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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ALTERNATIVE RESOURCES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(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:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ALTERNATIVE RESOURCES CORPORATION
100 TRI-STATE INTERNATIONAL
SUITE 300
LINCOLNSHIRE, ILLINOIS 60069
(847) 317-1000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1997
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Alternative Resources Corporation, a
Delaware corporation (the "Company"), will be held at the corporate headquarters
office, 100 Tri-State International, Suite 300, Lincolnshire, Illinois 60069 on
Tuesday, April 29, 1997 at 10:00 A.M. Central Daylight Time for the following
purposes:
1. To elect three Class III directors.
2. To consider and vote upon a proposal to approve an amendment to the
Company's Amended and Restated Incentive Stock Option Plan increasing the
number of shares of Common Stock authorized for issuance thereunder.
3. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 7, 1997 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting.
By Order of the Board of Directors
Bradley K. Lamers
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER,
SECRETARY AND TREASURER
March 21, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE FOR MAILING IN
THE UNITED STATES. A PROMPT RESPONSE IS HELPFUL, AND YOUR COOPERATION WILL BE
APPRECIATED.
ALTERNATIVE RESOURCES CORPORATION
100 TRI-STATE INTERNATIONAL
SUITE 300
LINCOLNSHIRE, ILLINOIS 60069
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 29, 1997
---------------------
TO THE STOCKHOLDERS OF
ALTERNATIVE RESOURCES CORPORATION:
This Proxy Statement is being mailed to stockholders on or about March 21,
1997 and is furnished in connection with the solicitation by the Board of
Directors of Alternative Resources Corporation, a Delaware corporation (the
"Company"), of proxies for the Annual Meeting of Stockholders to be held on
April 29, 1997 for the purpose of considering and acting upon the matters
specified in the Notice of Annual Meeting of Stockholders accompanying this
Proxy Statement. If the form of Proxy which accompanies this Proxy Statement is
executed and returned, it will be voted. A Proxy may be revoked at any time
prior to the voting thereof by written notice to the Secretary of the Company.
A majority of the outstanding shares entitled to vote at this meeting and
represented in person or by proxy will constitute a quorum. The affirmative vote
of the holders of a plurality of the shares entitled to vote and represented in
person or by proxy at this meeting is required for the election of directors.
With regard to Proposal No. 2, the amendment to the Company's Amended and
Restated Incentive Stock Option Plan (the "Stock Option Plan"), and any other
proposal submitted to a vote, approval requires the affirmative vote of a
majority of the shares entitled to vote and represented in person or by proxy at
this meeting. Shares represented by proxies which are marked "abstain" or to
deny discretionary authority on any matter will be treated as shares present and
entitled to vote, which will have the same effect as a vote against any such
matters. Broker "non-votes" will be treated as not represented at the meeting as
to matters for which a non-vote is indicated on the broker's proxy and will not
affect the determination of the outcome of the vote on any proposal to be
decided at the Annual Meeting. Broker "non-votes" and the shares as to which
stockholders abstain are included for purposes of determining whether a quorum
of shares is present at a meeting. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner.
Expenses incurred in the solicitation of proxies will be borne by the
Company. Officers of the Company may make additional solicitations in person or
by telephone.
The Annual Report to Stockholders for fiscal year 1996 accompanies this
Proxy Statement. If you did not receive a copy of the report, you may obtain one
by writing to the Secretary of the Company.
As of March 7, 1997, the Company had outstanding 15,653,267 shares of Common
Stock and such shares are the only shares entitled to vote at the Annual
Meeting. Each share is entitled to one vote on each matter to be voted upon at
the Annual Meeting.
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings (and the
percentages of outstanding shares represented by such beneficial holdings) as of
March 1, 1997, except as otherwise noted, of (i) each person (including any
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act")) known by the Company to own beneficially more than 5% of
its outstanding Common Stock, (ii) directors and nominees, (iii) each Named
Executive Officer, and (iv) all directors and nominees and executive officers as
a group. Except as otherwise indicated, the Company believes that the beneficial
owners of the Common Stock listed below, based on information provided by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. Under Rule 13d-3 of the
Exchange Act, persons who have the power to vote or dispose of Common Stock of
the Company, either alone or jointly with others, are deemed to be beneficial
owners of such Common Stock.
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OWNED CLASS
- ----------------------------------------------------------------------- ----------------- ----------
Larry I. Kane (1) ..................................................... 1,577,280 10.07%
100 Tri-State International, Suite 300
Lincolnshire, IL 60069
Keystone Investment (2) 1,285,772 8.22
Management Company ...................................................
200 Berkeley Street
Boston, MA 02116
Pilgrim Baxter & Associates, Ltd. (3) ................................. 824,600 5.27
1255 Drummers Lane, Suite 300
Wayne, PA 19087-1590
Robert V. Carlson (1) ................................................. 44,976 *
Bradley K. Lamers (1) ................................................. 36,009 *
Silvia U. Masini (1) .................................................. 46,572 *
Richard B. Williams (4) ............................................... 1,000 *
JoAnne Brandes (1) .................................................... 14,750 *
Michael E. Harris ..................................................... 27,676 *
Raymond R. Hipp (1) ................................................... 10,000 *
A. Donald Rully ....................................................... 300 *
Bruce R. Smith (1) .................................................... 59,758 *
All directors and executive officers as a group (10 persons) (5)....... 1,818,320 11.50
- ------------------------
* Less than 1%.
(1) Includes 8,400 shares (Mr. Kane), 41,662 shares (Mr. Carlson), 36,009 shares
(Mr. Lamers), 32,506 shares (Ms. Masini), 13,000 shares (Ms. Brandes),
10,000 shares (Mr. Hipp), 10,000 shares (Mr. Harris), and 10,000 shares (Mr.
Smith), which are subject to presently exercisable options or options
exercisable within 60 days of March 1, 1997.
(2) Based upon a Schedule 13G filed by First Union Corporation, the parent of
Keystone Investment Management Company, with the Securities and Exchange
Commission on February 3, 1997.
(3) Based upon an amendment to Schedule 13G filed by Pilgrim Baxter &
Associates, Ltd. ("Pilgrim") with the Securities and Exchange Commission on
February 14, 1997. Pilgrim has shared voting power and sole dispositive
power with respect to shares beneficially owned.
(4) Mr. Williams joined the Company as Director, President and Chief Operating
Officer on February 24, 1997.
(5) Includes 161,577 shares of Common Stock which are subject to presently
exercisable options or options exercisable within 60 days of March 1, 1997.
2
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Amended and Restated Certificate of Incorporation of the Company
provides that the Board of Directors of the Company shall be divided into three
classes, as nearly equal in number as possible, with one class being elected
each year for a three-year term. At the Annual Meeting of Stockholders, three
Class III directors are to be elected to serve until 2000 and five directors
will continue to serve in accordance with their prior election or appointment.
It is intended that the proxies (except proxies marked to the contrary) will
be voted for the nominees listed below, all of whom are members of the present
Board of Directors. It is expected that the nominees will serve, but if any
nominee declines or is unable to serve for any unforeseen cause, the proxies
will be voted to fill any vacancy so arising in accordance with the
discretionary authority of the persons named in the proxies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CLASS III NOMINEES.
NOMINEE AND CONTINUING DIRECTORS
The following table sets forth certain information with respect to the
nominees and the continuing directors:
NAME AND AGE DIRECTOR SINCE: PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------------- ----------------- ------------------------------------------------------------
CLASS III NOMINEES FOR ELECTION WITH TERM EXPIRING IN 2000
Raymond R. Hipp (54) August 1994 Mr. Hipp has been Chief Executive Officer of ITI Marketing
Services, a provider of telemarketing services, since
August 1996. He was a self-employed management consultant
from September 1994 to August 1996. Mr. Hipp was President
of Comdisco Disaster Recovery Services, a provider of
business continuity services for the information technology
industry, from 1980 through August 1994. Mr. Hipp
previously held executive and management positions with
International Business Machines Corporation.
A. Donald Rully (58) October 1996 Mr. Rully was employed by International Business Machines
Corporation from 1965 to 1996, most recently as Vice
President and General Manager of Technology Solutions with
IBM/ISSC. Since Mr. Rully's retirement in April 1996, he
has been engaged in the consulting business.
Richard Williams (51) February 1997 Mr. Williams joined the Company as Director, President and
Chief Operating Officer in February 1997. From 1995 through
1996, Mr. Williams was co-founder and Chairman and Chief
Executive Officer of Intellisource, Inc., an outsourcing
services firm. From 1990 to 1995, Mr. Williams was a senior
vice president of Dun & Bradstreet Corporation, where he
was responsible for corporate strategy and marketing, as
well as chief of technology. Previously, Mr. Williams was
vice president of U.S. marketing for Unisys and a general
manager of General Electric's Consumer Electronics
Division.
3
NAME AND AGE DIRECTOR SINCE: PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------------- ----------------- ------------------------------------------------------------
CLASS I DIRECTORS WITH TERMS EXPIRING IN 1998
JoAnne Brandes (43) August 1994 Ms. Brandes has been Vice President, General
Counsel-Worldwide Professional for S.C. Johnson & Son,
Inc., a worldwide consumer and commercial products company,
since October 1996. Ms. Brandes was Vice
President-Corporate Communications Worldwide for S.C.
Johnson Wax from October 1994 to October 1996, and was
Director-Corporate Communications Worldwide for S.C.
Johnson Wax from May 1992 through September 1994. From June
1981 through April 1992, she was senior counsel for S.C.
Johnson Wax.
Michael E. Harris (36) May 1995 Mr. Harris is a founder and has been President and Chief
Executive Officer of AuditForce, Inc., an internal audit
services company, since November 1995. Mr. Harris was Vice
President-Finance, Chief Financial Officer and Secretary of
the Company from February 1989 through October 1995. From
August 1987 to January 1989, Mr. Harris served as Senior
Financial Officer of Wind Point Management Partners II. Mr.
Harris previously held positions with First Financial
Savings and Ernst & Young LLP.
Robert V. Carlson (40) February 1997 Mr. Carlson has been Executive Vice President responsible
for the Company's field operations since November 1996. Mr.
Carlson joined the Company in April 1991 as a Branch
General Manager, became an Executive Director in December
1993, and was named Vice President in July 1995. Prior to
joining the Company, Mr. Carlson held various positions
with General Electric and Automated Data Processing, Inc.
CLASS II DIRECTORS WITH TERMS EXPIRING IN 1999
Larry I. Kane (56) March 1988 Mr. Kane founded the Company in March 1988 and has served as
its Chief Executive Officer and a Director since the
Company's inception. Mr. Kane was named Chairman of the
Board of the Company in May 1995. Mr. Kane also served as
the President of the Company from the Company's inception
to February 1997. Mr. Kane was Region Director for Brandon
Systems Corporation, a provider of technical staffing
services from August 1985 through November 1987. Mr. Kane
previously held various sales management and marketing
positions with General Electric Company and Automated Data
Processing, Inc.
4
NAME AND AGE DIRECTOR SINCE: PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------------- ----------------- ------------------------------------------------------------
Bruce R. Smith (55) April 1991 Mr. Smith is a founder and has been President and Chief
Executive Officer of Integration Alliance Corporation, a
commercial systems, technology marketing and distribution
company, since August 1994. Mr. Smith was President and
Chief Executive Officer of Client Systems, Inc., f/k/a
Systems/DRC, Inc., a distributor of computer software and
hardware systems, from November 1993 through July 1994.
From February 1991 through October 1993, Mr. Smith was Vice
President-Marketing and Sales of Distribution Resources
Company, a computer software developer and hardware systems
provider. From March 1986 through January 1991, Mr. Smith
was Vice President/ Division General Manager of
Businessland, Inc., a computer and local area network
distributor and a systems integrator. Mr. Smith previously
held various general management, sales and training
positions with Xerox Corporation and Exxon Corporation.
5
EXECUTIVE COMPENSATION
The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company by the Company's CEO and
each of the other executive officers at December 31, 1996 (together, the "Named
Executive Officers"), for the years indicated.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
--------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
---------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS (#)(2) ($)(3)
- ------------------------------ --------- ----------- ------------ -------------- -------------
Larry I. Kane 1996 $ 200,013 $ 120,000 -- $ 270
Chairman of the Board 1995 187,500 187,500 -- 1,386
and Chief Executive Officer 1994 90,000 150,000 -- 567
Robert V. Carlson 1996 $ 125,000 $ 45,000 100,500 --
Executive Vice President 1995 96,625 103,375 70,200 --
Bradley K. Lamers 1996 $ 100,001 $ 30,000 15,000 $ 180
Vice President, Chief 1995 74,523 30,000 97,000 --
Financial Officer, Secretary
and Treasurer
Silvia U. Masini 1996 $ 100,001 $ 60,000 15,500 --
Vice President 1995 90,000 45,000 20,300 --
1994 60,000 40,000 6,000 $ 260
- ------------------------
(1) Reflects bonuses earned under the Company's bonus plans described in the
Compensation Committee Report on Executive Compensation.
(2) Represents stock options granted under the Company's Stock Option Plan.
(3) Reflects the Company's matching contribution to the Company's 401(k) Plan.
The following tables set forth the number of incentive stock options granted
to the Named Executive Officers during 1996 and information regarding stock
option exercises and exercisable and unexercisable incentive stock options held
by the Named Executive Officers as of December 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES OR FOR OPTION TERM (4)
OPTIONS IN FISCAL BASE PRICE EXPIRATION ----------------------------
NAME GRANTED(#)(1) YEAR (2) ($/SH)(3) DATE 5% ($) 10%($)
- ------------------------------- ------------- ----------- ----------- ---------- ------------- -------------
Larry I. Kane -- -- -- -- -- --
Robert V. Carlson 100,500 9.66% $ 17.31 12/31/06 $ 1,094,462 $ 2,773,209
Bradley K. Lamers 15,000 1.44 17.31 12/31/06 163,352 413,911
Silvia U. Masini 15,500 1.49 17.31 12/31/06 168,797 427,708
6
- ------------------------
(1) Options are not exercisable during the first six months from the date the
options are granted. Thereafter, the options become exercisable at the rate
of 2.38% of the total shares subject to the option on and after the first
day of each month. The term of the options is ten years.
(2) Based on 1,039,700 total options granted to employees, including the Named
Executive Officers, in 1996.
(3) The exercise price is equal to the fair market value of the Common Stock on
the date of grant.
(4) The potential realizable value is calculated based on the term of the option
at its time of grant (ten years). It is calculated by assuming the stock
price on the date of grant appreciates at the indicated annual rate
compounded annually for the entire term of the option and that the option is
exercised and sold on the last day of its term for the appreciated stock
price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
SHARES VALUE AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
ACQUIRED ON REALIZED -------------------------- --------------------------
NAME EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ------------ ----------- ----------- ------------- ----------- -------------
Larry I. Kane -- -- 8,400 -- $ 143,073 --
Robert V. Carlson -- -- 31,541 163,141 165,773 $ 70,157
Bradley K. Lamers -- -- 26,775 85,225 -- --
Silvia U. Masini 6,097 $ 181,404 25,986 47,662 324,370 173,328
- ------------------------
(1) Value is calculated by subtracting the exercise price per share from the
fair market value at the time of exercise and multiplying by the number of
shares exercised pursuant to the stock option.
(2) Value is calculated by subtracting the exercise price per share from the
fair market value at December 31, 1996 and multiplying by the number of
shares subject to the stock option.
EMPLOYMENT AGREEMENTS
Mr. Kane is currently employed under an agreement that continues until his
resignation, death or termination by the Board of Directors. Under the
agreement, Mr. Kane's salary is determined by the Board of Directors or a
committee of the Board. Mr. Kane is entitled to participate in the Company's
executive bonus plans. In the event Mr. Kane's employment is terminated (i) by
the Company for any reason other than death or for cause, (ii) by Mr. Kane due
to a material breach of the agreement by the Company (including removal as a
director) or (iii) in connection with a change in control of the Company not
approved by Mr. Kane, either as a director or a stockholder, Mr. Kane will be
entitled to a severance payment equal to two and one-half times his total salary
and bonus compensation for the preceding 12 months. A change in control for
purposes of the agreement relates to, in general, the occurrence of (i) a
transaction or series of transactions pursuant to which a person or group of
affiliated persons will beneficially own more than 50% of the Company's voting
stock, (ii) a merger, consolidation or reorganization in which the Company is
not the surviving entity, or (iii) a sale of all or substantially all of the
property and assets of the Company. In the event of Mr. Kane's death or
disability, his salary will be paid for 12 additional months plus any accrued
bonus. In the event Mr. Kane is disabled, the Company will continue to provide
medical insurance as long as Mr. Kane is disabled. The agreement also contains
non-competition and confidentiality commitments.
The Company has also entered into employment agreements with each of Mr.
Carlson, Mr. Lamers and Ms. Masini, pursuant to which their 1997 base salaries
will be $175,000, $125,000 and $125,000, respectively. Under the agreements,
each executive is eligible to receive annual incentive compensation as a
participant in the Company's executive bonus plan as determined by the Board of
Directors. Ms. Masini's agreement provides that in the event she is terminated
for unsatisfactory
7
performance or without cause, severance payments equal to six months of her
current salary will be made. All of the employment agreements expire upon
termination or resignation, and contain non-competition and confidentiality
commitments.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW OF EXECUTIVE COMPENSATION POLICIES
The Compensation Committee of the Board of Directors determines the salaries
and bonuses of executive officers and other key employees of the Company and
administers the Company's Stock Option Plan. In setting the compensation levels
of the Company's executive officers and in administering the Stock Option Plan,
the Compensation Committee has established the following principles:
- Provide competitive compensation levels and use equity ownership through
the Stock Option Plan to attract and retain highly qualified individuals.
- Set competitive base compensation levels and utilize significant
performance based incentive compensation to achieve total compensation
targets.
- Establish performance goals which are aggressive and are aligned with an
objective of increasing stockholder value at a greater rate than the rate
achieved by the upper quartile of the Russell 2000 Index.
- Use discretionary cash awards as appropriate to recognize outstanding
individual contribution or overall Company performance which far exceeds
annual goals.
- Allocate stock options broadly across the organization so that all
executive officers and key employees have a stockholder perspective.
The overall compensation of the executive officers is comprised of the
compensation components set forth below. The Compensation Committee believes
that in 1996 the executive officers of the Company were compensated at levels
comparable to other information services or staffing companies.
TOTAL COMPENSATION - 1996
BASE SALARIES
Base salaries of executive officers were paid in accordance with the terms
of employment agreements entered into between the Company and the respective
executive officers. The Compensation Committee believes that the base salary
levels of the executive officers provided for in the employment agreements are
comparable to their peers within the information services and staffing
industries.
TARGET BONUS PLAN
Under the Company's 1996 Target Bonus Plan, the Compensation Committee
established goals based on the Company's earnings per share. The Company
achieved 97% of the EPS goal during the 1996 fiscal year. The Compensation
Committee elected to award 60% of the target bonuses to executive officers.
OPTION GRANTS
Executive officers and other key employees of the Company are eligible to
participate in the Stock Option Plan. The purpose of the Stock Option Plan is to
provide incentive to management and key employees to maximize stockholder value
by providing them with opportunities to acquire shares of the Company's Common
Stock. Options are granted to executive officers and key employees who the
Compensation Committee, in its sole discretion, determines to be responsible for
the future growth and profitability of the Company. The Compensation Committee
determines the employees to whom options will be granted and establishes the
number of shares covered by each grant and the exercise price and vesting period
for each grant. The Committee typically grants stock options with four year
vesting periods for each grant, creating strong incentives for recipients of
stock option grants to remain with the Company. The stock options granted by the
Compensation Committee have an
8
exercise price equal to the fair market value of the Company's Common Stock on
the date of grant, thus rewarding the recipient only if the Company's Common
Stock price appreciates above the price on the date of grant.
In addition to stock options granted to executive officers, the Compensation
Committee, in 1996, granted a total of 908,700 additional options to
approximately 255 employees, not including the executive officers. Option grants
ranged from 100 options to 100,500 options for executive officers and employees.
COMPENSATION OF CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Mr. Kane founded the Company in March 1988 and has served as its Chief
Executive Officer from the Company's inception. Mr. Kane was named Chairman of
the Board of the Company in May 1995. Mr. Kane also served as the President of
the Company from the Company's inception to February 1997. Mr. Kane is currently
employed under an agreement that continues until his resignation, death or
termination by the Board of Directors. Under this agreement, Mr. Kane was
entitled to a salary at the annual rate of $200,000 for 1996. Mr. Kane is
entitled to participate in the same bonus plans as the other executive officers.
In 1996, the Compensation Committee awarded Mr. Kane a total bonus of
$120,000 (representing 60% of his target bonus) based upon his and the Company's
1996 performance. Because Mr. Kane has a substantial equity position
attributable to his role as founder of the Company, Mr. Kane elected not to
receive an award of stock options in 1996 in favor of increasing the options
awarded to other managers and key employees.
Federal tax law establishes certain requirements in order for compensation
exceeding $1 million earned by certain executives to be deductible. Because the
total compensation for executive officers is significantly below the $1 million
threshold, the Compensation Committee has not had to address the issues relative
thereto.
Respectfully Submitted By:
The Compensation Committee
JoAnne Brandes
Raymond R. Hipp
A. Donald Rully
9
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Kane is a member of the board of directors of Integration Alliance
Corporation. All decisions regarding compensation of the executive officers of
Integration Alliance Corporation are made by its board of directors. Mr. Smith,
a director of the Company who served as a member of the Compensation Committee
until July 1996, is the President and Chief Executive Officer of Integration
Alliance Corporation. No member of the Compensation Committee was an executive
officer or employee of the Company during 1996 or at any time prior thereto.
BOARD OF DIRECTORS
The Board of Directors held 12 meetings during 1996. All directors attended
at least 75 percent of the aggregate number of such meetings and of meetings of
Board committees on which they served in 1996.
The Audit Committee in 1996 was composed of Raymond R. Hipp and Bruce R.
Smith. The Audit Committee met once in 1996. The functions of the Audit
Committee consist of recommending the appointment of auditors and overseeing the
accounting and audit functions of the Company.
The Board of Directors has a Compensation Committee which met once during
1996. The Compensation Committee is composed of JoAnne Brandes, Raymond R. Hipp
and A. Donald Rully. The functions of the Compensation Committee consist of
determining executive officers' salaries and bonuses and administering and
determining awards under the Stock Option Plan, the Employee Stock Purchase Plan
and certain other employee benefit plans.
Directors who are not employees or officers of the Company receive $2,000
for each Board and committee meeting attended and also receive on the date of
each annual meeting (and on the date of initial election to the Board if other
than at an annual meeting) a nonqualified stock option to purchase 5,000 shares
of Common Stock under the Stock Option Plan. In addition, all directors are
reimbursed for certain expenses in connection with attendance at Board and
committee meetings.
10
PERFORMANCE GRAPH
The following graph sets forth a comparison of the Company's cumulative
total stockholder return on its Common Stock for the period beginning May 3,
1994, the date the Company's Common Stock began trading on the Nasdaq National
Market, and ending December 31, 1996 against the cumulative total return of the
Russell 2000 Index, Peer Group A and Peer Group B for the same period. Peer
Group A consists of publicly-traded companies in the staffing industry and
includes the following companies: Kelly Services, Inc., Manpower, Inc., Olsten
Corporation, On Assignment, Inc., Robert Half International, Inc. and Uniforce
Temporary Personnel, Inc. Peer Group A included Brandon Systems Corporation for
purposes of the Company's Proxy Statement relating to the 1996 Annual Meeting of
Stockholders. Brandon Systems was deleted from Peer Group A because it ceased to
be a publicly-traded company during 1996. Peer Group B consists of
publicly-traded companies in the computer services industry and includes the
following companies: Cambridge Technology Partners, Inc., Computer Horizons
Corporation, Computer Sciences Corporation, Digital Equipment Corporation,
Hewlett-Packard Company, International Business Machines Corporation, Keane,
Inc. and Technalysis Corporation. The total stockholder return for each company
in Peer Group A and Peer Group B has been weighted according to its stock market
capitalization. This graph and table shown below assumes an investment of $100
on May 3, 1994 in each of the Company's Common Stock, the Russell 2000 Index,
Peer Group A and Peer Group B, and assumes reinvestment of dividends, if any.
The stock price performance shown below is not necessarily indicative of future
stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ALTERNATIVE
RESOURCES
Corporation Russell 2000 Index Peer Group A Peer Group B
05/03/94 $ 100.00 $ 100.00 $ 100.00 $ 100.00
06/30/94 121.918 94.417 104.332 97.559
12/31/94 172.603 98.373 118.812 126.763
06/30/95 290.411 111.446 115.855 171.705
12/31/95 331.507 124.153 140.663 184.703
06/30/96 402.740 136.196 173.334 204.872
12/31/96 190.411 142.479 143.633 252.741
11
PROPOSAL NO. 2: APPROVAL OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED INCENTIVE STOCK OPTION PLAN
GENERAL
Stockholders are being asked to approve an amendment to the Company's
Amended and Restated Stock Option Plan (the "Stock Option Plan") which increases
the number of shares of Common Stock authorized for issuance pursuant to the
Company's Stock Option Plan. The Stock Option Plan originally adopted and
approved by stockholders provided that options to acquire an aggregate of
2,064,000 shares of common stock may be granted. The plan was subsequently
amended to provide for the issuance of options to acquire an additional
1,200,000 shares of Common Stock (for an aggregate of 3,264,000 shares of Common
Stock). The Board of Directors has amended the Stock Option Plan to provide for
the issuance of options to acquire an additional 736,000 shares of Common Stock
(for an aggregate of 4,000,000 shares of Common Stock) and directed that such
amendment be submitted to the stockholders of the Company for their approval.
Since inception of the Stock Option Plan in 1992 and through March 1, 1997,
options to purchase 3,210,285 shares of Common Stock have been granted (net of
cancellations), 693,310 shares have been issued upon exercise of options and
2,516,975 shares are reserved for issuance upon exercise of currently
outstanding options.
The Board of Directors believes that the Company's continued success depends
upon its ability to attract and retain highly competent persons as officers and
key employees. The Board of Directors believes that one of the best ways to
attain these objectives is to give officers and key employees an opportunity to
acquire a proprietary interest in the Company by purchasing shares of Common
Stock through the exercise of options granted under the Stock Option Plan.
Approval of the amendment, which will be submitted at the Annual Meeting in
the form of the following resolution, will require the affirmative vote of a
majority of the shares of Common Stock outstanding and entitled to vote and
represented in person or by proxy at the Annual Meeting.
"RESOLVED, that the first sentence of Section 5 of the Stock Option Plan is
amended and restated in its entirety to provide as follows:
There is hereby reserved for issuance under the Plan an aggregate of Four
Million (4,000,000) shares of Common Stock, which may be authorized but unissued
or treasury shares."
SUMMARY OF STOCK OPTION PLAN
The Stock Option Plan is intended to provide incentives which will attract
and retain highly competent persons as officers and key employees of the Company
and its subsidiaries, by providing them opportunities to acquire shares of
Common Stock of the Company or to receive monetary payments based on the value
of such shares pursuant to awards granted under the Stock Option Plan.
The maximum number of shares which may be awarded to any participant in any
year during the term of the Stock Option Plan is 206,400 shares. If there is a
lapse, cancellation, expiration or termination of any award prior to the
issuance of shares, or if shares are issued and thereafter are reacquired by the
Company pursuant to rights reserved upon issuance thereof, those shares may
again be used for new awards under the Stock Option Plan.
The Stock Option Plan provides for administration by the Compensation
Committee of the Board of Directors (the "Committee"). Among the Committee's
powers are the authority to interpret the Stock Option Plan, establish rules and
regulations for its operation, select officers and other key employees of the
Company and its subsidiaries to receive awards, and determine the form, amount
and other terms and conditions of awards.
Officers and other key employees of the Company or any of its subsidiaries
are eligible to participate in the Stock Option Plan. The selection of
participants from eligible employees is within the discretion of the Committee.
The estimated number of employees who are eligible to participate in the Stock
Option Plan is approximately 500 staff employees and certain technical employees
who are eligible to participate based on outstanding performance.
12
The Stock Option Plan provides for the grant of any or all of the following
types of awards: (a) stock options, including incentive stock options and
nonqualified stock options; (b) stock appreciation rights ("SARs"); (c) stock
awards; and (d) performance units. Awards may be granted singly, in combination,
or in tandem as determined by the Committee.
Under the Stock Option Plan, the Committee may grant awards in the form of
incentive stock options or nonqualified stock options to purchase shares of the
Common Stock. The Committee, with regard to each stock option, determines the
number of shares subject to the option, the manner and time of the option's
exercise and vesting, and the exercise price per share of stock subject to the
option; provided, however, that no stock options shall be exercisable earlier
than six months after the date they are granted and no stock options shall be
exercisable later than ten years after the date they are granted. The exercise
price of an incentive stock option will not be less than 100% of the fair market
value of the Common Stock on the date the option is granted. The exercise price
of a nonqualified stock option will not be less than 85% of the fair market
value of the Common Stock on the date the option is granted. The option price
may be paid by a participant in cash or, in the discretion of the Committee, in
shares of Common Stock then owned by the participant, or a combination thereof.
The Stock Option Plan authorizes the Committee to grant an SAR either in
tandem with a stock option or independent of a stock option. An SAR is a right
to receive a payment equal to the appreciation in market value of a stated
number of shares of Common Stock from the exercise price. If issued in tandem
with a stock option such appreciation is measured from not less than the option
price and in the case of a SAR issued independently of any stock option, such
appreciation is measured from not less than 85% of the fair market value of the
Common Stock on the date the right is granted. No SAR may be exercisable earlier
than six months after the date of grant and shall expire at the earlier of the
date the related stock option expires or fifteen years after the SAR was
granted. The number of shares subject to SARs which may be granted during any
calendar year to a participant shall not exceed 206,400.
The Stock Option Plan authorizes the Committee to grant awards in the form
of restricted or unrestricted shares of Common Stock. Such awards are subject to
such terms, conditions, restrictions, and/or limitations, if any, as the
Committee deems appropriate including, but not by way of limitation,
restrictions on transferability and continued employment.
The Stock Option Plan authorizes the Committee to grant awards in the form
of performance units which consist of the right to receive Common Stock or cash
of equivalent value at the end of a specified period. The Committee determines
the terms and conditions of the performance units.
Each non-employee director is granted an annual nonqualified stock option to
purchase 5,000 shares of Common Stock, at an exercise price of 100% of the fair
market value of Common Stock on the date of grant. The non-employee director
stock options are granted on the date of the annual meeting of stockholders.
The Stock Option Plan provides that awards shall not be transferable
otherwise than by law or by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Committee may permit the transferability of
an award to members of the participant's immediate family or trusts or family
partnerships for the benefit of such family members.
The Board of Directors reserves the right to amend, suspend or terminate the
Stock Option Plan at any time, subject to the rights of participants with
respect to any outstanding awards. Notwithstanding the foregoing, no amendment
to the Stock Option Plan shall, without approval of stockholders of the Company,
(i) materially increase the total number of shares which may be issued under the
Stock Option Plan, (ii) materially modify the requirement as to eligibility for
awards under the Stock Option Plan, (iii) result in the Stock Option Plan
failing to comply with Section 16(b) of the Exchange Act and the rules and
regulations thereunder or (iv) extend the term of the Stock Option Plan.
13
The Stock Option Plan contains provisions for equitable adjustment of awards
in the event of a merger, consolidation or reorganization, or issuance of shares
by the Company without new consideration or a change of control.
FEDERAL TAX TREATMENT
Under current law, the following are U.S. federal income tax consequences
generally arising with respect to awards under the Stock Option Plan.
A participant who is granted an incentive stock option does not recognize
any taxable income at the time of the grant or at the time of exercise.
Similarly, the Company is not entitled to any deduction at the time of grant or
at the time of exercise. However, for purposes of the alternative minimum tax
the exercise of an incentive stock option will be treated as an exercise of a
nonqualified stock option. Accordingly, the exercise of an incentive stock
option may result in an alternative minimum tax liability to a participant. If
the participant makes no disposition of the shares acquired pursuant to an
incentive stock option before the later of two years from the date of grant and
one year from the date of exercise, any gain or loss realized on a subsequent
disposition of the shares will be treated as a long-term capital gain or loss.
Under such circumstances, the Company will not be entitled to any deduction for
federal income tax purposes.
However, if the participant disposes of shares acquired upon exercise of an
incentive stock option within two years after the date of grant or one year
after the date of exercise of the option (a "disqualifying disposition"), the
participant will recognize ordinary compensation income in the amount of the
excess of the fair market value of the shares on the date of exercise over the
option exercise price (or, in certain circumstances, the gain on the sale, if
less). Any excess of the amount realized on the disqualifying disposition over
the fair market value of the shares on the date of exercise of the option will
generally be treated as capital gain. In the event of a disqualifying
disposition, the Company will be entitled to a deduction equal to the amount of
ordinary compensation income recognized by the participant.
A participant who is granted a nonqualified stock option will not have
taxable income at the time of grant, but will have taxable income at the time of
exercise equal to the difference between the exercise price of the shares and
the market value of the shares on the date of exercise. The Company is entitled
to a tax deduction for the same amount.
The grant of an SAR will produce no U.S. federal tax consequences for the
participant or the Company. The exercise of an SAR results in taxable income to
the participant, equal to the difference between the exercise price of the
shares and the market price of the shares on the date of exercise, and a
corresponding tax deduction to the Company.
A participant who has been granted an award of restricted shares of Common
Stock will not realize taxable income at the time of the grant, and the Company
will not be entitled to a tax deduction at the time of the grant, unless the
participant makes an election to be taxed at the time of the award. When the
restrictions lapse, the participant will recognize taxable income in an amount
equal to the excess of the fair market value of the shares at such time over the
amount, if any, paid for such shares. The Company will be entitled to a
corresponding tax deduction.
The grant of an unrestricted stock award will produce immediate tax
consequences for both the participant and the Company. The participant will be
treated as having received taxable compensation in an amount equal to the then
fair market value of the Common Stock awarded. The Company will receive a
corresponding tax deduction.
14
OPTIONS ISSUED IN 1996 UNDER THE STOCK OPTION PLAN
The following table sets forth options granted in the aggregate, net of
cancellations, under the Stock Option Plan in 1996 to (i) the Named Executive
Officers, (ii) all executive officers as a group, (iii) all non-employee
directors and (iv) all employees, including all current officers who are not
executive officers, as a group.
NUMBER OF
SHARES UNDERLYING
OPTIONS GRANTED
NAME AND POSITION (1)
- ----------------------------------------------------------------------------------------------- -----------------
Larry I. Kane ................................................................................. --
Chairman of the Board and Chief Executive Officer
Robert V. Carlson ............................................................................. 100,500
Executive Vice President
Bradley K. Lamers ............................................................................. 15,000
Vice President
Silvia U. Masini .............................................................................. 15,500
Vice President
All executive officers as a group (4 persons).................................................. 131,000
All current directors who are not executive officers as a group (5 persons).................... 30,012
All employees who are not executive officers as a group........................................ 908,700
- ------------------------
(1) All options to purchase Common Stock were issued at 100% of their fair
market value on the date of grant and expire ten years from the date of
grant. See "Executive Compensation".
On March 10, 1997, the last reported sales price of the Common Stock on the
Nasdaq National Market was $16 7/8 per share.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE COMPANY'S AMENDED AND RESTATED INCENTIVE STOCK OPTION PLAN. UNLESS MARKED TO
THE CONTRARY, PROXIES RECEIVED BY THE COMPANY WILL BE VOTED IN FAVOR OF THE
AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED INCENTIVE STOCK OPTION PLAN.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's officers and
directors, and persons who own more than ten percent of the Company's
outstanding stock, file reports of ownership and changes in ownership with the
Securities and Exchange Commission. During 1996, to the knowledge of the
Company, all Section 16(a) filing requirements applicable to its officers,
directors, and greater than ten percent beneficial owners were complied with
except that JoAnne Brandes, a director, and Silvia U. Masini, an executive
officer, each failed to timely file one Form 4 report, in each case with respect
to one transaction.
ACCOUNTANTS
The firm of KPMG Peat Marwick LLP has been selected as independent
accountants to audit the books, records and accounts of the Company for 1997.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting with the opportunity to respond to appropriate questions and to make a
statement if they desire to do so.
15
PROPOSALS OF SECURITY HOLDERS
A stockholder proposal to be presented at the 1998 Annual Meeting must be
received at the Company's corporate headquarters, 100 Tri-State International,
Suite 300, Lincolnshire, Illinois 60069 by no later than November 21, 1997 for
evaluation as to inclusion in the Proxy Statement in connection with such
Meeting.
In order for a stockholder to nominate a candidate for director, under the
Company's Bylaws timely notice of the nomination must be given in writing to the
Secretary of the Company. To be timely, such notice must be delivered or mailed
by first class United States mail, postage prepaid, to the Secretary at the
principal executive offices of the Company not less than sixty (60) days nor
more than ninety (90) days prior to the date of the annual meeting of
stockholders or if the Company mails its notice and proxy to the stockholders
less than sixty (60) days prior to the annual meeting, within ten (10) days
after the notice and proxy is mailed. Such notice must describe various matters
regarding the nominee and the stockholder giving the notice, including such
information as name, address, occupation and shares held.
In order for a stockholder to bring other business before a stockholders
meeting, timely notice must be given to the Secretary of the Company within the
time limits described above. Such notice must include various matters regarding
the stockholder giving the notice and a description of the proposed business.
These requirements are separate from and in addition to the requirements a
stockholder must meet to have a proposal included in the Company's proxy
statement.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of the Company knows of no other business which may
come before the Annual Meeting. However, if any other matters are properly
presented to the Meeting, the persons named in the proxies will vote upon them
in accordance with their best judgment.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE PROXY AND
RETURN IT IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
Bradley K. Lamers
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, SECRETARY AND TREASURER
Date: March 21, 1997
16
PROXY PROXY
ALTERNATIVE RESOURCES CORPORATION
100 TRI-STATE INTERNATIONAL, SUITE 300, LINCOLNSHIRE, ILLINOIS 60069
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- APRIL 29, 1997
The undersigned appoints Larry I. Kane and Bradley K. Lamers, or either
of them, with full power of substitution, to represent and to vote the stock
of the undersigned at the Annual Meeting of Stockholders of Alternative
Resources Corporation, to be held at the corporate headquarters office, 100
Tri-State International, Suite 300, Lincolnshire, Illinois, on Tuesday, April
29, 1997 at 10 A.M., Central Daylight Time, or at any adjournment thereof as
follows:
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THE PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
ALTERNATIVE RESOURCES CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
[ ]
FOR ALL
EXCEPT
WITHHOLD nominees
FOR AUTHORITY listed below
1. Election of Directors / / / / / /
Richard B. Williams, Raymond A. Hipp,
and A. Donald Rully
INSTRUCTION: To withhold authority to vote
for any individual nominee, write the
nominee's name below:
__________________________________________
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to the / / / / / /
Company's Amended and Restated Incentive
Stock Option Plan increasing the number of
shares of Common Stock available for
issuance thereunder by 736,000 shares, to a
total of 4,000,000
3. In their discretion on any other matter that
may properly come before the meeting or any
adjournment thereof.
Dated __________________________________________________________, 1997
________________________________________________________________
Signature(s)
________________________________________________________________
Signature(s)
When signing as attorney, administrator, personal representative, executor,
custodian, trustee, guardian or corporate official, please give your full
title as such. When stock is held in the name of more than one person, each
such person should sign the proxy.