<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Personnel Group of America, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(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
[LOGO]
PERSONNEL GROUP OF AMERICA, INC.
6302 FAIRVIEW ROAD, SUITE 201
CHARLOTTE, NORTH CAROLINA 28210
April 10, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders to be held at The Park Hotel, 2200 Rexford Road, Charlotte, North
Carolina, on Thursday, May 21, 1997, at 9:30 a.m., local time.
The Notice of Annual Meeting of Shareholders and Proxy Statement are
attached hereto. The matters to be acted upon by our shareholders are set forth
in the Notice of Annual Meeting and discussed in the Proxy Statement.
We would appreciate your signing, dating and returning the enclosed
proxy card in the envelope provided at your earliest convenience. If you choose
to attend the meeting, you may revoke your proxy and personally cast your votes.
Also enclosed herewith is a copy of the Company's 1996 Annual Report to
Shareholders.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
/s/ Edward P. Drudge, Jr.
Edward P. Drudge, Jr.
Chairman and Chief Executive Officer
1
<PAGE> 3
PERSONNEL GROUP OF AMERICA, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1997
---------------
TO THE SHAREHOLDERS
OF PERSONNEL GROUP of AMERICA, INC.
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
Personnel Group of America, Inc., a Delaware corporation (the "Company"), will
be held at 9:30 a.m., local time, on May 21, 1997, at The Park Hotel, 2200
Rexford Road, Charlotte, North Carolina, for the following purposes:
(1) To elect two members to the Company's Board of Directors
to hold office until the Annual Meeting of Shareholders in 2000 or
until their successors are duly elected and qualified;
(2) To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to increase the Company's authorized
Common Stock;
(3) To consider and act upon a proposal to amend the Company's
1995 Equity Participation Plan;
(4) To consider and act upon a proposal to approve the
Company's 1997 Employee Stock Purchase Plan;
(5) To consider and act upon a proposal to ratify the
selection of Price Waterhouse LLP as the Company's independent public
accountants for 1997; and
(6) To transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on March 28,
1997 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof. A list of those shareholders may be examined at the principal executive
office of the Company, 6302 Fairview Road, Suite 201, Charlotte, North Carolina,
during the 10-day period preceding the meeting.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
/s/ Edward P. Drudge, Jr.
Edward P. Drudge, Jr.
Chairman and Chief Executive Officer
Charlotte, North Carolina
April 10, 1997
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. THOSE SHAREHOLDERS
WHO ARE UNABLE TO ATTEND ARE URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD
AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS
ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
2
<PAGE> 4
1997 ANNUAL MEETING OF SHAREHOLDERS
OF PERSONNEL GROUP OF AMERICA, INC.
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Personnel Group of America, Inc., a Delaware
corporation ("PGA" or the "Company"), of proxies from the holders of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), for use
at the 1997 Annual Meeting of Shareholders of the Company to be held at The Park
Hotel, 2200 Rexford Road, Charlotte, North Carolina, at 9:30 a.m., local time,
on May 21, 1997, or at any adjournments or postponements thereof (the "Annual
Meeting"), pursuant to the enclosed Notice of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the enclosed form of proxy
are first being sent or given to holders of Common Stock is April 10, 1997. The
Company's principal executive offices are located at 6302 Fairview Road, Suite
201, Charlotte, North Carolina 28210, and its telephone number is (704)
442-5100.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have a right to
revoke their proxy at any time prior to the exercise thereof, either in person
at the Annual Meeting or by filing with the Company's Secretary at the Company's
headquarters a written revocation or duly executed proxy bearing a later date.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company has retained
Corporate Communications, Inc. to aid in the proxy solicitation at an estimated
cost of $5,000.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) A proposal to elect two members to the Company's Board of
Directors to serve until the Annual Meeting of Shareholders in 2000 or
until their successors are duly elected and qualified;
(2) A proposal to amend the Company's Certificate of
Incorporation to increase the Company's authorized Common Stock;
(3) A proposal to amend the Company's 1995 Equity
Participation Plan;
(4) A proposal to approve the Company's 1997 Employee Stock
Purchase Plan;
(5) A proposal to ratify the selection of Price Waterhouse LLP
as the Company's independent public accountants for 1997; and
(6) Such other business as may properly come before the Annual
Meeting, including any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) in favor of the election of the two nominees for directors
named below and (b) in favor of each of the other proposals in clauses (2)
through (5) above. In the event a shareholder specifies a different choice by
means of the enclosed proxy, his or her shares will be voted in accordance with
the specification so made.
3
<PAGE> 5
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on March 28, 1997
as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 12,076,755 shares of Common Stock issued and
outstanding, all of which are entitled to one vote on all matters to be acted
upon at the Annual Meeting. Neither the Company's Certificate of Incorporation
nor Bylaws provides for cumulative voting rights.
The representation in person or by proxy of a majority of the issued
and outstanding shares of Common Stock entitled to vote will constitute a quorum
at the Annual Meeting. Directors of the Company are elected by a plurality vote,
and votes may either be cast in favor of nominees or withheld. Withheld votes
will be excluded entirely from the vote and will have no effect on the outcome
of the election. Approval of the remaining proposals (other than the proposed
amendment to the Certificate of Incorporation) requires the affirmative vote of
the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote. On any such proposal, an abstention
will have the same effect as a negative vote but, because shares held by brokers
will not be considered entitled to vote on matters as to which the brokers
withhold authority, a broker non-vote will have no effect on the vote. The
proposed amendment to the Certificate of Incorporation will require the
affirmative vote of a majority of the issued and outstanding Common Stock;
accordingly, abstentions and broker non-votes will have the same effect as
negative votes on this proposal.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 28, 1997, the number and
percentage of outstanding shares beneficially owned by each person known by the
Company to own beneficially more than 5% of the Company's Common Stock, by each
director and nominee for director of the Company, by each officer named in the
Summary Compensation Table under the heading "Executive Compensation" and each
current executive officer and by all directors and current executive officers of
the Company as a group. Except as otherwise indicated, each shareholder named
has sole voting and investment power with respect to such shareholder's shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF SHARES Percent of Common
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) Stock Outstanding
- ------------------------------------ ---------------------- -----------------
<S> <C> <C>
RCM Capital Management, L.L.C.
RCM Limited L.P.
RCM General Corporation..................................... 694,500 (2) 5.8%
Four Embarcadero Center, Suite 3000
San Francisco, California 94111-4189
Edward P. Drudge, Jr........................................ 197,807 (3) 1.6
Peter R. Sollenne........................................... 24,842 *
Rosemary Payne-Harris....................................... 16,815 *
James C. Hunt .............................................. 16,060 (4) *
Kevin P. Egan .............................................. 15,375 *
Gene C. Wilson.............................................. 14,715 *
Ken R. Bramlett, Jr. ....................................... 13,432 (5) *
Richard L. Peranton......................................... 12,715 *
James V. Napier............................................. 12,575 *
J. Roger King............................................... 10,375 *
William J. Simione, Jr. .................................... 10,375 *
All directors and current executive officers
as a group (9 persons).................................... 313,556 2.5%
</TABLE>
* Less than one percent
(1) Includes the following shares subject to stock options exercisable
within 60 days after March 28, 1997: Mr. Drudge--167,245; Mr. Sollenne-
-23,842; Ms. Payne-Harris--12,715; Mr. Hunt--14,000; Mr. Egan--9,375;
Mr. Wilson--12,715; Mr. Bramlett--9,182; Mr. Peranton--10,715; Mr.
Napier--9,375; Mr. King--9,375; Mr. Simione--9.375; Directors and
current executive officers as a group--262,484.
(2) The amount and nature of the shares beneficially owned are as of
December 29, 1996 and are based on the most recent Schedule 13G, or
amendment thereto, on file with the Company. Of the total shares
reported, sole voting power is reported with respect to only 597,500
shares and shared dispositive power is reported with respect to 44,000
shares.
(3) Includes 2,500 shares held in the names of Mr. Drudge's spouse and
children.
(4) Includes 560 shares held in the names of Mr. Hunt's spouse and
children.
(5) Includes 250 shares held in the name of Mr. Bramlett's spouse.
4
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES
The Company's Certificate of Incorporation and Bylaws provide for seven
directors who are divided into three classes. The terms of the directors in the
initial classes are being phased in over a three-year period, and after the
expiration of the terms of these directors, newly elected directors will serve
for a three-year term or until their successors are elected and qualify. Messrs.
Drudge, Napier and Simione were appointed to Class III to serve until the Annual
Meeting of Shareholders in 1998. Messrs. Egan and King were appointed to Class
II to serve until this Annual Meeting. Mr. Hunt, who replaced Michael P. Bernard
as the Company's Chief Financial Officer, has been appointed to Class I to serve
the remainder of Mr. Bernard's term, which would have expired at the Annual
Meeting of Shareholders in 1999. The Board of Directors is seeking a director
candidate to fill the Class I vacancy created by Ms. Joyce Mazero's resignation
in April 1996, but has yet to fill the vacancy. Messrs. Egan and King are the
sole nominees standing for election at the Annual Meeting and, if elected, will
serve for a term expiring at the Annual Meeting of Shareholders in 2000,
expected to be held in May 2000, or until their successors have been duly
elected and qualified. Any director appointed after this Annual Meeting to fill
the vacancy on the Board will be designated a Class I director and will serve a
term expiring at the Annual Meeting of Shareholders in 1999, expected to be held
in May 1999, or until a successor has been duly elected and qualified.
The Board of Directors makes nominations for director candidates as
permitted by the Company's Bylaws. Section 14 of Article II of the Company's
Bylaws prescribes the procedure a shareholder must follow to make nominations
for director candidates. Shareholder nominations for director will be considered
at an annual meeting or a special meeting of shareholders if the shareholder
(who must be, at the time of delivery of notice, a shareholder of record)
delivers to the Secretary of the Company a timely notice setting forth the
information specified in Section 14 of Article II of the Company's Bylaws. In
the case of an annual meeting, such notice shall be considered timely if
delivered not earlier than the close of business on the 90th day, nor later than
the close of business on the 60th day, prior to the first anniversary of the
preceding year's annual meeting. If, however, the annual meeting date is more
than 30 days before or 60 days after the anniversary date of the preceding
year's annual meeting, the notice will be considered timely if delivered not
earlier than the close of business on the 90th day prior to such meeting nor
later than the close of business on the later of (i) the 60th day prior to such
meeting or (ii) the 10th day following the day on which the public announcement
of the date of such meeting is first made by the Company. In the case of a
special meeting, such notice shall be considered timely if delivered not earlier
than the close of business on the 90th day prior to such meeting nor later than
the close of business on the later of (i) the 60th day prior to such meeting or
(ii) the 10th day following the day on which public announcement is first made
of the special meeting date and the nominees proposed by the Board of Directors.
Any shareholder desiring a copy of the Company's Bylaws will be furnished one
without charge upon written request to the Secretary. The Board of Directors has
no reason to believe that the nominees will refuse to act or be unable to accept
election; however, in the event that a nominee for a directorship is unable to
accept election or if any unforeseen contingencies should arise, it is intended
that proxies will be voted for such other person as may be designated by the
Board of Directors, unless it is directed by a proxy to do otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF MESSRS. EGAN AND
KING FOR ELECTION AS CLASS II DIRECTORS.
5
<PAGE> 7
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as to the Company's current
executive officers and directors:
<TABLE>
<CAPTION>
NAME Age Position
---- --- --------
<S> <C> <C>
Edward P. Drudge, Jr. 57 Chairman of the Board and Chief Executive Officer
James C. Hunt 40 Senior Vice President, Chief Financial Officer, Treasurer and Director
Ken R. Bramlett, Jr. 37 Senior Vice President, General Counsel and Secretary
Peter R. Sollenne 47 President-Commercial Staffing Division
Richard L. Peranton 46 President-Nursefinders
Kevin P. Egan (1) 53 Director
J. Roger King (1) 56 Director
James V. Napier(1)(2) 60 Director
William J. Simione, Jr.(2) 55 Director
</TABLE>
(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
Edward P. Drudge, Jr.: Mr. Drudge is the Chairman of the Board and
Chief Executive Officer of the Company and has served as such since the
formation of the Company in July 1995. Prior to that time, Mr. Drudge was
President of the Personnel Group of America Division of Adia, S.A. a Swiss
corporation ("Adia") and Senior Vice President of Adia Services, Inc., a
California corporation and wholly owned subsidiary of Adia ("Adia California"),
having joined Adia in April 1989. Prior to joining Adia, Mr. Drudge held senior
management positions with Manpower Inc., a provider of personnel services, for
16 years, and prior to that, sales and marketing positions with Procter &
Gamble.
James C. Hunt: Mr. Hunt joined the Company as a Senior Vice President
on January 2, 1997, and has served as Chief Financial Officer and Treasurer and
as a director of the Company since March 1, 1997. Prior to joining the Company,
Mr. Hunt spent 18 years with Arthur Andersen LLP, a worldwide accounting and
consulting firm, the last six years as a partner.
Ken R. Bramlett, Jr.: Mr. Bramlett has served as Senior Vice President,
General Counsel and Secretary of the Company since October 1996. Prior to
joining the Company, Mr. Bramlett spent 12 years with Robinson, Bradshaw &
Hinson, P.A., a Charlotte, North Carolina law firm, the last six years as a
partner. Mr. Bramlett also serves on the board of directors of World Acceptance
Corporation, a small loan consumer finance company headquartered in Greenville,
South Carolina.
Peter R. Sollenne: Mr. Sollenne has served as President of the
Commercial Staffing Division since October 1996. Mr. Sollenne served as
President of the Commercial Staffing Division's Abar Staffing Company in San
Francisco from July 1995 through October 1996. Prior to joining PGA, Mr.
Sollenne spent six years as Senior Vice President of Sales, Marketing and
Customer Services with USL Capital Fleet Services, a division of Ford Financial
Services, Inc., and prior to that was President of PHH Financial Services, and
held other senior management positions with PHH Corporation, Commercial Union
Assurance Companies and Bank of Boston.
Richard L. Peranton: Mr. Peranton has served as President of the Health
Care Services Division since April 1994 and has 15 years experience in the home
health care industry. From 1982 until April 1994, he held several executive
positions with Kimberly Quality Care, a provider of home health care services,
including President of that company's Southeastern Division.
Kevin P. Egan: Mr. Egan has served as a director of the Company since
September 1995. Since October 1995, Mr. Egan has been the President of Tamarack
Holdings, an investment company. From 1983 to September 1995, Mr. Egan served as
President and Chief Operating Officer of PrimeNet DataSystems, St. Paul,
Minnesota. PrimeNet provides database and integrated marketing services. Prior
to forming PrimeNet in 1983, Mr. Egan was senior vice president of Manpower
Temporary Services from 1975 to 1983. Mr. Egan also previously held marketing
and management positions with the Graphic Services Division of 3M Company and
Transamerica Computer Co., London, England.
6
<PAGE> 8
J. Roger King: Mr. King has served as a director of the Company since
September 1995. Mr. King joined the Frito-Lay Division of PepsiCo, Inc. in 1969
and has served in various personnel and employee relations positions for PepsiCo
since that time, including Senior Vice President of Personnel of PepsiCo from
1984 to 1995 and Senior Vice President of Human Resources of Frito-Lay from June
1995 to the present.
James V. Napier: Mr. Napier has served as a director of the Company
since September 1995. Since November 1992, Mr. Napier has been the Chairman of
Scientific-Atlanta, Inc., a telecommunications company. Between 1988 and 1992,
Mr. Napier served as Chairman and Chief Executive Officer of The Commercial
Telephone Group, a telecommunications engineering and design company, and
between 1985 and 1986, served as Chief Executive Officer and President of HBO &
Company, Inc., a health care information services company. In addition to
serving on the Board of Directors of Scientific-Atlanta, Mr. Napier is a
director of Engelhard Corporation, Vulcan Materials Company, HBO & Company,
Inc., Rhodes, Inc., Intelligent Systems Corporation and Westinghouse Air Brake
Company.
William J. Simione, Jr.: Mr. Simione has served as a director of the
Company since September 1995. Mr. Simione is Vice Chairman and Executive Vice
President of Simione Central Holdings, Inc., which provides consulting services
and information systems to the home health care industry. He is a member of the
Prospective Payment Task Force, a Regulatory Affairs Subcommittee for the
National Association for Home Care, and is one of the Subcommittee's National
Reimbursement Consultants. Mr. Simione is also a member of many state and
federal committees involving home care issues.
During the fiscal year ended December 29, 1996, the Board of Directors
held four meetings and took certain actions by unanimous written consent. During
1996, all incumbent directors had perfect attendance at (a) all meetings of the
Board of Directors held during the period, and (b) all meetings of committees of
the Board of Directors held during the period any such directors served on such
committees.
Messrs. Napier and Simione served as members of the Audit Committee of
the Board of Directors (the "Audit Committee") during 1996. The principal
functions of the Audit Committee are to meet with appropriate financial and
legal personnel and independent public accountants of the Company and review the
internal controls of the Company and the objectivity of its financial reporting.
This Committee makes recommendations to the Board of Directors with respect to
the appointment of the independent public accountants to serve as auditors in
examining the corporate accounts of the Company. The Company's independent
public accountants periodically meet privately with the Audit Committee and have
access to the Audit Committee at any time. The Audit Committee met twice during
1996.
Messrs. King, Egan and Napier served as members of the Compensation
Committee of the Board of Directors (the "Compensation Committee") during 1996.
The principal functions of the Compensation Committee are to review proposals
regarding the establishment or change of benefit plans, salaries and
compensation of the executive officers and other employees of the Company and
advise management and make recommendations to the Board of Directors with
respect thereto and administer the Company's 1995 Equity Participation Plan and
the Company's Management Incentive Compensation Plan. The Compensation Committee
met once during 1996 and took a number of actions by written consent.
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 more than 10% of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company during the fiscal year ended December 29,
1996, all Section 16(a) filing requirements applicable to its executive officers
and directors and any greater than 10% beneficial owners (the Company is aware
of none) were complied with.
7
<PAGE> 9
DIRECTOR COMPENSATION
During 1996, each non-employee director received an annual retainer of
$7,500, and each such director who chaired a committee received an annual
retainer of $1,000. In addition, non-employee directors received meeting fees of
$1,000 per board meeting attended and $500 per committee meeting attended, plus
reimbursement of expenses. Each non-employee director receives, upon joining the
Board, an initial option grant to purchase 6,250 shares of Common Stock at the
then fair market value, an additional option grant to purchase 3,125 shares of
Common Stock at the then fair market value in each of the succeeding two years,
and an annual option grant to purchase 1,500 shares of Common Stock at the
then fair market value in each year thereafter that such director remains on
the Board. All of such options will be granted under the Company's 1995 Equity
Participation Plan. Officers of the Company who are also directors are not paid
any director fees.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
for the fiscal years ended December 29, 1996, December 31, 1995 and January 1,
1995 for those persons who were, at December 29, 1996, the Chief Executive
Officer and the Company's four other most highly compensated officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------
Annual Compensation SECURITIES
--------------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS(#)(1) COMPENSATION(2)
------ ----- ------------- ---------------
Name and Principal Position
- ---------------------------
<S> <C> <C> <C> <C> <C>
Edward P. Drudge, Jr ................. 1996 $307,500 $ -- 271,817(3) $ 500(4)
Chairman and Chief Executive Officer 1995 269,994 302,535 178,572 30,993(5)
1994 243,750 296,535 -- 30,575(6)
Peter R. Sollenne .................... 1996 $154,826 $ -- 36,642(3) $ --
President-Commercial Staffing ...... 1995 58,872 36,795 8,000 --
1994 -- -- -- --
Richard L. Peranton .................. 1996 $211,762 $105,144 -- $ --
President-Nursefinders .............. 1995 205,691 191,394 26,786 20,609(7)
1994 133,333 133,333 -- --
Gene C. Wilson ....................... 1996 $170,500 $ 85,108 10,000 $ --
Senior Vice President .............. 1995 162,500 149,894 26,786 9,555(7)
1994 155,173 70,873 -- 14,605(6)
Rosemary Payne-Harris ................ 1996 $124,000 $ 49,394 10,000 $ 500(4)
Senior Vice President .............. 1995 106,750 102,352 26,786 10,729(8)
1994 92,175 61,331 -- 8,219(6)
</TABLE>
- ----------
(1) Except as set forth below, amounts shown for each of the named officers
are 20% vested, and will vest an additional 20% on each successive
anniversary of the grant date through the year 2000.
(2) Each of the named officers are eligible to participate in the Company's
non-qualified profit-sharing plan, but non-qualified profit-sharing
allocations for 1996 are not currently available.
(3) Includes 51,817 options and 16,642 options granted to Mr. Drudge and
Mr. Sollenne, respectively, on January 2, 1997 in lieu of 1996 bonuses.
See "Compensation Committee Report on Executive Compensation." These
options were vested 100% on the date of grant.
(4) Amounts represent employer matching contributions to individual
retirement accounts.
(5) Amount includes $30,493 in non-qualified profit-sharing allocations for
1995 and $500 in employer matching contributions to individual
retirement account.
(6) Amounts represent non-qualified profit-sharing allocations for 1994.
(7) Amount represents non-qualified profit-sharing allocation for 1995.
(8) Amount includes $10,246 in non-qualified profit-sharing allocations for
1995 and $483 in employer matching contributions to individual
retirement account.
Option Grants Table. The following table sets forth certain information
concerning grants of stock options to the named officers during the fiscal year
ended December 29, 1996:
8
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Number of % of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of
Underlying Granted to Exercise Stock Price Appreciation for
Options Employees or Base Option Term
Granted in Fiscal Price Expiration ----------------------------
Name (#)(1) Year ($/Sh) Date 5% ($) 10% ($)
---- -------- ---- ------ ------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
Edward P. Drudge, Jr.(2) .. 220,000 52.3% $24.94 9/25/06 $3,449,600 $8,745,000
Peter R. Sollenne(2) ...... 20,000 4.8% $27.00 11/5/06 $ 339,600 $ 860,800
Gene C. Wilson ............ 10,000 2.4% $24.94 9/25/06 $ 156,800 $ 397,500
Rosemary Payne-Harris ..... 10,000 2.4% $24.94 9/25/06 $ 156,800 $ 397,500
</TABLE>
(1) Amounts shown for each of the named officers are 20% vested, and will
vest an additional 20% on each successive anniversary of the grant date
through the year 2000.
(2) Amounts shown exclude 51,817 and 16,642 options granted to Mr. Drudge
and Mr. Sollenne, respectively, on January 2, 1997, in lieu of 1996
bonuses. See "Compensation Committee Report on Executive Compensation."
These options were granted at an exercise price of $23.18 and vested
100% on the date of grant.
Option Year-End Value Table. The following table sets forth certain
information concerning unexercised options held as of December 29, 1996:
FISCAL YEAR-ENDED OPTION VALUE
<TABLE>
<CAPTION>
Number of Securities Underlying Value Of Unexercised In-the-Money
Unexercised Options at FY-End (#) Options At FY-End ($)
------------------------------------ --------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edward P. Drudge, Jr.(1)... 115,428 283,144 $732,137 $1,098,226
Peter R. Sollenne(1)....... 7,200 20,800 $ 34,784 $ 51,936
Richard L. Peranton........ 10,715 16,071 $109,829 $ 164,727
Gene C. Wilson............. 12,715 24,071 $109,829 $ 164,727
Rosemary Payne-Harris...... 12,715 24,071 $109,829 $ 164,727
</TABLE>
(1) Amounts shown exclude 51,817 and 16,642 options granted to Mr. Drudge
and Mr. Sollenne, respectively, on January 2, 1997, in lieu of 1996
bonuses. See "Compensation Committee Report on Executive Compensation."
These options were granted at an exercise price of $23.18 and vested
100% on the date of grant.
9
<PAGE> 11
EMPLOYMENT AGREEMENTS
Edward P. Drudge, Jr. is employed pursuant to the terms of an
employment agreement, dated as of September 29, 1995, which provides for his
employment as Chief Executive Officer of the Company until September 30, 1998,
subject to automatic renewal for successive one-year periods unless either the
Company or Mr. Drudge has given notice of non-renewal six months prior to
expiration. The employment agreement currently provides for (i) an annual base
salary of $330,000 (subject to annual adjustment as determined by the
Compensation Committee) and (ii) the right to earn bonuses under the Company's
Management Incentive Compensation Plan. If the employment agreement is
terminated by the Company other than for cause or by Mr. Drudge upon a change in
terms and conditions of employment or following a change in control of the
Company, the Company must pay Mr. Drudge severance equal to 24 months' salary
and any unpaid bonus to which he would otherwise have been entitled, and all
unvested options to purchase Common Stock then held by Mr. Drudge become
immediately exercisable. The employment agreement contains a provision
prohibiting Mr. Drudge from competing with the Company or soliciting employees
and customers of the Company for a period of two years from the date Mr.
Drudge's employment with the Company ceases.
Peter R. Sollenne is employed pursuant to an employment agreement,
dated as of October 1, 1996, which provides for his employment as President of
the Commercial Staffing Division of the Company until September 30, 1997,
subject to automatic renewal for successive one-year periods unless either the
Company or Mr. Sollenne has given notice of non-renewal six months prior to
expiration. The employment agreement currently provides for (i) an annual base
salary of $200,000 (subject to annual adjustment as determined by the
Compensation Committee) and (ii) the right to earn bonuses under the Company's
Management Incentive Compensation Plan. If the employment agreement is
terminated by the Company other than for cause or by Mr. Sollenne upon a change
in terms and conditions of employment or following a change in control of the
Company, the Company must pay Mr. Sollenne severance equal to 12 months' salary
and any unpaid bonus to which he would otherwise have been entitled, and all
unvested options to purchase Common Stock then held by Mr. Sollenne become
immediately exercisable. The employment agreement contains a provision
prohibiting Mr. Sollenne from competing with the Company or soliciting
employees and customers of the Company for a period of two years from the date
Mr. Sollenne's employment with the Company ceases.
The Company assumed the obligations of Nursefinders, Inc. under an
employment agreement with Richard L. Peranton, dated April 1, 1994, which
provides for his employment as President of Nursefinders, Inc. The employment
agreement currently provides for (i) an annual base salary of $212,000 (subject
to annual adjustment as determined by the Compensation Committee), and (ii) the
right to earn bonuses of up to 100% of this base salary based on the performance
of Nursefinders. Under the employment agreement, Mr. Peranton must be given six
months notice of termination. In addition, if Nursefinders is sold during the
first three years of Mr. Peranton's employment and Mr. Peranton elects not to be
an employee of the acquiring company, the Company must pay Mr. Peranton
severance equal to 12 months' salary (not including bonus or benefits). The
employment agreement contains a provision prohibiting Mr. Peranton from
competing with the Company or soliciting employees and customers of the Company
for a period of one year from the date Mr. Peranton's employment with the
Company ceases.
10
<PAGE> 12
Gene C. Wilson is employed under an employment agreement dated
October 1, 1996, which provides for his employment as President of Thomas
Staffing Services, Inc. The employment agreement currently provides for (i) an
annual base salary of $173,350 (subject to annual adjustment as determined by
the Compensation Committee) and (ii) the right to earn bonuses under the
Company's Management Incentive Compensation Plan. If the employment agreement
is terminated by the Company other than for cause or by Mr. Wilson upon a
change in terms and conditions of employment or following a change in control
of the Company, the Company must pay Mr. Wilson severance equal to 12 months'
salary and any unpaid bonus to which he would otherwise have been entitled, and
all unvested options to purchase Common Stock then held by Mr. Wilson become
immediately exercisable. The employment agreement contains a provision
prohibiting Mr. Wilson from competing with the Company or soliciting employees
and customers of the Company for a period of two years from the date Mr.
Wilson's employment with the Company ceases.
The Company entered into an employment agreement with Rosemary
Payne-Harris, dated October 19, 1995, which has been renewed and provides for
her employment as Senior Vice President of the Company until October 31, 1997,
subject to automatic renewal for further successive one-year periods unless the
Company or Ms. Payne-Harris has given notice of non-renewal six months prior to
expiration. The employment agreement currently provides for (i) an annual base
salary of $144,000 (subject to annual adjustment as determined by the
Compensation Committee) and (ii) the right to earn bonuses under the Company's
Management Incentive Compensation Plan. If the employment agreement is
terminated by the Company other than for cause or by Ms. Payne-Harris upon a
change in terms and conditions of employment or following a change in control of
the Company, the Company must pay Ms. Payne-Harris severance equal to 12 months'
salary and any unpaid bonus to which she would otherwise be entitled, and all
unvested options to purchase Common Stock then held by Ms. Payne-Harris become
immediately exercisable. The employment agreement contains a provision
prohibiting Ms. Payne-Harris from competing with the Company or soliciting
employees and customers of the Company for a period of two years from the date
Ms. Payne-Harris' employment with the Company ceases.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
It is the Compensation Committee's responsibility to review and
recommend to the Board for approval the compensation of the Company's senior
executives. The goals of the Company's compensation program for executive
officers are to base compensation on the attainment of performance objectives,
to establish compensation levels that will enable the Company to attract and
retain talented individuals and to motivate them to achieve the Company's
business objectives, including increasing shareholder value. To achieve these
goals, the Company has established a compensation program consisting of three
principal components. The components are base salary, incentive bonus awards and
discretionary bonuses in the form of equity-based compensation consisting
primarily of qualified (i.e., incentive) and non-qualified stock options. The
Company strives to structure its compensation program to enable it to attract,
retain and reward executive officers whose contributions are critical to the
long-term success of the Company.
BASE SALARY
The Company considers the sustained performance of its executives in
establishing base salaries. Among the factors considered are length of service
with the Company, individual performance, scope of responsibilities and
successful management of administrative or financial functions or operating
subsidiaries or divisions. The assessment of management performance focuses on
both qualitative (leadership qualities) and quantitative (growth of revenues and
operating earnings, as well as management of expenses) factors.
11
<PAGE> 13
The Chief Executive Officer evaluates the overall performance of the
other executive officers, including the executive officers and former executive
officers named in the Summary Compensation Table. Financial and business goals
and objectives are discussed with key executives and periodic meetings of key
executives are held to discuss business strategies, financial and business
performance, budgeting matters and strategic planning matters. An executive's
overall evaluation is a combination of a qualitative review by fellow executives
and the Chief Executive Officer and a review of the extent to which
pre-established business and financial objectives have been obtained.
Base salaries for fiscal 1996 for all officers named in the Summary
Compensation Table were determined in accordance with the terms of employment
agreements in effect with such executives, as adjusted annually by the
Compensation Committee based on the factors mentioned above. The recommendation
for a particular base salary adjustment was determined primarily by the Chief
Executive Officer, based on the above factors, with no specified weight being
given to any particular performance factor, business or financial objective. The
recommendations were presented to the Compensation Committee, together with data
compiled by outside consultants engaged by the Company to obtain competitive
compensation data. For fiscal 1996, financial goals established for determining
adjustments to base salary were met or exceeded in most cases and, in such
cases, appropriate adjustments to base salary were made.
INCENTIVE BONUS AWARDS
Early in the fiscal year, the Compensation Committee establishes a
range of incentive bonus compensation that may be earned as part of each
executive's annual compensation. Incentive bonus compensation is based on the
achievement of pre-established annual financial goals relating to increases in
earnings growth, relative to budget and prior year, before interest and taxes of
the business unit or operating subsidiary for which such executive is
responsible. The financial goals established for fiscal 1996 for the payment of
incentive compensation to the Company's key executive officers were met or
exceeded in most cases, and bonuses were paid where appropriate.
For Messrs. Drudge, Sollenne and Bramlett, the Compensation Committee
determined that it would be in the Company's best interests to pay corporate
executives' 1996 bonuses in the form of stock options granted under the 1995
Equity Participation Plan and, accordingly, granted 51,817, 16,642 and 5,182
options to these individuals, respectively, on January 2, 1997, in lieu of 1996
cash bonuses. These options vested 100% on the date of grant. The Compensation
Committee's determination was based on two factors (in addition to the other
factors considered below in the granting of stock options generally). First,
distributing bonuses in the form of stock options to these executives enabled
the Company to conserve cash for investment. Second, paying bonuses in stock
options was consistent with one of the Compensation Committee's stated goals of
increasing the equity portion of senior executive compensation generally.
DISCRETIONARY BONUS AWARDS/EQUITY BASED COMPENSATION
The Company also rewards its executives with discretionary compensation
awards, generally in the form of incentive stock options and non-qualified stock
options. Through the granting of stock options, the Company seeks to align the
interests of key employees more closely with those of the Company's shareholders
by motivating and rewarding actions which lead to long-term value creation for
shareholders, and one of the Compensation Committee's stated goals is to
increase the equity portion of senior executive compensation generally. In
addition, the Company recognizes that stock options are a necessary part of its
competitive compensation program which, as discussed above, is designed to
attract and retain qualified executives. Historically, options granted to
executives and other employees have vested over a four to five-year period in
order to encourage executives and other key employees to remain in the employ of
the Company and to foster a long-term perspective.
In fiscal 1996, the Company used non-qualified stock options to achieve
the competitive compensation levels it determined to be necessary for the
executive officers and former executive officers named in the Summary
Compensation Table. In addition, the Company granted incentive options in fiscal
1996 to a group of other key employees, consisting of approximately 185
individuals. The 1996 options vest over a four-year period and, accordingly, are
a form of long-term compensation.
All options were granted by the Compensation Committee, acting as the
stock option committee under the Company's 1995 Equity Participation Plan. In
determining the employees to whom options would be awarded and the size of the
option awards, the Committee received a recommended list of key employees that
was compiled primarily by the Chief Executive Officer and the operating
subsidiary/division presidents with a view toward a fair and equitable
distribution of options among the employee pool.
12
<PAGE> 14
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The compensation of Edward P. Drudge, Jr., the Company's Chief
Executive Officer, is determined pursuant to the terms of his employment
agreement with the Company, as adjusted annually by the Compensation Committee
based on the factors described above. See "Executive Compensation -- Employment
Agreements." In fiscal 1996, Mr. Drudge's employment agreement provided for a
base annual salary, adjusted based on 1995 performance, and an incentive bonus
based on 1996 earnings growth, relative to budget and prior year, before
interest and taxes. For the year, revenues, earnings before interest and taxes
and net income increased 46.0%, 71.4% and 62.0%, respectively, over 1995, and
over the same period the Company's selling, general and administrative expenses
declined as a percentage of revenues from 20.6% to 18.6%. Because these
financial results met or exceeded the financial goals established for
determining the payment of incentive compensation, Mr. Drudge was granted 51,817
stock options under the 1995 Equity Participation Plan in January 2, 1997, in
lieu of a cash bonus as described above.
Also in 1996, the Compensation Committee granted 220,000 stock options
to Mr. Drudge on September 26, 1996. Of this total, 70,000 options comprised Mr.
Drudge's long-term compensation award for 1996 and the balance of the grant
represented a special, one-time long-term compensation award. The 1996 award was
made by the Compensation Committee on the basis of the factors set forth above
under the heading "Discretionary Bonus Awards/Equity Based Compensation." The
special award was made by the Compensation Committee on the basis of several
additional factors, including contributions made by Mr. Drudge since the
Company's initial public offering in September 1995 that the Committee deemed to
be extraordinary and an acknowledgment by the Committee that Mr. Drudge's equity
based compensation was lower than that generally paid to a number of similarly
situated executives at comparable companies.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
It is the Company's policy generally to design the Company's
compensation programs to comply with Section 162(m) of the Code, so that total
compensation paid to any employee will not exceed $1 million in any one year,
except for compensation payments in excess of $1 million which qualify as
"performance-based." The Company intends to comply with other requirements of
the performance-based compensation exclusion under Section 162(m), including
option pricing requirements and requirements governing the administration of the
1995 Equity Participation Plan, so that the deductibility of compensation paid
to top executives thereunder is not expected to be disallowed.
Compensation Committee:
Kevin P. Egan
J. Roger King
James V. Napier
13
<PAGE> 15
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total return on the
Company's Common Stock from the effective date of the Company's initial public
offering, September 25, 1995, to December 29, 1996, with the cumulative total
return of (a) the S&P 400 Index and (b) a peer group index selected by the
Company (the "Peer Group Index"), consisting of nine public companies that
specialize in providing personnel staffing services in the United States. All
cumulative returns assume the investment of $100 in each of the Company's Common
Stock, the S&P 400 Index and the Peer Group Index on September 25, 1995, and
assume the reinvestment of dividends.
[GRAPH HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SEPTEMBER 25, 1995 December 31, 1995 December 29, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Personnel Group of America, Inc. 100 104.5 149.1
- ----------------------------------------------------------------------------------------------
S&P 400 100 100.3 119.6
- ----------------------------------------------------------------------------------------------
Peer Group* 100 118.8 144.7
- ----------------------------------------------------------------------------------------------
</TABLE>
*The Peer Group Index consists of the following companies: Interim
Services Inc., The Olsten Corporation, AccuStaff Incorporated, Barrett Business
Services Inc., Robert Half International Inc., Kelly Services, Inc., Manpower,
Inc., Norrell Corporation and Staff Builders Inc. Career Horizons, Inc., which
was included in the Peer Group Index in the proxy statement relating to last
year's annual meeting of shareholders, was omitted from this year's Peer Group
Index because it was acquired by AccuStaff Incorporated during 1996.
14
<PAGE> 16
PROPOSAL 2
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
The shareholders are being asked to adopt an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 20,000,000 to 95,000,000. The Company currently has 20,000,000
authorized shares of Common Stock, of which 12,076,755 shares were issued and
outstanding as of March 28, 1997, and 5,000,000 authorized shares of Preferred
Stock, no par value (the "Preferred Stock"), none of which has been issued. The
Company also currently has reserved 1,200,000 shares for issuance pursuant to
the 1995 Equity Participation Plan (of which options with respect to 968,399
shares are currently outstanding), and the Board of Directors has proposed for
shareholder approval at the Annual Meeting an amendment to the 1995 Equity
Participation Plan to reserve at all times for issuance pursuant to that plan a
number of shares equal to 15% of the then outstanding Common Stock. See
"Amendment to the Company's 1995 Equity Participation Plan." The Board also has
proposed for shareholder approval at the Annual Meeting the 1997 Employee Stock
Purchase Plan, under which 500,000 shares of Common Stock would be reserved for
issuance. See "Approval of The 1997 Employee Stock Purchase Plan." The proposed
amendment to the Certificate of Incorporation would increase by 75,000,000 the
number of authorized shares of Common Stock and would not affect the number of
authorized shares of Preferred Stock. Adoption of the amendment requires the
affirmative vote of a majority of the outstanding shares of Common Stock. If
adopted by the shareholders, the proposed amendment will become effective upon
filing with the Secretary of State of Delaware of articles of amendment
certifying and setting forth the amendment.
If the amendment to the Certificate of Incorporation is adopted, the
Company would have approximately 81,723,245 authorized shares of Common Stock
(or approximately 80,611,732 shares, assuming approval of the proposed amendment
to the 1995 Equity Participation Plan and approval of the 1997 Employee Stock
Purchase Plan) that are neither issued nor reserved for issuance pursuant to
stock plans. Such additional authorized shares of Common Stock would be
available for issuance from time to time without shareholder approval upon such
terms and for such purposes as determined by the Board of Directors, including
issuances which could have a dilutive effect on existing shareholders and
issuances for antitakeover or other defensive purposes. The Board of Directors
believes that it is advisable to have such additional shares of Common Stock
authorized in order to provide an added element of flexibility in the Company's
capital structure. Although the Company has no present plans for the issuance of
additional shares, the Board of Directors of the Company believes that having
additional Common Stock available for issuance as the need may arise will enable
the Company to take advantage of business opportunities such as acquisitions
without the delay and expense of calling a meeting of shareholders to authorize
such shares.
The proposed text of the amendment to the Certificate of Incorporation
is set forth in its entirety as Exhibit A attached hereto.
FOR THE REASONS SET FORTH ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE FOR ADOPTION OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL 3
AMENDMENT TO THE COMPANY'S 1995 EQUITY PARTICIPATION PLAN
On February 26, 1997, the Board of Directors, subject to the approval
of the shareholders, amended the 1995 Equity Participation Plan (the "1995
Plan") to change the methodology of reserving shares of Common Stock available
for issuance under the 1995 Plan. Prior to the amendment, the 1995 Plan simply
reserved a fixed number of shares, 1,200,000 shares, for issuance under the
plan. The amendment changes the 1995 Plan to provide that at any time and from
time to time the number of shares reserved under the plan will equal 15% of the
Company's issued and outstanding Common Stock at such time. Based on the
outstanding Common Stock as of March 28, 1997, the number of shares reserved
under the amended 1995 Plan using this formula would be 1,811,513 shares. The
amendment will be effective as of February 26, 1997 if approved by the
shareholders. Approval of the amendment requires the affirmative vote of a
majority of the outstanding shares present or represented by proxy and entitled
to vote at the Annual Meeting.
The amendment to the 1995 Plan changes the methodology of reserving
shares of Common Stock that may be issued under the 1995 Plan by tying the
shares reserved at any time to the size of the outstanding share base at that
time. The Board of Directors believes this change is needed to permit the 1995
Plan to continue as an important means of attracting, holding and motivating key
employees. Without the amendment, the 1995 Plan by its terms would have only
255,691 shares left for issuance as of March 28, 1997, and the Board believes
that a change is necessary to allocate more shares to the 1995 Plan. The
amendment would have the short-term effect of achieving that goal, and long-term
would link further increases to growth in the Company's outstanding share base.
The 1995 Plan requires any amendment to increase the number of shares issuable
under the 1995 Plan (other than increases triggered by certain anti-dilution
provisions of the 1995 Plan) to be approved by the shareholders.
15
<PAGE> 17
SUMMARY OF THE 1995 PLAN
The following summary of the 1995 Plan is qualified in its entirety by
reference to the text of the 1995 Plan, a copy of which may be obtained, without
charge, by written request to the Company, 6302 Fairview Road, Suite 201,
Charlotte, North Carolina 28210, Attention: Corporate Secretary.
The 1995 Plan was adopted to attract and retain officers, key
employees, consultants and directors. Prior to the proposed amendment, an
aggregate of 1,200,000 shares of Common Stock (or their equivalent in other
equity securities), subject to adjustment for stock splits, stock dividends and
certain other types of recapitalizations, was authorized for issuance upon
exercise of options, stock appreciation rights ("SARs"), and other awards, or as
restricted or deferred stock awards under the 1995 Plan. The Compensation
Committee administers the 1995 Plan and determines the persons to whom options,
SARs, restricted stock and other awards are to be granted and the terms and
conditions, including the number of shares and the period of exercisability,
thereof; provided, however, that the Board, acting by a majority, generally
administers the 1995 Plan with respect to options granted to non-employee
directors. Options, SARs, restricted stock and other awards under the 1995 Plan
may be granted to individuals who are then officers or other employees of the
Company or any of its present or future subsidiaries and who are determined by
the Compensation Committee to be key employees. Such awards also may be granted
to consultants of the Company selected by the Compensation Committee for
participation in the 1995 Plan. Approximately 225 officers and other employees
are eligible to participate in the 1995 Plan.
The 1995 Plan authorizes the grant or issuance of various options and
other awards to employees and consultants, and the terms of each such option or
award will be set forth in separate agreements. In addition, non-employee
directors (including the directors who administer the plan) are eligible to
receive non-discretionary grants of non-qualified stock options ("NQSOs") under
the 1995 Plan pursuant to a formula. Pursuant to such formula, each of the
Company's non-employee directors received in September 1995 a grant of NQSOs to
purchase 6,250 shares of the Company's Common Stock at the initial public
offering price. Additionally, each non-employee director received or will
receive annual grants of options to purchase 3,125 shares of Common Stock in
1996 and 1997 and thereafter an annual grant of options to purchase 1,500
shares, in each case on the date of the Company's shareholders' meeting at which
such non-employee director was reelected and with an exercise price equal to the
fair market value of the Common Stock on the date of the grant. NQSOs may be
granted to an employee or consultant for any term specified by the Compensation
Committee and will provide for the right to purchase Common Stock at a specified
price which, except with respect to NQSOs intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue
Code, may be less than fair market value on the date of grant (but not less than
par value), and may become exercisable (in the discretion of the Compensation
Committee) in one or more installments after the grant date. Of the NQSOs
granted to non-employee directors, 100% are fully vested and exercisable upon
grant, and the term of each such option shall be 10 years, subject to expiration
90 days after the director ceases to serve as a director, except upon the
director's retirement in accordance with the Company's retirement policy
applicable to directors. Incentive stock options may be granted only to
employees and, if granted, will be designed to comply with the provisions of the
Code and will be subject to restrictions contained in the Code, including a
required exercise price equal to at least 100% of fair market value of Common
Stock on the grant date and a 10-year restriction on their term, but may be
subsequently modified to disqualify them from treatment as an incentive stock
option. SARs may be granted to employees and consultants and may be granted in
connection and simultaneously with the grant of an option, with respect to a
previously granted option or independent of an option. Participants may receive
dividend equivalents representing the value of the dividends per share paid by
the Company, calculated with reference to the number of shares covered by the
stock options, SARs or performance awards held by the participant. Performance
awards may be granted by the Compensation Committee to employees and consultants
and may include bonus or "phantom" stock awards that provide for payments based
upon increases in the price of the Company's Common Stock over a predetermined
period. Restricted stock may be sold to employees and consultants at various
prices (but not below par value) and made subject to such restrictions as may be
determined by the Compensation Committee. Deferred stock may be awarded to
employees and consultants, typically without payment of consideration, but
subject to vesting conditions based on continued employment or on performance
criteria established by the Compensation Committee. Whereas purchasers of
restricted stock will have voting rights and will receive dividends prior to the
time when the restrictions lapse, recipients of deferred stock generally will
have no voting or dividend rights prior to the time when vesting conditions are
satisfied. Stock awards may be made to employees and consultants and the number
of shares shall be determined by the Compensation Committee and may be based
upon the fair market value, book value, net profits or other measure of the
value of Common Stock or other specific performance criteria.
16
<PAGE> 18
The exercise or purchase price for all options, SARs, restricted stock
and other rights to acquire Common Stock, together with any applicable tax
required to be withheld, may be paid in cash or at the discretion of the
Compensation Committee (or the Board, in the case of NQSOs granted to
non-employee directors), in shares of Common Stock owned by the optionee (or
issuable upon exercise of the option) or in other lawful consideration,
including services rendered.
The dates on which options or other awards under the 1995 Plan first
become exercisable and on which they expire will be set forth in individual
stock options or other agreements setting forth the terms of the awards. Such
agreements generally will provide that options and other awards expire upon
termination of the optionee's status as an employee or consultant, although the
Committee may provide that such options continue to be exercisable following a
termination without cause, or following a change in control of the Company, or
because of the grantee's retirement, death, disability or otherwise. Similarly,
restricted stock granted under the 1995 Plan which has not vested generally will
be subject to repurchase by the Company in the event of the grantee's
termination of employment or consultancy, although the Committee may make
exceptions, based on the reason for termination or on other factors, in the
terms of an individual restricted stock agreement.
No restricted stock, deferred stock, option, SAR or other right to
acquire Common Stock granted under the 1995 Plan may be assigned or transferred
by the grantee, except by will or the laws of intestate succession, although
such shares or the shares underlying such rights may be transferred if all
applicable restrictions have lapsed. During the lifetime of the holder of any
option or right, the option or right may be exercised only by the holder.
The shares subject to stock options, SARs or other awards which have
terminated or lapsed unexercised or which have been canceled upon grant of a new
option, SAR or other award, and shares which are withheld by the Company upon
the exercise of stock options or other awards in payment of the exercise price
thereof, will continue to be available for issuance under the 1995 Plan.
The Compensation Committee has the right to accelerate, in whole or in
part, from time to time, conditionally or unconditionally, the right to exercise
any option or other award granted under the 1995 Plan other than NQSOs granted
to non- employee directors.
All amendments of the 1995 Plan to increase the number of shares as to
which options, SARs, restricted stock and other awards may be granted (except
for adjustments resulting from stock splits and the like) require the approval
of the Company's shareholders. The 1995 Plan generally may be amended, modified,
suspended or terminated by the Compensation Committee, unless such action would
otherwise require shareholder approval as a matter of applicable law, regulation
or rule. Amendments of the 1995 Plan will not, without the consent of the
participant, affect such person's rights under an award previously granted,
unless the award itself otherwise expressly so provides. The 1995 Plan
terminates 10 years from the date it was adopted by the Company's Board of
Directors.
Federal Income Tax Consequences. Certain tax consequences of the 1995
Plan under current federal law are summarized in the following discussion, which
deals with the general tax principles applicable to the 1995 Plan and is
intended for general information only. Alternative minimum tax and state and
local income taxes are not discussed, and may vary depending on individual
circumstances and from locality to locality.
17
<PAGE> 19
For Federal income tax purposes, the recipient of NQSOs granted under
the 1995 Plan will not have taxable income upon the grant of the option, nor
will the Company then be entitled to any deduction. Generally, upon exercise of
NQSOs the optionee will realize ordinary income, and the Company will be
entitled to a deduction, in an amount equal to the difference between the option
exercise price and the fair market value of the stock at the date of exercise.
An optionee's basis for the stock for purposes of determining his gain or loss
on his subsequent disposition of the shares generally will be the fair market
value of the stock on the date of exercise of the NQSO. There is no taxable
income to an employee when an ISO is granted to him or when that option is
exercised; however, the amount by which the fair market value of the shares at
the time of exercise exceeds the option price will be an "item of tax
preference" for the optionee. Gain realized by an optionee upon sale of stock
issued on exercise of an ISO is taxable at capital gains rates, and no tax
deduction is available to the Company, unless the optionee disposes of the
shares within two years after the date of grant of the option or within one year
of the date the shares were transferred to the optionee. In such event the
difference between the option exercise price and the fair market value of the
shares on the date of the option's exercise will be taxed at ordinary income
rates, and the Company will be entitled to a deduction to the extent the
employee must recognize ordinary income. An ISO exercised more than three months
after an optionee's retirement from employment, other than by reason of death or
disability, will be taxed as an NQSO, with the optionee deemed to have received
income upon such exercise taxable at ordinary income rates. The Company will be
entitled to a tax deduction equal to the ordinary income, if any, realized by
the optionee. No taxable income is realized upon the receipt of an SAR, but upon
exercise of the SAR the fair market value of the shares (or cash in lieu of
shares) received must be treated as compensation taxable as ordinary income to
the recipient in the year of such exercise. The Company will be entitled to a
deduction for compensation paid in the same amount which the recipient realized
as ordinary income. An employee or consultant to whom restricted or deferred
stock is issued will not have taxable income upon issuance and the Company will
not then be entitled to a deduction, unless in the case of restricted stock an
election is made under Section 83(b) of the Code. However, when restrictions on
shares of restricted stock lapse, such that the shares are no longer subject to
repurchase by the Company, the employee will realize ordinary income and the
Company will be entitled to a deduction in an amount equal to the fair market
value of the shares at the date such restrictions lapse, less the purchase price
therefor. Similarly, when deferred stock vests and is issued to the employee or
consultant, the employee or consultant will realize ordinary income and the
Company will be entitled to a deduction in an amount equal to the fair market
value of the shares at the date of issuance. If an election is made under
Section 83(b) with respect to restricted stock, the employee will realize
ordinary income at the date of issuance equal to the difference between the fair
market value of the shares at that date less the purchase price therefor and the
Company will be entitled to a deduction in the same amount. The Code does not
permit a Section 83(b) election to be made with respect to deferred stock.
Under Section 162(m) of the Code, income tax deductions of
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises and non-qualified
benefits) for certain executive officers exceeds $1 million (less the amount of
any "excess parachute payments" as defined in Section 280G of the Code) in any
one year. However, under Section 162(m), the deduction limit does not apply to
certain "performance-based" compensation established by a compensation committee
of outside directors and adequately disclosed to, and approved by, shareholders.
In particular, stock options and SARs will satisfy the performance-based
exception if the awards are made by a qualifying compensation committee, the
plan sets the maximum number of shares that can be granted to any particular
employee within a specified period and the compensation is based solely on an
increase in the stock price after the grant date (i.e. the option exercise price
is equal to or greater than the fair market value of the stock subject to the
award on the grant date).
18
<PAGE> 20
The table below sets forth certain information concerning grants under
the 1995 Plan during the fiscal year ended December 29, 1996 to (i) each officer
of the Company named in the Summary Compensation Table, (ii) all current
executive officers of the Company as a group, (iii) all non-employee directors
as a group and (iv) all employees other than the current executive officers as a
group.
PLAN BENEFITS
UNDER 1995 EQUITY PARTICIPATION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE (1) NUMBER OF UNITS (#)(2)
- ----------------- ---------------- ----------------------
<S> <C> <C>
Edward P. Drudge, Jr...................................... $151,800 220,000
Chairman and Chief Executive Officer
Peter R. Sollenne......................................... -- 20,000
President-Commercial Staffing Division
Gene C. Wilson............................................ 6,900 10,000
Senior Vice President
Rosemary Payne-Harris..................................... 6,900 10,000
Senior Vice President
All current executive officers as a group (5 persons)..... 209,400 260,000
All non-employee directors as a group (4 persons)......... 39,125 12,500
All employees other than current executive officers
as a group (182 persons)................................ 13,800 148,148
</TABLE>
- ------------------------------
(1) Dollar value is based on the difference between grant prices of stock
options and $25.63, the closing price of the Company's Common Stock on
March 10, 1997.
(2) All amounts shown are awards of options to purchase Common Stock.
Except for options granted to non-employee directors, which vested 100%
on the date of grant, these options are currently 20% vested, and will
continue vesting an additional 20% on each successive anniversary of
the grant date through the year 2000.
The proposed text of the amendment to the 1995 Plan is set forth in its
entirety as Exhibit B attached hereto.
FOR THE REASONS SET FORTH ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE FOR THE APPROVAL OF THE AMENDMENT TO THE 1995 PLAN.
19
<PAGE> 21
PROPOSAL 4
APPROVAL OF THE 1997 EMPLOYEE STOCK PURCHASE PLAN
On February 26, 1997, the Board of Directors of the Company adopted the
1997 Employee Stock Purchase Plan (the "Stock Purchase Plan"), effective July 1,
1997, for the purpose of encouraging employee participation in the ownership of
the Company by offering eligible employees of the Company and its subsidiaries
an opportunity to purchase Common Stock of the Company at a discount through
payroll deductions. The Board of Directors believes that employee participation
in ownership is to the combined benefit of the employee, the Company, its
subsidiaries and the Company's shareholders. Accordingly, the Board of Directors
unanimously adopted, and proposes that the shareholders approve, the Stock
Purchase Plan. Shareholder approval is required to qualify the Stock Purchase
Plan for treatment as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code, and the Stock Purchase Plan will not be effective unless
shareholder approval is obtained.
The Stock Purchase Plan is set forth as Exhibit C attached hereto and
the description of the Stock Purchase Plan contained herein is qualified in its
entirety by reference to such Exhibit C.
Under the Stock Purchase Plan, eligible employees of the Company and
its subsidiaries may participate by electing to have payroll deductions made in
an amount of not less than 1% nor more than 7% of the employee's compensation,
provided that the Market Value (defined generally as the last reported sales
price of the Common Stock on a specified date) of Common Stock (determined at
the beginning of each three-month "Purchase Period") purchased in any year may
not exceed $25,000. All employees who meet specified criteria for hours worked
and months worked within a calendar year will be eligible to participate upon
completion of 180 days of continuing employment. However, any beneficial owner
of 5% or more of the Common Stock shall not be eligible to participate.
Eligible employees may elect to participate by delivering a completed
purchase agreement prior to the beginning of each Purchase Period. At the end of
each Purchase Period, each participant's payroll deductions are applied to
acquire Common Stock at a price equal to 85% of the Market Value of the Common
Stock on either the first day or the last day of the Purchase Period, whichever
is lower (the "Exercise Price"). Shares acquired under the Stock Purchase Plan
may not, except in the case of death or disability, be sold or otherwise
disposed of for at least six months after the last day of the Purchase Period in
which such shares were acquired.
Employees may voluntarily withdraw from participation in the Stock
Purchase Plan by notifying the Company at such time in advance as the
Compensation Committee shall determine. An employee's participation shall cease
upon termination of employment for any reason, or otherwise if such employee no
longer qualifies as an eligible employee. Upon any withdrawal from
participation, all payroll deductions not applied to purchase Common Stock will
be returned to the employee (except in the case of certain inactive employees
who are awaiting assignment).
The number of shares of Common Stock reserved for purchase under the
Stock Purchase Plan is 500,000. Except pursuant to an adjustment as a result of
a change in the Company's capital structure, the number of shares of Common
Stock reserved for purchase under the Stock Purchase Plan will not be decreased
as a result of a decrease in the number of shares outstanding. Such reserved
shares may be made available by the Company from either authorized and unissued
shares or treasury shares.
The Stock Purchase Plan will be administered by the Compensation
Committee, which will have the authority to make, adopt, construe and enforce
rules not inconsistent with the Stock Purchase Plan, to interpret the Stock
Purchase Plan, and to prescribe the contents of all forms and documents required
in connection with the Plan. The Stock Purchase Plan may be amended in any
respect at any time by the Board of Directors, except that where shareholder
approval is necessary or desirable to comply with applicable law, in which case
such amendment shall be conditioned on such approval. The Stock Purchase Plan
may be terminated at any time by the Board of Directors.
20
<PAGE> 22
FEDERAL INCOME TAX CONSIDERATIONS
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code, and it is intended
to comply with the provisions of Sections 421 and 424 of the Code as well.
Under the Code as currently in effect, there are no federal income tax
consequences in connection with the acquisition of Common Stock pursuant to the
Stock Purchase Plan until the year in which the participant sells or otherwise
disposes of the shares, or, if earlier, the year in which the participant dies.
However, social security (FICA) taxes are applicable on the last day of each
Purchase Period (the "Exercise Date") on the amount by which purchase price is
discounted from the fair market value of the shares. If the shares are sold or
otherwise disposed of prior to a participant's death, then the income tax
consequences will depend upon whether or not the shares are sold within two
years after the first business day of the applicable three-month period in which
such shares were purchased (the "Offering Date").
If the shares are sold or disposed of more than two years after the
applicable Offering Date, then the participant will recognize ordinary income in
an amount equal to the lesser of (i) 15% of the fair market value of the shares
on the applicable Offering Date or (ii) the amount by which the fair market
value of the shares at the time of such sale or disposition exceeds the amount
paid for the shares, and the Company will not be entitled to any income tax
deduction. If the shares are sold or otherwise disposed of within two years
after the applicable Offering Date, a participant will generally recognize
ordinary income in the amount by which the fair market value of the shares on
the applicable Exercise Date exceeds the amount paid for the shares, and the
Company will be entitled to a corresponding income tax deduction.
In the event of the death of a participant prior to a sale or other
disposition of the shares (whether or not within two years after the applicable
Offering Date), a participant will be subject to ordinary income tax in an
amount equal to the lesser of (i) 15% of the fair market value of the shares on
the applicable Offering Date, or (ii) the amount, if any, by which the fair
market value of the shares as of the date of death exceeds the amount actually
paid for the shares.
In any case, the participant may also have a capital gain or loss
(long-term or short-term depending upon the length of time the shares were held)
in an amount equal to the difference between the amount realized upon the sale
and the participant's adjusted tax basis in the shares (the amount paid for the
shares plus the amount of ordinary income which the participant must recognize
at the time of the sale or other disposition).
The affirmative vote of a majority of the outstanding shares of Common
Stock present in person or represented by Proxy at the Annual Meeting and
entitled to vote is required to approve the adoption of the Stock Purchase Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL
OF THE ADOPTION OF THE 1997 EMPLOYEE STOCK PURCHASE PLAN.
21
<PAGE> 23
PROPOSAL 5
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, on the recommendation of the Company's Audit
Committee, has selected Price Waterhouse LLP ("Price Waterhouse") as of March
17, 1997 as the Company's independent public accountants for the year ending
December 28, 1997. One or more representatives of Price Waterhouse LLP will be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions from shareholders. The Company has been advised by Price Waterhouse
LLP that the firm did not have any direct financial interest or any material
interest in the Company and its subsidiaries during the Company's most recent
fiscal year.
As the result of hiring a new Chief Financial Officer, Mr. James Hunt,
who has a family relationship with a partner in the Greensboro, North Carolina
office of Arthur Andersen LLP ("Arthur Andersen"), which had served as the
Company's independent public accountants since 1995, the Company received a
letter from Arthur Andersen dated March 17, 1997 indicating that it would
decline to stand for reappointment as the Company's independent public
accountants for the current fiscal year.
The reports of Arthur Andersen on the Company's financial statements
for the fiscal years ended December 31, 1995 and December 29, 1996 contained no
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements for
each of the fiscal years ended December 31, 1995 and December 29, 1996, there
were no disagreements with Arthur Andersen on matters of accounting principles
or practices, financial statement disclosure or auditing scope or procedures
which, if not resolved to the satisfaction of Arthur Andersen, would have caused
Arthur Andersen to make reference to such matter in its report.
The Company has furnished Arthur Andersen with a copy of the
disclosures in the three preceding paragraphs and, in response thereto, Arthur
Andersen has furnished the Company with a letter dated March 21, 1997, addressed
to the Securities and Exchange Commission, indicating no disagreement with the
foregoing statements.
One or more representatives of Arthur Andersen will be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions from
shareholders.
Approval of the proposal to ratify the selection of Price Waterhouse
requires the affirmative vote of a majority of the outstanding shares of Common
Stock present in person or represented by proxy at the annual meeting and
entitled to vote. Should the shareholders vote negatively, the Board of
Directors will consider a change in independent public accountants for the next
fiscal year.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 28, 1997.
22
<PAGE> 24
PROPOSALS FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
Shareholders who intend to present proposals for consideration at next
year's annual meeting are advised that any such proposal must be received by the
Secretary of the Company no later than the close of business on December 11,
1997 if such proposal is to be considered for inclusion in the proxy statement
and proxy appointment form relating to that meeting.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
23
<PAGE> 25
EXHIBIT A
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
Paragraph (a) of Article IV of the Company's Restated Certificate of
Incorporation shall be amended and restated in its entirety by deleting the
current text of such paragraph (a) of Article IV and replacing it with the
following:
"(a) The Corporation is authorized to issue two classes of
shares to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation shall have
authority to issue is One Hundred Million (100,000,000) shares, and the
aggregate par value of all such shares which are to have a par value is
One Million (1,000,000). The total number of shares of Preferred Stock
which the Corporation shall have authority to issue is Five Million
(5,000,000) shares, and the par value of each share of Preferred Stock
is One Cent ($0.01). The total number of shares of Common Stock which
the Corporation shall have the authority to issue is Ninety-Five
Million (95,000,000) shares, and the par value of each share of Common
Stock is One Cent ($0.01)."
24
<PAGE> 26
EXHIBIT B
PROPOSED AMENDMENT TO 1995 EQUITY PARTICIPATION PLAN
The second sentence of Section 2.1(a) of the 1995 Equity Participation
Plan is hereby amended and restated in its entirety by deleting the current text
of such sentence and replacing it with the following:
"The aggregate number of such shares which may be issued upon
exercise of such options or rights upon any such awards under the Plan
shall not exceed 15% of the then issued and outstanding Common Stock of
the Company, and the number of shares reserved for issuance under the
Plan shall automatically be adjusted from time to time to an amount
equal to 15% of the Common Stock then issued and outstanding."
25
<PAGE> 27
EXHIBIT C
PERSONNEL GROUP OF AMERICA, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
Sec. 1.01 Statement of Purpose. The purpose of the Personnel Group of America,
Inc. Employee Stock Purchase Plan is to provide eligible employees of the
Company and its Subsidiaries, who wish to become stockholders, an opportunity to
purchase common stock of the Company. The Board of Directors of the Company
believes that employee participation in ownership will be to the mutual benefit
of both the employees and the Company.
Sec. 1.02 Internal Revenue Code Considerations. The Plan is intended to
constitute an "employee stock purchase plan" within the meaning of section 423
of the Internal Revenue Code of 1986, as amended.
ARTICLE II
DEFINITIONS
Sec. 2.01 "Board" means the Board of Directors of the Company.
Sec. 2.02 "Code" means the Internal Revenue Code of 1986, as amended.
Sec. 2.03 "Company" means Personnel Group of America, Inc., a Delaware
corporation.
Sec. 2.04 "Compensation" means the total remuneration paid, during the period of
reference, to an Employee by the Company or a Subsidiary, including regular
salary or wages, overtime payments, bonuses, commissions and vacation pay, to
which has been added (a) any elective deferral amounts by which the Employee has
had his current remuneration reduced for the purposes of funding a contribution
to any plan sponsored by the Company and satisfying the requirements of section
401(k) of the Code, and (b) any amounts by which the Employee's compensation has
been reduced pursuant to a compensation reduction agreement between the Employee
and the Company for the purpose of funding benefits through any cafeteria plan
sponsored by the Company meeting the requirements of section 125 of the Code.
There shall be excluded from "Compensation" for the purposes of the Plan,
whether or not reportable as income by the Employee, expense reimbursements of
all types, payments in lieu of expenses, the Company contributions to any
qualified retirement plan or other program of deferred compensation (except as
provided above), the Company contributions to Social Security or worker's
compensation, the costs paid by the Company in connection with fringe benefits
and relocation, including gross-ups, and any amounts accrued for the benefit of
Employee, but not paid, during the period of reference.
<PAGE> 28
Sec. 2.05 "Compensation Committee" means the Compensation Committee of the
Board.
Sec. 2.06 "Continuous Service" means the period of time during which the
Employee has been employed by the Company or a Subsidiary and during which there
has been no interruption of Employee's employment by the Company. For this
purpose, periods during which an Employee is on Temporary Inactive Status shall
not be considered to be interruptions of Continuous Service. If determined by
the Compensation Committee, periods of service with an entity prior to its
becoming a Subsidiary shall be taken into account.
Sec. 2.07 "Effective Date" shall mean July 1, 1997 if, within 12 months of that
date, the Plan is or has been approved at a meeting of the stockholders of the
Company by the affirmative vote of the holders of the majority of the
outstanding Stock of the Company.
Sec. 2.08 "Eligible Employee" means each person who:
(a) is an Employee whose customary employment is for more than 20 hours
per week and more than 5 months in any calendar year;
(b) is an Employee on the Effective Date, or otherwise has completed at
least 180 days of Continuous Service; and
(c) is not deemed for purposes of section 423 (b) (3) of the Code to
own capital stock possessing 5% or more of the total combined voting
power or value of all classes of capital stock of the Company.
Sec. 2.09 "Employee" means each person employed by the Company or a Subsidiary.
Sec. 2.10 "Exercise Date" means the last day of each Purchase Period.
Sec. 2.11 "Market Value" means, with respect to Stock, the fair market value of
such Stock, determined by such methods or procedures as shall be established
from time to time by the Compensation Committee; provided, however, that if the
Stock is listed on a national securities exchange or quoted in an interdealer
quotation system, the Market Value of such Stock on a given date shall be based
upon the last sales price or, if unavailable, the average of the closing bid and
asked prices per share of the Stock on such date (or, if there was no trading or
quotation in the Stock on such date, on the next preceding date on which there
was trading or quotation) as provided by one of such organizations.
2
<PAGE> 29
Sec. 2.12 "Offering" means the offering of shares of Stock under the Plan.
Sec. 2.13 "Offering Date" means the first business day of each July, October,
January and April during which the Plan is in effect, or such dates as may
otherwise be specified by the Compensation Committee.
Sec. 2.14 "Participant" means each Eligible Employee who elects to participate
in the Plan.
Sec. 2.15 "Plan" means the Personnel Group of America, Inc. Employee Stock
Purchase Plan, as the same is set forth herein and as may hereafter be amended.
Sec. 2.16 "Purchase Agreement" means the document prescribed by the Compensation
Committee pursuant to which an Eligible Employee has enrolled to be a
Participant.
Sec. 2.17 "Purchase Period" means the period beginning on an Offering Date and
ending on the business day preceding the next following Offering Date.
Sec. 2.18 "Purchase Price" means such term as it is defined in Section 4.03
hereof.
Sec. 2.19 "Stock" means the common stock, $.01 par value, of the Company.
Sec. 2.20 "Stock Purchase Account" means a noninterest bearing account
consisting of all amounts withheld from an Employee's Compensation (or otherwise
paid into the Plan) for the purpose of purchasing shares of Stock for such
employee under the Plan, reduced by all amounts applied to the purchase of Stock
for such Employee under the Plan.
Sec. 2.21 "Subsidiary" shall mean a corporation described in section 424(f) of
the Code that has, with the permission of the Board, adopted the Plan.
Sec. 2.22 "Temporary Inactive Status" shall describe the status of a former
hourly Employee whose employment was terminated upon completion of an assignment
for the Company or a Subsidiary, for so long as such former Employee (i) remains
available for future assignments with the Company or a Subsidiary, (ii) has not,
directly or indirectly, accepted an assignment from or a position with an entity
unaffiliated with the Company and its Subsidiaries, and (iii) otherwise remains
in good standing with the Company and its Subsidiaries.
3
<PAGE> 30
ARTICLE III
ADMISSION TO PARTICIPATION
Sec. 3.01 Initial Participation. Any Eligible Employee may elect to be a
Participant and may become a Participant by executing and filing with the
Compensation Committee a Purchase Agreement at such time in advance and on such
forms as prescribed by the Compensation Committee. The effective date of an
Eligible Employee's participation shall be the Offering Date next following the
date on which the Compensation Committee receives from the Eligible Employee a
properly executed and timely filed Purchase Agreement. Participation in the Plan
will continue automatically from one Purchase Period to another unless notice to
the contrary is given pursuant to Section 3.02.
Sec. 3.02 Voluntary Discontinuance of Participation. Any Participant may
voluntarily withdraw from the Plan by filing a Notice of Withdrawal with the
Compensation Committee at such time in advance as the Compensation Committee may
specify. Upon such withdrawal, there shall be paid to the Participant the
amount, if any, standing to his credit in his Stock Purchase Account.
Sec. 3.03 Involuntary Discontinuance of Participation. If a Participant ceases
to be an Eligible Employee, the entire amount, if any, standing to the
Participant's credit in his Stock Purchase Account shall be refunded to him.
Notwithstanding the foregoing, should a Participant cease to be an Eligible
Employee by reason of acquiring Temporary Inactive Status, such Participant may
continue to participate through the end of the Purchase Period during which such
status was acquired with respect to payroll deductions attributable to the
portion of the Purchase Period prior to the time such status was acquired.
Sec. 3.04 Readmission to Participation. Any Eligible Employee who has previously
been a Participant, who has discontinued participation, and who wishes to be
reinstated as a Participant may again become a Participant for any subsequent
Purchase Period by executing and filing with the Compensation Committee, at such
time in advance as the Compensation Committee shall determine, a new Purchase
Agreement on forms provided by the Compensation Committee. Reinstatement to
Participant status shall be effective no earlier than the Offering Date that
occurs six months following the Exercise Date for the Purchase Period in which
the Eligible Employee discontinued participation.
4
<PAGE> 31
ARTICLE IV
STOCK PURCHASE
Sec. 4.01 Reservation of Shares. There shall be 500,000 shares of Stock reserved
for the Plan, subject to adjustment in accordance with the antidilution
provisions hereinafter set forth. Except as provided in Section 5.02 hereof, the
aggregate number of shares that may be purchased under the Plan shall not exceed
the number of shares reserved for the Plan.
Sec. 4.02 Limitation on Shares Available. The maximum number of shares of Stock
that may be purchased for each Participant on an Exercise Date is the lower of
(a) the number of shares of Stock that can be purchased by applying the full
balance of his Stock Purchase Account to such purchase of shares at the Price
(as hereinafter determined), or (b) the Participant's proportionate part of the
maximum number of whole shares of Stock available within the limitation
established by the maximum aggregate number of such shares reserved for the
Plan, as stated in Section 4.01 hereof. Notwithstanding the foregoing, if any
person entitled to purchase shares pursuant to any offering hereunder would be
deemed for the purposes of section 423(b) (3) of the Code to own stock
(including any number of shares that such person would be entitled to purchase
hereunder) possessing 5% or more of the total combined voting power or value of
all classes of capital stock of Company, the maximum number of shares that such
person shall be entitled to purchase pursuant to the Plan shall be reduced to
that number which, when added to the number of shares of Stock that such person
is so deemed to own (excluding any number of shares that such person would be
entitled to purchase hereunder), is one less than such 5%. Any portion of a
Participant's Stock Purchase Account that cannot be applied by reason of the
foregoing limitation shall remain in the Participant's Stock Purchase Account
for application to the purchase of Stock on the next Offering Date (unless
withdrawn before that Offering Date).
Sec. 4.03 Purchase Price of Shares. The Purchase Price per share of the Stock
sold to Participants pursuant to any Offering shall be the sum of (a) 85% of the
Market Value of such share on the Offering Date on which such Offering commences
or on the Exercise Date on which such Offering expires, whichever is lower, and
(b) any transfer, excise or similar tax imposed on the transaction pursuant to
which such share of Stock is purchased. If the Exercise Date with respect to the
purchase of Stock is a day on which the Stock is selling ex-dividend but is on
or before the record date for such dividend, then for Plan purposes the Purchase
Price per share will be increased by an amount equal to the dividend per share.
In no event shall the Purchase Price be less than the par value of the Stock.
Sec. 4.04 Exercise of Purchase Privilege.
(a) Subject to the provisions of Section 4.02 above, if on the date of
the last paycheck of a Participant issued prior to any Exercise Date
there is a bank credit in the Participant's Stock Purchase Account,
there shall be purchased for the Participant at the Purchase Price of
the Purchase Period that expires on such Exercise Date the largest
number of whole shares of Stock as can be purchased with the entire
amount standing to the Participant's credit in his Stock Purchase
Account on such paycheck issue date. Each such purchase shall be deemed
to have occurred on the Exercise Date occurring at the close of the
Offering for which the purchase was made.
5
<PAGE> 32
(b) Any amount remaining in the Stock Purchase Account on the Exercise
Date after the purchase of the maximum number of whole shares shall
remain in the Stock Purchase Account to the credit of the Participant
and be applied to purchase additional shares of Stock on subsequent
Exercise Dates.
(c) Notwithstanding anything contained herein to the contrary, a
Participant may not during any calendar year purchase shares of Stock
having an aggregate Market Value, determined at the time of each
Offering Date during such calendar year, of more than $25,000.
Sec. 4.05 Establishment of Stock Purchase Account. Each Participant shall
authorize payroll deductions from Compensation for the purposes of funding his
Stock Purchase Account. In the Purchase Agreement, each Participant shall
authorize a deduction from each payment of his Compensation during a Purchase
Period, which deduction shall be not less than 1% nor more than 7% of the gross
amount of such payment, subject to Section 4.04 (c). Subject to Section 3.02, a
Participant may not reduce or increase his payroll deduction rate during any
Purchase Period. However, a Participant may change the deduction to any
permissible level for any subsequent Offering by filing notice thereof at such
time preceding the Offering Date on which such subsequent Offering commences as
the Compensation Committee shall determine.
Sec. 4.06 Payment for Stock. The Purchase Price for all shares of Stock
purchased by a Participant under the Plan shall be paid out of the Participant's
Stock Purchase Account. As of each Exercise Date, the entire amount standing to
the credit of each Participant in his Stock Purchase Account on the date of the
last paycheck issued to the Participant prior to the Exercise Date in the
Purchase Period that expires on such Exercise Date shall be charged with the
aggregate Purchase Price of the shares of Stock purchased by such Participant on
the Exercise Date. No interest shall be paid or payable with respect to any
amount held in the Participant's Stock Purchase Account.
Sec. 4.07 Share Ownership; Issuance of Certificates.
(a) The shares purchased by a Participant on an Exercise Date shall,
for all purposes, be deemed to have been issued and/or sold at the
close of business on such Exercise Date. Prior to that time, none of
the rights or privileges of a stockholder of the Company shall inure to
the Participant with respect to such shares. All the shares of Stock
purchased under the Plan shall be delivered by the Company in a manner
as determined by the Compensation Committee.
6
<PAGE> 33
(b) The Compensation Committee, in its sole discretion, may determine
that the shares of Stock shall be delivered by the Company (i) by
issuing and delivering to the Participant a certificate for the number
of whole shares of Stock purchased by such Participant on an Exercise
Date or during a calendar year, or (ii) by issuing and delivering a
certificate or certificates for the number of shares of Stock purchased
by all Participants on an Exercise Date or during a calendar year to a
member firm of the New York Stock Exchange which is also a member of
the National Association of Securities Dealers, as selected by the
Compensation Committee from time to time, which shares shall be
maintained by such member firm in separate brokerage accounts of each
participant, or (iii) by issuing and delivering a certificate or
certificates for the number of shares of Stock purchased by all
Participants on an Exercise Date or during the calendar year to a bank
or trust company or affiliate thereof, as selected by the Compensation
Committee from time to time, which shares shall be maintained by such
bank or trust company or affiliate in separate accounts for each
Participant or, if he designates on his Stock Purchase Agreement, in
his name jointly with his spouse, with right of survivorship. A
Participant who is a resident of a jurisdiction that does not recognize
such joint tenancy may have a certificate or account in his name as
tenant in common with his spouse, without right of survivorship. Such
designation may be changed by filing a notice thereof signed by the
Participant and his spouse. Such spouse shall be bound by all of the
terms and conditions of the Plan as if such spouse were a Participant.
Sec. 4.08 Restrictions on Resale. Stock acquired under the Plan may not be sold
or otherwise disposed of for at least six months after the Exercise Date on
which the shares were acquired, except in the case of death or disability. Any
Stock certificates delivered to a Participant prior to the expiration of such
six-month period shall contain a legend to reflect such restriction.
ARTICLE V
SPECIAL ADJUSTMENTS
Sec. 5.01 Shares Unavailable. If, on any Exercise Date, the aggregate funds
available for the purchase of Stock would purchase a number of shares in excess
of the number of shares then available for purchase under the Plan, the
following events shall occur:
(a) The number of shares that would otherwise be purchased by each
Participant shall be proportionately reduced on the Exercise Date in
order to eliminate such excess;
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(b) The Plan shall automatically terminate immediately after the
Exercise Date as of which the supply of available shares is exhausted;
and
(c) Any amount remaining in the Stock Purchase Account of each of the
Participants shall be repaid to such Participants.
Sec. 5.02 Antidilution Provisions. The aggregate number of shares of Stock
reserved for purchase under the Plan, as hereinabove provided, and the
calculation of the Purchase Price per share may be appropriately adjusted to
reflect any increase or decease in the number of issued shares of Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend, or other increase or decrease in
such shares, if effected without receipt of consideration by the Company. Any
such adjustment shall be made by the Compensation Committee acting with the
consent of, and subject to the approval of, the Board.
Sec. 5.03 Effect of Certain Transactions. Subject to any required action by the
stockholders, if the Company shall be the surviving or resulting corporation in
any merger or consolidation, or if the Company shall be merged for the purpose
of changing the jurisdiction of its incorporation, any Offering hereunder shall
pertain to and apply to the shares of stock of the Company or the survivor.
However, in the event of a dissolution or liquidation of the Company, or of a
merger or consolidation in which the Company is not the surviving or resulting
corporation, the Plan and any Offering hereunder shall terminate upon the
effective date of such dissolution, liquidation, merger or consolidation, and
the balance then standing to the credit of each Participant in his Stock
Purchase Account shall be returned to him.
ARTICLE VI
MISCELLANEOUS
Sec. 6.01 Nonalienation. The right to purchase shares of Stock under the Plan is
personal to the Participant, is exercisable only by the Participant during his
lifetime except as hereinafter set forth, and may not be assigned or otherwise
transferred by the Participant. Notwithstanding the foregoing, there shall be
delivered to the executor, administrator or other personal representative of a
deceased Participant such shares of Stock and such residual balance as may
remain in the Participant's Stock Purchase Account as of the date the
Participant's death occurs. However, such representative shall be bound by the
terms and conditions of the Plan as if such representative were a Participant.
Sec. 6.02 Administrative Costs. The Company shall pay all Administrative
expenses associated with the operation of the Plan. No Administrative charges
shall be levied against the Stock Purchase Accounts of the Participants.
Sec. 6.03 Collection of Taxes. The Company shall be entitled to require any
Participant to remit, through payroll withholding or otherwise, any tax that it
determines it is so obligated to collect with respect to the issuance of Stock
hereunder, or the subsequent sale or disposition of such Stock, and the
Compensation Committee shall institute such mechanisms as shall insure the
collection of such taxes.
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Sec. 6.04 Compensation Committee. The Compensation Committee shall have the
authority and power to administer the Plan and to make, adopt, construe and
enforce rules and regulations not inconsistent with the provisions of the Plan.
The Compensation Committee shall adopt and prescribe the contents of all forms
required in connection with the administration of the Plan, including, but not
limited to the Purchase Agreement, payroll withholding authorizations,
withdrawal documents and all other notices required hereunder. The Compensation
Committee shall have the fullest discretion permissible under law in the
discharge of its duties. The Compensation Committee's interpretations and
decisions in respect of the Plan, the rules and regulations pursuant to which it
is operated, and the rights of Participants hereunder shall be final and
conclusive.
Sec. 6.05 Amendment of the Plan. The Board may amend the Plan without the
consent of stockholders or Participants, except that any such action shall be
subject to the approval of the Company's stockholders at or before the next
annual meeting of stockholders for which the record date is after such Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under any award theretofore granted to him.
Sec. 6.06 Termination of the Plan. The Plan shall continue in effect unless
terminated pursuant to action by the Board, which shall have the right to
terminate the Plan at any time without prior notice to any Participant and
without liability to any Participant. Upon the termination of the Plan, the
balance, if any, then standing to the credit of each Participant in his Stock
Purchase Account shall be refunded to him.
Sec. 6.07 Repurchase of Stock. The Company shall not be required to purchase or
repurchase from any Participant any of the shares of Stock that the Participant
acquired under the Plan.
Sec. 6.08 Notice. A Purchase Agreement and any notice that a Participant files
pursuant to the Plan shall be on the form prescribed by the Compensation
Committee and shall be effective only when received by the Compensation
Committee.
Sec. 6.09 Government Regulation. The Company's obligation to sell and to deliver
the Stock under the Plan is at all times subject to all approvals of any
governmental authority required in connection with the authorization, issuance,
sale or delivery of such Stock.
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Sec. 6.10 Headings, Captions, Gender. The headings and captions herein are for
convenience of reference only and shall not be considered as part of the text.
The masculine shall include the feminine, and vice versa.
Sec. 6.11 Severability of Provisions; Prevailing Law. The provisions of the Plan
shall be deemed severable. In the event any such provision is determined to be
unlawful or unenforceable by a court of competent jurisdiction or by reason of a
change in an applicable statute, the Plan shall continue to exist as though such
provision had never been included therein (or, in the case of a change in an
applicable statute, had been deleted as of the date of such change). The Plan
shall be governed by the laws of the State of Delaware, to the extent such laws
are not in conflict with, or superseded by, federal law.
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APPENDIX A
[DETACH HERE]
PROXY
PERSONNEL GROUP OF AMERICA, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edward P. Drudge, Jr. and Ken R. Bramlett,
Jr. as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote, as designated on the reverse
side, all the shares of common stock of Personnel Group of America, Inc. (the
"Company") held of record by the undersigned on March 28, 1997, at the annual
meeting of shareholders to be held on May 21, 1997 or any adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[See reverse side]
- -----------------------------------------------------------------------------
detach here
[X] Please mark votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL, AND THIS PROXY WILL
BE VOTED FOR EACH PROPOSAL AND FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED
HEREIN UNLESS THE SHAREHOLDER DIRECTS OTHERWISE, IN WHICH CASE IT WILL BE VOTED
AS DIRECTED.
1. ELECTION OF DIRECTORS:
NOMINEES: Kevin P. Egan, J. Roger King
FOR [ ] WITHHELD [ ]
[ ] _______________________________________
For both nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
2. Proposal to amend the Company's Certificate of Incorporation to increase
the Company's authorized Common Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to amend the Company's 1995 Equity Participation Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal to approve the Company's 1997 Employee Stock Purchase Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Proposal to ratify the selection of Price Waterhouse LLP as the Company's
independent public accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement dated April 10, 1997, and revokes all proxies heretofore given by the
undersigned.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE PREPAID ENVELOPE.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a Partnership, please sign in partnership name by
authorized person.
Signature:________________________Date:_____________
Signature:________________________Date:_____________
