<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
STAFF BUILDERS, INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.................................................................
2) Aggregate number of securities to which transaction
applies:
.................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
<PAGE>
STAFF BUILDERS, INC.
1983 MARCUS AVENUE
LAKE SUCCESS, NEW YORK 11042
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Staff
Builders, Inc., a Delaware corporation (the 'Company'), will be held at 1983
Marcus Avenue, Lake Success, New York, on August 15, 1996, at 10:00 A.M. (New
York Time) for the following purposes:
1) To elect one Class C Director to serve for a three-year term and
until his successor is elected and qualified; and
2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on June 17, 1996, are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
DAVID SAVITSKY
Secretary
June 20, 1996
IMPORTANT: Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted at the meeting. Accordingly,
after reading the enclosed Proxy Statement, you are urged to SIGN, DATE and
RETURN the enclosed proxy in the envelope provided which requires no postage if
mailed in the United States.
<PAGE>
<PAGE>
STAFF BUILDERS, INC.
1983 MARCUS AVENUE
LAKE SUCCESS, NEW YORK 11042
---------------------------------
PROXY STATEMENT
---------------------------------
This Proxy Statement is being mailed to stockholders in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Stockholders of the Company to be held on August 15, 1996, and
any adjournment thereof. A copy of the notice of meeting accompanies this Proxy
Statement. The first date on which this Proxy Statement and accompanying proxy
are being sent to stockholders is on or about June 20, 1996.
SOLICITATION OF PROXIES
All shares represented by proxies received pursuant to this solicitation
will be voted as instructed. If no instructions are given, the persons named in
the accompanying proxy intend to vote for the nominee named herein as Class C
Director of the Company.
Stockholders who execute proxies may revoke them by delivering subsequently
dated proxies or by giving written notice of revocation to the Secretary of the
Company at any time before such proxies are voted. No proxy will be voted if the
stockholder attends the meeting and elects to vote in person.
The Board of Directors does not know of any matter other than as set forth
herein that is expected to be presented for consideration at the meeting.
However, if other matters properly come before the meeting, the persons named in
the accompanying proxy intend to vote thereon in accordance with their judgment.
A copy of the Annual Report of the Company containing financial statements
for the fiscal year ended February 29, 1996, is included herewith, but is not to
be considered part of the proxy soliciting materials.
The Company's principal executive offices are located at 1983 Marcus
Avenue, Lake Success, New York 11042.
RECORD DATE, OUTSTANDING VOTING SECURITIES,
VOTING RIGHTS AND VOTE REQUIRED
Only stockholders of record at the close of business on June 17, 1996 (the
'Record Date') will be entitled to notice of, and to vote at, the meeting and
any adjournment thereof. As of the Record Date, 22,095,218 shares of the
Company's Class A Common Stock, $.01 par value per share (the 'Class A Common
Stock'), and 1,493,785 shares of the Company's Class B Common Stock, $.01 par
value per share (the 'Class B Common Stock'), were outstanding. As of the Record
Date, the Class A Common Stock was held of record by approximately 351 holders
and the Class B Common Stock was held of record by approximately 560 holders (in
each case, including brokerage firms holding stock in 'street name' and other
nominees).
Each holder of record of Class A Common Stock is entitled to one vote for
each share of Class A Common Stock held by such holder. Each holder of record of
Class B Common Stock is entitled to ten votes (except in certain circumstances
which are inapplicable to the election of directors) for each share of Class B
Common Stock held by such holder. A holder may own both Class A Common Stock and
Class B Common Stock, in which case such holder will be entitled to one vote for
each share of Class A Common Stock and ten votes for each share of Class B
Common Stock held by such holder.
The affirmative vote of a majority of the votes of holders of shares of
Class A Common Stock and Class B Common Stock, voting together as one class,
represented at the meeting is necessary for the election of the nominee for
Class C Director.
With respect to abstentions, the shares will be considered present at the
meeting for the proposal, but since they are not affirmative votes for the
proposal, they will have the same effect as a vote
<PAGE>
<PAGE>
withheld on the election of the Class C Director. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to vote
on the proposal, those shares will not be considered as present at the meeting
and entitled to vote in respect of the proposal.
There is a box on the proxy card to vote for or to withhold authority to
vote for the nominee for Class C Director.
OWNERSHIP OF SECURITIES BY CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND OFFICERS
The following table sets forth information as of the Record Date with
respect to the beneficial ownership of the Company's Class A Common Stock, Class
B Common Stock and Class A Preferred Stock, $1.00 par value per share (the
'Preferred Stock') by (i) each person known to the Company who beneficially owns
more than 5% of any class of voting securities of the Company, (ii) each
director of the Company, (iii) the Company's Chief Executive Officer and four
other executive officers, and (iv) all directors and executive officers of the
Company as a group.
CLASS A AND CLASS B COMMON STOCK
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
-------------------------------------------------------------------------------------------
PERCENTAGE PERCENTAGE
OF OF
NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
SHARES OF SHARES OF SHARES OF SHARES OF PERCENTAGE OF
NAME OF CLASS A CLASS A CLASS B CLASS B OUTSTANDING
BENEFICIAL OWNER COMMON STOCK(2) COMMON STOCK COMMON STOCK(3) COMMON STOCK VOTES OWNED
- - --------------------------------------------- ------------ ---------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Stephen Savitsky(4).......... 1,672,017(5)(6) 7.1% 342,738 22.9% 13.2%
David Savitsky(4)............ 1,635,716(6)(7)(8) 6.9% 378,537(9) 25.3% 14.1%
Bernard J. Firestone......... 1,500(10) * 2,100(11) * *
Jonathan J. Halpert.......... -- -- -- -- --
Donald Meyers................ 2,000 * -- -- *
Gary Tighe................... 150,000(12) * -- -- *
Edward Teixeira.............. 62,800(13) * -- -- *
Sharon Hamilton.............. 105,000(14) * -- -- *
S Squared Technology
Corp.(15).................. 2,961,000 13.4% -- -- 8.0%
Dimensional Fund Advisors,
Inc.(16)................... -- -- 316,300 21.2% 8.5%
All executive officers and
directors as a group (10
persons)................... 3,404,732(6)(17) 13.5% 723,375 48.4% 26.5%
</TABLE>
- - ------------
* Less than one percent
CLASS A PREFERRED STOCK(18)
<TABLE>
<CAPTION>
PERCENTAGE
OF
AMOUNT AND NATURE OF OUTSTANDING
NAME OF BENEFICIAL OWNER(19) BENEFICIAL OWNERSHIP SHARES OWNED
- - -------------------------------------------------------------------------- -------------------- ------------
<S> <C> <C>
Stephen Savitsky.......................................................... 333 1/3 50%
David Savitsky............................................................ 333 1/3 50%
All executive officers and directors as a group (10 persons).............. 666 2/3 100%
</TABLE>
- - ------------
(1) 'Beneficial ownership' is determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended. In general, a person is
treated as the 'beneficial owner' of stock under Rule 13d-3 if such person
has (or shares) (i) either investment power or voting power over such
(footnotes continued on next page)
2
<PAGE>
<PAGE>
(footnotes continued from previous page)
stock (which may be by means of a contract, arrangement, understanding,
relationship or otherwise), or (ii) the right to acquire such stock within
60 days, including by means of the exercise of an option or the conversion
of a convertible security. Each beneficial owner's percentage of ownership
and percentage of votes is determined by assuming that options that are
held by such person (but not those held by any other person) and which are
exercisable within 60 days of the date of this table have been exercised.
Except as indicated in the footnotes that follow, shares listed in the
table are held with sole voting and investment power.
(2) Each holder of record of shares of Class A Common Stock is entitled to only
one vote per share held by such holder.
(3) Each holder of record of Class B Common Stock, except in certain
circumstances, is entitled to ten votes per share held by such holder.
(4) The address of each of these persons is c/o Staff Builders, Inc., 1983
Marcus Avenue, Lake Success, New York 11042. Each of these persons has sole
power with respect to the voting and investment of the shares which he
owns, except as follows: on November 1, 1991, Ephraim Koschitzki, a former
executive officer and director of the Company, granted to Stephen Savitsky
and David Savitsky a ten year revocable proxy to vote all shares of Common
Stock now or hereafter owned of record by him. The Company believes that
Mr. Koschitzki beneficially owns 282,635 shares of Class A Common Stock. As
a result, (i) Stephen Savitsky has sole voting and investment power with
respect to 1,389,382 shares of Class A Common Stock and 342,738 shares of
Class B Common Stock and has shared voting power with respect to the
282,635 shares of Class A Common Stock beneficially owned by Mr. Koschitzki
and (ii) David Savitsky has sole voting and investment power with respect
to 1,353,081 shares of Class A Common Stock and 378,537 shares of Class B
Common Stock and has shared voting power with respect to the 282,635 shares
of Class A Common Stock beneficially owned by Mr. Koschitzki.
(5) Includes options to purchase 500,000 shares of Class A Common Stock under
the 1994 Performance-Based Stock Option Plan, options to purchase 200,000
shares of Class A Common Stock under the 1993 Stock Option Plan, options to
purchase 334,000 shares of Class A Common Stock under the 1986
Non-Qualified Stock Option Plan and options to purchase 247,291 shares of
Class A Common Stock under the 1983 Incentive Stock Option Plan.
(6) Also includes options to purchase 225,440 shares of Class A Common Stock
granted to Ephraim Koschitzki under the 1986 Non-Qualified Stock Option
Plan, which are subject to the ten-year revocable proxy referred to in
footnote 4 above.
(7) Includes options to purchase 500,000 shares of Class A Common Stock under
the 1994 Performance-Based Stock Option Plan, options to purchase 200,000
shares of Class A Common Stock under the 1993 Stock Option Plan, options to
purchase 320,000 shares of Class A Common Stock under the 1986
Non-Qualified Stock Option Plan and options to purchase 247,291 shares of
Class A Common Stock under the 1983 Incentive Stock Option Plan.
(8) Includes 150 shares of Class A Common Stock held by David Savitsky's wife.
Mr. Savitsky disclaims beneficial ownership of these shares.
(9) Includes 1,000 shares of Class B Common Stock held by Mr. Savitsky's wife
as trustee for the benefit of their three children. Mr. Savitsky disclaims
beneficial ownership of these shares.
(10) Includes options to purchase 1,500 shares of Class A Common Stock under the
1986 Non-Qualified Stock Option Plan.
(11) Includes 1,000 shares of Class B Common Stock held by Dr. Firestone's wife.
Dr. Firestone disclaims beneficial ownership of these shares.
(12) Includes options to purchase 50,000 shares of Class A Common Stock under
the 1994 Performance-Based Stock Option Plan, options to purchase 20,000
shares of Class A Common Stock under the
(footnotes continued on next page)
3
<PAGE>
<PAGE>
(footnotes continued from previous page)
1986 Non-Qualified Stock Option Plan and options to purchase 80,000 shares
of Class A Common Stock under the 1983 Incentive Stock Option Plan.
(13) Includes options to purchase 25,000 shares of Class A Common Stock under
the 1994 Performance-Based Stock Option Plan, options to purchase 15,000
shares of Class A Common Stock under the 1986 Non-Qualified Stock Option
Plan and options to purchase 22,800 shares of Class A Common Stock under
the 1983 Incentive Stock Option Plan.
(14) Includes options to purchase 25,000 shares of Class A Common Stock under
the 1994 Performance-Based Stock Option Plan, options to purchase 20,000
shares of Class A Common Stock under the 1986 Non-Qualified Stock Option
Plan and options to purchase 60,000 shares of Class A Common Stock under
the 1983 Incentive Stock Option Plan.
(15) S Squared Technology Corp. ('S Squared'), a registered investment adviser,
is located at 515 Madison Avenue, New York, New York 10022. Includes
2,749,000 shares of Class A Common Stock for which S Squared has sole
voting and sole investment power and 212,000 shares of Class A Common Stock
for which S Squared has shared voting and sole investment power. The shares
are owned by limited partnerships for which S Squared is the sole general
partner, by advisory clients of S Squared, and by Seymour Goldblatt, the
principal of S Squared, and members of his family.
(16) Dimensional Fund Advisors, Inc., a registered investment advisor, is
located at 1299 Ocean Avenue, Santa Monica, California 90401.
(17) Includes options to purchase 1,115,000 shares of Class A Common Stock under
the 1994 Performance Based Stock Option Plan, options to purchase 433,334
shares of Class A Common Stock under the 1993 Stock Option Plan, options to
purchase 711,500 shares of Class A Common Stock under the 1986
Non-Qualified Stock Option Plan and options to purchase 666,382 shares of
Class A Common Stock under the 1983 Incentive Stock Option Plan.
(18) The approval of holders of two-thirds of the shares of Preferred Stock is
required to approve certain business combinations with respect to the
Company.
(19) Each person has sole power with respect to the voting and investment of the
shares which such person owns.
ELECTION OF CLASS C DIRECTOR
The Board of Directors is divided into three classes. One class is elected
each year to hold office for a three-year term. Class C is the class whose term
will expire at the Annual Meeting. This class consists of one director, Mr.
Stephen Savitsky, who is a nominee of the Board of Directors. The nominee for
Class C Director, if elected by a majority of the votes cast at the Annual
Meeting, will serve until the 1999 Annual Meeting and until his successor is
elected and qualified. Unless otherwise instructed by the stockholders, it is
intended that the shares represented by the proxies in the accompanying form
will be voted for such nominee. If the nominee should become unavailable to
serve for any reason, which the Board of Directors does not presently
anticipate, the proxies will be voted for any substitute nominee who may be
selected by the Board of Directors prior to or at the meeting or the Board of
Directors may elect to fill the vacancy at a later date after selecting an
appropriate nominee.
In addition to the Class C Director, the Board of Directors consists of
four other directors. Mr. David Savitsky and Dr. Jonathan J. Halpert are Class A
Directors whose terms expire at the 1997 Annual Meeting and Dr. Bernard J.
Firestone and Mr. Donald Meyers are Class B Directors whose terms expire at the
1998 Annual Meeting.
The Company's By-Laws require that notice of nomination of persons for
election to the Board of Directors, other than those made by the Board of
Directors, must be submitted in writing to the Secretary of the Company not less
than thirty nor more than sixty days prior to the Annual Meeting. The notice
must set forth certain information concerning the nominees and the stockholders
making the nominations. Also, within the same period, the Secretary of the
Company must receive the nominee's written consent to being a nominee and a
statement of intention to serve as a director, if elected.
4
<PAGE>
<PAGE>
The nominee for Class C Director named in this Proxy Statement has filed
with the Company a written consent to being a nominee and a statement of
intention to serve as a director, if elected.
The following table sets forth as to the nominee for election (shown by an
asterisk), each other director and each executive officer: (1) such person's
name; (2) the year in which such person was first elected (or designated) a
director of the Company; (3) biographical information for the last five years;
(4) certain other directorships, if any, held by such person; and (5) such
person's age.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING THE YEAR FIRST
PAST FIVE YEARS, ANY OFFICE HELD IN THE ELECTED
NAME AGE COMPANY AND ANY OTHER DIRECTORSHIPS AS A DIRECTOR
- - ----------------------------------- --- -------------------------------------------------- ---------------
<S> <C> <C> <C>
*Stephen Savitsky.................. 50 A founder of the Company, Mr. Savitsky has served 1983
as Chairman of the Board, Chief Executive Officer
and a Director of the Company since 1983 (and of
its predecessor from 1978 to 1983), and as
President of the Company since November 1991. Mr.
Savitsky is the brother of David Savitsky.
David Savitsky..................... 48 A founder of the Company, Mr. Savitsky has served 1983
as Secretary, Treasurer and a Director of the
Company since 1983 (and of its predecessor from
1978 to 1983), as Executive Vice President since
December 1987 and as Chief Operating Officer since
April 1991. Mr. Savitsky is the brother of Stephen
Savitsky.
Jonathan J. Halpert, Ph.D.......... 51 Dr. Halpert was elected a Director by the Board of 1983
Directors in August 1987. He previously served as
a Director of the Company from May 1983 until he
resigned from the Board in February 1985. Dr.
Halpert is a consultant in the area of
deinstitutionalization of the mentally retarded
and Chief Executive Officer of the Camelot
Community Residence Program.
Bernard J. Firestone, Ph.D. ....... 47 Dr. Firestone was elected a Director by the Board 1987
of Directors in August 1987. He is an associate
dean for curriculum and personnel in the College
of Liberal Arts and Sciences and professor of
political science at Hofstra University where he
has been teaching for 20 years.
Donald Meyers...................... 67 Mr. Meyers was elected a Director by the Board of 1994
Directors in August 1994. He has been an Associate
Clinical Professor, Health Policy and Management,
and the Director of the Resident and Fellow
Program in administration in New York University's
Robert W. Wagner Graduate School of Public Service
since November 1991. Mr. Meyers is also the
President and sole director and stockholder of RMR
Health & Hospital Management Consultants, Inc., a
health care consulting firm, where he has been an
executive officer, director and stockholder since
1976. From November 1986 through November 1991,
Mr. Meyers served as a Special Consultant in
health care matters to the accounting firm of KPMG
Peat Marwick located in New York.
</TABLE>
(table continued on next page)
5
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING THE YEAR FIRST
PAST FIVE YEARS, ANY OFFICE HELD IN THE ELECTED
NAME AGE COMPANY AND ANY OTHER DIRECTORSHIPS AS A DIRECTOR
- - ----------------------------------- --- -------------------------------------------------- ---------------
<S> <C> <C> <C>
Gary Tighe......................... 47 Mr. Tighe has been Senior Vice President, Finance Not Applicable
and Chief Financial Officer of the Company since
April 1991.
Larry Campbell..................... 51 Mr. Campbell has been Executive Vice President, Not Applicable
National Health Care Operations of a principal
subsidiary of the Company since March 1, 1996.
From July 1993 through December 1995, Mr. Campbell
was Vice President and Chief Operating Officer of
Medical Innovations, Inc., a home health care
company located in Texas. From January 1993
through June 1993, he was President of Campbell
Associates, a home care consulting and publishing
company located in Houston, Texas. From 1973 to
1992 he was the Executive Director of Visiting
Nurse Association of Southeast Missouri, a
not-for-profit health care organization.
Edward Teixeira.................... 53 Mr. Teixeira has been Senior Vice President, Not Applicable
Franchising of a principal subsidiary of the
Company since December 1990.
Cynthia Nye........................ 44 Ms. Nye has been Senior Vice President, Corporate Not Applicable
Support of a principal subsidiary of the Company
since November 1994. From January 1992 through
November 1994, Ms. Nye served as Vice President,
Corporate Support of a principal subsidiary of the
Company. From 1983 to 1991, Ms. Nye served as the
Chief Financial Officer of United Cerebral Palsy
of New York State, a not-for-profit health care
organization.
</TABLE>
6
<PAGE>
<PAGE>
OPERATION OF THE BOARD OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company. To assist it in carrying out its duties, certain authority has been
delegated to standing committees of the Board.
Each director who is not an officer or employee of the Company receives a
fee of $10,000 per annum for service on the Company's Board of Directors.
Directors who are officers or employees of the Company receive no fees for
service on the Board.
The Board of Directors held five meetings and acted by written consent on
nine occasions during the fiscal year ended February 29, 1996.
COMMITTEES OF THE BOARD
The Executive Committee, the Audit Committee and the Compensation and Stock
Option Committee are the only standing committees of the Board of Directors.
Membership is as follows:
<TABLE>
<CAPTION>
COMPENSATION
EXECUTIVE AUDIT AND STOCK OPTION
- - ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
Stephen Savitsky Bernard J. Firestone Bernard J. Firestone
David Savitsky Jonathan J. Halpert Jonathan J. Halpert
Donald Meyers
</TABLE>
The Executive Committee is authorized to exercise all powers of the Board
when the Board is not in session, except as to matters upon which action by the
Board itself is required.
The Audit Committee generally assists the Board with respect to accounting,
auditing and reporting practices.
The Compensation and Stock Option Committee determines the cash and other
incentive compensation, if any, to be paid to the Company's executive officers
and other key employees. In addition, it administers the 1983 Incentive Stock
Option Plan, 1986 Non-Qualified Stock Option Plan, 1993 Stock Option Plan, 1993
Employee Stock Purchase Plan, 1994 Performance-Based Stock Option Plan and the
Teamwork Incentive Program.
The Executive Committee held five meetings, the Audit Committee held two
meetings, and the Compensation and Stock Option Committee held three meetings
and acted by written consent on one occasion during the fiscal year ended
February 29, 1996.
COMPLIANCE WITH SECTION 16(a) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than ten
percent of the Common Stock to file with the Securities and Exchange Commission
initial reports of beneficial ownership and reports of changes in beneficial
ownership of the Common Stock. Officers, directors and persons owning more than
ten percent of the Common Stock are required to furnish the Company with copies
of all such reports. To the Company's knowledge, based on a review of copies of
such reports furnished to the Company and written representations from its
officers and directors that no other reports were required, during the fiscal
year ended February 29, 1996, all Section 16(a) filing requirements applicable
to its executive officers, directors and persons owning beneficially more than
ten percent of the Common Stock were complied with on a timely basis.
7
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation of the Company's Chief Executive Officer and the other
four most highly compensated executive officers (the 'Named Executive Officers')
for services as executive officers of the Company for the last three fiscal
years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#)
- - ---------------------------------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Stephen Savitsky ................................... 1996 $423,453 -- -- --
Chairman, President and Chief Executive Officer 1995 $372,073 $16,950 -- 1,000,000
1994 $330,298 -- -- 339,270
David Savitsky ..................................... 1996 $306,224 -- -- --
Executive Vice President, Chief Operating Officer, 1995 $269,999 $16,950 -- 1,000,000
Treasurer 1994 $240,217 -- $ 27,862(1) 339,270
Sharon E. Hamilton ................................. 1996 $187,056 -- -- --
Executive Vice President, Health Care Operations 1995 $174,308 $ 8,475 -- 50,000
1994 $158,917 -- -- 20,000
Gary Tighe ......................................... 1996 $155,241 -- -- --
Senior Vice President, Chief Financial Officer 1995 $139,458 $ 8,475 -- 100,000
1994 $128,025 -- -- 50,000
Edward Teixeira .................................... 1996 $156,640 -- -- --
Senior Vice President, Franchising 1995 $141,639 $ 5,085 -- 50,000
1994 $129,159 -- -- --
</TABLE>
- - ------------
(1) Includes a $13,000 expense allowance and $14,862 for an automobile furnished
for David Savitsky's business and personal use.
OPTION GRANTS
No options were granted to any Named Executive Officer of the Company
during the fiscal year ended February 29, 1996.
8
<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table provides information concerning the number and value of
stock options exercised during the fiscal year ended February 29, 1996, and held
at the end of such fiscal year, by the Named Executive Officers. No stock
appreciation rights ('SARs') were exercised during such fiscal year, and no SARs
are held by any Named Executive Officer, because the Company does not have any
plans providing for SARs.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS THE-MONEY OPTIONS
AT FEBRUARY 29, 1996 AT FEBRUARY 29, 1996
SHARES -------------------- ------------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- - --------------------------------------- ----------- -------- -------------------- ------------------------
<S> <C> <C> <C> <C>
Stephen Savitsky....................... 351,000 $682,695 1,248,557/587,693 $401,509/$46,258
David Savitsky......................... 330,000 $641,850 1,234,577/587,693 $384,884/$46,258
Sharon E. Hamilton..................... -- -- 95,000/45,000 $38,700/$0
Gary Tighe............................. -- -- 130,000/90,000 $46,175/$14,950
Edward Teixeira........................ -- -- 57,800/35,000 $20,270/$0
</TABLE>
EMPLOYMENT AGREEMENTS
On June 1, 1987, the Company entered into a five-year employment agreement
with Stephen Savitsky under which Mr. Savitsky received an initial base salary
(beginning in June 1987) of $200,000 per year, which base salary increases
annually at the rate of ten percent plus any increase in the cost of living. Mr.
Savitsky's employment agreement is automatically extended at the end of each
year for an additional year and is terminable by the Company upon five years'
notice. For the fiscal year ended February 29, 1996, Mr. Savitsky received a
base salary of $423,453. Mr. Savitsky's employment agreement provides that, upon
a 'change of control' of the Company and his termination of employment other
than for his conviction of a felony, he will be entitled to receive a lump sum
severance payment equal to 2.99 times his average annual compensation for the
five calendar years prior to termination. Mr. Savitsky is required to devote all
of his business time to the affairs of the Company and his employment agreement
provides that during the term of his employment and for a period of six months
thereafter he will not compete with the Company. After termination of his
employment (other than by reason of his conviction of a felony), Mr. Savitsky
will provide consulting services to the Company for a period of ten years at an
annual salary of $50,000.
The Company entered into an employment agreement, effective as of June 1,
1987, with David Savitsky on terms substantially similar to the employment
agreement with Stephen Savitsky, except that his initial base salary was
$110,000 per year. Under his employment agreement, Mr. Savitsky is required to
devote all of his business time to the affairs of the Company. His base salary
for the fiscal year ended February 29, 1996 was $306,224.
As of May 15, 1993, the Company entered into a 47-month employment
agreement with Gary Tighe under which his initial base salary was $128,532 per
year, which base salary increases by 10% per annum each April 15. Mr. Tighe's
salary for the fiscal year ended February 29, 1996, was $155,241. He also
receives an automobile allowance of $6,000 per annum. The employment agreement
obligates Mr. Tighe to devote all of his business time to the affairs of the
Company and provides that during the term of his employment and for one year
thereafter he will not compete with the Company. Upon a 'change of control' of
the Company and termination of Mr. Tighe's employment for any reason (other than
for his conviction of a felony) within 12 months after such change of control,
he will be entitled to receive a lump sum severance payment equal to 2.99 times
his average annual compensation for the five calendar years prior to
termination.
The Company entered into a two-year employment agreement with Edward
Teixeira to serve as Senior Vice President, Franchising of a principal
subsidiary of the Company until November 30, 1993. On July 26, 1993, that
principal subsidiary of the Company entered into an agreement with Mr. Teixeira
whereby he would continue to serve in such capacity for three additional years,
until November 30, 1996. Under his employment agreement, Mr. Teixeira is
obligated to devote his full business time to the
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affairs of the Company. Mr. Teixeira's initial base salary under his employment
agreement was $126,000 per year, which base salary increases by a minimum of 8%
per annum. Mr. Teixeira's base salary for the fiscal year ended February 29,
1996, was $156,640. He also receives an automobile allowance of $6,600 per
annum. Further, if within 90 days after a 'change of control' Mr. Teixeira were
terminated for any reason (other than the commission of a felony or the
perpetration of fraud against the Company), he would then be entitled to receive
an amount equal to six months' salary. The employment agreement prevents Mr.
Teixeira from competing with the Company for six months after his employment is
terminated.
Effective March 1, 1996, a principal subsidiary of the Company entered into
a three-year employment agreement with Larry Campbell under which Mr. Campbell
was employed as Executive Vice President for National Health Care Operations.
The employment agreement provides for an annual salary of $180,000, $190,000 and
$200,000 for each of the three years ending February 28, 1997, 1998 and 1999,
respectively. Additionally, Mr. Campbell received a one-time sign-on bonus in
the amount of $80,000 on March 1, 1996, and options to purchase 100,000 shares
of Class A Common Stock of the Company which vest over a three-year period. The
Company leases an automobile for Mr. Campbell's exclusive use at an annual cost
of approximately $6,000. Under his employment agreement, Mr. Campbell is
obligated to devote his full business time, attention and skill to the affairs
of the Company. If Mr. Campbell were terminated by the Company during the term
of his employment agreement for any reason (other than the commission of a
felony, perpetration of fraud against the Company or breach of certain
non-compete and confidentiality requirements), he would then be entitled to
receive an amount equal to twelve months' salary and would be prevented from
competing with the Company for six months after his employment is terminated.
Otherwise, the employment agreement provides that after the expiration of his
three-year term, Mr. Campbell may not compete with the Company for one year
thereafter, in consideration for which Mr. Campbell is entitled to receive
$180,000, payable in 52 weekly installments.
As of May 1, 1993, a principal subsidiary of the Company entered into a
three-year employment agreement with Sharon Hamilton. Ms. Hamilton's base salary
for the fiscal year ended February 29, 1996, was $187,056. The employment
agreement expired on May 1, 1996 and Ms. Hamilton is no longer an executive
officer of the Company.
If a 'change of control' were to occur prior to the next anniversary date
of the respective employment agreements of Stephen Savitsky, David Savitsky,
Gary Tighe and Edward Teixeira and such officers' employment relationships with
the Company were to terminate for reasons triggering the severance payments
noted above, then the Company would be obligated to make lump sum payments to
them in the approximate amounts of $1,344,000, $1,047,000, $454,000 and $86,000,
respectively. The lump sum severance payments payable after the end of the
calendar year or the anniversary dates of the respective employment agreements,
as the case may be, would change as a result of changes in such individuals'
compensation. The term 'change of control' as used in the employment agreements
with the Company's executive officers refers to an event in which a person,
corporation, partnership, association or entity (i) acquires a majority of the
Company's outstanding voting securities, (ii) acquires securities of the Company
bearing a majority of voting power with respect to election of directors of the
Company, or (iii) acquires all or substantially all of the Company's assets.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation and Stock Option Committee (hereinafter, the 'Committee')
determines the cash and other incentive compensation, if any, to be paid to the
Company's executive officers and other key employees. In addition, the Committee
administers the Company's 1983 Incentive Stock Option Plan, 1986 Non-Qualified
Stock Option Plan, 1993 Stock Option Plan, 1993 Employee Stock Purchase Plan,
1994 Performance-Based Stock Option Plan and Teamwork Incentive Program. The
Committee currently consists of Bernard J. Firestone and Jonathan J. Halpert,
each of whom is a non-employee director of the Company and a 'disinterested
director' (within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934).
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COMPENSATION PHILOSOPHY
The Committee has developed and implemented a compensation program that is
designed to attract, motivate, reward and retain the broad-based management
talent required to achieve the Company's business objectives and increase
stockholder value. There are three major components of the Company's
compensation program: base salary, short-term incentive compensation, including
annual bonuses, and long-term incentive compensation, including stock options.
These components are intended to provide management with incentives to aid the
Company in achieving both its short-term and long-term objectives. While salary
and bonus provide incentives to achieve short-term objectives, the Committee
believes that the potential for equity ownership by management addresses the
long-term objective of aligning management's and stockholders' interests in the
enhancement of stockholder value.
The Committee's executive compensation philosophy is to base management's
pay, in part, on the achievement of the Company's annual and long-term
performance goals, to provide competitive levels of compensation and to
recognize individual initiative, achievement and length of service to the
Company. The Committee does not assess these factors in a mechanical fashion,
but rather relies on its business experience in making a subjective evaluation
of the appropriate level and mix of compensation for each executive officer and
key employee.
The Committee evaluates the Company's performance by reviewing period to
period changes in such quantitative measures of performance as stock price,
revenue, net income and earnings per share.
During the Company's most recently completed fiscal year, the Company
increased revenues by 26% over fiscal 1995 to $410.2 million and opened 44 new
offices to expand operations to new key market areas. While earnings per share
was $.08 for fiscal year 1996 as compared to $.20 per share in the prior year,
such decrease is primarily due to several one-time charges aggregating $5.1
million pre-tax, or $.12 per share, net. Results for the year included $3.0
million for a reserve due to a revision in the methodology used to allocate
corporate overhead required by the Company's Medicare intermediary, $1.6 million
for the closure of two unprofitable divisions and $500,000 for other one-time
expenses. Additionally, the Company incurred operating losses prior to closing
its unprofitable divisions of $1.4 million. The Committee also considers
qualitative performance criteria such as the development of new business
strategies and resources, improvements in customer satisfaction and cost
management. During fiscal 1996, the Company completed 14 acquisitions
contributing annualized revenue of approximately $31 million. Additionally, the
Company has expanded its medical staffing operations to 33 locations as of
February 29, 1996.
The Committee believes that it competes for executives not only with the
companies comprising the New Peer Group Index described below under the heading
'Performance Graph' but also with numerous other companies in the home health
care, supplemental staffing and temporary personnel industries that are actively
seeking executives having the same type of skills and experience as the
Company's executives. The Committee has not made a statistical analysis of the
compensation practices of these competitors, but tries to keep itself generally
informed of such practices. The Committee believes that, notwithstanding the
variety of compensation packages offered by these competitors which make
objective comparisons difficult, the compensation paid by the Company to its
executive officers and other key employees is above average, reflecting the
Company's relative size and desire to retain its current employees.
The Committee also considers other subjective factors bearing on the
appropriate compensation for each of its executive officers and other key
employees, such as the length of an employee's service with the Company, which
the Committee believes enhance the value of the employee to the Company. The
Committee takes note of the individual initiative demonstrated by such officers
and employees in the development and implementation of the Company's business
plan. Where appropriate, the Committee will consider the performance of specific
divisions or departments of the Company for which the employee has direct
supervisory responsibility.
When the Company identifies a talented executive, it seeks to secure his or
her employment for a long term. For this reason, the Company has entered into
employment contracts with its executive officers, each of which provides for a
specified base salary. The existence of these employment agreements establishes
certain minimum salary and benefit levels for each covered employee during the
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term of such employee's agreement which may not be reduced by the Committee. The
Committee is able, however, to apply its compensation philosophy at the time
each such employment agreement is negotiated or renewed and in determining what,
if any, additional compensation, including bonuses or issuances of stock or
stock options, is appropriate beyond the minimums established by each employment
agreement.
The particular components of executive compensation employed by the Company
are discussed in greater detail below.
SALARIES
Base salaries for the Company's executive officers and other key employees
are determined initially by evaluating the responsibilities of the position held
and the experience of the individual in light of the Committee's compensation
philosophy discussed above. No specific formula is applied in setting an
employee's base salary, either with respect to the total amount of such base
salary or the relative value such base salary should bear to the employee's
total compensation package. The Committee believes that the base salaries paid
by the Company should be maintained at levels at least competitive with those
offered by companies with which the Company competes for executive talent in
order to attract and retain executive officers and other key employees of the
caliber that the Company desires.
The base salaries for the Company's executive officers and other key
employees are reflected in the employment agreements negotiated by the Company
with each such employee and are accordingly subject to formal review only at the
time each such contract is entered into or renewed. No such contract was entered
into or renewed during the Company's most recently completed fiscal year;
however, a principal subsidiary of the Company entered into an employment
agreement with Mr. Larry Campbell on March 1, 1996.
ANNUAL BONUSES AND INCENTIVE COMPENSATION
The payment of bonuses and other incentive compensation is an important
motivating factor in recognizing an executive's performance each year. For this
reason, the Company adopted a Teamwork Incentive Program commencing with the
Company's 1993 fiscal year to award its officers, including executive officers,
and other corporate employees with cash payments if the Company achieves certain
levels of profitability. Annual payments are made under the Teamwork Incentive
Program in an aggregate amount equal to 10% of the amount by which income from
continuing operations before income taxes (excluding extraordinary items) for a
fiscal year exceeds a specified percentage of the Company's revenues, as
determined by the Board of Directors. For the fiscal year ended February 29,
1996, and for the fiscal year ending February 28, 1997, such percentage was and
will be 2.5%. Any amounts distributed to executive officers of the Company under
the Program are determined by the Committee. In determining the allocation of
the annual payments under the Program, including those to executive officers,
the Committee considers the same factors as it considers in setting base
salaries. For fiscal 1996, no amounts were paid under the Teamwork Incentive
Program as the Company did not meet its performance goals as required by the
terms of the Program.
STOCK OPTION PLANS
To promote the long-term objectives of the Company and encourage growth in
stockholder value, options are granted to key executives who are in a position
to make a substantial contribution to the long-term success of the Company. We
believe that the executive officers should benefit together with stockholders as
the Company's stock increases in value. Stock options focus the executives'
efforts on managing the Company from the perspective of an owner with an equity
stake in the business. Because the Company views stock option grants as a part
of the executive officer's total annual compensation package, the amount of
stock options outstanding at the time of a new grant or granted in prior years
does not serve to increase or decrease the size of the new grant.
In the fiscal year ended February 29, 1996, no options were granted to any
executive officer of the Company; however, on March 1, 1996, Mr. Larry Campbell
was granted options to purchase 100,000 shares of Class A Common Stock of the
Company pursuant to the terms of his employment agreement.
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With respect to the executive officers of the Company, an aggregate of 1,115,000
shares of Class A Common Stock vested under the Company's 1994 Performance-Based
Stock Option Plan during fiscal 1996. It is the philosophy of the Committee that
stock options should be awarded to executive officers of the Company to promote
long-term interests between such individuals and the Company's stockholders and
to assist in the retention of such individuals. The 1994 Performance-Based Stock
Option Plan imposes a performance-based condition to exercisability on each
option granted, making it particularly well-suited for these purposes. The
options granted to the Company's key executive officers in fiscal 1995 under
this Plan become exercisable over a four-year period following the date of grant
if and only if the Company experiences certain specified increases in the price
of its Common Stock, thus closely linking the interests of these key executive
officers with those of the Company's stockholders. As with the other components
of executive compensation, the Committee does not apply any fixed formula to
determine the appropriate number of options to grant to an executive but rather
relies on its subjective judgment in applying the compensation philosophy
described above. In order to avoid any adverse effect on the Company's earnings
or cash flow, the Committee has generally relied much more on the granting of
stock options rather than the award of cash bonuses as a means of rewarding the
Company's executive officers and other key employees.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee applies the same factors in considering Stephen Savitsky's
compensation that it applies to the Company's other executive officers and key
employees. Mr. Savitsky's five-year employment agreement establishes his annual
minimum base salary, including the amount of his minimum annual salary
adjustment. The Committee may reduce this base salary only at the time a new
agreement is negotiated, although the Committee does have the ability to award
Mr. Savitsky additional base salary and to give the five year notice necessary
to terminate the agreement. During the fiscal year ended February 29, 1996, the
Committee neither gave notice of termination nor awarded Mr. Savitsky any
additional base salary and he accordingly received a base salary of $423,453
under the terms of his employment agreement. 500,000 options granted to Mr.
Savitsky under the 1994 Performance-Based Stock Option Plan vested during fiscal
1996. During the last fiscal year, Mr. Savitsky's efforts contributed to the
Company's 26% increase in revenues, expansion into new geographic markets and
the strategic positioning of the Company to take advantage of new opportunities
in the nationwide delivery of health services. As Chief Executive Officer, Mr.
Savitsky was responsible for overseeing the addition of 44 new offices and for
increasing the Company's strong cash position, with no borrowings under its $25
million credit line as of the 1996 fiscal year end.
Compensation and Stock Option
Committee
Bernard J. Firestone
Jonathan J. Halpert
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PERFORMANCE GRAPH
The following Performance Graph compares the total cumulative return
(assuming dividends are reinvested) on the Company's Common Stock during the
five fiscal years ended February 29, 1996, with the cumulative return on the
NASDAQ Market Index, a New Peer Group Index and an Old Peer Group Index,
assuming investment of $100 in the Company's Common Stock, the NASDAQ Market
Index, the New Peer Group Index and the Old Peer Group Index at closing stock
prices on February 28, 1991. The New Peer Group selected by the Company consists
of The Olsten Corporation, In Home Health Inc., Hospital Staffing Services,
Inc., Medical Innovations, Inc., The Care Group, Inc. and Caretenders Health
Corp. The New Peer Group consists of a representative group of companies whose
common stock has been publicly-traded during the five years ended February 29,
1996, and each of which, like the Company, engages in providing home health care
and temporary personnel services. Last year, the Company's performance graph
included Hooper Holmes Inc. and Uniforce Services, Inc. which are not included
in this year's Peer Group because Hooper Holmes is no longer engaged in
providing home health care services and Uniforce Services provides temporary
services which are not in the area of health care. The Old Peer Group Index
consists only of The Olsten Corporation, In Home Health, Inc. and Hospital
Staffing Services, Inc., the three remaining companies from the peer group index
used by the Company last year.
The Performance Graph below is presented in accordance with SEC
requirements. Stockholders are cautioned against drawing any conclusions from
the data contained herein, as past results are not necessarily indicative of
future stock performance. The Performance Graph in no way reflects the Company's
forecast of future stock price performance.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG STAFF BUILDERS, INC, NASDAQ MARKET
INDEX AND TWO PEER GROUP INDEXES
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
COMPANY/INDEX NAME FEB 91 FEB 92 FEB 93 FEB 94 FEB 95 FEB 96
- - ------------------------------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
STAFFBUILDERS INC. 100 280.15 260.09 433.51 336.87 313.45
NASDAQ 100 127.16 146.55 168.48 170.89 238.07
NEW PEER GROUP 100 180.09 211.14 233.81 249.13 323.53
OLD PEER GROUP 100 190.35 241.51 266.96 284.54 380.65
</TABLE>
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CERTAIN TRANSACTIONS
Effective April 1, 1992, the Company approved the sale by CTR Management
Corp. ('CTR') of a Staff Builders franchise for Nassau County, New York to Bayit
Care Corp. ('BCC'). The shareholders, officers and directors of BCC are Stuart
Savitsky, son of Stephen Savitsky, Chairman of the Board, President and Chief
Executive Officer of the Company, Samuel Schreier, the son-in-law of Stephen
Savitsky, and Julie Schreier, the daughter of Stephen Savitsky. The terms and
conditions of the franchise agreement between the Company and BCC, entered into
at the time of the sale, are substantially similar to those for other
franchisees of the Company, including the term of ten years with a five year
renewal option. In connection with the acquisition of its franchise, CTR
purchased certain assets of an existing branch office of the Company for
$911,000. The purchase price was evidenced by a promissory note, dated August
30, 1989. BCC purchased the franchise from CTR by assuming this promissory note
which, at the time of BCC's purchase of the franchise, had an outstanding
principal balance of $844,573 (the 'BCC Note'). The terms of the BCC Note
originally provided for repayment of the outstanding principal amount in 120
consecutive monthly installments of $7,038 each, commencing May 1, 1994,
together with interest at 3% over the prime rate, payable monthly. Effective
June 1, 1994, the BCC Note was amended and restated to (i) provide for the
repayment of the outstanding principal amount over a fifteen (15) year period,
and (ii) reduce the interest rate to the prime rate. The amended principal
payment schedule requires fixed monthly principal payments of $3,500 each with
all unpaid principal due at the end of the fifteen (15) year period or earlier
upon the termination of the franchise agreement for such franchise. The BCC Note
is secured by all of the franchisee's assets. The Company restructured the BCC
Note because it found the additional monthly expense associated with the start
of the principal repayment schedule in May 1994 to have a clear negative impact
on the franchisee's ability to operate the franchise. As described in greater
detail below, during the fiscal year ended February 29, 1996, the Company
retained $69,436 from the amount otherwise due to BCC under the terms of its
franchise agreement as interest payments on the BCC Note. The outstanding
balance of the BCC Note was $771,073 at February 29, 1996.
Effective August 23, 1993, Home Care Plus, Inc. ('Home Care') acquired a
franchise from the Company for Bristol and Barnstable counties in Massachusetts.
Mr. Edward Teixeira, Senior Vice President, Franchising of a principal
subsidiary of the Company, and his wife, each owns 25% of the outstanding
capital stock of Home Care. In purchasing the franchise, Home Care paid a
$23,000 franchise fee, received a commitment to advance up to $75,000 for
expenses from the Company, issued a $75,000 promissory note (the 'Home Care
Note') to the Company with respect to such advance, and entered into a franchise
agreement with the Company. Interest on the Home Care Note is computed at 3%
over the prime rate and is payable monthly beginning September 1, 1994. The
principal amount is payable in 60 consecutive monthly installments of $1,250
each, beginning September 1, 1994. The terms and conditions of the franchise
agreement between the Company and Home Care are substantially similar to those
for other franchisees of the Company, including the term of ten years with a
five year renewal option. During the fiscal year ended February 29, 1996, the
Company retained $9,483 from the amount otherwise due Home Care under the terms
of its franchise agreement as interest payments on the Home Care Note. The
outstanding balance of the Home Care Note was $50,994 at February 29, 1996.
Effective February 6, 1995, Home Care Plus Two, Inc. ('Home Care Two')
acquired a franchise from the Company for Worcester, Hampden and Franklin
counties in Massachusetts. Mr. Teixeira and his wife each owns 25% of the
outstanding capital stock of Home Care Two. During fiscal 1996, Home Care Two
paid $29,500 for the purchase of this franchise. The terms and conditions of the
franchise agreement between the Company and Home Care Two are substantially
similar to those for other franchisees of the Company, including the term of ten
years with a five year renewal option.
Effective October 1, 1993, Partners Two Management Corp. ('Partners')
acquired an existing franchise for Suffolk County, New York from an unaffiliated
franchisee of the Company. Prior to July 20, 1995, Ms. Sharon Hamilton, who was
Executive Vice President, Health Care Operations of a principal subsidiary of
the Company through May 1, 1996, owned 50% of the outstanding stock of Partners.
Effective July 20, 1995, Ms. Cynthia Nye, Senior Vice President, Corporate
Support of a principal subsidiary of the Company, acquired 9% of the outstanding
stock of Partners, reducing Ms.
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Hamilton's interest to 45.5%. The terms and conditions of the franchise
agreement between the Company and Partners are substantially similar to those
for other franchisees of the Company, including the term of ten years with a
five year renewal option. In connection with acquiring the franchise, Partners
assumed the obligations owing under a promissory note (the 'Partners Note')
issued by the former franchisee to the Company, and entered into a franchise
agreement with the Company. When originally issued by the former franchisee on
December 31, 1988, the Partners Note was in the principal amount of $446,910. On
the date of its assumption by Partners, the Partners Note had an outstanding
principal balance of $300,000. The Partners Note bears interest at 2% over the
prime rate of interest charged by Mellon Bank, N.A., and is payable monthly, in
arrears, beginning on November 1, 1993. Principal is payable in 96 consecutive
monthly installments of $3,125 each, beginning October 1, 1995. Ms. Sharon
Hamilton and the owner of the other 45.5% interest in Partners have jointly and
severally guaranteed payment of all amounts due under the Partners Note. As
described in greater detail below, during the fiscal year ended February 29,
1996, the Company retained $31,777 from the amount otherwise due Partners under
the terms of its franchise agreement as interest payments on the Partners Note.
The outstanding balance of the Partners Note was $281,250 at February 29, 1996.
Effective March 10, 1996, the Company acquired certain assets of American
Home Care Management, Incorporated ('American'). At the time of acquisition, Mr.
Larry Campbell, together with his wife, owned 51% of the outstanding capital
stock of American. The purchase price paid by the Company was $450,000. The
acquired assets were transferred to a newly formed corporation, American
Homecare Management Corp. ('AHCM'). Mr. Campbell owns 5.1% of the outstanding
capital stock and serves as a director of AHCM. The Company owns 90% of the
outstanding capital stock of AHCM.
Under the Company's franchise program, the Company processes and pays the
payroll to the field employees who service clients and invoices the clients for
such services. Each month the Company pays the franchisee 60% of the gross
margin dollars (in general, the difference between the amount so invoiced and
the payroll and related expenses for such field employees) from the franchisee's
business for the prior month's activity. Franchisees are responsible for their
general and administrative expenses, including office payroll. If the franchisee
elects, the Company will process payment of the franchisee's office payroll and
some or all of the franchisee's other administrative expenses, and withhold the
amount so expended from the 60% gross margin otherwise due the franchisee.
During the fiscal year ended February 29, 1996, the Company paid (i) BCC
$194,300 under the terms of its franchise agreement, representing a 60% gross
margin of $1,143,254 less $69,436 and $42,000 of interest and principal,
respectively, withheld on the BCC Note and $837,518 withheld for administrative
expenses; (ii) Home Care $1,066,445 under the terms of its franchise agreement,
representing a 60% gross margin of $1,566,278 less $9,483 and $14,925 of
interest and principal, respectively, withheld on the Home Care Note and
$475,425 withheld for administrative expenses; and (iii) Partners $1,061,844
under the terms of its franchise agreement, representing a 60% gross margin of
$2,979,588 less $31,777 and $18,750 of interest and principal, respectively,
withheld on the Partners Note and $1,867,217 withheld for administrative
expenses.
To a great extent, the success of the Company is dependent upon the success
of its approximately 85 franchisees. In order to facilitate the acquisition of a
franchise by a willing prospective franchisee, the Company will frequently
accept a promissory note as consideration for the purchase from the Company of
an existing branch location and will occasionally advance expenses to a
franchisee. The Company's transactions with BCC, Home Care, Home Care Two and
Partners described above are consistent with this business purpose and with
accommodations granted to other, unaffiliated franchisees in the past.
Prior to March 31, 1996, Messrs. Stephen Savitsky and David Savitsky were
directors and each owned one-third of the capital stock of Offset House, Inc.
('Offset House'), a private printing company that on occasion provides services
to the Company. For the fiscal year ended February 29, 1996, the Company paid
approximately $121,535 for such services. The Company has also engaged Offset
House during its 1997 fiscal year. The Company believes that the terms of such
transactions are as favorable as the Company would have received in arm's length
transactions with an unaffiliated party. As of March 31, 1996, Messrs. Stephen
Savitsky and David Savitsky are no longer directors or owners of Offset House.
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Mr. Donald Meyers, a director of the Company, is also the President and
sole director and stockholder of RMR Health & Hospital Management Consultants,
Inc. ('RMR Health'), a health care consulting firm. From time to time, the
Company has engaged RMR Health to perform consulting services on the Company's
behalf. For the fiscal year ended February 29, 1996, the Company paid RMR Health
$28,623 in fees for such services. The Company has also engaged RMR Health
during its 1997 fiscal year. The Company believes that the terms of such
transactions are as favorable as the Company would have received in arm's length
transactions with an unaffiliated party.
Although the Company has no formal policy regarding transactions with
affiliates, it does not intend to enter into a transaction with any affiliate on
terms less favorable to the Company than those it would receive in an arm's
length transaction with an unaffiliated party.
STOCKHOLDER PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the Annual Meeting of the Company to be held in 1997
must submit the same in writing so as to be received at the executive offices of
the Company on or before February 20, 1997. Such proposals must also meet the
other requirements of the rules of the Securities and Exchange Commission
relating to stockholder proposals.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected the firm of Deloitte &
Touche, LLP as the independent certified public accountants to audit the
accounts of the Company for the fiscal year ending February 28, 1997. A
representative of Deloitte & Touche, LLP, which also audited the accounts of the
Company for the fiscal year ended February 29, 1996, is expected to be present
at the Annual Meeting, with an opportunity to make a statement, if he so
desires, and to respond to appropriate questions at the meeting.
GENERAL
The management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before this meeting, it is
intended that proxies in the accompanying form will be voted on any such matters
in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such matters is conferred by such proxies by
the persons voting them.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING SOLICITED BY
THIS PROXY STATEMENT, UPON WRITTEN REQUEST, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. ALL SUCH REQUESTS SHOULD BE DIRECTED TO MR.
GARY TIGHE, STAFF BUILDERS, INC., 1983 MARCUS AVENUE, LAKE SUCCESS, NEW YORK
11042.
Insofar as any of the information in this Proxy Statement may rest
peculiarly within the knowledge of persons other than the Company, the Company
has relied upon information furnished by them.
By Order of the Board of Directors
DAVID SAVITSKY
Secretary
Dated: June 20, 1996
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APPENDIX 1 -- PROXY
PROXY
STAFF BUILDERS, INC.
ANNUAL MEETING OF STOCKHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen Savitsky and David Savitsky and
each of them (with power of substitution) proxies of the undersigned to
represent and vote, as designated below, all shares of Class A Common Stock,
$.01 par value per share (the 'Class A Common Stock'), and Class B Common Stock,
$.01 par value per share (the 'Class B Common Stock'), of Staff Builders, Inc.
(the 'Company') which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders to be held on August 15, 1996 and
at any adjournment thereof. Each holder of shares of Class A Common Stock is
entitled to one vote for each share held by such holder. Each holder of shares
of Class B Common Stock is entitled to ten votes for each share held by such
holder.
[x] Please mark your
votes as in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of Class C Director
Nominee for Class C Director: STEPHEN SAVITSKY
FOR Nominee [ ] WITHHOLD AUTHORITY for Nominee [ ]
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In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the annual meeting.
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This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted 'FOR' Item 1.
Date: ________________________, 1996
Signature(s): ______________________
IMPORTANT: PLEASE DATE AND SIGN AS
YOUR NAME APPEARS ABOVE AND RETURN
IN THE ENCLOSED ENVELOPE.
WHEN SIGNING AS EXECUTOR, AS
ADMINISTRATOR, TRUSTEE, GUARDIAN,
ETC., PLEASE GIVE FULL TITLE AS
SUCH. IF THE STOCKHOLDER IS A
CORPORATION, THIS PROXY SHOULD BE
SIGNED IN THE FULL CORPORATION NAME
BY A DULY AUTHORIZED OFFICER WHOSE
TITLE IS STATED.
