Garrison as an
officer and employee of the Company, the Company and Mr. Garrison entered into
a three-year Consulting Agreement.
13
<PAGE>
Mr. Garrison agreed to render up to 60 days of consulting services to the
Company during the first year and up to 45 days of consulting services during
each of the second and third years. The Consulting Agreement also contains
certain covenants restricting Mr. Garrison from competing with the Company and
from soliciting the Company's customers or management employees for a period
of five years. In consideration for the consulting services and the
restrictive covenants, the Company will pay Mr. Garrison $450,000 per year
during the three-year consulting term.
Consulting Agreement with Edgar D. Landis
In December 1997, in connection with the retirement of Mr. Landis as an
officer and employee of the Company, the Company and Mr. Landis entered into a
Consulting Agreement. Mr. Landis agreed to render up to 20 days of consulting
services to the Company during 1998, for which the Company will pay him
$80,000. The Consulting Agreement also contains certain covenants restricting
Mr. Landis from competing with the Company and from soliciting the Company's
customers or management employees for a period of five years (through December
31, 2002). In consideration for these restrictive covenants, the Company will
pay Mr. Landis $100,000 per year during the five-year term of the covenants.
SUPPLEMENTAL PENSION AGREEMENT WITH WALTER R. GARRISON
Under a 1978 supplemental pension agreement with Mr. Garrison, the Company
agreed to pay Mr. Garrison, upon his retirement, 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 was conditioned
upon the satisfactory performance by Mr. Garrison of his duties until
retirement. During 1997, $20,417 was paid to Mr. Garrison under this pension
agreement.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE OF THE
BOARD OF DIRECTORS ON 1997 EXECUTIVE COMPENSATION
The past year saw significant changes in the Company's senior executive
ranks. During 1997, the Company's long-time Chief Executive Officer and long-
time Chief Financial Officer both retired and the Company hired a new Chief
Executive Officer, a new Chief Operating Officer and a new Chief Financial
Officer. The hiring of those three new executives provided the Committee with
an opportunity to reevaluate the desired components of the compensation
packages for the Company's senior executives as well as the desired mix of
compensation among those components. At the end of 1997, the Board of
Directors considered and approved a new management compensation program. An
important element of that new compensation program, the CDI Corp. 1998 Non-
Qualified Stock Option Plan, is being submitted to the Company's shareholders
at this year's Annual Meeting and the entire stock-based compensation program
is described below in Proposal Two. The Committee has long believed, and
continues to believe, that a substantial portion of the compensation paid to
the Company's executives should be at risk and dependent upon the Company's
performance. As an extension of that philosophy, and as reflected in the
compensation packages given to the three new executive officers and in the new
compensation program for managers, the Committee has decided to place much
greater emphasis on stock-based compensation, in an effort to better align
compensation
14
<PAGE>
with shareholder interests and to increase the managers' focus on the
Company's long-term performance. Overall, the Company's compensation program
is intended to attract and retain entrepreneurial and talented executives
whose abilities and motivation are critical to the success and competitiveness
of the Company.
1997 Compensation to the Retiring Executives
Walter R. Garrison, who retired as President and Chief Executive Officer of
the Company in April 1997, received a salary and bonus for the portion of the
year through his retirement date. The annualized amount of base salary and the
formula for his bonus remained unchanged from his 1973 Employment Agreement.
Mr. Garrison's bonus was based on the pre-tax earnings of the Company. Those
salary and bonus arrangements are described in more detail earlier in this
Proxy Statement under the caption "Employment Agreement with Walter R.
Garrison".
Edgar D. Landis, who resigned as the Executive Vice President, Finance of
the Company as of November 10, 1997 but remained as an employee of the Company
through the remainder of the year, was paid a salary of $248,108 in 1997. That
salary was intended 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 did not seek to adhere rigidly to this
comparison in setting Mr. Landis' salary. Bonuses to Mr. Landis have been
determined in the sole discretion of the Committee. In recent years, in
determining Mr. Landis' bonus, the Committee examined factors such as the
level of the Company's earnings, the average total compensation given to chief
financial officers of other companies of similar size and complexity as the
Company, and Mr. Landis' contribution to the performance of the Company during
the year. The Committee has not assigned any particular priority or relative
weight to these factors, and acknowledges that the determination of Mr.
Landis' compensation has been subjective. The Committee awarded a $200,000
bonus to Mr. Landis for 1997, which reflected a $50,000 increase over the
bonus amount for each of the previous three years. This increase was in
recognition of, among other things, Mr. Landis' instrumental role in
recruiting the Company's new executives and in successfully implementing a
rapid transition to a new Chief Financial Officer.
1997 Compensation to the New Chief Executive Officer and other Executives
The compensation packages for the Company's new Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer each contain the same four
basic elements: base salary, cash bonus, restricted stock and stock options.
The executives can earn annual cash bonuses based on their percentage
achievement of pre-determined financial and other goals. The 1997 financial
goals consisted of achieving the targeted level of revenue growth and the
targeted level of growth in earnings from continuing operations before
interest and taxes (EBIT), the targets having been established in the
Company's operational plan. Of the shares of restricted CDI Stock granted to
each executive, half vest over time and half vest depending on the achievement
of the annual cash bonus awards. The stock options were granted at an exercise
price equal to the fair market value of the shares of CDI Stock on the last
trading day immediately preceding the date of grant, and are subject to
vesting over time. Details regarding the levels of base salary and cash
bonuses and the number and vesting requirements of the restricted stock and
stock options granted to the Company's new Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer are set forth earlier in this
Proxy Statement under the caption "Employment and Consulting Agreements".
15
<PAGE>
In setting the level of base salary and maximum annual cash bonuses, the
Committee looked at studies regarding the salaries and bonuses paid to the
Chief Executive Officer, the Chief Operating Officer and the Chief Financial
Officer at peer companies (specifically, the companies identified below as the
"Old Peer Group" in the section of this Proxy Statement relating to
"Comparative Stock Performance", as well as two additional companies which
were added as part of the "New Peer Group", also described below), at
companies of comparable size in service businesses and at companies of
comparable size regardless of the nature of their business. The Committee's
objective was that the level of base salary and maximum annual cash bonuses
for the Company's new executives should be at roughly the median level for
similar executives in those comparison groups.
In determining the number of restricted shares and stock options to grant to
the new executives, the Committee looked at the stock-based compensation
received by the top executives in the same comparison groups described in the
preceding paragraph and sought to give Company executives above-market stock-
based compensation provided they met their performance goals and provided that
there was significant growth in the value of the Company's stock. Assuming
that those goals and stock value growth were achieved, the Committee sought to
provide stock-based compensation to the Company's executives at approximately
the 75th percentile (i.e., that their stock-based compensation be equal to or
greater than that paid to 75% of the comparable executives in the comparison
groups identified above).
For 1997, the Committee determined that the three officers each achieved 93%
of their revenue goals, 50% of their EBIT goals, and, with regard to their
non-financial goals, that Mr. Wienick achieved 93% of his goals, Mr. Mannarino
achieved 87% of his goals and Mr. Sanford achieved 88% of his goals.
Section 162(m) - The $1 Million Cap on the Deductibility of Executive
Compensation
The Committee has continued to monitor the impact of 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 compensation paid to Mr. Garrison under his 1973 employment agreement is
not subject to this limitation because it is exempt under the rule's
"grandfather" provisions. As a result of the "grandfather" provisions
applicable to Mr. Garrison and because the historic level of compensation paid
to Mr. Landis has not approached the $1 million level, the deductibility
limitation has not been relevant to the Company's executive officers in the
past.
It is the Compensation and Stock Option Committee's present intention that
executive compensation arrangements be structured so as to be entirely
deductible. The Section 162(m) regulations provide an exemption for "qualified
performance-based compensation". In recent years, the Board has worked to
ensure that the Company's Non-Qualified Stock Option and Stock Appreciation
Rights Plan satisfied the requirements for a "performance-based" stock option
plan under the Section 162(m) regulations so that any compensation to
executive officers under that Plan would be exempt from the deductibility
limitation. Therefore, the stock options granted under that Plan in 1997 to
Messrs. Wienick, Mannarino and Sanford fall within the exemption. Furthermore,
to satisfy the "performance-based" exemption, certain elements of Mr.
Wienick's compensation package were submitted to - and approved by - the
shareholders of the Company at last year's Annual Meeting.
16
<PAGE>
Finally, the Board is seeking to ensure that the CDI Corp. 1998 Non-Qualified
Stock Option Plan satisfies the requirements for a "performance-based"
compensation plan under the Section 162(m) regulations so that any
compensation to executive officers under that Plan would be exempt from the
deductibility limitation. In order to achieve that objective, the Board is
submitting the Plan to the Company's shareholders for approval at this year's
Annual Meeting.
COMPENSATION AND STOCK OPTION
COMMITTEE:
Walter E. Blankley, Chairman
Alan B. Miller
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee consists of Walter E. Blankley
and Alan B. Miller, neither of whom is or has been an officer or employee of
the Company or any of its subsidiaries. No executive officer of the Company
served on the compensation committee of another entity (or on any other
committee of the board of directors of another entity performing similar
functions) during 1997.
COMPARATIVE STOCK PERFORMANCE
The following graph sets forth the cumulative total shareholder return
(assuming an investment of $100 on December 31, 1992 and the reinvestment of
any dividends) for the last five fiscal years on (a) CDI Stock, (b) the
Standard & Poor's (S&P) 500 Index, (c) the peer group index used in the
Company's previous proxy statements (the "Old Peer Group"), and (d) a new peer
group index (the "New Peer Group"). The Old Peer Group consisted of the
following companies: (i) Butler International Inc., Kelly Services, Inc.,
Manpower Inc., Olsten Corporation, Robert Half International Inc. and Volt
Information Sciences, Inc., all of which are in the staffing business, and
(ii) Foster Wheeler Corporation, Jacobs Engineering Group, Inc. and Stone &
Webster, Inc., all of which are in the engineering, design and construction
business. The New Peer Group selected by the Company consists of the following
companies: (i) AccuStaff Inc., Alternative Resources Corp., Butler
International Inc., Computer Horizons Corp., Computer Task Group Inc., Interim
Services Inc., Keane Inc., Kelly Services, Inc., Manpower Inc., Norrell Corp.,
Olsten Corporation, Robert Half International Inc. and Volt Information
Sciences, Inc., all of which are in the staffing business, and (ii) Jacobs
Engineering Group, Inc. and Stone & Webster, Inc., both of which are in the
engineering, design and construction business.
The changes from the Old Peer Group to the New Peer Group are as follows:
(a) AccuStaff, Alternative Resources, Computer Horizons, Computer Task Group,
Interim Services, Keane and Norrell were added, and (b) Foster Wheeler was
deleted. AccuStaff, Interim Services and Norrell, each of which became a
public company within the past four years, were added in recognition of their
now being among the largest firms in the staffing industry. Alternative
Resources, Computer Horizons, Computer Task Group and Keane are all in the
business of providing information technology personnel and services, and were
added to reflect the rapidly increasing portion of the Company's business
which involves information technology staffing. Foster Wheeler was deleted to
reflect the declining portion of the Company's business which involves in-
house engineering and design services. Both the Old Peer Group and the New
Peer Group reflect the elimination of Uniforce Temporary Personnel, Inc.
17
<PAGE>
from the peer group index used in previous proxy statements because Uniforce
was acquired by another company during 1997 and is no longer publicly traded.
With regard to the engineering companies included in the New Peer Group, the
Company notes that while those 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 its in-house engineering businesses and those companies share various
important business characteristics.
[A LINE GRAPH SHOWING THE COMPARISON BETWEEN THE
STOCK PERFORMANCE OF CDI CORP., THE S & P 500,
THE NEW PEER GROUP AND THE OLD PEER GROUP IS IN
THIS POSITION IN THE PRINTED PROXY STATEMENT.]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------
1992 1993 1994 1995 1996 1997
---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CDI Corp........................... $100 $149.25 $237.31 $214.93 $338.81 $546.27
S&P 500............................ 100 110.08 111.53 153.45 188.68 251.63
Old Peer Group..................... 100 107.88 127.23 156.98 162.25 198.68
New Peer Group..................... 100 106.59 133.73 175.91 209.76 290.01
</TABLE>
18
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CERTAIN BUSINESS RELATIONSHIPS
Dechert Price & Rhoads performed legal services for the Company during 1997.
Barton J. Winokur, a director of the Company, is the Chairman and a partner of
Dechert Price & Rhoads.
PROPOSAL TWO
APPROVAL OF THE CDI CORP. 1998 NON-QUALIFIED STOCK OPTION PLAN
As part of the Company's compensation of its management personnel, the Board
of Directors has adopted a new Stock-Based Compensation Program (the
"Program"). The Program consists of the following stand-alone plans: (i) the
CDI Corp. 1998 Non-Qualified Stock Option Plan (the "Stock Option Plan"); (ii)
the CDI Corp. Performance Shares Plan (the "Performance Shares Plan"); and
(iii) the CDI Corp. Management Stock Purchase Plan (the "MSPP"). The Board of
Directors is submitting to the shareholders at this Annual Meeting, and
recommends that the shareholders approve, the Stock Option Plan.
The Program provides selected members of the Company's management team with
the opportunity to acquire shares of CDI Stock pursuant to awards granted
under the Program, or upon meeting financial or other performance targets
established pursuant to the Program. The objective of the Program is to
promote the Company's long-term financial growth and success by providing
financial incentives to selected management personnel. The Program is intended
to provide financial rewards that will allow the Company to (i) attract and
retain management personnel of outstanding ability, (ii) strengthen the
Company's capability to develop, maintain and direct a highly skilled and
motivated management team, (iii) provide an effective means for selected
management personnel to acquire and maintain ownership of CDI Stock, (iv)
motivate selected management personnel to achieve long-range performance goals
and objectives, and (v) provide incentive compensation opportunities
competitive with those of other major corporations. The aggregate maximum
number of shares of CDI Stock which may be issued under the new Stock Option
Plan and under the Company's old stock option plan, which will be discontinued
upon shareholder approval of the new Stock Option Plan, will remain at
1,600,000 shares.
Shares of CDI Stock issued under the Stock Option Plan are intended to
qualify as "performance-based" compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended ("Code"). Section 162(m) of the Code
limits the deductibility of compensation paid to the Company's Chief Executive
Officer and to each of the next four most highly compensated executive
officers unless that compensation is "performance-based." Shareholder approval
of the Stock Option Plan is necessary in order for compensation paid under the
Stock Option Plan to be deemed "performance-based."
The following is a summary of the principal features of the Stock Option
Plan and the other elements of the Program.
DESCRIPTION OF THE STOCK OPTION PLAN
The awards made under the Stock Option Plan will consist of non-qualified
stock options ("Options"). An Option will give a participant the right, for a
specified period of time, to purchase a specified number of shares of CDI
Stock at a specific price.
19
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Administration. The Stock Option Plan will be administered by the CDI Corp.
Compensation and Stock Option Committee (to be referred to in this Proposal
Two as the "Committee"). The Committee's members will be composed of "Outside
Directors" (as such term is defined or interpreted for purposes of Section
162(m) of the Code) and "Disinterested Persons" (as such term is defined or
interpreted for purposes of Rule 16b-3 under the Securities Exchange Act of
1934).
Eligibility. Eligibility to participate in the Stock Option Plan is limited
to designated employees, directors and consultants of the Company or any of
its subsidiaries. As of December 31, 1997 there were approximately 34,500
eligible participants, consisting of approximately twenty consultants, eleven
non-employee directors and the remainder being employees. Except for Retainer
Fee Options (defined below), the Committee will, from time to time, determine
those eligible individuals who will receive grants of Options under the Stock
Option Plan.
Grant of Options. With the exception of Retainer Fee Options, grants of
Options under the Stock Option Plan will be made by the Committee. The
Committee will determine the number of shares which are to be subject to an
Option grant. The exercise price of Options granted to a participant will be
determined by the Committee, but such exercise price may not be less than 100%
of the fair market value of CDI Stock on the date of grant. The "fair market
value" of a share of CDI Stock will be the closing price of actual sales of
shares of CDI Stock on the New York Stock Exchange composite tape on a given
date. The closing price per share of CDI Stock on the New York Stock Exchange
on March 27, 1998 was $43.375. Options granted under the Stock Option Plan
will be appropriately adjusted in the event of a stock dividend, stock split
or other similar corporate change. No participant may receive Options with
respect to more than 400,000 shares of CDI Stock in any one calendar year. The
shares of CDI Stock delivered under the Stock Option Plan may be treasury
shares or shares originally issued for this purpose.
Retainer Fee Options will also be granted under the Stock Option Plan. A
Retainer Fee Option is an option granted in partial payment of retainer fees
to a non-employee director. In order to be eligible to receive a Retainer Fee
Option, no amount of the non-employee director's compensation for service on
the Board of Directors may be included in the income of a corporation or
partnership of which the director is an employee or partner. The exercise
price of a Retainer Fee Option must equal the fair market value of CDI Stock
on the date of grant. For each retainer fee year, a non-employee director will
be granted an Option to purchase the number of shares of CDI stock equal to
$30,000 of CDI Stock, using a Black-Scholes valuation as of the date of grant.
The grant of each Option under the Stock Option Plan will be subject to the
conditions that will cause the grant and exercise of the Option to comply with
the then-existing requirements of Rule 16b-3 of the Securities and Exchange
Commission.
Exercise of Options. The Options granted under the Stock Option Plan will
expire ten years from the date of grant, unless otherwise determined by the
Committee. Upon the payment of the exercise price of an Option, the Company
will deliver a certificate for the number of shares of CDI Stock to which a
participant is entitled as a result of the exercise of an Option.
Vesting. Except for Retainer Fee Options and unless otherwise determined by
the Committee, options granted under the Stock Option Plan will vest at a rate
of 20% per year. A Retainer Fee Option will vest one year after the date of
grant.
20
<PAGE>
Termination of Employment or Other Relationship. Options will terminate
immediately upon a participant's termination for cause. If a participant's
employment is terminated by reason of the participant's resignation, or for
any reason other than for cause or the participant's death, disability or
retirement, the participant's Options will terminate on the date that is two
weeks after the date of such termination of employment. If a participant
retires while holding an Option, the Option will become immediately and fully
vested, and may be exercised by the participant within six months of the
participant's date of retirement. In the event of the participant's death, the
Option will become immediately and fully vested and the participant's estate,
heirs or beneficiaries may exercise the Option within six months following the
participant's date of death. In the event the participant is disabled, the
Option will become immediately and fully vested and may be exercised by the
participant's guardian or personal representative within six months following
the date that the participant is found to be disabled. In no event may an
Option be exercised after it expires by its own terms.
Amendments. The Stock Option Plan may be amended by the Board of Directors
of the Company, without shareholder approval.
DESCRIPTION OF THE PERFORMANCE SHARES PLAN
Under the Performance Shares Plan, those members of the Company's senior
management team who are designated by the Committee as participants in the
plan will be eligible to receive shares of CDI Stock at the expiration of a
performance period if certain specified performance goals have been achieved
during that period. Awards are made at the beginning of a performance period
in the form of performance share units, each of which represents the right to
receive a share of CDI Stock at the end of the performance period if the
performance goals for that period have been achieved. The Committee will, from
time to time, determine the performance goals, length of performance periods
and frequency of awards. The Committee has determined that awards will
initially be made every two years and the performance periods applicable to
each award will initially be three years in length.
The performance goal applicable to the initial awards is based on the price
of CDI Stock and requires that the CDI Stock price outperform the Standard and
Poor's 500 Index by two percentage points over the three-year performance
period on a compound annual growth rate in order for the recipients to receive
any shares under the plan. If actual performance during the performance period
exceeds this performance goal by up to an additional two percentage points,
the number of shares of CDI Stock issued to the participants will increase
proportionally by up to an additional fifty percent.
DESCRIPTION OF THE MANAGEMENT STOCK PURCHASE PLAN (MSPP)
The MSPP provides designated individuals on the Company's management team
with the opportunity to purchase CDI Stock on a pre-tax basis and, in many
cases, to receive an additional contribution of CDI Stock from the Company.
Certain senior members of the Company's management team who are designated by
the Committee will be required to participate in the MSPP. They, and other
members of the Company's management team designated by the Committee, will
also be eligible to participate on a voluntary basis.
Participants will use a portion of their annual bonus awards to purchase
"MSPP Units". Participants who are required to participate in the MSPP Plan
will automatically have 25% (or some
21
<PAGE>
other percentage determined by the Committee) of their annual bonus award
withheld on a pre-tax basis to purchase MSPP Units. Participants who
participate in the MSPP Plan voluntarily may have up to 25% (or some other
percentage determined by the Committee) of their annual bonus award withheld
on a pre-tax basis to purchase MSPP Units.
The number of MSPP Units credited to a participant's MSPP account will be
determined by dividing the amount of annual bonus used to purchase MSPP Units
by the fair market value of a share of CDI Stock on the date the participant's
MSPP account is credited with the MSPP Units. The Company will also make a
matching contribution of one MSPP Unit for every three MSPP Units purchased by
the participant on a voluntary basis.
Each MSPP Unit credited to the participant's MSPP account will represent the
participant's right to receive one share of CDI Stock upon the satisfaction of
the vesting period applicable to the MSPP Unit. All MSPP Units purchased by a
participant during a particular year will be subject to a vesting period
ranging from three to ten years, as chosen by the participant. When the
vesting period elapses, a certificate for the number of shares of CDI Stock
equal to the number of MSPP Units which were subject to the elapsed vesting
period will be delivered to the participant.
NEW PLAN BENEFITS
Set forth below is information regarding Option grants approved or presently
under consideration by the Committee under the Stock Option Plan:
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS
NAME AND POSITION DOLLAR VALUE* GRANTED
- ----------------- ------------- ---------
<S> <C> <C>
Mitch Wienick, Chief Executive Officer $ 0 0
Robert J. Mannarino, Chief Operating Officer 0 0
John D. Sanford, Chief Financial Officer 0 0
All current executive officers as a group 38,000 1,324
All current non-executive directors 0 0
All nominees for director as a group 0 0
Non-Executive Officer Employee Group 4,587,335 165,631
</TABLE>
- --------
* Dollar values are based on a Black-Scholes pricing methodology.
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 and exercise
of Options under the Stock Option Plan are as follows:
The grant of nonqualified stock options is neither a taxable event to a
participant nor deductible by the Company. When a participant exercises a non-
qualified stock option under the Stock Option Plan, the participant will be
required to include in the participant's gross income for the taxable year of
exercise an amount equal to the difference between the fair market value of
CDI Stock on the date of exercise and the exercise price of the option. The
amounts included in the participant's gross income
22
<PAGE>
as a result of the exercise of an Option will be ordinary income, and will be
subject to ordinary income tax rates ranging from 15% to 39.6%. An amount
equal to the income required to be included in the participant's income, as a
result of the exercise of the option, will be deductible by the Company when
properly accrued under the Company's accounting method.
If the participant chooses to use CDI Stock already owned by the participant
to pay the exercise price of an Option, the participant will be treated as
having exchanged tax-free the number of shares of CDI Stock surrendered for an
equal number of shares of CDI Stock acquired upon the exercise of the Option.
The tax cost basis of the surrendered shares of CDI Stock will become the tax
cost basis of an equivalent number of shares of CDI Stock received upon the
exercise of the Option. The participant will be required to recognize as
ordinary income, during the taxable year in which the participant exercises
the Option, an amount equal to the fair market value of the number of shares
of CDI Stock acquired (as a result of the exercise of the Option) in excess of
the number of shares of CDI Stock surrendered.
THE BOARD OF DIRECTORS HAS APPROVED PROPOSAL TWO FOR THE REASONS DESCRIBED
ABOVE AND RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
The persons named in the enclosed Proxy (Joseph R. Seiders and Craig H.
Lewis) have advised the Company that they intend to vote FOR approval of
Proposal Two unless a contrary choice is specified.
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.
23
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders of the Company are entitled to submit proposals for inclusion
in the Company's 1999 Proxy Statement, to be considered for action at the 1999
Annual Meeting of Shareholders. Proposals so submitted must be received by the
Company at its principal executive offices no later than December 3, 1998 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
/s/ Joseph R. Seiders
JOSEPH R. SEIDERS, Secretary
Dated: April 2, 1998
Philadelphia, Pennsylvania
24
<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 on the reverse side, all
the shares of common stock of CDI Corp. held of record by the undersigned on
March 10, 1998, at CDI Corp.'s annual meeting of shareholders to be held on May
5, 1998, or any adjournments or postponements thereof. The undersigned
acknowledges receipt of the Proxy Statement dated April 2, 1998 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 NINE NOMINEES LISTED IN
PROPOSAL ONE ON THE REVERSE SIDE HEREOF AND FOR PROPOSAL TWO, APPROVING THE CDI
CORP. 1998 NON-QUALIFIED STOCK OPTION PLAN WHICH IS DESCRIBED IN THE PROXY
STATEMENT. WITH RESPECT TO ANY OTHER MATTERS OF BUSINESS PROPERLY BEFORE THE
MEETING, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS THE NAMED PROXIES
SHALL DECIDE.
(Continued and to be signed on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[CDI CORP. LOGO]
<PAGE>
- --------------------------------------------------------------------------------
[ X ] Please mark
your votes as
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
PROPOSAL 1 - ELECTION OF DIRECTORS
The nominees are:
Walter E. Blankley
John M. Coleman
Walter R. Garrison WITHHOLD
Kay Hahn Harrell FOR FOR ALL
Lawrence C. Karlson [ ] [ ]
Allen M. Levantin
Alan B. Miller
Mitch Wienick
Barton J. Winokur
WITHHOLD VOTE FOR: (Write the name(s) of such nominee(s) in the space provided
below.)
_____________________________________________________
PROPOSAL 2 - Approve the CDI Corp. 1998 Non-Qualified Stock Option Plan, as
described in the Proxy Statement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. 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.
Signature _________________ Signature_________________ Dated________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
corporate officer or partner, please give full title as such.
FOLD AND DETACH HERE
CDI
CORP.
[LOGO]
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE
ABOVE PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
CDI CORP.
1998 NON-QUALIFIED STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to provide an effective method of
- -- -------
compensating employees, consultants and directors of the Company, to align the
interests of such individuals with the interests of the Company's shareholders
and, accordingly, to provide financial rewards which will allow the Company to
(i) attract and retain management personnel of outstanding ability, (ii)
strengthen the Company's capability to develop, maintain and direct a highly
skilled and motivated management team, (iii) provide an effective means for
selected management personnel to acquire and maintain ownership of CDI Stock,
(iv) motivate selected management personnel to achieve long-range performance
goals and objectives, and (v) provide incentive compensation opportunities
competitive with those of other major corporations.
2. Definitions.
- -- -----------
(a) "Agreement" means a Stock Option Agreement, which is a written confirmation
furnished to an Optionee of the grant of an Option under the Plan.
(b) "Board" means the board of directors of CDI Corp.
(c) "Cause" shall have the same meaning as is set forth in an employment or
engagement agreement between an Optionee and the Company. If there is no
such agreement, then Cause shall mean:
(i) an Optionee's rendering services while under the influence of
alcohol or illegal drugs;
(ii) an Optionee's performing any act of dishonesty in rendering
services to the Company, including falsification of records,
expense accounts or other reports;
(iii) an Optionee's conviction, whether by judgment or plea, of any crime
which constitutes a felony or which constitutes a misdemeanor
involving violence, fraud, embezzlement, theft or business
activities;
(iv) an Optionee's violation of any law or agreement which results in
the entry of a judgment or order enjoining or preventing Optionee
from such activities as are essential for Optionee to perform
services for the Company;
(v) an Optionee's violation of any of the Company's policies which
provide for termination of employment as a possible consequence of
such violation;
<PAGE>
(vi) an Optionee's engaging in conduct which is injurious (other than to
an immaterial extent) to the Company;
(vii) the Company's receipt of reliable information from any source of an
Optionee's entering into or intending to enter into competition with
the Company; or
(viii) insubordination by an Optionee.
(d) "CDI Stock" means common stock, par value at $0.10 per share, of CDI Corp.
(e) "Committee" means the CDI Corp. Compensation and Stock Option Committee or
its successor.
(f) "Company", as the context requires, means CDI Corp., CDI Corp. and its
Subsidiary Companies or the individual Subsidiary Company which employs or
retains an Optionee.
(g) "Date of Exercise" means the date on which notice of exercise of an Option
is delivered to the Treasurer of CDI Corp.
(h) "Date of Grant" means the date on which an Option is granted.
(i) "Effective Date" means January 1, 1998.
(j) "Eligible Consultant" means an individual who performs consulting services
for the Company as an independent contractor or through a corporation of
which the individual is the sole owner, and who is designated as eligible
to participate in the Plan by the Committee.
(k) "Eligible Employee" means an employee or a group of employees identified by
job classification of the Company who has been designated as eligible to
participate in the Plan by the Committee.
(l) "Eligible Director" means any Non-Employee Director except a director whose
compensation for service on the Board is included in the income of a
corporation or partnership of which the director is an employee or partner.
(m) "Fair Market Value" means the closing price of actual sales of CDI Stock on
the New York Stock Exchange composite tape on a given date or, if there are
no such sales on such date, the closing price of CDI Stock on such Exchange
on the last preceding date on which there was a sale.
(n) "Non-Employee Director" means any director of CDI Corp. who is not a full-
time employee of the Company.
-2-
<PAGE>
(o) "Option" means a non-qualified stock option to purchase CDI Stock granted
under the Plan.
(p) "Optionee" means a person to whom an Option has been granted under the
Plan.
(q) "Personal Representative" means the person or persons who, upon the death
or Total and Permanent Disability of an Optionee, shall have acquired by
will or by the laws of descent and distribution or by other legal
proceedings the right to exercise an Option granted to such Optionee.
(r) "Plan" means the CDI Corp. 1998 Non-Qualified Stock Option Plan.
(s) "Retainer Fee" means the annual retainer fee payable to Non-Employee
Directors for their service as directors of CDI Corp. during a Retainer Fee
Year. A Retainer Fee does not include attendance or committee fees.
(t) "Retainer Fee Option" means an Option granted to an Eligible Director in
partial payment of such Eligible Director's Retainer Fee pursuant to
Paragraph 6.
(u) "Retainer Fee Year" means the one year period between consecutive annual
meetings of the shareholders of CDI Corp., beginning on the date
immediately following the annual meeting.
(v) "Retirement" means an Optionee's leaving the employ of the Company:
(i) on or after the date that the Optionee satisfies one of the
following combinations of age and years of service with the
Company:
- 60 years of age and 20 years of service;
- 62 years of age and 15 years of service; or
- 65 years of age and 5 years of service.
(ii) at such earlier date as may be approved by the Committee, in its
sole discretion.
(w) "Subsidiary Company" means any corporation controlled by CDI Corp. or by a
subsidiary controlled by CDI Corp. ("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 CDI Corp., either CDI Corp. must own 100% of the stock of the
subsidiary or the subsidiary must own 100% of the stock of the corporation.
-3-
<PAGE>
(x) "Termination Date" means, unless otherwise determined by the Committee, the
earliest of the following:
(i) ten years following the Date of Grant;
(ii) in the event an Optionee's employment or engagement with the
Company is terminated by the Company for Cause, the date of such
termination;
(iii) in the event an Optionee's employment or engagement with the
Company is terminated through the Optionee's resignation or by the
Company for reasons other than for Cause, two weeks following the
date of such termination; or
(iv) in the event an Optionee's employment or engagement with the
Company is terminated as a result of the Optionee's death, Total
and Permanent Disability or Retirement, six months following such
event.
(y) "Total and Permanent Disability" means a medically determinable disability
of a permanent nature as a result of which an Optionee is entitled to
receive and is receiving disability benefits under the Social Security Act.
3. CDI Stock Subject to the Plan. Not more than 1,600,000 shares of CDI Stock
- -- -----------------------------
may be delivered, in the aggregate, pursuant to the exercise of Options under
the Plan and the exercise of options under the CDI Corp. Non-Qualified Stock
Option and Stock Appreciation Rights Plan. The CDI Stock delivered under the
Plan may, at the election of the Company, be either treasury shares or shares
originally issued for the purpose. When an Option is granted, the number of
shares of CDI Stock subject to such Option shall be reserved for issuance out of
the shares of CDI Stock remaining available for issuance under the Plan. If
Options granted under the Plan terminate or expire without being exercised in
whole or in part, other Options may be granted covering the shares of CDI Stock
not delivered. No individual shall be eligible to receive, in any one calendar
year, Options with respect to more than 400,000 shares of CDI Stock (which
number is subject to adjustment as provided in Paragraph 14 hereof).
4. Rights to be Granted. Non-qualified stock options, which give the Optionee
- -- --------------------
the right for a specified time period to purchase a specified number of shares
of CDI Stock at a specified price shall be granted under the Plan, subject to
the discretion of the Committee.
5. Administration. The Plan shall be administered by the Committee. The
- -- --------------
Committee shall have all necessary powers to administer the Plan, including,
without limitation, the authority to determine the term and vesting schedule of
Options or holding period, if any, applicable to shares of CDI Stock received
pursuant to the exercise of an Option. The Committee will be composed entirely
of persons who are both an "Outside Director" (as such term is defined or
interpreted for purposes of Section 162(m) of the Internal Revenue Code of 1986,
as amended) and a "Non-Employee Director" (as such term is defined or
interpreted for
-4-
<PAGE>
purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended).
Except with respect to Retainer Fee Options, the Committee may determine from
time to time which eligible persons shall be granted Options under the Plan, the
number of shares of CDI Stock to be subject to the Option in each case and the
other substantive provisions of each Option. However, any Options, other than
Retainer Fee Options, granted to a member of the Board must also be approved by
a majority of the Board not including the recipient.
6. Retainer Fee Options.
- -- --------------------
(a) A portion of the Retainer Fee to Eligible Directors will be paid in the
form of Options. During each Retainer Fee Year, each Eligible Director
will receive Options having a value of $30,000 (or such other dollar amount
as may be determined by the Board) (the "Annual Option Value"). On the
first business day of each Retainer Fee Year and on the first business day
that is six months after the first day of each Retainer Fee Year, each
Eligible Director will be granted an Option for that number of shares of
CDI Stock which will result in the Option having a value of 50% of the
Annual Option Value, using a Black-Scholes valuation as of the applicable
date of grant. Such number of shares will be subject to adjustment as
provided in Paragraph 14.
(b) The Committee may determine from time to time the terms of the Retainer Fee
Options, provided such terms are consistent with the terms of the Plan.
Unless otherwise determined by the Committee, (i) Retainer Fee Options
shall not vest (and therefore will not be exercisable) until the completion
of the Retainer Fee Year for which the Retainer Fee Options have been
granted and (ii) if an Eligible Director ceases to be a member of the Board
for any reason, unvested Retainer Fee Options shall expire and be
unexercisable and the portion of the Eligible Director's Retainer Fee
earned as of the date of cessation that is represented by such unvested
Retainer Fee Options shall be paid in cash.
7. Eligibility. The Committee may, from time to time, subject to the
- -- -----------
provisions of the Plan and such terms and conditions as the Committee may
prescribe, award Options to any Eligible Employee or Eligible Consultant. Only
Eligible Directors shall be eligible to receive Retainer Fee Options pursuant to
Paragraph 6.
8. Option Exercise Price.
- -- ---------------------
(a) The price at which CDI Stock may be purchased on exercise of an Option
shall be determined in each case by the Committee, but may not be less than
100% of the Fair Market Value of the CDI Stock on the last trading date
immediately preceding the Date of Grant; provided, however, that the price
at which CDI Stock may be purchased on exercise of a Retainer Fee Option
shall be the Fair Market Value of CDI Stock on the last trading day
immediately preceding the Date of Grant.
(b) Upon exercise of any Option granted pursuant to the Plan, the Optionee
shall pay the full Option exercise price in cash or, in whole or in part,
through the transfer to the Company of shares of CDI Stock that have been
held by the Optionee for at least six months. In the event such Option
excercise price is paid in whole or in part with shares of CDI Stock, the
portion of the Option excercise price so paid shall
-5-
<PAGE>
be equal to the Fair Market Value of CDI Stock on the last trading day
immediately preceding such date of exercise.
9. Issuance of Certificates; Payment of Cash.
- -- -----------------------------------------
(a) Upon payment of the Option price and satisfaction of the tax payment
obligation set forth in Paragraph 9(b), a certificate for the number of
whole shares of CDI Stock to which the Optionee is entitled shall be
delivered to such Optionee by CDI Corp.
(b) The Company shall not issue or transfer CDI Stock upon exercise of an
Option until the Option price is fully paid and the tax withholding
obligations with respect to the exercise of the Option have been satisfied.
The Optionee may satisfy any statutory amounts required to be withheld
under applicable federal, state and local income, payroll, social security
and similar tax laws in effect from time to time by remitting the required
amount of cash to the Company or by electing to have the Company withhold
that number of shares of CDI Stock being purchased through the exercise of
the Option which have a Fair Market Value equal to the amount of tax to be
paid.
10. Term. Unless otherwise determined by the Committee, Options granted under
- --- ----
the Plan shall not be exercisable after the Termination Date.
11. Vesting Unless otherwise determined by the Committee, Options granted
- --- -------
under the Plan will vest as follows:
(a) Subject to the accelerated vesting provision of Paragraph 11(b), Options
will vest at the rate of 20% per year on each of the first five
anniversaries of the Date of Grant;
(b) If an Optionee's employment with the Company terminates as a result of the
Optionee's Retirement, death or Total and Permanent Disability, the Option
will vest as to all unvested shares as of the date of such event.
12. Exercise of Options. Unless otherwise determined by the Committee, the
- --- -------------------
vested portion of an Option may be exercised in whole or in part during its
term, but only as to whole shares, provided that an Option shall be exercisable
only by an Optionee during his lifetime, by his Personal Representative in the
event of the Optionee's death or Total and Permanent Disability, or by any
permitted transferee under Paragraph 13.
13. Transferability of Options. No Option may be transferred, in whole or in
- --- --------------------------
part, unless the Option is transferred (i) by will or the applicable laws of
descent and distribution, or (ii) to the extent allowed under the terms of the
Agreement, to the spouse or descendant of an Optionee or to a trust for the
benefit of the spouse or descendant of an Optionee.
14. Adjustment on Change in Capitalization. In case the number of outstanding
- --- --------------------------------------
shares of CDI Stock is changed as a result of a stock dividend, stock split,
recapitalization, combination, subdivision, issuance of rights or other similar
corporate change, and unless the Board determines otherwise, there shall be an
automatic adjustment in (a) the aggregate number
-6-
<PAGE>
of shares of CDI Stock which may be issued under the Plan, (b) the per
individual annual limitation set forth in Paragraph 3 above, and (c) the number
of shares of CDI Stock subject to, and the Option price of, any then outstanding
Options.
15. Certain Corporate Transactions. If during the term of any Option , CDI
- --- ------------------------------
Corp. or any Subsidiary Company 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 CDI Corp.,
CDI Corp. may (but shall not be required to) take any of the following courses
of action:
(a) Not less than 10 days nor more than 60 days prior to any such transaction,
all Optionees shall be notified that their Options shall expire on the 10th
day after the date of such notice, in which event all Optionees shall have
the right to exercise all of their Options prior to such new expiration
date; or
(b) CDI Corp. 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 to the Optionees to acquire
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, shall not be less than the excess of the Fair Market Value of CDI
Stock over the exercise price of Options, immediately prior to the
consummation of such merger, consolidation, combination or acquisition; or
(c) CDI Corp. shall take such other action as the Board shall determine to be
reasonable under the circumstances in order to permit Optionees and
Eligible Directors 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 shall confer upon any person any right to continue in the service of the
Company.
17. Cancellation of Options and Repayment of Gains. Notwithstanding any other
- --- ----------------------------------------------
provision of this Plan, the Board may, in its sole discretion and to the extent
allowed in an Optionee's Agreement, cancel the outstanding Options held by such
Optionee and/or require the Optionee to pay to the Company an amount equal to
any gains derived from the exercise of any Options previously granted to and
exercised by such Optionee if the Board, in its sole discretion, determines that
such Optionee has entered into or intends to enter into competition with the
Company or any Subsidiary Company.
18. Shareholder Rights and Privileges. An Optionee shall have no rights as a
- --- ---------------------------------
shareholder with respect to any shares of CDI Stock covered by an Option until
the issuance of a stock certificate to the Optionee representing such shares.
19. Amendment. The Board may at any time terminate the Plan or make such
- --- ---------
changes therein as it shall deem advisable. No outstanding Option shall be
affected by any such
-7-
<PAGE>
amendment without the written consent of the Optionee or other person then
entitled to exercise such Option.
20. Securities Laws. The Committee shall make each grant under the Plan
- --- ---------------
subject to such conditions as shall cause both the grant and exercise of an
Option to comply with the then-existing requirements of Rule 16b-3 (or any
similar rule) of the Securities and Exchange Commission.
21. Performance-Based Compensation. Unless otherwise provided by the Committee
- --- ------------------------------
in its discretion, it is intended that all compensation income recognized by
Eligible Employees as the result of the exercise of Options, or the disposition
of CDI Stock acquired on exercise of Options, shall be considered performance-
based compensation excludable from such Eligible Employee's "applicable employee
remuneration" pursuant to section 162(m)(4)(C) of the Internal Revenue Code of
1986, as amended.
22. General. Each Option granted shall be evidenced by an Agreement containing
- --- -------
such terms and conditions not inconsistent with the Plan as the Committee may
determine. The issuance of CDI Stock on the exercise of an Option shall be
subject to all of the applicable requirements of the Pennsylvania Business
Corporation Law and other applicable laws. Among other things, an Optionee may
be required to deliver an investment representation to the Company in connection
with any exercise of an Option or to agree to refrain from selling or otherwise
disposing of the CDI Stock acquired for a specified period of time.
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