SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
[x] Definitive Proxy Statement the Commission Only (as
[ ] Definitive Additional Materials permitted by
[ ] Soliciting Material Pursuant to Rule 14a-6(e)(2))
Section 240.14a-11(c)
or Section 240.14a-12
Barrett 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 if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
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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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BARRETT BUSINESS SERVICES, INC.
April 14, 2004
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Barrett Business Services, Inc., to be held at 2:00 p.m. on
Wednesday, May 12, 2004, at the Multnomah Athletic Club located at 1849 S.W.
Salmon Street, Portland, Oregon 97205.
Matters to be presented for action at the meeting include the
election of directors and such other business as may properly come before the
meeting or any adjournment thereof.
We look forward to conversing with those of you who are able to
attend the meeting in person. Whether or not you can attend, it is important
that you sign, date, and return your proxy as soon as possible. If you do attend
the meeting and wish to vote in person, you may withdraw your proxy and vote
personally.
Sincerely,
/s/ William W. Sherertz
-----------------------
William W. Sherertz
President and Chief Executive Officer
BARRETT BUSINESS SERVICES, INC.
_____________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 12, 2004
_____________________________
You are invited to attend the annual meeting of stockholders of
Barrett Business Services, Inc., to be held at the Multnomah Athletic Club
located at 1849 S.W. Salmon Street, Portland, Oregon 97205, on Wednesday, May
12, 2004, at 2:00 p.m., Pacific Time.
Only stockholders of record at the close of business on March 26,
2004, will be entitled to vote at the meeting.
The meeting is being held to consider and act upon the following
matters:
1. Election of directors.
2. Such other business as may properly come before the meeting or
any adjournments thereof.
Please sign and date the accompanying proxy, and return it promptly
in the enclosed postage-paid envelope to avoid the expense of further
solicitation. If you attend the meeting, you may withdraw your proxy and vote
your shares in person.
By Order of the Board of Directors
/s/ Michael D. Mulholland
-------------------------
Michael D. Mulholland
Secretary
Portland, Oregon
April 14, 2004
BARRETT BUSINESS SERVICES, INC.
4724 S.W. Macadam Avenue
Portland, Oregon 97239
(503) 220-0988
PROXY STATEMENT
2004 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board") of Barrett
Business Services, Inc. (the "Company"), to be voted at the annual meeting of
stockholders to be held on May 12, 2004, and any adjournments thereof. The proxy
statement and accompanying form of proxy were first mailed to stockholders on
approximately April 14, 2004.
VOTING, REVOCATION, AND SOLICITATION OF PROXIES
When a proxy in the accompanying form is properly executed and
returned, the shares represented will be voted at the meeting in accordance with
the instructions specified in the spaces provided in the proxy. If no
instructions are specified, the shares will be voted FOR Item 1 in the
accompanying Notice of Annual Meeting of Stockholders.
Any proxy given pursuant to this solicitation may be revoked by the
person giving the proxy at any time prior to its exercise by written notice to
the Secretary of the Company of such revocation, by a later-dated proxy received
by the Company, or by attending the meeting and voting in person. The mailing
address of the Company's principal executive offices is 4724 S.W. Macadam
Avenue, Portland, Oregon 97239.
The solicitation of proxies will be made primarily by mail, but
proxies may also be solicited personally or by telephone or facsimile by
directors and officers of the Company without additional compensation for such
services. Brokers and other persons holding shares in their names, or in the
names of nominees, will be reimbursed for their reasonable expenses in
forwarding soliciting materials to their principals and in obtaining
authorization for the execution of proxies. All costs of solicitation of proxies
will be borne by the Company.
OUTSTANDING VOTING SECURITIES
The close of business on March 26, 2004, has been fixed as the
record date for the determination of stockholders entitled to notice of and to
vote at the annual meeting. On the record date, the Company had outstanding
5,705,050 shares of Common Stock, $.01 par value ("Common Stock"), each share of
which is entitled to one vote at the meeting. Common Stock is the only
outstanding voting security of the Company. The presence, in person or by proxy,
of stockholders entitled to cast a majority of all votes entitled to be cast at
the meeting is required to constitute a quorum.
-1-
ITEM 1 - ELECTION OF DIRECTORS
The directors of the Company are elected at the annual meeting of
stockholders in May to serve until the next annual meeting and until their
successors are elected and qualified. The Company's Bylaws authorize the Board
to set the number of positions on the Board within a range of three and nine;
the Board has presently established the number of positions at six. Vacancies on
the Board, including vacancies resulting from an increase in the number of
positions, may be filled by the Board for a term ending with the next annual
meeting of stockholders.
All of the nominees for election as directors are members of the
present Board. A nominee will be elected if the nominee receives a plurality of
the votes cast by the shares entitled to vote in the election, provided that a
quorum is present at the meeting. A duly executed proxy will be voted FOR the
election of the nominees named below, unless authority to vote for a director is
withheld or a proxy of a broker or other nominee is expressly not voted on this
item. If for some unforeseen reason a nominee should become unavailable for
election, the number of directors constituting the Board may be reduced prior to
the annual meeting or the proxy may be voted for the election of such substitute
nominee as may be designated by the Board.
The following table sets forth information with respect to each
person nominated for election as a director, including their ages as of February
29, 2004, business experience during the past five years, and directorships in
other corporations.
Director
Name Principal Occupation(1) Age Since
---- ----------------------- --- -----
Fores J. Beaudry President of Insurance & Asset Protection, 59 2002
Inc., an independent insurance agency
Thomas J. Carley Private investor 45 2000
James B. Hicks, Ph.D. Co-founder, director, and Chief Technology 57 2001
Officer of Virogenomics, Inc., a
biotechnology company
Anthony Meeker Retired Managing Director of Victory Capital 64 1993
Management, Inc., Cleveland, Ohio, an
investment management firm
Nancy B. Sherertz Private investor 54 1998
William W. Sherertz President and Chief Executive Officer of the 58 1980
Company
-2-
(1) During the past five years, the principal occupation and other business
experience of each nominee has been as follows:
(a) Mr. Beaudry is President of Insurance & Asset Protection, Inc., an
independent insurance agency. He is also currently acting as the
manager for the National Education Association's long term care plan
in the State of Oregon.
(b) Mr. Carley was President and Chief Financial Officer of Jensen
Securities, a securities and investment banking firm in Portland,
Oregon, for eight years until February 1998, when the company was
sold to D.A. Davidson & Co. Thereafter, he was a research analyst
covering technology companies and financial institutions at D.A.
Davidson & Co. until December 1999.
(c) Mr. Hicks is a co-founder of Virogenomics, Inc., a biotechnology
company, located in the Portland metropolitan area, where he has
been Chief Technology Officer since 2001 and a director since 1997.
He has also been a director of AVI BioPharma, Inc., since 1997. He
is a partner in HHL Consulting LLC, where he has been providing
consulting services to early stage technology companies regarding
management and operational issues since 2000. From 1995 to 1999, he
was co-founder and technical consultant for Sapient Health Network.
He also currently continues to serve as President of Hedral
Therapeutics, Inc., a biotechnology company, where he was Chief
Executive Officer, Chief Scientist and a director from 1994 to 1998.
(d) Mr. Meeker retired in 2003 as a Managing Director of Victory Capital
Management, Inc. (formerly known as Key Asset Management, Inc.)
where he was employed for ten years. Mr. Meeker is Chairman of the
Board of First Federal Savings and Loan Association of McMinnville
and a director of Oregon Mutual Insurance Company. From 1987 to
1993, he was Treasurer of the State of Oregon.
(e) Ms. Sherertz was President and a director of the Company from 1975
to March 1993.
(f) Mr. Sherertz also serves as Chairman of the Board of Directors.
Ms. Sherertz and Mr. Sherertz were married to each other until 1994.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 2003, the Board held five meetings. Each director attended
more than 75 percent of (i) the aggregate of the total number of meetings of the
Board and (ii) the total number of meetings held by all committees of the Board
on which he or she served during 2003.
-3-
The Company does not have a policy regarding directors' attendance
at the Company's annual meeting of stockholders. All Board members, except for
Ms. Sherertz, attended last year's annual meeting.
The Board has determined that Messrs. Beaudry, Carley, Hicks, and
Meeker are independent directors as defined in Rule 4200(a)(15) of the listing
standards applicable to companies quoted on The Nasdaq Stock Market.
Audit and Compliance Committee
The Audit and Compliance Committee (the "Audit Committee") reviews
and pre-approves audit and legally-permitted non-audit services provided by the
Company's independent auditors, makes decisions concerning the engagement or
discharge of the independent auditors, and reviews with management and the
independent auditors the results of their audit, the adequacy of internal
accounting controls, and the quality of financial reporting. The Audit Committee
also develops and oversees the Company's corporate governance principles and the
Company's Code of Business Conduct and Code of Ethics for Senior Financial
Officers. The Audit Committee held eight meetings in 2003.
The current members of the Audit Committee are Messrs. Carley
(chair), Beaudry, Hicks, and Meeker. The Board has determined that Thomas J.
Carley is qualified to be an "audit committee financial expert" as defined by
the SEC under the Exchange Act. The Board has also determined that each member
of the Audit Committee, including Mr. Carley, meets the financial literacy and
independence requirements for audit committee membership specified in applicable
rules of the Securities and Exchange Commission ("SEC") under the Securities
Exchange Act of 1934 (the "Exchange Act") and in listing standards applicable to
companies quoted on The Nasdaq Stock Market. The Audit Committee's activities
are governed by a written charter, which was amended and restated by the Board
as of March 19, 2004. A copy of the amended and restated charter is attached
hereto as Appendix A and is available on the Company's website at
www.barrettbusiness.com.
Compensation Committee
The Compensation Committee reviews the compensation of executive
officers of the Company and makes recommendations to the Board regarding salary
levels and other forms of compensation to be paid to executive officers,
including decisions as to grants of options and other stock-based awards. The
current members of the Compensation Committee are Mr. Meeker (chair), Mr. Hicks,
and Ms. Sherertz. Ms. Sherertz does not participate in the Compensation
Committee's deliberations regarding stock options. The Compensation Committee
held two meetings in 2003.
Compensation Committee Interlocks and Insider Participation
Messrs. Meeker and Hicks and Ms. Sherertz also comprised the
Compensation Committee throughout 2003. Ms. Sherertz was President of the
Company from 1975 to March 1993.
-4-
Nominating Committee
The Nominating Committee, which was formed in March 2004, evaluates
and recommends candidates for nomination by the Board in director elections and
otherwise assists the Board in determining and evaluating the composition of the
Board and its committees. The Nominating Committee also assists in identifying
candidates for appointment as officers of the Corporation. The current members
of the Nominating Committee are Messrs. Beaudry, Carley, Hicks (chair), and
Meeker. The Board has determined that each current member of the Nominating
Committee is an independent director as defined in Rule 4200(a)(15) of the
listing standards applicable to companies quoted on The Nasdaq Stock Market. The
Nominating Committee is governed by a written charter, which is available on the
Company's website at www.barrettbusiness.com.
The Nominating Committee does not have any specific, minimum
qualifications for director candidates. In evaluating potential director
nominees, the Nominating Committee will consider:
o The candidate's ability to commit sufficient time to the
position;
o Professional and educational background that is relevant to
the financial, regulatory, and business environment in which
the Company operates;
o Demonstration of ethical behavior;
o Whether the candidate contributes to the goal of bringing
diverse perspectives, business experience, and expertise to
the Company's Board; and
o The need to satisfy independence and financial expertise
requirements relating to Board composition.
The Nominating Committee relies on its periodic evaluations of the
Board in determining whether to recommend nomination of current directors for
re-election. In the event the Nominating Committee is required to identify new
director candidates, because of a vacancy or a decision to expand the Board, the
Nominating Committee will poll current directors for suggested candidates. The
Nominating Committee has not hired a third-party search firm to date, but has
the authority to do so if it deems such action to be appropriate.
Once potential candidates are identified, the Nominating Committee
will conduct interviews with the candidates and perform such investigations into
the candidates' background as the Nominating Committee determines appropriate.
The Nominating Committee will consider director candidates suggested
by stockholders for nomination by the Board. Stockholders wishing to suggest a
candidate to the Nominating Committee should do so by sending the candidate's
name, biographical information, and qualifications to: Nominating Committee
Chair c/o Michael D. Mulholland, Secretary, Barrett Business Services, Inc.,
4724 S.W. Macadam Avenue, Portland, Oregon 97239. Candidates suggested by
stockholders will be evaluated by the same criteria and process as candidates
from other sources.
-5-
CODE OF ETHICS
The Company has adopted a Code of Ethics for Senior Financial
Officers ("Code of Ethics"), which is applicable to the Company's Chief
Executive Officer, principal financial officer, and principal accounting
officer. The Code of Ethics focuses on honest and ethical conduct, the adequacy
of disclosure in financial reports of the Company, and compliance with
applicable laws and regulations. The Code of Ethics is included as part of the
Company's Code of Business Conduct, which is generally applicable to all of the
Company's directors, officers, and employees. The Code of Business Conduct and
Code of Ethics for Senior Financial Officers is available on the Company's
website at www.barrettbusiness.com.
STOCK OWNERSHIP BY PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
Beneficial Ownership Table
The following table gives information regarding the beneficial
ownership of Common Stock as of March 26, 2004, by each director and nominee for
director and certain named executive officers and by all directors and executive
officers of the Company as a group. In addition, it gives information about each
person or group known to the Company to own beneficially more than 5% of the
outstanding shares of Common Stock. Information as to beneficial stock ownership
is based on data furnished by the stockholder. Unless otherwise indicated, all
shares listed as beneficially owned are held with sole voting and dispositive
powers.
Amount and Nature Percent
of Beneficial of
Name of Beneficial Owner Ownership(2) Class
Heartland Advisors, Inc.(1)........................... 846,162(3) 14.8%
Wynnefield Group(1)................................... 403,433(4) 7.1%
Dimensional Fund Advisors, Inc.(1).................... 296,000(5) 5.2%
Fores J. Beaudry...................................... 9,750 *
Thomas J. Carley...................................... 27,500 *
James B. Hicks, Ph.D.................................. 5,500 *
Anthony Meeker........................................ 12,950 *
Michael D. Mulholland................................. 24,078 *
Nancy B. Sherertz(1).................................. 1,259,200(6) 22.1%
William W. Sherertz(1)................................ 1,874,133(7) 32.8%
Gregory R. Vaughn .................................... 18,730 *
All directors and executive officers as a group
(8 persons)........................................... 3,237,481 56.0%
* Less than 1% of the outstanding shares of Common Stock.
(1) The addresses of persons owning beneficially more than 5% of the
outstanding Common Stock are as follows: Heartland Advisors, Inc., 789
North Water Street, Milwaukee, Wisconsin 53202; Wynnefield Group, 450
Seventh Avenue, Suite 509, New York, New
-6-
York 10123; Dimensional Fund Advisors, Inc., 1299 Ocean Avenue, 11th
Floor, Santa Monica, CA 90401; Nancy B. Sherertz, 27023 Rigby Lot Road,
Easton, Maryland 21601; and William W. Sherertz, 4724 S.W. Macadam Avenue,
Portland, Oregon 97239.
(2) Includes options to purchase Common Stock which are presently exercisable
or will become exercisable by May 25, 2004, as follows: Mr. Beaudry, 250
shares; Mr. Carley, 1,500 shares; Mr. Hicks, 1,500 shares; Mr. Meeker,
11,500 shares; Mr. Mulholland, 23,578 shares; Ms. Sherertz, 4,500 shares;
Mr. Sherertz, 12,500 shares; Mr. Vaughn, 17,370 shares; and all directors
and executive officers as a group, 72,698 shares.
(3) Heartland Advisors, Inc., a registered investment advisor, and its
President and principal shareholder, William J. Nasgovitz, filed an
amendment to Schedule 13G on February 12, 2004, reporting shared voting
power as to 750,762 shares and shared dispositive power as to 846,162
shares (including the 750,762 shares).
(4) Wynnefield Group is a combination of Wynnefield Partners Small Cap Value,
L.P., Wynnefield Small Cap Value Offshore Fund, Ltd., Wynnefield Partners
Small Cap Value, L.P. I., Channel Partnership II, L.P., Wynnefield Capital
Management, LLC, Wynnefield Capital, Inc., and Nelson Obus. Although the
listed entities are separate and distinct entities with different
beneficial owners (whether designated as limited partners or
stockholders), for the convenience of reporting their holdings they are
referred to collectively as the "Wynnefield Group." The Wynnefield Group
filed an amendment to Schedule 13G on February 11, 2004, reporting sole
voting and dispositive power as to 403,433 shares, of which 305,300
shares, or 5.4% of the outstanding shares of Common Stock, are
beneficially owned indirectly by Wynnefield Capital Management, LLC.
(5) Dimensional Fund Advisors, Inc., a registered investment advisor, filed an
amendment to Schedule 13G on February 6, 2004, reporting sole voting and
dispositive power as to 296,000 shares.
(6) Ms. Sherertz disclaims beneficial ownership of an additional 3,310 shares
held by her minor children.
(7) Includes 10,000 shares held by his wife and 31,300 shares held by Mr.
Sherertz for his minor children, as to which he shares voting and
dispositive powers.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Exchange Act ("Section 16") requires that reports
of beneficial ownership of Common Stock and changes in such ownership be filed
with the SEC by Section 16 "reporting persons," including directors, executive
officers, and certain holders of more than 10% of the outstanding Common Stock.
To the Company's knowledge, all Section 16 reporting requirements applicable to
known reporting persons were complied with for transactions and stock holdings
during 2003, except as follows: James B. Hicks, director, one late filing
reporting one purchase; Nancy B. Sherertz, director and 10% owner, one late
filing reporting four sales, one gift, and two option grants; William W.
Sherertz, director, officer, and 10% owner, one late filing reporting one option
grant; and Michael D. Mulholland and Gregory R. Vaughn, officers, each with one
late filing reporting one option grant.
-7-
SELECTION OF INDEPENDENT AUDITORS
As of the date of this proxy statement, the Audit Committee had not
yet selected an independent auditing firm to examine the financial statements of
the Company for the fiscal year ending December 31, 2004. The Audit Committee
and management are evaluating available alternatives, including negotiations
with PricewaterhouseCoopers LLP, to ensure that the Company receives fair value
for professional fees charged by its independent auditors.
PricewaterhouseCoopers LLP were the Company's independent auditors
for the year ended December 31, 2003. The Company expects representatives of
PricewaterhouseCoopers LLP to be present at the 2004 annual meeting of
stockholders and to be available to respond to appropriate questions. The
auditors will have the opportunity to make a statement at the annual meeting if
they desire to do so.
MATTERS RELATING TO OUR AUDITORS
Fees Paid to Principal Independent Auditors
The following fees were billed by PricewaterhouseCoopers LLP for
professional services rendered to the Company in fiscal 2002 and 2003:
2003 2002
Audit Fees(1) $138,000 $140,000(4)
Audit Related Fees(2) -- --
Tax Fees(3) 54,000 60,000
All Other Fees -- --
(1) Consists of fees for professional services rendered for the audit of the
Company's annual financial statements for fiscal 2002 and 2003 and for
review of financial statements included in quarterly reports on Form 10-Q
for those years.
(2) Refers to assurance and related services that are reasonably related to
the audit or review of a company's financial statements and that are not
included in audit fees.
(3) Consists of services rendered in connection with income tax consulting and
income tax return preparation.
(4) Audit fees incurred by the Company for 2002 were $18,000 higher than the
$122,000 estimated for that period and reported in the Company's proxy
statement for its 2003 annual meeting.
-8-
Pre-Approval Policy
The Company has adopted a policy requiring pre-approval by the Audit
Committee of all fees and services of the Company's independent auditors,
including all audit, audit-related, tax, and other legally-permitted services.
Under the policy, a detailed description of each proposed service is submitted
to the Audit Committee jointly by the independent auditors and the Company's
Chief Financial Officer, together with a statement from the independent auditors
that such services are consistent with the SEC's rules on auditor independence.
The policy permits the Audit Committee to pre-approve lists of audit,
audit-related, tax, and other legally-permitted services. The maximum term of
any preapproval is 12 months. Additional pre-approval is required for services
not included in the pre-approved categories and for services exceeding
pre-approved fee levels. The policy allows the Audit Committee to delegate its
pre-approval authority to one or more of its members provided that a full report
of any pre-approval decision is provided to the full Audit Committee at its next
scheduled meeting. All audit and permissible non-audit services provided by
PricewaterhouseCoopers LLP in 2003 were pre-approved by the Audit Committee.
AUDIT COMMITTEE REPORT
In discharging its responsibilities, the Audit Committee and its
individual members have met with management and with the Company's independent
auditors, PricewaterhouseCoopers LLP, to review their audit process and the
Company's accounting functions. The Committee discussed and reviewed with the
Company's independent auditors all matters that the independent auditors were
required to communicate and discuss with the Committee under applicable auditing
standards, including those described in Statement on Auditing Standards No. 61,
as amended, regarding communications with audit committees. Committee members
also discussed and reviewed the results of the independent auditors' examination
of the financial statements, the quality and adequacy of the Company's internal
controls, and issues relating to the auditors' independence. The Committee has
obtained a formal written statement relating to independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," and discussed with the auditors any relationships that may
affect their objectivity and independence.
Based on its review and discussions with management and the
Company's independent auditors, the Audit Committee recommended to the Board
that the audited financial statements for the fiscal year ended December 31,
2003, be included in the Company's Annual Report on Form 10-K for filing with
the SEC.
AUDIT COMMITTEE
Thomas J. Carley, Chair
Fores J. Beaudry
James B. Hicks, Ph.D.
Anthony Meeker
-9-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation for the years indicated
to the Company's chief executive officer and the Company's other executive
officers.
Summary Compensation Table
Long-Term
Compensation
Awards
Annual Compensation Securities
Underlying All Other
Name and Principal Salary Bonus Options Compensation
Position Year ($) ($) (#) ($)
William W. Sherertz 2003 $200,000 $53,436(1) 63,024 $ --
President and 2002 200,000 38,625(2) 161,719 56,461(3)
Chief Executive Officer 2001 200,000 38,526(2) 50,000 56,461(3)
Michael D. Mulholland 2003 $185,000 $13,646 15,000 --
Vice President-Finance 2002 185,000 -- 80,000 --
And Secretary; Chief 2001 185,000 -- 14,103 --
Financial Officer
Gregory R. Vaughn 2003 $150,000 $11,064 15,000 --
Vice President 2002 150,000 -- 45,000 --
2001 150,000 -- 8,159 --
(1) Includes $38,684 intended to cover Mr. Sherertz's personal expenses
related to an insurance plan for estate planning purposes.
(2) Represents a bonus intended to cover Mr. Sherertz's personal expenses
related to a split-dollar life insurance plan that will not be recovered
by the Company. See note 3 below.
(3) Represents the actual dollar amount of insurance premiums paid by the
Company in 2001 and 2002 as part of a split-dollar life insurance plan
provided to Mr. Sherertz. Mr. Sherertz's living trust is obligated to
repay to the Company all of the premiums that the Company has paid for
this insurance policy from the death benefits collected on the policy or,
if earlier, within 60 days after (x) termination of Mr. Sherertz's
employment by the Company, other than by reason of death, or (y) the
bankruptcy or dissolution of the Company.
-10-
Stock Option Data for Executive Officers
The following table provides information as to options to purchase
Common Stock granted under the Company's 2003 Stock Incentive Plan to the named
executive officers during 2003.
Option Grants in Last Fiscal Year
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise Grant Date
Granted(1) in Fiscal Price Expiration Present
Name (#) Year ($/Share) Date Value($)(2)
---- ---------- --------- --------- ---------- -------------
William W. 50,000 30.2% $ 3.02 6/03/2013 $ 82,500
Sherertz 13,024(3) 7.9 14.80 11/28/2013 104,583
Michael D. 15,000 9.1 3.02 6/03/2013 24,750
Mulholland
Gregory R. 15,000 9.1 3.02 6/03/2013 24,750
Vaughn
(1) Options generally become exercisable cumulatively in four equal annual
installments beginning one year after the date of grant; provided that the
option will become exercisable in full upon the officer's death,
disability or retirement, or in the event of a change in control of the
Company. A change in control is defined in the option agreements to
include (i) any occurrence which would be required to be reported as such
by the proxy disclosure rules of the SEC, (ii) the acquisition by a person
or group (other than the Company or one of its employee benefit plans) of
30% or more of the combined voting power of its voting securities, (iii)
with certain exceptions, the existing directors' ceasing to constitute a
majority of the Board, (iv) certain transactions involving the merger,
sale, or transfer of a majority of the assets of the Company, or (v)
approval by the stockholders of a plan of liquidation or dissolution of
the Company. The options include a feature which entitles an optionee who
tenders previously-acquired shares of Common Stock to pay all or part of
the exercise price of the option, to be granted a replacement option (a
"reload option") to purchase a number of shares equal to the number of
shares tendered with an exercise price equal to the fair market value of
the Common Stock on the date of grant. No SARs were granted by the Company
during 2003.
(2) The values shown have been calculated based on the Black-Scholes option
pricing model and do not reflect the effect of restrictions on
transferability or vesting. The values were calculated based on the
following assumptions: (i) expectations regarding volatility of 62% were
based on monthly stock price data for the Company; (ii) the risk-free rate
of return (3.22%) was assumed to be the Treasury Bond rate whose maturity
corresponds to
-11-
the expected term (5.0 years) of the option granted; and (iii) no
dividends on the Common Stock will be paid during the option term. The
values which may ultimately be realized will depend on the market value of
the Common Stock during the periods during which the options are
exercisable, which may vary significantly from the assumptions underlying
the Black-Scholes model.
(3) Option granted pursuant to "reload" provision of Mr. Sherertz's stock
award agreement. Option becomes fully exercisable six months from the date
of grant.
Information concerning exercises of stock options during 2003 and
the value of unexercised options held by the named executive officers at
December 31, 2003, is summarized in the table below.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values(1)
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Options at Fiscal Year-End (#) Fiscal Year-End(2)
Name Exercise (#) Realized ($) (Exercisable/Unexercisable) (Exercisable/Unexercisable)
---- ------------ ------------ ------------------------------ ---------------------------
William W. 54,219 $264,690 -- / 208,024 $ -- / $1,890,350
Sherertz
Michael D. 7,000 59,325 20,051 / 82,052 200,077 / 814,171
Mulholland
Gregory R. -- -- 15,329 / 52,830 150,437 / 524,393
Vaughn
_________________
(1) The named executive officers did not hold any SARs at December 31, 2003.
(2) The values shown have been calculated based on the last reported sale
price, $12.98, of the Common Stock reported on the SmallCap(TM) tier of
The Nasdaq Stock Market on December 31, 2003, and the per share exercise
price of unexercised in-the-money options.
Additional Equity Compensation Plan Information
The following table summarizes information regarding shares of the
Company's Common Stock that may be issued upon exercise of options, warrants,
and rights under the Company's existing equity compensation plans and
arrangements as of December 31, 2003. The only plan or arrangement under which
equity compensation could be awarded at December 31, 2003, was the Company's
2003 Stock Incentive Plan, including a related plan for California residents,
which was approved by stockholders in May 2003. Prior to 2003, grants of stock
options were made under the Company's 1993 Stock Incentive Plan, which had been
approved by stockholders. The information includes the number of shares covered
by, and the weighted average exercise price of, outstanding options, warrants,
and other rights under both plans, and
-12-
the number of shares remaining available for future grants excluding the shares
to be issued upon exercise of outstanding options.
A. Number of C. Number of securities
securities to be B. Weighted- remaining available for
issued upon exercise average exercise future issuance under equity
of outstanding price of outstanding compensation plans
options, warrants, options, warrants, (excluding securities
Plan Category and rights and rights reflected in column A)
------------- ---------- ---------- ----------------------
Equity compensation
plans approved by
stockholders 585,459 $4.32 258,917
Equity compensation
plans or
arrangements
not approved by 0 N/A 0
stockholders
Total 585,459 $4.32 258,917
Directors' Compensation
Under the standard arrangement in effect at the end of 2003,
directors (other than directors who are full-time employees of the Company, who
do not receive directors' fees) are entitled to receive a fee of $500 for each
Board meeting attended and each meeting of a committee of the Board attended
other than a committee meeting held on the same day as a Board meeting.
A nonqualified option for 1,000 shares of Common Stock is granted
automatically to each non-employee director whose term begins on or continues
after the date of each annual meeting of stockholders at an exercise price equal
to the fair market value of the Common Stock on the date of the meeting.
Accordingly, on May 14, 2003, each then non-employee director received an option
for 1,000 shares at an exercise price of $3.07 per share.
Payment of the exercise price of options granted to non-employee
directors may be in cash or in previously-acquired shares of Common Stock. Each
option includes a reload option feature to the extent that previously-acquired
shares are used to pay the exercise price. Non-employee director options (other
than reload options) become exercisable in four equal annual installments
beginning one year after the date of grant. Reload options become exercisable
six months following the date of grant. All options granted to a non-employee
director will be exercisable in full upon the director's death, disability, or
retirement, or in the event of a change in control of the Company. The option
term will expire three months following the date upon which the holder ceases to
be a director other than by reason of death, disability, or retirement; in the
event of death or disability, the option will expire one year thereafter; in the
event of retirement, the option will expire five years thereafter.
-13-
Employment Agreement
Effective January 26, 1999, the Company entered into an employment
agreement with Michael D. Mulholland, Vice President-Finance and Secretary of
the Company. The agreement provides for a term of not less than two years as of
each anniversary date of the agreement and is subject to automatic extension for
an additional year annually unless either party notifies the other of an
election to terminate the agreement by December 27 of the prior year. In the
event of a change in control of the Company, the agreement will be renewed
automatically for a two-year period beginning with the day immediately preceding
the change in control. The employment agreement provides for an annual salary of
not less than $155,000, subject to annual review by the Board, together with
other compensation and benefits provided for in the Company's compensation
policy for executive officers adopted in 1995.
Pursuant to the employment agreement, if Mr. Mulholland's employment
is terminated by the Company following a change in control of the Company other
than by reason of death or disability or for cause, or by Mr. Mulholland within
90 days following a change in duties related to a change in control of the
Company, he will be entitled to receive a lump sum payment of an amount equal to
two times his then-current annual base salary, subject to reduction to the
extent that such amount would be subject to the excise tax imposed on benefits
that constitute excess parachute payments under Section 280G of the Internal
Revenue Code of 1986, as amended.
A change in control of the Company for purposes of the employment
agreement is defined as summarized in the notes to the first table under "Stock
Option Data for Executive Officers" above, except for a business combination
transaction in which the Company becomes a privately-held company and William W.
Sherertz continues as President and Chief Executive Officer. A change in duties
includes a significant change in the nature or scope of Mr. Mulholland's
position, responsibilities, authorities or duties, a significant diminution in
his eligibility to participate in compensation plans or benefits, a change in
the location of his employment by more than 30 miles, or a significant violation
of the Company's obligations under the agreement.
REPORT OF THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee's goal in recommending levels of
executive compensation is to serve the interests of the Company's stockholders
by enabling the Company to attract, motivate, and retain the caliber of
management expertise necessary for successful implementation of the Company's
strategic goals.
Towards this goal, the Compensation Committee has adopted a
philosophy that combines goal-driven annual cash compensation packages with
equity incentives designed to build stock ownership among key employees. These
two key principles serve to align executives effectively with stockholder
interests by focusing management on financial goals necessary to enhance
stockholder value, as well as long-term growth, by strongly encouraging
significant ownership in the Company's stock.
-14-
Salaries. Base salaries for the Company's executive officers are
initially determined by evaluating the responsibilities of the position and the
experience of the individual, and by reference to the competitive marketplace
for management talent. Annual salary adjustments are determined by evaluating
the competitive marketplace, the performance of the Company, the performance of
the executive, particularly with respect to the individual's specific
contribution to the Company's success, and any increased responsibilities
assumed by the executive.
Annual Cash Incentive Bonuses. The Compensation Committee has
implemented a policy of providing annual cash incentive bonuses to the executive
officers of the Company below the level of President. It is the Compensation
Committee's belief that the stewardship provided by the executive officers is
best measured by the Company's return on equity. Accordingly, target amounts for
annual awards of cash incentive bonuses for 2003 were based upon a formula with
reference to the Company's return on stockholders' equity for the year ended
December 31, 2003, and each executive's total salary for the year. Based on the
Company's return on equity of 7.4% for 2003, each executive officer, including
the President, was awarded an annual cash incentive bonus in an amount equal to
7.4% of his 2003 salary.
Long-Term Incentive Compensation. The Company strives to align
executive officer financial interests with long-term stockholder value through
stock option grants. See "Option Grants in Last Fiscal Year" above for details
of options granted to the named executive officers in 2003.
Chief Executive Officer Compensation. For 2003, the Compensation
Committee maintained Mr. Sherertz's salary level at $200,000 and awarded him an
annual cash incentive bonus as described above.
In 2003, the Company ceased making payments for premiums under a
split-dollar life insurance arrangement approved for Mr. Sherertz in 2001. Upon
termination of the policy, the Company will be repaid an amount equal to the
premiums previously paid by the Company in 2001 and 2002.
COMPENSATION COMMITTEE
Anthony Meeker, Chair
James B. Hicks, Ph.D.
Nancy B. Sherertz
-15-
STOCK PERFORMANCE GRAPH
The graph on the following page shows the cumulative total return at
the dates indicated for the period from December 31, 1998, until December 31,
2003, for the Common Stock, the Standard & Poor's 500 Stock Index (the "S&P
500"), a group of the Company's current peers in the staffing industry (the
"2004 Peer Group"), and the companies comprising the staffing industry peer
group selected by the Company for its proxy statement for the 2003 annual
meeting (the "2003 Peer Group"). The 2004 Peer Group is comprised of C D I
Corp., Kelly Services, Inc., Manpower Inc., RemedyTemp, Inc., Robert Half
International Inc., Westaff, Inc., Administaff, Inc., and Gevity HR, Inc. Six of
those companies are also included in the 2003 Peer Group, as well as SOS
Staffing Services, Inc., and TeamStaff, Inc. (which were replaced by
Administaff, Inc., and Gevity HR, Inc. in the 2004 Peer Group). SOS Staffing
Services, Inc., was not included in the 2004 Peer Group because it is no longer
a public company as the result of a leveraged buyout in 2003, and TeamStaff,
Inc., is not included in the 2004 Peer Group because its products and services
have become increasingly dissimilar to those offered by the Company.
The stock performance graph has been prepared assuming that $100 was
invested on December 31, 1998, in the Common Stock, the S&P 500, the 2003 Peer
Group, and the 2004 Peer Group, and that dividends are reinvested. In accordance
with the SEC's proxy rules, the stockholder return for each company in the 2003
and 2004 Peer Group indices has been weighted on the basis of market
capitalization as of the beginning of each annual period shown. The stock price
performance reflected in the graph may not be indicative of future price
performance.
-16-
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Barrett Business Services, Inc.
Produced on 04/06/2004 including data to 12/31/2003
[GRAPHIC OMITTED]
--------------------------------------------------------------------------------------
Legend
CRSP Total Returns Index for: 12/1998 12/1999 12/2000 12/2001 12/2002 12/2003
--------------------------------------------------------------------------------------
Barrett Business Services, Inc. 100.0 77.9 41.9 43.5 38.8 152.7
S&P 500 Stocks 100.0 121.1 110.3 97.3 75.8 97.5
Self-Determined Peer Group 2003 100.0 92.9 117.0 114.4 90.6 126.6
Self-Determined Peer Group 2004 100.0 94.0 119.3 117.2 88.3 131.3
--------------------------------------------------------------------------------------
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the previous trading date is used.
D. The index for all series was set to $100.0 on 12/31/1998.
--------------------------------------------------------------------------------------
Prepared by CRSP (www.crsp.uchicago.edu), Center for Research in Security
Prices, Graduate School of Business, The University of Chicago. Used with
permission. All rights reserved.
Copyright (C) 2004
-17-
TRANSACTIONS WITH MANAGEMENT
In December 2001, pursuant to the approval of all disinterested
outside directors, the Company agreed to loan Mr. Sherertz up to $60,000 between
December 2001 and June 2002 to assist Mr. Sherertz in meeting his debt service
obligations on a loan from the Company's principal bank, which was secured by
Mr. Sherertz's holdings of Common Stock and provided for quarterly payments of
interest only. In the spring of 2002, with the approval of all disinterested
outside directors, the Company agreed to extend its financial commitment to lend
to Mr. Sherertz amounts equal to an additional two quarterly interest payments
in July and September 2002. The Company's note receivable in the aggregate
principal amount of $107,000 bears interest at the same rate as the rate charged
to Mr. Sherertz by the bank (prime less 50 basis points; 3.50% at March 31,
2004) and repayment by Mr. Sherertz to the Company is due upon demand. Mr.
Sherertz intends to pay this loan in full during 2004. In accordance with
applicable law, no new loans will be made to Mr. Sherertz under this or any
other arrangement.
Beginning in October 2001, the Company has rented Mr. Sherertz's
personal residence in La Quinta, California, for marketing, customer relations,
and business meeting purposes. The seasonal rental rates were established by a
local real estate broker who handles similar properties in the La Quinta area.
The Company made payments to Mr. Sherertz in the aggregate amount of $99,000 in
2003 for rental of the property.
OTHER MATTERS
Management knows of no matters to be brought before the annual
meeting other than the election of directors. However, if any other business
properly comes before the meeting, the persons named in the accompanying form of
proxy will vote or refrain from voting on the matter in accordance with their
judgment pursuant to the discretionary authority given in the proxy.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
Communications by stockholders to the Board should be submitted by
e-mail to bod@bbsihq.com. All directors have access to this e-mail address.
Communications to individual directors or committees should be sent to the
attention of the intended recipient. The chair of the Audit Committee will be
primarily responsible for monitoring e-mails to the Board (or its members or
committees) and for forwarding messages as appropriate.
Stockholder communications sent by regular mail to the attention of
the Board of Directors (or to individual directors or committees) will be
forwarded as the chair of the Audit Committee deems appropriate. Communications
will not be forwarded if they do not appear to be within the scope of the
Board's (or such other intended recipient's) responsibilities or are otherwise
inappropriate or frivolous.
-18-
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING IN 2005
Stockholder proposals submitted for inclusion in the proxy materials
for the annual meeting of stockholders to be held in 2005 must be received by
the Company by December 15, 2004. Any such proposal should comply with the SEC's
rules governing stockholder proposals submitted for inclusion in proxy
materials. Proposals should be addressed to Michael D. Mulholland, Secretary,
Barrett Business Services, Inc., 4724 S.W. Macadam Avenue, Portland, Oregon
97239.
For any proposal that is not submitted for inclusion in next year's
proxy materials, but instead is sought to be presented directly at the 2005
annual meeting of stockholders, management will be able to vote proxies in its
discretion if the Company: (1) receives notice of the proposal before the close
of business on February 28, 2005, and advises stockholders in the 2005 proxy
materials about the nature of the matter and how management intends to vote on
such matter; or (2) has not received notice of the proposal by the close of
business on February 28, 2005. Notices of intention to present proposals at the
2005 annual meeting should be forwarded to the address listed above.
April 14, 2004 BARRETT BUSINESS SERVICES, INC.
-19-
APPENDIX A
Barrett Business Services, Inc.
Charter for the Audit and Compliance Committee
of the Board of Directors
As Amended and Restated by the Board of Directors
as of March 19, 2004
Objectives
The Audit and Compliance Committee (the "Audit Committee") is appointed by the
Board of Directors to assist the Board in overseeing (1) the Company's
accounting and financial reporting processes, (2) the integrity and the audits
of the financial statements of the Company, (3) the compliance by the Company
with legal and regulatory requirements relating to its status as a public
company, (4) the independence and performance of the Company's independent
accountants, (5) corporate governance principles, and (6) standards of ethical
and business conduct.
Authority
The Audit Committee shall have the authority to retain independent counsel and
other advisers as it deems necessary to carry out its duties. The Audit
Committee may request any officer or employee of the Company or the Company's
outside counsel or independent accountants to attend a meeting of the Committee
or to meet with any members of, or consultants to, the Committee. To the extent
the Audit Committee deems appropriate and permitted by applicable law, rule or
regulation, it may delegate its responsibilities under this Charter to one or
more of its members.
Organization
The Audit Committee shall be comprised of at least three qualified directors.
The members of the Audit Committee shall be appointed by the Board to a one-year
term. The members of the Audit Committee shall meet the independence, expertise,
and other requirements set forth in Rule 4350(d)(2)(A)(i)-(iv) of the listing
standards for companies quoted on the Nasdaq Stock Market. At least one member
of the Audit Committee shall meet the requirements of an "audit committee
financial expert" as defined in the Securities and Exchange Commission's
("SEC's") rules. The Committee's Chair shall be appointed by the Board to serve
a one-year term. Unlimited successive one-year terms on the Committee are
permissible, in view of the independence and expertise requirements for
Committee membership.
Funding
The Audit Committee shall have the authority to determine and receive from the
Company the amount of funding required for (1) compensation to any registered
public accounting firm engaged for the purpose of preparing or issuing an audit
report or performing other audit, review,
A-1
or attest services for the Company, (2) compensation to independent and other
advisers retained by the Audit Committee, and (3) ordinary administrative
expenses of the Audit Committee in carrying out its responsibilities.
Roles and Responsibilities
The Audit Committee shall make regular reports of its recommendations to the
Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
2. Be directly responsible for the appointment, compensation,
retention, and oversight of the work of the Company's independent
accountants and any other registered public accounting firm engaged
for the purpose of performing any audit, review, or attest services
for the Company. All firms retained by the Audit Committee must
report directly to the Audit Committee.
3. Approve all fees and services (including audit and permissible
non-audit services) of the Company's independent accountants and any
other public accounting firm engaged by the Audit Committee. All
such services should be approved in advance of their performance
pursuant to policies established by the Audit Committee. The Audit
Committee may delegate authority to grant pre-approvals to one of
its members, provided such pre-approval is presented to the full
Audit Committee at its next meeting.
4. Establish procedures for (a) the receipt, retention, and treatment
of complaints received by the Company regarding accounting, internal
controls, or auditing matters, and (b) the confidential, anonymous
submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
5. Review and discuss with management and the independent accountants
the annual audited financial statements, including major issues
regarding or changes in accounting and auditing principles,
standards and practices, as well as the adequacy of internal
controls that could significantly affect the Company's financial
statements.
6. Review analyses prepared by management and the independent
accountants of significant financial reporting issues and judgements
made in connection with the preparation of the Company's financial
statements.
7. Review and discuss with management and the independent accountants,
as appropriate, earnings press releases and other financial
information that the Company proposes to disclose publicly.
A-2
8. Review and discuss with management and the independent accountants
the Company's quarterly and annual financial reports, including
specifically the "MD&A" section, prior to the filing of the
Quarterly Reports on Form 10-Q and Annual Report on Form 10-K.
9. To review and discuss with management and the independent
accountants, as appropriate, the Company's internal system of audit
and financial controls and the results of internal audits.
10. Review with management compliance by the Company with the terms of
loan agreements or other debt instruments, including indentures, as
applicable.
11. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to
monitor and control such exposures.
12. Receive written statements from the independent accountants
regarding the accountants' independence consistent with Independence
Standards Board Standard 1, discuss the contents of such statements,
including any relationships or services that may impact the
objectivity or independence of the accountants, with the
accountants, and, if determined necessary by the Audit Committee,
take or recommend that the full Board take appropriate action to
oversee the independence of the accountants.
13. Evaluate, together with the Board, the performance of the
independent accountants and, if determined necessary by the Audit
Committee, recommend that the Board replace the independent
accountants.
14. Meet with the independent accountants prior to the audit to review
the planning and staffing of the audit.
15. Obtain assurance from the independent accountants that no action or
disclosure is required with respect to the Company's financial
statements under Section 10A of the Securities Exchange Act of 1934.
16. Discuss with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
17. Review with the independent accountants any problems or difficulties
the accountants may have encountered and any management letter
provided by the independent accountants and the Company's response
to that letter. Such review should include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or
access to required information.
(b) Any changes required in the planned scope of the audit
performed by the independent accountants.
A-3
18. Prepare the audit committee report required by the SEC's rules to be
included in the Company's annual proxy statement.
19. Advise the Board with respect to the Company's policies and
procedures regarding compliance with applicable laws and regulations
relating to its status as a public company.
20. Review with the Company's outside counsel legal matters that may
have a material impact on the financial statements, the Company's
compliance policies and any material reports or inquiries received
from regulators or government agencies.
21. Meet at least annually with the Chief Financial Officer, the
Company's internal auditing staff, and the independent accountants
in separate executive sessions.
22. Develop and oversee (a) Board corporate governance principles, (b) a
code of conduct applicable to directors, officers, and employees of
the Company, and (c) a code of ethics for senior financial officers,
including making recommendations as to amendments to or waivers of
such documents and determining the treatment of violations of such
principles or codes by directors or officers of the Company.
23. Review for potential conflicts of interest and determine whether or
not to approve any transaction by the Company with a director,
officer or shareholder (including transactions with family members
or associates of such persons) that would be required to be
disclosed in the Company's annual proxy statement by the SEC's
disclosure rules.
24. Reviewing and evaluating the performance of the Board in relation to
committee charters, governance principles, and the code of conduct.
Subject to the specific responsibilities set forth in this Charter, it is not
the duty of the Audit Committee to plan or conduct audits or to determine that
the Company's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles in the United States.
This is the responsibility of management and the independent accountants.
Subject to the specific responsibilities set forth in this Charter, it is also
not the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent accountants or to
assure compliance with laws and regulations relating to the Company's status as
a public company.
A-4
PROXY
BARRETT BUSINESS SERVICES, INC.
2004 Annual Meeting of Stockholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William W. Sherertz and Anthony Meeker as
proxies, each with power to act alone and with power of substitution, and hereby
authorizes them to represent and to vote all the shares of common stock of
Barrett Business Services, Inc., which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders to be held on Wednesday, May 12, 2004, at
2:00 p.m., or at any adjournment thereof.
(Continued and to be signed on reverse)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
/FOLD AND DETACH HERE/
1. ELECTION OF DIRECTORS: FOR all nominees listed WITHHOLD AUTHORITY
Fores J. Beaudry (except as marked to to vote for all nominees
Thomas J. Carley the contrary below) listed
James B. Hicks, Ph.D. / / / /
Anthony Meeker
Nancy B. Sherertz
William W. Sherertz
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
2. In their discretion, upon any other matter
which may properly come before the
meeting.
The shares represented by this proxy when properly executed will be voted
in the manner directed herein by the undersigned stockholder. If no direction is
made, this proxy will be voted FOR Item 1. If any other matters properly come
before the meeting, the persons named as proxies will vote in accordance with
their best judgment.
The undersigned acknowledge receipt of the 2004 Notice of Annual Meeting
and accompanying Proxy Statement and revokes all prior proxies for said meeting.
Please sign exactly as your name appears hereon. If the shares are jointly
held, each joint owner named should sign. When signing as attorney, personal
representative, administrator, or other fiduciary, please give full title. If a
corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please Mark, Sign, Date and Return the Proxy Card Promptly Using the
Enclosed Envelope.
Signature(s)___________________________________________ Date:__________, 2004
/ FOLD AND DETACH HERE /