<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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
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
160 Pacific Avenue, Suite 222
San Francisco, California 94111
------------------------
NOTICE OF THE YEAR 2000 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MARCH 21, 2000
10:00 A.M.
------------------------
To Our Stockholders:
The Year 2000 Annual Meeting of Stockholders of ABM Industries Incorporated
will be held at The World Trade Club, 3rd Floor, Ferry Building, The
Embarcadero, San Francisco, California 94111, on Tuesday, March 21, 2000 at
10:00 a.m. for the following purposes:
(1) to elect four directors; and
(2) to transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of the Company at the close of business on January 31,
2000 will be entitled to vote at the Annual Meeting and any adjournments
thereof. A complete list of the Company's stockholders entitled to vote at the
Annual Meeting will be available for examination by any stockholder for ten days
prior to the meeting during normal business hours at the Company's executive
offices.
By Order of the Board of Directors
[/s/ HARRY H. KAHN, ESQ.]
Harry H. Kahn, Esq.
Senior Vice President, General Counsel
&
Corporate Secretary
San Francisco, California
February , 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE MARK YOUR VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE.
<PAGE> 3
LOGO
160 Pacific Avenue, Suite 222
San Francisco, California 94111
------------------------
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 Year 2000 Annual Meeting of Stockholders of the Company (the "Annual
Meeting") to be held at The World Trade Club, 3rd Floor, Ferry Building, The
Embarcadero, San Francisco, California 94111, at 10:00 a.m. on March 21, 2000,
and at any adjournments of the Annual Meeting, for the purposes set forth in the
accompanying notice.
Only stockholders of the Company at the close of business on the record
date of January 31, 2000 will be entitled to vote at the Annual Meeting. At the
close of business on that date, there were outstanding 22,338,157 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.
A majority of the Company's outstanding shares as of the record date must
be present at the meeting in order to hold the meeting and conduct business.
This is called a quorum. Shares are counted as present at the meeting if: (a)
the stockholder is present and votes in person at the meeting or, (b) has
properly submitted a proxy card. 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 "Withhold Authority";
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 are to be voted, the proxy holders will vote the shares "For" the
election of the nominees as director and in their discretion on other matters.
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, electronically or
personally. 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 entities for their reasonable expenses.
This Proxy Statement and the accompanying proxy were first sent to
stockholders on or about February 14, 2000.
ITEM 1 -- ELECTION OF DIRECTORS
The Company's Certificate of Incorporation divides the Board of Directors
into three classes, with each class serving a three-year term. Currently, the
total number of directors comprising the Board of Directors is set by the
Company's Bylaws at nine. Four members of the current Board of Directors have
terms expiring at this Annual Meeting of stockholders, three have terms expiring
at the 2001 Annual Meeting, and two have
<PAGE> 4
terms expiring at the 2002 Annual Meeting. Under the terms of its Certificate of
Incorporation, the Company is required to adjust the classes of directors at the
time of the Annual Meeting so that they are as nearly equal in number as
possible. Accordingly, the Board of Directors has nominated the directors listed
in the table below to serve for terms ending as shown opposite their respective
names, or until their successors have been elected and qualified.
In the absence of instructions to the contrary, shares represented by the
accompanying proxy will be voted "For" the election of the nominees recommended
by the Board of Directors, who are named in the following table. The nominees
receiving the highest number of votes in each class 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, Governance & Succession Committee will consider nominees
recommended by stockholders. The Company's Bylaws provide that stockholders
intending to nominate candidates for election as directors at an Annual Meeting
of Stockholders must give the prescribed notice to the Secretary of the Company
at least 60 days prior to the first anniversary of the mailing of the Proxy
Statement in connection with the previous year's Annual Meeting. No such notice
has been given with respect to this year's Annual Meeting.
The following table contains certain information concerning the nominees
and the Company's other directors which is based on data furnished by them.
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
TO SERVE
SERVED AS FOR A
PRINCIPAL OCCUPATIONS AND BUSINESS DIRECTOR TERM
NAME AGE EXPERIENCE DURING PAST FIVE YEARS SINCE ENDING
---- --- ---------------------------------- --------- --------
<S> <C> <C> <C> <C>
Linda Chavez........ 52 President of the Center for Equal 1997 2003
Opportunity; nationally syndicated
columnist and television commentator
Martinn H.Mandles... 59 Chairman of the Board of the Company since 1991 2002
December 1997; Chief Administrative Officer
since November 1991; Executive Vice
President from November 1991 to December
1997
Theodore Rosenberg.. 91 Chairman of the Company's Executive 1962 2003
Committee(1)
William W. Steele... 63 President & Chief Executive Officer of the 1988 2003
Company since November 1994
</TABLE>
- - ---------------
(1) Effective as of December 31, 1989, Theodore Rosenberg retired as an officer
and employee of the Company after more than fifty years of such service.
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.
2
<PAGE> 5
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
TO SERVE
SERVED AS FOR A
PRINCIPAL OCCUPATIONS AND BUSINESS DIRECTOR TERM
NAME AGE EXPERIENCE DURING PAST FIVE YEARS SINCE ENDING
---- --- ---------------------------------- --------- --------
<S> <C> <C> <C> <C>
Maryellen B. Cattani, Esq... 56 Attorney-at-law; Executive Vice President, 1993 2002
General Counsel & Corporate Secretary of
APL Limited from 1991 to 1997(1)
Luke S. Helms............... 56 Vice Chairman of KeyBank since March of 1995 2001
1998; Vice Chairman of BankAmerica
Corporation and Bank of America NT&SA from
May of 1993 to October of 1996
Charles T. Horngren......... 73 Edmund W. Littlefield Professor of 1973 2002
Accounting, Emeritus, Stanford University
Graduate School of Business, author and
consultant(2)
Henry L. Kotkins, Jr. ...... 51 President & Chief Executive Officer of 1995 2001
Skyway Luggage Company(3)
William E. Walsh............ 68 General Manager of the San Francisco 49ers 1993 2001
since January of 1999; author, management
consultant and NFL Hall of Fame Coach
</TABLE>
- - ---------------
(1) Maryellen B. Cattani is a member of the Board of Directors of Golden West
Financial Corporation and World Savings & Loan Association.
(2) Charles T. Horngren is a member of the Board of Directors of Interplast,
Inc.
(3) Henry L. Kotkins, Jr. is a member of the Board of Directors of Skyway
Luggage Company.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The standing committees of the Company's Board of Directors are the Audit
Committee, Executive Committee, Executive Officer Compensation & Stock Option
Committee, and the Nominating, Governance & Succession 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 audit 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 of Directors under
Delaware law, the Executive Committee has the authority to exercise all powers
of the Board with regard to the business of the Company, subject to certain
other limitations established by the Board. The current members of the Executive
Committee are Theodore Rosenberg, Chairman; Martinn H. Mandles; and William W.
Steele.
Executive Officer Compensation & 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 employee 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.
3
<PAGE> 6
Nominating, Governance & Succession Committee. The Nominating, Governance &
Succession 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
Committee is also responsible for executive officer succession and matters of
corporate governance in general. The current members of the Nominating,
Governance & Succession Committee are Luke Helms, Chairman; Linda Chavez; and
Henry L. Kotkins, Jr.
MEETINGS AND ATTENDANCE
During the fiscal year ended October 31, 1999, the Board of Directors met
six times, the Executive Committee met 24 times, the Audit Committee met four
times, and the Executive Officer Compensation and Stock Option Committee met
three times. During this period, the only directors who attended fewer than 75%
of the total number of meetings of the Board and Committees of which he or she
was a member were Linda Chavez and William E. Walsh.
COMPENSATION OF DIRECTORS
During the Company's fiscal year ended October 31, 1999, Directors who are
not employees of the Company ("Outside Directors") were paid retainer fees of
$24,000 per year and $2,000 for each Board or Committee meeting attended.
Outside Directors who serve as chairpersons of the standing committees received
an additional retainer fee of $2,000 per year. Pursuant to the terms of the
Company's "Time-Vested" Incentive Stock Option Plan adopted in 1987, as amended,
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 of 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 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, retired as an officer and
employee of the Company in 1989. Upon his retirement as an officer and employee,
the Company began and has continued making payments of $8,333.33 per month for
ten years pursuant to his previous employment contract with the Company. In
addition, Theodore Rosenberg provides consulting services to the Company on a
month-to-month basis, for which services he received a fee of $8,333 per month.
The late Sydney J. Rosenberg retired as a director, officer and employee of the
Company in December of 1997. Upon his retirement, the Company began and has
continued making payments of $8,333.33 per month to Sydney J. Rosenberg or his
estate for a period of ten years pursuant to his previous employment contract.
4
<PAGE> 7
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company for all services in all
capacities rendered to the Company and its subsidiaries during the fiscal years
ended October 31, 1999, 1998 and 1997 are set forth below. Columns regarding
"Other Annual Compensation," "Restricted Stock Awards," "Long-Term Incentive
Plan Payouts" and "All Other Compensation" are excluded because no reportable
payments were made to these executive officers in or for the relevant years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION(L) STOCK
FISCAL ----------------------- OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) GRANTED(#)
--------------------------- ------ ---------- --------- ------------
<S> <C> <C> <C> <C>
William W. Steele................................ 1999 $605,107 $496,466 -0-
President & Chief Executive Officer since
November 1994 1998 577,944 484,544 15,000
1997 552,000 462,598 100,000
Martinn H. Mandles............................... 1999 406,157 248,233 -0-
Chairman of the Board since December 1997; 1998 387,925 242,272 12,500
Chief Administrative Officer since November
1991; 1997 275,000 231,299 80,000
Executive Vice President from November 1991
through November 1997
John F. Egan..................................... 1999 383,673 180,338 -0-
Vice President of the Company since March 1984; 1998 366,450 165,664 12,500
Special Assistant to the President of the
Company 1997 350,000 126,537 60,000
since November 1999; President of the
Janitorial
Services Division from November 1991 through
October 1999
Henrik C. Slipsager.............................. 1999 383,673 118,870 -0-
Executive Vice President of the Company, and 1998 366,450 106,126 42,500
President of the Janitorial Services Division, 1997 271,702 135,851 50,000
since November 1999; Senior Vice President of
the Company, and Executive Vice President of
the Janitorial Services Division, from January
1997 through October 1999
Jess E. Benton, III.............................. 1999 339,445 145,291 -0-
Executive Vice President of the Company since 1998 324,207 124,849 12,500
November 1999; Senior Vice President of the 1997 276,627 150,477 60,000
Company from July 1994 through October 1999
</TABLE>
- - ---------------
(1) Includes amounts deferred under the Company's Deferred Compensation Plan.
5
<PAGE> 8
OPTIONS GRANTED TO EXECUTIVE OFFICERS
The Executive Officer Compensation & Stock Option Committee of the Board of
Directors currently has authority to grant stock options under either the
"Age-Vested" Career Stock Option Plan adopted in 1984, as amended (the "1984
Plan"), the "Time-Vested" Incentive Stock Option Plan adopted in 1987, as
amended (the "1987 Plan"), or the "Price-Vested" Performance Stock Option Plan
adopted in 1996 (the "1996 Plan"). During the last fiscal year, no stock options
were granted to the executive officers named in the foregoing Summary
Compensation Table. The following table sets forth certain information regarding
options exercised and owned by such executive officers.
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
COMMON SHARES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS ON IN-THE-MONEY OPTIONS
ACQUIRED OCTOBER 29, 1999(2) ON OCTOBER 29, 1999(3)
ON VALUE --------------------------- ---------------------------
NAME AND POSITION EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William W. Steele........ 115,000 $1,895,350 112,500 77,500 $ 444,375 $199,375
President & Chief
Executive Officer
Martinn H. Mandles....... -0- -0- 130,000 88,500 1,050,840 819,342
Chairman of the Board &
Chief Administrative
Officer
John F. Egan............. -0- -0- 148,250 56,250 1,529,230 537,192
Vice President &
Special Assistant to
the President
Henrik C. Slipsager...... -0- -0- 40,000 52,500 124,500 109,250
Executive Vice
President of the
Company and President
of the Janitorial
Services Division
Jess E. Benton, III...... -0- -0- 109,000 79,500 961,965 845,827
Executive Vice
President
</TABLE>
- - ---------------
(1) The value realized equals the difference between the stock option exercise
price and the fair market value of the Company's Common Stock on the date of
exercise, multiplied by the number of shares for which the stock option was
exercised.
(2) 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 based on the
price of the Company's Common Stock.
(3) The value of unexercised in-the-money options equals the difference between
the stock option exercise price and $23.875, the closing price of the
Company's Common Stock on the New York Stock Exchange on October 29, 1999
(the last day of trading for fiscal year 1999), multiplied by the number of
shares underlying the stock option.
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
6
<PAGE> 9
(currently over $80,000), are eligible for benefits under the plan. The Company
has a separate 401(k) and Profit Sharing Plan (the "401(k) Plan") for all
qualified employees, as defined in said 401(k) 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 calendar year of employment
subsequent to December 31, 1991. 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 has entered into written employment agreements with all of its
executive officers, including the five executive officers named in the Summary
Compensation Table. Written employment agreements that would have expired on
October 31, 1999, if any, were extended and otherwise amended as of November 1,
1999, and provide for annual salaries (in the following amounts for fiscal 2000:
$632,942 for William W. Steele; $424,840 for Martinn H. Mandles; $401,322 each
for John F. Egan and Henrik C. Slipsager, and $355,059 for Jess E. Benton),
annual bonuses based on pretax profits, plus other customary benefits including,
but 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
incidental personal benefits.
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, (i) for William
W. Steele, $693,333, plus $76,666 times the number of years of Mr. Steele's
employment with the Company after November 1, 1996; (ii) for Martinn H. Mandles,
$500,000; (iii) for John F. Egan, $471,428, plus $42,857 times the number of
years of Mr. Egan's employment with the Company after November 1, 1994; and
$250,000 each for Henrik C. Slipsager and Jess E. Benton, III. Unless earlier
terminated, or later extended pursuant to their term, these employment
agreements continue until October 31, 2000 for each of the above-named executive
officers.
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
7
<PAGE> 10
provisions and to provide an interest rate of 6% per annum. The maturity date of
the loan had been extended to August 1, 2000. However, on January 21, 2000 Mr.
Egan paid off the outstanding balance of $489,887.
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 1999, 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, 2000
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 fourteen executive officers of the Company, who
are: the President and Chief Executive Officer; the Chairman of the Board and
Chief Administrative Officer; two Executive Vice Presidents, four Senior Vice
Presidents (including the Chief Financial Officer); and six Vice Presidents
(including the Controller and Chief Accounting Officer; and the Treasurer).
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 services 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, incentivize 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 fourteen of its executive officers which set
forth the compensation and other terms and conditions of their employment with
the Company. 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.
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 each fiscal year must equal or exceed the Company's
earnings per share for the previous fiscal year, in which case the annual
salaries are increased
8
<PAGE> 11
by an amount equal to the percentage change in the American Compensation
Association Index for the Western Region 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.
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
incidental personal benefits.
Basis for CEO Compensation. The Chief Executive Officer's cash compensation
for fiscal 1999 was determined by such officer's employment contract. 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). 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 William W. Steele, the
Company's President & Chief Executive Officer, whose fiscal 1999 cash
compensation exceeded $1,000,000 by an amount less than Mr. Steele's
contribution to the Company's Deferred Compensation Plan. Consequently, the
Company did not lose any part of its federal income tax deduction for Mr.
Steele's compensation. 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
9
<PAGE> 12
EXECUTIVE OFFICER COMPENSATION & STOCK OPTION COMMITTEE REPORT ON STOCK OPTIONS
February 1, 2000
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 fiscal
1999, the Committee approved stock options for 19 newly-hired or recently
promoted employees to purchase a total of 75,000 shares under the "Age-Vested"
Career Stock Option Plan adopted in 1984, as amended; and approved stock options
for 168 newly hired or recently promoted employees to purchase of total of
90,600 shares under the "Time-Vested" Incentive Stock Option Plan adopted in
1987, as amended. During fiscal 1999, no stock option grants were approved under
the "Price-Vested" Performance Stock Option Plan adopted in 1996.
In determining the number of stock options to be granted to employees, the
Committee considers each employee's responsibility and 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
10
<PAGE> 13
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 all
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 $525 million to $550 million (based on the most
recent publicly available number of shares outstanding on December 31, 1999 and
the closing price of such shares on that date). The peer group consists of the
following companies, in addition to the Company: Atwood Oceanics, Bandag, C & D
Technologies, China Eastern Airlines, Crown Pacific Partners, E'Town, Energen,
Hanna (MA), Hayes Lemmerz International, Home Properties New York, Indiana
Energy, Industrias Bachoco, JDN Realty, Jefferies Group, Kellwood, McDermott
International, Metso, MFS Charter Income Trust, Moore Corporation, Northern
Border Partners, Russ Berrie, Sigcorp, Simpson Manufacturing, SL Green Realty,
Standard Register, Total Renal CareHoldings, Tricom, Vina Concha y Toro, Walden
Residential Properties, Walter Industries, Washington REIT.
The market capitalization criteria for selecting companies to be included
in the peer group differs from last year's proxy statement because of the change
in the market capitalization of the Company between December 31, 1998 and
December 31, 1999. Last year's peer group consisted of the following companies
that, like the Company, had market capitalizations of $625 to $650 million at
December 31, 1998: AAR, Ackerley Group, Baker Fentress, Ballard Medical
Products, CBL & Associates Properties, Credicorp, F & M National, Muniyield
Fund, Newpark Resources, Omega Healthcare Investors, Overseas Shipholding Group,
Pilgrims Pride, Sierra Health Services and Smucker (JM).
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 facility 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 nine 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 nine 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.
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.
[ABM GRAPH]
11
<PAGE> 14
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 December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES PERCENT(1)
------------------------------------ ------------ ----------
<S> <C> <C>
The Theodore Rosenberg Trust(2)............................. 2,416,770(3) 10.9%
295-89th Street, Suite 200
Daly City, California 94015
The Sydney J. Rosenberg Trust(2)............................ 2,256,384(4) 10.1%
c/o Bank of America NT&SA
2049 Century Park East, Suite 200
Los Angeles, California 90067
GeoCapital, LLC............................................. 1,772,578(5) 7.8%
767 Fifth Avenue, 45th Floor
New York, New York 10153-4590
</TABLE>
- - ---------------
(1) Based on a total of 22,148,348 shares of Common Stock outstanding as of
December 31, 1999.
(2) The Theodore Rosenberg Trust and The Sydney J. Rosenberg Trust constitute a
group within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), because under certain
circumstances they may act in concert with respect to the shares of Common
Stock held by each. Accordingly, each trust may be deemed to own an
aggregate of 4,673,154 shares of Common Stock or approximately 21% of the
outstanding Common Stock. Subject to the foregoing, The Theodore Rosenberg
Trust and The Sydney J. Rosenberg Trust disclaim beneficial ownership of
shares held by the other. The Theodore Rosenberg Trust and The Sydney J.
Rosenberg Trust may each be deemed to be a "control person" of the Company
within the meaning of the Rules and Regulations of the Securities and
Exchange Commission under the Exchange Act.
(3) Includes 2,369,778 shares of Common Stock held by The Theodore Rosenberg
Trust, a revocable trust of which Theodore Rosenberg is the only Trustee and
sole beneficiary. Also includes 30,792 shares of Common Stock held by a
family charitable foundation, of which Theodore Rosenberg is a director. The
Theodore Rosenberg Trust disclaims beneficial ownership of the shares held
by the family charitable foundation. Also includes 16,200 shares subject to
outstanding stock options held by Theodore Rosenberg that were exercisable
on or within 60 days after December 31, 1999.
(4) The Sydney J. Rosenberg Trust is an irrevocable trust of which S. Brad
Rosenberg, Martinn H. Mandles and Bank of America NT&SA are the only
Co-Trustees and of which there are several beneficiaries (including S. Brad
Rosenberg, but not Mr. Mandles). Except to the extent of their shared voting
and investment power, S. Brad Rosenberg, Martinn H. Mandles and Bank of
America NT&SA, as Co-Trustees, disclaim beneficial ownership of the shares
of Common Stock held in the name of The Sydney J. Rosenberg Trust.
(5) Based on a Schedule 13GA filed on January 27, 1999 by GeoCapital, LLC
reflecting beneficial ownership as of December 31, 1999. GeoCapital, LLC, in
its capacity as investment advisor, has sole dispositive power, but no
voting power for all such shares. Does not include 10,000 shares held by its
President, as reported to the Company by GeoCapital, LLC.
12
<PAGE> 15
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 December 31, 1999. Except as noted, each person has sole voting and
investment power over the shares shown in the table.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED AS OF
DECEMBER 31, 1999
-------------------------
NUMBER OF
EXECUTIVE OFFICER AND/OR DIRECTOR SHARES PERCENT(1)
--------------------------------- ---------- -----------
<S> <C> <C>
Jess E. Benton, III......................................... 155,536(2) *
Maryellen B. Cattani........................................ 22,200(3) *
Linda Chavez................................................ 4,600(4) *
John F. Egan................................................ 347,770(5) 1.6%
Luke S. Helms............................................... 13,400(6) *
Charles T. Horngren......................................... 30,000(7) *
Henry L. Kotkins, Jr. ...................................... 14,400(8) *
Martinn H. Mandles.......................................... 2,489,315(9) 11.2%
Theodore Rosenberg.......................................... 2,431,570(10) 11.0%
Henrik C. Slipsager......................................... 40,799(11) *
William W. Steele........................................... 313,351(12) 1.4%
William E. Walsh............................................ 13,600(13) *
Executive officers and directors as a group (21 persons).... 6,382,857(14) 28.9%
</TABLE>
- - ---------------
* Less than 1.00%
(1) Based on a total of 22,148,348 shares of Common Stock outstanding as of
December 31, 1999.
(2) Includes 109,000 shares subject to outstanding stock options held by Jess
E. Benton, III that were exercisable on or within 60 days after December
31, 1999.
(3) Includes 17,200 shares subject to outstanding stock options held by
Maryellen B. Cattani that were exercisable on or within 60 days after
December 31, 1999.
(4) Includes 4,600 shares subject to outstanding options held by Linda Chavez
that were exercisable on or within 60 days after December 31, 1999.
(5) Includes 177,500 shares subject to outstanding stock options held by John
F. Egan that were exercisable on or within 60 days after December 31, 1999.
(6) Includes 12,400 shares subject to outstanding stock options held by Luke S.
Helms that were exercisable on or within 60 days after December 31, 1999.
(7) Includes 23,200 shares subject to outstanding stock options held by Charles
T. Horngren that were exercisable on or within 60 days after December 31,
1999.
(8) Includes 14,400 shares subject to outstanding stock options held by Henry
L. Kotkins, Jr. that were exercisable on or within 60 days after December
31, 1999.
(9) Includes 2,243,824 shares of Common Stock held by The Sydney J. Rosenberg
Trust, an irrevocable trust, of which S. Brad Rosenberg, Martinn H. Mandles
and Bank of America NT&SA are the only Co-Trustees and of which there are
several beneficiaries (including S. Brad Rosenberg, but not Mr. Mandles).
Except to the extent of his shared voting and investment power, Mr. Mandles
disclaims beneficial ownership of all such shares. Also includes 38,136
shares of Common Stock held by The Leo L. Schaumer Trust, an irrevocable
trust of which Mr. Mandles is Co-Trustee with Bank of America NT&SA. Except
to the extent of his shared voting and investment power, Mr. Mandles
disclaims beneficial ownership of all such shares. Also includes 130,000
shares subject to outstanding stock options held by Martinn H. Mandles that
were exercisable on or within 60 days after December 31, 1999. See also
footnotes (2) and (4) of "Security Ownership of Certain Beneficial Owners".
13
<PAGE> 16
(10) Includes 2,369,778 shares of Common Stock held by The Theodore Rosenberg
Trust, an inter-vivos trust of which Theodore Rosenberg is the only Trustee
and sole beneficiary. Also includes 30,792 shares of Common Stock held by a
family charitable foundation, of which Theodore Rosenberg is a director.
The Theodore Rosenberg Trust disclaims beneficial ownership of the shares
held by the family charitable foundation. Also includes 31,000 shares
subject to outstanding stock options held by Theodore Rosenberg that were
exercisable on or within 60 days after December 31, 1999. See also
footnotes (2) and (3) of "Security Ownership of Certain Beneficial Owners".
(11) Includes 40,000 shares subject to outstanding options held by Henrik C.
Slipsager that were exercisable on or within 60 days after December 31,
1999.
(12) Includes 112,500 shares subject to outstanding stock options held by
William W. Steele that were exercisable on or within 60 days after December
31, 1999.
(13) Includes 13,600 shares subject to outstanding stock options held by William
E. Walsh that were exercisable on or within 60 days after December 31,
1999.
(14) Includes 1,062,615 shares subject to outstanding stock options held by the
Company's executive officers and directors that were exercisable on or
within 60 days after December 31, 1999.
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% of a registered class of
the Company's registered 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%
stockholders, the Company believes that during fiscal 1999 all such persons were
in compliance with the reporting requirements.
APPOINTMENT OF AUDITORS
KPMG LLP, independent certified public accountants, have been selected as
the Company's principal accountants for the current year. Representatives of
KPMG 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, the accompanying proxy grants the proxy holders
discretionary authority to vote on any matter raised at the Annual Meeting,
except to the extent such discretion may be limited under Rule 14a-4(c) under
the Securities Exchange Act of 1934.
2001 ANNUAL MEETING OF STOCKHOLDERS
In connection with this year's Annual Meeting, no stockholder proposals
were presented. Any proposals intended to be presented at the 2001 Annual
Meeting of stockholders must be received at the Company's offices on or before
October 17, 2000 in order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such meeting.
14
<PAGE> 17
If a stockholder intends to submit a proposal at the 2001 Annual Meeting of
Stockholders of the Company, which proposal is not intended to be included in
the Company's proxy statement and form of proxy relating to such meeting, the
stockholder must give proper notice no later than December 15, 2000. If a
stockholder fails to submit the proposal by such date, the proposal will not be
considered at the 2001 Annual Meeting of Stockholders as it will not have been
properly brought before the Annual Meeting as set forth in the Company's Bylaws.
By Order of the Board of Directors
[/s/ HARRY H. KAHN, ESQ.]
Harry H. Kahn, Esq.
Senior Vice President, General
Counsel & Corporate Secretary
February 14, 2000
15
<PAGE> 18
PROXY
ABM INDUSTRIES INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MARCH 21, 2000
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 to the held at The World Trade Club,
Ferry Building, The Embarcadero, San Francisco, California, on Tuesday, March
21, 2000 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
recommendations, please sign the reverse side; no boxes need be checked.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(CONTINUED ON OTHER SIDE.)
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Please mark [X]
your votes
as this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
Item 1. ELECTION OF DIRECTORS
Nominees: Linda Chavez
Martinn H. Mandles
Theodore Rosenberg
William W. Steele
WITHHOLD
FOR AUTHORITY
[ ] [ ]
WITHHELD FOR: (Write Nominee's name in the space provided below).
______________________________________________
______________________________________________
Signature(s) __________________________________ Date __________________________
- - -------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
