COMFORCE Corporation
415 Crossways Park Drive, P.O. Box 9006
Woodbury, New York 11797
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 9, 1999
As a stockholder of COMFORCE Corporation (the "Company"), you are invited
to be present, or represented by proxy, at the Company's 1999 Annual Meeting of
Stockholders, to be held at the Garden City Hotel, 45 Seventh Street, Garden
City, New York on June 9, 1999 at 10:00 a.m., New York City time, and any
adjournments thereof, for the following purposes:
1. To elect John C. Fanning, Harry Maccarrone, Michael D. Madden, Keith
Goldberg, Daniel Raynor, Gordon Robinett and Kenneth J. Daley to the Board
of Directors of the Company for terms of one (1) year. See "Election of
Directors" in the Proxy Statement.
2. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on April 28, 1999 are
entitled to vote at the Annual Meeting of Stockholders and all adjournments
thereof. Since a majority of the outstanding shares of the Company's Common
Stock must be represented at the meeting in order to constitute a quorum, all
stockholders are urged either to attend the meeting or to be represented by
proxy.
If you do not expect to attend the meeting in person, please sign, date and
return the accompanying proxy in the enclosed reply envelope. Your vote is
important regardless of the number of shares you own. If you later find that you
can be present and you desire to vote in person or, for any other reason, desire
to revoke your proxy, you may do so at any time before the voting.
If you plan to vote at the meeting in person and your shares are held in
the name of your broker, bank or other nominee, please request from such broker,
bank or other nominee a letter to present to the judge of the election
evidencing your ownership of the shares and your authority to vote the shares at
the meeting.
By Order of the Board of Directors
Harry Maccarrone
Secretary
April 30, 1999
<PAGE>
COMFORCE Corporation
415 Crossways Park Drive, P.O. Box 9006
Woodbury, New York 11797
ANNUAL MEETING OF STOCKHOLDERS
June 9, 1999
PROXY STATEMENT
This Proxy Statement and the Notice of Annual Meeting and Form of Proxy
accompanying this Proxy Statement, which will be mailed on or about May 10,
1999, are furnished in connection with the solicitation by the Board of
Directors of COMFORCE Corporation, a Delaware corporation (the "Company" or
"COMFORCE"), of proxies to be voted at the annual meeting of stockholders to be
held at Garden City Hotel, 45 Seventh Street, Garden City, New York on June 9,
1999 at 10:00 a.m., New York City time, and any adjournments thereof.
Holders of record of the Company's Common Stock at the close of business on
April 28, 1999 (the "record date") will be entitled to one vote at the meeting
or by proxy for each share then held. On the record date, there were 16,202,080
shares of Common Stock of the Company outstanding. All shares represented by
proxy will be voted in accordance with the instructions, if any, given in such
proxy. A stockholder may withhold authority to vote for the nominees by marking
the appropriate box on the accompanying proxy card, or may withhold authority to
vote for an individual nominee by drawing a line through such nominee's name in
the appropriate place on the accompanying proxy card. Unless instructions to the
contrary are given, each properly executed proxy will be voted, except as
specified below, to (i) elect John C. Fanning, Harry Maccarrone, Michael D.
Madden, Keith Goldberg, Daniel Raynor, Gordon Robinett and Kenneth J. Daley as
directors of the Company and (ii) to transact such other business as may
properly be brought before the meeting or any adjournment thereof.
All proxies may be revoked and execution of the accompanying proxy will not
affect a stockholder's right to revoke it by giving written notice of revocation
to the Secretary at any time before the proxy is voted or by the mailing of a
later-dated proxy. Any stockholder attending the meeting in person may vote his
or her shares even though he or she has executed and mailed a proxy. A majority
of all of the issued and outstanding shares of the Company's Common Stock is
required to be present in person or by proxy to constitute a quorum. Directors
are elected by a plurality.
This Proxy Statement is being solicited by the Board of Directors of the
Company. The expense of making this solicitation is being paid by the Company
and consists of the preparing, assembling and mailing of the Notice of Meeting,
Proxy Statement and Proxy, tabulating returns of proxies, and charges and
expenses of brokerage houses and other custodians, nominees or fiduciaries for
forwarding documents to stockholders. In addition to solicitation by mail,
officers and regular employees of the Company may solicit proxies by telephone,
facsimile or in person without additional compensation therefor.
ELECTION OF DIRECTORS
Election of Directors
The Company's Bylaws provide that the Board of Directors shall consist of
from three to nine persons as fixed by the Board. Seven persons have been
nominated to serve as directors to hold office until the next annual meeting or
until their successors shall be duly elected and qualified. It is intended that
proxies in the form enclosed granted by the stockholders will be voted, unless
otherwise directed, in favor of electing the following persons as directors:
John C. Fanning, Harry Maccarrone, Michael D. Madden, Keith Goldberg, Daniel
Raynor, Gordon Robinett and Kenneth J. Daley.
Unless you indicate to the contrary, the persons named in the accompanying
proxy will vote it for the election of the nominees named above. If, for any
reason, a nominee should be unable to serve as a director at the time of the
meeting, which is not expected to occur, the persons designated herein as
proxies may not vote for the election of any
<PAGE>
other person not named herein as a nominee for election to the Board of
Directors. See "Information Concerning Directors and Nominees."
Recommendation
The Board of Directors recommends a vote "FOR" the election of each of the
nominees. Proxies solicited by the Board of Directors will be voted in favor of
this proposal unless a contrary vote or authority withheld is specified.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Directors and Nominees
Set forth below is information concerning each director and nominee for
director of the Company, including his business experience during at least the
past five years, his positions with the Company and the Company's wholly-owned
subsidiary, COMFORCE Operating, Inc. ("COI"), and certain directorships held by
him. Each nominee is currently a director of the Company except for Kenneth J.
Daley. There are no family relationships among any of the directors or nominees,
nor, except as hereinafter described, are there any arrangements or
understandings between any director and another person pursuant to which he was
selected as a director or nominee. Each director is to hold office until the
next annual meeting of the stockholders or until his successor has been elected
and qualified.
<TABLE>
<CAPTION>
Name Age Current Position with the Company
- ---- --- ---------------------------------
<S> <C> <C>
John C. Fanning....................... 68 Chairman of the Board and Chief Executive Officer
Harry Maccarrone...................... 51 Executive Vice President, Secretary and Director
Michael D. Madden..................... 50 Vice Chairman of the Board
Keith Goldberg........................ 36 Director
Daniel Raynor......................... 39 Director
Gordon Robinett....................... 63 Director
Kenneth J. Daley...................... 61 Nominee for Director
</TABLE>
John C. Fanning has served as Chairman of the Board of Directors and Chief
Executive Officer of COMFORCE and COI since September 1998 and is a member of
the Compensation Committee of the Board. From November 1997 to September 1998 he
was President of the Company's Financial Services Division. Mr. Fanning was the
founder of Uniforce Services, Inc. ("Uniforce") and served as its Chairman,
Chief Executive Office and President and as one of its directors from 1961, the
year in which Uniforce's first office was opened, until its acquisition by the
Company in November 1997. Mr. Fanning entered the employment field in 1954, when
he founded the Fanning Personnel Agency, Inc., his interest in which he sold in
1967 to devote his efforts solely to Uniforce's operations. He also founded and
served as the first president of the Association of Personnel Agencies of New
York.
Harry Maccarrone has served as Executive Vice President, Secretary and a
Director of COMFORCE since September 1998 and is a member of the Finance
Committee of the Board. Mr. Maccarrone, who joined Uniforce in December 1988 as
Assistant Vice President-Finance, served as Vice President-Finance of Uniforce
from May 1989 to September 1998. From May 1989 until December 1997 he also
served as Uniforce's Treasurer and Chief Financial Officer.
Michael D. Madden has served as Vice Chairman of COI since its formation in
October 1997 and of COMFORCE since September 1997 and is a member of the Finance
Committee of the Board. He has served as Chairman of Hanover Capital L.L.C.
(merchant banking) since July 1996, as a Director of FM Properties, Inc. (real
estate investments) since 1991, and as a principal of Questor Management Company
(merchant banking) since March 1999. From 1994 to 1995, Mr. Madden served as a
Vice Chairman and member of the Executive Committee of the Board of
2.
<PAGE>
Directors of PaineWebber Incorporated (investment banking), having previously
headed the transition team to integrate Kidder Peabody & Co. (investment
banking) into PaineWebber Incorporated following their 1994 merger. Mr. Madden
held various positions with Kidder Peabody & Co. from 1973 to 1989 and from 1993
to 1994, most recently as Executive Vice President responsible for Global
Origination. He previously served as Senior Managing Director and co-head of
Worldwide Investment Banking (1989 to 1993) and a Director (1990 to 1993) of
Lehman Brothers (investment banking).
Keith Goldberg has served as a Director of COI since its formation in
October 1997 and of COMFORCE since December 1995 and is a member of the Audit,
Compensation and Stock Option Committees of the Board. He is a senior partner at
J. Walter Thompson Advertising. Previously, he worked for BBDO Advertising as an
Associate Creative Director from 1994 to 1995. From 1990 through 1994, he served
as a Vice President at Young & Rubicam (advertising).
Daniel Raynor has served as a Director of COMFORCE and COI since September
1998 and is a member of the Audit Committee of the Board. He has served as the
president of a general partner of the Argentum Group, a private investment firm,
since its founding in 1987. Argentum Group manages a group of private equity
partnerships which provide expansion capital to growth-oriented businesses. Mr.
Raynor also serves as a director of Dynamic Healthcare Technologies, Inc. and
NuCO2, Inc. as well as several private companies.
Gordon Robinett has served as a Director of COMFORCE and COI since
September 1998 and is a member of the Compensation and Stock Option Committees
of the Board. He is currently a Director and Vice Chairman of Command Security,
a security services firm based in Poughkeepsie, New York. Mr. Robinett retired
as the Vice President-Finance and Treasurer of Uniforce in May 1989, after more
than 20 years of service.
Kenneth J. Daley is a nominee to serve as a Director of the Company and
COI. From 1957 until his retirement in 1998, Mr. Daley held various positions
with Chase Manhattan Bank ("Chase") and, prior to its acquisition by Chase,
Chemical Banking Corporation, most recently as Division Executive responsible
for middle market business in the Long Island region. He currently serves as
Director of Hain Food Company, a distributor of specialty and natural foods, a
consultant to Key Span Energy, a trustee of Briarcliff College and a member of
the financial committee of the Long Island Catholic Charities.
Meetings of the Board of Directors
In 1998, the Board of Directors of the Company conducted eight meetings.
Each director of the Company attended at least 75% of the meetings held during
the time he served as director, except Michael Ferrentino, formerly a director
of the Company, who attended only five meetings.
Committees
The standing committees of the Board of Directors include the Audit
Committee, the Compensation Committee and the Stock Option Committee. The Audit
Committee has responsibility for conferring with and reviewing recommendations
of the Company's independent auditors and reviewing the Company's financial
statements, accounting policies and internal accounting controls. Messrs. Raynor
and Goldberg are currently members of the Audit Committee. The Audit Committee
met once during 1998. All of the members of the Committee attended this meeting.
The Compensation Committee has responsibility for reviewing and approving
executive and employee salaries, bonuses, non-cash incentive compensation and
benefits, exclusive of stock options and stock appreciation rights. Messrs.
Fanning, Goldberg and Robinett are currently members of the Compensation
Committee. The members of the Compensation Committee consulted with each other
on numerous occasions regarding compensation matters during 1998 and met
formally to approve the employment agreements with Messrs. Fanning and
Maccarrone in January 1999.
The Stock Option Committee has responsibility for administering the
Company's Long-Term Investment Plan and awarding and fixing the terms of stock
option grants. Messrs. Goldberg and Robinett are currently members of the Stock
Option Committee. The Stock Option Committee acted by unanimous consent on two
occasions in 1998.
3.
<PAGE>
INFORMATION REGARDING EXECUTIVE OFFICERS
The following table sets forth certain information concerning each
individual who currently serves as an executive officer or key employee of the
Company, including such person's business experience during at least the past
five years and positions held with the Company and its COI subsidiary. Executive
officers are appointed by the Board of Directors and serve at the discretion of
the Board. There are no family relationships among the executive officers, nor
are there any arrangements or understandings between any executive officer and
another person pursuant to which he was selected as an officer except as may be
hereinafter described.
Name Age Position
- ---- --- --------
Executive Officers
John C. Fanning......................... 68 Chairman of the Board and
Chief Executive Officer
Harry Maccarrone........................ 51 Executive Vice President,
Secretary and Director
Robert H.B. Baldwin, Jr. ............... 44 Senior Vice President and
Chief Financial Officer
Executive Officers
John C. Fanning. See "Information Concerning Directors and Nominees" for
information concerning Mr. Fanning.
Harry Maccarrone. See "Information Concerning Directors and Nominees" for
information concerning Mr. Maccarrone.
Robert H.B. Baldwin, Jr. has served as Senior Vice President and Chief
Financial Officer of COMFORCE since he joined COMFORCE in July 1998. From 1985
through 1998 Mr. Baldwin served as Managing Director of Smith Barney, Inc. He
joined Smith Barney as an officer in its Capital Markets Division and in 1990
became an officer in the Financial Institutions Group of the Investment Banking
Division.
EXECUTIVE COMPENSATION
Director Compensation and Arrangements
During 1998, non-employee directors and, commencing in the third quarter,
all directors received fees of $2,500 per quarter. In addition, during 1998,
under the Company's Long-Term Stock Investment Plan, each non-employee director
was entitled to receive options to purchase 10,000 shares of Common Stock upon
his initial election to the Board and, annually thereafter, options to purchase
10,000 shares upon his reelection to the Board, at an exercise price equal to
the market price on the date of grant. All options granted to non-employee
directors under these non-discretionary provisions of the Plan provide that the
options become exercisable one year from the date of grant and terminate 10
years from the date of grant. In addition, two former non-employee directors who
resigned from the Board in 1998 received payments of $40,000 each in
consideration of their service to the Company.
Executive Officer Compensation
The following table shows all compensation paid by the Company and its
subsidiaries for the fiscal years ended December 31, 1998, 1997 and 1996 to (1)
each person who has served as the chief executive officer of the Company at any
time since the beginning of 1998 (John C. Fanning and Christopher P. Franco),
(2) the Company's most highly compensated executive officers, other than persons
who served as chief executive officer, who were serving as executive
4.
<PAGE>
officers as of December 31, 1998 and whose income exceeded $100,000 (Harry
Maccarrone and Andrew Reiben), and (3) the two additional individuals (James L.
Paterek and Michael Ferrentino) who had served as executive officers during 1998
and whose income exceeded $100,000 during such year, but who had ceased to serve
as executive officers as of December 31, 1998 (collectively, the "Named
Executive Officers"). No other executive officers of the Company received
compensation in excess of $100,000 in 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term
------------------------------ Compensation
------------ All Other
Securities Underlying Compensation
Name and Position Year Salary ($) Bonus ($) Options/SAR's (#) ($) (1)
- ----------------- ---- ---------- --------- ----------------- -------
<S> <C> <C> <C> <C> <C>
John C. Fanning, 1998 260,192(2) 25,000 -- --
Chairman and Chief 1997(3) 47,815(2) 25,000(4) -- --
Executive Officer 1996(3) -- -- -- --
Harry Maccarrone, 1998 170,359(2) 25,000 -- --
Executive Vice President 1997(5) 14,729(2) 25,000 30,000(6) --
and Secretary 1996(5) -- -- -- --
Christopher P. Franco, 1998 215,493 -- -- --
formerly Chief Executive 1997 150,000 222,777 -- --
Officer 1996 150,000 -- 112,500(7) --
James L. Paterek, 1998 275,723 -- -- --
formerly Chairman of the 1997 208,000 271,849 -- --
Board (8) 1996 157,000 -- 281,250(7) --
Michael Ferrentino, 1998 208,281 -- -- --
formerly President 1997 150,000 223,088 -- --
1996 150,000 -- 281,250(7) --
Andrew C. Reiben, 1998 125,000 25,000 -- --
formerly Vice President 1997 100,000 42,000 -- --
of Finance and Chief 1996 83,333 -- 20,000(9) --
Accounting Officer
</TABLE>
- -----------
(1) Does not include perquisites and other personal benefits, securities or
other property, if any, received by any such executive officer which did
not exceed the lesser of $50,000 or 10% of such executive officer's salary
and bonus for the year indicated.
(2) Includes compensation which the executive officer elected to defer under a
deferred compensation plan.
(3) Includes compensation payable to Mr. Fanning during the period from
November 26, 1997 through October 2, 1998 when he served as an employee of
the Company but did not serve as an executive officer. The compensation
shown for 1997 includes only compensation payable from November 26, 1997
through December 31, 1997. Prior to Uniforce's acquisition by the Company
in November 1997, Mr. Fanning served as an officer of Uniforce; however,
the compensation payable to him during this period is not included in the
table since Uniforce was not then a subsidiary or affiliate of the Company.
5.
<PAGE>
(4) Does not include incentive compensation of $219,395 which was earned by Mr.
Fanning in 1997 for services performed for Uniforce prior to its
acquisition by the Company, but paid in 1998.
(5) Includes compensation payable to Mr. Maccarrone during the period from
November 26, 1997 through October 2, 1998 when he served as an employee of
the Company but did not serve as an executive officer. The compensation
shown for 1997 includes only compensation payable from November 26, 1997
through December 31, 1997. Prior to Uniforce's acquisition by the Company
in November 1997, Mr. Maccarrone served as an officer of Uniforce; however,
the compensation payable to him during this period is not included in the
table since Uniforce was not then a subsidiary or affiliate of the Company.
(6) Represents options to purchase the Company's Common Stock at an exercise
price of $7.00 per share, as to which 15,000 shares are currently
exercisable and 15,000 shares become exercisable on November 26, 1999.
(7) Represents currently exercisable options to purchase the Company's Common
Stock at an exercise price of $6.75 per share.
(8) Includes compensation payable to Mr. Paterek through February 1997 when he
served as a consultant to the Company.
(9) Represents currently exercisable options to purchase 20,000 shares of the
Company's Common Stock at an exercise price of $7.25 per share.
Option Awards and Values. No options or stock appreciation rights were
awarded to any of the Named Executive Officers in 1998. The following table sets
forth information concerning the aggregate number and values of options held by
Named Executive Officers as of December 31, 1998. None of the Named Executive
Officers holds stock appreciation rights and none of such persons exercised any
options in 1998.
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values (1)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Fiscal Year End (#) Fiscal Year End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- ---- ------------- -------------
John C. Fanning............... 0/0 --
Harry Maccarrone.............. 15,000/15,000 (2)
Christopher P. Franco......... 112,500/0 (2)
Michael Ferrentino............ 281,250/0 (2)
James L. Paterek.............. 281,250/0 (2)
Andrew C. Reiben.............. 20,000/0 (2)
- -----------
(1) This information is presented as of December 31, 1998 and does not include
options awarded in 1999.
(2) The exercise prices of these options were in excess of the closing market
price of the Company's Common Stock on December 31, 1998. See the notes to
the "Summary Compensation Table" for a description of the terms of the
options listed in this table.
6.
<PAGE>
Employment Agreements
Effective as of January 1, 1999, the Company entered into employment
agreements with John C. Fanning, Chairman and Chief Executive Officer of the
Company, and Harry Maccarrone, Executive Vice President and Secretary of the
Company. Each agreement is for a term of three years. Mr. Fanning's agreement
provides for (i) a salary of $385,000 per year, subject to annual increases of
the higher of 7% or the percentage increase in the Consumer Price Index, (ii)
annual incentive compensation equal to 5% of the Company's pre-tax operating
income in excess of $2.5 million and less than $3.0 million and 3.5% of the
Company's pre-tax operating income in excess of $3.0 million, and (iii)
participation in the Company's benefit programs. Mr. Maccarrone's agreement
provides for (i) a salary of $183,150 per year, subject to annual increases of
the higher of 7% or the percentage increase in the Consumer Price Index, and
(ii) participation in the Company's benefit programs.
Each agreement is terminable by the Company only for "just cause," and
imposes customary non-competition and confidentiality restrictions on each
executive. Each agreement provides that, if it is terminated or not extended,
other than for just cause, the executive will be entitled to a severance payment
equal to one year's compensation (with the bonus calculated at the highest rate
during the last three years) and reimbursement for health insurance costs for
three years. Furthermore, each agreement provides that, if the executive resigns
within one year following a "change of control," or if the agreement is
terminated or not extended within three years following a change of control,
other than for just cause, such executive shall be entitled to receive three
times the amount of his annual salary, bonus (calculated at the highest rate
during the last three years), benefits and the Company's pension contributions,
if any, on his behalf.
In addition, in the event the agreement is terminated or not extended prior
to a change of control or within three years after a change of control, other
than for just cause, or if the executive resigns within one year after a change
of control, all unvested stock options shall immediately vest and remain
exercisable throughout their original term. Each executive shall also be
entitled to receive a payment equal to the excise taxes payable by the executive
in respect of any of the termination payments described above plus a "gross up"
payment based on projected federal, state and local income taxes payable by the
executive due to his receipt of this additional compensation.
Compensation Committee Interlocks and Insider Participation
Until October 1998, Michael Ferrentino, Keith Goldberg and Glen Miller
served on the Company's Compensation Committee. Mr. Ferrentino resigned from the
Board and the Committee in October 1998, and Dr. Miller resigned from the Board
and Committee in December 1998. In December 1998, Gordon Robinett joined the
Committee and in February 1999, John C. Fanning joined the Committee. There are
no interlocking relationships, as defined in the regulations of the Securities
and Exchange Commission, involving any of these individuals. Mr. Fanning serves
as the Company's Chairman and Chief Executive Officer. See "Executive
Compensation---Employment Agreements" and "Certain Relationships and Related
Transactions" for a description of certain transactions entered into by Mr.
Fanning with the Company since the beginning of 1998.
Report of the Compensation Committee
Overview and Philosophy
The Company's executive compensation policy is to provide compensation to
employees at such levels as will enable the Company to attract and retain
employees of the highest caliber, to compensate employees in a manner best
calculated to recognize individual, group and Company performances and to seek
to align the interests of the employees with the interests of the Company's
stockholders. The Compensation Committee has responsibility for reviewing and
approving executive and employee salaries, bonuses, non-cash incentive
compensation and benefits, exclusive of stock options and stock appreciation
rights.
The Company's Stock Option Committee administers the Stock Option Plan
under which awards of incentive stock options, non-qualified stock options and
stock appreciation rights may be made to key management personnel and thereby
provide additional incentives for such persons to devote themselves to the
maximum extent practicable to the
7.
<PAGE>
business of the Company. The Stock Option Plan is also intended to aid in
attracting persons of outstanding ability to enter and remain in the employ of
the Company. During 1998, grants were awarded to specific key managers based on
the salary ranges applicable to such officers and employees at the time of the
award and various subjective factors such as the executive's responsibilities,
individual performance and anticipated contribution to the Company's
performance. Keith Goldberg and Gordon Robinett currently serve on the Stock
Option Committee.
Compensation of Executive Officers
Salary determinations for executive officers are based upon various
subjective factors such as the executive's responsibilities, position,
qualifications, individual performance and experience. In certain instances,
bonuses were awarded in 1998 for exemplary performance or the completion of
challenging projects, but the Company did not utilize quantitative measures of
Company or individual performance for purposes of fixing the salaries or bonuses
of its executives.
Compensation of Chief Executive Officer
John C. Fanning was appointed as the Company's Chief Executive Officer in
October 1998. In determining the appropriate compensation for Mr. Fanning, the
Compensation Committee engaged PricewaterhouseCoopers LLP to undertake an
analysis of the salaries and incentive compensation paid to the chief executive
officers of 15 other public staffing companies with annual revenues of from $142
million to $7.2 billion. To ensure comparability, the report size-adjusted the
compensation data from these companies through regression analysis and reported
competitive practices at the 50th and 75th percentile pay levels. In considering
Mr. Fanning's compensation and the terms of his employment agreement with the
Company, the Committee considered this report and considered the size of the
size and earnings history of the Company as compared to the companies listed in
the report. The Committee also considered various subjective factors such as Mr.
Fanning's responsibilities, position, qualifications and experience. The
Committee approved Mr. Fanning's employment agreement in January 1999. Mr.
Fanning's salary and projected incentive compensation as set forth in his
employment agreement are each consistent with the salaries and incentive
compensation at the 50th percentile level for the executives of the other
staffing companies included in the report. See "Executive
Compensation--Employment Agreements."
Deductibility of Compensation
Under Section 162(m) of the Code, the Internal Revenue Service will
generally deny the deduction of compensation paid to certain executives to the
extent such compensation exceeds $1 million, subject to an exception for
compensation that meets certain "performance-based" requirements. The Company
has taken actions designed to increase its opportunity to deduct all
compensation paid to highly compensated officers for federal income tax
purposes. However, no assurance can be given that such actions will ensure the
deductibility for federal income tax purposes of all executive compensation paid
by the Company. Furthermore, neither the Board nor the Compensation Committee
subscribes to the view that any executive's compensation should be limited to
the amount deductible if such executive deserves compensation in excess of $1
million and it is not reasonably practicable to compensate him or her in a
manner such that the compensation payable is fully deductible by the Company.
Submission of Report
This report on Executive Compensation is submitted by Keith Goldberg,
Gordon Robinett and John C. Fanning, the current members of the Compensation
Committee.
Performance Information
Set forth below in tabular form is a comparison of the total stockholder
return (annual change in share price plus dividends paid, assuming reinvestment
of dividends when paid) assuming an investment of $100 on the starting date for
the period shown for the Company, the Dow Jones Equity Market Index (a broad
equity market index which includes the stock
8.
<PAGE>
of companies traded on the American Stock Exchange) and the Dow Jones Industrial
Sector -- Industrial and Commercial Services Index (an industry index which
includes providers of staffing services).
No dividends were paid on the Company's Common Stock during the period
shown. The return shown is based on the percentage change from December 31, 1993
through December 31, 1998.
<TABLE>
<S> <C> <C>
COMFORCE Corporation Investment Date
---------- ----
$ 100.00 December 31, 1993
51.11 December 31, 1994
164.44 December 31, 1995
253.33 December 31, 1996
142.22 December 31, 1997
95.56 December 31, 1998
Dow Jones Equity Market Index Investment Date
---------- ----
$ 100.00 December 31, 1993
100.73 December 31, 1994
138.69 December 31, 1995
170.63 December 31, 1996
228.57 December 31, 1997
294.05 December 31, 1998
Dow Jones Industrial and Commercial Services Index Investment Date
---------- ----
$ 100.00 December 31, 1993
96.55 December 31, 1994
123.57 December 31, 1995
134.99 December 31, 1996
160.98 December 31, 1997
183.57 December 31, 1998
</TABLE>
PRINCIPAL STOCKHOLDERS
Securities Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares and percentage of
Common Stock known to the Company (based upon representations made to it or
public filings with the Securities and Exchange Commission) to be beneficially
owned as of April 28, 1999 by (i) each person who beneficially owns more than 5%
of the shares of Common Stock, (ii) each director and executive officer of the
Company, and (iii) all directors and executive officers of the Company as a
group. Unless stated otherwise, each person so named exercises sole voting and
investment power as to the shares of Common Stock so indicated. There were
16,202,080 shares of Common Stock issued and outstanding as of April 28, 1999.
9.
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Number(1) Percentage(1)
- ------------------------------------ --------- -------------
<S> <C> <C>
Management:
John C. Fanning (2)..................................... 4,752,579 29.3%
COMFORCE-Woodbury
415 Crossways Park Drive
P.O. Box 9006
Woodbury, NY 11797
Harry Maccarrone, individually (3)...................... 30,552 *
Harry Maccarrone, as trustee of the John C.
Fanning Irrevocable Trust (3)........................... 4,728,379 29.2%
COMFORCE-Woodbury
415 Crossways Park Drive
P.O. Box 9006
Woodbury, NY 11797
Daniel Raynor .......................................... -- *
Gordon Robinett (4)..................................... 1,043 *
Keith Goldberg (5)...................................... 30,000 *
Michael D. Madden (6)................................... 92,500 *
Directors and officers as a group
(7 persons) (7)...................................... 4,941,674 30.2%
Other Significant Stockholders:
ARTRA GROUP Incorporated (8)............................ 1,525,500 9.4%
500 Central Avenue
Northfield, Illinois 60093
Alberta, Canada (4)..................................... 1,400,000 8.6%
Alberta Treasury, Room 530
Terrace Building
9515 107th Street
Edmonton, Alberta T5K 2C3
</TABLE>
- -----------
* Less than 1%
(1) For purposes of this table, shares are considered "beneficially owned" if
the person directly or indirectly has the sole or shared power to vote or
direct the voting of the securities or the sole or shared power to dispose
of or direct the disposition of the securities. A person is also considered
to beneficially own shares that such person has the right to acquire within
60 days, and options exercisable within such period are referred to herein
as "currently exercisable."
(2) The shares beneficially owned by Mr. Fanning, the Chairman and Chief
Executive Officer of the Company, include (i) 24,200 shares currently held
of record by him, (ii) 3,396,069 shares owned by the John C. Fanning
Irrevocable Trust, of which Mr. Fanning is the beneficiary and (iii)
1,332,310 shares held by a limited partnership of which the John C. Fanning
Irrevocable Trust is the general partner. Mr. Fanning disclaims beneficial
ownership of shares owned by the limited partnership in excess of his
proportionate interest in the limited partnership. Harry Maccarrone holds
sole voting power with respect to the shares held by the limited
partnership and the John C. Fanning Irrevocable Trust.
(3) The shares beneficially owned by Mr. Maccarrone, Executive Vice President
and Secretary of the Company, include (i) 552 shares currently held of
record by him, (ii) 30,000 shares issuable to him upon exercise of an
10.
<PAGE>
option at an exercise price of $7.00 per share, (iii) 3,396,069 shares
owned by the John C. Fanning Irrevocable Trust, of which Mr. Maccarrone is
the trustee, and (iv) 1,332,310 shares held by a limited partnership of
which the John C. Fanning Irrevocable Trust is the general partner. Harry
Maccarrone holds sole voting power with respect to the shares held by the
limited partnership and the John C. Fanning Irrevocable Trust.
(4) These shares are owned of record.
(5) The shares beneficially owned by Mr. Goldberg, a Director of the Company,
include (i) 10,000 shares issuable to him upon exercise of an option at an
exercise price of $6.75 per share, (ii) 10,000 shares issuable to him upon
exercise of an option at an exercise price of $17.00 per share, and (iii)
10,000 shares issuable to him upon exercise of an option at an exercise
price of $7.625 per share.
(6) The shares beneficially owned by Mr. Madden, the Vice Chairman of the
Company, are issuable to him upon the exercise of an option at an exercise
price of $7.375 per share.
(7) The shares shown to be beneficially owned by the directors and officers as
a group include (i) 4,764,174 shares held of record by them or an affiliate
and (ii) 177,500 shares issuable upon the exercise of options at exercise
prices ranging from $6.75 to $17.00 per share.
(8) ARTRA Group Incorporated, a Delaware corporation, presently owns all of
such shares of record directly or through a wholly-owned subsidiary,
Fill-Mor Holding, Inc.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain of its officers and persons who own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
with the SEC. Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that all Section 16(a) filing requirements
applicable to persons who are officers or directors of the Company or holders of
10% of the Company's Common Stock were complied with in 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Executive Compensation--Employment Agreements" for a description of
the employment agreements entered into between the Company and each of Messrs.
Fanning and Maccarrone.
In connection with the closing of the Company's credit facility in November
1997, John C. Fanning, currently the Chairman and Chief Executive Officer of the
Company, posted cash collateral of $5.0 million to secure borrowings under the
credit facility. This collateral was fully released in February 1998. As
consideration for agreeing to make this collateral available, the Company paid
to Mr. Fanning $85,342, representing a 12% per annum yield on his cash
collateral, less the actual return thereon as invested.
11.
<PAGE>
STOCKHOLDERS' PROPOSALS
To be considered for inclusion in the Company's Proxy Statement for the
2000 Annual Meeting of Stockholders, stockholder proposals must be sent to the
Company (directed to the attention of Linda Annicelli, Vice President of
Administration, at COMFORCE Corporation, 415 Crossways Park Drive, P.O. Box
9006, Woodbury, New York 11797, for receipt not later than January 12, 2000.
GENERAL AND OTHER MATTERS
Management knows of no matters, other than those referred to in this Proxy
Statement, which will be presented to the meeting. However, if any other matters
properly come before the meeting or any adjournment, the persons named in the
accompanying proxy will vote it in accordance with their best judgment on such
matters.
The Company is presently reviewing proposals from two accounting firms to
audit its consolidated financial statements for 1999, including its current
auditor, PricewaterhouseCoopers LLP. The Company will not select an auditor for
1999 until it has completed this ongoing review process. A representative of
PricewaterhouseCoopers is expected to be present at the meeting and will be
given the opportunity to make a statement and respond to appropriate questions.
The Company will bear the expense of preparing, printing and mailing this
Proxy Statement, as well as the cost of any required solicitation. In addition
to the solicitation of proxies by use of the mails, the Company may use regular
employees, without additional compensation, to request, by telephone or
otherwise, attendance or proxies previously solicited.
By Order of the Board of Directors
Harry Maccarrone
Secretary
Woodbury, New York
April 30, 1999
12.
<PAGE>
PROXY
COMFORCE CORPORATION
Solicited by The Board of Directors for the 1999 Annual Meeting of Stockholders
415 Crossways Park Drive, P.O. Box 9006
Woodbury, New York 11797
The undersigned hereby appoints [John C. Fanning and Harry Maccarrone] as
Proxies, each with the power to appoint his substitute, to vote all of the
shares of Common Stock of COMFORCE Corporation, a Delaware corporation (the
"Company"), held of record by the undersigned on the record date, April 28,
1999, at the 1999 Annual Meeting of Stockholders to be held on June 9, 1999, or
any adjournment thereof, as directed and, in their discretion, on all other
matters which may properly come before the meeting. The undersigned directs said
proxies to vote as specified upon the items shown on the reverse side, which are
referred to in the Notice of Annual Meeting and set forth in the Proxy
Statement.
Holders of record of the Company's Common Stock at the close of business on
the record date will be entitled to vote at the Annual Meeting. Holders of
Common Stock will be entitled to one vote for each share then held. Each
stockholder may vote in person or by proxy. All shares represented by proxy will
be voted in accordance with the instructions, if any, given in such proxy. A
stockholder may may withhold authority to vote for any nominee(s) by so
indicating on the reverse side.
The votes represented by this proxy will be voted as marked by you.
However, if you properly execute and return the proxy unmarked, such votes will
be voted FOR all of the proposals. Any proxy which is not properly executed
shall be ineffetive. Please mark each box with an "x".
(Continued, and to be marked, dated and signed, on the other side)
<PAGE>
The votes represented by this proxy will be voted as marked by you. However, if
you execute and return the proxy unmarked, such votes will be voted FOR all of
the proposals. Please mark each box with an "x".
The Board of Directors Recommends a Vote "For" all proposals.
1. Election of Directors: John C. Fanning, Harry Maccarrone, Michael D.
Madden, Keith Goldberg, Daniel Raynor and Gordon Robinett have been
nominated.
FOR Withheld Withheld for the following
for all following (write the
nominee's name in the
space below).
|_| |_| _______________________________________
When shares are held as joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in the partnership name
by authorized person.
Dated: ________________________________
_______________________________________
Signature
_______________________________________
Signature if held jointly
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
