<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
<TABLE>
<C> <S>
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM _________________ TO _________________.
------------------------
COMMISSION FILE NUMBER 1-10427
ROBERT HALF INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 94-1648752
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2884 SAND HILL ROAD 94025
SUITE 200 (zip-code)
MENLO PARK, CALIFORNIA
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (650) 234-6000
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) had been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of April 30, 2000:
88,789,250 shares of $.001 par value Common Stock
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Cash and cash equivalents................................... $204,607 $151,074
Accounts receivable, less allowances of $15,381 and
$13,424................................................... 339,125 309,278
Other current assets........................................ 30,312 30,187
-------- --------
Total current assets.................................... 574,044 490,539
Intangible assets, less accumulated amortization of $62,951
and $60,889............................................... 173,519 175,747
Property and equipment, less accumulated depreciation of
$94,243 and $82,413....................................... 111,563 110,902
-------- --------
Total assets............................................ $859,126 $777,188
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses....................... $ 32,830 $ 29,835
Accrued payroll costs....................................... 167,267 145,410
Income taxes payable........................................ 18,615 64
Current portion of notes payable and other indebtedness..... 54 898
-------- --------
Total current liabilities............................... 218,766 176,207
Notes payable and other indebtedness, less current
portion................................................... 2,584 2,597
Deferred income taxes....................................... 16,024 22,281
-------- --------
Total liabilities....................................... 237,374 201,085
Commitments and Contingencies
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value authorized 260,000,000 shares;
issued and outstanding 88,727,278 and 88,073,937 shares... 89 88
Capital surplus............................................. 342,010 303,093
Deferred compensation....................................... (82,061) (54,127)
Accumulated other comprehensive income...................... (3,192) (2,420)
Retained earnings........................................... 364,906 329,469
-------- --------
Total stockholders' equity.............................. 621,752 576,103
-------- --------
Total liabilities and stockholders' equity.............. $859,126 $777,188
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
1
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
Net service revenues........................................ $632,846 $484,988
Direct costs of services, consisting of payroll, payroll
taxes and insurance costs for temporary employees......... 361,797 287,093
-------- --------
Gross margin................................................ 271,049 197,895
Selling, general and administrative expenses................ 200,944 138,990
Amortization of intangible assets........................... 1,253 1,229
Interest income, net........................................ (1,456) (1,307)
-------- --------
Income before income taxes.................................. 70,308 58,983
Provision for income taxes.................................. 26,928 23,673
-------- --------
Net income.................................................. $ 43,380 $ 35,310
======== ========
Basic net income per share.................................. $ .49 $ .39
Diluted net income per share................................ $ .47 $ .38
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
2
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
COMMON STOCK--SHARES:
Balance at beginning of period............................ 88,074 91,225
Issuances of restricted stock............................. 581 245
Repurchases of common stock............................... (244) (466)
Exercises of stock options................................ 316 148
-------- --------
Balance at end of period................................ 88,727 91,152
======== ========
COMMON STOCK--PAR VALUE:
Balance at beginning of period............................ $ 88 $ 91
Issuances of restricted stock............................. 1 --
-------- --------
Balance at end of period................................ $ 89 $ 91
======== ========
CAPITAL SURPLUS:
Balance at beginning of period............................ $303,093 $270,609
Issuances of restricted stock--excess over par value...... 35,712 7,166
Exercises of stock options--excess over par value......... 2,831 1,080
Capital impact of equity incentive plans.................. 374 7,561
-------- --------
Balance at end of period................................ $342,010 $286,416
======== ========
DEFERRED COMPENSATION:
Balance at beginning of period............................ $(54,127) $(56,790)
Issuances of restricted stock............................. (35,713) (7,166)
Amortization of deferred compensation..................... 7,779 5,730
-------- --------
Balance at end of period................................ $(82,061) $(58,226)
======== ========
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Balance at beginning of period............................ $ (2,420) $ (1,244)
Translation adjustments................................... (772) (929)
-------- --------
Balance at end of period................................ $ (3,192) $ (2,173)
======== ========
RETAINED EARNINGS:
Balance at beginning of period............................ $329,469 $309,804
Repurchases of common stock--excess over par value........ (7,943) (17,836)
Net income................................................ 43,380 35,310
-------- --------
Balance at end of period................................ $364,906 $327,278
======== ========
COMPREHENSIVE INCOME:
Net income................................................ $ 43,380 $ 35,310
Translation adjustments................................... (772) (929)
-------- --------
Total comprehensive income.............................. $ 42,608 $ 34,381
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
3
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 43,380 $ 35,310
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization of intangible assets..................... 1,253 1,229
Depreciation expense.................................. 12,177 6,736
Provision for deferred income taxes................... (6,086) 480
Changes in assets and liabilities, net of effects of
acquisitions:
Increase in accounts receivable....................... (29,847) (14,834)
Increase (decrease) in accounts payable, accrued
expenses and accrued payroll costs.................. 24,852 (2,409)
Increase in income taxes payable...................... 18,551 4,401
Change in other assets, net of change in other
liabilities......................................... 7,985 4,475
-------- --------
Total adjustments....................................... 28,885 78
-------- --------
Net cash and cash equivalents provided by operating
activities.............................................. 72,265 35,388
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (13,452) (15,951)
-------- --------
Net cash and cash equivalents used in investing
activities.............................................. (13,452) (15,951)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock and common stock
equivalents............................................. (7,943) (17,836)
Principal payments on notes payable and other
indebtedness............................................ (542) 20
Proceeds and capital impact of equity incentive plans..... 3,205 8,641
-------- --------
Net cash and cash equivalents used in financing
activities.............................................. (5,280) (9,175)
-------- --------
Net increase in cash and cash equivalents................... 53,533 10,262
Cash and cash equivalents at beginning of period............ 151,074 166,060
-------- --------
Cash and cash equivalents at end of period.................. $204,607 $176,322
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest................................................ $ 89 $ 92
Income taxes............................................ $ 10,367 $ 11,318
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these financial statements.
4
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. Robert Half International Inc. (the "Company")
provides specialized staffing services through such divisions as
ACCOUNTEMPS-Registered Trademark-, ROBERT HALF-Registered Trademark-,
OFFICETEAM-Registered Trademark-, RHI CONSULTING-Registered Trademark-, RHI
MANAGEMENT RESOURCES-Registered Trademark-, THE AFFILIATES-Registered Trademark-
and THE CREATIVE GROUP-SM-. The Company, through its ACCOUNTEMPS, ROBERT HALF
and RHI MANAGEMENT RESOURCES divisions, is the world's largest specialized
provider of temporary, full-time, and project professionals in the fields of
accounting and finance. OFFICETEAM specializes in highly skilled temporary
administrative support personnel. RHI CONSULTING provides contract information
technology professionals. THE AFFILIATES provides temporary, project, and
full-time staffing of attorneys and specialized support personnel within law
firms and corporate legal departments. THE CREATIVE GROUP provides project
staffing in the advertising, marketing, and Web design fields. Revenues are
predominantly from temporary services. The Company operates in the United
States, Canada, Europe, and Australia. The Company is a Delaware corporation.
PRINCIPLES OF CONSOLIDATION. The Consolidated Financial Statements include
the accounts of the Company and its subsidiaries, all of which are wholly-owned.
All significant intercompany balances have been eliminated. Certain
reclassifications have been made to the 1999 financial statements to conform to
the 2000 presentation.
INTERIM FINANCIAL INFORMATION. The Consolidated Financial Statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and, in management's opinion, include all
adjustments necessary for a fair statement of results for such interim periods.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules or regulations; however,
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
The interim results for the three months ended March 31, 2000, and 1999 are
not necessarily indicative of results for the full year. It is suggested that
these financial statements be read in conjunction with the financial statements
and the notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
REVENUE RECOGNITION. Temporary services revenues are recognized when the
services are rendered by the Company's temporary employees. Permanent placement
revenues are recognized when employment candidates accept offers of permanent
employment. Allowances are established to estimate losses due to placed
candidates not remaining employed for the Company's guarantee period, typically
90 days.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments with a maturity of three months or less as cash equivalents.
INTANGIBLE ASSETS. Intangible assets primarily consist of the cost of
acquired companies in excess of the fair market value of their net tangible
assets at acquisition date, which are being amortized on a straight-line basis
over a period of 40 years. The carrying value of intangible assets is
periodically reviewed by the Company and impairments are recognized when the
expected future operating cash flows derived from such intangible assets are
less than their carrying value. Based upon its most recent analysis, the Company
believes that no material impairment of intangible assets existed at March 31,
2000.
5
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
(UNAUDITED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES. Deferred taxes are computed based on the difference between
the financial statement and income tax bases of assets and liabilities using the
enacted marginal tax rates.
FOREIGN CURRENCY TRANSLATION. The results of operations of the Company's
foreign subsidiaries are translated at the monthly average exchange rates
prevailing during the period. The financial position of the Company's foreign
subsidiaries is translated at the current exchange rates at the end of the
period, and the related translation adjustments are recorded as a component of
comprehensive income within Stockholders' Equity. Gains and losses resulting
from foreign currency transactions are included in the Consolidated Statements
of Income.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.
PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost.
Depreciation expense is computed using the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized over
the shorter of the life of the related asset or the life of the lease.
NOTE B--BUSINESS SEGMENTS
The Company has two reportable segments: temporary and consultant staffing;
and permanent placement staffing. The temporary and consultant staffing segment
provides specialized personnel in the accounting and finance, administrative and
office, information technology, legal, advertising, marketing, and Web design
fields. The permanent placement staffing segment provides full-time personnel in
the accounting, finance, and information technology fields.
The accounting policies of the segments are the same as those described in
Note A: Summary of Significant Accounting Policies. The Company evaluates
performance based on profit or loss from operations before interest expense,
intangible amortization expense, and income taxes.
6
<PAGE>
ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 2000
(UNAUDITED)
NOTE B--BUSINESS SEGMENTS (CONTINUED)
The following table provides a reconciliation of revenue and operating
profit by reportable segment to consolidated results (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
Net service revenues
Temporary and consultant staffing..................... $574,745 $449,123
Permanent placement staffing.......................... 58,101 35,865
-------- --------
$632,846 $484,988
======== ========
Operating income
Temporary and consultant staffing..................... $ 54,156 $ 50,290
Permanent placement staffing.......................... 15,949 8,615
-------- --------
70,105 58,905
Amortization of intangible assets....................... 1,253 1,229
Interest income, net.................................... (1,456) (1,307)
-------- --------
Income before income taxes.............................. $ 70,308 $ 58,983
======== ========
</TABLE>
NOTE C--SUBSEQUENT EVENT
On May 4, 2000, the Company declared a two-for-one stock split in the form
of a 100 percent stock dividend on its common stock. The record date for
determining those stockholders entitled to receive the stock dividend will be
May 19, 2000, and the payment date for the stock dividend will be June 12, 2000.
A pro forma restatement of the Company's earnings per share is provided in the
following table:
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income per share:
Basic..................................................... $0.49 $0.39 $0.24 $0.19
Diluted................................................... $0.47 $0.38 $0.24 $0.19
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain information contained in Management's Discussion and Analysis and in
other parts of this report may be deemed forward-looking statements regarding
events and financial trends that may affect the Company's future operating
results or financial positions. Such statements may be identified by words such
as "estimate", "project", "plan", "intend", "believe", "expect", "anticipate",
or variations or negatives thereof or by similar or comparable words or phrases.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in the
statements. Such risks and uncertainties include, but are not limited to, the
following: changes in general or local economic conditions or in the economic
condition of any industry, the availability of qualified staff employees and
temporary candidates, government regulation of the personnel services industry,
general regulations relating to employers and employees, liability risks
associated with the operation of a personnel services business and competitive
conditions in the personnel services industry. In addition, it should be noted
that, because long-term contracts are not a significant portion of the Company's
business, future results cannot be reliably predicted by considering past trends
or extrapolating past results.
RESULTS OF OPERATIONS FOR EACH OF THE THREE MONTHS ENDED MARCH 31, 2000 AND
1999.
Temporary services revenues were $575 million and $449 million for the three
months ended March 31, 2000 and 1999, respectively, increasing by 28% during the
three months ended March 31, 2000 compared to the same period in 1999. The
increase in revenues during these periods reflected in part revenues generated
from the Company's OFFICETEAM, RHI CONSULTING, and RHI MANAGEMENT RESOURCES
divisions, which were started in 1991, 1994 and 1997, respectively. Permanent
placement revenues were $58 million and $36 million for the three months ended
March 31, 2000 and 1999, respectively, increasing by 62% during the three months
ended March 31, 2000 compared to the same period in 1999. Overall revenue
increases reflect continued improvement in demand for the Company's services,
which the Company believes is a result of increased acceptance in the use of
professional staffing services.
The Company currently has more than 270 offices in 40 states and seven
foreign countries. Domestic operations represented 89% and 88% of revenues for
the three months ended March 31, 2000 and 1999, respectively. Foreign operations
represented 11% and 12% of revenues for the three months ended March 31, 2000
and 1999, respectively.
Gross margin dollars from the Company's temporary services represent
revenues less direct costs of services, which consist of payroll, payroll taxes
and insurance costs for temporary employees. Gross margin dollars from permanent
placement services are equal to revenues, as there are no direct costs
associated with such revenues. Gross margin dollars for the Company's temporary
services were $213 million and $162 million for the three months ended
March 31, 2000 and 1999, respectively, increasing by 31% in 2000. Gross margin
amounts equaled 37% and 36% of revenues for temporary services for the three
months ended March 31, 2000 and 1999, respectively, which the Company believes
reflects its ability to adjust billing rates and wage rates to underlying market
conditions. Gross margin dollars for the Company's permanent placement division
were $58 million and $36 million for the three months ended March 31, 2000 and
1999, respectively, increasing by 62% for the three months ended March 31, 2000.
Selling, general and administrative expenses were $201 million for the three
months ended March 31, 2000 compared to $139 million for the three months ended
March 31, 1999. Selling, general and administrative expenses as a percentage of
revenues were 32% and 29% for the three months ended March 31, 2000 and 1999,
respectively. Selling, general and administrative expenses consist primarily of
staff compensation, advertising, depreciation and occupancy costs. The increase
in 2000 relates primarily to various candidate initiatives including those
related to the internet.
The Company allocates the excess of cost over the fair market value of the
net tangible assets first to identifiable intangible assets, if any, and then to
goodwill. Although management believes that goodwill has
8
<PAGE>
an unlimited life, the Company amortizes these costs over 40 years. Management
believes that its strategy of making acquisitions of established companies in
established markets and maintaining its presence in these markets preserves the
goodwill for an indeterminate period. The carrying value of intangible assets is
periodically reviewed by the Company and impairments are recognized when the
expected future operating cash flows derived from such intangible assets is less
than their carrying value. Based upon its most recent analysis, the Company
believes that no material impairment of intangible assets existed at March 31,
2000. Intangible assets represented 20% of total assets and 28% of total
stockholders' equity at March 31, 2000.
Interest income for the three months ended March 31, 2000 and 1999 was
$1,756,000 and $1,538,000, respectively. Interest expense for the three months
ended March 31, 2000 and 1999 was $300,000 and $231,000, respectively.
The provision for income taxes was 38% and 40% for the three months ended
March 31, 2000 and 1999, respectively. This decrease reflects the impact of
various state tax planning initiatives undertaken during 1999.
LIQUIDITY AND CAPITAL RESOURCES
The change in the Company's liquidity during the three months ended March
31, 2000 is the net effect of funds generated by operations and the funds used
for capital expenditures, repurchases of common stock and principal payments on
outstanding notes payable. As of March 31, 2000, the Company has authorized the
repurchase, from time to time, of up to nine million shares of the Company's
common stock on the open market or in privately negotiated transactions,
depending on market conditions. During the three months ended March 31, 2000,
the Company did not repurchase shares of common stock on the open market. Since
1997, the Company has repurchased approximately 5,907,000 shares on the open
market pursuant to this program. Repurchases of the securities have been funded
with cash generated from operations. For the three months ended March 31, 2000,
the Company generated $72 million from operations, used $13 million in investing
activities and used $5 million in financing activities.
The Company's working capital at March 31, 2000, included $205 million in
cash and cash equivalents. In addition at March 31, 2000, the Company had
available $75 million of its $80 million bank revolving line of credit. The
Company's working capital requirements consist primarily of the financing of
accounts receivable. While there can be no assurances in this regard, the
Company expects that internally generated cash plus the bank revolving line of
credit will be sufficient to support the working capital needs of the Company,
the Company's fixed payments, and other obligations on both a short and
long-term basis. As of March 31, 2000, the Company had no material capital
commitments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk sensitive instruments do not subject the Company
to material market risk exposures.
9
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
10.1 Equity Incentive Plan.
10.2 Annual Performance Bonus Plan.
11 Computation of Per Share Earnings.
27 Financial Data Schedule.
</TABLE>
(b) The registrant filed no current report on Form 8-K during the quarter
covered by this report.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBERT HALF INTERNATIONAL INC.
(Registrant)
/s/ M. KEITH WADDELL
--------------------------------------
M. Keith Waddell
VICE CHAIRMAN, CHIEF FINANCIAL OFFICER
AND TREASURER
(PRINCIPAL FINANCIAL OFFICER AND
DULY AUTHORIZED SIGNATORY)
Date: May 11, 2000
11
<PAGE>
EXHIBIT 10.1
ROBERT HALF INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE MAY 4, 2000)
1. PURPOSES. The principal purposes of the Robert Half International Inc.
Equity Incentive Plan (the "Plan") are: (a) to improve individual employee
performance by providing long-term incentives and rewards to key employees of
the Company, (b) to assist the Company in attracting, retaining and motivating
key employees with experience and ability, and (c) to align the interests of
such employees with those of the Company's stockholders.
2. DEFINITIONS. Unless the context clearly indicates otherwise, the
following terms, when used in this Plan, shall have the meanings set forth
below:
(a) "Administrator" means either the Board of Directors or a committee of
the Board of Directors of the Company, the composition and the size of which
shall cause such committee to satisfy the requirements of Rule 16b-3 of the
Exchange Act with respect to officers and directors.
(b) "Board" means the Board of Directors of the Company.
(c) "Change in Control" means the occurrence of any of the following:
(i) Any person or group (as such terms are defined in Section 13(d)(3) of
the Exchange Act), other than an employee benefit plan sponsored by the Company
or a subsidiary thereof or a corporation owned (directly or indirectly), by the
stockholders of the Company in substantially the same proportions of the
ownership of stock of the Company, shall become the beneficial owner of
securities of the Company representing 20% or more, or commences a tender or
exchange offer following the successful consummation of which the offerer and
its affiliates would beneficially own securities representing 20% or more, of
the combined voting power of then outstanding securities ordinarily (and apart
from rights accruing in special circumstances) having the right to vote in the
election of directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise; PROVIDED, HOWEVER, that
a Change in Control shall not be deemed to include the acquisition by any such
person or group of securities representing 20% or more of the Company if such
party has acquired such securities not with the purpose nor with the effect of
changing or influencing the control of the Company, nor in connection with or as
a participant in any transaction having such purposes or effect, including,
without limitation, not in connection with such party (A) making any public
announcement with respect to the voting of such shares at any meeting to
consider a merger, consolidation, sale of substantial assets or other business
combination or extraordinary transaction involving the Company, (B) making, or
in any way participating in, any "solicitation" of "proxies" (as such terms are
defined or used in Regulation 14A under the Exchange Act) to vote any voting
securities of the Company (including, without limitation, any such solicitation
subject to Rule 14a-11 under the Exchange Act) or seeking to advise or influence
any party with respect to the voting of any voting securities of the Company,
directly or indirectly, relating to a merger or other business combination
involving the Company or the sale or transfer of substantial assets of the
Company, (C) forming, joining or in any way participating in any "group" within
the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting
securities of the Company, directly or indirectly, relating to a merger or other
business combination involving the Company or the sale or transfer of any
substantial assets of the Company, or (D) otherwise acting, alone or in concert
with others, to seek control of the Company or to seek to control or influence
the management or policies of the Company.
(ii) The stockholders of the Company shall approve any plan or proposal for
the liquidation or dissolution of the Company.
<PAGE>
(iii) A change in the composition of the Board of Directors of the Company
occurring within a two-year period, as a result of which fewer than a majority
of the directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date hereof, or
(B) are elected, or nominated for election, to the Board of Directors of the
Company with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company).
As a result of or in connection with any cash tender offer, merger, or other
business combination, sale of assets or contested election, or combination of
the foregoing, the persons who were directors of the Company just prior to such
event shall cease within one year to constitute a majority of the Board.
(iv) The Company's stockholders approve a definitive agreement providing for
a transaction in which the Company will cease to be an independent publicly
owned corporation.
(v) The stockholders of the Company approve a definitive agreement (A) to
merge or consolidate the Company with or into another corporation in which the
holders of the Stock immediately before such merger or reorganization will not,
immediately following such merger or reorganization, hold as a group on a
fully-diluted basis both the ability to elect at least a majority of the
directors of the surviving corporation and at least a majority in value of the
surviving corporation's outstanding equity securities, or (B) to sell or
otherwise dispose of all or substantially all of the assets of the Company.
(d) "Common Stock" or "Stock" means Robert Half International Inc. Common
Stock, par value $.001 per share.
(e) "Company" means Robert Half International Inc., its divisions and direct
and indirect subsidiaries.
(f) "Continuous Employment" means employment with the Company or any
Subsidiary, or serving as a director or consultant to the Company or any
Subsidiary, without any termination or leave of absence, except for a leave of
absence approved by the Company or any Subsidiary which is less than six
consecutive months in duration.
(g) "Disability" or "Disabled" shall mean (i) a physical or mental condition
which, in the judgment of the Administrator based on competent medical evidence
satisfactory to the Administrator (including, if required by the Administrator,
medical evidence obtained by an examination conducted by a physician selected by
the Administrator), renders Holder unable to engage in any substantial gainful
activity for the Company and which condition is likely to result in death or to
be of long, continued and indefinite duration, or (ii) a judicial declaration of
incompetence.
(h) "Eligible Employee" means an employee of the Company or any Subsidiary
(including an employee who is a director and/or officer) who, as determined by
the Administrator in its sole discretion, has and exercises management functions
and responsibilities.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) "Fair Market Value" means the closing sales price on the New York Stock
Exchange or the NASDAQ National Market System, as the case may be, on the date
the value is to be determined as reported in THE WALL STREET JOURNAL (Western
Edition). If there are no trades on such date, the closing price on the latest
preceding business day upon which trades occurred shall be the Fair Market
Value. If the Stock is not listed in the New York Stock Exchange or quoted on
the NASDAQ National Market System, the Fair Market Value shall be determined in
good faith by the Administrator.
(k) "Grant" shall mean an Option or a Restricted Stock Award.
(l) "Grant Date" means the date a Grant is made under the Plan.
(m) "Holder" means the recipient of a Grant pursuant to this Plan.
<PAGE>
(n) "Issue Date" means the date on which shares of Stock subject to a
Restricted Stock Award are issued or transferred by the Company to the account
of an Eligible Employee who has received such grant.
(o) "Minimum Withholding Taxes" means any applicable federal, state and
local income and other employment taxes which the Company is required to
withhold in connection with (i) the lapse of restrictions on Stock subject to a
Restricted Stock Award, (ii) the exercise of an Option, or (iii) the making of
an election under Section 83(b) of the Internal Revenue Code with respect to a
Restricted Stock Award.
(p) "Offer" means a tender offer or an exchange offer for the Company's
Stock.
(q) "Option" or "Stock Option" means a right granted under the Plan to a
Holder to purchase shares of Common Stock at a fixed price for a specified
period of time.
(r) "Option Price" means the price at which a share of Common Stock covered
by an Option granted hereunder may be purchased.
(s) "Optionee" means an Eligible Employee who has received a Stock Option
granted under the Plan.
(t) "Restricted Stock Award" means a grant described in Section 6 of the
Plan.
(u) "Securities Act" means the Securities Act of 1933, as amended.
(v) "Subsidiary" means a "subsidiary" corporation as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended.
(w) "Vested" means that portion of a Grant with respect to which the Vesting
Date has arrived or passed.
(x) "Vesting Date" means the date specified in Section 5 or 6 hereof, as the
case may be, or such other date as shall be established by the Administrator or
otherwise on the Grant Date or thereafter.
(y) "Voting Shares" means the outstanding shares of the Company entitled to
vote for the election of Directors.
3. STOCK AVAILABLE. The number of shares of Stock for which Grants may be
made during each calendar year shall, commencing with the year 2000, be that
number which is equal to 2% of the number of issued and outstanding shares of
Common Stock of the Company (excluding treasury shares) as of January 1 of such
year. Any shares of Common Stock covered by Options which have terminated or
expired prior to exercise or have been cancelled without value shall not be
counted against the annual limit and shall be available for further grants
hereunder and shares constituting the portion of a Restricted Stock Award that
is forfeited before any dividends are paid upon such forfeited shares shall not
be counted against the annual limit and shall be available for further grants
hereunder. The foregoing number of shares available for Grants shall be subject
to any adjustments which may be made pursuant to Section 12 hereof. Shares of
Stock used for Options may be either shares of authorized but unissued Common
Stock or treasury shares or both. Shares of Stock used for Restricted Stock
Awards shall be treasury shares to the extent that treasury shares are
available, and, if no treasury shares are available, Restricted Stock Awards
shall be authorized but unissued Common Stock.
4. PARTICIPANTS. From time to time the Administrator shall, in its sole
discretion, but subject to all of the provisions of the Plan, determine which
Eligible Employees will be given Grants under the Plan, the number of Options or
shares of Restricted Stock to be granted to each such Eligible Employee and the
terms, conditions and restrictions of each such Grant. In making such
determinations, the Administrator shall take into account the nature of services
rendered and to be rendered by the respective recipients, their present and
potential contribution to the Company's success and such other factors as the
Administrator in its discretion deems relevant to the accomplishment of the
purposes of the Plan. In any year, the Administrator may approve Options to
Eligible Employees subject to differing terms and conditions and
<PAGE>
Restricted Stock Awards to Eligible Employees subject to differing terms and
conditions. During any calendar year, the number of shares of Stock with respect
to which Options or Restricted Stock are granted to any one individual may not
exceed 1.5% of the number of issued and outstanding shares of Common Stock as of
January 1, 2000, subject to adjustment pursuant to Section 12 hereof.
5. OPTIONS. Each Option granted hereunder shall be in writing and shall
contain such terms and conditions as the Administrator may determine, subject to
the following:
(a) PRICE. The Option Price shall be not less than 100% of the Fair Market
Value of Common Stock on the Grant Date.
(b) TERM AND EXERCISE. Options granted hereunder shall have a term of no
longer than ten years from the Grant Date. An Option may be exercised only as to
those portions of the Option that have Vested. Stock Options must be exercised
for full shares of Common Stock.
(c) INCENTIVE STOCK OPTIONS. No Option granted hereunder shall be deemed
an Incentive Stock Option (as such term is defined in the Internal Revenue Code)
unless (a) such Option is designated as an Incentive Stock Option at the time of
grant by the Administrator and (b) such Option otherwise meets the requirements
for Incentive Stock Options specified in the Internal Revenue Code. However, no
Option designated as an Incentive Stock Option shall contain any restrictions
upon the ability of the Holder to dispose of Stock acquired upon the exercise
thereof other than as provided elsewhere in this Plan. During the life of the
Plan, the total number of shares for which Incentive Stock Options may be
granted may not exceed ten times the number of shares available for Grants under
the Plan during the first calendar year in which the Plan is in effect.
(d) VESTING. Unless otherwise determined by the Administrator, each Option
shall Vest as to twenty-five percent (25%) of the Stock covered by such Option
on each of the first through fourth anniversaries of the Grant Date.
Notwithstanding the foregoing, the Administrator may accelerate Vesting, in
whole or in part, under such terms and conditions as the Administrator deems
appropriate.
(e) EXERCISE OF OPTION. To exercise an Option, the Holder shall give
written notice of exercise to the Company, specifying the number of shares of
Common Stock to be purchased and identifying the specific Options that are being
exercised. From time to time the Administrator may establish procedures relating
to such exercises. An Option is exercisable during a Holder's lifetime only by
the Holder or, with respect to options that are not designated as Incentive
Stock Options, under such other circumstances as may be permitted by
Rule 16b-3, or any successor rule, under the Exchange Act and all
interpretations of the staff of the Securities and Exchange Commission
thereunder.
(f) PAYMENT OF OPTION PRICE. The purchase price for Options being
exercised must be paid in full at time of exercise. Payment shall be, at the
option of the holder at the time of exercise, by any combination of cash, check
or delivery of shares of Common Stock that have been owned by Holder for at
least six months. If all or a portion of the purchase price is paid by delivery
of shares, the shares shall be valued at the Fair Market Value of such shares on
the date of exercise. In addition, unless the Administrator determines otherwise
at the time of grant, payment of the Option Price and of Minimum Withholding
Taxes may be made by (i) full recourse promissory note (secured or unsecured),
payable on such terms and bearing such interest as the Administrator may
determine or (ii) delivery (on a form acceptable to the Administrator) of an
irrevocable direction to a securities broker to sell shares of Common Stock and
to deliver part of the sales proceeds to the Company in payment of the full
exercise price and Minimum Withholding Taxes and receipt of written confirmation
from the securities broker of receipt of such irrevocable direction, the number
of shares sold, the price at which sold and the date of sale.
(g) NONTRANSFERABILITY OF OPTIONS. Options are not transferable except by
will, by the laws of descent and distribution, or, with respect to options that
are not designated as Incentive Stock Options, pursuant to a domestic relations
order or under such other circumstances as the Administrator may determine.
<PAGE>
6. RESTRICTED STOCK AWARDS. Each Restricted Stock Award made under the
Plan shall contain the following terms, conditions and restrictions and such
additional terms, conditions and restrictions as may be determined by the
Administrator at the time of grant.
(a) RIGHTS WITH RESPECT TO SHARES OF STOCK. Upon written acceptance by the
Eligible Employee of restrictions and other terms and conditions described in
the Plan and in the instrument evidencing such Restricted Stock Award, the
Eligible Employee shall be a Holder, and the Company shall cause to be issued or
transferred to the name of the Holder a certificate or certificates for the
number of shares of Stock granted. From and after the Issue Date, the Holder
shall have absolute ownership of such shares of Stock, including the right to
vote and to receive dividends thereon, subject to the terms, conditions and
restrictions described in the Plan and in the instrument evidencing the grant of
such Restricted Stock Award.
(b) RESTRICTIONS ON TRANSFER. Shares covered by a Restricted Stock Award
may not be sold, assigned, pledged, transferred or otherwise conveyed in any
manner until the Vesting Date for such shares.
(c) VESTING. Unless otherwise determined by the Administrator, each
Restricted Stock Award shall Vest as to twenty-five percent (25%) of the Stock
covered by such grant on each of the first through fourth Vesting Dates which
occur following the related Grant Date of such Restricted Stock Award.
Notwithstanding the foregoing, the Administrator may accelerate the lapsing of
restrictions on a Restricted Stock Award, in whole or in part under such terms
and conditions as the Administrator deems appropriate.
(d) AUTOMATIC VESTING IN SPECIAL CIRCUMSTANCES. Any provisions herein to
the contrary notwithstanding, a Restricted Stock Award shall automatically
become Vested upon (a) the Death or Disability of the Holder or (b) the
occurrence of a Change in Control.
(e) AGREEMENT BY HOLDER REGARDING WITHHOLDING TAXES. Each Holder granted a
Restricted Stock Award shall represent in writing that such Holder acknowledges
that, with respect to each Restricted Stock Award held by such Holder,
(i) Minimum Withholding Taxes shall be due with respect to shares of Stock
covered by such award, (ii) payment of Minimum Withholding Taxes to the Company
is the responsibility of Holder and (iii) payment of such Minimum Withholding
Taxes may require a significant cash outlay by Holder.
(f) ELECTION TO RECOGNIZE GROSS INCOME IN THE YEAR OF GRANT. If any Holder
properly elects within thirty (30) days of the Grant Date to include in gross
income for federal income tax purposes an amount equal to the fair market value
of the shares of Stock on the Grant Date, such Holder shall pay in cash to the
Company in the calendar month of such Grant Date, or make arrangements
satisfactory to the Administrator to pay to the Company, any Minimum Withholding
Taxes required to be withheld with respect to such shares.
(g) CONSIDERATION. Recipients of Restricted Stock Awards made in treasury
shares shall not be required to pay any consideration to the Company. Recipients
of Restricted Stock Awards made in the form of previously unissued shares shall
be required to pay such minimum consideration, if any, as may be required by
applicable law. The Administrator shall determine the form of consideration at
the time of the award, which may include services rendered prior to the award.
(h) PERFORMANCE CONDITIONS. Any grant of Restricted Shares shall be
made subject to the Performance Condition described in this subsection 6(h)
or the Alternative Performance Condition described in subsection 6(i) in
addition to any vesting requirements imposed upon such grant. Such
Performance Condition shall operate as specified in this paragraph (h).
(1) As used in this paragraph (h), the following terms shall have the
indicated meanings:
CERTIFICATION DATE means the date that the Administrator makes its written
certification of a Final Restricted Stock Award.
<PAGE>
EPS means fully diluted earnings per share, determined in accordance with
generally accepted accounting principles. For purposes of the foregoing
sentence, earnings shall mean income before extraordinary items, discontinued
operations and cumulative effect of changes in accounting principles and after
full accrual for the bonuses paid under this Plan.
EPS RATIO means the result obtained by dividing Preliminary EPS by Target
EPS.
FINAL RESTRICTED STOCK AWARD means the product of the Multiplier and the
Original Restricted Stock Award.
MEASUREMENT YEAR means (a) in the case of a grant made in the first fiscal
quarter of a fiscal year, that fiscal year or (b) in the case of a grant made in
the second, third or fourth quarters of a fiscal year, the subsequent fiscal
year.
MULTIPLIER means (a) the sum of 0.1 and the EPS Ratio, if the EPS Ratio is
greater than or equal to 0 and less than 0.9, (b) 1, if the EPS Ratio is greater
than or equal to 0.9, or (c) 0, if the EPS Ratio is less than 0.
NINE-MONTH PERIOD means the first three fiscal quarters of the Bonus Year.
ORIGINAL RESTRICTED STOCK AWARD means the number of shares initially granted
pursuant to a Restricted Stock Award made subject to a Performance Condition.
PRELIMINARY EPS means 1.334 multiplied by EPS for a Nine-Month Period.
TARGET EPS means the EPS goal for the Performance Period set with respect to
a Restricted Stock Award made subject to a Performance Condition.
(2) A Restricted Stock Award shall be subject to a Performance Condition
only if the Administrator makes such a determination on the Grant Date or if the
Holder consents thereto.
(3) If a Restricted Stock Award is made subject to a Performance
Condition, the Administrator shall, within the time permitted by section
162(m) of the Internal Revenue Code, determine the Target EPS for such award.
(4) After the public release by the Company of its unaudited results for the
third fiscal quarter of the Measurement Year, the Chief Financial Officer shall,
with respect to each Restricted Stock Award made subject to a Performance
Condition, (a) calculate the Preliminary EPS, (b) determine the Multiplier,
(c) calculate the Final Restricted Stock Award, and (d) deliver such calculation
to the Administrator.
(5) The Administrator shall, prior to the end of the Measurement Year,
review the information submitted by the Chief Financial Officer and certify, in
writing, each Final Restricted Stock Award.
(6) To the extent that a Final Restricted Stock Award is less than the
Original Restricted Stock Award, the number of shares of the Original Restricted
Stock Award representing the difference shall be forfeited by the Holder. The
Final Restricted Stock Award shall bear the same vesting schedule as the
Original Restricted Stock Award, and on each Vesting Date the percentage of the
Final Restricted Stock Award that vests shall be the same as the percentage of
the Original Restricted Stock Award that would have vested had no shares been
forfeited as a result of the performance condition.
(7) If all or a portion of a Restricted Stock Award made subject to a
Performance Condition shall vest prior to the Certification Date by reason of
death, Disability or a Change in Control, then the Performance Condition shall
be cancelled and none of such shares shall be subject to reduction or forfeiture
as provided by the Performance Condition. Such shares shall be released to
Holder in accordance with the terms of this plan relating to vested shares.
(8) If all or a portion of a Restricted Stock Award made subject to a
Performance Condition shall vest prior to the Certification Date for any reason
other than death, Disability or a Change in Control, no
<PAGE>
shares shall be released to the Holder until after the Certification Date. No
such vesting prior to the Certification Date shall in any way be deemed a
satisfaction, waiver or cancellation of the Performance Condition, and such
Restricted Stock Award shall remain subject to reduction and forfeiture as
provided by the Performance Condition.
(9) Once established, a Performance Condition may not be waived or
cancelled by the Administrator.
(i) ALTERNATIVE PERFORMANCE CONDITIONS. In lieu of the Performance
Condition described in subsection 6(h), any grant of Restricted Shares may be
made subject to an Alternative Performance Condition in addition to any
vesting requirements imposed upon such grant. Such Alternative Performance
Condition shall operate as specified in this paragraph (i).
(1) As used in this paragraph (i), the following terms shall have the
indicated meanings:
CERTIFICATION DATE means the date that the Administrator makes its written
certification of a Final Restricted Stock Award.
ACTUAL EPS means fully diluted earnings per share for the Performance
Period, determined in accordance with generally accepted accounting principles.
For purposes of the foregoing sentence, earnings shall mean income before
extraordinary items, discontinued operations and cumulative effect of changes in
accounting principles and after full accrual for the bonuses paid under this
Plan.
EPS RATIO means the result obtained by dividing Actual EPS by Target EPS.
FINAL RESTRICTED STOCK AWARD means the product of the Multiplier and the
Original Restricted Stock Award.
MULTIPLIER means (a) the sum of 0.1 and the EPS Ratio, if the EPS Ratio is
greater than or equal to 0 and less than 0.9, (b) 1, if the EPS Ratio is greater
than or equal to 0.9, or (c) 0, if the EPS Ratio is less than 0.
ORIGINAL RESTRICTED STOCK AWARD means the number of shares initially granted
pursuant to a Restricted Stock Award made subject to an Alternative Performance
Condition.
PERFORMANCE PERIOD means the period of service to which the Alternative
Performance Condition relates.
TARGET EPS means the EPS goal set with respect to a Restricted Stock Award
made subject to an Alternative Performance Condition.
(2) A Restricted Stock Award shall be subject to an Alternative Performance
Condition only if the Administrator makes such a determination on the Grant Date
or if the Holder consents thereto.
(3) If a Restricted Stock Award is made subject to an Alternative
Performance Condition, the Administrator shall establish the Performance Period
and Target EPS for such award no later than the time permitted by
section 162(m) of the Internal Revenue Code.
(4) After the public release by the Company of its unaudited results for the
last fiscal quarter of the Performance Period, the Chief Financial Officer
shall, with respect to each Restricted Stock Award made subject to an
Alternative Performance Condition, (a) calculate the Actual EPS, (b) determine
the Multiplier, (c) calculate the Final Restricted Stock Award, and (d) deliver
such calculation to the Administrator.
(5) The Administrator shall review the information submitted by the Chief
Financial Officer and certify, in writing, each Final Restricted Stock Award.
(6) To the extent that a Final Restricted Stock Award is less than the
Original Restricted Stock Award, the number of shares of the Original Restricted
Stock Award representing the difference shall be forfeited by the Holder. The
Final Restricted Stock Award shall bear the same vesting schedule as the
Original Restricted Stock Award, and on each Vesting Date the percentage of the
Final Restricted Stock
<PAGE>
Award that vests shall be the same as the percentage of the Original Restricted
Stock Award that would have vested had no shares been forfeited as a result of
the Alternative Performance Condition.
(7) If all or a portion of a Restricted Stock Award made subject to an
Alternative Performance Condition shall vest prior to the Certification Date by
reason of death, Disability or a Change in Control, then the Alternative
Performance Condition shall be cancelled and none of such shares shall be
subject to reduction or forfeiture as provided by the Alternative Performance
Condition. Such shares shall be released to Holder in accordance with the terms
of this plan relating to vested shares.
(8) If all or a portion of a Restricted Stock Award made subject to an
Alternative Performance Condition shall vest prior to the Certification Date for
any reason other than death, Disability or a Change in Control, no shares shall
be released to the Holder until after the Certification Date. No such vesting
prior to the Certification Date shall in any way be deemed a satisfaction,
waiver or cancellation of the Alternative Performance Condition, and such
Restricted Stock Award shall remain subject to reduction and forfeiture as
provided by the Alternative Performance Condition.
(9) Once established, an Alternative Performance Condition may not be
waived or cancelled by the Administrator.
7. WITHHOLDING TAXES. In order to enable the Company to meet any
applicable foreign, federal (including FICA), state and local withholding tax
requirements, a Holder shall be required to pay the Minimum Withholding Taxes.
No share of stock will be delivered to any Holder until Minimum Withholding
Taxes have been paid. At the option of the Holder, withholding taxes may be paid
by any combination of (a) cash, (b) reduction in the number of shares
deliverable to Holder (in the case of an Option) or by surrendering a portion of
the Restricted Stock Award to the Company (in either case "Share Reduction"),
(c) delivery to the Company of other shares of Common Stock owned by Holder
("Share Delivery") or (d) any other means approved or ratified by the
Administrator. If withholding taxes are paid by Share Reduction or Share
Delivery, such shares shall be valued at the Fair Market Value as of the date of
exercise or vesting. A Holder may elect to have additional shares delivered
pursuant to Share Delivery above the amount required to satisfy Minimum
Withholding Taxes. However, total combined Share Reduction and Share Delivery
may not exceed the total taxes that Holder will have to pay (assuming Federal
and state taxes are imposed at his marginal rate) by reason of the exercise or
vesting. In addition, any use of Share Delivery in excess of Minimum Withholding
Taxes must by effected with shares that have been held at least six months. In
the event that Minimum Withholding Taxes are not paid by Holder, to the extent
permitted by law the Company shall have the right, but not the obligation, to
cause such withholding taxes to be satisfied by Share Reduction or by offsetting
such withholding taxes against amounts otherwise due from the Company to the
Holder.
8. RESTRICTIVE LEGENDS; TRANSFER RESTRICTIONS; CUSTODY. So long as any
restrictions or obligations imposed pursuant hereto shall apply to a share of
Stock (including, but not limited to, the restrictions or obligations imposed
pursuant to Sections 5(f), 5(h), 6(b), 6(e), 6(f) and 7 hereof), each
certificate evidencing such share shall bear an appropriate legend referring to
the terms, conditions and restrictions. In addition, the Company may instruct
its transfer agent that shares of Stock evidenced by such certificates may not
be transferred without the written consent of the Company. Any attempt to
dispose of such shares of Stock in contravention of such terms, conditions and
restrictions shall be invalid. Certificates representing shares that have not
Vested or with respect to which Minimum Withholding Taxes have not been paid
will be held in custody by the Company or such bank or other institution
designated by the Administrator.
9. TERMINATION OF CONTINUOUS EMPLOYMENT. If the Holder's Continuous
Employment with the Company or any Subsidiary shall terminate for any reason,
then, with respect to any portion of a Grant that has not Vested prior to or
concurrently with such termination (a) in the case of an Option, all rights to
such portion that has not Vested shall terminate and (b) in the case of a
Restricted Stock Award, all rights to the shares covered by any portion thereof
that has not Vested shall be forfeited; provided, however, that the
Administrator, in its sole discretion within ninety (90) days of such
termination of Continuous Employment, may notify the Holder in writing that the
Holder's rights in such portion that has not Vested will not terminate or be
forfeited and that the Holder shall continue to be the owner thereof, subject to
<PAGE>
such continuing restrictions as the Administrator may prescribe in such notice.
Options then held by the Holder which are Vested at the date of termination
shall continue to be exercisable by the Holder, or, if applicable, Holder's
estate, until the earlier of 90 days after such date or the expiration of such
Options in accordance with their terms. Notwithstanding the foregoing, (i) the
Administrator may in its sole discretion extend the period during which an
Option may be exercised following termination of employment at any time,
provided that any such extension does not exceed the Option's normal termination
date, and (ii) if exercise of an Option during the 90-day period described in
the previous sentence would subject the Holder to liability under Section 16 of
the Exchange Act, such Option shall be exercisable until the earliest of
(a) its normal termination date and (b) seven months after the last transaction
in Common Stock by the Holder prior to termination.
10. ADMINISTRATION. The Plan shall be administered by the Administrator,
which shall have full power and authority to administer and interpret the Plan
and to adopt such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan as the Administrator deems necessary or
advisable. The Administrator's powers include, but are not limited to (subject
to the specific limitations described herein), authority to determine the
employees who shall receive Grants under the Plan, determine the size and
applicable terms and conditions of Grants to be made to such employees,
determine the time when Grants will be made and authorize Grants to Eligible
Employees.
The Administrator's interpretations of the Plan, and all actions taken and
determinations made by the Administrator concerning any matter arising under or
with respect to the Plan or any Grants hereunder, shall be final, binding and
conclusive on all interested parties. The Administrator may delegate ministerial
functions hereunder, such delegation to be subject to such terms and conditions
as the Administrator in its discretion shall determine. The Administrator may as
to all questions of accounting rely conclusively upon any determinations made by
the independent public accountants of the Company.
11. COMPLIANCE WITH SECURITIES LAWS. No Option may be exercised and no
Stock may be issued pursuant to an Option or transferred pursuant to a
Restricted Stock Award unless the Administrator shall determine that such
exercise, issuance or transfer complies with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, applicable
state securities laws, and rules and regulations promulgated under each of the
foregoing, and the requirements of any stock exchange upon which the Stock may
then be listed or quotation system upon which the Stock may be quoted, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance. If the Stock subject to this Plan is not registered under the
Securities Act and under applicable state securities laws, the Administrator may
require that the Holder deliver to the Company such documents as counsel for the
Company may determine are necessary or advisable in order to substantiate
compliance with applicable securities laws and the rules and regulations
promulgated thereunder.
12. ADJUSTMENT FOR CHANGE IN STOCK SUBJECT TO PLAN. In the event of any
change in the outstanding shares of Common Stock by reason of any stock split,
stock dividend, recapitalization, merger, consolidation, combination, spin-off
or exchange of shares or other similar corporate change, appropriate adjustments
shall be made by the Administrator in the number of shares of Stock subject to
this Plan, the number of shares of Stock covered by each Grant and, in the case
of Options, the Option Price of such Option. Any such adjustment shall be
determined by the Administrator in its sole discretion, which determination
shall be conclusive and binding for all purposes of the Plan. Any new or
additional Stock to which a Holder of a Restricted Stock Award may be entitled
shall be subject to all the terms and conditions set forth in Section 6 of this
Plan. If fractional shares become due to any Holder as a result of any
adjustment, the Company may, at its option, pay cash in lieu thereof.
13. NO RIGHTS TO GRANTS OR EMPLOYMENT. No employee or other person shall
have any claim or right to a Grant under the Plan. Receipt of a Grant under the
Plan shall not give an employee any rights to receive any other Grant under the
Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of the Company or any
Subsidiary.
<PAGE>
14. RIGHTS AS SHAREHOLDER. A Holder under the Plan shall have no rights as
a holder of Common Stock with respect to Options granted hereunder, unless and
until certificates for shares of Common Stock are issued to such Holder.
15. PLAN UNFUNDED. The Plan shall be unfunded. Except for reserving a
sufficient number of authorized shares to the extent required by law to meet the
requirements of the Plan, the Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
the payment of any grant under the Plan.
16. NO ASSIGNMENT. Except as specifically provided by law (including the
laws of descent and distribution) and elsewhere herein, no right or benefit
under, or interest in, the Plan shall be subject to assignment, and no such
right, benefit or interest shall be subject to attachment or legal process for
or against Holder or his or her beneficiaries, as the case may be.
17. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Delaware.
18. INDEMNIFICATION OF ADMINISTRATOR. Members of the group constituting
the Administrator shall be indemnified for actions with respect to the Plan to
the fullest extent permitted by the Certificate of Incorporation, as amended,
and the By-laws of the Company and by the terms of any indemnification agreement
that has been or shall be entered into from time to time between the Company and
any such persons.
19. HEADINGS. The headings used in this Plan are for convenience only, and
shall not be used to construe the terms and conditions of the Plan.
20. AMENDMENT. The Administrator may, at any time, amend, suspend or
terminate the Plan, in whole or in part, provided that no such action shall
adversely affect any rights or obligations with respect to any Grants
theretofore made hereunder, provided however, that stockholder consent is
required for any amendment, other than an amendment pursuant to Section 12
hereof, that would (i) increase the number of shares available annually under
the Plan (as specified in Section 3), (ii) increase the maximum number of
shares that may be granted in any calendar year to any individual (as
specified in Section 4), (iii) reduce the percentage expressed in Section
5(a), or (iv) increase the time period specified in Section 5(b). The
Administrator may amend or cancel the terms and conditions of any outstanding
Grant, determine whether cash will be paid or Grants will be made in
replacement of, or as alternatives to, outstanding Grants or grants under any
other incentive compensation plan; provided, however, that no such change
shall be adverse to the Holder thereof without such Holder's consent, and,
except pursuant to Section 12 hereof, no such change shall reduce the
exercise price of any Option.
21. EFFECTIVE DATE, TERMINATION. This Plan shall become effective upon
approval by the stockholders of the Company, and shall remain in effect until
terminated by the Board of Directors or Administrator. No Grants may be made
hereunder subsequent to December 31, 2005. Notwithstanding anything to the
contrary herein, the preceding sentence may not be amended without the
consent of the stockholders of the Company.
<PAGE>
EXHIBIT 10.2
ROBERT HALF INTERNATIONAL INC.
ANNUAL PERFORMANCE BONUS PLAN
(AS AMENDED AND RESTATED EFFECTIVE MAY 4, 2000)
1. DEFINITIONS. As used in this Plan, the following terms shall have the
meanings set forth below:
ADMINISTRATOR means a committee appointed by the Board of Directors of
the Company, which committee shall not have less than two Board members and
shall be disinterested within the meaning of Regulation 16b-3 under the
Securities Exchange Act of 1934.
ANNUAL DETERMINATION means the Target EPS and Target Bonuses determined
annually by the Administrator, as described in Section 4 of this Plan.
AWARD DATE means the date that the Administrator makes its written
certification of a Bonus pursuant to Section 5 or Section 6.
BONUS means a Preliminary Bonus, a Final Bonus, or both.
BONUS YEAR means the fiscal year with respect to which a Bonus is paid
pursuant to the Plan.
COMPANY means Robert Half International Inc., a Delaware corporation.
ELIGIBLE EXECUTIVE means (a) any elected executive officer of the
Company and (b) any executive of the Company who has senior management functions
and responsibilities, as designated by the Administrator.
EPS means fully diluted earnings per share, determined in accordance
with generally accepted accounting principles. For purposes of the foregoing
sentence, earnings shall mean income before extraordinary items, discontinued
operations and cumulative effect of changes in accounting principles and after
full accrual for the bonuses paid under this Plan.
FAIR MARKET VALUE of the Stock for a specified date means the closing
sales price of the Stock on the New York Stock Exchange, as reported in THE WALL
STREET JOURNAL (Western Edition), on such date or, if there are no trades on
such date, the closing price on the latest preceding business day upon which
trades occurred.
FINAL BONUS means the Year-End Bonus less the Preliminary Bonus, but
only if such number is greater than zero.
FINAL EPS means EPS calculated as of the end of a fiscal year.
FINAL MULTIPLIER means (a) the Final Ratio, if the Final Ratio is
greater than or equal to .5 and less than or equal to 2, (b) 2, if the Final
Ratio is greater than 2, or (c) 0, if the Final Ratio is less than .5.
FINAL RATIO means the result obtained by dividing Final EPS by Target
EPS.
NINE-MONTH PERIOD means the first three fiscal quarters of the Bonus
Year.
PLAN means this Annual Performance Bonus Plan.
POTENTIAL YEAR-END BONUS means, with respect to each Eligible Executive,
the product of the Final Multiplier and such Eligible Executive's Target Bonus,
but in no event may such amount be in excess of four times the highest bonus
paid by the Company to any Eligible Executive with respect to 1999, as reported
by the Company in its Proxy Statement for the 2000 Annual Meeting of
Stockholders.
<PAGE>
PRELIMINARY BONUS means, with respect to each Eligible Executive, 85% of
the Product of the Preliminary Multiplier and such Eligible Executive's Target
Bonus, but in no event may such amount be in excess of four times the highest
bonus paid by the Company to any Eligible Executive with respect to 1999, as
reported by the Company in its Proxy Statement for the 2000 Annual Meeting of
Stockholders.
PRELIMINARY EPS means 1.334 multiplied by EPS for a Nine-Month Period.
PRELIMINARY MULTIPLIER means (a) the Preliminary Ratio, if the
Preliminary Ratio is greater than or equal to .5 and less than or equal to 2,
(b) 2, if the Preliminary Ratio is greater than 2, or (c) 0, if the Preliminary
Ratio is less than .5.
PRELIMINARY RATIO means the result obtained by dividing Preliminary EPS
by Target EPS.
REPAYMENT AMOUNT means that amount calculated in accordance with
Section 7.4 hereof.
STOCK means the Common Stock, $.001 par value, of the Company.
TARGET BONUS means that amount set forth, with respect to each Eligible
Executive, in an Annual Determination.
TARGET EPS means the EPS goal set annually by the Administrator, as set
forth in an Annual Determination.
YEAR-END BONUS means, with respect to each Eligible Executive, that
amount that the Administrator determines in accordance with Section 6 hereof,
but in no event may such amount be in excess of four times the highest bonus
paid by the Company to any Eligible Executive with respect to 1999, as reported
by the Company in its Proxy Statement for the 2000 Annual Meeting of
Stockholders.
2. PURPOSE. The purpose of the Plan is to attract, retain and motivate key
senior management employees by providing additional compensation, in accordance
with the terms and conditions set forth herein, based on the Company's earnings.
3. ADMINISTRATION. The Administrator is authorized to construe and
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, and to make all determinations and to take all actions
necessary or advisable for the Plan's administration. Whenever the Plan
authorizes or requires the Administrator to take any action, make any
determination or decision, or form any opinion, then any such action,
determination, decision or opinion by or of the Administrator shall be in the
absolute discretion of the Administrator and shall be final and binding upon all
persons in interest, including the Company and all Eligible Executives.
4. ANNUAL DETERMINATION. On an annual basis, not later than the end of the
first fiscal quarter of the Bonus Year, the Administrator shall determine the
following with respect to the Bonus Year:
(i) the Eligible Executives;
(ii) the Target EPS for the Bonus Year;
(iii) the Target Bonus for the Bonus Year for each Eligible Executive;
and
(iv) such other matters as are appropriate with respect to the Plan
(together, the "Annual Determination").
5. DETERMINATION OF PRELIMINARY BONUS. Within five business days after the
public release by the Company of its audited results for the third fiscal
quarter of the Bonus Year, the Chief Financial Officer shall (a) calculate the
Preliminary EPS, (b) determine the Preliminary Multiplier for the Bonus Year,
(c) calculate, with respect to each Eligible Executive, his Preliminary Bonus,
(d) deliver each calculation to the Administrator. The Administrator shall,
prior to the end of the Bonus Year, review the information submitted by the
Chief Financial Officer and certify, in writing, each Eligible Executive's
Preliminary Bonus.
<PAGE>
6. DETERMINATION OF YEAR-END BONUS. Within ten business days after the
public release by the Company of its audited results for the Bonus Year, the
Chief Financial Officer shall (a) calculate the Final EPS, (b) determine the
Final Multiplier for the Bonus Year, (c) calculate, with respect to each
Eligible Executive, the Potential Year-End Bonus and (d) deliver such
calculations to the Administrator. The Administrator shall, within 90 days of
the end of the Bonus Year, review the information submitted by the Chief
Financial Officer and certify, in writing, each Eligible Executive's Year-End
Bonus, which shall be the Potential Year-End Bonus; provided, however, that if
any Eligible Executive's Potential Year-End Bonus is greater than such Eligible
Executive's Preliminary Bonus, the Administrator may, in its sole discretion,
reduce such Year-End Bonus to such amount that is not less than the Eligible
Executive's Preliminary Bonus as the Administrator may determine.
7. BONUS PAYMENTS. Each Eligible Executive shall be paid a Bonus in
accordance with the following:
7.1. PRELIMINARY BONUS. The Company shall pay the Preliminary Bonus to
each Eligible Executive after such Preliminary Bonus is certified by the
Administrator but prior to the end of the Bonus Year. Notwithstanding the
foregoing, or anything appearing elsewhere herein, if an Eligible Executive is
not employed by the Company on the date that Preliminary Bonuses are certified
by the Administrator, then a pro-rated Preliminary Bonus shall be paid to such
Eligible Executive (a) if the termination of employment was by reason of the
Eligible Executive's death, (b) as provided by any agreement or arrangement in
existence on the date the Plan was approved by the stockholders or (c) under
such circumstances as the Administrator, in its sole discretion, may determine;
otherwise, no Preliminary Bonus in any amount shall be paid to such Eligible
Executive.
7.2. FINAL BONUS. The Company shall pay the Final Bonus to each
Eligible Executive after such Final Bonus is certified by the Administrator but
prior to the end of the first fiscal quarter following the Bonus Year.
Notwithstanding the foregoing, or anything appearing elsewhere herein, if an
Eligible Executive is not employed by the Company on the last day of the Bonus
Year, then a pro-rated Final Bonus shall be paid to such Eligible Executive
(a) if the termination of employment was by reason of the Eligible Executive's
death, (b) as provided by any agreement or arrangement in existence on the date
the Plan was approved by the stockholders or (c) under such circumstances as the
Administrator, in its sole discretion, may determine; otherwise, no Final Bonus
in any amount shall be paid to such Eligible Executive.
7.3. STOCK IN LIEU OF CASH. At the discretion of the Administrator on
the Award Date, up to 100% of any Final Bonus may be paid in shares of Stock
rather than in cash. Any such shares shall be valued at their Fair Market Value
on the Award Date. Fractional shares may not be granted. Any shares granted
pursuant to this Section 7.3 shall not be subject to forfeiture for any reason,
but shall be subject to a restriction that prevents any disposition thereof for
a period of six months and one day from the Award Date.
7.4. REPAYMENT OF PRELIMINARY BONUS. If the Year-End Bonus for an
Eligible Executive is less than such Eligible Executive's Preliminary Bonus,
such Eligible Executive shall repay such difference (the "Repayment Amount")
within fifteen (15) business days of notification thereof. To the extent the
Repayment Amount is unpaid, the Company shall, consistent with applicable law,
be entitled to deduct the Repayment Amount from any other amounts due by the
Company to such Eligible Executive, and to pursue any and all other legal and
equitable remedies to recover such Repayment Amount.
8. EMPLOYMENT. The selection of an employee as an Eligible Executive shall
not affect any right of the Company to terminate, with or without cause, such
person's employment at any time.
9. WITHHOLDING TAXES. The Company shall, to the extent permitted by law,
have the right to deduct from a Bonus any federal, state or local taxes of any
kind required by law to be withheld with respect to such Bonus.
<PAGE>
10. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. The Administrator
may at any time amend, alter, suspend, or discontinue this Plan.
11. INDEMNIFICATION OF ADMINISTRATOR. Indemnification of members of the
group constituting the Administrator for actions with respect to the Plan shall
be in accordance with the terms and conditions of separate indemnification
agreements, if any, that have been or shall be entered into from time to time
between the Company and any such person.
12. HEADINGS. The headings used in this Plan are for convenience only, and
shall not be used to construe the terms and conditions of the Plan.
<PAGE>
Robert Half International Inc. and Subsidiaries
Computation of Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net Income $ 43,380 $ 35,310
Basic:
Weighted average shares 88,566 91,267
=========== ===========
Diluted:
Weighted average shares 88,566 91,267
Common stock equivalents-Stock options(A) 2,913 2,390
----------- -----------
Diluted shares outstanding 91,479 93,657
=========== ===========
Net Income Per Share:
Basic $ 0.49 $ 0.39
Diluted $ 0.47 $ 0.38
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 204,607
<SECURITIES> 0
<RECEIVABLES> 354,506
<ALLOWANCES> 15,381
<INVENTORY> 0
<CURRENT-ASSETS> 574,044
<PP&E> 205,806
<DEPRECIATION> 94,243
<TOTAL-ASSETS> 859,126
<CURRENT-LIABILITIES> 218,766
<BONDS> 2,638
0
0
<COMMON> 89
<OTHER-SE> 621,663
<TOTAL-LIABILITY-AND-EQUITY> 859,126
<SALES> 0
<TOTAL-REVENUES> 632,846
<CGS> 0
<TOTAL-COSTS> 361,797
<OTHER-EXPENSES> 1,253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,456)
<INCOME-PRETAX> 70,308
<INCOME-TAX> 26,928
<INCOME-CONTINUING> 43,380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,380
<EPS-BASIC> 0.49
<EPS-DILUTED> 0.47
</TABLE>
