<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
Roto-Rooter, Inc.
.........................................................................
(Name of Registrant as Specified in its Charter)
Roto-Rooter, Inc.
.........................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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-ll_/
.....................................................................
4) Proposed maximum aggregate value of transaction:
.....................................................................
5) Total fee paid: ________________
_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Fee previously paid with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
.....................................................................
<PAGE> 2
ROTO-ROOTER, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1996
The Annual Meeting of Stockholders of Roto-Rooter, Inc. will be held at The
Phoenix Club, 812 Race Street, Cincinnati, Ohio, on Monday, May 20, 1996 at
11:30 a.m. for the following purposes:
(1) To elect directors;
(2) To ratify the selection by the Board of Directors of independent
accountants; and
(3) To transact such other business as may properly be brought before the
meeting.
Stockholders of record at the close of business on March 25, 1996 are
entitled to notice of, and to vote at, the meeting.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED AT YOUR EARLIEST
CONVENIENCE.NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED STATES.
Naomi C. Dallob
Secretary
April 8, 1996
<PAGE> 3
ROTO-ROOTER, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Roto-Rooter, Inc. (hereinafter called the "Company")
of proxies to be used at the Annual Meeting of Stockholders ("Annual Meeting")
of the Company to be held on May 20, 1996 and any adjournments thereof. The
Company's mailing address is 2500 Chemed Center, 255 East Fifth Street,
Cincinnati, Ohio 45202.The approximate date on which this Proxy Statement and
the enclosed proxy are being sent to stockholders is April 8, 1996.Each valid
proxy received in time will be voted at the meeting and, if a choice is
specified on the proxy, the shares represented thereby will be voted
accordingly.The proxy may be revoked by the stockholder at any time before the
Annual Meeting by providing notice to the Secretary.
Only stockholders of record as of the close of business on March 25, 1996
will be entitled to vote at the Annual Meeting or any adjournments thereof.On
such date, the Company had outstanding 5,151,660 shares of common stock, par
value $1 per share ("Common Stock"), entitled to one vote per share.
ELECTION OF DIRECTORS
Nineteen directors are to be elected at the Annual Meeting to serve until
the following annual meeting of stockholders and until their successors are duly
elected and qualified.Set forth below are the names of the persons to be
nominated by the Board of Directors, together with a description of each
person's principal occupation during the past five years and other pertinent
information.The Company has a program under which three nominations for
membership on the Board of Directors are rotated each year among senior officers
of the Company, senior executives of its operating divisions and subsidiaries
and senior executives of Chemed Corporation, a Delaware corporation and the
majority (58 percent) owner of the Company's outstanding Common Stock
("Chemed").The persons considered to be in the rotating group are Ms. Naomi C.
Dallob and Messrs. Richard L. Arquilla, Brian A. Brumm, Gary C. Burger, Spencer
S. Lee, and Timothy S. O'Toole. Ms. Dallob and Messrs. Brumm and O'Toole are
being nominated from the group this year.It is anticipated that additional
executives of Chemed and the Company will be included in this rotating group in
future years.
Unless authority is withheld or names are stricken, it is intended that the
shares covered by each proxy will be voted for the nominees listed.Votes that
are withheld will be excluded entirely from the vote and will have no effect.The
Company anticipates that all nominees listed in this Proxy Statement will be
candidates when the election is held.However, if for any reason any nominee is
not a candidate at that time, proxies will be voted for any substitute nominee
designated by the Board of Directors (except where a proxy withholds authority
with respect to the election of directors).The affirmative vote of a plurality
of the votes cast will be necessary to elect each of the nominees for director.
NOMINEES
<TABLE>
<CAPTION>
<S> <C>
EDWARD L. HUTTON Mr. Hutton is Chairman of the Company and, from 1970 to November 1993,
Director since 1984 has served as President, Chief Executive Officer, and a director of
Age: 76 Chemed, Cincinnati, Ohio (a diversified public corporation with
interests in residential and commercial plumbing and sewer and drain
cleaning services; janitorial supply products and services; medical
and dental supply distribution for private practice; and home health
care services).Since November 1993, Mr. Hutton has served as Chairman
and Chief Executive Officer of Chemed.He is Chairman and a director of
Omnicare, Inc., Cincinnati, Ohio (health care products and services)
("Omnicare"), a public corporation in which Chemed holds a 2.8 percent
ownership interest.He is also Chairman and a director of National
Sanitary Supply Company, Cincinnati, Ohio (janitorial supplies)
("National"), a public corporation in which Chemed holds an 84 percent
ownership interest.Mr. Hutton is the father of Thomas C. Hutton, a
director of the Company.
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
WILLIAM R. GRIFFIN Mr. Griffin is President and Chief Executive Officer of the Company
Director since 1984 and has held these positions since May 1985.Mr. Griffin is also an
Age: 52 Executive Vice President of Chemed and has held this position since
May 1991.Mr. Griffin is a director of Barefoot, Inc., Globe Business
Resources, and Chemed.
BRIAN A. BRUMM Mr. Brumm is a Vice President, Treasurer and the Chief Financial
Director since 1985 Officer of the Company and has held these positions since
Age: 41 August 1984.
JAMES A. CUNNINGHAM Mr. Cunningham is a Senior Chemical Adviser with Schroder
Director since 1990 Wertheim & Co. Incorporated, New York, New York (an investment
Age: 51 banking, asset management and securities firm) and has held this
position since March 1992.Previously, he was a Managing Director
of Furman Selz Incorporated, New York, New York (an institutional
investment company), and held this position from October 1990 to
March 1992. Mr. Cunningham is a director of Chemed and National.
NAOMI C. DALLOB Ms. Dallob is Secretary and General Counsel of the Company and has
Director since 1992 held these positions since August 1994.Previously, from September
Age: 42 1984, she was Assistant Secretary of the Company.Ms. Dallob
is also a Vice President and the Secretary of Chemed and has held these
positions since February 1987 and August 1994, respectively.She is a
director of National.
CHARLES H. ERHART, JR. Mr. Erhart retired as President of W. R. Grace & Co., Boca Raton,
Director since 1985 Florida (international specialty chemicals and health care) ("Grace"),
Age: 70 in August 1990, having previously held this position since
July 1989. Previously, he was Chairman of the Executive Committee
of Grace and held that position from November 1986 to July 1989.He is a
director of Chemed, National and Omnicare.
NEAL GILLIATT Mr. Gilliatt is President of Neal Gilliatt/Stuart Watson, Inc., New York,
Director since 1985 New York (management consulting), and has held this position since
Age: 78 April 1982.On April 1, 1982 he retired as Chairman of the Executive
Committee of the Interpublic Group of Companies, Inc., New York, New York
(advertising and related communications), having held that position since
February 1980. Mr. Gilliatt is a director of Consolidated Products, Inc.
and National.
LAWRENCE J. GILLIS Mr. Gillis is a Vice President of the Company and has held this
Director from April 1985 position since May 1992.Mr. Gillis is also President and Chief
to May 1986 and May 1989 Operating Officer of Roto-Rooter Services Company and has held
to May 1990 and since these positions since October 1994.Previously, he was Senior Vice
May 1991 President-Operations of Roto-Rooter Services Company, from
Age: 61 February 1991 to October 1994.From November 1983 to February
1991, he was a Regional Vice President of Roto-Rooter Services Company.
DOUGLAS B. HARPER Mr. Harper is the Executive Vice President of the Company and has
Director since 1984 held this position since May 1992.Previously, from May 1984 to May
Age: 52 1992, he was a Vice President of the Company.Since October 1980, he has also
served as President of Roto-Rooter Corporation, a subsidiary of the Company.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
WILL J. HOEKMAN Mr. Hoekman is an Executive Vice President of Firstar Bank,
Director since 1985 Des Moines, Iowa, and has held this position since May, 1995.
Age: 50 Previously, he held the position of Senior Vice President
since November 1980. Mr. Hoekman is a director of National.
THOMAS C. HUTTON Mr. Hutton is a Vice President of Chemed and has held this position
Director since 1985 since February 1988. Mr. Hutton is a director of Chemed, National and
Age: 45 Omnicare. He is a son of Edward L. Hutton, Chairman and a director
of the Company.
PATRICK L. JOHNSON Mr. Johnson is a Vice President of the Company and President and
Director since 1984 Chief Executive Officer of Service America Systems, Inc., a subsidiary
Age: 42 of the Company ("Service America"), and has held these positions
since December 1983 and August 1991, respectively. From August 1991
to April 1993, he was Vice Chairman and Chief Executive Officer of
Service America. He also served as a Senior Vice President of
Roto-Rooter Services Company from September 1986 to September 1993.
SANDRA E. LANEY Ms. Laney is Senior Vice President and the Chief Administrative
Director since 1985 Officer of Chemed and has held these positions since November 1993
Age: 52 and May 1991, respectively. Previously, from May 1984 to November
1993, she was a Vice President of Chemed. Ms. Laney is a director of
Chemed, National and Omnicare.
KEVIN J. MCNAMARA Mr. McNamara is Vice Chairman of the Company and has held this
Director since 1986 position since August 1994.Previously, he served as Secretary and
Age: 42 General Counsel of the Company from August 1986 to August 1994. He is
also President of Chemed and has held this position since August
1994.Previously, November 1993 to August 1994, he held the position of
Executive Vice President of Chemed, and, from May 1992 to November
1993, he held the position of Vice Chairman of Chemed and, from August
1986 to May 1992, held the position of Vice President of Chemed. He
also held the positions of General Counsel and Secretary of Chemed
from August 1986 to August 1994.He is a director of Chemed, National
and Omnicare.
JOHN M. MOUNT Mr. Mount is a Principal of Lynch-Mount Associates, Cincinnati, Ohio
Previously a director (management consulting), and has held this position since
from August 1987 to November 1993.From April 1991 to November 1993, Mr. Mount was
April 1991 Senior Vice President of Diversey Corporation, Detroit, Michigan
Age: 54 (specialty chemicals) ("Diversey") and President of Diversey's
DuBois Industrial Division.Previously, from May 1989 to April
1991, Mr. Mount was an Executive Vice President of Chemed and
President of DuBois Chemicals, Inc., then a 100 percent-owned
subsidiary of Chemed ("DuBois"). He held the latter position from
September 1986 to April 1991. He is a director of Chemed and
Omnicare.
TIMOTHY S. O'TOOLE Mr. O'Toole is an Executive Vice President and the Treasurer
Director since 1991 of Chemed and has held these positions since May 1992. He is
Age: 40 also the Chairman and Chief Executive Officer of Patient
Care, Inc., a 100 percent-owned subsidiary of
Chemed. Previously, from February 1989 to May 1992, he held
the positions of Vice President and Treasurer of Chemed. He
is a director of Chemed, Vitas Healthcare Corporation,
National and Omnicare.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
DONALD E. SAUNDERS Mr. Saunders is President of Diversey's DuBois Division and has held
Not previously a director this position since November 1993. From April 1991 to October 1993,
Age: 52 he was Executive Vice President of Diversey and, from January 1991 to March
1991, he was Executive Vice President of DuBois.
D. WALTER ROBBINS, JR. Mr. Robbins retired as Vice Chairman of Grace in January 1987 and
Director since 1985 thereafter became a consultant to Grace until July 1995.He is a
Age: 76 director of Chemed, National and Omnicare.
GEORGE J. WALSH III Mr. Walsh is a partner with the law firm of Gould & Wilkie, New York,
Not previously a director New York, and has held this position since January 1978.He is a
Age: 50 director of Chemed.
</TABLE>
COMPENSATION OF DIRECTORS
Throughout 1995 each member of the Board of Directors who was not a regular
employee of the Company or of a wholly owned subsidiary of the Company was
entitled to be paid directors' fees.Accordingly, executives of Chemed who are
directors of the Company (other than Mr. E. L. Hutton who is the Company's
Chairman) are entitled to receive directors' fees for attending Board and
Committee meetings.Each member of the Board of Directors of the Company was paid
$1,000 for his attendance at each meeting of the Board and $550 for each meeting
of a Committee he attended.The chairman of each Committee was paid
$600.Effective February 7, 1996, the directors' fees were increased and each
member of the Board of Directors who is not a regular employee of the Company or
of a wholly owned subsidiary of the Company (other than Mr. E. L. Hutton) is now
paid $1,075 for his attendance at each meeting of the Board and $600 for each
meeting of a Committee of the Board he attended.The Chairman of each Committee
is paid $675.The following directors who are members of the Incentive Committee
of either the Company or an affiliated company also receive an additional annual
fee of $4,700:Messrs. Cunningham, Erhart, Gilliatt, Hoekman and Robbins.Messrs.
Hoekman and Schnee received $29,800 and $28,600, respectively, for serving on a
special committee which considered Chemed's offer to acquire the shares of the
Company's Common Stock it did not already own.Members of the Board of Directors
are reimbursed for reasonable travel expenses incurred in connection with such
meetings.
On May 15, 1995, each member of the Board of Directors (other than those
serving on the Incentive Committee of either the Company or an affiliated
company) was granted an unrestricted stock award covering 75 shares of the
Company's Common Stock under the Company's 1993 Stock Incentive Plan.Those
directors who are members of the Incentive Committee of either the Company or an
affiliated company were paid the cash equivalent of the 75 share stock award or
$2,050.
COMMITTEES AND MEETINGS OF THE BOARD
The Company has the following Committees of the Board of Directors: Audit
Committee; Compensation Committee; and Incentive Committee.It does not have a
nominating committee of the Board of Directors.
The Audit Committee (a) recommends to the Board of Directors a firm of
independent accountants to audit the Company and its consolidated subsidiaries,
(b) reviews and reports to the Board of Directors on the Company's annual
financial statements and the independent accountants' report on such financial
statements and (c) meets with the Company's senior financial officers, internal
auditors and independent accountants to review audit plans and work and other
matters regarding the Company's accounting, financial reporting and internal
control systems.The Audit Committee consists of Messrs. Gilliatt, Hoekman,
McNamara and Robbins.The Audit Committee met on two occasions in 1995.
The Compensation Committee makes recommendations to the Board of Directors
concerning (a) salary and incentive compensation payable to officers and certain
other key employees of the Company, (b) establishment of incentive compensation
plans and programs generally and (c) adoption and administration of certain
employee benefit plans and programs.The Compensation Committee consists of
Messrs. Erhart, Gilliatt, and T. C. Hutton and Ms. Laney.During 1995, the
Compensation Committee met on four occasions.
4
<PAGE> 7
The Incentive Committee administers the Company's 1984, 1987, 1990, 1993 and
1995 Stock Incentive Plans. In addition, the Incentive Committee makes (a)
grants of stock options and stock awards to key employees of the Company and (b)
recommendations to the Board of Directors concerning additional year-end
contributions by the Company under the Company's Retirement and Savings Plan.The
Incentive Committee consists of Messrs. Hoekman, Erhart, and Cunningham. The
Incentive Committee met on one occasion during 1995.
During 1995, there were five meetings of the Board of Directors.Each
incumbent director attended at least 75 percent of the aggregate of (a) the
total number of meetings held by the Board of Directors and (b) the total number
of meetings held by all Committees of the Board of Directors on which he served
which were held during the period for which he was a director or member of any
such Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Laney is the Chief Administrative Officer and Senior Vice President of
Chemed and Mr. T. C. Hutton is a Vice President of Chemed.Both are directors of
Chemed, of which Mr. Griffin is also an Executive Vice President and a
director.See "Certain Arrangements and Transactions-Transactions with Chemed" on
page 14.
EXECUTIVE COMPENSATION
JOINT REPORT OF THE COMPENSATION COMMITTEE AND INCENTIVE COMMITTEE ON EXECUTIVE
COMPENSATION
The Company believes that executive compensation must align executive
officers' interests with those of the Company's stockholders and that such are
best served by having compensation directly and materially linked to financial
and operating performance criteria which when successfully achieved will enhance
stockholder value.
The Company attempts to achieve this objective with an executive compensation
package for its senior executives which combines base salary, annual cash
incentive compensation, long-term incentive compensation in the form of stock
options and restricted stock awards along with various benefit plans, including
pension plans, savings plans and medical benefits generally available to the
employees of the Company.
The executive compensation program is administered through the coordinated
efforts of the Compensation Committee and the Incentive Committee of the Board
of Directors.The membership of both committees is comprised of outside directors
(i.e. non-employees of the Company), although the Compensation Committee
includes two officers of Chemed (see "Compensation Committee Interlocks and
Insider Participation" above). The Compensation Committee is responsible for the
review, approval and recommendation to the Board of Directors of matters
concerning base salary and annual cash incentive compensation for key executives
of the Company.The recommendations of the Compensation Committee on such matters
must be approved by the full Board of Directors.The Incentive Committee
administers the Company's stock incentive plans under which it reviews and
approves grants of stock options and restricted stock awards.Both the
Compensation and Incentive Committees may use their discretion to set executive
compensation where, in their collective judgement, external, internal or
individual circumstances warrant.
Following is a discussion of the components of the executive officer
compensation program.
In determining base salary levels, the Compensation Committee takes into
account the magnitude of responsibility of the position, individual experience
and performance and specific issues particular to the Company.In general, base
salaries are set at levels believed by this Compensation Committee to be
sufficient to attract and retain qualified executives when considered with the
other components of the Company's compensation structure.
5
<PAGE> 8
The Compensation Committee believes that a significant portion of total cash
compensation should be linked to annual performance criteria.Consequently, the
purpose of annual incentive compensation for senior executives and key managers
is to provide a direct financial incentive in the form of an annual cash bonus
to these executives to achieve their business unit's and the Company's annual
goals.Operational and financial goals are established at the beginning of each
fiscal year and generally take into account such measures of performance as
sales and earnings growth, profitability, cash flow and return on
investment.Other non-financial measures of performance relate to organizational
development, product or service expansion and strategic positioning of the
Company's assets.
Individual performance is also taken into account in determining individual
bonuses.It is the Company's belief that bonuses as a percent of a senior
executive's salary should be sufficiently high to provide a major incentive for
achieving annual performance targets.Bonuses for senior executives of the
Company generally range from 25-50 percent of base salary.
The stock option and restricted stock award program forms the basis of the
Company's long-term incentive plans for executive officers and key managers.The
objective of these plans is to align executive and long-term stockholder
interests by creating a strong and direct link between executive pay and
stockholder return.
Stock options and restricted stock awards generally are granted annually and
are generally regarded as the primary incentive for long-term performance as
they are granted at fair market value and have vesting restrictions which
generally lapse over three or four year periods.The Committee considers each
grantee's current option and award holdings in making grants.Both the amounts of
restricted stock awards and proportion of stock options increase as a function
of higher salary and position of responsibility within the Company.
The Compensation and Incentive Committees have considered, and are continuing
to review, the qualifying compensation regulations issued by the Internal
Revenue Service in December 1993.As compensation for any individual is not
currently expected to exceed the $1 million base, the Company is not presently
affected by these regulations.
The base salary of Mr. Griffin, the President and Chief Executive Officer of
the Company, was increased at an annualized rate of 6.5 percent in 1995 to a
base rate of $310,000.His cash bonus in respect of 1995 services was $154,000,
which represented an increase of $20,000 over 1994 and 50 percent of his base
salary.Restricted stock awards were granted to Mr. Griffin in respect of 1995
services having a value of $115,000.Factors considered in establishing the
compensation levels in 1995 for Mr. Griffin included Company sales growth of 4.5
percent and, excluding expenses related to Chemed's offer to acquire the shares
of the minority stockholders, net income growth of 14.4 percent.The Compensation
Committee and the Incentive Committee believe that Mr. Griffin's base salary,
the increases in his cash bonus and the restricted stock awards granted to Mr.
Griffin in respect of 1995 services are consistent with his performance as
measured by these factors and the criteria discussed above.
<TABLE>
<CAPTION>
Compensation Committee Incentive Committee
--------------------- -----------------
<S> <C> <C>
C. H. Erhart, Jr. J. A. Cunningham
N. Gilliatt C. H. Erhart, Jr.
T. C. Hutton W. J. Hoekman
S. E. Laney
</TABLE>
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table shows the compensation paid to the Chief Executive
Officer and the four most highly compensated executive officers of the Company
for the past three years for all services rendered in all capacities to the
Company and its subsidiaries:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation Awards
- ---------------------------------------------------------------------------------------------------------------------------
Securities
Securities Underlying
Name Roto-Rooter Underlying Service All
and Restricted Roto-Rooter America Other
Principal Stock Stock Stock Compen-
Position Year Salary ($) Bonus ($) Awards ($) (1) Options (#) Options (#) sation ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
W. R. Griffin 1995 $298,917 $154,000 $115,000 -0- -0- $127,084 (2)
President 1994 276,417 134,000 100,000 10,000 -0- 68,340
and CEO 1993 260,000 121,000 120,000 31,500 10,000 81,784
D. B. Harper 1995 188,180 86,000 60,000 -0- -0- 65,305 (3)
Executive 1994 180,514 75,500 53,000 5,000 -0- 39,284
Vice President 1993 174,737 71,000 50,000 15,000 -0- 47,816
L. J. Gillis 1995 182,833 72,600 80,000 -0- -0- 53,776 (4)
Vice President 1994 172,217 60,500 69,000 5,000 -0- 37,601
1993 164,000 52,500 60,000 17,000 -0- 45,423
P. L. Johnson 1995 162,422 17,800 20,000 -0- -0- 37,097 (5)
Vice President 1994 157,058 27,800 25,000 4,000 -0- 44,168
1993 149,400 48,000 50,000 15,000 13,000 40,554
B. A. Brumm 1995 114,000 47,400 45,000 -0- -0- 41,199 (6)
Vice President, 1994 107,698 41,200 40,000 4,000 -0- 27,754
Treasurer and 1993 102,750 37,200 40,000 14,000 4,000 30,113
Chief Financial
Officer
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The number and value of aggregate restricted stock holdings in Roto-Rooter
Common Stock at December 31, 1995 were as follows:W. R. Griffin--6,707
shares, $219,654; D.B. Harper--3,252 shares, $106,503; L.J. Gillis--4,120
shares, $134,930; P.L. Johnson--2,121 shares, $69,463; and B. A.
Brumm--2,505 shares, $82,039.Dividends are paid to holders of restricted
stock who are entitled to vote these shares, whether or not
vested.Restricted stock awards vest evenly over three-year
periods.Restricted stock awards were granted in February 1994, February
1995 and February 1996, as incentive compensation earned in 1993, 1994 and
1995, respectively.
(2) Includes a $16,767 contribution to the Company's Retirement and Savings
Plan ("Savings Plan"), a $81,900 contribution to the Company's Deferred
Compensation Plan, a $2,339 premium payment under the Company's Executive
Salary Protection Plan ("ESP"), a $2,335 premium payment for term life
insurance, and $23,743, which is the value of premium payments made by the
Company for the benefit of Mr. Griffin under a split dollar life insurance
policy, which provides for the refund of premiums to the Company upon
termination of the policy ("Split Dollar Policy").
(3) Includes a $15,069 contribution to the Savings Plan, a $33,536 contribution
to the Deferred Compensation Plan, a $1,829 premium payment for term life
insurance, and $14,871, which is the value of premium payments for a Split
Dollar Policy.
(4) Includes a $14,396 contribution to the Savings Plan, a $38,038 contribution
to the Deferred Compensation Plan, and a $1,342 premium payment for term
life insurance.
(5) Includes a $3,234 contribution to the Service America Retirement and
Savings Plan, a $24,469 contribution to the Service America Deferred
Compensation Plan, a $430 premium payment for term life insurance, and
$8,964, which is the value of premium payments for a Split Dollar Policy.
(6) Includes a $13,451 contribution to the Savings Plan, a $20,552 contribution
to the Deferred Compensation Plan, a $927 premium payment for term life
insurance, and $6,269, which is the value of premium payments for a Split
Dollar Policy.
</TABLE>
7
<PAGE> 10
The following table summarizes Roto-Rooter stock option exercises during 1995
and the year-end number and value of unexercised stock options held by the
executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Aggregated Roto-Rooter Stock Option Exercises in
1995 and Roto-Rooter Stock Option Values
as of December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------
Value of
Unexercised
In-the-Money
Shares Number of Unexercised Options
Acquired Options at 12/31/95 (#) at 12/31/95 ($)
On Value ------------------------------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. R. Griffin 25,500 $391,975 18,250 23,250 $146,200 $174,950
D. B. Harper -0- -0- 39,750 11,250 531,426 84,662
L. J. Gillis 22,125 295,635 -0- 12,250 -0- 92,162
P. L. Johnson 16,300 251,480 10,000 10,500 92,099 80,349
B. A. Brumm 9,700 169,400 8,000 10,000 65,100 76,600
</TABLE>
The table below shows information concerning the year-end number and value of
unexercised Service America stock options held by the executive officers named
in the Summary Compensation Table.
SERVICE AMERICA STOCK OPTION VALUES AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at 12/31/95 (#) at 12/31/95 ($)
--------------------------------- ---------------------------------
Name (1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
W. R. Griffin 17,000 8,000 $ -0- $ -0-
D. B. Harper -0- -0- -0- -0-
L. J. Gillis -0- -0- -0- -0-
P. L. Johnson 32,600 10,400 -0- -0-
B.A. Brumm 4,300 3,200 -0- -0-
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) None of the named executive officers exercised Service America stock
options during 1995.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Griffin,
Harper, Gillis, Johnson and Brumm.Mr. Griffin's employment agreement provides
for his continued employment as an executive employee of the Company through
October 31, 2000, subject to earlier termination under certain circumstances, at
a base salary of $310,000 per annum or such higher amounts as the Board of
Directors may determine as well as participation in incentive compensation
plans, stock incentive plans and other employee benefit plans.In the event of
termination without cause or a material reduction in authority or
responsibility, the agreement provides that Mr. Griffin will receive severance
payments equal to 150 percent of his then current base salary plus the amount of
incentive compensation most recently paid or approved in respect of the previous
year, and the fair market value of all stock awards which have vested during the
twelve months prior to termination, for the balance of the term of the
agreement.Messrs. Harper, Gillis, Johnson and Brumm have employment agreements
which provide for their continued employment as executive employees of the
Company through October 31, 2000, November 6, 1998, October 31, 1998 and October
31, 1998, respectively, and are identical in all material respects to that of
Mr. Griffin, except their respective agreements provide for a base salary of
$193,700, $191,000, $165,500 and $118,200 per annum or such higher amounts as
the Board of Directors may determine.
8
<PAGE> 11
COMPARATIVE STOCK PERFORMANCE
The graph below compares the yearly percentage change in the Company's
cumulative total stockholder return on the Common Stock (as measured by dividing
(i) the sum of (A) the cumulative amount of dividends for the period December
31, 1990 to December 31, 1995, assuming dividend reinvestment, and (B) the
difference between the Company's share price at December 31, 1990 and December
31, 1995; by (ii) the share price at December 31, 1990) with (1) the cumulative
total return, assuming reinvestment of dividends, of the NASDAQ Stock Index and
(2) the cumulative total return, assuming reinvestment of dividends, of the
group of companies set forth in the footnote to the graph.
ROTO-ROOTER, INC.
Total Cumulative Stockholder Return for
Five-Year Period Ending December 31, 1995
Roto-Rooter 100.00 101.50 141.68 180.73 135.50 206.29
- --------------------------------------------------------------------------------
NASDAQ (US) 100.00 160.56 186.87 214.51 209.69 296.30
- --------------------------------------------------------------------------------
Peer Group 100.00 114.27 119.38 127.63 140.05 165.90
(1) Since the Company does not believe that it can reasonably identify a peer
group on an industry or line of industry basis, for purposes of comparison,
the Company has selected the following companies which have similar market
capitalizations: Amplicon Inc., Chittenden Corp., Ecology and Environment
Inc.--Class A, Groundwater Technology Inc., Instron Corp., Knape & Vogt
Manufacturing Co., MacDermid Inc., Quaker Chemical Corp., and Tech-Sym
Corp.
9
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the only persons
who are known to be the beneficial owners of more than 5 percent of the Common
Stock of the Company:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial of Beneficial of
Title of Class Owner Ownership (1) Class (4)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Chemed Corporation 2,990,333 shares; 56.5%
Par Value 2600 Chemed Center Direct (2)
$1 Per Share Cincinnati, Ohio
Common Stock State Farm Mutual 463,066 shares; 8.7%
Par Value Automobile Insurance Direct and through
$1 Per Share Company affliliated entities (3)
One State Farm Plaza
Bloomington, Illinois
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Footnotes:
(1) As reported to the Securities and Exchange Commission by the beneficial
owners.
(2) Sole voting power, 2,990,333 shares; sole dispositive power, 2,990,333
shares.
(3) Sole voting power, 463,066 shares; sole dispositive power, 463,066 shares.
(4) For purposes of calculating Percent of Class, all shares subject to stock
options which were exercisable within 60 days from December 31, 1995 were
assumed to have been issued.
10
<PAGE> 13
The following table sets forth information as of December 31, 1995 with
respect to the Capital Stock of Chemed and the Common Stock of the Company
beneficially owned by all nominees and directors of the Company, each of the
named executive officers in the Summary Compensation Table, and the Company's
directors and executive officers as a group:
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial of
Name Title of Class Ownership (1) Class (2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
E. L. Hutton Chemed Capital Stock 42,321 Direct
36,750 Option
3,967 Trustee
Roto-Rooter Common Stock 35,089 Direct
12,500 Option
7,372 Trustee
W. R. Griffin Chemed Capital Stock 2,628 Direct
7,500 Option
Roto-Rooter Common Stock 22,536 Direct
18,250 Option
B. A. Brumm Chemed Capital Stock None
Roto-Rooter Common Stock 14,274 Direct
8,000 Option
J. A. Cunningham Chemed Capital Stock 1,000 Direct
500 Trustee
Roto-Rooter Common Stock 1,000 Direct
N. C. Dallob Chemed Capital Stock 6,846 Direct
750 Option
Roto-Rooter Common Stock 764 Direct
250 Option
C. H. Erhart, Jr. Chemed Capital Stock 1,500 Direct
Roto-Rooter Common Stock 6,666 Direct
N. Gilliatt Chemed Capital Stock 3,400 Direct
Roto-Rooter Common Stock 6,666 Direct
L. J. Gillis Chemed Capital Stock None
Roto-Rooter Common Stock 15,252 Direct
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial of
Name Title of Class Ownership (1) Class (2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
D. B. Harper Chemed Capital Stock 100 Direct
Roto-Rooter Common Stock 11,919 Direct
39,750 Option
W. J. Hoekman Chemed Capital Stock 109,110 Trustee (3) 1.1%
Roto-Rooter Common Stock 73,700 Trustee (3) 1.4%
T. C. Hutton Chemed Capital Stock 16,607 Direct
1,750 Option
4,467 Trustee (4)
Roto-Rooter Common Stock 4,724 Direct
250 Option
7,372 Trustee
P. L. Johnson Chemed Capital Stock None
Roto-Rooter Common Stock 11,693 Direct
10,000 Option
S. E. Laney Chemed Capital Stock 23,319 Direct
31,000 Option
Trustee (4)
Roto-Rooter Common Stock 2,461 Direct
250 Option
K. J. McNamara Chemed Capital Stock 12,611 Direct
7,500 Option
Trustee (4)
Roto-Rooter Common Stock 1,405 Direct
250 Option
J. M. Mount Chemed Capital Stock 7,520 Direct
Roto-Rooter Common Stock 1,000 Direct
T. S. O'Toole Chemed Capital Stock 12,450 Direct
5,250 Option
Roto-Rooter Common Stock 1,759 Direct
1,750 Option
D. W. Robbins, Jr. Chemed Capital Stock 2,000 Direct
Roto-Rooter Common Stock 1,000 Direct
D. E. Saunders Chemed Capital Stock 1720 Direct
Roto-Rooter Common Stock None
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
Amount and Nature Percent
of Beneficial of
Name Title of Class Ownership (1) Class (2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
J. E. Schnee Chemed Capital Stock None
Roto-Rooter Common Stock 325 Direct
G. J. Walsh III Chemed Capital Stock 1,000 Direct
Roto-Rooter Common Stock None
Directors and Executive Chemed Capital Stock 126,502 Direct 1.2%
Officers as a Group 113,577 Trustee (5) 1.1%
(20 persons) 90,875 Option
Roto-Rooter Common Stock 137,533 Direct 2.6%
81,072 Trustee (5) 1.5%
91,250 Option 1.7%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOOTNOTES TO STOCK OWNERSHIP TABLE
(1) Includes securities beneficially owned (a) by the named persons or group
members, their spouses and their minor children (including shares of Chemed
Capital Stock and Roto-Rooter Common Stock allocated as at December 31, 1995 to
the account of each named person or member of the group under the Company's
Retirement and Savings Plan, Chemed's Savings and Investment Plan, and Chemed's
Employee Stock Ownership Plan), (b) by trusts and custodianships for their
benefit and (c) by trusts and other entities as to which the named person or
group has or shares the power to direct voting or investment of
securities."Direct" refers to securities in categories (a) and (b) and "Trustee"
to securities in category (c).Where securities would fall into both "Direct" and
"Trustee" classifications, they are included under "Trustee" only."Option"
refers to shares which the named person or group has a right to acquire within
60 days from December 31, 1995.For purposes of determining the Percent of Class,
all shares subject to stock options which were exercisable within 60 days from
December 31, 1995 were assumed to have been issued.
(2) Percent of Class under 1.0 percent is not shown.
(3) Comprises shares with respect to which Mr. Hoekman shares the power to
direct the voting as a member of a bank trust committee.
(4) Messrs. T. Hutton, McNamara and Ms. Laney are trustees of the Chemed
Foundation which holds 57,971 shares of Chemed's Capital Stock over which the
trustees share both voting and investment power.This number is included in the
total number of "Trustee" shares held by the Directors and Executive Officers as
a Group but is not reflected in the respective holdings of the individual
trustees.
(5) Shares over which more than one individual holds beneficial ownership
have only been counted once in calculating the aggregate number of shares owned
by Directors and Executive Officers as a Group.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
regulations thereunder, the Company's officers and directors and persons who own
more than ten percent of the Company's Common Stock are required to file reports
with respect to their ownership and changes in ownership of the Company's Common
Stock with the Securities and Exchange Commission ("SEC").In addition, such
persons are required to forward copies of such reports to the Company.Based on a
review of the copies of such reports furnished to the Company and on the written
representation of those persons who have not furnished such reports that with
respect to 1995 no reports on Form 5 were required to be filed with the SEC, the
Company believes that during the period January 1, 1995 through December 31,
1995, except for Mr. Gillis, the Company's officers and directors and greater
than 10 percent stockholders have complied with all Section 16(a) reporting
requirements.Mr. Gillis belatedly reported on Form 4s an award of restricted
stock, the exercise of stock options, and the sale of stock.
13
<PAGE> 16
CERTAIN ARRANGEMENTS AND TRANSACTIONS
TRANSACTIONS WITH CHEMED
CASH MANAGEMENT AND FINANCING. The Company regularly deposits funds in excess
of its working capital requirements with Chemed for short-term investment and
Chemed, on occasion, may make short-term loans to the Company for working
capital needs.These unsecured deposits and loans bear interest at the rate
determined on the basis of United States Treasury Notes.At January 31, 1996, the
Company had $16,392,000 on deposit with Chemed.During the period January 1, 1995
through January 31, 1996, the largest amount on deposit with Chemed was
$26,266,000.Chemed paid the Company $1,424,000 during 1995 as interest on
amounts deposited by the Company with Chemed.
During 1991, Chemed loaned to the Company $4,200,000 to partially finance the
acquisition of Service America (formerly Convenient Home Services, Inc.).This
loan bears interest at the rate determined on the basis of United States
Treasury Notes.In addition, during 1993, Chemed loaned to the Company $4,224,000
to partially finance the acquisition of Encore Services Systems, Inc., a
subsidiary of Service America.This loan bears interest at the fixed rate of 8.15
percent.At January 31, 1996, the Company had $8,424,000 on loan from Chemed,
which was the largest amount on loan from Chemed at any time during the period
January 1, 1995 through January 31, 1996.The Company paid Chemed $631,000 during
1995 as interest on amounts loaned to the Company from Chemed.
SERVICE AND SUPPLY ARRANGEMENTS. As a subsidiary of Chemed and pursuant to an
agreement with Chemed, the Company has used and will continue to use various
financial, insurance, tax, audit, legal and other services provided by
Chemed.The Company pays fees for these services based on Chemed's costs.During
1995, the Company paid Chemed $305,000 for such services.
In addition, the Company has entered into a sublease agreement with Chemed
pursuant to which the Company leases approximately 23,500 square feet of office
space from Chemed on the 25th and 30th floors of the Chemed Center, Cincinnati,
Ohio, at a rental equal to that paid by Chemed under its lease and for a term
coterminous with Chemed's lease term which expires in 2006.For 1995, the Company
paid Chemed lease payments under the sublease aggregating $491,000.
STATE AND LOCAL INCOME TAXES. Should any state or locality impose, or should
Chemed and the Company elect to pay, an income or franchise tax by combining or
consolidating all or part of the income, losses, properties, payrolls, sales or
other attributes of Chemed and the Company or one or more of their respective
subsidiaries, the Company will reimburse Chemed for the Company's and its
subsidiaries' share of such franchise or income tax.The amount to be reimbursed
is equal to the tax that would have been required to be paid had the Company or
any of its subsidiaries included in such combined or consolidated return filed a
separate return without the inclusion of any income, losses, properties,
payrolls, sales or other attributes of any related parent or subsidiary
corporation.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants for the Company and its consolidated subsidiaries for
the year 1996.This firm has acted as independent accountants for Chemed since
1970 and for the Company and its consolidated subsidiaries since 1980.Although
the submission of this matter to the stockholders is not required by law or by
the By-Laws of the Company, the selection of Price Waterhouse LLP will be
submitted for ratification at the Annual Meeting.The affirmative vote of the
shares represented at the Annual Meeting, with abstentions having the effect of
negative votes and broker non-votes deemed to be absent shares, will be
necessary to ratify the selection of Price Waterhouse LLP as independent
accountants for the Company and its consolidated subsidiaries for the year
1996.If the selection is not ratified at the meeting, the Board of Directors
will reconsider its selection of independent accountants.
14
<PAGE> 17
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
It is expected that a representative of Price Waterhouse LLP will be present
at the Company's Annual Meeting. Such representative shall have the opportunity
to make a statement if he desires to do so and shall be available to respond to
appropriate questions raised at the meeting.
STOCKHOLDER PROPOSALS
Any proposals by stockholders intended to be included in the proxy materials
for presentation at the 1997 Annual Meeting of Stockholders must be in writing
and received by the Secretary of the Company no later than December 6, 1996.
OTHER MATTERS
As of the date of this Proxy Statement, the management knows of no other
matters which will be presented for consideration at the Annual Meeting.However,
if any other business should come before the meeting, the persons named in the
enclosed proxy (or their substitutes) will have discretionary authority to take
such action as shall be in accordance with their best judgment.
EXPENSES OF SOLICITATION
The expense of soliciting proxies in the accompanying form will be borne by
the Company.In addition to solicitation by mail, the Company will request banks,
brokers and other persons holding shares beneficially owned by others to send
proxy materials to the beneficial owners and to secure their voting
instructions, if any. The Company will reimburse such persons for their expenses
in so doing.Officers and regular employees of the Company may, without extra
remuneration, solicit proxies personally, by telephone or by telegram from some
stockholders if such proxies are not promptly received.This Proxy Statement and
the accompanying Notice of Meeting are sent by order of the Board of Directors.
Naomi C. Dallob
Secretary
April 8, 1996
15
<PAGE> 18
ROTO-ROOTER, INC.
2500 CHEMED CENTER
255 EAST FIFTH STREET PLEASE MARK, SIGN, DATE AND RETURN PROXY
CINCINNATI, OHIO 45202 CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
________________________________________________________________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS, MAY 20, 1996.
The undersigned hereby appoints E. L. Hutton, W. R. Griffin and Kevin J.
McNamara as Proxies, each with the power to appoint a substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side,
all the shares of stock of Roto-Rooter, Inc. held of record by the undersigned
on March 25, 1996, at the Annual Meeting of Stockholders to be held on May 20,
1996, or at any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<TABLE>
<CAPTION>
(1) Election of Directors (mark only ONE box):
<S> <C> <C>
/ / FOR all nominees / / FOR nominees listed EXCEPT / / WITHHOLD ALL AUTHORITY
listed. THOSE WHOSE NAMES I HAVE to vote in the selection
STRICKEN. of directors
Edward L. Hutton Neal Gilliatt Sandra E. Laney
William R. Griffin Lawrence J. Gillis Kevin J. McNamara
Brian A. Brumm Douglas B. Harper John M. Mount
James A. Cunningham Will J. Hoekman Timothy S. O'Toole
Naomi C. Dallob Thomas C. Hutton Donald E. Saunders
Charles H. Erhart, Jr. Patrick L. Johnson D. Walter Robbins, Jr.
George J. Walsh III
(2) Ratifying the selection of independent accountants.
/ / FOR / / AGAINST / / ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS (1) AND (2).
DATED: _______________________________________, 1996
(Be sure to date Proxy)
SIGNED: _____________________________________________
_____________________________________________
(Please sign exactly as names appear at left)
When signed on behalf of a corporation,
partnership, estate, trust, or other
stockholder, state your title or capacity
or otherwise indicate that you are
authorized to sign.
