<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: ...........................................................
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- --------------------------------------------------------------------------------
<PAGE> 2
CENTURY BUSINESS SERVICES, INC.
6480 ROCKSIDE WOODS BLVD., SOUTH, SUITE 330
CLEVELAND, OH 44131
April 10, 2000
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Century Business Services, Inc. which will be held on Friday, May 12, 2000, at
11:30 a.m., at The Holiday Inn - Grand Ballroom, 6001 Rockside Road,
Independence, Ohio 44131.
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 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 2000
TO THE STOCKHOLDERS OF CENTURY BUSINESS SERVICES, INC.:
The Annual Meeting of Stockholders of Century Business Services, Inc.
("Century") will be held on Friday, May 12, 2000, at 11:30 a.m., at The Holiday
Inn - Grand Ballroom, 6001 Rockside Road, Independence, Ohio 44131, for the
following purposes:
1. to elect a class of two (2) directors to the Board of Century with terms
expiring at the Annual Meeting in 2003;
2. to ratify the appointment of KPMG LLP as Century's independent
accountants for 2000; and
3. to transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record on March 31, 2000 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
April 10, 2000
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Voting Rights and Solicitation.............................. 3
Proposal No. 1 - Election of Directors...................... 4
Proposal No. 2 - Ratification of Appointment of Independent
Accountants............................................... 5
Security Ownership of Certain Beneficial Owners and
Management................................................ 6
Executive Compensation...................................... 10
Certain Relationships and Related Transactions.............. 11
Stockholder Return Performance Presentation................. 12
Section 16(a) Beneficial Ownership Reporting Compliance..... 13
Stockholder Proposals....................................... 13
Expenses of Solicitation.................................... 13
Other Matters............................................... 13
</TABLE>
2
<PAGE> 5
CENTURY BUSINESS SERVICES, INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
------------------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Century Business Services, Inc. ("Century") of proxies
to be voted at the Annual Meeting of Stockholders to be held on Friday, May 12,
2000, and any adjournment or adjournments thereof, for the purposes set forth in
the accompanying Notice of Meeting. The mailing of this proxy statement and
accompanying form of proxy to stockholders will commence on or about April 10,
2000.
VOTING RIGHTS AND SOLICITATION
Shares represented by properly executed proxies received on behalf of
Century will be voted at the meeting in the manner specified therein. If no
instructions are specified in a proxy returned to Century, the shares
represented thereby will be voted in favor of the election of the directors
listed in the enclosed proxy, and in favor of the appointment of KPMG LLP as
independent accountants for 2000. Any proxy may be revoked by the person giving
it at any time prior to being voted by attendance at the meeting or submitting a
subsequently signed and dated proxy.
Mr. Rick L. Burdick and Mr. Hugh P. Lowenstein are designated as proxy
holders in the proxy card. They will vote for the election as directors of Mr.
Michael G. DeGroote and Mr. Harve A. Ferrill 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 2000. 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 on Form 10-K for the year ended December 31, 1999,
including financial statements and a Letter to Shareholders (the "Annual
Report"), 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 31, 2000 as the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting. On the record date, Century had 95,423,629 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
whether a quorum is present 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.
3
<PAGE> 6
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Century's Certificate of Incorporation divides the Board of Directors into
three classes of directors, 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 2003, or until
their successors are duly elected and qualified. All other directors will
continue as such for the term to which they were elected. 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.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the election of the nominees
for election as directors listed below.
DIRECTORS STANDING FOR ELECTION
<TABLE>
<CAPTION>
EXPIRATION OF
PROPOSED
NAME AGE SINCE TERM
---- --- ----- -------------
<S> <C> <C> <C>
Michael G. DeGroote....................................... 66 1995 2003
Harve A. Ferrill.......................................... 67 1996 2003
</TABLE>
DIRECTORS WHOSE TERMS CONTINUE
<TABLE>
<CAPTION>
EXPIRATION OF
NAME AGE SINCE CURRENT TERM
---- --- ----- -------------
<S> <C> <C> <C>
Rick L. Burdick.......................................... 48 1997 2001
Hugh P. Lowenstein....................................... 69 1997 2001
Richard C. Rochon........................................ 42 1996 2002
Joseph S. DiMartino...................................... 56 1997 2002
</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
Michael G. DeGroote has served as the Chairman of the Board of Directors of
Century since April 1995. Mr. DeGroote also served as Chief Executive Officer
and President of Century from April 1995 until October 1996 and from November
1997 to April 1999. Since April 1999 Mr. DeGroote has served as CEO. Mr.
DeGroote served as Chairman of the Board, President and Chief Executive Officer
of Republic Industries, Inc., now known as AutoNation, Inc., from May 1991 until
August 1995. Mr. DeGroote founded Laidlaw Inc., a Canadian waste services and
transportation Century 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 currently serves on the Board of Directors of AutoNation, Inc.
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. Mr. Ferrill served as President of ARC
from 1990 to 1993, and as Chairman of the Board from 1992 to 1996. Since 1996
ARC is a wholly-owned subsidiary of Cendant Corporation. Mr. Ferrill has served
as President of Ferrill-Plauche Co., Inc., a private investment company, since
1982. Mr. Ferrill also serves on the Board of Directors of Gaylord Container
Corporation.
4
<PAGE> 7
CONTINUING DIRECTORS
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 Board of Directors of AutoNation, Inc.
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 served on the Board of Directors of Terra Nova
(Bermuda) Holdings Ltd.
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 Family 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 Quikcat.com; Health Plan Services Corporation; Carlyle Industries,
Inc.; and the Muscular Dystrophy Association.
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 President and Vice Chairman of Boca
Resorts, Inc., the owner and operator of luxury resort properties, 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.
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, 2000. 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 Century or
any of its subsidiaries or, during the past three years, has had any connection
with Century 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.
Representatives of KPMG LLP will be present at the Annual Meeting and will
have the opportunity to make a statement, if they so desire, and respond to
appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the ratification by the
stockholders of this appointment.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table shows the beneficial ownership of Century common stock
as of March 31, 2000, by (1) each person known by Century to own beneficially 5%
or more of Century's 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.
<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)...................................... 16,023,138(4) 16.46%
Huizenga Investments L.P.(5)................................ 7,644,444(6) 7.83%
Rick L. Burdick............................................. 59,034(7) *
Joseph S. DiMartino......................................... 85,000(8) *
Harve A. Ferrill............................................ 63,000(9) *
Hugh P. Lowenstein.......................................... 89,000(10) *
Richard C. Rochon........................................... 161,110(11) *
Douglas R. Gowland.......................................... 328,900(12) *
Jerome P. Grisko, Jr........................................ 113,400(13) *
Charles D. Hamm, Jr......................................... 82,800(14) *
John J. Hopkins............................................. 12,900(15) *
Brad A. Newman.............................................. 18,000(16) *
Robert A. O'Byrne........................................... 203,910(17) *
All directors and executive officers as a group (12
persons).................................................. 17,240,192 17.59%
Total Shares Outstanding 95,423,629
</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 March 31, 2000. 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 14,123,138 shares of common stock owned of record by Westbury
(Bermuda) Ltd., and 1,900,000 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
<PAGE> 9
(6) Consists of 5,422,222 shares of common stock owned of record by Huizenga
Investments Limited Partnership, and 2,222,222 shares of common stock that
Huizenga Investments Limited Partnership has the right to acquire upon
exercise of outstanding warrants.
(7) Consists of 9,034 shares of common stock and options to purchase 50,000
shares of common stock granted under the Century Employee's Stock Option
Plan (the "Century Option Plan").
(8) Consists of 35,000 shares of common stock and options to purchase 50,000
shares of common stock granted under the Century Option Plan.
(9) 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.
(10) 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.
(11) 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.
(12) Consists of 123,100 shares of common stock; 38,000 shares of common stock
issuable upon the exercise of outstanding warrants owned of record by Mr.
Gowland and options to purchase 167,800 shares of common stock granted
under the Century Option Plan.
(13) Consists of options to purchase 113,400 shares of common stock granted
under the Century Option Plan.
(14) Consists of 55,000 shares of common stock and options to purchase 27,800
shares of common stock granted under the Century Option Plan.
(15) Consists of 1,000 shares of common stock and options to purchase 11,900
shares of common stock granted under the Century Option Plan.
(16) Consists of 15,000 shares of common stock and options to purchase 3,000
shares of common stock granted under the Century Option Plan.
(17) Consists of 154,100 shares of common stock and options to purchase 7,800
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.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met four times in person, conducted four telephonic
meetings and took actions by unanimous written consent in lieu of meeting seven
times during 1999. Each director attended in person all regular meetings of the
Board of Directors and the committees on which such director served, with the
exception of Mr. DiMartino who missed two regular meetings and Mr. Ferrill who
missed one.
Committees of the Board of Directors. The Board of Directors had an Audit
Committee, a Compensation Committee and an Executive Management Committee active
during 1999. The following is a description of the committees of the Board of
Directors:
The members of the Audit Committee are Messrs. Burdick, Ferrill (Chairman)
and Rochon. The Audit Committee met three times in person and conducted two
telephonic meetings during 1999. The Audit Committee recommends the independent
accountants appointed by the Board of Directors 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 members of the Compensation Committee are Messrs. Ferrill, Lowenstein
(Chairman) and Rochon. The Compensation Committee took actions by unanimous
written consent in lieu of meeting four times during 1999. The Compensation
Committee reviews and makes recommendations to the Board of Directors with
respect to
7
<PAGE> 10
compensation of Century's executive officers, including salary, bonus and
benefits. The Compensation Committee also administers Century's stock option
plans.
The members of the Executive Management Committee are Messrs. DeGroote,
Hamm and Grisko. The Executive Management Committee, formed in February of 1998,
reviews and approves the acquisition of complementary businesses within
guidelines set by the Board of Directors. During 1999, the Executive Management
Committee took actions by unanimous written consent in lieu of meeting
thirty-six times.
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 person. In addition, directors who are committee members
receive a fee of $500 for each committee meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Ferrill, Lowenstein
and Rochon. They are neither officers nor 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 monitors the
compensation of the Chief Executive Officer of Century and the other officers
named in the Executive 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
Mr. DeGroote, the Chairman of the Board and Chief Executive Officer of
Century during 1999, has elected not to receive any compensation for his
services provided to Century. Mr. DeGroote's substantial stock position in
Century assures us of his close identification with the interests of Century's
stockholders.
With the exception of Mr. DeGroote, the executive base compensation for
executive officers of Century is intended to be competitive with that paid in
comparably-sized, publicly held companies in the outsourced business services
industry that are growing aggressively, taking into account the scope of
responsibilities and
8
<PAGE> 11
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, if any, 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 comparably-sized
companies in the outsourced business services industry.
Individual base salaries are based on the scope of the executive's
responsibilities, a subjective evaluation of the executive's performance,
including the performance of the business for which such executive is
responsible, the executive's ability to network, ability to influence,
leadership potential and loyalty, and the length of time the executive has been
in the position. In recruiting executives, the potential executive's salary in
his or her current position is used as an immediate benchmark. Annual cash
bonuses are not typically given to executives. If given, however, annual cash
bonuses are based on the financial performance of the company and the
executive's individual job performance. Century prefers to award equity
incentives to executives, typically in the form of stock options. Stock options
are granted by the Compensation Committee based on the executive's individual
job performance and to provide incentive to executives to maximize stock price
appreciation, thereby aligning their interests with those of Century's
stockholders.
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
Harve A. Ferrill
Richard C. Rochon
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following table provides a summary of compensation for the Chief
Executive Officer and the four other most highly-compensated officers who were
serving as executives of Century on December 31, 1999.
EXECUTIVE SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------- ------------------------
SECURITIES SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING UNDERLYING
POSITION YEAR SALARY BONUS COMPENSATION WARRANTS OPTIONS
------------------ ---- ------ ----- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael G. DeGroote 1999 $ 0 $ 0 $ 0 $ 0 $ 0
Chairman and 1998 0 0 0 0 0
Chief Executive Officer 1997 0 0 0 0 0
Phillip P. Andrews(1) 1999 314,922(2) 0 0 0 40,000(3)
Senior Vice President 1998 0 0 0 0
1997 0 0 0 0
Jerome P. Grisko, Jr. 1999 240,654 9,600 5,497(4) 0 17,000(5)
President 1998 64,904 0 2,769(4) 0 50,000(6)
1997 0 0 0 0
John J. Hopkins 1999 267,500 0 5,159(4) 0 17,000(5)
Senior Vice President 1998 113,462 0 3,268(4) 0 42,500(7)
1997 0 0 0 0
Fred M. Winkler(8) 1999 248,500 0 0 0 200,000(9)
President & Chief 1998 0 0 0 0
Operating Officer 1997 0 0 0 0
</TABLE>
- ---------------
(1) Mr. Andrews resigned as Senior Vice President effective February 15, 2000.
(2) Includes $123,800 received as consulting fees from Century prior to
employment as an executive officer.
(3) Consists of options that would have vested 20% annually beginning June 9,
2000, and would have remained exercisable for a six-year period from the
date of grant, had Mr. Andrews remained with Century.
(4) Includes employer matching 401(K) contributions and automobile adjustments.
(5) Consists of options that vest 20% annually beginning January 4, 2000, and
remain exercisable for a six-year period from the date of grant.
(6) Consists of options that vest 20% annually beginning October 2, 1999, and
remain exercisable for a six-year period from the date of grant.
(7) Consists of options that vest 20% annually beginning July 27, 1999, and
remain exercisable for a six-year period from the date of grant.
(8) Mr. Winkler resigned as a Director, President and Chief Operating Officer
effective January 27, 2000.
(9) Consists of 50,000 immediately vested options and 150,000 options that would
have vested 20% annually beginning January 1, 2000, and which would have
remained exercisable for a six-year period from the date of grant, had Mr.
Winkler remained with Century.
OPTIONS GRANTED DURING 1999
The following table sets forth as to each of the named executive officers
information with respect to option grants during 1999: (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
10
<PAGE> 13
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 1999.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1999 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 IN 1999 SHARE DATE GROWTH RATE GROWTH RATE
---------- ---------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. DeGroote......... -0- -0- -- -- -- --
Phillip P. Andrews.......... 40,000* 2.05% $11.875 6/9/2005* $ 481,745 $ 686,691
Jerome P. Grisko, Jr........ 17,000 .87 14.375 1/4/2005 247,756 353,195
John J. Hopkins............. 17,000 .87 14.375 1/4/2005 247,756 353,195
Fred M. Winkler............. 200,000** 10.24 11.875 1/27/2003** 2,408,727 3,433,457
</TABLE>
- ---------------
* As Mr. Andrews terminated employment while these options were unvested, all
options were cancelled in February 2000.
** In connection with Mr. Winkler's resignation, 170,000 of his options vested,
30,000 were cancelled and the expiration date was changed.
OPTION EXERCISES AND VALUES FOR 1999
The following table sets forth information as to each of the named
executive officers with respect to option exercises during 1999 and the status
of their options at December 31, 1999: (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, 1999, and (4) the
aggregate dollar value of in-the-money exercisable and non-exercisable options
at December 31, 1999.
AGGREGATED OPTION EXERCISES DURING 1999
AND OPTION VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NO. OF SHARES OPTIONS OPTIONS
ACQUIRED UPON VALUE AT DECEMBER 31, 1999 AT DECEMBER 31, 1999
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
Phillip P. Andrews........ 0 0 0 40,000 0 0
Jerome P. Grisko, Jr...... 0 0 10,000 47,000 0 0
John J. Hopkins........... 0 0 8,500 51,000 0 0
Fred M. Winkler........... 0 0 50,000 150,000 0 0
</TABLE>
- ---------------
+ Although not compensation, Mr. DeGroote exercised 555,556 warrants at an
exercise price of $11.00 per share on July 27, 1999. Mr. DeGroote purchased
these warrants pursuant to a Unit Purchase Agreement effective April 21, 1997.
The warrants would have expired April 21, 2000.
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 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.
11
<PAGE> 14
The office building utilized by SMR & Co. Business Services (a subsidiary
of Century) is leased under a ten-year lease, expiring February 26, 2006, from a
partnership in which a former Senior Vice President's spouse is a one-third
owner. 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. In the aggregate, in
1999, Century paid approximately $2.1 million under such leases, which were at
competitive market rates.
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 1999 for which the firm received $458,742 from Century.
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
Index 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 24, 1995 through the year ended December 31,
1999.
COMPARISON OF 57 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>
4/24/95 100.00 100.00 100.00 100.00
12/95 112.50 135.45 122.06 127.48
12/96 808.33 176.19 150.09 145.32
12/97 1150.00 228.42 200.16 213.17
12/98 958.33 245.42 257.36 189.89
12/99 562.53 223.99 311.52 147.44
</TABLE>
* $100 INVESTED ON 4/24/95 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
+ Century's Peer Group includes H & R Block, Inc.; Employee Solutions, Inc.;
Equifax Inc.; Gartner Group, Inc.; Paychex, Inc. and Robert Half
International, Inc.
12
<PAGE> 15
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 with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater than 10% stockholders are required by
the SEC 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, 1999 to December 31,
1999, all Section 16(a) applicable filing requirements for its officers,
directors and greater than 10% stockholders were complied with.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented at the 2001 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 5,
2001. 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 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 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
April 10, 2000
13
<PAGE> 16
CENTURY BUSINESS SERVICES, INC.
6480 ROCKSIDE WOODS BLVD., SOUTH, SUITE 330
CLEVELAND, OHIO 44131
ANNUAL MEETING OF STOCKHOLDERS, MAY 12, 2000
The undersigned stockholder of CENTURY BUSINESS SERVICES, INC. (the
"Company") hereby appoints Rick L. Burdick and Hugh P. Lowenstein, 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
2000 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 April 10, 2000 for the Annual Meeting of stockholders.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
CENTURY BUSINESS SERVICES, INC. 2000 ANNUAL MEETING
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: 1. - Michael G. DeGroote 2. - Harve A. Ferrill [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed to the to vote for all
left (except as nominees listed to
specified below). 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. Ratification of the appointment of KPMG LLP as independent accountants for [ ] FOR [ ] AGAINST [ ] ABSTAIN
fiscal year 2000.
3. Upon such other business as may properly come before said meeting, or any [ ] FOR [ ] AGAINST [ ] ABSTAIN
adjournment thereof.
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>
