SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
GENERAL EMPLOYMENT ENTERPRISES, INC.
(Name of Registrant as Specified in Its Charter)
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: __________________________________________________
(2) Aggregate number of securities to which transaction
applies: _________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): __________________________________________
(4) Proposed maximum aggregate value of transaction: __________
(5) Total fee paid: ___________________________________________
[ ] 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: ___________________________________
(2) Form, Schedule or Registration Statement No.: _____________
(3) Filing Party: _____________________________________________
(4) Date Filed: _______________________________________________
GENERAL EMPLOYMENT ENTERPRISES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held Monday, February 23, 2004
To the Shareholders of
GENERAL EMPLOYMENT ENTERPRISES, INC.
You are cordially invited to attend the Annual Meeting of
Shareholders of General Employment Enterprises, Inc. which will
be held in the Lane Room of the Hilton Suites Hotel, 10 Drury
Lane, in Oakbrook Terrace, Illinois 60181, on Monday, February
23, 2004, at 9:00 a.m., local time. Directions to the meeting
can be obtained by contacting the Company's Investor Relations
Department at One Tower Lane, Suite 2100, Oakbrook Terrace, IL
60181, or by calling (630) 954-0495.
The purpose of the meeting is:
1.To elect six directors of the Company;
2.To act upon such other matters as may properly be brought
before the meeting.
Shareholders of record at the close of business on December 29,
2003 will be entitled to vote at the meeting. Whether or not you
are able to attend the meeting in person, please vote as soon as
possible. You may vote by signing and mailing the enclosed proxy
card in the envelope provided.
By Order of the Board of Directors
Nancy C. Frohnmaier
Secretary
Oakbrook Terrace, Illinois
January 16, 2004
YOUR VOTE IS IMPORTANT
Even if you plan to attend the Annual Meeting, you are urged to
sign, date and promptly return your proxy in the enclosed postage
paid envelope so that your shares can be voted in accordance with
your wishes. If you attend the meeting, you may vote your shares
in person, even though you have previously signed and returned
your proxy.
GENERAL EMPLOYMENT ENTERPRISES, INC.
Oakbrook Terrace Tower
One Tower Lane, Suite 2100
Oakbrook Terrace, IL 60181
PROXY STATEMENT
For Annual Meeting of Shareholders
This statement and the accompanying proxy card, which are first
being sent to shareholders on approximately January 16, 2004, are
being furnished in connection with a solicitation of proxies by
the Board of Directors of General Employment Enterprises, Inc.
(the "Company"), an Illinois corporation, to be voted at the
Annual Meeting of Shareholders to be held on Monday, February 23,
2004, at 9:00 a.m., local time, in the Lane Room of the Hilton
Suites Hotel, 10 Drury Lane, in Oakbrook Terrace, Illinois 60181.
VOTING RIGHTS AND SOLICITATION
The only voting securities of the Company entitled to be voted
at the Annual Meeting are the shares of Common Stock, of which
there were 5,120,776 outstanding on December 29, 2003, the record
date for the Annual Meeting. Shareholders are entitled to one
vote for each share held except that, in elections for directors,
each shareholder has cumulative voting rights. When voting
cumulatively, each shareholder has the number of votes equal to
the number of directors to be elected (six) multiplied by the
number of his or her shares. Such number of votes may be divided
equally among all nominees, may be cumulated for one nominee, or
may be distributed on any basis among as many nominees as is
desired.
Each proxy that is properly signed and received before the
Annual Meeting will, unless such proxy has been revoked, be voted
in accordance with the instructions on such proxy. If no
instruction is indicated on the proxy card, the shares will be
voted for election of the six nominees for director listed in
this proxy statement. Proxies given may be revoked at any time
before the voting thereof by delivering to the Company a written
statement revoking the proxy or a subsequently dated proxy, or by
attending the meeting and voting in person.
A quorum of shareholders is necessary to take action at the
Annual Meeting. A majority of the total outstanding shares of
Common Stock of the Company, represented in person or by proxy,
will constitute a quorum for purposes of the meeting.
Abstentions or broker non-votes will be treated as shares of
Common Stock that are present for purposes of determining the
presence of a quorum. The six nominees for director receiving
the highest number of votes cast will be elected directors of the
Company; abstentions and broker non-votes will have no effect on
the vote for the election of directors. "Broker non-votes"
refers to a broker or other nominee holding shares for a
beneficial owner not voting on a proposal because the broker or
other nominee does not have discretionary voting power regarding
that item and has not received instructions from the beneficial
owner.
Manner and Costs of Solicitation
The cost of preparing, assembling and mailing the proxy
materials and of reimbursing brokers, nominees and fiduciaries
for the out-of-pocket expenses of transmitting copies of the
proxy materials to the beneficial owners of shares held of record
by such persons will be borne by the Company. The Company does
not intend to solicit proxies otherwise than by the use of mail,
but certain officers and regular employees of the Company or its
subsidiary, without additional compensation, may use their
personal efforts by telephone or otherwise, to obtain proxies.
ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting, to serve
until the 2005 Annual Meeting of Shareholders, or until their
successors are elected and qualified. Proxies will be voted,
unless otherwise indicated, for the election of the nominees
named below. If necessary to elect the nominees named below,
proxies will be voted cumulatively.
Nominees
The following information is furnished with respect to each
nominee for election as a director:
Name and Age of Director Nominees,
Their Primary Occupation and Other Information
HERBERT F. IMHOFF, JR., age 54 - Director of the Company since
1986; named Chairman of the Board and Chief Executive Officer in
July 2001; has been President and Chief Operating Officer since
February 1997 and had previously been Executive Vice President
since 1986; has served as the Company's general counsel since
1982.
KENT M. YAUCH, age 57 - Director of the Company since July 2001;
was named Vice President in 2001 and has served as Chief
Financial Officer and Treasurer of the Company since 1996; had
previously been Treasurer and Controller since 1991.
SHELDON BROTTMAN, age 69 - Director of the Company since 1991; is
an attorney, and for more than ten years, has operated a real
estate management and development business. Until December 1997,
he was President and CEO of Jemm Wholesale Meat Co. in Chicago,
Illinois.
DELAIN G. DANEHEY, age 69 - Director of the Company since 1995;
formerly with the auditing firm of Ernst & Young LLP for 31
years, and was a partner when he retired from the firm in 1991.
DENNIS W. BAKER, age 57 - Treasurer of CF Industries, Long Grove,
Illinois, a chemical manufacturing company, where he has been
employed for more than twenty-five years in various financial
capacities. Mr. Baker joined the Company's Board in November
2000.
JOSEPH F. LIZZADRO, age 66 - Chairman Emeritus of L&H Company,
Oak Brook, Illinois, an electrical contracting firm, where he had
been employed since 1963. Mr. Lizzadro also serves as a director
of Harris Bank, Oakbrook Terrace, Illinois, and Florence
Corporation, Glendale Heights, Illinois. He joined the Company's
Board in November 2000.
All of the foregoing nominees are currently serving as
directors of the Company and all were elected by the shareholders
at the last Annual Meeting. Each of the above-named nominees has
agreed to serve, if elected.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION
OF EACH OF THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Listed in the following table is information concerning persons
known to the Company to be beneficial owners of more than five
percent of the Company's outstanding Common Stock as of December
29, 2003:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
Herbert F. Imhoff, Jr. 601,678 (1) 11.41
One Tower Lane, Suite 2100
Oakbrook Terrace, IL 60181
Mark L. Imhoff 451,864 (2) 8.82
Clear Channel Worldwide
20880 Stone Oak Parkway
San Antonio, TX 78258
Brad A. Imhoff 451,049 (3) 8.81
Spry Group, Inc.
1111 W. 22nd Street
Oak Brook, IL 60523
(1) Includes 10,161 shares held by Mr. Imhoff, Jr.'s son and
152,193 option shares exercisable by Mr. Imhoff, Jr. within 60
days of record date.
(2) Includes 26,400 shares held by the spouse and children of
Mark L. Imhoff.
(3) Includes 24,100 shares held by the spouse and children of
Brad A. Imhoff.
The following information is furnished as of December 29, 2003,
to indicate the beneficial ownership of the Company's outstanding
Common Stock by each director and each "named executive officer,"
as defined below, individually, and all executive officers and
directors as a group:
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership* of Class
Herbert F. Imhoff, Jr. 601,678(1) 11.41
Kent M. Yauch 43,444(2) **
Sheldon Brottman 61,851(3) 1.20
Delain G. Danehey 28,456(3) **
Dennis W. Baker 8,460(4) **
Joseph F. Lizzadro 18,000(4) **
Marilyn L. White 10,000(5) **
All directors and executive 849,257(6) 15.67
officers as a group
(eight persons)
*Unless noted otherwise, the named individuals have sole voting
and dispositive power over the shares listed.
** Represents less than 1%.
(1) Includes 10,161 shares held by Mr. Imhoff, Jr.'s son and
152,193 option shares exercisable by Mr. Imhoff, Jr. within 60
days of record date.
(2) Includes 39,444 option shares exercisable within 60 days of
record date.
(3) Includes 25,731 option shares exercisable within 60 days of
record date.
(4) Includes 5,000 option shares exercisable within 60 days of
record date.
(5) Represents options shares exercisable within 60 days of
record date.
(6) Includes 10,161 shares held by Mr. Imhoff, Jr.'s son, and
299,832 shares exercisable by members of the group within 60 days
of record date.
3
DIRECTORS AND EXECUTIVE OFFICERS
Information Concerning the Board of Directors and its Committees
The Board of Directors meets on a regularly scheduled basis to
review significant developments affecting the Company and to act
on matters requiring Board approval. It also holds special
meetings when an important matter requires Board action between
scheduled meetings. The Board held six meetings during the last
fiscal year, and acted once by unanimous written consent. No
director of the Company attended fewer than 75% of the total
meetings of the Board and Committee meetings on which such Board
members served during this period.
The members of the Board of Directors are expected to attend
the Company's Annual Meeting of Shareholders. All of the
Directors were present at the prior year's annual meeting, which
was held on February 24, 2003.
The Board of Directors has not established a formal process for
shareholders to send communications to the Board of Directors
because the Company has had the practice of forwarding to the
Directors any shareholder correspondence it receives that is
addressed to the Directors. Shareholders who wish to communicate
with the Directors may do so in writing. Correspondence should
be sent to the Company's Corporate Headquarters at One Tower
Lane, Suite 2100, Oakbrook Terrace, Illinois 60181.
Executive Committee
The Board of Directors has an Executive Committee consisting of
the Board of Directors as a whole, and meetings of the Committee
may be called or requested by the Chairman of the Board or a
majority of the directors. The Executive Committee is authorized
to act upon all matters requiring Board approval except the
declaration of dividends, corporate reorganization, and merger
and acquisition decisions. As provided in the By-Laws of the
Company, a majority of the directors constitutes a quorum for the
purpose of transacting Committee business. No Executive
Committee meetings were held in fiscal 2003.
Audit Committee
The Audit Committee is presently composed of four non-employee
directors: Delain G. Danehey (Chairman), Dennis W. Baker,
Sheldon Brottman and Joseph F. Lizzadro. The Board of Directors
has determined that each of the members of this committee is an
"independent director" as defined by the rules of the American
Stock Exchange. The Board of Directors has also determined that
Mr. Danehey and Mr. Baker are each an "audit committee financial
expert" as defined in Item 401 of Regulation S-K. An Audit
Committee Charter was adopted by the Board of Directors during
the 2000 fiscal year. In November 2003, the Board of Directors
adopted and approved an amended Charter, which is attached to
this proxy statement as Exhibit A. The Audit Committee is
primarily concerned with the effectiveness of the Company's
accounting policies and practices, its financial reporting and
its internal accounting controls. In addition, the Audit
Committee reviews and approves the scope of the annual audit of
the Company's books, reviews the findings and recommendations of
the independent auditors at the completion of their audit, and
approves annual audit fees and the selection of an auditing firm.
The Audit Committee met twice during fiscal 2003.
Compensation and Stock Option Committee
The Compensation and Stock Option Committee is presently
composed of four non-employee directors: Sheldon Brottman
(Chairman), Dennis W. Baker, Delain G. Danehey and Joseph F.
Lizzadro. The Board of Directors has determined that each of the
members of this committee is an "independent director" as defined
by the rules of the American Stock Exchange. The Committee
reviews and establishes the Company's compensation policies and
practices, including salary and incentive compensation programs
for senior executives of the Company and also oversees the
administration of the Company's stock option plans. The
Committee has the power to determine from time to time the
individuals to whom options shall be granted, the number of
shares to be covered by each option, the time or times at which
options shall be granted, and the terms of such options. The
Compensation and Stock Option Committee met two times during
fiscal 2003.
4
Nominating Committee
The Company's By-Laws authorize the Board of Directors, acting
as a whole, to consider nominees for director, and to determine
the slate of directors to be submitted to the shareholders at the
Annual Meeting. Therefore, the Board of Directors does not have
a nominating committee or a nominating committee charter. A
majority of the members of the Board of Directors are an
"independent director" as defined by the rules of the American
Stock Exchange.
Nominations for Directors
The By-Laws of the Company establish procedures for the
nomination of candidates for election to the Board of Directors.
The By-Laws provide that the nominations may be made by the Board
of Directors or by a committee appointed by the Board of
Directors. Any shareholder entitled to vote in the election of
directors generally may make nominations for the election of
directors to be held at an annual meeting of shareholders,
provided that such shareholder has given actual written notice of
his intent to make such nomination or nominations to the
Secretary of the Company not later than sixty days before the
anniversary date of the immediately preceding annual meeting of
shareholders. Each such notice must set forth (a) the name and
address of the shareholder who intends to make the nomination and
of the person or persons to be nominated; (b) a representation
that the shareholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all
arrangements or understandings involving any two or more of the
shareholders, each such nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination
or nominations are to be made by the shareholder or relating to
the Company or its securities or to such nominee's service as a
director if elected; (d) such other information regarding such
nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been
nominated, or intended to be nominated, by the Board of
Directors; and (e) the consent of each nominee to serve as a
director of the Company, if so elected.
In the past, candidates for director have been identified by
recommendations from other directors and officers of the Company.
The Board of Directors also considers nominations by shareholders
that are presented through the above process. There were no
nominations received from shareholders for consideration at the
Annual Meeting.
In evaluating candidates to serve on the Company's Board of
Directors, consideration is given to the level of experience,
financial literacy and business acumen of the candidate. The
Board considers nominees for director that are made by
shareholders on the same basis as all other nominees.
Executive Officers of the Company
All executive officers are elected annually by the Board of
Directors at the first meeting of the Board held following each
annual meeting of shareholders, and they hold office until their
successors are elected and qualified. The executive officers of
the Company are as follows:
Name and Age Position and Other Information
HERBERT F. IMHOFF, JR. (54) Chairman of the Board and Chief
Executive Officer, and President
and Chief Operating Officer.
MARILYN L. WHITE (53) Vice President. Elected Vice
President in 1996, she is responsible
for the Company's branch operations.
KENT M. YAUCH (57) Vice President, Chief Financial
Officer and Treasurer.
NANCY C. FROHNMAIER (59) Vice President since 1995 and
Corporate Secretary since 1985.
5
Code of Ethics
The Company has adopted a code of ethics that applies to its
principal executive officer, principal financial officer and
principal accounting officer.
Section 16(a) Beneficial Ownership Reporting Compliance
Directors and officers of the Company are required to report to
the Securities and Exchange Commission, by a specified date,
their transactions related to General Employment Enterprises,
Inc. Common Stock. Based solely on review of the copies of these
reports furnished to the Company and written representation that
no other reports were required, the Company believes that during
the 2003 fiscal year, all filing requirements applicable to its
officers, directors and greater than ten percent beneficial
owners were complied with.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
The following table sets forth certain information regarding
compensation awarded, earned or paid during each of the Company's
last three fiscal years to the individual serving as the
Company's Chief Executive Officer during fiscal 2003 and the
other two most highly-compensated individuals serving as
executive officers at the end of the 2003 fiscal year. These
individuals are sometimes herein referred to as the "named
executive officers."
Summary Compensation Table
Long-Term
Compensation
Awards -
Name and Annual Securities All Other
Principal Fiscal Compensation Underlying Compen-
Position Year Salary Bonus Options* sation**
Herbert F. Imhoff, Jr. 2003 $360,000 $ -- -- $33,000
Chairman and Chief 2002 435,000 -- 102,193 36,750
Executive Officer, and 2001 325,672 -- 75,000 2,550
President and Chief
Operating Officer
Marilyn L. White 2003 $162,000 $ -- -- $ 8,430
Vice President 2002 177,000 -- 61,098 9,255
2001 180,000 -- 10,000 2,663
Kent M. Yauch 2003 $144,000 $ -- -- $ 7,493
Vice President, Chief 2002 157,333 -- 39,444 8,356
Financial Officer and 2001 155,833 -- 7,500 2,488
Treasurer
* The number of stock option awards for fiscal 2002 includes
options granted pursuant to the Company's 2002 tender offer to
exchange previously outstanding stock options.
**Amounts represent the Company's contributions to the Company's
401(k) plan and deferred compensation plan.
6
Stock Option Exercises and Fiscal Year-End Stock Option Values
The following table shows information with respect to each
named executive officer concerning unexercised options held as of
September 30, 2003, none of which were in-the-money. No options
were exercised by any named executive officer during fiscal 2003.
Aggregated Fiscal Year-End Option Values
Number of Securities Underlying
Unexercised Options at F/Y End
Name Exercisable Unexercisable
Herbert F. Imhoff, Jr. 152,193 --
Marilyn L. White -- 61,098
Kent M. Yauch 39,444 --
Compensation of Directors
During the last fiscal year, directors, who were not full-time
employees of the Company, were compensated at the rate of $1,000
per month. Compensation for non-employee Executive Committee
members is $1,000 per meeting; however, no Executive Committee
meetings were held in fiscal 2003. Since Audit Committee and
Compensation and Stock Option Committee meetings are held in
conjunction with regular Board meetings, Committee members
receive no additional fee for serving on these Committees.
Employment Agreements
Herbert F. Imhoff, Jr. has an employment agreement with the
Company, effective August 1, 2001, to serve as Chairman of the
Board and Chief Executive Officer, and President and Chief
Operating Officer. Mr. Imhoff, Jr.'s agreement provides for a
continuous three-year term of employment, at a minimum annual
base salary of $450,000. Under the terms of the agreement, Mr.
Imhoff, Jr. is also eligible to earn an annual performance bonus
and is entitled to receive certain perquisites and benefits. In
the event the Company would terminate his employment for any
reason other than for cause, Mr. Imhoff, Jr. would be entitled to
continue to receive compensation and benefits for a period of
three years. Effective August 1, 2002, Mr. Imhoff, Jr.'s
agreement was amended to reflect his offer to waive 20% of his
base salary for an indefinite period of time.
The Company has employment agreements with Marilyn L. White and
Kent M. Yauch. Under the terms of their agreements, these
employees would be entitled to continuation of base salary for a
one-year period as well as continuation of certain employee
welfare benefits, if their employment were terminated following a
change in control of the Company.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation and Stock Option Committee during
fiscal 2003 was ever an officer or employee of the Company.
During fiscal 2003, no executive officer of the Company served as
a member of the board of directors or compensation committee of
any other entity that had any of its executive officers serving
on the Company's Board of Directors or Compensation and Stock
Option Committee.
7
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee is responsible for
reviewing and recommending to the Board for approval, the
compensation plans for the Company's Chief Executive Officer.
This compensation review and evaluation considers the executive's
performance and contributions, and in doing so, compares the
overall performance of the Company with others in its industry,
while also taking into account general economic and competitive
conditions. The Committee also administers the Company's stock
option plans and reviews and approves stock option grants to
executive officers and other employees of the Company.
The Chief Executive Officer establishes compensation programs
covering the other executive officers of the Company, and the
Committee reviews these programs on an annual basis.
It is the goal of the Company's compensation programs to
establish compensation levels that will enable the Company to
retain talented individuals and motivate them to achieve stated
objectives while providing them with competitive compensation
opportunities based on their personal performance and
contributions to the Company's success. To achieve this, the
Company has compensation programs for its executive officers that
consist of three primary components: base salary, annual
performance bonus and long-term incentives.
Base Salary
Salaries for executive officers are based on competitive
factors such as salary levels for comparable positions at other
companies, as well as subjective factors which include the
individual's scope of responsibility, experience, and
contributions. Salaries are reviewed on an annual basis, and any
discretionary adjustments to an executive officer's base salary
are based upon the performance of the individual and the Company,
and may take into consideration inflationary trends. As of
August 2002, all of the executive officers of the Company
voluntarily requested reductions in their base salary for an
indefinite period, and the Committee agreed to honor their
requests. There were no further adjustments of base salary for
any of the executive officers during fiscal 2003.
Annual Performance Bonus
The Company has an executive bonus plan for the Chief Executive
Officer which provides a bonus formula based upon: 1) the
achievement of certain profit goals for the Company and, 2) the
level of performance improvement. In addition, the Company had a
similar bonus plan in effect during fiscal 2003 covering the
regional vice presidents, under which those executives were
eligible to receive a bonus based upon their respective region's
profits that exceeded specified levels. Under the established
bonus formulas for fiscal 2003, no bonuses were earned by any
executive officer.
Long-Term Incentives
The Company has a deferred compensation plan covering its
executive officers. Under the plan, as determined by the
Committee, the Company contributes a percentage of each
participant's base salary to a trust under a defined contribution
arrangement. The participants direct the investments of the
trust, and the Company does not guarantee investment performance.
Participant account balances are payable upon retirement or
termination from the Company, subject to certain vesting
requirements. All of the participants in the plan voluntarily
requested that the Company temporarily suspend the contributions
being made to the plan on their behalf, and as a result, the
Company's Directors approved a temporary suspension of all
contributions to the plan, effective June 1, 2003.
As an additional incentive to improve performance, the
Committee may grant stock options to the executive officers of
the Company from time to time, pursuant to stock option plans
that were approved by the shareholders. It is the policy of the
Committee to grant stock options that have an exercise price
equal to the fair market value of the Company's common stock on
the date of grant, and thus reward the recipient only if the
Company's stock price appreciates above the price on the date of
grant. No stock options were granted by the Committee to any
executive officer in fiscal 2003.
8
Compensation of the Chairman of the Board and Chief Executive
Officer
On an annual basis, the Committee reviews the compensation of
Herbert F. Imhoff, Jr., the Chairman of the Board and Chief
Executive Officer. Mr. Imhoff, Jr. has an employment agreement
with the Company which provides for a minimum annual base salary
of $450,000, contributions to the Company's deferred compensation
plan and certain other benefits. Under this agreement, Mr.
Imhoff, Jr. is also eligible to earn annual performance bonuses
under the Company's executive bonus plan. As of August 2002, Mr.
Imhoff, Jr. voluntarily requested a 20% reduction in his base
salary for an indefinite period, and the Committee agreed to
honor his request.
Mr. Imhoff, Jr.'s bonus plan for fiscal 2003 was based upon the
Company achieving certain performance levels for the year. Since
the specific goals were not achieved, Mr. Imhoff, Jr. earned no
bonus award during fiscal 2003. The Company contributed 10% of
Mr. Imhoff Jr.'s base salary under its deferred compensation plan
during fiscal 2003, until contributions were suspended as of June
1, 2003. No new stock options were awarded to Mr. Imhoff, Jr.
during fiscal 2003.
Compensation and Stock Option Committee of the Board of Directors
Sheldon Brottman, Committee Chair
Dennis W. Baker
Delain G. Danehey
Joseph F. Lizzadro
Performance Graph
The following graph compares the cumulative total return of the
Company's common stock with that of a Peer Group Index and the
Russell 2000 Index. The graph assumes an investment of $100 on
September 30, 1998 and that all dividends were reinvested.
The Peer Group consists of Alternative Resources Corporation,
Comforce Corporation, Headway Corporate Resources, Inc., K-force,
Inc. and SOS Staffing Services, Inc.
The stock performance of Headway Corporate Resources, Inc. is
included only through September 21, 2003, at which time the
company filed for bankruptcy and submitted a request to cease
being a publicly traded company. The stock performance of SOS
Staffing Services, Inc. is included only through September 10,
2003. On September 11, 2003, SOS announced its intent to merge
with a privately held company.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
on September 30, 1998
(PERFORMANCE GRAPH APPEARS HERE)
Total Return Analysis
1998 1999 2000 2001 2002 2003
General Employment $100.00 $ 72.42 $ 64.93 $ 29.98 $ 15.20 $ 17.95
Peer Group $100.00 $ 49.24 $ 20.52 $ 21.60 $ 13.26 $ 27.71
Russell 2000 $100.00 $119.15 $147.29 $116.26 $105.46 $143.96
9
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Audit Committee of the Company's Board of Directors engaged
BDO Seidman, LLP to serve as the Company's independent auditors
and to audit the Company's consolidated financial statements for
the fiscal year ending September 30, 2004. The appointment of
BDO Seidman, LLP was effective as of December 23, 2003.
During the Company's two most recent fiscal years, and
subsequently to the effective date of their appointment, the
Company did not consult with BDO Seidman, LLP regarding the
application of accounting principles to a specific transaction or
regarding the type of opinion that might be rendered on the
Company's financial statements.
Ernst & Young LLP served as the Company's independent auditors
for the year ended September 30, 2003, and had served in that
capacity since 1985. Ernst & Young LLP was dismissed as the
Company's independent auditors effective as of December 23, 2003.
During the Company's two most recent fiscal years, and
subsequently to the effective date of their dismissal, there were
no disagreements with Ernst & Young LLP on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
The audit reports of Ernst & Young LLP for the Company's two
most recent fiscal years did not contain an adverse opinion, a
disclaimer of opinion, or an opinion that was qualified or
modified as to uncertainty, audit scope or accounting principles.
Representatives of BDO Seidman, LLP and Ernst & Young LLP are
expected to be present at the Annual Meeting of Shareholders to
respond to appropriate questions and to make a statement if they
desire to do so.
Principal Accountant Fees and Services
The following is a summary of the fees billed to the Company by
Ernst & Young LLP for professional services rendered for the two
most recent fiscal years:
2003 2002
Audit fees $63,000 $58,000
Audit-related fees 8,000 15,400
Tax fees 2,230 2,570
All other fees -- --
"Audit fees" consist of fees billed for services rendered for
the audit of the Company's consolidated financial statements for
the fiscal year and for reviews of the interim consolidated
financial statements included in the Company's Form 10-Q
Quarterly Reports.
"Audit-related fees" consist of fees billed for services
rendered that are reasonably related to the audit of the
Company's consolidated financial statements and are not included
in "audit fees." These services include audits of the Company's
retirement plan and consultations regarding financial accounting
and reporting standards.
"Tax fees" consist of fees billed for services rendered for tax
consulting.
The Audit Committee's policy is to pre-approve all audit and
non-audit services provided by the independent auditors, and to
not engage the independent auditors to perform the specific non-
audit services proscribed by law or regulation.
10
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee oversees the Company's financial reporting
process on behalf of the Board of Directors. Management has the
primary responsibility for the financial statements and the
reporting process, including the system of internal control. In
fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Annual Report on Form 10-
K with management, including a discussion of the quality, not
just the acceptability, of the accounting principles; the
reasonableness of significant judgments; and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those
audited financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the
acceptability, of the Company's accounting principles and such
other matters as are required to be discussed with the Committee
under generally accepted auditing standards. In addition, the
Committee has discussed with the independent auditors the
auditors' independence from management and the Company, including
the matters in the written disclosures required by the
Independence Standards Board, and considered the compatibility of
non-audit services with the auditors' independence.
The Committee discussed with the Company's independent auditors
the overall scope and plans for their audit. The Committee meets
with the independent auditors, with and without management
present, to discuss the results of their examinations, their
evaluations of the Company's internal control, and the overall
quality of the Company's financial reporting. The Committee held
two meetings during fiscal year 2003.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors (and the
Board has approved) that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended
September 30, 2003 for filing with the Securities and Exchange
Commission.
The Audit Committee has also discussed with representatives of
BDO Seidman, LLP their proposal to serve as independent auditors
of the Company for the year ending September 30, 2004, and based
on these discussions, the Committee approved the selection of BDO
Seidman, LLP.
Audit Committee of the Board of Directors
Delain G. Danehey, Committee Chair
Dennis W. Baker
Sheldon Brottman
Joseph F. Lizzadro
OTHER MATTERS
Proposals of Shareholders
In order to be considered for inclusion in the Proxy Statement
for the 2005 Annual Meeting of Shareholders, any shareholder
proposal to take action at that meeting must be received by the
Company at its address hereinabove, on or before September 19,
2004. Any such proposal will be subject to the requirements of
the proxy rules adopted under the Securities Exchange Act of
1934.
In addition, any shareholder wishing to bring business before
an annual meeting must comply with certain provisions in the
Company's By-Laws. The Company's By-Laws establish an advance
notice procedure with regard to certain matters to be brought
before an annual meeting of shareholders of the Company other
than by or at the direction of the Board of Directors of the
Company. Such notice generally must be delivered to or mailed to
and received by the Secretary of the principal executive offices
of the Company not less than 30 days nor more than 60 days before
the meeting. The shareholder must also comply with certain other
provisions set forth in the Company's By-Laws relating to the
bringing of business before an annual meeting. For a copy of the
Company's By-Laws, which includes the provisions relating to the
bringing of business before an annual meeting, an interested
shareholder should contact the Secretary of the Company, in
writing, at Oakbrook Terrace Tower, One Tower Lane, Suite 2100,
Oakbrook Terrace, Illinois 60181.
11
Availability of Form 10-K
The Company will furnish, upon request and without charge to
each record or beneficial owner of its securities from whom it
solicits proxies, a copy of its current annual report on Form 10-
K including the financial statements and financial schedules
thereto, filed with the Securities and Exchange Commission.
Requests should be in writing and addressed to:
Investor Relations Department
General Employment Enterprises, Inc.
Oakbrook Terrace Tower
One Tower Lane, Suite 2100
Oakbrook Terrace, Illinois 60181
or E-mail to invest@genp.com
Other Business
At the date of this Proxy Statement, the Board of Directors is
not aware of any matters, other than those stated above, that may
be brought before the meeting. However, if any other matters
shall properly come before the meeting, it is the intention of
the persons named in the enclosed form of proxy to vote such
proxy in accordance with their best judgment on such matters.
12
APPENDIX A
AUDIT COMMITTEE CHARTER
As Amended
November 24, 2003
Organization
This charter governs the operations of the Audit Committee. The
Committee shall review and reassess the Charter at least annually
and obtain the approval of the Board of Directors. The Committee
shall be members of, and appointed by, the Board of Directors and
shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the
Committee shall be considered independent as long as they do not
accept any consulting, advisory, or other compensatory fee from
the Company and are not an affiliated person of the Company or
its subsidiary, and meet the independence requirements of the
American Stock Exchange listing standards. All Committee members
shall be financially literate, and at least one member shall be a
"financial expert," as defined by SEC regulations.
Purpose
The Audit Committee shall provide assistance to the Board of
Directors in fulfilling their oversight responsibility to the
shareholders, potential shareholders, the investment community,
and others relating to: the integrity of the Company's financial
statements; the financial reporting process; the systems of
internal accounting and financial controls; the performance of
the Company's independent auditors; the independent auditor's
qualifications and independence; and the Company's compliance
with ethics policies and legal and regulatory requirements. In
so doing, it is the responsibility of the Committee to maintain
free and open communication between the Committee, independent
auditor, and management of the Company.
In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company
and the authority to engage independent counsel and other
advisers as it determines necessary to carry out its duties.
Duties and Responsibilities
The primary responsibility of the Audit Committee is to oversee
the Company's financial reporting process on behalf of the Board
and report the results of their activities to the Board. While
the Audit Committee has the responsibilities and powers 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.
Management is responsible for the preparation, presentation, and
integrity of the Company's financial statements and for the
appropriateness of the accounting principles and reporting
policies that are used by the Company. The independent auditors
are responsible for auditing the Company's financial statements
and for reviewing the Company's unaudited interim financial
statements.
The Committee, in carrying out its responsibilities, believes its
policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The Committee
should take appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk
practices, and ethical behavior. The following shall be the
principal duties and responsibilities of the Audit Committee.
These are set forth as a guide with the understanding that the
Committee may supplement them as appropriate.
The Committee shall be directly responsible for the appointment
and termination, compensation, and oversight of the work of the
independent auditors, including resolution of disagreements
between management and the auditors regarding financial
reporting. The Committee shall pre-approve all audit and non-
audit services provided by the independent auditors and shall not
engage the independent auditors to perform the specific non-audit
services proscribed by law or regulation. The Committee may
delegate pre-approval authority to a member of the Audit
Committee. The decision of any Audit Committee member to whom
pre-approval authority is delegated must be presented to the full
Audit Committee at its next scheduled meeting.
At least annually, the Committee shall obtain and review a report
by the independent auditors describing:
- The firm's internal quality control procedures.
- Any material issues raised by the most recent internal
quality control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps
taken to deal with any such issues.
- All relationships between the independent auditors and the
Company (to assess the auditor's independence).
In addition, the Committee shall set clear hiring policies for
employees or former employees of the independent auditors that
meet the SEC regulations and stock exchange listing standards.
The Committee shall discuss with the independent auditors the
overall scope and plans for their audits, including the adequacy
of staffing and compensation. Also, the Committee shall discuss
with management and the independent auditors, the adequacy and
effectiveness of the accounting and financial controls, including
the Company's policies and procedures to assess, monitor, and
manage business risk, and legal and ethical compliance programs
(e.g., Company's Code of Conduct).
The Committee shall meet separately periodically with management,
and the independent auditors to discuss issues and concerns
warranting Committee attention. The Committee shall provide
sufficient opportunity for the independent auditors to meet
privately with the members of the Committee. The Committee shall
review with the independent auditors any audit problems or
difficulties and management's response.
The Committee shall receive regular reports from the independent
auditors on the critical policies and practices of the Company,
and all alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management.
The Committee shall review management's assertion on its
assessment of the effectiveness of internal controls as of the
end of the most recent fiscal year and the independent auditors'
report on management's assertion.
The Committee shall review and discuss earnings press releases,
as well as financial information provided to analysts prior to
their release. The Committee shall review the interim financial
statements and disclosures under Management's Discussion and
Analysis of Financial Condition and Results of Operations with
management and the independent auditors prior to the filing of
the Company's Quarterly Report on Form 10-Q. Also, the Committee
shall discuss the results of the quarterly review and any other
matters required to be communicated to the Committee by the
independent auditors under generally accepted auditing standards.
The chair of the Committee may represent the entire Committee for
the purposes of these reviews.
The Committee shall review with management and the independent
auditors the financial statements and disclosures under
Management's Discussion and Analysis of Financial Condition and
Results of Operations to be included in the Company's Annual
Report on Form 10-K (or the annual report to shareholders if
distributed prior to the filing of Form 10-K), including their
judgment about the quality, not just the acceptability, of
accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial
statements. Also, the Committee shall discuss the results of the
annual audit and any other matters required to be communicated to
the Committee by the independent auditors under generally
accepted auditing standards.
The Committee shall establish procedures for the receipt,
retention, and treatment of complaints received by the Company
regarding accounting, internal accounting controls, or auditing
matters, and the confidential, anonymous submission by employees
of the Company of concerns regarding questionable accounting or
auditing matters.
The Committee shall review corporate attorneys' reports of
evidence of a material violation of securities laws or breaches
of fiduciary duty.
The Committee shall prepare a report to be included in the
Company's annual proxy statement, as required by SEC regulations.
The Committee shall perform an evaluation of its performance at
least annually to determine whether it is functioning
effectively.
APPENDIX B
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
OF GENERAL EMPLOYMENT ENTERPRISES, INC.
One Tower Lane, Suite 2100, Oakbrook Terrace, IL 60181
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of GENERAL EMPLOYMENT ENTERPRISES,
INC. hereby appoints HERBERT F. IMHOFF, JR. and SHELDON BROTTMAN,
and each of them, as the proxies (with full power of
substitution) to vote all shares which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders to be held
on February 23, 2004 and any adjournment thereof. If a vote is
not specified, said proxies will vote FOR election of directors.
1. Election of Directors, Nominees:
D. W. Baker, S. Brottman, D. G. Danehey, H. F. Imhoff, Jr.,
J. F. Lizzadro, K. M. Yauch
For, except vote withheld
FOR ___ WITHHOLD ___ from the following nominee(s): ______________
2. In their discretion, in the transaction of such other
business as may properly come before the meeting.
You are encouraged to specify your choices by marking the
appropriate boxes with an "X" but you need not mark any boxes if
you wish to vote in accordance with the Board of Directors'
recommendation.
Please sign and date on the reverse side, and mail this proxy in
the enclosed envelope as promptly as possible.
This proxy when properly executed will be voted as directed. If
no direction is made, this proxy will be voted FOR the election
of Directors. This proxy confers on the proxy holders the power
of cumulative voting and the power to vote cumulatively for less
than all of the nominees as described in the accompanying proxy
statement.
The Board of Directors recommends a vote FOR the election of Directors.
The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting or any adjournments thereof.
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
__________________________________
__________________________________
SIGNATURE(S)
DATED:______________________, 2004
(PLEASE INSERT DATE)