<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 Section240.14a-11(c) or
Section240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
COMPUTER HORIZONS CORP.
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
COMPUTER HORIZONS CORP.
49 OLD BLOOMFIELD AVENUE
MOUNTAIN LAKES, NEW JERSEY 07046-1495
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
The Annual Meeting of Shareholders of Computer Horizons Corp. will be held
at The Hamilton Park Conference Center, Florham Park, NJ, on Wednesday, May 6,
1998 at 10:00 A.M., local time, for the following purposes:
1. To elect directors to serve until the next annual meeting and until their
successors are elected and qualify.
2. To approve an Amendment to the Company's Certificate of Incorporation
increasing the authorized number of shares of the Company's common stock, par
value $.10, from 60,000,000 to 100,000,000.
3. To approve the 1998 Amendment and Restatement to the Company's 1991
Director's Stock Option Plan.
4. To ratify the selection of the accounting firm of Grant Thornton LLP as
auditors for the Company's current year.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 23, 1998, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
WILLIAM J. MURPHY
SECRETARY
Mountain Lakes, New Jersey
April 6, 1998
IF IT IS CONVENIENT FOR YOU TO DO SO, WE HOPE YOU WILL ATTEND THE MEETING.
IF YOU CANNOT, WE URGE YOU TO FILL OUT THE ENCLOSED PROXY CARD AND RETURN IT TO
US IN THE ENVELOPE PROVIDED. NO ADDITIONAL POSTAGE IS REQUIRED.
<PAGE>
COMPUTER HORIZONS CORP.
49 OLD BLOOMFIELD AVENUE
MOUNTAIN LAKES, NEW JERSEY 07046-1495
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1998
------------------------
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company and may be revoked at any time before it is finally exercised. As of
March 23, 1998, the Company had outstanding 28,886,106 shares of common stock,
$.10 par value, each share entitled to one vote. Only shareholders of record at
the close of business on March 23, 1998, will be entitled to notice of and to
vote at the annual meeting. It is anticipated that the mailing to shareholders
of the Proxy Statement and the enclosed proxy will commence on or about April 6,
1998. Proxies for the annual meeting will be solicited by mail and through
brokerage institutions by a solicitor and all expenses involved, including
printing and postage, will be paid by the Company.
All properly executed and unrevoked proxies that are received in time for
the meeting will be voted at the meeting or any adjournment thereof in
accordance with any specifications therein, or if no specifications are made,
will be voted "FOR" the election of the named nominees and approval of the
proposals set forth in the Notice of Annual Meeting of Shareholders of the
Company. Any person giving a proxy may revoke it by written notice to the
Company at any time prior to exercise of the proxy. A person present at the
meeting may withdraw his or her proxy and vote in person.
Directors are elected by plurality vote. The affirmative vote of holders of
record at the close of business on the record date of a majority of the
outstanding shares of common stock is required to approve the proposed Amendment
to the Company's Certificate of Incorporation, and the affirmative vote of a
majority of the votes cast at the Annual Meeting is required to approve the
proposed 1998 Amendment and Restatement of the 1991 Director's Stock Option
Plan. Under New York law, abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present. Because the proposed
amendment to the Certificate of Incorporation requires the affirmative vote of a
majority of all outstanding shares entitled to vote for approval, an abstention
or broker non-vote on this proposal will have the same legal effect as a vote
against such proposal. Any other matter to be voted on at the meeting will
require, for approval, the affirmative vote of a majority of the shares of
common stock voting on the proposal, and abstentions and broker non-votes will
not be counted for this purpose.
1
<PAGE>
CERTAIN HOLDERS OF VOTING SECURITIES
The following table presents certain information with respect to the
beneficial ownership of shares of the Company's common stock (its only class of
voting securities) on March 23, 1998 (except as noted otherwise), by (a) persons
owning more than 5% of such shares or nominated for election as a director (see
"Election of Directors"), (b) the named executive officers identified in the
Summary Compensation Table, and (c) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
- ------------------------------------------------------------------------------------ ------------------ -----------
<S> <C> <C>
John J. Cassese..................................................................... 1,747,343(1) 6.0%
49 Old Bloomfield Avenue
Mountain Lakes, NJ 07046-1495
William J. Murphy................................................................... 65,500(1) (2)
49 Old Bloomfield Avenue
Mountain Lakes, NJ 07046-1495
Michael J. Shea..................................................................... 15,713(1) (2)
49 Old Bloomfield Avenue
Mountain Lakes, NJ 07046-1495
Thomas J. Berry..................................................................... 51,938(1) (2)
49 Old Bloomfield Avenue
Mountain Lakes, NJ 07046-1495
Rocco J. Marano..................................................................... 65,813(1) (2)
49 Old Bloomfield Avenue
Mountain Lakes, NJ 07046-1495
All directors and executive officers as a group (five persons)...................... 1,946,307(3) 6.7%
FMR Corp............................................................................ 3,024,100(4) 11.2%
Putnam Investments, Inc............................................................. 2,752,641(5) 10.0%
Pilgrim Baxter & Associates, Ltd.................................................... 2,558,308(6) 9.4%
</TABLE>
- ------------------------
(1) Includes 727,130 shares issuable upon exercise of options granted under the
Company's 1985 (as amended) and 1994 Incentive Stock Option and Appreciation
Plans, as follows: Cassese, 659,537; Murphy 63,000, and Shea, 4,593. Also
includes 94,751 shares issuable upon exercise of options granted under the
Company's 1991 Directors' Stock Option Plan, as amended, as follows: Berry
51,938 and Marano 42,813.
(2) Less than 1%.
(3) Includes all shares issuable upon exercise of options granted under the
Company's 1985 (as amended) and 1994 Incentive Stock Option and Appreciation
Plans and the Company's 1991 Directors' Stock Option Plan, as amended,
included in Note 1.
(4) FMR Corp. filed a schedule 13G Statement with the Securities and Exchange
Commission stating that as of December 9, 1997, it may be deemed to have
sole dispositive power with respect to 3,024,100 shares of the Company's
common stock and sole voting power with respect to 637,250 of such shares.
(5) Putnam Investments, Inc. ("PI") on behalf of itself and Marsh & McLennan
Companies, Inc. Americas ("MMC"), Putnam Investment Management, Inc.
("PIM"), the Putnam Advisory Company, Inc. ("PAC") and Putnam New
Opportunities Fund, filed a Schedule 13G Statement with the Securities and
Exchange Commission stating that as of November 6, 1997, through its
wholly-owned registered investment advisor subsidiaries, it may be deemed to
have shared dispositive power with respect to 2,752,641 shares of the
Company's common stock and to have shared voting power with respect to
330,419 of said shares. Putnam Investments, Inc. and Marsh & McLennan
disclaim beneficial ownership of all 2,752,641 of said shares.
2
<PAGE>
(6) Pilgrim Baxter & Associates Ltd. filed a Schedule 13G Statement with the
Securities and Exchange Commission stating that as of January 20, 1998 it
may be deemed to have sole dispositive power and shared power to vote or
direct the vote with respect to 2,558,308 shares of the Company's common
stock and to have sole voting power with respect to 2,074,058 of said
shares.
ELECTION OF DIRECTORS
The three current members of the Board of Directors have been nominated, for
election by the Shareholders, to hold office until the next Annual Meeting of
Shareholders and until their successors have been elected and qualify. Unless
such authority is withheld by an indication thereon, the proxy will be voted for
the election of the nominees named herein. An employment agreement between the
Company and Mr. Cassese provides that he will be included as a nominee for
election at each annual meeting so long as the employment period under his
agreement shall not have terminated. See "Executive Compensation" for additional
information concerning such agreement.
If any nominee is unable to be a candidate when the election takes place,
the shares represented by valid proxies will be voted in favor of the remaining
nominees and for such person as may be designated by the present Board of
Directors to replace such nominee. The Board of Directors does not presently
anticipate that any nominee will be unable to be a candidate for election. The
following table sets forth certain information regarding the nominees:
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE SINCE PRESENT PRINCIPAL OCCUPATION
- ------------------- --- ----------- ----------------------------------------------------------------------------
<S> <C> <C> <C>
John J. Cassese 53 1969 Chairman and President of the Company
Thomas J. Berry 73 1989 Retired 1993 as Executive Advisor and Executive Asst. to Postmaster General
U.S. Postal Services. Retired 1986 as Vice President-- AT&T
Rocco J. Marano 70 1995 Retired 1994 as Chairman of Blue Cross Blue Shield--New Jersey. Retired as
Chairman and President of Bellcore (Bell Communications Research) in 1991
</TABLE>
The Board of Directors was reduced to three members during 1997 upon the
death of Director, Wilfred R. Plugge.
The Board of Directors held eight meetings during 1997. The Audit Committee
consisting of the Board's outside Directors (Messrs. Berry, Marano and Plugge),
held two meetings in 1997, and the Compensation Committee, consisting of the
same members, held one meeting in 1997.
The functions of the Audit Committee include reviewing with the independent
auditors the objectives and scope of the audit, the audit approach and the
results and findings of the audit. The functions also include understanding new
accounting pronouncements as they pertain to the Company and recommending to the
Board the engagement or discharge of the independent auditors.
The Compensation Committee considers and authorizes remuneration
arrangements for senior management, including the granting of options under the
Company's Incentive Stock Option and Appreciation Plans.
The Company does not have a Nominating Committee.
3
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company for the
fiscal years indicated, to the Chief Executive Officer and to each of the
Company's other executive officers (together, the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------ ---------------------------- -------------
<CAPTION>
SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ LTIP
YEAR SALARY BONUS COMPEN- SATION AWARDS SARS PAYMENTS
--------- ---------- ---------- ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Cassese..................... 1997 $ 375,000 $ 400,000 -- -- -- -- -- -- 75,000 -- -- --
Chairman of the Board, President 1996 375,000 250,000 75,000
and Chief Executive Officer 1995 360,000 300,000 118,125
William J. Murphy................... 1997 225,000 150,000 -- -- 75,000 --
Executive Vice President,
Chief Financial Officer and
Secretary
Michael J. Shea..................... 1997 123,300 45,000 -- -- 1,125 --
Vice President and Controller 1996 113,300 25,000 -- -- 15,000 --
1995* 82,500 16,000 -- -- 21,375 --
<CAPTION>
<S> <C>
ALL
OTHER
COMPEN-
SATION(1)
---------
<S> <C>
John J. Cassese..................... $ 74,393
Chairman of the Board, President 44,255
and Chief Executive Officer 44,328
William J. Murphy................... 304
Executive Vice President,
Chief Financial Officer and
Secretary
Michael J. Shea..................... 1,435
Vice President and Controller 1,068
169
</TABLE>
- ------------------------
* Started 3/6/95.
(1) In 1997, the Company paid the premiums on a whole life insurance policy of
$80,000, a universal life insurance policy of $800,000 and a term life
insurance policy of $150,000 for Mr. Cassese. The Company also paid premiums
of $60,000 on a $3,000,000 split-dollar life insurance policy on the joint
lives of Mr. Cassese and his spouse. In addition the Company paid the
premiums on a $150,000 term life insurance policy for Mr. Murphy and a term
life insurance policy for Mr. Shea averaging $123,300. Under each such
insurance policy the insured has the right to designate the beneficiaries.
The company maintains a defined contribution (401K) savings plan and
contributes $.25 for every dollar contributed by all participating employees
up to 4% of each employee's salary deferral.
The Company has non-qualified supplemental retirement benefit agreements with
Messrs. Cassese and Murphy. Under their agreements, Messrs. Cassese and
Murphy will be entitled to receive $2,000,000 and $1,000,000, respectively,
upon retirement from the Company at age 65. If Mr. Cassese or Mr. Murphy
retires from continuous employment with the Company prior to age 65 as a
result of total and permanent disability, he will be deemed to have been
continuously employed by the company until age 65 for purposes of his
agreement. If Mr. Cassese or Mr. Murphy terminates his employment with the
Company prior to reaching age 65, other than as a result of death or total
and permanent disability, he will be entitled to receive, upon reaching age
65, a retirement benefit based on accrual and vesting formulas set forth in
his respective agreement. If Mr. Cassese or Mr. Murphy were to terminate his
employment as of the date of this Proxy Statement or during the year of
1998, Mr. Cassese's accrued and vested benefit would be $272,000; and Mr.
Murphy's accrued and vested benefit would be $6,400. If Mr. Cassese or Mr.
Murphy were to die prior to age 65, while still in the employ of the
Company, his beneficiaries would be entitled to receive a lump sum benefit
equal to the greater of his accrued and vested benefit and $1,000,000, in
the case of Mr. Cassese, and $500,000 in the case of Mr. Murphy. Benefits
payable upon retirement may be paid in a lump sum or in annual installments
at the discretion of the beneficiary.
4
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE APPRECIATION
SECURITIES OPTIONS FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE OR EXPIRATION ------------------------
GRANTED IN 1997 BASE PRICE DATE 5% 10%
----------- ------------- ----------- ----------- ---------- ------------
John J. Cassese..................... 75,000 21.0% $ 21.00 01/30/07 $ 990,509 $ 2,510,144
William J. Murphy................... 75,000 21.0% 21.00 12/31/05 859,034 2,111,758
Michael J. Shea..................... 1,125 0.3% 25.67 04/22/02 7,979 17,631
</TABLE>
Pursuant to the terms of option grants, upon exercise of such options, if
the optionee, while employed by the Company, desires to sell any shares acquired
upon exercise of such options, the optionee must first offer such shares to the
Company at their then fair market value.
The following table sets forth certain information concerning stock options
exercised in 1997 and/or held as of the end of the year, by the named executive
officers. Such options were granted under the Company's 1985 (as amended) and
1994 Incentive Stock Option and Appreciation Plans. No stock appreciation rights
have been granted under either Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/97 OPTIONS AT 12/31/97
ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------- ------------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Cassese.......................... -- $ -- 584,537 -- $ 22,852,659 $ --
William J. Murphy........................ -- -- -- 75,000 -- 1,837,500
Michael J. Shea.......................... 1,800 20,200 4,218 27,263 173,485 975,165
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Cassese is a party to an Employment Agreement with the Company which
expired on February 15, 1998, and which provides for an automatic renewal for
successive additional terms of three (3) years unless either party gives at
least 180 days prior written notice of intent to terminate. No written notice of
intent to terminate having been given by either the Company or Mr. Cassese, the
Agreement is extended through and until February 15, 2001. The Agreement
provides, among other things, for an annual salary at the current rate of
$400,000, with such increases and bonuses, if any, as the Company may determine.
The Agreement also provides that if Mr. Cassese terminates his employment
following the first anniversary of a Change of Control, he will be entitled to
receive a lump sum equal to three times his base salary and highest bonus and
continued benefits under Company benefit plans. In addition, the Agreement
provides for an entitlement to salary, bonus and continued benefits based on the
balance of the employment term (which automatically extends for three years if a
Change of Control occurs) in the event of certain other terminations of
employment. In general, a Change of Control is deemed to occur if a person or
group acquires 20% or more of the Company's outstanding common stock, the
Company's shareholders approve, with certain exceptions, a disposition of the
Company, or a majority of the directors are succeeded within a 24-month period
by individuals not nominated or approved by the Board as previously constituted.
The Agreement also provides, in substance, that amounts receivable by Mr.
Cassese after a Change of Control, which are subject to additional excise or
other taxes, are to be increased to preserve the net benefit to the executive of
such payments.
5
<PAGE>
Mr. Murphy is a party to an employment agreement with the Company which
expires on December 31, 1999. The Agreement provides, among other things, for an
annual salary at the current rate of $250,000, with such increases and bonuses,
if any, as the Board of Directors may determine, together with participation in
all benefit plans in which members of the Company's senior management generally
are entitled to participate. The Agreement also provides that, if a change of
Control occurs and thereafter Mr. Murphy either continues to be employed by the
Company through the end of the contract term or his employment is terminated by
the Company other than for cause or disability (as such terms are defined in the
Agreement) or Mr. Murphy terminates his employment for good reason (as defined
in the Agreement), then Mr. Murphy shall be entitled to received a lump sum
equal to two times his base salary and highest bonus (subject to reduction to
avoid excise or other taxes) as well as continued benefits under the Company's
benefit plans.
Mr. Shea has an Employment Agreement with the Company which automatically
renews (unless terminated by either party) each March. The Agreement provides
for an annual salary at the current rate of $125,000, plus severance pay in the
event of termination of employment by the Company, which in no event can exceed
one year's salary.
COMPENSATION COMMITTEE REPORT
COMPENSATION POLICIES
The Compensation Committee (the "Committee") of the Board of Directors
consists of its non-employee Directors. The Committee is responsible for
developing policies and making specific recommendations to the Board of
Directors with respect to the compensation of the Company's executive officers.
The goal of these policies is to ensure that an appropriate relationship exists
between executive pay and the creation of shareholder value, while at the same
time motivating and retaining key employees.
To help achieve this, the Committee, among other things, considers the chief
executive officer's recommendations with respect to other executive officers,
evaluates the Company's performance both in terms of current achievements and
significant initiatives with long-term implications, assesses the contributions
of individual executives, and compares compensation levels with those of other
leading companies in similar or related industries.
FISCAL 1997 COMPENSATION
With respect to the Company's chief executive officer, the Committee focused
principally upon recommending to the Board an appropriate base salary increase
and incentive compensation. As noted above, the chief executive officer is a
party to an employment agreement with the Company that provides for base salary
increases and bonuses as the Company may determine. In the view of the
Committee, the base salary increase and bonus granted the chief executive
officer with respect to 1997, appropriately reflected the Committee's policies
outlined above.
The Company has periodically granted stock options in order to provide
certain of its executives with a competitive total compensation package and
reward them for their contribution to the Company's long-term share performance.
These grants are designed to align the executive's interests with that of the
shareholders. During 1997, stock options were granted to Mr. Cassese and to
other members of management based upon their actual and potential contributions
to the Company.
Compensation Committee
Thomas J. Berry
Rocco J. Marano
6
<PAGE>
DIRECTORS' COMPENSATION
Directors who are not employees of the Company, are each entitled to receive
as compensation the sum of $12,000 per year. If there are more than four
non-telephonic meetings per year, they will each receive an additional sum of
$2,000 per non-telephonic meeting. In 1997, the Company incurred an expense of
$12,000 each for Messrs. Berry and Marano and $9,000 for Mr. Plugge.
1991 DIRECTOR'S STOCK OPTION PLAN
The Computer Horizons Corp. 1991 Director's Stock Option Plan, as amended in
1994, (the "1991 Plan") provides for automatic grants of options to purchase
75,938 shares of common stock at its then fair market value, and up to five (5)
additional annual grants to purchase 10,125 shares of common stock at its then
fair market value. To date, Messrs. Berry, Marano and Plugge have each received
options for 75,938 shares and Messrs. Berry and Plugge have each received five
(5) annual grants of 10,125 shares per grant and Mr. Marano two (2) grants of
10,125 shares. As noted herein, a proposal to amend and restate the Plan will be
voted on at the 1998 Annual Meeting of Shareholders.
APPROVAL OF AMENDMENTS TO
THE COMPUTER HORIZONS CORP. 1991 DIRECTOR'S STOCK OPTION PLAN
BACKGROUND
The 1991 Plan became effective on March 5, 1991, and was amended by the
Board on August 5, 1993 and approved by the shareholders of the Company on May
4, 1994, to increase the total number of shares of common stock that may be
issued under the 1991 Plan by 137,500 to 250,000 and to provide for annual
Option grants to eligible directors. The total number of shares that may be
issued under the Plan has subsequently increased pursuant to the terms of the
1991 Plan as a result of certain stock splits declared by the Company.
The 1991 Plan was subsequently amended and restated by the Board to be
effective on May 6, 1998, subject to approval by the shareholders of the Company
at the Annual Meeting. The amendments contained in the proposed amendment and
restatement of the 1991 Plan (the "Amendment and Restatement") (i) decrease the
number of shares of common stock that may be purchased under each type of option
grant under the 1991 Plan; (ii) remove the limit on the number (currently 5) of
annual option grants available to a non-employee director; and (iii) provide for
certain technical amendments in order for the 1991 Plan to satisfy the
requirements under Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
The following description of the 1991 Plan, as proposed to be amended and
restated, is a summary of the principal provisions of the 1991 Plan and is
qualified in its entirety by reference to the 1991 Plan.
PURPOSE OF THE PLAN
The purposes of the 1991 Plan are to enable the Company to attract, retain,
and motivate the non-employee directors of the Company and to enhance the
long-term mutuality of interest between the non-employee directors and the
Company's shareholders by granting non-qualified stock options to purchase
Common Stock ("Options").
7
<PAGE>
ADMINISTRATION
The 1991 Plan is administered by the Board. The Board may delegate its
powers and functions under the 1991 Plan to a committee (the "Committee") of the
Board of the Company (the "Board"), appointed from time to time by the Board.
The Committee is intended to consist of two or more directors, each of whom will
be non-employee directors as defined in Rule 16b-3 under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Board, or
the Committee, if applicable, has full authority to interpret the 1991 Plan and
decide any questions under the 1991 Plan and to make such rules and regulations
and establish such procedures for administration of the 1991 Plan as it deems
appropriate subject to the provisions of the 1991 Plan.
AVAILABLE SHARES
The 1991 Plan authorizes the issuance of up to 843,750 shares of Common
Stock, subject to adjustment.
The 1991 Plan provides that appropriate adjustments will be made in the
number and kind of securities receivable upon the exercise of outstanding
Options in the event of a stock split, stock dividend, merger, consolidation or
reorganization. The number of shares of Common Stock subject to an Option that
has not yet been granted will not be automatically adjusted to reflect a change
in the capital structure of the Company which would result in an increase in the
number of Common Stock of the Company. However, the number of shares of Common
Stock subject to an Option will be automatically adjusted downward to reflect a
change in the capital structure of the Company which would result in a decrease
in the number of Common Stock of the Company.
In general, if Options are for any reason canceled, or expire or terminate
unexercised, the shares covered by such Options will again be available for the
grant of Options.
ELIGIBILITY
All non-employee directors of the Company are eligible to be granted Options
under the Director's Stock Option Plan. A non-employee director is a director
serving on the Company's Board who is not an active employee of the Company.
GRANT OF OPTIONS
Currently, upon his or her initial election to the Board, each non-employee
director of the Company is granted an Option to purchase 75,938 (as previously
adjusted from 10,000 under the terms of the 1991 Plan to reflect stock splits)
shares of Common Stock (the "Initial Grant"). The Amendment and Restatement
provides that the amount of shares of Common Stock that may be purchased under
any Initial Grant made to a non-employee director following the effective date
of the amendment and restatement of the 1991 Plan has been decreased to 10,000.
On each January 1 after the non-employee director receives the Initial
Grant, a non-employee director who has been a non-employee director for at least
6 months will be automatically granted an Option to purchase 10,125 (as
previously adjusted from 2,000 under the terms of the 1991 Plan to reflect
splits) shares of Common Stock (the "Annual Grant"). Prior to the Amendment, the
Plan provided that the maximum number of Annual Grants that could be made to an
eligible director was five. Pursuant to the 1998 Amendment, subject to
shareholder approval, the maximum limit on the number of Annual Grants to an
eligible director has been eliminated and the amount of shares of common stock
that may be purchased
8
<PAGE>
under an Annual Grant made to a non-employee director following the effective
date of the Amendment of the 1991 Plan has been decreased to 10,000.
The exercise price per share of Common Stock upon the exercise of an Options
is 100% of the fair market value (as defined in the 1991 Plan) of the Common
Stock at the time of the grant of the Options, or the par value of the share of
Common Stock, whichever is greater.
EXERCISE OF OPTIONS
Subject to acceleration of the exercisability of the Options (as described
below), each Initial Grant of an Option becomes exercisable as to 20% of the
shares of Common Stock on the date of grant, as to an additional 20% of the
shares of Common Stock on each anniversary of the date of grant up to the fourth
anniversary of the date of grant. Options granted pursuant to an Annual Grant
are fully vested and immediately exercisable upon the date of grant.
Except where an Option expires earlier (as described below), if not
previously exercised, each Option will expire upon the tenth anniversary of the
date of the grant thereof.
Options that are exercisable upon a non-employee director's termination of
directorship for any reason except cause, prior to the complete exercise of an
Option (or deemed exercise thereof), will remain exercisable by the non-employee
director or, in the case of death, by the non-employee director's estate or by
the person given authority to exercise such Options by his or her will or by
operation of law following such termination until the earlier of (i) the
expiration of the one year period following the non-employee director's
termination of directorship or (ii) the remaining term of the Option. All
Options held by a non-employee director expire immediately upon the non-employee
director's termination of directorship for cause.
All Options granted to a non-employee director and not previously
exercisable become vested and fully exercisable immediately upon the occurrence
of a change in control (as defined in the 1991 Plan).
Common Stock purchased pursuant to the exercise of Options must be paid for
at the time of exercise in cash or by delivery to the Company of unencumbered
shares of Common Stock owned by the director for at least 6 months (or such
longer period as required by applicable accounting standards to avoid a charge
to earnings) or a combination thereof.
AMENDMENTS
The 1991 Plan provides that it may be amended by the Board or the Committee
at any time, and from time to time, to effect (i) amendments necessary or
desirable in order that the 1991 Plan and the Options granted thereunder conform
to all applicable laws, and (ii) any other amendments deemed appropriate.
Notwithstanding the foregoing, to the extent required by law, no amendment may
be made that would require the approval of the stockholders of the Company under
applicable law or under any regulation of a principal national securities
exchange or automated quotation system sponsored by the Nasdaq Stock Market,
Inc. unless such approval is obtained. The 1991 Plan may be amended or
terminated at any time by stockholders of the Company.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the principal U.S. federal income tax
consequences with respect to Options under the 1991 Plan is based on statutory
authority and judicial and administrative interpretations as of the date of this
Proxy Statement, which are subject to change at any time (possibly with
retroactive effect) and may vary in individual circumstances. Therefore, the
following is designed to provide only a
9
<PAGE>
general understanding of the federal income tax consequences (state and local
income tax and estate tax consequences are not addressed below).
In general, an optionee will realize no taxable income upon the grant of
nonqualified stock options and the Company will not receive a deduction at the
time of such grant. Upon exercise of a nonqualified stock option, an optionee
generally will recognize ordinary income in an amount equal to the excess of the
fair market value of the stock on the date of exercise over the exercise price,
but such amount will not be subject to federal wage withholding or employment
taxes. Upon a subsequent sale of the stock by the optionee, the optionee will
recognize short-term or long-term capital gain or loss, depending upon his
holding period for the stock. If the Common Stock is held for more than 18
months after the date of exercise, the holder will be taxed at the lowest rate
applicable to capital gains for such holder. The Company will generally be
allowed a deduction equal to the amount recognized by the optionee as ordinary
income.
An optionee should consult with his or her tax advisor as to whether, as a
result of Section 16(b) of the Exchange Act and the rules and regulations
thereunder, the timing of income recognition is deferred for any period
following the exercise of an Option (the "Deferral Period"). If there is a
Deferral Period, absent a written election (pursuant to Section 83(b) of the
Code) filed with the Internal Revenue Service within 30 days after the date of
transfer of the shares of Common Stock pursuant to the exercise of the
nonqualified stock option to include in income, as of the transfer date, the
excess (on such date) of the fair market value of such shares over their
exercise price, recognition of income by the recipient could, in certain
instances, be deferred until the expiration of the Deferral Period.
In addition, any entitlement to a tax deduction on the part of the Company
is subject to the applicable federal tax rules, and in the event that the
exercisability of an Option is accelerated because of a change in control,
payments relating to the Options, either alone or together with certain other
payments may constitute parachute payments under Section 280G of the Code, which
excess amounts may be subject to excise taxes and be nondeductible by the
Company.
The 1991 Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended. The 1991 Plan is not, nor is
it intended to be, qualified under Section 401(a) or 421 of the Code.
[THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE
THEIR SHARES FOR THE PROPOSAL TO ADOPT THE AMENDMENT.]
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company maintains directors' and officers' liability insurance,
providing coverage of up to $15,000,000, subject to a deductible. The policy
also insures the Company against amounts paid by it to indemnify directors and
officers. The current policy covers a period of one year at an annual premium of
approximately $121,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During 1997 Mr. Wilfred R. Plugge (former director, deceased) inadvertently
filed a Form 4 as to one transaction after the due filing date.
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PERFORMANCE GRAPH
Below is a graph comparing the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return of companies included in the Nasdaq Market Index and the Index of the
Peer Group of Companies selected by the Company:
The total cumulative return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the Company, the
Nasdaq Market Index and the Peer Group, is based on the stock price or composite
index at the end of fiscal 1992.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND BROAD MARKET
<S> <C>
Computer Horizons Corp
1992 $100
1993 178.38
1994 307.28
1995 1296.76
1996 1969.74
1997 3490.07
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND BROAD MARKET
<S> <C> <C>
Peer Group Broad Market
1992 $100 $100
1993 120.65 119.95
1994 152.32 125.94
1995 218.73 163.35
1996 518.95 202.99
1997 1077.87 248.3
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
------------------------------------------------------------------
COMPANY 1992 1993 1994 1995 1996 1997
- ---------------------------------------------------- ----- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Computer Horizons................................... 100 178.38 307.28 1,296.76 1,969.74 3,490.07
Peer Group.......................................... 100 120.65 152.32 218.73 518.95 1,077.87
Broad Market........................................ 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
The preceding graph compares the performance of the Company with the Nasdaq
Market Index and the Peer Group Index. The Peer Group Index is comprised of four
companies, each of whom is engaged not only in professional services, but is
also involved in emerging and prospective "total solutions." They are Analysts
International Corp., CIBER, Inc., Computer Task Group Inc. and Keane Inc.
11
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PROPOSAL TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
On March 25, 1998, the Board of Directors unanimously approved and
authorized the submission to the Shareholders of, an amendment to the Company's
Certificate of Incorporation to increase the authorized number of shares of the
Company's Common Stock, par value $.10, from 60,000,000 to 100,000,000. The
proposed amendment requires the affirmative vote of the holders of a majority of
all shares of Common Stock outstanding as of the record date.
As of March 23, 1998 there were 28,886,106 shares of Common Stock issued and
outstanding. An aggregate 5,817,972 shares of Common Stock are reserved for
issuance pursuant to the Company's 1985 (as amended) and 1994 Incentive Stock
Option and Appreciation Plans, the 1991 Directors' Stock Option Plan, as
amended, and outstanding Stock Purchase Warrants. This leaves a balance of
25,295,922 authorized but unissued shares of Common Stock (including shares held
in treasury) available for future issuance.
The Board of Directors considers the proposed increase in the number of
authorized shares of Common Stock desirable because it would give the Board the
necessary flexibility to issue Common Stock in connection with and in
furtherance of general Corporate purposes, whether in the nature of stock
dividends and splits, acquisitions, financings, employee benefits or any other
appropriate Corporate purposes without the expense and delay that would arise if
there were insufficient authorized shares for a specific issuance, as
shareholder approval would then be needed to increase the authorized number of
shares. The Company has no present plans to issue any additional shares of
Common Stock, but reviews and evaluates potential Corporate actions on an
on-going basis to determine if such action would be in the best interest of the
Company and its shareholders. Depending on the nature of any future issuance of
common stock, further shareholder authorization may be required under New York
law or the rules of Nasdaq or any stock exchange on which the common stock may
then be listed.
The proposed increase in the number of authorized shares of common stock
could enable the Board of Directors to render more difficult or discourage an
attempt by another person or entity to obtain control of the Company. Although
the Board of Directors has no present intention of issuing additional shares for
such purpose, the Securities and Exchange Commission has indicated that this
potential use should be disclosed.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSED AMENDMENT TO INCREASE THE AUTHORIZED SHARES OF COMMON
STOCK.
AUDITORS
The Board of Directors, with the approval of the Audit Committee, has
selected the firm of Grant Thornton LLP as independent auditors to examine the
financial statements of the Company for the year ending December 31, 1998. This
selection is being presented to the shareholders for ratification at the annual
meeting. If the shareholders do not ratify the employment of Grant Thornton LLP,
the selection of independent auditors will be reconsidered by the Board of
Directors.
A representative of Grant Thornton LLP is expected to be present at the
annual meeting with the opportunity to make a statement, if he so desires, and
to be available to respond to appropriate questions.
OTHER INFORMATION
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, directors, officers and regular employees of
the Company may solicit proxies personally or by telephone without additional
compensation. The Company also has retained Regan & Associates, New York, New
York, to assist in soliciting proxies at a cost not to exceed $5,500 exclusive
of expenses.
12
<PAGE>
Proposals of shareholders intended to be presented at the annual meeting to
be held in 1999 must be received by the Company no later than December 1, 1998,
to be included in the proxy materials for such meeting.
The Board of Directors is aware of no other matters that are to be presented
to the shareholders for action at the meeting. If, however, any other matters
properly come before the meeting, the person named in the enclosed form of proxy
will vote such proxies in accordance with his judgment on such matters.
Upon the written request of any shareholder as of March 23, 1998, a copy of
the Company's Annual Report on Form 10-K for the year ended December 3l, 1997
(excluding exhibits), as filed with the Securities and Exchange Commission, will
be supplied without charge. Requests should be directed to Shareholder
Relations, Computer Horizons Corp., 49 Old Bloomfield Avenue, Mountain Lakes,
New Jersey 07046-1495.
By Order of the Board of Directors,
William J. Murphy
Secretary
Mountain Lakes, New Jersey
April 6, 1998
13
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COMPUTER HORIZONS CORP.
The undersigned appoints JOHN J. CASSESE as proxy to vote all shares of
stock the undersigned is entitled to vote at the Annual Meeting of
Shareholders of COMPUTER HORIZONS CORP. to be held at The Hamilton Park
Conference Center, 175 Park Avenue, Florham Park, NJ, on Wednesday, May 6,
1998 at 10:00 A.M. and any adjournment thereof.
IF NOT OTHERWISE INDICATED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS, "FOR" THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
"FOR" THE APPROVAL OF THE 1998 AMENDMENT AND RESTATEMENT TO THE 1991
DIRECTOR'S STOCK OPTION PLAN AND "FOR" THE RATIFICATION OF THE SELECTION OF
GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT YEAR.
(1) Election of Directors: John J. Cassese, Thomas J. Berry and Rocco J.
Marano For all Withhold authority to vote nominees listed. For all nominees
listed. For all nominees except nominees written in space below. (2) To
approve an Amendment to the Company's Certificate of Incorporation increasing
the authorized number of shares of the Company's common stock, par value
$.10, 60,000,000 to 100,000,000. For Against Abstain (3) To approve the 1998
Amendment and Restatement to the 1991 Director's Stock Option Plan, as
amended in 1994. For Against Abstain (4) Proposal to ratify the selection of
Grant Thornton LLP as the company's independent auditors for the current
year. For Against Abstain (5) Upon any other matters that may properly come
before the meeting or any adjournment.
Signature Date Signature Date
-------------- ---------- ------------- ------------
Mark here for address change and note above. Signature(s) should agree
with name(s) printed hereon. Please correct any errors in address shown. If
signing in representative capacity include full title. Proxies by a
corporation should be signed in its name by an authorized officer. Where
stock stands in more than one name, all holders of record should sign.
