<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ABM Industries Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
* 50 Fremont Street, 26th Floor
San Francisco, California 94105
------------------------
NOTICE OF THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MARCH 17, 1998
10:00 A.M.
------------------------
To Our Stockholders:
The 1998 Annual Meeting of Stockholders of ABM Industries Incorporated will
be held at The World Trade Club, Third Floor, Ferry Building, The Embarcadero,
San Francisco, California 94111, on Tuesday, March 17, 1998 at 10:00 a.m. for
the following purposes:
(1) To elect three directors, each to serve for a term of three years;
and
(2) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record on the books of the Company at the close of
business on January 30, 1998 will be entitled to vote at the Annual Meeting and
any adjournments thereof.
By Order of the Board of Directors
/s/ HARRY H. KAHN
Harry H. Kahn, Esq.
Vice President, General Counsel &
Secretary
San Francisco, California
February 17, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE MARK,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE.
* On or about April 1, 1998, our Corporate Headquarters will relocate to 160
Pacific Avenue, Suite 222, San Francisco, CA 94111.
<PAGE> 3
[LOGO]
50 Fremont Street, 26th Floor
San Francisco, California 94105
------------------------
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of Directors of
ABM Industries Incorporated, a Delaware corporation (the "Company"), for use at
the 1998 Annual Meeting of Stockholders of the Company (the "Annual Meeting") to
be held at 10:00 a.m. on March 17, 1998, and at any adjournments of the Annual
Meeting, for the purposes set forth in the accompanying notice.
Only stockholders of record on the books of the Company at the close of
business on January 30, 1998 will be entitled to vote at the Annual Meeting. At
the close of business on that date, there were outstanding 20,727,040 shares of
Common Stock of the Company and 6,400 shares of Preferred Stock of the Company.
Each share of Common Stock and each share of Preferred Stock is entitled to one
vote upon each of the matters to be presented at the Annual Meeting.
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted as present in
determining whether the quorum requirement is satisfied. With regard to the
election of directors, votes may be cast "For" or "Withheld For" each nominee;
votes that are withheld will be excluded entirely from the vote and will have no
effect.
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted as recommended by
the Board of Directors. Any person signing a proxy in the form accompanying this
proxy statement has the power to revoke it prior to or at the Annual Meeting. A
proxy may be revoked by written request delivered to the Secretary of the
Company stating that the proxy is revoked, by a subsequent proxy signed by the
person who signed the earlier proxy or by attendance at the Annual Meeting and
voting in person.
The expense of soliciting proxies in the enclosed form will be paid by the
Company. Following the original mailing of the proxies and soliciting materials,
employees of the Company may solicit proxies by mail, telephone, telegraph and
personal interviews. The Company will request brokers, custodians, nominees and
other record holders to forward copies of the proxies and soliciting materials
to persons for whom they hold shares of the Company's Common Stock or Preferred
Stock and to request authority for the exercise of proxies; in such cases, the
Company will reimburse such holders for their reasonable expenses.
This Proxy Statement and the accompanying proxy were first sent to
stockholders on or about February 17, 1998.
<PAGE> 4
ITEM 1 -- ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes with each
director serving a three-year term and one class being elected at each Annual
Meeting. The total number of directors comprising the Board of Directors is
currently set by the Company's by-laws at eleven. Of this number, three members
of the Board of Directors have terms expiring at this year's Annual Meeting,
three members have terms expiring at the 1999 Annual Meeting and four members
have terms expiring at the Annual Meeting to be held in the year 2000. Directors
elected at this year's Annual Meeting will hold office until the Annual Meeting
to be held in the year 2001, or until their successors have been elected and
qualified, whichever is later.
In the absence of instructions to the contrary, shares represented by the
accompanying proxy will be voted for the election of the three nominees
recommended by the Board of Directors, who are named in the following table. The
three nominees receiving the highest number of votes will be elected. If a
stockholder withholds authority to vote for one or more of the nominees, such
stockholder's shares will be counted for purposes of determining whether a
quorum is present at the Annual Meeting but will have no effect on the outcome
of the election.
The Company has no reason to believe that the nominees for election will be
unable or unwilling to serve if elected as directors. However, if any such
nominee is unable or unwilling to be a candidate for the office of director at
the date of the Annual Meeting, or any adjournment thereof, the proxy holders
will vote for such substitute nominee as they shall in their discretion
determine.
The Nominating Committee will consider nominees recommended by
stockholders. The Company's by-laws provide that stockholders intending to
nominate candidates for election as directors must give the prescribed notice to
the Secretary of the Company at least 60 days prior to the applicable meeting of
stockholders. No such notice has been given with respect to this year's Annual
Meeting.
The following table indicates certain information concerning the nominees
and the Company's other directors which is based on data furnished by them.
NOMINEES FOR ELECTION AS DIRECTORS FOR A
TERM ENDING AT THE 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS AND SERVED AS
BUSINESS EXPERIENCE DIRECTOR
NAME AGE DURING PAST FIVE YEARS SINCE
- ------------------------------------- ---- ----------------------------------- ---------
<S> <C> <C> <C>
Luke S. Helms........................ 54 Vice Chairman of BankAmerica 1995
Corporation and Bank of America
NT&SA from May of 1993 to October
of 1996; Chairman & Chief
Executive Officer of Seattle
First National Bank (a
wholly-owned subsidiary of
BankAmerica Corporation) from
1991 to 1993
Henry L. Kotkins, Jr................. 49 President & Chief Executive Officer 1995
of Skyway Luggage Company(1)
William E. Walsh..................... 66 Management Consultant and Author; 1993
Football Consultant to the San
Francisco 49ers since 1996; Head
Football Coach for Stanford
University from 1992 to 1993
</TABLE>
2
<PAGE> 5
DIRECTORS CONTINUING IN OFFICE FOR A
TERM ENDING AT THE 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS AND SERVED AS
BUSINESS EXPERIENCE DIRECTOR
NAME AGE DURING PAST FIVE YEARS SINCE
- ------------------------------------- ---- ----------------------------------- ---------
<S> <C> <C> <C>
Maryellen B. Cattani, Esq............ 54 Attorney-at-law; Executive Vice 1993
President, General Counsel &
Secretary of APL Limited from
1991 to December of 1997(2)
John F. Egan......................... 62 Vice President of the Company, and 1988
President of the Janitorial
Services Division
Charles T. Horngren.................. 71 Edmund W. Littlefield Professor of 1973
Accounting, Emeritus, Stanford
University Graduate School of
Business
</TABLE>
DIRECTORS CONTINUING IN OFFICE FOR A
TERM ENDING AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS AND SERVED AS
BUSINESS EXPERIENCE DIRECTOR
NAME AGE DURING PAST FIVE YEARS SINCE
- ------------------------------------- ---- ----------------------------------- ---------
<S> <C> <C> <C>
Linda Chavez......................... 50 President of the Center for Equal 1997
Opportunity; nationally
syndicated columnist and
television commentator(3)
Martinn H. Mandles................... 57 Chairman of the Board of the 1991
Company since December of 1997;
Chief Administrative Officer
since November of 1991; Executive
Vice President from November of
1991 to December of 1997
Theodore Rosenberg................... 89 Chairman of the Company's Executive 1962
Committee(4)
William W. Steele.................... 61 Chief Executive Officer of the 1988
Company since November of 1994;
President since November of 1991
</TABLE>
- ---------------
(1) Henry L. Kotkins, Jr. is a member of the Board of Directors of Skyway
Luggage Company.
(2) Maryellen B. Cattani is a member of the Board of Directors of Golden West
Financial Corporation and World Savings & Loan Association.
(3) Linda Chavez is a member of the Board of Directors of Greyhound Lines, Inc.
(4) Theodore Rosenberg is deemed to be a "control person" of the Company within
the meaning of the General Rules and Regulations adopted by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended. Effective as of December 31, 1989, Theodore Rosenberg retired as an
officer and employee of the Company. Theodore Rosenberg has retained his
positions as a director of the Company and as Chairman of the Executive
Committee of the Company's Board of Directors. Theodore Rosenberg also
serves as a consultant to the Company.
3
<PAGE> 6
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The standing committees of the Company's Board of Directors are the
Executive Committee, Audit Committee, Nominating Committee and Executive Officer
Compensation & Stock Option Committee. The members and functions of these
committees are as follows:
Audit Committee. The Audit Committee meets periodically with management and
the independent public accountants for the Company to make inquiries regarding
the manner in which their respective responsibilities are being discharged and
reports thereon to the full Board of Directors. The Audit Committee also
recommends the annual appointment of the independent public accountants with
whom the Audit Committee reviews the scope of the audit and non-audit
assignments and related fees, the accounting principles applied by the Company
in financial reporting, internal financial auditing procedures and the adequacy
of internal controls. The current members of the Audit Committee are Charles T.
Horngren, Chairman; Maryellen B. Cattani; and Luke S. Helms.
Executive Committee. Except for the declaration of dividends and certain
other powers which may be exercised only by the full Board under Delaware law,
the Executive Committee has the authority to exercise all powers of the Board
with regard to the business of the Company. The current members of the Executive
Committee are Theodore Rosenberg, Chairman; Martinn H. Mandles; and William W.
Steele.
Executive Officer Compensation and Stock Option Committee. The Executive
Officer Compensation & Stock Option Committee reviews and recommends to the
Board of Directors executive officer compensation and other terms and conditions
of employment for the executive officers of the Company, administers the
Company's stock option plans and authorizes grants thereunder and administers
the Company's stock purchase plan. The current members of the Executive Officer
Compensation & Stock Option Committee are Maryellen B. Cattani, Chairman; Henry
L. Kotkins, Jr.; and William E. Walsh.
Nominating Committee. The Nominating Committee is responsible for making
recommendations regarding the size of the Board of Directors, recommending
criteria for selection of candidates to serve on the Board of Directors,
evaluating all proposed candidates and recommending to the Board of Directors a
slate of nominees for election to the Board of Directors at the Annual Meeting
of Stockholders. The current members of the Nominating Committee are Luke Helms,
Chairman; Linda Chavez; and Henry L. Kotkins, Jr.
MEETINGS AND ATTENDANCE
During the fiscal year ended October 31, 1997, the Board of Directors met
eight times, the Executive Committee met 24 times, the Audit Committee met five
times, and the Executive Officer Compensation & Stock Option Committee met three
times. During this period, no director attended fewer than 84% of the total
number of meetings of the Board and Committees of which he or she was a member.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company ("Outside Directors") are
paid retainer fees of $18,000 per year and $1,500 for each Board or Committee
meeting attended. Outside Directors who serve as chairpersons of the standing
committees receive an additional retainer fee of $1,500 per year. Pursuant to
the terms of the Company's 1987 Stock Option Plan, each outside director also
receives an annual grant of stock options in the amount of 5,000 shares of
Common Stock on the first day of each fiscal year.
Since June, 1992, the Company has entered into Director Retirement Benefit
Agreements with all Outside Directors. These agreements provide that, upon the
retirement of such Outside Directors, the Company will pay them the monthly
retainer they were receiving at the time of their retirement (subject to a 10%
reduction for every year of service as an Outside Director less than ten) for a
maximum period of ten years. Upon or after attaining the age of 72 years, the
retired Outside Director may elect to receive such payment monthly, or in a lump
sum discounted to present value at the time of such election. Outside Directors
under the age of 72 years who retire with fewer than five years of service as
Outside Directors, however, are
4
<PAGE> 7
not entitled to any benefits under these agreements. The Company has also
entered into Director Indemnification Agreements with each of its Directors.
These agreements, among other things, require the Company to indemnify its
Directors against certain liabilities that may arise by reason of their status
or service as directors, to the fullest extent provided by Delaware law.
Theodore Rosenberg, a director of the Company, is a former officer and
employee of the Company. He is the brother of Sydney J. Rosenberg, who served as
the Company's Chairman of the Board until his retirement in December of 1997.
Upon Theodore Rosenberg's retirement as an officer and employee of the Company
in December of 1989, the Company began and has continued making payments of
$8,333.33 per month for ten years pursuant to Theodore Rosenberg's previous
employment contracts with the Company. In addition, Theodore Rosenberg provides
consulting services to the Company on a month-to-month basis, for which services
he receives a fee of $6,250 per month. See also "Certain Relationships and
Related Transactions" herein for a description of an office lease between the
Company and certain other family members of Sydney J. Rosenberg and Theodore
Rosenberg. Neither Sydney J. Rosenberg nor Theodore Rosenberg directly or
indirectly receives any proceeds from this lease.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of the Chief Executive Officer and the four most highly
compensated executive officers of the Company for services in all capacities
rendered to the Company and its subsidiaries during the fiscal years ended
October 31, 1997, 1996 and 1995 are set forth below. Columns regarding "Other
Annual Compensation," "Restricted Stock Awards," "Long-Term Incentive Plan
[LTIP] Payouts" and "All Other Compensation" are excluded because no reportable
payments were made to such executive officers for the relevant years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION(1) SECURITIES
FISCAL ---------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- ------------------------------------------------- ------ -------- -------- ------------
<S> <C> <C> <C> <C>
William W. Steele................................ 1997 $552,000 $462,598 100,000
President & Chief Executive Officer 1996 480,302 327,794 50,000
1995 460,500 230,250 10,000
Martinn H. Mandles............................... 1997 275,000 231,299 80,000
Chairman of the Board since December of 1997; 1996 235,302 164,563 40,000
Chief Administrative Officer since November of 1995
1991; 216,601 112,800 12,000
Executive Vice President from November of 1991
until December of 1997
John F. Egan..................................... 1997 350,000 126,537 60,000
Vice President of the Company, and President 1996 327,928 108,200 30,000
of the Janitorial Services Division 1995 314,408 90,616 0
Jess E. Benton, III.............................. 1997 276,627 150,477 60,000
Senior Vice President 1996 264,715 129,497 30,000
1995 253,801 109,610 0
Sydney J. Rosenberg.............................. 1997 283,928 141,864 0
Chairman of the Board until December of 1997 1996 271,702 135,851 40,000
1995 260,500 130,250 0
</TABLE>
- ---------------
(1) Includes amounts deferred under the Company's Deferred Compensation Plan.
OPTIONS GRANTED TO EXECUTIVE OFFICERS
The Officer Compensation & Stock Option Committee of the Board of Directors
currently has authority to grant stock options under either the Executive Stock
Option Plan (the "1984 Plan"), the 1987 Stock
5
<PAGE> 8
Option Plan (the "1987 Plan"), or the Long-Term Senior Executive Stock Option
Plan (the "1996 Plan"). The following table sets forth certain information
regarding stock options granted to, and exercised and owned by, the executive
officers named in the foregoing Summary Compensation Table.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL
NUMBER OF TOTAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME AND POSITION GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- --------------------------- ------------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William W. Steele.......... 100,000 8.8% $20.00 (4) $1,258,000(5) $3,187,000(5)
President & Chief
Executive Officer
Martinn H. Mandles......... 80,000 7.05% $20.00 (4) $1,006,400(5) $2,549,600(5)
Chairman of the Board
since December of 1997;
Chief Administrative
Officer since November of
1991; Executive Vice
President from November
of 1991 until December of
1997
John F. Egan............... 60,000 5.29% $20.00 (4) $ 754,800(5) $1,912,200(5)
Vice President of the
Company and President of
the Janitorial Services
Division
Jess E. Benton, III........ 60,000 5.29% $20.00 (4) $ 754,800(5) $1,912,200(5)
Senior Vice President
Sydney J. Rosenberg........ 0 n/a n/a n/a n/a n/a
Chairman of the Board
until December of 1997
</TABLE>
- ---------------
(1) All such stock options were granted under the 1996 Plan on December 17,
1996. These stock options will vest according to a schedule tied to the
price of the Company's Common Stock. Stock options have been assigned four
incremental vesting price goals. One-fourth of the total number of options
granted become exercisable immediately if, on or before the close of
business on the fourth anniversary of the grant date, the Fair Market Value
of the Company's Common Stock shall have been equal to or greater than the
assigned vesting price for that increment for ten (10) trading days in any
period of thirty (30) consecutive trading days. Any stock option that has
not vested on or before the close of business on the fourth (4th)
anniversary of its grant date shall vest at the close of business on the
business day immediately preceding the eighth anniversary of its date of
grant, if such options have not previously terminated.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% annual rates of stock appreciation prescribed by the Securities
and Exchange Commission and are not intended to forecast future
appreciation, if any, of the Company's stock price. No gain to the optionees
is possible without an increase in the price of the Company's stock, which
will benefit all stockholders.
(4) The right to exercise such stock options expires immediately upon
termination of employment, but if termination is due to death or disability,
the right to exercise expires within 90 days of such termination. However,
the stock options may be immediately exercised in the event of dissolution
or liquidation of the Company or a merger or combination in which the
Company is not the surviving corporation.
(5) For purposes of calculating the potential realizable value, it has been
assumed that the stock options have a term of ten years.
6
<PAGE> 9
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
COMMON SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS(1) ON IN-THE-MONEY OPTIONS(2)
SHARES OCTOBER 31, 1997 ON OCTOBER 31, 1997
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME AND POSITION EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William W. Steele............... 0 $ 0 165,000(3) 185,000(4) $ 3,207,145(3) $ 1,919,375(4)
President & Chief Executive
Officer
Martinn H. Mandles.............. 0 0 82,000(5) 164,000(6) 1,570,080(5) 1,846,480(6)
Chairman of the Board since
December of 1997; Chief
Administrative Officer since
November of 1991; Executive
Vice President from November
of 1991 until December of 1997
John F. Egan.................... 0 0 129,000(7) 123,000(8) 2,618,665(7) 1,412,335(8)
Vice President of the Company,
and President of the
Janitorial Services Division
Jess E. Benton, III............. 0 0 60,000(9) 136,000(10) 1,097,690(9) 1,703,340(10)
Senior Vice President
Sydney J. Rosenberg............. 0 0 38,000(11) 52,000(12) 571,900(11) 554,000(12)
Chairman of the Board until
December of 1997
</TABLE>
- ---------------
(1) Includes stock options granted under the 1984 Plan, 50% of which vest upon
the optionee's 61st birthday and 50% of which vest upon the optionee's 64th
birthday; stock options granted under the 1987 Plan, which vest at a rate
of 20% per year commencing one year after the date of grant; and stock
options granted under the 1996 Plan, which vest according to a schedule
tied to the price of the Company's Common Stock.
(2) Based on a price per share of $27.13 which was the price of a share of
Common Stock on the New York Stock Exchange at the close of business on
October 31, 1997.
(3) Includes 20,000 stock options granted in 1983 at an exercise price of $5.72
per share, 60,000 stock options granted in 1988 at an exercise price of
$5.06 per share, 40,000 stock options granted in 1991 at an exercise price
of $8.49 per share, 30,000 stock options granted in 1994 at an exercise
price of $8.91 per share, 5,000 stock options granted in 1995 at an
exercise price of $11.25 per share and 10,000 stock options granted in 1996
at an exercise price of $18.75 per share.
(4) Includes 20,000 stock options granted in 1983 at an exercise price of $5.72
per share, 20,000 stock options granted in 1994 at an exercise price of
$8.91 per share, 5,000 stock options granted in 1995 at an exercise price
of $11.25 per share, 40,000 stock options granted in 1996 at an exercise
price of $18.75 per share and 100,000 stock options granted in 1996 at an
exercise price of $20.00 per share.
(5) Includes 40,000 stock options granted in 1988 at an exercise price of $5.20
per share, 16,000 stock options granted in 1991 at an exercise price of
$8.49 per share, 18,000 stock options granted in 1994 at an exercise price
of $8.91 per share and 8,000 stock options granted in 1996 at an exercise
price of $18.75 per share.
(6) Includes 28,000 stock options granted in 1983 at an exercise price of $5.72
per share, 12,000 stock options granted in 1994 at an exercise price of
$8.91 per share, 12,000 stock options granted in 1995 at an exercise price
of $11.25 per share, 32,000 stock options granted in 1996 at an exercise
price of $18.75 per share and 80,000 stock options granted in 1996 at an
exercise price of $20.00 per share.
(7) Includes 23,000 stock options granted in 1983 at an exercise price of $5.72
per share, 60,000 stock options granted in 1988 at an exercise price of
$4.78 per share, 16,000 stock options granted in 1991 at
7
<PAGE> 10
an exercise price of $8.49 per share, 24,000 stock options granted in 1994
at an exercise price of $8.91 per share and 6,000 stock options granted in
1996 at an exercise price of $18.75 per share.
(8) Includes 23,000 stock options granted in 1983 at an exercise price of $5.72
per share, and 16,000 stock options granted in 1994 at an exercise price of
$8.91 per share, 24.000 stock options granted in 1996 at an exercise price
of $18.75 per share and 60,000 stock options grated in 1996 at an exercise
price of $20.00 per share.
(9) Includes 20,000 stock options granted in 1988 at an exercise price of $6.06
per share, 16,000 stock options granted in 1991 at an exercise price of
$8.49 per share, 18,000 stock options granted in 1994 at an exercise price
of $8.91 per share and 6,000 stock options granted in 1996 at an exercise
price of $18.75 per share.
(10) Includes 40,000 stock options granted in 1983 at an exercise price of $5.72
per share, 12,000 stock options granted in 1994 at an exercise price of
$8.91 per share, 24,000 stock options granted in 1996 at an exercise price
of $18.75 per share and 60,000 stock options granted in 1996 at an exercise
price of $20.00 per share.
(11) Includes 30,000 stock options granted in 1994 at an exercise price of $9.80
per share, and 8,000 stock options granted in 1996 at an exercise price of
$20.63 per share.
(12) Includes 20,000 stock options granted in 1994 at an exercise price of $9.80
per share and 32,000 stock options granted in 1996 at an exercise price of
$20.63 per share.
SERVICE AWARD BENEFIT PLAN
The Company's Service Award Benefit Plan became effective on November 1,
1989. This plan is an unfunded "severance pay plan" as defined in the Employee
Retirement Income Security Act of 1974, as amended. All qualified employees, as
defined in said Service Award Benefit Plan, earning more than the Internal
Revenue Service determination of a highly compensated individual as determined
each calendar year (currently over $80,000), are eligible for benefits under the
plan. The Company has a separate Profit Sharing and Employee Savings Plan for
all qualified employees, as defined in said Profit Sharing and Employee Savings
Plan, who earn less than such amount. The Service Award Benefit Plan provides
that, upon termination, eligible employees will receive seven days pay for each
full fiscal year of employment subsequent to November 1, 1989. The Company, at
its discretion, may also award additional days each year. The amount of the
payment is based on the average annual compensation, up to a maximum of
$175,000, received by the employee in the current calendar year and the two
calendar years preceding termination. The amount of the payment under the plan,
together with any other severance pay paid to the employee, cannot exceed two
times the compensation received by the employee in the 12 month period preceding
the termination of employment. If employment terminates before the employee has
been employed for five years, except in the case of death, disability or normal
retirement of the employee, or if the employee is terminated for cause (such as
theft or embezzlement), such employee forfeits any benefits payable under the
plan. Following termination, eligible employees will receive their payments
under the plan in two equal installments. Executives, managers and salespersons
of the Company will receive their first payment in the eleventh month following
termination and the second payment no later than the last day of the
twenty-third month following termination. Other eligible employees will receive
their first payment as soon as administratively possible following termination
and their second payment in the thirteenth month following termination. The
payment schedule may be waived for employees who terminate employment after
reaching age 62, or if termination results from death or total disability.
EMPLOYMENT AGREEMENTS
The Company had in effect written employment agreements with all of its
executive officers, including the executive officers named in the foregoing
compensation tables for the fiscal year ended October 31, 1997. Written
employment agreements provide for annual salaries (in the following amounts for
fiscal 1998: $577,944 for William W. Steele; $366,450 for John F. Egan; $287,925
for Martinn H. Mandles and $324,207 for Jess E. Benton, III), annual bonuses
based on pretax profits, plus other customary benefits including, but
8
<PAGE> 11
not limited to, participation in the Company's group health, disability and life
insurance programs. The Company also provides all of its executive officers with
certain other perquisites, such as Company-provided automobiles or car
allowances, an executive group health plan, club memberships and dues, and/or
incidental personal benefits. Sydney J. Rosenberg's employment agreement would
have expired on October 31, 1997, but was extended until December, 1997, at
which time he retired as a director, officer and employee of the Company.
The written employment agreements include several significant restrictions
on increases in annual salary and on payment of annual bonuses that are set
forth in the Executive Officer Compensation & Stock Option Committee Report on
Executive Officer Compensation that follows.
These written employment agreements also provide that upon an executive
officer's retirement from full time employment with the Company at or after
reaching age 65 or in certain other specified events, the Company will pay them
or their respective estates consulting fees in the amounts of: $693,333, plus
$76,666 times the number of years of Mr. Steele's employment with the Company
after November 1, 1996, for William W. Steele; $471,428, plus $42,857 times the
number of years of Mr. Egan's employment with the Company after November 1,
1994, for John F. Egan; and $150,000 each for Martinn H. Mandles and Jess E.
Benton, III. Unless earlier terminated, or later extended pursuant to their
term, these employment agreements continue until October 31, 2000 for William W.
Steele; October 31, 1998 for John F. Egan; and October 31, 1998 for Martinn H.
Mandles and Jess E. Benton, III. Upon Sydney J. Rosenberg's retirement as a
director, officer and employee of the Company in December of 1997, the Company
began and is continuing to make payments of $8,333.33 per month for ten years
pursuant to his previous employment contracts with the Company.
MANAGEMENT INDEBTEDNESS
During fiscal 1984, John F. Egan relocated his personal residence from
Illinois to California in connection with his employment by the Company. As a
condition of his relocation, the Company loaned Mr. Egan $575,000 for the
purchase of a personal residence in California. This loan is secured by a deed
of trust on the residence. The loan, which initially contained a shared
appreciation provision, accrued interest at the rate of 3% per annum from August
of 1987 until July of 1989, and 4% per annum from August of 1989 to December 31,
1991. Effective January 1, 1992, the loan was amended to terminate the shared
appreciation provisions and to provide for an interest rate of 6% per annum. The
loan will mature in 1999, unless accelerated by the occurrence of certain
specified events such as the termination of Mr. Egan's employment with the
Company. As of December 31, 1997, the outstanding principal balance of this loan
was $505,774.14.
EXECUTIVE OFFICER COMPENSATION & STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Maryellen B. Cattani, Henry L. Kotkins, Jr. and William E. Walsh currently
serve as members of the Executive Officer Compensation & Stock Option Committee
of the Board of Directors. They have no relationships with the Company other
than as directors and stockholders. During fiscal 1997, no executive officer of
the Company served as a director, or as a member of the compensation committee,
of any other for-profit entity other than subsidiaries of the Company.
EXECUTIVE OFFICER COMPENSATION & STOCK OPTION COMMITTEE REPORT ON COMPENSATION
February 1, 1998
To the Board of Directors:
INTRODUCTION. Based upon its evaluation of the performance of both the
Company and its executive officers, and subject to existing employment
contracts, the Executive Officer Compensation & Stock Option Committee reviews
and recommends to the Board of Directors the compensation and other terms and
conditions of employment for all eleven executive officers of the Company, who
are: the President & Chief Executive Officer; the Chairman of the Board & Chief
Administrative Officer; two Senior Vice Presidents; five Vice Presidents
(including the Chief Financial Officer); the Controller (Chief Accounting
Officer); and the Treasurer.
9
<PAGE> 12
COMPENSATION PROGRAM. Because the Company is primarily a service business,
the leadership of its executive officers is crucial to the Company's growth and
prosperity. It is the Committee's goal that the policies underlying the
Company's executive compensation programs support the Company's ultimate goal of
enhancing stockholder value by providing value to customers at a profit to the
Company. Each executive officer is compensated through a combination of annual
salary and bonus, plus stock option grants from time-to-time. Subject to the
terms and conditions of the written employment contracts described below, the
Committee reviews the overall compensation of the executive officers primarily
by evaluating their past performance, expectations as to their future
performance, the Company's profitability and other factors such as length of
service to the Company.
To assist in its review, the Committee retains, from time-to-time, the
services of an independent executive compensation consulting firm to evaluate
the Company's cash compensation of its executive officers. The consultant helped
to design the current compensation program and confirmed that this program was
competitive with companies of similar size and performance. Based upon the
results of the evaluation undertaken by its consulting firm, the Committee
believes that the Company's cash compensation program for its executive officers
in general, and the individual cash compensation of the Company's executive
officers in particular, are fair and reasonable. Through the consistent and fair
application of its executive compensation program, the Company believes it will
be able to recruit and retain executives who are best able to contribute to the
overall success of the Company, including the Company's ultimate goal of
enhancing stockholder value.
ANNUAL SALARIES AND BONUSES. The Company has entered into written
employment agreements with all eleven of its executive officers which set forth
the compensation and other terms and conditions of their employment with the
Company. Sydney J. Rosenberg retired as a director, officer and employee in
December of 1997 and his employment agreement terminated at that time.
Under these written employment agreements, each executive officer receives
cash compensation in the form of an annual salary, plus an annual bonus that is
related directly to the profit before taxes of the Company on a consolidated
basis or the division(s) of the Company for which that executive officer is
responsible, and is limited to a specified percentage of each officer's annual
salary. If the annual bonus exceeds the specified limit, the executive is
eligible for an additional bonus at the discretion of the Executive Officer
Compensation & Stock Option Committee.
For the Company's executive officers to be entitled to receive an increase
in annual salary under their written employment agreements, the Company's
earnings per share for fiscal years beginning with 1995 must equal or exceed the
Company's earnings per share for the previous fiscal year, in which case the
annual salaries are increased by an amount equal to the percentage change in the
American Compensation Association Index for the Western Region, up to a maximum
of 6% per year.
The annual bonus of each executive officer is either a percentage of profit
for the current fiscal year, or it is a percentage of both the profit for the
current fiscal year and any increase in profit over the previous fiscal year.
All such bonuses are calculated and earned only after completion of the
Company's annual audit. However, for any of the Company's executive officers to
receive an annual bonus under the written employment agreements, the Company's
annual earnings per share for any fiscal year after 1995 must exceed 80% of the
Company's earnings per share for the previous fiscal year. The Committee views
the annual bonus as an important part of the overall compensation of each
executive officer because it provides each of them with a material stake in the
financial performance of the Company and/or the division(s) of the Company for
which they are responsible. The members of the Executive Officer Compensation &
Stock Option Committee expect that such bonuses will represent a significant
portion of an executive officer's annual salary if the Company and/or the
applicable division(s) achieve their projected income. Accordingly, a portion of
the compensation of each executive officer is related directly to the Company's
profitability and, therefore, to the Company's ultimate goal of enhancing
stockholder value.
Prior to the expiration of a written employment agreement between the
Company and an executive officer, the Committee will evaluate the compensation
of that officer in accordance with the executive compensation program described
above, focusing on motivating that officer to attain corporate and individual
performance objectives.
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<PAGE> 13
OTHER COMPENSATION. The Company's executive officers are also eligible to
participate in compensation and benefit programs generally available to other
employees, including, but not limited to, the Company's group health, disability
and life insurance programs. In accordance with the terms and conditions of the
written employment agreements, the Company also provides its executive officers
with certain perquisites, such as Company-provided automobiles or car
allowances, an executive group health plan, club memberships and dues, and/or
incidental personal benefits.
BASIS FOR CEO COMPENSATION. The Chief Executive Officer's cash compensation
for fiscal 1997 was determined by such officer's employment contract. The annual
bonus of the Chief Executive Officer is calculated as a percentage of both the
profit for the current fiscal year and any increase in profit over the previous
fiscal year. The Chief Executive Officer's compensation is evaluated in
accordance with the factors and criteria used to evaluate all executive officers
and is subject to the same limitations described above.
IRS SECTION 162(m). Section 162(m) of the Internal Revenue Code of 1986
generally limits a corporation's annual federal tax deduction for compensation
(including stock-based compensation such as options) paid to certain top
executive officers. The Company generally may deduct such compensation only to
the extent that the amount paid to any such officer does not exceed $1,000,000
during any fiscal year or is "performance-based" as defined in Section 162(m).
The Company does not expect the deductibility limit of Section 162(m) to have a
material effect on the Company because cash compensation paid to each of the
Company's executive officers currently is less than $1,000,000 per year except
with respect to the Company's Chief Executive Officer, whose fiscal 1997 cash
compensation exceeded $1,000,000 by only a small amount. However, for the
purpose of Section 162(m), the Company's Chief Executive Officer's fiscal 1997
cash compensation is below $1,000,000 because he deferred receipt of a
percentage of such compensation pursuant to the Company's non-qualified deferred
compensation plan. In addition, the Company believes that non-qualified stock
options granted under the Company's stock option plans are exempt from the
deductibility limitation because such options have been qualified as
"performance-based" compensation under Section 162(m). Incentive stock options
granted under the Company's stock option plans generally do not entitle the
Company to a tax deduction without regard to Section 162(m).
Executive Officer Compensation &
Stock Option Committee
Maryellen B. Cattani, Chairman
Henry L. Kotkins, Jr., Member
William E. Walsh, Member
EXECUTIVE OFFICER COMPENSATION & STOCK OPTION COMMITTEE REPORT ON STOCK OPTIONS
February 1, 1998
To the Board of Directors:
The Executive Officer Compensation & Stock Option Committee administers the
Company's stock option plans and authorizes grants thereunder. The Company's
stock option plans provide executive officers and other employees with an
opportunity to purchase a proprietary interest in the Company and thus encourage
them to become and remain employed by the Company. The Committee views the
granting of stock options and the ownership of stock as important mechanisms for
relating overall compensation of executive officers and other employees directly
to the Company's ultimate goal of enhancing stockholder value. During 1997, the
Committee approved stock options for 5 newly-hired or promoted officers to
purchase a total of 32,500 shares under the 1987 Plan, and approved stock
options for 23 senior executives and other officers of the Company to purchase
1,080,000 shares under the 1996 Plan. There were no stock options granted under
the 1984 Plan in fiscal 1997.
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<PAGE> 14
In determining the number of stock options to be granted to the executive
officers, the Committee considers each officer's performance, the Company's
overall profitability, the aggregate number of such stock options that had been
granted in recent years, and other factors such as length of service to the
Company.
Executive Officer Compensation &
Stock Option Committee
Maryellen B. Cattani, Chairman
Henry L. Kotkins, Jr., Member
William E. Walsh, Member
PERFORMANCE GRAPH
Set forth below is a graph comparing the five-year cumulative total
stockholder return on the Company's Common Stock with the five-year cumulative
total return of: (a) the Standard & Poor's 500 and (b) a peer group of companies
that, like the Company, (i) are currently listed on the New York Stock Exchange,
(ii) have been publicly-traded for at least five years and (iii) have a market
capitalization of $625 million to $650 million (based on the most recent
publicly-available number of shares outstanding on December 31, 1997 and the
closing price of such shares on that date). The peer group consists of the
following companies, in addition to the Company: ACM Government Income Fund,
American Health Properties, Colonial Properties Trust, D. R. Horton, Inc.
Foremost Corporation of America, Graco Inc., Hudson Foods Inc., Hughes Supply
Inc. Nonics Inc., Irvine Apartment Communities, KCS Energy Inc. Kellwood Co.,
Kuhlman Corp., Mastec Inc., Orange & Rockland Utilities, Plantronics Inc.,
Spelling Entertainment Group Inc., True North Communications, United
Illuminating Co.
Although the criteria for selecting companies to be included in the peer
group are the same as the criteria used in last year's proxy statement (except
that the range of market capitalization has been revised upward to take into
account the Company's increased capitalization), the following companies from
last year's peer group have been deleted from this year's peer group because
they failed to meet the market capitalization requirement set forth above and/or
they are not currently listed on the New York Stock Exchange: American Heritage
Life Investment Corporation, Blackrock North American Government Income Trust,
Inc., BP Prudhoe Bay Royalty Trust, The Brazil Fund, Inc., Chemed Corporation,
Diagnostic Products Corporation, Eastern Utilities Association, Griffon
Corporation, Laboratory Corporation of America Holdings, MFS Municipal Income
Trust, Nuveen California Select Quality Municipal Fund, Inc., Nuveen New York
Select Quality Municipal Fund, Inc., Nuveen New York Quality Income Municipal
Fund, Inc., Public Service Company of North Carolina, Quanex Corporation,
Savannah Foods & Industries Inc., Southern Union Company, Southwestern Energy
Company, The Taiwan Fund, Inc. and Tesoro Petroleum Corporation.
The Company does not believe it can reasonably identify a peer group of
companies on an industry or line of business basis for the purpose of developing
a comparative performance index. The building services industry is highly
fragmented, primarily consisting of privately-owned businesses that provide a
limited range of services on a local or regional basis. While the Company is
aware that some other publicly-traded companies market services in one or more
of the Company's eight lines of business, none of these other companies provide
most or all of the services offered by the Company, and many offer other
services or products as well. Moreover, some of these other companies that
engage in one or more of the Company's eight lines of business do so through
divisions or subsidiaries that are not publicly-traded and/or reported. For all
of these reasons, no such comparison would, in the opinion of the Company,
provide a meaningful index of comparative performance.
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<PAGE> 15
The comparisons in the graph shown are based on historical data and are not
indicative of, or intended to forecast, the possible future performance of the
Company's Common Stock.
FIVE-YEAR CUMULATIVE TOTAL RETURN TO STOCKHOLDERS*
<TABLE>
<CAPTION>
S&P 500 PEER
FISCAL YEARS ENDED OCTOBER 31ST ABM INDEX GROUP
<S> <C> <C> <C>
1992 100 100 100
1993 94 115 134
1994 124 119 128
1995 160 151 161
1996 218 187 177
1997 342 247 225
</TABLE>
* Assumes: (a) $100.00 invested on November 1, 1992, and (b) immediate
reinvestment of all interim dividends.
PRINCIPAL STOCKHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to the persons or
entities known to the Company to be beneficial owners of more than 5% of the
Company's Common Stock as of February 4, 1998:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF
BENEFICIAL OWNER SHARES PERCENT
------------------------------------------------------- --------- -------
<S> <C> <C>
The Theodore Rosenberg Trust(1)........................ 2,407,770(2) 11.6%
295-89th Street, Suite 200
Daly City, California 94015
The Sydney J. Rosenberg Trust(l)....................... 2,375,696(3) 11.5%
9831 West Pico Boulevard
Los Angeles, California 90035
Palisade Capital Management L.L.C...................... 1,758,300 8.5%
One Bridge Plaza, #695
Fort Lee, New Jersey 07024
GeoCapital Corporation................................. 1,744,000(4) 8.4%
767 Fifth Avenue
New York, New York 10153
</TABLE>
- ---------------
(1) The Sydney J. Rosenberg Trust and The Theodore Rosenberg Trust may each be
deemed to be a member of a group within the meaning of Section 13 (d) (5) of
the Securities Exchange Act of 1934, as amended, and therefore, each may be
deemed to own an aggregate of 4,783,466 shares of Common Stock or
approximately 23.1% of the outstanding Common Stock. Subject to the
foregoing, The Sydney J. Rosenberg Trust and The Theodore Rosenberg Trust
disclaim beneficial ownership of shares held by the other.
(2) Includes 2,368,778 shares of Common Stock held in the name of The Theodore
Rosenberg Trust, an inter vivos trust of which Theodore Rosenberg is sole
Trustee and beneficiary. Theodore Rosenberg may
13
<PAGE> 16
be deemed the beneficial owner of all such shares. Also includes 30,792
shares of Common Stock held by a family charitable foundation, of which
Theodore Rosenberg is a director. Theodore Rosenberg and The Theodore
Rosenberg Trust disclaim beneficial ownership of the shares held by the
family charitable foundation. Also includes 8,200 shares subject to
outstanding stock options held by Theodore Rosenberg that were exercisable
on or within 60 days after February 4, 1998.
(3) Includes 2,231,264 shares of Common Stock held in the name of The Sydney J.
Rosenberg Trust, an inter vivos trust of which Sydney J. Rosenberg is the
sole beneficiary, and may be deemed the beneficial owner of all such shares.
The Co-Trustees of the Trust are Martinn H. Mandles, Brad Rosenberg and Bank
of America NT&SA, who have certain voting and investment rights with regard
to such shares; however, each disclaims beneficial ownership of such shares.
Also includes 63,732 shares of Common Stock held by Sydney J. Rosenberg's
wife and 32,700 shares held by a family charitable foundation, of which
Sydney J. Rosenberg is a director. Sydney J. Rosenberg and The Sydney J.
Rosenberg Trust disclaim beneficial ownership of the shares held by his wife
and by the family charitable foundation. Also includes 38,000 shares subject
to outstanding stock options held by Sydney J. Rosenberg that were
exercisable on or within 60 days after February 4, 1998.
(4) Based on information provided to the Company as of February 5, 1998 by
GeoCapital Corporation. Does not include 10,000 shares held by their
president, as reported to the Company by GeoCapital Corporation.
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates, as to each named executive officer, director
and nominee, and as to all directors and executive officers as a group, the
number of shares and percentage of the Company's Common Stock beneficially owned
as of February 4, 1998:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED AS OF
FEBRUARY 4, 1998
------------------------------
NUMBER OF
SHARES PERCENT(1)
--------- ----------
<S> <C> <C>
Jess E. Benton, III............................. 128,561(2) *
Maryellen B. Cattani............................ 13,200(3) *
Linda Chavez.................................... -0- *
John F. Egan.................................... 275,637(4) 1.3%
Luke S. Helms................................... 5,200(5) *
Charles T. Horngren............................. 21,000(6) *
Henry L. Kotkins, Jr............................ 7,000(7) *
Martinn H. Mandles.............................. 2,448,513(8) 11.8%
Sydney J. Rosenberg............................. 2,375,696(9)(10) 11.5%
Theodore Rosenberg.............................. 2,407,770(10)(11) 11.6%
William W. Steele............................... 243,875(12) 1.2%
William E. Walsh................................ 16,200(13) *
Executive officers and directors
as a group (19 persons)....................... 6,191,663(14) 29.8%
</TABLE>
- ---------------
* Less than 1.00%
(1) Based on a total of 20,744,308 shares of Common Stock outstanding as of
February 4, 1998.
(2) Includes 76,000 shares subject to outstanding stock options held by Jess E
Benton, III that were exercisable on or within 60 days after February 4,
1998.
(3) Includes 8,200 shares subject to outstanding stock options held by
Maryellen B. Cattani that were exercisable on or within 60 days after
February 4, 1998.
14
<PAGE> 17
(4) Includes 167,000 shares subject to outstanding stock options held by John
F. Egan that were exercisable on or within 60 days after February 4, 1998.
(5) Includes 4,200 shares subject to outstanding stock options held by Luke S.
Helms that were exercisable on or within 60 days after February 4, 1998.
(6) Includes 14,200 shares subject to outstanding stock options held by Charles
T. Horngren that were exercisable on or within 60 days after February 4,
1998.
(7) Includes 5,000 shares subject to outstanding stock options held by Henry L.
Kotkins, Jr. that were exercisable on or within 60 days after February 4,
1998.
(8) Includes 2,231,264 shares of Common Stock held in the name of The Sydney J.
Rosenberg Trust, an inter vivos trust, of which Sydney J. Rosenberg is the
sole beneficiary, and Sydney J. Rosenberg may be deemed the beneficial
owner of all such shares. The Co-Trustees of the trust are Martinn H.
Mandles, Brad Rosenberg and Bank of America NT&SA, who have certain voting
and investment rights with regard to such shares; however, each disclaims
beneficial ownership of such shares. Also includes 50,736 shares of Common
Stock held by The Leo L. Schaumer Trust, a testamentary trust of which Mr.
Mandles is Co-Trustee with Bank of America NT&SA. Mr. Mandles disclaims
beneficial ownership of all such shares. Also includes 108,000 shares
subject to outstanding stock options held by Martinn H. Mandles that were
exercisable on or within 60 days after February 4, 1998.
(9) Includes 2,231,264 shares of Common Stock held in the name of The Sydney J.
Rosenberg Trust, an inter vivos trust of which Sydney J. Rosenberg is the
sole beneficiary, and Sydney J. Rosenberg may be deemed the beneficial
owner of all such shares. Also includes 63,732 shares of Common Stock held
by Sydney J. Rosenberg's wife, and 32,700 shares held by a family
charitable foundation of which Sydney J. Rosenberg is a director. Sydney J.
Rosenberg and The Sydney J. Rosenberg Trust disclaim ownership of the
shares held by his wife and the family charitable foundation. Also includes
38,000 shares subject to outstanding stock options held by Sydney J.
Rosenberg that were exercisable on or within 60 days after February 4,
1998.
(10) The Sydney J. Rosenberg Trust and The Theodore Rosenberg Trust may each be
deemed to be a member of a group within the meaning of Section 13(d)(5) of
the Securities and Exchange Act of 1934, as amended, and therefore each may
be deemed to own an aggregate of 4,783,466 shares of Common Stock or
approximately 23.1% of the outstanding Common Stock. Subject to the
foregoing, each of them disclaim beneficial ownership of shares held by the
other.
(11) Includes 2,368,778 shares of Common Stock held in the name of The Theodore
Rosenberg Trust, an inter vivos trust of which Theodore Rosenberg is the
sole Trustee and beneficiary. Also includes 30,792 shares of Common Stock
held by a family charitable foundation of which Theodore Rosenberg is a
director. Theodore Rosenberg and The Theodore Rosenberg Trust disclaim
beneficial ownership of the shares held by the family charitable
foundation. Also includes 8,200 shares subject to outstanding stock options
held by Theodore Rosenberg that were exercisable on or within 60 days after
February 4, 1998.
(12) Includes 215,400 shares subject to outstanding stock options held by
William W. Steele that were exercisable on or within 60 days after February
4, 1998.
(13) Includes 14,200 shares subject to outstanding stock options held by William
E. Walsh that were exercisable on or within 60 days after February 4, 1998.
(14) Includes 990,700 shares subject to outstanding stock options held by the
Company's executive officers and directors that were exercisable on or
within 60 days after February 4, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers and persons who own more than 10 percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Based on a
review of the reporting forms and representations of its directors, officers and
10 percent shareholders, the Company believes that during fiscal 1997 all such
persons were in compliance with the reporting requirements.
15
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases office space in Los Angeles from several children of
Sydney J. Rosenberg and Theodore Rosenberg pursuant to a lease that expires in
June 1999. As of December 31, 1997, the aggregate rental payments made under the
lease since its inception on July 1, 1979 were $499,776. The current rental
payment for the leased property is $2,826 per month, plus an increase of $62 per
month on July 1 of each year. Neither Sydney J. Rosenberg nor Theodore Rosenberg
directly or indirectly receives any proceeds from the lease.
APPOINTMENT OF AUDITORS
KPMG Peat Marwick LLP, independent certified public accountants, have been
selected as the Company's principal accountants for the current year.
Representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting
with the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
OTHER MATTERS
As of the date of this proxy statement, there are no other matters which
the Board of Directors intends to present or has reason to believe others will
present at the Annual Meeting of Stockholders. If other matters properly come
before the Annual Meeting, those persons named in the accompanying proxy will
vote in accordance with their judgment.
1999 ANNUAL MEETING OF STOCKHOLDERS
Stockholders are entitled to present proposals for action at stockholders'
meetings if they comply with the requirements of the proxy rules. In connection
with this year's Annual Meeting, no stockholder proposals were presented. Any
proposals intended to be presented at the 1999 Annual Meeting must be received
at the Company's offices on or before October 20, 1998 in order to be considered
for inclusion in the Company's proxy statement and form of proxy relating to
such meeting.
By Order of the Board of Directors
/s/ HARRY H. KAHN
Harry H. Kahn, Esq.
Vice President, General Counsel &
Secretary
February 17, 1998
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<PAGE> 19
(LOGO)
<PAGE> 20
<TABLE>
<S> <C>
Please mark [X]
your votes
as this
The Board of Directors recommends a vote FOR Item 1.
Item 1. ELECTION OF DIRECTORS
WITHHELD
FOR FOR ALL
Nominees: Luke S. Helms, Henry L. Kotkins, Jr. and [ ] [ ]
William E. Walsh
WITHHELD FOR: (Write that nominee's name in
the space provided below).
___________________________________________ ADDRESS CHANGE: Please mark this box if you have [ ]
an address change and indicate such change below.
Receipt is hereby acknowledged of the ABM
Industries Incorporated Notice of Meeting and Proxy
Statement.
Signature(s)________________________________________________________________________________________ Date_________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
- ---------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
<PAGE> 21
PROXY
ABM INDUSTRIES INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
March 17, 1998
This Proxy is Solicited on Behalf of the Board of Directors of
ABM Industries Incorporated
The undersigned hereby appoints William W. Steele, Martinn H. Mandles and
Harry H. Kahn, and each of them, proxies for the undersigned, with full power
of substitution, to vote all shares of ABM Industries Incorporated capital
stock which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of ABM Industries Incorporated at The World Trade Club, Ferry
Building, The Embarcadero, San Francisco, California, on Tuesday, March 17,
1998 at 10:00 a.m., or at any adjournment thereof, upon the matters set forth
on the reverse side and described in the accompanying Proxy Statement and upon
such other business as may properly come before the meeting or any adjournment
thereof.
Please mark this proxy as indicated on the reverse side to vote on any
item. If you wish to vote in accordance with the Board of Directors'
recommendation, please sign the reverse side; no boxes need to be checked.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
