<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
/X/ Definitive Proxy Statement Commission Only
/ / Definitive Additional Materials (as permitted by Rule
/ / Soliciting Material Pursuant to 14a-6(e)(2))
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)(1) and
0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
- ------------------------------------------------------------------------------
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTIONS 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:
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(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
ANGELICA [LOGO]
April 16, 1998
Dear Shareholder:
You are cordially invited to attend our Annual Meeting
of Shareholders at 10:00 a.m. on Wednesday, May 27, 1998,
at the Saint Louis Club, 14th Floor, 7701 Forsyth
Boulevard, Clayton, Missouri. We will review Angelica's
Fiscal Year 1998 performance and answer your questions.
Enclosed with this Proxy Statement are your proxy card and
the 1998 Annual Report.
Angelica has taken the challenge to write a proxy
statement in "plain English." We hope you like this new
simplified format, and we welcome your comments.
I look forward to seeing you on May 27 and would like
to take this opportunity to remind you that your vote is
important.
Sincerely,
/s/ Don W. Hubble
Don W. Hubble
Chairman, President
and Chief Executive Officer
April 16, 1998
424 South Woods Mill Road
Chesterfield, Missouri 63017-3406
<PAGE> 3
ANGELICA [LOGO]
MAY 27, 1998
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Angelica Corporation will
be held on Wednesday, May 27, 1998 at the Saint Louis Club, 14th
Floor, 7701 Forsyth Boulevard, Clayton, Missouri, to consider and
take action on the following:
1. Election of three Directors to serve for three-year terms.
2. Election of one Director to serve for a two-year term.
3. Transact any other business properly brought before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on April 7,
1998, will be entitled to vote at the Annual Meeting or any
adjournments thereof. A ticket is not necessary to attend the Annual
Meeting, however, in order to estimate the number of people who will
attend, please mark the appropriate box on the proxy card if you
plan to attend the Annual Meeting.
This Proxy Statement, proxy card and Angelica's Fiscal 1998
Annual Report to Shareholders are being distributed on or about
April 16, 1998.
By order of the Board of Directors,
Jill Witter, Esq.
Secretary
<PAGE> 4
ANGELICA [LOGO]
PROXY STATEMENT
GENERAL QUESTIONS AND ANSWERS
ON WHAT AM I VOTING?
Four Directors will be elected at this year's annual meeting. Three
directors, Susan S. Elliott, Don W. Hubble, and H. Edwin Trusheim are nominated
for election to a term of three years each. One director, David A. Abrahamson,
will serve for a term of two years. These will be separate elections, and the
persons with the three highest vote totals in the first election and the highest
vote total in the second election will be elected as Directors. Because of his
position as Chairman, President and Chief Executive Officer, Mr. Hubble is
considered an inside director. All other nominees for director are considered
outside directors.
- --------------------------------------------------------------------------------
WHO IS ENTITLED TO VOTE?
Shareholders as of the close of business on April 7, 1998 (the Record Date)
are entitled to vote at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each matter to be considered at the meeting.
Shareholders do not have the right to cumulate their votes for one or more of
the Directors standing for election.
- --------------------------------------------------------------------------------
HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the prepaid
envelope. You have the right to revoke your proxy any time before the meeting
by: 1) notifying Angelica's Corporate Secretary, 2) voting in person, or 3)
returning a later-dated proxy. If you return your signed proxy card, but do not
indicate your voting preferences, Don W. Hubble and Leslie F. Loewe will vote,
on your behalf, FOR each of the nominees for Director. The Board of Directors
recommends you vote FOR each of the directors standing for election.
- --------------------------------------------------------------------------------
IS MY VOTE CONFIDENTIAL?
Proxy cards, ballots and voting tabulations that identify individual
shareholders are confidential. Only the proxy tabulator and certain employees
associated with processing proxy cards and counting the vote have access to your
card. Additionally, all comments directed to management (whether written on the
proxy card or elsewhere) will remain confidential, unless you ask that your name
be disclosed.
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WHO WILL COUNT THE VOTE?
Representatives of UMB Bank will tabulate the votes and act as inspectors of
election.
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2
<PAGE> 5
WHAT SHARES ARE INCLUDED IN THE PROXY CARD?
The shares on your card represent all your shares, including those in
Angelica's dividend reinvestment plan, the employee benefit plans and shares
credited to your savings plan account held in custody by the trustee, Bankers
Trust Company.
- --------------------------------------------------------------------------------
WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
It is an indication that your shares are registered differently and are in
more than one account. Sign and return all proxy cards to ensure that all your
shares are voted. To provide better shareholder services, we encourage you to
have all accounts registered in the same name or names and address. You may do
this by contacting our transfer agent, UMB Bank at (800) 884-4225.
- --------------------------------------------------------------------------------
WHAT CONSTITUTES A QUORUM?
As of the Record Date, 9,194,581 shares of Angelica Common Stock were issued
and outstanding. A majority of the shares which are either present in person or
represented by proxy at the meeting is required to constitute a quorum.
The total number of votes that will be considered to be present at the
meeting is the number of votes actually cast. Votes withheld in election of
Directors are counted as "shares present" at the meeting for purposes of
determining whether a quorum exists and, because the votes to elect Directors is
based upon a plurality of the votes cast in each particular election, votes
withheld will not affect the outcome of the vote. Proxies submitted by brokers
that do not indicate a vote for some or all of the proposals because they don't
have discretionary voting authority and haven't received instructions as to how
to vote on those proposals (so-called "broker nonvotes") are not considered
"shares present" and will not affect the outcome of the vote.
- --------------------------------------------------------------------------------
WHO CAN ATTEND THE ANNUAL MEETING?
All shareholders as of the Record Date can attend, although seating is
limited.
- --------------------------------------------------------------------------------
HOW DOES A SHAREHOLDER NOMINATE SOMEONE TO BE A DIRECTOR OF ANGELICA?
Any shareholder may recommend any person as a nominee for Director of
Angelica by writing to the Chairman of the Nominating Committee, c/o Corporate
Secretary, 424 S. Woods Mill Rd., Chesterfield, MO, 63017-3406. Recommendations
must be received at least 30 days prior to the Annual Meeting of Shareholders,
but not more than 60 days prior to Annual Meeting of Shareholders. The
recommendation must be accompanied by 1) the name and address of the shareholder
and the number of shares of Angelica Common Stock owned by the shareholder, and
2) a statement from the nominee indicating his or her willingness to serve if
elected and disclosing principal occupations or employment of the nominee over
the past five years.
- --------------------------------------------------------------------------------
WHO ARE THE LARGEST SHAREHOLDERS?
First Pacific Advisors, Inc. owned 1,437,500 shares or 15.7% as of December 31,
1997.
Dimensional Fund Advisors, Inc. owned 755,000 shares or 8.25% as of December 31,
1997.
Both of these firms are institutional investment managers.
- --------------------------------------------------------------------------------
3
<PAGE> 6
WHEN ARE THE 1999 SHAREHOLDER PROPOSALS DUE?
In order to be considered for inclusion in next year's Proxy Statement,
shareholder proposals must be submitted in writing by December 15, 1998, to
Corporate Secretary, Angelica Corporation, 424 S. Woods Mill Rd., Chesterfield,
MO 63017-3406. Proposals not in full conformity with the applicable rules of the
Securities and Exchange Commission may be excluded from the Proxy Statement.
- --------------------------------------------------------------------------------
WHO ARE THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS?
Arthur Andersen LLP has served as independent public accountants for the
Company since 1954, and the Board of Directors has selected that firm to serve
in that capacity again. Representatives of Arthur Andersen LLP are expected to
be present at the Annual Meeting. Such representatives may make a statement if
they so desire, and will be available to respond to appropriate questions by
shareholders.
- --------------------------------------------------------------------------------
HOW MUCH DID THIS PROXY SOLICITATION COST?
Corporate Investor Communications, Inc. was hired to assist in the
distribution of proxy materials and solicitation of votes at a cost of $5,000,
plus out-of-pocket expenses. Angelica will reimburse brokerage firms and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses
for forwarding proxy and solicitation material to the owners of Common Stock.
Officers and regular employees of the Company may also solicit proxies, but they
will not be specifically compensated for such services.
- --------------------------------------------------------------------------------
ARE THERE OTHER MATTERS TO BE ACTED ON AT THE ANNUAL MEETING?
We do not know of any other matters to be presented or acted upon at the
meeting. Under our By-Laws, no business besides that stated in the meeting
notice may be transacted at any meeting of shareholders. If any other matter is
presented at the meeting on which a vote may properly be taken, the shares
represented by proxies in the accompanying proxy card will be voted in
accordance with the judgment of the person or persons voting those shares.
- --------------------------------------------------------------------------------
ELECTION OF DIRECTORS
The only matter to be voted on is the election of directors. Nominees for
election this year are Susan S. Elliott, Don W. Hubble and H. Edwin Trusheim,
each for a term of three years expiring in 2001; and David A. Abrahamson, for a
term of two years expiring in 2000. The election of the Directors for the
three-year terms will be separate from the election of the Director for the
two-year term.
If any Director is unable to stand for re-election, the Board may, by
resolution, provide for a lesser number of Directors or designate a substitute.
In the latter event, shares represented by proxies may be voted for the
substitute nominee.
The elections of Directors are based upon a plurality of the votes cast in
each election. The three persons with the highest vote totals in the first
election will be elected to terms of three years and the person with the highest
vote total in the second election will be elected to a term of two years. Your
Board recommends a vote FOR these Directors. Votes withheld for Directors will
not affect the outcome of the vote in the elections for Directors.
4
<PAGE> 7
BOARD OF DIRECTORS
DAVID A. ABRAHAMSON<F*> Director since 1997
Mr. Abrahamson, age 58, has been President of Medicine Shoppe International,
Inc. since May, 1990. Mr. Abrahamson has also served as Executive Vice President
of Cardinal Health Inc. since August, 1996.
SUSAN S. ELLIOTT<F*> Director since 1998
Ms. Elliott, age 60, is President and Chief Executive Officer of Systems
Service Enterprises, Inc. (SSE), a desktop information technology services
company which she founded in 1966. Ms. Elliott is a Director and serves as
Deputy Chairman of the Federal Reserve Bank of St. Louis.
EARLE H. HARBISON, JR. Director since 1986
Mr. Harbison, age 69, has been Chairman of the Board of Harbison Corporation
(a manufacturer of molded plastic containers) since 1993. Mr. Harbison retired
from Monsanto Company where he was a member of the Board of Directors from 1986
to 1993, Chairman of the Executive Committee from January to September, 1993,
and President and Chief Operating Officer from 1986 to January, 1993. Mr.
Harbison is a director of Merrill Lynch & Co. and RightChoice Managed Care, Inc.
DON W. HUBBLE<F*> Director since 1998
Mr. Hubble, age 58, joined Angelica as Chairman, President and Chief
Executive Officer on January 1, 1998. Mr. Hubble was President of National
Service Industries, Inc. from 1994 to 1996. He also served as Chief Operating
Officer from 1993 to 1996 and Executive Vice President from 1988 to 1994. Mr.
Hubble is a director of Melita International.
LESLIE F. LOEWE Director since 1980
Mr. Loewe, age 76, most recently served as interim Chairman, President and
Chief Executive Officer of Angelica from August 1, 1997 until December 31, 1997.
Mr. Loewe had previously served as Chairman of the Board from 1984 to 1990 and
as Chief Executive Officer from 1980 until 1989.
CHARLES W. MUELLER Director since 1996
Mr. Mueller, age 59, is Chairman, President and Chief Executive Officer of
Ameren Corporation. Mr. Mueller served as President, Chief Executive Officer and
Director of Union Electric Company from January 1, 1994, to January 1, 1998 and
President and Director from July 1, 1993 to January 1, 1994. He was Senior Vice
President--Administrative Services from 1988 to July 1, 1993.
WILLIAM A. PECK, M.D. Director since 1996
Dr. Peck, age 64, has been Dean of the School of Medicine since 1989 and
Executive Vice Chancellor for Medical Affairs, Washington University since 1993.
Dr. Peck is a director of Allied Healthcare Products, Inc., Hologic, Inc., Magna
Group, Inc. and Reinsurance Group of America Incorporated.
WILLIAM P. STIRITZ Director since 1983
Mr. Stiritz, age 63, is Chairman and Chief Executive Officer of Agribrands
International, Inc. He serves as Chairman of the Board of Ralston Purina Company
and Ralcorp Holdings, Inc., and was formerly Chief Executive Officer and
President of Ralston Purina Company from 1981 until 1997. Mr. Stiritz serves on
the Boards of Ball Corporation, The May Department Stores Company, Reinsurance
Group of America Incorporated and Vail Resorts, Inc.
H. EDWIN TRUSHEIM<F*> Director since 1980
Mr. Trusheim, age 70, retired as Chairman of the Board of General American
Life Insurance Company in 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.
Mr. Trusheim is a director of Laclede Gas Company, RehabCare Group, Inc.,
Reinsurance Group of America Incorporated, and Venture Stores, Inc.
[FN]
<F*>Nominees for re-election
5
<PAGE> 8
<TABLE>
BOARD COMMITTEES
MEMBERSHIP ROSTER
<CAPTION>
COMPENSATION
NAME AUDIT & ORGANIZATION NOMINATING EXECUTIVE OTHER
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David A. Abrahamson
- -----------------------------------------------------------------------------------------------------------------------
Susan S. Elliott
- -----------------------------------------------------------------------------------------------------------------------
Earle H. Harbison, Jr. x x<F*> x x
- -----------------------------------------------------------------------------------------------------------------------
Don W. Hubble x<F*>
- -----------------------------------------------------------------------------------------------------------------------
Leslie F. Loewe x x
- -----------------------------------------------------------------------------------------------------------------------
Charles W. Mueller x<F*>
- -----------------------------------------------------------------------------------------------------------------------
William A. Peck, M.D. x
- -----------------------------------------------------------------------------------------------------------------------
William P. Stiritz x x
- -----------------------------------------------------------------------------------------------------------------------
H. Edwin Trusheim x<F*> x x x
- -----------------------------------------------------------------------------------------------------------------------
No. of Meetings in FY1998 4 1 2 0 3
- -----------------------------------------------------------------------------------------------------------------------
<FN>
<F*>chairperson
</TABLE>
During the fiscal year, 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, except for Mr. Harbison and Mr.
Stiritz.
STANDING COMMITTEES
Audit: The Audit Committee reviews Angelica's auditing, accounting,
financial reporting and internal control functions and monitors compliance with
the Company's Code of Conduct. This Committee also recommends the firm that
Angelica should retain as its independent public accountants. All members are
non-employee Directors.
Compensation and Organization: The Compensation and Organization Committee
reviews and approves executive compensation and employee benefit plans and
programs, including their establishment, modification, and administration. All
members are non-employee Directors.
Executive Committee: The Executive Committee has limited powers to act on
behalf of the Board whenever the Board is not in session.
Nominating Committee: The Nominating Committee recommends nominees for
election as Directors of the Company, recommends nominees for Board committee
appointment, and recommends candidates for appointment as corporate officers.
All members are non-employee Directors.
BOARD COMPENSATION
Employee Directors receive no additional compensation other than their
normal salary for serving on the Board or its Committees. Directors who are not
employees of the Company receive a retainer of $16,000 annually, payable in
shares of Common Stock pursuant to the Non-Employee Directors Stock Plan
(described below). The shares are based on the fair market value of a share on
the date of the Annual Meeting of Shareholders each year. A portion of the
shares are forfeitable if the non-employee Director serves less than ten months
after such Annual Meeting. Directors also receive $1,250 for each Board meeting
attended, $450 for each telephonic Board meeting and $700 for each Committee
meeting in which they participate.
Mr. Loewe has entered into a Consulting Agreement with the Company dated
January 1, 1998. The Consulting Agreement provides compensation at the rate of
$5,000 per month for a term of six months.
6
<PAGE> 9
NON-EMPLOYEE DIRECTOR PROGRAMS
NON-EMPLOYEE DIRECTORS STOCK PLAN. Each non-employee Director receives 100
shares of Common Stock each year. In addition, new non-employee Directors
receive, upon their initial election to the Board, 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. Options to purchase 2,000 shares of Common Stock
are also granted annually under the plan to each non-employee Director. The
purchase price of these option shares is 100% of the fair market value of the
shares on the date of the Annual Meeting. The option shares become exercisable
in full upon a non-employee Director's retirement.
DEFERRED COMPENSATION OPTION PLAN FOR NON-EMPLOYEE DIRECTORS. Four Directors
participate in either the Deferred Compensation Option Plan for Directors or the
Deferred Compensation Option Plan for Selected Management Employees. Upon
election to the Board, a Director may, at his or her election, defer $5,000 to
$10,000 of Board meeting and Committee meeting fees annually for a period of
years, not to exceed four years. In exchange, the Director is entitled to
receive, at retirement, a retirement benefit payment payable over 15 years. The
amount of the retirement benefit is a function of the amount of compensation
deferred and certain actuarial factors.
BENEFICIAL STOCK OWNERSHIP
The table below lists those 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 SHARES OF PERCENT
OF BENEFICIAL OWNER COMMON STOCK OF CLASS
------------------- ------------ ---------
<S> <C> <C>
First Pacific Advisors, Inc.<F1>..................... 1,437,500 15.7%
11400 Olympic Boulevard
Los Angeles, CA 90064
Dimensional Fund Advisors Inc.<F2>................... 755,000 8.25%
1299 Ocean Avenue, 11th Fl.
Santa Monica, CA 90401
<FN>
- -------
<F1> Stated information is based on a Schedule 13G, dated February 10, 1998,
filed with the Securities and Exchange Commission. First Pacific Advisors,
Inc., an investment advisor, has shared voting power as to 520,500 shares
and shared dispositive power as to 1,437,500 shares. A separate Schedule
13G, dated February 10, 1998, 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 Advisors, Inc.
<F2> Stated information is based on a Schedule 13G, dated February 9, 1998,
filed with the Securities and Exchange Commission. Dimensional Fund
Advisors Inc. ("Dimensional"), a registered investment advisor, is
deemed to have beneficial ownership of 755,000 shares of stock as of
December 31, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors Inc. serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares. Dimensional has sole
voting power as to 496,100 shares<F*> and sole dispositive power as to
755,000 shares.
<F*>Persons who are officers of Dimensional Fund Advisors Inc. also serve
as officers of DFA Investment Dimensions Group Inc., (the "Fund") and
The DFA Investment Trust Company (the "Trust"), each an open-end
management investment company registered under the Investment Company Act
of 1940. In their capacity as officers of the Fund and the Trust, these
persons vote 86,500 additional shares which are owned by the Fund and
172,400 shares which are owned by the Trust (both included in the sole
dispositive power totals above).
</TABLE>
7
<PAGE> 10
MANAGEMENT STOCK OWNERSHIP
The table below shows how much stock of Angelica each Director and executive
officer ("Named Executive Officer") listed in the Summary Compensation Table
beneficially owned as of April 7, 1998. Each Director or Named Executive Officer
beneficially owns less than 1%, except for Mr. Young who owns 1.16%, and all
Directors and executive officers as a group, including the Named Executive
Officers, own 3.6% of Angelica Common Stock plus options that are exercisable
within 60 days after April 7, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY
OWNED DIRECTLY OR INDIRECTLY
AS OF APRIL 7, 1998
---------------------------------------
OBTAINABLE
THROUGH
STOCK OPTION
OWNED<F1> EXERCISE<F2> TOTAL
-------- ------------ -------
<S> <C> <C> <C>
David A. Abrahamson.......................... 1,355 -- 1,355
Theodore M. Armstrong........................ 11,367<F3> 35,650 47,017
Michael E. Burnham........................... 6,160<F4> 21,200 27,360
Susan S. Elliott............................. 637 -- 637
Earle H. Harbison, Jr........................ 3,952 3,000 6,952
Don W. Hubble................................ 30,000 -- 30,000
Leslie F. Loewe.............................. 29,582<F5> 3,000 32,582
Charles W. Mueller........................... 2,286<F6> 400 2,686
William A. Peck.............................. 2,286 400 2,686
William A. Stiritz........................... 4,102 3,000 7,102
H. Edwin Trusheim............................ 4,302 3,000 7,302
Alan D. Wilson............................... 3,798 15,600 19,398
Lawrence J. Young............................ 36,176 71,300 107,476
All Executive Officers and Directors as a
group (16 persons)......................... 145,450 197,250 342,700
<FN>
- -------
<F1> Includes 400 shares for Mr. Abrahamson, 400 shares for Ms. Elliott, 1,350
shares for Mr. Harbison, 300 shares for Mr. Loewe, 600 shares for Mr.
Mueller, 600 shares for Dr. Peck, 1,500 shares for Mr. Stiritz, and 1,650
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 these shares, non-employee Directors have sole voting
power and no current dispositive power, except for 675 shares held by Mr.
Harbison, 300 shares held by Mr. Loewe, and 1,650 shares held by Mr.
Trusheim, which are nonforfeitable.
<F2> Stock options exercisable within 60 days after April 7, 1998.
<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 2,286 shares included above
which are held by his wife's living trust.
</TABLE>
8
<PAGE> 11
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Company records and other information, Angelica believes that all
SEC filing requirements applicable to its Directors and officers were complied
with for the 1998 fiscal year.
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 18 shall not be incorporated by reference into any
such filings.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
WHAT IS OUR COMPENSATION PHILOSOPHY?
The objectives of Angelica's executive compensation programs are to motivate
management to create shareholder value by making compensation commensurate with
performance and the attainment of predetermined financial and strategic
objectives. The Compensation and Organization Committee of the Board of
Directors (the "Committee"), which consists entirely of outside Directors, has
overall responsibility to administer the executive compensation programs,
policies, and practices.
WHAT FACTORS ARE CONSIDERED IN DETERMINING COMPENSATION?
There are two components in the Company's executive cash compensation
program, base salary and target incentive compensation. The cash compensation
program is structured so 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 image apparel
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
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.
HOW DO WE DETERMINE BASE SALARY AND INCENTIVE COMPENSATION?
The Company has established guidelines that the Committee uses in
determining on a continuing 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. All of the named executive officers currently have target
9
<PAGE> 12
incentive compensation percentages within the established guidelines for their
grade levels for their respective executive positions, which percentages range
from 41% to 67%. To the extent that the split between base salary and target
incentive compensation in a newly-hired executive's initial compensation 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 1998 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 by some of the named executives during the last
fiscal year demonstrates the Board's philosophy. For fiscal 1998, Mr. Young and
Mr. Armstrong earned 57% of target incentive compensation, based upon the
consolidated performance of the Company. Mr. Wilson earned 171% of target
incentive compensation, based on the performance of the textile services
segment. Mr. Burnham earned 103% of target incentive compensation, based on the
performance of the Life retail segment. Target incentive compensation earned by
Messrs. Young and Hubble is discussed below.
WHAT OTHER TYPES OF COMPENSATION DO EXECUTIVES RECEIVE?
The Committee believes that executives who own Angelica Common Stock will be
more motivated to work towards increasing shareholder value. The Stock Bonus and
Incentive Plan encourages employees to invest in the Company's Common Stock by
providing a matching incentive. The Plan requires both the employee's investment
in Common Stock and the Company's match be retained for three and five years,
respectively, encouraging employees to work to increase the price of the Common
Stock.
To further encourage employees to work towards the growth of shareholder
value, the Committee periodically awards stock options to various employees
under the Angelica Corporation 1994 Performance Plan. This gives employees the
opportunity to buy Common Stock at option prices which, at the time of exercise,
may be below the then market value. The option price is the fair market value on
the date of grant. Options become exercisable ratably over four to ten years,
provided the executive remains employed by the Company. The grant of stock
options is strictly discretionary; however, the employee's performance and grade
level, as well as total grants outstanding, are considered in determining the
amount of option grants. The amount an employee may realize from exercising
options depends on the market price of the Company's Common Stock at the time of
exercise. The decision of when to exercise an option and thus realize the value
is determined by each individual executive.
HOW IS CEO COMPENSATION DETERMINED?
The Committee's general approach in establishing the Chief Executive
Officer'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 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 salary portion of total compensation. The grant of stock
options to Mr. Young and his participation in the Stock Bonus and Incentive Plan
was 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 interest with those of the Company's shareholders. Mr. Young
served as Chief Executive Officer from January 26, 1997 through July 31, 1997,
and Mr. Loewe served as Chief Executive Officer from August 1, 1997 to December
31, 1997. Mr. Hubble commenced employment on January 1, 1998. The grant of stock
options to Mr. Hubble is also in accordance with the Committee's philosophy
regarding encouraging a significant stock position. Since Mr. Hubble was not
employed on August 1, 1997, he did not qualify to participate in the Stock Bonus
and Incentive Plan for fiscal year 1998. Mr. Hubble will qualify to participate
in that Plan for fiscal year 1999.
10
<PAGE> 13
MR. HUBBLE'S COMPENSATION
Mr. Hubble assumed the position as Chairman, President and Chief Executive
Officer on January 1, 1998. The Committee established Mr. Hubble's base salary
at $375,000. Mr. Hubble's target incentive compensation was set at 50% of his
base salary, or $187,500. His incentive compensation is guaranteed to be
$175,000 for fiscal year 1999. Depending on the performance of the Company
during fiscal year 1999, Mr. Hubble can receive incentive compensation equal to
80% of his base salary. In addition, Mr. Hubble was guaranteed to receive 100%
of his pro rata bonus for fiscal year 1998 ($14,583).
Mr. Hubble received, upon accepting the position as Chief Executive Officer,
a grant of 25,000 shares of restricted Common Stock. The shares vest over a
period of three years and are forfeitable if Mr. Hubble leaves the Company for
reasons other than death or disability prior to the expiration of the vesting
period. Mr. Hubble also received options to purchase 100,000 shares of Common
Stock at an exercise price of $21.9375 per share, the market value on January 2,
1998. The options will become exercisable ratably in three equal installments
beginning January 2, 1999.
MR. LOEWE'S COMPENSATION
Mr. Loewe served as Chairman, President and Chief Executive Officer from
August 1, 1997 until December 31, 1997. Because Mr. Loewe served in this
position on an interim basis while a nationwide search was being conducted to
fill this position, the Committee felt it was not appropriate for Mr. Loewe's
compensation to be incentive based. Mr. Loewe did not qualify to participate in
the Company-provided medical and health benefit program and waived all rights to
participate in other health and welfare benefit plans.
MR. YOUNG'S COMPENSATION
Mr. Young received a base salary of $253,333 in fiscal 1998, during which he
was Chairman, President and Chief Executive Officer from January 26, 1997 to
July 31, 1997. Mr. Young's target incentive compensation for fiscal 1998 was set
at 85% of his base salary. Although this percentage was in excess of Company
guidelines, the Committee felt a higher percentage of compensation tied to
Company performance was appropriate in light of recent Company performance. Mr.
Young resigned his position as Chairman, President and Chief Executive Officer
of the Company, effective July 31, 1997, but retained the position of President
of Angelica Image Apparel. Mr. Young's target incentive compensation for fiscal
1998 was based solely on the performance of the Company on a consolidated basis,
reflecting his position as Chief Executive Officer for a significant portion of
the year. Mr. Young's base salary and target incentive compensation for fiscal
1999 is commensurate with his position as President of Angelica Image Apparel
and is deemed competitive with similarly situated executives in competitive
companies and markets.
In addition to the base salary and target incentive compensation outlined
above, Mr. Young will receive the sum of $40,000 per month from January 1, 1998
through December 31, 1999. This amount is in full settlement of the Company's
obligation to Mr. Young pursuant to an employment agreement entered into with
Mr. Young during his term as Chief Executive Officer.
HOW HAVE WE RESPONDED TO THE IRS LIMITS ON DEDUCTIBILITY OF COMPENSATION?
Although no executive officer currently receives in excess of $1,000,000 of
compensation annually, the Committee's policy is to maximize the tax
deductibility of executive compensation without compromising the essential
framework of the existing total compensation program. The Committee may elect to
forego deductibility for federal income tax purposes if such action is, in the
opinion of the Committee, necessary or appropriate to further the goals of the
Company's executive compensation program, or otherwise is in the Company's best
interests.
Although the foregoing describes the Committee's current compensation
policies applicable to the Company's executive officers, the Committee reserves
the right to change these policies at such time in the future and in such manner
as the Committee deems necessary or appropriate.
SUBMITTED BY THE COMPENSATION AND ORGANIZATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS
E. H. Harbison, Jr., Chairman H. E. Trusheim
W. P. Stiritz
11
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
The table below shows the before-tax compensation for the last three years
for Don W. Hubble, who assumed the position of Chief Executive Officer ("CEO")
on January 1, 1998, for Leslie F. Loewe, who served as CEO from August 1, 1997
to December 31, 1997, and for the four next highest paid executive officers at
the end of fiscal 1998. The four next highest paid executive officers includes
Lawrence J. Young, who served as CEO during fiscal 1998 from January 26, 1997 to
July 31, 1997.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------------
BONUS RESTRICTED ALL OTHER
FISCAL --------------------------- STOCK COMPEN-
NAME AND YEAR NONCASH TOTAL AWARD(S) SATION
PRINCIPAL POSITION ENDING SALARY<F1> CASH <F2><F3> BONUS ($)<F2><F3> OPTIONS (#) ($)<F4>
------------------ ------ ---------- ---- -------- ----- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Don W. Hubble<F5> 1/31/98 $ 31,250 $14,583 $ -- $ 14,583 $575,000<F6> 100,000 $ --
Chairman, President 1/25/97 -- -- -- -- -- -- --
& CEO 1/27/96 -- -- -- -- -- -- --
Leslie F. Loewe<F7> 1/31/98 200,000 -- -- -- 11,133<F8> 2,000 16,966<F9>
Chairman, President 1/25/97 -- -- -- -- 18,550 2,000 10,416
& CEO 1/27/96 -- -- -- -- 18,375 2,000 11,404
Lawrence J. Young<F10> 1/31/98 253,333 62,700 62,700 125,400 31,350 -- 40,600<F11>
Executive Vice President. 1/25/97 260,000 46,250 46,250 92,500 23,125 62,000 600
Also President, Angelica 1/27/96 260,000 46,250 46,250 92,500 23,125 10,000 600
Image Apparel
Theodore M. Armstrong 1/31/98 164,000 35,568 8,892 44,460 4,446 -- 600
Senior Vice President-- 1/25/97 164,000 18,000 18,000 36,000 9,000 31,000 600
Finance & Administration 1/27/96 164,000 16,500 16,500 33,000 8,250 5,000 600
and Chief Financial Officer
Michael E. Burnham, Vice 1/31/98 113,750 43,905 4,878 48,783 2,439 -- 600
President. Also President, 1/25/97 101,500 24,805 24,805 49,610 12,402 15,000 600
Life Uniform and Shoe 1/27/96 93,000 17,871 17,871 35,742 8,935 4,000 600
Shops
Alan D. Wilson, Vice 1/31/98 165,000 154,047 -- 154,047 -- -- 600
President. Also, President, 1/25/97 169,518 34,542 11,514 46,056 5,757 17,500 600
Angelica Textile Services 1/27/96 156,592 43,110 14,370 57,480 7,185 5,000 600
<FN>
- --------
<F1> Includes participant deferrals under the Retirement Savings Plan for all
Named Executive Officers except Mr. Loewe and Mr. Hubble.
<F2> Participants in the Stock Bonus and Incentive Plan may elect to receive
up to 50% of their Incentive Compensation in shares of Company's Common
Stock ("elected shares") in lieu of cash. Elected shares cannot be sold
for three years. 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. Mr.
Hubble and Mr. Loewe were not eligible to participate in the Stock Bonus
and Incentive Plan for fiscal 1998. The following named executive
officers received elected shares for fiscal 1998, which become
transferable in three years as follows: Mr. Young, 2,682 shares; Mr.
Armstrong, 380 shares; and Mr. Burnham, 208 shares. Mr. Wilson did not
elect to participate. Participants receive dividends on all restricted
shares.
12
<PAGE> 15
<F3> At the end of the last fiscal year, the following named executive
officers held the following number of shares of restricted stock issued
under the Stock Bonus and Incentive Plan (elected and matching shares):
Mr Young, 13,872 shares with an aggregate value of $319,056, Mr.
Armstrong, 4,750 shares with an aggregate value of $109,250, Mr. Burnham,
4,750 shares with an aggregate value of $109,250, and Mr. Wilson, 2,904
shares with an aggregate value of $66,792. Matching shares become
transferable in five years and are subject to forfeiture should the
participant leave the Company prior to the expiration of five years.
Participants receive any dividends paid on matching shares.
<F4> Includes Company contributions to the Retirement Savings Plan on behalf
of each of the named executive officers, except Mr. Loewe and Mr. Hubble,
to match calendar 1997 participant deferrals (included under Salary) made
by each to such Plan.
<F5> Assumed position of Chairman, President and Chief Executive Officer on
January 1, 1998.
<F6> 25,000 shares of restricted stock were issued to Mr. Hubble on January 2,
1998, pursuant to his employment agreement. The shares vest in equal
amounts over a period of three years and are forfeitable if Mr. Hubble's
employment terminates prior to vesting for any reason other than death or
disability. At the end of the fiscal year, the restricted shares had an
aggregate value of $575,000.
<F7> Held the position of Chairman, President and Chief Executive Officer from
August 1, 1997 until December 31, 1997.
<F8> In his capacity as a non-employee Director and pursuant to the
Non-Employee Directors Stock Plan, Mr. Loewe received a retainer of
$9,333 in fiscal year 1998 and $16,000 in each of fiscal years 1996 and
1997. The retainer fees were paid in Angelica Restricted Stock. In
addition, Mr. Loewe received 100 shares of unrestricted Common Stock in
his capacity as a non-employee Director in each of the fiscal years
listed. The shares were issued pursuant to the Non-Employee Directors
Stock Plan. Because Mr. Loewe is over 70 years of age, the shares are
unrestricted. At the end of the fiscal year, Mr. Loewe held 2,087 shares
of Restricted Stock with an aggregate value of $48,001 and 300 shares of
unrestricted stock with an aggregate value of $6,900.
<F9> Includes $5,000 compensation earned pursuant to a Consulting Agreement
entered into on January 1, 1998. In addition, as compensation for Mr.
Loewe's services as a non-employee Director, Mr. Loewe received meeting
fees in the amounts described on page 6. Mr. Loewe did not receive
compensation for any Board or Committee Meeting he attended while an
employee of the Company.
<F10> During fiscal year 1998, Mr. Young was Chairman, President and Chief
Executive Officer from January 26, 1997 to July 31, 1997.
<F11> Includes $40,000 in settlement of a prior contractual employment
obligation (see page 11).
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACTS
With the exception of Mr. Loewe, all of the Named Executive Officers have
employment agreements with the Company (referred to herein individually as an
"Employment Agreement" and collectively as the "Employment Agreements") that
define the Named Executive Officer's employment relationship with the Company.
The Employment Agreements protect the Named Executive Officers from certain
terminations of employment with the Company, both prior to and after a
"Triggering Transaction". The definition of a "Triggering Transaction" (as
defined in each of the Employment Agreements) varies depending on the executive
and his responsibilities, however, it generally refers to a sale or change in
control of one or more operating divisions of the Company, or the sale or change
in control of the entire Company. The Employment Agreements provide that if,
during the term of the Employment Agreement, a Triggering Transaction occurs
and, within three years following the Triggering Transaction, the Company
terminates the Named Executive Officer's employment without "cause", or the
Named Executive Officer terminates his employment for "good reason", the
Company will be required to pay to the Named Executive Officer an amount ranging
from 2.00 to 2.99 times the Named Executive Officer's then-current annual base
salary and the then-current year's target bonus. In addition, all 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. Messrs. Armstrong, Hubble and Young will be entitled to enhanced
supplemental retirement and medical and health benefits without cost to the
Named Executive Officer for a period ranging from five to ten years thereafter.
Mr. Armstrong will also be entitled to enhanced supplemental deferred
compensation benefits. These provisions also apply if, within six months
following a termination by the Company without cause or by the Named Executive
Officer
13
<PAGE> 16
with good reason, a Triggering Transaction occurs or a definitive agreement is
executed that eventually results in a Triggering Transaction. The terms "good
reason" and "cause" are defined in the Employment Agreements.
The Employment Agreements also set out the employment arrangement if an
executive's employment is terminated by the Company without cause (or by the
executive for good reason in the case of Messrs. Hubble and Armstrong) and no
Triggering Transaction has occurred. Except for Mr. Young's Employment
Agreement, which is described below, the Company will be required to continue
the then-current base salary for a period of two years. In the case of Messrs.
Hubble and Armstrong, medical and health benefits shall be continued for a
period of one year.
If it is determined that any portion of the payments made to an executive
officer pursuant to the Employment Agreement would be subject to an excise tax
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended, the
Company will 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.
Under the terms of a special retirement agreement with Mr. Hubble (the
"Hubble Retirement Agreement") the Company has agreed to pay to Mr. Hubble an
annual retirement benefit starting at age 65 equal to $15,000 multiplied by the
number of full years Mr. Hubble is employed by the Company. All benefits under
the Hubble Retirement Agreement will be reduced by the amount of retirement
benefits payable by the Company to Mr. Hubble under certain of the Company's
other retirement benefit plans.
In the event Mr. Young is terminated for any reason except death, but not in
connection with a Triggering Transaction, Mr. Young shall be entitled to receive
the sum of $25,000 a month for six months. However, if the termination occurs
after January 2001 and the operating income of Angelica Image Apparel for the
fiscal year ending January, 2001 has reached or exceeded $10,000,000, Mr. Young
shall be entitled to receive an amount equal to two years of his then-current
base salary. In addition, if a termination, including termination because of
death, occurs prior to December 31, 1999, the Company will pay to Mr. Young or
his estate the amount of $40,000 per month for each month following termination
through December, 1999.
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 "Wilson Retirement
Agreement"). The Wilson Retirement Agreement provides for a monthly retirement
benefit of $8,333, payable over a ten-year period commencing on or after Mr.
Wilson's 65th birthday. All benefits under the Wilson 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
Wilson 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 Wilson
Retirement Agreement.
MANAGEMENT RETENTION AND INCENTIVE PLAN
All of the executive officers except for Messrs. Hubble and Loewe have 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). If an officer's employment with the Company is terminated by the
Company without cause or by the employee for good reason, within two years after
a Change in Control, 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 provides the terminated executive with outplacement
counseling and certain medical benefits and health insurance. The executive
officer will also be relieved of all non-compete obligations with respect to the
Company.
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. As a result,
the severance benefits payable under
14
<PAGE> 17
the employment agreements are computed differently than under the Management
Retention and Incentive Plan and may result in significantly different
entitlements to a particular executive officer. In the event a severance benefit
is payable under an Employment Agreement as a result of a Triggering Transaction
and is payable under the Management Retention and Incentive Plan as a result of
a Change of Control, the executive officer will be entitled to the larger of the
two amounts.
TRUST AGREEMENTS
Two separate trusts have been established with UMB Bank to fund certain
benefits payable to key management personnel pursuant to certain employee
benefit plans in the event the executive officer's employment is terminated
following a "change in control" (as defined in the respective employee benefit
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
deposit in each trust 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 can be revoked by the Company at
any time prior to a potential change in control or change in control of the
Company. The trust will terminate automatically on the third anniversary of the
occurrence of the change in control. If the trust is revoked or terminated, all
remaining trust assets will be returned to the Company. If the Company 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. In the event the
Company becomes bankrupt or insolvent, the assets of the trust will be subject
to the claims of the general creditors of the Company.
RETIREMENT PLANS
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. Hubble, $4,838; Mr. Young, $44,889; Mr. Armstrong,
$15,093; Mr. Burnham, $27,747; and Mr. Wilson, $15,762. 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.
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. Hubble, $50,334; Mr. Young, $135,120; Mr. Armstrong, $39,649; Mr.
Burnham, $121,645; and Mr. Wilson, $58,752. These figures reflect a reduction
for the benefit payable under the Pension Plan (or predecessor plan), and assume
that participants will remain with the Company until their normal retirement
dates and will receive reasonable increases to their current compensation.
15
<PAGE> 18
Mr. Loewe currently receives benefits under the Pension Plan and the
Supplemental Plan that are in conjunction with his term of employment with the
Company prior to his retirement in 1990. He did not accrue any additional
benefits as a result of his employment during fiscal 1998.
STOCK OPTIONS
The 1994 Performance Plan allows grants of stock options and other rights
relating to Common Stock. In general, whether exercising stock options is
profitable depends on the relationship between the Common Stock's market price
and the option's exercise price, as well as on the grantee's investment
decisions. Options that are "in the money" on a given date can become "out of
the money" if prices change on the stock market. For these reasons, we believe
that placing a current value on outstanding options is highly speculative and
may not represent the true benefit, if any, that may be realized by the grantee.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION GRANT DATE
NAME (#) YEAR<F1> ($/SH) DATE PRESENT VALUE ($)<F2>
---- ---------- ---------- -------- ---------- ---------------------
<S> <C> <C> <C> <C> <C>
Don W. Hubble........................... 100,000<F3> 90% $21.9375 1/02/05 $442,800
Leslie F. Loewe......................... --<F4> -- -- -- --
Lawrence J. Young....................... -- -- -- -- --
Theodore M. Armstrong................... -- -- -- -- --
Alan D. Wilson.......................... -- -- -- -- --
Michael E. Burnham...................... -- -- -- -- --
<FN>
- -------
<F1> Based on 111,000 options granted to 3 employees during the fiscal year.
<F2> 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 6.0% based
upon the ten-year Treasury Bill rate as of grant date, dividend yield of
3.7% based upon average annual dividend yield for the prior seven years,
exercise term of seven years, stock price volatility of 19.32% 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.
<F3> Options were granted pursuant to the terms of Mr. Hubble's Employment
Agreement dated December 12, 1997, and a Stock Option Agreement dated
January 2, 1998. One-third of the stock option grant can be exercised one
year after the grant date, two-thirds after two years, and 100% after
three years. Any unexercised options expire after seven years. Options
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 Agreement. (See "Employment Contracts and
Termination of Employment and Change-in Control Arrangements.")
<F4> All options held by Mr. Loewe were granted under the 1994 Non-Employee
Directors Stock Plan during Mr. Loewe's tenure as an outside Director and
not in his capacity as an employee.
</TABLE>
16
<PAGE> 19
OPTION EXERCISES AND HOLDINGS
This table shows the number and value of unexercised stock options for the
Named Executive Officers during fiscal 1998. Value is calculated based on the
average of the high and low transaction prices as reported on the New York Stock
Exchange composite tape on January 30, 1998. No options were exercised by the
Named Executive Officers during fiscal 1998.
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE<F1>
---- ------------- -----------------
<S> <C> <C>
Don W. Hubble.......................... 0/100,000 $ 0/106,250
Leslie F. Loewe........................ 1,800/5,200 0/10,000
Lawrence J. Young...................... 66,900/55,100 54,800/169,200
Theodore M. Armstrong.................. 33,450/27,550 27,400/84,600
Alan D. Wilson......................... 13,100/17,400 11,000/44,000
Michael E. Burnham..................... 19,400/15,100 10,000/40,000
<FN>
- -------
<F1> Based upon the average of the high/low transaction prices as reported on
New York Stock Exchange composite tape on January 30, 1998.
</TABLE>
17
<PAGE> 20
STOCK PERFORMANCE GRAPH
SEC rules require proxy statements to contain a performance graph comparing,
over a five-year period, the performance of our Common Stock against Standard &
Poor's 500 Stock Index and against either a published industry or
line-of-business index or a group of peer issuers. Angelica chose the Value Line
Industrial Services Index for the graph.
[Performance Graph]
<TABLE>
<CAPTION>
1/31/93 1/31/94 1/31/95 1/31/96 1/31/97 1/31/98
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Angelica............................................. 100 114 112 90 88 112
S&P 500.............................................. 100 113 114 158 200 254
Value Line: Industrial Services...................... 100 120 131 191 287 393
</TABLE>
(ASSUMES $100 INVESTED ON JANUARY 31, 1993 AND THAT DIVIDENDS ARE REINVESTED.)
PLEASE DATE, SIGN, AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
St. Louis, Missouri
April 16, 1998
18
<PAGE> 21
(Fold And Detach Here)
- -------------------------------------------------------------------------------
ANGELICA CORPORATION
PROXY for Annual Meeting of Shareholders to be held May 27, 1998
- -------------------------------------------------------------------------------
Directors recommend a vote FOR all nominees listed
- -------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS to serve for three-year terms:
Susan S. Elliott, Don W. Hubble and H. Edwin Trusheim.
/ / FOR all nominees listed.
/ / FOR all nominees listed except
-------------------
/ / WITHHOLD AUTHORITY to vote for all nominees listed.
2. ELECTION OF DIRECTOR to serve for a two-year term:
David A. Abrahamson
/ / FOR nominee listed.
/ / WITHHOLD AUTHORITY to vote for nominee listed.
- -------------------------------------------------------------------------------
3. 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 THE FORM.
<PAGE> 22
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 Don W. Hubble and Leslie F. Loewe, 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 27, 1998, 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.
Date:--------------------------------------------, 1998
-------------------------------------------------------
-------------------------------------------------------
(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> 23
Appendix
Page 18 of the printed Proxy contains a Stock Performance Graph. The
information contained in the graph is depicted in the table that follows the
graph.
