<PAGE>
SCHEDULE 14A
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:
__ Preliminary Proxy Statement
X Definitive Proxy Statement
__ Definitive Additional Materials
__ Soliciting Material Pursuant to Exchange Act Rule 14a-11 or 14a-12
Right Management Consultants, Inc.
(Name of Registrant as Specified In Its Charter)
_____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing Fee (check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(j)(2).
__ $500 per each part to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
____________________________________________________________
2) Aggregate number of securities to which the 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 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 num-
ber, 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>
LOGO
RIGHT MANAGEMENT CONSULTANTS, INC.
1818 Market Street
Philadelphia, Pennsylvania 19103
------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MAY 9, 1996
------
The annual meeting of shareholders (together with any and all adjournments
and postponements, the "Meeting") of Right Management Consultants, Inc., a
Pennsylvania corporation (the "Company"), will be held on Thursday, May 9,
1996, at 10.00 a.m., at the Company's headquarters, 1818 Market Street, 33rd
Floor, Philadelphia, Pennsylvania, for the following purposes:
1. To elect directors to hold office until the annual meeting of
shareholders in 1997 and until their respective successors are duly
elected and qualified.
2. To amend the Right Management Consultants, Inc. 1993 Stock Incentive
Plan.
3. To adopt the 1996 Employee Stock Purchase Plan.
4. To ratify the selection by the Board of Directors of Arthur Andersen
LLP, as the Company's independent public accountants for the current
fiscal year.
The Board of Directors has fixed the close of business on March 20, 1996
as the record date for the Meeting. Only shareholders of record at that time
are entitled to notice of and to vote at the Meeting and any adjournment or
postponement thereof.
The enclosed proxy is solicited by the Company. Reference is made to the
accompanying proxy statement for further information with respect to the
business to be transacted at the Meeting.
The Board of Directors urges you to sign, date and return the enclosed
proxy promptly. You are cordially invited to attend the meeting in person.
The return of the enclosed proxy will not affect your right to vote in person
if you do attend the Meeting.
By Order of the Board of Directors
G. Lee Bohs
Chief Financial Officer, Treasurer and Secretary
Philadelphia, Pennsylvania
April 8, 1996
<PAGE>
RIGHT MANAGEMENT CONSULTANTS, INC.
1818 Market Street
Philadelphia, Pennsylvania 19103
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
May 9, 1996
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Right Management Consultants, Inc., a
Pennsylvania corporation (the "Company"), for use at the Company's annual
meeting of shareholders (together with any and all adjournments and
postponements, the "Meeting") which is scheduled to be held at 10:00 a.m.,
local time, on Thursday, May 9, 1996 at the Company's headquarters, 1818
Market Street, 33rd Floor, Philadelphia, Pennsylvania. This proxy statement,
the foregoing notice and the enclosed proxy are being sent to shareholders on
or about April 8, 1996.
The Board of Directors knows of no matters that are likely to be brought
before the Meeting other than those specified in the Notice thereof. If any
other matters properly come before the Meeting, however, the persons named in
the enclosed proxy, or their duly constituted substitutes acting at the
Meeting, will be authorized to vote or otherwise act thereon in accordance
with their judgment on such matters. If the enclosed proxy is properly
executed and returned prior to voting at the Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon. In
the absence of instructions, executed proxies will be voted "FOR" all the
nominees of the Board of Directors, "FOR" the amendment of the 1993 Stock
Incentive Plan, "FOR" the adoption of the 1996 Employee Stock Purchase Plan
and "FOR" the ratification of the selection by the Board of Directors of
Arthur Andersen LLP as the Company's independent public accountants for the
current fiscal year.
Any proxy may be revoked at any time prior to its exercise by notifying
the Secretary of the Company in writing, by delivering a duly executed proxy
bearing a later date or by attending the Meeting and voting in person.
All references in this proxy statement to amounts of shares or per share
data reflect the Company's three-for-two stock split, effective November 10,
1995.
VOTING SECURITIES, VOTING RIGHTS AND SECURITY OWNERSHIP
VOTING SECURITIES
At the close of business on March 20, 1996, the record date fixed for the
determination of shareholders entitled to notice of and to vote at the
Meeting, there were outstanding 4,129,723 shares of the Company's common
stock, par value $0.01 per share ("Common Stock"), each of which has one vote
per share. The presence at the Meeting, in person or by proxy, of
shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast shall constitute a quorum for the purpose
of considering the matters expected to be voted on at the meeting.
Abstentions, and any shares as to which a broker or nominee indicates that it
does not have discretionary authority to vote on a particular matter, will be
treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of
determining whether the approval of shareholders has been obtained with
respect to any such matter and thus will have the effect of a vote to
"Withhold Authority" in the election of directors or as a vote "Against" all
other matters included in the proxy. Shareholders of the Company do not have
the right to cumulate votes in the election of directors or otherwise.
PRINCIPAL SHAREHOLDERS AND SHAREHOLDINGS OF MANAGEMENT
The following table sets forth certain information as of March 20, 1996
with respect to the holdings of Common Stock of each director and nominee for
director, all directors and officers as a group and each person who was known
to the Company to be the beneficial owner of more than 5% of the outstanding
shares of Common Stock. Except as otherwise specified, the named beneficial
<PAGE>
owner has sole voting and investment power. As used in this table, "beneficially
owned" means the sole or shared power to vote or dispose of, or to direct the
voting or disposition of, the shares, or the right to acquire such power within
60 days of March 20, 1996 with respect to any shares.
A Shareholders' Agreement is in effect among the Company and all holders
of 2% or more of the outstanding shares of Common Stock of the Company who
were shareholders on September 25, 1986 and who remain shareholders,
directors or employees of the Company whereby each party has granted the
Company, and after the Company, the other parties to the Agreement, certain
rights of first refusal with respect to a proposed sale of shares to a third
party by such shareholder.
All of the individuals listed below are nominees for directors of the
Company, except for Mr. Manville D. Smith, who is a "named officer." Their
address is the same as the Company's listed on the previous page.
<TABLE>
<CAPTION>
Number of Percent
Shares of
Name of Shareholder Beneficially Owned Class(1)
- -------------------- ------------------ ---------
<S> <C> <C>
FMR Corp. ........................................ 407,100 (2) 9.9%
Richard J. Pinola ................................ 260,467 (3) 6.0%
T. Rowe Price Associates, Inc. ................... 244,500 (4) 5.9%
Greenville Capital Management .................... 225,422 (5) 5.5%
Frank P. Louchheim ............................... 159,489 (6) 3.9%
Larry A. Evans ................................... 146,370 (7) 3.5%
Joseph T. Smith .................................. 70,974 (8) 1.7%
Nancy N. Geffner ................................. 42,732 (9) 1.3%
Joseph E. Jannotta, Jr. .......................... 11,000 (10) *
John R. Bourbeau ................................. 9,675 *
Manville D. Smith ................................ 6,116 (11) *
Catherine Y. Selleck ............................. 1,000 *
Raymond B. Langton ............................... 0 0
Rebecca J. Maddox ................................ 0 0
Marti D. Smye .................................... 0 0
All Directors and Officers as a Group (19 persons) 863,148 (12) 19.2%
</TABLE>
- ------
* Less than 1%.
(1) Any securities not currently outstanding but subject to options
exercisable by such shareholder within 60 days of March 20, 1996 are
deemed to be outstanding for the purpose of computing the percentage of
outstanding securities of the class owned by such person.
(2) Based on Schedule 13G dated February 14, 1996, and filed by FMR Corp.
with the Securities and Exchange Commission (the "SEC"). In such
Schedule, FMR Corp. reported having sole voting power with respect to
7,500 shares and sole dispositive power with respect to all such shares.
Their address is as follows: 82 Devonshire Street, Boston, MA 02019.
(3) The number of shares listed as held by Mr. Pinola includes (a) currently
exercisable options to purchase an aggregate of 226,167 shares of the
Company's Common Stock and (b) restricted stock awards totaling 12,700
shares of the Company's Common Stock.
(4) Based on Schedule 13G dated February 14, 1996 and filed by T. Rowe Price
Associates, Inc. ("Price Associates") with the SEC. Their address is as
follows: 100 E. Pratt Street, Baltimore, MD 21202. In such Schedule,
Price Associates reported having sole dispositive power with respect to
such shares and states the following: "These securities are owned by
various individual and institutional investors including T. Rowe Price
Small Cap Value Fund, Inc. (which owns 244,500 shares, representing 6% of
the shares outstanding), which Price Associates serves as investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner
of such securities; however, Price Associates expressly disclaims that it
is, in fact, the beneficial owner of such securities."
(5) Based on Schedule 13G dated January 30, 1996 and filed by Greenville
Capital Management with the SEC. In such Schedule, Greenville Capital
Management reported having sole dispositive power with respect to such
shares. Their address is as follows: P.O. Box 4589, Greenville, DE 19807.
(6) The number of shares listed as held by Mr. Louchheim includes (a) an
aggregate of 1,050 shares which are held by certain of his children as
custodian for a total of seven minor grandchildren of Mr. Louchheim, as
to which he disclaims beneficial ownership, (b) currently exercisable
options to purchase an aggregate of 7,500 shares of the Company's Common
Stock and (c) a restricted stock award of 450 shares of the Company's
Common Stock.
2
<PAGE>
(7) The number of shares listed as held by Mr. Evans includes (a) an
aggregate of 300 shares which are held by Mr. Evans as custodian for his
two children and 7,800 shares held by his wife, as to which he disclaims
beneficial ownership, (b) currently exercisable options to purchase an
aggregate of 1,000 shares of the Company's Common Stock and (c) 10,178
shares held in the Company's 401(k) Plan.
(8) The number of shares listed as held by Mr. J. Smith includes (a)
currently exercisable options to purchase an aggregate of 52,250 shares
of the Company's Common Stock and (b) restricted stock awards totaling
8,150 shares of the Company's Common Stock.
(9) The number of shares listed as held by Ms. Geffner includes (a) an
aggregate of 1,500 shares which are held by Ms. Geffner for the benefit
of her two children, as to which she disclaims beneficial ownership, (b)
currently exercisable options to purchase an aggregate of 5,500 shares of
the Company's Common Stock and (c) a restricted stock award of 800 shares
of the Company's Common Stock.
(10) The number of shares listed as held by Mr. Jannotta includes (a)
currently exercisable options to purchase an aggregate of 5,000 shares
of the Company's Common Stock and (b) a restricted stock award of 1,500
shares of the Company's Common Stock.
(11) The number of shares listed as held by Mr. M. Smith includes (a)
currently exercisable options to purchase an aggregate of 2,500 shares
of the Company's Common Stock, (b) restricted stock awards totaling
3,500 shares of the Company's Common Stock and (c) 115 shares held in
the Company's 401(k) Plan.
(12) The number of shares listed as held by the Directors and Executive
Officers of the Company as a group includes, in addition to the
currently exercisable options, the restricted stock awards and the
shares held in the Company's 401(k) Plan described above, (a) currently
exercisable options to purchase an aggregate of 354,320 shares of the
Company's Common Stock, (b) restricted stock awards of 49,200 shares of
the Company's Common Stock and (c) 8,421 shares held in the Company's
401(k) Plan.
COMPLIANCE WITH SECTION 16 (A) OF SECURITIES EXCHANGE ACT OF 1934
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
with the SEC initial reports of ownership and reports of changes in ownership
of common stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16 (a) forms
they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1995 all
Section 16 (a) reports by its officers, directors and greater than ten
percent beneficial owners were timely filed except one report relating to one
transaction for Ms. Geffner and Mr. Evans and one report relating to two
transactions for Mr. Louchheim, each of which was filed one day late with the
SEC and one other report for Mr. Louchheim reporting four transactions.
3
<PAGE>
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
At the Meeting, the shareholders will elect ten directors to hold office
until the annual meeting of shareholders in 1997 and until their respective
successors are duly elected and qualified. Unless contrary instructions are
given, the shares represented by the enclosed proxy will be voted "FOR" the
election of the nominees for director shown below.
The Board of Directors believes that the nominees are willing to serve as
directors. If any nominee at the time of his or her election is unable or
unwilling to serve or is otherwise unavailable for election, and as a result
another nominee is designated, the persons named in the enclosed proxy or
their substitutes will have discretion and authority to vote or to refrain
from voting for the other nominee in accordance with their judgment. The
nominees for election as directors, together with certain information about
them, are as follows:
<TABLE>
<CAPTION>
Director
Name Since Age Positions
----- -------- --- ---------
<S> <C> <C> <C>
Frank P. Louchheim ................ 1980 72 Founding Chairman and Director
Richard J. Pinola ................. 1989 50 Chairman of the Board of Directors and
Chief Executive Officer
Joseph T. Smith ................... 1991 60 President, Chief Operating Officer and
Director
Larry A. Evans .................... 1980 53 Executive Vice President, Founding
Principal and Director
Nancy N. Geffner .................. 1983 56 Group Executive Vice President of the
Greater New York Region and Director
Joseph E. Jannotta (1) ............ 1994 68 Executive Vice President, Career
Management Consulting and Director
John R. Bourbeau .................. 1995 51 President of Right Associates of the
Great Lakes Region, a franchise of the
Company
Raymond B. Langton ................ 1995 51 President and Chief Executive Officer of
SKF North America
Rebecca J. Maddox ................. 1995 42 President and Co-founder of Capital Rose,
Inc.
Catherine Y. Selleck .............. 1995 62 Business Consultant
Marti D. Smye (1) ................. -- 45 Chair of the Board of Directors of People
Tech Consulting, Inc.
</TABLE>
- ------
(1) Dr. Smye will replace Mr. Jannotta as a nominee for director subject to
the consummation of the acquisition by the Company of People Tech
Consulting, Inc., an international change leadership consulting firm. See
Note K of the Notes to Consolidated Financial Statements in the Company's
1995 Annual Report to Shareholders which accompanies this proxy
statement.
Mr. Louchheim was one of the founders of the Company and from November
1980 until September 1987, Mr. Louchheim served as President, Chief Executive
Officer and Chairman of the Board of Directors of the Company. From January
1992 to December 31, 1993, he served as the full-time Chairman of the Board
of Directors. Effective January 1, 1994, Mr. Louchheim was appointed Founding
Chairman and continues as a Director.
Mr. Pinola was elected as a Director by the Board in October 1989. Mr.
Pinola is a Certified Public Accountant and joined Penn Mutual Life Insurance
Company in 1969 and was appointed Senior Vice President, Insurance Business,
4
<PAGE>
in 1984. He was promoted to Executive Vice President of Insurance, Pensions and
Marketing in 1987 and was appointed President and Chief Operating Officer in
1988, which positions he held until his resignation in September 1991. Mr.
Pinola was a financial consultant to various organizations from September 1991
until July 1992, at which time he was appointed President and Chief Executive
Officer of the Company. Effective January 1, 1994, Mr. Pinola was appointed
Chairman of the Board of Directors and continues as Chief Executive Officer. Mr.
Pinola also serves as a director of K-Tron International, a publicly held
company.
From 1963 to 1980, Mr. Smith was employed by the Penn Mutual Life
Insurance Company, where he worked in increasingly responsible positions. He
was appointed Second Vice President of Administrative Services in 1973, and
in 1976 was promoted to Vice President of Administration and Human Resources.
From 1981 to 1984, Mr. Smith worked as an independent consultant offering a
range of consulting services to businesses. He joined the Company as a Senior
Consultant in Professional Services in August 1984 and, from August 1988
until September 1992 held the position of Regional Managing Principal of the
Company's Philadelphia Office. Mr. Smith was elected as a Director in May
1991. From September 1992 through December 1993, Mr. Smith served as the
Company's Chief Operating Officer. Effective January 1, 1994 , Mr. Smith was
appointed President and continues as Chief Operating Officer.
Prior to May 1978, Mr. Evans was professionally involved in the
international finance and venture capital industries. From May 1978 to
November 1980, Mr. Evans was employed as an independent outplacement
consultant for Bernard Haldane Associates, Inc., reporting to Mr. Louchheim.
Since November 1980, Mr. Evans has served as Executive Vice President and a
Director of the Company. In January 1988, Mr. Evans was named Regional Sales
Manager of the Company's New York City Office, and, in January 1990, Mr.
Evans was named Regional Managing Principal of the Company's Stamford,
Connecticut Office. From September 1992 until April 1995, Mr. Evans held the
position of Regional Managing Principal of the Company's Philadelphia Office.
In May 1995 Mr. Evans joined the Company's corporate office where he works
together with the Company's regional offices in marketing to major national
and international accounts.
From August 1979 to February 1981, Ms. Geffner was a Career Consultant
with Bernard Haldane Associates, Inc. Since March 1981, Ms. Geffner has
served as regional Managing Principal of the Company's New York City Office.
In June 1983, Ms. Geffner was elected to the Board of Directors and in
December 1983 was named an Executive Vice President of the Company. In 1993,
Ms. Geffner took on the additional responsibilities of directing the
Company's Key Executive Service program, the consulting program for senior
executives, throughout the United States and Canada. Effective January 1996,
Ms. Geffner resigned from this role and was appointed Group Executive Vice
President for the Greater New York Region.
Mr. Joseph E. Jannotta was appointed Director by the Board in October
1994. For 25 years Mr. Jannotta worked for Jewel Companies, Inc., a
multibillion dollar retailing conglomerate. He had roles in sales and
management development and spent his last five years there as Vice President
of Human Resources of Osco Drug, one of the largest U.S. drug store chains.
From 1975 to 1978, Mr. Jannotta was an owner and operator of a Company that
introduced and supplied Yoplait Yogurt to the U.S., until it was sold to
General Mills in 1978. In 1978, Mr. Jannotta founded Jannotta, Bray &
Associates, Inc. a $17 million career management consulting firm where he
served as Chairman until the Company acquired it in September 1994.
From 1968 to 1980, Mr. Bourbeau served as the President of Bourbeau
Automotive, an automotive after-market company. In 1981, Mr. Bourbeau
founded Right Associates of the Great Lakes Region where he currently serves
as the Regional Managing Principal and which has offices in Southfield, Grand
Rapids, Lansing and Midland, Michigan, as well as Toledo, OH. Mr. Bourbeau
also serves as a board member for the State of Michigan Chamber of Commerce
and is a member of the Economic Club of Detroit.
Prior to joining SKF Bearing Industries, Mr. Langton held key managerial
posts with Fram Corporation (an Allied-Signal Company). At Fram Corporation,
Mr. Langton served as Vice President, Marketing and Business Development;
Vice President and General Manager, Industrial Products Group; and Vice
President -- Operations. In July 1987, Mr. Langton became President of SKF
Bearing Industries, where he was responsible for the manufacture and original
equipment sales of all SKF standard bearings in the U.S. Currently, Mr.
Langton serves as President and Chief Executive Officer of SKF USA Inc.,
where he is responsible for SKF's worldwide seal and aero engine bearing
businesses. He is a member of the Board of Directors of SKF USA Inc. and a
Group Executive of AB SKF, Gothenburg Sweden, the world's largest manufacturer
5
<PAGE>
of bearings and one of the leading producers of seals. In addition to Mr.
Langton's responsibilities at SKF, he is a member of the Regional Advisory Board
of First Union Bank. He holds an MBA from the Wharton School, University of
Pennsylvania.
Ms. Maddox held various senior executive positions prior to joining
National Liberty Corporation, a subsidiary of Capital Holding Corporation. At
National Liberty, Ms. Maddox served as the Senior Vice President of Marketing
and was a member of the company's Strategy and Policy Committee. In 1990, Ms.
Maddox created a new division of National Liberty called Compass Rose
Development Corporation, which provided in depth training to women business
owners in all areas of business ownership. In 1993, Ms. Maddox left Compass
Rose to form a new company, Capital Rose, which provides women business
owners with access to financing and technical assistance, and consults
Fortune 500 companies to capitalize on the growing opportunities in the
women's market, where she currently serves as President and Co-founder. Ms.
Maddox is a Certified Public Accountant, holds an MBA from Columbia
University and is the author of Inc. Your Dreams (Viking Penguin, May 1995).
Ms. Maddox is also a member of the Regional Advisory Board of PNC Bank.
Ms. Selleck spent many years with IBM, including four years as the General
Manager of IBM's Professional Services organization. Other executive
positions with IBM included Corporate Director of Office and Decision Support
Systems, U.S. Group Director of Quality and Vice President of Field
Operations for the National Distribution Division. Subsequent to her
positions with IBM, Ms. Selleck joined Metaphor, a software and services
company, where she served as President and CEO, and was responsible for a
major restructuring of the company functions. She is now an independent
business consultant to information technology companies on a wide range of
business issues. Ms. Selleck is a member of the Occidental College Board of
Trustees and a director of the Memorex Telex Corporation.
From 1981 to 1989, Dr. Smye was a partner of the industrial psychology
firm, Jackson Smith. From this company, in 1989 she founded the international
change leadership consulting firm, People Tech Consulting, Inc. ("People
Tech"). Dr. Smye currently serves as the Founding President and Chair of the
Board of Directors of People Tech. She earned her Ph.D. in Psychology from
the University of Toronto, as well as an M.Ed. from that University's Ontario
Institute for Studies In Education. In addition, she is the author of the
book You Don't Change a Company by Memo: The Simple Truths About Managing
Change and her second book, which discusses corporate abuse in the workplace,
will be published this fall. Dr. Smye also serves on various boards of both
private companies and community associations, including the Public Policy
Forum and the Harvard Business School Club of Toronto.
COMMITTEES OF THE BOARD OF DIRECTORS
During the months of January to April 1995 the Board had a Compensation
and Finance Committee, an Options Committee, an Audit Committee and a
Nominating Committee. With the election of new directors in May 1995, the
Company reorganized its committees so that since May 1995 the Board had an
Executive and Finance Committee, Compensation and Options Committee, Audit
Committee and Nominating Committee. Previous non-employee directors Messrs.
Donald Calvin and Robert Tomasko served on the Compensation and Finance
Committee, which oversaw management's recommendations for remuneration
arrangements, annual budgets and the overall financial performance of the
Company. As a result of the reorganization, the Executive and Finance
Committee assumed the responsibilities relating to annual budgets and the
overall financial performance of the Company. Messrs. Bourbeau, Louchheim,
Pinola, Smith and Ms. Maddox serve on this committee. Previous non-employee
directors Messrs. Calvin, Alvin Hainline and Tomasko served on the Options
Committee which reviewed proposals made by the Chief Executive Officer to
grant stock options, evaluated the rationale and expected contributions of
the grantees to the future results of the Company and determined whether to
approve grants with any modifications it deemed appropriate. The Compensation
and Options Committee took over these functions for the latter part of the
year and is also responsible for overall remuneration arrangements. Mr.
Langton, Ms. Maddox and Ms. Selleck serve on this committee. During the time
that they served as directors during 1995, Messrs. Calvin and Hainline,
served on the Audit Committee together with Messr. Tomasko and subsequent to
the reorganization of the committees, Messrs. Tomasko, Bourbeau and Langton
together with Ms. Selleck served on the Audit Committee. The Audit
Committee's principal function is to oversee the annual audit and financial
reporting of the Company. Messrs. Louchheim, Evans, Pinola, Langton and Ms.
Geffner serve on the Nominating Committee which recommends to the Board of
6
<PAGE>
Directors nominees for election or reelection as director at the next annual
meeting of shareholders. The Nominating Committee will consider nominees
recommended by shareholders, which nominations should be submitted in writing to
the Nominating Committee on or before the date specified under "Shareholder
Proposals" below in order to be considered for the next annual meeting. The
Nominating Committee is under no obligation to recommend any persons identified
by shareholders as nominees to the Board of Directors.
From January 1, 1995 to April 30, 1995, Mr. Calvin served as Chairman of
both the Options Committee and the Audit Committee, and as a member of the
Compensation and Finance Committee. Also during this time, Mr. Tomasko served
as Chairman of the Compensation and Finance Committee and as a member of the
Options Committee and Audit Committee. Mr. Hainline served as a member of
both the Options Committee and the Audit Committee. In connection with the
restructuring of the committees, effective May 4, 1995, Mr. Pinola became
Chairman of the Executive and Finance Committee and Mr. Langton became
Chairman of the Compensation and Options Committee. They both serve as
members of the Nominating Committee, and Mr. Langton serves as a member of
the Audit Committee as well. Both Mr. Bourbeau and Ms. Maddox serve as
members of the Executive and Finance Committee. Ms. Maddox also serves as a
member of the Compensation and Options Committee. Also effective May 4, 1995,
Ms. Selleck became Chairman of the Audit Committee. Mr. Tomasko continued to
serve as a member of the Audit Committee until January 31, 1996 at which time
he resigned from the Board of Directors. Messrs. Calvin and Hainline did not
stand for re-election to the Board of Directors at the Company's 1995 meeting
and thereafter terminated their service on the Board of Directors and its
committees.
During 1995, the Compensation and Finance Committee met five times, the
Options Committee met six times, the Compensation and Options Committee met
four times and the Audit Committee met three times. The Executive and Finance
Committee did not meet in 1995. Mr. Bourbeau, who was elected as a director
effective in May 1995, attended fewer than 75% of all Board and Committee
meetings that he was scheduled to attend during the year. No additional fees
were received by members of the Nominating Committee for service thereon.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the amounts reported above, Right Human Resource
Consultants, Inc. ("RHRC"), the franchise owned by Mr. Hainline, and Right
Associates of the Great Lakes Region ("RAGLR"), the franchise owned by Mr.
Bourbeau, received approximately $753,000 and $524,000, respectively, in fees
from the Company for services these affiliates performed on behalf of the
Company. RHRC and RAGLR paid the Company approximately $3,793,000 and
$2,357,000, respectively, in royalties and fees for services the Company
performed on behalf of RHRC and RAGLR, in addition to payments for
reimbursable expenses and materials purchased by these franchises from the
Company. The fees paid and received by RHRC and RAGLR were in accordance with
the Company's standard fee and royalty arrangement with all of the Company's
franchises under the Right Associates Affiliate Agreement.
Effective September 1, 1994, the Company acquired the business and certain
assets of the career management consulting firm Jannotta, Bray & Associates,
Inc. ("JBA"). Simultaneously with this acquisition, the Company sold certain
assets associated with JBA's Michigan operations to RAGLR for $1,200,000. In
connection with this sale the Company received a three year term note of
$700,000 from RAGLR. The note is collateralized by RAGLR's outstanding stock,
to be paid in equal installments plus the prime rate thereon. Approximately
$659,000 and $389,000 of this note remained outstanding at January 1, 1995
and March 29, 1996, respectively.
The Company also paid Mr. Tomasko approximately $39,000 for consulting
services provided to, and speeches made for, the Company.
PROPOSAL TO AMEND THE RIGHT MANAGEMENT CONSULTANTS, INC.
1993 STOCK INCENTIVE PLAN (THE "PLAN")
The Board of Directors believes the stock option program is an effective
means of attracting, motivating and retaining key personnel of the Company
and that the authorization of additional shares for the grant of options
under the Plan will facilitate the achievement of the Plan's purpose. The
current aggregate maximum number of shares of common stock for which options
7
<PAGE>
may be granted pursuant to the Plan is 1,050,000. Currently, there are
approximately 161,000 such shares available for grant. However, should the
Company achieve 1996 performance criteria, it is expected that all of these
shares will be awarded some time in late 1996 or early 1997.
In order to provide for grants after 1996 and to have available shares in
order to attract further key personnel, the Board of Directors amended the
Plan, subject to shareholder approval, to increase the aggregate maximum
number of shares for which options may be granted under the Plan by 600,000
from 1,050,000 to 1,650,000.
1. SUMMARY OF THE PLAN
The key features of the Plan are as follows:
(a) Eligibility. All employees, directors and managing principals are
eligible to receive options under the Plan. Only employees (including
employee-directors) are eligible to receive restricted stock under the
Plan. Members of the committee administering the Plan (see
"Administration" below) are ineligible to receive any awards under the
Plan. Currently, there are approximately 600 persons eligible to receive
awards under the Plan.
(b) Grant. The Plan allows the Committee (as defined below) to grant
singly, or in any combination, options and restricted stock as the
Committee, in its sole discretion, may determine. Options may be in the
form of Incentive Stock Options or Non-qualified Stock Options.
(c) Shares Covered by the Plan. The maximum number of shares of common
stock reserved for issuance under the Plan (the "Plan Shares") is
1,650,000 (to be increased from the current 1,050,000 share maximum if the
amendment is approved), subject to adjustment upon the occurrence of a
stock dividend, stock split, recapitalization or certain other capital
adjustments. If an option granted under the Plan expires or terminates
without having been fully exercised for any reason or, generally, if
restricted stock granted under the Plan is forfeited for any reason, the
Plan Shares underlying the unexercised portion of such option or forfeited
restricted stock, as the case may be, may again be the subject of one or
more awards granted pursuant to the Plan. No more than 450,000 of the Plan
Shares are available for award in the form of restricted stock.
Furthermore, no single Plan participant may receive, in any calendar year,
awards entitling such participant to more than 10% of the Plan Shares.
Prior to the date of this proxy, option grants have been made under the
Plan to the following persons and groups (with the underlying share
amounts immediately following each person or group): Richard J. Pinola,
Chairman and Chief Executive Officer (175,550); Frank P. Louchheim,
Founding Chairman (12,750); Joseph T. Smith, President and Chief Operating
Officer (105,750); G. Lee Bohs, Executive Vice President and Chief
Financial Officer (52,950); Manville D. Smith, Executive Vice President -
Business Development; Nancy N. Geffner, Group Executive Vice President
(14,250); Larry A. Evans, Executive Vice President (6,750); Joseph E.
Jannotta, Executive Vice President (23,400); all current executive
officers as a group (486,739); all other employees as a group (395,249).
As of March 29, 1996, the fair market value of a share of common stock of
the Company was $29.50.
(d) Administration. The Plan is administered by a committee composed of
two or more of the Company's Directors (the "Committee"). Each member of
the Committee is a "disinterested person", as such term is defined in Rule
16b-3 under the Securities Exchange Act of 1934, as amended and an
"outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). Subject to the provisions
of the Plan, the Committee is authorized to determine the participants to
whom, and the times at which, awards under the Plan shall be granted.
Furthermore, the Committee determines the type of award to be granted and
the number of shares underlying options and/or amount of restricted stock
(or any combination thereof) comprising such award. The Committee is
authorized to determine other terms and conditions of awards which are not
inconsistent with the Plan. Any awards granted pursuant to the Plan will
be evidenced by an award document setting forth the terms of the award.
Interpretation and construction by the Committee of any provision of the
Plan or of any award document is final, binding and conclusive. The Board
of Directors has appointed Raymond B. Langton, Rebecca J. Maddox and
Catherine Y. Selleck to serve as the members of the Committee, until their
resignation or removal from such Committee.
8
<PAGE>
(e) Term of the Plan. No award may be granted under the Plan after
October 27, 2002.
(f) Option Provisions.
(i) Exercise Price of Options under the Plan. The Committee
determines for each option grant, the exercise price for the shares
covered thereby (the "Option Shares"). The exercise price cannot be
less than 85% of the fair market value of the Option Shares at the time
of grant, provided that, with respect to all Incentive Stock Options,
the exercise price may not be less than 100% of the fair market value
of such shares on the date that the option is granted. In addition, if
an Incentive Stock Option is granted to an optionee who then owns,
directly or by attribution under Section 424(d) of the Code, shares of
the Company's stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, the exercise price
must be at least 110% of the fair market value of such shares on the
date the option is granted.
(ii) Payment. Payment for shares of common stock purchased upon
exercise of options may be made in cash or by such other mode of
payment as the Committee may approve.
(iii) Restriction on Exercise. An option cannot be exercised before
the later of six months from the date of grant or the expiration of any
longer period prescribed by the Committee.
(iv) Term of Options. The right of an optionee to exercise any part
of an option granted pursuant to the Plan terminates on the first to
occur of the following:
(A) Ten years after the date of grant or expiration of the option
terms specified in the option document;
(B) If an Incentive Stock Option, five years from the date of grant
if the optionee possesses more than 10% of the combined voting power of
all classes of stock of the Company;
(C) Expiration of one year from the date the optionee's employment
or service terminates with the Company as a result of death or
disability;
(D) Expiration of three months from the date the optionee's
employment or service with the Company terminates for any reason other
than death, disability or those reasons specified in subsections (F)
and (G) of this paragraph;
(E) The date set by the Committee as an accelerated expiration of
termination date (which can be no earlier than 30 days after notice of
such date) in the event of a "Change of Control" (as defined in the
Plan);
(F) The date of a finding by the Committee that the optionee (a)
became employed by a competitor without the consent of the Company or
has become engaged in competition with the Company, (b) has been
dishonest or fraudulent in any matter affecting the Company, (c)
committed an act substantially detrimental to the interest of the
Company or was terminated for reasons which constitute cause under
applicable law, or (d) disclosed secret or confidential information of
the Company; and
(G) The date set by the Board as an accelerated expiration date in
the event of the liquidation or dissolution of the Company.
In the event an optionee is found to have done anything described in
clause (F), in addition to immediate termination of the option, the
optionee will automatically forfeit all Option Shares for which the
Company has not yet delivered stock certificates, upon refund by the
Company of the amounts paid for such Option Shares.
(v) Transferability of Options. Options granted under the Plan are
not transferable by the optionee except by will or laws of descent and
distribution. However, a non-qualified stock option may be transferred
pursuant to the terms of a "qualified domestic relations order" within
the meaning of Sections 401(a)(13) and 414(p) of the Code or within the
meaning of the Employee Retirement Income Security Act of 1974, as
amended.
9
<PAGE>
(vi) Amendment of the Option Documents. The Committee may amend the
provisions of option documents issued to an optionee, subject to the
optionee's consent if the amendment is not favorable to the optionee.
Consent of the optionee is not required for acceleration of the
expiration date of an option granted under the Plan in the event of the
dissolution or liquidation of the Company or by the occurrence of
certain other corporate transactions.
(g) Restricted Stock. The Plan authorizes the Committee to grant awards
of restricted stock consisting of shares that may not be sold, transferred
or otherwise disposed of by participants and which may be forfeited in the
event of termination of employment or for other reasons as determined by
the Committee prior to the end of a restriction period established by the
Committee. The minimum restriction period that may be established by the
Committee is six months from the grant of restricted stock. An award of
restricted stock entitles a participant to all of the rights of a
stockholder of the Company, including the right to vote and receive any
dividends thereon unless otherwise determined by the Committee. The
Committee, in its sole discretion, may permit or require the payment of
any cash dividends on restricted stock to be deferred and, if the
Committee so determines, reinvested in additional restricted stock or
other investment vehicles. An award of restricted stock may contain other
restrictions or limitations at the discretion of the Committee. Unless
otherwise provided by the Committee at the time of grant or otherwise,
upon termination of employment for any reason during a restriction period,
all shares of restricted stock still subject to restriction will be
forfeited by the participant. At the expiration of each applicable
restriction period, the Company will release to the participant
certificates for the restricted stock as to which any applicable
restrictions and conditions have been satisfied.
(h) Amendments of the Plan. The Board of Directors or its executive
committee in its discretion, may amend the Plan from time to time but may
not, without obtaining shareholder approval within twelve months before or
after such action, change the class of the individuals eligible to receive
an Incentive Stock Option or increase the maximum number of Plan Shares
(other than as a result of an adjustment in the event of a stock dividend,
stock split, recapitalization or certain other capital adjustments), or
make any other change or amendment as to which shareholder approval is
required in order to satisfy the conditions set forth in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended. No
amendment to the Plan shall adversely affect any outstanding option or
restricted stock, without the consent of the optionee or the holder of
restricted stock, as the case may be. Subject to the provisions of the
Plan, the Board of Directors may authorize adjustments to options granted
under the Plan with respect to the number of shares subject to the
options, option price, term and any restrictions. Such adjustments may be
accomplished by cancellation of outstanding options and subsequent
granting of options. The Board of Directors may not reduce the exercise
price of outstanding options other than for adjustments in the Company's
capitalization without first obtaining shareholder approval.
(i) Change of Control. In the event of a Change of Control of the
Company (as defined in the Plan), all options previously granted become
immediately exercisable, and the Compensation Committee may take whatever
other action with respect to the outstanding options and restricted stock
it deems necessary or desirable.
2. FEDERAL INCOME TAX MATTERS
The following discussion is intended to point out the general principles
of current federal income tax law applicable to the options and restricted
stock.
(a) Incentive Stock Options.
Incentive Stock Options granted under the Plan are intended to qualify for
the favorable federal income tax treatment currently afforded "Incentive
Stock Options" as defined under Section 422 of the Code.
Under the Code, generally no federal income tax is imposed at the time an
Incentive Stock Option is granted or exercised. While ordinarily no income is
required to be recognized at the time an Incentive Stock Option is exercised
it should be noted that, for purposes of the alternative minimum tax, an
Incentive Stock Option is treated as a Non-Qualified Stock Option.
Accordingly, the excess of the fair market value of the shares of stock
subject to the Incentive Stock Option, determined at the time of exercise,
over the exercise price constitutes ordinary income for purposes of the
10
<PAGE>
alternative minimum tax. If an optionee disposes of stock acquired pursuant to
the exercise of an Incentive Stock Option within the same taxable year as the
exercise of such option, then the amount of ordinary income recognized for
alternative minimum tax purposes is the lesser of (i) the excess of the fair
market value of the shares over the exercise price at the time the option is
exercised, and (ii) the excess of the amount realized on the sale of such stock
by the optionee over the exercise price. Accordingly, the exercise of an
Incentive Stock Option by an optionee may cause the optionee to incur some
alternative minimum tax. For purposes of the alternative minimum tax, the basis
of stock acquired through the exercise of any Incentive Stock Option is equal to
the fair market value taken into account in determining the amount of ordinary
income recognized for alternative minimum tax purposes.
If the shares of stock acquired upon the exercise of an Incentive Stock
Option are not disposed of (i) within two years after the date of the grant
of the Incentive Stock Option, or (ii) within one year after the exercise of
the Incentive Stock Option, then, generally, any gain realized upon the sale
or other disposition of such shares will be treated as long-term capital
gain. These holding periods are not applicable to Incentive Stock Options
exercised after the death of an optionee by his estate or a person who
acquired the right to exercise such Incentive Stock Option by reason of the
death of the optionee.
The optionee's tax basis, in shares of stock acquired upon the exercise of
an Incentive Stock Option, in the event that the entire exercise price is
paid in cash, is equal to the exercise price paid. In a case where the
optionee pays all or a portion of the exercise price in the form of shares of
stock of the Company already owned by him or her, in general, (i) the
optionee will not recognize any gain (or loss) with respect to the
already-owned shares, but the amount of the gain, if any, which is not so
recognized will be excluded from the optionee's bases in the new shares
received, and (ii) the new shares received will have a holding period that
includes the holding period of the already-owned shares. In the event the
already-owned shares used to acquire new shares were acquired pursuant to the
exercise of an Incentive Stock Option, the optionee will be treated as having
made a Disqualifying Disposition (as defined below) of the already-owned
shares if the holding period requirements have not been satisfied.
In the event an optionee sells or otherwise disposes of shares of stock
acquired upon the exercise of an Incentive Stock Option before the expiration
of two years after the grant of the Incentive Stock Option or before the
expiration of one year after the exercise of the Incentive Stock Option (a
"Disqualifying Disposition"), the lesser of (i) the excess of the fair market
value of the shares of stock at the time the Incentive Stock Option was
exercised over the exercise price of such shares, and (ii) the excess of the
amount realized upon such Disqualifying Disposition over the exercise price,
is treated as ordinary income at the time of the sale or other disposition.
Any gain upon a Disqualifying Disposition which is not treated as ordinary
income will be treated as long-term capital gain if the shares of stock have
been held for a period of more than one year prior to such disposition. The
Company generally is entitled to a tax deduction equal to the amount of
ordinary income, if any, recognized by the optionee upon a Disqualifying
Disposition.
(b) Non-Qualified Stock Options.
Non-qualified Stock Options granted under the Plan will not qualify for
the favorable federal income tax treatment accorded Incentive Stock Options.
Generally, an optionee should not recognize any income for federal income tax
purposes at the time of the grant of a Non-qualified Stock Option under the
Plan. Upon the exercise of a Non-qualified Stock Option, the excess of the
fair market value of the shares of stock acquired pursuant to such exercise,
determined at the time of the exercise, over the exercise price, constitutes
ordinary income to the optionee. The Company generally is entitled to a
corresponding income tax deduction for the taxable year in which the optionee
is required to recognize such ordinary income.
Optionees who are subject to the short-swing profits rules of Section
16(b) of the Securities Exchange Act of 1934, as amended ("Section 16(b)"),
unless they elect within 30 days of exercising a Non-qualified Stock Option
to be taxed as of the time of such exercise (on the basis of the fair market
value of the stock at the time of such exercise), are permitted to defer the
recognition of gain from the exercise until the earlier of (i) the expiration
of the six-month period described in such sales, and (ii) the first day on
which the sale of such stock at a profit will not subject such optionee to
suit under Section 16(b).
11
<PAGE>
(c) Restricted Stock.
Generally, a participant who receives a grant of restricted stock will
recognize ordinary income with respect to such stock in the year or years in
which such stock ceases to be subject to forfeiture. The amount of ordinary
income recognized will be equal to the fair market value of the restricted
stock on the date it ceases to be subject to forfeiture. Notwithstanding the
general rule, a participant who receives restricted stock which is subject to
forfeiture may elect, within 30 days of the issuance of such stock, to
include in his or her taxable income for the year of issuance an amount equal
to the fair market value of such restricted stock at the date of such
issuance. If a participant makes this election, no additional ordinary income
is required to be recognized at the time the risk of forfeiture for such
restricted stock lapses. However, in the event that such participant actually
forfeits the stock, such participant may not deduct the amount previously
included in income pursuant to the election. Any dividends paid to a
participant on restricted stock prior to the lapse of the risk of forfeiture
will be treated as ordinary income.
The Company will be entitled to a deduction with respect to a restricted
stock award in the year in which ordinary income is recognized by the
participant on account of such award. Such deduction will be equal to the
amount of ordinary income recognized by the participant with respect to such
restricted stock.
(d) Relevance of Distinction Between Capital Gains and Ordinary Income.
Currently, the maximum rate of tax imposed on ordinary income is 39.6% and
the maximum marginal rate of tax imposed on long-term capital gains is 28%.
In addition to this difference in tax rates, the distinction between capital
gains and ordinary income is relevant for a number of reasons, including the
fact that capital losses only are deductible against capital gains and a
limited amount ($3,000) of ordinary income.
The above description is a partial summary of material provisions of the
1993 Stock Incentive Plan and is qualified in its entirety by reference to
the 1993 Stock Incentive Plan, a copy of which will be sent without charge
prior to the Meeting to any shareholder requesting it from the Secretary of
the Company.
The affirmative vote of the holders of a majority of the Company's common
stock present at the meeting in person or by proxy is required to approve the
amendment to the Plan adopted by the Board as described above. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE ADOPTION OF
THE AMENDMENT TO THE 1993 STOCK INCENTIVE PLAN.
PROPOSAL TO ADOPT THE RIGHT MANAGEMENT CONSULTANTS, INC. 1996
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors believes that an employee stock purchase plan (as
contemplated by Section 423 of the Internal Revenue Code of 1986, as amended)
will give employees a greater stake in the Company through increased stock
holdings and is therefore in the Company's best interest. Accordingly, the
Board of Directors recommends adoption of the Right Management Consultants,
Inc. 1996 Employee Stock Purchase Plan (the "ESPP").
The following summary describes features of the ESPP and is qualified in
its entirety by reference to the specific provisions of the ESPP, the full
text of which is set forth as Appendix A.
If approved by shareholders, the ESPP will become effective July 1, 1996,
and 100,000 shares of authorized common stock will be reserved for issuance
under the ESPP. The ESPP will have a duration of five years, subject to
earlier termination by the Board of Directors.
The ESPP permits employees to purchase Company common stock through
payroll deductions during five consecutive annual offerings, beginning July
1, 1996. Eligible employees on each offering date may purchase full shares
through payroll deductions of up to 10% of compensation, but in no event can
more than $25,000 worth of common stock be purchased in a calendar year. The
price an employee pays will be 85% of the average market price on the last
day of the applicable calendar-quarterly period. Shares for the ESPP may be
either shares purchased in the open market, or authorized and unissued
shares. Eligibility will be extended to all regular and certain other
employees of the Company and of its subsidiaries, as defined in the ESPP,
except that officers of the Company subject to reporting requirements under
Section 16 of the Securities Exchange Act of 1934 are ineligible.
12
<PAGE>
For federal income tax purposes, an employee does not recognize income at
the time of entry into the ESPP or purchase of a share. If no disposition of
the stock is made within two years from the offering date, and one year from
the date the share is transferred to the employee, upon subsequent
disposition of the stock or the death of a participating employee, ordinary
income will be realized to the extent of the lesser of (1) 15% of the average
market value on the offering date, or (2) the amount by which the net
proceeds of the sale exceed the price paid. Any further gain upon such a
disposition of the stock is treated as capital gain. No income tax deduction
will be allowed by the Company for shares transferred to an employee,
provided such shares are held for the periods described above. If the shares
are disposed of within the periods described above, the employee will
recognize ordinary income for the taxable year of the disposition equal to
the excess of the fair market value of the shares on the date of purchase
over the price paid. Under such circumstances, the participating employee
will be deemed to have a tax basis in the shares equal to their fair market
value as of the date of purchase and any gain or loss resulting from such
disposition will be treated as long or short-term capital gain or loss
depending on how long the shares were held. Generally, the Company will be
entitled to a deduction equal to the amount of ordinary income recognized by
the employee.
The ESPP will be administered by a committee composed of senior management
or one or more directors who are not eligible to participate. The ESPP may be
amended by the Board of Directors but may not be amended, without prior
stockholder approval, to increase the number of shares, to reduce the
purchase price per share, to remove the ESPP's administration from a
committee whose members are not eligible to participate, or to change the
designation of subsidiaries eligible to participate in the ESPP. The proceeds
of the sale of stock under the ESPP will constitute general funds of the
Company and may be used by it for any purpose. The ESPP provides for
proportionate adjustments to reflect stock splits, stock dividends, or other
changes in the capital stock.
On March 29,1996, the Company's common stock closed at $29.50 on the
NASDAQ Stock Market.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE ADOPTION OF THE ESPP.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of the Chief Executive
Officer and the four other most highly compensated executive officers for
1995 (the "named officers") and the compensation paid to each such individual
for 1993 and 1994.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------------------------- ---------------------------------------------
Common
Restricted Stock
Other Annual Stock Underlying All other
Name Year Salary Bonus Compensation(1) Awards ($)(2) Options (#) Compensation (3)
- ---- ---- ------ ----- --------------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard J. Pinola 1995 $385,000 $512,531 -- $101,250 161,000 $ 48,341
Chairman of the 1994 350,000 822,500 -- -- 45,000 65,270
Board and CEO 1993 175,000 489,588(4) -- -- 52,500 42,576
Joseph T. Smith 1995 250,000 230,938 -- 66,825 45,000 3,465
President and COO 1994 225,000 392,400 -- -- 35,000 3,465
1993 175,000 280,333 $36,442 -- 22,500 2,249
Joseph E. Jannotta, Jr. 1995 200,000 167,000 -- 20,250 15,000 3,465
EVP 1994 66,667(5) -- -- -- -- --
1993 -- -- -- -- -- --
Manville D. Smith 1995 200,000 167,000 -- 20,250 -- 1,875
EVP - Business 1994 75,000(6) 143,900(6) -- -- 7,500 --
Development 1993 -- -- -- -- -- --
Nancy N. Geffner 1995 250,000(7) 319,250(7) -- -- -- 3,465
Group EVP - Greater 1994 225,000 359,497 -- -- 4,500 3,465
New York Region 1993 208,000 165,971 24,244 -- 6,000 2,249
</TABLE>
- ------
(1) Consists of sales commissions.
(2) Mr. Pinola, Mr. Jannotta, Mr. J. Smith and Mr. M. Smith hold an aggregate
number of restricted shares of 7,500, 1,500, 4,950 and 1,500,
respectively, with a year-end value of $174,375, $34,875, $115,088 and
$34,875, respectively for 1995. The amount reflected above as
compensation for 1995 was calculated by applying the closing price of the
Company's common stock on the NASDAQ Stock Market on the date of the
grant ($13.50) to the number of restricted shares awarded. The Company
has never paid any dividends on its restricted stock and currently
expects that all of its earnings will be retained and reinvested in the
Company's business. These restricted shares were distributed at the
beginning of 1995 and are subject to the attainment of minimum three year
cumulative EPS levels. If the Company does not meet its minimum
cumulative EPS target, then the restricted shares will be forfeited by
the recipient. Otherwise the restrictions will lapse at the beginning of
the fourth year after grant on 50% of the restricted stock upon the
attainment of the minimum EPS levels and will lapse in increasing
increments thereafter (upon achievement of increasing EPS levels) up to
100% of such restricted stock.
(3) Includes amounts paid, payable or accrued in connection with retirement.
Such amounts consist of contributions and allocations to qualified and
nonqualified defined contribution plans. Matching contributions to the
qualified defined contribution plans vest at a rate of 33 1/3 % per year
from the date of hire. Contributions to the nonqualified plans vest
according to the terms in each officer's respective employment agreement.
See "Employment Agreements."
(4) Bonus for the period July 1, 1992 through December 31, 1993.
(5) Mr. Jannotta joined the Company in September 1994. His 1994 salary was
prorated based on his length of service.
(6) Mr. M. Smith joined the Company in August 1994. His 1994 salary and bonus
was prorated based on his length of service.
(7) Ms. Geffner deferred $13,660 in 1995 and 1994 to a non-qualified defined
contribution plan which vest according to the terms of Ms. Geffner's
employment agreement.
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<PAGE>
STOCK OPTION GRANTS
The table below shows option grants in 1995 to the named officers who
received option grants in 1995.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term (2)
------------------------------------------------------------------------ --------------------------
Number of Securities % of Total Options
Underlying Options Granted to Employees Exercise Expiration
Name Granted in 1995 (1) in FY 1995 Price Date 5% 10%
- ---- -------------------- -------------------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Pinola .... 11,000 4.4% $ 11.67 01/27/00 $ 35,455 $ 78,345
150,000 60.5% 21.17 10/24/05 1,996,740 5,060,132
Mr. J. Smith .. 7,500 3.0% 11.67 01/27/00 24,175 53,420
37,500 15.1% 21.17 10/24/05 499,185 1,265,033
</TABLE>
- ------
(1) Mr. Pinola's grant of 11,000 options and Mr. Smith's grant of 7,500
options were made on January 27, 1995. Their respective grants of 150,000
and 37,500 were made on October 24, 1995 in connection with the signing
of Mr. Pinola and Mr. Smith's 1996 employment agreements as discussed in
the "Employment Agreements" section of this proxy. The first one-third of
each grant become exercisable on January 27, 1996 and October 24, 1996,
respectively. All options vest on a cumulative basis, one-third each
year. All options were granted at an exercise price equal to the then
current closing price of the Company's common stock on the NASDAQ Stock
Market as of the date of grant. If a change in control (as defined in the
1993 Stock Incentive Plan pursuant to which the options were granted)
were to occur before the expiration date, these options would become
exercisable immediately.
(2) The potential realizable values are based on an assumption that the stock
price of the Company's common stock will appreciate at the annual rate
shown (compounded annually) from the date of grant until the end of the
option term. These values do not take into account amounts required to be
paid as income taxes under the Code and any applicable state laws or
option provisions providing for termination of an option following
termination of employment, nontransferability or vesting over a three
year period. These amounts are calculated based on the requirements
promulgated by the SEC and do not reflect the Company's estimate of
future stock price growth of the shares of the Company's common stock.
OPTION EXERCISES AND YEAR-END OPTION VALUE
The table below shows information concerning the exercise of stock options
during 1995 by each of the named officers and the year-end value of the
in-the-money unexercised options.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (#) at FY-End ($)(1)
-------------------------------- --------------------------------
Shares Acq'd. on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------------- ------------ ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Pinola .... 7,500 $ 76,850 226,167 204,833 $ 4,104,779 $ 958,482
Mr. J. Smith .. 0 0 52,250 70,001 731,563 456,250
Mr. Jannotta .. 0 0 5,000 10,000 35,017 70,033
Mr. M. Smith .. 0 0 2,501 4,999 25,938 51,875
Ms. Geffner ... 0 0 11,500 5,000 148,417 59,333
</TABLE>
- ------
(1) Based on the closing price ($23.25) on the NASDAQ Stock Market on
December 29, 1995.
EMPLOYMENT AGREEMENTS
Effective January 1, 1996, the Company entered into an agreement with Mr.
Pinola which has an initial term expiring on December 31, 1998. Pursuant to
this agreement, Mr. Pinola's base salary is $450,000, subject to annual
review and adjustment at the discretion of the Company, but in no event shall
it be less than $450,000 without Mr. Pinola's consent. In addition, the
Company will pay to Mr. Pinola annually as incentive compensation a cash
bonus based upon the Company's financial performance for that year in such
amounts, if any, as are determined by the Company's Board of Directors or its
Compensation and Options Committee. Mr. Pinola is also entitled to
participate in and receive the benefits of any profit sharing, retirement
plans and insurance programs made available to other similarly situated
employees of the Company.
15
<PAGE>
The agreement also entitles Mr. Pinola to participate in a deferred
compensation plan to which 5% of his compensation, including base salary and
bonuses, is credited annually. Mr. Pinola's deferred compensation account
balance vests at the rate of 10% per year, beginning at age 47. The account
balance is payable as a life annuity (based on specified mortality tables) in
equal monthly installments with interest on the unpaid balance upon his
termination of service with the Company (except for death or if he is
discharged for cause) on or after age 62, subject to earlier payment in the
event of death or disability prior to termination of service, termination by
the Company without cause and under certain circumstances relating to a
change in control of the Company. In the event there is a change in control
of the Company, as defined in his agreement, the Company shall establish a
trust and shall, from time to time, transfer into such trust sufficient
assets to meet the Company's obligation to pay the deferred compensation
benefits to Mr. Pinola and his beneficiaries. Also, if Mr. Pinola's
employment is terminated within two years after the change in control, he
shall be entitled to begin receiving his deferred compensation benefits as if
he had reached his normal retirement date prior to such termination.
Mr. Pinola's employment agreement is renewable for successive one year
terms unless either party gives the other party written notice of non-renewal
at least 120 days prior to the expiration of the then current term.
Notwithstanding the foregoing, Mr. Pinola's employment with the Company will
not be renewed under this agreement on or after December 31 of the calendar
year in which he reaches sixty-five years of age. In the event that Mr.
Pinola's employment is terminated by the Company without cause, his
employment is not renewed at the end of the initial term or any renewal term
of his employment agreement, or if Mr. Pinola terminates his employment as a
result of various reasons specified in the agreement, he will be entitled to
severance compensation equal to the greater of $450,000 or his total salary
and cash bonus paid during the 12 month period immediately preceding the
termination. This amount will be payable over the longer of the remaining
term of the agreement or 12 months from the date of termination. Upon certain
changes in control (as defined in the agreement) of the Company, Mr. Pinola
may, upon written notice given to the Company within 60 days thereafter,
elect to either (a) continue his employment with the Company for a period
equal to the greater of the then current term or a period which expires two
years after the date of the change in control or (b) terminate his employment
and receive severance compensation. If Mr. Pinola elects to continue to be
employed by the Company, the annual compensation payable to him shall not be
less than the greater of the total amount of the base salary and cash bonus
paid to him during the 12 months immediately preceding the change in control
or $450,000.
Effective January 1, 1996, the Company and Mr. Joseph Smith entered into
an employment agreement having an initial term expiring December 31, 1998.
The terms of Mr. Smith's agreement are substantially the same as those of Mr.
Pinola's agreement except that his initial base salary is $300,000 and any
component of his compensation determined by his initial base salary is based
upon $300,000. Mr. Smith is also entitled to participate in a deferred
compensation plan with substantially the same terms as outlined above for Mr.
Pinola, except that Mr. Smith vests in his plan at the rate of 20% per year,
beginning at age 61.
Effective January 1, 1992, the Company and Mr. Louchheim entered into an
amendment and restatement of his employment agreement. Pursuant to such
agreement, Mr. Louchheim received an annual base salary of $153,000 in 1995
and is expected to receive an annual base salary of $163,000 in 1996. In
addition, Mr. Louchheim received a cash bonus equal to 20% of the annual cash
bonus payable to the Company's chief executive officer in 1995 and expects to
receive the same percentage each year thereafter. Under the agreement, he is
entitled to participate in and receive the benefits of any profit sharing or
retirement plans and any insurance programs made available to other similarly
situated employees of the Company. Severance compensation is also provided in
the event that his employment is terminated by the Company other than for
cause. The term of the agreement expired December 31, 1994, but provides for
annual renewals thereafter unless either party gives the other party notice
of termination at least 120 days prior to the end of the then current term.
Concurrently with the execution of his amended and restated employment
agreement, Mr. Louchheim and the Company also entered into an agreement
modifying Mr. Louchheim's Supplemental Executive Retirement Plan (the "SERP")
with the Company. The SERP, as modified, provides that upon retirement Mr.
Louchheim shall be paid each year 50% of the average of his total annual
compensation (base salary plus bonus payments) with respect to the four
consecutive years in which such four year average compensation is the
greatest during his employment with the Company. One-twelfth of such amount
(after deducting therefrom his social security payments and the amount of his
16
<PAGE>
401(k) plan attributable to the Company's matching contributions that are
payable to him in a given year, based on certain assumptions) shall be paid to
him monthly following retirement. The estimated annual benefit to be paid to Mr.
Louchheim upon retirement is $154,000 after the deductions described above. In
the event of Mr. Louchheim's death either before or after retirement, the
Company shall pay a survivor's benefit to his spouse for life in monthly
installments equal to one-half of the retirement benefit he was entitled to
receive on the date of his death. In the event there is a change of control of
the Company (as defined in the modified SERP) and Mr. Louchheim retires within
two years thereafter, the Company is required to pay to Mr. Louchheim within 30
days after his retirement an amount equal to the net present value of the total
benefits he would have received under the SERP, with the calculation of such
amount based on specified mortality tables.
In September 1986, the Company and Ms. Geffner entered into a written
employment agreement which originally expired in September 1990, subject to
annual renewal thereafter. Such agreement was renewed for 1996 and provides
for a base salary and/or sales commissions, and includes a bonus program.
Each component of compensation is subject to annual adjustment.
Ms. Geffner's employment agreement also provides for payments upon death
or disability. In the case of death, Ms. Geffner's estate will receive
payments for a period of three months immediately after her death. In the
case of disability, the Company will continue to pay her total compensation
at its then current rate for a period of three months following the date of
the onset of the disability. The Company will have no obligation to make
payments relating to any period thereafter and may terminate her agreement
without further obligation if the disability continues for six consecutive
months.
In addition, Ms. Geffner's agreement provides that if the Company elects
to terminate the agreement at the end of any term or wrongfully terminates
the agreement prior to the end of such term, the Company shall pay Ms.
Geffner, in 12 equal monthly installments, the lesser of the amount payable
as total compensation plus all bonuses payable during the 12-month period
immediately preceding termination, or $150,000. The agreement also provides
that if the Company is involved in a merger in which it is not the surviving
corporation, sells all or substantially all of the Company's assets or if 51%
or more of the outstanding stock of the Company is sold in a single
transaction or group of related transactions, then Ms. Geffner has the option
to extend her employment agreement for an additional two years, with a cap of
$150,000 per year in total compensation during such extended term.
COMPENSATION OF DIRECTORS
For 1995, the Company paid all directors who were not Company officers or
employees $15,000 per year as a director's fee, plus $750 for each Board of
Directors meeting attended and $750 for each Committee meeting attended plus
reasonable out-of-pocket expenses for attending such meetings. In addition,
the Company also paid the Audit Committee and the Compensation and Finance
Committee Chairmen and the non-employee Committee members $2,500 and $1,000
respectively, per year.
In addition, pursuant to the Company's 1995 Directors' Stock Option Plan,
each director who was not a Company officer or employee received a grant of
3,000 options on December 29, 1995. The first one-third of such options
become exercisable on December 29, 1996. The options vest on a cumulative
basis, one-third each year and they expire on December 29, 2000. These
options were granted at an exercise price equal to the then current closing
price of the Company's common stock on the NASDAQ Stock Market as of the date
of grant of $23.25.
17
<PAGE>
COMPENSATION AND OPTIONS COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Options Committee of the Board of Directors (within
this report, the "Committee") is comprised of non-employee directors of the
Company listed in this report. The Committee is responsible for overseeing
management's recommendations on the Company's executive compensation and
option proposals, policies, and programs. In addition, the Committee
recommends to the Board of Directors, on an annual basis, the compensation to
be paid to the Chief Executive Officer ("CEO"). Prior to May 1995, these
functions were split between two committees, the Compensation and Finance
Committee and the Options Committee. The reorganization of the Board's
committees caused these functions to consolidate under the Committee.
COMPENSATION PHILOSOPHY
This report reflects the Company's compensation philosophy as adopted by
the Committee and endorsed by the Board of Directors. The Company's executive
compensation programs are intended to provide its executives and managing
principals with competitive market salaries and the opportunity to earn
incentive compensation related to performance expectations identified by
management. The broad objectives of the Company's executive compensation
program, as developed by the Committee and subject to periodic review, are
to:
(1) Support and reinforce the Company's business strategy and link pay to
shareholder value,
(2) Align compensation with the goals and key performance measures of the
business,
(3) Attract and retain high quality executives and managing principals;
and
(4) Reward such employees for superior performance, as measured by
financial results and key strategic achievements.
A significant portion of executive pay is variable and uncapped and tied
to improvement in earnings per share ("EPS") and, in the case of managing
principals, improvement in regional operating income. This policy reflects
management's belief that continuous improvement in EPS and regional operating
income directly contributes toward creating shareholder value through
increasing the Company's stock price.
PAY POSITIONING
The Committee's executive compensation program is constructed to provide
an opportunity for compensation, through the three components described below
(base salaries, annual incentive compensation and long-term incentives), to
vary with performance relative to a peer group of professional services
companies. Competitive levels of pay for purposes of compensation comparison
are provided by compensation consultants and published surveys. The primary
companies used in the compensation comparison are those in the Company's peer
group selected by the outside compensation consultant retained by the
Company. Privately-held professional services companies of similar size are
also considered in determining pay level opportunity.
PAY MIX AND MEASUREMENT FOR EXECUTIVES
The compensation of executives currently includes base salary, annual
incentive compensation, and long- term incentive compensation in the form of
restricted stock and stock option awards. The Committee considers the total
compensation of each of the named officers and the other executives in
reviewing each element of compensation. In general, the proportion of an
executive's incentive compensation increases with the executive's level of
responsibility. Executives also receive various benefits, including life,
medical, and disability insurance, similar to those generally available to
all employees of the Company.
BASE SALARIES
The Committee, based on management's recommendations, seeks to set base
salaries for the Company's executives at levels that are competitive for
executives with comparable roles and responsibilities within the peer group
and other comparison companies. See "Common Stock Performance" below for the
identification of peer group companies and the bases for inclusion in the peer
18
<PAGE>
group. The Company maintains an executive salary administration program which
uses ongoing internal and periodic external comparisons to set salary ranges at
or around the median levels of the comparison companies.
Individual executive salaries are reviewed annually. Annual salary
adjustments are determined by a subjective evaluation of: (1) the position's
responsibilities, (2) competitive market rates, (3) strategic importance of
the position, and (4) individual performance and contributions. The annual
salaries for executives (other than the CEO, whose salary is evaluated by the
Committee with the Board of Directors) are approved by the Committee
following a review with the CEO and Chief Operating Officer.
ANNUAL INCENTIVE COMPENSATION
The Committee administers an annual cash incentive plan for executives.
The annual cash incentive plan reflects the Company's belief that executives'
contributions to shareholder value come from maximizing earnings and the
annual incentive payments to executives are made upon the achievement of
annual corporate financial objectives (expressed as a post-incentive EPS
goal) that reflect targeted annual growth. Individual award targets are
established at the beginning of the year and are based on an individual's
position and contribution to the Company results. Increased awards are made
for achievement that is significantly above target levels. The Company
exceeded its 1995 EPS target which resulted in corporate executive officers
receiving an incentive award greater than their target amount. However, since
the EPS target for 1995 was not exceeded to the same extent as in 1994,
annual cash incentive awards decreased from 1994 levels.
In addition to the incentive to achieve the EPS goal, certain executives
and managing principals responsible for individual region and/or group
performance are rewarded based on the achievement of regional and/or group
revenue and operating income targets. No awards are made unless a threshold
regional and/or group operating income level is achieved that generally
reflects growth over the prior year.
LONG-TERM INCENTIVES ("LTI")
The Company provides executives with a restricted stock and stock options
plan to retain and motivate them to improve long-term stock values. Annual
grants of restricted stock and stock options are made to executives based on
a market analysis of LTI levels within a peer group of companies. The annual
grants are intended to reflect the individuals' respective responsibilities,
as well as the actual and expected contribution of the individuals to the
Company's long-term success. Restricted stock represents 25% of the LTI
levels and are distributed to levels of Executive Vice President and above.
The restricted stock is distributed at the beginning of a given year and is
subject to the attainment of minimum three year cumulative EPS levels. If the
Company does not meet its minimum cumulative EPS target then the restricted
stock will be forfeited by the recipient. Otherwise, the restrictions will
lapse at the beginning of the fourth year after grant on 50% of the
restricted stock upon the attainment of the minimum EPS levels and will lapse
in increasing increments (upon achievement of increasing EPS levels) up to
100% of such restricted stock. The EPS target for the shares reflects the
annual growth targets set out in the Company's Strategic Plan. Stock options
are granted only if the Company achieves its annual EPS target and, in the
case of managing principals, the region achieves its earnings target, as
applicable to the individual for the preceding year. Grants vest in equal
amounts over a three year period and are exercisable over a five year or ten
year period, as applicable. The Committee reviews and establishes the grants
for directors and the executive officers.
The Company exceeded its EPS target for 1995. The average number of
options granted to executive officers, excluding the CEO, for 1995, including
those options granted in January 1, 1996 pertaining to 1995 performance was
9,469.
RETIREMENT COMPENSATION
The intent of the Committee's retirement compensation policy is to provide
employees and executives with certain tax-qualified retirement benefits. The
Company maintains a defined contribution savings plan available,
substantially to all employees, including executives, under Section 401(k) of
the Code. Under this plan, the Company contributes 25% of the participating
19
<PAGE>
employee's contribution. Employee contributions are generally limited to 10% of
their compensation, subject to Code limitations. The Company also provides
discretionary contributions if the Company exceeds the EPS target. Such
discretionary contributions were made for 1995 as actual results significantly
exceeded the EPS target.
In addition, the Company provides a nonqualified deferred compensation
plan to eligible employees to help them save for retirement. Under the plan,
participants may defer payment of up to 10% of their annual cash
compensation, subject to limitations and reduced by amounts contributed to
the Company's 401(k) plan.
SECTION 162 (M)
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)") generally imposes a $1,000,000 limit on the amount of compensation
deductible by the Company that it pays to certain executive officers except
for qualified "performance-based compensation." Compensation attributable to
options granted under the various stock option plans currently in effect are
expected to qualify for deductibility under Section 162(m). The Committee
monitors the effect of Section 162(m) on the deductibility of such
compensation paid by the Company and intends to optimize the deductibility of
such compensation to the extent deductibility is consistent with the
objectives of the executive compensation program. The Committee, however,
intends to weigh the benefits of full deductibility with the objectives of
the executive compensation program and, if the Committee believes to do so is
in the best interests of the Company and its shareholders, will make
compensation arrangements that may not be fully deductible due to Section
162(m).
During 1995, the provisions of Section 162(m) did not cause any
compensation paid by the Company to be non-deductible.
CHIEF EXECUTIVE OFFICER COMPENSATION
The principles guiding compensation for the Company's CEO are
substantially the same as those set forth for other executives as previously
described in this report. During 1995, the Company's most highly compensated
officer was Richard J. Pinola, Chairman of the Board and CEO. Mr. Pinola's
performance was reviewed by the Committee which made recommendations to the
Board regarding his annual cash compensation (salary plus annual incentive)
and approved his long-term incentive (restricted stock and stock options)
award.
Effective January 1, 1995, Mr. Pinola's annual base salary was increased
to $385,000 for 1995. This increase was approved by the Board of Directors.
Mr. Pinola received an annual cash incentive award of $512,531 in 1996 based
on the Company's 1995 actual EPS results. One grant of 40,950 stock options
was made during 1996 to reflect the achievement of exceeding target EPS
levels for 1995. This grant was made at the closing market price of the
Company's common stock on January 4, 1996. In addition, effective January 1,
1995, Mr. Pinola received a restricted stock award of 7,500 shares.
Compensation and Options
Committee
Raymond B. Langton, Chairman
Rebecca J. Maddox
Catherine Y. Selleck
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION
During 1995, there were no interlocking relationships between any
executive officers of the Company and any entity whose directors or executive
officers serve on the Board of Directors' Compensation and Options Committee,
nor did any current or past officers of the Company serve on the Compensation
and Options Committee. Except as discussed in the section "Certain
Relationships and Related Party Transactions" with respect to the
transactions with RHRC and RAGLR, the franchises owned by Mr. Hainline and
Mr. Bourbeau, respectively, and the consulting fees paid to Mr. Tomasko, no
member of the Compensation and Options Committee in 1995 had any relationship
with the Company other than as a director and member of such committee.
20
<PAGE>
COMMON STOCK PERFORMANCE
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock, based on the market price of the Common
Stock, with the cumulative total return (assuming dividend reinvestment) of
common stock listed on the NASDAQ Stock Market and common stock issued by
companies in a peer group selected by the Company for the five year period
December 31, 1990 through December 31, 1995. The peer group consists of the
following companies: Robert Half International, Inc., Staff Builders,
Healthcare Compare Corp., Dimark, Information Resources, Inc. and National
Tech Team. The companies included in the peer group were selected primarily
because they were publicly-held, professional service firms with
international operations, had revenues similar to those of the Company and
were in favorable financial condition.
COMPARISON OF 5 YEAR CUMULATIVE RETURN AMONG THE COMPANY, NASDAQ
STOCK MARKET (U.S. COMPANIES) AND PEER GROUP
500|------------------------------------------------------------------|
| & |
| |
400|------------------------------------------------------------------|
| # |
| & & |
300|---------------&--------------------------------------------------|
| & * |
D | # |
O 200|------------------------------------#-*-----------*---------------|
L | #* * |
L | |
A 100|-#&*--------------------------------------------------------------|
R | # |
S | |
0|----|----------|---------|-----------|-----------|-----------|----|
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
|-------------------------------------------------------|
| #=The Company &=Peer Group *=NASDAQ Stock Market |
|-------------------------------------------------------|
ASSUMES $100 INVESTED ON DECEMBER 31, 1990 AND ALL DIVIDENDS REINVESTED
(Graphic information in dollars)
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Company # 100 166.21 108.11 205.40 218.92 376.84
Peer Grp. & 100 297.38 287.92 338.20 335.84 462.31
NASDAQ * 100 160.56 186.87 214.51 209.69 296.30
</TABLE>
21
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
Subject to the shareholders' ratification, the Board of Directors has
appointed the firm of Arthur Andersen LLP, which served as the Company's
independent public accountants for the last fiscal year, to serve as the
Company's independent public accountants for the current fiscal year. If the
shareholders do not ratify this appointment by the affirmative vote of a
majority of shares present in person or represented by proxy at the Meeting,
other independent accountants will be considered by the Board of Directors
upon recommendation of the Audit Committee.
A representative of Arthur Andersen LLP is expected to be present at the
meeting and will have the opportunity to make a statement if he desires to do
so. The representative is also expected to be available to respond to
appropriate questions.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of the independent public accountants.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Annual Meeting
of Shareholders in 1997 must be received by the Company by December 9, 1996
in order to be considered for inclusion in the Company's proxy statement and
form of proxy relating to that meeting.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board
of Directors of the Company. The expense of solicitation of proxies for the
meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone or
telegraph by directors, officers or regular employees of the Company or its
subsidiaries.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUEST
SHOULD BE DIRECTED TO MS. CINDY NG, CORPORATE CONTROLLER, AT THE ADDRESS OF
THE COMPANY APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
THE BOARD OF DIRECTORS HOPES THAT SHAREHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, SHAREHOLDERS ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ACCOMPANYING ENVELOPE. SHAREHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR
SHARES PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors
/s/ G. Lee Bohs
G. Lee Bohs
Chief Financial Officer, Treasurer and Secretary
22
<PAGE>
Appendix A
RIGHT MANAGEMENT CONSULTANTS, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN (THE "PLAN")
The purpose of the Plan is to provide employees a continued opportunity to
purchase RMCI stock through annual offerings to be made during the five-year
period commencing July 1, 1996. One hundred thousand (100,000) shares of RMCI
stock in the aggregate have been approved for this purpose.
1. Administration. The Plan shall be administered by a Committee
appointed by the Board of Directors from members of the Board of Directors or
senior management, consisting of at least three members. Members of the
Committee shall not be eligible to participate in the Plan. The Committee
shall have authority to make rules and regulations for the administration of
the Plan; its interpretations and decisions with regard thereto shall be
final and conclusive.
2. Eligibility. Except as provided below, all employees of the Company or
its subsidiaries shall be eligible to participate in the Plan in accordance
with such rules as may be prescribed by the Committee from time to time,
which rules, however, shall neither permit nor deny participation in the Plan
contrary to the requirements of the Internal Revenue Code of 1986, as amended
(the "Code") (including, but not limited to, Section 423(b)(3),(4),(5), and
(8) thereof) and the regulations promulgated thereunder. No employee may be
granted the right to acquire stock under the Plan if such employee,
immediately after such right is granted, owns 5% or more of the total
combined voting power or value of the stock of the Company or any subsidiary,
or if such employee is subject to the reporting requirements under Section 16
of the Securities Exchange Act of 1934, as amended. Eligibility to the Plan
begins on each January 1, April 1, July 1, and October 1 for those employees
who have completed one year of service. A year of service is earned at the
end of each full year, beginning with the date of hire, in which the employee
has 1,000 or more hours of service.
3. Offerings. The Company shall make one or more annual offerings to
employees to purchase RMCI stock under the Plan. Each offering period shall
be 12 months in duration, during which (or during such portion thereof as an
employee may elect to participate) the amounts received as compensation by an
employee shall constitute the measure of such of the employee's participation
in the offering as is based on compensation.
4. Participation. An eligible employee may participate in such offering
or subsequent offering beginning on the next January 1, April 1, July 1, or
October 1 while the Plan is in effect by completing and forwarding a payroll
deduction authorization to the employee's appropriate payroll location in
advance of such date. The form will authorize a regular payroll deduction
from the employee's compensation, and must specify the date on which such
deduction is to commence, which may not be retroactive.
5. Deductions. The Company shall maintain payroll deduction accounts for
all participating employees. With respect to any offering made under the
Plan, an employee may authorize a payroll deduction of a whole percentage (up
to a maximum of 10%) of the compensation the employee receives during the
offering period (or during such portion thereof in which the employee may
elect to participate).
No employee may be granted rights to purchase stock under the Plan, which
rights, together with rights under any other stock purchase plan of the
Company and its subsidiaries, accrue at a rate that exceeds $25,000 of the
fair market value of such stock (determined at the effective date of the
applicable offering) for each calendar year in which the rights are
outstanding at any time.
6. Deduction Changes. An employee may increase or decrease the employee's
payroll deduction by filing a new payroll deduction authorization at any time
during an offering period. The change may not become effective sooner than
the next pay period after receipt of the authorization.
7. Purchase of Shares. Each employee participating in any offering under
this Plan shall be granted a right to acquire stock under the Plan, upon the
effective date of such offering, as many full shares of RMCI stock as the
participating employee may elect to purchase with up to 10% of the
compensation received during the specified offering period (or during such
portion thereof as the employee may elect to participate), to be paid by
payroll deductions during such period.
The purchase price for each share purchased shall be 85% of the average
market price on the last business day of a calendar year-quarter, i.e. March
31, July 31, September 30 and December 31 (or the next preceding business
23
<PAGE>
day if such date falls on a non-business day) (the "Investment Date"). On the
Investment Date the account of each participating employee shall be totaled, and
the employee shall be deemed to have exercised a right to purchase one or more
full shares at the then-applicable price; the employee's account shall be
charged for the amount of the purchase; and the ownership of such share or
shares shall be appropriately evidenced on the books of the Company. Excess
amounts that are insufficient to purchase a full share will remain in the
employer's payroll deduction account and carried forward to the next
calendar-year quarter. Additional shares covered by the employee's right to
acquire stock under the Plan shall be purchased in the same manner on each
subsequent Investment Date during the offering period. A participating employee
may not purchase a share under any offering period beyond 12 months from the
effective date thereof. Any balance remaining in an employee's payroll deduction
account at the end of an offering period will be carried forward to the next
offering period.
If the number of shares that participating employees become entitled to
purchase is greater than the shares remaining available, the available shares
shall be allocated by the Committee among such participating employees in
such manner as it deems fair.
8. Employee Accounts and Certificates. Upon purchase of one or more
shares by a Plan participant pursuant to Section 7 hereof, the Company shall
establish a book entry account in the name of the employee to reflect the
share(s) purchased at that time. Certificates shall be issued only on request
and also when necessary to comply with transaction requirements outside the
United States. To request certificates, employees may contact the corporate
controller at the Company's offices in Philadelphia.
9. Registration of Shares. Shares may be registered only in the name of
the employee, or, if the employee so indicates on the employee's payroll
deduction authorization form, in the employee's name jointly with a member of
the employee's family, with right of survivorship. An employee who is a
resident of a jurisdiction that does not recognize such a joint tenancy may
have shares registered with a member of the employee's family, without right
of survivorship. If the employee resides in a jurisdiction requiring a
spousal waiver if such shares are registered in the employee's name only,
then the Committee shall provide an appropriate form of waiver, which shall
be executed prior to the issuance of shares under the Plan.
10. Definitions. The term "Company" or "RMCI" means Right Management
Consultants, Inc., a Pennsylvania corporation.
The term "RMCI stock" means the common stock of RMCI.
The phrase "average market price" means the average of the high and low
closing sale prices of RMCI stock on the NASDAQ Stock Market on a given day
or, if no sales of RMCI stock were made on that day, the average of the high
and low closing sale prices of RMCI stock on the next preceding day on which
sales were made on said Market.
The term "subsidiary" means a subsidiary of the Company within the meaning
of Section 424(f) of the Code and the regulations promulgated thereunder.
11. Rights as a Shareholder. None of the rights or privileges of a
shareholder of the Company shall exist with respect to shares purchased under
the Plan unless and until such shares shall have been appropriately evidenced
on the books of the Company.
12. Rights on Retirement, Death, or Termination of Employment. In the
event of a participating employee's retirement, death, or termination of
employment, the employee shall be ineligible to continue to participate in
the Plan, and no payroll deduction shall be taken from any pay due and owing
to the employee after the pay period during which the employee became
ineligible. In the event of a participating employee's termination,
retirement or death, any excess amounts in such employee's payroll deduction
account will be paid to the employee in cash.
13. Rights Not Transferable. Rights under the Plan are not transferable by
a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee.
14. Adjustments in Case of Changes Affecting RMCI Stock. In the event of
a subdivision of outstanding shares, or the payment of a stock dividend, the
number of shares approved for the Plan shall be increased proportionately,
24
<PAGE>
and such other adjustments shall be made as may be deemed equitable by the Board
of Directors. In the event of any other change affecting RMCI stock, such
adjustments shall be made as may be deemed equitable by the Board of Directors
to give proper effect to such event.
15. Amendment of the Plan. The Board of Directors may from time to time
amend the Plan in any respect, except that, without the approval of a
majority of the shares of stock of the Company then issued and outstanding
and entitled to vote, no amendment shall be made (i) increasing the number of
shares approved for the Plan (other than as provided in Section 15 hereof),
(ii) decreasing the purchase price per share, (iii) withdrawing the
administration of the Plan from a Committee consisting of persons not
eligible to participate in the Plan, or (iv) changing the designation of
subsidiaries eligible to participate in the Plan.
16. Termination of the Plan. This Plan and all rights of employees under
any offering hereunder shall terminate at any time, at the discretion of the
Board of Directors. No offering hereunder shall be made which shall extend
beyond July 1, 2001.
17. Governmental Regulations. The Company's obligation to sell and deliver
RMCI stock under the Plan is subject to the approval of any governmental
authority required in connection with the authorization, issuance, or sale of
such stock.
18. Plan Shares Purchases. Purchases of outstanding shares may be made
pursuant to and on behalf of this Plan, upon such terms as the Company may
approve, for delivery under the Plan.
25
<PAGE>
Appendix B
RIGHT MANAGEMENT CONSULTANTS, INC.
1993 STOCK INCENTIVE PLAN
1. Purpose. This 1993 Stock Incentive Plan (the "Plan") is intended to recognize
the contributions made to the Company by key employees (including employees who
are members of the Board of Directors) of the Company or any Affiliate and
independent contractors who are managing principals of one or more of the
Company's franchisees, to provide such persons with additional incentive to
devote themselves to the future success of the Company or an Affiliate, and to
improve the ability of the Company or an Affiliate to attract, retain, and
motivate individuals upon whom the Company's sustained growth and financial
success depend, by providing such persons with an opportunity to acquire or
increase their proprietary interest in the Company through receipt of Restricted
Stock (as defined below) of the Company and/or rights to acquire the Company's
Common Stock, par value $.01 per Share (the "Common Stock") in accordance with
the terms of the Plan. In addition, the Plan is intended as additional incentive
to directors of the Company who are not employees of the Company or an Affiliate
to devote themselves to the future success of the Company by providing them with
an opportunity to acquire or increase their proprietary interest in the Company
through the receipt of Options to acquire Common Stock in accordance with the
terms of the Plan.
2. Definitions. Unless the context clearly indicates otherwise, the following
terms shall have the following meanings:
(a) "Affiliate" means a corporation which is a parent corporation or a
subsidiary corporation with respect to the Company within the meaning of Section
424(e) or (f) of the Code.
(b) "Award" means an award of an Option and/or Restricted Stock granted
pursuant to the Plan.
(c) "Award Document" means either an Option Document or a Restricted
Stock Document or both.
(d) "Board of Directors" means the Board of Directors of the Company.
(e) "Change of Control" shall have the meaning as set forth in Section
9 of the Plan.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the committee consisting of at least two (2)
members of the Board of Directors who satisfy the requirement of Section 3(a) of
the Plan appointed by the Board of Directors from time to time to administer the
Plan pursuant to Section 3 of the Plan.
(h) "Company" means Right Management Consultants, Inc., a Pennsylvania
corporation.
(i) "Disability" means a physical or mental impairment sufficient to
make the individual eligible for benefits under the Long-Term Disability Plan of
the Company (whether or not a participant in such plan), provided such
impairment also constitutes a "disability" within the meaning of Section
22(e)(3) of the Code.
(j) "Fair Market Value" shall have the meaning set forth in Subsection
8(a)(ii) of the Plan.
(k) "ISO" means an Option granted under the Plan which is intended to
qualify as an "incentive stock option" within the meaning of Section 422(b) of
the Code.
<PAGE>
(l) "Non-employee Director" means a member of the Board of Directors
who is not an employee of the Company or an Affiliate.
(m) "Non-qualified Stock Option" means an Option granted under the Plan
which is not intended to qualify, or otherwise does not qualify, as an
"incentive stock option" within the meaning of section 422(b) of the Code.
(n) "Option" means either an ISO or a Non-qualified Stock Option
granted under the Plan.
(o) "Optionee" means a person to whom an Option has been granted under
the Plan, which Option has not been exercised and has not expired or terminated.
(p) "Option Document" means the document described in Section 8(a) of
the Plan, as applicable, which sets forth the terms and conditions of each grant
of Options.
(q) "Option Price" means the price at which Shares may be purchased
upon exercise of an Option, as calculated pursuant to subsection 8(a)(ii) of the
Plan.
(r) "Participant" means a person who holds an Option or Restricted
Stock.
(s) "Plan Shares" means the shares of Common Stock of the Company which
have been, or may be, issued pursuant to the Plan.
(t) "Restricted Stock" means Common Stock granted pursuant to Section
8(b) of the Plan that is subject to a risk of forfeiture in accordance with the
terms of such grant.
(u) "Restricted Stock Document" means the document described in Section
8(b) of the Plan which sets forth the terms and conditions of each grant of
Restricted Stock.
(v) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended.
(w) "Shares" means the shares of Common Stock of the Company which are
the subject of Options.
3. Administration of the Plan.
(a) General. The Plan shall be administered by the Committee which
shall at all times consist of two (2) or more persons, each of whom shall be
members of the Board of Directors. Each member of the Committee shall be a
disinterested person (as such term is defined in Rule 16b-3) and an "outside
director" within the meaning of Section 162(m) of the Code and applicable
interpretive authority thereunder. The Board of Directors may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled (or eliminated, consistent with the
first sentence of this Section 3(a) by the reduction of the size of the
Committee) by the Board of Directors.
<PAGE>
(b) Meetings. The Committee shall hold meetings at such times and
places as it may determine. Acts approved at a meeting by a majority of the
members of the Committee or acts approved in writing by the unanimous consent of
the members of the Committee shall be the valid acts of the Committee.
(c) Grants. The Committee shall from time to time at its discretion
grant Awards pursuant to the terms of the Plan. The Committee shall have plenary
authority to (i) determine the individuals to whom, and the times at which, the
Awards shall be granted, (ii) determine the type of Award to be granted and the
number of Shares and/or amount of Restricted Stock subject thereto, (iii) if an
Option is granted, determine the Option Price, its terms and the period or
periods when such Option is exercisable, and (iv) approve the form and terms and
conditions of the Award Documents; all subject, however, to the express
provisions of the Plan. In making such determinations, the Committee may take
into account the nature of the individual's services and responsibilities, the
individual's present and potential contribution to the Company's success and
such other factors as it may deem relevant. The interpretation and construction
by the Committee of any provisions of the Plan or of any Awards granted under it
shall be final, binding and conclusive. Notwithstanding the foregoing, no single
individual shall receive, in any calendar year, Awards entitling such individual
to more than 10% of the Plan Shares.
(d) Exculpation. No member of the Committee shall be personally liable
for monetary damages as such for any action taken or any failure to take any
action in connection with the administration of the Plan or the granting of
Awards thereunder unless (i) the member of the Committee has breached or failed
to perform the duties of his office under Subchapter B of Chapter 17 of the
Pennsylvania Business Corporation Law of 1988, as amended, and (ii) the breach
or failure to perform constitutes self-dealing, willful misconduct or
recklessness; provided, however, that the provisions of this Subsection 3(d)
shall not apply to the responsibility or liability of a member of the Committee
pursuant to any criminal statute or to the liability of a member of the
Committee for the payment of taxes pursuant to local, state or federal law.
(e) Indemnification. Service on the Committee shall constitute service
as a member of the Board of Directors of the Company. Each member of the
Committee shall be entitled without further act on his part to indemnity from
the Company to the fullest extent provided by applicable law and the Company's
Articles of Incorporation and/or By-laws in connection with or arising out of
any action, suit or proceeding with respect to the administration of the Plan or
the granting of Awards thereunder in which he or she may be involved by reason
of his or her being or having been a member of the Committee, whether or not he
or she continues to be such member of the Committee at the time of the action,
suit or proceeding.
4. Grants under the Plan. The Committee may grant any of the following types of
Awards, either singly, in tandem or in any combination as the Committee may in
its sole discretion determine:
(a) Options, in the form of Non-qualified Stock Options or ISOs or any
combination thereof; and Restricted Stock.
5. Eligibility. Subject to the limitations set forth in this Section 5, all key
employees and independent contractors who are managing principals of one or more
of the Company's franchisees and members of the Board of Directors who are not
then serving as members of the Committee shall be eligible to receive Awards
hereunder. The Committee, in its sole discretion, shall determine whether an
individual is eligible to be granted Awards hereunder. Only employees or
employee directors may be granted an ISO or Restricted Stock.
<PAGE>
6. Shares Subject to Plan. The aggregate maximum number of Plan Shares is One
Million Six Hundred Fifty Thousand (1,650,000), subject to adjustment or
amendment as provided in Sections 10 and 11 of the Plan. No more than Four
Hundred Fifty Thousand (450,000) of the Plan Shares, as such number may be
adjusted as provided in Sections 10 and 11 of the Plan, shall become permanently
issued (i.e., cease to be subject to risk of forfeiture) as a result of Awards
of Restricted Stock. Plan Shares not issued in the form of Restricted Stock
(including all or any portion of the Plan Shares available for issuance as
Restricted Stock Awards) may be issued pursuant to Options. The Plan Shares
shall be issued from authorized and unissued Common Stock or Common Stock held
in or hereafter acquired for the treasury of the Company. If an Option
terminates, is cancelled or expires without having been fully exercised for any
reason or if Restricted Stock is forfeited for any reason, the Shares underlying
the unexercised portion of the Option and/or the forfeited Restricted Stock, as
the case may be, may again be the subject of one or more Awards granted pursuant
to the Plan.
7. Term of the Plan. The Plan is effective as of October 28, 1992, the date on
which it was adopted by the Board of Directors. The Plan was approved by the
shareholders of the Company on December 16, 1992. The amendments to the Plan as
contained herein and as approved by the Board of Directors on February 22, 1996
shall require shareholder approval on or before February 21, 1997 (which
approval shall be by a majority of the votes cast at a duly called meeting of
the shareholders at which a quorum representing a majority of all outstanding
voting stock of the Company is, either in person or by proxy, present and
voting) or such amendments shall be deemed null and void.
8. Award Documents and Terms.
(a) Options. Each Option granted under the Plan shall be a
Non-qualified Stock Option unless the Option shall be specifically designated at
the time of grant to be an ISO for Federal income tax purposes. If any Option
designated an ISO is determined for any reason not to qualify as an ISO within
the meaning of Section 422 of the Code, such Option shall be treated as a
Non-qualified Stock Option for all purposes under the provisions of the Plan.
Options granted pursuant to the Plan shall be evidenced by the Option Documents
in such form as the Committee shall from time to time approve, which Option
Documents shall comply with and be subject to the following terms and conditions
and such other terms and conditions as the Committee shall from time to time
require which are not inconsistent with the terms of the Plan:
(i) Number of Option Shares. Each Option Document shall state the
number of Shares to which it pertains. An Optionee may receive more than one
Option, which may include Options which are intended to be ISOs and Options
which are not intended to be ISOs, but only on the terms and subject to the
conditions and restrictions of the Plan.
(ii) Option Price. Each Option Document shall state the Option Price
which, for a Non-qualified Stock Option, may be less than, equal to, or greater
than the Fair Market Value of the Shares on the date the Option is granted, but
in no case less than eighty-five percent (85%) of such Fair Market Value, and,
for an ISO, shall be at least 100% of the Fair Market Value of the Shares on the
date the Option is granted as determined by the Committee in accordance with
this Subsection 8(a)(ii); provided, however, that if an ISO is granted to an
Optionee who then owns, directly or by attribution under Section 424(d) of the
Code, shares possessing more than ten percent of the total combined voting power
of all classes of stock of the Company or an Affiliate, then the Option Price
shall be at least 110% of the Fair Market Value of the Shares on the date the
Option is granted. If the Common Stock is traded in a public market, then the
Fair Market Value per share shall be, if the Common Stock is listed on a
national securities exchange or included in the NASDAQ National Market System,
the last reported sale price thereof on the date the Option is granted, or, if
the Common Stock is not so listed or included, the mean between the last
reported "bid" and "asked" prices thereof on the relevant date, reported on
NASDAQ or, if not so reported, as reported by the National Daily Quotation
Bureau, Inc. or as reported in a customary financial reporting service, as
applicable and as the Committee determines.
<PAGE>
(iii) Exercise. No Option shall be deemed to have been exercised
prior to the receipt by the Company of written notice of such exercise and of
payment in full of the Option Price for the Shares to be purchased. Each such
notice shall specify the number of Shares to be purchased and shall (unless
Shares are covered by a then current registration statement or a Notification
under Regulation A under the Securities Act of 1933, as amended (the "Act"))
contain the Optionee's acknowledgment in form and substance satisfactory to the
Company that (a) such Shares are being purchased for investment and not for
distribution or resale (other than a distribution or resale which, in the
opinion of counsel satisfactory to the Company, may be made without violating
the registration provisions of the Act), (b) the Optionee has been advised and
understands that (i) the Shares have not been registered under the Act and are
"restricted securities" within the meaning of Rule 144 under the Act and are
subject to restrictions on transfer and (ii) the Company is under no obligation
to register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (c) such Shares
may not be transferred without compliance with all applicable federal and state
securities laws, and (d) an appropriate legend referring to the foregoing
restrictions on transfer and any other restrictions imposed under the Option
Documents may be endorsed on the certificates. Notwithstanding the foregoing, if
the Company determines that issuance of Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available, (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may defer
exercise of any Option granted hereunder until any of the events described in
this sentence has occurred.
(iv) Medium of Payment. An Optionee shall pay for Shares (i) in cash,
or (ii) by such other mode of payment as the Committee may approve, including
payment through a broker in accordance with procedures permitted by Regulation T
of the Federal Reserve Board. Furthermore, the Committee may provide in an
Option Document that payment may be made in whole or in part in shares of the
Company's Common Stock. If payment is made in whole or in part in shares of the
Company's Common Stock, then the Optionee shall deliver to the Company
certificates registered in the name of such Optionee representing the shares
owned by such Optionee, free of all liens, claims and encumbrances of every kind
and having an aggregate Fair Market Value on the date of delivery that is at
least as great as the Option Price of the Shares (or relevant portion thereof)
with respect to which such Option is to be exercised by the payment in shares of
Common Stock, endorsed in blank or accompanied by stock powers duly endorsed in
blank by the Optionee. Notwithstanding the foregoing, Company Common Stock which
is identified as having been obtained through an Option under this Plan and
still subject to the holding rules applicable to ISOs under the Code may not be
tendered in payment of the Option Price. In the event that certificates for
shares of the Company's Common Stock delivered to the Company represent a number
of shares in excess of the number of shares required to make payment for the
Option Price of the Shares (or relevant portion thereof) with respect to which
such Option is to be exercised by payment in shares of Common Stock, the stock
certificate issued to the Optionee shall represent (i) the Shares in respect of
which payment is made, and (ii) such excess number of shares. Notwithstanding
the foregoing, the Committee may impose from time to time such limitations and
prohibitions on the use of shares of the Common Stock to exercise an Option as
it deems appropriate.
<PAGE>
(v) Termination of Options.
(A) No Option shall be exercisable after the first to occur of the following:
(1) Expiration of the Option term specified in the Option Document,
which shall not occur after (i) ten years from the date of grant, or (ii) five
years from the date of grant of an ISO if the Optionee on the date of grant
owns, directly or by attribution under Section 424(d) of the Code, shares
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or an Affiliate;
(2) Expiration of three months from the date the Optionee's employment
or service with the Company or its Affiliates terminates for any reason other
than Disability or death or as otherwise specified in Subsection 8(a)(v)(A)(4)
or 8(a)(v)(A)(5) below;
(3) Expiration of one year from the date such employment or service
with the Company or its Affiliates terminates due to the Optionee's Disability
or death;
(4) A finding by the Committee that the Optionee (i) has become
employed without the Company's or an Affiliate's consent by a competitor of the
Company or an Affiliate, or has become engaged in competition with the Company
or an Affiliate, (ii) has divulged without the consent of the Company or an
Affiliate any secret or confidential information belonging to the Company or an
Affiliate, (iii) has been dishonest or fraudulent in any matter affecting the
Company, (iv) committed any act which, in the sole judgment of the Committee,
has been substantially detrimental to the interests of the Company or (v) was
terminated for other reasons which would constitute cause under applicable law.
The Company shall give an Optionee written notice of the occurrence of any such
event prior to making any such determination. The determination of the Committee
as to the occurrence of any of the events specified in this paragraph shall be
conclusive and binding upon all persons for all purposes. In the event the
Committee determines that any such event as specified in this paragraph has
occurred, in addition to immediate termination of the Options held by the
Optionee, the Optionee shall automatically forfeit all Shares for which the
Company has not yet delivered the share certificates upon refund by the Company
of the Option Price. Notwithstanding anything herein to the contrary, the
Company may withhold delivery of share certificates pending the resolution of
any inquiry that could lead to a finding resulting in a forfeiture.
(5) The date, if any, set by the Board of Directors as an accelerated
expiration date in the event of the liquidation or dissolution of the Company.
(B) Notwithstanding the foregoing, the Committee may extend the period during
which all or any portion of an Option may be exercised to a date no later than
the Option term specified in the Option Document pursuant to Subsection
8(a)(v)(A)(1), provided that any change pursuant to this Subsection 8(a)(v)(B)
which would cause an ISO to become a Non-qualified Stock Option may be made only
with the consent of the Optionee.
(vi) Transfers. No Option granted under the Plan may be transferred,
except by will or by the laws of descent and distribution. During the lifetime
of the person to whom an Option is granted, such Option may be exercised only by
him. Notwithstanding the foregoing, a Non-qualified Stock Option may be
transferred pursuant to the terms of a "qualified domestic relations order,"
within the meaning of Sections 401(a)(13) and 414(p) of the Code or within the
meaning of Title I of the Employee Retirement Income Security Act of 1974, as
amended.
<PAGE>
(vii) Holding Period. No Option granted under the Plan may be exercised
before the later of (i) the expiration of six months from the date of grant,
(ii) the expiration of six months following the date the Plan is approved by the
Company's shareholders or (iii) the expiration of such greater period of time as
may be specified in the Option Documents.
(viii) Limitation on Grants. In no event shall the aggregate fair
market value of the shares of Common Stock (determined at the time the ISO is
granted) with respect to which ISOs under all incentive stock option plans of
the Company or its Affiliates are exercisable for the first time by the Optionee
during any calendar year exceed $100,000.
(ix) Other Provisions. Subject to the provisions of the Plan, the
Option Documents shall contain such other provisions including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
and such additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee shall deem advisable.
Subject to Sections 8(a)(v) and 8(a)(x) and the general limitations on Options
contained herein, the Board of Directors may authorize adjustments of an Option
granted under the Plan with respect to the Option Price, the number of Shares,
the term and any restrictions. Such adjustments may be accomplished by
cancellation of an outstanding Option and a subsequent regranting of an Option,
by amendment, or by substitution of an outstanding Option and may result in an
Option Price which is higher but not lower than the Option Price of the prior
Option, provide for a greater or lesser number of Shares subject to the Option,
or provide for a longer or shorter term than the prior Option. The prohibition
on the reduction of the Option Price contained in the preceding sentence shall
not apply to adjustments made to reflect changes in capitalization as
contemplated by Section 10.
(x) Amendment. Subject to the provisions of the Plan, the Committee
shall have the right to amend Option Documents issued to an Optionee, subject to
the Optionee's consent if such amendment is not favorable to the Optionee,
except that the consent of the Optionee shall not be required for any amendment
made pursuant to Subsection 8(a)(v)(A)(5) or Section 10 of the Plan, as
applicable.
(b) Restricted Stock. Restricted Stock granted pursuant to the Plan
shall be evidenced by the Restricted Stock Documents (which shall include the
stock certificate(s) evidencing such Restricted Stock and such other documents
as the Committee shall determine with respect to each Award of Restricted Stock)
in such form(s) as the Committee shall from time to time approve, which
Restricted Stock Documents shall, to the extent applicable, comply with and be
subject to the following terms and conditions and such other terms and
conditions as the Committee shall from time to time require which are not
inconsistent with the terms of the Plan:
(i) Amount of Restricted Stock. The Restricted Stock Documents shall
state the amount of Restricted Stock to which they pertain.
(ii) Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in combination
at such time(s), under such circumstances, in such installments, or otherwise,
as the Committee may determine. Except to the extent restricted under the terms
of the Plan and the applicable Restricted Stock Documents, a Participant granted
Restricted Stock shall have all rights of a shareholder of the Company with
respect to the Restricted Stock issued in the name of such Participant and then
outstanding, including, without limitation, the right to vote such Restricted
Stock and the right to receive dividends thereon.
<PAGE>
(iii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of the employment of a Participant during a period when the
Restricted Stock of such Participant is subject to forfeiture under the
Restricted Stock Documents applicable thereto, such Restricted Stock shall be
forfeited and reacquired by the Company; provided, however, that the Committee
may provide, by rule or regulation or in any Restricted Stock Document, or may
determine in any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock.
(iv) Certificates. Restricted Stock granted under the Plan shall be
evidenced by one or more stock certificates as determined by the Committee. Each
such certificate shall be registered in the name of the Participant and such
certificates shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock. The Company
shall retain physical possession of the certificate(s) so long as the Plan
Shares evidenced thereby are subject to forfeiture and the Participant shall (as
a condition precedent to the issuance of a Restricted Stock Award) deliver a
stock power to the Company, endorsed in blank, relating to the Restricted Stock
to be issued. At the expiration of the applicable restriction period, the
Company shall release to the Participant (or the Participant's legal
representative or designated beneficiary) the certificate(s) representing the
Restricted Stock with respect to which the applicable restrictions have been
satisfied.
(v) Dividends. The Committee, in its sole discretion, may permit or
require the payment of dividends on the Restricted Stock to be automatically
reinvested in additional Restricted Stock or other investment vehicles. Unless
otherwise determined by the Committee, Common Stock distributed as a dividend or
otherwise distributed in connection with the Restricted Stock shall be subject
to the same restrictions and risk of forfeiture as the Restricted Stock with
respect to which such Common Stock has been distributed.
(vi) Minimum Holding Period. Restricted Stock granted under the Plan
may not be transferred, sold or otherwise disposed of, by the Participant before
the later of (i) the expiration of six months from the date of grant, or (ii)
the expiration of six months following the date the amendments to the Plan
adopting the Restricted Stock provisions are approved by the Company's
Shareholders.
9. Change of Control. In the event of a Change of Control, the Committee may
take whatever action it deems necessary or desirable with respect to the Options
and Restricted Stock outstanding. Such action includes, without limitation,
accelerating the expiration or termination date in the respective Option
Documents to a date no earlier than thirty (30) days after notice of such
acceleration given to the Optionees or accelerating the restriction periods in
the respective Restricted Stock Documents. In addition to the foregoing, in the
event of a Change of Control, Options granted pursuant to the Plan shall become
immediately exercisable in full.
A "Change of Control" shall be deemed to have occurred upon the
earliest to occur of the following events: (i) the date the shareholders of the
Company (or the Board of Directors, if shareholder action is not required)
approve a plan or other arrangement pursuant to which the Company will be
dissolved or liquidated, or (ii) the date the shareholders of the Company (or
the Board of Directors, if shareholder action is not required) approve a
definitive agreement to sell or otherwise dispose of substantially all of the
assets of the Company, or (iii) the date the shareholders of the Company (or the
Board of Directors, if shareholder action is not required) and the shareholders
of the other constituent corporation (or its board directors if shareholder
action is not required) have approved a definitive agreement to merge or
consolidate the Company with or into such other corporation, other than, in
either case, a merger or consolidation of the Company in which holders of shares
of the Company's Common Stock immediately prior to the merger or consolidation
will have at least a majority of the ownership of common stock of the surviving
corporation (and, if one class of common stock is not the only class of voting
securities entitled to vote on the election of directors of the surviving
corporation, a majority of the voting power of the surviving corporation's
voting securities) immediately after the merger or consolidation, which common
stock (and, if applicable, voting securities) is to be held in the same
proportion as such holders' ownership of Common Stock of the Company immediately
before the merger or consolidation, or (iv) the date any entity, person or
group, within the meaning of Section 13(d)(3) or Section 14 (d)(2) of the
Securities Exchange Act of 1934, as amended, other than (A) the Company or any
of its subsidiaries or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (B) the chief executive
officer immediately prior to the determination of whether a Change of Control
has occurred or any "group" of which such chief executive officer is a member or
any entity of which such chief executive officer owns 25% or more of the voting
interests, shall have become the beneficial owner of, or shall have obtained
voting control over, more than twenty-five percent (25%) of the outstanding
shares of the Company's Common Stock, or (v) the first day after the date this
Plan is effective when directors are elected such that a majority of the Board
of Directors shall have been members of the Board of Directors for less than two
(2) years, unless the nomination for election of each new director who was not a
director at the beginning of such two (2) year period was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period.
<PAGE>
10. Adjustments on Changes in Capitalization. The aggregate number of Shares and
class of shares as to which Options may be granted hereunder, the number and
class or classes of shares covered by each outstanding Option and the Option
Price thereof, the Restricted Stock outstanding and the amount of uncommitted
Plan Shares remaining subject to the Plan shall be appropriately adjusted in the
event of a stock dividend, stock split, recapitalization or other change in the
number or class of issued and outstanding equity securities of the Company
resulting from a subdivision or consolidation of the Common Stock and/or, if
appropriate, other outstanding equity securities or a recapitalization or other
capital adjustment (not including the issuance of Common Stock on the conversion
of other securities of the Company which are convertible into Common Stock)
affecting the Common Stock which is effected without receipt of consideration by
the Company. The Committee shall have authority to determine the adjustments to
be made under this Section, and any such determination by the Committee shall be
final, binding and conclusive. Fractional shares resulting from any adjustment
pursuant to this Section 10 may be settled in cash or otherwise as the Committee
shall determine.
11. Amendment of the Plan. The Board of Directors may amend the Plan from time
to time in such manner as it may deem advisable. Nevertheless, the Board of
Directors of the Company may not amend the Plan to (i) change the class of
individuals eligible to receive an ISO, (ii) permit the Board to reduce the
Option Price of outstanding Options other than for adjustments in capitalization
as contemplated by Section 10, (iii) increase the maximum number of Plan Shares,
or (iv) make any other change or amendments to which shareholder approval is
required in order to satisfy the conditions set forth in Rule 16b-3 without
obtaining approval of such amendments, within twelve months before or after such
action, by vote of a majority of the votes cast at a duly called meeting of the
shareholders at which a quorum representing a majority of all outstanding voting
stock of the Company is, either in person or by proxy, present and voting on the
matter. In the future the Plan may be amended by the Board of Directors to
provide for the granting of Options to Non-employee Directors pursuant to a
formula which satisfies the requirements of Rule 16b-3(c)(2)(ii) of the
Securities Exchange Act of 1934. No amendment to the Plan shall adversely affect
any outstanding Option or Restricted Stock, however, without the consent of the
Optionee or the holder of Restricted Stock, as the case may be.
12. No Commitment to Retain. The grant of an Award pursuant to the Plan shall
not be construed to imply or to constitute evidence of any agreement, express or
implied, on the part of the Company or any Affiliate to retain the Participant
in the employ of the Company or an Affiliate and/or as a member of the Company's
Board of Directors or in any other capacity.
13. Designation of Beneficiary. Each Participant may designate a beneficiary or
beneficiaries (on a form supplied by the Committee) to exercise his Options
and/or receive any payments as may be due under the Plan to such beneficiary or
beneficiaries in the event of the Participant's death, and may change such
designation from time to time and at any time prior to the death of such
Participant.
14. Withholding of Taxes. Whenever the Company proposes or is required to
deliver Restricted Stock certificates or deliver or transfer shares in
connection with the exercise of an Option, or whenever the Company is otherwise
obligated to withhold taxes in connection with an Option or Restricted Stock,
the Company shall have the right to (a) require the recipient to remit or
otherwise make available to the Company an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to delivery or
transfer of any certificate or certificates for such Restricted Stock or Shares
or (b) take whatever other action it deems necessary to protect its interests
with respect to tax liabilities. The Company's obligation to make any delivery
of certificates in connection with Restricted Stock or make any delivery or
transfer of Shares will be conditioned on the recipient's compliance, to the
Company's satisfaction, with any withholding requirement.
<PAGE>
15. Interpretation.
(a) The Plan is intended to enable transactions under the Plan with
respect to directors and officers (within the meaning of Section 16(a) under the
Securities Exchange Act of 1934, as amended) to satisfy the conditions of Rule
16b-3. To the extent that any provision of the Plan would cause a conflict with
such conditions or would cause the administration of the Plan as provided in
Section 3 to fail to satisfy the conditions of Rule 16b-3, such provision shall
be deemed null and void to the extent permitted by applicable law. This section
shall not be applicable if no class of the Company's equity securities is then
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
(b) The Plan is intended to satisfy the applicable requirements of Code
Section 162(m) so that the tax deduction for the Company for remuneration in
respect of this Plan for services performed by employees within the purview of
Code Section 162(m) is not disallowed in whole or in part by the operation of
such Code Section. If any provision of this Plan or of any Award Document would
otherwise frustrate or conflict with the intent expressed in this Section 15(b),
that provision to the extent possible shall be interpreted and deemed amended so
as to avoid such conflict. To the extent there remains an irreconcilable
conflict with such intent, such provision shall be deemed null and void as
applicable to such employees.
<PAGE>
RIGHT MANAGEMENT CONSULTANTS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Shareholders -- May 9, 1996
The undersigned shareholder of RIGHT MANAGEMENT CONSULTANTS, INC. (the
"Company"), revoking all previous proxies, hereby constitutes and appoints
RICHARD J. PINOLA and JOSEPH T. SMITH, and each of them acting as
individually, as the attorney and proxy of the undersigned, with full power
of substitution, for and in the name and stead of the undersigned, to attend
the Annual Meeting of Shareholders of the Company to be held on Thursday, May
9, 1996, at 10:00 A.M. at the Company's headquarters, 1818 Market Street,
33rd Floor, Philadelphia, Pennsylvania, and to vote all shares of Common
Stock of the Company which the undersigned would be entitled to vote if
personally present at such Annual Meeting, and at any adjournment or
postponement thereof; provided that said proxies are authorized and directed
to vote as indicated with respect to the following matters:
1. [ ] FOR all nominees for director named below.
[ ] WITHHOLD AUTHORITY to vote for all nominees for director named below.
[ ] FOR all of the nominees for director named below, except WITHHOLD
AUTHORITY to vote for the nominee(s) whose name(s) is (are) lined
through.
Nominees: FRANK P. LOUCHHEIM, RICHARD J. PINOLA, JOSEPH T. SMITH, LARRY
A. EVANS, NANCY N. GEFFNER, JOSEPH E. JANNOTTA, JOHN R. BOURBEAU,
RAYMOND B. LANGTON, REBECCA J. MADDOX, CATHERINE Y. SELLECK and MARTI D.
SMYE (Substitute nominee for Mr. Jannotta subject to consummation of the
acquisition of People Tech Consulting, Inc.)
2. [ ] FOR the amendment of the Right Management Consultants, Inc. 1993
Stock Incentive Plan.
[ ] AGAINST
[ ] ABSTAIN
3. [ ] FOR adoption of the Right Management Consultants, Inc. 1996
Employee Stock Purchase Plan.
[ ] AGAINST
[ ] ABSTAIN
4. [ ] FOR the ratification of the Selection by the Board of Directors of
Arthur Andersen LLP, as the Company's independent public
[ ] AGAINST accountants for the current fiscal year.
[ ] ABSTAIN
<PAGE>
5. In their discretion, the proxies will vote on such other business as
may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholders. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE NOMINEES FOR DIRECTOR AND "FOR" PROPOSALS 2, 3 and 4 REFERRED TO
IN THIS PROXY. This proxy also delegates discretionary authority to vote with
respect to any other business which may properly come before the meeting or any
adjournment or postponement thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE ANNUAL REPORT, NOTICE OF
SAID MEETING AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The
undersigned also hereby ratifies all that the said attorneys and proxies may
do by virtue hereof and hereby confirms that this proxy shall be valid and
may be voted whether or not the shareholder's name is signed as set forth
below or a seal is affixed or the description, authority or capacity of the
person signing is given or other defect of signature exists.
NOTE: PLEASE MARK, DATE AND SIGN THIS
PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE. Please sign this proxy exactly
as name appears in address below. If
shares are registered in more than one
name, all owners should sign. If signing
in a fiduciary or representative
capacity, such as attorney-in-fact,
executor, administrator, trustee or
guardian, please give full title and
attach evidence of authority.
Corporations please sign with full
corporate name by a duly authorized
officer and affix the corporate seal.
Dated:_________________________ , 1996
________________________________(SEAL)
(Shareholder's Signature)
________________________________(SEAL)
(Shareholder's Signature)
