SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
ABM INDUSTRIES, INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(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.
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filing fee is calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by
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fee was paid previously. Identify the previous filing by registration statement
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[ABM INDUSTRIES INCORPORATED LOGO]
160 Pacific Avenue, Suite 222
San Francisco, California 94111
------------------------
NOTICE OF THE 2002 ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MARCH 12, 2002
10:00 A.M.
------------------------
To Our Stockholders:
The 2002 Annual Meeting of Stockholders of ABM Industries Incorporated (the
"2002 Annual Meeting") will be held at the Concordia-Argonaut Club, 1142 Van
Ness Avenue, San Francisco, California 94109, on Tuesday, March 12, 2002 at
10:00 a.m. for the following purposes:
(1) to elect three directors;
(2) to approve the Company's 2002 Price-Vested Performance Stock Option
Plan as set forth and further described in the attached Proxy
Statement; and
(3) to transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of the Company at the close of business on January 18,
2002 (the "Stockholders") will be entitled to vote at the 2002 Annual Meeting
and any adjournments thereof. A complete list of the Company's Stockholders
entitled to vote at the 2002 Annual Meeting will be available for examination by
any Stockholder for ten days prior to the meeting during normal business hours
at the Company's corporate headquarters.
By Order of the Board of Directors
/s/ HARRY H. KAHN, ESQ.
Harry H. Kahn, Esq.
Senior Vice President, General Counsel
& Corporate Secretary
San Francisco, California
February 11, 2002
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING
IN PERSON, PLEASE VOTE AS PROMPTLY AS POSSIBLE,
TELEPHONE AND INTERNET VOTING ARE AVAILABLE.
[ABM INDUSTRIES INCORPORATED LOGO]
160 Pacific Avenue, Suite 222
San Francisco, California 94111
------------------------
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of ABM Industries Incorporated, a Delaware corporation (the
"Company"), for use at the 2002 Annual Meeting of Stockholders of the Company
(the "2002 Annual Meeting") to be held at the Concordia-Argonaut Club, 1142 Van
Ness Avenue, San Francisco, California 94109, on Tuesday, March 12, 2002 at
10:00 a.m. and at any adjournments of the 2002 Annual Meeting, for the purposes
set forth in the accompanying notice.
Only Stockholders of record of the Company (the "Stockholders") at the
close of business on January 18, 2002 will be entitled to vote at the 2002
Annual Meeting. At the close of business on that date, there were outstanding
24,520,144 shares of the Company's common stock ("ABM Common Stock"). Each share
of ABM Common Stock is entitled to one vote on each of the matters to be
presented at the 2002 Annual Meeting.
A majority of the Company's outstanding shares as of the record date must
be present at the meeting in order to hold the meeting and conduct business.
Shares are counted as present at the meeting if the Stockholder: (a) is present
and votes in person at the meeting, or (b) has properly given his or her proxy
to vote using the enclosed proxy card, or using the telephone or Internet
procedures. Abstentions and broker non-votes are counted as present in
determining whether the quorum requirement is satisfied. With regard to the
election of directors, votes may be cast "For" or "Withhold Authority." Votes
that are withheld and broker non-votes are excluded entirely from the vote and
have no effect on the outcome of the election of directors. An abstention may be
specified on Item 2. Abstentions and broker non-votes on Item 2 will have the
effect of a vote against this proposal because approval requires the affirmative
vote of the majority of shares present in person or by proxy and entitled to
vote.
If the enclosed form of proxy is properly signed and returned, or telephone
and Internet instructions are properly followed, the shares represented thereby
will be voted at the 2002 Annual Meeting in accordance with the instructions
specified thereon. If no choice is specified, the proxy holders will vote the
shares represented: (i) "For" the election of the nominees as directors, (ii)
"For" Item 2, and (iii) in their discretion on other matters. Full instructions
for voting by mail, telephone and Internet are included on the proxy card. A
proxy may be revoked by submitting a proxy with a later date signed as the
stockholder's name appears on the account. Telephone or Internet votes can be
revoked by a subsequent vote using the assigned control number shown on the
proxy card.
The expense of soliciting proxies will be paid by the Company. The Company
will request brokers, custodians, nominees and other record holders to forward
copies of the proxies and soliciting materials to persons for whom they hold
shares of ABM Common Stock and to request authority for the exercise of proxies;
in such cases, the Company will reimburse such entities for their reasonable
expenses. Following the original mailing of the proxies and soliciting
materials, employees of the Company may, for no additional compensation, solicit
proxies by mail, electronically or personally.
This proxy statement ("Proxy Statement") and the accompanying proxy card
were first sent to Stockholders on or about February 11, 2002.
ITEM I -- ELECTION OF DIRECTORS
The Company's Certificate of Incorporation divides the Board into three
classes, with each class serving a three-year term. Currently, the total number
of directors comprising the Board is set by the Company's Bylaws at ten. Three
members of the current Board have terms expiring at the 2002 Annual Meeting,
four have terms expiring at the 2003 Annual Meeting of Stockholders, and three
have terms expiring at the 2004 Annual Meeting.
In the absence of instructions to the contrary, shares represented by valid
proxies will be voted "For" the election of the persons nominated by the Board,
who are named in the following table. The nominees receiving the highest number
of votes will be elected.
The Company has no reason to believe that the nominees for election will be
unable or unwilling to serve if elected as directors. However, if any nominee is
unable or unwilling to be a candidate for the office of director at the date of
the 2002 Annual Meeting, or any adjournment thereof, the proxy holders will vote
for such substitute nominee as they shall in their discretion determine.
The Nominating, Governance & Succession Committee of the Board will
consider nominees recommended by Stockholders. The Company's Bylaws provide that
Stockholders intending to nominate candidates for election as directors at an
Annual Meeting of Stockholders must give the prescribed notice to the Secretary
of the Company at least sixty days prior to the first anniversary of the mailing
of the Proxy Statement in connection with the previous year's Annual Meeting. No
such notice has been given with respect to the 2002 Annual Meeting.
The following table contains information about the nominees and the
Company's other directors based on data furnished by them.
NOMINEES FOR ELECTION AS DIRECTORS FOR A TERM ENDING AT THE 2005 ANNUAL MEETING
<Table>
<Caption>
SERVED AS
PRINCIPAL OCCUPATIONS AND BUSINESS DIRECTOR
NAME AGE EXPERIENCE DURING PAST FIVE YEARS SINCE
- ---- --- ---------------------------------- ---------
Maryellen C. Herringer 58 Attorney-at-law; Retired Executive Vice President
& General Counsel of APL Limited, an international
provider of transport and logistics services(1) 1993
Charles T. Horngren 75 Edmund J. Littlefield Professor of Accounting,
Emeritus, Stanford Business School; author and
consultant(2) 1973
Martinn H. Mandles 61 Chairman of the Board of the Company since
December 1997; Chief Administrative Officer since
November 1991; Executive Vice President from
November 1991 to December 1997 1991
</Table>
- ---------------
(1) Maryellen C. Herringer is a member of the Board of Directors of Golden West
Financial Corporation, a publicly-held company; and World Savings Bank, a
wholly-owned subsidiary of Golden West Corporation.
(2) Charles T. Horngren is a member of the Board of Directors of Interplast,
Inc., a privately-held company.
2
DIRECTORS CONTINUING IN OFFICE FOR A TERM ENDING AT THE 2003 ANNUAL MEETING
<Table>
<Caption>
SERVED AS
PRINCIPAL OCCUPATIONS AND BUSINESS DIRECTOR
NAME AGE EXPERIENCE DURING PAST FIVE YEARS SINCE
---- --- ---------------------------------- ---------
Linda L. Chavez 54 President of the Center for Equal Opportunity; 1997
author and nationally syndicated columnist and
television commentator
Henrik C. Slipsager 47 President & Chief Executive Officer of the Company 2000
since November 2000; Executive Vice President of
the Company, and President of the Janitorial
Services Division, from November 1999 to October
2000; Senior Vice President of the Company, and
Executive Vice President of the Janitorial
Services Division, from January 1997 to October
1999.
Theodore T. Rosenberg 93 Vice Chairman of the Company's Executive Committee 1962
since November 2000; Chairman of the Executive
Committee from January 1990 to October 2000(3)
William W. Steele 65 Chairman of the Company's Executive Committee 1988
since November 2000; President & Chief Executive
Officer of the Company from November 1994 to
October 2000(4)
</Table>
DIRECTORS CONTINUING IN OFFICE FOR A TERM ENDING AT THE 2004 ANNUAL MEETING
<Table>
<Caption>
SERVED AS
PRINCIPAL OCCUPATIONS AND BUSINESS DIRECTOR
NAME AGE EXPERIENCE DURING PAST FIVE YEARS SINCE
- ---- --- ---------------------------------- ---------
Luke S. Helms 58 Managing Partner, Sonata Capital Management since 1995
June 2000; Vice Chairman of KeyBank from April
1998 to March 2000; Vice Chairman of BankAmerica
Corporation and Bank of America NT&SA from May
1993 to October 1996
Henry L. Kotkins, Jr. 53 President & Chief Executive Officer of Skyway 1995
Luggage Company(5)
William E. Walsh 70 Consultant to the San Francisco 49ers since June 1993
2001; General Manager of the San Francisco 49ers
from January 1999 to May 2001; author and
management consultant from January 1993 to
December 1998
</Table>
- ---------------
(3) Theodore Rosenberg retired as an officer and employee of the Company as of
December 31, 1989 after sixty-one years of service. He also serves as a
consultant to the Company.
(4) William W. Steele retired as an officer and employee of the Company
effective as of October 31, 2000 after forty-three years of service. He is
also a director of Labor Ready, Inc., a publicly-held company.
(5) Henry L. Kotkins, Jr. is a member of the Board of Directors of Skyway
Luggage Company, a privately-held company.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The standing committees of the Board are the Audit Committee, Executive
Committee, Executive Officer Compensation & Stock Option Committee, and the
Nominating, Governance & Succession Committee. The members and functions of
these committees are as follows:
Audit Committee. The Audit Committee oversees the corporate financial
reporting process and the internal and external audits of the Company, and
ensures that there is effective communication among the Board, management and
outside auditors. The responsibilities of the Audit Committee include: (1)
recommending outside auditors for approval by the Board, (2) approving fees for
the annual audit and related
3
services, (3) ensuring the independence of the outside auditors, (4) reviewing
the Company's system of internal accounting controls, (5) reviewing the
Company's quarterly and annual financial statements, and discussing them with
management and the independent auditors, and (6) making inquiries into matters
within the scope of the Audit Committee's functions, and retaining outside
counsel if deemed appropriate in connection with such inquiries. The current
members of the Audit Committee are Charles T. Horngren, Chairman; Luke S. Helms
and Maryellen C. Herringer.
Executive Committee. The Executive Committee has the authority to exercise
all power and authority of the Board in the management of the business and
affairs of the Company, except for: (1) any functions delegated to other
committees of the Board, and (2) any powers which, under Delaware law, may only
be exercised by the full Board. The current members of the Executive Committee
are William W. Steele, Chairman; Theodore T. Rosenberg, Vice Chairman and Henrik
C. Slipsager. Martinn H. Mandles is a non-voting member.
Executive Officer Compensation & Stock Option Committee. The Executive
Officer Compensation & Stock Option Committee is responsible for: (1) reviewing
and recommending to the Board the compensation and other contractual terms and
conditions for employment of the Company's executive officers, and any and all
former executive officers of the Company who continue or resume service to the
Company as non-officer employees or independent contractors, (2) reviewing the
compensation and other contractual terms of other corporate or subsidiary
employees whose annual cash compensation exceeds $250,000, (3) administering the
Company's stock option plans and authorizing grants thereunder, and (4)
administering the Company's employee stock purchase plan. The current members of
the Executive Officer Compensation & Stock Option Committee are: Maryellen C.
Herringer, Chairman; Henry L. Kotkins, Jr. and William E. Walsh.
Nominating, Governance & Succession Committee. The Nominating, Governance &
Succession Committee is responsible for: (1) making recommendations to the Board
as to the optimal number of directors on the Board, (2) reviewing and
recommending criteria and candidates for selection of new directors and the
reelection of incumbent directors, (3) reviewing and recommending management
succession plans, and (4) all matters of corporate governance. The current
members of the Nominating, Governance & Succession Committee are: Luke S. Helms,
Chairman; Linda Chavez and Henry L. Kotkins, Jr.
MEETINGS AND ATTENDANCE
During the fiscal year ended October 31, 2001 ("Fiscal 2001"), the Board
met four times; the Executive Committee met twenty-five times; the Audit
Committee met five times; the Executive Officer Compensation & Stock Option
Committee met five times; and the Nominating, Governance & Succession Committee
met twice. During this period, no director attended less than seventy-five
percent of the total number of meetings of the Board and of the Committees of
which he or she was a member.
COMPENSATION OF DIRECTORS
During Fiscal 2001, Directors who were not current employees of the Company
("Outside Directors") were paid retainer fees of $24,000 per year and $2,000 for
each Board or Committee meeting attended. Outside Directors who served as
chairpersons of the standing committees of the Board received an additional
retainer fee of $2,000 per year. Pursuant to the terms of the Company's
Time-Vested Incentive Stock Option Plan adopted in 1987, as amended, each
Outside Director also received an annual grant of stock options in the amount of
5,000 shares of ABM Common Stock on the first day of Fiscal 2001. In addition,
each Outside Director was entitled to receive $350 per hour for each hour of
other services rendered to the Company. In Fiscal 2001, the aggregate amount
paid to Outside Directors for additional services was $23,450. The Company
reimbursed its Outside Directors for expenses incurred in attending Board and
Committee meetings, and for certain other out-of-pocket expenses.
Since June 1992, the Company has entered into Director Retirement Benefit
Agreements with all Outside Directors. These agreements provide that, upon the
retirement of such Outside Directors from the Board, the Company will pay them
the monthly retainer they were receiving at the time of their retirement
(subject to a ten percent reduction for every year of service as an outside
director less than ten) for a
4
maximum period of ten years. The retired Director may elect to receive such
payment monthly, or in a lump sum discounted to present value at the time of
retirement. However, Directors under 72 years of age who retire with fewer than
five years of service as Outside Directors, are not entitled to any benefits
under these agreements. The Company has also entered into Director
Indemnification Agreements with each of its directors. These agreements, among
other things, require the Company to indemnify its directors against certain
liabilities that may arise by reason of their status of service as Directors, to
the fullest extent provided by Delaware state law.
Theodore Rosenberg, an Outside Director of the Company since November 1990,
retired as an officer and employee of the Company in December 1989. Since
January 1990, Theodore Rosenberg has provided consulting services to the Company
on a month-to-month basis, for which services he currently receives a fee of
$8,333.33 per month in addition to the compensation set forth above for Outside
Directors in general. The late Sydney J. Rosenberg retired as a director,
officer and employee of the Company in December 1997. Pursuant to his previous
employment contract, the Company began making payments to Sydney J. Rosenberg
and will continue making payments of $8,333.33 per month to his estate for a
period of ten years ending November 2007. The Company also provides medical
benefits to the widow of Sydney J. Rosenberg in an amount not to exceed $6,000
per year. William W. Steele, an Outside Director of the Company since November
2000, retired as an officer and employee of the Company in October 2000.
Pursuant to his previous employment contract, the Company has begun making
payments of $8,333,33 per month to Mr. Steele for a period of ten years ending
May 2011. The Company will also provide limited medical and dental benefits for
William W. Steele and his wife until each is age seventy-five, and for their
minor child until such time as he is no longer an eligible dependent. The
current estimated cost of these benefits is $901.26 per month. Since November
2000, William W. Steele has served as Chairman of the Executive Committee of the
Board, for which services he currently receives a retainer fee of $8,333.33 a
month in addition to the compensation set forth above for Outside Directors.
ITEM 3 -- APPROVAL OF THE COMPANY'S 2002 PRICE-VESTED PERFORMANCE STOCK OPTION
PLAN
On December 11, 2001, the Board adopted the 2002 Price-Vested Performance
Stock Option Plan (the "2002 Plan"). Adoption of the 2002 Plan is subject to
Stockholder approval at the 2002 Annual Meeting. The following discussion
provides a summary of the 2002 Plan.
PURPOSE OF THE PLAN
The 2002 Plan is intended to help recruit, motivate, retain and reward
senior executives. The 2002 Plan is also intended to provide the Company and its
subsidiaries with the ability to utilize incentives which are more directly
linked to increases in the price per share of ABM Common Stock.
ADMINISTRATION
The 2002 Plan will be administered by the Executive Officer Compensation &
Stock Option Committee (the "Committee"). Members of the Committee must qualify
as "nonemployee directors" under Rule l6b-3 of the Securities and Exchange Act
of 1934, and as "outside directors" under Section 162(m) of the Code.
Subject to the terms of the 2002 Plan, the Committee has the sole
discretion to determine the participants in the Plan, the number of shares of
ABM Common Stock to be covered by each stock option ("Option") granted, and the
terms and conditions of such grants, except that during the life of the 2002
Plan, no participant may be granted Options for more than 100,000 shares. The
Committee also has the authority to adopt, alter and repeal administrative
rules, guidelines and practices, to interpret the terms and provisions of the
2002 Plan and any Option issued thereunder and to otherwise supervise the
administration of the 2002 Plan.
5
GENERAL
The number of shares authorized for issuance under the 2002 Plan is
2,000,000. If an Option granted under the 2002 Plan terminates without being
exercised, shares subject to such Option will be available for future grants
under the Plan. None of the Options will be "incentive stock options" within the
meaning of Section 422 of the Code.
In the event of a merger, reorganization, consolidation, recapitalization,
stock split, extraordinary distribution with respect to the ABM Common Stock or
other similar event affecting ABM Common Stock, the Committee or the Board will
make adjustments or substitutions, as appropriate, in the number, class and
option price of shares authorized or outstanding as Options,
ELIGIBILITY
The Committee has established that senior executives who are full-time
employees of the Company or its subsidiaries, and who are responsible for, or
contribute to, the profitable growth of the Company or its subsidiaries are
eligible to receive Options under the 2002 Plan.
TERM OF OPTIONS
The term of each Option will be ten years, unless earlier terminated under
the circumstances described below.
EXERCISE PRICE OF OPTIONS
In general, the exercise price of each Option will be the fair market value
("Fair Market Value") per share of ABM Common Stock on the date of grant. Fair
Market Value means, as of any given date, the average of the highest and lowest
reported trades of ABM Common Stock on the New York Stock Exchange Composite
Tape for that date or, if there were no trades on that date, the Fair Market
Value per share on the nearest trading day after that date. The exercise price
of each Option must be paid in full in cash at the time of exercise.
EXERCISABILITY AND VESTING OF OPTIONS
Each Option is exercisable only if such Option has vested. Each Option will
vest on the business day immediately preceding the eighth (8th) anniversary of
its grant; provided that it has not terminated prior to that date. The vesting
of any Option can also accelerate and become immediately exercisable if prior to
the fourth (4th) anniversary of its grant, the Fair Market Value of a share of
ABM Common Stock equals or exceeds a "Vesting Price" assigned to such Option by
the Committee at the date of its grant. In order for accelerated vesting to
occur, the Fair Market Value of a share of ABM Common Stock must equal or exceed
the Vesting Price of the Option for a period of at least ten (10) trading days
in any period of thirty (30) consecutive trading days. It is expected that the
Vesting Prices assigned by the Committee to the grants of Options will be: $35,
$40, $45 and $50. However, actual Vesting Prices may be higher or lower than
those amounts. In no event, however, may any Option be exercised sooner than the
first anniversary of its grant date.
If the optionee's employment terminates by reason of death or disability,
or if such employment is terminated by the Company without cause, those Options
will be exercisable only within ninety days of termination, and only if those
Options are then vested. If the optionee's employment terminates by reason of
retirement or other "voluntary quit" prior to the vesting of an Option, those
Options will terminate immediately. If the optionee's employment is terminated
by the Company for cause prior to the vesting of an Option, those unexercised
Options will terminate immediately. If the optionee's employment is terminated
for any reason after an Option has vested, those Options will be exercisable
only within ninety days of such termination.
The right of any participant to exercise an Option may not be transferred
in any way other than: (1) pursuant to a beneficiary designation satisfactory to
the Committee, or (2) by will or the laws of descent
6
and distribution. All Options are exercisable by an Optionee during his or her
lifetime only by the Optionee, or any guardian or legal representative or
permitted transferee.
2002 PLAN AWARDS
As described earlier, the Committee has discretion to determine the number
of Options to be granted to any individual under the 2002 Plan. Accordingly, the
actual number of Options to be granted to any individual is not determinable.
Subject to Stockholder approval of the 2002 Plan, the Committee may grant
Options to eligible senior executives at a future date.
CHANGE IN CONTROL
Options will become fully vested and exercisable upon a Change in Control
(as defined in the 2002 Plan) during the ninety-day period from and after a
Change in Control. The 2002 Plan also provides that during the ninety-day period
following a Change in Control, the holder of an Option has the right to
surrender such Options for cash in an amount equal to the difference between the
"Change in Control Price" (as defined in the 2002 Plan) and the exercise price.
AMENDMENT AND TERMINATION
The 2002 Plan will terminate on December 11, 2011. The Committee may amend
or terminate the 2002 Plan as of any earlier date.
TAX ASPECTS
The following discussion is intended to provide an overview of the U.S.
federal income tax laws which are generally applicable to awards granted under
the 2002 Plan as of the date of this Proxy Statement. People in differing
circumstances may have different tax consequences, and federal tax laws may
change in the future. This discussion is not to be construed as tax advice.
A participant will not realize income at the time an Option is granted.
Instead, upon exercise of the Option, the participant will recognize ordinary
income equal to the difference between the Fair Market Value of the shares on
the date of exercise and the exercise price. Any price gain or loss recognized
upon any later disposition of the shares generally will be capital gain or loss.
The Company generally will be entitled to a tax deduction for an award in
an amount equal to the ordinary income realized by the participant at the time
the participant exercises an Option. In addition, Section 162(m) of the Code
contains special rules regarding the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. The general rule is that
annual compensation paid to any of these specified executives will be deductible
only to the extent that it does not exceed $1 million. However, the Company can
preserve the deductibility of certain compensation in excess of $1 million if it
complies with conditions imposed by Section 162(m), including the establishment
of a maximum number of shares with respect to which Options may be granted to
any one employee. The 2002 Plan has been designed so that Options granted
thereunder will qualify as performance-based compensation, thereby preserving
the deductibility.
The affirmative vote of the majority of the shares represented at the 2002
Annual Meeting and entitled to vote on this proposal will be necessary to
approve the 2002 Plan. The Board believes that the 2002 Plan will be valuable to
the Company in attracting and retaining the services of key executives upon whom
the Company's success depends.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THE PROPOSAL TO APPROVE THE 2002 PLAN
7
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company serving as such as of the
end of the fiscal year as well as one officer who retired during the fiscal
year, for all services in all capacities rendered to the Company and its
subsidiaries during the fiscal years ended October 31, 2001, 2000 and 1999 is
set forth below. Columns regarding "Other Annual Compensation," "Restricted
Stock Awards," and "Long-Term Incentive Plan Payouts" are excluded because no
reportable payments in those categories were made to these executive officers in
or for the relevant years.
<Table>
<Caption>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION(L) SECURITIES ALL
FISCAL ---------------------- UNDERLYING OTHER
NAME AND THEN CURRENT TITLE(S) YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION
------------------------------ ------ ---------- --------- ------------ ------------
Henrik C. Slipsager.................... 2001 $650,000 $195,356(2) 62,500 -0-
President & Chief Executive Officer 2000 401,322 189,047 -0- -0-
since November 2000; Executive Vice 1999 383,673 118,870 -0- -0-
President of the Company, and
President of the Janitorial Services
Division, since November 1999; Senior
Vice President of the Company, and
Executive Vice President of the
Janitorial Services Division, from
January 1997 to October 1999
Martinn H. Mandles..................... 2001 $445,232 $140,562 -0- -0-
Chairman of the Board since December 2000 424,840 128,436 -0- -0-
1997; Chief Administrative Officer 1999 406,157 248,233 -0- -0-
since November 1991
Jess E. Benton......................... 2001 $450,000 $ 94,791 -0- -0-
Chief Operating Officer since 2000 355,059 151,002 -0- -0-
November 2000; Executive Vice 1999 339,445 145,291 -0- -0-
President since November 1999; Senior
Vice President from July 1994 through
October 1999
Harry H. Kahn.......................... 2001 $278,625 $ 80,754 -0- -0-
Senior Vice President since November 2000 265,864 115,544 32,500 -0-
1999; General Counsel & Corporate 1999 254,172 111,174 -0- -0-
Secretary since May 1988; Vice
President from November 1985 through
October 1999
Donna M. Dell.......................... 2001 $224,244 $ 52,392 -0- -0-
Senior Vice President of Human 2000 196,638 36,902 32,500 -0-
Resources since November 1999; Chief 1999 187,990 35,506 -0- -0-
Employment Counsel since April 1997;
Vice President of Human Resources
from July 1994 through October 1999
David H. Hebble........................ 2001 $229,143 $ 49,987 -0- $122,967(3)
Senior Vice President from November 2000 327,972 108,323 32,500 -0-
1999 until his retirement in June 1999 313,549 104,226 -0- -0-
2001; Chief Financial Officer since
October 1979; Vice President from
October 1979 through October 1999
</Table>
- ---------------
(1) Includes amounts deferred under the Company's Deferred Compensation Plan.
(2) Includes $50,000 signing bonus paid to Mr. Slipsager upon his election as
President & Chief Executive Officer
8
(3) Includes a $34,869 payment for accrued, unused vacation, $1,400 in special
project consulting fees, a payment of $82,115 pursuant to the Company's
Service Award Benefit Plan and three monthly payments for a total of $4,583
pursuant to the Company's Senior Executive Retirement Plan.
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS
The following table sets forth certain information regarding stock options
granted during the last fiscal year to the executive officers named in the
Summary Compensation Table.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<Table>
<Caption>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM(2)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION ---------------------
NAME AND TITLE(S) GRANTED IN FISCAL YEAR ($/SH)(1) DATE $@5% $@10%
- ----------------- ---------- ---------------- ----------- ---------- -------- ----------
Henrik C. Slipsager.......... 40,000(3) 2.2% $30.75 (4) $773,600 $1,960,000
President & Chief Executive 20,000(5) 8.6% $30.75 (6) $386,800 $ 980,000
Officer 2,500(7) 3.5% $30.75 (8) $ 48,350 $ 122,500
Martinn H. Mandles........... -0- -0- -0- -0- n/a n/a
Chairman of the Board &
Chief Administrative
Officer
Jess E. Benton............... -0- -0- -0- -0- n/a n/a
Executive Vice President &
Chief Operating Officer
Harry H. Kahn................ -0- -0- -0- -0- n/a n/a
Senior Vice President,
General
Counsel & Corporate
Secretary
Donna M. Dell................ -0- -0- -0- -0- n/a n/a
Senior Vice President of
Human Resources &
Chief Employment Counsel
David H. Hebble.............. -0- -0- -0- -0- n/a n/a
Senior Vice President &
Chief Financial Officer
until
his retirement in June 2001
</Table>
- ---------------
(1) Fair market value on date of grant.
(2) The dollar amounts under these columns are the result of calculations at the
five percent and ten percent annual rates of stock appreciation prescribed
by the Securities and Exchange Commission and are not intended to forecast
future appreciation, if any, of the Company's stock price. No gain to the
optionee is possible without an increase in the price of the Company's
stock, which will benefit all Stockholders. A term of ten years has been
used in calculating assumed appreciation.
(3) Options granted under the Price-Vested Performance Stock Option Plan adopted
in 1996, which vest according to a schedule tied to the price of ABM Common
Stock. Options have been assigned four incremental vesting price goals of
$25, $30, $35 and $40. One-fourth of the total number of options granted
become exercisable immediately if, on or before the close of business on the
fourth anniversary of the grant date, the Fair Market Value of ABM Common
Stock (as defined under that Plan) is equal to or greater than the assigned
vesting price for that increment for ten trading days in any period of
thirty consecutive trading days. Any stock option that has not vested on or
before the close of business on the business day immediately following the
fourth anniversary of its grant date shall vest at the close of business on
the business day immediately preceding the eighth anniversary of its date of
grant, if such options have not previously terminated.
(4) The right to exercise these stock options expires on the earlier of ten
years from the grant date or upon termination of employment. If termination
is due to death or disability, the right to exercise these options expires
within ninety days of
9
such termination. However, these stock options may be immediately exercised
in the event of a "Change of Control" as defined in the Price-Vested
Performance Stock Option Plan adopted in 1996.
(5) Options granted under the Time-Vested Incentive Stock Option Plan adopted in
1987 which vest at a rate of twenty percent per year over a period of five
years.
(6) The right to exercise these options expires three months after termination
of employment. However, these stock options may be immediately exercised in
the event of a "Change of Control" as defined in the Time-Vested Incentive
Stock Option Plan adopted in 1987.
(7) Options granted under the Age-Vested Career Stock Option Plan adopted in
1984. Fifty percent of these options vest on Mr. Slipsager's sixty-first
birthday, and the balance vest on his sixty-fourth birthday.
(8) The right to exercise these options expires one year after termination of
employment. However, these stock options may be immediately exercised in the
event of a "Change of Control" as defined in the Age-Vested Career Stock
Option Plan adopted in 1984.
OPTIONS EXERCISED BY EXECUTIVE OFFICERS
The following table sets forth certain information regarding options
exercised and owned by the executive officers named in the Summary Compensation
Table.
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<Table>
<Caption>
COMMON SHARES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON OCTOBER 31, 2001 ON OCTOBER 31, 2001(1)
ON VALUE --------------------------- ---------------------------
NAME AND TITLE EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- ----------- ---------- ----------- ------------- ----------- -------------
Henrik C. Slipsager....... -0- -0- 36,000 14,000 $ 294,800 $ 110,200
President & Chief
Executive Officer
Martinn H. Mandles........ 38,000 $ 953,470 100,000 60,000 $ 780,000 $ 942,840
Chairman of the Board &
Chief Administrative
Officer
Jess E. Benton............ 16,000 $ 381,040 105,000 55,000 $1,136,850 $ 972,750
Executive Vice President
& Chief Operating
Officer
Harry H. Kahn............. -0- -0- 94,000 45,500 $1,003,055 $ 584,005
Senior Vice President,
General Counsel &
Corporate Secretary
Donna M. Dell............. 6,000 $ 58,876 58,715 29,500 $ 430,513 $ 238,725
Senior Vice President of
Human Resources & Chief
Employment Counsel
David H. Hebble........... 130,050 $2,332,057 -0- -0- -0- -0-
Senior Vice President &
Chief Financial Officer
until his retirement in
June 2001
</Table>
- ---------------
(1) The value of unexercised in-the-money options equals the difference between
the stock option exercise price and $27.30, the closing price of ABM Common
Stock on the New York Stock Exchange on October 31, 2001, multiplied by the
number of shares underlying the stock option.
SERVICE AWARD BENEFIT PLAN
The Company's Service Award Benefit Plan is an unfunded "severance pay
plan" as defined in the Employee Retirement Income Security Act of 1974, as
amended. All qualified employees, as defined in the
10
Service Award Benefit Plan, who meet the Internal Revenue Service definition of
being a highly compensated employee are eligible for benefits under the Plan.
The Company has a separate 401(k) Plan for all qualified employees, as defined
in the 401(k) Plan, who earn less than such amount. The Service Award Benefit
Plan provides that, upon termination, eligible employees will receive seven days
pay for each full calendar year of employment subsequent to December 31, 1991.
The Company, at its discretion, may also award additional days each year. The
amount of the payment is based on the final average annual compensation, up to a
maximum of $175,000, received by the employee during their last three calendar
years of full-time employment with the Company. The amount of the payment under
the plan, together with any other severance pay paid to the employee, cannot
exceed two times the compensation received by the employee in the twelve-month
period preceding the termination of employment. If employment terminates before
the employee has been employed for five years, except in the case of death,
disability or normal retirement of the employee, or if the employee is
terminated for cause (such as theft or embezzlement), such employee forfeits any
benefits payable under the plan. Following termination, eligible employees will
receive their payments under the plan in two equal installments. Executives,
managers and salespersons of the Company will receive their first payment in the
eleventh month following termination and the second payment no later than the
last day of the twenty-third month following termination. Other eligible
employees will receive their first payment as soon as administratively possible
following termination and their second payment in the thirteenth month following
termination. The payment schedule may be waived for employees who terminate
employment after reaching age sixty-two, or if termination results from death or
total disability.
EMPLOYMENT AGREEMENTS
During Fiscal 2001, the Company had written employment agreements with all
of its current executive officers, including the six executive officers named in
the Summary Compensation Table. These employment agreements provide for annual
salaries in the following amounts for fiscal 2001: $650,000 for Henrik C.
Slipsager, $450,000 for Jess E. Benton, $445,232 for Martinn H. Mandles,
$278,625 for Harry H. Kahn, $343,715 for David H. Hebble, and $225,000 for Donna
M. Dell. Unless earlier terminated or later extended pursuant to their terms,
these employment agreements continue until October 31, 2003 for Henrik C.
Slipsager and Martinn H. Mandles, and October 31, 2002 for Jess E. Benton. The
employment agreements of Harry H. Kahn and Donna M. Dell terminated on October
31, 2001, and David H. Hebble's agreement terminated upon his retirement in June
2001. These employment agreements also provided for annual bonuses based on
pretax profits, plus other customary benefits including, but not limited to,
participation in the Company's group health, disability and life insurance
programs. The Company also provides all of its executive officers with certain
other perquisites, such as Company-provided automobiles or car allowances, an
executive group health plan, club memberships and dues, and incidental personal
benefits.
These written agreements also provide that after an executive officer's
resignation, retirement or other termination from full-time employment with the
Company (but commencing no earlier than the executive officer's 65th birthday),
the Company has accrued and/or will accrue for them or their respective estates,
as applicable, consulting fees in the following amounts, with the total accrual
payable in 120 equal monthly installments to each executive or their estate: (i)
for Henrik C. Slipsager, $1,000 per month for each month of employment completed
between November 1, 1997 and October 31, 2007, plus $500 per month for each
month of employment completed between March 1, 1998 and February 29, 2003, plus
$14,167 per month for each month of employment completed between November 1,
2000 and October 21, 2005; (ii) for Martinn H. Mandles, $500,000; (iii) for Jess
E. Benton, $250,000; (iv) for Harry H. Kahn, $150,000 plus $1,667 per month for
each month of employment completed between November 1, 1999 and October 31,
2004; (v) for Donna M. Dell, $1,250 per month for each month of employment
completed between July 1, 1994 and June 30, 2004, plus $1,667 per month for each
month of employment completed between November 1, 1999 and October 31, 2004, and
(vi) for David H. Hebble, $183,333.
EXECUTIVE OFFICER COMPENSATION & STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Maryellen C. Herringer, Henry L. Kotkins, Jr. and William E. Walsh
currently serve as members of the Executive Officer Compensation & Stock Option
Committee of the Board. They have no relationships with
11
the Company other than as directors and Stockholders. During Fiscal 2001, no
executive officer of the Company served as a member of the compensation
committee, or as a director of any other for-profit entity other than
subsidiaries of the Company.
EXECUTIVE OFFICER COMPENSATION & STOCK OPTION COMMITTEE REPORT ON COMPENSATION
February 11, 2002
To the Board of Directors:
Introduction. Based upon its evaluation of the performance of both the
Company and its executive officers, the Executive Officer Compensation & Stock
Option Committee reviews and recommends to the Board the compensation and other
terms and conditions of employment for: (i) all current executive officers of
the Company, who are: the President & Chief Executive Officer, the Chairman of
the Board & Chief Administrative Officer, the Executive Vice President & Chief
Operating Officer, four Senior Vice Presidents (including the Chief Financial
Officer), and four Vice Presidents (including the Controller & Chief Accounting
Officer), and (ii) any former executive officer who continues or resumes service
to the Company as a non-officer employee or consultant. The compensation
decisions made for executive officers have generally become the subject of
written employment agreements between the Company and the executive officers.
The Committee also reviews the compensation and other terms and conditions of
employment of any corporate or subsidiary employee whose annual cash
compensation exceeds $250,000.
Compensation Program. Because the Company is primarily a service business,
the leadership of its executive officers is crucial to the Company's growth and
prosperity. It is the Committee's goal that the policies underlying the
Company's executive compensation programs support the Company's ultimate goal of
enhancing stockholder value by providing services to customers at a profit to
the Company. Each executive officer is compensated through a combination of
annual salary and bonus, plus stock option grants from time-to-time. Prior to
the replacement or renewal of an employment agreement with an executive officer,
the Committee reviews the overall compensation package of the executive officer
and weighs it against the executive's past performance, expectations as to the
executive's future performance, the Company's profitability and other factors
such as length of service to the Company, in determining any new employment
agreement. Annual bonuses are an important part of overall executive officer
compensation because it gives these officers a material stake in the financial
performance of the Company by tying their compensation to the Company's ultimate
goal of enhancing stockholder values. When the Committee implemented the bonus
arrangement included in the employment agreements applicable to Fiscal 2001, it
expected that such bonuses would represent a significant portion of an executive
officer's annual salary if the Company achieved its budgeted profit.
To assist in its review, the Committee retains, from time-to-time, the
services of an independent executive compensation consulting firm to evaluate
the Company's compensation of its executive officers. The consultant reviewed
the compensation program during fiscal year 2000 and compared the cash, bonus
and long term incentive compensation of executives against a peer group of
companies providing business services similar to the Company and certain
nationally published compensation surveys. Based upon the results of the
evaluation undertaken by its consulting firm, the Committee believes the basic
framework of the Company's compensation program generally allows the Company to
recruit, incentivize and retain executives who are best able to contribute to
the overall success of the Company, including the Company's ultimate goal of
enhancing stockholder value.
Annual Salaries and Bonuses. During Fiscal 2001, the Company had
employment agreements with all of its executive officers which set forth the
compensation and other terms and conditions of their employment with the
Company. Under these written employment agreements, each executive officer was
entitled to receive cash compensation in the form of an annual salary, plus an
annual bonus related directly to the profit before taxes of the Company on a
consolidated basis (and after giving effect to certain adjustments for
extraordinary items as specified in such agreements).
12
For the Company's executive officers to be entitled to receive an increase
in annual salary for Fiscal 2001 under their employment agreements, the
Company's earnings per share for fiscal year 2000 had to exceed the earnings per
share for fiscal year 1999, in which case annual salaries would be increased by
an amount equal to the percentage change in the WorldatWork(TM) 2001 - 2002
Total Salary Increase Budget Survey (formerly the American Compensation
Association Index) to a maximum of six percent per year. Since earnings per
share in fiscal year 2000 exceeded earnings per share in fiscal year 1999, each
executive officer received a salary increase of 4.8% for Fiscal 2001.
Under the employment agreements in effect for Fiscal 2001, no bonus
payments were required to be made to the executive officers because earnings per
share were less than 80% of earnings per share in fiscal year 2000. The
Committee, however, waived this provision and approved bonus payments based on
the Company's income before taxes for Fiscal 2001, adjusted to (a) exclude the
premium over the book value of the net assets of the Easterday Janitorial Supply
Division, which was sold during such year, and (b) include a tax credit not
reflected in pre-tax profit. The Committee approved these bonuses, as well as
additional minor discretionary bonuses for the Company's Chief Executive Officer
and two other executive officers, after assessing the performance of the
executive officers during Fiscal 2001 and concluded that such bonuses were in
the Company's interests under the circumstances and notwithstanding the fact
that the Company was not obligated to pay such bonuses.
Stock Option Grants. Except for grants made to the Chief Executive Officer
and described below, the Company did not grant any stock options to the named
executive officers during fiscal year 2001.
Other Compensation. The Company's executive officers are also eligible to
participate in compensation and benefit programs generally available to other
employees, including, but not limited to, the Company's group health, disability
and life insurance programs. In accordance with the terms and conditions of the
written employment agreements, the Company also provides its executive officers
with certain perquisites, such as Company-provided automobiles or car
allowances, an executive group health plan, club memberships and dues, and
incidental personal benefits.
Basis for CEO Compensation. The Chief Executive Officer's compensation is
evaluated in accordance with the factors and criteria used to evaluate all
executive officers. For Fiscal 2001, the Company's Chief Executive Officer,
Henrik C. Slipsager, received a salary of $650,000 and a bonus of $145,356. In
addition and as a result of Mr. Slipsager's election to that office at the
beginning of Fiscal 2001, Mr. Slipsager was paid a signing bonus of $50,000, and
he was also granted options to purchase 20,000 shares of ABM Common Stock under
the Time-Vested Stock Option Plan, options to purchase 40,000 shares under the
Price-Vested Stock Option Plan and options to purchase 2,500 shares under the
Age-Vested Stock Option Plan, in each case at an exercise price of $30.75 per
share.
IRS Section 162(m). The Company does not expect the deductibility limit of
Section 162(m) to have a material effect on the Company because cash
compensation paid to each of the Company's executive officers currently is less
than $1,000,000 per year. In addition, the Company believes that non-qualified
stock options granted under the Company's stock option plans are exempt from the
deductibility limitation because such options have been qualified as
"performance-based" compensation under Section 162(m). Incentive stock options
granted under the Company's stock option plans generally do not entitle the
Company to a tax deduction without regard to Section 162(m).
Executive Officer Compensation &
Stock Option Committee
Maryellen C. Herringer, Chairman
Henry L. Kotkins, Jr., Member
William E. Walsh, Member
13
EXECUTIVE OFFICER COMPENSATION & STOCK OPTION COMMITTEE REPORT ON STOCK OPTIONS.
February 11, 2002
To the Board of Directors:
The Executive Officer Compensation & Stock Option Committee administers the
Company's stock option plans and authorizes grants thereunder. The Company's
stock option plans provide executive officers and other employees with an
opportunity to purchase a proprietary interest in the Company and thus encourage
them to become and remain employed by the Company. The Committee views the
granting of stock options and the ownership of stock as important mechanisms for
relating overall compensation of executive officers and other employees directly
to the Company's ultimate goal of enhancing stockholder value. During the fiscal
year ended October 31, 2001, the Committee approved stock options for 228 newly
hired or recently promoted employees to purchase a total of 233,200 shares under
the Time-Vested Incentive Stock Option Plan adopted in 1987, as amended;
approved stock options for 16 newly hired or recently promoted employees to
purchase a total of 72,500 shares under the Age-Vested Career Stock Option Plan
adopted in 1984, as amended, and approved stock options for five recently
promoted employees to purchase 180,000 shares under the Price-Vested Performance
Stock Option Plan adopted in 1996. Similar evaluations and grants have been made
each year since 1996.
In determining the levels of stock option grants available to employees,
the Committee considers the employee's responsibility and performance, the
Company's overall profitability, the aggregate number of such stock options that
had been granted in recent years, and other factors such as length of service to
the Company.
Executive Officer Compensation &
Stock Option Committee
Maryellen C. Herringer, Chairman
Henry L. Kotkins, Jr., Member
William E. Walsh, Member
AUDIT COMMITTEE REPORT
February 11, 2002
The Audit Committee of the Board is comprised of three independent
directors, none of whom are officers or employees of the Company. The members of
the Committee are: Charles T. Horngren, Chairman; Maryellen C. Herringer and
Luke S. Helms. The Board adopted a written charter for the Audit Committee on
June 19, 2000 and reviewed and confirmed its adequacy at the Committee meeting
held on March 21, 2001. The Audit Committee recommends the selection of the
Company's independent auditors for approval by the Board.
The Audit Committee reviews the company's financial reporting process on
behalf of the Board. Management has the primary responsibility for the financial
statements and the reporting process, including the system of internal controls.
The independent auditors are responsible for performing an independent audit of
the consolidated financial statements to ensure that those statements were
prepared in accordance with generally accepted accounting principles and report
thereon to the Audit Committee. The Audit Committee reviews and monitors these
processes.
Within this framework, the Audit Committee has reviewed and discussed the
audited financial statements with management and the independent auditors.
Management of the Company has affirmed to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles. The Audit Committee has discussed with the
independent auditors those matters required to be discussed by Statement of
Auditing Standards No. 61.
14
In addition, the Audit Committee has received the written disclosures and
the letter from the independent auditors required by the Independence Standards
Board Standard No. 1, and has also discussed with the independent auditors, the
auditor's independence from management and the Company. In connection with the
new standards for independence of the Company's independent auditors promulgated
by the Securities and Exchange Commission, the Audit Committee has undertaken to
consider whether the provision of any non-audit services (such as internal audit
assistance and tax-related services) by the Company's independent auditors is
compatible with maintaining the independence of the independent auditors when
the independent auditors are also engaged to provide non-audit services.
The Audit Committee also discussed with the Company's internal and
independent auditors the overall scope and plans for their respective audits,
their evaluation of the company's internal controls and the overall quality of
the Company's financial reporting.
Based on these reviews and discussions, the Audit Committee has recommended
to the Board, and the Board has approved, that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K, as
amended, for the year ended October 31, 2001.
Audit Committee
Charles T. Horngren, Chairman
Luke S. Helms, Member
Maryellen C. Herringer, Member
15
PERFORMANCE GRAPH
Set forth below is a graph comparing the five-year cumulative total
stockholder return of ABM Common Stock with the five-year cumulative total
return of: (1) the Standard & Poor's 500, and (2) a peer group of all companies
that, like the Company: (a) are currently listed on the New York Stock Exchange,
(b) have been publicly-traded for at least five years, and (c) have a market
capitalization of $650 million to $675 million based on the most recent publicly
available number of shares outstanding on December 31, 2001, and the closing
price of such shares on that date. The peer group consists of the following
companies, in addition to the Company: Agnico Eagle Mines Ltd., Banco De A.
Edwards -- SP ADR, Brady Corporation, Burlington Coat Factory Warehouse
Corporation, CH Energy Group, Inc., First Commonwealth Financial Corporation,
Footstar Inc., Gables Residential Trust, J. Hancock Bank and Thrift Opportunity
Fund, Home Properties New York, Inc., Industrie Natuzzi SpA, Manufactured Home
Communities, Inc., McDermott International Inc., MFS Government Markets Income
Trust, Moore Corporation, Ltd., Nuveen Municipal Market Opportunity Fund, Olin
Corporation, Southwest Gas Corporation, Suburban Propane Partners, Sun
Communities, Inc., Sunrise Assisted Living, Inc. Visx Incorporated, Westcorp,
and Zweig Total Return Fund.
Last year's peer group consisted of the following companies that, like the
Company: (1) were then listed on the New York Stock Exchange, (2) had been
publicly-traded for at least five years, and (3) had a market capitalization of
$625 to $675 million at December 31, 2000: Acuson Corporation, Alliance World
Dollar Government Fund II, Baldor Electric Co., Belden Inc., CH Energy Group
Inc., Developers Diversified Realty, Diagnostic Products Corp., Dole Food Co.,
Inc., F & M National Corp., J. Hancock Bank and Thrift Opportunity Fund,
Jefferies Group, Inc., Kaydon Corp., MacDermid Inc., Macerich Co., Manitowoc
Company, Inc., Minerals Technologies Inc., Newhall Land & Farming Co., LP,
Newpark Resources, Inc., Rehabcare Group Inc., Reliance Steel & Aluminum Co.,
Service Corp. International, Shandong Huaneng Ltd., J.M. Smucker Co., Southwest
Gas Corp., SPS Technologies Inc., Summit Properties Inc., Sun International
Hotels Ltd., UGI Corp. and UIL Holdings Corp.
The Company does not believe it can reasonably identify a peer group of
companies on an industry or line-of-business basis for the purpose of developing
a comparative performance index. The facility services industry is highly
fragmented, primarily consisting of privately-owned businesses that provide a
limited range of services on a local or regional basis. While the Company is
aware that some other publicly-traded companies engage in one or more of the
Company's eight lines-of-business, none of these other companies provide most or
all of the services offered by the Company, and many offer other services or
products as well. Moreover, some of these other companies that engage in one or
more of the Company's eight lines of business do so through divisions or
subsidiaries that are not publicly-traded and/or reported. For all of these
reasons, no such comparison would, in the opinion of the Company, provide a
meaningful index of comparative performance.
The comparisons in the following graph are based on historical data and are
not indicative of, or intended to forecast, the possible future performance of
ABM Common Stock.
FIVE YEAR CUMULATIVE TOTAL RETURN TO STOCKHOLDERS*
* Assumes (a) $100.00 invested on November 1, 1996, and (b) immediate
reinvestment of all interim dividends.
[GRAPH]
<Table>
<Caption>
Fiscal Years
Ended
October 31st 1996 1997 1998 1999 2000 2001
- ------------ ---- ---- ---- ---- ---- ----
Company:
ABM Industries
Incorporated** 100 157 165 143 172 171
Broad Market:
Standard and
Poor's 500
Index** 100 132 161 203 215 161
Peer Group:
Market capitalization
of $650-$675 million,
listed on the NYSE
and publicly-traded
for at least five
years** 100 118 110 125 103 114
</Table>
** Source: Standard & Poor's Computer Data Services
16
PRINCIPAL STOCKHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to the persons or
entities known to the Company to be beneficial owners of more than five percent
of ABM Common Stock as of December 31, 2001.
<Table>
<Caption>
NAME AND ADDRESS OF BENEFICIAL OWNERS NUMBER OF SHARES PERCENT(1)
------------------------------------- ---------------- ----------
The Theodore Rosenberg Trust(2)(3).......................... 2,395,778 9.8%
295-89th Street, Suite 200
Daly City, California 94015
The Sydney J. Rosenberg Trusts(2)(4)........................ 2,243,824 9.2%
c/o Bank of America N.A
2049 Century Park East, Suite 200
Los Angeles, California 90067
</Table>
- ---------------
(1) Based on a total of 24,483,118 shares of ABM Common Stock outstanding as of
December 31, 2001.
(2) Agreements establishing and between The Sydney J. Rosenberg Trusts and The
Theodore Rosenberg Trust (the "Trusts") each contain provisions that request
their respective Trustees to act in concert with each other, and that
prohibit the sale, transfer or distribution prior to January 1, 2006, of the
ABM Common Stock held in the Trusts (except in connection with the sale or
exchange by both Trusts of all or substantially all of their ABM Common
Stock). Because these Trusts may act in concert with each other, they
constitute a group within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, each
Trust may be deemed to own an aggregate of 4,639,602 shares of ABM Common
Stock, or approximately nineteen percent of the outstanding ABM Common
Stock. Subject to the foregoing, The Sydney J. Rosenberg Trusts and The
Theodore Rosenberg Trust disclaim beneficial ownership of ABM Common Stock
held by the other. The Sydney J. Rosenberg Trusts and The Theodore Rosenberg
Trust may each be deemed to be a "control person" of the Company within the
meaning of the Rules and Regulations of the Securities and Exchange
Commission under the Exchange Act.
(3) Includes 2,373,778 shares of ABM Common Stock held by The Theodore Rosenberg
Trust, a revocable trust of which Theodore Rosenberg is the only Trustee and
sole beneficiary. Also includes 22,000 shares subject to outstanding stock
options held by Theodore Rosenberg that were exercisable on or within 60
days after December 31, 2001.
(4) The Sydney J. Rosenberg Trusts are irrevocable trusts of which S. Brad
Rosenberg, Martinn H. Mandles and Bank of America N.A. are the only
Co-Trustees, and of which there are several beneficiaries (including S. Brad
Rosenberg, but not Mr. Mandles). Except to the extent of his shared voting
and investment power, Martinn H. Mandles disclaims beneficial ownership of
the shares of ABM Common Stock held in the name of The Sydney J. Rosenberg
Trusts.
17
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates, as to each named executive officer, director
and nominee, and as to all directors and executive officers as a group, the
number of shares and percentage of ABM Common Stock beneficially owned as of
December 31, 2001. Except as noted, each person has sole voting and investment
power over the shares shown in the table.
<Table>
<Caption>
NUMBER OF SHARES
BENEFICIALLY OWNED AS OF
DECEMBER 31, 2001
-------------------------
NUMBER OF
EXECUTIVE OFFICER AND/OR DIRECTOR SHARES PERCENT(1)
--------------------------------- --------- ----------
Jess E. Benton.............................................. 194,524(2) *
Linda Chavez................................................ 13,200(3) *
Donna M. Dell............................................... 67,565(4) *
David H. Hebble............................................. 56,223 *
Luke S. Helms............................................... 24,000(5) *
Maryellen C. Herringer...................................... 32,000(6) *
Charles T. Horngren......................................... 39,800(7) *
Harry H. Kahn............................................... 94,537(8) *
Henry L. Kotkins, Jr. ...................................... 25,000(9) *
Martinn H. Mandles.......................................... 2,502,452(10) 10.2%
Theodore Rosenberg.......................................... 2,426,570(11) 9.9%
Henrik C. Slipsager......................................... 66,660(12) *
William W. Steele........................................... 157,258(13) *
William E. Walsh............................................ 17,400(14) *
Executive Officers and directors as a group (nineteen
persons).................................................. 5,821,220(15) 23.8%
</Table>
- ---------------
* Less than one percent
(1) Based on a total of 24,483,118 shares of ABM Common Stock outstanding as of
December 31, 2001.
(2) Includes 131,250 shares subject to outstanding stock options held by Jess
E. Benton III that were exercisable on or within 60 days after December 31,
2001.
(3) Includes 13,200 shares subject to outstanding options held by Linda Chavez
that were exercisable on or within 60 days after December 31, 2001.
(4) Includes 60,715 shares subject to outstanding stock options held by Donna
M. Dell that were exercisable on or within 60 days after December 31, 2001.
(5) Includes 23,000 shares subject to outstanding stock options held by Luke S.
Helms that were exercisable on or within 60 days after December 31, 2001.
(6) Includes 27,000 shares subject to outstanding stock options held by
Maryellen C. Herringer that were exercisable on or within 60 days after
December 31, 2001.
(7) Includes 33,000 shares subject to outstanding stock options held by Charles
T. Horngren that were exercisable on or within 60 days after December 31,
2001.
(8) Includes 84,000 shares subject to outstanding stock options held by Harry
H. Kahn that were exercisable on or within 60 days after December 31, 2001.
(9) Includes 23,000 shares subject to outstanding stock options held by Henry
L. Kotkins, Jr. that were exercisable on or within 60 days after December
31, 2001.
(10) Includes 2,243,824 shares of ABM Common Stock held by The Sydney J.
Rosenberg Trusts, which are irrevocable trusts, of which S. Brad Rosenberg,
Martinn H. Mandles and Bank of America N.A. are the only Co-Trustees, and
of which there are several beneficiaries (including S. Brad Rosenberg, but
not Mr. Mandles). Except to the extent of his shared voting and investment
power, Mr. Mandles disclaims beneficial ownership of all such shares. Also
includes 25,536 shares of ABM Common Stock held by The
18
Leo L. Schaumer Trusts, which are irrevocable trusts of which Mr. Mandles
is Co-Trustee with Bank of America N.A. Except to the extent of his shared
voting and investment power, Mr. Mandles disclaims beneficial ownership of
all such shares. Also includes 126,250 shares subject to outstanding stock
options held by Martinn H. Mandles that were exercisable on or within 60
days after December 31, 2001. See also footnotes (2) and (4) of "Security
Ownership of Certain Beneficial Owners".
(11) Includes 2,373,778 shares of ABM Common Stock held by The Theodore
Rosenberg Trust, a revocable trust of which Theodore Rosenberg is the only
Trustee and sole beneficiary. Also includes 30,792 shares of ABM Common
Stock held by a family charitable foundation, of which Theodore Rosenberg
is a director. The Theodore Rosenberg Trust disclaims beneficial ownership
of the shares held by the family charitable foundation. Also includes
22,000 shares subject to outstanding stock options held by Theodore
Rosenberg that were exercisable on or within 60 days after December 31,
2001. See also footnotes (2) and (3) of "Security Ownership of Certain
Beneficial Owners".
(12) Includes 64,000 shares subject to outstanding options held by Henrik C.
Slipsager that were exercisable on or within 60 days after December 31,
2001.
(13) Includes 1,000 shares subject to outstanding stock options held by William
W. Steele that were exercisable on or within 60 days after December 31,
2001.
(14) Includes 17,400 shares subject to outstanding stock options held by William
E. Walsh that were exercisable on or within 60 days after December 31,
2001.
(15) Includes 717,315 shares subject to outstanding stock options held by the
Company's executive officers and directors that were exercisable on or
within 60 days after December 31, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers and persons who own more than ten percent of a registered class of the
Company's registered securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Based on a review of the
reporting forms and representations of its directors, officers and ten percent
Stockholders, the Company believes that during Fiscal 2001 all such persons were
in compliance with the reporting requirements; however, reports of two
transactions of one sale each by Director William W. Steele were inadvertently
delayed.
APPOINTMENT OF AUDITORS
KPMG LLP, independent certified public accountants, have been selected as
the Company's principal accountants for the current year. Representatives of
KPMG LLP will be present at the 2002 Annual Meeting with the opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate questions.
Audit Fees. KPMG LLP billed the Company $532,000 during Fiscal 2001 for
the independent audit of the Company's annual financial statements and review of
the financial statements contained in the Company's quarterly reports on Form
10-Q.
All Other Fees. KPMG LLP billed the Company $888,000 during Fiscal 2001
for services other than those covered under "Audit Fees", including internal
audit assistance and tax-related services. Prospectively, KPMG will not be
engaged in the dual capacity of providing internal audit assistance and serving
as principal independent auditor.
OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters which
the Board intends to present or has reason to believe others will present at the
2002 Annual Meeting of Stockholders. If other matters properly come before the
2002 Annual Meeting, the accompanying proxy grants the proxy holders
discretionary
19
authority to vote on any matter raised at the 2002 Annual Meeting, except to the
extent such discretion may be limited under Rule 14a-4(c) of the Exchange Act.
2003 ANNUAL MEETING OF STOCKHOLDERS
In connection with the 2002 Annual Meeting, no Stockholder proposals were
presented. Any proposals intended to be presented at the 2003 Annual Meeting of
Stockholders must be received at the Company's offices on or before October 18,
2002 in order to be considered for inclusion in the Company's proxy statement
and form of proxy relating to such meeting.
If a stockholder intends to submit a proposal at the 2003 Annual Meeting of
the Company, which proposal is not intended to be included in the Company's
proxy statement and form of proxy relating to such meeting, the stockholder must
give proper notice no later than December 17, 2002. If a stockholder fails to
submit the proposal by such date, the proposal will not be considered at the
2003 Annual Meeting as it will not be in accordance with the Company's Bylaws.
By Order of the Board of Directors
/s/ HARRY H. KAHN, ESQ.
Harry H. Kahn, Esq.
Senior Vice President, General Counsel
& Corporate Secretary
February 11, 2002
20
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ABM INDUSTRIES INCORPORATED
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MARCH 12, 2002
The undersigned hereby appoints Harry H. Kahn, Martinn H. Mandles and Henrik C.
Slipsager, and each of them, as proxies and attorneys-in-fact and hereby
authorizes them to represent and vote, as provided on the reverse side of this
card, all the shares of Common Stock of ABM Industries Incorporated which the
undersigned is entitled to vote and, in their discretion, to vote upon such
other business as may properly come before the Annual Meeting of Stockholders of
the Company to be held on March 12, 2002, or at any adjournment thereof, with
all powers which the undersigned would possess if present at the Meeting.
To vote on any item, please mark this proxy as indicated on the reverse side of
this card. If you wish to vote in accordance with the Board of Directors
recommendations, please sign the reverse side; no boxes need be checked.
Instructions to vote via telephone or on the Internet are on the reverse side of
this card.
(Continued on other side)
--FOLD AND DETACH HERE--
Please mark
your votes [X]
this way
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR ITEM 2.
FOR WITHHOLD
ALL NOMINEES AUTHORITY
(EXCEPT AS LISTED TO VOTE FOR
BELOW) ALL NOMINEES
------ ------------
Item 1. ELECTION OF DIRECTORS [ ] [ ]
For terms ending at the Annual Meeting in 2005
Nominees: Maryellen C. Herringer
Charles T. Horngren
Martinn H. Mandles
WITHHELD FOR: (Write Nominee name(s) in the space provided below).
- ------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
Item 2. Approve the Company's 2002 Price-Vested [ ] [ ] [ ]
Performance Stock Option Plan.
Signature(s) Date
----------------------------------------------- --------------
Please sign exactly as your name appears above. For joint accounts, each owner
should sign. If signing as an administrator, attorney, conservator, executor,
guardian, officer or trustee, please provide full title(s) as well as
signature(s)
--FOLD AND DETACH HERE BEFORE MAILING CARD--
Vote by Internet or telephone
24 hours a day, 7 days a week
Internet and telephone voting is available
through 4:00 p.m. Eastern Time on March 11, 2002
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
INTERNET TELEPHONE
http://www.eproxy.com/abm 1-800-435-6710
Use the Internet to vote your Use any touch-tone telephone to
proxy. Have your proxy card in OR vote your proxy. Have your proxy
hand when you access the web card in hand when you call. You
site. You will be prompted to enter will be prompted to enter your
your control number, located in control number, located in the
the box below, to create and box below, and then follow the
submit an electronic ballot. directions given.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.