UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Administaff, Inc.
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(Name of Registrant as Specified In Its Charter)
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[ADMINISTAFF LETTERHEAD]
March 29, 2002
Dear Stockholder:
On behalf of your board of directors and management, you are cordially invited
to attend the Annual Meeting of Stockholders to be held at Administaff's
Corporate Headquarters, Centre II in the University Rooms, located at 29801 Loop
494, Kingwood, Texas 77339, on May 7, 2002 at 10:00 a.m. The University Rooms
are accessible to the disabled.
It is important that your shares are represented at the meeting. Whether or not
you plan to attend the meeting, please complete and return the enclosed proxy
card in the accompanying envelope or vote using the telephone or Internet
procedures that may be provided to you by your broker. Please note that voting
using any of these methods will not prevent you from attending the meeting and
voting in person.
You will find information regarding the matters to be voted on at the meeting in
the following pages. Our 2001 Annual Report to Stockholders is also enclosed
with these materials.
Your interest in Administaff is appreciated, and we look forward to seeing you
on May 7.
Sincerely,
/s/ PAUL J. SARVADI
Paul J. Sarvadi
President and Chief Executive Officer
ADMINISTAFF, INC.
A DELAWARE CORPORATION
19001 CRESCENT SPRINGS DRIVE
KINGWOOD, TEXAS 77339-3802
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 2002
KINGWOOD, TEXAS
The Annual Meeting of the Stockholders of Administaff, Inc., a Delaware
corporation (the "Company"), will be held at the Company's Corporate
Headquarters, Centre II in the University Rooms, located at 29801 Loop 494,
Kingwood, Texas 77339, on May 7, 2002 at 10:00 a.m., Central Daylight Savings
Time, for the following purposes:
1. To elect two Class I directors to serve until the 2005 annual
meeting of stockholders or until their successors have been
elected and qualified.
2. To ratify the appointment of Ernst & Young LLP as the
Company's independent public accountants for the year ending
December 31, 2002.
3. To act upon such other business as may properly come before
the meeting or any reconvened meeting after an adjournment
thereof.
Only stockholders of record at the close of business on March 8, 2002
are entitled to notice of, and to vote at, the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
OF STOCKHOLDERS REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY. IF YOU ARE PRESENT AT THE
MEETING, AND WISH TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
/s/ JOHN H. SPURGIN, II
John H. Spurgin, II
Vice President, Legal,
General Counsel and Secretary
March 29, 2002
Kingwood, Texas
2
ADMINISTAFF, INC.
A DELAWARE CORPORATION
19001 CRESCENT SPRINGS DRIVE
KINGWOOD, TEXAS 77339-3802
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PROXY STATEMENT
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The accompanying proxy is solicited by the Board of Directors of
Administaff, Inc., a Delaware corporation (the "Company"), for use at the 2002
Annual Meeting of Stockholders to be held on May 7, 2002, and at any reconvened
meeting after an adjournment thereof. The Annual Meeting of Stockholders will be
held at 10:00 a.m., Central Daylight Savings Time, at the Company's Corporate
Headquarters, Centre II in the University Rooms, located at 29801 Loop 494,
Kingwood, Texas 77339.
Stockholders of record may vote by attending the meeting or by signing,
dating and returning your proxy in the envelope provided. If you return your
signed proxy, your shares will be voted as you direct. IF THE ACCOMPANYING PROXY
IS PROPERLY EXECUTED AND RETURNED, BUT NO VOTING DIRECTIONS ARE INDICATED
THEREON, THE SHARES REPRESENTED THEREBY WILL BE VOTED FOR EACH OF THE PROPOSALS
SET FORTH IN THIS PROXY STATEMENT. In addition, the proxy confers discretionary
authority to the persons named in the proxy authorizing those persons to vote,
in their discretion, on any other matters properly presented at the Annual
Meeting of Stockholders. The Board of Directors is not currently aware of any
such other matters. Any stockholder of record giving a proxy has the power to
revoke it at any time before it is voted by (i) submitting written notice of
revocation to the Secretary of the Company at the address listed above, (ii)
submitting another proxy that is properly signed and later dated, or (iii)
voting in person at the Annual Meeting. Stockholders who hold their shares
through a nominee or broker are invited to attend the meeting but must obtain a
signed proxy from the broker in order to vote in person.
The expense of preparing, printing and mailing proxy materials to the
Company's stockholders will be borne by the Company. The Company has engaged
Georgeson Shareholder Communications, Inc. (f/k/a Corporate Investor
Communications, Inc.) to assist in the solicitation of proxies from stockholders
at a fee of approximately $5,000 plus reimbursement of reasonable out-of-pocket
expenses. In addition, proxies may be solicited personally or by telephone by
officers or employees of the Company, none of whom will receive additional
compensation. The Company will also reimburse brokerage houses and other
nominees for their reasonable expenses in forwarding proxy materials to
beneficial owners of our common stock.
The approximate date on which this Proxy Statement and the accompanying
proxy card will first be sent to stockholders is March 29, 2002.
At the close of business on March 8, 2002, the record date for the
determination of stockholders of the Company entitled to receive notice of, and
to vote at, the 2002 Annual Meeting of Stockholders or any reconvened meeting
after an adjournment thereof, 27,949,461 shares of the Company's Common Stock,
par value $0.01 per share (the "Common Stock"), were outstanding. Each share of
Common Stock is entitled to one vote upon each of the matters to be voted on at
the meeting. The presence, in person or by proxy, of a majority of the
outstanding shares of Common Stock is required for a quorum. If a quorum is
present at the meeting, action on a matter (other than the election of
directors) shall be approved if the votes cast in favor of the matter exceed the
votes cast opposing the matter. Directors of the Company shall be elected by a
plurality of the votes cast. In determining the number of votes cast, shares
abstaining from voting or not voted on a matter will not be treated as votes
cast. Accordingly, although proxies containing broker non-votes (which result
when a broker holding shares for a beneficial owner has not received timely
voting instructions on certain matters from such beneficial owner) are
considered "shares present" in determining whether there is a quorum present at
the Annual Meeting, they are not treated as votes cast with respect to any
matter, and thus will not affect the outcome of the voting on a particular
proposal.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of March 8, 2002, certain information
with respect to the shares of Common Stock beneficially owned by (i) each person
known by the Company to beneficially own five percent or more of the Common
Stock, (ii) each director and director nominee of the Company, (iii) each of the
executive officers of the Company identified under the caption "Election of
Directors -- Executive Compensation," and (iv) all directors, director nominees
and executive officers of the Company as a group.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------------ -------------- --------
Steven Alesio.............................................................. 12,500 (2) *
Michael W. Brown........................................................... 37,919 (3) *
Jack M. Fields, Jr......................................................... 3,474 (4) *
Paul S. Lattanzio.......................................................... 21,899 (5) *
Linda Fayne Levinson....................................................... 37,497 (6) *
Richard G. Rawson.......................................................... 1,411,092 (7) 5.0%
Paul J. Sarvadi............................................................ 3,465,231 (8) 12.3%
A. Steve Arizpe............................................................ 140,393 (9) *
Jay E. Mincks.............................................................. 78,967(10) *
John H. Spurgin, II........................................................ 34,910(11) *
American Express Travel Related Services Company, Inc...................... 3,917,282(12) 12.9%
Ronald Juvonen, et al...................................................... 1,433,300(13) 5.1%
William Blair & Company, L.L.C............................................. 1,941,060(14) 6.9%
Executive Officers and Directors as a group (14 persons)................... 5,376,724 18.8%
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* Represents less than 1%.
(1) Except as otherwise indicated, each of the stockholders has sole voting
and investment power with respect to the securities shown to be owned
by such stockholder. The address for each officer and director is in
care of Administaff, Inc., 19001 Crescent Springs Drive, Kingwood,
Texas 77339-3802.
(2) Includes options to purchase 2,500 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
(3) Includes options to purchase 32,500 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
(4) Includes options to purchase 2,500 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
(5) Includes options to purchase 17,500 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
(6) Includes options to purchase 32,500 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
(7) Includes 658,866 shares owned by the RDKB Rawson LP, 521,502 shares
owned by the R&D Rawson LP, 350 shares owned by Dawn M. Rawson
(spouse), 50 shares owned by Kimberly Rawson (daughter), 50 shares
owned by Richard G. Rawson as Custodian for Barbie Rawson UGMA, and
options to purchase 92,399 shares of Common Stock that are exercisable
within 60 days of March 8, 2002.
(8) Includes 2,365,100 shares owned by Our Ship Limited Partnership, Ltd.,
957,120 shares owned by the Sarvadi Children's Partnership, Ltd.,
10,036 shares owned by Paul J. Sarvadi and Vicki D. Sarvadi, JT TEN,
19,644 shares owned by six education trusts established for the benefit
of the children of Paul J. Sarvadi, and options to purchase 113,331
shares of Common Stock that are exercisable within 60 days of March 8,
2002.
(9) Includes options to purchase 138,436 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
4
(10) Includes options to purchase 74,232 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
(11) Includes options to purchase 27,398 shares of Common Stock that are
exercisable within 60 days of March 8, 2002.
(12) Includes warrants to purchase 2,531,030 shares of Common Stock.
American Express Travel Related Services Company, Inc.'s (American
Express) address is World Financial Center, 200 Vesey Street, New York,
NY 10285.
(13) Based on a Schedule 13G filed with the Securities and Exchange
Commission on January 31, 2002, Ronald Juvonen is deemed to
beneficially own 1,433,300 shares of Common Stock. The shares are held
by Downtown Associates I, L.P., Downtown Associates II, L.P., Downtown
Associates III, L.P., Downtown Associates IV, L.P. and Downtown
Associates V., L.P. (collectively referred to as the "Downtown Funds").
The general partner of the Downtown Funds is Downtown Associates,
L.L.C. (the "General Partner"). Ronald Juvonen, as the Managing Member
of the General Partner, has sole power to vote and direct the
disposition of all shares of the Common Stock held by the Downtown
Funds. The address of each of such parties is c/o Downtown Associates,
L.L.C., 674 Unionville Road, Suite 105, Kennett Square, Pennsylvania
19348.
(14) Based on a Schedule 13G filed with the Securities and Exchange
Commission on February 15, 2002. William Blair & Company, L.L.C.'s
address is 222 W. Adams Street, Chicago, Illinois 60606.
5
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
GENERAL
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors on the Board shall be fixed from time to time by the Board
of Directors but shall not be less than three nor more than 15 persons. The
number of members constituting the Board of Directors is currently fixed at
seven.
In accordance with the Certificate of Incorporation of the Company, the
members of the Board of Directors are divided into three classes and are elected
for a term of office expiring at the third succeeding annual stockholders'
meeting following their election to office, or until a successor is duly elected
and qualified. The Certificate of Incorporation also provides that such classes
shall be as nearly equal in number as possible. The terms of office of the Class
I, Class II and Class III directors expire at the annual meeting of stockholders
in 2002, 2003 and 2004, respectively.
The term of office of each of the current Class I directors expires at
the time of the 2002 Annual Meeting of Stockholders, or as soon thereafter as
their successors are elected and qualified. Mr. Brown and Ms. Levinson have been
nominated to serve an additional three-year term as Class I directors. Both of
the nominees have consented to be named in this Proxy Statement and to serve as
a director if elected.
It is the intention of the person or persons named in the accompanying
proxy card to vote for the election of all nominees named below unless a
stockholder has withheld such authority. The affirmative vote of a plurality of
the votes cast by holders of the Common Stock present in person or by proxy at
the 2002 Annual Meeting of Stockholders is required for election of the
nominees.
If, at the time of or prior to the 2002 Annual Meeting of Stockholders,
any of the nominees should be unable or decline to serve, the discretionary
authority provided in the proxy may be used to vote for a substitute or
substitutes designated by the Board of Directors. The Board of Directors has no
reason to believe that any substitute nominee or nominees will be required. No
proxy will be voted for a greater number of persons than the number of nominees
named herein.
NOMINEES-- CLASS I DIRECTORS (FOR TERMS EXPIRING AT THE 2005 ANNUAL MEETING)
MICHAEL W. BROWN. Mr. Brown, age 56, joined the Company as a Class I
director in November 1997. Mr. Brown is the past Chairman of the Nasdaq Stock
Market Board of Directors and a past governor of the National Association of
Securities Dealers. Mr. Brown joined Microsoft Corporation in 1989 as its
Treasurer and became its Chief Financial Officer in 1993, in which capacity he
served until his retirement in July 1997. Prior to joining Microsoft, Mr. Brown
spent 18 years with Deloitte & Touche LLP. Mr. Brown holds a Bachelor of Science
in Economics from the University of Washington in Seattle. Mr. Brown is also a
director of Fat Kat, Inc., a member of the Thomas Weisel Partners Advisory Board
and the XML Fund Advisory Board. He is also a Fellow at BIOS, L.P., a Santa Fe,
New Mexico group specializing in commercial applications of the science of
complex adaptive systems.
LINDA FAYNE LEVINSON. Ms. Levinson, age 60, has been a Class I director
of the Company since April 1996. She has served as a partner of GRP Partners,
Inc., a venture capital firm investing in retail, consumer services, and
technology companies, since April 1997. From 1994 to 1997, she served as
President of Fayne Levinson & Associates, an independent consulting firm located
in Santa Monica, California that advises major corporations and early stage
companies on strategic and organizational issues. Prior to starting Fayne
Levinson & Associates, Ms. Levinson served as an executive with Creative Artists
Agency, Inc. in 1993, a partner of Wings Partners, Inc., a merchant banking
firm, from 1989 to 1992, Senior Vice President for American Express Travel
Related Services Company, Inc. from 1984 to 1987, and as a partner of the
consulting firm of McKinsey and Co. from 1979 to 1981. Ms. Levinson holds a
Bachelor of Arts in Russian Studies from Barnard College, a Master of Business
Administration from New York University School of Business and a Master of Arts
in Russian Literature from Harvard University. Ms. Levinson also currently
serves as a director for Jacobs Engineering Group, Inc., NCR Corporation,
Overture Services, Inc. and Lastminute.com, plc.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF EACH OF THE ABOVE-NAMED NOMINEES, AND PROXIES EXECUTED AND RETURNED
WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
6
DIRECTORS REMAINING IN OFFICE
STEVEN ALESIO. Mr. Alesio, age 47, has been a Class II director of the
Company since July 1999. Mr. Alesio was named Senior Vice President of The Dun &
Bradstreet Corporation in January 2001. He has responsibility for Global
Marketing, Asia Pacific and Latin America, e-Business, and Strategy
Implementation, and is a member of that company's Global Leadership Team. Before
joining Dun & Bradstreet, Mr. Alesio was with the American Express Company for
19 years until his resignation in November 2000. In his last position there, he
served as President and General Manager of the Small Business Services Group for
more than 5 years and was a member of that company's Planning and Policy
Committee. Prior to assuming those duties, Mr. Alesio held several senior
management positions with American Express. Prior to joining American Express in
1981, he held several positions with Arthur Andersen & Co. in Washington, D.C.
Mr. Alesio also serves on the Board of Directors for Overture Services, Inc. Mr.
Alesio holds a Bachelor of Science from St. Francis College and a Master of
Business Administration from the University of Pennsylvania's Wharton School of
Business.
JACK M. FIELDS, JR. Mr. Fields, age 50, joined the Company as a Class
III director in January 1997 following his retirement from the United States
House of Representatives, where he served for 16 years. During 1995 and 1996,
Mr. Fields served as Chairman of the House Telecommunications and Finance
Subcommittee, which has jurisdiction and oversight of the Federal Communications
Commission and the Securities and Exchange Commission. Mr. Fields has been Chief
Executive Officer of 21st Century Group in Washington, D.C. since January 1997.
Mr. Fields also serves on the Board of Directors for AIM Mutual Funds. Mr.
Fields earned a Bachelor of Arts in 1974 from Baylor University, and graduated
from Baylor Law School in 1977.
PAUL S. LATTANZIO. Mr. Lattanzio, age 38, has been a Class III director
of the Company since 1995. He has been a Managing Director for TD Capital
Communications Partners (f/k/a Toronto Dominion Capital), a venture capital
investment firm, since July 1999. From February 1998 to March 1999, he was a
co-founder and Senior Managing Director of NMS Capital Management, LLC, a $600
million private equity fund affiliated with NationsBanc Montgomery Securities.
Prior to NMS Capital, Mr. Lattanzio served in several positions with various
affiliates of Bankers Trust New York Corporation for over 13 years, most
recently as a Managing Director of BT Capital Partners, Inc. for more than 5
years. Mr. Lattanzio has experience in a variety of investment banking
disciplines, including mergers and acquisitions, private placements and
restructuring. Mr. Lattanzio also serves on the Board of Directors of General
Communication, Inc. and the Advisory Board of MVP America L.P. Mr. Lattanzio
received his Bachelor of Science in Economics with honors from the University of
Pennsylvania's Wharton School of Business in 1984.
RICHARD G. RAWSON. Mr. Rawson, age 53, Executive Vice President of
Administration, Chief Financial Officer and Treasurer of the Company and its
subsidiaries, is a Class III director and has been a director of the Company
since 1989. He has been Executive Vice President of Administration, Chief
Financial Officer and Treasurer of the Company since February 1997. Prior to
that, he served as Senior Vice President, Chief Financial Officer and Treasurer
of the Company since 1989. Prior to joining the Company in 1989, Mr. Rawson
served as a Senior Financial Officer and Controller for several companies in the
manufacturing and seismic data processing industries. Mr. Rawson previously
served the National Association of Professional Employer Organizations (NAPEO)
as President (1999-2000), First Vice President, Second Vice President and
Treasurer. In addition, he previously served as Chairman of the Accounting
Practices Committee of NAPEO for five years. He is also a member of the
Financial Executives Institute. Mr. Rawson has a Bachelor of Business
Administration in finance from the University of Houston.
PAUL J. SARVADI. Mr. Sarvadi, age 45, President, Chief Executive
Officer and co-founder of the Company and its subsidiaries, is a Class II
director and has been a director since its inception in 1986. He has been
President and Chief Executive Officer of the Company since 1989. Prior to that,
he served as Vice President and Treasurer of the Company from its inception in
1986 until April 1987, and then as Vice President from April 1987 until 1989. He
attended Rice University and the University of Houston prior to starting and
operating several small companies. Mr. Sarvadi has served as President of NAPEO
and was a member of its Board of Directors for five years. He also served as
President of the Texas Chapter of the National Association of Professional
Employer Organizations for three of the first four years of its existence. In
1995, Mr. Sarvadi was selected as Houston's Ernst & Young Entrepreneur of the
Year for service industries and in 2001, he was selected as the 2001 National
Ernst & Young Entrepreneur of the Year for service industries.
7
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has appointed three committees: a Finance, Risk
Management and Audit Committee, a Compensation Committee and a Nominating
Committee.
The members of the Finance, Risk Management and Audit Committee are Mr.
Brown, who serves as Chairperson, Mr. Lattanzio and Mr. Alesio. All three
members are "independent" under the standards of The New York Stock Exchange.
The Finance, Risk Management and Audit Committee reviews and monitors (i) the
financial affairs of the Company, (ii) the financial statements of the Company
and the independence of the firm of independent public accountants hired to
audit the Company's financial statements, and (iii) the Company's policies and
procedures with respect to risk management, as well as other matters that may
come before it as directed by the Board of Directors. The Finance, Risk
Management and Audit Committee charter, which has been adopted by the Board of
Directors and is attached as Appendix A to this proxy statement, contains a
detailed description of the Committee's duties and responsibilities.
The members of the Compensation Committee are Ms. Levinson, who serves
as Chairperson, and Mr. Fields. The Compensation Committee evaluates the
performance of and determines the compensation for senior management,
administers the Company's compensation programs and performs such other duties
as may from time to time be determined by the Board of Directors.
The members of the Nominating Committee are Mr. Sarvadi, who serves as
Chairperson, and Ms. Levinson. The Nominating Committee considers and makes
recommendations to the Board of Directors or the stockholders regarding persons
to be nominated by the Board of Directors for election as directors and, in the
event of a vacancy in the office of the Chief Executive Officer, would recommend
a successor to the Board. The Nominating Committee will consider nominations to
the Board submitted by stockholders, provided that any stockholder submitting a
nomination complies with the procedures set forth in the Company's Bylaws
governing nominations by stockholders. Such procedures are described under
"Additional Information."
INFORMATION REGARDING MEETINGS
During 2001, the Finance, Risk Management and Audit Committee had seven
meetings, the Compensation Committee had four meetings, the Nominating Committee
had no meetings and the Board of Directors had five meetings. All of the members
of the Board participated in more than 75% of the meetings of the Board and
Committees of which they were members during the fiscal year ended December 31,
2001.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors. Directors of the Company who
are not employees of the Company are paid (i) an annual retainer of $10,000,
(ii) $2,500 for each Board of Directors meeting attended, (iii) an annual fee of
$1,000 payable for each committee of the Board (if any) which that Director
chairs, and (iv) reasonable expenses incurred in serving as a director. All
compensation can be taken in cash or Common Stock, at the director's option. In
addition, pursuant to the Company's 2001 Incentive Plan, each non-employee
director automatically receives, on the date such person first becomes a
director, a grant of nonqualified options to purchase 7,500 shares of Common
Stock, which have a term of ten years and vest in increments of one-third of the
total grant on the first, second and third anniversaries of the grant. In
addition, following each annual meeting of the Company's stockholders, each
non-employee director who was not initially elected at such meeting, receives an
annual grant of nonqualified options to purchase an additional 5,000 shares of
Common Stock, all of which have a term of ten years and are fully vested and
exercisable on the date of grant. The exercise price of all such options is the
closing sale price on the New York Stock Exchange of the Common Stock on the
date the options are granted.
8
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding
compensation earned by the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company
(collectively the "Named Executive Officers") for services rendered in all
capacities to the Company during 2001.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) -----------------
----------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION(3)
--------------------------- ---- -------- ---------- ------------------ ---------------
Paul J. Sarvadi .......................... 2001 $304,672 - 60,000 $11,520(4)
President and Chief 2000 $297,492 $223,543 100,000 $11,220
Executive Officer 1999 $270,706 $ 71,097 80,000 $10,620
Richard G. Rawson......................... 2001 $286,020 $ 80,590(2) 40,000 $ 9,180(4)
Executive Vice President 2000 $279,278 $306,057(2) 60,000 $ 9,180
of Administration, Chief 1999 $254,132 $162,944(2) 50,000 $ 9,100
Financial Officer and Treasurer
A. Steve Arizpe........................... 2001 $266,513 -- 40,000 $10,500
Executive Vice President 2000 $260,232 $195,545 60,000 $10,200
of Client Services 1999 $236,420 $ 62,193 50,000 $ 9,235
Jay E. Mincks............................. 2001 $240,631 -- 40,000 $ 6,300
Executive Vice President of 2000 $233,791 $175,676 60,000 $ 6,213
Sales and Marketing 1999 $205,902 $ 54,965 50,000 $ 4,988
John H. Spurgin, II ...................... 2001 $209,252 -- 30,000 $10,500
Vice President of Legal, 2000 $204,526 $153,686 40,000 $10,200
General Counsel and Secretary 1999 $187,939 $ 49,287 30,000 $ 8,602
----------
(1) Excludes perquisites and other personal benefits because such
compensation did not exceed the lesser of $50,000 or 10% of the total
annual salary reported for each executive officer.
(2) Includes a bonus for Mr. Rawson equal to the interest paid by Mr.
Rawson to the Company on loans from the Company during the applicable
year, plus any applicable taxes due on such component of his bonus. See
"Certain Relationships and Related Transactions."
(3) Represents the Company's employer matching contributions to the
Administaff 401(k) Plan.
(4) Includes payments of $1,020 and $2,880 in 2001 for Mr. Sarvadi and Mr.
Rawson, respectively, with respect to life insurance policies
benefiting the named executive.
9
STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------- POTENTIAL REALIZABLE VALUE
AT
PERCENT OF TOTAL ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS/SARS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM(3)
UNDERLYING OPTIONS/ EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME SARS GRANTED(1) FISCAL YEAR ($/SH)(2) DATE 5% 10%
---- ------------------ --------------- ----------- ---------- --------- ----------
Paul J. Sarvadi ....... 30,000 $18.00 03/15/11 $339,603 $ 860,621
30,000 $23.48 10/02/11 442,993 1,122,632
-------- -------- ----------
60,000 4.2% $782,596 $1,983,253
Richard G. Rawson ..... 20,000 $18.00 03/15/11 $226,402 $ 573,747
20,000 $23.48 10/02/11 295,329 748,421
-------- -------- ----------
40,000 2.8% $521,731 $1,322,168
A. Steve Arizpe ....... 20,000 $18.00 03/15/11 $226,402 $ 573,747
20,000 $23.48 10/02/11 295,329 748,421
-------- -------- ----------
40,000 2.8% $521,731 $1,322,168
Jay E. Mincks ......... 20,000 $18.00 03/15/11 $226,402 $ 573,747
20,000 $23.48 10/02/11 295,329 748,421
-------- -------- ----------
40,000 2.8% $521,731 $1,322,168
John H. Spurgin, II ... 15,000 $18.00 03/15/11 $169,802 $ 430,310
15,000 $23.48 10/02/11 221,497 561,316
-------- -------- ----------
30,000 2.1% $391,299 $ 991,626
(1) All options have a term of ten years. The options expiring on March 15,
2011 become exercisable in increments of one-third of the total grant
on the first, second and third anniversaries of the grant. The options
expiring on October 2, 2011 become exercisable in increments of
one-fifth of the total grant on the first, second, third, fourth and
fifth anniversaries of the grant.
(2) The exercise price of the options granted is equal to the closing price
per share of the Common Stock on the New York Stock Exchange on the
date of grant.
(3) Represents total appreciation over the exercise price at the assumed
annual appreciation rates of 5% and 10% compounded annually for the
term of the options.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
---- ----------- -------- ----------------- -----------------------
Paul J. Sarvadi........................... - - 86,665 / 153,335 $1,166,789 / $1,170,612
Richard G. Rawson......................... - - 75,733 / 102,267 $1,104,783 / $ 836,737
A. Steve Arizpe........................... 14,200 $253,286 121,770 / 118,268 $1,833,012 / $1,014,837
Jay E. Mincks............................. 36,567 $700,980 57,566 / 121,867 $ 557,755 / $1,069,309
John H. Spurgin, II....................... 18,000 $380,684 15,732 / 79,468 $ 76,574 / $ 697,726
(1) Represents the difference between the closing price of the Company's
Common Stock on December 31, 2001, the last trading day of the year,
($27.41) and the exercise price of the options.
10
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee is responsible for evaluating the
performance of and determining the compensation for executive officers including
the Chief Executive Officer. It is also responsible for overseeing the Company's
1997 Incentive Plan and 2001 Incentive Plan (the "Incentive Plans"). The
Compensation Committee has furnished the following report on executive
compensation for 2001.
The Company's compensation programs are designed to attract and retain
key executives responsible for the success of the Company and motivate
management to enhance long-term stockholder value. The annual compensation
package for executive officers, including the Chief Executive Officer, generally
consists of three components: (i) a base salary payable in cash, (ii) variable
compensation, which is targeted as a percentage of base pay and may be payable
in cash awards, phantom shares, performance units, bonus stock or other
stock-based awards, and (iii) long-term incentive compensation, which generally
consists of stock options.
In determining the overall level of compensation for each of the
Company's executive officers, including the Chief Executive Officer, the
Compensation Committee takes into account various qualitative and quantitative
indicators of corporate and individual performance. In setting base salary for
executives other than the Chief Executive Officer, the Compensation Committee
also considers the Chief Executive Officer's subjective evaluation of each
executive's performance.
No variable compensation was paid to any executive officer in 2001,
except for Mr. Rawson, who received an additional bonus equal to the interest
paid by him on loans from the Company plus any applicable taxes due on such
additional bonus. See "Certain Relationships and Related Transactions."
Long-term Incentive Compensation
Long-term incentive compensation is provided through the Incentive
Plans, the objectives of which are to promote the interests of the Company by
encouraging employees of the Company and its subsidiaries to acquire or increase
their equity interest in the Company and to provide a means whereby such persons
may develop a sense of proprietorship and personal involvement in the
development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its stockholders. Awards
under the Incentive Plans have generally been made in the form of stock options,
although in the future such awards may include phantom shares, performance
units, bonus stock or other stock-based awards. The Compensation Committee
believes that stock options align the interest of the Company's executives with
those of its stockholders by encouraging executives to enhance the value of the
Company, and hence, the price of the Common Stock and each stockholder's return.
The Company may periodically grant new options or other long-term equity-based
incentives to provide continuing incentive for future performance. In making the
decision to grant options, the Compensation Committee considers factors
including an executive's current ownership stake in the Company, the degree to
which increasing that ownership stake would provide the executive with
additional incentives for future performance, the likelihood that the grant of
those options would encourage the executive to remain with the Company and the
value of the executive's service to the Company.
In 2001, the Company granted options to purchase an aggregate of
400,000 shares of Common Stock to executive officers of the Company, including
the Chief Executive Officer.
CEO Compensation
The compensation of the Chief Executive Officer is determined in the
same manner as the other executives of the Company, as set forth above, and
includes stock options. In 2001, the Compensation Committee granted Mr. Sarvadi
options to purchase 60,000 shares of Common Stock.
Section 162(m) of the Internal Revenue Code
Because the Company has not yet granted any executive officer
compensation exceeding $1,000,000 in any year, the Compensation Committee has
not yet adopted a policy with respect to the limitation under Section 162(m) of
the Internal Revenue Code, which generally limits the Company's ability to
deduct compensation in excess of $1,000,000 to a particular executive officer in
any year. The Compensation Committee, in consultation with the Board of
Directors, will adopt such a policy if the compensation awarded to an executive
exceeds such amount.
Linda Fayne Levinson
Jack M. Fields, Jr.
11
REPORT OF THE FINANCE, RISK MANAGEMENT AND AUDIT COMMITTEE
The Finance, Risk Management and Audit Committee (the "Committee") of
Administaff, Inc. is responsible for providing independent, objective oversight
of the Company's accounting functions and internal controls. The Committee acts
under a written charter adopted and approved by the Board of Directors and
reviewed annually by the Committee. A copy of the Committee charter is attached
to this Proxy Statement as Appendix A.
The Committee has reviewed and discussed with the Company's management
the Company's consolidated financial statements as of and for the fiscal year
ended December 31, 2001.
The Committee has discussed with Ernst & Young LLP, the Company's
independent public accountants, the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as
amended.
The Committee has received and reviewed the written disclosures and the
letter from Ernst & Young required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees, as amended, and has discussed
with Ernst & Young its independence. The Committee has also considered the
compatibility of non-audit services with Ernst & Young's independence.
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2001 for filing with the Securities and Exchange Commission.
Michael W. Brown
Paul S. Lattanzio
Steven Alesio
12
PERFORMANCE GRAPH
COMPARISON OF 59 MONTH CUMULATIVE TOTAL RETURN*
AMONG ADMINISTAFF, INC., THE S&P SMALLCAP 600 INDEX,
A NEW PEER GROUP AND AN OLD PEER GROUP
[GRAPH]
Cumulative Total Return
--------------------------------------------------
2/3/97 12/97 12/98 12/99 12/00 12/01
ADMINISTAFF, INC. 100.00 152.21 147.06 177.94 320.00 322.47
S & P SMALLCAP 600 100.00 123.53 126.90 142.64 159.47 191.98
NEW PEER GROUP 100.00 148.54 200.72 261.65 346.92 302.18
OLD PEER GROUP 100.00 72.14 44.03 37.92 19.02 16.90
* $100 invested on 2/3/97 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
Copyright 2002, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved. www.researchdatagroup.com/S&P.htm
The above performance graph compares the cumulative total stockholder
return of the Common Stock to the cumulative total stockholder return of the
Standard & Poor's SmallCap 600 Stock Index and a new industry peer group index
for the period from February 3, 1997 to December 31, 2001 (assuming reinvestment
of any dividends and an investment of $100 in each on February 3, 1997). In
compliance with SEC rules, the Company is also comparing its stock performance
to an old peer group index which it used last year.
The new peer group consists of Team Mucho, Inc. (formerly known as Team
America Corporation), TeamStaff, Inc., Staff Leasing, Inc., d/b/a Gevity HR,
Automatic Data Processing, Inc., and Paychex, Inc., each of which provides
professional employer services. Automatic Data Processing, Inc. and Paychex,
Inc. were added to the peer group this year because they each own large
professional employer organizations. The old peer group consisted of Team Mucho,
Inc., TeamStaff, Inc., Gevity HR, Employee Solutions, Inc. (through December 31,
2000), Vincam, Inc. (through December 31, 1998) and NovaCare Employee Services,
Inc. (through December 31, 1998), each of which provides or provided
professional employer services. Employee Solutions, Inc. was dropped from the
return calculation after December 31, 2000 because it discontinued its
13
operations as a professional employer organization in December 2000. Vincam,
Inc. and NovaCare Employee Services, Inc. were dropped from the return
calculation after December 31, 1998 as a result of each of them being acquired
in 1999. For the purposes of this graph, the market value then attributable to
Employee Solutions, Vincam and NovaCare was assumed to be reinvested in the
other five companies in the old peer group index.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2001, the members of the Compensation Committee were Ms.
Levinson and Mr. Fields. No member of the Compensation Committee (or board
committee performing equivalent functions) (i) was an officer or employee of the
Company, (ii) was formerly an officer of the Company, or (iii) had any business
relationship or conducted any transactions with the Company.
During 2001, no executive officer of the Company served as (i) a member
of the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served on the
Board of Directors of the Company, or (ii) a director of another entity, one of
whose executive officers served on the Board of Directors of the Company or its
subsidiaries.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of the Common Stock, to file initial reports of ownership and
reports of changes in ownership (Forms 3, 4, and 5) of Common Stock with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% stockholders are required by Securities and
Exchange Commission regulation to furnish the Company with copies of all such
forms that they file.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all Section 16(a) reports with respect to the year ended
December 31, 2001 applicable to its officers, directors and greater than 10%
beneficial owners, were timely filed, except that A. Steve Arizpe was late in
filing one Form 4 reflecting a change in the beneficial ownership of his Common
Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1995, Richard G. Rawson, Executive Vice President of
Administration, Chief Financial Officer, Treasurer and a director of the
Company, exercised options to purchase 897,334 shares of Common Stock (as
adjusted for the 2-for-1 split of the Common Stock effected in October 2000) at
a price of $1.50 per share (as adjusted for the 2-for-1 split of the Common
Stock effected in October 2000). The purchase price was paid in cash by Mr.
Rawson. In connection with the exercise of the options, the Company entered into
a loan agreement with Mr. Rawson in the amount of approximately $694,000,
whereby the Company paid certain federal income tax withholding requirements
related to the stock option exercise. Mr. Rawson, his wife and a family limited
partnership of which Mr. Rawson is the general partner are obligors of the loan.
The maturity date of the loan was extended in February 2000 to June 2002. The
loan is secured by 97,964 shares of Common Stock (as adjusted for the 2-for-1
split of the Common Stock effected in October 2000) owned by the obligors. The
loan agreement called for an additional amount to be advanced to Mr. Rawson if
the ultimate tax liability resulting from the exercise were to exceed the
statutory withholding requirements. In April 1996, an additional $300,000 was
loaned to Mr. Rawson pursuant to this provision of the agreement. The $300,000
loan was paid in full in June 2001. The loans accrue interest at 6.93%; however,
pursuant to an understanding Mr. Rawson has with the Company, in each year that
the loans have been outstanding, Mr. Rawson has received a bonus equal to
the interest paid by Mr. Rawson on the loans, plus any applicable taxes due on
such component of his bonus. See "Report of the Compensation Committee of the
Board of Directors."
Our Ship Limited Partnership, Ltd. ("Our Ship"), which is a family
limited partnership owned by Mr. Paul Sarvadi, President and Chief Executive
Officer of the Company, and members of his immediate family, is a client of the
Company. In 2001, Our Ship paid comprehensive service fees of $75,143 ($19,870
net of payroll costs) to the Company. Mr. Sarvadi's brother is an owner and
officer of three companies that are clients of the Company. In 2001, the three
companies paid comprehensive service fees totaling $1,534,994 ($348,814 net of
payroll costs) to the Company.
In March 1998, the Company completed a Securities Purchase Agreement
(the "Agreement") with American Express Travel Related Services Company, Inc.
("American Express") whereby the Company sold units consisting of 1,386,252
shares (as adjusted for the 2-for-1 split of the Common Stock effected in
October 2000) and warrants to purchase an additional
14
4,131,030 shares (as adjusted for the 2-for-1 split of the Common Stock effected
in October 2000) of Common Stock to American Express for a total purchase price
of $17.7 million. The warrants have exercise prices ranging from $20 to $40 per
share (as adjusted for the 2-for-1 split of the Common Stock effected in October
2000) and terms ranging from three to seven years. On February 28, 2001,
American Express exercised warrants to purchase 800,000 shares of Common Stock
at $20 per share. On March 12, 2001, the Company repurchased 800,000 shares of
Common Stock from American Express and a related entity for a per share price of
approximately $24.4629. The price was based upon the average closing price of
the shares on the New York Stock Exchange over a period of 20 trading days. On
November 7, 2001, American Express exercised warrants to purchase 273,729 shares
of Common Stock at $25.00 per share. On March 5, 2002, American Express
exercised warrants to purchase 526,271 shares of Common Stock at $25.00 per
share. The Company repurchased the 526,271 shares of Common Stock from American
Express for a per share price of $27.02, which was the closing price of the
shares on the New York Stock Exchange Composite Transaction Tape on March 5,
2002.
In March 1998, the Company entered into a Marketing Agreement with
American Express, under which American Express is utilizing its resources and
working jointly with the Company to generate appointments with prospects for the
Company's services from the American Express customer base in certain markets.
In addition, certain American Express services are included in the Company's My
MarketPlace(SM) offerings. The Company pays a commission to American Express
based upon the number of worksite employees paid after being referred to the
Company pursuant to the Marketing Agreement and the total number of worksite
employees paid by the Company. In 2001, the Marketing Agreement produced 18% of
the Company's sales leads and 16% of new worksite employees sold. The Marketing
Agreement expires at the end of 2005.
15
PROPOSAL NUMBER 2:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
GENERAL
The Board of Directors has appointed the firm of Ernst & Young LLP as
the Company's independent public accountants for the year ending December 31,
2002, subject to ratification by the Company's stockholders. Ernst & Young has
served as the Company's independent public accountants since 1991.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting of Stockholders and will have an opportunity to make a statement, if
they desire to do so, and to respond to appropriate questions from those
attending the meeting.
FEES OF ERNST & YOUNG LLP
Ernst & Young's fees for professional services provided to Administaff
totaled $565,000 for the calendar year 2001. Ernst & Young's fees for
professional services included the following:
AUDIT FEES
The Company was billed a total of $173,000 by Ernst & Young for
services rendered in connection with the annual audit and for the review of the
Company's financial statements included in the Company's Forms 10-Q for fiscal
year 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young did not provide any information technology services to
the Company during fiscal year 2001.
ALL OTHER FEES
The Company was billed a total of $392,000 by Ernst & Young for all
other non-audit services, including $356,000 for tax-related services and
$36,000 for non-audit attestation services, for fiscal year 2001.
The Finance, Risk Management and Audit Committee reviewed the non-audit
services provided to the Company and considered whether Ernst & Young's
provision of such services was compatible with maintaining its independence.
REQUIRED AFFIRMATIVE VOTE
If the votes cast in person or by proxy at the 2002 Annual Meeting of
Stockholders in favor of this proposal exceed the votes cast opposing the
proposal, the appointment of Ernst & Young LLP as the Company's independent
public accountants for the year ending December 31, 2002 will be ratified.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF ERNST & YOUNG LLP'S APPOINTMENT AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2002, AND PROXIES EXECUTED
AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED
THEREON.
16
ADDITIONAL INFORMATION
DELIVERY OF PROXY STATEMENT
Effective in December 2000, the Securities and Exchange Commission
adopted new rules that permit companies and intermediaries (e.g,. brokers) to
satisfy the delivery requirements for proxy statements with respect to two or
more security holders sharing the same address by delivering a single proxy
statement addressed to those security holders. This process, which is commonly
referred to as "householding," potentially means extra convenience for
securityholders and cost savings for companies. This year, a number of brokers
with accountholders who are Administaff shareholders will be householding our
proxy materials. A single proxy statement will be delivered to multiple
shareholders sharing an address unless contrary instructions have been received
from the affected shareholder. Once you have received notice from your broker
that they will be householding communications to your address, householding will
continue until you are notified otherwise or until you revoke your consent. If,
at any time, you no longer wish to participate in householding and would prefer
to receive a separate proxy statement, please notify your broker or direct your
written request to Administaff, Inc., Attention: Ruth Holub, Investor Relations
Administrator, 19001 Crescent Springs Drive, Kingwood, Texas 77339 or contact
Ruth Holub at 800-237-3170. The Company will promptly deliver a separate copy to
you upon request. If you are a holder of record of Administaff shares, you will
be receiving a communication from our transfer agent, Computershare Trust
Company, regarding householding of the materials we send to you. Householding of
your materials will take effect unless you inform them that you would prefer to
receive multiple copies. You may communicate with Computershare Trust Company by
telephone (800-962-4284) or by facsimile (303-986-2444).
STOCKHOLDER PROPOSALS FOR 2002 MEETING
In order for director nominations and stockholder proposals to have
been properly submitted for presentation at the 2002 annual meeting, notice must
have been received by the Company between the dates of October 31, 2001 and
November 30, 2001. The Company received no such notice, and no stockholder
director nominations or proposals will be presented at the annual meeting.
STOCKHOLDER PROPOSALS FOR 2003 PROXY STATEMENT
Any proposal of a stockholder intended to be considered for inclusion
in the Company's proxy statement for the 2003 Annual Meeting of Stockholders
must be received at the Company's principal executive offices no later than the
close of business on November 29, 2002.
ADVANCE NOTICE REQUIRED FOR STOCKHOLDER NOMINATIONS AND PROPOSALS
The Bylaws of the Company require timely advance written notice of
stockholder nominations of director candidates and of any other proposals to be
presented at an annual meeting of stockholders. Notice will be considered timely
for the annual meeting to be held in 2003 if it is received not later than the
close of business on November 29, 2002 and not earlier than the close of
business on October 30, 2002. In addition, the Bylaws require that such written
notice set forth (a) for each person whom the stockholder proposes to nominate
for election, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act,
including, without limitation, such person's written consent to be named in the
proxy statement as a nominee and to serve as a director if elected, and (b) as
to such stockholder (i) the name and address, as they appear on the Company's
books, of such stockholder, (ii) the class and number of shares of the Company's
capital stock that are beneficially owned by such stockholder, and (iii) a
description of all agreements, arrangements or understandings between such
stockholder and each such person that such stockholder proposes to nominate as a
director and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder.
In the case of other proposals by stockholders at an annual meeting,
the Bylaws require that such written notice set forth as to each matter such
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting, (b) the reasons
for conducting such business at the annual meeting, (c) the name and address, as
they appear on the Company's books, of such stockholder, (d) the class and
number of shares of the
17
Company's stock which are beneficially owned by such stockholder, and (e) any
material interest of such stockholder in such business.
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2001, INCLUDING ANY FINANCIAL STATEMENTS AND SCHEDULES AND EXHIBITS
THERETO, MAY BE OBTAINED WITHOUT CHARGE BY WRITTEN REQUEST TO RUTH HOLUB,
INVESTOR RELATIONS ADMINISTRATOR, ADMINISTAFF, INC., 19001 CRESCENT SPRINGS
DRIVE, KINGWOOD, TEXAS 77339-3802.
By Order of the Board of Directors
/s/ JOHN H. SPURGIN, II
John H. Spurgin, II
Vice President of Legal,
General Counsel and Secretary
March 29, 2002
Kingwood, Texas
18
APPENDIX A
ADMINISTAFF FINANCE, RISK MANAGEMENT AND
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Finance, Risk Management and Audit Committee (the
"Committee") is to assist the Board of Directors in fulfilling its
responsibility to oversee the financial affairs, risk management and accounting
practices of the Company. The scope of the Committee's responsibility entails
reviewing and monitoring (i) the financial affairs of the Company, (ii) the
financial statements of the Company and the independence of the firm of
independent public accountants hired to audit the Company's financial statements
(the "external auditors"), and (iii) the Company's policies and procedures with
respect to risk management, as well as other matters that may come before it as
directed by the Board of Directors.
While the Committee has the responsibilities and powers set forth in this
Charter, the Board of Directors and the Committee recognize that the Company's
management is responsible for preparing the Company's financial statements and
the external auditors are responsible for auditing those financial statements.
Therefore, the Board of Directors and the Committee's responsibility is one of
oversight.
MEMBERSHIP AND MEETINGS
The Committee shall consist of not less than three directors who serve at the
discretion of the Board of Directors, and the Committee's composition shall meet
the requirements of the Audit Committee Policy of the New York Stock Exchange
("NYSE"). Accordingly, (i) each member shall have no relationship to the Company
that may interfere with the exercise of his or her independence from management
and the Company, (ii) each member shall be (or shall become within a reasonable
time after appointment) financially literate, and (iii) at least one member
shall have accounting or related financial management expertise, as the Board of
Directors interprets each such qualification in its business judgment.
The Committee shall meet at least four times each year.
PRIVATE DISCUSSIONS/INVESTIGATIONS
The Committee may ask officers and employees of the Company, the Company's
outside counsel, the Company's external auditor or others to attend meetings
with, and furnish pertinent information to, the Committee. The Committee is
empowered to investigate any matter relating to the financial affairs and risk
management of the Company brought to its attention, shall have full access to
all books, records, facilities and personnel of the Company, and shall have the
power to retain counsel, auditors or other experts for this purpose.
ACCOUNTABILITY OF EXTERNAL AUDITORS
The external auditors are ultimately accountable to the Committee and the Board
of Directors. The Committee and the Board of Directors have the responsibility
to select, evaluate and, where appropriate, replace the Company's external
auditors.
DUTIES AND RESPONSIBILITIES
The Committee shall:
1. Annually recommend to the Board of Directors the selection of the
Company's external auditors, with such selection to be submitted to the
stockholders for ratification.
2. Review and approve the plan and scope of the annual audit of the
Company's consolidated financial statements and any other services
provided by the Company's external auditors, as well as the fees
related to the audit and such other services.
19
3. Prior to the filing of the Company's quarterly report on Form 10-Q and
annual report on Form 10-K, review and discuss with the external
auditors and management the results of any annual audit or interim
financial review and any report or opinion rendered in connection
therewith, as the case may be, any unresolved disagreements with
management concerning accounting or disclosure matters and any
significant adjustment proposed by the external auditors.
4. Review and consider with the external auditors, the Chief Financial
Officer and the Vice President of Finance the matters required to be
discussed by Statement of Auditing Standards No. 61.
5. Review with the external auditors any management letter provided by the
external auditors and management's response to that letter.
6. Review proposed changes to the Company's financial and accounting
standards and principles and the Company's policies and procedures with
respect to its internal accounting, auditing and financial controls.
7. Review and approve the services provided by independent accounting
firms other than the external auditors.
8. Discuss with management and the external auditors the quality and
adequacy of the Company's internal controls.
9. Ensure that the external auditors deliver to the Committee on a
periodic basis a formal written report delineating all relationships
between the external auditors and the Company. The Committee shall
discuss with the external auditors their independence from management
and the Company and shall consider the compatibility of non-audit
services with the auditors' independence. The Committee shall recommend
that the Board of Directors take appropriate action in response to the
written report to satisfy itself of the independence of the external
auditors.
10. Meet periodically with management to review the Company's major risk
exposures and any steps management has taken to monitor and control
such exposures.
11. Provide a report of Committee activities to the Board of Directors at
regular intervals.
12. Perform such other functions as requested by the Board of Directors, or
required by law or NYSE rule.
ANNUAL REVIEW OF CHARTER
At least annually, the Committee shall review and reassess the adequacy of this
Charter. The Committee shall report the results of the review to the Board of
Directors and, if necessary, recommend that the Board of Directors amend this
Charter.
20
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
ADMINISTAFF, INC.
TO BE HELD ON MAY 7, 2002
The undersigned hereby appoints Paul J. Sarvadi and John H. Spurgin, II, or
either of them, as the lawful agents and proxies of the undersigned (with all
the powers the undersigned would possess if personally present, including full
power of substitution), and hereby authorizes them to represent and to vote, as
designated on the reverse side, all the shares of Common Stock of Administaff,
Inc. held of record by the undersigned on March 8, 2002, at the Annual Meeting
of Stockholders of Administaff, Inc., to be held at the Company's Corporate
Headquarters, Centre II in the University Rooms, located at 29801 Loop 494,
Kingwood, Texas on May 7, 2002 at 10:00 a.m., Central Daylight Savings Time, or
any reconvened meeting after an adjournment thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned stockholder. WHERE NO CHOICE IS
SPECIFIED BY THE STOCKHOLDER, THE PROXY WILL BE VOTED "FOR" THE PROPOSALS 1 AND
2, AND IN THE DISCRETION OF THE PERSONS NAMED HEREIN ON ALL OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
ADMINISTAFF, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X}
[ ]
1. Election of Directors. For Withheld For All The undersigned hereby revokes
Nominees: 01) Michael W. Brown All All Except all previous proxies relating
02) Linda Fayne Levinson [ ] [ ] [ ] to the shares of Common Stock
covered hereby and confirms all
FOR ALL EXCEPT NOMINEE(S) CROSSED OUT. that said Proxy may do by virtue
hereof.
2. To ratify the appointment of Ernst & Young For Against Abstain , 2002
LLP as the Company's independent auditors [ ] [ ] [ ] ---------------------------
for the year 2002. Dated
---------------------------------
Signature of Stockholder
---------------------------------
Signature of Stockholder
This proxy must be signed exactly
as the name appears hereon. Joint
owners should each sign. Executors,
administrators, trustees, etc., should
give full title as such. If the signer
is a corporation, please sign full
corporate name by duly authorized officer.