<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
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material 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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
LOGO
Dear Shareholder:
It is my pleasure to invite you to Angelica's 1999 Annual Meeting of
Shareholders at 10:00 a.m. on Tuesday, May 25, 1999, at The Saint Louis Art
Museum, 1 Fine Arts Drive, Forest Park, St. Louis, Missouri. We will review
Angelica's Fiscal Year 1999 performance and answer your questions. Enclosed with
this Proxy Statement are your proxy card and the 1999 Annual Report.
I look forward to seeing you on May 25 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 15, 1999
424 South Woods Mill Road
Chesterfield, Missouri 63017-3406
<PAGE> 3
LOGO
424 South Woods Mill Road
Chesterfield, MO 63017-3406
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<S> <C>
Date: Tuesday, May 25, 1999
Time: 10:00 a.m.
Place: Auditorium
The Saint Louis Art Museum
1 Fine Arts Drive
Forest Park
St. Louis, Missouri
</TABLE>
MATTERS TO BE VOTED ON:
-- Election of three Directors to serve for three-year terms
-- Adoption and approval of the Angelica Corporation 1999 Performance
Plan
-- The criteria to be used in the grant of performance awards and
performance-based restricted stock awards under the Angelica
Corporation 1999 Performance Plan
-- Re-affirmation of performance goals used for the performance awards
under the 1994 Performance Plan
-- Any other matters that may be properly brought before the meeting or
any adjournment thereof
This Proxy Statement, proxy card and the Company's Fiscal 1999 Annual Report to
Shareholders were distributed to shareholders on or about April 15, 1999.
By order of the Board of Directors,
/s/ STEVEN L. FREY
Secretary
April 15, 1999
<PAGE> 4
GENERAL INFORMATION
WHO CAN VOTE
Shareholders of Angelica Corporation (the "Company") as of the close of
business on April 5, 1999 ("the Record Date") are entitled to vote at the Annual
Meeting. On April 5, 1999, 8,694,863 shares of the Company's Common Stock were
issued and outstanding. Each share of Common Stock is entitled to vote on each
matter to be considered at the meeting. The enclosed proxy card shows the number
of shares which you are entitled to vote. The shares on your card represent all
your shares registered in your name on our records, including those in the
Company's dividend reinvestment plan, the employee benefit plans and shares
credited to your savings plan account held in custody by the trustee, UMB Bank.
If you receive 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.
Shareholders do not have the right to cumulate their votes for one or more
of the Directors standing for election. Your individual vote is confidential and
will not be disclosed to third parties.
HOW TO 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 the Company's Corporate Secretary, 2) voting in person, or 3)
returning a later-dated proxy.
HOW PROXIES WORK
The Board of Directors is asking for your proxy. Giving us your proxy means
that you authorize us to vote your shares at the meeting in the manner you
direct. You may vote for all, some, or none of our Director nominees. You may
also vote for or against each of the other proposal(s) or abstain from voting.
If you return your signed proxy card but do not indicate your voting
preferences, we will vote, on your behalf, FOR each of the nominees for Director
and FOR each of the other proposals. The Board of Directors recommends you vote
FOR each of the Directors standing for election and FOR each of the other
proposals.
REQUIRED VOTES
A majority of the issued and outstanding shares entitled to vote must be
represented at the meeting in person or by proxy in order to have a quorum. A
plurality of the shares voted is required to elect Directors and the affirmative
vote of a majority of the shares voted is required to approve other matters to
be acted on. If you vote to abstain on any matter, or withhold votes in election
of Directors, your shares will be counted as present at the meeting for quorum
purposes, but will not be counted as votes cast on the proposal specified.
Because the votes to elect Directors are based upon a plurality of the votes
cast, votes withheld will not affect the outcome of the vote. Likewise, since
abstentions on the proposals will not be counted as votes cast, abstentions 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 have no
discretionary voting authority and have not received instructions as to how to
vote on those proposals (so-called "broker
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<PAGE> 5
nonvotes") are not considered as represented at the meeting and will not affect
the outcome of the vote.
Proxies will be inspected and tabulated by UMB Bank, our transfer agent.
ATTENDING THE ANNUAL MEETING
When you vote, indicate if you are a holder of record if you plan to attend
the Annual Meeting. You will need proof of ownership to be admitted to the
meeting if you are a beneficial owner of Common Stock held by a bank or broker.
A recent brokerage statement or letter from a bank or broker are examples of
proof of ownership. If you want to vote in person your Common Stock held in
street name, you will have to get a proxy in your name from the registered
holder.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
If any shareholder wants to submit a proposal for inclusion in the proxy
material for the 2000 Annual Meeting, it must be received by the Corporate
Secretary by December 16, 1999. Proposals not in full conformity with the
applicable rules of the Securities and Exchange Commission may be excluded from
the Proxy Statement. Under our By-Laws, shareholder proposals, including
nominations of candidates for director, which do not appear in the proxy
statement may be considered at the Annual Meeting if the shareholder gives
timely notice of the proposal in proper written form to the Corporate Secretary.
To be timely, a shareholder's notice must be received by the Company not less
than 30 days nor more than 60 days prior to the date of the meeting. To be in
proper written form, a shareholder's notice to the Corporate Secretary shall set
forth in writing as to each matter the shareholder proposes to bring before the
Annual Meeting: (i) a brief description of the business desired to be brought
before the Annual Meeting and the reasons for conducting such business at the
Annual Meeting, (ii) the name and address, as they appear on the Company's
books, of the shareholder proposing such business, (iii) the class and number of
shares of the Company which are beneficially owned by the shareholder and (iv)
any material interest of the shareholder in such business.
Any recommendation for director candidates must be accompanied by: (i) the
name and address of the shareholder and the number of shares of the Company's
Common Stock owned by the shareholder, and (ii) 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. Such written
recommendation and statement must be received not less than 30 days nor more
than 60 days prior to the date of the Annual Meeting.
SOLICITATION OF PROXIES
Proxy materials were first mailed to shareholders on or about April 15,
1999. Corporate Investor Communications, Inc. was hired to assist in the
distribution of proxy materials and solicitation of votes at a cost of
approximately $6,000, plus out-of-pocket expenses. The Company will bear the
entire cost of solicitation of proxies. The Company will also 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.
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<PAGE> 6
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as independent public accountants for the
Company since 1954, and the Board of Directors has once again selected that firm
to serve in that capacity. 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.
OTHER MATTERS
We do not know of any other matters to be presented or acted upon at the
meeting. Under our By-Laws, no business other than 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.
THE BOARD OF DIRECTORS
QUALIFICATIONS OF DIRECTORS
Our Board of Directors presently consists of nine Directors, of whom eight
are outside Directors. The Board is divided into three classes, with one class
standing for election each year for a three-year term. Our Board believes that
all of the outside directors act independently from management, do not have any
relationships that would interfere with their free exercise of judgment, and are
eligible to serve on the Audit Committee, the Corporate Governance and
Nominating Committee, or the Compensation and Organization Committee under the
rules and regulations of the Securities and Exchange Commission, the New York
Stock Exchange and the Internal Revenue Service.
COMMITTEES OF THE BOARD
In order to fulfill its responsibilities, our Board delegates to its four
Committees the authority to consider certain matters and report to the Board
with appropriate recommendations. To enhance the effectiveness of the
Committees:
-- All but the Executive Committee is chaired by an outside Director.
-- Reports of Committee activities are given at each Board meeting
following Committee action.
Descriptions of the principal functions of the Committees, the current
membership of the Committees, and the number of meetings held during fiscal year
1999 are as follows:
AUDIT COMMITTEE
Members: H. Edwin Trusheim (Chairman)
David A. Abrahamson
Earle H. Harbison, Jr.
William A. Peck
(all outside Directors)
Number of Meetings: Four
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Functions: Reviews the Company'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 of independent
public accountants that the Company should retain.
COMPENSATION AND ORGANIZATION COMMITTEE
Members: Earle H. Harbison, Jr. (Chairman)
Charles W. Mueller
William P. Stiritz
H. Edwin Trusheim
(all outside Directors)
Number of Meetings: Four
Functions: Reviews and approves executive compensation and
employee benefit plans and programs, including their
establishment, modification and administration.
EXECUTIVE COMMITTEE
Members: Don W. Hubble (Chairman)
Earle H. Harbison, Jr.
H. Edwin Trusheim
(a majority of outside Directors)
Number of Meetings: None
Functions: The Executive Committee has the power to act on
behalf of the Board whenever the Board is not in
session.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
Members: Charles W. Mueller (Chairman)
Susan S. Elliott
Leslie F. Loewe
William P. Stiritz
(all outside Directors)
Number of Meetings: Two
Function: Recommends nominees for election as Director of the
Company, recommends nominees for Board Committee
appointment, and recommends candidates for
appointment as corporate officers. Also recommends a
Corporate Governance Plan for the Company and
monitors ongoing application of its provisions.
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DIRECTOR COMPENSATION
Employee Directors do not receive compensation for serving as Directors.
Outside Directors are compensated as follows:
<TABLE>
<S> <C>
Annual Board retainer....................................... $16,000
Board attendance fee (per meeting).......................... 1,250
Telephone Board Meeting fee (per meeting)................... 450
Committee attendance fee (per meeting)...................... 700
</TABLE>
The annual Board retainer fee is paid in shares of Common Stock pursuant to
the Non-Employee Directors Stock Plan (described below). The number of shares is
based on the fair market value of a share on the date of the Annual Meeting of
Shareholders in each year. A portion of the shares are forfeitable if the
non-employee Director serves less than ten months after such Annual Meeting.
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 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 the Deferred Compensation Option Plan for Directors.
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.
DIRECTOR ATTENDANCE
The Board of Directors met a total of eight times during the fiscal year
ended January 30, 1999. All of the Directors attended at least 75% of the total
meetings which were held by the Board and its respective Committees and which
each respective Director was eligible to attend, except for Mr. Harbison and Mr.
Stiritz.
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<PAGE> 9
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 as of April 5, 1999:
<TABLE>
<CAPTION>
BENEFICIALLY OWNED DIRECTLY
OR INDIRECTLY
----------------------------
SHARES OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK OF CLASS
- ------------------------------------ -------------- ----------
<S> <C> <C>
First Pacific Advisors, Inc.(1)................ 1,452,400 16.7%
11400 Olympic Boulevard
Los Angeles, CA 90064
Dimensional Fund Advisors, Inc.(2)............. 734,300 8.4%
1299 Ocean Avenue, 11th Fl.
Santa Monica, CA 90401
</TABLE>
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(1) Stated information is based on a Schedule 13G, dated February 12, 1999,
filed with the Securities and Exchange Commission. First Pacific Advisors,
Inc., an investment advisor, has shared voting power as to 432,400 shares
and shared dispositive power as to 1,452,400 shares. A separate Schedule
13G, dated February 12, 1999, was also filed for FPA Capital Fund, Inc., an
investment company, which has sole voting power as to 600,000 shares and
shared dispositive power as to 600,000 shares. These shares are included in
the number of shares shown as beneficially owned by First Pacific Advisors,
Inc.
(2) Stated information is based on a Schedule 13G, dated February 11, 1999,
filed with the Securities and Exchange Commission. Dimensional Fund Advisors
Inc. ("Dimensional"), an investment advisor registered under the Investment
Advisors Act of 1940, furnishes investment advice to four investment
companies registered under Investment Company Act of 1940, and serves as
investment manager to certain other investment vehicles, including
commingled group trusts. (These investment companies and investment vehicles
are the "Portfolios"). In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over the
securities described in the schedule that are owned by the Portfolios. All
securities reported in the schedule are owned by the Portfolios, and
Dimensional disclaims beneficial ownership of such securities. Dimensional
has sole voting power as to 734,300 shares, and sole dispositive power as to
734,300 shares.
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MANAGEMENT STOCK OWNERSHIP
The table below shows how much stock of the Company each Director and
current executive officer listed in the Summary Compensation Table ("Named
Executive Officer") beneficially owned as of April 5, 1999. Each Director or
Named Executive Officer beneficially owns less than 1%, and all Directors and
executive officers as a group, including the Named Executive Officers, own 3.5%
of the Company's Common Stock plus options that are exercisable within 60 days
after April 5, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY
OWNED DIRECTLY OR INDIRECTLY
AS OF APRIL 5, 1999
---------------------------------
OBTAINABLE
THROUGH
STOCK OPTION
OWNED(1) EXERCISE(2) TOTAL
-------- ------------ -------
<S> <C> <C> <C>
David A. Abrahamson...................................... 2,193 200 2,393
Theodore M. Armstrong.................................... 15,921(3) 45,100 61,021
Michael E. Burnham....................................... 6,494(4) 25,700 32,194
Susan S. Elliott......................................... 1,475 120 1,595
Earle H. Harbison, Jr.................................... 4,790 4,800 9,590
Don W. Hubble............................................ 47,285 33,333 80,618
Leslie F. Loewe.......................................... 30,420(5) 4,800 35,220
Charles W. Mueller....................................... 3,304(6) 1,200 4,504
Charles D. Molloy, Jr. .................................. 4,664 4,000 8,664
William A. Peck.......................................... 3,304 1,200 4,504
William P. Stiritz....................................... 4,940 4,800 9,740
H. Edwin Trusheim........................................ 5,140 4,800 9,940
Alan D. Wilson........................................... 5,964 20,500 26,464
All Executive Officers and Directors as a group
(16 persons)........................................... 141,338 171,453 312,791
</TABLE>
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(1) Includes 500 shares for Mr. Abrahamson, 500 shares for Ms. Elliott, 1,450
shares for Mr. Harbison, 400 shares for Mr. Loewe, 700 shares for Mr.
Mueller, 700 shares for Dr. Peck, 1,600 shares for Mr. Stiritz, and 1,750
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, the named Directors have sole voting power and
no current dispositive power, except for 725 shares held by Mr. Harbison,
400 shares held by Mr. Loewe, and 1,750 shares held by Mr. Trusheim, which
are nonforfeitable.
(2) Stock options exercisable within 60 days after April 5, 1999.
(3) 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.
(4) Mr. Burnham disclaims beneficial ownership of 120 shares included above
which are held by his wife as custodian for their children.
(5) Mr. Loewe disclaims beneficial ownership of 6,945 shares included above
which are owned by his wife.
(6) Mr. Mueller disclaims beneficial ownership of 3,304 shares included above
which are held by his wife's living trust.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Company records and other information, the Company believes that
all SEC filing requirements applicable to its Directors and executive officers
were complied with in fiscal 1999.
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 on Executive Compensation and the Stock
Performance Graph on page 18 shall not be incorporated by reference into any
such filings.
COMPENSATION AND ORGANIZATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The objectives of Angelica's executive compensation programs are to
motivate management to create shareholder value by making an executive's
aggregate compensation generally 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.
FACTORS CONSIDERED IN DETERMINING COMPENSATION
During fiscal year 1999, the Company engaged Watson Wyatt & Associates, a
nationally recognized expert on executive compensation, to review and assist in
developing a compensation program that would motivate management in a manner
consistent with the desire to increase shareholder value and that would be
competitive within the marketplace in which the Company competes for executive
talent. Based on this study, the Company developed an executive compensation
program with total cash compensation consisting of both base salary and
incentive compensation.
An executive's base salary is established 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 base salary range for
executives in the Company's various operating divisions, the Committee considers
compensation packages offered by companies in competitive markets, such as
textile service companies, image apparel manufacturing 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
Value Line Industrial Services peer group utilized in the Stock Performance
Graph included in this Proxy Statement.) For these officers, the Committee uses
a variety of nationally published surveys in order to develop a median range of
compensation. The surveys cover many companies and deal with a variety of
factors such as labor force, sales or revenue, location and market. Base salary
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 base salary at the
median of the range.
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INCENTIVE COMPENSATION
Incentive compensation can range from 0 to 80% of an individual's base
salary. The maximum amount which can be earned varies depending on the
individual's grade level and area of responsibility. Only those individuals
whose performance would have a measurable impact on shareholder value are
eligible for incentive compensation. Generally, this includes the Chief
Executive Officer, those officers of the Company who directly report to the
Chief Executive Officer ("direct reports"), and other employees who are no more
than two reporting levels below the direct reports. The ranges for those
eligible for incentive compensation are from 0-25% to 0-80%. The Chief Executive
Officer's range is 0-80% and all other Named Executive Officers are assigned a
range of 0-60%.
In order to earn incentive compensation, individual, as well as division
and corporate goals, must be attained. Goals are established specifically to
motivate management to increase earnings and shareholder value. In fiscal 1999,
these goals included growth in earnings per share, growth in return on net
assets and growth in revenues in addition to individual performance goals within
the participant's area of responsibility. Goals, other than the individual
goals, are set by the Chief Executive Officer with approval of the Committee.
Individual goals are set by the participant's immediate superior.
On the basis of meeting these criteria for fiscal 1999, the Named Executive
Officers received the following percentages of base salary in incentive
compensation: Mr. Armstrong, 40%; Mr. Wilson, 46%; Mr. Burnham, 14%; and Mr.
Molloy, 30%. Mr. Young, an executive officer until June 1, 1998, received 50% of
base salary in pro-rated incentive compensation.
OTHER TYPES OF COMPENSATION RECEIVED BY EXECUTIVES
The Committee believes that executives who own the Company's 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 allowing the executive to elect to receive up to one-half of his or her
annual bonus in shares of the Company's Common Stock and by providing a Company
match of 50% of the amount elected, also payable in the Company's Common Stock,
as incentive to invest in the Common Stock. The Plan requires that the
employee's investment in Common Stock be retained for three years after the
election and that the Company Match be subject to forfeiture for five years in
the event that an executive's employment with the Company terminates,
encouraging employees to continue to work for the long-term increase in the
price of the Common Stock.
To further encourage employees to work toward 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 the option
grants depends on the market price of the Company's Common Stock at the time
that the underlying stock is sold by the executive. The decision of when to
exercise an option and when to sell the underlying stock, thus realizing the
value, is determined by each individual executive. For fiscal 1999, the Named
Executive Officers received the following option
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<PAGE> 13
grants: Mr. Armstrong, 7,000 shares; Mr. Wilson, 12,000 shares; Mr. Burnham,
8,000 shares; and Mr. Molloy, 12,000 shares.
CEO COMPENSATION
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 motivates
the 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 award of restricted stock and grant of stock
options to Mr. Hubble in fiscal 1998 (referred to below) as well as 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. Hubble did not receive a stock
option grant in fiscal 1999.
Mr. Hubble assumed the position of Chairman, President and Chief Executive
Officer on January 1, 1998. At that time, the Committee established Mr. Hubble's
base salary at $375,000, which was unchanged during fiscal 1999. Mr. Hubble's
incentive compensation for fiscal 1999 was set at up to 80% of his base salary,
but guaranteed to be no less than $175,000 for fiscal year 1999. For fiscal year
1999, Mr. Hubble received incentive compensation equal to $200,000 or 53% of his
base salary. 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 at that time an option 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 become exercisable ratably in three
equal installments beginning January 2, 1999.
IRS LIMITS ON DEDUCTIBILITY OF COMPENSATION
Although no executive officer currently receives in excess of $1,000,000 of
compensation annually, the Committee's policy is to maximize the tax
deductibility of executive compensation without compromising the essential
framework of the existing total compensation program. The Committee may elect to
forego deductibility for federal income tax purposes if such action is, in the
opinion of the Committee, necessary or appropriate to further goals of the
Company's executive compensation program, or otherwise is in the Company's best
interests.
Although the foregoing describes the Committee's current compensation
policies applicable to the Company's executive officers, the Committee reserves
the right to change these policies at such time in the future and in such manner
as the Committee deems necessary or appropriate.
SUBMITTED BY THE COMPENSATION AND ORGANIZATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS
<TABLE>
<S> <C>
E. H. Harbison, Jr., Chairman W. P. Stiritz
C. W. Mueller H. E. Trusheim
</TABLE>
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<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
The table below summarizes the amounts paid to the Chief Executive Officer
and each of the four next highest paid executive officers at the end of fiscal
1999. The table also includes Lawrence J. Young, who served as Executive Vice
President and President of Angelica Image Apparel during fiscal 1999 until June
1, 1998 and who would have been included in the four next highest compensated
executive officers but for his departure.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- AWARDS
BONUS RESTRICTED ALL OTHER
FISCAL ----------------------------- STOCK COMPEN-
YEAR NONCASH TOTAL AWARD(S) SATION
NAME AND PRINCIPAL POSITION ENDING SALARY(1) CASH (2)(3) BONUS ($)(2)(3) OPTIONS (#) ($)(4)
- --------------------------- ------- --------- -------- ------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Don W. Hubble 1/30/99 $375,000 $130,000 $70,000 $200,000 $ 35,000 $ -- $ --
Chairman, President and 1/31/98 31,250 14,583 -- 14,583 575,000(5) 100,000 --
CEO 1/25/97 -- -- -- -- -- -- --
Theodore M. Armstrong 1/30/99 174,833 35,000 35,000 70,000 17,500 7,000 600
Senior Vice President-- 1/31/98 164,000 35,568 8,892 44,460 4,446 -- 600
Finance & Administration 1/25/97 164,000 18,000 18,000 36,000 9,000 31,000 600
and Chief Financial Officer
Michael E. Burnham, Vice 1/30/99 129,792 13,281 4,427 17,708 2,213 8,000 600
President. Also President, 1/31/98 113,750 43,905 4,878 48,783 2,439 -- 600
Life Uniform and Shoe 1/25/97 101,500 24,805 24,805 49,610 12,402 15,000 600
Shops
Charles D. Molloy, Jr.(6) 1/30/99 164,319 37,500 12,500 50,000 6,250 12,000 600
Vice President. Also 1/31/98 119,166 25,666 6,417 32,083 3,208 -- 600
President, Manufacturing 1/25/97 -- -- -- -- -- -- --
and Marketing segment
Alan D. Wilson, Vice 1/30/99 175,231 60,000 20,000 80,000 10,000 12,000 600
President. Also, President, 1/31/98 165,000 154,047 -- 154,047 -- -- 600
Angelica Textile Services 1/25/97 169,518 34,542 11,514 46,056 5,757 17,500 600
Lawrence J. Young(7) 1/30/99 80,077 40,000 -- 40,000 -- -- 605,600(8)
Formerly Executive Vice 1/31/98 253,333 62,700 62,700 125,400 31,350 -- 40,600(9)
President and President, 1/25/97 260,000 46,250 46,250 92,500 23,125 62,000 600
Angelica Image Apparel
</TABLE>
- ---------------
(1) Includes participant deferrals under the Retirement Savings Plan for all
Named Executive Officers except Mr. Hubble.
(2) Participants in the Stock Bonus and Incentive Plan may elect to receive up
to 50% of their incentive compensation in shares of the 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
one-half 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 following Named Executive Officers
12
<PAGE> 15
received elected shares for fiscal 1999, which become transferable in three
years as follows: Mr. Hubble, 4,857 shares; Mr. Armstrong, 2,428 shares;
Mr. Burnham, 307 shares; Mr. Molloy, 867 shares; and Mr. Wilson 1,387
shares. Participants receive dividends on all restricted shares.
(3) 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. Armstrong,
3,942 shares with an aggregate value of $59,130, Mr. Burnham, 4,159 shares
with an aggregate value of $62,385, Mr. Molloy 411 shares with an aggregate
value of $6,165 and Mr. Wilson, 2,363 shares with an aggregate value of
$35,445. 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, except in the case of death, disability,
retirement after the age of 62 or certain terminations after a Change of
Control of the Company. Participants receive any dividends paid on matching
shares.
(4) Includes Company contributions to the Retirement Savings Plan on behalf of
each of the Named Executive Officers, except Mr. Hubble, to match calendar
1998 participant deferrals (included under Salary) made by each to such
Plan.
(5) 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.
One-third of these shares vested on January 1, 1999. At the end of the
fiscal year, the remaining restricted shares had an aggregate value of
$250,005.
(6) Assumed position of Vice President on August 25, 1998 and President of the
Manufacturing and Marketing segment on July 20, 1998.
(7) Until June 1, 1998, Mr. Young was Executive Vice-President and President of
Angelica Image Apparel.
(8) Includes $605,000 in severance payments pursuant to Mr. Young's employment
agreements.
(9) Includes $40,000 in severance payments pursuant to Mr. Young's employment
agreements.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACTS
All of the current 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 for all but Mr. Molloy 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
13
<PAGE> 16
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 and Hubble will be entitled
to enhanced supplemental retirement and medical and health benefits without cost
to them 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 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. 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 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.
Under the terms of his employment agreement, the Company is paying to Mr.
Young $40,000 per month through December, 1999.
MANAGEMENT RETENTION AND INCENTIVE PLAN
All of the Named Executive Officers except Mr. Hubble have an agreement
with the Company under the Management Retention and Incentive Plan that grants
certain severance benefits in the
14
<PAGE> 17
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 ranging from 2.00 to 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 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 in 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 Change in Control or potential 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
15
<PAGE> 18
Plan payable upon normal retirement to the Named Executive Officers are as
follows: Mr. Hubble, $4,305; Mr. Armstrong, $14,927; Mr. Burnham, $27,335; Mr.
Molloy, $16,005 and Mr. Wilson, $15,597. These figures assume that participants
will remain with the Company until their normal retirement dates and will
receive increases to their current compensation consistent with historical
increases in compensation. With respect to Mr. Young, annual benefits under the
Pension Plan payable at normal retirement were fixed upon the termination of his
employment with the Company at $34,233.
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, $31,425; Mr. Armstrong, $41,287; Mr. Burnham, $127,208; Mr.
Molloy, $78,784 and Mr. Wilson, $57,670. 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 increases to their current compensation consistent with
historical increases in compensation. With respect to Mr. Young, annual benefits
under the Supplemental Plan (net of benefits payable under the Pension Plan)
payable at normal retirement were fixed upon the termination of his employment
with the Company at $122,190.
STOCK OPTIONS
The 1994 Performance Plan allows grants of stock options and other rights
relating to Common Stock. In general, whether exercising stock options is
profitable depends on the relationship between the Common Stock's market price
and the option's exercise price, as well as on the grantee's investment
decisions.
16
<PAGE> 19
The following table sets forth information concerning stock option grants
made in fiscal year 1999 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION GRANT DATE
NAME (#) YEAR(1) ($/SH) DATE PRESENT VALUE ($)(2)
- ---- ---------- ---------- -------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
Don W. Hubble....................... -- -- -- -- $ --
Theodore M. Armstrong............... 7,000 5.0% 20.1563 8/25/08 31,358
Michael E. Burnham.................. 8,000 5.8% 20.1563 8/25/08 35,838
Charles D. Molloy, Jr............... 12,000 8.7% 20.1563 8/25/08 53,757
Alan D. Wilson...................... 12,000 8.7% 20.1563 8/25/08 53,757
Lawrence J. Young................... -- -- -- -- --
</TABLE>
- ---------------
(1) Based on 138,500 options granted to 60 employees during the fiscal year.
(2) 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 officer may realize will depend on the excess of the stock
price over the exercise price on the date the underlying stock is sold, so
that there is no assurance the value realized by an executive officer 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 5.5% based upon the ten-year Treasury Bill rate as of grant date,
dividend yield of 3.8% based upon average annual dividend yield for the
prior seven years, exercise term of ten years, stock price volatility of
21.5% based upon average stock price volatility for the prior six years, and
that no adjustments have been made for transferability of risk or forfeiture
of the options.
OPTION HOLDINGS
This table shows the number and value of unexercised stock options for the
Named Executive Officers during fiscal 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON FY-END (#) FY-END ($)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED UNEXERCISABLE UNEXERCISABLE(1)
- ---- ----------- ---------- ------------- ----------------
<S> <C> <C> <C> <C>
Don W. Hubble.................... -- $ -- 33,333/66,667 $ 0/0
Theodore M. Armstrong............ -- -- 42,900/25,100 0/0
Michael E. Burnham............... -- -- 23,900/18,600 0/0
Charles D. Molloy, Jr............ -- -- 2,000/20,000 0/0
Alan D. Wilson................... -- -- 18,000/24,500 0/0
Lawrence J. Young................ 12,500 3,516 -- --
</TABLE>
- ---------------
(1) Based upon the average of the high/low transaction prices as reported on New
York Stock Exchange Composite Tape on January 29, 1999.
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 the Company's 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. The Company
utilizes the Value Line Industrial Services Index for comparison.
PERFORMANCE CHART
<TABLE>
<CAPTION>
ANGELICA CORPORATION S&P 500 INDUSTRIAL SERVICES
-------------------- ------- -------------------
<S> <C> <C> <C>
'1/31/94' 100.00 100.00 100.00
'1/31/95' 98.00 101.00 109.00
'1/31/96' 78.00 139.00 158.00
'1/31/97' 77.00 176.00 238.00
'1/31/98' 98.00 224.00 327.00
'1/31/99' 67.00 296.00 262.00
</TABLE>
<TABLE>
<CAPTION>
1/31/94 1/31/95 1/31/96 1/31/97 1/31/98 1/31/99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Angelica.................................... 100 98 78 77 98 67
S&P 500..................................... 100 101 139 176 224 296
Value Line Industrial Services.............. 100 109 158 238 327 262
</TABLE>
(ASSUMES $100 INVESTED ON JANUARY 31, 1994 AND THAT DIVIDENDS ARE REINVESTED.)
18
<PAGE> 21
MATTERS TO BE ACTED UPON
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Nominees for election this year are Earle H. Harbison, Jr., Charles W.
Mueller and Dr. William A. Peck, each for a term of three years expiring in
2002.
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 will be elected to
terms of three years. YOUR BOARD RECOMMENDS A VOTE FOR THESE DIRECTORS.
Information concerning each of the nominees and Directors continuing in
office is presented below.
BOARD OF DIRECTORS
NOMINEES FOR TERMS ENDING IN 2002
EARLE H. HARBISON, Jr. Director since 1986
Mr. Harbison, age 70, 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.
CHARLES W. MUELLER Director since 1996
Mr. Mueller, age 60, 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. Mr. Mueller is a
Director and serves as Deputy Chairman of the Federal Reserve Bank of St. Louis.
WILLIAM A. PECK, M.D. Director since 1996
Dr. Peck, age 65, 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.,
Reinsurance Group of America Incorporated and TIAA-CREF Trust Company.
TO CONTINUE IN OFFICE FOR TERMS ENDING IN 2001
SUSAN S. ELLIOTT Director since 1998
Ms. Elliott, age 61, is Chairman 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
Chairman of the Federal Reserve Bank of St. Louis.
19
<PAGE> 22
DON W. HUBBLE Director since 1998
Mr. Hubble, age 59, joined the Company 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.
H. EDWIN TRUSHEIM Director since 1980
Mr. Trusheim, age 71, retired as Chairman of the Board of GenAmerica
(formerly named General American Life Insurance Company) in January, 1995. Mr.
Trusheim served as Chairman of the Board 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., and
Reinsurance Group of America Incorporated.
TO CONTINUE IN OFFICE FOR TERMS ENDING IN 2000
DAVID A. ABRAHAMSON Director since 1997
Mr. Abrahamson, age 59, has been President and Chief Executive Officer of
Medicine Shoppe International, Inc. (a retail drug store franchiser) since May,
1990. Mr. Abrahamson has also served as Executive Vice President of Cardinal
Health Inc. since August, 1996.
LESLIE F. LOEWE Director since 1980
Mr. Loewe, age 77, most recently served as interim Chairman, President and
Chief Executive Officer of the Company 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.
WILLIAM P. STIRITZ Director since 1983
Mr. Stiritz, age 64, is Chairman, Chief Executive Officer and President of
Agribrands International, Inc. (an international animal feed processor). 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.
20
<PAGE> 23
PROPOSAL TO ADOPT AND APPROVE THE ANGELICA CORPORATION
1999 PERFORMANCE PLAN
(ITEM 2 ON PROXY CARD)
The Board of Directors has approved, subject to adoption by the Company's
shareholders, the Angelica Corporation 1999 Performance Plan (the "1999 Plan").
The 1999 Plan contains substantially the same terms as the Company's 1994
Performance Plan. The adoption and approval of the 1999 Plan is necessitated by
the small remaining balance of shares authorized for grant under the 1994
Performance Plan.
GENERAL
The 1999 Plan provides for the grant of Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock and Performance Awards to employees
of the Company. The purpose of the 1999 Plan is to advance the interests of the
Company and its shareholders by encouraging the success of the Company through
the acquisition of an equity interest by employees, by providing additional
incentives and motivation toward superior Company performance, and by enabling
the Company to attract and retain the services of employees upon whose judgment,
talents and special effort the successful conduct of its operations is largely
dependent.
Incentive Stock Options and Nonqualified Stock Options consist of options
to purchase shares of Common Stock at purchase prices not less than 100% of the
fair market value of the shares on the date the option is granted. Options are
exercisable not less than six months and not more than ten years after the date
of grant.
The aggregate fair market value (determined as of the time an option is
granted) of the stock with respect to which an Incentive Stock Option is
exercisable for the first time during any calendar year (under all option plans
of the Company) shall not exceed $100,000.
Restricted Stock consists of Common Stock of the Company issued at any
purchase price less than the fair market value thereof on the date of issuance.
The Restricted Stock may be subject to certain restrictions set by the
Compensation and Organization Committee (the "Committee"). Participants will be
entitled to all dividends with respect to Restricted Stock and shall be entitled
to vote the Restricted Stock during the period of restriction.
Performance Awards consist of Common Stock of the Company, monetary units
or some combination thereof, to be issued without any payment therefor, in the
event that certain performance goals established by the Committee are achieved
over a period of time not more than five years.
In the event of a "Change of Control" (as defined below) of the Company,
all outstanding Stock Options shall become fully vested and exercisable and any
restrictions on Restricted Stock shall lapse. A "Change of Control" is defined
as any of the following: (a) the acquisition by any person of 20% or more of
either the outstanding Common Stock or the combined voting power of the Common
Stock entitled to vote for the election of directors; (b) the incumbent
directors at the time of approval of the 1999 Performance Plan, or any
subsequent directors whose election or nomination was approved by a majority of
the then incumbent directors, cease to constitute a majority of the Board of
Directors; (c) approval by the stockholders of a reorganization, merger or
consolidation of the Company under certain circumstances; or (d) approval by the
stockholders of a liquidation or dissolution or a sale of substantially all of
the assets of the Company under certain circumstances.
21
<PAGE> 24
The 1999 Plan will be administered by the Committee, consisting of three or
more outside Directors of the Company.
TOTAL NUMBER OF SHARES SUBJECT TO THE 1999 PLAN
The 1999 Plan authorizes the issuance of up to 500,000 shares of the Common
Stock of the Company, which may be authorized but unissued or treasury shares.
ELIGIBILITY
Officers and employees of the Company and its subsidiaries and divisions
are eligible to participate at the sole discretion of the Committee. Designation
of a participant in any year does not require the Committee to designate such
person to receive a benefit in any other year. The Committee will consider such
factors as it deems pertinent in selecting participants and in determining the
type and amount of their respective benefits.
FEDERAL INCOME TAX CONSEQUENCES
A participant realizes taxable income in the case of Incentive Stock
Options equal to the difference between the market price on the date of sale and
the exercise price at the time that shares underlying an option are sold. In the
case of a Nonqualified Stock Option, participants realize taxable income equal
to the difference between the market price on the date of exercise and the
exercise price at the time of exercise of the Option. With respect to Restricted
Stock, a participant will not recognize taxable income until such time as any
restrictions involving a risk of forfeiture by the participant are terminated.
The taxable income will be equal to the difference between the market price on
the date of termination of the risk of forfeiture and any amount paid for the
stock by the participant. Performance Awards could result in taxable income to a
participant at various times, depending on the nature of the award, vesting
schedule, or restrictions imposed by the Committee. The Company has the power to
withhold or require a Participant to remit to the Company, an amount sufficient
to satisfy Federal, state, and local withholding tax requirements. If the
Company permits, a Participant may elect to satisfy the tax withholding
requirement by directing the Company to apply shares of stock to which the
Participant will be entitled as a result of the exercise of options, the grant
of an award of shares or the lapse of restrictions, to satisfy such tax
requirement.
Assuming compliance with Section 162(m) of the Internal Revenue Code of
1986 as amended (the Code), the Company is entitled to a tax deduction at such
time as the participant realizes taxable income. Section 162(m) of the Code and
the regulations promulgated thereunder limit the deductibility of non-qualifying
compensation in excess of $1,000,000 paid to the chief executive officer and
certain other executive officers. 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.
A copy of the 1999 Plan is attached hereto as Appendix A.
The required vote of the shareholders that is required to approve the 1999
Plan is a majority of the shares of the Company's Common Stock present, in
person or by proxy, and voting on this proposal at this Annual Meeting.
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<PAGE> 25
THE BOARD OF DIRECTORS RECOMMENDS WITHOUT DISSENT A VOTE FOR ADOPTION OF
THE 1999 PLAN, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY.
APPROVAL OF THE MATERIAL TERMS OF THE CRITERIA TO BE USED IN
THE GRANT OF PERFORMANCE AWARDS AND PERFORMANCE-BASED RESTRICTED
STOCK AWARDS UNDER THE 1999 PLAN
(ITEM 3 ON PROXY CARD)
The Board of Directors has approved and recommended the approval by the
Company's shareholders at this Annual Meeting of the 1999 Plan (Item 2 on proxy
card). The 1999 Plan has been drafted and will be administered so as to assure
that the compensation payable pursuant to Stock Options issued under the 1999
Plan will qualify as "performance based" under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and the proposed regulations
thereunder. Section 162(m), which was adopted during 1993 for tax years
beginning in 1994, limits the deductibility for federal income tax purposes of
non-qualifying compensation in excess of $1,000,000 paid by the Company to the
Chief Executive Officer and certain other executive officers of the Company.
In order to qualify the compensation payable to such officers pursuant to
the grant of performance awards and performance-based restricted stock awards
under the Plan, the Committee has established, and the Board of Directors has
ratified and recommended for the approval of the Company's shareholders, the
material terms of the criteria to be utilized by the Committee in the making of
such award grants. Approval of the material terms of the criteria is necessary
for the compensation payable pursuant to performance awards and
performance-based restricted stock awards to be performance-based under Section
162(m) and the regulations promulgated thereunder and, thus, fully deductible
under the Code when taxable to the participant.
Pursuant to the 1999 Plan and the criteria established by the Committee
pursuant thereto, any officer and any other employee who the Committee, in its
sole discretion, determines to have an important impact on the success and
future growth and profitability of the Company may be selected by the Committee
to receive a performance award or a performance-based restricted stock award
under the 1999 Plan. The 1999 Plan authorizes the Committee to grant
periodically both performance awards and performance-based restricted stock
grant awards. The Committee may also choose to grant non-performance-based
restricted stock awards under the terms of the 1999 Plan.
Performance awards are awards that will be payable in shares of Common
Stock of the Company, monetary units based upon the Company's Common Stock or
any combination thereof as the Committee may in its sole discretion determine
based upon the achievement of certain performance goals established by the
Committee during a designated performance period of not more than five years.
Performance-based restricted stock awards are awards of the Company's
Common Stock, at a purchase price of less than the then-current fair market
value of such stock or as a bonus upon the achievement of certain performance
goals established by the Committee. The grant of such restricted stock awards
will be subject to such restrictions, conditions and terms as the Committee
shall deem appropriate at the time of the grant of the award. Shares of the
Company's Common Stock will be issued in the name of the participant at the time
that the performance goal is
23
<PAGE> 26
achieved. The participant shall be entitled to receive dividends from and vote
the shares during any subsequent period of restriction. The shares of restricted
stock subject to earned awards will be released to the participant after the
termination of the period of restriction.
The performance goal categories to be utilized for both the performance
awards and the performance-based restricted stock awards may be based upon one
or more of the following financial performance standards: earnings per share,
return on assets, net income, overhead ratio, expense to asset ratio, total
shareholder return, pre-tax earnings, debt to equity ratio, asset management
criteria, expense reduction goals, expense to sales ratio, working capital to
sales ratio, gross margin performance, current ratio, share price change, sales
and revenues, return on equity, free cash flow per share and operating earnings
per share. The Committee may exclude from such performance categories such
extraordinary and non-recurring items as the Committee, in consultation, at its
discretion, with the Company's internal and external auditors, may deem
appropriate in determining whether the established performance goals have been
achieved.
The Committee will also establish at the time of the grant of the
particular award, the potential stock or stock unit amounts that can be earned
by the participant upon achievement of the performance goals. The maximum number
of shares or share units of the Company's Common Stock that may be earned by a
single participant under the Plan pursuant to a performance award or a
performance-based restricted stock award is 200,000. The Committee retains the
right to set performance goals on the basis of any of the performance categories
set forth above or to change the performance categories used to determine
whether an award has been earned or the level of the award so earned. No
compensation will be paid under performance awards or performance-based
restricted stock awards granted pursuant to the 1999 Plan in the event that the
shareholders do not approve the material terms of the criteria set forth above.
Such material terms with respect to the grant of performance awards and
performance-based restricted stock awards will remain in full force and effect
until amended by the Committee and approved by the shareholders.
The vote of the shareholders that is required to approve the material terms
of the financial performance standards applicable to the grant of performance
awards and performance-based restricted stock awards pursuant to the 1999 Plan
is a majority of the shares of the Company's Common Stock present, in person or
by proxy, and voting on this proposal at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS WITHOUT DISSENT A VOTE FOR THE APPROVAL
OF THE MATERIAL TERMS OF THE CRITERIA TO BE USED IN THE GRANT OF PERFORMANCE
AWARDS AND PERFORMANCE-BASED RESTRICTED STOCK AWARDS UNDER THE 1999 PLAN.
RE-AFFIRMATION OF PERFORMANCE GOALS UNDER 1994 PLAN
(ITEM 4 ON PROXY CARD)
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, the
Company cannot deduct certain compensation in excess of $1,000,000 paid to the
chief executive officer and certain other executive officers. However,
compensation will be deemed to be performance-based and, therefore, not subject
to this limitation if the material terms of such compensation, including the
maximum amounts payable to any individual and the performance goals to be used,
are approved by shareholders.
In 1994, the Board of Directors adopted, and the shareholders approved, the
1994 Performance Plan (the "1994 Plan") satisfying the above requirements for
full deductibility of compensation paid under the stock option, performance
award and performance-based restricted stock
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<PAGE> 27
award components of the 1994 Plan. The 1994 Plan provided that the performance
goal categories to be utilized for both the performance awards and the
performance-based restricted stock awards may be based upon one or more of the
following financial performance standards: earnings per share, return on assets,
net income, overhead ratio, expense to asset ratio, total shareholder return,
pre-tax earnings, debt to equity ratio, asset management criteria, expense
reduction goals, expense to sales ratio, working capital to sales ratio, gross
margin performance, current ratio, share price change, sales and revenues,
return on equity, free cash flow per share and operating earnings per share. The
Compensation and Organization Committee of the Board of Directors must establish
the applicable performance goals within the time period required for the
compensation to qualify as performance-based under Section 162(m).
The tax code requires that shareholders re-affirm these financial
performance standards every five years. Proposal 4 seeks shareholder
re-affirmation of the existing financial performance standards, which will allow
these standards to remain applicable through the balance of the 1994 Plan.
The vote of the shareholders that is required to reaffirm the material
terms of the financial performance standards applicable to the grant of
performance awards and performance-based restricted stock awards pursuant to the
1994 Plan is a majority of the shares of the Company's Common Stock present, in
person or by proxy, and voting on the proposal at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS WITHOUT DISSENT A VOTE FOR RE-AFFIRMATION
OF FINANCIAL PERFORMANCE STANDARDS FOR THE 1994 PLAN.
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 15, 1999
25
<PAGE> 28
APPENDIX A
ANGELICA CORPORATION
1999 PERFORMANCE PLAN
A-1
<PAGE> 29
ANGELICA CORPORATION
1999 PERFORMANCE PLAN
<TABLE>
<S> <C> <C>
SECTION 1. PURPOSE............................................ A-3
SECTION 2. ADMINISTRATION..................................... A-3
SECTION 3. SHARES RESERVED UNDER THE PLAN..................... A-3
SECTION 4. PARTICIPANTS AND PERMISSIBLE TRANSFEREES........... A-3
SECTION 5. TYPES OF BENEFITS.................................. A-4
SECTION 6. DATE OF GRANTING BENEFITS.......................... A-4
SECTION 7. INCENTIVE STOCK OPTIONS............................ A-4
SECTION 8. NONQUALIFIED STOCK OPTIONS......................... A-4
SECTION 9. RESTRICTED STOCK................................... A-5
SECTION 10. PERFORMANCE AWARDS................................. A-6
SECTION 11. ADJUSTMENT PROVISIONS.............................. A-6
SECTION 12. CHANGE OF CONTROL.................................. A-7
SECTION 13. NONTRANSFERABILITY................................. A-8
SECTION 14. TAXES.............................................. A-8
SECTION 15. TENURE............................................. A-9
SECTION 16. DURATION, INTERPRETATION, AMENDMENT AND
TERMINATION...................................... A-9
SECTION 17. STOCKHOLDER APPROVAL............................... A-9
SECTION 18. GOVERNING LAW...................................... A-9
SECTION 19. SEVERABILITY....................................... A-9
</TABLE>
A-2
<PAGE> 30
ANGELICA CORPORATION
1999 PERFORMANCE PLAN
1. PURPOSE. The purpose of this Plan is to encourage certain employees of
Angelica Corporation, and of such subsidiaries of the Corporation as the
Committee administering the Plan designates, to acquire Common Stock of the
Corporation or to receive monetary payments based on the value of such stock or
based upon achieving certain goals on a basis mutually advantageous to such
employees and the Corporation and thus provide an incentive for continuation of
the efforts of employees for the success of the Corporation and for continuity
of employment.
2. ADMINISTRATION. The Plan will be administered by the Compensation and
Organization Committee (the "Committee") of the Board of Directors of the
Corporation consisting of three or more Directors as the Board may designate
from time to time, each of whom is an "outside director" as that term is defined
pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations promulgated thereunder and is also a "Non-Employee
Director" as that term is defined pursuant to Rule 16b-3 of the Securities Act
of 1934, as amended (the "Act"). The determinations of the Committee shall be
made in accordance with its judgment as to the best interests of the Corporation
and its stockholders and in accordance with the purpose of the Plan. A majority
of members of the Committee shall constitute a quorum, and all determinations of
the Committee shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or meeting of the
Committee, by a writing signed by a majority of the Committee members.
3. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for issuance
under the Plan an aggregate of Five Hundred Thousand (500,000) shares of Common
Stock of the Corporation, which may be authorized but unissued or treasury
shares. Stock underlying outstanding options or Performance Awards will be
counted against the Plan maximum while such options, rights or awards are
outstanding. Shares underlying expired, cancelled or forfeited options, rights
or awards may be added back to the Plan. When the exercise price of stock
options is paid by delivery of shares of Common Stock of the Corporation, the
number of shares available for issuance under the Plan shall be reduced by the
gross (rather than the net) number of shares which would have been issued
pursuant to such exercise, regardless of the number of shares surrendered in
payment. Restricted Stock issued pursuant to the Plan will be counted against
the Plan maximum while outstanding even while subject to restrictions. Shares of
Restricted Stock may not be added back to the Plan if such Restricted Stock is
forfeited.
4. PARTICIPANTS AND PERMISSIBLE TRANSFEREES.
(a) Participants will consist of such officers and employees of the
Corporation or any designated subsidiary as the Committee in its sole discretion
determines have an important impact on the success and future growth and
profitability of the Corporation. Designation of a participant in any year shall
not require the Committee to designate such person to receive a benefit in any
other year or to receive the same type or amount of benefit as granted to the
participant in any other year or as granted to any other participant in any
year. The Committee shall consider such factors as it deems pertinent in
selecting participants and in determining the type and amount of their
respective benefits.
(b) A Permissible Transferee is a person or entity, other than a
participant, to whom a Nonqualified Stock Option, Restricted Stock or
Performance Award is transferred as provided in Sections 8, 9(f) or 10(c). The
only Permissible Transferees are (i) one or more members of the
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<PAGE> 31
participant's family, (ii) one or more trusts for the benefit of the participant
and/or one or more members of the participant's family, or (iii) one or more
partnerships (general or limited), corporations, limited liability companies or
other entities in which the aggregate interests of the participant and members
of the participant's family exceed 80 percent of all interests. For this
purpose, the participant's family includes only the participant's spouse,
children and grandchildren.
5. TYPES OF BENEFITS. The following benefits may be granted under the
Plan: (a) Incentive Stock Options, (b) Nonqualified Stock Options; (c)
Restricted Stock; and (d) Performance Awards; all as described below.
6. DATE OF GRANTING BENEFITS. All benefits granted under the Plan shall be
granted as of an award date. Promptly after each award date, the Corporation
shall notify the participant of the grant of the benefit, and shall hand deliver
or mail to the participant an agreement awarding the benefit, duly executed by
and on behalf of the Corporation.
7. INCENTIVE STOCK OPTIONS. Incentive Stock Options shall consist of stock
options to purchase shares of Common Stock at purchase prices not less than 100%
of the fair market value of the shares on the date the option is granted. Said
purchase price may be paid (i) by check or, in the discretion of the Committee,
either (ii) by the delivery of shares of Common Stock of the Corporation then
owned by the participant or (iii) by a combination of the foregoing, in the
manner provided in the option agreement. Incentive Stock Options will be
exercisable not earlier than six months and not later than ten years after the
date they are granted and will terminate not later than three months after
termination of employment for any reason other than death or disability. In the
event termination of employment occurs as a result of death or disability, such
an option will be exercisable for 12 months after such termination. If the
optionee dies within 12 months after termination of employment by disability,
then the period of exercise following death shall be the remainder of the
12-month period, or three months, whichever is longer. If the optionee dies
within three months after termination of employment for any other reason, then
the period of exercise following death shall be three months. However, in no
event shall any Incentive Stock Option be exercised more than ten years after
its grant. Leaves of absence granted by the Corporation for military service,
illness, and transfers of employment between the Corporation and any subsidiary
thereof shall not constitute termination of employment. The aggregate fair
market value (determined as of the time an option is granted) of the stock with
respect to which an Incentive Stock Option is exercisable for the first time
during any calendar year (under all option plans of the Corporation and its
subsidiary corporations) shall not exceed $100,000, or such other amounts and
limitations as may be provided from time to time by the Code and any regulations
promulgated thereunder. The fair market value of stock shall be determined
without regard to any restriction, other than a restriction, which, by its
terms, will never lapse.
8. NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options shall consist of
nonqualified stock options to purchase shares of Common Stock at purchase prices
not less than 100% of the fair market value of the shares on the date the option
is granted. Said purchase price may be paid (i) by check or, in the discretion
of the Committee, either (ii) by the delivery of shares of Common Stock of the
Corporation then owned by the participant or Permissible Transferee or (iii) by
a combination of the foregoing, in the manner provided in the option agreement.
Nonqualified Stock Options will be exercisable not earlier than six months and
not later than ten years after the date they are granted and will terminate not
later than three months after termination of employment of the participant for
any reason other than death, retirement or disability. In the event termination
of employment of the participant occurs as a result of death,
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<PAGE> 32
retirement or disability, such an option will be exercisable for 12 months after
such termination. If the participant dies within 12 months after termination of
employment by retirement or disability, then the period of exercise following
death shall be three months. However, in no event shall any option be exercised
more than ten years after its initial grant. Leaves of absence granted by the
Corporation for military service, illness, and transfers of employment between
the Corporation and any subsidiary thereof shall not constitute termination of
employment. The Committee shall have the right to determine at the time the
option is granted whether shares issued upon exercise of a Nonqualified Stock
Option shall be subject to restrictions, and if so, the nature of the
restrictions. Subject to the provisions of this Section 8, a participant may at
any time before the earlier of his or her death or the date when a Nonqualified
Stock Option is exercised, direct that all or any portion of the option granted
or to be granted pursuant to this Section 8 be granted or regranted in the name
of one or more Permissible Transferees. Such direction shall be effective only
to the extent that the Corporation receives written notice from the participant,
before his or her death, advising of such a direction, the name or other
identifying information concerning the Permissible Transferee or Transferees,
and the number of shares to which such direction relates. If an option is issued
in the name of a Permissible Transferee, such Permissible Transferee shall have,
with respect to such option, all of the rights, privileges and obligations which
would attach thereunder to the optionee if the option were issued to such
participant.
9. RESTRICTED STOCK. Restricted Stock shall consist of Common Stock of the
Corporation issued or transferred under the Plan (other than upon exercise of
Stock Options or as Performance Awards) at any purchase price less than the fair
market value thereof on the date of issuance or transfer, or as a bonus. In the
case of any Restricted Stock:
(a) The purchase price, if any, will be determined by the Committee.
(b) Restricted Stock may be subject to (i) restrictions on the sale or
other disposition thereof; (ii) rights of the Corporation to reacquire such
Restricted Stock at the purchase price, if any, originally paid therefor upon
termination of the employee's employment within specified periods; (iii)
representation by the employee or Permissible Transferee that he or she intends
to acquire Restricted Stock for investment and not for resale; and (iv) such
other restrictions, conditions and terms as the Committee deems appropriate.
(c) The participant or Permissible Transferee shall be entitled to all
dividends paid with respect to Restricted Stock during the period of restriction
and shall not be required to return any such dividends to the Corporation in the
event of the forfeiture of the Restricted Stock.
(d) The participant or Permissible Transferee shall be entitled to vote the
Restricted Stock during the period of restriction.
(e) The Committee shall determine whether Restricted Stock is to be
delivered to the participant or Permissible Transferee with an appropriate
legend imprinted on the certificate or if the shares are to be deposited in
escrow pending removal of the restrictions.
(f) Subject to the provisions of this Section 9(f), a participant may at
any time before the earlier of his or her death or the date when all
restrictions on Restricted Stock are removed, direct that one or more shares of
Restricted Stock granted or to be granted pursuant to this Section 9 be granted
or regranted in the name of one or more Permissible Transferees. Such direction
shall be effective only to the extent that the Corporation receives written
notice from the participant, before his or her death or the removal of the
restrictions, as the case may be, advising of such a direction, the name or
other identifying information concerning the Permissible Transferee or
Transferees, and the number of shares of Restricted Stock to which such
direction relates. If
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<PAGE> 33
Restricted Stock is issued in the name of a Permissible Transferee, such
Permissible Transferee shall have, with respect to such Restricted Stock, all of
the rights, privileges and obligations which would attach thereunder to the
participant if the Restricted Stock were issued to such participant.
10. PERFORMANCE AWARDS.
(a) Performance Awards shall consist of Common Stock of the Corporation,
monetary units or some combination thereof, to be issued without any payment
therefor, in the event that certain performance goals established by the
Committee are achieved over a period of time designated by the Committee, but
not in any event more than five years. The goals established by the Committee
may include return on average total capital employed, earnings per share, return
on stockholders' equity and such other goals as may be established by the
Committee. In the event the minimum corporate goal is not achieved at the
conclusion of the period, no payment shall be made to the participant or
Permissible Transferee. Actual payment of the award earned shall be in cash or
in Common Stock of the Corporation or in a combination of both, as the Committee
in its sole discretion determines. If Common Stock of the Corporation is used,
the participant or Permissible Transferee shall not have the right to vote and
receive dividends until the goals are achieved and the actual shares are issued.
In the event of a cash payment, the number of shares reserved for issuance
hereunder shall be reduced as if shares had been issued.
(b) The Committee is expressly authorized to include under this Section 10
and to pay under this Plan that portion of any award earned under any separate
management incentive award program (or similar program) of the Corporation or
any subsidiary thereof which is to be paid or distributed to participants
thereunder in Common Stock of the Corporation. If and to the extent that the
Committee exercises its authority to include and pay such awards under this
Plan, the designation of the incentive award program as covered by this Plan
shall be sufficient to include the participants under such award program as
participants in this Plan, but such participants may not receive any other
benefits or distributions under this Plan unless they are separately designated
as participants hereunder with specific additional rights to benefits described
only in this Plan. Reporting Persons who receive payment under this Section 10
shall be subject to the provisions of this Plan applicable to awards to
Reporting Persons.
(c) Subject to the provisions of this Section 10(c), a participant may at
any time before the earliest of his or her death, the date on which the goals
established for a Performance Award are met, or the expiration of a Performance
Award, direct that all or any portion of the Performance Award granted or to be
granted pursuant to Section 10(a) (but not pursuant to Section 10(b)) be granted
or regranted in the name of one or more Permissible Transferees. Such direction
shall be effective only to the extent that the Corporation receives written
notice from the participant, before the earliest of the dates described in the
preceding sentence, advising of such a direction, the name or other identifying
information concerning the Permissible Transferee or Transferees, and the number
and description of the awards to which such direction relates. If a Performance
Award is issued in the name of a Permissible Transferee, such Permissible
Transferee shall have, with respect to such Performance Award, all of the
rights, privileges and obligations which would attach thereunder to the
participant if the Performance Award were issued to such participant.
11. ADJUSTMENT PROVISIONS.
(a) If the Corporation shall at any time change the number of issued shares
of Common Stock without new consideration to the Corporation (such as by stock
dividends or stock splits), the total number of shares reserved for issuance
under this Plan, the maximum number of shares available to a particular
participant or Permissible Transferee, and the number of shares covered by each
outstanding benefit, shall be adjusted so that the aggregate consideration
payable to the
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<PAGE> 34
Corporation, if any, and the value of each such benefit shall not be changed.
Benefits may also contain provisions for their continuation or for other
equitable adjustments after changes in the Common Stock resulting from
reorganization, sale, merger, consolidation, issuance of stock rights or
warrants, or similar occurrence.
(b) Notwithstanding any other provision of this Plan, and without affecting
the number of shares reserved or available hereunder, the Board of Directors may
authorize the issuance or assumption of benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it may deem appropriate.
12. CHANGE OF CONTROL. Notwithstanding any other provision of this Plan,
upon a Change of Control (as defined in this Section 12) outstanding benefits
shall become immediately and fully exercisable or payable according to the
following terms:
(a) Any outstanding and unexercised Incentive Stock Option or Nonqualified
Stock Option shall become immediately and fully exercisable, and shall remain
exercisable until it would otherwise expire by reason of lapse of time.
(b) Any Restricted Stock granted pursuant to Section 9 shall become
immediately and fully transferable, and the Committee shall be deemed to have
exercised its discretion to waive any automatic forfeitures provided with
respect to such Restricted Stock. Any shares held in escrow shall be delivered
to the participant, and the share certificates shall not contain the legend
specified by subsection 9(e). Reporting Persons shall not dispose of any
Restricted Stock until six (6) months following the date of award of such
Restricted Stock.
(c) Any Performance Award granted pursuant to Section 10 that has not
expired or been forfeited shall be deemed to have been earned on the assumption
that all performance goals have been achieved to the fullest extent scheduled in
the Performance Award. All payments shall be made promptly in a lump sum,
notwithstanding any other provision for installment or deferred payment
prescribed in the Performance Award.
(d) For purposes of this Plan, Change of Control shall mean: (i) the
acquisition by any individual, entity or group, or a Person (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") of ownership of 20% or more of either (a) the then
outstanding shares of common stock of the Corporation (the "Outstanding Angelica
Common Stock") or (b) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Angelica Voting Securities"); (ii) individuals who,
as of the date hereof, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, as a member of the Incumbent Board, any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; (iii) approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (a) more than 50% of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially
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<PAGE> 35
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were beneficial owners, respectively, of the Outstanding
Angelica Common Stock and Outstanding Angelica Voting Securities immediately
prior to such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization, merger
or consolidation, of the Outstanding Angelica Common Stock and Outstanding
Angelica Voting Securities, as the case may be, (b) no Person beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then outstanding
voting securities of such corporation, entitled to vote generally in the
election of directors and (c) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or (iv) approval by the stockholders of the Corporation of (a) a
complete liquidation or dissolution of the Corporation or (b) the sale or other
disposition of all or substantially all of the assets of the Corporation, other
than to a corporation, with respect to which following such sale or other
disposition, (1) more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Angelica Common Stock and Outstanding
Angelica Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Angelica Common Stock and
Outstanding Angelica Voting Securities, as the case may be, (2) no Person
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (3) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Corporation.
13. NONTRANSFERABILITY. Each benefit granted under the Plan to an employee
shall not be transferable, to other than a Permissible Transferee, otherwise
than by will or the laws of descent and distribution or pursuant to a Qualified
Domestic Relations Order (as defined in Section 206(d)(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules promulgated
thereunder), and shall be exercisable, during the participant's lifetime, only
by the participant or a Permissible Transferee. In the event of the death of a
participant, exercise or payment shall be made only:
(a) By or to a Permissible Transferee, the executor or administrator of the
estate of the deceased participant or the person or persons to whom the deceased
participant's rights under the benefit shall pass by will or the laws of descent
and distribution; and
(b) To the extent that the deceased participant was entitled thereto at the
date of his death.
14. TAXES. The Corporation shall be entitled to withhold the amount of any
tax attributable to any amounts payable or shares deliverable under the Plan
after giving the person entitled to receive such payment or delivery notice as
far in advance as practicable, and the Corporation may defer making payment or
delivery as to any benefit if any such tax is payable until indemnified to its
satisfaction. The person entitled to any such delivery may, by notice to the
Corporation at the time the requirement for such delivery is first established,
elect to have such withholding satisfied
A-8
<PAGE> 36
by a reduction of the number of shares otherwise so deliverable, such reduction
to be calculated based on a closing market price on the date of such notice.
15. TENURE. A participant's right, if any, to continue to serve the
Corporation and its subsidiaries as an officer, employee, or otherwise, shall
not be enlarged or otherwise affected by his or her designation as a participant
under the Plan.
16. DURATION, INTERPRETATION, AMENDMENT AND TERMINATION. No benefit shall
be granted more than ten years after the date of adoption of this Plan;
provided, however, that the terms and conditions applicable to any benefit
granted within such period may thereafter be amended or modified by mutual
agreement between the Corporation and the participant or such other person as
may then have an interest therein. Also, by mutual agreement between the
Corporation and a participant or Permissible Transferee hereunder, stock options
or other benefits may be granted to such participant or Permissible Transferee
in substitution and exchange for, and in cancellation of, any benefits
previously granted such participant or Permissible Transferee under this Plan.
To the extent that any stock options or other benefits which may be granted
within the terms of the Plan would qualify under present or future laws for tax
treatment that is beneficial to a recipient, then any such beneficial treatment
shall be considered within the intent, purpose and operational purview of the
Plan and the discretion of the Committee, and to the extent that any such stock
options or other benefits would so qualify within the terms of the Plan, the
Committee shall have full and complete authority to grant stock options or other
benefits that so qualify (including the authority to grant, simultaneously or
otherwise, stock options or other benefits which do not so qualify) and to
prescribe the terms and conditions (which need not be identical as among
recipients) in respect to the grant or exercise of any such stock option or
other benefits under the Plan. The Board of Directors may amend the Plan from
time to time or terminate the Plan at any time. However, no action authorized by
this paragraph shall reduce the amount of any existing benefit or change the
terms and conditions thereof without the participant's or Permissible
Transferee's consent. No amendment of the Plan shall, without approval of the
stockholders of the Corporation (a) increase the total number of shares which
may be issued under the Plan or increase the amount or type of benefits that may
be granted under the Plan; (b) change the minimum purchase price, if any, of
shares of Common Stock which may be made subject to benefits under the Plan; or
(c) modify the requirements as to eligibility for benefits under the Plan.
17. STOCKHOLDER APPROVAL. The Plan shall be effective on February 23,
1999, and shall be submitted for approval by the stockholders of the Corporation
at the annual meeting of the stockholders in 1999. If the stockholders do not
approve the Plan, it, and any action taken hereunder, shall be void and of no
effect.
18. GOVERNING LAW. Subject to the provisions of applicable federal law,
the Plan shall be administered, construed and enforced according to the internal
laws of the State of Missouri, excluding its conflict of law rules and the
conflict of law rules of any other state.
19. SEVERABILITY. The invalidity of any particular clause, provision or
covenant herein shall not invalidate all or any part of the remainder of the
Plan, but such remainder shall be and remain valid in all respects as fully as
the law will permit.
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<PAGE> 37
THE ANNUAL MEETING WILL BE HELD IN THE AUDITORIUM OF THE SAINT LOUIS ART
MUSEUM, 1 FINE ARTS DRIVE, FOREST PARK, ST. LOUIS, MISSOURI. PLEASE ENTER BY
THE SOUTH AUDITORIUM ENTRANCE OF THE ADMINISTRATION BUILDING, AT THE REAR OF
THE MUSEUM. PARKING IS ALSO AVAILABLE AT THE REAR.
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 Theodore 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 25, 1999, 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 FOR items 2, 3, and 4.
Date: ________________________________, 1999
____________________________________________
____________________________________________
(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 IN THE
ENCLOSED ENVELOPE.
<PAGE> 38
(Fold And Detach Here)
- -------------------------------------------------------------------------------
ANGELICA CORPORATION
PROXY for Annual Meeting of Shareholders to be held May 25, 1999
1. ELECTION OF DIRECTORS to serve for three-year terms expiring in 2002:
Earle H. Harbison, Jr., Charles W. Mueller and Dr. William A. Peck
[ ] FOR all nominees listed.
[ ] FOR all nominees listed except _____________________________________
[ ] TO WITHHOLD AUTHORITY to vote for all nominees listed.
2. Adoption and approval of the Angelica Corporation 1999 Performance Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of performance goals under the 1999 Performance Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Re-affirmation of performance goals under the 1994 Performance Plan.
[ ] 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 THE FORM.
