<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CENTURY BUSINESS SERVICES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CENTURY BUSINESS SERVICES, INC.
6480 ROCKSIDE WOODS BLVD., SOUTH, SUITE 330
CLEVELAND, OH 44131
March 24, 1999
Dear Stockholder:
We cordially invite you to attend the 1999 Annual Meeting of Stockholders
of Century Business Services, Inc. which will be held on Wednesday, April 28,
1999, at 11:30 a.m., at The Ritz-Carlton Ballroom -- Salon II, 1515 West Third
Street, Cleveland, Ohio 44113.
The matters to be considered at the meeting are described in the formal
notice and proxy statement on the following pages.
We encourage your participation at this meeting. Whether or not you plan to
attend in person, it is important that your shares be represented at the
meeting. Please review the proxy statement and sign, date and return your proxy
card in the enclosed envelope as soon as possible.
If you attend the meeting and prefer to vote in person, your proxy card can
be revoked at your request.
We appreciate your confidence in Century Business Services, Inc. and look
forward to the chance to visit with you at the meeting.
Very truly yours,
CENTURY BUSINESS SERVICES, INC.
/s/ Michael G. DeGroote
Michael G. DeGroote, Chairman of the
Board
<PAGE> 3
CENTURY BUSINESS SERVICES, INC.
6480 ROCKSIDE WOODS BLVD., SOUTH, SUITE 330
CLEVELAND, OHIO 44131
NOTICE OF THE 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1999
TO THE STOCKHOLDERS OF CENTURY BUSINESS SERVICES, INC.:
The 1999 Annual Meeting of Stockholders of Century Business Services, Inc.
will be held on Wednesday, April 28, 1999, at 11:30 a.m., at The Ritz-Carlton
Hotel Ballroom -- Salon II, 1515 West Third Street, Cleveland, Ohio 44113, for
the following purposes:
1. To elect two directors for a term of three years each.
2. To ratify the appointment of KPMG LLP as Century's independent
accountants for 1999.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record on March 10, 1999 will be entitled to vote at
the meeting.
You are cordially invited to attend the Annual Meeting. Your vote is
important. WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, YOU ARE URGED TO SIGN,
DATE AND MAIL THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE SO THAT YOUR SHARES
MAY BE REPRESENTED AND VOTED. The envelope enclosed requires no postage if
mailed within the United States. If you attend the meeting and prefer to vote in
person, your proxy card can be revoked at your request.
By Order of the Board of Directors,
/s/ Barbara A. Rutigliano
Barbara A. Rutigliano, Corporate
Secretary
Cleveland, Ohio
March 24, 1999
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE
<PAGE> 4
CENTURY BUSINESS SERVICES, INC.
6480 ROCKSIDE WOODS BLVD., SOUTH, SUITE 330
CLEVELAND, OHIO 44131
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
------------------------
We, the Board of Directors of Century Business Services, Inc. ("Century"),
are soliciting proxies to vote Century shares at the 1999 annual meeting of
shareholders. Stockholders will meet Wednesday, April 28, 1999, at 11:30 a.m.,
at The Ritz-Carlton Hotel Ballroom -- Salon II, 1515 West Third Street,
Cleveland, Ohio, for the purposes stated in the accompanying Notice of the 1999
Annual Meeting of Stockholders. This proxy statement contains information which
may help you decide whether to sign and return the enclosed proxy.
This proxy statement is being mailed on or about March 24, 1999 to
stockholders entitled to vote. If you complete the enclosed proxy and return it
before the meeting, the persons named by you will vote your shares. A
stockholder giving a proxy may revoke it at any time before it is voted by
contacting Century's Corporate Secretary and delivering another executed proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
Mr. Michael G. DeGroote and Mr. Rick L. Burdick are designated as proxy
holders in the proxy card. They will vote for the election as directors of Mr.
Richard C. Rochon and Mr. Joseph S. DiMartino who have been proposed by the
Board of Directors, and for the ratification of the appointment of KPMG LLP as
Century's independent accountants for fiscal year 1999. If any other matters are
properly presented at the Annual Meeting for consideration, the proxy holders
will have discretion to vote on such matters in accordance with their best
judgment. The Board of Directors knows of no other matters to be presented at
the meeting.
Century's Annual Report for the year ended December 31, 1998 (the "Annual
Report"), including financial statements, is being mailed to all stockholders
entitled to vote at the Annual Meeting. The Annual Report does not constitute a
part of the proxy solicitation material.
The Board of Directors established March 10, 1999 as the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting. On the record date, Century had 75,225,487 shares of voting common
stock issued and outstanding. The common stock is the only class of capital
stock Century has outstanding. Holders of Century common stock do not have
preemptive rights. Only stockholders of record at the close of business on the
record date will be entitled to vote at the Annual Meeting. Each share of common
stock is entitled to one vote on each matter presented. The holders of a
majority of the total shares issued and outstanding, whether present in person
or represented by proxy, will constitute a quorum for the transaction of
business at the Annual 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. Broker non-votes, on the other hand, are
not counted for purposes of determining whether a proposal has been approved.
The affirmative vote of the holders of a majority of the votes cast at the
meeting is necessary for the election of directors and for approval of any other
matter scheduled for vote.
2
<PAGE> 5
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Century's Certificate of Incorporation divides the Board of Directors into
three classes, with one class to be elected for a three-year term at each annual
meeting of stockholders. The Board of Directors currently consists of six
members. If elected at the Annual Meeting, the nominees listed below will serve
until the Annual Meeting of Stockholders in 2002; or until their successors are
duly elected and qualified. All other directors will continue as such for the
term to which they were elected. The Board of Directors recommends a vote FOR
the election of the nominees for election as directors listed below and proxies
executed and returned will be so voted unless contrary instructions are
indicated. Although the Board of Directors does not contemplate that any of the
nominees will be unable to serve, if such a situation arises prior to the Annual
Meeting, the persons named in the enclosed proxy will vote for the election of
another person as may be nominated by the Board of Directors.
DIRECTORS STANDING FOR ELECTION
<TABLE>
<CAPTION>
EXPIRATION OF
NAME AGE SINCE PROPOSED TERM
---- --- ----- -------------
<S> <C> <C> <C>
Richard C. Rochon....................................... 41 1996 2002
Joseph S. DiMartino..................................... 55 1997 2002
</TABLE>
DIRECTORS WHOSE TERMS CONTINUE
<TABLE>
<CAPTION>
EXPIRATION OF
NAME AGE SINCE CURRENT TERM
---- --- ----- -------------
<S> <C> <C> <C>
Michael G. DeGroote..................................... 65 1995 2000
Harve A. Ferrill........................................ 66 1996 2000
Rick L. Burdick......................................... 47 1997 2001
Hugh P. Lowenstein...................................... 68 1997 2001
</TABLE>
Set forth below is biographical information for the individuals nominated
and each person whose term of office as a director will continue after the
Annual Meeting.
NOMINEES FOR DIRECTORS
Richard C. Rochon has served as a Director of Century since October 1996,
when he was elected as an outside director. Mr. Rochon has served since 1988 as
President of Huizenga Holdings, Inc., a management and holding company for
diversified investments in operating companies, joint ventures, and real estate,
on behalf of its owner, Mr. H. Wayne Huizenga. Mr. Rochon also has served as a
director since September 1996 and as Vice Chairman of Florida Panthers Holdings,
Inc., a leisure and recreation and sports and entertainment company, since April
1997. From 1985 until 1988, Mr. Rochon served as Treasurer of Huizenga Holdings,
Inc. and from 1979 until 1985, he was employed as a certified public accountant
by the international public accounting firm of Coopers & Lybrand, L.L.P.
Joseph S. DiMartino has served as a Director of Century since November
1997, when he was elected as an outside director. Mr. DiMartino has been
Chairman of the Board of The Dreyfus Group of Mutual Funds since January 1995.
Mr. DiMartino served as President, Chief Operating Officer and Director of The
Dreyfus Corporation from October 1982 until December 1994 and was also a
director of Mellon Bank Corporation. Mr. DiMartino also serves on the Boards of
Directors of Noel Group, Inc., Career Blazers Inc. (formerly Staffing Resources,
Inc.); Health Plan Services Corporation; Carlyle Industries, Inc.; and the
Muscular Dystrophy Association.
Rick L. Burdick has served as a Director of Century since October 1997,
when he was elected as an outside director. Mr. Burdick has been a partner at
the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. since April 1988. Mr.
Burdick also serves on the Boards of Directors of Republic Industries, Inc.
("RII"), and J. Ray McDermott, S.A.
3
<PAGE> 6
Michael G. DeGroote has served as the Chairman of the Board of Century
since April 1995 and as Chief Executive Officer and President since November
1997. Mr. DeGroote also served as President and Chief Executive Officer of
Century from April 1995 until October 1996. Mr. DeGroote founded Laidlaw Inc., a
Canadian waste services and transportation company in 1959. In 1988, Mr.
DeGroote sold his controlling interest in Laidlaw to Canadian Pacific Limited.
Mr. DeGroote served as President and Chief Executive Officer of Laidlaw from
1959 until 1990. Mr. DeGroote served as Chairman of the Board, President and
Chief Executive Officer of RII from May 1991 until August 1995. Mr. DeGroote
also serves on the Board of Directors of RII.
Harve A. Ferrill has served as a Director of Century since October 1996,
when he was elected as an outside director. Mr. Ferrill has served as Chief
Executive Officer of Advance Ross Corporation, a company that provides tax
refunding services ("ARC"), since 1991 and as President of Ferrill-Plauche Co.,
Inc., a private investment company, since 1982. Mr. Ferrill served as President
of ARC from 1990 to 1993 and as Chairman of the Board from 1992 to 1996. Mr.
Ferrill also serves on the Board of Directors of Gaylord Container Corporation.
Hugh P. Lowenstein has served as a Director of Century since March 1997,
when he was elected as an outside director. Mr. Lowenstein has served as the
Founder and Chief Executive Officer of Shore Capital Ltd. (Bermuda), a
consulting and investment advisory firm, since 1994. Mr. Lowenstein served as a
Managing Director of Donaldson, Lufkin and Jenrette Securities Corporation from
1987 to 1994. Mr. Lowenstein also serves on the Board of Directors of Terra Nova
(Bermuda) Holdings Ltd.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table shows the beneficial ownership of Century common stock
as of March 10, 1999, by (1) each person known by Century to own beneficially 5%
or more of our common stock, (2) each director, (3) each executive officer named
in the Summary Compensation Table (see "Executive Compensation") and (4) all
directors and executive officers of Century as a group.
4
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER(1) OWNERSHIP(2) OF CLASS
---------------------- ------------ --------
<S> <C> <C>
Michael G. DeGroote(3)...................................... 15,592,738(4) 20.07%
Huizenga Investments L.P.(5)................................ 7,644,444(6) 9.62%
Douglas R. Gowland.......................................... 275,300(7) *
Keith W. Reeves............................................. 449,500(8) *
Rick L. Burdick............................................. 59,034(9) *
Harve A. Ferrill............................................ 63,000(10) *
Hugh P. Lowenstein.......................................... 89,000(11) *
Richard C. Rochon........................................... 161,110(12) *
Joseph S. DiMartino......................................... 50,000(13) *
Charles D. Hamm, Jr......................................... 67,200(14) *
Jerome P. Grisko, Jr........................................ 0 *
Robert A. O'Byrne........................................... 170,610(15) *
John J. Hopkins............................................. 1,000(16) *
All directors and executive officers as a group (12
persons).................................................. 16,978,492 21.63%
Total Shares Outstanding 75,225,487(17)
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise indicated in the notes below, the mailing address of
each entity, individual or group named in the table is 6480 Rockside Woods
Blvd., South, Suite 330, Cleveland, OH 44131, and each person named has
sole voting and investment power with respect to the shares of common stock
beneficially owned by such person.
(2) Share amounts and percentages shown for each person in the table are
adjusted to give effect to shares of common stock that are not outstanding
but may be acquired upon exercise of all options and warrants exercisable
within 60 days of the March 10, 1999. Such shares of common stock are not
deemed to be outstanding, however, for the purpose of computing the
percentage of outstanding shares beneficially owned by any other person.
(3) Mr. Michael G. DeGroote beneficially owns his shares of common stock
through Westbury (Bermuda) Ltd., a Bermuda corporation controlled by him.
Westbury (Bermuda) Ltd. is located at Victoria Hall, 11 Victoria Street,
P.O. Box HM 1065, Hamilton, HMEX Bermuda.
(4) Consists of 13,137,182 shares of common stock owned of record by Westbury
(Bermuda) Ltd., and 2,455,556 shares of common stock that Westbury
(Bermuda) Ltd. has the right to acquire upon exercise of outstanding
warrants.
(5) The address of Huizenga Investments Limited Partnership, a limited
partnership controlled by Mr. H. Wayne Huizenga, is 450 E. Las Olas Blvd.,
Suite 1500, Fort Lauderdale, Florida 33301.
(6) Consists of 3,422,222 shares of common stock owned of record by Huizenga
Investments Limited Partnership, and 4,222,222 shares of common stock that
Huizenga Investments Limited Partnership has the right to acquire upon
exercise of outstanding warrants.
(7) Consists of 123,100 shares of common stock and 70,000 shares of common
stock issuable upon the exercise of outstanding warrants owned of record by
Mr. Gowland and options to purchase 80,000 shares of common stock granted
by Century's predecessor under its Employee Stock Option Plan ("Option
Plan"), and options to purchase 2,200 shares of common stock granted under
the Century Employee Stock Option Plan ("Century Option Plan").
5
<PAGE> 8
(8) Consists of 166,400 shares of common stock and 278,100 shares of common
stock issuable upon the exercise of outstanding warrants owned of record by
Mr. Reeves' spouse and options to purchase 5,000 shares of common stock
granted under the Century Option Plan.
(9) Consists of 3,500 shares of common stock, 5,534 shares of common stock
issuable upon the exercise of outstanding warrants and options to purchase
50,000 shares of common stock granted under the Century Option Plan.
(10) Consists of 7,500 shares of common stock owned of record by The Harve A.
Ferrill Trust U/A 12/31/69; 5,500 shares of common stock issuable upon the
exercise of outstanding warrants owned of record by Mr. Ferrill's Trust
and options to purchase 50,000 shares of common stock granted under the
Century Option Plan.
(11) Consists of 39,000 shares of common stock owned of record by Mr.
Lowenstein and options to purchase 50,000 shares of common stock granted
under the Century Option Plan.
(12) Consists of 55,555 shares of common stock; 55,555 shares of common stock
issuable upon the exercise of outstanding warrants owned of record by
WeeZor I Limited Partnership, a limited partnership controlled by Mr.
Rochon and options to purchase 50,000 shares of common stock granted under
the Century Option Plan.
(13) Consists of options to purchase 50,000 shares of common stock granted
under the Century Option Plan.
(14) Consists of 24,244 shares of common stock, 30,756 shares of common stock
issuable upon the exercise of outstanding warrants and options to purchase
12,200 shares of common stock granted under the Century Option Plan.
(15) Consists of 127,100 shares of common stock and options to purchase 1,500
shares of common stock granted under the Century Option Plan held in Mr.
O'Byrne's name and 42,010 shares of common stock held by a limited company
in which Mr. O'Byrne has a 25% interest.
(16) Consists of 1,000 shares of common stock.
(17) Does not include 4,006,055 shares of common stock issued and held in
escrow pending satisfaction of certain performance targets.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings and took actions by unanimous
written consent in lieu of meeting ten times during 1998. Each director attended
all meetings of the Board of Directors and the committees on which such director
served, although in one instance one of the directors participated via
telephone.
Committees of the Board of Directors. The Board of Directors of Century had
an Audit Committee, a Compensation Committee and an Executive Management
Committee active during 1998. The following is a description of the Board's
committees:
The Audit Committee, which held four meetings during 1998, presently
consists of Messrs. Burdick, Ferrill and Rochon. The Audit Committee recommends
the independent accountants appointed by the Board of Directors of Century and
reviews issues raised by the accountants as to the scope of their audit and
their audit report, including questions and recommendations that arise relating
to Century's internal accounting and auditing control procedures.
The Compensation Committee, which held one meeting and took actions by
unanimous written consent in lieu of meeting four times during 1998, presently
consists of Messrs. Ferrill, Lowenstein and Rochon. The Compensation Committee
reviews and makes recommendations to the Board of Directors with respect to
compensation of Century's officers, including salary, bonus and benefits. The
Compensation Committee also administers Century's stock option plans.
The Executive Management Committee was formed in February of 1998 to review
and approve the acquisition of complementary businesses within guidelines set
forth by the Board of Directors. From February through December of 1998, the
Executive Management Committee took actions by unanimous written consent in lieu
of meeting sixty-two times and consisted of Messrs. DeGroote, Skoda (the
Executive Vice President and a
6
<PAGE> 9
Director of Century through December 1998) and Hamm. It is currently comprised
of Messrs. DeGroote, Hamm and Grisko.
DIRECTOR COMPENSATION
Directors who are employees of Century are not paid any fees or additional
compensation for service as members of the Board of Directors or any of its
committees. Directors who are not employees of Century receive a $15,000 annual
retainer fee, as well as a fee of $1,000 for each meeting of the Board of
Directors attended. In addition, directors who are committee members receive a
fee of $500 for each committee meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since December 18, 1997, the members of the Compensation Committee are
Messrs. Lowenstein, Rochon and Ferrill, none of whom are or have been officers
or employees of Century. There are no compensation committee interlock
relationships with respect to Century.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors determines the
compensation of the Chief Executive Officer of Century and the other executive
officers named in the Summary Compensation Table. The Compensation Committee has
furnished the following report on executive compensation in connection with the
Annual Meeting.
Compensation Philosophy
As members of the Compensation Committee, it is our duty to administer the
executive compensation program for Century. The Compensation Committee is
responsible for establishing appropriate compensation goals for the executive
officers of Century, evaluating the performance of such executive officers in
meeting such goals and making recommendations to the Board of Directors with
regard to executive compensation.
Century's compensation philosophy is to ensure that executive compensation
be directly linked to continuous improvements in corporate performance,
achievement of specific operational, financial and strategic objectives and
increases in stockholder value. The Compensation Committee regularly reviews the
compensation packages of Century's executive officers, taking into account
factors which it considers relevant, such as business conditions within and
outside the industry, Century's financial performance, the market compensation
for executives of similar background and experience and the performance of the
executive officer under consideration. The particular elements of Century's
compensation programs for executive officers are described below.
Compensation Structure
With the exception of Mr. DeGroote, the Chairman of the Board, Chief
Executive Officer and President of Century, the executive base compensation for
executive officers of Century is intended to be competitive with that paid in
comparably situated industries, taking into account the scope of
responsibilities and internal relationships. The goals of the Compensation
Committee in establishing Century's executive compensation program are:
(1) To fairly compensate the executive officers of Century and its
subsidiaries for their contributions to Century's short-term and long-term
performance. The elements of Century's executive compensation program are
(a) annual base salaries, (b) annual bonuses and (c) equity incentives.
(2) To allow Century to attract, motivate and retain the management
personnel necessary to Century's success by providing an executive
compensation program comparable to that offered by companies with which
Century competes for such management personnel.
Individual base salaries are determined by the Compensation Committee based
on the scope of the executive's responsibilities, a subjective evaluation of the
executive's performance and the length of time the executive has been in the
position.
7
<PAGE> 10
Executive Compensation Deductibility
It is Century's intent that amounts paid pursuant to Century's compensation
plans will generally be deductible compensation expenses. The Compensation
Committee does not currently anticipate that the amount of compensation paid to
executive officers will exceed the amounts specified as deductible pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Hugh P. Lowenstein, Chairman
Richard C. Rochon
Harve A. Ferrill
8
<PAGE> 11
EXECUTIVE COMPENSATION
The following tables set forth information with respect to the Chief
Executive Officer and the four other most highly compensated executive officers
of Century as to whom the total annual salary and bonus for the year ended
December 31, 1998, exceeded $100,000. In addition, the following tables set
forth information with respect to two additional individuals who would have been
included but who were not serving Century in an executive officer capacity as of
December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-----------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND -------------------- OTHER ANNUAL WARRANTS/
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
------------------ ---- --------- ------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. DeGroote 1998 0 0 0 0
Chairman, Chief Executive 1997 0 0 0 0
Officer and President 1996 0 0 0 0
Douglas R. Gowland 1998 273,167 0 0 4,800(1) /11,000(3)
Senior Vice President 1997 193,446 0 0 7,293(1) 0
1996 204,800 0 0 200,000(2) 0
Charles D. Hamm, Jr. 1998 182,726 0 0 11,000(3) 0
Senior Vice President and 1997 17,308 0 0 50,000(4) 0
Chief Financial Officer 1996 0 0 0 0 0
Keith W. Reeves 1998 187,451 0 0 5,000(1) /11,000(3)
Senior Vice President 1997 192,540 0 0 4,089(1) 0
1996 17,258 0 0 313(1) / 7,000(6)
Robert A. O'Byrne 1998 191,323 0 0 4,000(1) / 7,500(7)
Senior Vice President 1997 0 0 0 0 0
1996 0 0 0 0 0
Gregory J. Skoda 1998 186,348 0 0 4,603(1) /12,500(3)
Executive Vice President and 1997 187,810 0 0 14,423(5) 0
Director until 12/14/98 1996 17,142 0 0 100(5) /10,000(6)
Craig L. Stout 1998 180,756 0 0 4,800(1) /11,000(3)
Senior Vice President until 1997 177,082 0 0 13,643(5) 0
12/14/98 then Vice President 1996 25,481 2,492 0 2,058(5) /10,000(6)
</TABLE>
- ---------------
(1) Includes employer 401(K) contributions.
(2) Consists of options that vest 20% annually beginning May 17, 1997, and
remain exercisable for a six-year period from the date of grant.
(3) Consists of options that vest 20% annually beginning February 12, 1999, and
remain exercisable for a six-year period from the date of grant.
(4) Consists of options that vest 20% annually beginning November 24, 1998, and
remain exercisable for a six-year period from the date of grant.
(5) Includes employer 401(K) contributions and employer profit sharing
contributions.
(6) Consists of options that vest 20% annually beginning December 31, 1997, and
remain exercisable for a six-year period from the date of grant.
(7) Consists of options that vest 20% annually beginning January 2, 1999, and
remain exercisable for a six-year period from the date of grant.
9
<PAGE> 12
OPTIONS GRANTED DURING 1998
The following table sets forth as to each of the named executive officers
information with respect to option grants during 1998: (1) the number of shares
of common stock underlying options granted, (2) the percentage that such options
represent of all options granted to officers and employees during the year, (3)
the exercise price, (4) the expiration date and (5) the potential realizable
value of such options. It should be noted that the actual value of the options
may be significantly different from the value shown in the assumptions, and the
value actually realized, if any, will depend upon the excess of the market value
of the common stock over the option exercise price at the time of exercise.
Century granted no warrants to its executive officers during 1998.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1998 POTENTIAL REALIZABLE VALUE AT
------------------------------------------------ ASSUMED ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION FOR OPTION
SECURITIES OPTIONS TERM
UNDERLYING GRANTED TO EXERCISE ------------------------------
OPTIONS EMPLOYEES PRICE PER EXPIRATION AT 5% ANNUAL AT 10% ANNUAL
GRANTED(1) IN 1998 SHARE DATE GROWTH RATE GROWTH RATE
---------- ---------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. DeGroote......... -0- -- -- -- -- --
Douglas R. Gowland.......... 11,000 .68% $17.25 2/11/2004 $60,848 $141,532
Charles D. Hamm, Jr......... 11,000 .68% $17.25 2/11/2004 $60,848 $141,532
Keith W. Reeves............. 11,000 .68% $17.25 2/11/2004 $60,848 $141,532
Robert A. O'Byrne........... 7,500 .46% $17.25 1/2/2004 $41,487 $ 96,499
Gregory J. Skoda............ 11,000 .68% $17.25 2/11/2004 $60,848 $141,532
Craig L. Stout.............. 11,000 .68% $17.25 2/11/2004 $60,848 $141,532
</TABLE>
OPTION EXERCISES AND VALUES FOR 1998
The following table sets forth information as to each of the named
executive officers with respect to option exercises during 1998 and the status
of their options at December 31, 1998: (1) the number of shares of common stock
acquired upon exercise of options during the year, (2) the aggregate dollar
value realized upon the exercise of such options, (3) the total number of
exercisable and non-exercisable options at December 31, 1998, and (4) the
aggregate dollar value of in-the-money exercisable and non-exercisable options
at December 31, 1998.
AGGREGATED OPTION EXERCISES DURING 1998
AND OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NO. OF SHARES OPTIONS OPTIONS
ACQUIRED UPON VALUE AT DECEMBER 31, 1998 AT DECEMBER 31, 1998
EXERCISE OF REALIZED --------------------------- ---------------------------
NAME OPTION ON EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. DeGroote...... 0 0 0 0 $ 0 $ 0
Douglas R. Gowland....... 0 0 150,000 131,000 $1,673,850 $1,170,000
Charles D. Hamm, Jr...... 0 0 10,000 51,000 $ 32,815 $ 131,260
Keith W. Reeves.......... 0 0 2,800 15,200 $ 9,450 $ 14,175
Robert A. O'Byrne........ 0 0 0 7,500 $ 0 $ 0
Gregory J. Skoda......... 0 0 4,000 18,500 $ 13,500 $ 20,250
Craig L. Stout........... 0 0 4,000 17,000 $ 13,500 $ 20,250
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of certain agreements and transactions between
or among Century and certain related parties. It is Century's policy to enter
into transactions with related parties on terms that, on the whole, are no less
favorable than those that would be available from unaffiliated parties. Based on
Century's experience and
10
<PAGE> 13
the terms of its transactions with unaffiliated parties, it is the Board of
Directors' belief that the transactions described below met these standards at
the time of the transactions.
In February of 1998, Century arranged for the private placement of
5,000,000 shares of common stock. Century accepted subscriptions from
institutional and other accredited investors, including Westbury (Bermuda) Ltd.,
a Bermuda corporation controlled by Mr. DeGroote. The private placement included
3.8 million newly-issued shares and 1.2 million shares sold by certain selling
stockholders, including Mr. Stout and the spouses of Messrs. Skoda and Reeves,
for a purchase price of $13.25 per share. Mr. Stout sold 120,000 shares and
exercised warrants to purchase 39,200 shares of common stock at an exercise
price of $2.625. Such warrants would have expired by their terms on October 18,
1998. Mrs. Skoda sold 29,250 shares and exercised 14,000 warrants expiring on
October 18, 1998 at the $2.625 exercise price. Mrs. Reeves sold 19,000 shares,
and a corporation owned by Mrs. Skoda and Mrs. Reeves, among others, exercised
warrants to purchase 19,600 shares at the $2.625 exercise price. Such warrants
would have expired on October 18, 1998. Additionally, Mr. LoConti, a 10%
shareholder of Century during portions of 1998, sold 150,000 shares, and the
LoConti Family Trust, over which Mr. LoConti has control, sold 200,000 shares.
Mr. LoConti and the LoConti Family Trust also exercised 84,000 and 145,600 of
the October 18, 1998 warrants, respectively, at the $2.625 exercise price.
Finally, Sophia Management Ltd., an Ohio limited liability company whose members
include Messrs. LoConti, Skoda, Hamm, Stout and Mr. Stout's spouse, also sold
556,750 shares and exercised 955,503 warrants. Such warrants consisted of
840,000 warrants with an exercise price of $2.625 and 115,503 warrants with an
exercise price of $3.125.
During 1998, Century repaid a note consisting of $1.3 million in principal
and $57,458 in interest to Sophia Management Ltd. in accordance with its terms.
Mr. Gowland and his spouse own controlling interests in SD Aviation
Investments, Inc., an aircraft charter company, used occasionally by Century.
During 1998, Century paid $63,000 to SD Aviation for aircraft charter services.
The office building utilized by SMR & Co. Business Services is leased under
a ten-year lease, expiring February 26, 2006, from a partnership in which the
spouses of Messrs. Skoda and Reeves are each one-third owners. The lease
provides for rental payments of $557,700 per year. A number of the businesses
acquired since October 1996 are located in properties owned indirectly by and
leased from persons employed by Century.
Mr. Stout's spouse, Anne L. Meyers, currently serves as Secretary of some
of Century's insurance subsidiaries. The law firm of Anne L. Meyers & Associates
Co., L.P.A., now known as Meyers, Lamanna & Roman, L.P.A., has performed
substantial legal work for Century and its subsidiaries. In 1998, Century paid
$610,250 to Ms. Meyers' firm for services rendered in connection with the
insurance subsidiaries and for merger and acquisition transactions.
Rick L. Burdick, a director of Century, is a partner of Akin, Gump,
Strauss, Hauer & Feld, L.L.P. Akin, Gump performed substantial legal work for
Century during 1998.
11
<PAGE> 14
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a performance graph comparing the cumulative total
stockholder return on Century's common stock based on its market-price, with the
cumulative total return of companies in the S&P 500 Index, the NASDAQ Insurance
Group and a Peer Group. Century included the performance of the NASDAQ Insurance
Group for the first time in 1996 due to its combination and merger with Alliance
Holding Company in October 1996. The graph assumes the reinvestment of dividends
for the period beginning April 27, 1995, the date Century's common stock was
initially offered, through the year ended December 31, 1998.
COMPARISON OF 44 MONTH CUMULATIVE TOTAL RETURN*
AMONG CENTURY BUSINESS SERVICES, INC.,
THE S&P 500 INDEX, THE NASDAQ INSURANCE INDEX
AND A PEER GROUP+
<TABLE>
<CAPTION>
CENTURY BUSINESS
SERVICES, INC. PEER GROUP S&P 500 NASDAQ INSURANCE
---------------- ---------- ------- ----------------
<S> <C> <C> <C> <C>
'4/27/95' 100 100 100 100
'12/95' 113 135 122 127
'12/96' 808 176 150 145
'12/97' 1150 233 200 213
'12/98' 958 249 257 190
</TABLE>
* $100 INVESTED ON 4/27/95 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
+ The Peer Group includes H & R Block, Inc.; Employee Solutions, Inc.; Equifax
Inc.; Gartner Group, Inc.; Paychex, Inc., Robert Half International, Inc. and
Vincam Group, Inc.
12
<PAGE> 15
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(ITEM 2 ON PROXY CARD)
The Board of Directors, upon recommendation of the Audit Committee, has
approved and recommends the appointment of KPMG LLP, independent accountants, to
audit the consolidated financial statements of Century and its subsidiaries for
the year ending December 31, 1999. This appointment was made subject to the
approval of Century's stockholders. KPMG LLP has been serving Century in this
capacity since 1997. Century has been advised that no member of KPMG LLP has any
direct financial interest or material indirect financial interest in the Company
or any of its subsidiaries or, during the past three years, has had any
connection with the Company or any of its subsidiaries in the capacity of
promoter, underwriter, voting trustee, director, officer or employee. Charles D.
Hamm, Jr., Century's Sr. Vice President and Chief Financial Officer, was
previously a partner with KPMG LLP.
Ratification of the appointment of KPMG LLP as independent accountants
shall be effective upon receiving the affirmative vote of the holders of a
majority of the Common Stock present or represented by proxy and entitled to
vote at the Annual Meeting. Under Delaware law, an abstention would have the
same legal effect as a vote against this proposal, but a broker non-vote would
not be counted for purposes of determining whether a majority had been achieved.
The Board of Directors recommends a vote FOR the ratification by the
stockholders of this appointment.
A representative of KPMG LLP is expected to attend the Annual Meeting and
will have the opportunity to make a statement, if such representative desires to
do so, and will be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Century's officers and directors, and persons who own more than 10% of a
registered class of Century's equity securities, to file reports of ownership
and changes in ownership to the Securities and Exchange Commission. Officers,
directors and greater than 10% stockholders are required by the Commission
regulations to furnish Century with copies of all Section 16(a) reports they
file.
Based solely on its review of copies of such reports received by it,
Century believes that, during the period from January 1, 1998 to December 31,
1998 all filing requirements applicable to its officers, directors and greater
than 10% stockholders were complied with.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by Century for inclusion in the proxy
statement and form of proxy relating to the meeting not later than January 9,
2000. It is suggested that proponents submit their proposals by certified mail,
return receipt requested. Detailed information for submitting resolutions will
be provided upon written request to Century's Corporate Secretary at Century
Business Services, Inc., 6480 Rockside Woods Blvd., South, Suite 330, Cleveland,
Ohio 44131, Attention: Corporate Secretary. No stockholder proposals were
received for inclusion in this Proxy Statement.
EXPENSES OF SOLICITATION
Century will bear the expense of preparing and mailing the materials in
connection with the solicitation of proxies, as well as the cost of
solicitation. Firstar Bank, N.A. ("Firstar Bank") has been retained by Century
to assist in the solicitation of proxies. For such services, Firstar Bank will
be paid fees in the aggregate amount of approximately $5,000 plus reimbursement
of out-of-pocket expenses. In addition, Century will reimburse brokers,
nominees, banks and other stockholders of record for their expenses incurred in
forwarding proxy materials to beneficial owners. It is expected that the
solicitation of proxies will be primarily by mail, but
13
<PAGE> 16
directors, officers and employees of Century may solicit proxies by personal
interview, telephone or telecopy. These persons will receive no additional
compensation for such services.
OTHER MATTERS
Management does not intend to present any other items of business and knows
of no other matters that will be brought before the Annual Meeting. However, if
any additional matters are properly brought before the Annual Meeting, it is
intended that the shares represented by proxies will be voted with respect
thereto in accordance with the judgment of the persons named in such proxies.
The accompanying form of proxy has been prepared at the direction of the
Board of Directors of Century and is sent to you at the request of the Board of
Directors. The Board of Directors has designated the proxies named therein.
By Order of the Board of Directors,
/s/ Barbara A. Rutigliano
Barbara A. Rutigliano, Corporate
Secretary
Cleveland, Ohio
March 24, 1999
14
<PAGE> 17
CENTURY BUSINESS SERVICES, INC.
6480 Rockside Woods Blvd., South, Suite 330
Cleveland, Ohio 44131
ANNUAL MEETING OF STOCKHOLDERS, APRIL 28, 1999
The undersigned stockholder of CENTURY BUSINESS SERVICES, INC. (the
"Company") hereby appoints Michael G. DeGroote and Rick L. Burdick, and either
of them, with power of substitution and revocation, to represent and vote all
the shares of Common Stock of the Company held of record by the undersigned at
the 1999 Annual Meeting and any adjournment(s) as set forth below.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE BELOW. UNMARKED PROXIES WILL BE
VOTED IN FAVOR OF EACH OF THE MATTERS LISTED BELOW. THE PROXIES WILL USE THEIR
DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM (3). THIS PROXY IS
REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
The undersigned hereby acknowledges receipt of the Notice of Meeting
and Proxy Statement dated March 24, 1999 for the Annual Meeting of stockholders.
-DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED-
CENTURY BUSINESS SERVICES, INC. 1999 ANNUAL MEETING
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: 1. -Richard C. Rochon 2. - Joseph S. DiMartino [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed to the left to vote for all
(except specified below). nominees as to the
left.
-----------------------------------------------------
(Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box provided to the
right).
-----------------------------------------------------
2. Approval of the appointment of KPMG LLP as independent accountants
for fiscal year 1999. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Upon such other business as may properly come before said meeting,
or any adjournment thereof. [ ] FOR [ ] AGAINST [ ] ABSTAIN
Check appropriate box Date No. OF SHARES
Indicate changes below. -------------------------- -----------------------------------------------------
Address Change? [ ] Name Change? [ ]
-----------------------------------------------------
Signature(s) In Box
Please sign EXACTLY as name appears on this card.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee, guardian or corporate
officer, please give full title.
</TABLE>
