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Exhibit 10(iii)A(t)
NATIONAL SERVICE INDUSTRIES, INC.
MANAGEMENT COMPENSATION AND INCENTIVE PLAN
Effective as of September 1, 1994
1. ESTABLISHMENT AND EFFECTIVE DATE OF PLAN
National Service Industries, Inc. (the "Corporation") hereby
adopts the National Service Industries, Inc. Management
Compensation and Incentive Plan (the "Plan") for its executive
officers and certain other executives of the Corporation, its
Divisions and affiliates who are in management positions
designated as eligible for participation by the Executive Resource
and Nominating Committee (the "Committee") of the Board of
Directors of the Corporation or its designee. The Plan shall be
effective on September 1, 1994 and shall remain in effect, subject
to the rights of amendment and termination in Section 13, until
the Incentive Awards are paid for the Corporation's fiscal year
ending in 1999. Payments under the Plan shall only be made to
Named Executive Officers after the Plan is approved by the
stockholders of the Corporation.
2. PURPOSE OF THE PLAN
The purpose of the Plan is to further the growth and
financial success of the Corporation by offering performance
incentives to designated executives who have significant
responsibility for such success.
3. DEFINITIONS
(a) "Base Annual Salary" means the actual salary paid to a
Participant during the applicable Plan Year, increased by the
amount of any pre-tax deferrals or other pre-tax payments
made by the Participant to the Corporation's deferred
compensation or welfare plans (whether qualified or non-
qualified).
(b) "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Change in Control" means any of the following events:
(i) The acquisition (other than from the Corporation)
by any "Person" [as the term person is used for purposes of
Sections 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")] of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934
Act) of twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding voting
securities; or
(ii) The individuals who, as of September 1, 1994, are
members of the Board of Directors (the "Incumbent Board"),
cease for any reason to constitute at least twothirds of the
Board of Directors; provided, however, that if the election,
or nomination for election by the Corporation's stockholders,
of any new director was approved by a vote of at least
twothirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the
Incumbent Board; or
(iii) Approval by stockholders of the Corporation of
(1) a merger or consolidation involving the Corporation if
the stockholders of the Corporation, immediately before such
merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than seventy
percent (70%) of the combined voting power of the then
outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same
proportion as their ownership of the combined voting power of
the voting securities of the Corporation outstanding
immediately before such merger or consolidation or (2) a
complete liquidation or dissolution of the Corporation or an
agreement for the sale or other disposition of all or
substantially all of the assets of the Corporation.
Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur pursuant to subsection (i) above,
solely because twenty percent (20%) or more of the combined
voting power of the Corporation's then outstanding securities
is acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans
maintained by the Corporation or any of its subsidiaries, or
(ii) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the
stockholders of the Corporation in the same proportion as
their ownership of stock in the Corporation immediately prior
to such acquisition.
(d) "Chief Executive Officer" means the chief executive officer
of the Corporation, unless otherwise specified.
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Exhibit 10(iii)A(t)
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Executive Resource and Nominating
Committee of the Board of Directors or any other committee
designated by the Board of Directors which is responsible for
administering the Plan.
(g) "Corporation" means National Service Industries, Inc. and its
successors.
(h) "Division" means a separate business operating unit of the
Corporation with respect to which separate performance goals
are established hereunder.
(i) "Incentive Award" or "Award" means the bonus awarded to a
Participant under the terms of the Plan.
(j) "Maximum Award" means the maximum percentage of Base Annual
Salary which may be paid based upon the Relative Performance
during the Plan Year.
(k) "Named Executive Officer" means a Participant who as of the
date of payment of an Incentive Award is one of the group of
"covered employees" under Code Section 162(m) and the
regulations thereunder.
(l) "Participant" means an employee of the Corporation, a
Division or an affiliate who is designated by the Committee
to participate in the Plan.
(m) "Personal Performance Goals" means the goals established for
each Participant each year to improve the effectiveness of
the Participant's area of responsibility as well as the
Corporation as a whole.
(n) "Plan Rules" means the guidelines established annually by the
Committee pursuant to Section 4, subject to ratification by
the Board of Directors.
(o) "Plan Year" means the twelve month period which is the same
as the Corporation's fiscal year. The initial Plan Year
shall be September 1, 1994 through August 31, 1995.
(p) "Relative Performance" means the extent to which the
Corporation, or designated Division, as applicable, achieves
the performance measurement criteria set forth in the Plan
Rules.
(q) "Target Award" means the percentage (which may vary among
Participants and from Plan Year to Plan Year) of Base Annual
Salary which will be paid to a Participant as an Incentive
Award if the performance measurement criteria applicable to
the Participant for the Plan Year is achieved, as reflected
in the Plan Rules for such Plan Year.
(r) "Threshold Award" means the percentage of Base Annual Salary
which may be paid based on the minimum acceptable Relative
Performance during the Plan Year.
4. ADMINISTRATION OF THE PLAN
The Plan will be administered by the Committee, subject to
its right to delegate responsibility for administration of the
Plan as it applies to Participants other than Named Executive
Officers pursuant to Section 8. The Committee will have authority
to establish Plan Rules with respect to the following matters,
subject to the right of the Board of Directors to ratify such Plan
Rules:
(a) the employees who are to become Participants in the Plan;
(b) the Target Award, Maximum Award and Threshold Award that can
be granted to each Participant and the method for determining
such award, which the Committee may amend from time to time;
(c) performance targets and the measurement criteria to be used
in determining the Corporation's or a Division's Relative
Performance, which will include one or more of the following,
as determined by the Committee each year: net income,
earnings per share, return on equity, return on assets (or
net assets), profit before taxes, market value of the
Corporation's stock, and total shareholder return; and
(d) the time or times and the conditions subject to which any
Incentive Award may become payable.
The Plan Rules will be adopted by the Committee prior to, or
as soon as practical after, the commencement of each Plan Year.
Subject to the provisions of the Plan and the Committee's right to
delegate its responsibilities, the Committee will also have the
discretionary authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, and to make all
other determinations deemed necessary or advisable in
administering the Plan. The determinations of the Committee on
the matters referred to in paragraphs (a) through (d) of this
Section 4 shall be submitted at least annually to the Board of
Directors for its consideration and ratification. For
Participants who are not Named Executive Officers, the Committee
may in its discretion establish performance measures not listed in
this Section 4 without obtaining shareholder approval.
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Exhibit 10(iii)A(t)
5. PARTICIPATION
Eligibility for participation in the Plan is limited to
executive officers of the Corporation and certain other executives
of the Corporation and its Divisions or affiliates who hold key
management and staff positions. From among those eligible and
based upon the recommendations of the Chief Executive Officer and
other designees, the Committee will designate by name or position
the Participants each Plan Year. Any employee who is a
Participant in one Plan Year may be excluded from participation in
any other Plan Year. If, during the Plan Year, a Participant
other than a Named Executive Officer changes employment positions
to a new position which corresponds to a different award level,
the Committee may, in its discretion, adjust the Participant's
award level for such Plan Year. The Committee may, in its
discretion, designate employees who are hired after the beginning
of the Plan Year as Participants for such Plan Year and as
eligible to receive full or partial Incentive Awards for such
year.
6. INCENTIVE AWARDS
6.1 Determination of the Amount of Incentive Awards
At the end of each Plan Year, the Committee shall certify the
extent to which the performance targets and measurement criteria
established pursuant to Section 4 have been achieved for such Plan
Year based upon information prepared by the Corporation's finance
department. Subject to the right to decrease an award as
described in the next paragraph, the Participant's Incentive Award
shall be computed by the Committee based upon the achievement of
the established performance targets, measurement criteria and the
requirements of the Plan. The Committee may in determining
whether performance targets have been met adjust the Corporation's
financial results to exclude the effect of unusual charges or
income items, including gains and losses resulting from
divestitures, currency fluctuations or changes in accounting,
which are distortive of results year over year (either on a
segment or consolidated basis); provided, that for purposes of
determining the Incentive Awards of Named Executive Officers, the
Committee shall exclude unusual items whose exclusion has the
effect of increasing Relative Performance if such items constitute
"extraordinary items" under generally accepted accounting
principles. In addition, the Committee will adjust its
calculations to exclude the unanticipated effect on financial
results of changes in the Code or other tax laws, or the
regulations relating thereto.
The Committee may, in its discretion, decrease the amount of
a Participant's Incentive Award for a Plan Year based upon such
factors as it may determine, including the failure of the
Corporation or a Division to meet certain performance goals or of
a Participant to meet his Personal Performance Goals. The factors
to be used in reducing an Incentive Award may be established at
the beginning of a Plan Year and may vary among Participants.
In the event that the Corporation's or a Division's
performance is below the performance thresholds for the Plan Year
and the Incentive Awards are reduced or cancelled, the Committee
may in its discretion grant Incentive Awards to deserving
Participants, except for Participants who are Named Executive
Officers.
The Plan Rules and Incentive Awards under the Plan shall be
administered in a manner to qualify payments under the Plan to the
Named Executive Officers for the performance-based exception under
Code Section 162(m) and the regulations thereunder, except where
the Board of Directors determines such compliance is not
necessary. The maximum Incentive Award that may be paid to an
individual Participant for a Plan Year shall be the amount which
when added to the Participant's Base Annual Salary for such Plan
Year totals an aggregate of $1.5 million.
6.2 Eligibility for Payment of Incentive Award
No Participant will have any vested right to receive any
Incentive Award until such date as the Board of Directors has
ratified the Committee's determination with respect to the payment
of individual Incentive Awards, except where the Committee
determines such ratification is not necessary. No Incentive Award
will be paid to any Participant who is not an active employee of
the Corporation, a division or an affiliate at the end of the Plan
Year to which the Incentive Award relates; provided, however, at
the discretion of the Committee or its designee (subject to
ratification by the Board of Directors, where required), partial
Incentive Awards may be authorized by the Committee to be paid to
Participants (or their beneficiaries) who are terminated without
cause or who retire, die or become permanently and totally
disabled during the Plan Year. No Participant entitled to receive
an Incentive Award shall have any interest in any specific asset
of the Corporation, and such Participant's rights shall be
equivalent to that of a general unsecured creditor of the
Corporation.
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Exhibit 10(iii)A(t)
6.3 Payment of Awards
Payment of the Incentive Awards will be made as soon as
practicable after their determination pursuant to Sections 6.1 and
6.2, subject to a Participant's right to defer payment pursuant to
applicable deferred compensation plans of the Corporation.
Payment will generally be made in a lump sum in cash, unless the
Committee otherwise determines at the beginning of the Plan Year.
7. DELEGATION OF AUTHORITY BY THE COMMITTEE
Notwithstanding the responsibilities of the Committee set
forth herein, the Committee may delegate to the Chief Executive
Officer or others all or any portion of its responsibility for
administration of the Plan as it relates to Participants other
than Named Executive Officers. Such delegation may include,
without limitation, the authority to designate employees who can
participate in the Plan, to establish Plan Rules, to interpret the
Plan, to determine the extent to which performance criteria have
been achieved, and to adjust Incentive Awards payable. In the
case of each such delegation, the administrative actions of the
delegate shall be subject to the approval of the person within the
Corporation to whom the delegate reports (or, in the case of a
delegation to the Chief Executive Officer, to the approval of the
Committee).
8. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, unless the
Participant otherwise elects in writing, the Participant's
Incentive Award for the Plan Year, determined at the Target Award
level (without any reductions under Section 6.1) shall be deemed
to have been fully earned for the Plan Year, provided that the
Participant shall only be entitled to a pro rata portion of the
Incentive Award based upon the number of days within the Plan Year
that had elapsed as of the effective date of the Change in
Control. The Incentive Award amount shall be paid in cash within
thirty (30) days of the effective date of the Change in Control.
9. BENEFICIARY
Each Participant will designate a person or persons to
receive, in the event of death, any Incentive Award to which the
Participant would then be entitled under Section 6.2. Such
designation will be made in the manner determined by the Committee
and may be revoked by the Participant in writing. If a
Participant fails effectively to designate a beneficiary, then the
estate of the Participant will be deemed to be the beneficiary.
10. WITHHOLDING OF TAXES
The Corporation shall deduct from each Incentive Award the
amount of any taxes required to be withheld by any governmental
authority.
11. EMPLOYMENT
Nothing in the Plan or in any Incentive Award shall confer
(or be deemed to confer) upon any Participant the right to
continue in the employ of the Corporation, a Division or an
affiliate, or interfere with or restrict in any way the rights of
the Corporation, a Division or an affiliate to discharge any
Participant at any time for any reason whatsoever, with or without
cause.
12. SUCCESSORS
All obligations of the Corporation under the Plan with
respect to Incentive Awards granted hereunder shall be binding
upon any successor to the Corporation, whether such successor is
the result of an acquisition of stock or assets of the
Corporation, a merger, a consolidation or otherwise.
13. TERMINATION AND AMENDMENT OF THE PLAN; GOVERNING LAW
The Committee, subject to the ratification rights of the
Board of Directors, has the right to suspend or terminate the Plan
at any time, or to amend the Plan in any respect, provided that no
such action will, without the consent of a Participant, adversely
affect the Participant's rights under an Incentive Award approved
under Section 6.2. The Plan shall be interpreted and construed
under the laws of the State of Georgia.