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
[X] Definitive Proxy Statement Commission Only (as permitted by
[_] Definitive Additional Materials Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
(ss.)240.14a-11(c) or (ss.)240.14a-12
ROLLINS, INC.
-------------
(Name of Registrant as Specified In Its Charter)
N/A
---
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: 5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[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 2000 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, 2000, 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 24, 2000, is attached.
The Board of Directors has fixed the close of business on February 29,
2000, 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
Michael W. Knottek, Secretary
Atlanta, Georgia
March 24, 2000
<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,
2000, 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, 2000. 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
proxy holder.
CAPITAL STOCK
The outstanding capital stock of the Company on February 29, 2000
consisted of 29,881,458 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 29, 2000, the record date for determining stockholders entitled to
notice of and to vote at the meeting or any adjournment thereof.
A majority of the outstanding shares will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
In accordance with General Corporation Law of the state of Delaware, 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 Annual
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 for each nominee, and
hence only votes for director nominees (and not abstentions or broker non-votes)
are relevant to the outcome.
The names 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 29, 2000,
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
Beneficially Outstanding
Name and Address of Beneficial Owner Owned (1) Shares
- ------------------------------------ --------- ------
<S> <C> <C>
R. Randall Rollins 13,847,245(2) 46.3
2170 Piedmont Road, N.E.
Atlanta, Georgia
Gary W. Rollins 14,388,660(3) 48.2
2170 Piedmont Road, N.E.
Atlanta, Georgia
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amount Percent of
Beneficially Outstanding
Name and Address of Beneficial Owner Owned (1) Shares
- ------------------------------------ --------- ------
<S> <C> <C>
Mario Gabelli 6,581,875(4) 22.0
One Corporate Center
Rye, New York 10020
Michael W. Knottek 705,452(5) 2.4
Harry J. Cynkus 8,900(6) -
All Directors and Executive Officers as a group 16,247,829(7) 54.4
(9 persons)
</TABLE>
(1) Except as otherwise noted, the nature of the beneficial ownership for
all shares is sole voting and investment power.
(2) Includes 163,292 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 2,079,700 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 61,530* 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 432,000 shares owned by The Rollins Holding Company.
Mr. Rollins is an officer, director and stockholder of Rollins Holding
Company, Inc. Also includes 683,288 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 365,846 shares of the Company held as Custodian for the
grandchildren of his brother, R. Randall Rollins, and 2,046,100 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 66,140* 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 432,000 shares owned by The Rollins Holding
Company. Mr. Rollins is an officer, director and stockholder of Rollins
Holding Company, Inc. Also includes 683,288 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
6,581,875 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., 4,794,875 shares; Gabelli
Funds, Inc., 1,783,000 shares and Mr. Mario Gabelli, 4,000 shares.
GAMCO Investors, Inc. does not have authority to vote 148,500 shares of
the total 4,794,875 held. Several of these entities share voting and
disposition powers with respect to the shares of Company Common Stock
held by them.
(5) Includes options to purchase 16,000 shares, which are currently
exercisable or will become exercisable within 60 days of the date
hereof. This excludes options to purchase 56,000 shares that are
not currently exercisable and will not become exercisable within
sixty days of the date hereof. Also includes 682,552 shares held by
the Rollins 401 (k)Plan as to which Mr. Knottek has voting power.
(6) Mr. Cynkus owns less than 1% of outstanding shares. This includes
options to purchase 6,000 shares, which are currently exercisable or
will become exercisable within 60 days of the date hereof. This
excludes options to purchase 21,000 shares that are not currently
exercisable and will not become exercisable within sixty days of the
date hereof.
(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 Rollins Holding Company.
* Messrs. R. Randall Rollins and Gary W. Rollins disclaim any beneficial
interest in these holdings.
3
<PAGE>
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 fourth and fifth 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 29,
2000, (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 I (Term Expires 2002)
R. Randall Rollins (3) Chairman of the Board and Chief 1968 to date 68 13,847,245(4) 46.3
Executive Officer of the Company;
Chairman of the Board, Chief
Executive Officer of RPC, Inc.
(oil and gas field services and
boat manufacturing)
Henry B. Tippie Chairman of the Board and Chief 1960 to 73 1,244,750(5) 4.2
Executive Officer of Tippie 1970;
Services, Inc. (management 1974 to
services); Chairman of the date
Executive Committee and Vice
Chairman of the Board of Rollins
Truck Leasing Corp. (vehicle
leasing and transportation);
Chairman of the 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)
James B. Williams Chairman of the Executive 1978 to date 66 20,000 *
Committee of SunTrust Banks, Inc.
(bank holding company)
</TABLE>
4
<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>
Class II (Term Expires 2003)
John W. Rollins (3) Chairman of the Board and Chief 1948 to date 83 15,510(6) *
Executive Officer of Rollins
Truck Leasing Corp. (vehicle
leasing and transportation);
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 1981 to date 55 14,388,660(7) 48.2
Officer of the Company (since
1984)
Class III (Term Expires 2001)
Wilton Looney Honorary Chairman of the Board of 1975 to date 80 1,500 *
Genuine Parts Company (automotive
parts distributor)
Bill J. Dismuke Retired President of Edwards 1984 to date 63 900 *
Baking Company (manufacturing of
baked pies and pie pieces)
</TABLE>
(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. and Safety-Kleen Corporation; Henry
B. Tippie: Safety-Kleen Corporation; James B. Williams: The Coca-Cola
Company, Genuine Parts Company, 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) (See information contained in footnote (2) to the table appearing in
Capital Stock section.)
(5) 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 Rollins
Holding Company, an interest in which is indirectly held by a trust of
which Mr. Tippie is a Co-Trustee but not a beneficiary, and 300**
shares held by his wife.
(6) Does not include 1,950** shares held by his wife as custodian for his
children.
(7) (See information contained in footnote (3) to the table appearing in
Capital Stock section.)
* Less than 1% of outstanding shares.
** Messrs. John W. Rollins and Henry B. Tippie disclaim any beneficial interest
in these holdings.
5
<PAGE>
BOARD OF DIRECTORS COMPENSATION, COMMITTEES AND MEETINGS
During 1999, non-employee Directors received $750 for each Board of
Directors or committee meeting 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 ended December 31, 1999. 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 ended
December 31, 1999. 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, Inc.
1994 and 1998 Employee Stock Incentive Plans. The Board of Directors met, or
took action by way of unanimous consent, seven times during the year ended
December 31, 1999. No Director attended fewer than 75% of the board meetings and
meetings of committees on which he served during 1999. 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
During fiscal year 1999, the members of the Compensation Committee of the Board
of Directors held primary responsibility for determining executive compensation
levels. The Compensation Committee is comprised of outside directors who are not
eligible to participate in the Company's compensation plans and over whose name
this report is presented.
The Company is engaged in a highly competitive industry. The actions of the
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. In order to retain key employees, 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.
Pursuant to the above compensation philosophy, the three main components of the
executive compensation package are base salary, a cash incentive plan, and
stock-based incentive plans.
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 geographic area. These factors are not used in any
specific formula or weighting. The salaries of the Named Executives are reviewed
annually. One Named Executive received a raise in 1999 that was based on his
individual performance and overall departmental improvements. The other three
did not receive a raise because the current salaries were deemed appropriate
given the profits of the Company in 1999.
The annual cash incentive compensation package for the non-Director Named
Executives is developed by the Chief Executive Officer of the Company prior to
the end of each fiscal year. It is based upon performance objectives for the
ensuing fiscal year. The specific performance objectives relate to each
6
<PAGE>
executive improving the contribution of his functional area of responsibility to
further enhance the earnings of the Company. These performance objectives and
incentive package are then reviewed by the Compensation Committee and either
accepted, amended or modified. Both of the Named Executives participating in
this Plan earned a bonus during 1999 as a result of improvements in departmental
function and progress made toward the Company's strategic objectives. The Chief
Executive Officer and the Chief Operating Officer do not participate in this
cash incentive plan.
Awards under the Company's Stock Option Plans are purely discretionary, and are
not based upon any specific formula and may or may not be granted in any given
fiscal year. When considering the grant of stock options, the Compensation
Committee gives consideration to the overall performance of the Company and the
performance of individual employees. 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 1999 under the 1994 or 1998 Employee Stock Incentive
Plan. Grants are made under the Plans and the Plans are administered by
non-employee directors within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. During the fiscal year 1999, the non-Director
Named Executives were granted a total of 44,000 Incentive Stock Options. In
general, these grants were based upon the scope of the position and the
individual performance of each individual.
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 COMPENSATION
The CEO's compensation is determined by the Compensation Committee. For fiscal
year 1999, the cash compensation for R. Randall Rollins was $461,045. This
represents the total compensation for Mr. Rollins, no portion of which was in
performance driven bonuses or stock based incentive plans. The CEO's
compensation is based upon the long-term growth in the Company's net income,
shareholder value improvements, as well as, the CEO's individual performance.
The decision of the Compensation Committee is, however, subjective and is not
based upon any specific formula or guidelines. The CEO does not consult with the
Compensation Committee when his salary is determined. Neither the CEO nor any
other member of the Compensation Committee participates in any Company incentive
program.
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 GRAPH
<TABLE>
<CAPTION>
Years Rollins, Inc. S&P 500 S&P Commercial Svcs.
- ----- ------------- ------- --------------------
<S> <C> <C> <C>
1994 $100.00 $100.00 $100.00
1995 97.93 137.58 128.82
1996 90.97 169.17 155.62
1997 94.85 225.61 243.82
1998 84.05 290.09 267.12
1999 72.94 351.13 208.13
</TABLE>
ASSUMES INITIAL INVESTMENT OF $100
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
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, 1999, 1998 and 1997, of those persons who were, at
December 31, 1999 (i) the chief executive officer and (ii) the other most highly
compensated executive officers of the Company whose total annual compensation
exceeded $100,000 ("the Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
------------------- -----------------------------
Name and Principal Position Year Salary ($) Bonus ($) Restricted Securities LTIP All Other
- --------------------------- ---- ---------- --------- Stock Underlying Payouts (3) Compensation (1)
Awards Options (#) ----------- ----------------
------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Randall Rollins................ 1999 $461,045 $- - - - $2,400
Chairman of the Board and 1998 457,632 - - - - 1,920
Chief Executive Officer 1997 459,018 - - - - 1,920
Gary W. Rollins................... 1999 $798,572 $- - - - $2,400
President and 1998 797,908 - - - - 1,920
Chief Operating Officer 1997 798,208 - - - - 1,920
Michael W. Knottek............. 1999 $200,708 $95,500 - 32,000 - $2,400
Vice President and Secretary 1998 192,560 15,000 - 40,000 - 1,920
1997 70,759 - - - - -
Harry J. Cynkus................... 1999 $170,333 $77,407 - 12,000 - $22,540
Chief Financial Officer and 1998 114,548 10,500 - 15,000 - -
Treasurer
</TABLE>
- -----------
(1) Except for the $20,140 for relocation expenses paid to Harry J. Cynkus,
the amounts shown in this column represent the Company match for the
Named Executives under the Rollins 401 (k) Plan. Effective October 1,
1983, the Company adopted the Rollins 401(k) Plan ("401(k) Plan"), a
qualified retirement plan designed to meet the requirements of Section
401(k) of the Internal Revenue Code. The 401(k) Plan provides for a
matching contribution of forty cents ($.40) for each one dollar ($1.00)
of a participant's contribution to the 401(k) Plan, not to exceed 3
percent of his or her annual compensation (which includes commissions,
overtime and bonuses). A participant's voluntary pre-tax salary
deferrals made under the 401(k) Plan are in lieu of payment of
compensation to the participant.
9
<PAGE>
OPTION/SAR GRANTS IN FISCAL YEAR 1999
The following table sets forth stock options granted in the fiscal year
ending December 31, 1999 to each of the Named Executives. The table also sets
forth the hypothetical gains that would exist for the options at the end of
their ten-year term, assuming compound rates of stock appreciation of 5% and
10%. The actual future value of the options will depend on the market value of
the Company's Common Stock. All option exercise prices are based on the market
price at the grant date.
<TABLE>
<CAPTION>
Individual Grants (1) Potential Realizable
--------------------- Value at Annual Rates
Of Stock Price
Appreciation for
Option Term (2)
Name Number of Percent of Exercise Expiration 5% ($) 10% ($)
- ---- Securities Total or Base Date ------ -------
Underlying Options Price ($/Sh) ----
Options Granted to ------------
Granted (#) Employees
----------- in Fiscal
Year
----
<S> <C> <C> <C> <C> <C> <C>
R. Randall Rollins................. - N/A N/A N/A N/A N/A
Gary W. Rollins.................... - N/A N/A N/A N/A N/A
Michael W. Knottek................. 32,000(3) 3.7% 16 5/16 01/26/09 $328,283 $831,934
Harry J. Cynkus.................... 12,000(3) 1.4% 16 5/16 01/26/09 $123,106 $311,975
</TABLE>
- -----------
(1) Options were granted on January 26, 1999 at a price of $16 5/16 per
share. No Stock Appreciation Rights were granted to the Named
Executives during 1999.
(2) These amounts, based on assumed appreciation rates of 5% and 10%
prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the
Company's stock price. These numbers do not take into account certain
provisions of options providing for termination of the option following
termination of employment, nontransferability, or phased-in vesting.
The Company did not use an alternative formula for a grant date
valuation as it is not aware of any formula that will determine with
reasonable accuracy a present value based on future unknown or volatile
factors. Future compensation resulting from option grants is based
solely on the performance of the Company's stock price.
(3) These Incentive Stock Options vest and become exercisable 20% each year
over 5 years and expire after 10 years.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1999
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Name Shares Acquired Value Number of Value of
- ---- On Exercise (#) Realized ($) Securities Unexercised
--------------- ------------ Underlying In-the-Money
Unexercised Options/SAR's
Options/SAR's At FY-End ($) (1)
At FY-End (#) Exercisable/
Exercisable/ Unexercisable
Unexercisable -------------
-------------
<S> <C> <C> <C> <C>
R. Randall Rollins............... - $- -/- $-/-
Gary W. Rollins.................. - - -/- -/-
Michael W. Knottek............... - - 8,000/72,000 -/-
Harry J. Cynkus.................. - - 3,000/27,000 -/-
</TABLE>
(1) Based on the closing price of the Company's Common Stock on the
New York Stock Exchange on December 31, 1999 of $15.00 per share.
10
<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, 1999 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 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 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 1999 was $130,000. However, this
limitation does not affect previously accrued benefits of those individuals who
became entitled to benefits in excess of $130,000 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 $160,000 in 1999. 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, 16 years; Gary
W. Rollins, 30 years; Michael W. Knottek, 2 years; and Harry J. Cynkus, 1 year.
11
<PAGE>
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 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 1999 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 1999. As is
its policy, upon the recommendation of the Audit Committee, the Board of
Directors shall select a firm of certified public accountants for 2000. 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, 1999 were timely
satisfied.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at the Company's
2001 Annual Meeting of the Stockholders, pursuant to Rule 14a-8 promulgated
under the Securities Exchange Act of 1934, as amended, must be received by the
Company by November 24, 2000 for inclusion in its proxy statement and form of
proxy relating to that meeting.
With respect to the Company's annual meeting of the stockholders to be held in
2001, all stockholder proposals submitted outside the stockholder proposal rules
contained in Rule 14a-8 promulgated under the Securities Exchange Act of 1934,
as amended, which pertains to the inclusion of stockholder proposals in a
Company's proxy materials, must be received by the Company by February 7, 2001,
in order to be considered timely. With regard to such stockholder proposals, if
the date of the next annual meeting of stockholders is advanced or delayed more
than 30 calendar days from April 25, 2001, the Company shall, in a timely
manner, inform its stockholders of the change and of the date by which such
proposals must be received.
MISCELLANEOUS
The Company's Annual Report for the calendar year ended December 31,
1999 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 2000
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,
1999. 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: HARRY J. CYNKUS, CHIEF FINANCIAL OFFICER.
12
<PAGE>
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
Michael W. Knottek, Secretary
Atlanta, Georgia
March 24, 2000
13
<PAGE>
PROXY ROLLINS, INC.
Proxy Solicited by the board of Directors of Rollins, Inc. for
Annual Meeting of Stockholders, Tuesday, April 25, 2000, 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, 2000, 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, 2000, 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 John W. Rollins and Gary W. Rollins as Class II directors;
/ / For all Class II nominees, except as indicated below; or
/ / REFRAIN from voting for the election of all Class II nominees.
(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 ENVVELOPE AND
MAILED IN THE UNITED STATES.
