SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Rollins Environmental Services, Inc.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
ROLLINS ENVIRONMENTAL SERVICES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 31, 1997
------------------------
TO THE HOLDERS OF COMMON STOCK:
PLEASE TAKE NOTICE that the 1997 Annual Meeting of Shareholders of ROLLINS
ENVIRONMENTAL SERVICES, INC., a Delaware corporation, will be held on the First
Floor, 1209 Orange Street, Wilmington, Delaware, on Friday, January 31, 1997 at
9:00 A.M. (Eastern Standard Time) for the following purposes:
1. To elect three Class III Directors to the Board of Directors;
2. To take action on a Shareholder Proposal; and
3. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Proxy Statement dated December 20, 1996 is attached.
The Board of Directors has fixed the close of business on December 13, 1996
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
You are cordially invited to attend the Annual Meeting. If you cannot be
present in person, please sign and date the enclosed proxy and promptly mail it
in the enclosed return envelope which requires no United States postage. Any
shareholder giving a proxy has the right to revoke it any time before it is
voted.
BY ORDER OF THE BOARD OF DIRECTORS
MICHAEL B. KINNARD, Secretary
Dated: Wilmington, Delaware
December 20, 1996
------------------------
YOU ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO UNITED STATES POSTAGE.
<PAGE>
PROXY STATEMENT
ROLLINS ENVIRONMENTAL SERVICES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 31, 1997
------------------------
The information concerning the enclosed proxy and the matters to be acted
upon at the Annual Meeting of Shareholders to be held on January 31, 1997 (the
"Annual Meeting") is submitted to the shareholders for their information.
SOLICITATION OF AND POWER TO REVOKE PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of ROLLINS ENVIRONMENTAL SERVICES,
INC., a Delaware corporation (the "Company"). Proxies solicited hereby are to be
voted at the Annual Meeting or at any adjournment thereof.
The mailing address for the Company's principal executive office is P.O.
Box 2349, Wilmington, Delaware 19899. This Proxy Statement and the form of proxy
were first sent to the Company's shareholders on December 20, 1996.
A form of proxy is enclosed. Each proxy submitted will be voted as directed
but, if not otherwise specified, proxies solicited by the Board of Directors of
the Company will be voted in favor of the candidates for election to the Board
of Directors as Class III Directors and against the shareholder proposal
described herein.
The solicitation of proxies will be by mail. It may be that further
solicitation of proxies will be made by telephone, telegram or interview with
some shareholders of the Company, following the original solicitation. All such
further solicitations are expected to be made by regular officers and employees
of the Company, who will not be additionally compensated therefor, or its
Transfer Agent. The Company will bear the entire cost of all such solicitations,
which will be nominal and include reimbursements paid to brokerage firms and
others for their expenses in forwarding solicitation material regarding the
meeting to beneficial owners.
Each shareholder has the right to revoke his or her proxy at any time
before it is voted. A proxy may be revoked by filing with the Secretary of the
Company a written revocation or a duly executed proxy bearing a later date or by
voting in person at the Annual Meeting. Any shareholder may attend the Annual
Meeting and vote in person, whether or not such shareholder has previously given
a proxy.
CAPITAL STOCK
The outstanding capital stock of the Company on December 13, 1996 consisted
of 60,375,811 shares of Common Stock, par value $1.00 per share. Holders of
Common Stock are entitled to one vote (non-cumulative) for each share of such
stock registered in their respective names at the close of business on December
13, 1996, the record date for determining shares entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof.
The holders of a majority of the issued and outstanding Common Stock
constitute a quorum at any meeting of shareholders and the affirmative vote of a
majority of the shares present is required for shareholder approval, except for
certain proposals to amend the Restated Certificate of Incorporation which
require the affirmative vote of the holders of a majority of all outstanding
Common Stock for approval. Other amendments to the Restated Certificate of
Incorporation concerning: (a) special meetings of shareholders; (b) amendments
to the by-laws; (c) provisions relating to the Board of
1
<PAGE>
Directors; and (d) certain business transactions, when not approved by a
majority of the Board of Directors, require the affirmative vote of 75% of the
shares then entitled to be voted for approval.
As of October 31, 1996, three persons were known to the Company to own
beneficially more than five percent (5%) of the outstanding shares of Common
Stock of the Company. The name and address of each such person, together with
the number of shares owned and the percentage of outstanding shares that
ownership represents and information as to Common Stock ownership of the Named
Executives identified in the Summary Compensation Table and the officers and
directors of the Company as a group (according to information received by the
Company) are set forth below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF
TITLE OF BENEFICIAL PERCENT OF
CLASS NAMES AND ADDRESSES OF BENEFICIAL OWNERS OWNERSHIP(1) CLASS
- ----------- -------------------------------------------- --------------------- -------------
<S> <C> <C> <C>
Common John W. Rollins 3,697,576 6.1%
One Rollins Plaza
Wilmington, DE 19803
Common State of Wisconsin 5,966,800 9.9%
Investment Board
P.O. Box 7842
Madison, WI 53707
Common The Crabbe Huson Special Fund, Inc. 5,963,400(2) 9.9%
and The Crabbe Huson Group, Inc.
121 S.W. Morrison, Suite 1400
Portland, OR 97204
Common John V. Flynn, Jr. 20,000 --
One Rollins Plaza
Wilmington, DE 19803
Common John W. Rollins, Jr. 166,125 .3%
One Rollins Plaza
Wilmington, DE 19803
Common Henry B. Tippie 1,270,000 2.1%
One Rollins Plaza
Wilmington, DE 19803
Common Frank H. Minner, Jr. 30,725 .1%
117 Willow Glen Drive
Kennett Square, PA 19348
Common All Directors and Officers as a Group 5,315,288 8.8%
(11 persons)
</TABLE>
- ------------------
(1) As to officers and directors, owned directly and of record.
(2) The Crabbe Huson Special Fund, Inc. and The Crabbe Huson Group, Inc.
("Crabbe Huson") is a registered investment advisor. In its capacity as an
investment advisor, Crabbe Huson has discretionary authority to dispose of
or to vote shares that are under its management. As a result, Crabbe Huson
may be deemed to have beneficial ownership of such shares. Crabbe Huson does
not, however, have any economic interest in the shares. Crabbe Huson's
clients are the actual owners of the shares.
2
<PAGE>
PROXY ITEM NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, three individuals are to be elected to serve as
Class III Directors for a term of three years and until the election and
qualification of their successors. Five other individuals serve as directors but
are not standing for re-election because their terms as directors extend past
the Annual Meeting pursuant to provisions of the Company's Restated Certificate
of Incorporation which provides for the election of directors for staggered
terms. Directors elected at the commencement of the term of a given Class serve
a three year term.
Unless a shareholder WITHHOLDS AUTHORITY, the proxy holders will vote FOR
the election of the persons named below to serve as directors. Although the
Board of Directors does not contemplate the possibility, in the event a nominee
is not a candidate or is unable to serve as a director at the time of the
election, unless the shareholder WITHHOLDS AUTHORITY, the proxies will be voted
for a nominee designated by the present Board of Directors to fill such vacancy.
The name and age of each of the nominees, his principal occupation, the
period during which he has served as a director, together with the number of
shares of Common Stock beneficially owned by him, directly or indirectly, and
the percentage of outstanding shares that ownership represents, all as of the
close of business October 31, 1996 (according to information received by the
Company), are set forth below. Similar information is also provided for those
directors whose terms expire in future years.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAMES OF PRINCIPAL SERVICE AS COMMON OUTSTANDING
NOMINEES OCCUPATION(1) DIRECTOR AGE STOCK(2) SHARES
- ---------------------------- -------------------------------------- --------------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Class III (Term Expires 2000)
Nicholas Pappas Vice Chairman of the Board; Former 1991 to date 66 100,170(3) .2%
President and Chief Operating Officer
John W. Rollins Chairman of the Board and Chief 1982 to date 80 3,697,576(5) 6.1%
Executive Officer; Chairman of the
Board and Chief Executive Officer,
Rollins Truck Leasing Corp.*; Chairman
of the Board, Dover Downs
Entertainment, Inc.*** (4)
Don C. Stansberry, Jr. Attorney 1996 to date 57 2,000 --
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAMES OF DIRECTORS WHOSE PRINCIPAL SERVICE AS COMMON OUTSTANDING
TERMS HAVE NOT EXPIRED OCCUPATION(1) DIRECTOR AGE STOCK(2) SHARES
- ---------------------------- -------------------------------------- --------------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Class I (Term Expires 1998)
William B. Philipbar, Jr. Retired; Former Chief Executive 1978 to 1980 71 27,692 --
Officer, President and Vice Chairman 1982 to date
of the Board
William L. Medford Physician 1996 to date 54 -- --
Class II (Term Expires 1999)
Patrick J. Bagley Vice President-Finance and Treasurer 1993 to date 49 1,000 --
of Rollins Truck Leasing Corp.*; Vice
President-Finance and Treasurer and
Director, Matlack Systems, Inc.**
John W. Rollins, Jr. Senior Vice Chairman of the Board; 1978 to 1980 54 166,125(6) .3%
President, Chief Operating Officer and 1982 to date
Director, Rollins Truck Leasing
Corp.*; Chairman of the Board, Matlack
Systems, Inc.** (4)
Henry B. Tippie Chairman of the Executive Committee; 1982 to date 69 1,270,000(7) 2.1%
Chairman of the Executive Committee
and Vice Chairman of the Board,
Rollins Truck Leasing Corp.*; Chairman
of the Executive Committee and
Director, Matlack Systems, Inc.**;
Chairman of the Board and Chief
Executive Officer, Tippie Services,
Inc. (Management Services); Vice
Chairman of the Board, Dover Downs
Entertainment, Inc.***
</TABLE>
- ------------------
* Rollins Truck Leasing Corp. is engaged in the business of truck leasing.
** Matlack Systems, Inc. is engaged in the business of bulk trucking.
*** Dover Downs Entertainment, Inc. operates a multi-purpose gaming and
entertainment complex.
(1) Except as otherwise stated, the nominees and directors have held the
positions of responsibility set out in the above column (but not necessarily
their present titles) for more than five years. In addition to the
directorships listed in the above column, the following individuals also
serve on the board of directors of the following companies: John W. Rollins,
Jr., Dover Downs Entertainment, Inc.; William B. Philipbar, Jr., Matlack
Systems, Inc. and Rollins Truck Leasing Corp.; John W. Rollins, Rollins,
Inc., Matlack Systems, Inc., RPC Energy Services, Inc. and FPA Corp.; Henry
B. Tippie, Rollins, Inc. and RPC Energy Services, Inc.; Nicholas Pappas,
CHEMFAB Corporation, Yenkin Majestic Paint Co. and Nova Corp.; Patrick J.
Bagley, Dover Downs Entertainment, Inc.
(2) All shares are owned directly and of record.
(3) Does not include 10,450* shares held by his wife.
(4) John W. Rollins is the father of John W. Rollins, Jr.
(5) Does not include 182,749* shares held by his wife or 101,975* shares held by
his wife as Custodian for his minor children.
(6) Does not include 191,737* shares held as Co-Trustee and 6,191* shares held
by his wife.
(7) Does not include 968,689* shares held as Co-Trustee, 26,000* shares held as
Trustee, 23,000* shares owned by his wife, 21,000* shares held by his wife
as Trustee for his children, or 30,000* shares owned by a partnership over
which Mr. Tippie has sole voting power.
- ------------------
* The Messrs. Rollins, Tippie and Pappas disclaim any beneficial interest in
these holdings.
4
<PAGE>
PROXY ITEM NO. 2
SHAREHOLDER PROPOSAL
The following proposal was submitted by California Public Employees'
Retirement System, P.O. Box 942701, Sacramento, California 94229-2701, which is
the owner of approximately 143,700 shares of Common Stock of the Company:
"RESOLVED, that the stockholders of Rollins Environmental Services, Inc.
("the Company") recommend that the Board of Directors take steps necessary to
amend the Company's by-laws to require that, at the earliest practical date, a
majority of the Board be comprised of Independent Directors. For purposes of
this proposal, the stockholders further recommend that the term "Independent
Director" mean a director who:
(i) has not been employed by the Company in an executive capacity within
the last five years;
(ii) is not, and is not affiliated with a company that is, an advisor or
consultant to the Company, or a significant customer or supplier of
the Company;
(iii) has no personal services contract(s) with the Company;
(iv) is not affiliated with a not-for-profit entity that receives
significant contributions from the Company;
(v) within the last five years, has not had any business relationship
with the Company that the Company has been required to disclose under
the Securities and Exchange Commission disclosure regulations;
(vi) is not employed by a public company at which an executive officer of
the Company serves as a director;
(vii) has not had a relationship described in (i) through (vi) above with
any affiliate of the Company; and
(viii) is not a member of the immediate family of any person described in
(i) through (vii) above.
The shareholders further recommend that this provision, after adoption by
the Board, may only be amended by the affirmative vote of the holders of the
outstanding common stock of the Company."
The following statement has been submitted by the proponent in support of
the proposal:
"How important is the Board of Directors? As a trust fund with over 100,000
shares of the Company's stock, held for the benefit of our 1,000,000 fund
participants, the California Public Employees' Retirement System (CalPERS)
believes that the Board is of paramount importance. Through this proposal, we
seek to promote strong, objective leadership on the Board.
The benefits of independent directors are generally well accepted. A
November 1992 survey of 600 directors of Fortune 1,000 corporations, conducted
by Directorship and endorsed by the Business Roundtable, found that 93 percent
believed that a majority of the Board should be composed of outside, independent
directors. A majority also believed that the nominating committee should consist
entirely of outside independent directors. We agree.
The Company's Board is currently comprised of eight directors. Of these,
six also serve in some capacity with other companies formed by this Company's
founder (i.e., Rollins Truck Leasing and/or Matlack Systems, Inc.). We are
concerned that these inter-locking positions raise the potential for conflicts
of interests. We believe that the best way to ensure that this Company's
shareholders are always considered first is to instill independence --
independence from the other Rollins companies, and independence from their
founder.
Help us send a message to this Board. Please VOTE FOR THIS PROPOSAL."
5
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE AGAINST THIS PROPOSAL
FOR THE REASONS SET FORTH BELOW:
"The Board opposes the Shareholder Proposal. The Board believes that this
Proposal loses sight of the primary objective in Board composition. Directors
should be chosen on the basis of their qualifications and ability to exercise
sound business judgment. The Board understands and appreciates the contribution
that independent directors make, but does not believe that the composition of
the Board should be determined on the basis of arbitrary quotas such as those
suggested in this Proposal.
Further, the Board believes, contrary to the proponent's assertion, that
the Board has significant independent representation. Presently, three persons
on the Board have never been employed by the Company nor are they related in any
manner to any executive officer of the Company. They are Patrick J. Bagley,
William L. Medford, Jr., M.D., F.A.C.S., and Don C. Stansberry, Jr., Esquire.
Another Director, William B. Philipbar, Jr., while formerly employed by the
Company, left active service more than ten years ago.
Therefore, it is the opinion of the Board that four of the eight Directors
are independent of the Company's management. The New York Stock Exchange, on
which the Common Stock is listed, requires that all listed companies have at
least two outside directors. Rollins Environmental Services, Inc.'s Board
exceeds this requirement by a significant degree. Accordingly, the Board
believes that imposition of additional constraints on the director selection
process beyond the recognized corporate governance standards embraced by the New
York Stock Exchange is both unnecessary and unwarranted.
Some Members of the Board are active in the management of the Company and
have significant stockholdings in the Company, totalling in excess of 5,300,000
shares. The Board believes that when Board Members have a significant personal
investment in the Company it is beneficial to the Company and that their
interest is directly in line with those of all other shareholders of the
Company.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE ADOPTION OF THE SHAREHOLDER PROPOSAL WHICH IS DESIGNATED AS ITEM NO. 2 ON
THE ENCLOSED PROXY."
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors held four regularly scheduled meetings during fiscal
year 1996. All members of the Board attended each meeting.
Audit Committee. The Audit Committee consists of Patrick J. Bagley,
Chairman, and William B. Philipbar, Jr. The Audit Committee held two meetings
during the last fiscal year. The Committee's functions include consulting with
the Company's independent public accountants concerning the scope and results of
the audit, reviewing the evaluation of internal accounting controls and
inquiring into special accounting-related matters.
Executive Committee. The Executive Committee consists of Henry B. Tippie,
Chairman, John W. Rollins and John W. Rollins, Jr. The Executive Committee held
three meetings during the last fiscal year. The Executive Committee has the
power to exercise all of the powers and authority of the Board of Directors in
the management of the business and affairs of the Company in accordance with the
provisions of the by-laws of the Company. The Executive Committee performs all
of the functions of a compensation committee of the Board of Directors.
Stock Option Committee. The Stock Option Committee consists of Henry B.
Tippie, Chairman, and John W. Rollins. The Stock Option Committee held three
meetings during the last fiscal year. The Stock Option Committee administers the
Company's outstanding Stock Option Plans including the granting of options to
various employees of the Company and its subsidiaries.
The Company does not have a nominating committee of the Board of Directors.
6
<PAGE>
DIRECTORS' COMPENSATION
Directors who are not full-time employees of the Company or any of its
subsidiaries are each paid an annual retainer for Board service of $10,000 and
an attendance fee of $750 for each Board of Directors or committee meeting
attended.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 9 shall not be incorporated by reference into any
such filings.
REPORT OF THE EXECUTIVE AND STOCK OPTION COMMITTEES OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During fiscal year 1996, the members of the Executive Committee of the
Board of Directors held primary responsibility for determining executive
compensation levels.
The Company is engaged in a highly competitive industry. As a consequence,
the Company views its ability to attract and retain qualified executives as the
cornerstone of its future success. In order to accomplish this objective, the
Company has endeavored to structure its executive compensation in a fashion that
takes into account the Company's operating performance and the individual
performance of the executive. Of necessity, this analysis is subjective in
nature and not based upon a structured formula. The factors referred to above
are not weighted in an exact fashion.
Pursuant to the above compensation philosophy, the total annual
compensation of executive officers of the Company is made up of one or more of
three elements. The three elements are salary, an annual incentive compensation
package and, in some years, grants of stock options.
The salary of each executive officer is determined by the Executive
Committee. As previously stated, in making its determinations the Executive
Committee gives consideration to the Company's operating performance for the
prior fiscal year and the individual executive's performance.
The annual incentive compensation package for executive officers is
developed by the Chief Operating Officer of the Company prior to the end of each
fiscal year. It is based upon a performance formula for the ensuing fiscal year.
That performance formula and incentive package is then reviewed by the Executive
Committee and is either accepted, amended or modified. None of the members of
the Board of Directors participate in the incentive program.
Awards under the Company's Stock Option Plan are purely discretionary, are
not based upon any specific formula, and may or may not be granted in any given
fiscal year. Grants are made under the Plan and the Plan is administered by
disinterested directors within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934. When considering the grant of stock options, the Stock
Option Committee gives consideration to the overall performance of the Company
and the performance of individual employees.
7
<PAGE>
CEO COMPENSATION
The CEO's compensation is determined by the Executive Committee. As is the
case with respect to the Named Executives, the CEO's compensation is based upon
the Company's operating performance and his individual performance. The decision
of the Executive Committee is, however, very subjective and is not based upon
any specific formula or guidelines. The CEO does not participate in the
deliberations of the Executive Committee when his salary is determined. Neither
the CEO nor any other member of the Executive Committee participates in any
Company incentive program. The CEO has never received a Stock Option from the
Company.
Executive Committee
Henry B. Tippie, Chairman
John W. Rollins
John W. Rollins, Jr.
Stock Option Committee
Henry B. Tippie, Chairman
John W. Rollins
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based on its review of the copies of such forms received by it, the Company
believes that during its fiscal year ended 1996 all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
8
<PAGE>
COMMON STOCK PERFORMANCE
The following graph reflects a comparison of the cumulative total
shareholder return on the Company's common stock for the five year period
commencing October 1, 1991 through September 30, 1996, with the cumulative
return of the S&P Composite 500 Index and an index of peer companies selected by
the Company consisting of companies engaged in the industrial waste disposal
industry. In addition to the Company, the 1996 peer group includes Clean
Harbors, Inc. and Philip Environmental, Inc. For the fiscal year ended September
30, 1995, the peer group included the Company, Clean Harbors, Inc. and Horsehead
Resource Development Inc. As the stock of Horsehead Resource Development Inc. is
no longer publicly traded, the 1995 peer group, as presented here for
comparative purposes, consists only of the Company and Clean Harbors, Inc. The
graph assumes that the value of an investment in the Company's common stock and
each index was 100 at September 30, 1991 and all dividends were reinvested. The
comparisons in this table are required by the Securities and Exchange Commission
and, therefore, are not intended to forecast or be necessarily indicative of any
future return on the Company's common stock.
IN PRINTED DOCUMENT CHART WAS INSERTED HERE.
THE PLOT POINTS FOLLOW.
<TABLE>
<CAPTION>
YEARS
----------------------------------------------------------------
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Rollins Environmental Services, Inc................... 100 107 59 60 48 27
1996 Peer Group....................................... 100 103 59 57 50 48
1995 Peer Group....................................... 100 103 59 58 44 26
S&P 500............................................... 100 111 125 130 169 203
Assumes $100 invested on October 1, 1991
</TABLE>
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors serve on the Company's Executive Committee: John W.
Rollins, John W. Rollins, Jr. and Henry B. Tippie. Each is an employee of the
Company, but none participate in the deliberations of the Executive Committee
with respect to his own compensation. Henry B. Tippie serves on the Compensation
Committees of Rollins, Inc. and RPC Energy Services, Inc. John W. Rollins, John
W. Rollins, Jr. and Henry B. Tippie are members of the Executive Committees of
Rollins Truck Leasing Corp. and Matlack Systems, Inc. The Executive Committee of
each of these two Companies performs the functions of a Compensation Committee.
John W. Rollins and Henry B. Tippie serve on the Compensation Committee of Dover
Downs Entertainment, Inc.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for services
in all capacities to the Company for the fiscal years ended September 30, 1994,
1995 and 1996, of those persons who were, at September 30, 1996, (i) the
Chairman and Chief Executive Officer and (ii) the other most highly compensated
executive officers of the Company whose total annual salary exceeded $100,000
(the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------ PAYOUTS
--------------------------------------- RESTRICTED STOCK -----------
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMP. (2) AWARDS(3) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR (1) $ $ $ $ # $ $
- ----------------------- ----------- --------- ----------- --------------- ------------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John W. Rollins 1996 180,000 -0- -- -0- -0- -0- -0-
Chairman of the 1995 300,000 -0- -- -0- -0- -0- -0-
Board and CEO 1994 315,000 -0- -- -0- -0- -0- -0-
John V. Flynn, Jr. 1996 401,981 -0- -- -0- 18,000 -0- -0-
President and COO 1995 287,500 -0- -- -0- 54,000 -0- -0-
John W. Rollins, Jr. 1996 180,000 -0- -- -0- 18,000 -0- -0-
Senior Vice 1995 300,000 -0- -- -0- 18,000 -0- -0-
Chairman of the 1994 315,000 -0- -- -0- 10,200 -0- -0-
Board
Henry B. Tippie 1996 180,000 -0- -- -0- -0- -0- -0-
Chairman-Executive 1995 300,000 -0- -- -0- -0- -0- -0-
Committee 1994 315,000 -0- -- -0- -0- -0- -0-
Frank H. Minner, Jr. 1996 169,520 -0- -- -0- 15,000 -0- -0-
Group Vice President-
Finance,Treasurer & CFO
</TABLE>
- ------------------
(1) Fiscal years ending September 30.
(2) The only type of Other Annual Compensation for each of the named officers
was in the form of perquisites and was less than the level required for
reporting.
(3) No awards have ever been made.
10
<PAGE>
OPTION AND STOCK APPRECIATION RIGHTS GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted in the fiscal year
ending September 30, 1996 to each of the Company's Named Executives. Employees
of the Company and its subsidiaries are eligible for stock option grants based
on individual performance. The Company did not issue any stock appreciation
rights. The table also sets forth the hypothetical gains that would exist for
the options at the end of their eight-year terms, assuming compound rates of
stock appreciation of 0%, 5% and 10%. The actual future value of the options
will depend on the market value of the Company's Common Stock. All option
exercise prices are based on the market price on the grant date.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO OPTION TERM (2)
OPTIONS EMPLOYEES EXERCISE -----------------------------------
GRANTED IN FISCAL PRICE EXPIRATION 0%
NAME (#) YEAR ($/SH) DATE -- 5% 10%
- ---------------------------------------- --------- ------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
John V. Flynn, Jr. 18,000 5.3% $ 2.875 12/03/03 -- $ 24,708 $ 59,181
John W. Rollins, Jr. 18,000 5.3% $ 2.875 12/03/03 -- $ 24,708 $ 59,181
Frank H. Minner, Jr. 15,000 4.4% $ 2.875 12/03/03 -- $ 20,590 $ 49,317
All employees as a group (3) 341,200 100.0% $ 2.25 10/03/03 -- $ 472,931 $ 1,132,753
to to
$3.875 2/04/04
</TABLE>
- ------------------
(1) Options were granted on December 4, 1995 to Messrs. Flynn, Rollins and
Minner.
(2) These amounts, based on assumed appreciation rates of 0% and the 5% and 10%
rates prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the Company's
stock price. These numbers do not take into account certain provisions of
the options providing for termination of the option following termination of
employment, nontransferability or phased-in vesting. The Company did not use
an alternative formula for a grant date valuation as it is not aware of any
formula which will determine with reasonable accuracy a present value based
on future unknown or volatile factors. Future compensation resulting from
option grants is based solely on the performance of the Company's stock
price.
(3) Based on 25,200 options granted October 4, 1995 at an exercise price of
$3.875, 291,000 options granted December 4, 1995 at an exercise price of
$2.875 and 25,000 options granted February 5, 1996 at an exercise price of
$2.25.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table summarizes option exercises during fiscal year 1996 by
the Company's Named Executives, and the value of the options held by such
persons as of September 30, 1996. The Company has not granted and does not have
any Stock Appreciation Rights outstanding.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES ACQUIRED VALUE FY-END (#) FY-END ($)
NAME (1) ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(3)
- ------------------------ ----------------- ------------- -------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
John V. Flynn, Jr. -- -- 9,000 63,000 -0- -0-
Frank H. Minner, Jr. -- -- 4,200 36,000 -0- -0-
John W. Rollins, Jr. -- -- 93,300 -0- -0- -0-
Henry B. Tippie -- -- 47,100 -0- -0- -0-
</TABLE>
- ------------------
(1) John W. Rollins has never been granted any Incentive Stock Options.
(2) The value of the Company's common stock on September 30, 1996 was $2.75 per
share.
11
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
There were no Long-Term Incentive Plan Awards to the Named Executives
during fiscal year 1996.
DEFINED BENEFIT PLANS
The Company's Pension Plan is a non-contributory qualified employee defined
benefit plan. All full-time employees of the Company are eligible to participate
in the Pension Plan. Up to September 30, 1989, retirement benefits were equal to
the sum of from 1% to 1.5% of an employee's annual cash compensation for each
year of service to age 65. Commencing October 1, 1989 and thereafter, retirement
benefits are equal to the sum of 1.25% of earnings up to covered compensation,
as that term is defined in the Plan, and 1.7% of earnings above covered
compensation. Covered compensation includes regular salaries or wages,
commissions, bonuses, overtime earnings and short-term disability income
protection benefits.
The Company maintains a non-qualified, defined benefit plan, called the
Excess Benefit Plan, which covers those participants of the Pension Plan whose
benefits are limited by the Internal Revenue Code. A participant in the Excess
Benefit Plan is entitled to a benefit equaling the difference between the amount
of the benefit payable without limitation and the amount of the benefit payable
under the Pension Plan.
Retirement benefits are not subject to any reduction for Social Security
benefits or other offset amounts. An employee's benefits may be paid in certain
alternative forms having actuarially equivalent values. Retirement benefits are
fully vested after the completion of five years of credited service or, if
earlier, upon reaching age 55. The maximum annual benefit under a qualified
pension plan is currently $120,000 beginning at the Social Security retirement
age (currently age 65).
Annual pension benefit projections for the Named Executives assume: (a)
that the participant remains in the service of the Company until age 65; (b)
that the participant's earnings continue at the same rate as paid in the fiscal
year ended September 30, 1996 during the remainder of his service until age 65;
and (c) that the Plans continue without substantial modification. The estimated
annual benefit at retirement for each of the following Named Executives of the
Company is: John V. Flynn, Jr., $85,243; John W. Rollins, Jr., $87,608; Henry B.
Tippie, $58,491; and Frank H. Minner, Jr., $5,127. John W. Rollins does not
participate in the Pension Plan.
AUDITORS
The Board of Directors has not selected or recommended the name of an
independent public accounting firm for approval or ratification by the
shareholders. The Board of Directors believes that it will be in the best
interests of the shareholders if it is free to make such determination based
upon all factors that are then relevant.
KPMG Peat Marwick LLP served as the Company's auditors for the fiscal year
ended September 30, 1996. A representative of KPMG Peat Marwick LLP will be
present at the Annual Meeting and will have the opportunity to make a statement
should such representative so desire. Such representative also will be available
to answer questions raised orally.
During the fiscal year ended September 30, 1996, KPMG Peat Marwick LLP's
services rendered to the Company consisted of auditing the Company's financial
statements. In this connection, KPMG
12
<PAGE>
Peat Marwick LLP performed such tests of the Company's accounting records and
other auditing procedures as were required by generally accepted auditing
standards.
SHAREHOLDER PROPOSALS
Appropriate proposals of eligible shareholders (an eligible shareholder
must be a record or beneficial owner of at least 1% or $1,000 in market value of
securities entitled to be voted at the meeting and have held such securities for
at least one year) intended to be presented at the Company's next Annual Meeting
of Shareholders must be received by the Company no later than August 22, 1997
for inclusion in the Proxy Statement and form of proxy relating to that meeting.
MISCELLANEOUS
ON WRITTEN REQUEST OF ANY RECORD OR BENEFICIAL SHAREHOLDER OF THE COMPANY,
THE COMPANY WILL PROVIDE, FREE OF CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR A COPY OF FORM 10-K
SHOULD BE MADE IN WRITING AND ADDRESSED TO:
FRANK H. MINNER, JR.
GROUP VICE PRESIDENT - FINANCE AND TREASURER
ROLLINS ENVIRONMENTAL SERVICES, INC.
P.O. BOX 2349
WILMINGTON, DELAWARE 19899
THE COMPANY WILL CHARGE REASONABLE OUT-OF-POCKET EXPENSES FOR THE
REPRODUCTION OF EXHIBITS TO FORM 10-K SHOULD A SHAREHOLDER REQUEST COPIES OF
SUCH EXHIBITS.
The Company's Annual Report for the fiscal year ended September 30, 1996
has been mailed to shareholders under separate cover.
The Board of Directors knows of no business other than the matters set
forth herein which will be presented at the meeting. Inasmuch as matters not
known at this time may come before the meeting, the enclosed proxy confers
discretionary authority with respect to such matters as may properly come before
the meeting and it is the intention of the persons named in the proxy to vote in
accordance with their judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
MICHAEL B. KINNARD, Secretary
Wilmington, Delaware
December 20, 1996
13
ROLLINS ENVIRONMENTAL SERVICES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
Friday, January 31, 1997, 9:00 A.M., E.S.T.
The undersigned hereby constitutes and appoints John W. Rollins, Jr. and
Michael B. Kinnard, and each of them jointly and severally, proxies with full
power of substitution, to vote all shares of Common Stock which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of the Company to be
held on January 31, 1997 at 9:00 A.M. Eastern Standard Time, First Floor, 1209
Orange Street, Wilmington, Delaware, or at any adjournment thereof, on all
matters set forth in the Notice of Annual Meeting and Proxy Statement dated
December 20, 1996, as follows:
(Mark only one box for each proposal)
1. ELECTION OF DIRECTORS
Nominees: Nicholas Pappas, John W. Rollins and Don C. Stansberry, Jr.
|_| VOTE FOR all nominees listed above; except vote withheld from
following nominee (if any):
---------------------------------------------------------------------------
|_| VOTE WITHHELD FROM all nominees.
The Board recommends a vote "FOR" all the nominees listed.
2. SHAREHOLDER PROPOSAL
|_| FOR |_| AGAINST |_| WITHHOLDS AUTHORITY FROM VOTING
The Board recommends a vote "AGAINST" this proposal.
3. At their discretion, upon such matters as may properly come before the
Annual Meeting or any adjournment thereof.
(OVER)
<PAGE>
(CONTINUED FROM OTHER SIDE)
The undersigned acknowledges receipt of the aforesaid Notice of Annual
Meeting and Proxy Statement, each dated December 20, 1996, grants authority to
any of said proxies, or their substitutes, to act in the absence of others, with
all the powers which the undersigned would possess if personally present at such
meeting, and hereby ratifies and confirms all that said proxies, or their
substitutes, may lawfully do in the undersigned's name, place and stead.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ROLLINS
ENVIRONMENTAL SERVICES, INC. AND THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS. IF NO CHOICE IS SPECIFIED BY YOU,
THIS PROXY WILL BE VOTED FOR ITEM NO. 1 AND AGAINST ITEM NO. 2.
--- -------
Please sign below, date and return promptly.
Signature(s) of Shareholder(s)
- --------------------------------
- --------------------------------
DATED: January , 1997
Signature(s) should conform to name(s) and title(s) stenciled hereon.
Executors, administrators, trustees, guardians and attorneys should add their
title(s) on signing.
NO POSTAGE IS REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.
