DEF 14A: Definitive proxy statements
Published on April 19, 2002
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.
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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
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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
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BARRETT BUSINESS SERVICES, INC.
April 19, 2002
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 15,
2002, at the Multnomah Athletic Club, 1849 S.W. Salmon Street, Portland, Oregon.
Matters to be presented for action at the meeting include the election of
directors and ratification of the selection of independent accountants.
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.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 15, 2002
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You are invited to attend the annual meeting of stockholders of Barrett
Business Services, Inc., to be held at the Multnomah Athletic Club, 1849 S.W.
Salmon Street, Portland, Oregon, on Wednesday, May 15, 2002, at 2:00 p.m.,
Pacific Time.
Only stockholders of record at the close of business on March 29, 2002,
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. Approval of the appointment of PricewaterhouseCoopers LLP as independent
accountants for the current fiscal year ending December 31, 2002.
3. 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 19, 2002
BARRETT BUSINESS SERVICES, INC.
4724 S.W. Macadam Avenue
Portland, Oregon 97201
(503) 220-0988
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PROXY STATEMENT
2002 ANNUAL MEETING OF STOCKHOLDERS
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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 15, 2002, and any adjournments thereof. The proxy statement and
accompanying form of proxy were first mailed to stockholders on approximately
April 19, 2002.
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 Items 1 and 2 in the accompanying
Notice of Annual Meeting of Stockholders.
Stockholders may expressly abstain from voting on Item 2 by so indicating
on the proxy. Abstentions and shares represented by duly executed and returned
proxies of brokers or other nominees which are expressly not voted on Item 2
will have no effect on the required vote.
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 97201.
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 29, 2002, 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 5,813,098 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.
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 five. In late
March 2002, two directors, Robert R. Ames and Richard W. Godard, submitted their
resignations. The Board is currently conducting a search for one or more
qualified individuals to serve as directors, but due to the timing of the 2002
annual meeting, only five nominees are being submitted for election at the
meeting. All of the nominees for election as directors are members of the
present Board. 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.
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. Unless authority to vote for a director or directors is
withheld, the accompanying proxy will be voted FOR the election of the nominees
named below. 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.
Any recommendations as to nominees for election at the 2003 annual meeting
should be submitted in writing by December 20, 2002, to the Secretary of the
Company at its principal executive offices and should include the name, address,
and qualifications of each proposed nominee.
The following table sets forth information with respect to each person
nominated for election as a director, including their ages as of February 28,
2002, business experience during the past five years, and directorships in other
corporations.
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(1) During the past five years, the principal occupation and employment of each
nominee for director has been in the capacity set forth above except as
follows:
(a) 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.
(b) Mr. Hicks is a co-founder and Chief Technology Officer at
Virogenomics, Inc., a biotechnology company (formerly known as
Activated Cell Systems, LLC), which is located in the Portland
metropolitan area. He has also been a director of AVI
BioPharma, Inc. since 1997. He continues to serve as a partner
in TekSTART Consulting Group, 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, and also served as Chief Executive
Officer, Chief Scientist and a director of Hedral
Therapeutics, Inc., a biotechnology company, from 1994 to
1998.
(c) Mr. Meeker is currently a Managing Director of Victory Capital
Management, Inc. (formerly known as Key Asset Management,
Inc.) where he has been employed since 1993. From 1987 to
1993, he was Treasurer of the State of Oregon.
(d) Ms. Sherertz was President and a director of the Company from
1975 to March 1993.
(e) Mr. Sherertz also serves as Chairman of the Board of
Directors.
Ms. Sherertz and Mr. Sherertz were married to each other until 1994.
Directors' Meetings and Standing Committees
The standing committees of the Board include an audit committee and a
compensation committee. During 2001, the Board held six meetings, the audit
committee held seven meetings, and the compensation committee held two meetings.
Each director attended more than 75 percent of the aggregate of the total number
of meetings of the Board and the total number of meetings held by all committees
of the Board on which he or she served during 2001.
The audit committee reviews services provided by the independent
accountants, makes recommendations concerning their engagement or discharge, and
reviews with management and the independent accountants the results of their
audit, the adequacy of internal accounting controls, and the quality of
financial reporting. The current members of the audit committee are Mr. Carley,
chairman, and Mr. Meeker. Robert R. Ames was a member of the audit committee
until his resignation as a director of the Company in March 2002.
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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, chairman, Mr. Hicks, and
Ms. Sherertz, who does not participate in the committee's deliberations
regarding stock options.
Compensation Committee Interlocks and Insider Participation
The members of the compensation committee of the Board during 2001 were
James B. Hicks, Anthony Meeker, and Nancy B. Sherertz. Ms. Sherertz was
President of the Company from 1975 to March 1993.
Audit Committee Report
The audit committee of the Board (the "Committee") reports to the Board and
is responsible for monitoring the integrity of the Company's financial
statements, the compliance by the Company with legal and regulatory requirements
relating to its status as a public company, and the independence and performance
of the Company's independent accountants. The Committee is presently comprised
of two directors, each of whom meets the financial literacy and independence
requirements specified in current National Association of Securities Dealers
corporate governance standards. The committee's activities are governed by a
written charter adopted by the Board, a copy of which was included with the
Company's proxy statement for its 2001 annual meeting filed with the Securities
and Exchange Commission and available at www.sec.gov.
In discharging its responsibilities, the Committee and its individual
members have met with management and with the Company's independent accountants,
PricewaterhouseCoopers LLP, to review their audit process and the Company's
accounting functions. The Committee discussed and reviewed with the Company's
independent accountants all matters that the independent accountants 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 accountants'
examination of the financial statements, the quality and adequacy of the
Company's internal controls, and issues relating to the accountants'
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
accountants any relationships that may affect their objectivity and
independence.
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Based on its review and discussions with management and the Company's
independent accountants, the Committee recommended to the Board that the audited
financial statements for the fiscal year ended December 31, 2001, be included in
the Company's Annual Report on Form 10-K for filing with the Securities and
Exchange Commission.
AUDIT COMMITTEE
Thomas J. Carley, Chair
Anthony Meeker
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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 29, 2002, 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 percent of the
outstanding shares of Common Stock. Information as to beneficial stock ownership
is based on data furnished by the persons concerning whom such information is
given. Unless otherwise indicated, all shares listed as beneficially owned are
held with sole voting and dispositive powers.
* Less than 1 percent of the outstanding shares of Common Stock.
(1) The addresses of persons owning beneficially more than 5 percent 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 York 10123; Dimension Fund
Advisors, Inc., 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401;
Nancy B. Sherertz, 401 Goldsborough Street, Easton, Maryland 21601; and
William W. Sherertz, 4724 S.W. Macadam Avenue, Portland, Oregon 97201.
(2) Includes options to purchase Common Stock which are presently exercisable
or will become exercisable by May 28, 2002, as follows: Mr. Carley, 250
shares; Mr. Hicks, 250 shares; Mr. Meeker, 9,500 shares; Mr. Mulholland,
3,526 shares; Ms. Sherertz, 2,500 shares; Mr. Sherertz, 12,500 shares;
Mr. Vaughn, 2,040 shares; and all directors and executive officers as a
group, 30,566 shares.
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(3) Heartland Advisors, Inc., a registered investment advisor, filed an
amendment to Schedule 13G on January 16, 2002, reporting sole voting
power as to 312,300 shares and sole dispositive power as to 922,300
shares. William J. Nasgovitz, President and principal shareholder of
Heartland Advisors, Inc., also reported sole voting power as to 500,000
of the 922,300 shares reported as beneficially owned by Heartland
Advisors, Inc., as a result of his position as an officer and director of
Heartland Group, Inc., a registered investment company.
(4) Wynnefield Group is a combination of Wynnefield Partners Small Cap Value,
L.P., Wynnefield Small Cap Value Offshore Fund, Ltd., and Wynnefield
Partners Small Cap Value, L.P. I. Although these entities are each a
separate and distinct entity 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
13D on October 24, 2000, reporting sole voting and dispositive power as
to a total of 675,000 shares.
(5) Dimension Fund Advisors, Inc., a registered investment advisor, filed a
Schedule 13G on February 12, 2002, reporting sole voting and dispositive
power as to 361,500 shares.
(6) Includes 4,000 shares owned by Mr. Carley's wife.
(7) Ms. Sherertz disclaims beneficial ownership of 3,310 shares held by her
minor children.
(8) Includes 41,300 shares held by his wife and his minor children, as to
which he shares voting and dispositive powers.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934 ("Section 16") requires
that reports of beneficial ownership of Common Stock and changes in such
ownership be filed with the Securities and Exchange Commission ("SEC") by
Section 16 "reporting persons," including directors, executive officers, and
certain holders of more than 10 percent 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
2001.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth for the years indicated the compensation
awarded or paid to, or earned by, the Company's chief executive officer and the
Company's other executive officers whose salary level and bonus in 2001 exceeded
$100,000.
(1) Represents a bonus intended to cover Mr. Sherertz's personal expenses
related to the split-dollar life insurance plan that will not be
recovered by the Company. See note 2 below.
(2) Represents the actual dollar amount of an insurance premium paid by the
Company 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 it 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.
(3) Stock option award was voluntarily surrendered as of September 20, 2001
pursuant to a Company offer made to all optionees. See discussion below
under "Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values."
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Stock Option Data
The following table provides information as to options to purchase Common
Stock granted under the Company's 1993 Stock Incentive Plan to the named
executive officers during 2001.
(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 percent 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 2001.
(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 56
percent were based on monthly stock price data for the Company; (ii) the
risk-free rate
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of return (4.59 percent) was assumed to be the Treasury Bond rate whose
maturity corresponds to 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.
Information concerning exercises of stock options during 2001 and the value
of unexercised options held by the named executive officers at December 31,
2001, is summarized in the table below.
(1) The named executive officers did not exercise any options or SARs during
2001 and did not hold any SARs at December 31, 2001.
(2) The values shown have been calculated based on the difference between
$3.705, which was the mean of the reported high and low sale prices of
the Common Stock reported on The Nasdaq Stock Market on December 31,
2001, and the per share exercise price of unexercised in-the-money
options.
On August 22, 2001, the Company offered to all optionees who held options
with an exercise price of more than $5.85 per share (covering a total of 812,329
shares), the opportunity to voluntarily return for cancellation without payment,
any stock option award with an exercise price above that price. At the close of
the offer period on September 20, 2001, stock options for a total of 797,229
shares were voluntarily surrendered for cancellation. Pursuant to this offer,
the above-named executive officers voluntarily surrendered stock option awards
covering shares as follows: Mr. Sherertz, 273,693 shares; Mr. Mulholland,
137,298 shares; and Mr. Vaughn, 76,538 shares. The compensation committee of the
Company's board of directors may consider whether or not to grant stock-based
awards under the Plan to optionees who surrendered stock options during the
above offer period. As of the date of this filing, the compensation committee
has taken no action.
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Transactions with Management
Beginning in October 2001, the Company has rented Mr. Sherertz's personal
residence in LaQuinta, California, from time to time 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
LaQuinta area. The Company made rental payments in the aggregate amount of
$20,250 to Mr. Sherertz for use of his residence in LaQuinta, California, during
2001, and estimates that it will make payments in the range of $69,000 to
$78,000 for use of his residence in 2002.
To refinance the purchase of 355,000 shares of the Company's common stock
that Mr. Sherertz acquired from another stockholder in June 2000, Mr. Sherertz
entered into a loan transaction with Wells Fargo Bank in December 2001 under
which Mr. Sherertz is required to make interest-only payments until June 2002.
The Company entered into a loan transaction with Mr. Sherertz in December 2001
under which the Company agreed to advance funds in an amount equal to the
interest-only payments owed to Wells Fargo Bank in December 2001 and March 2002,
up to a maximum of $60,000 outstanding at any one time. The advances bear
interest at the same rate as the rate charged to Mr. Sherertz by Wells Fargo
Bank (prime less 1.50 percent) and repayment by Mr. Sherertz to the Company is
due upon demand. The outstanding balance of the loan by the Company at March 31,
2002, including accrued interest, was $51,686. Mr. Sherertz and Wells Fargo Bank
expect to renegotiate the terms of his loan by mid-June 2002.
The Company provided certain professional employer services during 2001 to
Oregon Logistics Distribution Company ("OLDC"), a company owned by Mr. Sherertz,
which provides labor services to a distribution and storage company. The Company
generated revenues of approximately $25,700 in 2001 from the services provided
to OLDC and expects to continue to generate revenues in 2002.
Directors' Compensation
Under the standard arrangement in effect at the end of 2001, 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 17, 2001, each then non-employee director received an option
for 1,000 shares at an exercise price of $3.66 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
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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, while non-employee director options will expire five years after
retirement.
Employment Agreement
In January 1999, the Company entered into an employment agreement with
Michael D. Mulholland, Vice President-Finance and Secretary of the Company. The
term of the agreement will expire on January 26, 2003, 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, such
that the effective term of the agreement will always have at least two years
remaining. 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" 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 (the "Committee") of the Board acts as an
independent resource to the Board in recommending executive salary levels and
analyzing other proposed forms of executive compensation and was composed of
three outside directors during 2001. The Committee, except for Ms. Sherertz,
also provides disinterested administration of the Company's 1993 Stock Incentive
Plan.
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The Committee's goal 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 the successful implementation of
the Company's strategic goals.
The Company's overall approach to executive compensation is based on a
philosophy that combines a goal-driven annual cash compensation package 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.
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 Committee has implemented a policy to
guide its compensation decisions with respect to the executive officers of the
Company below the level of president. It is the 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 2001 were based upon a formula with reference to the
Company's return on stockholders' equity for the year ended December 31, 2001,
and the executive's total salary for the year.
Long-Term Incentive Compensation. The Company strives to align executive
officer financial interests with long-term stockholder value. See "Option Grants
in Last Fiscal Year" above for details of options granted to the named executive
officers in 2001.
In August 2001, the Committee approved an option replacement program under
which options for a total of 797,229 shares of Common Stock, including 594,779
options held by executive officers, with per share exercise prices of $5.85 or
above were voluntarily surrendered for cancellation. The Committee expects to
consider granting options in the next few weeks to replace the options that were
cancelled under the program. The Committee believes that the replacement program
will restore the Company's ability to provide incentives for performance to its
senior management and other key employees while minimizing the dilutive effect
of option grants on the Company's shareholders.
Chief Executive Officer Compensation. In view of the Company's financial
performance for 2001, it was the recommendation of the Company's president,
William W. Sherertz, to the Committee that his salary level remain unchanged for
2001. It was Mr. Sherertz's further recommendation that his incentive
compensation continue to be tied to the long-term enhancement of stockholder
value. It was the decision of the Committee to accept Mr. Sherertz's
recommendations in view of the fact that Mr. Sherertz is a significant
shareholder
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in the Company and, to the extent his performance as chief executive officer
results in an increase in the value of the Company's stock, all stockholders,
including him, share the benefits.
In 2001, a split-dollar life insurance arrangement was approved for Mr.
Sherertz. Upon termination of the policy, the Company will be repaid an amount
equal to the premiums previously paid by the Company. It is the Committee's
position that, in view of Mr. Sherertz's relatively large stockholdings in the
Company, a split dollar life insurance arrangement would be in the best
interests of all shareholders.
COMPENSATION COMMITTEE
Anthony Meeker, Chair
James B. Hicks, Ph.D.
Nancy B. Sherertz
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total return at the dates indicated for
the period from December 31, 1996, until December 31, 2001, for the Common
Stock, the Standard & Poor's 500 Stock Index (the "S&P 500"), and for a group of
the Company's peers in the staffing industry. The staffing industry peer group
(the "2002 Peer Group") is comprised of the same eight companies included in the
peer group used to prepare the performance graph set forth in the Company's
proxy statement for its annual meeting in May 2001, C D I Corp., Kelly Services,
Inc., Manpower Inc., RemedyTemp, Inc., Robert Half International Inc., SOS
Staffing Services, Inc., TeamStaff, Inc., and Westaff, Inc.
The following graph has been prepared assuming that $100 was invested on
December 31, 1996, in the Common Stock, the S&P 500, and the 2002 Peer Group and
that dividends are reinvested. In accordance with the SEC's proxy rules, the
shareholder return for each company in the 2002 Peer Group index 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.
-14-
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
Performance Graph for
Barrett Business Services, Inc.
Produced on 03/11/2002 including data to 12/31/2001
[GRAPHIC OMITTED]
LEGEND
Companies in the Self-Determined Peer Group
C D I CORP KELLY SERVICES INC
MANPOWER INC WIS REMEDYTEMP INC
ROBERT HALF INTERNATIONAL INC SOS STAFFING SERVICES INC
TEAMSTAFF INC WESTAFF INC
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 preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/1996.
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. (C) Copyright 2002
-15-
APPROVAL OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has selected PricewaterhouseCoopers LLP as independent
accountants to examine the financial statements of the Company for the fiscal
year ending December 31, 2002. Although the appointment of accountants is not
required to be submitted to a vote of the stockholders, the Board has decided to
ask the stockholders to approve the appointment and recommends that you vote FOR
approval. If a majority of the shares of Common Stock represented at the annual
meeting does not vote to approve the appointment, the Board will reconsider the
appointment.
PricewaterhouseCoopers LLP were the independent accountants for the year
ended December 31, 2001. The Company expects representatives of
PricewaterhouseCoopers LLP to be present at the 2002 annual stockholders'
meeting and to be available to respond to appropriate questions. The accountants
will have the opportunity to make a statement at the annual meeting if they
desire to do so.
Audit Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for professional
services rendered for the audit of the Company's annual financial statements for
the year ended December 31, 2001, and their review of the financial statements
included in its quarterly reports on Form 10-Q for that fiscal year were
$127,300.
Financial Information Systems Design and Implementation Fees
During 2001, PricewaterhouseCoopers LLP did not provide any professional
services to the Company with regard to financial information systems design and
implementation.
All Other Fees
Fees billed for services provided to the Company by PricewaterhouseCoopers
LLP during 2001, other than the services described above under "Audit Fees,"
were $116,300. Such fees were for services rendered in connection with income
tax consulting, planning and return preparation and various other consulting
related to accounting matters. The audit committee of the Board has considered
whether the provision of these services to the Company is compatible with
maintaining the independence of the Company's independent public accountants.
OTHER MATTERS
Management knows of no matters to be brought before the annual meeting
other than the election of directors and ratification of the selection of
accountants. 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 thereon in accordance with their judgment pursuant to the discretionary
authority given them in the proxy.
-16-
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING IN 2003
Stockholder proposals submitted for inclusion in the proxy materials for
the annual meeting of stockholders to be held in 2003 must be received by the
Company by December 20, 2002. 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
97201.
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 2003 annual
meeting, 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
March 5, 2003, and advises stockholders in the 2003 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 March 5,
2003. Notices of intention to present proposals at the 2003 annual meeting
should be forwarded to the address listed above.
April 19, 2002 BARRETT BUSINESS SERVICES, INC.
-17-
BARRETT BUSINESS SERVICES, INC.
2002 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 15, 2002, 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
Thomas J. Carley below (except as marked to vote for all nominees
James B. Hicks to the contrary below) listed below
Anthony Meeker / / / /
Nancy B. Sherertz
William W. Sherertz
(INSTRUCTION: To withhold authority to vote for any individual nominees, write
that nominee's name in the space provided below)
- -------------------------------------------------------
3. 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 Items 1 and 2. If any other matters properly
come before the meeting, the persons named as proxies will vote in accordance
with their best judgment.
The undersigned acknowledges receipt of the 2002 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:----------------,2002
/FOLD AND DETACH HERE/
MEMORANDUM:
- ----------
DATE: April 19, 2002
TO: Participants in the Barrett Business Services, Inc.
Employees' Savings Plan (the "401(k) Plan")
FROM: Michael Mulholland
SUBJECT: Proxy solicitation in connection with May 15, 2002
Annual Meeting of Stockholders
- --------------------------------------------------------------------------------
The enclosed material, which consists of:
-- 2001 Annual Report
-- Proxy statement
-- Proxy card
-- Return envelope
is being provided to you as a participant in Barrett's 401(k) plan, which owns
shares of the Company's common stock. Pursuant to the Plan Document and Trust
Agreement, you are entitled to vote the shares held for your account in the Plan
on the proposals outlined in the accompanying proxy statement.
After you have considered the enclosed information, please mark your votes on
the proxy card, sign the card, fold it and return it in the postage-paid
envelope. Your vote will be compiled with those of other Plan participants and
conveyed to the Company's stock transfer agent, Mellon Investor Services, by the
Plan's trustee, Smith Barney Trust Company.
Enclosures
cc: Mary Ann Frantz