<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/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
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 1997 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
22, 1997, at 9:30 A.M., or any adjournment thereof, for the following purposes:
(a) To elect two Class II directors to the Board of Directors;
(b) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Proxy Statement dated March 17, 1997, is attached.
The Board of Directors has fixed the close of business on February 28, 1997,
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 17, 1997
<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 22,
1997, 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 17, 1997. 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, 1997 consisted
of 34,413,481 shares of Common Stock, par value $1.00 per share. 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, 1997, the record date for determining stockholders entitled to notice of and
to vote at the meeting or any adjournment thereof.
The names and addresses 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, 1997, 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 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....................................................... 13,991,295(2) 40.7
2170 Piedmont Road, N.E.
Atlanta, Georgia
Gary W. Rollins.......................................................... 14,370,209(3) 41.8
2170 Piedmont Road, N.E.
Atlanta, Georgia
Reich & Tang Asset Management L.P........................................ 2,749,689(4) 8.0
600 Fifth Avenue
New York, New York
Mario Gabelli............................................................ 2,518,825(5) 7.3
One Corporate Center
Rye, New York
Gene L. Smith............................................................ 9,300(6) --
2170 Piedmont Road, N.E.
Atlanta, Georgia
All Directors and Executive Officers as a group (8 persons).............. 15,301,768(7) 44.5
</TABLE>
- - ------------------------
(1) Except as otherwise noted, the nature of the beneficial ownership for all
shares is sole voting and investment power.
1
<PAGE>
(2) Includes 156,329 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 1,431,700 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 56,543* 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 738,288 shares
owned by Mr. O. Wayne Rollins' Estate. Mr. Rollins is the Co-Executor and
Co-Trustee of this estate. Also includes 50,010 shares owned by the RWR
Investment Partnership, a Georgia limited partnership, of which Mr. Rollins
is the sole general partner.
(3) Includes 252,386 shares of the Company held as Custodian for the
grandchildren of his brother, R. Randall Rollins, and 1,398,100 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 61,299* 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 738,288 shares owned by Mr. O. Wayne Rollins' Estate. Mr. Rollins
is the Co-Executor and Co-Trustee of this estate.
(4) Based upon the information received by the Company, an aggregate of
2,749,689 shares of Company Common Stock are beneficially owned by Reich &
Tang Asset Management L.P. on behalf of certain accounts for which Reich &
Tang Asset Management L.P. provides investment advice on a fully
discretionary basis. This entity has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
shares of the Common Stock. None of the above mentioned entities has a
greater than 5% interest in the Common Stock.
(5) Based upon information received by the Company, an aggregate of 2,518,825
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., 1,809,825 shares; Gabelli Funds, Inc., 705,000
shares; and Mr. Mario Gabelli, 4,000 shares. GAMCO Investors, Inc. does not
have authority to vote 130,500 shares of the total 1,809,825 held. Several
of these entities share voting and disposition powers with respect to the
shares of Company Common Stock held by them.
(6) Mr. Smith owns less than 1% of outstanding shares. This includes 5,032
incentive stock options that are currently exercisable.
(7) 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. This also includes 5,032 incentive
stock options held by Mr. Gene L. Smith that are currently exercisable.
* 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.
2
<PAGE>
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, 1997,
(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 PRINCIPAL OCCUPATION (1) DIRECTOR AGE STOCK (2) SHARES
- - ---------------------- ---------------------------------------- ---------- --- ------------- -----------
<S> <C> <C> <C> <C> <C>
CLASS II (NEW TERM EXPIRES 2000)
John W. Rollins (3) Chairman of the Board and Chief 1948 to 80 15,510(4) *
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); Chairman
of the Board of Dover Downs
Entertainment, Inc. (operator of
multi-purpose gaming and entertainment
complex) (since October 1996)
Gary W. Rollins (3) President and Chief Operating Officer of 1981 to 52 14,370,209(5) 41.8
the Company (since 1984) date
CLASS I (TERM EXPIRES 1999)
R. Randall Rollins (3) Chairman of the Board and Chief 1968 to 65 13,991,295(6) 40.7
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,
Inc. (oil and gas field services and
boat manufacturing) (since 1984)
Henry B. Tippie Chairman of the Board and Chief 1960 to 70 1,244,750(7) 3.6
Executive Officer of Tippie Services, 1970;
Inc. (management services); Chairman of 1974 to
the Executive Committee and Vice date
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); Chairman of
Executive Committee of Matlack Systems,
Inc. (bulk trucking and terminaling);
Vice Chairman of the Board of Dover
Downs Entertainment, Inc. (operator of
multi-purpose gaming and entertainment
complex) (since October 1996)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENT OF
SERVICE AS OF COMMON OUTSTANDING
NAME PRINCIPAL OCCUPATION (1) DIRECTOR AGE STOCK (2) SHARES
- - ---------------------- ---------------------------------------- ---------- --- ------------- -----------
<S> <C> <C> <C> <C> <C>
James B. Williams Chairman of the Board and Chief 1978 to 63 20,000 *
Executive Officer of SunTrust Banks, date
Inc. (bank holding company) (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 of Georgia (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 1998)
Wilton Looney Honorary Chairman of the Board of 1975 to 77 1,500 *
Genuine Parts Company (automotive parts date
distributor)
Bill J. Dismuke Retired President of Edwards Baking 1984 to 60 900 *
Company (manufacturing of baked pies and date
pie pieces); President and Chief
Executive Officer of Jackson and Coker,
Inc. (Physician recruiting) (1987-1990)
</TABLE>
- - ------------------------
* Less than .1% of outstanding shares.
(1) Except as noted, 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: 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: SunTrust Banks, Inc., SunTrust Banks of Georgia, and
Dover Downs Entertainment, Inc. All persons named in the above table, other
than Bill J. Dismuke, are also directors of RPC, 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) Does not include 1,350** shares held by his wife as custodian for his
children.
(5) (See information contained in footnote (3) to the table appearing in Capital
Stock section.)
(6) (See information contained in footnote (2) to the table appearing in Capital
Stock section.)
(7) 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, 5,000** shares in a trust of which he is the sole Trustee, and 10,000
shares in a partnership which he has voting right for 10,000 shares but
beneficial partnership interest of 100 shares. 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.
- - ------------------------
** 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 1996, non-employee Directors received $750 for each meeting of the
Board of Directors or committee they attended, plus $10,000 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, 1996. 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, 1996. 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, five times during the year ended December 31, 1996. No
director attended fewer than 75% of the board meetings and meetings of
committees on which he served during 1996. 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
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE COMPANY 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 executive 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 base salary, cash incentive plans, and
stock-based incentive plans.
BASE SALARY
The first 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 subjectively 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 in the same geographical area. These factors are not used
in any specific formula or weighting. The salaries of the Named Executives are
reviewed annually.
5
<PAGE>
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 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. The annual
incentive compensation package for executive officers is developed by the Chief
Executive Officer of the Company prior to the end of each fiscal year. It is
based upon a performance formula for the ensuing fiscal year. That performance
formula and incentive package is then reviewed by the Compensation Committee and
is either accepted, amended or modified. 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, earned no bonus in 1996 because
the Company did not attain its profit objectives.
STOCK BASED INCENTIVE PLANS
At the Company's 1994 Annual Meeting the stockholders approved the 1994
Employee Stock Incentive Plan. As detailed in the Long-Term Incentive Plans
Table on page 10, the Chief Financial Officer, Gene L. Smith, was awarded 3,000
shares of Performance Restricted Stock under this plan in 1996. No other awards
were granted to the Named Executives under the 1994 Employee Stock Incentive
Plan during 1996. Mr. Smith's award was based on his performance and took into
consideration the value of all unexercised options he currently holds under this
plan and a previous plan. 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 for grants in 1996
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 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.
CEO PAY
The 1996 cash compensation of R. Randall Rollins, Chairman and Chief
Executive Officer, was $460,057. This represents the total compensation for Mr.
Rollins, no portion of which was in performance driven bonuses or stock based
incentive plans as mentioned above. The Committee feels that due to the
significant level of ownership in the Company, the Chief Executive Officer will
not participate in an incentive plan 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. The decision of the Committee is subjective and these
factors are not used in any
6
<PAGE>
specific formula or weighting. The CEO does not participate in the deliberations
of the Compensation Committee when his salary or incentive is determined.
CONCLUSION
The Committee believes that this mix of conservative 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 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 the Company 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>
S&P
COMMERCIAL
ROLLINS, INC S&P 500 SVCS
<S> <C> <C> <C>
1991 $100.00 $100.00 $100.00
1992 130.93 107.62 99.02
1993 148.21 118.46 95.94
1994 128.24 120.03 88.29
1995 125.60 165.13 119.26
1996 116.72 203.05 123.16
ASSUMES INITIAL INVESTMENT OF $100
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
</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 both SunTrust Banks, Inc. and
SunTrust Banks of Georgia, 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 Banks of Georgia or
SunTrust Banks, Inc. Rollins, Inc. maintains a significant banking relationship
with SunTrust Banks of Georgia. All banking services provided by SunTrust Banks
of Georgia 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, 1996, 1995 and 1994, of those persons who were, at December 31,
1996 (i) the chief executive officer and (ii) the other most highly compensated
executive officers of the Company whose total annual compensation exceeded
$100,000 (the Named Executives):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
--------------------------
RESTRICTED
ANNUAL COMPENSATION STOCK SECURITIES ALL OTHER
-------------------------------- AWARDS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ($) (1) OPTIONS (#) (2)
- - ------------------------------------------------ --------- ---------- --------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins.............................. 1996 $ 460,057 $ -- $ -- -- $1,800
Chairman of the Board & 1995 459,036 -- -- -- 1,800
Chief Executive Officer 1994 437,632 -- -- -- 1,800
Gary W. Rollins................................. 1996 798,208 -- -- -- 1,800
President & 1995 798,228 -- -- -- 1,800
Chief Operating Officer 1994 757,632 -- -- -- 1,800
Gene L. Smith................................... 1996 164,620 -- -- -- 1,800
Chief Financial Officer 1995 162,779 -- -- -- 1,800
1994 157,332 25,030 51,075 4,000 1,800
</TABLE>
- - ------------------------
(1) The values set forth above in the column for restricted stock awards are as
of January 24, 1994, the date of grant of Time Lapse Restricted Stock. On
December 31, 1996, these were the only shares of Time Lapse Restricted Stock
held by the Named Executive. The number of shares and their value on
December 31, 1996 were as follows: Mr. Smith, 1,800 shares valued at
$36,000. The December 31, 1996 values are based on the December 31, 1996
closing market stock price of $20 and do not take into account any
diminution of value attributable to time lapse restrictions on these shares.
Time Lapse Restricted Stock vests ten years from the date of grant. During
these ten years, grantees receive all dividends declared and retain voting
rights for the granted shares. Any nonvested Time Lapse Restricted Stock
will be forfeited upon termination of employment.
(2) Effective October 1, 1983, the Company adopted the Rollins 401(k) Plan
("401(k) Plan"), a qualified retirement plan designed to meet the
requirements of Section 401(k) of the Internal Revenue Code. The 401(k) Plan
provides for a matching contribution of forty cents ($.40) for each one
dollar ($1.00) of a participant's contribution to the 401(k) Plan, not to
exceed 3 percent of his or her annual compensation (which includes
commissions, overtime and bonuses). A participant's voluntary pre-tax salary
deferrals made under the 401(k) Plan are in lieu of payment of compensation
to the participant. The amounts shown in this column represent the Company
match for the Named Executives.
OPTION/SAR GRANTS IN FISCAL YEAR 1996
There were no Incentive Stock Option or Stock Appreciation Right grants to
the Named Executives during 1996.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1996
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SAR'S
OPTIONS/SAR'S AT FY-END ($)
VALUE 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.................................... 177 1,549 4,072/6,220 15,628/21,822
</TABLE>
- - ------------------------
(1) Based on the closing price of Company common stock on the New York Stock
Exchange on December 31, 1996 of $20 per share.
LONG-TERM INCENTIVE PLANS -- AWARDS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
PERFORMANCE OR
OTHER PERIOD
NUMBER OF SHARES, UNTIL
UNITS OR OTHER MATURATION OR
NAME RIGHTS (#) PAYOUT
- - --------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
R. Randall Rollins......................................................... 0 N/A
Gary W. Rollins............................................................ 0 N/A
Gene L. Smith.............................................................. 3,000 01/23/01
</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 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.
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<PAGE>
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, 1996 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
900,000......................... 202,500 270,000 337,500 405,000 405,000
1,000,000........................ 225,000 300,000 375,000 450,000 450,000
</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 of 1986 as amended (the "Code"), or the maximum
benefit limitations under Section 415 of the Code. The covered compensation for
the Named Executives is identical to the compensation 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 Code, the maximum annual benefit that could be payable to
a Retirement Income Plan beneficiary in 1996 was $120,000. However, this
limitation does not affect previously accrued benefits of those individuals who
became entitled to benefits in excess of $120,000 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 1996. 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 Named Executives, each of whom
is a participant in the Plan, are: R. Randall Rollins, 13 years; Gary W.
Rollins, 30 years; and Gene L. Smith, 11 years.
Effective October 1, 1983, the Company adopted a qualified retirement plan
designed to meet the requirements of Section 401(k) of the Code ("401(k) Plan").
The only form of benefit payment under the 401(k) Plan is a single lump-sum
payment equal to the balance in the participant's account on the date the
distribution is processed. Under the 401(k) Plan, the full amount of a
participant's accrued benefit is
11
<PAGE>
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 by the Company to the accounts of Named Executives
for 1996 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 1996. As is its
policy, upon the recommendation of the Audit Committee, the Board of Directors
shall select a firm of certified public accountants for 1997. 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(A) BENEFICIAL OWNERSHIP REPORTING 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 all filing requirements of such
persons under Section 16 for the fiscal year ended December 31, 1996 were timely
satisfied.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company by
November 17, 1997 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 30 calendar days or delayed by more than 30 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. 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 and broker non-votes 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.
12
<PAGE>
MISCELLANEOUS
The Company's Annual Report for the calendar year ended December 31, 1996 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 1997 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, 1996.
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 17, 1997
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<PAGE>
PROXY
ROLLINS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF ROLLINS, INC. FOR
ANNUAL MEETING OF STOCKHOLDERS, TUESDAY, APRIL 22, 1997, 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 22,
1997, 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 17, 1997, 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 as Class II directors.
(INSTRUCTIONS: To refrain from voting for any individual nominee, write that
nominee's name on the space provided below.)
- - --------------------------------------------------------------------------------
2. 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. 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.
