SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a party other than the Registrant o
Check the appropriate box:
o Preliminary proxy statement
x Definitive proxy statement
o Soliciting material pursuant to Rule 14a-1(c) or Rule 14a-2
Winston Resources, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
o $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2).
o $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
o 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:
<PAGE>
(2) Aggregate number of securities to which transactions
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11:
(4) Proposed maximum aggregate value of transaction:
o Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
WINSTON RESOURCES, INC.
535 Fifth Avenue
New York, New York 10017
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 19, 1999
---------------------
The Annual Meeting of Stockholders of Winston Resources, Inc. (the
"Company") will be held at The Bank of New York, 51 West 51st Street, New York,
New York on Wednesday, May 19, 1999, at 9:00 a.m. local time for the following
purposes:
1. To elect three Class III directors to hold office for a term of three
years, until their successors have been elected and qualified.
2. To consider and act upon a proposal to ratify the selection of Ernst
& Young LLP as the Company's independent auditors for the current fiscal year.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 9, 1999
are entitled to notice of and to vote at the Annual Meeting. A list of such
stockholders will be available at the Annual Meeting for examination by any
stockholder. During the ten days prior to the Annual Meeting, the list may be
inspected by any stockholder, for any purpose germane to the Annual Meeting,
during usual business hours at the offices of Company counsel, Newman Tannenbaum
Helpern Syracuse & Hirschtritt LLP, 900 Third Avenue, New York, New York 10022.
Your attention is drawn to the accompanying Proxy Statement.
By Order of the Board of Directors,
Eric Kugler
Secretary
April 26, 1999
New York, New York
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON
ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE.
<PAGE>
WINSTON RESOURCES, INC.
535 Fifth Avenue
New York, New York 10017
_____________________
PROXY STATEMENT
_____________________
This Proxy Statement and the accompanying proxy card are being mailed to
holders of shares of common stock, par value $.01 per share (the "Common
Stock"), of Winston Resources, Inc., a Delaware corporation (the "Company"),
commencing on or about April 27, 1999, in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board") for use at the
1999 Annual Meeting of Stockholders (the "Meeting") to be held on Wednesday, May
19, 1999 at 9:00 a.m. local time at The Bank of New York, 51 West 51st Street,
New York, New York.
Proxies in the form enclosed are solicited by the Board for use at the
Meeting. All properly executed proxies received prior to or at the Meeting will
be voted. If a proxy specifies how it is to be voted, it will be so voted. If no
specification is made, it will be voted (1) for the election of management's
nominees as directors, (2) for ratification of the selection of Ernst & Young
LLP as the Company's independent auditors for the current fiscal year, and (3)
if other matters properly come before the Meeting, in the discretion of either
of the persons named in the proxy. The proxy may be revoked by a properly
executed writing of the stockholder delivered to the Company's Chairman of the
Board or Secretary before the Meeting, or by the stockholder at the Meeting
before it is voted.
The Board has fixed the close of business on April 9, 1999 as the record
date for determining the stockholders of the Company entitled to notice of and
to vote at the Meeting. On that date, there were 3,228,521 shares of Common
Stock outstanding and entitled to vote. Each such share is entitled to one vote
on each matter submitted to a vote at the Meeting. Stockholders are not entitled
to vote cumulatively in the election of directors.
As required under Section 231 of the Delaware General Corporation Law
(the "DGCL"), the Company will, in advance of the Meeting, appoint one or more
Inspectors of Election to conduct the vote of the Meeting. The Company may
designate one or more persons as alternate Inspectors of Election to replace any
Inspector of Election who fails to act. If no Inspector or alternate Inspector
is able to act at the Meeting, the person presiding at the Meeting will appoint
one or more Inspectors of Election. Each Inspector of Election before entering
the discharge of his duties shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality. The Inspectors of Election
will (i) ascertain the number of shares of Common Stock outstanding as of the
record date, (ii) determine the number of shares of Common Stock present or
represented by proxy at the Meeting and the validity of the proxies and ballots,
(iii) count all votes and ballots, and (iv) certify the
1
<PAGE>
determination of the number of shares of Common Stock present in person or
represented by proxy at the Meeting and the count of all votes and ballots.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting, present in person or
represented by proxy, shall constitute a quorum at the Meeting. Under Section
216 of the DGCL, any stockholder who abstains from voting on any particular
matter described herein will be counted for purposes of determining a quorum.
For purposes of voting on the matters described herein, the affirmative vote of
(i) a plurality of the shares of Common Stock present or represented at the
Meeting is required to elect management's nominees as directors; and (ii) a
majority of the shares present or represented at the Meeting is required to
approve the selection by the Board of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year.
EXECUTIVE OFFICERS
The executive officers of the Company are identified in the table below.
Each executive officer of the Company serves at the pleasure of the Board of
Directors.
<TABLE>
<S> <C> <C>
Year Became an
Name and Age Position Executive Officer
Seymour Kugler...................... Chairman, President 1967
62............................... and Chief Executive Officer
Jesse Ulezalka...................... Chief Financial Officer 1995
50
Alan E. Wolf........................ Vice President 1974
54...............................
Todd Kugler......................... Vice President 1995
33
Gregg S. Kugler..................... Vice President 1993
36
David Silver........................ Vice President 1992
68
Eric Kugler......................... Vice President and Secretary 1998
39
</TABLE>
2
<PAGE>
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation, as amended (the "Restated
Certificate of Incorporation"), and By-Laws, as amended (the "By-Laws"), of the
Company provide that the number of directors of the Company shall be fixed from
time to time by the Board of Directors but shall not be less than three
classified into three approximately equal classes. The Board of Directors has
fixed the number of directors constituting the entire Board of Directors at
nine, consisting of three Classes, each consisting of three directors. The only
current Class I directors are Norton Sperling and Todd Kugler, who hold office
until the 2000 Annual Meeting of Stockholders. The current Class II directors
are Martin Wolfson, Martin A. Fischer and Martin J. Simon, who hold office until
the 2001 Annual Meeting of Stockholders. The current Class III directors are
Seymour Kugler, Alan E. Wolf and Gregg S. Kugler, who hold office until the 1999
Annual Meeting of Stockholders. There is currently one unfilled directorship on
the Board in Class I, which directorship may only be filled by action of the
Stockholders.
The Board of Directors has selected, and will cause to be nominated at
the Meeting, three persons for election as Class III directors, to hold office
until the 2002 Annual Meeting and until their successors shall have been duly
elected and qualified. Assuming that a quorum of stockholders is present at the
Meeting in person or by proxy, such directors will be elected by a plurality of
the votes cast at the Meeting.
The persons named on the enclosed proxy card or their substitutes will
vote all of the shares that they represent for the nominees listed below unless
instructed otherwise on the proxy card. If such nominees should be unavailable
to stand for election, the persons named on the proxy card or their substitutes
may vote for a substitute or substitutes designated by the Board of Directors.
At the date of this Proxy Statement, the Board of Directors has no reason to
believe that any nominee listed below will be unable to stand for election.
Set forth below is certain information concerning the directors of the
Company, including the incumbent directors nominated by the Board of Directors
for reelection at the Meeting. All nominees for election at the Meeting were
previously elected by the Company's stockholders as directors of the Company.
Nominees for Election
Name and Age Director Since
Class III
Seymour Kugler, 62 ............................................. 1967
Alan E. Wolf, 54 ............................................... 1974
3
<PAGE>
Gregg S. Kugler, 36 ........................................... 1992
Continuing Directors
Class I
Norton Sperling, 64 ...............................................1998
Todd Kugler, 33 ...................................................1998
Class II
Martin Wolfson, 62 ................................................1987
Martin A. Fischer, 62 ......................................... 1987
Martin J. Simon, 79 ........................................... 1992
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES FOR
ELECTION AS DIRECTORS.
BIOGRAPHICAL INFORMATION
Certain information about the executive officers and the directors of
the Company is set forth below. This information has been furnished to the
Company by the individuals named.
Mr. Seymour Kugler, who is generally known to employees of the Company
as Sy Kaye, founded the Company in 1967 and has been its Chief Executive Officer
since that time.
Mr. Wolf has been a Vice President of the Company since September 17,
1987 and has been an Executive Vice President of the Company's permanent
placement division since 1974.
Mr. Gregg Kugler (who is known generally to clients and employees of the
Company as Gregg Kaye) has been employed by the Company since 1983. He became a
Vice President of the Company on August 12, 1993 and is President of the
Permanent Placement Division. Mr. Kugler is Sy Kaye's son.
Mr. Wolfson, a certified public accountant, is Senior Vice President,
Chief Financial Officer and a director of Concord Fabrics, Inc., New York, New
York, which develops, designs, styles and produces woven and knitted fabrics for
sale to clothing manufacturers and fabric retailers. He has been employed by
that corporation since 1966, has been an officer and a director since 1973 and
was first elected to his present offices in 1981.
Mr. Fischer is a member of the Board of Trustees of Brooklyn Law School.
He is an attorney and is Vice Chairman and a member of the Board of Directors of
the Berkshire Bank, New York. Mr. Fischer was counsel to the law firm of Warshaw
Burstein Cohen Schlesinger & Kuh from 1986 to 1997.
4
<PAGE>
Mr. Simon served as the Chairman of the Board and President of First
Central Financial Corporation and First Central Insurance Company from August
1985 and August 1980, respectively, through February, 1997, at which time he
resigned from such positions. Mr. Simon is counsel to the law firm of Dienst &
Serrins, LLP and also serves as a consultant to DBP International, an
international freight forwarding operation and to Simon Agency NY, Inc., a
managing general insurance agency. Mr. Simon also serves as Secretary of the
Board of Trustees of Brookdale University Hospital and Medical Center.
Mr. Sperling was President of Finity Apparel Group from 1997 to 1998,
when he retired. He was President and Vice Chairman of Norton McNaughton from
1981 to 1997. Finity and Norton McNaughton are makers of fine moderately priced
women's sportswear, dresses and casual knitwear. Mr. Sperling was a founder of
Norton McNaughton.
Mr. Silver has been Vice President - Administration/Human Resources of
the Company since November 1987. Mr. Silver also served as Secretary of the
Company from December 1991 until May, 1998.
Mr. Ulezalka has been the Chief Financial Officer of the Company since
August 4, 1995. Prior thereto he was CFO of Consultants for Architects, Inc.
from April 1995 - August 1995, a financial consultant from April 1994 - April
1995, CFO, Vice President - Finance of ECCO Staffing Services, Inc. from March
1992 - April 1994.
Mr. Todd Kugler (who is known generally to clients and employees of the
Company as Todd Kaye) has been employed by the Company since 1988. He became a
Vice President of the Company and its temporary staffing division on November
23, 1995. Mr. Kugler is Sy Kaye's son.
Mr. Eric Kugler has been employed by the Company since April, 1994. He
became Vice President of Corporate Development in April, 1994 and became
Secretary of the Company in May, 1998. Mr. Kugler is Sy Kaye's son.
FUNCTIONS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
Under the DGCL, the business and affairs of the Company are managed
under the direction of the Board. The Board establishes fundamental corporate
policies and authorizes various types of significant transactions, but is not
involved in day-to-day operational decisions. During 1998, the Board held four
meetings. Each of the incumbent directors attended all meetings of the Board
held in 1998 other than Mr. Sperling, who attended all meetings held following
his election to the Board in May, 1998. The Board has appointed from its members
an Executive Committee, an Audit Committee, a Compensation Committee, an Option
Committee and an Alternate Option Committee with the areas of responsibility
described below.
5
<PAGE>
The Executive Committee consists of Seymour Kugler, Gregg Kugler and
Alan E. Wolf. It is empowered to exercise all of the authority of the Board,
subject to certain limitations specified in the By-Laws, during the intervals
between meetings of the Board. It is contemplated that meetings of the Executive
Committee will be convened only in extraordinary circumstances when it is not
practicable to call a meeting of the full Board. The Executive Committee did not
meet during 1998.
The Audit Committee consists of Martin A. Fischer, Martin Wolfson and
Martin J. Simon. It is responsible for overseeing and reporting to the Board of
Directors concerning the policies and practices of the Company and its
subsidiaries with respect to accounting, financial reporting, and internal
auditing and financial controls. It also is responsible for maintaining a direct
exchange of information between the Board of Directors and the Company's
independent auditors. The Audit Committee met once during 1998.
The Compensation Committee consists of Martin A. Fischer, Martin J.
Simon and Martin Wolfson. It must approve the salary of each officer of the
Company and its subsidiaries which exceeds a specified amount and is responsible
for reviewing, and making recommendations to the management of the Company
concerning the general policies and practices of the Company and its
subsidiaries with respect to compensation and employee benefits. The
Compensation Committee did not meet during 1998.
The Option Committee consists of Martin A. Fischer, Martin Wolfson and
Martin J. Simon. It administers the Company's 1996 Stock Plan. The Alternate
Option Committee, which administers grants to outside directors under the
Company's 1990 Incentive Program consists of Seymour Kugler, Alan E. Wolf and
Gregg Kugler. Neither the Option Committee nor the Alternate Option Committee
met during 1998.
The Board of Directors has not appointed a nominating committee.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock with respect to the Company's
directors, the Company's "named executive officers" within the meaning of Item
402(a)(2) of Regulation S-K of the Securities Act of 1933, as amended (the
"Act") and by all of the Company's directors and executive officers as a group,
as reported to the Company as of April 9, 1999. Beneficial ownership has been
determined for purposes of the following table in accordance, with Rule 13d-3 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), under
which a person is deemed to be the beneficial owner of securities if he or she
has or shares voting power or investment power in respect of such securities or
has the right to acquire beneficial ownership within 60 days.
6
<PAGE>
<TABLE>
<S> <C> <C>
Percentage of Outstanding
Name and Address Number of Shares (1) Shares
Directors and Officers
Seymour Kugler (2)(3)
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017........................... 1,390,456 41.16%
Gregg Kugler (3)(4)
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017........................... 206,729 6.23%
Todd Kugler(3)(5)
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017 180,691 5.45%
Alan E. Wolf (3)(6)
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017........................... 138,291 4.25%
David Silver (3)(7)
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017........................... 49,900 1.54%
Eric Kugler (3)(8)
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017........................... 102,043 3.12%
Martin Wolfson (9)
c/o Concord Fabrics Inc.
1359 Broadway
New York, New York 10018........................... 4,667 *
Martin A. Fischer (10)
West Center Associates
30-00 47 Avenue
Long Island City, New York 11101................... 9,667 *
Martin J. Simon (11)
360 Merrick Road
Lynbrook, New York 11563 .......................... 10,667 *
7
<PAGE>
Norton W. Sperling 0 *
1025 Seawane Drive
Hewlett Harbor, New York 11557
All directors and executive officers as 2,093,111 57.27%
a group (10 persons) (12)..........................
Other Beneficial Owners
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202 ........................ 301,600 9.34%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109 ....................... 288,900 8.94%
</TABLE>
* Represents less than 1% of outstanding shares.
(1) All shares are beneficially owned and, unless otherwise stated, the
sole voting power and investment power is held by the persons named.
(2) The amount set forth above includes 145,001 shares currently issuable
upon the exercise of stock options.
(3) For the year ended December 31, 1998 such person was a "Named
Executive Officer" of the Company within the meaning of Item 402(a)(3)
of Regulation S-K of the Act.
(4) The amount set forth above includes 90,000 shares currently issuable
upon the exercise of stock options. Mr. Kugler disclaims beneficial
ownership of 36,000 shares owned by his children.
(5) The amount set forth above include 85,000 shares currently issuable
upon the exercise of stock options issued to Mr. Kugler and his wife.
Mr. Kugler disclaims beneficial ownership of 9,500 shares owned by his
child.
(6) The amount set forth above includes 25,334 shares currently issuable
upon the exercise of stock options.
(7) The amount set forth includes 16,800 shares currently issuable upon
the exercise of stock options.
(8) The amount set forth includes 40,000 Shares currently issuable upon
the exercise of stock options.
(9) The amount set forth includes 4,667 shares currently issuable upon the
exercise of stock options.
(10) The amount set forth above includes 2,687 shares currently issuable
upon the exercise of stock options.
(11) The amount set forth above includes 6,667 shares currently issuable
upon the exercise of stock options.
(12) The amount set forth above includes 425,656 shares currently issuable
upon the exercise of stock options.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table sets forth certain information
concerning the compensation of the Company's "named executive officers" within
the meaning of Item 402(a)(3) of Regulation S-K of the Act, as amended, for each
of the three fiscal years during the period ending December 31, 1998.
<TABLE>
<S> <C> <C> <C> <C> <C>
Long Term
Annual Compensation All Other
Compensation(1) Awards Compensation(3)
Options to Purchase
Salary Bonus Shares(2)
Name and Principal Position Year ($) ($) (#) ($)
Seymour Kugler.................. Fiscal 1998 458,493 431,453 0 7,323
Chairman of the Board and Fiscal 1997 444,741 345,226 20,000 7,300
Chief Executive Officer Fiscal 1996 433,266 134,209 100,000 7,300
Alan E. Wolf.................... Fiscal 1998 190,000 0 0 3,079
Vice President, Executive Fiscal 1997 190,000 10,233 0 2,900
Vice President of Permanent Fiscal 1996 190,000 40,613 10,000 2,900
Placement Division
Gregg S. Kugler................. Fiscal 1998 249,038 142,407 0 3,942
Vice President Fiscal 1997 224,539 116,523 20,000 2,500
President of Permanent Placement Fiscal 1996 199,317 76,691 50,000 2,500
Division
Todd Kugler..................... Fiscal 1998 249,038 142,407 0 2,462
Vice President Fiscal 1997 196,269 116,523 20,000 2,300
Vice President of Temporary Fiscal 1996 146,865 76,691 40,000 2,300
Staffing Division
Eric Kugler..................... Fiscal 1998 125,788 71,200 0 1,307
Vice President & Secretary Fiscal 1997 114,250 58,262 20,000 600
Fiscal 1996 89,250 38,260 30,000 400
</TABLE>
(1) The aggregate amount of perquisites and other personal benefits for
each of the "named executive officers" did not equal or exceed the
lesser of either $50,000 or 10% of the total of such individual's base
salary and bonus, as reported herein for the last fiscal year, and is
not reflected in the table.
(2) Stock options are granted under the terms and provisions of the
Company's 1996 Stock Plan. For a description of the stock options
issued in fiscal 1998, see "Option Grants in Last Fiscal Year."
(3) Amounts reported under this column reflect premiums paid by the
Company on behalf of the "named executive officers" for supplemental
long-term disability coverage in excess of the coverage provided to
employees generally.
9
<PAGE>
Option Grants In Last Fiscal Year
No stock options were granted by the Company during fiscal year 1998.
Aggregated Option Exercises and Fiscal Year-End Option Values
The following table provides certain summary information concerning
stock option exercises during the fiscal year ended December 31, 1998, by the
"named executive officers" within the meaning of Item 402(a)(3) of Regulation
S-K under the Act and the value of unexercised stock options held by the "named
executive officers" as of December 31, 1998.
<TABLE>
<S> <C> <C> <C> <C>
Number of Value of Unexercised
Shares Number of Unexercised "In the Money"
Acquired Value Options at Fiscal Options at Fiscal
on Realized Year End(1) Year End(2)
Name Exercise ($) (#) ($)
Exercisable Unexercisable Exercisable Unexercisable
Seymour Kugler........ 129,336 46,664 185,363 46,475
Alan E. Wolf ......... 23,668 3,332 45,127 4,998
Gregg S. Kugler....... 80,000 30,000 142,292 28,333
Todd Kugler........... 53,334 26,666 77,502 19,998
Eric Kugler........... 36,667 23,333 44,585 11,666
</TABLE>
___________________________________
(1) Represents the aggregate number of stock options held as of December
31, 1998 which can and cannot be exercised pursuant to the terms and
provisions of the stock options.
(2) Values were calculated by multiplying the closing market price of the
Common Stock as reported on the American Stock Exchange on December
31, 1998 ($3.625 per share), by the respective number of shares and
subtracting the exercise price per share, without any adjustment for
any termination or vesting contingencies.
Executive Employment Agreement
Mr. Seymour Kugler entered into a five-year employment agreement with
the Company, effective as of May 1, 1987, which was amended on March 2, 1992 and
January 1, 1997 (the "Employment Agreement"), pursuant to which he serves as
Chairman of the Board of Directors and the Chief Executive Officer of the
Company. Under the terms of the Amendment to the Employment Agreement dated
January 1, 1997, Mr. Kugler's term of employment was extended for an additional
five (5) year period ending on August 14, 2002. The Employment Agreement
provides for the payment to Mr. Kugler of (i) a base salary at the annual rate
of $445,638 per annum, subject to annual cost of living adjustments and
increases equal to the greater of (a) three percent (3%) per annum, compounded
or (b) an amount which is determined by multiplying the base salary by the
percentage increase, if
10
<PAGE>
any, of the Consumer Price Index for all Urban Workers (New York-Northeastern
New Jersey) (1967 = 100), issued by the Bureau of Labor Statistics of the United
States Department of Labor (the "Index") for such subsequent year over the Index
for the fiscal year ended December 31, 1998 and (ii) incentive compensation with
respect to each fiscal year during his term of employment of an amount equal to
the aggregate of the following percentages of Pre-Tax Income (as defined in the
Employment Agreement): (a) 6% of Pre- Tax Income up to $1,000,000; (b) 10% of
Pre-Tax Income over $1,000,000 up to $2,000,000; (c) 20% of Pre-Tax Income over
$2,000,000 up to $3,200,000; and (d) 6% of Pre-Tax Income over $3,200,000,
without limitation. In the event of the termination of Mr. Kugler's employment
by reason of his death or disability, the Company will continue to pay his
salary, including the Incentive Compensation, to him or his beneficiary or
estate, for a period of one year thereafter.
In the event of the Company's termination of Mr. Kugler's employment for
any reason other than for death, disability or for cause, or in the event Mr.
Kugler resigns from his employment for Good Reason (as defined in the Employment
Agreement), Mr. Kugler is entitled to receive (i) his base salary, fringe
benefits and incentive compensation, if any, through the date of termination,
(ii) a lump sum severance payment equal to 2.99 times Mr. Kugler's "base amount"
as such term is defined in Section 28OG of the Internal Revenue Code and (iii)
continued coverage for the term of the Employment Agreement under the Company's
health and insurance plans applicable to Mr. Kugler immediately prior to such
termination or resignation or, if any such plan does not permit continued
coverage of Mr. Kugler, the Company shall arrange to provide a benefit
substantially similar to and no less favorable than the benefits he was entitled
to under such plan.
Compensation of Directors
Directors who are officers or employees of the Company or any of its
subsidiaries do not receive any compensation, other than their regular salaries,
for attending meetings of the Board of Directors or any committee thereof. See
"Summary Compensation Table." Other members of the Board (the "Non-Employee
Directors") receive a retainer of $2,000 per year payable quarterly in arrears,
plus a fee of $500 for each meeting of the Board and of any committee thereof
attended, but only for committee meetings that take place on days other than the
day of a Board meeting.
SECTION 16(a) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock of the
Company to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the exchange on which the Common Stock is
listed for trading. Officers, directors and more
11
<PAGE>
than ten percent stockholders are required by regulations promulgated under the
Exchange Act to furnish the Company with copies of all Section 16(a) reports
filed.
The Company has reviewed copies of the Section 16(a) reports filed for
the year ended December 31, 1998 and written representations from certain
reporting persons that no delinquent Form 3 holdings or Form 4 transactions were
required to be reported on Form 5 for such persons for the year ended December
31, 1998. Based solely on this review, the Company believes that all reporting
requirements applicable to its officers, directors and more than ten percent
stockholders were complied with for the year ended December 31, 1998.
PERFORMANCE GRAPH
The following graph tracks an assumed investment of $100 on December 31,
1993 in the Common Stock of the Company, The American Stock Exchange Market
Value Index and a peer group comprised of ten companies whose principal
operations are similar to those of the Company, assuming full reinvestment of
dividends and no payment of brokerage or other commissions or fees. Past
performance is not necessarily indicative of future performance.
12
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG WINSTON RESOURCES, INC., THE AMERICAN STOCK
EXCHANGE MARKET VALUE INDEX AND A PEER GROUP
Cumulative Total Return
_________________________________
12/93 12/94 12/95 12/96 12/97 12/98
WINSTON RESOURCES, INC. 100 77 68 177 290 187
PEER GROUP 100 126 184 218 285 266
AMEX MARKET VALUE 100 91 115 122 148 151
The peer group consists of Barrett Business Services, Inc., Employee
Solutions, Inc., Interim Services, Inc., Norrell Corp., Olsten Corp., On
Assignment, Inc., Robert Half International, Inc., Romac International, Inc. and
SOS Staffing Services, Inc.
13
<PAGE>
Report of Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors of the Company (the
"Committee") is responsible for setting and administering the compensation
policies which govern annual compensation, long-term compensation, and stock
ownership programs for the Company's executive officers as well as the other
employees of the Company and its subsidiaries. The Committee, during fiscal
1998, consisted of three outside directors, Martin A. Fischer, Martin J. Simon
and Martin Wolfson.
The policies and decisions of the committee are designed to achieve the
following goals:
o Reflect a pay-for-performance relationship where a portion of total
compensation is at risk, through bonuses and stock options.
o Attract and retain key management personnel critical to the Company's
long-term success.
The Committee reviews and evaluates information from independent sources
to determine senior executive officers of the Company, by comparison to
compensation paid by competing companies, companies of similar size, and the
Company's performance, taking into account activities that have special value to
the Company but have no immediate impact on operating results and the increased
level of revenues and income of the Company.
The committee functioning as the Company's Stock Option Committee, also
monitors the Company's 1996 Stock Plan (the "Plan") and, prior to 1996,
monitored the Company's 1990 Incentive Program, pursuant to which stock options
were granted to eligible employees. The Committee granted no new options to
employees during 1998. As of March 31, 1999, options to purchase an aggregate of
400,000 shares of Common Stock have been granted under the Plan. The Committee
is of the opinion that the Plan is an extremely effective means of attracting
and retaining key executives and employees of the Company and its subsidiaries
and motivating them to improve the Company's financial performance.
Section 162(m) of the Internal Revenue Code (the "Code"), enacted in
1993 and effective for taxable years beginning after January 1, 1994, generally
limits to $1 million per individual per year the federal income tax deduction
for compensation paid by a publicly-held company to the Company's chief
executive officer and its other four highest paid executive officers.
Compensation that qualifies as performance-based compensation for purposes of
Section 162(m) is not subject to the $1 million deduction limitation. The
Committee currently does not anticipate that any executive officer will be paid
compensation from the Company in excess of $1 million in any year (including
amounts that do not qualify as performance-based compensation under the Code),
and accordingly, the Committee anticipates that all amounts paid as executive
compensation will be deductible by the Company for federal income tax purposes.
14
<PAGE>
Summary of Chief Executive Officer Compensation
During the fiscal year ended December 31, 1998, Mr. Seymour Kugler
received $458,493 in salary and $431,453 in bonuses. Mr. Kugler's total
compensation during the 1998 fiscal year, and the terms of his employment
agreement, which includes base salary adjusted annually plus incentive bonuses,
was designed to reward Mr. Kugler for his diligent efforts overseeing the
Company's development of new markets, upgrading of systems, introduction of a
range of new programs and pursuit of major new customers, the effect of which
has been continued record operating results for the Company.
COMPENSATION COMMITTEE
Martin A. Fischer
Martin J. Simon
Martin Wolfson
RATIFICATION OF SELECTION
OF THE COMPANY'S INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1999. Although it
is not required to do so, the Board is submitting its selection of Ernst & Young
LLP for ratification at the Meeting in order to ascertain the views of the
stockholders regarding such selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
SOLICITATION EXPENSES
The costs of this solicitation will be paid by the Company. Proxies will
be solicited principally by mail, but some telephone, telegraph or personal
solicitations of stockholders may be made. Officers or employees of the Company
who make or assist in such solicitations will receive no additional compensation
for doing so. The Company will request brokers, banks and other custodians and
fiduciaries holding shares in their names or in the names of nominees to forward
copies of the proxy solicitation materials to the beneficial owners of the
shares, and the Company will reimburse them for their reasonable expenses
incurred in doing so.
15
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the Company's next Annual
Meeting of Stockholders must be received by the Secretary of the Company at its
principal executive offices for inclusion in its proxy statement and form of
proxy relating to that meeting no later than December 31, 1999.
ANNUAL REPORT
Concurrently with the mailing of these Proxy Materials, the Company is
mailing a copy of its Annual Report to Stockholders for the fiscal year ended
December 31, 1998. Such Annual Report is not to be regarded as proxy
solicitation material.
Upon written request by a Stockholder entitled to vote at the 1998
Annual Meeting, the Company will furnish that person without charge with a copy
of the Form 10-K Annual Report for 1998 which is filed with the Securities and
Exchange Commission, including the financial statements and schedules thereto.
If the person requesting the report was not a Stockholder of record on April 9,
1999, the request must contain a good faith representation that the person
making the request was a beneficial owner of the Common Stock of the Company at
the close of business on such date. Requests should be addressed to Winston
Resources, Inc., 535 Fifth Avenue, New York, New York 10017 (Attn: Eric Kugler).
OTHER BUSINESS
Management does not know of any other matters to be brought before the
Meeting except those set forth in the notice thereof. If other business is
properly presented for consideration at the Meeting, it is intended that the
Proxies will be voted by the persons named therein in accordance with their
judgment on such matters.
By Order of the Board of Directors
ERIC KUGLER
Secretary
Dated: April 26, 1999
16
<PAGE>
WINSTON RESOURCES, INC.
535 Fifth Avenue, New York, New York 10017
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD MAY 19, 1999
The undersigned hereby appoints SEYMOUR KUGLER and ERIC KUGLER as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of Winston Resources, Inc., held of record by the undersigned on April 9,
1999 at the Annual Meeting of Stockholders to be held on May 19, 1999, or any
adjournment thereof.
1. The election of all nominees for directors listed below.
|_| FOR all nominees (except as marked to the contrary)
|_| WITHHOLD AUTHORITY TO VOTE
Instruction: To withhold authority to vote for any particular nominee, strike
a line through that nominee's name in the list below.
Seymour Kugler, Alan E. Wolf, Gregg S. Kugler
2. Ratification of the selection of Ernst & Young LLP as the Company's
independent auditors.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion upon any other matters which may properly come
before such meeting.
This Proxy will be voted as specified above.
This Proxy confers authority to vote "FOR" each proposition listed above
unless otherwise indicated.
(continued on reverse side)
<PAGE>
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
DATE ______________, 1999
---------------------------------
Signature
-----------------------------------
Signature of joint holder, if any
Please sign exactly as your name appears to the left. If
joint owners, both should sign. Executors,
administrators, trustees, etc. should sign and give full
titles as such. If the signer is a corporation or
partnership, please sign full corporate or partnership
name by a duly authorized officer or partner.
