SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
(xx) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
(xx) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Rollins, Inc.
(Name of Registrant as Specified In Its Charter)
Rollins Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
(xx) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
( ) 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:
( ) Filing Fee of $ was previously paid on , 199 ,
the date the Preliminary Proxy Statement was filed.
<PAGE>
(Logo, see appendix)
ROLLINS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
2170 PIEDMONT ROAD, N.E., ATLANTA, GEORGIA 30324
TO THE HOLDERS OF THE COMMON STOCK:
PLEASE TAKE NOTICE that the 1994 Annual Meeting of Stockholders of Rollins,
Inc., a Delaware corporation (the Company) will be held at the Company's offices
located at 2170 Piedmont Road, N.E., Atlanta, Georgia on Tuesday, April 26,
1994, at 11:30 A.M., or any adjournment thereof, for the following purposes:
(a) To elect two Class II directors to the Board of Directors;
(b) To approve the proposed 1994 Employee Stock Incentive Plan; and
(c) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Proxy Statement dated March 18, 1994, is attached.
The Board of Directors has fixed the close of business on February 28,
1994, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting.
Stockholders who do not expect to be present at the meeting are urged to
complete, date, sign, and return the enclosed proxy. No postage is required if
the enclosed envelope is used and mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
Gene L. Smith, SECRETARY
Atlanta, Georgia
March 18, 1994
<PAGE>
PROXY STATEMENT
The following information concerning the enclosed proxy and the matters to
be acted upon at the Annual Meeting of Stockholders to be held on April 26,
1994, is submitted by the Company to the stockholders for their information.
SOLICITATION OF AND POWER TO REVOKE PROXY
A form of proxy is enclosed. Each proxy submitted will be voted as
directed, but if not otherwise specified, proxies solicited by the Board of
Directors of the Company will be voted in favor of the candidates for election
to the Board of Directors and in favor of the 1994 Employee Stock Incentive
Plan.
This Proxy Statement and a form of proxy were first mailed to stockholders
on or about March 18, 1994. A stockholder executing and delivering a proxy has
power to revoke the same and the authority thereby given at any time prior to
the exercise of such authority if he so elects, by contacting either
proxyholder.
CAPITAL STOCK
The outstanding capital stock of the Company on February 28, 1994 consisted
of 35,684,459 shares of Common Stock, par value $1.00 per share (excluding
5,747,355 treasury shares). Holders of Common Stock are entitled to one vote
(non-cumulative) for each share of such stock registered in their respective
names at the close of business on February 28, 1994, the record date for
determining stockholders entitled to notice of and to vote at the meeting or any
adjournment thereof.
The name and address of the executives named in the Summary Compensation
Table and the name and address of each stockholder who owned beneficially five
percent (5%) or more of the shares of Common Stock of the Company on February
28, 1994, together with the number of shares so owned and the percentage of
outstanding shares that ownership represents, and information as to Common Stock
ownership of certain members of the Rollins family, and of the executive
officers and directors of the Company as a group (according to information
received by the Company) is set out below:
<TABLE>
<CAPTION>
AMOUNT PERCENT OF
NAME AND ADDRESS BENEFICIALLY OUTSTANDING
OF BENEFICIAL OWNER OWNED (1) SHARES
<S> <C> <C>
R. Randall Rollins.................................................... 14,367,040(2) 40.3
2170 Piedmont Road, N.E.
Atlanta, Georgia
Gary W. Rollins....................................................... 14,348,567(3) 40.2
2170 Piedmont Road, N.E.
Atlanta, Georgia
Mario Gabelli......................................................... 1,963,975(4) 5.5
655 Third Avenue
New York, New York
Gene L. Smith......................................................... 2,500(5) --
2170 Piedmont Road, N.E.
Atlanta, Georgia
All Directors and Executive Officers as a group
(8 persons)........................................................... 14,851,391(6) 41.6
</TABLE>
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(2) Includes 638,876 shares of the Company held as Trustee, Guardian, or
Custodian for his children and grandchildren, or as custodian for the
children of his brother, Gary W. Rollins. Also includes
1
<PAGE>
1,282,200 shares of the Company held in five trusts of which he is a
Co-Trustee and as to which he shares voting and investment power. Does not
include 51,870* shares of the Company held by his wife. Also includes
10,419,000 shares owned by LOR, Inc. Mr. Rollins is an officer, director and
stockholder of LOR, Inc. Also includes 1,080,000 shares owned by The May
Partnership. Mr. Rollins is an officer, director and stockholder of Rollins
Holding Company, Inc., the corporation which is the sole general partner of
The May Partnership. Also includes 773,288 shares owned by Mr. O. Wayne
Rollins' Estate. Mr. Rollins is the Co-Executor and Co-Trustee of this
estate.
(3) Includes 198,969 shares of the Company held as Trustee or Custodian for his
children or as Custodian for a child of his brother, R. Randall Rollins, and
1,248,600 shares of the Company in five trusts of which he is Co-Trustee and
as to which he shares voting and investment power. Does not include 57,079*
shares of the Company held by his wife. Also includes 10,419,000 shares
owned by LOR, Inc. Mr. Rollins is an officer, director and stockholder of
LOR, Inc. Also includes 1,080,000 shares owned by The May Partnership. Mr.
Rollins is an officer, director and stock-holder of Rollins Holding Company,
Inc., the corporation which is the sole general partner of The May
Partnership. Also includes 773,288 shares owned by Mr. O. Wayne Rollins'
Estate. Mr. Rollins is the Co-Executor and Co-Trustee of this estate.
(4) Based upon information received by the Company, an aggregate of 1,963,975
shares of Company Common Stock are beneficially owned by Mario Gabelli and
entities controlled directly or indirectly by Mario Gabelli as follows:
GAMCO Investors, Inc., 1,326,675 shares; Gabelli Funds, Inc., 630,000
shares; Gabelli and Company, 2,800 shares; and Mr. Mario Gabelli, 4,500
shares. Several of these entities share voting and disposition powers with
respect to the shares of Company Common Stock held by them.
(5) Mr. Smith owns less than 1% of outstanding shares. This includes 2,323
incentive stock options that are currently exercisable.
(6) Shares held in trusts as to which more than one officer and/or director are
Co-Trustees have been included only once. These shares include shares held
by LOR, Inc. and The May Partnership.
* Messrs. R. Randall Rollins and Gary W. Rollins disclaim any beneficial
interest in these holdings.
ELECTION OF DIRECTORS
Two individuals are to be elected at the Annual Meeting to serve as Class
II directors for a term of three years, and until the election and qualification
of their successors. Five other individuals serve as directors but are not
standing for re-election because their terms as directors extend past this
Annual Meeting pursuant to provisions of the Company's Bylaws which provide for
the election of directors for staggered terms, with each director serving a
three year term. Unless authority is withheld, the proxy holders will vote for
the election of the first two persons named below to three year terms as
directors. Although Management does not contemplate the possibility, in the
event any nominee is not a candidate or is unable to serve as director at the
time of the election, unless authority is withheld, the proxies will be voted
for any nominee who shall be designated by the present Board of Directors to
fill such vacancy.
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<PAGE>
The name and age of each of the two nominees, his principal occupation,
together with the number of shares of Common Stock beneficially owned, directly
or indirectly, by him and the percentage of outstanding shares that ownership
represents, all as of the close of business January 31, 1994, (according to
information received by the Company) are set out below. Similar information is
also provided for those directors whose terms expire in future years.
<TABLE>
<CAPTION>
SHARES PERCENT OF
SERVICE AS OF COMMON OUTSTANDING
NAME OF NOMINEE PRINCIPAL OCCUPATION (1) DIRECTOR AGE STOCK (2) SHARES
<S> <C> <C> <C> <C> <C>
CLASS II (NEW TERM EXPIRES 1997)
John W. Rollins (3) Chairman of the Board and Chief 1948 to 77 15,510(7) *
Executive Officer of Rollins Truck date
Leasing Corp. (vehicle leasing and
transportation); Chairman of the
Board and Chief Executive Officer of
Rollins Environmental Services, Inc.
(hazardous waste treatment and
disposal)
Gary W. Rollins (3) President and Chief Operating 1981 to 49 14,348,567(5) 40.2
Officer (since 1984) date
CLASS I (TERM EXPIRES 1996)
R. Randall Rollins (3) Chairman of the Board and Chief 1968 to 62 14,367,040(4) 40.3
Executive Officer of the Company date
(since October 1991); Senior Vice
Chairman of the Board of the Company
(October 1983-October 1991); Chair-
man of the Board, Chief Executive
Officer of RPC Energy Services, Inc.
(oil and gas field services and boat
manufacturing) (since 1984)
Henry B. Tippie Chairman of the Board and Chief 1960 to 67 1,244,750(6) 3.5
Executive Officer of Tippie 1970;
Communications, Inc. (radio 1974 to
stations); Chairman of the Executive date
Committee and Vice Chairman of the
Board of Rollins Truck Leasing Corp.
(vehicle leasing and transpor-
tation); Chairman of Executive
Committee, Rollins Environmental
Services, Inc. (hazardous waste
treatment and disposal); and
Chairman of Executive Committee of
Matlack Systems, Inc. (bulk truck-
ing and terminaling)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENT OF
SERVICE AS OF COMMON OUTSTANDING
NAME OF NOMINEE PRINCIPAL OCCUPATION (1) DIRECTOR AGE STOCK (2) SHARES
<S> <C> <C> <C> <C> <C>
James B. Williams Chairman, CEO, and Director of 1978 to 61 1,500 *
SunTrust Banks, Inc. (bank holding date
company) (since April 1991);
President, CEO and Director of
SunTrust Banks, Inc. (bank holding
company) (April 1990-April 1991);
Vice Chairman and Director of Sun-
Trust Banks, Inc. (bank holding
company) (July 1984-April 1990);
President and Director of Trust
Company Bank (bank holding company)
(June 1981-January 1989); President
and Director of Sun Banks, Inc.
(bank holding company) (from January
1986 - January 1989)
CLASS III (TERM EXPIRES 1995)
Wilton Looney Honorary Chairman of the Board of 1975 to 74 1,500 *
Genuine Parts Company (automotive date
parts distributor)
Bill J. Dismuke President of Edwards Baking Company 1984 to 57 900 *
(manufacturer of baked pies and pie date
pieces) (since 1991); President and
Chief Executive Officer of Jackson
and Coker, Inc. (Physician
recruiting) (1987-1990)
</TABLE>
* Less than .1% of outstanding shares.
(1) Each of the directors has held the positions of responsibility set out in
this column (but not necessarily his present title) for more than five
years. In addition to the directorships listed in this column, the following
individuals also serve on the boards of directors of the following
companies: John W. Rollins: FPA Corporation and Matlack Systems, Inc.; James
B. Williams: The Coca-Cola Company, Genuine Parts Company, Sonat, Inc., and
Georgia-Pacific Corp.; Gary W. Rollins: Rollins Truck Leasing Corporation;
R. Randall Rollins: Trust Company Bank. All persons named in the above
table, other than Bill J. Dismuke, are also directors of RPC Energy
Services, Inc.
(2) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(3) R. Randall Rollins and Gary W. Rollins are brothers. John W. Rollins is
their uncle.
(4) (See information contained in footnote (2) to the table appearing in Capital
Stock section.)
(5) (See information contained in footnote (3) to the table appearing in Capital
Stock section.)
(6) Includes 905,100** shares of Common Stock of the Company in four trusts of
which he is Co-Trustee and as to which he shares voting and investment power
and 5,000** shares in a trust of which he is the sole Trustee. Does not
include shares of Common Stock of the Company owned by The May Partnership,
an interest in which is indirectly held by a trust of which Mr. Tippie is
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<PAGE>
a Co-Trustee but not a beneficiary, 150** shares held by his wife, or 450**
shares held by his wife as Trustee for his children.
(7) Does not include 1,070** shares held by his wife as custodian for his
children.
** Messrs. John W. Rollins and Henry B. Tippie disclaim any beneficial interest
in these holdings.
BOARD OF DIRECTORS COMPENSATION, COMMITTEES AND MEETINGS
During 1993, non-employee Directors received $500 for each meeting of the
Board of Directors or committee they attended, in January 1993 and $550 for each
meeting of the Board of Directors or committee they attended after January, 1993
plus $8,800 per year, from the Company.
The Audit Committee of the Board of Directors of the Company consists of
Henry B. Tippie, Chairman; Wilton Looney; and James B. Williams. The Audit
Committee had two meetings during the year ending December 31, 1993. Its
functions are to select a firm of certified public accountants whose duty it is
to audit the books and accounts of the Company and its subsidiaries for the
fiscal year for which they are appointed and to monitor the effectiveness of the
audit efforts and the Company's financial and accounting organization and
financial reporting. The Compensation Committee of the Board of Directors of the
Company consists of Henry B. Tippie, Chairman; Wilton Looney; and James B.
Williams. The Compensation Committee had one meeting during the year ending
December 31, 1993. The function of the Compensation Committee is to review the
Company's executive compensation structure and recommend to the Board any
changes to insure continued effectiveness. It also administers the Rollins Stock
Option Plan and Stock Appreciation Rights Plan. The Board of Directors met, or
took action by way of unanimous consent, four times during the year ended
December 31, 1993. Each director attended all of the board meetings and meetings
of committees on which he served during 1993. The Company does not have a
nominating committee of the Board of Directors.
REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee is comprised of outside directors who are not
eligible to participate in the plans administered by the Committee and over
whose names this report is presented. The Committee reviews and approves the
compensation of the Company's top executives annually. The actions of top
executives have a profound impact on the short-term and long-term profitability
of the Company. Therefore, the design of the executive compensation package is
very important.
The Company has an executive compensation package that is driven by an
increase in shareholder value, the overall performance of the Company, and the
individual performance of the executive. The measures of the Company's
performance include sales revenue and income. The three main components of the
executive compensation package are a stock-based incentive plan, cash based
incentive plans, and a base salary.
STOCK BASED INCENTIVE PLAN
At the Company's 1984 Annual Meeting the stockholders approved the
Company's Employee Stock Option Plan. A total of 1,200,000 shares was reserved
for issuance under the plan. As of December 31, 1993, options pertaining to a
total of 246,900 shares had been granted since inception of the plan. After the
date of grant of an option, the stock becomes eligible for purchase in 20%
increments per year beginning at the end of the first year. Options have a life
of ten years. The options generally also expire upon termination of employment.
5
<PAGE>
The exercise price of the option at the time of grant equals the market
price of the underlying stock. This plan has been effective in focusing
attention on shareholder value since the value of the options will increase as
the stock appreciates. This has been an important incentive during 1993 as the
Rollins, Inc. Stock closed at $27 1/4 per share on December 31, 1993 as compared
to a closing price of $24 1/2 on December 31, 1992. (Prices reflect a 3 for 2
stock split for shareholders of record November 10, 1992.) This price increase
resulted in an appreciation percentage of 11.2% for the fiscal year 1993.
During 1993, the Chief Financial Officer, Gene L. Smith, was granted 800
stock options and 800 independently exercisable stock appreciation rights. The
grant was subjectively based on the Company's achievement of sales revenue and
income objectives. The Chief Executive Officer, R. Randall Rollins, and the
President and Chief Operating Officer, Gary W. Rollins, were not considered for
grants in 1993.
The 1984 Employee Stock Option Plan expires in fiscal year 1994. Therefore,
the Company will propose a new 1994 Employee Stock Incentive Plan at the April
26, 1994 shareholders' meeting. A total of 1,200,000 shares have been reserved
for issuance under the new plan. A summary of the new plan is contained in this
proxy statement under the heading Proposal To Approve The Rollins, Inc. 1994
Employee Stock Incentive Plan.
The Committee thinks it unlikely that any participants in the Company's
stock plans will, in the foreseeable future, receive in excess of $1
million in aggregate compensation (the maximum amount for which an
employer may claim a compensation deduction pursuant to Section 162(m)
of the Internal Revenue Code of 1986, as amended, unless certain
performance-related compensation exemptions are met) during any fiscal
year, and has therefore determined that since the exemption requirement
does not apply, the Company will not change its various compensation
plans, or otherwise meet the requirements of such exemptions, at this
time.
CASH BASED INCENTIVE PLANS
The second component of the executive compensation package is cash-based
incentive plans. The Company offers two cash-based incentive plans, the Stock
Appreciation Rights Plan or Long-term Plan, and the Performance Bonus Plan or
Short-term Plan.
There is significant emphasis on long-term performance in the Stock
Appreciation Rights Plan. Participation in the plan is limited to a select group
of senior management who have material impact on the operating results of the
Company. These rights have a ten year maturity and the value at time of grant
equals the market value of the stock. Therefore, as the price of the Company's
stock appreciates, the Stock Appreciation Rights increase in value. This plan
provides participants a significant focus on long-term shareholder value growth.
The plan also provides an excellent way for the Company to retain senior
management as the plan contains a provision that all rights will be forfeited
upon discontinuance of employment.
The Performance Bonus Plan has more emphasis on short-term performance by
evaluating performance over a 12 month operating cycle. This plan has a payout
which is subjectively based on income, budget objectives, and other individual
specific performance objectives. These specific performance objectives relate to
each executive improving the contribution of his functional areas of
responsibility to further enhance the earnings of the Company. Of the three
named executives, only the Chief Financial Officer, Gene L. Smith, participates
in this plan. The Company's philosophy is that the executive should receive a
bonus only if certain performance targets are met. This means that a significant
portion of the compensation package is at risk. The Performance Bonus as a
percent of total compensation will vary in accordance with the type of executive
position. The named executive participating in this plan received approximately
20% of his total 1993 cash compensation in a Performance Bonus. During 1993, Mr.
Smith met, and in some instances exceeded, his specific performance and budget
objectives. The Company also achieved its income objectives for the fiscal year
1993. Other senior managers with direct responsibilities for sales and other
operational areas received higher Performance Bonuses of approximately 40% of
their total 1993 cash compensation.
The financial goals for incentive plans are stretch goals, being neither
easy nor unreachable. They reflect a steady increase in income and continuing
growth. During the past few years several senior managers have earned minimal
incentives for one or more years' performance.
BASE SALARY
The third component is base salary. The Company believes that it is
important for senior management to receive acceptable salaries so the Company
can keep the talent it needs to meet the challenges in today's environment. The
factors used in determining base salary include the recent profit performance of
the Company, the magnitude of responsibilities and contributions, the scope of
the
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<PAGE>
position, and individual performance. Approximately one half of the merit
percentage increases are based on attainment of the profit performance
objective. The remaining half of the merit increase is determined subjectively
based upon the three other criteria mentioned above. The salaries of senior
management are reviewed annually.
CEO PAY
The 1993 cash compensation of R. Randall Rollins, Chairman and Chief
Executive Officer, was $437,632. This represents the total compensation for Mr.
Rollins of which no portion was in performance driven bonuses. This represented
a 22% increase from his 1992 salary of $357,632. Factors used to determine his
base salary include his performance and the scope of his responsibilities. His
1993 base salary increase was subjectively based on these factors and on the
Company achieving its sales revenue and net income objectives.
CONCLUSION
The Committee believes that this mix of conservative salaries, cash
incentives for both long-term and short-term performance, and the potential for
equity ownership in the Company represents a balance that will motivate the
management team to continue to produce the type of results that the Company has
historically achieved. The Committee further believes this program strikes an
appropriate balance between the interests of Rollins, Inc. in operating its
businesses and appropriate rewards based on shareholder value.
Henry B. Tippie, Chairman
Wilton Looney
James B. Williams
7
<PAGE>
PERFORMANCE GRAPH
As part of the executive compensation information presented in this Proxy
Statement, the Securities and Exchange Commission requires a five year
comparison of the cumulative total stockholder return based on the performance
of the stock of the Company as compared with both a broad equity market index
and an industry or peer group index. The indices included in the following graph
are the S&P 500 Index and the S&P 500 Commercial Services Index.
(Graph, see appendix)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors serve on the Company's Compensation Committee:
Henry B. Tippie, Wilton Looney, and James B. Williams. None of these individuals
are employees of the Company. No executive officer of the Company serves on a
Compensation Committee of another company. R. Randall Rollins, an executive of
the Company, serves on the Board of Directors of Trust Company Bank, a
subsidiary of SunTrust Banks, Inc. Mr. Williams is the Chairman and Chief
Executive Officer of SunTrust Banks, Inc. Mr. Rollins is not on the Compensation
Committee of either SunTrust or Trust Company Bank. Rollins, Inc. maintains a
significant banking relationship with Trust Company Bank. All banking services
provided by Trust Company Bank are priced at market-competitive rates.
8
<PAGE>
EXECUTIVE COMPENSATION
Shown below is information concerning the annual and long-term compensation
for services in all capacities to the Company for the calendar years ended
December 31, 1993, 1992, and 1991, of those persons who were, at December 31,
1993 (i) the chief executive officer and (ii) the other most highly compensated
executive officers of the Company whose total annual salary exceeded $100,000
(the named executives):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND PRINCIPAL SALARY OPTIONS/SARs ALL OTHER
POSITION YEAR (1) BONUS GRANTED (POUND)(2) COMPENSATION(3)
<S> <C> <C> <C> <C> <C>
R. Randall Rollins 1993 $437,632 $ -- -- $2,830
Chairman of the Board & 1992 357,632 -- -- 2,746
Chief Executive Officer 1991 257,632 -- -- 2,666
Gary W. Rollins 1993 757,632 -- -- 2,830
President & 1992 657,632 -- -- 2,746
Chief Operating Officer 1991 557,632 -- -- 2,666
Gene L. Smith 1993 137,400 30,528 1,600 2,015
Chief Financial Officer 1992 127,200 27,600 -- 1,857
1991 120,000 22,919 1,800 1,715
</TABLE>
(1) Amounts include compensation deferred in the Company's 401(k) Plan.
(2) Gene L. Smith received 800 Incentive Stock Options and 800 Stock
Appreciation Rights during 1993 and received 900 Incentive Stock Options and
900 Stock Appreciation Rights during 1991. No other long-term incentive
awards were granted to the named executives.
(3) Effective October 1, 1983, the Company adopted the Rollins Retirement
Account (Retirement Account), a qualified retirement plan designed to meet
the requirements of Section 401(k) of the Internal Revenue Code. The
Retirement Account provides for a matching contribution of forty cents
($.40) for each one dollar ($1.00) of a participant's contribution to the
Retirement Account, not to exceed 3 percent of his or her annual
compensation (which includes commissions, overtime and bonuses).
Participants accrue benefits under the Retirement Account in lieu of payment
of compensation to the participant. The amounts shown in this column
represent the Company match for the named executives.
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<PAGE>
OPTION/SAR GRANTS IN FISCAL YEAR 1993
The following table sets forth stock options and Stock Appreciation Rights
granted in the fiscal year ending December 31, 1993 to each of the Company's
Named Executives. Employees of the Company and its subsidiaries are eligible for
stock option and stock appreciation right (SARs) grants based on individual
performance. The table also sets forth the hypothetical gains that would exist
for the options at the end of their ten-year terms, assuming compound rates of
stock appreciation of 5% and 10%. The actual future value of the options will
depend on the market value of the Company's Common Stock. All option exercise
prices are based on the market price on the grant date.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS (1) AT
NUMBER OF ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK
UNDERLYING OPTIONS/SARS PRICE
OPTIONS/ GRANTED TO EXERCISE APPRECIATION
SARS EMPLOYEES OR BASE FOR OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION (2)
NAME (POUND) YEAR 1993 ($/SH) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins -- -- -- -- -- --
Gary W. Rollins -- -- -- -- -- --
Gene L. Smith 800 (3) 8.1% $ 25.50 01/26/03 $12,715 $32,165
800 (4) 8.1% 25.50 01/26/03 12,715 32,165
</TABLE>
(1) Options and SARs were granted on January 26, 1993 at a price of $25.50 per
share.
(2) These amounts, based on assumed appreciation rates of 5% and 10% rates
prescribed by the Securities and Exchange Commission rules, are not intended
to forecast possible future appreciation, if any, of the Company's stock
price. These numbers do not take into account certain provisions of options
providing for termination of the option following termination of employment,
nontransferability or phased-in vesting. The Company did not use an
alternative formula for a grant date valuation as it is not aware of any
formula which will determine with reasonable accuracy a present value based
on future unknown or volatile factors. Future compensation resulting from
option grants is based solely on the performance of the Company's stock
price.
(3) Incentive Stock Options. Options vest and become exercisable 20% each year
and expire after 10 years.
(4) Stock Appreciation Rights. SARs may only be paid on the date that is ten
years from the date of grant.
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OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the unexercised options to
purchase the Company's Common Stock and unexercised Stock Appreciation Rights
granted under the 1984 Incentive Stock Option Plan and Stock Appreciation Rights
Plan.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES DURING FISCAL YEAR 1993,
AND 1993 FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS/ SARS AT OPTIONS/SARS AT
ON EXERCISE VALUE DECEMBER 31, 1993 (POUND) DECEMBER 31, 1993 ($) (2)
NAME (POUND) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
R. Randall Rollins (1) -- -- -- /-- --
Gary W. Rollins (1) -- -- -- /-- --
Gene L. Smith -- -- 2,160/4,840 $33,838/$51,757
</TABLE>
(1) R. Randall Rollins and Gary W. Rollins did not have any unexercised
Incentive Stock Options as of December 31, 1993.
(2) Based on the closing price on the New York Stock Exchange -- Composite
Transactions of the Company's Common Stock on that date ($27 1/4).
LONG-TERM INCENTIVE PLAN AWARDS DURING FISCAL YEAR 1993
There were no Long-Term Incentive Plan Awards to the named executives
during fiscal year 1993 other than the 800 Incentive Stock Options and 800 Stock
Appreciation Rights that were awarded to Gene L. Smith and are disclosed in the
Option/SAR Grants in fiscal year 1993 table which is presented above.
BENEFIT PLANS
The Rollins, Inc. Retirement Income Plan is a trusteed defined benefit
pension plan. The amounts shown on the following table are those annual benefits
payable for life on retirement at age 65. The amounts computed in the following
table assume: (a) that the participant remains in the service of the Company
until his normal retirement date at age 65; (b) that the participant's earnings
continue at the same rate as paid in the year ended December 31, 1993 during the
remainder of his service until age 65; (c) that the normal form of benefit is a
single-life annuity; and (d) that the Plan continues without substantial
modification.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$100,000................ $22,500 $ 30,000 $ 37,500 $ 45,000 $ 45,000
200,000................. 45,000 60,000 75,000 90,000 90,000
300,000................. 67,500 90,000 112,500 135,000 135,000
400,000................. 90,000 120,000 150,000 180,000 180,000
500,000................. 112,500 150,000 187,500 225,000 225,000
600,000................. 135,000 180,000 225,000 270,000 270,000
700,000................. 157,500 210,000 262,500 315,000 315,000
800,000................. 180,000 240,000 300,000 360,000 360,000
</TABLE>
The above table does not reflect the Plan offset for Social Security average
earnings, the maximum limit on covered compensation under Section 401(a)(17) of
the Internal Revenue Code, or the maximum benefit limitations under Section 415
of the Internal Revenue Code. The covered compensation for the named executives
is identical to the salary reflected in the Summary Compensation Table under the
two columns titled Salary and Bonus.
11
<PAGE>
Retirement income benefits are based on the average of the employee's
compensation from the Company for the five consecutive complete calendar years
of highest compensation during the last ten consecutive complete calendar years
(final average compensation) immediately preceding the employee's retirement
date or, if earlier, the date of his termination of employment. All full-time
corporate employees of the Company and its subsidiaries (other than employees
subject to collective bargaining agreements) are eligible to participate in the
Retirement Income Plan after completing one year of service as an employee. The
benefit formula calculated is 1 1/2% of final average compensation less 3/4% of
final average FICA earnings multiplied by years of service (maximum 30 years).
The Plan also provides reduced early retirement benefits under certain
conditions. In accordance with the Internal Revenue Code of 1986, the maximum
annual benefit that could be payable to a Retirement Income Plan beneficiary in
1994 is $118,800. However, this limitation does not affect previously accrued
benefits of those individuals who became entitled to benefits in excess of
$118,800 prior to the effective date of applicable provisions of the Tax Equity
and Fiscal Responsibility Act of 1982 and the Tax Reform Act of 1986. In
accordance with Internal Revenue Code of 1986, the maximum compensation
recognized by the Retirement Income Plan is $235,840 in 1993. The Omnibus Budget
Reconciliation Act of 1993 reduced the maximum recognized compensation to
$150,000 effective January 1, 1994. This reduction will not reduce retirement
benefits accrued through December 31, 1993.
The current credited years of service for the three individuals named in
the Summary Compensation Table, each of whom is a participant in the Plan, are:
R. Randall Rollins, 10 years; Gary W. Rollins, 28 years; and Gene L. Smith, 8
years.
Effective October 1, 1983, the Company adopted a qualified retirement plan
designed to meet the requirements of Section 401(k) of the Internal Revenue Code
(Rollins Retirement Account). The only form of benefit payment under the Rollins
Retirement Account is a single lump-sum payment equal to the balance in the
participant's account on the quarterly valuation date preceding date of
distribution. Under the Rollins Retirement Account, the full amount of a
participant's accrued benefit is payable upon his termination of employment,
attainment of age 59 1/2 with respect to pre-tax deferrals only, retirement,
total and permanent disability, or death. Amounts contributed to the accounts of
executive officers for 1993 under this plan are reported in the All Other
Compensation column of the Summary Compensation Table above.
12
<PAGE>
PROPOSAL TO APPROVE THE ROLLINS, INC.
1994 EMPLOYEE STOCK INCENTIVE PLAN
The Board of Directors recommends that the shareholders vote FOR the
approval of the Rollins, Inc. 1994 Employee Stock Incentive Plan (the 1994
Plan). The 1994 Plan was adopted by the Board of Directors on January 25, 1994,
effective as of the date of such approval. An aggregate of 1,200,000 shares of
Common Stock have been reserved for issuance under the 1994 Plan. The 1994 Plan
provides for the granting to directors and key employees of the Company
(Participants) stock options, stock appreciation rights (SARs), and/or other
awards valued in whole or in part by reference to, or based upon, the Company's
$1.00 par value Common Stock, including without limitation, restricted stock.
The 1994 Plan will be administered by the Board of Directors or a duly appointed
committee thereof (the Committee). The 1994 Plan will afford the Company
latitude in tailoring incentive compensation to support corporate and business
objectives, and to anticipate and respond to a changing business environment and
competitive compensation practices. The 1994 Plan is intended to replace the
Company's Employee Incentive Stock Option Plan, and following approval of the
1994 Plan by the shareholders, no further awards will be made under the 1984
Employee Incentive Stock Option Plan. The following is a description of the
principal features of the 1994 Plan, a copy of which is attached as Exhibit A to
this Proxy Statement. The description which follows is qualified in its entirety
by Exhibit A.
The Committee will consist of at least two directors who are disinterested
persons for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (Rule 16b-3). Members of the Committee will not be eligible to receive
options or other grants under the 1994 Plan. It is anticipated that the 1994
Plan will be administered by the Compensation Committee and will satisfy the
requirements of Rule 16b-3. The Committee will have exclusive discretion to
select the Participants, to determine the type, size and terms of each award, to
determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the 1994 Plan. The 1994 Plan will terminate ten years from
January 25, 1994, the date that it was initially approved and adopted by the
Board of Directors of the Company. With limited exceptions, including
termination of employment as a result of death, disability or retirement, option
and other awards under the 1994 Plan are forfeited if a recipient's employment
or performance of services terminates following the grant of the award but prior
to its exercise and/or vesting. Generally, a Participant's rights and interest
under the 1994 Plan will not be transferable except by will or by the laws of
descent and distribution.
There is no maximum number of persons eligible to receive options, SARs,
restricted stock and other awards under the 1994 Plan. It is currently estimated
that the eligible group will be comprised of approximately 125 persons.
Options, which include nonqualified stock options and incentive stock
options, are rights to purchase a specified number of shares of Common Stock at
a price fixed by the Committee. In the case of incentive stock options, the
option price may not be less than the fair market value of the underlying shares
of Common Stock at the time of grant. In the case of nonqualified stock options,
the option price may not be less than 90% of such fair market value. On February
28, 1994, the closing price of the Company's Common Stock on the New York Stock
Exchange was $29 3/8 per share. Options generally will expire not later than ten
years after the date on which they are granted. Options will become exercisable
at such times and in such installments as the Committee shall determine. Payment
of the option price must be made in full at the time of exercise in such form
(including, but not limited to, cash, unrestricted Common Stock held for at
least six months, or any combination thereof) as the Committee may determine. In
order to comply with certain federal tax restrictions, no employee may be
granted an incentive stock option if taking into account such option the
aggregate fair market value of the stock with respect to which incentive stock
options are exercisable for the first time by such employee during any given
calendar year, under this and all other incentive stock option plans of the
Company, would exceed $100,000. In addition, special restrictions concerning the
option price and the period during which the option may be exercised will be
applicable in the case of any individual who, at the time the option is granted,
owns more than 10% of the total combined voting power of all classes of stock of
the Company.
13
<PAGE>
An SAR may be granted alone, or a holder of an option or other award may be
granted a related SAR either at the time of grant or by amendment of the option
or award thereafter. Upon exercise of an SAR, the holder must surrender the SAR
and surrender, unexercised, any related option or other award, and the holder
will receive in exchange, at the election of the Committee, cash or Common
Stock, or any combination thereof, equal in value to the difference between the
exercise price or option price per share and the fair market value per share on
the last business day preceding the date of exercise, times the number of shares
subject to the SAR, or portion thereof, which is exercised.
A restricted stock award is an award of a given number of shares of Common
Stock which are subject to a restriction against transfer and to a risk of
forfeiture during a period set by the Committee. During the restriction period,
the Participant generally has the right to vote and receive dividends on the
shares.
The 1994 Plan is subject to amendment or termination by the Board of
Directors without shareholder approval as deemed in the best interests of the
Company. However, no such amendment may (i) materially increase the benefits
accruing to Participants under the 1994 Plan, (ii) materially increase the
number of shares which may be issued under the 1994 Plan, (iii) materially
modify the requirements as to eligibility for participation in the 1994 Plan, or
(iv) reduce the amount of any previously granted award or adversely change the
terms and conditions thereof, without the consent of the holder of such award.
In general, subject to the discretion of the Board of Directors, if the
Company is merged into or consolidated with another corporation under
circumstances in which the Company is not the surviving corporation, or if the
Company is liquidated, or sells or otherwise disposes of substantially all of
its assets to another corporation (any such merger, consolidation, etc. being
hereinafter referred to as a Non-Acquiring Transaction) while unexercised
options or SARs are outstanding under the 1994 Plan, after the effective date of
a Non-Acquiring Transaction each holder of an outstanding option or SAR shall be
entitled, upon exercise of such option or SAR, to receive such stock or other
securities as the holders of the same class of stock as those shares subject to
the option or SAR shall be entitled to receive in such Non-Acquiring Transaction
based upon the agreed upon conversion ratio or per share distribution, or, in
the case of an SAR, an equivalent cash payment or combination of cash and
securities. Other awards under the 1994 Plan will receive such treatment in
connection with Non-Acquiring Transactions as the Committee shall determine at
or after the date of grant.
The following table sets forth all awards granted under the 1994 Plan prior
to the date hereof to each of the individuals and groups named therein. All such
grants were in the form of incentive stock options, restricted stock or some
combination of the two and were made as of January 25, 1994, contingent upon
shareholder approval of the 1994 Plan. No awards have been granted under the
1994 Plan to any nominees for director or to any associate of any of the
Company's directors, executive officers or nominees for director. The only
individual who received 5% or more of the awards granted pursuant to the 1994
Plan was Vince Stevens, Senior Vice President for the Company's Orkin Division,
who received grants for an aggregate of 16,600 units. It is not expected that
any additional awards will be granted under the 1994 Plan during 1994. Although
it is anticipated that additional grants under the 1994 Plan will be made
subsequent to 1994, the nature and amounts of such grants are not determinable
at this time.
14
<PAGE>
NEW PLAN BENEFITS
ROLLINS, INC. 1994 EMPLOYEE STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF UNITS
<S> <C>
R. Randall Rollins................................................................... 0
Gary W. Rollins...................................................................... 0
Gene L. Smith........................................................................ 8,100
Executive Group...................................................................... 8,100
Non-Executive Director Group......................................................... 0
Non-Executive Officer Employee Group................................................. 192,900
</TABLE>
CERTAIN FEDERAL TAX CONSEQUENCES UNDER THE 1994 PLAN
The following discussion addresses certain anticipated federal income tax
consequences to recipients of awards made under the 1994 Plan. It is based on
the Internal Revenue Code of 1986 and interpretations thereof as in effect on
the date of this proxy statement.
An optionee to whom a nonqualified stock option is granted will not
recognize income as a result of the grant of the option. However, upon exercise
of the nonqualified stock option, the optionee will generally recognize ordinary
compensation income equal to the excess, if any, of the fair market value of the
stock received pursuant to exercise of the option (the Shares) over the exercise
price. However, taxation will be deferred (i) if the Shares are subject to
restrictions imposed by the Committee which could result in a substantial risk
of their forfeiture or (ii) if the optionee is subject to the forfeiture
provisions of Section 16(b) of the Exchange Act, unless the optionee makes an
election pursuant to Section 83(b) of the Code (an 83(b) Election), within 30
days of receipt of the Shares, to be taxed on the date of receipt of the Shares.
If no 83(b) Election is made, the optionee will recognize ordinary compensation
income at the time the Shares are no longer subject to such restrictions or the
optionee is no longer subject to Section 16(b) liability as a result of the
transfer of the Shares, in an amount equal to the excess of the value of the
Shares at such time over the amount paid for them. The optionee's tax basis for
the Shares will be equal to the exercise price paid by the optionee plus the
amount includable in the optionee's gross income as compensation, and the
optionee's holding period for the Shares will commence on the date on which the
Shares are acquired.
An optionee to whom an incentive stock option which qualifies under Section
422 of the Code is granted generally will not recognize income at the time of
grant of the incentive stock option or at the time of its exercise. However, the
excess of the fair market value of the Shares of stock subject to the option
(the Incentive Shares) over the exercise price of the option at the time of its
exercise is an adjustment to taxable income in determining an optionee's
alternative minimum taxable income and ultimately his alternative minimum tax
(AMT). As a result, this adjustment could cause the optionee to be subject to
AMT or increase his AMT liability.
If an optionee who has exercised an incentive stock option does not sell
the Incentive Shares until more than one year after exercise and more than two
years after the date of grant, such optionee will normally recognize long term
capital gain or loss equal to the difference, if any, between the selling price
of the Incentive Shares and the exercise price. If the optionee sells the
Incentive Shares before the time periods expire (a disqualifying disposition) he
or she will recognize ordinary compensation income equal to the lesser of (i)
the difference, if any, between the fair market value of the Incentive Shares on
the date of exercise and the exercise price of the option, and (ii) the
difference, if any, between the selling price for the Incentive Shares and the
exercise price of the option. Any other gain or loss on such sale will normally
be capital gain or loss. The tax basis of the Incentive Shares to the optionee,
for purposes of computing such other gain or loss, should be equal to the
exercise price paid (plus, in the case of an early disposition, the amount
includable in the optionee's gross income as compensation, if any).
With respect to either nonqualified or incentive stock options, if an
optionee delivers shares of the Company's Common Stock in part or full payment
of the option price, the optionee generally will be treated as having exchanged
such shares for an equivalent number of the shares received upon
15
<PAGE>
exercise of the option (the Exchange Shares), and no gain or loss will be
recognized with respect to the shares surrendered to the Company in payment of
the option price. In such a case, the optionee will have a tax basis in the
Exchange Shares which is the same as the optionee's tax basis in the shares of
stock delivered in payment of the option price. The remaining shares received
upon exercise of the option (other than the Exchange Shares) will, in the case
of nonqualified options, have a tax basis equal to the income recognized on the
exercise of the option plus any additional consideration paid pursuant to the
exercise of the option, and in the case of incentive stock options, will have a
tax basis equal to any additional consideration paid pursuant to the exercise of
the option.
The grant of SARs in connection with the issuance of a nonqualified stock
option or an incentive stock option will not result in taxable income to the
grantee. At the time an SAR is exercised, an grantee will recognize ordinary
compensation income in an amount equal to the cash or the fair market value of
any other property the grantee receives to satisfy the SAR.
An officer, employee or other individual who receives stock pursuant to a
restricted stock award (the Restricted Shares) should not recognize any taxable
income upon the receipt of such award (unless such recipient makes an
83(b) Election). Any recipient who does not make an 83(b) Election will
recognize taxable compensation income at the later of (i) the time his or
her interest in the Restricted Shares is no longer subject to a substantial
risk of forfeiture under the terms of the grant, or (ii) the time he or
she is no longer subject to Section 16(b) liability upon transfer of
the Restricted Shares, in an amount equal to the fair market value
of the Restricted Shares at such time. The tax basis of the Restricted Shares to
the recipient should be equal to the amount includable in the recipient's gross
income as compensation, and the recipient's holding period for the Restricted
Shares should normally commence on the day following the date on which the value
of such Shares is includable in income. Dividends paid on Restricted Shares
prior to the lapse of the restrictions (if an 83(b) Election is not made) should
be included in the income of the recipient as taxable compensation income when
received.
Different tax rules will apply to a recipient of a restricted stock award
if the recipient makes a timely 83(b) Election. In such event the recipient will
recognize the fair market value of the Restricted Shares as taxable compensation
income at the time of their receipt. Any gain recognized on a subsequent sale of
the Restricted Shares, after a holding period of one year has elapsed, will be
treated as long term capital gain.
The discussion set forth above is intended only as a summary and does not
purport to be a complete enumeration or analysis of all potential tax effects
relevant to recipients of awards under the 1994 Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. served as the Company's auditors for 1993. As is its
policy, upon the recommendation of the Audit Committee, the Board of Directors
shall select a firm of certified public accountants for 1994. It is anticipated
that a representative of Arthur Andersen & Co. will be present at the Annual
Meeting to answer questions and make a statement should such representative so
desire.
SECTION 16 COMPLIANCE
The Company has completed a review of Forms 3, 4, and 5 and amendments
thereto furnished to the Company by all Directors, Officers and greater than 10
percent stockholders subject to the provisions of Section 16 of the Securities
Exchange Act of 1934. In addition, the Company has a written representation from
all Directors, Officers and greater than 10 percent stockholders from whom no
Form 5 was received, indicating that no Form 5 filing was required. Based solely
on this review, the Company believes that filing requirements of such persons
under Section 16 for the fiscal year ended December 31, 1993 have been
satisfied.
16
<PAGE>
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the
Company's next Annual Meeting of Stockholders must be received by the Company by
November 18, 1994 for inclusion in its proxy statement and form of proxy
relating to that meeting. If the date of the next annual meeting is advanced by
more than 90 calendar days or delayed by more than 90 calendar days from the
date of the annual meeting to which this proxy statement relates, the Company
shall, in a timely manner, inform its stockholders of the change and the date by
which proposals of stockholders must be received.
VOTING PROCEDURES AND VOTE REQUIRED
The Chairman of the Board of Directors of the Company will select a
representative of the Company's transfer agent as Inspector of the Election, to
determine the eligibility of persons present at the Meeting to vote and to
determine whether the name signed on each proxy card corresponds to the name of
a stockholder of the Company. The Inspector shall also determine whether or not
a quorum of the shares of the Company (consisting of a majority of the votes
entitled to be cast at the Meeting) exists at the Meeting. A majority of the
outstanding shares will constitute a quorum at the meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. If a quorum exists and a vote is
taken at the Meeting, the Inspector shall tabulate (i) the votes cast for or
against each proposal and (ii) the abstentions in respect of each proposal.
In accordance with the Delaware General Corporation Law, the election of
the nominees named herein as directors will require the affirmative vote of a
plurality of the votes cast by the share of Company Common Stock entitled to
vote in the election provided that a quorum is present at the Meeting.
In the case of a plurality vote requirement (as in the election of
directors), where no particular percentage vote is required, the outcome is
solely a matter of comparing the number of votes cast in favor of a proposal to
the number of votes cast against the proposal, and hence only votes for or
against the proposal (and not abstentions or broker non-votes) are relevant to
the outcome. The proposal for approval of the 1994 Employee Stock Incentive Plan
will require the affirmative vote of a majority of the shares of Common Stock
present in person or by proxy and entitled to vote on the proposal. Abstentions
will have the effect of negative votes with respect to this proposal, while
broker non-votes will have no effect on the outcome of the proposal.
17
<PAGE>
MISCELLANEOUS
The Company's Annual Report for the calendar year ended December 31, 1993
is being mailed to stockholders with this proxy statement.
UPON THE WRITTEN REQUEST OF ANY RECORD OR BENEFICIAL OWNER OF COMMON STOCK
OF THE COMPANY WHOSE PROXY WAS SOLICITED IN CONNECTION WITH THE 1994 ANNUAL
MEETING OF STOCKHOLDERS, THE COMPANY WILL FURNISH SUCH OWNER, WITHOUT CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1993.
REQUEST FOR A COPY OF SUCH ANNUAL REPORT ON FORM 10-K SHOULD BE MADE IN WRITING,
ADDRESSED TO ROLLINS, INC., P.O. BOX 647, ATLANTA, GEORGIA 30301, ATTENTION:
GENE L. SMITH, SECRETARY.
Management knows of no business other than the matters set forth herein
which will be presented at the meeting. Inasmuch as matters not known at this
time may come before the meeting, the enclosed proxy confers discretionary
authority with respect to such matters as may properly come before the meeting;
and it is the intention of the persons named in the proxy to vote in accordance
with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
Gene L. Smith, SECRETARY
Atlanta, Georgia
March 18, 1994
18
<PAGE>
ROLLINS, INC.
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF ROLLINS, INC. FOR
ANNUAL MEETING OF STOCKHOLDERS, TUESDAY, APRIL 26, 1994, 11:30 A.M.
The undersigned hereby constitutes and appoints R. RANDALL ROLLINS and GARY
W. ROLLINS, and each of them, jointly and severally, proxies with full power of
substitution, to vote all shares of Common Stock which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on April 26,
1994, at 11:30 a.m., at 2170 Piedmont Road, N.E., Atlanta, Georgia, or any
adjournment thereof.
The undersigned acknowledges receipt of Notice of the aforesaid Annual
Meeting and Proxy Statement, each dated March 18, 1994, grants authority to said
proxies, or either of them, or their substitutes, to act in the absence of
others, with all the powers which the undersigned would possess if personally
present at such meeting, and hereby ratifies and confirms all that said proxies,
or their substitutes, may lawfully do in the undersigned's name, place or stead.
The undersigned instructs said proxies, or either of them, to vote as follows:
1. ( ) FOR all Class II nominees; ( ) FOR all Class II nominees, except as
indicated below; or
( ) REFRAIN from voting for the election of John W. Rollins, and Gary W.
Rollins
(INSTRUCTIONS: To refrain from voting for any individual nominee, write that
nominee's name on the space provided below.)
2. ( ) For the proposed 1994 Employee Stock Incentive Plan; or
( ) Against the proposed 1994 Employee Stock Incentive Plan; or
( ) REFRAIN from voting for the proposed 1994 Employee
Stock Incentive Plan.
3. ON ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
(over)
<PAGE>
(continued from other side)
ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE WILL BE VOTED FOR ELECTION OF THE
BOARD OF DIRECTORS' NOMINEES FOR DIRECTOR AND FOR APPROVAL OF THE 1994 EMPLOYEE
STOCK INCENTIVE PLAN. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY.
PROXY
PLEASE SIGN BELOW, DATE AND RETURN
PROMPTLY
Signature
Dated:
(Signature should conform to name and
title stenciled hereon. Executors,
administrators, trustees, guardians
and attorneys should add their title
upon signing.)
NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.
**************************APPENDIX TO 14A***********************************
Rollins Logo appears on first page where indicated.
On page 8 a Five-Year Comparison Graph of cumulative total return*
appears where indicated.
The plot points are as follows:
Measurement Period (fiscal year covered)
1988 1989 1990 1991 1992 1993
ROLLINS INC $100.00 $106.66 $127.25 $175.58 $229.90 $260.23
S&P 500 $100.00 $131.69 $127.60 $166.47 $179.15 $197.21
S&P COMM SVCS $100.00 $108.80 $ 91.36 $ 99.31 $ 98.33 $ 95.28
Assumes initial investment of $100
* Total Return Assumes Reinvestment of Dividends
Note: Total Returns Based on Market Capitalization
<PAGE>
ROLLINS, INC.
1994 EMPLOYEE STOCK INCENTIVE PLAN
JANUARY 25, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1. PURPOSE; DEFINITIONS.......................................................................... 2
SECTION 2. ADMINISTRATION................................................................................ 4
SECTION 3. STOCK SUBJECT TO PLAN......................................................................... 5
SECTION 4. ELIGIBILITY................................................................................... 5
SECTION 5. STOCK OPTIONS................................................................................. 5
(a) OPTION PRICE..................................................................................... 5
(b) OPTION TERM...................................................................................... 6
(c) EXERCISABILITY................................................................................... 6
(d) METHOD OF EXERCISE............................................................................... 6
(e) NON-TRANSFERABILITY OF OPTIONS................................................................... 6
(f) TERMINATION BY DEATH............................................................................. 6
(g) TERMINATION BY REASON OF DISABILITY.............................................................. 6
(h) TERMINATION BY REASON OF RETIREMENT.............................................................. 7
(i) OTHER TERMINATION................................................................................ 7
(j) BUYOUT PROVISIONS................................................................................ 7
(k) CERTAIN RECAPITALIZATIONS........................................................................ 7
(l) SUBDIVISION OR CONSOLIDATION..................................................................... 7
(m) FRACTIONAL SHARES................................................................................ 8
(n) COMPLIANCE WITH SECTION 422...................................................................... 8
SECTION 6. STOCK APPRECIATION RIGHTS..................................................................... 8
(a) GRANT AND EXERCISE............................................................................... 8
(b) TERMS AND CONDITIONS............................................................................. 8
SECTION 7. OTHER STOCK-BASED AWARDS...................................................................... 9
(a) ADMINISTRATION................................................................................... 9
(b) TERMS AND CONDITIONS............................................................................. 9
SECTION 8. AMENDMENTS AND TERMINATION.................................................................... 11
SECTION 9. UNFUNDED STATUS OF PLAN....................................................................... 11
SECTION 10. GENERAL PROVISIONS........................................................................... 12
SECTION 11. EFFECTIVE DATE OF PLAN....................................................................... 12
SECTION 12. TERM OF PLAN................................................................................. 12
</TABLE>
1
<PAGE>
ROLLINS, INC.
1994 EMPLOYEE STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Rollins, Inc. 1994 Employee Stock Incentive Plan (the
Plan) is to enable Rollins, Inc. (the Company) to attract, retain and reward
directors and key employees of the Company and its Subsidiaries and Affiliates,
and strengthen the mutuality of interests between such persons and the Company's
shareholders, by offering such persons performance-based stock incentives and/or
other equity interests or equity-based incentives in the Company, as well as
performance-based incentives payable in cash.
For purposes of this Plan, the following terms shall be defined as set
forth below:
(a) Affiliate means any entity other than the Company and its Subsidiaries
that is designated by the Board as a participating employer under this Plan,
provided that the Company directly or indirectly owns at least 20% of the
combined voting power of all classes of stock of such entity or at least 50% of
the ownership interests in such entity.
(b) Board means the Board of Directors of the Company.
(c) Book Value means, at any given date, (i) the consolidated stockholders'
equity in the Company and its Subsidiaries, as shown on the Company's
consolidated balance sheet as of the end of the immediately preceding fiscal
year, subject to such adjustments as the Committee shall in good faith specify
at or after grant, divided by (ii) the number of shares of Outstanding Stock as
of such year-end date (as adjusted by the Committee for subsequent events).
(d) Code means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(e) Committee means the Committee referred to in Section 2 of this Plan. If
at any time no Committee shall be in office, then the functions of the Committee
specified in this Plan may be exercised by the Board or the Compensation
Committee of the Board, as set forth in Section 2 hereof.
(f) Company means Rollins, Inc., a corporation organized under the laws of
the State of Delaware, or any successor corporation.
(g) Disability means disability as determined under procedures established
by the Committee for purposes of this Plan and shall in all events be consistent
with the definition of disabled provided in Sections 422(c)(6) and 22(e)(3) of
the Code.
(h) Disinterested Person shall have the meaning set forth in Rule 16b-3 as
promulgated by the Securities and Exchange Commission (Commission) under the
Securities Exchange Act of 1934, as amended (the Exchange Act), or any successor
definition adopted by the Commission.
(i) Early Retirement means retirement with the express written consent of
the Committee (given for purposes of this Plan only at or before the time of
such retirement) from active employment with the Company and/or any Subsidiary
or Affiliate or pursuant to the early retirement provisions of the applicable
pension plan of such entity.
(j) Fair Market Value means, as of any given date, unless otherwise
determined by the Committee in good faith:
(i) if the Stock is listed on an established stock exchange or
exchanges, or traded on the NASDAQ National Market System (NASDAQ/NMS) the
highest closing price of the Stock as listed thereon on the applicable day,
or if no sale of Stock has been made on any exchange or on NASDAQ/NMS on
that date, on the next preceding day on which there was a sale of Stock;
(ii) if the Stock is not listed on an established stock exchange or
NASDAQ/NMS but is instead traded over-the-counter, the mean of the dealer
bid and askprices of the Stock in the over-the-counter market on the
applicable day, as reported by the National Association of Securities
Dealers, Inc.;
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(iii) if the Stock is not listed on any exchange or traded
over-the-counter, the value determined in good faith by the Committee.
(k) Incentive Stock Option means any Stock Option designated as an
Incentive Stock Option within the meaning of Section 422 of the Code.
(l) Non-Qualified Stock Option means any Stock Option that is not an
Incentive Stock Option.
(m) Normal Retirement means retirement from active employment with the
Company and/or any Subsidiary or Affiliate on or after age 65.
(n) Other Stock-Based Award means an award under Section 7 below that is
valued in whole or in part by reference to, or is otherwise based on, Stock.
(o) Outstanding Stock shall include all outstanding shares of Common Stock,
$1.00 par value, of the Company as well as the number of shares of Common Stock
into which then outstanding shares of capital stock of the Company, of whatever
class, are convertible as of the year-end immediately preceding the date of
calculation thereof (as adjusted by the Committee for certain events).
(p) Performance-Accelerated Restricted Stock means Restricted Stock which
is subject to restrictions for a stated period of time based on continued
employment, with the opportunity for the restriction period to be shortened
based on the achievement of predetermined performance goals.
(q) Performance Stock means Stock awarded under Section 7 below at the end
of a specified performance period, the amount of which is determined by
multiplying a performance factor times either (i) the Fair Market Value of the
Stock on the last day of the performance period, or (ii) the difference between
the Fair Market Value of the Stock on the first and last days of the performance
period; provided, however, that at the discretion of the Committee, participants
may receive the value of Performance Stock in cash, as determined by reference
to the Fair Market Value on the date the amount of the award is determined.
(r) Performance Unit means an award pursuant to Section 7 with a starting
value and an associated performance period, such that at the end of the
performance period participants receive an amount, payable in either cash or
Stock, at the discretion of the Committee, equal to (i) the number of units
earned based on a predetermined performance schedule times the starting unit
value, or (ii) the number of units granted times the ending unit value based on
a predetermined performance schedule.
(s) Plan means this Rollins, Inc. 1994 Employee Stock Incentive Plan, as
hereafter amended from time to time.
(t) Premium Stock Option means any Stock Option with an exercise price in
excess of the Fair Market Value, as computed on the date of grant of the Stock
Option.
(u) Retirement means Normal or Early Retirement.
(v) Restricted Stock means Stock awarded under Section 7 below which is (i)
subject to restrictions for a stated period of time based on continued
employment, (ii) subject to restrictions which will only lapse upon the
achievement of predetermined performance goals, or (iii) subject to a
combination of the restrictions described in (i) and (ii) above.
(w) Stock means the Common Stock, $1.00 par value per share, of the
Company.
(x) Stock Appreciation Right means the right pursuant to an award granted
under Section 6 below to receive an amount in either cash or stock, equal to the
difference between the Fair Market Value of the Stock on the date of exercise
and the Fair Market Value of the Stock on the date of grant of the right.
(y) Stock Option or Option means any option to purchase shares of Stock
granted pursuant to Section 5 below.
(z) Subsidiary means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in
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the unbroken chain) owns stock possessing 100% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
SECTION 2. ADMINISTRATION.
This Plan shall be administered by a Committee of not less than two
Disinterested Persons, who shall be members of the Board and who shall serve at
the pleasure of the Board, such Committee to be designated by the Board. The
functions of the Committee specified in this Plan may be exercised by the Board
or by the Compensation Committee of the Board, however, if and to the extent
that no Committee meeting the requirements of this Section 2 has been designated
by the Board as having the authority to so administer this Plan and if a
resolution to such effect is adopted by the Board after due consideration of the
impact of such resolution upon the status of this Plan under Rule 16b-3
promulgated pursuant to the Exchange Act (Rule 16b-3).
The Committee shall have full authority to grant, pursuant to the terms of
this Plan, to directors, officers and other key employees eligible under Section
4: (i) Stock Options, including, without limitation, Incentive Stock Options,
Non-Qualified Stock Options and Premium Stock Options, (ii) Stock Appreciation
Rights and/or (iii) Other Stock-Based Awards, including, without limitation,
Restricted Stock, Performance-Accelerated Restricted Stock, Performance Stock
and Performance Units.
In particular, the Committee shall have the authority:
(i) subject to Section 4 hereof, to select the directors, officers and
other key employees of the Company or its Subsidiaries and Affiliates to
whom Stock Options, Stock Appreciation Rights and/or Other Stock-Based
Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Stock Options, Stock
Appreciation Rights and/or Other Stock-Based Awards, or any combination
thereof, are to be granted hereunder to one or more eligible employees;
(iii) to determine the number of shares of Stock to be covered by each
such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any
vesting, acceleration or waiver of forfeiture restrictions regarding any
Stock Option or other award and/or the shares of Stock relating thereto,
based in each case on such factors as the Committee shall determine, in its
sole discretion);
(v) to determine whether and under what circumstances Stock Options,
Stock Appreciation Rights, Performance Stock and Performance Units may be
settled in cash;
(vi) to determine whether, to what extent and under what circumstances
Stock Option grants and/or other awards under this Plan and/or other cash
awards made by the Company are to be made, and operate, on a tandem basis
vis-a-vis other awards under this Plan and/or cash awards made outside of
this Plan, or on an additive basis; and
(vii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election
of the participant (including providing for and determining the amount (if
any) of any deemed earnings on any deferred amount during any deferral
period).
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing this Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of this Plan and any
award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan.
Except as otherwise specifically provided herein, all decisions made by the
Committee pursuant to the provisions of this Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons,
including the Company and all Plan participants.
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SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under this Plan shall be 1,200,000 shares. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares.
Subject to section 6(b)(iv) below, if any shares of Stock that have been
optioned hereunder cease to be subject to a Stock Option, or if any such shares
of Stock that are subject to any Other Stock-Based Award granted hereunder are
forfeited or any such award otherwise terminates without a payment being made to
the participant in the form of Stock, such shares shall again be available for
distribution in connection with future awards under this Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividends, stock split or other changes in corporate
structure affecting the Stock, and subject to Sections 5(k) and 5(m), such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under this Plan, in the number and option price of shares
subject to outstanding Options granted under this Plan and in the number of
shares subject to other outstanding awards granted under this Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
Such adjusted option price shall be used to determine the amount payable by the
Company upon the exercise of any Stock Appreciation Right associated with any
Stock Option.
SECTION 4. ELIGIBILITY.
Directors, officers and other key employees of the Company or its
Subsidiaries and Affiliates (but excluding members of the Committee if a
Committee meeting the requirements of Section 2 is designated by the Board) who
are responsible for or contribute to the management, growth and/or profitability
of the business of the Company and/or its Subsidiaries and Affiliates are
eligible to be granted awards under this Plan. Notwithstanding the foregoing,
Incentive Stock Options may only be granted to employees of the Company and any
of its Subsidiaries or Affiliates that are a subsidiary corporation (within the
meaning of Section 424(f) of the Code). Furthermore, no director who is not also
an employee of the Company shall be eligible to receive Incentive Stock Options.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under this Plan and/or cash awards made outside of this Plan. Any
Stock Option granted under this Plan shall be in such form as the Committee may
from time to time approve.
Stock Options granted under this Plan may be of two types: (i) Incentive
Stock Options, and (ii) Non-Qualified Stock Options. Incentive Stock Options and
Non-Qualified Stock Options may be issued as Premium Stock Options at the
discretion of the Board.
Subject to the restrictions contained in Section 4 hereof concerning the
grant of Incentive Stock Options, the Committee shall have the authority to
grant to any optionee Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options (in each case with or without Stock Appreciation
Rights). To the extent that the Fair Market Value of the shares with respect to
which Incentive Stock Options first become exercisable by an optionee during any
calendar year (under the Plan and any other plans granting Incentive Stock
Options which are established by the Company or its Subsidiaries) exceeds
$100,000, such Options shall be treated as Non-Qualified Stock Options.
Options granted under this Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of Stock purchasable under a
Stock Option shall be determined by the Committee at the time of grant but shall
be (i) not less than 100% (or, in the case of an employee who owns stock
possessing more than 10 percent of the total combined voting power of all
classes of capital stock of the Company or of any of its subsidiary or parent
corporations, not less than 110%) of the Fair Market Value of the Stock at
grant, in the case of Incentive Stock
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Options, and (ii) not less than 90% of the Fair Market Value of the Stock at
grant, in the case of Non-Qualified Stock Options.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercised more than ten years (or, in
the case of an employee who owns stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or any of its
subsidiary or parent corporations, more than five years) after the date the
Option is granted.
(c) EXERCISABILITY. Stock Options shall be exercised at such time or times
and subject to such terms and conditions as shall be determined by the Committee
at or after grant; provided, however, that, except as provided in Section 5(f),
5(g), or 5(k), unless otherwise determined by the Committee at or after grant,
no Stock Option shall be exercisable until at least one year after the granting
of the Option. If the Committee provides, in its sole discretion, that any Stock
Option is exercisable only in installments, the Committee may waive such
installment exercise provisions at any time at or after grant in whole or in
part, based on such factors as the Committee shall determine, in its sole
discretion.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise provisions
or other restrictions apply under Section 5(c), Stock Options may be exercised
in whole or in part at any time during the option period, by giving written
notice of exercise to the Company specifying the number of shares to be
purchased; provided, however, that if exercised in part, a Stock Option may not
be exercised for fewer than 100 shares, unless the remaining balance of the
Stock Option is less than 100 shares, in which case the Stock Option may be
exercised for the remaining balance.
Such notice shall be accompanied by payment in full of the purchase price,
either by cash or such instrument as the Committee may accept. Payment in full
or in part may also be made in the form of unrestricted Stock already owned by
the optionee for a period of at least six months, based, in each case, on the
Fair Market Value of the Stock on the date the option is exercised, unless it
shall be determined by the Committee, at or after grant, in its sole discretion,
that unrestricted Stock is not a permissible form of payment with respect to any
Stock Option or Options.
No shares of Stock shall be issued until full payment therefor has been
made. An optionee shall generally have the rights to dividends or other rights
of a shareholder with respect to shares subject to the Stock Option when the
optionee has given written notice of exercise, has paid in full for such shares,
and, if requested, has given the representation described in Section 10(a).
(e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee.
(f) TERMINATION BY DEATH. Subject to Section 5(k), if an optionee's
employment by the Company and/or any Subsidiary or Affiliate terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised to the extent such option was exercisable at the time of death or on
such accelerated basis as the Committee may determine at or after grant (or as
may be determined in accordance with procedures established by the Committee),
by the legal representative of the estate or by the legatee of the optionee
under the will of the optionee, for a period of six months (or such other period
as the Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(g) TERMINATION BY REASON OF DISABILITY. Subject to Section 5(k), if an
optionee's employment by the Company and/or any Subsidiary or Affiliate
terminates by reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee or his/her guardian, to the extent it
was exercisable at the time of termination or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined in accordance
with procedures established by the Committee), for a period of one year (or such
other period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however, that, if the
optionee dies
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within such one-year period (or such other period as the Committee may specify
at grant), any unexercised Stock Option held by such optionee shall thereafter
be exercisable only pursuant to Section 5(f). In the event of termination of
employment by Disability, if a Stock Option theretofore designated as an
Incentive Stock Option is exercised more than one year after such termination of
employment, such Stock Option shall be treated as a Non-Qualified Stock Option.
(h) TERMINATION BY REASON OF RETIREMENT. Subject to Section 5(k), if an
optionee's employment by the Company and/or any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Stock Option held by
such optionee may be exercised by the optionee, to the extent it was exercisable
at the time of such Retirement, for a period of three months, less one day, (or
such other period as the Committee may specify at grant) from the date of such
termination, or the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such three-month, less one day, period (or such other period as the
Committee may specify at grant), any unexercised Stock Option held by such
optionee shall thereafter be exercisable only pursuant to Section 5(f). In the
event of termination of employment by Retirement, if a Stock Option theretofore
designated as an Incentive Stock Option is exercised more than three (3) months
after such termination of employment, such Stock Option shall be treated as a
Non-Qualified Stock Option.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee (or
pursuant to procedures established by the Committee) at or after grant, if an
optionee's employment by the Company and/or any Subsidiary or Affiliate
terminates for any reason other than death, Disability or Normal or Early
Retirement, as in the case of voluntary resignation of employment by the
optionee, the Stock Option shall thereupon terminate and shall be immediately
forfeited, regardless of its vesting status.
(j) BUYOUT PROVISIONS. The Committee may at any time offer to buy out for a
payment in cash or Stock a Stock Option previously granted, based on such terms
and conditions as the Committee shall establish and communicate to the optionee
at the time that such offer is made.
(k) CERTAIN RECAPITALIZATIONS. In general, if the Company is merged into or
consolidated with another corporation under circumstances in which the Company
is not the surviving corporation, or if the Company is liquidated, or sells or
otherwise disposes of substantially all of its assets to another corporation
(any such merger, consolidation, etc. being hereinafter referred to as a
Non-Acquiring Transaction) while unexercised Options are outstanding under this
Plan, after the effective date of a Non-Acquiring Transaction each holder of an
outstanding Option shall be entitled, upon exercise of such Option, to receive
such stock or other securities as the holders of the same class of stock as
those shares subject to the Option shall be entitled to receive in such
Non-Acquiring Transaction based upon the agreed upon conversion ratio or per
share distribution. However, in the discretion of the Board of Directors, after
giving due consideration to the impact on the optionee, if any, pursuant to Rule
16b-3, any limitations on exercisability of Options may be waived so that all
Options, from and after a date prior to the effective date of such Non-Acquiring
Transaction shall be exercisable in full. Furthermore, in the discretion of the
Board of Directors, the right to exercise may be given to each holder of an
Option during a 30-day period preceding the effective date of such Non-Acquiring
Transaction. Any outstanding Options not exercised within such 30-day period may
be cancelled by the Board of Directors as of the effective date of any such
Non-Acquiring Transaction. To the extent that the foregoing adjustments relate
to stock or securities of the Company, such adjustments shall be made by the
Board of Directors, whose determination in that respect shall be final, binding
and conclusive. The Committee need not treat all optionees and/or Options in the
same manner.
(l) SUBDIVISION OR CONSOLIDATION. Except as set forth in this Plan,
optionees shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, or consolidation or spinoff of stock of
another corporation, and no issue by the Company of shares of stock of any class
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to the Stock Option. The grant of any
Stock Option pursuant to this Plan shall not affect in any way the right or
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power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or to transfer all or any part of its business or
assets.
(m) FRACTIONAL SHARES. If any adjustment referred to herein shall result in
a fractional share for any optionee under any Stock Option hereunder, such
fraction shall be completely disregarded and the optionee shall only be entitled
to the whole number of shares resulting from such adjustment.
(n) COMPLIANCE WITH SECTION 422. Unless otherwise determined by the
Committee with the consent of the optionee, any Option granted hereunder and
designated as an Incentive Stock Option shall comply with all relevant
provisions of Section 422 of the Code; provided, however, that to the extent
that any such Option which is designated as an Incentive Stock Option hereunder
fails for any reason to comply with the provisions of Section 422 it shall be
treated as a Non-Qualified Stock Option.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted alone, in
addition to or in tandem with all or part of any other award granted under this
Plan. In the case of a Non-Qualified Stock Option, such tandem rights may be
granted either at or after the time of the grant of such Stock Option. In the
case of an Incentive Stock Option, such tandem rights may be granted only at the
time of the grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, subject to such provisions
as the Committee may specify at grant where a Stock Appreciation Right is
granted with respect to less than the full number of shares covered by a related
Stock Option.
A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee for
such purpose. Upon such exercise, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options which
were issued in tandem with exercised Stock Appreciation Rights shall no longer
be exercisable to the extent that the related Stock Appreciation Rights have
been exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Except as set forth below, the term of each Stock Appreciation
Right shall be fixed by the Committee, but no such Stock Appreciation Right
shall be exercised more than ten years after the date it is granted. Stock
Appreciation Rights granted in tandem with Stock Options shall be
exercisable only at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in accordance with the
provisions of Section 5 and this Section 6 whenever the Fair Market Value
of the Stock exceeds the option price per share specified in the related
Stock Option. The foregoing notwithstanding, no Stock Appreciation Right
granted hereunder to a Plan participant who is subject to Section 16(b) of
the Exchange Act shall be exercisable during the first six months of its
term, except that, with the exception of Stock Appreciation Rights granted
in tandem with Incentive Stock Options, in the discretion of the Committee,
after giving due consideration to the impact on the participant, if any,
pursuant to Rule 16b-3, this special limitation may be waived in the event
of death or Disability of the optionee prior to the expiration of the
six-month period. The exercise of Stock Appreciation Rights held by
participants who are subject to Section 16(b) of the Exchange Act shall
comply with Rule 16b-3(e)(3) thereunder, or any successor provision, to the
extent applicable.
(ii) Stock Appreciation Rights shall be exercised at such time or
times and subject to such terms and conditions as shall be determined by
the Committee at or after grant; provided, however, that, except as
provided in Section 5(f), 5(g), or 5(k), as incorporated herein by Section
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6(b)(vi) below, unless otherwise determined by the Committee at or after
grant, no Stock Appreciation Right shall be exercisable until at least one
year after its date of grant. If the Committee provides, in its sole
discretion, that any Stock Appreciation Right is exercisable only in
installments, the Committee may waive such installment exercise provisions
at any time at or after grant in whole or in part, based on such factors as
the Committee shall determine, in its sole discretion. Upon the exercise of
a Stock Appreciation Right, a participant shall be entitled to receive an
amount in cash and/or shares of Stock equal in value to the excess of Fair
Market Value of the Stock on the date of exercise over the Fair Market
Value of the Stock on the date of grant multiplied by the number of Stock
Appreciation Rights exercised, with the Committee having the right to
determine the form of payment. Subject to whatever installment exercise
provisions or other restrictions apply hereunder, Stock Appreciation Rights
may be exercised in whole or in part at any time during the term thereof by
giving written notice of exercise to the Company specifying the number of
rights to be exercised.
(iii) No Stock Appreciation Right shall be transferable by a
participant otherwise than by will or by the laws of descent and
distribution, and all Stock Appreciation Rights shall be exercisable,
during the participant's lifetime, only by the participant.
(iv) Upon the exercise of a tandem Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation
set forth in Section 3 of this Plan on the number of shares of Stock to be
issued under this Plan, but only to the extent of the number of shares
issued under the Stock Appreciation Right at the time of exercise based on
the value of the Stock Appreciation Right at such time.
(v) Stock Appreciation Rights issued in tandem with Incentive Stock
Options shall contain such terms and conditions as the Committee may
determine to be necessary for the qualification of the Incentive Stock
Options.
(vi) Sections 5(f)-(m) hereof shall apply equally to all Stock
Appreciation Rights granted pursuant to this Plan, as if each reference
therein to a Stock Optionwas instead a reference to a Stock Appreciation
Right.
SECTION 7. OTHER STOCK-BASED AWARDS.
(a) ADMINISTRATION. Other awards of Stock and other awards that are valued
in whole or in part by reference to, or are otherwise based on, Stock (Other
Stock-Based Awards), including, without limitation, Restricted Stock,
Performance-Accelerated Restricted Stock, Performance Stock, Performance Units
and Stock awards or options valued by reference to Book Value or Subsidiary
performance, may be granted either alone or in addition to or in tandem with
Stock Options or Stock Appreciation Rights granted under this Plan and/or cash
awards made outside of this Plan.
Subject to the provisions of this Plan, the Committee shall have authority
to determine the persons to whom and the time or times at which such awards
shall be made, the number of shares of Stock to be awarded pursuant to such
awards, and all other conditions of the awards. The Committee may also provide
for the grant of Stock upon the completion of a specified performance period or
event.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
(b) TERMS AND CONDITIONS. Other Stock-Based Awards made pursuant to this
Section 7 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award agreement
referred to in Section 7(b)(v) below, Other Stock-Based Awards and shares
subject to such awards made under this Section 7 may not be sold, assigned,
transferred, pledged or otherwise encumbered, in the case of shares of
Stock, prior to the date on which the shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period
lapses, and in all other cases, not at all.
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(ii) Subject to the provisions of this Plan and the award agreement
and unless otherwise determined by the Committee at grant, the recipient of
an award under this Section 7 shall be entitled to receive, currently or on
a deferred basis, as determined by the Committee, interest or dividends or
interest or dividend equivalents with respect to the number of shares
covered by the award, as determined at the time of the award by the
Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional
Stock or otherwise reinvested.
(iii) Any award under this Section 7 and any Stock covered by any such
award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or
death, and in other instances, the Committee may, in its sole discretion,
waive in whole or in part any or all of the remaining limitations,
performance requirements or restrictions imposed (if any) with respect to
any or all of an award under this Section 7 and/or accelerate the payment
of cash or Stock pursuant to any such award.
(v) Each award under this Section 7 shall be confirmed by, and subject
to the terms of, an agreement or other instrument executed by the Company
and by the participant.
(vi) Stock (including securities convertible into Stock) issued on a
bonus basis under this Section 7 may be issued for no cash consideration.
(vii) Other Stock-Based Awards, to the extent they constitute
derivative securities for purposes of Section 16 of the Exchange Act, and
are owned by persons who are subject to Section 16(b) of the Exchange Act,
shall be transferable only when and to the extent a Stock Option would be
transferable under Section 5(e) of this Plan. The Committee may also take
into account other provisions contained in the Exchange Act or which are
promulgated pursuant thereto.
(viii) Unless otherwise determined by the Committee at or after grant,
if a participant's employment by the Company and/or any Subsidiary or
Affiliate terminates by reason of death or Disability, a pro rata portion
of the restrictions pertaining to continued employment on any Restricted
Stock will lapse, based on the number of full months the participant was
employed during the restriction period divided by the total number of
months in the restriction period. All such pro rata awards will be
determined and distributed at such time as awards are paid to other Plan
participants.
(ix) Unless otherwise determined by the Committee at or after grant,
if a participant's employment by the Company and/or any Subsidiary or
Affiliate terminates by reason of Normal Retirement, all of the
restrictions pertaining to continued employment on any Restricted Stock
will lapse. Any such award will be determined and distributed at such time
as awards are paid to other Plan participants.
(x) Unless otherwise determined by the Committee at or after grant, if
a participant's employment by the Company and/or any Subsidiary or
Affiliate terminates by reason of death or Disability, the estate of the
participant or the participant, as applicable, will receive a pro rata
portion of the payment or Stock the participant would have received for
Performance Stock or Performance Units, based on the number of full months
in the performance period prior to the participants's death or Disability,
divided by the total number of months in the performance period. All such
pro rata payments will be determined and distributed at such time as awards
are paid to other Plan participants.
(xi) Unless otherwise determined by the Committee at or after grant,
if a participant's employment by the Company and/or any Subsidiary or
Affiliate terminates by reason of Early Retirement and if such Early
Retirement occurs before age 65 and before completion of 10 years of
service with the Company and/or a Subsidiary or Affiliate subsequent to the
date of grant of Restricted Stock or Performance-Accelerated Restricted
Stock, all such Restricted Stock and
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Performance-Accelerated Restricted Stock will be forfeited by the
participant. In addition, in the event of Normal or Early Retirement before
the end of the performance period for Performance Stock or Performance
Units, no awards will be paid unless specifically approved by the Committee
on a case-by-case basis.
(xii) Unless otherwise determined by the Committee (or pursuant to
procedures established by the Committee) at or after grant, if a
participant's employment by the Company and/or any Subsidiary or Affiliate
terminates for any reason other than death, Disability or Normal or Early
Retirement, as in the case of voluntary resignation of employment by the
participant, all Other Stock-Based Awards shall be immediately forfeited.
(xiii) The Committee may at any time offer to buy out for a payment in
cash or Stock an Other Stock-Based Award previously granted, based on such
terms and conditions as the Committee shall establish and communicate to
the participant at the time that such offer is made.
(xiv) Except as set forth in this Plan, participants shall have no
rights by reason of any subdivision or consolidation of shares of stock of
any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation or spinoff of stock of
another corporation, and no issue by the Company of shares of stock of any
class shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to any Other Stock-Based
Award. The grant of any Other Stock-Based Award pursuant to this Plan shall
not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital
or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or to transfer all or any part of its business or
assets.
SECTION 8. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue this Plan, but, except as
otherwise provided herein, no amendment, alteration, or discontinuation shall be
made which would impair the rights of an optionee or participant under a Stock
Option, Stock Appreciation Right or Other Stock-Based Award theretofore granted,
without the optionee's or participant's consent, or which, without the approval
of the Company's stockholders, would:
(a) materially increase the benefits accruing to participants under
this Plan;
(b) materially increase the number of securities which may be issued
under this Plan; or
(c) materially modify the requirements as to eligibility for
participation in this Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority to
amend this Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 9. UNFUNDED STATUS OF PLAN.
This Plan is intended to constitute an unfunded plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
this Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that, unless the Committee otherwise determines
with the consent of the affected participant, the existence of such trusts or
other arrangements is consistent with the unfunded status of this Plan.
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SECTION 10. GENERAL PROVISIONS.
(a) The Company shall not be obligated to sell or issue any shares pursuant
to any Option unless the shares with respect to which the Option is being
exercised are at the time effectively registered or exempt from registration
under the Securities Act of 1933, as amended (the 1933 Act). The Company shall
have no obligation to register pursuant to the 1933 Act any shares of Stock
issued pursuant to this Plan. The Committee may require each person purchasing
shares pursuant to a Stock Option or other award under this Plan to represent to
and agree with the Company in writing that the optionee or participant is
acquiring the shares for investment and without a view to distribution thereof.
The certificates for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
this Plan shall be subject to such conditions, stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of this Plan shall not confer upon any employee of the
Company or of any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includable
in the gross income of the participant for federal income tax purposes with
respect to the exercise of any Option or Stock Appreciation Right or any award
under this Plan, the participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any federal, state, or
local taxes of any kind required by law to be withheld with respect to such
amount. The obligations of the Company under this Plan shall be conditional on
such payment or arrangements, and the Company and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents
in additional types of Plan awards at the time of any dividend payment shall
only be permissible if sufficient shares of Stock are available under Section 3
for such reinvestment, taking into account other Plan awards then outstanding.
(f) This Plan and all awards made and actions taken hereunder shall be
governed by and construed in accordance with the Delaware General Corporation
Law, to the extent applicable, and in accordance with the laws of the State of
Georgia in all other respects.
(g) The value of awards made pursuant to this Plan shall not be included as
part of the definition of cash compensation in connection with any other benefit
offered by the Company.
SECTION 11. EFFECTIVE DATE OF PLAN.
This Plan shall be effective as of January 25, 1994.
SECTION 12. TERM OF PLAN.
No Stock Option, Stock Appreciation Right or Other Stock-Based Award shall
be granted pursuant to this Plan on or after the tenth anniversary of the
effective date of this Plan, but awards granted prior to such tenth anniversary
may extend beyond that date.
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