1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Team America Corporation
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(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
TEAM AMERICA CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 25, 1999
AND
PROXY STATEMENT
================================================================================
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE
3
TEAM AMERICA CORPORATION
110 East Wilson Bridge Road
Columbus, Ohio 43085
(614) 848-3995
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 15, 1999
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of TEAM
America Corporation will be held at the Clarion Hotel, located at 7007 North
High Street, Worthington, Ohio, on Tuesday, May 25, 1999, at 10:00 a.m.
(local time), for the following purposes:
1. To elect four Class I Directors, each to serve for a two-year
term expiring at the 2001 Annual Meeting and until their
successors are duly elected and qualified.
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 2, 1999
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
You will be most welcome at the meeting, and we hope you can attend.
Directors and officers of the Corporation and representatives of its independent
public accountants will be present to answer your questions and to discuss its
business.
We urge you to execute and return the enclosed proxy as soon as
possible so that your shares may be voted in accordance with your wishes. If you
attend the meeting, you may vote in person and your proxy will not be used.
By Order of the Board of Directors,
William W. Johnston
Chairman of the Board of Directors
- --------------------------------------------------------------------------------
PLEASE SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES
- --------------------------------------------------------------------------------
4
TEAM AMERICA CORPORATION
110 East Wilson Bridge Road
Columbus, Ohio 43085
(614) 848-3995
-----------------------------
PROXY STATEMENT
-----------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1999
-----------------------------
This Proxy Statement is furnished to the shareholders of TEAM America
Corporation (the "Corporation") in connection with the solicitation of proxies
to be used in voting at the Annual Meeting of Shareholders to be held on May 25,
1999, and at any adjournment thereof (the "Annual Meeting"). The enclosed proxy
is solicited by the Board of Directors of the Corporation. This Proxy Statement,
together with the Corporation's Annual Report to Shareholders for the fiscal
year ended December 31, 1998 ("fiscal 1998"), will be first sent or given to the
Corporation's shareholders on or about April 15, 1999.
The close of business on April 2, 1999 has been fixed as the date of
record for those shareholders entitled to vote at the Annual Meeting. The stock
transfer books of the Corporation will not be closed. As of April 2, 1999, the
Corporation had outstanding and entitled to vote 4,262,880 shares of common
stock, without par value (the "Common Stock"), each of which is entitled to one
vote. The Corporation has no other class of capital stock outstanding.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Corporation is necessary to constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum. Broker non-votes occur when brokers, who hold their customers' shares in
street name, sign and submit proxies for such shares and vote such shares on
some matters, but not others. Typically, this would occur when brokers have not
received any instructions from their customers, in which case the brokers, as
the holders of record, are permitted to vote on "routine" matters, which
typically include the election of directors.
Under Ohio law, the nominees for election as Directors at the Annual
Meeting receiving the greatest number of votes shall be elected. Each other
matter to be submitted to the shareholders for approval or ratification at the
Annual Meeting requires the affirmative vote of the holders of a majority of the
Common Stock present and entitled to vote on the matter.
Any shareholder giving the enclosed proxy has the power to revoke it at
any time before it is voted if notice of revocation is given to the Secretary of
the Corporation in writing or at the Annual Meeting. The shares represented by
the enclosed proxy will be voted as specified by the shareholders. If no choice
is specified, the proxy will be voted FOR the election as Directors of the
nominees named herein.
The cost of soliciting proxies and preparing the proxy materials will
be borne by the Corporation. In addition, the Corporation will request
securities brokers, custodians, nominees, and fiduciaries to forward
solicitation material
-1-
5
to the beneficial owners of Common Stock held of record and will reimburse them
for their reasonable out-of-pocket expenses in forwarding such solicitation
material. Proxies may be solicited personally or by telephone or telegram by
Directors, officers and employees of the Corporation without additional
compensation to them. The Corporation may engage an outside firm to distribute
proxy solicitation materials to brokers, banks and other nominees.
NOMINATION AND ELECTION OF DIRECTORS
The number of Directors has been fixed by the Board of Directors of the
Corporation at eight. The Board of Directors currently is divided into two
classes. Class I has four members and Class II currently has three members.
There is currently one vacancy in Class II. The members of the two classes are
elected to serve for staggered terms of two years.
At the Annual Meeting, four Class I Directors will be elected, each to
hold office for a term of two years and until a successor is elected and
qualified. William W. Johnston, Byron G. McCurdy, S. Cash Nickerson, and M. R.
Swartz are nominees (collectively, the "Nominees") for election as Class I
Directors at the Annual Meeting, each to hold office for a term of two years
until the 2001 Annual Meeting of Shareholders. The terms of Kevin T. Costello,
Charles F. Dugan II and Crystal Faulkner (collectively, the "Continuing
Directors") expire at the 2000 Annual Meeting of Shareholders.
All the Nominees have indicated a willingness to stand for election and
to serve if elected. It is intended that the shares represented by the enclosed
proxy will be voted for the election of the Nominees. Although it is anticipated
that each Nominee will be available to serve as a Director, should any Nominee
be unavailable to serve, the proxies will be voted by the proxy holders in their
discretion for another person designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR.
Listed below are the names of each Nominee and Continuing Director,
their ages, the year in which each first became a Director, their principal
occupations during the past five years and other directorships, if any, held by
them in companies with a class of equity securities registered pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to its periodic reporting requirements. See "Security Ownership of
Certain Beneficial Owners and Management" for information regarding such
persons' holdings of equity securities of the Corporation.
-2-
6
CLASS I DIRECTORS
(NOMINEES FOR TERMS EXPIRING IN 2001)
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
- -------------------- ---- ---------- ---------------------------------------------------------
William W. Johnston 53 1990 Chairman of the Board of Directors of the Corporation
since 1999; Secretary of the Corporation since 1990;
outside general counsel to the Corporation since 1989.
M. R. Swartz 59 1991 Restaurant owner/operator.
S. Cash Nickerson 39 1998 Executive Vice President of the Corporation since 1997;
President of TEAM America of California, Inc., a wholly
owned subsidiary of the Corporation, since 1997;
President of Workforce Strategies, Inc., a PEO, from
1995 to 1997; CEO of Hazar, Inc. from August 1994
until February 1995; President of Heatherton, Ltd., a
PEO, from October 1993 until July 1994.
Byron G. McCurdy 42 1998 Executive Vice President of the Corporation since 1997;
President of TEAM America West, Inc., a wholly owned
subsidiary of the Corporation, since 1997; President of
Aspen Consulting Group, Inc., a PEO, from 1984 to 1997.
CLASS II DIRECTORS
(TERMS EXPIRE IN 2000)
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
- -------------------- ---- ---------- ---------------------------------------------------------
KEVIN T. COSTELLO 49 1992 CHIEF EXECUTIVE OFFICER OF THE CORPORATION SINCE 1999;
PRESIDENT OF THE CORPORATION SINCE 1998; SENIOR VICE
PRESIDENT OF OPERATIONS AND CHIEF OPERATING OFFICER OF
THE CORPORATION FROM 1993 TO 1998; VICE PRESIDENT OF
SALES AND MARKETING OF THE CORPORATION FROM 1991 TO
1993.
CHARLES F. DUGAN II 59 1994 SECRETARY OF THE CORPORATION SINCE 1999; ASSISTANT
SECRETARY OF THE CORPORATION FROM 1992 TO 1999; OUTSIDE
COUNSEL TO THE CORPORATION SINCE 1987. PRIVATE LAW PRACTICE
SINCE 1990.
CRYSTAL FAULKNER 39 1997 PRINCIPAL IN THE ACCOUNTING FIRM OF RIPPE & KINGSTON,
CINCINNATI, OHIO SINCE 1991.
-3-
7
INFORMATION CONCERNING THE BOARD OF DIRECTORS, EXECUTIVE OFFICERS,
AND PRINCIPAL SHAREHOLDERS
MEETINGS, COMMITTEES, AND COMPENSATION OF THE BOARD OF DIRECTORS
A total of 4 meetings of the Directors of the Corporation were held
during fiscal 1998. Each of the Directors attended 75% or more of the meetings
of the Directors.
The Corporation has an Audit Committee and a Compensation Committee.
Both such committees were formed by the Board of Directors at its first meeting
following the completion of the Corporation's initial public offering in
December 1996.
Audit Committee. The Audit Committee, which consisted of Ms. Faulkner
and Messrs. Schilg and Swartz and, as of January 1, 1999, consists of Ms.
Faulkner and Messrs. Dugan and Swartz , is charged with the responsibility of
reviewing such financial information (both external and internal) about the
Corporation and its subsidiaries, so as to assure (i) that the overall audit
coverage of the Corporation and its subsidiaries is satisfactory and appropriate
to protect the shareholders from undue risks and (ii) that an adequate system of
internal financial control has been implemented throughout the Corporation and
is being effectively followed. The Audit Committee met once in fiscal 1998.
Compensation Committee. The Compensation Committee, which consists of
Ms. Faulkner and Messrs. Dugan and Johnston, considers and formulates
recommendations to the Board with respect to all aspects of compensation to be
paid to the executive officers of the Corporation subject to the provisions of
the applicable employment agreements, undertakes such evaluations and makes such
reports as are required by then applicable rules of the Securities and Exchange
Commission and performs and exercises such other duties and powers as shall from
time to time be designated by action of the Board of Directors. The Compensation
Committee met once during fiscal 1998. See "Report of Compensation Committee."
In connection with the initial public offering of the Corporation's
Common Stock in December 1996, the Corporation granted to each non-employee
Director, at the time, an option to purchase 5,000 shares of Common Stock at
$12.00 per share, subject to vesting on December 9, 1996. These options are
subject to the terms and conditions of the Corporation's 1996 Incentive Stock
Plan. On September 3, 1997, the options issued in December 1996 were cancelled
and replaced with options to purchase 5,000 shares of Common Stock at $8.50 per
share. In addition, Ms. Faulkner was granted an option to acquire 5,000 shares
of Common Stock at $8.50 per share. These options expire September 2, 2007.
Non-employee Directors receive $1,000 for each Board of Directors
meeting attended, plus out-of-pocket expenses incurred in connection with
attending meetings. Directors who are employees do not receive any separate
compensation for their services as Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of March 1, 1999, by each person known by the
Corporation to own beneficially more than five percent of the Corporation's
outstanding Common Stock, by each Nominee and Continuing Director, by each
executive officer named in the Summary Compensation table contained in
"Executive Compensation," and by all directors and executive officers as a
group. Except as otherwise noted, each person named in the table has sole voting
and investment power with respect to all shares shown as beneficially owned by
him or her.
-4-
8
PERCENT OF
SHARES
NAME AND ADDRESS OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER (1) OWNED AT MARCH 1 , 1999 OWNED(2)
- -------------------------------- ----------------------- ------------
Richard C. Schilg 643,264 (3) 15.0%
Kevin T. Costello 441,900 (4) 10.3%
Anne M. Costello 373,200 (5) 8.8%
Charles F. Dugan II 37,200 (6) *
Crystal Faulkner 5,500 (6) *
William W. Johnston 8,980 (7) *
M. R. Swartz 16,960 (6) *
S. Cash Nickerson 465,171 (8) 10.6%
Byron G. McCurdy 403,349 (9) 9.4%
Terry C. McCurdy 388,304 (10) 9.0%
Michael R. Goodrich 20,500 (11) *
All Directors and Executive
Officers as a group (10 Persons) 2,431,128 (12) 53.5%
- ----------
* Represents less than 1% of the Corporation's outstanding shares of
Common Stock.
(1) The address of each of the Directors and Officers listed in the table
is 110 East Wilson Bridge Road, Worthington, Ohio 43085.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute ownership
of securities to persons who possess sole or shared voting power and/or
investment power with respect to those shares.
(3) Includes 388,600 shares owned of record by Mr. Schilg over which he has
sole voting and investment power and 224,664 shares owned of record by
Mr. Schilg and his wife, Judith Schilg, as joint tenants, of which Mr.
Schilg shares with his wife voting and investment power. Also, includes
30,000 shares as to which Mr. Schilg has a right to acquire beneficial
ownership upon the exercise of stock options exercisable within 60 days
of March 1, 1999.
(4) Includes 43,100 shares owned of record by Mr. Costello of which he has
the sole voting and investment power and 373,800 shares owned of record
by Mr. Costello and his wife, Anne M. Costello, as joint tenants, of
which Mr. Costello shares with his wife voting and investment power.
Also includes 25,000 shares as to which Mr. Costello has the right to
acquire beneficial ownership upon the exercise of stock options
exercisable within 60 days of March 1, 1999.
-5-
9
(5) Includes 373,800 shares owned of record by Mrs. Costello and her
husband, Kevin T. Costello, as joint tenants, of which Mrs. Costello
shares with her husband voting and investment power. Mrs. Costello
disclaims beneficial ownership of the 43,100 shares owned of record by
her husband.
(6) Includes 5,000 shares available from the exercise of stock options
exercisable within 60 days of March 1, 1999.
(7) Includes 8,680 shares as to which Mr. Johnston has the right to acquire
beneficial ownership upon the exercise of stock options exercisable
within 60 days of March 1, 1999.
(8) Includes 138,000 shares as to which Mr. Nickerson has the right to
acquire beneficial ownership upon the exercise of stock options
exercisable within 60 days of March 1, 1999 and 84,459 shares held by
Los Lobos, Inc., an investment company of which Mr. Nickerson is a
majority owner.
(9) Includes 500 shares owned by Mr. McCurdy's minor children as to which
Mr. McCurdy retains sole investment and dispositive control. Also
includes 31,940 shares as to which Mr. McCurdy has the right to acquire
beneficial ownership upon the exercise of stock options exercisable
within 60 days of March 1, 1999.
(10) Includes 31,940 shares available from the exercise of stock options
exercisable within 60 days of March 1, 1999.
(11) Includes 11,000 shares available from the exercise of stock options
exercisable within 60 days of March 1, 1999.
(12) Includes 291,560 shares available from the exercise of stock options
exercisable within 60 days of March 1, 1999.
EXECUTIVE OFFICERS
The following table and biographies set forth information concerning
the executive officers of the Corporation, who are elected by the Board of
Directors:
NAME AGE POSITION
- ---- --- --------
Kevin T. Costello 49 President, Chief Executive Officer and Director
Charles F. Dugan II 59 Secretary and Director
Michael R. Goodrich 46 Chief Financial Officer, Vice President of Finance, and Treasurer
William W. Johnston 53 Chairman of the Board of Directors
Byron G. McCurdy 42 Executive Vice President of Government Affairs; President of TEAM America
West, Inc. and Director
S. Cash Nickerson 39 Executive Vice President of Corporate Development, President of TEAM America
of California, Inc. and Director
- ----------
Kevin T. Costello has been a Director of the Corporation since 1992,
President since 1998 and Chief Executive Officer since 1999. Mr. Costello served
as Senior Vice President of Operations and Chief Operating Officer of the
Corporation from 1993 to 1998. From 1991 to 1993, Mr. Costello served as Vice
President of Sales and Marketing of the Corporation.
-6-
10
Charles F. Dugan II has been a Director of the Corporation since 1994
and served as Assistant Secretary of the Corporation since 1992 and Secretary
since 1999. Mr. Dugan has served as counsel to the Corporation since 1987. From
1970 to 1990, Mr. Dugan was a partner in the law firm of Vorys, Sater, Seymour
and Pease located in Columbus Ohio. Mr. Dugan currently practices law in his own
firm located in Columbus, Ohio.
Michael R. Goodrich was appointed Vice President of Finance, Treasurer
and Chief Financial Officer of the Corporation on March 31, 1997. Mr. Goodrich
was Chief Financial Officer and Secretary of Barefoot Inc. located in
Worthington, Ohio from 1991 to March 1997 and was Vice President Finance of
Barefoot Grass Lawn Service, Inc. from 1986 to March 1997. From 1974 to 1986,
Mr. Goodrich was a Certified Public Accountant in the Columbus, Ohio office of
Arthur Andersen & Co.
William W. Johnston has been a Director of the Corporation since 1990
and served as Secretary of the Corporation from 1990 to 1998 and as general
counsel to the Corporation since 1989. Mr. Johnston was named Chairman of the
Board in 1999. From 1982 to 1990, Mr. Johnston was a partner in the law firm of
Crabbe, Brown, Jones, Potts and Schmidt located in Columbus, Ohio. Mr. Johnston
currently practices law in his own firm located in Worthington, Ohio. From 1976
to 1982, Mr. Johnston was the Chairman of the Ohio Industrial Commission.
S. Cash Nickerson has been Executive Vice President of Corporate
Development of the Corporation and President of TEAM America of California,
Inc., a wholly owned subsidiary of the Corporation, since September 8, 1997. Mr.
Nickerson was the President and founder of Workforce Strategies, Inc. from May
1995 until September 7, 1997. Mr. Nickerson was CEO of Hazar, Inc. from August
1994 until February 1995. He was President of Heatherton, Ltd., a PEO, from
October 1993 until July 1994 and he was an associate and then partner with the
law firm of Jenner & Block, in Chicago, Illinois from January 1990 until October
1993.
Byron G. McCurdy has been Executive Vice President of Government
Affairs of the Corporation and President of TEAM America West, Inc., a wholly
owned subsidiary of the Corporation, since November 1, 1997. Mr. McCurdy was the
President and founder of Aspen Consulting Group, Inc. from March 1984 until
November 1997.
-7-
11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
annual and long-term compensation of the chief executive officer of the
Corporation and the other executive officers (together, the "Named Executives"),
whose total salary and bonus for the last completed fiscal year exceeded
$100,000.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
------------------------- ------------
STOCK OPTIONS ALL OTHER(4)
Name and Principal Position YEAR SALARY BONUS # GRANTED COMPENSATION
- --------------------------- ---- ----------- ----------- ---------- ------------
Kevin T. Costello, President and 1998 $308,752(1) -- 50,000 $ 8,587
Chief Executive Officer 1997 $266,686(1) $ 60,000 125,000(3) $ 8,222
1996 $232,210(1) $138,930(2) 50,000 $ 4,558
Richard C. Schilg, Former Chairman 1998 $324,494(1) -- -- $ 8,523
of the Board, President and 1997 $282,431(1) $ 95,000 150,000(3) $ 8,247
Chief Executive Officer 1996 $241,561(1) $206,637(2) 50,000 $ 4,553
Michael R. Goodrich 1998 $110,982 -- 35,000 $ 9,830
Chief Financial Officer (5) 1997 $ 62,320 30,000 55,000 $ 3,017
1996 -- -- -- --
S. Cash Nickerson 1998 $100,000 -- -- $ 6,195
Executive Vice President (5) 1997 $ 39,067 -- 282,000 $ 4,220
1996 -- -- -- --
Byron G. McCurdy 1998 $150,000 -- -- $ 5,181
Executive Vice President (5) 1997 $ 18,750 -- 159,702 $ 800
1996 -- -- -- --
- ----------
(1) Includes commissions in the amounts of $115,620 and $115,620 in 1998,
$90,553 and $90,553 in 1997 and $144,480 and $100,061 in 1996 paid to
Messrs. Costello and Schilg, respectively.
(2) Includes payments of $70,000 and $63,000 in February 1997 to Messrs.
Schilg and Costello, respectively, based in part on the financial
performance of the Corporation in 1996. In accordance with generally
accepted accounting principles, these amounts were required to be
recognized as expenses in fiscal 1996. See "Report of Compensation
Committee" for a further discussion of executive bonuses. Also included
are payments of $136,637 and $75,930 in June 1996 of discretionary
bonuses to Messrs. Schilg and Costello, respectively. These
discretionary bonuses were not related to specific performance criteria
for the Corporation in 1995 and accordingly were not required to be
expensed until paid in 1996.
(3) Includes the replacement of 50,000 options each for Mr. Schilg and Mr.
Costello which were granted in 1996 at $12.00 per share and cancelled
on September 3, 1997.
(4) Represents health care insurance premiums paid by the Corporation for
the benefit of the indicated Named Executive Officer and the
compensatory value of a company provided car.
-8-
12
(5) Dates of employment for the Named Executives are as follows: Mr.
Goodrich, March 31, 1997; Mr. Nickerson, September 8, 1997 upon the
acquisition of Workforce Strategies, Inc.; Mr. McCurdy, November 1,
1997, upon the acquisition of Aspen Consulting Group, Inc.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted during fiscal 1998 to the Named Executives.
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
PERCENTAGE
OF TOTAL POTENTIAL
OPTIONS REALIZABLE VALUE AT
NUMBER GRANTED TO EXERCISE ASSUMED ANNUAL RATES
OF EMPLOYEES PRICE OF STOCK PRICE
OPTIONS IN FISCAL PER EXPIRATION APPRECIATION
NAME GRANTED 1998 SHARE DATE FOR OPTION TERM(1)(2)
- ---- ------- ---------- -------- ---------- ---------------------
5%($) 10%($)
----- ------
Kevin T. Costello 50,000 23.82% $5.375 12/14/08 $169,000 $428,250
Richard C. Schilg -- -- -- -- -- --
Michael R. Goodrich 35,000 16.67% $5.375 12/14/08 $118,300 $299,775
S. Cash Nickerson -- -- -- -- -- --
Byron G. McCurdy -- -- -- -- -- --
- ----------
(1) The dollar amounts in these columns are the product of (a) the
difference between (1) the product of the per share market price at the
date of the grant and the sum of 1 plus the assumed rate of
appreciation (5% and 10%) compounded over the term of the option (ten
years) and (2) the per share exercise price and (b) the number of
shares underlying the grant.
(2) The appreciation rates stated are arbitrarily assumed, and may or may
not reflect actual appreciation in the stock price over the life of the
option. Regardless of any theoretical value which may be placed on a
stock option, no increase in its value will occur without an increase
in the value of the underlying shares. Whether such an increase will be
realized will depend not only on the efforts of the recipient of the
option, but also upon conditions in the Corporation's industry and
market area, competition, and economic conditions, over which the
optionee may have little or no control.
In December 1998, the Company granted incentive stock options to
purchase a total of 150,500 shares of Common Stock at $5.375 per share and, in
May 1998, the Company granted incentive stock options to purchase a total of
4,000 shares of Common Stock at $11.375 per share.
In connection with employment agreements and other employment
arrangements entered into with the employees and key employees of the companies
acquired in 1998, non-statutory options to acquire 33,733 shares of Common Stock
at $10.00 per share were granted on January 2, 1998 and to acquire 16,667 shares
of Common Stock at $14.00 per share were granted on March 1, 1998. These
employment-related options vest ratably over a five-year period and expire ten
years from the date of grant. Non-statutory options to acquire 5,000 shares of
Common Stock at $11.00 per share were granted to a key employee on January 1,
1998.
-9-
13
All shares of Common Stock issuable upon the exercise of non-statutory
options will be unregistered shares which can only be sold pursuant to the
requirements of Rule 144.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning the value
of unexercised stock options held as of December 31, 1998 by the Named
Executives. No options were exercised by such executive officers during fiscal
1998.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END (#) AT FISCAL YEAR-END ($) (2)
------------ ---------------------------
SHARES
ACQUIRED ON Value
EXERCISE (#) REALIZED ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ---------------- ----------- ------------- ----------- -------------
Kevin T. Costello 0 0 25,000 150,000 $0 $0
Richard C. Schilg 0 0 30,000 120,000 $0 $0
Michael R. Goodrich 0 0 11,000 79,000 $0 $0
S. Cash Nickerson 0 0 138,000 144,000 $0 $0
Byron G. McCurdy 0 0 31,940 127,762 $0 $0
- ----------
(1) Represents the difference between the per share fair market value on
the date of exercise and the per share option exercise price,
multiplied by the number of shares to which the exercise relates.
(2) Represents the total gain which would be realized if all in-the-money
options held at year end were exercised, determined by multiplying the
number of shares underlying the options by the difference between the
per share option exercise price and per share fair market value at year
end. An option is in-the-money if the fair market value of the
underlying shares exceeds the exercise price of the option.
EMPLOYMENT AGREEMENTS
Kevin T. Costello. Mr. Costello has executed an employment agreement
with the Corporation pursuant to which he has agreed to serve as Senior Vice
President of Operations and Chief Operating Officer of the Corporation for a
period of three years and, unless terminated in accordance with the provisions
therein, on the first day of each month that the agreement is in effect, the
remaining term thereof will be automatically extended for one additional month.
Under the terms of the agreement, Mr. Costello receives an annual base salary
which was increased 5% to $183,750 in 1998, plus incentive compensation in an
amount determined by the Corporation's Compensation Committee based upon various
factors including the Corporation's results of operations and financial
condition and Mr. Costello's performance during the relevant period. In addition
to such base salary and incentive compensation, Mr. Costello may receive
commissions on sales to clients for which he is responsible pursuant to terms
and conditions determined by the Corporation's Compensation Committee. In the
event Mr. Costello's employment is terminated for cause, the Corporation will
pay Mr. Costello the compensation and benefits due under his employment
agreement through the date of such termination. Mr. Costello's employment
agreement contains certain noncompetition and non-solicitation provisions which
prohibit him from competing with the Corporation during his employment by the
Corporation and for a period of one year after termination of his employment.
The Corporation has agreed to maintain one or more life insurance
policies on the life of Mr. Costello in an aggregate amount sufficient to pay
Mr. Costello's widow approximately $43,000 per year for 15 years in the event
that he dies prior to his retirement. No such benefit will be paid in the event
that Mr. Costello dies after his retirement. In addition, upon Mr. Costello's
retirement on or after his sixty-fifth birthday, the Corporation will pay him an
amount calculated to be equal to the maximum loan available from such
-10-
14
insurance policy which will not cause the insurance policy to lapse prior to his
life expectancy. Thereafter, such amount shall be recalculated on an annual
basis and the Corporation will pay Mr. Costello any increase in such amount.
Additionally, the Corporation maintains a Key Man life insurance policy on Mr.
Costello in the amount of $750,000 for the benefit of the Corporation.
See "Executive Compensation--Stock Option Grants in Last Fiscal Year"
for a discussion of options granted to Mr. Costello in 1998.
Effective January 1, 1999, the Corporation's founder and chairman,
Richard C. Schilg, resigned his position with the Corporation. In lieu of any
other separation payments that may have been required, the Corporation agreed to
acquire 500,000 shares at $5 per share, the fair market value, from Mr. Schilg.
The shares were acquired on February 11, 1999 for a cash payment of $800,000 and
two notes bearing interest at 5.75%. One note in the amount of $700,000 is due
upon demand with a final due date of February 19, 2000. The second note in the
amount of $1,000,000 is also due February 19, 2000.
The following Compensation Committee Report and Performance Graph shall
not be deemed incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any of the Corporation's filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Corporation specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
REPORT OF COMPENSATION COMMITTEE
THE COMPENSATION COMMITTEE
The Compensation Committee consisted of Messrs. Dugan and Johnston and
Ms. Faulkner in fiscal 1998.
COMPENSATION POLICIES
The Corporation's compensation program is designed to attract and
retain highly qualified executive officers and managers and to motivate them to
maximize the Corporation's earnings and shareholder returns. The Corporation's
executive and key personnel compensation consists of two principal components:
(i) cash compensation, consisting of a base salary and, in certain cases,
commissions on sales to clients and/or a bonus which is based upon the
Corporation's operating performance, and (ii) stock options. Stock options are
intended to encourage key employees to remain employed by the Corporation by
providing them with a long-term interest in the Corporation's overall
performance as reflected by the performance of the market for the Corporation's
Common Stock.
The compensation of executive officers of the Corporation, other than
the chief executive officer ("CEO"), is established annually by the CEO in
consultation with the Compensation Committee, subject to the provisions of any
applicable employment agreements. See "Executive Compensation--Employment
Agreements." In establishing the compensation of executive officers, various
factors are considered, including the executive officer's individual scope of
responsibilities, the quality of his or her performance in discharging those
responsibilities and the financial performance of the Corporation as a whole.
CEO COMPENSATION
The CEO's minimum annual base salary has been established pursuant to
an employment agreement which was executed on December 13, 1996. In fiscal 1998,
the CEO's potential compensation included base salary, a bonus and stock option
awards which were determined by the Board of Directors based upon its perception
of the individual performance of the CEO and the performance of the Corporation
as a whole. However, no bonus was paid for 1998. No particular weight was given
by the Board of Directors to any particular factor in its evaluation of each
component of the CEO's compensation for fiscal 1998. In 1999, the CEO's base
salary will be as set forth in his employment agreement (see "Executive
Officers--Employment Agreements") and his bonus and commissions, if any, will be
determined by the Compensation Committee based upon the foregoing factors.
-11-
15
The Budget Reconciliation Act of 1993 amended the Internal Revenue Code
to add Section 162(m) ("Section 162(m)") which bars a deduction to any publicly
held corporation for compensation paid to a "covered employee" in excess of
$1,000,000 per year. Generally, the Corporation intends that compensation paid
to covered employees shall be deductible to the fullest extent permitted by law.
The 1996 Incentive Stock Plan, as defined and described in this Proxy Statement,
is intended to qualify under Section 162(m).
THE COMPENSATION COMMITTEE
William W. Johnston
Charles F. Dugan II
Crystal Faulkner
-12-
16
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Corporation's Common Stock from December 10, 1996 (the date the Corporation
became a public company), until December 31, 1998, with the cumulative total
return of (a) the Nasdaq Stock Market-US Index and (b) the S&P SmallCap 600
Services (Commercial and Consumer) Index. The graph assumes the investment of
$100 in the Corporation's Common Stock, the Nasdaq Stock Market-US Index and the
S&P SmallCap 600 Services (Commercial and Consumer) Index. The initial public
offering price of the Corporation's Common Stock was $12.00 per share and the
closing price of the shares on the first day of trading was $12.25. In fiscal
1997, the Corporation compared it's return to that of the S&P MidCap Commercial
Services Composite Index. The Corporation has changed to the S&P SmallCap 600
Services (Commercial and Consumer) Index to more accurately reflect it's peer
group size. If $100 was invested in the S&P MidCap Commercial Services Composite
Index on December 10, 1996, it would have been worth $100.11 on December 31,
1996, $132.40 on December 31, 1997, and $151.50 on December 31, 1998.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE CORPORATION, THE NASDAQ STOCK MARKET - US INDEX
AND THE S&P SMALLCAP 600 SERVICES (COMMERCIAL AND CONSUMER) INDEX
DECEMBER 10, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1996 1997 1998
TEAM AMERICA 100 94.79 87.50 47.92
CORPORATION
NASDAQ STOCK MARKET U.S. 100 98.38 120.70 169.67
INDEX
S&P SMALLCAP 600 100 96.06 128.74 144.98
SERVICES (COMMERCIAL AND
CONSUMER) INDEX
-13-
17
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Costello is President and Chief Executive Officer of the
Corporation. Messrs. Johnston and Dugan are Chairman and Secretary of the
Corporation, respectfully. Messrs. Nickerson and McCurdy are Executive Vice
Presidents of the Corporation and Presidents of wholly-owned subsidiaries of the
Corporation. Ms. Faulkner and Mr. Swartz are not employees of the Corporation.
Mr. Nickerson was paid as an employee of the subsidiary until August 1, 1998 and
since that date has been a paid consultant to the Corporation. During fiscal
1998, Messrs. Johnston and Dugan received fees for legal services provided to
the Corporation in the amounts of $176,642 and $5,271, respectively. Ms.
Faulkner's firm received fees of $29,087 for tax accounting and consulting
services in 1998.
Each of Messrs. Johnston and Dugan have entered into a standard client
agreement with the Corporation pursuant to which each of them is both a client
and a worksite employee of the Corporation. Entities in which Mr. Nickerson or
Mr. McCurdy have a controlling ownership position are clients of subsidiaries of
the Corporation. The Corporation has provided, and expects to continue to
provide, professional employer organization services to such individuals or
entities upon terms and conditions no more favorable than those generally
provided to the Corporation's other clients.
TRANSACTIONS BETWEEN EXECUTIVE OFFICERS AND THE CORPORATION
Effective November 1, 1997, the Corporation acquired Aspen Consulting
Group, Inc. which was owned by Messrs. Byron and Terry McCurdy. A subsidiary of
the Corporation entered into a lease for office space in Twin Falls, Idaho with
an entity controlled by the McCurdy's. Rent paid for the office space was
$82,573 in 1998. That subsidiary also purchases copier maintenance services,
supplies and office supplies from a business controlled by Mr. McCurdy. Such
purchases amounted to $15,939 in 1998. In 1998, the Corporation paid $50,000 to
a law firm in which Mr. Nickerson is a partner.
CERTAIN TRANSACTIONS
For a discussion of certain business relationships and transactions
between the Corporation and each of Messrs. Johnston, Dugan and Cash and Ms.
Faulkner, see "Compensation Committee Interlocks and Insider Participation."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's Directors
and executive officers, and persons who own more than ten percent of a
registered class of the Corporation's equity securities, to file initial
statements of beneficial ownership (Form 3), and statements of changes in
beneficial ownership (Forms 4 and 5), of shares of Common Stock of the
Corporation with the Securities and Exchange Commission. Executive officers,
Directors and greater than ten percent shareholders are required to furnish the
Corporation with copies of all such forms they file.
To the Corporation's knowledge, based solely on its review of the
copies of such forms received by it, and written representations from certain
reporting persons that no additional forms were required, all filing
requirements applicable to its executive officers, Directors and greater than
ten-percent shareholders were complied with in fiscal 1998, except for two late
filings.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has acted as independent certified public
accountants of the Corporation for fiscal 1998. Arthur Andersen LLP is expected
to have a representative present at the Annual Meeting who may make a statement,
if desired, and will be available to answer appropriate questions.
-14-
18
SHAREHOLDER PROPOSALS
In order for shareholder proposals to be considered for presentation at
the 2000 Annual Meeting of Shareholders, such proposals must be received by the
Corporation at its principal executive offices not later than December 31, 1999.
Any shareholder proposal submitted outside the processes of Rule 14a-8 under the
Securities Exchange Act of 1934 for presentation to the Corporation's 2000
Annual Meeting of Shareholders will be considered untimely for purposes of Rule
14a-4 and 14a-5 if notice thereof is received by the Corporation after April 12,
2000.
The Corporation's Amended and Restated Regulations (the "Regulations")
provide that shareholder nominations for election as Directors may be made in
compliance with certain advance notice, informational and other applicable
requirements. In order to be considered, a shareholder's notice of Director
nomination must be delivered to or mailed and received by the Secretary of the
Corporation at 110 East Wilson Bridge Road, Worthington, Ohio 43085 not less
than 60 or more than 90 days prior to the Corporation's Annual Meeting;
provided, however, that in the event that less than 75 days notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the
close of business on the 15th day following the earlier of the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
The Corporation's Annual Meeting will generally be held in May of each year. A
shareholder's notice of Director nominations must contain certain information
required by the Regulations and must be accompanied by the written consent of
each proposed nominee to serve as a Director of the Corporation, if elected.
Copies of the Regulations are available upon request made to the Secretary of
the Corporation at the above address. The requirements described above do not
supersede the requirements or conditions established by the Securities and
Exchange Commission for shareholder proposals to be included in the
Corporation's proxy materials for a meeting of shareholders.
OTHER MATTERS
As of the date of this statement, the Board of Directors knows of no
other business that will come before the Annual Meeting. Should any other matter
requiring the vote of the shareholders arise, the enclosed proxy confers upon
the proxy holders discretionary authority to vote the same in respect to the
resolution of such other matters as they, in their best judgment, believe to be
in the best interest of the Corporation.
Shareholders are urged to forward their proxies without delay. A prompt
response will be greatly appreciated.
By Order of the Board of Directors
William W. Johnston
Chairman of the Board of Directors
April 15, 1999
-15-
19
TEAM AMERICA CORPORATION
110 EAST WILSON BRIDGE ROAD, WORTHINGTON, OHIO 43085
--------------------------------------------------------------
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- MAY 25, 1999
The undersigned shareholder of TEAM America Corporation (the "Company")
hereby appoints Kevin T. Costello and Michael R. Goodrich, or either one of
them, as attorneys and proxies with full power of substitution to each, to vote
all shares of Common Stock of the Company which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of the Company to be held at the
Clarion Hotel, located at 7007 North High Street, Worthington, Ohio, on Tuesday,
May 25, 1999, at 10:00 a.m. local time, and at any adjournment or adjournments
thereof, with all of the powers such undersigned shareholder would have if
personally present, for the following purposes:
1. ELECTION OF WILLIAM W. JOHNSTON, BYRON G. MCCURDY, S. CASH NICKERSON,
AND M. R. SWARTZ AS CLASS I DIRECTORS.
[ ] FOR
[ ] WITHHOLD AUTHORITY FOR EACH NOMINEE
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR A SPECIFIC NOMINEE, WRITE THAT
NOMINEE'S NAME HERE: .
--------------------------------------------------
2. IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
(Continued and to be signed on other side.)
(Continued from other side.)
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders, dated April 15, 1999, the Proxy Statement and the
Annual Report of the Company furnished therewith. Any proxy heretofore given to
vote said shares is hereby revoked.
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IN THE ENCLOSED
ENVELOPE.
Dated: , 1999
-----------------------------
--------------------------------------------
(Signature)
--------------------------------------------
(Signature)
SIGNATURE(S) SHALL AGREE WITH THE NAME(S)
PRINTED ON THIS PROXY. IF SHARES ARE
REGISTERED IN TWO NAMES, BOTH SHAREHOLDERS
SHOULD SIGN THIS PROXY. IF SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE YOUR FULL TITLE AS
SUCH.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS