SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
CENTURY BUSINESS SERVICES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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CENTURY BUSINESS SERVICES, INC.
6050 OAK TREE BOULEVARD SOUTH, SUITE 500
CLEVELAND, OH 44131
April 9, 2004
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Century Business Services, Inc., which will be held on Friday, May 27, 2004, at
11:00 a.m. EDT, at The Embassy Suites Hotel, 5800 Rockside Woods Boulevard
North, Independence, Ohio 44131.
The matters to be considered at the meeting are described in the formal
notice and proxy statement on the following pages.
We encourage your participation at this meeting. Whether or not you plan to
attend in person, it is important that your shares be represented at the
meeting. Please review the proxy statement and sign, date and return your proxy
card in the enclosed envelope as soon as possible.
If you attend the meeting and prefer to vote in person, your proxy card can
be revoked at your request.
We appreciate your confidence in Century Business Services, Inc. and look
forward to the chance to visit with you at the meeting.
Very truly yours,
CENTURY BUSINESS SERVICES, INC.
/s/ Steven L. Gerard
Steven L. Gerard, Chairman of the
Board
CENTURY BUSINESS SERVICES, INC.
6050 OAK TREE BOULEVARD SOUTH, SUITE 500
CLEVELAND, OHIO 44131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 2004
TO THE STOCKHOLDERS OF CENTURY BUSINESS SERVICES, INC.:
The Annual Meeting of Stockholders of Century Business Services, Inc. will
be held on May 27, 2004, at 11:00 a.m. EDT, at The Embassy Suites Hotel, 5800
Rockside Woods Boulevard North, Independence, Ohio 44131, for the following
purposes:
1. To elect two (2) of a class of two (2) Directors to the Board of
Directors of Century with terms expiring at the Annual Meeting in 2007;
2. To ratify the appointment of KPMG LLP as Century's independent
accountants for 2004; and,
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record on April 9, 2004 will be entitled to vote at
the meeting.
You are cordially invited to attend the Annual Meeting. Your vote is
important. WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, YOU ARE URGED TO SIGN,
DATE AND MAIL THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE SO THAT YOUR SHARES
MAY BE REPRESENTED AND VOTED. The envelope enclosed requires no postage if
mailed within the United States. If you attend the meeting and prefer to vote in
person, your proxy card can be revoked at your request.
By Order of the Board of Directors,
/s/ Michael W. Gleespen
Michael W. Gleespen, Corporate
Secretary
Cleveland, Ohio
April 9, 2004
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE
TABLE OF CONTENTS
PAGE
----
Voting Rights and Solicitation.............................. 3
Proposal No. 1 -- Election of Directors..................... 4
Proposal No. 2 -- Ratification of Appointment of Independent
Accountants............................................... 6
Security Ownership of Certain Beneficial Owners and
Management................................................ 6
Report of the Compensation Committee on Executive
Compensation.............................................. 10
Report of the Audit Committee............................... 12
Executive Compensation...................................... 15
Certain Relationships and Related Transactions.............. 17
Stockholder Return Performance Presentation................. 19
Section 16(a) Beneficial Ownership Reporting Compliance..... 19
Stockholder Proposals....................................... 20
Expenses of Solicitation.................................... 20
Other Matters............................................... 21
2
CENTURY BUSINESS SERVICES, INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
----------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Century Business Services, Inc. ("Century" or "CBIZ")
of proxies to be voted at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Thursday, May 27, 2004, and any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. The mailing of this proxy statement and
accompanying form of proxy to stockholders will commence on or about April 16,
2004.
VOTING RIGHTS AND SOLICITATION
Shares represented by properly executed proxies received on behalf of
Century will be voted at the meeting in the manner specified therein. If no
instructions are specified in a proxy returned to Century, the shares
represented thereby will be voted in favor of the election of the directors
listed in the enclosed proxy, and in favor of the appointment of KPMG LLP as
independent accountants for 2004. Any proxy may be revoked by the person giving
it at any time prior to being voted by attendance at the meeting or submitting a
subsequently signed and dated proxy.
Mr. Joseph S. DiMartino and Mr. Todd J. Slotkin are designated as proxy
holders in the proxy card. They will vote for the election as directors of Mr.
Rick L. Burdick and Mr. Steven L. Gerard, who have been proposed by the Board of
Directors, and for the ratification of the appointment of KPMG LLP as Century's
independent accountants for 2004. If any other matters are properly presented at
the Annual Meeting for consideration, the proxy holders will have discretion to
vote on such matters in accordance with their best judgment. The Board of
Directors knows of no other matters to be presented at the meeting.
The Board of Directors established April 9, 2004 as the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting. On the record date, Century had 78,346,083 shares of voting common
stock issued and outstanding. The common stock is the only class of capital
stock Century has outstanding. Only stockholders of record at the close of
business on the record date will be entitled to vote at the Annual Meeting. Each
share of common stock is entitled to one vote on each matter presented. The
holders of a majority of the total shares issued and outstanding, whether
present in person or represented by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting.
Abstentions and broker non-votes are counted for purposes of determining
whether a quorum is present for the transaction of business. Abstentions are
counted in tabulations, but not as an affirmative vote, of the votes cast on
proposals presented to stockholders. Broker non-votes, on the other hand, are
not counted for purposes of determining whether a proposal has been approved.
The affirmative vote of the holders of a majority of the votes cast at the
meeting is necessary for the election of directors and for approval of any other
matter scheduled for vote.
3
ELECTION OF DIRECTORS
PROPOSAL NO. 1 (ITEM 1 ON PROXY CARD)
Century's Certificate of Incorporation divides the Board of Directors into
three classes of directors, with one class to be elected for a three-year term
at each annual meeting of stockholders. The Board of Directors currently
consists of eight members, with two members' terms expiring at this Annual
Meeting. If elected at the Annual Meeting, the nominees listed below will serve
until the Annual Meeting of Stockholders in 2007, or until their successors are
duly elected and qualified. All other directors will continue as such for the
term to which they were elected. Although the Board of Directors does not
contemplate that any of the nominees will be unable to serve, if such a
situation arises prior to the Annual Meeting, the persons named in the enclosed
proxy will vote for the election of another person as may be nominated by the
Board of Directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors, upon nomination by the Nominating and Governance
Committee, recommends a vote FOR the election of the nominees for election as
directors listed below.
DIRECTORS STANDING FOR ELECTION
EXPIRATION OF
PROPOSED
NAME AGE SINCE TERM
---- --- ----- -------------
Rick L. Burdick............................................. 52 1997 2007
Steven L. Gerard............................................ 58 2000 2007
DIRECTORS WHOSE TERMS CONTINUE
EXPIRATION OF
CURRENT
NAME AGE SINCE TERM
---- --- ----- -------------
Joseph S. DiMartino......................................... 60 1997 2005
Richard C. Rochon........................................... 46 1996 2005
Donald V. Weir.............................................. 62 2003 2005
Harve A. Ferrill............................................ 71 1996 2006
Gary W. DeGroote............................................ 48 2002 2006
Todd J. Slotkin............................................. 51 2003 2006
Set forth below is biographical information for the individuals nominated
to serve as directors and each person whose term of office as a director will
continue after the Annual Meeting.
NOMINEES FOR DIRECTORS
Rick L. Burdick has served as a Director of Century since October 1997,
when he was elected as an outside director. In October 2002, he was elected by
the Board as Vice Chairman, a non-officer position. Mr. Burdick has been a
partner at the law firm of Akin Gump Strauss Hauer & Feld LLP since April 1988.
Mr. Burdick also serves on the Board of Directors of AutoNation, Inc.
Steven L. Gerard was elected by the Board of Directors to serve as its
Chairman on October 10, 2002, following the resignation of Michael G. DeGroote
for health reasons. He was appointed Chief Executive Officer and Director on
October 12, 2000. Mr. Gerard was Chairman and CEO of Great Point Capital, Inc.,
a provider of operational and advisory services from 1997 to October 2000. From
1991 to 1997, he was Chairman and CEO of Triangle Wire & Cable, Inc. and its
successor, Ocean View Capital, Inc. Mr. Gerard's prior experience includes 16
years with Citibank, N.A. in various senior corporate finance and banking
positions, including ultimately Senior Managing Director, responsible for the
risk management of Citibank's commercial and investment banking activities in
the United States, Europe, Australia and Japan. Further, Mr. Gerard served seven
years with
4
the American Stock Exchange, where he last served as Vice President of the
Securities Division. Mr. Gerard also serves on the Boards of Directors of The
Fairchild Corporation, Lennar Corporation, Joy Global, Inc. and TIMCO Aviation
Services, Inc.
CONTINUING DIRECTORS
Joseph S. DiMartino has served as a Director of Century since November
1997, when he was elected as an independent director. Mr. DiMartino has been
Chairman of the Board of The Dreyfus Family of Funds since January 1995. Mr.
DiMartino served as President, Chief Operating Officer and Director of The
Dreyfus Corporation from October 1982 until December 1994 and also served as a
director of Mellon Bank Corporation. Mr. DiMartino also serves on the Boards of
Directors of The Newark Group, LEVCOR International, Inc. (formerly Carlyle
Industries, Inc), and the Muscular Dystrophy Association.
Richard C. Rochon has served as a Director of Century since October 1996,
when he was elected as an independent director. Mr. Rochon is Chairman and CEO
of Royal Palm Capital Partners, a private investment and management fund. From
1985 to February 2002, Mr. Rochon served in various capacities with, and most
recently as President of, Huizenga Holdings, Inc., a management and holding
company owned by H. Wayne Huizenga. Mr. Rochon also has served as a director,
since September 1996, and as Vice Chairman since April 1997, of Boca Resorts,
Inc., an owner and operator of luxury resort properties in South Florida. Mr.
Rochon also serves on the Board of Directors of Citizens Bancshares of South
Florida. From 1979 until 1985 Mr. Rochon was employed as a certified public
accountant by the public accounting firm of Coopers & Lybrand, L.L.P. Mr. Rochon
also serves on the Board of Directors of Citizens Bancshares of South Florida.
Donald V. Weir has served as a Director of Century since September 2, 2003,
when he was elected as an independent director. Mr. Weir has served as financial
consultant with Sanders Morris Harris for the past four years. Prior to this,
Mr. Weir was CFO and director of publicly-held Deeptech International and two of
its subsidiaries, Tatham Offshore and Leviathan Gas Pipeline Company, the latter
of which was a publicly-held company. Prior to his employment with Deeptech, Mr.
Weir worked for eight years with Sugar Bowl Gas Corporation, as Controller and
Treasurer and later in a consulting capacity. Mr. Weir was associated with Price
Waterhouse, an international accounting firm, from 1966 to 1979.
Harve A. Ferrill has served as a Director of Century since October, 1996,
when he was elected as an independent director. Mr. Ferrill served as Chief
Executive Officer and Chairman of Advance Ross Corporation, a company that
provides tax refunding services from 1992 to 1996. Mr. Ferrill served as
President of Advance Ross Corporation from 1990 to 1992. Since 1996, Advance
Ross Corporation has been a wholly-owned subsidiary of Cendant Corporation. Mr.
Ferrill has served as President of Ferrill-Plauche Co., Inc., a private
investment company, since 1982.
Gary W. DeGroote has served as a Director of Century since October, 2002,
when he was elected as an outside director. Mr. DeGroote is the President of GWD
Management, Inc., a private Canadian diversified investment holding company
founded in 1980 with an office in Burlington, Ontario. Mr. DeGroote also serves
as a Director and Officer of other private companies. From 1976 to 1989, Mr.
DeGroote held several positions with Laidlaw, Inc., a public waste services and
transportation company, ending as Vice-President and Director in 1989. From 1991
to 1994, Mr. DeGroote served as President of Republic Environmental Systems
Ltd., and Director of Republic Industries, Inc. He is currently a Director of
Capital Environmental Resources Inc.
Todd J. Slotkin has served as a Director of Century since September 2,
2003, when he was elected as an independent director. Mr. Slotkin serves as
Executive Vice President and CFO of MacAndrews and Forbes Holdings, and as
Executive Vice President and CFO of publicly owned MYF Worldwide (NYSE:MFW).
Prior to joining MacAndrews & Forbes in 1992, Mr. Slotkin spent 17 years with
Citicorp, ultimately serving as senior managing director and senior credit
officer. Mr. Slotkin serves on the Board of Directors of TransTech Pharma,
formerly served as director of CalFed Bank, and is Chairman and co-founder of
the Food Allergy Institute.
5
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PROPOSAL NO. 2 (ITEM 2 ON PROXY CARD)
The Audit Committee of the Board of Directors has approved, appointed, and
recommends the ratification of KPMG LLP, independent accountants, to audit the
consolidated financial statements of Century and its subsidiaries for the year
ending December 31, 2004. This appointment was made subject to the approval of
Century's stockholders. KPMG LLP has been serving Century in this capacity since
1997. Century has been advised that no member of KPMG LLP has any direct
financial interest or material indirect financial interest in Century or any of
its subsidiaries or, during the past three years, has had any connection with
Century or any of its subsidiaries in the capacity of promoter, underwriter,
voting trustee, director, officer or employee. Century has been advised that no
other relationship exists between KPMG LLP and Century that impairs KPMG's
status as independent accountants with respect to Century within the meaning of
the Federal securities laws administered by the Securities and Exchange
Commission and the requirements of the Independence Standards Board.
Representatives of KPMG LLP will be present at the Annual Meeting and will
have the opportunity to make a statement, if they so desire, and respond to
appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the ratification by the
stockholders of this appointment.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership of Century common stock
as of April 9, 2004, by (1) each person known by Century to own beneficially 5%
or more of Century's common stock, (2) each director, (3) each executive officer
named in the Summary Compensation Table (see "Executive Compensation") and (4)
all directors and executive officers of Century as a group.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER(1) OWNERSHIP(2) OF CLASS
---------------------- ------------ --------
Michael G. DeGroote(3)...................................... 15,186,198(4) 19.38%
Steven L. Gerard............................................ 1,264,329(5) 1.61%
Rick L. Burdick............................................. 144,034(6) *
Gary W. DeGroote............................................ 188,100(7) *
Joseph S. DiMartino......................................... 95,000(8) *
Harve A. Ferrill............................................ 67,500(9) *
Richard C. Rochon........................................... 115,000(10) *
Todd J. Slotkin............................................. 50,000(11) *
Donald V. Weir.............................................. 50,000(12) *
Jerome P. Grisko, Jr. ...................................... 346,921(13) *
Ware H. Grove............................................... 115,000(14) *
Leonard Miller.............................................. 161,644(15) *
Robert O'Byrne.............................................. 419,727(16) *
All directors and executive officers as a group (12
persons).................................................. 3,017,255 3.85%
Total Shares Outstanding 78,346,083
---------------
* Represents less than 1% of total number of outstanding shares.
(1) Except as otherwise indicated in the notes below, the mailing address of
each entity, individual or group named in the table is 6050 Oak Tree
Boulevard, South, Suite 500, Cleveland, Ohio 44131, and each person
6
named has sole voting and investment power with respect to the shares of
common stock beneficially owned by such person.
(2) Share amounts and percentages shown for each person in the table include
shares of common stock that are not outstanding but may be acquired upon
exercise of all options exercisable within 60 days of April 9, 2004.
(3) Mr. Michael G. DeGroote beneficially owns his shares of common stock
through Westbury (Bermuda) Ltd., a Bermuda corporation controlled by him.
Westbury (Bermuda) Ltd. is located at Victoria Hall, 11 Victoria Street, P.
O. Box HM 1065, Hamilton, HMEX Bermuda.
(4) Consists of 15,186,198 shares of common stock owned of record by Westbury
(Bermuda) Ltd., and options to purchase 55,000 shares of common stock
granted to Mr. DeGroote under the Amended and Restated Century Business
Services, Inc. 2002 Stock Incentive Plan (the "Century Option Plan") that
are exercisable within 60 days of April 9, 2004.
(5) Consists of 14,329 shares of common stock owned of record by Mr. Gerard and
options to purchase 1,250,000 shares of common stock granted to Mr. Gerard
under the Century Option Plan which are exercisable within 60 days of April
9, 2004.
(6) Consists of 9,034 shares of common stock owned of record by Mr. Burdick and
options to purchase 135,000 shares of common stock granted under the
Century Option Plan that are exercisable within 60 days of April 9, 2004.
(7) Consists of 21,100 shares of common stock owned of record by GWD
Management, Inc., of which Mr. DeGroote is the sole director and
shareholder; 112,000 shares of common stock held in a fixed irrevocable
trust and options to purchase 55,000 shares of common stock granted under
the Century Option Plan that are exercisable within 60 days of April 9,
2004. Gary W. DeGroote is the son of Michael G. DeGroote, who is the
beneficial owner of greater than 10% of outstanding Century common stock.
(8) Consists of 35,000 shares of common stock owned of record by Mr. DiMartino
and options to purchase 60,000 shares of common stock granted under the
Century Option Plan that are exercisable within 60 days of April 9,2004.
(9) Consists of 7,500 shares of common stock owned of record by The Harve A.
Ferrill Trust U/A 12/31/69 and options to purchase 60,000 shares of common
stock granted under the Century Option Plan that are exercisable within 60
days of April 9, 2004.
(10) Consists of 55,555 shares of common stock owned of record by WeeZor I
Limited Partnership, a limited partnership controlled by Mr. Rochon, and
options to purchase 60,000 shares of common stock granted to Mr. Rochon
under the Century Option Plan that are exercisable within 60 days of April
9, 2004.
(11) Consists of options to purchase 50,000 shares of common stock granted to
Mr. Slotkin under the Century Option Plan that are exercisable within 60
days of April 9, 2004.
(12) Consists of options to purchase 50,000 shares of common stock granted to
Mr. Weir under the Century Option Plan that are exercisable within 60 days
of April 9, 2004.
(13) Consists of 3,921 shares of common stock owned of record by Mr. Grisko and
options to purchase 343,000 shares of common stock granted under the
Century Option Plan that are exercisable within 60 days of April 9, 2004.
(14) Consists of 6,000 shares of common stock owned of record by Mr. Grove and
options to purchase 109,000 shares of common stock granted under the
Century Option Plan that are exercisable within 60 days of April 9, 2004.
(15) Consists of 53,644 shares of common stock owned of record by Mr. Miller,
60,000 shares of common stock owned of record by the Miller Family
Partnership, and options to purchase 68,000 shares of common stock granted
under the Century Option Plan that are exercisable within 60 days of April
9, 2004.
(16) Consists of 265,017 shares of common stock owned of record by Mr. O'Byrne,
options to purchase 135,240 shares of common stock granted under the
Century Option Plan held in Mr. O'Byrne's name and 42,010 shares of common
stock held by MRCP, L.C., a Missouri Limited Company in which Mr. O'Byrne
has a 25% interest, all of which are exercisable within 60 days of April 9,
2004.
7
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducted four regular meetings and one telephonic
meeting during 2003. In addition, there was one Unanimous Written Consent in
Lieu of a Meeting of the Board of Directors dated March 24, 2003. Each director
attended in person at least 75% of the aggregate of all meetings of the Board
and Committees of the Board, in accordance with the Company's expectations. The
Company does not have a formal policy regarding directors' attendance at annual
stockholders meetings. Nevertheless, the Company strongly encourages and prefers
that directors attend regular and special board meetings as well as the annual
meeting of stockholders in person, although attendance by teleconference is
considered adequate. The Company recognizes that attendance of the Board members
at all meetings may not be possible, and excuses absences for good cause.
Communication with the Board of Directors. Security holders are permitted
to communicate with the members of the Board by forwarding written
communications to the CBIZ Corporate Secretary at the company's headquarters in
Cleveland. The Corporate Secretary will present all communications, as received
and without screening, to the Board at its next regularly scheduled meeting.
Committees of the Board of Directors. The Board of Directors has an Audit
Committee, a Compensation Committee, a Nominating and Governance Committee, and
an Executive Management Committee, all of which were active during 2003. The
Board of Directors has determined that all members of the Audit Committee,
Compensation Committee and Nominating and Governance Committee meet the
definition of "independence" set forth in Rule 4200(a)(15) of the NASDAQ Stock
Market listing standards. The following is a description of the committees of
the Board of Directors:
The members of the Audit Committee are Messrs. Ferrill (Chairman), Rochon,
and Weir. Century's Board of Directors has determined that the Audit Committee
members meet the independence standards set forth in Rule 10A-3(b)(1) of the
Securities Exchange Act of 1934, as amended. In addition, the Board has
determined that Mr. Rochon and Mr. Weir are "audit committee financial experts,"
as that term is defined by the rules and regulations of the Securities and
Exchange Commission (the "SEC"), and meet the financial sophistication
requirements of the NASDAQ Stock Market. The Audit Committee conducted three
regular meetings and eight special telephonic meetings during 2003. In addition,
consent for one Action in Writing in Lieu of a Meeting of the Audit Committee
was granted. The Audit Committee appoints the Company's independent accountants
and reviews issues raised by the accountants as to the scope of their audit and
their audit report, including questions and recommendations that arise relating
to Century's internal accounting and auditing control procedures. The Audit
Committee operates under a written Charter adopted by the Board of Directors, a
copy of which is available on the Investor Relations page of the Company's
website, www.cbiz.com, or by writing to us at Attention: Investor Relations
Department, 6050 Oak Tree Boulevard South, Suite 500, Cleveland, Ohio 44131.
The members of the Compensation Committee are Messrs. DiMartino (Chairman),
Rochon and Slotkin. The Compensation Committee conducted four regular meetings
during 2003. The Compensation Committee reviews and makes recommendations to the
Board of Directors with respect to compensation of Century's executive officers,
including salary, bonus and benefits. The Compensation Committee also
administers Century's incentive-compensation plans and equity-based plans. The
Charter of the Compensation Committee is available on the Investor Relations
page of the Company's website, www.cbiz.com, or by writing to us at Attention:
Investor Relations Department, 6050 Oak Tree Boulevard South, Suite 500,
Cleveland, Ohio 44131.
The Nominating and Governance Committee was created by the Board on
February 12, 2003, and its duties were established in its Charter adopted at
that time. The Committee was formed to propose and recommend candidates for the
Board, review Board committee responsibilities and composition, review the
effectiveness of the Board and of Company management, and to monitor the
Company's corporate governance policies and practices. The Committee's Charter
is available on the Investor Relations page of the Company's website,
www.cbiz.com, or by writing to us at Attention: Investor Relations Department,
6050 Oak Tree Boulevard South, Suite 500, Cleveland, Ohio 44131
Upon establishment, the Nominating and Governance Committee consisted of
Messrs Burdick (Chairman), Ferrill and DiMartino, and undertook the process of
identifying suitable and willing candidates to fill the Company's need for
additional independent directors under anticipated SEC rules, NASDAQ Stock
Market
8
standards, as well as pursuant to principles of good corporate governance.
Following an extended search process conducted by the Committee and with the
assistance of Mr. Gerard, on July 31, 2003, the Committee recommended the
expansion of the Board to eight members, and the appointment of Messrs. Slotkin
and Weir to the Board. The nominations originated within the Committee and were
based upon suggestions by Board members. No third party was involved in the
nominating process or paid a fee to assist in identifying and evaluating
nominees. The Board as a whole concurred and expanded the size of the Board and
offered appointments to Messrs. Slotkin and Weir at its meeting held on July 31,
2003. Following the acceptance of their appointment, and the reconstitution of
the Nominating and Governance Committee with all of the independent directors
completed by the Board on November 4, 2003, the Committee now consists of
Messrs. Burdick (Chairman), DiMartino, Ferrill, Rochon, Slotkin and Weir. The
Committee conducted one regular meeting in 2003 and approved one Unanimous
Written Consent in Lieu of Meeting. No candidates were recommended by beneficial
owners of more than 5% of the company's voting common stock within the last
year.
The Committee's process for identifying and evaluating candidates to be
nominated as directors consists of reviewing with the Board the desired
experience, mix of skills and other qualities to assure appropriate Board
composition; conducting candidate searches and inquiries; recommending to the
Board, with the input of the Chief Executive Officer, qualified candidates for
the Board who bring the background, knowledge, experience, skill sets and
expertise that would strengthen the Board; and selecting appropriate candidates
for nomination. The Nominating and Governance Committee and the Board have
determined that a director should have the following characteristics: (1) the
ability to comprehend the strategic goals of the Company and to help guide the
Company towards the accomplishment of those goals; (2) a history of conducting
his/her personal and professional affairs with the utmost integrity and
observing the highest standards of values, character and ethics; (3) the
availability for in-person or telephonic participation in Board or Committee
meetings, as well as the Annual Meeting of shareholders; (4) the willingness to
demand that the Company's officers and employees insist upon honest and ethical
conduct throughout the Company; (5) knowledge of, and experience with regard to
at least some of: real estate properties, loans and securities, including any
lending and financing activities related thereto, public company regulations
imposed by the Securities and Exchange Commission and the NASDAQ Stock Exchange,
amongst others, portfolio and risk management, the major geographic locations
within which the Company operates, sound business practices, accounting and
financial reporting, and one or more of the principal lines of business in which
the Company is engaged; and, (6) the ability to satisfy criteria for
independence established by the Securities and Exchange Commission and the
NASDAQ Stock Exchange, as they may be amended from time to time.
The Nominating and Governance Committee will consider any candidate
recommended by a shareholder, provided that the shareholder mails a
recommendation to the Corporate Secretary at the Company's Headquarters, prior
to the deadline for Stockholder Proposals, that contains the following: (1) the
recommending shareholder's name and contact information; (2) the candidate's
name and contact information; (3) a brief description of the candidate's
background and qualifications; (4) the reasons why the recommending shareholder
believes the candidate would be well suited for the Board; (5) a statement by
the candidate that the candidate is willing and able to serve on the Board; (6)
a statement by the recommending shareholder that the candidate meets the
criteria established by the Board; and, (7) a brief description of the
recommending shareholder's ownership of common stock of the Company and the term
during which such shares have been held. In making its discretionary
determination whether to nominate a candidate who had been recommended by a
shareholder, the Nominating and Governance Committee will consider, among other
things, (a) the appropriateness of adding another director to the Board, or of
replacing a currently sitting director, (b) the candidate's background and
qualifications, and other facts and circumstances identified in the Committee's
Charter.
The members of the Executive Management Committee are Messrs. Burdick,
Gerard, and Grisko. The Executive Management Committee approved five Unanimous
Written Consents in Lieu of Meeting of The Executive Management Committee of
Century Business Services, Inc. during 2003. The Executive Management Committee
is empowered with the same authority as the full Board of Directors to take any
action including the authorization of any transaction in the amount of $10
million or less. With respect to acquisition or divestiture of assets,
consisting of entities of assets, the Committee has the power to execute and
deliver documents in the name and on behalf of the Company, to issue shares of
Common Stock of the Company and to take all actions
9
necessary for the purpose of effecting acquisition of core assets or divestments
of non-core assets, consisting of entities of assets, so long as all members of
the Committee approve the transaction and the total consideration to be paid to
or by the Company in connection with the acquisition or divestiture of the
assets does not exceed $10 million. The Committee does not have the power or
authority of the Board of Directors to approve or adopt or recommend to the
shareholders any action or matter expressly required by the Delaware General
Corporation Law to be submitted to shareholders for approval; adopt, amend or
repeal any Bylaw of the Company; fill or approve Board or Board committee
vacancies; declare or authorize the payment of dividends; fix compensation for
service on the Board or any committee thereof; and elect executive officers of
the Company.
Century has a Code of Professional Conduct and Ethics Guide that applies to
every director, officer, and employee of the Company. The Code of Professional
Conduct and Ethics Guide is available on the Investor Relations page of the
Company's website, www.cbiz.com, or by writing to us at Attention: Investor
Relations Department, 6050 Oak Tree Boulevard South, Suite 500, Cleveland, Ohio
44131
DIRECTOR COMPENSATION
Directors who are employees of Century are not paid any fees or additional
compensation for service as members of the Board of Directors or any of its
committees. Directors who are not employees of Century receive a $25,000 annual
retainer fee, as well as a fee of $1,000 for each meeting of the Board of
Directors attended. In addition, directors who are committee members receive a
fee of $1,000 for each committee meeting attended. The Audit Committee Chairman
receives an additional annual grant of $5,000, and remaining committee Chairmen
receive annual grants of $3,000 each. In addition, an annual award of 3,000
shares of restricted stock is awarded to continuing non-employee directors. Upon
appointment, directors receive an immediately exercisable award of 50,000 stock
options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 2003 and continuing
through 2004 are Messrs. DiMartino (Chairman), Rochon and Slotkin. None of
Messrs. DiMartino, Rochon or Slotkin is or has been an officer or employee of
Century. There are no compensation committee interlock relationships with
respect to Century.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Committee was established to: (a) review and approve the Company's
stated compensation philosophy, strategy and structure and assist the Board in
ensuring that a proper system of long-term and short-term compensation is in
place to provide performance-oriented incentives to management, and that
compensation plans are appropriate and competitive and properly reflect the
objectives and performance of management and the Company; (b) discharge the
Board's responsibilities relating to compensation of the executive officers of
the Company and its subsidiaries; (c) evaluate the Company's Chief Executive
Officer and set his or her remuneration package; (d) evaluate the other
executive officers of the Company and its subsidiaries and set their
remuneration packages; (e) prepare an annual report on executive compensation
for inclusion in the Company's annual proxy statement; (f) make recommendations
to the Board with respect to incentive-compensation plans and equity-based
plans; and (g) perform such other functions as the Board may from time to time
assign to the Committee. In order to document these purposes, and to keep CBIZ
shareholders apprised of the Committee's goals and duties, the Compensation
Committee has authorized the Company to post the Compensation Committee Charter
on the investor relations portion of the Company's internet website, at
www.cbiz.com.
In the past year the Committee again reassessed the compensation structure
of the Company. The Committee reviewed the effect of changes made during 2003 as
a result of the commissioned compensation studies referenced in the Committee's
report contained in the 2003 Proxy Statement which were used in restructuring
compensation in order to maximize shareholder value and to retain and recruit
qualified management and staff. The Committee generally found the results of
these actions to be satisfactory, but have undertaken further changes in its
compensation philosophy and strategy in order to fine-tune the Company's efforts
to achieve its
10
goals. This process lead to adjustments in the compensation levels of several
executive officers, and to the adoption of new compensation methodologies.
Compensation Policy Statement
The general CBIZ policy remains the same--to pay compensation that is
competitive to total compensation provided at comparable financial service and
professional service firms similar in size and complexity to CBIZ. Compensation
paid to individuals will be determined based on the discretionary judgment of
the Compensation Committee and senior Company management. This means:
- Salaries will be targeted at the median based on an individual's
performance, experience and unique value. Those executives and managers
whose performance is exceptional, or who have long experience,
considerable knowledge, or have a focused skill that would be difficult
to replace may be targeted above the median. Those who demonstrate the
ability to meet their job requirements, and have been in their position
at least three years, may be paid approximately the median. Those who
have been in their position less than three years may generally be paid
below the median, absent exceptional performance or relevant career
experience outside CBIZ. According to these general principles, pay may
range between 80% and 120% of the median. The companies used to determine
current market practices may include other financial and professional
service companies of comparable size and complexity. Median ranges may be
estimated by discretionary means, including adjustment to reflect CBIZ'
relative revenue size. Annual increases may be kept at or below national
averages and, over time, efforts will be made to limit the fixed portion
of total cash compensation and increase the amount available under
incentive plans.
- The Company will strive to provide annual incentive award opportunities
that equal market median when financial and individual goals are
achieved. Award programs will be designed to provide compensation above
the median of the marketplace when company and individual performance is
significantly above goals, and below the median when performance fails to
meet goals. For 2004 performance, the Committee has elected to grant
Qualified Performance-Based Awards to a pre-defined group of senior
executives--including the Chief Executive Officer--pursuant to Section 7
of the Amended and Restated Century Business Services, Inc. 2002 Stock
Incentive Plan. The performance goals are based on benchmark goals tied
to the Company's earnings per share ("EPS"). The actual compensation
award amounts for 2004 will be based on actual EPS. If actual EPS equals
a predetermined target level, each awardee will receive an amount equal
to his or her target award. The award will be less than the target award
if actual EPS is below the target level, and will be greater if actual
EPS is above the target. No award will be paid if the actual EPS is less
than a predetermined floor level of earnings per share. A maximum award
will be achieved if the EPS reaches or exceeds a ceiling goal.
- Stock options and direct stock grants may be granted by the Committee to
provide a reward opportunity for those management and other key employees
who have performed well in the prior year, and who can impact the profit
and loss goals of the Company. A new element to this portion of the
Company's compensation strategy relates to the establishment of a
restricted stock program which the Company is permitted to maintain under
the Amended and Restated Century Business Services, Inc. 2002 Stock
Incentive Plan. The long-term objective of any CBIZ stock-based
compensation methodology is to provide stock option and restricted stock
grants that offer similar opportunities for compensation that those
offered at comparable financial and professional service firms that are
similar in size to CBIZ.
- Total compensation will reflect an individual's performance and
potential. Performance will be measured in accordance with an
individual's goals and objectives as well as their contribution to CBIZ's
corporate goals and initiatives. Such factors as team work, new product
innovation, aggressiveness, mentoring and personal development will
strongly influence the non-quantitative portion of compensation awards.
Chief Executive Officer Compensation
The Compensation of the Chief Executive Officer is largely determined by
the pre-negotiated terms of his contract described in the "Executive
Compensation" section stated below. This contract was renewed and increases in
both the base and bonus compensation of the CEO were awarded as a result of Mr.
Gerard's
11
successes in reducing corporate debt, continuing office consolidation, improving
cross-serving program results, and increasing earnings per share.
Executive Compensation Deductibility
Century intends that amounts paid pursuant to Century's compensation plans
will generally be deductible compensation expenses. The Compensation Committee
does not currently anticipate that the amount of compensation paid to executive
officers will exceed the amounts specified as deductible pursuant to Section
162(m) of the Internal Revenue Code of 1986, as amended.
COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
Joseph S. DiMartino, Chairman
Richard C. Rochon
Todd Slotkin
REPORT OF THE AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee comprised of three of
the Company's independent directors. The Board of Directors and the Audit
Committee believe that the Audit Committee's current member composition
satisfies the current rule of the National Association of Securities Dealers,
Inc. ("NASD") that governs audit committee composition, including the
requirement that audit committee members all be "independent directors" as that
term is defined by NASD Rule 4200 (a)(14).
The Audit Committee closely monitored developments in corporate governance
arising from the adoption of the Sarbanes-Oxley Act and rules related to the
Act. In response, the Audit Committee amended its Charter and the Company's Code
of Professional Conduct and Ethics Guide to reflect those portions of the Act
and attendant rules promulgated by the SEC and the NASDAQ Stock Market. The
Audit Committee anticipates that additional changes to its Charter may be
necessary if the SEC and the NASDAQ Stock Market adopt additional rules bearing
on the duties and activities of the Committee. At the request of the Audit
Committee, the Audit Committee Charter and Code of Professional Conduct and
Ethics Guide have been posted on the Investor Relations portion of the Company's
website, at www.cbiz.com.
The membership of the Audit Committee changed in 2003 as a result of these
new rules. Mr. Burdick, an independent director whose relationship with the
Company's outside securities law firm required him to give up his committee
membership under SEC audit committee membership rules, was succeeded by Mr.
Weir. The Company's relationship with Mr. Burdick's law firm was specifically
reviewed and approved by the Audit Committee. Both Mr. Rochon and Mr. Weir have
been designated as "audit committee financial experts," as defined by the rules
and regulations of the SEC, in light of their training, experience and
expertise.
The Audit Committee oversees the Company's financial process on behalf of
the Board of Directors. Management has the primary responsibility for the
consolidated financial statements and the reporting process including the
systems of internal controls. In fulfilling its oversight responsibilities, the
Audit Committee reviewed the audited consolidated financial statements with
management including a discussion of the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the consolidated financial statements.
The Audit Committee received, reviewed, and adopted management's report
assessing the Company's internal controls over financial reporting.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
consolidated financial statements with generally accepted accounting principles,
their judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards, including
Statement on Auditing Standards No. 61. In addition, the Audit Committee has
discussed with the independent auditors the auditors' independence from
management and the Company
12
including the matters in the written disclosures and the letter received from
the independent auditors required by the Independence Standards Board Standard
No. 1.
The Audit Committee discussed with the Company's independent auditors the
overall scope, plans and results of their audit activities. The Audit Committee
meet regularly throughout 2003 with the independent auditors, and the Head of
the Company's Internal Audit staff, with and without management present, to
discuss the results of their examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
The Audit Committee held eleven meetings during fiscal 2003. The Company
incurred the following fees for services performed by KPMG LLP in fiscal 2003:
Audit Fees
Fees for the fiscal year 2003 audit and the review of Forms 10-Q billed
through December 31, 2003 were $582,500. Fees for the fiscal year 2002 audit and
the review of Forms 10-Q billed through December 31, 2002 were $562,500.
Audit-Related Fees
Audit-related fees of $16,000 were billed for the year ended December 31,
2003. Audit related fees consisted of an audit of the financial statements of
the employee benefit plan and SAS 70 procedures. Audit-related fees of $83,500
were billed for the year ended December 31, 2002. Audit-related fees consisted
primarily of an audit of the financial statements of the employee benefit plan
and a SAS 70 internal control review engagement for a subsidiary.
Tax Fees
Tax fees billed for all other services rendered by KPMG LLP for the year
ended December 31, 2003 were $2,169, representing fees related to tax
compliance. No other tax consulting services were incurred or billed during
fiscal year 2003. Tax fees billed for services rendered by the Company's auditor
for the year ended December 31, 2002 were $18,600, representing fees related to
tax consultation and tax compliance.
All Other Fees
There were no fees billed for professional services by our independent
auditors during fiscal year 2003 that are not included in one of the above
categories.
Pursuant to its Charter and the Sarbanes-Oxley Act of 2002, the Audit
Committee is responsible for pre-approving all services performed by the
Company's independent auditors, and certain services may not, under any
circumstances, be performed for the Company by its independent auditors. KPMG,
LLP, the Company's independent auditor, may not be engaged to perform for the
Company, and is prohibited from performing for the Company, any prohibited
service enumerated in the Sarbanes-Oxley Act of 2002, or in any other law or
regulation. In addition, the independent auditor is not permitted to perform
services for the Company, whether associated with audit or non-audit functions,
unless the services to be provided have been approved prior to their performance
by this Committee, except as may otherwise be provided by law or regulation.
However, certain non-prohibited services may be pre-approved by the Audit
Committee Chairman personally in advance of full Audit Committee consideration
and approval, provided, that each engagement total no more than Twenty Thousand
Dollars in fees prior to the next regularly scheduled meeting of the Audit
Committee, at which time the entire Audit Committee is required to consider and
either approve or reject the engagement, provided the engagement otherwise does
not appear reasonably likely to compromise KPMG LLP's independence.
The Audit Committee pre-approved all of the services described above under
Audit Fees, Audit-Related Fees and Tax Fees. 100% of the services described
above under Audit Fees, Audit-Related Fees and Tax Fees were approved by the
Audit Committee pursuant to 17 CFR 210.2-01(c)(7)(i)(C).
13
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003 for filing with
the Securities and Exchange Commission. The Audit Committee has appointed,
subject to considerations arising out of the stockholder ratification proposal
on this issue, the reappointment of KPMG LLP as independent auditors.
AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
Harve A. Ferrill, Chairman
Richard C. Rochon
Donald V. Weir
14
EXECUTIVE COMPENSATION
The following table provides a summary of compensation for the Chief
Executive Officer during fiscal year 2003 and the four other most highly
compensated officers who were serving as executives of Century on December 31,
2003
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
-----------------------
ANNUAL COMPENSATION SECURITIES SECURITIES
------------------------ OTHER ANNUAL UNDERLYING UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION WARRANTS OPTIONS
--------------------------- ---- ------- ------- ------------ ---------- ----------
Steven L. Gerard 2003 550,000 308,000(1) 125,172(2) 0 0
Chief Executive Officer/Chairman 2002 510,417 300,000(1) 133,165(2) 0 0
2001 500,000 250,000(1) 96,986(2) 0 250,000(3)
Jerome P. Grisko, Jr. 2003 375,000 150,000 6,611(4) 0 0
President & COO 2002 350,000 75,000 6,133(4) 0 125,000(5)
2001 350,000 100,000 5,858(4) 0 210,000(6)
Ware H. Grove 2003 285,000 91,200 6,575(4) 0 20,000(7)
Sr. Vice President and CFO 2002 260,000 75,000 6,576(4) 0 75,000(5)
2001 240,000 100,000 3,962(8) 0 0
Leonard Miller 2003 365,000 100,000 6,000(9) 0 0
Sr. Vice President 2002 350,000 50,000 6,440(10) 0 100,000(5)
2001 350,000 100,000 5,100(9) 0 70,000(6)
Robert O'Byrne 2003 335,000 132,200 6,439(10) 0 0
Sr. Vice President 2002 300,000 75,000 5,940(10) 0 100,000(5)
2001 250,000 100,000 7,310(10) 0 120,000(6)
---------------
(1) Mr. Gerard's employment agreement specifies a bonus of at least $150,000
per year.
(2) Includes payment for life insurance policy, commuting costs, automobile
adjustments and employer matching 401(k) contributions.
(3) Bonus for 2001 performance. Consists of options that are exercisable on
January 1, 2002 and remain exercisable for a six-year period from the date
of the grant.
(4) Includes payment for automobile adjustments and employer matching 401(k)
contributions.
(5) Consists of options that vest 20% annually beginning April 5, 2003, and
remain exercisable for a six-year period from date of grant.
(6) Consists of options that vest 20% annually beginning March 7, 2002, and
remain exercisable for a six-year period from grant date.
(7) Consists of options that vest 20% annually beginning May 16, 2004 and
remain exercisable for a six-year period from grant date.
(8) Includes payment for automobile adjustments.
(9) Includes payment for employer matching 401(k) contributions.
(10) Includes payment for insurance premiums and employer matching 401(k)
contributions.
Employment Agreements
Century is a party to employment agreements with Messrs. Gerard, Grisko and
Grove. The employment agreements provide for annual base salaries of at least
$500,000, $300,000 and $240,000, respectively, subject to the adjustment by the
Compensation Committee of the Board of Directors.
Mr. Gerard's contract, executed October 11, 2000, was for an initial term
of three years, with automatic annual one-year extensions beginning on the year
2003 anniversary of the execution of the agreement in the
15
absence of termination. Mr. Gerard's base salary may be increased by the Board,
and for each of years 2001, 2002 and 2003, the agreement provided for a bonus of
at least $150,000, with bonus increases based upon achievement of performance
goals established by the Compensation Committee. Pursuant to the contract,
Century granted Mr. Gerard a nonqualified stock option to acquire 1,000,000
shares of common stock at the fair market value of the stock at the date of
granting. The options vest in increments of 33 1/3% on each of the first, second
and third anniversaries of the date of the grant. Other compensation includes an
automobile allowance, participation in Century welfare, pension and incentive
benefit plans, maintenance of a term life insurance policy, and reimbursement
for travel and housing expenses. If the agreement is terminated by Century
without cause or by Mr. Gerard for reasons such as a change of control of
Century, Mr. Gerard is entitled to (1) his base salary and vacation pay through
the date of termination, (2) a cash payment equal to two times the sum of his
then current base salary and average bonus paid in the three year period
preceding the year of termination, (3) maintenance of health and life insurance
coverage, and (4) other amounts due through the date of termination. If the
agreement is terminated by Century with cause or by Mr. Gerard without good
reason, as defined by the contract, Mr. Gerard is entitled to (1) his base
salary and vacation pay through the date of termination, and (2) other amounts
due through the date of termination. The contract contains restrictive covenants
that obligate Mr. Gerard to (1) maintain Century's confidential information, (2)
return company information or other personal and intellectual property, and (3)
avoid disparagement of the company.
Mr. Grisko's contract, executed February 1, 2000, provides for a one-time
bonus of $50,000, and an immediately vested, nonqualified stock option to
acquire 75,000 shares of common stock at the fair market value of the stock at
the date of granting. Other compensation includes all benefits generally
available to senior level executives of Century, such as an automobile
allowance, and participation in Century welfare, pension and incentive benefit
plans. In addition, the contract provides for the payment of severance upon
termination without cause (including termination resulting from a change of
control), or upon a request by the Chairman of the Board that Mr. Grisko resign.
Severance would include (1) a cash payment of two times Mr. Grisko's base salary
at the time of termination, (2) continued participation for two years in Century
health and welfare benefit plans, (3) immediate vesting of, and ability to
exercise, any unvested but previously granted stock options, and (4) receipt of
title to any company vehicle then in use by Mr. Grisko. The contract contains
restrictive covenants that obligate Mr. Grisko to (1) maintain Century's
confidential information, (2) return company information or other personal and
intellectual property, (3) abide by a two-year employee, customer, and supplier
nonsolicitation and noninterference term, and (4) avoid disparagement of the
company.
Mr. Grove's contract, executed December 12, 2000, provides for
discretionary bonuses, and a nonqualified stock option to acquire 75,000 shares
of common stock at the fair market value of the stock at the date of granting.
38,000 of the shares underlying the 75,000 share option vested immediately upon
grant. The remaining options vested upon the first anniversary of the date of
the grant. Other compensation includes all benefits generally available to
senior level executives of Century, such as an automobile allowance, and
participation in Century welfare, pension and incentive benefit plans. In
addition, the contract provides for the payment of severance upon termination
without cause, or upon voluntary termination due to a change of control.
Severance would include (1) continued payment for a period of one year of Mr.
Grove's base salary at the time of termination, and (2) continued participation
for one year in Century health and welfare benefit plans. The contract contains
restrictive covenants that obligate Mr. Grove to (1) maintain Century's
confidential information, (2) return company information or other personal and
intellectual property, (3) abide by a one-year non-compete, and one-year
employee, customer, and supplier nonsolicitation and noninterference term, and
(4) avoid disparagement of the company.
OPTIONS GRANTED DURING 2003
The following table sets forth as to each of the named executive officers
information with respect to option grants during 2003: (1) the number of shares
of common stock underlying options granted, (2) the percentage that such options
represent of all options granted to officers and employees during the year, (3)
the exercise price, (4) the expiration date and (5) the potential realizable
value of such options. It should be noted that the actual value of the options
may be significantly different from the value shown in the assumptions, and the
value
16
actually realized, if any, will depend upon the excess of the market value of
the common stock over the option exercise price at the time of exercise. Century
granted no warrants to its executive officers during 2002.
OPTION GRANTS DURING 2003 POTENTIAL REALIZABLE VALUE
------------------------------------------------ AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE APPRECIATION
SECURITIES OPTIONS FOR OPTION TERM
UNDERLYING GRANTED EXERCISE ----------------------------
OPTIONS EMPLOYEES PRICE PER EXPIRATION AT 5% ANNUAL AT 10% ANNUAL
GRANTED IN 2002 SHARE DATE GROWTH RATE GROWTH RATE
---------- ---------- --------- ---------- ------------ -------------
Steven L. Gerard...... 0 0.00% -- -- 0 0
Jerome P. Grisko...... 0 0.00% -- -- 0 0
Ware H. Grove......... 20,000 3.58% 2.90 05/14/2009 $19,726 $44,751
Leonard Miller........ 0 0.00% -- -- 0 0
Robert D. O'Byrne..... 0 0.00% -- -- 0 0
OPTION EXERCISES AND VALUES FOR 2003
The following table sets forth information as to each of the named
executive officers with respect to option exercises during 2003 and the status
of their options at December 31, 2003: (1) the number of shares of common stock
acquired upon exercise of options during the year, (2) the aggregate dollar
value realized upon the exercise of such options, (3) the total number of
securities underlying exercisable and unexercisable options at December 31, 2003
and (4) the aggregate dollar value of in-the-money exercisable and unexercisable
options at December 31, 2003.
AGGREGATED OPTION EXERCISES DURING 2003
AND OPTION VALUES AT DECEMBER 31, 2003
NUMBER OF SECURITIES
NO. OF SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED(1)
ACQUIRED OPTIONS AT IN-THE-MONEY OPTIONS
UPON VALUE DECEMBER 31, 2003 AT DECEMBER 31, 2003
EXERCISE OF REALIZED --------------------------- ---------------------------
NAME OPTION ON EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- ----------- ------------- ----------- -------------
Steven L. Gerard..... 0 0 1,250,000 0 $4,077,500 0
Jerome P. Grisko,
Jr. ............... 0 0 272,600 229,400 $ 378,460 $472,440
Ware H. Grove........ 0 0 90,000 80,000 $ 256,800 $ 61,200
Leonard Miller....... 0 0 48,000 122,000 $ 102,720 $205,080
Robert D. O'Byrne.... 0 0 105,200 168,800 $ 180,576 $107,472
---------------
(1) The In-the-Money values are based on the closing price of the Company stock
as reported on the NASDAQ National Market on December 31, 2003, which was
$4.4700.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of certain agreements and transactions between
or among CBIZ and certain related parties. It is CBIZ' policy to enter into
transactions with related parties on terms that, on the whole, are no less
favorable than those that would be available from unaffiliated parties. Based on
CBIZ' experience and the terms of its transactions with unaffiliated parties, it
is the Board of Directors' belief that the transactions described below met
these standards at the time of the transactions.
A number of the businesses acquired since October 1996 are located in
properties owned indirectly by and leased from persons employed by CBIZ. In the
aggregate, CBIZ paid approximately $1.4 million, $0.8 million and $1.5 million
for the years ended 2003, 2002 and 2001, respectively, under such leases which
management believes were at market rates.
17
Rick L. Burdick, a director of CBIZ, is a partner of Akin Gump Strauss
Hauer & Feld LLP (Akin Gump). Akin Gump performed legal work for CBIZ during
2003, 2002, and 2001 for which the firm received approximately $180,000,
$119,000, and $69,000 from CBIZ, respectively.
CBIZ and/or its subsidiaries maintain joint-referral relationships and
service agreements with licensed CPA firms under which CBIZ subsidiaries provide
administrative services (including office, bookkeeping, accounting, and other
administrative services, preparing marketing and promotion materials, and
leasing of administrative and professional staff) in exchange for a fee. A
number of CBIZ employees own interests in the independent companies maintaining
administrative services agreements with CBIZ.
Robert O'Byrne, a Senior Vice President, was indebted to CBIZ in the amount
of $250,000 and $325,000 at December 31, 2002 and 2001, respectively. Likewise,
CBIZ was indebted to the former shareholders of RDOB/ GNG of which Mr. O'Byrne
is one, for $420,000 at December 31, 2002. The notes to CBIZ and Mr. O'Byrne
were paid in 2003, and no indebtedness remains at December 31, 2003. Mr. O'Byrne
also has an interest in a partnership that receives commissions from CBIZ that
are paid to certain eligible benefits and insurance producers in accordance with
a formal program to provide benefits in the event of death, disability,
retirement or other termination. The note and the program were both in existence
at the time CBIZ acquired the former company, of which Mr. O'Byrne was an owner.
During 2003, CBIZ guaranteed two letters of credit for a CPA firm with
which CBIZ maintains an administrative services agreement. The letters of credit
total $654,000.
In 2002, CBIZ executed a note receivable with a CPA firm whose partner
group has since joined MHM, PC, a CPA firm with which CBIZ maintains an
administrative services agreement. The balance on the note at December 31, 2003
and 2002 was approximately $222,000 and $263,000, respectively. The note does
not have a stated maturity date.
CBIZ divested several operations during 2003, 2002, and 2001, in an effort
to rationalize the business and sharpen the focus on non-strategic businesses.
In accordance with this strategy, CBIZ has sold and may sell in the future
businesses to former employees or shareholders. Management believes these
transactions were priced at market rates, competitively bid, and entered into at
arm's length terms and conditions.
18
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a performance graph comparing the cumulative total
stockholder return on Century's common stock, based on its market price, with
the cumulative total return of companies in the S&P 500 Index and a Peer Group.
The graph assumes the reinvestment of dividends for the period beginning
December 31, 1998 through the year ended December 31, 2003.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CENTURY BUSINESS SERVICES, INC.,
THE S&P 500 INDEX, AND A PEER GROUP**
CENTURY BUSINESS
SERVICES, INC. S&P 500 PEER GROUP
---------------- ------- ----------
12/98 100.00 100.00 100.00
12/99 58.70 121.04 151.42
12/00 7.83 110.02 165.16
12/01 16.00 96.95 123.81
12/02 18.43 75.52 117.41
12/03 31.10 97.18 159.67
* $100 invested on 12/31/98 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
** Peer group includes American Express, Paychex, Brown & Brown, H&R Block,
Arthur J. Gallagher, Ceridian, and Answerthink.inc.
Copyright(C) 2002, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved. www.researchdatagroup.com/S&P.htm
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Century's officers and directors, and persons who own more than 10% of a
registered class of Century's equity securities, to file reports of ownership
and changes in ownership with the SEC. Officers, directors and greater than 10%
stockholders are required by the SEC regulations to furnish Century with copies
of all Section 16(a) reports they file.
Century believes that during the 2003 fiscal year, its officers, directors
and 10% stockholders complied with all Section 16(a) filing requirements. In
making these statements, Century has relied upon examination of the copies of
Forms 3 and 4 provided to the company and the written representations of its
directors and officers.
19
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information about our equity compensation
plans as of December 31, 2003. All outstanding awards relate to our common
stock.
A B C
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
EQUITY COMPENSATION
NUMBER OF SECURITIES TO BE PLANS (EXCLUDING
ISSUED UPON EXERCISE OF WEIGHTED AVERAGE EXERCISE SECURITIES REFLECTED IN
PLAN CATEGORY OUTSTANDING OPTIONS PRICE OF OUTSTANDING OPTIONS COLUMN A)
Equity compensation plans
approved by shareholders 10,845,334(1) $4.58 4,154,666(2)
Equity compensation plans
not approved by
shareholders 0 0 0
Total
(1) Consists of 13,120 option awards under the 1991 Employee Stock Option Plan
and 10,832,214 option and restricted stock awards under the Century Business
Services, Inc. 2002 Stock Incentive Plan.
(2) All remaining shares available for grant are subject to the Century Business
Services, Inc. 2002 Stock Incentive Plan.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented at the 2005 Annual
Meeting of Stockholders must be received by Century for inclusion in the proxy
statement and form of proxy relating to the meeting not later than December 1,
2004. It is suggested that proponents submit their proposals by certified mail,
return receipt requested, to the Corporate Secretary at the address provided
below. Pursuant to Rule 14a-4(c)(1) under the Securities Exchange Act of 1934 if
any stockholder proposal intended to be presented at the 2004 Annual Meeting
without inclusion in our proxy statement for such meeting is received at our
principal office after February 16, 2004, then a proxy will have the ability to
confer discretionary authority to vote on such proposal. Detailed information
for submitting resolutions will be provided upon written request to Century's
Corporate Secretary at Century Business Services, Inc., 6050 Oak Tree Boulevard
South, Suite 500, Cleveland, Ohio 44131, Attention: Corporate Secretary. No
stockholder proposals were received for inclusion in this proxy statement.
EXPENSES OF SOLICITATION
Century will bear the expense of preparing and mailing the materials in
connection with the solicitation of proxies, as well as the cost of
solicitation. Computershare Investor Services, LLC ("Computershare") has been
retained by Century to assist in the solicitation of proxies. Computershare,
which has a contract to act as the transfer agent for Century, will not be paid
any additional fees for these services. Computershare will receive reimbursement
of out-of-pocket expenses it incurs in connection with its efforts. In addition,
Century will reimburse brokers, nominees, banks and other stockholders of record
for their expenses incurred in forwarding proxy materials to beneficial owners.
Century expects that the solicitation of proxies will be primarily by mail, but
directors, officers and employees of Century may solicit proxies by personal
interview, telephone or telecopy. These persons will receive no additional
compensation for such services.
Century's Annual Report on Form 10-K for the year ended December 31, 2003,
including financial statements and a Letter to Stockholders is being mailed to
all stockholders entitled to vote at the Annual Meeting. The Annual Report does
not constitute a part of the proxy solicitation material. CENTURY WILL MAIL
ADDITIONAL COPIES OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2003, TO EACH STOCKHOLDER OR BENEFICIAL OWNER OF SHARES OF COMMON STOCK
WITHOUT CHARGE UPON SUCH PERSON'S WRITTEN REQUEST TO THE INVESTOR RELATIONS
DEPARTMENT AT CENTURY'S EXECUTIVE OFFICES AT 6050 OAK TREE BOULEVARD SOUTH,
SUITE 500, CLEVELAND, OHIO 44131.
20
OTHER MATTERS
Management does not intend to present any other items of business and knows
of no other matters that will be brought before the Annual Meeting. However, if
any additional matters are properly brought before the Annual Meeting, it is
intended that the shares represented by proxies will be voted with respect
thereto in accordance with the judgment of the persons named in such proxies.
The accompanying form of proxy has been prepared at the direction of the
Board of Directors and is sent to you at the request of the Board of Directors.
The Board of Directors has designated the proxies named therein.
By Order of the Board of Directors,
/s/ Michael W. Gleespen
Michael W. Gleespen, Corporate
Secretary
Cleveland, Ohio
April 9, 2004
21
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MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 000000000.000 ext
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ADD 6 C 1234567890 JNT
[ ] Mark this box with an X if you have made
changes to your name or address details above.
ANNUAL MEETING PROXY CARD
A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees.
FOR WITHHOLD
01 - Rick L. Burdick [ ] [ ]
02 - Steven L. Gerard [ ] [ ]
B ISSUES
The Board of Directors recommends a vote FOR the following proposals.
FOR AGAINST ABSTAIN
2. Ratification of the appointment of KPMG LLP as [ ] [ ] [ ]
independent accountants for fiscal year 2004.
3. Upon such other business as may properly come [ ] [ ] [ ]
before said meeting, or any adjournment thereof.
C AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
NOTE: Please sign EXACTLY as name appears on this card. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, guardian or corporate officer, please give full title.
Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (mm/dd/yyyy)
[ ] [ ] [ / / ]
1 U P X H H H P P P P 003351 +
001CD40001 00BZ0A
PROXY - CENTURY BUSINESS SERVICES, INC.
2004 ANNUAL MEETING
THE EMBASSY SUITES HOTEL
5800 ROCKSIDE WOODS BOULEVARD, NORTH
INDEPENDENCE, OHIO 44131
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING - MAY 27, 2004
Joseph S. DiMartino and Todd J. Slotkin, or any of them, each with the power of
substitution, are hereby authorized to represent and vote the shares of the
undersigned, with all the powers which the undersigned would possess if
personally present, at the Annual Meeting of Stockholders of Century Business
Services, Inc. to be held on May 27, 2004 or at any postponement or adjournment
thereof.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED BY THE STOCKHOLDER. IF NO SUCH
DIRECTIONS ARE INDICATED, THE PROXIES WILL HAVE AUTHORITY TO VOTE FOR THE
ELECTION OF MR. RICK L. BURDICK AND MR. STEVEN L. GERARD AS DIRECTORS, FOR THE
RATIFICATION OF THE AUDIT COMMITTEE'S SELECTION OF KPMG, LLP AS THE COMPANY'S
INDEPENDENT AUDITOR FOR 2004, AND FOR ITEM 3, SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be voted on reverse side.)
00BZ1C