<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE DAVEY TREE EXPERT CO.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ............
(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: ................................................................
================================================================================
<PAGE> 2
[DAVEY LOGO]
THE DAVEY TREE
EXPERT COMPANY
NOTICE OF 1997
ANNUAL MEETING
AND PROXY STATEMENT
<PAGE> 3
[DAVEY LOGO]
John W. Joy
Chairman of the Board
R. Douglas Cowan
President and Chief
Executive Officer
April 16, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at the Holiday Inn Akron-Kent, 4363 State Route 43, Kent, Ohio at 5:00 p.m.
on Tuesday, May 20, 1997. We hope that you will be able to attend.
The Notice of Annual Meeting of Shareholders and the Proxy Statement, which are
included in this booklet, describe the matters to be acted upon at the meeting.
Regardless of the number of shares you own, your vote on these matters is
important. Whether or not you plan to attend the meeting, we urge you to mark
your choices on the enclosed proxy card and sign and return it in the envelope
provided. If you later decide to vote in person at the meeting, you will have an
opportunity to revoke your proxy and vote by ballot.
We look forward to seeing you at the meeting.
Sincerely,
JOHN W. JOY
Chairman of the Board R. DOUGLAS COWAN
President and
Chief Executive Officer
<PAGE> 4
THE DAVEY TREE EXPERT COMPANY
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
The Annual Meeting of Shareholders of The Davey Tree Expert Company will be held
at the Holiday Inn Akron-Kent located at 4363 State Route 43, Kent, Ohio, at
5:00 p.m. on Tuesday, May 20, 1997. The purposes of the meeting are:
1. To elect directors to the class whose term expires in 2000.
2. To hear reports and to transact any other business that may properly come
before the meeting.
Shareholders of record at the close of business on April 5, 1997, are entitled
to notice of and to vote at the meeting.
For the Board of Directors
DAVID E. ADANTE
Secretary
April 16,1997
1
<PAGE> 5
THE DAVEY TREE EXPERT COMPANY
PROXY STATEMENT
The Board of Directors of The Davey Tree Expert Company requests your proxy for
use at the Annual Meeting of Shareholders to be held on May 20, 1997, and at any
adjournments of that meeting. This Proxy Statement is to inform you about the
matters to be acted upon at the meeting.
If you attend the meeting, you can vote your shares by ballot. If you do not
attend, your shares can still be voted at the meeting if you sign and return the
enclosed proxy card. Shares represented by a properly signed card will be voted
in accordance with the choices marked on the card. If no choices are marked, the
shares will be voted to elect as directors the nominees listed on page 3. You
may revoke your proxy before it is voted by submitting another proxy card with a
later date or by giving notice to the Company in writing or orally at the
meeting.
This Proxy Statement and the enclosed proxy card are being mailed to
shareholders on or about April 16, 1997. The Company's executive offices are
located at 1500 North Mantua Street, Kent, Ohio 44240. Its telephone number is
(330) 673-9511.
ELECTION OF DIRECTORS
The Company's Board of Directors is now composed of nine directors, with four
directors in the class whose terms expire in 1997, three directors in the class
whose terms expire in 1998, and two directors in the class whose terms expire in
1999. Each of the directors serves for a term of three years and until a
successor is elected. The Board met five times during the last fiscal year.
2
<PAGE> 6
Nominees for election as directors for the term expiring in 2000, as well as
present directors whose term will continue after the meeting, appear below. The
Board of Directors recommends you vote for the nominees listed.
NOMINEES FOR TERM EXPIRING IN 2000
RICHARD E. DUNN, age 69, has been a director of the Company since 1980. He was
Vice President for Business Affairs and Treasurer of Kent State University in
Kent, Ohio, for more than five years, prior to his retirement in 1991.
WILLIAM D. GINN, age 73, has been a director of the Company since 1973. He has
been a partner with the law firm of Thompson, Hine and Flory LLP of Cleveland,
Ohio, for more than five years. Mr. Ginn is also a director of Nordson
Corporation, a manufacturer of industrial application equipment. Thompson, Hine
and Flory LLP has in the past provided and continues to provide legal services
to the Company.
RICHARD S. GRAY, age 65, has been a director of the Company since 1991. He has
been President of Enterprise Development, Incorporated, a non-profit
organization that provides counsel and assistance to new enterprises, since
April 1987. He is a director of SIFCO Industries, a manufacturer and marketer
that focuses on metalworking and related industrial technologies. He is also a
director of SHILOH, a manufacturer of heavy metal products and steel processing.
THOMAS MURDOUGH, JR., age 58, has been a director of the Company since 1994 and
is the founder and President of Step 2 Corporation since 1991. Prior to this,
Mr. Murdough was the founder of Little Tikes Company which he sold to Rubbermaid
in 1984. He continued as its President and General Manager until September,
1989.
3
<PAGE> 7
PRESENT DIRECTORS WHOSE TERM EXPIRES IN 1998
EUGENE W. HAUPT, age 75, has been a director of the Company since 1979. Mr.
Haupt was President of The Davey Tree Surgery Company, a wholly-owned subsidiary
of the Company, from 1985 until his retirement in December, 1990.
JAMES H. MILLER, AGE 70, has been a director of the Company since 1985. Mr.
Miller has been retired since 1986. Before his retirement, he was Vice
President-Administration of GenCorp, Inc. (formerly the General Tire and Rubber
Co.), a tire manufacturer.
R. CARY BLAIR, AGE 57, has been a director of the Company since 1989 and has
been a director of the Westfield Companies since 1984. He has been President and
Chief Executive Officer of the Westfield Companies, a group of insurance
companies headquartered in Westfield, Ohio, since 1991. He is also a director of
Inter-Ocean Reinsurance Co., Ltd., a multi-line finite re-insurance concern. He
is also a director of First Merit-Old Phoenix National Bank and First Merit
Corporation, both of which are financial institutions.
PRESENT DIRECTORS WHOSE TERM EXPIRES IN 1999
JOHN W. JOY, AGE 74, has been a director of the Company since 1964 and Chairman
of the Board of the Company since 1983. He was Chief Executive Officer of the
Company for more than five years until 1988, and has been retired since May
1990.
R. DOUGLAS COWAN, AGE 56, has been a director of the Company since 1982,
President since 1985, and Chief Executive Officer since 1988.
COMMITTEES OF THE BOARD OF DIRECTORS;
ATTENDANCE
The present members of the Audit Committee are Messrs. Dunn, Haupt, and Gray
(Chairman). The Audit Committee reviews the proposed audit programs (in-
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<PAGE> 8
cluding both independent and internal audits) for each fiscal year, the results
of these audits, and the adequacy of the Company's systems of internal control.
The Committee also recommends to the Board of Directors the appointment of the
independent auditors for each fiscal year. The Audit committee met two times
during the last fiscal year.
The present members of the Compensation committee are Messrs. Gray, Miller, and
Blair (Chairman). The Compensation Committee recommends to the Board of
Directors the salaries and other compensation of executive officers of the
Company and supervises the administration of the Company's benefits programs.
The Compensation Committee met three times during the last fiscal year.
The present members of the Nominating Committee are Messrs. Cowan, Blair, Dunn,
Ginn (Chairman), and Murdough. The Nominating Committee screens and nominates
candidates for election as directors and recommends committee members for
appointment by the Board of Directors. A shareholder who wishes to suggest a
director candidate for consideration by the Nominating Committee should consult
the applicable provision of the Company's Regulations, which are available for
inspection at the Company's offices during business hours. The Nominating
Committee met one time during the last fiscal year.
The present members of the Finance Committee are Messrs. Joy, Cowan, Ginn,
Miller (Chairman), and Murdough. The Finance Committee reviews the Company's
annual business plan as developed by management and recommends it to the Board
of Directors for approval. The Committee also reviews longer-term financial
issues affecting the Company's ownership structure, financial condition and
business plans. The Finance Committee met five times during the last fiscal
year.
5
<PAGE> 9
During the last fiscal year, each director attended at least 75% of the meetings
of the Board of Directors and of the committees on which he served.
COMPENSATION OF DIRECTORS
The Company pays directors who are not executive officers of the Company a fee
of $9,000 per year plus $800 for the first and $400 for each additional Board or
Committee meeting attended on the same day. Chairmen of Committees receive an
additional retainer of $2,500 per year and the Chairman of the Board receives an
additional retainer of $5,000 per year. Directors may defer all or part of their
fees until their retirement as directors.
OWNERSHIP OF COMMON SHARES
The following table shows, as of April 5, 1997, the number and percent of Common
Shares of the Company beneficially owned by each director, the officers listed
in the Summary Compensation Table, and all directors and officers as a group:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES(1)(2) PERCENT(2)(3)
- --------------------------------------- -------------
<S> <C> <C>
John W. Joy 81,155 1.81%
R. Douglas Cowan 180,129 3.96%
Eugene W. Haupt 86,014 1.92%
R. Cary Blair 5,000 .11%
Thomas Murdough, Jr. 2,000 .04%
Richard E. Dunn 3,200 .07%
William D. Ginn 26,800 .60%
Richard S. Gray 4,000 .09%
James H. Miller 18,000 .40%
David E. Adante 104,953 2.32%
Karl J. Warnke 89,344 1.99%
Howard D. Bowles 92,840 2.05%
C. Kenneth Celmer 68,842 1.52%
20 directors and officers
as a group, including
those listed above 1,123,515 23.06%
</TABLE>
6
<PAGE> 10
- ---------------
1. Other than as described below, beneficial ownership of the Common Shares
listed in the tables is comprised of sole voting and investment power, or
voting and investment power, shared with spouses.
Includes shares allocated to individual accounts under the Company's Employee
Stock Ownership Trust (the "ESOP") with respect to which the following
executive officers have only sole voting power as follows: R. Douglas Cowan,
21,347 shares, David E. Adante, 10,790 shares, Karl J. Warnke, 8,654 shares,
Howard D. Bowles, 12,938 shares, C. Kenneth Celmer, 16,579 shares, and
127,914 shares by all officers as a group.
2. These include the right to purchase on or before June 4, 1997, upon the
exercise of outstanding stock options, 66,000 Common Shares by Mr. Cowan,
45,500 Common Shares by Mr. Adante, 45,500 Common Shares by Mr. Warnke,
39,000 Common Shares by Mr. Bowles, 31,500 Common Shares by Mr. Celmer and
388,000 Common Shares by all directors and officers as a group.
3. Percentage calculation based on total shares outstanding plus the options
exercisable by the respective individual on or before June 4, 1997, in
accordance with Rule 13d-3(d) of the Securities Exchange Act of 1934.
To the Company's knowledge, as of April 5, 1997, the only beneficial owner of
more than five percent of the outstanding Common Shares of the Company was
Whitelaw & Co., the nominee of Key Trust Company of Ohio, N.A., trustee of ESOP,
127 Public Square, 14th Floor, Cleveland, Ohio 44114, which, as of April 5,
1997, had sole dispositive power with respect to 1,636,165 Common Shares (36.5%
of the outstanding Common Shares).
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<PAGE> 11
REMUNERATION OF EXECUTIVE OFFICERS
The table below shows the cash compensation of the five highest paid executive
officers of the Company whose aggregate cash compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------------
ALL OTHER
ANNUAL
NAME AND COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION(1)
- -------------------------- ---- -------- ------- ---------
<S> <C> <C> <C> <C>
R. Douglas Cowan 1996 227,475 80,500 1,310
President and Chief 1995 211,048 50,000 1,120
Executive Officer 1994 200,253 35,000 1,096
David E. Adante 1996 152,286 47,450 1,310
Executive Vice President, 1995 133,370 29,250 1,120
Chief Financial Officer 1994 124,302 19,950 1,096
and Secretary-Treasurer
Karl J. Warnke 1996 151,091 47,450 1,310
Executive Vice President, 1995 132,221 29,250 1,120
and General Manager 1994 123,253 19,950 1,096
Utility Services
Howard D. Bowles 1996 111,942 51,700 1,310
Vice President and 1995 105,560 37,150 1,120
General Manager -- 1994 98,285 16,250 1,096
Davey Tree Surgery Company
C. Kenneth Celmer 1996 111,475 57,850 1,310
Vice President and 1995 107,550 35,850 1,120
General Manager, 1994 94,258 18,500 1,096
Residential Services
---- -------- ------- ---------
</TABLE>
- ---------------
1. All other compensation represents amounts allocated to the participant
accounts for each of the officers under the terms of the Company's Employee
Stock Ownership Plan.
8
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
EXERCISE VALUE AT ASSUMED
% OF TOTAL OR BASE ANNUAL RATES OF STOCK
OPTIONS PRICE PER PRICE APPRECIATION FOR
GRANTED SHARE OPTION TERM(4)(5)
OPTIONS TO EMPLOYEES ($/SH) EXPIRATION ----------------------
NAME GRANTED(#)(1) IN FISCAL YEAR (2) DATE(3) 5% 10%
- ----------------------- ------------- -------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
R.D. Cowan 28,000 11% $ 15.80 12-6-2006 $279,174 $704,987
David E. Adante 20,000 8% $ 15.80 12-6-2006 $199,410 $503,562
Karl J. Warnke 20,000 8% $ 15.80 12-6-2006 $199,410 $503,562
Howard D. Bowles 14,000 5% $ 15.80 12-6-2006 $139,587 $352,493
C. Kenneth Celmer 14,000 5% $ 15.80 12-6-2006 $139,587 $352,493
</TABLE>
- ---------------
(1) All options granted in 1996 are exercisable in cumulative installments
commencing one year from date of grant. The right to exercise these options
expires 3 months after retirement or termination due to disability or death.
Termination for any other reason cancels the right to exercise these options
as of the date of termination.
(2) All options were granted at the Fair Market Value at date of grant.
(3) All options granted have a 10 year term.
(4) Gains are reported net of the option exercise price. These amounts represent
certain assumed rates of appreciation only. Actual gains, if any, on stock
option exercises are dependent on the future performance of the Common
Stock, overall stock conditions, as well as the option holders' continued
employment. The amounts reflected in this table may not be achieved.
(5) The potential realizable gain for all shareholders of the Company during the
term of the options shown in this table, at the assumed rates of stock price
appreciation of 5% and 10%, would be $44,842,045 and $113,237,800,
respectively. These shareholder gain amounts are based on the $15.80
exercise price applicable to options granted to executive officers and on
the 4,497,472 Common Shares that were outstanding on the December 6, 1996,
grant date.
9
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT FISCAL OPTIONS AT FISCAL YEAR END
SHARES YEAR END (#) ($)(2)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE # REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. D. Cowan --0-- --0-- 66,000 34,000 $ 428,100 $93,420
David E. Adante --0-- --0-- 45,500 24,500 291,955 67,665
Karl J. Warnke --0-- --0-- 45,500 24,500 291,955 67,665
Howard D. Bowles --0-- --0-- 39,000 17,000 260,770 46,710
C. Kenneth Celmer --0-- --0-- 31,500 16,500 207,495 44,525
</TABLE>
- ---------------
(1) The value realized upon exercise of options is based on the difference
between the option exercise price and the fair market value at the date of
exercise.
(2) The value of unexercised options is based on the year-end price of $18.20
per share.
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<PAGE> 14
PENSION PLAN TABLE
The table below shows estimated annual benefits payable under the employee
retirement plan to an employee, including officers (other than to an employee
who is subject to a collective bargaining agreement), retiring at age 65, and
electing a life benefit without survivor options, in the years of benefit
service base compensation indicated. Such benefits reflect a reduction to
recognize in part the Company's cost of Social Security benefits related to
service for the Company. The Company's plans also provide for the payment of
benefits to an employee's surviving spouse or beneficiary.
<TABLE>
<CAPTION>
FINAL
AVERAGE
BASE 10 15 20 25 30 35+
COMPENSATION YEARS YEARS YEARS YEARS YEARS YEARS
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
100,000 6,897 10,345 13,794 17,242 20,691 24,139
125,000 8,897 13,345 17,794 22,242 26,691 31,139
150,000
and up 10,897 16,345 21,794 27,242 32,691 38,139
</TABLE>
A participant generally will be credited with a year of benefits service for
each year after December 31, 1988, that he was eligible to participate in the
pension plan and elected to make a contribution when required to do so. An
employee's final annual compensation is his average annual base compensation for
the five years in which his base compensation was highest during the ten years
prior to termination of employment or age 65, except that the final annual base
compensation for participants who are compensated primarily on a commission
basis cannot include annual base compensation in excess of $50,000, and for the
year 1996 cannot include compensation in excess of $150,000 for all other
participants.
The credited years of service for Messrs. Cowan, Adante, Warnke, Bowles, and
Celmer are 11.4, 14.0, 8.0, 21.0 and 13.1, respectively.
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<PAGE> 15
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
THE DAVEY TREE EXPERT COMPANY
<TABLE>
<CAPTION>
S & P
MEASUREMENT S & P 500 SERVICE
PERIOD COM- (COMML. &
(FISCAL YEAR POSITE- CON-
COVERED) DAVEY LTD. SUMER)*
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 105.4 107.6 99.0
1993 123.5 118.6 95.9
1994 103.6 120.0 87.8
1995 117.9 165.1 118.7
1996 161.5 203.0 122.5
</TABLE>
*Name change from Specialized Services.
(S&P performance data provided by Standard & Poor's)
12
<PAGE> 16
REPORT OF COMPENSATION COMMITTEE
GENERAL
The Compensation Committee of the Board of Directors, composed entirely of
non-employee Directors, is responsible for management succession matters, for
administering the Company's executive incentive and benefits programs, and for
establishing salaries for executive officers. The Committee's recommendations in
these matters are presented to the Board of Directors for approval. In its
deliberations, the Committee periodically retains outside professionals to
assess the fairness of the Company's compensation programs and meets frequently
with the Chief Executive Officer of the Company to obtain management's
recommendations on compensation issues.
COMPENSATION POLICIES
The Committee is careful to align executive officer compensation with the
interest of shareholders. The Committee has established a policy whereby a
substantial portion of the compensation of executive officers, including the
chief executive officer, is contingent on the profitability of the Company.
Approximately twenty to forty percent of an executive officer's compensation is
determined based on pre-tax profits of the Company, after a target return on
shareholders' equity is achieved. The fundamental theory of this policy is that
the shareholders of the Company are entitled to a fair pre-tax return on their
investment before any incentive payments are made to executive officers. To the
extent that the efforts of the executive officers result in a higher return on
shareholders' equity, the Committee believes that the officers should be
rewarded. The Committee and the Board of Directors believe that this
compensation policy creates a significant incentive for management of the
Company, which in turn creates long-term benefit for the shareholders.
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<PAGE> 17
BASE SALARY
Base salary levels are largely determined on the basis of comparisons with
similar companies of approximately the same size. The Committee periodically
retains a nationally known compensation consulting firm to conduct a
compensation competitiveness study to determine the adequacy of the Company's
compensation for executive officers compared to the compensation of officers in
comparable companies. The last study was conducted in 1994, and compensation
ranges were established by the Committee for each of the officers on the basis
of job description and market comparisons. The Committee's general policy
regarding base salary is that the Company's executive officers should be
compensated near the "mid-point" of the market range established by the
consultants, giving allowance to experience and provided that the Company's
long-term goals are being achieved. None of the executive officers has an
employment agreement with the Company.
The Committee reviews the performance of each of the officers of the Company
with the Chief Executive Officer at each of its meetings and is particularly
attentive to an assessment of the officers' performance against goals,
demonstrated capabilities and development of subordinates. The salary
adjustments for the Chief Executive Officer are determined solely by the
Committee after an evaluation of the same criteria used for other executive
officers. The officers of the Company are generally on a 12-15 month salary
adjustment cycle.
INCENTIVE COMPENSATION
In 1979, the Board of Directors adopted a Management Incentive Compensation Plan
designed to reward the Company's management group, which includes approximately
50 people, for above average profit performance. The Plan provides for the
calculation of a
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<PAGE> 18
"Bonus Fund" based on the average of the last three years' pre-tax profit
performance. Under the terms of the Plan, a required return on the Shareholders'
Equity is deducted from pre-tax profits, and a percentage of any excess amount
is designated as a "Bonus Base". The Bonus Fund for the year equals an average
of the Bonus Base for each of the preceding three years. This Bonus Fund is
allocated by the Committee to the management group based on individual
performance, operating group performance, as well as overall Company
performance.
In 1994, the shareholders approved the 1994 Omnibus Stock Plan (the Plan), which
consolidates into a single plan provisions for the grant of stock options, other
stock-based incentives, and the maintenance of an employee stock purchase
program. The Plan replaced the 1982 Employee Stock Purchase Plan and the 1987
Incentive Stock Option Plan, under which no future grants will be made.
Provisions of the Plan give the committee broad discretion to fashion the terms
of awards in order to provide Davey Tree's employees with stock-based incentives
that are appropriate under the circumstances. It is designed to foster long-term
growth and performance by motivating employees through stock-based incentives
and ownership, as well as enhance the Company's ability to attract and retain
qualified employees and directors. Option grants are based on the fair market
value of the Company's Common Shares on the date of grants, as established by
Management Planning, Inc. All employees of Davey Tree and its subsidiaries are
eligible to participate in the Plan, and all non-employee directors of Davey
Tree are eligible to receive director options under the Plan. The committee
believes the Plan provides incentives to increase the market performance of the
Company's shares, thereby aligning the Company's interests with those of the
shareholders.
The Compensation Committee of the Board of Directors
R. Cary Blair, Richard S. Gray, James H. Miller.
15
<PAGE> 19
INDEBTEDNESS OF MANAGEMENT
As part of the Company's 1989 subscription offering, employees of the Company
subscribed for a total of 228,876 Common Shares. These employees were entitled
to finance up to ninety percent of the purchase price of Common Shares by giving
the Company a seven-year promissory note for the balance due with interest at 8%
per annum, with the final payment due in 1996. Under the subscription offering,
no officer or director was indebted to the Company as of April 5, 1997, nor was
any officer or director indebted to the Company in excess of the Securities and
Exchange Act(s) General Rules and Regulations reporting requirement any time
during the year 1996.
INDEPENDENT AUDITORS
Deloitte & Touche LLP has been appointed as the Company's independent auditors
for the fiscal year ending December 31, 1997. Deloitte & Touche was created by
the merger of Touche, Ross & Co. with Deloitte, Haskins and Sells in 1989.
Touche, Ross & Co. has served as the Company's independent auditors since 1975.
A representative of Deloitte & Touche is expected to be present at the meeting.
The representative will be given an opportunity to make a statement if he or she
desires to do so and to respond to questions regarding Deloitte & Touche's
examination of the Company's financial statements and records for the fiscal
year ended December 31, 1996.
GENERAL
VOTING AT THE MEETING
Shareholders of record at the close of business on April 5, 1997, are entitled
to vote at the meeting. On that date, a total of 4,484,888 of the Company's
Common Shares were outstanding and entitled to vote.
16
<PAGE> 20
Each of the Company's common shares is entitled to one vote.
Each shareholder has the right to vote cumulatively if any shareholder gives
notice in writing to the President, any Vice President or the Secretary of the
Company at least 48 hours before the time set for the meeting and an
announcement of the notice is made at the beginning of the meeting by the
Chairman or the Secretary, or by or on behalf of the shareholder giving notice.
If cumulative voting is in effect, you will be entitled to cast a number of
votes equal to the number of shares that you are voting multiplied by the number
of directors to be elected. You may cast all of these votes for one nominee or
distribute them among several nominees, as you see fit. If cumulative voting is
in effect, shares represented by each properly signed proxy card will also be
voted on a cumulative basis, with the votes distributed among the nominees in
accordance with the judgment of the persons named in the proxy card.
Under Ohio law, directors are elected by the votes of shareholders exercising a
majority of the voting power of the Company present at a meeting at which a
quorum is present, and proposals are adopted or approved by the vote of a
specified percentage of the voting power of the Company. Abstentions and non-
votes are tabulated in determining the votes present at the meeting.
Consequently, an abstention or a non-vote has the same effect as a vote against
a director nominee, as each abstention or non-vote would be one less vote for a
director nominee.
If any of the nominees listed on page three becomes unable or declines to serve
as a director, each properly signed proxy card will be voted for another person
recommended by the Board of Directors. However, the Board has no reason to
believe that this will occur.
The Board of Directors knows of no other matters that will be presented at the
meeting. However, if other matters do properly come before the meeting, the
17
<PAGE> 21
person named in the proxy card will vote on these matters in accordance with
their best judgment.
SHAREHOLDER PROPOSALS
Any shareholder who wished to submit a proposal to be considered for inclusion
in next year's Proxy Statement should send the proposal to the Company on or
before December 17, 1997.
EXPENSES OF REQUESTING PROXIES
The Company will bear the expense of preparing, printing, and mailing this
Notice and Proxy Statement. In addition to requesting proxies by mail, officers
and regular employees of the Company may request proxies by telephone or in
person. The Company will ask custodians, nominees, and fiduciaries to send proxy
material to beneficial owners in order to obtain voting instructions. The
Company will, upon request, reimburse them for their reasonable expenses for
mailing the proxy material.
ANNUAL REPORT
The Company's Annual Report to Shareholders, including financial statements for
the fiscal year ended December 31, 1996, is being mailed to shareholders of
record with this Proxy Statement.
For the Board of Directors,
DAVID E. ADANTE
Secretary
April 16, 1997
18
<PAGE> 22
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN
YOUR PROXY.
<PAGE> 23
THE DAVEY TREE EXPERT COMPANY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 1997
THIS PROXY IS SOLICITED BY YOUR BOARD OF DIRECTORS, WHICH RECOMMENDS THAT YOU
VOTE FOR THE NOMINEES LISTED IN ITEM 1 AND FOR ITEM 2.
At the Annual Meeting of Shareholders of the Corporation to be held May 20,
1997, and at any adjournment, David E. Adante, Howard D. Bowles, C. Kenneth
Celmer, Roger C. Funk, and Karl J. Warnke, and each of them, with full power of
substitution in each, are hereby authorized to represent me and to vote my
shares on the following:
1. Elect four Directors to the class to serve for a three year term of office
expiring at the Corporation's 2000 Annual Meeting of Shareholders. The
nominees of the Board of Directors are: Richard E. Dunn, William D. Ginn,
Richard S. Gray and Thomas Murdough, Jr.
(Instruction: On the line below, write the name of any nominee or nominees
for whom authority to vote is withheld. This proxy cannot be voted for a
greater number of persons than the number of nominees named.)
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2. Any other matter that may properly come before the meeting.
UNLESS OTHERWISE SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR THE NOMINEES
LISTED IN ITEM 1.
Signed the ___ day of ___________________, 1997.
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Please sign here
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Joint owner if any sign here
Please sign this Proxy exactly as your name appears above. If the address on
this Proxy is incorrect, please note your correct address.
Please check this box if you plan to attend the Annual Meeting of
Shareholders. [ ]
