<PAGE> 1
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
OLSTEN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
OLSTEN CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
LOGO
April 9, 1998
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders of
Olsten Corporation to be held on May 5, 1998 at 9:00 a.m. at our world
headquarters located at 175 Broad Hollow Road, Melville, New York.
The accompanying Notice and Proxy Statement describe the matters to be
voted upon at the Annual Meeting. Holders of Common Stock and Class B Common
Stock will be entitled to one vote and ten votes, respectively, at the Annual
Meeting for each share held of record at the close of business on March 11,
1998, but will vote as separate classes in the election of Directors.
At the Annual Meeting, shareholders will have an opportunity to inquire
about the affairs of the Company that may be of interest to shareholders
generally.
We would appreciate your signing, dating and returning the enclosed proxy
in the envelope provided for that purpose so that your shares may be represented
and voted at the Annual Meeting in the event you do not attend. If you attend
the Annual Meeting, you may withdraw your proxy and vote in person.
Thank you and we look forward to greeting you personally if you are able to
be present.
Sincerely,
FRANK N. LIGUORI
Chairman and Chief Executive Officer
<PAGE> 3
LOGO
175 BROAD HOLLOW ROAD
MELVILLE, NEW YORK 11747-8905
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 1998
------------------------------
TO THE SHAREHOLDERS OF OLSTEN CORPORATION:
You are cordially invited to attend the Annual Meeting of Shareholders of
Olsten Corporation, a Delaware corporation (the "Company"), which will be held
at the executive offices of the Company, 175 Broad Hollow Road, Melville, New
York 11747-8905, on May 5, 1998, at 9:00 o'clock in the forenoon, New York time,
for the following purposes:
1. To elect nine Directors of the Company, three by the holders of
Common Stock voting separately as a class and six by the holders of Class B
Common Stock voting separately as a class, to serve until the next Annual
Meeting of Shareholders and until their successors are elected and qualify;
2. To consider and vote upon a proposal to approve amendments to the
Company's 1994 Stock Incentive Plan;
3. To consider and vote upon a proposal to approve an amendment to the
Company's 1990 Non-Qualified Stock Option Plan for Non-Employee Directors
and Consultants;
4. To consider and vote upon a proposal to approve the Company's Stock
& Deferred Compensation Plan for Non-Employee Directors;
5. To consider and vote upon a proposal to ratify and approve the
appointment by the Board of Directors of Coopers & Lybrand L.L.P. as
independent accountants for the Company for its 1998 fiscal year; and
6. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The stock transfer books of the Company will not be closed but only
shareholders of record at the close of business on March 11, 1998 are entitled
to notice of and to vote at such meeting or any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Laurin L. Laderoute, Jr.
Secretary
Dated: April 9, 1998
Melville, New York
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WE DO HOPE
YOU WILL ATTEND, BUT IF YOU DO NOT INTEND TO BE PRESENT IN PERSON, PLEASE MARK,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY. A STAMPED REPLY ENVELOPE
IS ENCLOSED FOR THAT PURPOSE.
<PAGE> 4
LOGO
175 BROAD HOLLOW ROAD
MELVILLE, NEW YORK 11747-8905
------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 1998
------------------------------
This Proxy Statement is furnished to shareholders of Olsten Corporation, a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Shareholders to be held at the executive offices of the Company, 175 Broad
Hollow Road, Melville, New York 11747-8905, on May 5, 1998, at 9:00 o'clock in
the forenoon, New York time, including any adjournments thereof, for the
purposes set forth in the accompanying Notice of Meeting. Only shareholders of
record at the close of business on March 11, 1998 are entitled to vote at such
meeting. This Proxy Statement and the accompanying proxy are first being sent or
given to shareholders on or about April 9, 1998.
A shareholder who returns the accompanying proxy may revoke it at any time
before it is voted by giving notice in writing to the Company, by granting a
subsequent proxy or by appearing in person and voting at the meeting. Any
shareholder attending the meeting and entitled to vote may vote in person
whether or not said shareholder has previously submitted a proxy. Where no
instructions are indicated, proxies will be voted for the nominees for Directors
set forth herein and in favor of the other proposals described herein.
Proxies marked as abstentions will have the effect of a negative vote.
Broker non-votes (where a nominee holding shares for a beneficial owner has not
received voting instructions from the beneficial owner with respect to a
particular matter and such nominee does not possess or choose to exercise its
discretionary authority with respect thereto) will be considered as present at
the meeting but not entitled to vote with respect to the particular matter and
will have no effect on the vote. Votes are counted by employees of ChaseMellon
Shareholder Services, L.L.C., the Company's independent transfer agent and
registrar.
At the close of business on March 11, 1998, the record date for the
determination of shareholders entitled to vote at the Annual Meeting, the
Company had outstanding 68,159,755 shares of its Common Stock, par value $.10
per share ("Common Stock"), and 13,152,437 shares of its Class B Common Stock,
par value $.10 per share ("Class B Common Stock"). The holders of such Common
Stock and Class B Common Stock are entitled to one vote and ten votes,
respectively, for each share held on such record date, but with respect to the
election of Directors, holders of Common Stock voting separately as a class are
entitled to elect three Directors and holders of Class B Common Stock voting
separately as a class are entitled to elect six Directors.
No person has been authorized to give any information or to make any
representation other than those contained in this Proxy Statement and, if given
or made, such information or representation must not be relied upon as having
been authorized by the Company.
A copy of the 1997 Annual Report to Shareholders, containing the financial
statements of the Company and a report with respect thereto by Coopers & Lybrand
L.L.P., independent accountants, is also being mailed to you herewith. The
Annual Report is not deemed a part of the soliciting material for the proxy.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 11, 1998, the amount and nature
of beneficial ownership of the Company's Common Stock and Class B Common Stock
by each Director and nominee for Director; each beneficial owner of more than
five percent of the Common Stock or Class B Common Stock known by management;
named executive officers of the Company; and all executive officers and
Directors as a group.
Since each share of Class B Common Stock may be converted into one share of
Common Stock, the beneficial ownership rules under the Securities Exchange Act
of 1934 require that all shares of Common Stock issuable upon the conversion of
Class B Common Stock by any shareholder be included in determining the number of
shares and percentage of Common Stock held by such shareholder. The effect of
the assumption that such shareholder has converted into Common Stock the shares
of Class B Common Stock of which such shareholder is the beneficial owner is
also reflected in the following table. For a more complete description of the
method used to determine such beneficial ownership, see footnote (2) to the
following table.
<TABLE>
<CAPTION>
AMOUNT OF SHARES AND NATURE PERCENT OF CLASS IF
OF BENEFICIAL OWNERSHIP(1)(2) MORE THAN 1.0%(2)
---------------------------------------- -------------------------------
COMMON STOCK COMMON STOCK
(IF CLASS B (IF CLASS B
CLASS B COMMON STOCK CLASS B COMMON STOCK
NAME AND ADDRESS COMMON COMMON DEEMED COMMON COMMON DEEMED
OF BENEFICIAL OWNER STOCK STOCK CONVERTED) STOCK STOCK CONVERTED)
------------------- ------ ------- ------------ ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Miriam Olsten 18,000(3) 4,436,766(3) 4,454,766(3) -- 33.7% 6.1%
175 Broad Hollow Road
Melville, NY
Stuart Olsten 57,975(4) 5,876,502(4) 5,934,477(4) -- 44.7% 8.0%
175 Broad Hollow Road
Melville, NY
Cheryl Olsten 4,883,715(5) 4,883,715(5) 37.1% 6.7%
175 Broad Hollow Road
Melville, NY
Andrew N. Heine 15,954(6) 3,127,610(6) 3,143,564(6) -- 23.8% 4.4%
114 West 47th Street
New York, NY
Robert L. Riedinger 5,600,710(7) 5,600,710(7) 42.6% 7.6%
4444 Blackland Drive
Marietta, GA
Victor F. Ganzi 3,003
Frank N. Liguori 1,362,734 9 1,362,743 2.0% -- 2.0%
Stuart R. Levine 10,618(8) --
John M. May 34,500(9) --
Richard J. Sharoff 15,421(10) --
Raymond S. Troubh 92,599(11) 67,735(11) 160,334(11) -- -- --
Josh S. Weston 12,350(12) --
Robert A. Fusco 135,250(13) --
Richard A. Piske, III 59,000(14) --
Anthony J. Puglisi 42,250(15) --
Morgan Stanley, Dean Witter,
Discover & Co. and Miller
Anderson & Sherrerd, LLP 4,512,941(16) 6.6%
1585 Broadway
New York, NY
Pacific Financial Research 3,637,500(17) 5.3%
9601 Wilshire Boulevard
Beverly Hills, CA
All executive officers and 1,951,217(18) 11,944,817(19) 13,896,034(18)(19) 2.8% 90.4% 17.3%
Directors as a group
(15 persons)
</TABLE>
- ---------------
(1) Unless otherwise indicated, the shareholders identified in this table have
sole voting and investment power with respect to the shares beneficially
owned by them.
2
<PAGE> 6
(2) Each named person and all executive officers and Directors as a group are
deemed to be the beneficial owners of securities that may be acquired
within 60 days through the exercise of options or exchange or conversion
rights. Accordingly, the number of shares and percentage set forth opposite
each shareholder's name in the above table under the columns captioned
"Common Stock" and "Class B Common Stock" include shares of Common Stock
and Class B Common Stock (in the case of Mr. Troubh), respectively,
issuable upon exercise of presently exercisable stock options under the
Company's stock option plans, and the columns captioned "Common Stock (if
Class B Common Stock Deemed Converted)" relating to such shareholders
reflect the effect of the right to convert beneficially owned shares of
Class B Common Stock into Common Stock, both with respect to the number of
shares of Common Stock deemed to be beneficially owned and the adjusted
percentage of outstanding Common Stock resulting from such right of
conversion. However, the shares of Common Stock so issuable upon such
exercise, exchange or conversion by any such shareholder are not included
in calculating the number of shares or percentage of Common Stock
beneficially owned by any other shareholder.
(3) Mrs. Olsten owns of record 2,769,144 shares of Class B Common Stock. She
has sole voting and investment power with respect to 730,812 shares of
Class B Common Stock held under a trust and has sole voting and investment
power with respect to 936,810 shares of Class B Common Stock held under a
trust for the benefit of one of her children, of which she is trustee, and
as to which shares she disclaims beneficial ownership. Her holding includes
18,000 shares of Common Stock that may be purchased pursuant to presently
exercisable stock options.
(4) Mr. Olsten's holding includes 3,600 shares of Common Stock owned of record,
200 shares of Common Stock owned of record by his wife, as to which shares
he disclaims beneficial ownership, and 54,175 shares of Common Stock that
may be purchased pursuant to presently exercisable stock options. Mr.
Olsten owns of record 1,929,597 shares of Class B Common Stock and has
shared voting and investment power as a trustee with respect to 2,164,495
shares of Class B Common Stock owned by a trust for his and his sister's
benefit and 1,563,805 shares of Class B Common Stock owned by a trust for
his benefit. He has shared voting and investment power as a trustee with
respect to 45,000 shares of Class B Common Stock owned by a trust for the
benefit of his son, 90,000 shares of Class B Common Stock owned by two
trusts for the benefit of his niece and nephew and 83,605 shares of Class B
Common Stock owned by a trust for the benefit of his descendants, as to
which shares he disclaims beneficial ownership.
(5) Ms. Olsten owns of record 936,810 shares of Class B Common Stock and has
shared voting and investment power as a trustee with respect to 2,164,495
shares of Class B Common Stock owned by a trust for her and her brother's
benefit and 1,563,805 shares of Class B Common Stock owned by a trust for
her benefit. Ms. Olsten has shared voting and investment power as a trustee
with respect to 90,000 shares of Class B Common Stock owned by two trusts
for the benefit of her two children, 45,000 shares of Class B Common Stock
held by a trust for the benefit of her nephew and 83,605 shares of Class B
Common Stock owned by a trust for the benefit of her descendants, as to
which shares she disclaims beneficial ownership.
(6) Includes 13,500 shares of Common Stock that may be purchased pursuant to
presently exercisable stock options, 575 shares of Common Stock as to which
Mr. Heine has an indirect beneficial interest and 1,200 shares owned by Mr.
Heine's wife, as to which shares he disclaims beneficial ownership. Mr.
Heine has shared voting and investment power as a trustee with respect to
1,563,805 shares of Class B Common Stock owned by a trust for the benefit
of Stuart Olsten and as a trustee with respect to
(footnotes continued on next page)
3
<PAGE> 7
1,563,805 shares of Class B Common Stock owned by a trust for the benefit
of Cheryl Olsten, as to which shares Mr. Heine disclaims beneficial
ownership.
(7) Mr. Riedinger owns of record 225,000 shares of Class B Common Stock. He has
shared voting and investment power as a trustee with respect to 2,164,495
shares of Class B Common Stock owned by a trust for the benefit of Stuart
Olsten and Cheryl Olsten, 1,563,805 shares of Class B Common Stock owned by
a trust for the benefit of Stuart Olsten, 1,563,805 shares of Class B
Common Stock owned by a trust for the benefit of Cheryl Olsten and 83,605
shares of Class B Common Stock owned by a trust for the benefit of
descendants of Ms. Olsten, as to which shares Mr. Riedinger disclaims
beneficial ownership.
(8) Includes 9,000 shares that may be purchased pursuant to presently
exercisable stock options.
(9) Includes 18,000 shares that may be purchased pursuant to presently
exercisable stock options.
(10) Includes 13,500 shares that may be purchased pursuant to presently
exercisable stock options.
(11) Includes 18,000 shares of Common Stock and 67,735 shares of Class B Common
Stock that may be purchased pursuant to presently exercisable stock
options.
(12) Includes 9,000 shares that may be purchased pursuant to presently
exercisable stock options.
(13) Includes 83,125 shares that may be purchased pursuant to presently
exercisable stock options.
(14) Includes 48,125 shares that may be purchased pursuant to presently
exercisable stock options.
(15) Includes 30,000 shares that may be purchased pursuant to presently
exercisable stock options.
(16) Based on a Schedule 13G dated February 13, 1998 and jointly filed with the
Securities and Exchange Commission. Morgan Stanley, Dean Witter, Discover &
Co. held shared voting power as to 3,869,501 of such shares and shared
dispositive power as to 4,512,941 of such shares, and Miller Anderson &
Sherrerd, LLP held shared voting power as to 3,722,500 of such shares and
shared dispositive power as to 4,322,200 of such shares.
(17) Based on a Schedule 13G dated February 12, 1998 and filed with the
Securities and Exchange Commission. Pacific Financial Research held sole
voting power and sole dispositive power as to all of such shares.
(18) Includes 1,573,656 shares of Common Stock owned by executive officers and
Directors and 377,561 shares of Common Stock that may be purchased pursuant
to presently exercisable stock options.
(19) Includes 11,877,082 shares of Class B Common Stock owned by executive
officers and Directors and 67,735 shares of Class B Common Stock that may
be purchased pursuant to presently exercisable stock options.
PROPOSAL 1
ELECTION OF DIRECTORS
The nine persons named below, all of whom are presently Directors of the
Company, except for Mr. Ganzi, have been nominated for election as Directors of
the Company. One incumbent Director, Andrew N. Heine, is not standing for
reelection. Three Directors are to be elected by the holders of Common Stock
voting separately as a class, and six Directors are to be elected by the holders
of Class B Common Stock voting separately as a class, with the Directors, in
each separate class vote, to be elected by a plurality of the votes cast. All
Directors will serve until the next Annual Meeting of Shareholders and until
their successors are elected and qualify. If no contrary instructions are
indicated, it is intended that the accompanying proxy
4
<PAGE> 8
will be voted for the election of the respective Directors hereinafter shown as
nominees for each respective class of stock. The Company does not expect that
any of the nominees will be unavailable for election, but if that should occur
before the meeting, the proxies may be voted for a substitute nominee or
nominees.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
JOHN M. MAY
Mr. May, age 70 and a Director of the Company since 1989, has been an
independent management consultant for more than five years.
RAYMOND S. TROUBH
Mr. Troubh, age 71 and a Director of the Company since 1993, has been a
financial consultant for more than five years. He is a director of America West
Airlines, Inc., ARIAD Pharmaceuticals, Inc., Becton Dickinson and Company,
Diamond Offshore Drilling, Inc., Foundation Health Systems, Inc., General
American Investors Company, Time Warner, Inc., Triarc Companies, Inc. and WHX
Corporation.
JOSH S. WESTON
Mr. Weston, age 69 and a Director of the Company since 1995, has been
Chairman of Automatic Data Processing, Inc., a provider of computerized
transaction processing, data communication and information services, since 1982,
and was Chief Executive Officer of Automatic Data Processing, Inc. from 1982 to
August 1996. He is a director of Automatic Data Processing, Inc., Public Service
Enterprise Group Company, Shared Medical Systems, Inc. and Vanstar Corporation.
NOMINEES FOR ELECTION BY HOLDERS OF CLASS B COMMON STOCK
VICTOR F. GANZI
Mr. Ganzi, age 51, has been Executive Vice President of The Hearst
Corporation, a diversified communications company with interests in magazine,
newspaper, book and business publishing and television and radio stations, since
March 1997 and its Chief Operating Officer since March 1998. From 1992 to 1997,
at various times Mr. Ganzi served as Hearst's Senior Vice President, Chief
Financial Officer and Chief Legal Officer. Since March 1995 he has also been
Group Head of Hearst's Books/Business Publishing Group. He is a director of
Hearst-Argyle Television, Inc.
STUART R. LEVINE
Mr. Levine, age 50 and a Director of the Company since 1995, has been
Chairman and Chief Executive Officer of Stuart Levine & Associates LLC, an
international training company specializing in leadership, communication, team
building and strategic planning, since June 1996. From September 1992 to June
1996 he was Chief Executive Officer of Dale Carnegie & Associates, Inc., a
global provider of corporate training in leadership and personal development.
FRANK N. LIGUORI
Mr. Liguori, age 51 and a Director of the Company since 1986, has been
Chairman of the Board of the Company since February 1992 and its Chief Executive
Officer since April 1990. He was Vice Chairman from April 1990 to February 1992,
President of the Company from January 1986 to April 1990 and its Chief Operating
Officer from April 1983 to April 1990. He joined the Company in 1971.
5
<PAGE> 9
MIRIAM OLSTEN
Mrs. Olsten, age 73 and a Director of the Company since 1993, is a
significant shareholder of the Company. She is the mother of Stuart Olsten, a
Director and Vice Chairman and President of the Company.
STUART OLSTEN
Mr. Olsten, age 45 and a Director of the Company since 1986, has been Vice
Chairman of the Company since August 1994 and President of the Company since
April 1990. He was Chief Operating Officer of the Company from April 1990
through July 1993 and was Executive Vice President of the Company from November
1987 to April 1990. He joined the Company in 1975. He is the son of Miriam
Olsten, a Director of the Company.
RICHARD J. SHAROFF
Mr. Sharoff, age 51 and a Director of the Company since 1994, has been
President and Chief Executive Officer of MagCorp., Inc., a franchisor of
restaurants, since November 1996. From January 1996 to November 1996 he was
Chairman and Chief Executive Officer of Superior Pasta, L.L.C., a developmental
stage company in the food industry. From July 1995 to December 1995 he was a
consultant to the food industry. From January 1992 to June 1995, he was
President and Chief Executive Officer of Haifoods, Inc., a holding company in
the food and beverage industries.
------------------------------------
The Board held seven meetings during the past fiscal year. Each outside
member of the Board was paid an annual retainer in 1997 of $30,000 in monthly
installments and $1,500 for each meeting of the Board attended. In 1998, the
Company proposes to provide for payment of annual retainer fees of outside
Directors in the form of shares of the Company's Common Stock and also allow
deferral of such payments. See Proposal 4, "Adoption of Company's Stock &
Deferred Compensation Plan for Non-Employee Directors."
The Board has a standing compensation committee, comprised of Messrs. May,
Troubh and Weston, and a standing audit committee, comprised of Messrs. Heine,
Levine, May and Sharoff. The compensation committee and the audit committee held
three meetings and four meetings, respectively, in 1997. Each Director who was a
committee member was paid $1,000 for each such meeting attended. The
compensation committee reviews and approves senior executive compensation and
determines compensation of the Chief Executive Officer. The audit committee
reviews the Company's financial results, the scope and results of audits of the
Company by its independent accountants and the scope and result of internal
audits and oversees the Company's compliance program. The Board has no
nominating committee.
In 1997, options to purchase 6,000 shares of Common Stock at a per share
exercise price of $15.50 were automatically granted to each of Messrs. Heine,
Levine, May, Sharoff, Troubh and Weston and Mrs. Olsten, under the Company's
1990 Non-Qualified Stock Option Plan for Non-Employee Directors and Consultants,
as amended and restated. The increase in the number of options granted to each
non-employee Director, from 4,500 options granted in 1996 to 6,000 options, is
subject to shareholder approval. See Proposal 3, "Adoption of Amendment to the
Company's 1990 Non-Qualified Stock Option Plan for Non-Employee Directors and
Consultants."
In 1997, the Company terminated its Retirement Plan for Outside Directors
and Consultants, which provided for payment of a retirement benefit to a
Director who had served for at least five years. Under the Plan, the retirement
benefit was calculated as a percentage of the sum of all Board annual retainer
and committee fees paid to a Director during the three-year period immediately
preceding his or her departure from the Board. For a Director who had served 20
or more years, 15 to 19 years, 10 to 14 years and 5 to 9 years, the applicable
percentage was 100%, 75%, 50% and 25%, respectively. In early 1998 the Company
paid the present value of the retirement benefit in a lump sum to one Director
with a 100% vested benefit. For each
6
<PAGE> 10
other Director without a 100% vested retirement benefit, the Company paid the
present value of that Director's retirement benefit in a lump sum at the next
higher vesting level.
In 1997, the Company had sales of temporary personnel to Automatic Data
Processing, Inc. of approximately $1,320,000, and the Company purchased payroll
processing services from Automatic Data Processing, Inc. of approximately
$450,000. Mr. Weston, a Director of the Company, is Chairman of Automatic Data
Processing, Inc.
CERTAIN BUSINESS RELATIONSHIPS
Mr. Heine, a Director of the Company, is of counsel to the law firm of
Gordon Altman Butowsky Weitzen Shalov & Wein. Mr. Heine's compensation from the
firm is based in part on fees generated by clients originated by Mr. Heine,
including the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires certain
persons, including the Company's Directors and executive officers, to file
reports with the Securities and Exchange Commission regarding beneficial
ownership of equity securities of the Company. In March 1997 Stuart R. Levine, a
Director of the Company, filed one late report covering the purchase of the
Company's Common Stock in February 1997.
------------------------------------
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation of the Company's Chief Executive Officer and the other
four most highly compensated executive officers (the "Named Officers") for
services as executive officers of the Company for the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ---------------------------- ----------
OTHER ANNUAL RESTRICTED SECURITIES
NAME AND COMPENSATION STOCK UNDERLYING LTIP
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS($)(2) OPTIONS(#) PAYOUTS($)
------------------ ---- --------- -------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank N. Liguori 1997 $1,000,000 $ 700,000 $ 2,619 150,000 $4,295,700(4)
Chairman and Chief 1996 1,007,692 875,000
Executive Officer 1995 900,000 1,175,000 1,411,000
Stuart Olsten 1997 650,000 325,000 2,162 150,000
Vice Chairman and 1996 637,019 425,000 30,000
President 1995 540,865 500,000 37,500
Robert A. Fusco 1997 600,000 1,484 150,000
Executive Vice President 1996 587,019 240,000 25,000
and President, Olsten 1995 514,904 300,000 37,500
Health Services
Richard A. Piske, III 1997 435,000 200,000 2,018 100,000
Executive Vice President 1996 416,827 175,000 23,000
and President, Olsten 1995 365,835 220,000 30,000
Staffing Services
Anthony J. Puglisi 1997 319,808 150,000 1,913 75,000
Senior Vice President 1996 294,231 150,000 30,000
and Chief Financial 1995 260,288 125,000 22,500
Officer
<CAPTION>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)(3)
------------------ ------------
<S> <C>
Frank N. Liguori $164,790
Chairman and Chief 192,483
Executive Officer 175,380
Stuart Olsten 83,790
Vice Chairman and 91,622
President 126,467
Robert A. Fusco 71,640
Executive Vice President 75,881
and President, Olsten 73,883
Health Services
Richard A. Piske, III 50,940
Executive Vice President 49,305
and President, Olsten 55,469
Staffing Services
Anthony J. Puglisi 38,322
Senior Vice President 36,021
and Chief Financial 33,909
Officer
</TABLE>
7
<PAGE> 11
- ---------------
(1) Amount reimbursed for payment of taxes.
(2) The number and value of the aggregate restricted (unvested) share holdings
of the Named Officers at December 28, 1997 are as follows:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
RESTRICTED RESTRICTED
NAME SHARES SHARES
---- ---------- ----------
<S> <C> <C>
F. N. Liguori...................................... 150,000 $2,193,750
S. Olsten.......................................... 1,800 26,325
R. A. Fusco........................................ 9,000 131,625
R. A. Piske........................................ 1,500 21,938
A. J. Puglisi...................................... 1,800 26,325
</TABLE>
(3) Represents profit sharing and matching contributions contributed by the
Company for the Named Officers to the Company's Non-Qualified Retirement
Plan for Selected Management Employees.
(4) The long-term incentive payout reported for Mr. Liguori reflects the dollar
value on the date of issuance of (i) shares of the Company's Common Stock
(150,000 shares) issued to Mr. Liguori further to an incentive award
approved by shareholders at the Company's 1994 Annual Meeting and (ii)
shares of the Company's Common Stock (136,380 shares) issued to Mr. Liguori
further to a performance award approved by shareholders at the Company's
1996 Annual Meeting.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to the Named Officers during the Company's last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------- ANNUAL RATES
NUMBER OF OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(1)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(#)(2) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------------- ---------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Frank N. Liguori........ 150,000 13.9% $19.625 08/22/07 $1,851,300 $4,691,550
Stuart Olsten........... 150,000 13.9 19.625 08/22/07 1,851,300 4,691,550
Robert A. Fusco......... 150,000 13.9 19.625 08/22/07 1,851,300 4,691,550
Richard A. Piske, III... 100,000 9.3 19.625 08/22/07 1,234,200 3,127,700
Anthony J. Puglisi...... 75,000 6.9 19.625 08/22/07 925,650 2,345,775
</TABLE>
- ---------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and are not
intended to forecast possible future appreciation of the Company's stock
price.
(2) The options were granted at an exercise price equal to the fair market value
of the Company's Common Stock on the date of grant. The options have a ten
year term and become exercisable over a five year period in increments of
20% per year beginning with the first anniversary of the date of grant.
8
<PAGE> 12
The following table sets forth information with respect to the Named
Officers concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of that year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END(#) AT FISCAL YEAR END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank N. Liguori.......... 0 -- 0 150,000 $ -- $ 0
Stuart Olsten............. 0 -- 54,175 200,625 3,750 11,250
Robert A. Fusco........... 0 -- 96,625 196,875 3,125 9,375
Richard A. Piske, III..... 0 -- 59,375 137,875 2,875 8,625
Anthony J. Puglisi........ 0 -- 30,000 111,750 3,750 11,250
</TABLE>
RETIREMENT PLAN
The following table shows the estimated annual retirement benefit payable
on a straight life annuity basis at normal retirement date to participants in
the Company's Supplemental Executive Retirement Plan for key employees
designated by the Company ("SERP"), which is a non-contributory, non-qualified
defined benefit plan. Amounts shown include Social Security benefits and the
annuitized value of accumulations of profit sharing contributions made by the
Company on behalf of a participant.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL FIVE YEAR ANNUAL BENEFITS FOR YEARS OF SERVICE
AVERAGE EARNINGS ----------------------------------------------
---------------- 10 YEARS 15 YEARS 20 YEARS 25 YEARS
<S> <C> <C> <C> <C>
$ 250,000..................................... $ 60,000 $ 90,000 $120,000 $ 150,000
450,000.................................... 108,000 162,000 216,000 270,000
650,000.................................... 156,000 234,000 312,000 390,000
850,000.................................... 204,000 306,000 408,000 510,000
1,050,000.................................... 252,000 378,000 504,000 630,000
1,250,000.................................... 300,000 450,000 600,000 750,000
1,450,000.................................... 348,000 522,000 696,000 870,000
1,650,000.................................... 396,000 594,000 792,000 990,000
1,850,000.................................... 444,000 666,000 888,000 1,110,000
2,050,000.................................... 492,000 738,000 984,000 1,230,000
</TABLE>
The SERP benefit objective is to provide a participant who has spent a 25
year career with the Company with retirement income at age 65 equal to 60% of
the average of his or her covered compensation (salary, bonuses and incentive
compensation) over the five years prior to retirement. Proportionately decreased
benefits may be payable at early retirement. The SERP benefit is reduced both by
the value of Social Security benefits and by the annuitized value of
accumulations of profit sharing contributions made on behalf of a participant by
the Company. The current credited years of service for Messrs. Liguori, Olsten,
Fusco, Piske and Puglisi are 26, 22, 12, 17, and 4, respectively.
9
<PAGE> 13
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Frank N. Liguori is employed by the Company as Chairman of the Board and
Chief Executive Officer, for a term expiring March 31, 1999, unless otherwise
extended, pursuant to an employment agreement which provides for an initial
annual base salary of $750,000.
The employment agreement provides that if Mr. Liguori's employment is
terminated by the Company for any reason other than for disability or for cause,
or if Mr. Liguori voluntarily terminates his employment within one year after
(A) a Change of Control (defined substantially as occurring on the date any of
the following occurs: (a) any person or persons acting together which would
constitute a "group" for the purposes of Section 13(d) of the Securities
Exchange Act of 1934 (other than the Company, any subsidiary of the Company,
members of the Olsten family and their "permitted transferees") shall
beneficially own, directly or indirectly, at least 25% of the total voting power
of all classes of capital stock of the Company; (b) either (i) certain directors
(or, under certain circumstances, their successors) cease for any reason to
constitute at least a majority of the members of the Company's Board of
Directors or (ii) at a meeting of the Company's shareholders called for the
purpose of electing directors, a majority of the persons nominated by the Board
for election as directors fail to be elected; (c) the Company's shareholders
approve (i) a plan of complete liquidation of the Company, or (ii) an agreement
providing for the merger or consolidation of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which the Company's
Common Stock and Class B Common Stock are converted into cash, securities or
other property, except in certain circumstances; or (d) the Company's
shareholders approve an agreement (or agreements) providing for the sale or
other disposition (in one transaction or a series) of all or substantially all
of the assets of the Company), (B) a substantial change in his responsibilities
or (C) a determination not to renew the employment agreement, Mr. Liguori will
be entitled to receive a cash lump sum equal to (X) his then current base
salary, plus the highest bonus paid to him during the term of the employment
agreement plus the annualized value of benefits provided under the Company's
benefit programs multiplied by (Y) the number of full and partial years in the
period from the date of termination to the twenty-fourth month following the
date on which his employment would otherwise have terminated. The Company may
elect to withhold up to $1 million of such amount for a two-year period after
termination of employment during which Mr. Liguori may not compete with the
Company's businesses, with his right to receive such amount being conditioned
upon his compliance with such restriction.
If Mr. Liguori's employment is terminated by the Company due to disability,
he is entitled to receive, for a period of three years from termination, a
monthly sum equal to 1/12 of his then current base salary (less any benefits
paid under any disability policies maintained by the Company).
Under Mr. Liguori's employment agreement, if any payment to Mr. Liguori
(under the employment agreement or otherwise) is, upon a Change of Control,
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended, Mr. Liguori will be entitled to receive an additional
"gross-up payment" in an amount sufficient to make Mr. Liguori whole for such
excise tax.
The Company has entered into change in control agreements with each of
Messrs. Robert Fusco, Richard Piske and Anthony Puglisi. The agreements were for
a term in effect through August 9, 1997 and are automatically extended for
successive one-year terms thereafter unless the Company provides one-year's
prior notice that it does not wish to extend the term. In addition, if a Change
in Control (defined substantially the same as with respect to Mr. Liguori,
above) occurs during the term of the agreement, the agreement continues in
effect for a period of 36 months beyond the month in which the Change in Control
occurs.
If a Change in Control occurs and the executive's employment is terminated
during the term of the agreement for any reason except termination by the
Company for "cause," termination by the executive other than for "good reason"
or termination because of death, retirement or disability, the executive will
generally be
10
<PAGE> 14
entitled to receive a cash lump sum equal to 2.99 times the average of the
annual compensation payable to the executive by the Company for the five
calendar years preceding the calendar year in which a Change in Control occurs.
In addition, all outstanding stock options granted to the executive will become
fully exercisable and vested, and for the 36 month period after the date of the
executive's termination of employment, the Company will, upon request from the
executive, arrange to provide the executive with health, life, disability and/or
accident benefits substantially similar to those the executive received
immediately prior to the termination unless and until the executive receives
such benefits from a subsequent employer.
In addition, with respect to Messrs. Fusco and Piske (each, a "Grantee"),
pursuant to the Executive Officer Incentive Stock Award to each Grantee in 1995,
which was approved at the 1996 Annual Meeting of Shareholders ("Incentive
Award"), in the event that there is a Change of Control during the 1996 to 1998
measuring period, the cumulative pre-tax profits for the division of each
Grantee will be deemed to be the maximum target level of pre-tax profits and the
Company will immediately issue and grant Grantee the maximum number of shares he
is entitled to receive under the Incentive Award; provided, however, that if the
grant of shares to a Grantee under the Incentive Award (and any payments payable
under any other plan, program, arrangement or agreement maintained by the
Company or an affiliate) would constitute an "excess parachute payment" (as
described in Section 280G of the Code), the number of shares granted to Grantee
will be reduced (by the minimum possible amount) so as not to trigger the golden
parachute provisions of the Code. In the event that there is a Change of Control
after the measuring period expires but before a Grantee has received all of the
shares to which he is entitled under the Incentive Award, the Company will
accelerate the issuance of all shares to the Grantee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company has, with the direction and supervision of the Compensation
Committee of the Board of Directors, established and put into practice
compensation policies, plans and programs, whose goals are twofold: to attract
and retain qualified executives and to seek to enhance the Company's
profitability by uniting senior management's interests with those of the
Company's shareholders.
BASE SALARY
Compensation for each of the Named Officers, as well as other senior
executives, consists of a base salary and annual and longer-term incentive
compensation. In the setting of base salaries, consideration is given to salary
surveys and review of salaries paid to senior executives with comparable
qualifications, experience and responsibilities at other companies. Annual and
longer-term incentive compensation is tied to the Company's and the executive's
success in achieving significant financial and non-financial goals.
Each fiscal year, the Committee fixes the base salary of the Chief
Executive Officer and the Vice Chairman and President. Beginning in 1994, the
Chief Executive Officer's base salary cannot be set lower than the minimum base
salary provided for in his employment agreement with the Company. The Chief
Executive Officer recommends the base salaries of the other Named Officers and
the other senior executives for review and approval by the Committee.
INCENTIVE COMPENSATION
In evaluating the performance and setting the incentive compensation of the
Chief Executive Officer and the Vice Chairman and President, the Committee
approved a bonus incentive predicated on the attainment of specific levels of
net income for the Company. The Committee also approved a bonus incentive
predicated on the achievement of certain profit targets in setting the incentive
compensation for the President of Olsten Staffing Services. No incentive
compensation was paid to the President of Olsten Health Services, because his
11
<PAGE> 15
profit targets were not met. Except for one senior executive, whose bonus
incentive is based on the achievement of certain profit targets, the Chief
Executive Officer recommends the incentive compensation of the Company's other
senior executives, including the other Named Officer, and the Committee reviews
and approves the final compensation for these executives.
STOCK OPTIONS AND GRANTS
During each fiscal year, the Committee considers the desirability of
granting senior executives, including the Named Officers, awards under the
Company's stock plans. In determining the amount and nature of awards under such
plans to be granted to the senior management group, including the Named Officers
other than the Chief Executive Officer and the Vice Chairman and President, the
Committee reviews with the Chief Executive Officer awards recommended by him,
taking into account the respective scope of accountability, strategic and
operational goals, and anticipated performance requirements and contributions of
each member of the senior management group. Awards to the Chief Executive
Officer and the Vice Chairman and President are established separately and are
based, among other things, on the Committee's analysis of their respective past
and expected future contributions to the Company's achievement of its long-term
performance goals. In making stock option grants to the Named Officers and other
senior executives in 1997, the Committee made larger grants to them than in the
past, with the options vesting over five years rather than four years, to help
bind senior management to the Company and to align further their interests with
the interests of the Company's shareholders.
CEO COMPENSATION
The Committee maintained the Chief Executive Officer's base salary in 1997,
as it had in 1996, at $1,000,000. Under the Company's Executive Officer Bonus
Plan, which was approved by shareholders at the 1994 Annual Meeting, and based
on certain performance goals previously established, the Chief Executive Officer
was awarded bonus compensation in 1997 of $700,000, which was 70% of his current
base salary. In 1997, the Committee awarded the Chief Executive Officer 150,000
stock options, vesting over five years, which was the first award of options to
the Chief Executive Officer since 1990.
DEDUCTIBILITY OF COMPENSATION
Beginning in 1994, Section 162(m) of the Internal Revenue Code of 1986
generally limits to $1 million per person the Company's federal income tax
deduction for compensation paid in any year to its Chief Executive Officer and
each of its four other highest paid executive officers to the extent such
compensation is not "performance based" within the meaning of Section 162(m).
The Committee will in general seek to qualify compensation paid to such
executive officers for deductibility under Section 162(m) in order to decrease
the after-tax cost of such compensation to the Company, although there may be
circumstances in which it is not possible, or not in the Company's best
interests, to do so.
The foregoing report has been furnished by:
<TABLE>
<S> <C>
Raymond S. Troubh, Chairman
John M. May
Josh S. Weston
</TABLE>
12
<PAGE> 16
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
the Company's Common Stock against the cumulative total return of the S&P MidCap
400 Index and a Peer Group Index for the period of five years commencing
December 31, 1992 and ending December 31, 1997.
The Peer Group Index is comprised of the following publicly traded
companies: Apria Healthcare Group Inc.; Kelly Services, Inc.; Manpower Inc.;
Robert Half International Inc.; Staff Builders, Inc.; and Volt Information
Sciences, Inc. Uniforce Services, Inc., which was included in last year's
performance graph, is not included in this year's performance graph because its
shares are no longer publicly traded. Apria Healthcare Group Inc. has been added
to this year's performance graph.
The line graph assumes that $100 was invested on December 31, 1992 in each
of the Company's Common Stock, the S&P MidCap 400 Index and the Peer Group Index
and that all dividends were reinvested. Media General Financial Services
furnished the data for the graph.
<TABLE>
<CAPTION>
Measurement Period S&P MidCap 400
(Fiscal Year Covered) Olsten Corporation Index Peer Group Index
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 111.06 113.59 108.06
1994 120.94 109.52 148.53
1995 151.88 140.90 171.91
1996 86.59 167.96 211.39
1997 88.72 222.13 283.04
</TABLE>
------------------------
13
<PAGE> 17
PROPOSAL 2
ADOPTION OF AMENDMENTS TO THE COMPANY'S
1994 STOCK INCENTIVE PLAN
GENERAL
On November 7, 1997, the Board adopted, subject to approval by
shareholders, an amendment to the Company's 1994 Stock Incentive Plan (the
"Stock Incentive Plan") which would, if approved, increase the maximum number of
shares of Common Stock that may be granted under the Stock Incentive Plan from
3,000,000 to 6,000,000. On February 6, 1998 the Board also adopted, subject to
shareholder approval, an amendment to the Stock Incentive Plan which would, if
approved, increase the maximum number of shares of Common Stock for which option
grants may be made to any employee, franchisee or licensee in any calendar year
from 150,000 to 300,000, and the Board also amended the Stock Incentive Plan to
reflect recent changes to Securities and Exchange Commission Rule 16b-3. The
increase in number of shares is being proposed in order to enhance the Company's
ability to attract and retain highly qualified officers, key employees,
franchisees and licensees, and to better enable such persons to participate in
the long-term success and growth of the Company.
The Stock Incentive Plan was originally adopted by the Board on February
14, 1994, and approved by shareholders of the Company on April 29, 1994. The
Stock Incentive Plan was amended February 13, 1995 to increase the maximum term
of options granted and to extend eligibility to franchisees and licensees, and
the amendment was approved by shareholders on April 28, 1995.
A copy of the Stock Incentive Plan, as proposed to be amended, is attached
as Exhibit A to this Proxy Statement. The material features of the Stock
Incentive Plan, as proposed to be amended, are described below, but this
description is only a summary and is qualified in its entirety by reference to
the actual text of the Stock Incentive Plan.
TYPES OF AWARDS
Awards under the Stock Incentive Plan may be in the form of (i) incentive
stock options ("Incentive Stock Options") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") or any successor
provision thereto, and (ii) options that do not qualify as Incentive Stock
Options ("Non-Qualified Stock Options", and together with Incentive Stock
Options, "Stock Options").
ADMINISTRATION
The Stock Incentive Plan is administered by a committee of the Board (the
"Committee") consisting of not less than two "non-employee directors" (as such
term is defined in Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), who, to the extent required to satisfy the
exception for performance-based compensation under Section 162(m) of the Code,
are also "outside directors" (within the meaning of Section 162(m) of the Code).
Subject to the express provisions of the Stock Incentive Plan, the
Committee has the power to select the eligible employees, and franchisees and
licensees (collectively, the "Participants"), to whom Stock Options are to be
granted under the Stock Incentive Plan, and to determine the terms and
conditions of each Stock Option granted thereunder. The Committee's authority
shall include, but is not limited to, the authority to determine the number of
shares of Common Stock to be covered by each award. However, the maximum number
of shares of Common Stock for which grants may be made to any employee,
franchisee or licensee in any calendar year is 150,000. The February 6, 1998
amendment, if approved, will increase that number to
14
<PAGE> 18
300,000. The Committee also has authority to adopt and revise rules, guidelines
and practices governing the Stock Incentive Plan, to interpret the terms and
provisions of the Stock Incentive Plan and any award granted thereunder, and to
otherwise supervise the administration of the Stock Incentive Plan.
STOCK SUBJECT TO STOCK INCENTIVE PLAN
An aggregate of 3,000,000 shares of Common Stock are reserved for issuance
upon exercise of Stock Options granted under the Stock Incentive Plan. The
November 7, 1997 amendment, if approved, will increase the number of shares of
Common Stock reserved for issuance upon exercise of the Stock Options to
6,000,000. To the extent that a Stock Option terminates without having been
exercised, the shares subject to such award will again be available for
distribution in connection with future awards under the Stock Incentive Plan.
In the event of any merger, reorganization, consolidation, sale of
substantially all assets, recapitalization, Common Stock dividend, Common Stock
split, spin-off, split-up, split-off, distribution of assets or other change in
corporate structure affecting the Common Stock, a substitution or adjustment, as
may be determined to be appropriate by the Committee in its sole discretion,
will be made in the aggregate number of shares reserved for issuance under the
Stock Incentive Plan, the number of shares available for any individual awards,
the number of shares subject to outstanding awards and the exercise price to be
paid by optionees with respect to outstanding awards; provided, however, that no
such adjustment may increase the aggregate value of any outstanding award.
ELIGIBILITY
Officers and other key employees of the Company or a Related Company (which
is defined in the Stock Incentive Plan as any corporation, partnership, joint
venture or other entity in which the Company owns, directly or indirectly, at
least 20% beneficial ownership interest) and franchisees and licensees are
eligible to be granted awards under the Stock Incentive Plan; provided, however,
that, to the extent required under Section 422 of the Code, Incentive Stock
Options may not be granted to franchisees and licensees and may be granted only
to officers and other key employees of the Company or any subsidiary corporation
in which the Company owns, directly or indirectly, stock having 50% or more of
the total combined voting power of all classes of stock. A director of the
Company or a Related Company who is not also an employee of the Company or a
Related Company is not eligible to be granted awards under the Stock Incentive
Plan. The Participants under the Stock Incentive Plan will be selected from time
to time by the Committee, in its sole discretion, from among those eligible.
Approximately 500 persons are eligible to participate in the Stock Incentive
Plan.
TERMS OF STOCK OPTIONS
OPTION PRICE. The option price per share of Common Stock purchasable under
a Stock Option is determined by the Committee; provided, however, that the
option price of Non-Qualified Stock Options cannot be less than 85%, and the
option price of Incentive Stock Options cannot be less than 100%, of the fair
market value of the Common Stock on the date of award of each such Stock Option.
On April 6, 1998, the closing sale price of the Common Stock, which is the
security underlying the Stock Options, as reported on the New York Stock
Exchange was $15.50.
OPTION TERM. The term of each Stock Option will be ten years from the date
of grant, unless a shorter term is provided for by the Committee at the time of
grant, and subject to earlier termination as provided below.
EXERCISABILITY. Except as otherwise provided by the Committee at the time
of grant or as provided as described below under "Change of Control", Stock
Options vest and are first exercisable in annual installments of 25% of the
shares originally subject thereto, commencing on the first anniversary of the
date of
15
<PAGE> 19
grant of the Stock Option, and an additional 25% of such shares each year
thereafter. The Committee may accelerate an exercise date of any Stock Option or
otherwise waive the installment exercise provisions at any time (including at
time of grant) in whole or in part. Except as described below, a Stock Option is
not exercisable unless the optionee is an employee of the Company or a Related
Company or is either a franchisee or licensee of the Company at the time of
exercise.
METHOD OF EXERCISE. Stock Options may be exercised in whole or in part at
any time during the option term by giving written notice of exercise to the
Company specifying the number of shares to be purchased, accompanied by payment
of the option price. Payment of the option price may be made in cash or cash
equivalents or, if permitted by the Committee (either in the option agreement or
at the time of exercise), by delivery of shares of Common Stock already owned by
the optionee or withholding of shares subject to awards under the Stock
Incentive Plan (in each case, such shares having a fair market value on the date
of exercise equal to the aggregate option price), or in any other manner
permitted by law and as determined by the Committee, or any combination of the
foregoing.
NO SHAREHOLDER RIGHTS. An optionee will have neither rights to dividends
nor other rights of a shareholder with respect to shares subject to a Stock
Option until the optionee has given written notice of exercise and has paid for
such shares.
NON-TRANSFERABILITY. No Stock Option is transferable by the optionee other
than by will or by the laws of descent and distribution. During the optionee's
lifetime, all Stock Options are exercisable only by the optionee.
TERMINATION UNDER CERTAIN CIRCUMSTANCES. If an optionee ceases to be an
employee of the Company or a Related Company, or if a franchisee or licensee
ceases to be a franchisee or licensee, for any reason other than death,
retirement or permanent disability, any Stock Option held by such optionee under
the Stock Incentive Plan will terminate immediately.
If an optionee ceases to be an employee of the Company or a Related
Company, or if a franchisee or licensee ceases to be a franchisee or licensee,
by reason of retirement (on or after attaining the age of 65 or such earlier age
as the Committee may determine) or permanent disability, any Stock Option held
by such optionee may be exercised, to the extent exercisable on the day
preceding the date of such cessation of employment or termination of the
franchisee or licensee relationship at any time within three months (one year in
the case of permanent disability) after such cessation of employment or
termination of the franchisee or licensee relationship at the end of which
period the Stock Option will terminate. Notwithstanding the foregoing, the
Committee in its sole discretion may provide, at the time of grant or otherwise,
for different rules to apply to the exercisability of Stock Options held by any
optionee at the time of such optionee's cessation of employment or termination
of its franchisee or licensee relationship. In no event may a Stock Option be
exercised after the expiration of the term thereof.
TERMINATION UPON DEATH. If an optionee dies while an employee of the
Company or a Related Company, or while a franchisee or licensee, or within three
months after the optionee has ceased to be an employee, franchisee or licensee
by reason of retirement, or within one year after the optionee has ceased to be
an employee, franchisee or licensee by reason of such optionee's permanent
disability, such Stock Option may be exercised, to the extent exercisable on the
day preceding the date such optionee ceases to be an employee, franchisee or
licensee, by the estate of such deceased optionee, or by a person or persons who
acquire the right to exercise such option by bequest or inheritance or by reason
of the death of such optionee, at any time within one year after such optionee's
death, or within such shorter period of time as prescribed in the option
agreement, at the end of which period such Stock Option will terminate. In no
event may a Stock Option be exercised after the expiration of the term thereof.
16
<PAGE> 20
TAX WITHHOLDING
Each optionee must pay to the Company or make arrangements satisfactory to
the Committee regarding payment of any applicable Federal, state, local or other
withholding tax obligation to satisfy the Company's withholding tax obligation
in respect of the exercise of a Stock Option. The obligations of the Company
under the Stock Incentive Plan shall be conditional on such payment or
arrangements, and the Company (and, where applicable, any Related Company),
shall to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the optionee.
If permitted by the Committee, payment may be made by (i) having the
Company withhold shares of Common Stock (at its fair market value) otherwise
deliverable to the optionee with respect to the award, or (ii) delivering to the
Company shares of Common Stock (at its fair market value) already owned by the
optionee.
CHANGE OF CONTROL
In the event of a Change of Control (as defined below), unless otherwise
determined by the Committee at the time of grant or by amendment (with the
holder's consent) of such grant, all outstanding Stock Options awarded under the
Stock Incentive Plan will become fully exercisable and vested.
A "Change of Control" will be deemed to occur on the date any of the
following events occur:
(a) any person or persons acting together which would constitute a
"group" for purposes of Section 13(d) of the Exchange Act (other than the
Company, any subsidiary, members of the Olsten family (defined as Miriam
Olsten, any lineal descendant of William and Miriam Olsten, any spouse of
any such lineal descendant, a trust established principally for the benefit
of any of the foregoing, and the executor, administrator or personal
representative of the estate of any of the foregoing) and the "permitted
transferees" of such members of the Olsten family as defined in the
Company's Restated Certificate of Incorporation) beneficially own (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, at
least 25% of the total voting power of all classes of capital stock of the
Company entitled to vote generally in the election of the Board of
Directors of the Company;
(b) either (i) Current Directors (as herein defined) cease for any
reason to constitute at least a majority of the members of the Board (for
these purposes, a "Current Director" means any member of the Board as of
the effective date of the Stock Incentive Plan, and any successor of a
Current Director whose election, or nomination for election by the
Company's shareholders, was approved by at least two-thirds of the Current
Directors then on the Board) or (ii) at any meeting of the shareholders of
the Company called for the purpose of electing directors, a majority of the
persons nominated by the Board for election as directors fail to be
elected;
(c) the shareholders of the Company approve (i) a plan of complete
liquidation of the Company, or (ii) an agreement providing for the merger
or consolidation of the Company (A) in which the Company is not the
continuing or surviving corporation (other than a consolidation or merger
with a wholly-owned subsidiary of the Company in which all shares of Common
Stock and Class B Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same
consideration) or (B) pursuant to which the Common Stock and Class B Common
are converted into cash, securities or other property, except a
consolidation or merger of the Company in which the holders of the Common
Stock and Class B Common Stock immediately prior to the consolidation or
merger have, directly or indirectly, at least a majority of the common
stock of the continuing or surviving corporation immediately after such
consolidation or merger or in which the Board immediately prior to
17
<PAGE> 21
the merger or consolidation would, immediately after the merger or
consolidation, constitute a majority of the board of directors of the
continuing or surviving corporation; or
(d) the shareholders of the Company approve an agreement (or
agreements) providing for the sale or other disposition (in one transaction
or a series of transactions) of all or substantially all of the assets of
the Company.
AMENDMENTS AND TERMINATION
The Stock Incentive Plan will terminate on February 14, 2004, and no Stock
Option shall be awarded under the Stock Incentive Plan on or after such date.
The Board may discontinue the Stock Incentive Plan at any time and may amend it
from time to time. No amendment or discontinuation of the Stock Incentive Plan
may adversely affect any award previously granted without the optionee's written
consent. Amendments may be made without shareholder approval except as required
to satisfy Section 162(m) of the Code or, with respect to Incentive Stock
Options, Section 422 of the Code.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
NAMES AND POSITION STOCK OPTIONS(A)
------------------ ----------------
<S> <C>
Frank N. Liguori............................................ 100,000
Chairman and Chief Executive Officer
Stuart Olsten............................................... 50,000
Vice Chairman and President
Robert A. Fusco............................................. 40,000
Executive Vice President and President, Olsten Health
Services
Richard A. Piske, III....................................... 40,000
Executive Vice President and President, Olsten Staffing
Services
Anthony J. Puglisi.......................................... 0
Senior Vice President and Chief Financial Officer
Executive Group............................................. 245,000
Non-Executive Director Group................................ 0
Non-Executive Officer Employee Group........................ 680,800
</TABLE>
- ---------------
(a) These options were granted on January 13, 1998. 388,617 of these options in
the aggregate were granted subject to shareholder approval of the amendment
to the Stock Incentive Plan described above. The exercise price of the
options is $14.6875 per share, they have a maximum term of ten years and
they generally become exercisable in annual installments of 25%, commencing
on the first anniversary of the date of grant.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK INCENTIVE PLAN
The following is a summary of certain Federal income tax aspects of awards
made under the Stock Incentive Plan, based upon the laws in effect on the date
hereof.
Incentive Stock Options
Generally, no taxable income is recognized by the optionee upon the grant
of an Incentive Stock Option or upon the exercise of an Incentive Stock Option
either during the period of the optionee's employment with the Company or one of
its subsidiaries (as defined in Section 424(f) of the Code) or within the period
ending three months (12 months, in the event of permanent and total disability
or death of the optionee) after
18
<PAGE> 22
termination of such employment. However, the exercise of an Incentive Stock
Option may result in an alternative minimum tax liability to an optionee since
the excess of the fair market value of the optioned stock at the date of
exercise over the exercise price must be included in alternative minimum taxable
income.
If the optionee holds shares acquired upon the exercise of an Incentive
Stock Option for at least two years from the date of grant of the option and for
at least one year from the date of exercise (the "ISO Holding Period"), any gain
on a subsequent sale of such shares will be considered as long-term capital gain
to an optionee. In general, long-term capital gain is subject to lower maximum
Federal income tax rates than ordinary income. Currently, the maximum rate for
long-term capital gain on assets held for more than eighteen months is generally
20%, and the maximum rate on capital gain on assets held for more than one year
but less than eighteen months ("mid-term gain") is 28%. The gain recognized upon
the sale of the shares is equal to the excess of the selling price of the shares
over the exercise price.
However, if the optionee sells the shares prior to expiration of the ISO
Holding Period (a "Disqualifying Disposition"), generally (a) the optionee will
recognize ordinary income in an amount equal to the lesser of (i) the fair
market value of the shares on the date of exercise, less the exercise price or
(ii) the amount realized on the date of sale, less the exercise price, and (b)
if the selling price of the shares exceeds the fair market value on the date of
exercise, the excess will be taxable to the optionee as short-term, mid-term or
long-term capital gain.
No deduction will be allowed to the Company with respect to Incentive Stock
Options for Federal income tax purposes, unless the optionee sells the shares in
a Disqualifying Disposition. In the case of a Disqualifying Disposition, the
Company will generally be entitled to deduct the amount of ordinary income
recognized by the optionee.
Non-Qualified Stock Options
In general, with respect to Non-Qualified Stock Options granted to
employees and independent contractors of the Company or a Related Company: (i)
no income is recognized by the optionee at the time the option is granted; (ii)
upon exercise of the option, the optionee recognizes ordinary income in an
amount equal to the difference between the exercise price and the fair market
value of the shares on the date of exercise; and (iii) at disposition any
appreciation after the date of exercise is treated as long-term, mid-term or
short-term capital gain, depending on the length of time the shares are held by
the optionee.
Generally, the Company will, subject to possible limitations imposed by
Section 162(m) of the Code (see discussion below), be entitled to a tax
deduction equal to the amount of ordinary income recognized by the employee or
independent contractor at the date of exercise.
$1 Million Limitation on Deductible Compensation
Section 162(m) of the Code generally limits the Company's deduction with
respect to compensation paid to each of its "covered employees" (generally
defined as the chief executive officer and four highest compensated officers of
the corporation other than the chief executive officer) to $1 million per year,
effective for taxable years of the Company beginning after 1993. This deduction
limit, however, does not apply to certain "performance-based compensation,"
including stock options which, among other things, are granted at an exercise
price which is not less than fair market value. The Company intends that Stock
Options granted under the Stock Incentive Plan at not less than fair market
value of the Common Stock subject to the option at the time of grant will
qualify as "performance-based compensation."
The foregoing is based upon Federal tax laws and regulations as presently
in effect and does not purport to be a complete description of the Federal
income tax aspects of the Stock Incentive Plan. Also, the specific
19
<PAGE> 23
state and local tax consequences to each optionee under the Stock Incentive Plan
may vary, depending upon the laws of the various states and localities and the
individual circumstances of each optionee.
REQUIRED VOTE
In voting on approval of the amendments to the Stock Incentive Plan, the
shares of Common Stock and Class B Common Stock shall vote together as one class
with each share of Common Stock entitled to one vote and each share of Class B
Common Stock entitled to ten votes. Approval of the amendments requires the
affirmative vote by the holders of a majority of the votes represented by the
shares of Common Stock and Class B Common Stock, voting as a single class,
present in person or by proxy at the meeting. Unless marked to the contrary,
proxies received will be voted for approval of the amendments.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY VOTE
FOR THE APPROVAL OF THE AMENDMENTS TO THE STOCK INCENTIVE PLAN.
PROPOSAL 3
ADOPTION OF AMENDMENT TO THE COMPANY'S
1990 NON-QUALIFIED STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS AND CONSULTANTS
GENERAL
On November 7, 1997, the Board adopted, subject to approval by
shareholders, an amendment to the Company's 1990 Non-Qualified Stock Option Plan
for Non-Employee Directors and Consultants, as Amended and Restated (the
"Non-Employee Stock Option Plan") which would, if approved: (i) increase the
maximum number of shares of Common Stock that may be granted under the
Non-Employee Stock Option Plan from 225,000 to 375,000, and (ii) increase the
number of NQSOs automatically granted to Non-Employee Directors from 4,500
shares to 6,000 shares. These increases are being proposed in order to enhance
the Company's ability to attract and retain highly qualified Non-Employee
Directors and consultants and to better enable such persons to participate in
the success and growth of the Company's business. On February 6, 1998 the Board
also amended the Non-Employee Stock Option Plan to reflect recent changes in
Securities and Exchange Commission Rule 16b-3.
A copy of the Non-Employee Stock Option Plan, as proposed to be amended, is
attached as Exhibit B to this Proxy Statement. The material features of the
Non-Employee Stock Option Plan, as proposed to be amended, are described below,
but this description is only a summary and is qualified in its entirety by
reference to the actual text of the Non-Employee Stock Option Plan.
TYPES OF AWARDS
Awards under the Non-Employee Stock Option Plan may be in the form of
Non-Qualified Stock Options ("NQSOs").
EFFECTIVE DATE AND TERM
The Non-Employee Stock Option Plan was originally adopted by the Board on
December 17, 1990 and approved by the Company's shareholders on April 26, 1991.
The current proposed changes to the Non-Employee Stock Option Plan were approved
by the Board on November 7, 1997, subject to the approval of shareholders of the
Company. No NQSO shall be granted pursuant to the Non-Employee Stock Option Plan
20
<PAGE> 24
on or after April 26, 2001 (the tenth anniversary of the approval of the
Non-Employee Stock Option Plan by the Company's shareholders), but NQSOs
theretobefore granted may extend beyond that date.
ADMINISTRATION
The Non-Employee Stock Option Plan is administered by a committee of the
Board (the "Committee") consisting of the members of the Board who are not
Non-Employee Directors ("Employee Directors") or a committee thereof appointed
by such Employee Directors. A Non-Employee Director is defined in the Non-
Employee Stock Option Plan as an individual who: (i) is now, or hereafter
becomes a member of the Board; (ii) is neither an employee or officer of the
Company or any subsidiary of the Company on the date of grant of the NQSO; and
(iii) has not elected to decline to participate in the Non-Employee Stock Option
Plan.
Subject to the express provisions of the Non-Employee Stock Option Plan,
the Committee has the authority to interpret and administer that part of the
Non-Employee Stock Option Plan relating to Non-Employee Directors, but the
Committee shall not have the authority to determine the number of shares
granted, the persons eligible to participate under the Non-Employee Stock Option
Plan or the terms of the option grants to Non-Employee Directors.
Subject to the express provisions of the Non-Employee Stock Option Plan,
the Committee has the authority to administer that part of the Non-Employee
Stock Option Plan relating to Consultants, in its sole and absolute discretion.
A Consultant is defined in the Non-Employee Stock Option Plan as an individual
who furnishes services to the Company and (i) is neither an employee of the
Company nor a Non-Employee Director and (ii) in the Committee's determination,
has made a significant contribution to the growth and development of the
Company. To this end, the Committee is authorized to determine the Consultants
to whom, and the time or times at which, any NQSO shall be granted to such
Consultants; to determine the number of shares of Common Stock to be covered by
each NQSO; to determine the price at which each share of Common Stock covered by
a NQSO may be purchased; to determine the terms and provisions of each NQSO
granted to Consultants under the Non-Employee Stock Option Plan, which need not
be identical; to accelerate any exercise date of any NQSO granted to
Consultants; to waive restrictions imposed with respect to the transferability
of stock acquired on exercise of NQSOs granted to Consultants under the Non-
Employee Stock Option Plan; to authorize any person to execute on behalf of the
Company an option agreement with respect to a NQSO granted to Consultants by the
Committee; to construe and interpret the Non-Employee Stock Option Plan as it
relates to Consultants and to make any other determination deemed necessary or
advisable for the administration of the Non-Employee Stock Option Plan as it
relates to Consultants.
SHARES SUBJECT TO NON-EMPLOYEE STOCK OPTION PLAN
The maximum number of shares of Common Stock which may be subject to NQSOs
granted to Participants (which are defined in the Non-Employee Stock Option Plan
as either Non-Employee Directors or Consultants who are granted a NQSO under the
Non-Employee Stock Option Plan) under the Non-Employee Stock Option Plan is
currently 225,000. The November 7, 1997 amendment, if approved, will increase
the number of shares of Common Stock subject to the NQSOs to 375,000. To the
extent that a NQSO terminates without having been exercised, the shares subject
to such award will again be available for future awards under the Non-Employee
Stock Option Plan.
In the event of any change in capitalization affecting the Common Stock of
the Company, such as a stock dividend, stock split or recapitalization, the
Committee shall make proportionate adjustments with respect to: (i) the
aggregate number of shares of Common Stock available for issuance under the
Non-Employee Stock Option Plan; (ii) the number and exercise price of shares of
Common Stock subject to outstanding NQSOs;
21
<PAGE> 25
provided, however, that the number of shares of Common Stock subject to any NQSO
shall always be a whole number; (iii) the number of shares of Common Stock
subject to each grant under the Non-Employee Stock Option Plan; and (iv) such
other matters as shall be appropriate in light of the circumstances.
In connection with the dissolution or liquidation of the Company or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon the sale of all or substantially all of the property of the Company or
upon any other similar extraordinary transaction, all NQSOs not vested on or
prior to the effective time of any such transaction shall immediately vest as of
such effective time. The Committee in its discretion may make provisions for the
assumption of outstanding NQSOs, or the substitution for outstanding NQSOs of
new incentive awards covering the stock of a successor corporation or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices so as to prevent dilution or enlargement of rights.
SOURCE OF SHARES ISSUED
Common Stock issued under the Non-Employee Stock Option Plan may consist,
in whole or in part, of authorized and unissued shares of Common Stock or
treasury shares of Common Stock, as determined in the sole and absolute
discretion of the Committee. No fractional shares of Common Stock shall be
issued under the Non-Employee Stock Option Plan.
TERMS OF NON-QUALIFIED STOCK OPTIONS
GRANTS. Prior to the November 7, 1997 amendment, the Non-Employee Stock
Option Plan provided for automatic grants on December 7 of each year (or if such
date is not a Business Day then on the next succeeding Business Day) of NQSOs to
purchase 4,500 shares of Common Stock. The November 7, 1997 amendment, if
approved, will increase the automatic grants of NQSOs to 6,000 shares of Common
Stock, effective from (and including grants made on) December 8, 1997.
Discretionary awards of NQSOs may be made to Consultants as determined by the
Committee. Approximately seven persons are eligible to participate in the
Non-Employee Stock Option Plan.
EXERCISE PRICE. In the case of NQSOs granted to Non-Employee Directors,
the price at which each share of Common Stock covered by a NQSO may be purchased
pursuant to the Non-Employee Stock Option Plan shall be the fair market value of
a share of Common Stock on the date of the award of the NQSO. In the case of
NQSOs granted to Consultants, the price at which each share of Common Stock
covered by a NQSO may be purchased pursuant to the Non-Employee Stock Option
Plan shall be determined by the Committee at the time of grant but shall not be
less than the fair market value of a share of Common Stock on the date of the
grant.
EXERCISABILITY. All NQSOs granted to Non-Employee Directors shall vest and
become first exercisable six months from the date of grant and all NQSOs granted
to Consultants shall vest and become first exercisable no earlier than six
months and not later than five years from the date of grant, as may be
determined and prescribed by the Committee. The failure of a NQSO to vest for
any reason whatsoever shall cause the NQSO to expire and be of no further force
or effect. Unless terminated earlier pursuant to the Non-Employee Stock Option
Plan, the term of each NQSO granted shall be ten years from the date of grant,
or, in the case of stock options granted to Consultants, such shorter term as
the Committee may provide at the date of the grant of the stock option. NQSOs
are not transferable by the holder otherwise than by will or by the laws of
descent and distribution and shall be exercised during the lifetime of the
holder only by the holder. No NQSO or interest therein may be transferred,
assigned, pledged or hypothecated by the holder during the holder's lifetime
whether by operation of law or otherwise, or be made subject to execution,
attachment or
22
<PAGE> 26
similar process. Payment for the shares of Common Stock to be received upon
exercise of a NQSO is to be made in full in cash.
TERMINATION OF NQSOS. In the event a Non-Employee Director is removed from
the Board, all unexercised NQSOs held by such Non-Employee Director on the date
of such removal (whether or not vested) shall expire immediately. In the event a
Non-Employee Director ceases to be a member of the Board, other than by reason
of removal or in the event that a Consultant no longer furnishes services to the
Company, then all unexercised NQSOs held by such Participant shall expire,
unless vested, and if vested must be exercised within 60 days.
AMENDMENT AND TERMINATION
The Board may, insofar as permitted by law, from time to time, with respect
to any shares of Common Stock, suspend or terminate the Non-Employee Stock
Option Plan or revise or amend the Non-Employee Stock Option Plan in any respect
whatsoever, provided, however, that any revision or amendment that would cause
the Non-Employee Stock Option Plan to fail to comply with Rule 16b-3 or any
other requirement of applicable law or regulation if such amendment were not
approved by the shareholders of the Company shall not be effective until such
approval is obtained.
No amendment, suspension or termination of the Non-Employee Stock Option
Plan that would adversely affect the right of any Participant with respect to a
NQSO previously granted under the Non-Employee Stock Option Plan will be
effective without the written consent of the affected Participant.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
NAMES AND POSITION STOCK OPTIONS(A)
------------------ ----------------
<S> <C>
Non-Executive Director Group................................ 42,000
</TABLE>
- ---------------
(a) Options to purchase 6,000 shares were automatically granted on December 8,
1997 to each Non-Employee Director. If shareholder approval of the November
7, 1997 amendment to the Non-Employee Stock Option Plan is not obtained,
each of the automatic grants will be reduced to 4,500 shares. The exercise
price of the options is $15.50 per share, they have a maximum term of ten
years and they generally become exercisable six months after the date of
grant.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE NON-EMPLOYEE STOCK OPTION PLAN
The following is a summary of certain Federal income tax aspects of awards
made under the Non-Employee Stock Option Plan, based upon the laws in effect on
the date hereof.
In general: (i) no income is recognized by the optionee at the time a NQSO
is granted; (ii) upon exercise of the NQSO, the optionee recognizes ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise; and (iii) at
disposition any increase or decrease in value of the shares after the date of
exercise is treated as capital gain or loss. If the holding period for the
shares is not more than one year, the gain or loss will be short-term capital
gain or loss. Short-term capital gain is taxable at the same rates as ordinary
income. If the holding period is more than one year, the gain or loss will be
long-term capital gain or loss. In general, long-term capital gain is subject to
lower maximum Federal income tax rates than ordinary income. Currently, the
maximum rate for long-term capital gain on assets held for more than eighteen
months is generally 20%, and the maximum rate on capital gain on assets held for
more than one year but less than eighteen months ("mid-term gain") is 28%.
23
<PAGE> 27
Generally, the Company will be entitled to a tax deduction equal to the
amount of ordinary income recognized by the optionee at the date of exercise.
The foregoing is based upon Federal tax laws and regulations as presently
in effect and does not purport to be a complete description of the Federal
income tax aspects of the Non-Employee Stock Option Plan. Also, the specific
state and local tax consequences to each optionee under the Non-Employee Stock
Option Plan may vary, depending upon the laws of the various states and
localities and the individual circumstances of each optionee.
REQUIRED VOTE
In voting on approval of the amendment to the Non-Employee Stock Option
Plan, the shares of Common Stock and Class B Common Stock shall vote together as
one class with each share of Common Stock entitled to one vote and each share of
Class B Common Stock entitled to ten votes. Approval of the amendment to the
Non-Employee Stock Option Plan requires the affirmative vote by the holders of a
majority of the votes represented by the shares of Common Stock and Class B
Common Stock, voting as a single class, present in person or by proxy at the
meeting. Unless marked to the contrary, proxies received will be voted for
approval of the Non-Employee Stock Option Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY VOTE
FOR APPROVAL OF THE AMENDMENT TO THE NON-EMPLOYEE STOCK OPTION PLAN.
PROPOSAL 4
ADOPTION OF THE COMPANY'S
STOCK & DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
GENERAL
On November 7, 1997, the Board adopted, subject to approval by
shareholders, the Company's Stock & Deferred Compensation Plan for Non-Employee
Directors (the "Directors Stock Plan") which would, if approved, provide for
payment of annual retainer fees for Non-Employee Directors in the form of shares
of Common Stock and also allow deferral of such payments. The Directors Stock
Plan is being proposed in order to enhance the Company's ability to attract and
retain highly qualified Non-Employee Directors. Approximately seven persons are
eligible to participate in the Directors Stock Plan.
A copy of the Directors Stock Plan is attached as Exhibit C to this Proxy
Statement. The material features of the Directors Stock Plan are described
below, but this description is only a summary and is qualified in its entirety
by reference to the actual text of the Directors Stock Plan.
EFFECTIVE DATE AND SHARES RESERVED
The Directors Stock Plan is effective as of May 5, 1998, subject to
approval by the Company's shareholders.
The total number of shares of Common Stock reserved for issuance under the
Directors Stock Plan is 150,000.
In the event of any change in capitalization affecting the Common Stock of
Company, such as a stock dividend, stock split or recapitalization, there shall
automatically be substituted (i) for each share unit a new unit and (ii) for the
number of shares reserved for issuance under the Directors Stock Plan a number
of shares
24
<PAGE> 28
or other consideration, in the case of (i) and (ii) above, representing the
number and kind of shares, other securities or other consideration into which
outstanding shares shall be changed or for which such shares shall be exchanged.
ANNUAL RETAINER PAID IN SHARES
Each Non-Employee Director's annual retainer fee shall be paid in shares of
Common Stock in an amount (rounded to the nearest 100 shares) determined by
dividing $30,000 by the average closing price of shares of Common Stock on the
New York Stock Exchange for the ten trading days immediately prior to the
Company's annual shareholder meeting at which directors are elected or
reelected. Proportionate awards are made for anyone who becomes a Non-Employee
Director other than on the date of the annual shareholder meeting. Payments
under the Directors Stock Plan will be based on Plan Years of approximately
twelve months beginning on the date of the Company's annual general meeting of
shareholders for a year and ending on the day immediately preceding the
Company's annual general shareholder meeting for the following year. The initial
Plan Year will begin on May 5, 1998. The shares are payable 30 days following
the annual shareholder meeting or 30 days following the date the person becomes
a director. Shares distributed are fully vested.
DEFERRAL OF SHARES
Non-Employee Directors can make an irrevocable election in the preceding
calendar year to defer the retainer fee shares. Amounts deferred are credited in
the form of share units to a share unit account. If any dividends are payable on
shares of Common Stock during the deferral period, Non-Employee Directors shall
have dividend equivalents of equal amount paid to them in cash. Share units in
the account are fully vested at all times.
A Non-Employee Director's "plan benefit," which consists of shares of
Common Stock equal to the number of share units in the Non-Employee Director's
account, shall be distributed either in a lump sum at the time of termination of
the Non-Employee Director's service or in up to three annual installments
beginning at termination of service, as elected by the Non-Employee Director at
least one year in advance of termination.
Upon death of a Non-Employee Director, the plan benefit shall be
distributed to beneficiaries specified by the Non-Employee Director or otherwise
to the Non-Employee Director's surviving spouse or living children or estate.
NON-TRANSFERABILITY
Except in the case of death, payment of plan benefits may not be
transferred.
AMENDMENT AND TERMINATION
The Board may amend, alter, suspend, discontinue or terminate the plan
(including, without limitation, amending the dollar amount set forth in "Annual
Retainer Paid in Shares" above) without the consent of shareholders, provided
that no amendment or termination may materially and adversely affect the rights
of any Non-Employee Director without his or her consent.
UNFUNDED
The unit awards account of the Directors Stock Plan is unfunded, and
Non-Employee Directors stand as general creditors.
25
<PAGE> 29
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
NAMES AND POSITION SHARES OR SHARE UNITS
------------------ ---------------------
<S> <C>
Non-Executive Director Group.............................. (a)
</TABLE>
- ---------------
(a) Each Non-Executive Director will receive on an annual basis either shares or
share units (each unit representing one share) having a value of $30,000.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTORS STOCK PLAN.
In general, the fair market value of shares of Common Stock received by
Non-Employee Directors will be taxable as ordinary income to them when received,
and the Company will be entitled to a corresponding deduction.
The forgoing is based upon Federal tax laws and regulations as presently in
effect and does not purport to be a complete description of the Federal income
tax aspects of the Directors Stock Plan. Also, the specific state and local tax
consequences to each Non-Employee Director under the Directors Stock Plan may
vary, depending upon the laws of the various state and localities and their
individual circumstances.
REQUIRED VOTE
In voting on approval of the Directors Stock Plan, the shares of Common
Stock and Class B Common Stock shall vote together as one class with each share
of Common Stock entitled to one vote and each share of Class B Common Stock
entitled to ten votes. Approval of the Directors Stock Plan requires the
affirmative vote by the holders of a majority of the votes represented by the
shares of Common Stock and Class B Common Stock, voting as a single class,
present in person or by proxy at the meeting. Unless marked to the contrary,
proxies received will be voted for approval of the Directors Stock Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY VOTE
FOR APPROVAL OF THE DIRECTORS STOCK PLAN.
PROPOSAL 5
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as
independent accountants of the Company for the 1998 fiscal year, subject to
ratification and approval by the shareholders. In voting on such ratification
and approval, the shares of Common Stock and Class B Common Stock shall vote
together as one class with each share of Common Stock entitled to one vote and
each share of Class B Common Stock entitled to ten votes.
Coopers & Lybrand L.L.P. has audited the accounts of the Company since
1967. The Company has been advised that a representative of Coopers & Lybrand
L.L.P will be present at the meeting and will have an opportunity to make a
statement and to answer appropriate questions posed by shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
AND APPROVAL OF COOPERS & LYBRAND L.L.P.
26
<PAGE> 30
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the next annual
meeting must be received by the Company by December 9, 1998, for inclusion in
the proxy statement and form of proxy.
GENERAL
A COPY OF THE ANNUAL REPORT ON FORM 10-K FILED BY THE COMPANY WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR ITS LAST FISCAL YEAR IS AVAILABLE WITHOUT
CHARGE TO SHAREHOLDERS UPON WRITTEN REQUEST TO LAURIN L. LADEROUTE, JR.,
SECRETARY, OLSTEN CORPORATION, 175 BROAD HOLLOW ROAD, MELVILLE, NEW YORK
11747-8905.
The cost of solicitation of proxies will be borne by the Company. The Board
of Directors may use the services of individual Directors, as well as officers
and others, to solicit personally or by telephone. Arrangements may also be made
with brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of the stock held of record by
such persons and the Company may reimburse them for reasonable out-of-pocket
expenses incurred by them in doing so.
The Board of Directors knows of no other matters that may come before the
meeting. If any other matters should be brought before the meeting for action,
it is the intention of the persons named in the proxy to vote in accordance with
their discretion pursuant to authority conferred by the proxy.
By Order of the Board of Directors
LAURIN L. LADEROUTE, JR.
Secretary
Dated: April 9, 1998
Melville, New York
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EXHIBIT A
OLSTEN CORPORATION
1994 STOCK INCENTIVE PLAN
SECTION 1. Purpose.
The purpose of the Olsten Corporation 1994 Stock Incentive Plan, as amended
and restated (the "Plan"), is to enable Olsten Corporation (the "Company") and
Related Companies (as defined below) to attract and retain (i) employees who
contribute to the Company's success by their ability, ingenuity and industry and
(ii) franchisees ("Franchisees") and licensees ("Licensees") of the Company who
perform substantial services that contribute to the success and growth of the
Company, and to enable such employees, Franchisees and Licensees to participate
in the long-term success and growth of the Company by giving them an equity
interest in the Company. For purposes of the Plan, a "Related Company" means any
corporation, partnership, joint venture or other entity in which the Company
owns, directly or indirectly, at least a 20% beneficial ownership interest.
SECTION 2. Types of Awards.
Awards under the Plan may be in the form of (i) incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (hereinafter, including applicable regulations
thereunder, the "Code") or any successor provision thereto, and (ii) options
that do not qualify as Incentive Stock Options ("Non-Qualified Stock
Options")(collectively, "Stock Options").
SECTION 3. Administration.
3.1 The Plan shall be administered by a committee (the "Committee") of the
Company's Board of Directors (the "Board") consisting of not less than two
"non-employee directors" (as such term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") or any successor rule) who,
to the extent required to satisfy the exception for performance-based
compensation under Section 162(m) of the Code, are also "outside directors"
(within the meaning of Section 162(m) of the Code). The members of the Committee
shall serve at the pleasure of the Board.
3.2 The Committee shall have the authority to grant awards to eligible
employees, Franchisees and Licensees under the Plan; to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall deem advisable; to interpret the terms and provisions of the Plan and any
award granted under the Plan; and to otherwise supervise the administration of
the Plan. Subject to the terms of the Plan, the Committee's authority shall
include, but not be limited to, the authority:
(a) to determine whether and to what extent any award will be granted
hereunder;
(b) to select the employees, Franchisees and Licensees to whom awards
will be granted;
(c) to determine the number of shares of the common stock, par value
$.10 per share, of the Company (the "Common Stock") to be covered by each
award granted hereunder; provided, however, that no more than 300,000
shares (subject to adjustment as provided in Section 4.3 herein) may be
awarded under the Plan to any employee, Franchisee or Licensee in any
calendar year;
(d) to determine the form and the terms and conditions of any award
granted hereunder, including, but not limited to, any restrictions based on
performance and such other factors as the Committee may determine, and to
determine whether the terms and conditions of the award are satisfied;
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(e) to determine pursuant to a formula or otherwise the fair market
value of the Common Stock on a given date; provided, however, that if the
Committee fails to make such a determination, fair market value shall mean
the closing sale price of the Common Stock on the New York Stock Exchange
(or on any other national stock exchange on which the Common Stock may be
listed) on a given date;
(f) to amend the terms of any award, prospectively or retroactively;
provided, however, that no amendment shall impair the rights of the award
holder without his or her consent; and
(g) to substitute new Stock Options for previously granted Stock
Options, or for options granted under other plans, in each case including
previously granted options having higher option prices.
3.3 All determinations made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan participants.
SECTION 4. Stock Subject to Plan.
4.1 The total number of shares of Common Stock reserved and available for
distribution under the Plan shall be 6,000,000 (subject to adjustment as
provided below). Such shares may consist of authorized but unissued shares or
treasury shares.
4.2 To the extent an option terminates without having been exercised, the
shares subject to such award shall again be available for distribution in
connection with future awards under the Plan.
4.3 In the event of any merger, reorganization, consolidation, sale of
substantially all assets, recapitalization, Common Stock dividend, Common Stock
split, spin-off, split-up, split-off, distribution of assets or other change in
corporation structure affecting the Common Stock, a substitution or adjustment,
as may be determined to be appropriate by the Committee in its sole discretion,
shall be made in the aggregate number of shares reserved for issuance under the
Plan, the number of shares available for any individual awards, the number of
shares subject to outstanding awards and the exercise price to be paid by
employees, Franchisees and Licensees with respect to outstanding awards;
provided, however, that no such adjustment shall increase the aggregate value of
any outstanding award.
SECTION 5. Eligibility
Officers and other key employees of the Company or a Related Company,
Franchisees and Licensees are eligible to be granted awards under the Plan;
provided, however, that, to the extent required under Section 422 of the Code,
Incentive Stock Options may be granted only to officers and other key employees
of the Company or any subsidiary corporation in which the Company owns, directly
or indirectly, stock having 50% or more of the total combined voting power of
all classes of stock, within the meaning of Section 424(f) of the Code. A
director of the Company or a Related Company who is not also an employee of the
Company or a Related Company will not be eligible to be granted awards under the
Plan. The participants under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible.
SECTION 6. Terms of Stock Options.
6.1 Option Price. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee; provided, however,
that the option price of Non-Qualified Stock Options shall not be less than 85%,
and the option price of Incentive Stock Options shall not be less than 100%, of
the fair market value of the Common Stock on the date of award of each such
Stock Option.
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6.2 Option Term. The term of each Stock Option shall be ten years from
the date of grant thereof, unless a shorter term is provided for by the
Committee at the time of grant, subject to earlier termination as provided in
Sections 6.7 and 6.8 hereof.
6.3 Exercisability. Except as otherwise provided by the Committee at the
time of grant, or as provided in Section 9 hereof, Stock Options shall vest and
be first exercisable in annual installments of 25% of the shares originally
subject thereto, commencing on the first anniversary of the date of grant of the
Stock Option, and an additional 25% of such shares each year thereafter. The
Committee may accelerate an exercise date of any Stock Option or otherwise waive
the installment exercise provisions at any time (including at time of grant) in
whole or in part. Except as provided in Sections 6.7 and 6.8, a Stock Option
shall not be exercisable unless the optionee is an employee of the Company or a
Related Company, or is a Franchisee or Licensee, at the time of exercise.
6.4 Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option term by giving written notice of exercise to
the Company specifying the number of shares to be purchased, accompanied by
payment of the option price. Payment of the option price shall be made in cash
or cash equivalents or, if permitted by the Committee (either in the option
agreement or at the time of exercise), by delivery of shares of Common Stock
already owned by the optionee or withholding of shares subject to awards
hereunder (in each case, such shares having a fair market value on the date of
exercise equal to the aggregate option price), or in any other manner permitted
by law and as determined by the Committee, or any combination of the foregoing.
6.5 No Shareholder Rights. An optionee shall have neither rights to
dividends or other rights of a shareholder with respect to shares subject to a
Stock Option until the optionee has given written notice of exercise and has
paid for such shares.
6.6 Non-transferability. No Stock Option shall be transferable by the
optionee other than by will or by the laws of descent and distribution. During
the optionee's lifetime, all Stock Options shall be exercisable only by the
optionee.
6.7 Termination Under Certain Circumstances. If an optionee ceases to be
an employee of the Company or a Related Company, or if a Franchisee or Licensee
ceases to be a Franchisee or Licensee, for any reason other than death,
retirement or permanent disability, any Stock Option held by such optionee under
the Plan shall terminate immediately. If an optionee ceases to be an employee of
the Company or a Related Company, or if a Franchisee or Licensee ceases to be a
Franchisee or Licensee, by reason of retirement (on or after attaining the age
of 65 or such earlier age as the Committee may determine) or permanent
disability, any Stock Option held by such optionee may be exercised, to the
extent exercisable on the day preceding the date of such cessation of employment
or termination of the franchisee or licensee relationship, at any time within
three months (one year in the case of permanent disability) after such cessation
of employment or termination of the franchisee or licensee relationship, at the
end of which period the Stock Option shall terminate. Notwithstanding the
foregoing, the Committee in its sole discretion may provide, at the time of
grant or otherwise, for different rules to apply to the exercisability of Stock
Options held by an optionee at the time of such optionee's cessation of
employment or termination of the franchisee or licensee relationship. In no
event shall a Stock Option be exercised after the expiration of the term
thereof.
6.8 Death of the Optionee. If an optionee dies while an employee of the
Company or a Related Company or while a Franchisee or Licensee, or within three
months after the optionee has ceased to be an employee, Franchisee or Licensee
by reason of retirement, or within one year after the optionee has ceased to be
an employee, Franchisee or Licensee by reason of such optionee's permanent
disability, such Stock Option may be exercised, to the extent exercisable on the
day preceding the date such optionee ceases to be an employee, Franchisee or
Licensee, by the estate of such deceased optionee, or by a person or persons who
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acquire the right to exercise such option by bequest or inheritance or by reason
of the death of such optionee, at any time within one year after such optionee's
death, or within such shorter period of time as shall be prescribed in the
option agreement, at the end of which period such Stock Option shall terminate.
In no event shall a Stock Option be exercised after the expiration of the term
thereof.
SECTION 7. Tax Withholding.
7.1 Each optionee shall, no later than the date as of which the value of
an award first becomes includible in the optionee's gross income for applicable
tax purposes, pay to the Company, or make arrangements satisfactory to the
Committee regarding payment of, any federal, state, local or other taxes of any
kind required by law to be withheld with respect to the award. The obligations
of the Company under the Plan shall be conditional on such payment or
arrangements, and the Company (and, where applicable, any Related Company),
shall to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the optionee.
7.2 To the extent permitted by the Committee, and subject to such terms
and conditions as the Committee may provide, an optionee may elect to have the
withholding tax obligation, or any additional tax obligation with respect to any
awards hereunder, satisfied by (i) having the Company withhold shares of Common
Stock (at its fair market value) otherwise deliverable to the optionee with
respect to the award, or (ii) delivering to the Company shares of Common Stock
(at its fair market value) already owned by the optionee.
SECTION 8. Amendments and Termination.
The Plan shall terminate on February 14, 2004, and no Stock Option shall be
awarded under the Plan on or after such date. The Board may discontinue the Plan
at any time and may amend it from time to time. No amendment or discontinuation
of the Plan shall adversely affect any award previously granted without the
employee's, Franchisee's or Licensee's written consent. Amendments may be made
without shareholder approval except as required to satisfy Section 162(m) of the
Code or, with respect to Incentive Stock Options, Section 422 of the Code.
SECTION 9. Change of Control.
9.1 In the event of a Change of Control, unless otherwise determined by
the Committee at the time of grant or by amendment (with the holder's consent)
of such grant, all outstanding Stock Options awarded under the Plan shall become
fully exercisable and vested.
9.2 A "Change of Control" shall be deemed to occur on the date that any of
the following events occur:
(a) any person or persons acting together which would constitute a
"group" for purposes of Section 13(d) of the Exchange Act (other than the
Company, any subsidiary, members of the Olsten family (defined as Miriam
Olsten, any lineal descendant of William and Miriam Olsten, any spouse of
any such lineal descendant, a trust established principally for the benefit
of any of the foregoing, and the executor, administrator or personal
representative of the estate of any of the foregoing) and the "permitted
transferees" of such members of the Olsten family as defined in the
Company's Restated Certificate of Incorporation) shall beneficially own (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at
least 25% of the total voting power of all classes of capital stock of the
Company entitled to vote generally in the election of the Board;
(b) either (i) Current Directors (as herein defined) shall cease for
any reason to constitute at least a majority of the members of the Board
(for these purposes, a "Current Director" shall mean any
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member of the Board as of the effective date of the Plan, and any successor
of a Current Director whose election, or nomination for election by the
Company's shareholders, was approved by at least two-thirds of the Current
Directors then on the Board) or (ii) at any meeting of the shareholders of
the Company called for the purpose of electing directors, a majority of the
persons nominated by the Board for election as directors shall fail to be
elected;
(c) the shareholders of the Company approve (i) a plan of complete
liquidation of the Company, or (ii) an agreement providing for the merger
or consolidation of the Company (A) in which the Company is not the
continuing or surviving corporation (other than a consolidation or merger
with a wholly owned subsidiary of the Company in which all shares of Common
Stock and the Company's Class B Common Stock, par value $.10 per share
("Class B Common Stock") outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same consideration) or (B)
pursuant to which the Common Stock and Class B Common Stock are converted
into cash, securities or other property, except a consolidation or merger
of the Company in which the holders of the Common Stock and Class B Common
Stock immediately prior to the consolidation or merger have, directly or
indirectly, at least a majority of the common stock of the continuing or
surviving corporation immediately after such consolidation or merger or in
which the Board immediately prior to the merger or consolidation would,
immediately after the merger or consolidation, constitute a majority of the
board of the directors of the continuing or surviving corporation; or
(d) the shareholders of the Company approve an agreement (or
agreements) providing for the sale or other disposition (in one transaction
or a series of transactions) of all or substantially all of the assets of
the Company.
SECTION 10. General Provisions.
10.1 Each award under the Plan shall be subject to the requirement that,
if at any time the Committee shall determine that (i) the listing, registration
or qualification of the Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, or (ii) the consent or
approval of any government regulatory body or (iii) an agreement by the
recipient of an award with respect to the disposition of Common Stock is
necessary or desirable (in connection with any requirement or interpretation of
any federal or state securities law, rule or regulation) as a condition of, or
in connection with, the granting of such award or the issuance, purchase or
delivery of Common Stock thereunder, such award shall not be granted or
exercised, in whole or in part, unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
10.2 Nothing set forth in this Plan shall prevent the Board from adopting
other or additional compensation arrangements. Neither the adoption of the Plan
nor any award hereunder shall confer upon: (i) any employee of the Company, or
of a Related Company, any right to continued employment; or (ii) any Franchisee
or Licensee any right to continue as a Franchisee or Licensee.
10.3 Determinations by the Committee under the Plan relating to the form,
amount and terms and conditions of awards need not be uniform, and may be made
selectively among persons who receive or are eligible to receive awards under
the Plan, whether or not such persons are similarly situated.
10.4 With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent
that any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
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10.5 No member of the Board or the Committee, nor any officer or employee
of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board or the Committee and all
officers or employees of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.
SECTION 11. Effective Date of Plan.
The Plan was originally adopted by the Board on February 14, 1994, and
approved by the shareholders of the Company on April 29, 1994. The Plan, as
amended and restated, was adopted by the Board on February 13, 1995, effective
for option grants made on or after December 1, 1994, and approved by the
shareholders of the Company on April 28, 1995.
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EXHIBIT B
OLSTEN CORPORATION
1990 NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS AND CONSULTANTS
1. NAME AND BACKGROUND
The name of this plan (the "Plan") is the Olsten Corporation 1990
Non-Qualified Stock Option Plan for Non-Employee Directors and Consultants. The
Plan was originally adopted by the Board on December 17, 1990 and approved by
the Company's shareholders on April 26, 1991. The Plan was amended and restated
by the Board, effective August 6, 1992. The Plan was further amended by the
Board, effective February 13, 1995, and approved by the Company's shareholders
on April 28, 1995.
2. DEFINITIONS
For the purposes of the Plan, the following terms shall have the meanings
set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Business Day" means any day other than a Saturday, Sunday or
other day on which banks in New York City are required or authorized by law
to close.
(c) "Chairman" means the individual appointed by the Committee to
serve as the chairman of the Committee.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" means the committee specified in Section 4(d) hereof
to administer the Plan.
(f) "Common Stock" means the Common Stock of the Company, par value
$.10 per share, or any security of the Company identified by the Committee
as having been issued in substitution or exchange therefor or in lieu
thereof.
(g) "Company" means Olsten Corporation, a Delaware corporation.
(h) "Consultant" means an individual who furnishes services to the
Company and (i) is neither an Employee of the Company or any Subsidiary nor
a Non-Employee Director and (ii) in the determination of the Committee, has
made a significant contribution to the growth and development of the
Company.
(i) "Effective Date" means the date on which the Plan was originally
approved by the Board, as provided in Section 5(a) hereof.
(j) "Employee" means an individual whose wages are subject to the
withholding of federal income tax under Section 3401 of the Code.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute.
(l) "Fair Market Value" of a Share as of a specified date means the
closing price of the Common Stock on the New York Stock Exchange (or on any
other national stock exchange on which the Common Stock may be listed) on
such date.
(m) "Non-Employee Director" means an individual who: (i) is now, or
hereafter becomes, a member of the Board; (ii) is neither an Employee nor
an Officer of the Company or any Subsidiary on the date of the grant of the
NQSO; and (iii) has not elected to decline to participate in the Plan
pursuant to the next succeeding sentence. A Non-Employee Director otherwise
eligible to participate in the Plan may make an irrevocable, one-time
election, by written notice to the Corporate Secretary of the Company and
the Chairman of the Committee within thirty days after his initial election
or appointment
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to the Board or, in the case of Non-Employee Directors in office, on the
date the Plan was adopted by the Board, to decline to participate in the
Plan.
(n) "NQSO" means an option that is not qualified under Section 422 of
the Code.
(o) "Officer" means an individual elected or appointed by the Board or
by the board of directors of a Subsidiary, or chosen in such other manner
as may be prescribed by the by-laws of the Company or a Subsidiary, as the
case may be, to serve as an officer of the Company or a Subsidiary.
(p) "Participant" means a Non-Employee Director or a Consultant who is
granted a NQSO under the Plan.
(q) "Plan" means this 1990 Non-Qualified Stock Option Plan for
Non-Employee Directors and Consultants, as may be amended from time to
time.
(r) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor or replacement
rule adopted by the Securities and Exchange Commission. Accordingly, all
references in the Plan to a specific paragraph of Rule 16b-3 shall be
deemed to be references to such paragraph or to the applicable successor or
replacement paragraph thereto.
(s) "Share" means one share of Common Stock, adjusted in accordance
with Section 9(b) hereof, if applicable.
(t) "Stock Option Agreement" means the written agreement between the
Company and the Participant that contains the terms and conditions
pertaining to the NQSO.
(u) "Subsidiary" means any corporation or entity of which the Company,
directly or indirectly, is the beneficial owner of fifty percent (50%) or
more of the total voting power of all classes of its stock having voting
power, unless the Committee shall determine, for purposes of this Plan as
it pertains to Consultants, that any such corporation or entity shall be
excluded hereunder from the definition of the term Subsidiary.
3. PURPOSE
The purpose of the Plan is to enable the Company to provide incentives,
which are linked directly to increases in shareholder value, by awarding stock
options (i) to Non-Employee Directors in order that they will be encouraged to
serve on the Board and exert their best efforts on behalf of the Company, and
(ii) to Consultants in order to encourage such Consultants to promote the
success and progress of the Company's business.
4. ADMINISTRATION
(a) Powers of the Committee with Respect to the Non-Employee Directors.
The Committee shall have the authority to interpret and administer that
part of the Plan relating to Non-Employee Directors in accordance with the
provisions of the Plan; provided, however, that the Committee shall not have the
authority to determine the number of shares granted, the persons eligible to
participate under the Plan or the terms of the options granted to Non-Employee
Directors. The Committee: (i) may authorize any person to execute, on behalf of
the Company, an option agreement with respect to a NQSO granted to a
Non-Employee Director in accordance with an automatic award under the Plan; and
(ii) is authorized to construe and interpret the Plan as it relates to
Non-Employee Directors and to make all other determinations necessary or
advisable for the administration of the Plan as it relates to Non-Employee
Directors. Subject to the foregoing, any determination, decision or action of
the Committee in connection with the construction, interpretation,
administration or application of the Plan as it relates to Non-Employee
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Directors shall be final, conclusive and binding upon all Non-Employee Directors
and any person claiming under or through a Non-Employee Director.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
that any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Board.
(b)Powers of the Committee with Respect to the Consultants.
The Committee shall have the authority to administer that part of the Plan
relating to Consultants in accordance with the provisions of the Plan in its
sole and absolute discretion. To this end, the Committee is authorized to
determine the Fair Market Value of the Common Stock covered by each NQSO and the
Consultants to whom, and the time or times at which, any NQSO shall be granted
to Consultants; to determine the number of Shares to be covered by each NQSO; to
determine the price at which each share of Common Stock covered by a NQSO may be
purchased; to determine the terms and provisions of each NQSO granted to
Consultants under the Plan, which need not be identical; to accelerate any
exercise date of any NQSO granted to Consultants; to waive restrictions imposed
with respect to the transferability of stock acquired on exercise of NQSOs
granted to Consultants under the Plan; to authorize any person to execute on
behalf of the Company an option agreement with respect to a NQSO granted to
Consultants by the Committee; to construe and interpret the Plan as it relates
to Consultants and to make any other determination deemed necessary or advisable
for the administration of the Plan as it relates to Consultants. Subject to the
foregoing, any determination, decision or action of the Committee in connection
with the construction, interpretation, administration or application of the Plan
as it relates to Consultants shall be final, conclusive and binding upon all
Consultants and any person claiming under or through a Consultant.
(c) Actions by the Committee.
The Committee shall hold meetings at such times and places as it may
determine. The Committee shall appoint one of its members as Chairman of the
Committee. Acts approved by a majority of the members of the Committee present
at a meeting at which a quorum is present, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee.
(d) Composition of the Committee.
The Committee shall consist of the members of the Board who are not
Non-Employee Directors (the "Employee Directors"), or a committee thereof
appointed by such Employee Directors. Employee Directors may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Employee Directors.
(e) Liability of Board or Committee Members.
No member of the Board or the Committee will be liable for any action or
determination made in good faith by the Board or the Committee with respect to
the Plan or any grant or exercise of a NQSO thereunder.
(f) NQSO Accounts.
The Committee shall maintain or cause to be maintained a journal or other
record in which a separate account for each Non-Employee Director or Consultant,
as the case may be, shall be established. Whenever NQSOs are granted to or
exercised by a Participant, the Participant's account shall be appropriately
credited or debited. Appropriate adjustment shall also be made in such journal
with respect to each Participant's account in the event of an adjustment
pursuant to Section 9(b) hereof.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date of the Plan. The effective date of the Plan is December
17, 1990 (the date the Plan was approved by the Board).
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(b) Term of the Plan. No NQSO shall be granted pursuant to the Plan on or
after April 26, 2001 (the tenth anniversary of the approval of the Plan by the
Company's shareholders), but NQSOs theretofore granted may extend beyond that
date.
6. SHARES SUBJECT TO THE PLAN
The maximum aggregate number of Shares which may be subject to NQSOs
granted to Participants under the Plan shall be 375,000. The limitation on the
number of Shares which may be subject to NQSOs under the Plan shall be subject
to adjustment as provided in Section 9(b) hereof.
If any NQSO granted under the Plan expires or is terminated for any reason
without having been exercised in full, the Shares allocable to the unexercised
portion of such NQSO shall again become available for grant pursuant to the
Plan. At all times during the term of the Plan, the Company shall reserve and
keep available for issuance such number of Shares as the Company is obligated to
issue upon the exercise of all then outstanding NQSOs.
7. SOURCE OF SHARES ISSUED UNDER THE PLAN
Common Stock issued under the Plan may consist, in whole or in part, of
authorized and unissued Shares or treasury Shares, as determined in the sole and
absolute discretion of the Committee. No fractional Shares shall be issued under
the Plan.
8. NON-QUALIFIED STOCK OPTIONS
(a) Grant of NQSOs.
(i) An automatic NQSO to purchase 6,000 shares (subject to adjustment
as provided in Section 9(b) hereof) shall be awarded to each Non-Employee
Director on December 7, 1992 and upon each anniversary thereafter (or if
such date is not a Business Day, then on the next succeeding Business Day),
subject to the terms and conditions described in Section 8(c) below;
(ii) Discretionary awards of NQSOs shall be made to Consultants as
determined by the Committee, which shall have full and final authority in
its discretion, subject to the provisions of the Plan, to grant NQSOs to
any one or more Consultants.
(b) Exercise Price.
(i) In the case of NQSOs granted to Non-Employee Directors, the price
at which each Share covered by a NQSO may be purchased pursuant to this
Plan shall be the Fair Market Value of a Share on the date of the award of
the NQSO;
(ii) In the case of NQSOs granted to Consultants, the price at which
each Share covered by a NQSO may be purchased pursuant to this Plan shall
be determined by the Committee at the time of grant but shall not be less
than the Fair Market Value of a Share on the date of the grant.
(c) Terms and Conditions.
All NQSOs granted pursuant to the Plan shall be evidenced by a Stock Option
Agreement (which need not be the same for each Participant or NQSO), approved as
to form by the Committee, and which shall be subject to the following express
terms and conditions and to the other terms and conditions specified in this
Section 8, and, in the case of Consultants, to such other terms and conditions
as shall be determined by the Committee in its sole and absolute discretion
which are not inconsistent with the terms of the Plan:
(i) except as set forth in Section 9(c) hereof, (A) all NQSOs granted
to a Non-Employee Director shall vest and become first exercisable six
months from the date of grant; and (B) all NQSOs granted to a Consultant
shall vest and become first exercisable no earlier than six months nor
later than five years from the date of grant, as may be determined and
prescribed by the Committee;
B-4
<PAGE> 41
(ii) the failure of a NQSO to vest for any reason whatsoever shall
cause the NQSO to expire and be of no further force or effect;
(iii) unless terminated earlier pursuant to Section 8(e) hereof, the
term of each NQSO shall be ten years from the date of grant, or, in the
case of stock options granted to Consultants, such shorter term as the
Committee may provide at the time of the grant of the NQSO;
(iv) NQSOs shall not be transferable by the holder otherwise than by
will or by the laws of descent and distribution and shall be exercised
during the lifetime of the holder only by the holder;
(v) no NQSO or interest therein may be transferred, assigned, pledged
or hypothecated by the holder during the holder's lifetime whether by
operation of law or otherwise, or be made subject to execution, attachment
or similar process; and
(v) payment for the Shares to be received upon exercise of a NQSO
shall be made in full in cash.
(d) Exercise.
The holder of a NQSO may exercise the same by filing with the Corporate
Secretary of the Company a written election, in such form as the Committee may
determine, which notice shall specify the number of Shares with respect to which
such NQSO is being exercised. Such notice shall be accompanied by payment in
full of the exercise price for such Shares. Notwithstanding the foregoing, the
Committee may specify a reasonable minimum number of Shares that may be
purchased on any exercise of any NQSO, provided that such minimum number will
not prevent the Participant from exercising the NQSO with respect to the full
number of Shares as to which the NQSO is then exercisable.
(e) Termination of NQSOs.
NQSOs granted under the Plan shall be subject to the following events of
termination:
(i) in the event a Non-Employee Director is removed from the Board,
all unexercised NQSOs held by such Non-Employee Director on the date of
such removal (whether or not vested) shall expire immediately;
(ii) in the event a Non-Employee Director ceases to be a member of the
Board, other than by reason of removal, all unexercised NQSOs held by such
Non-Employee Director at the time the Non-Employee Director ceases to be a
member of the Board shall expire, unless vested, and if vested must be
exercised within sixty (60) days of the Non-Employee Director's last day as
a member of the Board; and
(iii) in the event a Consultant no longer furnishes services to the
Company, all unexercised NQSOs held by such Consultant at the time such
Consultant ceases to furnish services to the Company shall expire, unless
vested, and if vested must be exercised within sixty (60) days of the time
such Consultant so ceases to furnish services to the Company.
9. RECAPITALIZATION
(a) Corporate Flexibility.
The existence of the Plan and the NQSOs granted hereunder shall not affect
or restrict in any way the right or power of the Board or the shareholders of
the Company, in their sole and absolute discretion, to make, authorize or
consummate any adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or consolidation of
the Company, any issue of bonds, debentures, common stock, preferred or prior
preference stocks ahead of or affecting the Company's capital stock or the
rights thereof, the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business, or any other grant of
rights, issuance of securities, transaction, corporate act or proceeding and
notwithstanding the fact that any such activity, proceeding, action, transaction
or other event may have, or be expected to have, an impact (whether positive or
negative) on the value of any NQSO.
B-5
<PAGE> 42
(b) Adjustments Upon Changes in Capitalization.
Except as otherwise provided in Section 9(c) below and subject to any
required action by the shareholders of the Company, in the event of any change
in capitalization affecting the Common Stock of the Company, such as a stock
dividend, stock split or recapitalization, the Committee shall make
proportionate adjustments with respect to: (i) the aggregate number of Shares
available for issuance under the Plan; (ii) the number and exercise price of
Shares subject to outstanding NQSOs; provided, however, that the number of
Shares subject to any NQSO shall always be a whole number; (iii) the number of
shares subject to each grant under the Plan; and (iv) such other matters as
shall be appropriate in light of the circumstances.
(c) Adjustments Involving Transactions Where Company Does Not Survive.
In connection with the dissolution or liquidation of the Company or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon the sale of all or substantially all of the property of the Company or
upon any other similar extraordinary transaction, all NQSOs not vested on or
prior to the effective time of any such transaction shall immediately vest as of
such effective time. The Committee in its discretion may make provisions for the
assumption of outstanding NQSOs, or the substitution for outstanding NQSOs of
new incentive awards covering the stock of a successor corporation or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices so as to prevent dilution or enlargement of rights.
10. SECURITIES LAW REQUIREMENTS
No shares shall be issued under the Plan unless and until: (i) the Company
and the Participant have taken all actions required to register the Shares under
the Securities Act of 1933, as amended, or perfect an exemption from the
registration requirement thereof; (ii) any applicable listing requirement of any
stock exchange on which the Common Stock is listed has been satisfied; and (iii)
any other applicable provision of state or federal law has been satisfied.
11. AMENDMENT AND TERMINATION
(a) Modifications to the Plan.
The Board may, insofar as permitted by law, from time to time, with respect
to any Shares at the time not subject to NQSOs, suspend or terminate the Plan or
revise or amend the Plan in any respect whatsoever; provided, however, that any
revision or amendment that would cause the Plan to fail to comply with Rule
16b-3 or any other requirement of applicable law or regulation if such amendment
were not approved by the shareholders of the Company shall not be effective
unless and until such approval is obtained.
(b) Rights of Participant.
No amendment, suspension or termination of the Plan that would adversely
affect the right of any Participant with respect to a NQSO previously granted
under the Plan will be effective without the written consent of the affected
participant.
12. MISCELLANEOUS
(a) Shareholders' Rights.
No Participant and no beneficiary or other person claiming under or through
such Participant shall acquire any rights as a shareholder of the Company solely
by virtue of such Participant's having been granted a NQSO under the Plan. No
Participant and no beneficiary or other person claiming under or through such
Participant will have any right, title or interest in or to any Shares allocated
or reserved under the Plan or subject to any NQSO except as to Shares, if any,
that have been issued or transferred to such Participant. No
B-6
<PAGE> 43
adjustment shall be made for dividends or distributions or other rights for
which the record date is prior to the date of exercise.
(b) Other Compensation Arrangements.
Nothing contained in the Plan shall prevent the Board from adopting other
compensation arrangements, subject to shareholder approval if such approval is
required. Such other arrangements may be either generally applicable or
applicable only in specific cases.
(c) Treatment of Proceeds.
Proceeds realized from the exercise of NQSOs under the Plan constitute
general funds of the Company.
(d) Costs of the Plan.
The costs and expenses of administering the Plan shall be borne by the
Company.
(e) No Right to Continue as Non-Employee Director or Consultant.
Nothing contained in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Participant any right to continue as a member of the
Board (or as a Consultant, as the case may be) or affect the right of the
Company, the Board or the shareholders of the Company to terminate the
directorship (or consultancy) of any Participant at any time with or without
cause.
(f) Severability.
The provisions of the Plan shall be deemed severable and the validity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
(g) Binding Effect of Plan.
The Plan, as amended and restated, supersedes prior versions of the Plan.
The Plan shall inure to the benefit of the Company, its successors and assigns.
(h) No Waiver of Breach.
No waiver by any person at any time of any breach by another person of, or
compliance with, any condition or provision of the Plan to be performed by such
other person shall be deemed a waiver of the same, any similar or any dissimilar
provisions or conditions at the same or at any prior or subsequent time.
(i) Headings.
The headings contained herein are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Plan.
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<PAGE> 44
EXHIBIT C
OLSTEN CORPORATION
STOCK & DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
SECTION 1. Introduction.
The Olsten Corporation Stock & Deferred Compensation Plan for Non-Employee
Directors (the "Plan") provides for the payment of annual retainer fees of
non-employee directors of Olsten Corporation in the form of Shares. It also
provides an opportunity for the non-employee directors to defer their annual
retainer fees and have them deemed invested in Shares. The Plan is intended to
encourage qualified individuals to accept nominations as directors of Olsten
Corporation and to strengthen the mutuality of interest between the non-employee
directors and Olsten Corporation's other shareholders.
SECTION 2. Definitions.
For purposes of the Plan, the following terms shall be defined as set forth
below.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to
include successor provisions thereto and regulations thereunder.
(c) "Company" means Olsten Corporation, a corporation organized under
the laws of Delaware, or any successor corporation.
(d) "Director" means a member of the Board who is not employed by the
Company or any of its subsidiaries.
(e) "Plan" means this Stock & Deferred Compensation Plan for
Non-Employee Directors.
(f) "Plan Benefits" means the benefits described in Sections 5 and 6
hereof.
(g) "Plan Year" means a period of approximately twelve months
beginning on the date of the Company's annual general meeting of
shareholders for a year and ending on the day immediately preceding the
Company's annual general meeting of shareholders for the following year;
and the initial Plan Year shall begin on May 5, 1998.
(h) "Shares" means Common Stock, $0.10 par value per share, of the
Company.
SECTION 3. Administration.
The Plan shall be administered by the Board. The Board shall have full
authority to construe and interpret the Plan, and any action of the Board with
respect to the Plan shall be final, conclusive, and binding on all persons.
Subject to adjustment as provided in Section 7(g) hereof, the total number of
Shares reserved for issuance under the Plan shall be 150,000.
SECTION 4. Annual Retainer Paid In Shares.
(a) After the Effective Date of this Plan, each Director's annual retainer
fee for a Plan Year shall, subject to any deferral election made pursuant to
Section 5 below, be the number of Shares (rounded to the
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<PAGE> 45
nearest 100 Shares) determined by dividing $30,000 by the average closing price
of Shares on the New York Stock Exchange for the ten trading days immediately
preceding the date of the Company's annual general meeting of shareholders on
the first day of the Plan Year at which Directors are elected or reelected. Such
annual retainer fee shall be payable on an annual basis 30 days following such
annual general meeting of shareholders. The annual retainer fee payable to a
person who becomes a Director other than at such an annual general meeting shall
be the number of Shares (rounded up to the nearest Share) determined by
multiplying the number of Shares determined pursuant to the first sentence of
this Section 4(a) for the Plan Year during which such person becomes a Director
by a fraction, the numerator of which is 365 minus the number of days elapsed
since the last annual general meeting of shareholders and the denominator of
which is 365, and such Shares shall be payable on the 30th day following the day
on which the person becomes a Director.
(b) Shares distributed to a Director shall be vested in full at the time of
distribution.
SECTION 5. Share Unit Accounts.
The Company shall maintain a Share unit account (an "Account") for each
Director. Share units will be credited to each such Account as follows:
(a) Each Director may make an irrevocable election on or before the
December 31 immediately preceding the beginning of a Plan Year by written
notice to the Company, to defer payment of all of the compensation
otherwise payable during the Plan Year as his or her annual retainer fee
for service as a Director. Notwithstanding the foregoing, a Director may
make such an election within 10 days after first becoming eligible to
participate in the Plan, with respect to compensation payable after the
effective date of the election. All compensation which a Director elects to
defer pursuant to this Section 5(a) shall be credited in the form of Share
units to the Director's Account. The number of units so credited will be
equal to the number of Shares deferred by the Director in his or her
deferral election. Deferrals of compensation hereunder shall continue until
the Director notifies the Company in writing, on or prior to the December
31 immediately preceding the commencement of any Plan Year, that the
Director wishes his or her compensation payable during such Plan Year and
succeeding periods to be distributed as Shares on a current basis, as
provided above.
(b) If any dividends are payable on Shares during the deferral period,
dividend equivalents equal to the dividend that would have been payable on
the units credited to a Director's Account if such units had constituted
Shares shall be paid to the Director in cash at the time the corresponding
dividends are paid on Shares.
SECTION 6. Plan Benefits.
(a) Form. The Plan Benefit of a Director shall consist of Shares equal in
number to the Share units in the Director's Account. Such Share units shall be
fully vested at all times. Any fractional Share unit shall be paid in cash.
(b) Distribution.
(i) The Plan Benefit of a Director shall be distributed either (i) in a
single lump sum at the time of termination of the Director's service on the
Board or (ii) in up to three annual installments beginning at the time of
termination of the Director's service on the Board. Each Director may elect the
form of distribution, and such election must be made in the form designated by
the Company from time to time, must be made within 10 days after the Director
first becomes eligible to participate in the Plan, and shall be irrevocable once
filed with the Company; provided, however, that Director may file a new election
as to the form of distribution
C-2
<PAGE> 46
if such election is filed at least one year in advance of termination of service
on the Board. In the absence of a timely election by a Director hereunder, the
Director shall be deemed to have elected to have his or her Plan Benefit
distributed in a single lump sum at the time of termination of the Director's
service on the Board.
(ii) In the case of the death of a Director, the Director's Plan Benefit
shall be distributed, within a reasonable time as determined by the Company,
after the Director's death to the Director's beneficiary or beneficiaries, as
specified by the Director on a form furnished by and filed with the Secretary of
the Company. If no beneficiary has been designated by the Director or if no
beneficiary survives the Director, the undistributed balance of his or her Plan
Benefit shall be distributed to the Director's surviving spouse as beneficiary
if such spouse is still living or, if not living, in equal shares to the then
living children of the Director as beneficiaries or, if none, to the Director's
estate as beneficiary.
SECTION 7. General.
(a) Nontransferability. Except as provided in Section 6(b)(ii), no payment
of any Plan Benefit of a Director shall be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any creditor's process,
whether voluntarily or involuntarily or by operation of law. Any act in
violation of this subsection shall be void.
(b) Compliance with Legal and Trading Requirements. The Plan shall be
subject to all applicable laws, rules and regulations, including, but not
limited to, federal and state laws, rules and regulations, and to such approvals
by any regulatory or governmental agency as may be required. No provision of the
Plan shall be interpreted or construed to obligate the Company to register any
Shares under federal or state securities laws. The transfer by a Director of
Shares distributed pursuant to the Plan will be subject to such restrictions as
the Company deems necessary or desirable in connection with federal or state
securities laws, and Share certificates will bear a legend setting forth any
such restriction.
(c) Taxes. The Company is authorized to withhold from any payment made
under this Plan any amounts of withholding and other taxes due in connection
therewith, and to take such other action as the Company may deem advisable to
enable the Company and a Director to satisfy obligations for the payment of any
withholding taxes and other tax obligations relating thereto.
(d) Amendment. The Board may amend, alter, suspend, discontinue, or
terminate the Plan (including, without limitation, amending the dollar amount
set forth in Section 4(a) hereof) without the consent of shareholders of the
Company or individual Directors; provided, however, that, without the consent of
an affected Director, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may materially impair the rights or, in any other
manner, materially and adversely affect the rights of such Director hereunder.
(e) Unfunded Status of Awards. This Plan (other than Section 4 hereof) is
intended to constitute an "unfunded" plan of deferred compensation. With respect
to any payments not yet made to a Director, nothing contained in the Plan shall
give any such Director any rights that are greater than those of a general
creditor of the Company; provided, however, that the Company may authorize the
creation of trusts or make other arrangements to meet the Company's obligations
under the Plan to deliver cash, or other property pursuant to any award, which
trusts or other arrangements shall be consistent with the "unfunded" status of
the Plan unless the Company otherwise determines with the consent of each
affected Director.
(f) Nonexclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as creating any limitations on the power of the Board to
adopt such other compensation arrangements as it may deem desirable, including,
without limitation, the granting of options on Shares and other awards otherwise
than under the Plan, and such arrangements may be either applicable generally or
only in specific cases.
C-3
<PAGE> 47
(g) Adjustments. In the event that subsequent to the Effective Date any
dividend in Shares, recapitalization, Share split, reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other such change, affects the Shares such that they are
increased or decreased or changed into or exchanged for a different number or
kind of Shares, other securities of the Company or of another corporation or
other consideration, then in order to maintain the proportionate interest of the
Directors and preserve the value of the Directors' Share units and to maintain
the value of the Plan, there shall automatically be substituted (i) for each
Share unit a new unit and (ii) for the number of Shares set forth in Section 3
above a number of Shares or other consideration, in the case of (i) and (ii)
above, representing the number and kind of Shares, other securities or other
consideration into which each outstanding Share shall be changed or for which
each such Share shall be exchanged. The substituted units shall be subject to
the same terms and conditions as the original Share units.
(h) No Right to Remain on the Board. Neither the Plan nor the crediting of
Share units under the Plan shall be deemed to give any individual a right to
remain a director of the Company or create any obligation on the part of the
Board to nominate any Director for reelection by the shareholders of the
Company.
(i) Governing Law. The validity, construction, and effect of the Plan
shall be determined in accordance with the laws of the State of New York without
giving effect to principles of conflict of laws.
(j) Effective Date. The Plan shall, subject to obtaining approval of this
Plan by the shareholders of the Company, become effective as of May 5, 1998 (the
"Effective Date").
(k) Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only. In the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.
C-4
<PAGE> 48
CLASS B COMMON STOCK
[OLSTEN CORPORATION LOGO]
175 Broad Hollow Road
Melville, New York 11747-8905
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
OF OLSTEN CORPORATION
The undersigned hereby appoints Frank N. Liguori, Stuart Olsten and
Laurin L. Laderoute, Jr., jointly and severally, proxies, with full power of
substitution to represent the undersigned and vote all shares of Class B Common
Stock of Olsten Corporation (the "Company") which the undersigned is entitled
to vote at the Annual Meeting of Shareholders of the Company to be held at 175
Broad Hollow Road, Melville, New York on Tuesday, May 5, 1998 at 9:00 a.m.,
and at any adjournments thereof, upon the following matters and upon such other
matters as may properly come before the meeting:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR PROPOSALS
1, 2, 3, 4 AND 5 AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY
OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED, AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE> 49
Please mark [X]
your votes as
indicated in
this example
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND
5.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
1. Election of Directors:
FOR all nominees WITHHOLD
(except as AUTHORITY
marked) for all nominees
[ ] [ ]
Nominees to be elected by holders of Class B Common Stock: Victor F. Ganz,
Stuart R. Levine, Frank N. Liguori, Miriam Olsten, Stuart Olsten and Richard J.
Sharoff.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
________________________________________________________________________________
2. Approve amendments to 1994 Stock Incentive Plan.
[ ] [ ] [ ]
3. Approve amendment to 1990 Non-Qualified Stock Option Plan for Non-Employee
Directors and Consultants.
[ ] [ ] [ ]
4. Approve Stock & Deferred Compensation Plan for Non-Employee Directors.
[ ] [ ] [ ]
5. Approve Coopers & Lybrand L.L.P. as independent accountants for 1998.
[ ] [ ] [ ]
6. In their discretion, upon such other matters as may properly come before
this meeting.
__ PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS HEREON AND
| RETURN IN THE ENCLOSED ENVELOPE. IF ACTING AS EXECUTOR,
ADMINISTRATOR, TRUSTEE, ETC., PLEASE SO INDICATE WHEN SIGNING. IF
THE SIGNER IS A CORPORATION, PLEASE SIGN THE FULL CORPORATE NAME
BY DULY AUTHORIZED OFFICER. IF SHARES ARE HELD JOINTLY, EACH
SHAREHOLDER SHOULD SIGN. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated: __________________________________________________, 1998
______________________________________________________________
(Signature)
______________________________________________________________
(Signature, if held jointly)
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE> 50
COMMON STOCK
[OLSTEN CORPORATION LOGO]
175 Broad Hollow Road
Melville, New York 11747-8905
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
OF OLSTEN CORPORATION
The undersigned hereby appoints Frank N. Liguori, Stuart Olsten and Laurin
L. Laderoute, Jr., jointly and severally, proxies, with full power of
substitution to represent the undersigned and vote all shares of Common Stock of
Olsten Corporation (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of the Company to be held at 175 Broad Hollow
Road, Melville, New York on Tuesday, May 5, 1998 at 9:00 a.m., and at any
adjournments thereof, upon the following matters and upon such other matters as
may properly come before the meeting:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR PROPOSALS
1, 2, 3, 4 AND 5 AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY
OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
CONTINUED, AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE> 51
Please mark [X]
your votes as
indicated in
this example
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND
5.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
1. Election of Directors:
FOR all nominees WITHHOLD
(except as AUTHORITY
marked) for all nominees
[ ] [ ]
Nominees to be elected by holders of Common Stock: John M. May, Raymond S.
Trough and Josh S. Weston.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
________________________________________________________________________________
2. Approve amendments to 1994 Stock Incentive Plan.
[ ] [ ] [ ]
3. Approve amendment to 1990 Non-Qualified Stock Option Plan for Non-Employee
Directors and Consultants.
[ ] [ ] [ ]
4. Approve Stock & Deferred Compensation Plan for Non-Employee Directors.
[ ] [ ] [ ]
5. Approve Coopers & Lybrand L.L.P. as independent accountants for 1998.
[ ] [ ] [ ]
6. In their discretion, upon such other matters as may properly come before
this meeting.
__ PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS HEREON AND
| RETURN IN THE ENCLOSED ENVELOPE. IF ACTING AS EXECUTOR,
ADMINISTRATOR, TRUSTEE, ETC., PLEASE SO INDICATE WHEN SIGNING. IF
THE SIGNER IS A CORPORATION, PLEASE SIGN THE FULL CORPORATE NAME
BY DULY AUTHORIZED OFFICER. IF SHARES ARE HELD JOINTLY, EACH
SHAREHOLDER SHOULD SIGN. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated: __________________________________________________, 1998
______________________________________________________________
(Signature)
______________________________________________________________
(Signature, if held jointly)
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
