HEADWAY CORPORATE RESOURCES, INC.
317 MADISON AVENUE, 3RD FLOOR
New York, New York 10017
October 2, 2000
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of
stockholders of Headway Corporate Resources, Inc., to be held at
3:30 P.M., Eastern Time on November 9, 2000. The Annual Meeting
will be held at 850 Third Avenue, 11th Floor, in New York City,
New York.
I believe that the Annual Meeting provides an excellent
opportunity for stockholders to become better acquainted with
Headway and its directors and officers. I hope you will be able
to attend the meeting.
Whether or not you plan to attend, the prompt execution and
return of your proxy card will assure that your shares are
represented at the meeting.
Sincerely,
Gary S. Goldstein
Chairman of the Board
and Chief Executive Officer
HEADWAY CORPORATE RESOURCES, INC.
NOTICE OF ANNUAL MEETING
PROXY STATEMENT
NOVEMBER 9, 2000
The Annual Meeting of the Stockholders of Headway Corporate
Resources, Inc., a Delaware corporation, will be held at 3:30
p.m., on November 9, 2000, at 850 Third Avenue, 11th Floor in New
York City, New York. The Board of Directors of Headway is
soliciting the enclosed proxy for use at the Annual Meeting and
at any adjournment thereof.
The purpose of the Annual Meeting is to propose and vote on
the following items:
(1) Election of G. Chris Andersen and Richard B. Salomon as
Class 3 Directors of Headway to serve for a term of three years
and until their successors are duly elected and qualified;
(2) Ratification of the appointment of Ernst & Young LLP as
independent auditors of Headway for 2000; and
(3) All other business as may properly come before the
Annual Meeting or any adjournments thereof.
Please sign your name exactly as it appears on the proxy.
If you receive more than one proxy because of shares registered
in different names or addresses, you must complete and return
each proxy in order to vote all shares that you hold.
All proxies will be voted as specified. In the absence of
specific instructions, your proxy will be voted FOR proposal (1)
and (2). Proxies will be voted in the discretion of the proxy
holder on any other business coming before the Annual Meeting,
including any stockholder proposal or other matter not included
in this proxy statement of which Headway did not receive notice
prior to September 29, 2000.
You may revoke your proxy by delivering a written notice of
revocation to the Corporate Secretary of Headway at any time
prior to the Annual Meeting, by executing a later-dated proxy
with respect to the same shares, or by attending the Annual
Meeting and voting in person.
Proxies will be solicited primarily by mail, but may also
include telephone, telegraph, or oral communication by officers
or regular employees. Officers and employees will receive no
additional compensation for soliciting proxies. All costs of
soliciting proxies will be borne by Headway.
This Proxy Statement serves as notice of the Annual Meeting,
a description of the proposals to be addressed at the Annual
Meeting, and a source of information on Headway and its
management. The approximate mailing date of the Proxy Statement
and Proxy to stockholders is October 2, 2000.
Outstanding Shares and Voting Rights
Record Date. Stockholders of record at the close of
business on September 29, 2000, are entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof.
Shares Outstanding. As of September 29, 2000, a total of
10,632,461 shares of Headway's Common Stock (the "Common Stock"),
were outstanding and entitled to vote at the Annual Meeting. As
of the Record Date, Headway had one class of preferred stock
outstanding, Series F Convertible Preferred Stock, which is not
entitled to vote on any of the matters to be voted upon by
stockholders at the Annual Meeting.
Voting Rights and Procedures. Each outstanding share of
Common Stock is entitled to one vote on all matters submitted to
a vote of stockholders. Headway's Bylaws and Delaware law
require the presence, in person or by proxy, of a majority of the
outstanding shares entitled to vote to constitute a quorum to
convene the Annual Meeting. Shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a
broker or nominee which are represented at the meeting, but with
respect to which such broker or nominee is not empowered to vote
on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the
presence of a quorum.
Stockholder Proposals for the 2001 Annual Meeting. If you
want to submit a proposal for possible inclusion in Headway's
2001 Proxy Statement, our Corporate Secretary must receive it on
or before January 15, 2001. If you submit a proposal, it may be
omitted from our 2001 Proxy Statement if it does not meet certain
requirements.
You may present a proposal at the 2001 Annual Meeting
without including the proposal in the 2001 Proxy Statement.
However, if we do not receive notice of this proposal on or
before February 29, 2001, any proxy returned to Headway
conferring discretionary authority to vote may be voted at the
proxy holder's discretion on the proposal.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Headway's Certificate of Incorporation and Bylaws provide
that the Board is divided into three classes designated as Class
1, Class 2 and Class 3, which are as equal in number as possible.
The Directors in each Class serve for a term ending on the date
of the third annual meeting following the meeting at which the
Directors of that Class are elected. At the 2000 Annual Meeting
Directors of Class 3, consisting of two persons, are up for
election to serve until the annual meeting of stockholders in the
year 2003.
2
The Board of Directors has nominated for election as the
Class 3 Directors G. Chris Andersen and Richard B. Salomon, who
currently serve in those positions. Set forth below under the
caption "DIRECTORS AND EXECUTIVE OFFICERS", is information on the
age, presently held positions with Headway, principal occupation
now and for the past five years, other directorships in public
companies, and tenure of service with Headway as a Director for
each of the nominees.
Each Director is elected by vote of a plurality of the
shares of voting stock present and voted, in person or by proxy,
at the Annual Meeting. Votes that are withheld will be excluded
from the vote and will have no effect on the election of
directors. Brokers who hold shares in street name for customers
have the authority to vote at their discretion on the election of
directors, when they have not received instructions from
beneficial owners. If no direction is indicated on the proxy,
the shares represented by the proxy will be voted for the
election of the nominees named above. Although it is anticipated
that each nominee will be able to serve as a director, should any
nominee become unavailable to serve, the proxies will be voted
for such other person or persons as may be designated by
Headway's Board of Directors.
The Board Recommends a Vote "FOR" The Nominees
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
The accounting firm of Ernst & Young LLP ("Ernst & Young")
has been approved by the Board, upon recommendation by the Audit
Committee, to serve as independent auditors of Headway for 2000,
subject to approval by the stockholders by an affirmative vote of
a majority of the outstanding shares of Headway's Common Stock
represented at the Annual Meeting. Ernst & Young served as
independent auditors of Headway since 1996. Headway has been
advised that neither Ernst & Young nor any of its members or
associates has any relationship with Headway or any of its
affiliates, except in the firm's capacity as Headway's
independent auditors.
Representatives of Ernst & Young will be present at the
Annual Meeting of Stockholders, will be afforded an opportunity
to make a statement if they desire, and will be available to
respond to appropriate questions from stockholders.
The proposal to ratify the selection of Ernst & Young to
serve as independent auditors of Headway for 2000 must be
approved by the affirmative vote of a majority of the shares of
voting stock present and voted on the proposal, in person or by
proxy, at the Annual Meeting. Abstentions will have the effect
of a negative vote on the proposal. If no direction is indicated
on the proxy, the shares represented by the proxy will be voted
FOR the proposal. Broker non-votes as to the proposal will not
affect the outcome of the vote on the proposal.
The Board of Directors Recommends a Vote "For" Ratification of
the Appointment of Ernst & Young LLP.
3
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
Principal Stockholders
The following table sets forth as of September 29, 2000, the
number and percentage of the outstanding shares of Common Stock
that, according to the information supplied to Headway, were
beneficially owned by each person who, to the knowledge of
Headway, is the beneficial owner of more than 5% of the
outstanding Common Stock. Except as otherwise indicated, the
persons named in the table have sole voting and dispositive power
with respect to all shares beneficially owned, subject to
community property laws where applicable.
Amount and Nature of
Beneficial Ownership
----------------------
Options,
Common Warrants and Percent
Shares Rights (1) of Class (2)
--------- ------------ -----------
Gary S. Goldstein 1,877,005 355,000 20.3%
850 Third Avenue
New York, NY 10022
Barry Roseman 383,629 150,000 5.0%
317 Madison Avenue
New York, NY 10011
G. Chris Andersen (3) 549,965 20,000 5.4%
Anderson, Weinroth & Co., L.P.
1330 Avenue of the Americas
New York, NY 10019
GarMark Partners, L.P. (4) -0- 2,414,545 18.5%
1325 Avenue of the Americas
26th Floor
New York, NY 10019
Moore Global Investments, Ltd. (5) -0- 896,075 7.8%
Remington Investment Strategies, L.P.
c/o Moore Capital
1251 Avenue of the Americas
53rd Floor
New York, NY 10020
Footnotes to the table on the following page
4
Footnotes to the table on previous page
(1) These figures represent options and warrants that are vested
or will vest within 60 days from the date as of which information
is presented in the table.
(2) These figures represent the percentage of ownership of the
named individuals assuming each of them alone has exercised his
or her options, warrants, or conversion rights, and percentage
ownership of all officers and directors of a group assuming all
such purchase or conversion rights held by such individuals are
exercised.
(3) Anderson, Weinroth & Co., L.P. ("AWLP"), is a Delaware
private investment partnership. G. Chris Anderson and Stephen D.
Weinroth are the sole limited partners of AWLP. The general
partner of AWLP is A.W. & Co. GP Inc. ("AW Inc."), a Delaware
corporation. Messrs. Anderson and Weinroth are the sole
stockholders, officers, and directors of AW Inc. As a result of
these relationships, Messrs. Anderson and Weinroth and AW Inc.
may be deemed to have shares voting and investment control over
500,000 shares of Common Stock held by AWLP. Mr. Anderson
individually holds options to purchase 20,000 shares. The G.
Chris Andersen Family foundation, of which Mr. Andersen is a
trustee, holds 49,965 shares of Common Stock. Mr. Weinroth,
AWLP, and AW Inc. disclaim any beneficial ownership of the option
held by Mr. Andersen and the Common Stock held by the G. Chris
Andersen Family Foundation.
(4) GarMark Partners, L.P., is the holder of Series F
Convertible Preferred Stock of Headway, which is convertible to
the 2,389,545 shares of Common Stock, subject to adjustment in
certain circumstances. E Garrett Bewkes, III, and Mark Solow are
the Managing Members of GarMark Associates L.L.C., the general
partner of GarMark Partners, L.P., and, therefore, these persons
may be deemed to have shared voting and investment control with
respect to such shares. Mr. Bewkes serves as a non-employee
director of Headway, for which he is entitled to receive annually
5,000 options to purchase Common Stock. Mr. Bewkes has elected
to have all such options issued to GarMark Partners, L.P., so the
figure in the table includes the options.
(5) Moore Capital Management, Inc. ("MCM"), is the discretionary
investment manager of Moore Global Investments, Ltd., a Bahamian
corporation ("MGI"). MGI is the holder of Series F Convertible
Preferred Stock of Headway, which is convertible to 734,781
shares of Common Stock, subject to adjustment in certain
circumstances. Moore Capital Advisors, LLC ("MCA"), is the
discretionary investment manager and general partner of Remington
Investment Strategies, L.P., a Delaware limited partnership
("RIS"). RIS is the holder of Series F Convertible Preferred
Stock of Headway, which is convertible to 161,293 shares of
Common Stock, subject to adjustment in certain circumstances.
Louis M. Bacon is the Chairman and Chief Executive Officer,
director, and controlling equity owner of both MCM and MCA.
Accordingly, Mr. Bacon and MCM, and Mr. Bacon and MCA may be
deemed to have shared voting and investment control with respect
to the shares held by MGI and RIS.
Management
The table on the following page sets forth as of September
29, 2000, the number and percentage of the outstanding shares of
Common Stock which, according to the information supplied to
Headway, were beneficially owned by (i) each person who is
currently a director of Headway, (ii) each Named Executive
Officer (as defined below), and (iii) all current directors and
executive officers of Headway as a group. Except as otherwise
indicated, the persons named in the table have sole voting and
dispositive power with respect to all shares beneficially owned,
subject to community property laws where applicable.
5
Amount and Nature of
Beneficial Ownership
--------------------
Options,
Common Warrants and Percent of
Shares Rights (1) Class (2)
--------- ------------ ----------
Gary S. Goldstein 1,877,005 355,000 20.3%
Barry S. Roseman 383,629 150,000 5.0%
G. Chris Andersen (3) 549,965 20,000 5.4%
E. Garrett Bewkes, III (4) -0- 2,414,545 18.5%
Bruce R. Ellig 65,000 15,000 0.8%
Ehud D. Laska 79,580 140,000 2.0%
Richard B. Salomon 49,965 20,000 0.7%
Jamie Schwartz -0- 65,000 0.6%
All Executive officers and 3,005,144 3,179,545 44.8%
Directors as a Group (8 Persons)
____________________________________________
(1) These figures represent options and warrants that are vested
or will vest within 60 days from the date as of which information
is presented in the table.
(2) These figures represent the percentage of ownership of the
named individuals assuming each of them alone has exercised his
or her options, warrants, or conversion rights, and percentage
ownership of all officers and directors of a group assuming all
such purchase or conversion rights held by such individuals are
exercised.
(3) The figure for Common Stock includes the 500,000 shares of
Anderson, Weinroth & Co., L.P., because of the relationships
described in Note (3) to the table for Principal Stockholders.
(4) The figure for options, warrants and rights includes the
shares of GarMark Partners, L.P., because of the relationships
described in Note (4) to the table for Principal Stockholders.
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Officers
The table on the following page sets forth the names, ages,
and positions with Headway for each of the directors and officers
of Headway. The Board of Directors is divided into three
classes, and only one class of directors is elected at each
annual meeting of stockholders. The
6
table indicates the class of which each director is a member and
the year in which his term expires based on the class.
Name Age Positions (1) Term Ends
Gary S. Goldstein 45 Chairman, Chief Executive Class 1
Officer and Director 2002
Barry S. Roseman 47 President, Chief Operating Class 1
and Financial Officer and 2002
Treasurer, Director
G. Chris Andersen (2) 62 Director Class 3
2000
E. Garrett Bewkes, III 49 Director Class 2
2001
Bruce R. Ellig 63 Director Class 1
2002
Ehud D. Laska 50 Director Class 2
2001
Richard B. Salomon (2) 52 Director Class 3
2000
Jamie Schwartz 32 Executive Vice President, N/A
Chief Operating Officer of
HCSS and Secretary
___________________________________________
(1) All executive officers are elected by the Board and hold
office until the next Annual Meeting of stockholders and until
their successors are elected and qualify.
(2) G. Chris Andersen and Richard B. Salomon are members of
Class 3 of the Board of Directors, and have been nominated by the
Board for re-election at the Annual Meeting. See "PROPOSAL NO. 1
- -- ELECTION OF DIRECTORS", above.
The following is information on the business experience of
each director and officer.
Gary S. Goldstein has served in a number of executive
positions with Headway and its predecessors over the past
thirteen years, including, Chairman, President, and Chief
Executive Officer. He is currently a director and executive
officer of each of Headway's subsidiary corporations. Mr.
Goldstein has extensive experience in human resource recruitment
within all areas of the financial services industry. Prior to
entering the recruitment industry, Mr. Goldstein
7
was on the audit and consulting staffs of Arthur Andersen & Co.,
in New York. Mr. Goldstein is an active member of the Young
Presidents' Organization, Inc., and serves on its Metro Division
Board of Directors. He is also an active member of The Brookings
Council of the Brookings Institution, The Presidents Association
of the American Management Association, and is listed in Who's
Who in Finance and Industry.
Barry S. Roseman oversees all operation of Headway and its
subsidiaries. He joined Headway as its Senior Executive Vice
President and Chief Operating Officer in January 1992, and became
President in September 1996. In August 1999, he took over the
role of Chief Financial Officer. He is currently a director and
executive officer of each of Headway's subsidiary corporations.
For nine years prior to 1992, Mr. Roseman was employed at
FCB/Leber Katz Partners, Inc., a division of True North
Communications, Inc., in various positions; most recently as
Senior Vice President Director of Agency Operations.
G. Chris Andersen became a director of Headway in June 1995.
He is one of the founders of Andersen, Weinroth & Co., L.P., a
merchant banking firm, which commenced operations in January
1996. For over five years prior to 1996, Mr. Andersen served as
the Vice Chairman of PaineWebber Incorporated. Mr. Andersen also
serves as a director of four other public companies, Sunshine
Mining and Refining Company, TEREX Corporation, GP Strategies,
and Compost America.
E. Garrett Bewkes, III, became a director of Headway in
March 1998 pursuant to the terms of the new financing obtained by
Headway in that month. From November 1995 to the present he has
served as a Managing Member of GarMark Associates L.L.C. He was
a member of the Management Committee of Investcorp International,
Inc., from March 1994 to November 1995, where he headed the North
American Investment Group. Mr. Bewkes was with Bear Stearns and
Co., Inc., for nine years prior to March 1994, most recently as
Vice Chairman and Co-Head of Investment Banking.
Bruce R. Ellig became a director of Headway in April 1997.
Currently Mr. Ellig is an independent consultant and adviser on
human resource matters. From 1985 through October 1996, Mr.
Ellig served as a Corporate Vice President of the research-based
health care company, Pfizer Inc., with worldwide responsibility
for its personnel functions. He is a member of the American
Compensation Association and the Society for Human Resource
Management ("SHRM"). Mr. Ellig was the Chairman of the SHRM
board in 1996. Prior to his retirement from Pfizer, Mr. Ellig
was a member of many human resource organizations, and received
numerous awards for his contributions to the field. He is a
fellow of the National Academy of Human Resources, and is listed
in Who's Who in Finance and Industry, the East, America, and the
World.
Ehud D. Laska was appointed a director of Headway in August
1993. He is the Chairman of Coleman and Company Securities,
Inc., a member firm of the National Association of Securities
Dealers, Inc. Mr. Laska is also a founding partner and President
of InterBank Capital Group, LLC. Through these firms, Mr. Laska
specializes in building up companies through same industry
consolidation and acquisitions. From August 1994 to February
1996, Mr. Laska served as a
8
managing director at the investment banking firm of Continuum
Capital, Inc. While serving as a Managing Director with Tallwood
Associates, Inc., a boutique investment banking firm, from May
1992 to August 1994, Mr. Laska founded the Private Equity Finance
Group, which merged with Continuum Capital, Inc. in August 1994.
Richard B. Salomon became a director of Headway in June
1995. He has been engaged in the private practice of law for the
past five years, during which period he has been a partner in the
law firm of Salans Hertzfeld Heilbronn Christy & Viener, counsel
to Headway. Mr. Salomon's practice is primarily in the areas of
real estate and corporate law. He currently serves as a director
of Tweedy Browne Fund, Inc., a mutual fund based in New York
City.
Jamie Schwartz was appointed Chief Operating Officer of
Headway Corporate Staffing Services and Secretary in June 2000.
Prior to this, he served as the National Vice President of
Headway Corporate Staffing Services. He was hired by Irene Cohen
Temps in December 1993, which was acquired by Headway Corporate
Resources in December 1996 as Director of Technology. He has a
BA in Economics from the University of Rochester and his MBA in
Operations and Finance from the William E. Simon Graduate School
of Business Administration.
Board Meetings and Committees/Compensation
In 1999 the Board of Directors had four committees. The
Executive Compensation Committee considers salary and benefit
matters for the executive officers and key personnel of Headway.
The members of the Executive Compensation Committee in 1999 were
G. Chris Andersen, E. Garrett Bewkes, III, Bruce R. Ellig, and
Ehud D. Laska (only until April 1999). The Finance Committee
assists the Board in areas of financing proposals, budgeting, and
acquisitions. Members of the Finance Committee in 1999 included
Gary S. Goldstein, Barry S. Roseman, G. Chris Andersen, E.
Garrett Bewkes, III, and Ehud D. Laska. The Audit Committee is
responsible for financial reporting matters, internal controls,
and compliance with financial polices of Headway, and meets with
Headway's auditors when appropriate. The members of the Audit
Committee in 1999 were E. Garrett Bewkes, III, Ehud D. Laska, and
Richard B. Salomon. The Governance Committee makes
recommendations to the Board regarding appropriate governance
policies and practices, as well as Board and committee membership
candidates. Members of the Governance Committee in 1999 included
E. Garrett Bewkes, III, Bruce R. Ellig, and Richard B. Salomon.
The Board of Directors met four times during the past fiscal
year. All directors attended at least 75% of the meetings of the
Board of Directors. The Executive Compensation Committee met 21
times in 1999, and all director members of those committees
attended at least 75% of the meetings. The Finance Committee met
five times in 1999, and all director members of that committee
attended at least 75% of the meetings, except for G. Chris
Andersen. The Audit Committee met once during 1999, and all
director members of that committee attended the meeting. The
Governance Committee did not meet in 1999.
9
Non-employee directors receive $2,500 for each meeting of
the Board of Directors attended, $500 for each committee meeting
attended, which is held on a day other than a day when a Board of
Directors meeting is also held, and reimbursement for travel
expenses. In September of each year, non-employee directors
receive options to purchase 5,000 shares of Headway's Common
Stock exercisable over a period of ten years at an exercise price
equal to the fair market value of Headway's Common Stock on the
date of issuance. Non-employee directors also receive at the
time they are first elected or appointed to the board of
directors options to purchase 10,000 shares of Headway's Common
Stock exercisable over a period of ten years at an exercise price
equal to the fair market value of Headway's Common Stock on the
date of issuance.
Section 16(a) Filing Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires officers and Directors of Headway and persons who own
more than ten percent of a registered class of Headway's equity
securities to file reports of ownership and changes in their
ownership on Forms 3, 4, and 5 with the Securities and Exchange
Commission, and forward copies of such filings to Headway. Based
on the copies of filings received by Headway, during the most
recent fiscal year the directors, officers, and beneficial owners
of more than ten percent of the equity securities of Headway
registered pursuant to Section 12 of the Exchange Act have filed
on a timely basis all required Forms 3, 4, and 5 and any
amendments thereto.
10
EXECUTIVE COMPENSATION
Annual Compensation
The following table sets forth certain information regarding
the annual and long-term compensation for services in all
capacities to Headway for the prior fiscal years ended December
31, 1999, 1998, and 1997, of those persons who were either (i)
the chief executive officer of Headway during the last completed
fiscal year or (ii) one of the other four most highly compensated
executive officers of Headway as of the end of the last completed
fiscal year whose annual salary and bonuses exceeded $100,000
(collectively, the "Named Executive Officers").
Annual Compensation
__________________________________________
Other Annual
Name and Principal Year Salary ($) Bonus ($) Compensation
Position
Gary S. Goldstein 1999 327,375 468,250 62,489
Chairman, Chief 1998 302,375 450,000 55,961
Executive Officer 1997 300,000 425,000 44,222
Barry S. Roseman 1999 252,375 135,000 23,390
President, Chief 1998 252,375 212,500 26,727
Operating Officer 1997 250,000 169,000 24,416
Jamie Schwartz 1999 120,000 87,500 --
Executive Vice 1998 100,000 73,000 --
President, Chief 1997 80,000 46,745 --
Operating Officer
of HCSS
Long Term Compensation
_____________________________________
Securities
Restricted Underlying LTIP All Other
Name and Principal Year Stock Options/ Payouts($) Compensation
Position Awards ($) SARs (#)
Gary S. Goldstein 1999 593,750 (2) -- 350,000 --
Chairman, Chief 1998 -- -- -- --
Executive Officer 1997 -- 250,000 -- 2,375 (1)
Barry S. Roseman 1999 -- -- 200,000 --
President, Chief 1998 -- -- -- --
Operating Officer 1997 -- -- -- 2,375 (1)
Jamie Schwartz 1999 -- 25,000 -- --
Executive Vice 1998 -- 5,000 -- --
President, Chief 1997 -- 10,000 -- --
Operating Officer
of HCSS
Footnotes to the table on the following page
11
Footnotes to the table on previous page
(1) Represents contributions by Headway to the former defined
contribution 401(k) plan.
(2) Represents a restricted stock award of 125,000 shares of
common stock approved in July 1999. The restrictions will lapse
on the earlier of the date that the market price for the common
stock of Headway achieves certain performance criteria or July 1,
2006.
Employment and Other Arrangements
In August 2000 Headway implemented new base and annual
incentive compensation arrangements for Messrs. Goldstein and
Roseman on the recommendation of the Executive Compensation
Committee, which were implemented retroactive to January 1, 2000.
The long-term incentive plan implemented in 1999 did not change.
The base salary of Mr. Goldstein increased to $650,000 and Mr.
Roseman's salary increased to $350,000. The new annual incentive
plan for Messrs. Goldstein and Roseman will pay to them annually
up to $350,000 each based upon earnings per share performance
against the budget. Additionally, because of his position as a
recruiter for Headway's subsidiary, Whitney Partners, L.L.C.,
Gary S. Goldstein receives commissions on his personal search
revenue. The new long-term incentive plan implemented in 1999
for the same individuals is a four-year plan with interim
phasing. The first payment will be in 2000 for 1998-1999
performance (two years). The second payment will be in 2001 for
1998-2000 performance (three years). This is followed by a
payment in 2002 for 1998-2001 performance (four years). All
three plans use 1997 as the base year. These are performance
unit plans with each unit in the described plans worth $1.
Payment is predicated on Headway's performance versus a peer
group of companies in terms of earnings per share and stock
price. Thus, while the annual plan is based on absolute
performance, the long-term plan is based on Headway's performance
relative to its peer group. Messrs. Goldstein and Roseman may
receive additional bonus or stock incentive compensation from
time to time as determined by the Board of Directors on the
recommendation of the Executive Compensation Committee.
Headway maintains key-man life insurance on Gary S.
Goldstein in the amount of $5,893,000, Barry S. Roseman in the
amount of $1,868,000, and on the lives of three other employees
in the amount of $2,228,000. All policies are owned by Headway,
and Headway is the named beneficiary.
Defined Contribution Plan
At January 1, 1998, Headway implemented a 401(k) retirement
plan covering substantially all employees. The plan does not
require matching contributions by Headway, and Headway made no
contributions to the plan for 1999. Benefits payable to an
employee under the plan are determined solely on the basis of the
employee's contributions. Prior to 1998, Headway had four
qualified 401(k) contribution plans for its employees. Under one
plan, Headway was required to make matching contributions up to
25% of the amount contributed by the employees. Employees are
fully vested on their contributions when made, and are fully
vested on employer contributions after five years of service.
Contributions to the old plans for the year ended December 31,
1997 were $53,000.
12
Stock Options
In 1999 the Board of Directors and stockholders approved
Headway's Amended 1993 Incentive Plan. The purpose of the Plan
is to provide directors, officers, employees, and consultants
with additional incentives by increasing their ownership
interests in the Company. Directors, officers, and other
employees of the Company and its subsidiaries are eligible to
participate in the Plan. In addition, awards may be granted to
consultants providing valuable services to the Company. Awards
under the Plan are granted by the Executive Compensation
Committee of the Board and may include incentive stock options,
non-qualified stock options, stock appreciation rights, stock
units, restricted stock, restricted stock units, performance
shares, performance units, or cash awards.
The following table sets forth certain information with
respect to unexercised options held by the Named Executive
Officers as of December 31, 1999. No outstanding options held by
the Named Executive Officers were exercised in 1999.
Number of Securities Value of Unexercised
Name and Principal Underlying Unexercised Options In-the-Money Options
Position at FY End (#) at FY End ($)(1)
Exercisable/ Unexercisable Exercisable/ Unexercisable
Gary S. Goldstein 271,667/ 83,333 206,458/ 20,417
Chairman, Chief
Executive Officer
Barry S. Roseman 150,000/ -0- 252,500/ -0-
President, Chief
Operating Officer
Jamie Schwartz 8,333/ 31,667 2,100/ 1,050
Executive Vice
President, Chief
Operating Officer of HCSS
__________________________________________
(1) This value is determined on the basis of the difference
between the fair market value of the securities underlying the
options and the exercise price at fiscal year end. The fair
market value of Headway's common stock at fiscal year end was
$4.375, which is the last sale price on December 31, 1999.
Report of the Executive Compensation Committee of the Board of
Directors On Executive Compensation
The Executive Compensation Committee (the "Committee") of
Headway's Board of Directors sets the salaries and other
compensation of Headway's executive officers, including the
Chairman and Chief Executive Officer and other Named Executive
Officers. Compensation for these executive officers consists
mainly of three items:
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* Salaries which are intended to be competitive, are not
performance-based, as are the annual and long-term elements.
* Annual incentive awards are based on Headway performance
versus standards adopted early in the year. The Committee may
include a subjective assessment in setting the award, but did not
do so for 1999.
* Long term incentive awards consist of stock options and
performance unit awards. No stock options were granted to any
executive officers during 1999.
The Committee put in place a new annual incentive plan and
continued the long-term incentive plan adopted by the committee
in 1999 for the Chairman/Chief Executive Officer and
President/Chief Operating Officer. The annual incentive plan
pays up to $350,000 to each executive based upon earnings per
share performance versus the budget. Additionally, because of
his position as a recruiter for Whitney Partners, Gary S.
Goldstein receives commissions on his personal search revenue.
The bonus payments are shown in the following table.
Actual Earnings Per Share Bonus
as a % of Budget
75% $ 0
80% $ 70,000
85% $ 140,000
90% $ 210,000
95% $ 280,000
100% $ 350,000
Mr. Goldstein's search revenue commission rate is as follows:
Revenue Commission
0-$500,000 10%
$500,000-$1,000,000 20%
Greater than $1,000,000 25%
The long-term incentive plan for the Chief Executive Officer
and Chief Operating Officer is a four-year plan with interim
phasing. The first payment was in 2000 for 1998-1999 performance
(two years). The second payment will be in 2001 for 1998-2000
performance (three years). This is followed by a payment in 2002
for 1998-2001 performance (four years). All three plans, use
1997 as the base year. These are performance unit plans with
each unit in the described plans worth $1. Payment is predicated
on Headway's performance versus a peer group of companies in
terms of earnings per share and stock price. Thus, while the
annual plan is based on absolute performance, the long-term plan
is based on Headway's performance relative to its peer group.
Threshold, target and maximums are as follows:
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Gary S. Goldstein Barry S. Roseman
Chairman, CEO President, COO
Maximum
1998-1999 $ 350,000 $ 200,000
1998-2000 525,000 300,000
1998-2001 700,000 400,000
Target
1998-1999 $ 150,000 $ 100,000
1998-2000 225,000 150,000
1998-2001 300,000 200,000
Threshold
1998-1999 $ 50,000 $ 25,000
1998-2000 75,000 38,000
1998-2001 100,000 50,000
Chief Executive Officer Compensation: The Committee set Mr.
Goldstein's salary at $650,000 per annum effective January 1,
2000, this represents a $297,625 increase from his salary in
effect since July 1, 1999. It was believed this adjustment was
supported by competitive data, provided to the Committee.
Chief Operating Officer Compensation: The Committee set Mr.
Roseman's salary at $350,000 per annum effective January 1, 2000,
this represents a $97,625 increase from his salary in effect
since 1994. It was believed this adjustment was supported by
competitive data, provided to the Committee.
Section 162(m) of the Internal Revenue Code: This section of
the Internal Revenue Code (the "Code") limits Headway to a
deduction for federal income tax purposes of no more than
$1,000,000 of compensation paid to any name executive officer in
a taxable year. Compensation above $1,000,000 may be deducted if
it is a "performance-based compensation" within the meaning of
the Code. The shareholders approved, at its 1999 shareholders
meeting, performance based compensation.
Conclusion: The Committee will continue to monitor the
annual and long-term compensation of the named executive officers
making it contingent on Headway's performance, linking
realization of rewards closely to increases in financial
performance and shareholder value. Headway is committed to this
philosophy of pay for performance, recognizing the competitive
market for talented executives and the volatility of Headway's
business may result in highly variable compensation for the
period.
Members of the Compensation Committee
Ehud D. Laska, Chair G. Chris Anderson E. Garrett Bewkes, III
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Compensation Committee Interlocks and Insider Participation
The members of the Executive Compensation Committee are
listed above. The committee is composed solely of non-employee
directors.
Performance Graph
Headway Corporate Resources, Inc.
Comparison of Five Year Cumulative Total Return*
Headway Corporate Resources, Inc., Russell 2000, and the Staffing
Industry Index 1994 to 1999
[Graph]
Cumulative Total Return* 1995 1996 1997 1998 1999
Headway Corporate Resources, Inc. 93 185 174 245 175
Russell 2000 126 145 175 169 202
Staffing Industry Index 117 218 223 202 175
___________________________________________
* Cumulative Total Return assumes an initial investment of
$100. No dividends were paid by Headway during the five-year
period, so no assumption is made with respect to reinvestment.
The Staffing Industry Index includes: CDI Corporation,
Interim Services, Inc., Kelly Services, Inc., Labor Ready Inc.,
Manpower Inc., Modis Professional Services Inc., On Assignment
Inc., Personnel Group of America Inc., Remedy Temp, Inc., Robert
Half International Inc., Kforce.com, Inc., SOS Staffing Services
Inc., and StaffMark Inc.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rights of Series F Stock
In March 1998, Headway obtained $105,000,000 of financing
consisting of $85,000,000 in debt and $20,000,000 of equity
financing. The equity financing was obtained through the sale of
1,000 shares of Series F Convertible Preferred Stock of Headway
("Series F Stock"). GarMark Partners, L.P. ("GarMark"), Moore
Global Investments, Ltd. ("Moore"), and Remington Investment
Strategies, L.P. ("Remington"), purchased 666.67, 205, and 45
shares of the Series F Stock, respectively. The Series F Stock
is convertible to Common Stock of Headway on the basis of the
liquidation preference of the Series F Stock at a conversion
price of $5.58 per share. Assuming GarMark, Moore, and Remington
each converted their shares of Series F Stock, they would receive
2,389,545, 734,781, and 161,293 shares of Common Stock,
respectively, which together would represent approximately 23.5%
of the outstanding shares assuming no other outstanding options,
warrants, or rights were exercised. Consequently, GarMark,
Moore, and Remington would have, assuming conversion of their
Series F Stock, a significant voice in any matter voted on by the
stockholders of Headway.
The terms of the Series F Stock also provide that GarMark
has the right to designate for election one voting member of
Headway's Board of Directors and one voting member of each
committee of the Board. Each of GarMark and Moore also have the
right to designate one non-voting observer of Headway's Board of
Directors and one non-voting observer to each of the committees
of the Board. Pursuant to these requirements, Headway appointed
E. Garrett Bewkes, III, the designee of GarMark, as a director of
Headway and a member of each committee of the Board.
If at any time there is a default in the payment of any
dividend on the Series F Stock, which remains unpaid for four
consecutive quarters, or if Headway fails to redeem any shares of
Series F Stock when required at the election of the holders on
the occurrence of a default or breach of the terms of the Series
F Stock, then Headway is required to increase the number of
directors constituting the Board by such number that the number
of directors nominated and elected by the holders of the Series F
Stock is at least one-third of the entire Board and the holders
of the Series F Stock shall have the exclusive right to nominate
and elect the new directors. In the event the default or breach
is subsequently cured, the right of the holders of the Series F
Stock to nominate and elect one-third of the Board terminates.
At the time the terms of the financing and Series F Stock
were negotiated between Headway and the participants, none of the
participants, including, GarMark, Moore, Remington, and E.
Garrett Bewkes, III, were affiliated with Headway.
Other Matters
Richard B. Salomon, a director of Headway, is also a partner
in the law firm of Salans Hertzfeld Heilbronn Christy & Viener,
which represents Headway on various legal matters from time to
time.
17
FORM 10-K
Upon written request, Headway will provide to stockholders,
without charge, a copy of Headway's annual report on Form 10-K
for the year ended December 31, 1999, as filed with the
Securities and Exchange Commission. Requests should be directed
to Barry S. Roseman, President, Headway Corporate Resources,
Inc., 317 Madison Avenue, 3rd Floor, New York, NY 10017.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of
Directors of Headway knows of no other matters that may come
before the Annual Meeting. However, if any matters other than
those referred to herein should be presented properly for
consideration and action at the Annual Meeting, or any
adjournment or postponement thereof, the proxies will be voted
with respect thereto in accordance with the best judgment and in
the discretion of the proxy holders.
Please sign the enclosed proxy and return it in the enclosed
return envelope.
Dated: October 2, 2000
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[Proxy Form Appendix]
HEADWAY CORPORATE RESOURCES, INC.
317 MADISON AVENUE, 3RD FLOOR
NEW YORK, NEW YORK 10017
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary S. Goldstein and Barry
S. Roseman as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and
to vote, as designated below, all the shares of Common Stock of
Headway Corporate Resources, Inc. (the "Company") held of record
by the undersigned on September 29, 2000, at the Annual Meeting
of Stockholders to be held on November 9, 2000, and at any
adjournment or postponement thereof.
Proposal No. 1 The election of each of the following persons as
Class 3 directors of the Company
(1) G. Chris Andersen (2) Richard B. Salomon
[ ] For all nominees
[ ] Withhold all nominees
[ ] Withhold authority to vote for any individual nominee.
Write number(s) of nominee(s) ____
Proposal No. 2 Ratification of the appointment of Ernst & Young
LLP as independent auditors
[ ] For [ ] Against [ ] Abstain
Note The proxies are authorized to vote in accordance with their
judgment on any matters other than those referred to herein
that are properly presented for consideration and action at
the Annual Meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is given, this proxy will be voted for Proposal No.'s 1 and 2.
All other proxies heretofore given by the undersigned to vote
shares of stock of the Company, which the undersigned would be
entitled to vote if personally present at the Annual Meeting or
any adjournment or postponement thereof, are hereby expressly
revoked.
Dated:________________________________, 2000
__________________________________________
__________________________________________
Please sign it exactly as name appears hereon. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation or partnership, please
sign in full corporate or partnership name by an authorized
officer or person.
Please mark, sign, date and promptly return the proxy card using
the enclosed envelope. If your address is incorrectly shown,
please print changes.
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