COMSYS IT PARTNERS, INC.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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COMSYS IT PARTNERS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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COMSYS IT PARTNERS, INC.
4400 Post Oak Parkway
Suite 1800
Houston, Texas 77027
NOTICE OF 2006 ANNUAL STOCKHOLDERS MEETING
and
PROXY STATEMENT
Thursday
July 27, 2006
9:30 a.m. (local time)
St. Regis Hotel
1919 Briar Oaks Lane
Houston, Texas 77027
June 27, 2006
Dear COMSYS Stockholder:
On behalf of COMSYS board of directors and management, you are cordially invited to attend
the 2006 Annual Meeting of Stockholders to be held at the St. Regis Hotel in Houston, Texas on
Thursday, July 27, 2006, at 9:30 a.m. (local time).
It is important that your shares are represented at the meeting. Whether or not you plan to
attend, please complete and return the enclosed proxy card in the accompanying envelope. Also note
that submitting a proxy 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 enclosed
proxy statement. Our 2005 Annual Report to Stockholders is either enclosed with these materials or
has previously been mailed to you.
We appreciate your interest in COMSYS, and look forward to seeing you on July 27, 2006.
Sincerely,
Larry L. Enterline
Chief Executive Officer
COMSYS IT PARTNERS, INC.
4400 POST OAK PARKWAY
SUITE 1800
HOUSTON, TEXAS 77027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 27, 2006
To our Stockholders:
The Annual Meeting of Stockholders of COMSYS IT Partners, Inc. will be held on Thursday, July
27, 2006, at 9:30 a.m. (local time) at the St. Regis Hotel, 1919 Briar Oaks Lane, Houston, Texas
77027, for the following purposes:
1. To elect seven directors to serve until the Companys 2007 Annual Meeting of
Stockholders;
2. To ratify the appointment of Ernst & Young LLP as the Companys independent auditors
for the fiscal year ending December 31, 2006; and
3. To transact such other business as may properly come before the Annual Meeting and any
adjournment or postponement thereof.
If you are a stockholder of record at the close of business on May 30, 2006, you will be
entitled to vote at the Annual Meeting. Your vote is important. Please carefully consider the
proposals and mark, sign, date and promptly return the enclosed proxy card in the postage-paid
envelope.
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By Order of the Board of Directors, |
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![-s- KEN R. BRAMLETT, JR.](g02208deg0220803.gif) |
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Ken R. Bramlett, Jr. |
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Senior Vice President, General Counsel and
Secretary |
This notice of Annual Meeting and proxy statement are first being mailed to stockholders on or about June 30, 2006.
TABLE OF CONTENTS
COMSYS IT PARTNERS, INC.
4400 Post Oak Parkway
Suite 1800
Houston, Texas 77027
PROXY STATEMENT
Questions and Answers about the 2006 Annual Meeting
About the Annual Meeting
Who is soliciting my vote?
The Board of Directors of COMSYS IT Partners, Inc., which we refer to as COMSYS or the
Company, is soliciting your vote at the Companys 2006 Annual Meeting of Stockholders.
What am I voting on?
You are voting on:
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The election of seven directors; |
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The ratification of Ernst & Young LLP as our independent auditors for the fiscal year
ending December 31, 2006; and |
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Any other business that properly comes before the Annual Meeting. |
How does the Board recommend that I vote my shares?
Unless you give other instructions on your proxy card, the persons named as proxy holders on
the proxy card will vote your shares in accordance with the recommendations of the Board of
Directors. The Boards recommendation can be found with the description of each item in this proxy
statement. In summary, the Board recommends a vote:
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FOR the proposal to elect the nominated directors; and |
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FOR the proposal to ratify Ernst & Young LLP to serve as the Companys independent
auditors for the fiscal year ending December 31, 2006. |
Who is entitled to vote?
You may vote if you were the record owner of our common stock as of the close of business on
May 30, 2006. Each share of common stock is entitled to one vote. As of May 30, 2006, we had
18,757,103 shares of common stock outstanding and entitled to vote. There is no cumulative voting.
How many votes must be present to hold the Annual Meeting?
Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in
person or if you properly return a proxy by mail. In order for us to hold our meeting, holders of a
majority of our outstanding shares of common stock as of the close of business on May 30, 2006,
must be present in person or by proxy at the meeting. This is referred to as a quorum. Abstentions
and broker non-votes will be counted for purposes of establishing a quorum at the meeting.
What is a broker non-vote?
If a broker does not have discretion to vote shares held in street name on a particular
proposal and does not receive instructions from the beneficial owner on how to vote those shares,
the broker may return the proxy card without voting on that proposal. This is known as a broker
non-vote.
How many votes are needed to approve each of the proposals?
The seven nominees for election as directors at the Annual Meeting who receive the highest
number of FOR votes will be elected as directors. This is called plurality voting. Unless you
indicate otherwise on your proxy card, the persons named as your proxies will vote your shares FOR
all the nominees for director named in this proxy statement.
The ratification of auditors requires the affirmative FOR vote of a majority of the votes
cast. Only votes for or against this proposal will be counted as votes cast. Abstentions and
broker non-votes will not be counted for voting purposes and will have no effect on the result of
the vote.
How do I vote?
You can vote either by proxy without attending the meeting or in person at the meeting. Even
if you plan to attend the meeting, we encourage you to vote by proxy in any event.
To vote by proxy, you must fill out the enclosed proxy card, date and sign it, and return it
in the enclosed postage-paid envelope. If you hold your COMSYS stock in a brokerage account (that
is, in street name), please carefully follow the directions on your proxy card or voter
instruction form.
If you plan to vote in person at the meeting, and you hold your stock in street name, you must
obtain a proxy from your broker and bring that proxy to the meeting.
Can I change my vote?
Yes. You can change or revoke your vote at any time before the polls close at the Annual
Meeting. You can do this by:
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Signing another proxy card with a later date and returning it to us prior to the meeting, |
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Sending our Corporate Secretary a written document revoking your earlier proxy, or |
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Voting again at the meeting. |
Who counts the votes?
We have hired American Stock Transfer & Trust Company, our transfer agent, to count the votes
represented by proxies cast by ballot. Employees of the transfer agent will also act as inspectors
of election.
Will my shares be voted if I dont provide my proxy and dont attend the Annual Meeting?
If you do not provide a proxy or vote your shares held in your name, your shares will not be
voted.
If you hold your shares in street name, however, your broker will be able to vote your shares
for the election of directors and the ratification of auditors even if you do not provide the
broker with voting instructions.
How are votes counted?
In the election of directors, you may vote FOR all of the nominees or your vote may be
WITHHELD with respect to one or more of the nominees. For the ratification of auditors, you may
vote FOR, AGAINST or ABSTAIN.
2
What if I return my proxy, but dont vote for some of the matters listed on my proxy card?
If you return a signed proxy card without indicating your vote, your shares will be voted FOR
the nominee directors listed on the card and FOR the ratification of Ernst & Young LLP as our
independent auditors for the fiscal year ending December 31, 2006.
Could other matters be decided at the Annual Meeting?
We are not aware of any other matters that will be considered at the Annual Meeting. If any
other matters arise at the Annual Meeting, however, the persons named in your proxies will vote
your shares in accordance with their best judgment.
Who can attend the meeting?
The Annual Meeting is open to all holders of COMSYS common stock.
What do I need to bring to attend the Annual Meeting?
You will need proof of ownership of your shares to enter the meeting. If your shares are in
the name of your broker or bank or other nominee, you will need to bring evidence of your stock
ownership, such as your most recent brokerage statement. All stockholders will be required to
present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF
THAT YOU OWN COMSYS STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING.
How can I access COMSYS proxy materials and annual report electronically?
This proxy statement and the 2005 annual report are available on our website at
www.comsys.com.
Board of Directors Information
What is the makeup of the Board of Directors and how often are the members elected?
Our Board of Directors currently has seven members. We began 2005 with nine directors, but
one, Christopher R. Pechock, resigned during that year and a second, Michael T. Willis, our former
Chief Executive Officer, resigned in early 2006. As a result, the Board currently has two
vacancies. In addition, two of our current directors, Ted A. Gardner and Arthur C. Roselle, have
advised us that they do not intend to stand for reelection at the 2006 Annual Meeting of
Stockholders. Our Nominating and Governance Committee has nominated Courtney R. McCarthy and
Robert Fotsch, whose biographies are set forth below in the section entitled Election of Directors
and Director Biographies, to take the seats to be vacated by Mr. Gardner and Mr. Roselle.
Our directors generally serve one-year terms from the time of their election until the next
annual meeting of stockholders or until their successors are duly elected and qualified. In
connection with the September 2004 merger of a wholly-owned subsidiary of Venturi Partners, Inc.
with and into COMSYS Holding, Inc., which we refer to as the merger, we entered into a voting
agreement which provided the parties with certain rights regarding the nominations of directors.
The nomination procedure is set forth in our amended and restated bylaws, as further amended, and
is described in more detail below in the section entitled Nominating Process for Directors.
Except as otherwise specified, references to Old COMSYS are to COMSYS Holding, Inc., its
subsidiaries and their respective predecessors prior to the merger.
What if a nominee is unable or unwilling to serve?
That is not expected to occur. If it does, shares represented by proxies will be voted for a
substitute nominated by the Board of Directors.
How are directors compensated?
Directors who are employed by us or our principal stockholders receive no additional
compensation for serving on our Board of Directors. We refer to our directors who are neither
employed by us nor by our principal stockholders as outside directors. Compensation for our
outside directors consists of equity and cash as described
3
below. Our outside directors as of the
date of this proxy statement are Ted A. Gardner, Victor E. Mandel and Kevin M. McNamara.
Equity Compensation
Outside directors who join our Board receive options to purchase 6,000 shares of our common
stock at an exercise price determined on the date they join the Board, and subsequent annual option
grants of 3,000 shares of our common stock on the date of each annual meeting of stockholders,
commencing with this Annual Meeting. Our outside directors may elect to receive restricted stock
in lieu of stock options.
Cash Compensation
We also pay our outside directors an annual retainer of $25,000, plus fees of $2,000 per
meeting of the Board attended in person and $1,000 per meeting of the Board attended by telephone
or other electronic means. All directors are also entitled to reimbursement of expenses. Outside
directors serving in specified committee positions also receive the following additional annual
retainers:
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Chairman of the Audit Committee |
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10,000 |
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Chairman of the Compensation Committee |
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5,000 |
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Each committee member receives $2,000 for each meeting of a committee of the Board attended in
person and $1,000 for each meeting of a committee of the Board attended by telephone or other
electronic means.
Our outside director fees are payable in cash or, at the election of each director, which is
made on an annual basis, in shares of restricted stock determined by the current market price of
the stock at the time of each cash payment.
The Compensation Committee of our Board is evaluating whether to implement changes to director
compensation, which may include an increase in the cash and/or equity compensation paid to our
outside directors.
Liability insurance and indemnification agreements
We provide liability insurance for our current directors and officers, and, pursuant to the
merger agreement, maintain liability insurance for actions of both our and Old COMSYS former
officers and directors that took place prior to the merger. We also have contractual
indemnification arrangements with our directors and officers under
which we agree, in certain circumstances, to compensate them for costs and liabilities
incurred in actions brought against them while acting as directors or officers of our company.
How often did the Board meet in 2005?
The Board met six times in fiscal 2005 and took actions by written consent at various times
throughout the year. Each director attended at least 75% of the Board meetings and 75% of the
meetings of the committees on which he served.
Election of Directors and Director Biographies
(Proposal 1 on the Proxy Card)
Who are the director nominees?
As discussed above, the Board currently has two vacancies, which were created by the
resignations of Christopher R. Pechock and Michael T. Willis. In addition, two of our current
directors, Ted A. Gardner and Arthur C. Roselle, have advised us that they do not intend to stand
for reelection at the 2006 Annual Meeting of Stockholders. Our Nominating and Governance Committee
has nominated Courtney R. McCarthy and Robert Fotsch to take the seats to be vacated by Mr. Gardner
and Mr. Roselle.
The seven directors and director nominees standing for election this year, who would hold
office until the 2007 Annual Meeting of Stockholders and until their successors are elected, are:
4
Larry L. Enterline, age 53. Mr. Enterline was re-appointed as our Chief Executive Officer
effective February 2, 2006. Mr. Enterline had previously served as our Chief Executive Officer from
December 2000, when our company was known as Venturi Partners, Inc., until September 30, 2004, when
we completed our merger with COMSYS Holding, Inc. He has served as a member of our Board since
December 2000 and served as Chairman of the Board from December 2000 until the merger. Prior to
joining our company, Mr. Enterline served in a number of senior management positions at
Scientific-Atlanta, Inc. from 1989 to 2000, the last of which was Corporate Senior Vice President
for Worldwide Sales and Service. He also held management positions in the marketing, sales,
engineering and products areas with Bailey Controls Company and Reliance Electric Company from 1974
to 1989. Mr. Enterline also serves on the boards of directors of Raptor Networks Technology, Inc.
and Concurrent Computer Corporation.
Frederick W. Eubank II, age 42. Mr. Eubank has served as a director since the completion of
the merger in September 2004. Mr. Eubank joined Wachovia Capital Partners (formerly First Union
Capital Partners), an affiliate of Wachovia Investors and Wachovia Corporation, in 1989 and
currently serves as its Chief Investment Officer. Prior to joining Wachovia Capital Partners, Mr.
Eubank was a member of Wachovias specialized industries group. Mr. Eubank also serves on the
board of directors of CapitalSource Inc.
Robert Fotsch, age 47. Our Governance and Nominating Committee has nominated Mr. Fotsch for
election to the Board of Directors at the 2006 Annual Meeting. Mr. Fotsch currently is a private
investor. From 1996 to 2005, Mr. Fotsch served as Chief Executive Officer of Strategic
Outsourcing, Inc., a professional employer organization company, growing that company from $157
million in sales in 1996 to over $1 billion in sales in 2003 solely through organic growth. Mr.
Fotschs prior experience also included service as Chief Executive Officer (from 1992 until 1995)
and Chief Operating Officer (from 1988 until 1992) of Home Innovations, Inc., a textile company.
Prior to joining Home Innovations, Inc., Mr. Fotsch held management positions with Electronic Data
Systems, Inc. and General Motors Corporation.
Victor E. Mandel, age 41. Mr. Mandel has served as a director since April 2003. Since 2001,
Mr. Mandel has served as founder and Managing Member of Criterion Capital Management, an investment
company. From May 1999 to November 2000, Mr. Mandel was Executive Vice President-Finance and
Development of Snyder Communications, Inc., with operating responsibility for its publicly traded
division Circle.com. From June 1991 to May 1999, Mr. Mandel was a Vice President in the Investment
Research department at Goldman Sachs & Co. covering emerging growth companies.
Courtney R. McCarthy, age 30. Our Governance and Nominating Committee has nominated Ms.
McCarthy for election to the Board of Directors at the 2006 Annual Meeting. Ms. McCarthy has
served as a Board observer since the completion of the merger in September 2004. Ms. McCarthy
joined Wachovia Capital Partners in 2000, where she currently serves as a Vice President, focusing
on the investment in the financial services and healthcare industries. From 1997 to 2000, Ms.
McCarthy served as an associate and analyst in Wachovias Leveraged Capital
Group where she focused on mezzanine and equity investments and on one-stop financings for
leveraged transactions.
Kevin M. McNamara, age 50. Mr. McNamara has served as a director since the completion of the
merger in September 2004. Since April 2005, Mr. McNamara has served as Executive Vice President
and Chief Financial Officer and Treasurer of Healthspring, Inc., a managed care organization
primarily focusing on the Medicare Advantage market. From April 2005 to January 2006, Mr. McNamara
also served as non-executive Chairman of ProxyMed, Inc., a provider of automated healthcare
business and cost containment solutions for financial, administrative and clinical transactions in
the healthcare payments marketplace, and served as interim Chief Executive Officer of ProxyMed from
December 2004 through June 2005. Mr. McNamara served as Chief Financial Officer of HCCA
International, Inc., a healthcare management and recruitment company, from October 2002 to April
2005. From November 1999 until February 2001, Mr. McNamara served as Chief Executive Officer and a
director of Private Business, Inc., a provider of electronic commerce solutions that help community
banks provide accounts receivable financing to their small business customers. From 1996 until its
acquisition by Quintiles Transnational Corp. in 1999, Mr. McNamara served as Senior Vice President
and Chief Financial Officer of Envoy Corporation, a provider of electronic transactions processing
services to participants in the healthcare industry. Mr. McNamara also serves on the board of
directors of Luminex Corporation, a diagnostic and life sciences tool and consumables manufacturer.
5
Elias J. Sabo, age 35. Mr. Sabo has served as a director since April 2003. Since 1998, Mr.
Sabo has served as a founding partner at The Compass Group International LLC. Prior to joining
Compass, Mr. Sabo worked in the acquisition department for Colony Capital, a Los Angeles-based real
estate private equity firm, from 1992 to 1996 and as a healthcare investment banker for CIBC World
Markets (formerly Oppenheimer & Co.) from 1996 to 1998.
What does the Board recommend?
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THESE SEVEN DIRECTORS.
What are the committees of the Board?
Our Board has the following committees:
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Number of |
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Meetings in |
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Principal Functions |
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Fiscal 2005 |
Audit(1)
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Kevin M. McNamara(2)
Victor E. Mandel
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Oversees
(i) our accounting,
auditing and
financial reporting
processes,
including
qualifications,
independence and
performance of our
independent
auditors, (ii) our
internal audit
function, (iii) the
integrity of our
financial
statements, (iv)
our systems of
internal controls
regarding finance
and accounting and
(v) our risk
management and
compliance with
legal and
regulatory
requirements.
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5 |
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Appoints,
sets compensation
for, oversees and,
where appropriate,
replaces
independent
auditors, resolves
disagreements
between management
and independent
auditors regarding
financial reporting
and pre-approves
all auditing,
internal
control-related and
permitted non-audit
services. |
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Reviews and
discusses with
management and
independent
auditors our annual
audited and
quarterly unaudited
financial
statements,
including
disclosures made in
managements
discussion and
analysis, as well
as our earnings
press releases. |
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Discusses
with management and
independent
auditors
significant
reporting issues
and judgments made
in connection with
the preparation of
our financial
statements,
including any
significant changes
in accounting
principles and
quality and
appropriateness of
the accounting
principles as
applied in
financial
reporting. |
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Reviews and
discusses with
management and
independent
auditors any major
issues as to the
adequacy of our
internal controls,
any material
control
deficiencies and
steps adopted in
light thereof and
adequacy of
disclosures
regarding any
changes in internal
control over
financial
reporting. |
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Reviews and
discusses quarterly
reports from
independent
auditors on
critical accounting
policies and any
alternative
treatments of
financial
information within
GAAP that have been
discussed with
management,
including
ramifications of
the use thereof and
the treatment
preferred by
independent
auditors. |
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Maintains
an open avenue of
communication with
the Board, our
independent
auditors, any
internal auditors
and our management. |
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Number of |
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Meetings |
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in Fiscal |
Committee |
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Members |
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Principal Functions |
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2005 |
Compensation
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Ted A. Gardner(2)(3)
Frederick W. Eubank II
Elias J. Sabo
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Oversees,
evaluates and,
where appropriate,
administers our
compensation
policies, plans and
practices,
particularly for
our executives.
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3 |
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Assists the
Board in
discharging its
responsibilities
relating to the
compensation of our
executives,
including our Chief
Executive Officer,
and other key
employees. |
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Evaluates
the performance of
our Chief Executive
Officer and other
executives in light
of established
performance goals
and objectives. |
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Sets the
compensation of our
Chief Executive
Officer and other
executives upon
such evaluation. |
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Reviews and
recommends to the
full Board director
compensation. |
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Governance
and
Nominating
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Frederick W. Eubank II
Ted A. Gardner(3)
Arthur C. Roselle(3)
Elias J. Sabo
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Subject to
our charter and
bylaws, identifies
individuals who are
qualified to become
members of the
Board and selects
candidates to be
submitted for
election at the
Annual Meeting.
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Assesses
the effectiveness
of the Board and
its committees. |
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Reviews
various corporate
governance issues
affecting our
company, including
the number and
functions of the
Boards committees
and their governing
charters. |
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Develops
and recommends to
the Board a set of
corporate
governance
principles and a
code of business
conduct and ethics. |
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(1) |
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Nasdaq Marketplace Rule 4350(d)(2)(A) requires that the audit committee of any listed
company be comprised of three directors who are independent under the Nasdaq listing
standards. Our Audit Committee currently consists of two directors, both of whom are
independent under the Nasdaq listing standards and otherwise meet the requirements for such
service under applicable SEC rules and regulations, with one vacancy created by the
resignation of Christopher R. Pechock from our Board. Under the Nasdaq listing standards, we
have until the 2006 Annual Meeting of Stockholders to fill this vacancy, which we intend to
do. Robert Fotsch, one of our director nominees at this Annual Meeting, is expected to fill
the vacancy on our Audit Committee, provided he is elected to our Board. |
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Committee Chairman. |
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Mr. Gardner and Mr. Roselle have each advised us that they will not stand for reelection to
our Board at the Annual Meeting. |
Do the Board committees have written charters?
Yes. The charters for our Audit Committee, Compensation Committee and Governance and
Nominating Committee can be found on our website at www.comsys.com under the Corporate Governance
caption. Our Corporate Governance Policy and Code of Business Conduct and Ethics, which are
referenced in the charters and described in more detail below, are also posted on our website under
the Corporate Governance caption. You can also obtain copies of these documents by writing to
our Corporate Secretary, COMSYS IT Partners, Inc., 4400 Post Oak Parkway, Suite 1800, Houston,
Texas 77027.
Corporate Governance Matters and Communications with the Board
Does the Company have a corporate governance policy?
Our Board of Directors has adopted a Corporate Governance Policy, which is posted on our
website under the Corporate Governance caption. This policy addresses the following matters,
among others: composition of the Board, director qualifications, selection of directors, director
responsibilities, service on other boards, Board compensation and performance, Board committees and
their responsibilities, managements responsibilities, Board access to senior management,
attendance of non-director executive officers at Board meetings, the Boards
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interaction with
institutional investors, press and customers, executive session meetings of independent directors,
director orientation and continuing education, evaluation of our Chief Executive Officer,
succession planning and compliance with our Code of Business Conduct and Ethics.
Who are our independent directors?
Our Corporate Governance Policy provides that a majority of our directors must be
independent as provided by the Nasdaq listing standards. Our Board of Directors has determined
that Messrs. Eubank, Gardner, Mandel, McNamara, Roselle and Sabo, comprising a majority of our
directors, meet the standards regarding independence set forth in the Nasdaq listing standards and
our Corporate Governance Policy. In addition, if elected to our Board, Courtney R. McCarthy and
Robert Fotsch, our director nominees, are each expected to qualify as independent for purposes of
serving on our Board under the Nasdaq listing standards.
Governance and Nominating Committee
Our Governance and Nominating Committee currently consists of Messrs. Eubank, Gardner, Roselle
and Sabo, with one vacancy created by Mr. Pechocks resignation. Our Board has determined that
each current member of the Governance and Nominating Committee is independent for purposes of
serving on such committee under the Nasdaq listing standards.
Audit Committee
Our Audit Committee currently consists of Messrs. Mandel and McNamara, with one vacancy
created by Mr. Pechocks resignation. Under the Nasdaq listing standards, we are required to fill
this vacancy not later than the 2006 Annual Meeting of Stockholders, which we intend to do. Robert
Fotsch, one of our director nominees at this Annual Meeting, is expected to fill the vacancy on our
Audit Committee, provided he is elected to our Board. Mr. McNamara serves as the Chairman of the
Audit Committee.
Our Board has determined that each current member of the Audit Committee is independent for
purposes of serving on the Audit Committee under the Nasdaq listing standards and applicable
federal law. Our Board has also determined that each current member of the Audit Committee is
financially literate under the Nasdaq listing standards, and that at least one member, Mr.
McNamara, is an audit committee financial expert as defined by the SEC. If elected to our Board,
Mr. Fotsch is expected to have the qualifications required under the Nasdaq listing standards and
applicable federal law for purposes of serving on the Audit Committee.
Compensation Committee
Our Compensation Committee currently consists of Messrs. Eubank, Gardner and Sabo. Mr.
Gardner serves as the Chairman of the Compensation Committee. Our Board has determined that each
current member of the Compensation Committee is independent for purposes of serving on such
committee under the Nasdaq listing standards.
Our Board has also determined that each current member of the Compensation Committee is an
outside director in accordance with Section 162(m) of the Internal Revenue Code. Our Board has
also determined that
Messrs. Eubank, Gardner and Sabo currently qualify as non-employee directors in accordance
with Rule 16b-3 of the Exchange Act.
Do our independent directors meet separately without management?
Our Corporate Governance Policy provides that independent directors will meet in regularly
scheduled executive sessions, which shall be held at such times as determined by the Chairman of
the Board or by the presiding independent director. During fiscal 2005, our independent directors
held six executive sessions.
How can I communicate with the Board?
Our Board of Directors maintains a process for stockholders and interested parties to
communicate with the Board. Stockholders may write to the Board c/o Corporate Secretary, COMSYS IT
Partners, Inc., 4400 Post Oak Parkway, Suite 1800, Houston, Texas 77027. Communications addressed
to individual Board members and clearly marked as stockholder communications will be forwarded by
the Corporate Secretary unopened to the individual
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addresses. Any communications addressed to the
Board of Directors and clearly marked as stockholder communications will be forwarded by the
Corporate Secretary unopened to the Governance and Nominating Committee.
Do directors attend the Annual Meeting?
Recognizing that director attendance at the Companys Annual Meeting can provide the Companys
stockholders with an opportunity to communicate with Board members about issues affecting the
Company, the Company actively encourages its directors to attend the Annual Meeting of
Stockholders. All of our directors attended the 2005 Annual Meeting of Stockholders, which was
held on June 9, 2005.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics designed to help directors and
employees resolve ethical issues and to help us conduct our business in accordance with all
applicable laws, rules and regulations and with the highest ethical standards. Our Code of
Business Conduct and Ethics applies to all directors and employees, including our principal
executive officer, principal financial officer, principal accounting officer and all other
executive officers. We also expect the consultants we retain to abide by our Code of Business
Conduct and Ethics. Our Code of Business Conduct and Ethics sets forth our policies with respect
to public disclosure of Company information, our financial statements and records, compliance with
laws, rules and regulations, insider trading, conflicts of interest, corporate opportunities, fair
dealing, confidentiality, equal employment opportunity and harassment, protection and proper use of
our assets and employee complaint procedures. The Code of Business Conduct and Ethics is posted on
our website at www.comsys.com under the Corporate Governance caption. Any amendment to, or a
waiver from, a provision of our Code of Business Conduct and Ethics that is applicable to our
principal executive officer, principal accounting officer or controller (or persons performing
similar functions) and is required to be disclosed by the relevant rules and regulations of the SEC
will be posted on our website.
Nominating Process for Directors
The Governance and Nominating Committee and Corporate Governance Policy
The Governance and Nominating Committee of our Board of Directors is currently comprised of
four non-employee directors (one Group A director and three Group B directors), all of whom have
been determined by our Board to be independent under Nasdaq listing standards and our Corporate
Governance Policy. We currently have one vacancy on the Governance and Nominating Committee
created by the resignation of Mr. Pechock, who served on such committee as a Group A director. The
general nominating process, and nominating procedures provided by our charter and bylaws, as well
as the requirements of the voting agreement, are described in more detail below.
Subject to the provisions of our charter, bylaws and the voting agreement described below, the
Governance and Nominating Committee identifies individuals who are qualified to become members of
the Board and, on behalf of the Board, selects and recommends director candidates to be submitted
for election at the Annual Meeting in accordance with our Corporate Governance Policy. Our
Corporate Governance Policy outlines the criteria for Board membership. These criteria reflect the
Boards belief that all directors should have the highest personal and professional integrity and,
as a general rule, should be persons who have demonstrated exceptional ability, diligence and
judgment. In addition, the policy requires that at least a majority of the Board consist of
independent directors. The Governance and Nominating Committee will also take into account the
nature and time involved in an individuals service on other boards (considering, among other
factors, the specific board committees on which he or she sits) in evaluating the individuals
suitability for the Board. Directors should also be willing and able to devote the required amount
of time to company business. The Governance and Nominating Committee has not developed or
recommended to the Board any specific criteria for Board membership to complement these general
criteria.
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Our Charter and Bylaws
Our charter, which became effective on September 30, 2004 at the effective time of the merger,
provides that for the first three years after the merger, directors may be nominated only pursuant
to the voting agreement described below or in accordance with Section 3.2 of our bylaws, which also
became effective upon the completion of the merger. Section 3.2 provides that nominations may be
made:
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on behalf of our Board by the Governance and Nominating Committee in accordance with
Section 3.2; |
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pursuant to any agreement of ours under which a party has a contractual right to
nominate a director; and |
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by any stockholder who is a stockholder as of the record date of any meeting who
complies with the advance notice requirements of Section 3.2 of our bylaws, which
stockholder nomination process is described in more detail under the heading Nominations
by Stockholders set forth below. |
Under Section 3.2 of our bylaws, during the first three years following the merger, the
Governance and Nominating Committee is to consist of five directors who are independent directors
eligible to serve on such Committee under applicable rules of Nasdaq (or if our common stock is not
traded on Nasdaq, the principal securities exchange or market on which shares of our common stock
are listed or approved for trading), which we refer to in this document as independent directors.
If there are three or more Group B directors who are independent directors, then three of the five
members of the Governance and Nominating Committee must be Group B directors. If there are fewer
than three Group B directors who are independent directors, then the Governance and Nominating
Committee will include the number of Group B directors who are independent directors. If there are
two or more Group A directors who are independent directors, then two of the five members of the
Governance and Nominating Committee must be Group A directors. If there is only one Group A
director who is an independent director, then that Group A director will serve on the Governance
and Nominating Committee. The Group B directors serving on the Governance and Nominating Committee
will make up a subcommittee referred to as the Group B subcommittee, and the Group A directors
serving on the Governance and Nominating Committee will make up a separate subcommittee referred to
as the Group A subcommittee.
Section 3.2 of our bylaws gives the Group A subcommittee and the Group B subcommittee the
right to recommend to the Governance and Nominating Committee a number of nominees, based on the
size of the Board of
Directors. However, the number of nominees that the Group B subcommittee is entitled to
recommend for election at any annual meeting will be reduced by the number of nominees designated
for election at that annual meeting under the voting agreement described below.
Subject to applicable fiduciary duties, the Governance and Nominating Committee will recommend
to the stockholders the nominees recommended by the Group A subcommittee and the Group B
subcommittee. Individuals recommended by the Group A subcommittee, if elected to the Board of
Directors, are deemed to be Group A directors. Individuals recommended by the Group B subcommittee
or designated as a nominee pursuant to the voting agreement described below, if elected to the
Board of Directors, are deemed to be Group B directors.
The Group A subcommittee is delegated the exclusive authority to fill any vacancy caused by
the death, resignation or removal of any Group A director and, subject to the limits on the number
of nominees the Group A subcommittee can nominate based on the size of the Board of Directors,
vacancies resulting from an increase in the size of the Board of Directors. The Group B
subcommittee has the right to fill any vacancy caused by the death, resignation or removal of any
Group B director and, subject to the limits on the number of nominees the Group B subcommittee can
nominate based on the size of the Board of Directors, vacancies resulting from an increase in the
size of the Board of Directors.
If either the Group A subcommittee or the Group B subcommittee fails to recommend the maximum
number of nominees permitted or to fill any vacancy that it has the delegated authority to fill,
the Governance and Nominating Committee may nominate the number of nominees or vacancies permitted
to be recommended or filled by the applicable subcommittee but not recommended or filled by that
subcommittee. In such a case, any director so nominated or elected by the Governance and
Nominating Committee will not be deemed a Group A or Group B director and need not satisfy the
qualification requirements for Group A or Group B directors discussed below.
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Each of the Group A subcommittee and the Group B subcommittee is to be dissolved if for a
period of 30 days there are no Group A directors or Group B directors, respectively, who are
independent directors. Upon dissolution of any subcommittee, the Governance and Nominating
Committee will have the authority to recommend nominees or elect directors to fill vacancies to the
extent formerly delegated to that subcommittee, subject to any contractual right we have given to
others to designate directors, including under the voting agreement described below.
The Group A subcommittee may not recommend a nominee or elect a director to fill a vacancy
unless, after giving effect to the election of such person, there would be at least:
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three Group A directors who are independent directors; |
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two Group A directors who would be considered independent for the purposes of serving
on the Audit Committee of the Board of Directors under the rules of Nasdaq (or if our
common stock is not traded on Nasdaq, the principal securities exchange or market on which
our common stock is then listed or approved for trading) and who are willing to serve on
the Audit Committee; and |
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one Group A director who is an audit committee financial expert as set forth in Item
401 of Regulation S-K of the SEC. |
The Group B subcommittee may not recommend a nominee or elect a director to fill a vacancy
unless, after giving effect to the election of such person, there would be at least three Group B
directors who are independent directors or, if the size of the Board of Directors is 11, 12 or 13,
four independent directors. One of the Group B directors must be considered independent for
purposes of serving on the Audit Committee, as described above, and must be willing to serve on the
Audit Committee.
Our bylaws also provide that Group B directors will constitute a majority of the Compensation
Committee and such Committee will have at least one Group A director during the first three years
after the merger.
Voting Agreement
At the effective time of the merger, Wachovia Investors, Inc. beneficially owned 47.3% of our
outstanding common stock, MatlinPatterson Global Opportunities Partners, L.P. beneficially owned
9.4% of our outstanding
common stock and Inland Partners, L.P. and Links Partners, L.P. collectively beneficially
owned 9.5% of our outstanding common stock. Pursuant to the terms of the voting agreement entered
into at the time of the merger with certain of our stockholders, Wachovia Investors has the right
to recommend to the nominating committee of our Board four to six nominees to be elected to our
Board, depending on the size of the Board, during the first three years after the merger. Each
stockholder party to the voting agreement is required to vote its shares of our common stock in
favor of such nominees. Although MatlinPatterson is not a party to the voting agreement,
MatlinPatterson has separately agreed to vote all of its shares of our common stock in favor of the
directors nominated by our Governance and Nominating Committee during the first three years after
the merger. Certain parties to the voting agreement also have the conditional right to designate
observers to attend meetings of our Board of Directors. After the expiration of this three-year
period, the stockholders that are parties to the voting agreement and owned more than 10% of our
outstanding stock at the effective time of the merger will have the right to designate nominees for
election to the board if they then own 10% or more of our common stock.
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Nominations by Stockholders
Our bylaws permit stockholders to nominate directors for election at an annual stockholders
meeting whether or not such nominee is submitted to and evaluated by the Governance and Nominating
Committee. To nominate a director using this process, the stockholder must follow procedures set
forth in our bylaws. Those procedures require a stockholder to notify the Companys Secretary of a
proposed nominee not less than 90 days nor more than 120 days prior to the anniversary date of the
immediately preceding Annual Meeting of Stockholders. Notwithstanding the foregoing, if the Annual
Meeting is called for a date that is not within 45 days before or after such anniversary date,
notice by the stockholder to be timely must be received (i) not less than 90 days before the
meeting or 10 days following the day on which public announcement of the date of the annual meeting
was first made by the Company (ii) nor more than 120 days prior to the meeting. The notice to the
Secretary should include the following:
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The nominees name, age and business and residence addresses; |
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The nominees principal occupation or employment; |
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The class or series and number of shares of capital stock of the Company, if any, owned
beneficially or of record by the nominee; |
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The name and address of the stockholder as they appear on the Companys books and the
name and address of the beneficial owner, if any, on whose behalf the nomination is made; |
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The class or series and number of shares of Company capital stock owned by the
stockholder beneficially and of record; |
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A description of all arrangements or understandings among the stockholder, the
beneficial owner, if any, on whose behalf the nomination is made, and the nominee; |
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A representation that the stockholder intends to appear in person or by proxy at the
meeting to nominate the candidate specified in the notice; and |
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Any other information regarding the nominee, stockholder and the beneficial owner, if
any, on whose behalf the nomination is made, that would be required to be included in a
proxy statement relating to the election of directors. |
Subject to the provisions of our charter, bylaws and the voting agreement discussed above, the
Governance and Nominating Committee will consider director candidates recommended by stockholders.
If a stockholder wishes to recommend a director for nomination by the Governance and Nominating
Committee, the stockholder should follow the same procedures set forth above for nominations to be
made directly by the stockholder. In addition, the stockholder should provide such other
information as it may deem relevant to the Committees evaluation. Candidates recommended by the
Companys stockholder are evaluated on the same basis as candidates recommended by the Companys
directors, CEO, other executive officers, third party search firms or other sources.
For more details regarding the nomination process, please refer to the voting agreement and
our charter and bylaws, which are filed as Exhibits 2.4, 2.5, 3.1 and 3.2 to our Current Report on
Form 8-K filed with the SEC on October 4, 2004, an amendment to our bylaws, which is filed as
Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on May 4, 2005, and our Corporate
Governance Policy, which is posted on our website.
Audit Committee Report
The Audit Committee is responsible for providing independent, objective oversight for the
integrity of the Companys financial reporting process and internal control system. Other primary
responsibilities of the Audit Committee include the review, oversight and appraisal of the
qualifications, independence and audit performance of the Companys independent auditors and
providing an open venue for communication among the independent auditors, financial and senior
management, any internal auditors and the Board of Directors of the Company. A more detailed
description of the responsibilities of the Audit Committee is set forth in its written charter,
which was attached to last years proxy statement as an appendix and is posted on our website at
www.comsys.com. The following report summarizes certain of the Committees activities with respect
to its responsibilities during fiscal year 2005.
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Review with Management and Independent Auditing Firm. The Audit Committee has reviewed and
discussed with management and Ernst & Young LLP, an independent registered public accounting firm,
the audited consolidated financial statements of the Company for the year ended January 1, 2006.
Controls and Procedures. Management has established and maintains a system of disclosure
controls and procedures designed to provide reasonable assurance that information required to be
disclosed by our company in the reports that we file or submit under the Securities Exchange Act of
1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms, and includes controls and procedures designed
to provide reasonable assurance that information required to be disclosed by us in those reports is
accumulated and communicated to our management, including our Chief Executive Officer and our Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of
January 1, 2006, management conducted an evaluation of our disclosure controls and procedures.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures are effective to provide reasonable assurance that the
information required to be disclosed by us in the reports we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the SECs
rules and forms. The Audit Committee discussed with management, internal audit, and Ernst & Young
LLP the quality and adequacy of the companys disclosure controls and procedures.
Management has also established and maintains a system of internal controls over
financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended. These internal controls are designed to provide reasonable assurance that the
reported financial information is presented fairly, that disclosures are adequate and that the
judgments inherent in the preparation of financial statements are reasonable. Management conducted
an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on managements evaluation under the framework in
Internal ControlIntegrated Framework, management concluded that our internal control over
financial reporting was effective as of January 1, 2006, as discussed in more detail in the
Managements Report on Internal Control Over Financial Reporting, which is included in our Annual
Report on Form 10-K for the year ended January 1, 2006, filed with the SEC on March 17, 2006.
Managements assessment of the effectiveness of our internal control over financial reporting as of
January 1, 2006 has been audited by Ernst & Young LLP, as stated in its attestation report, which
is included in our Annual Report on Form 10-K for the year ended January 1, 2006, filed with the
SEC on March 17, 2006. The Audit Committee reviewed and discussed with management, internal audit
and Ernst & Young LLP the companys system of internal control over financial reporting in
compliance with Section 404 of the Sarbanes-Oxley Act of 2002.
Discussions with Independent Auditing Firm. The Audit Committee has also discussed with Ernst
& Young LLP the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. The Audit Committee has received the written
disclosures and the letter from Ernst & Young LLP required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees, as amended, and has discussed with that firm
its independence from the Company.
Recommendation to the Board of Directors. Based on its review and the discussions noted above,
the Audit Committee recommended to the Board of Directors that the audited financial statements be
included in the Companys Annual Report on Form 10-K for the year ended January 1, 2006, filed with
the SEC on March 17, 2006.
THE AUDIT COMMITTEE
Kevin M. McNamara, Chairman
Victor E. Mandel
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Executive Compensation
The Compensation Committee of our Board of Directors is charged with administering our
companys executive compensation programs. Our Compensation Committee evaluates the performance,
and based on such evaluation sets the compensation, of our Chief Executive Officer and other
executive officers, and administers our equity compensation plans. Set forth below is the
Compensation Committees report on its actions and policies with regard to the compensation of our
Chief Executive Officer and our other executive officers generally for our fiscal year ended
January 1, 2006.
Compensation Committee Report to Stockholders on Executive Compensation
General
The Compensation Committee is responsible for reviewing and approving the compensation plans
for our executive officers. The Compensation Committee believes that compensation of executive
officers should be fair to both the employee and the stockholders, externally competitive and
designed to align the interests of executive officers with the interests of the stockholders. The
compensation program for executive officers is designed to set compensation based on the attainment
of financial and other performance objectives, establish compensation levels that will enable us to
attract and retain talented individuals and motivate them to achieve our business objectives.
The compensation programs consist of three principal components. These components are (i) base
salary, (ii) incentive bonus awards made under these officers employment agreements and incentive
bonus plan and (iii) equity-based compensation.
Base Salary: To Attract and Retain Management Talent
Base salaries are designed to help attract and retain management talent. To ensure that
salary ranges are competitive in the overall marketplace, salary ranges are periodically compared
to the salaries paid for comparable positions by peers and with other companies of comparable size.
Our general objective is to consider the sustained performance of our executive officers in
establishing base salaries. Among the factors considered are length of service, individual
performance, scope of responsibilities and successful management of administrative or financial
functions or operating divisions. In addition, the Compensation Committee recognized the
challenges of combining the companies in connection with the merger and the importance of efficient
management of the combined company. The assessment of management performance focuses on both
qualitative factors (such as leadership and management qualities) and quantitative factors (such as
growth of revenues, operating earnings, cash flow, earnings per share and the containment of
expenses).
The Chief Executive Officer historically has evaluated the overall performance of our
executive officers, including those officers named in the Summary Compensation Table, and made
recommendations for base salary adjustments to the Compensation Committee. Financial and business
goals and objectives are typically discussed with key executives, and periodic meetings of key
executives are held to discuss business strategies, financial and business performance, budgeting
matters and strategic planning matters. An executives overall evaluation is a combination of a
qualitative review by the Chief Executive Officer and a review of the extent to which
pre-established business and financial objectives have been obtained.
The following individuals served as our executive officers in 2005: (i) Michael T. Willis:
Chief Executive Officer and President, (ii) Michael H. Barker: Executive Vice PresidentField
Operations, (iii) David L. Kerr: Senior Vice PresidentCorporate Development, (iv) Margaret G.
Reed: Senior Vice President, General Counsel and Corporate Secretary, and (v) Joseph C. Tusa, Jr.:
Senior Vice PresidentChief Financial Officer and Assistant Secretary. Each such individual was
and, except for Mr. Willis and Ms. Reed who resigned from their respective positions with our
company at the beginning of 2006, continues to be party to an employment agreement with us. The
base salaries for each of these individuals in 2005 were determined as provided in their respective
employment agreements, subject to such annual increases as were determined by the Compensation
Committee.
In connection with Mr. Willis and Ms. Reeds resignations, their respective employment
agreements were terminated. Mr. Willis entered into a resignation agreement and release with us,
which is described, along with Ms. Reeds severance payments, under the Severance Agreements
caption below. Larry L. Enterline, our Chief Executive Officer prior to the merger, was reappointed
as our Chief Executive Officer to replace Mr. Willis, and Ken R. Bramlett, Jr., our General Counsel
prior to the merger, was reappointed as our Senior Vice President,
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General Counsel and Corporate
Secretary to replace Ms. Reed. In January 2006, we entered into an employment agreement with Mr.
Bramlett. The terms of his and other employment agreements are described in more detail under the
caption Employment Agreements and Related Arrangements below.
On February 9, 2006, the Compensation Committee approved a $500,000 annual base salary for Mr.
Enterline and is in the process of determining other material terms of his compensation. As part
of this process, the Compensation Committee is evaluating the incentive bonus arrangements
currently in place for our other executive officers, which are described in more detail below.
Upon completion of its review, the Compensation Committee may propose certain changes to such bonus
arrangements.
Incentive Bonus Awards: To Reward Excellent Year-to-Year Performance
The Compensation Committee believes that annual bonuses motivate executives and reward them
for good performance. Historically, our Chief Executive Officer and other executive officers were
eligible to earn annual incentive bonuses under their employment agreements and the incentive bonus
plan. Annual incentive bonuses were linked to the achievement of certain financial goals
established by the Compensation Committee in the annual incentive plan.
Under the COMSYS 2005 Annual Incentive Plan, our former Chief Executive Officer and other
executive officers were eligible to receive an annual bonus based on our achievement of EBITDA
targets approved by the Compensation Committee. The plan sets forth the bonus targets for the
former Chief Executive Officer and each other executive officer and specified the percentage of
bonus targets payable to such executives upon achieving specified EBITDA targets.
As discussed below under the heading Employment Agreements and Related Arrangements, Mr.
Willis was eligible for an annual bonus ranging from 40% to 200% of the annual bonus target (set at
$250,000 for 2005) based upon the achievement of EBITDA targets established by the Compensation
Committee. Mr. Tusa, Mr. Kerr and Ms. Reed were each eligible for an annual bonus, ranging from 50%
to 200% of one-half of such executives annual base salary, also referred to as their bonus target,
based upon the achievement of EBITDA targets established by the Compensation Committee. Except for
Mr. Willis, each additional 5% incremental increase over the maximum established EBITDA target
would have resulted in an additional 5% incremental increase in the bonus target for these
executives. No incentive was provided in any event unless a minimum of 90% of the EBITDA plan was
achieved.
Mr. Barkers incentive bonus for 2005 was specified in the amendment to his employment
agreement, which was executed in connection with the merger and is discussed in more detail under
the Employment Agreements and Related Arrangements caption below. It was the higher of (i) an
amount based on the same formula and EBITDA targets used for Mr. Tusa, Mr. Kerr and Ms. Reed in
2005 and (ii) $100,000.
Due in part to the circumstances associated with the merger, our company did not meet the
EBITDA targets established by the Compensation Committee for fiscal 2005. Mr. Barker earned the
$100,000 minimum incentive provided in his employment agreement, but at the Compensation
Committees request Mr. Barker agreed to accept 12,500 restricted shares of our common stock in
lieu thereof. See Summary Compensation Table. Neither Mr. Willis nor Ms. Reed received bonuses
for their performance in 2005, and, under the terms of the 2005 Annual Incentive Plan and/or their
respective employment agreements, no other executive officers are entitled to receive bonuses for
2005. See Summary Compensation Table. Notwithstanding the foregoing, the Committee believes that
the substantial completion of the merger integration in 2005, the completion of several refinancing
transactions and the completion of our public equity offering in December were significant
achievements for our company in 2005 and is considering whether to award discretionary bonuses
consisting of grants of restricted stock to Mr. Tusa and Mr. Kerr.
Equity Based Compensation: To Promote Long-Term Growth and Stockholder Value
One of the Compensation Committees goals is to include equity-based compensation as a
meaningful portion of our executive officers compensation generally. Through the granting of
equity awards, we seek to align the interests of executive officers more closely with those of our
stockholders by motivating and rewarding actions that lead to long-term value creation for
stockholders. In addition, we recognize that equity awards are a necessary part of a competitive
compensation program, which, as discussed above, is designed to attract and retain qualified
executives.
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In 2004, prior to the merger, we rewarded our executive officers with discretionary
compensation awards in the form of incentive stock options and non-qualified stock options granted
under our 2003 Equity Incentive Plan, which replaced our 1995 Equity Participation Plan. Our 1995
Equity Participation Plan was terminated in connection with our financial restructuring in 2003,
and most of our employees and directors forfeited their options issued under that plan. In 2004,
options to purchase 100,000 shares of our common stock were granted to Mr. Barker under our 2003
Equity Incentive Plan following the completion of the merger. Options granted prior to the merger
(other than options granted in lieu of cash bonuses) generally vested over a four-year period in
order to encourage the executives and other key employees receiving them to remain in our employ
and to foster a long-term perspective. However, options granted to the executives prior to the
merger became fully vested and immediately exercisable at the effective time of the merger.
Equity compensation for Mr. Willis and other executive officers formerly with Old COMSYS in
2004 consisted of awards under the Old COMSYS 2004 Management Incentive Plan. In connection with
the merger, the shares of Old COMSYS Class D Preferred Stock awarded under the Old COMSYS 2004
Management Incentive Plan and outstanding immediately prior to the effective time of the merger
were cancelled and converted automatically into the right to receive an aggregate of 1,405,844
shares of our common stock subject to vesting and certain other restrictions. Approximately 2% of
such shares were placed in escrow to secure certain obligations under the merger agreement. Mr.
Willis, Mr. Tusa, Mr. Kerr and Ms. Reed received 688,864, 182,760, 182,760 and 168,701 shares of
common stock, respectively, of which 13,785, 3,657, 3,657 and 3,376 shares, respectively, were
placed in escrow as described above. As of January 1, 2006, 55.56% of these restricted shares had
vested.
In connection with the merger, our Board adopted the 2004 Stock Incentive Plan, which was
approved by our stockholders on September 27, 2004 and became effective as of September 30, 2004.
Because of the size of the 2004 grants, our Compensation Committee approved no additional grants of
equity compensation to our executive officers in 2005. The Compensation Committee is currently
evaluating various alternatives to achieve the Companys goals of retaining and further
incentivizing key personnel. These actions could include the issuance of additional options or
grants of restricted stock under the 2004 Stock Incentive Plan and modification and/or
relinquishment of certain existing rights under the 2004 Management Incentive Plan. Any such
changes to the 2004 Management Incentive Plan would require the consent of the existing
participants under that plan.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a tax
deduction to public companies for compensation of more than $1 million paid in any year (not
including amounts deferred) to a corporations Chief Executive Officer and the four other most
highly compensated executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The Compensation Committees
general policy is to structure long-term and incentive compensation programs to preserve the tax
deductibility of compensation paid to our executive officers including under the executive
incentive plan. However, base salaries and other non-performance based compensation as defined in
Section 162(m) in excess of $1 million paid to these executive officers in any year would not
qualify for deductibility under Section 162(m).
THE COMPENSATION COMMITTEE
Ted A. Gardner, Chairman
Frederick W. Eubank II
Elias J. Sabo
The Compensation Committee Report and the disclosure regarding the independence of the members
of the Compensation Committee should not be deemed to be soliciting material or to be filed
with the SEC nor deemed incorporated by reference into any future filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically
incorporate it by reference into the filing.
Compensation Committee Interlocks and Insider Participation
No current member of our Compensation Committee has ever been an officer or employee of
ours. None of our executive officers serves, or has served during the past fiscal year, as a
member of the board of directors or compensation committee of any other company that has one or
more executive officers serving as a member of our Board of Directors or Compensation Committee.
16
COMPENSATION TABLES
SUMMARY COMPENSATION TABLE
The following table provides information concerning total compensation earned for our
Chief Executive Officer during fiscal 2005 and the four other most highly paid executive officers
of our company.
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Long-Term Compensation |
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Annual Compensation |
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Awards |
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Payouts |
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Shares |
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Long- |
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Restricted |
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Underlying |
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Term |
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Bonus |
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Other Annual |
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Stock |
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Options/SARs |
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Incentive |
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All Other |
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Name and Principal Position |
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Year |
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Salary |
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(1) |
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Compensation |
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Award |
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Granted |
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Payout |
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Compensation |
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Michael T. Willis(2)(3) |
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2005 |
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$ |
478,125 |
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$ |
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$ |
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$ |
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$ |
33,389 |
(4) |
Chief Executive |
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2004 |
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100,079 |
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200,000 |
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(5) |
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6,991 |
(4) |
Officer, President
and Chairman of the
Board of Directors |
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2003 |
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Michael H. Barker(6) |
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2005 |
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$ |
312,000 |
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$ |
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(7) |
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$ |
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12,500 |
(7) |
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$ |
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$ |
19,863 |
(8) |
Executive Vice |
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2004 |
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260,200 |
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280,000 |
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100,000 |
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15,100 |
(8) |
President
Field
Operations |
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2003 |
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240,000 |
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21,600 |
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90,000 |
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24,000 |
(8) |
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Joseph C. Tusa, Jr.(2) |
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2005 |
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$ |
293,583 |
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$ |
115,000 |
(9)(10) |
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$ |
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(10) |
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$ |
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$ |
5,611 |
(11) |
Senior Vice |
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2004 |
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71,625 |
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(5) |
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581 |
(12) |
President, Chief
Financial Officer and
Assistant Secretary |
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2003 |
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David L. Kerr (2) |
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2005 |
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$ |
281,800 |
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$ |
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(10) |
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$ |
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(10) |
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$ |
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$ |
6,240 |
(12) |
Senior Vice President |
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2004 |
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68,750 |
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100,000 |
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(5) |
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1,550 |
(12) |
Corporate
Development |
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2003 |
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Margaret G. Reed(2)(13) |
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2005 |
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$ |
254,392 |
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$ |
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$ |
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$ |
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$ |
6,851 |
(12) |
Senior Vice President, |
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2004 |
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62,500 |
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150,000 |
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(5) |
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796 |
(12) |
General Counsel and |
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2003 |
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Corporate Secretary |
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(1) |
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Except as provided in a separate footnote, bonus amounts include bonuses earned in the fiscal
year specified in the table and do not include bonuses paid in such year, but earned in the
preceding year. |
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(2) |
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Mr. Willis, Mr. Tusa, Mr. Kerr and Ms. Reed were appointed as executive officers of our
company in September 2004 in connection with the merger, and information with respect to their
2004 compensation is provided beginning September 30, 2004. |
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(3) |
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Mr. Willis resigned from his employment with our company and from our Board in February 2006.
See Severance Agreements. |
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(4) |
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Includes an auto allowance and reimbursements for health benefits and country club dues in
the years presented (except that the 2004 amount was for the period from September 30, 2004
through the end of fiscal 2004). The amount for 2005 also includes a matching contribution to
the applicable 401(k) plan of $1,338. |
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(5) |
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Excludes shares of Old COMSYS Class D Preferred Stock awarded under the Old COMSYS 2004
Management Incentive Plan. In connection with the merger, each share of Old COMSYS Class D
Preferred Stock awarded under the management incentive plan and outstanding immediately prior
to the effective time of the merger was cancelled and converted automatically into the right
to receive 1,405,844 shares of our common stock subject to vesting and certain other
restrictions, of which approximately 2% was placed in escrow to secure certain obligations
under the merger agreement. Mr. Willis, Mr. Tusa, Mr. Kerr and Mr. Reed received 688,864,
182,760, 182,760 and 168,701 restricted shares, respectively, of which 13,785, 3,657, 3,657
and 3,376 shares, respectively, were placed in escrow as described above. As of January 1,
2006, 55.56% of these restricted shares had vested. |
17
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(6) |
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Mr. Barker served as President of our Division Operations prior to the merger and was
appointed to serve as our Executive Vice PresidentField Operations in September 2004 in
connection with the merger. |
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(7) |
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Mr. Barker was contractually entitled to a bonus of not less than $100,000 for his
performance in 2005. At the Compensation Committees request Mr. Barker agreed to accept
12,500 restricted shares of our common stock in lieu thereof. These shares vest at the rate of
33 1/3% each year over the three-year period beginning on the grant date. |
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(8) |
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Includes an auto allowance and reimbursements for country club dues in the years presented
and, for 2003 only, an allocation to our non-qualified profit sharing plan for Mr. Barker of
$9,840. These amounts exclude $91,765 paid to Mr. Barker in 2004 in connection with the
termination of our non-qualified profit sharing plan. See Benefit PlansNon-Qualified Profit
Sharing Plan. The amount for 2005 also includes a matching contribution to the applicable
401(k) plan of $3,083. |
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(9) |
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Mr. Tusa received a special bonus of $115,000 in 2005 under a bonus plan established by the
Compensation Committee in connection with the integration of Old COMSYS and Venturi. |
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(10) |
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The Compensation Committee is considering whether to award discretionary bonuses consisting
of grants of restricted stock to Mr. Tusa and Mr. Kerr for their performance in 2005. |
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(11) |
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Includes an auto allowance for a portion of the month of December (after the execution of Mr.
Tusas new employment agreement), reimbursement of club dues and a matching contribution to
the applicable 401(k) plan of $3,083. |
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(12) |
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Includes reimbursement of club dues. For Ms. Reed, the amount for 2005 also includes a
matching contribution to the applicable 401(k) plan of $3,083. |
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(13) |
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Ms. Reed resigned from all positions she held with our company in January 2006. See
Severance Agreements. |
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No equity awards were made to the named executive officers during fiscal 2005.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND YEAR-END OPTION VALUES
The following table provides certain information concerning option exercises and
unexercised options held as of January 1, 2006.
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Shares |
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Number of Shares |
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Value of Unexercised |
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Acquired |
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Underlying Unexercised |
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In-the-Money Options at |
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on |
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Value |
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Options at January 1, 2006 |
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January 1, 2006 |
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Name |
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Exercise |
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Realized |
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Exercisable |
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Unexercisable |
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Exercisable |
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Unexercisable |
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Michael T. Willis |
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$ |
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$ |
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$ |
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Michael H. Barker |
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$ |
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106,667 |
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83,333 |
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$ |
236,668 |
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$ |
208,333 |
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Joseph C. Tusa, Jr. |
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$ |
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$ |
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$ |
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David L. Kerr |
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$ |
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$ |
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$ |
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Margaret G. Reed |
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$ |
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$ |
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$ |
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EMPLOYMENT AGREEMENTS AND RELATED ARRANGEMENTS
Michael H. Barker
Michael H. Barker, who remained with us following the merger as our Executive Vice
PresidentField Operations, has an employment agreement with us dated as of April 13, 2003. This
employment agreement provides for an annual base salary of $320,000, which may be adjusted as
determined by the Compensation Committee. Mr. Barker is eligible to participate in the Old COMSYS
2004 Annual Incentive Plan. Under this incentive plan, Mr. Barker is eligible for an annual bonus,
ranging from 50% to 200% of one-half of such executives annual base salary, also referred to as
the bonus target, based upon the achievement of certain EBITDA targets established by the
Compensation Committee. Each additional 5% incremental increase over the maximum established EBITDA
target will result in an additional 5% incremental increase in the bonus target. No incentive is
provided unless a minimum of 90% of the EBITDA plan is achieved.
For 2005, Mr. Barker was entitled to receive a minimum performance bonus of $100,000 under an
amendment to his employment agreement that was executed in connection with the closing of the
merger. At the Compensation Committees request Mr. Barker agreed to accept 12,500 restricted
shares of our common stock in lieu thereof. These shares vest at the rate of 33 1 / 3 % each year over the three-year period beginning on the grant date.
18
The employment agreement with Mr. Barker provides for severance equal to one year of his base
salary and a pro rata bonus upon termination (including non-renewal) without cause. The employment
agreement also includes a restriction on competition for a period of two years following
termination of Mr. Barkers employment.
Joseph C. Tusa, Jr.
Joseph C. Tusa, Jr. has an amended and restated employment agreement with us dated as of
December 9, 2005. This employment agreement provides for an annual base salary of $296,500, which
may be adjusted as determined by the Compensation Committee. Mr. Tusa is eligible to participate in
the incentive bonus plan provided to similarly situated executives. Under the incentive plan, Mr.
Tusa is eligible for an annual bonus, ranging from 50% to 200% of one-half of his annual base
salary, also referred to as the bonus target, based upon the achievement of certain EBITDA targets
established by the Compensation Committee. Each additional 5% incremental increase over the maximum
established EBITDA target will result in an additional 5% incremental increase in the bonus target.
No incentive is provided unless a minimum of 90% of the EBITDA plan is achieved. In the event that
we do not renew Mr. Tusas employment agreement, he is terminated other than for cause, he resigns
for good reason, or his employment is terminated due to death or disability, Mr. Tusa will receive
severance equal to 150% of his base compensation, plus an amount equal to the average bonus earned
by Mr. Tusa for the two years prior his termination, payable in a lump sum or, in certain
circumstances, over a 24-month period. Mr. Tusa would also be entitled to receive continued
insurance and benefits for a 24 month period following such a termination. Also under the terms of
the agreement, in the event of a change of control of our company, Mr. Tusa would be entitled to
receive an additional severance benefit of 50% of his base compensation. The agreement includes a
restriction on competition for a period of two years following termination of Mr. Tusas
employment.
David L. Kerr
David L. Kerr has an employment agreement with COMSYS Information Technology Services, Inc.,
dated as of July 16, 2004. This employment agreement provides for an annual base salary of
$284,600, which may be adjusted as determined by the Compensation Committee. Mr. Kerr is eligible
to participate in the incentive bonus plan provided to similarly situated executives. Under the
incentive plan, Mr. Kerr is eligible for an annual bonus, ranging from 50% to 200% of one-half of
such executives annual base salary, also referred to as the bonus target, based upon the
achievement of certain EBITDA targets established by the Compensation Committee. Each additional 5%
incremental increase over the maximum established EBITDA target will result in an additional 5%
incremental increase in the bonus target. No incentive is provided unless a minimum of 90% of the
EBITDA plan is achieved. Mr. Kerrs agreement provides for severance equal to one years base
compensation, provided that the
executive is terminated without cause. Each agreement includes a restriction on competition
for a period of two years following termination of the executives employment.
Ken R. Bramlett, Jr.
Ken R. Bramlett, Jr. has an employment agreement with us, dated as of January 3, 2006. The
employment agreement provides for an annual base salary of $270,000, which may be adjusted as
determined by the Compensation Committee. Mr. Bramlett is eligible to participate in the incentive
bonus plan provided to similarly situated executives. Under the incentive plan, Mr. Bramlett is
eligible for an annual bonus, ranging from 50% to 200% of one-half of his annual base salary, also
referred to as the bonus target, based upon the achievement of certain EBITDA targets established
by the Compensation Committee. Each additional 5% incremental increase over the maximum established
EBITDA target will result in an additional 5% incremental increase in the bonus target. No
incentive is provided unless a minimum of 90% of the EBITDA plan is achieved. In the event that we
do not renew Mr. Bramletts employment agreement, he is terminated other than for cause, he resigns
for good reason, or his employment is terminated due to death or disability, Mr. Bramlett will
receive severance equal to 150% of his base salary, plus an amount equal to the average bonus
earned by Mr. Bramlett for the two years prior his termination, payable in a lump sum or, in
certain circumstances, over a 24 month period. Mr. Bramlett would also be entitled to receive
continued insurance and benefits for a 24 month period following such a termination. Under the
terms of the agreement, in the event of a change of control of our company, Mr. Bramlett would be
entitled to receive an additional severance benefit of 50% of his base salary. The agreement
includes a restriction on competition for a period of two years following termination of Mr.
Bramletts employment. In connection with his employment Mr. Bramlett also received options to
purchase an aggregate of 66,000 shares of our common stock at an exercise price of $11.05 per
share. One-third of these options vests on each anniversary of the date of grant, with all such
options fully vesting on January 3, 2009.
19
Larry L. Enterline
On February 9, 2006, the Compensation Committee approved a $500,000 annual base salary for Mr.
Enterline and is in the process of determining other material terms of his compensation.
SEVERANCE AGREEMENTS
Michael T. Willis
In connection with Michael T. Willis resignation, we entered into a resignation agreement and
release, dated as of February 2, 2006, with Mr. Willis in which he, among other things, agreed to
provide certain consulting services to us until April 30, 2006 and we agreed to make the following
cash payments to Mr. Willis:
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$1,000,000 of severance, half of which was paid in February 2006 with the balance to be
paid thereafter in 48 equal installments over a two-year period. In addition; |
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An additional one time severance payment of $150,000 on December 31, 2006; and |
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Fees for Mr. Willis consulting services of $105,000, payable on July 31, 2006. |
We also agreed to provide Mr. Willis an expense allowance of $100,000 to reimburse him for his
expenses associated with his resignation, which amount is being paid in arrears in monthly payments
of $8,250 commencing February 28, 2006. We also agreed to reimburse the cost of Mr. Willis health
insurance coverage, in an amount not to exceed $1,000 per month, until the earlier of (a) his 65th
birthday and (b) the date he becomes eligible for medical insurance coverage under a new or
subsequent employers plan.
The resignation agreement provides that in addition to the 282,703 vested shares of common
stock that Mr. Willis currently holds under our Old COMSYS 2004 Management Incentive Plan, an
additional 204,109 shares of restricted common stock held by Mr. Willis will vest if, and only if,
the average closing price for our common
stock over any consecutive 30-day period ending on or before December 31, 2006 equals or
exceeds $18.67 per share, as adjusted for any stock splits, stock dividends or combination of
shares.
Under the resignation agreement, Mr. Willis released us, our subsidiaries and affiliates and
certain others from any and all claims he may have against us or them up to the date of his
resignation. Although the resignation agreement superseded and canceled all prior agreements with
Mr. Willis with respect to the subject matter, Mr. Willis will remain subject to certain
non-solicitation and non-disclosure obligations although he will not be subject to certain
non-competition restrictions. In the event that Mr. Willis materially violates any of the
provisions of the resignation agreement, he will forfeit all unpaid cash payments described above.
In connection with the execution of the Resignation Agreement, Wachovia Investors, Inc., our
largest stockholder with beneficial ownership of 39.0% of our outstanding common stock, agreed to
amend the terms of a $1.0 million note made by Mr. Willis and held by Wachovia. The amendment,
among other things, reduced the interest rate on the note from a variable floating rate to 5%,
extended the maturity date from December 31, 2006 to December 31, 2010, and provided for various
repayment options, including discounts and forgiveness of certain payment obligations under
specified circumstances.
Margaret G. Reed
Margaret G. Reed, our former general counsel, resigned in January 2006. Subject to Ms. Reeds
execution of a release agreement, Ms. Reed is entitled to severance payments totaling $256,000 and
to certain other specified benefits. Also subject to the execution of such release, our
Compensation Committee approved the payment of additional severance in the amount of $100,000 to
Ms. Reed. Ms. Reeds unvested restricted shares were repurchased by us in the amount of Ms. Reeds
original investment.
20
DESCRIPTION OF BENEFIT PLANS
2004 Stock Incentive Plan
In connection with the merger, our Board of Directors adopted the 2004 Stock Incentive Plan,
which was approved by our stockholders on September 27, 2004 and became effective as of the
effective time of the merger. As of May 30, 2006, options to purchase 576,168 shares of our common
stock were outstanding and 17,500 shares of our restricted stock were granted under the 2004 Stock
Incentive Plan. As of May 30, 2006, 556,008 shares of our common stock remain authorized for
issuance and are reserved for future grants under this plan. The weighted average exercise price of
the options outstanding under this plan is $9.79 per share. No awards were granted to the named
executive officers under the 2004 Stock Incentive Plan in 2005.
2003 Equity Incentive Plan
Our 2003 Equity Incentive Plan was approved by our stockholders on July 24, 2003. As of May
30, 2006, options to purchase 640,400 shares of our common stock with a weighted average exercise
price of $8.94 were outstanding under our 2003 Equity Incentive Plan and 53,035 shares of our
common stock were available for future grants under our 2003 Equity Incentive Plan. No awards were
granted to the named executive officers under the 2003 Equity Incentive Plan in 2005.
1995 Equity Participation Plan
Our 1995 Equity Participation Plan was terminated in connection with our financial
restructuring in 2003, and most of our employees and directors forfeited their options issued under
that plan. As of May 30, 2006, options to purchase 2,748 shares of our common stock were
outstanding under the 1995 Equity Participation Plan. The weighted average exercise price of these
options is $233.93.
COMSYS 2005 Annual Incentive Plan
Under the COMSYS 2005 Annual Incentive Plan, our Chief Executive Officer and other executive
officers were eligible to receive an annual bonus in 2005 based on the achievement of EBITDA
targets approved by the Compensation Committee. The plan sets forth the bonus targets for the
Chief Executive Officer and each other executive officer and specifies the percentage of bonus
targets payable to such executives upon achieving specified EBITDA targets. As provided in his
employment agreement, Mr. Willis, our CEO in 2005, was eligible for a bonus in 2005 ranging from
40% to 200% of the annual bonus target (set at $250,000 for 2005) based upon the achievement of
EBITDA targets established by the Compensation Committee. Mr. Tusa and Mr. Kerr and Ms. Reed, our
General Counsel in 2005, were each eligible for an annual bonus, ranging from 50% to 200% of
one-half of such executives annual base salary, also referred to as their bonus target, based upon
the achievement of EBITDA targets established by the Compensation Committee. Except for Mr. Willis,
each additional 5% incremental increase over the maximum established EBITDA target would have
resulted in an additional 5% incremental increase in the bonus target for these executives. No
incentive bonus would have been provided unless a minimum of 90% of the EBITDA plan was achieved.
The EBITDA target for 2005 was not achieved, and as a result no bonuses were paid to the named
executive officers under the Old COMSYS 2004 Annual Incentive Plan for 2005 performance.
Old COMSYS 2004 Management Incentive Plan
Effective January 1, 2004, Old COMSYS adopted the 2004 Management Incentive Plan. The plan was
structured as a stock issuance program under which eligible employees were awarded shares of Old
COMSYS nonvoting Class D Preferred Stock (liquidation value $1,000). Dividends on the Class D
Preferred Stock were payable in an amount equal to 17.647% of dividends Old COMSYS declared and
paid on its common or any other series of its preferred stock. The Class D Preferred Stock was
redeemable at the rate of 17.647% of the redemption price paid to the holders of Old COMSYS Class
C, B or A Preferred Stock. Effective July 1, 2004, 1,000 shares of Old COMSYS Class D Preferred
Stock were issued under the management incentive plan. At the effective time of the merger, these
shares were exchanged for a total of 1,405,844 restricted shares of our common stock. Approximately
one-third of these shares were vested at the closing of the merger. An additional 22.2% of these
shares had vested by January 1, 2006. Of the remaining unvested shares, 11.1% vests on December 31,
2006 and 33.3% were scheduled to vest in equal annual installments if specified earnings targets
were met for fiscal years 2004, 2005 and 2006. Although the earnings target was not met for 2004 or
2005, these restricted shares remain subject to vesting as described below.
21
Upon the occurrence of certain events, including the sale or transfer of more than 50% of our
assets, a merger or consolidation in which we are not the surviving corporation, the liquidation or
dissolution of our company, a change in ownership (as defined in the plan) or the completion of
an equity offering resulting in gross proceeds of $35.0 million, referred to as the qualified
offering, all outstanding shares of restricted stock will immediately vest in full, other than the
33.3% of the shares for which vesting is subject to the satisfaction of the annual earnings
targets. The shares subject to specified earnings targets are also subject to immediate vesting,
however, if the aggregate value of the securities issued in the merger to the stockholders of Old
COMSYS exceed $175 million over a 30-day period beginning after the qualified offering and ending
on or prior to December 31, 2006.
The Compensation Committee is currently evaluating various alternatives to achieve the
Companys goals of retaining and further incentivizing key personnel. These actions could include
the issuance of additional options or grants of restricted stock under the 2004 Stock Incentive
Plan and modification and/or relinquishment of certain existing rights under the 2004 Management
Incentive Plan. Any such changes to the 2004 Management Incentive Plan would require the consent
of the existing participants under that plan.
401(k) Plans
We maintain the COMSYS 401(k) Plan covering eligible employees of our company and its
subsidiaries, as defined in the plan document. This plan is a voluntary defined contribution
profit-sharing plan. Participating employees can elect to defer and contribute a percentage of
their compensation to the applicable plan, not to exceed the dollar limit set by the Internal
Revenue Code. The maximum deferral amount is 50% and we match 25% of each employees eligible
contribution up to a maximum of the first 6% of each employees compensation. Matching
contributions vest after three years of service. We contributed $1.1 million of matching
contributions in the aggregate to this plan in fiscal 2005.
We also maintain the Venturi Partners, Inc. 401(k) Plan. Beginning January 1, 2005, no new
contributions were permitted under this plan, which covered eligible employees of both Venturi
Staffing Partners, Inc. and executive officers of Venturi Partners, Inc. prior to the merger. We
are in the process of terminating this plan. Participating employees were allowed to elect to defer
and contribute a percentage of their compensation to the plan, not to exceed the dollar limit set
by the Internal Revenue Code, and the maximum deferral amount was 75%. Venturi suspended the
matching program in 2003.
During 1999, we established a Supplemental Employee Retirement Plan, or the SERP, for our then
chief executive officer. When this officer retired in February 2000, the annual benefit payable
under the SERP was fixed at $150,000. As of January 1, 2006, approximately $1,191,757 million had
been accrued under the SERP.
22
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on our common stock for the five
fiscal years ended January 1, 2006 with the cumulative total return of the S&P 400 Index and a peer
group index we selected. Our current peer group consists of six public companies that specialize in
providing IT and other staffing services in the United States. All cumulative returns assume the
investment of $100 in each of our common stock, the S&P 400 Index, and our peer group index on
December 29, 2000, the last trading day before January 1, 2001, the beginning of our fifth
preceding fiscal year, and assume the reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG COMSYS IT PARTNERS, INC.,
THE S&P MIDCAP 400 INDEX AND A PEER GROUP
|
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12/29/00 |
|
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12/30/01 |
|
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12/29/02 |
|
|
12/28/03 |
|
|
1/2/05 |
|
|
1/2/06 |
|
COMSYS IT Partners, Inc. |
|
|
100.00 |
|
|
|
52.15 |
|
|
|
8.59 |
|
|
|
26.10 |
|
|
|
23.70 |
|
|
|
26.19 |
|
S & P Midcap 400 Index |
|
|
100.00 |
|
|
|
99.39 |
|
|
|
84.97 |
|
|
|
115.24 |
|
|
|
134.23 |
|
|
|
151.08 |
|
Peer Group(1) |
|
|
100.00 |
|
|
|
129.72 |
|
|
|
105.64 |
|
|
|
163.44 |
|
|
|
172.60 |
|
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|
194.10 |
|
|
|
|
(1) |
|
The following companies currently comprise our peer group: Spherion
Corp., MPS Group, Inc., Kforce Inc., Computer Horizons Corp., Analysts
International Corporation and CDI Corp. |
The Stock Performance Graph and the related information should not be deemed to be
soliciting material or to be filed with the SEC nor deemed incorporated by reference into any
future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to
the extent that we specifically incorporate it by reference into the filing.
23
EQUITY COMPENSATION PLAN INFORMATION
We currently have options outstanding under the 1995 Equity Participation Plan, the 2003
Equity Incentive Plan and the 2004 Stock Incentive Plan. Each of these plans was approved by our
stockholders. The 1995 Equity Participation Plan was terminated in connection with our financial
restructuring in 2003. The following table provides information about the common stock that may be
issued under these plans as of January 1, 2006.
|
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|
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|
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Number of |
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|
|
|
|
|
|
|
|
Securities to be |
|
|
|
|
|
|
|
|
|
Issued Upon |
|
|
Weighted Average |
|
|
Number of |
|
|
|
Exercise of |
|
|
Exercise Price of |
|
|
Securities |
|
|
|
Outstanding |
|
|
Outstanding |
|
|
Remaining |
|
|
|
Options and |
|
|
Options and |
|
|
Available for |
|
Plan Category |
|
Warrants (1) |
|
|
Warrants |
|
|
Future Issuance |
|
Equity compensation
plans approved by
security holders
(2) |
|
|
916,780 |
|
|
$ |
9.51 |
|
|
|
862,331 |
|
Equity compensation
plans not approved
by security holders |
|
None |
|
None |
|
None |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
916,780 |
|
|
$ |
9.51 |
|
|
|
862,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
No warrants were outstanding under these plans as of January 1, 2006. |
|
(2) |
|
Does not include options to purchase 56 shares of our common stock outstanding under the Old
COMSYS 1999 Stock Option Plan. The 1999 Stock Option Plan was terminated in connection with
the Venturi merger. At the effective time of the merger, each option to acquire shares of Old
COMSYS common stock that was outstanding under the Old COMSYS 1999 Stock Option Plan
immediately prior to the effective time of the merger remained outstanding and became
exercisable for shares of our common stock at the rate of 0.0001 of a share for each share of
Old COMSYS common stock, and the exercise price per share was adjusted in accordance with the
conversion ratio referenced above to $20,000 per share. |
BENEFICIAL OWNERSHIP
The following table sets forth certain information regarding the beneficial ownership as
of May 30, 2006 of shares of our common stock by each person or entity known to us to be a
beneficial owner of 5% or more of our common stock.
MAJOR STOCKHOLDERS TABLE
|
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|
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|
|
|
Shares of Common Stock Beneficially |
|
|
|
Owned |
|
Name and Address of Beneficial Owner |
|
Number |
|
|
Percent (1) |
|
Wachovia Investors, Inc. |
|
|
7,310,395 |
(2) |
|
|
39.0 |
% |
301 South College Street, 12th Floor
Charlotte, North Carolina 28288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amalgamated Gadget, L.P. |
|
|
1,938,067 |
(3) |
|
|
10.2 |
% |
City Center Tower II
301 Commerce Street, Suite 2975
Fort Worth, Texas 76102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Links Partners, L.P. and Inland Partners, L.P. et. al |
|
|
1,569,576 |
(4) |
|
|
8.3 |
% |
61 Wilton Avenue, 2nd Floor
Westport, Connecticut 06880 |
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
Shares of Common Stock Beneficially |
|
|
|
Owned |
|
Name and Address of Beneficial Owner |
|
Number |
|
|
Percent (1) |
|
MatlinPatterson Global Opportunities Partners L.P.
and MatlinPatterson Global Opportunities Partners
(Bermuda) L.P., et. al |
|
|
1,458,499 |
(5) |
|
|
7.7 |
% |
520 Madison Avenue
New York, New York 10022 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Old Trafford Investment Pte Ltd. |
|
|
1,160,653 |
(6) |
|
|
6.2 |
% |
168 Robinson Road
#37-01 Capital Tower
Singapore 068912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zazove Associates, LLC |
|
|
1,125,899 |
(7) |
|
|
6.0 |
% |
940 Southwood Boulevard, Suite 200
Incline Village, NV 89451 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These calculations are based on an aggregate of 18,757,103
shares issued and outstanding as of May 30, 2006. Warrants and
options to purchase shares held by a person that are
exercisable or become exercisable within the 60-day period
after May 30, 2006 are deemed to be outstanding for the
purpose of calculating the percentage of outstanding shares
owned by that person but are not deemed to be outstanding for
the purpose of calculating the percentage owned by any other
person. |
|
(2) |
|
This amount includes 146,296 shares currently being held in
escrow to secure certain obligations under the merger
agreement. Pursuant to an option agreement dated July 19, 2004
by and among Wachovia Investors, Inc., J.P. Morgan Direct
Corporate Finance Institutional Investors LLC, J.P. Morgan
Direct Corporate Finance Private Investors LLC, GTCR Fund VI,
L.P. and Old Trafford Investment Pte. Ltd, Wachovia Investors
granted the other parties to the agreement the right to
purchase a maximum of 1,651,399 shares of common stock from
Wachovia Investors at a price of $13.90 per share. Prior to
the merger, Wachovia Investors was a major stockholder of Old
COMSYS and an affiliate was a lender to Old COMSYS. |
|
(3) |
|
The amount and nature of the shares beneficially owned are
based on a Schedule 13G amendment filed on May 19, 2006 and on
Form 4 filed on May 25, 2006. This amount includes 163,411
shares of common stock issuable upon exercise of warrants, all
of which are currently exercisable. Amalgamated Gadget, L.P.,
an investment manager for R2 Investments, LDC, has sole voting
and dispositive power over the reported shares and R2
Investments LDC has no beneficial ownership of such shares. R2
Investments, LDC was a senior secured lender under Venturi
Partners, Inc.s credit facility, which was paid off on
September 30, 2004. Amalgamated Gadget, L.P. is controlled by
Scepter Holdings, Inc., its general partner, and Geoffrey
Raynor, the President and the sole shareholder of Scepter
Holdings, Inc. Scepter Holdings, Inc. and Geoffrey Raynor may
be deemed to be the beneficial owners of the reported shares. |
|
(4) |
|
The amount and nature of the shares beneficially owned are
based on a Schedule 13D amendment filed on August 18, 2005 by
Links Partners, L.P., Inland Partners, L.P., Coryton
Management Ltd., Arthur Coady, Elias Sabo and Joe Massoud.
Links Partners and Inland Partners have reported shared voting
and dispositive powers with respect to 784,515 and 785,061
shares, respectively. All other parties reporting in this
amendment have reported shared voting and dispositive powers
with respect to all shares reported. The number of shares of
common stock shown in the table also includes 85,242 shares
subject to warrants that are currently exercisable. |
|
(5) |
|
The amount and nature of the shares beneficially owned are
based on a Schedule 13G filed on December 2, 2005 by
MatlinPatterson Global Opportunities Partners L.P.,
MatlinPatterson Global Opportunities Partners (Bermuda) L.P.,
MatlinPatterson Global Opportunities Partners B, L.P.,
MatlinPatterson Global Advisers LLC, MatlinPatterson Global
Partners LLC, MatlinPatterson Asset Management LLC,
MatlinPatterson LLC, Mark R. Patterson and David J. Matlin.
All of these parties except MatlinPatterson Global
Opportunities Partners (Bermuda) L.P. and MatlinPatterson
Global Opportunities Partners B, L.P. have reported to us
shared voting and dispositive powers with respect to all
shares reported. The number of shares of common stock shown in
the table includes 78,169 shares subject to warrants that are
currently exercisable. |
|
(6) |
|
The amount and nature of the shares beneficially owned are
based on a Schedule 13G amendment filed on February 15, 2006
filed by Old Trafford Investment Pte Ltd, GIC Special
Investment Pte Ltd, Government of Singapore Investment
Corporation Pte Ltd and Government of Singapore. All of these
parties have reported shared voting and dispositive powers
with respect to all shares reported. This stockholder has an
option to purchase up to 830,654 additional shares of common
stock pursuant to the Option Agreement referenced in Note 2
above. |
|
(7) |
|
The amount and nature of the shares beneficially owned are
based on a Schedule 13G amendment filed on January 25, 2006.
Zazove Associates, LLC is an investment manager and has
discretionary authority with regard to certain accounts that
hold our common stock. No such account managed by Zazove
Associates, LLC holds an interest greater than 5% of our
common stock. Zazove Associates, LLC has sole power to
dispose, or to direct the disposition of, and sole power to
vote, or to direct the vote of, 713,233 shares. |
25
HOLDINGS OF OFFICERS AND DIRECTORS
The following table sets forth the number of shares of common stock beneficially owned on
May 30, 2006, by each of our directors and nominees for director, by each named executive officer
and by all directors and executive officers as a group:
|
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|
|
|
|
|
|
|
Common Stock Beneficially Owned |
|
|
|
Number |
|
|
Percent |
|
Name |
|
of Shares(1) |
|
|
of Class(2) |
|
Michael T. Willis |
|
|
486,812 |
(3) |
|
|
2.6 |
% |
|
|
|
|
|
|
|
|
|
Joseph C. Tusa, Jr. |
|
|
182,760 |
(4) |
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
David L. Kerr |
|
|
182,760 |
(4) |
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
Michael H. Barker |
|
|
120,426 |
(5) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Margaret G. Reed |
|
|
93,723 |
(6) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Ken R. Bramlett, Jr. |
|
|
74,000 |
(7) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Larry L. Enterline |
|
|
240,000 |
(8) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Frederick W. Eubank II |
|
|
|
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Robert Fotsch |
|
|
480 |
(9) |
|
|
* |
|
|
Ted A. Gardner |
|
|
6,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Victor E. Mandel |
|
|
7,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Kevin M. McNamara |
|
|
6,000 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Courtney R. McCarthy |
|
|
|
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Arthur C. Roselle |
|
|
|
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
Elias J. Sabo |
|
|
1,569,576 |
(10) |
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
|
Directors and Executive Officers as a Group (11 persons) |
|
|
2,388,522 |
(11) |
|
|
12.4 |
% |
|
|
|
* |
|
Less than 1%.
|
|
(1) |
|
These amounts include the following shares subject to stock options
that are exercisable within 60 days of May 30, 2006: Mr.
Enterline236,000; Mr. Barker106,667; Mr. Bramlett64,000, Mr.
Mandel7,000; and Mr. McNamara6,000. |
|
(2) |
|
These calculations are based on an aggregate of 18,757,103 shares
issued and outstanding as of May 30, 2006. Warrants and options to
purchase shares held by a person that are exercisable or become
exercisable within the 60-day period after May 30, 2006 are deemed to
be outstanding for the purpose of calculating the percentage of
outstanding shares owned by that person but are not deemed to be
outstanding for the purpose of calculating the percentage owned by
any other person. |
|
(3) |
|
This amount includes 282,703 shares of restricted stock issued under
the Old COMSYS 2004 Management Incentive Plan that are currently
vested (including 7,658 shares currently being held in escrow to
secure certain obligations under the merger agreement) and 204,109
shares that will vest if, and only if, the average closing price for
our common stock over any consecutive 30-day period ending on or
before December 31, 2006 equals or exceeds $18.67 per share, as
adjusted for any stock splits, stock dividends or combination of
shares. Mr. Willis resigned as our Chief Executive Officer and
President and from our Board of Directors in February 2006. |
|
(4) |
|
These amounts represent shares of restricted stock outstanding under
the Old COMSYS 2004 Management Incentive Plan, of which shares 55.56%
are currently vested for each of these named executive officers, and
include 3,657 shares from each of them that are currently being held
in escrow to secure certain obligations under the merger agreement. |
|
(5) |
|
This amount includes 12,500 shares of restricted stock granted to Mr.
Barker in February 2006 in lieu of his 2005 performance bonus. These
shares vest at the rate of 33 1 / 3 %
each year over the three-year period beginning on the grant date. |
26
|
|
|
(6) |
|
This amount represents shares of restricted stock issued under the
Old COMSYS 2004 Management Incentive Plan, and includes 3,376 shares
that are currently being held in escrow to secure certain obligations
under the merger agreement. Ms. Reed resigned from her position as
our Senior Vice President, General Counsel and Corporate Secretary in
January 2006. |
|
(7) |
|
This amount excludes options to purchase 66,000 shares of our common
stock, none of which are exercisable within 60 days of May 30, 2006. |
|
(8) |
|
Mr. Enterline was re-appointed as our Chief Executive Officer
effective February 2, 2006 and also serves as one of our directors. |
|
(9) |
|
Mr. Fotsch may be deemed to be the beneficial owner of an aggregate
of 480 shares of our common stock held by four of his minor children.
Mr. Fotsch disclaims the beneficial ownership of such shares. |
|
(10) |
|
The amount and nature of the shares beneficially owned are based on a
Schedule 13D amendment filed on August 18, 2005 by Links Partners,
L.P., Inland Partners, L.P., Coryton Management Ltd., Arthur Coady,
Elias Sabo and I. Joseph Massoud. Links Partners and Inland Partners
have reported shared voting and dispositive powers with respect to
784,515 and 785,060 shares, respectively. All other parties reporting
in this amendment have reported shared voting and dispositive powers
with respect to all shares reported. The number of shares of common
stock shown in the table also includes 85,242 shares subject to
warrants that are currently exercisable. |
|
(11) |
|
This amount excludes an aggregate of 580,535 shares of restricted
stock held by Mr. Willis and Ms. Reed, each a named executive officer
who resigned from our company in January 2006. See Notes 2 and 5
above. This amount also excludes an aggregate of 480 shares of our
common stock indirectly held by Mr. Fotsch, a nominee to our Board of
Directors. See Note 9 above. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive
officers, and persons who beneficially own more than 10% of a registered class of the Companys
equity securities, to file reports of ownership and changes in ownership with the SEC and to
furnish us with copies of the forms they file. To our knowledge, based solely on a review of the
copies of such reports furnished to us and written representations of our
officers and directors, all Section 16(a) reports for fiscal 2005 applicable to our officers
and directors and such other persons were filed on a timely basis. An option grant to Michael H.
Barker on September 30, 2004 was inadvertently reported late on a Form 4. His Form 4 reporting
such transaction was filed with the SEC in February of 2006.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Voting Agreement, Charter and Bylaws
At the effective time of the merger, Wachovia Investors, Inc. beneficially owned 47.3% of our
outstanding common stock, MatlinPatterson Global Opportunities Partners, L.P. beneficially owned
9.4% of our outstanding common stock and Inland/Links beneficially owned 9.5% of our outstanding
common stock. Pursuant to the terms of the voting agreement entered into at the time of the merger
with certain of our stockholders, Wachovia Investors, Inc. has the right to recommend to the
Governance and Nominating Committee of our Board four to six nominees to be elected to our Board of
Directors, depending on the size of the Board, during the first three years after the merger, and
each stockholder party to the voting agreement agreed to vote its shares of our common stock in
favor of such nominees. Currently, Wachovia Investors, Inc. has the ability to designate four
candidates to our Board of Directors, as our Board of Directors is set at nine members. Although
MatlinPatterson is not a party to the voting agreement, MatlinPatterson has separately agreed to
vote all of its shares of our common stock in favor of the directors nominated by our Governance
and Nominating Committee during the first three years after the merger. Certain parties to the
voting agreement also have the conditional right to designate observers to attend meetings of our
Board of Directors. After the expiration of this three-year period, the stockholders that are
parties to the voting agreement and owned more than 10% of our outstanding stock at the effective
time of the merger will have the right to designate nominees for election to the Board if they then
own 10% or more of our common stock.
In addition, our charter and bylaws, effective as of the effective time of the merger, provide
for the designation of nominees for election as directors. During the three-year period following
the merger, our Group B directors serving on our Governance and Nominating Committee have the right
to designate a majority of the nominees for election to our Board of Directors to the extent such
nominees are not designated pursuant to the voting agreement discussed above, and our Group A
directors on the Committee have the right to designate the remaining directors.
27
Registration Rights Agreements
In connection with the merger, we filed a shelf registration statement with the SEC pursuant
to a registration rights agreement we had with a number of our large stockholders. This shelf
registration statement, which was declared effective by the SEC on July 20, 2005, was filed on Form
S-3 and generally permits delayed or continuous offerings of all of our common stock issued to
stockholders in the merger. Under the registration rights agreement, which we amended as of April
1, 2005, our obligation to keep this registration statement effective terminates 18 months after it
was declared effective by the SEC or, if earlier, when all of the common stock covered by the
registration statement has been sold.
Under this registration rights agreement, the stockholders are entitled to an unlimited number
of additional shelf registrations, except that we are not obligated to effect any shelf
registration within 120 days after the effective date of a previous registration statement (other
than registrations on Form S-4 for exchange offers and Form S-8 for employee benefit plans, or
forms for similar purposes).
In addition, under the registration rights agreement, Wachovia Investors, Inc. and any of its
permitted transferees are entitled to demand a total of three registrations, and another group of
institutional stockholders of Old COMSYS (and their permitted transferees) are entitled to demand
one registration.
If we receive a request for a demand registration and our Board of Directors determines that
it would be in the best interest of our company to have an underwritten primary registration of our
securities, we may satisfy the demand registration by having a primary registration of our common
stock for our own account, so long as we offer the stockholders party to the registration rights
agreement piggyback rights to join in our registration.
We are obligated to pay all expenses incurred in connection with registrations pursued under
the terms of the registration rights agreement, whether or not these registrations are completed.
The selling stockholders are obligated to pay all underwriting discounts and commissions with
respect to the shares they are selling for their own
accounts. Under the registration rights agreement, we also agreed to indemnify the
stockholders and their affiliated and controlling parties for violations of federal and state
securities laws and regulations, including material misstatements and omissions in the offering
documents with respect to any registration, except with respect to any information furnished in
writing to us by a stockholder expressly for use in the registration statement or any holders
failure to deliver a prospectus timely supplied by us that corrected a previous material
misstatement or omission. In the event indemnification is unavailable to a party, or insufficient
to hold the party harmless, we have further agreed to contribute to the losses incurred by the
party.
Also in connection with the merger, we made conforming amendments to our existing registration
rights agreement with the holders of our common stock and warrants received in connection with our
April 2003 restructuring, as further amended effective April 1, 2005. Under this agreement, we are
obligated to register approximately 5,785,000 shares of our common stock. The holders of such
registration rights also participated in our shelf registration that was declared effective by the
SEC on July 20, 2005.
Severance Agreements and Related Arrangements
A description of certain severance agreements and related arrangements with Michael T. Willis
and Margaret G. Reed, our former executive officers, who resigned at the beginning of fiscal 2005,
is set forth under the caption Executive CompensationSeverance Agreements.
28
Proposal
to Ratify the Appointment of Our Independent Auditors
(Item 2 on the Proxy Card)
What am I voting on?
You are voting on a proposal to ratify the appointment of Ernst & Young LLP as our independent
auditors for the fiscal year ending December 31, 2006. The Audit Committee has appointed Ernst &
Young LLP to serve as our independent auditors.
What services do the independent auditors provide?
PricewaterhouseCoopers LLP served as our independent auditor and provided audit services for
fiscal years 2003 and 2004 until its dismissal on October 21, 2004, effective upon completion of
services related to the review of our Form 10-Q for the quarter ended September 26, 2004. At that
time, we engaged Ernst & Young LLP to serve as our independent auditor. Ernst & Young also served
as our independent auditor and provided the services described below in fiscal 2005. Prior to this
engagement, Ernst & Young LLP served as the independent registered public accounting firm for Old
COMSYS. Our Audit Committee participated in and approved the decision to change our independent
registered public accounting firm. During our two most recent fiscal years and any subsequent
interim periods preceding PricewaterhouseCoopers LLPs dismissal, there were no disagreements
between us and PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure.
Audit services of PricewaterhouseCoopers LLP for fiscal 2004 (until its dismissal in October
2004) included audits of our consolidated financial statements and services related to periodic
filings made with the SEC. Additionally, until its dismissal, PricewaterhouseCoopers LLP provided
certain services related to the consolidated quarterly reports and annual and other periodic
reports and other services as described below. Since its engagement in October 2004, Ernst & Young
LLP has provided certain services related to the audits of our consolidated financial statements,
our periodic filings made with the SEC, services related to various registration statements filed
by us with the SEC and other services as described below.
How much were the independent auditors fees for 2004 and 2005?
PricewaterhouseCoopers LLPs fees billed for professional services totaled $969,223 for 2004
and $0 for 2005. PricewaterhouseCoopers LLPs fees billed for professional services were as
follows:
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Audit Servicesfees for audit services, which relate
to the fiscal year consolidated audit (for 2003 only), the
review of the financial statements included in our
quarterly reports on Form 10-Q for the first three fiscal
quarters of 2004, and the services that are normally
provided by the independent auditors in connection with
our statutory and regulatory filings, were $256,047 in
2004 and $0 in 2005. |
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Audit-Related Servicesfees for audit-related services,
consisting of audits in connection with proposed or consummated
acquisitions or dispositions or restructuring advisory services,
including the merger in fiscal 2004, executive compensation,
accounting consultations and related services, were $480,889 in 2004
and $0 in 2005. |
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Tax Servicesfees for tax services, consisting of tax compliance
services and tax planning and advisory services, were $232,287 in 2004
and $0 in 2005. |
The Audit Committee pre-approved all of the fees listed above. The Audit Committee has
considered whether the non-audit services provided to us by PricewaterhouseCoopers LLP impaired the
independence of PricewaterhouseCoopers LLP and concluded that they did not.
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Since its engagement in October 2004, Ernst & Young LLPs fees billed for professional
services totaled $651,272 for 2004 (see Note 1 below) and $1,907,770 for 2005 (see Note 2 below).
Ernst & Youngs LLPs fees billed for professional services were as follows:
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Audit Servicesfees for audit services, which relate
to the fiscal year consolidated audits for 2004 and 2005,
the review of the financial statements included in our
quarterly reports on Form 10-Q for the third quarter 2004
and the first three fiscal quarters of 2005 and related
earnings releases, various registration statements filed
by us with the SEC and other documents issued in
connection with securities offerings in 2004 and 2005,
and other services that are normally provided by the
independent auditors in connection with our statutory and
regulatory filings, were $648,572 for 2004 (see Note 1
below) and $1,598,486 for 2005 (see Note 2 below). |
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Audit-Related Servicesfees for audit-related services,
consisting of assurance and related services in connection with
acquisitions were $2,700 in 2004 and $75,425 in 2005 (see Note 2
below). |
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Tax Servicesfees for tax services, consisting of tax compliance
services and tax planning and advisory services, were $0 in 2004 and
$233,859 in 2005. |
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Our definitive proxy statement filed with the SEC on May 2,
2005 in connection with the 2005 Annual Meeting of
Stockholders stated that Ernst & Young LLPs fees billed
for professional services totaled $214,200 for 2004, which
consisted of $211,500 billed for 2004 audit fees and $2,700
billed in 2004 for audit-related fees. The previously
disclosed amounts did not include an aggregate of $437,072
of audit fees for 2004 that were billed by Ernst & Young
LLP or processed by us subsequent to our filing of the 2005
proxy statement. |
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Our Amendment No. 1 to the Annual Report on Form 10-K filed
with the SEC on May 1, 2006 stated that Ernst & Young LLPs
fees billed for professional services totaled $1,501,721
for 2005, which consisted of $1,198,437 billed for 2005
audit fees, $69,425 billed in 2005 for audit-related fees
and $233,859 billed in 2005 for tax services. The
previously disclosed amounts did not include an aggregate
of $406,049 for 2005 audit fees that were either billed by
Ernst & Young LLP or processed or agreed to by us
subsequent to our filing of Amendment No. 1 to our Form
10-K. In addition, an aggregate of $6,000 was reallocated
by us from 2005 audit fees to 2005 audit-related fees
subsequent to the filing of Amendment No. 1 to our Form
10-K. |
The Audit Committee has considered whether the non-audit services provided to us by Ernst &
Young LLP impaired the independence of Ernst & Young LLP and concluded that they did not.
The Audit Committee has adopted a pre-approval policy that provides guidelines for the audit,
audit-related, tax and other non-audit services that may be provided by the independent auditors to
the Company. The policy (a) identifies the guiding principles that must be considered by the Audit
Committee in approving services to ensure that independent auditors independence is not impaired;
(b) describes the audit, audit-related, tax and other services that may be provided and the
non-audit services that are prohibited; and (c) sets forth pre-approval requirements for all
permitted services. Under the policy, all services to be provided by our independent auditors must
be pre-approved by the Audit Committee. The Audit Committee pre-approved all of the fees listed
above that we incurred for services rendered by our independent auditors in fiscal 2004 and 2005.
Will a representative of Ernst & Young be present at the meeting?
Yes, one or more representatives of Ernst & Young LLP will be present at the meeting. The
representatives will have an opportunity to make a statement if they desire and will be available
to respond to appropriate questions from the stockholders.
What vote is required to approve this proposal?
Stockholder ratification of the appointment of our independent auditors is not required by the
Companys bylaws or otherwise. However, we are submitting this proposal to the stockholders as a
matter of good corporate
practice. Approval of this proposal requires the affirmative vote of a majority of the votes
cast on the proposal. If the appointment of Ernst & Young LLP is not ratified, the Audit Committee
will reconsider the appointment. Even if the appointment is ratified, the Audit Committee in its
discretion may direct the appointment of a different independent audit firm at any time during the
year if it is determined that such change would be in best interests of the Company and its
stockholders.
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What does the Board recommend?
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
LLP AS THE COMPANYS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2006.
Solicitation by Board; Expenses of Solicitation
Our Board of Directors has sent you this proxy statement. Our directors, officers and
employees may solicit proxies by mail, by telephone or in person. Those persons will receive no
additional compensation for any solicitation activities. We will request banking institutions,
brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials
to the beneficial owners of common stock held of record by those entities, and we will, upon the
request of those record holders, reimburse reasonable forwarding expenses. We will pay the costs
of preparing, printing, assembling and mailing the proxy material used in the solicitation of
proxies.
Submission of Future Stockholder Proposals
Under SEC rules, a stockholder who intends to present a proposal, including the
nomination of directors, at the 2007 Annual Meeting of Stockholders and who wishes the proposal to
be included in the proxy statement for that meeting must submit the proposal in writing to our
Corporate Secretary. The proposal must be received no later than March 1, 2007.
Stockholders who wish to propose a matter for action at the 2007 Annual Meeting, including the
nomination of directors, but who do not wish to have the proposal or nomination included in the
proxy statement, must notify the Company in writing of the information required by the provisions
of our by-laws dealing with stockholder proposals. The notice must be delivered to our Corporate
Secretary between March 28, 2007 and April 27, 2007. You can obtain a copy of our bylaws by
writing the Corporate Secretary at the address below, or via the Internet at www.comsys.com under
our Corporate Governance caption.
All written proposals should be directed to Ken R. Bramlett, Jr., Corporate Secretary, COMSYS
IT Partners, Inc., 4400 Post Oak Parkway, Suite 1800, Houston, Texas 77027.
The Governance and Nominating Committee is responsible for selecting and recommending director
candidates to our Board of Directors, and will consider nominees recommended by stockholders. For
information on the nominating process, see the section entitled Nominating Process for Directors
of this proxy statement.
Availability of Form 10-K and Annual Report to Stockholders
SEC rules require us to provide an Annual Report to stockholders who receive this proxy
statement. Additional copies of the Annual Report, along with copies of our Annual Report on Form
10-K for the fiscal year ended January 1, 2006, including the financial statements and the
financial statement schedules, are available without charge to stockholders upon written request to
Ken R. Bramlett, Jr., Corporate Secretary, COMSYS IT Partners, Inc., 4400 Post Oak Parkway, Suite
1800, Houston, Texas 77027, or via the Internet at www.comsys.com. We will furnish the exhibits to
our Annual Report on Form 10-K upon payment of our copying and mailing expenses.
Other Matters
The Board of Directors does not intend to present any other items of business other than
those stated in the Notice of Annual Meeting of Stockholders. If other matters are properly
brought before the meeting, the persons named as your proxies will vote the shares represented by
it in accordance with their best judgment. Discretionary authority to vote on other matters is
included in the proxy .
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PROXY CARD
COMSYS IT PARTNERS, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS: JULY 27, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry L. Enterline, Joseph C. Tusa, Jr. and Ken R. Bramlett,
Jr. (together, the Proxies), and each of them, with full power of substitution, as proxies to
vote the shares that the undersigned is entitled to vote at the Annual Meeting of Stockholders of
COMSYS IT Partners, Inc. (the Company) to be held at the St. Regis Hotel, 1919 Briar Oaks Lane,
Houston, Texas 77027, on July 27, 2006, at 9:30 a.m. (local time) and at any adjournments and
postponements thereof. Such shares shall be voted as indicated with respect to the proposals
listed on the reverse side hereof and in the Proxies discretion on such other matters as may
properly come before the meeting or any adjournment or postponement thereof.
(Continued and to be signed on the reverse side.)
PROXY CARD
ANNUAL MEETING OF STOCKHOLDERS OF
COMSYS IT PARTNERS, INC.
July 27, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
6 Please detach along perforated line and mail in the envelope provided. 6
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS UNDER PROPOSAL 1 AND FOR PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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WITHHOLD |
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NOMINEES |
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ELECTION OF DIRECTORS:
NOMINEES:
¡ Larry L. Enterline
¡ Frederick W. Eubank II
¡ Robert Fotsch
¡ Victor E. Mandel
¡ Courtney R. McCarthy
¡ Kevin M. McNamara
¡ Elias J. Sabo
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INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here: l
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To change the address on your account, please check the box at right and indicate
your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via
this method. ¨
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2.
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Proposal to ratify the appointment of Ernst & Young LLP as the
Companys independent auditors for the fiscal year ending December 31, 2006. |
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AGAINST
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ABSTAIN
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PLEASE MARK THIS PROXY AS INDICATED HEREIN TO VOTE ON ANY ITEM. THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, OR IF NO SUCH DIRECTION IS INDICATED HEREIN, IN ACCORDANCE WITH THE RECOMMENDATION
OF THE BOARD OF DIRECTORS ON EACH PROPOSAL. |
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Signature of Stockholder
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Signature of Stockholder |
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NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a partnership,
please sign in the partnership name by authorized person.