<PAGE>
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
INTERIM SERVICES INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(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.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
To our Stockholders:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the Annual Meeting of Stockholders of Interim Services Inc.
As shown in the formal notice enclosed, the meeting will be held at 10:00
a.m. (Eastern Daylight Time) on Thursday, May 7, 1998 at the executive offices
of the Company, 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309. At the
meeting, in addition to acting on the matters described in the Proxy Statement,
we will present a current report on the activities of the Company. Stockholders
will have an opportunity at that time to comment on or to inquire about the
affairs of the Company that may be of interest to stockholders generally. If you
will need special assistance at the meeting because of a disability, please
contact Ms. Weatherly Treese.
We sincerely hope you will be able to attend our Annual Meeting. However,
whether or not you are personally present, it is important that your shares be
represented at this meeting in order that the presence of a quorum may be
assured. Whether or not you plan to attend the meeting, you are urged to date,
sign and mail the enclosed proxy card in the envelope provided.
Thank you for your support.
Sincerely,
Raymond Marcy
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
INTERIM SERVICES INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
TO BE HELD
THURSDAY, MAY 7, 1998
10:00 A.M. EDT
The Annual Meeting of Stockholders of INTERIM SERVICES INC. will be held at
10:00 a.m. (Eastern Daylight Time) on Thursday, May 7, 1998 at the executive
offices of the Company, 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309.
The meeting will be held for the following purposes:
1. To elect two directors to hold office for three years and until their
successors are elected and shall have qualified.
2. To ratify the appointment of Deloitte & Touche as the Company's
independent auditors for the fiscal period ending December 25, 1998.
3. To approve the proposed Amendment of Restated Certificate of
Incorporation to Increase Authorized Shares of Common Stock.
4. To approve the Company's 1998 Stock Incentive Plan.
5. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
Only stockholders of record at the close of business on March 17, 1998 are
entitled to notice of, and to vote at, the meeting and any adjournment of the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
John B. Smith, SECRETARY
Fort Lauderdale, Florida
March 24, 1998
--IMPORTANT--
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POST-PAID ENVELOPE. IF
YOU ATTEND THE MEETING AND SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON.
THANK YOU FOR ACTING PROMPTLY.
<PAGE>
INTERIM SERVICES INC.
----------------
PROXY STATEMENT
SOLICITATION OF PROXIES FOR ANNUAL MEETING
---------------------
This Proxy Statement is furnished by the Board of Directors of Interim
Services Inc. (the "Company") to help you exercise your voting rights at the
1998 Annual Meeting of Stockholders of the Company to be held at 10:00 a.m.
(Eastern Daylight Time) on Thursday, May 7, 1998, at the executive offices of
the Company, 2050 Spectrum Boulevard, Fort Lauderdale, Florida 33309, (954)
938-7600, or at any adjournments thereof (the "Annual Meeting"). The
accompanying Proxy Card represents your holdings of the Company's Common Stock,
par value $.01 per share ("Common Stock"), and is being solicited by the Board
of Directors.
INFORMATION FOR STOCKHOLDERS
REGARDING PROXIES AND VOTING
If you are a stockholder of the Company, you can be represented at the
Annual Meeting and have your shares voted as you direct by means of the enclosed
Proxy Card. The affirmative vote of the holders of a majority of all outstanding
shares entitled to vote and present in person or represented by proxy at the
Annual Meeting is required for the adoption of all matters listed in this Proxy
Statement and coming before the meeting. The proxy holders, Roy G. Krause and
John B. Smith, will vote all shares of the Company's stock represented by Proxy
Cards that are properly signed and returned by stockholders. Your shares will be
voted by the proxy holders as you have directed. You may specify your voting
choices by marking the appropriate boxes on the Proxy Card. If you properly sign
and return your Proxy Card, but do not specify your choices, your shares will be
voted as recommended by the Board of Directors. The Proxy Card also authorizes
the proxy holders to vote the shares represented on any matters not known at the
time this Proxy Statement was printed that may properly be presented for action
at the Annual Meeting.
The total number of shares of stock of the Company outstanding and eligible
to vote at the Annual Meeting is 39,944,245 consisting of Common Stock, par
value $.01 per share. Each share of the Company's Common Stock entitles the
holder to one vote with respect to all matters to come before the Meeting, and
all of such shares vote as a single class. Only stockholders of record at the
close of business on March 17, 1998, are entitled to notice of, and to vote at,
the Annual Meeting. The election inspectors appointed for the Annual Meeting
will tabulate all votes cast in person or by proxy and will determine whether or
not a quorum is present. A majority of the outstanding shares entitled to vote,
present in person or represented by proxy, will constitute a quorum at the
meeting. The affirmative vote of the holders of a majority of the shares of
Common Stock represented in person or by proxy at the meeting is required to
approve each matter presented at the meeting. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions are counted in tabulations, but not as
an affirmative vote, of the votes cast on proposals presented to stockholders,
whereas broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
Solicitation of the proxies will be made by Corporate Investors
Communications, Inc. ("CIC") who will engage approximately two of their
employees to solicit stockholders. The anticipated cost of the solicitation is
$9,500. In addition, solicitation of the proxies may be made by certain
directors, officers and employees of the Company who may do so by telephone,
telegram, mail or personal contact. Arrangements have been made with brokers,
nominees and fiduciaries to send proxies and proxy material at the
1
<PAGE>
Company's expense to their principals. This Proxy Statement is first being
mailed on or about March 24, 1998 to stockholders of record as of March 17,
1998.
The Board of Directors encourages you to complete and return the Proxy Card
even if you expect to attend the Annual Meeting. If the enclosed form of proxy
is executed and returned, it may, nevertheless, be revoked at any time before it
is voted by written notice to the Secretary of the Company. If you attend the
Annual Meeting and wish to vote, your ballot at the Annual Meeting will cancel
any proxy that you have previously given.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows the amount and nature of "beneficial ownership" of
the 39,923,262 shares of Common Stock of the Company, as of March 1, 1998, by
each person known by the Company to be the "beneficial owner" of more than five
percent of such Common Stock, by each present director and nominee for director
of the Company, by the Named Officers in the Summary Compensation Table, and by
all the continuing directors, nominees to the Board of Directors and executive
officers of the Company as a group. The determinations of "beneficial ownership"
of the Company's Common Stock are based upon responses to Company inquiries
which cited Rule 13d-3 under the Securities Act of 1934, as amended (the "1934
Act"). Such Rule provides that shares shall be deemed so owned where a person
has, either solely or in conjunction with others, the power to vote or to direct
the voting of shares and/or the power to dispose, or to direct the disposition
of shares; or where a person has the right to acquire any such power within 60
days after the date such "beneficial ownership" is determined.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY PERCENT OF CLASS
(AND ADDRESS IF BENEFICIAL OWNERSHIP EXCEEDS 5%) OWNED (1) IF MORE THAN 1%
- ----------------------------------------------------------------------------- ----------------- ------------------
<S> <C> <C>
Putnam Investments, Inc. (2) ................................................ 5,159,258 13.0%
One Post Office Square
Boston, MA 02109
T. Rowe Price Associates, Inc. (3) .......................................... 3,330,632 8.4%
100 East Pratt Street
Baltimore, MD 21202
Massachusetts Financial Services Company (4) ................................ 2,419,864 6.1%
500 Boylston Street
Boston, MA 02116
Raymond Marcy (5)............................................................ 261,200 --
Robert E. Livonius (6)....................................................... 132,882 --
Gary Peck (7)................................................................ 69,232 --
Roy G. Krause (8)............................................................ 63,604 --
Jerome B. Grossman (9)....................................................... 27,556 --
William F. Evans (10)........................................................ 27,556 --
J. Ian Morrison (11)......................................................... 26,174 --
Steven S. Elbaum (12)........................................................ 25,906 --
Cinda A. Hallman (13)........................................................ 21,556 --
A. Michael Victory (14)...................................................... 13,556 --
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY PERCENT OF CLASS
(AND ADDRESS IF BENEFICIAL OWNERSHIP EXCEEDS 5%) OWNED (1) IF MORE THAN 1%
- ----------------------------------------------------------------------------- ----------------- ------------------
Robert J. Evans (15)......................................................... 9,908 --
<S> <C> <C>
Directors and Executive Officers as a group (17 persons) (16)................ 796,993 2.0%
</TABLE>
- ------------------------
(1) Unless otherwise indicated in the notes to this Table, the stockholders
listed in the Table have sole voting and dispositive power with respect to
shares beneficially owned by them.
(2) Based on Schedule 13G dated January 16, 1998, and filed with the Securities
and Exchange Commission, Putnam Investments, Inc., and certain of its
subsidiaries including Putnam Investment Management, Inc. and The Putnam
Advisory Company, Inc., are considered "beneficial owners" in the aggregate
of 5,159,258, or 13% of shares outstanding, of the Company's common stock,
which shares were acquired for investment purposes by such investment
managers for certain of their advisory clients. Neither Putnam Investments,
Inc. nor its subsidiaries report sole voting power or sole dispositive power
over such shares. Putnam Investments, Inc. has shared dispositive power with
the Putnam Advisory Company, Inc. as to 163,100 shares, and with Putnam
Investment Management, Inc. as to 4,996,158 shares. Putnam Investments, Inc.
has shared voting power with the Putnam Advisory Company, Inc. as to 97,800
of such shares.
(3) Based on Schedule 13G dated February 12, 1998, and filed with the Securities
and Exchange Commission, T. Rowe Price Associates, Inc. is considered a
"beneficial owner" in the aggregate of 3,330,632, or 8.4% of shares
outstanding, of the Company's common stock, which shares were acquired for
investment purposes by such investment manager for certain of its advisory
clients. T. Rowe Price Associates, Inc. asserts sole voting power as to
326,200 of those shares and sole dispositive power with respect to all such
shares.
(4) Based on Schedule 13G dated February 12, 1998, and filed with the Securities
and Exchange Commission, Massachusetts Financial Services Company is
considered a "beneficial owner" in the aggregate of 2,419,864, or 6.1% of
shares outstanding, of the Company's common stock, which shares were
acquired for investment purposes by such investment manager for certain of
its advisory clients. Massachusetts Financial Services Company asserts sole
voting power with respect to 2,377,364 of such shares and sole dispositive
power with respect to all such shares.
(5) Includes 156,664 shares of Common Stock deemed to be beneficially owned by
Mr. Marcy by reason of his right to acquire such shares within 60 days after
March 1, 1998 through the exercise of stock options granted to him pursuant
to the 1997 Plan and its predecessor plan.
(6) Includes 98,332 shares of Common Stock deemed to be beneficially owned by
Mr. Livonius by reason of his right to acquire such shares within 60 days
after March 1, 1998 through the exercise of stock options granted to him
pursuant to the 1997 Plan and its predecessor plan.
(7) Includes 63,932 shares of Common Stock deemed to be beneficially owned by
Mr. Peck by reason of his right to acquire such shares within 60 days after
March 1, 1998 through the exercise of stock options granted to him pursuant
to the 1997 Plan and its predecessor plan.
(8) Includes 16,666 shares of Common Stock deemed to be beneficially owned by
Mr. Krause by reason of his right to acquire such shares within 60 days
after March 1, 1998 through the exercise of stock options granted to him
pursuant to the 1997 Plan and its predecessor plan.
(9) Includes 24,000 shares of Common Stock deemed to be beneficially owned by
Mr. Grossman by reason of his right to acquire such shares within 60 days
after March 1, 1998 through the exercise of stock options granted to him
pursuant to the 1997 Plan and its predecessor plan.
3
<PAGE>
(10) Includes 24,000 shares of Common Stock deemed to be beneficially owned by
Mr. Evans by reason of his right to acquire such shares within 60 days after
March 1, 1998 through the exercise of stock options granted to him pursuant
to the 1997 Plan and its predecessor plan.
(11) Includes 24,000 shares of Common Stock deemed to be beneficially owned by
Mr. Morrison by reason of his right to acquire such shares within 60 days
after March 1, 1998 through the exercise of stock options granted to him
pursuant to the 1997 Plan and its predecessor plan.
(12) Includes 9,280 shares of Common Stock deemed to be beneficially owned by
Mr. Elbaum by reason of his right to acquire such shares within 60 days
after March 1, 1998 through the exercise of stock options granted to him
pursuant to the 1997 Plan and its predecessor plan.
(13) Includes 20,000 shares of Common Stock deemed to be beneficially owned by
Ms. Hallman by reason of her right to acquire such shares within 60 days
after March 1, 1998 through the exercise of stock options granted to her
pursuant to the 1997 Plan and its predecessor plan.
(14) Includes 12,000 shares of Common Stock deemed to be beneficially owned by
Mr. Victory by reason of his right to acquire such shares within 60 days
after March 1, 1998 through the exercise of stock options granted to him
pursuant to the 1997 Plan and its predecessor plan.
(15) Includes 9,908 shares of Common Stock deemed to be beneficially owned by
Mr. Evans by reason of his right to acquire such shares within 60 days after
March 1, 1998 through the exercise of stock options granted to him pursuant
to the 1997 Plan and its predecessor plan.
(16) Includes an aggregate of 557,724 shares of Common Stock deemed to be
beneficially owned by Directors and Officers of the Company by reason of
their right to acquire such shares within 60 days after March 1, 1998
through the exercise of stock options granted to them pursuant to the 1997
Plan and its predecessor plan.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors to constitute the Board of Directors shall be nine unless
otherwise fixed by a resolution adopted by the affirmative vote of the holders
of a majority of the outstanding shares entitled to vote thereon or by a
majority of the whole Board. The Certificate of Incorporation and Bylaws further
provide that the Board of Directors shall be divided into three classes: Class
I, Class II and Class III, with each class to consist, as nearly as possible, of
one-third of the members of the Board. The term of office of one class of
directors shall expire at each annual meeting of stockholders. Directors elected
at an annual meeting of stockholders to succeed those whose terms expire shall
be identified as being of the same class as those directors they succeed and
shall be elected for a term to expire at the third annual meeting of
stockholders after their election.
At the annual meeting of stockholders to be held on May 7, 1998, two Class
II directors will be elected to hold office for three years and until their
successors are elected and shall have qualified. Steven S. Elbaum and Jerome B.
Grossman have been nominated for election as Class II directors of the Company
and both of them are currently Class II directors of the Company. The Company
has adopted a retirement policy whereby directors may not stand for re-election
after the end of the term during which they attain 70 years of age. This policy,
however, has been waived by the Board of Directors for Jerome B. Grossman, a
current Class II director, who has been a director of the Company for
approximately 20 years and who has great insight and knowledge of the Company.
Upon the sale of the Company's HealthCare Division and as a result of that
divestiture, Allan C. Sorensen resigned his position as Chairman of the Board
and a Class II Director of the Company. The Nominating Committee has commenced a
search for a new outside director to fill Mr. Sorensen's vacancy as a Director
and continues its search for a new outside director to fill the Class I director
vacancy which arose upon the retirement of former director Harold Toppel in May
1997.
4
<PAGE>
The persons nominated to fill the vacant seats in Class I and Class II will be
selected by a majority vote of the Board of Directors. The shares voted by the
proxies will be voted for the election of Mr. Elbaum and Mr. Grossman unless
authority to do so is withheld as provided in the form of proxy. All nominees
have consented to serve if elected and the Board of Directors has no reason to
believe that any of the nominees will be unable to accept the office of
director, but if such contingency should arise, it is the intention of the
proxies to vote for such person or persons as the Board of Directors may
recommend.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
---------------------------------------------------
<S> <C>
NOMINEES FOR CLASS II
(TERM EXPIRING IN 2001)
Steven S. Elbaum (49)....................................... Director of the Company since May 1996. Director of
Brandon Systems Corp. from January 1987 until May
1996. Chairman of the Board and Chief Executive
Officer of The Alpine Group, Inc., a diversified
public holding company, since June 1984. Chairman
and Chief Executive Officer of Superior Telecom,
Inc., a wire and cable telecommunications company,
since October 1996.
Jerome B. Grossman (78)..................................... Director of the Company since August 1978.
Executive Vice President and Chief Operating
Officer of H&R Block, Inc. from May 1971 to August
1989 and Vice Chairman of the Board until he
retired in July 1992. Director of H&R Block, Inc.
from September 1973 until September l992, at which
time he was elected Vice Chairman Emeritus.
CONTINUING DIRECTORS CLASS III
(TERM EXPIRING IN 1999)
Raymond Marcy (47).......................................... Chairman of the Company since August 1997. Director
of the Company since November 1989. Chief Executive
Officer of the Company since September 1991.
President since November 1989. Chief Operating
Officer from November 1989 until September 1991.
J. Ian Morrison (45)........................................ Director of the Company since August 1993.
Consultant and Senior Fellow of the Institute for
the Future (IFTF), a non-profit research and
consulting firm, since August 1996. President from
May 1990 until August 1996.
A. Michael Victory (63)..................................... Director of the Company since August 1980.
President of AMEC Capital, Inc. since January 1993.
Prior to that, and for more than five years,
general partner in Cumberland Investment Group.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
---------------------------------------------------
<S> <C>
CONTINUING DIRECTORS--CLASS I
(TERM EXPIRING IN 2000)
William F. Evans (50)....................................... Director of the Company since August 1993.
Executive Vice President, ProSource, Inc., a food
service distribution company, since July 1995.
Consultant to H & R Block from November 1994
through June 1995. Senior Vice President, Corporate
Operations, of H&R Block, Inc., from August 1992
through October 1994. Executive Vice President and
Chief Financial Officer of Dun & Bradstreet
Software Services, Inc., Atlanta, Georgia, from
January 1990 through July 1992.
Cinda A. Hallman (53)....................................... Director of the Company since February 1995. Global
Vice President Integrated Processes and Systems of
E. I. DuPont de Nemours & Co. ("DuPont") since
August 1997. Vice President, Information Systems
and Chief Information Officer of DuPont from
November 1991 to August 1997. Trustee of the
Medical Center of Delaware. Board Chair of the
United Way of Delaware.
</TABLE>
DIRECTORS' COMPENSATION, COMMITTEES AND MEETINGS
Non-employee directors receive an annual retainer, which is in the form of
shares of the Company's Common Stock. The number of shares of Common Stock
payable as the annual retainer is determined by dividing the annual retainer,
which has been raised effective July 1, 1998 from $17,500 to $25,000, by the
closing price of the Company's Common Stock on the date of the annual meeting of
stockholders. The annual retainer fee is determined as of the date of the annual
meeting of stockholders and is effective on the following July 1 of each year.
For 1998 and future years this annual retainer shall be awarded pursuant to the
Company's 1998 Stock Incentive Plan, subject to the stockholders' approval of
the plan, and may be paid in either shares of Common Stock (the payment of which
may be deferred) or stock options. Additionally, non-employee directors are
entitled to a fee of $2,000 for attending each Board meeting and $1,500 for
attending each Committee meeting, each payable in cash. Non-employee directors
are reimbursed for expenses which may be incurred by them in connection with the
business and affairs of the Company.
On May 22, 1997 the stockholders approved the 1997 Long Term Compensation
and Outside Director Stock Option plan (the "1997 Plan"). In applicable part,
the 1997 Plan (and its predecessor plan) prescribes that each non-employee
director shall receive an annual stock option of 4,000 shares of the Company's
$.01 par value Common Stock at an exercise price equal to the closing price of
such stock on the date of grant (April 30), which first becomes exercisable one
year from the date of grant. Under the Company's 1998 Stock Incentive Plan,
subject to stockholder approval of the plan, the annual stock option grant of
4,000 shares to each non-employee director will continue and such grant will be
made on the date of the Annual Meeting of Stockholders. Outside director stock
options of 4,000 shares each were granted on April 30, 1995 at an exercise price
of $14.44 per share and became fully exercisable on April 30, 1996. Outside
director stock options of 4,000 shares each were granted on April 30, 1996 at an
exercise price of $21.69 per share and became fully exercisable on April 30,
1997. Outside director stock options of 4,000
6
<PAGE>
shares each were granted on April 30, 1997 at an exercise price of $19.38 per
share and will become fully exercisable on April 30, 1998. In a separate grant
of options unrelated to the Director Plan, stock options of 8,000 shares each,
plus an additional 4,000 shares in the case of Mr. Evans who had previously
waived his right to receive an earlier 1994 grant under the Director Plan, were
granted on May 11, 1995 at an exercise price of $12.00, with 50% exercisable on
May 11, 1996 and the remainder exercisable on May 11, 1997. The information in
this paragraph has been adjusted for the two-for-one stock split that was
effective in September 1997 and it should be noted that options granted prior to
April 30, 1997 were granted under a predecessor plan.
The standing committees of the Board include: The Audit Committee, the
Compensation Committee, the Corporate Governance Committee, the Executive
Committee, and the Nominating Committee.
The Audit Committee, whose members are William F. Evans (Chairperson),
Jerome B. Grossman, and A. Michael Victory held three meetings during the twelve
months ended December 26, 1997. The functions of the committee include, among
other things, reviewing the various internal accounting controls of the Company;
reviewing and approving the services of the Company's independent auditors,
including any non-audit services provided by them; making recommendations to the
Board of Directors with respect to the employment, retention or replacement of
such auditors, as well as monitoring the independence of such auditors; and
reviewing the scope of the annual audit and related matters. Also, the Audit
Committee receives periodic reports from the Company's internal auditor.
The Compensation Committee, whose members are Cinda A. Hallman
(Chairperson), Steven S. Elbaum and J. Ian Morrison, held five meetings during
the twelve months ended December 26, 1997. The functions of the committee
primarily include presenting recommendations to the Board of Directors on the
compensation of the Chief Executive Officer and approving the compensation
program for certain of the Company's other executive officers after receiving
recommendations from the Chief Executive Officer. Duties also include
determining executive salaries, setting the performance criteria for annual
bonuses, determining their awards under the annual incentive programs and
administering the Company's 1997 Long-Term Compensation and Outside Director
Stock Option Plan. The Compensation Committee also determines the amount and
terms of all stock options awarded to employees of the Company.
The Corporate Governance Committee was established at the meeting of the
Board of Directors on November 13, 1997, consists of all of the outside
Directors and is chaired by Mr. Grossman. The Committee is to meet at least once
each year to review the performance of the Chief Executive Officer and to
consider issues of corporate governance. The committee held no meetings in 1997.
The Executive Committee, whose members are Raymond Marcy (Chairperson),
William F. Evans, Jerome B. Grossman, and A. Michael Victory, held nine meetings
during the twelve months ended December 26, 1997. The primary function of the
Executive Committee is to control and manage, during intervals between meetings
of the Board, the property and business of the Company in all matters in which
exclusive authority has not been given to the entire Board of Directors or in
which specific direction has not been given by the Board.
The Nominating Committee, whose members are J. Ian Morrison (Chairperson),
Raymond Marcy and A. Michael Victory, held two meetings during the twelve months
ended December 26, 1997. The Nominating Committee is responsible for the
initiation of nominations for election as a director of the Company. The
Nominating Committee will consider nominees recommended by stockholders (see
section below entitled "STOCKHOLDER PROPOSALS").
The Board of Directors met ten times during the twelve months ended December
26, 1997. There were a total of twenty-nine meetings of the Board and its
committees. All directors attended more than seventy-five percent of the
meetings of the Board and the committees on which they served during the past
year.
7
<PAGE>
EXECUTIVE COMPENSATION
The annual and long-term compensation of Raymond Marcy, the Company's Chief
Executive Officer, and certain other highly compensated executive officers for
whom such information must be disclosed (the "Named Officers") for the twelve
months ended December 26, 1997, is shown in the tables that follow and discussed
in a report from the Compensation Committee of the Board of Directors.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS (2)
--------------------------------------------- -------------
OTHER ANNUAL INTERIM STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION $(1) OPTIONS #(3) COMPENSATION ($)
--------- ----------- ----------- ------------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Raymond Marcy ................ 1997 $ 536,538 $ 402,325(4) $ 10,853 100,000 $ 27,219(5)
Chairman, President and 1996 487,884 186,985 7,318 80,000 1,573
Chief Executive Officer 1995 444,231 268,777 4,463 70,000 1,626
Robert E. Livonius ........... 1997 $ 270,621 $ 142,510(6) $ 5,498 50,000 $ 1,566(7)
Executive Vice 1996 250,903 95,912 3,763 40,000 1,546
President and Chief 1995 231,153 106,887 2,461 35,000 1,483
Operating Officer
Roy G. Krause (8) ............ 1997 $ 254,618 $ 130,899(9) $ 5,122 50,000 $ 53,137(10)
Executive Vice 1996 218,850 86,863 3,283 40,000 71,220
President and 1995 48,654 22,945 531 -0- 4,830
Chief Financial Officer
Gary Peck .................... 1997 $ 246,577 $ 108,664 $ 5,230 40,000 $ 932(7)
President, Commercial 1996 238,502 102,069 5,701 20,000 875
Staffing Group 1995 247,101 95,405 2,906 20,000 864
Robert J. Evans(11) .......... 1997 $ 215,846 $ 95,184 $ 2,390 20,000 $ 60,901(12)
Vice President 1996 131,654 65,691 -0- 9,728 10,161
and Chief Information 1995 N/A N/A N/A N/A N/A
Officer
</TABLE>
- ------------------------------
(1) For 1997, consists of matching contributions paid by the Company on behalf
of its executives to the Interim Deferred Compensation Plan ("IDCP").
(2) There were no Restricted Stock Awards, Stock Appreciation Rights or
Long-Term Incentive Plan Payouts to the listed individuals during 1995, 1996
or 1997.
(3) Incentive stock options and non-qualified stock options were granted under
the Company's 1993 Long-Term Executive Compensation Plan at an exercise
price equal to the fair market value of the Company's Common Stock on
February 9, 1995, January 31, 1996, and February 5, 1997, the dates of
grant. In addition, on August 1, 1997 Mr. Peck received a grant of 10,000
shares and on May 9, 1996 Mr. Evans received a grant of 9,728 shares at an
exercise price equal to the fair market value of the Company's Common Stock
on the respective dates of grant. These options have ten-year terms (except
for those options granted in 1996 to Messrs. Krause, Livonius and Marcy,
which have five-year terms) and become exercisable over a three-year period
in cumulative increments of 33-1/3% per year beginning with the first
anniversary of the date of grant. All options have been restated for the
September, 1997 stock split.
(4) Pursuant to the Company's bonus plan for its executives, this includes a
mandatory deferred amount of $99,825, which is deferred over a three-year
period.
(5) Includes $1,566 as the imputed economic value of a death benefit provided by
the Company for life insurance purchased by the Executive; and $25,653
reimbursement of loan interest expense related to purchase of stock to meet
stock ownership goals.
(6) Pursuant to the Company's bonus plan for its executives, this includes a
payment of $4,786, which amount was a previously deferred portion of Mr.
Livonius' 1995 bonus.
(7) Includes the imputed economic value of a death benefit provided by the
company for life insurance purchased by the Executive.
(8) Mr. Krause joined the Company in October, 1995.
(9) Pursuant to the Company's bonus plan for its executives, this includes a
payment of $1,159, which amount was a previously deferred portion of Mr.
Krause's 1995 bonus.
(10) Includes $2,541 as the imputed economic value of a death benefit provided
by the Company for life insurance purchased by the Executive; and $50,596 as
moving expenses paid by the Company.
(11) Mr. Evans joined the Company in May, 1996.
(12) Includes $2,197 as the imputed economic value of a death benefit provided
by the Company for life insurance for the Executive; and $58,704 as moving
expenses paid by the Company.
8
<PAGE>
OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 26, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE GRANT DATE
GRANTED TO EMPLOYEES IN PRICE EXPIRATION VALUE
NAME (#)(1) FISCAL YEAR ($/SH) DATE ($)(2)
----------- ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Raymond Marcy................................... 100,000 6.1% 18.625 2/5/07 399,636
Robert E. Livonius.............................. 50,000 3.1% 18.625 2/5/07 199,819
Roy G. Krause................................... 50,000 3.1% 18.625 2/5/07 199,189
Gary Peck (3)................................... 30,000 1.8% 18.625 2/5/07 119,890
10,000 0.6% 22.66 8/1/07 48,636
Robert J. Evans................................. 20,000 1.2% 18.625 2/5/07 79,929
</TABLE>
- ------------------------
(1) See Note (3) to the Summary Compensation Table for a description of the
terms and other information regarding these options.
(2) The dollar amounts under this column are the result of calculations
utilizing the Black-Scholes option pricing model. The assumptions used
relating to the expected volatility, risk-free rate of return, dividend
yield and time of exercise were 0.30, 5.88, 0.00, and 2.00 respectively.
(3) Mr. Peck received two separate option grants in the fiscal year ended
December 26, 1997.
9
<PAGE>
The following table sets forth information with respect to the Named
Officers concerning the exercise of options during the fiscal year ended
December 26, 1997, and unexercised options held as of the end of that year.
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED
DECEMBER 26, 1997 AND THAT YEAR'S END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES VALUE OPTIONS AT YEAR END (#) YEAR END ($)(1)
ACQUIRED ON REALIZED -------------------------- -------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ----------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Raymond Marcy ................. 12,000 175,500 143,332 176,668 1,695,822 1,136,678
Chairman, President and
Chief Executive Officer
Robert E. Livonius ............ 3,000 43,875 83,664 88,336 1,018,894 568,357
Executive Vice
President and Chief
Operating Officer
Roy G. Krause ................. 5,368 28,853 7,965 76,667 44,803 431,252
Executive Vice
President and Chief
Financial Officer
Gary Peck ..................... 3,000 33,625 44,598 60,002 544,697 338,040
President, Commercial
Staffing Group
Robert J. Evans ............... -0- -0- 3,242 26,486 11,955 136,417
Vice President, Chief
Information Officer
</TABLE>
- ------------------------
(1) The value realized on the exercise of options and the value of unexercised
in-the-money options at year end are determined by subtracting the exercise
price for the options from the fair market value of the shares subject to
the options as of the date of exercise or year end, respectively. There can
be no assurance that the value of "unexercised options" reported above will
be realized, and any gains on exercise will depend on the value of the
Company's Common Stock on the date of exercise.
EMPLOYMENT CONTRACTS
Mr. Marcy is employed under an employment contract dated May 1, 1994,
entered into in connection with his employment as President and Chief Executive
Officer. The term of the contract is for three years and is automatically
renewable for one-year terms thereafter unless, not later than six months prior
to the end of the term, written notice is given by Mr. Marcy or the Company
advising that the term of employment shall not be extended further. Mr. Marcy's
compensation arrangement is noted in the Compensation Committee's Report on
Executive Compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Mr. Morrison, who served on the Compensation Committee during the twelve
months ended December 26, 1997, was a member of the Company's former HealthCare
Division Advisory Board, and served at the pleasure of the Company without a
written contract. Mr. Morrison did not receive any compensation as a result of
such membership during any time of the fiscal year ended December 26, 1997 up to
and including the sale of the Company's HealthCare Division on September 26,
1997.
10
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors (the
"Committee") has prepared the following report on executive compensation. This
report describes the Company's current executive compensation program including
the underlying philosophy of the program and the criteria on which executive
compensation is based. This report also describes the compensation paid to the
Company's Chairman and Chief Executive Officer, Raymond Marcy, during the most
recent fiscal year.
The Committee is composed entirely of independent outside directors. Their
responsibilities include presenting recommendations to the Board of Directors on
the compensation of the Chief Executive Officer and approving the compensation
program for certain of the Company's other executive officers, currently
consisting of nine executives (including the named officers), after receiving
recommendations from the Chief Executive Officer. Specific duties include
determining the executive salaries, setting the performance criteria for annual
bonuses, determining their awards under the annual incentive program, and
administering the Company's 1997 Long-Term Executive Compensation and Outside
Director Stock Option Plan. The Committee also reviews total compensation for
the top 30 executives.
The Committee has retained the services of an outside consultant, Frederic
W. Cook & Co., to provide information and advice on executive compensation
issues.
COMPENSATION PHILOSOPHY
The Company's executive compensation program consists of three main
elements:
BASE SALARY
Base compensation set to attract and retain qualified management, when
combined with the other components of the compensation program.
ANNUAL BONUS
An opportunity to earn additional cash reward for yearly business success
and individual performance.
STOCK OPTIONS
Grants, which will encourage stock ownership and reward executives for
increases in stockholder value. There is strong emphasis on stock option awards
as both recruitment and retention vehicles.
The annual bonus is "at risk" compensation in that it is not payable except
to the extent that the Company's business objectives are attained. Similarly,
stock options are "at risk" in that their value depends upon success in
enhancing stockholder value.
The compensation program is designed to contribute to the viability and
long-term success of the Company by meeting the following objectives:
- To compensate fairly for financial and strategic success and the
enhancement of stockholder value.
- To attract, retain and motivate experienced and competent managers and
professionals who are performance-oriented.
- To reinforce a commitment to take action, which will contribute to the
long-term success of the Company.
- To encourage the ownership of Interim stock so that management's long-term
financial interests are closely linked with success in serving the
long-term interests of the Company's stockholders. To this end, in 1997,
Interim adopted stock ownership goals for the direct reports of the CEO
and select
11
<PAGE>
direct reports of the COO and CFO, to include approximately 22 executives.
The Company also adopted a discounted stock purchase plan for all
employees.
COMPETITIVE STANCE
In 1997, the Company expanded its comparison groups for senior executives to
include other service companies and high growth companies in addition to the
temporary service and staffing industry and general industry comparisons
previously used. Industry-specific companies are also used for business-unit
heads. All of the companies used in the peer group for the total shareholder
return graph are included within the temporary service comparison group.
The Company's policy is to offer salaries which are competitive at the
median of companies of similar size within the comparison groups, annual
incentive opportunities, which could pay at median levels if pre-set performance
goals are met and above-median if the goals are exceeded, and stock option
awards, which are highly competitive and at least median over time.
BASE SALARIES
Base salaries are reviewed annually using competitive compensation
information provided by nationally recognized consulting firms. Increases in
base salaries are granted after considering relative competitive positions,
individual performance and general salary increases within the rest of the
Company.
INCENTIVE COMPENSATION
The Committee determines the performance measures used in setting the annual
incentive targets of the CEO and his direct reports, including the named
officers. Incentive compensation is designed to specifically relate executive
pay to Company performance. Bonuses under such plans provide financial rewards
for achievement of substantive business results and where substantive business
results are attained, for the attainment of objectively measured personal
performance goals. Bonuses are paid after the end of the fiscal year if the
individual remains in the employ of the Company and achieves established
performance targets. The bonus incentive requires the attainment of specific
earnings per share (EPS) growth targets for the Company's stock. The CEO's bonus
is based 100% on EPS growth, while the COO's and the CFO's bonuses are based 75%
on EPS growth. Other executives have up to 50% of their bonuses based on EPS. If
more than the target bonus is earned, the excess bonus is deferred, is subject
to forfeiture, and will be paid out in equal installments over the next three
years.
STOCK OPTION AWARDS
The Committee views stock options as a critical element of the compensation
program. Options have been granted broadly in the Company, may be used as a
hiring inducement, and are increasingly viewed as a key element in retaining
executives important to the future success of the Company. Because the Company
has a high proportion of professionals, it expects to utilize an above-average
level of stock in its program. In 1997, the Committee carefully reviewed its
past grant practices for key executives and decided to make retention awards to
a number of key executives, including the CEO, in order to retain them and help
them meet their ownership goals in the future. Because these awards are intended
to enhance retention, they will vest over four years rather than the three years
used for prior awards.
In this proxy is a proposal for a new stock option plan, which will provide
shares for 1999 grants.
STOCK OWNERSHIP
In 1997, the Committee adopted stock ownership goals for 22 top executives,
which range from five times salary for the CEO to two times salary for first
level participants. Participants have been offered a favorable financing program
whereby the Company reimburses executives for loan interest for the first
12
<PAGE>
three years. As of March 1, 1998, the CEO achieved 101% of his goal, the CFO
achieved 144%, and the COO achieved 106%. The other 19 executives achieved 41%
of their goals. Total stock ownership for this group as of March 1, 1998, is
261,786 shares.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
The Committee intends that all compensation paid to Interim executives will
be tax-deductible. The Committee has requested shareholder approval where
necessary and has established administrative rules for its plans in order to be
in compliance with Internal Revenue Code Section 162(m).
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 1997
In 1997, the base salary, incentive compensation and stock option awards for
the Chief Executive Officer were determined by the Committee based on the
principles outlined above. After reviewing a competitive study from its
consultants, the Board of Directors adopted the Compensation Committee's
recommendation to increase the CEO's salary from $550,000 to $600,000 effective
January 1, 1998. His target incentive for 1998 was increased from 55% of salary
to 75% of salary. In 1997, the CEO earned a bonus of $402,325 under the bonus
incentive plan for executives described above, $99,825 of which was deferred
under the terms of the plan. In calendar year 1997, he was granted two stock
option awards of 100,000 shares each, one normal annual award and one special
retention award. Additional retention stock option grants, including one for
200,000 shares to the CEO, were made to select key executives in January 1998.
The Employment Agreement of the CEO was effective May 1, 1994 and has a term
of three years with provisions for automatic renewals subject to a prior notice
not to extend the term. Salary, incentives and stock option awards are to be
determined by the Committee. The Employment Agreement also provides for the
continuation of the Chief Executive Officer's annual salary for the remaining
term of employment and the vesting of outstanding stock options if the Chief
Executive Officer's employment is terminated without good cause or as a result
of retirement or a change in control. The Committee is currently considering a
new employment agreement for implementation in 1998.
BY THE COMPENSATION COMMITTEE: Cinda A. Hallman, Chairperson
Steven S. Elbaum
J. Ian Morrison
13
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the cumulative total stockholder return on
the Company's Common Stock for the period beginning January 27, 1994 (the date
of the Company's initial public offering) and ended December 26, 1997, as well
as the cumulative total return of the Standard and Poor's 500 stock index and a
Peer Group Index, for the same time period. The total cumulative return on
investment (change in stock price plus reinvested dividends, if any) for the
Company, the Standard and Poor's 500 stock index and the Peer Group Index is
based on stock prices as of January 27, 1994, assuming a $100 investment. The
Company has not declared any dividends in the period represented in this
performance graph.
The Peer Group Index is comprised of the following publicly traded
companies: CDI Corporation; Kelly Services, Inc.; Manpower Inc.; and, Robert
Half International, Inc. Please note that since the Company divested itself of
its HealthCare Division on September 26, 1997, it no longer includes The Olsten
Corporation and Staff Builders, Inc. in the Company's Peer Group Index. Also,
due to the acquisition of Uniforce Services, Inc. by another entity, it is no
longer included in the Company's Peer Group Index.
The data for this performance graph was compiled by the Company from
Bloomberg Financial Services. The stock price performance shown on this graph is
not necessarily indicative of future price performance of the Company's Common
Stock.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERIM SERVICES
INC. S&P 500 COMPOSITE PEER GROUP
<S> <C> <C> <C> <C> <C> <C>
1/27/94 $100.00 $100.00 $100.00
6/24/94 $118.75 $92.50 $103.79
12/30/94 $123.13 $95.94 $126.55
6/30/95 $125.00 $113.80 $121.69 .
12/29/95 $173.75 $128.63 $133.12
6/28/96 $215.00 $140.09 $183.13
12/27/96 $177.50 $154.74 $167.66
6/27/97 $222.50 $184.90 $225.73
12/26/97 $258.75 $202.72 $228.86
</TABLE>
14
<PAGE>
APPOINTMENT OF AUDITORS
(ITEM 2 ON PROXY CARD)
Deloitte & Touche audited the accounts of the Company for the twelve months
ended December 26, 1997. Deloitte & Touche has offices or affiliates convenient
to most of the Company's operations in the United States and other countries and
is considered to be well qualified. The Board of Directors has appointed such
firm as the Company's independent auditors for the fiscal period ending December
25, 1998, and recommends that the stockholders ratify such appointment.
Representatives of Deloitte & Touche expect to attend the annual meeting, will
be afforded an opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions by stockholders.
Proxies solicited by the Board of Directors will be voted for ratification
of the appointment of Deloitte & Touche in the absence of instructions to the
contrary.
APPROVAL OF PROPOSED AMENDMENT TO RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK
(ITEM 3 ON PROXY CARD)
The Board of Directors has determined that it is advisable to amend the
Restated Certificate of Incorporation of the Company and has recommended that
the stockholders approve an amendment to ARTICLE FOURTH of the Restated
Certificate of Incorporation (the "Amendment") to increase the authorized number
of shares of Common Stock, par value $0.01 per share, from 50,000,000 to
100,000,000 in order to provide the Company flexibility to meet future needs for
unreserved Common Stock. The full text of the Amendment is attached to this
Proxy Statement as Exhibit A. The Board has directed that the Amendment be
submitted to the stockholders for their consideration.
REASONS FOR THE PROPOSED AMENDMENT
During the past year, the Company had a two-for-one stock split which had
the effect of increasing the Common Stock outstanding by 19,666,675 shares. As
of March 17, 1998, of the 50,000,000 currently authorized shares of Common
Stock, 39,944,245 were issued and outstanding and approximately 6,984,809 shares
(which number reflects both the two-for-one stock split and the additional
1,500,000 shares reserved in connection with the 1998 Plan being voted on at
this annual meeting of stockholders) were reserved for issuance under the
Company's various stock option plans and other stock related incentive benefit
plans. The remaining 3,070,946 authorized shares of Common Stock available for
issuance are not considered adequate for the Company's future possible
requirements.
In light of the 1997 stock split, there are not sufficient authorized but
unissued shares of Common Stock to fully fund the Company's existing
stockholders rights plan with Common Stock. While the stockholders rights plan
could be funded by the Company's authorized Preferred Stock, the Company's Board
of Directors believes that it is advisable to increase the number of authorized
shares of Common Stock in order to provide the ability to fully fund the
stockholders rights plan with Common Stock.
Additionally, although the Company currently has no specific plans to use
the additional authorized shares of Common Stock, the Company's Board of
Directors believes that it is prudent to increase the number of authorized
shares of Common Stock to the proposed level in order to provide for a reserve
of shares available for issuance in connection with possible future actions.
Such actions may include, but are not limited to, equity financings, business
acquisitions, corporate mergers, establishing strategic relationships with
corporate partners, funding employee benefit plans, stock splits or stock
dividends, and other general corporate purposes. Currently there are no plans,
agreements or arrangements in place requiring the utilization of these
additional shares for any such purposes. However, having such additional
authorized Common Stock available for issuance would allow the Board of
Directors to issue shares of Common Stock in the future without the delay and
expense associated with seeking stockholder approval at such
15
<PAGE>
time. Elimination of the delays and expense occasioned by the necessity of
obtaining stockholder approval will better enable the Company, among other
things, to engage in financing transactions and acquisitions as well as to take
advantage of changing market and financial conditions on a more competitive
basis, as determined by the Board of Directors.
The additional Common Stock to be authorized by adoption of the Amendment
would have rights identical to the currently outstanding Common Stock of the
Company. Adoption of the proposed Amendment and the future issuance of the
Common Stock would not affect the rights of the holders of currently outstanding
Common Stock of the Company, except for effects incidental to increases in the
number of outstanding shares of the Company's Common Stock at the time of any
such issuances. Any future issuance of Common Stock will be subject to the
rights of holders of any outstanding shares of any Preferred Stock which the
Company may issue in the future.
POSSIBLE EFFECTS OF THE AMENDMENT
If the proposed Amendment is approved, there will be a larger number of
authorized shares which the Board of Directors may issue without further vote of
the stockholders of the Company, except as may be required by applicable laws or
under the rules of the New York Stock Exchange (or any national securities
exchange on which shares of Common Stock of the Company are then listed).
Current holders of Common Stock have no preemptive or like rights, which means
that current stockholders do not have a prior right to purchase any new issue of
stock of the Company in order to maintain their proportionate ownership thereof.
The effects of the authorization of additional shares of Common Stock and
issuance of such additional shares may also include dilution of the voting power
of currently outstanding shares and reduction of the portion of dividends, if
any, and liquidation proceeds available to the holders of currently outstanding
stock.
In addition, the Board of Directors could use authorized but unissued shares
to create impediments to a takeover or a transfer of control of the Company.
Accordingly, the increase in the number of authorized shares of Common Stock may
deter a future takeover attempt which holders of Common Stock may deem to be in
their best interest or in which holders of Common Stock may be offered a premium
for their shares over the market price.
Although an increase in the authorized shares of Common Stock could, under
certain circumstances, have an anti-takeover effect (by, for example, diluting
the stock ownership of a person seeking to effect a change in the composition of
the Board of Directors or contemplating a tender offer or other transaction for
the combination of the Company with another company), this proposal to amend the
Restated Certificate of Incorporation is not prompted by any specific effort or
takeover threat currently perceived by management, nor is it part of a plan by
management to recommend a series of similar amendments to the Board of Directors
and stockholders. The Board of Directors is not currently aware of any attempt
to takeover or acquire the Company and it does not presently contemplate
recommending the adoption of any other amendments to the Restated Certificate of
Incorporation which could be construed to affect the ability of third parties to
take over or change control of the Company.
EFFECTIVE DATE
If approved by the stockholders, the proposed amendment will become
effective upon the filing of a Certificate of Amendment with the Secretary of
State of Delaware amending the Company's Restated Certificate of Incorporation,
which will occur as soon as reasonably practicable.
RECOMMENDATION OF THE BOARD OF DIRECTORS "FOR" THIS PROPOSAL
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE AMENDMENT OF THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION AND PROXIES SOLICITED BY THE BOARD WILL BE
SO VOTED IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY.
16
<PAGE>
APPROVAL OF THE 1998 STOCK INCENTIVE PLAN
(ITEM 4 ON PROXY CARD)
INTRODUCTION
On March 5, 1998, the Board of Directors approved the 1998 Stock Incentive
Plan (the "1998 Plan"). The 1998 Plan is intended to replace the 1997 Long-Term
Executive Compensation and Outside Director Stock Option Plan, and its
predecessor plans (collectively, the "1997 Plan") for future grants. Upon
stockholder approval of the 1998 Plan, the 1997 Plan will terminate, except as
to any outstanding stock options granted thereunder, and any authorized shares
under the 1997 Plan that have not been reserved for outstanding stock options
will become available for issuance under the 1998 Plan. For a thorough
discussion of the number of shares available under the 1998 Plan, see SHARES
SUBJECT TO THE 1998 PLAN, below.
Since its IPO in 1994, the Company has requested a new share authorization
each year for stock option grants during the upcoming year from its
stockholders. Another annual request is being made this year with the
expectation that a multi-year plan will be prepared and presented to the
stockholders at next year's annual meeting.
The Board of Directors believes that past stock options have been very
effective in motivating management to build the Company and its market value,
and to increase management's stock ownership in the Company. Options have
historically been granted quite broadly and, in 1997, a stock purchase plan was
adopted by the stockholders which will help all employees become stockholders of
the Company.
The Board now requires all top officers to own stock, as discussed in the
Compensation Committee report, and option grants are necessary to help them meet
their goals. Stock options are also increasingly important to the Company in its
efforts to attract the kind of talent needed for the future.
Approval of the 1998 Plan by the stockholders is desired so that some of the
options to purchase Common Stock granted under the 1998 Plan (each a "Stock
Option") may qualify as "Incentive Stock Options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and so that some of the
Awards granted under the 1998 Plan may qualify for certain exemptions under
Section 162(m) of the Code. Additionally, approval by the stockholders enables
the Company to apply for the listing on the New York Stock Exchange of the
shares of Common Stock newly reserved for issuance under the 1998 Plan.
The Board of Directors of the Company believes that the 1998 Plan and its
approval by the stockholders of the Company are in the best interests of the
Company. Accordingly, the Board of Directors recommends approval of the 1998
Plan by the stockholders and requests a favorable vote from you on the 1998
Plan.
MATERIAL FEATURES OF THE PLAN
The following discussion, which summarizes the material features of the 1998
Plan, is qualified in its entirety by reference to the full text of the 1998
Plan, which is attached to this proxy statement as Exhibit B.
SHARES SUBJECT TO THE 1998 PLAN
The Company previously has authorized an aggregate of 4,800,000 shares of
Common Stock for use under the 1997 Plan (including its predecessor plans). Of
these, options for 887,023 shares have been exercised and options for 3,409,869
shares are currently outstanding. The remaining 503,108 shares have not yet been
reserved for issuance pursuant to specific option grants or grants of other
awards under the 1997 Plan and will be available for grant under the 1998 Plan.
In order to make additional awards under the 1998 Plan so that the Company
continues to receive the benefits associated therewith, the 1998 Plan
17
<PAGE>
authorizes an additional 1,500,000 shares of Common Stock for issuance in
accordance with the 1998 Plan's terms. The total number of shares available for
issuance under the 1998 Plan shall not exceed 2,003,108 subject to increase due
to the anti-dilution provisions of the 1998 Plan and any Non-Issuance or Stock
Exercise (as defined below).
Shares of Common Stock not actually issued pursuant to an Award under the
1998 Plan, or an award under the 1997 Plan or any other stock option or benefit
plan of the Company for the benefit of employees or Directors which has been
approved by the stockholders of the Company (collectively, with the 1997 Plan,
"Other Company Plans"), due to forfeiture, lapse, surrender, payment of
withholding taxes or otherwise, shall be available for future Awards under the
1998 Plan. (A non-issuance of Common Stock under any plan other than the 1998
Plan, shall be a "Non-Issuance.") In the event that shares of stock already
owned by an optionee are tendered either to exercise a Stock Option, or a stock
option granted under any Other Company Plan, or for the payment of withholding
taxes under the Plan or any Other Company Plan (collectively, a "Stock
Exercise"), the shares of Common Stock so tendered shall be added to the total
number of authorized shares under the 1998 Plan.
Shares of Common Stock to be delivered or purchased under the 1998 Plan may
be either authorized but unissued Common Stock or treasury shares. Not more than
200,311 of such shares (subject to the anti-dilution provisions of the 1998
Plan) may be issued in Awards other than Stock Options. Up to 2,003,108 of such
shares may be issued or issuable under the 1998 Plan in connection with the
exercise of Incentive Stock Options, subject to increases due to either the
anti-dilution provisions of the 1998 Plan or any Stock Exercise with respect to
Awards or Director Stock Options. The maximum number of shares of Common Stock
with respect to which Stock Options and stock appreciation rights may be granted
to any Recipient during any three calendar years is 1,000,000 shares.
ELIGIBILITY
Awards may be granted to (i) employees of the Company and its subsidiaries,
(ii) members of the Boards of Directors of the Company or its subsidiaries,
(iii) persons who have agreed in writing to become an employee of the Company or
a subsidiary within thirty (30) days, or (iv) consultants or advisors who have
rendered bona fide services to the Company or a subsidiary (not including
services in connection with the offer or sale of securities in a capital-raising
transactions) (collectively, "Recipients"); provided, that Incentive Stock
Options may only be granted to employees of the Company or a subsidiary in which
the Company owns, directly or indirectly, stock possessing 50% or greater of the
total combined voting power of such subsidiary. Members of the Committee (except
for an ex officio member) only may be eligible for grants of Director Stock
Options or for Awards which are granted by the Board of Directors.
ADMINISTRATION
The Plan shall be administered by a Compensation Committee (the "Committee")
consisting of not less than two (2) outside directors of the Company each of
whom qualifies as an "Outside Director" under Treasury Regulation Section
1.162-27(e)(3) and as a "Non-Employee Director" under Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended. The members of the
Committee shall be appointed by and serve at the pleasure of the Board of
Directors of the Company. The Committee shall have full power and authority to
determine which Recipients shall receive Awards, to construe, interpret and
administer the 1998 Plan and, to make determinations which shall be final,
conclusive and binding upon all persons. The Committee shall impose such
conditions upon the grant and exercise of Awards under the 1998 Plan as may from
time to time be deemed necessary or advisable, in the opinion of counsel to the
Company, to comply with applicable laws and regulations, and from time to time
may adopt rules, regulations and policies for carrying out the 1998 Plan. Such
policies may include, but need not be limited to, the type, size and terms of
Awards to be made to Recipients and the conditions for payment of such Awards.
In addition, the Committee may delegate to the Chief Executive Officer of the
Company the authority to grant Awards to Recipients who are not subject to
Section 16(a) of the Securities Act of 1934,
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as amended. Notwithstanding the foregoing, the Board of Directors shall have the
authority to determine which Outside Directors shall receive Awards and the
terms and conditions of such Awards.
TYPES OF AWARDS
Awards to Recipients under the 1998 Plan (collectively, "Awards") may
include shares of Common Stock, restricted shares of Common Stock ("Restricted
Shares"), Stock Options, including Reload Stock Options (but excluding Director
Stock Options), stock appreciation rights, and performance shares, performance
units and other performance-based compensation ("Target Awards"). The Committee
may establish performance goals to be achieved within such Performance Periods
as may be selected by it using such measures of the performance of the Company
it may select as a condition to the receipt of the Award. Not more than 200,311
shares (subject to anti-dilution adjustment) may be issued in Awards other than
Stock Options.
In addition to the Awards granted to Recipients, as of each annual meeting
of the stockholders of the Company, each director of the Company who is not an
employee of the Company or a subsidiary of the Company, including newly elected
Directors, (each an "Outside Director") shall be granted a Stock Option to
purchase 4,000 shares of Common Stock (a "Director Stock Option"). Director
Stock Options shall vest one year from the date of grant, shall have a term of
ten (10) years, and must be exercised prior to the first anniversary of the
Outside Director's termination of service as a Director.
Additionally, in connection with the exercise of a Stock Option (other than
a Director Stock Option), if a Recipient exercises such Stock Option by
surrendering other shares of Common Stock (as discussed in PRICING AND MARKET
VALUE RESTRICTIONS), the Committee may grant an additional Stock Option for the
number of shares of Common Stock so surrendered and also for the number of
shares withheld or tendered to satisfy tax withholding requirements (a "Reload
Stock Option"). Any Reload Stock Option shall become exercisable upon such terms
and conditions as the Committee shall determine, but the exercise price shall
not be less than the market value of the shares of Common Stock on the date of
the exercise of such prior Stock Option and the term shall not extend beyond the
expiration of the prior Stock Option.
The Committee may determine that all or a portion of an Award or a payment
to a Recipient pursuant to an Award, in any form whatsoever, shall be vested at
such times and upon such terms as may be selected by it, provided, however, an
Award of Restricted Shares may not vest in less than three years from its grant.
The Committee may determine that the vesting of any Award shall be accelerated
in the event of a change of control of the Company. The Committee also may
determine that the receipt of all or a portion of an Award or a payment to a
Recipient pursuant to an Award, in any form whatsoever, shall be deferred.
Deferrals shall be for such periods and upon such terms as the Committee may
determine. Additionally, the Committee may determine the term of a Stock Option
or other Award, provided no Stock Option or other Award shall have a term of
greater than ten (10) years.
In addition, the Committee may require a Recipient to refund to the Company
the value of an Award realized by a Recipient, if the Recipient accepts
employment with a competitor of the Company or a subsidiary of the Company
within six (6) months of such realization. In the case of a Stock Option, a
Recipient shall be deemed to realize its value upon the exercise of the Stock
Option and its value shall be an amount equal to the excess of the market value
of the shares of Common Stock received as of the date of the exercise over the
exercise price paid for such shares. In the case of all other Awards, a
Recipient shall be deemed to realize their value upon the payment (in cash or
stock) of the Award and its value shall be the amount of any cash received plus
an amount equal to the market value of the shares of Common Stock received in
connection with the Award. The market value of shares shall be the closing price
for the Common Stock on the New York Stock Exchange (or on the principal
securities exchange or other market on which the Common Stock is then being
traded) on the date of realization, or if such closing price is not reported on
such date, the last reported closing price.
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The Committee and the Board of Directors, respectively, shall have the power
to specify the form of Award contracts and Director Stock Option agreements to
be granted from time to time pursuant to and in accordance with the 1998 Plan
and such contracts shall be final, conclusive and binding. No Recipient or
Outside Director shall have any rights as a stockholder of the Company with
respect to Awards or Director Stock Options unless and until certificates for
shares of Common Stock or Restricted Shares are issued to the Recipient or
Outside Director.
The Company shall have the right to deduct from all Awards paid in cash any
federal state local or foreign taxes required by law to be withheld with respect
to such Awards, and with respect to Awards paid in other than cash, to require
the payment (through withholding from the Recipient's salary or otherwise) of
any such taxes. Subject to such conditions as the Committee may establish,
Awards payable in shares of Common Stock may provide that the Recipients thereof
may elect, in accordance with any applicable regulations, to have the Company
withhold shares of the Common Stock to satisfy all or part of such withholding
obligations, with the value of such withheld shares of Common Stock based upon
their fair market value on the date the tax withholding is required to be made.
PAYMENT OF TARGET AWARDS
The payment under any Target Award shall be contingent upon the attainment
of one or more pre-established performance goals established by the Committee in
writing within ninety (90) days of the commencement of a performance period
designated by the Committee (the "Target Award Performance Period") (or in the
case of a newly hired Recipient, before 25% of such Recipient's service for such
Target Award Performance Period has elapsed). Such performance goals shall be
based upon one or more of the following performance-based criteria: earnings per
share of the Common Stock, the Company's return on net assets, equity, or
revenues, or the Company's cash flow, book value, Common Stock performance or
price-earnings ratio. The Committee, in its discretion, may cancel or decrease
an earned Target Award, but, except as otherwise permitted by the Treasury
Regulations, may not, under any circumstances, increase such Award. The maximum
amount which any Recipient may be paid under a Target Award is $2,000,000 per
calendar year. The Committee may, in its discretion, decrease this maximum, but,
except as otherwise permitted under the Treasury Regulations, may not, under any
circumstances, increase this maximum. Before payments are made under a Target
Award, the Committee shall certify in writing that the performance goals
justifying the payment under the Target Award have been met.
PRICING AND MARKET VALUE RESTRICTIONS
The amounts of certain Awards are based on the market value of a share of
Common Stock at a specified point in time. The exercise price per share of
Common Stock under each Stock Option granted under the 1998 Plan (including
Director Stock Options) shall not be less than the closing price for the Common
Stock on the New York Stock Exchange (or on the principal securities exchange or
other market on which the Common Stock is then being traded) on the date the
Stock Option is granted or if such closing price is not reported on the date of
grant, the last reported closing price. The exercise price for each Stock Option
will remain constant during the life of the option, subject to adjustment
pursuant to the anti-dilution provisions of the 1998 Plan. The base value per
share of Common Stock covered by an Award in the form of a stock appreciation
right shall be not less than the market value of one share of Common Stock on
the initial day of the performance period for such stock appreciation right .
Other than pursuant to the anti-dilution provisions of the 1998 Plan, no Stock
Option may be re-priced to a lesser price without approval of the stockholders
of the Company. On March 17, 1998, the last reported sale price of the Common
Stock on The New York Stock Exchange was $30.31 per share.
Payment for exercise of any Stock Option, including Director Stock Options,
shall be made (a) in cash, (b) by delivery of Common Stock having a market value
equal to the aggregate exercise price, (c) by a combination of payment of cash
and delivery of Common Stock in amounts such that the amount of cash plus the
market value of the Common Stock equals the aggregate exercise price, or (d) by
a cashless
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exercise upon such terms and conditions as the Committee, it its sole and
absolute discretion, shall determine. The Committee may, in its discretion,
include within any Stock Option agreement (other than an agreement covering a
Director Stock Option), a provision entitling the Recipient to a Reload Stock
Option in the event that shares of Common Stock are surrendered for payment of
the exercise price.
EMPLOYMENT
With respect to Awards granted to Recipients who are employees of the
Company or its subsidiaries, the Committee shall require that a Recipient must
be an employee of the Company or a subsidiary (or have retired) at the time an
Award becomes vested and may provide for the termination of any such outstanding
Award if a Recipient ceases to be an employee of the Company or a subsidiary or
an Outside Director, and may establish such other provisions with respect to the
termination or disposition of an Award on the death or retirement of a Recipient
as it, in its sole and absolute discretion, deems advisable. Notwithstanding the
foregoing, the Committee shall have the sole power to determine the date of, and
the circumstances which shall constitute, a cessation of employment (including
whether the spin-off of a subsidiary constitutes a cessation of employment of
employees who continue in the employ of the spun-off company) and to determine
whether such cessation is the result of retirement, death or any other reason.
No Award shall be construed as imposing upon the Company or a subsidiary the
obligation to continue the employment of a Recipient. No employee or other
person shall have any claim or right to be granted an Award under the Plan.
ANTI-DILUTION PROTECTION
In the event of any changes in the capital structure of the Company,
including but not limited to a change resulting from a stock dividend or
split-up, or combination or reclassification of shares, the Board of Directors
shall make such equitable adjustments with respect to Awards and Director Stock
Options or any other provisions of the 1998 Plan as it deems necessary and
appropriate, including, if necessary, any adjustment in the maximum number of
shares of Common Stock subject to the 1998 Plan or the number of shares of
Common Stock subject to an outstanding Award or Director Stock Option. If the
Company shall become a party to any corporate merger, consolidation, major
acquisition of property for stock, reorganization, or liquidation, the Board of
Directors may make such arrangements it deems advisable with respect to
outstanding Awards or Director Stock Options, which shall be binding upon
Recipients and Outside Director Recipients, including, but not limited to, the
substitution of any new Awards or Director Stock Options then outstanding, the
assumption of any such Awards or Director Stock Options and the termination of,
or payment for, such Awards or Director Stock Options. In the absence of any of
the foregoing transactions, Stock Options may not be re-priced to a lower price
without approval of the stockholders of the Company.
ASSIGNABILITY
No Award granted pursuant to the 1998 Plan shall be transferable or
assignable by the Recipient other than by will or the laws of descent and
distribution and during the lifetime of the Recipient shall be exercisable or
payable only by or to him or her. Notwithstanding the foregoing, the Committee
specifically may designate that a Stock Option may be transferred to a family
member, a trust established primarily for the benefit of a family member, or to
an entity which is a corporation, partnership, or limited liability company (or
any other similar entity) the owners of which are primarily the aforementioned
persons or trusts. Any such Stock Option so transferred shall be subject to the
provisions of the 1998 Plan concerning the exercisability during such
transferor's employment or service as Director.
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REGISTRATION
Each Award and Director Stock Option shall be subject to the requirement
that if at any time the Committee (or in the case of a Director Stock Option,
counsel for the Company) shall determine that qualification or registration
under any state or federal law of the shares of Common Stock, Restricted Shares,
Stock Options or other securities thereby covered, or the consent or approval of
any governmental regulatory body is necessary or desirable as a condition of or
in connection with the granting of such Award or Director Stock Option or the
purchase of shares thereunder, the Award or Director Stock Option may not be
paid or exercised in whole or in part unless and until such qualification,
registration, consent or approval shall have been effected or obtained free of
any conditions the Committee, in its sole discretion, deems unacceptable.
FEDERAL INCOME TAX CONSEQUENCES
The Company has been advised by its counsel that the federal income tax
consequences of the grant and/or exercise of Awards and Director Stock Options
under the 1998 Plan are as described below. The following information is not a
definitive explanation of the tax consequences of the Awards. Recipients should
consult with their own tax advisors with respect to the tax consequences
inherent in the ownership and/or exercise of the Awards, and the ownership and
disposition of any underlying securities.
COMMON STOCK AWARDS; RESTRICTED SHARES. Under the Code, the federal
income tax consequence to the recipient of an Award of Common Stock or
Restricted Shares will depend on the facts and circumstances of each
such Award, and, in particular, the nature of the restrictions imposed
with respect to the shares of stock which is the subject of such Award.
In general, if the shares which are the subject of the Common Stock or
Restricted Share Awards are actually issued to the Recipient but is
subject to a "substantial risk of forfeiture," e.g., if the rights to
ownership of the shares are conditioned upon the future performance of
substantial services by the Recipient, a taxable event occurs only when
the risk of forfeiture ceases and not before. So long as the sale of
stock at a profit could subject the Recipient to suit under Section
16(b) of the Securities Exchange Act of 1934, the shares are considered
to be subject to a "substantial risk of forfeiture." At such time as the
substantial risk of forfeiture ceases, the Recipient will realize
ordinary income to the extent of the excess of the fair market value of
the shares of stock on the date the risk of forfeiture terminates over
the Recipient's cost of such shares (if any), and the same amount is
deductible by the Company as compensation. Under certain circumstances,
the Recipient, by making an election under Section 83(b) of the Code,
can accelerate the taxable event with respect to the stock, in which
event the ordinary income amount and the Company's deduction will be
measured and timed as of the date the stock is deemed, for Section 83(b)
purposes, to have been transferred to the Recipient. If the restrictions
with respect to the stock which is the subject of such a Common Stock or
Restricted Share Award, by their nature, do not subject the recipient to
a "substantial risk of forfeiture" of the stock, then the recipient will
realize ordinary income with respect to the stock to the extent of the
excess, at the time of grant, of the fair market value of the stock over
the Recipient's cost therefor, if any; and the same amount is then
deductible by the Company.
Any disposition of shares after restrictions lapse will be subject
to the regular rules governing long-term and short-term capital gains
and losses, with the basis for this purpose equal to the fair market
value of the shares at the end of the restricted period (or the date of
the receipt of the Restricted Shares, if the Recipient elects to be
taxed on the fair market value upon such receipt). Dividends received by
a Recipient during the restricted period will be taxable to the
recipient at ordinary income tax rates and will be deductible by the
Company unless the Recipient has elected to be taxed on the fair market
value of the Restricted Shares upon receipt, in which case they will
thereafter be taxable to the Recipient as dividends and will not be
deductible by the Company.
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INCENTIVE STOCK OPTIONS. The 1998 Plan qualifies as an incentive
stock option plan within the meaning of Section 422 of the Code. A
Recipient who is granted an Incentive Stock Option will not recognize
any taxable income for federal income tax purposes either on the grant
or exercise of the Incentive Stock Option. However, the excess of the
fair market value of the Common Stock received upon the exercise of the
Incentive Stock Option over the exercise price is included in the
recipient's alternative minimum taxable income and may be subject to
alternative minimum tax ("AMT"). For AMT purposes only, the basis of the
Common Stock acquired upon the exercise of the Incentive Stock Option is
increased by the amount of such excess ("AMT Basis").
If the Recipient disposes of the shares purchased pursuant to the
Incentive Stock Option more than two years after the date of grant and
more than one year after the transfer of the shares to him (the required
statutory "holding period"), (a) the Recipient will recognize long-term
capital gain or loss, as the case may be, equal to the difference
between the selling price and the exercise price; and (b) the Company
will not be entitled to a deduction with respect to the shares so
issued. For AMT purposes, the gain is the difference between the sales
price and the AMT Basis. If the holding period requirements are not met,
any gain realized upon disposition of the shares will be taxed as
ordinary income to the extent of the excess of the lesser of (i) the
fair market value of the shares at the time of exercise, or (ii) the
amount, if any, realized on the disposition, over the exercise price.
The Company will be entitled to a deduction in the year of disposition
in an amount equal to the ordinary income recognized by the Recipient.
Any additional gain will be taxed as short-term or long-term capital
gain depending upon the holding period for the shares. For AMT purposes,
the gain is the difference between the sales price and the AMT Basis.
NONQUALIFIED STOCK OPTIONS. The Recipient of a nonqualified stock
option under the 1998 Plan will not recognize any income for federal
income tax purposes on the grant of the Stock Option. Generally, on the
exercise of the Stock Option, the Recipient (or the Outside Director in
the case of a Director Stock Option) will recognize taxable ordinary
income equal to the difference between the fair market value of the
shares on the exercise date and the exercise price for the shares. The
Company generally will be entitled to a deduction on the date of
exercise in an amount equal to the ordinary income recognized by the
Recipient. Upon disposition of the shares purchased pursuant to the
Stock Option, the Recipient will recognize long-term or short-term
capital gain or loss, as the case may be, equal to the difference
between the amount realized on such disposition and the basis for such
shares, which basis will include the amount previously recognized by the
recipient as ordinary income.
STOCK APPRECIATION RIGHTS. A Recipient who is granted stock
appreciation rights will not recognize any taxable income on the receipt
of the stock appreciation rights. Upon the exercise of a stock
appreciation right, (a) the Recipient will recognize ordinary income
equal to the amount received (the increase from the per share base line
exercise value established on the date of grant to the per share fair
market value of the Common Stock on the date of exercise, multiplied by
the number of shares subject to the stock appreciation right); and (b)
the Company will be entitled to a deduction on the date of exercise in
an amount equal to the ordinary income recognized by the Recipient.
PERFORMANCE SHARES AND PERFORMANCE UNITS. A Recipient of
performance shares or performance units will not recognize any income
for federal income tax purposes on the date of the grant of the right to
receive performance shares or units. The Recipient will recognize
ordinary income for federal income tax purposes at the time of receipt
of cash and/or Common Stock with respect to the performance shares or
units in an amount equal to the sum of the amount of cash received plus
the excess, if any, of the fair market value of the performance shares
or units on the date received over the Recipient's cost of such
performance shares or units on the date of grant. The Company will be
entitled to a deduction on the date of receipt of the performance shares
or units by the Recipient in an amount equal to the ordinary income
recognized by the Recipient. Upon disposition of any shares received,
the Recipient will recognize long-term or short-term
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gain or loss depending upon the period for which he or she has held the
shares in an amount equal to the difference between the selling price
and the fair market value of the shares on the date of receipt.
TARGET AWARDS. Section 162(m) of the Code provides that
compensation paid to certain highly compensated executives of public
companies is not deductible to the extent such compensation paid to any
such executive exceeds $1 million per year (the "$1 million deduction
limitation"). However, compensation which qualifies as
"performance-based compensation" within the meaning of the regulations
under Section 162(m) is exempt from the $1 million deduction limitation.
Payments under the Target Awards are intended to qualify as
"performance-based compensation" so that they will not be subject to the
$1 million deduction limit.
AMENDMENTS AND TERMINATION
The Board of Directors of the Company shall have the right at any time
during the continuance of the 1998 Plan to amend, modify, supplement, suspend or
terminate the 1998 Plan, provided that in the absence of the approval of the
holders of a majority of the shares of Common Stock of the Company present in
person or by proxy at a duly constituted meeting of the stockholders of the
Company, no such amendment, modification or supplement shall (i) increase the
aggregate number of shares which may be issued under the 1998 Plan, unless such
increase is by reason of any change in capital structure, (ii) change the
termination date of the 1998 Plan, or (iii) delete or amend the market value
restrictions contained in the 1998 Plan, and provided further, that no
amendment, modification or termination of the 1998 Plan shall in any manner
affect any previously granted Award or Director Stock Option without the consent
of the Recipient or the Outside Director, as the case may be, unless such
amendment, modification or termination is by reason of any change in capital
structure or unless the same is by merger, consolidation, reorganization,
liquidation or similar occurrence.
Awards and Director Stock Options may be granted at any time prior to March
5, 2008, on which date the 1998 Plan will terminate except as to Awards and
Stock Options then outstanding thereunder, which Awards and Stock Options shall
remain in effect until they have expired according to their terms or until March
5, 2018, whichever first occurs. No Incentive Stock Option shall be exercisable
later than 10 years following the date it is granted.
AWARDS TO BE GRANTED UNDER THE 1998 PLAN
Set forth in the Proxy Statement under the section entitled "Executive
Compensation" is information concerning the type and amount of grants under the
1997 Plan made to eligible employees and Outside Directors of the Company.
Pursuant to the 1998 Plan, each Outside Director will receive a Director Stock
Option to purchase 4,000 shares of Common Stock annually on April 30. The Board
of Directors also intends to pay the Outside Director's annual retainer ($25,000
for 1998) by the issuance of Awards of either Common Stock or Stock Options. The
exact types and amounts of any other Awards to be made by the Committee in the
future to any eligible employees or Outside Directors pursuant to the 1998 Plan
are not presently determinable. As a result of the discretionary nature of the
1998 Plan, it is not possible to state who the Recipients of Awards under the
Plan will be, the numbers of Stock Options or other Awards to be received by any
person or group, or the benefits or amounts that would have been received by
certain persons or groups under the 1998 Plan. The Committee presently expects
that Awards of Stock Options and Target Awards will be made if the 1998 Plan is
approved by the stockholders, but the eligible Recipients to whom such Stock
Options and Target Awards will be granted are not yet determinable. In the
exercise of its discretion under the 1998 Plan, the Committee may choose to
grant other types of Awards under such Plan or may choose to grant no Awards
under such Plan.
INTEREST IN THE 1998 PLAN
Because of their status as executive officers or Outside Directors of the
Company (and, in some cases, as nominees for election as directors of the
Company), and due to their eligibility for the grant of Awards under the 1998
Plan, the executive officers and Outside Directors may be considered to have a
direct
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interest in the approval of the 1998 Plan by the stockholders of the Company.
The executive officers of the Company are: Shannon Allen, Ronald de Heer, Mark
Dermott, Robert Evans, Kenneth Kilburn, III, Roy G. Krause, Robert Livonius,
Raymond Marcy, Gary Peck, Mark W. Smith and John B. Smith. The Company's Outside
Directors are: Steven S. Elbaum, William F. Evans, Jerome B. Grossman, Cinda A.
Hallman, J. Ian Morrison and A. Michael Victory. Neither the 1998 Plan nor any
Award or Director Stock Option granted thereunder confers any right upon a
person to continue as a director or executive officer of the Company or
interferes in any way with either the right of the Board of Directors or
stockholders of the Company to terminate the directorship or employment of a
person or the person's right to terminate his or her directorship or employment
at any time.
RECOMMENDATION OF THE BOARD OF DIRECTORS "FOR" THIS PROPOSAL
The Board of Directors believes that the 1998 Plan will promote the
interests of the Company and its stockholders and enable the Company and its
subsidiary corporations to continue to attract, retain and reward persons
important to the Company's success. The 1998 Plan is designed to enhance the
identity of the interests of the plan participants with the interests of the
Company's stockholders. As such, the Board of Directors believes that the 1998
Plan is in the best interests of the Company and its stockholders. Accordingly,
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE 1998 PLAN AND PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED IN THE ABSENCE OF INSTRUCTIONS TO THE
CONTRARY.
OTHER INFORMATION
Information as to certain benefit plans currently in effect or proposed for
directors, officers and employees of the Company is set forth in the sections of
this proxy statement entitled, "DIRECTORS' COMPENSATION, COMMITTEES AND
MEETINGS" and "EXECUTIVE COMPENSATION."
NEW PLAN BENEFITS
The following table sets forth certain information concerning stock options
to be granted to Outside Directors pursuant to the 1998 Plan. Because of the
discretionary nature of the 1998 Plan, the exact type and quantity of Awards to
be granted to any eligible employees pursuant to the 1998 Plan are not presently
determinable.
1998 STOCK INCENTIVE PLAN (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NAME AND POSITION UNDERLYING OPTION GRANTS
- ---------------------------------------------------------------------------------------- -------------------------
<S> <C>
Non-Executive Director Group (2)........................................................ 24,000
</TABLE>
- ------------------------
(1) See discussion under "APPROVAL OF THE 1998 STOCK INCENTIVE PLAN."
(2) All current directors who are not officers as a group. The value of each
Director Stock Option is not determinable until the date of the annual
meeting of Company stockholders and thus, is not set forth above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own beneficially more than ten
percent of the Company's Common Stock to file with the Commission initial
reports of beneficial ownership and reports of changes in beneficial ownership
of the Common Stock. Officers, directors and persons owning more than ten
percent of the Common Stock are required to furnish the Company with copies of
all such reports. Officers Shannon C. Allen, Robert E. Livonius and Roy G.
Krause each filed late one (1) time during the fiscal year ended December 26,
1997, the late filing in each instance involved eight (8) transactions. Officer
Mark Dermott filed late one (1) time during the fiscal year ended December 26,
1997, which involved two (2) transactions.
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Officer Gary Peck filed late two (2) times during fiscal year ended December 26,
1997, which involved a total of ten (10) transactions. Director Ray Marcy filed
late one (1) time during the fiscal year ended December 26, 1997, which involved
a total of eight (8) transactions. Officer Mark W. Smith filed late one (1) time
during the fiscal year ended December 26, 1997, which involved one (1)
transaction. Except as stated above, to the Company's knowledge, based on a
review of copies of such reports furnished to the Company and written
representations from its officers and directors that no other reports were
required, during the fiscal year ended December 26, 1997, all Section 16(a)
filing requirements applicable to its executive officers, directors and persons
owning beneficially more than ten percent of the Common Stock were complied with
on a timely basis.
STOCKHOLDER PROPOSALS
Recommendations to the Nominating Committee for nominees to be elected to
the Board of Directors and proposals of stockholders intended to be presented at
the next Annual Meeting scheduled to be held in May or June, 1999, must be
submitted in writing to the Secretary of Interim Services Inc., 2050 Spectrum
Boulevard, Fort Lauderdale, Florida 33309. Stockholder recommendations and
proposals must be received by the Secretary no later than December 31, 1998, in
order to be included in next year's Proxy Statement and Proxy Card.
OTHER MATTERS
The Board of Directors knows of no other matters which will be presented at
the meeting, but if other matters do properly come before the meeting it is
intended that the persons named in the proxy will vote according to their best
judgment.
The Annual Report To Stockholders of the Company for the twelve months ended
December 26, 1997 (the "Annual Report"), is being mailed concurrently with this
Proxy Statement to all stockholders of record as of March 17, 1998, except for
accounts where the stockholder had filed a written request to eliminate
duplicate reports. In addition, the Company has provided brokers, dealers,
banks, voting trustees and their nominees, at Company expense, with additional
copies of the Annual Report so that such record holders could supply such
material to beneficial owners as of March 17, 1998. ADDITIONAL COPIES OF THE
ANNUAL REPORT AND THE ANNUAL REPORT ON FORM 10-K FOR THE TWELVE MONTHS ENDED
DECEMBER 26, 1997, FILED WITH THE COMMISSION (the "Form 10-K"), BUT WITHOUT
EXHIBITS TO THE FORM 10-K, WILL BE AVAILABLE WITHOUT CHARGE, UPON REQUEST TO:
Deirdre Skolfield
Manager, Investor Relations
Interim Services Inc.
2050 Spectrum Boulevard
Fort Lauderdale, Florida 33309
By Order of the Board of Directors
John B. Smith, SECRETARY
March 24, 1998
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EXHIBIT A
AMENDMENT OF
RESTATED CERTIFICATE
OF INCORPORATION OF INTERIM SERVICES INC.
1. The Restated Certificate of Incorporation of the Corporation is hereby
amended by deleting the first paragraph and subparagraph (i) of ARTICLE FOURTH
of the Restated Certificate of Incorporation in their present form and
substituting therefor a new first paragraph and subparagraph (i) of ARTICLE
FOURTH in the following form:
FOURTH: The aggregate number of shares of all classes of
stock that the Corporation shall have authority to issue
is 102,500,000 divided into two classes as follows:
(i) 100,000,000 shares of a class designated Common Stock,
with a par value of $0.01 per share; and
2. The remainder of the Restated Certificate of Incorporation of Interim
Services Inc. is hereby ratified and remains in full force and effect.
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EXHIBIT B
INTERIM SERVICES INC.
1998 STOCK INCENTIVE PLAN
1. PURPOSES. The purposes of this Interim Services Inc. 1998 Stock
Incentive Plan are to provide incentives and rewards to those employees largely
responsible for the success and growth of Interim Services Inc. and its
Subsidiary corporations, and to assist all such entities in attracting and
retaining executives and other key employees with experience and ability; to
attract and retain experienced and qualified directors who are not employees of
the Company or any Subsidiary; and to secure for the Company and its
stockholders the benefit of stock ownership in the Company by those employees
and directors.
2. DEFINITIONS.
(a) "Award" means one or more of the following: shares of Common Stock,
Restricted Shares, Stock Options (including Reload Stock Options), Stock
Appreciation Rights, Performance Shares, Performance Units or Target Awards
(but shall not mean a Director Stock Option).
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Common Stock" means the Common Stock, $0.01 par value, of the
Company.
(d) "Company" means Interim Services Inc., a Delaware corporation.
(e) "Director" means a member of the Board of Directors of the Company
or a member of the Board of Directors of any Subsidiary.
(f) "Director Stock Option" means a Stock Option granted pursuant to
Section 11.
(g) "Incentive Stock Option" means a Stock Option which meets all of the
requirements of an "incentive stock option" as defined in Section 422(b) of
the Internal Revenue Code.
(h) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
(i) "Outside Director" means a Director who is not an employee of the
Company or a Subsidiary.
(j) "Outside Director Recipient" means an Outside Director who has been
granted a Director Stock Option.
(k) "Performance Period" means that period of time specified by the
Committee during which a Recipient must satisfy any designated performance
goals in order to receive an Award.
(l) "Performance Share" means the right to receive, upon satisfying
designated performance goals for a Performance Period, shares of Common
Stock.
(m) "Performance Unit" means the right to receive, upon satisfying
designated performance goals within a Performance Period, Performance
Shares, cash, or a combination of cash and Performance Shares, based upon
the market value of shares of Common Stock covered by such Performance
Shares at the close of the Performance Period.
(n) "Plan" means this Interim Services Inc. 1998 Stock Incentive Plan,
as the same may be amended from time to time.
(o) "Recipient" means someone who has been granted an Award under the
Plan and is either (i) an employee of the Company or a Subsidiary, (ii) a
Director, (iii) a person who has agreed in writing to become an employee of
the Company or a Subsidiary within thirty (30) days, or (iv) a
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consultant or advisor who has rendered bona fide services to the Company or
a Subsidiary not in connection with the offer or sale of securities in a
capital-raising transaction.
(p) "Reload Stock Option" means an additional Stock Option (other than a
Director Stock Option) granted either in connection with, or (except in the
case of Incentive Stock Options) after, the grant of a prior Stock Option,
entitling the Recipient to such additional Stock Option in the event the
Recipient exercises such prior Stock Option by surrendering other shares of
Common Stock in accordance with Section 12. Any such Reload Stock Option
shall be for the number of shares of Common Stock surrendered but may also
include the number of shares tendered or withheld for taxes in accordance
with Section 18, shall become exercisable upon such terms and conditions as
the Committee shall determine, but (i) the purchase price shall not be less
than the market value of the shares of Common Stock on the date of exercise
of such prior Stock Option, and (ii) the term shall not extend beyond the
expiration of the prior Stock Option.
(q) "Restricted Share" means a share of Common Stock issued to a
Recipient hereunder subject to such terms and conditions, including, without
limitation, forfeiture or resale to the Company, and to such restrictions
against sale, transfer or other disposition, as the Committee may determine
at the time of issuance.
(r) "Stock Appreciation Right" means the right to receive, upon exercise
of a Stock Appreciation Right granted under the Plan, shares of Common
Stock, cash, or a combination of cash and shares of Common Stock, based on
the market value of the shares of Common Stock covered by such Stock
Appreciation Right on the date of exercise over the base line exercise value
established on the initial day of a Performance Period for such Stock
Appreciation Right.
(s) "Stock Option" means the right to purchase shares of the Company's
Common Stock upon exercise of an option granted under the Plan, including a
Director Stock Option.
(t) "Subsidiary" means a subsidiary of the Company controlled directly
or indirectly by the Company within the meaning of Rule 405 promulgated
under the Securities Act of 1933, as amended, and such subsidiaries
divisions, departments, and subsidiaries and the respective divisions,
departments and subsidiaries of such subsidiaries.
(u) "Target Award" means an Award, other than a Stock Option or Stock
Appreciation Right, the payment under which is intended to qualify as
"performance-based compensation" under Section 162(m) of the Internal
Revenue Code and the regulations thereunder.
(v) "Target Award Performance Period" means the performance period over
which a Target Award is earned.
3. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a Compensation Committee (the
"Committee") consisting of not less than two (2) Outside Directors of the
Company each of whom qualifies as an "Outside Director" under Treasury
Regulation Section 1.162-27(e)(3) and as a "Non-Employee Director" under
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended. The members of the Committee shall be appointed by, and serve at
the pleasure of, the Board of Directors. A majority of the Committee members
shall constitute a quorum and the acts of a majority of the members present
at any meeting at which a quorum is present or acts approved in writing by a
majority of the Committee, shall be valid acts of the Committee. All
references herein to the Committee shall be deemed to mean any successor to
the Committee, however designated, or the Board of Directors, if the Board
of Directors has not appointed a Committee.
(b) Subject to the powers herein specifically reserved to the Board of
Directors, the Committee shall have full power and authority to determine
which Recipients shall receive Awards, to construe,
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interpret and administer the Plan and, subject to the other provisions of
the Plan, to make determinations which shall be final, conclusive and
binding upon all persons including, without limitation, the Company, the
stockholders of the Company, the Board of Directors, the Recipients and any
persons having any interest in any Awards which may be granted under the
Plan. The Committee shall impose such additional conditions upon the grant
and exercise of Awards under the Plan as may from time to time be deemed
necessary or advisable, in the opinion of counsel to the Company, to comply
with applicable laws and regulations. The Committee from time to time may
adopt such rules and regulations for the carrying out the Plan and written
policies for implementation of the Plan. Such policies may include, but need
not be limited to, the type, size and terms of Awards to be made to
Recipients and the conditions for payment of such Awards. Notwithstanding
the foregoing, the Board of Directors shall have authority to determine
which Directors shall receive Awards and the terms and conditions of such
Awards. In addition, the Committee may delegate to the Chief Executive
Officer of the Company the authority to grant Awards to Recipients who are
not subject to Section 16(a) of the Securities Act of 1933, as amended.
(c) The payment under any Target Award shall be contingent upon the
attainment of one or more pre-established performance goals established by
the Committee in writing within ninety (90) days of the commencement of the
Target Award Performance Period (or in the case of a newly hired Recipient,
before 25% of such Recipient's service for such Target Award Performance
Period has elapsed). Such performance goals will be based upon one or more
of the following performance-based criteria: earnings per share of the
Common Stock, the Company's return on net assets, equity, or revenues, or
the Company's cash flow, book value, Common Stock performance or
price-earnings ratio. The Committee, in its discretion, may cancel or
decrease an earned Target Award, but, except as otherwise permitted by
Treasury Regulation Section 1.162-27(e)(2)(iii)(C), may not, under any
circumstances, increase such award. The maximum amount which any Recipient
may be paid under a Target Award is $2,000,000 per calendar year. The
Committee may, in its discretion, decrease this maximum, but, except as
otherwise permitted under Treasury Regulation Section
1.162-27(e)(2)(iii)(C), may not, under any circumstances, increase this
maximum. Before payments are made under a Target Award, the Committee shall
certify in writing that the performance goals justifying the payment under
Target Award have been met.
4. ELIGIBILITY. Awards may be granted to any Recipient. Provided, that
Incentive Stock Options may only be granted to employees of the Company or a
Subsidiary in which the Company owns, directly or indirectly, stock possessing
50% or more of the total combined voting power of such Subsidiary (or such other
level of stock ownership as may from time to time be set forth in Section 424(c)
of the Internal Revenue Code). No member of the Committee (other than an ex
officio member) shall be eligible for grants of Awards under the Plan by the
Committee, although such member may be eligible for grants of Director Stock
Options or for Awards granted by the Board of Directors.
5. STOCK SUBJECT TO THE PLAN.
(a) The total number of shares of Common Stock issuable under this Plan
may not exceed an aggregate of 1,500,000 shares plus the number of unused
shares under the Interim Services Inc. 1997 Long Term Executive Compensation
Plan and Outside Directors' Stock Option Plan, (2,003,108 in the aggregate),
subject to adjustment pursuant to Section 16 pertaining to a change in
capital structure, and subject to increase as provided in Sections 5(d) and
5(e). Shares of Common Stock to be delivered or purchased under the Plan may
be either authorized but unissued Common Stock or treasury shares. All of
such shares may be issued or issuable under this Plan in connection with the
exercise of Incentive Stock Options, provided that not more than 2,003,108
may used to grant Incentive Stock Options subject to adjustment pursuant to
Section 16 pertaining to a change in capital structure, and subject to
increase as provided in Section 5(e).
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(b) Not more than 200,311 (subject to adjustment pursuant to Section 16
pertaining to a change in capital structure) may be issued in Awards other
than Stock Options.
(c) Shares of Common Stock reserved for issuance pursuant to previously
granted Awards or Director Stock Options which are not actually issued
pursuant to such Award or Director Stock Option pursuant to this Plan (due
to forfeiture, cancellation, lapse, surrender, payment of withholding taxes
or otherwise) shall be available for future Awards or Director Stock
Options.
(d) Shares of Common Stock reserved for issuance pursuant to previously
granted stock options under any other plan of the Company for the benefit of
employees or Directors which has been approved by the stockholders of the
Company, and which are not actually issued pursuant to such stock option
(due to forfeiture, cancellation, lapse, surrender, payment of withholding
taxes or otherwise) shall be available for future Awards or Director Stock
Options.
(e) In the event that (i) a Stock Option (or a stock option granted
under any other stock option plan of the Company for the benefit of
employees or Directors which has been approved by the stockholders of the
Company) is exercised by tendering shares of Common Stock already owned, or
(ii) shares of Common Stock already owned are tendered to satisfy tax
withholding requirements, the shares of Common Stock so tendered shall be
added to the total number of authorized shares hereunder, but such shares so
added in respect of a stock option granted under another plan of the Company
shall not be available for grants of Incentive Stock Options.
(f) The maximum number of shares of Common Stock with respect to which
Stock Options and Stock Appreciation Rights may be granted to any Recipient
during any three (3) calendar years is 1,000,000 shares.
6. AWARDS.
(a) Awards under the Plan may include shares of Common Stock, Restricted
Shares, Stock Options, Stock Appreciation Rights, Performance Shares,
Performance Units and Target Awards.
The Committee may establish performance goals to be achieved within such
Performance Periods as may be selected by it using such measures of the
performance of the Company it may select as a condition to the receipt of
the Award
7. VESTING REQUIREMENTS AND OTHER CONTINGENCIES. The Committee may
determine that all or a portion of an Award or a payment to a Recipient pursuant
to an Award, in any form whatsoever, shall be vested at such times and upon such
terms as may be selected by it, except that an award of Restricted Shares shall
not vest prior to the expiration of three (3) years from the date of grant.
However, the Committee may accelerate the vesting of any Award upon a "Change of
Control of the Company" as such term may be defined in the Award agreement. In
addition, the Committee may require a Recipient to refund to the Company the
value of an Award realized by a Recipient, if the Recipient accepts employment
with a competitor of the Company or a subsidiary of the Company within six (6)
months of such realization. In the case of a Stock Option, a Recipient shall be
deemed to realize its value upon the exercise of the Stock Option and its value
shall be an amount equal to the excess of the market value of the shares of
Common Stock received as of the date of the exercise over the exercise price
paid for such shares. In the case of all other Awards, a Recipient shall be
deemed to realize their value upon the payment (in cash or stock) of the Award
and its value shall be the amount of any cash received plus an amount equal to
the market value of the shares of Common Stock received in connection with the
Award. The market value of shares shall be the closing price for the Common
Stock on the New York Stock Exchange (or on the principal securities exchange or
other market on which the Common Stock is then being traded) on the date of
realization, or if such closing price is not reported on such date, the last
reported closing price.
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8. DEFERRED PAYMENT. The Committee, or in the case of Awards to Outside
Directors, the Board of Directors, may determine that the receipt of all or a
portion of an Award or a payment to a Recipient pursuant to an Award, in any
form whatsoever, (i) shall be deferred, or (ii) at the election of such
Recipient, may be deferred. Deferrals shall be for such periods and upon such
terms as the Committee, or in the case of Awards to Outside Directors, the Board
of Directors, may determine.
9. CONTINUATION OF EMPLOYMENT. With respect to Awards granted to
employees, the Committee shall require that (a) Awards may only be granted to
Recipients, and (b) a Recipient must be an employee of the Company or a
Subsidiary (or must have retired with the approval of the Company or a
Subsidiary) at the time an Award becomes vested. Notwithstanding the foregoing,
the Committee shall have the sole power to determine the date of and the
circumstances which shall constitute a cessation of employment (including
whether the spin-off of a Subsidiary constitutes a cessation of employment of
employees who continue in the employ of Subsidiary subject to such spin-off) and
to determine whether such cessation is the result of retirement, death or any
other reason. The Committee may provide for the termination of any such
outstanding Award if a Recipient ceases to be an employee of the Company or a
Subsidiary or a Director and may establish such other provisions with respect to
the termination or disposition of an Award on the death or retirement of a
Recipient as it, in its sole and absolute discretion, deems advisable.
10. EMPLOYMENT STATUS. No Award shall be construed as imposing upon the
Company or a Subsidiary the obligation to continue the employment of a
Recipient. No employee or other person shall have any claim or right to be
granted an Award under the Plan.
11. DIRECTOR STOCK OPTIONS. As of each annual meeting of the stockholders
of the Company, each continuing Outside Director serving on the Company's Board
of Directors (including newly elected Outside Directors) shall be granted a
stock option to purchase 4,000 shares of Common Stock ( a Director Stock
Option). Director Stock Options shall vest on the first anniversary of the date
of grant, shall have a term of ten (10) years, and must be exercised prior to
the first anniversary of the Outside Director's termination of service as a
Director.
12. STOCK OPTION PRICE. The purchase price per share of Common Stock under
each Stock Option shall not be less than the closing price for the Common Stock
on the New York Stock Exchange (or on the principal securities exchange or other
market on which the Common Stock is then being traded) on the date the Stock
Option or Incentive Stock Option is granted or if such closing price is not
reported on the date of grant, the last reported closing price. Payment for
exercise of any Stock Option granted hereunder shall be made (a) in cash, or (b)
by delivery of Common Stock having a market value equal to the aggregate option
price, (c) by a combination of payment of cash and delivery of Common Stock in
amounts such that the amount of cash plus the market value of the Common Stock
equals the aggregate option price, or (d) by a cashless exercise upon such terms
and conditions as the Committee, in its sole and absolute discretion, shall
determine. The Committee may, in its discretion, include within any Stock Option
agreement (other than an agreement covering a Director Stock Option), a Reload
Stock Option provision.
13. STOCK APPRECIATION RIGHT VALUE. The base line exercise value per share
of Common Stock covered by an Award in the form of a Stock Appreciation Right
shall be not less than the market value of one share of Common Stock on the
initial day of a Performance Period for such Stock Appreciation Right.
14. REGISTRATION OF STOCK. Each Award and each Director Stock Option shall
be subject to the requirement that if at any time the Committee (or, in the case
of a Director Stock Option, counsel for the Company) shall determine that
qualification or registration under any state or federal law of the shares of
Common Stock, Restricted Shares, Stock Options, Incentive Stock Options, or
other securities thereby covered or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of or in connection
with the granting of such Award or Stock Option or the purchase of shares
thereunder, the Award or Stock Option may not be paid or exercised in whole or
in part unless and until
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such qualification, registration, consent or approval shall have been effected
or obtained free of any conditions the Committee, in its sole discretion, deems
unacceptable.
15. ASSIGNABILITY. No Award or Director Stock Option shall be transferable
or assignable by the Recipient other than by will or the laws of descent and
distribution (subject, in the case of Director Stock Options, to such
restrictions as may be imposed pursuant to Section 11) and during the lifetime
of the Recipient shall be exercisable or payable only by him or her.
Notwithstanding the forgoing, the Committee may permit a Recipient of a Stock
Option (other than an Incentive Stock Option) or an Outside Director Recipient,
to transfer such Stock Option to any one or more of the following: such
Recipient's or Outside Director Recipient's family member, a trust established
primarily for the benefit of a family member, or to an entity which is a
corporation, partnership, or limited liability company (or any other similar
entity) the owners of which are primarily the aforementioned persons or trusts.
Any such Stock Option so transferred shall be subject to the provisions of
Section 9 or 11 as the case may be, concerning the exercisability during such
transferor's employment or service as a Director.
16. DILUTION OR OTHER ADJUSTMENTS. In the event of any changes in the
capital structure of the Company, including, but not limited to a change
resulting from a stock dividend or split-up, or combination or reclassification
of shares, the Board of Directors shall make such equitable adjustments with
respect to Awards and Director Stock Options or any other provisions of this
Plan as it deems necessary and appropriate, including, if necessary, any
adjustment in the maximum number of shares of Common Stock subject to the Plan
or the number of shares of Common Stock subject to an outstanding Award or
Director Stock Option. In the absence of any of the foregoing transactions, in
no event will Stock Options be re-priced to a lower price without approval of
the stockholders of the Company.
17. MERGER, CONSOLIDATION, REORGANIZATION, LIQUIDATION, ETC. The Board of
Directors may make such arrangements it deems advisable with respect to
outstanding Awards or Director Stock Options in connection with any corporate
merger, consolidation, major acquisition of property for stock, reorganization,
or liquidation, which arrangements shall be binding upon Recipients of
outstanding Awards and all Outside Director Recipients, including, but not
limited to, the substitution of any new Awards or Director Stock Options then
outstanding, the assumption of any such Awards or Director Stock Options and the
termination of or payment for such Awards or Director Stock Options.
18. WITHHOLDING TAXES. The Company shall have the right to deduct from all
Awards paid hereunder in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such Awards and, with respect to
Awards paid in other than cash, to require the payment (through withholding from
the Recipient's salary or otherwise) of any such taxes. Subject to such
conditions as the Committee may establish, Awards payable in shares of Common
Stock may provide that the Recipients thereof may elect, in accordance with any
applicable regulations, to tender shares of Common Stock to the Company, or have
the Company withhold shares of Common Stock, to satisfy all or part of any such
withholding obligations, with the value of such tendered or withheld shares of
Common Stock based upon their fair market value on the date the tax withholding
is required to be made.
19. COSTS AND EXPENSES. The costs and expenses of administering the Plan
shall be borne by the Company and not charged to any Award nor to any Recipient
or Outside Director Recipient.
20. FUNDING THE PLAN. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the Plan.
21. AWARD CONTRACTS AND STOCK OPTION AGREEMENTS. The Committee shall have
the power to specify the form of Award contracts to be granted from time to time
pursuant to and in accordance with the provisions of the Plan and such contracts
shall be final, conclusive and binding upon the Company, the stockholders of the
Company and the Recipients. The Board of Directors shall have the power to
specify the form of Director Stock Option agreements to be granted from time to
time pursuant to and in
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accordance with the provisions of the Plan and such agreements shall be final,
conclusive and binding upon the Company, the stockholders of the Company and the
Outside Director Recipients. No Recipient or Outside Director Recipient shall
have any rights as a holder of Common Stock with respect to Awards or Director
Stock Options hereunder unless and until certificates for shares of Common Stock
or Restricted Shares are issued to the Recipient or to the Outside Director
Recipient.
22. GUIDELINES. The Board of Directors of the Company shall have the power
to provide guidelines for administration of the Plan by the Committee and to
make any changes in such guidelines from time to time as the Board deems
necessary.
23. AMENDMENT AND DISCONTINUANCE. The Board of Directors of the Company
shall have the right at any time during the continuance of the Plan to amend,
modify, supplement, suspend or terminate the Plan, provided that in the absence
of the approval of the holders of a majority of the shares of Common Stock of
the Company present in person or by proxy at a duly constituted meeting of the
stockholders of the Company, no such amendment, modification or supplement shall
(i) increase the aggregate number of shares which may be issued under the Plan,
unless such increase is by reason of any change in capital structure referred to
in Section 16 hereof, (ii) change the termination date of the Plan provided in
Section 24, or (iii) delete or amend the market value restrictions contained in
Sections 12 and 13 hereof, and provided further, that no amendment, modification
or termination of the Plan shall in any manner affect any Award or Director
Stock Option of any kind theretofore granted under the Plan without the consent
of the Recipient of the Award or the Outside Director Recipient, as the case may
be, unless such amendment, modification or termination is by reason of any
change in capital structure referred to in Section 16 hereof or unless the same
is by reason of the matters referred to in Section 17 hereof.
24. TERMINATION. The Committee may grant Awards and Director Stock Options
at any time prior to March 5, 2008, on which date this Plan will terminate
except as to Awards and Stock Options then outstanding hereunder, which Awards
and Director Stock Options shall remain in effect until they have expired
according to their terms or until March 5, 2018, whichever first occurs. No
Stock Option shall be exercisable later than ten (10) years following the date
it is granted and no other Award shall have a term of more than ten (10) years.
25. APPROVAL. The Plan was adopted by the Board of Directors on March 5,
1998 subject to the approval of the stockholders of the Company. The Plan shall
take effect upon due approval of the stockholders of the Company.
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PROXY
INTERIM SERVICES INC.
ANNUAL MEETING THURSDAY, MAY 7, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION.
The undersigned stockholder of Interim Services Inc., a Delaware
corporation, appoints ROY G. KRAUSE and JOHN B. SMITH, or either of them,
with full power to act alone, the true and lawful attorneys-in-fact of
the undersigned, with full power of substitution and revocation, to vote all
shares of stock of said Corporation which the undersigned is entitled to vote
at the annual meeting of its stockholders to be held at the Corporate Service
Center of the Corporation at 2050 Spectrum Boulevard, Fort Lauderdale,
Florida 33309, on Thursday, May 7, 1998, at 10:00 a.m., Fort Lauderdale time,
and at any adjournment thereof, with all powers the undersigned would possess
if personally present, as indicated on the reverse side hereof.
YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY
(Continued and to be SIGNED on the reverse side)
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March 24, 1998
Dear Stockholder:
The annual meeting of stockholders of Interim Services Inc. will be held at
the Corporate Service Center of the Corporation at 2050 Spectrum Boulevard,
Fort Lauderdale, Florida at 10:00 a.m., Fort Lauderdale time, on Thursday,
May 7, 1998. At the meeting stockholders will elect two directors and act
upon three proposals to (i) ratify the appointment of Deloitte & Touche for
the fiscal period ending December 25, 1998; (ii) approve the proposed
Amendment of Restated Certificate of Incorporation to Increase Authorized
Shares of Common Stock; (iii) approve the Company's 1998 Stock Incentive Plan.
It is important that your shares are represented at this meeting. Whether or
not you plan to attend the meeting, please review the enclosed proxy
materials, complete the attached proxy form below, and return it promptly in
the envelope provided.
Enclosures.
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[UNREADABLE]
INDICATED IN
THIS EXAMPLE /X/
[UNREADABLE]
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATION OF MANAGEMENT.
1. Election of Directors, Nominees: STEVEN S. ELBAUM AND JEROME B. GROSSMAN
FOR all nominees WITHHOLD INSTRUCTION: To withhold authority to vote
listed above, AUTHORITY for any individual nominee, write that
(except as marked to vote for nominee's name in the space below.
to the contrary). all nominees
listed above.
/ / / / ____________________________________________
2. Ratification of the appointment of Deloitte & Touche as the Company's
independent auditors for the fiscal period ending December 25, 1998.
FOR AGAINST ABSTAIN
/ / / / / /
3. The approval of the proposed Amendment of Restated Certificate of
Incorporation to increase Authorized Shares of Common Stock.
FOR AGAINST ABSTAIN
/ / / / / /
4. The approval of the Company's 1998 Stock Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
5. On any other matter that may be submitted to a vote of stockholders.
Dated: __________________________________________, 1998
_______________________________________________________
Signature
_______________________________________________________
Signature if held jointly
Please sign name or names as appearing on this proxy. If
signing as a representative, please include capacity.
TRIANGLE FOLD AND DETACH HERE TRIANGLE
