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
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 Rule 14a-11(c) or Rule 14a-12
TEAMSTAFF, INC.
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(Name of the Corporation as Specified in Charter)
Edmund C. Kenealy, Secretary
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(Name of Person(s) Filing Proxy Statement)
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:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0- 11(a)(2) and identify the filing forwhich the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or form or schedule and the date of filing.
(1) Amount previously paid:
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(2) Form schedule or registration number:
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(3) Filing party:
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(4) Dated filed:
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TEAMSTAFF, INC.
300 Atrium Drive
Somerset, New Jersey 08873
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on August 12, 2003
To the Shareholders of TEAMSTAFF, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
TEAMSTAFF, INC. ("TeamStaff"), will be held at the Somerset Marriott, 110
Davidson Avenue, Somerset, New Jersey 08873 on August 12, 2003 at 9:00 AM New
Jersey Time, for the following purposes:
1. To elect two Class 1 Directors to TeamStaff's Board of Directors to
hold office for a period of three years or until their successors are duly
elected and qualified; and
2. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The close of business on June 16, 2003 has been fixed as the record
date ("Record Date") for the determination of shareholders entitled to notice of
and to vote at, the Meeting and any adjournment thereof.
You are cordially invited to attend the Meeting. Whether or not you
plan to attend, please complete, date and sign the accompanying proxy and return
it promptly in the enclosed envelope to assure that your shares are represented
at the Meeting. If you do attend, you may revoke any prior proxy and vote your
shares in person if you wish to do so. Stockholders who hold their shares
through a nominee or broker are invited to attend the meeting but must obtain a
signed proxy from the broker in order to vote in person. Any prior proxy will
automatically be revoked if you execute the accompanying proxy or if you notify
the Secretary of TeamStaff, in writing, prior to the Annual Meeting of
Shareholders.
By Order of the Board of Directors
Edmund C. Kenealy
Secretary
Dated: July 11, 2003
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
TEAMSTAFF, INC.
300 Atrium Drive
Somerset, New Jersey 08873
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 12, 2003
This proxy statement and the accompanying form of proxy have been
mailed on or about July 11, 2003 to the shareholders of Common Stock of record
of June 16, 2003 (the "Record Date") of TEAMSTAFF, INC., a New Jersey
corporation, in connection with the solicitation of proxies by the Board of
Directors of TeamStaff for use at the Annual Meeting of shareholders to be held
on August 12, 2003 at 9:00 a.m. and at any adjournment THEREOF.
SOLICITATION, VOTING AND REVOCABILITY OF PROXY
Shares of TeamStaff's Common Stock, par value $.001 per share,
represented by a properly executed Proxy in the accompanying form will, unless
contrary instructions are specified in the Proxy, be voted FOR the election of
two Class 1 Directors to hold office for a period of three years or until their
successors are duly elected and qualified. Each share of common stock is
entitled to one vote. Voting is on a noncumulative basis.
If your shares are held in an account at a brokerage firm or bank, you
may submit your voting instructions by signing and timely returning the enclosed
voting instruction form, by Internet or telephone (if available) at the address
or telephone number shown on your voting instruction form, or by providing other
proper voting instructions to the registered owner of your shares. If you either
return your signed proxy or submit your proxy using the Internet or telephone
procedures that may be available to you, your shares will be voted as you
direct. IF THE ACCOMPANYING PROXY IS PROPERLY EXECUTED AND RETURNED, BUT NO
VOTING DIRECTIONS ARE INDICATED THEREON, THE SHARES REPRESENTED THEREBY WILL BE
VOTED FOR THE PROPOSAL SET FORTH IN THIS PROXY STATEMENT.
In addition, the proxy confers discretionary authority to the persons
named in the proxy authorizing those persons to vote, in their discretion, on
any other matters properly presented at the Annual Meeting of Stockholders. The
Board of Directors is not currently aware of any such other matters.
Any proxy may be revoked at any time before it is voted. A shareholder
may revoke a proxy by submitting a proxy bearing a later date or by notifying
the Secretary of TeamStaff either in writing prior to the Annual Meeting or in
person at the Annual Meeting. Revocation is effective only upon receipt of such
notice by the Secretary of TeamStaff. Stockholders who hold their shares through
a nominee or broker are invited to attend the meeting but must obtain a
signed proxy from the broker in order to vote in person. Election of directors
is by plurality vote, with the two nominees receiving the highest vote totals to
be elected as directors of TeamStaff. Accordingly, abstentions and broker
non-votes will not affect the outcome of the election of directors. Abstentions
and non-votes will, however, be considered as votes represented at the Annual
Meeting solely for quorum purposes.
TeamStaff will bear the cost of the solicitation of proxies by the
Board of Directors. The Board of Directors may use the services of its executive
officers and certain directors to solicit proxies from shareholders in person
and by mail, telegram and telephone. Arrangements may also be made with brokers,
fiduciaries, custodians, and nominees to send proxies, proxy statements and
other material to the beneficial owners of TeamStaff's common stock held of
record by such persons, and TeamStaff may reimburse them for reasonable out-of-
pocket expenses incurred by them in so doing.
The Annual Report to shareholders for the fiscal year ended September
30, 2002, including financial statements, accompanies this proxy statement.
The principal executive offices of TeamStaff are located at 300 Atrium
Drive, Somerset, New Jersey 08873; TeamStaff's telephone number is (732)
748-1700.
INDEPENDENT PUBLIC ACCOUNTANTS; FEES PAID
On April 10, 2002, the Board of Directors of TeamStaff and its Audit
Committee decided to change independent public accountants from Arthur Andersen
LLP to PricewaterhouseCoopers, LLP for the fiscal year ending September 30,
2002. The change was made due to the uncertainties surrounding Arthur Andersen
at the time.
Arthur Andersen's reports on TeamStaff's consolidated financial
statements for each of the years ended September 30, 2001 and 2000 did not
contain an adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope or accounting principles. During the
years ended September 30, 2001 and 2000 and through the date hereof, there were
no disagreements with Arthur Andersen on any matter of accounting principle or
practice, financial statement disclosure, or auditing scope or procedure which,
if not resolved to Arthur Andersen's satisfaction, would have caused them to
make reference to the subject matter in connection with their report on our
consolidated financial statements for such years; and there were no reportable
events as defined in Item 304(a)(1)(v) of Regulation S-K.
During the years ended September 30, 2001 and 2000 and through April
10, 2002 , TeamStaff did not consult PricewaterhouseCoopers with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
its consolidated financial statements, or any other matters or reportable events
as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
At a meeting held on December 10, 2002, prior to concluding their audit
for fiscal 2002,
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PricewaterhouseCoopers expressed its opinion to the Audit Committee of TeamStaff
that there were material weaknesses in TeamStaff's system of internal controls,
including the adequacy, competency and reliability of operational and financial
information, information systems and finance personnel. PricewaterhouseCoopers
further stated that information had come to its attention, that if further
investigated may materially impact the fairness or reliability of the previously
issued financial statements for fiscal year 2001 and/or the financial statements
to be issued for fiscal year 2002. PricewaterhouseCoopers also stated that due
to an accounting error in the treatment of a supplemental retirement plan, a
restatement and a reaudit of fiscal 2001 would be required but it declined the
engagement for the reaudit of fiscal year 2001.
In December 2002, PricewaterhouseCoopers further advised TeamStaff that
it believed it would be essential to employ a new Chief Financial Officer and
conditioned the continuance of its audit for fiscal 2002 on the employment of a
new Chief Financial Officer. PricewaterhouseCoopers acknowledged that in view
of the foregoing, it was likely that TeamStaff would be unable to make a timely
filing of its annual report for fiscal year 2002.
In response to the foregoing advice from PricewaterhouseCoopers, the
Audit Committee recommended to the Board of Directors that TeamStaff's Chief
Financial Officer, Donald T. Kelly, be relieved of his duties immediately, and a
search for a new Chief Financial Officer be commenced. The Board accepted and
implemented the recommendations of the Audit Committee in full. We are
aggressively recruiting a new Chief Financial Officer and have established, and
will continue to establish, new policies and procedures designed to improve the
reliability and reporting of operational and financial information.
Our consolidated financial statements for Fiscal 2001 were audited by
Arthur Andersen LLP which is no longer licensed to practice before the
Securities and Exchange Commission, and therefore, the restatement of Fiscal
2001 would require the reaudit of the Fiscal 2001 financial statements.
PricewaterhouseCoopers advised the Audit Committee that it would not accept an
engagement for the reaudit of Fiscal 2001 due to the internal control issues
described above. In light of the need to engage a new auditor for Fiscal 2001,
the Audit Committee determined that the interests of TeamStaff were best served
by engaging new independent accountants willing to audit both Fiscal 2001 and
Fiscal 2002.
On December 13, 2002 the Audit Committee dismissed
PricewaterhouseCoopers and engaged Lazar Levine & Felix LLP to serve as
TeamStaff's independent public accountants. In conducting the audit for fiscal
year ended September 30, 2002, Lazar expanded its testing of TeamStaff's
internal controls, including information technology controls, to include the
fiscal year ended September 30, 2001. This procedure was followed since the
Arthur Anderson LLP work papers were not readily available for review by Lazar
and to investigate the concerns regarding internal controls by
PricewaterhouseCoopers. As a result of this expanded testing, no material
weaknesses in the systems was revealed and, based on these results, Lazar
concluded that only an audit of one restatement adjustment, as discussed below,
was appropriate and not a full reaudit of the fiscal 2001 consolidated financial
statements.
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Prior to its dismissal, PricewaterhouseCoopers had advised the Audit
Committee that, in PricewaterhouseCoopers' opinion, TeamStaff should not have
applied pension plan accounting to its supplemental retirement plan adopted on
October 1, 2000, resulting in a material error requiring the restatement of the
fiscal year 2001 financial statements. This would have resulted in an additional
after-tax charge to earnings of approximately $408,000 in fiscal year 2001.
TeamStaff had engaged an independent firm to design the plan and had reviewed
the plan's accounting treatment with Arthur Andersen prior to its certification
of TeamStaff's fiscal year 2001 financial statements. Lazar has advised the
Audit Committee that it has undertaken its own analysis of the appropriate
accounting treatment for the supplemental retirement plan. Lazar has determined
that the plan is indeed a pension plan and TeamStaff has accounted for it as
such. Nevertheless, Lazar has determined that a restatement of TeamStaff's
fiscal 2001 financial statements is appropriate due to the omission of a note in
the fiscal year 2001 consolidated financial statements containing certain
required disclosures for the plan. Further, an adjustment in the expense
calculation of the plan resulted in a reduction in net income after-tax for
fiscal 2001 of $76,000 from $1,424,000 to $1,348,000.
In light of the foregoing, TeamStaff determined that the conclusions
reached by PricewaterhouseCoopers concerning TeamStaff's internal controls and
financial and operational systems were not supported by Lazar's independent
analysis or TeamStaff's own assessment of its financial and operational systems.
During the period of PricewaterhouseCoopers's engagement, which
commenced on April 10, 2002, there were no disagreements with
PricewaterhouseCoopers on any matter of accounting principle or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to PricewaterhouseCoopers's satisfaction, would have caused them to
make reference to the subject matter in connection with their report on
TeamStaff's consolidated financial statements. PricewaterhouseCoopers did not
report on our consolidated financial statements for any fiscal year.
PricewaterhouseCoopers expressed its opinion to the Audit Committee that there
are material weaknesses in our system of internal controls, including the
adequacy, competency and reliability of operational and financial information,
information systems and finance personnel, as described above.
During the years ended September 30, 2002 and 2001 and the interim
periods up to and including the date of Lazar's engagement, TeamStaff did not
consult Lazar with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on its consolidated financial statements, or any
other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii)
of Regulation S-K.
The Audit Committee has retained Lazar to serve as our independent
accountants for the fiscal year ending September 30, 2003. Shareholders are not
being asked to approve the selection of independent accountants for the fiscal
year ending September 30, 2003 because such approval is not required under our
Certificate of Incorporation or Bylaws. The audit services provided by Lazar
consist of examining financial statements, reviewing filings with the Securities
and Exchange Commission, and consulting in regard to various accounting matters
as
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permitted under the Sarbanes-Oxley Act of 2002. Representatives of Lazar are
expected to be present at the Annual Meeting, will have the opportunity to make
a statement if they so desire, and will be available to respond to appropriate
questions.
Audit Fees. During the fiscal year ended September 30, 2002, TeamStaff
paid and/or accrued an aggregate of $293,000 to PricewaterhouseCoopers, $15,000
to Arthur Andersen, and $195,000 to Lazar, Levine & Felix for fees related to
the audit of TeamStaff's financial statements.
Audit Related Fees. During the fiscal year ended September 30, 2002,
TeamStaff did not pay any additional fees to its auditing firms for any
assurance and related services related to such firms' audit services other than
as reported under the caption "Audit Fees."
Tax Fees. During the fiscal year ended September 30, 2002, TeamStaff
paid and/or accrued an aggregate of $26,000 to PricewaterhouseCoopers and
$104,000 to Lazar Levine & Felix for tax provision review and tax compliance
services.
All Other Fees. During the fiscal year ended September 30, 2002,
TeamStaff paid and/or accrued an aggregate of $231,000 in fees to
PricewaterhouseCoopers for various due diligence, advisory services and benefit
reconciliations.
The Audit Committee of the Board of Directors has determined that the
services provided by Lazar and the fees paid to it for such services has not
compromised the independence of Lazar.
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VOTING SECURITIES AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The securities entitled to vote at the Annual Meeting are TeamStaff's
common stock, $.001 par value. Each share of common stock entitles its holder to
one vote on each matter submitted to shareholders. The close of business on June
16, 2003 has been fixed as the Record Date for the determination of shareholders
entitled to notice of and to vote at the meeting and any adjournment thereof. As
of the Record Date, 15,676,172 shares of common stock were issued and
outstanding. Voting of the shares of common stock is on a noncumulative basis.
The following table sets forth certain information as of the Record
Date with respect to each director, each of the named executive officers as
defined in Item 402(a)(3), and directors and executive officers of TeamStaff as
a group, and to the persons known by TeamStaff to be the beneficial owner of
more than five percent of any class of TeamStaff's voting securities.
NUMBER OF SHARES PERCENT OF COMPANY'S
NAME CURRENTLY OWNED (1) OUTSTANDING STOCK
---- ------------------- ---------------------
Martin J. Delaney (2) 65,448 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Karl W. Dieckmann (3) 98,780 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Benjamin J. Dyer (4) 16,664 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Elizabeth Hoaglin (5) 67,428 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
T. Stephen Johnson (6) 269,011 1.72%
c/o T. Stephen Johnson & Associates, Inc.
3650 Mansell Road, Suite 200
Alpharetta, GA 30022
Donald W. Kappauf (7) 398,909 2.54%
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
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NUMBER OF SHARES PERCENT OF COMPANY'S
NAME CURRENTLY OWNED (1) OUTSTANDING STOCK
---- ------------------- ---------------------
Edmund Kenealy (8) 43,031 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Wayne Lynn (9) 87,120 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Rocco Marano (10) 2,000 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
Gerard Romano (11) 10,000 *
c/o TeamStaff, Inc.
300 Atrium Drive
Somerset, NJ 08873
First Union Private Capital (12) 3,263,017 20.94%
301 South College Street
NC 0009, Suite 4000
Charlotte, NC 28288
Nationwide Financial Services (13) 2,256,488 14.39%
One Nationwide Plaza
Mail Stop 01-12-13
Columbus, OH 43215
All officers and directors as a group 1,058,391 6.75%
(10) persons (2,3,4,5,6,7,8,9, 10, 11)
- --------------------------
* Less than 1 percent.
1. Ownership consists of sole voting and investment power except as
otherwise noted.
2. Includes options to purchase 13,213 shares of our common stock and
excludes unvested options to purchase 5,000 shares of common stock.
Also includes warrants to purchase 10,000 shares of common stock.
3. Includes options to purchase 12,586 shares of our common stock and
excludes unvested options to purchase 5,000 shares of common stock.
4. Excludes unvested options to purchase 5,000 shares of common stock.
5. Includes options to purchase 67,142 shares of our common stock.
6. Includes an aggregate of 147,790 shares owned by or on behalf of
certain of the holder's family members and as to which shares the
listed holder expressly disclaims beneficial ownership. Includes
options to purchase 5,000 shares of our common stock, and excludes
unvested options to purchase 5,000 shares of common stock.
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7. Includes options to purchase 271,427 shares of our common stock and
excludes unvested options to purchase 100,000 shares of common stock.
8. Includes options to purchase 35,000 shares of our common stock and
excludes unvested options to purchase 25,000 shares of common stock.
9. Includes options to purchase 55,000 shares of our common stock and
excludes unvested options to purchase 25,000 shares of common stock.
10. Includes warrants to purchase 2,000 shares of our common stock and
excludes unvested options to purchase 5,000 shares of common stock.
11. Includes options to purchase 10,000 shares of our common stock and
excludes unvested options to purchase 20,000 shares of common stock.
12. First Union Private Capital, an affiliate of First Union Corporation
(now known as Wachovia Corporation), obtained these shares in
connection with the acquisition of BrightLane completed as of August
31, 2001. Number of shares currently owned as reported by Wachovia
Corporation on Form 4/A filed June 20, 2003.
13. Nationwide Financial Services obtained these shares in connection with
the acquisition of BrightLane completed as of August 31, 2001.
CERTAIN REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires TeamStaff's directors and officers, and persons who own, directly or
indirectly, more than 10% of a registered class of TeamStaff's equity
securities, to file with the Securities and Exchange Commission reports of
ownership and reports of changes in ownership of common stock and other equity
securities of TeamStaff. Officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish TeamStaff with copies of all Section
16(a) forms that they file. Based solely on review of the copies of such reports
received by TeamStaff, TeamStaff believes that all Section 16(a) filing
requirements applicable to officers, directors and 10% shareholders were
complied with during the fiscal year ended September 30, 2002.
ELECTION OF DIRECTORS
GENERAL
Our Certificate of Incorporation provides for the classification of the
Board of Directors into three classes of Directors, each class as nearly equal
in number as possible but not less than one Director, each to serve for a
three-year term, staggered by class. The Certificate of Incorporation further
provides that any class of directors of TeamStaff may be removed by the
shareholders only for cause by the affirmative vote of the holders of at least
66-2/3% of the combined voting power of all outstanding voting stock, with
vacancies on the Board being filled only by the affirmative vote of a majority
of the remaining directors then in office, even if less than a quorum, or by the
sole remaining director.
The affirmative vote of a plurality of the outstanding shares of Common
Stock entitled to vote thereon, voting together as a single class at the Annual
Meeting of Shareholders is required to elect the directors. All proxies received
by the Board of Directors will be voted for the election as directors of the
nominees listed below if no direction to the contrary is given. In the event
that any nominee is unable to serve, the proxy solicited hereby may be voted, in
the discretion of the proxies, for the election of another person in his stead.
The Board of Directors
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knows of no reason to anticipate that this will occur. No family relationship
exists between any nominee for election as a director.
Pursuant to the terms of the Agreement and Plan of Merger dated as of
March 6, 2001 among TeamStaff, Inc., BrightLane.com, Inc., and TeamSub, Inc.
governing TeamStaff's acquisition of BrightLane, Wachovia Corporation had the
right to have two persons serve on the Board of Directors. These persons were
David Carroll and Donald MacLeod. However, during the 2002 fiscal year, both of
these persons resigned from the Board. As of the date of this Proxy Statement,
Wachovia has declined to appoint a replacement for either person and has advised
TeamStaff that it will forego its right with respect to one director. Similarly,
pursuant to the Agreement and Plan of Merger governing TeamStaff's acquisition
of BrightLane, Nationwide Financial Services, Inc., was granted the right to
have one person serve on our Board. This person was Susan Wolken who resigned
from the Board effective November 8, 2002. As of the date of this Proxy
Statement, Nationwide has not nominated a person to replace Ms. Wolken. In
addition, Mr. William J. Marino, who had served as director since 1995, resigned
from the Board of Directors on February 25, 2002.
Under TeamStaff's Bylaws (except for the position reserved for a
nominee of Wachovia and Nationwide), the remaining members of the Board of
Directors fill all vacancies on the Board of Directors. Any person nominated by
the Board of Directors to fill the vacancy will serve until completion of the
term of the Class member being filled. Mr. Benjamin J. Dyer was elected to the
Board to fill the vacancy created by the resignation of Mr. William Marino and
Mr. Rocco Marano was elected to the Board to fill the vacancy created by the
resignation of Mr. Donald MacLeod.
The terms of the Class 1 Directors expire at this Annual Meeting. The
present Directors of TeamStaff nominated for re-election to TeamStaff's Board of
Directors as the Class 1 Directors at the Annual Meeting are T. Stephen Johnson
and Benjamin J. Dyer.
Due to the resignations of four of our directors, as noted above, the
appointment of two new directors to replace them and the appointment of Mr. T.
Kent Smith as our Chief Executive Officer, President and as a Director, our
Board of Directors is currently constituted as set forth in the following table.
Class 1 Directors are the only Directors nominated for election at the Annual
Meeting.
DIRECTOR
POSITION WITH COMPANY CONTINUOUSLY TERM
NAME AND AGE SINCE EXPIRES
---- ----------------------- ------------- -------
CLASS 1 (NOMINEES FOR ELECTION)
-------------------------------------
T. Stephen Johnson Chairman of the Board of Directors, 53 2001 2003
Benjamin J. Dyer Director, 54 2002 2003
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CLASS 2
Karl W. Dieckmann Vice Chairman, 74 1990 2004
Donald Kappauf Director, 56 1998 2004
CLASS 3
Rocco Marano Director, 74 2002 2005
Martin Delaney Director, 59 1998 2005
T. Kent Smith Director, 46 2003 2005
MARTIN J. DELANEY joined the Board of Directors in July 1998. Mr.
Delaney is an attorney and in 1971 began a prominent career as a healthcare
executive.. He has been a director of a large regional Health Maintenance
Organization on Long Island, the Hospital Association of New York State, the
Greater New York Hospital Association, and chairman of the Nassau-Suffolk
Hospital Council. He has been President, CEO and a director of Winthrop
University Hospital, Winthrop South Nassau University Health Care Systems, and
the Long Island Health Network. He has a graduate degree in health care
management from The George Washington University and a law degree from St.
John's University. He has been admitted to practice in New York State and
federal courts.
KARL W. DIECKMANN, a Director of TeamStaff since April 1990, had been
Chairman of the Board from November 1991 until September 2001 and has been Vice
Chairman since September 2001. From 1980 to 1988, Mr. Dieckmann was the
Executive Vice President of Science Management Corporation and managed the
Engineering, Technology and Management Services Groups. From 1948 to 1980, Mr.
Dieckmann was employed by the Allied Signal Corporation (now Honeywell
Corporation) in various capacities including President, Semet Solvay Division;
Executive Vice President, Industrial Chemicals Division; Vice President
Technical -- Fibers Division; Group General Manager -- Fabricated Products
Division; and General Manager -- Plastics Division, as well as various positions
with the Chemicals Division.
BENJAMIN J. DYER joined the Board of Directors in December 2002. Mr.
Dyer is currently a general partner of Cordova Intellimedia Ventures and is
President of Innovations Publishing, LLC, an Atlanta based company, which
provides a subscription-based online catalog of emerging technology ventures. He
also chairs the editorial boards of Catalyst and Business-to-Business magazines
in Atlanta. In the 1980s Mr. Dyer served as chairman and CEO of Comsell, Inc., a
pioneering multimedia development firm and was president and a director of the
de novo Enterprise National Bank. Mr. Dyer founded Intellimedia Sports, Inc. in
1992 to create the ESPN-branded sports instruction category in the CD-ROM
industry. He was earlier a founder of Peachtree Software, Inc. and served as its
President from 1977 to September 1983. He
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currently serves on a number of private boards including eBroadcasters, PMFM,
Quellan and FundRaisingInfo.com. He concentrates his community activities on
higher education and has been president of the Georgia Tech Alumni Association,
a director of the Georgia Tech Foundation and chairman of the Alumi Advisory
Board for Tech's School of Industrial & Systems Engineering. He is currently
Chairman of the Georgia Tech Research Corporation and serves on the advisory
boards of the Georgia Tech Research Institute and Georgia State University's
Robinson College of Business. Mr. Dyer holds a Bachelors degree in Industrial
Engineering from Georgia Tech and an MBA in finance from Georgia State
University
ELIZABETH L. HOAGLIN joined TeamStaff as President of the TeamStaff Rx
Division in 1994, when we acquired RADS Technology, Inc. ("RADS"), of which she
was President and founder. Ms. Hoaglin established RADS in 1980 in Clearwater,
FL. This was the first temporary staffing firm that specialized in placing
radiology professionals. In 1983, RADS began providing traveler technologists to
hospitals and clinics nationwide. In 1984, RADS began staffing radiation
therapy, providing a niche market for Therapists, Dosimetrists and Medical
Physicists. Prior to starting RADS, Ms. Hoaglin was a Radiological Technologist
herself, graduating from Saint Anthony's Hospital in St. Petersburg, Florida.
Ms. Hoaglin worked as a technologist for major hospitals and physicians office
for over fifteen years. Ms. Hoaglin is active in numerous professional, business
and civic organizations and frequently writes articles for publication in the
radiology industry's journals.
T. STEPHEN JOHNSON has been Chairman of the Board of TeamStaff since
September 2001. He has served as Chairman of T. Stephen Johnson & Associates,
Inc., a financial services consulting firm, and its related entities since
inception in 1986. Mr. Johnson is a long-time banking consultant and Atlanta
entrepreneur who has advised and organized dozens of community banks throughout
the Southeast. He is Chairman Emeritus and a Director of Netbank, as well as
Chairman and principal owner of Bank Assets, Inc., a provider of benefit
programs for directors and officers of financial institutions. Mr. Johnson is
Chairman of the Board of Director, Inc., a company specializing in providing
financial services for unbanked individuals and Vice Chairman of Florida Bank.
DONALD W. KAPPAUF served as the President and Chief Executive Officer
of TeamStaff from December 16, 1997 until June 18, 2003, when he agreed to
relinquish such offices. Mr. Kappauf continues to serve as member of our Board
of Directors. Mr. Kappauf joined TeamStaff in 1990 and has held several senior
management positions including Division President and Executive Vice President.
From 1988 to 1990, Mr. Kappauf was President of Perm Staff/Temp Staff in
Princeton, New Jersey. He was Assistant Vice President of SMC Engineering and
then President of SMC Personnel Support.
EDMUND C. KENEALY has been Vice President, General Counsel of TeamStaff
since November 2001 and Secretary since February 2003. Mr. Kenealy joined
TeamStaff as Vice President, Legal & Regulatory Affairs (PEO Division) in
October 2000 upon its acquisition of HR2, Inc., where he was Vice President,
General Counsel and Vice President, Operations. Prior to joining HR2, Inc. in
April 1998, Mr. Kenealy was Assistant General Counsel of
11
ManagedComp, Inc. from 1993 to 1998. He was previously associated with the
Boston offices of Nutter, McClennen & Fish and Skadden, Arps, Slate, Meagher &
Flom. He is a graduate of Dartmouth College and the Vanderbilt University School
of Law. He is admitted to practice in Massachusetts and the District of
Columbia.
WAYNE R. LYNN joined TeamStaff as Area Vice President in October 2000,
when we acquired HR2, Inc., of which he was Chief Executive Officer and a
principal owner. In March 2002, Mr. Lynn was appointed Chief Operating Officer
of our PEO Division. Prior to his 7-year involvement in the PEO industry, Mr.
Lynn was engaged in the insurance industry for more than 20 years. He served as
President and CEO of Founders Financial Corporation, a publicly owned insurance
holding company, from 1981 to 1987 and as President and CEO of Capital Investors
Life Insurance Company from 1987 to 1994. He also served on the Board of
Directors of Gulf/Bay Bank of Tampa, Florida, and South Trust Bank of Florida.
Mr. Lynn is a graduate of the U.S. Naval Academy, the U.S. Navy Supply Corps
School, and the U.S. Navy Transportation Management School. Mr. Lynn has also
completed numerous graduate level business management courses at the California
State University at Hayward, California. He has held licenses to sell Life,
Health, and Property/Casualty Insurance, Variable Annuities and Securities. He
is currently licensed as an insurance third-party administrator.
ROCCO MARANO served as member of the Board of Directors from July 1999
thru September 2001. He rejoined the Board of Directors in November 2002. Mr.
Marano, a prominent telecommunications executive, is the retired chairman and
President of Bellcore, Inc. a Bell Communications research and engineering
entity formerly owned by the seven Bell regional communications companies. His
present additional board affiliations include computer Horizons Corp. He has
also served as Chairman of Horizon Blue Cross/Blue Shield of New Jersey.
GERARD A. ROMANO has been Corporate Controller of TeamStaff since he
joined TeamStaff in September 2001. Prior to joining TeamStaff, he was Vice
President of Administration at Jet Aviation from December of 2000 to September
of 2001. Prior to Jet Aviation, he was employed by the PQ Corporation from
January of 1980 through December of 2000, where he held various positions
including Vice President and Chief Financial Officer of PQ's European Joint
Venture, Akzo-PQ Silica, Director of Corporate Development and Director of
Financial Planning and Analysis. He is a graduate of William Paterson
University.
T. KENT SMITH was appointed as our Chief Executive Officer, President
and a member of our Board of Directors on June 18, 2003. From January 2000 to
January 2003, Mr. Smith served as the President of HoneyBaked Ham Company and
Chief Executive Officer of the Heavenly Ham Company. From 1998 to 1999, Mr.
Smith was the Senior Vice President of Organization Serv. Prior to that, Mr.
Smith served in various executive positions for Norrell Corporation from 1987 to
1998, including Senior Vice President, Service Operations, Vice President and
Chief Information Officer and Vice President, Finance & Strategic Planning. Mr.
Smith received a Masters in Business Administration from the University of
Virginia and is a graduate of Vanderbilt University.
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Steven Johnson, Karl W. Dieckmann and Martin J. Delaney served on the
Compensation Committee during the fiscal year ended September 30, 2002. There
are no interlocks between TeamStaff's Directors and Directors of other
companies.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended September 30, 2002, the Board of Directors
met on 8 occasions, one of which was by telephone conference call.
The Board of Directors has four committees: Audit, Compensation,
Executive and Nominating Committees.
For the fiscal year ended September 30, 2002, the members of the
committees, and a description of the duties of the Committees were as follows:
Audit Committee. TeamStaff's audit committee acts to: (i) review with
management the finances, financial condition and interim financial statements of
TeamStaff; (ii) review with TeamStaff's independent auditors the year-end
financial statements; and (iii) review implementation with the independent
auditors and management any action recommended by the independent auditors and
the retention and termination of our independent auditors. During the fiscal
year ended September 30, 2002, the audit committee met on six occasions.
The audit committee adopted a written charter governing its actions
effective June 14, 2000. The board has adopted a new charter, and we have
attached a copy to this proxy statement as Exhibit A. During the fiscal year,
the members of the audit committee were Donald McLeod, Martin Delaney and Susan
Wolken. All three of these members of TeamStaff's audit committee were
"independent" within the definition of that term as provided by Rule 4200(a)(14)
of the listing standards of the National Association of Securities Dealers.
Donald McCleod and Susan Wolken have resigned from the Board and are no longer
members of the audit committee. Audit committee members as of the Record Date
are Martin Delaney, Karl W. Dieckmann, T. Stephen Johnson, and Rocco J. Marano.
Mr. Delaney was elected as its chairman. All of the current members of our Audit
Committee are "independent" within the definition of that term as provided by
Rule 4200(a)(14) of the listing standards of the National Association of
Securities Dealers.
The audit committee report, with respect to the audit of our financial
statements as of and for the year ended September 30, 2002, is as follows. The
audit committee hereby states that it:
- has reviewed and discussed the audited financial statements with
TeamStaff's management;
13
- has discussed with TeamStaff's independent auditors the matters
required to be discussed by SAS 61, as may be modified or supplemented;
- has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1,
as may be modified or supplemented, and has discussed with the independent
accountants the independent accountant's independence; and
- has recommended to the board of directors of TeamStaff that the
audited financial statements be included in TeamStaff's Annual Report on Form
10-K for the fiscal year ended September 30, 2002 for filing with the
Commission.
This report of the audit committee does not constitute soliciting material and
should not be deemed filed or incorporated by reference into any other filing by
us under the Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended, except to the extent we specifically incorporate this
report by reference therein.
The Audit Committee
Martin Delaney
Karl W. Dieckmann
T. Stephen Johnson
Rocco J. Marano
Compensation Committee. The compensation committee functions include
administration of TeamStaff's 2000 Employee Stock Option Plan and Non-Executive
Director Stock Option Plan and negotiation and review of all employment
agreements of executive officers of TeamStaff. The compensation committees'
members are Karl W. Dieckmann, T. Stephen Johnson and Martin J. Delaney. Karl W.
Dieckmann was elected as its chairman. During the fiscal year ended September
30, 2002, the committee met on 4 occasions.
Nominating Committee. The nominating committee functions include the
review of all candidates for a position on the board of directors including
existing directors for renomination and reports its findings with
recommendations to the Board. The nominating committee solicits candidates on
behalf of TeamStaff to fill any vacancy on the Board. The nominating committee
performs such other duties and assignments as directed by the Chairman or the
Board but shall have no power to add or remove a director without the approval
of the Board. During the fiscal year, the nomination committee members were
Donald W. Kappauf and Susan A. Wolken. During the fiscal year ended September
30, 2002, the committee did not meet. Susan Wolken has resigned from the Board
and is no longer a member of the nominating committee. Nominating committee
members as of December 30, 2002 are Karl W. Dieckmann, T. Stephen Johnson and
Donald W. Kappauf. Karl W. Dieckmann was elected the Nomination Committee's
chairman.
14
Executive Committee. The Board of Directors created an Executive
Committee effective September 4, 2001. The members are T. Stephen Johnson, Karl
W. Dieckmann and Donald W. Kappauf. T. Stephen Johnson serves as its chairman.
This committee met 4 times via telephone during the fiscal year ended September
30, 2002.
No member of the Board of Directors or any committee failed to attend
or participate in fewer than 75% of the meetings of the Board or of a committee
on which such member serves.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following provides certain summary information concerning
compensation paid or earned by TeamStaff during the years ended September 30,
2002, 2001 and 2000 to TeamStaff's Chief Executive Officer and each of the
executive officers of TeamStaff who received in excess of $100,000 in
compensation during the last fiscal year.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------
AWARDS
----------------------------------------- -------------------------------------------
SECURITIES
OTHER ANNUAL RESTRICTED STOCK UNDERLYING OPTIONS/
SALARY BONUS COMPENSATION AWARD(S) SARS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#)
(A) (B) (C) (D) (E) (F) (G)
- ---------------------------- ---- -------- -------- ------------- ---------------- -------------------
Donald W. Kappauf, 2002 $300,000 $477,500 $ 26,163 $ -- 0
Chief Executive Officer 2001 $267,130 $200,000 $ 46,268 $ -- 300,000
(1) 2000 $230,126 $ 0 $ 17,251 $ -- 57,143
Donald T. Kelly,
Chief Financial Officer (2) 2002 $200,000 $151,250 $ 18,205 $ -- 0
2001 $177,247 $100,000 $ 18,172 $ -- 150,000
2000 $165,000 $ 0 $ 12,231 $ -- 14,286
Elizabeth Hoaglin,
President, TeamStaff Rx 2002 $114,250 $149,289 $ 3,600 $ -- 50,000
Division 2001 $ 95,159 $173,885 $ 3,600 $ -- 10,000
2000 $ 86,662 $ 92,050 $ 3,600 $ -- 4,286
Edmund Kenealy,
Vice-President, General 2002 $135,000 $ 25,000 $ 15,859 $ -- 50,000
Counsel and Secretary 2001 $100,000 $ 15,000 $ 15,859 $ -- 10,000
Wayne Lynn, Chief Operating
Officer, PEO Division 2002 $139,615 $ 30,000 $ 15,589 $ -- 50,000
2001 $117,949 $ 5,000 $ 15,589 $ -- 10,000
15
- ----------------------------
(footnotes from table on preceding page)
(1) Donald W. Kappauf relinquished the positions of President and Chief
Executive Officer on June 18, 2003. Mr. Kappauf continues to be a TeamStaff
employee.
(2) Donald T. Kelly was relieved of his responsibilities as Vice President,
Chief Financial Officer and Secretary effective December 10, 2002. Mr.
Kelly continues to be a TeamStaff employee, although he has given notice
that he will terminate his employment on July 2, 2003.
TeamStaff provides normal and customary life and health insurance
benefits to all of its employees including executive officers. TeamStaff has a
401(k) plan that is voluntary.
COMPENSATION OF DIRECTORS
During the fiscal year ended September 30, 2002, the Chairman and
Vice-Chairman of the Board each received $2,500 per month. Non-Employee
Directors receive $1,500 per board meeting and $1,000 per non-board meeting,
related travel expenses, and $600 for each committee meeting attended. Directors
may also receive $1,000 per meeting with executives, which do not constitute
Board or Committee meetings. TeamStaff's Non-Executive Director Stock Option
Plan also provides that directors, upon joining the Board, and for one year
thereafter, will be entitled to purchase restricted stock from TeamStaff at a
price equal to 80% of the closing bid price on the date of purchase up to an
aggregate purchase price of $50,000.
Effective November 19, 2002, the board established new cash
compensation terms for the members of the Board and committees. The Chairman and
Vice-Chairman of the Board each receive $3,000 per month. The Chairman of the
Audit Committee receives $2,500 per month. All other independent Directors
receive $1,667 per month, and $1,500 for each board meeting attended, $600 for
each committee meeting attended, plus related travel expenses. The Chairman of
all other committees receives $1,000 for each committee meeting attended.
EMPLOYMENT AGREEMENTS
TeamStaff entered into an employment agreement with Mr. Donald Kappauf,
TeamStaff's former President and Chief Executive Officer effective April 2, 2001
and terminating on September 30, 2003. As of June 18, 2003, Mr. Kappauf agreed
to relinquish his position as President and Chief Executive Officer of
TeamStaff. Mr. Kappauf remains a TeamStaff employee.
Under the terms of this agreement, Mr. Kappauf's base compensation was
initially $230,000, increasing to $300,000 commencing September 1, 2001, and
subject to yearly increases thereafter at the discretion of the compensation
committee. For the fiscal year ended September 30, 2002, Mr. Kappauf received a
base salary of $300,000. Mr. Kappauf is also entitled to an annual bonus based
on the achievement of certain performance criteria as determined by the
compensation committee.
In addition, Mr. Kappauf received certain other benefits including
insurance benefits as
16
are provided to all other executives, a car lease allowance in the maximum
amount of $1,000 per month, participation in the supplemental executive
retirement plan and a split dollar life insurance arrangement. The agreement
also provided for the grant of 300,000 stock options, which vested in annual
increments of one third commencing on the date of the agreement. TeamStaff also
entered into a severance agreement with Mr. Kappauf, as described below, which
governs the termination of his employment and certain other events including a
change of control of TeamStaff.
TeamStaff entered into an employment agreement with Mr. Donald Kelly,
TeamStaff's former Chief Financial Officer, effective April 2, 2001 and
terminating on September 30, 2003. In June 2003, Mr. Kelly notified TeamStaff
that he would be terminating his employment on July 2, 2003 purportedly for
"good reason," as defined in his severance agreement, as described below.
Under the terms of his employment agreement, Mr. Kelly's base
compensation was initially $170,000, increasing to $200,000 commencing September
1, 2001, and subject to yearly increases thereafter at the discretion of the
compensation committee. For the fiscal year ended September 30, 2002, Mr. Kelly
received a base salary of $200,000. Mr. Kelly is also entitled to a bonus based
on the achievement of certain performance criteria as determined by the
compensation committee.
In addition, Mr. Kelly received certain other benefits including
insurance benefits as are provided to all other executives, a car allowance in
the amount of $800 per month, participation in the supplemental executive
retirement plan and a split dollar life insurance arrangement. The agreement
also provided for the grant of 150,000 stock options, which vested in annual
increments of one third commencing on the date of the agreement. TeamStaff also
entered into a severance agreement with Mr. Kelly, as described below, which
governs the termination of his employment and certain other events including a
change of control of TeamStaff.
The split dollar life insurance agreements and supplemental retirement
plan were approved by the Compensation Committee of the Board during the 2000
fiscal year and implemented effective October 1, 2000. Under the terms of the
SERP, a participant receives a benefit sufficient to provide lump sum annual
payments equal to approximately one-third of the participant's base salary on
the date the participant becomes a participant. Payment of benefits commences
when the participant reaches 65 years of age. The benefit under the SERP is
subject to a seven-year vesting schedule (0%, 0%, 20%, 40%, 60%, 80%, 100%),
based on the participant's original date of employment with TeamStaff and
contingent on the participant's reaching age 55; provided, however, a
participant's benefit becomes fully vested upon a change of control, as defined
in the SERP, if within two years of the change of control there is a material
change in the participant's job title or responsibilities or if the
participant's employment is terminated by TeamStaff for any reason other than
conviction for theft or embezzlement from TeamStaff. Additionally, if a
participant retires by means of total disability (as defined in the
17
SERP), the participant's benefit becomes fully vested and benefit payments
commence as of the disability retirement date. The SERP does not provide a death
benefit. Mr. Kappauf and Mr. Kelly are the only SERP participants at the present
time.
SERP participants also are provided with a split dollar life
insurance policy, insuring the life of the participant until the participant
reaches age 65. Although the participant is the owner of the Policy, TeamStaff
pays all Policy premiums. Each participant has collaterally assigned the Policy
to TeamStaff to secure repayment of the premiums through either its cash
surrender value or the Policy proceeds. The participant's right to the Policy
vests in accordance with the same schedule as the SERP and with similar change
of control provisions. Upon the participant's 65th birthday (and in certain
other circumstances provided by the Policy agreement), TeamStaff will release
the collateral assignment of the Policy provided the participant releases
TeamStaff from all obligations it may have with respect to the participant
(including those under the SERP). However, given the uncertainty of TeamStaff's
ability to continue to maintain this payment arrangement in light of certain of
the provisions of the Sarbanes-Oxley Act of 2002, TeamStaff had, with the
President and Chief Executive Officer's consent, deferred paying Policy premiums
on behalf of the Chief Executive Officer, pending review of the SERP to comply
with the Sarbanes-Oxley Act. For the fiscal quarter ended December 31, 2002,
TeamStaff paid the Chief Executive Officer a bonus in the amount of the Policy
premiums, grossed-up to cover allocable income taxes.
Pursuant to the severance agreement with Mr. Kappauf, in the event he
is terminated for cause, he will be entitled only to his accrued compensation,
which means his base salary, reimbursement of business expenses, vacation pay
and earned but unpaid bonuses to the date of termination. "Cause" is defined to
include conviction of a felony, an intentional and continual failure to
substantially perform his duties or an intentional failure to follow or perform
a lawful direction of the Board of Directors. If Mr. Kappauf is terminated for
disability or death, he will be entitled to his accrued compensation and certain
other payments, such as the pro rata bonus amount. The pro rata bonus amount is
defined as the amount equal to the greater of the most recent annual bonus
amount paid or the annual bonus paid or payable for the full fiscal year ended
prior to the termination, in either case pro-rated through the date of death or
disability. In the event that Mr. Kappauf's employment terminates for any other
reason, the agreement provides for payment of his accrued compensation, a pro
rata bonus amount, a bonus amount allocated to the remainder of the term of his
employment agreement, his base salary through the remainder of the term of his
employment agreement, a severance payment equal to one year's base compensation,
a payment equal to the cost of health and other similar benefits for a period of
two years and costs associated with outplacement services.
Until June 18, 2003, Mr. Kappauf held the positions of President and
Chief Executive Officer of TeamStaff. In light of the circumstances regarding
the relinquishment by Mr. Kappauf of his positions, Mr. Kappauf may have reason
to terminate his employment with TeamStaff for "good reason" and exercise his
rights under the severance agreement. The term good reason includes "a change in
the [e]xecutive's status, title, position or responsibilities . . . ."
18
Additionally, the change in Mr. Kappauf's duties has caused his benefits under
the SERP to become fully vested. In the event that Mr. Kappauf exercises these
rights, such termination is deemed proper, and Mr. Kappauf is eligible to
receive all potential compensation under the severance agreement and the SERP,
TeamStaff may be required to make payments, either directly to Mr. Kappauf, in
the case of the severance agreement, or to a trust, in the case of any payments
to be made pursuant to the SERP.
The severance agreement with Mr. Kelly has terms which are
substantially similar to those described above for Mr. Kappauf. Until December
10, 2002, Mr. Kelly held the positions of Chief Financial Officer, Vice
President, Finance and Secretary of TeamStaff. In June 2003, Mr. Kelly notified
the Board of Directors that he will terminate his employment, effective July 2,
2003, for "good reason" and intends exercise his rights under the severance
agreement. The term good reason includes "a change in the [e]xecutive's status,
title, position or responsibilities . . . ." Additionally, the removal of Mr.
Kelly from his duties may have caused his benefits under the SERP to become
fully vested. In the event that Mr. Kelly's exercise of these rights is
appropriate, such termination is deemed proper, and Mr. Kelly is eligible to
receive all potential compensation under the severance agreement and the SERP,
TeamStaff may be required to make payments, either directly to Mr. Kelly, in the
case of the severance agreement, or to a trust, in the case of any payments to
be made pursuant to the SERP.
On June 18, 2003, T. Kent Smith was appointed TeamStaff's President and
Chief Executive Officer at an initial annual base salary of $250,000. Mr. Smith
was also appointed to TeamStaff's Board of Directors. Mr. Smith is eligible to
receive a bonus of up to 50% of his base salary based on the achievement of
revenue, income and other objectives established by the Compensation Committee.
Mr. Smith also will be granted an option to purchase 400,000 shares of TeamStaff
common stock, one-fourth of which vested on June 18, 2003, one-fourth of which
will vest one year thereafter, and the remainder of which will vest on June 18,
2005. Mr. Smith also receives four weeks annual vacation and is offered
insurance benefits generally made available to other members of TeamStaff's
senior management. Mr. Smith and TeamStaff currently are negotiating the
specific terms of a written employment agreement that will have an expiration
date of September 30, 2005.
Effective January 1, 2003, TeamStaff entered into a one-year employment
agreement with Elizabeth Hoaglin pursuant to which Ms. Hoaglin currently serves
as President, TeamStaff Rx, Inc., at an annual salary of $130,000. In addition,
Ms. Hoaglin is entitled to receive a bonus to be determined based on the
achievement of certain performance criteria determined as of the commencement of
each fiscal year. Ms. Hoaglin receives certain other benefits granted to other
members of TeamStaff's senior management, including health and other insurance
benefits, as well as a car allowance of $300 per month and four weeks annual
vacation.
Effective January 1, 2003, TeamStaff entered into a one-year employment
agreement with Edmund C. Kenealy pursuant to which Mr. Kenealy currently serves
as Vice President, General Counsel, at an annual salary of $160,000. In
addition, Mr. Kenealy is entitled to receive
19
an increase in annual compensation as of October 1, 2003 and a bonus to be
determined based on the achievement of certain performance criteria determined
as of the commencement of each fiscal year. Mr. Kenealy receives certain other
benefits granted to other members of TeamStaff's senior management, including
health and other insurance benefits, as well as a car allowance of $500 per
month and three weeks annual vacation.
Effective January 1, 2003, TeamStaff entered into a one-year employment
agreement with Wayne R. Lynn pursuant to which Mr. Lynn currently serves as
Chief Operating Officer of TeamStaff's PEO Division, at an annual salary of
$150,000 . In addition, Mr. Lynn is entitled to receive a yearly increase in
annual compensation as of March 19, 2003 and a bonus to be determined based on
the achievement of certain performance criteria determined as of the
commencement of each fiscal year. Mr. Lynn receives certain other benefits
granted to other members of TeamStaff's senior management, including health and
other insurance benefits, as well as a car allowance of $500 per month and three
weeks annual vacation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the compensation committee of the Board of
Directors of TeamStaff. During the fiscal year ended September 30, 2002, the
compensation committee was responsible for reviewing TeamStaff's stock plans and
reviewing and approving compensation matters concerning the executive officers.
Overview and Philosophy. TeamStaff uses its compensation program to
achieve the following objectives:
- To provide compensation that attracts, motivates and retains
the talented, high caliber officers and employees necessary to
achieve TeamStaff's strategic objectives, as determined by the
compensation committee;
- To align the interest of officers with the success of
TeamStaff;
- To align the interest of officers with stockholders by
including long-term equity incentives; and
- To increase the long-term profitability of TeamStaff and,
accordingly, increase stockholder value.
Compensation under the executive compensation program is comprised of
cash compensation in the form of base salary, bonus compensation and long-term
incentive awards, generally in the form of options to purchase common stock. In
addition, the compensation program includes various other benefits, including
medical and insurance plans, TeamStaff's
20
401(k) Plan and the employee stock option incentive plans, which plans are
generally available to all employees of TeamStaff. In addition, the committee
considers the eligibility of certain executive officers in a supplemental
retirement plan ("SERP") as discussed below.
The principal factors which the compensation committee considered with
respect to each officer's compensation package for fiscal year ended September
30, 2002 are summarized below. The compensation committee may, however, in its
discretion, apply different or additional factors in making decisions with
respect to executive compensation in future years.
Base Salary. Compensation levels for each of TeamStaff's officers,
including the Chief Executive Officer, are generally set within the range of
salaries that the compensation committee believes are paid to officers with
comparable qualifications, experience and responsibilities at similar companies.
In setting compensation levels, the compensation committee takes into account
such factors as (i) TeamStaff's past performance and future expectations, (ii)
individual performance and experience and (iii) past salary levels. The
compensation committee does not assign relative weights or ranking to these
factors, but instead makes a determination based upon the consideration of all
of these factors as well as the progress made with respect to TeamStaff's
long-term goals and strategies. Base salary, while reviewed annually, is only
adjusted as deemed necessary by the compensation committee in determining total
compensation for each officer. Base salary levels for each of TeamStaff's
officers, other than the Chief Executive Officer, were also based in part upon
evaluations and recommendations made by the former Chief Executive Officer.
Additionally, certain executives, including Donald Kappauf, the former President
and Chief Executive Officer, Donald Kelly, the former Chief Financial Officer,
have existing employment agreements with TeamStaff which set forth certain
levels of base salary and bonus compensation.
Equity Incentives. The compensation committee believes that stock
participation aligns officers' interests with those of the stockholders. In
addition, the compensation committee believes that equity ownership by officers
help to balance the short-term focus of annual incentive compensation with a
longer-term view and may help to retain key executive officers. Long-term
incentive compensation, generally granted in the form of stock options, allows
the officers to share in any appreciation in the value of TeamStaff's common
stock.
In making stock option grants, the compensation committee considers
general corporate performance, individual contributions to TeamStaff's
financial, operational and strategic objectives, the Chief Executive Officer's
recommendations, level of seniority and experience, existing levels of stock
ownership, previous grants of restricted stock or options, vesting schedules of
outstanding restricted stock or options and the current stock price. With
respect to the compensation determination for the fiscal year ended September
30, 2002, the compensation committee believes that the current stock ownership
position of the executive officers was sufficient to achieve the benefits
intended by equity ownership. During the fiscal year ended September 30, 2002,
the compensation committee approved the grant of 256,430 options,
21
150,000 of which were granted to executive officers.
Other Benefits. TeamStaff also has various broad-based employee benefit
plans. Executive officers participate in these plans on the same terms as
eligible, non-executive employees, subject to any legal limits on the amounts
that may be contributed or paid to executive officers under these plans.
TeamStaff offers a stock incentive plan and a 401(k) plan, which allows
employees to invest in a wide array of funds on a pre-tax basis. TeamStaff also
maintains insurance and other benefit plans for its employees, including
executive officers of TeamStaff.
The compensation committee determined that the 401(k) plan did not
provide sufficient retirement benefits to its top executive officers, including
its former Chief Executive Officer and former Chief Financial Officer.
Accordingly, during the fiscal year ended September 30, 2001, the compensation
committee created the supplemental retirement plan or SERP to provide retirement
benefits comparable with plans offered executives in comparable positions at
other companies. Each corporate executive whose eligibility is specifically
approved by the Compensation Committee will receive a benefit (subject to
certain vesting criteria) sufficient to provide lump sum annual payments equal
to approximately one-third of the participant's base salary in effect on the
date the participant enters the Plan for a period of 15 years, and a death
benefit payable to the participant's beneficiaries. Payment of benefits
commences upon the executive's reaching 65 years of age. The commencement of
benefit payments is accelerated in the event the participant becomes totally
disabled prior to retirement. A split dollar life insurance policy also is in
place for each participant. The split dollar life insurance policy is designed
to provide either a death benefit if the employee dies prior to retirement age,
or, if the employee attains retirement age, the funds necessary for the payment
of the SERP retirement benefit at retirement through the application of the
policy's cash surrender value. At the present time, Donald Kappauf and Donald
Kelly are the only participants in the SERP. The SERP plan became effective on
October 1, 2000.
Chief Executive Officer Compensation. In the fiscal year ended
September 30, 2002, Mr. Donald Kappauf, TeamStaff's former Chief Executive
Officer, received a salary of $300,000, which represents an increase of
approximately 12% from the prior year. In the fiscal year ended September 30,
2001, Mr. Kappauf received a base salary of $267,130, which represents a 16%
increase from his base salary in the fiscal year ended September 30, 2000. The
base salary is believed by the compensation committee to be consistent with the
range of salary levels received by executives in a similar capacity in companies
of comparable size. In addition, Mr. Kappauf received an annual bonus of
$302,500 during the fiscal year ended September 30, 2002. The terms of Mr.
Kappauf's employment compensation are determined primarily pursuant to his
employment agreement, which was entered into in April 2001. Among other things,
the employment agreement provides for the payment of certain bonuses based upon
performance by TeamStaff, including earnings per share. The bonus payment was
made in accordance with the employment agreement terms. Mr. Kappauf also
received a special bonus of $175,000 to reward Mr. Kappauf for the extraordinary
efforts and success in securing a new workers'
22
compensation policy for TeamStaff.
Additionally, in May 2002, the Committee approved severance agreements
for each of Mr. Kappauf, the former Chief Executive Officer, and Mr. Kelly, the
former Chief Financial Officer during the fiscal year ended September 30, 2002.
The Committee determined that these officers were essential to TeamStaff, and
that their continued retention, especially in the event of a threat of a change
of control of TeamStaff, necessitated that these executives be eligible for
added compensation under certain conditions. The Committee believed that several
factors out of the control of TeamStaff and management made a potential change
of control possible. These factors included the falling stock market generally,
and the falling price of TeamStaff's stock, even though the financial condition
and performance of TeamStaff had improved over prior years. The severance
agreements also provide for additional financial and employment security under
other conditions, such as termination without cause.
Tax Deductibility of Executive Compensation. Section 162(m) of the Code
limits the tax deduction to TeamStaff to $1 million for compensation paid to any
of the executive officers unless certain requirements are met. The compensation
committee has considered these requirements and the regulations. It is the
compensation committee's present intention that, so long as it is consistent
with its overall compensation objectives, substantially all executive
compensation be deductible for United States federal income tax purposes. The
compensation committee believes that any compensation deductions attributable to
options granted under the employee stock option plan currently qualify for an
exception to the disallowance under Section 162(m). Future option grants to
executive officers under each of TeamStaff's employee stock option plans will be
granted by the compensation committee.
By the Compensation Committee
of the Board of Directors of
TeamStaff, Inc.
T. Stephen Johnson
Karl W. Dieckmann
Martin Delaney
23
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
TERM
-----------------------------
NO. OF PERCENTAGE OF EXERCISE OF
SECURITIES TOTAL OPTIONS/ BASE PRICE
UNDERLYING GRANTED IN FISCAL PER SHARE EXPIRATION DATE 5% ($) 10% ($)
NAME OPTIONS GRANTED YEAR (F) (G)
- ---- --------------- ----------------- ------------ --------------- ------- --------
Donald Kappauf 0 0% N/A N/A
Donald Kelly 0 0% N/A N/A
Elizabeth Hoaglin 50,000 19% $6.15 10/02/2007 $85,000 $188,000
Edmund Kenealy 50,000 19% $6.60 10/01/2007 $91,000 $201,000
Wayne Lynn 50,000 19% $5.36 03/19/2007 $74,000 $124,000
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information with respect to the named
executive officers concerning exercise of stock options and SARs during the last
fiscal year and the value of unexercised options and SARs held as of the year
ended September 30, 2002.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS SEPTEMBER 30, IN-THE-MONEY OPTIONS AS OF
2002 SEPTEMBER 30, 2002
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
- ---- ----------- -------- ------------- ----------------
Donald W. Kappauf 0 $0 285,871/100,000 $0/$0
Donald T. Kelly 0 $0 142,855/50,000 $0/$0
Elizabeth Hoaglin 0 $0 67,142/0 $0/$0
Edmund Kenealy 0 $0 5,000/55,000 $0/$0
Wayne Lynn 0 $0 11,250/61,250 $0/$0
- --------------------------------
(footnote from table on preceding page)
24
(1) Based upon a closing bid price of the Common Stock at $2.82 per share on
September 30, 2002.
STOCK OPTION PLANS
In April 1990, the Board of Directors adopted the 1990 Employees Stock
Option Plan , which was approved by shareholders in August 1990. The 1990 Plan
provided for the grant of options to purchase up to 285,714 shares of
TeamStaff's common stock. Under the terms of the 1990 Plan, options granted
thereunder may be designated as options which qualify for incentive stock option
treatment under Section 422A of the Code, or options which do not so qualify .
In April 1990, the Board of Directors adopted the Non-Executive
Director Stock Option Plan, which was approved by shareholders in August, 1991
and amended in March 1996. The Director Plan provided for issuance of a maximum
of 142,857 shares of common stock upon the exercise of stock options arising
under the Director Plan.
In April 1990, the Board of Directors adopted and in August, 1990,
TeamStaff's shareholders approved the Senior Management Incentive Plan for use
in connection with the issuance of stock, options and other stock purchase
rights to executive officers and other key employees and consultants who render
significant services to TeamStaff and its subsidiaries. A total of 1,428,571
shares of common stock were reserved for issuance under the Management Plan.
The forgoing plans have expired and options are no longer being granted
under these plans.
2000 EMPLOYEES' STOCK OPTION PLAN
In the fiscal year 2000, the Board of Directors and shareholders
approved the adoption of the 2000 Employees' Stock Option Plan to provide for
the grant of options to purchase up to 1,714,286 shares of TeamStaff's common
stock to all employees, including senior management. The 2000 Plan replaces the
1990 Employee Plan and Senior Management Plans, both of which expired. Under the
terms of the approved 2000 Plan, options granted there under may be designated
as options which qualify for incentive stock option treatment under Section 422A
of the Code, or options which do not so qualify . As of the Record Date, an
aggregate of 822,000 options are outstanding under the 2000 Plan.
The 2000 Plan is administered by the Compensation Committee designated
by the Board of Directors. The Compensation Committee has the discretion to
determine the eligible employees to whom, and the times and the price at which,
options will be granted; whether such options shall be incentive stock options
or non-incentive stock options; the periods during which each option will be
exercisable; and the number of shares subject to each option. The Committee has
full authority to interpret the 2000 Plan and to establish and amend rules and
regulations relating thereto.
25
Under the 2000 Plan, the exercise price of an option designated, as an
incentive stock option shall not be less than the fair market value of the
common stock on the date the option is granted. However, in the event an option
designated as an incentive stock option is granted to a ten percent (10%)
shareholder (as defined in the 2000 Plan), such exercise price shall be at least
110% of such fair market value. Exercise prices of non-incentive stock options
options may be less than such fair market value.
The aggregate fair market value of shares subject to options granted to
a participant, which are designated as incentive stock options and which become
exercisable in any calendar year shall not exceed $100,000.
The Compensation Committee may, in its sole discretion, grant bonuses
or authorize loans to or guarantee loans obtained by an optionee to enable such
optionee to pay the exercise price or any taxes that may arise in connection
with the exercise or cancellation of an option. The Compensation Committee can
also permit the payment of the exercise price in the common stock of the
Corporation held by the optionee for at least six months prior to exercise.
NON-EXECUTIVE DIRECTOR PLAN
In fiscal year 2000, the Board of Directors and stockholders approved
the adoption of the 2000 Non-Executive Director Stock Option Plan to provide for
the grant of options to non-employee directors of TeamStaff. Under the terms of
the Director Plan, each non-executive director is automatically granted an
option to purchase 5,000 shares upon joining the Board and each September lst,
pro rata, based on the time the director has served in such capacity during the
previous year. The Directors' Plan also provides that directors, upon joining
the Board, and for one (1) year thereafter, will be entitled to purchase
restricted stock from TeamStaff at a price equal to 80% of the closing bid price
on the date of purchase up to an aggregate purchase price of $50,000. The
Director Plan replaced the previous Director Plan that expired in April 2000. As
of the Record Date, an aggregate of 55,000 options are outstanding under the
Director Plan.
Under the Director Plan, the exercise price for options granted under
the Director Plan shall be 100% of the fair market value of the common stock on
the date of grant. Until otherwise provided in the Stock Option Plan, the
exercise price of options granted under the Director Plan must be paid at the
time of exercise, either in cash, by delivery of shares of common stock of the
Company or by a combination of each. The term of each option commences on the
date it is granted and unless terminated sooner as provided in the Director
Plan, expires five (5) years from the date of grant. The Committee has no
discretion to determine which non-executive director or advisory board member
will receive options or the number of shares subject to the option, the term of
the option or the exercisability of the option. However, the Committee will make
all determinations of the interpretation of the Director Plan. Options granted
under the Director Plan are not qualified for incentive stock option treatment.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
26
Set forth herein is a line graph comparing the total returns (assuming
reinvestment of dividends) of TeamStaff's common stock, the Standard and Poor
Industrial Average, and an industry composite consisting of a group of three
peer issuers selected in good faith by TeamStaff. TeamStaff's common stock is
listed for trading in the Nasdaq National Market and is traded under the symbol
"TSTF."
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100
SEPTEMBER 2002
[LINE GRAPH]
NOTES
1. Assumes that the value of the investment in TeamStaff's Common Stock and each
index was $100 on September 30, 1997 and that dividends were reinvested at years
ended September 30th.
2. Industry composite includes Administaff, Gevity HR, and Team America Corp.
The industry composite has been determined in good faith by management to
represent entities that compete with TeamStaff in certain of its significant
business segments. Management does not believe there are any publicly held
entities that compete with all of TeamStaff's business segments.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
27
For information concerning employment and severance agreements with,
and compensation of, our executive officers and directors, see "Executive
Compensation." The Directors' Plan provides that directors, upon joining the
Board, and for one year thereafter, will be entitled to purchase restricted
stock from TeamStaff at a price equal to 80% of the closing bid price on the
date of purchase up to an aggregate purchase price of $50,000.
In connection with TeamStaff's acquisition of BrightLane, persons
holding BrightLane options to acquire approximately 2,078,000 BrightLane shares
(the equivalent of approximately 481,000 TeamStaff shares) exercised their
options. TeamStaff made recourse loans of approximately $1,047,000 principal
amount to the holders of these options to assist them in payment of tax
obligations incurred with exercise of the options. The loans are repayable upon
the earlier of (i) sale of the TeamStaff shares or (ii) three years. As of
September 30, 2002, approximately $654,000.00 of these loans has been repaid or
forgiven. All loans must be repaid in cash with the exception of one loan. Under
the terms of the Company's employment agreement with an executive officer of the
Company's BrightLane subsidiary, the loan ($131,000) is to be forgiven over a
two-year period of time as long as the officer remains employed by the Company.
In connection with the BrightLane acquisition, TeamStaff and First
Union Corporation (renamed Wachovia), a leading financial services company, have
signed, effective August 31, 2001, an agreement to market our professional
employer services to Wachovia's small business customers. The agreement calls
for a two-year, extendable relationship in which we will be an authorized
marketer of professional employer services to Wachovia's business banking
customers. This agreement presents us with an opportunity to market its services
to Wachovia's customer base of small businesses. Although TeamStaff believes
that the agreement will be extended beyond August 31, 2003, TeamStaff does not
anticipate that the extension will provide it with the ability to market its
services to Wachovia's small business customers on an exclusive basis. Wachovia
owns approximately 21% of our stock.
Under the terms governing the transaction, certain option holders were
restricted from selling TeamStaff shares acquired from the exercise of their
BrightLane options for a period of up to two years. T. Stephen Johnson and his
spouse, Mary Johnson, also a former director of BrightLane, were the only option
holders who exercised their options and who were subject to these lockup
provisions. Due to the significant rise in our stock price and the significant
increase in the amount of the tax loans to be made to T. Stephen Johnson and
Mary Johnson, the Board of Directors of TeamStaff concluded it would be more
appropriate to allow Mr. and Mrs. Johnson to sell a portion of their TeamStaff
shares to cover their tax liability rather than carry a large loan receivable on
the Company's financial statements. The Board therefore agreed to allow the sale
of up to 40% of Mr. and Mrs. Johnson's option shares (approximately 56,230
TeamStaff shares) as an exempt transaction under SEC Rule 16(b)(3).
Under the terms of the agreements governing the BrightLane transaction,
TeamStaff agreed to register for resale shares obtained by former BrightLane
shareholders who would be deemed "affiliates" under SEC rules and regulations.
The registration statement includes
28
6,096,946 shares of common stock owned by these persons. Certain former
shareholders of BrightLane, who are selling security holders, including First
Union Corporation, Nationwide Financial Services and T. Stephen Johnson agreed
to the terms of a "lockup" agreement whereby they have agreed that the shares of
TeamStaff obtained by them may only be sold as follows: commencing on the first
anniversary of the transaction (August 31, 2002) 50% of the acquired shares may
be sold and commencing on the second anniversary (August 31, 2003) the remaining
shares may be sold. The Board of Directors has reserved the right to release all
of part of the shares from the lockup prior to its expiration.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at TeamStaff's 2004
Annual Meeting of Shareholders must be received by TeamStaff on or before March
12, 2004 to be eligible for inclusion in TeamStaff's proxy statement and form of
proxy to be used in connection with the 2004 Annual Meeting of Shareholders.
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM l0-K FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2002 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO SHAREHOLDERS WITHOUT CHARGE
UPON WRITTEN REQUEST THEREFORE SENT TO EDMUND C. KENEALY, SECRETARY, TEAMSTAFF,
INC., 300 ATRIUM DRIVE, SOMERSET, NEW JERSEY 08873. Each such request must set
forth a good faith representation that as of the Record Date, the person making
the request was the beneficial owner of common stock of TeamStaff entitled to
vote at the Annual Meeting of Shareholders.
29
OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the
Board of Directors intends to present, and knows that others will present, at
the Annual Meeting is that herein above set forth. If any other matter or
matters are properly brought before the Annual Meeting, or any adjournments
thereof, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy on such matters in accordance with their judgment.
By Order of the Board of Directors
Edmund C. Kenealy,
July 11, 2003 Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND
RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF
IT IS MAILED IN THE UNITED STATES OF AMERICA.
30
EXHIBIT A
TEAMSTAFF, INC.
AUDIT COMMITTEE CHARTER
REVISED MAY 27, 2003
Organization
There shall be a committee of the board of directors to be known as the audit
committee, the purpose of which shall be to oversee the accounting and financial
reporting processes of the corporation and audits of the financial statements of
the corporation. The audit committee shall be composed of at least three
directors who are independent of the management of the corporation and are free
of any relationship that, in the opinion of the board of directors and in
accordance with any applicable rules and regulations of the Securities and
Exchange Commission and the principal exchange or over the counter market upon
which the corporation's securities are listed for trading, would interfere with
their exercise of independent judgment as committee members.
Audit Committee Financial Expert
The audit committee shall include such number of persons, but no fewer than one,
who qualify as audit committee financial experts in accordance with any
applicable rules and regulations of the Securities and Exchange Commission and
the principal exchange or over the counter market upon which the corporation's
securities are listed for trading. The determination of which members, if any,
qualify as audit committee financial experts shall be made by the board of
directors in accordance with any applicable rules and regulations of the
Securities and Exchange Commission and the principal exchange or over the
counter market upon which the corporation's securities are listed for trading.
Meetings
The audit committee shall meet as required throughout the fiscal year, but no
less than four times.
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling its responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the corporation.
1
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality. In carrying out these
responsibilities, the audit committee will:
- Be directly responsible for the appointment, compensation,
retention and oversight of the work of any registered public
accounting firm engaged (including resolution of disagreements
between management and the auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or
related work or performing other audit, review or attest services
for the corporation, and each such registered public accounting
firm will report directly to the audit committee. .
- Establish policies and procedures for pre-approval of all audit
or permissible non-audit services provided by the corporation's
independent auditors.
- Meet with the independent auditors and financial management of
the corporation to review the scope of the proposed audit for the
current year and the audit procedures to be utilized, and at the
conclusion thereof review such audit, including any comments or
recommendations of the independent auditors.
- Review with the independent auditors and the company's financial
and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and elicit
any recommendations for the improvement of such internal control
procedures or particular areas where new or more detailed
controls or procedures are desirable. Particular emphasis should
be given to the adequacy of such internal controls to expose any
payments, transactions, or procedures that might be deemed
illegal or otherwise improper. Further, the committee
periodically should review company policy statements.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be
presented to the shareholders. Any changes in accounting
principles should be reviewed.
- Provide sufficient opportunity for the independent auditors to
meet with the members of the audit committee without members of
management present. Among the items to be discussed in these
meetings are the independent auditors'
2
evaluation of the corporation's financial and accounting
personnel, and the cooperation that the independent auditors
received during the course of the audit.
- Review accounting and financial human resources and succession
planning within the company.
- Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the
board of directors.
- Establish procedures for the receipt, retention, and treatment of
complaints received by the corporation regarding accounting,
internal accounting controls, or auditing matters and the
confidential, anonymous submission by the corporation's employees
of concerns regarding questionable accounting or auditing
matters.
- Have the authority to engage independent counsel and other
advisers, as it determines necessary to carry out its duties.
- Will be provided with appropriate funding, as determined by the
audit committee, in its capacity as a committee of the board of
directors, for payment of compensation:
o To any registered public accounting firm engaged for the
purpose of rendering or issuing an audit report or related
work or performing other audit, review or attest services
for the corporation; and
o To independent counsel or other advisers employed by the
audit committee.
Membership
The audit committee is composed of the following independent directors:
Martin Delaney (Chairman) Karl W. Dieckmann
T. Stephen Johnson
Rocco J. Marano
Rocco J. Marano has been designated an audit committee financial expert by the
corporation's board of directors.
3
PROXY TEAMSTAFF, INC.
ANNUAL MEETING OF SHAREHOLDERS -- AUGUST 12, 2003
The undersigned hereby appoints T. Stephen Johnson, Karl W. Dieckmann and T.
Kent Smith and each of them, proxies, with full power of substitution, to vote
all shares of common stock of TeamStaff, Inc. owned by the undersigned at the
Annual Meeting of Shareholders of TeamStaff, Inc. to be held on August 12, 2003
and at any adjournments thereof, hereby revoking any proxy heretofor given. The
under-signed instructs such proxies to vote:
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS:
[ ] FOR all Nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below). listed below.
(Instruction: Please check appropriate box. To withhold authority for any
individual nominee, strike a line through the nominee's name in the list below.)
NOMINEES FOR CLASS 1 DIRECTORS
T. Stephen Johnson
Benjamin Dyer
and to vote upon any other business as may properly come before the meeting or
any adjournment thereof, all as described in the proxy statement dated July 11,
2003, receipt of which is hereby acknowledged.
(Continued and to be signed and dated on the reverse side.)
(Continued from other side)
Either of the proxies or their respective substitutes who shall be present and
acting shall have and may exercise all the powers hereby granted. The shares
represented by this proxy will be voted FOR the election of two (2) directors
unless contrary instructions are given. Said proxies will use their discretion
with respect to any other matters which properly come before the meeting.
Date
---------------------------------------------------
Signed
-------------------------------------------------
(Please date and sign exactly as accounts. Each joint
owner should sign. Executors, administrators, trustees,
etc. should also so indicate when signing.)
The proxy is solicited on behalf of the Board of
Directors. Please sign and return in the enclosed
envelope.