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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:
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/ / 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
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National Service Industries, Inc.
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(Name of Registrant as Specified In Its Charter)
Kenyon W. Murphy, Secretary and Assistant Counsel
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (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
(NSI LOGO)
NATIONAL SERVICE INDUSTRIES, INC.
NSI CENTER
1420 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 3, 1996
The annual meeting of stockholders of NATIONAL SERVICE INDUSTRIES, INC.
(the "Corporation") will be held on Wednesday, January 3, 1996, at 10:00 a.m. in
the Walter C. Hill Auditorium at the High Museum of Art, 1280 Peachtree Street,
N.E., Atlanta, Georgia, for the following purposes:
(1) to elect directors;
(2) to ratify the appointment of Arthur Andersen LLP as independent
auditors for the Corporation for the fiscal year ending August 31, 1996;
and
(3) to transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on November 6, 1995
as the record date for the determination of the stockholders who will be
entitled to notice of and to vote at this meeting or any adjournments thereof.
A list of the stockholders entitled to vote at the meeting may be examined
at the Corporation's executive offices, 1420 Peachtree Street, N.E., Atlanta,
Georgia, during the ten-day period preceding the meeting.
November 17, 1995
By order of the Board of Directors,
KENYON W. MURPHY
Secretary and Assistant Counsel
IMPORTANT -- YOUR PROXY IS ENCLOSED
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES IN THE ACCOMPANYING ENVELOPE.
<PAGE> 3
NATIONAL SERVICE INDUSTRIES, INC.
NSI CENTER
1420 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
PROXY STATEMENT
The following information is furnished in connection with the solicitation
of proxies by the Board of Directors of the Corporation for the annual meeting
to be held on January 3, 1996. A copy of the annual report of the Corporation
for the fiscal year ended August 31, 1995 and a proxy for use at the meeting are
enclosed with this proxy statement. This proxy statement and the enclosed proxy
are initially being mailed to stockholders on or about November 17, 1995.
GENERAL INFORMATION
PROXY
Stockholders are requested to execute and return the enclosed proxy in the
accompanying envelope. At any time before the proxy is voted, it may be revoked
by written notice to the Secretary of the Corporation. Proxies which are
returned properly executed, and not revoked, will be voted in accordance with
stockholders' directions specified thereon. Where no direction is specified,
proxies will be voted for the election of the nominees listed below as directors
and for ratification of the appointment of Arthur Andersen LLP as independent
auditors for the Corporation.
STOCK OUTSTANDING AND VOTING RIGHTS
As of November 6, 1995, the record date for the annual meeting, there were
48,350,171 shares of common stock outstanding and entitled to vote. The holders
of common stock, the only class of voting stock of the Corporation outstanding,
are entitled to one vote per share for the election of directors and on the
other matters presented.
VOTING PROCEDURE
Votes cast by proxy or in person at the annual meeting will be tabulated by
the election inspector appointed for the meeting and will determine whether or
not a quorum is present. The election inspector will treat abstentions as shares
that are present and entitled to vote but as unvoted for purposes of determining
the approval of any matter submitted to the stockholders. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will be considered as present but
not entitled to vote with respect to that matter.
SOLICITATION
The cost of soliciting proxies is paid by the Corporation. Officers and
regular employees of the Corporation, at no additional compensation, may assist
in the solicitation of proxies. Solicitation will be by mail and perhaps by
telephone and personal contact.
ITEM NO. 1 -- ELECTION OF DIRECTORS
At the annual meeting thirteen (13) directors of the Corporation will be
elected to hold office until the next annual meeting of stockholders and until
their successors are elected and qualified. To be elected, a nominee must
receive a plurality of the votes cast at the meeting. The persons named as
proxies in the accompanying proxy, or their substitutes, will vote for the
election of the nominees listed hereafter, except to the extent authority to
vote for any or all of the nominees is withheld. No nominee for election as a
director is proposed to be elected pursuant to any arrangement or understanding
between the nominee and any other person or persons. It is believed that all
such nominees are available for election; however, Herman J. Russell's serving
as a director of the Corporation while a director of Georgia Power Company is
subject to approval of the Federal Energy Regulatory Commission. If any of the
nominees are unable or unwilling to serve, the persons named as proxies in the
accompanying proxy, or their substitutes, shall have full discretion and
authority to vote or refrain from voting for any substitute nominees in
accordance with their judgment.
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INFORMATION CONCERNING NOMINEES
All of the nominees listed below, other than Herman J. Russell, are now
directors of the Corporation and have served continuously since their first
election. All of the current directors were elected by the stockholders. Mr.
Russell was nominated by the Board of Directors on September 20, 1995, to fill
the vacancy on the Board which will be created by the retirement of Jesse Hill,
Jr. as a director effective January 3, 1996.
The following is a brief summary of each nominee's business experience,
other directorships held, and membership on the standing committees of the Board
of Directors of the Corporation.
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D. RAYMOND RIDDLE Director since
1993
Mr. Riddle, 62 years old, is Chairman of the Board and Chief
Executive Officer of the Corporation. He served as President and
Chief Executive Officer from January 1993 until September 1994, when
he became Chairman. He served from 1985 until 1993 as an Executive
Vice President of Wachovia Corporation and from 1987 until 1993 as
President and Chief Executive Officer and as a director of Wachovia
[PHOTO] Corporation of Georgia and its lead bank, Wachovia Bank of Georgia,
N.A. He is a director of Atlanta Gas Light Co., Atlantic American
Corporation, Equifax Inc., and Fuqua Enterprises, Inc. Mr. Riddle is
Chairman of the Executive Committee and a member of the Strategic
Planning and Finance Committee of the Board.
ROBERT M. HOLDER, JR. Director since
1974
Mr. Holder, 65 years old, has served since 1960 as Chairman of the
Board of Holder Corporation, a real estate development and
construction firm he founded. He also served as its Chief Executive
[PHOTO] Officer from 1960 until April 1994. He is a director of Wachovia
Corporation. Mr. Holder is Chairman of the Audit Committee and a
member of the Executive and the Executive Resource and Nominating
Committees of the Board.
DON W. HUBBLE Director
since 1994
Mr. Hubble, 56 years old, is President and Chief Operating Officer
of the Corporation. He served as a Group Vice President of the
[PHOTO] Corporation from 1980 until 1988, when he was elected Executive Vice
President. He was designated Chief Operating Officer in September
1993 and was elected President effective September 1994.
F. ROSS JOHNSON Director
since 1988
Mr. Johnson, 63 years old, has served as Chairman and Chief
Executive Officer of RJM Group, Inc., a private management/advisory
group, since February 1989. He has served as Chairman of Bionaire,
Inc., an international manufacturer of environmental air products,
since December 1991 and also served as Chief Executive Officer from
[PHOTO] December 1991 until October 1992. He has served as Chairman of
Peterson Properties, a real estate management company, since
February 1993. Mr. Johnson is a director of American Express
Company, Archer-Daniels-Midland Co., Midland Financial Group, Inc.,
Noma Industries Ltd., and Power Corporation of Canada. He is a
member of the Strategic Planning and Finance and the Executive
Resource and Nominating Committees of the Board.
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JAMES C. KENNEDY Director since
1993
Mr. Kennedy, 47 years old, has served since January 1988 as Chairman
and Chief Executive Officer of Cox Enterprises, Inc., a company
[PHOTO] engaged in publishing, broadcasting, and automobile auction
businesses. He has been employed by Cox Enterprises since 1972 and
has served as an officer of the company since 1986. He is a director
of Cox Communications, Inc. Mr. Kennedy is a member of the Audit and
the Strategic Planning and Finance Committees of the Board.
DONALD R. KEOUGH Director since
1988
Mr. Keough, 69 years old, has served as Chairman of the Board of
Allen & Company Incorporated, an investment banking firm, since
April 1993. He served as President, Chief Operating Officer and a
director of The Coca-Cola Company from 1981 until 1993, when he was
[PHOTO] appointed Advisor to the Board. In addition, he served as Chairman
of the Board of Coca-Cola Enterprises Inc. from 1986 until 1993. He
is a director of H. J. Heinz Company, The Home Depot, Inc.,
McDonald's Corporation, and The Washington Post Company. Mr. Keough
is Chairman of the Strategic Planning and Finance Committee and a
member of the Audit and Executive Committees of the Board.
BRYAN D. LANGTON, C.B.E. Director since
1993
Mr. Langton, 58 years old, has since February 1990 served as
Chairman, Chief Executive Officer, and President of Holiday Inns,
Inc., a subsidiary of Bass PLC, and headed Holiday Inn Worldwide, a
group of affiliated companies. He has held various executive
[PHOTO] positions with affiliates of Bass PLC since 1971 and has been in
charge of its hotel and restaurant interests since 1988. Mr. Langton
is a director of Bass PLC. He is a member of the Audit and the
Executive Resource and Nominating Committees of the Board.
DAVID LEVY Director
since 1984
Mr. Levy, 58 years old, is Executive Vice President, Administration
and Counsel of the Corporation. He served the Corporation as Senior
[PHOTO] Vice President, Secretary and Counsel from 1982 through September
1992. He has served as an officer of the Corporation since 1973.
BERNARD MARCUS Director since
1990
Mr. Marcus, 66 years old, is one of the co-founders of The Home
Depot, Inc. and has served as its Chairman of the Board and Chief
Executive Officer since 1978. Mr. Marcus was Chairman of the Board
[PHOTO] and President of Handy Dan Home Improvement Centers, Inc. from 1972
to 1978. He is a member of the Audit and the Strategic Planning and
Finance Committees of the Board.
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JOHN G. MEDLIN, JR. Director
[PHOTO] since 1988
Mr. Medlin, 61 years old, has served as Chairman of the Board of
Wachovia Corporation since 1985 and also served as its Chief
Executive Officer from 1977 through 1993. He joined Wachovia Bank
and Trust Company in 1959 and has served as an officer of the Bank
and affiliated companies since 1962. He is a director of BellSouth
Corporation, Burlington Industries, Inc., Media General, Inc.,
Nabisco Holdings Corp., RJR Nabisco Holdings Corp., and USAir Group,
Inc. Mr. Medlin is Chairman of the Executive Resource and Nominating
Committee and a member of the Executive and the Strategic Planning
and Finance Committees of the Board.
HERMAN J. RUSSELL
Mr. Russell, 64 years old, has served since 1959 as Chairman and
[PHOTO] Chief Executive Officer of H.J. Russell & Company, which is engaged
in construction, client services, and property management
businesses. He also serves as a director of Wachovia Corporation.
BETTY L. SIEGEL Director
since 1988
Dr. Siegel, 64 years old, has served as President of Kennesaw State
College since 1981. She previously served as Dean of the School of
Education and Psychology and Professor of Psychology at Western
Carolina University from 1976 to 1981 and served as Dean of Academic
[PHOTO] Affairs for Continuing Education at the University of Florida from
1972 to 1976. She is a director of Atlanta Gas Light Co. and Equifax
Inc. Dr. Siegel is a member of the Audit and the Strategic Planning
and Finance Committees of the Board.
ERWIN ZABAN Director
since 1962
Mr. Zaban, 74 years old, serves as a consultant to the Corporation.
He served as Chairman of the Board of the Corporation from 1975
through August 1994, except for ten months in 1992 when he served as
[PHOTO] a consultant. Mr. Zaban also served as President and Chief Executive
Officer of the Corporation from October 1992 until January 1993. He
previously served as Chief Executive Officer from 1972 until 1987
and President from 1966 until 1979. Mr. Zaban is a member of the
Executive and the Strategic Planning and Finance Committees of the
Board.
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COMPENSATION OF DIRECTORS
During the fiscal year ended August 31, 1995, directors who were not
employees of the Corporation received an annual fee of $30,000, payable
quarterly. The chairman of each committee of the Board received an additional
annual fee of $3,000. Under the Directors' Deferred Compensation Plan of the
Corporation, directors may defer payment of all or any part of their fees.
Under the National Service Industries, Inc. 1992 Non-employee Directors
Stock Option Plan, each non-employee director received on September 21, 1994 a
grant of a non-qualified option for the purchase of 1,000 shares of common stock
at an exercise price of $26.25 per share, the fair market value on the grant
date. Each option grant is exercisable after one year and remains exercisable
for a period of ten years from the grant date.
Directors may participate in the Corporation's Matching Gift Program. Under
this program, the Corporation will match charitable contributions up to a total
of $2,500 per individual per year.
Mr. Zaban is paid $350,000 per year under a consulting agreement which
expires in October 1996.
For information on compensation of directors who also served as executive
officers during the fiscal year, see "Executive Compensation" below.
CERTAIN TRANSACTIONS
During the 1995 fiscal year, the Corporation paid Holder Corporation
approximately $490,000 for the renovation and improvement of office and
laboratory space. Holder Corporation, of which Mr. Holder is Chairman of the
Board and the principal stockholder, was selected for the work on a negotiated
bid basis.
The Corporation also had other transactions in the ordinary course of
business with unaffiliated corporations and institutions of which certain
non-employee directors and nominees for director of the Corporation are officers
or directors, including Atlanta Life Insurance Company, BellSouth Corporation,
Cox Enterprises, Inc., Holder Corporation, Holiday Inns, Inc., The Home Depot,
Inc., Kennesaw State College and Wachovia Corporation. The Corporation considers
the amounts involved in such transactions to be immaterial in relationship to
its business and believes that such amounts are not material in relationship to
the business of such corporations or institutions or to such directors.
Management believes that the terms of these transactions are no less favorable
than those available from non-affiliated sources.
Affiliates of INVESCO Capital Management, Inc., an investment management
firm which is the owner of 7.31% of the Corporation's stock, provide
record-keeping and administrative services for the defined contribution plans
sponsored by the Corporation and manage certain investment alternatives
available under those plans. In each case, selection was made on a competitive
basis using cost and performance criteria. The aggregate amount of fees for all
such services is dependent upon the level of enrollment in those plans and the
participants' investment directions. Aggregate fees were approximately $413,000
for fiscal 1995.
OTHER INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
The Board of Directors has delegated certain functions to the following
standing committees:
The Executive Committee is authorized to perform all of the powers of
the full Board, except the power to amend the By-laws and to fill vacancies
among its membership and except as restricted by the Delaware General
Corporation Law. The Committee is comprised of D. Raymond Riddle, Chairman,
Jesse Hill, Jr., Robert M. Holder, Jr., Donald R. Keough, John G. Medlin,
Jr., and Erwin Zaban. It held one meeting during the fiscal year.
The Audit Committee's responsibilities include: reviewing the scope
and results of audits performed by the independent and internal auditors;
reviewing recommendations by the independent and internal auditors relating
to internal controls; reviewing non-audit services provided by the
independent auditors; and recommending to the Board the independent
auditing firm to be retained by the Corporation. The Committee is comprised
of Robert M. Holder, Jr., Chairman, James C. Kennedy, Donald R. Keough,
Bryan D. Langton, Bernard Marcus, and Betty L. Siegel. It held two meetings
during the fiscal year.
The Executive Resource and Nominating Committee is responsible for
certain matters relating to the compensation of the officers of the
Corporation, as set forth in the Committee's report below, and for
recommending to the full Board a slate of directors for consideration by
the shareholders at the annual meeting and candidates to fill any vacancies
on the Board. The Committee is comprised of John G.
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Medlin, Jr., Chairman, Jesse Hill, Jr., Robert M. Holder, Jr., F. Ross
Johnson, and Bryan D. Langton. It held two meetings during the fiscal year.
The Strategic Planning and Finance Committee is responsible for
reviewing, and advising Management with respect to, the Corporation's
long-term business goals and strategies, financial planning, financial
structure, financial condition, and requirements for funds. The Committee
is comprised of Donald R. Keough, Chairman, F. Ross Johnson, James C.
Kennedy, Bernard Marcus, John G. Medlin, Jr., D. Raymond Riddle, Betty L.
Siegel, and Erwin Zaban. It held two meetings during the fiscal year.
During the fiscal year ended August 31, 1995, the Board of Directors met
six times. All of the directors attended at least 75% of the total meetings held
by the Board and their respective committees during the fiscal year except Mr.
Langton.
The Executive Resource and Nominating Committee will consider nominee
recommendations from stockholders made in writing and addressed to the attention
of Chairman of the Executive Resource and Nominating Committee, c/o Kenyon W.
Murphy, Secretary and Assistant Counsel, National Service Industries, Inc., P.O.
Box 7158, Midtown Station, Atlanta, Georgia 30357-0158.
BENEFICIAL OWNERSHIP OF THE CORPORATION'S SECURITIES
The following table sets forth information concerning beneficial ownership
of the Corporation's common stock, as of September 1, 1995 unless otherwise
indicated, by each of the directors and nominees for director, by each of the
executive officers named in the Summary Compensation Table on page ten, by all
directors and executive officers of the Corporation as a group, and by the owner
of more than five percent of the Corporation's stock.
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SHARES OF COMMON STOCK BENEFICIALLY OWNED(1)
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SOLE VOTING AND
INVESTMENT AGGREGATE AGGREGATE
NAME POWER OTHER TOTAL PERCENTAGE
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D. Raymond Riddle...................... 74,391 74,391 .15%
Jesse Hill, Jr......................... 3,648 3,648 *
J. Robert Hipps........................ 31,443 31,443 .07
Robert M. Holder, Jr................... 9,330 9,330 .02
Don W. Hubble.......................... 37,523 37,523 .08
F. Ross Johnson........................ 18,000 18,000 .04
James C. Kennedy....................... 3,000 3,000 *
Donald R. Keough....................... 3,668 3,668 *
Bryan D. Langton....................... 3,000 3,000 *
David Levy............................. 67,263 108(4) 67,371 .14
Bernard Marcus......................... 5,000 5,000 .01
John G. Medlin, Jr..................... 4,000 4,000 *
Herman J. Russell...................... 1,000(2) 1,000 *
Betty L. Siegel........................ 3,581 3,581 *
Erwin Zaban............................ 1,226,170(3) 17,014(5) 1,243,184 2.57
Directors and executive officers as a
group................................ 1,490,017(2)(3) 17,122(4)(5) 1,507,139 3.12
INVESCO Capital Management, Inc........
1315 Peachtree Street, N.E.
Atlanta, Georgia 30309 3,533,200(6) 7.31%
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* Indicates an aggregate percentage of less than 0.01%.
(1) Includes shares that may be acquired within 60 days after September 1, 1995,
upon exercise of employee and director stock options. Options included for
the individuals shown are as follows: Mr. Riddle, 64,167 shares; Mr. Hipps,
30,904 shares; Mr. Hubble, 34,918 shares; Mr. Levy, 40,051 shares; Mr.
Zaban, 1,000 shares; Mr. Kennedy, 2,000 shares; Mr. Langton, 2,000 shares;
other directors shown, 3,000 shares each; and all directors and executive
officers as a group, 196,040 shares.
(2) Shares purchased by Mr. Russell on October 27, 1995.
(3) Includes 157,304 shares held by The Zaban Foundation, Inc. Mr. Zaban
disclaims beneficial ownership in said shares.
(4) Shares held by Mr. Levy's wife and by his children.
(5) Shares held by Mr. Zaban's wife.
(6) Shares with respect to which INVESCO Capital Management, Inc., an investment
management firm, had shared power to vote or direct the vote and shared
power to invest or direct investment as of October 20, 1995, as reported to
the Corporation.
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COMPLIANCE WITH STOCK OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and officers to file reports of ownership and changes in
ownership of the Corporation's stock with the Securities and Exchange
Commission, the New York Stock Exchange, and the Corporation. Based on a review
of the copies of such forms received by the Corporation during or with respect
to the fiscal year ended August 31, 1995, or written representations from
certain reporting persons that no Form 5 reports were required for those
persons, the Corporation believes that all required Section 16(a) filings were
made on a timely basis, except for late Form 4 filings by Messrs. Riddle, Hubble
and Levy to report the grant to them of transferable employee stock options on
September 21, 1994.
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE RESOURCE AND NOMINATING COMMITTEE
The Executive Resource and Nominating Committee of the Board of Directors
is composed entirely of non-employee directors. The Committee is responsible for
approving the salary payable to the Chairman of the Board and Chief Executive
Officer, subject to ratification by the full Board, for setting the salary
payable to each of the other executive officers of the Corporation, and for
administering the Corporation's Management Compensation and Incentive Plan (the
"Incentive Plan"), subject to ratification of certain matters thereunder by the
full Board. The Committee has authority to grant awards under the Corporation's
Long-Term Incentive Program (the "Long-Term Plan") and it reviews and makes
recommendations to the Board with respect to any proposed awards under any other
compensation plan, benefit plan or perquisite in which executive officers
participate.
Set forth below is a discussion of the compensation policies applicable to
the Corporation's executive officers, the executive officers' compensation
program for the last fiscal year, and the Chief Executive Officer's compensation
for the last fiscal year.
Compensation Policies for Executive Officers
The Corporation's compensation program is designed to attract, retain,
motivate, and reward qualified executives, with a direct linkage between the
level of an individual's compensation and the performance of the individual and
the Corporation. The principal compensation components are base salary, bonus
awards under the Incentive Plan, and awards under the Long-Term Plan, currently
consisting of stock options. Bonus awards and long-term awards are generally
granted on an annual basis. Salary adjustments are made periodically as merited
or on promotion to a position of increased responsibilities.
The compensation program was revised in 1993, effective beginning with the
1994 fiscal year, to more clearly and quantifiably relate reward opportunities
with performance and to insure that executive officers are compensated
competitively. The Incentive Plan, which was adopted by the Board of Directors
and approved by stockholders during the 1995 fiscal year, was based on the
Corporation's 1994 bonus incentive plan, with appropriate modifications and
limitations to comply with Section 162(m) of the Internal Revenue Code.
The Committee reviews the compensation of each executive officer utilizing
competitive compensation information prepared by an independent compensation
consultant and a performance review and recommendation by the Chief Executive
Officer for each other executive officer. The competitive compensation
information utilized by the Committee is for positions of comparable
responsibilities with publicly traded, comparably sized diversified companies,
which are representative of the companies with whom the Corporation competes for
executive talent. The Committee has been advised by its independent compensation
consultant that, overall, the Corporation's current compensation program for
executive officers is approximately at the median competitive level.
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Committee considers the anticipated
tax treatment to the Corporation and to the executives of various payments and
benefits. Based on compensation arrangements currently in place, the Committee
does not reasonably anticipate that any executive officer's fiscal 1996
compensation will be subject to the $1 million deductibility limitation of
Section 162(m) of the Internal Revenue Code.
Executive Officers' 1995 Compensation
Each executive officer's salary for fiscal 1995 was based on competitive
compensation data, at approximately the median level, adjusted to reflect the
officer's past performance and expected future
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contribution, taking into account the executive's experience and abilities, and
the Corporation's performance in the prior year.
Bonuses for fiscal 1995 under the Incentive Plan were intended to provide
competitive total cash compensation at approximately the median level, subject
to achievement of the Corporation's and the individual's target performance
objectives as described below. A bonus fund, stated as a percentage of gross
salary, was determined for each executive officer based on the net earnings
objective for the Corporation established by the Committee and approved by the
Board of Directors at the beginning of the fiscal year. The bonus fund increased
or decreased in relationship to net earnings, with no bonus fund for net
earnings below a threshold level. For fiscal 1995, the threshold level required
a specified increase in net earnings from fiscal 1994.
The amount actually paid from each bonus fund under the Incentive Plan for
fiscal 1995 was based on the level of achievement of two performance criteria in
addition to the Corporation's net earnings. For the Chief Executive Officer, the
bonus amount could be reduced by up to 25% based on the Corporation's
achievement of return on equity objectives and could be reduced by up to 25%
based on the individual's personal performance. For other executive officers,
the bonus amount could be reduced by up to 30% based on the Corporation's
achievement of return on equity objectives and could be reduced by up to 10%
based on the individual's personal performance. The corporate performance
objectives were established by the Committee and approved by the Board of
Directors. The personal performance objectives of the executive officers (other
than the Chief Executive Officer) were established by the Chief Executive
Officer, subject to the Committee's review, and the personal performance
objectives for the Chief Executive Officer were established by the Committee and
approved by the Board.
The compensation of executive officers is further linked with the
Corporation's performance and to the increase in shareholder value through stock
options granted under the Long-Term Plan. Options provide compensation
opportunities directly related to, and contingent upon, the long-term
performance of the Corporation and to the increase in market value of its
shares. Option awards to executive officers in fiscal 1995 were based on
competitive long-term grants at approximately the median level.
Chief Executive Officer's 1995 Compensation
Mr. Riddle's salary was increased effective October 1, 1994 (the first
increase since he joined the Corporation in January 1993) pursuant to the
compensation review procedure described above. During the 1995 fiscal year, Mr.
Riddle participated in the Incentive Plan as described above and received stock
options in accordance with the Long-Term Plan discussed above. Competitive
compensation data (of the type described above) indicated that Mr. Riddle's
total cash compensation for fiscal 1995 was approximately at the median level.
The bonus fund for Mr. Riddle for fiscal 1995 reflected the Corporation's
achievement of earnings exceeding its target objective. Based on the
Corporation's exceeding its target for return on equity and Mr. Riddle's
accomplishment of the personal performance objectives which had been established
for him, his full bonus fund was paid to him.
During the fiscal year, Mr. Riddle announced that he intended to retire as
Chairman of the Board and Chief Executive Officer effective upon the election of
his successor, and the Committee approved the related matters described on page
12 of the proxy statement under "Other Agreements."
EXECUTIVE RESOURCE AND
NOMINATING COMMITTEE
John G. Medlin, Jr., Chairman
Jesse Hill, Jr.
Robert M. Holder, Jr.
F. Ross Johnson
Bryan D. Langton
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors serving on the Executive Resource and Nominating Committee of
the Board of Directors during the fiscal year ended August 31, 1995 were John G.
Medlin, Jr. (Chairman), Jesse Hill, Jr., Robert M. Holder, Jr., F. Ross Johnson,
Bryan D. Langton, and, until February 28, 1995 (the effective date of his
resignation from the Board), John L. Clendenin. None of these individuals are or
have ever been officers or employees of the Corporation. During the 1995 fiscal
year, no executive officer of the Corporation served as a director of any
corporation which any of these individuals served as an executive officer, and
there were no other compensation committee interlocks with the companies with
which these individuals or the Corporation's other directors are affiliated.
PERFORMANCE GRAPH
The following graph compares, for the five years ended August 31, 1995, the
yearly percentage change in cumulative total shareholders' return on the
Corporation's common stock with (a) the S&P 500 Stock Index and (b) the S&P
Specialized Services Index (the industry group within the S&P 500 in which the
Corporation is included). The graph assumes an initial investment of $100 at the
closing price on August 31, 1990 and assumes all dividends were reinvested.
<TABLE>
<CAPTION>
S&P
Measurement Period Specialized
(Fiscal Year Covered) NSI S&P 500 Services
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 101.15 126.91 109.89
1992 103.28 136.96 101.68
1993 114.28 157.80 98.00
1994 125.58 166.43 98.77
1995 141.18 202.12 112.71
</TABLE>
9
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following table presents the cash compensation paid by the Corporation
for the past three fiscal years, as well as compensation accrued for those
years, to the Corporation's Chief Executive Officer and the three other
executive officers as of August 31, 1995 (the four officers referred to herein
as the "named executive officers"), in all positions in which they served during
those years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- ------------------------- -------
OTHER
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
FISCAL SALARY BONUS SATION AWARD(S) OPTIONS/SARS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#)(2) ($) ($)(3)
- -------------------------------- ------ -------- -------- --------- ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. Raymond Riddle(4)............ 1995 568,750 428,269 5,300 0 65,000 0 36,610
Chairman of the Board and 1994 500,000 280,000 5,200 0 55,000 0 20,728
Chief Executive Officer 1993 333,333 100,000 3,600 0 20,000 0 15,772
Don W. Hubble(5)................ 1995 325,000 200,233 5,300 0 25,000 0 14,118
President and Chief Operating 1994 258,300 119,619 5,200 0 15,000 0 8,603
Officer 1993 230,392 75,000 5,200 0 12,000 0 12,823
David Levy...................... 1995 314,167 193,558 5,300 0 20,000 0 20,703
Executive Vice President, 1994 306,667 142,017 5,200 0 15,000 0 10,808
Administration and Counsel 1993 296,279 83,400 5,200 0 15,000 0 18,582
J. Robert Hipps................. 1995 249,167 153,512 5,300 0 20,000 0 7,156
Senior Vice President, Finance 1994 242,333 112,224 5,200 0 15,000 0 5,979
1993 233,292 75,000 5,200 0 12,000 0 3,709
</TABLE>
- ---------------
(1) Each amount shown includes an automobile allowance of $400 per month.
(2) No stock appreciation rights were granted during this period.
(3) The amounts shown for 1995 include the following: a matching contribution of
$500 each on 401(k) deferrals; a matching contribution on other deferred
compensation in the amount of $5,000 for Messrs. Hubble, Levy and Hipps and
$2,500 for Mr. Riddle; and accrued above-market earnings on other deferred
compensation for Messrs. Hubble, Levy and Hipps in the amount of $8,618,
$15,203, and $1,656, respectively. Of the amount shown for Mr. Riddle in
1995, $33,610 represents premiums paid on insurance policies in which Mr.
Riddle has an interest.
(4) Mr. Riddle was elected Chairman of the Board effective September 1, 1994. He
served as President and Chief Executive Officer for eight months in fiscal
1993 at an annual salary of $500,000.
(5) Mr. Hubble was elected President effective September 1, 1994.
10
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning stock options which
were granted to the named executive officers during the fiscal year ended August
31, 1995, as disclosed in the Summary Compensation Table above. The Corporation
did not award any stock appreciation rights or reprice any stock options during
the year.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE GRANT
SARS EMPLOYEES OR BASE DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(1) YEAR ($/SH) DATE VALUE ($)(2)
- ------------------------------------------- ---------- ----------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
D. Raymond Riddle.......................... 65,000 20.7% 26.25 9/20/04 425,100
Don W. Hubble.............................. 25,000 8.0% 26.25 9/20/04 163,500
David Levy................................. 20,000 6.4% 26.25 9/20/04 130,800
J. Robert Hipps............................ 20,000 6.4% 26.25 9/20/04 130,800
</TABLE>
- ---------------
(1) Options have a ten-year term, subject to earlier termination in certain
events related to termination of employment. Options granted to Messrs.
Hubble, Levy and Hipps vest in four equal annual installments beginning on
the first anniversary of the grant date. Options granted to Mr. Riddle vest
in three equal annual installments beginning on the first anniversary of
the grant date, except that the exercisability of the first installment was
accelerated to March 15, 1995. The Executive Resource and Nominating
Committee has discretion, subject to limitations in the Long-Term Incentive
Program, to modify the terms of outstanding options and to reprice the
options.
(2) The amounts shown were calculated using a Black-Scholes option pricing
model. The estimated values assume a risk-free rate of return of 7.563%, a
dividend yield of 4.170%, an option term of ten years, and stock price
volatility measured over the 250 trading days immediately preceding the
date of grant (producing a standard deviation of .1940). The option value
was not discounted to reflect the vesting period of the options or to
reflect any exercise or lapse of the options prior to the end of the ten
year option period. The actual value, if any, that an executive may realize
will depend upon the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the value
realized by an executive will be at or near the value estimated by the
Black-Scholes model.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table contains information concerning the aggregate value of
unexercised stock options held by the named executive officers as of August 31,
1995. No stock appreciation rights are held by any named executive officer and
no stock options were exercised by any named executive officer during the 1995
fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS/SARS AT
OPTIONS/SARS AT FY-END (#) FY-END ($)(1)
----------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
D. Raymond Riddle.............................. 64,167(2) 75,833 192,709 232,291
Don W. Hubble.................................. 21,918 43,550 107,966 151,463
David Levy..................................... 27,551 40,527 138,174 149,250
J. Robert Hipps................................ 19,154 38,710 115,734 139,193
</TABLE>
- ---------------
(1) The amounts shown for in-the-money options represent the aggregate excess of
market value of shares under option as of August 31, 1995 over the exercise
price of the options.
(2) In connection with Mr. Riddle's announced retirement (see "Other Agreements"
below), option installments for 35,417 shares which would otherwise have
become exercisable in September 1995 and for 5,000 shares which would
otherwise have become exercisable in January 1996 were accelerated to March
15, 1995. The terms of the exercisable options were also amended so that
the options will remain exercisable for five years after the date of his
retirement rather than be cancelled upon his retirement pursuant to their
original terms.
11
<PAGE> 14
OTHER AGREEMENTS
In March 1995, Mr. Riddle announced that he intended to retire as Chairman
of the Board and Chief Executive Officer effective upon the election of his
successor, and the Corporation entered into a consulting agreement with him for
a three year period commencing upon the effective date of his retirement. Under
that agreement, the Corporation will pay him $25,000 per month and will, until
his 65th birthday, continue to pay certain premiums on insurance policies
referenced in footnote 3 of the Summary Compensation Table on page 10. Also, as
described in footnote 2 of the preceding table, the exercisability of certain
stock options previously granted to him was accelerated and the terms of those
options were modified.
The Corporation has entered into Severance Protection Agreements (the
"Agreements") with each of the named executive officers. The Board intends for
the Agreements to provide the named executive officers some measure of security
against the possibility of employment loss that may result following a change in
control in order that they may devote their energies to meeting the business
objectives and needs of the Corporation and its stockholders.
The Agreements (all of which are substantially similar) are effective for a
term of two years, which is automatically extended for one year at the end of
each year unless terminated by either party. However, the term of the Agreements
will not expire during a "Threatened Change in Control Period" (as defined in
the Agreements) or prior to the expiration of 24 months following a "Change in
Control" (as described below). If the employment of the named executive officer
is terminated within 24 months following a Change in Control or in certain other
instances in connection with a Change in Control (1) by the Corporation other
than for "Cause" or "Disability" or (2) by the named executive officer for "Good
Reason" (as each term is defined in the Agreements) or during the 60-day period
commencing on the first anniversary of the occurrence of a Change in Control,
the named executive officer will be entitled to receive (a) a pro rata bonus for
the year of termination, (b) a lump sum cash payment equal to two times the sum
of his base salary and bonus (in each case at least equal to his base salary and
bonus prior to a Change in Control), subject to certain adjustments, (c)
continuation of life insurance, disability, medical, dental, and hospitalization
benefits for a period of up to 24 months, and (d) a lump sum cash payment
reflecting certain retirement benefits he would have been entitled to receive
had he remained employed by the Corporation for an additional two years and a
reduced requirement for early retirement benefits. Additionally, all
restrictions on any outstanding incentive awards will lapse and become fully
vested, all outstanding stock options will become fully vested and immediately
exercisable, and the Corporation will be required to purchase for cash, on
demand, at the then per-share fair market value, any shares of unrestricted
stock and shares purchased upon exercise of options.
The Agreements provide that the Corporation shall make an additional
"gross-up payment" to each named executive officer to offset fully the effect of
any excise tax imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), on any payment made to him arising out of or in
connection with his employment. In addition, the Corporation will pay all legal
fees and related expenses incurred by the named executive officer arising out of
his employment or termination of employment if, in general, the circumstances
for which he has retained legal counsel occurred on or after a Change in
Control.
Assuming a Change in Control had occurred on October 1, 1995 and their
employment had terminated on that date, the approximate cash payments that would
have been made under the Agreements (not including the gross-up payments) would
have been $2,874,591, $1,642,674, $1,545,669, and $1,229,396 for Messrs. Riddle,
Hubble, Levy and Hipps, respectively. The amount of the gross-up payment, if
any, to be paid may be substantial and will depend upon numerous factors,
including the price per share of common stock of the Corporation and the extent,
if any, that payments or benefits made to the named executive officers
constitute "excess parachute payments" within the meaning of Section 280G of the
Code.
A "Change in Control" includes (1) the acquisition (other than from the
Corporation) by any "person" (as that term is used for purposes of Sections
13(d) or 14(d) of the Exchange Act) other than a trustee of an employee benefit
plan maintained by the Corporation or certain related entities of beneficial
ownership of 20% or more of the combined voting power of the Corporation's then
outstanding voting securities, (2) a change in more than one-third of the
members of the Board who were either members as of September 21, 1989 or were
nominated or elected by a vote of two-thirds of those members or members so
approved, or (3) approval by stockholders of the Corporation of (i) a merger or
consolidation involving the Corporation if the stockholders of the Corporation
immediately before such merger or consolidation do not, as a result of such
merger or consolidation, own, directly or indirectly, more than seventy percent
(70%) of the combined voting power of the then outstanding voting securities of
the Corporation resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power of the voting
securities of the Corporation outstanding immediately before such merger or
consolidation or (ii) a complete liquidation or
12
<PAGE> 15
dissolution of the Corporation or an agreement for the sale or other disposition
of all or substantially all of the assets of the Corporation.
Letter agreements issued to the named executive officers in conjunction
with the Agreements provide that in the event of a Change in Control, each such
officer shall receive an annual cash bonus for that fiscal year at least equal
to the annual cash bonus paid to him in the prior fiscal year if he remains in
the employ of the Corporation for the full fiscal year. Each letter agreement
had an initial term of 48 months and is subject to an automatic one-year
extension after each year unless terminated by the Corporation, but in no event
will the term expire following a Change in Control until the Corporation's
obligations as set forth therein have been satisfied.
PENSION AND SUPPLEMENTAL RETIREMENT BENEFITS
The combined benefit under the Corporation's qualified defined benefit
retirement plan ("Pension Plan") and non-qualified supplemental retirement plan
for executives ("SERP"), as amended, is 45% of average base salary and bonus
(using the highest three consecutive years of remuneration out of the ten years
preceding the individual's retirement), less 50% of the individual's primary
social security benefit, and less the actuarial equivalent of the participant's
account in the 401(k) plan for corporate employees, assuming an annual
contribution of 4% of the individual's annual compensation over $15,000 (subject
to applicable limitations on eligible compensation), any applicable matching
contribution, and earnings on those amounts at 8% per annum.
The following table shows the estimated aggregate annual benefits payable
to a covered participant at normal retirement age under the Pension Plan and
SERP, without the reduction under the SERP for the actuarial equivalent of
401(k) plan benefits (approximately $3,053 for Mr. Riddle, $7,733 for Mr. Levy,
$10,885 for Mr. Hubble, and $10,885 for Mr. Hipps):
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------------------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 300,000........................... $ 95,900 $127,800 $127,800 $127,800 $127,800
400,000.......................... 129,600 172,800 172,800 172,800 172,800
500,000.......................... 163,400 217,800 217,800 217,800 217,800
600,000.......................... 197,100 262,800 262,800 262,800 262,800
700,000.......................... 230,900 307,800 307,800 307,800 307,800
800,000.......................... 264,600 352,800 352,800 352,800 352,800
900,000.......................... 298,400 397,800 397,800 397,800 397,800
1,000,000.......................... 332,100 442,800 442,800 442,800 442,800
1,100,000.......................... 365,900 487,800 487,800 487,800 487,800
</TABLE>
The remuneration specified in the table above consists of salary and bonus.
Benefits shown above are based on payment of a single life annuity with 10 years
certain. Equivalent payment options are offered.
The salary and bonus currently covered by the Pension Plan and the SERP for
each of the named executive officers substantially correspond to the amounts
disclosed in the Summary Compensation Table. The years of credited service for
each of the named executive officers as of August 31, 1995 were as follows: Mr.
Riddle, 2 years; Mr. Hubble, 15 years; Mr. Levy, 20 years; and Mr. Hipps, 5
years.
ITEM NO. 2 -- APPOINTMENT OF INDEPENDENT AUDITORS
At the annual meeting, a proposal will be presented to ratify the
appointment of Arthur Andersen LLP as independent auditors to examine the books
of account and other corporate records of the Corporation for the fiscal year
ending August 31, 1996. Arthur Andersen LLP has performed this function for the
Corporation since 1964. Representatives of Arthur Andersen LLP are expected to
be present at the annual meeting, will have the opportunity to make a statement
if they desire, and are expected to be available to respond to questions of
stockholders. The total amount of fees charged by Arthur Andersen LLP for their
services during the fiscal year ended August 31, 1995, was $725,588,
substantially all of which was for services provided in connection with annual
audits, retirement plan audits, and tax assistance.
ITEM NO. 3 -- OTHER MATTERS
The Board of Directors knows of no other business to be transacted, but if
any other matters do come before the meeting, the persons named as proxies in
the accompanying proxy, or their substitutes, will vote or act with respect to
them in accordance with their best judgment.
13
<PAGE> 16
ANNUAL MEETING IN JANUARY 1997 -- STOCKHOLDER PROPOSALS
If a stockholder wishes to have a proposal considered for inclusion in the
Corporation's proxy solicitation materials in connection with the annual meeting
of stockholders to be held in January 1997, the proposal must comply with the
Securities and Exchange Commission's proxy rules, be stated in writing, and be
submitted on or before July 14, 1996, to the Corporation at its principal
executive offices at P.O. Box 7158, Midtown Station, Atlanta, Georgia
30357-0158, Attention: Kenyon W. Murphy, Secretary and Assistant Counsel. All
such proposals should be sent by certified mail, return receipt requested.
Excluding stockholder proposals filed in accordance with the proxy rules, a
stockholder is required to comply with the Corporation's By-laws with respect to
any proposal to be presented for action at an annual meeting of stockholders.
The Corporation's By-laws require each proposal to be (i) written, (ii)
delivered to, or mailed and received at, the principal executive office of the
Corporation not less than 60 days nor more than 90 days prior to the date of the
annual meeting, and (iii) accompanied by (A) a brief description of the proposal
and the reasons therefor, (B) the name and address of the stockholder making the
proposal and any other stockholders known by such stockholder to support such
proposal, (C) the class and number of shares of the Corporation's capital stock
beneficially owned by all such stockholders, and (D) any financial interest of
such stockholder in the proposal. If notice or public disclosure of the date of
the annual meeting occurs less than 70 days prior to the date of the annual
meeting, stockholders must deliver to the Corporation, or mail and have received
at the Corporation, the proposal and the required attendant information not
later than the close of business on the tenth day following the earlier of (i)
the day on which such notice of the date of the annual meeting was mailed or
(ii) the day on which such public disclosure was made. Nothing in the By-laws
requires the Corporation to include in its proxy statement and proxy for any
annual meeting of stockholders any stockholder proposal which the Corporation is
permitted to exclude pursuant to the rules of the Securities and Exchange
Commission at the time such proposal is received.
If a stockholder wishes to nominate a candidate for election as director at
the annual meeting of stockholders to be held in January 1997, the stockholder
must comply with the Corporation's By-laws with respect to director nominations.
Written notice of the stockholder's intent to make such nomination must be given
to the Secretary of the Corporation, at the principal executive offices of the
Corporation, not later than October 7, 1996. The written notice shall set forth
(A) the name and address of the stockholder and each person whom the stockholder
proposes to nominate as a director; (B) a representation that the stockholder is
a holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (C) a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (D) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission as then in effect; and (E) the consent of
each nominee to serve as a director of the Corporation if so elected. The
presiding officer of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
The preceding two paragraphs are intended to summarize the applicable
By-laws of the Corporation. These summaries are qualified in their entirety by
reference to those By-laws.
THE ANNUAL REPORT OF THE CORPORATION WHICH ACCOMPANIES THIS PROXY STATEMENT
CONTAINS MUCH OF THE INFORMATION CONTAINED IN THE CORPORATION'S ANNUAL REPORT ON
FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. A COPY OF THE FORM
10-K REPORT WILL BE FURNISHED TO STOCKHOLDERS UPON REQUEST WITHOUT CHARGE.
REQUESTS FOR FORM 10-K REPORTS SHOULD BE SENT TO KENYON W. MURPHY, SECRETARY AND
ASSISTANT COUNSEL, NATIONAL SERVICE INDUSTRIES, INC., P.O. BOX 7158, MIDTOWN
STATION, ATLANTA, GEORGIA 30357-0158.
By order of the Board of Directors,
KENYON W. MURPHY
Secretary and Assistant Counsel
14
<PAGE> 17
Graphic Material Appendix
The following graphic or image material appears in the paper format
version of this proxy statement:
1. On pages 2 through 4, pictures of the nominees for director.
2. On page 9, the Performance Graph described and interpreted in tabular/
chart form under that heading within this filing.
<PAGE> 18
NATIONAL SERVICE INDUSTRIES, INC. ANNUAL STOCKHOLDERS MEETING
JANUARY 3, 1996
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned does hereby appoint D. RAYMOND RIDDLE, DON W. HUBBLE, and
KENYON W. MURPHY and each of them proxies of the undersigned with full power of
substitution in each of them to vote at the annual meeting of stockholders of
the Corporation to be held on January 3, 1996 at 10:00 A.M., and at any and all
adjournments thereof, with respect to all shares which the undersigned would be
entitled to vote, and with all powers which the undersigned would possess if
personally present, as follows, and in their discretion upon all other matters
brought before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR:
<TABLE>
<C> <S> <C>
1. Election of Directors: FOR all WITHHOLD VOTE for all nominees
nominees listed below / / listed below / /
(except as indicated to the contrary below)
D. Raymond Riddle, Robert M. Holder, Jr., Don W. Hubble, F. Ross Johnson,
James C. Kennedy, Donald R. Keough, Bryan D. Langton, David Levy, Bernard
Marcus, John G. Medlin, Jr., Herman J. Russell, Betty L. Siegel, and
Erwin Zaban.
(Instruction: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below.)
-------------------------------------------------------------------------
</TABLE>
2. Ratification of appointment of Arthur Andersen LLP as independent
auditors for the Corporation.
FOR / / AGAINST / / ABSTAIN / /
(continued and to be signed on reverse side)
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Dated , 1995
----------------------
---------------------------------
---------------------------------
Please date this proxy and sign
above exactly as your name, or
names, appear hereon. Where there
is more than one owner, each must
sign. When signing in fiduciary
or representative capacity,
please give full title.
