1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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-12
Administaff, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
2
[ADMINISTAFF LETTERHEAD]
March 30, 2001
Dear Stockholder:
On behalf of your board of directors and management, you are cordially invited
to attend the Annual Meeting of Stockholders to be held at Administaff's
Corporate Headquarters, Centre II in the University Rooms, located at 29801 Loop
494, Kingwood, Texas 77339, on May 8, 2001 at 10:00 a.m.
It is important that your shares are represented at the meeting. Whether or not
you plan to attend the meeting, please complete and return the enclosed proxy
card in the accompanying envelope or vote using the telephone or Internet
procedures that may be provided to you by your broker. Please note that voting
using any of these methods will not prevent you from attending the meeting and
voting in person.
You will find information regarding the matters to be voted on at the meeting in
the following pages. Our 2000 Annual Report to Stockholders is also enclosed
with these materials.
Your interest in Administaff is appreciated, and we look forward to seeing you
on May 8.
Sincerely,
/s/ PAUL J. SARVADI
Paul J. Sarvadi
President and Chief Executive Officer
3
ADMINISTAFF, INC.
A DELAWARE CORPORATION
19001 CRESCENT SPRINGS DRIVE
KINGWOOD, TEXAS 77339-3802
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 2001
KINGWOOD, TEXAS
The Annual Meeting of the Stockholders of Administaff, Inc., a Delaware
corporation (the "Company"), will be held at the Company's Corporate
Headquarters, Centre II in the University Rooms, located at 29801 Loop 494,
Kingwood, Texas 77339, on May 8, 2001 at 10:00 a.m., Central Daylight Savings
Time, for the following purposes:
1. To elect three Class III directors to serve until the annual
stockholders' meeting in 2004 or until their successors have
been elected and qualified.
2. To approve the adoption of the Administaff, Inc. 2001
Incentive Plan covering 1,500,000 shares of the Company's
Common Stock.
3. To ratify the appointment of Ernst & Young, LLP as the
Company's independent public accountants for the year ending
December 31, 2001.
4. To act upon such other business as may properly come before
the meeting or any reconvened meeting after an adjournment
thereof.
Only stockholders of record at the close of business on March 9, 2001
are entitled to notice of, and to vote at, the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
OF STOCKHOLDERS REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY. IF YOU ARE PRESENT AT THE
MEETING, AND WISH TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
/s/ JOHN H. SPURGIN, II
John H. Spurgin, II
Vice President, Legal,
General Counsel and Secretary
March 30, 2001
Kingwood, Texas
2
4
ADMINISTAFF, INC.
A DELAWARE CORPORATION
19001 CRESCENT SPRINGS DRIVE
KINGWOOD, TEXAS 77339-3802
---------------
PROXY STATEMENT
---------------
The accompanying proxy is solicited by the Board of Directors of
Administaff, Inc., a Delaware corporation (the "Company"), for use at the 2001
Annual Meeting of Stockholders to be held on May 8, 2001, and at any reconvened
meeting after an adjournment thereof. The Annual Meeting of Stockholders will be
held at 10:00 a.m., Central Daylight Savings Time, at the Company's Corporate
Headquarters, Centre II in the University Rooms, located at 29801 Loop 494,
Kingwood, Texas 77339.
Stockholders of record may vote by attending the meeting or by signing,
dating and returning your proxy in the envelope provided. If you return your
signed proxy, 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 EACH OF THE PROPOSALS
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 stockholder giving a proxy has the power to revoke it at
any time before it is voted by (i) submitting written notice of revocation to
the Secretary of the Company at the address listed above, (ii) submitting
another proxy that is properly signed and later dated, or (iii) voting in person
at the Annual Meeting.
The expense of preparing, printing and mailing proxy materials to the
Company's stockholders will be borne by the Company. The Company has engaged
Corporate Investor Communications, Inc. to assist in the solicitation of proxies
from stockholders at a fee of approximately $5,000 plus reimbursement of
reasonable out-of-pocket expenses. In addition, proxies may be solicited
personally or by telephone by officers or employees of the Company, none of whom
will receive additional compensation. The Company will also reimburse brokerage
houses and other nominees for their reasonable expenses in forwarding proxy
materials to beneficial owners of Common Stock.
The approximate date on which this Proxy Statement and the accompanying
proxy card will first be sent to stockholders is March 30, 2001.
At the close of business on March 9, 2001, the record date for the
determination of stockholders of the Company entitled to receive notice of, and
to vote at, the 2001 Annual Meeting of Stockholders or any reconvened meeting
after an adjournment thereof, 27,426,869 shares of the Company's Common Stock,
par value $0.01 per share (the "Common Stock"), were outstanding. Each share of
Common Stock is entitled to one vote upon each of the matters to be voted on at
the meeting. The presence, in person or by proxy, of a majority of the
outstanding shares of Common Stock is required for a quorum. If a quorum is
determined to exist at the meeting, action on a matter (other than the election
of directors) shall be approved if the votes cast in favor of the matter exceed
the votes cast opposing the matter. Directors of the Company shall be elected by
a plurality of the votes cast. In determining the number of votes cast, shares
abstaining from voting or not voted on a matter will not be treated as votes
cast. Accordingly, although proxies containing broker non-votes (which result
when a broker holding shares for a beneficial owner has not received timely
voting instructions on certain matters from such beneficial owner) are
considered "shares present" in determining whether there is a quorum present at
the Annual Meeting, they are not treated as votes cast with respect to any
matter, and thus will not affect the outcome of the voting on a particular
proposal.
3
5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of March 12, 2001, certain information
with respect to the shares of Common Stock beneficially owned by (i) each person
known by the Company to own beneficially five percent or more of the Common
Stock, (ii) each director and director nominee of the Company, (iii) each of the
executive officers of the Company identified under the caption "Election of
Directors -- Executive Compensation," and (iv) all directors, director nominees
and executive officers of the Company as a group.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- ------------------------ -------------- --------
Steven Alesio ............................................... 10,000 *
Michael W. Brown ............................................ 34,576 (2) *
Jack M. Fields, Jr .......................................... 7,979 (3) *
Paul S. Lattanzio ........................................... 18,588 (4) *
Linda Fayne Levinson ........................................ 34,636 (5) *
Richard G. Rawson ........................................... 1,394,435 (6) 5.1%
Paul J. Sarvadi ............................................. 3,541,732 (7) 12.9%
A. Steve Arizpe ............................................. 110,444 (8) *
Jay E. Mincks ............................................... 53,329 (9) *
John H. Spurgin, II ......................................... 16,378 (10) *
American Express Travel Related Services Company, Inc. ...... 4,717,282 (11) 15.3%
Lang H. Gerhard ............................................. 5,859,600 (12) 21.4%
Executive Officers and Directors as a group (13 persons) .... 5,263,041 18.9%
- ----------
* Represents less than 1%.
(1) Share numbers have been adjusted to reflect the 2-for-1 split of the Common
Stock effected in October 2000. Except as otherwise indicated, each of the
stockholders has sole voting and investment power with respect to the
securities shown to be owned by such stockholder. The address for each
officer and director is Administaff, Inc., 19001 Crescent Springs Drive,
Kingwood, Texas 77339-3802.
(2) Includes options to purchase 30,000 shares of Common Stock that are
exercisable within 60 days of March 12, 2001.
(3) Includes 4,000 shares owned by Jack Fields as Custodian for Jordan Fields
UGMA.
(4) Includes options to purchase 15,000 shares of Common Stock that are
exercisable within 60 days of March 12, 2001.
(5) Includes options to purchase 30,000 shares of Common Stock that are
exercisable within 60 days of March 12, 2001.
(6) Includes 668,866 shares owned by the RDKB Rawson LP, 536,502 shares owned
by the R&D Rawson LP, 350 shares owned by Dawn M. Rawson (spouse), 50
shares owned by Kimberly Rawson (daughter), 50 shares owned by Richard G.
Rawson as Custodian for Barbie Rawson UGMA, and options to purchase 43,466
shares of Common Stock that are exercisable within 60 days of March 12,
2001.
(7) Includes 2,440,100 shares owned by Our Ship Limited Partnership, Ltd.,
1,027,120 shares owned by the Sarvadi Children's Partnership, Ltd., 10,036
shares owned by Paul J. Sarvadi and Vicki D. Sarvadi, JT TEN, 21,144 shares
owned by six education trusts established for the benefit of the children
of Paul J. Sarvadi, and options to purchase 43,332 shares of Common Stock
that are exercisable within 60 days of March 12, 2001.
(8) Includes options to purchase 90,705 shares of Common Stock that are
exercisable within 60 days of March 12, 2001.
(9) Includes options to purchase 50,266 shares of Common Stock that are
exercisable within 60 days of March 12, 2001.
4
6
(10) Includes options to purchase 10,666 shares of Common Stock that are
exercisable within 60 days of March 12, 2001.
(11) Includes warrants to purchase 3,331,030 shares of Common Stock. American
Express Travel Related Services Company, Inc.'s (AETRS) address is World
Financial Center, 200 Vesey Street, New York, NY 10285.
(12) Based on a Schedule 13D filed with the Securities and Exchange Commission
on August 9, 1999, West Highland Capital ("WHC"), a registered investment
advisor, has shared voting and dispositive power with respect to 3,358,000
shares; Estero Partners, LLC ("LLC") has shared voting and dispositive
power with respect to 3,168,000 shares; West Highland Partners, L.P.
("WHP") has shared voting and dispositive power with respect to 2,560,000
shares; and Buttonwood Partners, L.P. ("BP") has shared voting and
dispositive power with respect to 608,000 shares. Mr. Gerhard is the sole
director and occupies all executive offices of WHC, and is the sole manager
of LLC. WHC, LLC and Mr. Gerhard are the general partners of WHP and BP,
both of which are investment limited partnerships. The address of each of
such parties is 300 Drakes Landing Road, Suite 290, Greenbrae, California
94904.
5
7
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
GENERAL
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors on the Board shall be fixed from time to time by the Board
of Directors but shall not be less than three nor more than 15 persons. The
number of members constituting the Board of Directors is currently fixed at
seven.
In accordance with the Certificate of Incorporation of the Company, the
members of the Board of Directors are divided into three classes and are elected
for a term of office expiring at the third succeeding annual stockholders'
meeting following their election to office, or until a successor is duly elected
and qualified. The Certificate of Incorporation also provides that such classes
shall be as nearly equal in number as possible. The terms of office of the Class
I, Class II and Class III directors expire at the annual meeting of stockholders
in 2002, 2003 and 2001, respectively.
The term of office of each of the current Class III directors expires
at the time of the 2001 Annual Meeting of Stockholders, or as soon thereafter as
their successors are elected and qualified. Mr. Fields, Mr. Lattanzio and Mr.
Rawson have been nominated to serve an additional three-year term as Class III
directors. Each of the nominees have consented to be named in this Proxy
Statement and to serve as a director if elected.
It is the intention of the person or persons named in the accompanying
proxy card to vote for the election of all nominees named below unless a
stockholder has withheld such authority. The affirmative vote of holders of a
plurality of the Common Stock present in person or by proxy at the 2001 Annual
Meeting of Stockholders and entitled to vote is required for election of the
nominees.
If, at the time of or prior to the 2001 Annual Meeting of Stockholders,
any of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy may be used to vote for a substitute or
substitutes designated by the Board of Directors. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required. No
proxy will be voted for a greater number of persons than the number of nominees
named herein.
NOMINEES -- CLASS III DIRECTORS (FOR TERMS EXPIRING AT THE 2004 ANNUAL MEETING)
JACK M. FIELDS, JR. Mr. Fields, age 49, joined the Company as a Class
III director in January 1997 following his retirement from the United States
House of Representatives, where he served for 16 years. During 1995 and 1996,
Mr. Fields served as Chairman of the House Telecommunications and Finance
Subcommittee, which has jurisdiction and oversight of the Federal Communications
Commission and the Securities and Exchange Commission. Mr. Fields is Chief
Executive Officer of 21st Century Group in Washington, D.C. Mr. Fields also
serves on the Board of Directors for AIM Mutual Funds. Mr. Fields earned a
Bachelor of Arts degree in 1974 from Baylor University, and graduated from
Baylor Law School in 1977.
PAUL S. LATTANZIO. Mr. Lattanzio, age 37, has been a Class III director
of the Company since 1995. He has been a Managing Director for Toronto Dominion
Capital, the private equity arm for Toronto Dominion Bank, since July 1999. From
February 1998 to March 1999, he was a co-founder and Senior Managing Director of
NMS Capital Management, LLC, a $600 million private equity fund affiliated with
NationsBanc Montgomery Securities. Prior to NMS Capital, Mr. Lattanzio served in
several positions with various affiliates of Bankers Trust New York Corporation
for over 13 years, most recently as a Managing Director of BT Capital Partners,
Inc. Mr. Lattanzio has experience in a variety of investment banking
disciplines, including mergers and acquisitions, private placements and
restructuring advisory areas. Mr. Lattanzio also serves on the Board of
Directors of General Communication, Inc., Medical Logistics, Inc. and the
Advisory Board of MVP America L.P. Mr. Lattanzio received his Bachelor of
Science degree in Economics with honors from the University of Pennsylvania's
Wharton School of Business in 1984.
RICHARD G. RAWSON. Mr. Rawson, age 52, who serves as Executive Vice
President of Administration, Chief Financial Officer and Treasurer of the
Company and its subsidiaries, is a Class III director and has been a director of
the Company since 1989. Prior to joining the Company in 1989, Mr. Rawson served
as a Senior Financial Officer and Controller for several companies in the
manufacturing and seismic data processing industries. Mr. Rawson is on the Board
of Directors and is the
6
8
immediate Past President of the National Association of Professional Employer
Organizations (NAPEO), having served as President of that Board in 1999-2000.
Mr. Rawson also serves on the Executive Committee of NAPEO's Board of Directors.
He previously served as Chairman of the Accounting Practices Committee of NAPEO
for five years as well as Treasurer, Second Vice President and First Vice
President. He is also a member of the Financial Executives Institute. Mr. Rawson
has a Bachelor of Business Administration degree in Finance from the University
of Houston.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE ABOVE-NAMED NOMINEES, AND PROXIES EXECUTED AND RETURNED
WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
DIRECTORS REMAINING IN OFFICE
STEVEN ALESIO. Mr. Alesio, age 46, has been a Class II director of the
Company since July 1999. Mr. Alesio was named Senior Vice President of The Dun &
Bradstreet Corporation in January 2001. He has responsibility for Global
Marketing, Technology, Corporate Communications, and Strategy Implementation,
and is a member of that company's Global Leadership Team. Before joining Dun &
Bradstreet, Mr. Alesio was with the American Express Company for 19 years until
his resignation in November 2000. In his last position there, he served as
President and General Manager of the Small Business Services group and as a
member of that company's Planning and Policy Committee. Prior to assuming those
duties, Mr. Alesio held several senior management positions with American
Express. Prior to joining American Express in 1981, he held several positions
with Arthur Andersen & Co. in Washington, D.C. Mr. Alesio holds a Bachelor of
Science degree from St. Francis College and a Master of Business Administration
from the University of Pennsylvania's Wharton School of Business.
MICHAEL W. BROWN. Mr. Brown, age 55, joined the Company as a Class I
director in November 1997. Mr. Brown is the past Chairman of the Nasdaq Stock
Market Board of Directors and is currently a governor of the National
Association of Securities Dealers. Mr. Brown joined Microsoft Corporation in
1989 as its Treasurer and became its Chief Financial Officer in 1993, in which
capacity he served until his retirement in July 1997. Prior to joining
Microsoft, Mr. Brown spent 18 years with Deloitte & Touche LLP. Mr. Brown is
also a director of Fat Kat, Inc., a member of the Thomas Weisel Partners
Advisory Board, the Financial Executives Institute, and the University of
Washington School of Business Advisory Board. He is also a Fellow at BIOS, L.P.,
a Santa Fe, New Mexico group specializing in commercial applications of the
science of complex adaptive systems.
LINDA FAYNE LEVINSON. Ms. Levinson, age 58, has been a Class I director
of the Company since April 1996. She has served as a principal of Global Retail
Partners, L.P. since April 1997. From 1994 to 1997, she served as President of
Fayne Levinson & Associates, an independent consulting firm located in Santa
Monica, California that advises both major corporations and start-up
entrepreneurial ventures. Prior to starting Fayne Levinson & Associates, Ms.
Levinson served as an executive with Creative Artists Agency, Inc. in 1993, a
partner of Wings Partners, Inc., a merchant banking firm, from 1989 to 1992,
Senior Vice President for American Express Travel Related Services Company, Inc.
from 1984 to 1987, and as a partner of the consulting firm of McKinsey and Co.
from 1979 to 1981. Ms. Levinson holds a Bachelor of Arts degree in Russian
Studies from Barnard College, a Master of Business Administration degree from
New York University School of Business and a Master of Arts degree in Russian
Literature from Harvard University. Ms. Levinson also currently serves as a
director for Jacobs Engineering Group, Inc., NCR Corporation, CyberSource
Corporation, GoTo.com, Inc. and Exactis.com, Inc.
PAUL J. SARVADI. Mr. Sarvadi, age 44, President, Chief Executive
Officer and co-founder of the Company and its subsidiaries, is a Class II
director and has been a director since its inception in 1986. He attended Rice
University and the University of Houston prior to starting and operating several
small companies. Mr. Sarvadi has served as President of NAPEO and was a member
of its Board of Directors for five years. He also served as President of the
Texas Chapter of the National Association of Professional Employer Organizations
for three of the first four years of its existence. In 1995, Mr. Sarvadi was
selected as Houston's Entrepreneur of the Year for service industries.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has appointed three committees: a Finance, Risk
Management and Audit Committee, a Compensation Committee and a Nominating
Committee.
7
9
The members of the Finance, Risk Management and Audit Committee are Mr.
Brown, who serves as Chairperson, Mr. Lattanzio and Mr. Alesio. The Finance,
Risk Management and Audit Committee reviews and monitors (i) the financial
affairs of the Company, (ii) the financial statements of the Company and the
independence of the firm of independent public accountants hired to audit the
Company's financial statements, and (iii) the Company's policies and procedures
with respect to risk management, as well as other matters that may come before
it as directed by the Board of Directors. The Finance, Risk Management and Audit
Committee charter, which is attached as Appendix A to this proxy statement,
contains a detailed description of the committee's duties and responsibilities.
The members of the Compensation Committee are Ms. Levinson, who serves
as Chairperson, and Mr. Fields. The Compensation Committee evaluates the
performance of and determines the compensation for senior management,
administers the Company's compensation programs and performs such other duties
as may from time to time be determined by the Board of Directors.
The members of the Nominating Committee are Mr. Sarvadi, who serves as
Chairperson, and Ms. Levinson. The Nominating Committee considers and makes
recommendations to the Board of Directors or the stockholders regarding persons
to be nominated by the Board of Directors for election as directors and, in the
event of a vacancy in the office of the Chief Executive Officer, would recommend
a successor to the Board. The Nominating Committee will consider nominations to
the Board submitted by stockholders, provided that any stockholder submitting a
nomination complies with the procedures set forth in the Company's Bylaws
governing nominations by stockholders. Such procedures are described under
"Proposals of Stockholders."
INFORMATION REGARDING MEETINGS
During 2000, the Finance, Risk Management and Audit Committee had five
meetings, the Compensation Committee had two meetings, the Nominating Committee
had no meetings and the Board of Directors had seven meetings. All of the
members of the Board participated in more than 75% of the meetings of the Board
and Committees of which they were members during the fiscal year ended December
31, 2000.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors. Directors of the Company who
are not employees of the Company are paid (i) an annual retainer of $10,000,
(ii) $2,500 for each Board of Directors meeting attended, (iii) an annual fee of
$1,000 payable for each committee of the Board (if any) of which such person is
the Chairperson and (iv) reasonable expenses incurred in serving as a director.
The annual compensation can be taken in cash or Common Stock, at the director's
option. In addition, pursuant to the Company's 1997 Incentive Plan, each
non-employee director automatically receives on the date such person first
becomes a director, a grant of nonqualified options to purchase 7,500 shares of
Common Stock, which have a term of ten years and vest in increments of one-third
of the total grant on the first, second and third anniversaries of the grant. In
addition, following each annual meeting of the Company's stockholders, each
non-employee director who was not initially elected at such meeting, receives an
annual grant of nonqualified options to purchase an additional 2,500 shares of
Common Stock, all of which have a term of ten years and are fully vested on the
date of grant. If proposal 2 is adopted and the Administaff, Inc. 2001 Incentive
Plan is approved at the annual meeting, beginning in 2002, the number of options
that each non-employee director will receive on an annual basis will increase to
5,000. The exercise price of all such options is the closing sale price on the
New York Stock Exchange of the Common Stock on the date the options are granted.
Mr. Alesio declined all compensation for his service as director except for
reimbursement of actual expenses during 2000.
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding
compensation earned by the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company
(collectively the "Named Executive Officers") for services rendered in all
capacities to the Company during 2000.
8
10
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ---------------------
---------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) UNDERLYING OPTIONS(3) COMPENSATION(4)
--------------------------- ---- ------ ------- --------------------- ---------------
Paul J. Sarvadi .......................... 2000 $297,492 $223,543 100,000 $11,220
President and Chief 1999 $270,706 $ 71,097 80,000 $10,620
Executive Officer 1998 $275,154 -- -- $ 1,020
Richard G. Rawson......................... 2000 $279,278 $306,057 60,000 $ 9,180
Executive Vice President 1999 $254,132 $162,944 50,000 $ 9,100
of Administration, Chief 1998 $253,885 $ 96,199 -- $ 2,880
Financial Officer and Treasurer
A. Steve Arizpe........................... 2000 $260,232 $195,545 60,000 $10,200
Executive Vice President 1999 $236,420 $ 62,193 50,000 $ 9,235
of Client Services 1998 $235,557 -- 40,000 --
Jay E. Mincks............................. 2000 $233,791 $175,676 60,000 $ 6,213
Executive Vice President of 1999 $205,902 $ 54,965 50,000 $ 4,988
Sales and Marketing 1998 $197,670 -- 40,000 --
John H. Spurgin, II ...................... 2000 $204,526 $153,686 40,000 $10,200
Vice President of Legal, 1999 $187,939 $ 49,287 30,000 $ 8,602
General Counsel and Secretary 1998 $188,150 -- 12,000 --
- ----------
(1) Excludes perquisites and other personal benefits because such compensation
did not exceed the lesser of $50,000 or 10% of the total annual salary
reported for each executive officer.
(2) Includes for each year shown an additional bonus amount for Mr. Rawson
equal to the interest paid by Mr. Rawson to the Company on loans from the
Company during the applicable year, plus any applicable taxes due on such
component of his bonus. See "Certain Relationships and Related
Transactions."
(3) Share numbers have been adjusted to reflect the 2-for-1 split of the Common
Stock effected in October 2000.
(4) Represents the Company's employer matching contributions to the Administaff
401(k) Plan and payments of $1,020 and $2,880 in 2000 for Mr. Sarvadi and
Mr. Rawson, respectively, with respect to life insurance policies
benefiting the named executive.
STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------- VALUE AT
PERCENT OF TOTAL ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS/SARS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM(3)
UNDERLYING OPTIONS/ EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME SARS GRANTED(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ---- ------------------- ---------------- ----------- ---------- ---------- ----------
Paul J. Sarvadi............. 50,000 $19.93 04/27/10 $ 626,693 $1,588,164
50,000 $43.69 09/15/10 1,373,820 3,481,530
------- ---------- ----------
100,000 5.3% $2,000,514 $5,069,695
Richard G. Rawson............ 30,000 $19.93 04/27/10 $ 376,016 $ 952,899
30,000 $43.69 09/15/10 824,292 2,088,918
------- ---------- ----------
60,000 3.2% $1,200,308 $3,041,817
A. Steve Arizpe ............. 30,000 $19.93 04/27/10 $ 376,016 $ 952,899
30,000 $43.69 09/15/10 824,292 2,088,918
------- ---------- ----------
60,000 3.2% $1,200,308 $3,041,817
Jay E. Mincks ............... 30,000 $19.93 04/27/10 $ 376,016 $ 952,899
30,000 $43.69 09/15/10 824,292 2,088,918
------- ---------- ----------
60,000 3.2% $1,200,308 $3,041,817
John H. Spurgin, II.......... 20,000 $19.93 04/27/10 $ 250,677 $ 635,266
20,000 $43.69 09/15/10 549,528 1,392,612
------- ---------- ----------
40,000 2.1% $ 800,206 $2,027,878
9
11
(1) All options have a term of ten years and become exercisable in increments
of one-third of the total grant on the first, second and third
anniversaries of the grant. The number of shares underlying options shown
have been adjusted to reflect the 2-for-1 split of the Common Stock
effected in October 2000.
(2) The exercise price of the options granted is equal to the closing price per
share of the Common Stock on the New York Stock Exchange on the date of
grant. The exercise prices shown have been adjusted to reflect the 2-for-1
split of the Common Stock effected in October 2000.
(3) Represents total appreciation over the exercise price at the assumed annual
appreciation rates of 5% and 10% compounded annually for the term of the
options.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(1) REALIZED UNEXERCISABLE(1) UNEXERCISABLE(2)
- ---- ------------ -------- ----------------- ----------------------
Paul J. Sarvadi........................... -- -- 26,666 / 153,334 $ 568,768 / $1,601,114
Richard G. Rawson......................... -- -- 33,466 / 104,534 $ 669,550 / $1,198,490
A. Steve Arizpe........................... 33,734 $842,685 85,705 / 128,533 $1,689,834 / $1,508,549
Jay E. Mincks............................. 43,492 $991,270 40,266 / 135,734 $ 656,878 / $1,630,442
John H. Spurgin, II....................... 29,600 $651,336 -- / 83,200 -- / $1,031,792
(1) Share numbers have been adjusted to reflect the 2-for-1 split of the Common
Stock effected in October 2000.
(2) Represents the difference between the closing price of the Company's Common
Stock on December 29, 2000, the last trading day of the year, ($29.20) and
the exercise price of the options.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee is responsible for evaluating the performance
of and determining the compensation for executive officers including the Chief
Executive Officer. It is also responsible for overseeing the Company's 1997
Incentive Plan and 2001 Incentive Plan. The Compensation Committee has furnished
the following report on executive compensation for 2000.
The Company's compensation programs are designed to attract and retain
key executives responsible for the success of the Company and motivate
management to enhance long-term stockholder value. The annual compensation
package for executive officers, including the Chief Executive Officer, generally
consists of three components: (i) a base salary payable in cash, (ii) variable
compensation, which is targeted as a percentage of base pay and may be payable
in cash awards, phantom shares, performance units, bonus stock or other
stock-based awards, and (iii) long-term incentive compensation, which generally
consists of stock options.
In determining the overall level of compensation for each of the
Company's executive officers, including the Chief Executive Officer, the
Compensation Committee takes into account various qualitative and quantitative
indicators of corporate and individual performance. The Compensation Committee
annually reviews the overall compensation levels of executives of a peer group
of companies, and generally seeks to set base compensation at the median point
of the range of those compensation levels and total compensation (variable plus
base) at the third quartile of the range in comparison to such peer companies.
The Company's peers for executive compensation purposes include some, but not
all, of the companies included in the self-constructed peer index on the
performance graph. The Company likewise includes as peers for compensation
purposes some companies in the service industry that have similar revenue as the
Company, but that are not PEOs. In setting base salary for executives other than
the Chief Executive Officer, the Compensation Committee also considers the Chief
Executive Officer's subjective evaluation of each executive's performance.
10
12
Variable compensation is generally computed as a percentage of base
salary, which is determined by the Compensation Committee based on factors such
as the Company's earnings per share and achievement of the Company's expansion
goals. More specifically, 2000 variable compensation (which was paid in 2001)
was based on the achievement of diluted earnings per share of $0.58 (which
constituted 67.1% of the base pay) and achievement of the following major
initiatives (which constituted 8% of the total pay): achievement of the
E-commerce portal launch by the end of the second quarter of 2000; opening four
sales offices by the end of the third quarter of 2000; opening of the Houston
Service Center by the end of 2000; and the launch of online forms submission
through Administaff Assistant(R) by the third quarter of 2000. In addition to
his variable compensation calculated as a percentage of base salary, Mr. Rawson
receives an additional bonus amount equal to the interest paid by him on loans
from the Company plus any applicable taxes due on such additional bonus amount.
See "Certain Relationships and Related Transactions."
Long-term Incentive Compensation
Long-term incentive compensation is provided through the Company's 1997
Incentive Plan, the objectives of which are to promote the interests of the
Company by encouraging employees of the Company and its subsidiaries to acquire
or increase their equity interest in the Company and to provide a means whereby
such persons may develop a sense of proprietorship and personal involvement in
the development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its stockholders. Awards
under the 1997 Incentive Plan have generally been made in the form of stock
options, although in the future such awards may include phantom shares,
performance units, bonus stock or other stock-based awards. The Compensation
Committee believes that stock options align the interest of the Company's
executives with those of its stockholders by encouraging executives to enhance
the value of the Company, and hence, the price of the Common Stock and each
stockholder's return. The Company may periodically grant new options or other
long-term equity-based incentives to provide continuing incentive for future
performance. In making the decision to grant options, the Compensation Committee
considers factors including an executive's current ownership stake in the
Company, the degree to which increasing that ownership stake would provide the
executive with additional incentives for future performance, the likelihood that
the grant of those options would encourage the executive to remain with the
Company and the value of the executive's service to the Company.
In 2000, the Company granted options to purchase an aggregate of
660,000 shares of Common Stock (adjusted to reflect the 2-for-1 split of the
Common Stock effected in October 2000) to executive officers of the Company,
including the Chief Executive Officer.
CEO Compensation
The compensation of the Chief Executive Officer is determined in the
same manner as the other executives of the Company, as set forth above. In 2000,
the Compensation Committee granted Mr. Sarvadi options to purchase 100,000
shares of Common Stock (adjusted to reflect the 2-for-1 split of the Common
Stock effected in October 2000). In making the grant, the Compensation Committee
considered Mr. Sarvadi's large ownership position in the Company. Although the
Compensation Committee believes that the grant of options to Mr. Sarvadi further
aligns his interests with those of stockholders, the Compensation Committee
considered the grant to Mr. Sarvadi to be more in the nature of variable
compensation than a long-term incentive.
Section 162(m) of the Internal Revenue Code
Because the Company has not yet granted any executive officer
compensation exceeding $1,000,000 in any year, the Compensation Committee has
not yet adopted a policy with respect to the limitation under Section 162(m) of
the Internal Revenue Code, which generally limits the Company's ability to
deduct compensation in excess of $1,000,000 to a particular executive officer in
any year. The Compensation Committee, in consultation with the Board of
Directors, will adopt such a policy if the compensation awarded to an executive
exceeds such amount.
Linda Fayne Levinson
Jack M. Fields, Jr.
11
13
REPORT OF THE FINANCE, RISK MANAGEMENT AND AUDIT COMMITTEE
The Finance, Risk Management and Audit Committee (the "Committee") of
Administaff, Inc. is responsible for providing independent, objective oversight
of the Company's accounting functions and internal controls. The Committee acts
under a written charter adopted and approved by the Board of Directors and
reviewed annually by the Committee. A copy of the Committee charter is attached
to this Proxy Statement as Appendix A.
The Committee has reviewed and discussed with the Company's management
the Company's consolidated financial statements as of and for the fiscal year
ended December 31, 2000.
The Committee has discussed with Ernst & Young, LLP, the Company's
independent public accountants, the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as
amended.
The Committee has received and reviewed the written disclosures and the
letter from Ernst & Young required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees, as amended, and has discussed
with Ernst & Young its independence. The Committee has also considered the
compatibility of non-audit services with Ernst & Young's independence.
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000 for filing with the Securities and Exchange Commission.
Michael W. Brown
Paul S. Lattanzio
Steven Alesio
12
14
PERFORMANCE GRAPH
COMPARISON OF 47 MONTH CUMULATIVE TOTAL RETURN*
AMONG ADMINISTAFF, INC., THE RUSSELL 2000 INDEX,
THE S & P SMALLCAP 600 INDEX AND A PEER GROUP
[GRAPH]
Cumulative Total Return
--------------------------------------
2/3/97 12/97 12/98 12/99 12/00
------ ----- ----- ----- -----
ADMINISTAFF, INC. 100.00 152.21 147.06 177.94 320.00
RUSSELL 200 100.00 119.97 116.91 141.76 123.92
S & P SMALLCAP 600 100.00 123.53 126.90 142.64 159.47
PEER GROUP 100.00 23.70 14.39 10.62 4.91
* $100 INVESTED ON 2/3/97 IN STOCK OR ON 1/31/97 IN INDEX - INCLUDING
REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
The above graph compares the cumulative total return of the Company's
Common Stock with the cumulative total return of the Standard & Poor's SmallCap
600 Stock Index, the Russell 2000 Index and an industry peer group index for the
period from February 3, 1997 to December 31, 2000 (assuming reinvestment of any
dividends and an investment of $100 in each on February 3, 1997). This is the
first year that the Company has compared its stock performance to the S&P
SmallCap 600 Index. The Company intends to use this index in future years
because the Company is now included in such Index. In compliance with SEC rules,
the Company is also comparing its stock performance to the Russell 2000 Index,
which it used last year.
The peer group consists of Employee Solutions, Inc., Team Mucho, Inc.
(formerly known as Team America Corporation), TeamStaff, Inc., Staff Leasing,
Inc., Vincam, Inc. (through December 31, 1998) and NovaCare Employee Services,
Inc. (through December 31, 1998), each of which provides or provided
professional employer services. Vincam, Inc. and NovaCare Employee Services,
Inc. were dropped from the return calculation after December 31, 1998 as a
result of each of them being acquired in 1999, and the then market value
attributable to each was assumed to be reinvested in the other four companies in
the index.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2000, the members of the Compensation Committee were Ms.
Levinson and Mr. Fields. No member of the Compensation Committee (or board
committee performing equivalent functions) (i) was an officer or employee of the
Company, (ii) was formerly an officer of the Company, or (iii) had any business
relationship or conducted any transactions with the Company.
During 2000, no executive officer of the Company served as (i) a member
of the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company, or (ii) a director of another entity, one of
whose executive officers served on the Board of Directors of the Company or its
subsidiaries.
13
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of the Common Stock, to file initial reports of ownership and
reports of changes in ownership (Forms 3, 4, and 5) of Common Stock with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% stockholders are required by Securities and
Exchange Commission regulation to furnish the Company with copies of all such
forms that they file.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all Section 16(a) reports with respect to the year ended
December 31, 2000 applicable to its officers, directors and greater than 10%
beneficial owners, were timely filed, except that Paul J. Sarvadi was late in
filing one Form 4 reflecting a change in the beneficial ownership of his Common
Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1995, Richard G. Rawson, Executive Vice President of
Administration, Chief Financial Officer, Treasurer and a director of the
Company, exercised options to purchase 897,334 shares of Common Stock (as
adjusted for the 2-for-1 split of the Common Stock effected in October 2000) at
a price of $1.50 per share (as adjusted for the 2-for-1 split of the Common
Stock effected in October 2000). The purchase price was paid in cash by Mr.
Rawson. In connection with the exercise of the options, the Company entered into
a loan agreement with Mr. Rawson in the amount of approximately $694,000,
whereby the Company paid certain federal income tax withholding requirements
related to the stock option exercise. The loan agreement called for an
additional amount to be advanced to Mr. Rawson in the event the ultimate tax
liability resulting from the exercise exceeded the statutory withholding
requirements. In April 1996, an additional $300,000 was loaned to Mr. Rawson
pursuant to this provision of the agreement. Mr. Rawson, his wife and a family
limited partnership of which Mr. Rawson is the general partner are obligors of
such loans. The maturity date of the June 1995 loan was extended in February
2000 to June 2002. The April 1996 loan matures in April 2001. Both loans are
secured by 97,964 shares of Common Stock (as adjusted for the 2-for-1 split of
the Common Stock effected in October 2000) owned by the obligors. The loans
accrue interest at 6.93%; however, pursuant to an understanding Mr. Rawson has
with the Company, in each year that the loans have been outstanding, Mr. Rawson
has received a bonus amount equal to the interest paid by Mr. Rawson on the
loans, plus any applicable taxes due on such component of his bonus. See "Report
of the Compensation Committee of the Board of Directors."
In March 1998, the Company completed a Securities Purchase Agreement
(the "Agreement") with AETRS whereby the Company sold units consisting of
1,386,252 shares (as adjusted for the 2-for-1 split of the Common Stock effected
in October 2000) and warrants to purchase an additional 4,131,030 shares (as
adjusted for the 2-for-1 split of the Common Stock effected in October 2000) of
Common Stock to AETRS for a total purchase price of $17.7 million. The warrants
have exercise prices ranging from $20 to $40 per share (as adjusted for the
2-for-1 split of the Common Stock effected in October 2000) and terms ranging
from three to seven years. Mr. Alesio was elected a director of the Company in
July 1999 pursuant to the terms of the Agreement. Mr. Alesio resigned from
American Express in November 2000.
In conjunction with the Agreement with AETRS, the Company entered into
a Marketing Agreement with AETRS to jointly market the Company's services to
American Express' substantial small business customer base across the country.
Under the terms of the Marketing Agreement, AETRS is utilizing its resources to
generate appointments with prospects for the Company's services. In addition,
the Company and AETRS are working to jointly develop product offerings that
enhance the current PEO services offered by the Company. In April 2000, the
Marketing Agreement was amended to provide for increased marketing efforts by
AETRS and to provide that the parties would work towards embedding services
provided by AETRS in the Company's client offerings through its E-commerce
portal. The Company pays a commission to AETRS based upon both the number of
worksite employees paid after being referred to the Company pursuant to the
Marketing Agreement and the total number of worksite employees paid by the
Company. The Marketing Agreement expires at the end of 2005. On February 28,
2001, American Express exercised warrants to purchase 800,000 shares of Common
Stock at $20 per share. On March 12, 2001, the Company purchased 800,000 shares
of Common Stock from American Express and a related entity for a per share price
of approximately $24.4629. The price was based upon the average closing price of
the shares on the New York Stock Exchange over a period of 20 trading days.
14
16
PROPOSAL NUMBER 2:
APPROVAL OF THE
ADMINISTAFF, INC. 2001 INCENTIVE PLAN
REASONS FOR ADOPTION OF THE 2001 PLAN
On March 7, 2001, the Board of Directors approved, subject to
stockholder approval, the Administaff, Inc. 2001 Incentive Plan (the "2001
Plan"). The Board of Directors believes that the 2001 Plan will serve to retain
and attract persons of training, experience and ability to serve as employees of
the Company and its subsidiaries and to serve as non-employee directors of the
Company, to encourage the sense of proprietorship of such persons and to
stimulate the active interest of such persons in the development and financial
success of the Company and its subsidiaries. The 2001 Plan is substantially
similar to the Company's existing 1997 Incentive Plan, which currently has less
than 75,000 shares available for awards, except that it provides for more
flexibility in the types of awards authorized. Up to 1,500,000 shares of Common
Stock are reserved for issuance under the 2001 Plan. The aggregate market value
of these shares based upon the closing price per share of $18.18 on the New York
Stock Exchange as of March 12, 2001 was $27,270,000. Currently, there are
approximately 69,200 employees and 5 non-employee directors who will be eligible
to participate in the plan. A copy of the 2001 Plan is attached as Appendix B to
this Proxy Statement.
REQUIRED AFFIRMATIVE VOTE AND RECOMMENDATION
If the votes cast in person or by proxy at the 2001 Annual Meeting in
favor of the proposal exceed the votes cast opposing the proposal, the 2001 Plan
will be approved. If not approved by the stockholders, the 2001 Plan will
terminate.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO APPROVE THE 2001 PLAN, AND PROXIES EXECUTED AND RETURNED WILL BE SO
VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
SUMMARY OF THE 2001 PLAN
The summary description that follows is qualified by reference to the
2001 Plan, a copy of which is attached as Appendix B to this proxy statement.
Eligibility for Participation. All employees of the Company and its
subsidiaries and non-employee directors of the Company are eligible for awards
under the 2001 Plan.
The allocation of awards in 2001 under the 2001 Plan for persons other
than non-employee Directors is not currently determinable because awards will be
made in accordance with future decisions of committees of the Board following
the general guidelines of the 2001 Plan. For a description of the options
granted during 2000 to Named Executive Officers under the 1997 Incentive Plan,
please see the "Summary Compensation Table" and the "Option/SAR Grants in Last
Fiscal Year" table. Awards to non-employee directors in connection with the 2001
Annual Meeting will be made under the 1997 Incentive Plan. Thereafter,
non-employee directors will receive awards pursuant to the 2001 Plan. The
following table sets forth the awards that will be made to non-employee
directors under the 2001 Plan for the calendar year beginning January 1, 2002,
assuming that five non-employee Directors are then serving on the board:
NEW PLAN BENEFITS TABLE
ADMINISTAFF, INC. 2001 INCENTIVE PLAN
Name and Position Dollar Value ($) Number of Units
- ---------------------- ---------------- -----------------------------
Non-employee Directors $ (*) 25,000 shares of Common Stock
(as a group)
(*) Beginning in 2002, non-employee directors will receive annual grants of
options to purchase 5,000 shares of Common Stock. The dollar value of such
options is not determinable at this time because it will depend upon the fair
market value of the Common Stock on the date of the grant, which will be the
date of the annual meeting for each year beginning after January 1, 2002.
15
17
Administration. The 2001 Plan is administered by the Compensation
Committee of the Company's Board of Directors or any other committee that may be
designated by the Board of Directors. The Board of Directors has designated Mr.
Sarvadi as the sole member of a Special Awards Committee (together with the
Compensation Committee, the "Committee") for the purpose of making awards under
the 2001 Plan to participants other than officers of the Company. Except with
respect to the automatic grant of non-employee director options, the Committee
will select the employees who will receive awards, determine the type and terms
of awards to be granted and interpret and administer the 2001 Plan. Awards under
the 2001 Plan may be granted in tandem with other compensation.
Terms, Conditions and Limitations of Employee Awards.
Performance Objectives. The Committee may condition any employee award
under the 2001 Plan on the achievement of one or more performance objectives.
The Committee shall determine the performance objectives to be achieved and the
length of time allowed to achieve any performance objectives. The term
"performance objectives" means the objectives established by the Committee that
are to be achieved with respect to an award, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to performance
of a division, subsidiary, department, geographic market or function within the
Company or a subsidiary in which the person receiving the award is employed, or
in individual or other terms, and which will relate to the period of time
determined by the Committee. The performance objectives intended to qualify
under Section 162(m) of the Internal Revenue Code shall be with respect to one
or more of the following: (a) net earnings; (b) operating income; (c) earnings
before interest and taxes; (d) earnings before interest, taxes, depreciation,
and amortization expenses; (e) earnings before taxes and unusual or nonrecurring
items; (f) total revenue; (g) return on investment; (h) return on equity; (i)
return on total capital; (j) return on assets; (k) total stockholder return; (l)
return on capital employed in the business; (m) stock price performance; (n)
earnings per share growth; (o) cash flows; (p) total profit; (q) operating
expenses; (r) fee revenue; (s) total revenue less bonus payroll; (t) the number
of paid worksite employees; and (u) gross mark-up per worksite employee.
Which objectives to use with respect to an award, the weighting of the
objectives if more than one is used, and whether the objective is to be measured
against a Company-established budget or target, an index or a peer group of
companies, shall be determined by the Committee in its discretion at the time
the award is granted. A performance objective need not be based on an increase
or a positive result and may include, for example, maintaining the status quo or
limiting economic losses.
Employee Stock Options. Stock options granted to employees are subject
to such terms and conditions as may be established by the Committee, except that
the option exercise price cannot be less than the fair market value per share of
the Common Stock on the date of grant. Stock options may be granted either as
incentive stock options ("ISOs") under Section 422 of the Internal Revenue Code,
nonqualified stock options or a combination thereof. No ISO may be exercised
more than ten years after the date of grant. An award may provide for the
granting of additional, replacement or alternative awards upon the occurrence of
specified events, including the exercise of the original award. Payment of the
option exercise price may be by cash, check, shares of Common Stock already
owned by the optionee for a required period, a "cashless broker exercise"
procedure, or a combination thereof.
Stock Award (including Restricted Stock). The Committee may grant an
award of Common Stock, which may be restricted stock, or an Award that is
denominated in units of Common Stock.
Phantom Stock Award. The Committee may grant phantom shares of Common
Stock to employees, which may be payable in cash, shares of Common Stock or a
combination thereof, subject to the achievement of specified performance goals.
Stock Appreciation Right. The Committee may grant an award that is in
the form of a stock appreciation right ("SAR"). A SAR is the right to receive an
amount in cash or Common Stock equal to the appreciation in value of a specified
number of shares of Common Stock over a particular period of time.
Cash Award. The Committee may grant an award in cash.
Performance Awards. The Committee may grant a performance award
consisting of any type of award or combination of awards. A performance award is
subject to the achievement of one or more performance objectives.
16
18
Performance Units. The Committee may grant an award in Performance
Units. Performance Units are units equivalent to $100 (or such other value as
the Committee determines) and may consist of payments in cash, shares of Common
Stock or a combination thereof, payable upon the achievement of specified
performance goals.
Other Stock-Based Awards. The Committee, in its discretion, may grant
other forms of awards based on, or payable in, shares of Common Stock.
Annual Award Limits. No participant may be granted, during any one
calendar year, options or SARs with respect to more than 100,000 shares of
Common Stock that are not subject to the achievement of a performance objective
or cash awards having a total value in excess of $1,000,000 that are not subject
to the achievement of a performance objective. No participant may be granted,
during any one calendar year, performance awards having a total value in excess
of $1,000,000. No participant may be granted, during any one calendar year,
stock awards or phantom stock awards that are not subject to the achievement of
a performance objective or other stock-based awards with respect to more than
100,000 shares of Common Stock.
Terms, Conditions and Limitations of Non-employee Director Awards.
Non-employee Director Stock Options. The 2001 Plan provides that each
person who is initially appointed or elected as a director of the Company after
March 7, 2001 shall be automatically granted an option to purchase 7,500 shares
of Common Stock on the date of election or appointment at an exercise price per
share equal to the fair market value of the Common Stock on the date of grant,
and such option shall vest as to one-third of the shares on each anniversary of
its grant date. The 2001 Plan also provides that, for each calendar year
beginning after January 1, 2002, each director shall automatically receive on
the date of each annual meeting of the Company's stockholders (unless first
elected or appointed at such meeting) an immediately vested and exercisable
option to purchase 5,000 shares of Common Stock at an exercise price per share
equal to the fair market value of the Common Stock on the date of grant. Neither
the Committee nor the Board of Directors has any discretion with respect to the
grant of these director options. Each director option shall have a term of 10
years, subject to earlier termination depending upon continuity of service on
the Board.
Other Terms and Limitations.
Transferability. Awards under the 2001 Plan generally will not be
transferable other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order; provided, however, the
Committee may, in its discretion, permit a participant to transfer all or a
portion of any award that is not an ISO to the participant's "immediate family
members," as defined in the 2001 Plan.
Deferral. The Committee may permit participants to elect to defer
payment of some or all types of awards or provide for the deferral of an award.
A deferral may be in the form of an installment payment or a future lump-sum
payment.
Dividends and Interest. An award denominated in Common Stock may
include dividends or dividend equivalent rights. The Committee may also
establish rules for the crediting of interest on deferred cash payments and
dividend equivalents for deferred payment denominated in Common Stock or units
of Common Stock.
Adjustments to Awards Following Grant. The Committee may provide for
adjustment of awards following grant under the 2001 Plan in the following
circumstances. In the event of any Common Stock distribution or split,
recapitalization, extraordinary distribution, merger, consolidation, combination
or exchange of shares of Common Stock or similar change or upon the occurrence
of any other event that the Committee, in its sole discretion, deems
appropriate, the Committee may adjust the number of shares, the award exercise
price and the type of shares covered by the award. In the event of a corporate
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Committee may substitute new awards for
previously issued awards, or cancel outstanding options or SARs and give the
holder of the outstanding option or SAR thirty days to exercise the cancelled
option or SAR. The Committee, in its sole discretion, may amend any stock-based
award to reflect a change in accounting rules required by the Financial
Accounting Standards Board, and with respect to any award that is not intended
to meet the requirements of Section 162(m) of the Internal Revenue Code, may
amend any award to reflect a significant event if the Committee believes
amendment is appropriate to reflect the original intent in the grant of the
award.
17
19
Tax Withholding. The 2001 Plan permits the Committee to allow a
participant, upon exercise of an option or payment of an award, to satisfy any
applicable federal tax withholding requirements in the form of shares of Common
Stock, including shares issuable upon exercise or payment of such award.
Change in Control. The 2001 Plan provides that upon a "change in
control" of the Company (as defined in the 2001 Plan), all Awards shall become
immediately exercisable or payable, as the case may be.
Amendment and Termination. The Company may amend, alter or discontinue
the 2001 Plan, except that no amendment or alteration that would impair the
rights of a holder of any award shall be made without the holder's consent, and
no amendment or alteration shall be effective prior to approval by the
stockholders to the extent the Board of Directors determines such approval is
required by applicable laws, regulations or exchange requirements.
18
20
PROPOSAL NUMBER 3:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
GENERAL
The Board of Directors has appointed the firm of Ernst & Young, LLP as
the Company's independent public accountants for the year ending December 31,
2001, subject to ratification by the Company's stockholders. Ernst & Young has
served as the Company's independent public accountants since 1991.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting of Stockholders and will have an opportunity to make a statement, if
they desire to do so, and to respond to appropriate questions from those
attending the meeting.
FEES OF ERNST & YOUNG, LLP
Ernst & Young's fees for professional services provided to Administaff
totaled $225,000 for the calendar year 2000. Ernst & Young's fees for
professional services included the following:
AUDIT FEES
The Company was billed a total of $121,000 by Ernst & Young for
services rendered in connection with the annual audit and for the review of the
Company's financial statements included in the Company's Forms 10-Q for fiscal
year 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young did not provide any information technology services to
the Company during fiscal year 2000.
ALL OTHER FEES
The Company was billed a total of $104,000 by Ernst & Young for all
other non-audit services, including $78,000 for tax-related services and $26,000
for non-audit attestation services, for fiscal year 2000.
The Finance, Risk Management and Audit Committee reviewed the non-audit
services provided to the Company and considered whether Ernst & Young's
provision of such services was compatible with maintaining its independence.
REQUIRED AFFIRMATIVE VOTE
If the votes cast in person or by proxy at the 2001 Annual Meeting of
Stockholders in favor of this proposal exceed the votes cast opposing the
proposal, the appointment of Ernst & Young, LLP as the Company's independent
public accountants for the year ending December 31, 2001 will be ratified.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF ERNST & YOUNG, LLP'S APPOINTMENT AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2001, AND PROXIES EXECUTED
AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED
THEREON.
19
21
PROPOSALS OF STOCKHOLDERS
STOCKHOLDER PROPOSALS FOR 2002 MEETING
Any proposal of a stockholder intended to be considered for inclusion
in the Company's proxy statement for the 2002 Annual Meeting of Stockholders
must be received at the Company's principal executive offices no later than the
close of business on November 30, 2001.
ADVANCE NOTICE REQUIRED FOR STOCKHOLDER NOMINATIONS AND PROPOSALS
The Bylaws of the Company require timely advance written notice of
stockholder nominations of director candidates and of any other proposals to be
presented at an annual meeting of stockholders. Notice will be considered timely
for the annual meeting to be held in 2002 if it is received not later than the
close of business on November 30, 2001 and not earlier than the close of
business on October 31, 2001. In addition, the Bylaws require that such written
notice set forth (a) for each person whom the stockholder proposes to nominate
for election, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act,
including, without limitation, such person's written consent to be named in the
proxy statement as a nominee and to serving as a director if elected, and (b) as
to such stockholder (i) the name and address, as they appear on the Company's
books, of such stockholder, (ii) the class and number of shares of the Company's
capital stock that are beneficially owned by such stockholder, and (iii) a
description of all agreements, arrangements or understandings between such
stockholder and each such person that such stockholder proposes to nominate as a
director and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder.
In the case of other proposals by stockholders at an annual meeting,
the Bylaws require that such written notice set forth as to each matter such
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting, (b) the reasons
for conducting such business at the annual meeting, (c) the name and address, as
they appear on the Company's books, of such stockholder, (d) the class and
number of shares of the Company's stock which are beneficially owned by such
stockholder, and (e) any material interest of such stockholder in such business.
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2000, INCLUDING ANY FINANCIAL STATEMENTS AND SCHEDULES AND EXHIBITS
THERETO, MAY BE OBTAINED WITHOUT CHARGE BY WRITTEN REQUEST TO RUTH HOLUB,
INVESTOR RELATIONS ADMINISTRATOR, ADMINISTAFF, INC., 19001 CRESCENT SPRINGS
DRIVE, KINGWOOD, TEXAS 77339-3802.
By Order of the Board of Directors
/s/ JOHN H. SPURGIN, II
John H. Spurgin, II
Vice President of Legal,
General Counsel and Secretary
March 30, 2001
Kingwood, Texas
20
22
APPENDIX A
ADMINISTAFF FINANCE, RISK MANAGEMENT AND
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Finance, Risk Management and Audit Committee (the
"Committee") is to assist the Board of Directors in fulfilling its
responsibility to oversee the financial affairs, risk management and accounting
practices of the Company. The scope of the Committee's responsibility entails
reviewing and monitoring (i) the financial affairs of the Company, (ii) the
financial statements of the Company and the independence of the firm of
independent public accountants hired to audit the Company's financial statements
(the "external auditors"), and (iii) the Company's policies and procedures with
respect to risk management, as well as other matters that may come before it as
directed by the Board of Directors.
While the Committee has the responsibilities and powers set forth in this
Charter, the Board of Directors and the Committee recognize that the Company's
management is responsible for preparing the Company's financial statements and
the external auditors are responsible for auditing those financial statements.
Therefore, the Board of Directors and the Committee's responsibility is one of
oversight.
MEMBERSHIP AND MEETINGS
The Committee shall consist of not less than three directors who serve at the
discretion of the Board of Directors, and the Committee's composition shall meet
the requirements of the Audit Committee Policy of the New York Stock Exchange
("NYSE"). Accordingly, (i) each member shall have no relationship to the Company
that may interfere with the exercise of his or her independence from management
and the Company, (ii) each member shall be (or shall become within a reasonable
time after appointment) financially literate, and (iii) at least one member
shall have accounting or related financial management expertise, as the Board of
Directors interprets each such qualification in its business judgment.
The Committee shall meet at least four times each year.
PRIVATE DISCUSSIONS/INVESTIGATIONS
The Committee may ask officers and employees of the Company, the Company's
outside counsel, the Company's external auditor or others to attend meetings
with, and furnish pertinent information to, the Committee. The Committee is
empowered to investigate any matter relating to the financial affairs and risk
management of the Company brought to its attention, shall have full access to
all books, records, facilities and personnel of the Company, and shall have the
power to retain counsel, auditors or other experts for this purpose.
ACCOUNTABILITY OF EXTERNAL AUDITORS
The external auditors are ultimately accountable to the Committee and the Board
of Directors. The Committee and the Board of Directors have the responsibility
to select, evaluate and, where appropriate, replace the Company's external
auditors.
DUTIES AND RESPONSIBILITIES
The Committee shall:
1. Annually recommend to the Board of Directors the selection of the
Company's external auditors, with such selection to be submitted to the
stockholders for ratification.
2. Review and approve the plan and scope of the annual audit of the
Company's consolidated financial statements and any other services
provided by the Company's external auditors, as well as the fees
related to the audit and such other services.
21
23
3. Prior to the filing of the Company's quarterly report on Form 10-Q and
annual report on Form 10-K, review and discuss with the external
auditors and management the results of any annual audit or interim
financial review and any report or opinion rendered in connection
therewith, as the case may be, any unresolved disagreements with
management concerning accounting or disclosure matters and any
significant adjustment proposed by the external auditors.
4. Review and consider with the external auditors, the Chief Financial
Officer and the Vice President of Finance the matters required to be
discussed by Statement of Auditing Standards No. 61.
5. Review with the external auditors any management letter provided by the
external auditors and management's response to that letter.
6. Review proposed changes to the Company's financial and accounting
standards and principles and the Company's policies and procedures with
respect to its internal accounting, auditing and financial controls.
7. Review and approve the services provided by independent accounting
firms other than the external auditors.
8. Discuss with management and the external auditors the quality and
adequacy of the Company's internal controls.
9. Ensure that the external auditors deliver to the Committee on a
periodic basis a formal written report delineating all relationships
between the external auditors and the Company. The Committee shall
discuss with the external auditors their independence from management
and the Company and shall consider the compatibility of non-audit
services with the auditors' independence. The Committee shall recommend
that the Board of Directors take appropriate action in response to the
written report to satisfy itself of the independence of the external
auditors.
10. Meet periodically with management to review the Company's major risk
exposures and any steps management has taken to monitor and control
such exposures.
11. Provide a report of Committee activities to the Board of Directors at
regular intervals.
12. Perform such other functions as requested by the Board of Directors, or
required by law or NYSE rule.
ANNUAL REVIEW OF CHARTER
At least annually, the Committee shall review and reassess the adequacy of this
Charter. The Committee shall report the results of the review to the Board of
Directors and, if necessary, recommend that the Board of Directors amend this
Charter.
22
24
APPENDIX B
ADMINISTAFF, INC.
2001 INCENTIVE PLAN
1. OBJECTIVES. This Administaff, Inc. 2001 Incentive Plan (this "Plan")
is intended as an incentive to retain and attract persons of training,
experience and ability to serve as employees of Administaff, Inc., a Delaware
corporation (the "Company"), and its Subsidiaries and as non-employee directors
of the Company, to encourage the sense of proprietorship of such persons and to
stimulate the active interest of such persons in the development and financial
success of the Company and its Subsidiaries.
2. DEFINITIONS. As used herein, the terms set forth below shall have
the following respective meanings:
"ANNUAL DIRECTOR AWARD DATE" means, for each calendar year
beginning on or after January 1, 2002, in which this Plan is in effect, the date
on which the annual meeting of the stockholders of the Company is held in that
year.
"AWARD" means an Employee Award or a Director Award.
"AWARD AGREEMENT" means a written agreement between the
Company and a Participant that sets forth the terms, conditions and limitations
applicable to an Award.
"BOARD" means the Board of Directors of the Company.
"CASH AWARD" means an Award payable in cash.
"CAUSE" means:
(a) the Director whose removal is proposed has been convicted,
or when a Director is granted immunity to testify when another has been
convicted, of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal;
(b) such Director has been found by the affirmative vote of a
majority of the entire Board at any regular or special meeting of the
Board called for that purpose or by a court of competent jurisdiction
to have been guilty of willful misconduct in the performance of his
duties to the Company in a matter of substantial importance to the
Company; or
(c) such Director has been adjudicated by a court of competent
jurisdiction to be mentally incompetent, which mental incompetency
directly affects his ability as a Director of the Company.
"CHANGE IN CONTROL" means:
(a) the date of the acquisition by any "person" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding
the Company or any of its Subsidiaries, of beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of
either the then outstanding shares of Common Stock of the Company or
the then outstanding voting securities entitled to vote generally in
the election of directors; or
(b) the date the individuals who constitute the Board as of
March 7, 2001 (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the members of the Board, provided
that any person becoming a director subsequent to March 7, 2001, whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than any individual whose
nomination for election to Board membership was not endorsed by the
Company's management prior to, or at the time of, such individual's
initial nomination for election) shall be, for purposes of this Plan,
considered as though such person were a member of the Incumbent Board;
or
23
25
(c) the date of consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets or the issuance of shares
of stock of the Company in connection with the acquisition of the stock
or assets of another entity, provided, however, that a Change in
Control shall not occur under this clause (c) if consummation of the
transaction would result in at least 65% of the total voting power
represented by the voting securities of the Company (or, if not the
Company, the entity that succeeds to all or substantially all of the
Company's business) outstanding immediately after such transaction
being beneficially owned (within the meaning of Rule 13d-3 promulgated
pursuant to the Exchange Act) by at least 65% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or
(d) the date the Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report of item therein) that a change in
control of the Company has or may have occurred, or will or may occur
in the future, pursuant to any then existing contract or transaction.
"CODE" means the United States Internal Revenue Code of 1986,
as amended from time to time.
"COMMITTEE" means the Compensation Committee of the Board or
any other committee as may be designated by the Board.
"COMMON STOCK" means the common stock, par value $0.01 per
share, of the Company or any security into which such Common Stock may be
changed by reason of any transaction or event of the type described in Section
13.
"COMPANY" means Administaff, Inc., a Delaware corporation.
"DIRECTOR" means a member of the Board, excluding any
individual who is also an employee of the Company or any Subsidiary.
"DIRECTOR AWARD" means a Director Option.
"DIRECTOR OPTION" means a nonqualified stock option granted to
a Director pursuant to Section 7.
"DISABILITY" means the inability to perform the duties of the
Director's position for a period of six (6) consecutive months or for an
aggregate of six (6) months during any twelve (12) month period after the Grant
Date by reason of any medically determinable physical or mental impairment, as
determined by the Committee in the Committee's sole discretion.
"EMPLOYEE" means an individual employed by the Company or any
Subsidiary. For purposes of this Plan, an Employee also includes any individual
who has been offered employment by the Company or any Subsidiary, provided that
(a) any Award granted to such prospective employee shall be canceled if such
individual fails to commence such employment, (b) no payment of value may be
made in connection with such Award until such individual has commenced such
employment, and (c) such individual may not be granted an ISO prior to the date
the individual actually commences employment.
"EMPLOYEE AWARD" means any Option, Performance Award, Phantom
Stock Award, Cash Award, Stock Award, Stock Appreciation Right or Other
Stock-Based Award, whether granted singly, in combination or in tandem, to a
Participant who is an Employee pursuant to any applicable terms, conditions and
limitations as the Committee may establish in order to fulfill the objectives of
the Plan.
"EXERCISE PRICE" means the price at which the Option Shares
may be purchased under the terms of the Award Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"FAIR MARKET VALUE" of a share of Common Stock means, as of a
particular date, (a) if shares of Common Stock are listed on a national
securities exchange, the closing sales price per share of Common Stock on the
consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date or, if there
shall have been no such sale so reported on that date, on the last preceding
date on which such a sale was so
24
26
reported or, at the discretion of the Committee, the price prevailing on the
exchange at the time of exercise; (b) if shares of Common Stock are not so
listed but are quoted on the Nasdaq National Market, the closing sales price per
share of Common Stock reported by the Nasdaq National Market on that date or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported or, at the discretion of the
Committee, the price prevailing on the Nasdaq National Market at the time of
exercise; (c) if the Common Stock is not so listed or quoted, the closing price
on that date or, if there are no quotations available for such date, on the last
preceding date on which such quotations shall be available, as reported by the
Nasdaq Stock Market or, if not reported by the Nasdaq Stock Market, by the
National Quotation Bureau Incorporated; or (d) if none of the above is
applicable, then such amount as may be determined by the Committee or the Board
in such a manner as it deems in good faith to be the fair market value per share
of Common Stock.
"GRANT DATE" means (a) with respect to an Award other than a
Director Award, the date specified by the Committee in the Award Agreement on
which such Award will become effective, and (b) with respect to a Director
Award, the automatic date of grant for such Award as provided in Section 7.
"ISO" means an incentive stock option within the meaning of
Code Section 422.
"OPTION" means a right to purchase a particular number of
shares of Common Stock at a particular Exercise Price, subject to certain terms
and conditions as provided in this Plan and in the Award Agreement. An Option
may be in the form of an ISO or a nonqualified stock option within the meaning
of Code Section 83.
"OPTION SHARES" means the shares of Common Stock covered by a
particular Option.
"OTHER STOCK-BASED AWARD" means any Award that shall consist
of a right that (a) is not an Option, Performance Award, Phantom Stock Award,
Stock Award or SAR, and (b) is denominated or payable in, valued in whole or in
part by reference to, or otherwise based on or related to shares of Common Stock
as is deemed by the Committee to be consistent with the terms of the Plan.
"PARTICIPANT" means an Employee or a Director to whom an Award
has been granted under this Plan.
"PERFORMANCE AWARD" means an Employee Award, such as a
Performance Unit, that is subject to the achievement of one or more Performance
Objectives established by the Committee.
"PERFORMANCE OBJECTIVES" means the objectives, if any,
established by the Committee that are to be achieved with respect to an Award
granted under this Plan, which may be described in terms of Company-wide
objectives, in terms of objectives that are related to performance of a
division, Subsidiary, department, geographic market or function within the
Company or a Subsidiary in which the Participant receiving the Award is
employed, or in individual or other terms, and which shall relate to the period
of time determined by the Committee. The Performance Objectives intended to
qualify under Code Section 162(m) shall be with respect to one or more of the
following: (a) net earnings; (b) operating income; (c) earnings before interest
and taxes; (d) earnings before interest, taxes, depreciation and amortization
expenses; (e) earnings before taxes and unusual or nonrecurring items; (f) total
revenue; (g) return on investment; (h) return on equity; (i) return on total
capital; (j) return on assets; (k) total stockholder return; (l) return on
capital employed in the business; (m) stock price performance; (n) earnings per
share growth; (o) cash flows; (p) total profit; (q) operating expenses; (r) fee
revenue; (s) total revenue less bonus payroll; (t) the number of paid worksite
employees; and (u) gross mark-up per worksite employee.
The Committee shall determine, in its sole discretion, at the
time of grant of an Award, which Performance Objectives to use with respect to
an Award, the weighting of such objectives if more than one is used and whether
such objective(s) is (are) to be measured against a Company-established budget
or target, an index or a peer group of companies. A Performance Objective need
not be based on an increase or a positive result and may be based, for example,
on maintaining the status quo or limiting economic losses.
"PERFORMANCE UNIT" means a unit equivalent to $100 or such
other value as determined by the Committee.
"PHANTOM STOCK AWARD" means the right to receive the value of
a specified number of shares of Common Stock.
"PLAN" means the Administaff, Inc. 2001 Incentive Plan, as
amended from time to time.
25
27
"RESTRICTED STOCK" means shares of Common Stock that are
restricted or subject to forfeiture provisions.
"STOCK APPRECIATION RIGHTS" or "SARS" means the right to
receive an amount in cash or Common Stock equal to the appreciation in value of
a specified number of shares of Common Stock over a particular period of time.
"STOCK AWARD" means an Employee Award denominated in or
payable in shares of Common Stock, which may be Restricted Stock.
"SUBSIDIARY" means (a) with respect to any Awards other than
ISOs, (i) in the case of a corporation, any corporation of which the Company
directly or indirectly owns shares representing 50% or more of the combined
voting power of the shares of all classes or series of capital stock of such
corporation that have the right to vote generally on matters submitted to a vote
of the stockholders of such corporation, and (ii) in the case of a partnership
or other business entity not organized as a corporation, any such business
entity of which the Company directly or indirectly owns 50% or more of the
voting, capital or profits interests (whether in the form of partnership
interests, membership interests or otherwise), and (b) with respect to Awards of
ISOs, any subsidiary within the meaning of Code Section 424(f).
3. PLAN ADMINISTRATION AND DESIGNATION OF PARTICIPANTS. All Employees
of the Company and its Subsidiaries and all Directors of the Company are
eligible for Awards under this Plan. The Committee shall select the Participants
from time to time by the grant of Employee Awards under this Plan and, subject
to the terms and conditions of this Plan, shall determine all terms and
conditions of the Employee Awards. The Committee shall have no discretion with
respect to the grant of Director Awards.
This Plan shall be administered by the Committee, which shall
have full and exclusive power to interpret this Plan and to adopt such rules,
regulations and guidelines for carrying out this Plan as it may deem necessary
or appropriate.
The Committee may, in its discretion, provide for the
extension of the exercisability of an Employee Award, accelerate the vesting or
exercisability of an Employee Award, eliminate or make less restrictive any
restrictions contained in an Employee Award, waive any restriction or other
provision of this Plan or an Employee Award or otherwise amend or modify an
Employee Award in any manner that is either (a) not adverse to the Participant
to whom such Employee Award was granted, or (b) consented to by such
Participant. Notwithstanding anything herein to the contrary, no Option or SAR
shall be granted in exchange for another Option or SAR if the Exercise Price of
the previously granted Option or SAR is greater than the Exercise Price of the
replacement Option or SAR.
No member of the Committee shall be liable for anything done
or omitted to be done by him or her, by any member of the Committee or by any
officer of the Company in connection with the performance of any duties under
this Plan, except for his or her own willful misconduct or as expressly provided
by statute.
4. AWARD AGREEMENT. Each Award granted hereunder shall be described in
an Award Agreement, which shall be subject to the terms and conditions of this
Plan and shall be signed by the Participant and by the appropriate officer for
and on behalf of the Company.
5. SHARES OF COMMON STOCK RESERVED FOR THIS PLAN. Subject to adjustment
as provided in Section 13 hereof, a total of 1,500,000 shares of Common Stock
shall be reserved for issuance upon the exercise or payment of Awards granted
pursuant to this Plan. Such shares may be shares of original issuance or
treasury shares or a combination of the foregoing. The Committee and the
appropriate officers of the Company shall from time to time take whatever
actions are necessary to execute, acknowledge, file and deliver any documents
required to be filed with or delivered to any governmental authority or any
stock exchange or transaction reporting system on which shares of Common Stock
are listed or quoted in order to make shares of Common Stock available for
issuance pursuant to this Plan. Awards that are forfeited or terminated or
expire unexercised in such a manner that all or some of the shares of Common
Stock subject thereto are not issued to a Participant shall immediately become
available for the granting of Awards under this Plan.
6. EMPLOYEE AWARDS.
(a) OPTIONS. An Employee Award may be in the form of an
Option. The Exercise Price of an Option granted under this Plan shall
not be less than 100% of the Fair Market value of the Common Stock at
the time of grant. Options granted to an Employee of the Company may,
in the discretion of the Committee, provide for an automatic "reload"
grant upon the exercise of the Option, with such terms and conditions
on any such reload grant as
26
28
the Committee may choose, provided, however, that the Exercise Price
for such reload option shall not be less than 100% of the Fair Market
Value of the Common Stock at the time of grant of such reload option
and the term for such reload option shall not exceed the remaining term
for the original Option.
(i) INCENTIVE STOCK OPTIONS. Options granted to
Employees hereunder may be ISOs. An ISO shall consist of a
right to purchase a specified number of shares of Common Stock
at a price specified by the Committee in the Award Agreement
or otherwise, which shall not be less than the Fair Market
Value of the Common Stock on the Grant Date. Any ISO granted
shall expire not later than ten (10) years after the Grant
Date, with the expiration date to be specified by the
Committee in the Award Agreement. Any ISO granted must, in
addition to being subject to applicable terms, conditions and
limitations established by the Committee, comply with Code
Section 422. All other terms, conditions and limitations
applicable to ISOs shall be determined by the Committee.
(ii) NONQUALIFIED STOCK OPTIONS. Options granted to
Employees may be nonqualified stock options within the meaning
of Code Section 83. A nonqualified stock option shall consist
of a right to purchase a specified number of shares of Common
Stock at a price specified by the Committee in the Award
Agreement or otherwise, which shall not be less than the Fair
Market Value of the Common Stock on the Grant Date. The
expiration date of the nonqualified stock option shall be
specified by the Committee in the Award Agreement. All other
terms, conditions and limitations applicable to nonqualified
stock options shall be determined by the Committee.
(b) PERFORMANCE AWARD. An Employee Award may be in the form of
a Performance Award, such as a Performance Unit. A Performance Award
shall be subject to the achievement of one or more Performance
Objectives. All other terms, conditions and limitations applicable to
Performance Awards shall be determined by the Committee.
(c) STOCK AWARD (INCLUDING RESTRICTED STOCK). An Employee
Award may consist of Common Stock or may be denominated in units of
Common Stock. All terms, conditions and limitations applicable to any
Stock Award pursuant to this Plan shall be determined by the Committee.
(d) PHANTOM STOCK AWARD. An Employee Award may be in the form
of Phantom Stock or other bookkeeping account tied to the value of
shares of Common Stock. All terms, conditions and limitations
applicable to any Phantom Stock Award shall be determined by the
Committee.
(e) STOCK APPRECIATION RIGHT. An Employee Award may be in the
form of SARs. All terms, conditions and limitations applicable to any
Employee Awards of SARs shall be determined by the Committee.
(f) CASH AWARD. An Employee Award may be in the form of a Cash
Award. All terms, conditions and limitations applicable to any Cash
Award shall be determined by the Committee.
(g) OTHER STOCK-BASED AWARDS. An Employee Award may be in the
form of any Other Stock-Based Award. All terms, conditions and
limitations applicable to any Other Stock-Based Award shall be
determined by the Committee.
(h) The following limitations shall apply to any Award made
hereunder:
(i) Notwithstanding anything herein to the contrary,
no Participant may be granted, during any one calendar year
period, Options or SARs (that are not subject to the
achievement of any Performance Objectives) with respect to more
than 100,000 shares of Common Stock.
(ii) Notwithstanding anything herein to the contrary,
no Participant may be granted, during any one calendar year
period, Performance Awards having a total value in excess of
$1,000,000 or Cash Awards (that are not subject to the
achievement of any Performance Objectives) having a total value
in excess of $1,000,000.
(iii) Notwithstanding anything herein to the contrary,
no Participant may be granted, during any one calendar year
period, Stock Awards or Phantom Stock Awards (that are not
subject to the achievement of
27
29
any Performance Objectives) or Other Stock-Based Awards with
respect to more than 100,000 shares of Common Stock.
7. DIRECTORS AWARDS. Directors of the Company shall be granted Director
Awards in accordance with this Section 7 and subject to applicable terms and
limitations set forth in this Plan and the applicable Award Agreements.
Notwithstanding anything herein to the contrary, if the number of shares of
Common Stock available for Awards under this Plan is insufficient to make all
automatic grants of Director Awards provided for in this Section 7 on the
applicable Grant Date, then all Directors who are entitled to a Director Award
on such date shall share ratably in the number of shares then available for
Awards under this Plan, all Directors shall have no right to receive a Director
Award with respect to the deficiencies in the number of available shares, and
all future Director Awards under this Section 7 shall terminate.
(a) INITIAL DIRECTOR AWARD. Each Director who is elected or
appointed to the Board for the first time after March 7, 2001, shall be
automatically granted, on the date of his or her election or
appointment to the Board, a Director Option to purchase 7,500 shares of
Common Stock (the "Initial Director Award"), which shall become vested
and exercisable as to one-third (1/3) of the Option Shares on each
anniversary of the Grant Date unless such Director requests in writing
not to receive such Initial Director Award. Notwithstanding the
foregoing, if the Director terminates his service as a member of the
Board, his or her unvested Option Shares, if any, shall terminate
immediately on such termination date, unless such termination of
service is due to death or Disability, in which event the unvested
Option Shares shall become immediately 100% vested and exercisable on
such termination date.
(b) ANNUAL DIRECTOR AWARD. On the Annual Director Award Date,
each Director who is in office immediately after the annual meeting on
such date and who was not elected or appointed to the Board for the
first time on such date shall be automatically granted a Director
Option to purchase 5,000 shares of Common Stock (the "Annual Director
Award"), which shall be 100% vested and exercisable on the Grant Date
unless such Director requests in writing not to receive such Annual
Director Award.
(c) TERMINATION OF DIRECTOR AWARDS. The Initial Director Award
and the Annual Director Award granted to each Director shall terminate
and be of no force and effect with respect to any shares of Common
Stock not previously purchased by the Director upon the first to occur
of:
(i) the tenth (10th) anniversary of the Grant Date for
such Award or
(ii) with respect to
(1) the portion of the Initial Director Award and
Annual Director Award exercisable upon termination of service,
the expiration of (A) three (3) months following the
Director's termination of service for Cause, or (B) three (3)
years following the Director's termination of service for any
other reason; and/or
(2) the portion of the Initial Director Award not
exercisable upon termination of service, the date of the
Director's termination of service.
Notwithstanding anything herein to the contrary, the normal
expiration date for Director Awards shall not be extended.
(d) EXERCISE PRICE. The exercise price of the Common Stock
under the Initial Director Award and the Annual Director Award granted
to each Director shall be the Fair Market Value of the shares of Common
Stock subject to such Director Award on the Grant Date for such
Director Award.
(e) AWARD AGREEMENT. Each Initial Director Award and Annual
Director Award granted to a Director shall be evidenced by an Award
Agreement between the Company and such Director that sets forth the
terms, conditions and limitations described above and any additional
terms, conditions and limitations applicable to the Initial Director
Award or the Annual Director Award. Such Award Agreements shall be
consistent with the terms and conditions of this Plan.
28
30
8. PAYMENT OF AWARDS.
(a) GENERAL. Payment of Awards may be made in the form of cash
or Common Stock or combinations thereof and may include such
restrictions as the Committee shall determine, including, in the case
of Common Stock, restrictions on transfer and forfeiture provisions.
(b) DEFERRAL. The Committee may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types
of Awards in accordance with procedures established by the Committee,
or (ii) provide for the deferral of an Award in an Award Agreement or
otherwise. Any such deferral may be in the form of installment payments
or a future lump-sum payment. Any deferred payment, whether elected by
the Participant or specified by the Award Agreement or the Committee,
may be forfeited if and to the extent that the Award Agreement so
provides.
(c) DIVIDENDS AND INTEREST. Dividends or dividend equivalent
rights may be extended to and made part of any Award denominated in
Common Stock or units of Common Stock, subject to such terms,
conditions and restrictions as the Committee may establish. The
Committee may also establish rules and procedures for the crediting of
interest on deferred cash payments and dividend equivalents for
deferred payment denominated in Common Stock or units of Common Stock.
(d) SUBSTITUTION OF AWARDS. At the discretion of the
Committee, a Participant who has been granted an Employee Award may be
offered an election to substitute an Employee Award for another
Employee Award or Employee Awards of the same or different type,
subject to the overall limits expressed in this Plan.
(e) NO FRACTIONAL SHARES. The Committee shall not be required
to issue any fractional shares of Common Stock under this Plan. The
Committee, in its sole discretion, may provide for the elimination of
fractions for the settlement of fractions in cash.
9. OPTION EXERCISE. The price at which shares of Common Stock may be
purchased under an Option shall be paid in full at the time of exercise (a) in
cash or by check payable and acceptable to the Company, or (b) by tendering to
the Company shares of Common Stock owned by the Participant for at least six
months, if acquired pursuant to a Company stock option, such shares having an
aggregate Fair Market Value as of the date of exercise and tender that is not
greater than the Exercise Price for the shares with respect to which the Option
is being exercised, and by paying any remaining amount of the Exercise Price as
provided in (a) above (provided that the Committee may, upon confirming that the
Participant owns the number of shares being tendered, authorize the issuance of
a new certificate for the number of shares being acquired pursuant to the
exercise of the Option less the number of shares being tendered upon the
exercise and return to the Participant (or not require surrender of) the
certificate for the shares being tendered upon the exercise), or (c) by the
Participant delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company to pay the
Exercise Price and any required tax withholding amounts, provided that in the
event the Participant chooses to pay the Exercise Price and withholding taxes as
provided in (c) above, the Participant and the broker shall comply with such
procedures and enter into such agreements as the Committee may prescribe as a
condition of such payment procedure, or (d) by a combination of such payment
methods.
10. TERMINATION OF EMPLOYMENT OR SERVICE. Upon the termination of
employment or service by a Participant, any unexercised, deferred or unpaid
Awards shall be treated as provided in the specific Award Agreement evidencing
the Award or, in the case of Director Awards, as provided in this Plan. Unless
otherwise specifically provided in the Award Agreement, each Award granted
pursuant to this Plan that is an Option shall immediately terminate to the
extent the Option is not vested (or does not become vested as a result of such
termination of employment or service) on the date the Participant terminates
employment or service with the Company or its Subsidiaries.
11. ACCELERATION UPON A CHANGE IN CONTROL. Notwithstanding anything
herein to the contrary, all conditions and/or restrictions relating to the
continued employment or service of a Participant and/or the achievement of
Performance Objectives with respect to the vesting and exercisability or full
entitlement to any Award shall immediately lapse upon a Change in Control.
12. ASSIGNABILITY. Unless otherwise permitted by the Committee, no
Award granted under this Plan shall be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated by a Participant other than by (a) will or
the laws of descent and distribution, or (b) a qualified domestic relations
order. During the lifetime of a Participant, any Award shall be
29
31
exercisable only by him, or in the case of a Participant who is mentally
incapacitated, the Award shall be exercisable by his guardian or legal
representative. The Committee may prescribe and include in applicable Award
Agreements other restrictions on transfer. Any attempted assignment or transfer
in violation of this Section 12 shall be null and void. Upon the Participant's
death, the personal representative or other person entitled to succeed to the
rights of the Participant (the "Successor Participant") may exercise such
rights. A Successor Participant must furnish proof satisfactory to the Company
of his or her right to exercise the Award under the Participant's will or under
the applicable laws of descent and distribution.
Subject to approval by the Committee in its sole discretion,
other than with respect to ISOs, all or a portion of the Awards granted to a
Participant under this Plan may be transferable by the Participant, to the
extent and only to the extent specified in such approval, to (a) the spouse,
children or grandchildren (including adopted children and stepchildren and
grandchildren) of the Participant ("Immediate Family Members"), (b) a trust or
trusts for the exclusive benefit of such Immediate Family Members and, if
applicable, the Participant, or (c) a partnership or partnerships in which such
Immediate Family Members and, if applicable, the Participant are the only
partners, provided that the Award Agreement pursuant to which such Awards are
granted (or an amendment thereto) must expressly provide for transferability in
a manner consistent with this Section. Subsequent transfers of transferred
Awards shall be prohibited except by will or the laws of descent and
distribution, unless such transfers are made to the original Participant or a
person to whom the original Participant could have made a transfer in the manner
described herein. No transfer shall be effective unless and until written notice
of such transfer is provided to the Committee, in the form and manner prescribed
by the Committee. Following transfer, any such Awards shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, and except as otherwise provided herein, the term "Participant" shall
be deemed to refer to the transferee. No transferred Options shall be
exercisable unless arrangements satisfactory to the Company have been made to
satisfy any tax withholding obligations the Company may have with respect to the
Options. The consequences of termination of employment or service shall continue
to be applied with respect to the original Participant, following which the
Awards shall be exercisable by the transferee only to the extent and for the
periods specified in this Plan and the Award Agreement.
13. ADJUSTMENTS.
(a) The existence of outstanding Awards shall not affect in
any manner the right or power of the Company or its stockholders to
make or authorize (i) any or all adjustments, recapitalization,
reorganizations or other changes in the ownership of the Company or its
business, (ii) any merger or consolidation of the Company, (iii) any
issue of bonds, debentures or other obligations, (iv) the dissolution
or liquidation of the Company, (v) any sale or transfer of all or any
part of its assets or business, or (vi) any other Company act or
proceeding of any kind, whether or not of a character similar to that
of the acts or proceedings enumerated above.
(b) In the event of any Common Stock distribution or split,
recapitalization, extraordinary distribution, merger, consolidation,
combination or exchange of shares of Common Stock or similar change or
upon the occurrence of any other event that the Committee, in its sole
discretion, deems appropriate, (i) the number of shares of Common Stock
reserved under this Plan and covered by outstanding Awards, (ii) the
Exercise Price in respect of such Awards, and (iii) the kind of shares
covered thereby (including shares of another issuer) shall be adjusted
as appropriate.
(c) In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation, the Committee shall be authorized (i) to issue or assume
Awards by means of substitution of new Awards, as appropriate, for
previously issued Awards or to assume previously issued Awards as part
of such adjustment, or (ii) to cancel Awards that are Options or SARs
and give the Participants who are the holders of such Awards notice and
opportunity to exercise for thirty (30) days prior to such
cancellation.
(d) The Committee, in its sole discretion and without the
consent of the Participant, may amend (i) any stock-based Award to
reflect a change in accounting rules required by the Financial
Accounting Standards Board, and (ii) any Award that is not intended to
meet the requirements of Code Section 162(m), to reflect a significant
event that the Committee, in its sole discretion, believes to be
appropriate to reflect the original intent in the grant of the Award.
14. TAX WITHHOLDING. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount
of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of such taxes.
The Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to
30
32
satisfy tax withholding, such shares shall be valued based on the Fair Market
Value when the tax withholding is required to be made.
15. AMENDMENTS OR TERMINATION. The Company may amend, alter or
discontinue this Plan, except that (a) no amendment or alteration that would
impair the rights of any Participant under any Award that he has been granted
shall be made without his consent, and (b) no amendment or alteration shall be
effective prior to approval by the Company's stockholders to the extent such
approval is determined by the Board to be required by applicable laws,
regulations or exchange requirements.
16. RESTRICTIONS. No shares of Common Stock or other form of payment
shall be issued with respect to any Award unless the Company shall be satisfied,
based on the advice of its counsel, that such issuance will be in compliance
with applicable federal and state securities laws. The Award Agreement may
include provisions for the repurchase by the Company of Common Stock acquired
pursuant to an Award and repurchase of the Participant's Option rights.
17. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts shall be
used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Common Stock or rights thereto to be granted under this
Plan. Any liability or obligation of the Company to any Participant with respect
to a grant of cash, Common Stock or rights thereto under this Plan shall be
based solely upon any contractual obligations that may be created by this Plan
and any Award Agreement, and no such liability or obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on any property
of the Company. None of the Company, the Board or the Committee shall be
required to give any security or bond for the performance of any obligation that
may be created by this Plan.
18. INDEMNIFICATION. The Company shall indemnify and hold harmless any
member of the Board or the Compensation Committee and other individuals,
including Employees and Directors, performing services on behalf of the
Committee, against any liability, cost or expense arising as a result of any
claim asserted by any person or entity under the laws of any state or of the
United States with respect to any action or failure to act of such individuals
taken in connection with this Plan, except claims or liabilities arising on
account of the willful misconduct or bad faith of such Board member,
Compensation Committee member or individual.
19. MISCELLANEOUS. The granting of any Award shall not impose upon the
Company any obligation to maintain any Participant as an Employee or a Director
and shall not diminish the power of the Company to terminate any Participant's
employment or service at any time.
20. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.
21. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of March 7,
2001, subject to approval of this Plan by the stockholders of the Company within
one year of the date this Plan is adopted by the Board. If the stockholders of
the Company should fail to so approve this Plan within one year of the adoption
date, this Plan shall terminate and cease to be of any further force or effect
and all grants of Awards hereunder shall be null and void.
Attested to by the Secretary of Administaff, Inc.,
as adopted by the Board of Directors effective
as of March 7, 2001.
/s/ John H. Spurgin, II
--------------------------------------------
31
33
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
ADMINISTAFF, INC.
TO BE HELD ON MAY 8, 2001
The undersigned hereby appoints Paul J. Sarvadi and John H. Spurgin, II, or
either of them, as the lawful agents and proxies of the undersigned (with all
the powers the undersigned would possess if personally present, including full
power of substitution), and hereby authorizes them to represent and to vote, as
designated on the reverse side, all the shares of Common Stock of Administaff,
Inc. held of record by the undersigned on March 9, 2001, at the Annual Meeting
of Stockholders of Administaff, Inc., to be held at the Company's Corporate
Headquarters, Centre II in the University Rooms, located at 29801 Loop 494,
Kingwood, Texas on May 8, 2001 at 10:00 a.m., Central Daylight Savings Time, or
any reconvened meeting after an adjournment thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned stockholder. WHERE NO CHOICE IS
SPECIFIED BY THE STOCKHOLDER, THE PROXY WILL BE VOTED "FOR" THE PROPOSALS 1, 2
AND 3, AND IN THE DISCRETION OF THE PERSONS NAMED HEREIN ON ALL OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
34
ADMINISTAFF, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors. The undersigned hereby revokes all previous
Nominees: 01) Jack M. Fields, Jr. For Withhold For All proxies relating to the shares of Common Stock
02) Paul S. Lattanzio. All All Except covered hereby and confirms all that said Proxy
03) Richard G. Rawson. [ ] [ ] [ ] may do by virtue hereof.
FOR ALL EXCEPT NOMINEE(S) CROSSED
OUT. , 2001
-----------------------------------------
2. To approve the adoption of the For Against Abstain Dated
Administaff, Inc. 2001 Incentive [ ] [ ] [ ]
Plan. -----------------------------------------------
Signature of Stockholder
3. To ratify the appointment of Ernst & For Against Abstain
Young, LLP as the Company's independent [ ] [ ] [ ] -----------------------------------------------
auditors for the year 2001. Signature of Stockholder
This proxy must be signed exactly as the name
appears hereon. Joint owners should each
sign. Executors, administrators, trustees, etc.,
should give full title as such. If the signer is a
corporation, please sign full corporate name by
duly authorized officer.