SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[X] Filed by the registrant
[ ] 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 Rule 14a-11(c) or Rule 14a-12
Commission File Number 0-11781
HOSPITAL STAFFING SERVICES, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2150637
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6245 NORTH FEDERAL HIGHWAY, SUITE 400
FORT LAUDERDALE, FLORIDA 33308-1900
(Address of principal executive offices)
(305) 771 - 0500
Registrant's telephone number, including area code
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 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 the 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 transactions apply:
(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 the 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>
HOSPITAL STAFFING SERVICES, INC.
6245 NORTH FEDERAL HIGHWAY
SUITE 400
FORT LAUDERDALE, FLORIDA 33308
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 17, 1995
The 1994 Annual Meeting of Shareholders of HOSPITAL STAFFING SERVICES,
INC., a Florida corporation (the "Company"), will be held at the Westin Hotel,
400 Corporate Drive, Fort Lauderdale, Florida 33308 (I-95 and Cypress Creek), on
November 17, 1995, at 9:00 A.M., E.D.T., for the following purposes:
1. To elect a Board of Directors, as more fully described in the
accompanying Proxy Statement, to hold office until the next Annual Meeting of
Shareholders or until their successors are duly elected and qualified;
2. To ratify the appointment of Arthur Andersen & Co., independent
certified public accountants, as the Company's auditors; and
3. To transact such other business as may properly come before the
meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on September 28,
1995 as the record date for determination of shareholders entitled to notice of
and to vote at the meeting and any and all adjournments thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card as promptly as possible in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald A. Cass, Secretary
Fort Lauderdale, Florida
October 18, 1995
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE
RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AT THEIR
EARLIEST CONVENIENCE. PROMPTNESS IN RETURNING THE EXECUTED PROXY CARD WILL BE
APPRECIATED. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE
MEETING, REVOKE THEIR PROXY, AND VOTE THEIR SHARES IN PERSON.
<PAGE>
PROXY STATEMENT
HOSPITAL STAFFING SERVICES, INC.
6245 NORTH FEDERAL HIGHWAY
SUITE 400
FORT LAUDERDALE, FLORIDA 33308
ANNUAL MEETING OF SHAREHOLDERS
---------
THE PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY
THE BOARD OF DIRECTORS OF HOSPITAL STAFFING SERVICES, INC., A FLORIDA
CORPORATION (THE "COMPANY"), OF PROXIES FOR USE AT THE 1994 ANNUAL MEETING OF
SHAREHOLDERS ("ANNUAL MEETING") TO BE HELD AT THE WESTIN HOTEL, 400 CORPORATE
DRIVE, FORT LAUDERDALE, FLORIDA 33308 (I-95 AND CYPRESS CREEK ROAD), ON NOVEMBER
17, 1995, AT 9:00 A.M., E.D.T., AND AT ANY AND ALL ADJOURNMENTS THEREOF. THE
COMPANY'S TELEPHONE NUMBER IS 305-771-0500.
SHARES OUTSTANDING AND VOTING RIGHTS
The number of outstanding voting securities of the Company entitled to
one (1) vote per share on September 28, 1995, was 6,349,770 shares of the
Company's common stock, $.001 par value (the "Common Stock"). In accordance with
the Bylaws of the Company, holders of record of the Common Stock at the close of
business on September 28, 1995, will be entitled to notice of, and to one vote
per share on each matter submitted to or acted upon by the Shareholders at the
Annual Meeting. Only shareholders of record on that date, on which the transfer
books of the Company remained open, will be entitled to vote. Holders of shares
of Common Stock are not entitled to cumulate their votes. The election of the
directors nominated will require a plurality of the votes cast by the shares
entitled to vote at the Annual Meeting at which a quorum is present; and, if a
quorum is present, ratification of the appointment of the Company's auditors
will require that the votes cast favoring such proposal exceed any votes cast
opposing such proposal.
Abstentions and "broker non-votes" (as defined below) are counted as
shares eligible to vote at the Annual Meeting in determining whether a quorum is
present, but do not represent votes cast with respect to any Proposal. "Broker
non-votes" are shares held by a broker or nominee as to which instructions have
not been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power.
PROXIES/REVOCABILITY
A shareholder who submits a proxy on the accompanying form has the
power to revoke it by notice of revocation directed to the proxy holders of the
Company at any time before it is voted. Unless authority is withheld or a
shareholder otherwise abstains from voting, in which case their vote will not be
counted, proxies which are properly executed in favor of or against
<PAGE>
the proposals set forth therein will be voted accordingly. Although a
shareholder may have given a proxy, such shareholder may nevertheless attend the
meeting, revoke the proxy and vote in person.
COST AND METHOD OF SOLICITATION
The cost of this solicitation of proxies will be borne by the Company,
including expenses in connection with preparing, assembling and mailing the
proxy solicitation materials and the charges and expense of brokerage houses and
other custodians, nominees and fiduciaries for forwarding solicitation materials
to beneficial owners. In addition to solicitation by mail, proxies may be
solicited personally or by telephone, telegraph, facsimile or electronic mail,
by directors, officers or employees of the Company, who will receive no
additional compensation for such services.
ANNUAL REPORT AND MAILING OF PROXY STATEMENT AND PROXY
The Annual Report of the Company for the fiscal year ended November 30,
1994 is being mailed together with this Proxy Statement and Proxy. The date of
mailing of this Proxy Statement and Proxy is approximately October 18, 1995.
<PAGE>
ELECTION OF DIRECTORS
Four Directors are to be elected for a term that expires at the next
annual meeting of the Company's shareholders or until the election and
qualification of their successors. It is the intention of the persons named in
the proxy to vote the proxies for the election as Directors of Ronald A. Cass,
Robert B. Fields, William F. McConnell, and Hector Luis Ziperovich, M.D. All of
the nominees are currently Directors of the Company. Directors will be elected
by the vote of a majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election
of Directors.
The names of the nominees, their principal occupations and the year in
which they became Directors, are set forth below. Unless otherwise indicated,
the business address of each person listed is 6245 North Federal Highway, Suite
400, Fort Lauderdale, Florida 33308.
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION
NAME AND DIRECTOR
PRINCIPAL OCCUPATION AGE SINCE
- -------------------- --- -----
<S> <C> <C>
Ronald A. Cass 50 1982
Chairman of the Board,
Chief Executive Officer,
President, Acting Chief Financial
Officer and Treasurer,
Hospital Staffing Services, Inc.
William F. McConnell 54 1986
Managing Director,
Emerald Capital Services, Inc.
Hector Luis Ziperovich, M.D. 41 1992
Medical Director,
Hospital Staffing Services, Inc.
Robert B. Fields 58 1995
Chairman of the Board,
Chief Executive Officer
Associates for Managed Care, Inc.
</TABLE>
Directors are elected for a term that expires at the next annual
meeting of the Company's shareholders. Officers are elected by and serve at the
pleasure of the Board of Directors, subject to the terms of employment
contracts, if any, between the Company and any such officer. The Company pays
Directors who are not officers of the Company $750 and travel expenses for each
meeting attended. During fiscal year 1994, the Board of Directors held 10
meetings, and no
<PAGE>
director attended fewer than 75% of the meetings.
During 1994, Brian M. Lechner, an executive officer and director of the
Company, and Jack R. Kronfeld, a director, resigned.
No director, officer, affiliate, beneficial owner of more than 5% of
the Company's Common Stock or associate of any of the foregoing is a party
adverse or has a material interest adverse to the Company or any of its
subsidiaries.
RONALD A. CASS founded the Company in 1981 and has been Chairman of the
Board since March 1982, Chief Executive Officer from April 1989 to the present,
President from March 1982 to April 1989 and December 1992 to the present,
Secretary from December 1992 to May 1993, Chief Financial Officer from April
1986 to April 1989, and Acting Chief Financial Officer and Acting Treasurer from
May 1995 to the present.
WILLIAM F. MCCONNELL was elected to the Company's Board of Directors in
1986. In early 1994, Mr. McConnell became Managing Partner of Emerald Capital
Services, Inc., a consulting firm offering management and financial services to
small public companies. From 1991 through 1993, Mr. McConnell was Chairman of
the Board, Chief Operating Officer and Vice President of Dollar Time Group,
Inc., a publicly-held national discount retail chain. On July 24, 1995 Dollar
Time Group, Inc. filed for bankruptcy protection under Chapter 11 of the Federal
Bankruptcy laws. From 1987 and through 1992, Mr. McConnell was the President of
Travel Data & Marketing, Inc., an international travel research firm with
offices in Rome, Paris, London and Zurich.
HECTOR LUIS ZIPEROVICH, M.D. was elected to the Company's Board of
Directors effective February 1992. Since January 1993, Dr. Ziperovich has been
the Company's National Medical Director. From November 1990 to early 1992, Dr.
Ziperovich was Medical Director of Mediflex Acute Staffing Services, a home
health agency, the assets of which were acquired by the Company in early 1992.
Since 1987, Dr. Ziperovich has served as Medical Director of HLZ Acute Dialysis
Service and Clinica Medica del Pueblo (Multi-Specialty Clinic), both of which
are located in Montebello, California. Dr. Ziperovich is a licensed and
practicing physician in the State of California.
ROBERT B. FIELDS was elected to the Company's Board of Directors
effective July 1995. He is President of Tradestar Ltd., a New York City based
financial and management consulting firm. Since November 1992, Mr. Fields has
been Chairman and CEO of Associates for Managed Care, Inc., a provider of cost
containment and preventative social intervention services to the managed care
industry. Prior thereto, Mr. Fields was President, CEO and a Director of
L'Express, Inc., an interstate regional airline based in New Orleans. From
January 1987 through June 1988, Mr. Fields was Executive Vice President of
American Finance Group, Inc., an equipment leasing and asset management company
headquartered in Boston. Mr. Fields is on the Board of Directors of Printron,
Inc., Albuquerque, NM, and an advisory director of Quadra Interactive, Inc. of
Carlsbad, CA.
<PAGE>
KEY EMPLOYEES
JEFFREY A. BARNHILL, age 38, became the Company's Vice President of
Health Services effective September 1995. Mr. Barnhill has progressed from
Director of Reimbursement to Vice President, Operations to his current position
since his initial employment with the Company in October 1994. Mr. Barnhill has
over fifteen (15) years experience in financial and operations management in the
health care field. From October 1992 until his employment by the Company, Mr.
Barnhill was a principal of O. P. Medical Consultants, Inc., a health care
financial and operations consulting firm. From July 1990 to September 1992, Mr.
Barnhill was Chief Financial Officer and Chief Operating Officer for Omni
Medical Management, Inc., which managed a 35 member physician multi-specialty
group, a home care company, a DME company and a staffing company. From August
1989 to June 1990 Mr. Barnhill was the Director of Reimbursement with Florida
Medical Center, a 400 plus bed acute care and rehab facility. He was also the
controller for Florida Medical Center's affiliate companies. Mr. Barnhill earned
his M.B.A. (Health Care Management) from Nova University and his B.A.B.A.
(Accounting) from Rollins College.
JAY GERSHBERG, age 56, was appointed President of HSSI Travel Nurse
Group in late 1992 and has been Vice President of Marketing and Sales for the
Company's Travel Nurse Group as well as the Executive Search Group since 1984.
BOBBY L. SHIELDS, age 39, became the Company's Corporate Counsel and
Director of Legal and Regulatory Affairs in May 1995 and its Corporate Secretary
in August 1995. Mr. Shields is a licensed member of The Florida Bar, and has a
diverse financial and legal background in corporate and health care matters.
From November 1992 until his employment by the Company, Mr. Shields pursued a
practice in corporate and health care law and commercial litigation. Prior to
becoming a licensed attorney, Mr. Shields was employed in financial and
operations management, most notably during a seven (7) year period from 1982
through 1989 with Coulter Electronics, Inc. Mr. Shields earned his J.D., M.B.A.
(Finance) and B.S.B.A. (Finance) degrees from the University of Florida.
COMMITTEES OF THE BOARD OF DIRECTORS;
BOARD AND COMMITTEE MEETINGS
As permitted by the By-Laws of the Company, the Company has several
standing committees, including an Investment Committee, an Audit Committee, and
a Compensations and Stock Option Committee. The Company does not have a
Nominating Committee or a committee performing a similar function.
The Investment Committee consists of Ronald A. Cass, the Chairman of
the Board, Roderick C. Dickinson and William F. McConnell. This committee
reviews and monitors the investments of the Company and makes recommendations to
the Board of Directors in that regard. During fiscal year 1994, this committee
had no meetings.
The Audit Committee consists of Roderick C. Dickinson and William F.
McConnell.
<PAGE>
The Audit Committee's function is to make recommendations concerning the
effectiveness of the Company's internal auditing methods and procedures, to
determine through discussions with the independent auditors whether any
limitations or instructions have been placed upon them in connection with either
the scope of the audit or its implementation, to review the financial statements
and related notes with the independent auditors to ensure the statements and
notes fully disclose all material facts of the Company, and to recommend
approval or non-approval of such financial statements and related notes. During
fiscal year 1994, the Audit Committee met once, with all members in attendance.
The function of the Compensation and Stock Option Committee, which
consists of William F. McConnell and Hector L. Ziperovich, M.D. (who are not
officers of the Company), is to review and make recommendations to the Board of
Directors regarding practices and procedures relating to the compensation of
executive officers and the establishment and administration of compensation
plans. Additionally, the Compensation and Stock Option Committee oversees the
granting of options pursuant to the Company's stock option plans. See also "1983
Stock Option Plan" and "1990 Stock Option Plan" herein. During fiscal year 1994,
the Compensation and Stock Option Committee had no meetings.
In January 1993, the Company appointed a special committee of its Board
of Directors to work with special counsel and general counsel to oversee the
defense of the federal investigation and to otherwise review the Company's
Medicare operations in South Florida. The special committee initially consisted
of Roderick C. Dickinson, William F. McConnell and Jack Kronfeld. The special
committee has had the responsibility of conducting, through counsel, an internal
investigation into the underlying facts and circumstances which gave rise to the
execution of search warrants at the offices of the Company on December 3, 1992.
The mission of the special committee, through counsel, is to determine the
existence of any criminal fraud in connection with the Medicare operations of
the Company from 1990 through December 3, 1992. During fiscal year 1994, this
committee met seven times, with all members present at each meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF SUCH NOMINEES AS DIRECTORS OF THE COMPANY
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information,
based on 6,349,770 shares of common stock outstanding as of September 28, 1995
(the record date), with respect to (i) each person known to the Company to be
the beneficial owner of more than 5% of the Company's Common Stock, (ii) each
director and executive officer of the Company and (iii) all directors and
executive officers of the Company as a group. This information as to beneficial
ownership was furnished to the Company by or on behalf of the persons named.
Unless otherwise indicated, the business address of each person listed is 6245
North Federal Highway, Suite 400, Fort Lauderdale, Florida 33308.
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
OWNED(1) CLASS(2)
----- -----
<S> <C> <C>
Ronald A. Cass 620,288(3) 10%
Chairman, Chief Executive
Officer, President, Acting
Chief Financial Officer and
Acting Treasurer
Jeffrey A. Barnhill(4) 7,000(5) *(6)
Vice President, Health Services
Jay L. Gershberg 12,534(7) *(6)
Vice President, Ancillary Services
President, Travel Nurse Group
Warren Marmorstein(8) 100,000(9) 2%
Bobby L. Shields(10) 10,000(11) *(6)
Corporate Counsel
Director, Legal & Regulatory
Affairs
Secretary
Roderick C. Dickinson 16,000(12) *(6)
Director
Robert B. Fields 10,500(13) *(6)
Director
William F. McConnell 15,000(14) *(6)
Director
Hector Luis Ziperovich, M.D. 20,500(15)(16) *(6)
Director
<PAGE>
All officers and directors 811,822 13%
as a group (8 individuals)
(3)(5)(7)(9)(11)(12)(13)(14)(15)(16)
The Taneja Group(17) 356,800(18) 6%
Heartland Advisors, Inc.(19) 500,000(20) 8%
Continental Stock Transfer
& Trust Company, Trustee(21) 700,000(22) 11%
<FN>
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended ("Rule 13d-3") and
unless otherwise indicated, represents shares for which the beneficial
owner has sole voting and investment power.
(2) The percentage of class is calculated in accordance with Rule 13d-3 and
assumes that the beneficial owner has exercised any options or other rights
to subscribe which are currently exercisable within sixty (60) days and
that no other options or rights to subscribe have been exercised by anyone
else.
(3) The total amount includes 358,288 shares of Common Stock held jointly by
Mr. Cass and his wife, 7,000 shares held solely by Mr. Cass and options to
purchase 255,000 shares of Common Stock held solely by Mr. Cass.
(4) Mr. Barnhill became the Company's Vice President, Health Services on
September 1, 1995.
(5) Includes stock options to purchase 7,000 shares of Common Stock.
(6) Represents less than 1%.
(7) Includes stock options to purchase 12,500 shares of Common Stock.
(8) On May 1, 1995, Mr. Marmorstein resigned as the Company's Chief Financial
and Administrative Officer, Senior Vice President, Treasurer and Secretary.
(9) Includes stock options to purchase 100,000 shares of Common Stock.
(10) Mr. Shields was hired as the Company's Corporate Counsel and Director of
Legal & Regulatory Affairs on May 29, 1995. Mr. Shields was appointed the
Company's Secretary on August 7, 1995.
(11) Includes stock options to purchase 5,000 shares of Common Stock.
(12) Includes stock options to purchase 15,000 shares of Common Stock.
<PAGE>
(13) Includes stock options to purchase 10,000 shares of Common Stock.
(14) Includes stock options to purchase 15,000 shares of Common Stock.
(15) Includes stock options to purchase 5,000 shares of Common Stock.
(16) Includes warrants to purchase 10,000 shares of Common Stock.
(17) The Taneja Group is a group of related shareholders who have joined
together as a voting group. The business address of the corporation
involved in this group is NuMed Home Health Care, Inc., 6505 Rockside Road,
Suite 400, Independence, OH 44131-2342.
(18) As per Amended Schedule 13D filed with the Securities Exchange Commission
by the Taneja Group on March 27, 1995.
(19) The business address of Heartland Advisors, Inc. is 790 Milwaukee Street,
Milwaukee, WI 53202.
(20) As per Schedule 13G filed with the Securities Exchange Commission by
Heartland Advisors, Inc. on February 15, 1995.
(21) The business address for Continental Stock Transfer & Trust Company is 2
Broadway, New York, NY 10014.
(22) In July 1995, 700,000 shares of Company Common Stock were placed in escrow
with Continental Stock Transfer & Trust Company, as Escrow Agent, pending
the final approval of the Stipulation and Settlement Agreement (the
"Stipulation") in connection with the settlement of a class action suit
filed in the United States District Court for the Northern District of
California styled ROE ET AL. V. HOSPITAL STAFFING SERVICES, INC. Once the
Court has approved the Stipulation, the shares will be distributed to the
authorized claimants in accordance with the Stipulation. The shares will be
voted by the Escrow Agent in the same percentage as the holders of the
remaining outstanding Company shares are voted.
</FN>
</TABLE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During fiscal year 1994, the Company hired William F. McConnell, an
outside director, as a consultant. Such consulting services have included public
relations, the identification and negotiation of strategic alternatives that
would result in maximizing shareholder value and other duties as periodically
assigned by the Chief Executive Officer. Fees earned for such services amounted
to approximately $173,000 for the period March through November 30, 1994. While
future consulting services are expected to be received from the director, the
Company has no commitment to request such services and the Company does not
expect that Mr. McConnell will provide significant future services to the
Company.
During fiscal year 1994, the Company also received consulting services
from Brian M. Lechner, a former officer and director who resigned from the
Company in May 1994. Such services included the sale of the Company's
California, New York and Arizona home health care operations and Medicare
consulting. Fees for such services amounted to $74,142 during 1994. No such
services are expected to be required by the Company in the future.
During fiscal year 1994, the Company changed Hector L. Ziperovich's
services to the Company from employee to consultant. Consulting services, which
began in June 1994, are of a medical advisory nature. Fees for such services
amounted to $8,483 during 1994. While future consulting services are expected to
be received from the director, the Company has no commitment to request such
services.
In June 1993, the Company received proceeds from two secured loans,
each in the principal amount of $240,000 and bearing interest at 11% per annum,
from Ronald A. Cass, Chairman of the Company, and from Brian M. Lechner, who at
the time was an executive officer and director of the Company. During August
1993, in partial consideration for their loans to the Company, Messrs. Cass and
Lechner were each granted stock options to purchase 30,000 shares of Common
Stock at $3.00 per share, which exceeded the market price of the Common Stock at
the date of grant, exercisable immediately over three years. None of these
options are part of the 1983 or 1990 Plan. These loans were repaid in full in
September 1993 by the Company from its revolving line of credit obtained in
August 1993.
SUBSEQUENT EVENTS
Subsequent to fiscal year end 1994, on January 13, 1995, certain assets
of the Company's Broward County, Florida, private duty home health agency were
sold to Ronald A. Cass, the Company's Chairman and Chief Executive Officer. The
assets were sold for $185,000 representing all of the fixed assets and certain
intangible assets. This price, which the Company believes is slightly in excess
of fair market value, was based upon the valuations of the Company's investment
banker and various offers received by the Company from third parties. See also
"Executive Compensation and Other Information" and "Termination and Benefits
<PAGE>
Agreements" below.
INDEBTEDNESS OF DIRECTORS AND MANAGEMENT
As of the year ended November 30, 1994, the Company had loaned,
including interest, $99,851 to Ronald A. Cass, Chairman of the Company, which
loan accrued interest at the rate of 6.5% to 8% per annum. All funds advanced
have been for personal, non-business related purposes. On January 13, 1995, all
advanced funds were repaid to the Company via an offset to the Company's payment
to Mr. Cass of a promissory note in the amount of $1 million. See "Termination
and Benefits Agreements."
As of the beginning of the fiscal year ended November 30, 1994, the
Company had loaned $58,060 to Brian M. Lechner, at the time an executive officer
of the Company, which loan accrued interest at the rate of 6.5% per annum.
During fiscal year 1994, in connection with Mr. Lechner's May 27, 1994
resignation from the Company, the loan was repaid in its entirety.
As of the beginning of the fiscal year ended November 30, 1993, the
Company had loaned $16,747 to Jay Gershberg, an executive officer of the
Company, which loan accrued interest at the rate of 8% per annum. During fiscal
year 1994, additional interest charges accrued on the same terms and conditions
and $1,000 was repaid, resulting in an outstanding balance of $16,230 at
November 30, 1994. All funds advanced have been for personal, non-business
related purposes. Mr. Gershberg's loan has since been repaid in full.
During the fiscal year ended November 30, 1992, the Company had loaned
$34,000 to Warren Marmorstein, at the time an executive officer of the Company
(who resigned his positions with the Company on May 1, 1995). Interest, which
accrued at the rate of 6.5% per annum on $25,000 and 8% per annum on $9,000, has
cumulatively totaled $5,525 resulting in a balance of $39,333 at November 30,
1994. Additionally, during 1994, the Company advanced Mr. Marmorstein an
additional $13,209 bringing his total outstanding balance to $52,542 as of
November 30, 1994. All funds advanced have been for personal, non-business
related purposes. The Company anticipates satisfactory repayment of the loans
under the terms of a promissory note.
During the fiscal year ended November 30, 1992, the Company loaned
$60,000 to William F. McConnell, a director of the Company. Interest, which
accrued at the rate of 8% per annum, has cumulatively totaled $12,157 resulting
in a balance of $72,157 at November 30, 1994. All funds advanced have been for
personal, non-business related purposes. The Company anticipates satisfactory
repayment of the loan under the terms of a promissory note.
<PAGE>
COMPLIANCE WITH SECTION 16 (A) OF THE SECURITIES EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. These insiders are required by the Securities and Exchange
Commission's regulations to furnish the Company with copies of all Section 16
(a) forms they file, including Forms 3, 4 and 5.
To the Company's knowledge, based solely upon review of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended November 30, 1994, all such Section 16
(a) filing requirements were satisfied.
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company
include in this proxy statement a line-graph presentation comparing cumulative,
five-year shareholder returns on an indexed basis with a performance indicator
of the overall stock market and either a published industry index or
company-determined peer group. The Company has approved the use of the Dow Jones
Equity Market Index for the performance indicator of the overall stock market
and an index of health care providers as its selected peer group index. The
selected peer group consists of the following companies: Olsten; Hooper Holmes;
Staff Builders; and Inhome Health. The table below compares the cumulative total
return as of the end of each of the Company's last five fiscal years on $100
invested as of November 30, 1989 in the Common Stock of the Company, the Dow
Jones Equity Market Index and the company-determined peer group as listed above,
assuming the reinvestment of all dividends:
<TABLE>
<CAPTION>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
NOV 1989 NOV 1990 NOV 1991 NOV 1992 NOV 1993 NOV 1994
<S> <C> <C> <C> <C> <C> <C>
HSS 100 44 190 92 26 21
DOW 100 95 107 122 136 138
PEER 100 76 178 228 194 166
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation accrued by the Company
in each of the last three fiscal years for the Company's Chief Executive Officer
and each other executive officer serving as such whose annual compensation
exceeded $100,000 in such year as well as those Company directors who received
compensation from the Company in capacities other than their directorship:
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- ---------------------------
OPTIONS
NAME AND OTHER ANNUAL (NUMBER ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OF SHARES) COMPENSATION
- ------------------ ---- ------ ----- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Cass 1994 $331,003 - $ 85,459(1) - -
Chief Executive Officer, 1993 $330,307 - $ 87,139(1) 30,000(2) -
and President 1992 $330,191 - $ 90,515(1) 25,000 -
Brian M. Lechner 1994(3) $116,382 - $227,043(5) - -
Chief Operating 1993 $188,938 $100,000(4) $ 49,694(5) 80,000(3) -
Officer, Executive Vice 1992 $182,335 $120,750(4) $258,070(5) 75,000 -
President, President of
HSSI HomeCare
Warren A. Marmorstein(6) 1994 $186,339 $ 40,000 $111,175(7) - -
Chief Financial and 1993 $160,245 $ - $ 62,576(7) 50,000 -
Administrative Officer, 1992 $134,836 $ 15,000 $ 13,804(7) 15,000 -
Senior Vice President,
Treasurer and Secretary
Jay Gershberg 1994 $123,227 $ 7,500 $ 30,239(8) - -
Vice President, 1993 $108,908 $ 16,000 $ 43,876(8) 10,000 -
President Travel Nurse 1992 $107,193 $ 10,000 $ 19,877(8) 2,500 -
Group
William F. McConnell 1994 $ - $ - $173,000(9) - -
Director 1993 $ - $ - $ - - -
1992 $ - $ - $ - 5,000 -
Hector L. Ziperovich 1994 $ 39,233 $ - $ 17,575(10) - -
Director 1993 $ 57,832 $ - $ - - -
1992 $ 33,697 $ - $ - 5,000 -
<FN>
- -----------------------------
<PAGE>
(1) Includes payment in lieu of vacation taken (1994 - $29,531; 1993 - $25,774
and 1992 - $33,558); annual deferred retirement compensation (1994 -
$26,480; 1993 - $26,480 and 1992 - $26,480; automobile allowance and
related insurance (1994 - $18,000; 1993 - $20,813 and 1992 - $19,227);
health club benefits in 1994 and 1993; and various other types of insurance
payments; health, disability and life.
(2) During August 1993, in partial consideration of their loans to the Company,
Messrs. Cass and Lechner were each granted options to purchase 30,000
shares of the Company's Common Stock.
(3) Information provided herein on Brian M. Lechner's 1994 compensation
consists of the approximately six-month period from December 1, 1993
through May 27, 1994, the date of Mr. Lechner's resignation from the
Company.
(4) Includes annual $100,000 installment payments of a total of $300,000
inducement bonus for services rendered over three years ending November 30,
1993 (see "Termination and Benefits Agreement"); and
(5) Includes payment in lieu of vacation taken (1994 - $10,690; 1993 - $16,153;
and 1992 - $11,538); gain on sale of Company's Common Stock sold (1992 -
$191,875); annual deferred retirement compensation (1994 - $11,731; 1993 -
$15,040 and 1992 - $15,040); automobile allowance and related insurance
(1994 - $6,000; 1993 - $12,462 and 1992 - $16,677); health club benefits in
1994 and 1993; and various types of insurance payments; health, disability
and life. Also includes $114,971 in severance pay and $74,142 in
post-termination consulting fees in 1994.
(6) Mr. Marmorstein resigned from the Company on May 1, 1995.
(7) Includes payment in lieu of vacation taken in 1990, 1991, 1992, 1993 and
1994 paid in 1994 of $73,790; annual deferred retirement compensation
(1994 - $14,519; 1993 - $12,433 and 1992 - $10,800); automobile benefits
(1994 - $15,636; 1993 - $23,516 and 1992 - $7,312); health club benefits in
1994 and 1993; and various types of insurance payments; health and
disability.
(8) Includes payment in lieu of vacation taken of $7,730 in 1994; gain on sale
of Company's Common Stock sold (1992 - $7,581); annual deferred retirement
compensation (1994 - $9,859; 1993 - $8,805 and $8,320 for 1992); difference
between fair market value and purchase price of Company automobile (1993 -
$11,900); automobile benefits (1994 - $9,000; 1993 - $8,112 and 1992 -
$7,250); health club benefits in 1994 and 1993; and various types of
insurance payments; health and disability.
<PAGE>
(9) In March 1994 the Company engaged William F. McConnell, Director, as a
consultant. Such consulting services have included public relations, the
identification and negotiation of strategic alternatives that would result
in maximizing shareholder value and other duties as periodically assigned
by the Chief Executive Officer. Charges for such services amounted to
$173,000 for the period March 1994 through November 30, 1994.
(10) Represents Medical Director consulting fees and automobile benefits.
</FN>
</TABLE>
STOCK OPTIONS
During fiscal year 1994, no options were granted or exercised to or by
any executive officers or directors of the Company under or outside of any of
the Company's stock options plans.
Option Exercises and Holdings
The following table sets forth information with respect to the named
executives, concerning the exercise of options during the 1994 fiscal year and
unexercised options held as of the end of the fiscal year:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES 1994 FISCAL YEAR
AND 1994 FISCAL YEAR END OPTION VALUES
VALUE OF UNEXERCISED
IN-THE-MONEY
VALUE REALIZED NUMBER OF UNEXERCISED OPTIONS AT FY END (BASED
(MARKET PRICE AT OPTIONS AT FY END ON FY END PRICE OF $/SHARE)
EXERCISE LESS -------------------------- ---------------------------
NAME SHARES EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald A. Cass - - 255,000 - - -
Brian M. Lechner(11) - - - - - -
Warren A. Marmorstein - - 98,334 16,667 - -
Jay Gershberg - - 12,500 - - -
<FN>
- ------------------
(11) Mr. Lechner's previously granted but unexercised stock options expired 90
days after his May 1994 resignation from the Company in accordance with the
applicable provision of the 1990 Stock Option Plan.
</FN>
</TABLE>
<PAGE>
Termination and Benefits Agreements
The Company has agreements with certain of its key employees which
provide for severance payments in the case of voluntary and involuntary
termination, retirement benefits, stock option rights, change in control,
non-disclosure and non-competition provisions. The agreements in place with the
Company's executive officers identified in the table on pages 13 and 15 are as
follows (the Company's obligation to other key employees in the case of their
termination is not deemed to be material because it represents only a small
portion of the Company's obligation to all key employees):
As the Company's Chief Executive Officer and President, Mr. Ronald A.
Cass receives from the Company a base salary, annual incentive compensation not
to exceed 100% of base salary, to be paid from a bonus pool based upon the
Company's annual pre-tax profits, and other benefits and compensation granted by
the Board of Directors. In connection with his employment, Mr. Cass was granted
options in December 1990 outside of the Company's 1983 and 1990 Stock Option
Plans to purchase 200,000 shares of the Common Stock at $3.375 (the then current
market value) per share vesting over a period of three years and with a
restriction that 40% of all stock options exercised cannot be sold for a period
of three years from the date of exercise. Pursuant to the terms of such grant,
which further provided for an accelerated vesting schedule of such options in
the event that the market value of the Common Stock increased by more than 20%
from the value on the date of grant, such options have since become immediately
exercisable. The Company also provides certain retirement benefits for Mr. Cass,
as described below, and has purchased a split dollar life insurance policy with
a death benefit of $1 million for Mr. Cass. The Company has a non-qualified
retirement plan to which the Company may contribute 0-15% of the participant's
annual base salary. Mr. Cass has participated in this plan since its inception
in 1991 and received 8% of his annual salary for fiscal years 1991, 1992, 1993
and 1994. Effective June 1, 1991, Mr. Cass entered into a Termination and
Benefits Agreement. Pursuant to the Termination and Benefits Agreement and
subject to Mr. Cass' termination from the Company without cause, voluntarily or
with cause, Mr. Cass will be entitled to the benefits and compensation existing
at the time of his termination for either a five, three or two-year period,
respectively, following such termination. If, however, Mr. Cass should
voluntarily resign, he shall be required to furnish certain consulting services
to the Company. The Termination and Benefits Agreement also provides that either
in the event of Mr. Cass' termination or in the event of change in control (as
defined in the Termination and Benefits Agreement) while Mr. Cass is serving as
the Company's Chairman, all options granted to Mr. Cass shall be deemed
immediately and fully vested. The provisions of the Termination and Benefits
Agreement have been modified as set forth below.
On December 30, 1994, the Company and Mr. Cass, its Chairman and Chief
Executive Officer, entered in an agreement to modify the Termination and
Benefits Agreement dated June 1, 1991. In lieu of the Company's future
obligation to the Chief Executive Officer of between three and five years of
base salary and certain benefits (as defined), totaling approximately $1.2-$2
million, which would result from a termination of the Chief Executive Officer
upon his resignation or dismissal by the Company without cause, respectively,
the Company and the Chief
<PAGE>
Executive Officer agreed to currently settle the future obligation for $1
million. In connection with the agreement, effective on January 1, 1995, the
Chief Executive Officer also agreed to reduce his future base salary from
$330,000 to $175,000 per year.
Mr. Cass continues in the Company's employ and upon 90 days written
notice from the Company, can be terminated at will whereby the Company's only
continuing obligation, in addition to the remaining unpaid portion of the $1
million settlement discussed above, would be for the payment of certain benefits
(primarily life, health and disability insurance) for a period of one year.
In connection with the subsequent fiscal year end 1994 sale of the
Broward County private duty home health agency to Mr. Cass, which occurred on
January 13, 1995, $185,000 of the $1 million obligation was satisfied as an
offset to the purchase price of the Broward County agency. Additionally,
$100,000 of the $1 million obligation was satisfied as settlement of the amounts
advanced from the Company to Mr. Cass in prior years. The remaining obligation
of $715,000 will be satisfied through installment payments under a promissory
note dated January 13, 1995. The promissory note requires monthly installments
of $13,000 plus accrued interest at prime rate per annum from the date of the
agreement for a period of 55 months. The promissory note provides for
acceleration of the balance due to be immediately payable to Mr. Cass upon the
Company's default as defined in the Promissory Note.
As the Company's Chief Financial and Administrative Officer and Senior
Vice President, Warren A. Marmorstein received a base salary, a performance
bonus, and other benefits as are generally granted to senior executives of the
Company. In connection with his employment, Mr. Marmorstein was granted options
under the Company's 1990 Stock Option Plan to purchase an aggregate of 50,000
shares of the Common Stock at $3.00 (the then current market value) per share
vesting over a period of three years. Mr. Marmorstein also participated in the
Company's retirement plan, as described above, and received 8% of his annual
base salary for fiscal years 1991, 1992, 1993 and 1994. In addition, the Company
purchased a split dollar life insurance policy for Mr. Marmorstein with a death
benefit of $500,000. Effective November 1, 1993, Mr. Marmorstein entered into a
new Termination and Benefits Agreement, superseding his previous Termination and
Benefits Agreement, which provided that in the event of Mr. Marmorstein's
termination from the Company without cause, voluntarily or with cause, he will
receive the benefits and compensation existing at the time of his termination,
including bonuses, for either a two, one or one-year period, respectively,
following such termination, subject to Mr. Marmorstein's compliance with certain
non-competition provisions contained therein. The Termination and Benefits
Agreement also provided that either in the event of Mr. Marmorstein's
termination or in the event of a change in control, as defined, all options
granted to Mr. Marmorstein would be deemed immediately and fully vested and Mr.
Marmorstein would also receive 10,000 shares of the Common Stock for no
additional consideration.
Subsequent to fiscal year end 1994, on March 31, 1995, the Company and
Mr. Marmorstein, entered in an agreement to modify the Termination and Benefits
Agreement dated November 1, 1993. Pursuant to the modified agreement, Mr.
Marmorstein resigned as an
<PAGE>
officer and employee of the Company as of May 1, 1995, and agreed to accept
severance payments in the amount of $630,000, evidenced by a non-interest
bearing, unsecured promissory note, payable over 24 months, commencing May 1,
1995. Mr. Marmorstein is subject to a one year non-competition provision and to
confidentiality of the trade secrets of the Company.
Effective June 29, 1993, Jay Gershberg, Vice President and President of
the Travel Nurse Group, entered into a Termination and Benefits Agreement with
the Company. This Agreement provides that in the event of Mr. Gershberg's
termination from the Company without cause, he will receive his base
compensation existing at the time of termination for a six-month period
following such termination. This Agreement also granted Mr. Gershberg options to
purchase 10,000 shares of the Common Stock at $3.00 per share, which exceeded
the market price per share at the date of grant, vesting April 1, 1994, and
exercisable April 1, 1997, or the date of the employee's termination. If his
termination is without cause, the options shall immediately vest and be
exercisable for 90 days. Mr. Gershberg also participate in the Company's
retirement plan, as described above, and received 8% of his annual base salary
for fiscal years 1992, 1993 and 1994.
Upon his resignation on May 27, 1994, Brian M. Lechner, the Company's
Executive Vice President and Chief Operation Officer, entered into a Termination
Agreement (the "1994 Agreement") dated May 27, 1994, which superseded a prior
Termination and Benefits Agreement (the "1991 Agreement") dated June 1, 1994.
The 1994 Agreement provides that compensation and benefits will be received for
a 90-day consulting period beginning May 27, 1994, for a period of one year
thereafter, subject to certain non-competition provisions contained therein. The
Company's obligation for the entire 15-month period, aggregated $310,000. As of
November 30, 1994, the Company's remaining unpaid obligation was $186,000. The
Company has since satisfied its obligations under the 1994 Agreement.
1983 STOCK OPTION PLAN
The Company's 1983 Incentive Stock Option Plan, as amended (the "1983
Plan"), was designed to provide officers and key employees with additional
incentives to promote the success of the Company. The 1983 Plan provided for the
grant of options to purchase 300,000 shares of Common Stock at an exercise price
of not less than 100% of the fair market value of the Common Stock on the date
of grant (110% of fair market value in the case of an optionee who is the owner
of greater than 10% of the outstanding shares).
During the fiscal year ended November 30, 1994, no options were granted
or exercised under the 1983 Plan and none expired. At November 30, 1994, options
to purchase 17,250 shares were outstanding under the 1983 Plan all at an
exercise price of $5.875 per share, all of which were exercisable. These options
are exercisable for up to 10 years from the date of grant. No options will be
granted under the 1983 Plan in the future.
<PAGE>
1990 STOCK OPTION PLAN
In September 1989, the Company's Board of Directors adopted the 1990
Stock Option Plan (the "1990 Plan") in order to increase the number of shares
available for options and to provide a more modern plan than the 1983 Plan. The
1990 Plan, as amended, is designed to attract and retain qualified officers and
other key employees to the Company and to attract qualified persons to serve as
directors of the Company. The 1990 Plan provides that options may be granted to
purchase up to 770,000 shares of Common Stock at an exercise price of not less
than 100% (or 110% under certain circumstances) of the fair market value of the
Common Stock on the date of grant. Options granted under the 1990 Plan are in
the form of either an incentive stock option ("ISO") qualified under Section
422A of the Internal Revenue Code, a non-qualified stock option ("NSO") or a
reload option (a newly issued option to purchase shares of Common Stock equal in
number to the shares of Common Stock which may be tendered, in lieu of cash, to
pay for the exercise of options previously granted).
Options are to be granted during a ten-year period at no less than the
fair market value (as defined in the 1990 Plan) of the Common Stock of the
Company at the date of grant. Limitations are contained in the 1990 Plan
pursuant to which the aggregate fair market value (determined at the time an ISO
is granted) of the Common Stock with respect to which an ISO is first
exercisable during any calendar year shall not exceed $100,000. The options are
not transferable, and with certain exceptions are exercisable only while the
optionee is associated with the Company and for three months thereafter. The
Company's Compensation and Stock Option Committee determine which employees are
awarded options under the 1990 Plan and the terms and vesting provisions of such
options.
During the fiscal year ended November 30, 1992, no options were granted
or exercised under the 1990 Plan. Options for 168,000 shares expired during the
fiscal year ended November 30, 1994. At November 30, 1994, 192,800 options were
outstanding under the 1990 Plan with exercise prices ranging from $3.00 to
$13.50 per share, of which 176,134 options were exercisable for periods ranging
from one to six years from vesting dates. Options not exercisable at November
30, 1994, vest in one year and have exercise periods of up to five years upon
vesting. As of November 30, 1994, 445,750 options were available to be granted
under the 1990 Plan.
OTHER OPTIONS AND WARRANTS
At November 30, 1994, 27,500 options which were not part of the 1983 or
1990 Plan expired.
During fiscal year 1994, the Company issued warrants to acquire 3,750
shares with an exercise price of $.01 to a non-employee in exchange for services
to the Company. These warrants were exercised in August 1994.
During August 1993, in partial consideration of their loans to the
Company, Ronald A.
<PAGE>
Cass and Brian M. Lechner were each granted stock options to purchase 30,000
shares of the Company's Common Stock at $3.00 per share, which exceeded the
market price of the Common Stock at the date of grant, exercisable immediately
over three years. None of these options are part of the 1983 or 1990 Plan. Those
options granted to Mr. Lechner expired during the third quarter of fiscal year
1994, 90 days after his May 27, 1994, resignation from the Company.
During fiscal year 1993, 60,000 stock options were grant among seven
employees (under neither the 1983 nor 1990 Plan) with an exercise price of $3.00
per share, which exceeded the market price of the Common Stock at the date of
grant, vesting April 1, 1994, and exercisable from that date through April 1,
1997, or date of employee termination, whichever is earlier.
In May 1992, 5,000 stock options each were granted (under neither the
1983 nor 1990 Plan) with an exercise price of $10.25 per share, the fair market
value at the date of grant, to Roderick Dickinson and William McConnell, vesting
immediately and exercisable for a period of five years.
During fiscal year 1991, the Company issued warrants to acquire 10,000
shares of its Common Stock to Dr. Hector Ziperovich. These warrants vest over
one year, are exercisable at $7.75, the fair market value at the date of grant
and expire five years from the issuance date.
During fiscal year 1991, the Company issued warrants to acquire 10,000
shares with an exercise price of $9.125 to non-employees in exchange for their
services to the Company. These warrants expired in September 1993.
In December 1990, options were granted to Ronald A. Cass to purchase
200,000 shares of the Company's Common Stock at $3.375 per share, the market
value at the date of grant, vesting over a period of three years, with a
restriction that 40% of all stock options exercised not be sold for a period of
three years from the date of exercise. Pursuant to the term of such grant, which
further provided for an accelerated vesting schedule of such options in the
event that the market value of the Company's Common Stock increased by more than
20% from the value on the date of grant, such options have since become
immediately exercisable. None of the above options are part of either the 1983
or 1990 Plan.
In December 1990, options to purchase 100,000 shares of Common Stock
were granted to Brian M. Lechner (30,769 options under the 1990 Plan, 69,231
options not under either the 1983 or 1990 Plan), with an exercise price of $3.25
per share vesting immediately and exercisable for a period of 36 months from the
date of grant, with any remaining unexercised options expiring November 30,
1993. On such date 85,000 unexercised options expired. On December 1, 1991,
50,000 options were granted at $14.125, the fair market value at the date of
grant, and additionally, on December 1, 1992, 50,000 options were granted at
$6.875, the fair market value at the date of grant. The December 1991 and 1992
options are under the 1990 Plan, vest immediately and are exercisable for a
period of 36 months from their respective dates of grant.
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
In May 1993, the Board of Directors elected Hector Luis Ziperovich,
M.D. to serve as a member of the Compensation and Stock Option Committee.
Concurrent with his tenure on the Committee, Dr. Ziperovich was employed by the
Company as National Medical Director and as the Medical Director of Mediflex
Acute Staffing Services, Inc., a home health agency located in Montebello,
California, the assets of which were acquired by the Company in 1992. Dr.
Ziperovich received an annual salary of $60,000 plus automobile benefits valued
at approximately $9,000 annually. Effective June 1994, Dr. Ziperovich was
terminated as an employee of the Company; however, he continued to assist the
Company with medical consulting. During fiscal year 1994, Dr. Ziperovich
received $56,808 in salary, automobile benefits and consulting fees.
William F. McConnell, a member of the Compensation and Stock Option
Committee, assists the Company with matters relating to public relations, the
identification and negotiation of strategic alternatives that would result in
maximizing shareholder value and other duties as periodically assigned by the
Chief Executive Officer. The director's charges for such services amounted to
$173,000 for the period March 1994 through November 30, 1994.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation and Stock Option Committee is comprised of
two outside members of the Board of Directors, William McConnell and Hector
Ziperovich, M.D., and has an overall responsibility to review and approve the
Company's executive compensation programs. To assist the Company in recruiting,
motivating and retaining high caliber executives, the Committee has approved a
compensation policy that pays key executives for superior results. The current
compensation program for executive officers consists of three major elements:
(1) base salary; (2) performance based discretionary cash bonus; and (3)
periodic stock option grants (which are granted pursuant to the Company's 1990
Stock Option Plan).
BASE SALARY
It is the policy of the Company to review executive officer base
salaries each year in relation to comparable positions of responsibility in
similar sized companies. This does not assure an increase in salary. In
establishing base salary levels, the Committee has considered the
competitiveness of the entire compensation package.
<PAGE>
STOCK OPTION GRANTS
The Company believes that the ability to use the Stock Option Plan to
attract and retain key personnel has been essential to the growth of the
Company. Stock option grants are designed to concurrently reward the
shareholders and recipients since the executive officers realized increases in
value from the stock option will occur only if the stock price, and thus
shareholder value, also increases. Additionally, this element of compensation
encourages and creates ownership and retention of the Company's stock by key
employees and further aligns the long- range interests of these employees with
those of the shareholders by allowing key employees to build a meaningful
ownership stake in the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
It is the policy of the Committee to review the base salary of the
Chief Executive Officer each year in relation to comparable positions of
responsibility in companies of similar size. This does not assure an increase in
salary. Ronald A. Cass receives a base salary, annual incentive compensation not
to exceed 100% of base salary, to be paid from a bonus pool based upon the
Company's annual pre-tax profits, and other benefits granted by the Board of
Directors.
Based on the Company's performance during fiscal 1994, the Compensation
and Stock Option Committee did not increase Mr. Cass' annual base salary from
1993.
In August 1993, Mr. Cass received options to purchase 30,000 shares of
common stock at $3.00 per share exercisable over three years from the grant
date. These were granted in connection with a $240,000 loan made to the Company
by Mr. Cass. The loan has since been paid.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162 (M)
Section 162 (m) of the Internal Revenue Code, as amended, enacted in
1993, generally disallows a tax deduction to public companies for compensation
over $1 million paid to the Chief Executive Officer and the Company's four other
most highly-paid executive officers. Performance based compensation is not
subject to the deduction limit if certain requirements are met. The Company
intends to structure the performance-based position of the compensation to its
executive officers, when and if awarded in the future, (which currently consists
of a stock option and bonus) in a manner that complies with the new statute.
RETIREMENT BENEFIT
The Company's retirement plan provides for the qualified participants
to receive, on an annual basis, 0-15% of their respective annual base salary
depending upon the Company's performance. Since it inception in 1991, the
Company has awarded Messrs. Cass, Lechner, Marmorstein and Gershberg (Mr.
Gershberg since 1992) 8% of their respective annual base salary pursuant to this
plan.
<PAGE>
Submitted by the Compensation Committee of the Board of Directors
/s/WILLIAM F. MCCONNELL 10/18/95 /s/HECTOR ZIPEROVICH, M.D. 10/18/95
- ------------------------------------ --------------------------------------
William F. McConnell Date Hector Ziperovich, M.D. Date
<PAGE>
RATIFICATION OF THE SELECTION OF
ARTHUR ANDERSEN & CO. AS THE COMPANY'S AUDITORS
The Board of Directors of the Company has selected Arthur Andersen &
Co., independent certified public accountants, as independent auditors for the
Company for the fiscal year ended November 30, 1994, and has determined that it
would be desirable to request that the Company's shareholders ratify such
selection.
Although the Board of Directors of the Company is submitting the
appointment of Arthur Andersen & Co. for shareholder ratification, it reserves
the right to change the selection of Arthur Andersen & Co. as auditors, at any
time during the fiscal year, if it deems such change to be in the best interest
of the Company, even after shareholder ratification.
Representatives of Arthur Andersen & Co. are expected to be present at
the Annual Meeting with the opportunity to make a statement if they so desire,
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF ARTHUR ANDERSEN & CO. AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING NOVEMBER 30, 1995
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or
indirect, by securities holdings or otherwise of any officer, director, director
nominee or associate of the foregoing persons in any matter to be acted on, as
described herein, other than elections to offices.
None of the Directors of the Company have informed the Company of any
intention to oppose the corporate actions as described herein.
OTHER MATTERS
Management is not aware of any other business which may come before the
meeting. However, if additional matters properly come before the meeting,
proxies will be voted at the discretion of the proxy holders.
<PAGE>
SHAREHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals intended to be presented at the 1995 Annual
Meeting of Shareholders of the Company must be received by the Company, at its
principal executive offices, no later than April 1, 1996, for inclusion in the
Proxy Statement and Proxy relating to the 1995 Annual Meeting of Shareholders.
<PAGE>
HOSPITAL STAFFING SERVICES, INC.
6245 NORTH FEDERAL HIGHWAY, SUITE 400
FORT LAUDERDALE, FLORIDA 33308
PROXY
The undersigned hereby constitutes and appoints RONALD A. CASS as Proxy,
with the power to appoint his substitute, and hereby authorizes him to
represent and to vote as designated below, all shares of common stock of the
Company held of record by the undersigned on September 28, 1995, at the
Annual Meeting of Shareholders to be held on November 17, 1995, or any
adjournment thereof.
1. Election of Directors FOR all nominees listed below (except as marked to
the contrary.)
[ ] FOR [ ] WITHHOLD AUTHORITY
Ronald A. Cass Robert B. Fields Hector L. Ziperovich, M.D.
William F. McConnell
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE PLEASE
DRAW A LINE THROUGH THAT NOMINEE'S NAME)
2. To ratify the appointment of Arthur Andersen & Co., independent certified
public accountants as the Company's auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
(See reverse side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOSPITAL
STAFFING SERVICES, INC. This Proxy when properly executed will be voted in
the manner directed herein by the undersigned shareholder. If no direction is
made, this Proxy will be voted FOR the nominees listed in Proposal 1 and FOR
Proposal 2.
Dated _______________________________ , 1995
____________________________________________
Signature
____________________________________________
Signature If Held Jointly
____________________________________________
(Please Print Name)
____________________________________________
Number of Shares Subject to Proxy
Please sign exactly as name appears below.
When shares are held by 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 the Corporate
name by President or other authorized
officer. If a Partnership, please sign in
Partnership name by authorized person.
