<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
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:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
Angelica Corporation
----------------------------------------------------------------------------
(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/ 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[LOGO] ANGELICA(R)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 28, 1997
The Annual Meeting of Shareholders of Angelica
Corporation will be held at the Saint Louis Club, 14th
Floor, 7701 Forsyth Boulevard, Clayton, Missouri, on
Wednesday, May 28, 1997 at 10:00 a.m. local time, for the
following purposes:
1. To elect two Directors for terms expiring at the
2000 Annual Meeting, or until their successors have
been duly elected and qualified.
2. To consider and act upon, if presented at the
meeting, proposals submitted by certain
shareholders as described at pages 14-18 in the
Proxy Statement.
3. To transact such other business as may properly
come before the meeting or any adjournment thereof.
The record date for determining shareholders entitled
to notice of and to vote at the meeting is April 7, 1997.
By Order of the Board of Directors
JILL WITTER, Secretary
April 16, 1997
424 South Woods Mill Road
Chesterfield, Missouri 63017-3406
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE
MEETING WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. PLEASE COMPLETE AND MAIL THE ACCOMPANYING PROXY IN
THE ENCLOSED RETURN ENVELOPE.
<PAGE> 3
[LOGO] ANGELICA(R)
PROXY STATEMENT
Angelica Corporation (the "Company") has furnished this Proxy Statement to
its shareholders in connection with a solicitation of proxies by the Company's
Board of Directors. The proxies solicited are to be used at the Company's Annual
Meeting of Shareholders on May 28, 1997, for the purposes described in the
accompanying Notice of Annual Meeting of Shareholders.
Shares represented by a properly completed and returned proxy will be voted
in accordance with the shareholder's directions on the proxy. If no directions
are given on the proxy, the shares will be voted as recommended by the Board of
Directors. A proxy may be revoked at any time before it is voted by giving
written notice to the Company's Secretary, by executing a later dated proxy or
by appearing in person at the meeting and so advising the inspectors of the
voting.
This Proxy Statement and the accompanying proxy were mailed to shareholders
on or about April 16, 1997.
GENERAL INFORMATION
The only securities entitled to vote at the meeting are the outstanding
shares of the Company's Common Stock (the "Common Stock"). As of April 7,
1997, the record date for the Annual Meeting, there were 9,146,789 shares of
Common Stock outstanding.
Each shareholder is entitled to one vote per share on each matter to be
considered at the meeting. Shares subject to abstentions will be treated as
shares that are represented at the 1997 Annual Meeting for purposes of
determining the presence of a quorum and as voted for purposes of determining
the approval of the shareholders on a particular proposal unless otherwise
stated in the disclosure regarding such proposal. Shares for which a broker
indicates it has no discretionary authority to vote and which are not otherwise
voted by such broker on a routine matter or matters requiring no prior
authorization or direction of the beneficial owner will not be considered
represented at the 1997 Annual Meeting for purposes of determining the presence
of a quorum or the approval of the shareholders on a particular proposal. Shares
that are voted by a broker on a routine matter but for which such broker has no
authorization or direction to vote on a nonroutine matter will be considered as
represented at the meeting for the determination of a quorum but as not
represented or voting for purposes of determining shareholder approval on such
nonroutine matter.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The Company's Board of Directors consists of seven members classified into
one group of three members and two groups of two members each. Two Directors
will be elected to serve three-year terms expiring in 2000, or until their
successors are elected and qualified. Unless authority to vote is withheld,
proxies will be voted for the election of all of the nominees listed below. Each
of the nominees is presently a member of the Board. Mr. Elliot H. Stein is
completing his term on the Board and will retire effective May 28, 1997. The
Board voted to amend the Company's By-Laws to reduce the number of Directors
from eight to seven effective May 28, 1997. A majority of the outstanding shares
entitled to vote must be represented in person or by proxy at the meeting in
order to conduct the election of directors and other matters mentioned in this
Proxy Statement. If such a majority is represented at the meeting, then the two
nominees to the terms expiring in 2000 who receive the highest total number of
votes cast will be elected as Directors. Should any nominee listed below become
unavailable for any reason before the meeting, proxies will be voted for a
substitute person to be selected by the Board of Directors unless the Board
elects to reduce the number of Directors.
2
<PAGE> 4
INFORMATION ABOUT NOMINEES FOR DIRECTORS
THREE-YEAR TERMS EXPIRING IN 2000
LESLIE F. LOEWE<F*> -- Chairman Emeritus since November 1, 1990, Chairman of the
Board from 1984 to November 1, 1990 and Chief Executive Officer of the Company
from 1980 until November 1, 1989. Director of the Company since 1980; Age 75.
WILLIAM P. STIRITZ -- President, Chief Executive Officer and Chairman of the
Board of Ralston Purina Company (producer of pet foods and batteries, as well as
other food products). Director: Ball Corporation, Interstate Bakeries
Corporation, The May Department Stores Company, Ralcorp Holdings, Inc. and
Reinsurance Group of America Incorporated; Director of the Company since 1983;
Age 62.
INFORMATION ABOUT DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 1999
EARLE H. HARBISON, JR. -- Chairman of the Board of Harbison Corporation
(manufacturer of molded plastic containers) since October, 1993. Mr. Harbison
retired from Monsanto Company where he had been a member of the Board of
Directors since 1986, Chairman of the Executive Committee from January to
September, 1993, and President and Chief Operating Officer from 1986 to January,
1993. Director: Merrill Lynch & Co. and RightChoice Managed Care, Inc.; Director
of the Company since 1986; Age 68.
CHARLES W. MUELLER -- President, Chief Executive Officer and Director of Union
Electric Company. Mr. Mueller has served as Chief Executive Officer of Union
Electric Company since January 1, 1994, and President and Director since July 1,
1993. He was Senior Vice President--Administrative Services from 1988 to July 1,
1993. Director: Boatmen's National Bank of St. Louis; Director of the Company
since 1996; Age 58.
WILLIAM A. PECK, M.D. -- Dean of the School of Medicine since 1989 and Executive
Vice Chancellor for Medical Affairs, Washington University since 1993. Director:
Allied Healthcare Products, Inc., Hologic, Inc. and Reinsurance Group of America
Incorporated; Director of the Company since 1996; Age 63.
TERMS EXPIRING IN 1998
H. EDWIN TRUSHEIM -- Retired Chairman of the Board of General American Life
Insurance Company since January, 1995. Mr. Trusheim served as Chairman of the
Board of General American Life Insurance Company from May, 1992 to January, 1995
and as Chairman of the Board and Chief Executive Officer from 1986 to May, 1992.
Director: Laclede Gas Company, RehabCare Group, Inc., Reinsurance Group of
America Incorporated, and Venture Stores, Inc.; Director of the Company since
1980; Age 69.
LAWRENCE J. YOUNG -- Chairman of the Board, President and Chief Executive
Officer of the Company. Mr. Young has served as Chairman of the Board since
November 1, 1990, Chief Executive Officer since November 1, 1989, and President
since 1988. He was Chief Operating Officer from 1988 to November 1, 1989.
Director: Venture Stores, Inc.; and Boatmen's National Bank of St. Louis;
Director of the Company since 1988; Age 52.
COMPENSATION OF DIRECTORS AND OTHER INFORMATION CONCERNING THE BOARD AND ITS
COMMITTEES
Employee Directors receive no additional compensation for service on the
Board of Directors or its Committees. Directors who are not employees of the
Company were paid during the fiscal year ended January 25, 1997, an annual fee
of $16,000, payable in shares of Common Stock of the Company pursuant to the
Non-Employee Directors Stock Plan described below, plus $1,250 for each Board
meeting attended, $450 for each telephonic Board meeting and $700 for each
Committee meeting in which he participated.
[FN]
- -------
<F*>The Company's By-Laws provide that a nominee may not stand for election as a
Director if he is age 72 or older and that if a Director attains his 72nd
birthday prior to the expiration of his term, he shall serve until the next
Annual Meeting at which time his office as Director shall automatically
become vacant, except that a majority of the Directors may vote to waive the
age requirement. Such action has been taken with respect to Mr. Loewe.
3
<PAGE> 5
Pursuant to the Non-Employee Directors Stock Plan, each non-employee
Director is entitled to receive 100 shares of Common Stock of the Company each
year. In addition, new non-employee Directors receive, upon their election, 400
shares of Common Stock. Stock granted under the plan is forfeitable until earned
out pursuant to a schedule based upon years of participation in the plan and the
Director's age at the time of entering the plan. Additionally, options to
purchase 2,000 shares of Common Stock are granted annually under the plan to
each non-employee Director at 100% of the fair market value of the shares on the
Option Date (the date of the Annual Meeting in years 1995 through 2004). Such
option shares become exercisable in full upon a non-employee Director's
retirement. Shares of Common Stock received as payment of the retainer fee are
based on the fair market value of a share on the Retainer Date (the date of the
Annual Meeting of Shareholders each year). These shares are subject to
forfeiture at the rate of one-tenth of the total shares purchased for each month
less than ten that a non-employee Director serves as a Director after such
Annual Meeting.
All Directors but two participate in either the Deferred Compensation Option
Plan for Directors or the Deferred Compensation Option Plan for Selected
Management Employees. Directors may defer $5,000 to $10,000 of Board meeting and
Committee meeting fees annually for a period of years, not to exceed four, after
becoming a participant. In consideration of the compensation deferred, and
subject to certain conditions, participants are entitled to receive supplemental
retirement or survivor benefit payments over a 15-year period. The amount of
such benefit is related to the amount of compensation deferred and certain
actuarial factors.
The Board of Directors has standing Audit, Compensation and Organization,
Executive, and Nominating Committees. All members of the Audit, the Compensation
and Organization and the Nominating Committees are non-employee Directors.
The Audit Committee consists of three Directors: H. Edwin Trusheim
(Chairman), Earle H. Harbison, Jr., and Dr. William A. Peck. During the last
fiscal year, the Committee held four meetings. The Committee's principal
functions are: to recommend to the Board the employment of the Company's
independent auditors; to approve the scope of the auditors' work and to review
the results of that work; to review with management and the auditors the
Company's quarterly and annual results; to review and approve the auditors'
fees; to review the Company's internal auditing procedures and accounting
controls; to approve any non-audit service rendered by the auditors to the
Company; and to monitor compliance with the Company's Code of Conduct.
The Compensation and Organization Committee consists of three Directors:
Earle H. Harbison, Jr. (Chairman), William P. Stiritz and H. Edwin Trusheim.
During the last fiscal year, the Committee held two meetings. The Committee's
principal functions are: to determine the compensation of the Chief Executive
Officer and certain other executive officers; to review and approve management's
recommendations as to the compensation of other officers and managerial
employees; to recommend contracts for officers and certain managerial employees;
to evaluate the Company's senior management and recommend changes as
appropriate; and to review and approve certain of the Company's major employee
compensation and benefit plans.
The Executive Committee consists of four Directors: Lawrence J. Young
(Chairman), Earle H. Harbison, Jr., Elliot H. Stein, and H. Edwin Trusheim.
There were no meetings held during the last fiscal year. The Committee's
function is: to manage and direct the business of the Company during the
interval between Board meetings, except as limited by Missouri law and except
for those matters assigned to other Board committees.
The Nominating Committee consists of three Directors: Elliot H. Stein
(Chairman), Leslie F. Loewe, and William P. Stiritz. During the last fiscal
year, the Committee held two meetings. The Committee's principal functions are:
to recommend nominees for election as Directors of the Company; to recommend
nominees for Board committee appointment; and to recommend candidates for
appointment as corporate officers. The Committee will consider any nominee for
Director recommended by a shareholder who submits a notice of nomination to the
Company at least 30 days but not more than 60 days prior to the Annual Meeting
of Shareholders. Such notice shall contain appropriate data with respect to the
suggested candidate as required pursuant to the Company's By-Laws.
The Board of Directors met a total of eight times during the fiscal year
ended January 25, 1997. All of the Directors attended at least 75% of the total
meetings held by the Board and its respective committees, and which each
respective Director was eligible to attend, during the fiscal year.
4
<PAGE> 6
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table shows the shares of Common Stock beneficially owned by
persons known by the Company to own 5% or more of the outstanding shares of
Common Stock.
<TABLE>
<CAPTION>
BENEFICIALLY OWNED DIRECTLY
OR INDIRECTLY
---------------------------
NAME AND ADDRESS PERCENT
OF BENEFICIAL OWNER COMMON STOCK OF CLASS
------------------- ------------ --------
<S> <C> <C>
First Pacific Advisors, Inc.<F1>......................... 1,404,100 15.4%
11400 W. Olympic Boulevard
Los Angeles, CA 90064
Morgan Stanley Group Inc.<F2>............................ 583,900 6.4%
1585 Broadway
New York, NY 10036
Radnor Capital Management, Inc.<F3>...................... 543,354 5.9%
Two Radnor Corporate Center
100 Matsonford Rd., Suite 250
Radnor, PA 19087
Pioneering Management Corporation<F4>.................... 532,100 5.8%
60 State Street
Boston, MA 02109-1820
<FN>
- -------
<F1> Stated information is based on a Schedule 13G, dated February 12, 1997,
filed with the Securities and Exchange Commission. First Pacific Advisors,
Inc., an investment advisor, has shared voting power as to 487,100 shares
and shared dispositive power as to 1,404,100 shares. A separate Schedule
13G, dated February 12, 1997, was also filed for FPA Capital Fund, Inc., an
investment company, which has sole voting power as to 500,000 shares and
shared dispositive power as to 500,000 shares. These shares are included in
the number of shares shown as beneficially owned by First Pacific Advisers,
Inc.
<F2> Stated information is based on a Schedule 13G, dated February 14, 1997,
filed with the Securities and Exchange Commission by Morgan Stanley Group
Inc. and Miller Anderson & Sherrerd LLP, a wholly-owned subsidiary. Morgan
Stanley Group Inc., an investment advisor, has shared voting power as to
552,800 shares, and shared dispositive power as to 583,900 shares. Miller
Anderson & Sherrerd LLP, an investment advisor, has shared voting power as
to 543,500 shares and shared dispositive power as to 574,600 shares, which
shares are included in the number of shares shown as beneficially owned by
Morgan Stanley Group Inc.
<F3> Stated information is based on a Schedule 13G, dated February 12, 1997,
filed with the Securities and Exchange Commission. Radnor Capital
Management, Inc., an investment advisor, has sole voting power as to
532,354 shares and sole dispositive power as to 543,354 shares.
<F4> Stated information is based on a Schedule 13G, dated January 21, 1997,
filed with the Securities and Exchange Commission. Pioneering Management
Corporation, an investment advisor, has sole voting power as to 532,100
shares, sole dispositive power as to 17,100 shares and shared dispositive
power as to 515,000 shares.
</TABLE>
5
<PAGE> 7
The following table shows, as of April 7, 1997, the shares of Common Stock
beneficially owned by each person who is a Director or a named executive officer
and all persons as a group who were Directors or executive officers as of that
date. Except as otherwise noted, each such person has sole voting and
dispositive power as to his or her shares. Each Director and named executive
officer owns less than 1%, and all executive officers and Directors as a group
own 2.9% of the outstanding shares of Common Stock plus options that are
exercisable within 60 days after April 7, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY
OWNED DIRECTLY OR INDIRECTLY
AS OF APRIL 7, 1997
--------------------------------------
OBTAINABLE
THROUGH
STOCK OPTION
OWNED<F1> EXERCISE<F2> TOTAL
-------- ------------ --------
<S> <C> <C> <C>
Theodore M. Armstrong........................................... 10,797<F3> 26,200 36,997
Michael E. Burnham.............................................. 5,848<F4> 16,700 22,548
Earle H. Harbison, Jr........................................... 2,964 1,600 4,564
Leslie F. Loewe................................................. 29,009<F5> 1,600 30,609
Charles W. Mueller.............................................. 1,194<F6> -- 1,194
William A. Peck................................................. 1,194 -- 1,194
Elliot H. Stein................................................. 20,624<F7> 5,000<F8> 25,624
William P. Stiritz.............................................. 3,114 1,600 4,714
H. Edwin Trusheim............................................... 3,314 1,600 4,914
Alan D. Wilson.................................................. 4,449 10,700 15,149
Jill Witter..................................................... 3,283 16,600 19,883
Lawrence J. Young............................................... 32,153 52,400 84,553
All Executive Officers and Directors as a group (14 persons).... 122,311 146,100 268,411
<FN>
- -------
<F1> Includes 1,250 shares for Mr. Harbison, 200 shares for Mr. Loewe, 500 shares
for Mr. Mueller, 500 shares for Dr. Peck, 2,650 shares for Mr. Stein, 1,400
shares for Mr. Stiritz, and 1,550 shares for Mr. Trusheim, all held under
the Company's 1994 Non-Employee Directors Stock Plan or its predecessor
Non-Employee Directors Stock Plan. With respect to such shares, non-employee
Directors have sole voting power and no current dispositive power, except
for 625 shares held by Mr. Harbison, the 200 shares held by Mr. Loewe, the
2,650 shares held by Mr. Stein, and 775 shares held by Mr. Trusheim which
are nonforfeitable.
<F2> Stock options exercisable within 60 days after April 7, 1997.
<F3> Mr. Armstrong disclaims beneficial ownership of 200 shares included above
which are held by a trust for his father of which he is co-trustee.
<F4> Mr. Burnham disclaims beneficial ownership of 120 shares included above
which are held by his wife as custodian for their children.
<F5> Mr. Loewe disclaims beneficial ownership of 6,945 shares included above
which are owned by his wife.
<F6> Mr. Mueller disclaims beneficial ownership of 1,194 shares included above
which are held by his wife's living trust.
<F7> This total also includes 15,679 shares held by Mr. Stein as a co-trustee of
various trusts for beneficiaries who are unrelated to him, as to which
shares he has shared voting power and dispositive power with the co-trustee.
Mr. Stein disclaims beneficial ownership of all the shares referred to in
this note.
<F8> Includes 3,400 options to purchase shares which will become exercisable upon
Mr. Stein's retirement from the Board on May 28, 1997.
</TABLE>
6
<PAGE> 8
EXECUTIVE COMPENSATION
During the last three fiscal years, the amounts shown in the table below
were paid to each of the Company's five most highly compensated executive
officers for services rendered during the applicable fiscal year.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
-------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------------
BONUS RESTRICTED ALL OTHER
FISCAL -------------------------- STOCK COMPEN-
NAME AND YEAR NONCASH TOTAL AWARD(S) SATION
PRINCIPAL POSITION ENDING SALARY<F1> CASH <F2><F3> BONUS ($)<F2><F3> OPTIONS (#) ($)<F4>
------------------ ------ ---------- ---- -------- ----- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence J. Young, 1/25/97 $260,000 $46,250 $46,250 $92,500 $23,125 62,000 $600
Chairman, President 1/27/96 260,000 46,250 46,250 92,500 23,125 10,000 600
& CEO 1/28/95 245,000 80,965 80,964 161,929 40,482 -- 600
Theodore M. Armstrong, 1/25/97 164,000 18,000 18,000 36,000 9,000 31,000 600
Senior Vice President-- 1/27/96 164,000 16,500 16,500 33,000 8,250 5,000 600
Finance & Administration 1/28/95 157,584 28,142 28,142 56,284 14,071 -- 600
and Chief Financial Officer
Michael E. Burnham, Vice 1/25/97 101,500 24,805 24,805 49,610 12,402 15,000 600
President. Also President, 1/27/96 93,000 17,871 17,871 35,742 8,935 4,000 600
Life Uniform and Shoe 1/28/95 84,500 41,937 19,063 61,000 9,532 -- 600
Shops
Alan D. Wilson, Vice 1/25/97 169,518 34,542 11,514 46,056 5,757 17,500 600
President. Also, President, 1/27/96 156,592 43,110 14,370 57,480 7,185 5,000 600
Angelica Textile Services 1/28/95 132,371 34,817 11,606 46,423 5,803 -- 600
Jill Witter, Vice 1/25/97 90,000 6,480 6,480 12,960 3,240 26,000 600
President, Secretary and 1/27/96 87,084 5,459 5,458 10,917 2,729 4,000 600
General Counsel 1/28/95 82,082 9,120 9,120 18,240 4,560 -- 600
<FN>
- --------
<F1> Includes participant deferrals under the Retirement Savings Plan.
<F2> Participants in the Stock Bonus and Incentive Plan may elect to receive up
to 50% of their Incentive Compensation in restricted shares of Company's
Common Stock ("elected shares") in lieu of cash. Additionally,
participants receive restricted shares in the Company's Common Stock
("matching shares") with a fair market value equal to 1/2 of that portion
of the Incentive Compensation which participants elected to take in Common
Stock. Restricted shares of Common Stock (both "elected shares" and
"matching shares") were issued to participants based upon the fair market
value (the average of the high/low transaction prices) of the Common Stock
on the date of issuance. Elected shares are reported under the "Noncash"
column, while matching shares are reported under the "Restricted Stock
Awards" column. The named executive officers received elected shares, which
become transferable in three years as follows: Mr. Young 2,500 shares; Mr.
Armstrong 972 shares; Mr. Burnham 1,340 shares; Mr. Wilson 622 shares; and
Ms. Witter 350 shares. Participants receive dividends on all restricted
shares.
<F3> At the end of the last fiscal year, the named executive officers held the
following number of shares of restricted stock (elected and matching
shares): Mr. Young, 12,182 shares with an aggregate value of $240,594; Mr.
Armstrong, 3,638 shares with an aggregate value of $71,850; Mr. Burnham,
3,099 shares with an aggregate value of $61,205; Mr. Wilson, 2,315 shares
with an aggregate value of $45,721; and Ms. Witter, 1,367 shares with an
aggregate value of $26,998.
<F4> Company contributions to the Retirement Savings Plan on behalf of each of
the named executive officers to match 1996 participant deferrals (included
under Salary) made by each to such Plan.
</TABLE>
7
<PAGE> 9
STOCK OPTIONS
The following table contains information concerning the grant of options
under the Company's 1994 Performance Plan to the named executive officers of the
Company during the last fiscal year.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION GRANT DATE
NAME (#)<F1> YEAR<F2> ($/SH) DATE PRESENT VALUE ($)<F3>
---- ---------- ---------- -------- ---------- ---------------------
<S> <C> <C> <C> <C> <C>
Lawrence J. Young....................... 12,000 5.7% $21.00 3/13/05 $ 63,687
50,000 23.7 19.00 12/02/04 237,917
Theodore M. Armstrong................... 6,000 2.8 21.00 3/13/05 31,843
25,000 11.8 19.00 12/02/04 118,958
Alan D. Wilson.......................... 7,500 3.6 21.00 3/13/05 39,805
10,000 4.7 19.00 12/02/05 47,901
Michael E. Burnham...................... 5,000 2.4 21.00 3/13/05 26,536
10,000 4.7 19.00 12/02/05 47,901
Jill Witter............................. 6,000 2.8 21.00 3/13/05 31,844
20,000 9.5 19.00 12/02/04 95,167
<FN>
- --------
<F1> All options become exercisable ratably over periods of four or five years
and are subject to continued employment. In the event of a "Non-Approved
Takeover," all options become immediately exercisable for a period of 90
days, provided, however, SEC "Reporting Persons" are subject to certain
qualifications. In addition, options granted on December 2, 1996, to Messrs.
Young and Armstrong and to Ms. Witter become immediately exercisable in the
event of a termination of employment occurring in connection with a
"Triggering Transaction," as such term is defined in the Employment
Agreements dated November 27, 1996 and described in the section of this
Proxy Statement titled "Employment Contracts and Termination of Employment
and Change-in-Control Arrangements." The named executive officers received
two grants of options during the last fiscal year.
<F2> Based on 211,250 options granted to 31 employees during the fiscal year.
<F3> The fair market value of each option granted is estimated on the date of
grant using the Black-Scholes option pricing model. The actual value, if
any, an executive may realize will depend on the excess of the stock price
over the exercise price on the date the option is exercised, so that there
is no assurance the value realized by an executive will be at or near the
value estimated by the Black-Scholes model. The Black-Scholes evaluation
employed the following factors: risk-free rate of return of 6.4% based upon
the ten-year Treasury Bill rate as of grant date, dividend yield of 3.5%
based upon average annual dividend yield for the prior seven years, exercise
term of nine years, stock price volatility of 18.5% based upon average stock
price volatility for the prior five years, and that no adjustments have been
made for transferability of risk or forfeiture of the options.
</TABLE>
8
<PAGE> 10
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers concerning unexercised options held as of the end of the last
fiscal year. No options were exercised by the named executive officers during
the last fiscal year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END (#) FY-END ($)
ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE<F1>
---- ------------ ------------------ ------------- -----------------
<S> <C> <C> <C> <C>
Lawrence J. Young.......................... -- $ -- 53,000/78,000 $0/34,375
Theodore M. Armstrong...................... -- -- 29,000/39,000 0/17,187
Michael E. Burnham......................... -- -- 13,700/20,800 0/6,875
Alan D. Wilson............................. -- -- 7,600/22,900 0/6,875
Jill Witter................................ -- -- 13,400/31,600 0/13,750
<FN>
- --------
<F1> Based upon the average of the high/low transaction prices as reported on New
York Stock Exchange composite tape on January 24, 1997.
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Each of the executive officers named in the Summary Compensation Table have
entered into individual employment agreements with the Company that cover such
executive officer's employment relationship with the Company both prior to and
after a "Triggering Transaction" (as defined in the employment agreements)
involving the Company, including severance benefits payable under certain
designated circumstances. Each of the named executive officers also has an
agreement with the Company under the Management Retention and Incentive Plan
that grants certain severance benefits in the event of certain terminations of
employment after a "Change in Control" involving the Company (as defined in
the plan). The differing scope of the term "Change in Control" in the
Management Retention and Incentive Plan and the term "Triggering Transaction"
in the employment agreements may result in an entitlement to payment under one
arrangement but not the other, depending upon the circumstances. In addition,
the severance benefits payable under the employment agreements are computed
differently than under the Management Retention and Incentive Plan, which may
result in significantly different entitlements to a particular executive
officer. Under the terms of the employment agreements, in the event that a
severance benefit is payable thereunder on account of a Triggering Transaction,
and the executive officer is also entitled to a severance benefit under the
Management Retention and Incentive Plan on account of a Change in Control, the
executive officer will be entitled to the larger of the amounts computed under
the relevant provisions of his or her respective employment agreement or the
Management Retention and Incentive Plan. The payment of such larger benefit will
be in lieu of the payment of any benefit under the agreement or plan that
resulted in the lesser payment.
Under the Management Retention and Incentive Plan, if such officer's
employment with the Company is terminated within two years after a Change in
Control other than (i) due to the executive officer's death or retirement, (ii)
for "cause" (as defined in the plan) or (iii) by action of the executive
officer other than for "good reason" (as defined in the plan), the Company
will make a payment of 2.99 times the average Annual Compensation of the
executive officer for the five full calendar years immediately preceding a
Change in Control of the Company. "Annual Compensation" is generally defined
as all wages, salary, bonuses, incentive compensation and all other amounts paid
by the Company to the executive officer in consideration for services rendered,
including all deferred compensation. In addition, the plan grants the terminated
executive officer Company-paid outplacement counselling and certain medical
benefits and health insurance. The executive officer will also be
relieved of all non-compete obligations with respect to the Company.
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<PAGE> 11
The employment agreements with each of the named executive officers (said
agreements are referred to herein individually as an "Employment Agreement"
and collectively as the "Employment Agreements") are for terms ranging from
two to three years, subject to annual renewals thereafter. The Employment
Agreements define each such executive officer's employment arrangement with the
Company prior to a Triggering Transaction involving the Company. Certain
executive officers have different definitions of Triggering Transaction
depending upon their responsibilities within the Company. The Employment
Agreements provide that if, prior to the end of the term of the Employment
Agreement and prior to six months before either (i) a Triggering Transaction, or
(ii) the execution of a definitive agreement or contract that eventually results
in a Triggering Transaction, the Company terminates the executive officer's
employment without "cause" (as defined in the Employment Agreements), or, in
the case of Messrs. Armstrong and Young and Ms. Witter, the executive officer
terminates his or her employment for "good reason" (as defined in the
Employment Agreements), the Company will be required to continue the
then-current base salary (plus the then-current target bonus, in the case of Mr.
Young) and, in the case of Messrs. Armstrong and Young and Ms. Witter, medical
and health benefits for a designated period after such termination. The salary
continuation will be for the remaining term of the Employment Agreement or two
years after termination, whichever is greater.
The Employment Agreements also protect the executive officers from certain
terminations of the executive officer's employment with the Company for a period
beginning six months before either (i) a Triggering Transaction or (ii) the
execution of a definitive agreement that eventually results in a Triggering
Transaction and ending three years after the date that the Triggering
Transaction occurs. In the event that the executive officer terminates his
employment during such period for good reason or the Company terminates the
executive officer's employment without cause, the Company will be required to
pay the executive officer a lump-sum severance amount ranging from 2.00 to 2.99
times the executive officer's then-current annual base salary and the
then-current year's target bonus. In addition, the executive officer's stock
options and unvested and restricted stock under the Company's stock option plans
and the Stock Bonus and Incentive Plan will vest and/or become unrestricted, as
the case may be. In addition, Messrs. Armstrong and Young and Ms. Witter will be
entitled to enhanced supplemental retirement and deferred compensation benefits
in a lump-sum payment and medical and health benefits without cost to the
executive officer for a period of ten years thereafter. If it is determined that
any portion of the payments made to an executive officer pursuant to the
Employment Agreement would subject the executive officer to an excise tax
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, the
Company will also be obligated to pay to the executive officer an additional
cash payment sufficient to place the executive officer in the same after-tax
position as he or she would have been in had no excise tax been imposed upon
such payments.
In the event of termination of employment in connection with a Triggering
Transaction, Mr. Wilson's Employment Agreement provides for the payment of
certain enhanced benefits under a special retirement benefit agreement executed
between Mr. Wilson and the Company on August 25, 1987 (the "Retirement
Agreement"). The Retirement Agreement provides for the payment by the Company
of monthly benefits of $8,333 over a ten-year period commencing on or after Mr.
Wilson's 65th birthday. All benefits under the Retirement Agreement will be
reduced by the amount of retirement benefits payable by the Company to Mr.
Wilson under certain of the Company's other retirement and deferred compensation
plans. Mr. Wilson's right to receive such special retirement benefits under the
Retirement Agreement vests at the rate of 6% per year for each of Mr. Wilson's
first ten years of employment with the Company and at the rate of 4% per year
for each of Mr. Wilson's second ten years of employment. In any case, such
benefits will fully vest in the event that Mr. Wilson reaches the age of 65 and
has been continuously employed by the Company since the date of the Retirement
Agreement.
Two separate trusts have been established with Boatmen's Trust Company to
fund certain benefits payable to key management personnel pursuant to certain
employee benefit plans in the event of a termination of the executive officer's
employment with the Company after a "change in control" (as defined in the
respective plans). The trusts relate to the benefits payable under the Deferred
Compensation Option Plan for Selected Management Employees, the Supplemental
Plan, and the Management Retention and Incentive Plan. In the event of a change
in control or a potential change in control of the Company that is not approved
by the Board of Directors of the Company, the Company will be required to make a
deposit to each trust in an amount equal to the difference between the maximum
amount potentially payable under the plan or plans to all participants and the
current value of the trust assets. Each trust is revocable by the Company at any
time prior to a potential change in control or change in control of the Company,
and will terminate automatically on the third anniversary of the occurrence of
the change in control. All remaining trust assets will be returned to the
Company upon revocation or termination of the trust. If the Company
10
<PAGE> 12
makes a deposit to a trust in connection with a potential change in control and
an actual change in control does not occur within 90 days thereafter, the Board
of Directors may adopt a resolution that the change of control is not imminent
and the deposit should be returned by the trust to the Company. The assets of
the trust are at all times subject to the claims of the general creditors of the
Company in the event of the bankruptcy or insolvency of the Company.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, or the Securities Exchange
Act of 1934, each as amended, that might incorporate future filings, including
this Proxy Statement, in whole or in part, the following Compensation and
Organization Committee Report Regarding Executive Compensation and the
Performance Graph on page 14 shall not be incorporated by reference, into any
such filings.
COMPENSATION AND ORGANIZATION COMMITTEE REPORT
REGARDING EXECUTIVE COMPENSATION
The Compensation and Organization Committee of the Board of Directors (the
"Committee"), which consists entirely of outside directors, has overall
responsibility to review and recommend broad-based compensation plans to the
Board of Directors. The Committee also reviews and approves participation in
stock-related and long-term incentive plans and executive benefits. The
Committee and the management of the Company are committed to the principle that
a significant portion of total compensation should be commensurate with
performance and attainment of predetermined financial and strategic objectives.
There are two elements in the Company's executive cash compensation program,
base salary and target incentive compensation. The Company's cash compensation
program is structured such that the total of an executive's base salary and
target incentive compensation is within a range deemed to be competitive with
other companies that are considered to be the Company's competitors for
executive talent. In setting the total cash compensation range for executives of
the Company's various operating divisions, the Committee considers compensation
packages offered by companies in competitive markets, such as uniform
manufacturing companies, textile service companies and specialty retail
companies. Since there are no companies with substantially similar lines of
business as the Company, taken as a whole, the compensation packages for the
officers employed at the Company's executive offices are compared to the
compensation packages of comparable officers of companies of similar size and
complexity as the Company. Companies used for comparative purposes in analyzing
the Company's compensation policies are not necessarily the same companies
included in the performance graph peer group.
The Committee uses a variety of nationally published surveys in order to
develop a median range of compensation. The surveys cover hundreds of companies
and deal with a variety of factors such as labor force, sales revenue, location,
and market. Total cash compensation is maintained within the target range as
developed by the surveys. Although factors such as location, experience and
performance can affect where in the range total cash compensation falls,
attempts are made to maintain total cash compensation at the median of the
range. However, due to results of the Company in recent years causing incentive
compensation for such years to be below target levels, total cash compensation
has been in the lower half of the range.
The Company has established guidelines that the Committee uses in
determining on an ongoing basis the desired split between base salary and target
incentive compensation for executives of the Company. Under these guidelines,
executive positions are assigned grade levels, and officers in the higher paid
grade levels will generally have a smaller percentage of their total
compensation payable as base salary and a greater percentage of their
compensation payable upon the achievement of performance targets established by
the Committee. Under these guidelines, an individual executive's target
incentive compensation ranges from 10% to 65% of base salary compensation based
upon the particular grade level. From time to time, the Committee may establish
target incentive levels for certain senior management executives in excess of
the established guidelines for the particular grade level. The target incentive
portion of the total compensation package is consistent with the Committee's
strong commitment to a pay-for-performance policy with respect to executive
compensation. With the exception of Mr. Young, all of the named executive
officers currently have target incentive compensation percentages within the
established guidelines for their grade levels for their respective executive
positions, which percentages range from 33% to 53%. Mr. Young's target incentive
percentage is in excess of the established guidelines and is discussed later in
this report. To the extent that the split between base salary and target
incentive compensation in a newly-hired executive's initial compensation
11
<PAGE> 13
package deviates from these guidelines, the Committee will make adjustments in
future years in such a manner that the split between the executive's base salary
and target incentive compensation comes within the executive's applicable grade
level guidelines as soon as practicable after the initial year of employment.
Compensation increases are generally divided between base salary and target
incentive compensation in amounts intended to meet the established target
incentive percentage guidelines. However, compensation increases granted to
certain of the named executive officers during fiscal 1997 were applied 100% to
target incentive compensation.
The actual amount of incentive compensation paid is based upon performance
in comparison to a targeted pre-tax earnings level achieved by the Company or
relevant operating group. Factors such as economic or market conditions are
considered in setting the Company's targeted pre-tax earnings level. Actual
incentive compensation earned during the last fiscal year demonstrates the
Board's philosophy. As the Company did not achieve all of its financial
objectives in fiscal 1997, executive officers, with the exception of Mr.
Burnham, received less than their targeted incentive compensation. Those listed
in the Summary Compensation Table received the following percentage of their
targeted incentive compensation: Mr. Young 50%; Mr. Armstrong 50%; Mr. Wilson
55%; and Ms. Witter 50%. Because the Life division exceeded its financial
objectives in fiscal 1997, Mr. Burnham received 121%.
The Company's executive officers are encouraged to maintain a significant
long-term stock ownership position in the Company's Common Stock in order to
align their interests with those of the Company's shareholders. The Committee
believes that executives who hold such positions will be more motivated to
generate performance gains by working steadily to increase shareholder value
over the long term. The Stock Bonus and Incentive Plan encourages employees to
invest in the Company's Common Stock by providing a matching incentive, yet
requires that the stock investment be held for set periods after issuance in
order to retain the stock purchased with the Company's match, encouraging
employees to work to increase the price of Common Stock.
In addition, the Committee, from time to time, awards stock options under
the Company's Stock Option Plan or the 1994 Performance Plan to various
executives. The option price is the fair market value on the date of grant, and
options become exercisable ratably over the next four or five years if the
executive remains employed by the Company. The Stock Option Plan and the 1994
Performance Plan give employees the opportunity to buy Common Stock at option
prices which, at the time of exercise, may be below the then market value. This
also encourages employees to work towards the growth of shareholder value.
Grants are viewed as an opportunity for employees to invest in the Company's
Common Stock in such a manner as will result in a long-term increase in the
employee's net worth and a supplement to retirement savings, while at the same
time meeting the Board's goal of employee ownership of Common Stock. The grant
of stock options is strictly discretionary; however, total grants outstanding,
as well as the employee's performance and grade level are considered in
determining the amount of option grants. While the value realizable from
exercisable options depends on the extent to which the Company's performance is
reflected in the market price of the Company's Common Stock at a particular
point in time, the decision to exercise an option and thus realize the value in
any particular year is determined by each individual executive.
MR. YOUNG'S COMPENSATION FOR THE FISCAL YEAR
The Committee's general approach in setting Mr. Young's annual cash
compensation is to seek to be competitive with other companies of comparable
size and business scope, while at the same time having a large percentage of his
total cash compensation based upon performance criteria. While this may result
in a fluctuation in the actual level of Mr. Young's compensation from year to
year, the Committee believes that its objective appropriately incentivizes the
Company's chief executive officer toward clearly defined goals, while
maintaining some certainty in the level of compensation through the
non-performance-based base salary portion of total compensation. In keeping with
this philosophy, Mr. Young's target incentive compensation for fiscal 1998 is
equal to 85% of his base salary compensation. For the reported fiscal year 1997,
Mr. Young received 50% of his target incentive compensation.
Mr. Young's participation in the Stock Option Plan, the 1994 Performance
Plan and the Stock Bonus and Incentive Plan is also in accordance with the
Committee's philosophy that the chief executive officer be encouraged to
maintain a significant stock ownership position in order to align his interests
with those of the Company's shareholders.
Although no executive officer currently receives in excess of $1,000,000 of
compensation, the Committee's policy is to maximize the tax deductibility of
executive compensation without compromising the essential framework of the
existing total compensation program. The Committee may elect to forego
deductibility for federal income tax
12
<PAGE> 14
purposes if such action is, in the opinion of the Committee, necessary or
appropriate to further the goals of the Company's executive compensation
program, or otherwise is in the Company's best interests.
Although the foregoing describes the Committee's current compensation
policies applicable to the Company's executive officers, the Committee reserves
the right to change these policies at such time in the future and in such manner
as the Committee deems necessary or appropriate.
SUBMITTED BY THE COMPENSATION AND ORGANIZATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS
E. H. Harbison, Jr., Chairman H. E. Trusheim
W. P. Stiritz
PENSION PLAN
The Company has maintained a defined benefit Pension Plan since April 1,
1980. An employee earns benefits in any year equal to 0.25% of total
compensation plus an additional 0.25% of that part of compensation which is in
excess of one-half of the Social Security Taxable Wage Base, plus, for each year
of employment in excess of 15 years, an additional 0.05% of total compensation.
Reduced benefits are payable at early retirement. Estimated annual benefits
under the Pension Plan payable upon normal retirement to the named executive
officers are as follows: Mr. Young, $45,105; Mr. Armstrong, $15,173; Mr.
Burnham, $28,464; Mr. Wilson, $15,973; and Ms. Witter, $29,822. These figures
assume that participants will remain with the Company until their normal
retirement dates and will receive reasonable increases to their current
compensation.
The Company also maintains the Supplemental Plan, a supplemental retirement
benefit plan for a limited number of highly compensated officers and management
personnel selected by the Compensation and Organization Committee. All of the
named executive officers participate in the Supplemental Plan.
The "formula amount" of supplemental retirement benefit payable under the
Supplemental Plan is determined by the Committee when the participant is invited
to join the Plan and is subject to increase at the Committee's discretion.
Additionally, the Committee may, at its discretion, reduce the formula amount or
"freeze" the then vested benefit of certain participants. A full benefit is
the participant's final average compensation multiplied by the formula amount
(between 30% and 50%). A participant who has less than 30 years of service at
retirement will receive a reduced amount of the otherwise fully vested formula
amount, based on actual years of service. For the purposes of the Supplemental
Plan, final average compensation means the average compensation paid during the
three most highly compensated years of the participant's last five years of
employment.
Benefits are generally payable over 120 months beginning at age 65, but may
extend for a period of up to 15 years. Any benefit payable under the
Supplemental Plan will be reduced by benefits paid under the Pension Plan.
Estimated annual benefits under the Supplemental Plan payable upon normal
retirement over a ten-year period to the named executive officers are as
follows: Mr. Young, $277,278; Mr. Armstrong, $42,146; Mr. Burnham, $92,471; Mr.
Wilson, $69,537; and Ms. Witter, $75,210. These figures reflect a reduction for
the benefit payable under the Pension Plan (or predecessor plan), and assume
that participants will remain with the Company until their normal retirement
dates and will receive reasonable increases to their current compensation.
13
<PAGE> 15
PERFORMANCE GRAPH
The following is a line-graph presentation comparing five-year cumulative
total returns among the Company's Common Stock, the Standard & Poors 500 Index
and the Value Line Industrial Services Index for the five years ended January
31, 1997.
[GRAPH]
<TABLE>
<CAPTION>
1/31/92 1/31/93 1/31/94 1/31/95 1/31/96 1/31/97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Angelica............................................ 100 70 80 78 62 62
S&P 500............................................. 100 111 125 126 175 221
Value Line: Industrial Services..................... 100 119 149 143 172 219
(ASSUMES $100 INVESTED ON JANUARY 31, 1992 AND THAT DIVIDENDS ARE REINVESTED.)
</TABLE>
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSAL A
APPROVAL OF GOLDEN PARACHUTE AGREEMENTS
(ITEM 2 ON PROXY CARD)
The Company has been advised that a shareholder proposes to introduce the
following resolution and statement in support hereof at the 1997 Annual Meeting
of Shareholders:
"RESOLVED, that the shareholders recommend that the board of directors
adopt a policy against entering into future agreements with officers and
directors of this corporation which provide compensation contingent on a change
of control of the corporation, unless such compensation agreements are submitted
to a vote of the shareholders and approved by a majority of shares present and
voting on the issue."
(The name and address of, and the number of shares held by, the proponent can be
obtained upon request from the Office of the Secretary of the Company.)
STATEMENT BY SHAREHOLDER IN SUPPORT OF THE RESOLUTION
"Lucrative severance contracts awarded to senior corporate executives which
provide compensation contingent on a change of control, usually through a merger
or acquisition of the corporation, are known as `golden parachutes.' These
contracts are awarded without shareholder approval.
14
<PAGE> 16
The practice of providing these large cash awards to a small group of senior
corporate managers without shareholder approval has been a subject of public
outcry. In 1988, the U.S. Senate in emphasizing the potential conflict of
interest between management and shareholders created by these agreements voted
ninety eight to one to require shareholder approval of golden parachutes which
exceed three times annual compensation.
Although final action was not taken, it is clear to me that the overwhelming
vote in favor of the measure reflects public sentiment against golden
parachutes. A shareholder vote would allow the corporation's owners to decide
for themselves whether golden parachutes are in their best interests.
I am a founding member of the Investors Rights Association of America and it
is clear to me that requiring a shareholder vote is necessary to address the
conflicts of interest between management and shareholders that arise in the
awarding of golden parachutes.
I urge your support. Vote for this resolution."
STATEMENT BY THE BOARD OF DIRECTORS AGAINST THE RESOLUTION
The Company's Board of Directors strongly believes that this shareholder
proposal is contrary to the best interests of the Company and its shareholders.
The Company must be able to attract and retain employees who have the requisite
managerial and operational skills to contribute significantly to the Company's
growth and success. In the current environment of hostile takeovers and other
changes of control, reasonable post-takeover arrangements are often an essential
term of employment contracts. The Board expressly recognized the importance of
retaining key personnel during and after a disruption which is typically
provoked by takeover offers (whether or not ultimately successful) by adopting
the Management Retention and Incentive Plan (the "Plan") in 1990 which
provides for change of control severance agreements with certain key executives.
The five change-in-control agreements under the Plan to which the Company is a
party are described on page 9 of this Proxy Statement under the caption
"Employment Contracts and Termination of Employment and Change-In-Control
Arrangements."
Under the Plan, an executive is not automatically entitled to a severance
payment upon a change of control. Instead, an executive will receive payments
only if there is a change of control of the Company as a result of a hostile
takeover and the acquiror either (1) terminates the executive's employment or
(2) adversely changes the terms of the executive's employment. Thus, it is the
acquiror--not the executive--who controls whether the executive will receive a
severance payment. As a result, the executive does not have a financial
incentive to act detrimentally to shareholder interests. In fact, if the
executive voluntarily resigns or is fired for cause (as defined in the Plan), he
or she is not entitled to severance payments.
The Company's change-in-control agreements are not "lucrative severance
contracts." No severance payment may exceed 2.99 times an executive's average
annual compensation for the five calendar years immediately preceding the change
of control. Because the benefit is based on a five-year average, an executive is
prevented from artificially inflating his or her salary immediately prior to the
change of control in order to increase his or her severance payment. Further,
the severance benefit payable for any executive who is 62 years of age or older
at the time of termination is adjusted downward on a pro rata basis to account
for full retirement benefits received at age 65. An executive who is 65 years of
age or older at the time of termination is not entitled to any severance
benefit.
Although the proposal does not relate to the Company's existing
change-in-control agreements, to adopt such a policy with respect to future
arrangements would adversely affect the Company's ability to recruit top
executives, and might force the Company to make alternative, more costly
employment arrangements.
The Board strongly believes that its change-in-control agreements benefit
the shareholders by ensuring that key executives are not distracted by personal
uncertainties which arise during a threatened change of control. The agreements,
which have no current cost to the Company and under which no payments have ever
been made, are designed to keep key executives' undivided attention on their
duties at precisely the time when such attention is needed most. Without a
change-in-control agreement, an executive could be tempted to leave the Company
for another position which offers greater security. In short, the agreements
help motivate key executives to act objectively and in the shareholders' best
interests, even when their jobs and financial well-being may be threatened by a
would-be acquiror of the Company.
The Board of Directors is aware that agreements contingent on a "change of
control" are sometimes criticized as an anti-takeover device. However, the
Company's change-in-control agreements should not, in the Board's opinion,
significantly inhibit any potential acquiror, particularly in light of the
Company's longstanding realistic compensation policies upon which the severance
payments are based. Furthermore, in the event of a hostile takeover, an acquiror
15
<PAGE> 17
may well choose to continue at a higher salary the services of some or all of
the subject employees rather than making the relatively modest payments under
existing severance contracts.
Traditionally, compensation arrangements with key executives have been the
responsibility of the Board of Directors. The Board believes it has properly
fulfilled its responsibilities in this area in the past and is fully prepared to
fulfill its responsibilities in the future. Accordingly, the Board of Directors
believes that the adoption of the proposal is not only unnecessary, but would be
detrimental to the best interests of the Company and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS WITHOUT DISSENT A VOTE AGAINST THIS PROPOSAL
A. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE
PROPOSAL UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY.
SHAREHOLDER PROPOSAL B
PROPOSAL REGARDING STRATEGIC ALTERNATIVES
(ITEM 3 ON PROXY CARD)
The Company has been advised that a shareholder proposes to introduce the
following resolution and statement in support hereof at the 1997 Annual Meeting
of Shareholders:
"RESOLVED, that the shareholders of the Company recommend and deem it
desirable and in their best interest that the board of directors immediately
engage the services of a nationally recognized investment banker to explore all
alternatives to enhance the value of the Company. These alternatives should
include, but not be limited to, the possible sale, merger or other transaction
involving the Company."
(The name and address of, and the number of shares held by, the proponent can be
obtained upon request from the Office of the Secretary of the Company.)
STATEMENT BY SHAREHOLDER IN SUPPORT OF THE RESOLUTION
"In support of the above resolution, the proponent believes that in view of
the unacceptable performance of the Company over the past five years, the
deplorable stock price, and in my opinion, ineffective management, the board of
directors should take immediate action to engage the services of an investment
banker to explore all alternatives to enhance the value of the Company.
I am the founder of the Investors Rights Association of America and it is my
opinion that the value of the Company can be enhanced if the above resolution is
carried out and the shareholders would at long last be able to salvage
meaningful monetary rewards for their patience and long suffering.
Nell Minow, a highly acclaimed corporate governance specialist, and
principal of the LENS Fund, which specializes in increasing the value of
under-performing companies, has stated:
`Companies can only justify asking investors to take the risk of
investing in equities by delivering a competitive rate of return on the
invested capital. When a company's management and board cannot meet that
goal, they owe it to their investors to submit themselves to an
independent evaluation by an outside firm, to insure that all options
are objectively evaluated.
If a company's performance lags over a sustained period, it is time
for the shareholders to send a message of no confidence to the board,
reminding them that they have to hold management--and themselves--to a
high standard.'
I urge your support. Vote for this resolution."
STATEMENT BY THE BOARD OF DIRECTORS AGAINST THE RESOLUTION
Your Directors have also been disappointed by the Company's financial
performance and remain committed to enhancing shareholder value. The Board
regularly reviews the Company's position and strategic direction as well as
available options and potential alternatives, including from time to time
consulting with investment banking firms and other consulting firms. Moreover,
as a matter of course, the Board regularly reviews each of the businesses of the
Company, as well as market and competitive conditions which have significant
impact on the Company and on shareholder value. The Board has taken and will
continue to take steps that it believes are prudent to increase long-term
shareholder value.
16
<PAGE> 18
The Board believes that the Company's strategic planning is best conducted
confidentially. While the Board is committed to enhancing shareholder value, the
adoption of the proposal could lead to short-term market rumors and speculation,
which may adversely impact the Company's important relationships with its
customers, employees, and others and may negatively impact long-term shareholder
value and market prices.
THE BOARD OF DIRECTORS RECOMMENDS WITHOUT DISSENT A VOTE AGAINST THIS PROPOSAL
B. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE
PROPOSAL UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY.
SHAREHOLDER PROPOSAL C
ELIMINATION OF CLASSIFIED BOARD OF DIRECTORS
(ITEM 4 ON PROXY CARD)
The Company has been advised that a shareholder proposes to introduce the
following resolution and statement in support hereof at the 1997 Annual Meeting
of Shareholders:
"RESOLVED, that the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to declassify
the Board of Directors so that all directors are elected annually, such
declassification to be effected in a manner that does not affect the unexpired
terms of directors previously elected."
(The name and address of, and the number of shares held by, the proponent can be
obtained upon request from the Office of the Secretary of the Company.)
STATEMENT BY SHAREHOLDER IN SUPPORT OF THE RESOLUTION
"The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable for
implementation of those policies. I believe that the classification of the Board
of Directors, which results in only a portion of the Board being elected
annually, is not in the best interests of the Company and its stockholders.
The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. I believe that a Company's classified Board of
Directors maintains the incumbency of the current Board and therefore of current
management, which in turn limits management's accountability to shareholders.
The elimination of the Company's classified Board would require each new
director to stand for election annually and allow the stockholders an
opportunity to register their views on the performance of the Board collectively
and each director individually. I believe that this is one of the best methods
available to the stockholder to insure that the Company will be managed in a
manner that is in the best interests of the stockholders.
A classified board might also be seen as an impediment to a potential
takeover of the Company's stock at a premium price. With the inability to
replace the majority of the Board at one annual meeting, an outside suitor might
be reluctant to make an offer in the first place.
I am a founding member of the Investors Rights Association of America and I
believe that the concerns expressed by companies with classified boards that the
annual election of all directors could leave companies without experienced
directors in the event that all incumbents are voted out by stockholders, are
unfounded. In my view, in the unlikely event that the stockholders vote to
replace all directors, this decision would express stockholder dissatisfaction
with the incumbent directors and reflect the need for change.
I urge your support, vote for this resolution."
STATEMENT BY THE BOARD OF DIRECTORS AGAINST THE RESOLUTION
Under the corporate law of Missouri, the State in which the Company is
incorporated, the change contemplated by the proposal would require an amendment
to the Company's By-Laws, which must first be approved by the Board of
Directors. A vote in favor of Proposal C, therefore, would constitute a request
that the Board initiate an amendment. The Board does not believe, however, that
such an amendment would be in the best interests of the Company or its
shareholders.
The staggered election of directors is intended to prevent precipitous
changes in the composition of the Board by preventing the election of an
entirely new Board in a single year. In the opinion of this Board, a staggered
Board of
17
<PAGE> 19
Directors facilitates continuity and stability of leadership and policy by
assuring that several experienced personnel familiar with the Company and its
business will be on the Board of Directors at all times. Preventing such a
precipitous change serves to moderate changes in corporate policies, business
strategies and operations which are not in the best interests of the Company and
its shareholders.
The Board of Directors recognizes that the proposal would enable a group of
individuals or entities owning a significant but minority position in a company
to obtain actual control of the Company or further some other personal goal with
respect to the Company or its shares or assets by electing at a single Annual
Meeting its own slate of directors. Such an attempt, even if unsuccessful, can
seriously disrupt the business of the Company and cause it to incur substantial
expense. Board classification encourages any person or group seeking to acquire
control of the Company to initiate such action through arm's-length negotiations
with management and the Board of Directors, who are in a position to negotiate a
transaction which is fair to all Company shareholders. In the event the Board is
radically changed, it may be unable or unwilling to protect the interests of all
shareholders from the abusive tactics of a corporate raider who seeks to obtain
effective control of any public corporation for its own purposes rather than to
create long-term value for the shareholders.
The staggered election of Directors used by the Company is a common practice
and is similar to procedures which have been adopted by the shareholders of many
major corporations. It is specifically permitted by the laws of many states,
including the State of Missouri, as well as the rules of the New York Stock
Exchange.
THE BOARD OF DIRECTORS RECOMMENDS WITHOUT DISSENT A VOTE AGAINST THIS PROPOSAL
C. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE
PROPOSAL UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as independent public accountants for the
Company since 1954, and the Board of Directors has selected it to serve in that
capacity again. Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting of Shareholders. Such representatives will have an
opportunity to make a statement, if they so desire, and will be available to
respond to appropriate questions by shareholders.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company at its principal
executive offices no later than December 17, 1997 to be included in the
Company's proxy materials for its 1998 Annual Meeting of Shareholders.
Shareholder proposals not in full conformity with applicable rules of the
Securities and Exchange Commission may be excluded from such materials.
GENERAL
Proxies will be solicited by mail. They also may be solicited by officers
and regular employees of the Company personally or by telephone, but such
persons will not be specifically compensated for such services. Corporate
Investor Communications, Inc. has been retained to assist in the solicitation of
proxies for a fee of $5,000, plus expenses. Banks, brokers, nominees, and other
custodians and fiduciaries may be reimbursed for their reasonable out-of-pocket
expenses in forwarding soliciting material to the beneficial owners. The cost of
soliciting proxies will be borne by the Company.
The Board of Directors does not intend to bring any other matters before the
meeting, and, at the date of this Proxy Statement, the Board of Directors is not
informed of any matters that others may bring before the meeting. However, if
any other matters properly come before the meeting, it is the intention of the
proxies named on the proxy to vote as proxies on such matters in accordance with
their judgment as to the Company's best interest.
SHAREHOLDERS ARE URGED TO DATE, SIGN, AND PROMPTLY RETURN THE ENCLOSED PROXY IN
THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. YOUR COOPERATION WILL BE APPRECIATED.
St. Louis, Missouri
April 16, 1997
18
<PAGE> 20
(Fold And Detach Here)
- -------------------------------------------------------------------------------
ANGELICA CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 28, 1997
DIRECTORS RECOMMEND A VOTE FOR DIRECTORS RECOMMEND A VOTE AGAINST
1. ELECTION OF DIRECTORS: For terms 2. Shareholder proposal on Approval
expiring in 2000: of Golden Parachute Agreements
Leslie F. Loewe and
William P. Stiritz FOR AGAINST ABSTAIN
/ / / / / /
/ / FOR all nominees listed
3. Shareholder proposal Regarding
/ / FOR all nominees listed except Strategic Alternatives
------------------------------ FOR AGAINST ABSTAIN
/ / / / / /
/ / WITHHOLD AUTHORITY to vote for
all nominees listed. 4. Shareholder proposal on
Elimination of Classified
Board of Directors
FOR AGAINST ABSTAIN
/ / / / / /
5. In such manner as said proxies may in their discretion determine, upon such
other matters as may properly come before the meeting.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS FORM.
<PAGE> 21
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING, WHETHER OR NOT
YOU ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE
URGE YOU TO COMPLETE, DETACH AND MAIL THE PROXY FORM BELOW.
(Fold And Detach Here)
- ------------------------------------------------------------------------------
The undersigned hereby appoints Lawrence J. Young and T.M. Armstrong, and each
of them, the proxy of the undersigned, each with power of substitution, to vote
all shares which the undersigned would be entitled to vote if personally present
at the Annual Meeting of Shareholders of Angelica Corporation to be held on May
28, 1997, and at any adjournment thereof; provided, however, that said shares
shall be voted as specified on the reverse side hereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. UNLESS OTHERWISE INDICATED ON
THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE
NOMINEES LISTED; AND, UNLESS THE SHAREHOLDER GIVES OTHER INSTRUCTIONS, WILL BE
VOTED AGAINST ITEMS 2, 3 AND 4.
Date: , 1997
----------------------
---------------------------------
---------------------------------
(SIGNATURE OF SHAREHOLDER(S))
(Please sign proxy exactly as
name appears hereon. Joint owners
should each sign personally.
Corporate proxies should be
signed by authorized officer.
Executors, administrators,
trustees, etc. should so indicate
when signing.)
/ / Check here if you plan to
attend the Annual Meeting.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 22
Appendix
Page 14 of the printed Proxy contains a performance graph. The information
in the graph is set forth in the table which follows said graph.
