SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ROBERT HALF INTERNATIONAL INC.
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(Name of Registrant as Specified In Its Charter)
ROBERT HALF INTERNATIONAL INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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ROBERT HALF INTERNATIONAL INC.
2884 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
TO BE HELD
WEDNESDAY, MAY 6, 1998
9:00 A.M.
To the Stockholders:
The annual meeting of stockholders of ROBERT HALF INTERNATIONAL INC. (the
"Company") will be held at 9:00 a.m. on Wednesday, May 6, 1998 at The Westin
Hotel--San Francisco Airport, 1 Old Bayshore Highway, Millbrae, California,
94030. The meeting will be held for the following purposes:
1. To elect two directors.
2. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
Only stockholders of record at the close of business on March 16, 1998 are
entitled to notice of, and to vote at, the meeting and any adjournment of the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
STEVEN KAREL
SECRETARY
Menlo Park, California
March 25, 1998
--IMPORTANT--
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POST-PAID ENVELOPE. IF
YOU ATTEND THE MEETING AND SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON.
THANK YOU FOR ACTING PROMPTLY.
ROBERT HALF INTERNATIONAL INC.
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PROXY STATEMENT
-------------------
INTRODUCTION
The enclosed proxy is solicited on behalf of the present Board of Directors
(sometimes referred to as the "Board") of Robert Half International Inc., a
Delaware corporation (the "Company"), the principal executive offices of which
are located at 2884 Sand Hill Road, Menlo Park, California 94025. The
approximate date on which this proxy statement and the enclosed proxy are being
mailed to the Company's stockholders is March 25, 1998. The proxy is solicited
for use at the annual meeting of stockholders (the "Meeting") to be held at 9:00
a.m. on Wednesday, May 6, 1998, at The Westin Hotel--San Francisco Airport, 1
Old Bayshore Highway, Millbrae, California, 94030. Only stockholders of record
on March 16, 1998 will be entitled to notice of, and to vote at, the Meeting and
any adjournment of the Meeting. Each share is entitled to one vote. At the close
of business on March 16, 1998 the Company had outstanding and entitled to vote
91,692,329 shares of its common stock, $.001 par value ("Common Stock").
A stockholder giving a proxy in the form accompanying this proxy statement
has the power to revoke the proxy prior to its exercise. A proxy can be revoked
by an instrument of revocation delivered prior to the Meeting to the Secretary
of the Company, by a duly executed proxy bearing a date later than the date of
the proxy being revoked, or at the Meeting if the stockholder is present and
elects to vote in person. Solicitation of proxies may be made by directors,
officers or employees of the Company by telephone or personal interview as well
as by mail. Costs of solicitation will be borne by the Company.
An automated system administered by the Company's transfer agent will
tabulate votes cast at the Meeting. Abstentions and broker non-votes are each
included in the determination of the number of shares present and voting, and
each is tabulated separately. Abstentions are counted in tabulations of the
votes cast on proposals presented to stockholders or with respect to election of
directors, whereas broker non-votes are not counted for purposes of determining
whether a proposal has been approved or a nominee has been elected.
The Company effected a two-for-one stock split in the form of a stock
dividend in June 1996 and a three-for-two stock split in the form of a stock
dividend in September 1997. All share and price per share amounts in this Proxy
Statement have been restated, as appropriate, to reflect the stock splits.
NOMINATION AND ELECTION OF DIRECTORS
NOMINEES OF THE PRESENT BOARD OF DIRECTORS
The By-Laws of the Company provide for a Board of Directors consisting of
not less than six nor more than eleven directors. The size of the Board of
Directors is presently set at seven and there are no vacancies.
The Board of Directors is divided into three classes serving staggered three
year terms. Currently, there are two directors in Class I, whose terms expire in
2000, three directors in Class II, whose terms expire in 1999, and two directors
in Class III, whose terms expire at the 1998 Annual Meeting. However, if the
stockholders of the Company do not approve the continuing classification of the
Board of Directors at the 1999 Annual Meeting of Stockholders, then the terms of
all directors shall expire at the 2000 Annual Meeting of Stockholders and all
directors elected at the 1999 Annual Meeting of Stockholders or any subsequent
meeting of stockholders shall hold office for a one-year term. Each Director
holds office until the annual meeting in the year in which his term expires and
until his successor is elected and qualified.
1
The current members of Class III, whose terms expire at the Annual Meeting,
are Edward W. Gibbons and Harold M. Messmer, Jr., both of whom are nominees.
Proxies cannot be voted for more than two persons. Directors are elected by
a plurality of the votes of the shares present in person or represented by proxy
at the Meeting. Proxies solicited by the Board will be voted "FOR" the election
of Messrs. Gibbons and Messmer unless stockholders specify in their proxies to
the contrary. Although the Board does not expect any nominee to become
unavailable to serve as a director for any reason, should that occur before the
Meeting, proxies will be voted for the balance of those named and such
substitute nominee as may be selected by the Board.
The following table lists the name of each current member of the Board of
Directors, his age at January 31, 1998, the Class of which he is a member and
the period during which he has served as a director.
CURRENT DIRECTOR
NAME AGE CLASS SINCE
- ---------------------------------------------------------------------------------------- ---- ------- -----------
Andrew S. Berwick, Jr. ................................................................. 64 I 1981
Frederick P. Furth...................................................................... 63 I 1983
Edward W. Gibbons....................................................................... 61 III 1988
Harold M. Messmer, Jr. ................................................................. 51 III 1982
Frederick A. Richman.................................................................... 52 II 1994
Thomas J. Ryan.......................................................................... 73 II 1987
J. Stephen Schaub....................................................................... 57 II 1989
Mr. Berwick has been President of Berwick-Pacific Corporation, a real estate
development company, for more than the past five years. He is Chairman Emeritus
of California Healthcare System.
Mr. Furth has been senior partner of the law firm of Furth, Fahrner & Mason
for more than the past five years. He is the Proprietor and Chairman of the
Board of Chalk Hill Winery and Chairman of the Board of the Furth Family
Foundation.
Mr. Gibbons has been a partner in Gibbons, Goodwin, van Amerongen, a private
merchant banking firm, since its founding in 1969. Mr. Gibbons is also currently
a director of Foodmaker, Inc.
Mr. Messmer has been Chairman of the Board since 1988, Chief Executive
Officer since 1987 and President since 1985. Mr. Messmer is a director of
Airborne Freight Corporation, Health Care Property Investors, Inc. and Spieker
Properties, Inc.
Mr. Richman is a senior tax partner of the law firm of O'Melveny & Myers, of
which he has been a member since 1978.
Mr. Ryan has been Chairman of the Board of Directors and Chief Executive
Officer of ISU International, a franchisor of independent insurance agents,
since 1979.
Mr. Schaub has been President and owner of J.S. Schaub & Co., Inc., a firm
engaged in investments and financial consulting, for more than the past five
years. Since 1984, he has also been Chief Financial Officer, part owner and a
director of Northwest Energy Services, Inc., a privately owned engineering firm
specializing in energy audits, installation and financing of energy conservation
measures.
THE BOARD AND COMMITTEES
The Board of Directors has standing Audit, Compensation, Stock Plan and
Executive Committees. The Board currently has no standing nominating committee.
The Audit Committee, composed of Messrs. Berwick, Richman and Schaub, met
once during 1997. The function of the Audit Committee is to recommend to the
full Board of Directors the firm to be retained by the Company as its
independent auditors, to consult with the auditors with regard to the plan of
audit, the results of the audit and the audit report, and to confer with the
auditors with regard to the adequacy of internal accounting controls.
2
The Compensation Committee, composed of Messrs. Furth, Berwick and Ryan, met
twice during 1997 and acted once by unanimous written consent. The function of
the Compensation Committee is to establish compensation policies for the
Company's senior officers and to administer non-stock compensation plans in
which officers, directors and employees are eligible to participate.
The Stock Plan Committee, a subcommittee of the Compensation Committee
composed of Messrs. Berwick and Furth, met four times during 1997 and acted once
by unanimous written consent. The Stock Plan Committee administers the Company's
equity incentive plans.
The Executive Committee, composed of Messrs. Messmer, Furth and Gibbons, met
three times during 1997. The Executive Committee has all of the powers of the
Board of Directors, with certain specific exceptions required by Delaware law.
The Board met five times during 1997 and acted once by unanimous written
consent. Each of the directors attended at least 75% of the aggregate number of
meetings of the Board and of the committees of the Board on which he served that
were held while he was a member thereof.
EXECUTIVE OFFICERS
The following table lists the name of each executive officer of the Company,
his or her age at January 31, 1998, and his or her current positions and offices
with the Company:
NAME AGE OFFICE
- ----------------------------------- --- --------------------------------------------------
Harold M. Messmer, Jr. ............ 51 Chairman of the Board, President and Chief
Executive Officer
M. Keith Waddell................... 40 Senior Vice President, Chief Financial Officer and
Treasurer
Robert W. Glass.................... 39 Senior Vice President, Corporate Development
Steven Karel....................... 47 Vice President, Secretary and General Counsel
Barbara J. Forsberg................ 37 Vice President and Controller
Mr. Waddell has been Senior Vice President of the Company since 1993, Chief
Financial Officer of the Company since 1988 and Treasurer since 1987. From 1986,
when he joined the Company, until 1993, he served as Vice President.
Mr. Glass has been Senior Vice President, Corporate Development, since 1993.
He served as Vice President, Corporate Development from 1988 until 1993. From
1987 until 1988, he served as Vice President, Planning of the Company.
Mr. Karel has been Vice President and General Counsel of the Company since
1989 and Secretary since 1993.
Ms. Forsberg has been Vice President of the Company since 1993 and
Controller since 1990.
The executive officers of the Company are also officers of the Company's
wholly owned subsidiaries.
All of the executive officers serve at the pleasure of the Board of
Directors. Mr. Messmer has an employment agreement with the Company to serve as
Chairman, President and Chief Executive Officer. In addition, severance
agreements have been entered into with certain executive officers. See the
discussion under "Compensation of Executive Officers" below.
There are no family relationships between any of the directors or executive
officers.
3
BENEFICIAL STOCK OWNERSHIP
The following table sets forth information as of February 28, 1998
concerning beneficial ownership of Common Stock by (i) the only persons known to
the Company to be beneficial owners of 5% or more of the outstanding Common
Stock, (ii) each director, (iii) the five executive officers of the Company who
had the highest combination of salary and bonus during 1997, and (iv) all
executive officers and directors as a group. Included in share ownership are
shares that may be acquired upon the exercise of options that are currently
exercisable or become exercisable on or before May 31, 1998 ("Exercisable
Options"). All persons have sole voting and investment power except as otherwise
indicated.
SHARES OF PERCENT
COMMON STOCK OF
BENEFICIALLY COMMON
NAME OF BENEFICIAL OWNER OWNED(A) STOCK
- -------------------------------------------------- --------------- --------
Putnam Investments, Inc. ......................... 12,068,271(a) 13.2%
One Post Office Square
Boston, MA 02109
FMR Corp. ........................................ 6,007,750(b) 6.6%
82 Devonshire Street
Boston, MA 02109
Ronald Baron...................................... 4,650,512(c) 5.1%
Baron Capital Group, Inc.
767 Fifth Avenue
New York, NY 10153
Andrew S. Berwick, Jr. ........................... 282,000(d) 0.3%
Frederick P. Furth................................ 2,579,300(e) 2.8%
Edward W. Gibbons................................. 821,835(f) 0.9%
Harold M. Messmer, Jr............................. 1,837,098(g) 2.0%
Frederick A. Richman.............................. 58,500(h) 0.1%
Thomas J. Ryan.................................... 228,318(i) 0.3%
J. Stephen Schaub................................. 2,786,229(j) 3.0%
M. Keith Waddell.................................. 660,857(k) 0.7%
Robert W. Glass................................... 304,584(l) 0.3%
Steven Karel...................................... 138,641(m) 0.2%
Barbara J. Forsberg............................... 187,776(n) 0.2%
All executive officers and directors as a group
(11 persons).................................... 9,885,138 10.6%
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(a) Information is as of December 31, 1997, the latest date for which
information is available to the Company. According to a Schedule 13G filed
by Putnam Investments, Inc., these shares are held indirectly by Putnam
Investments, Inc. and its parent, Marsh & McLennan Companies, Inc. and
directly by various entities controlled by Putnam Investments, Inc.,
including Putnam Investment Management, Inc. and The Putnam Advisory
Company, Inc., all of which own such shares in their capacities as
investment advisers or investment managers. According to the Schedule 13G,
shared dispositive power is held with respect to all of such shares and
shared voting power is held with respect to 457,485 of such shares.
(b) Information is as of December 31, 1997, the latest date for which
information is available to the Company. According to a Schedule 13G filed
by FMR Corp., these shares are held indirectly by FMR Corp. and Edward C.
Johnson 3d (Chairman and a significant stockholder of FMR Corp.) and Abigail
P. Johnson (director and a significant stockholder of FMR Corp.) and
directly by various entities controlled by FMR Corp., including Fidelity
Management & Research Company
4
and Fidelity Management Trust Company, all of which own such shares in their
capacities as investment advisers, investment companies, investment managers
or banks. According to the Schedule 13G, sole dispositive power is held with
respect to all of such shares and sole voting power is held with respect to
226,100 of such shares.
(c) Information is as of February 12, 1998, the latest date for which
information is available to the Company. According to a Schedule 13D filed
by Mr. Baron, 75,000 of these shares are held directly by him and the
remaining shares are held directly or indirectly by Baron Capital Group,
Inc., BAMCO, Inc., Baron Capital Management, Inc. and Baron Asset Fund, each
of which is a holding company, investment advisor or investment company of
which Mr. Baron is President or Chief Executive Officer. According to the
Schedule 13D, shared dispositive and voting power is held with respect to
3,711,312 of such shares.
(d) Includes 78,000 shares that may be acquired upon the exercise of Exercisable
Options.
(e) Includes 1,641,600 shares as to which Mr. Furth has voting power but not
dispositive power, 172,400 shares owned by the Furth Family Foundation, a
charitable foundation of which Mr. Furth is a director, as to which shares
Mr. Furth has shared voting and dispositive powers, and 78,000 shares that
may be acquired upon the exercise of Exercisable Options. Also includes
4,500 shares owned by Mr. Furth's wife, as to which shares he has sole
voting and dispositive power.
(f) Includes 108,000 shares that may be acquired upon the exercise of
Exercisable Options. Also includes 15,000 shares owned by Mr. Gibbons' wife.
(g) Includes 760,601 shares that may be acquired upon the exercise of
Exercisable Options, 954,623 shares acquired pursuant to Company benefit
plans, as to which shares Mr. Messmer has sole voting power but as to which
disposition is restricted pursuant to the terms of such plans, 103,346
shares as to which Mr. Messmer shares voting and dispositive power with his
wife and 14,724 shares held by Mr. Messmer as custodian for his children, as
to which shares Mr. Messmer has voting and dispositive power but disclaims
beneficial ownership.
(h) Includes 48,000 shares that may be acquired upon the exercise of Exercisable
Options.
(i) Includes 78,000 shares that may be acquired upon the exercise of Exercisable
Options and 12,750 shares held by NAYR Group, LP, of which Mr. Ryan is a
limited partner.
(j) Includes 48,000 shares that may be acquired upon the exercise of
Exercisable Options, 73,362 shares owned by Schaub Family Partners, LP, of
which Mr. Schaub is general partner but has no limited partnership interest,
and 28,500 shares held by The Schaub Foundation, as to which shares Mr.
Schaub shares voting and dispositive power but in which he has no pecuniary
interest. Also includes 1,294,254 shares as to which Mr. Schaub has voting
power (and with respect to 458,559 of which shares Mr. Schaub has a right of
first refusal) but in which he has no pecuniary interest.
(k) Includes 243,448 shares that may be acquired upon the exercise of
Exercisable Options, 385,101 shares acquired pursuant to Company benefit
plans, as to which shares Mr. Waddell has sole voting power but as to which
disposition is restricted pursuant to the terms of such plans and 89,075
shares as to which Mr. Waddell shares voting and dispositive power with his
wife.
(l) Includes 185,268 shares that may be acquired upon the exercise of
Exercisable Options, 57,428 shares acquired pursuant to Company benefit
plans, as to which shares Mr. Glass has sole voting power but as to which
disposition is restricted pursuant to the terms of such plans, and 60,148
shares as to which Mr. Glass shares voting and dispositive power with his
wife.
(m) Includes 42,230 shares that may be acquired upon the exercise of Exercisable
Options and 55,431 shares acquired pursuant to Company benefit plans, as to
which shares Mr. Karel has sole voting power but as to which disposition is
restricted pursuant to the terms of such plans.
(n) Includes 104,902 shares that may be acquired upon the exercise of
Exercisable Options and 57,125 shares acquired pursuant to Company benefit
plans, as to which shares Ms. Forsberg has sole voting power but as to which
disposition is restricted pursuant to the terms of such plans.
5
COMPARATIVE PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate by reference this Proxy Statement or
future filings with the Securities and Exchange Commission, in whole or in part,
the following Performance Graph shall not be deemed to be incorporated by
reference into any such filings.
The following graph compares, through December 31, 1997, the cumulative
return of the Company's Common Stock, an index of certain publicly traded
employment services companies, and the S&P 500. The graph assumes the investment
of $100 at the end of 1992 and reinvestment of all dividends. The information
presented in the graph was obtained by the Company from outside sources it
considers to be reliable but has not been independently verified by the Company.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ROBERT HALF
INTERNATIONAL PEER GROUP INDEX(A)(B) S&P 500 INDEX
1992 $100 $100 $100
1993 $198 $109 $110
1994 $362 $145 $112
1995 $632 $167 $153
1996 $1,030 $183 $189
1997 $1,812 $239 $252
- ------------------------
(a) This index represents the cumulative total return of the Company and the
following corporations providing temporary or permanent employment services:
CDI Corp., Kelly Services, Inc., Manpower Inc. and The Olsten Corporation.
Many of the Company's direct competitors are privately held. However, the
selected corporations, which for the most part are general employment
agencies and therefore not comparable to the Company, which is a specialized
staffing service, constitute the best approximation of a peer group among
companies that were publicly traded for the entire five-year period.
(b) In the Company's previous proxy statements, Uniforce Services, Inc. was
included in the Peer Group Index. Uniforce ceased to be publicly traded in
1997, so full five-year information is not available. Therefore, Uniforce
has been excluded from the Index. Its exclusion from the Index has caused an
insignificant change in the performance of the Peer Group Index. (Inclusion
of Uniforce in the Index for the full years during which it was publicly
traded would result in a change of less than 1% in each such year.)
6
COMPENSATION OF EXECUTIVE OFFICERS
The following tables provide information as to compensation for services of
the five executive officers of the Company who had the highest combination of
salary and bonus with respect to 1997.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
----------------------------------------------------------------
RESTRICTED
STOCK AWARDS(A)
ANNUAL ----------------------------- SECURITIES
COMPENSATION MARKET UNDERLYING
NAME AND -------------------- NUMBER OF VALUE ON STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS SHARES GRANT DATE(B) OPTIONS COMPENSATION(D)
- -------------------------- ---- -------- ---------- ------------ -------------- -------------- ----------------
Harold M. Messmer, Jr..... 1997 $500,000 $1,204,819 380,868(c) $11,635,205 465,500 shares $319,011
Chairman and Chief 1996 $387,122 $ 882,353 450,000 $ 8,756,250 450,000 shares $285,915
Executive Officer 1995 $375,847 $ 646,687 277,908 $ 2,821,509 318,129 shares $119,720
M. Keith Waddell.......... 1997 $247,500 $ 572,289 155,561(c) $ 4,618,412 172,500 shares $227,434
Senior Vice 1996 $225,000 $ 441,176 150,000 $ 2,918,750 150,000 shares $207,497
President 1995 $200,000 $ 330,444 127,560 $ 1,295,072 147,081 shares $ 94,794
Robert W. Glass........... 1997 $160,000 $ 228,916 12,000(c) $ 450,000 22,850 shares $ 94,099
Senior Vice 1996 $155,000 $ 188,235 7,500 $ 170,625 15,000 shares $ 85,596
President 1995 $145,000 $ 159,108 40,260 $ 408,747 35,802 shares $ 54,266
Steven Karel.............. 1997 $160,000 $ 108,434 21,500(c) $ 806,250 32,100 shares $ 66,484
Vice President 1996 $150,000 $ 88,235 21,014 $ 478,057 26,223 shares $ 60,419
1995 $135,000 $ 56,873 33,273 $ 337,810 27,177 shares $ 33,115
Barbara J. Forsberg....... 1997 $160,000 $ 108,434 18,800(c) $ 496,850 59,400 shares $ 60,544
Vice President 1996 $135,000 $ 76,471 15,000 $ 291,875 15,000 shares $ 49,904
1995 $110,000 $ 55,455 19,500 $ 203,625 27,240 shares $ 25,935
- ------------------------------
(a) At December 31, 1997, Messrs. Messmer, Waddell, Glass and Karel and Ms.
Forsberg held an aggregate of 1,092,893, 429,313, 73,906, 71,733 and 51,200
shares of restricted stock, respectively, having a market value, on that
date of $43,715,720, $17,172,520, $2,956,240, $2,869,320 and $2,048,000,
respectively. All restricted stock awards vest automatically upon the
occurrence of a Change in Control. The executive officers have the right to
receive any dividends paid on restricted shares.
(b) Determined by multiplying the number of shares granted by the fair market
value of the Company's Common Stock on the date of grant, without giving
effect to the diminution of value attributable to vesting restrictions.
(c) Grants vest at the rate of 25% per year over the first four years following
the grant.
(d) The amounts in this column relating to 1997 include (a) $12,627 paid for
life insurance for Mr. Messmer and (b) $189,361, $152,996, $75,752, $51,481
and $47,892 allocated in the Company's records for the benefit of Messrs.
Messmer, Waddell, Glass and Karel and Ms. Forsberg, respectively, pursuant
to defined contribution plans that pay the benefits allocated thereunder
only upon the executive officer's retirement, death or termination of
employment. The amounts in this column also include amounts deemed to be
compensation under the rules of the Securities and Exchange Commission
related to the present value of the premium payments made by the Company for
the benefit of the named executive officers under the Company's split-dollar
life insurance program. Such amounts in fiscal year 1997 amounted to
$117,023, $74,438, $18,347, and $15,003 for Messrs. Messmer, Waddell, Glass,
Karel and $12,652 for Ms. Forsberg. Premiums paid by the Company will be
reimbursed to the Company on termination of the respective policies to the
extent and provided there is sufficient cash value. Cash value in excess of
such premiums is paid to the executive's beneficiary.
7
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO GRANT
UNDERLYING EMPLOYEES EXERCISE DATE
OPTIONS IN FISCAL OR BASE EXPIRATION PRESENT
NAME GRANTED(A) YEAR PRICE DATE VALUE(B)
- ----------------------------------------- ------------- ------------- ----------- ---------- -----------------
Harold M. Messmer, Jr.................... 10,500(c) 0.5% $ 22.75 01/01/07 $ 124,748*
330,000(d) 17.0% $ 22.4167 01/02/07 $ 3,882,660**
125,000(e) 6.4% $ 37.50 12/11/07 $ 2,381,457***
M. Keith Waddell......................... 5,550(c) 0.3% $ 22.75 01/01/07 $ 65,938*
151,469(d) 7.8% $ 22.4167 01/02/07 $ 1,782,129**
15,481(e) 0.8% $ 37.50 12/11/07 $ 294,939***
Robert W. Glass.......................... 2,850(c) 0.1% $ 22.75 01/01/07 $ 33,860*
20,000(e) 1.0% $ 37.50 12/11/07 $ 381,033***
Steven Karel............................. 2,100(c) 0.1% $ 22.75 01/01/07 $ 24,950*
30,000(e) 1.5% $ 37.50 12/11/07 $ 571,550***
Barbara J. Forsberg...................... 1,800(c) 0.1% $ 22.75 01/01/07 $ 21,385*
27,600(d) 1.4% $ 22.4167 01/02/07 $ 324,732**
30,000(e) 1.5% $ 37.50 12/11/07 $ 571,550***
* In order for the assumed values to be realized, the total market value of
all outstanding shares of the Company's Common Stock would have to increase
by approximately $1,064,000,000 from its value on the grant date.
** In order for the assumed values to be realized, the total market value of
all outstanding shares of the Company's Common Stock would have to increase
by approximately $1,054,000,000 from its value on the grant date.
*** In order for the assumed values to be realized, the total market value of
all outstanding shares of the Company's Common Stock would have to increase
by approximately $1,735,000,000 from its value on the grant date.
- ------------------------
(a) All grants entitle the holder to satisfy tax withholding obligations
resulting from exercise by reduction in the number of shares otherwise
deliverable. In addition to the specified vesting schedule, (i) the options
granted to Messrs. Messmer, Waddell, Glass and Karel may vest upon
termination of employment under certain circumstances pursuant to their
respective severance agreements described below, (ii) all grants vest
automatically upon death, disability or the occurrence of a change in
control and (iii) all grants are subject to accelerated vesting at the
discretion of the Compensation Committee.
(b) Calculated in accordance with the Binomial Model for estimating the value of
stock options, which estimates the present value of an option based upon
assumptions as to future variables such as interest rate and stock price
volatility. The Binomial calculations assumed an expected volatility of
34.09%, an interest rate of between 5.82% and 6.54%, depending on the grant
date, no dividends, a 3% annual reduction until the option is fully vested
to reflect risk of forfeiture and the indicated expiration date. The actual
value, if any, realized on the exercise of an option will depend on the
excess of the fair market value of the stock over the exercise price on the
date the option is exercised, and may be substantially different from the
value estimated by the Binomial Model.
(c) Vests in four equal annual installments on each of December 31, 2000,
December 31, 2001, December 31, 2002 and December 31, 2003.
8
(d) This grant vests in four equal annual installments on each of December 31,
1997, December 31, 1998, December 31, 1999 and December 31, 2000.
(e) This grant vests in four equal annual installments on each of December 31,
1998, December 31, 1999, December 31, 2000 and December 31, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS OPTIONS
ACQUIRED AT FISCAL YEAR-END AT FISCAL YEAR-END
ON VALUE -------------------------- ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- --------- -------------- ----------- ------------- -------------- --------------
Harold M. Messmer, Jr....... 350,000 $ 10,052,507 670,601 1,122,212 $ 19,068,348 $ 24,003,321
M. Keith Waddell............ 75,000 $ 1,671,798 313,448 422,186 $ 9,213,343 $ 9,764,631
Robert W. Glass............. 75,000 $ 1,934,068 185,268 85,817 $ 6,428,457 $ 1,908,928
Steven Karel................ 60,000 $ 1,899,713 42,230 77,725 $ 1,239,891 $ 1,225,886
Barbara J. Forsberg......... 0 0 101,902 87,644 $ 3,442,424 $ 1,402,936
Harold M. Messmer, Jr., Chairman of the Board, President and Chief Executive
Officer, has an employment agreement with the Company terminating December 31,
2001. Under the terms of the employment agreement, Mr. Messmer will receive a
base annual salary of not less than $525,000 and will receive certain other
benefits, including life insurance and tax planning. In the event the employment
of Mr. Messmer is terminated involuntarily other than for cause, or voluntarily
within thirty (30) days following a change in control of the Company, he is
entitled to receive severance compensation. The amount of such severance
compensation shall be, at Mr. Messmer's election, either (i) his base salary, at
the rate in effect on the date of termination, plus an equal amount annually in
lieu of a bonus, through the stated expiration date of his agreement, or (ii)
the present value of such payments. If Mr. Messmer's employment is terminated by
reason of death or disability, he or his estate will receive only 75% of his
base salary through the termination date of the agreement and will not receive
any amount in lieu of bonus. The employment agreement provides for automatic
renewal for an additional year on each December 31.
Severance agreements, which were recommended in 1989 by an outside
compensation consulting firm, have been entered into with Messrs. Messmer,
Waddell, Glass and Karel. Each severance agreement provides that the employee
will be paid between six and 24 months base salary (depending upon length of
service) if his employment is terminated without cause, as defined in the
agreement. The terminated employee will also receive a pro rata share of any
bonus he would otherwise have received pursuant to any bonus plan if his
employment had not been terminated, such amount to be paid when bonuses are
generally paid pursuant to the plan. (Notwithstanding the foregoing, no
individual shall receive salary and bonus payments under both this agreement and
any other agreement. Instead, only the greater of such benefits provided by
either agreement shall be paid.) On the termination date, any unvested stock or
options would become fully vested, as would any amounts accrued for the
employee's benefit under the Deferred Compensation Plan (a defined contribution
plan that pays benefits only upon retirement, death or other termination of
employment).
The Company had in effect a key executive retirement plan, which was
terminated in 1987. Participants in the plan prior to its termination will
continue to receive benefits thereunder. The only current employee participating
in the plan is Mr. Messmer, who participates pursuant to a separate retirement
agreement. Under Mr. Messmer's retirement agreement, as amended, if Mr.
Messmer's employment is terminated (whether voluntarily or involuntarily) for
any reason, he is to receive monthly benefits commencing the month following the
date of his employment termination. Monthly benefit payments are a specified
percentage, depending upon his age at retirement, (the "Retirement Percentage")
of the sum of $2,500 plus 1/12 of Mr. Messmer's highest combination of Salary
and Bonus (as such terms are defined in his retirement agreement) with respect
to any of the five calendar
9
years prior to the date his employment with the Company terminates. For purposes
of the retirement agreement, Salary is defined as the greater of (a) actual cash
base salary paid during the year or (b) the amount calculated for the year by
increasing $413,019 annually each calendar year after 1995 on a compound basis
by the annual percentage increase in the Consumer Price Index for the preceding
calendar year (but not by more than 10% or less than 4%) through the date of
retirement. Bonus is defined as cash bonus or amounts paid in lieu of cash
bonus. The Retirement Percentage (which was established at its current levels on
the recommendation of an outside compensation consulting firm) is 30% if Mr.
Messmer retires at age 50, and increases by 0.25% for each month Mr. Messmer
delays his retirement beyond age 50, to a maximum of 66% if Mr. Messmer retires
at or after age 62. Notwithstanding the foregoing, the Retirement Percentage is
66% if a Change in Control (as defined in the plan) occurs prior to Mr.
Messmer's retirement. Such monthly benefits will be increased annually
thereafter by the rate of increase in the consumer price index (but not more
than 7 1/2%) that existed at the end of the calendar year prior to his
retirement, plus any additional increases in such rate (but not more than a
total of 7 1/2%) that occur in subsequent calendar years, and are to be paid
until his death. For the first 15 years after his termination of employment, Mr.
Messmer or his beneficiary will also receive a supplemental monthly benefit that
varies depending upon his retirement age, which benefit will be $6,241 per month
if he retires at age 50, and increases by 8%, compounded, for each year he
delays his retirement beyond age 50 through, but not beyond, age 62. This
supplemental benefit is not subject to the annual CPI increase provisions. The
retirement agreement also provides that if Mr. Messmer dies before his
employment is otherwise terminated or after his employment terminates but before
receiving 180 monthly retirement payments, such payments are to be made to his
designated beneficiary beginning the month following his death until an
aggregate of 180 monthly retirement payments have been made. If his designated
beneficiary is his wife, after the payment for the 180th month has been made,
she will continue to receive monthly payments until her death of half the amount
he would have received. Both of these death benefits are subject to the annual
CPI increase provisions. Pursuant to the retirement agreement, the Company will
annually fund an irrevocable grantor trust as necessary to provide for its
obligations under the retirement agreement. Upon Mr. Messmer's termination of
employment, the Company will deliver to him (or his beneficiary) an annuity or,
at his request, a lump sum cash payment, and annually thereafter the Company
will pay him any additional post-retirement CPI increases.
The Company has adopted an Excise Tax Restoration Agreement under which the
current executive officers and directors who become subject to such a tax in
connection with a change of control receive a cash payment equal to the sum of
the excise tax due, in addition to an amount necessary to restore the individual
to the same after-tax position as if no excise tax had been imposed.
10
COMPENSATION OF DIRECTORS
Each outside director received an annual fee of $20,000 for services as a
director during 1997, $1,000 for each board meeting attended, and an annual fee
of $3,000 for each committee (but not subcommittee) on which he serves as a
member. Effective January 1, 1998, the annual fee for service as a director will
be $30,000. All directors receive reimbursement for travel and other expenses
directly related to activities as directors.
Each outside director also receives an annual option grant under the Outside
Directors' Option Plan. The plan provides for the automatic granting of options
to outside directors (currently all directors other than Mr. Messmer) on the day
of each Annual Meeting of Stockholders. On such day, each outside director will
receive an option for the purchase of 12,000 shares. However, if such individual
has not previously been granted an option by the Company, the grant will be for
the purchase of 15,000 shares, rather than 12,000 shares. The exercise price for
all options is 100% of the fair market value on the date of grant. All options
are for a term of ten years and will vest at the rate of 25% per year for each
of the first four years. However, all options vest automatically and immediately
upon the occurrence of a Change in Control (as defined in the plan). No option
may be exercised until at least six months after its grant date. Unvested
options terminate on the day that an individual ceases to be a director. Vested
options may be exercised for a limited period following termination. Each of the
outside directors (all directors other than Mr. Messmer) was, pursuant to the
terms of the plan, granted an option on May 7, 1997 (the date of the 1997 Annual
Meeting of Stockholders) at an exercise price of $26.8333 per share, the fair
market value on the date of grant. Each of such grants was for an option to
purchase 12,000 shares.
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
AND CERTAIN TRANSACTIONS
The Compensation Committee is composed of Frederick P. Furth, Andrew S.
Berwick, Jr., and Thomas J. Ryan.
ISU Insurance Services of San Francisco has acted as broker and paying agent
for the Company with respect to certain of the Company's insurance policies.
Total payments received by ISU Insurance Services of San Francisco for these
services (net of amounts paid to ISU Insurance Services and remitted to the
insurance carriers) aggregated approximately $250,000 in 1997 and are expected
to aggregate a similar amount in 1998. Mr. Ryan is Chairman of ISU Insurance
Services of San Francisco, the stock of which is owned by members of Mr. Ryan's
family. ISU Insurance Services of San Francisco is a franchisee of ISU
International, a corporation of which Mr. Ryan is Chairman of the Board and
Chief Executive Officer and a majority of whose stock is owned by Mr. Ryan.
Frederick A. Richman, a director, is a partner in the law firm of O'Melveny
& Myers, which has performed legal services for the Company from time to time.
Amounts paid by the Company to O'Melveny & Myers have not been material.
12
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate by reference this Proxy Statement or
future filings with the Securities and Exchange Commission, in whole or in part,
the following report shall not be deemed to be incorporated by reference into
any such filings.
The Compensation Committee, after consultation with and upon the
recommendation of an outside compensation consulting firm, developed the
philosophy statement set forth below, which it has followed in every year since
1989, when it was first adopted:
"Compensation policies and practices, and other related programs, will be
developed and designed in line with the following statement of compensation
philosophy:
The overriding objective of the Company's compensation and benefit program
is to attract, retain and reward talented employees through programs that
also align with and support the Company's goals and strategies.
A competitive compensation package will be provided for all positions:
- Positions that participate in short-term incentive plans because of their
significant impact on short-term performance will have salaries that are
set at the 50th percentile. Additional short-term incentive pay will allow
total annual pay at the 75th percentile if target performance is achieved.
- Key executives with significant impact on the long-term performance of the
Company will also participate in long-term incentive plans (stock and/or
cash plans) that will result in total target pay at the 90th percentile if
short- and long-term performance targets are achieved.
Survey data reflective of relevant labor markets will be used to determine
actual pay levels that are consistent with desired competitive levels. In
addition to external pay data, internal relationships among positions and
differences in impact and importance of positions will influence pay. All
compensation programs will incorporate "pay for performance" concepts by
allowing pay of individual employees to vary according to individual, unit
and company performance:
- Performance planning and appraisal systems, together with incentive
programs where appropriate, will direct and reward effort and performance
of employees."
The Committee believes that setting compensation at levels designed to
attract and retain key individuals is critical to the success of a personnel
services business in which there are few tangible assets and in which people
represent the true "assets" of the Company. The Committee is also mindful of the
fact that the Company's industry is fractured with a myriad of private firms
owned by entrepreneurial individuals representing the Company's most effective
competition in many markets. Successful competitors generate large financial
rewards to the owners as the Company knows from its acquisitions of such firms
over the years. It is imperative that the Company's compensation program provide
significant cash and equity incentives to its key managers so as to compete with
both public and private companies for this talent and the Committee believes the
Company's compensation program achieves this result. Annual base salaries,
bonuses, restricted stock and stock option awards are all designed to achieve
the above-specified goals. Generally, annual bonus awards are based upon
earnings per share, and each executive's bonus is increased or decreased,
according to a formula, in relation to how the actual earnings per share
compares with the target earnings per share for the year set by the Committee.
The Committee believes that the emphasis placed upon equity grants (restricted
stock and stock options) aligns the interest of the officers with those of the
stockholders, and makes a significant portion of executive compensation
contingent upon long-term positive share price performance.
13
In establishing compensation levels for the Chief Executive Officer, the
Compensation Committee followed the guidelines and policies described above. In
addition, the Committee also considered several subjective factors related to
the Company's business. These included, among other things, the Company's strong
cash position and its continued generation of strong cash flow, the Company's
performance relative to both its public and private competitors, the Chief
Executive Officer's ability to develop and maintain significant business
relationships for the Company and the complexity of managing an international
service business. The Committee also noted the following items:
1. The Company's stock price increased approximately 78% from the beginning
of the year to the end of the year.
2. Earnings per share were 49% higher in 1997 than in 1996.
3. The Company's stock performance during the five year period from January
1, 1993 through December 31, 1997, calculated on a total return to
investors basis, ranked 6th out of over 1,900 New York Stock Exchange
companies.
4. The Company was one of fewer than 40 companies, and was the only
staffing firm, recognized by THE WALL STREET JOURNAL on its "Honor Roll"
as having posted superior average compound annual total returns for each
of the last one, three, five and ten year periods.
5. In 1997, the Company was recognized by FORTUNE magazine as one of the
100 fastest-growing U.S. companies, based on three-year sales and
earnings growth.
In determining executive compensation, the Compensation Committee considers,
among other factors, the possible tax consequences to the Company and to the
executives. However, tax consequences, including but not limited to tax
deductibility by the Company, are subject to many factors (such as changes in
the tax laws and regulations or interpretations thereof and the timing and
nature of various decisions by executives regarding options and other rights)
that are beyond the control of either the Compensation Committee or the Company.
In addition, the Compensation Committee believes that it is important for it to
retain maximum flexibility in designing compensation programs that meet its
stated objectives. For all of the foregoing reasons, the Compensation Committee,
while considering tax deductibility as one of its factors in determining
compensation, will not limit compensation to those levels or types of
compensation that will be deductible. The Compensation Committee will, of
course, consider alternative forms of compensation, consistent with its
compensation goals, that preserve deductibility.
Andrew S. Berwick, Jr.
Frederick P. Furth
Thomas J. Ryan
14
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected Arthur Andersen LLP, independent public accountants,
to audit the books, records and accounts of the Company during 1998. Arthur
Andersen LLP has acted as auditors of the Company and its predecessor since
1977. Representatives of that firm will be present at the Meeting and will have
the opportunity to make a statement if they desire to do so. They will also be
available to respond to questions.
STOCKHOLDER PROPOSALS
To be considered for presentation at the 1999 Annual Meeting of
Stockholders, a stockholder proposal must be received at the office of the
Company not later than November 25, 1998.
OTHER MATTERS
The proxy holders are authorized to vote, in their discretion, upon any
other business that comes before the Meeting and any adjournment of the Meeting.
The Board knows of no other matters which will be presented to the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
STEVEN KAREL
SECRETARY
Menlo Park, California
March 25, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED, POST-PAID ENVELOPE.
15
ROBERT HALF INTERNATIONAL INC.
2884 SAND HILL ROAD
MENLO PARK, CA 94025
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harold M. Messmer, Jr. and Andrew S. Berwick,
Jr. as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side
hereof, all the shares of common stock of Robert Half International Inc. held
of record by the undersigned on March 16, 1998 at the annual meeting of
stockholders to be held on May 6, 1998 or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
------------
See Reverse
Side
------------
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY. ----- Please mark
X your choices
----- like this
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES NAMED IN PROPOSAL 1.
- -------------------------------------------------------------------------------
1. Election of Directors: Edward W. Gibbons, Harold M. Messmer, Jr.
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
above (except as marked to vote for all
to the contrary below) nominees listed above
(INSTRUCTION: To withhold authority to vote for
any individual nominee, write nominee's name on
the space provided below.
- --------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
- -------------------------------------------------------------------------------
__ __ Please sign 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, please sign in full
corporation name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Date ___________________________, 1998
Signature ____________________________
Signature, if held jointly ___________
PLEASE MARK, SIGN, DATE AND RETURN PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
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