<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 240.14a-11(c) or 240.14a-12
ARAMARK CORPORATION
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ARAMARK CORPORATION
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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.:
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3) Filing Party:
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4) Date Filed:
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[GRAPHIC OMITTED]
Notice of Annual Meeting of Stockholders
To our Stockholders:
The annual meeting of the stockholders of ARAMARK Corporation, a
Delaware corporation, will be held on the Sixteenth Floor of ARAMARK Tower, 1101
Market Street, Philadelphia, Pennsylvania, on Tuesday, February 11, 1997, at
3:00 p.m. Philadelphia time, for the following purposes:
1. To elect directors for the ensuing year.
2. To consider and act upon a proposal to approve the CEO Annual
Performance Bonus Arrangement.
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on December 27,
1996 as the record date for determination of the stockholders entitled to notice
of and to vote at the meeting. A list of such stockholders will be open for
examination by stockholders for any purpose germane to the meeting for a period
of ten days prior to the meeting at the offices of ARAMARK at ARAMARK Tower,
1101 Market Street, Philadelphia, Pennsylvania.
Whether or not you expect to attend the meeting in person, please fill
in, date and sign the enclosed proxy card and mail it in the enclosed return
envelope provided for that purpose.
Martin W. Spector
Executive Vice President
and Secretary
Dated: January 7, 1997
<PAGE>
[GRAPHIC OMITTED]
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Solicitation by Board of Directors
This statement is furnished in connection with the solicitation by the
Board of Directors of ARAMARK Corporation (herein called "ARAMARK" or the
"Company") of proxies for use at the annual meeting of its stockholders to be
held on February 11, 1997, and at any adjournment thereof. Stockholders who
execute proxy cards may revoke them at any time before they are voted by
delivering a later-dated proxy card or written notice of revocation to the
Secretary of ARAMARK, or by personally notifying the Secretary of ARAMARK at the
meeting.
ARAMARK's executive offices are located at ARAMARK Tower, 1101 Market
Street, Philadelphia, Pennsylvania 19107 (telephone: 215-238-3000). It is
expected that proxy cards and proxy statements will be mailed to stockholders on
or about January 7, 1997.
Shares Outstanding and Voting Rights
Only holders of shares of Common Stock Class A and Common Stock Class B
of record at the close of business on December 27, 1996 are entitled to vote at
the meeting. On that date, there were outstanding 1,936,243 shares of Common
Stock Class A and 21,810,324 shares of Common Stock Class B (together, the
"Common Stock"). Each holder of Common Stock entitled to vote will have the
right to one vote for each such share standing in his, her or its name on the
books of ARAMARK.
All shares represented in person or by proxy will be counted for quorum
purposes. Where a stockholder does not specify a choice on a properly signed and
dated proxy card, the shares will be voted as recommended by the Board of
Directors. Where a stockholder, by marking a proxy card, withholds a vote on the
election of any director, such vote will not be counted as entitled to vote
(i.e., will not be counted as a vote cast) with respect to that election.
Abstentions will be counted as votes cast (i.e., will be counted as votes
against) on any matter to which they relate.
<PAGE>
1. Election of Directors
Ten directors will be elected by a plurality of the votes cast at the
meeting. The persons listed below are proposed to be elected to serve until the
next annual meeting of stockholders and the election and qualification of their
respective successors:
Joseph Neubauer Mitchell S. Fromstein
Robert J. Callander Edward G. Jordan
Alan K. Campbell Thomas H. Kean
Ronald R. Davenport Reynold C. MacDonald
Lee F. Driscoll, Jr. James E. Preston
If, due to circumstances not now foreseen, any of the nominees becomes
unavailable for election, the proxy agents named in the proxy cards will have
the right to vote for a substitute in each case, or the Board of Directors will
take appropriate action to reduce the number of directors.
2. CEO Annual Performance Bonus Arrangement
The CEO Annual Performance Arrangement ("Arrangement") is intended to
provide for an annual performance bonus for the CEO upon the attainment of
preestablished performance goals, which annual performance bonus will be
excluded from the computation of compensation for purposes of the U.S. income
tax deductibility limitation on executive officer compensation.
Background. Current U.S. income tax laws deny a deduction for certain
compensation in excess of $1 million per year paid to the executive officers
named under "Executive Compensation." Certain compensation, including
compensation the payment of which is deferred by the executive ("deferred
compensation") and compensation paid based on the achievement of preestablished
performance goals ("performance-based compensation"), is excluded from this
deduction limit. For compensation to qualify for the performance-based
compensation exclusion, the material terms pursuant to which the
performance-based compensation is to be paid, including the performance goals,
must be disclosed to, and approved by, the stockholders prior to the payment. In
1996 and previous years, Mr. Neubauer participated in the Company's management
incentive bonus plan. (Although the award of bonuses under that plan is based
upon attainment of performance goals, such plan does not meet the
performance-based compensation requirements.) Mr. Neubauer elected to defer any
compensation in excess of $1 million and accordingly, his compensation was not
subject to the U.S. tax deductibility limitation on executive officer
compensation. Mr. Neubauer has indicated that in future years, he may not elect
to defer such compensation. The Board of Directors has approved and recommended
for stockholder approval, an annual bonus arrangement for the Company's Chief
Executive Officer ("CEO") which is designed to qualify as performance-based
compensation under current U.S. income tax laws.
Description of the Arrangement. The Human Resources, Compensation and
Public Affairs Committee (the "Committee") has been designated by the Board of
Directors to administer the provisions of the Arrangement. The Board retains the
authority to designate a different committee to administer the Arrangement. In
any event, only members of the Committee who are independent directors may vote
on matters relating to the Arrangement. The Committee is required generally to
set one or more performance goals for a fiscal year not later than 90 days after
the beginning of such fiscal year. Under the Arrangement, the annual performance
goals must be based on attainment of target levels of, or a targeted percentage
2
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increase in, one or more of the following criteria: (1) Earnings Before Interest
and Taxes ("EBIT"), (2) Return on Net Assets ("RONA"), (3) Net Income, (4) After
Tax Return on Investment ("ATROI"), (5) Revenues, (6) Earnings Per Share, (7)
Total Shareholder Return, (8) Return on Equity ("ROE") or (9) Return on
Investment ("ROI"). The maximum annual performance bonus payable in respect of
any fiscal year under the Arrangement is the least of the following amounts: (i)
$2,200,000, (ii) 150% of the base salary of the CEO at the beginning of such
fiscal year, and (iii) such amount as may be set by the Committee at the time it
establishes the annual performance goals. The Committee shall increase the
attainment of performance goals to offset (a) a change in accounting standards,
(b) a significant acquisition or divestiture, (c) a significant capital
transaction, or (d) any other unusual, nonrecurring items which are separately
identified and quantified in ARAMARK's audited financial statements, so long as
such accounting change is required or such transaction or nonrecurring item
occurs after the goals for the fiscal year are established. The Committee at its
sole discretion may reduce, but may not increase, the amount of the annual
performance bonus that would be otherwise payable under the Arrangement. In
making this determination, the Committee may take into consideration any and all
factors relating to ARAMARK's and the CEO's performance for such fiscal year.
The Arrangement shall be effective, beginning for fiscal year 1997, upon its
approval by the stockholders of ARAMARK. The Committee may, without further
action by the stockholders, amend the Arrangement from time to time as it deems
desirable; provided, that no such amendment may increase the employees who may
receive compensation under the Arrangement, change the permitted performance
measures, increase the maximum bonus payable under the Arrangement or make any
other change requiring further approval under U.S. income tax laws. The
Arrangement, unless earlier terminated, will be effective for each of the five
fiscal years 1997 through 2001. The Board of Directors may, in its discretion,
terminate the Arrangement at any time.
Stockholder Approval. If the Arrangement is not approved, then Mr.
Neubauer will continue to participate in the management incentive bonus plan to
the same extent as in previous years. To be approved, the Arrangement must
receive the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the meeting (voting as
a single class).
The Board of Directors recommends a vote FOR the Arrangement.
3
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Directors
Name (Age as of November 1, 1996) Office Held (Committee) Since
- --------------------------------- ----------------------- -----
Joseph Neubauer (55).................... Chairman and President 1979
and Director (1)(2)(3)
Robert J. Callander (65)................ Director(2)(3)(4)(5) 1986
Alan K. Campbell (73)................... Director (4) 1980
Ronald R. Davenport (60)................ Director(1)(4)(5) 1980
Lee F. Driscoll, Jr. (70)............... Director(1) 1973
Mitchell S. Fromstein (68).............. Director (3)(4) 1990
Edward G. Jordan (66)................... Director(1)(2)(3) 1980
Thomas H. Kean (61)..................... Director (3) (4) 1994
Reynold C. MacDonald (78)............... Director(1)(2)(3) 1977
James E. Preston (63)................... Director (3)(4) 1993
- ---------------------
The numbers following the offices held by the directors indicate membership in
the following Board committees during fiscal 1996:
(1) Audit and Corporate Practices
(2) Executive
(3) Finance
(4) Human Resources, Compensation and Public Affairs
(5) Stock
Directors Meetings and Committees
ARAMARK's Board of Directors held six meetings during fiscal 1996. The
Board has certain standing committees which are described below. During fiscal
1996, each director attended at least 75% of the aggregate of all Board meetings
and all meetings of committees on which he served.
The Audit and Corporate Practices Committee reviews the periodic
financial reports and the accounting principles used by the Company and the
adequacy of the Company's system of internal controls. It also reviews with the
independent public accountants and the internal audit department the scope of
their audits, their audit reports and any recommendation made by them to
determine whether these activities are reasonably designed to assure the
soundness of accounting and financial procedures. It recommends the action to be
taken with respect to the appointment, and approves the compensation, of the
Company's independent public accountants and monitors compliance with the
Company's business conduct policy. It held four meetings during fiscal 1996.
The Executive Committee, when acting by unanimous vote of all members,
has the full power of the Board of Directors when the Board is not in session,
with specific limitations relating to certain corporate governance or other
corporate matters. The committee did not hold any meetings in fiscal 1996.
The Finance Committee reviews the overall financial and business plans
of the Company, including capital expenditures, acquisitions and divestitures,
securities issuances and incurrences of debt and the performance of the
Company's retirement benefit plans. It recommends to the Board specific
transactions involving the foregoing, and it has been empowered by the Board to
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<PAGE>
approve certain financial commitments and acquisitions and divestitures by the
Company up to specified levels. It held five meetings during fiscal 1996.
The Human Resources, Compensation and Public Affairs Committee consists
entirely of outside directors. The committee determines the base salary of the
Chairman and President (subject to review and approval by the Board) and
approves the salaries and bonuses paid to officers and other employees who are
line of business presidents or whose current or proposed base salary exceeds
$200,000 per annum. It reviews appointments to senior management positions and
the nature and scope of the Company's employee benefit plans. It also reviews
and recommends the compensation of outside directors and reviews the Company's
contribution policy and practices for its retirement benefit plans. The
committee is also authorized to exercise the Company's rights and powers under
the Restated and Amended Stockholders' Agreement, including approval of grants
of stock purchase opportunities under the ARAMARK Ownership Program as well as
the annual approval of an internal market policy providing for the repurchase of
shares from management investors. It held six meetings during fiscal 1996.
The Stock Committee consists of two outside directors. The committee
has concurrent authority, with the Human Resources, Compensation and Public
Affairs Committee, to approve specific transactions involving Company stock
between officers and directors and the Corporation. The committee was created by
the Board in fiscal 1996. It did not hold any meetings during fiscal 1996.
Business Experience
The principal occupations during the past five years of the Company's
directors and other directorships currently held by directors are as follows:
Mr. Neubauer has been president and chief executive officer of the
Company since February 1983 and the chairman since April 1984. He is a director
of Bell Atlantic Corporation, Federated Department Stores, Inc., First Union
Corporation, and Penn Mutual Life Insurance Co.
Mr. Callander is executive-in-residence at the Business School of
Columbia University. He was president of Chemical Bank and Chemical Banking
Corporation from August 1990 to June 1992. He is a director of Barnes Group,
Inc., Beneficial Corporation, Latin American Dollar Income Fund, Omnicom Group
Inc., Scudder New Asia Fund, Scudder World Income Opportunities Fund and The
Korea Fund Inc.
Dr. Campbell was vice chairman of the Company from April 1984 to
February 1991 and was executive vice president from December 1980 until his
retirement in September 1990.
Mr. Davenport has been the chairman of Sheridan Broadcasting
Corporation since 1972.
Mr. Driscoll was a partner in the Philadelphia law firm of Ballard,
Spahr, Andrews & Ingersoll from January 1984 until December 1990.
Mr. Fromstein has been chairman, president and chief executive officer
of Manpower Inc. since March 1976. He is a director of Manpower Inc. and ARI
Network Services, Inc.
5
<PAGE>
Mr. Jordan was the chairman and chief executive officer of Consolidated
Rail Corporation from 1975 to 1981 and served as the president of The American
College from 1982 until 1987. He is a director of Acme Metals Incorporated.
Former Governor Kean was the Governor of the State of New Jersey from
1982 until 1990. He has been the president of Drew University since 1990. He is
a director of Amerada Hess Corporation, Bell Atlantic Corporation, Beneficial
Corporation, Fiduciary Trust Company International and United Health Care
Corporation.
Mr. MacDonald serves as a consultant to Acme Metals Incorporated. He
was chairman of Acme Metals Incorporated from June 1986 until May 1992. He is a
director of Acme Metals Incorporated and Kaiser Ventures Inc.
Mr. Preston has been the chairman, president, chief executive officer
and a director of Avon Products, Inc. since 1989. He is a director of Woolworth
Corporation and Reader's Digest Association.
Executive Compensation
The following table sets forth information with respect to the
compensation of the named executive officers for services in all capacities to
the Company in the years indicated.
<TABLE>
<CAPTION>
Annual Compensation Stock All
Fiscal ------------------------ Options Other
Name and Current Principal Position Year Salary Bonus Granted(#) Comp(1)
- ----------------------------------- ---- ------ ----- ---------- -------
<S> <C> <C> <C> <C> <C>
Joseph Neubauer 1996 $850,000 $700,000 0 $14,500
Chairman, President and 1995 $820,000 $650,000 500,000 $15,000
Chief Executive Officer 1994 $790,000 $650,000 0 $5,500
James E. Ksansnak 1996 $354,000 $300,000 0 $6,000
Executive Vice President, 1995 $342,000 $225,000 35,000 $5,500
Chief Financial Officer 1994 $330,000 $235,000 0 $5,500
William Leonard 1996 $385,000 $275,000 0 $6,000
Executive Vice President, and 1995 $362,000 $325,000 70,000 $5,500
President of ARAMARK Global 1994 $345,000 $240,000 0 $5,500
Food & Support Services Group
Martin W. Spector 1996 $337,000 $200,000 0 $6,000
Executive Vice President, 1995 $327,000 $200,000 10,000 $5,500
General Counsel and 1994 $317,000 $210,000 0 $5,500
Secretary
L. Frederick Sutherland 1996 $314,500 $240,000 0 $6,000
Executive Vice President and 1995 $280,000 $310,000 100,000 $5,500
President of ARAMARK Uniform 1994 $260,000 $200,000 0 $5,500
Services Group
.
</TABLE>
- --------------------
(1) Other compensation includes employer contributions to the Stock Unit
Retirement Plan, plus for fiscal 1996 and 1995, the value of interest
foregone and not recaptured by the Company relating to payment of
premiums for split dollar life insurance.
6
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Stock Purchase Opportunities
Of the more than 4,000,000 stock purchase opportunities granted in
fiscal 1996, none were granted to the named executive officers.
The following table sets forth information with respect to the named
executive officers concerning the exercise of options in fiscal 1996 and the
unexercised options held as of September 27, 1996.
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
(Stock Purchase Opportunities)
<TABLE>
<CAPTION>
Number of Options Held Current Value of Options Held (2)
Shares --------------------------- ----------------------------------
Acquired on Value Currently Not Currently Currently Not Currently
Name Exercise Realized (1) Exercisable Exercisable Exercisable Exercisable
---- -------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joseph Neubauer 48,152 $499,288 0 521,404 $0 $1,536,857
James E. Ksansnak 17,924 $195,941 21,400 43,560 $305,806 $169,229
William Leonard 62,080 $490,724 21,400 172,800 $305,806 $861,508
Martin W. Spector 7,704 $56,085 68,480 17,708 $978,579 $94,291
L. Frederick Sutherland 37,248 $363,599 0 142,848 $0 $537,863
</TABLE>
- --------------------
(1) Value realized refers to the appraisal price of the underlying shares
at the time the option was exercised minus the exercise price of the
option.
(2) Options currently exercisable and current values of options are
determined as of September 27, 1996. Current value of an option refers
to the appraisal price of the underlying shares minus the exercise
price of the option.
The following graph compares the five year cumulative return of Class B
Common Stock (measured by the appraisal price) to the Standard & Poor's 500
Stock Index and the Dow Jones Consumer Non-Cyclical Index.
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Five Year Cumulative Total Shareholder Return
PERCENT OF BASE YEAR PRICE
250|------------------------------------------------------------------|
| & |
| & |
200|-------------------------------------------------------------#*---|
| & |
| * |
150|-------------------------&-----------------------#----------------|
| * |
| & * # |
100|&*#-|---------*|#-------#|-----------|-----------|-----------|----|
1991 1992 1993 1994 1995 1996
&=ARAMARK *=S&P 500 ADJ. #=DOW JONES: CONSUMER NON-CYC.
Cumulative total return is stated as a percentage of the base year
(1991) stock price. Cumulative total return in a given year equals (i) the
cumulative amount of dividends paid since the base year, assuming dividend
reinvestment, plus the year-end stock price, (ii) divided by the base year stock
price.
ARAMARK Dow Jones
Fiscal Year Consumer
Ended ARAMARK S&P 500 Non-Cyclical
----- ------- ------- ------------
1991 100.00 100.00 100.00
1992 118.75 110.20 109.12
1993 151.84 125.42 98.05
1994 189.10 130.32 115.97
1995 214.05 167.61 157.36
1996 239.05 201.08 204.34
Directors who are employees of the Company are not paid directors'
fees. Directors who are not employees receive an annual retainer of $25,000 for
serving on the Board, $3,000 for services as chairman of a Board committee and
$1,000 for otherwise serving on a committee, and they receive meeting fees of
$1,000 per day for attendance at meetings of the Board, and for each committee
meeting.
8
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The Company has employment agreements or arrangements with all of its
officers, under which they are currently being paid annual salaries ranging up
to $900,000. Generally, these are for indeterminate periods terminable by either
party upon notice ranging from eight weeks to six months. Mr. Neubauer's
agreement currently provides for services to February 17, 1998 (with automatic
renewals for successive three year terms unless terminated) at a current annual
base salary of $900,000 and for fully vested supplemental benefits upon his
death of 25% of his highest base salary payable to his surviving spouse, if any,
annually for life or upon his retirement, disability or termination for any
other reason of 50% of his highest base salary payable to him annually for life.
Upon termination by the Company without cause, Mr. Neubauer's management
incentive bonus shall be prorated through the time of termination; his base
salary at time of termination shall continue for a period of three years after
termination; and, his supplemental benefits shall commence at the end of such
three year period. The Company has a split dollar life insurance agreement with
Mr. Neubauer. The agreement relates to life insurance policies owned by a trust
created by Mr. Neubauer. Pursuant to the agreement, the Company pays a
substantial portion of the premiums on the policies, such amounts to be repaid
from the proceeds of the policies upon their termination. The current amount
thus outstanding is $649,000. The Company foregoes charging interest in each
fiscal year on such amount. However, the foregone interest is at least partially
recaptured by the Company by reducing the amount of the interest which would
otherwise accrue on Mr. Neubauer's deferred compensation. The Company holds a
security interest in the policies to secure the repayment of the premium amount
paid by the Company. The arrangement terminates upon the termination of Mr.
Neubauer's employment (other than by reason of his retirement). Through fiscal
1996, Mr. Neubauer also had an agreement with the Company which provided for
deferral of that portion of his salary and bonus payments which, but for the
deferral, would have been subject to the U.S. tax deductibility limitation on
executive officer compensation. Messrs. Ksansnak, Leonard, Spector, and
Sutherland have current annual base salaries of $368,000 $410,000, $347,000 and
$345,000, respectively. Several agreements (including the above-referenced
agreement with Mr. Neubauer) provide for the deferral of a part of prior salary
and bonus payments with interest, currently at the Moody's long-term bond index
rate, usually payable in equal monthly installments beginning upon retirement,
permanent disability, death or termination of employment.
The Company currently has a severance pay policy, pursuant to which
severance payments are made to executive officers and certain other key
employees on the basis of continuous service, generally equal to between 3 and
18 months of pay if their employment is terminated for reasons other than cause
plus the continuation of certain other benefits during the period of such
payment.
9
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Committee Report On Executive Compensation
The Company's compensation programs are designed to support the
Company's overall commitment to continued growth and quality services to
customers. The programs are intended, among other things, to enable ARAMARK to
recruit and retain the best performers, to provide compensation levels
consistent with the level of contribution and degree of accountability, to use
performance measures consistent with the Company's goals, to provide
compensation consistent with competitive market rates, and to include a
significant portion of incentive compensation.
Salary. Salary levels for all salaried employees are generally reviewed
annually. Guideline increases are established generally based upon overall
financial performance of the Company, the current rate of inflation and general
compensation levels in the industries in which the Company operates. For fiscal
1996, the guideline increase for executive officers, including the five named
individuals, was 3.5%, which was the same as for fiscal 1995. The specific
salary increases for each individual executive officer is based upon a review of
his or her individual performance and development. In the case of Mr. Neubauer,
the review is conducted independently by the Human Resources, Compensation and
Public Affairs Committee without any officers present, subject to final review
and approval by the Board of Directors of the Company; for all other executive
officers, the individual's supervisor and more senior executives, along with the
corporate human resources department, conduct the review and make a
recommendation to the Committee. Mr. Neubauer's salary was increased by 5.9%
during fiscal 1996.
Bonus. Senior executive officers participate in the Company's
management incentive bonus program. Bonuses are awarded annually based in part
upon the attainment of predetermined financial goals and in part upon the
attainment of individual objectives. Generally, non-financial objectives
represent 30% of the bonus potential and are established by the supervisor of
the executive. Financial goals generally represent 70% of the bonus potential.
An employee's bonus potential generally varies, as a percentage of total cash
compensation, dependent upon the level of responsibility of the employee's
position. The measures of financial performance used are for the business unit
which is either under the managerial direction of the participant or, if a staff
executive, is the unit on which the participant impacts most frequently and
significantly. In the case of Mr. Neubauer, the Committee awards a bonus based
on a general review of the Company's and Mr. Neubauer's performance.
Mr. Neubauer was awarded 73% of his maximum bonus potential for fiscal 1996.
Performance measures. The Company uses various financial measures to
evaluate the performance of the Company and its business units, with the
specific measures in some cases varying depending upon the line of business
involved. Generally, the measures used are Revenue Growth, EBIT, RONA and, in
addition, for overall corporate performance Net Income and ATROI. EBIT is
Earnings Before Interest and Taxes. RONA is Return on Net Assets. ATROI is After
Tax Return on Investment. Targets for each of these performance measures are
established annually in the Company's business plan, which is approved at the
beginning of the fiscal year by the Board of Directors.
Mr. Neubauer's Bonus Arrangement. In 1996 and previous years, Mr.
Neubauer participated in the management incentive bonus plan. Mr. Neubauer
elected to defer any compensation in excess of $1 million, and accordingly, his
compensation was not subject to the U.S. tax deductibility limitation on
executive officer compensation. Mr. Neubauer has indicated that in future years,
he may not elect to defer such compensation. The Committee has proposed
10
<PAGE>
to the Board of Directors, and the Board has recommended for stockholder
approval, an annual bonus arrangement for the Company's Chief Executive Officer
which will allow the Committee to award a bonus to Mr. Neubauer in future years
on the basis of specific performance criteria and goals being attained, while
also allowing the Company to deduct the entire amount of Mr. Neubauer's
compensation as an expense for U.S. income tax purposes. See "The CEO Annual
Performance Bonus Arrangement."
Stock Purchase Opportunities. The Committee believes that management
ownership contributes to the Company's success, and supports senior management's
goal of expanding both the number of management investors and their percentage
ownership. The Committee, accordingly, grants stock purchase opportunities to
selected management employees. In addition, the Committee oversees the Company's
expanded ownership program, to further expand the number of management owners.
The terms of the installment stock purchase opportunities and the expanded
ownership opportunities are generally described under "The ARAMARK Ownership
Program." Individual grants are generally made by the Committee in connection
with hires, promotions and other recognition of performance. The amount of a
grant generally varies depending upon the level of responsibility of the
employee's position, the number of purchase opportunities previously granted,
and the number of shares owned. The individual's supervisor and other senior
executives, along with the corporate human resources department, make
recommendations to the Committee. The Company has in the past also made
broad-based grants to management employees.
Compensation Committee Interlocks and Insider Participation. Dr.
Campbell, who was an Executive Vice President until his retirement in September
1990, is a member of the Committee.
Members of the Committee:
Robert J. Callander, Chair Mitchell S. Fromstein
Alan K. Campbell The Honorable Thomas H. Kean
Ronald R. Davenport James E. Preston
11
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table presents certain information as of December 27,
1996 with respect to shares of the Common Stock of the Company beneficially
owned by each person known to the Company to be the beneficial owner of more
than 5% of the Common Stock (on a Class B equivalent basis), by each director
and by each named executive officer.
<TABLE>
<CAPTION>
Percent
----------------------
Number of Voting Total
Shares (3) Power Outstanding
---------- ----- -----------
<S> <C> <C> <C>
Trustees for various ARAMARK
employee benefit plans (1)(2) 9,857,230 4.2% 24.2%
Joseph Neubauer 5,447,057 22.8% 13.3%
Robert J. Callander 115,490 * *
Alan K. Campbell 243,443 1.0% *
Ronald R. Davenport 60,500 * *
Philip L. Defliese 98,637 * *
Lee F. Driscoll, Jr. 10,480 * *
Mitchell S. Fromstein 129,797 * *
Edward G. Jordan 122,500 * *
Thomas H. Kean 70,700 * *
Reynold C. MacDonald 2,500 * *
James E. Preston 86,500 * *
James E. Ksansnak 718,497 3.0% 1.8%
William Leonard 576,709 2.4% 1.4%
Martin W. Spector 882,306 3.7% 2.2%
L. Frederick Sutherland 494,052 2.1% 1.2%
All directors and executive
officers as a group (26 persons) 10,691,569 43.6% 25.7%
All employees** and directors
as a group 25,070,163 93.0% 56.9%
All employees **, directors and
employee benefit plans as a group 34,927,393 96.6% 79.3%
</TABLE>
- ---------------
(1) The address of this stockholder is ARAMARK Corporation, ARAMARK Tower,
1101 Market Street, Philadelphia, PA 19107
(2) The trustees are Alan K. Campbell, James E. Ksansnak and Martin W.
Spector.
(3) Includes shares issuable upon the exercise of currently exercisable
stock purchase opportunities and options.
* Less than 1%.
** Includes children and other transferees for estate planning purposes.
12
<PAGE>
The ARAMARK Ownership Program
The ARAMARK Ownership Program (the "Program") is designed to provide an
opportunity for selected management employees of the Company and its
subsidiaries to acquire an ownership interest in the Company and thereby give
them a more direct continuing interest in the future success of the Company's
business. Under the Program, direct ownership in the Company has increased from
62 original management investors in December 1984 to approximately 1,150
management investors owning approximately 53% of the equity. At December 27,
1996, management employees and directors held stock purchase opportunities and
options for 12,454,011 shares.
The Company's senior management believes that management ownership has
significantly contributed to the Company's success, and intends to continue to
use the Program to expand both the number of management investors and their
percentage ownership.
Through installment stock purchase opportunities and expanded ownership
purchase opportunities, the Company has granted management employees an
opportunity to invest in, or increase their investment in, the Company.
The purchase price for shares subject to either installment stock
purchase opportunities ("ISPOs") or expanded ownership purchase opportunities
("EXPOs") is the appraisal price of the shares (based upon the most recent
available independent appraisal) on the date of the grant. Shares issued
pursuant to the exercise of purchase opportunities are subject to the Company's
Stockholders' Agreement. Generally, purchase opportunities are not transferable,
and each purchase opportunity is exercisable only by the employee to whom it is
granted.
Each installment stock purchase opportunity has an installment schedule
that limits the number of shares of common stock that may be purchased during
each annual installment exercise period. Unless the first installment is
exercised by its expiration date for a minimum number of shares, the entire
installment purchase opportunity is canceled. Thereafter, subsequent annual
installments may be exercised (subject to exercise of a minimum number of
shares) for up to the maximum number of shares specified in the certificate for
that installment. Any portion of an annual installment not exercised by the
appropriate expiration date is canceled. Each installment stock purchase
opportunity is exercisable only while an employee of the Company or a
subsidiary. The Company also grants cumulative ISPOs which are similar to
regular ISPOs except that if a portion of an annual installment is not exercised
during the corresponding exercise period, then it is not canceled but rather may
be exercised during any subsequent exercise period.
Each expanded ownership purchase opportunity provides that once vested,
the entire opportunity or a portion (in 100 share increments) may be exercised
during any of the specified annual exercise periods. Upon termination of
employment, an employee can exercise his or her expanded ownership purchase
opportunity if it is vested, within three months after termination (but not
beyond its expiration date). If it is not vested at such time, the entire grant
is canceled. Expanded ownership opportunities have been awarded to management
employees who had not previously been granted installment stock purchase
opportunities. The size and the structure of the expanded ownership
opportunities were approved, taking into consideration the general compensation
levels of the recipients, the size of the cash investment that would be
required, the general suitability of such an investment to recipients generally,
the
13
<PAGE>
goal of encouraging management investors to retain the shares they acquire, the
potential dilution to existing stockholders, and the costs and additional
administrative requirements of such expanded ownership.
In connection with the exercise of installment purchase opportunities
and non-qualified stock options, ARAMARK has adopted a deferred payment program
whereby a portion of the purchase price for certain installments may be deferred
at the election of the employee for approximately six years. The deferred
payment obligation is a full recourse obligation of the individual, accrues
interest and is secured by a pledge of the shares of ARAMARK Common Stock
purchased. The interest rate for deferred payment obligations incurred in the
current exercise period has been set at 8.25%. More than 500 employees
(including executive officers) are currently participating in the program. At
fiscal year end, the amount of the deferred payment obligations of Messrs.
Neubauer, Ksansnak, Leonard, Spector and Sutherland were $928,500, $600,000,
$584,000, $280,500 and $379,000, respectively.
Certain Relationships and Related Transactions
During fiscal 1996, the Company repurchased from three executive
officers 20,084 shares of common stock at an average price per share of $15.67.
The Company also repurchased or redeemed an aggregate of 5,187 shares of Series
C Preferred Stock from directors and executive officers at prices equal to
$1,000 per share plus accrued and unpaid dividends to the respective dates of
such repurchases or redemption, payable in cash or in some instances shares of
Common Stock. The Company anticipates that it will continue to repurchase shares
held by officers and directors, through the Company's internal market, and
following their termination of employment or cessation as a director.
The Company, the members of management who are equity investors in the
Company and certain other investors (collectively, "Restricted Investors") are
parties to an amended and restated stockholders' agreement. Restricted Investors
are subject to certain restrictions on transfer, with the Company having certain
rights of first offer in the event of any sales or dispositions by Restricted
Investors or their estates. In addition, upon death, complete disability or
normal retirement of management investors or upon death or complete disability
of other individual Restricted Investors, such persons or their estates may
cause the Company to repurchase for cash up to 30% of their shares at the then
current appraisal price but only to the extent such repurchase by the Company is
permitted under the Company's credit agreement. Such repurchased shares may be
resold to others, including replacement personnel. In addition, it is
contemplated that shares which may be issued pursuant to exercise of employee
stock options and stock purchase opportunities would also be subject to the
stockholders' agreement.
Relationship with Independent Public Accountants
The Board of Directors is expected to reappoint the firm of Arthur
Andersen LLP as independent auditors for the Company for the 1997 fiscal year. A
representative of Arthur Andersen LLP is expected to be present at the annual
meeting and will be offered the opportunity to make a statement if desiring to
do so and will be available to respond to appropriate questions.
14
<PAGE>
Financial Statements
A copy of the Company's annual report on Form 10-K for the fiscal year
ended September 27, 1996 has been delivered to stockholders. Stockholders are
referred to the report for financial and other information about the Company.
General
Proxies will be solicited by mail. Proxies may be solicited by
directors, officers and a small number of regular employees of the Company
personally or by mail, telephone or telegraph, but such persons will not be
specially compensated for such services. The entire cost of solicitation will be
borne by the Company.
Management does not intend to present, and does not have any reason to
believe that others will present, any item of business at the annual meeting
other than those specifically set forth in the notice of the meeting. However,
if other matters are presented for a vote, the proxy agents will have the right
to vote the shares represented by proxy cards on such matters in accordance with
their discretion.
Stockholder Proposals
Stockholders may submit proposals on matters appropriate for
stockholder action at future annual meetings of the Company in accordance with
regulations adopted by the Securities and Exchange Commission. For such
proposals to be considered for inclusion in the Company's proxy statement and
form of proxy for next year's annual meeting, they must be received by the
Company not later than September 9, 1997. Proposals should be directed to the
attention of the Corporate Secretary.
15
<PAGE>
[GRAPHIC OMITTED]
ARAMARK CORPORATION
PROXY CARD
SOLICITED BY THE BOARD OF DIRECTORS
Joseph Neubauer, Martin W. Spector and Donald S. Morton (each with power of
substitution) are hereby authorized to vote all the shares which the undersigned
would be entitled to vote if personally present at the annual meeting of
stockholders of ARAMARK Corporation (the "Company") to be held on February 11,
1997 and at any adjournment, as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Directors [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
</TABLE>
R.J. Callander, A.K. Campbell, R.R. Davenport, L.F. Driscoll, Jr.,
M.S. Fromstein, E.G. Jordan, T.H. Kean, R.C. MacDonald,
J. Neubauer, J.E. Preston
(To withhold authority to vote FOR, write name(s) on
line:--------------------------------------------------------)
2. To consider and act upon a proposal to approve the CEO Annual Performance
Bonus Arrangement
[ ] FOR [ ] ABSTAIN [ ] AGAINST
3. In their discretion upon such other matters as may properly come before this
meeting
[ ] GRANT AUTHORITY [ ] WITHHOLD AUTHORITY
(Continued and to be signed on reverse side)
<PAGE>
Any of the above-named proxy agents or their substitutes present and acting at
the meeting shall have all the powers conferred hereby.
If no choice is specified and the card is properly signed and returned, the
shares represented by the proxy card will be voted FOR the election of directors
and the approval of the CEO Annual Performance Bonus Arrangement.
Dated:_________________________ ____________________________________
Signature of Stockholder
IMPORTANT: Please sign exactly as
your name or names appear hereon.
Joint owners should each sign
personally. If you sign as agent or
in another representative capacity,
please state the capacity in which
you sign.
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
[GRAPHIC OMITTED]
PLEASE INDICATE ANY ADDRESS CORRECTIONS OR CHANGES ABOVE.
