<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ROLLINS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
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 1995 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
25, 1995, at 9:30 A.M., or any adjournment thereof, for the following purposes:
(a) To elect two Class III directors to the Board of Directors;
(b) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Proxy Statement dated March 24, 1995, is attached.
The Board of Directors has fixed the close of business on February 28, 1995,
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 24, 1995
<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 25,
1995, 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.
This Proxy Statement and a form of proxy were first mailed to stockholders
on or about March 24, 1995. 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, 1995 consisted
of 35,838,091 shares of Common Stock, par value $1.00 per share (excluding
5,593,723 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, 1995, 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, 1995, 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...................................................... 14,158,990(2) 39.5
2170 Piedmont Road, N.E.
Atlanta, Georgia
Gary W. Rollins......................................................... 14,339,364(3) 40.0
2170 Piedmont Road, N.E.
Atlanta, Georgia
Mario Gabelli........................................................... 1,911,025(4) 5.3
655 Third Avenue
New York, New York
Gene L. Smith........................................................... 5,440(5) --
2170 Piedmont Road, N.E.
Atlanta, Georgia
All Directors and Executive Officers as a group
(8 persons)............................................................. 15,443,078(6) 43.1
<FN>
------------------------
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
(2) Includes 339,734 shares of the Company held as Trustee, Guardian, or
Custodian for his children or as custodian for the children of his brother,
Gary W. Rollins. Also includes 1,407,200 shares of the Company held in five
trusts of which he is a Co-Trustee and as to which he shares voting and
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
investment power. Does not include 53,563* 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 748,288 shares owned by Mr.
O. Wayne Rollins' Estate. Mr. Rollins is the Co-Executor and Co-Trustee of
this estate.
(3) Includes 219,386 shares of the Company held as Custodian for the
grandchildren of his brother, R. Randall Rollins, and 1,373,600 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 58,339* 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 748,288 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 1,911,025
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., 1,277,025 shares; Gabelli Funds, Inc., 630,000
shares; and Mr. Mario Gabelli, 4,000 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 3,109
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.
</TABLE>
*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
III 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.
The name and age of each of the two nominees, their principal occupations,
together with the number of shares of Common Stock beneficially owned, directly
or indirectly, by each nominee and the percentage of outstanding shares that
ownership represents, all as of the close of business February 28, 1995,
(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 III (NEW TERM EXPIRES 1998)
Wilton Looney Honorary Chairman of the Board of 1975 to 75 1,500 *
Genuine Parts Company (automotive parts date
distributor)
</TABLE>
2
<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>
Bill J. Dismuke President of Edwards Baking Company 1984 to 58 900 *
(manufacturing of baked pies and pie date
pieces) (since 1991); President and
Chief Executive Officer of Jackson and
Coker, Inc. (Physician recruiting)
(1987-1990)
CLASS II (TERM EXPIRES 1997)
John W. Rollins (3) Chairman of the Board and Chief 1948 to 78 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 Officer 1981 to 50 14,339,364(5) 40.0
(since 1984) date
CLASS I (TERM EXPIRES 1996)
R. Randall Rollins (3) Chairman of the Board and Chief 1968 to 63 14,158,990(4) 39.5
Executive Officer of the Company (since date
October 1991); Senior Vice Chairman of
the Board of the Company (October
1983-October 1991); Chairman 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 68 1,245,950(6) 3.5
Executive Officer of Tippie Com- 1970;
munications, Inc. et.al. (radio sta- 1974 to
tions); Chairman of the Executive date
Committee and Vice Chairman of the
Board of Rollins Truck Leasing Corp.
(vehicle leasing and transportation);
Chairman of Executive Committee,
Rollins Environmental Services, Inc.
(hazardous waste treatment and
disposal); and Chairman of Executive
Committee of Matlack Systems, Inc.
(bulk trucking and terminaling)
</TABLE>
3
<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 SunTrust 1978 to 62 20,000 *
Banks, Inc. (bank holding company) date
(since April 1991); President, CEO and
Director of SunTrust Banks, Inc. (bank
holding company) (April 1990-April
1991); Vice Chairman and Director of
SunTrust 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)
<FN>
------------------------
*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 909,750** shares of Common Stock of the Company in five 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 a Co-Trustee but not a beneficiary, 300** shares held by his
wife, or 900** shares held by his wife as Trustee for his children.
(7) Does not include 1,100** shares held by his wife as custodian for his
children.
</TABLE>
------------------------
**Messrs. John W. Rollins and Henry B. Tippie disclaim any beneficial interest
in these holdings.
4
<PAGE>
BOARD OF DIRECTORS COMPENSATION, COMMITTEES AND MEETINGS
During 1994, non-employee Directors received $550 for each meeting of the
Board of Directors or committee they attended, 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, 1994. 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, 1994. 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
Employee Stock Incentive Plan. The Board of Directors met, or took action by way
of unanimous consent, four times during the year ended December 31, 1994. Each
director attended all of the board meetings and meetings of committees on which
he served during 1994. 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 and over whose names this report is
presented. The Committee reviews and approves the compensation of the Company's
executive officers annually. The actions of executives officers have a profound
impact on the short-term and long-term profitability of the Company. Therefore,
the design of the executive officer 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 net income. The three main components of
the executive compensation package are stock-based incentive plans, cash
incentive plans, and base salary.
STOCK BASED INCENTIVE PLAN
The 1994 Employee Stock Incentive Plan was approved by the stockholders at
the April 26, 1994 Meeting. As detailed in the Summary Compensation Table on
page 9, the Option/SAR grant Table on page 10 and Long-Term Incentive Plan Table
on page 11, the named executives received an aggregate of 8,100 units in 1994
under this plan. These awards were intended to help insure that the long-term
goals of the executives were aligned with those of the Company. Specific award
amounts were determined based on the performance of the individual and took into
consideration the number of options awarded in a previous plan that are
currently held by the named executives. The Chief Executive Officer, R. Randall
Rollins, and the Chief Operating Officer, Gary W. Rollins, maintain a
significant ownership interest in the Company and were therefore not considered,
at this time, for grants under the 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
5
<PAGE>
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 exemption, at this time.
CASH BASED INCENTIVE PLANS
The second component of the executive compensation package consists of a
cash based incentive plan. The Company currently offers one cash based incentive
plan which is the performance bonus plan or short-term plan. The Company's Stock
Appreciation Rights Plan expired in 1994 and no cash based grants were made
pursuant thereto.
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
subjectively based on net 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 Chief Executive Officer, R. Randall Rollins, and the President
and Chief Operating Officer, Gary W. Rollins, do not participate in the
performance bonus plan. The Committee determined that due to the short term
nature of the performance bonus plan, it is not appropriate for the two
aforementioned named executives to participate at this time because many of
their individual contributions cannot be effectively measured over a 12 month
operating cycle.
Gene L. Smith, the Chief Financial Officer, who participates in the
performance bonus plan, will receive approximately 20% of his 1994 compensation
in a performance bonus. The amount of Mr. Smith's bonus was determined based on
his attainment of his specific performance and budget objectives.
BASE SALARY
The third component is base salary. The Company believes that it is
important for the named executives to receive acceptable salaries so the Company
can keep the senior executive 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, the scope
of the position, individual performance and the pay received by peers in similar
positions. Approximately one half of the merit percentage increases are based on
attainment of the net income objectives. The remaining 50% of the merit salary
increase is subjectively based on the other aforementioned criteria. These
factors are not used in any specific formula or weighting. The salaries of the
named executives are reviewed annually.
CEO PAY
The 1994 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. The Committee
feels that due to the significant level of stock ownership in the Company, the
Chief Executive Officer will not participate in the stock based incentive plans
at this time. The Committee considers several factors when determining the CEO's
salary. These factors include long-term growth in net income, stockholder value
improvements as well as his individual performance. These factors are not used
in any specific formula or weighting.
6
<PAGE>
CONCLUSION
The Committee believes that this mix of acceptable market-based salaries,
cash incentives for short-term performance, and stock based incentives for
long-term performance in the Company represent a balance that will motivate the
executive 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.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ROLLINS, INC S&P 500 S&P COMMERCIAL SVCS
<S> <C> <C> <C>
1989 100 100 100
1990 119.3 96.89 83.97
1991 164.62 126.42 91.28
1992 215.55 136.05 90.38
1993 243.99 149.76 87.57
1994 211.11 151.74 80.59
</TABLE>
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, 1994, 1993 and 1992, of those persons who were, at December 31,
1994 (i) the chief executive officer and (ii) the other most highly compensated
executive officers of the Company whose total annual compensation exceeded
$100,000 (the named executives):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
------------------------
RESTRICTED
ANNUAL COMPENSATION STOCK SECURITIES
--------------------------------- AWARDS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ($) (1) OPTIONS (#) COMPENSATION (2)
------------------------------ --------- ----------- --------- --------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins 1994 $ 437,632 $ -- $ -- -- $ 1,800
Chairman of the Board & 1993 437,632 -- -- -- 2,830
Chief Executive Officer 1992 357,632 -- -- -- 2,746
Gary W. Rollins 1994 757,632 -- -- -- 1,800
President & 1993 757,632 -- -- -- 2,830
Chief Operating Officer 1992 657,632 -- -- -- 2,746
Gene L. Smith 1994 157,332 34,350 51,075 4,000 1,800
Chief Financial Officer 1993 137,400 30,528 -- 800 2,015
1992 127,200 27,600 -- -- 1,857
<FN>
------------------------
(1) The values set forth above in the column above for restricted stock awards
are as of January 24, 1994, the date of grant of Time Lapse Restricted
Stock. On December 31, 1994, these were the only shares of restricted stock
held by the named executive officers. The number of shares and their value
on December 31, 1994 were as follows: Mr. Smith, 1,800 shares valued at
$41,625. The December 31, 1994 values are based on the December 31, 1994
closing market stock price of $23 1/8 and do not take into account any
diminution of value attributable to time lapse restrictions on these
shares. Time Lapse Restricted Stock vests ten years from the date of grant.
During these ten years, grantees receive all dividends declared and retain
voting rights for the granted shares. No Time Lapse Restricted Stock will
vest upon termination of employment.
(2) Effective October 1, 1983, the Company adopted the Rollins Retirement
Account ("Retirement Account"), a qualified retirement plan designed to
meet the requirements of Section 401(k) of the Internal Revenue Code. The
Retirement Account provides for a matching contribution of forty cents
($.40) for each one dollar ($1.00) of a participant's contribution to the
Retirement Account, not to exceed 3 percent of his or her annual
compensation (which includes commissions, overtime and bonuses).
Participants accrue benefits under the Retirement Account in lieu of
payment of compensation to the participant. The amounts shown in this
column represent the Company match for the named executives.
</TABLE>
9
<PAGE>
OPTION/SAR GRANTS IN FISCAL YEAR 1994
The following table sets forth stock options granted in the fiscal year
ending December 31, 1994 to each of the named executives. The table also sets
forth the hypothetical gains that would exist for the options at the end of
their ten-year term, assuming compound rates of stock appreciation of 5% and
10%. The actual future value of the options will depend on the market value of
the Company's Common Stock. All option exercise prices are based on the market
price on the grant date.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
-------------------------------------------------
PERCENT POTENTIAL REALIZABLE
NUMBER OF OF TOTAL VALUE AT ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OR OPTION TERM (2)
GRANTED IN FISCAL BASE PRICE EXPIRATION ----------------------
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
------ ----------- ----------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins.................... 0 N/A N/A N/A N/A N/A
Gary W. Rollins....................... 0 N/A N/A N/A N/A N/A
Gene L. Smith......................... 4,000(3) 3% $ 28 3/8 01/24/04 $ 71,380 $ 180,890
<FN>
------------------------
(1) Options were granted on January 24, 1994 at a price of $28 3/8 per share.
No Stock Appreciation Rights were granted to the named executives during
1994.
(2) These amounts, based on assumed appreciation rates of 5% and 10% prescribed
by the Securities and Exchange Commission rules, are not intended to
forecast possible future appreciation, if any, of the Company's stock
price. These numbers do not take into account certain provisions of options
providing for termination of the option following termination of
employment, nontransferability or phased-in vesting. The Company did not
use an alternative formula for a grant date valuation as it is not aware of
any formula which will determine with reasonable accuracy a present value
based on future unknown or volatile factors. Future compensation resulting
from option grants is based solely on the performance of the Company's
stock price.
(3) These Incentive Stock Options vest and become exercisable 20% each year and
expire after 10 years.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1994
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S OPTIONS/SAR'S
VALUE AT FY-END (#) AT FY-END ($) (1)
SHARES ACQUIRED REALIZED EXERCISABLE / EXERCISABLE /
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
------ ------------------- ----------- ------------- ------------------
<S> <C> <C> <C> <C>
R. Randall Rollins............................. 0 $ 0 0/0 $ 0/0
Gary W. Rollins................................ 0 0 0/0 0/0
Gene L. Smith.................................. 531 6,305 2,309/8,160 22,177/43,336
<FN>
------------------------
(1) Based on the closing price of Company common stock on the New York Stock
Exchange on December 31, 1994 of $23 1/8 per share.
</TABLE>
10
<PAGE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN FISCAL YEAR 1994
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF OTHER PERIOD
SHARES, UNITS UNTIL MATURATION
NAME OR OTHER RIGHTS (#) OR PAYOUT
------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
R. Randall Rollins..................................... 0 N/A
Gary W. Rollins........................................ 0 N/A
Gene L. Smith.......................................... 2,300 01/24/99
</TABLE>
Performance restricted stock is granted, but not earned and issued, until
certain five year tiered performance criteria are met. The performance criteria
are predetermined market prices of the Company's stock. On the date that the
stock appreciates to each level (determination date), 20% of performance shares
are earned. Once earned, the stock vests in five years from the determination
date. After the determination date, the grantee will receive all dividends
declared and also have voting rights to the shares.
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, 1994 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".
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 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 as amended (the "Code"),
the maximum annual benefit that could be payable to a Retirement Income Plan
beneficiary in 1994 was $118,800. However, this limitation does not affect
11
<PAGE>
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 the Code (as amended by the Omnibus Budget
Reconciliation Act of 1993), the maximum compensation recognized by the
Retirement Income Plan was $150,000 in 1994. Retirement benefits accrued at the
end of any calendar year will not be reduced by any subsequent changes in the
maximum compensation limit.
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, 11 years; Gary W. Rollins, 29 years; and Gene L. Smith, 9
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
named executives for 1994 under this plan are reported in the "All Other
Compensation" column of the Summary Compensation Table above.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's auditors for 1994. As is its
policy, upon the recommendation of the Audit Committee, the Board of Directors
shall select a firm of certified public accountants for 1995. It is anticipated
that a representative of Arthur Andersen LLP 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, 1994 have been
satisfied, except that R. Randall Rollins and Gary W. Rollins each filed a late
report on Form 5 which reported the disposition of shares by the estate of O.
Wayne Rollins, of which both are co-executors.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the
Company's 1996 Annual Meeting of Stockholders must be received by the Company by
November 19, 1995 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
12
<PAGE>
Meeting) exists 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 shares 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.
MISCELLANEOUS
The Company's Annual Report for the calendar year ended December 31, 1994 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 1995 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, 1994.
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 24, 1995
13
<PAGE>
PROXY ROLLINS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF ROLLINS, INC. FOR
ANNUAL MEETING OF STOCKHOLDERS, TUESDAY, APRIL 25, 1995, 9:30 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 25,
1995, at 9:30 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 24, 1995, 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:
<TABLE>
<S> <C>
1. / / FOR all Class III nominees; / / For all Class III nominees, except as indicated below; or / / REFRAIN from voting
for the election of Wilton Looney and Bill J. Dismuke as Class III directors.
(INSTRUCTIONS: To refrain from voting for any individual nominee, write that nominee's name on the space provided
below.)
</TABLE>
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------------------
2. ON ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
(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. 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.
