<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UNITOG COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
UNITOG COMPANY
101 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 1996
To all Stockholders:
The Annual Meeting of Stockholders of Unitog Company will be held on
Thursday, May 23, 1996, at 10:00 a.m. at the Kansas City Club, 1228 Baltimore,
Kansas City, Missouri for the following purposes:
(1) To elect two directors to serve three-year terms;
(2) To approve the appointment of KPMG Peat Marwick LLP as independent
auditors for fiscal 1997; and
(3) To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Stockholders of record at the close of business on March 29, 1996 are
entitled to receive notice of, and to vote at, the meeting or any adjournments
or postponements thereof. A list of stockholders of the Company as of the
close of business on March 29, 1996 will be available for inspection during
business hours from May 10 through May 22, 1996 at 101 West 11th Street,
Kansas City, Missouri, and will also be available at the meeting.
By Order of the Board of Directors
Randolph K. Rolf
Chairman of the Board
Dated: April 22, 1996
IMPORTANT--YOUR PROXY IS ENCLOSED
YOU ARE URGED TO SIGN, DATE AND MAIL YOUR PROXY EVEN THOUGH YOU MAY PLAN TO
ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE MEETING, YOU MAY VOTE BY PROXY OR YOU MAY WITHDRAW YOUR PROXY
AND VOTE IN PERSON.
<PAGE>
UNITOG COMPANY
101 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 1996
----------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Unitog Company (the "Company") for use at
the Annual Meeting of Stockholders of the Company. The meeting will be held on
Thursday, May 23, 1996, commencing at 10:00 a.m., at the Kansas City Club,
1228 Baltimore, Kansas City, Missouri. This Proxy Statement and the
accompanying form of proxy are being mailed on or about April 22, 1996.
Only stockholders of record at the close of business on March 29, 1996 will
be entitled to notice of and to vote at, the annual meeting. On the record
date, the Company had 9,416,033 shares of common stock issued and outstanding
and entitled to vote.
All shares represented by proxies will be voted by the individuals
designated on the enclosed proxy card in accordance with the stockholders'
directions. If the proxy card is signed and returned without any direction
given, shares will be voted in accordance with the recommendations of the
Board of Directors as described below. Any stockholder giving a proxy may
revoke it at any time before such proxy is voted at the meeting by giving
written notice of revocation to the Secretary of the Company, by submitting a
later dated proxy or by attending the meeting and voting in person. The
Chairman and Chief Executive Officer will announce the closing of the polls
during the meeting. All proxies must be received prior to the closing of the
polls to be counted.
The Company will bear all the costs of solicitation of proxies. Officers,
agents and employees of the Company may, by letter, by telephone or in person,
make additional requests for the return of proxies and may receive proxies on
behalf of the Company. Brokers, nominees, fiduciaries and other custodians
will be requested to forward soliciting materials to the beneficial owners of
shares and will be reimbursed for their expenses.
Stockholders representing a majority of the common stock outstanding and
entitled to vote must be present or represented by proxy in order to
constitute a quorum to conduct business at the meeting. At the meeting, the
stockholders will elect two directors and be asked to approve the appointment
of KPMG Peat Marwick LLP as independent auditors for fiscal 1997. If any other
matters are properly brought before the meeting, the enclosed proxy permits
the stockholder to give discretionary authority to the persons named in the
proxy to vote the shares in their best judgment.
Each share of common stock represented at the meeting is entitled to one
vote on each matter properly brought before the meeting. The two nominees for
director who receive the highest number of votes cast will be elected as
directors. Approval of the auditors requires the affirmative vote of a
majority of the total number of shares represented and entitled to vote at the
meeting. Therefore, an abstention with respect to approval of the auditors is
in effect a vote against the proposal. Shares represented by proxies which are
marked "withhold authority" with respect to the election of one or more
nominees for election as directors will be considered to be represented at the
meeting, but will not be included in determining the number of votes cast. In
instances where
<PAGE>
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned proxies to the brokers, those shares will not be
included in the vote totals and, therefore, will have no effect on the vote.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
common stock as of March 1, 1996 for: (i) each person known to be the
beneficial owner of more than 5% of the Company's common stock; (ii) each
director and each nominee for director; (iii) each executive officer listed in
the charts under Executive Compensation and Other Information; and (iv) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
VOTING AND
INVESTMENT POWER
-------------------- PERCENT
NAME OF BENEFICIAL OWNER SOLE SHARED OTHER OF CLASS(1)
- ------------------------ --------- ------- ------- -----------
<S> <C> <C> <C> <C>
Stein Roe & Farnham -- -- 731,850(2) 7.7%
Incorporated....................
One South Wacker Drive
Chicago, Illinois 60606
William D. Thomas............... 34,596 661,870(3) -- 7.3%
120 West 12th Street
Kansas City, Missouri 64105
G. Kenneth Baum................. 483 661,870(3) -- 6.9%
120 West 12th Street
Kansas City, Missouri 64105
George K. Baum Group, Inc....... 661,870(3) -- -- 6.9%
120 West 12th Street
Kansas City, Missouri 64105
Randolph K. Rolf................ 630,150 15,000 -- 6.7%
101 West 11th Street
Kansas City, Missouri 64105
T. Rowe Price Associates, Inc... -- -- 591,000(4) 6.2%
100 E. Pratt Street
Baltimore, Maryland 21202
SteinRoe Special Fund........... -- -- 488,850(2) 5.1%
One South Wacker Drive
Chicago, Illinois 60606
Robert F. Hagans................ 140,000 1,250 -- 1.5%
J. Craig Peterson............... 85,500(5) -- -- *
John W. Hall.................... 63,000(5) -- -- *
D. Patrick Curran............... 24,383 750 -- *
Terence C. Shoreman............. 26,250(5) -- -- *
Robert M. Barnes................ 16,500(5) 750 -- *
John W. Caffry.................. 4,223 1,500 -- *
David B. Sharrock............... 4,000 -- -- *
All executive officers and
directors as a group 1,060,410 681,120 -- 18.2%
(14 persons)...................
</TABLE>
2
<PAGE>
- --------
*Denotes less than 1%
(1) Based on the number of outstanding shares of common stock as of March 1,
1996 (9,283,337 shares), plus the number of shares subject to acquisition
before April 30, 1996, by the relevant beneficial owners.
(2) Information is as of December 31, 1995 based on a joint Schedule 13G,
dated February 12, 1996. Stein Roe & Farnham Incorporated has sole
investment power as to 731,850 shares and SteinRoe Special Fund has sole
voting power as to 488,850 of such shares.
(3) Shares are owned directly by George K. Baum Group, Inc., of which Mr. Baum
and Mr. Thomas are directors, officers and stockholders.
(4) Based on a Schedule 13G, dated February 14, 1996, T. Rowe Price
Associates, Inc. ("Price Associates") beneficially owned 591,000 shares as
of December 31, 1995. Price Associates has sole dispositive power as to
all such shares and has sole voting power as to 58,100 of such shares.
According to the Schedule 13G, the securities are owned by various
individual and institutional investors for which Price Associates serves
as investment adviser with power to direct investments and/or sole power
to vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(5) Includes maximum number of shares subject to acquisition before April 30,
1996 upon the exercise of stock options as follows: Mr. Peterson, 84,000
shares; Mr. Hall, 1,500 shares; Mr. Shoreman, 26,250 shares; Mr. Barnes,
15,000 shares; all executive officers as a group, 147,875 shares.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of seven members,
one of whom is an executive officer of the Company.
The Company's Certificate of Incorporation and Bylaws provide for a
classified Board of Directors under which there are three classes of
directors, all of which are as equal in number as possible. The class to which
each director is assigned is designated as Class A, Class B or Class C. The
term of office of Class A Directors will expire at the 1996 Annual Meeting,
Class B at the 1997 Annual Meeting and Class C at the 1998 Annual Meeting. At
its March 15, 1996 meeting, the Board of Directors nominated two persons
listed below for election as Class A Directors for a three-year term expiring
at the 1999 Annual Meeting. Each director elected will continue in office
until a successor has been elected or until resignation or removal. Both
nominees for directors are current Board members.
Shares represented by the accompanying form of proxy will be voted for the
election of the two nominees listed below, unless otherwise instructed on the
proxy card. If any nominee should at the time of the meeting be unavailable or
unable to serve as a director, the shares represented by the proxies will be
voted to elect the remaining nominees or any substitute nominee or nominees
designated by the Board. The Board knows of no reason why either of the
nominees would be unavailable or unable to serve.
3
<PAGE>
NOMINEES FOR THREE-YEAR TERMS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE TWO
NOMINEES FOR CLASS A DIRECTOR NAMED BELOW:
<TABLE>
<CAPTION>
NAME OF NOMINEE FOR DIRECTOR PRINCIPAL OCCUPATION FOR
DIRECTOR AGE SINCE LAST FIVE YEARS AND DIRECTORSHIPS
- ------------------- --- -------- ------------------------------------------------
<S> <C> <C> <C>
Randolph K. Rolf........ 54 1986 Mr. Rolf has served as Chairman of the Board of
the Company since May 1991 and President and
Chief Executive Officer since May 1988. He is a
member of the Executive Committee. Mr. Rolf also
serves on the Board of Directors of SOS Staffing
Services, Inc.
William D. Thomas....... 52 1984 Mr. Thomas has served as President of George K.
Baum Group, Inc., an investment company, since
May 1994. He has also served as Executive
Director of George K. Baum Merchant Banc,
L.L.C., an investment advisor, since May 1994.
He served as Vice Chairman of George K. Baum &
Company, an investment banking firm, from June
1991 to May 1994. From 1985 to June 1991 he was
Executive Vice President of George K. Baum &
Company. He is a member of the Audit Committee.
Mr. Thomas also serves on the Board of Directors
of Sealright Co., Inc.
</TABLE>
CONTINUING DIRECTORS
The following is information concerning the directors whose terms continue
after the annual meeting:
<TABLE>
<CAPTION>
DIRECTOR CURRENT PRINCIPAL OCCUPATION FOR
NAME AGE SINCE TERM LAST FIVE YEARS AND DIRECTORSHIPS
- ---- --- -------- ------- ------------------------------------------------
<S> <C> <C> <C> <C>
G. Kenneth Baum......... 65 1984 1998 Mr. Baum has served as Chairman of the Board of
George K. Baum Group, Inc., an investment
company, since May 1994. He served as Chairman
of the Board of George K. Baum & Company, an
investment banking firm, from April 1982 to May
1994. He is a member of the Compensation
Committee and Executive Committee. Mr. Baum also
serves on the Board of Directors of H & R Block,
Inc., Interstate Bakeries Corporation and
Sealright Co., Inc.
John W. Caffry.......... 68 1989 1997 Mr. Caffry served as Executive Vice President,
Administration, for Northern Telecom, Inc., a
company engaged in the telecommunications
industry, from February 1991 until his
retirement in October 1991. Prior to that time
he served as Executive Vice President, Finance
and Administration, for Northern Telecom, Inc.
He is a member of the Compensation Committee.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR CURRENT PRINCIPAL OCCUPATION FOR
NAME AGE SINCE TERM LAST FIVE YEARS AND DIRECTORSHIPS
- ---- --- -------- ------- ------------------------------------------------
<S> <C> <C> <C> <C>
D. Patrick Curran....... 51 1984 1998 Mr. Curran has served as Chairman and Chief
Executive Officer of Curran Companies, a company
engaged in the specialty chemicals business,
since August 1979. He is a member of the Audit
Committee. Mr. Curran also serves on the Board
of Directors of American Safety Razor Company,
Applebee's International, Inc. and Sealright
Co., Inc.
Robert F. Hagans........ 69 1979 1998 Mr. Hagans served as Chairman of the Board of
the Company from 1979 until his retirement in
1991. He is a member of the Executive Committee.
Mr. Hagans also serves on the Board of Directors
of Sealright Co., Inc.
David B. Sharrock....... 59 1994 1997 Mr. Sharrock has been engaged as a private
consultant since January 1994. He served as
Executive Vice President and Chief Operating
Officer of Marion Merrell Dow Inc., a
pharmaceutical manufacturer, from January 1990
until his retirement in December 1993. He is a
member of the Compensation Committee. Mr.
Sharrock also serves on the Board of Directors
of Cincinnati Bell, Inc., Intercardia, Inc.,
Interneuron Pharmaceuticals, Inc.,
Pharmaceutical Peptides, Inc. and Progenitor,
Inc.
</TABLE>
DIRECTOR NOMINATIONS
In addition to the Board of Director's selection of nominees, nominations
for directors may be made by the Company's stockholders in compliance with
certain provisions of the Company's Bylaws. These requirements include written
notice to the secretary of the Company not less than 60 days and not more than
90 days prior to the meeting. In the event that less than 70 days' notice (or
public disclosure) of the stockholder meeting date is given, notice of
stockholder nominations must be received by the Company's secretary before the
close of business on the 10th day following the date on which notice was
mailed or public disclosure of the meeting was made. In the case of the
Company's annual meeting of stockholders, such public disclosure of the
meeting date is considered to have been made more than 70 days in advance,
because the meeting date is set forth in the Company's Bylaws (unless the
meeting date is changed from the fourth Thursday in May).
A stockholder notice regarding a director nomination must include:
. The name, age, business address, residence address, principal occupation
and/or employment of each nominee;
. The number of shares of each class of the Company's stock beneficially
owned by each director nominee;
. Such other information concerning the nominee as would be required under
the rules of the Securities and Exchange Commission in a proxy statement
soliciting proxies for the election of the nominee;
. The name and address of the stockholder or stockholders giving notice of
the nomination (as such name and address appear in the Company's stock
ledger); and
. The number of shares of each class of the Company's stock beneficially
owned by the nominating stockholder or stockholders.
5
<PAGE>
The person acting as chairman of the stockholder meeting may determine
whether a nomination was made in accordance with the Bylaw procedures
described above, and, if the nomination is defective, shall declare that the
nomination shall be disregarded.
BOARD MEETINGS
The Board of Directors of the Company held eight meetings during fiscal
1996. During fiscal 1996, all directors attended at least 75% of the total
number of meetings of the Board of Directors and Committees of which they are
members.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive annual retainers of
$12,000 and meeting fees of $700 for each Board of Directors meeting attended,
$300 for each telephonic Board of Directors meeting attended and $300 for each
Board of Directors committee meeting attended (except committee chairmen
receive $500 per committee meeting). The Company's Outside Director Fee/Stock
Program (the "Director Program"), approved by stockholders at the last annual
meeting, permits non-employee directors to take all or a portion of their
director fees in Unitog stock. Shares issued for director fees payable before
January 1, 1997, will be issued for 91% of the fair market value as of the
date the director fees would otherwise be payable. After that time, the
Compensation Committee will establish a percentage of fair market value for
each calendar year, at a level between 67% and 91%. The Compensation Committee
may not select a percentage lower than the lowest percentage which permits
outside directors to remain "disinterested persons" for purposes of
administering other employee benefit plans of Unitog and ensuring that the
transactions under those other plans are exempt from the short-swing profit
provisions of Section 16 of the Securities Exchange Act of 1934. The Committee
bases its determination of the lowest permissible percentage upon the advice
of outside legal counsel as to the interpretation of the Section 16 rules
governing a determination of who is a "disinterested person." The Company also
provides each non-employee director group term life insurance coverage of
$50,000.
COMMITTEES
The Board has established standing Audit, Compensation and Executive
Committees. The Board does not have a standing nominating committee. The
biographical information included in this Proxy Statement identifies committee
memberships held by each director.
The Audit Committee held two meetings during fiscal 1996. It consists of two
non-employee directors. The functions performed by the Audit Committee are
review of significant financial information of the Company, review of the
effectiveness of the Company's accounting and internal control system,
oversight of the audit function, and recommendation of the appointment of
independent auditors of the Company.
The Compensation Committee held three meetings during fiscal 1996. It
consists of three non-employee directors. The Compensation Committee
establishes the general compensation policies and specific compensation levels
for executive officers and key management of the Company. The Committee also
administers the Management Incentive Plan, the Unitog Company 1992 Stock
Option Plan and the Director Program.
The Executive Committee did not meet during fiscal 1996. It consists of two
non-employee directors and one employee director. The Executive Committee has
authority to exercise, between Board meetings, all the powers and authority of
the Board, subject to certain restrictions.
6
<PAGE>
STOCK OWNERSHIP AND TRADING REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file with the Securities and Exchange
Commission and Nasdaq reports of ownership and reports of changes in such
ownership of common stock and other equity securities of the Company. SEC
regulations require those persons to furnish the Company with copies of all
Section 16(a) reports that they file. Based solely on a review of the copies
of such reports received by it, and written representations that no Forms 5
were required, the Company believes that during fiscal 1996 its executive
officers and directors complied with all applicable filing requirements in a
timely manner.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning compensation provided to
the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company for the fiscal years ended
January 28, 1996, January 29, 1995 and January 30, 1994.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
---------------- ------------
SECURITIES ALL OTHER
FISCAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) ($)(1)
- --------------------------- ------ -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Randolph K. Rolf............. 1996 $262,872 $50,150 -- $10,495
Chairman, President and 1995 251,043 99,780 -- 11,709
Chief Executive Officer 1994 236,608 73,629 -- 10,603
Terence C. Shoreman.......... 1996 $148,346 $28,959 6,000 $ 4,991
Executive Vice President, 1995 140,601 41,396 12,000 4,564
Chief Operating Officer 1994 105,462 12,359 9,000 672
J. Craig Peterson............ 1996 $144,442 $24,481 -- $ 5,073
Sr. Vice President- 1995 138,173 41,456 6,000 5,597
Finance and Administration 1994 132,077 36,447 12,000 5,673
John W. Hall................. 1996 $121,904 $14,897 -- $ 4,703
Sr. Vice President- 1995 118,904 38,072 3,000 5,411
Human Resources 1994 115,538 28,715 -- 5,075
Robert M. Barnes............. 1996 $101,808 $11,809 -- $ 3,967
Vice President, General 1995 95,808 25,910 4,500 4,216
Counsel and Secretary 1994 90,173 11,290 9,000 3,627
</TABLE>
- --------
(1) All Other Compensation for fiscal year 1996 includes the Company
contribution under the qualified thrift plan as follows: Mr. Rolf, $9,391;
Mr. Shoreman, $4,180; Mr. Peterson, $4,281; Mr. Hall, $4,032 and Mr.
Barnes, $3,409. All other amounts reported for fiscal year 1996 under this
heading represent premiums paid by the Company for term life insurance.
7
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options during fiscal 1996 to the named executive officers.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM(2)
-------------------------------------------------- ----------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ---- ---------- ---------------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Randolph K. Rolf........ -- -- -- -- -- --
Terence C. Shoreman..... 6,000 28.6% $17.63 3/17/05 $66,660 $168,180
J. Craig Peterson....... -- -- -- -- -- --
John W. Hall............ -- -- -- -- -- --
Robert M. Barnes........ -- -- -- -- -- --
</TABLE>
- --------
(1) The options were granted on March 17, 1995 and become exercisable in four
equal annual installments commencing one year from the date of grant. In
the event the employment of an option holder is terminated within one year
after a change of control, any unvested options which have been held for
at least six months immediately vest and are settled by the payment to the
option holder of an amount equal to the excess of the fair market value of
the shares over the exercise price of the option. Options become
immediately exercisable upon the death or, in some instances, the
retirement of the option holder.
(2) The price of Unitog Company common stock at the end of the 10-year option
term would be as follows: assuming 5% annual appreciation, $28.74 per
share, and assuming 10% annual appreciation, $45.66 per share. The assumed
annual rates of stock price appreciation of 5% and 10% are set by the
Securities and Exchange Commission and are not intended as a forecast of
possible future appreciation in stock prices.
FISCAL YEAR END STOCK OPTION VALUES
The following table provides information concerning unexercised options held
as of the end of fiscal 1996 by the named executive officers. None of the
named executive officers exercised any stock options during fiscal 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR END(#)(1) FISCAL YEAR END($)(2)
----------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Randolph K. Rolf........ -- -- -- --
Terence C. Shoreman..... 16,500 22,500 $ 182,590 $184,350
J. Craig Peterson....... 76,500 13,500 1,193,865 133,635
John W. Hall............ 750 2,250 5,063 15,188
Robert M. Barnes........ 10,125 9,375 113,344 90,791
</TABLE>
- --------
(1) All outstanding options are nonqualified stock options.
(2) Based on the closing market price of the Company's common stock at fiscal
year end ($23.75 per share).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
In July 1991, the Company entered into a five year employment agreement with
J. Craig Peterson, the Company's Senior Vice President--Finance and
Administration. Under the agreement, Mr. Peterson's
8
<PAGE>
compensation is as follows: a minimum base salary of $120,000, an automobile
allowance of $10,000 and the right to participate in all benefit programs and
incentive compensation plans that the Company generally makes available to its
executive officers. In addition, Mr. Peterson was granted a 10-year option to
purchase 60,000 shares of common stock at $7.00 per share, the fair market
value of the Company's common stock on the date of grant. The option provides
for a reduction in exercise price to $1.00 per share in the event of a change
of control of the Company during the term of the employment agreement.
Under the terms of the Unitog Company 1992 Stock Option Plan, in the event
the employment of an option holder is terminated within one year after a
change of control of the Company, any unvested options then outstanding which
have been held for at least six months immediately vest and are settled by the
payment to the option holder of an amount equal to the excess of the fair
market value of the shares subject to outstanding options over the exercise
price of the options.
Under Mr. Peterson's employment agreement and under the Stock Option Plan, a
"change of control" is deemed to have occurred in the event: (i) any person
acquires more than 25% of the common stock through a tender offer, exchange
offer or otherwise; or (ii) the Company is liquidated or dissolved following
the sale of all or substantially all of its assets; or (iii) the Company is
not the surviving parent corporation resulting from any merger or
consolidation to which it is a party.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes the general
compensation policies and specific compensation levels for executive officers
and key management of the Company and administers the Management Incentive
Plan and the Unitog Company 1992 Stock Option Plan. The Compensation Committee
is composed of three members, each of whom is a non-employee director. All
decisions by the Compensation Committee relating to the compensation of the
Company's executive officers and key management are ratified by the entire
Board, except for decisions about awards under the Stock Option Plan which are
made solely by the Compensation Committee. The Compensation Committee has
furnished the following report on executive compensation.
The Company's executive compensation policies are designed to integrate
compensation with the Company's financial performance and long-term stock
appreciation, to provide competitive levels of compensation to assist the
Company in attracting and retaining qualified executives and to recognize
individual initiatives and achievements. There are three principal elements in
the Company's executive compensation program:
. Base Salary Compensation
. Annual Incentive Compensation
. Stock-Based Performance Compensation through Stock Option Grants
Base Salary
Base salary ranges are established each year for each executive position
based primarily on a review of salaries offered by other industrial companies
with revenues comparable to Unitog's for positions with comparable
responsibilities. The Compensation Committee believes that the Company's base
salary structure should approximate the 50th percentile of companies with
revenues comparable to Unitog's. The Compensation Committee sets executive
salaries within the applicable ranges each year after reviewing the following
criteria for each executive: job performance and results achieved, potential
for future responsibilities, the overall
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financial performance (primarily revenues and operating income) of the Company
or, for those executives who work primarily in a particular operating segment,
a combination of financial performance of the Company and of the executive's
business segment, and the experience of the executive, in roughly that order
of importance.
Annual Incentive Compensation
The purpose of the Company's Management Incentive Plan is to provide a
direct financial incentive in the form of an annual cash bonus for achievement
of Company and major business segment goals. At least 60% of an executive's
annual bonus is based on actual versus targeted operating income performance,
either as to the Company as a whole or, for those executives who work
primarily in a particular operating segment, a combination of operating income
of the Company and of the executive's business segment. Up to 20% of an
executive's bonus may be based on objective criteria applicable to the
executive's area of responsibility, such as revenues and expense control,
which are set by the executive's supervisor, and up to 20% of the bonus may be
discretionary based on a subjective evaluation of whether individual goals
applicable to the executive were attained. To the extent the financial and
individual goals are met, an executive receives a cash bonus equivalent to a
pre-determined percentage of base salary that is based on the executive's
level of responsibility within the Company. The specific operating income
goals for the major business segments and the Company as a whole are approved
by the Compensation Committee at the beginning of each fiscal year based on
financial plans for the year. The Plan utilizes operating income as the key
performance measure because of the Company's belief that operating income most
accurately measures management performance. Although bonuses are generally not
paid unless the Company attains a minimum operating income goal for the year,
the Compensation Committee has the discretion to award individual or major
segment bonuses if the operating income goal is not met.
Stock Option Grants
Stock-based performance compensation is provided through stock options
granted under the Stock Option Plan. The purpose of the Stock Option Plan is
to align executive and stockholder long-term interests by creating a direct
link between executive compensation and stockholder return. The selection of
the participants, allotment of shares, exercise price (which may not be less
than the fair market value on the date of grant), determination of the vesting
schedule and other conditions are established by the Compensation Committee.
There is no explicit formula for deciding specific stock option grants. In
awarding options the Committee evaluates the recipient's ability to influence
the Company's long-term growth and profitability and to a lesser extent the
recipient's prior contributions to the Company. The Committee also considers
the number of options previously granted the recipient and, in certain cases,
the number of shares of common stock held by the recipient.
Chief Executive Compensation
Mr. Rolf is eligible to participate in the same executive compensation plans
available to other executive officers. Mr. Rolf's base salary is determined
each year by the Compensation Committee based on a review of the Company's
prior year financial performance (revenues, operating income and net
earnings), salaries paid to chief executive officers of companies with
revenues comparable to Unitog's and salaries paid by companies included in the
peer group, in that order of importance. As with other executives, it is the
Committee's belief that the base salary for the chief executive officer should
be set within a range that approximates the 50th percentile of companies with
revenues comparable to Unitog's. In fiscal 1996, Mr. Rolf received a base
salary of $263,000, an increase of $11,289, or 4.7%, over his fiscal 1995 base
salary. The Compensation Committee determined that the increase in base salary
was appropriate in consideration of the 6% increase in revenues, the 18%
increase in operating income and the 28% increase in net earnings from fiscal
1994 to fiscal 1995. The amount of Mr. Rolf's bonus for fiscal 1996 under the
Management Incentive Plan was $50,150, or 19% of his
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base salary. Mr. Rolf declined stock options in fiscal 1996 because of his
desire that available stock options be granted to executives with a less
significant ownership stake in the Company.
Deductibility of Compensation Expenses
Under the Omnibus Budget Reconciliation Act of 1993, the Company is not
allowed a tax deduction for compensation paid in excess of $1 million to any
officer listed in the Summary Compensation Table, subject to certain
exceptions. The Committee did not consider this restriction in setting
executive compensation because in no case does compensation subject to the
limitation paid to any executive approach the $1 million limit.
John W. Caffry, Chairman
G. Kenneth Baum
David B. Sharrock
TOTAL MARKET RETURN
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG UNITOG COMPANY, THE S&P 500 INDEX AND A PEER GROUP
LOGO
<TABLE>
<CAPTION>
1/27/91 1/26/92 1/31/93 1/30/94 1/29/95 1/28/96
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Unitog Company 100 222 279 339 372 498
Peer Group 100 134 139 158 160 213
S&P 500 Index 100 123 136 153 154 213
</TABLE>
11
<PAGE>
Assumes $100 invested on January 27, 1991 in the Company's common stock, in
the S&P 500 Index and in a peer group of companies comprised of Angelica
Corporation, Cintas Corporation, G & K Services, Inc., National Service
Industries, Inc. and Unifirst Corporation.
- --------
* Total return equals price appreciation plus dividends and assumes
reinvestment of dividends.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of G. Kenneth Baum, John W. Caffry
and David B. Sharrock. None of these individuals is or has ever been an
officer or employee of the Company. During fiscal 1996, no executive officer
of the Company served as a director of any corporation for which any of these
individuals served as an executive officer, and there were no other
compensation committee interlocks with the companies with which these
individuals or the Company's other directors are affiliated.
PROPOSAL NO. 2:
APPROVAL OF INDEPENDENT AUDITORS
For fiscal year 1996, KPMG Peat Marwick LLP examined the consolidated
financial statements of the Company and its subsidiaries, including reports to
the Securities and Exchange Commission and others. Representatives of KPMG
Peat Marwick LLP will attend the meeting, will have an opportunity to make a
statement if they desire and will be available to respond to questions by
stockholders.
The Board of Directors, upon the recommendation of the Audit Committee, has
selected KPMG Peat Marwick LLP as independent auditors of the Company for
fiscal 1997 and is therefore asking the stockholders to approve the
appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS.
MISCELLANEOUS
STOCKHOLDER PROPOSALS. In the event any stockholder intends to present a
proposal at the annual meeting of stockholders to be held in 1997, such
proposal must be received by the Company, in writing, on or before December
24, 1996 to be considered for inclusion in the Company's next Proxy Statement.
To be properly brought before a stockholder meeting, a proposal must be:
. Specified in the notice of the meeting given by the Board of Directors
or the persons calling the meeting;
. Otherwise be properly brought before the meeting by the Board of
Directors or at their direction; or
. Otherwise be properly brought before the meeting by a stockholder.
For a proposal to be properly brought before the meeting by a stockholder,
the stockholder must have given timely notice of the proposal in writing to
the Company's secretary. To be timely, the notice must be given, in the case
of an annual meeting, not less than 60 days and not more then 90 days prior to
the meeting date, and, in the case of a special meeting, not later than the
close of business on the 10th day following the date on which
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<PAGE>
notice of the stockholder meeting was mailed to stockholders. If, however, a
stockholder gives notice of a proposal in order to have the matter included in
the proxy statement for a meeting not less than 120 calendar days in advance
of the date of the Company's proxy statement for the last annual stockholder
meeting, that notice will be considered timely.
Stockholder notices must set forth the following information as to each
matter proposed:
. A brief description of the proposal and the reasons for conducting such
business at the stockholder meeting;
. The name and address of record of the stockholder proposing the business
and any other stockholder or stockholders known to be supporting the
proposal;
. The number of shares of each class of Company stock beneficially owned
by the proposing stockholder or stockholders; and
. Any material interest of the proposing stockholder or stockholders in
the proposal.
The Board of Directors or chairman of the stockholder meeting must reject
any stockholder proposal not in accordance with the requirements of the
Bylaws, or which in their judgment, is not a proper subject for stockholder
action.
See "Director Nominations" for a discussion of provisions applicable to
stockholder nominations to the Board of Directors. Any stockholder desiring a
copy of the Company's Bylaws will be furnished a copy without charge upon
written request to the Company's secretary.
VOTING PROXIES AND OTHER MATTERS. Proxies will be voted in accordance with
the choices specified on the form of Proxy. If no choice is specified, shares
will be voted "FOR" the nominees listed on the Proxy and in this Proxy
Statement and "FOR" approval of the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for fiscal 1997.
Management of the Company does not intend to present any business at the
meeting except as indicated herein and presently knows of no other business to
be presented at the meeting. Should any other business come before the
meeting, the persons named in the accompanying form of Proxy will vote the
Proxy in accordance with their best judgment.
ANNUAL REPORT. A copy of the Company's Annual Report accompanies this Proxy
Statement. The Annual Report is not part of the proxy solicitation materials.
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for fiscal 1996 may be obtained without charge upon
written request to the Secretary, Unitog Company, 101 W. 11th Street, Kansas
City, Missouri 64105.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE,
SIGN, DATE AND MAIL THE ACCOMPANYING PROXY. IF YOU ARE PRESENT AT THIS
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
Randolph K. Rolf
Chairman of the Board
April 22, 1996
13
<PAGE>
UNITOG COMPANY
ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints G. Kenneth Baum, Robert F. Hagans and
Randolph K. Rolf, jointly and individually, as Proxies, each with full power of
substitution, and hereby authorizes them to represent and to vote, as designated
below, all the shares of common stock of Unitog Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders to be held on May 23, 1996, or any adjournments or postponements
thereof.
1. ELECTION OF CLASS A DIRECTORS
[_] FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below).
[_] WITHHOLD AUTHORITY
to vote for all nominees listed below.
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name.)
Randolph K. Rolf William D. Thomas
2. APPROVAL OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR FISCAL 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
PLEASE SEE REVERSE SIDE
<PAGE>
PLEASE SEE REVERSE SIDE FOR MATTERS TO BE VOTED ON
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES FOR CLASS A DIRECTOR AND FOR PROPOSAL 2, AND AT THE DISCRETION OF
THE PROXIES ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Please mark, date, sign and return this Proxy card by mail in the enclosed
prepaid envelope.
DATED: , 1996
--------------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature
(Please sign exactly as name appears on stock
certificate. Where stock is registered jointly,
all owners must sign. Corporate owners should
sign full corporate name by an authorized person.
Executors, administrators, trustees or guardians
should indicate their status when signing.)
