<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TEAM AMERICA CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
<TABLE>
<S> <C> <C>
1) Title of each class of securities to which transaction applies: .
---------------------------------
2) Aggregate number of securities to which transaction applies: .
------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): .
--------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction: .
------------------------------------------------
5) Total fee paid: .
---------------------------------------------------------------------------------
[ ] 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: .
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</TABLE>
<PAGE> 2
TEAM AMERICA CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 1997
Notice is hereby given that the Annual Meeting of Shareholders of TEAM
America Corporation will be held at The Westin Hotel Columbus, located at 310
South High Street, Columbus, Ohio, on Wednesday, June 11, 1997, at 10:00 a.m.
(local time), for the following purposes:
1. to elect three Directors, each to serve until the 1999 Annual
Meeting and until their successors are duly elected and
qualified; and
2. to transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on May 9, 1997
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors.
RICHARD C. SCHILG
Chairman of the Board
of Directors, President and
Chief Executive Officer
May 12, 1997
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE
URGED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<PAGE> 3
TEAM AMERICA CORPORATION
110 E. Wilson Bridge Road
Columbus, Ohio 43085
(614) 848-3995
PROXY STATEMENT
GENERAL INFORMATION
TEAM AMERICA CORPORATION (the "Corporation") is furnishing this Proxy
Statement to its shareholders in connection with the solicitation of proxies for
use in voting at the annual meeting of shareholders to be held on Wednesday,
June 11, 1997 (the "Annual Meeting"). The enclosed proxy is solicited by the
Board of Directors of the Corporation. This Proxy Statement, together with the
Corporation's Annual Report to Shareholders for the fiscal year ended December
31, 1996 ("fiscal 1996"), is being mailed on or about May 12, 1997.
The close of business on May 9, 1997 has been fixed as the date of
record for those shareholders entitled to vote at the Annual Meeting. The stock
transfer books of the Corporation will not be closed. As of May 9, 1997, the
Corporation had outstanding and entitled to vote 3,375,703 common shares,
without par value ("Common Shares"), each of which is entitled to one vote. The
Corporation has no other class of capital stock outstanding.
The presence of holders of a majority of the outstanding Common Shares
in person or by proxy is necessary to constitute a quorum of shareholders for
all matters to be considered at the Annual Meeting.
Votes, whether in person or by proxy, will be counted and tabulated by
inspectors of election appointed by the Board of Directors of the Corporation.
With respect to all matters to be considered, abstentions and broker non-votes
will not be counted as votes either "for" or "against" any matters coming before
the Annual Meeting. Under Ohio law, the nominees for election as Directors at
the Annual Meeting receiving the greatest number of votes shall be elected.
Any shareholder giving the enclosed proxy has the power to revoke it at
any time before it is voted if notice of revocation is given to the Secretary of
the Corporation in writing or at the Annual Meeting. The shares represented by
the enclosed proxy will be voted as specified by the shareholders. If no choice
is specified, the proxy will be voted for the election as Directors of the
nominees named herein.
The cost of soliciting proxies and preparing the proxy materials will
be borne by the Corporation. In addition, the Corporation will request
securities brokers, custodians, nominees, and fiduciaries to forward
solicitation material to the beneficial owners of Common Shares held of record
and will reimburse them for their reasonable out-of-pocket expenses in
forwarding such solicitation material. Proxies may be solicited personally or by
telephone or telegram by Directors, officers and employees of the Corporation
without additional compensation to them. The Corporation may engage an outside
firm to distribute proxy solicitation materials to brokers, banks and other
nominees.
<PAGE> 4
NOMINATION AND ELECTION OF DIRECTORS
The number of Directors has been fixed by the Board of Directors of the
Corporation at six. The Board of Directors currently is divided into two classes
of three members each. The members of the two classes are elected to serve for
staggered terms of two years.
At the Annual Meeting, three Directors will be elected, each to hold
office for a term of two years and until his successor is elected and qualified.
Paul M. Cash, William W. Johnston and M. R. Swartz are nominees (collectively,
the "Nominees") for election as Directors at the Annual Meeting, each to hold
office for a term of two years until the annual meeting of shareholders to be
held in 1999. The terms of Richard C. Schilg, Kevin T. Costello and Charles F.
Dugan II (collectively, the "Continuing Directors") expire in 1998.
All the Nominees have indicated a willingness to stand for election and
to serve if elected. It is intended that the shares represented by the enclosed
proxy will be voted for the election of the Nominees. Although it is anticipated
that each Nominee will be available to serve as a Director, should any Nominee
be unavailable to serve, the proxies will be voted by the proxy holders in their
discretion for another person designated by the Board of Directors.
Listed below are the names of each Nominee and Continuing Director,
their ages, the year in which each first became a Director, their principal
occupations during the past five years and other directorships, if any, held by
them in companies with a class of equity securities registered pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to its periodic reporting requirements. See "Security Ownership of
Certain Beneficial Owners and Management" for information regarding such
persons' holdings of equity securities of the Corporation.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
---- --- ----- --------------------------------------------
<S> <C> <C> <C>
Richard C. Schilg 39 1986 Chairman of the Board of Directors, President and Chief
Executive Officer of the Corporation since its founding in
1986.
Kevin T. Costello 47 1992 Senior Vice President of Operations and Chief Operating
Officer of the Corporation since 1993; Vice President of Sales
and Marketing of the Corporation from 1991 to 1993.
Charles F. Dugan II 57 1994 Assistant Secretary of the Corporation since 1992; Outside
counsel to the Corporation since 1987; Partner in the law firm
of Vorys, Sater, Seymour and Pease from 1970 to 1990.
Paul M. Cash 50 1990 Human resource consultant to the Corporation since 1989.
William W. Johnston 50 1990 Secretary of the Corporation since 1990; outside general
counsel to the Corporation since 1989.
M. R. Swartz 57 1991 Owner, operator of the Dairy Depot restaurant located in
Delaware, Ohio.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
A total of 4 meetings of the Directors of the Corporation were held
during fiscal 1996. Each of the Directors attended at least 75% of the total
number of meetings of the Directors.
-2-
<PAGE> 5
The Corporation has an Audit Committee and a Compensation Committee.
Both such committees were formed by the Board of Directors at its first meeting
following the completion of the Corporation's initial public offering in
December 1996.
Audit Committee. The Audit Committee, which consists of Messrs. Schilg,
Cash and Swartz, is charged with the responsibility of reviewing such financial
information (both external and internal) about the Corporation and its
subsidiaries, so as to assure (i) that the overall audit coverage of the
Corporation and its subsidiaries is satisfactory and appropriate to protect the
shareholders from undue risks and (ii) that an adequate system of internal
financial control has been implemented throughout the Corporation and is being
effectively followed. The Audit Committee did not meet in fiscal 1996.
Compensation Committee. The Compensation Committee, which consists of
Messrs. Cash, Dugan and Johnston, considers and formulates recommendations to
the Board with respect to all aspects of compensation to be paid to the
executive officers of the Corporation subject to the provisions of the
applicable employment agreements, undertakes such evaluations and makes such
reports as are required by then applicable rules of the Securities and Exchange
Commission and performs and exercises such other duties and powers as shall from
time to time be designated by action of the Board of Directors. The Compensation
Committee did not meet during fiscal 1996. See "Report of Compensation
Committee."
COMPENSATION OF DIRECTORS
In connection with the initial public offering of the Corporation's
Common Shares in December 1996, the Corporation granted to each non-employee
Director an option to purchase 5,000 Common Shares at $12.00 per share, subject
to vesting on December 9, 1997. These options will expire on December 9, 2006
and are subject to the terms and conditions of the Corporation's 1996 Incentive
Stock Plan. In addition, non-employee Directors receive $500 for each Board of
Directors meeting attended, plus out-of-pocket expenses incurred in connection
with attending meetings. Directors who are employees do not receive any separate
compensation for their services as Directors.
-3-
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Shares as of May 9, 1997, by each person known by the
Corporation to own beneficially more than five percent of the Corporation's
outstanding Common Shares, by each Nominee and Continuing Director, by each
executive officer named in the Summary Compensation table contained in
"Executive Compensation", and by all Directors and executive officers as a
group. As of May 9, 1997, there were 3,375,703 Common Shares issued and
outstanding and no Common Shares subject to options exercisable within 60 days
thereafter. Except as otherwise noted, each person named in the table has sole
voting and investment power with respect to all shares shown as beneficially
owned by him or her.
<TABLE>
<CAPTION>
PERCENT OF
SHARES
NAME AND ADDRESS OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED AT MAY 9, 1997 OWNED
- -------------------- -------------------- ------
<S> <C> <C>
Richard C. Schilg 1,181,464(1) 35.0%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Judith Schilg 223,443(2) 6.6%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Kevin T. Costello 423,200(3) 12.5%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Anne M. Costello 373,200(4) 11.1%
110 East Wilson Bridge Road
Worthington, Ohio 43085
Michael R. Goodrich 2,500 *
Charles F. Dugan II 32,200 *
Paul M. Cash 9,936 *
M. R. Swartz 11,960 *
All Directors and Executive
Officers as a group (7 Persons) 1,661,260 49.2%
<FN>
- -----------------------------
* Represents less than 1%.
(1) Includes 958,021 shares owned of record by Mr. Schilg over which he has
sole voting and investment power and 223,443 shares owned of record by
Mr. Schilg and his wife, Judith Schilg, as joint tenants, of which Mr.
Schilg shares with his wife voting and investment power.
(2) Includes 223,443 shares owned of record by Mrs. Schilg and her husband,
Richard C. Schilg, as joint tenants, of which Mrs. Schilg shares with
her husband voting and investment power. Mrs. Schilg disclaims
beneficial ownership of the 958,021 shares owned of record by her
husband.
</TABLE>
-4-
<PAGE> 7
(3) Includes 50,000 shares owned of record by Mr. Costello of which he has
the sole voting and investment power and 373,200 shares owned of record
by Mr. Costello and his wife, Anne M. Costello, as joint tenants, of
which Mr. Costello shares with his wife voting and investment power.
(4) Includes 373,200 shares owned of record by Mrs. Costello and her
husband, Kevin T. Costello, as joint tenants, of which Mrs. Costello
shares with her husband voting and investment power. Mrs. Costello
disclaims beneficial ownership of the 50,00 shares owned of record by
her husband.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's Directors
and executive officers, and persons who own more than ten percent of a
registered class of the Corporation's equity securities, to file initial
statements of beneficial ownership (Form 3), and statements of changes in
beneficial ownership (Forms 4 and 5), of Common Shares of the Corporation with
the Securities and Exchange Commission. Executive officers, Directors and
greater than ten-percent shareholders are required to furnish the Corporation
with copies of all such forms they file.
To the Corporation's knowledge, based solely on its review of the
copies of such forms received by it, and written representations from certain
reporting persons that no additional forms were required, all filing
requirements applicable to its executive officers, Directors and greater than
ten-percent shareholders were complied with in fiscal 1996.
EXECUTIVE OFFICERS
The following table and biographies set forth information concerning
the executive officers of the Corporation, who are elected by the Board of
Directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard C. Schilg 39 Chairman of the Board of Directors, President and Chief
Executive Officer
Kevin T. Costello 47 Senior Vice President, Chief Operating Officer and
Director
Michael R. Goodrich 44 Vice President of Finance, Treasurer and Chief Financial
Officer
William W. Johnston 50 Secretary and Director
Charles F. Dugan II 57 Assistant Secretary and Director
</TABLE>
- ----------------
Richard C. Schilg has served as Chairman of the Board of Directors,
President and Chief Executive officer of the Corporation since founding the
Corporation in 1986. From 1982 to 1986, Mr. Schilg served as a Career Agent,
Sales Manager and Director of Development of Mutual Security Life Insurance
Company located in Ft. Wayne, Indiana. Mr. Schilg served as President of the
Ohio Association of Professional Employer Organizations, a state chapter of the
National Association of Professional Organizations, from March 1995 to September
1996. Mr. Schilg is a Certified Professional Employer Specialist.
Kevin T. Costello has been a Director of the Corporation since 1992 and
has served as Senior Vice President of Operations and Chief Operating Officer of
the Corporation since 1993. From 1991 to 1993, Mr. Costello served as Vice
President of Sales and Marketing of the Corporation.
-5-
<PAGE> 8
Michael R. Goodrich was appointed Vice President of Finance, Treasurer
and Chief Financial Officer of the Corporation on March 31, 1997. Mr. Goodrich
was Chief Financial Officer and Secretary of Barefoot Inc. located in
Worthington, Ohio from 1991 to March 31, 1997 and was Vice President Finance of
Barefoot Grass Lawn Service, Inc. from 1986 to March 31, 1997. From 1974 to
1986, Mr. Goodrich was a Certified Public Accountant in the Columbus, Ohio
office of Arthur Andersen & Co.
William W. Johnston has been a Director of the Corporation since 1990
and has served as Secretary of the Corporation since 1990 and as general counsel
to the Corporation since 1989. From 1982 to 1990, Mr. Johnston was a partner in
the law firm of Crabbe, Brown, Jones, Potts and Schmidt located in Columbus,
Ohio. Mr. Johnston currently practices law in his own firm located in
Worthington, Ohio. From 1976 to 1982, Mr. Johnston was the Chairman of the Ohio
Industrial Commission.
Charles F. Dugan II has been a Director of the Corporation since 1994
and has served as Assistant Secretary of the Corporation since 1992. Mr. Dugan
has served as counsel to the Corporation since 1987. From 1970 to 1990, Mr.
Dugan was a partner in the law firm of Vorys, Sater, Seymour and Pease located
in Columbus Ohio. Mr. Dugan currently practices law in his own firm located in
Columbus, Ohio.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
annual and long-term compensation of the chief executive officer of the
Corporation and the one other executive officer (together, the "Named
Executives"), whose total salary and bonus for the last completed fiscal year
exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
-------------
STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER(4) # GRANTED
- --------------------------- ---- ------ ----- -------- ---------
<S> <C> <C> <C> <C> <C>
Richard C. Schilg, Chairman 1996 $241,561(2) $206,637(3) $4,553 50,000
of the Board, President and 1995 $180,010(2) $158,790 $4,529 -0-
Chief Executive Officer
Kevin T. Costello, Senior 1996 $232,210(2) $138,930(3) $4,558 50,000
Vice President and Chief 1995 $178,316(2) $98,285 $4,529 -0-
Operating Officer
</TABLE>
- ------------------
(1) Under rules promulgated by the Commission, since the Corporation was not a
reporting company during the three immediately preceding fiscal years, only
the information with respect to the two most recently completed fiscal years
is noted in the Summary Compensation Table.
(2) Includes commissions in the amounts of $100,061 and $144,480 in 1996 and
$51,010 and $97,716 in 1995 paid to Mr. Schilg and Mr. Costello,
respectively.
(3) Includes payments of $70,000 and $63,000 in February 1997 to Messrs. Schilg
and Costello respectively, based in part on the financial performance of the
Company in 1996. In accordance with generally accepted accounting
principles, these amounts were required to be recognized as expense in
fiscal 1996. See "Report of Compensation Committee" for a further discussion
of executive bonuses. Also included are payments of $136,637 and $75,930 in
June 1996 of discretionary bonuses to Messrs. Schilg and Costello,
-6-
<PAGE> 9
respectively. These discretionary bonuses were not related to specific
performance criteria for the Company in 1995 and accordingly were not
required to be expensed until paid in 1996.
(4) Represents health care insurance premiums paid by the Corporation for the
benefit of the indicated Named Executive Officer.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted during fiscal 1996 to the Named Executives.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------------------------
PERCENTAGE
OF TOTAL
OPTIONS
GRANTED TO POTENTIAL REALIZABLE VALUE
NUMBER OF EMPLOYEES EXERCISE AT ASSUMED ANNUAL RATES
OPTIONS IN FISCAL PRICE PER EXPIRATION OF STOCK PRICE APPRECIATION
NAME GRANTED 1996 SHARE DATE FOR OPTION TERM
- -------------------- -------- ------ ------- ------ ----------------
5% 10%
---- ----
<S> <C> <C> <C> <C> <C> <C>
Richard C. Schilg 50,000 26.9% $12.00 12/09/06 $377,500 $956,000
Kevin T. Costello 50,000 26.9% $12.00 12/09/06 $377,500 $956,000
</TABLE>
In fiscal 1996, the Corporation granted options to purchase a total of
186,000 Common Shares, subject to the terms and conditions of the Corporation's
1996 Incentive Stock Plan. All such options were granted in connection with the
initial public offering of the Corporation's Common Shares in December 1996.
Such options consisted of (i) options to purchase 50,000 Common Shares granted
to each of Messrs. Schilg and Costello (see "Executive Compensation -- Stock
Option Grants in Last Fiscal Year"), (ii) options to purchase an aggregate of
66,000 Common Shares granted to a total of twelve other key employees, and (iii)
options to purchase an aggregate of 20,000 Common Shares granted to the
Directors (see "Compensation of Directors"). All such options expire on December
9, 2006 and have an exercise price of $12.00 per share. The options granted to
Messrs. Schilg and Costello and key employees are subject to vesting 20% per
year over five years and the options granted to the Directors will vest on
December 9, 1997.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the value
of unexercised stock options held as of December 31, 1996 by the Named
Executives. No options were exercised by such executive officers during fiscal
1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
NAME AND PRINCIPAL POSITION OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
- --------------------------- -------------------------- ------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard C. Schilg,
President and Chief 0 50,000 NA NA
Executive Officer
</TABLE>
-7-
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C>
Kevin T. Costello,
Vice President and 0 50,000 NA NA
Chief Operating Officer
</TABLE>
EMPLOYMENT AGREEMENTS
Richard C. Schilg. Mr. Schilg has executed an employment agreement with
the Corporation pursuant to which he has agreed to serve as Chairman of the
Board, President and Chief Executive Officer of the Corporation for a period of
three years and, unless terminated in accordance with the provisions therein, on
the first day of each month that the agreement is in effect, the remaining term
thereof will be automatically extended for one additional month. Under the terms
of the agreement, Mr. Schilg receives an annual base salary of $195,000, plus
incentive compensation in an amount determined by the Corporation's Compensation
Committee based upon various factors including the Corporation's results of
operations and financial condition and Mr. Schilg's performance during the
relevant period. In addition to such base salary and incentive compensation, Mr.
Schilg may receive commissions on sales to clients for which he is responsible
pursuant to terms and conditions determined by the Corporation's Compensation
Committee. In the event Mr. Schilg's employment is terminated for cause, the
Corporation will pay Mr. Schilg the compensation and benefits due under his
employment agreement through the date of such termination. Mr. Schilg's
employment agreement contains certain non-competition and non-solicitation
provisions which prohibit him from competing with the Corporation during his
employment by the Corporation and for a period of one year after termination of
his employment.
The Corporation has agreed to maintain one or more life insurance
policies on the life of Mr. Schilg in an aggregate amount sufficient to pay Mr.
Schilg's widow at least $48,000 per year for 15 years in the event that he dies
prior to his retirement. No such benefit will be paid in the event that Mr.
Schilg dies after his retirement. In addition, upon Mr. Schilg's retirement on
or after his sixty-fifth birthday, the Corporation will pay him an amount
calculated to be equal to the maximum loan available from such insurance policy
which will not cause the insurance policy to lapse prior to his life expectancy.
Thereafter, such amount shall be recalculated on an annual basis and the
Corporation will pay Mr. Schilg any increase in such amount.
Pursuant to Mr. Schilg's employment agreement, on December 9, 1996, the
Corporation granted to Mr. Schilg the right to purchase 50,000 Common Shares at
an exercise price equal to the initial offering price of the Corporation's
Common Shares of $12.00 per share, subject to vesting 20% per year over five
years. These options will expire on December 9, 2006 and are subject to the
terms and conditions of the Corporation's 1996 Incentive Stock Plan. See
"Executive Compensation--Stock Option Grants in Last Fiscal Year."
Kevin T. Costello. Mr. Costello has executed an employment agreement
with the Corporation pursuant to which he has agree to serve as Senior Vice
President of Operations and Chief Operating Officer of the Corporation for a
period of three years and, unless terminated in accordance with the provisions
therein, on the first day of each month that the agreement is in effect, the
remaining term thereof will be automatically extended for one additional month.
Under the terms of the agreement, Mr. Costello receives an annual base salary of
$175,000, plus incentive compensation in an amount determined by the
Corporation's Compensation Committee based upon various factors including the
Corporation's results of operations and financial condition and Mr. Costello's
performance during the relevant period . In addition to such base salary and
incentive compensation, Mr. Costello may receive commissions on sales to clients
for which he is responsible pursuant to terms and conditions determined by the
Corporation's Compensation Committee. In the event Mr. Costello's employment is
terminated for cause, the Corporation will pay Mr. Costello the compensation and
benefits due under his employment agreement through the date of such
termination. Mr. Costello's employment agreement contains certain noncompetition
and non-solicitation provisions which prohibit him from competing with the
Corporation during his employment by the Corporation and for a period of one
year after termination of his employment.
-8-
<PAGE> 11
The Corporation has agreed to maintain one or more life insurance
policies on the life of Mr. Costello in an aggregate amount sufficient to pay
Mr. Costello's widow at least $24,000 per year for 15 years in the event that he
dies prior to his retirement. No such benefit will be paid in the event that Mr.
Costello dies after his retirement. In addition, upon Mr. Costello's retirement
on or after his sixty-fifth birthday, the Corporation will pay him an amount
calculated to be equal to the maximum loan available from such insurance policy
which will not cause the insurance policy to lapse prior to his life expectancy.
Thereafter, such amount shall be recalculated on an annual basis and the Company
will pay Mr. Costello any increase in such amount.
Pursuant to Mr. Costello's employment agreement, on December 9, 1996,
the Company granted to Mr. Costello the right to purchase 50,000 Common Shares
at an exercise price equal to the initial offering price of the Corporation's
Common Shares of $12.00 per share, subject to vesting 20% per year over five
years. These options will expire on December 9, 2006 and are subject to the
terms and conditions of the Corporation's 1996 Incentive Stock Plan. See
"Executive Compensation--Stock Option Grants in Last Fiscal Year."
REPORT OF COMPENSATION COMMITTEE
FORMATION OF COMPENSATION COMMITTEE
The Compensation Committee was formed by the Board of Directors at its
first organizational meeting following the completion of the Corporation's
initial public offering in December 1996. At the Compensation Committee's first
meeting in February 1997, the Compensation Committee determined to pay bonuses
of $70,000 and $63,000 to Messrs. Schilg and Costello, respectively, in view of
the profitable results of the operations of the Corporation during fiscal 1996.
The Compensation Committee did not make any determinations regarding the base
salaries of Mr. Schilg or Mr. Costello for fiscal 1996 because those
determinations had already been made and put into effect by the Board of
Directors prior to the formation of the Compensation Committee.
COMPENSATION POLICIES
The Corporation's compensation program is designed to attract and
retain highly qualified executive officers and managers and to motivate them to
maximize the Corporation's earnings and shareholder returns. The Corporation's
executive and key personnel compensation consists of two principal components:
(i) cash compensation, consisting of a base salary and, in certain cases,
commissions on sales to clients and/or a bonus which is based upon the
Corporation's operating performance, and (ii) stock options. Stock options are
intended to encourage key employees to remain employed by the Corporation by
providing them with a long-term interest in the Corporation's overall
performance as reflected by the performance of the market for the Corporation's
Common Shares.
The compensation of executive officers of the Corporation, other than
the chief executive officer ("CEO"), is established annually by the CEO in
consultation with the Compensation Committee, subject to the provisions of any
applicable employment agreements. See "Executive Compensation--Employment
Agreements." In establishing the compensation of executive officers, various
factors are considered, including the executive officer's individual scope of
responsibilities, the quality of his or her performance in discharging those
responsibilities and the financial performance of the Corporation as a whole.
CEO COMPENSATION
The CEO's minimum annual base salary has been established pursuant to
an employment agreement which was executed on December 13, 1996. In fiscal 1996,
the CEOs compensation included base salary, a bonus and stock option awards
which were determined by the Board of Directors based upon its perception of the
individual performance of the CEO and the performance of the Corporation as a
whole. No particular weight was given by the Board of Directors to any
particular factor in its evaluation of each component of the CEO's compensation
for
-9-
<PAGE> 12
fiscal 1996. In 1997, the CEO's base salary will be as set forth in his
employment agreement (see "Executive Officers--Employment Agreements") and his
bonus and commissions, if any, will be determined by the Compensation Committee
based upon the foregoing factors.
Richard C. Schilg
Kevin T. Costello
William W. Johnston
Charles F. Dugan II
Paul M. Cash
M. R. Swartz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Schilg is Chairman of the Board of Directors, President and Chief
Executive Officer of the Corporation. Mr. Costello is Senior Vice President of
Operations and Chief Operating Officer of the Corporation. Messrs. Johnston and
Dugan are Secretary and Assistant Secretary, respectfully, of the Corporation.
Messrs. Cash and Swartz are not corporate employees of the Corporation. During
fiscal 1996, Messrs. Johnston and Dugan received fees for legal services
provided to the Corporation in the amounts of $68,892 and $54,656, respectively,
and Mr. Cash received fees for consulting services provided to the Corporation
in the amount of $11,040.
During fiscal 1996, Mr. Schilg personally guaranteed the Corporation's
performance of its obligations under its credit facility with a bank. No amounts
are currently owed by the Corporation under such credit facility. In 1997, the
bank released Mr. Schilg from such guaranty.
Each of Messrs. Johnston, Dugan and Cash have entered into a standard
client agreement with the Corporation pursuant to which each of them is both a
client and a worksite employee of the Corporation. The Corporation has provided,
and expects to continue to provide, professional employer organization services
to such individuals upon terms and conditions no more favorable to such
individuals than those generally provided to the Corporation's other clients.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Corporation's Common Shares from December 10, 1996 (the date the Corporation
became a public company), until December 31, 1996, with the cumulative total
return of (a) the NASDAQ Stock Market-US Index and (b) the S&P MidCap Commercial
Services Composite Index. The graph assumes the investment of $100 in the
Corporation's Common Shares, the NASDAQ Stock Market-US Index and the S&P MidCap
Commercial Services Composite Index. The initial public offering price of the
Corporation's Common Shares was $12.00 per share and the closing price of the
shares on the first day of trading was $12.25.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE CORPORATION, THE NASDAQ STOCK MARKET - US INDEX
AND THE S&P MIDCAP COMMERCIAL SERVICES COMPOSITE INDEX
[Graph inserted here]
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<PAGE> 13
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
December 10, 1996 December 31, 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TEAM America Corporation 100.00 94.79
- --------------------------------------------------------------------------------------------------------------------------
NASDAQ Stock Market - US Index 100.00 98.36
- --------------------------------------------------------------------------------------------------------------------------
S&P MidCap Commercial Services Composite Index 100.00 98.34
==========================================================================================================================
</TABLE>
CERTAIN TRANSACTIONS
For a discussion of certain business relationships and transactions
between the Corporation and each of Messrs. Schilg, Johnston, Dugan and Cash,
see "Compensation Committee Interlocks and Insider Participation."
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has acted as independent certified public
accountants of the Corporation for fiscal 1996. Arthur Andersen LLP is expected
to have a representative present at the Annual Meeting who may make a statement,
if desired, and will be available to answer appropriate questions.
SHAREHOLDER PROPOSALS
In order for shareholder proposals to be considered for presentation at
the 1998 Annual Meeting of Shareholders, such proposals must be received by the
Corporation at its principal executive offices not later than January 12, 1998.
The Corporation's Amended and Restated Regulations (the "Regulations")
provide that shareholder nominations for election as Directors may be made in
compliance with certain advance notice, informational and other applicable
requirements. In order to be considered, a shareholder's notice of Director
nomination must be delivered to or mailed and received by the Secretary of the
Corporation at 110 E. Wilson Bridge Road, Worthington, Ohio 43085 not less than
60 or more than 90 days prior to the Corporation's Annual Meeting; provided,
however, that in the event that less than 75 days notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the 15th day following the earlier of the day on which such notice
of the date of the meeting was mailed or such public disclosure was made. The
Corporation's Annual Meeting will generally be held in May of each year. A
shareholder's notice of Director nominations must contain certain information
required by the Regulations and must be accompanied by the written consent of
each proposed nominee to serve as a Director of the Corporation, if elected.
Copies of the Regulations are available upon request made to the Secretary of
the Corporation at the above address. The requirements described above do not
supersede the requirements or conditions established by the Securities and
Exchange Commission for shareholder proposals to be included in the
Corporation's proxy materials for a meeting of shareholders.
-11-
<PAGE> 14
OTHER MATTERS
As of the date of this statement, the Board of Directors knows of no
other business that will come before the Annual Meeting. Should any other matter
requiring the vote of the shareholders arise, the enclosed proxy confers upon
the proxy holders discretionary authority to vote the same in respect to the
resolution of such other matters as they, in their best judgment, believe to be
in the best interest of the Corporation.
SHAREHOLDERS ARE URGED TO FORWARD THEIR PROXIES WITHOUT DELAY. A PROMPT
RESPONSE WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
/s/ Richard C. Schlig
RICHARD C. SCHILG
Chairman of the Board of Directors,
President and Chief Executive Officer
May 9, 1997
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<PAGE> 15
TEAM AMERICA CORPORATION
ANNUAL MEETING OF SHAREHOLDERS -- JUNE 11, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard C. Schilg, Kevin T. Costello and Michael
R. Goodrich, and each of them, Proxies, with power of substitution to each, for
and in the name of the undersigned to vote, as designated below, all the Common
Shares of TEAM America Corporation held of record by the undersigned as of May
9, 1997 at the Annual Meeting of Shareholders to be held on June 11, 1997 or any
adjournment thereof.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below
(except as marked to the contrary below) [ ] WITHHOLD AUTHORITY to vote for all nominees listed
below [ ]
</TABLE>
Paul M. Cash, William W. Johnston and M.R. Swartz.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
-----------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
Continued, and to be signed on other side)
PROXY NO. SHARES
(Continued from the other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS BY THE NOMINEES NAMED IN THE PROXY STATEMENT
AND ACCORDING TO THE JUDGMENT OF THE PROXIES WITH RESPECT TO PROPOSAL 2 OR ANY
ADJOURNMENT THEREOF.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated May 12, 1997. Please sign exactly
as name appears hereon. When shares are held by joint tenants, both should sign.
Date: , 1997
-----------------------
-----------------------------------
-----------------------------------
(Signature)
(When signing as attorney, as
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Proxy Card
